Steps to Financial Freedom
Realizing financial freedom means you can finally live the life you want. It’s a tremendously freeing achievement that can help you feel secure, but it’s elusive for most of us unless we take the proper steps to achieve it.
Paying yourself first is the first rule to achieving financial freedom. That means each pay day you should make it a habit to transfer part of your income (10 to 20 percent) to an investment account – and forget about it.
Another step to financial freedom is to pay down your credit card debt. This is considered consumer debt and is fraught with high interest rates and the inherent temptation to overspend.
Even if you have a low interest rate on your annual balance amount, you could be saving that if you paid off the credit card. Experts agree that paying off credit cards is like giving yourself a raise.
Use tax advantage methods such as retirement savings, IRAs and MyRAs until you’ve maxed them out. Since most of us are uniformed about stocks and bonds, these methods are easy and proven ways to manage your investments.
If you can invest through your workplace, do it. Establish a monetary reserve to get you through tough times or unexpected expenses. Some recommend having a savings account with six to eight months’ worth of net income while others claim that two months savings is enough.
Do what makes you feel most comfortable. Purchase a home only when you can easily afford it. A home can become a financial burden by requiring a higher payment, upkeep, insurance and other strains on the pocketbook.
Rather than making a small down payment, try for a larger down payment (such as 20% of the purchase price). Your mortgage is more likely to be approved by the lender and your home insurance will cost less.
It’s best to purchase a lower priced home than one you’re qualified to buy. The financial freedom of having enough money you need to feel secure both now and in the future is a tough goal to achieve in these tough times.
But, when you follow the advised steps to keep out of overwhelming debt and paying yourself first, you will eventually achieve the dream. You may have to adjust your lifestyle to live within your means – or below it.
Putting off taking an expensive vacation, choosing a less expensive place to live, foregoing private schools for the kids or paring down to one car gets you closer to financial freedom and the ability to achieve what you really want in life.