Do you lay in bed at night thinking about money? Do you get stressed on Sunday evening knowing you have to go back to work Monday morning?
Maybe you do, maybe you don’t. It really doesn’t matter if you’re a financial rock star or on the financial rocks – we all want the same thing: financial freedom.
But what’s stopping you?
I was reviewing my finances today and thinking about how much harder I’m going to need to work to hit that financial freedom mark. Right now, I’m not even close. So I started mapping out a plan to accelerate my journey.
Here’s what I need to do:
1. Earn More Money
If you can’t save or invest a decent chunk of change each month, then you have one of two problems. You either 1) spend too much money or 2) don’t make enough money.
I’ve got my expenses under control, so now I need to ramp up my earnings.
Luckily, I’ve taken on more work over the past couple of months and I will soon start to see the financial benefits. This should leave me with at least $500 extra per month to save or invest.
2. Build Passive Income Sources
Ever since I’ve gotten into personal finance, passive income has been on my mind.
Last year, I started buying dividend stocks – but now I’m looking to be a little more creative. You see, with stocks you have to put down a bunch of money to earn anything decent. For me, that’s not possible yet.
Instead, I’m more interested in earning other sources of passive income. I’m currently working on an ebook and I’d like to have around five books available on Amazon in the next year. I’m also saving for a possible investment property.
Both of these would only be considered semi-passive income because there’s some work involved. But these are the most appealing options to me.
3. Pay Cash for a House
I live in the rural Midwest where homes are fairly cheap. Ideally, I’d like to have a house on at least five acres of woods; I want a mini farm where I can raise my children and I want to have my forever home. At the moment, properties like these are going for $250,000 to $300,000.
I’m going to put my passive income earnings into a separate saving account for a house. I’d like to have enough money to either pay cash or put a sizeable down payment on a house in the next five years.
4. Double My Retirement Contributions
Right now, I’m only adding $100 per month to my IRA. (But as I said, I’ve also been saving for an investment property and buying dividend stocks in a personal investing account.)
Since I’m starting at such a small number, I think it’d be feasible to double my retirement contributions every year for at least the next three years. After that, I’ll have to reevaluate.
5. Stay focused While Still Enjoying Life
In the grand scheme of financial freedom, one of the most important aspects to me is that I enjoy living my life.
I’m not going to skip out on every single purchase and start hoarding pennies in hopes of “making it” someday. Instead, I want to live my life to the fullest TODAY while still maintaining focus on my goal of financial freedom.
Here’s my financial freedom plan. Do you have one as well? Share it in the comments!
Editor's Note: I've begun tracking my assets through Personal Capital. I'm only using the free service so far and I no longer have to log into all the different accounts just to pull the numbers. And with a single screen showing all my assets, it's much easier to figure out when I need to rebalance or where I stand on the path to financial independence.
They developed this pretty nifty 401K Fee Analyzer that will show you whether you are paying too much in fees, as well as an Investment Checkup tool to help determine whether your asset allocation fits your risk profile. The platform literally takes a few minutes to sign up and it's free to use by following this link here. For those trying to build wealth, Personal Capital is worth a look.
{ read the comments below or add one }
Building credit can make life easier, it gives you a better chance of qualifying for loans or credit cards. You also might get lower interest rates, better car insurance rates and a chance to skip utility deposits. Let’s say your score is 450, this range is considered a bad credit.You can reach out to this professional via his email (creditfixtech gmail com) or via his phone number 213 245 2098 to help you fix your credit score.
You have a solid plan for your money. I like it. If you have a plan for the cash flow your making your way ahead of alot people. My plans for my money hasn’t changed much since I got my finances in order. Little by little it all adds up over time. As they say just stay on course.
I’m with James… the first thing we need is a solid understanding of the way money works so we can have it work for us better. Increasing your earning potential is important of course, but if you spend everything you earn because you never learned how to budget, you’re no closer to financial independence than if you were flipping burgers. How often do we see people earning massive wages who simply rack up massive debts to go with them?
Totally agree – living below your means applies to any income level. And once someone starts building a cushion, then it’s time to look at investments options to make money work even harder!
These are good steps. I formalized my own written “Five Steps to Financial Freedom” some time ago so I can share them (the similar title on your post is what grabbed my attention):
1. Get in control of your money by learning how to effectively manage your money so you live on less than you make and have a potential for success with your money.
2. Get out of debt, all of it, including your mortgage.
3. Increase your income by becoming more productive in your work, learning skills for higher paying work, or starting your own business.
4. Learn how to save and invest money.
5. Claim financial freedom as a real life experience, not just a dream by identifying and defining the income you need to live the life that is meaningful to you and by enjoying the stages of freedom that come from getting out of credit card and personal debt, paying off your mortgage, and meeting your retirement goals with passive income.
In any case, the best plan is the one we do, not just the ones we write about.
Good Success!
I completely agree with taking action! Yay to financial freedom!
I find one of the quickest ways to increase my available money is to look and evaluate my spending. I can hope for a raise at work or I can cut back my spending and have money available immediately. I just move that money in to investments so really I am just paying me instead of someone else. Anything you can give to retirement is crucial, especially early on.
My plan is to save and invest as much as possible early on. We’ve been doing it for nearly 8 years and have maxed out as much investments as possible. The faster you can invest and the more you can invest the quicker you will watch you money work for you. Another passive income stream for you to enjoy later on.
You have a great plan Lance. Consistency is a very solid way to build wealth, as I’m sure you know by just looking at your account balances!
I’m with you on #1 and #2, but I’m not looking into buying a house just yet. Eventually I would buy a house, maybe, but that’s not my concern at the moment. Maybe if I move to another state, but where I live renting is so much cheaper than buying a house.
Owning a home is an emotion that’s hard to overcome, so it’s nice to hear from someone who actually makes the right financial decision because the math is tilted towards renting!
Cheers to getting to the finish line earlier 🙂
Why would you put money in a taxable account before putting it in an IRA? You can buy dividend stocks in either.
You are right. While some people may want to keep money earmarked for short term savings goals in a taxable account, most people should just try to max their retirement accounts as much as possible unless they are in a very low income bracket and foresee themselves staying there.