Address
304 North Cardinal St.
Dorchester Center, MA 02124
Work Hours
Monday to Friday: 7AM - 7PM
Weekend: 10AM - 5PM
If you are like me, you might crave financial freedom. Part of the reason I started this blog is to share my own journey to reach FI.
Financial Freedom is important to me. It will give me the freedom to have my own time, Freedom to not have to work to make someone else rich. To spend as much time as I want with my family and friends. Freedom to chase the sun. I just hate the feeling of having to trade my time for a rate that is determined by someone else.
I know money is not the key to happiness, but it is a tool that can help me reach the freedom I desire. A valuable tool that could eliminate the worry of putting food on the table or paying the bills.
Maybe its the engineer in me but I am a huge believer in having a plan or some structure. Having a goal to aim for and a plan that will help me get what i want. I know Plans don’t always work but they cant help you refocus when you go a little off track.
This is why I have 8 steps that will lay the foundations to become financially free. I call them the 8 pillars to reach Financial Freedom.
Pillar 1 – get rid of any unnecessary debt
To say I dislike debt is an understatement. The reason for this is because during the last financial crash I was in so much debt that when I lost my Job I went to a dark place that I never want to go to again.
The funny thing is that debt can, for the most part be avoided. Sure you need a load for your house or even your car. But do you really need a load for the latest I phone?
https://www.buymeacoffee.com/dividendtalk
Unfortunately, debt is common place in our society these days. So common in fact that it is encouraged by banks and even governments.
If you are one of the people who has some unnecessary debt built up, it is time to fight back.
Pay off your debt
The best way to get rid of debt is to write it all down. All your car loans, holiday loans, home refurb loans. Absolutely everything. This may seem daunting as the figure may be bigger than you expected but the key is not to panic.
The first step is to pick the debt with the highest interest rate. This is the debt that is costing you the most money to own the debt. Pay the minimum amount possible for the rest of your loans and Work towards getting this paid down as quickly as possible.
Once this is paid off, start on the next loan with the highest interest rate. You should be able to pay a little extra off this loan as you have eliminated the first loan.
Keep going with this method until all your loans are paid off. if you need help with Budgeting than check out Gord Manzers guide “Making it Stick” here
Pillar 2 -Build an Emergency Fund
According to CNBC, Only 43% of Americans say they could come up with $2,000 for an emergency.
Think about it, if 57% of Americans had an emergency over $2000, they would not be able to afford it. This alone shows the importance of having an emergency fund.
An emergency fund is a pile of cash that you could access in the morning in the event that financial circumstances changes. This could be losing a job for example.
There are lots of different guides on how much you should put aside for an Emergency. I aim to have at least 6 months of essential food and bills covered. That way if I ever do lose my job, I would have 6 months peace of mind while looking for a new one.
How to start building an Emergency fund
Saving 6 months of expenses may not be as hard as you think. The first step is to figure out how much you need. I use pocketsmith to keep track of my finances.
Once you have the total amount you want to save, set up an automatic payment from your bank account every month into your emergency account. I find that it is important to do this automatically so you don’t miss a payment. Spread the cost over a period of time you feel comfortable with.
Pillar 3 -Track your expenses
Tracking your expenses is a great way to keep you accountable at the end of each month. If you don’t know how much you have spent that you cannot tell how much you have overspent.
One area that shocked me was how much I was spending in the canteen in work. A couple of dollars may not seem like a lot but it all adds up.
I use an app called pocket smith which connects straight to my bank accounts. This makes it super easy for me to see what I am spending by category each month. I just make sure that I use my debit card as much as possible.
Pillar 4 -Automate your Savings
As an Automation Engineer, you should not be surprised that I have some automation in here. Saving /Investing consistently every week or month is important to grow your wealth.
Sometimes it is tempting to spend your money on the latest and greatest gadgets.Automatically transferring your money to a saving or investment account will shake any temptation you have to spend the money. If you have the automatic payment set up to happen on payday than you won’t even miss the money because chances are that you may not have seen it in your bank account in the first place.
Pillar 5 -Decrease Expenses
Hopefully while tracking your expenses you will see some areas where you can save some money. To help me decrease my own expenses I like to split my Expenses into 2 categories. Fixed Expenses and Discretionary Expenses.
Fixed expenses are expenses that do not change much. These are items such as my TV, gas, electric and Bins. I usually calculate how much these will cost me over the course of a year and break it down to pay weekly. You can usually cut down on these expenses by shopping around every year.
Discretionary Expenses are expenses that I make that I absolutely don’t have to spend. This is stuff like eating out in restaurants, clothes, movies, etc. These are the areas that I can cut down the most if I wanted to.You need to enjoy yourself and have some discretionary expenses but to much can seriously damage your future wealth.
Pillar 6 -Pick a Target Number
Financial freedom means something different to everybody. The cost of FI will fluctuate wildly depending on a number of factors such as geography, cost of living, hobbies just to name a few. In order to reach financial freedom, you need to know what this figure is.
I came up with my number by following the steps below
- Determine total income needed for a year
- Calculate how long I estimate I will be retired for
- Multiply the two numbers above
- Double it
Don’t be afraid to make it a big number. Reach for the moon! Even if you miss, you will land among the stars!
Pillar 7 – Take advantage of Tax Advantage accounts.
In Ireland, there is a decent tax benefit when investing in a pension fund. Especially if you fall into the higher Tax bracket. In most cases your employer will at least match your contributions. This is literally free money.
Taking full advantage of any accounts where you save money on tax and fees can really compound into a decent amount by the time you want to retire.
Pillar 7 – Earn Passive Income
If you don’t find a way to make money while you sleep, you will work unitl you die
Warren Buffet
Passive Income is the true key to financial freedom. If you can earn money without having to work than you will have true financial freedom. There is a couple of ways that you can earn passive Income – Download my Free Ebook to find out how.
[convertkit form=1332182]
Want to learn dividend Investing!
My Friend Dividend Cultivator wrote a guide that takes you step-by-step through the way he personally invests for dividend growth. It works the same way whether you have $100 or $100,000 dollars making this an approachable book for growing your income. Check out his book here. He also has developed a platform that will help you filter and chose your dividend stocks in a matter of seconds. The perfect tool for the busy investor who wants a quick and easy way to filter through 100s of companies.
Alternatively check out my Books section from Amazon where you will find books on dividend Investing
