Hi - I'm a new person w/o a clue

[evenstarjm]

I'm in Denver

Hi everyone; found this site today and have perused it thoroughly and find most of you are pretty sound financially; scares me a bit to think of early retirement on my income.  I'm a civil servant under FERS (Federal Employees Retirement System); have about 70K in my Savings plan, of which the first 5% is matched by the government.   However, I'm going to spend 33K of it this December to pay off a manufactured home I own in Cheyenne WY (my oldest daughter rents here - but will leave when she graduates school in Feb 2007).  I own the land it sits on, but the home is older and is NOT on a permanent foundation, so I cannot get a "normal" mortgage + it's on a 5-yr balloon which is due Jan 2007 and I have a 555 score on my credit.  Really sounds like I'll be working for the next 20 years.  It would be nice to have a place without a mortgage but I HATE living in Cheyenne.  I was there for 14 years before moving here to Denver. 
I make approx. 45K/yrly at my job.  I find it hard to make ends meet now; what will retirement be like?  YIKES!
I'm a 53 yr old woman, divorced with no benefits from that (meaning no portion of his retirement - maybe some Social Security), no dependents (I have 3 wonderful children, all grown and out on their own), just me and my 12 yr old Lab.  I don't have any credit card debt, but I do have a house payment and car payment, plus the normal utilities.  I commute 17 miles one way each day and as my friend put is so succinctly:  It's not that I hate going to work, it's that I hate getting up.  I will probably work PT in a job where I love what I do (i.e., crafts, fabric, plants - something I knew I could never make a living from full time).
Any suggestions from the multitude?  On ANYTHING?
Thanks and I look forward to many chats.

 

[evenstarjm]

Also, what do the Acronyms stand for?

 

[jeff2006]

Hi, Evenstar -- a thought and a question. 

The thought:  be sure not to take social security at age 62 if you plan to work any, even part time, between ages 62 and FRA (full retirement age).

The question:  what turns you off about Chayenne?  (I have never been there)

edit -- on second thought, you can earn some money while drawing early SS before the really crushing taxes set in, but I forget exactly how much. In any case, look into this aspect carefully . . .

 

[evenstarjm]

Cheyenne - It's a prairie town - the wind blows all the time - although there are some nice days - winters can be 16 below, with wind.. 50,000. Reallly not bad - an hour and a half from Denver...Just not a pretty town.

Thanks for the advice on SS.

 

[evenstarjm]

what do these mean?

LBYM
FIRE
where are the calculators

 

[jeff2006]

LBYM -- live below your means

FIRE -- financial independence, retire early

The best calc is at www.firecalc.com

 

[evenstarjm]

THANKS JEFF

 

[just_hatched]

Also, what do the Acronyms stand for?

Hi and welcome! There is a "sticky" post in the Forum Admin section where
you will find common acronyms used here.

 

[Texas Proud]

Don't worry too much... you are a lot farther behind than a lot of the people on the board... but you have made the first step!!!

And look at the riches you have... you say you have three wonderful kids.. that is a big plus..

Read a lot on the board and start to figure out what you need to do...

One of the FIRST things is to figure out WHERE you money is going today... get a small notebook and every PENNY you spend, write it down... you will soon start to see trends where money is slipping through you fingers and it will add up.. THEN you can make changes so you will not have to work until you die...

 

[cube_rat]

Don't worry too much... you are a lot farther behind than a lot of the people on the board... but you have made the first step!!!

Yep, this is so true. I started from zero at the age of 40 when the light build finally went off. There's a lot of great information here. The forum members are very nice and the moderators are helpful. You won't have to worry about anyone flaming you for asking newbie questions. Welcome, BTW (by the way..)

 

[Zoocat]

I'm in Denver

I'm a civil servant under FERS (Federal Employees Retirement System); have about 70K in my Savings plan, of which the first 5% is matched by the government.   However, I'm going to spend 33K of it this December to pay off a manufactured home I own in Cheyenne WY (my oldest daughter rents here - but will leave when she graduates school in Feb 2007).  I own the land it sits on, but the home is older and is NOT on a permanent foundation, so I cannot get a "normal" mortgage + it's on a 5-yr balloon which is due Jan 2007
I make approx. 45K/yrly at my job.  I find it hard to make ends meet now; what will retirement be like?  YIKES!
I'm a 53 yr old woman, divorced with no benefits from that (meaning no portion of his retirement - maybe some Social Security), no dependents

Welcome, evanstarjm,

One item raises red flags with me. Your "savings" of 70K, is that a FERS or 401K, or what exactly? How can you take 33K from FERS to pay off the mortgage?  No matter what kind of retirement fund it is, in my opinion, it would be a very bad idea to cash out any amount, even to pay off a balloon loan. Is there any way you could sell the property before jan 07? I know as a mom of a college age daughter that asking her to move during the semester would be a hardship for her.  But taking money from your retirement should not be the first option, IMHO.

Others, who are more financially savy, may weigh in with other options.  You may also want to repost this question on the FIRE and Money section.  Keep hanging around here and ask questions and you will learn a lot. I have!

 

[donheff]

Hi Even... I agree with others that you should not touch that $70K in the TSP. That is needed for retirement.

You didn't mention how long you have worked for the Feds but in addition to Social Security and TSP, FERS gives you a pension of 1% per year worked. So, if you put in a normal 30 year career at your present salary you would get about $13.5 K FERS, plus $20K+ social security (both inflation protected) pluc whatever you can parlay that TSP into -- keep on saving.

 

[Martha]

Welcome to the Forum.

I agree with those who suggest looking at other options rather than taking money out of your savings plan.  You may end up chosing to do so or end up needing to do so, but have you looked at other possibilities? 

Your current lender may refinance the loan for another year to five years, even if your credit score is poor if you have paid this lender regularly they may welcome the refinance.

Is the property worth more or less than the loan balance?

 

[yakers]

I am still working and covered by the CSRS Fed retirement system. I agree that it doesn't sound like the best option to take $70K out of the TSP at least with the info present. This would be a taxable withdrawal, it may raise your tax rate. To keep cash flow going it might be a time for a Home Loan line of credit. As you are a Federal retiree I assume you have medical coverage? That helps a lot.

 

[mickeyd]

Hey Even? Star? JM?,

Welcome here...

just me and my 12 yr old Lab.

With a lab you are already ahead of the power curve on this one! My 10 year old lab keeps me steady as can be, he has no choice as it is his nature.


My suggestion is to begin today to save as much as you can until it hurts, and then save some more. After a while, if the pain persists, back off the savings with the idea that you are going to pick it up again soon.  At age 52 you can consider yourself fortunate to have recognized that you are in a bit of a pickle.

Now the good part. Imagine if you were age 66 and just realized that you have a few financial shortcomings? See my point? You now have the luxury of having time on your side and a steady job in which to overcome all or part of it.  Look at your  entire LONG-TERM situation and make some hard decisions now that are very difficult today. In the future you will have fewer options and will look back and say "Why did I not...", and you don't want to do that.

Only you can make such a choice. I recommend that you pick up a book entitled "The Millionaire Next Door" at your library or book store. It is a jewel that will get you thinking the right way about finances and life in general.

You are going to receive a lot of responses to your post here, just remember how much you paid for the advice and keep it in perspective. 8)

 

[astromeria]

Welcome, evenstar (love that name!).

it sounds like Cheyenne isn't your favorite place (and it must be expensive to heat in the winter)--could you consider selling there and perhaps locating closer to one or more of your children or some place with milder weather? Are any of your kids in a position to buy or build a home with a "granny apartment"? Would you like that level of intimacy with grown children? Could you move somewhere where you could continue to work for the govt and so hold on to benefits such as health care and a future pension?

If you would be willing to share the level of benefits you expect (and at what age), we can help you determine the financially best course of action. For example, if you will qualify for a $1500/month pension at age 58 and that would make a big difference in your retirement financial well-being, we might encourage you to stay with the Feds as long as your job isn't killing you COuld you lower your living expenses by sharing digs with a roommate?

I hear you about the early wake-up. I'm a night owl myself, and one year I carpooled with someone who needed me to leave the house at 5:15am (so she could be home for her children after school). It was awful to get up so early, but I really liked getting home at 4pm (I had a 36-mile each way commute in Silicon Valley at that time ).

Your credit score sounds like there might be a problem with paying bills on time or maybe your ex trashed your credit. In any case, have you considered paying bills online? (Full disclosure--I haven't set this up myself--maybe you can tell me how if you manage it!)

If you can get out from under your car loan and get into less expensive housing, living on $45k will be a lot easier (very easy if there is little or no debt)--I think that's close to the average American income and many people on this board are living on about that amount in retirement. Would it make sense to sell your car (to ditch the loan) and buy a less expensive one for cash?

 

[evenstarjm]

Wow, thanks for all the responses! I'm overwhelmed at the amount of helpful people here. Let's see if I can answer some of the questions. I'm still working as a Fed, I'm in FERS. Have been with the feds for 22 years. The bank which holds the note on the MH has said they will not refinance (because of the credit score - the banker I worked with all these years has gone to another bank - this is the new banker ) and in 10 years I've never been late.......I COULD sell it; it will be impossible to get a mortgage, as I stated, the home doesn't have a permanent foundation.....you cannot get a mortgage because of that. My children live in Cheyenne, lol, so I can't get any closer than that. The child living in the home graduates in Feb and will be leaving town. There are worse places and there is NO state income tax, so I might decide that's where I need to be. My credit history is due to so many bad things. I owned a home and rented it out; the renters not only DIDN'T pay (which made the mortgage payments late) they also trashed it; I took them to court, won, but don't have any way to collect as I don't have a work place nor a SS number for them.....what good was it? Cannot locate them anywhere. This has happened at least 3 times since I've owned homes. Rented them out and they didn't pay and it screwed up my credit. Oh yeah, the ex hurt my credit only as far as he was to pay the bills, I was to pay the mortgage and he filed bankruptcy, so I had to file the same to protect myself from inheriting $20,000 worth of debt. It was discharged long ago and no longer shows on my credit report.....but it did hurt me financiallly.
Have I left any questions unanswered.
Again, I'd like to thank everyone for their welcome advice.

 

[donheff]

I'm still working as a Fed, I'm in FERS. Have been with the feds for 22 years.

Everyone always disses FERS but at your income level you are actually as well off under FERS as under the old system. If you work 9 more years, retire at 62 and take social security you would get about $26K per year ($14K FERS, $12K SS - today's dollars, assuming your salary stays at $45k in today's dollars). Under the old CSRS system you would get about the same. Your TSP savings provide additional income and you do much better with TSP under FERS. So keep saving, at least enough to get the full match.

Of course if you work longer than that, retirement income will go up -- but we can't advise such a thing on this board.