Debt Free Retirement

As many of you know I have promoted a debt free life style. Recently, one of my clients and good friends reached a major milestone along their journey to a successful retirement.  I wanted to share this with all of you.

Dear XX:

I just wanted to take a moment and celebrate with you. The fact that you paid off your home completely is really exciting news.  Even more impressive is that you have paid off your home, your business, your cars, everything - That’s remarkable!

In my pursuit of finding contentment, I have lived my life this way for years and have never regretted it. There were a few moments when the stock market was rocking and rolling, that I was feeling that I was missing out on the rally. But in the past ten years, the stock market has experienced a 100 year flood event twice. Your money invested in your home and hard assets are safe.

Here are the steps I have taken after I had everything paid off:

1. Save an amount monthly into a money market or bond fund to purchase the next car with cash. It sure is nice to receive interest rather than pay interest.
2. Take half of your previous house payment and automatically invest it every month into a stock mutual fund. This will give you the discipline to buy into the market even when the market is tanking. You can sure buy a lot of shares cheap during such difficult times. Since I am receiving dividends rather than paying interest, I only need to use ½ the previous payment.
3. Put the other half of your previous payment into a retirement account.
4. I also find at the end of each year I have an additional lump sum available to work with. I divide this money up in several ways. I make provision for any unusual expenses I anticipate this next year, I review any special needs for the charities I support and then I save the rest.

There have been several additional benefits to being debt free. First, my wife feels a lot safer and secure, which reflects itself in the quality of our home life. Second, the secret to making money in the tough stock market is the ability to hold tight when it is gyrating against us. I’m not saying I’m always calm, but I stick to my game plan. And lastly, we have been free to tithe to our church and give to other missions generously. God has blessed us abundantly and it is our choice to use some of this excess for his benefit.

Some people run to gold for safety. I turn to being debt free and cash strong. I’m glad you selected this option as well. A lot of advisors would not have encouraged you to go this route, because they want to have the ability to invest all that money for you.  I made a commitment when I started my business to only encourage people toward actions I would take myself.

I look forward to sitting down with you soon and updating your financial plan to establish new goals with your new found position.

Once again, congratulations. 

Ron Dickinson, CPA, CFP^®, MPA-tax