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Usually when I read an email from someone asking for a case study, I can usually tell where it’s going within the first paragraph or so. This one, however, I must admit I started getting more and more alarmed the more I read. Our reader has made some…let’s say…expensive mistakes over their life, and as a result is writing to us at the age of 50 with no money and still going FURTHER into student loans. Needless to say, I wasn’t hopeful that we could pull him out of his financial nosedive, but people who know me know that I’m an eternal optimist, so let’s give it the ol’ college try anyway, shall we?
Dear Kristy and Bryce,
First of all, thanks so much for publishing your story, and showing me (and the rest of the world) your unique approach to “getting out of the f-ing matrix.” My situation seems different than what I read about in the book so I thought I’d see if you agree. I am hoping that I can sill achieve FI. Because you no doubt get a gazillion emails just like this, I will be brief. My family became poor after my father died at age 40. My mother is the hero of my story; she went from home-maker to secretary overnight raising 4 children on her own. Needless to mention but the scarcity mindset is deeply ingrained in me and my siblings.
I am now 50 years old and spent the last 30 years “following my writing passion” (yay) until it all but left me homeless. I know, seriously stupid to wait so long to change. But…Then I discovered your path to wealth in July while reading the article that appeared on the Guardian news site featuring you and Bryce. I purchased your book via Audible and it changed my entire perspective about money, assets, debt, investing, and retirement literally over night. I acted right away by switching my major in college from Social Work to a professional health degree; I sold my beloved Red Volkswagen Jetta tdi, and with the profits I paid off the loan balance as well as a $956 dollar balance on my blood sucking credit card. The remainder of the funds $675.00 are in ally Bank savings account earning 2.11% until I have the $3000 I need to enter Vanguards VTSAX.
I am a junior in college; and honor student (meaning I am studying my ass off) working towards a BS in Dental Hygiene; and taking on student debt because I am not working yet. I am seeking a student worker position at my university in order to accommodate a full-time student schedule.
I will be 53 by the time I enter the workforce. My total living expenses are currently $1,310 / month and living off of my student loans. After tuition, books and scholarships I wind up with $9,600 per year.
Here is my financial picture as of today.
- Your gross/net annual family income
- $9600
- Your monthly family spending
- $1,017
- For any debts you have, please include: Student loans
- Loan 1: $3000
- Interest 5.05% (fixed) Direct Stafford Unsubsidized
- Bal: $3036
- Loan 2: $2250
- Interest 5.05% (fixed) Direct Stafford Subsidized (SULA Eligible)
- Bal: $2250
- Loan 3: $3000
- Interest 5.05% (fixed) Direct Stafford Unsubsidized
- Bal: $3076
- Loan 4: $2250
- Interest 5.05% (fixed) Direct Stafford Subsidized (SULA Eligible)
- Bal: $2250
- Loan 5: $4000
- Interest 4.66% (fixed) Direct Stafford Unsubsidized
- Min Mo. Payment: Deferred, then pay as you earn
- Bal: $4412
- Loan 6: $3500
- Interest 4.66% (fixed) Direct Stafford Subsidized (SULA Eligible)
- Min Mo. Payment: Deferred, then pay as you earn.
- Bal: $3510
- Loan 1: $3000
- Any fixed assets you have (house, car, etc.)
- No fixed assets
- Any investments or savings you have (cash, bonds, stocks, etc.)
- Ally Bank Savings: $675 earning 2.11% compounding monthly
I want to retire by age 63. In order to do that I plan on living off of U.S $12,200 per year for the next 13 years.
The median salary for dental hygienists is $72,330 per year, and those in the 90th percentile earn $108,000 with 5 years experience.
Thanks for considering my financial situation Kristy and Bryce. I hope that you find my situation worth using as a case study. Going to college at age 50, with a net worth under $1000 (and a million volts of enthusiasm to be FI) is probably something people can relate to. Hope that you agree.
BackToSchoolAt50
Yikes. What really set the tone of this reader case is the line “spent the last 30 years following my writing passion until it all but left me homeless.”
Yeah, that sounds about right. Anyone who’s read our book will know that FIRECracker’s passion was being a writer, but when she sat down and ran the numbers, she realized that following her passion was a surefire way to poverty. That’s why she chose engineering as her career and only chose to pursue writing after she became FI. Unfortunately, BackToSchoolAt50 didn’t run the same math and as a result wasted 30 years of their life with basically nothing to show for it.
One thing that gives me hope is that he bought and read our book and, apparently, started making changes right away based on what they read. That’s quite amazing, and humbling, for us to hear. We wrote the book hoping that it would change people’s lives, and here we have someone who actually implemented some of the advice we put in there! That being said, they are nowhere near early retirement age anymore, but as we say in the book, “the past doesn’t matter. The only thing that matters is that you start climbing now.”
Let’s see what impact their changes actually made.
The POT Score
The POT score is a concept that we only describe in the book, but basically it’s a way to evaluate whether a degree is worth it. As we Millennials know, degrees no longer guarantee a good paying job. Not all degrees are created equal, and if you pick the wrong one it could end up saddling you with debt for the rest of your life while not increasing your earning power at all. Some even DECREASE your earning power!
The Pay-Over-Tuition (or POT) score is a system we came up with to compare different degrees with each other. Basically, you take the median starting salary you can expect to earn above minimum wage, then divide it by the total tuition cost of the degree. This gives you a single number that you can use to rank whether a degree is worth the amount of money you’d be paying to get it.
After reading our book, BackToSchoolAt50 realized that his current career path of studying social work was a dead end, and immediately switched it to a B.SC. in Dental Hygiene. Let’s see if this decision made any sense.
Based on his email address, I was able to go to his university’s website and get current tuition numbers. Each year of undergrad costs $10,650 for in-state students. And a brief search of salary expectations of entry-level social workers in this state shows a starting annual salary of just $27k. This state also has a minimum wage of $11 an hour, or $11 x 40 x 52 = $22,880 a year. A social worker’s degree is a 4-year program, so their total tuition cost would be $10,650 x 4 = $42,600. So that means this degree has a POT score of…
POT = ($27000 – $22,880) / $42,600 = 0.1
What this means is that for every dollar you invest into this degree, you will only increase your annual earning power by ten cents. If this degree is financed using debt, you’ll likely be paying this degree off for the next 10 years, or more!
But now that BackToSchoolAt50 read our book, he’s no dummy anymore, is he? He switched his degree to Dental Hygienist. Let’s see how the math adds up.
The median entry level salary of a dental hygienist in his area is $72,330 a year. And according to his university’s website, it’s a 2 year program, but you have to apply after 2 years of undergrad. Presumably, this is why he chose this program, so he could redirect his existing credits towards this new direction. Smart.
So that means the cost of the degree would be the same: $42,600. Yet his earnings upon graduation is now significantly higher.
POT = ($72,330 – $22,880) / $42,600 = 1.2
MUCH better. Now, every dollar he invests in this degree will return $1.20 back to him each and every year. This should allow him to pay off his debt in the first year.
About That Debt…
Speaking of debt, let’s take a closer look at his debt numbers. Considering he’s described himself as a junior in college, there’s a surprising amount of student debt he’s already racked up. The first 4 appear to be from a previous degree, as they aren’t marked as “deferred.” Adding those balances up, we’re looking at $3036 + $2250 + $3076 + $2250 = $10,612. So that’s our starting debt load that we’ve inherited before we even start this degree.
The next two debt numbers appear to be from his current degree, as they’re marked “deferred.” Generally, student loans don’t need to get paid back until after you’ve graduated, so that’s why this is probably from his current time in school. The amounts loaned of $4000 + $3500 = $7500. This is less than the actual tuition, so that would indicate that he’s got some kind of scholarship or is working to partially fund himself. Assuming that continues, that means he’s accumulating debt at a rate of $7500 a year, so we can project that at the end of this 4 year program, he’ll have $7500 x 4 = $30,000 in additional debt. Add that to his previous loans and we’re talking about a total of $40,612.
In terms of debt load, it sounds like a lot, but we regularly get emails from our American readers with $100k+ or $200k+ student debt balances, so it’s not THE WORST, so yay?
Math Shit Up!
OK so let’s see where our intrepid reader stands. He’s 50, he’s made some mistakes in the past, but he’s trying to right the ship and he’s already made some smart moves. Let’s see if it’s enough to save him. And THAT means it’s time to MATH SHIT UP!
The linchpin of BackToSchoolAt50’s retirement strategy is based off two things: His increased earning power from switching his degree to a dental hygienist and his amazingly low living costs. He’s planning on living off of just $12,200 a year, and normally when someone writes something like that to us we call BULLSHIT on that number, but I also have to remember: he was trying to make it as a WRITER for 30 years. So he’s already used to living on almost nothing.
Plus, I looked up some cost of living numbers in the state he’s in, and they are significantly below the national average, so I’m comfortable at taking his living cost projections at face value.
At that level, his expenses of $12,200 per year will require a portfolio of $12,200 x 25 = $305k to become FIRE. That’s not too insurmountable, so that gives us hope that we can find a way there.
Now let’s take a look at his expected earnings as a dental hygienist of $72,330. Plugging his numbers into a tax calculator, for the state of Arizona, his after-tax income would be $55,438. However, there’s an additional weapon we have at our disposal. Because he’s over 50, he’s eligible to contribute an additional $6000 ABOVE the normal $18,500 contribution limit into a 401(k) plan. If he does that, he can reduce his tax burden considerably, and it would raise his after-tax income to $61,481.
So to summarize, this is what our reader’s finances should look like after graduation.
| Summary | Amount |
|---|---|
| Income | $72,330 pre-tax, $61,481 post-tax |
| Expenses | $12,200 per year |
| Assets | $675 |
| Debt | $40,612 student debt |
Given these numbers, we can calculate our annual savings rate of $61,481 – $12,200 = $49,281, or an impressive 80%! How does this shake out in his retirement projection?
| Year | Balance | Savings | ROI | Total |
|---|---|---|---|---|
| 1 | -$39,937.00 | $49,281.00 | -$2,396.22 | $6,947.78 |
| 2 | $6,947.78 | $49,281.00 | $416.87 | $56,645.65 |
| 3 | $56,645.65 | $49,281.00 | $3,398.74 | $109,325.39 |
| 4 | $109,325.39 | $49,281.00 | $6,559.52 | $165,165.91 |
| 5 | $165,165.91 | $49,281.00 | $9,909.95 | $224,356.86 |
| 6 | $224,356.86 | $49,281.00 | $13,461.41 | $287,099.28 |
| 7 | $287,099.28 | $49,281.00 | $17,225.96 | $353,606.23 |
Boom goes the dynamite. Despite the mistakes our reader made in the past, he can STILL retire in just 7 years! He’s going to graduate at the age of 53, so that means he’ll be able to retire at 60. Coming from the fact that he spent the first 50 years of his life basically just getting screwed by the writing industry with nothing to show for it, in just 10 years he’ll STILL make it to FIRE.
This is a really inspiring story, and it’s why we’ve said before that it doesn’t matter what mistakes you’ve made in the past, all that matters is that you start doing the right thing NOW. By picking up our book, and making just a few decisions using the power of MATH rather than the stupidity of feelings, BackToSchoolAt50 will be able to salvage his finances and still retire before the normal American retirement age.
Questions? Comments? What do you think of BackToSchoolAt50’s journey? Let’s hear it in the comments below!
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Hi Wanderer,
This is indeed an inspiring post. This shows that one will always be able to achieve FIRE regardless of the present age. As long as he/she takes action in making FIRE the journey, this can be achieved.
Such example goes to show that it is the mind and determination that matters in deciding the destiny of one. I am not sure whether this will be an added inspiration to the rest. I can attest that I will be more determined to focus on my aspiration and have no fear of doubt on the failure.
What is the worst which can happen? The worst case scenario is to go back to the full-time employment which I previously exited from, a few months back. I believe that it is unlikely to happen after the implementation of several measures mentioned in this blog such as the three buckets etc.
My two cents worth of views.
WTK
Yes, thank you! I thought this one was super inspiring as well, glad you thought so too!
It’s true that dental hygiene is physically demanding work. My mother is a hygienist and is in her early 60s. She has all kinds of issues with her neck and arms because of the awkward sitting position required for hours every day. Many hygienists begin suffering from things like carpal tunnel syndrome and back problems for the same.
I can’t help but wonder if NAU mean Northern Arizona University, if so, that’s Flagstaff, AZ. It’s where I live and work.
I am actually in the process of buying a house, but feel like I had lost my way and ended up almost buying into a pretty big house (1,800 sqft). In the end, the appraisal came in 10% lower than sale price and seller wouldn’t budge. After much discussion and thoughts, had to cancel it.
I can’t confirm the reader’s location since he didn’t give me permission, but regardless it sounds like you dodged a bullet on that one. If you don’t like the deal, vote with your feet 🙂
Thanks for sharing BackToSchoolAt50’s story and I hope it works out as planned. However, I’m not too optimistic. This is one of those cases where math probably won’t work. It’ll be really tough to find a dental hygienist job at 53.
You should flag this story for a follow up in 4 years. I want to see if this plan works. It’s easy to say 80% saving rate, but most people can’t execute. 50% is already very difficult. Anyway, good luck.
Just want to note that dental hygenist jobs in Arizona are pretty accessible and many practioners are in their late 40’s to 60’s. Even in low-wage Arizona they make good money. I am guessing that this might also be true in other States. The position is a terrific profit center for busy dentists.
I had dentists joke that they should have chosen a career as a DH instead of dentistry.
I’m also curious whether this will work out or not, but I have a few dentists in my family and apparently good dental hygienists are always in demand. Plus they can’t be outsourced easily, which is nice.
That is awesome! I hope it all works out for him
I’m optimistic that BackToSchoolAt50 can turn things around and have adequate retirement income if he (not sure why we’re assuming it’s a he) can snag a good paying dental hygienist position. But retiring at 60 or 63 is not a good idea in the USA if you’re just getting by. Who knows what health insurance will look like in 10 or 15 years, maybe affordable universal health care, maybe not. My advice as an aging boomer is to stick it out a few more years until Medicare (or whatever it’s called then) kicks in at 65. Using my friends and me as an example, even if you don’t have health problems in your fifties, you really start to fall apart in your sixties and need things like new eyes and new knees (and expensive prescriptions). One friend describes aging after 60 as “every year after 60 counts as a dog’s year!”). Also at the present time postponing social security payments past 62 increases the annual payments significantly (6 – 8%) once you do start to collect. If you’re lucky enough to have a good paying job at 60 or 63, work a few more years, even if it’s just part-time to keep your employer health insurance.
Yeah it’s not exactly “early” retirement as we usually define it in the FIRE community, but the decision of whether to retire at 60 has many factors to it, including social security, medicare, etc. The point is that if he plays his cards right, he has the option of making that choice rather than what he was doing before, which was forced homelessness.
And you can’t tell it’s a he from what I’ve posted but his original email suggested “he”.
You did mention ‘him’ in your first paragraph …
Good for “BackToSchoolAt50” – two hard changes made already (writing isn’t feasible for a living anymore AND changing majors midway through school). I’m glad you were selected for a case study. Sure, it’s a different flavor from I’m 27 making >150K/year in a tech field… and what is the alternative? Sit on one’s tail and wail at the heavens until….what? So, again, good on you!!
A couple of thoughts: retiring at 60 [if FI by then] is a great plan, and who says you can’t keep working if you need to, right? Also, many specialty fields – once you have some experience – often can be spun out into technical writing gigs…meaning you may be able to go back to “living the dream” without poverty after FI or semi-FI.
We have family (parents) who opted NOT to switch careers or start working at the young age of about 55. We begged, cajoled etc., and really, it perhaps was OK at the time. Now, 15 years later, it’s not quite as fabulous because a fixed income is, well, FIXED.
Yeah that’s a good point. He can maybe return back to writing once he’s FI, only now he won’t be a starving artist anymore.
I am a dental hygienist here in Canada and it is an extremely physically (and mentally) demanding job. I physically can’t work at it full time and I’m only in my 30’s. I can’t imagine getting in to this field at an older age when most people are already starting to experience aches and pains.
I don’t know how dental hygiene is regulated in the states, but I have to pay a hefty annual fee to be a part of the college of dental hygienists in order to have a license to practice and have to keep my cpr current as well as do continuing education courses which are not cheap.
I hope he enjoys the new career and that it all works out for him.
Really? Huh, I never thought of dental hygienist as a physically demanding job before. Do you think it’s more physically demanding than being the dentist?
That’s hard to say because I’m not a dentist, but dentists have more variance in their day. For example, they might freeze a patient, then do a check up, then a filling, etc. A hygienist does the same thing for hours on end sitting in a fairly fixed position. I didn’t realize how physically demanding it was until I started doing it!
One quick correction. The 2019 401k limit for contribution is $19,000 instead of $18,500. He still can contribute $6,000 additional for being over 50. Thanks for the analysis. As someone who went back to med school in his 30’s, I wished I was a little more financially savy and understood the tax consequences of cashing out my 401k to pay for premed course requirements. I looked at it that I was investing in myself rather than in the stock market. I never even thought about the POT score or the amount of student loans I would accumulate while attending a foreign medical school. I just was glad to get accepted and welcomed the chance of pursuing a lifelong dream.
Right, good catch. The stupid calculator I used still says $18,500.
It’s often surprising to me that doctors can often not be in the best financial shape considering how much they made, and it’s because of how bloody expensive their degree is.
Out of curiosity, how much will a foreign medical degree cost?
The cost for a foreign medical degree varies based on the school. I wouldn’t recommend this route at this time due to an increase in the number of US med school grads since I graduated from med school which has resulted in a bottleneck of medical school grads entering residency positions. The really sad cases are people that graduated medical school and can’t find a residency position and now are saddled with a huge debt burden for a degree the can’t use.
My degree foreign medical degree cost me about $210,000 after paying interest but I graduated in 2009. The price has risen dramatically and now is $269,433 for just tuition and fees at the school I attended. Housing, food, and airfare isn’t included in this cost. The cost varies quite a bit among schools. One of my colleagues who just graduated from residency went to a out of state US school and is now saddled with a half million in student loan debt. I was fortunate to not develop a severe case of lifestyle inflation after residency. Within 6 years of residency, I was able to pay off my loans, house (I know your opinion on home ownership but I live in a low cost area where a 2300 square foot house on an acre lot on a trout stream which cost me $160,000) and at the same time fully fund my retirement plans each year. In order to do this I was able put up to 75 percent of my take home pay to retirement savings, student loans, and house payments. I am not financially independent yet but delayed it by going to part-time and am now contracted to work only 80 days a year after becoming debt free. Rather than retiring earlier, I figured I could spread the number of years that I continue to work in order to still benefit from tax benefits by contributing to retirement plans, using employer sponsored insurance, and contributing to social security.
I would like to know where you live, on a trout stream for $160k please. Thanks
I also am a little surprised at the dental hygiene salary. At least in my area, the average salary is closer to 50,000, and starting right out of school will be lower. It’s also tricky to find a full time position, leading many hygienists to patch together multiple part-time jobs. Also, it’s an extremely physical job, so I would be worried about his body keeping up with the job as he got older. Not to poo-poo it, I think it will be a bigger money maker than a social worker, and it may be very rewarding personally, but I think the numbers given here are very optimistic. (I’m hoping I’m just wrong because of the difference in location though!)
Yeah I’m not completely sure where he lives so I had to take his salary estimate at face value.
Awesome! And many more smiles will be had because of his vocation!
I was blown away by how positive BackToSchoolAt50 sound. Not sure if I would be as upbeat as he. It seems like he is willing to put in the work to meet his goal so huge kudos to him and his tenacity.
What he is doing is actually really inspiring, considering that I have close family members who stopped trying at anything once they hit 50. So… I’m sure the road will be difficult but I am hopeful that he’ll get there.
Yeah writing in to us for a reader case is kind of a filter for naturally optimistic people. People who give up and blame the world tend ot to write into random bloggers to share their story.
Would be interested to see if this works. Certainly possible, but to live on “$12,200 per year for the next 13 years” takes major discipline.
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