Can Everyone Achieve Financial Freedom?

Financial freedom is an aspect of the American Dream, but are we living above our means?

With the current levels of government subsidization, it can be difficult to assess exactly what type of life is possible under our own steam. None of us wants to go back to having to work at WalMart when we are seventy, so how can we ensure (or insure) our financial freedom for when we need it? The answer is to have a long term focus. If you decide and plan to have a goal to be able to live however you want after you "retire," then you must plan for this scenario. What kind of vehicle will you want to drive? Where will you want to live? What will you want to do? All of these questions have answers, but to achieve the amount of capital necessary to find them, you must change your focus.

We see short term foci all around us. Every advertisement on television is hawking the fruits of capitalism: the cars, motor homes, expensive electronics, and other high-dollar items. How much of this do we really need? When I was in high school, my parents had the consideration to buy me a 2001 Ford Explorer XLT for about $6,000. But, did I really need that? The truth was, I wasn't ready for the gas-hungry and insurance-rich (when they say insurance premiums, they mean it!) SUV. Recognizing that I was sporting a luxury that didn't fit my financial situation (college student), I made the conversion to a 1991 Honda Accord in my final year of school. That decision has saved me more money than any other I could have made right now, because until I have a house payment, my transportation money is the largest expense in my budget.

No one wants to get stuck at WalMart in the end, but let us say you are now. Can you start saving toward your own financial freedom, even on limited wages of between $17,000 and $20,000 a year full time? Yes! There are a number of items eating away at your hard-earned dollars that you can remove, alter, or replace with more efficient methods of life.

I already mentioned transportation, but it bears repeating. Americans waste more money on cars than any other single item except perhaps food. Instead of educating ourselves on the proper maintenance methods and when to replace oil, we don't worry about it and then fret when the engine falls apart after 15,000-20,000 miles between oil changes. Learning how to take care of your car is not a question of aptitude or even gender; it's a question of effort. We often say that time is money, but the hours you spend maintaining your automobile mean less hours paying someone (at a high rate) to fix the car. Owner's manuals cost around twenty dollars and are written at approximately the 7th grade reading level. Oil changes cost $30-40 if you use good oil, plus the 10 cents it takes for a shower to clean the grease off of you.

Thus, if you can keep even 20 percent of your wages as a WalMart employee back each year, you will net $3,400 a year in savings. Invest this amount in an IRA, and after five years you will have $17,000 in contributions plus between $500-1000 in earnings. Even if you had to work this job for until age 80 without a single raise, you could still net $204,000 in contributions and between $100,000 to $200,000 in earnings! Thus, no matter how bad your job is, your life, both now and later, is in your hands. If you choose to live slim now, you may not have to later.

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David Guion
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Posted on Aug 12, 2010