Financial Freedom: 4 Phases of Becoming Financially Free

Financial Freedom: 4 Phases of Becoming Financially Free

Financial freedom is when you’ve gotten to the point where you have more than enough money to live on, and have direct control over your income.  Obtaining financial freedom needs to be your main priority.  Without getting it, you’ll always be a wage slave to another man.  You don’t control your time when you’re always chasing a check.  And at the end of the day, financial freedom is the key to living life on your own terms.

That’s why becoming financially free needs to be your biggest target.

Whether you learn how to be financially free in 5 years, or you have a goal on how to be financially free by 40 depends on where you are in life.

How much is enough?

This depends on where you live and the lifestyle you want to have.  The financially free meaning or definition is when you control your own income and have money to do what you want.  Some people want to do crazy things like learn how to become financially free on $50 a month or a few hundred a year.  While I’m for minimalism, that’s ridiculous.

It’s better to have a solid amount of money in the bank, no debt, and have money coming in that you control, like through a business.  That’s my financially free definition and something we should all aim for.

On top of that, I have a goal to not just become wealthy, but to get rich.

I imagine many of you are the same way.  But either way, financial freedom is when you have enough money in the bank to keep you afloat for a few years, as well as more than enough money coming in from a source you control.

I say you should have 50-100k+ in the bank, combined with 4-10k+, depending on where you live, in order to say you have financial freedom.  The money in the bank will be there in case something goes wrong with your income streams, medical emergencies, and so forth.  However, saved up money in a freedom fund isn’t enough.  You also need money coming in that you control in order to have true financial freedom.

These may seem like big goals to some of you.  Others may think they’re doable if you get the right job, but even just getting a high paying job isn’t real financial freedom, because you can be fired or the company can go under.

That’s why we’re going to discuss the 4 phases of financial freedom, so you can break free from wage slavery and take control of your life.

The 4 Phases of Financial Freedom

  1. Destroy all debt and reduce spending
  2. Increase your money
  3. Invest into your business
  4. Quit your Job and Create Multiple Streams of Income

1. Destroy all debt and reduce spending

build wealth - start a business

The first thing you must do is absolutely kill your debt.  You must crush your debt.  Because right now, any debt you have is crushing you.  Debt for corporations is one thing.  Personal debt is a big no-no.  You can’t achieve financial freedom when you’re paying interest to the banks.

Destroy all debt like

  • student loans
  • car payments
  • credit cards
  • mortgage

With things like student loans and credit card debt, you must pay these off.  Do this first, as the debt you incur over time will just cause you to lose more money.  See if you can consolidate or pay off the interest first.  Do whatever it takes to pay these off.

Car payments and mortgage payments are also huge burdens on anyone trying to become financially free.  Too many guys will go out and buy a sports car they can’t afford.  Especially when they start making a little bit of money, they’ll blow it on a new car that will only lose value over time.  You should only buy major depreciating liabilities, like a car, when you’re already financially free.

If you need to have a car for where you live, then try to buy a cheap, used car for cash.  If you need to go on a monthly payment plan, then get it as low as possible.  You’re still going to have gas, insurance, and maintenance, which can dd up heavily over time.

Mortgages are mistakes

avoid debt

Mortgages are also mistakes.  There may be some cases where you can get a cheap property, and over time the value rises to be out the interest you’re going to have to pay.  If that happens, you won’t see most of that money until 30 years from now.  And most of the profit you gain is an illusion because of inflation.  You might make 3-4%, maybe more in a hot market.  And that’s only considering if the market does well.  The market could crash you and could get screwed.

Plus, having the majority of your freedom fund in a down payment destroys any chance of you getting financial freedom in the next 20 years.  You’ll have a fat monthly mortgage payment, on top of any renovations, HOA’s fees, and general wear and tear.

That’s money that could be used to create your money making machine.

Am I saying that real estate is always a bad investment?  No, it can be a good place to put your money.  But that’s once you’ve already become financially free and you can buy it in cash.

You’re just getting started on your journey to reach financial freedom.  You can’t afford to have any debt, especially soul crushing debt like a mortgage payment for the next 30 years.

Become a minimalist

While you destroy your debt, you need to also become a minimalist.  This means

  • downsizing your lifestyle
  • and not spending money on stupid shit

The one thing I tell you guys you can spend money on a decent apartment in the central / trendy part of a city.  This will make it easier for you to meet women if you’re in the dating game.  Even though you’re becoming financially free, and will be grinding for the next few years, you should still have a little bit of fun.  Additionally, living in the city will make it easier to get more clients when you start your business, more on that later.

But that’s it.  Even living in the city, you need to stop eating out, stop spending tons of money on drinks, and cut back everywhere else you can.

Living in the city can also reduce the need for a car, which will save you a lot of money.

Take a look at your spending habits, and cut back where you can.  Stop going on expensive dates that don’t even get you laid.  Cancel subscriptions you don’t use.

You want to get to the point where you’re spending only 20% (or less) of the money you make.  40% or so will go to the government, and 40% gets saved.  That will require a cut in your expenses, and also an increase in your income.

2. Increase your money

stacking cash

The next phase in achieving financial freedom is to increase your money.  You do this by making more money at your job, getting a hire paying job, and/or starting a side business.

Raise

You can go in and ask for a raise, but chances are you won’t get it.  And if you do get it, your total income is only going up 5-10%.

Sales job

However, if you’re in a commissioned based job like corporate sales, you can earn more money by closing more deals.  I hated sales.  But I got good at it.  I was able to find my ideal customer profile through prospecting, and I learned how to ask the right questions, and then sell the prospect a dream.  They still got a great service.  92% of the clients renewed.  But it still took me selling the dream of the benefits in order for me to get the deal.

And even though it was a grind, it was worth it.  Because I was able to make 6-figures in corporate sales.  In fact I made 90k, 150k, 175k, and then even 210k each consecutive year.  This allowed to me to build my freedom fund, which was instrumentally in achieving financial freedom.

I don’t tell you guys this to brag.  I wasn’t happy at the job, it wasn’t my life calling.  Far from it.  But it was a tool for me to propel myself.  The vast majority of the clients liked the service, and I never had to sell unethically, although there was definitely pressure to do so.  Instead I put 60 hours a week at my job.

I increased my money, while still keeping my expenses to a minimum.  This is was absolutely key for me to access financial freedom.  Most guys blow the money they make on a sports car or flashy items.  They don’t save the money.

We’ll get into investing later.  But for now, increase your income and save your money.

Side business

Let’s say you’re not in sales, and you’re not willing to switch.  I think sales is one of the best things you can do for yourself because you’ll learn how to sell.  Which you’ll need if you start your own business.

But either way, whether you have a corporate sales job, or you have another wage slave job, you need to start a side business.  This is your purpose.  It’s something you enjoy, are an expert in, and can make money with.  You don’t have to be the worlds best in your field, but you need to be good and be getting better.  You also need to be able to deliver for your future clients.  And you need to love what you do so you’re able to stay consistent with it.

If you’re working 40-50 hours a week at your main job, you need to put another 20-40 hours a week on your side business.  It’s a lot of work, but that’s what it takes to achieve financial freedom.  There’s a reason why most people are wage slaves.  And that’s because it’s hard as hell to become financially free.

What kind of business?

how to build an audience for your business

You can start a product-based business, a service-based business, or do a hybrid.  I recommend sticking to one for now, and then you can always make it a hybrid later.

Service-based business

For my first successful business, I chose a service-based business.  I did marketing services like web design, social media management, facebook ads, and so on.  Is marketing my life’s purpose in of itself?  No.  But I enjoyed it way more than sales, was decent at it (not actually amazing at web design but ads and social), and was able to provide a lot of value to my clients.

I did work for free for a business owner I knew in real life in order to get experience and a strong client testimonial.  This allowed me to market and sell to other clients.  Even though I was still starting out, I could point to examples of work that I did and show the ROI that a business had from letting me do their marketing.

I was able to get more clients and bring in more revenue.  It’s incredible when you’re your own boss.  To call yourself the CEO.  To make deals happen for yourself.

Starting that business helped my income even more.  Even more importantly, it gave me a stream of income that I controlled.

The reason most of you don’t have financial freedom, besides being in debt and having no freedom fund, is that you don’t have control of the money you make.  If you’re able to start your own business on the side, you control that and can become financially free.

Product-based business

Product based businesses are more scalable and make you money while you sleep.  That’s why they’re so appealing to everyone.

But I recommend starting a service-based business first.  The reason is because there’s little money needed to get it started, and if you’re willing to prospect like crazy you don’t need much money to begin with.

With a product-based business, you’re going to need thousands upfront.  Even fi you try amazon FBA or Shopify dropshipping – (I tried both), the chances of you becoming financially free off of that are small.  It’s extremely competitive.  You’ll have Amazon buy in bulk and undercut you when you get too big.  Shopify can work, but it still takes thousands of dollars in market.  And if you’re wrong about the market, then you’ve just wasted 3-10k.

There’s also blogging, youtube, and content creation, like this website.  However, it takes years to build an audience.  If you want to know how much money I made with Rebellious Development in the first year, it’s $0.  I didn’t make a penny my first year.

But I’m able to do it, while still working on my other business, because it’s my purpose in life.  The money will come in time.

Get your income up

For you guys who aren’t financially free, you need to get your income up.  You need to have a side business, in addition to your full time job, that will get your income up.  That’s what I did, and that’s what the vast majority of real guys have done who’ve achieved financial freedom.

3. Invest into your business

spend less money

The next step towards financial freedom is to invest into your side business.  Because your side business is your marvelous money making machine.  It’s the vehicle that’s going to launch you towards financial freedom.  When you control the means to your money, there’s no limit for what you can do in life.

Investing into your side business will increase the amount of money you get from it and increase the number of people you help with it.

The point of financial freedom isn’t just to be rich.  It’s to be free.  If you’re making 100k at your job, but only 30k at your side business, you’re making 130k.  Which is a solid amount of money.  But if you quit your job now you’re only making 30k.  It’s still much better than 0, and ideally your business is growing.  However, it’s better if you got it up to 50, 70, or even 100k in it of itself before you leave wage slavery for good.

The two things you can invest

There’s two ways to invest in your business:

  • time
  • money

Investing your time is the best option when you’re young, and it’s what I recommend.  Once your side business is generating a fair amount of money, you can take some of that and invest in with marketing.  That way you’ll be able to have leads come in with less work on your part.

But in the beginning, it’s better to not blow your extra money from your freedom fund.  Instead, invest the extra time you have in your side business.  If this means working 4 hours Monday through Friday after work, and another 10 hours each on Saturday and Sunday, then that’s what it means.

If it sounds like a lot, it’s because it is.  Financial freedom is worth it though.  It might take you 2-5 years of grinding it out.  I promise you that building that side business will set the foundation for the rest of your life.

4. Quit your Job and Create Multiple Streams of Income

how to quit your job - man leaving job

The last phase of financial freedom is having multiple streams of income.  Warren Buffet and other top investors always discuss having many sources of income at once.  That way you’re never dependent on just one method.

When you’re first working a job, you only have one stream of income.  Then when you’re building your business, you have a second stream of income.  When you have a healthy freedom fund of 50-100k+, along with more than enough money coming in each month from your business, you’re able to quit your job.

At this point you’ve escape wage slavery.  But unless you have a massive savings of 1 to 3 Million, you’re not going to be set for the rest of your life.  Especially if you want to have kids in the future or live without worrying about money.   So you’re temporarily financially free.  And you’re broken free from the corporate slavery system.  So you should definitely celebrate how far you’ve come.  But you’re not set for life, you’re not completely financially free yet.

That’s okay.  Because now you can work on your business, which is something you love, and get rich doing it.  You’ll still have days you work long hours.  After all, you’re not going to be a slouch now.  You’re a winner.  You’re blessed that you can focus on what you love to do and make really good money doing it.

At the same time, you’re looking to achieve true financial freedom.  Which means creating multiple streams of income.  You most likely went from two down to one when you quit your job.  That’s fine, since you have a nice freedom fund, coupled with money from your business.

Now is where you create multiple streams of income by

  • figuring out new ways your business can make money – either adding services or products
  • investing in other assets, like real estate or mutual funds

Within your existing business

The first one way is to diversify within your business.  If you sell services to clients, add new, premium services.  This will create a higher selling point for you to increase your revenues with.  You can also create products to sell to your clients as well, which means you don’t need to preform services on those products.

If you have a product based business, you can offer services or consulting so customers can get the most out of them.

Investing in real estate and stock market

Besides creating multiple streams of income through your existing business, you can also do this in traditional avenues like real estate and the stock market.  Although it seems like I hate on real estate, it can be a good investment.

It’s just that it’s for when you’re already rich.  I don’t recommend trying to figure out how to become financially independent by investing in real estate.  It’s something you invest in later.  Real estate helps to maintain your financial independence.  But it’s not the best way to financial freedom form the get-go.

Real estate can be a good deal if you can buy properties in cash – meaning no mortgage – and it’s not all of your life savings.  It’s not a good way to get rich, but it’s a great way to maintain and grow our existing wealth so it beats inflation.

The same goes with the stock market.  Investing $100 in the stock market is dumb, because an 8% return will only give you $108.  But if you invest $1,000,000, then an 8% return will yield you $1,080,000, an extra $80,000.  It can be a great to to continue to grow your wealth.  However it’s better to use real estate and the stock market as multiple streams of income once you’ve already built up your money from your business.

You go higher risk, higher reward on your business when you have little to lose.  And then you go more safe and long term when you have money that just needs to grow over time and beat inflation.

Stay motivated and stay consistent

power in a relationship, focus on purpose

The biggest roadblock in achieving financial freedom is yourself.  If you stay consistent, then you’ll be able to become financially free.  Most people give up on their business.  That’s why most businesses  – especially service-based businesses with little upfront costs – fail.  Because people underestimate how long it takes to build a real business.

But if you can put an extra 20-40 hours of work on your side business, outside of your regular full time job, each and every week, then it’s only a matter of time before you obtain financial freedom.

What’s your reason for Financial Freedom?

When you have a reason, becoming financially free becomes achievable.  You’ll be able to remind yourself of the reason you set out to obtain financial freedom when it gets tough.  Because even if you love your side business, as it’s your purpose, it’s tough putting in the work when you’re tired from a long day of wage slavery.  And you’re not going to love every part of the business, even if the core part of it revolves around things you like.

Rebellious Development is my purpose.  I love what I do.  But it was tough coming home from work at 6 and 7pm, and then working on my marketing business and writing articles.  I was able to do it by sacrificing my weekends and working long hours.  And I had the drive because my reason was so strong.

I hated not being my own boss.  I absolutely hated not being able to do what I wanted with my life.  Even though I was a good looking player and good with women, I still wasn’t in charge of my life most of the week.  Even though I lifted weights and did martial arts, I still had to deal with the bullshit of being a wage slave.

All of this being said, I was grateful to be making really good money, helping clients, and learning valuable skills.

I was blessed and extremely grateful for the opportunity I had been given.

But I wanted financial freedom because I wanted to have full control of my life.  If I want to go work from Bangkok or Spain for 2 months, then so be it.  There’s no doubt I’m still going to grind hard on my purpose.  But just being able to do what I wanted, when I wanted, and not need to suck up to another man was more than enough motivation for me to chase financial freedom.

Having a wishlist 

sports car - porsche

Having a wishlist is also powerful during your chase for financial freedom.  While you should be strict with your money now, and not blow it all once you start making 6-figures, you can still have a wishlist.  These are things you’ll buy when you’re worth a few Million dollars.  You’ll get to that few million mark over the next 10-20 years, by doing what you love and building your wealth.

Long term wishlist items can be things like

  • dream house
  • dream sports car

You can even have short term wishlist items like

  • watches
  • clothes
  • trip to a place you’ve always wanted to visit

Even though I tell you guys to save your money like crazy, you can still go on a nice vacation when you have 50-100k in the bank, and have 5-10k+ coming in a month.  You still should enjoy your purpose, which is your business, but these are extra fun things to look forward to.

Financial Freedom is Freedom itself 

dan bilzerian: financial freedom

Financial freedom is freedom itself.  We live in a world where money either holds you back or makes you free.

If you’re 20 or 25, you can have a goal to be financially free by 30.  This doesn’t mean you stop working.  It means you have lots of money for a rainy day and own your own business doing something you love.  If you’re older, you can still make a goal to figure out how to be financially free in 5 years, or some specific timeline.

You can be a slave for 40-50 years and then die, leaving no mark, and impacting no one.  Or you can work more than everyone else for 2-5 years, then have your own business and live life on your own terms.  Financial freedom can be yours, but you need to take action and make it your #1 priority.

Subscribe
Notify of
guest
0 Comments
Inline Feedbacks
View all comments
0
Would love your thoughts, please comment.x
()
x