Money talk: finances as an older single woman

I’ve decided to write more about money this year, so let’s kick this off by setting the stage and outlining some key facts about me.

  • I’m 50 years old.
  • I’m single. I was married, but divorced nine years ago.
  • I have no children, and my only current dependents are a fish and an elderly dog.
  • I’m entirely self-supporting; I don’t receive or pay alimony, or have access to family money.
  • I’m not a financial planner, nor do I work in financial services. I’m not a “money expert.”

In the personal finance and money blogosphere, there aren’t many single women aged 40+ who are writing. I can think of only two: Donna Freedman at Surviving and Thriving, and Funny About Money.

While I don’t consider this a personal finance blog, money — making it and managing it — is something that I’m always trying to learn more about, and I find value reading the personal stories, opinions, and research that is shared via blogs. So, here I am perpetuating that approach with my own personal slant.

My money goals are as follows:

  • Generate enough income to pay for my basic expenses of housing, food, and personal care;
  • Maintain a generous emergency fund;
  • Save enough to support my future self during retirement, or when I’m no longer able to work full-time;
  • Support my animal dependents;
  • Have some extra funds for fun stuff and luxuries like vacations and fancy meals.

Those are just the basics for now. Off the top of my head, I’m planning to write posts about income generation, my savings and strategy, and lifestyle choices that impact my budget. I also occasionally add tweets to the #1GoodMoneyThing topic started by Revanche at A Gai Shan Life.

Are there other topics you think I should explore? Do you know of any other older single women writing about how they handle money (such as saving and investing, budgeting, etc.)? If so, please add to the comments.

Happy New Year!

Money talk: loans to family and friends

After reading this post by Revanche at A Gai Shan Life my first thought was that I’ve never loaned money to family, so I can’t comment on the experience. Then I realized that wasn’t true at all, and that I could write a fairly lengthy comment in response to her post. Since I’ve been trying to get myself to write more blog posts, I decided that my response was better done here.

My one experience with loaning money to family didn’t turn out so well for me. When I was 15, my father asked me to loan him the contents of my savings account. As a minor, he probably could have taken the money out of my account without checking with me, so it was nice to have him ask me first. Of course I said yes because this was my Dad, after all. My hazy memory pegs the amount he borrowed at $6,000.

The only reason I had any money in my savings account at that time was because of my maternal grandfather. Every year he gave me and my sister a savings bond for Christmas with the stipulation that we could use the money for either a wedding or college. As the bonds matured, the funds needed to go somewhere, so my parents created savings accounts for us at my father’s credit union and put the money there. In today’s dollars, that $6,000 would be worth about $15,000, so it was a pretty substantial amount for me to have in savings at a time when I wasn’t even old enough to be earning a real paycheck.

Dad wanted to borrow the money so he could do a little real estate investing and flip a house or two. He got the idea in his head that he could do this pretty easily by pooling funds with another neighbor and doing the labor on fixing up the house themselves. I don’t know the details of why he didn’t make the profit they had projected, or even if there was any loss involved, but the payback to me didn’t work the way it was supposed to. There wasn’t any documentation of this loan or even a timeline for repayment discussed, but it was understood that I’d get the money back PLUS interest in time for me to use it for college, so he had about three years to pay me back. At this time (1982-1985), interest rates for savings accounts were around 8%, so I should have been reimbursed about $7,500 in 1985 dollars (nearly $18,000 in today’s dollars).

In those three years, our family life disintegrated, though. Dad and I started clashing on typical teenage stuff; I wanted to date boys and Dad wanted me to stay away from them until I was 18, apparently. The close, warm relationship I had with my dad as a child vaporized. My parent’s marriage — which had never been very happy or close from my recollection — disintegrated completely to the point where Dad moved out in my last year of high school, and I was left living with my Mom. (Because my mother is not the most emotionally stable person this was a very stressful time for me, but that’s not something to go into here).

So there I was at 17, wanting to get my money back so I could head off to college, and Mom and Dad in the midst of divorce negotiations. Dear reader, I think you can see where this is going: Dad tried to default on the loan.

Actually, the loan would have been considered a marital debt that both of my parents needed to document during their divorce. Whether my parents had the money to pay me back or not wasn’t material, apparently, since they were still in the early stages of negotiations at the point where I needed my money, and both attorneys were counseling that this was not something that could be addressed at the time.

Mom insisted that I needed my money, and actually lost her attorney over this issue since she continued to push on the issue at every meeting despite the attorney telling her to stop. I did eventually get SOME of the money back by the time I needed it for college. I didn’t get all of my capital back, much less any interest, but I was told that was the best I could expect and to just accept it. So that’s my story about lending money to family: I got screwed.

On the other hand, I have lent money to close friends twice in the past 10 years or so and been paid back in full. For both of those loans we talked about expectations for repayment and a promissory note was signed.

I also invested money in a friend’s business a few years ago and recently learned that the business has folded. At the time I invested the money I knew I was taking a risk, though. The lost investment is going to be a capital loss on my taxes over the next few years, so it’s going to be put to use, in a way.

I think what is more important to me is the fact that my own father has never once apologized for not paying me back, or for not recognizing how his actions impacted me.

Dad did another shameful money grab at the time of the divorce, too. A few years prior, he had set up an account at his credit union that he held jointly with my mother’s uncle as a way to pay back a personal loan great-uncle gave to my parents. During the divorce negotiations, Mom documented the loan in their joint debts, and the savings account in their joint assets. She had no access to the records for that savings account since her name was never on it and Dad denied its existence. When great-uncle (whose name was on the account) tried to access it he was advised it had been closed. The best estimate was that there was roughly $10,000 in the account at the time.

So Dad not only screwed me over, he also screwed great-uncle over, and my mother, too, since she was held responsible for half of those debts while he hid away the money to repay them from his asset statement. Is it any wonder I often say that my parents are best dealt with from a distance?

To end on a somewhat positive note, though, I have come to understand that my parents are only human, so any disappointments I have in their past or present behavior is tempered with this mindset. Nonetheless, I will never trust my father with my money or my mother with my deepest emotions.

A little PF

That stands for “personal finance” for those of you who may not know.

Last month I earned $44.36 for doing nothing. That’s the interest I earned on my “high interest online savings accounts.” These days, 1.10% is considered high. Sheesh. I could move some of that money to an account earning 1.40% interest, but I’m not sure the small gain is worth the time. We’ll see. Either way, I am reaping the benefits of compound interest. The previous month I made less than that, but every month the amount grows little by little.

The (small) joy of compound interest is one of the things I’ve learned in recent years. As soon as it became apparent that I was headed for divorce, I started searching out and reading personal finance blogs. I wanted to learn all I could about how to budget and live frugally as I was quite intimidated at the thought of handling a house payment on my own.

Before I got married I had very little money saved, although my debts were fairly low, too. As I recall, I had about $2,000 in credit card debt and about $3,000 in student loans. The credit card debt came about because I loved to travel, yet made little money in my job at a non-profit human service agency. I had taken a few (relatively) cheap trips and just charged the expenses to pay off later.

I guess this made my ex-husband nervous, because he was extremely reluctant to establish any joint accounts with me. He reasoned that the most important thing for us to focus on was paying our fair shares towards household expenses and it didn’t matter how we accomplished that goal. He ran some calculations to determine who should pay what so we came out proportionately even.

We had some spats about money and it took five years of marriage before he agreed to open any joint accounts at all. We finally set up a money market account for our emergency fund and then calculated how much each should contribute to it, again based on that proportional formula. We also set up a joint checking account at the same time but he never used it. Since his share of expenses was to pay the mortgage and I picked up everything else (food, utilities, household stuff), he didn’t see the point of cycling his share through the joint account.

I learned about the comfort of having emergency savings from him, but over the years I realized he wasn’t the money whiz I had thought he was. He never seemed to make his money work for him and just didn’t want to set any goals around savings. He just wanted to save, because it was the right thing to do.  

Through my judicious reading of personal finance blogs — including the comments — I’ve learned much more about how to make my money work for me. It is a great feeling to have emergency funds available in case something catastrophic happens, but I also have savings goals. In addition to the emergency fund account containing several months of expenses, I’ve created two other targeted savings accounts through my online bank (FNBO Direct): the “big-ticket” fund for the eventual expense of replacing my aging car or the roof on the house, and; the vacation fund, so I don’t fall back into those old, old habits of incurring consumer debt so I can take a nice trip.

I often look at online travel sites to figure out just how much I’d like to accumulate, but despite not having a firm decision on where to take my next big vacation, I’m still adding to the account and enjoy watching it increase over time. Checking my monthly statements and seeing that the account has gone up a few dollars with no extra effort on my part is a very good feeling.

I’m careful not to over-commit in one direction or the other around money, though. One phenomenon I’ve noticed is that some people seem to get a little crazy over number crunching and stockpiling their funds. (Most of these folks are men, for whatever reason.) These people tout “financial freedom,” which seems to mean they have no debts at all. They pay down their mortgages as fast as they can and preach about their money habits and hacks that allow them to squeeze their budgets down to insignificance.

I don’t understand this approach any more than I understand the folks who continue to spend themselves into bankruptcy or keep huge balances on their credit cards. I suppose I’d call myself fiscally moderate: not spending too much, not saving too little. It’s a nice place to be.