HUSHPUPPIES

On a warm October day shortly after Martin retired, we headed for North Carolina on Martin’s Kawasaki Versys. Wearing our usual cycling gear of leather jackets, boots, gloves and full-coverage helmets, we sailed along through the foothills of the Blue Ridge Mountains to Shelby, NC. There, we stopped for lunch at Bridges Barbecue. A little diner serving up southern style barbecue with a vinegar based sauce and all the fixin’s, Bridges is one of those places where cyclists like to stop for the casual, friendly atmosphere as well as the good food. When we pull off our helmets and people see our graying hair, there’s sometimes a look of surprise. We’re not what most people expect under all that leather. But, everyone is always friendly and that day was no different.

We made our way inside and through the little diner to the only empty table and chairs, hauling jackets and helmets with us. A server took our orders as the booth next to us emptied out and was quickly filled by two women who looked a little younger than me. They were both dressed very nicely as if for work in an office. As Martin went to make a pit stop, one of the women leaned across the aisle, pointing at my helmet, and asked, “Are you going to or coming from someplace?” One thing led to another and by the time Martin returned to our table, I was talking about cycling, gardening, grandkids and living in South Carolina with my two new friends.

Unlike most people contemplating retirement and where they will live, we had the good fortune of discovering one of the most livable areas of the country long before we reached this juncture. One sunny Michigan day about fifteen years ago Martin called me and said, “How would you feel about moving to Greenville, South Carolina?” “Where?” I asked. We’d been to Hilton Head on vacation and loved it but I’d never heard of Greenville. In order to decide if we would make the transfer Martin’s employer was offering, the following Friday we flew down on a look-see. We found warm weather, friendly people and a lively downtown featuring a Main Street jazz concert on Friday nights. By Sunday, we were hooked! The South Carolina slogan of “Smiling Faces, Beautiful Places” described the upstate…well…beautifully. Since then, we’ve discovered it also describes the other Carolina to the north as well.

So, it was no surprise when we encountered such friendliness during our lunch in Shelby. One of the women asked if we’d ever had the hushpuppies at Bridges. “Well, no.” I answered. “Oh, then, you must try some. They’re simply the best.” With that, she offered up a bread basket full of long, brown fingers of crisply cooked dough. When I hesitated, she said with a big smile, “Oh, I insist. You must try these.” Shortly, we were trading french fries and hush puppies and talking some more. This time, them telling me about how the Reverend Billy Graham used to bring his family here for lunch when his kids were young. As we finished our lunch and said our goodbyes, I thought about what a great place the Carolinas are for retirees.

There are websites like AARP.org, moneyrates.com and CNN.Money.com teeming with suggestions to assist those contemplating retirement. You can find the best and worst states to retire, the cities with the lowest or highest cost of living, the states with the most sunshine, the states with the best or worst tax treatment for retirees, the cities with the most affordable housing, least crime, best jobs for retirees or some combination of all the above. Where you live is a very personal decision, which will affect the quality of your retirement. So, taking the time to explore the possibilities is time well spent. Even if you are happy where you live now and think you’ll just stay there, you may owe it to yourself to do a little exploring. We love living in South Carolina but we did a little reading, thinking and looking around just to be sure there wasn’t someplace even better for us. In the process, we discovered many places in this country, which we plan to visit in our retirement journey.

Taking a look around the country verified, for us, the Upstate of South Carolina is one of the best places to live. For the warm climate including lots of sunshine. For the cultural activities in three cities within an easy driving distance. For the outdoor recreation and beautiful vistas in both North and South Carolina. For all the fabulous eateries. For the favorable tax treatment of retirees. For the up to the minute health care facilities with a teaching hospital within 25 minutes of our house. For the affordable housing with relatively low property taxes. For the colleges where we can take courses tuition-free. For the vibrant economy fueled by BMW, Michelin and many other companies big and small. For the friendly, smiling faces.

And, the hushpuppies? Well, they’re simply the best!

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THE WHY FACTOR

Having my three-year old grandson with me twice a week is a joy, even with all the ‘whys’ he asks. While I repainted a mural on the guest room wall recently, he asked all kinds of whys. Why are you painting? Why are you using those colors? Why are you using that brush? Kids don’t gravitate to asking “Why?” to frustrate adults. That possibility is not even on their radar at age three. Instead, kids are in active mode on a constant quest to gather knowledge about the world around them. They are naturally curious. Their inquisitiveness and the answers they receive widen their knowledge base as they grow their minds, albeit exasperating parents, grandparents and care givers as they go. Eventually, as kids grow to understand their surroundings and enter a formal education setting, their learning and exploration continue while the constant whys diminish. Unfortunately, for some, if not most of us, as we move through our lives, we become less and less curious about the world around us as we settle into the comfortable security of routines. Then, along comes retirement.

Retirement is a big change. And a big opportunity. Gone are the days of going to work and hearing someone say, “Well, that’s the way we’ve always done it.” Gone are the familiar routes taken every day to and from work. Gone is the need to rise at a certain hour every day, going through the same routine as you prepare for the work day ahead. Gone are the lunch hours running errands, grabbing a sandwich or salad on the fly. Gone is the need to hit the gym early morning or late evening. Even the weekend routines are gone as you can now shop, mow the lawn, get the car serviced or your hair cut at any hour on any day during the week. Retirement is an opportunity to spend your time doing what you want on your terms. It’s a time to get curious again.

While it’s unlikely any of us can recapture the natural curiosity of a three-year old, we can still do some things to open our minds to possibilities. Even if you’re approaching retirement or in retirement and not in the best financial shape, there are plenty of things to do cheaply or even for free. So, open your mind and start asking not only why, but what. What will you do in retirement?

Perhaps you’d like to take some college courses. Many states have programs, which offer courses at state funded colleges tuition-free to seniors. Or, maybe you want to volunteer your time. I spoke with someone the other day who was on their way to their first day volunteering at a hospice. While this may not be something you’d want to do, there are hundreds of non-profits, which depend on volunteers to keep the organization humming along. Or, maybe you want to travel. Even on a tight budget, you can explore your local area and probably discover things right in your own backyard, including history, art and culture, which cost little or nothing to see. You could even volunteer as an usher or ticket taker at a local theater so you can see the plays for free. You may even want to continue working, at least part-time, but doing something you always dreamed of doing, like being a teaching assistant or a bread baker. So, start asking yourself what it is you want to do in retirement without thinking first about the finances. Go on…dream a little dream!

Besides the bucket list I talked about in my post Regrets Only, Martin and I made a vision board. If you have a partner, this is a great way to reach a mutual understanding of what retirement looks like to each other. If you’re single, it’s still a great way to visualize your own thoughts. Figuring out what retirement looks like to you requires intense focus. You should be as specific as possible. A vision board helps you reach specificity. We bought a piece of white board and both put pictures and notes of our individual ideas for retirement on the board as well as our dreams for us as a couple. We had fun cutting out photos from magazines, printing off tidbits from the web and making our notes. Besides putting our thoughts on a visual plane for each other to see, it helped us focus on what we wanted to do as individuals and as a couple. And, there were surprises! We left the board sitting in our bedroom for months as we let it soak in. We tweaked it as new ideas cropped up or some of the original ones didn’t seem quite so appealing after all.

Still, with all that, recently, we each made a new bucket list and then met over a glass of wine to compare notes. I have also started keeping a journal of thoughts and ideas for the future. This way, I can write down ideas as they surface and add to the idea as it grows, hopefully fueling a continuance of my curiosity about our world. Since the concept of retirement has shifted as we live longer, healthier lives, a journal may help you plan for what you want your retirement to look like 10 years or even 20 years after your retirement date. One of the best things of all about being retired is the luxury of living in a moment of your life, which can be fluid, unconstrained and ever-changing. Your retirement is a work in progress. I’ve said this in many posts but I’ll say it again, it’s up to you to create your reality. If you want an exciting, challenging, stimulating, active retirement, you’re the only one who can really, truly make that happen. While we may not be able to harness the curiosity of a three-year old, our retirements will be a lot more fulfilling if we keep ‘why’ in our vocabulary.

ANTE UP

Once you get your financial house in order with a budget and debt reduction, it’s time to get serious about saving. Get ready to ante up. According to the January/February 2013 issue of Money magazine, page 112, in order to have enough savings to retire and have that money last, “The amount you save is more crucial than how you invest.” It seems counterintuitive but I’m here to tell you this is what worked for me. This same article in Money recommends saving at least 15% of your gross income per year. That 15% doesn’t include any employer match. Now, in the past, I’ve talked with people about this strategy and they’ve claimed they can make up for a lower savings percentage with an aggressive investment strategy. Well, yes, you could take that risk with your future, but, how will you weather a severe economic downturn such as the recent one the nation is still trying to crawl out from under. Due to the strategy I’m telling you about here, we were still able to retire early despite the dive the stock market took in 2008. So, how do you reach the point where you can ante up 15% of your income per year?

Well, for starters, if you free yourself of non-mortgage debt, how much will you have in additional monies, which can then be redirected to your retirement savings? After all, that’s the entire reason for becoming debt-free. Look at the light at the end of your debt reduction tunnel. Maybe the thought of adding more to your retirement fund will be an incentive to stay on track to free yourself from the debt. Will your employer give you a raise this year? Most people who have taken control of their financial situation by accounting for every dime they earn can add at least 1% of their gross income per year to their contribution. Think about this. Look at the historical average annual inflation rate in the US, which, as of 2012, is a little more than 3%. We lived through years in the 1980’s when inflation was about 14% and then there are years, like 2012, when the rate is around 2%. Lower inflation rates are likely to be with us for a while. If you receive a raise in 2013 of 3%, decide right now, before you even see the dollars in your paycheck, to put 1% into your 401K. And then, do it! Will you get a promotion? Even in these slow economic times people get promoted. If someone retires, moves on to another company or is transferred to another city, there’s most likely an opening. Are you doing everything you can at work to put yourself in a position to reap the rewards of filling a vacancy? Promotions usually come with substantial raises. Look for ways to change your financial outlook so you can increase the amount you save toward retirement.

A savings strategy as opposed to an investment strategy also doesn’t mean you can now ignore where you put your money. If you work for an employer offering a 401K, they most likely have a money management company who administers their program. You may be offered options on how to invest your savings and they may automatically rebalance your portfolio to meet your retirement goals according to the mix you choose. Additionally, they most probably also offer investment counseling from the administrator’s financial planners. As a manager, I often found this to be an underused resource by employees. Take advantage of this opportunity to have an advisor help you plan your financial future. Even if you’re self-employed, before you decide where to put your money, decide who will administer your self-employed pension for you. I found, as a real estate broker, this became more personal as I wanted someone who was knowledgeable, trust worthy and willing to take the time to sit down with me to answer questions. Who I chose as a partner advisor was entirely up to me. I gave it a lot of thought.

Lastly, I learned to ignore the emotion attached to trading on the stock market. When the market has ups and downs and you hear the commentators on the news talking about the emotional swings, they are talking about YOU! The pros are not getting all worked up about this news or that news. It’s their job to remain clear headed. They look at it from a more pragmatic view. We know people who panicked during the downturn of October 2008 and moved their entire portfolios to money market accounts, thus locking in their losses. One individual told me this was the only way he could sleep at night and, besides, he’d time it so he came back in as things started to pick up. This same individual then missed the “timing” in March 2009 when the market took an upswing. As I mentioned, you lock in your losses and even the experts, who do this for a living, can’t predict the market. So, we chose to adopt a strategy of not moving money out of a mutual fund or selling a stock unless there was something wrong with the management or something wrong with the product. And, yes, that also means looking at who’s managing your fund or who’s at the helm of a company. It also means keeping an eye on the product to be sure it’s still desired by the general public. With the power of the internet this has become easier just be aware everything you read on the web is not always true.

As you can see, once you ante up, along with that comes even more personal responsibility. Taking control of your financial life is never easy but the reward of increasing your chances of having enough money to last your lifetime is more than worth the extra work. In order to retire comfortably, you don’t need a lot of money to begin with. You need a steady savings plan and time. After all, this is your money and your future. So, ante up!

I OWE, I OWE…

Driving down the highway, on occasion I’ll spot a bumper sticker on the car in front of me announcing ‘I owe, I owe so off to work I go’. You’ve probably seen it, too. This, of course, is a play on the classic Disney movie, ‘Snow White and the Seven Dwarfs’, and the dwarfs’ song of ‘Hi ho, hi ho, it’s off to work we go’. As I look at the sticker, besides thinking immediately of Snow White, I always wonder if the car’s driver thinks having debt is something cute or something of a joke.

To be sure, debt is no joke. Nor, is there anything cute about it. Debt overload is a blood sucking, killer of the spirit. If you get yourself into a situation where everything you earn is paid to creditors, you may be one paycheck away from bankruptcy. The loss of a job can snowball into the loss of a home, car and credit standing. Even a minor emergency can be devastating if you’re a slave to debt. Having so much of your money going out the door to support creditors that you’re living hand to mouth is not living. It’s no more than survival. And, before you can start increasing your savings amount so you can retire, you must pay off your non-mortgage debt and not accumulate more. But, how do you get rid of the debt monster?

Decades ago as a young loan officer at a bank, I met a couple who wanted to take their children to Europe the following summer. They didn’t come to me for a loan. They wanted to know how they could come up with the money to go to Europe without taking out another loan. Maybe they could find the money by consolidating all their loans. It took no more than a few minutes for me to recognize this couple’s circumstance was dire. No matter how you looked at it, they wouldn’t be going to Europe any time soon. They were buried in debt, living paycheck to paycheck. They already had a second mortgage, something almost unheard of at the time, the purpose of which was to consolidate their earlier load of debt. Being in the business of putting people in debt, over their protests, I sent them to a debt counselor. Sometime later, I saw the debt counselor. She told me how shocked this couple was to find they had to sell their boat and trailer, the pick up truck purchased to haul the boat and trailer and one of their cars just to avoid financial disaster. And, to get out of other unnecessary debt, the wife should find a job. They left their first meeting with her angry and mumbling how they knew how to handle their money. A personal emergency, for which they had no funds, brought them back to her and reality. Sad story. And, this was prior to people having multiple credit cards in their wallets! Unfortunately, this is a story that’s still being played out today all over America. People who want a certain lifestyle without thinking about the result. If you’re in a similar circumstance, the first step toward freeing yourself is to admit you’re here. Even if your situation isn’t severe but you just want to save more, taking personal responsibility is the first step in creating a new reality for yourself.

Once you decide to be accountable for the situation you created, you free yourself to make a plan to pay off your debt. If you’ve been reading my blog everyday, you already know we did things contrary to what the financial experts recommend. That’s because we didn’t know any better at the time. So, we started saving first. Then, we paid off debt using bonuses, tax refunds and anything else we could lay our hands on. But, we took action, which is required for changing any situation.

So, what do the experts recommend? Take your smallest debt and pay that off first. Then, once that loan is paid off, take the monthly payment on that loan and apply it to the next smallest debt and so on and so on until all your loans are paid off. Cut up the credit cards! We shredded every card but one, which is all we carry today. Since just about every business takes all the major cards, there’s no reason to carry several cards, other than to continue to keep yourself in slavery to the credit card companies. You don’t need store credit cards, either, because they take all the major cards. Place a moratorium on new purchases. Live with the same household goods, cars and clothes until all debt is paid off. If you have toys like boats, RV campers, motorcycles or extra cars, consider selling them to pay off debt. Clean out the garage, attic and basement and either hold a garage sale or go to that giant flea market on the web, eBay, and sell the stuff collecting dust. Look at your payroll taxes. You really don’t want a refund from Uncle Sam or your state. The country may need you to float them a loan, but you need the use of your money today. So, look at the tax tables and your deductions and make any adjustments necessary to avoid over paying by too much.

Just like your budget, making a debt reduction plan is the easy part. Sticking to it takes WORK! It takes discipline and commitment. It takes a new mindset. And, above all, it takes action. I recently made a $64 purchase at a store using my debit. The clerk enticingly told me how I could save 10% today if I signed up for the store’s credit card. She even threw in a big smile! Nice try but NO, NO, NO! You already know they want you to run up charges on that card, only pay the minimum payment each month and, if you do, they’ll get their 10% back and a boatload more in interest. And, if you really mess up and pay late, they can tack on up to a $25 late charge. So, smile back and say, “NO, thank you”. And, take that bumper sticker off of your car.

BUDGET AND OTHER DIRTY WORDS

This morning I met with an aide of my Congressional Representative, Trey Gowdy, to discuss my thoughts about the country’s deficit. As we talked about the deficit and the handling of the fiscal cliff, she mentioned how the country didn’t have a budget. Well, that’s because congress hasn’t passed a budget in the last four years! And, the American people haven’t demanded as much of their congressional representatives, at least not loudly enough. Perhaps we’re apathetic to this gap in service because 70% of American households don’t run on a budget. Somehow, the word budget has become synonymous with unpleasantries, constraint, constriction. It’s become a dirty word.

However, a household budget is a major component of the level of personal responsibility necessary to obtain a secure retirement. It never ceases to amaze me how people don’t budget, don’t find the inner ability to discipline themselves to organize their financial life and then wonder why their golden years are not so golden. So, don’t look at budget as a dirty word. Instead, look at it as your plan to change your life. If you are going to pay off non-mortgage debt and start saving larger amounts of your income, the first step is learning to live within, and maybe even below, your means. Over the years I’ve met a lot of people who are saving enough in their 401K to receive their employer’s match but that match is usually somewhere between 2% and 6% at the rate of $.50 on the $1. Well, friends, that won’t get you to a secure, happy retirement.

Successful businesses all have budgets. At the end of each year, they put together an operating budget based on the current year’s income and spending trends for their business. Then, they follow their progress throughout the next year with a profit and loss statement as measured against the operating budget. They adjust as necessary to remain on target for their year-end financial goals. Now, all of this means being organized and disciplined. Ugh! Organized and disciplined. Really? I can see your eyes glazing over as I type this. But, would you consider working for a business that was being flown by the seat of the managers’ pants? Would you invest your hard-earned cash in such a business? Not likely. Why? Because you’d want to work for a stable company, which would produce a good paycheck for you or you’d want to invest in a company, which could pay dividends or increase its stock value. And, you’d want a company which had a little something left over to reinvest in the company.

In order to change your mindset about budgets, think of your household as YOU, Inc. Your business isn’t to support all kinds of service providers and manufacturers by spending every last dime of your household income. Your business is providing the necessities for life along with a few niceties of life and having some left to reinvest in YOU, Inc. so you can enjoy a secure retirement. Many years ago, when I had only one grandchild, that grandchild was jumping around on the couch next to me. Suddenly, he stopped and looked at me intently. “Grandma”, he said, sounding very serious and beyond his four years, “Did you know a house is a need and a toy is a want?” Out of the mouths of babes! He’d obviously been listening to my daughter, his mother, explain why he couldn’t get a toy every time they went to the store. The plan was to pay for needs first. Whether you’re already retired or you want to retire or even if you want to retire young, the only way to manage your financial life is by having a plan. That’s all a budget is. It’s a plan. It’s a plan for YOU, Inc. Most of us have enough money to meet our basic needs. We end up in financial trouble when we also want the toys and, sometimes, too many toys.

When we started budgeting, I was pretty stringent with the limits. We didn’t have an emergency fund yet. We were just trying to get a handle on expenses. I didn’t understand how a budget has a life of its own. I didn’t understand how sometimes, especially if you have kids at home, something unexpected can pop up and wreck your plan momentarily. So, it took a while to learn that a budget has to be fluid at times. If you have an unexpected expense, the first thing is to look at other items to see if you can re-allocate some money. However, if you overspend on an item over and over, maybe you weren’t realistic about the cost to begin with. Or, maybe that’s a financial drain you need to plug. Our big wake up was what we spent on groceries. Since we both like to cook, finding a new recipe could decimate the week’s grocery allocation. We REALLY like to cook! We plugged that hole by making a list of a month’s worth of meals, shopping twice a month and not deviating from the plan. Now, new recipes had to wait until next month and we offset expensive, gourmet meals with something cheaper. We brown bagged lunches and cut back on our eating out budget. On another note, we eliminated the feeling of being constrained by giving each of us a monthly allowance. We call it our ‘blow money’ meaning we can blow it on whatever we want, no questions asked, no holds barred. This also eliminated 99.9% of the arguments over money. Every budget is unique to your needs. Just be careful not to confuse needs with wants. Conversely, don’t be so stingy with your assessment that you forget needs, which feed your soul.

Whatever you do, make that budget now! Work to internalize your budget into your mindset and everyday life until budget’s no longer a dirty word but an empowerment word.