Even if you’re not looking for a property this exact second, you always want to be improving your position.
So, focus on the downtime to improve your finances, get your debt squared away, and put yourself in a better position when you are ready to buy!
It’s important to be sure of your financial position before you buy a property because you might find it’s harder to get that property than you would have originally thought.
Here are a few ways to quickly improve your finances to help you save more, pay down more debt, and qualify for better loans.
One of the most common reasons that people struggle financially is because they simply don’t pay attention to what is going on in their own financial life. If you are not paying attention, you can’t hope to know what is going on and therefore know how to improve matters.
So, the first item on your list is to start paying attention to your finances!
When I’m working on a project, I’m laser-focused on the budget, the details, the costs, etc. But, sometimes in my personal life, I let this slide.
The reality is, when we do have a budget and focus on sticking to it, our bank account balances grow so much faster than when we aren’t using one.
I love to eat out, and my wife loves to buy small things around the house. One day, we looked back over the previous year of spending and found we each averaged over $1,000 per month on our hobbies!
By pulling back a little in each area, we were able to save over $1,000 per month but still do the things we enjoyed.
So, start by having a budget!
Even if you are financially well off and can afford most of what you want, by budgeting for the items and spreading the costs out over several months, you’ll find that you buy less, spend less, and save more.
Also, if you budget to pay down certain debts faster, you’ll see those balances dramatically drop!
So, do not overlook the importance of a family budget.
Save On Other Purchases
There might be a number of other big purchases you need to make before you get hold of your next property, and it is a good idea to make sure that you are only spending as much on those as absolutely necessary.
For any big ticket items, we actually start searching for them months or even a year in advance. For example, let’s consider kitchen appliances.
As you know, a full set of appliances can easily cost $5,000-$10,000 if you are getting high-end products. It includes a fridge, double oven, gas cooktop, microwave/fan, and dishwasher.
The first thing we did was go to the store and decide on two or three brands, styles and product lines we wanted. It’s hard to compare prices unless you are looking at similar products between stores.
Then, for months we’ll watch these items and their prices. Occasionally there will be sales and by tracking the pricing all year, we know which sales are worth getting or not. When we feel we are getting the best price, we’ll buy.
And by doing that, we can easily save $500-$1,000 or even more.
We did something similar with our TV, computer monitors, etc. Basically, anything that is currently working that we want to upgrade. Over the course of a year, we are saving thousands of dollars.
You might also use a money saving app to help.
Saving money in all these places will make an enormous difference when it comes to saving for your next down-payment
Pay Down Debt
With all the money you are saving by budgeting and by planning out major purchases, you might want to use some of it to pay down debt.
You’ll have to decide if it’s better to pay down debt or have a larger down payment because both will hold you back on your next purchase.
But, generally, paying down $1/month in debt is worth about $3/month in income. At least, as far as loans are concerned.
If you do decide to work on paying down your debt, I fully detail a unique debt pay down method to get you into your next rental property faster.
Increase Your Income
Most people just focus on debt, but the reality is you can only cut your expenses so much.
Income, on the other hand, has unlimited potential. So, why not focus on growing your income?
Increasing your monthly income can be done in a number of passive and active ways, and it is worth looking into as many of these as you can to find the right one for you. I outline a number of ways to increase your income in this article on how to earn $10,000 per month.
While earning $10,000 per month in side-income might seem a long way off, it’s important to start! Even if you can earn an extra $500 month now, and grow it slowly over time, it’s worth it!.
Don’t Focus on Just One Thing
As I mentioned already, focusing on just budgeting, or debt paydown can be detrimental to your overall financial goals. It’s important to combine a number of different things into an overall strategy, which includes budgeting, debt paydown, and increasing your income.
The Main Benefits of Being Financially Independent
Being financially independent means different things to different people.
To some, it means retiring and traveling the world, relaxing at home, or doing whatever you love.
For others, it means having the financial stability to have at your back, while you continue your career or business.
In general, financial independence is defined as when your passive income is higher than your living expenses. Here’s the issue though…
It can be a moving target.
You need different levels of income at different points in your life. Let me explain
How Much Money Do I Need?
If you are 18 years old and have no debts, are healthy, and can get by with little, the amount of income you actually need to get by is very low.
Eventually, you might get married, have a family, a dog, etc. So, the income you need to sustain this is a lot higher.
Then, the kids move out and you downsize. You need a lot less again.
Then you start to get older and you find your health failing you. Your costs will go up once again.
So, at a minimum, I’ve already outlined 4 different points in your life where your “financial independence number” will go up or down.
Regardless of the difficulty in calculating exactly how much you’ll need, there still are a lot of benefits to strive for financial independence. Let’s take a look at those.
Freedom of Choice
I already alluded to it a bit, but the biggest benefit to financial independence is freedom.
As soon as your passive income is higher than your wages, you’ll find that you don’t need that job. You can continue to work, but you don’t have to. So, all the stress is gone.
Same goes if you’re a business owner. You can continue to grow your business if you want, but you don’t need to.
You could opt to walk away from it and do something else entirely. It allows you could leave the high paying job and find a job that is more rewarding.
Whatever you choose to do, it’s because you’ve achieved Financial Independence.
You’ll Be Able to Make More Money
You can never unlock your true potential as long as you are a slave to your job or business. It’s hard to pursue other opportunities when you can’t afford to leave your job.
As an employee, you can earn money by working more, getting a raise, or getting better positions. But, you are actually very limited because most of your time is dedicated to the job.
And that brings us to the heart of financial independence – time. The most valuable commodity is time, and if your time is spent working for someone else, it isn’t spent finding new opportunities for growth.
By growing your passive income to the point where you don’t have to work anymore, you can unlock that time and harness all of your intelligence and creative power to pursue more valuable endeavors.
You’ll Actually Get to Retire
If you haven’t realized it yet, Social Security is going to go broke, pensions can disappear overnight, and even state or municipal government benefits can be slashed to pennies on the dollar.
While some people will be able to retire with these, we should not depend on them entirely. Doing so will make it far less likely that you’ll have the security you need or want in retirement.
But, retirement isn’t something many of us worry about until it’s far too late. We don’t save or prepare, then find ourselves unable to retire.
So many people work until they are no longer able to work and they are forced to retire. By then, they have no way to actually enjoy any of their ‘retirement.’
If you are financially independent at a young age, you are kind of already retired. Additionally, you can continue to work and just save everything to get to a point where you are truly prepared for retirement.
You might even be able to afford to retire early and enjoy your later years to their full potential.
Passive Income is Like Unemployment Insurance
Unemployment insurance covers only a portion of your lost wages. But, if your passive income is already at or above your wages, then it’s like a really good insurance policy.
The fact is that many industries are changing and advancing, which is leaving its older workers behind. Having financial independence means that you’ve got something to fall back on and can take your time to find new work without worrying.
You Can Plan
A lot of people never plan ahead. While they might plan their next vacation, wedding, or Black Friday shopping spree, most people aren’t planning for their finances next month let alone 20 years from now.
A lot of that comes from the belief that it’s impossible to get ahead, be successful, wealthy, and secure. Planning ahead would just be depressing.
But, if you work to attain financial independence, planning for the future becomes fun. Who doesn’t want to think about the future when the world is your oyster?
You’ll Be Less Stressed
Money is one of the leading causes of worry and stress in our society and in most households.
Having more passive income can help with your finances, allowing you to enjoy the company of your spouse and children. It can allow your family to actually enjoy each other rather than always being stressed over paying bills.
Why Aren’t You Chasing F.I.?
What is holding you back from pursuing financial independence? Comment below.
(INFOGRAPHIC) 8 Ways To Stretch Your Travel Budget
While the days of lounging at hostels, backpacking and hitchhiking to cities might be far behind you, your travel budget does not have to take a hit. Here are 8 fantastic ways to get the biggest bang for your buck and stretch your budget.
5 Money Mistakes That Millennials Are Making In Their Prime Investing Years
Millennials are often accused of making serious money mistakes. In fact, according to a recent study, 80% of Millennials don’t invest—and one out of five expect to die in debt.
Naturally, these financial blunders have a significant impact on their ability to save money, accumulate wealth, and build emergency savings.
Here are five major money mistakes millennials are making in their prime.
1. Millennials are risk-averse
Millennials had to watch their parents lose their retirement savings, pension benefits, and 401ks to the recession, and it didn’t go down well with them.
According to research, most of the millennials are likely to pass on long-term investments—such as stocks—to avoid risk. However, this also limits their ability to create wealth in the long run. A big no-no for those planning to retire in Belize!
2. Inflated lifestyle is the new norm
Do you feel the pressure of matching your peers when it comes to spending? Apparently, most of the millennials do, and it has resulted in inflated lifestyles. Millennials spend an average of $838 on non-essentials, such as cocktails, cabs, and clothing.
The TD Ameritrade survey also finds the leading reasons for millennial credit card debt as paying for necessities, dining out, and shopping.
3. Putting retirement savings for later
When you have over three decades to save for retirement, what’s the rush? That’s precisely exactly how millennials are planning (or NOT planning!) their retirement savings.
Not only is delaying savings economically catastrophic. You also lose out on the magical benefits of compound interest.
(And if you haven’t heard of compound interest, just peep this story about how a $14K/year UPS worker retired with $70M just from saving a few bucks a month…)
4. Saving nothing for emergencies
A survey from Harris Poll reveals over 20% of millennials would require help from family and friends to pay for an emergency bill of $500.
Emergencies are a part of life, and you never know when you’re caught up in one.
The best strategy to survive financial crises is to set apart a portion of your income as emergency savings.
5. Not taking student debt seriously
America has a SERIOUS student debt problem. And millennials are right at the center of it.
How bad? Well, here goes.
Nearly 45% of millennials have student debt, with net US student debt exceeding $1.5 trillion.
Needless to say, student debt can hamper the millennials’ ability to generate long-term wealth or retirement savings.
The Bottom Line
There’s no doubt millennials face a unique set of financial challenges. Goes without saying. Still, careful financial planning, a little bit of fiscal restraint, and financial discipline can help them redefine their financial freedom.
These 22-Year-Olds Built A $2B+ Business In 2 Years
(WTF?!) Is The MBA Dead?
NBA Legend Kobe Bryant Passes Away At 41
EXCLUSIVE: This Entrepreneur Built A $7B Business Without Outside Funding. Here’s How He Did It
Real Estate Rockstars: 5 Millennial Realtors Who Are Crushing It In 2018
EXCLUSIVE: World Cup Star Reveals His No. 1 Investment Strategy (And It’s Brilliant)
Warning: count(): Parameter must be an array or an object that implements Countable in /homepages/28/d742565295/htdocs/clickandbuilds/WealthLab/wp-content/themes/zox-news-child/single.php on line 681