Financial freedom can mean a lot of things to a lot of people. To some, it may mean the ability to never work again. To others, it could just mean having enough to not have to worry about the bills for the next week. It is all perspective on where you are on your journey of life.
What is Financial Freedom? My Take
To me, financial freedom is the ability to do what I want, when I want. If my wife and I want to take a trip to a National Park, we go. If we want to stay home and hang out with our puppies, we do that. It isn’t about having billions of dollars to buy houses all over the world and the nicest cars money can buy. It may be that for someone else but not for me.
Money isn’t everything. If having money meant losing the ones I love, I would throw it all away in a heartbeat. Life is about the journey, not the destination. Spend time and make lasting memories with the ones closest to you. That’s what life is about to me.
My Goals in Life
Understanding what Financial Freedom means to you starts with knowing what your goals and dreams are in your life. For me, I want to see every National Park the U.S. has to offer. I desire to spend as much time with my family as I can. I want to provide the kind of life for my wife that she deserves to have. None of these goals will take billions of dollars. One thing it will take. Total Debt Freedom.
Debt is the enemy of financial freedom. In order to be truly financially free, you need to have enough cash flow to support your needs. For me, that means without having to work 40+ hours a week away from the people I want to be spending my time with. Debt ruins your monthly cash flow. It would be much harder to reach my goals with also having to pay a mortgage of over $1,400 every month. That is close to $17,000 over the course of a year. Quite the chunk of money that could be used towards reaching our dreams.
How to Reach Financial Freedom
Step one in reaching our goals is to get rid of that cash flow dampening debt. Paying off my student loans was a huge weight off our shoulders. With those gone, it is full steam ahead on the mortgage. Thanks to understanding our why, nothing will get in our way of reaching our goals.
After the mortgage gets paid off (still a few years away, unfortunately), it is time to get our investments to a place where we can live off of the income from them. How do we plan on doing that? Easy.
- 1) Invest in low cost index funds, making deposits every single month
- 2) Utilizing the greatest force in the universe: Compounding
That’s it. That is all it will take. Use a little patience, and with time, freedom will come. All you need is discipline and the right mindset and financial freedom can be obtained.
Can you Reach Financial Freedom?
Can you reach financial freedom? The answer is a resounding yes! It doesn’t matter how much you make, you can get there. First, you need to decide you are going to go for it and not let anything stop you. Determination and the right mindset it key. Then, you need to come up with your plan.
If you never made a budget yet, start there. By creating a budget, you will see where your money goes and where you could do better by spending less. Then, you need to get your debts in order. I am a strong proponent of paying of all of your debt, but it is up to you on what you want to focus on. Definitely pay off your high interest debts first, there should be no argument there. But with lower interest loans, you have a choice.
After tackling your debt, it is time to invest hard and heavy. Learning how to use your money to make money is the key to financial freedom. If your money makes enough money to support you, you no longer have to trade your time for money. It is that simple. But how do you get there. We have already discussed it!
First, determine how much you will need to retire. Then you will have a goal that you need to get to. Make sure it is specific. After that, it is time to determine what you will be investing in. Lucky for you, index funds are here to help. They will allow you to invest in the market without having to pick individual stocks. This is much less risky and what the average investor needs.
Once all that is figured out, all you need is time and patience. Make continuous contributions to your investment accounts each month. Let compounding works its magic. Try not to focus too much on the investment balance at any one time. This will stress you out and you probably don’t need more of that in your already hectic life. Just trust that you are making strides towards your ultimate goal. Each contribution you are purchasing more shares and those dollars are becoming little workers for you, each producing income that you will then use to be financially free!