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My friend is an independent IT Systems Integrator. She essentially pitches for tenders from large corporations and government departments for help with new software integration. It’s a very well-paid job, but there can be lulls between contracts. This requires a good deal of business savvy to manage not only the workload and tendering process, but also her intermittent financial situation and the need for constant training to stay relevant.
A woman who has her life together you would think. I know her very well, we first met during the global live aid concert being staged at Wembley in London in the mid 80’s. She was a bit of a wild child and we have a lot of history together. But here’s the thing, she’s no different today when it comes to personal finance.
She can burn through cash faster than I can blink. We met up recently, and over a few drinks we started talking about my recent retirement and the hopes for her own retirement. We know each other’s life struggles intimately, and she had no problems telling me the personal numbers. My shock was evident, she’s not in a good place.
We spent a long evening brainstorming her choices and possible paths going forward towards retirement. The problems are compounded by her age in a young person’s game and the gradual whittling away of her dependable business contacts due to their own retirements, her network is fading just like her retirement dreams.
I came away from our time together slightly downbeat. I would love to say we found a brilliant solution, but alas life is real and happy endings are sometimes only the work of fairytales. I don’t know if there’s any moral to this story other than the obvious around the importance of planning for your future self. In this case the horse has well and truly bolted.
Maybe there’s a little hope yet. She has a low six-figure sum in retirement accounts and, luckily, owns her property in a high-value area of London outright. Downsizing is a possible framework to more than triple the available working capital. A few good years of income generation squirrelled into savings, and a possible route to an okay retirement becomes feasible.
I guess there’s a peculiar shame in being financially sophisticated professionally while feeling out of control personally – like a split personality between the confident consultant and the woman who can’t say no to beautiful art or expensive restaurants. It’s not ignorance driving her spending; I’m not sure what is but hopefully she can overcome it.
I think that’s the best she can hope for. It’s just sad that her hedonistic consumption has robbed her of a great retirement. My only hope is the professional determination she applied to her career can now be turned inward towards changing a lifetime of engrained spending habits. I cross my fingers and wish for success. My friend, the wild child from Wembley, unfortunately needs to finally confront her past choices.
“live beneath your means and save invest) the rest” is simple advice.
But not always EASY to do.
Is there a Spenders or Shopaholics Anonymous group she could join? This sounds like compulsive behavior.
I’ve truly never heard of such a group. I think, if they exist in the UK, it would require a face to face meeting to broach the subject.
Looks like Debtors Anonymous is the UK equivalent.
I think people are spenders or savers; 40 years as a CPA confirmed my view. Spenders have an appetite for spending they cannot switch off to become a saver, especially when they approach retirement age and realize they have saved nothing. Advice to save and payoff debt is not in their DNA.
I had a friend in the 1970s who worked in the bond department of a major Wall Street firm. He dealt all day in $200 million sums. He couldn’t balance his checkbook; his wife did it.
As an aside, his salary at the time was $22k/yr for 10-hour days and two weeks vacation. But his bonus each year was $3-5 million so he retired okay.
Another friend owned a small company where his salary was $1 million per year. He never saved a cent and died (by suicide) penniless and facing a return to prison for fraud.
The tangled webs, eh?
Mark, thanks for an interesting story. Your friend’s story has elements of people I know. It strikes me that she may be a great candidate for a quality, holistic, financial planner. She could treat this situation like work, only she is the client, and the FP builds and pitches a personalized, detailed plan that your friend accepts and executes. I know 2 couples who were very good at their jobs, but not sophisticated or comfortable with personal financial planning. They used a good holistic planner and stuck to the plan. One couple retired successfully in their early 60s, and the other is on track for a mid-60s retirement. Some folks just seem to respond better to this kind of relationship. One of the benefits of this approaches building momentum as you accomplish milestones along the way. I’m a big believer in automating savings as much as possible. I understand that is more difficult with intermittent income, but if she could find a way to “pay herself” first, and live on the remainder it should help. I wish her luck, and you’re a good friend to try to help her.
Thanks for the suggestion, Rick. I hadn’t considered it, and I’ll certainly pass the idea on to my friend. I’m sure London has many such planners to choose from. It would definitely refocus her on her retirement predicament without me seeming too pushy.