10 Money Bliss Steps to Financial Freedom

Steps laid out for you to enjoy a life of Money Bliss. This is a path, a guide, to help you enjoy financial freedom. The Money Bliss Steps are in order for a reason. They work. The Steps to Money Bliss – Where Cents Parallel Vision.

Money Bliss Steps to Financial Freedom. Life debt free. Simple steps for life. Money saving tips. Alternative to Dave Ramsey baby steps or Tony Robbins or Suze Orman. Personal Finance. Money Bliss Checklist. Printable. Budget.

1. Financial House in Order (Create your Cents Plan)

The first step to living a life of Money Bliss is to get your financial house in order. This step isn’t meant to be daunting at all. At this point, look at your financial picture as a whole. The 1,000 foot view!

You must know:

  • Where you are spending your money
  • How many accounts you have.
  • How many credit cards are open.
  • Any outstanding debt unpaid.
  • How you want to live your life with money.

The next step is to create your Cents Plan. To live a life of Money Bliss, it is necessary to live within your means. Don’t play the “Keep up with the Joneses’ Game.” Remember, most people use debt to finance their lives. But, it does not have to be that way! You can pay in full on the purchase (and many times get a discount). Plus save hundreds of dollars in interest!

Another important part of getting your financial house in order is to make sure you are properly insured. The first piece being life insurance. A basic guideline with life insurance is to have enough coverage to pay off your home plus living expenses for surviving, immediate family members. If you are single with no dependents, a small life insurance policy to cover funeral expenses and travel costs for family is enough. However, it is important to review all insurance policies – auto, home, renter’s, umbrella, identity theft – to make sure you are properly covered.

Sign up for Jumpstart to Money Bliss, a free 7 day email program to addresses your full financial situation and provides actionable steps (with worksheets and printables). 

Completing the first step puts you on the Money Bliss Steps to Financial Freedom. Remember to focus on each step individually. It is impossible to work through all of the steps at once.

2. Emergency Fund

An emergency fund is so important because life will throw curve balls. The question is not if an emergency expense will arise, but a matter of when it will happen. So, be prepared! Start an emergency fund.

The minimum emergency fund should be $1,000. Yes, setting aside a minimum of $1,000 just for emergencies. However, a better threshold of how much to save for an emergency fund is 2% of the annual salary. The best place for an emergency fund is a savings account associated with checking account. You need to be able to access the money quickly and not wait a couple of days. Remember, this account is for REAL emergencies – not to cover overspending.

The only exception to the $1,000 minimum are high schoolers and college students; a $500 emergency fund should suffice.

Fifty percent (50%) of Americans cannot cover a $400 emergency expense out of savings, according to a study by the Federal Reserve in 2015. Most noteworthy, when looking across income levels, the same statistic hardly varied. By saving money, you are considered an oddity in America. Rather, I prefer to be different and fiscally responsible while prepared for any situation.

Related Post: How Much to Save for Emergency Fund & Variables to Consider

When building the emergency fund, Money Bliss recommends to build the emergency fund fast using the following methods. First, sell anything possible to reach the minimum threshold. Second, pick up extra hours or a second job to establish an emergency fund. Third, if a Health Savings Account (HSA) is utilized, stop contributions for now until this step is completed. Lastly, contribute to an employer retirement plan only up to the employer’s match during Money Bliss Steps 2-5 if there are no credit card debt or personal loans. If credit card debt or personal loans are present, then stop all contributions to retirement accounts even if matched by the employer.

The most common question is why stop contributions to retirement…Very simple, it is extremely difficult to make any significant progress financial when trying to attack all of the steps. Focus on the current step. Then, make progress through the remaining steps.

An emergency fund should be established in a short amount of time. Less than 2 months would be ideal.

3. Medical Fund

In today’s society, medical costs are high in the United States. By establishing a separate medical fund, medical expenses, co-pays, and deductibles are easily managed. Thus, not causing financial ruin.

How much to set aside for a medical fund? Enough to cover the in-network deductible, prescriptions, and average co-pays for a year. If the medical account is depleted for any reason, stop the Money Bliss steps and come back to replenish to one year of medical coverage. While working through Money Bliss steps 4 & 5, one year of medical fund coverage is sufficient. Once Money Bliss Step 6 is started, re-visit the amount in the medical fund and fully fund to the out-of-network deductible and/or Health Savings Account.

If your employer offers a Health Savings Account (HSA), take full advantage of this type of account. The contributions to a HSA are taken pre-tax; thus, they lowering your taxable income. However, each year a maximum amount of money can be contributed; in 2018, the contribution limit is $3,450 for a single coverage (up from $3,400 in 2017) and $6,900 for a family (up from $6,750 in 2017).

Since this account has tax advantages, the Money Bliss recommendation is to fully max out the contribution limit each year (unless credit card debt is involved). Even if employment switches, the Health Savings Account (HSA) can be moved and used for medical expenses for many years in the future. Another qualification of contributing to a HSA is the health coverage must be tied to a High Deductible Health Plan (HDHP). The other tax benefits of HSA is the account grows tax-free and withdrawals are tax-free (under current tax codes).

If you don’t have access to a Health Savings Account, create your own medical savings fund. It would be a plain, savings account. It won’t have the tax advantages as the HSA; however, money is set aside to cover just medical expenses. And that alone is worth less stress!

You will learn how to manage your money, your way. Not have your money manage you. 

4. Pay Off Debt

D-E-B-T is the Cash Flow Killer. The ability to get ahead financially when in debt is impossible! The cycle of debt happens very easy in our debt obsessed, spending freely society. Each HOUSEHOLD has over $90,000 of debt – credit card debt, student loan debt, and auto loans, according to a recent study. That number does NOT include mortgage debt. That is a LOT of debt (and overwhelming stress) to be carrying on your shoulders. Debt is the Cash Flow Killer in action.

With each debt payment, there is an outflow of money plus interest. Thus, debt is withholding your cash flow hostage and decimating your Cents Plan.

Let’s look at a simple example of the cost of debt. Without an emergency fund to cover an unexpected expense, the $800 is typically charged to a credit card with 18% interest. Now, a debt and paying only the minimum payment due. It will take you 7.5 years to pay off the debt and pay $623.13 in interest. Making the $800 really cost $1,423. With each payment, additional interest piles up on the total amount due.

The fourth Money Bliss Step is to pay off debt. Period. Pay Off Debt. Traditionally, to pay off debt a couple of different methods are used; either the debt snowball or the debt avalanche (sometimes called debt stacking). There is a lot of advice as which is best. Here is the one key factor to live a life of Money Bliss…. You must pay off the debt and live debt free.

In Money Bliss Step 4, the type of debt we are most concerned with is credit card debt, auto loans, personal loans, and student loans. Tackling the mortgage happens further down the line of the Money Bliss steps (to be exact is is Step 8).

Related Debt Posts:

If credit card debt or personal loans are included in your debt total, then Money Bliss recommends to stop all contributions to retirement accounts even if matched by the employer. With auto loans or student loans, Money Bliss recommends to contribute to an employer retirement plan only up to the employer’s match during Money Bliss steps 2-5.

Sign up for Jumpstart to Money Bliss, a free 7 day email program to addresses your full financial situation and provides actionable steps (with worksheets and printables). 

5. Big Expense Funds

Life happens. Unexpected job loss. Cross-country move. Long-term illness. The best outcome in these situations is to be financially prepared. The first big expense fund to create is a rainy day fund; a minimum of 3 months of basic expenses is needed. However, six months is suitable for most households. In some cases, twelve months of expenses is recommended; these situations include highly variable commission jobs or any person over the age of 55.

While funding a rainy day fund or any big expense funds in Money Bliss Step 5, contribute to an employWhere to Save Money (Better Options Than Under the Bed)er retirement plan only up to the employer’s match.

Related Saving Posts:

The second part of big expense funds is to prepare for big expenses with long term savings in advance. Some big expense examples to save up for include a car, down payment for a house, or a home remodel. Also, included in this section is saving for personal college expenses for yourself – not any children. By setting aside money for big expenses, then you are able to not become slave to the lender and stay out of debt.

Revising this step again to build up savings goal is completely normal. You are able to pay in cash vs. being strapped to a debt. If this step is revisited, continue the current allocations on retirement savings.

6. Save for Retirement

The two biggest mistakes most people make when it comes to retirement is (1) starting too late and (2) not saving enough. Personally, I am guilty, too. In my 20s, my first response to saving for retirement was I will start once I get a pay raise. Yes, I did contribute some here and there. Rather, if I could do it over again, I would start saving for retirement at my first job when I was 14. Good habits to start young. So, Money Bliss step 6 is saving for retirement.

Contribute 15% of gross income to retirement accounts, like 401(k), IRA, Roth IRA, or SEP IRA. This percentage does not include an employer’s match. Think of that match like gravy or whip cream on top. If you have a tax-deferred retirement account (traditional 401(k) or IRA), the employer match will pay the taxes on withdrawal. If you have a choice between retirement accounts, Money Bliss recommendations is to always choose a Roth account. With a Roth IRA, taxes are taken out on the contribution; however, distributions are tax-free.

If you want to contribute more than 15% of your gross income towards retirement, wait until reaching Money Bliss Step 9. Finish Money Bliss Steps 7 and 8 first.

7. Bucket List Adventure

This step is about you! A chance to live life now. Cross off a bucket list adventure. What if you were to die tomorrow? Then, what is the one experience you wished you could do? What experiences do you want to feel? What is the most important thing for you?

Some examples of a bucket list adventure include: travel, pursue your passion, learn a new language, try a new sport, switch professions, write a book, visit a country. The list can go on and on. Money Bliss Step 7 is filling your heart with an adventure of a lifetime.

Too many stories include the words…

“We planned to travel once we retired, but my spouse passed away before we could.”

“I always wanted to work in “xyz,” but I was too scared because I felt the financial pressure to provide.”

“We wanted to move out of the city or to a foreign country, but my spouse passed away before we did.”

Personally, I heard these statements from my grandpa and my mother-in-law. Memories never made because their loved one passed too soon. This is especially relevant in our fast-paced society.

The first question is you are thinking, but wait, I’m not financially free from my obligations. Yes, that is true. However, you are alive!! If properly insured with life insurance, the life insurance will take care of your family’s needs, college savings, and pay off the house upon death. One thing the life insurance CANNOT do is provide memories during your bucket list adventure.

The time to live is today. Take advantage of life and live for today.

Sign up for Jumpstart to Money Bliss, a free 7 day email program to addresses your full financial situation and provides actionable steps (with worksheets and printables). 

8. Pay Off Mortgage Early

Almost all people believe paying off the house seems like a dream. This dream can become a reality. However, it is estimated only between 19-30% of homes are owned free and clear – no mortgage; the studies on this subject vary on the exact percentage of mortgages completely paid off. Above all, homeowners have paid off their mortgage and eliminated their biggest expense in the Cents Plan. So, you can do it too!

Money Bliss Step 8 won’t happen overnight. It will take time, persistence, and perseverance. For homeowners who have paid off there mortgage early, typically it took them about seven years. Therefore, celebrate the small successes as you progress in paying off your mortgage early.

By paying off a mortgage early, hence you save thousands of dollars in interest (maybe even hundreds of thousands). Plus years of paying on another debt is wiped away! Consequently, you are able to live the life you want.

Also, there are swirling rumors about removing the mortgage deduction on personal tax returns or changing the current tax code, so the deduction for interest on mortgages may become non-existent.

Learn how to manage your money, your way. Not have your money manage you. 

9. Fund Your Life’s Vision

Money Bliss is all about Where Cents Parallel Vision. To reach that place, where Life + Money  =  Enjoyment. Yes, experiencing this place happens around Money Bliss step 5-7. It is on a smaller scale. However, once the mortgage is paid off in Step 8, the bliss and peace is heightened. This is the step where you can implement those long-term visions.

During Money Bliss Step 9, the goal is build wealth, so you can live and fully fund your life’s visions.

Life’s Vision Ideas…

“I could change jobs and finally be happy in a career field I truly enjoy.”

“We are able to setup the non-profit we always dreamed about.”

“We are able to pay for our kids college without sacrificing our retirement.”

“I plan to retire when I want.”

During Money Bliss 9, it is fully funding yourself and the life you want to live. That magic number where your assets can sustain your current lifestyle. Determining at what age “early”retirement is an option.

First, maxing out retirement accounts is the utmost importance. The contribution limits are constantly changing, so check here for the latest info. Depending on your age, you need to balance how soon before “retirement” you will need access your money. A Certified Financial Planner or investment advisor will be able to run various scenarios based on your situation. Since contributions to retirement accounts to the max, look at non-retirement accounts. For one simple reason, retirement accounts can’t be used without penalties until 59 1/2. So, spread the retirement savings into a brokerage account or a mutual fund account. These types of accounts do not have the same tax advantages. However, diversification is key.

Other options to build wealth include rental properties, invest in a business, or develop passive income.

If you want to pay for your children college, this is where you would start saving for their college expenses. Completely backwards of most financial experts since most recommend to start at infancy. However, many of us managed to pay our our schooling and survived. Maybe not thrived financial due to student loans, but many lessons of hard work were learned. By waiting to fund college expenses, you are able to become financial free first, and then, help out your children with college.

Continue to earn income until you believe your assets are fully funded for your Money Bliss Life. Remember, there are no debt obligations to hold you back…

10. Money Bliss Life

Money Bliss = Where Cents Parallel Vision. This is the point in life where financial obligations do not dominate your life and your decisions. You are able to live financially free! Live the life you want! There are no payments to be made or debt to be the slave under.

The last Money Bliss Step is taking a HUGE breath of air and realize all of the struggles, the determination, and the sacrifices made over the years were well worth it.

With Money Bliss Step 10, retirement is not an age – it is the ability to self-finance your life adventures.

During this step, building wealth happens fast if you choose to continue earning income. Remember, there are no debt obligations?

Money is a blessing for you as well as the impact on others through giving.

Money Bliss Steps to Financial Freedom. Life debt free. Simple steps for life. Money saving tips. Alternative to Dave Ramsey baby steps or Tony Robbins or Suze Orman. Personal Finance. Money Bliss Checklist. Printable. Budget.
Money Bliss Steps to Financial Freedom. Life debt free. Simple steps for life. Money saving tips. Alternative to Dave Ramsey baby steps or Tony Robbins or Suze Orman. Personal Finance. Money Bliss Checklist. Printable. Budget.
Money Bliss Steps to Financial Freedom. Life debt free. Simple steps for life. Money saving tips. Alternative to Dave Ramsey baby steps or Tony Robbins. Personal Finance. Money Bliss Checklist. Printable.

The Money Bliss Steps to Financial Freedom.

This is a journey! To complete all the steps and live in Money Bliss, it will take time, dedication, and sacrifice. As a result, you can live with financial freedom. Step by step you are impacting your life as well as your family legacy.

Understand the Cents Plan Formula…

Cents Plan Formula. How to budget. Printable. Monthly basis. How to budget your money.
Learn how to manage your money, your way. Not have your money manage you. 

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