Money problems don’t have to be financial

Willingness to seek self-control is key.

Dear Pete: I am 75 and my wife is 65 (second marriage for each of us). I enjoy my work but would like to be able to retire and have that choice. I earn between

$300,000-$400,000 in commissiononly sales. We have adequate insurance to cover our debts in case of my death. We have about $400,000 in debt (mostly in a home-equity loan with mostly interest-only monthly payments). Our assets are mostly in stocks and incomeproducing real estate and total about

$2 million.

So what is our problem? We have never kept a budget – ever. We need about $15,000 a month before taxes just to maintain our lifestyle. We really do not know what our actual expenses are, and it is solely up to me to cover those expenses. It concerns me greatly that, if my health were to deteriorate and I could not work, we could not maintain our lifestyle without selling off assets. Neither my wife nor I are very frugal. We need help and do not know where to start. My wife does not seem too con- cerned as long as I continue to provide sufficient funds to maintain her and my lifestyle. Any suggestions about where to start?

— Bob in Raleigh, North Carolina Bob, I fear you’ve fallen for the great American retirement lie that you will be able to retire when you have a lot of money. Two million dollars — supplemented by roughly $400,000 a year in work income — is a lot of money by most standards. Yet as you’ve learned, it’s not enough.

Let’s begin with the positives. You are really good at making money. That’s a skill. Unfortunately, that skill can often be misconstrued for being good with money. The more money a person earns, the more likely they are to confuse the two concepts and become overconfident in their financial health.

But career success and financial success are very different. Financial success isn’t a number. It’s not an income level or an asset level. Financial success is self-control.

You can achieve that self-control, but it will be difficult. It will require you to take inventory of what’s really important to you. But be aware that re-evaluation can be especially difficult when another person is involved who has their own thoughts about self-control. And the difference in ages can exacerbate these views. It will help if you are both in agreement on this going forward.

Now, to some numbers. First, choose a retirement date. I recommend the date be about two years away, based on the information you provided.

Once you’ve selected the date, determine a sustainable level of annual income. Based on the numbers you provided, you should be able to generate at least $100,000 a year off your assets and Social Security. Consult a local financial planner to verify my prediction.

Over the next two years, you must wean yourself off your need for $400,000 of income a year. Do it right, and you will complete your wean on your retirement date. You could try to do it cold-turkey now, but I don’t like your chances.

If you don’t know where to start, grab your bank statement, a calculator and four color markers. With the first color, circle the beginning balance and ending balance for the given month. Did you have a surplus (spent less than you made) or a shortage (spent more than you made)? Take note. Going forward, you must show a surplus, at an increasing level, each month over the next

24 months.

Now grab another color and circle your deposits (presumably your income) and add them up. This total will eventually go down once you retire. But your commitment to monthly surpluses will make the decrease palatable.

Next, circle your recurring monthly bills (not one-time purchases) with the third color. Add them up. If your major bills are unsustainable at your future

$100,000-a-year income, start making changes now to get them down. Don’t wait.

Finally, use the last marker to circle the most frequently reoccurring expenses on your statement. Total those numbers. This is the make-it-or-break-it marker. How you get these expenses under control will determine whether you’re able to retire.

Financial success begins with the ability to make money and ends with your willingness to seek self-control.

Peter Dunn is an author, speaker and radio host, and he has a free podcast: “Million Dollar Plan.” Have a question for Pete the Planner? Email him at AskPete@petetheplanner.com.

The views and opinions expressed in this column are the author’s and do not necessarily reflect those of USA TODAY.