Tips for Financial Freedom

Mortgage payments, student loan debt and multiplying credit card bills may seem like shackles around your legs. However, achieving financial freedom is possible. You do not need a high income, nor does this freedom have to come only after you start making more money or find a better career. The path to financial freedom requires a change in attitude and clear, decisive action.



Establish an Emergency Fund

Financial freedom will remain out of reach if your current emergency fund is a credit card or borrowing from parents, as neither of these options are secure. Experts disagree on how much money you should allocate to your emergency fund: Financial expert Dave Ramsey suggests starting out with $1,000 if you have other debts to pay off, whereas financial adviser Suze Orman recommends eight months' worth of expenses. If saving at least $8,000 is daunting, begin with $1,000. Use these funds for genuine emergencies such as car repairs, hospital bills and house repairs.

Pay Off Debt

Transitioning to a new, lower-paying career you love or taking off to travel the world seems like a distant reality when credit card payments account for a high percentage of your budget. Extricate yourself from these payments by eliminating the balance. Take a part-time job to pay it off, even if it’s a humbling one such as serving cocktails or delivering newspapers. Sell your extra items on free websites like Craigslist or sell them on eBay. If possible, downgrade cars by selling your nice, new one for a reliable older car.

Motivate yourself to pay off debts by posting a picture of a thermometer showing your outstanding debt on a visible surface, like the refrigerator or bedroom door. Every time you pay off a bill, mark it on the thermometer. Treat yourself to a small purchase for every credit card paid off or for every debt milestone achieved.

Analyze Materialism

Keeping the debt at bay requires a fundamental shift in how you view money and, consequently, material things. Ask yourself what benefits, if any, have been produced as a result of buying something. John De Graaph, author of the book, “Affluenza: The All-Consuming Epidemic,” states that marketing forces are adept at convincing the population that the purchase of a product will result in being loved, revered and respected by others. When people buy a non-essential item like a new shirt, the goal is to fulfill an emotional need. Before every purchase, pinpoint the underlying emotional reason for why you desire the purchase.

Wait Before Purchasing

The image of you driving in a beautiful new convertible with the wind blowing through your hair may last for just an hour but those painful (and very real) monthly $480 car payments last for years. Therefore, wait at least 24 hours before making a large purchase. If you are concerned about the item not being there when you return, ask the salesperson to put it on layaway. In the meantime, go home and see if you can find the same item used and for less money. If the item is still a ‘must have’ purchase, go back to the store and pick it up. If not, you may have lost out on a purchase but you’re one step closer to gaining financial freedom.