We celebrate the 4th of July each year to remember our country’s declaration of Independence from Great Britain. As I was sitting at an Independence Day parade, I thought about how we all need to declare our own Independence Day. There are a lot of things that we can declare independence from, but the recent financial crisis has reminded all of us how fragile our financial well being is.
So, how do we prepare for the next financial crisis? Take a close look at how you make and spend money and then build a plan that will allow you to maintain "Personal Independence" from debt and unwarranted spending. Debt, when used appropriately (meaning you have a full understanding of its true cost and you are confident it is helping you achieve your personal financial goals) is a good thing. However, debt to “keep up with the Joneses” or for impulse purchases is usually not a good thing. There are a variety of resources out there that discuss the effective use of debt and I would encourage you to do some research. In the meantime, here is a simple idea to help you move along the path towards financial independence.