Jackie Cummings Koski has been a member of her local investment club for 11 years and is now on the board of directors, but when she started she had little money for her name and no clear path to financial freedom.
Koski joined the club to improve her investment knowledge, but it was also where she was able to openly talk about her divorce and find meaningful ways to provide security for herself and her young daughter. Each member became a mentor to her, and the discussions were engaging. “It was all very inspiring,” he said.
Joining the investment club, along with following a budget and spending well below your means, has made the former saleswoman financially independent. In the past 11 years, the single mother has gone from $ 20,000 in her 401 (k) at the time of her divorce to $ 1.3 million, and is now a financial advisor to others. She achieved financial independence at age 46 and retired three years later.
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Mentoring, either individually or in groups, can be crucial to achieving goals. Connecting on a personal level helps. When Koski works with his clients, including high school students and those in underserved populations, he talks about growing up in rural poverty, with a single father who had a sixth-grade education and was raising six children.
“All of those things influence how difficult it was at first,” he said. “Moving from poverty to being financially independent – that’s a path that most of the people I’m working with can get on and connect with.”
The FIRE movement, short for “financial independence, early retirement,” has no shortage of inspiring stories about people who cut their expenses in half, cut their homes, or took numerous jobs to save as much as possible. But not everyone can follow that path. Some FIRE bloggers may not be aware of the subtle advantages they had growing up, such as starting in a middle-class family or living in an area with public transportation to get to the library or a job.
However, Koski has followed some of the pillars of the FIRE movement, such as cutting spending and investing much of the rest. As a sales representative at LexisNexis, his salary varied from year to year with an average of about $ 80,000, but he spent between $ 40,000 and $ 45,000 a year and saved the rest.
The early retiree noted that this would not be possible everywhere: she lives in Ohio, where home prices are not as high as some major centers like New York City or San Francisco, so her mortgage, taxes and insurance amounted to about $ 1,000 a month. Still, she was careful with her money. She would buy a luxury vehicle, but one that was three to five years old and priced at half what it was when it was new. She worked only a few miles from her home, so gasoline was not a big budget item. She did not deprive herself of spending on food and went out to lunch or dinner.
“I didn’t design my life to live on $ 45,000,” he said. “I went back and found that my expenses were $ 45,000.” At the same time, she was maximizing all of her investment accounts, including her 401 (k), individual retirement account, and a health savings account.
It is important to immerse yourself in an environment that supports the same values and goals. Koski was the first in her family to graduate from college, and she didn’t have many sources of financial advice when she started, so she figured it out on her own. “By changing my environment, I was exposed to different things,” she said.
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The COVID-19 crisis has the potential to worsen future retirement security, and in some cases has already impaired the current well-being of Americans, but people can take advantage of this time to learn more about money and their own personal finances. Koski said. People can turn to the internet, books, or even an investment club (socially estranged, of course) for more information on savings, budgeting, investing, and personal finance.
Savers can also use this time to reflect on what works financially, what doesn’t, what goals they would like to achieve, and delve deeper into why they behave the way they do with their money. Breaking down what it would take to achieve that goal is a revelation. For example, Koski tells students and aspiring investors that saving $ 50 a week for 40 years can bring someone $ 1 million.
“You are not going to save or invest unless you think it will make a difference in your mind,” he said. “It can take a while to really understand things like me, but it happens, and when it does, it’s very, very powerful.”