Of our many mistakes with money, one that is particularly ironic has to do with housing. The irony is due to the fact that our mortgages have been, by far, our largest debts in our lifetime. Yet, by having had so many of them — each with a break in between — we’ve been temporarily debt free several times.
By the time we had been married for 20 years, we had purchased our fourth house with our fourth 30 year mortgage. It’s not like we’ve ever had to move due to some compelling outside reason like a job transfer or being closer to an ailing loved one. In fact, none of our homes has ever been outside a ten-mile radius from our first. Each time, we had different reasons that prompted us to leave. They were generally the wrong reasons and, being honest with ourselves, they generally shared a common theme.
When you look at an intricate painting, you tend to notice different things, depending upon your present perspective and what element currently holds your focus. I’ve learned that hindsight is very similar; events look very different as the lens through which you view them evolves. When I started sharing my experience leaving a pension behind, I ended with the question “would I do it again?”. In that post, I was focused on the long-term financial impact. I do realize even pensions aren’t guaranteed; in fact, the one I left had already ended as a benefit for new hires, though it is still in force to this day for those who were already covered. This knowledge made gauging the financial impact of leaving pretty straightforward. Even though financial ramifications are certainly of great import and, likely of great interest to those reading this blog, they are just one piece of the puzzle.
While cashing in the 401k was probably the most blatantly stupid financial decision, another decision Mr. Frugal Source made for the wrong reasons is in competition for the greatest negative impact on our ability to retire “early”, and possibly eclipses it.
When I was a relative youngster (mid 20s), I found a secure job writing software for a bank. This was the same job I left just before cashing out the 401k. The cash-out notwithstanding, the decision to leave that employer, in it’s own right, hugely impacted our retirement timeline. Why is that? One word. Pension.