Because the internet is already littered with overdeveloped articles chock-full of irrelevant details attempting to persuade you that they are providing actual value, everything I write will be brief and to-the-point. You will have to figure out HOW to do certain things on your own, but you will not have to figure out WHAT to do.
It took me three years just to LEARN, let alone APPLY, the steps to freedom. I fell ill from blowing money on useless trading books, money-making blogs, and mediocre tutorials. While on the hunt for the secret recipe, I realised that everyone is out for themselves, and no one would tell me the true way to get rich. After all, slaves are needed to prepare their groceries, clean their homes, and build their yachts...
If you could, would you use your power and opportunity to bring about massive changes in the world and shoot an arrow into the hearts of the capitalists? Because I don't need anyone to clean for me, I grow my own food, and I'm not interested in yachts, I'll share my cheat sheet in exchange for a couple pennies in ad revenue.
Part 1 - Money Flow
Understanding where your money is going is the first step toward gaining control of your finances. We'll make a budget. Use your preferred method, whether it's pen and paper, an excel spreadsheet, or a simple budget app. I make use of the Fudget app.
Begin by recording your monthly income, then your fixed recurring monthly expenses such as mortgage/rent, car payments, insurances, phone bill, and so on. Make a list of your variable expenses, such as food, gas, and entertainment, and average them at the end of the quarter. This will enable you to accurately assess your financial situation and calculate how much money you have left over each month. Then you can move on to the next step.
Part 2 - Sacrifices
Simply lowering your internet speed, adjusting your TV and cell phone plans, quitting video games, being more conscious of your electricity and car usage, avoiding restaurants by cooking more, and so on can save you hundreds of dollars per month. I don't have to tell you exactly because deep down, you already know. The budget in Part 1 allows you to quickly assess where you can save money.
Part 3 - Repay
Before attempting any investment, any debt that is not a mortgage and has an interest rate greater than 7% should be completely paid off. This is due to the fact that there are no guarantees when it comes to investing. Investing and starting a business are both high-risk endeavours. Meanwhile, you will pay guaranteed monthly interest on your loan. Begin with the smallest debt so that you can quickly apply the extra money to your larger debts. Another benefit of using this method is that it motivates you every time you pay off a debt.
Part 4 - Invest
Individual steps will differ depending on where you live, but the concepts should remain the same. We’ll want to free up even more funds here. Sending less money to your government is an awesome way. So the first step here is to open an RRSP. Determine your tax rate and how much you can save to reduce it. For example, investing $3,000 per year in my RRSP reduces my income just enough to reduce my tax rate by up to 5% per year, resulting in a couple thousand dollars in my pocket rather than the government’s. Even better, my RRSP is employer-sponsored, resulting in an additional 30% tax savings. To get the best yield, make sure you thoroughly research what is available to you.
Using the RRSP's cashback money, you can start building a portfolio of cash flow-generating stocks with the cashback money. I've inserted my top picks which include both opportunities for growth as well as dividend yields ranging from 1% to 18% per year. But, unlike the institutions, don't buy those stocks blindly; instead, wait for discounts. A 80% drop from the ATH, a stock price near its 52-week low, and the RSI Indicator plotted on the daily/weekly/monthly chart at a level less than 35 are all better strategies than blind buying. I've covered other investment ideas so make sure to check the rest of this blog.
Part 5 - Reinvest
Make sure to reinvest your profits in order to benefit from the power of compounding. It's completely insane. Consider the following example:
You invest $10,000. We use a 12% annual return to account for defaults. That equates to a yearly return of $1200. After 5 years, you will have a balance of $16,000. Assume you reinvest your profits rather than leaving them in your account. You will have a balance of $11.2k after the first year. After year two, there will be a balance of $12.5k. After three years, the amount is $14,000, and after five years, it is $17,600. Yearly compounding has resulted in a $1600 bonus. Faster results are achieved by coumpounding more often.
Life does not have to be complicated; humans make it so. Getting free all comes down to balancing money in vs. money out.
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