At Super-Advice we are about all things financial, but more importantly, helping people understand so they can get ahead financially.
In today’s blog post we share with you our Seven Super Steps to Financial Freedom.
1 Use your Budgeting Skills
We want you to use your budgeting skills. Remember you itemise your income, you itemise, your expenses, and you have a surplus and you have a surplus the following payday and the following payday, and you begin to accumulate money.
We want you to stay safe, so for step one, we want you to save $1,000, which we call the starter emergency fund. We have this so that as we’re moving through the steps if something happens like a car breaks down or an emergency, you’ve got some money and you don’t have to go back into debt.
So we need to have that starter emergency fund.
2 Retire Personal Debt
We want to retire all of our personal debt except the mortgage if you’ve got one.
Any credit cards, after pays, any debts at all, we want them gone, and we use the debt snowball technique.
How we do that as we line up all of our debts from smallest to largest, we take all of our spare money and dump it onto the smallest debt, regardless of interest.
Then we pay the minimum on the rest. Once we’ve paid off the smallest, we take the smallest debt repayment amount and anything we can spend and we power it into the second biggest debt while paying the minimum, and then so forth and so forth and so forth.
You can see now that you’re pouring more and more and more available cash onto those debts, they should be gone a lot quicker.
3 Fully Funded Emergency Fund
We want to now set up your fully-funded emergency fund. Now you’ve learned how to budget because you did it to get that thousand bucks.
You’ve got all the spare money that you’re no longer paying to your debts, to your after pays, to your credit cards because you’ve paid it all off.
We want you to funnel as much as you can of that to build at least three months of your ongoing expenses. If you can do six, that’s fantastic.
This acts a bit like an insurance policy. It means if anything big happens, you stay on your financial path because you’ve put the money aside for the emergency.
4 Save more for Retirement
We’re going to save for retirement more than KiwiSaver. Most people are in KiwiSaver and most people contribute 3%.
We want you to contribute 15%. So you can either up your contributions into KiwiSaver, the maximum you can pay into KiwiSaver is 10% so we recommend opening another investing account.
Saving 15% of your gross income up until retirement will make sure that you have an enjoyable retirement
5 Saving for your kid’s university
Now this is not going to be the right fit for everybody depending on age, or how you want your kids to be educated or how they want to be educated.
But if you can remember, you’ve paid off all your debts, and you’ve got fully-funded emergency funds. So the income coming in is available for redistribution.
So a good idea is to look at the cost of the education and put half away maybe, and the kids can take care of the rest.
6 Smash the Mortgage
This is the big boy. If you’ve got a mortgage, smash it.
You’ve saved everything. You’re a good budgeter. You’ve got free income again.
The more you can pay off your mortgage, the better, it may feel like you’re not seeing the results of it right away….
When you do see the results of it, you’ll be so very happy and you’ll be completely, completely debt-free.
7 Build Wealth and Give
Do you know what people with no debt can do?
Whatever they want!
And that is now you as you have reached step seven.
You’re mortgage-free, and your retirement fund is growing. That feeling of being able to walk around with absolutely no debt, a big stack of cash, and investing for your retirement.
The reason people do that is just for that wonderful feeling of security and happiness.
That’s a wrap
Those seven steps absolutely work. And if you’d like to know more about them, or you’d like a copy of them, please just message us, call us, email us, and we’ll share it with you.
If you need any financial help or advice please get in touch with us at Super-Advice.