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Our now financial behavior is the result of many factors and one for sure is our prior experiences from long ago, either what we learned from our parents (i.e. their financial dysfunction) or something we learned ourselves in our long journey of attending the financial school of hard knocks.
I thought I'd start this topic discussion to see if some good sharing results so we all learn from it. I'll start the ball rolling to hopefully get it going. I ask this question in the context of those who are retired or contemplating retirement and find themselves having a financial skeleton or two in their emotional closet that shows its ugly head in retirement planning or retirement living behaviors.
When I was a soldier in the Army stationed in Korea, I'd go to the BX (Base Exchange) there and they had a Harley Davidson motorcycle on display that I would adore. I made a promise to myself that upon discharge that I would buy one.
When I was discharged, I went to the local dealer to buy one and was told that I would need a co-signer for a loan. I asked one of my parents if they would co-sign and they said yes they would but unfortunately that didn't get the job done and I was denied the loan.
I was disappointed.
I think in some way that event left a lasting impact on me because I've always found borrowing stressful. And being self-employed, it was always challenging particularly during the early years of being in business.
Now it's no problem whatsoever and I'm probably done borrowing but about 11 years ago when buying an expensive home, I had occasion to apply for a large loan. While my numbers all pointed to me having no problem and that was my case, I still privately had worries about the underwriting process as it was taking place.
So this is my yesteryear financial scare that lives in my emotion today.
So how does this impact me in my retirement planning?
There may come a day when we need to take out a short term loan to purchase a retirement home before we sell our existing home. While the numbers would support such an action, otherwise we wouldn't pursue it, I'm sure I would find a new borrowing experience to be stressful
By the way, I never bought that motorcycle nor did I later in life when I could easily afford to pay cash for one. So my motorcycle memories are limited to the Honda 450 that I owned in high school.
I assume you meant to post in the personal finance forum?
Actually no because I was thinking about behavior that still lingers today for those who are retired or contemplating retirement but I do agree that this topic perhaps better belongs there. Thanks for asking.
borninsac: IMHO, I believe you are posting in the correct place. You are asking about how it affects retirement planning/living.
I don't think I truly understand the problem. I've made a mess out of my financial life. Some through legitimate reasons, others through foolish spending. Credit card is my enemy. It took me a long time to wake up to what a mess I have and that I am responsible for cleaning it up.
You seem to have the awareness from your long ago experiences. Now you seem to have been quite successful. I wonder how that one dark experience can continue to ruin the light of your successes.
It's faulty thinking. Perhaps some counseling would be helpful?
I took a big loss in the market drop in 2007 2008. Later I got a financial advisor as protection. He is redicously expensive but I figure as long as I'm ahead after his fee I'm doing better than I would otherwise. Right now though he isen't doing too good.
borninsac: IMHO, I believe you are posting in the correct place. You are asking about how it affects retirement planning/living.
I don't think I truly understand the problem. I've made a mess out of my financial life. Some through legitimate reasons, others through foolish spending. Credit card is my enemy. It took me a long time to wake up to what a mess I have and that I am responsible for cleaning it up.
You seem to have the awareness from your long ago experiences. Now you seem to have been quite successful. I wonder how that one dark experience can continue to ruin the light of your successes.
It's faulty thinking. Perhaps some counseling would be helpful?
I did make some edits after the one poster commented about how this topic may better belong in another forum so I think him/her for the comment.
In my case, my father died when I was 21, and he was 57. Mom was 53 and a typical stay at home mom. His death plummeted us into near poverty. Watching my mother struggle scared me. A lot. It also scared the man I ended up marrying.
That really made think about retirement at a very young age. Add to that, we married when the economy was changing. Steel crashed, took our area with it, pensions went away, and we pretty much knew we were never going to high wage earners. I developed a plan. Each deposit into savings was a step towards independence. We don't have millions, but we're set.
And my mom? A child of the Great Depression, she took those lessons learned and used them again. When she got through the loss of my dad, she was fine. Shopped smart, cooked...taught me a lot of frugal lessons....
Yes, there are "yesteryear financial scars" that live in our emotions today. However, the scars are not ours. They were the deep scars left on my PIL's psyches by the great depression and my parents' psyches by major events in their lives.
Having seen both the benefits and the heavy burdens of these scars on their lives have taught us to prepare for the future but also to enjoy living the moment. However, this is a delicate balance and we have found ourselves prone to leaning too much to the cautious, conservative side.
Now in my retirement, in looking back at my life, I have very few regrets. Although these regrets were small, I wished that we had 'lived' a bit more, that we had more interesting trips and doing more exiting things with our daughter when she were young instead of waiting until we were more financially secured after she had gone to college!
I would say that the past scars of the previous generations still affect our emotions today but in a positive way. I find myself more relaxed, not too uptight about spending/giving, not worrying about financial market fluctuations or getting upset about unexpected expenses. I have always loved the phrase "Que sera sera", but find that my mind is a lot more in tune with this sentiment now than before my retirement.
My grandfather was born in 1899 and lived through the great depression. And because of that experience he would never borrow any money, for any reason, and was, I thought, overly conservative about his investments. He had stocks, but I guess about 70% of his portfolio was in bank CDs. Inflation over the years didn't help. Watching that affected me to the point that I vowed not to be so conservative. Save your money and the Fed will just steal it from you.
On the other had, I've learned some hard lessons by taking too much risk. On several occasions I've seen $50K or so disappear in a matter of minutes. I've made that and more on other investments, but now that I'm retired I'm not so reckless.
My financial scar from the past that affects me today is that up until about 40, I was always poor. I lived paycheck to paycheck and that nicer car or nicer apartment was always just out of reach. Fast forward to now, I'm 63 and my business has been very successful. I could easily retire with the money I've been able to save & invest. However, the very thought of no new money coming in every month scares the bejeezus out of me because of the fear of being poor again even though that would be almost impossible given my current position. Consequently, I know that I will never retire. When I've had a tough week of work and start complaining as we all do, friends and family will say, "why don't you just quit, you can afford to". I smile and tell them that I love what what I do. While this may be true, the real reason is that fear from the past.
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