The “Financial Rock Star”
One of my best and oldest friends is also a teacher, also willing to talk about money, and also does pretty well financially. This means we know a lot more about each others’ finances than most friends because we just chat about that stuff without it getting all weird.
However, she has a totally different style than I do. TOTALLY. Whereas I am always ready to jump into the next new thing, she does NOT like change. She’s awesome, and whenever change occurs, she totally kills her new venture, but it takes a lot more time for her to get on board. So when she read my blog, she had some advice for me: Keep it Simple, Stupid.
OK, she didn’t use those exact words, but we’ve known each other long enough that I can read between the lines. And I may be stupid, but I know enough to value other perspectives, especially ones from someone whose financial advisor refers to her as a “financial rockstar.” (Seriously.)
Let me give you a little background info. She has requested to remain anonymous, so I’ll call her Anne. Anne is 40 years old, single, and has taught in the Midwest for 17 years. She owns a modest 3 bedroom home in a nice, but not fancy, neighborhood in a small town. If it’s not paid off, it will be soon. She buys a new car (not used) every 7 years or so.
She really enjoys going out with friends to restaurants and wineries. And travel is a big part of her life. She has been to South America, several countries in Europe, and more cool spots in the US than I can count. She volunteers for a lot of community organizations, but hasn’t had any other paying gigs since she started teaching. She is not into side hustles, but has invested in and managed rental real estate. From what I hear (and she is pretty darn modest, so I imagine she understates her success, if anything), she has done well in real estate, but in a slow, steady non-flashy way.
As you can see, she doesn’t live like a hermit. She enjoys a lot of wonderful things in life, and she isn’t working her life away.
What she has accomplished
- When her teaching job got cut to ½ time just a few days before school started (She’s a specials teacher, so that stuff happens sometimes.), she didn’t blow a gasket. She just lowered her retirement contribution and started job searching. She literally lived on half her salary for a year while she prepared herself emotionally for the big change. She taught part time for a year (loved it!) and then found another job that suited her.
- As a 29-year-old teacher, she had stashed approximately $45,000 in her Edward Jones account.
- In January 2020, just before the big nosedive in stocks, she had $308,000 in her retirement account.
- As I mentioned before, she has paid off her house (or very nearly). And not in 30 years, either. In about 15.
We were talking recently about our different approaches toward money, she underlined how it was really doing the simple things that made a difference for her. For example, she invests in her retirement account every month, no matter what. Even that year when her income got cut in half, she found a way to invest something every paycheck. She’s all into that low-hanging fruit. Do the easy stuff, she says. If you do the easy stuff, the payoff is often bigger than you can imagine.
So here are some tips from Anne, in her own words.
Always invest. ALWAYS.
Anne says: “When I think back to how I have gained my wealth, some of it has come from the rentals, of course. But really, it is because I have done little things that have made a big difference over time. (Sorta like you post about jill from 2003 and jill from 2012).
Let me explain: I have been cleaning out files and decluttering my filing cabinet. I just found my Edward Jones statement from 2009. Want to know how much money I had in there at that time? Roughly 45,000 dollars. Not too shabby for a 29 year old teacher. I was pretty proud of myself back then. In January 2020 before the nosedive that the stock market took, do you want to know how much money I had in Edward Jones? $308,000!!! Yes! For a single income public school 40 year old teacher. Do I have that much in there now, no way! But it will come back, at least, that is what I am telling myself. And it is all because I put in the maximum amount for my IRA each year. Either 5-6,000 dollars a year (It has changed over the years). Not exactly sure what it is now. I rarely put extra money in, money outside of my IRA, because I just don’t have it. Right now I am trying to scrape together some money to sink in to the stock market while it is down, because it’s a sale on stocks! So I have done minimal work for that gain. I have just let time do its thing. Lots of people don’t have 5-6,000. I get it. I don’t think I started out maxing out my contribution either. But the key is to put it in there and let time help you out. I think that is a crucial piece that needs to be hit on.”
Make your investing automatic.
Anne says, “When I was a young naive teacher, one of the smartest things I ever did (Besides switching to PE) is I started having money taken out of my paycheck and put in my 403B without me even seeing it. At first I noticed it. But then I forgot about it. And each year I got a raise, I automatically went in and raised the amount to be taken out by 25 or 50 dollars. This then comes out of my pay check before taxes, plus I never even knew I had it, because the raise covered it. I changed it by 100 or so dollars when I got my masters. Today, I am taking home only slightly more than I did as a new teacher. My 2 week take home is roughly 1100 dollars. I think I started at 850 or so. But here is the thing–$450 or 500 a month is going into my 403 B and the school district puts in a % of that. Is it a lot? Nope, but a little over time adds up to lot. Plus I have some of my paycheck directed into a savings account before I ever see it each pay period. Then at the end of the year, I use that money for my IRA contribution, or vacation, etc. Also that helped when my position got cut to part time. That was the only time I lessened the amount that I was putting into my 403 B and savings account. Even part time, I managed to put in 25 dollars a paycheck. Because I still wanted my employer to contribute their percentage. But that gave me back that extra money that I “Never saw” so I could live on 1/2 my usual salary.”
On rotten days, pay yourself, not somebody else.
Anne says, “After a really rotten day at school. You know the days–the ones where you are defeated and you think to yourself, “There ain’t no way I can do this job for another year, let alone 15 years!” I always come home and put in 25 dollars into my savings account. Instead of going and spending $25 dollars on retail therapy or at a restaurant or bar, I put $25 in my savings account to feed my retirement. And it wouldn’t have to be $25. It could be $5 or $10. Just something I started doing years ago when I needed to physically do something to better my situation. Might not be much. But it makes me feel closer to being able to walk away from teaching.”
Be like Anne
Here’s the bottom line: Anne is proof that teacher doesn’t equal poverty-stricken. She did have some major advantages like graduating from college without debt and not having kids. (Kids are wonderful, but expensive as all of us parents know.) But she has found a way to live and enjoy life while still socking away some major bank. And she has done it by doing the things that are easy and putting them on autopilot.
If you are thinking, “Sounds great, but I can barely pay my bills, much less have any money left over,” check out my 5 Day Found Money Challenge. See what you are spending money on that you aren’t even using, cut your costs, and keep the $$ for yourself.