How to Change Your Life with Financial Freedom
Do you ever feel as though you are caught in a cycle of work and debt? Do you feel like you can never really get ahead, or maybe you can’t even make ends meet? Many people spend their entire life feeling this way, but you can change it. You can seek and find financial freedom with the tips below.
What is Financial Freedom?
To some extent, you define this yourself. At minimum, it means that you have enough money to meet your needs, you are not in debt and you are putting money away in savings, but some people expand it beyond this. They define financial freedom as being able to retire by a certain age. Some people would say that you can still have financial freedom if you haven’t yet paid off your mortgage, while others would say that you should own your home free and clear as well. Have a goal in mind for what will constitute this concept for you.
Assess Your Situation
The first step is to take a look at your finances. You need to know exactly how much is coming in, how much is going out, what your debts are, how much you have in savings and what you are spending. You need to have three initial goals. These goals should be to have enough money to cover your expenses, to pay off your debt, and to build an emergency fund. Look for ways to cut your spending or increase your income if necessary. Can you make more money in your current job or should you consider a career change, or second stream of income?
Tackle Your Debts
The first step in tackling your debts is to reduce them as much as possible before you even begin aggressively paying them off. You might be able to roll your credit card balance on to another card with a lower interest rate or no interest rate. Similarly, you might be able to refinance any loans you have. You can apply for a student loan refinance in minutes and get terms available from five to 20 years. With your monthly expenses lowered, you can focus your energy on one debt at a time until they are all paid off.
Emergency Savings
What would you do if you suddenly had car trouble or had to take your pet to the vet? Many people do not have the savings to handle even a few hundred dollars of unexpected expenses, and this is one of the reasons people get into debt in the first place. As you pay off those debts, build up an emergency fund of $500-$1000. Once you are debt-free, work on building up a fund that contains several months’ worth of expenses.
Retirement Savings and Investments
You should also be putting some of your money toward retirement. Your employer may offer a fund, or you might set one up on your own. Once you are regularly contributing to it, you might want to consider other investments as well depending on your financial situation, your age and your tolerance for risk. A financial professional can help you, or you can set up a brokerage account on your own and start investing.
