In 2017, Dr. Lakisha Simmons after going thru a divorce, she became a single mother with two children. Soon it became too financially difficult to kept her marital home and raise her children on a single income.
The situation grew direr whilst she actually was seeking for solutions to reach financial freedom. For her, financial freedom meant not having to live from paycheck to paycheck.
"The financial insecurity was weighing on me so heavy. I didn't want to be in a position where I couldn't take care of myself. Like, what does it take for me to just live off of investments?" said Simmons.
Simmons became astute and diligent about her goals. Thus, within four years, she had reached her goal of financial independence. She managed to acquire $750,000 in savings and investments, she could live off of her investments. Irrespective of her ability quit her job and live off her financial stability, she decided to stop working since she was content with her job.
Simmons began her financial journey by reading financial blogs, articles, and books where she found viable solutions. However, they were not going to be easy adjustments since it was going to take a lot of sacrifices.
For example and perhaps the biggest financial load was her home. Although it was a tough decision, she realized it was her largest unnecessary expense. As a family of three, Simmons decided having a five-bedroom house was too much of an expense that prevented her from moving towards her financial freedom. So, she decided to move to a two-bedroom apartment. The downsizing of her home granted the ability to economise $12,600 a year. She wisely took the profit she netted from the sale and invested it into a diversified portfolio.
Simmons began taking a better management of her budget. Firstly, she created a ledger to figure out what expenses she had for the entire year. The spreadsheets were a way to pre-plan how she would divide up her income into spending, saving, and investing.
Then, she used the budgeting app to track her real-time transactions on a monthly basis. The tool showed her how she was spending money from one moment to the next, so she could reflect on whether the purchases were worth it. This all enabled her to take copious tracking of her net worth.
Once Simmons was able to reduced her largest and most unnecessary expense she reviewed her recurring monthly bills. This would permit her to reduce her expenses even more. This meant that she would either eliminate the expenses entirely or find meaningful options for the products and services she would use.
Her cancelled cable TV service which was nearly $1500 annually. She switched her mobile service saved her another $1,600 a year. She made modifications to her insurance policies. She changed grocery stores and her shopping to make wiser shopping decisions.
With all these adjustments and freed up money from expenses and maxing out her retirement accounts like her 403(b), a retirement fund provided by her employer. She also utilised her employer offered, a 457(b), a tax-advantaged deferred compensation plan to contribute pre-tax dollars. She preselected these government retirement accounts prior that are employer-sponsored accounts to max out first before she focused on moving the remainder of her available funds to a Roth IRA, an individual retirement account that is generally not taxed upon distribution.
Simmons was able to save nearly $20,000 from the aforementioned spendings and balanced her budget tremendously. Due to her calculated savings efforts, managed to contribute nearly 33% of her income towards her retirement.
Her next goal after maxing out her retirement funds was to begin investing into a diversified portfolio. She made investments in index funds and exchange-traded funds also known as ETFs. These investments were based on what she could manage to spare after investing monthly into her retirement funds.
"To become financially independent, I just needed to switch my mindset from spending money, to saving money, to investing money," Simmons told Insider. "Because the investments have grown so much, way more than I could have even saved over the years."
Simmons loves to share her journey with the world and decided to help women who've gone through similar struggles to achieve their goals. She started BRAVE Consulting LLC, a women's empowerment training company. She teaches women how to create their own financial security through budgeting, debt payoff, investing all moving towards financial independence.