While most people aspire to become financially independent, many don’t take any steps to get there when they’re struggling to pay down debt. However, you can reach financial independence even if you’re currently in debt. Consider the following actions to increase your chances of becoming financially sound.
Keep Your Career Moving Forward
Image via Flickr by 401(K) 2013
While financial independence doesn’t mean you have to quit working a job you love, it’s important that you have a steady income so you can pay down debts and build your savings. One important way to do this is to steadily increase your income while keeping your spending low. This means honing your skills at work, applying for promotions, and always looking for better opportunities. If necessary, you can also keep an eye out for part-time work on the side to bring in a little extra money.
Always Save Something
You’ll never gain financial independence if you don’t start saving as soon as possible. Even if you’re in debt, it’s important to begin saving something right away. This might mean increasing your income with side work or cutting your expenses. Most experts recommend saving between 10 and 15 percent of your gross income. If you have a hard time saving, consider starting out slowly and building up over time. You can begin by saving $10 a week. When that feels comfortable, bump it up to $20 a week, and so on.
Diversify Your Income
Just like you should diversify your investments, you should also consider diversifying your income. The job market isn’t as stable as it once was, and you never know when you might unexpectedly get laid off. If you have a full-time job, start working on a side business. Not only can it provide a little extra income, it could also replace your job if you ever lose it.
Consolidate or Refinance Student Loans
If you’ve been diligently paying down your student loans since you graduated, you might be able to look into student loan consolidation or refinancing for a better interest rate. You can then take the money you save from refinancing and increase the amount you’re saving. Even better, consider refinancing your student loans and using your savings to pay down your loans even faster. With your student loan debt out of your way, you can then focus on better ways to invest and save that money.
Always Revisit Your Plan
You can’t create a plan for achieving financial independence and then assume you’re set for life as long as you follow that plan. Situations in your life are always changing, so it’s important to revisit your plan and your goals to make sure they line up with your current circumstances. Make it a habit to review your plan at least once a year. However, since life can change quickly in today’s world, you might want to consider reviewing your plan every few months instead.
Even if you’re currently in debt, you can start down the path to financial independence today by following these five tips.