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When I was in my early 40s, I went through a divorce and found myself facing a radically changed financial landscape. Because I had stayed home for a few years off after my son was born, I didn’t have the same earning potential or job security I would have had otherwise. I don’t for a minute regret taking that time off, but as the academics on this forum know, once you hop off the tenure-track, it’s not easy to get back on. When I did go back to work, I took a position as a part-time lecturer; I eventually worked my way to a full-time position, but being a lecturer doesn’t have the security of being tenured, and the is pay significantly less.
Initially, I was consumed with fear and even panic –What if my teaching load is reduced? Or I lose my job entirely? I knew how to live within my means and also knew I could find other work if funding cuts eliminated my position, but being the head of household and knowing that I needed to provide not just for me, but also my son, was stressful.
While I had always been a good money manager, I didn’t really understand investing. I put money in my IRA and, while married, into my ex-husband’s 401k because I knew that’s what one should do, but I’d never heard of index funds, didn’t understand bonds (I still don’t really…despite Adam Grossman’s fantastic explanations!), and had no idea how to figure out an appropriate asset allocation. I just stuck everything into target date funds and called it good.
My new circumstances, with its attendant feelings of financial insecurity, motivated me to educate myself. I wanted to know how much I needed to have so a job loss wouldn’t be a catastrophe. So, I Googled “how to be financially independent” – or something like that – and a whole world opened up. I found JL Collins, Mr Money Mustache, Our Next Life, Frugalwoods, Humble Dollar, and the Bogleheads. I learned about index funds, asset allocations, and, from blogs about the FIRE movement, how to answer that all important question: how much do I need to be financially independent.
So, how are things going 12 years on? The short answer is, pretty good! I took the lessons I learned from the above sources and made a plan. I started tracking my spending and identified areas where I could tighten up and taught extra classes when they were available. These actions allowed me to increase my saving rate. I opened a brokerage account and, together with my IRA and 403(b), constructed a 3 Fund Portfolio (total bond, total US stock, total international stock).
With the magic of compounding and a strong market, I passed my “number” a couple of years ago. I’m still teaching, and while I had a number of years of relative job security, declining student enrollment coupled with state and federal funding cuts to higher education are pointing to a more uncertain future. But that’s ok. Thanks to what I’ve learned from the bloggers and forums mentioned above, I’m feeling secure.
Lovely post. This is right from Jonathan’s old wheelhouse and his book, My Money Journey. We all have different starting points and different obstacles to overcome. It is always interesting to me to hear the approach to how people problem solved. Well done!
I think I’ve read most of what Jonathan posted on Humble Dollar (this is where I first encountered him), but none of his books. Something I clearly need to remedy!
Wonderful post, Cecilia. The details are different, but I have a similar story—of moving from financial darkness into the light—and I’ve shared a good bit of it here. Great job, and thanks for telling us about it!
I’ve been reading your posts for years and always enjoy them. I love the image of moving ‘from financial darkness into the light’. While the details are different, I think that pretty accurately describes what the journey felt like for many of us!
Awesome piece, thanks for sharing. I just retired from academia myself and am so grateful for the great medical and retirement benefits. Plus I adored teaching.
I’ve been following your journey to retirement – congratulations on crossing the line! I also love teaching – there is nothing like watching a student who has been struggling with a concept suddenly ‘get it’. Or to have a student say “I never realized how cool molluscs are!”. But there are other things I want to do, like hike the GR5 or the Hexatrek, that aren’t compatible with full time teaching so at some point in the next couple of years I’ll step away. Figuring out when is the question I’m struggling with at the moment!
Academia and public employment are two great examples of how somewhat hidden costs impact others. In one case it is taxes and the other tuition.
Both generally have okay pay, but not high pay, and make up for it with above average benefits, mostly retirement and health benefits – typically significantly better than the private sector.
The non cash compensation is much harder to control and generally increases at a higher rate than wages, especially healthcare benefits for retirees pre-Medicare.
This is an advantage for the employees, but not so much for taxpayers and students paying tuition.
No 🔻necessary, just the facts.
I’m not really sure what your purpose in saying that to me was. I shouldn’t feel grateful? Cecilia and I should feel guilty? For the record, I made a hefty monthly contribution to my own pension (not voluntary, required and taken out of my paycheck) for 35 years, paid federal and state income taxes, paid into Medicare and Social Security. Furthermore, I didn’t make up the system. If you don’t think public employees should have those benefits, I guess you could get involved politically in your state and try to change them. Carping at me like I’ve done something wrong doesn’t accomplish much.
I didn’t carp at you I was merely explaining the general situation. How and why would you conclude I thought you did something wrong?
I served on two governors task forces to better align benefits with what was affordable and with those provided by large employers, I also served on a state commission on school employee health benefits.
The bottom line is that public employees should be treated no worse, nor better than the private sector in terms of total compensation and considering it is mostly taxpayer funded.
Public employee unions and politicians together too often forget that.
And don’t all the customers of the utility you worked for continue to fund your benefits?
Yes, of course, but unlike the groups I cited there is strict oversight and management like terminating prospective retiree coverage or in my case dropping our coverage after we retired and replacing it with a lump payment that does not increase at the rate of our costs thus transferring more to retirees each year. In NJ up until a few years ago the state even paid the retiree Part B Medicare premium. Plus with the utility what it can charge customers is regulated by the state as is what it can make in profit. Academia and government don’t have such restraints and both, more so with government, are susceptible to union pressures and politics. The consequences of spending money are far less than in the private sector. That’s why so many state pensions are underfunded.
Don’t the voters act as restraints? If NJ paid Part B and now doesn’t, doesn’t that suggest state retiree benefits can change?
Not at all. It took two governor task forces on which I participated to evaluate the public and school employee benefits. At public hearings we held the unions bussed in hundreds of people to protest any changes. In the end very few changes were made. Stopping Part B payments was one. Even now workers can borrow from their pension fund at interest rates lower than the assumed return in the fund thus making the funding shortfall even worse.
Voters and politicians side with the unions never making the connection to their taxes.
In one instance when the state was in negotiations with public unions, the governor who should have been working on behalf of taxpayers went to a union rally and cheered them on to fight for a good contract.
Public union employees are also taxpayers. In addition, I believe the union representing Local 105 (Correction’s Officers) took the state to court and won regarding NJ’s nonpayment of Medicare Part B premiums. If upheld upon appeal, NJ needs to cough up the $$$$$.
Yes they are, but they receive the pensions and other benefits that the vast majority of other taxpayers can only dream of. I once proposed on a task force that the public employee package be limited in value to that of the states largest employers. Needless to say that was ignored. The reality is the state can’t afford what the politicians promised and that has been true for decades.
It’s not the state that is going to cough up, it’s the citizens of NJ in cash or a reduction in other services.
It is my understanding that the NJ State Pension system was well funded and in good financial shape until sometime in the 1990’s. Gov. Whitman decided to “borrow” money to help pay for her proposed tax cuts. The next several governors (both parties) skipped the yearly state pension cointribution totally. Needless to say the pension funds ended up less than 50% funded. The current governor has fully funded the pension over the last several years.
In addition, in 2011, Gov. Christie froze the pension COLA. The prevision to reinstate same may never be reached. I retired in 2010 and have never received an increase. He also signed a provision that current employees/retireees after a certain date pay 33 % of their health care premium. Employees who were not contributing to their health care premium ended up paying $500 to $900 per month.
Some research indicates the average teacher pension is approx. $43,000. The average state and local employee is approx. $24,000.
It just doesn’t seem right to make the public workers the bogeyman in this situation. Changes were made and these changes have had a significant negative impact to NJ Public employees and retirees.
I’m not sure of the situation before 1990, but you are right about Whitman and Christie. The reality is the very existence of a COLA is unique. It’s rare in the private sector because it is expensive. I have been collecting a pension since 2008 and will never see a COLA. Your COLA was suspended to shore up the trust. The question is why was the trust not funded. That’s not your fault.
The current governor made the lottery an asset of the trust thus diverting it from the original purpose. One of the task forces I was on was chaired by him.
You’re right about health benefits too but all those years when it was free including to retirees, workers in the private sector were paying.
Actually in some ways the workers are the victims of a greedy union and politicians willing to appease them for votes.
If you look at BLS data you will see pay is lower than the private sector, benefits still higher and the combined total slightly higher for the public sector.
Until a crisis hits there is no reason for public unions not to ask for as much as possible and politicians to agree and workers end up suffering. If you want a private sector comparison look at the UAW and the old General Motors.
You’re generalizing from one state and experience that’s 15+ years old. Not good. Maybe you should stick to shopping cart policing.
in Wi, the election of a Republican governor forced changes in retirement funding and the newly elected Democratic members of the state Supreme Court are likely to reverse some of those changes. Either eway, I suspect my benefits are safe. And the performance of the employee trust fund— which is fully funded— is likely to result in a pension increase this year. I never received bonus or stock options while employed (not much managerial oversight and no regulation of those), so having strong benefits now seems reasonable.
Reasonable is whatever is paid for and taxpayers are willing to pay for so if that is the case among WI taxpayers so be it.
Here is one reason the WI pension is funded which does not apply in most states even those with some worker contributions.
This strong financial position is attributed to factors such as prudent plan design, sound actuarial assumptions, and reforms that include requiring public employees to contribute half of the annual contribution.
Cecilia, I have huge admiration for your efforts. My wife and I are fortunate to have forged a rock solid partnership in both finance and pointing our family in the right direction. The thought of starting off again all on my own scares me to death.
To yourself and the many others that have rebuilt on their own, I take my hat off.
Sounds like a very good job to me. You said you contributed to your husband’s 401k how did you do that? I hope you got it back in the divorce.
Did you hear what happened to Frugalwoods?
Apologies for the poor wording. I managed our money and insisted that he contribute to his employer’s 401k to get the match. So, while I technically didn’t contribute, the balance would have been zero if I hadn’t stuck my oar in!
Yes, I heard that Liz had failed to register as a financial advisor and was ordered to stop providing advice. I got some great tips from reading her posts…one of the best being to switch to an MVNO – my cell phone bill went from $134 to $26/month!
Depending on how you handled your finances you did contribute, if the money would otherwise have gone into a joint fund. There was less money for the two of you to use for common expenses.
Thank you for this. I’d been feeling bad that I had inadvertently taken credit for something I didn’t do. This makes me feel better – our finances were joint, so the money that was contributed meant there was less to spend on other things.
She hasn’t even posted on her blog in over two years.
No, she hasn’t. She wrote about her reasons for stepping away, including that as her kids got older she wasn’t comfortable sharing so much of her life. I’m grateful for what I learned from her and respect her decision to stop blogging.
We often hear claims in the financial media suggesting we should not settle for “mediocre” results, like earning market averages via index fund investing. Those promotional claims omit the fact that earning market averages is better than what the majority of investors using active management will earn, over long periods. I think most of us non-experts can point to many prior investment decisions we have made which were not ideal. And yet, if we keep plugging away, minimize costs, avoid making rash decisions and allow compounding to occur, we turn out just fine.
The goals we set can influence our behavior. For some, whether they admit it or even realize it themselves, the goal is to make as much money as possible. You were wise to pursue the goal of becoming financially independent. The beauty of knowing how much is enough, and achieving it makes it easier to tune out the headlines and avoid falling victim to the fear of missing out (FOMO). Missing out on what, exactly? You have already won the game. Your story supports my belief. Congratulations Cecelia!
Thank you for sharing your thoughts. I hadn’t considered it, but you are so right that how we frame our goals influences our behavior. Striving to be rich sets a person up for failure as the goalposts keep moving; there’s always more money to be made. Sounds stressful and exhausting to me!
Few people outside of academia can appreciate what a true jungle it can be. I started as an adjunct, then switched to tenure track when I completed my PhD. I was so relieved and burned out when I made Associate Professor that a senior faculty member had to persuade me to apply to be full Professor.
Adjuncts truly do the heavy lifting— teach more classes, do the work that nobody else wants to do, and deal with the worst scheduling. I’m very glad you reached your goals; I’m sure it wasn’t easy. Hopefully, your employer will provide solid retirement benefits when you decide to leave. I always have to laugh when I see a comment like “you must work for the government or university, “. The writer truly has no idea how hard earned those benefits are.
Yes, I’ll have a small pension and health insurance for life whenever I decide to retire. I’ve been very fortunate to have Department Chairs who recognize my contributions and treat me like regular faculty. I know that’s not always the case for lecturers!
Cecilia, I think you evolved in a way similar to many here on HumbleDollar. We may have made sub-optimal decisions but always kept at it while continuing to educate ourselves.
You had an extra obstacle to overcome, that of a former stay-at-home parent.
Congratulations for hitting your number, and thanks for sharing your story.
Yes, it seems like there are a lot of us who fumbled around for a while before figuring things out. I love hearing people’s stories – I always learn something and it heightens my appreciation for what a diverse community we are!
Congratulations! BTW, retirement is great….
Hearing about your adventures is inspiring!
Kudos Cecilia! As an additional benefit I suspect your son may have absorbed some of your lessons.
Yes, he has! When he got his first credit card he said, “I haven’t forgotten what you said…’if you can’t pay for it in cash, you can’t afford it.'”
I think one of the best lessons was when he opened up his Roth IRA in the Fall of 2021 and then watched it stay in the red for 2 years. I encouraged him to just keep adding to it and not worry. Amazingly, he trusted me and was then blown away when things recovered. He was totally calm during the tariff nonsense in April; I think that early experience taught him the value of ignoring the noise and staying the course.
Love your story–thanks for sharing it!
Many aspects of your story mirror my own. I got divorced in my forties and suddenly found myself searching for as much information as I could about investing and retirement planning. Jonathan’s books were my favorite source but I also read many of the other authors you mentioned.
I also worked in academia, but as a staff member, not faculty. The pay wasn’t great but the benefits were.
I agree that the future of higher education is less secure now than it has been over the past several decades. I’m glad you’ve achieved “your number” and wish you well on your future retirement!
Thank you! Yes, the benefits are fantastic, even if the pay isn’t. I’m especially grateful for the health insurance, which will cover me before Medicare kicks in.
The retirement waters are looking pretty good…I’ll keep you posted on when I decide to jump in!
It just shows how uncomplicated it really is. Spend a little time and effort getting a basic financial understanding, apply what you learned in the real world, add some market luck and a dollop of time, and boom—suddenly you’ve got this lovely sense of security when your portfolio hits your number. Makes you wonder why we make it all sound so difficult.
It really is pretty straightforward – especially if you stay away from the financial ‘experts’ who have a vested interest in convincing you that it’s complicated!
Love hearing your story, Cecilia. Another HD success story. Well done! Chris
Thank you!