Our Story: Part 4

Have you ever heard of frugal fatigue? It is basically when a person gets tired of saving every penny and delaying gratification. It is a real thing, and we’ve experienced it many times. After our long stretch of frugality while paying off our balloon loan, we were ready to live life again. In case you’re worried, we didn’t get ourselves into more debt. But we did start to spend money more freely. We began taking annual vacations with our kids. We purchased a new (used) minivan. We splurged on very expensive replacement windows for our home. We also expanded our family again, welcoming our 4th child in 2015 and our 5th child in 2019.

The thing that remained consistent through these ups and downs with our spending, was our savings. We always saved $1,000 per month. From 2013 to 2019, we managed to save $72,000. That is a lot of money. You might feel like that is unattainable. And it might be. We were only able to save this much because we stopped contributing to my husband’s 401K. Do I think that was a great plan? No. I wish we had continued contributing.

After the stock market crash, John no longer felt comfortable using the stock market to save for retirement. He wanted to use our retirement savings to make other investments. We discussed buying gold/silver. We talked about using the money to flip a foreclosed house. We also considered buying a rental property. But ultimately, we just ended up sitting on the money. We were saving for retirement by merely putting our money in a regular old savings account. We were earning next to nothing in interest. Not a great strategy to build wealth.

In the summer of 2019, John realized that by combining our “retirement” savings account with our regular savings account, we could pay off our mortgage. At first, I was hesitant to touch that money. But the more I though about it, the more sense it made. We still had 20 years left on our mortgage (we refinanced our mortgage in 2009). We would be shelling out interest payments every month. By paying off the mortgage, we would automatically be saving that 4.6% we were paying in interest. That was definitely a better rate of return than the .5% we were earning at the bank.

In August, we took the plunge and paid off the mortgage. John kept a journal in the weeks leading up to the payoff, which we’ll share soon. I know this might not be the story you were expecting. We successfully paid off our mortgage, but we failed to save for retirement. We are trying to address that issue now. We definitely feel the retirement noose tightening, and I know we need to prioritize saving for our future. We are once again contributing to John’s 401k and we plan to open a separate IRA this year. We’ll talk more about retirement savings in the coming weeks.

That’s our whole debt story in a nutshell. Now that our spending/debt is firmly under control, we are ready to start seriously investing. We’re approaching middle age, and suddenly the notion of retirement seems a little more important than it had in the past. We’re ready to get started!