Your Success Resources

Written by John on October 18th, 2011

Financial Freedom – The Secret

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Has it ever felt like:

- You aren’t in charge of your time?

- You haven’t got enough time in the day?

- Someone else makes the decisions about what you do?

- You are bored or stressed and only working for the money?

- You have other obligations that always come first?

- You are looking forward to retirement?

Most of us can relate to this at some level.

At Your Success Resources, we define financial freedom as

“Having enough money every month so you can do what you truly want.”

So what’s the secret to getting control back in our lives?

The Secret

The vast majority of us have been sold the following plan:

- Work hard at school to get good grades

- Find a well paid and secure job or career

- Buy the best house and luxuries we can afford

- Save money and retire on a pension

First and foremost, the banks have first charge on our houses and on our money via mortgages, loans and credit card debts.   If you work in a job and exchange your time for money the people in control of your money are also in control of your time.

The secret to getting financial control back into our lives is to understand that the government and the banks love this plan because we pay lots of taxes and get into lots of debt.  In other words the system works just fine.  The bank and the government will not help you – you must change your relationship to debt yourself.

To help illustrate what I am saying, a few years back (before credit crunch time) my wife and myself went to the bank to ask for a re-mortgage on our house.   We wanted to use the money to help with the deposit on a purchase of a rental property which was going to make more than £200 per month every month (i.e. rent – mortgage – insurance/maintanance = £200pm+).  When we told them that we wanted to use as a deposit on a buy to let house they turned us down flat.  They confirmed that they would authorise the re-mortgage but only if we were going to make home improvements, purchase a car or go on holiday!

Lesson:  It is not in the bank’s interest for you to get out of debt unless you are old and can no longer work for them.

The difference between good and bad debt

Robert Kiyosaki’s book “Rich Dad, Poor Dad” (see our book recommendations) explains the simple difference between good and bad debt as follows:

- Good debt is debt that makes you money every month

- Bad debt is debt that costs you money every month

Bad debt is created through purchasing things that don’t make you any money.  Good debt is using other people’s money to make you money.  In other words, good debt moves us towards financial freedom and bad debt moves us away from financial freedom.  Using this definition, although you might benefit from some capital gains a mortgage on your own home is bad debt.

Conclusion

Its not your boss that you need to tackle first if you want to become financially free its your relationship with money and debt (and the banks!).  If you use your debt wisely you can, like millions of others before you propel yourself to financial freedom within a few short years.