- Pay off your debts. Paying off debt is a key factor in obtaining financial freedom. Pay off credit card debt first starting with the smallest bill. Then begin paying off loans and any other debt.
- Plan for your retirement. Many Americans have to work past retirement age because they have no savings or retirement. Contact a brokerage company and open a no load mutual fund. Visit www.morningstar.com for information on planning for retirement.
- Start a business. Find out what your passion is, what you love to do more than anything else. Do your research before starting your business. You can start your business in your home; there are many tax write-offs for home based businesses. Contact the Small Business Administration at www.sba.gov for information on starting a business.
Friday, April 01, 2016
7 Steps to Financial Freedom
Most Americans are too materialist and focus all the energy and money on buying things. You can have financial freedom no matter what your current financial situation. Elinor Sauerwein was an elderly poor woman who saved her money and donated over $1,000,000 to charity. Oseola McCarty was an elderly poor woman who saved her money and donated over $150,000 to a local college. Both women lived a simple life but always had everything they needed.
Financial freedom requires changing your mindset, changing the way you think about money. If you believe you will always be poor, you will. If you believe you will always be in debt, you will. Your words are powerful and your actions are even more powerful. Your thoughts, attitudes, beliefs and actions always have to align with your financial goals.
1. Budget. Track your spending daily or weekly using pen and paper, a Word or Excel document, an app or online banking. The key to financial freedom is creating a monthly spending plan and spending less than you earn.
2. Less. Less is more. Spend less than you earn. Buy more needs versus wants. If you have less than 5% of your monthly income left over each month you need to reduce spending by 30% - 50%. Use the money left over to contribute to a savings account or pay down debt. Avoid buying liabilities or things that have no value such as designer clothes, shoes, cars, games, electronics and accessories. Buy items that appreciate over time and have value such as homes, stocks, bonds, diamonds, gold or art.
3. Become a homeowner. Becoming a homeowner provides a tax write-off, increases your financial worth and provides you with an asset that will appreciate over time. Visit www.hud.gov for information on buying a home.
4. Buy insurance. Buy health, life and disability insurance. Many people get in debt from medical costs because they do not have health insurance. Disability insurance will help you if you become seriously ill and have to be off work for an extended period of time. This will also help you to recover because you will not have to worry about how your bills will be paid during your time off from work. Life insurance helps cover burial costs after a loved one has passed.
By following these steps, developing practical spending habits and investing your money wisely you will be well on your way to financial freedom.