A 12 Step Program To Financial Freedom (Part 2)

If you haven’t read Part 1 of our financial freedom 12-step program, stop reading! Go back and read the first part, which contains crucial information about the beginning stages of attaining liberation from debt AND your 9-5. If you’ve already read Part 1, and you know all about tracking your expenses and making a budget, then onward you go to Part 2!

Step 7 – Make an emergency fund. Once you’ve gotten all your expenses organized and your debt has been eliminated, what do you do when something major happens that you can’t avoid spending money on? The answer is an emergency fund. This is money that you’ve set aside for emergency situations, such as major car repairs, medical bills, or worst of all, loss of income. Many experts recommend putting aside enough money to get you by for 3 to 6 months.

Step 8 – Save, save, save. If you’ve been following the previous steps religiously, then this step should come as second nature. However, with your debts paid off and your emergency fund set, now you really need to kick it up a notch in the savings department. The more you have saved, the better off you’ll be when it comes time to make your money work for you. There are three main ways to save: decrease your expenses, increase your income, or keep things status quo and just wait until you’ve saved whatever you deem is the appropriate amount, which may take considerably longer.

Step 9 – Educate yourself about investments. While you’re saving, start learning all you can about investing. Obviously, the internet is a great resource for this, but you can also talk to real people with real experience. If you know someone (or you know someone who knows someone) who’s invested in real estate, ask them about it! Spend some time getting acquainted with market trends in your area, look at properties that are currently for sale, listen to investment podcasts – soak up as much information as you can, because the next step is where the fun really begins.

Step 10 – Put your education into action. With your newfound financial security and the necessary background information in place, it’s time to start putting what you’ve learned into practice. Evaluate a few potential investment properties, weighing the pros and cons of each and running all the numbers (rent/cost, operating income, cap rate, etc.) Once you’ve made your purchase, whether it’s outright or with a mortgage, you’re a bonafide investor! Now you can sit back and just let the money roll in, right? Well, not exactly…see Step 11.

Step 11 – Stay on top of your financial situation. With one or more investments under your belt, it’s more important than ever to keep close tabs on your finances. In fact, a portion of each day should be spent monitoring all your revenues and expenses, because you want to ensure that your cashflow is on track and you’re in the black each month. Plus, you still have one more important decision to make: when is the right time to claim your freedom and quit your day job?

Step 12 – Quit your job and do what you love! Once you’ve answered that last question and feel 100% secure in your new profession as a real estate investor, it’s time to take the plunge. Tell your boss to shove it (just kidding, don’t do that; you never want to burn bridges) and focus all your efforts into investing and building more wealth. With time, dedication, and some savvy decision-making, you can achieve true financial freedom and live the kind of life you always dreamed about before.