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5 Steps To Financial Independence

Thursday, July 4, 2013 - 8:21 AM
Financial independence is a lifetime goal worth fighting for.

It means you can maintain your standard of living without running out of money -- no matter what. Layoffs, illness or retirement shouldn't place you in financial jeopardy.

This goal is less about how much you make and more about how much you save.

5 steps to financial independence | Interest.com

"Medical bills cause more than 60% of all personal bankruptcies and pose the single biggest threat to everything you're working to achieve.  Protecting yourself against that is part of declaring your financial independence."
11
ShorebreakShorebreak2,675 posts since
Apr 6, 2010
Rep Points: 14,527
1. Thursday, July 4, 2013 - 11:21 AM
Oh darn!  They found out about "my" 5 Steps for Financial Security and now everyone is going to do it! Oh Well.  Can't keep good things a secret for long.  Seriously, I have lived our lives by each of these steps and they do work!

Happy Day!
6
paoli2paoli21,401 posts since
Aug 10, 2011
Rep Points: 6,135
2. Saturday, July 6, 2013 - 7:30 AM
I would disagree with having a car payment. Once your first car is paid for, save that car payment each week and when you need a new car you can pay cash. When we were first married my whole paycheck was put in the bank, I walked to work. In 6 months I had enough money to pay off my husband's car and did it for his birthday present. We never had another car payment. Then we saved my paycheck for a down payment for the house. In a year we had enough and each week my whole paycheck was put on the principal. We used his paycheck for groceries, housepayment, saving for a new car when we needed it and everything else that we needed and saved 10%. I know that a lot of this is not possible now with job situation but saving has to be number one on everyones list. When you borrow it makes you poorer. You only make the bond holder richer. You should only borrow for education and a home. But don't buy a home until you have saved your 20 to 30% downpayment. 
3
Ally6770Ally6770934 posts since
Jan 16, 2010
Rep Points: 2,717
3. Saturday, July 6, 2013 - 8:12 AM
Rosie:  What car payment?  I must have missed that part in the article because I agreed with it.  Like yourself, we never had a car payment because I always saved ahead for the next car.  There is a way to live debt free even if one doesn't make lots of money.  We just have to be disciplined enough to want to do it.  Having that "emergency fund" to keep one from going into debt when those unexpected emergencies happen is one of the most important items to me.
3
paoli2paoli21,401 posts since
Aug 10, 2011
Rep Points: 6,135
4. Saturday, July 6, 2013 - 8:24 AM
Sorry, Should have made myself clear. I was referring to the article which stated---

The only things you should ever finance are a car, a home and a good education. The latter assumes you’re going to a reasonably priced school and studying something that will earn you a decent living
3
Ally6770Ally6770934 posts since
Jan 16, 2010
Rep Points: 2,717
5. Saturday, July 6, 2013 - 8:50 AM
One thing I neglected to mention is that we budgeted each paycheck as if there were 48 weeks in the year instead of 52. This way we had extra money in each envelope in case my husband had to take a sick day or we took a vacation. We received no pay for that. He worked in contruction so if the weather was bad there was no pay for that day either. It took the pressure off for not having money for a house payment or the electric bill without taking it out of savings. By buying only what was on sale at the grocery stores each week  (there were 5 in our town back then competing) and stocking up we had enough money in the food envelope to pay for the food for the large family dinners at Easter, Thanksgiving and Christmas. Kids now do not believe that we never even had a hamburg because it used too much meat, that we had spaghetti, goulash, chili. We never had a beef roast for the first 5 years we were married. But it worked for us. When we could have hamburgs and barbeque sandwiches my husband grandmother taught me to put 2 tablespoons of cracker crumbs and one egg for each lb of hamburg to make it go further.  We also  put ground carrots in our ground beef barbeques to make it go further. 

3
Ally6770Ally6770934 posts since
Jan 16, 2010
Rep Points: 2,717
6. Saturday, July 6, 2013 - 8:57 AM
Darn it Rosie!  You get the crown from me!  I thought I had everyone beat and now I find I am uncrowned by one of my own.  Oh well at least I didn't have to give the crown to "Wil" as much as I would love to crown "him" certain days! :)
4
paoli2paoli21,401 posts since
Aug 10, 2011
Rep Points: 6,135
7. Saturday, July 6, 2013 - 9:11 AM
My hat is off to you and your posts. They really are informative. 
3
Ally6770Ally6770934 posts since
Jan 16, 2010
Rep Points: 2,717
8. Tuesday, July 9, 2013 - 10:40 PM
Now this is good stuff!  So inspiring. So I'll see how much I can save in a year and post that a year from now.  Not sure how much it is going to be, but I figure to maximize this, I need to spend more to make more. 
1
mustsavemoremustsavemore49 posts since
Jun 26, 2013
Rep Points: 152
9. Wednesday, July 10, 2013 - 7:29 AM
To #8
You do not need to spend more to make more. You need to make more to save more. Work any extra hours you can. 


In a year it won't be much but it is a start. It is like the magic of compounding it grows as times goes on. As your emergency fund gets built up you can use your extra house payment money to make an extra payment a year. Use an extra payment calculator with your figures to see how much faster you will pay your home off. When we purchased our first house and I went back to work, I would take money out of my paycheck for the $3 it took in extra gas (I would go to work when my husband got home so we only needed one car and he would babysit) and then run down to the bank with the rest of the check and put it on the house principal. We paid our first house off in 6 years, saved for farm land with a pond, and then built our second home, paid that off in 8 years. It is hard to live on one paycheck especially now but the only way to make it is to live below your means. Always save. When you borrow you only make the bond holders rich. 
2
Ally6770Ally6770934 posts since
Jan 16, 2010
Rep Points: 2,717
10. Thursday, July 11, 2013 - 9:37 AM
Rosie:  I think you gave the answer why so many don't save.  Your mantra (and mine) is "live below your means".  That, I think, is the problem.  Too many people refuse to do that.   They want what they want, when they want it. Waiting to save for it is not a part of who they are.  Something or someone in our lives has to mold us into this kind of thinking when we are still children.  With me, it was my beloved mom.  She lost everything in the Great Depression and made sure she trained me to always save "safely" to try to protect my finances.   I just don't think we are born to want to save.  It is more fun to spend but one can do both if done wisely.
2
paoli2paoli21,401 posts since
Aug 10, 2011
Rep Points: 6,135
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