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6 Paths to Financial Freedom

Written on July 2, 2009 by George Krueger & Mary-Lynn Foster in Financial Freedom

freedom Today is the fourth installment in our freedom series. We’ll focus on financial freedom.

Financial freedom … can you imagine it? To use the lingo from our last couple of posts, it means freedom from money worries or, even better, freedom to choose how we spend and live.

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Financial freedom is just one piece

We’ve defined bigg success as life on your own terms. There are five elements of bigg success – money, time, growth, work and play. Bigg success comes faster when these five elements work in synergy; that’s part of the bigg idea behind bigg success.

So while financial freedom is a worthy goal, be sure you’re looking at it as part of the bigg picture. What does life on your own terms mean to you? Only you know the answer that’s best for you.

Framing financial freedom

You are the entrepreneur of your own life. As the entrepreneur, you need to understand the two basic financial statements: your Income Statement and Balance Sheet.

The Income Statement shows how much money you brought in the front door and how much money went out the back door. Financial freedom means more income and less costs.

The Balance Sheet shows how much you own (your Assets) and how much you owe (your Liabilities). Financial freedom means more Assets and less Liabilities.

6 ways to define financial freedom

Debt free

There are variations of this. You may consider yourself free if you don’t carry a credit card balance forward from month to month. Other people want everything paid off except their house. For some, they want no debt period.

You focus on the Liabilities side of the Balance Sheet with this path. You want to minimize what you owe. Better yet, owe nothing.

Low standard of living

Some people take this to an extreme, but they’re the only ones who have to be happy with it. This is a very simple, yet proven path. Focus on spending less so you’re free to spend the excess money however you want.

Obviously, this path focuses on the Expense side of your Income Statement. “Low” is a relative term; it means low relative to your Income.

High salary

Conversely, you can focus on making a lot of money. Make a lot more than you spend and you’ll feel free financially.

We called it “salary” but it can be active income from any source – commissions, business ownership and the like. Obviously, we’re on the Income side of the Income Statement here.

Cash in the bank

If you have an amount equal to three to twelve months of living expenses in the bank, you may feel a sense of financial freedom. It doesn’t have to literally be “in the bank.” For example, you may have the money invested in a money market mutual fund.

This is a Balance Sheet strategy focusing on Assets, specifically Cash and Cash Equivalents.

Retirement nest egg

Here you get that sense of financial freedom by having enough money stored up to allow you to live comfortably, without working, for the rest of your life. Your focus is on building up the Asset side of your Balance Sheet. Unlike our third definition, this path is about building passive income from these Assets.

Wealth-creation

For some people, financial freedom means being wealthy enough to buy anything they want. There are a lot of degrees here. “Everything you want” doesn’t have to mean a jet or a yacht, but it can if that’s what you really want!

This is a complex path. You’ll probably need to manage both sides of the Income Statement and the Balance Sheet. You may not try to minimize Liabilities; instead, you’ll focus on having Liabilities that have paid for Assets that make you money.

It’s important to define financial freedom so you can determine your goals. With your goals in mind, you can develop strategies to achieve them. That leads to bigg success!

What does financial freedom mean to you?

Share that with us by leaving a comment below, calling us at 888.455.BIGG (2444) or e-mailing us at bigginfo@biggsuccess.com.

We’re so thankful that you took the time to read our post today!

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Please join us next time as we wrap up this series on freedom. We’ll talk about being a free agent. Until then, here’s to your bigg success!

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Related posts

Three Levels of Freedom – Part 1

Three Levels of Freedom – Part 2

Three Levels of Freedom – Part 3

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5 Places to Find Cash for Your Business Today

Written on March 24, 2008 by George Krueger & Mary-Lynn Foster in Business, Business Ownership, Money

We have a friend who is setting sales records in her business. However, she recently faced a severe cash crunch. She felt overwhelmed and discouraged, to the point of giving up. She was scared. What should she do?

We told her to find the low-hanging fruit!

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When you’re faced with a cash crunch, think about all the places, prospects, and possibilities where you could get cash today. Then spend your time on the things most likely to pay off TODAY.

5 things to understand about this strategy

#1 – Long-term strategy
This is not a good long-term strategy – in fact, it distracts from it! However, when survival is the issue, who cares? Survive today so you can thrive tomorrow.

#2 – Perceptions
This strategy can create misperceptions with customers, employees, vendors, and investors. For example, customers may expect discounts if you offer them frequently. They’ll sit back and wait for the next one.

#3 – Frequency
If it happens occasionally, perhaps seasonally, that may be okay. Even then, you should plan for those occasions in advance. If you’re in this position frequently, it’s probably a sign of a bigger problem.

#4 – Financial statements
To find the real problem, understand your financial statements. What are the numbers telling you? How can you prevent this from happening again? Is it a short-term problem? Or do you need to make some adjustment for the long-term?

#5 – Mindset
Get over any reluctance to cut special deals. Some people really struggle with this. For example, they find it hard to sell inventory at less than cost. But if it’s not selling at its current price, it’s not worth its current price! Mark it down so it moves and you get the cash you need!

5 places to find cash today for your business

#1 – Call people who owe you money.
See when they will commit to paying. Consider a discount if your situation is severe enough.

#2 – Contact customers.
Find the customers who are the far along in the sales cycle. Follow up on proposals you’ve already made. Once again, if your situation dictates, offer them a discount for signing on the dotted line and paying today.

#3 – Work your contacts for referrals.
Who do they know that might do business with you? Tell them you have a special deal that you want to share with as many people as possible.

# 4 – Sell assets you don’t need any longer.
They’re costing you money sitting around. This includes inventory as we discussed earlier. Also think about your receivables. If you have customers with good credit, you may be able to sell your receivables to a factoring company.

#5 – Borrow.
This is similar to #4, only here you use your assets as collateral for a loan. You have a short-term problem; get a short-term loan!

One final tip – don’t appear desperate. People do business with successful people. So don’t present it as your problem; show them an opportunity.

Our bigg quote today is unclaimed, but still good.

“Money is not the most important thing in the world. Love is. Fortunately, I love money.”

And absence makes the heart grow fonder!

Next time, we’ll discuss six factors that will help you succeed when opportunity knocks. Until then, here’s to your bigg success!

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