5 Stages of Financial Freedom

https://www.youtube.com/watch?v=jr1v5WgC77o If your goal is to be financially free, where your investments are completely paying for your life and you have choices to do what you want with your time then these stages are great signposts on your way to that goal. Understanding what stage you're in can help you stay motivated and help you to know exactly what to do to get to the next stage. 0:00 - Introduction1:35 - Stage 1: Survival3:47 - Stage 2: Progress6:41 - Stage 3: Debt Free8:57 - Stage 4: Growth13:11 - Stage 5: Freedom Recommended: How I Got Myself Into Debt How I'm Paying Off Debt Transcription: hey you incredible people today i want to talk about the five stages towards financial freedom so if your goal is like me to be financially free where your investments are completely paying for your life and you have choices to do whatever you want whether that be go to the beach every day or pursue a job that you absolutely love then there's actually stages to get there we don't just get there overnight and these five stages five stages of progress towards financial freedom i find it just really good benchmarks really good goal posts so we can look at it and we can say okay where am i at right now in this journey and what do i need to do to move towards the next stage something really interesting in my life is that a couple years ago i was what i called sudo financially free started business an online business that was generating me enough income that i didn't need to work and so i had a couple of years where i basically didn't work because my business was paying for my life but what i didn't realize at the time was i was actually only in stage three of the journey towards financial freedom i hadn't even moved to stage four or gotten to stage five yet whereas if i knew this if i knew what the stages were i could have realized instantly you're only in stage three ryan you've got to keep working or you've got to be smarter with your money to move to stage four to ultimately get to that long-term financial freedom so that's the journey that i'm on now i'm excited to share these stages with you and i hope that you go through this and look at okay where am i at stay motivated what do i need to do to get to the next stage so starting with stage one this is the worst stage to be in and that's the survival stage this is the stage where you're just struggling to get by you've got a lot of bad debt consumer debt so that might be credit cards or car loans or personal loans or student loans you're kind of buried in debt you're buried in the expenses of life chances are in survival stage your income is actually less than your expenses so you're getting to the end of each and every pay cycle and you don't have enough money to keep living this means you either just go without you know fasting can be healthy so maybe you do that but more likely you've got a credit card and you're using that to get by at the end of each pay cycle so you're in this really bad situation where you're not getting ahead you're quite far behind already in terms of net worth you've got more debt than you have assets and so it's just it's just difficult and to be honest this is the stage that i've been in for the last year last two years maybe so i was in stage three with my business doing well and just kind of getting by and then my business went through a downturn i went through a separation ah a lot of stuff happened and i moved back to stage one so while we would like to be constantly moving up towards financial freedom stuff happens in life right life isn't a straight line it's not perfect things go wrong and that's definitely what happened to me i didn't prepare i didn't do well enough and so i ended up back in stage one which is survival now i'm still in this stage no i'm not i'm in stage two a year ago i was in this stage and it was horrible i couldn't really pay my bills i was living week to week paycheck to paycheck so to speak and i was getting to the end of each pay cycle not really having enough to get by and i was robbing from peter to give to paul i was just in this bad kind of debt cycle and bad situation and so that's stage one and when you're in stage one it's time for some drastic change you gotta make some changes in your life in order to move into stage two stage two is where things start to click the rubber starts to hit the road and you start to actually build the skills that you're going to need in order to get you towards financial freedom technically it's still the stage that i'm in it's the stage i've been in probably for the last year and this is where you're actually making progress so stage two is progress where you're increasing your income you're decreasing your expenses so you've got money left over at the end that you can go and put onto your debt so you can start to pay off debts so you're still in a negative net worth situation you're still not in a great situation you may be living below your means in a way that isn't long-term sustainable i've definitely been doing that for the last year where you know i just haven't been spending money and it's not long term a great way to live but for now i'm just not spending money so that i can pay off my debt as quickly as possible so stage two progress is all about paying off your debt it's learning how to budget it's learning how to pay yourself first so when you get paid each and every cycle a percentage of that money goes towards paying off your debt first and then you have to live off the rest or if you can't live off the rest no credit cards no getting into more debt you've got to work out how can i earn some extra money so i can get by but your debt repayment should be automatically happening ideally or if they can't automatically happen you're just living frugally so that you've got money left over to pay off your debt so this is a really exciting time because you've taken control you've taken responsibility as well to say that i got myself into this bad situation i'm not going to be a victim of this anymore yes life may be hard yes it may suck that i'm in this situation but i'm here and what am i going to do about it hey i can do this like i just remember a year ago being nearly bankrupt or a bit more than a year ago now and just being like i'm going to get myself out of this situation i'm going to build up my income i'm going to build up my business and then things would happen time and time again where i felt like the universe was just kicking me down i'll put a meme over this video that just shows um how i felt like i was drowning putting my hand out for help from the universe and the universe was just like giving me a high five and saying you can do it it wasn't giving me a hand out it wasn't helping me it was just kind of like kicking me while i was down but in this such situation i was like no i'm gonna do this i take responsibility that i got myself in this situation i'm taking responsibility that i'm going to get myself out of this situation start getting creative with it how can i just drastically reduce my expenses how can i grow my income and make more money so i can pay off my debt faster that's stage two which is the progress stage where you're making progress towards not being in a negative net worth situation and start moving towards actually acquiring assets and financial freedom stage three is the debt free stage so this is where your debts are completely paid off your bad debts i'm talking about so consumer debt car loans personal loans student loans etc things that aren't generating you income or aren't paying for assets so i wouldn't classify a home mortgage in this because ideally the value of the home would offset the value of the mortgage if you had to sell your home it would cancel itself out or maybe your home's worth more so i'm not kind of counting that i'm just looking at bad sort of debt in this situation so stage three is debt free where you're not necessarily making progress and acquiring a lot of assets but you're also not getting into more bad consumer debt so when i was pseudo financially free through my business so when i had those couple years where i wasn't working because my business was just paying for my life what i didn't realize was that i was actually stuck in stage three i was actually stuck in a situation where i was basically spending every dollar that i earned now towards the end of my pseudo-financial freedom i actually moved into stage four started saving money before business took a nosedive life took his twists and turns and i went back to stage one so i did actually get to stage four for a few months before i dropped back to stage one but yeah stage three is like okay i'm debt free i don't have these liabilities net worth is basically zero or maybe i've got some superannuation or something but i'm not actually moving forward i'm not actually getting any passive income from assets i'm totally reliant on the income that i can drive through my work or through my business so it's a good situation to be in in one state because you're probably living a pretty decent life you're not getting into bad debt but it's a bad situation in that you're not actually moving forward towards financial freedom you're just kind of staying flat any pay rise that you get you're spending that extra money to improve your life and to catch up to where you felt like you wanted to be and if you're not careful you can stay in stage three forever i had a financially free business and i was still in stage three and so stage three is debt-free it's like kind of a respite before okay let's tackle this again let's move to stage four let's move towards financial freedom so stage four is the growth phase this is i guess similar to the progress phase where we had extra money while paying off debt but now instead of that money paying off debt we're actually using that money to acquire assets that are going to grow in value...