Financial independence is when your wealth is sufficient enough to live on without needing an income from a job.
To achieve this state, there are three steps you must take to even begin this journey. So these are the prerequisites.
Step #1: Have $1,000 cash as an emergency fund.
- This is our basic emergency fund to have until we pay off all credit card and high interest debt.
Step #2: Pay off all credit card and high interest debt.
- If you have credit card debt, you need to drop everything and treat this as an emergency.
Step #3: Build an emergency fund of 3-6 months of expenses.
- Then, after paying off all the credit card, you should build up your emergency fund from $1K to 3-6 months of expenses.
- So, figure out how much you typically spend in a month and then save 3-6 months of that number.
These are the basic steps to even get started. There are additional steps that you must take if you’re really serious about achieving financial independence.
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