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Eight Steps to Financial Freedom - Part One
By Craig Brown
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
Craig Brown is a life coach and web-preneur. For information on credit cards go to http://www.americancreditcardsguide.com
Article Source: http://EzineArticles.com/?expert=Craig_Brown
Eight Steps to Financial Freedom - Part Two
By Craig Brown
Imagine what you could do in your life if you had financial freedom. In the first article in this series we looked at taking control of your current situation. Controlling your spending, controlling and eliminating your debt, and starting a savings plan - all so you can have a firm foundation to take the leap to financial freedom.
In this article we're going to look at some simple strategies to go from financial control to financial power.
Step Five - Save and Prosper
We touched on this in the first article, but for different reasons. Now we're moving on to building wealth. A major part of your strategy has to be cash. Cash is the only true financial wealth, so you need some. You need a lot. Now you have cleared your debts and you have your spending under limits, you have some spare cash to save. Find the highest interest account you can and start depositing regular amounts. Each month put as much into your account as possible. Set up an automatic payment to go from your salary account. Set yourself a target, let's say $10,000 and go for it with all your effort.
Step Six - Split Hairs
When you've reached your savings target you need to start getting creative with your money. Our example target is $10,000 so the way we're going to get creative is by splitting it three ways. First we're going to find another highest interest possible account and transfer about $4,000 into it. This is going to be your emergency account. In reality an emergency account should have the equivalent of about three months' salary in it; and you never touch it, unless it's a genuine emergency. Next, put $3000 aside for investing (see step three). And the remaining $3,000 stays in the savings account, where you keep adding to it.
Step Seven - Speculate to Accumulate
High interest bank accounts are fine and they're a fairly safe place to build your wealth - slowly. But if you want to build wealth faster, you're going to have to take some risks. There are three ways I see of doing this: one is to start a business; two is to invest in property; three is to invest in stocks and bonds. In the example we're working with we've set aside $3,000 to do this. On the one hand it's not a lot of money - it won't go far in stocks or in property. On the other hand it's a third of our savings and that's a big risk. But if you worked through step one in the first of these two articles you'll have a better understanding of yourself. You'll be able to work out for yourself what kind of risk you are prepared to take. Because believe me this step is risky. So you might decide to just continue saving, that's fine. You are now in control and hey - that's a lot of freedom in itself. Or you might decide that you can stand the risk of losing that $3,000. If you do, then you'll probably have a clear idea of how you want to risk it. The only advice I'm going to give here is to make sure you plan it. Have a plan for your investment, do your research, don't get lured by 'get-rich-quick-for-no-work' schemes, set a limit to what you are prepared to lose - and stay disciplined and focused.
Step Eight - Plan to Enjoy
This isn't so much of a final step, as something you should be doing all the time in all areas of your life. People who plan and set goals and have timescales for achieving things have more failures and more setbacks than those who don't make plans and set goals. Yes, you read that right. But the reason they have more setbacks is because they are doing more, they are always moving forwards, they are never giving up. And the bottom line is that they achieve more than those who don't plan. So set goals and put plans in place. And make sure you plan to enjoy your financial freedom - whatever it means to you - because if you turn the achievement of your dreams into a form of unremitting slavery you will end up sabotaging yourself.
Craig Brown is a life coach and web-preneur. For information on credit cards go to http://www.americancreditcardsguide.com
Article Source: http://EzineArticles.com/?expert=Craig_Brown
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