First Person: I Had No Savings at 40, but I Retired by 60

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I was living in Los Angeles. Had a great job at 40 and was not putting one penny away in savings. I was spending money faster than I was making it, living the single life. I knew every bar and restaurant along Hollywood Boulevard, and bartenders and waitresses knew me by name.

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Now I'm living a comfortable retirement. What turned me around?

Reality. I noticed my co-workers and friends moving on with their lives. While I was stuck in a small apartment, they were getting married, buying homes and establishing a life beyond the nightclub. I knew I had to get serious and start saving.

I tore up all of my 13 credit cards

At the time I owed over $30,000 in credit card bills and my interest was over 19% on each card. Each card had a limit of $10,000. I cut them all up and started using a debit card.

I got on a budget

I created a budget. I paid off several cards in two years and reduced my expenses and saved over $900 a month. My income was $40,000 a year I was 40 which was a net of around $2,500 month. However, I charged everything. When I tore up my credit cards I put myself on strict budget: rent $440 per month, car note $275, and credit card $400 a month. I took all the extra cash and paid off my lowest balance credit card first, then second. I also put over 20% of my gross into the 401(k) and profit sharing programs and stock options at work.

I took advantage of my company's profit sharing and 401(k) options

Before I was 40, I never put any money away into our company's saving programs. I started putting the highest percentage allowable of my salary into the company's profit sharing and 401(k) program. Working for ABM (American Building Maintenance) I was also able to purchase stock at an employee discount rate of 20%, so I added that to my nest egg.

I purchased rental property

At 40, I was able to purchase my first rental property in Pennsylvania for $8,000. With my wife we paid cash for the house. As an old Victorian home split into three apartments it grosses over $1,500 a month. Within a few years, I built our rental income to over $85,000 a year including selling a few properties at a profit.

I married well

Before I turned 40 I had never been married, but meeting my wife was my best decision ever. My wife is thrifty and our combined incomes were well over $100,000 a year. With her spendthrift abilities we were able to pay off all of our credit card debts.

Being married to the right person with the same mindset has been my best investment by far.

We hired a financial advisor

We hired an expert to look at our plans for retiring when we were in our mid-fifties. She calculated our money and life goals, living expenses, health plans, and our level of risk. Her advice helped us build our stock and other investment income to prepare for retirement.

We were moderately aggressive investors and with her advice -- along with our international equities and other investments -- were able to build up a very good nest egg.

We downsized

In 2006, we downsized and sold our home in Pasadena, Calif. along with a few of our rental properties and moved to a less expensive area in the Republic of Panama. Between the current market and our pension, dividends, and rental income of about $70,000 per year, we are now retired and living comfortably within our means, with expenses that total only $34,000 per year.

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