Repairing your Credit and becoming Debt Free is your Road to Financial Freedom!
Here are some select quotes that have withstood the test of time –
“An investment in knowledge pays the best interest.” Benjamin Franklin
“Too many people spend money they haven’t earned, to buy things they don’t want, to impress people they don’t like”. Will Rogers
Financial freedom is to be able to what you want, when you want, without being limited by money concerns.
Achieving financial freedom may not be as difficult as you think.
We have all heard stories of the school teacher, janitor, etc ( insert low paying job of your choice) who have lived within their means and saved all of the money they made only to give away a surprisingly large donation to charity upon their death.
With some careful planning, setting financial goals, cutting unnecessary expenses staying frugal and focused, just about anyone can do it.
Start with the long term plan:
Figure out you finances, income and expenses and where you are at both in your finances and in your life.
Obviously the longer your time horizon the more you will be able to save over time.
Understand how much you are spending each month and how much income you are producing to cover those expenses each month.
Determine what your financial goals are – both short and long term. Once you have your goals set, the target that you will be shooting at, you can then create your plan.
How do you eat an elephant you ask? One bite at a time.
Chunk down your plan. One step at a time. Write down your goals, numbered in order of importance.
Pay yourself first! Just like tithing at your church, tithe yourself 10 to 15% of you monthly income directly into a savings plan. You will be surprised at how quickly it can add up.
Here’s what the hierarchy of the path to financial success would look like if you put it in a pyramid form –
#1. Surviving stage – This is where you have to start getting your head in the game. Look around at where you are at in life and start thinking about money correctly. This is the stage, where you need to start living below your means, watching your expenses and keeping your expenses, what you spend, less than your monthly income.
#2. Eliminating Debts – This is where you need to start cutting down and eliminating your “bad debts” like credit cards so that you can start to make some real progress on your journey.
#3. Financial Literacy – This is where you start to wise up about buying things that you don’t need on a high interest credit card but instead start putting moneys aside in a rainy day fund for emergencies and unforeseen expenses.
#4. Investing – Congratulations, now that you have achieved some level of financial literacy this is where you turbo charge your savings and start your retirement planning. Maximizing your 401K or IRA accounts, passive investing in stock index funds, bonds etc. to start collecting interest instead of paying interest.
#5. Tax Planning – Wow! Look how far you have come. Now that you have eliminated the urge to “buy now” with those high interest credit cards, and you have learned to save money and then invest it wisely it is time meet with your tax advisor / account and or financial planner to to see how you can minimize your taxes. It is also time to create a will, review insurance needs, and create a system to monitor your monies.
#6. Financial Freedom – At this stage you have sound investments compounding your monies, possibly passive incomes from real estate or stock dividends that exceeds your expenses. Congratulations – you have made the journey!
While this pyramid is not perfect and we will all encounter obstacles in our paths as we make the journey, it can be used as a guide or a helpful template to give some thought to as you make your financial decisions along all stages of life’s beautiful journey.
Remember, as Ralph Waldo Emerson once said ” Life is a journey, not a destination”. May you enjoy every step along the way!
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