Moneywatch101, Personal Finance, Money, Life, Debt, Savings
What it means to be Debt Free!
The premise of what I want to discuss with you today is not given much attention in our current society. But this site will be a bit different and enlighten you to get a basic understanding of what it means to be debt free. There’s been a lot of talk recently about reaching the pinnacle of financial freedom, the crossover point where your finances can cover expenses with no problem. The wishing well from others trying to reach this is abundant, but before you dive in to begin your FI journey.
Everyone must reach a very critical stepping stone, and that is debt freedom. People this is a wakeup call, because there are sharks out there ready to take your cash flow away from you for years. That new shiny credit card offer, or the new sedan waiting to be driven off the lot, plus never forget the always modest student loan. Many of these debt perpetrators can be halted, by telling the reflection in the mirror, I will not borrow money under any circumstances.
If you can successfully go 3 years without borrowing any money, then you can finally reach debt freedom. The average American consumer reaches debt freedom in 18-36 months if they can keep new borrowing at bay. (Which means Never Again?) Now I will show you how getting to that step will elevate your finances to work extremely hard for you and possibly help you reach the pinnacle of finance. In a few examples below the current cash flow killers, will show that if you rid them from your life then invest the amounts below consistently you can be wealthy.
What it means to be Debt Free?
- The credit card monthly payment = $150
- The car monthly payment = $350
- The student loan monthly payment = $280
- The medical procedure monthly payment = $75
- The tax man monthly payment = $75
- The Home equity loan payment= $120
- The Retail Store monthly payment = $50
- The second credit card monthly payment = $75
The total comes to a whopping $1,175 dollars every month going to fake bosses robing your cash flow. The proof is in the figures. If you made a plan to pay these horrible loans off and invested it every month, in 1 year you would have 14 thousand dollars. In 5 years you would have upwards of 75K compounding year after year, and paying you back for being money smart. In 10 years you would have over 141K + any market increases and dividend reinvestments on top of that figure. These estimates are on the low end because we can never predict what the future will hold with invested dollars, but believe me I would rather be in the game making my dollars work hard for me than not in it at all.
How will you get there?
- Stop adding new Debt
- Use the Snowball Method
- Get an Extra job
- Sell Something Valuable to apply to debt
By applying these 4 debt freedom methods you will be free sooner rather than later. Can you really give up the opportunity to have financial freedom because you made mistakes early on, and never attempted to correct those debt mistakes? Sacrifice is when you hold yourself accountable for the actions that held you back in life. In the end that sacrifice will pay off, and that is the right financial path anybody who wants debt freedom should take. But many just want to wave the white flag and not fight debt impulses. Another issue I have witnessed with debt freedom is that people, who reach that stage, immediately increase lifestyle to the sum total of all the debt repayments. Instead what they should do is to gradually increase as income escalates every year, and not blow the opportunity that debt freedom gives them to become wealthy.
Comment if you have an idea of what it means to be debt free?
Rich Uncle EL
What it means to be Debt Free? is a post from: MoneyWatch 101
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