Posts tagged as:

financial independence

Why Should You Be Financially Independent?

by Vinaya HS on June 12, 2008

in Finance

Continuing yesterday’s thoughts on financial independence, I made a list of the whys – why should you be financially independent? What does being financially independent really translate to in your daily life?

Here’s what financial independence translates to me:

  1. Having no loans or debts means I don’t have to worry every second of the day about late fees and astronomical interest charges, repossession, foreclosure, mean letters and calls from lenders, debt recovery agents at my doorstep, et al.
  2. Having a sufficient emergency fund in place means I don’t have to come into work each day worrying about whether I will also come into work the next day. It lets me do my best on the job today. Our Information Technology (IT) jobs were pretty safe up to now; now, there’s no guarantee. Really.
  3. Having independent health and life insurance means I don’t have to worry in case something were to go wrong with me or with my dependents.

If you noticed, the recurring theme in all these statements is “I don’t have to worry” i.e. “freedom from worry.” That’s what I’d like to achieve through financial independence.

What do you think? Why do you want to be financially independent?

{ 5 comments }

What’s Your Definition of Financial Independence?

by Vinaya HS on June 11, 2008

in Finance

Of late, I’ve been thinking a fair bit about financial independence. The Simple Dollar summarizes it best in defining financial independence to include:

  • Freedom from financial reliance on loved ones
  • Freedom from financial reliance on creditors
  • Freedom from financial reliance on employment

That set me into preparing the checklist below which constitutes what I define to be financial independence, given my current situation.

My financial independence checklist:

  1. I do not have any credit card debt
  2. I do not have any vehicle loans to be paid
  3. I do not have any education loans to be paid
  4. I do not have any personal loans to be paid
  5. I do not have any home loans to be paid
  6. I do not owe money to any person
  7. I have a sufficient emergency fund in place
  8. I have independent health insurance for myself
  9. I have independent health insurance for my dependents
  10. I have independent life insurance to take care of my dependents
  11. I have established a plan to achieve my goals (financially)

There’s a lot to be done before I can declare financial independence. But having such a checklist is a start and keeps you focused. Further, having such a list does not imply that one has to be stingy; you just have to be financially responsible.

So, what’s your definition? How do you plan to get there?

{ 6 comments }