Fighting the Most Common Chronic Financial Illness

Chronic illness is a long-lasting condition that can be controlled but not cured. As described by the Centers for Disease Control, chronic disease is the leading cause of death and disability in the United States.

In financial terms the most common chronic illness is the “Disease of Fixed Expenses”. This affects all demographics and incomes. It is the never ending list of payments and obligations that one accrues through ordinary life. It becomes an acute illness when the “patient” gets ill, fired, laid-off, and or retires where the monthly income is significantly reduced or eliminated.

This can be controlled through conscientious budgeting, but this is not in the nature of 95% of the population. The advice is always the same- Save, spend less, avoid immediate gratification, have a plan, etc., etc.

This advice is always in a vacuum that doesn’t take into account the pressures to spend by family and friends is endless. The most organized and frugal person may not control their dependent group leading to a feeling of hopelessness or just “going with the flow”.

Some easy suggestions to ameliorate the problems.

1.      Anticipate that house payments, car payments, insurance payments, and tax payments never go away.  Realize that the most expensive house and or car is not necessary and these possessions are only tools. After a couple of years, the $25-40,000 car gets you to the same location as the $60,000 vehicle. The more expensive car with insurance, maintenance et al costs over $1,000 per month for 5 years.

2.     Discuss money with your family/dependents and carefully explain “how much a broom” costs and come up with a reasonable spending approach. Let them make compromises to get what they want.

3.     Realize you are getting older, and basing your “happiness” on things is misguided and driven by television and movies.

4.     Avoid being jealous of another’s success.

5.     Stay healthy and avoid medical costs.

6.     Anticipate unanticipated disasters – things are going to happen; face it. These characteristically require significant expenditure, often all at once, and often without time to develop a less costly strategy. Thus, planning for, and having an account with, say, $100-$150K, set aside only for emergency purposes, is wise.  If you do, there are several principles: don’t touch it for anything but an emergency; never borrow from it thinking you will repay (shortly) in the future. You won’t. Are you wise?

 

These may sound preachy but I am guilty of all these sins and now realize the shortsighted of my lifestyle decisions.

Making more money does not improve the condition, it only changes the paradigm. More money=More expenses=More Fixed expenses.

 

Should Baby Boomers Retire Already?

Baby boomers are defined as people born during the demographic post-WW II baby boom between the years 1946 and 1964.  As a group, they were the wealthiest, most active, and most physically fit generation up to that time.  They were a generation that received peak levels of income, so they could reap the benefits of abundant levels of food, apparel, retirement programs, and sometimes even "midlife crisis" products. 

Being a member of that group, it is time to think of retirement and all of its trappings. 
When I was 50, my requirement for retirement was a Dow of 20,000, and S&P of 2,000, an end to supporting various universities, winning the lottery, and finally controlling my chronic disease of fixed monthly expenses. 

Time has changed these criteria, but even with a 20% net reduction in the value of the dollar since the "crash" I '08-'09, the stock market has recovered significantly.  This has given more people a chance to consider retirement despite the fear of "running out of money".

Of course, this is all monetary.  The real substance of the issue is within the word retire.  How can I re-tire, when I an not even tired, yet?  Other than finances, then, a more important question is "what am I going to do with myself"?  This is a real issue for hard-working type A personalities who daily have a large number of people under their beck and call.  Another facet of this issue is the concept, long purposed in many corporation, of mandatory retirement.  Have many of us worked alongside a long-time partner who is "slowing down" and whose apparent clinical productivity is not what it use to be?  What should happen to him, if he loves practicing medicine, and wants to work into his 70's?

Start thinking about this, when you are 50.  If your life expectancy is 80 or 90, you probably will have at lease 20 years of retirement. 

Retirement does not mean intellectual, spiritual, and physical death.  It should be viewed as an opportunity.  After all, there are many youths out there that world love to have your job!!  Give the "kids a chance".