With the benefit of hindsight, what would I tell myself ten years ago? There are many ways to approach an answer. Knowing what I know now, I’ll give Ms. Vine in April 2008 some advice. This is a somewhat silly exercise because many experiences along the way were valuable and shaped the me I would become. But here goes.
To provide context, I’ll share some details about life for the Vines a decade ago. Mr. Vine and I had been married for a few years in April 2008. I was in my mid-twenties. We had purchased our first home a handful of years earlier. Out of college, I started working for a large construction supply wholesaler. We were earning higher than average incomes and living the DINK life. I was still employed there, but my career path had stagnated. I had always planned to attend grad school, but towards the end of earning my bachelor’s degree, I was burned out on school. I couldn’t even bear the thought of preparing for the entrance exam. So I decided to take a year or two off. Those two years turned into three as of April 2008 and I started thinking seriously about grad school. The economic collapse was just beginning in our midwestern home state. My industry and Mr. Vine’s would be among the hardest hit. Even though we didn’t know that yet, I was reluctant to leave a stable job and paycheck to venture into another unstable industry. We owned two cars, both paid off and reliable. In fact, one of those cars was the first, big, smart financial decision we ever made.
The first piece of advice I would give 2008 Ms. Vine is to stop buying all that crap. I don’t know what it all was now and that’s the point. I wasted so much money on clothes and books and things that would ultimately end up donated to charity, or worse, in a landfill. By 2008, some of my bad spending habits had been broken, but I still had plenty. I would also tell her to stop eating out so much. It caused weight gain and wasted so much money. This is probably good advice for 2018 Ms. Vine, too! I had stumbled upon an internet message board for newlyweds that dealt with money. I also started reading books by Suze Orman and Jean Chatzy around this time. So my financial awakening had begun. But I had no idea what was possible. We were both saving the max in Roth IRAs and enough to get the full company match for our employers’ 401k plans. With the money 2008 Ms. Vine would have saved from lunches out and discretionary spending, she could have easily contributed much more to her 401k.
The second piece of advice I would give 2008 Ms. Vine is to tell her that she could be financially independent within ten years. Investing 5ish% in the 401k and maxing out a Roth IRA was not nearly enough. Because I have the benefit of knowing the future, I’d tell Ms. Vine to put that savings in a CD ladder maturing in 6-18 months. The rates weren’t bad (when compared with today) and the bottom was about to fall out on the economy. Once the market bottomed out, those CDs would mature and the money could be invested in the stock market.
The third piece of advice I have for 2008 Ms. Vine is not to worry. In December, Mr. Vine would lose his good job, kicking off what would turn out to be eight months of unemployment. Those were tough, scary months. My job became increasingly unsatisfying and the pressure of being the breadwinner was difficult. I’d tell the past Ms. Vine to be kinder to Mr. Vine. I know now we were going to emerge from that time better off than ever. We drastically cut spending during those months and didn’t need to dip into savings to stay afloat. My salary and Mr. Vine’s unemployment insurance paid the bills.
The fourth piece of advice for 2008 Ms. Vine is that the travel is worth it and maybe she should investigate rewards credit cards. Mr. Vine and I traveled so often in those years before his unemployment (and after his re-employment, too). Largely, it was because I was so unhappy at work. I was always looking for an escape, even for a weekend. We could have done it a little more cheaply, though. I also squandered many frequent flier and points opportunities in those years.
When Mr. Vine became reemployed with a fantastic company, at a big salary increase, in September 2009, I’d tell Ms. Vine to put all of that CD money into the market. I’d guess this would be about $10,000-20,000 in capital. And whatever Mr. Vine was making in excess of unemployment insurance, that should go straight into the market as well. I’m guessing that to be about $1500 per month, although it was probably higher. I would have also started putting in the IRS max into our 401k accounts, which would have saved us loads in taxes, too. Without the 401k increases, assuming we had $15,000 in starting capital, plus $1500 per month at 6.5% returns (which is also conservative, I picked the mean return for the S&P 500 over the last 10 years), we’d be $275,000 richer today. The crazy truth is that the lifestyle impact would have been minimal, or at least in terms of quality of life.
I would also tell 2008 Ms. Vine to stay the course on that grad school thing. It was the right thing to do at the right time. Even though it might have meant we wouldn’t quite be $275,000 richer today, that education was priceless. Waiting until Mr. Vine was settled in his job and shaking off the insecurity of long term unemployment allowed for legal professional job prospects to improve. It isn’t always necessary to make decisions from a strictly financial perspective. I’m a firm believer that financial impacts should always be considered, and then priorities aligned accordingly. Toiling at that former job for another several years to retire without going to grad school might have resulted in less net happiness (even if it had made for a better story to retire in my early 30s!). Early retirement is pretty cool, but it needn’t be everyone’s goal. There’s nothing wrong with finding satisfaction in paid, traditional work.
What about you? What advice do you have for you in a past decade? Have you learned from anyone else’s “past me” advice?