Amongst all the posts I read about investing and finances, what stood out was setting defined clear goals. Like in any project, having a clear objective is an essential task. Since this blog is about achieving financial freedom, I'm listing my top goals or objectives.
- Getting out of debt and staying that way.
- Paying off student loans and car loans.
- Creating an emergency fund (most important given the current economic scenario).
- Buying a house.
- Starting a retirement fund.
- Create an investment portfolio that will maximize my savings and returns.
Next is devising specific strategies to achieve all these goals. For credit cards, it is paying off the cards with higher interest and/or paying off the ones with the least debt.
Student loan interests can be deferred which seems like a good idea, but unfortunately it piles up the amount you eventually need to pay back. Making regular interest payments is a better choice.
Explore options for refinancing car loans. Leasing a car is not a good solution, and I had to learn it the hard way.
Find out the bare minimum household expense and then plan a strategy to save at least six months of safety savings. A great idea that I came across is to invest this safety amount in fixed term deposits. For e.g investing Rs 10,000 for a 1 month short term deposit, another Rs 10,000 for a 2 month deposit. This ensures a steady flow of Rs.10,000 (projected minimum household expense) at the end of each month. Great strategy!
Owning a house is a huge asset in your personal portfolio and a major lifetime undertaking. Careful scrutiny of the real estate market, housing loan options available, "rent-to-buy" schemes can be very useful before taking the plunge.
Starting a retirement fund as early as possible ensure you have money tucked away in your old age and also that you can retire earlier than you expected.
The last and the most important is creating a well balanced investment portfolio to make your money grow. Exploring different bank interest options, investing in mutual funds and stocks, investing in gold and cash; all need to be done on a consistent monthly basis.
Do all this and you just might be on your way to be a millionaire! :)
Priyanka S Vaidya
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