Financial Freedom

What is financial freedom? The pop culture definition of financial freedom seems to be one of freedom to do whatever one wants without financial repercussion. That definition is variable based on what one wants to do. I like things to be a little more concrete so I have come up with my own definition. For me, financial freedom is the accumulation of enough wealth to satisfy all my needs from today until the day I die. This definition certainly will not fit everyone, but it makes sense to me.

As you might assume I also have a plan to achieve financial freedom that has evolved over the years. Rather than bore you with the details of the plan up to this point in my life I will share the details of the plan from this point on (I'll bore you with the details of the plan up to this point at a future date).

The wealth necessary to satisfy my needs (when I say my needs, I include the needs of my wife and kids of course) for the next 50+ years isn't going to appear in the next month, the next year, or even the next decade, so I have set up some long term rules for what to do with my income. Here are those rules:

1. Be generous with charitable contributions.

2. Contribute the max to my work retirement plan.

3. Budget to live below my means. I'm a believer in strict budgeting (before redbox came along the video rental category was $4.04 per month because that's how much it cost to rent one video from Hollywood Video).

4. Make purchases and pay bills with rewards credit cards.
4a. Keep credit card purchases within budget.
4b. Pay off full credit card balance each month.
(exception to rule 4: If purchases or bills charge a fee to use a credit card then use checks)

5. Don't carry cash

6. Buy used cars.
6a. Pay cash for used cars.

7. Invest wisely
7a. If you can't devote at least a few hours a month to investment research then it is imperative to hire a financial advisor.

8. Hire a good tax accountant.

9. Purchase adequate insurance.

10. Avoid impulse decisions when dealing with money.

11. Track all money movement with financial software.
11a Review monthly and yearly reports.

Obviously most of my rules have some detail within them (budget for example) and I may post on them individually in more detail at a future (that's fodder for 11 future posts right there).

Feel free to add any of your own rules, but know that if I don't agree with them I will probably tell you why (maybe even in another post).