Recs

0

Retirement Is Not Rocket Science

A regular feature of theMotley Fool Rule Your Retirementnewsletter service is our success stories -- profiles of people who have become financially independent. One of the most remarkable stories involves Billy and Akaisha Kaderli, who, at age 38, left their fast-track lives, moved to Nevis, West Indies, in the Caribbean, and started traveling the world. We caught up with the Kaderlis, currently in Thailand. In this article, Billy talks about how financial independence doesn't need to be complicated.

Getting your house in order for retirement or financial independence is not that difficult. Many investment professionals, journalists, and commentators seem to complicate the issue to the point that even we can't understand it. Safe withdrawal rates, stocks, bonds, balanced funds, commodities, options, laddered portfolios, annuities, offshore accounts, hedge funds ... are you kidding? No wonder some people are confused and scared!

What's a person to do?
First, you need to recognize your needs. Let's be realistic here. How much are you spending now? Not how much do you make a year, but how much are you paying out? With today's computer tools, this is a very easy task to compute. Or you can do what we did: Create a chart on a piece of paper and add to it daily.

Date

Cumulative Spending

Day No.

Cost
Per Day

Times 365

1/1/2006

$24

1

$24

$8,760

1/2/2006

$99

2

$49.50

$18,068

1/3/2006

$144

3

$48

$17,520

1/4/2006

$244

4

$61

$22,265

1/5/2006

$314

5

$62.80

$22,922

(These figures are for illustrative purposes only.)

The longer you keep track of current consumption, the more confident you'll become of your future spending habits.

Once you know your expenditures per year, take a look at where that money is going. If it's to pay credit card bills or other consumer debt, you need to pay that off first. It's fine to use credit cards as long as you completely pay off your balance monthly. And stay out of debt. I know this is not easy, but it's your future, and the money you were paying in interest can now be invested.

With your debts paid off, you can commit to financial independence. Analysts say a guideline of 25 times your annual capital outlay should be enough to sustain your current lifestyle. With the data you've collected in your chart, you can easily calculate a target amount. It's really that simple.

How do you get there?
Only you know what your risk tolerance is, but have some faith in yourself. Learn about no-load mutual funds, read the Rule Your Retirement newsletter, and become your own financial advisor. You can do this. Remember, it's not how complicated your investments are, it's how well they perform and whether you understand them.

You've managed your finances for 40 to 50 years already, right? You maybe weren't perfect, but you're still here! So do you not think that you can manage your finances for the next 40 to 50 years? Even though you will no longer have that paycheck coming on Friday, there are many ways to pay yourself each week. You could simply write yourself a check each Friday, or have automatic withdrawals transferred into your checking account.

So start today. Get your consumer debts paid off completely, educate yourself on investment opportunities that you understand, and take control of your future. Dream of financial independence, and let that motivate you. You can do it -- we did!

In 1991, Billy and Akaisha Kaderli retired from the brokerage and restaurant businesses to a life of international travel. Visit their website at RetireEarlyLifestyle.com, and check out their new CD book, The Adventurer's Guide to Early Retirement.


Read/Post Comments (0) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 501488, ~/Articles/ArticleHandler.aspx, 10/21/2014 6:51:47 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated 9 hours ago Sponsored by:
DOW 16,399.67 19.26 0.12%
S&P 500 1,904.01 17.25 0.91%
NASD 4,316.07 57.64 1.35%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes


Advertisement