Out of the blue this week I received a call from one of the most interesting guys I’ve ever met. Jim had come to me almost three years ago looking for my take on his financial position, and any moves I thought he should make. I found him to be (even though he’s an attorney) a very witty, self effacing, and enormously intelligent guy. You can’t help buy like him.

After listening to him decribe his current position (spring of ’04) it was clear to me what he needed to do.

He was from Wisconsin and went there during his wife’s (a teacher) summer vacation to take advantage of the opportunity he saw in land there. He subdivided land into several parcels and sold them to folks who wanted to build second homes or vacation cabins on a lake. He’s doing this pretty much by himself. Like I said, a very smart man. He also owned a pretty well located four unit property in San Diego. These units had, if memory serves me, a little more than $500K in net equity.

Jim was retired from his law practice, as he’d had enough. He and his wife lived on her teacher’s salary and the cash flow from the SD units. The Wisconsin project was longer term, and progressing more slowly than he’d projected. (welcome to the club) In any case, any profits would be considered ‘job’ income anyway. After carefully reviewing his status, I made the following recommendations.

In the end, he decided he didn’t want to buy in Phoenix, or even sell to trade anywhere. He thought the SD market was going to give him growth, (correct) and was iffy about getting rid of that portion of his cash flow. He knew he needed to grow in order to create the retirement he envisioned, but just couldn’t make himself pull the trigger. I tried, in vain, to convince him exchanging would literally turbo charge his equity growth rate, esspecially if he went to Phoenix.

He remained unconvinced.

Fast forward to this past Tuesday morning.

He called me saying he’d like to buy me lunch. Seems he’d been doing the numbers, and his decision back in ’04 had literally cost him $2.6Mil in equity growth — net. If I agreed to lunch he promised to order filet of crow and eat it in front of me. Gotta love the guy.

I felt for Jim because counting what would have been his original Phoenix down payment, his equity indeed would have totaled at least $3Mil. “What would my life be like now with only a 6% yield on that much money? I think I could find a way to live on $15K a month in retirement.” Ouch — and a half.

His next question shows why I always liked Jim. “So BawldGuy, what do you want me to do?”

We’re scheduled to talk on Valentine’s Day which is when he’ll finally be done with all repairs and remodeling. I’ve advised him to sell as a first step in a tax deferred exchange, taking equity out of SD.

Next I’ll detail the Purposeful Plan I’ve created for Jim. He now knows that growth is the only thing that can make his retirement dream come true — and growth is what he’s gonna get.