Apprehending Financial Freedom

The following are vital nuggets to get you on the road to financial freedom

Get organized
Set goals
Get information and education

GETTING ORGANIZED
The first step towards financial independence is getting organized. This involves getting an accurate picture of where you are in terms of debt and income. In getting organized, you need to determine your debt-to-income ratio.

WHAT IS DEBT-TO-INCOME RATIO?
This is your total monthly expenses divided by total monthly income(before taxes). It is expressed as a percentage. Example; monthly income = $2000. Monthly expenses = $ 1100. Debt-to-income ratio is therefore 1100 divided by 2000=0.55 or 55%

A debt-to-income ratio of more than 51% is generally considered dangerous by most financial experts and could lead to bankrupcy if an urgent financial plan of recovery is not immediately put in place.

SETTING GOALS
Every traveller gets a roadmap when setting out on a new journey. This is also true of financial planning. Setting goals regarding what needs to be achieved is definately a step in the right direction. Determine a time-frame needed to raise income levels and lower the debt burden. This will decrease the debt-to-income ratio to manageable levels.

LOWERING YOUR DEBT-TO-INCOME RATIO
A debt-to-income ratio of more than 51% signifies trouble. It is a snapshop that your debt burden is overwhelming. People with such a debt-to-income ratio normally live paycheck-to-paycheck. The first thing that needs to be done is to create an income and expenditure list that details where your money is going. Then you should zero in on expenditure with the aim of slashing items that are not necessary. Use the extra cash to pay down outstanding debt.

EDUCATE YOURSELF
The path to financial freedom involves the initial realization that all is not well. This involves a sober self-analysis. When one undertakes a sober assessment of where one is financially, then one is able to seek help. Help is sought through EDUCATION. Most people get into debt because lack of knowledge regarding interest rates, prepayment penalties, finance charges, late fees, etc. Make a commitment to get as much information as you can regarding credit cards, and personal loans and please READ THE FINE PRINT on every contract you sign.