Financial freedom or financial independence seems like next to impossible in today’s world.
We live in a world of debt, buy today pay tomorrow is the rule of the modern world.
Now, imagine a life with no monthly payments and you can get to keep all your paycheck! Enjoy life as you please.
Sounds amazing, right?
It has been a few years now since I embarked to pursue a minimalist life. Slowly, I let go of a lot of stuff that doesn’t serve any purpose in my life. I also let go of the toxic relationships I had in the past.
Yes, that too is part of my plan to live a meaningful life. Now, the time has come to start removing further anchors that hold me back from doing what I love to do and what I can do.
I felt my life was overwhelmed with so many material things that I have accumulated over the years.
Coming from a poor family in the Philippines, it was such a liberation to finally get what I want, when I want it now that I’m working and living here in the UK.
Financial literacy on personal finance is a topic that I am naïve on. It is more than just the standard addition, subtraction, division and multiplication of your money. It’s more about that person in front of your mirror!
I have made a lot of stupid mistakes that I have just realised. Being blinded by the societal norms and crooked financial beliefs that everything I did was ok! Almost everyone is doing it, so it must be OK! It’s accepted by the society!
I made a lot of excuses! Both mental and emotional excuses to let myself off the hook. Trying to feel that I’m still in control of my life, but in reality, I wasn’t! Far from it. Sometimes the things you own end up owning you.
Our Financial Freedom Journey: Dave Ramsey’s Total Money Makeover (UK) Contents
- What is Financial Freedom?
- What does financial freedom mean to you?
- Who is Dave Ramsey?
- What is the Total Money Makeover plan?
- The Beauty of Sinking funds
- The value of Life Insurance
- What are the Total Money Makeover Baby Steps?
- Step 0: Make a Budget Plan
- Step 0.5: Get current on your monthly payments
- Step 1: £1,000 Starter Emergency Funds
- Step 2: Pay ALL THE DEBTS using the Debt Snowball method
- Step 3: Save 3 to 6 Months of expenses for TRUE EMERGENCIES
- Step 3b: Save for the House deposit
- Step 4: Invest 15% of your household income
- Step 5: Save for the children’s educational fund
- Step 6: Pay off the mortgage early
- Step 7: Build wealth and give outrageously
I have tried so many times over the past 10 years to sort out our financial life. Every time we try and see some good progress, life will always find a way to slap us back down.
Until the day that I found this book that persuaded me to aim again to live a meaningful life with options and contentment.
I finally had a clear picture and well-guided map of the financial freedom my husband and I are hoping for.
What is Financial Freedom?
Financial freedom can come in many forms. For us, this would mean the world to us. A life well-lived without living from paycheck to paycheck.
That moment that we can give enough, spend enough, travel enough and save enough not just for us but for our legacy. For our future kids and grandkids so that life will be different from how we’ve known it. A much better one!
The road to financial freedom will be uncomfortable, but we have decided to do it anyway. Just keep our eyes focused on goals.
What does financial freedom mean to you?
We are all in different stages in our lives. My financial freedom goals might not resonate with you, as you have your eyes on something different. Something meaningful in your own world.
Whatever your financial freedom goals might be, you always have to remember to remind yourself on why you want financial freedom.
Visualize your life on how it will be to live with financial independence.
Who is Dave Ramsey?
Dave Ramsey is an American Financial Guru for over 25 years. He’s been teaching amazing financial wisdom from his personal experience’s.
He is also a best-selling New York Times author, financial coach and speaker, radio and tv personality, and great uncle that you never had!
He started a program called Financial Peace University in the US, however, they don’t have it here in the UK yet.
However, other Dave Ramsey’s UK listeners enjoy his radio show thru his mobile app or Youtube Channel.
When I found out about Dave Ramsey and his amazing mission, I was totally hooked! I managed to listen to his two audiobooks (The Total Money Makeover and the Financial Peace Revisited) in less than a week!
I also watch his program daily. I have almost 25 years’ worth of financial wisdom to catch up on! I personally love the segment in their show called the Debt Free Screams, Turning Point and the Everyday Millionaires.
You should also watch them, they are so inspirational! The videos will surely get you pumped up to tackle your personal finance once and for all.
What is the Total Money Makeover plan?
The Total Money Makeover is a simple and effective financial concept that has been taught by Dave Ramsey for more than 25 years.
The Total Money Makeover book has been one of the New York Times Bestseller.
It has made a phenomenal impacts to millions of lives in America to control their finance’s again.
Part of the Total Money Makeover lessons on financial learning is to implement a ZERO BASED HOUSEHOLD WRITTEN BUDGET before the start of each month or before your payday.
ZERO BASED HOUSEHOLD BUDGET =
Income (minus) Savings (minus) All the expenses.
This strategy will ensure that every penny has a name and will serve its purpose.
The Zero-based written budget will also track every single transaction in each category so you won’t wonder where did your money go in each month.
There are three main things that you can do with your money: Spend, Give and Save.
Winning with money is 80% behaviour and 20% head knowledge.
These are the themes to base your budget on. Spend it for recreational and for your necessities. Give to Charity and Save to build wealth for your future legacy.
When Debt comes into the picture, (as the majority of us has debt) this will become the main priority of your budget after you have covered the main necessities like shelter, food, utilities, clothing and transport.
To take action and implement the teaching of the Total Money Makeover plan, we have implemented our zero-based written budget in our household and also using the money envelope system.
The Money Envelope system is a way of segregating your money to make sure you are not overspending in each category. Because of this, we also use cash majorly for our daily or monthly spending other than the typical direct debits.
Here is the sample of our money envelope system in our household.
Here is the back of our money envelopes.
If you are single, this is pretty easy because you will only have to control the person in the mirror to make this happen.
If you are married, this will be a bit tricky as it is absolutely necessary that both parties is on the same page for both of you to succeed in this.
The Beauty of Sinking funds
Sinking funds are simply a savings fund within your budget. This will give you the purchasing power to buy an expensive item or fund an expensive holiday and pay for it in cash!