Ways To Achieve Financial Freedom
While many people think about how wonderful it would be to attain fantastic wealth, most would be thrilled simply to be free of monthly bills and a soul-crushing day job.
The dream of financial freedom is a realistic one and you can start working toward it almost immediately with a little forward planning.
The first thing you must do and probably the hardest, is realize that this is not an overnight process.
There is no single action that will instantly repair your finances and pull you out of the hole you’ve been living in for so many years.
It takes planning and careful analysis of your current spending and how you can improve it over time. Let’s take a closer look.
Step 1 – Learn How to Budget
The first thing you must do on the road to financial freedom is learn how to budget your money.
Millions of people think they do this every day and find later that they have no idea how much they spend each month and are not saving nearly enough of their paycheck.
So, before you start brainstorming what you will do with your vast stores of new wealth, you must first figure out exactly what you are spending right now and then how to control that spending.
A good budget should do three things. It should identify all recurring monthly expenses, layout a realistic distribution of funds for things like food and entertainment and then set aside a reasonable portion for later.
If your budget doesn’t do this, it won’t work as you start trying to recover from debt.
Step 2 – Get Out of Debt
Next, you need to pay off the debt you already have. Whether it is relatively stable debt like a car payment and student loans or exorbitant credit card debt, you need to take action now to pay it down before it buries you in interest and monthly minimums.
Break down your debts according to interest rates. The higher the rate, the higher priority the payment.
Next, try to double your minimum payment.
If you look on your bill, you’ll see a box that shows how long it takes to pay off a credit card with the minimum payment – usually it’s between 5 and 15 years.
Double that and it drops to 2-3 years. Interest will kill you when you pay the minimum.
Finally, stop taking new debt. No matter how much you want or think you need something, you probably don’t. Get rid of credit cards as they are paid off, close loan accounts and start using credit responsibly now, as part of your built-in budget.
Step 3 – Save Your Money
Putting your extra money in the bank is good – any money you’re not spending is money you’re saving – but it isn’t enough if you want to achieve true financial freedom.
You need to make your money work for you. At the same time, steer clear of speculation – those educated guesses that can just as easily bankrupt you as free you of the pressures of monthly payments.
Look for sound investments like precious metals, mining stocks, and commodities, and diversify your money into a range of stable mutual funds and overseas cash holdings.
You’re not going to make a fortune overnight in anything unless you get very lucky. That’s not investing – it’s gambling.
The Final Word on Financial Freedom
If you want to successfully free yourself of monthly payments, set aside money for retirement and reach a point where growing your income can be as much fun as it is stressful right now, you need to take it seriously.
Take notes on what you spend, balance your checkbook every month, record expenses and how they could have been avoided.
By having a clear plan in place, you not only announce to yourself and your family where you want to be next week, but where you want to be five or six years from now.
Financial freedom doesn’t just happen. People who go on vacation every 2-3 months do it because they have planned meticulously and generated a plan that works within their means.
Do the same and you will be set for years to come.