FINANCIAL FREEDOM

You have achieved financial freedom when you have sufficient passive income to support your lifestyle and you work because you choose to, not because you have to.

There are many "ordinary" people who enjoy financial freedom, and you can be among them. But it might not be a comfortable process getting there. A lot depends on your financial conditioning.

You might have to change some beliefs and actions that are familiar to you now and feel like they are based in an objective reality, when in fact, there is no such thing. A belief is just a thought you keep thinking. Beliefs can change, and so can your opinion about what is real and what is possible.

The financial conditioning for the majority of people goes something like this:
* Go to work for a stable company and you will have job security.
* Work hard and you will earn a fair income.
* Avoid debt because all debt is bad.
* Minimize spending and put your money into savings.
* Focus on funding your retirement. Retirement planning should pay a fraction of what you made during your working years.

If these money statements sound familiar - even if they don't ring true, or make sense - then your financial conditioning needs revision in order for you to achieve financial freedom. For starters, rather than planning for retirement, how about planning for wealth?

First step: know exactly where you are right now- your net worth as of today. List all your assets, from cash on hand to retirement to home equity. List all your liabilities, from mortgage to credit card to student loans.

When you find the difference between your assets and liabilities, you know your net worth.

Next step: know your cash flow. Itemize your income and expenses. (By the way, the mortgage on your house is a liability; a monthly mortgage payment is an expense).

When you find the difference between income and expenses, you know your cash flow.

Once you know your net worth and your cash flow, you have a financial baseline from which to launch your financial freedom plan.

[A little incentive for you to do your financial baseline: most people tell me that when they do this inventory, they find money they didn't realize they had. Years ago, when I first did my financial baseline, I found papers for a fund worth about $7000 that I had from an early employer. I had forgotten about it when I left the company and moved to another city.]

The plan for financial freedom that you design involves sequencing, or doing the right thing at the right time, and there is no formula for that. It depends on your particular situation. But in general, you want to start with a focus on creating cash - not on paying down debt.

Let me emphasize this because it is the opposite of the way most people think. Most people think they have to get debt-free first. And yes, eventually, you want to be consumer debt-free, but that might not be your best first move. Your best first move is to figure out a way to create more cash.

Think like a wealth builder. How can you take your existing skill set and leverage it? What could you do right now to make an extra $50 or $100 or $500 dollars a day?

Focus your attention on creating more cash, and then your next move toward financial freedom will become apparent. It might be a matter of paying down debt, might be a tax strategy, might be an investment plan. But for the present, increase your income. After figuring out your baseline, it's the next logical step.

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