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True independence will take
planning and patience

MONDAY is Independence Day, a time for fireworks, parades and picnics. Of course, it's enjoyable to celebrate this national holiday. But why not also use this occasion to think about achieving more kinds of freedom in your own life? Specifically, why not begin taking the steps necessary to attain your own financial independence?

Consider the following:

» Reduce your debt load. Try to do whatever you can to pay down your debts -- especially the high-rate credit card debt. The more you have to pay on your credit cards or other consumer loans, the less you have to invest.

» Build an emergency fund. Try to create an emergency fund consisting of six to twelve months worth of living expenses. Because you may need quick access to these funds, you'll want to put them in a liquid vehicle, such as a money market account. If you don't have an emergency fund, you might constantly end up dipping into your investments to pay for big-ticket items, such as a new appliance or a major car repair. And the more you cash out your investments for short-term needs, the slower your progress toward your important long-term investment goals.

» "Max out" on retirement plans. Ultimately, your financial independence should culminate in a retirement in which you can do pretty much what you choose. But to reach that point, you will need to accumulate sufficient financial resources. Consequently, you will want to try to contribute the maximum amount each year to a traditional IRA, which provides tax-deferred growth of earnings, or a Roth IRA, which offers tax-free earnings, provided you meet certain conditions. Also try to contribute as much as possible to your 401(k) or other employer-sponsored retirement plan.

» Pay yourself first. After paying all your bills, you may find it hard to come up with extra money to invest for the future. So, pay yourself first. Consider setting up a bank authorization to automatically route a certain amount of money each month into an investment. As you get salary increases, increase the amount of money you put away.

» Build a diversified investment portfolio. Many people think they can become financially independent by buying "hot" stocks and getting rich quick. But, in reality, that hardly ever happens. By the time you buy a hot stock, it may already be cooling off. Furthermore, if you're constantly selling some types of stocks in pursuit of those big gainers, you'll rack up big commissions and other fees. We believe in building a diversified portfolio of quality stocks, bonds, and other investment vehicles -- and then holding them for the long-term. Consider selling if your investment goals change or the investments consistently fail to meet your needs.

» Try to protect yourself from large financial risks. Injury, illness and infirmity can rob you of your ability to earn income and preserve your assets. That's why you may want to purchase the appropriate protection vehicles, such as disability insurance to replace lost income or long-term care insurance to cover the enormous costs of an extended nursing home stay.

It will take many years for you to reach the point where you can truly feel as if you've reached financial independence. But by following the suggestions listed above, you may speed up the journey.