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emergency fund
Small emergency fund

Step 1: Small
emergency fund

First, you must be prepared for the worst. If you pay off debt or invest, you still need to establish a smaller emergency fund as anything can happen at any time.

It is too uncertain and unsafe to live on the edge.

To begin with I will suggest that you save 1000 EUR.

This shouldn’t take more than 1-2 months to save.

Your financial freedom journey starts now!

My main goals in this step

1000 EUR emergency fund​
100%
Save +40% of my income on average
100%
I completed this goal in January 2018. It took just 1 month.


Great blog posts at this step:

 ★ I want to change my life

 ★ 7 essential mindset changes

Pay loans
Pay off high interest loans

Step 2: Pay off
high-interest loans

It’s time to remove dirt in your life 😛

Most people agree that expensive consumer loans are a bad thing to have and must be paid off as quickly as possible.

Loans with a high-interest rate take money away from you and make it even harder for you to become financially independent.

If you have any credit card debt or consumer loans they usually have a high-interest rate.

I think everything above 7.5% is too high interest and need to be paid off immediately.

It’s not easy to get a much higher return in the long term. So better be safe than sorry.

You can try out negotiating your interest rate if you have a lot of debt and save some money. Simply just ask them.

My main goals in this step

Pay off a high interest loans
(I had none)
100%
Save +40% of my income
100%
I never had any high-interest loans so this step was quick and easy for me.
emergency fund
emergency fund
Strong emergency fund

Step 3: Strong emergency fund

While investing

This emergency fund will for sure make you sleep well at night 🙂

I have chosen to save money that potentially can cover 6 months of expenses.

This money is not considered as an investment but should be used in emergency cases and is available immediately.


I’m actually lucky because I have a good agreement with my bank and my emergency fund has an interest rate of 5%. In most cases, you will not get any interest but maybe you can figure out something.

Start investing

I think it’s also important to get started and invest. It will give you motivation, valuable experience, and a potentially great return in the long term.

My first investment was in some stocks and I knew very little at the time. I just wanted to get started and learn.

Here are some suggestions
you can look into:

Index funds

P2P lending

Real estate crowdfunding


Out of your monthly savings rate, approximately 60% should go to your emergency fund and 40% should be invested in my opinion. 

In this way, you will have a little more focus on minimizing risk and create a better financial foundation. It will help you reach financial freedom.

My main financial freedom goals in this step

6 months emergency fund​
100%

2018:

  • January: Started the goal
  • February:  4,54% (+4,54%
  • March: 9,09% (+4,55%
  • April: 14,77% (+5,68%) 
  • May: 11,36% (3,41%
  • June: 18,18% (+6,82%) 
  • July: 27,27% (+9,09%
  • August: 29,54% (+2,27%
  • September: 32,38% (+2,84%) 
  • October: 48,29% (+15,91%)
  • November: 57,38% (+9,09%
  • December: 64,28% (+6,90%)

2019:

  • January: 76,70% (+12,42%
  • February: 100% (+23,30%)
Save +50% of my income on average
84.86%
I didn’t achieve the 50% savings rate, but it’s also in focus in the next step. It was more likely at 42%.
I was in step 3 for 1 year and 2 months.
Loans
Pay off any other loans
This is my current step 😎

Step 4 - Pay off any other loans

While investing

It is time for you to only have your mortgage or rent 😀

In this step, you continue to pay off all the loans while investing.

 

I have no consumer loans but I do have a student loan and a leveraged loan. They will be paid off in the step.

Out of your monthly savings rate, approximately 60% should go to your loans and 40% should be invested in my opinion.

In this way, you will have a little more focus on minimizing risk.

My main goals in this step

Pay off my student loan
100%

It’s paid off !!

My goal was to pay off this loan 3,5 years earlier. Before summer 2019. The annual interest rate is great but I feel that the loan has been in my life for too long.

  • 8 years loan agreement (2022)
  • 1% (APR) annual fixed interest rate


Monthly payment of income in % / Remaning payment in %

2018:

  • January: 4,53% / 82,81%
  • February:  0,00% / 82,81%
  • March: 4,40% / 79,87%
  • April: 0,00% / 79,87%
  • May: 3,99% / 76,92%
  • June: 0,00% / 76,92%
  • July: 4,54% / 73,99%
  • August: 0,00% / 73,99%
  • September: 5,13% / 71,06%
  • October: 0,00% / 71,06%
  • November: 3,91% / 68,13%
  • December: 0,00% / 68,13%

2019:

  • January: 4,24% / 65,20%
  • February: 1,96% / 62,72%
  • March: 4,37% / 59,79%
  • April: 14,88% / 44,88%
  • May: 3,85% / 41,95%
  • June: (Used opportunity money) / 00,00% 😎
Pay off my leveraged loan
47.37%
  • 3 years loan agreement (2021)
  • 7,45% (APR) variable annual interest rate
  • Invested mostly in P2P Lending


Monthly payment of income in % / Remaning payment in %

2018:

  • January:  0,00% / 100,00%
  • February:  0,00% / 100,00%
  • March: 11,91% / 98,35%
  • April: 11,63% / 95,25%
  • May: 10,49% / 92,15%
  • June: 12,48% / 90,72%
  • July: 11,94% / 87,62%
  • August: 11,60% / 84,52%
  • September: 13,51% / 82,97%
  • October: 12,20% / 79,87%
  • November10,30% / 76,77%
  • December: 12,71% / 75,08%

2019:

  • January: 11,16% / 71,98%
  • February: 6,06% / 68,88%
  • March: 11,49% / 67,02%
  • April: 7,68% / 63,92%
  • May: 10,14% / 60,80%
  • June: 8,34% / 58,82%
  • July: 10,50% / 55,72%
  • August: 12,64% / 52,63%
Save +50% of my income on average
81.66%

This goal will be achieved when my student loan and leveraged loan have been repaid. This will happen in 2019. 


2018:

  • June: Started the goal 89,46% 
  • July: 87,64% (-1,82%
  • August: 85,76% (1,88%
  • September: 85,88% (+0,10%
  • October: 85,44% (-0,42%)
  • November: 84,38% (-1,06%
  • December: 80,18% (-4,20%)

2019:

  • January: 77,30% (-2,88%
  • February: 79,84% (+2,54%)
  • March: 84,64% (+5,02%)
  • April: 88,28% (+3,64%)
  • May: 82,44% (-5,84%
  • June: 85,82% (+3,38%)
  • July: 82,16% (-3,66%
  • August: 81,66% (-0,50%
I expect this step to be completed in 2019.


Great blog posts at this step:

 ★ Increase savings rate

 ★ Inspiring financial independence quotes

Pay off the mortgage

Step 5 - Pay off the mortgage

While investing

This step will take some time to complete.

I recommend that you are able to pay off your mortgage within 15 years.

I plan to pay my mortgage within 7 years (2026).

Furthermore, I suggest you really focus on increasing the savings rate. You can find ways to save more but also to earn more at the same time.


Out of your monthly savings rate, approximately 40% should go to your mortgage and 60% should be invested in my opinion.  

In this way, you will have a little more focus on creating wealth and benefit from compound interest.

My main financial freedom goals in this step

Pay off the mortgage
0%
Save +70% of my income on average
0%
I expect this step to be completed in 2026.
I will also have short term goals at the same time.


Great blog posts at this step:

 ★ Rent or buy a house?

 ★ Money affirmations

debt free
Be totally debt free

Step 6 - Be totally
debt free

While investing

This step is a dream for many (including myself) because it’s a huge step to become debt free.

You are getting closer to financial freedom!

I’m pretty sure this will give me a great feeling of control.

The stress about money will be gone and everything is about to fall into place.

Now you can invest 100% of your monthly savings rate.

I can’t wait for this level and every skill I have learned at this time 🙂

My main goals in this step

Save +70% of my income on average
0%
I expect this step to be completed within  2029.
I will also have short term goals at the same time.


Great blog posts at this step:

 ★ Early Retirement Extreme Stories

 

financial freedom
financial freedom
Be financially independent

“Your dream can come true if you set the right goals and train your inner voice to execute the steps”

Step 7 - Be financially independent​

The last step and my vision will become a reality.

Financial freedom in my reality!!!

It’s unreal right now but maybe it becomes more realistic when I approach this goal.

I have a good feeling about this day! 😎

My very clear vision (My financial freedom dream)

I will wake up in the morning and drink my morning coffee, while I can hear the waves of the ocean.

Then I will swim in the ocean, stretch my body and breathe deeply.

I will train my inner voice and be thankful for everything I love.

Afterward, I will set goals for my day to make progress and follow up on my investments.

I will use what I have learned and is the best version of myself.

My focus will be on eating and live healthily and take care of my family.

Finally, I will write down new value knowledge in my journal in the evening.

I’m financially free and 100% independent.

My life is in balance and I’m in control over my own life.

I hope you liked this financial freedom overview.
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