How to have a perfect financial life

Perfect is unattainable. At least that's what everyone says, but what if it isn't? I give realistic advice. Which is why I'm going to argue that you can have a "perfect" financial life, as long as your definition of perfect aligns with mine. Most importantly my definition of being perfect doesn't involve being a millionaire. Wealth may be a result, but not always. A perfect financial life is all about making good, smart decisions. It is possible to make the right money decisions all of the time. Don't believe me? That's okay, just settle in and allow me to tell you the story of Herm and Cloris.

At 22, Herm and Cloris both graduate from college with as little student loan debt as possible. Upon graduating they both contribute to their employer-sponsored retirement accounts. And instead of buying a house right away they decide to focus on two goals before they turned 30, pay off their student loan debt and save for a down-payment. Did I mention they got married and didn't go into debt doing so?

By 30 their student loans are paid off and they've saved enough to buy a home. Their mortgage is just under 25% of their monthly take home pay. As they get raises over the years they save them, to prevent growing dependent on their income. They pay cash for a used car about every eight years or so.

Since Herm and Cloris made the smart decision to get a 15 year mortgage, their home is paid off by the time they are 45. From age 45-65 they pay for their kids' college education, a wedding, and max out their retirement accounts. By 65 they are only living on 48% of their incomes. This is when they retire.

They travel and volunteer throughout their retirement. When Herm's health declines they rely on the Long Term Care Insurance they purchased at age 55 to help cover the costs. Herm moves into assisted living at age 80 and lives there for 19 years. His stay costs $1.5 million but since insurance covered his stay Cloris was able to remain in their home. When they both pass away their children and their favorite charitable organization share the $5 million Herm and Cloris have amassed.

"A few things may become very clear upon reading this. To begin, you and I may not share the same opinion of what’s perfect. That’s okay. I’m comfortable with my definition, just be comfortable with yours. Second, there were a tremendous number of opportunities to ruin this storybook tale. From student loans, their wedding, their home purchase, car purchases, and Long Term Care insurance, Herm and Cloris were faced with all the same decisions that you and I are faced with everyday. Yet, they showed resolve in an indelible fashion. Do you and I do that?

It’s funny how easy it is to make excuses as to why Herm and Cloris’ story isn’t realistic. Heck, I did it myself while writing the tale of Herm and Cloris. But why can’t we do this? You and I may have taken the wrong decision path in the past, but that doesn’t mean we can't strive to make more objective decisions in the future which reflect a longer-term perspective. You have the ability to be perfect from this point forward. Of course by perfect, I mean perfect decision-making." (courtesy of the Indy Star)

This story is from my Indy Star column this week, you can read the whole tale here.