I have this friend in Florida named Fred. He's a transplanted Bostonian who moved to South Florida eons ago. He still has that New England accent and still believes the Boston Red Sox will one day upend the "Evil Empire." He is a dreamer. He retired about seven years ago and has been trying to convince me to do the same so that we can spend time together cleaning out the cat and dog bowls. My friend Fred is a tad older than I am even though we both ran up San Juan Hill with Teddy Roosevelt. But, that's another story.


In any event, Florida Fred quit the rat race with a fairly decent payout. But, before he actually took the money and ran, he did some fancy footwork in getting himself ready for the time when he would spend a half-hour cleaning Brandy's (his Yorkie's) bowl. (Incidentally, I don't believe in the word "retirement." I think in terms of "changing lifestyles." I have no intention of spending a half-hour cleaning the cat's bowl.)


Now, I should mention that in my line of work, I know most of the prominent financial planners in the country along with a smattering in England, and I have a fairly good bead on what needs to be done. In fact, most of the planners I have spoken to are pretty much in agreement on what constitutes a solid financial plan. There are no surprises here, even with asset allocation differences.


However, Fred was already in the vanguard of these things when he was packing it in and he espouses the same two key elements (as if they were mantras) to me whenever we get together.


  • "First you must have a roof over your head that is paid for. That means, no mortgage. Now granted, with a coop or condo, the mortgage may be paid but you will still have maintenance payments to be made on a quarterly basis and of course, what about if you rent an apartment or house? In that case, you must compute whether your monthly Social Security check (provided you are eligible) and any other pension payments, will cover that, preferably with room to spare."

What is Florida Fred really talking about? A money stream. With the source being dried up (meaning that salary from the company), one has to make do with what is available.

  • "Second, all debts must be extinguished. You can't go into a retirement mode carrying debt. You simply won’t have the money to cover this."

Now obviously, Florida Fred is not talking about those of you out there who have more money than you can count. He's talking about the rest of us, the majority, the 99 percent of Americans.To be sure, Fred simply doesn’t believe in debt. In fact, he carries only one credit card: with a zero percent charge and he pays all bills when they come in, incurring no charges whatsoever. If the credit card company decides to move to a percent fee, then Fred simply moves to another company.


Is he a tightwad? Absolutely not. He has a beautiful house, a big swimming pool, a Jacuzzi, and drives a Jaguar. He goes on cruises, eats at the finest restaurants, and plays golf but only on public courses. "I'm not giving money away belonging to fancy country clubs."


Is he smart? Other than still betting on the Bosox, you better believe it. He wouldn't have made it to the top of San Juan Hill if he wasn't.

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