4 Ways to Feel More Independent in Life

Most Americans get really excited about the Fourth of July. This date is all about American independence. Unfortunately, when most citizens discuss their finances, independence is probably not the first word that comes to mind. With a bit of work and planning, however, it is possible to increase the level of independence in your life. Here are four ways that you can gain some freedom.

Pay Off Debt

An ancient proverb states that the borrower is a slave to the lender. This could not be truer. When you owe money, it's hard to feel independent because a nice chunk of your monthly income goes to paying someone else. Depending upon the size of the debt, you might feel like you have a small inconvenience, or you might feel like you have a 100-lb iron ball that's chained to your leg and dragging you to the bottom of a lake. There are some simple steps that you can take to make it more likely that your debt impacts your feeling of independence less over time.

Don't Overspend And Build An Emergency Fund

Debt comes from one source, and one source alone. It comes from overspending. Sometimes, such as when unplanned medical expenses pop up, it is unavoidable. However, most of the time, overspending on nice new cars or big McMansions might be the reason debt rears its ugly head. Most everyone who works outside of the home or the volunteer sector will have some money coming in every week or month. Setting up a budget each month and sticking with it will give you a feeling of power over your finances.

One of the emotions that lead to a perceived lack of independence is fear. Many people will have a fear of an unplanned expense because they have no money stashed away because of their overspending. In a recent survey, 57 percent of Americans could not handle a $500 surprise expense. Those who do not have an emergency fund are just one small problem away from having to take on some new debt. This can lead to a feeling of powerlessness in life. The best way to get rid of this fear is through building up an emergency fund. Some of the income that comes in each month should go toward building up a fund to handle some of life's unexpected problems.

Look For Extra Ways To Make Money

There has probably never been a time in history in which people have had more options for earning money. The Internet has opened up a number of options for people who are looking to make money online, many times without spending any money at all. Additionally, there are many work-at-home businesses that can help you bring in some extra income each month. It's possible to earn by selling items for companies like The Pampered Chef or by becoming a LipSense distributor.

Watch Taxes And Invest The Difference

Every dollar that goes toward taxes is a dollar that you can't use for another purpose. Watching the amount of money that goes toward taxes can go a long way in helping you achieve a feeling of additional independence. Why? Every dollar that you do not pay in taxes effectively adds more money to your cash flow. For example, if you save $100 in a tax-sheltered retirement plan, you'll also cut your tax bill by the marginal tax rate on the $100. If you're in the 15 percent tax bracket, you'd have $100 in the retirement account and pay $15 less in taxes. Funding the government is a major expense for most people.

Building wealth requires spending less than you bring in over a long period of time, but it doesn't pay to stuff the excess capital in a mattress. You'll need to use the money you save from your budget and from paying less in taxes to make more money. Through dividends and interest payments, your wealth and passive income stream will build over time. Once you have enough passive income to pay all of your bills, you'll really feel independent.

Feeling powerless can really drain the enjoyment out of life. By taking some proactive steps, you can start to work toward independence. You'll be able to say you owe no one, and you'll eventually have enough passive income to really be independent.