Financial freedom is a thing that everyone wants. We don’t want to be bogged down by being required to go to a job every day of our life. I want to have the freedom to do what I want. I want to be able to stay home with my wife and help raise our kids. I want to be able to help teach my kids about the important things in this world. My goal is to reach the financial summit.
The idea of reaching financial independence is a mindset. You have to get rid of the excuses. Stop blaming the government for your poor choices. People complain that you can’t get ahead in today’s culture. This is not true! Anybody can become a millionaire, all you need is belief and a few strategies to get you there.
Step 1: Acknowledge that your poor choices put you in financial hell. The first step to changing anything is acknowledging that you are at fault. It is not your friends fault, it is not your boss’ fault and it is not the governments fault. The blame must be squarely placed on your shoulder. When my car tire blew out, I didn’t blame anyone except myself, because my decisions put me in that situation. Once I acknowledged those poor choices, then I was able to change the direction of my finances. Read more about step 1 here.
Step 2: Go crazy and get out of debt! Debt is an anchor on your finances. You are paying compound interest to the banks and making the banks richer. To gain wealth you must get out of debt and start investing as soon as possible. The debts that you should pay off are everything except for the mortgage. This should be paid off later. Read more about step 2 here.
Step 3: Build up emergency savings. Bad things happen. You need to be prepared. This means that you need to build up an account of 3-6 months of expenses in a fund that is there in case something comes up. This account will be used strictly for emergencies and nothing else. Read more about step 3 here.
Step 4: Invest, Invest and Invest some more! This is where you build your financial wealth. The more you save now, then the faster you will reach the financial summit. Investing can include buying rental properties, mutual funds, index funds, REITs or individual stocks. Individual stocks can be too volatile, so I don’t recommend then, but all the other investments are great ways to build wealth. This is also the step where you will be investing in a 401k or 403b, Roth IRA or traditional IRA, and ESA or 529. Read more about step 4 here.
Step 5: Pay off the house early. The house is considered an investment, so it could be included in step 4. I feel like paying off the house early is very important that it needed it's own step. Making extra payments on your mortgage should be done as you are investing and thus this will take a while. Once the house is paid off, then you have a major investment that is yours free and clear. Read about step 5 here and here.
Step 6: Reach the Financial Summit! This step is the point in which you make more money from you investments than you make from your job. You could quit work at this time. You can do three things with your money at this point. (1) Spend, (2) Save, and (3) Give. I encourage you to use money in all three of these ways.
Those are essentially the six main strategies to grow financial wealth. This is not a fast process, it will take a minimum of ten years to even reach financial freedom and that’s if you are investing 65% of your income. You can be financially free in 17 years if you invest 50% of you income.
If you want to read more, then click on the blog link above and start reading more in depth about different strategies to reach financial independence.
Above photo was taken at Channel Islands National Park off the coast of California.