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Let’s say smallest debt you have is your Visa with minimum payment of $148. The 5% of your net income is $70. For next few months (or years) you will be paying off your Visa with minimum payment PLUS 5% of your net income, which is $218.
While you are focusing on your Visa, you should pay off rest of your debt according to each monthly minimum payment agreement. This should go on until your Visa is paid off completely.
As soon as your Visa is paid off, you focus on smallest debt. Like before, add up minimum payment with 5% of your net income. But this time add sum with minimum payment of your Visa that is already paid off.
If your next smallest debt is MasterCard with minimum payment of $183, this should be added up with 5% of your net income AND Visa minimum payment. The total payment for your MasterCard would be $401. Now that your Visa is paid off you have more money to pay off rest of your debt faster.
Your next debt should be paid with money you used before to pay off your Visa and your MasterCard minimum payment. This process should be repeated on and on until all your debt is eliminated.
By doing this you will shorten years of your debt elimination process.
Manage Your Time and Money Wisely
Time and money is most precious resources everybody has to actually attain financial freedom. But yet, none of us are taught in schools to manage them wisely.
Now you are in process of paying off your debt. If you manage your time wisely to make more money to save or help to pay off your debt, you will not only speed up your debt elimination but retirement process and your financial freedom.
Devote some of your spare time to reducing your expenses and increasing your income. The sooner you become debt free sooner you can save more money and invest to start working on your early retirement process and attain financial freedom.
Everybody knows disadvantages of being in a debt. But not many of us are aware of advantages of being debt-free. By being debt-free you have more money to save and invest to prepare for your retirement. And this should be your next goal. Use your time wisely to create extra money and use your extra money wisely to prepare for your retirement and eventually your financial freedom.
Create Passive Income
Now you have paid off your debt, taken up a side job and saved money for investing.
Your next important step to financial freedom is creating passive income.
Passive income is income which requires little or no work at all. Although it is possible to attain freedom just by saving, it will take decades to actually accumulate wealth. Some people never even make it there. By creating passive income you will not just be able to speed up your debt elimination and retirement process but also your journey to attain financial freedom.
The most powerful way to create passive income is by having your own small business or home-based business. This type of business does not require a lot of capital.
Keep your business expenses low and try to put aside a percentage of your net income for saving and another percentage for investing in your own business. Note that for next 1-2 years you will be experiencing negative cash flow from your new business. But keep in mind that if you persistently invest your spare time, effort and money in your business, you will have all quality time you want to spend with your family and friends, all money you dream of for you, your family and even your grandchildren and all freedom to live your life abundantly.
To learn more about financial freedom and how to achieve it visit http://www.financialfreedomawaits.com.
Dinar P. Wiria-Atmadja is the owner of FinancialFreedomAwaits.com, helping families and individuals achieve financial freedom in years instead of decades. Visit the site here at http://www.financialfreedomawaits.com. You are free to publish this article to your site as long as the article is not changed and the resource box is included.