Marion Syversen, was in for this week’s Finance Is Fun to talk about how to achieve financial freedom.
Want to be financially free? Freedom isn’t free, as the saying goes. You have to work for it. But you can achieve it.
#1.) Every month make a budget with your partner. DO NOT SPEND MORE THAN YOU EARN. That means if you don’t have the money – cash- for it, do not buy it. And include SAVING in the equation.
#2.) If you really want to be free, add no new debt. The best way for most people to do that may be to CUT UP CREDIT CARDS and use only cash or debit cards.
#3.) Save $1,000 in an emergency savings account and do it NOW! Do you know that recent surveys found that 63% of Americans don’t even have $500 saved for an emergency? Get that money saved as quickly as you can, preferably in less than one month. Go without your usual ‘fun’ purchases and be disciplined to put this money away! This is EMERGENCY account. This money is not for buying a guitar, or for birthday or Christmas. This is EMERGENCY money only. Save separately for a Christmas Club account and to replenish the wear and tear on household appliances and other needs.
#4.) Save for retirement at least as much as if matched at work. If your employer will match 3% of your income if you contribute at least 3%, then CONTRIBUTE. For many people a 3% contribution made pre-tax will be negliable to their take-home pay and you will be getting started on a wonderful future.
#5.) Attack debt. Pay it off starting with the smallest debt, making minimum payments on all others, using as much additional money as possible towards that one bill. When that one is paid off, use the extra money, plus the minimum payment towards the NEXT bill. Typically called the ‘snowball’ effect’ this is a long-held method of paying off debt.
#6.) Once you have gotten debt paid off, add to your retirement contributions and your emergency savings.
You should feel the freedom taking control gives you as you chip away and succeed at your financial freedom!