We must bear in mind that our financial freedom will only be possible when our debts are less than our capital. That is why achieving financial freedom is not only based on having a large amount of money when the debts we have are even greater, in this blog we will mention some ideas to achieve it and gradually prepare the way for that process.
- Invest your savings
Remember that your money should always be making more money. So, don´t leave your savings stored under the mattress and invest everything you have left over. In this way you will get two effects:
- You don’t spend your savings on unnecessary things: because you don’t have them available.
- Investments will generate more income: in the form of returns, interest or dividends.
- Buy experiences, not things
Life is short. It’s not about saving all your money until you’re 65. You can enjoy life while you are alive.
Ultimately, the things that will help you live a fuller life will be the experiences you have and not the products you own.
Do the things you buy make you happy in the long run? Does the debt you have obtained from buying so many things make your life easier?
Now let’s flip the coin.
What is your happiest memory? What were you doing? Who were you with?
We´ll create more memories like this.
- Pay your debts as soon as possible
After paying off their debts, most people are relieved.
If you have a debt of $ 50,000 dollars, even if you have $ 30,000 in the bank, you´ll not feel financially free because you still owe $ 20,000 dollars.
And while paying someone else is not as satisfying as having the money in the bank, doing so will bring you closer to financial freedom.
There are two main ways to pay off debt:
Snowball strategy: pay the smallest debt first.
Avalanche strategy: you pay off the debt with the highest interest rate first.
- Create additional sources of income
You may be thinking: «My debt is much higher than my salary, so how will I be able to pay it if my salary doesn´t cover the expense?»
If you really want to have financial freedom, it will cost you blood, sweat, and tears.
If you don´t have enough with your usual job, you should find money by doing more jobs in the time you have free.
- Invest in the stock market
Investing in the stock market is based on the fact that you buy shares in a company, and this company gives you a part of its profits in the form of dividends.
If you buy a lot of stocks, you will get large amounts in dividends.
It isn´t recommended, unless the mechanism of the stock market is well known, that you speculate by buying shares and selling them more expensive, because it is easy that you end up losing a lot of money.