Posts Tagged ‘financial freedom’
If you read the newspaper or watch TV, you can’t help but feel that everyone in the US is in debt up to their ears. With the economy still struggling to recover, we hear of more and more people becoming mired in more and more debt.
I have heard from many people who are just paying the monthly minimum, but keep on using the card. The result is that the debt just keeps growing and growing and every payday a larger part of their salary is being used to service their debt. These people want a path toward financial freedom, a place where they control their finances, instead of their finances controlling them.
The problem so many of these people have is that they want very badly to gain control of their finances, but they lack the motivation to keep on track, to keep taking the steps they need to take to make that dream happen.
For those people I offer in this article, five steps to financial freedom, steps by which you can seize control of your finances. These steps are based upon the model for self motivation. They serve the dual purpose of not only helping you get back on track, but also keeping you motivated to stay on track.
Step 1: The first thing you need to do is to understand why you want to seize control of your finances. The more valuable a goal is, the more likely you are to achieve it. So write down all the positive reasons for why you want to regain control of your finances. What will you gain? reduced stress? the ability to buy things you need? a feeling of pride at how responsible you are? Also write down what will happen if you fail to make this change. Will you have to file bankruptcy? Will you lose your house? Will you be miserable and depressed and disappointed in yourself?
Step 2: Determine exactly what regaining control of your finances means in your situation. Clarity is motivating, so the clearer you are on exactly what you are moving toward, the more likely you are to get there. Here are some issues you need to get clarity on. How will you know when you have regained control of your finances? Does it mean reducing your debt? Does it mean living below your means so you can be paying off your debt? Write down what will be occurring in your life when you have succeeded. Every success you have will motivate you even more to achieve another success.
Step 3: Write down a clear description of how you are going to make this change happen. Make a plan. Write down all the steps you can think of that will help you make this change. Will you cut up your credit cards? Will you track your spending for a certain period of time? How long? Will you make a budget? Will you set aside a set percent of each pay check to use toward your debt? Will you need to take an additional, part time job for a while to catch up on your debt? Will you contact your creditors to try to work out a payment plan? Step Three provides two very important motivational impacts. Clarity, as we saw in Step Two, is motivating. But also, a big goal, like gaining control of your finances, is less scary when it is broken down into its component tasks. The less scary something is, the more confident you will be that you can succeed. Nothing is more motivating than confidence in your competence. That’s why it’s factor number two in the model for self motivation.
Step 4: Be in charge. Suze Orman says in The 9 Steps to Financial Freedom, “True financial freedom is not only having money, but having power over that money as well.” Make a conscious decision that you control your financial life. You are the boss! Power is motivating. Acting intentionally is motivating. Being a helpless victim of the economy is NOT motivating. Take charge and you will stay in charge.
And last, but by no means least:
Step 5: Find resources that will help you make this change. The worse the economy gets, it seems, the more resources there are for those who need help getting back on their feet.
You left the house of your father and you are finally on the path to financial freedom. There is one thing you do not have yet to complete their life goals, a relationship. Relationships are funny in way because every person you meet may like you, hate you, or have no idea what they think of you.
This is the beauty of dating. But after a while you soon realize that you cannot save money, as his friends and you’ll soon deeply in debt.
What many people do not realize is that a relationship is a lifestyle choice. People can look at you differently if you do not now, but soon after some time, you can see a good return on your money and less stress on your little life. I’m not saying that relationships fall through, but I’m trying to recommend that relationships are a strategy for temporary relief of debt.
We will have here a scene graph and numbers. Say you find a partner and you decide to eat three times a week. You will be agreeable companion and pay for all three. Dinner is on average forty dollars a plate, totaling a hundred and twenty dollars. The following week, you receive a phone call and that the relationship ended. If this pattern keeps going, which is $ 6,240 per year? After this year, you’re still single, $ 6,240 poorer, while the other working on his career plans and investments is now $ 6,240 richer.
Now, you’re probably getting the idea that I’m sexist. I’m not. When people get into debt, they try to see where the money is going such as credit cards, clothes that do not need, and foods. They do not open their eyes and realize that it is useless on dates ranging from, week after week.
After all this, I’m sure you’re still thinking “Hey, I’m still going to date, the money is not as important as love and I do not want to be alone all my life.” This is great, you have to have an optimistic view about its future and plan accordingly. While you still try to find such a partner, you will have to write all your expenses on paper and include the “relationships” as one of them. That is, of course, if you’re single and dating. If you are married, you should not be reading this article anyway. After discovering his ‘relationship’ budget, then you will be able to determine how much you can spend on movies, dinners, holidays, etc. So when the month ends and you look at your bank statement, you will be able to determine where the money went.
Sure, there are many other ways to save money. Cut back on your purchases, get rid of things you do not need, such as satellite radio, cable TV with the three hundred channels, or just eat at home.
While the following strategies can stand alone, multiple strategies can combine to obtain superior results. Adding the tax savings available to a business can go a long way towards maximizing what you keep. To quote Supreme Court Chief Justice Learned Hand speaking of taxes, “we must all pay our fair share, and not a penny more”. In addition, eliminating debt and saving thousands in future interest, plus creating passive income can help to create “The American Dream”, financial freedom and retirement.
Wealth Builder No.1, Have Your Own Business
No matter what, if you don’t have your own business today you are missing out on all the tax deductions that are allowed as incentives by the IRS code. If you are a W-2 employee, you are taxed to the tune of 44% to 55%, while the rich and the super rich are taxed in the single digits. Are they more deserving than you … or are they just more educated.
Now even if you do own a business, one might think that their accountant would know and set them up with all the tax deductions that apply. However, what is the accountant’s job? Isn’t it to take the information you supply and fill out the paperwork so that there are no red flags? Not to take away from your CPA, but he has plenty to do … and in all fairness … most have a list of 10 to 50 deductions that they use to help their business clients.
Would you be surprised to learn that there are at least 330 possible deductions based on your circumstances, plus there are business structures that can shelter and protect your assets and give you additional tax advantages.
Wealth Builder No.2, Get Rid Of Your Debt
I had a Financial Professional tell me that he didn’t think it was a good idea to pay off the mortgage because, after all it was the one place he could write off the interest.
Think about it … how many people do you know that have to continue working in their “golden” years because they have to pay off their credit cards and other outstanding loans? Actually, you probably don’t know because we think this is “normal”.
The only people who look at their “liability portfolio” are those who can’t afford to pay the minimum payments. Until now there was little incentive for a Financial Professional to do anything about it.
So, what about the family, making a decent living and still not living the “American Dream”? A family that has not ruined their “credit rating” and lives cautiously so that they don’t get in trouble like half their friends!
Would you be surprised to learn that there is a “Program For Liability Management” that is saving people hundreds of thousands of dollars in future interest? Would you be surprised if this can be accomplished without paying any more than you are currently … without anything more out of pocket?
Wealth Builder No.3, Create Passive Income
If you would like to retire, eventually you will need enough income to maintain your lifestyle. Our first wealth building strategy, “Have Your Own Business” can go a long way to make that happen. There are so many businesses you can create that can work for you while you are busy with your life. (Oh yes) they also give you those tax deductions since “it’s not what you have, it’s what you keep” that is going to go a long way towards giving you and your family the lifestyle you dream about … plus if you have it, ask me about the doctor that saved about $1,300,000 in future interest.
Pensions from employment, Investments, Insurance, Annuities, IRA’s (both regular and Roth) are just some of the ways that should be explored with your Financial Professional
I recently saw a method that showed us how to be millionaires, which was about some steps that we should do if we wanted to become the next millionaires and appear in magazine.
But for those who have no desire or time to follow a method like this, and want to become millionaires without having to work, without making the greatest effort in the shortest time possible.
We present below some effective ways of achieving this:
* Playing and winning the lottery to get us out even before the lottery, are more likely to suffer an accident when going to buy it.
* Reading all the books that discuss how to build wealth, attain wealth, how to achieve financial freedom, or become a millionaire: probably find the magic formula.
* Reading all the books on the “law of attraction”: probably come to dominate and attract all the money we want.
* Marrying a millionaire person: preferably one that has more than 90 years.
* Receiving a large inheritance if our parents are not rich, we seek to be adopted by a few who do are.
* By joining a MLM business that promises to become millionaires: probably is one of the lucky ones.
Obviously, these ways of being a millionaire should be taken in a joking and not serious.
This article discusses the concept of financial freedom and the most effective way to achieve it, based on the path that most millionaires today took to amass their fortunes.
To achieve financial freedom the first to do is take better understand the concept of it, this concept may vary for different people, but a commonly accepted concept is as follows:
“Financial freedom is a situation where passive income (income generated without you having to work actively) a person charged style that you want to view, ie when a person can live the lifestyle you want without having to work or depend on others for money. ”
Therefore, if we want to achieve financial freedom, our aim should be sufficient assets to generate sufficient passive income to pay for the lifestyle we want, without having to work (unless we do it by choice and not necessity ) or depend on others.
The secret of wealth
Wealth is achieved by creating or acquiring assets that we generate passive income, ie income generated without us having to work actively.
Examples of assets that generate passive income are: actions that generate dividends, rental properties, businesses where we have to get involved personally to work, multilevel, copyrights, books, music or software, franchise rights, etc.
But to save enough money to allow us to create or acquire assets that we generate passive income, you may need to generate income by working, that is, income earned from active work.
So to achieve financial freedom may at first be necessary to have a job that we generate enough revenue so that we can save enough money and then invest in the creation or acquisition of assets that we generate passive income.
My first business
However, a better alternative to find a job that we generate good income, is to set up their own business, for which we could start a business that does not require further investment, for example, an Internet business, a business advisory, or a multilevel business.
Or in any case, if we do not have enough capital to set up the business we want, we may request a loan, find investors, or partner with other people.
It may seem that today starting a new business is a complicated task, it seems that all the business ideas were taken, and those that remain seem to have too much competition.
However, if we pay attention to business magazines, will always find new entrepreneurs who have recently started their business, and they are slowly starting to be very successful with them.
And if we take a closer look, we see that these new businesses are common business, but businesses are treated different, unique or novel, or in any case, are traditional business, but offer something different to consumers.
As far as starting a business is not really a difficult task, just a matter of being creative, and seek a new business, unique, innovative, offering something different, that satisfies a need, and to improve living conditions people.
Saving culture
Achieving financial freedom is not just about generating a good income, but most of all, a matter of saving these revenues to good use then give them (acquire assets that we generate passive income).
As the next step to achieve financial freedom is to save money we win with our employment and/or business.
Saving means spending as little as possible, which does not mean we have to live an austere life, but we always try to spend as little, and to avoid unnecessary costs, while giving us some treats from time to time to foster our culture of wealth .
But saving also means allocating a portion of proceeds to a stock savings will be used later to create or acquire assets that we generate passive income, money in this bag should not be spent, but only be used to create or acquire these assets.
My first million
Once you have saved enough money, it’s time to really start our journey towards financial freedom through the creation or acquisition of assets that we generate passive income.
For example, as we mentioned, we could start to buy stocks that generate dividends, rental properties, businesses where we do not have to get involved personally to work, etc.
It should be noted that to begin acquiring these assets is not necessary that we should have saved a lot of money, but we could get the money by borrowing or fail us in any case, partnering with others.
Then, little by little, the money we will generate our assets, we will invest in the creation or acquisition of additional assets, to have a good portfolio of investments based on passive income.
And finally, once we have enough assets to generate sufficient passive income to the lifestyle we want, without having more to work or depend on other people, then we say that we have finally achieved financial freedom.