Ever hoped to achieve financial freedom and become financially independent and retire early? Ever wanted to not have to be tied to a job? This is a common goal that many desire, but few actually take the proper steps to accomplish. How would you provide for yourself anyhow? No matter how hard you might try, the “job” always seems to pull you back into its grasps, right? Does financial freedom always seem like an unattainable dream? Is there a way to implelent a different income strategy and not have to trade your time for money anymore?
The secret to real financial freedom is to increase your income and reduce your expenses. This may not be as seemingly impossible as you might think. All it takes is some self-control, some desire, some wise decisions, and a few tips.
1) Live Frugally
Live within your means… without chasing after stuff that will just end up in a yard sale. Prepare your own meals instead of always eating out. You will be taken aback at how much money you will have avoided spending. Financial freedom is predicated upon avoiding excessive consumptions.
2) Reduce Your Expenses
Be cognizant of your cash outflow. Track your expenses and compare them to a pre thought out “financial freedom” budget. You must commit to managing your recurring expenses if financial independence is your goal. Do you actually need the most expensive option for cable? Do you truly need yet another pair of shoes?
3) Get Out of Debt
When you reduce your recurring expenses, you will free up some money for other things. Debt is slavery. Financial freedom involves liberation from consumer debt. Increase the payment on your credit cards with your extra money. Begin with the credit card with the highest interest rate. This will rapidly reduce your interest expense, and it is akin to earning your credit card’s interest rate on your own money, since you no longer have to pay them that interest payment.
4) Save For Your Retirement
Once you begin repaying your highest interest rate credit cards, there will be an even more significant increase in your excess monthly income. Start putting that cash into investments that can generate even more cash flow. It is most helpful to find investments that are scalable, so that you can add more funds to them at will, and have your next dollar earn the same return as the previous dollar. You create financial freedom when your passive income exceeds your living expenses. Make money your slave, don’t be a slave to money.
5) Invest In Your Retirement
Look for investments where you can taken risk out of the equation soon, while making a fat return. Certain managed investment accounts can accomplish this. These are game changing financial freedom vehicles. The main risk to be concerned about is risk of loss of investment principle. When you’ve removed your original investment principal from the investment, you’ve effectively removed that risk from off the table and your money in that account is now growing for you essentially risk free.
6) Have a Goal For Your Retirement Date
What the mind can conceive and believe, it can achieve. Your main financial levers for getting there are 1) the amount of investment capital you are using and 2) your return on your investment. When planning your financial freedom, start at the end and work backwards, to calculate how much return you think you’ll need to get, and how much money you’ll need to start with. Can you get only 5% return or can you get a 20% return? Some currency trading strategies can perform at these higher levels. Or perhaps, can you leverage $100k of other people’s money, or can you only invest with your own savings? Once you know those two factors, you can then begin looking for ways to get access to that amount of capital and get that target rate of return.
7) Control Your Retirement Expenses
If you have your house and cars mostly paid off, you might not actually need very much cash flow in order to retire early. This is especially true if you retire in a place like Baja Mexico. You can live very comfortably there, on a meager budget. The more residual income you’ve been able to generate, the more places you can live, for whatever length of time you like. This is financial freedom. By executing the above financial freedom plan you will be pleasantly surprised at how much you passive income you can actually establish.
By following to the above financial freedom plan, you will discover a reduction in your living expenses and an increase in your monthly left over money. Then use that excess income to rapidly bring down your debt expenses. Always save something for investing. Establish your retirement goals by beginning with the end in mind. Be disciplined in living within your means and financial freedom will become your reality.