My Journey Toward Financial Freedom

I have a 20-year old memory of asking Bob Bova, the founder of Moneywatch Advisors, if he thought I could retire if we could accumulate $1 Million. At the time the company I worked for was being acquired – there’s no such thing as a merger – and I was particularly frustrated with the new management team. Bob and I were playing golf at Andover Country Club where it was abundantly clear that the PGA Tour was not a viable fallback career and I was at a professional low point and looking for some hope. In typical fashion, Bob didn’t say, “sure” and give me false hope. Or, “no way” and dash my hopes. He said, “Let’s sharpen our pencils and make a plan.”

Lisa and I had been clients of Moneywatch for 2-3 years at this point, signing on after observing my parents’ outstanding experience as clients for about a decade. Until then, they had primarily focused on managing the investments within our 401(k)s. But, what Bob developed for us now changed the course of our financial lives.

The Financial Planner

Let’s face it, the world is full of people who call themselves financial planners, financial advisors, wealth managers, and other titles used for marketing purposes. Unfortunately, many anoint these titles on themselves without the training and competence the titles imply they have. Financial planning isn’t about selling insurance and it’s not even purely about investments. To call oneself a financial planner, one should be trained and demonstrate competency in multiple areas such as: cash flow/budgeting, retirement, tax, estate planning, education funding and, yes, investments. The “Good Housekeeping” seal of approval for all these disciplines put together is the Certified Financial Planner (CFP) designation that those of us who act solely in our clients’ interest, and don’t sell insurance or other products, obtain. Now, no one person is a complete expert in all those areas so a good financial planner works with CPAs and estate planning attorneys and others when additional expertise is necessary.

Moneywatch doesn’t sell insurance or any other products so, as true financial planners, they started us on our journey by going through a disciplined financial planning process.

Asking the Right Questions

How many times have you met someone who thought they had all your answers before asking any questions? The CFP training teaches you a process to thoroughly understand an individual or family’s financial life and their goals – short and long-term. For us, we wanted to develop a plan where we could achieve financial independence by our early 50’s. To us, that didn’t mean we’d stop working, that meant having the flexibility to pursue a career based on a passion, not just a paycheck. So, Moneywatch gathered our living expenses, assets, investment assets, and much more to help determine how much we would need to accumulate by our early 50’s to achieve our dream/goal.

The Financial Plan

A good financial planner is trained to synthesize all the information gathered, as well as their clients’ desires, into a well-coordinated plan that connects their assets to their personal goals. It isn’t so much a final product as it is a process, one that will adjust as circumstances change over the years. In fact, we worked together to adjust our plan after the kids were born to include the costs of raising children and saving for college educations.

For us, here is what it delivered:

• In order to sustain our standard of living throughout our lives, our plan identified the target amount of financial assets – accumulated savings – we would need by our early 50’s;
• It showed us how much we needed to save each year to get us on the right track to hit that goal;
• It structured our investments as one portfolio, across all our accounts, in order to grow our savings at the pace necessary to hit our goal;
• It showed us how to save taxes by saving to the proper accounts available to us and how to best prepare us for when we eventually take income from those accounts;
• It developed a budget that served our current purposes and didn’t choke our lifestyle. Financial freedom was a goal but life wasn’t going to start then, just change then.

As a couple consumed with our careers and no time to do this for ourselves, we needed simple takeaways. While the plan contained many details, they boiled it down to what we wanted and needed to know - bite-sized, understandable pieces.

Peace of Mind

I recently heard a faculty member at the University of Kentucky explain that students today have access through their phones to virtually any information they want or need. So, the challenge of faculty is not to simply convey information but help students interpret that information. That is exactly what Moneywatch did for us back then and what we do now for clients. The details of the plan were quite complex but their recommendations to us were clear and concise. “You two focus on X, we will do Y, and you can rest assured that you are on the right track to accomplish your goals.”

Remarkably, I slept much better after going through this process. Having a goal, complete with steps to get there, made life easier and simpler. Yes, the purchase of my employer at the time was difficult, stressful and extremely challenging. But, our financial plan was like our little secret, made just for us. Yes, work is hard, but it won’t be like this forever. When you’re in your 30’s, retirement seems like something that is so far away it will never arrive. It’s akin to death on the time horizon. So, having an intermediate goal of financial freedom not only provides a motivational target but one that seems achievable too.

Results

Well, it worked. We actually exceeded the goals set in our financial plan by our early 50’s. And, that allowed me to take on a new challenge that has reenergized me after a couple of decades of professionally doing the same thing. Now, please understand, between our early 30’s and early 50’s weren’t lost decades. We did a lot of living during that time – rode the ebbs and flows of challenging careers, raised two wonderful children (ongoing), enjoyed memorable vacations and developed meaningful friendships – all while shooting for this goal. But, I can tell you, financial freedom – however you define it – offers choices. And, who doesn’t like choices?

Steve Byars