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As far as couples are concerned, we’re pretty different.
Mrs. r&R can bang through a stack of books in a week while Mr. r&R would rather binge watch documentaries and PBS nature films. Mrs. r&R grew up in the South with a sibling in a comfortable dual income earning household, while Mr. r&R grew up an only child to a single parent in Brooklyn, NY that fell juuust short of comfortable.
Recently, the differences in our parents and the role they play in our lives has been in the forefront of our minds. On one hand, Mrs. r&R’s parents are building their forever home; a beautiful custom ranch-style property with more than enough space for them and their growing set of grandchildren. On the other hand, Mr. r&R’s Mom is not doing so well financially; and she’s not alone. According to a recent Forbes article,
“The average white family had more than $130,000 in liquid retirement savings (cash in accounts such as 401(k)s, 403(b)s and IRAs) vs. $19,000 for the average African American”.
Like a lot of people, she was devastated by the ’08 Recession, losing significant value in her home, being downsized at her job and having to tap into her retirement savings early to get by. That, combined with bad luck and a handful of poor financial decisions have put her in a situation that can only be described as walking on thin ice. While most people who had investments did well in the post-recession recovery, her investments were largely depleted because she spent the money to get by.
A few years ago, this all came to a head as she decided to retire. She didn’t really have a plan for how she would spend her time and wasn’t 100% sure how she was going to get by on just her Social Security check, but she opted to walk away from working at the tender age of 71. After decades of working, [at times two jobs] she finally called it quits. But it was clear this was no storybook career ending with a golden chariot ride into the sunset.
Given all we’ve learned on our journey to financial independence, we sprung into action and had an intervention. Not some dramatic, made for TV plea to change her life but an honest, difficult and intentional step over her boundaries to build and put a financial plan into action. After some initial resistance, she agreed to listen to us. We helped her wrap her head around her debts, liquidate her savings, understand her spending habits and create a budget. When it was all said and done, we gave her a simple plan to follow and a few weeks later for the first time in her life she was completely debt free.
As an added bonus, we agreed to pay her to be the primary caretaker of our son so she could earn some money to supplement her social security. It was a win-win for everyone. But now that our son is in daycare, we knew we would have to keep our eyes open for cracks in the ship and low and behold, a few weeks ago a big one appeared.
Long story short, due to the heavy rain we’ve experienced over the past few weeks, her basement has been leaking water through cracks in the foundation. At the same time, she received an offer from Opendoor outlining how they would buy her home. After following up, she quickly received an official offer on her home and is likely to accept it since the proceeds from the sale would give her some much needed breathing room.
While she loves her home, she’s admittedly reached a point where the upkeep and costliness of repairs is simply not something she can absorb anymore; particularly as a single woman. The problem is, there are no solid solutions on the table for where she would live afterwards if she sold her home.
Right now, we’re exploring moving into a a smaller house/condo, renting an apartment, moving into a senior residence community, living with a friend or some type of temporary space until we figure it all out. Of course, simply keeping the house and dealing with the repair is an option as well.
Why are we sharing this?
Well, more than anything, it’s to highlight that we deal with real issues too. Having more money than most doesn’t mean all our problems or our family’s problems go away. Secondly, Mr. r&R’s Mom is one of millions of single older American’s that are financially insecure. At any moment, an unexpected medical bill, prescription, car repair or home repair could send them into a tailspin. But on a deeper level,
At a moment in our lives where we want nothing more than to spread our wings and fly, we’re cautious because we have to consider carrying a heavier load than expected from the ghosts of a parent’s past.
This is also one of the reasons why we despise the common question/greeting asked among members of the FIRE community…”what’s your number“? This is a reference to the target value of our nest egg that will officially consider us FI [financially independent]. It’s a fair question but one that feels a bit difficult for us to answer because our number isn’t just “our number”.
Our number has to support us, our son, potentially another child and potentially an aging parent who is struggling financially. This dynamic isn’t isolated to communities of color but they do impact those communities at significantly higher rates than our white counterparts because of the history of racial and wealth inequality in the US.
We may all be lined up to run the same mile on the same track on the same day. But significantly more people of color have high hurdles to jump over and parachutes strapped to their backs than their white counterparts.It's not that Black people don't understand the formulas, it's that they have more variables in their equation than others. Click To Tweet
We also share this to encourage our readers to have open, direct and frequent conversations about money with their parents, whether they’re doing well or not. It’s easy to assume they’re doing fine, to respect the boundaries they’ve built or to deal with these matters only when it’s absolutely necessary. However, delaying or avoiding the conversation with your parents almost certainly introduces a mountain of stress into what could have been a simpler conversation. Things are even worse if you add an unexpected illness, death or if some dirtbag has already taken advantage of them.
What does this mean for us?
We’d be lying if we said this additional layer of complexity doesn’t introduce an element of stress in our lives as well. However, it brings us back to why we’re pursuing FIRE in the first place. If we weren’t financially literate then we wouldn’t have the tools or resources to help her. At the same time, knowing that at any given moment, we might have to swoop in to financially support her puts us on edge a bit. Particularly now that we’re down to one income, have incurred expenses to repair our properties and are incurring more to build this platform.
But luckily, we also thought about this years ago. One of the underlying reasons why we were interested in owning rental real estate is because we knew that if we had to, we could always move her into a rental property. While it would cut off some much appreciated cash flow, it would enable her to save hundreds of dollars a month and provide a much needed degree of stability. There are a few options to consider before we even get there but it’s good to have those cards to play if we had to.