6 Steps to Your Personal Independence Day

Photo (cc) by Vironevaeh

Editor’s note: Some newspapers run “Yes, Virginia, there is a Santa Claus” every Christmas. Here at Money Talks News, we run this column from Money Talks News founder Stacy Johnson every Fourth of July – because this is the perfect holiday to take a look at your financial independence…

Independent: (adjective /ˌindəˈpendənt/) Free from outside control; not depending on another for livelihood or subsistence.

Our nation’s independence is a source of pride for every American, because it marks the day when our nation became the master of its own destiny – free from outside control.

Imagine the day when the definition of “independent” will apply to you – the day you’ll stop “depending on another for livelihood or subsistence.” When it arrives, fireworks won’t come close to expressing the satisfaction you’ll feel. Can’t see it happening? Here’s some advice that might help.

Finding your own version of financial freedom

I’m financially free – able to work because I want to, not because I have to. It’s been a long road, but I’ve learned some lessons along the way that might help you do it faster…

1. Freedom is inversely proportional to debt. It’s fundamental: The more debt you have, the less freedom you have. In fact, while it may sound extreme to compare debt to slavery, in a sense that’s exactly what it is. Every debt you have is an invisible ball and chain. If you owe MasterCard 10 grand, until you pay it off, MasterCard has the ability to influence what you do with your money, which means they also have a say in what you do with your life. (Is that why they call it MasterCard?)

Freedom means not owing anybody anything. If you have debt, read my book Life or Debt, or at least this story: 5 Steps to a Debt-Free Life.

2. Freedom means being rich, not looking rich. See that guy in the Porsche next to you at the red light? He’s not rich. He’s a salesman on his way to the home of someone who is. When he gets there, the house will probably be average but paid for. The cars in the driveway were probably bought used, and the prospect’s entire wardrobe will be worth less than one of the salesman’s suits. If you have time, read 19 Things Your Millionaire Neighbor Won’t Tell You.

Virtually everyone with a job will make a lot more than a million dollars during their lifetime. It’s not what you make that matters, it’s what you keep.

You can either look independent, or you can be independent, but you probably won’t live long enough to accomplish both.

3. If you want to work less, make your money work more. Say you set aside $1,000 a month. If you earn 1 percent on it for 30 years, you’ll end up with $419,628. Earn 10 percent on it and you’ll end up with $2,260,487. The one-percenter has a nice nest-egg, the 10-percenter is not only financially free, their kids might be as well.

“But wait!” you say. “There’s no way to safely earn 10 percent. And if I lose my money, I’ll be worse off than I was before because I’ve also lost all the time it took to earn it!”

True. And the same logic applies to love. If you’re going to find the love of your life, you’re going to have to risk major pain if it doesn’t work out. The solution? Be wise with both your money and your heart: Think it through before you make a move. In short, act cautiously but don’t miss an opportunity by standing there like a deer in the headlights.

That’s why I don’t just offer tips to save money but also advice on what to do with your savings – see our investment page and our rates page.

The more you earn on the money you set aside, the sooner you’ll achieve financial independence.

4. Think like a hamster, live like a hamster. People who go through life doing what commercials tell them live in a world of instant gratification. They see, they want, they buy. Result? They run like hamsters on a wheel, filling their closet, refrigerator, and garage with impulse buys and struggling to stay ahead of their Visa bill.

A hamster can only think in the present. You have the ability to visualize the future and sacrifice today for a reward tomorrow. When you watch an ad on TV, you might see a funny skit or a cool new product. What I see is an attempt by some company to convert your future financial freedom into their next quarterly earnings statement.

Financial freedom is the result of focusing on the future.

5. Think less about money, more about time. Stop thinking of physical possessions in terms of money and start thinking of them in terms of time.

If you can live on a hundred dollars a day, every hundred dollars you can save is worth a week of free time 20 years from now. Here’s the math: Save $100, earn 10 percent on it for 20 years, and you’ll end up with $732. This “rule of 7” will work with any amount. If you don’t spend $10, you’ll have an extra $70. If you don’t spend $1,000, you’ll have an extra $7,000.

I realize that it’s not easy to earn 10 percent, especially consistently for 20 years, and I’ll also concede that $100 20 years from now won’t buy what it will today. That’s not the point. Here’s what is: The only thing you have that can’t be replaced is your time on the planet. For every $100 you don’t spend now, you could be spending a week down the road doing what you want to do instead of what you have to do.

Mentally convert money into minutes and you’ll achieve financial freedom faster.

6. Where you see yourself is where you’ll be. There are dozens of examples of lottery winners ending up as broke as they started, and dozens more people who lost everything in one field only to regain it another. This offers evidence that the way we visualize our future over time shapes it.

There’s an expression that goes, “If other people thought of me the way I think of myself, I wouldn’t have any friends at all.” Stop beating yourself up and start visualizing a new, financially free you. No matter where you’re starting from, or how bad you’ve screwed up in the past, financial independence is achievable. Picture it, believe it, and you’ll achieve it.

After all, your odds are certainly no worse than those faced by a rag-tag group of freedom-seekers who threw in together about 235 years ago.

Disclosure: The information you read here is always objective. However, we sometimes receive compensation when you click links within our stories.

Read Next
7 Kitchen Gadgets That Make Healthy Cooking a Breeze
7 Kitchen Gadgets That Make Healthy Cooking a Breeze

These small appliances and cooking aids make healthy eating easy — and they’re all available on Amazon.

7 Ways Coupons Waste Your Money and Time
7 Ways Coupons Waste Your Money and Time

Here’s why I hung up my scissors and quit clipping coupons.

2 Costly Rewards Credit Card Mistakes — and How to Fix Them
2 Costly Rewards Credit Card Mistakes — and How to Fix Them

If you commit either of these credit card sins, you are likely losing money every time you use a card. Here’s how to easily right this wrong.

America’s Most Reliable Appliance Brand Is a Surprise
America’s Most Reliable Appliance Brand Is a Surprise

Have you heard of this appliance manufacturer?

7 Reasons Workers Age 65 and Older Have Not Retired Yet
7 Reasons Workers Age 65 and Older Have Not Retired Yet

For some, the golden years are a time to increase the gold — but their reasons for delaying retirement vary widely.

View this page without ads

Help us produce more money-saving articles and videos by subscribing to a membership.

Get Started

Most Popular
9 Mistakes Everyone Makes When Shopping on Amazon
9 Mistakes Everyone Makes When Shopping on Amazon

Are you losing money due to any of these missteps?

Can a Divorced Widow Claim Her First Husband’s Social Security Benefits?
Can a Divorced Widow Claim Her First Husband’s Social Security Benefits?

The rules are complicated when it comes to eligibility for survivors benefits.

Can a Twice-Divorced Woman Claim Social Security Survivors Benefits?
Can a Twice-Divorced Woman Claim Social Security Survivors Benefits?

Understanding survivors benefits rules is the key to getting the most from your benefit.

These Are the 10 Worst Cars for Depreciation
These Are the 10 Worst Cars for Depreciation

Two types of vehicles are especially likely to see steep plunges in value.

10 Things I Always Buy at Trader Joe’s
10 Things I Always Buy at Trader Joe’s

From snacks to sweets to side dishes, stock your cart with these time-tested favorites on your next TJ’s run.

9 Things You’ll Never See at Costco Again
9 Things You’ll Never See at Costco Again

The warehouse store offers an enormous selection, but these products aren’t coming back.

5 Ways Social Security Will Change in 2021
5 Ways Social Security Will Change in 2021

These adjustments will affect both workers and retirees in the new year.

11 ‘Disposable’ Items You Should Be Reusing
8 Things You Should Buy at Restaurant Supply Stores
8 Things You Should Buy at Restaurant Supply Stores

You don’t have to be a chef or a restaurant owner to shop here.

3 Ways to Get Microsoft Office for Free
3 Ways to Get Microsoft Office for Free

With a little ingenuity, you can cut Office costs to zero.

19 High-Paying Jobs You Can Get With a 2-Year Degree
19 High-Paying Jobs You Can Get With a 2-Year Degree

There are easy high-paying majors available in the U.S. — and no bachelor’s degree is required. We’re here to help you find easy degrees that pay well.

Stop Buying These 19 Things Online
Stop Buying These 19 Things Online

The internet has changed how we shop. But for some things, you’re still better off buying the old-fashioned way.

Cut These 11 Expenses Now If You Hope to Retire Early
Cut These 11 Expenses Now If You Hope to Retire Early

Like the idea of financial independence? Part of the FIRE equation is cutting costs.

27 Things You Should Never Pay For — and How to Get Them for Free
27 Things You Should Never Pay For — and How to Get Them for Free

When you know the tricks, you can save big on all kinds of useful things that others pay for.

4 Tax Credits That Will Be More Generous in 2021
4 Tax Credits That Will Be More Generous in 2021

If you are eligible for these tax breaks, they will slash your federal income tax bill — dollar for dollar.

15 Things You Can Get for Free in December
15 Things You Can Get for Free in December

December is here, which means it’s your last chance to take advantage of fabulous freebies in 2020.

7 Tips for Building an Emergency Food Supply
7 Tips for Building an Emergency Food Supply

A pandemic or natural disaster could leave you reliant on your existing emergency food supply. Is your pantry well-prepared for emergencies? Knowing what to stock up on for emergencies can be a difficult task and we’re here to help.

7 Reasons to Carry Mortgage Debt Into Retirement
7 Reasons to Carry Mortgage Debt Into Retirement

It often makes financial sense to not pay off your mortgage before retiring.

These Are the 4 Best Medicare Advantage Plans for 2020
These Are the 4 Best Medicare Advantage Plans for 2020

Medicare Advantage customers themselves rate these plans highest.

View More Articles

View this page without ads

Help us produce more money-saving articles and videos by subscribing to a membership.

Get Started

Add a Comment

Our Policy: We welcome relevant and respectful comments in order to foster healthy and informative discussions. All other comments may be removed. Comments with links are automatically held for moderation.