I have talked many times about the steps to take to achieve financial freedom. However, I found this awesome little graphic on @r/personalfinance on reddit.com. I thought it may be beneficial for you readers that learn visually. The following visual gives you a basic road map for financial freedom.
The first thing to do is to build yourself an emergency fund. The emergency fund should be a savings account or money market account. You want this money to be very liquid (easy to convert to cash). This money is here for… well emergencies i.e. you get laid off, your car breaks down, you have a medical emergency, your washer goes on the fritz. This account is a buffer between life and your finances. The emergency fund is an important foundation for your financial financial freedom, because let’s face it Forrest Gump said it best when he said, “Shit happens.” The emergency fund will prevent you from turning to a credit card when an emergency happens. Trust me they will happen
The next stop on your path to financial freedom is paying down your debts, i.e. your credit cards, student loans, and car notes. The problem with these debts is you are lining someones pockets with your money. These lenders aren’t really there to help you buy that new TV or car they are there to make money and they are making it off of you.
The next steps on the road to financial freedom are outlined with dashes, and they deal with saving for retirement. Let’s face it you and I don’t want to work the rest of our lives. I mean work is a four letter word. The first step is to contribute to your 401k @ work up to the amount that the company will match you. The match is basically free money, well not basically… it is free money. After you receive the match from your company its time to fund an IRA ( Individual Retirement Account). I prefer the Roth for reasons I will outline in something I call “The Seed or the Harvest.” After you max out your IRA, go back and try and max out your 401k.
This is by no means a comprehensive road map to financial freedom however, it is a good guide.If you want to see how you are doing as you move towards financial freedom use this roadmap as a guide and see how you are doing. Personally, I am building my emergency fund and paying off my student loans.
So, I just wantes to let everyone know that I took and passed my last CPA exam on 2/25/13. What a relief, but there is no rest for the weary. I have got eight more months of work experience to get before I can apply for my license. In the mean time I am looking to find a tax firm to work in or I eill dtart writing my business planbto open my own. As much as I preach seeking freedom I am clawing for
a way out of the corporate structure I sit in now. Be sure to check back in soon I am going to outline the steps it takes to be a CPA.
So we just got through Valentines day. Did you have a nice Valentines day? Did you buy flowers or take your loved one to dinner? I found this interesting infographic talking about Valentines Day statistics… Hope you enjoy.
So you have started on your road to financial freedom, and decided to pay off your debt. So far the road to paying off your debt may have been smooth… or it could be rocky. Are you having problems with those credit cards you are trying to pay off burning a hole in your pocket? Sometimes they are so tempting and easy to use to buy a little something here and there. You are using your debt snowball but you can’t seem to make any headway on those pesky credit cards (because you still use it for _________). Well here’s an idea to help get you with your credit cards… freeze those SOBs! That’s right freeze them, walk to your kitchen get a big Tupperware fill it up with water throw your credit cards in there close it up and throw it in the freezer.
After you have frozen your credit cards, you will notice it will be much easier to get out of your credit card debt. You may ask why. Well when you have frozen your credit cards you will have to thaw them out before you use them. While the credit cards thaw you will have a cooling off period… LOL cooling off… That’s right while your credit cards warm up you will have time to consider how important it is for you to go make whatever purchase you were planning on making. You will begin to ask yourself questions like… Do I really need this? Do I really want to have this? Is buying this help me attain my financial goals? The goal here is to make you wait long enough to use your credit card that you realize that whatever you were going to buy in the first place wasn’t really all that important.
I heard this great idea a week or so ago at my future in-laws house. My future father in-law (we’ll call him R) was talking about how they were trying to pay off their debts and how they had been successful except for one credit card. R said he was going to take the last credit card and freeze it. That way next time they wanted to use it they would have to wait for it to thaw and consider whether the purchase was worth putting on the credit card.
Tracking My Financial Journey December 2012
At the outset of December, I aggregated financial information to help me track where I am on my road to financial freedom. How do you know where you are going if you don’t know where you have been? In my December post about starting my new job and my move towards financial independence I set out some goals. My main goal is to bring my networth to $0.
I know it looks like this is moving the wrong direction, but I used some of my savings to buy my Fiances engagement ring from christmas. Which you can see below in my savings chart.
Here I have a summary of my student loans. There isn’t alot of movement here and it will take some time before I can really start moving the principal balances down. However, as I write this today A is paid off!
My retirement savings has basically stayed flat and won’t pick up much until I become eligible for my Roth 401k in July. I also want to get through our wedding and get my student loan debt snowball moving a little faster.
I also started tracking my passive income in December, because this will ultimately be one of the most important metrics and mile markers on my road to financial freedom.
I need to add an average line to this since the dividends in my brokerage and Roth account are typically paid quarterly and it will make this data look very lumpy. So as I aggregate the data I will incorporate a moving average line into this chart.