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How would you change how you live if you had financial freedom? The answer is likely to be “enormously.” Everything about your daily life would be different, from working to how you spend your free time. 

Unfortunately, while many people want to achieve financial freedom, only a tiny minority of people ever actually get there. For most, life turns into a hamster wheel, where every increase in income is offset by an increase in expenses. 

The purpose of this post is to provide you with a guide to eliminating debt and achieving financial freedom on your terms. It is possible, even for people of modest means, but it requires the proper strategy. 

Take Stock Of Your Financial Situation

The first step is to take stock of your financial situation. You want to find out where you stand now so you can assess your current situation and work out where you can go from where you are now. 

This starts with working out how much debt you owe and any money you currently have in the bank. Mortgage debt is generally okay, but other types aren’t because of the high interest payments they demand.

In some cases of extremely high debt, you might be able to write it off. ATO debt forgiveness, for example, is something many households use to reduce their monthly outgoings and get on the path to freedom. 

Build A Budget

The next step is to build a budget, detailing how you’ll spend your income and where it is going. This step shows you how much spare cash you have to play with at the end of each month. 

Don’t worry if you don’t have anything left over. You still have time to downsize or get a better job in a higher-paying role. 

Ensure you prioritize debt repayments at the start. That’s because these cost you more every month that goes by. Chop them off one by one, focusing on those with the highest interest rates first. 

Increase Your Income

Once you’ve done that, you can also focus on increasing your income. Earning more doesn’t help everyone (including those with unhealthy spending habits), but it can make a massive difference to most people. That’s because income is the primary limiting factor in many people’s finances, not the need to spend constantly. 

Look for opportunities at other firms offering roles similar to yours. Shoot for more senior positions with additional responsibility. Alternatively, set up a side business and start earning cash through that to supplement your income. 

Continue Saving And Investing Long-Term

Don’t view your savings and investments as something you can dip into whenever you want. Instead, take a long-term view. Get into the habit of seeing them as a sacred cow, something you won’t touch until it is self-sustaining. 

Ideally, you want to get your investments to the point where they grow faster than you spend them. Getting on that upward trajectory sets you up for life, and helps you increase your net worth year on year.