What does achieving financial independence mean? It means being able to pay your bills without worry that you won’t have enough. It means having the freedom to make choices you want. And it means being free from debt.
In today’s world, though, this level of independence can seem impossible. Car loans, student loans, and credit card debt can keep you trapped in a cycle for years if you aren’t careful. In fact, the average American household owes $130,000 in loans, creating a hole that is difficult to climb out of.
So how do you break the cycle and achieve financial freedom? Here are some tips to get you started.
How Can I Achieve Financial Independence?
Create a Debt Payment Plan
It is wise to get rid of consumer debt so that it doesn’t pile higher and higher. There are two approaches: either pay the highest interest rate debt or the smallest balance. Create a plan that you can stick to so that you can pay off a certain amount each month.
Track and Cut Expenses
Not knowing where your finances go is dangerous. Start by tracking your spending to see where you are putting unnecessary funds. You can download super helpful apps like Mint or Personal Finance to help you track expenses.
While you are still making payments, you will most likely need to cut back some. Going out to eat, cable, Netflix, clothes shopping, and movie tickets may all need to go for the time being. While it isn’t exactly fun, remember that this step is temporary to help you get back on track.
Build an Emergency Fund
No matter how careful you are, sometimes life just happens. You need to be building an emergency fund. Start by putting at least 10% of your income each month into it. Once you have become more stable, you can put 20% monthly. This stash will help you from getting into another hole that you’d have to climb out of. Ideally a minimum of three to six months of expenses should be in your savings.
Hire a Financial Wellness Coach
A money coach can make all of the difference. Many of us think of our finances and cringe, but why? It doesn’t have to be that way. Having a teacher show you how to take the steps towards financial independence can completely change how you view your finances.
Coremoney Coaching is here to help. I am passionate about helping others achieving financial independence that I know they deserve. Contact us today to get your free initial consultation.