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5 Reasons to Pursue Financial Independence

5 Reasons to Pursue Financial Independence

    Do you crave a life without financial constraints?

    Too often our ability to make progress towards our passions has been limited by the “rat race.” In the rat race, we work for our employers, the government by paying taxes, and the lenders (ie, of our mortgages, credit cards, car loans, and student loans).

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    Usually, our own passions are dead last, relegated to when we can find free time — if they get focused on at all.

    Fortunately, you can have a very different plan. Here are five reasons to pursue financial independence…even if you love your job.

    Financial Independence is Important Because Job Security is an Illusion

    Financial vulnerability often motivates entrepreneurs. Many entrepreneurs work ridiculous hours, risk their entire life savings, and neglect important relationships for a dream with no promise of success. What sane person would take such risks?

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    Well, one thing to note is that regardless of whether you are self-employed, a traditional employee, or a business owner, you are in business for yourself. The primary distinction is who are your customers? For a typical employee, your “customer” is your boss. He or she is the one who is purchasing your services. However, if you own a business, you have many customers (or bosses).

    Accordingly, many entrepreneurs feel it is inherently more risky to have a single boss than having many “bosses.” For example, if you own a thriving business where you can control costs, growth, and marketing, then a whole bunch of customers would have to effectively “fire” you before you were forced out of a “job.” A business owner’s sustenance is no longer determined by single person’s opinion or by shareholders who may not even know his or her name. This is why financial independence is so important to traditional employees: no amount of education or experience can guarantee that even the most talented and faithful workers won’t be unemployed by the end of business tomorrow. If you are an employee, the reality is that you are constantly interviewing for your job.

    Financial Independence is Important Because it Means You Are No Longer Trapped in the “Rat Race”

    Sometimes there is an outright disdain for work nowadays. We marvel at those who retire early. However, I have come to the conclusion that the idea of leaving the “rat race” excites me infinitely more than the idea of retirement. For example, there’s an internal yearning to make a difference that would be very hard to achieve if your idea of retirement is sitting on the couch everyday watching The Bold and the Beautiful. Stephen Covey said that we all want to “live, to love, to learn, and to leave a legacy.” The right work can help us fulfill such aspirations.

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    Rather than eliminating work, I suspect that many people crave eliminating their need of provision clouding every decision that they make, stopping them from chasing their dreams, and robbing them from spending time with the people who matter most. A financially free person possesses insights and goals untainted by concern for sustenance, can pursue opportunities that are generally perceived as risky but high reward, and can control his or her time in ways those stuck working nine-to-five jobs can only dream of.

    Financial Independence is Important Because It Means You Are in an Even Better Position to Help Others

    It was Margaret Thatcher — The Iron Lady — who said that “no one would have remembered the Good Samaritan if he only had good intentions.” Some people piously say that they just want enough for their families. It’s as if they have outright indignation for anyone who craves more. Ironically, they completely miss how ridiculously selfish they sound.

    If we want to live extraordinarily, then we often have to look beyond our own four walls to see who we can serve. Just because charity starts at the home doesn’t mean it should stop there. One reason it is so important to expand your vision is that it will often be the stimulus prompting others to get involved in your dream. For example, part of the reason Oprah, Rachael Ray, and Dr. Oz are so successful is because they “major” in helping others. It is the problems that you solve for others that serve as the doors to your next promotion. One of the benefits of being financially free is that you are also free to tackle some really complex problems!

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    Financial Independence is Important Because it Means Fun is Amplified

    While happiness can’t be bought, fun can. I personally have no problem if someone wants to walk into his dream home or drive his dream vehicle, as long as he has been financially responsible. Recently, billionaire heiress Petra Eclestone purchased the old Aaron Spelling 57,000 square foot mansion for a staggering $85,000,000. In an interview, one reporter asked her response to the many detractors arguing that there were so many better uses for her family’s money. She replied she was extremely active and generous to her chosen charities and felt no responsibility to stop living her life based on what others have to say. One takeaway point was that just because you can have fun with less doesn’t mean you have too. Money is merely a tool. It only amplifies what’s already there, so if you have fun and give with your existing income and assets, just imagine what fun you can have and charitable deeds you can perform if all your financial resources were amplified.

    Financial Independence is Important Because it Increases Your Ability to Structure Work to Suit You

    Of course, choosing or creating the right kind of work is not limited to those who are financially independent. However, the two do appear to be linked. In the Millionaire’s Mind, Thomas Stanley argued that millionaires are more likely to have chosen work that uniquely suits them; the right work serves as a competitive advantage. Being financially independent means that you have more time and resources to explore your skills and abilities, your personality, and your passions and dreams and decide how best to incorporate that into your work; you have all the more opportunity to make sure that you get it right.

    Recently, there has been an explosive increase in people exploring alternative work models, such as freelance work, independent contractors, consulting, distributorships, licensing, etc. Just because one may not be a good fit doesn’t mean that you can’t find or create an authentic fit with another model. Be mindful regarding your work. Not only may your financial independence be determined by this decision but also your sanity!

    Closing Thoughts

    Not only are financial independence and building phenomenal wealth laudable goals, they are also achievable. Consider that when you are inundated with opportunities to forsake your budget for purchases misaligned with your values. Consider that additionally when market volatility and doom pundits make you want to duck and hide rather than invest. Most millionaires consistently invest at least 15% of their incomes, despite alluring sales and tumultuous economic climates. Follow that example when you face difficult financial decisions; choose freedom today.

    (Photo credit: Growing Money via Shutterstock)

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    Published on January 8, 2021

    How To Pay Off Credit Card Debt Fast: 7 Powerful Tips

    How To Pay Off Credit Card Debt Fast: 7 Powerful Tips

    Ever wondered whether your credit card debt is the reason you’re in a bad financial situation? You can’t enjoy any fun activities because a good chunk of your money goes toward debt payment. Heck, you’re even behind on some of your monthly bills.

    The effects of clumsy debt management are too many to list here. This guide is going to help you discover how to pay off credit card debt fast and start chasing your financial goals.

    Debt problems are the last thing anyone wants to encounter. But things can get out of hand when all the “little debts” you take accumulate in interests.

    What if you knew some simple and proven ways to be debt-free quickly? Implementing them would mean better financial health for you. It becomes possible to free up cash for your “wants.” These include taking a trip or buying something you’ve always desired. All that while paying your bills on time!

    Let’s not wait any longer. Here are 7 powerful tips for paying off credit card debt fast:

    1. Pay More Than the Minimum Credit Card Payments

    Many people only pay the monthly minimum on their credit cards. Truly, that’s the right amount for staying on good terms with your credit card company. But you need a different approach if you’re looking to achieve financial independence within a short time.[1]

    Most of your payments go toward interest costs when you only pay the minimum amount. A substantial sum of your balance remains standing. As a result, it becomes more expensive to eliminate your debts.

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    You don’t want to wait more than 10 years to get rid of debt while it’s possible to do it sooner. All you have to do is double that $100 minimum payment to $200 or go higher.

    The good thing is that minimum credit card payments are affordable in most cases. By paying a higher amount, you reduce your interest costs, lessen your borrowing period, and boost your credit score.

    2. Start With High-Interest Credit Card Debt

    If you have more than one credit card debt, prioritize putting the extra money toward the ones with the highest interests. This debt pay-off strategy, known as the debt avalanche method, is essential for being debt-free quickly.[2]

    First, you need to list down all the credit card debts you have in the order of their interest rates. Next, you choose the one with the highest interest and pay a significant amount toward it each month. It can be an amount twice or even thrice larger than the minimum payment.

    At the same time, you make monthly minimum payments on the other debts. Their interest charges won’t be as costly as that of the first debt on your list. You only move on to the next high-interest debt after the first one is gone. Remember that your focus is on the interest rates and not the balances.

    3. Revisit Your Budget

    Budgeting is useful for tracking your financial moves. Once you create a budget, some tweaks along the way can make it work for you better. One situation that requires you to revisit your budget is when you’re struggling with debts. It might hurt a bit to slash some expenses. But you also don’t want to miss out on achieving financial freedom in the long run.

    You can reduce some variable expenses to free up more cash for credit card debt payments. They’re the ones that change from time to time. Some examples are groceries, fuel, and clothing.

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    Other opportunities for cutting down your spending lie in non-essential expenses. Instead of dining out all the time, you can cook at home more to save money. You can also share some subscriptions with friends and pay a fraction of the cost.

    If you’re determined enough, you can eliminate all your unnecessary expenses and focus on paying off your credit card debt first.

    4. Avoid Using Your Credit Cards

    Do you want to know how to pay off credit card debt with a low income? One simple way is to stop using them. Having your credit cards everywhere you go means that you’ll be more tempted to buy unnecessary stuff. In this case, you spend money that you don’t really own and get deeper into debt.

    The quickest fix to stop the debt build-up is spending with cash. You’ll be more aware of everything you can afford at any particular time. If you decide to keep one or two cards to ease the transition, always make wise choices. For instance, only use them when experiencing financial difficulties.

    It’s best to categorize your fun activities under “discretionary spending” in your budget. This way, you won’t need more debt to kill your boredom. By halting your credit debt from accumulating, it’s easy to pay down what you already owe and be happy with the progress.

    5. Start a Side Hustle to Boost Your Income

    You’re probably turning away a lot of money by not monetizing your skills. Everyone has something that they’re good at doing. And you can use that to generate extra income for attacking your credit card debt.

    If you look around your neighborhood, you can find several side hustle opportunities. It can be pet sitting, tutoring, or lawn mowing. You can start an online business by offering services such as digital marketing, content creation, and web development. Such skills go in high demand on freelance sites and job boards.

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    Finding clients on social media is also a good strategy to utilize your skills and make more money. Facebook groups, Quora Spaces, and subreddits are some places to look for side jobs. You only have to join a niche-specific platform, share your services, and respond to any opportunities.

    It’s possible to learn a skill, practice it, and earn from it. Use the free resources online or purchase some e-courses to get started.

    6. Sell Your Used Items for Extra Cash

    Starting a side hustle isn’t the only way to generate extra money. You can turn unwanted items into cash for paying off credit card debt. Whether it’s an old TV, book, or furniture, there is always someone itching to buy your used stuff.

    A garage sale, as much as it’s old-fashioned, is perfect for getting your neighbors and passers-by to buy from you. You keep all the money because there are no business permits or taxes involved. While you may not make much cash, it’s better than leaving your stuff to go defunct in your storage.

    Other than that, you can sell your used stuff on online marketplaces. Facebook groups are great places to start if you want quick approvals and hence sales. You only have to ensure that your listing follows Facebook’s commerce policies.

    When selling any pre-owned items online, ensure they’re in good shape to avoid problems with your buyers.

    7. Know When to Seek Help With Your Debt

    Asking for help with your credit card debt can be challenging to do. But letting it drown you is a road you don’t want to take. While you may feel embarrassed at first, it’s the best way to get back on track when you run out of options.

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    There are tons of non-profit credit counseling organizations that can offer you free guidance on how to escape the debt trap. An example is The National Foundation for Credit Counseling. They simply review your finances and help you determine the source of your financial problems. After that, they match you with an actionable debt management solution.[3]

    In extreme cases, the debt solution can be:

    • Debt relief – where your debt is partially or wholly forgiven
    • Debt consolidation – taking out one loan to repay others
    • Debt settlement – the creditor forgives a significant portion of your debt
    • Bankruptcy – legal process for seeking relief from some or all your debts

    It’s necessary to carefully weigh your options before deciding on the way to go. Find out how it might affect your credit score and any other risks.

    Wrapping It Up

    Debt is a major setback when you’re trying to prosper in life. Paying off credit card debt is essential if you want to reach your financial goals. That means having more free income, a good credit card score, and even a chance to retire early. You become more productive each day because of the peace in your mind.

    So, you now have some tips on how to pay off credit fast. Go ahead and get rid of that good life progress killer!

    More Tips on How to Pay Off Debt

    Featured photo credit: rupixen.com via unsplash.com

    Reference

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