Can I Get Rich on a Salary tagged me a while back with a challenge to tell a story of making lemonade from a personal finance lemon. Since iWeb doesn’t do pings or pingbacks, I didn’t notice, and so I have to apologize for running a bit late with this. But…do I have lemons? Let’s raid the tree.
Tartest: is that a word? The tartest lemon I’ve picked to date was when my father disinherited me. He disapproved of my leaving my husband of 20 years, a gentleman I married largely because he exactly fit the description of the kind of man my parents wanted me to marry. While divorce proceedings were under way, my father secretly got together with my soon-to-be-ex and engineered a revision of his will.
The original terms were that when he died, his wife would get the interest from his investments and then, after she was gone, I would get the principal. He had about $100,000.
When I left the marriage, I took almost $100,000 in community property, plus a small amount of alimony and $40,000 of sole and separate property. I had no job. In early 1980s, $240,000 was not a bad grubstake. Relying on what I expected to inherit from my father, I figured I could grow my freelance writing business so that by the time the alimony ran out, in about six years, my earnings plus interest off investments would carry me all the way through retirement. This, it must be admitted, was one of the stupidest ideas to which I have ever subscribed.
Luckily for me, a full-time teaching job came along at a satellite campus of the Great Desert University. It was pure serendipity. Little did I know how broadly God was smiling on me: I had no idea my father had effectively written me out of his will, and, with my pending-ex’s collusion, had done so in a way that I had no chance of breaking the new will. Neither he nor the ex ever told me that he had changed his will.
He died of a stroke at 84. Not until then did I learn that $1,500 a month went to his wife, whom I disliked with some fervor. Her mother had lived to be 103 years old, and so it was reasonable to expect that the widow would live long enough to collect the entire pot and nothing would go to me. By way of delivering one last back-handed slap across the face from beyond the grave, my father made me the executor! This meant I would have to write a $1,500 check every month for the next five and a half years to a woman who had long made a hobby of making me miserable whenever she found an opportunity.
After about five years and six months, the fund would be drawn dry.
Even though I had a reasonably decent job, nontenurable English faculty do not earn much. I was in my late 40s when I started working and contributing to the university’s 403(b) plan, leaving me nowhere near enough time to accumulate a decent retirement fund. Because I had been a society matron most of my adult life, I had few credits toward Social Security; no matter how long I worked, I could never come close to the (modest!) maximum Social Security entititlement. If I was not to spend old age in dire poverty,Ineededthat money.
I called my financial advisor and asked him what to do. He suggested putting it in a short-term corporate bond fund at Vanguard. In the early 80s, the fund was doing quite well, and as investments go, it was conservative enough that no one could say it violated my fiduciary responsibility to the widow. My lawyer revealed that I could pay myself a thousand bucks or so each year as compensation for serving as the estate’s executor, which helped a little.
Each month the fund returned an amount that was about 30% to 50% of the monthly drawdown. Thus although the balance dropped steadily, it did not dwindle to the disappearing point as fast as my father planned.
There was nothing I could do about the will, despite the circumstances in which it was changed. The wife’s daughter was a Superior Court judge, one renowned for making capricious decisions, and so not a lawyer in the county would touch the case. Although several agreed that my ex had committed malpractice by representing my father while we were engaged in divorce proceedings, I could not get any lawyer to represent me.
My father’s widow survived him by about five years, falling short of her mother’s longevity by some fifteen years. When she passed, about $40,000 remained in my father’s estate.
Forty thousand was a heck of a lot better than the nothing my father had in mind. Thanks to some smart investment advice, I managed to retrieve almost half the money.
Meanwhile, the teaching income was not quite enough for me to cover the $840 mortgage payments and have enough to live without running up debt. My plan had evolved so that it had me saving all the after-tax alimony payments toward retirement; in fact, each month I was having to use one or two hundred dollars to make ends meet. Nevertheless, I managed to save about $60,000.
So, when the alimony ran out, I pooled the inheritance and the amount I’d saved from the five years of alimony income and used a chunk of it to pay off the $80,000 mortgage on my house. This left about twenty grand still in savings while it gave me a de facto raise in pay of $640 a month, after I had set aside $240 a month for taxes and insurance.
Just before the bubble started to inflate, my house was worth three times what I’d paid for it; I sold it and bought a more nicely renovated place with a bigger yard and a pool, a good long way away from the noisy intersection and crime zone that had cop helicopters parked over my roof at 11:00 p.m. every Friday and Saturday night, and I paid for the new place in cash.
No matter what anyone says, it’s great to have your house paid off. That ain’t lemonade: it’s fine white wine with overtones of summer citrus.
