A truly simple life is a debt-free life — one in which you don’t have to work to pay the bills. This may sound unrealistic in the current economy — but financial freedom is achievable on any income, as long as you understand your true priorities and eliminate money clutter from your life.
financial independence doesn’t mean living in the lap of luxury
it has more to do with liberty from monetary worries
financial freedom means no debt — no credit card bills, car payment, or mortgage
financial freedom means having a healthy nest egg saved away for emergencies
financial freedom means keeping your expenses below your income
financial freedom means developing a steady habit of saving and investing
financial freedom means being frugal and deliberate about your spending choices
financial freedom means that you don’t have to work to pay the bills
the first obstacle to financial freedom is the way we view money
as a society, we place a great deal of importance on income and material possessions
debt has become commonplace and even expected
the truth is that money is really nothing but a means to an end
money is only worth the non-material things it buys you
you’re financially free if you use your money to buy leisure time, security, and the freedom to enjoy life
money is not evil or divine, it is simply a tool
financial independence is about making value-based spending decisions
avoid impulsive spending — an financial freedom requires proactive rather than reactive behaviors
you want to make conscious decisions about how to invest your resources — think it through first
clear up any financial disorganization that costs you money — interest charges, late fees, etc.
pay attention to where your money actually goes — track every single penny you spend for a month
look at each expense and ask if you get a tangible benefit from it
ask if that expense is worth the time you have to spend earning the money to pay for it
if the answer to both questions is yes, great!
if not, that may be an expense you could let go of without much pain
list out all of the balances you owe on every credit card and loan
make note of the interest rate and APR charged by each
pay the minimum on all of your debts except the one with the highest interest rate
pay as much as you can afford to on the highest interest rate account
when that debt is paid off, apply the money you were paying to the next-highest rate account
keep working your way down the ladder until all your debts are paid off
decide which expenses are necessary and which waste money without giving you any tangible benefit
start first eliminating incidental expenses — sodas, snacks, magazines, Starbucks, etc.
also consider ways to reduce larger expenses — cheaper housing, give up one car, fewer vacations
<30% of your income should be spent on housing, <30% on household, and <30% on other bills
is your money isn’t better spent elsewhere? would you get more benefit from other spending patterns?
credit cards can be a great tool for building credit and consolidating expenses
but when used irresponsibly, credit cards can drive you into debt
pay your cards off in full each month to avoid interest charges
don’t use your cards as a quick “loan” for purchases
if you don’t have the money to pay the bill, don’t put it on the card — save before making the purchase
be careful about annual fees for “rewards” cards — you can get cash back and miles for free
the goal is to live comfortably without having to work
compound interest earns money on both your capital and past interest
invest regularly, putting a set amount away each month
plan to invest for the long run — don’t try to “time” the market
diversify by including many types of investments in your portfolio
protect yourself against loss by spreading your investments around
it’s never too late to start — if you started late, try to catch up with extra contributionsClick here for reuse options!
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Ramona Creel is an award-winning 15-year veteran organizer and member of the National Association Of Professional Organizers. As well as having birthed “The A-To-Z Of Getting Organized,” Ramona is also the author of “The Professional Organizer’s Bible: A Slightly Irreverent And Completely Unorthodox Guide For Turning Clutter Into A Career”—and the creator of more than 200 “quick-start” business tools and templates for use by productivity professionals. She writes seven different blogs, has worked with hundreds of clients, and has delivered scores of presentations on getting organized. Ramona resides on the roads of America as a full-time RVer—living and working in a 29-foot Airstream. Learn more at and RamonaCreel.com.
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