Last week, I received a fascinating question from somebody I know back in Portland. Let’s call her Aly. Aly and her husband have a great life, one that’s built around their values. The trouble? This ideal life costs too much. They long for financial independence, but they’re headed in the other direction. They’re digging themselves into debt.
Here’s what Aly wrote:
My husband and I both have jobs that we love that fit our values. He’s teaching preschool full time and making a good wage. I’m working three days a week in an inpatient treatment program for people healing from mental illness and long psychiatric hospitalizations.
I’m somewhat underemployed (working at a job I am over-qualified for) but this was an intentional decision to keep balance in our home life and for me to maintain my own mental health. I anticipate over time I’ll increase responsibilities as well as earnings in this job. I love the company I work for. They offer generous retirement and stock benefits. At this time I really want to stay put and so does my husband. It feels wise and healthy.
We love our home and have made every major improvement possible in the fifteen years we’ve lived here. Heck, you were part of that, helping us remove old shingles to get ready for the reroof! Our kids are in great schools and are thriving. We love our neighbors. We’re not interested in renting a room or otherwise having other people live in our house as this is our biggest place of respite and again, a place to recharge and to nurture our children. We’re one year in to a fifteen-year mortgage that we both feel thrilled about in terms of low interest and reasonable monthly amount.
In terms of cutting costs, we’ve consistently taken the angle of simplicity. I don’t see any obvious new way that we can cut costs. We want our children to have important cultural experiences, so we pay for them to go to summer camps and for some after school activities. Our daughter will be going to Costa Rica with her science teacher this summer. These things aren’t cheap, but we put careful thought into the ones we choose and again, make sure the mission of them fits our values. Additionally, we’re paying for braces, but have done that though a flex spending account.
We have no car payment and are fine with the cars we have.
The bottom line is we keep ending up with debt that we can’t cover and are building up a credit card balance that both of us feel bad about. This summer we anticipate some more expenses for a family reunion in Indiana that we go to every other summer. We’d hoped that we would have money saved up for this trip, but instead we find ourselves needing to fund this trip again on credit.
We anticipate getting a rather large inheritance within the next few years. I also anticipate earning considerably more as I get promotions and am able to work more hours when the kids are a bit older.
So, my idea to get out of this constant money stress is for us to get a home equity line of credit. The interest would be tax deductible and it would take some pressure off while we are in this window of time. It seems to be the one way we can benefit from the fact that our house is worth a ton. We really love it here, and really don’t want to leave.
I’m sure I’m missing all sorts of important details. Doing the Money Boss net worth exercise was helpful. It forced me to get organized. I thought I was already pretty organized, but now I definitely have the information in clear accessible format!
I don’t expect you to be our financial adviser, but as soon as my husband asked the “I wonder what J.D. would say?” I knew I wanted to write.
In many ways, Aly’s story reminds me of the recent Atlantic article about “The Secret Shame of the Middle Class”. In that essay, New York writer Neal Gabler confesses that although his family enjoys a wonderful life, it’s a life that keeps them on the knife edge of financial catastrophe. Like half of all Americans, he’d have a tough time of coming up with $400 to cope with an emergency.
It seems that my friend Aly is living the Portland-version of Gabler’s life.
I’m not going to use this space to condemn Aly for the choices she’s making. Instead, as I advocated earlier this week, I’ll practice a little financial empathy.
On the plus side, Aly and her husband are making conscious decisions. They’re not living reactively, doing things because that’s how other people do them. Their choices are aligned with their purpose and values, which is awesome. But Aly needs to understand that all choices have consequences. [Read more…]