How I became an investor after a divorce

See how one woman took charge of her money and became an investor.

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Key takeaways

  • Take a serious look at your income and expenses and have a budget to stay on track.
  • Keep an eye on saving for retirement and save in a tax-advantaged account.
  • Seek out financial advice, but educate yourself as well.

Every time Debra FitzGibbons gets a $5 bill, she puts it in a jar. “I don't have a fortune saved there,” she says. “But it should be enough to pay my plane fare for my dream trip to Ireland.”

That would be a sweet reward for the 54-year-old who lives outside of Boston. The past few years have been tough. She’s navigated her way through a divorce, and pushed the “restart” button on her personal, professional, and financial life.

Starting over, too, has been a reminder of how far she had come from her childhood upbringing, and how little she understood about investing and saving for her future. “My parents were of modest means, but they knew how to manage and stretch the money they had,” she says. “I was taught at an early age to not buy anything you can’t afford, know how to manage your checking account, and always save.”

She was always a good saver. FitzGibbons contributed to a 401(k) retirement savings account offered by her first employer as a result of her Dad’s counseling. “I knew nothing about retirement. It seemed so far away, but my Dad said ‘set up a retirement plan—it’s the old pay yourself mentality.’” After she co-founded a Boston-based technology and advisory firm with her now ex-husband in 1990, she rolled the funds over into an IRA, but, unfortunately, stopped making new contributions.

The business took off. “They were heady days,” she recalls. “We traveled to Greece and Norway, among other places, and spent money on our 2 kids, now 18 and 22.”

Although, the couple was “not extravagant,” according to FitzGibbons, they eventually owned 2 homes. When the monthly bills, such as utilities and property taxes, came due, there were 2 of everything. Their kids also went to private schools. “We didn't focus on saving for retirement and investing.” Since the couple divorced, here are the steps FitzGibbons has taken and is taking to get her financial footing back on solid ground.

Budget. “When I got divorced, the first thing I did was set up a budget. I wrote down all my monthly expenses and sources of income. When I add it all up, I’m just breaking even. I have to be very careful about money, which I didn’t have to do for so many years. I had to learn to live within my means. And I set savings goals. My cash jar is a game I play. I haven’t dipped into it. It’s a simple thing, but knowing I have that accessible cash gives me peace of mind. I have traded going out with friends and paying $25 for a bowl of pasta to having friends over at my house. Everyone brings something.”

Downsize. “I have been creative. I sold a lot of jewelry for gold scrap on eBay and I sold other items like furniture and clothes through consignment shops. I rented a room from a friend for a while. In lieu of paying rent, I painted 2 of her bathrooms. I am definitely not a person to sit back and say ‘woe is me.’ I keep asking myself how I can make some more money. And if I have a choice now—new shoes or save for retirement—the money goes for retirement.”

Take on part-time jobs. “Initially, I got a job working as a sales clerk at a local boutique, earning $12 an hour. Then, I accepted a position working as a sales development manager for a software company. I edited a book for an independent book publisher. I set up a LinkedIn profile and am now working on my resume.”

Consider a financial partner. “I got a lump sum of money as part of the divorce settlement and I knew that I had to put it somewhere. I signed up for a managed account service because I’m not very market savvy and I felt I needed a guiding hand to help me along. The fee I pay is a percentage of the amount invested. For me to try to learn about investing, and move my money around, it’s worth it. I am just not there yet.”

Invest. “I don’t have a job with a 401(k), but alimony counts as income when contributing to an IRA. Since I am over 50, I can make an extra $1,000 catch-up contribution to my IRA. It isn't huge, but at least it’s money in there, plus I get the tax deduction. I’ve made funding my IRA a priority every year since the divorce. To get started, I set up an auto-deduction of $500 from my checking account every month. I really don't miss it. It’s money I would have spent on who knows what. I also have a smaller savings account that is my backup emergency money.”

Ramp up your money smarts. “Educating myself about my own finances and investing has been the biggest challenge for me. I have a business background. In college, I learned about finance and economics, but I am just not knowledgeable about how the stock and bond markets work. I didn’t understand, for instance, what it means when someone says the market is up so many points. I simply put off learning about it. Now I want to get under the hood. I’m feeling more confident. I’ve started reading about investing topics everywhere I can. For example, I subscribe to Money magazine, and read Fidelity’s publications. I study my bank and brokerage statements carefully now and am working to really understand them.

I can ask for help too. That makes me less fearful. It is bothersome to me how I could go along for so long, la la la, and not pay attention. With everything else I do, I make sure I know the ins and outs.”

Run your retirement scenario. “I use the Fidelity Planning & Guidance Center to see how I am doing and get my Fidelity Retirement Score. It asks for your income, expenses, and how long you expect to live. Then it tells you how you’re doing. In the back of my mind when I thought about retirement, I always was saying, ‘Oh, I’m fine.’ When you see the results on the calculator, there’s red on the left and green on the right. I was in the red. I knew then, oh my gosh, I have got to do something. For me, it was ‘Ewww’ that is not good. It is telling me I have to step it up.”

Find a job with a retirement plan. “It’s clear to me that I need to earn more income and try to find a job with a company that also offers benefits such as a 401(k) and an employer match, so I can have some matching funds to give me a boost.”

But, in truth, it’s not easy finding a job when you’re over 50 and have been out of the mainstream job market for a number of years. While for the past 3 years, FitzGibbons has cobbled together an income from a variety of sources, the reality of going back to a corporate 9-to-5-work environment is daunting. “Ideally, I would like the flexibility to work from home,” she says. “I could work ‘til midnight.”

It’s more than that, though. At this stage of her life, she wants to find work with meaning for her. “My skill set and my passions don’t align,” says Fitzgibbons. “In order for me to make good money, I’d have to stay in the computer and technology industry that I have been in, but it’s not my passion anymore," she says. Her new loves: photography and copyediting. So she’s buckling down to network and explore ways to reposition her career and market her verbal and written communication skills, as well as strong computer skills to an employer who might allow her to work remotely in these new fields. “I’m also open to volunteer opportunities, to get a foot in the door and learn,” she says.

While FitzGibbons is gritty and pragmatic these days, she is also an optimist. “My Dad used to tell me I would find money everywhere,” she laughs. “When we had phone booths back in my childhood, I would put my hand in the change slot, and sometimes I’d find change there. Even today, everywhere I go there’s a penny outside my car. I swear my Dad is sending that to me.”

Next steps to consider

Take advantage of potential tax-deferred or tax-free growth.

Consider professional money management from Fidelity.

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