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- My mother was a smart saver – she knew her financial priorities and focused on them.
- Following his example, I never deprived myself but I also don’t waste money on expensive items.
- My father taught me to invest. His example helped build a $530,000 retirement portfolio.
The year I turned 12, my mom drove me in our Chevy station wagon to the bank in Bethesda, Maryland, where the teller helped me open my first savings account. My mother insisted that I deposit $6, which is half of my babysitting and newspaper delivery earnings.
She was a smart saver. Even though our family went to the beach every summer, we never went on fancy vacations because mom thought school fees were more important. She even bought dented canned vegetables for half price.
My husband and I followed my mother’s example
His example has served me well all my life. Because my husband Barry and I managed our money carefully, in our 70s we now split our lives between Eureka, the “Victorian seaport” on the northern California coast, and Guanajuato, a world heritage center of UNESCO in the central highlands of Mexico.
Throughout our marriage, we rarely bought new cars or new furniture. Today we own a 1990 Mazda Miata, which we drive about once a week, and a 2003 EuroVan, which we use to explore the beauties of northern California and southern Oregon. In Guanajuato, we don’t have a car — a great advantage, because at center, where we live, the houses have no garages or driveways, and paid parking is expensive. We walk everywhere in the lively and colorful streets of the city.
We also do not have a dishwasher or dryer in either house. In Guanajuato, clothes dry quickly on our patio in the warm, sunny air, but even in Eureka, it doesn’t take that long. You just have to be patient.
I admit that we are not complete minimalists. We can’t be – we own six kayaks, two paddle boards and eight bikes! The bikes are divided between our two houses. As for the kayaks, each one has its history. Another article!
We visit Europe about once a year, but rarely pay for international tickets. By applying for a credit card with 50,000 or 60,000 bonus air miles every two years, we accumulate our miles. We only ask for a new card when we know we can compress a lot of expenses in a short time, because you have to spend $3,000 to $4,000 in the first two months, which is way more than we spend normally.
A friend recently described us as “frugal”, but I don’t agree, because we don’t deprive ourselves. I don’t believe that self-deprivation works in the long run: it’s like dieting — too much deprivation can lead to excess.
My father taught me to invest for the long term
My father, on the other hand, was not just a saver, but an investor. During my childhood, I heard him discuss stocks with my mother.
In my early thirties when Barry and I were living in Bellingham, Washington, a then-cheap hippie town, Dad encouraged me to open an IRA because I was her only child who worked for herself and had no no pension. I wasn’t making much at the time, but I took his advice and opened an IRA with $50. Barry did the same, and a year later we each opened a SEP IRA. Our accountant advised us to max out both accounts each year to reduce our annual taxes, so we did, and today, 40 years later, my two IRAs combined are worth over $530,000.
I made stupid decisions, of course, like impulsively following Barry’s idea in the 80s to buy futures. Never again! I lost $1,500 this way.
But other decisions were smart. When we moved from Bellingham to Palo Alto in 1987, I was terrified because our rent went from $265 to $1,200 a month, and soared to $1,400 a year later. But I was forced to earn a lot of money for the first time in my life, and it was good for my future. After six months of networking, I got an ongoing contract with Apple, which led to other contracts, leading trainings for companies like Hewlett-Packard and AT&T.
Seven years later, during a brief market downturn, we managed to scrape together enough money to buy a friend of a friend a house, avoiding real estate fees. We worked hard to pay for the house.
In 2004 we left Palo Alto and sold the house. After giving money to our daughters, we invested about a third of our profits in a bond, which has since been earning us about $1,000 to $1,200 a month. At most, before the crash of 2008, we were earning $2,000 a month. This is an average return of around 5-7%.
And instead of paying someone to manage our stocks, we invested in index funds. We understood that no one has a “market in the market”, so to speak.
Between stocks, bonds, our IRAs, Social Security, and our part-time earnings, we’re financially comfortable. Thanks to my parents’ example—investing wisely and not spending our money on big-ticket items like trips to Hawaii or new cars—we can afford the rich, diverse, bicultural life we now enjoy.
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