If being debt free is everything you yearn for and more, you’re not alone. A study conducted by Credit.com found that 25% of Americans define the “American Dream” as being financially free. But, how does one make that dream a reality? Financial freedom is no easy goal to achieve and the path to freedom is no get-rich-quick strategy. However, economic stability is more attainable than you might think, and it is very much a goal worth striving for. Six St. Louis financial experts chime in with their personal finance insights for St. Louis residents below.
1) Create a Financial Plan | Jeff Laughlin
Finance is no different from any other aspect of life. Your progress and improvements will be little to nonexistent if you have no goals and no plan in place. Jeff Laughlin of Fidelis Financial Planning, LLC reiterates that the first thing you should do when working towards financial freedom is to create a plan to get you there. Jeff reminds us that if you work on your plan, “consistently and with patience for many many years…financial freedom and peace of mind become the result.”
What should your plan include? A good financial plan involves reducing expenditures, increasing savings and investments, and increasing income. Hence, the second financial tip.
2) Save/Invest At Least 10-20% Of Your Income | Lisa Avenevoli
Your financial plan should include saving and investing consistently. The easiest way to earn more money is to let your money work for you. Lisa Avenevoli of Steve Robbins, CFP recommends that everyone should aim to save/invest at least 10-20% of their income. If this does not seem doable then you may be living beyond your means and it might be time to reevaluate your spending.
The important thing to remember is that you will earn more interest investing than you could ever earn in a bank. Keep a reasonable amount of money in your checkings and savings account, but invest the rest of your 10-20% monthly budget. How much money should you be keeping in your savings account? Lisa recommends having enough for at least 6 months of expenses. Having funds for 6 months of expenses will pad your bank account in case emergency situations like the loss of a job or a unforeseen medical expense arise.
3) Track Your Numbers | Cora Allen
Ultimately, you won’t know if you’re sticking to your plan, meeting your goals, and investing 10-20% of your income if none of your finances are being tracked. Cora Allen of Red Hen Business Services emphasis the importance of tracking your numbers, noting that putting in place a system to do so is, “absolutely invaluable while working to achieve financial freedom.”
While free tools like Google Sheets or Mint would suffice, Cora recommends St. Louis residents invest in QuickBooks Desktop. QuickBooks may be the most popular accounting software for businesses on the market, but that doesn’t mean you can’t use it for personal finance. The initial cost will appear steep in comparison to QuickBooks Online. However, you’ll be able to avoid paying a monthly fee, gain access to better data, and build better recording habits. In the long run, better data equates to better decision making and easier goal obtainment.
4) Cut Your Credit Card Spending | Katherine Smith
Once you’ve started tracking what you’re spending, you can then analyze areas where you could potentially tighten up your budget. When it comes to cutting spending, Katherine Smith of Best Choice Tax recommends starting with credit card spending.
Katherine herself has had an unpleasant history with credit card spending. When one of her early business ventures was beginning to collapse Katherine loaded up credit card after credit card to keep her dying business afloat. Katherine ultimately incurred close to $28,000 in credit card debt. In the end, she was able to pay it all off, but she remains extremely vigilant of her card spending, and urges others to do the same.
How much of your credit limit should you be utilizing? A good rule of thumb is to remain within 30% of your total credit limit each month if possible. Doing so will also help to increase your credit score.
5) Eliminate Paid Television/ Unnecessary Subscriptions | Shawn Williamson
You likely winced a little bit at the thought of no longer having ESPN or AMC at the tip of your fingers, but television subscriptions are not cheap. The average cable bill currently sits at approximately $103/month, which is a considerable chunk of change for the number of channels you probably use on a regular basis. Shawn Williamson of Fick, Eggemeyer, and Williamson, CPAs, suggest that those serious about earning their way to financial freedom eliminate paid television entirely. Cutting the cord on paid television could save you up to $3,000 a year. Your television savings could then be applied to paying off debts or increasing your investments/savings.
It’s worth noting that getting rid of paid television won’t leave you television-less. There are a number of free stations available for use. If the free stations don’t cut it, you could always invest in a streaming subscription like Netflix and still save a considerable amount of money.
Whether you signed up for a free trial and forgot to cancel, or you bought a subscription to a service you no longer really use, there are likely other monthly subscription you could cut out of your life. Trim is online free automated personal finance assistant you can use to monitor and cut out unwanted subscriptions. Trim may even be able to save you money on subscriptions you wish to keep.
6) Contemplate Your Legal Options | Michael Benson
Depending on your financial situation, it could be difficult or even near impossible to get ahead of debt without a little help from the American judicial system. Bankruptcy is a protection offered by the US government to assist individuals trying to recover from crippling debt. Michael Benson and A Bankruptcy Law Firm, LLC would highly encourage individuals struggling to make payments each month or even those who can make their payments, but realize it will take the next 5-15 years to pay them off to first consider filing for bankruptcy.
A Chapter 7 bankruptcy can eliminate most unsecured debt, including outstanding credit card debt, medical bills, judgments, payday loans, and car repo and home foreclosure deficiencies. Contrary to popular bankruptcy myth, yes, you can keep your car or home while filing for Chapter 7 bankruptcy relief unless you have significant equity in your home. On the other hand, a Chapter 13 bankruptcy can help filers create a manageable repayment plan that results in zero percent interest rates for unsecured debts, taxes and past due mortgage payments, and lower interest rates for vehicle loans. Oftentimes, individuals do not pay anything toward their unsecured creditors in a Chapter 13 bankruptcy, and only pay the debts they wish to keep (i.e. car or home) or debts that they are required to pay (i.e. taxes).
In a lot of ways, filing for bankruptcy is the fresh start many individuals need to get back on a track towards financial freedom. Benson agrees with all the tips stated above and urges his clients to follow the advice of Jeff, Lisa, Cora, Katherine and Shawn immediately after filing any bankruptcy. Bankruptcy is not the mark of a financial failure, rather, bankruptcy is a smart legal and financial tool to avoid it and can provide a shortcut to the “American Dream.”
Important Disclaimer: The information discussed above and throughout this website should not be relied upon to make any decisions without first speaking to a bankruptcy attorney. There are many intricate rules of law governing bankruptcy with many exceptions to the general rules that could change the advice given by an attorney based on the differing facts in each person’s special set of circumstances. THEREFORE, it is important to discuss any information contained in this website with one of our attorneys before taking any action or refraining from taking any action.