What Is Meant by Financial Freedom?
Financial freedom has no set definition. However, it typically means that you are living comfortably and saving for retirement and in general. It can also mean that you have an emergency reserve set up. In general, financial freedom can mean whatever you want it to mean for you. For example, a prior college student may not think that financial freedom includes paying off all their student loans. This is because, at least currently, a college student who needs to pay their own way realizes they will always be paying off their student loans. However, they might feel that student loans are the only debt they should have. Therefore, being able to pay off credit cards or medical bills leads them to financial freedom.
Some people might feel that financial freedom indicates they have absolutely no debt or loans. This includes them having paid off their mortgage and any car loans. They might also feel that to reach financial freedom, they need to be investing in a CD, bond, or even in the stock market.
Other people may feel that financial freedom means they are no longer tied down to a job. They can live off their savings or a passive income, and they can retire and enjoy life through traveling.
Credit Card and Financial Freedom – Is It Safe?
One of the biggest questions people have when it comes to financial freedom is if they can have any credit card accounts in their name. While you may not owe anything on your credit cards (in fact, you might only owe one which you pay off in full every month), is this still financial freedom? In general, this is completely determined by your definition of financial freedom. However, if you ever find yourself not being able to pay off your credit card every month, this is not financial freedom. In most cases, financial freedom does mean you no longer have any debt, or at least that you are free from unnecessary debt, such as credit cards.
Most people are quick to state that financial freedom and credit cards do not gotogether simply because they are not safe with each other. This is because it is often easy to fall back into thinking you can pay off the complete amount each month and then you become unable to do so. In general, people who reach financial freedom feel that credit cards allow for more of a trap and keep them from ever reaching financial freedom.
However, other people who feel they have reached financial freedom state that as long as you can manage your credit cards wisely, they can be included with your freedom. Some of them also advise that you set up a financial freedom plan. Within this plan, you will state your conditions for using a credit card. Of
course, you need to be self-disciplined enough to follow your condition.