Do you worry about money?
February 26, 2018
Photo by averie woodard on Unsplash
Are you naturally a money-worrier (hello friend), or does it depend on your situation?
It’s been said that you can’t rely on the wealth you accumulated, you can only truly rely on the skills that you have that would let you start over if you really had to. Having come up from near the bottom, for years, it was easy for me to agree with that.
I knew how to climb the ladder, having done it before. I have a strong work ethic and drive. It wouldn’t be fun or easy, but it was doable.
These days, it’s more complicated than that. It’s about money and it’s about more than money.
My worries about money on a day to day level are much reduced now that we bring in two good incomes and have dedicated savings. Some time back, our focus pivoted to building wealth with a background of simple living and frugality, no longer preoccupied to the point of breaking on survival. That was a massive change.
This shift, a transition from the lower class to (maybe upper) middle class mentality, has a weird lingering side effect.
I’ve always been risk averse. Always. Undertaking the journey to get out of debt meant, in large part, remaking myself with better impulses, suited to building rather than squalor and squandering. Combating risk aversion meant learning to take calculated risks, both in investing and professionally, to hold every bit of ground and build on it. With all that experience under my belt, one would expect to have a healthier level of aversion.
Nope.
With the new house, the real portfolio to maintain, and my own little family to support, it’s intensified. It’s accompanied by a quite unsettling feeling that we have something to lose, now that we have some accumulated wealth and a generally happy family. We worked so very hard to get here. Quite pointedly, in part, now that I’ve separated from my nuclear family.
The past couple of years underscores those half formed fears of losing what we have and not so incidentally being alone. My family circle is quite small, supplemented by chosen family. I’m certainly not getting any younger, and my health and energy are hovering somewhere around Laughable. (I fake Normal pretty well but can’t lie to myself.)
Just when we’re arguably doing our best financially, it suddenly feels precarious. When I started writing this, it didn’t make sense, so I had to dig into what this further until I find the roots of this distrust.
Dig I did, until my deep memory came to the surface – it’s all about patterns. My family was doing best around 1998-1999. We were talking about buying a house, we had decent disposable income, it was pretty good. Or so I thought. The underpinnings were, we know now, rotten. When it inevitably toppled, it did so with a vengeance. It started small. Mysterious doctor’s appointments for Mom. Secrecy. They couldn’t make rent because all the cash was keeping their business afloat until not even that was working. The business was gone. Their savings were gone. There was no money to pay the bills much less for college for me. We took in Grandma and on and on and on. It was bad enough that I started blogging (back in ye olde early PF blogging days of yore).
Once we settled into our new house, with a poopton of mortgage, my gut recognized this feeling of having it all (with debt), this particular familiar scenario and panicked. It helps not at all that we’re nearing the end of a ten year bull market cycle and a correction is due. Normally that wouldn’t much matter since we’re investing for decades, not for tomorrow’s profit, it’s just bad timing. “We have it all” feels more like we have it all *to lose*.
(Right about now, I can hear echoes of FIRE notables talking blithely about their ability to live with next to nothing and I think that’s amazing. But that’s not us. My body has been 80 years old since I was 15 so with this kind of failing geriatric body, I’ll keep my expensive mattress that lets me get any sleep at all and the other comforts of life that let me live better even when in excruciating pain.)
Past performance is not a guarantee of future results
The unease deep in my gut is picking up all kinds of doomsday scenarios and pointing to the past in a frantic pantomime. But! The best way off this particular cliff is to back up, step by step, with logic and shred the parallels between 1999 and 2018. The old saw cuts both ways. I can’t deny it went badly back then but we are different people and we’re the ones in charge this time.
Debts and spending. They owed (I paid) hundreds of thousands of debt and bills – credit card companies, auto loans, rent, expensive cable, etc. All the personal debts that accumulated over the years borrowed from family are still outstanding.
I set up our own finances so I know we only have (massive) mortgage debt which I’ve taken serious steps to reduce. We put 20% down, paid down another 20% last year, and our monthly payments include a couple hundred extra to principal so even when I’m not thinking about it, I’m whittling it down. We won’t be haunted by the Debts of Christmas Past or Bad Decisions Past or Terrible Business Ideas of the Present.
Losing incomes. My parents owned their own small businesses in an industry that was hammered by big league competition.
We work two full time jobs with a fair amount of responsibility and autonomy – we aren’t the first targets to be let go if either of our businesses need to trim back their expenses. His company has actually done some layoffs this year but he’s reasonably well insulated. My company isn’t rock solid but they’re not on shaky ground like in previous years. Our jobs aren’t safe, no job truly is, but they’re not vulnerable to a month of bad sales, either.
We have assets. When their business went under, my parents had nothing but debt and a pile of sand to show for their hard work. I fell into “supporting the family on their expenses that I can’t control” pit immediately.
Today, even if PiC and I both lost our jobs, we have enough cash/cash alternatives to see us through 16-18 months without income. After that, we could sell off our stocks. Even if they lost half their value, they could see us through another 10 months. More, if the market didn’t crash. That’s 2-3 years covered right off the bat that we could access, leaving aside any unemployment income or side money, compared to the big ole goose egg I got in the face in 2000.
Our underpinnings are sound.
We’re by no means rich, not in the sense that we could weather any and all crises alone – freak accidents, deaths in the family, more severe disability, supernatural visitations. But we are absolutely rich compared to many who don’t make the kind of money that lets them save for emergencies as we have. In a recession that margin for error would shrink, of course, but recession-proofing is my next order of business.
What you might notice is that I’m not looking to family or friends as assets. They are wonderful support and we rely on their love and support but our financial plan does not rely on JB getting a job or having rich enough friends or family who felt they owed me a life debt subsidize me with “loans” (never to be repaid).
We still need to work for quite a while but that’s not the same as being on the verge of disaster. That’s not to say that I can stop worrying now, but my worry can focus on a smaller area rather than all over.
Despite being in a good financial position overall, I find myself often worrying about money too! I think the unknown (aka- the future) is scary to me. I don’t know what will come our way, good or bad. Haha- I’m glad I’m not the only one who carries these concerns!
You are most definitely not alone! 🙂 I find that it helps to talk it out and keep working on shoring up our positions.
Whenever I worry I look at my bank accounts (almost reflexively) and that calms me. I have definitely done the calculations that show in the worst case scenario (that will hopefully never happen) we could move to DH’s tiny home town, buy a house for 40K and live indefinitely on what we’ve already got saved. We would prefer not to do that, but we could.
nicoleandmaggie recently posted…What we decided to do with “all that extra money”
I have the same reflex! It’s probably why I spend way too much time logging into my accounts …
I’ve been gaming out increasingly worse case scenarios, almost compulsively, and while having some answers to those scenarios helps, I don’t LIKE any of them. but I don’t have to like them to take comfort in having options, right?
Right!
nicoleandmaggie recently posted…What we decided to do with “all that extra money”
The most anxious I’ve ever been about money was during the year after we bought our home. Constantly bleeding so much money toward the house, feeling cash poor, fiance was unemployed. I felt so insecure even though intellectually if I crunched the numbers we were doing okay.
After that year though I’ve gotten a lot better about money anxiety. I’d always been anxious about money since I was a kid but for whatever reason in the past year or so I like I’ve kind of been getting… over it? It’s weird. I think we’ve managed to hit my crossover point in terms of financial stability where I can say pretty definitively to my anxious brain, “You know, you’re being silly right now” and move on.
Paying down the mortgage helped. Once it hit 2x my salary, I stopped thinking about it as something to pay off immediately and feel pretty comfortable just letting it sit there. The bigger thing, I think, was calculating how much money we’d actually need to make to cover our expenses and thinking realistically about how hard it would be for two college grads with our skillsets to make that much money if we lost our jobs (not that hard). Over time, little exercises like that helped me build up my financial confidence/resilience, buffered by our accounts of course.
Yet Another PF Blog recently posted…My Thoughts On Sephora Having Been There Once For Approximately Five Minutes
We had two incomes last year but I felt similarly last year with all the house stuff as well. Now I suspect this is the hangover!
I was trying to decide when I could take comfort in the fact that our mortgage is some multiple of our incomes. Is 2x the “safe” amount? It’d have to be 2x just one of our incomes for me to feel ok about it but it’s nice to have some kind of reasonable goal in mind.
I worry…but, I’ve also had a number of situations that feed that worry. I now try to focus on one day at a time. It’s a lot more manageable.
One day at a time tends to be a calming effect for most things. 🙂
I worry too, but not excessively. I’m sure your previous experience is the trigger. It sounds like you’ll get through this next recession fine, though. Your finance is much more solid now.
Our finance is okay, but it could turn on a dime. That’s why I have more bond allocation now. We could fall back on that if there is a big recession. I’m pondering escaping the US for a year too. That might be a good excuse to travel.
Joe recently posted…How to Build Your Opportunity Fund
“Our finance is okay, but it could turn on a dime.”
I’m so impressed that you can say this but not be having screaming nightmares 😀 😀
I know this same thing and it keeps me up!
My parents had a major financial setback when I was about 16 or 17 and through my college years, related to my dad starting his own business for several years, which ultimately failed and a lot of business debt was repaid. In my case,, the kids remained mostly insulated from the impact, and my parents ultimately were able to recover their lives (although sacrifices were made and IRAs were dipped into). And of course, no illness was involved. This influences my risk adverse posture when it comes to money, although I think some of it is just personality. I was always the one who hoarded my candy and money.
I worry a bit, but then I look at our spending then estimate how much take-home pay we’d get without my job, without his job, etc. Then I compute how much we could save for retirement under those scenarios. Then I convince myself that worrying is not needed right now and that we will react to any unknowns when the time comes.
Like YAPFB above, right after we bought our house was a high-anxiety time, because mortgages are scary. After 3 years, the prepayments, increased cash reserves, a plan for maintenance makes it not much of a worry. Except when I look at the mortgage balance itself, because it is just a lot of money!
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I’d agree with you – I was a hoarder long before my parents’ thing happened but since our scenario spiraled down the drain, I became 10x more risk averse. I bet that someone who was much less conservative, or not at all, would have reacted differently.
And yes! Our mortgage balances, oh my goodness.
I get anxious about money, even though I’ve got reserves. But I do remember the day before I bought my condo. I was buying it alone, and the unknowns of signing for a 30 year mortgage were eating into my soul. I walked into my boss’ office, and told him that if he was going to fire me, I’d like it to be today. He laughed looked at me a bit oddly, and remembered that I had closing the next day. He reassured me, and, in fact, I did not lose my job, and that condo has actually been a pretty decent investment (it’s rented out now).
I love this story 🙂
It depends on the day really. I used to worry a lot more about it. Then I realized, the more I worried, the worse it got. When I started putting together my plan, it started to get easier. The worries went away and the money issues began to alleviate themselves.
There are times I worry still – left over habits and behaviour. Mostly now I know what I have available to spend and I am looking forward to the day when the debt is gone and the worry with it. I’m approaching the owing less than $20K mark, and life is so much better these days!
Having support. Being out of my previous relationship, and being in a position where I no longer fill my life with empty material because it is rich with experience, is getting me through the days when sometimes the worry takes over. I get giddy when it’s payment day, and check balances until I see the payment post. I enjoy life now.
The changes are amazing once we’re on track with a plan, aren’t they? You’re doing great!
I’m sure my parents had lean years but the worst were probably before we were born. Of course there were tough times after we Immigrated and there was trouble finding work, but I am confident that was temporary (and they had just enough cash to build a house mortgage free so that was one big expense not to worry about).
I wrote a while back about having financial PTSD which really was very real for me. My deep seated fears about becoming homeless have abated a little. Home ownership has done wonders for me.
I’m so grateful to be earning more, to have the great benefits my job offers, but it also does mean there is potentially more to lose.
NZ Muse recently posted…What makes you feel rich?
Did your parents ever tell you much about their tougher times? I often wonder if it’s worth taking the time to talk to JB about them when ze is older, or if my time is better spent teaching zir about zir privilege in some other way.
Financial PTSD – yes!
I think that what leads to feeling like the more you have, the more you have to lose. For me, anyway.
I am mostly a natural worrier. I find that when I start worrying about money, it isn’t always about money, but the money existence reassures me. It turned out that a huge part of why my money worries went away was that I had separated myself financially from my parents’ claws substantially and I had a solid shovel of my income to work with that was vastly more than what I was spending. Then, I lost my job, lived off my savings for a year, and my husband and I started combining things. That brought back all of the fears of the claws and control I had from my parents. He isn’t them, of course, but that trigger sure was there.
We got the mortgage down to the point that we will have a ~$1,000/month payment on a 10 year amortization once we finish refinancing. The balance is less than my husband’s annual salary and less than either of our taxable accounts or my Roth IRA, which is so very destressing versus when I bought the place and the mortgage was 3x my annual salary. If my husband lost his job, we don’t have a lot of cash right now (which we are fixing), but we have over 5 years of expenses in cash or taxable index fund accounts. Our plan is to get the joint accounts up to 3-6 months in cash and then open up a joint Vanguard account! (The last part is very exciting!!!)
Anyway, we have made some really great progress, yet still I worry. We have taken many steps to ease it, but I think it’ll still take some time from here for me to not worry quite as much.
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That makes a lot of sense – it’s not just the money itself but also what the money means and how it’s used or wielded (in some cases, like a weapon as we know from family).
It’s going to take a lot more money and years for my personal PTSD to fade.
I’m very excited for you to open your Vanguard account!
I am much older than most of you (almost 58 yikes) and I have a pension that I can actually draw on at age 60 (although I could not live on it alone) but the pension increases for every year that I work. My total mortgage does not equal my yearly salary (I had a house paid off, but I had to move after four years of the Great Recession to another area a few hours away to get my income and pension back up) so I have lived through y’alls worst fears. It will be ok. Life has life bumps. You are all doing very well and have prepared yourself for a couple of years of expenses covered. My hat is off to you!
You know, I don’t know the age range here but I love that it seems relatively wide.
Thanks for the perspective, Cindy! I know I still have a long way to go before I fully relax but it will help if we do a great job saving and reducing the many multiples of my income that our mortgage is.
Chortle! Given that I just looked at the bank account and noted that I have about 3 grand to live on between now and the end of October…and that it takes 2 grand a month to support me, the dogs, and the paid-off house and the paid-off car… Darn right I worry about money!
Know what? There’s not one thing I can do about it. If I have to support myself through my dotage — another ten to (if I’m truly unlucky) twenty years — by racking up a sh!tload of debt, that is exactly what I will do.
So much for working like a horse all your life, calculating and saving and scheming to build a retirement nut, and imagining you’ll be able to take care of yourself in your old age.
Enjoy life and stop obsessing. There’s not a thing you can do about the economy or the stock market or the wacky fake-“Christian” politicos. Nobody in the next generation or in this one cares whether you go hungry in your old age — and neither should you. Just go with the flow.
Funny about Money recently posted…I need another hole in my head….
Yes, I’m an inveterate money worrier. Like you and some of the commenters, it comes from a financial setback my parents suffered. I say “suffered,” but it was really of their own making. They were immigrants who lived in the US for 25 years, and they had to move back to their home country to clear it up. I was in college, and while I was fortunate enough to finish, it was touch and go. Since then I’ve been far too risk-averse in my financial life. I’ve stayed at a steady job probably longer than I should have. My first instinct is always to pay off debt rather than invest or pursue some income-generating opportunity. I check my account balances daily.
That said, there are some things I don’t obsess about, like the state of the stock market. It’s more a sense of wondering if I’m prone to the same sort of midlife crisis (for lack of a better term) that caused my parents to lose all their money.
I enjoy the way you write and assemble words. I wish I could write like you and do it so gracefully.
I worry about money way more than anyone would believe. It’s worst because we’re a single income family (don’t count BnB). If I went out, I could make starting $19/hr which is peanuts after taxes. If I try to start my own business, it causes my husband stress since I don’t spend that quality time. So that’s another reason why I’m frugal. If I can’t earn, I’ll try my darnest to save.
Ooh yes I worry about money and I don’t even have experiences like yours to trigger that worry! Anxious brains are so fun. I’m just trying to remember that this is the reason I’m working on building up my position and that if I lost my job, things would eventually turn out okay. It would be terrifying and not fun, but one way or another I’d figure something out.