Start Late, Finish Not Broke

I have read story after story on the many news services, magazines, papers and blogs that I subscribe to about the massive lack of savings that most Americans do not have.

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I probably read fifty articles on that topic alone last year.  One such article is titled “The Retirement Savings Deficit in America” by Steve Pressman on the Committee for Economic Development website.  The CED website is one of about a thousand that I peruse once per month or so.

This article echoes many others, citing statistics like only 55% of Baby Boomers have any retirement savings and seventy-one percent have less than $250,000 put away. With expected lifespans continuing to lengthen, many Boomers are at grave risk of burning through their nest egg and having to rely solely on Social Security. The bottom line: Many Boomers will likely have to work longer, scale back and struggle to live with very limited financial resources.

Regarding my generation, what is known in general parlance as Generation X, “while they recognize the importance of retirement savings, one out of three has not put any money aside. Of those who are saving, just one-third are saving 11% or more annually – which is still well below the 15% or more that experts recommend. Among those with retirement savings, the amount Gen Xers have put away is a median of $60,000 per household, compared to the estimated $1 million they will need to tide them through retirement.”

At least I am in the two-thirds of Gen Xers who has saved something for retirement.  I have been contributing to a defined benefit plan pension fund for over twenty years, the subject of an upcoming post (yes, I realize that I have a long list of upcoming posts pending that I have referenced), but I have also contributed to a Roth IRA for quite a few years, and one for my wife.  If you do not count my pension plan, which is actually my wife and my primary retirement savings, we have put away less than the median $60,000.

The downside of saving $100,000 for each of our two children for college is that we have not contributed nearly enough to our IRAs.  The upsides are numerous, namely that our children will not have to go into massive debt to obtain their bachelor’s degrees.  Our son may not have to borrow a dime to obtain his bachelor’s, but he will be joining the millions of students holding trillions of debt when he attends graduate school, but that is still years away.

Start Late, Finish Not Broke

I have previously posted about purchasing and reading over 100 books last year, most of which I lump together in a genre that I made up called the “Change Your Way of Thinking/Improve Your Life/Become Wealthy” genre.  Most of the books, whether written by the Money Madman, the Rich Dad, Stephen Covey, Dale Carnegie or one of the thousands of lesser known authors, addressed those three issues.


One such book that I purchased and read last year is Start Late, Finish Rich: A No-Fail Plan For Achieving Financial Freedom At Any Age by David Bach.

In an effort to make my posts less book report-like, I am not going to share everything that I learned from this very interesting book on this post.  For what it is worth, I marked fifteen sections that I found particularly enlightening in Bach’s book and plan on converting those into five or so posts.

The Past is…in the Past

I should have gone to a different college.  I should have chosen a more useful major.  I should have taken the intern job at the radio or TV station that paid $5 per hour right out of college instead of taking a job that paid $7 per hour at a local courthouse.  I should have taken a stock order runner job with some of my friends (millionaires and semi-retired now) for minimum wage right out of college instead of that crummy job with the Clerk of the Circuit Court.  I should have spent more money for our house because the house that cost $20,000 more back then in a better town is worth $100,000 more than ours now.  I should have accepted a position two years ago for more money and more hours even though it was an extra hour of driving every day.

In other words, I woulda coulda shoulda.  I bet that you, too, woulda coulda and shoulda.

Guess what?  You and I did not know then what we know now and our lives are the way they are mostly based on the decisions we have made, our work habits and determination, and I firmly believe that there is a fair amount of luck involved, as well.

Bach writes at length early in the book that some readers, including me, have been beating ourselves up about what we have not done or should have done.  Some of us for decades.  Everyone does this and the author and Yours Truly Middle Class Guy are no exceptions.

I could go on with several dozen more small decisions that, added up, have resulted in residing in a house in need of major repairs, working for a slew of bosses who do not always make great decisions yet dictate much of how I spend my work weeks year after year, still watching two tube TVs in our house and me driving an 18-year-old hand-me-down rusted out old Subaru.  I love that Subaru and it is the best car out of our three.

If you make the wrong decisions, you could realize one of my greatest fears, which is working through your sixties and taking orders from kids just in high school or perhaps college now, telling you what to do by consulting an app on their phone or perhaps you and I will be taking orders from manager robots from China.

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This guy may be your or my boss in 2025. Source: iStock photo

Anyway, you or I could list out mistakes that we have made over the years that have kept us struggling to get to and remain in the middle class.  Bach writes that with all the mistakes that he has made, he still managed to become a multimillionaire.  Me, not so much.  The good news is, I am only about $800,000 away from becoming a millionaire, but once I had to pay taxes and some bills I would dip well under a million, so let’s say that I am still about a million bucks away from becoming a millionaire.

Bach urges me and you to decide today – right now – to let it go.  We have all made mistakes, our parents, ourselves, our spouses and now even our children do.  We are all human and humans make mistakes.  Bach urges the reader to let it go by making a list of “if only’s” on paper and then setting fire to it during a “Goodbye If Only” party.  It sounds very cheesy and I have not done it, but just might do so.  That would surely be worth a short post.

Chipping Away

I have read the advice to Pay Yourself First in literally all 100+ books that I read in the genre last year.  I cannot think of one that did not give that advice, and take that advice I did.

If I had to choose one major point that made an impact on me in Start Late, Finish Rich it is this.  Although every financial guru gives this advice, I have never before read advice on how much.

Bach recommends that to be fair to yourself and your future you should Pay Yourself First at least one hour’s worth of income every day. Regarding us late savers, whom he defines as in our forties or fifties who are just getting started, he recommends paying ourselves two hours’ worth of income every day.

Holy guacamole!  Did he just recommend saving a quarter of your gross income?!  Yes.  Bach writes, “don’t shoot the messenger.  Nobody said starting late would be easy.”  He also acknowledges that you should not start out trying to pay yourself that much every month but in a perfect world, that is where you’d like to end up.

Do I pay myself a quarter of my gross salary?  Hell no!  But I made a note on a post-it note near the front of the book that I finished reading this book at 6:00 a.m. in the morning of September 21st, 2016, after a sleepless night.  I vowed at that time to pay myself (and my wife) the first half-hour of my income every day from my day job.

I know, it is only a quarter of what Bach recommends for a 45-year-old (at the time) with only about $20,000 in his IRA.  But if I went ahead and paid myself a quarter of my gross salary, I would have a lot in savings but might get foreclosed on or perhaps my home would be sold at the Crook County tax sale, since I must pay nearly $3,000 to the County Treasurer by the end of this month or that is exactly what they would do.

So, I make about $50.00 per hour by my salary (actually closer to $51) but, as I have written, the money flies out of our checking account faster than it comes in.  My wife works very part-time, about ten hours per week at a lower salary, so together we take home about three grand every two weeks. Our expenses are greater than that, mostly due to having a son attending a private college, but that is where the $100,000 that I have saved for him in years past comes into play.

Also, when I write that about $8,000 to $10,000 leaves our checking account in an average month, we are now investing at least $900 per month as I use the strategy that I will describe next.

I plowed through this book voraciously for about three or four nights in a row, late at night, even after I had worked all day, been a great family man in the evening and blogged for an hour or two at night.  I had high aspirations for the Middle Class Guy blog, that have been tempered somewhat in the ensuing months.

What I did decide to do after reading this book was to send 1/2-hour’s worth of my daily salary, or $25 per workday, better known as $250 after every paycheck to my or my wife’s IRA.  I allowed for an exception of the last paycheck in December, knowing that my wife and I were going to spend a considerable amount of money making it a very Merry Christmas, and we did.

I have my Roth IRA with T. Rowe Price, split up between the Blue Chip Growth fund and the Capital Appreciation fund.  My wife’s IRA is with Vanguard, in the ever-so-popular S&P 500 Index fund.

I log our investments in a notebook and here they are since I read Bach’s book:

  • 9/30/16     $250 to Blue Chip Growth
  • 10/14/16    $250 to Capital Appreciation
  • 10/28/16    $250 to my wife’s IRA
  • 11/11/16     $250 to Blue Chip Growth
  • 11/23/16    $250 to Capital Appreciation
  • 12/9/16     $250 to my wife’s IRA
  • 1/15/17      $250 to Blue Chip Growth
  • 1/23/17      $250 to Capital Appreciation
  • 2/3/17       $250 to my wife’s IRA

Like millions or perhaps billions of people, I always look forward to payday.  Even though I know that my entire check will disappear into a sea of bills and investments, I look forward to getting it.  On Friday, February 17th, our next payday, I will be sending $250 to the Blue Chip Growth fund in my Roth IRA again in my continuing effort to Finish Not Broke.

I look forward to sending the $250 to my IRA or my wife’s IRA.  I have sent money to both in the past, but very sporadically. Maybe a thousand dollar check in March and another one in October.  The next year, maybe five hundred bucks once per quarter.  Now, I am doing it systematically and when I send the paper check to Vanguard or send the $250 electronically to T.Rowe Price, I like to do it before I pay the other bills on payday.

I think to myself, I am paying myself (or my wife) first, with the first half-hour of my workday, which I typically spend trying to clean out my in-box and consuming coffee.

By the way, the other $400 that leaves our account automatically on the first of every month is a contribution to our daughter’s 529 Plan.

I know that we are not going to become very wealthy by investing $4,000 or so into my IRA and another $2,000 or so into my wife’s per year.  I will send some extra to hers that is not considered “paying ourselves first.”

But maybe, just maybe, if I continue doing that for the rest of my career and can remain gainfully employed, we will be able to finish “Not Broke” in our so-called Golden Years.

Maybe that should be the name of an e-book that I should start working on: How to Retire Not Broke.  I am taking pre-orders now.

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