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There are three key concepts you must understand in order to be in a position to build wealth. One is Financial Independence, which is what you'll achieve by accumulating wealth. The second is the Time Value of Money, which is the engine by which wealth is obtained. And the third is the Destructive Nature of Debt, which stands in the way of gaining wealth and keeps most folks in a dependent financial state.
Before you can choose to pursue the path to financial independence, you need to fully understand what it means to be "financially independent." We can break it down this way:
Financial Independence is a state of being...
* where you have absolutely no outstanding debts of any kind,
* where your investments are such that you can easily live off the earnings without ever touching the principal,
* where you have complete control over your time, giving you the freedom to enjoy your income with your family and friends,
* and where your stress levels relating to financial concerns are virtually eliminated.
Basically, we're talking about life in a much more simple and laid back setting with the financial worries of the world behind us. An existence where we can truly appreciate the little things in our lives. A lifestyle where time and money are relegated to the background and simply enjoying our family and friends becomes our focus.
Now you should have a better understanding of what it means to be Financially Independent. In our next newsletter we'll look at the second key concept of wealth building - the Time Value of Money.
Until next time, Al Crisp, CPA
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