Financial Independence Is Easy When Your Spouse Is on Board
By: Christopher Pascale
Around the same time I set my kids on F.I.R.E., I showed a video to my wife. A few minutes in, her reaction was, ‘yeah, I bet they had no kids.’ She was right. The speaker was Pete, the Money Mustache guy, who had his only kid after he’d paid off the house and left his job. We watched a couple more minutes, then went to bed.
The next day she surprised me. I was up at 5:30, dressing in the dark when my wife said from bed unprompted:
“We don’t need to replace the kitchen.”
We’d been talking about a full makeover. Aside from it being in a state of cosmetic disrepair, it’s the room we use the most, and where we usually entertain. In fact, we’d just had 15 friends over for my birthday, and they all crammed in there until I relocated everyone to the living room for Mario Kart.
Responding to her, I said: “Sure, just the counters and cabinets.”
We have a broken cabinet, and the Formica counters are discolored.
“No,” she clarified. “It all works. And it’s not like our guests care. We’ll leave it.”
I didn’t say anything, so she continued.
“I’m going to get a job. We’ll take all of my income to pay off debt.”
All of Her Income to Eradicate Debt
My wife retired from the Army quite unexpectedly in 2012. Since then she’s tried a couple part-time jobs and a few college programs. At this time, she was just weeks from graduating with her MBA. I honestly didn’t care if she ever worked outside the home again because with our youngest being 7 and the oldest being 17, there’s still a need at home, and she might be providing daycare to a grandkid or two in the next 5-10 years. Plus, not only does she provide income to our family with a pension, as a military retiree she has also provided us with a very good, extremely affordable health insurance plan.
Additionally, our situation is already very good. With a 15-year mortgage, we’ll be debt free in 2031, when I’m 49-years-old. However, she made good on what she said, and it completely changed everything.
Upon graduating, she began applying for work, landing a part-time job, and then a full-time one. Keeping them both, she spent more than 3 months working 8-10 shifts a week. The pace wasn’t sustainable, but that fast influx of two extra sources of income put a turbo boost on paying off debt.
While the weekend gig is gone, her full-time job income is still direct deposited into a separate account that I use as a conduit from us to debt. And the result is that instead of having everything paid off (including our $310,000 mortgage) when I’m 49, it now looks more like 44.
By taking her new income and diverting it to an account that acts as a conduit from us to our debt, we’ll have everything paid off when I’m 44 instead of 49; that’s 8 years instead of 13.
Going back to her initial reaction to seeing Money Mustache guy – that she was sure (and correct) he didn’t have kids, and earned a good income – we’re in a similar situation in one unique way. Because my wife has been home or in school since 2012, her going to work is a means of creating a new source of incredible cash flow.
Something that is often ignored by many finance writers is that starting on the path to FI is so challenging for older people because they don’t have this advantage.
The Common Challenges for Mid-Life FI Fans
A few issues many mid-life people take with FI and F.I.R.E. are that:
- They feel locked in to their way of life
- All funds are allocated
- Income makes a substantial difference
Point 1 – Feeling Locked in: When my wife correctly predicted that Money Mustache guy had no kids when he did this, she also nailed it by saying he had a high income. He and his wife were making a combined $150,000, which was about the total of what we made the first 5 years of our marriage, and we had 2 kids in that time!
I tried to better our situation but didn’t have the tools (like a good income) to do so while enlisted in the military, then as a community college student on the GI Bill.
Point 2 – All Funds Are Called for: A good friend was over the house. I told him about the O.L.D. podcasts I had heard. He immediately interrupted with, ‘I already know that I need $8,000 per month,’ which wasn’t on-topic, so I just let it go.
The truth is that we usually spend everything we make. This is why just about all of my accounting students have zero cash in the bank, even if they’ve been working since they were 14, and have had over $100,000 flow through their lives. That’s also why automatic draws work so well: The money is taken before we feel it.
Point 3 – Income Matters; It’s ½ the Equation: Just as you need to watch your spending, you need to consider if your income is enough. If you’re not making a lot, it’s not realistic to believe you can put a lot away. How do I know this? Because numbers. If you put away two-thirds of $10,000, it will be nothing compared to a quarter of $120,000, especially over a decade.
This is the big strength my wife and I have at this point in time as she has made the mental shift to deep-dive into the F.I.R.E. Her income is brand new, and as such, it is an incredible source of debt-killing capital.
This means that I won’t have to wait until I’m 49 (when I’m debt-free) to retire.
Why Isn’t 49 Young Enough to Retire?
In my Partial FI = Substantial Freedom piece, I mention retiring at 48, because that’s when I’ll reach 20 years of federal service. However, it’s going to be hard to do when I have a year left on my $2,700/month mortgage.
But that’s not the question here. The question is: why am I so eager to retire so young, especially knowing what I know? My uncle, Dr. Rob Pascale, retired at 51, rich, successful, and thrilled with what lay before him. But he was miserable, and, to his own admission in his first book, The Retirement Maze, aimless.
Uncle Rob’s story is an interesting one. I won’t go into great detail, but will say that he thought he had a plan, and it turned out he didn’t. Something similar happened to my grandfather when he retired fairly young, too. But catching F.I.R.E. is not about retiring, as the retirement police so aptly point out to the FI community. It’s about doing whatever we want. If you want to work at your same job, great! Do that. If you want to teach adjunct at a local college, like I think I will continue to do, you can. Or you can surf all year, like Doug Nordman.
Frankly, I don’t see myself sitting around doing nothing. I have a hard enough time just sticking to one thing, but in a state of something that qualifies for being called retirement, I’ll be doing the things I want. For example, while in the Marine Corps, I wrote several novels and tried to get them published. While a stay-at-home-dad, I was in college, writing and editing on several sites, still working to get a book published, and then got a part-time job in a friend’s store. When I was an IRS auditor, I was in graduate school and had a second job on a farm – while still trying to publish a book. Retirement isn’t about not working. It’s about working on whatever we want to work on, and working wherever we can get the most value for ourselves.
Retirement isn’t about not working. It’s about working on whatever we want to work on, and working wherever we can get the most value for ourselves.
And 49 is not soon enough when I can lock in a pension at 48. This is for several reasons. Among them is that my father died at 55. He was not in a position to retire, but he actually loved what he did, so even if he could have retired, he wouldn’t have. I don’t love my current job, and probably won’t love any job I have, but it helps me fulfill my obligations as a husband and father while also helping me get the skills I can use to do things like write about finance and accounting, and help others see how they can better handle their finances.
Lastly, when I’m 48, my four kids will be 18-28-years-old. I might be a grandfather. There are plenty of expenses I’ll still be incurring, including two in college, but if I keep teaching we can hack college tuition down to about $0.00, and since I’m teaching at a public school, I can accrue a larger pension from New York State in the process, which I’ll be discussing in a future piece on traditional pension hacking.
Back on Topic: Wife on F.I.R.E.
This all ties together because my wife knows these things about me. She knows I don’t want to work any longer than I have to in a normal job. She even told me when I started teaching that if I wanted to go into it as my sole career, she would work full-time so I could resign from my job to be a professional educator, whether it was as a career-adjunct, or in pursuit of a full professorship with a PhD. I have to admit, it’s appealing.
But what is so much better than the idea of teaching 10 hours or less a week, taking long breaks in the Spring and Summer, and over Christmas, is having the freedom that comes with the stability of a growing asset base (like a Roth IRA and real estate), and the security of the income that it pays me (the pensions).
As I wrote the first draft of this, my wife was just about to complete her MBA. Since then, she has helped flush out thousands of dollars in debt on a bi-weekly basis, and her income will someday be used not to crush what we owe, but to grow what we own.
Without her working, truly building wealth would have started at 49. But now it’s more like 44, and that’s with 4 kids in the house – 2 of whom will soon be in college, and 2 who are not too far behind.
Christopher Pascale is an author, accountant and adjunct professor from Long Island. He is the former CFO of Portfolios with Purpose. His finance writing has been featured on the AIPCA’s “Tax Matters” page, WealthyJoe.com, and others. He is also the author of a book of poetry, and is working on a novel due to be released in 2019.