I have a good friend who works in an area of the US that has more than its
Share of poverty. He called me the other day with a very broken heart. He
Was feeling badly for the people around him who simply do not allow
Themselves to get set free financially. I could feel the pain he was feeling
Because I too, very often wonder why it is that some people experience
Financial independence and others do not. It really is a mystery.
But how to get financial independence is not a mystery!
Rather, financial independence is a very simple thing. Truly! It is hard
Work and takes time, but the process is very simple! In fact, financial
Independence can come from following a very simple plan. All of the books on
Financial independence can extremely be boiled down to this basic equation.
It is an equation that is as simple as it gets. In fact, it is not even a
Multiplication problem, it is an addition equation! And we all learned
Addition in the first grade! Just as 1 + 1 = 2, so does this POWERFUL yet
SIMPLE equation add up to your financial independence!
What is this equation? Get ready, your life is about to change forever if
You will allow yourself to understand and live by the simplicity of this
Equation. Here it is:
Smart Decisions + Good Math = Financial Independence
Let's break it down and take a closer look. First the Smart Decisions, then
The Good Math.
Go to college. Get educated. I know that somebody will say, "Yeah but most
Of the people on the Forbes 400 never went past high school. "Well so did
Most of the people on the welfare line! Most people are not Bill Gates or Sam
Walton. Most people who earn between $ 100,000- $ 150,000 a year are college
Graduates. "But I'm forty! I can not go to college." Yes you can. You will be
44 when you get out and have 21 years of a much better income. The fact is
That most good jobs and careers go to those who have educated themselves. It
Is still the sure way to a long-term large income.
Still do not want to go to college? See the last item under smart decisions.
Get better training. At the very least go get some training in your specific
Area of expertise. The promotions will go to those who are the best trained,
So become the best trained! Take a course, even if your employer will not pay
For it, because eventually they will pay you for it!
Work hard. I have found that the many hundreds of high achievers who I know
Personally who have become and are becoming financially independent are hard
Workers. Every one of them works long hours. They sacrifice for the security
They are shooting for and have attained. I know, we all get emails that say,
"Financial Independence in 10 hours a week." Let me ask you, do you know
Anyone like that? I do not. No one. Even the success stories you here in the
Get rich quick industries show you that they worked HARD!
Develop yourself. Become a better person. Better people get better jobs and
Get paid better dollars! Make sure that every day you are becoming a person
Who is on the growth track, raising yourself to a higher and higher level
With each and every passing day! Sometimes your development will catch up
With you and your income will soar!
Stay out of debt. This is the smartest decision you will ever make. NO Debt!
You know what? I have ONE bill I have to pay every month. That is my
Mortgage. But that's a debt! Well, without getting into argument, I consi
Der it a forced investment with the added benefit of providing me and my
Family with shelter! I do not consider a mortgage a debt. I mean car debt,
Stereo debt, and consumer debt of all kinds. It is possible. It can be done.
And it will provide you with financial freedom!
Own your own business if you can. So you do not want to go to college. Okay.
Or maybe you did go to college and you just want to make sure that you make
As much as you can. Well, the smart decision is to own your own business.
Most millionaires in America are the people who own their own businesses. It
Will take a lot of risk, a lot of hard work, and many ups and downs, but
Owning your business gives you the opportunity to accumulate great wealth,
Because the profit is all yours. There are plenty of opportunities to own
Your own business and I would encourage you to consistently consider the
Alternative for many reasons, of the best of which is the opportunity to
Achieve financial independence.
Spend less than you earn. One plus one equals two. We learn that very early
On. Occasionally, we learn negatives and we learn that one minus two equals
Negative one. Simple right? Yet many people live their lives in such a way
That they spend more than their income and destroy their opportunity for
Long-term financial independence.
There are two things you can do to make this "good math" work for you. You
Can increase your income so that it envelopes your spending, or you can
Decrease your spending. You increase your income by making the smart
Decisions listed above. You decrease your spending by making hard choices.
One of these must be done if you are going to achieve the kind of long-term
Financial independence you desire.
Put money away into investment vehicles on a regular basis. If you are going
To achieve financial independence, you will have to put away money
Regularly. This is the math principle of addition. Do not laugh: most people
Do not get this. Or if they do, they do not practice it! Whatever it is every
Paycheck, or the first of the month, or quarterly, or even you can do
It – DO IT! When you hit 65 years of age, you will be glad you did. And if
You put away enough and into the right investments, you may just be thankful
A lot sooner than that!
Let your interest accrue. This is compounding and it is powerful! If you
Earn twelve percent on your money every year, do you know how soon it will
Be until you have twice as much as you started with? At first thought you
May encompass that it is one hundred divided by twelve, or eight and a third
Years. Not true. There is an investment rule that is called the rule of 72.
That is, divide 72 by what average interest you make and that is how many
Years it takes to double your money. In this case, at twelve percent, your
Money doubles every six years! This works because you earn twelve percent on
Not only the original amount but the interest you earned as well.
Start with $ 100 and the next year you have $ 112. If you take the $ 12 out
Then you will only make twelve percent on $ 100 again. If you let it accrue,
You will make twelve percent on $ 112. This will cut almost two years off of
The time it takes to double!
Where the real power comes in is over longer periods of time. Let's say
Grandma dies and leaves you $ 25,000 when you are eighteen. You can do any
Number of things with that money.
1. Buy a snazzy car. Not a good idea, though most eighteen year-olds would do just this.
2. Invest the money and take out the interest every year. This is nice. It throws you $ 3,000 every year and over forty-two years you make $ 126,000 for doing nothing and you still have $ 25,000!
3. Here is the real deal! You leave the money alone for forty-two years at twelve percent (about the long-term average for the stock market). At the end of that time you decide to retire and go to the investment summary to see how much you have. What do you find? You find that your money doubled seven times and that leaves you with 3.2 million dollars! Can you retire on that? You bet you can.
You can achieve financial independence. You can live the life you have
Always dreamed of. You can have a life where you have enough at all times,
Especially in the end. It is possible. You just have to make smart decisions
And use good math!
As a refresher, here they are again:
Go to college.
Get better training.
Stay out of debt.
Own your own business if you can.
Spend less than you earn.
Put money away into investment vehicles on a regular basis.
Let your interest accrue.