Reaching Financial Independence

It is possible to reach financial independence, but there is no secret formula.  What you need to do (and you probably already know this) is to work hard, save your money and follow these steps.

First up is GET OUT OF DEBT!  Our society makes it easy for us to get into debt with credit cards and everybody wanting it now, but debt kills.  You pay more in interest than what you may have purchased.  And it compounds over time.  And being in debt stops you from saving money.

Other than your mortgage (you get a tax break), all other debt does nothing for you, so get rid of it as quickly as possible.  Cut up those cards, purchase only necessities.  Work with someone to reduce that debt and you will feel so much better when you no longer have to pay.

Just think if you pay off that car loan, student loan, credit card, then maybe you can start paying more into your mortgage.  Before you know you will have no debt.  And believe me that feels very good.  I k now I can sleep better at night knowing that I don’t have the worry of where I am going to get money to make those payments.

Photo courtesy of Vecteezy

Next CUT THOSE EXPENSES!  I’m not talking about the necessities like food, shelter and clothing, but do you really need a brand new car, eat at a five-star restaurant or own a house too big for you? The answer is no.  In previous posts I’ve mentioned how we cut costs and save money.  That’s what needs to be done.

We are down to one car and it is 4 years old.  We’d have paid it off already, but my wife got an interest free loan, so we didn’t and use that money elsewhere.  You don’t have to starve yourself to ne financially independent, but you can save put really putting an effort in how you grocery shop.  There are savings out there.  There are many times when I’ve cut my grocery bill in half by using coupons (both paper and digital) and buying BOGOs (buy one get one free).  I also have a grocery list so I do not buy on the fly.

You may love to eat out at restaurants, and guess, what food is food.  You can find a decent restaurant that makes a decent steak (if that’s what you like) and no need to go to an expensive restaurant.  You may love taking a lot of vacations.  We do, and save in advance for every one of them.  If we don’t have the money, we don’t go on vacation.  We also find inexpensive ways to travel and enjoy ourselves.

My wife and I both work from home, but we used to commute.  Commuting expenses were a big chunk of our money.  Suggestion, if you cannot telecommute, try moving closer to your job.

Now that there are many options out there, you can cut cable, change to a cheaper phone plan, cut your own hair, cut your own lawn, and cancel magazine subscriptions and even subscription boxes (which seem to be the craze lately).  I’m sure you can find a way to eliminate a lot and save.  Then take that savings and put in the bank or invest it.

You’ve cut those unneeded expenses, so what’s next.  INCREASE YOUR INCOME.  How can you do that, you may ask?  You could always ask for a raise.  If you love your job, you could stay the course and, work hard, maybe get a promotion, and increase your salary.  You could look for another job with a better salary.  That’s up to you.

You can also take on a side gig?  Maybe, there is something you enjoy doing as a hobby that could make you some extra cash.  Maybe there’s a weekend or seasonal gig that you want to do.  Who knows?  Just look at yourself and see what matters to you.

SAVE YOUR PENNIES.  And your dollars too!  You’re making money and cutting expenses.  What’s next?  Save as much as you can.  Don’t go for that 10% of your income, but try for more.  The more you save and the earlier you save, the bigger the pot will be when you are older.

INVEST.  If you have saved a lot of money and have an emergency fund.  (We all know what that is, right?)  Then maybe you should invest.  I am not a financial advisor and am only talking about what I have done.  Start small, and invest wisely.  Don’t think you will make a killing in the stock market.  I have an account at discount brokerage and invest in income generating stocks (those with big dividends).  If you are younger, you may want to invest in growth stocks or funds.  That’s totally up to you.  My IRA is mainly in growth funds because I want it to be big when I retire.

That about wraps it up.  Get out of debt, cut unnecessary expenses, make more money, save and invest.  Easy said than done.  That’s is correct.  You must have the right mindset to work at it.  If you want it you can achieve it.  Track your expenses.  Know your net worth.  Plan ahead.  I wish I had the mindset when I was younger.  Who knows what I could have accomplished.  No crying over spilled milk.  I am doing it now, still enjoying life, living frugally and reaching for financial independence.