I have made some dumb financial decisions in my 20’s but one thing that I have done correctly is plan for retirement. I have no idea what inspired me at 21 to start saving 10% of my income but I did. A few times I have considered taking a distribution from my retirement accounts but thank goodness I never did. I promise up until the last few months I can honestly say that saving for retirement is the only smart thing I have done financially!
I was making really good money at a young age and still racking up credit card debt. And then I bought a house and a car I didn’t need at 22. I like to think I learned a lot of life lessons at a young age and now I am a pretty frugal practical person. I’m not sure if that’s good or bad, but it is what it is.
So back to thinking about retirement. My husband and I want to retire at 55 and maybe farm or something to keep us busy. He says that he will work my job is handling the money to ensure we can live it up with an early retirement.
So we ran into a dilemma today. A good dilemma, a situation that really made us think. I was just informed yesterday that I am receiving a settlement on a retirement account because of a lawsuit. I wont bore you with the details but it added and extra $18k to one of my accounts. YAY! I’ll take it and I wont complain at all. But they are making me do something with it I can’t just leave it with my other account. Actually I can but they don’t advise it, because there wont be any real gains on it so its smart to roll it over into a better performing account. OR I can cash it out, but I will pay taxes and penalties. I told my husband about the news and both of our brains started working over time. If we cashed it out after taxes and penalties we’d have about 13k… that would be a good chunk of money to throw at our debt snowball. It would get us much closer to paying off that travel trailer.
We were talking ourselves into cashing it out and then we both stopped. I looked at him and asked, “Would we cash out a different retirement plan to pay down this debt?” He said “No” So I said “Then we shouldn’t cash out this settlement retirement account.” He agreed. Its free money so we want to take it and run, but we shouldn’t, so we aren’t.
See how responsible Dave Ramsey has made us. It didn’t even cross my mind to take that money and use it for new carpet, or a vacation or anything else that would have been fun. Completing baby step 2 is all I thought of. (I secretly hate him right now!)
Now we are just a tad bit closer to our dream of retiring young! I can see us now riding our horses into the sunset! Just 26 more years to go.