Philosophy Tristan on 04 Feb 2009 07:11 pm
Guide To Financial Freedom
As the world enters what will no doubt in years to come be known as a depression, perhaps not as bad as the 1930’s depression, but of a similar magnitude, there must be many people out there that have lost their jobs and are searching for answers.
Well, this is by no means the Holy Grail, but it is a nice guide to help shed some light on the elusive status of Financial Freedom.
Financial freedom is achieved when your regular monthly liabilities are exceeded by your regular monthly passive income. It’s a fairly easy definition, but so many people get hung up on this notion that they will not be financially free until they have paid off their mortgage and any other debt. This does not have to be the case.
If you could generate enough passive income from property (be it bricks and mortar, stocks and shares, intellectual or otherwise) to cover the cost of your mortgage, household bills, petrol (gasoline for our American readers), insurances, food and entertainment then you would be free.
Now before the clever ones at the back pipe up and say:
If you only make just enough money to pay the bills, how are you going to repay the capital on the mortgage?
Don’t worry, this is all in hand and is in fact part of the strategy. Hear me out.
Most people spend their lives worried about money. They worry that they don’t have enough to live off now, they worry that their income will come to an end one day (loss of job or retirement through old age, ill health) and they also worry that they won’t have enough in retirement.
This is futile. I know, I’ve been there. I spent two years running my business as a mortgage broker constantly worried about not having enough in the bank to pay the business expenses, pay myself and leave enough for the taxman. Thankfully I’m not doing that anymore and I’m no longer worried about not having enough money.
The reason people worry so much about not having enough money is because for the vast majority of us, the schooling system, parental views on money and our peers leads us all to believe that this is the norm. It’s called having a scarcity outlook.
And it is this same outlook that leads so many of us to not understand that financial freedom can be achieved without paying off the mortgage.
By changing your point of view so that you have an abundance outlook, we are able to see that the most important thing in life is to not have money worries. So to achieve this, we need to acquire or create some property that can create passive income at a level just above what we need each month to live off.
Once we have achieved this and feel confident that the income is stable, we can shift our thinking to much bigger ideas and dreams. This is only possible by reducing the negative effect that “worrying about lack of money” has on our mental state, thus releasing the creativity that resides in all of us to go and achieve whatever dreams we may have.
The creativity inside you will allow you to trade your way to financial freedom or invest your way to financial freedom, the choice will be yours to make. You won’t have to worry about playing it safe and scarcity any longer, instead you will choose to think in terms of abundance, just like the rich do.
