A Story About Paying Off Debt and the Obstacles Along the Way

Finances After 40 #6: Saving On A Single Income (Kate's Story)

Photo by Nicole Harrington

Welcome to the 6th installment of Finances After 40! This week, we're featuring Kate from It's A Kate Life. Kate is in her early 40s. She works in corporate accounting, is a devoted cat friend (see below - GOOD HUMAN ALERT), and has a wealth of actionable advice to share. She's living on a single income and is absolutely acing the whole saving-for-the-future thing. I've been following her for a couple of years on Twitter, so I was thrilled when she volunteered to contribute to this series. I knew she was a badass, but I was not really prepared for this level of badassery. You'll see what I mean...

Take it away, Kate!

About Kate


I live in the Twin Cities (Minneapolis/St. Paul) in Minnesota. I’ve lived here my entire life. The quality of life is good overall, but the past few winters have gotten me thinking about other places I’d consider living that aren’t quite as extreme. It’s tough enduring winter temperatures around -20 and summer temperatures that can reach 100.

I’m single and don’t have any kids. My family consists of my parents (still married after 52 years!), an older brother and a sister-in-law. My parents also live in the Twin Cities and my brother and his wife live in Wisconsin.

Most of my career has been spent doing corporate accounting, although I’ve also worked in finance. I’ve worked across many industries including retail, medical supplies, advertising and education. I’m a numbers person so this career has suited me well and I wouldn’t change anything. I have a Bachelor’s in Economics and an MBA.

I was a homeowner for 18 years and sold my house in April. I now rent an apartment and chose to put the proceeds into a savings account in case I decide I’d like to buy another house in the future. So far I’m enjoying being a renter, so I don’t foresee this happening.

"Ten years ago I had a negative net worth and now my net worth is about 21x my current expenses."

I have one cat, who is diabetic and requires insulin injections every 12 hours. He was diagnosed 3.5 years ago and it drastically changed my life. Because I don’t trust anyone else to care for him and I live alone, I haven’t taken any trips since 2015 and my social calendar is coordinated around his feeding and shot schedule. Fortunately, my employer is understanding and knows that I can only be in the office during certain hours. I adore him and don’t view this as a sacrifice. He’s not going to live forever (he’s almost 14 already) and I’m happy to do whatever I can to give him the best life possible.

I’m in a great place financially. Ten years ago I had a negative net worth and now my net worth is about 21x my current expenses. My salary (including an annual bonus) is enough to max out my 401k, Roth, and HSA and still allow me to put a little bit of money into a brokerage account each payday.

Although I might consider myself FI at 25x expenses, I wouldn’t pull the trigger on early retirement until I had at least 33x expenses. But rather than use a basic calculation, I have an Excel file the projects all my account balances through age 55. Seeing the account balances each year provides a better illustration than using a simple multiplier.

Looking Towards The Future: FI Goals, Medical Costs, And Living Arrangements


Medical costs never crossed my mind when I was younger. I just figured that insurance would always be good enough to cover any kind of medical expense. As we’re seeing with increased costs and the decline of insurance coverage, this just isn’t the case anymore. This is the one thing that actually keeps me up at night and I really hope that there are changes that make healthcare affordable for everyone, not just the wealthy.

"The idea I’m trying to pitch to friends is that we should all live in the same building so we can help and keep an eye on each other, but still maintain independence and privacy. A few friends joke that we should buy a house together, similar to the Golden Girls, but this is something I’d actually consider."

While my parents are doing fine financially, I consider them to be an indirect impact on my finances. The main reason I want to pursue FIRE is to give me the option of leaving the workforce so I can help care for them and spend more time with them. They’d be in their mid-80s if I retired at 55. I never want it to be a question of whether I should continue working or leave the workforce to help them. They always come first.

I also never thought about what would happen as I got older and couldn’t live independently anymore. I don’t have plans to marry and I don’t have kids to care for me, so this is something I’m still trying to plan for. The idea I’m trying to pitch to friends is that we should all live in the same building (either renting apartments or owning condos) so we can help and keep an eye on each other, but still maintain independence and privacy. A few friends joke that we should buy a house together, similar to the Golden Girls, but this is something I’d actually consider. One friend plans to buy property in Oregon and has offered to let some of us put tiny houses on it. I’m glad that we are having conversations now and really happy that we agree that we’re all kind of in this together. As the cost of aging increases, it’s important to adopt a community mindset.

I’m really fortunate that I’ve been able to save and invest as much as I can. My main challenge is ensuring I’m doing enough and allocating my money effectively so I can reach my FI goal. Taxes are on my mind, as far as wondering if I should reduce my 401k contributions and put that money into my brokerage account while tax rates are low. There are so many scenarios and variables to consider. I’m sure in the end these things won’t push the needle very much, since contributions matter the most.

I’m hoping to reach FI by the time I’m 50 and I’d like to have the option to retire by the time I’m 55. Of course, healthcare will play a major role in this decision. I have an autoimmune disease that’s easily managed now, but it’s entirely possible that I’ll develop another one or inherit one of the many health problems my parents have (i.e. type II diabetes, glaucoma, high blood pressure). Because of this, I might be forced to continue working until I’m eligible for Medicare.

"Women this age are in the 'sandwich generation,' so they’re often caring for kids and starting to help care for their parents. It’s not hard to understand why they feel stretched so thin financially and in regards to their time."

Hopefully investing as much as I can and being conscientious of my spending will be enough to get me there. How the market acts during this time is completely out of my control.

Reflecting On Past Choices


I really wish that I hadn’t spent as much money in my 20s as I did. Shopping with friends was an easy pastime and I constantly gave into peer pressure and the idea that it wasn’t a big deal because I’d make more as I got older. Not only was it a waste of money, but it bothers me to think of the environmental impact as well.

I’m really proud that I’ve always contributed to a 401k. At some points, it might have only been 1% (i.e. when I first bought my house) but I always put something away, no matter how small. I’m mostly proud of paying off my house within 14 years of buying it. Beyond that, I’m proud of constructing a life where I can contribute the maximum limits to my 401k, Roth, and HSA and still live a great life.

Perspectives On Finances After 40


One of the easier parts of being older is that most of my friends don’t want to spend a lot of money when we get together. They have other expenses (mainly kids) and I’ve benefited from this. So, as someone who is single and childless, I only have to think about myself. My main concerns are the cost of healthcare and the possibility that my parents will need money for a nursing home in 10-15 years.

"For the single and childless, we have the challenge of saving enough money on a single income to ensure we can retire comfortably and pay for expenses for care when we’re in our 80s and 90s."

Women this age are in the “sandwich generation,” so they’re often caring for kids and starting to help care for their parents. It’s not hard to understand why they feel stretched so thin financially and in regards to their time.

For the single and childless, we have the challenge of saving enough money on a single income to ensure we can retire comfortably and pay for expenses for care when we’re in our 80s and 90s. It’s also important to ensure we have a good support system as we get older. It’s easy for friendships to fade as your friends get married and have kids, but the key is to be flexible and understanding to help keep these friendships going.

Kate's Advice And Recommendations


Always save money, no matter how little it is. Think about what you want your future to look like and take steps to help you get there. While it’s fine to anticipate getting married, don’t include a second income in any of your projections. Know that there are so many other ways than the traditional idea of working until you’re old enough for Social Security. You have the ability to create whatever life you want, as long as you have the determination to get there.

"Always save money, no matter how little it is. Think about what you want your future to look like and take steps to help you get there."

As polarizing as she is, Suze Orman can be credited with helping me turn my finances around. I watched her show every week on CNBC in the early 2000s. What I like best about her is how she makes the connection between emotions and money. My favorite Suze-ism is “When you feel less than, you spend more than.” She taught me to identify how I’m feeling if I get the urge to spend money on a want. If it’s boredom, I snap out of it immediately.

Mr. Money Mustache can be credited for teaching me about FIRE, specifically his post titled The Shockingly Simple Math Behind Early Retirement. This was intriguing to me and drove me to learn more, which lead to so many blogs: Root of Good, Go Curry Cracker, Our Next Life, and lots more.

For books, I’m a fan of The Simple Path to Wealth by Jim Collins (I’ve given this to a few people as gifts) and Work Optional by Tanja Hester.

When I was starting out, I would go to the library every week and pick out 5 books from the personal finance section. Now there’s so much information in the form of blogs. I’d urge people to seek out blogs that not only represent where they currently are in their financial journey but also read blogs representing where it is you want to be.

Where To Connect With Kate


Twitter: @itsakatelife
Blog: It's A Kate Life
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9 comments:

  1. Thank you so much for giving me the opportunity to share my thoughts!

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  2. This is awesome. Congratulations on doing so well with your money -- you're totally on track and it's very impressive. As a fellow single/no kids person I spend *so* much time thinking about/strategizing about the future. And I also have aging parents that I want to see more of (I'm jealous that you're in the same area. I either don't see my parents or we share a house for a week, and the latter is kind of a lot/stressful. I'd love to be able to just drop by for an hour or two.)

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    1. Thanks! I'm curious what other single/childless women are planning for their futures and would love to hear your thoughts :)

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  3. You are rocking it and congratulations for always having invested in your 401k, regardless of the amount at a given time. Also, I can relate to the 12 hr injections you need to give your cat for his diabetes. My first cat Winnie also had diabetes and she would fight every injection. Unfortunately she declined rapidly, lost a lot of weight and we had to send her over the rainbow bridge to spare her further pain. Enjoy all the time you have with your little guy.

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    1. Thanks Kassandra! I'm so sorry to hear about Winnie. It's kind of a blessing to be "forced" to spend more time with my cat. It's a great excuse to ensure we get as much time together as possible. No matter how long they're with us, it's never enough. I'm fortunate that he does well with the injections so I'm hopeful that we still have a few more years together.

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  4. Great to learn more about your backstory Kate. I'm in awe of how you can cope with those temperatures - such an extreme variation!

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    1. Thanks Ms. ZiYou! I saw a local meteorologist tweet recently that we've had a swing of 170 degrees from the lowest windchill in January to the highest heat index so far in July. It's crazy here!

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  5. My in laws have a diabetic dog on a similar schedule, so I feel for you there! My MIL watches my son twice a week, so I have a hard stop time I need to get home so she can get back to her pup. It’s a serious commitment.

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    1. It's interesting how many people have diabetic pets -- I had no idea until my cat was diagnosed. It's definitely a commitment but I'm more than happy to care for him since it means he's still with me. I'm glad to hear your in-laws are willing to do the same.

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