Freedom

 

I would like you to know that I am not going to recommend you make drastic cuts in your budget so that you can eventually crawl your way out of debt and build a few thousands in savings.   If you try that, you will likely stop because you simply will not tolerate the drop in lifestyle. Worse, you may succeed and simply become a miserable miser hoping to see a positive net worth when you are too old to enjoy it.

 

To get out of the seemingly eternal mess of debt and into the joy of true financial freedom, you need to do two things:  spend your money on your interests and increase your income.   For the rest of this book and the rest of your journey, please focus on those two principles.   You will know that you are successful in this plan when you meet every financial situation with those two principles in mind.

 

Increase your income.  That is a principle easy enough to translate but easy to misinterpret.  This does not mean that you need to double your already overwhelming working hours or work a second job.  This means that it is time for you to seriously consider if you are making the amount of money you need to support the lifestyle you want.  This is your time to learn how to first supplement your income, and then massively grow it while likely working far less than you are right now.

 

Spend your money on your interests.  This is not a plug for narcissism.  This is the principle of spending your money to accomplish your goals.  Support your charities.  Reward your family.  Have a great vacation.  Help people you know.  Improve your home.  If you are paying interest on credit card or mortgage debt, then you are blowing thousands every year on what some stranger wants.  This is your time to feel empowered by spending money rather than be enslaved by your debtors.

 

You are here because you are ready to get out of the rat race.  Chances are you are highly educated and extremely talented.  This probably is not the first personal finance book you have read.  This is, however, the one that can and will lead you to financial freedom if you are willing to succeed in our plan.

 

This is going to be an exhilarating journey.  It will be fun.  It will be rewarding.  It will be challenging.  It will be everything that you make it.

 

To be fair, I will tell you what your very first step is.  You can make your conscious decision to continue and make your financial freedom happen.  Are you ready?  Here is your first step:  Buy a safe.

 

 

 

The first step:  Buy a safe.

 

Buy a safe.  This doesn’t have to be overly complex or expensive.  It should be roughly 1 cubic foot in size.  You can buy one of these for less than $100 at any office supply or large home product store.   You will not want a cheap $20 lock box.  You will want an affordable and reasonably sized safe.

 

Now take all of your credit cards and lock them in the safe.

 

You need to stop generating more debt.  You are going to spend a considerable amount of time and effort to achieve Financial Freedom.  Once you have arrived, you will look back in amazement.  If you do not stop generating debt, however, you will never get there.

This is not the point to discuss “good” debt and “bad” debt.  For all intents and purposes at this phase, debt is bad.  Period.   The reasons you have this debt are unimportant.  What is important is the transformation of your financial life.

Obtain a bank debit card so that you can do basic things like buying gas.  Put all of your credit cards away in the safe.

It would be counterproductive to destroy your cards.  While it may feel instantly liberating to put hundreds of jagged plastic pieces into the trashcan, the shock of what you just did will hit you sometime in the wee morning hours and paralyze you with fear.  This will not help.  I want you to be in control of your transformation.

You are going to want to use your credit cards.  Your car will need maintenance.  You will want to buy your spouse a gift.  You will want to donate to a charity.   Something will arise where you will want to spend more money than you have…again.  I want you to make a conscious decision to not use your cards.

You have to be the one to make the decision.  Rashly cutting up your cards or passing them off to some other person for safe keeping simply delays handling the main issue.  Your willpower is the main issue.  This will not be easy.  But this must be done.

 

Second step:  Pay your minimum debt payments for two months.

 

Reduce your credit card and other debt payments to the minimum payments necessary.  Establishing automated payments from your bank account is a great way to make this happen.                  If you have extra money left over at the end of your pay period, keep it in your bank so that you can pay the emergency should it arise.  Be very careful to not spend “extra” money on frivolous items.  Let your account balance grow a little.  You will need it.

This is your time to pay attention to your minimum required cash flow.  Your minimum payments and bills are mandatory expenses.  Everything else is discretionary.  Even your food costs are discretionary.  Before you laugh off that comment, consider the fact that no bill collector or government agent is going to contact you and force you to buy dinner.  You can be sure, however, they will shut off your power, drag you into court, and kick you onto the street if you don’t pay up.  They don’t care what you need to pay to eat.   As far as they are concerned, your mission is to serve them.

Don’t get mad.  Get focused.  For two months, pay just your absolute minimum payment necessary.

 

Third step:  Pay yourself first.  Do this for three months

It’s time to start opening your safe.  With each paycheck, take 10% of your take home amount and get it from your bank in cash.  Place the cash in your safe and lock the safe.

Don’t do any more than 10%.  Do not take the money out of the safe.  Period.   Make it a point of burying those credit cards with your cash.

 

Fourth step:  Party time!  Blow every bit of cash in your safe!

Ok, it is perhaps mathematically and economically illogical.  It is 100% emotional!  That is 100% the point here.  Open your safe, count up all that cash and blow it on something you consider to be complete fun.  Spoil yourself.  Surprise someone you love.  Don’t buy something you “need”.  Don’t get the car fixed.  Have fun!  Call a limousine service and have them drive you to and from work for a day.  It doesn’t matter!  Just keep it legal.  Enjoy spending every dollar!

This is as important as every other step.  You need to share in the joy of having a great time without putting that time on a credit card.

This is a congratulatory step.  We won’t repeat it in quite this manner.  We are going to go back to putting 10% in our safe and leaving it there.  Just this one time, though, we need to have some fun!

 

Fifth step:   Get back to paying yourself first.

10% again.  Same deal.  Put it in the safe and leave it there.

 

Sixth step:  paying off your debts

 

We’re already back to putting 10% in cash directly into your safe each time you get paid.  Now we are going to add a new challenging step.  Take another 10% and pay extra towards one of your debts.   Do this with each paycheck.

Start with your smallest debt and end with your largest.  Yes, your largest may very well be your house.

It is time for a little math.  As you pay off your first card, roll that minimum amount into your additional payment for the next card.  For an example.  10% of your monthly paycheck is $600.  Your minimum required payment on your first card is $50.  Your minimum required payment on your next card is $60.

For your first card, you will pay $650 each month until it is paid off.  That is the minimum required payment of $50 plus 10% of your monthly take-home pay.

When you pay off that first card, you will pay $710 each month until that one is paid off.  That is the $600 for 10% of your monthly take-home pay, the $50 you were required to pay for the earlier card, and the $60 you are required to pay for this card.

Continue this pattern.  You MUST be disciplined about this.  If you do this, you will vaporize your debt in no time.  Trust this.

As you pay off each card, cancel the card and cut it up.  Throw the cut up pieces in the trash.

If you own a home, keep going until you pay that off, too.

 

Seventh step:  Enjoy!

Congratulations, you are out of debt!

 

Ok.  At least you are still reading.  We know this will take years.  We are here with you.  The sixth step is the hardest one.  You need to stick it out.  This will take just 3-5 years rather than 30-40 years.  If you are 40, do you want to be completely debt free by the time you are 45?  If you are 40, do you want to be 85 and still paying for the laptop computer you bought in college?

 

Remember those thousands you were paying every month in mandatory expenses?  Poof.  That money is yours now.  You can choose to enjoy this money.  You absolutely must continue to take your 10% off the top and put it into your safe.

As for the money that is left, spend it and invest it as you want!  You are free to spend your money on your interests!

 

Don’t forget the other equally important part:

Increase Your Income!

 

You probably went into debt in the first place to buy things you wanted yet couldn’t afford.  You didn’t have $20,000 for a car in the bank.  You didn’t have the cash for Christmas gifts.  You comfortably went into debt for one thing after another because you knew you could manage the payments.  You just didn’t realize you were managing yourself into a lifetime of servitude.

 

It is time to change your strategy.  It is time to increase your income.

 

Before we get to that, I would ask you to do two things.  First, complete step one: Buy a Safe listed above.  Second, get a PayPal account.

 

You can do the rest of these powerful measures to increase your income at the same time you are doing steps 2-7 from above.  Once you are out of debt, your massive new income flow will be completely yours to spend the way you want to.

 

So get that safe and put those credit cards away.  They are bad.  Period.

 

Next, get the PayPal account.  You join PayPal for free.  They make their money from business clients and people sending money, not from the income earners such as yourself.  PayPal membership is absolutely essential in this path to massive new income.  You can both receive and spend money instantly without giving away vital private information like your credit card number to multiple businesses.  PayPal is also your advocate for online transactions.

For the record, I don’t own PayPal (wish I did!).  I don’t make money by recommending PayPal.  I run my business with PayPal.  You can trust them to protect you.

 

Increase Your Income

 

Don’t you want to be the anonymous donor who gave $10,000 to your Church on Christmas?  Or wouldn’t you love to buy the exact new car you want with every feature you want?  Of course you do.  Unfortunately we know that the most unlikely path to get there is through saving money in your current income system.

 

Perhaps you could work overtime, but you are already overworked.  You could ask for a raise, and pray that you didn’t just volunteer for the next right-sizing symposium.  Or you could start making all of that extra money today.

 

Take the time to learn more about a fantastic range of affordable businesses you start running for little to no financial investment.  Many of these programs will teach you all the essentials from start to finish.  The best ones have a free or low cost trial and allow you to opt out at any time.  You will be able instantly accept profits and make payments using your PayPal information you made earlier.

 

Spend Your Money on Your Interests

and

Increase Your Income

Remember these two key elements.  You must get out of debt so that you get to decide how to spend your money.  You must increase your income so that you don’t need to go back into debt to accomplish the things you want.  These key elements go together.  Do them together.

 

Please begin your journey on those seven steps to get out of debt.

 

At the same time, take a serious look at increasing your income.  This will take some work.  But aren’t you already working hard for someone else?  It’s time to get to work for you.

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About the Author:
Robert is the owner of RCents LLC, specializing in web hosting and online marketing services.  His company operates through www.rcents.ws and is based in Virginia.
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