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How to Achieve Financial Freedom by Maximizing Your Assets

April 29th, 2009

how-to-achieve-financial-freedom.jpgFed up with working yourself to the bone just to get debt free? Feel like financial freedom is just a distant dream that you have no idea of how to reach? Have you fallen for get-rich-quick schemes in your quest for a rich life? Are you ready to build a foundation for a rich life that will lead to financial freedom and an end to the daily grind? It’s actually simpler than most people think. The secret to financial freedom is the adoption of sound wealth creation strategies: maximizing your assets, decreasing your liabilities, and making your main priority to get debt free.

The key for a rich life and financial freedom is understanding the Net Worth Formula. Your Net Worth is calculated by subtracting your liabilities from your assets. You achieve financial freedom by increasing your assets and decreasing your liabilities. It’s as simple as it sounds. The reason that people can’t maximize this formula for a rich life is because they don’t understand how to maximize assets and decrease liabilities.

Obtain Financial Freedom by Maximizing Your Assets

A solid plan for a rich life starts with an Assets Appraisal. Make a list of your assets. An asset is any property you own that will help you obtain financial freedom by increasing in value over time. Assets include your home or any other real estate, stocks, interest-earning savings accounts, and any other profitable investments. People with financial freedom own several assets that will help them increase their personal net worth over time.

Non-wealth building assets are those that do not contribute to your financial freedom, and decrease in value over time. These are items that may be purchased out of necessity or desire, like cars and other vehicles, televisions and other entertainment purchases, and other types of property that depreciate over time. The less of these items you own, the closer you will come to financial freedom.

Your list should consist of two columns: Wealth-building Assets and Non-wealth building assets. Next to each asset, include the amount of money invested into each. If you have not already obtained financial freedom, it is likely that the non-wealth building assets column is sucking in a large portion of your income. Your next step in your plan for a rich life is to change the balance of these columns. Wealthy people obtain financial freedom by funneling their investments into wealth-building assets which are key for a rich life: investing in property, stocks, IRAs, mutual funds, and anything else that can reliably increase in value or provide you with passive income on an ongoing basis.

Building your portfolio of wealth-building assets is such an important step toward financial freedom that it is forgivable to accrue debt while building it. The ultimate goal for a rich life is to get debt free. If possible, you should avoid actually going into debt. However, not all debt is created equal and there is such a thing as Good Debt that will help you obtain financial freedom. Good Debt, by definition is any debt that you have accumulated while building wealth-building assets.

A loan to purchase a home or other property that will increase in value is good debt. The investment in the wealth-building asset is taking two steps toward financial freedom while the debt accumulated in the mean time is one step back. The key is progress. Accumulating debt to buy something such as a new television is an investment in a non wealth-building asset and not only a step away from financial freedom, but does not help you get debt free which is a primary goal.

Get Debt Free

For those seeking financial freedom, this goal should be a primary step in their plan for a rich life. In fact, you should get debt free or at least be well on your way before you think of accumulating any good debt.

However, many people seeking financial freedom find that their plan for a rich life is being blocked by large piles of debt. Eradicating that debt is a crucial first step to financial freedom and a solid foundation for a rich life. You cannot accrue wealth-building assets when a significant portion of your income is going toward your goal to get debt free.

The first step to get debt free is to acknowledge the debt that you owe. Leaving bills unpaid and ignoring debt collectors will only increase the amount of principal for which you will be liable, not to mention that additional interest is accumulating all the while. If you are at the point where your debt is becoming unmanageable, the smartest step you can take toward a debt-free life is to seek professional help. Debt consolidation companies can help you obtain lower interest rates and consolidate your bills into a single monthly payment. A professional can also help you to get debt free by assisting you in obtaining debt settlements which can significantly reduce the amount of debt you ultimately have to pay.

There are lots of debt consolidation and debt settling companies that offer free counseling sessions to help those seeking financial freedom to get debt free. Counselors will analyze your financial situation and prepare a monthly budget designed to put you on the road to financial freedom as efficiently as possible. After the counseling session, you will make a single monthly debt payment to the consolidation or settlement company which will be distributed to your creditors.

Once you are on your way to financial freedom and feel comfortable with your plan to get debt free, the key final step is to avoid accumulating any new debt (even good debt) until you have paid off the creditors you currently owe. Any discretionary income not spent helping you get debt free can then go toward your plan for financial freedom: accumulating wealth-building assets. Follow these steps to get debt free and build assets and your plan for a rich life will be well under way. You can then begin to see your daily grind as a key (and temporary) step on your road to financial freedom.


Meg Butler (username Emma Gin) is a freelance writer at Constant Content who has posted a total of 18 articles on a variety of topics. She has managed to make 17 sales so far with six articles still available at the site.


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