Financial freedom may sound like a vague concept. Trust us. You want to know what it is and how to get there. Right now, millions of Americans are living paycheck to paycheck. From the outside, they look like they have it all. They drive nice vehicles and live in McMansions. In reality, they are leveraged to the hills. Just one missed paycheck, and they could lose everything.
Achieving Financial Freedom
- 1. Get out of Debt.
- 2. Build Passive Revenue Streams.
- 3. Learn to Live Within Your Means.
1. How Debt Can Affect You
Taking out debt is much easier than paying it off. Most people don’t even think about it when they dig themselves deeper into a hole. Here are a few ways it can directly impact you.
Interest:
If you buy something with cash, you pay the sticker price. When you finance it, you pay the sticker price plus interest. In the case of a home, you pay as much in interest as you do on principle by the end of the mortgage.
Pressure to Earn:
When you have debts, you need to have an income. Do you like your job? We hope so. If you do not, it’s going to be difficult to quit due to all of your debt.
House of Cards Syndrome:
A small mishap can quickly spiral out of control. If you have ten payments due each month, your flat tire could derail all of your financial planning.
2. Money Mistakes and How to Avoid Them
How do you avoid getting into a situation like this? It’s simpler than most people believe. Mostly, it comes down to your decisions. Good decision-making leads to better futures.
Taking Out Non-Productive Debt:
What is nonproductive debt? Well, what do you think productive debt is? Compare your credit card to your mortgage. A credit card does nothing for you. Your mortgage at least secures your right to own a property.
Late Payments on Regular Bills:
Always pay your bills on time. If you are in a difficult situation, late payments make it even worse. For example, if you are late on your Oncor bill, you get hit with a late fee. Then, you have to pay even more.
3. Steps to Financial Freedom
There is a way for you to escape this endless cycle. It does require commitment and self-discipline. As long as you can furnish those two things, you can reach a new plateau.
Pay Off All Debts:
Debts are the unseen burden. Each month when you pay them, some of that money goes to interest. By simply getting rid of your debt, you can free up a lot of monthly cash flow.
Minimalism:
How many of the things that you spend money on do you really need? For most people, there is a huge contrast. We tend to spend money on things that we enjoy and make us happy. Try going for a few days without spending money on anything unless it is necessary for survival. At the end of the day, how you spend your money is just as important as how much you earn.
Working Around the Clock:
Maximizing your income should be of utmost priority. The easiest way to do this is by working around the clock. You do not need to do it for the rest of your life. However, if you work 60 or 70 hour weeks for five years, you could live the rest of your life in leisure.
Finding Freedom Financially
In addition to working overtime for a specific period to build your nest-egg, you need to allocate your new-found resources appropriately. For example, buy some rental properties. Each property you own is an additional income source. Eventually, you can live off of that income and reduce your work hours.