Eight Steps To Financial Freedom – Part One

Imagine what you could do in your life if you had financial
freedom Perhaps you would never work again Or you would work,
only it would be what interested you Perhaps you would get that
house, or car, or boat you dreamed of And the best part would
be that you wouldn’t have to worry about how you were going to
afford these things
Financial freedom is a great thing, it really is But to get
there it takes work, and if you aren’t prepared to put in that
effort, then there’s no point in reading on But if you do read
on, you’ll learn that although it takes hard work to get
financial freedom, the steps to it aren’t that many
Step One – “Know thyself”
That’s it in a nutshell What it means is, you’ve got to take
some time out to think about what you want out of life What are
your hopes and dreams? You also need to think about who you are
and what it means to be you What are your strengths, what are
your limitations? Where do you want to improve, to grow? What
are you interested in, what matters to you? What are you not
interested in? And, of course, what does ‘financial freedom’
mean to you? Take a notepad or a journal and write your answers
to these questions Just write, without hesitation Keep
writing Then take a break, come back to it later and add some
more thoughts The more you understand yourself, the more solid
your foundation for success
Step Two – “Show me the money!”
To paraphrase Charles Dickens, if your annual income is $20,000
and you’re spending £20,001, that’s misery; but if your annual
income is $20,000 and you’re spending $19,999, that’s happiness
So you need to know what you are spending and what you are
earning Not just in the big picture, but in the detail You
need to know what you are spending on clothes, treats, meals out
and yes, on debt Either keep a daily notebook, use a computer
worksheet, or invest in a package like Quicken, and track your
spending and your income in all the gory detail You’ll probably
surprise yourself at the way money is leaking out in all
different directions But until you know what’s happening,
you’ll stay powerless to do anything about it
Step Three – “Eliminate the Negative”
Now you know where your debt is, how much you are spending on
it, and where else the money is leaking away from you it’s time
to start taking control Take two steps to do this First,
reduce your spending Do whatever it takes: cut up your store
cards (and most of your credit cards); set yourself a weekly
cash budget (don’t carry checks and cards around with you) and
when you run out of your weekly allowance that’s it, no more;
identify those things you can cut out (magazine and club
subscriptions; take-outs; whatever, be ruthless) Second, put
all your debts, where possible, into one place Consolidate
those five or six card debts either with a low interest loan or
with a low or zero interest balance transfer credit card
Sometimes a balance transfer card can be better than a loan,
provided you have the discipline to pay it off in good time or
you remember to keep switching to new balance transfer deals
Step Four – “Accentuate the Positive”
So you’ve started to take control The next thing to do is place
that control on firm foundations with some good planning First,
set up a spending budget that covers all your outgoings (easy
with a program like Quicken) and stick to it Second, if you
have any debts to pay off, set up an automatic payment to come
out of your pay check the day it goes into your account – that
way you won’t miss it Third, set up a savings plan That’s
right, even though things are tough and you’re still in debt,
set up a savings plan Find the highest interest account
available and start paying in (again set up an automatic
payment) It doesn’t matter if it’s a dollar a week or $100 a
week, the key is to save something You might think it’s best to
use any spare cash to pay off your debts, but the point of
saving something is not – at this stage – to build wealth The
point is to pay off your debts and feel positive about it
Saving just a dollar a week is a positive thing you can do; it’s
a way of telling yourself that you aren’t a slave to your debts,
that you are actually in control of your finances and you can
stay in control of them
When you have paid off your debts, that’s when you are in a
position to move on to building up your wealth so that you can
have financial freedom We’ll explore strategies around that in
the Steps to Financial Freedom Part Two

Tags | charles, clothes, dickens, dreams, Finance, financial, happiness, hesitation, misery, money, notebook, nutshell, picture, result