7 Essentials for Your Financial Freedom Tool Kit
Want to be financially free? You gotta learn the mantra: eliminate debt, increase income and build wealth. We’ve completed our journey to debt freedom and are on the way to increasing income and building wealth. Here are some must haves in your financial freedom tool kit!
#1 Financial Freedom Vision
Before you make a plan to get out of debt, increase your income or create your investing portfolio, you need a vision! The vision will give you a roadmap of where you are going and keep you inspired when you get tired of being frugal or are just sick of budgeting. The vision will keep your decisions in check and make sure your actions line up with where you want to be. If you need help framing your vision, try creating a vision board or using this Financial Freedom 101 Map workbook I created for my readers. It’s free and will get you started in the right direction.
#2 A Credit Report
I’m team I-don’t-need-no-stinkin’credit but to get started on the road to financial freedom, you’ve got to clean up your financial mess (paying off all debt.) A great place to start is by getting a copy of your most recent credit report. You can obtain this free of charge once a year at www.annualcreditreport.com. There are other services where you can obtain a credit report, a credit score and monitoring if you feel it is necessary. www.MyFreeScoreNow.com is one such source.
# 3 Debt Elimination Plan
We got out a debt by negotiating high bills to lower amounts then……paying them off! Yes, the old fashioned way. The plan we used came from the Total Money Makeover Book by Dave Ramsey. He’s helped thousands (if not millions of people) get out of debt. At least check out the book! Note: there are a few different ways you can get out of debt including obtaining a HELOC, consolidation and declaring bankruptcy. There are serious pitfalls to some of these approaches, so be wise about what you choose to do.
#4 Budgeting & Money Tracking Apps
Here’s some techie utilities that will help you keep you keep tabs on your money in this process:
- Debt Repayment App- Payoff Debt
- Budgeting- You Need a Budget, Quicken, Google Apps
- Taxes- Turbo Tax
- Tracking net worth- Personal Capital
- Accounting- FreshBooks, QuickBooks or WaveApps
#5 Decision Calculators
Should you finance a large purchase or save cash for it? (Hint the answer will always be save, but seeing the numbers will give you a jolt into the right direction!) For example using both a time value of money calculator and an amortization calculator you can clearly see the difference between financing a $165,000 home over 30 years and saving up to pay cash for it over 10 years. If you can’t see the difference, check out how to figure it out here.
# 6 Multiple Streams of Income
You can’t depend on just one source of income these days. Don’t spread yourself too thin but at least start with something so you can get the hang of what works and what doesn’t. Having more passive income will get you closer to financial freedom much sooner. If you are stumped on what to start with. Check out one of my most popular, most shared articles, 19 Reasons You Should Never be Broke for ideas.
#7 Investment Portfolio
Your assets could include a mix of stocks, bonds and mutual funds and other asset classes like precious metals, real estate, intellectual property , business equity holdings and cash. Securities and mutuals funds are a great starting points for investing (remember to pay off debt first!) One of my favorite online brokerages, Trade King, has even started a new advisor program to get you going on investing. If you fund your account with $500 to start investing with, you’ll get access to their initial tier advising service (offered up for free for one year.) Now, there is really NO REASON to be scared about investing! Note: Even if you have a 401k, 403b or a Thrift Savings Plan investment account through work, you should also maintain a taxable brokerage account where you have more control over when you can withdraw funds and what investments make up your portfolio.