*This is a collaborative post*
Financial freedom may seem like something only the wealthy can achieve, but this is not the case. Many individuals who earn high incomes struggle in the same ways that individuals with lower incomes struggle. Financial freedom at any income bracket may be hindered by a tight budget, excessive debt and poor savings habits. It is never too late to adjust your financial habits and efforts so that you can move forward on a path toward financial freedom. These are some of the more essential steps to follow to get started.
Reduce Recurring Expenses
In many cases, individuals who are burdened by debt and who have a dismal balance in their savings and investment accounts live on a very tight budget. Essentially, they spend almost every dime that they earn. Scaling back on entertainment, dining at home rather than at restaurants and other efforts can help you to reduce expenses on a monthly basis. However, to make a true and lasting impact on your budget, you need to reduce your recurring expenses. For example, try to live with one car rather than two. Move to a more affordable home. Shop around for lower insurance rates. When you save money in these and other similar ways, you will have extra money on hand each month that can be used for beneficial purposes.
Refinance High-Interest Debt
If you are like many other people, you make a sizable monthly payment on your different loan types. For example, people who used private student loans for graduate school can carry higher than normal interest rates. One important component that is used to figure your monthly debt payments is the interest rate. Shaving even a point or two off of the interest rate on a high balance account can result in tremendous savings and may help you to pay the debt off faster and more easily. All types of debts may be refinanced. You can begin exploring the options today to determine if you qualify for a lower interest rate on any of your debts. You may even consolidate multiple accounts into a single loan to save money in some cases.
Financial freedom can only be achieved when you stop living on a paycheck to paycheck basis. This means that you need to have enough cash on hand in savings and investment accounts to feel secure even if you go several months without earning income. After you follow the previous two steps to free up more money in your budget, you may be able to make larger debt payments for faster reduction of balances. In addition, you should fund a savings account. It may take several months to accumulate a decent amount of money, but saving even $10 or $25 per week can result in a sizable amount of money over time. You can gradually increase your weekly savings contribution as well. After you have approximately three to six months of expenses saved, you can then begin funding retirement and investment accounts.
It can be frustrating to improve your financial situation. Many people expect to see instant results from their efforts. However, it will reasonably take time and steady effort to produce results. Be patient with the process, and you will gradually see progress being made.