A Road Map to Financial Independence
The weather was beautiful, we just had a barbecue party in the afternoon of the Independence day.
We celebrated the 4th of July, the day of independence, we had great food, lots of fun, we watched the firework; everyone sang the independence, cheered the independence, acclaimed the independence.
But are you truly independent? I mean financially?
Speaking of financial independence, it typically means having enough income to cover the expenses, including living expenses and medical expenses for the rest of your life without having to work full time.
When we are young, we have more responsibilities than our wealth, so we work hard to take care of our family; but when we are getting older, our wealth is accumulated, and our responsibilities are getting less, because kids are finishing up college, mortgage, loans are paying off; but we need to plan for our retirement and our health are getting worse, then we have to start thinking about ourselves, how to take care of ourselves, right?
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So if you are interested in learning more about how to build a solid foundation for yourself, no matter what are you are, click here to sign up my financial education mailing list, I will occasionally send you some information, updates, blogs and emails on investment, retirement, protection, tax, asset and estate planning, and college planning...
The sooner we pass the cross point, the better. It means our wealth has outweighed our responsibilities.
In general, we are expected to achieve financial independence before retirement, otherwise we may never be able to achieve that, because we may not have any active income afterwards (without considering passive income).
Do you know 60% of Americans are forced retire earlier than they’d planned? (USA Today).
So it is better to plan sooner than later.
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The bill of rights says we are entitled to Life, Liberty, and the Pursuit of Happiness and security ..., but are we?
I worked many jobs, I worked harder and harder, and I ever stopped learning, so my salary kept increasing, but my tax rate also increased along with my salary...
When I realized it, my income tax was already about 50%. I have already paid more than million dollar taxes, but what was left for me could only afford me a tiny crappy 250 square feet apartment without a kitchen or living room, so that I have to leave my family 3000 miles away ...
Well, it really stinks, doesn't it? And I did not own it, I rented it.
I had to learn this the long hard way. So let me help you here to skip a lot of the frustration I went through and instead learn how to plan for your freedom and independence...
I was well educated, I studied many areas, I had many degrees, three masters and one Ph.D, but still I didn't know much about wealth management, because it was not taught at school.
You see, over the years since I got out of school, I was married, bought a house, got kids, need to save for my kids to go to school, I have much more responsibilities than I did 20 years ago or 10 years ago ...
What I found was, my household income was more than tripled from 20 years ago and more than doubled from 10 years ago, and my life was more than 3 times as busy as it was 20 years ago, more than twice as busy as it was 10 years ago, but the money I could put into my savings account was about the same or even less than I could 10 years ago or 20 years ago ...
And even worse, I could frequently see my saving was going downward whenever there were any bigger expenses coming in, such as vacation or when my insurance premium due. I felt that I would never be able to reach my freedom ... I mean financially.
Have you ever felt like this?
If you think you are far from reaching your financial independence and you are willing to plan and commit to earn yours, this post will be extremely helpful to you...
Well, back to our Topic ...
A Roadmap to Financial Independence
Well, some people can build financial independence through purchase of assets that can generate income or appreciate, for example, investment properties, arts and collectibles, build a business...
Some of these require significant investment upfront, so probably not practical for the majority of Americans.
Building a business may sound out of whack for you ...
Still, for most people, there are many ways that can still help you towards that goal, and it’s not just for the wealthiest.
Here are some wealth generating habits that can make financial independence a part of your future...
#1 Pay Down That Debt.
By now you’ve probably heard a financial guru or two talking about “good” debt and “bad” debt. Debt IS debt, but some types of debt really are worse than others.
Credit cards and any high-interest loans are the first priority when retiring debt – so that you can retire too, someday.
Do you really know how much you’re paying in interest each month?
Go ahead and look. I’ll wait... Once you know this number, you can’t “unknow” it. But take heart! Use this as a powerful incentive to pay those balances off as fast as you can.
The cost of credit isn’t just the interest. That part is spelled out in black and white on your credit card statement (which you just looked at, right)?
The other costs of credit are less obvious.
Do you know your credit score affects your insurance rates? Keeping those cards maxed out can cost more than just the interest charges.
Every month you chip away at the balances, you’ll owe less and pay less in interest. (You’ll feel better, too.) And you know what to do with the leftover money since you knocked out that debt. Hint: Save it.
But keep this in mind – life is all about balance. It’s okay to treat yourself once in a while. Just make sure to pay yourself first now, so you can treat yourself later in retirement.
#2. Got A Bonus From Work? Great! Keep it.
What do you think most people are tempted to do if they get a bonus or a raise?
What are YOU most tempted to do if you get a bonus or a raise? Probably spend it.
Why? It’s easy to think of 100 things you could use that extra cash for right now. Home repairs or upgrades, a night out on the town, that new handbag you’ve been coveting for months...
Maybe your bonus is enough for you to consider trading in your car for a nicer one, or getting that new addition to your house.
Receiving an unexpected windfall is fun. It’s exciting!
But here is where some caution is wise. Pause for a moment. If you had everything you needed on Friday and then get a raise on Monday, you’ll still have everything you need, right?
Nothing has changed but the calendar. If you hadn’t gotten that bonus, would your life and your current financial strategy still be the same as it was last week?
Consider putting (most of) that extra money away for later, and using some of it for fun!#3. Pay Yourself First.
If you’re making contributions to your 401k plan at work, you’re already paying yourself first.
But you can also apply the same principle to saving. (If you open a separate account just for this, it’s easier to do.)
If you prefer, you can accomplish the same thing on paper by keeping a ledger. Just be aware that paper makes it easier to cheat (yourself).
With a separate account, you can schedule an automatic transfer to make the process painless and fuhgettaboutit.
Here’s how it works. Whenever you get paid, transfer a fixed dollar amount into your special account – before you do anything else.
If you don’t pay yourself first, you might guess what will happen. (Be honest.)
If you’re like most people, you’ll probably spend it, and if you’re like most people, you might not really know where it went. It’s just gone, like magic.
Paying yourself first helps to avoid the “disappearing money” trick. Hang in there! After a while, as the money starts adding up, you’ll impress yourself with your savings prowess.#4. Cash Value Life Insurance.
We purchase car insurance just in case of accident, it is not only protect ourselves but also protect the others. Do you know only 1.6 out of 10000 licensed drivers was involved in a fatal accident in 2016; but 100% of licensed drivers are required to have a valid car insurance?
As shown with the X curve, when we are young, we have more responsibilities than our wealth; we need a life insurance to take care of our responsibilities just in case we pass away; when we are old, we have more wealth than our responsibilities, then the life insurance can be used to protect our assets, to cover the estate tax, to cover the cost of living too long such as long term care, or to cover the cost of the expenses after we pass away.
Do you know what is the probability that a person will pass away…
100%?
But do you know what is the percentage of all households that have ever owned an individual life insurance?
Only 44%, according to LIMRA’s Trends in Life Insurance Ownership study (2010). Then for the other 56% Americans, "Who is going to take care of your family..."
Do you know the cash value in a life insurance has a downside protection with upside potential?
“Yes”, certain forms of cash value life insurance will have investment feature with return rate greater than S&P500 for an upside stock market; and for a downside stock market, the cash value still has a return rate of +0.75, so that you will never have the risk of losing money.
Do you know your cash value insurance does not count toward your assets, and it does not affect your chance of getting college grants?
Do you even know the cash value from your life insurance is exempt from creditors or garnishment?
Sound appealing? Something even more appealing ...
Do you know there is no tax consequences for the death benefit paying out to your beneficiaries when you pass away ...
When we are old, we have more wealth than our responsibilities; we can leverage the cash value life insurance to protect our assets, avoid Taxation and cover the estate tax.
Do you also know you can take the cash out from your life insurance in the form of loans, and there is no tax consequences for the return you earned over the years, as long as the policy is not lapsed?
So after the retirement, it may be used as another source of retirement income...
By leveraging the cash value from the life insurance, we may be able to enjoy a “Tax-FREE” retirement without building a business, without investing upfront , without any headaches for protection or maintenance of the precious assets or investment ...
Do you know if you just save $10 a day, equivalent to 3.63 cups of Lattes, with a 5% return interest, the saving can be $249,677 in 30 years?
Sound too good to be true?
Click here to sign up my financial education mailing list, I will occasionally send you some information, updates, blogs and emails on investment, retirement, protection, tax, asset and estate planning, and college planning...
Can we Reach Financial Independence?
Can you think of any other ways to help ourselves to reach financial freedom?
You have just read my blog and heard my thoughts, now let me hear what you think.
Or do you ever think it’s possible to reach financial independence before retirement?
Answer with a yes or no in the comments section and feel free to tell me more about what you think. I’ve got my opinions, but I’d love to know yours!
Does it sound easy to form a good habits toward your goal of financial independence? Just save a little bit, plan a little bit and commit to it, then your financial freedom should be waiting for you before you retire ...
Is there any way to fast forward to a financial independence long before our retirement, so that we can enjoy more free time for the rest of our lives?
But what if I can show you a faster way to reach your dream of financial freedom… Does that sound like a cool thing to do…
So go ahead sign up my financial education mailing list, I will occasionally send you some information, updates, blogs and emails on investment, retirement, protection, tax, asset and estate planning, and college planning...
Feel free to share this with your friends if you got value from this post!
If I can show you a way to fast forward to your freedom, but requires a little bit more time, hard work, commitment, and you are willing to help others, help them to march toward freedom, if that sounds like your kind of business…
Click here to sign up my financial education mailing list, I will occasionally send you some information, updates, blogs and emails on investment, retirement, protection, tax, asset and estate planning, and college planning...
 | Duo Zhou Founder of BuildWealthwithDuo.com |
PS. If you have different thoughts or different opinions, please leave me a comment below, or connect with me by entering your name, number and email below ...
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