Day 1: What’s the First Step in Achieving Financial Freedom?

admin — Fri, 16 Mar 2012 15:54:49 +0000

Welcome to the first day of your seven part mini-course

on financial freedom. Over the next seven days, we’ll be

laying out a simple plan for acquiring financial freedom,

one which can get you on track immediately by the application

of practical steps which can fit easily into your everyday

life.

I’ve always believed that financial advice should be

simple and practical enough to fit with the context of

one’s life, otherwise, it’s not very useful or valuable.

So over the next seven days, my objective will be to

provide you with some straightforward tools which will

empower you to take control of your financial life and

to enjoy greater freedom and flexibility with your money.

Let’s get right into the first step: Identifying your

income sources.

Your first step to reaching any destination is

having clarity about where you are right now. This is just as

true when it comes to creating financial freedom as it is in

taking a trip to another country.

One of the primary reasons most of us never achieve

financial success is because we’re not managing our finances

on purpose. Instead, we pay our expenses and leave the rest

of our money in our account with no specific plan or purpose.

As you’ve probably already discovered, leaving money in your

account with no specific plan or purpose causes it to disappear,

leaving you wondering where it went. Of course, when this

happens the natural assumption for most people is that they

“need to make more money” so that they can finally start saving

or investing in order to increase their wealth and financial

security.

In my work helping people improve their financial life,

I’ve found that most people have more money than they realize,

even if they think that they’re living paycheck to paycheck. The

problem is that they’re not watching where every dollar is

going and when they find that it’s all gone, they just assume

that they aren’t making enough.

So the first thing we’re going to do is get a crystal

clear picture of exactly how much money you have coming in

so that we can develop a plan for giving every single dollar

a specific purpose. As we get to the step of giving each

dollar a specific purpose, we’re going to use the principles

of “Powerspending” to make sure that you’re’ spending in

ways that add value to your life and help you create a

sound financial future. (In case you’ve never heard of

Powerspending, don’t worry. We’ll be getting more into that later).

Now, what we’re going to do is develop a plan for keeping track of all the money

that’s coming in and where it’s coming from. This means that

every time you get any money coming in, you’re going to write

down how much came in and where it came from. At first, it

might look like you only have one source of income.

However, as you keep track over months or even a year,

you’ll start to discover two things:

First, you have more income streams that you’re aware of.

Second, keeping track of your income streams is a good way to

start brainstorming new ways to bring in additional income.

In regard to this second point, there’s something which is

VERY important to remember about the current economy that we

live in: A lot of people are scared because they believe that

we’re in an economic recession which will eventually pass.

However, what we’re going through right now is more of a

transition than it is a recession. The economy that we live

in now is the economy of the information age, and there are

a few new rules now when it comes to building financial

freedom.

The first of these is that financial security is no longer

linked to job security and this is not going to change anytime

soon…but that’s not bad. As you’ll be learning in this course,

the most sound and practical means of building financial

security is to:

#1: Have a solid net worth

#2: Have income coming to you through multiple streams

Most of us are already familiar with how a solid net worth

can bring us financial freedom. You hear people all the time

talking about how they would be better off if they had a

million dollars. However, many people who win the lottery burn

through it very fast, when they could be using that money to

set up multiple streams of income and temper their spending

so that they always had money coming in.

Also, taking the example of job security for a moment,

what’s stable about having ALL of your income coming from

one source? If anything ever happens which cause you to lose

that income stream you’re completely dried up until you can

find something else. However, the great thing about having

multiple income streams is that if one of them dries up, you

have others to sustain you long enough for you to start

building more.

So now that you have an idea of where we’re going long

term, here is the first habit which you’re going to work on:

keeping track of your income sources. What I recommend is

making a chart or spreadsheet with these basic categories

below so that you can start keeping track of what’s coming

in, where it’s coming from and how much. Also, I recommend

that you estimate the length of time you expect the income

steam to continue:

Your W2 income
Your spouse’s W2 income
Earned interest from investments
Earned income from rental properties
Earned income from online ventures
Earned income from selling things you’re no longer using

Now, this is just a simple list to get you started, you can

add categories as you keep track of your income sources. What

I recommend at this point is that you start brainstorming about

one new income stream, no matter how small, that you can create

within the next year.

This is a lot easier than it sounds, it simply takes a change

of mindset, a focus on building multiple income streams instead

of simply trading hours for dollars.

Most important, remember that keeping track of where your

money is coming from and how much you have coming in is an

ongoing habit, and the best time to get started is right now.

In tomorrow’s email, we’ll be working on the second step to

building financial freedom: getting a clear picture of where

your money is going when it’s being spent. So be looking out

for tomorrow’s email.

Welcome Article

admin — Thu, 11 Mar 2010 01:21:29 +0000

I met with a business owner to introduce certain financial products that will allow him to expand and improve his business. He quickly informed me that he has never had a loan. He proudly shared with me that he is debt free and presently the owner of a personal residence, rental apartments, barber shops, and Bar-B-Q restaurants. His business transactions are all cash when purchasing and selling assets. His model for business expansion or entering a new venture is first to purchase the necessary equipment and facility for the business venture, and then open the business without debt. He stated firmly that “a person who needs a loan to start a business does not need to be in business!”

Many may disagree with this business philosophy and speculate that he perhaps could have generated more revenue and accumulated greater wealth by using the concept of leveraging, but this business man has defined his success. He owns debt-free cash generating assets which exceed a million dollars in value, and has cash money set aside for each of his children in the event they decide to travel an entrepreneurial pathway. This gentleman is in his early sixties, does not have a high school diploma, and cannot read or write.

Cash Over Cash

Day 1: What’s the First Step in Achieving Financial Freedom?

Welcome Article