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Learn How to Achieve Financial Freedom

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Twosomes could learn a few things about tackling money issues from this very unlikely source. (Take a moment now to picture your beloved sporting a perfectly worn leather tool holster and rugged flannel shirt, beaming at a job well done. OK, enough fantasizing.)

It's not too far of a leap to connect the similarities of home-improvement projects to other household chores, including managing the family finances. Both have the opportunity for big payoffs. Both have the potential to be fraught with frustrations. Both undertakings are designed to increase comfort, livability, and, in some instances, a lovely southern view. Neither is free from a certain amount of drudgery, anxiety, or opportunity, not to mention the risk of a few paper cuts or trips to the emergency room.



But in matters of money and small construction, four hands are always better than two. The old saw about measuring twice and cutting once can get dull if you're the one doing all the measuring and cutting.

The blueprint for financial dreams
Bill and Akaisha Kaderli, frequent Fool.com contributors, were like most couples working long hours at the office in the hopes of someday celebrating their successes with a cushy retirement. But retiring "early" at age 55 meant that they would have to carry on working 60- to 80-hour work weeks for another 20 years.

They decided that their present happiness was just as important as their future well-being. Actually, Bill was the one who decided that a dramatic shift was due. It took a bit of negotiating and number-crunching to get Akaisha on board with the plan to leave the rat race and travel the world.

The difference between construction and financial affairs is that matters of the heart tend to have more fluid rules. (You probably don't want to test the accepted rules of positive-negative charges when it comes to handling wiring.) Just because there are black and white numbers in your checkbook, that doesn't mean you can treat this topic with black and white answers. Consensus is key if you want your union to last till death do you part.

Akaisha describes the negotiations in their household this way: "Bill was like a bulldog with a chew toy — a bulldog who also knows how to crunch numbers. He's the one who sat down, simplified our personal infrastructure from a what-does-this-cost-us point of view, and then laid out his findings to me."

To avoid coming to blows, consider treating your finances as you would a fixer-upper. Come up with a master plan for your family's future — together. Tackle big projects (saving for retirement) and small ones (cutting down the entertainment budget) — together. When you keep the ultimate payoff in mind (and perhaps a few snapshots of your retirement manse on the fridge), developing a shared vision of what could be is that much sweeter.

For the Kaderlis, the vision of what could be was leaving the rat race at age 38 and traveling the world. And that's exactly what they've been doing since 1991. But getting there was nothing short of a major financial reconstruction. Says Akaisha, "Neither of us could have created this unique lifestyle alone. Both of us had to be willing to endure growing pains and come back to the discussion table again and again."

Do the prep work
Before any renovation project — whether it's retiring at age 38 or paying off the house early — there's a certain amount of prep work to be done. Having a clear financial goal and a dedication toward reaching it are key.

Start off by thinking of money as opportunity. The best things in life are indeed free — like catching the twinkling eye of your Sig. O across the room at a cocktail party. All other things require cash. Don't avoid the topic of finances just because you think it's unromantic. Instead, start your money conversation by discussing your dreams. Maybe you both pine for an early retirement, a summer home, sending the kids to your alma mater. Next, start brainstorming ways to align your finances with your life goals.

As you lay out your project, play to your strengths. Who's better at bargain shopping? Which one of you has a knack for researching things online? Answer these questions, and you've started to form your plan of attack.

Don't use trouble spots as an excuse to give up. According to the Great Neck survey, 6% of couples say that they fought like cats and dogs during their home renovations. Their main complaints? A full 20% think that their partner can be too bossy, and 16% said their partner is too much of a perfectionist. When things get heated and nerves frazzled, take a break and approach the project with fresh eyes and a full night's rest. Oh, and try not to be a bossy perfectionist.

Finally, divide and conquer. This is the old "I'll cook if you do the dishes" rule at play. Even if one of you is giddy with excitement over balancing the checkbook or reviewing your insurance needs once a year, it takes two to make your financial whoopee work. That may mean that one person does most of the heavy lifting when it comes to money matters while the other picks up the slack in other areas of household management.

With the tarp rolled out and the kids packed off to the babysitter, it's time to don your grubby clothes and get to work.

Spruce up the exterior
A little superficial housekeeping can go a long way to improving your living conditions. Just finished your taxes? What a great time to dig a little deeper into your financial files! Bill and Akaisha started with a simple piece of paper and tracked their day-to-day expenditures. From there, they extrapolated and developed a financial snapshot with more perspective. That was the jumping-off point for their financial overhaul.

Perform a patch test
Don't you hate it when that perfect shade of celadon on the 1-inch-by-1-inch sample turns into what your brother-in-law affectionately refers to as "the puke-green room?" Before you go hog-wild rearranging your finances, run through a few scenarios. What would happen if you were forced to live off one salary for six months? How much would it pay off in the future to increase your contribution to your work retirement plan by 3%?

Bill and Akaisha figured out that they could sustain their dream early retirement on $24,000 a year. Here's more on how they came to that conclusion. Borrow and outright steal from their plan the parts that best serve your financial goals.

Pick one project at a time
In home renovation, it's all about increasing the resale value of your abode. In finances it's, well, getting the most bang for your buck — the "bang" being enjoyment and peace of mind. Whether it's retirement savings, paying down debt, or adding to your child's college savings, concentrate first on one area that'll give your family the biggest payoff. After that, tackle your next project with the same zeal.

Lean on your partner
Couples said that one of the most satisfying parts about working together on home-improvement projects is proving that they could work together, according to the Great Neck survey. And while wielding sharp objects, no less. Ah, togetherness.

One of the hardest parts about Bill and Akaisha's unconventional retirement was dealing with the emotional component of their decisions. They faced times of uncertainty in their journey, but together they made it through by constant assessment, research, and reaching out to others who were on the same path.

Don't be shy about calling for backup
Asking for reinforcements is not a sign of failure. But before you cede any financial decisions to others, do your homework. You wouldn't hire an electrician without calling his references. Same goes for your financial pros.

Do you want to retire early, or just avoid working for the rest of your life? Be sure you're on target toward reaching your retirement goals by taking a 30-day free trial subscription of our Rule Your Retirement newsletter service. Or renew your subscription and get a copy of Stocks 2006 free.

Dayana Yochim has a way with a staple gun, although she has never been described as "handy" around the house. Otherwise, you can bet she'd tout that in her Fool disclosure.

This feature may not be reproduced or distributed electronically, in print or otherwise without the written permission of uclick and Universal Press Syndicate.
 
 
 
 



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