The Road to Financial Freedom

The Road to Financial Freedom is Literally Paved with Gold

Consider financial freedom as a road. Each birthday is a milestone.

For those of us not "to the manor borne", we have only a road of about 50 miles to travel. After all, we only have 46 to 49 years in which we can produce income - a bit more if you want to continue working past age 65.

During that time you have to be educated or learn a skill, you have to start a career, get a job or open a business, all the while facing the normal expenses of living - taxation being one of the highest.

With whatever is left after taxes, you have to purchase food, shelter and utilities, clothe yourself and provide for transportation. Insurance premiums, student loan repayments, vacations, child rearing costs and more all make demands on your income.

In spite of all this, some people can live comfortably and still retire at 50. Others can never quite scrape enough together to retire at all.

If you read the article, Get Rich Slowly you can see how you can use the power of compound growth to amass millions of dollars if you start young.

However, this is the period in most people’s lives where the greatest demands seem to be made on their income. For the first time in their lives they have some real money to play with.

Credit is usually easy to come by. And so much need be bought: the first car, furniture, a vacation, a new business wardrobe - the list goes on. It is easy to get into enough debt that you will still be paying it off 20 years later.

The ones that make to the end of the road to financial freedom can have large salaries, but that is not necessary. They first learn to live within their means and then save as much as possible.

My brother-in-law never went to college and works as a machinist. He has three children that he has put through college and has a larger portfolio than I ever amassed. His lifestyle may be considered frugal by many, but he has everything he needs to get by.

Branches on the Road to Financial Freedom

If we look at the road to financial freedom, you can see many branches off to the sides. Equate traveling the straight and narrow path as working for wages until you retire.

But consider straying onto some of the branches.

Take advantage of all the tax shelters the government allows and if possible, save even more.

Invest in or start a part time business, buy rental property or learn to increase returns by smart investing.

Insure against potential risks that could cause financial ruin.

Use debt wisely. Don’t necessarily shun debt, but use it as a tool to grow wealth. For example, leverage one 20% down payment into a string of houses using mortgages. Use margin debt to double the amount of invested funds.

Take advantage of tax credits, government guaranteed loans or grants offered to small businessmen or to certain minorities to fund multiple streams of income.

Don’t use debt to fill the house with things. Pay cash for depreciating assets like new TV’s and stereos, if they are bought at all.

Take taxes into account when planning how and where to live; employ investments and use all the tricks the IRS allows.

Financial Success

For a little over $3.00 a day, starting at age 22, you can amass over $850,000 in an IRA by age 65.

The difference between the financially independent and most of the rest of us is that they can find that $100 a month and don’t consider it a sacrifice to invest it for the sake of financial freedom.

You can complain that you live from paycheck to paycheck and can't possibly save, but in almost all cases this will be due to choices you have made with your life.

There are many stories about very low income people managing to put multiple children not only through college, but also graduate school or who left thousands or even millions of dollars to a favorite charity.

These people are special in the sense that they had a goal and stuck to it no matter what. They worked hard, sometimes at two or more jobs at once, saved their money and achieved their financial goals.

Everyone can do this. You have to ignore the siren song of commercialism, and decide whether a secure future for yourself, a college education for your children or leaving a large bequest to your favorite charity is worth skipping the daily double latte at Starbucks.

Nobody will put a gun to your head and force you to do this. Nobody, but you, will even know if you are trying. But if you succeed, you will find the proverbial pot of gold at the end of the road.

Growing wealthy will not happen all by itself. Start now and you will be very happy later.

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