Living in freedom due to financial independence.
Photo by Pablo Heimplatz on Unsplash
It is possible to become financially independent in three years, especially the coming three years?
Retirement planning promotes a 30 year plan of saving, scrimping and cutting back in the hopes that discipline and patience will payoff. So when someone becomes financially independent in one-tenth of that time, was it because they took more risk, hustled harder or was it just luck?
Most likely, it’s none of the above. You don’t need to take risks to get rich, but learning to manage it is helpful. Hard work won’t help if you have the wrong methodology. Cutting back isn’t the answer either, people don’t just “shrink” their way to wealth. Obsessing over what can be cut or reduced is finite and leads to a mindset that is unlikely to create wealth.
So if the answer is not risk-taking, hard work or cutting back, how can you gain substantial wealth in three years? I’m going to break it down for you, but first, there are a few steps to consider and criteria to know how to navigate in order to stack the odds in your favor.
How To Recover Your Cash
Before we get into wealth creation, let’s look first at keeping more of your money. There are four I’s to recovering your cash that will have a big impact on these three years.
First is the IRS: make sure you’re not tipping the government. The majority of business owners overpay on their income tax. Look to maximize your deductions and reclassify your income to pay less on what you earn. This requires a proactive approach of meeting with a tax team that may include an attorney, tax strategist and even a cost segregation engineer if you own a commercial building.
Next up is interest. This is about restructuring loans, renegotiating interest rates and reallocating resources if you have underperforming assets that could be used to pay off high-interest loans. Interest rates are low right now, look to refinance and lower your interest rates.
The third I is investments. Protect the downside, eliminate non-performing fees and look to create cash flow with them immediately.
Finally, insurance: eliminate inefficiency or duplicate costs by having the right design.
Criteria For Gaining Financial Independence
Recovering cash is important, but, if you don’t have all the pieces in place before you start, you won’t get to where you want to go.
First, don’t borrow to consume. If you have loans beyond car loans or mortgages, your cash flow is going …….