We always hear “become debt-free and start living your life.” That’s the ultimate goal of many. To become debt-free, to be financially free. For me, debt-free and financially free aren’t mutually exclusive. My perception is that the pursuit of financial freedom involves having some debt on the books. No, I am not talking about bad debt! Bad debt is that debt that doesn’t get you an asset. I like having good debt because, with good debt, I am turning prospective liabilities into assets, building cash flow, and ultimately gaining access to more funds by using other people’s money.
It all starts with a money management mindset. Everyone’s goal is different. Some may seek to be completely debt-free, and if being debt-free means, you no longer worry, then go for it. I don’t think anything is wrong with that, but I think it can slow down your wealth journey. Some may decide that using debt to leverage more assets or to build a business is their avenue. Whatever the goal, you must start with your mindset on building funds/income and managing those funds. I can go into this long spiel about setting a budget, following a budget (if you want that, take a look at my budget worksheet). What I want you to understand is the execution behind that budgeting, and that is money management. For me, money management is taking what you have on the small scale (your income, your dollars, your assets, your credit, etc.) and applying it to large scale goals (becoming debt-free, building a business, leveraging credit and obtaining income producing assets). It starts with understanding how to manage your money.
Money management is about ultimately getting to financial freedom by:
PLANNING – write down your debt, write down your assets, write down your goals, and write down how to get from point A to point B. Plan to start small then get bigger with time. Tackle the small tasks first, paying off a small credit card or getting your credit usage to down then move to the next level. Remember this, what is measured get results, so make your plans and measure the likelihood of achieving your goals. Most importantly, celebrate your small wins!
Have a mindset of this is where I want to be, this is what I want to have, and this is the work I need to put in to get there!
There isn’t an exact science to becoming financially free. Everyone’s goals and the level of desired money is different. Everyone’s need is different, so your level of financial freedom is dependent on where you are. You need to manage the funds that you have, do it well, and build. My advice is to acknowledge where you are, plan out how money management should look for you, and then execute!
Once you are in execution mode (my favorite mode), start looking for a way to help you keep track of your money, use money management tools as your money grows, you want your business structure and your capabilities to grow as well. For me, I learned how to plug into Excel, QuickBooks, and maximized my time with an accountant/CPA. These things structurally assisted me in growing my business and getting to my level of financial freedom. My wish is that you find your level of financial freedom, too!