Hope everyone had a great 4th of July! While celebrating Independence Day last week, I was thinking about how lucky I am to be free. I live in a great country where I’m able to say what I want and do as I please, for the most part at least. The only thing really “tying me down” is my financial situation. It’s the one thing that’s limiting me from doing everything I want to do in life.
That’s when I remembered the promise I made to myself, that I will one day get out of debt and start building towards a better financial future. Goodbye to the days when I would spend on a whim. My wake-up call came when creditors started to contact me. I knew I couldn’t repay them, especially when I was dangerously close to losing my apartment. I made a vow right then and there to change my ways, and stop being a slave to my finances. The day that I reach my goal and start feeling financially independent will be a day worth celebrating. In honor of that achievement, I will dub it as my Happy (Financial) Independence Day!
If you’re facing a similar situation, I encourage you to work towards your financial independence too. Stop borrowing money from people or living from paycheck to paycheck. It’s time to stand on your own two feet. I’ve been working on it for several months now, and it feels great. If you’re ready to join me on the path towards achieving financial freedom, here are a few tips to help you get started on the right track.
Find your motivation.
Most of us know that financial planning is something that we need to do, but it’s easy to procrastinate because we never see it as an urgent matter. By the time we realize we need to deal with our finances, we are already in trouble. So how can we overcome this challenge? I think it begins with finding at least one thing that really motivates you.
Imagine being financially independent 5 years from now and being able to do whatever you want. To me, it’s more about the security and peace of mind that comes from not being dependent on anyone else for my livelihood. It’s a pretty awesome feeling knowing that you’re 100% capable of taking care of yourself.
Whether your motivation is financial security or to save a certain amount of money, set a goal for yourself. It will keep you focused and motivated throughout the entire process.
Spend less than you make.
Many people believe the key to wealth is a high-paying job. Yes, it’s easier to amass more money if you have more income coming in each month, but the real way to increase your net worth is to spend less than you make. It may sound like a no-brainer, but it’s a reality that many people tend to overlook. You have to remember – having a high income alone does not equal financial independence. The only way you can have more money left over at the end of the month is to increase revenue, decrease costs, or both.
A better way to gage wealth is by the length of time you can maintain your standard of living without an additional paycheck. If you stop working right now, how long can you keep your current lifestyle? Many people aren’t aware of this concept, so even if they earn more money, they are left wondering why they can’t achieve financial security. The key to financial success starts with a good savings habit.
It’s a team effort.
No matter how diligent you are at saving money and spending wisely, you can’t achieve financial independence if your spouse has reckless spending habits. It’s like trying to stay afloat and having someone pull you back into deep waters every day.
No matter how careful you are, unless your spouse is equally disciplined, your efforts toward a financially independent life are going to be a struggle. The emotional and financial toll can overwhelm almost any progress you make. If you and your spouse are not on the same page, it will make it nearly impossible for you to achieve financial independence. This is a commitment that both parties need to be responsible for and work towards together.
These tips, although extremely basic, have been the most helpful in my journey towards achieving financial independence.
I’m not going to lie – at first it was quite hard to come up with a game plan that was both manageable and sustainable, but I’m glad I didn’t give up. It’s very easy to get discouraged, especially when debt is mounting or you’re not sure how you’re going to make your next payments. Even if your paycheck seems miniscule, it’s more about changing your perspective on money and realizing how much you really need to live a happy, fulfilling life.
If you’re ready to embark on this journey, I’d suggest starting at DebtCoach by bills.com, a great tool designed to help you find your best way out of debt. It will help you understand your financial situation so that you can make healthier money decisions. Soon you’ll be celebrating your own Financial Independence Day, and when that day comes, let me know so that I can celebrate with you too!