10 Levels of Financial Independence breaks down the huge goal of Financial Independence into 10 distinct levels. Seeing which level you are at and what you must do to get to the next level makes the overall goal more obtainable. It’s a lot of distinct steps you take so breaking it down into individual levels makes it clear where you stand. .
How’s it going everybody this is beat the bush today i like to talk about ten levels of financial independence a lot of times people think that you just get a lot of money somehow and then you become financially independent in just one single step really it’s not like that it’s many multiple mini steps and i’ve broken it down into ten steps so that you can kind
Of see that it’s much more manageable and it’s actually realistic to obtain from going from one level to another so here it is all ten levels most people start with level two where you’re dependent you have parents and then you depend on them for your livelihood you don’t make any money but you’re actually spending their money all the time so that’s why you’re
Dependent so you’re actually have a lot more expenditure than what you make you don’t make very much money at some point you get a job maybe you move out and stuff and then you your job pays you enough to pay for rent pay for your living expenses your food and stuff then you become break-even it turns out a lot of people can just stay at level 3 all their lives
Because you can just keep on getting a higher and higher paying job but then you keep on increasing your standard of living you buy a fancy car you get a fancy house or something but all the bills that are come in mortgage car payments and stuff your salary just barely covers all of that so it just means your solvent all the money you bring in every month you’re
Actually spending at all in order to pay for bills and stuff you’re paying on interest rate on credit cards paying interest rates or or your monthly payment on your car your mortgage etc but then you’re not saving very much so you are break-even right here but sometimes maybe people slip up they lose their job or somehow maybe they get a big bill somehow and then
They got to go into bankruptcy it’s actually worse than being a dependent because you owe people money if you like most people people start saving a little bit people start covering all their credit card debt then you become in level 4 where you don’t have any credit card debt which is really good 90% of the population do you have credit card debt so if you are
In level 4 you’re already 90 percent better than all of america the rest of the population 90 of the population or somewhere over here they just kind of go up in and out of bankruptcy or break even and they’re just going from paycheck to paycheck which is what most people do in level four you paid off all your credit card debt your personal loans if you have any
For me i never got any personal loans ever and you probably have paid off all your car loans and for me i actually never had a car loan because i saved up enough to buy the car in full if you happen to have student loans it usually ranges in 10,000 up to a hundred thousand two hundred thousand if you’re a doctor or lawyer then you come to level five if you had
Rich parents then maybe you don’t have student loans because they paint it for you if you paid it all off somehow with rich parents or maybe on your own then you are here at level five now what takes a little bit more effort is paying down your mortgage so that you have no mortgage can you imagine how much money would come in if you have no mortgage and nowhere
In because every single month that you work all that mortgage money all that rent money actually goes into your bank account and you can imagine how big and how fast your savings can become if you have no mortgage so in level six you have no mortgage it’s important to note that if you have enough assets and cash to pay off your mortgage immediately today it also
Means you have no mortgage because you already have the capital to do that it’s just sometimes not necessary to pay off your mortgage because it’s better to hold on to that money because of opportunity cost sometimes holding on to the money is good sometimes because you might want to buy another house maybe something happens it’s good to hold on to some cash and
Not have it locked up in a property so when you have no mortgage you’re at level seven here and if you’re still working then you’re building wealth you are increasing your wealth at an alarming rate because all that rent mortgage are going into your savings and you are at seven here you’re not actually financially independent yet because you still have to build a
Lot of money and that money needs to pay a dividend or interest or whatnot you need make a gain on it and every single month it increases in size the money sitting there if you have it invested properly it’s growing on its own now if you have enough money to get by to pay for all your bare essentials food insurance clothing if you have a car that you need to use
Then you’re at level 8 which is bare-bones you can’t have much extra to pay for like vacations and stuff fancy cars and things like that so you’re just bare-bones on level 8 you can imagine that if you have no mortgage already this bare-bones level is a lot easier to achieve so it comes it goes in a gradient like this if you step once one step further now and then
You become more and more financially independent and then when you have amassed enough capital more and more so that would generate extra cash for you just sitting there then you can go to level 9 where you have a current standard of living which means that whatever you’re doing right now you don’t have to pare it down to get to level 8 because if you pare it
Down to its bare bones then you get to the level 8 but if you’re like kind of living a comfortable life you can go you know whatever that you like maybe you really enjoy going to fancy restaurants once in a while a fancy car or whatever you have enough assets that appreciates so you can just skim off a little bit off the top every single year and it won’t go down
In principle then you’re at level 9 you that amount that you take off can pay for everything that you need to use every single year so you’re then financially independent for your current standard of living which is level 9 which is probably a level that everybody really wants to be in but it’s very rare that people are in so when you reach level 10 you have so
Much money that it fits your current standard of living you’re living very comfortably you have extra cash you can actually choose to do whatever you want with it you can start a business you can donate it if you want you can just blow it off all on something but most people that can reach at this level or a frugal enough that they probably won’t blow it off on
Something maybe they would just keep on investing and just make their wealth bigger and bigger so i really hope describing the multiple levels of financial independence kind of get your gears working and make you think oh yeah you know if i go from one step to another you can get a little bit closer to financial independence so that’s all i have for you for today
I hope this video helps you advance your own financial independence don’t forget to give me a like over here comment down below let me know which level that you are at right now and don’t forget to subscribe over here thanks for watching
Transcribed from video
10 Levels of Financial Independence | BeatTheBush By BeatTheBush
