28yr old w/family looks at future

[Joshua]

Hello everyone,

I have just recently found this website, so I thought I would introduce myself to everyone. You can call me Josh. Looking back over things, this is a long first post, but I'm not sure how else to introduce myself and still give make it meaningful.

I am 28 years old. That means almost exactly ten years have gone by since I became a legal adult, and this has caused me to take a hard look at what I have spent the time doing. Ten years, when you think about it, is a lot of time. I could have done a lot in ten years, right? Well, maybe. When I was 18, I wanted to conquer the world, make big bucks, and retire quietly by the time I was 35. I am, of course, no closer to financial independence now than I was ten years ago.

The nebulous financial plans I had at the age of 18 didn't count on a lot of things that have happened between then and now. They didn't have room for me to find the love of my life. They didn't have room for two daughters. They didn't count on being unable to pay for my family and stay in college, or on becoming unemployed for long periods, or on living in a tent in the woods because I couldn't pay for rent. They didn't count on winding up in a small town where the only job I could qualify for would not pay enough after childcare expenses to bother having.

Funny how things happen, isn't it? It doesn't matter if you have a good understanding of compound interest, or you've read books on how to invest in real estate, or if you know other obscure strategies for "making your money work for you" when your biggest worry is whether you'll be able to buy enough gas to make it to the food bank and back this month.

So, enough sob story - where am I now? Well, right now, to recap a bit, I am 28 years old. I have a dedicated, loving wife who has spent several hard years recovering from an illness that left her unable to work or function meaningfully in society. I have two sweet daughters who each have their own special emotional and educational needs. I have been in the US Army for the past three years. Enlisting was the only thing, at the time, that I could think of to do in order to give us a hope of moving forward, and I'm glad I did it. I don't think I had any other choices just then, and now that I see what it's all about, I'm proud to say that I serve my country. I probably would have done it sooner, if I had known what it would be like.

Since this is a financial forum, let me give you a run-down on my status in that area. I currently earn about $2,400 a month after taxes, and though other people at my level complain bitterly about how little money they get, this is more than I have ever made in my life. I have very few bills, as the Army pays for my housing and utilities. I have paid off most of the debts that I incurred in my earlier, confused years, though they're still black marks against my credit.

My current debts are a 5 year car loan (been paying for about a year so far) that runs me $280 a month and about $3,000 +/- worth of maxed out credit cards that sap a few hundred a month for payments but never actually get paid off. My credit score still hovers right around 600 due to my poor use of credit cards and what seems to be an unending stream of things from the "bad years" that still surface when I'm least suspecting it and land on my credit report. I have nothing saved for emergencies or towards retirement.

I should be happy that things are at least stable for me and my family right now. At the very least, I don't have to worry about getting laid off any time soon. Instead, I seem to spend a lot of time mourning what I failed to accomplish over the last ten years. I feel like I have failed my family, because I have not been able to provide them with a better life, and I feel like I continue to fail them because I let us give in to short term desires rather than plan for our future.

I've told people that I am thinking about "doing my 20" in the Army, so I can retire with my pension. It's a hard job, but it's satisfying, and I like a lot of my work, so it might not be a bad deal, but the question I often get asked is, "What kind of job will you get when you get out?"

My response is something like slack-jawed amazement. Why in the world would I spend twenty years in a demanding profession just so I could start a whole new career at the age of 45? Yet, many people do this. They separate from the military after twenty years and then have to go live with their parents while they look for work because they have nothing saved, and their retirement pay isn't enough to live on. How can this happen?

Well, look at me - almost three years in the Army so far and almost nothing to show for it but some consumer debt and a depreciating asset. Spooky. That means if I want to make a career out of this, I have 17 years left to get myself in gear, or I'll be right there looking for a handout when I leave. And that's assuming I can stay in for 20 full years anyway. Maybe I'll get fed up with the constant deployments. Maybe I'll hurt myself in a car accident and get kicked out on medical grounds. Maybe a hostile supervisor will decide to ruin my career out of spite. Anything could happen. And then where will I be, if I have nothing prepared?

Anyway, that's where I am right now. I'm momentarily stable, but I've suddenly realized that it could all be temporary at best or an illusion at worst.

One of my biggest shake-ups has been discovering quite recently that I have a bad habit of spending money on my family for pointless reasons. It's like I have to justify why I'm here by providing for every whim. If I'm not giving them something, then I am useless. I suppose it's kind of inevitable as a sort of back-lash from what we've been through, but I now recognize that it's a toxic feedback loop that will never help us to get ahead or become secure, so I've been trying to put it behind me and quash urges to spend (usually on credit!) for stuff we don't really need just to prove to myself that I am a good husband/father who is able to provide for his family. Knowing what I'm facing has made a surprising difference, but it still takes work.

So... I don't exactly know where I'm going from here, but I figure dipping back into some educational sites, books, and communities will be a good start. It's been a while since I read up on any of this stuff, and I've forgotten most of what I ever knew.

Maybe the re-education effort will focus my mind. I don't know. We have some things going for us, but we still face challenges. My wife thinks the concept of financial independence that I have held on to for years is just something unrealistic that gets marketed on late night infomercials. She agrees that we need to start putting away for our retirement, but it's more of a vague, "that's a good idea" thing for when we are in our advanced old age. It's not something that makes her wake up in a cold sweat in the middle of the night wondering whether or not I'm going to waste what could be the best years of my life doing menial labor for someone else's gain.

I notice most of the people introducing themselves here are already established professionals with hundreds of thousands of dollars worth of assets to their names. I'm not drowning in debt, but I don't really have any assets, either. Surely some of you folks started where I am, right?

I have seen scarcity. I don't want to go back there. Ever. I want to collect my "wages" in the mail right along with my bills. I want to own my time again. I have too many ideas and too much to do! I can't afford to be saddled with a job my whole life. I don't have to be ridiculously rich. I just want to be independent. Is it too late to start?

Josh

 

[REWahoo]

I didn't get serious about saving/investing until I was 31 and scraped together my first $1k to start saving for my eventual retirement. Twenty eight is a great age to get started - much better than 48 or 58!

 

[FIREd]

Hi Josh,

welcome. First, stop beating yourself up. You are young, you are healthy, you have a loving family, that's already so much. Hold your head high my man. Second, you say you spend money on your family for pointless reasons because you feel the need to show you can provide for them. I think the best way to provide for your family is to ensure that they have financial security. A house full of toys and useless stuff doesn't mean anything when the bow breaks. Money in the bank is the ultimate safety blanket.

It's certainly never too late to start.

 

[aaronc879]

I notice most of the people introducing themselves here are already established professionals with hundreds of thousands of dollars worth of assets to their names. I'm not drowning in debt, but I don't really have any assets, either. Surely some of you folks started where I am, right?

I'll be 31 in a couple days. I do 12 hour shifts of manual labor in a factory and my take-home pay is about the same as yours. Low by the standards of most on this board but about equal with the national median individual pay. I don't have hundreds(plural) of thousands in assets. I still expect to retire in my 40's with no pension. I am single with no kids which helps but I have to pay my own housing expenses which you don't. You have no housing expenses so you should be able to put a large amount towards your consumer debt plus start some savings. If your wife wants luxuries she can get a job and buy them herself.

 

[Coach]

Josh, welcome to the forum! That was a great introductory post.

Like FIREdreamer says, quit beating up yourself. Nothing is going to change the past, but the future is entirely yours to determine.

I'd like to suggest that you read Dave Ramsey's The Total Money Makeover. If you follow his plan you can get out of debt much faster than you think. You'll also develop a budget which will get the spur-of-the-moment spending under control. It won't be easy, but you sound to me like you've got what it takes.

You've got a good career now -- perhaps you'll do your 20, perhaps not. But you've got a lot to be proud about. Most importantly, you're taking care of your family.

I was dead broke at age 29, and retired at 57. There are a lot of people who have done the same. You can too.

Coach

 

[WM]

Hi Josh,

Welcome! It sounds like you're on a good path right now, and you have a lot of things going for you. Most people haven't done anything for retirement by 28 so in my opinion you're ahead even to be thinking about it. And if your wife isn't as obsessed (in a good way ) as you are, or if becoming FI seems like an impossible task, then focus on something smaller - DH and I started out thinking we'd save enough to take a year off from working to do whatever we wanted.

There are lots of smart people here and good resources to help you make a plan. And thanks for your service!

 

[flyfishnevada]

Josh, first off thanks for serving. Sounds like you are a typical 20-something. First off, stop beating yourself up over your past mistakes. Learn from them and apply those lessons.

Your credit doesn't sound horrible and your debt situation is better than average. You have a good career with a lot of opportunity. Take advantage of those positives and start building.

First off, get a hold of your spending. In addition to Dave Ramsey's book, try "Your Money or Your Life". Even if you don't follow the plan, it teaches you a lot about your relationship with money. You may be surprised how much you actually have and how much frivolous spending you can cut out without feeling deprived. Of course, reading this forum can teach you a lot and keep you motivated.

When you control your spending, start saving. A pension would help, but even if you decide to leave the Army, you can take advantage of your experience, the G.I. Bill and maybe some educational opportunities before you leave to get a good job and a better income. If you stay, maybe going back to school on the U.S. Government's dime is a possibility.

Either way, 28 is young. You have time. A little discipline, something a soldier should find easy, and planning and you are on your way. You can do it. Good luck!

 

[HawkeyeNFO]

1 - Please no more long posts like that. People can't pay attention that long.

2 - I too am in the military. My advice is to do it as long as you enjoy it overall. Use the Army as much as they are using you. Take advantage of the educational opportunities. The Navy has Seaman-to-Admiral, which pays enlisted people to go to college for three years and then they are commissioned as an officer. Getting paid (base pay plus BAH) to be a college student, with a guaranteed job once you graduate. Good deal, and I'm sure the Army has something just like it.

3 - Pay off the credit card ASAP, but you already know that.

4 - Retiring at 45 sounds great (my goal too), just be sure to do some real planning so you can make it happen.

 

[Joshua]

Thanks for welcome

1 - Please no more long posts like that. People can't pay attention that long.

Sorry. I looked for a posting guideline that specified what the average post should look like, but I couldn't find a word count requirement. I'll delete it, if necessary.

Use the Army as much as they are using you.

Yeah, I am trying. I finished my Associates degree not too long ago, and I have the first couple classes towards my Bachelors starting in September. I've already looked into the enlisted-to-commissioned program for the Army, but there are various issues associated with it. I think I'm going to try to just get my Bachelors Degree on my own time and then drop an OCS package. It's not as convenient as getting the actual college time in a brick and mortar place, but it should work, and an LT's pay is the same no matter where he gets the bar from.

Pay off the credit card ASAP, but you already know that.

Yeah. That's top priority right now. If nothing else, I'll be able to wipe it out next spring when I get our tax returns back.

Thanks for the welcome, HawkeyeNFO. It's good to see other military folks taking a look at the future instead of spending all their checks on booze and tricked out cars.

Josh

 

[Joshua]

I think the best way to provide for your family is to ensure that they have financial security. A house full of toys and useless stuff doesn't mean anything when the bow breaks.

You've got it spot-on, FIREdreamer.

For me, I think it's just a focus issue. Everyone always asks for easy to get stuff. "Can I have a..." (ipod, bike, laptop, new tv, game, etc.) None of my kids has ever tugged on my shirt sleeve and said, "Daddy, can you establish some long term investments this year? Please? All the other daddies have them! Why can't you be cool like them?"

No one to blame for it but me! I've helped to build the culture that prevails in this household. It's up to me to start working against that momentum and fixing things.

Josh

 

[Joshua]

I do 12 hour shifts of manual labor in a factory and my take-home pay is about the same as yours. Low by the standards of most on this board but about equal with the national median individual pay.

Hey, not bad. It's nice to see someone else from a modest background taking his finances seriously.

I am single with no kids which helps but I have to pay my own housing expenses which you don't.

Yeah, being single makes your budget pretty simple. You only have to worry about yourself. No kids growing out of clothes every five minutes, no multiple adults to coordinate spending with, etc. When I was single, I used to chart every penny of expense and income I had on an Excel spreadsheet. I could have projected my checking account balance three months from now based on five dollars spent or not spent today. Life's a little less predictable now, though not without some positive tradeoffs.

As you say, housing is such a big part of an average budget, so I should be able to save a fair bit. I can't argue with that. We use to live on $1,200 a month (when we weren't out of work!), and that included rent, utilities, and transportation. So if we could get by on half our current income back then, why can't we get by now? Standard of living, I guess. We were poverty level, and we looked it. Had a ratty car, worn clothes, no cell phones, monotonous diet, etc. Just need to see where there's room to compromise in the present.

If your wife wants luxuries she can get a job and buy them herself.

Hard words! Especially for someone who has been too ill to work for most of her life. The medical care that my Army insurance has made available to her has helped a lot, to the point where she has been almost symptom free since this spring for the first time in her life, but I can't pressure it. She's started to talk about maybe wanting to find a job eventually, so I'll leave it up to her when she is ready for something like that.

Josh

 

[TooFrugal]

Everyone always asks for easy to get stuff. "Can I have a..." (ipod, bike, laptop, new tv, game, etc.)

Personally, I think one of the best gifts you can give your kids is to help them to manage their own money and learn the value of delayed gratification. We pay for all their necessities like clothes, food, school supplies, sports fees, etc. But for most extra things like ipods, concert tickets, hobby stuff, expensive cameras, etc. they have to pay for themselves by saving up their allowance, doing extra chores around the house, working odd jobs like pet sitting or helping people move, or using their birthday or Christmas money.

 

[militaryman]

Until you have a "better offer" stick with and invest in your current military career. You DO have something saved already for retirement and that is your 3 years towards a lifetime on paychecks that you can start collecting at 45y.o.. Until you get a better offer from a megaCORP or win the lottery continue to try to put on stripes or bars and maximize that pension. Further you are not limited at 20 years.... I know plenty of E7's that after 20 see E8 or E9 in their future and end up staying 25-30 years and retiring at 50 or 55 with a very substantial pension that does not need to be supplemented by other income. As time goes by your education efforts will benefit your military career as you are able to reposition yourself into less demanding jobs that you can see doing longer term.

Goes without saying but.... Invest in your marraige, daily. Divorce is one of the most devestaing spiritual and financial things that can happen to a persons life.

Chin Up -- you've come a long way from the Tent in the woods.

 

[donheff]

Only you can figure out whether staying in the military for 20 years works for you. But I agree with the others that you should stop fretting. At 28 you are still a kid. Few of us have gotten our Sh** together by that point. Start saving, LBYM, but don't give up all the frills for the family. They deserve attention from you now. When you are 45 you will be in an entirely different place than you are now. Assuming you stick with the military career you may want to ER but you may want to explore a new career. Try to keep your options open by saving but don't close your mind to new possibilities.

 

[HawkeyeNFO]

Forgot to ask:

5 - Are you doing the TSP? I highly recommend it! I do the C, S, and I funds.

 

[ziggy29]

Not being retired military it's harder for me to comment, but you only have three years in so you still have a reasonable option of looking outside at civilian work. But at some point the "golden handcuffs" will start tightening until you get your 20. They're not that tight yet but will slowly tighten over time.

Nothing wrong with having your feelers out for now. But by the time you have 5-7 years in, or so I'm told, you'll be increasingly likely to feel like you need to suck it up for the full twenty. And by the time you have 15+ years in, you may well have "that date" circled and highlighted on the calendar.

Good luck!

 

[WM]

There's no limit on length of posts (as you'll see if you read some of Nords' excellent ones , he's a longtime member and retired Navy). I guess the only risk you run with going long is not getting good advice if people don't really read the whole thing.

With respect to your spouse, it sounds like it's been a long road, and it's wonderful that things are turning around for her. There seem to be a number of people on the boards here who've been burned financially by spouses who were more than happy to overspend. So any hint of partners who aren't fully on board sometimes elicits harsh comments. That doesn't seem to be your situation, though.

Finally, should have said that my DH is military - 15 years USMC and counting. Five years still feels too far away to be counting our chickens, but we're definitely aware of that 20-year mark approaching. If things go well, we plan to retire for good at that point.

 

[REWahoo]

There's no limit on length of posts...

Actually I think there is a 10,000 character limit to an individual post. But since there is nothing in the rules regarding the use of "to be continued", the limit certainly hasn't hamstrung any of our more prolific members.

 

[NW-Bound]

Josh, I read through your post. It's long, but fine, and I am a fast reader.

One of my biggest shake-ups has been discovering quite recently that I have a bad habit of spending money on my family for pointless reasons. It's like I have to justify why I'm here by providing for every whim. If I'm not giving them something, then I am useless...

Now that you have recognized that, it is a good start.

I just want to be independent. Is it too late to start?

Come on! You are still young. Some of the people here who retired early or plan to do so in their 30s, or even 40s, are able to do that because of special circumstances, like working for a startup or small company that grants stock options. Many of us are only able to think about early retirement when in our late 40s, or 50s, particularly people who have children to support.

Think positive, start saving and get that money to grow. And be patient. Some of my good-wage-earning friends never bothered to save, then in their 50s started to gamble big with penny stocks trying to make up for lost time. I just don't know what to say to them.

 

[Sarah in SC]

Joshua, good first post, I enjoyed reading your thoughtful and heartfelt words. To repeat what others have said, try reading one of Dave Ramsey's books, as his methods inspired us to become debt free and started us on the road to financial success. I highly recommend the debt snowball method, because you get to see yourself making progress.
Good luck to you and I hope you'll keep us posted on your progress.

 

[Joshua]

Thanks for the encouragement, Sarah. I'll look into the writer you mentioned. The name is familiar, but I don't think I've actually read any of his work yet.

As for updates, yep, I'll probably be sticking around for a while. I've just started to get a solid enough grip on the present to start looking at the future, so it will take me a little while to get where I want to go, but most good things are worth working a while for. I've been combing the forum archives, trying to get a handle on things around here and maybe avoid asking too many questions that have already been amply addressed. I'm sure you'll still see a few confused posts from me, though.

Planning for retirement is like the argument people have about going back to school...
"But if I start working on this now, I'll be X years older by the time I'm done!"
"Ok, and how much older will you be by that time if you *don't* do it?"

Josh

 

[Walt34]

I think you're doing fine. As others mentioned very few people have their act together at age 27 - I didn't either. At that age I was still single, and owned an airplane and a motorcycle, not giving a thought to where I wanted to be in five years, let alone 20.

Read the books mentioned and you can turn things around. You have responsibilities to your family and you're meeting them.

At 28 I was newly married and divorced five years later. So at 34 I had a net worth of about $8k, most of that in cash, and was living with my mother, not where any guy wants to be at that age, saving for a house which I bought 18 months later. At 36 I had an income of $38k/year and was six figures in debt between the house and a pickup truck. I met and married a wonderful girl who had the wisdom and maturity to say "The only trouble with loans is that they always want you to pay it back. Plus interest."

Well, duh.

Fourteen years later DW and I achieved Zero Debt, in part because we haven't paid a dime in credit card interest charges, taking to heart Suzie Orman's mantra of "If you can't pay cash you can't afford it!"

At the other extreme we know a couple who has had a great time the last 25 years, with every "I wanna..." funded by credit. They were $700k in debt, just sold a house via a short sale, meaning the bank accepted less than the amount due on the loan figuring half a loaf was better than none. So their next 20 years looks pretty bleak to me since the era of easy credit is gone for the foreseeable future and their credit is destroyed. They have no savings of course, but one has a pension so they probably won't starve.

That is not a place anyone wants to be.

 

[chris2008]

Look for the contributions by Nords. He was in the military and ER'ed successfully and his contributions are great to read.

Then, tackle your habit of spending money in ways that do not support your goals in life.
This does not mean that you should not buy things for your family. But you could be more creative to find alternatives to buying as your sign of love.
Long term, no kid misses the toy that Daddy did not buy. But they all miss the game that Dad did not play with them, the book that Dad did not read to them.
If you feel the urge to buy as sign of love, put the item on a list for at least a week, go home instead and try to express your love in a special way that does not involve consumption.

It is highly recommended to start keeping track of expenses in writing and as detailed as possible. Create budget categories and monitor at least monthly. Only if you know exactly where your money goes you can find opportunities to save, attack useless expenses and see your progress. There are lots of contributions here on tracking expenses.

As you wrote, your family has some obstacles with only one income. But look out for examples of other one income families like on www.slnet.com's forums, or on The Dollar Stretcher: Frugal Living since 1996. Get a copy of the "Complete Tightwad Gazette" and of "Your Money, Your Life" from the library or buy used. Lots of ideas and examples, even though the prices in the examples are outdated by inflation.

Share your dreams and goals with DW. You need to work as a team and her support will help you in your daily work and she might come up with some ideas as well.

All the best to you and to your family. Please keep us updated.

 

[Joshua]

If you feel the urge to buy as sign of love, put the item on a list for at least a week, go home instead and try to express your love in a special way that does not involve consumption.

That's good advice. I probably fell into the habit because it's more or less what I learned from my own dad, and patterns like that have a tendancy to reassert themselves when you're not paying attention.

Share your dreams and goals with DW. You need to work as a team and her support will help you in your daily work and she might come up with some ideas as well.

Yep. We always try our best to work as a team with everything. No couple is 100% in harmony all the time, but I think the trying is almost more important in some ways than the succeeding. We've made it five happy years so far.

You know what they say - the hardest working person in the military is a spouse!

Josh