8 Stages of Financial Freedom

People seem to really enjoy the 1.0 series so far. As mentioned, sending me questions either in the comments or via email (TheLucesco@gmail.com) helps me tailor content for readers. Last week, I received two questions that I’d like to address:

Do you recommend cutting up your credit or closing the account altogether?

I don’t recommend using credit cards unless you pay off the full balance each month. If you are unable to pay off the full balance each month, then I suggest closing the account altogether. Better safe than sorry. You can build credit using other lines of credit (student loans, car, phone bill, etc.).  You also don’t need credit to live; there are other ways that banks can evaluate your ability to pay when getting a mortgage or car loan. Using an emergency savings account, instead of a credit card, in the case of an emergency is the best option.

Do I work on debt or savings first? What are the steps to financial freedom? 

Below are my 8 stages to financial freedom. I used these stages when I graduated from college in 2009 to get out of debt in less than 18 months and plan to get out of debt in about 2 years once I am gainfully employed.

Eight Stages of Financial Freedom

Eight Stages of Financial Freedom


3 thoughts on “8 Stages of Financial Freedom

  1. This is a helpful graphic. I’d challenge tho that this is too slow.

    The biggest piece that’s missing is investing like rich people do.

    When someone is at stage 5 and only has student loans. I think more than likely people get stuck in this paradigm of saving and it becomes a rat race of saving.

    Yes, saving means making money too and, everyone has different risk tolerances but rich people tend to have more flexibility in throwing things against the wall and see if it sticks.

    I believe people at stage 5, heck throughout, should be taking some educated chances – investing in things you love or have good knowledge about, and yes it may not always work but it might work and you chase your passion sooner than later.


    • What makes it too slow? I deliberately didn’t attach a time schedule because it varies from person to person. On average, I think most people can make it to Stage 7, which is essentially the investing stage in 18-36 months. Three years isn’t a long time, particularly when the average American works for 40 years. I don’t recommend investing before saving; when it comes to higher risks, like the ones I’ve mentioned in previous post, that exist for ethnic minorities — savings covers them. Minorities endure much more economic turmoil that other groups, and when they encounter financial instability, investing won’t help them, savings will. Thanks for sharing your opinion, AS.


      • It’s interesting debate between investing and saving. However, you bring up an interesting point. Numbers actually support your response:

        There are currently 316,128,839 people in the United States; of that approximately 77.1% are White, 13.2% are African American, 17.1% are Hispanic, 5.3% are Asian, 1.2% are American Indian, .02% are Native Hawaiian and other Pacific Islanders, and 2.4% identify as being two or more races.

        As of 2014, 65% of whites have at least some money set aside for retirement compared to 15.3% of African Americans, 6.1% of Asians, and 2.9% of mixed and other races have retirement savings.

        Especially, with the growth of minorities, financial education becomes more important as in 30-40 years, we’ll be living in a more mixed racial demographic world than we live now. Thank you for your blog as I think it addresses the root-cause of this all – financial literacy.

        Liked by 1 person

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