Financial freedom is often described as having both the time and money to live the life you want to live – essentially it could be summed up by the phrase “life on your terms”.
No matter what freedom means to you the common factor is that money is the essential fuel that transports us from where we are to where we want to be. We require money to live, yet beyond that we seem to be caught in a cultural cycle or striving for more and more; which means that our feeling of contentment and happiness is always kept out of reach, just like the carrot being dangled in front of a donkey to keep him moving forward.
Therefore, rather than strive for more, more more – it might pay to look at the destination we actually want to get to; the place that will make us feel content and satisfied, emotionally, and then work out the most efficient way to fuel the journey required to get you to where you want to be.
There are all sorts of ways to obtain financial freedom, from property investing to spread betting, but the most fundamental thing required to enable financial freedom is a shift in your own psychology.
When it comes to creating great wealth, attitude is everything, as the mind is an incredibly powerful tool that wealthy people condition to attract the levels of wealth they are able to create.
This isn’t some new-age “build it and they will come” philosophy, it’s scientifically proven that thoughts become things and if we are so focused on debt the whole time, we attract more of it, or become imprisoned, feeling impotent to break out of the situation. In some ways this could be described as someone with their head down, looking at their feet, in the place they are in – rather than where they want to be. Whereas, people walking the path to financial freedom have their heads up, looking forward to where they are going rather than where they are right now.
Similarly, there’s a huge difference between how the wealthy think about their time and how they go about building assets to create passive income rather than trade their time for money like the majority of people do.
No matter how you look at it, financial freedom, can feel like an elusive goal that will forever be just out of reach for them and something to be enjoyed by “other people” who are in more fortunate positions than they are.
This article faces the fact that a lot of people, right now, are enduring financially tough times. It encourages you to shift your focus from thinking about debt the whole time (i.e. looking down at the floor) to consciously creating a more prosperous future for yourself and your family (i.e. looking up at the stars). However, it can’t all just be wishy-washy positive thinking, action needs to be taken and challenges need to be addressed.
Therefore, we’re going to focus on the very first step to financial freedom – which is to get out of debt and start keeping on top of your finances. This first, basic step, is like the bottom layer of a pyramid; without this fundamental layer in place you’ll never have a firm foundation on which to build financial freedom.
1. STOP BURYING YOUR HEAD IN THE SAND
The challenge with debt is that it can be a vicious cycle that quickly spirals out of control, and rather than bury your head in the sand like most people, you’ll want to be proactive and take the “bull by the horns”, so to speak. Being in debt is often a slippery slope due to the interest and late fees that accrue on overdue payments – and the situation can quickly snowball out of control.
One thing’s for sure, debt can seriously affect your mental health and similarly a poor state of mental health can seriously affect your financial health. This guide offers some great advice in terms of this.
2. UNDERSTAND WHERE THE STRESS IS COMING FROM
For most people, having debt in itself, isn’t particularly stressful – it’s the debt collection activities that happen when people fall behind and the constant worry about what could happen next — it’s the phone calls… the threat of a ‘home visit’… the threat of court action, and even the prospect of bailiffs coming to remove personal items from your home.
Being pursued for debt can be an extremely stressful situation, and often times when people are in a serious financial position they are pursued by multiple creditors with multiple streams of debt collection activity. Due to this, many choose to be like a turtle and stick their head back in their shell; avoiding interaction with their creditors. However, when it comes to debt avoidance really isn’t the best strategy, it can provide temporary relief but it isn’t a long-term solution.
3. THE DIFFERENCE BETWEEN GOOD DEBT AND BAD DEBT
There’s a large difference between good debt and bad debt. For example, the prospect of consolidating your debt into one larger loan in order to pay off the smaller fragments of debt offers immediate and permanent relief from multiple creditors banging at your door… it can start to repair your credit rating in the sense that you are no longer making several missed payments each month… and presuming you keep on top of the payments for the consolidation loan, it will actually start to rebuild your credit score, and save a lot of money (due to the reduction of late fees).
In summary, the first step to financial freedom is not to go out and create a side hustle or go on Shark Tank to pitch a fantastic business idea – it’s not as glamorous or fun – but getting out of debt will allow you to lay firm foundations on which to build a stable future – so this first step is vitally important to reaching your goal of financial freedom and shouldn’t be underestimated.