The Time Proven Process To Reach Financial Freedom

Hey there. This is Jeremy with Strength In Numbers. Do you feel like you’ve got to be doing this handful of things just to get traction in your finances? Well, I’m going to show you a proven step by step process to help you get traction in your finances like never before. (upbeat music) One of the most common things I see when I sit down and do a free consultation with people that are interested in working with me, is that they’re doing too many major things at one time. Because if you’re discouraged, if you’re overwhelmed, if you’re distracted and you’re not motivated, you’re a human. You’re going to give up. You’re not a machine. Yes, this stuff makes sense and the math says do this and do that and do it in that order, but if you’re not motivated, you’re really not going to actually follow through. And that’s where people usually lose their way. So I want to show you today a proven seven step process that I teach my clients as to what they should do first, and then second and third and so on over their overall scope of their life. And I’m in a different place in this process myself. We’re all on this journey. I want to show you these seven steps today. Now, before we get to the first step, there’s actually two pre-steps. We’ll call them A and B. A is make sure that you are current on all of your bills. If you’re behind on your cable bill for one day or your mortgage for one day, you need to put your dollars towards that first before you go to the other steps. Make sure you’re current on all your bills, you’re not behind because otherwise you’re going to be constantly trying to play catch up as you’re trying to make progress. Man that is stressful and it will back fire. So that’s pre-step A. Pre-step B is make sure you live on a zero based budget. Ooh budget. I said the B word, ick. Right? Well it’s just a spending plan, which means determine how you’re going to spend the money before you get it so you already know what to do with it when it comes. Later you won’t be wondering where it went, instead you’ll know where it is ’cause you told it where to go. That’s all budget really is and zero based just simply means every dollar has a job. If you’ve got $4,000 you name every dollar of that and the difference is zero. Doesn’t mean you’re going to spend it all, just means that you have a plan for every dollar, it’s zero based. That’s a zero based budget. Now as we talk about these seven steps, think of those two pre-steps I just shared as just basically your boat okay? We’re sailing to these different destinations, steps one through seven, but if we don’t have a sound ship, we’re not going to get there so if we don’t have a zero based budget that’s basically like having a boat with a hole in it. It’s not a matter of whether of not you’re going to sink it’s a matter of how fast. So we’ve got to have a sound ship. At the same time, if we’re not current on our bills, then we’ve basically never picked up our anchor. We’re trying to sail in one direction and the anchor’s pulling us in another direction, and that might rip a hole in the boat as well. So it’s definitely not going to get us traction if we’re constantly dragging that anchor behind us. So we want to set sail to each of these destinations but we can’t do that if our ship isn’t sound. That’s why the pre-steps are so important. So step 1. Get $1,000 cash in the bank or in your cookie jar but preferably in your bank account as fast as you can for emergencies. Why a $1,000? Well 90% statistically of what will happen to you for an emergency case will be $1,000 or less. That’s what the math shows and the research shows. We want to make sure that this is somewhere that’s liquid which is defined by two things. Number one, you can get to it quickly. And number two, there’s no penalty to get your own money. So this is not going to go into a CD, it’s not an investment, it’s not money in the equity of your house. It’s not all those different types of places. Your credit card is not an emergency fund okay? It’s liquid, you can get to cash quickly. There’s no penalty to do so. So, make sure you get $1,000 set aside as fast as possible. This is a starter emergency fund. Now if you do put it in a bank account, I recommend a money market account, and we’ve talked about this
more in my previous video The Essentials Of An Emergency Fund okay? So, make sure you get step one in place as fast as possible and
do not proceed to step two until you’ve got step one in place. Step 2. Step 2 is paying off all of your debt except the primary mortgage using the method called the debt snowball. Now I talked about this in a previous video as well about How To Crush Debt And Find Freedom. So check that out. But essentially in a nutshell, the debt snowball is listing all of your debts smallest to largest and paying them off one by one, until you’re 100% debt free except the house. That’s step 2, okay? We’re putting all our focus towards one step at a time at this point. Step 3. Step 3 is taking the account that you started in step one that has $1,000 in it and increasing the balance of that account to a fully funded emergency fund of three to six months of living expenses. Well, how do you know what three to six months of living expenses is? You do a budget. You’re not doing a budget you’re not going to know what your expenses are to base this on and you’re also not going to have the resources to ever reach these goals. A budget is your ship. It’s going to get you where you want to go. So it’s very essential that you have that in place. So step 3 is a fully funded emergency fund increasing the balance of the account you already had to a fully funded three to six months after you become debt free except the house. Now there’s a little bit of a pausing point here where we step back and go okay, do we need to take care of any major things with this step 3b? It’s an imaginary step. Sometimes it applies, sometimes it doesn’t. So step three B is where we’re going to work on things and ask, do we need to set aside money for these mid term goals? I’ve talked about this in a previous video, The Five Big Things You’re Forgetting To Save For. Do we need to make sure that we save for a down payment on a first house ’cause we didn’t have a house when we started this process? Or the next vehicle or appliances, furniture, things like that. And I’ll talk about that more in that video you can check out of course that I did before, but we want to make sure that any of the cash we were setting aside before, that was going to debt pay off and then the emergency fund, now it’s freed up, we’re going to now turn it towards this secondary savings account that’s not the emergency fund to be prepared for all those large expenses and they don’t catch us by surprise next time. After this we’re going to move into step 4. We’re going to dial our pace back a little bit more, put this on cruise control instead of hitting the accelerator and we’re going to really drive through this and get some important legacy things in place. So step 4 is investing 15% of your gross annual income into retirement savings. What’s implied in step 4 is that you’re pausing temporarily and not putting any money into retirement during the first three steps. You’re putting that on hold which is why we want to get those first three steps done in two to three years max ideally. If you don’t, we want to pick back up retirement by then ’cause you don’t want to put off the retirement too long and overall it’s going to be in your best interests to do this in a more focused manner than spreading yourself thin trying to do everything at once. So step 4 is putting 15% of your gross annual income into retirement. Now 15% is a rule of thumb number, what the percentage should be for you is different most likely and you need to talk to your financial advisor about your specific investment strategy to make sure you’re prepared for retirement. So make sure you have an investment buyer that you trust and if you need one I’d be happy to refer you to one. Okay once we get step four in place and it’s running we’re not going to finish step 4 unless you’re already in retirement at this point, but we’re going to get step 4 running, humming and then we’re going to move on to step 5. Step 5 is saving for kids college. Now if this is something you’re going to do, awesome. Use this step. If it’s not I want to encourage you, it’s not child abuse to not pay for kids college. I think some of you need to hear that, okay? In fact, research shows that those who work their way through college have higher test scores. So it might even be in their better interests. But either way if you’re going to save for kids college this is where you do it. Now you’ll notice that it comes after the retirement step and there’s a reason for that. If you’re cruising through an airplane at 37,000 feet, and the cabin pressure drops, you’re going to have oxygen masks fall from the ceiling. What do they tell you to do? Put it on yourself first and then assist your child. There’s many reasons for that but I don’t want to scare you from flying. But essentially there’s many different places to get money for college, none of which are student loans and there’s only one place to get money for retirement. You save it. So we need to make sure that we take care of our retirement savings before college savings so that we don’t end up making our kids part of the sandwich generation. Taking care of their adult kids and us ’cause we didn’t plan for retirement. That is not helping us. It’s not serving our family well if we can avoid that right? So make sure that if you’re going to do a college savings you do it after retirement and this is the juncture where you would put your money into those tax deferred college saving funds or cash flow college if it’s too close to college. You’re just paying for it out of pocket. Next is step 6. So step 6 is paying off your mortgage. Now you may hear some financial advisors telling you well mathematically it’s better to keep the mortgage, and the tax write off, and (sighs). How would it feel to be mortgage free? How would it feel to just have to pay for your taxes and your insurance? What could you do with a paid for mortgage? Probably anything you want, okay? So remember this about behavior not just math. 80% of this personal finance is behavior. So, yeah maybe some of the math makes a little more sense but man how would life feel if you were 100% debt free and you paid off the house? I know colleagues like that, who have done that. I know friends that have done that. It’s a real thing that can happen. And any dollars that you’ve got freed up now that you can throw at paying off that house, after getting all of these other things in place in previous steps, this is where you would do it to pay off that principal, pay down the house, and be totally debt free. That’s step 6, paying off the house early. And then lastly step 7. Step 7 is simply the long term game plan. It’s now we’re on the other side of this. We’ve taken care of our own present reality, we’ve taken care of our own future. We’ve taken care of now the future for our family with getting those things in place for them and getting this house paid off, and this inheritance stuff we’re getting in place. Now we get to reach beyond our own family. We get to reach out to create foundations because now we can build wealth and give, which is step 7, build wealth and give. We can grow our investments outside of retirement and college savings. We can grow them more and more. Grow our wealth, be able to give more away, start some, maybe you want to start a foundation. I don’t know. Maybe you want to start a non-profit. I have no idea. What are the dreams inside of you is a way you can serve those outside of your own family? And that’s where the final step becomes such a big mission where you can do so much more than you could before. And that’s the game plan for your money with finances. These are the pre-steps and the 7 steps that we’re all on this journey if we’re applying this plan to our life that’s affected so many thousands and hundreds of thousands of people including myself. This is the journey we’re on and I hope that this has been helpful information for you as well. Make sure that you download my free eBook The Money Finder which will go over six categories that you can apply in your daily life right now and how you can save on those things and different things like that. And join my free Facebook group the Strong Together Money Community, every week we are in there talking. Every day we’re in there talking in different ways that we can help one another. Different ways that I can support you. It’s all for free. So come and join us in Facebook. I would love to talk to you more in that Facebook group. Again, this is Jeremy with Strength In Numbers helping you keep your wallet heavy and your heart light. (upbeat music)

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