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"the 7 Steps to Financial Freedom" / 2006 Version 2

"the 7 Steps to Financial Freedom" / 2006 Version 2



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Published by api-3697282
"The 7 Steps to Financial Independence" - Very Good Resource - Be sure to save this to your computer and review it each month to stay on track, very good information.
"The 7 Steps to Financial Independence" - Very Good Resource - Be sure to save this to your computer and review it each month to stay on track, very good information.

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Published by: api-3697282 on Oct 19, 2008
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From: \u201cHow to become a Millionaire\u201d: The 7 Steps.
Source: Wendy Stevensww w. Yo ur M ent or F or S u cc ess .c om
Added Notes: By Author: Brian Morgan
7 steps to wealth

Paring it all down, we've come up with seven steps to becoming wealthy.
Remember, wealth is relative, it doesn't necessarily mean "millionaire." The goal
for many people is financial independence, says Stewart Welch of The Welch

Group in Birmingham, Ala.
"That's the point in time when your cash flow from investments is equal to or
greater than your income from work. Look at the statistics: 95 percent of the
population never achieves financial independence. For 65 percent of retirees,
Social Security is their largest source of retirement income."
The No. 1 reason people don't achieve financial independence, says Welch,
is they don't have a written financial plan. So, that is our No. 1 rule for
becoming wealthy.
1. Develop a written financial plan
Saying you want to be wealthy isn't good enough. You need to come up with a
workable plan and put it on paper. The written plan forces you to do something.
Calculate what you need to earn and how to invest. The plan isn't just the

goal; it's the whole thing -- the dream, the goals, the options. The options are scenario planning -- all the ways you can accomplish that goal -- open a Roth IRA, contribute to a 401(k).

2. Save, save, save

The end result of your financial plan should be systematic investment. Get in
the habit of saving money. Build an emergency fund in a money market account
so you don't have to raid the rest of your savings and investments when there's
an unexpected major expense. Make it a point to save at least half of every pay

3. Live below your means
Don't be a walking billboard foro ve rp ric e d designer clothes, shoes, sunglasses
or jewelry. Don't allow your house or car payments to beb ud g e t- b us t e rs.
4. Lay off the credit
Some people say that if you can eat it or wear it, don't put it on your credit card.
That's good advice, but take it further. Try not putting anything on your cards
that you can't pay off in two or three months. You need only one or two credit
cards. If you have a fistful, pay them off and cancel them. Remember,d eb t
holds you back. It reduces cash flow for other things, including investing. If no

one gave you money to borrow, you'd be better off and the economy would be smaller. If they only let you borrow 75 percent of the value of your home, you'd be a heck of a lot better off.

5. Make your money work for you
It takes money to make money, but that doesn't mean you need a lot to invest.

Open an account with a mutual fund company that has no-load funds and
low expense ratios. Build a diverse portfolio and you can reasonably expect to
earn 8 percent to 10 percent annually on your investments over the long haul.

6. Start your own business
In the 1996 book The Millionaire Next Door: The Surprising Secrets of America's
Wealthy, the authors state that two-thirds of the millionaires are self-
employed, with 75 percent of them entrepreneurs, and the remainder
professionals such as doctors and accountants. "The idea that most people
inherit wealth is outdated. A lot is built throughb us ine s s e s. Business creation
is the No. 1 driver of wealth in this country," says Zultowski.
7. Get professional advice
A good financial planner can help you fill your portfolio with the right
investments and dump the wrong ones. You don't need to relinquish control,
but you do need to form a good working relationship with someone who has
expertise in this complicated area. "About 76 percent of those surveyedar e

actively involved in the day-to-day management of their financial affairs,"
notes Zultowski. "They get involved; they learn about finances, they're not day
traders. They work with advisers but ultimately make their own decisions." If
you can't afford to have a financial planner manage your money, many of them
will review your portfolio and make recommendations for a one-time fee.

Added Research Notes from Brian Morgan / Nov. 2006
1. Develop a written financial plan (double click links)
www.Schwab.com look under \u201cPlanning &Retirement\u201d; Schwab offers an article and other
resources to help you calculate how much you need to save each month depending on your
current age and income.
Lincoln Financial PlanningLincoln offers a nice financial planning resource & helps you decide
where you should invest money based also on your current age.
Smart About MoneyHere is another resource to help you with many articles & other resources
in planning for the future.
A G Edwards & Sons - Retirement PlanningHere is another retirement planning resource that
I found to be easy to use and helpful.
2. Save, save, save

By using some of the available resources mentioned above, you should be able to calculate
(using the software on these sites) the amount of money that you need tosave each month to
reach the right income levels you need to retire.

3. Live below your means
If you are able to develop a financial plan using the above resources, than this should help you
realize how much you shouldsave each year, which would affect your buying decisions as
you approach retirement.Therefore, with a financial plan in place, you\u2019ll know whether or not
certain purchases are really necessary and if they will fit into your financial plan.
4. Lay off the credit
Credit, especially credit cards, is just another way to over extend what you really should be
saving and investing in.So as the author above says- stay away from your credit cards unless

you do have the cash available to pay them off monthly. If you are paying them (totally) off
each month, then you are reallyno t falling into extensive debt, and you are managing your credit
use wisely. Credit becomes an issue when you are not able to pay these types of account off

each month.If you are indebt with credit, seek professional help and resources to get yourself
out of debt, so you will be able to save this money instead of paying high interest rates on credit.
5. Make your money work for you

Set up your financial plan for the future, and determine exactly how much you should be saving
and investing each month- this makes your money grow while you are getting nearer to
retirement. If you are having problems in knowing what to invest in, then surely get financial
investment advice from a CPA, or certified financial planner.CPA\u2019s generally should be able

to answer many of your investment and savings questions, they are also very well networked
within the community (normally) and will be able to help you seek the right financial planner.
6. Start your own business

For younger people I highly recommend starting a business while they are young. Of course
the indicators show that many businesses fail within 3-5 years, so you should research this
venture very well \u2013 including getting free advice from a local SCORE chapter, or Small

Business Development Office, or by doing some networking and talking to a wise business

owner. It\u2019s my guess that buying into an existing business (like a franchise) that is doing very well might just be much easier than going into a start-up business. Again, the home based business industry may provide you with some business skills- but I challenge you to really think seriously about getting involved in a larger real business that has some track record for

success. If you do venture into the start-up business \u2013 be sure you have the skills necessary

and also build a management team or advisory team that you will be able to work with so they
can provide their knowledge, skills, and advice during the start-up & business development
processes. Read up on the available literature that shows the risks associated with start-ups

in comparison to already successful business buying.
7. Get professional advice
Unless you have extensive business and investing education behind you, I suggest getting
the advice of a CPA and certified financial planner at the beginning of your financial planning
phase. This will help you develop a more realistic financial plan for you and your family, and
these people will be available for you to consult with whenever your financial or career
situation changes. A very large percentage of people in the USA thought they\u2019d be comfortable in
their retirement years due to working all their lives in a stable company- yet a very high

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