3 Steps to Financial Independence after You've Saved your Emergency Fund

Congratulations! If you've saved enough money to cover six months of living expenses, you've made a serious dent in both your short-term, and long-term financial planning. And, chances are, you're as passionate about building real wealth as I am.

But what do you do next? I remember four years ago when I had finally socked away $30,000 in my money market account. I was laser-focused, and worked hard to hit that savings goal. But, I remember finally hitting my goal and wondering, what next?

Below are a few of the steps I've used to secure my family's financial future, and ensure I would be comfortable in retirement (without sucking all of the fun out of life in the short-term).

1. Debt is EVIL!

One of my favorite wealth building coaches is Dave Ramsey. He's full of personality, and has a passion for helping people build a solid financial foundation. If you tune into his podcasts, you'll probably hear his signature quote: "Debt is dumb, cash is king." And, on this point, I have to agree with him.

If you've saved up all of this money, and you're excited about the idea of compound interest, it's time to get rid of your debt. Why? Because, your debt is costing you each and every month, even if you pay your bills on-time. Those interest rates on your credit cards, personal loans, vehicles and mortgage are all eating into your net-worth.

I love the idea of converting every ounce of my earnings each pay-period into the things I'm passionate about. Instead of paying a fee to a bank or credit card company (in the form of an interest payment), I want every dollar I earn to go towards my living expenses and retirement.

So, if you want to enjoy financial independence, start throwing every extra dollar you have towards your debt!

2. Earn Money While You're Sleeping

Warren Buffet once said: "If you don't find a way to earn money while you sleep, you'll work until you die." This simple quote used to keep my up at night, because I wasn't earning money while I slept. Once I paid off my debt, I at least knew I wasn't losing money while I slept. But, it was time to kick my net-worth building into high-gear.

I knew I needed to start investing, but getting Warren Buffet on the phone to help me get started just wasn't practical. So, I turned to someone I could reach out to, who had investment experience and credibility. Adam Green, the Founder and CEO of Investoo, shared that:

"Starting out, diversification of your investments is critical. Take a look under the hood of your 401(k) and other retirement savings accounts. You'll want to make sure your investments are spread out in a way that makes sense, based on your age and other risk factors. You should also create your own retirement fund that you manage. Day-trading is risky, but if you're conservative and take the time to research different factors impacting the market, it's very possible to outperform the traditional retirement accounts and supercharge your net-worth."

3. Insure that You're Protected from Life's Ups and Downs

It's impossible to completely remove all risk from your life, but it's important to cover yourself for the events that are likely to occur, and potentially burn a hole in your financial picture. For example, life insurance is incredibly important for your family, in the event that something happens to you. If you're the sole breadwinner, how will your children pay for college, and how will your wife put food on the table while keeping a roof over your family's heads?

After the children have left the nest, and you're starting to approach retirement age, it's time to start paying for long-term care insurance. This insurance will kick-in in the event that you require nursing home care. Figures from a 2012 study highlight that nursing homes can cost as much as $222/per day! That's a mind-boggling $81,030 per year for the long-term care you or spouse may require as you age together. Don't let your retirement savings evaporate, or your loved ones have to take on the burden of providing for your financial needs in retirement.

Financial independence is about creating the foundation you need in order to feel secure as you age. It starts with having a solid emergency fund, which will prevent the need for you or your family to take on debt in an emergency. Having an emergency fund will allow you to make better decisions during a crisis, as the absence of short-term financial stress will pay huge dividends once the storm passes.

Becoming debt free and living a cash-based lifestyle will allow you to experience the true value of your hard-work. And, investing in a diverse portfolio will empower you to take advantage of long-term growth from compound-interest.

But, most importantly, financial independence means being completely responsible for life's expenses; avoiding the guilt and drama of becoming a burden to your loved ones in your remaining years. It might seem difficult, but the alternative is a life of hard-work that never ends, or a potential for impoverishment as you outlive your money. You can do this! Get started on the path today. Future you will be grateful.