3 Non-Standard Ways to Edge You Closer to Financial Freedom
by Hans Hallanger
1. Pay your bills as soon as they arrive.
I know you have always been told to pay your bills on the day they are due or as close to the due date as possible so as to draw some interest on your money. But that method, in addition to hardly any return on your money, fills you with stress and does not simplify your life at all. If you want a simpler and better life along with financial freedom, start paying your bills as soon as they arrive or even months in advance. You have to pay those bills anyway. Unless you are really strapped for money or considering bankruptcy, this simpler bill paying method will free you. Instead of having your bills linger around for weeks, and fill your thoughts, you keep them moving. You will have more time to make use of productively and experience less stress around your bills.
Paying your bills as soon as they arrive also prods you to find ways to eliminate or reduce them. The annoyance of handling a bill every few days will wake you up to the fact that you have too many bills. Instead of dreading your bill paying sessions once or twice a month and then doing nothing about it, you take swift, decisive action to reduce or eliminate what bills you can. You will enjoy your days more as you pay off bills entirely, or pay them a year in advance or you think hard about adding just one smaller monthly bill to your list of expenses.
2. Pay with cash.
The overuse of credit cards and debit cards amazes me. When I first left my wife and started going out to socialize it blew my mind to see people order a drink at a bar and then hand the bartender their credit card for the night. They would then spend a few hours at the bar, drinking, and have to settle up at the end of the night. Doesn’t anyone see the potential for fraud, cheating, loss of your card and just drinking more than you ought to? Plus what if there is a problem and you need to run?
The problem of spending too much money and getting yourself in a bind financially this way is magnified dramatically. There is nothing so freeing and financially empowering as having hundreds or even thousands of dollars on you.
A credit card with a bunch of available credit is nice but nothing like actual dollars.
There is no easier way to keep track of things financially than just paying for most things in cash. You limit your spending by using cash. You don’t need elaborate bill paying or budgeting software. I love computers and use them every day. But not for something as simple as pulling out a ten dollar bill to pay for lunch or even buying a new washing machine and dryer for $800 in cash.
Yes, you will need to use checks and your debit card. But if you can make most of your in store, restaurant, entertainment purchases with cash you will be so much freer.
Plus, you have the feeling that if things really take a turn for the worst, at least you have a pocket full of cash, a roll of bills hidden in your home and enough money hidden in your vehicle to fill it with gas.
I think that if you can move a step over from what everyone else is doing, your life will get a step better than others.
3. Do not own a house.
This is a difficult one and a hard choice. I know home ownership is supposed to be the American dream or worldwide dream. We are all told over and over again how buying a home is the best thing you could do with your money. We have been told to have pride of ownership and that a house with a white picket fence is what we all dream about. They say that if you own a house nobody can take it away from you or that a mortgage payment is like free money.
I don’t agree at all. Anything you have to be told over and over again is just a form of propaganda.
Financial freedom occurs when you have a continual and substantial excess of cash. A gigantic mortgage payment you struggle to pay each and every month is not freedom. Using the vast majority of your income every month on home ownership will not make you free. Your life will revolve around your massive monthly payments interspersed with incredibly stressful times when the major problems involved with home ownership jumps up like a leaking roof or worn out furnace.
Owning a house only works financially when your payment is small relative to your normal monthly income. Big houses require a large income that does not require you to struggle to pay those monthly bills.
If you insist on buying a home then your monthly payment needs to be about half of what the bank will give you. Go to the bank, apply for a home loan and see what they will give you. Then shop for a house using half of that number. At least you will have a buffer of cash to see you through life better.
Feel free to visit my website at www.whytoretire.com for more of my thoughts on retiring as early as possible.