I am going to give you a rough map of what you need to do to navigate your way to achieve financial independence. You’re probably asking yourself right now why you are not financially independent. The simple answer is choice. You have not made the choice to be that way. Most people who are financially independent think that way. In fact to start your way on being financially independent I want you to get up in the morning and say theses words, “Today I decide to be wealthy”. Say them a loud and with conviction by doing this you have made the choice to start on your way to wealth.
The hardest thing to change is your own mind. I know so many people that are stuck in their own ways and refuse to change for whatever reason. A lot of these people are not in a great financial situation. They have learned bad habits over the course of their lives and have not corrected them. We learn these habits from our parents the media, social influence and so on. But it all comes back to choice. If we want to become wealthy it all starts with the choice and having the mindset and willingness to change those habits. If you don’t learn from your mistakes then you are doomed to repeat the past. You will want to avoid this at all possible cost. If you don’t learn this valuable lesson you could drift into the same financial position or worse.
So let’s start with getting you on the right path. The first thing I told you to do is repeat to yourself everyday, Today I decide to be wealthy. This is a primer for your mind to start to think about being wealthy. You need to condition your mind to achieve what I call wealth awareness. Wealth awareness is understanding the bad financial habits you have gotten yourself into and breaking them. Developing your wealth awareness will allow you to see opportunities that will help increase your personal wealth. This maybe putting more money to the debt you owe, it could be seeing an opportunity to invest in something that will help increase your wealth. The main point is it will give you the ability to analyze situations and make the correct decision pertaining to your wealth.
Setting Goals and Planning
In Alice in Wonderland there is a point when Alice comes to a fork in the road and she cant decide which way to go and The Cheshire Cat asked, “Which way do you want to go?” he asked. Her response, “I don’t know?” “Then it doesn’t really matter which road you take?” The cat responded. The point is you have to know where you are going in order to get where you want to go. Otherwise you will drift aimlessly not knowing what you really want out of life.
Only you know what you want to accomplish, however you will need how to formulate goals. The rules of goal making are:
1. Have a definite goal. In other words know what you want to accomplish.
2. Determine what you are willing to give up in order to achieve the goal. This is important delaying what you want for the future need.
3. Establish the exact date to accomplish it.
4. Prepare a plan to carry it out. The most important thing here is to take action and to start immediately other wise momentum can be lost in achieving it.
5. Write your goals down in a clear and direct way and include the previous elements in the written version.
6. Read your goals daily. This will help to orientate you mind to your goals and doing that will help you focus on them each day.
7. Most importantly with this process is be as specific as you can get and use positive terminology like I will, I can. These words have a powerful impact on your mind in helping it know what you want to accomplish.
In the Millionaire Next Store a book by Thomas Stanely and William Danko. They asked a group of millionaires, “Do you have a clearly defined set of daily, weekly, monthly, yearly, and lifetime goals?” The overwhelming majority said yes they did. This should tell you that the financially independent focus on building themselves up on a daily basis and that they refocus themselves every day to accomplish what they want out of life. So focus yourself on setting some goals for your self include family, financial, personal goals. You want to be well balanced, because true millionaires are balanced in all aspects of their lives.
Get out of Debt
Once you have understood the direction of your life we can start to attend to the financial issues. The thing that most people struggle with is debt. Our habits today are very consumer oriented which means the advertisers are doing their best to get us to spend money even if we don’t have it. Banks and Credit Card companies target young people and get them to use their credit cards especially college students. College students as you know don’t have much restraint and by the time they are out of college they have between $40,000-$100,000 worth of debt. So most people start out in a hole after the get out of college, it progressively gets worse because you then grow and life happens you then go into debt for other reasons, car, home etc. So the first stone on the path to financial independence is invest in your debt.
Most people want to save a little bit while trying to pay down their debt. But you are in debt and trying to invest is counter productive to paying you debt.. Most credit card interest rates are averaging about 10%, but most people have rates that are upwards of 20%. The best you can do on average in an investment is 10% in a good year. In other words in order to be profitable your investments have to average at least 30%. Not likely. So the most important thing is to concentrate all the extra money you have in order to pay it off.
The most effective way to pay of you debts is a debt accelerator system or a debt roll up system. To do this you take all your credit cards and arrange them in the priority that makes sense to you. Most people start with the highest interest rate but you can arrange it to your circumstances. Then say your 1st credit card has minimum payment of $50 and you have $50 extra a month. Well you them pay $100 dollars to that card till it is paid off all the while just pay minimum payments to your other cards. Then you roll that $100 into the next debt which has a minimum payment of $100 so you pay $200 and so forth and so on. When you use this system you can on average get all your debt paid off in 5-10 years and that will include your mortgage. This is powerful being out of debt. When you have achieved that level you are in many ways financially independent. But we then have to take the next step to getting completely financially independent.
Build streams of Income
You now have the extra money from paying of you debt what do you do with it. The key to being financially independent is having different sources of income. Most millionaires have those streams. Real Estate, The Stock Market, Internet Marketing, Creating a business, most millionaires have a combination of each of these. On this website I will focus a lot on the stock market and investment products, but I will also talk about some of the other ways to increase you r income. It is wise to research each of these areas before deciding which one you want to do first. My recommendation would be to go down to the local library and check out some books on the subject that your interested in or research it on the internet.
Financial Planning
This is an area in which everyone should start early in. Really what it addresses is theses 5 things.
1. Get out of Debt
2. Create and Emergency Fund
3. Protect Your Assets
4. Invest in Your Future
5. Estate Planning
The other important step that can be started really any time and can be considered the 6th step is build additional income. Whether by getting another job or by focusing on other streams of income. First and foremost get out of debt. Second, Set up an emergency fund so that if an emergency occurs or you lose your job you have at least 6 months worth of income to cover your bills. The next thing is to protect you assets by getting life insurance. This is important if something were to happen to you and you don’t have life insurance your heirs may have to pay estate taxes, all your debts with out that spouses source of income which usually puts most families in financial ruin. The point is find some life insurance. Invest in your future is really planning or retirement. The early you start here the more advantageous it is for you. Generally those who invest early accumulate more retirement money by the retirement hits you will be set.
Estate planning is really insuring that everything you own goes to the right people at the right time. All these put together will strengthen your ability to become financially free.
Money making Money.
This is the most important concept in achieving financial freedom. The wealthiest people in the world understand this concept and practice it every day. The fact is if you put money into something that generates money, it will eventually lead you to having wealth. You always have to ask yourself when spending money, is this something that will increase my wealth. If it will then use it, if it doesn’t don’t consider it. This concept has a name compound interest. Albert Einstein called it he 9th wonder of the world. The fact that if you put money into an investment that grows with out you having to do anything is amazing. So understand this concept, use it, and embrace it. Understanding this concept will ultimately lead you to financial independence.
The way to financial independence is with in everyone’s grasp if you apply yourself and take the concepts I have shown you and take action.