Wealth Without Risk.

I like getting up in the morning knowing that my net worth is the same as it was the night before when I went to sleep.  I don’t know.  Call me crazy. But, that’s what I like.

I’ve never earned much money in my working career despite having two college careers.  Employers never wanted to pay me what I was worth.  I think it was because I was too easy-going.  In reality, it was probably because I learned very early on in my life that it’s NOT how much money you earn in life.  It’s how you spend it after you get it.  If I could live a life I wanted, while earning less than my counterpart, why try harder?

For example, my college friends wanted Abercrombie & Fitch tee shirts.  The cost was $50 for this thin, emaciated piece of cotton-nothingness that displayed a logo proclaiming “Hey!  I spent fifty bucks on this tee-shirt and you can’t!” Fortunately, for me, it wasn’t true.  I could find the tee-shirt wholesale or in some toss-away discount bin and buy it for ten single dollars.  Who’s the wiser?  Who’s the smarter?  While my cohorts slaved away earning the big bucks to buy that pathetic tee-shirt (or their hard-working parents footed the bill), I had better things to do. Such as, plan my life for true financial independence without too much effort.

I learned in my twenties that if I lived a simple life, bought most of my material possessions wholesale or deeply discounted, never pay retail for anything and made ‘free‘ my middle name, I could concentrate more on safe investments. Having lived through the financial downturns of 1987 and 2001, I concluded that Wall Street was not an avenue I enjoyed walking down (or up). When you live below your means, you’re able to invest in lower-risk ways rather than be forced to gamble on riskier investments to make up for the lost time (Jeff Yeager).

Since I haven’t lost any money in the stock market since those heady days, I can earn less, live on less and not suffer any of the angst that comes with taking years off my life in order to rebuild what I have lost. Instead, I get more life to live and enjoy myself.  And, I get to sleep fantastic at night.

What about inflation, you might ask?  That’s the same boring question I hear all the time.  People tell me they MUST invest in Wall Street because they need the higher returns to offset the rate of inflation.  WRONG.  The bottom line is that you need a certain amount of money to pay your bills.  But if you do as I have done over the years, and that is consistently lower my bills by seeking either alternatives or simple elimination, I’m not very worried about inflation at all.

Over the years, my expenses have come down, NOT up. Back in the mid-90′s hubby and I needed $6100 net income to pay our bills per month.  We were never extravagant BUT that’s what we needed to afford our mortgage, two kids, two cars, two tuition payments.  Today, DH and I live the same type of lifestyle minus the two kids, a mortgage, credit cards or two car loans and our expenses are only $3400 net income per month.  Instead of increasing our lifestyle, starting in 2001, as our youngest entered freshman year in college (and after the 2nd stock market crash of our lifetime) we embarked on downsizing.  Each and every year we lower our bills.  Nothing too drastic, mind you.  Time is on our side.  I want to make the transition enjoyable.  What’s the rush?  We’re not competing with anyone, are we?

Let me give you another example.  One of my favorite, fellow, early retiree blogger was touting her retirement fund, which took a 20% hit back in 2008 (the year of the beginning of The Great Recession) and was happy to report that after five years, now in 2013, her retirement account is back up the 20%. She’s back where she left off. Me, on the other hand, in 2008, much to the chagrin of practically every financial adviser I have ever known (including Dave Ramsey and Suze Orman) invested my money (for argument’s sake, I’ll use the dollar figure of $100,000) in FDIC Roth IRA CD’s instead.  At that time, if I locked in for 10 years, I’d earn 4% on my money (tax-free because it’s a qualified retirement investment).

Fast forward to today, five years later, and my little CD is worth approximately $121,665.28.  That comes out to earning 21.665% so far.  It never went down twenty percent ever (like a knuckle-cracking $80,000) as my fellow blogger’s investment did.  I never lost any sleep.  I never had to downsize my life any more than I wanted to in order to make up for the paper wealth-gap ‘loss’.  I don’t have to take any risk in order to make back what I lost. For in reality, the 20% my fellow retiree boasts she earned, when you divide that number by the five years, turns out she earned 4% every year anyway.  But with more drama.

My fellow blogger explained to me that she has to invest in Wall Street and take risks because she has to earn at least 2.5% on her money in order to keep up with inflation. No you don’t, thought I (but never told her).  You just have to keep tweaking your expenses and lower your overhead, thought I again.  She just bought a new couch and without asking her, I knew she got it retail and I knew she paid full price.  By just shopping around and either buying floor models or discontinued styles (which is what I have always done) the money saved on the couch would surely have gone a long way towards taming inflationary expenses.

I always wanted to be as wealthy as the next guy/gal but I wanted it to be painless. I always wanted to retire young and I did (at fifty).  Contrary to what all those financial wizards advise, you do NOT need a million-plus bucks in some Wall Street brokerage house making some fiduciary smuck richer than you thanks to those hefty fees they charge you. Gradually learn (and enjoy) to live on less and get ready to find out what is really important in your life.  It ain’t no couch.  And it ain’t stress.

Live well and prosper.