Financial freedom is all about taking charge of your financial future. With hard work and a bit of foresight, you can establish financial independence. You now have a reliable money flow that enables you to live the lifestyle you desire most of the time. You no longer worry about sudden financial expenditures or how you will pay your current bills.
The key to establishing financial freedom lies in paying off your debts. You can do this by using a debt consolidation loan to pay off old unsecured loans, credit cards and consumer debts such as store cards and personal loans. If you are able to pay off all your debt, you will be left with one loan, one monthly payment and one interest rate. That’s great!
How would that make you feel, though, if you continued to keep your car repair bills paid on the side? It certainly wouldn’t be very encouraging, would it? Or to think about your car repair bill at the end of the month: You need a new tire. It is that scary a thought coming to mind. When you realize that your debt is actually more than your annual income, it will certainly help you get the idea.
The key, then, to achieving financial freedom and becoming debt-free is to eliminate non-income-producing expenses. In other words, eliminate the seven streams of passive income you are currently earning. If these income streams are consistent, you are well on your way. If they are sporadic and inconsistent, take action. You will soon be on your way to financial freedom.
So now we know how to eliminate the non-income generating expenses we are currently paying every month. How to achieve financial freedom and become financially independent? The answer is… cutting out the middleman, or charging direct clients only. This is the most effective way on how to create wealth, generate passive income and live an abundant life.
Now, let’s talk about how to eliminate the seven streams of passive income and pay off the current debt burden. This is a much trickier proposition but not impossible. First, by eliminating the extra money spent every month on things like cigarettes, alcohol, snack foods and the like, how much money do you have left? The answer to this question will tell you how much debt you need to eliminate. How much debt you have depends on how much money you spend on non-income producing activities (i.e. food, alcohol, etc.)
Once you have determined how much debt you have to eliminate, then you can divide it between the different creditors. The goal here is to put aside a portion of your net worth to pay off each debt so that you are only paying the interest, principal and the remaining amount at the end of the term. In other words, you want to use this extra money to invest in stocks, bonds, mutual funds or whatever is best suited to generate a passive income stream that will earn you a significant income once you stop paying it. You can also set aside a portion of your net worth for an emergency fund. Just be sure that your emergency fund is not overloaded with expensive items, otherwise it won’t be able to serve as an effective investment tool.
The bottom line is: achieving financial freedom means that you have freed yourself from the burden of excessive debt and that you are no longer paying outrageous interest rates to creditors. It may not be easy but it is possible. There are many people who successfully left the rat race and earned the freedom they were dreaming of. If you follow these simple steps, just like the ones above, then you too will experience financial freedom.