Financial freedom and living a debt free lifestyle can easily become your reality.
Financial freedom, what is it? For me it is the freedom to choose how I spend my money and not owing anybody anything. Therefore, having NO DEBT.
If you are wondering what the benefits are to debt free living, check out my blog
DEBT FREE LIVING – WHAT ARE THE BENEFITS?
Keep in mind that this does not necessarily mean that you no longer earn an income. It means that you don’t owe money to anyone so you can choose how you spend, save or give away your earnings.
My story of financial freedom
My husband and I have been debt free for over fifteen years (excluding our mortgage) and it is by far one of the best decisions we have made. We recently paid off our mortgage. As a result, we are now completely debt free.
Has our life changed? ABSO-FRICKIN-LUTELY
We don’t owe anyone anything! We pay our standard living expenses and we spend our income as we choose. It’s liberating to be in control of our financial situation.
Before we started our journey we had multiple credit cards with very high balances and high-interest rates. We were making minimum payments and the balances were increasing every month. We were literally going in the wrong direction.
Our vision was to own a home. There was no way that we would save for a down payment or even qualify for a loan so we made the decision to embark on the debt free journey. BEST DECISION EVER!!
I will be honest with you, it was not always easy. There were many times when we declined invitations from friends. We chose not to purchase big ticket items and we had many nights eating at home and watching television. But with our vision always in front of us we found ways to make it work. We never felt we were suffering. We just made different choices.
What changed?
The debt free journey became a little fun. Budgeting and paying off debt fun? What? Well, it WAS fun when we saw balances on the statements decreasing and not increasing. YES!!! Going in the right direction. After the first card was paid, the motivation kicked in and we were more creative. Our habits began to line up with our goals and the process seemed easier the longer we stuck with it. All of those habits, we still have today.
Once all of our debt was paid we regularly put money into our savings account. We basically paid ourselves the money that we were once paying the credit card companies (less the interest – which is HUGE).
It did not take us much time to have the down payment for our first home. We were certain we could make the mortgage payments (and horrendous California Prop tax payments) because it was less than what we were paying monthly toward our debt. Our vision came true.
Our journey consisted of three steps. Three steps that can help with any decision. However, we will focus on debt free and financial freedom for this article.
Let’s go…..
STEP 1: KNOW WHERE YOU WANT TO GO
Without knowing where it is you want to go it will be difficult to get there.
You need a vision.
A vision is a clear picture of what you want to achieve. It gives you a purpose. Having one will help you set appropriate goals to get there. When you feel excitement about your vision you are more likely to find inspiration and joy when setting your goals.
Having a vision keeps you focused when you are required to make choices. Every day you have choices to make. Before making a choice take a few minutes to ask yourself how this choice lines up with your goals and vision. All of the choices you make are a key component to your success.
I recommend in this step to define your vision. You can choose one or many. I focus on one or two at a time but they are generally related to a much larger picture. For example, our vision was to purchase a house and ultimately achieve financial freedom.
If you are having trouble defining your vision or narrowing it down take some quiet time to do some internal processing. What is truly important to you? What would you love to achieve if there was nothing stopping you?
Put your vision in writing or on something where you can visually see it.
Some ideas:
1. Create a vision board
2. Write a letter to yourself describing what you achieved (make it in the present tense so you feel the joy of having it)
3. Write a few sentences that you can repeat to yourself (mantras)
I suggest keeping your vision in a place where you can visit it regularly to keep you motivated and inspired. I visit mine daily.
Your vision will change as you are in different stages of your life. Checking in on it regularly will help you when this occurs. You will know where and what to adjust in your goals and how that will keep you moving forward.
More on creating a vision and determining your values in these links below:
STEP 2: KNOW WHERE YOU ARE
Now you know where you want to go , you are ready to create some goals to get there, right? Not yet. Before you can make any goals you need to know where you currently are. You may be closer to that vision than you think. Or…maybe you have some work to do. You won’t know without knowing exactly where you are.
In this step you will gather all of your financial information and document in a way that you can easily see where you are. You can use a spreadsheet, a financial app, or financial software. Use what works for you. I recommend something that is not too difficult. If you feel more comfortable with pen and paper then use that.
What you need:
Income – All sources of income. I recommend documenting this as an average monthly income. Each situation is unique so just be sure to gather all of your particular sources.
Expenses – All expenses need to be documented. I also recommend listing these average monthly expenses. Be as specific as possible. The more specific you are the more accurate your picture will be. Note each expense as a need or a want. This will help you determine which areas are flexible when it comes to adjusting your spending.
Savings – Document your current balances on all savings and investment accounts.
Debt – Document your current debt balances. This includes credit cards, loans and mortgages.
STEP 3: CREATE AND MONITOR YOUR PLAN
Once you have all of the information from Step 2 documented you will have a good idea of where you currently are and you can start creating your goals for reaching your vision.
The first question to ask yourself is if you can reach your vision now. If yes, GREAT! If the answer is no, then start digging in to see what needs adjusting. Below are a few things you can look at.
Are your expenses greater than your income? If yes, then a review of your spending is required.
Do you have debt that is blocking your progress? If yes, maybe it is time to reduce this or better yet, get rid of it.
Do you have adequate savings? If not, maybe it is time to focus on bumping this up.
Every situation is unique so dig into yours and find the gaps that need tending to. In my example of our vision to buy a house, we found it was necessary for us to eliminate our debt and increase our savings so we set these two items as our goals and created our plan (mini goals) to help us achieve them.
I encourage you to write these goals down and look at them often. You will want to review them whenever you are making choices to be sure that your choices are lining up with your goals and your vision.
Now what?
The final piece of this step is to monitor what you are doing. Regularly check in with yourself to be sure you are progressing and if not, make the appropriate adjustments. I suggest to check in monthly. Often times you may find that you are missing data that you forgot about so checking in monthly ensures that it eventually gets captured. It also gives you a chance to get yourself back on track should you fall off.
These are basically the three steps to take. Of course there are also little steps in between but if you start with these you will be heading in the right direction and closer to your vision becoming your reality.
If your vision is financial freedom and debt free living you will want to remain there once you have accomplished the goal check out my blog
Are you on your journey to financial freedom? Please comment. I would love to hear from you.
Stay balanced,
Jill