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Motivation and the three stages to financial wealth.

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Posted in General by admin
October 11, 2008

This is a personal finance blog with a twist of entrepreneurship. Most personal finance blogs focus on saving money and being financially responsible. While I’m all for financial responsibility, it’s boring.

Just like losing weight, there are two simple ways, either lower your caloric consumption or increase your caloric usage through exercise. Similarly in financial freedom, there are two methods:

  • Old school path to financial freedom: Get a steady job, save as much as possible, live well within your means, be financially responsible (diet)
  • New school path to financial freedom: Start your own business (even if it’s just on the side to start), spend a little on “toys” while still living within your means and being financially responsible (exercise)

Chances are your current goal to financial freedom is the old school path. I would like to shift your line of thinking a little with this blog towards the new school view.

The three stages to financial freedom and corresponding goals:

Stage 1 - Have credit card debt, have a job, spending more than earning

  • Main goal is to limit spending on all unnecessary items until income is at least equal to expenses (including credit card interest)
  • Pay off credit card expense ASAP
  • Recommended reading: The Millionaire Next Door

Stage 2 - No credit card debt, have a job, earning more than spending

  • Main goal is to increase income through side projects (more to come on this subject later) with the eventually goal in mind to leave your job and focus on your own business
  • Recommended reading: Who Moved My Cheese?, The 4-Hour Workweek

Stage 3 - Running your own business, earning enough to live comfortably

Those are the three stages to financial freedom via the new school path. Whatever stage you are in, you should focus on achieving the goals then moving towards the next stage. If you are in stage 3 already, then congratulations and I’m sure you’re already trying to increase your income each year.

I’m going to try as much as possible to interact with you, the reader. When I can, I will also try to help you on your path to financial freedom.

To start off, leave a comment and I’ll pick one person to get a free copy of any of the books mentioned above (please fill out the contact section). Some suggestions on comments:

  • The current stage you’re in and what you’re doing to move to the next one
  • Feedback on the blog and post
  • Any questions or topics you’d like to see in the future

(To comment, click on the blue box below the title)