One may wonder, what it means to be financially free. Financial freedom is the ability to live without financial burden that is created by debt. The Burden of debt enslaves an individual to a life of misery and chaos!
Have you asked yourself, how does it feel to become financially free? What does it mean to be financially free? What does it take to be financially free? And what are you willing to do to achieve financial freedom?
To become financially free, you must start with the self-realization and determination to be free. Then you must begin to make it a reality by doing all that is humanly possible to achieve financial freedom.
The following steps can help you get started to the path of freedom.
1.Understand your financial situation: For one to be able to get out of the financial rat race, one has to understand his/her current financial situation. If you don’t know you have a problem, how then can you solve that problem? So I started by understanding that I was in a financial mess and acknowledging that fact. I took the time to look at all my debt accounts, studied my cash flow, my day to day expense and realized something got to change.
2.Make a bold decision about fixing it: It is one thing to realize that one is in a financial mess and another thing to actually make that move towards changing that situation. This was my next move. It was a difficult one but I was determined to become financially free. With this, you want to think about the end, you want to think about the joy of becoming financial free. The satisfaction that comes with looking at your bank account and seeing the savings that have accumulated because you have no payments to make to a creditor. In other to do this, find your motivation. A good reason as to why you want to fix your financial situation.
3.Start by cutting up your credit card: This is the part that a little investment in a scissors comes in handy. Do not hesitate to cut up your credit card. Remember the saying “Out of site out of mind?” it really works! When you no longer have a credit card in your wallet, you will be able to stop impulsive spending. You will learn to only spend money for the things you really need versus the things you want. You will learn to budget properly for your necessities. You will be surprised to find out that the money you have is really enough for your day to day living without really needing more money.
4.Make a budget: Too many people think of the idea of a budget as a restricting way of spending their earnings and as such difficult to follow. A budget helps with keeping me focused at my goal. Basically sticking to a spending plan. With Budgeting, an individual can still get to enjoy all the things they love to do. It all helps you with allocating funds towards those activities without going overboard.
5.Increase your ability to earn: Finding ways to earn more money went a long way in reducing my debt burden. I had to work some overtime since my job allows for it. At my spare time, I also used my car to drive for the ridesharing companies Uber and Lyft. The extra earnings I directed towards paying down my debt and maintaining my day to day living expense.
6.Choose a payoff method: reading through several books and listening to personal finance podcast like the Dave Ramsey Show, I learned that there were efficient ways to pay off debt. According to Dave Ramsey, he recommends using the debt snowball method, which implies paying off your smallest debt first. Here he recommends making large payments towards your smallest debt while making the regular minimum payments to your other debt. When you are done paying it off, then you apply the amount you would make to that smallest debt to the next smallest debt. This method may cost you more but the joy and satisfaction that comes with paying off a debt gives you the motivation to continue. The other method suggests paying off the debt with the highest interest rate. For me, my sole determination is to know what it feels like again to be debt free and what I did was paying the debt with the highest interest rate and the largest balance while paying just a little extra to other debt. My method is not that easy but it will save you a lot of money.