Ever dreamed of how to achieve financial freedom and exit the rate race and retire early? Ever wanted to go on vacation… forever? This is a laudable goal that many desire, but few will ever accomplish. How would you support yourself anyways? 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 elusive goal? Is there a way to change things around and not have to trade your time for money anymore?
The key to sustainable financial freedom is to boost your income and minimize your expenses. This may not be as formidable as you might think. All it takes is some self-control, some desire, some planning, and a few tips.
1) Live Frugally
Live within your means… without chasing after junk that will just end up in a garage sale. Make your own meals instead of always eating out. You will be surprised at how much money you will have conserved. Financial freedom is predicated upon avoiding excessive consumptions.
2) Reduce Your Expenses
Be conscious of your cash outflow. Track your expenses and compare them to a pre thought out “financial freedom” budget. You must commit to managing your common expenses if financial independence is your objective. 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. Consumer debt is slavery. Financial freedom includes liberation from consumer debt. Increase the payment on your credit cards with your extra cash flow. Begin with the credit card with the highest interest rate. This will rapidly reduce your debt service, and it is like 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 bigger increase in your excess monthly income. Start putting that money into investments that can generate even more excess income. It is best to find investments that are scalable, so that you can add more funds to them at any time, and have your next dollar earn the same return as the previous dollar. You achieve financial freedom when your passive income exceeds your living expenses. Make money your best worker, don’t be a slave to money.
5) Invest In Your Retirement
Look for investments where you can removed risk from off the table soon, while making an attractive return. Certain managed investment accounts can accomplish this. These are game changing financial freedom vehicles. The main risk to control for is risk of loss of investment principle. As soon as you’ve removed your original investment principal from the investment, you’ve completely removed that risk out of the equation 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 two financial levers for getting there are 1) the amount of investment capital you are working with and 2) the 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 30% return? Some currency trading strategies can perform at these higher levels. Or perhaps, can you use $100k of other people’s money, or can you only work with your own savings? Once you determine 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 all that 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 low budget. The more passive income you’ve been able to put in place, the more places you can live, for whatever length of time you like. This is financial independence. By following the above financial freedom plan you will be pleasantly surprised at how much you extra income you can actually build.
By living on to the above financial freedom plan, you will discover a reduction in your common expenses and an increase in your monthly excess income. 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. Stick to living within your means and financial freedom will become your reality.
