The six rungs to financial freedom

There are six rungs on the ladder to financial freedom. Be honest with me here, which of the following categories do you fall into? Where are you on the ‘financial ladder of life'?

Rung One
- Got loans, got credit cards.
- Live month to month.
- Credit card and loan debt increases year on year.

Rung Two
- Got loans, got credit cards.
- Live month to month.
- Credit card and loan debt reducing year on year.

Rung Three
- No debt.
- Live month to month.

Rung Four
- No debt.
- If you don't get paid this month it wouldn't be a major problem.

Rung Five
- No debt.
- You have the equivalent of six months salary on deposit or available within 14 days.

Rung Six
- No debt.
- You can write a cheque out for £50,000 without asking anyone's permission.

So how do you get from one rung up to the next?

Easy.

Stop spending money on things you don't need. Accept the fact that you can't afford them and start saving. If the only way you can ‘afford' to buy something is on a credit card then you can't afford to buy it.

It will take, on average, between one and two years to move up each rung of the ladder unless there is a major change for the better in your income streams.

For most people this happens rarely or never at all.

One last thing – being on the bottom of the ladder is bloody hard. As you move up the ladder, life becomes far less hassle and far less worry. You can start to enjoy life again.

Was it Chris Rock who said – “I've been rich and unhappy and poor and unhappy – believe me, rich is better.”