Financial Freedom is Not Just About Being Debt Free

Financial freedom is a bit of a misnomer, in my opinion. Having financial freedom is defined as being in a place in your life where you no longer have to work to pay for your living expenses. To me, having financial freedom is more about time than money. What could be better than having the time to do what you want without having to work?

That said, many people seem to confuse being financially free with being debt free. Debt has very little to do with financial freedom. If your income is enough to cover the debt without you having to work, you are financially free. Even if you have $5,000 a month in credit card payments, if you have the money to pay them and you don't have to work for it, you have financial freedom.

Of course, being debt free can be an integral step in achieving financial freedom since the less debt you have, the less your living expenses are from month to month and the less you income you will to achieve financial freedom. It is definitely recommended that you attempt to pay off all your debts. But paying off debt is just one of the first steps in a journey towards financial freedom.

Saving money is also a big part of financial freedom. I recommend having a savings account that is for emergencies only and is easy accessible in case you need to withdraw money. Start with a small amount - maybe $500 or $1000 - just in case your car breaks down or, like me, your stove decides to catch fire and explode one day. Don't worry too much about the interest rate on this account since its purpose is not to make you money.

Next you should have a savings account that is hard to withdraw from, like an automatic deposit savings account that gets a predetermined amount from your paycheck every payday and is invested in a mutual fund or other low-risk investment. The annual gain can be pretty good with this type of investment and it is more difficult to withdraw money from them than your local bank savings account.

Once your savings accounts are set up, and you are focusing on paying as much debt off each month as possible, you need to begin thinking about increasing your income. This is the step that most people overlook in their quest for debt and financial freedom, but it is the most important.

In order to stop working and still earn enough money to pay your living expenses, you need to find a way to get income without working. The two main ways of doing this is through investments and through passive income. There's also inheritance and winning the lottery, but I wouldn't stake my financial future on either of those.

Investing is tricky when talking about getting enough of a return to live on. Real estate can be a good investment, especially with rental income, for producing cash flow but as with all forms of investments it is at the whim of the market. Plus, despite what all those 'no money down real estate deals' books tell you, you need good credit or a lot of money (or both) to seriously invest in real estate.

Creating a passive income is a more likely way to become financially free than investing, at least for the short term. Internet niche marketing is currently the easiest and most profitable way online to make a passive income without having to invest a whole lot of money. In fact, it is possible to make money through niche marketing without spending any money at all through sites like Squidoo and Hubpages but it is easier and more profitable to build individual niche sites with a targeted domain name.

Don't be fooled though, although it is easy enough to learn, Internet marketing takes hard work and a lot of time invested into it. Building a website that will bring in targeted readers who are willing to spend their money is quite a task and building trust takes time. You will not get rich overnight but, if you put in the time and effort, you will be able to achieve financial freedom from niche marketing in the future.