midlifedude

Man at midlife making second half matter

Archive for the tag “finances”

Debt: The Mosquito in my Ear

Debt nags me like a mosquito buzzing my ear as I try to sleep.

I’ve spent my midlife trying to get out of debt while preserving assets – in other words, reducing debt with current income while attempting to avoid incurring more liabilities Debtor depleting investments. Sometimes I have had to unload investments to pay off debts, and always feel bad about it, like I’m filling a city street pothole that is sure to crater again.

Overall, I’ve been fairly successful at paying down and staving off debt. Still, whenever I become completely debt-free, something seems to suck me back “into the red” – a job loss, a major repair, education costs, or simply operating a budget that gets out of whack and spending beyond current means, a cash flow problem. I’m not alone.

Americans are swimming in debt:

  • The average American household that carries credit card debt has a balance of more than $15,000 on the cards, according to a 2017 NerdWallet survey. The same study found that the average American household carrying student loan debt owed $46,597 in education expenses, and the average American household with auto loans owed $27,669 for their vehicles.
  • A 2014 Urban Institute study found that 35 percent of Americans had delinquent debt. That debt typically came from credit cards or medical or utility bills that was more than 180 days past due and had been turned over to collections. The debts averaged more than $5,000.
  • In 2013, 7 out of 10 graduating college seniors were entering post-college life with student loans, which averaged $28,400, according to the Project on Student Debt.

Debt limits freedom and choice. Debt triggers shame and guilt. Debt causes stress and distrust in relationships. Worry over debt can lead to physical health problems, such as high blood pressure.

Debt makes me irritable, anxious and angry. I’m not alone in suffering from negative emotions related to debt. Research has found links between financial health and mental health.

Researchers from the University of South Hampton who analyzed 65 studies on debt and mental health determined the likelihood of having a mental health problem, particularly depression and anxiety disorders, is three times higher among people who have debt. The link between debt and suicide was especially pronounced: People who committed suicide were eight times more likely to be in debt.

Drug abusers were more than eight times more likely to be in debt, and problem drinkers 2.5 times more likely.

Short-term debt, such as credit card debt and overdue bills, was associated with greater depressive symptoms, according to a 2016 study in the Journal of Family and Economic Issues. People in the latter stage of midlife and closing in on retirement, 51- to 64-year-olds, were among the groups where the link between debt and depression was the strongest, along with people who were not stably married and those with no higher than a high school education.

Researchers aren’t unified in what causes what – whether stress related to debt causes mental health problems or mental health problems lead to poor financial management. But the two woes are close partners either way.

As midlife progresses, the urgency to escape debt and then keep it at bay increases. Time becomes the enemy; opportunities to get out of debt and recover start to diminish. Wives have been horribly miscast; debt is the real proverbial “ball and chain,” and not something one wants to drag into later adulthood. Whenever I hear that mosquito known as debt whining in my ear, I’m going to slap it silly.

Good Money

When I would tell people I got a new job to start a new career in another state and would be moving, one of the first questions they’d inevitably ask was, “How much will you be making?” Or, so as to be less crass, “Will you be making good money?”PileOfMoney

In our competitive, capitalist, consumerist society, it is only natural that money is the first thing that comes to mind when someone accepts a new position. To be sure, why would anyone choose to move more than 500 miles and three states away for a job if not to make good money?

I had three answers for that question, and all had validity:

  1. Yes, of course I would be making good money, because there’s no such thing as bad money.
  2. No, I wouldn’t be making good money, compared to the much better money I had made in previous jobs.
  3. None of your friggin’ business what kind of money!

The answer is not simple. My job as a therapist under a two-year provisional license pays considerably less than my previous positions in public relations. I am at the entry level in the mental health field, where salaries and pay, though variable depending upon many factors, are relatively low compared to many other professions.

However, my job pays considerably more annually than the series of Gig Economy counseling internships and part-time and temporary jobs I had pieced together for the final two years of my counseling master’s degree program after leaving my full-time job. So viewed from that perspective, my new job does pay good money, and I’m grateful for that.

In midlife, we evaluate what we’ve already done and what we’d like to do with our remaining years, which no longer seem infinite. Priorities change, as we shift from the achievement-oriented, ladder-climbing, self-focused goals of younger adulthood to an increased desire to make a contribution to others, pursue meaningful activities and leave a legacy. My change to a career in counseling reflects the internal re-evaluations of the midlife transitional period.

When you realign priorities and make a significant change, there will be sacrifices. For me, one of those was money – good money. I knew that consequence of my decision from the start, when I embarked on the graduate program nearly six years before actually entering the counseling field. But I ignored that inescapable fact at the time.

Now that my new level of pay is a reality, I’m adjusting my life and budget to match. I may not yet qualify as a full-fledged Minimalist, but I’ve moved closer to that end of the scale in my spending, decision-making and thinking.

I don’t want to minimize the importance of making money – good money – or pretend I don’t care. It certainly helps in many ways and I always endeavored to make good money – at least the best I could in any given circumstance. I’d certainly rather be well-off and feel secure than poor and living anxiously paycheck to paycheck. Wouldn’t everyone? Fortunately, I have some financial cushion, enough to allow me to overcome the financial anxieties of making a career change, but far below some golden threshold to claim money doesn’t really matter.

But making ever more good money – however one defines it — isn’t the end-all be-all path to an ever more glorious Shangri-La, as a 2010 Princeton University study concluded. The Princeton researchers found that no matter how much more than $75,000 per year that a person earned, their “degree of happiness,” or emotional well-being did not increase. It also found that, though earning less than $75,000 in and of itself did not cause people to feel more unhappy, it did magnify and intensify negative feelings from life problems they had.

Beyond the practical realities of how I spend and the reduced margin of discretionary money available to save or burn compared to my previous work life, I’ve had to make a humbling mental adjustment: Here I am, in my 50s, peak earning years, with two graduate degrees, making less than half of what I made at my last full-time job, and less than or equivalent to many workers with much less education or years of experience than I have. Yet, I would still contend I am making good money, not bad money.

I gain fulfillment and a sense of purpose and contribution from counseling people and helping them improve their lives. Work is stimulating, rewarding and challenging, which I couldn’t always claim before. I look forward to my future in this new profession, and its many opportunities for learning, growth and entrepreneurship.

For those reasons, I know I can take this to the bank: I am making good money, with the promise of better money to come. When you truly enjoy what you are doing for a living and apply yourself with a passion because of that, the money naturally tends to follow. Good money.

Divorced Parents with United Financial Goals

One of the toughest things about divorce is untangling and dividing finances, and planning and making financial agreements for the future that each party can live up to when kids are involved. Fortunately, my ex-wife and I have done a pretty good job at that, and it’s paying off now.

Money battles between divorced parents and short-sightedness not only cause intenseCollegeTuition acrimony between the former husband and wife, but almost unavoidably will spill over into relationships between the parents and the kids and cause more turmoil, stress and anxiety. Challenging enough that parents who once combined incomes to create more buying power and economies of scale have to double down on everything after divorce – housing, property taxes, furniture, electricity, cable, maintenance costs, health and car insurance and more – without negatively affecting relationships and kids’ attitudes, perceptions and sense of well-being and security.

My ex-wife and I are likely going through our greatest time of financial stress since our separation 11 years ago right now, yet we are weathering it well (I can’t be positive, but I think I can speak for both of us). This fall 2016, both our children will be in college at the same time. In addition, I am in a graduate school program for counseling, so I’ll be paying for three higher education degrees simultaneously.

But a few things have saved us from potentially extreme financial pressures and enormous debt.

First, we planned for the kids’ college education early in their lives, investing in Maryland’s prepaid college tuition program (for two years’ tuition) when they were 4 and 2. We also opened Education IRAs for each child around the same time. Second, when we divorced, we agreed to continue contributing to each fund on an arranged schedule, and each of us adhered to the agreement. Third, I opened Maryland 529 college investment accounts for me and both kids a few years before my oldest entered college to help fund my education and fill in inevitable gaps in theirs. Finally, each kid made wise choices to attend state universities, where tuition costs are half or less of private or out-of-state colleges.

My ex-wife and I each have had the discipline, cooperation and foresight to keep contributing to the kids’ college educations, even though we were no longer united or in agreement on other things. Sending both kids to college still will make a big dent in my monthly budget and annual cash flow. But as a result of our advanced planning and divorce agreements, I believe each kid will be able to graduate from college debt-free (and me from my graduate program without wiping out savings and investments). That will be a huge gift to each of them, and a big benefit in starting out their adult lives.

Working together with an ex-spouse after a divorce, as aggravating and imperfect as it may be at times, certainly pays off, both for the kids and the adults going their own ways.

Post Navigation