Many of the sites on the first several pages were of course those looking to make money, but I was pleased to see Dave Ramsey's site & a quick description of his Financial Peace University curriculum in the first handful of sites listed. And, as you'd expect, many of the sites had to do with reverse mortgages. Which, I've heard a little about them & the little I've heard scares me. Though I'm sure they can be fine in the right situation. I put them in the same category as debt consolidation. Any tool can be a good thing if used wisely.
My interest in a definition of financial freedom was piqued a week or so ago as the question came up on LinkedIn, a professional network that I'm a part of (I'd encourage you to check it out if you haven't). The question was posted, "Show me the money? How do you define 'financially free'?" Here's an excerpt of the some of the answers:
- To me, "financially free" or "financial freedom" or "financial independence" all refers to the state where you no longer need to "work to live" but rather you "live to work". i.e. You have a net worth that is enough to sustain your desired lifestyle from now till the very day you leave this world.
- Most people in employment couldn't survive for more than a couple of months, or a year at the most. You need to push that boundary out to several decades if you want to retire early.
- Financial freedom is reached when you no longer think about the cost of things you need or want. Example: Mr. Financially Free: "I want to fly from New York to London at noon tomorrow." Mr. Not So Much: "You can save $1,500 if you leave at 3pm." Mr. Financially Free: "Who cares? Noon works better for me."
- One would be Financially Free if you have all the money -- or means to access all the money -- you "want", when and where you want it.
- About $2 million.
- There is no absolute answer to this question since to each person, the amount is different. However, the subjective guage of this is to have enough money (properly invested) that you can live the way that you wish off of the earned income, and not have to worry about having enough income to pay your bills. BTW, $2 million is far from enough to consider yourself financially free.
- When I can walk into my local BMW dealership, and order a 7 Series with full options, and pay full MSRP (without even bothering to ask what it is) to get bumped to the front of the line, I would consider myself to be financially free.
And finally, here's part of my answer (you wouldn't expect me to pass that one up, would you?)
- Great question, but as I read the answers they're (mostly) all from a worldview, practical perspective. There's probably no right or wrong answer, but from my perspective, it means you have no consumer debt; have no student loans; have at least three months of living expenses saved up; have a good start on your retirement savings (depending on your age); have your car(s) paid off; give at least 10%; save at least 10%; have more money left at the end of the month; and perhaps even have your home paid for as well. We're all rich in the US. So...our biggest problem is that we have a serious problem confusing our needs with our wants. We profess to be a generous country but that would be a stretch as we give only about 3% of our incomes away for worthy causes.
Good question, how would you define it?