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5 Steps to Financial Freedom

While many people think about reaching retirement early, what most people are actually thinking about is financial freedom. Financial freedom refers to the point in time where someone has enough capital and assets working for them that work becomes optional and retirement becomes a reality, no matter what the person’s age is. While many of us dream of making this a reality, there are in fact several things that can be completed in order to help someone achieve this.
Follow these 5 steps to financial freedom:

1.Reduce and Eliminate Debt

One of the most important steps that someone can take in order to achieve financial freedom is to reduce or eliminate personal consumer debt. The interest paid annually on consumer debt is often substantially more than someone initially thinks, preventing them or delaying them from reaching the other financial goals that they have set in their lives. In order to reduce debt, you need to establish a personal budget. Use your discretionary income monthly and start paying this amount on the debt with the highest interest rate. After this debt has been paid, take the amount you were paying and then apply it to your next highest interest rate debt. By doing so, you will be paying your consumer debt down quicker than if you paid a smaller amount on each consumer debt.

2.Arm Yourself with Cash

In order to stay out of debt, you will need to build personal cash reserves. Cash reserves are funds that are set aside in the event of an emergency or an opportunity. It is advised to have between 3-6 months of cash reserves set aside in an interest bearing checking account. If you work in a steady career, consider keeping 3 months of cash reserves. But, if you are in a sales career or a more volatile career, consider keeping 6 months or more in cash.

3.Build a Fort

The next step in creating financial freedom is to protect yourself. While most people protect themselves from theft and fire, most do not protect their most important asset, their ability to earn an income. Disability insurance can protect you in the event of an illness or accident, giving you the income that you need to maintain your personal household. In addition to disability insurance, life insurance is also an important consideration. Protecting those that you love in the event of a premature death is something that each individual and family should consider.

4.Have a Plan

Almost everyone desires to achieve financial freedom, yet most people fail to plan. Taking the steps to create a detailed financial plan will improve your chances of achieving your goals. A plan should include time frames and amounts for each of your business and financial goals. Write each goal down and then write down the implementation steps that will help you to accomplish these goals. Be sure to check your progress, to reward yourself when you achieve your goals and to make adjustments if you are off track.

5.Passive Income Streams

While this step is last, it is certainly not the least important step. In addition to the steps above, one of the best ways to achieve financial freedom is to create passive streams of income, something that most of the wealthy have created for themselves. Passive streams of income will offer regular income without regular work. Examples of these income sources include rental real estate, network marketing or affiliate marketing programs online. There is generally some initial legwork required to establish these income sources, although the long term passive income can be tremendous if the work is put in.

Passionate about helping people create their own unique financial future Linda Rugg retired before she was 50 years old. Through her web site http://www.CreateYourFuture.co.nz Linda is helping people just like you “Retire Healthy, Wealthy and Financially Free!” Be Linda’s guest and grab yourself a free copy of her latest new wealth creating audio report at http://www.CreateYourFuture.co.nz

Article Author :Linda_Rugg

Tags: insurance

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Tags: insurance