Follow these basic strategies and begin your
Journey toward financial freedom and success

1. First of all, we as individuals should be honest, respectful to others, hard working,persistent, self-controlled, responsible, motivated, willing to make plans and to execute them, willing to take some risks, and willing to set and to achieve our goals. We should always do our best in school and at work. We must find something we absolutely love to do and then pursue it. Success can only follow. Education is a must these days and you're never too old to learn. You must continue to read,listen, and learn. And for length and quality of life, we must take care of our health by eating healthy foods, by drinking lots of liquids, by taking vitamin supplements, by getting adequate rest, and by exercising for 20 minutes or more each day (please see your doctor first). We must not smoke or use drugs and only drink alcohol in moderation. We must get an annual physical, a bi-annual eye check-up, and a semi-annual dental check-up. Why? Because you want to be around long enough and healthy enough to enjoy your new found wealth.

2. With that said, this step along with the next 2 steps are perhaps the most important things you can do. If you do none of the others, these three are a must. Someone once said that "The most powerful force in the universe is compound interest". And that principle coupled with growth, appreciation, and tax deferments associated with a retirement and investment plan can lead to incredible wealth. You must invest in your employer's retirement plan or your own if you're self-employed to the maximum allowable in stocks, bonds or stock and bond mutual funds. Employers will usually match or exceed your contribution. It's tax deferred, even the contribution and it's like free money or extra income from your employer. Plan to leave contributions in until you retire. You'll retire a millionaire if you contribute for 40 years.

3. Invest in a traditional, educational, or Roth Individual Retirement Account (IRA) each year through a stock or bond mutual fund. Be aggressive when you're young as you have many years to recover if you experience a downturn or a short lived loss in the stock market. It grows tax free and in the case of the Roth IRA your earnings are never taxed if left in for over 5 years. This is more of the step 2, but here you're limited to a $2,000 per year contribution. Hopefully, one day Congress will increase the amount you can contribute to an IRA.

4. Always save and invest 10% of your salary no matter what that salary is(that's over and above your retirement plan and IRAs). Pay yourself first before any other payments and living expenses. Stock mutual funds are best for long term growth but must be left in at least five years for maximum risk management (as stated before they can go down in value). Use the fund's automatic monthly investment plan to take advantage of dollar cost averaging (this strategy allows you to lower the average cost of your purchases). If you have a low tolerance for risk, then buy bonds (Corporate or Government) through bond mutual funds and CDs instead of stocks. However, they usually provide a lower annual rate of return than stocks or equities. In addition, put three to six months worth of salary in a fairly liquid account for emergencies, e.g., a money market account, savings account, or short term Certificate of Deposit.

5. Only buy life insurance when you need it, i.e., when you have dependents. Buy it at work in a group policy because it's cheaper. If you must buy outside of work, then get renewable term life insurance. Also get your health insurance through your employer. Buy disability insurance if not covered at work in case of some inability to earn income. Carry high deductibles on policies to generate cash for those investments in the previous steps. Get a low cost umbrella insurance policy of $1 million liability coverage. It supplements your other policies(home and car) and usually costs less than $150 a year.

6. Buy 1 or 2 year old low mileage used cars. The value of a new car decreases by thousands of dollars once you leave the dealer's lot. Carry adequate insurance especially liability. Raise your insurance deductibles and it will lower the cost of your insurance. Obtain multiple coverage along with your homeowners policy because you'll qualify for a multiple coverage discount. Compare rates each year to keep your premium at it's lowest. The savings generate more money to invest.

7. Buy a home as soon as possible. It's a great investment and tax deduction. You may have to start out small but you must get in as soon as possible. You can move up later once you have some equity built up. Carry full replacement homeowner's insurance with high liability coverage. Raise your deductible to lower your cost. Prepay your mortgage by adding additional principle to your payment from the next months payment (see your amortization schedule). The principle is very low in the beginning but this strategy will save you thousands of dollars over the life of a 30 year mortgage . An example. Say your first mortgage payment is $500. Most of it is interest, probably $499 is interest and $1 is principle. The second month's payment is $498 interest and $2 is principle and so on. So in payment number 1 you would pay $500 plus the $2 principle from the 2nd payment. As a result of paying an additional small amount or $502 in month number one you never pay the interest for payment 2 or the $498. The next (second)payment due the next month will then actually be payment number 3. This strategy saves thousands of dollars over the life of the mortgage(usually 30 years) and reduces the mortgage down by years so that your mortgage is paid off long before the 30 years.

8. Stay away from credit card interest (usually 18-21%) by paying off the card balance each month. Get a no fee card and use a home equity loan for major purchases,i.e., that two year old car. This loan interest is also tax deductible on your home equity loan. Even, if you pay off your credit cards with money from your 4% savings account, you're dollars ahead by now getting the equivalent of a 18-21% return (or the amount not paid on your credit card).

9. Get a will so you can designate who gets your assets and not the probate court of the state you live in. When you become wealthy, you can then turn to estate planning and afford to hire an estate planning expert. Estate planning will protect your new found wealth from the tax collector and allow it to pass down to whom you have designated. Use the long form when filing your tax return. You can only pay less if your deductions (medical costs, property tax, mortgage interest, charitable contributions, etc.) exceed the standard deduction. And they will.

10. In order to accomplish the things I've discussed above, you must budget so that you know exactly what your income is and more importantly what your expenses are. You must be a disciplined spender, yes even frugal. Some people have enormous salaries, but have no wealth as they choose to spend everything they make. Wealth has been defined as the absence of consumption (spending). Others have moderate to medium incomes, but spend it wisely, invest it to outpace inflation, and are building wealth for their retirement, financial independence, their children's education, a new home, or for any other purpose. There are thousands of people living right next door to us who are wealthy but live a modest existence and who appear to be of average means. Join their ranks, take action today, just do it. Once your wealth building action plan is in place, it pretty much takes care of itself. You must, however, continue to monitor your plan and make small adjustments to it from time to time as required. A good rule for success is to only buy appreciating assets (home,stocks) and try to reduce the costs of depreciating assets (car, home furnishings).

These are simple things. Yet are so hard to sometimes remain committed to. YOU alone must decide and take action I wish you GOODLUCK and MUCH SUCCESS on your journey to FINANCIAL INDEPENDENCE. Never give up, Never stop Learning. But YOU must take some ACTION NOW , TODAY, as TIME IS MONEY. YOUR MONEY!!!! Just take one step at a time and YOU WILL SUCCEED.

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