The 1930’s marked a crucial decade in American history. The Great Depression: One of the deepest, longest-lasting economic downturns in the history of the Western world, challenging many American families in major economic, social, and psychological ways. What if we could follow a set of twins that go down two different financial roads.
Today we share the first part of our story about two twins. Both born during the Great Depression and both were trying to do everything ‘right’ when it came to saving their money. Tune in to see how each of them took very different forks in the financial road, and how it impacted them later in life.
Here Are The Show Highlights:
– The most practical time-tested rule when it comes to long-term financial security for your savings ([7:40])
– Was this one of the greatest rip-offs or greatest investments of the 1980’s? We’ll let you decide ([9:50])
– Two very alternative ways to invest your money…with two very different outcomes ([12:20])
Remember to download Grandma’s free wholesome wealth recipes book by dropping into http://www.grandmaswealth.com. Time-honored wealth strategies served with a helping of balance and trust.
If you’d like to see how Grandma’s timeless wealth strategies can work in your life, schedule your free 15-minute coffee chat with us by visiting https://www.grandmaswealthwisdom.com/call…just like Grandma would want us to do.
A hearty welcome to Grandma’s Wealth Wisdom with your hospitable hosts, Brandon and Amanda Neely. This is the only podcast for strategies to grow your wealth simply and sustainably like grandma used to. Without further ado here are your hosts.
Brandon: Hey, I’m Brandon, and welcome to Grandma’s Wealth Wisdom where we work with you to build your wealth Grandma would be proud of.
Amanda: And I’m Amanda, hello! A big welcome, indeed!
Brandon: Before we jump into today’s episode, I want to add a segment to our podcast All About Reviews because, as you know, reviews help.
First what I want to do is share a review we got from Rainer22222. [0:00:59.2] The title was A Unique Twist on Boring Money Talk, and he says, “I think what I like most about the podcast is the uniqueness. Money and finances can be a boring topic, but Amanda and Brandon find a much different way to personalize it. I followed their other podcasts for a while now, so I know the amount of knowledge they had from their own experiences, but I’m really enjoying the approach they took with the podcast. Sometimes we hear advisors say we should be doing A, B, C, and D, all the way to Z with our money, but they are focused on simplifying and getting back to the common sense approaches that set up previous generations for success. Looking forward to hearing more episodes.”
So, thanks, Rainer22222 for your review and hopefully we continue to entertain but also make it simple for other listeners. [0:02:01.2]
As you know, ratings and reviews and subscribers are super helpful. They help us know we are making an impact personally through our podcast, and reviews also help the podcast reach more people. It helps other people find it as well, and apparently, I’ve heard, iTunes and Google look at this, and they share with more people, the more reviews you have, the more downloads you have, all that stuff. We decided that we, Amanda and I, are not beyond bribing you. So here’s the deal: If you write us an honest, 5-star review - honest review - we will share it on the podcast, but we will want to actually sweeten the deal even more. If you take a picture of your review and send it to email@example.com, we’ll send you a copy of the bestselling book by Pamela Yellen, The Bank on Yourself Revolution book. [0:03:03.8] It has changed our lives. As long as you’re in the U.S., we will send you a copy in the mail or if you really want the Kindle version, we can send that as well; your choice. So write an honest 5-star review and send it to firstname.lastname@example.org, and you get that free book.
Amanda: Yes, thanks to Rainer22222 and thanks to you hearing my voice right now in advance for your review. We are very excited to do a little storytelling today, so without further ado, we’re going to get into this thing we’re calling a Tale of Two Grandmas.
Brandon: It sounds like a great movie.
Amanda: [laughter] These two grandmas are twins, Margaret and Mildred are their names. They were born in 1930, and they have a tale very much the same for their first 50 years of life, but at starting around age 50, their lives took very different paths, and it all stems from what they did with their money. [0:04:03.9] We’ll cover the first half of their lives in this episode and then in the next episode, we’ll cover the second half.
Brandon: So Margaret and Mildred, two M’s, were born during the Great Depression – remember they’re twins so they have to have the…
Amanda: The same birthday.
Brandon: They remember being under 10 years old and living a very simple life because there wasn’t a lot of anything to around. I mean, it was a long time ago, and they were poor. It was the Great Depression, of course, and people were barely scraping by.
Amanda: Yeah, so they weren’t necessarily poor. They were like everybody else, and thankfully, their father had a stable job. There were a lot of people that had it a lot worse. Their mother was able to stay at home to cook from scratch, to grow vegetables, to make dresses, and all kinds of activities that reduced their family expenses.
Brandon: And, again, many families had it much worse, but these guys… They had an okay life. [0:05:03.8]
Amanda: Right. The when Margaret and Mildred were in their tweens, the war started, World War II, and things continued as they had before.
Brandon: Their father was too old to be drafted, so he continued at his job, lucky he was at that age so he did not have to go to war, and as a family, they were used to living simply so the rations of food and gas didn’t impact them too much. I mean, in their household, you wouldn’t know a war was actually going on if it weren’t for the air raid drills at school and the ration tickets their parents kept in their wallet.
Grandma always said, “Eat your vegetables.” She loved making home-cooked meals with healthy food and from-scratch desserts. Would you create a diet of fast food or cookie cutter financial products that made you fat and bloated with fees or would you like wholesome time-honored wealth strategies served with balance and trust. Get started with your healthy money planning by downloading wholesome wealth recipes; your moola cookbook is waiting for you at grandmaswealth.com.
Amanda: Thankfully, when Margaret and Mildred were finished with high school, the war was over, and women were still being employed in large numbers, so both Margaret and Mildred were able to find jobs as secretaries. Margaret worked for an attorney and Mildred worked for an accountant.
Brandon: So they started out in entry level, helping to answer the phones and do some typing. That’s how they got started, and over the years, they excelled at their work, and they were all promoted to assistants and all kinds of great titles.
Amanda: Yeah, at age 40, Margaret was the executive assistant to one of the partners of the law firm and Mildred had become the executive assistant to the president of the accounting practice. [0:07:01.4]
Brandon: And those guys were moving.
Brandon: Over the years, they both married men who respected their careers and helped raise their children. I think their names were Tim and Ted.
Amanda: [laughter] I did not tell you their names! [laughter]
Brandon: I’m pretty sure it was Tim and Ted, married Margaret and Mildred, so that Margaret and Mildred were able to increase the standard of living for their household.
Amanda: Yeah, Brandon is adding details to this story as we go on the fly here, but one thing you should know, is after World War II, people had started doing things like keeping up with the Jones’, it was a lot of economic activity, people were encouraged to buy, buy, buy, that kind of thing.
Brandon: Along with their husbands, Tim and Ted, Margaret and Mildred continued to live relatively simply.
Amanda: Yeah, while many people seem to be spending every penny they earned, Margaret and Mildred saved 30% of their household income, 10% for long-term needs like retirement; 10% for medium-term needs like a new car or car repairs, a new roof, their kids’ college, weddings, those kind of things; and 10% for short-term needs like birthday presents and family vacations. [0:08:14.8]
Brandon: They followed the 10/10/10 savings rule that we covered in previous episodes. The other 70% provided a pretty nice life.
Amanda: Yeah, much better than what Margaret and Mildred had growing up. They could go out to eat once or twice a month. They had a television in the family room. They wore store-bought clothes instead of home-made ones.
Brandon: While their neighbors were starting to accumulate things, Margaret and Mildred’s families were starting to accumulate wealth.
Amanda: Yup, and then we get to 1980. A very important thing happened in 1980. Both Margaret and Mildred’s employers began to offer the staff a company 401K program. [0:09:03.9]
Brandon: It was a new flashy thing that Ted had come across in the IRS code. It looked like a great deal, save 3% of your paycheck automatically and the company would match it and add an additional 3%, plus it’s all pre-tax.
Amanda: In 1980, I looked this up, the employee contribution limit was $45,475, and Margaret and Mildred were making above average. The average income was, I think, around $11,000. Margaret and Mildred were making $15,000 because they had been in the same company and were executive assistants. So only making $15,000 and the contribution limit being over $45,000, practically speaking, they could contribute as much as they wanted to.
Brandon: That’s really high compared to what we can do today, right? [0:09:59.2]
Amanda: Well, relatively, yeah, because salaries are higher, but also the contribution has gone up and down.
Brandon: Gotcha. So Margaret kept her financial plan the same as it was before, but started saving an extra 3% in this new 401K, so that she could get the match from her employer.
Amanda: That means that Margaret was now saving 33% of her income and her employed added another 3% to the 3% that Margaret put into her 401K.
Brandon: Now Mildred was more excited about the 401K. After all, she did work for an accountant and had seen lots and lots of numbers over the years, and she wanted to get in on the game that many of the firms wealthiest clients were playing for the last 30 years. She decided to move the entire 20% of her long-term and medium-term savings into this new 401K strategy. [0:11:01.4] She would get the 3% match, plus she was super excited about the growth that she could get in the market.
Amanda: In order to save that 20% of her income into the 401K, she had to quit saving that 20% where she had been saving it.
Brandon: We skipped over this part. Where had been Margaret and Mildred been saving 30% of their income in the first place, Amanda? I forgot that we didn’t add that.
Amanda: Right, terrific question. The 10% that they set aside for short-term needs was going into a savings account and being used on an annual basis. It was kind of rolling over, that kind of way. The other 10% for medium-term and the 10% for long-terms needs was going into a cash-value whole life insurance policy. They would use the cash value when needed for their kids’ college, for that new car, for the roof repairs, whatever, and then they would refill it as they were able. [0:12:00.5] Most of that cash value in their policy was there to help cover their retirement needs above what they could expect to receive from Social Security.
Brandon: When they made their decision related to the 401K, Margaret continued saving 20% of her income in her life insurance policy. Mildred stopped funding her life insurance policies all together. In fact, she cashed out her cash value and opened up a brokerage account with the funds that she had in there before. She saw herself in a different league. She saw herself in the big leagues. She could do what those wealthy clients were finally doing.
Amanda: Yeah, what those wealthy clients had been doing…
Brandon: What they had been doing, but she finally got to do it, yup.
Amanda: Yeah. So could she really be in these big leagues? Was she set to go into a different income bracket or a different lifestyle than her sister? [0:13:04.6] Who was making the better decision here? Margaret or Mildred?
Brandon: This is only the first half of the stories. Both Margaret and Mildred lived to age 88.
Amanda: Which means that they passed away this past year in 2018, but from the story, we are only at 1980. We’ve got another 38 years, from 1980, to tell how this story shakes out, including the birth of their grandchildren in the mid to late-1980s.
Brandon: Remember, they are both savers and are trying to do everything right. How will everything work out for them? Their husbands, Tim and Ted; their children, Randy, Sandy, and Mandy and the other ones; and their grandchildren – I don’t have all their names. How’s it all going to work out for them?
Amanda: You’ll have to tune into the next episode to find out, and until next time, keep building your wealth simply and sustainably for your own future, and the future of our grandchildren’s generation. [0:14:07.0]