My husband is a Mustachian by nature. I'm not. I've lived a frugal life by necessity for twenty-five years, a lot of it below the poverty line before I met my now husband. Suddenly I'm earning more money than I ever dreamed of and I don't know how to handle it. I'm terrified of losing it. I'm looking for clarity. I'm trying to figure out both how to have a comfortable retirement, and if I can relax a little bit now.
The backstory: Without knowing about the Mr. Money blog, my husband and I have lived the type of frugal lifestyle it delineates. In fact, I'm kind of wondering if my husband IS Mr. Money and has created a whole secret life and blog I know nothing about. He was born loving to save money, loving to find a deal and loving to live within his means. I'm the spouse that got dragged into it kicking and screaming and even though I can see the value of it and know being frugal is a great thing, my reality is that I often felt blocked, stopped, frustrated, thwarted and pissed off. While living frugally meant we didn't accumulate debt other than our mortgage and our kids learned to live really cheaply too, I finally realized that my "happy point" with money is different than my husband's. I decided to live and let live as far as he was concerned and make my own money and my own money decisions--that way we can each live at our "happy points".
Once I got over feeling guilty about not sharing a money vision with my husband and "allowed" myself to strive for what I wanted, I really got into it. I started to work harder. In fact, I started to work all the time. All the time. All. the. time. It paid off. I started a company that made some $ and I stacked it up in a savings account. When I realized that company wasn't going to do well long-term, I gave myself a year (which my savings could cover) to see if my dream job (writing) could earn me the living I wanted. The first year writing I earned enough to cover my portion of our bills. This year (my second) my writing took off.
I write romance novels and I self-publish them. The stars aligned (and I worked all the time) and since April I've earned $500,000. Suddenly I'm living the life I wanted to live. I paid off our house. I got my very first cell phone (at 45!) and got cell phones for the two remaining kids at home so they wouldn't always have to borrow their friends'. Once in a while we go on day trips. I'm taking a vacation in October. I have more money to help my kids with college.
And I'm FREAKING OUT.
$500,000 is terrific, but I'll get hit by taxes (I'm incorporating and that will help). Paying off the house took a whack of cash, too. What's leftover will not set me up for life. :)
I'm freaking out because I don't know how much $ I need. I don't know how long this string of good luck will go on. I don't know when it's okay to relax. I don't even know how to relax. Every time I spend money I feel guilty. I feel like I should be over the moon about what I've earned. Instead I feel daunted by how far I have to go. In order to keep my income high, I have to publish frequently, so I write a novel every other month. The pace is really getting to me. I'm terrified of making mistakes, terrified my next book will flop and so on. When I'm hanging out with friends, I have a hard time being present. People keep telling me I need to slow down.
But whenever I think of slowing down I panic. After all, this is the first year we've had any savings to speak of. We're in our late forties. Shouldn't I be working like crazy to stack up the cash? I don't want to go back to living the way we used to. I could bore you for hours with grim tales of hardship and stress from my early adult years - the reason that living frugally pushes some of my buttons.
So - I'm hoping a clear plan will take off some of the pressure. I need to balance my knowledge that there's no guarantee this crazy kind of income will go on, with my need for a slightly less stressful work schedule.
Income:
Writing: 2014 - $500,000
Loan repayment money (we sold a rental complex to a couple and are acting as the bank. They will pay us about $750,000 over 25 years.) 2014: $39600
Total: $539,600
Current expenses:
YEARLY EXPENSES
Food and household: $6000
Electricy: $540
Medical: $4800
Natural Gas: $2700
Phone and internet: $1320
Netflix: $108
Gas: $1500
Kids' allowances $2880 (they pay for all clothes, fun expenses, birthday gifts for friends and so on)
Kids' activities (music lessons, etc.) $2000
Christmas $1000
Vehicle Ins $1700
Vehicle upkeep $2000
Home insurance $940
House taxes $2400
House expenses $1500
Personal expenses $14,400 (we each take a $600 monthly allowance for....everything)
Vacation: $10,000 (nice round number)
Business Expenses: $10,000
Total: $65,788
Taxes: ??? (somewhere between $100,000 and 200,000?)
Real Total: $165,788 to 265,788?
Expected ER expenses: Not sure.
Assets:
House: $320,000
Car: $5000
Truck $5000
Savings: $204,000
Receivables: $100,000
Loan receivable: $750,000 (not sure what to call that)
Mutual funds: $12,000
Total: $1,396,000
Liabilities: Amount - rate - description
Total: None
Specific Question(s):
1. What should be my goal amount for retirement? How much money do I need to save?
2. How do I decide what I need per year for retirement? We seem to be getting by on under $70,000 now, but I'd like to spend more on travel and have some cash to help our children and grandchildren. Plus there will be inflation. I feel like 20 years from now when we officially retire, we probably need $100,000 a year.
3. My income could disappear overnight if Amazon and iTunes decide to change the game. How do I handle that? This is a major reason I'm afraid to relax. Amazon did this to one of my husband's businesses about 8 years ago. One day he was making a decent income as an independent working with a distributor. The next day Amazon bought that distributor, changed all the rules and my husband's income disappeared. I live in constant fear of this happening to me.
4. How do I overcome my fear of investing this extra money and what do I invest it in? I don't want to own rentals again. We battled drug dealers for years and came close to having our property seized. I'm done with that. We are becoming open to stocks again after backing way off for a long time. Our mutual funds are performing pretty poorly. I'm beginning to spend more money on help so that I can keep writing fast - so I farm out tasks I used to do, like formatting, cover art and so on. Other than investing in myself, I don't know what to do.
Thanks for any and all help!