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The Major Reasons Why People Don’t Become Wealthy

Self help guru and wealth creation coach, Brian Tracy, has shared many words of wisdom over the years. For the financial freedom seeker, this presentation discussing the reasons why most of us don’t become wealthy is especially pertinent.

One of the key reasons is that many people never think in terms of being wealthy. It’s simply not part of their self-image, their belief about who they are.  Mr. Tracy addresses this issue and others in this post.

Please click “Like” and “Share” this post with others you think may be interested in increasing their wealth and financial independence.

(Disclaimer:  The views presented here are strictly those of the presenter.  The are not necessarily those of FFN.  Please use due diligence in applying the concepts, recommendation and in the purchase of products and services offered by the presenter)  FFN Editors

Achieving Financial Freedom in a Slow Economy

While the economy is showing steady signs of improvement, the approaches suggested in our featured article are certainly worth heeding. These are evergreen steps that are applicable in any economy.  
 
The article is entitled ” How to Achieve Financial Freedom in an Economic Crisis” by Sandra Simmons for Money Management Solutions. In it, Sandra outlines 4 actions to move towards financial independence even in difficult economic times 
 
Please let us know your thoughts on this article in the comment section below.
 
(Disclaimer: The following views are strictly those of the author. They do not necessarily reflect those of FFN.  Use due diligence prior to applying any concepts offered or purchasing products or services from the author.)
  
 
           
 

How to Achieve Financial Freedom In An Economic Crisis

By Sandra Simmons for “Money Management Solutions”

Does the current economic crisis have you worried? Are you wondering how to achieve financial freedom so you can protect yourself and your family from the coming financial crash? Here is what you need to know.

The first thing you need to understand is what the word economics means in terms of thinking about your family, and how you can use what it means to your financial advantage.

Forget what the media says about economics when they talk about the roller coaster ride of the stock market, supply and demand, inflation, banking industry mortgage defaults and the unemployment rate. Those are ‘economic characteristics’ that measure an area much larger than you can control.

What you can control is your own household economics. The definition of economics I am using is the original one; meaning “the art or science of managing a household or business.” And that is something that you, as an individual, can control.

There is an art to managing a household. It takes having certain skills and abilities, like organizing things so they run smoothly. There is a science of managing a household, especially in the area involving money. Here is what you can do to make sure that the economics of your household are strong and stable, even though the economy of the country may be on the slippery slide to disaster.

1 – Spend Less Than You Make

Take a lesson from your parents or grandparents who made very little, but lived very well. Keep expenses down to a level below what you bring home in your paycheck after taxes. The fastest road to financial disaster is spending more than you make. It’s possible to maintain your quality of life while cutting optional spending. This can be done by doing something as simple as renting a movie and making popcorn at home instead of going to the theatre, to buying a new used car instead of a brand new car.

2 – Pay CASH

Every time you purchase something using credit cards that you cannot pay off as soon as the statement arrives, you are committing your future earnings to the credit company. Those future earnings will be needed to pay your regular household expenses, so you end up in economic slavery known as the credit trap. The exception is purchasing property that increases in value, such as buying a home or investing in a commercial building that puts more income in your pocket.

Tip: When paying with cash; negotiate a cash discount. When the economy is sliding down and credit is harder to get, the guy with the cash is king. In addition, find out how to buy wholesale instead of retail to further lower your cost.

3 – Make the Money BEFORE Spending It

If there is some large purchase you need to make or want to make in the future, start putting small amounts in a savings account towards that purchase and keep that up until you have the cash to pay for it. If you have 10 years before your child enters college, then find out what the tuition will be and figure out how much you have to put away every week to have the cash the year they graduate from high school. Plus apply for every student scholarship, grant or financial aid package you can locate.

4 – Stash Some Cash for Emergencies and Living Expenses

Nothing will make you sleep better at night than the financial freedom of having some cash tucked away for emergencies like having to get the car repaired, needing some unexpected dental work or losing a job. When you have a cash cushion you can get your hands on immediately, then magically, you stop worrying about money, your attention goes back on living life and enjoying it, and making money suddenly gets easier.

The only thing you have to fear in an economic crisis is not having some cash reserves you can immediately get your hands on. Did you know that more millionaires were made during the Great Depression in the United States than during any other era in our history? How did that happen? In that time, the economy crashed, the stock market crashed, inflation took prices of everything through the roof, the unemployment rate went sky high as businesses closed, and people who lost their jobs also lost their homes.

The people who had cash stashed away were able to buy houses, property and whole companies for pennies on the dollar. They ended up being millionaires because they had enough cash to weather the storm called the Depression.

Out of every bit of income that comes in the door, immediately carve off 10% and put it in a savings account that you have designated for your cash cushion. Even if you have to work an extra job and cut expenses on top of that, JUST DO IT! As the weeks roll by you’ll find you sleep better at night and walk through life with a lot more confidence knowing you have achieved financial freedom and have protected yourself from the economic crisis looming on the horizon.

© 2008 Sandra S. Simmons. All Rights Reserved. Web Site Maintenance by Fast Track Business Solutions, Inc.

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How to Invest for Financial Freedom

 

     
In our journey towards achieving financial freedom, the role of investing is often mentioned.  In this issue, the writing staff at “Motley Fool”, well-known for providing investor education, offer a primer on how to go about the investment process.  While not an exhaustive treatise on the subject of investing, the following article gives a sense of the main aspects of investing.

The article is entitled “How Do I Invest” and covers topics ranging from the importance of reducing personal debt to an explanation of the two major approaches to investing…active and passive.  Please let us know your thoughts about this article in the comments section at the end of the screen.

(Notice:  The views expressed in the following article are strictly those of the author.  They do not necessarily represent those of FFN, its management, editors, staff, affiliates, etc. Readers are advised to use due diligence prior to applying any of the concepts or recommendations offered by the author. Further, readers are urged to use due diligence regarding the purchase of products or services offered by the author’s publication(s), website, etc) FFN Editors

Featured Article:

How Do I Invest?

http://www.fool.com/investing/beginning/how-do-i-invest.aspx

Motley Fool Staff
May 16, 2008

Once you’ve figured out why you should invest, the next step is learning how. We’ll break that question into two parts. First, we’ll talk about how you can structure your financial life to make it possible to invest. Then, we’ll delve into the mechanics of investing, such as opening a brokerage or mutual fund account.

What is investing?
Any time you invest, you’re devoting your own time, resources, or effort to achieve a greater goal. You can invest your weekends in a good cause, invest your intelligence in your job, or invest your time in a relationship. Just as you undertake each of these expecting good results, you invest your money in a stock, bond, or mutual fund because you think its value will appreciate over time.

Investing money involves putting that money into some form of “security” — a fancy word for anything that is “secured” by other assets. Stocks, bonds, mutual funds, and certificates of deposit are all types of securities.

As with anything else, there are many different approaches to investing — some of which you’ve probably seen on late-night TV. A well-dressed, wildly positive (though somewhat whiny) young man sits in front of lazily waving palm fronds, shaking his head about how incredibly easy it is to amass vast wealth — in no time at all! Well, hey! That sounds fine! But if it were so easy, wouldn’t everyone who saw the same pitch be rich? And how come you always have to send in money to learn those wealth-building secrets?

We suggest you take the $25 you’d spend on the hardcover EZ Secrets to Untold Billions book and the $500 you would shell out for the EZ Seminar, and invest it yourself — after you’ve learned the basics here.

First, douse your debt
After learning why investing is a smart thing to do, you’re probably itching to take the next step. You want to drop everything and start investing right now. But hold on! Would you start running a marathon without first stretching? Would you pour syrup on the plate before the pancakes are done? Having dazzled you with the power of compounded returns, we want to make sure that same principle’s not working against you. Before you start investing, you’ve got to get rid of your high-interest debt.

The very same principle of compounding that helps your investments grow can quickly transform a dollar of debt into a few hundred dollars. Does it make sense to try to save money even as your debts are multiplying like bunnies? No way. Although some kinds of debt may be low-interest or tax-advantageous (such as your mortgage), you’ll want to free yourself from the high-interest stuff before you begin to invest.

Every dollar you can put toward investing will work for you. And every dollar of yours kept out of the pockets of financial professionals or full-service brokers is also creating value for you. (We’ll get back to this point later.)

Pay yourself first
To become a successful investor, make investing a part of your daily life. That’s not as great a stretch as it may sound. After all, you make decisions that affect your finances every day, whether you’re ordering a $7 glass of wine with dinner or getting a home equity loan to pay down credit card debt.

We’re not suggesting that you obsess over every penny you throw into a wishing well. (Please don’t embarrass your mother by diving in after it.) If you pay yourself first, you won’t have to.

You already pay the companies behind your credit card, gas, water, electric, cable, and phone bills every month, right? Why not add yourself to the list? Heck, put yourself right at the top. Set aside a chunk of money to save or invest when you first get your paycheck, and you can happily forget about it for the rest of the month.

The Motley Fool recommends that you save as much as possible; 10% of your annual income (total, not take-home) is a good goal. Depending on your obligations, you may be able to save more or less. The more you save, the more wealth you create — but anything is better than nothing. Even a few dollars saved now will be worth more than lots of dollars saved later.

With online banking and brokerage services, it’s easier than ever to set up automatic monthly transfers between your checking account and a savings account or investing vehicle of your choice. You’ll be surprised how easy it is to live on a little less money each month — in fact, you probably won’t even notice the difference.

Don’t hesitate to be flexible about your savings. If you find yourself truly pinched for pennies once all the bills are paid, perhaps you’re paying yourself too much. Perhaps you’re not yet in a position to start paying yourself at all. That’s perfectly OK — but as soon as you can feasibly start saving, jump right in! The earlier you start, the better.

Active and passive strategies
The two main methods of investing in stocks are called active and passive management, and the difference between them has nothing to do with how much time you spend on the couch (or the exercise bike). Active investors (or their brokers or fund managers) pick their own stocks, bonds, and other investments. Passive investors let their holdings follow an index created by some third-party.

When most people talk about stock investing, they mean active investing. It may sound like the superior strategy, but active investing isn’t always all it’s cracked up to be. Over the long haul, most actively managed stock mutual funds have underperformed the S&P 500 Index, the most popular and prominent benchmark for index funds.

In that light, you can understand why some people want an alternative to “active” management. Many people who just want a return roughly equal to that of a major stock index prefer passive investing. Beyond the S&P 500, you can find passive investments in many indexes, including the Russell 2000 for small-cap stocks, the Wilshire 5000 for the broad market as a whole, and various international indexes as well.

Investing versus speculating
Right about now, you may be thinking about that brother-in-law who “made a killing” in options. Or maybe you’re reminiscing about the Nevada vacation when your one lucky quarter magically drew out 700 more with the pull of a slot-machine lever. Why put your money in slow-and-steady investment vehicles that merely promise double-digit returns, when you could have near-instant riches? With compounding, you have to wait patiently for years for your riches to accumulate. What if you want it all now?

Granted, there’s nothing exhilarating about predictability. Matching the performance of the S&P 500 won’t make you the life of the party. But neither will the far more common tales about how you lost your savings on some speculative gamble — nor a recounting of your subsequent adventures in bankruptcy court.

You don’t need a card dealer, dour strangers, or Wayne Newton background muzak to gamble. Plenty of stock market gamblers do an admirable job of losing their money on seemingly legitimate pursuits. At The Motley Fool, we believe investors “gamble” every time they commit money to something they don’t understand.

Suppose you overhear your best friend’s dentist’s nanny talking about a company called Huge Fruit at a cocktail party. “This thing is gonna go through the roof in the next few months,” she says in a stage whisper. If you call your broker the first thing the next morning to place an order for 100 shares, you’ve just gambled.

Do you know what Huge Fruit does? Are you familiar with its competition (Heavy Melon)? What were its earnings last quarter? There are a lot of questions you should ask about a “hot” company before you throw your hard-earned cash at it. A little knowledge could help keep you from losing a lot of money.

Remember, every dollar that you speculate with and lose is a dollar that’s not working to create long-term wealth for you. Speculation promises to give you everything you want right now, but rarely delivers. In contrast, patience all but guarantees those goals down the road.

Planning and setting goals
Investing is like a long car trip: A lot of planning goes into it. Before you start, you’ve got to ask yourself:

  • Where are you going? (What are your financial goals?)
  • How long is the trip? (What is your investing “time horizon”?)
  • What should you pack? (What type of investments will you make?)
  • How much gas will you need? (How much money will you need to reach your goals? How much can you devote to a regular investing plan?)
  • Will you need to stop along the way? (Do you have short-term financial needs?)
  • How long do you plan on staying? (Will you need to live off the investment in later years?)

Running out of gas, stopping frequently to visit restrooms, and driving without sleep (this is the last of the travel analogy, we promise) can ruin your trip. So can saving too little money, investing erratically, or doing nothing at all.

Don’t let yourself get away with fuzzy answers, either. Investing demands hard numbers — get used to them. You’ll need to pin down exactly how much it’ll cost to send a child to college, or how much you’ll need to live on in retirement. It can be liberating to see exactly what you need to reach your destination, and that precision helps you stay accountable to yourself along the way.

Don’t worry — you don’t have to do all the math yourself.  Online interactive calculators can help you figure your future money needs. The more specific you can be, the more likely you are to set and achieve reasonable goals.

How stock trading works
You’ve whipped your finances into shape. You’ve set concrete financial goals. Now you’re ready to learn how to start making your investments. If you use a mutual fund, the process is pretty easy: Contact the fund company and ask to open an account. But with stocks, things get a little trickier.

Stocks trade on exchanges. In the U.S., the major exchanges are the New York Stock Exchange (NYSE), the American Stock Exchange (AMEX), and the Nasdaq Stock Market. While there are differences in the way the various exchanges handle trades, buying and selling shares on any of them involves a similar process.

Exchanges bring together buyers and sellers. The price that buyers are willing to pay for shares is called the “bid,” while the price sellers are willing to accept to sell their shares is the “ask” price. The difference between these two prices is called the “spread.” Usually, the spread goes into the pockets of the exchange professionals who handle trades.

The amount of spread will vary, depending on the volume of shares traded. For heavily traded stocks, competition will make spreads quite small. Thinly traded stocks may carry a large spread, in order to compensate exchange professionals for the risk they take.

Investors can set their own bid or ask prices, too, by placing orders to sell or buy only at a specific price. (These are called “limit” orders.) Exchange professionals keep a close eye on these “open” orders, executing them when conditions are met, and using them to gauge demand for the stock.

Brokerage accounts are the most common way to buy stocks. You can either use one of the many way-too-expensive full-service (or full-price) brokers, or execute your trades through a discount broker. Learn more about how to pick one in our Broker Center, where you can compare brokers and open an account.

The perils of margin
When you use a brokerage account, you can have a cash account or a margin account. The former lets you trade only with money you actually have. The latter — and right about now, you should be hearing alarm bells and warning sirens — lets you purchase stocks with borrowed money. Margin accounts can increase your returns — but they’ll also increase your risk.

Brokers, who have a vested interest in enticing customers to use margin, like to say that such accounts increase your “buying power.” But in reality, buying on margin only enhances your “borrowing power.” You’ll have to pay all that margin money back at some point — forget that at your peril.

Brokers make a good part of their money by collecting interest on margin loans. And since margin gives investors more (borrowed) money with which to buy stocks, it generates greater commission fees for those same brokers. The broker has total control over the collateral for the loan, including the ability to step in and force you to sell stock if it thinks you’re in danger of defaulting on its loan. For brokers, margin is a cash cow; for investors, it’s a double-edged sword.

Dividend reinvestment plans (DRPs) and direct investment plans (DIPs)
Not yet ready to open a brokerage account? These plans offer another, steadier way to buy stock. Lovingly known by many investors as Drips, they allow shareholders to purchase stock directly from a company, with only minimal costs or commissions. Not every company offers such plans, but they’re great for people who can only invest small amounts of money at regular intervals.

Summing up
All right, Fool — you’ve got a rough idea of what you want to do with your finances, how much money you’ll need, and how much time you have to reach that goal. And you now know how to start investing your money in the market. For your next step, it’s time to start thinking about exactly what you should invest in, and the kind of returns you can reasonably expect.

Financial Freedom on a Limited Income

Can one create a financially secure life style on a limited budget?  In these times, this is an important question for many people.  Optimistic economic reports aside,  many  people across the country are not making the incomes they once had. 

There are those who are recovering from being laid off from formerly well-paid jobs.  Others are just entering the workforce and finding it difficult to secure long-term, full-time employment. Still others are being asked to do more on their jobs with minimal or no annual increases. 

All of this while companies are still reducing jobs and the costs of living are steadily increasing.

In the following article, “Achieving Financial Freedom on an Irregular Income”, our contributing author, Angie, describes how she and her husband have achieved exactly that goal.

A doctoral student and online writer for “Live Healthy, Save More”,  Angie and her husband, both freelance workers, made creating financial freedom their goal. Here’s what she recommends.

(Notice: The following views are strictly those of the author.  They do not necessarily represent those of FFN, its’ management, editors, staff, affiliates, etc. The reader is advised to use due diligence prior to applying any of the author’s concepts or recommendations offered in this article. Further, the reader is urged to use due diligence regarding the purchase of any products/services offered by the authors publication or website). FFN Editors 

Featured Article:

[1]

[2]

Guest post from Angie of Live Healthy Save More [3]

Choosing to live debt-free is a challenging task for anyone, but it is especially difficult for anyone dealing with an irregular income. In today’s changing economy, more and more people are adopting freelance, self-employed, and contract-style careers.

Sticking to a budget, paying off debt, and saving can be incredibly difficult when your income varies from month to month. Long term planning can also be very challenging when there is no way to predict how much money will be coming in.

My husband and I have been in this situation for the last two and a half years. He is a freelance violinist. I am a doctoral student, freelance administrative assistant, and blogger.

We went through Financial Peace University [4] our first year of marriage, and it changed our lives. However, many times we had to adapt Dave’s [Ramsey] suggestions to fit our “non-traditional” lifestyle. Although it has not been without set-backs, we have learned a lot about how to plan and budget with a irregular income.

Here are five simple tips you can use to harness the power of your variable income to achieve your goals:

1. Build a larger emergency fund.

Freelance or contract income is often incredibly unpredictable. Gigs or contracts fall through, or customers delay payment.

In light of this unpredictability, I highly recommend building at least a three-month emergency fund [5] before putting any extra money toward paying off debt. This will give you a large cushion to rely on in case you have a slow month or a job unexpectedly falls through.

We learned this one the hard way. When we only had a small emergency fund, we often found ourselves on the ever-revolving cycle of having to put essentials on the credit card while waiting on a payment from a previous job.

2. Budget a month in advance.

Another way to prevent the credit card cycle and to avoid frequently draining your savings is to budget a month ahead. For example, everything we make in February goes towards paying the bills in March. February’s bills have already been covered by January’s income.

Being a month ahead gives you the flexibility to have a whole month to prepare if gigs or contracts dry up. It also allows you to wisely allocate unexpected extra income.

If you know next month’s bills are covered, you can put this extra income towards savings or debt payment. If you are receiving a tax-refund, you could use it to jump start your month ahead budgeting.

3. Know your seasons and stockpile accordingly.

Living with a “non-traditional” income often comes with seasons of feast and famine. It is important to plan for these seasons as much as possible. For example, I know that we have less income in the summer.

This means that during our busy season (February through May) I intentionally look for extra deals and sales. If spinach is on sale for 99 cents, I may buy two bags and freeze one for later use. I take extra time to coupon and add to our toiletries stockpile. I also garden in the summer to reduce our grocery bill.

4. Get organized.

This is a huge key to success on a variable income. Know when your big non-monthly bills are due and save monthly whenever possible. We use automatic savings bank drafts to ensure we will have the cash for our yearly instrument and rental insurance payments.

Also, keep track of all income. We use a modified version of this spreadsheet [6]. This will help with long-term planning.

This spreadsheet can also help with tax planning. You can also use this to track receipts and possible deductions. I am not a tax expert, so I will not attempt to offer tax advice. However, I will say that it is imperative to keep track of your income and to have a plan for tax payments. We also learned this one the hard way!

5. Stay in your day.

Although planning ahead is vital to financial success, everything must be done in moderation. Planning can quickly turn to obsessing, especially when there are unpredictable months ahead. I limit the amount of time each day that I spend working on our finances in order to prevent excessive worry.

A friend, who has recently overcome a major life obstacle, shared with me her secret to success. Her motto is, “Stay in your day”. Plan wisely, but do not allow your planning to pull you from living well in the present.

Worry never robs tomorrow of its sorrow, it only saps today of its joy.”
~Leo Buscaglia

Do you have irregular income? What are your tips for sticking with a budget? I’d love to hear!

Angie is a doctoral student and online writer. Outside of her academic pursuits, she loves creating useful and innovative online content about healthy living. She also enjoys spending time with her amazing husband. Her other favorite things include chocolate, sports, and sunny days. She blogs at Live Healthy Save More [3].

photo source [7]


Article printed from Money Saving Mom®: http://moneysavingmom.com

URL to article: http://moneysavingmom.com/2013/02/5-tips-for-achieving-financial-freedom-on-an-irregular-income.html

Copyright © 2009 Money Saving Mom. All rights reserved.


The Magic of Compounding in Financial Freedom Investing (Video)

Producing a passive income stream through investing is one of the basic tenets of the financial freedom philosophy.  The following video by Tim Bennett, Deputy Editor, at Money Week.com shows how an investment can grow over time through the magic of compounding.

Albert Einstein was once quoted as saying that compounding is the most powerful force in the universe.

Tim discusses how financial “compounding” is key in allowing investors to make money on their money. This is an important concept in passive investing for financial freedom.

The video is titled “The Lazy Way to Get Rich”.  And,Tim discusses  what compounding is in investing and how it makes more money from the investor’s original capital input. 

(Notice: The views expressed in the following video are strictly those of the presenter.  They do not necessarily represent those of FFN, its management, editors, staff or affiliates, etc.  The reader is advised to use due diligence prior to applying any concept or recommendation offered by the presenter.  Further, readers are urged to use due diligence regarding the purchase of any products or services offered by the presenter’s publication or website.) FFN Editors

Featured Video:

“The Lazy Way to Get Rich”

by Tim Bennett, Deputy Editor, Money Week .com

Create Your Own Financial Safety Net

It could be argued that without some sort of safety net in our lives, there can be little sense of financial security.  However, building a meaningful safety net, in case of an emergency, continues to elude many of us.  

And, that net is not only monetary.  While certainly an important component there are other important components that Trent discusses. 

(Notice: The views expressed in the following article are strictly those of the author.  They do not necessarily represent those of FFN, its management, editors, staff, affiliates, etc.  Readers are advised to use due diligence prior to applying any of the author’s concepts or recommendations. It is further urged that due diligence be applied to the purchase of any products/services  offered by the author’s publication(s) or website.)

Featured Article:

How to build a financial safety net

By , Guest blogger for The Simple Dollar ,  March 7, 2013

If life is something like a high wire act, everyone needs a financial safety net. Hamm offers his advice for developing a financial safety net for if you fall on hard times.

We balance ourselves on that high wire and attempt to walk through life. We’re carrying a lot of weight to make the balancing act even trickier – children, marriage, and other responsibilities.

Eventually, something happens and we fall. Something interfered with our walk – a personal failing, a job loss, or something else entirely.

When we fall, there’s a safety net there to catch us. Some of us have family wealth or personally accumulated wealth. Others are surrounded by family and close friends for support. Still others have built up a long history of professional contacts. Skills and personal attributes also make up a part of that safety net.

Not everyone can draw upon all of those threads to weave their safety net, though. For some of us, the threads are much stronger. For others, they’re weaker, and for still others, there’s nothing there at all.

So, what does all that mean?

Some people can afford acrobatics on the high wire, while others cannot. The person who isn’t burdened by responsibilities and has an extremely strong net to fall onto can manage things in life that the person who is carrying a great deal of responsibility with a weak safety net cannot.

A single, healthy child of a supportive and wealthy family can easily dive into career paths and education without any sort of short-term return without having to worry too much about it.

On the other hand, I know of at least one older sibling who is barely twenty and is caring for her two younger siblings. There is no money for them and no functional family. That person has a great deal of burden and no safety net. That person cannot afford to take many risks at all on the high wire, so that person is consigned to getting the best possible paying job now and living with whatever it is.

It is completely unreasonable to think that the same financial and career plans would apply to these two people. They simply live in different worlds. Even things that they could both utilize, like being very frugal with their money, applies much more strongly to one than the other.

Whenever you read about personal finance tactics and you recognize that some of them don’t apply to you, remember that they do apply to people carrying different burdens and to people with a stronger – or weaker – safety net than you have.

This all leads to a pretty straightforward question: what can a person do to improve their safety net? There are several steps anyone can take.

First, build up an emergency fund. Try to get to at least $1,000 in cash in a savings account and just let it sit there. When an emergency happens in your life, you have the cash to deal with it.

Beyond that, focus on paying off debts and not acquiring new ones. If you don’t have a safety net, minimizing your bills and maximizing the amount of money you can save each month is your best path.

Second, build a strong social circle and be there for the people in it. The best thing you can do is identify people that seem reliable and, when they need a hand in their life, step up and give them a hand without expecting anything in return. Do that enough to other reliable people and you begin to build a relationship with them, one that will be there for you when you stumble and fall.

When a person loses a job, help them find another one. When a person is moving, help them to move. When a person needs help with something, just step up and help, even if they don’t ask for it. There is no better way to build a lasting and valuable relationship with someone than actually helping them when they need it.

Third, take your work seriously, even when it seems trivial. Yes, sweeping the floor is a very simple task and it’s boring, but do it with focus and strive to do it well. If you have a task to do, don’t just do the minimum to get it “done.” Try to get it done as well as you can within the alloted time (or within reasonable time). If you’re standing around with nothing to do, look for something to do.

Sure, some of the stuff you do will be overlooked, but it won’t be long before you begin to establish a pattern of excellence and the people who rely on you in the workplace will notice. When your chips are down, that pattern of excellence will be the thing that sets you apart and gives you the help you need.

Finally, stop wasting time and energy on things you can’t control. Sure, someone else might have a wealthy and supportive family while you do not. Don’t waste a second being jealous of them or wishing you were in their shoes. Instead, focus on what you can control, including the things above.

We’re all walking the tightrope, but the journey is a little different for each of us.

A Motley Fool’s Journey to Financial Independence

Motley Fool contributor, Chuck Saletta, provides great insights into the reality of achieving financial freedom. 

His article for the Motley Fool is entitled “The Incredible Joy of Financial Independence”.  In it he discusses both the lifestyle strategy to which he and his family adhere and their investment approach, in detail.

Mr. Saletta refers to the goal as realizing the family’s own financial independence day. He describes their strategy as “simple” but not “quick or easy”. 

Nevertheless, the Salettas reached their goal. And, the rewards are enviable. 

They are living proof that with a plan, discipline and persistence…gaining financial freedom is far from a fool’s errand. 

(Notice: The views expressed in the following article are strictly those of the author.  They do not necessarily reflect those of FFN, its management, editors, staff or affiliates,etc. 

The reader is urged to exercise due diligence prior to applying any of the concepts or recommendations of the author.  Further, due diligence is urged prior to the purchase of any products or services offered  by the author’s publication(s)/website.)  FFN Editors   

Featured Article:

The Incredible Joy of Financial Independence

By Chuck Saletta| More Articles | Save For Later
July 3, 2013 | Comments (48)   For “Motley Fool”

About a year ago — around Independence Day 2012 — my wife and I reached an important financial milestone, our own Financial Independence Day. We were in our mid-30s, with four kids and only one working-for-pay adult amid one of the worst job markets in generations, but we were free. Not rich, mind you, but free nonetheless.

When we ran the numbers, we discovered that with reasonable returns on our investments, we could stay in our house, cover COBRA/HIPAA health insurance premiums, and feed our family home-cooked meals. The kids would be on their own for college, our entertainment budget would consist of walks to the park for picnics, and we’d have to downsize our transportation to just the (paid-off) minivan. But still, we had a reasonable chance of making bare-minimum ends meet without working.

Peace throughout turbulent times
The transformation in our lives was astounding and almost instantaneous. I still work, as we want better than subsistence living and to help our kids start their lives without excessive debt, but I was able to land two jobs that were about as close to ideal fits for me as exist in the job market. That only happened because we had the freedom to ask for what we wanted at a time when many others were simply happy to have any job.

In addition to the awesome jobs, I also regained the ability to attend most of my kids’ sporting events, spend most weekends and some evenings with them, and tackle some of the overdue “honey-do” list. For the first time in years, our work and life were in some semblance of balance, thanks almost entirely to reaching that state of financial independence.

We got there, so can you
We followed an incredibly simple strategy to reach that point of financial independence:

  • Spend less than we earn.
  • Invest the rest, in tax-advantaged accounts when possible.
  • Reinvest dividends in something, though not necessarily the dividend payer.
  • Repeat.

The strategy was simple, but it certainly wasn’t easy or quick. Kids got sick. Cars broke down. The air conditioner, water heater, furnace, and other appliances needed to be replaced. Vacations were reduced to driving trips to visit out-of-town family. Entertainment came largely from the public library and neighborhood sports. And notice that I mentioned working two jobs…

I followed that four-step strategy before my wife and I were married, and once she realized that it was her best shot of being able to stay home with the kids, she quickly converted. Yes, it took years of sacrifice and being extremely choosy in our spending. Still, having emerged intact on the side of financial independence, we can attest that the benefits, from peace of mind to improved work-life balance and family time, are certainly worth it.

How we invest
The centerpiece of our plan was consistent investing in a strategy that has its roots in Benjamin Graham’s timeless classic, The Intelligent Investor. The keys to that strategy are:

  • Dividends: We look for companies that pay dividends, have a history of raising their dividends, and look capable of continuing to raise their dividends over time.
  • Valuation: We look for companies that trade at what look like reasonable-to-cheap prices based on some fundamental measure of their worth. Since the financial crisis took out some of our weaker holdings, we began including balance sheet strength in that valuation consideration.
  • Diversification: We follow Graham’s advice to look for companies that meet our other investing criteria and that operate in different industries. This absolutely saved us during the financial crisis, as many financial institutions looked good in the rearview mirror at the same time they were busy melting down. We lost more than I would have liked due to our holdings of financial companies, but far less than we would have were it not for Graham’s diversification principles.

As we worked through that strategy, we had some good years and some bad years, and we didn’t consistently beat the market. But we were able to keep on plugging away, because we understood the strategy and believed from Graham’s experience and his followers’ that it would work for us over time. And with every paycheck with money automatically sent to the 401(k), every IRA contribution, every reinvested dividend payment, and the occasional after-tax investment, we kept at it.

Why almost anyone can succeed
Perhaps the most important lesson we learned along the way is that you don’t need to trounce the market to wind up comfortable. Indeed, the act of investing is in many ways more important than the returns you get from investing. You just need a reasonable strategy that you can consistently follow and the persistence, perseverance, and time to see it through.

The strategy that got us to our Financial Independence Day may or may not work for you. But in honor of our nation’s Independence Day this Fourth of July, I encourage you to take the time to consider what your path to your Financial Independence Day might look like. Because the sooner you start, the better your chances are of reaching that goal, and the longer you’ll be able to enjoy the fruits of your effort and sacrifice.

How will you reach your Financial Independence Day?
Making the right financial decisions today makes a world of difference in your golden years, but with most people chronically under-saving for retirement, it’s clear not enough is being done. Don’t make the same mistakes as the masses. Learn about The Shocking Can’t-Miss Truth About Your Retirement. It won’t cost you a thing, but don’t wait, because your free report won’t be available forever.

(Motley Fool contributor Chuck Saletta is honored to call the Fool the home of one of his two awesome jobs.)

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