There’s a difference between being financially uncomfortable, being comfortable, and reaching financial freedom. And Brian Robben is committed to reaching financial freedom and teaching others how to do it along the way. Today, I interviewed Brian who recently wrote the new book Freedom Money.
Debt is often a roadblock for many people trying to get rich. What are some specific tips you have to destroy debt?
I 100% agree that debt needs to go if your goal is financial freedom. Debt is vicious and can ruin your life if it gets too much power over you.
Because of that, if you have debt then it’s crucial you aggressively attack your debt.
Below are some tips I recommend for paying off student loans, credit card debt, or any other debt:
Pay every two weeks instead of monthly. If you do this you’ll actually make 13 payments a year instead of 12. (Since there are 52 weeks in a year, you’d make 26 half-payments every two weeks which equals 13 full-payments). This can save you thousands of dollars in interest!
Make larger payments. A quick way to pay off your debt is to increase your payment by $50 to $200 each month. This requires saving more money, but the feeling of relief after your debt is gone is entirely worth it.
Set up automatic payments. Besides the nice convenience, automatic payments toward your debt work so well because they don’t require any discipline from you. If you’re not on automatic payments, you could be tempted to spend your income that’s meant to pay off debt.
We all know we should save more, but how do you actually do it?
Many people get all excited and pumped up about their saving goals, but they don’t have a strong reason WHY they save. So if you’re just saving to save, then it’s not going to work out. You’ll always buy the fancy car, new clothes, or expensive dinners and your bank account will be on the losing end.
Instead, change the reason WHY you save. I save for freedom because that’s more appealing than any material item out there. So when I’m tempted to spend money on something I don’t need, my brain asks me if I’d rather have these new shoes, for example, or freedom. And freedom is always more attractive so I’m able to save money because I know WHY I’m saving.
Finding the WHY behind your saving is crucial because how much you save determines how much debt you can pay off and how much money you can invest. In simple terms, the more you save, the quicker your journey is to financial freedom.
Because it’s extremely hard to pick specific stocks that are going to outperform the market (essentially what mutual funds aim to do) and most investment professionals don’t beat the S&P 500, I put 90% of my investment money in an index fund. Index funds have low expenses and beat the vast majority of mutual funds over time. Although they’re not flashy, history says they’re the best place to put your money.
Then with the other 10% of my money dedicated to investments, I look for individual stocks that could bring me a gain of 1,000% percent or more. Take early-Tesla, early-Netflix, and early-Apple, for example, who are all up 1,000% in profit since going public. My goal is to find the next one!
But if my bets don’t pay off, then I still have 90% of my money in a safe index fund that are bringing me dividends (money given to shareholders by the company) and hopefully positive growth.
What is financial freedom to you?
Financial freedom can mean a lot of things. For me, it means having the ability to choose what I want to do and how I want to spend my time, regardless of money. This translates to doing work I love, traveling the world, spending more time with my future family, or giving back to a community or organization I support.
I know if I continue to increase my income, save a large portion of if, and invest it so it works to make me money, then I can spend my time working on what I love instead of what I have to.
Ask the dead and they’ll tell you that time is the most valuable asset. So it’s a shame that many people are stuck trading most of their time for money, and then they are left with regrets and missed opportunities later in life. Rich people use their money to make more money, so they can spend their time doing better things.
What are the steps for someone looking to reach financial freedom?
It’s simply not true that you need to make six- or seven-figures a year to become rich. Having that kind of paycheck would make it much easier, but it isn’t a requirement.
Instead, if you regularly follow these three steps below and stay true to this method over time, then there’s absolutely no reason you can’t reach financial freedom.
Step 1 – Decide your monthly savings percentage based on your income.
I’m a little radical and recommend a savings percentage of 50% in my book Freedom Money. I figure it’s best to set the bar high and go for it. And if you fall short of 50% and save 40% or 30% each month, then you’re still saving a lot more than setting the bar at 15% and falling short to only save 10% or less.
So challenge yourself to save more than you normally would for the sake of freedom. Then, depending on your income and monthly bills, determine a savings percentage that you’re going to stick to each month.
You can have the right intentions to save a certain amount of your paycheck each month, but fail to do it after unexpected bills and frivolous spending gets in the way. The only way to guarantee you hit your savings goal is to set up automatic saving.
Here’s what you do. First create an online savings account (at Capital One 360, for example) that’s separate from your checking account. Then schedule bank transfers (they’re free) to go from your checking account to your savings account the day after you get your paycheck.
Say you get paid the 1st and 15th of each month. You would set up a transfer to take place on the 2nd and 16th of every month from your checking account to your savings account with the income percentage you decided in Step 1. Then you pay your bills with the money left.
This automatic system makes saving money effortless, requires no discipline, and forces you to save what you set out to from start. Those who consistently do this and follow Step 3 below become rich.
Step 3 – Invest the majority of the money you save.
Saving more money each month will be extremely beneficial to your net worth if you do it the right way. However, if you don’t invest it and only put it in a savings account with a less than 0.1% interest rate then that won’t do much to make you rich.
Instead, supercharge the money you’re saving by investing in a low-expense index fund and hope for a 7% to 10% portfolio growth. I personally prefer Vanguard index funds that match the S&P 500 (like VFIAX), but there are many options. You can schedule automatic payments from your checking account to your investment account as well.
Be aware that if you commit to reaching financial freedom, then you won’t have as much money to throw around each month as before. Your life won’t be as comfortable and you’ll have to make sacrifices.
But, if you stick with it to see your nest egg grow month after month, I’m positive you’ll be inspired to keep going until you reach your financial goals.
Do you have any final words for the readers?
My last comment is that the choice is yours when it comes to your financial success. You get to play the director of your life and lead the show to failure, mediocrity, or grand success.
The French philosopher Jean-Paul Sartre put it best with the words,
“We are our choices.”
So you can read every blog post from Derek and know exactly what to do with your money and why. But at the end of the day, you need to choose to act on it. Otherwise, you won’t reap the benefits and you won’t achieve financial freedom.
Choose to save. Choose to invest. Choose freedom. And choose happiness.
If you’re looking for in-depth strategies to reach financial freedom, order Brian Robben’s new book Freedom Money on Amazon. If you want to read more from Brian, he writes content each week at TakeYourSuccess.com and SelfPublishingX.com.