Break Free From The Chains of Debts



break free from the chains of debts

Everybody has their financial goals in life but many of us get sidetracked into pursuing lavish lifestyles and get bogged down by debt or worse – bankruptcy. But is the dream of financial freedom really that hard to achieve? It really isn’t.

Financial Freedom Is A Reality Everyone Can Achieve

Everybody has their financial goals in life but many of us get sidetracked into pursuing lavish lifestyles and get bogged down by debt or worse – bankruptcy. But is the dream of financial freedom really that hard to achieve? It really isn’t.

But it does take many years of planning, self-discipline, and working towards building a solid financial foundation for your future. That doesn’t mean you need to lock up all of your wealth and become a scrooge either.

How Do I Achieve Financial Freedom?

Evaluate Your Financial Situation.

Take a long, hard look at your finances and write down everything that you spend your money on. Is your debt service ratio too high because ¾ of your salary goes to paying off your mortgage? Are there any unnecessary expenses that you can do away with? Ask yourself these difficult questions now so that you can start making a change today before it’s too late.

evaluate your financial situation

Set Your Financial Goals.

Now that you’ve identified your financial situation, what short and long-term financial goals do you want to achieve? Ideally the first step would be to ensure that you have at least 3-6 months of your salary as savings, just in case you lose your job. Do you want to have your first property by the age of 35? Or would you rather save up and retire early at 45? How much money should your emergency fund have?

By setting these financial goals, you get a sense of the investments you need and what you should be prioritising your budget towards. Plus, it’s always best to have a financial plan in place just in case of any emergencies.

Create A Budget.

As much as we hate to admit it, money runs the world and we need to be aware of this fact at all times. So make sure you adopt the ‘savings first’ mentality, it will serve you well for many years to come. This means that you need to stop procrastinating and actually start actively saving!

Before you even touch your salary for anything else, make sure at least 10% of it goes into a savings account you can’t readily access. Try automating your monthly savings at the start of every month so that you won’t be tempted to use it up before paying off your monthly bills and expenses.

It’s time draw up your monthly budget and make sure you list down all your expenses (Mortgage, hire-purchase, utilities bill and etc.) and monthly income. To give your budgeting skills a head start, try one of the smartphone budgeting apps we’ve listed out here.

achieve financial freedom

 

Track All Of Your Spending.

You’ve made a budget, so you need to stick to it. Every ringgit and sen counts so make yourself accountable by tracking all of your spending. Even if it’s as simple as buying a pack of nasi lemak, to splurging  on that sweet new pair of shoes, make sure you know where your money is going at all times. Keeping all of your receipts also comes in handy when it’s time for income tax filing every year.

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Pay Off Your Debts.

Not everyone can claim to be debt-free but there is a huge difference between good debt and bad debt. Bad debt is the type of debt that adds zero financial value to your life and costs you money in the long run, like credit card debt.

Instead of paying high interest charges every month, try practicing the ‘snowball’ method: Pay off your smaller debts first while servicing the larger ones with the minimum payment to avoid late charges. As you clear off your smaller debts, you gain momentum to pay off the larger ones. Be disciplined and make sure you stay clear of the financial pitfalls that drove you into debt in the first place. You can also try debt consolidation or debt restructuring if you would like to consolidate your various debts into a singly monthly payment amount and pay off your debts at a potentially, lower interest rate.

Plan For Your Future, Now.

While it seems like your golden years are far, far away, and there’s still have time to enjoy your youth – the fact is that the best time to start saving for your retirement is when you are young, healthy and able to work hard for your future. According to Bank Negara Malaysia, 92% of Malaysians are concerned over the state of their retirement funds.

Remember, you should have already established your financial goals by this point. So what are you doing to achieve them beyond the years where you can work for a living? There are several financial products in the market that can help you plan ahead for your retirement, like Private Retirement Schemes, Unit Trust Funds and more.

Start Investing Your Wealth.

Contrary to what many people believe, investing for the future is not something that involves hundreds and thousands of ringgit that only the rich can afford. What it does entail however, is you actually begin by taking first step and stay committed to investing for your future.

If you are interested in growing your wealth (as you should be), there are ways for you to start investing from only RM100 a month while working in your first job. Or you can also engage a certified financial planner to help you out. There are plenty of financial products out there, so don’t feel embarrassed in seeking advice from a financial professional.

financial freedom

Is Financial Freedom Really Worth It?

Yes it is and never doubt it! Financial freedom is about being able to live a financially independent life without having to worry about bankruptcy, running out of money or struggling to make ends meet.

The Ultimate Financial Freedom Checklist!  

  • Emergency Savings (6 Months’ Salary)
  • Minimum Retirement Savings by EPF Malaysia (RM228,000)
  • Life and Medical Insurance Policy
  • Diversified Investments (REITs, Unit Trust and PRS)
  • Healthy Debt Service Ratio (Less Than 40%)
  • Zero Bad Debts

You will be able to pursue your passions and goals and still be able to sufficiently provide a comfortable lifestyle for you and your loved ones. And you don’t have to be a multi-millionaire to enjoy financial freedom either! All you need is to start planning, be disciplined and to keep your eyes on the prize – the peace of mind knowing you and your loved ones will always be financially taken care of.

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(Video Source : Truly Rich Noypi – Dave Ramsey – How to Get out of Debt and Be Financially Successful)