This question is unavoidable whether you are going to enter RV living full-time or not “Are you financially secure?” That question is one we typically do not want to think about for many reasons. Maybe it is because we feel we can never be 100% financially secure. Or perhaps, it is because we do not know what our financial retirement goals should be.
When we do start asking questions, we get bombarded with people giving their advice. Each group sending a different message and financial strategy. In my experience, each person trying to ‘help’ had one financial interest in mind, lining their own pockets. I do not mean to sound cynical in any manner. I understand not every financial rep is a bad egg.
Being Financially Secure
For us, being financially secure is having minimal worry about how to pay for future expenses. That means a goal of: having a paid-for roof over our head, a vehicle, and a good sum of funds set aside to use when we retire. We hope the funds will go towards traveling, and not paying medical bills, but we need to be prepared either way.
As you can see there is no magical number to reach financial security. Each person or family will need to figure out what being financially secure means to them and set goals to achieve it. More importantly, is sticking to the roadmap for those goals you lay out.
Obtaining complete and utter financial security can be very hard for the average person. There always seems to be a bump in the road. Such as a stock market crash. This happened to me during the Great Recession of 2008-2009, where I lost half of my retirement account balance. Unemployment and job changes can set you back on your financial roadmap too. Then there are the ‘life happens’ moments when the furnace gives out in your home, or your car can not be held together with another roll of duct tape.
Financial Road Map
So, how do you prepare to be financially secure with so many potholes on your roadmap? I would suggest to sit back and take each day, week and month as it comes. You can only do so much at one time. Slow down to fix the large pothole coming at you, by thinking through the options available with a long-term mindset.
For example, the car has been diagnosed as a non-running lawn ornament. More duct tape will not revive it, not this time.
Now, you are facing a financial and transportation burden.
What do you do?
First, you will assess how to get around town. Most of us will jump to automatically wanting to replace the vehicle. Where we try to decide if we should buy used, gambling with the hope it will not need repairs. Or, to spend the extra money to buy a new vehicle. Used is typically the option most people will do. But, is it the best decision?
Often we overlook the less common transportation methods. And I say this as a person who grew up in a mid-size town where every household has at least 2-3 cars and no subway station. Anyway, the choices are: walk everywhere, call an Uber or taxi, use a bus or other mass transit.
This is when you need to think about what option is best to meet your financially secure goal. I know, that is the last concern you have at the moment. All you see is the broken car and your kids needing to be taken to after school events.
But, this is the opportunity that is often missed. Separating those that have a financially secure future from those that have fallen short. And I am not talking about the kids (haha). I am referring to the smart financial choice you can make right now, that will help you 5-10 years down the road. Sometimes sacrificing a little now by riding the bus, or stepping into a car payment for a more reliable vehicle, will help you in the long run.
Our Great Depression
After our decision to Sell It All and move into a 5th wheel full-time, we needed to change our financial goals. We needed to realistically forecast how long we could live off our 401k’s during retirement years. I knew that stepping down from a management salary to part-time gigs would reduce Social Security’s future benefits. Also on my mind is the inevitable stock market downturn, that could affect our accounts.
We opted to do this RV lifestyle in our 40s rather than our 60s, so we needed to be prepared on many levels. In the present, having enough savings and other income resources. Hopefully, that will get us to our retirement years. At which time, we can access our retirement accounts.
You may call me crazy, but I am a hawk when it comes to watching our spending. Every receipt is tracked on a spreadsheet, even groceries. Line by line of what we bought. That way I can see how frequently we buy certain items and where we may go over budget.
It goes without saying that we are vigilant in looking at account balances, frequently. So one day when Don logged into his 401k to check the balance, it showed $0. He had given me the balance a week prior to put on my spreadsheet. What happened? Where is the money? Why were we not notified?
On a Friday night (of course) is when we found our money to be missing and no agent could help us. All we can see is the transaction being labeled as a withdrawal. We would NEVER make a withdrawal, especially knowing the tax consequences and early withdrawal penalties. At this time we are on a hunt to find the 15-year-old investment account that has gone missing.
Overcoming Financial Trouble
At this point, with missing 401k funds, we are certainly looking forward to overcoming financial trouble. I am deciding to write about this so that you do not let your guard down. Log into your account at least monthly, weekly would be better. No matter how small your 401k, IRA, or whatever your retirement account is, go look at the balance.
After the Great Recession of 2008-2009, I lost close to 50% of my 401k. Part of it was on me, as I had an account I could have moved it into. Also, I could have transferred it into an IRA. But I did not. I was not even checking the balance, except for the quarterly statements. This happened to me while in my 20s. At that time, thinking about retirement savings and watching the stock market, was not high on my list. Hopefully, you can learn from my mistake so you can get a leg up on being financially secure.
Don started his retirement savings shortly after I lost so much of mine. We sat down to go over our expenses. Slowly we cut out going to the movies, I got my hair done less often and started doing my own nails. Clothes and makeup shopping took the back burner too. That helped reduce the number of times we had to fill up the car. Eating out less helped save us a ton of money too. With the new lower monthly budget, we calculated what the ‘extra’ is over our income. Then put 90% of it into our retirement accounts. The other 10% was the on-hand cushion for those ‘life happens’ moments.
Piece Of Advice
The best piece of advice I have for you is to never give up and stay vigilant. Look in on your account balance monthly. Keep striving for your financially secure goal. Take on each pothole along your financial roadmap with a long-term mindset. Sometimes spending more money now, for something that is durable and long-lasting may be the better choice over a cheap quick fix that will need to be replaced.
Thanks for reading our blog and we will see you on our next Adventure!
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