June Lantz Walbert is a USAA Certified Financial Planner and lieutenant colonel in the U.S. Army Reserve.
It's that time of year. Life suddenly brims with backyard barbecues, ice chests, and fireworks. As we celebrate our country's Independence Day, I can't help but reflect on what must have been simpler times back in 1776 ... at least financially. There weren't interest-only mortgages, car loans, title loans, credit cards, or payday lenders.
When making your declaration of independence this July 4th, consider making it your mission to let financial freedom ring for you. Remember, the Revolutionary War lasted eight years; winning financial liberty will not be done overnight either. To execute this operation you must be properly armed with knowledge, organization, discipline and patience.
Three goals to shoot for include living within your means, eliminating debt and paying off your mortgage.
Shoot for more money than month. This is another way of saying live within your means. Too many do just the opposite -- there's more month than money, That often equates to reaching for the credit cards or digging into savings. The cornerstone of financial liberty, living within your means, involves controlling impulses and putting off instant gratification. In other words, organize your spending around a budget where income exceeds expenses and savings! I fear that few take the time and effort to develop and execute this critical tactic. Once you've done it, you'll find that you have money in your bank account before making a purchase. Bottom line: Use credit cards for convenience, not to finance your lifestyle. If you live within your means, your debt may actually start to disappear.
Attack high interest rate debt. The British tried to blockade us into submission during the revolution, and debt can certainly be a "blockade" that keeps you from reaching your financial goals. I consistently campaign against carrying high interest credit card debt because it's a waste of money and it makes good financial sense to be debt free. This point is worth stressing considering the national average credit-card interest rate is 14.75%. Rather than spending chunks of your pay on past expenditures, imagine the financial freedom of having that money in your monthly budget instead. There are no quick fixes, so develop a plan to eliminate your debt and execute it with military precision and a hefty dose of patience.
Burn your mortgage. "Should I pay off my mortgage?" I get this question often. From a financial independence standpoint, the answer is clear -- yes, it makes sense to pay off your mortgage and burn the note! "But I need the tax deduction" folks object. Listen up. The tax deduction simply lowers the cost of the mortgage, it doesn't eliminate it. A tax break is hardly comparable to knowing the roof over your head is yours. The lower your monthly expenses, the more financial freedom and flexibility you'll enjoy, especially in retirement.
Independence as a country didn't come overnight, and yours won't either, but it's a fight worth fighting. Mission complete.
June Lantz Walbert is a CERTIFIED FINANCIAL PLANNER practitioner with USAA Financial Planning Services. She is also a lieutenant colonel in the U.S. Army Reserve with 20 years of service. Walbert's basic branch is Air Defense Artillery. She writes a weekly advice column, "Ask June" on military.com. Follow June @AskJune_usaa.
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