This article is by staff writer William Cowie.

You’ve seen them before: 10 mistakes that could ruin your retirement, 6 things to avoid, and so on. But … I don’t know if you’ve noticed that many of those lists are copies of each other. Make no mistake: Common sense is common sense, and there’s only so many ways to catalog it.

The common sense behind any successful savings or investment plan? Rhythm, or doing the same thing month after month. When that rhythm gets disrupted, it can take months, even years sometimes, to get established in a new rhythm. It’s a funny thing about saving or investing: the more you have to think about it, the less you generally do of it. The best savings plans, therefore, are usually the ones that run on auto-pilot. Starting over — no matter the cause — is costly.

My millionaire next door — master of stability

I have written elsewhere about Jim, my neighbor, who is one of those mythical “millionaires next door.” (Yes, they do exist, and — cue the “Jaws” music — they may live close to you; but you may never know it if your conversations never go beyond small talk.) On our other side lives Mario, whose parents immigrated from Mexico, and who owns the auto repair shop which takes good care of our gizmobile (long story as to why we happily own that gas hog). Ours is a decidedly middle class neighborhood, populated by some interesting people.

Anyway, my wife and I were hanging out in Jim and Eileen’s basement after another of her lovely dinners and, having solved all the world’s political problems, the conversation turned to money. Now, for those who haven’t met (or heard of) Jim, he is as ordinary as neighbors could come. In his 60s, he never had a high-paying job or inherited any windfalls. Although he never heard of Get Rich Slowly before (he turns his computer on once a week only to check for Internet jokes that his buddies might have forwarded), he might as well have been a reader from the day J.D. Roth started banging keys.

I could go on about old Jim, except that that particular evening I thought to ask about something much more relevant — the secret of his retirement success (even though he postpones actual retirement, but that’s a different story). As I said, he hasn’t read any of those blog posts with x things to do right and y things not to do wrong so you, too, can retire comfortably. It was refreshing to talk to someone who hasn’t read any of those “lists.” What he did for his retirement is all his own wisdom.

He took a deep breath, another sip of his drink, and out came his list of things to do and to avoid if you want to end up being a millionaire without earning a huge income. (The sequence is his, by the way.)

1. I stay married

Jim and Eileen are older than we are, so that makes them older than dirt! Hey, they don’t use their computers, so I can get away with the truth here. Hehe :)

Along the way, they have seen many of their friends “lose everything” to divorce. (As an aside, it always puzzled me that when you talk to both parties after a divorce, both sides always claim to have “lost everything.” Mathematically, you know that can’t be the case — if one “loses everything,” the other one would gain it; but in one of our universe’s unfathomed mysteries, that almost never happens.)

It happens a lot, unfortunately, where both sides lose. You read in the press about the divorce rate rising, with numbers close to 50 percent being bandied about a lot. As with most things in the popular press, I suspect that number is exaggerated for effect. If you look at hard census data, you will find the bottom line is between 30 and 35 percent of everyone who got married has had a divorce before they turned 40. Although the numbers are getting better (not worse), that is still a very high percentage of people who have (and unfortunately will) endure this trauma of emotions … and obliteration of their finances.

As we talked about it, several things emerged which would not be immediately obvious. The obvious financial hit comes when each party has to pay lawyers and split up properties and other assets. It’s clear that that sets everyone back. However, the hit to your financial future (and, therefore, your retirement) doesn’t stop there. For a few years prior and several years after, it can be difficult to make sound, rational decisions, and that’s pretty much where financial decisions fall. Jim and Eileen’s commitment to stay married is one of the decisions they make which keeps their financial rhythms on track.

2. I never moved

They had their home built over 30 years ago, and never added to it. By simply keeping up the payments, they paid off their house. Once it was paid off, they had a jacuzzi built next to their deck, but that was paid for in cash from funds they had kicking around.

Few transactions have as high a transaction cost as selling a home and buying another one. It’s not only the realtor commission, which can be substantial. There are a host of other expenses attendant to this change, not the least of which is the cost of moving. Then, the new place usually requires some money to make it “just so.” The total cost of a move can be well north of $20,000 — and that’s a straight hit to your retirement nest egg. Jim says that’s a big reason they decided just to stay put.

3. Dead horses

Although Jim says he never read any financial books or websites, he listed a few items we all know and have heard enough of that we can call them dead horses (which don’t need to be beaten again):

  • We always spend less than we make
  • We always have “mattress money” (his term for an emergency fund)
  • We stayed out of debt

As we talked, we agreed on this: Debt is nothing more than impatience expressed in money. If we buy anything with debt, what we are saying is after x months we will have paid enough to buy it. Well, if we saved the money for the same x months, we would be able to buy the same thing for cash. Therefore, the only reason we’re doing it with debt is to change the date of the purchase, i.e., we want it now rather than later. You can argue all you want, but the only difference is the date. To move the date forward, you not only pay more (in interest) but you also increase the risk that you would never become able to make the payments. Jim may be a bit of an Eeyore, but he’s a patient one.

And frugal — their daily drivers are more than 10 years old, both bought used. Their garage is occupied by a top-of-the-line Corvette, though, one of those scary fast ones which they drive only a few times a year. It was an indulgence bought late in life which he bought used as well, and for cash. But he mows his own lawn and fixes everything that breaks himself. They don’t eat out often. In fact, they still owe us a dinner from more than a year ago when he bet against me and lost.

4. I always invested

Jim is not the world’s biggest authority on investing, but from his young days he took the difference between their earnings and their spending and invested it. He didn’t do it with IRAs, 401(k)s or any fancy or tax-advantaged instruments. He simply did it “old-school,” buying stocks and mutual funds consistently. Over the years, he has tried every way imaginable — with an adviser and without, with stocks, managed mutual funds and index funds, following some trends and then not following them. Some of his investments were good and some were mistakes. But as he put it, “If you do it often enough and consistently, you can’t help but come out ahead.” The only thing he didn’t do was buy a rental property. (“I deal enough with people already,” he says.)

When I asked him to what he ascribed his investing success, he didn’t hesitate: “Just keep on doing it, no matter what.” His returns were never spectacular and pretty much mirrored what everyone else was getting. He just did it for a long time, plugging along even when the markets crashed. And he never took anything out for any reason.

As the conversation wound down, he thought a bit and summed it up: “I guess when you boil it down, not making changes is the biggest reason we don’t have to worry about our retirement.” People so often get wrapped up in change because they see only how that change will improve their happiness. What they overlook is how not changing can also add happiness, albeit later in life.

It’s not often you’ll see that in those lists of things to do or not to do to succeed financially.

Of course, not everyone can pull off what he did. I sure didn’t. But it struck me that when we encounter life’s decisions along the way, many of them are not black and white, and very often we overlook the financial cost that change — any change — brings, because that cost is often hidden. Yes, there are things like divorce or moving because you simply cannot find a job, and there are other things like disease and family issues which don’t give you much choice. But there are also many changes we sign up for without considering the long-term financial hit to our retirement investments.

I’ve learned how important it is not to make changes. My wife and I were reflecting on this recently and realized that this is the longest we have lived in one spot. We’re also the best off we’ve ever been. Coincidence? Maybe.

But maybe not.

Is this how you plan to retire successfully? What life decisions have you made that helped secure your retirement?

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