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Please listen to this call I recorded with the Freedom Ratio creator, Dave Fenton.

Give me your feedback below!

I consider myself a pretty financially savvy guy, but my CPA just introduced me to something that opened my eyes…
Dave observed that I will not truly be free until I no longer have to work to cover my overhead. If my passive income doesn’t cover my monthly expenses, I’m controlled by my need to make money.
I’ve heard this concept before, but he really opened my eyes in a different way.
What if I invested my money in such a way that it creates cash flow sufficient to cover my monthly expenses? Then my time will truly be my time. I could do whatever I wanted to do…
I could choose to work.
I could choose to kick back in Hawaii wearing a Speedo and eating bananas on the beach.
I could choose to become an avid stamp collector.
I could choose to make teeny, tiny little birds out of paper.
I could do whatever I wanted to do because I wouldn’t have to worry about monthly overhead.
Some of us have investments, but Dave made an important observation…
If your investments aren’t creating cash flow, then they don’t give you freedom over your day-to-day life. Instead, they exist as some far-off abstraction and may or may not fluctuate upward or downward when you finally need them.
The Freedom Ratio basically tells you what percent of overhead your passive income covers. So if your passive income is $150 a month and your expenses are $6,000 a month, your Freedom Ratio is 2.5 percent. In other words, your passive income covers 2.5 percent of your monthly expenses.
Once I looked at it this way, I started asking myself: What are the investments I can make that help my Freedom Ratio.
What am I spending money on that really doesn’t serve me?
See, if I can bring my monthly overhead down and in turn invest that saved money so that it produces cash flow, my Freedom Ratio will go up… which would make my life a lot easier.
Lily and I have created a plan to build our Freedom Ratio. Here is what it entails:
First, we went through our credit card bills and realized that we were spending money on things that made no long-term differences in our lives. So as a test, we have vowed to be “cash only” on day-to-day expenses. I’m really curious to see how much we are going to save.
We use the “envelope” system for our day-to-day expenses. Instead of putting anything on credit cards, we put cash into envelopes and we spend money based on the money we pre-planned for the week.
We started this week with three envelopes:

1. Food
2. Lily and kids
3. Philip

Just this morning, Lily came to me and said, “I picked up your dry cleaning. You owe me $37 out of your envelope.”
I said,“$37 for dry cleaning! That’s a rip off.”
She said, “Philip, you had 17 shirts.”
I said, “Next time, I want to take it to a place that charges .99 cents per shirt.”
She said, “Great, you find that place and let me know.” 🙂
My point is this… we have NEVER had a conversation about the cost of dry cleaning, so I didn’t know it cost me that much money every time I wore a “dry clean” shirt instead of a washable shirt.
Now that I think about my money in terms of the Freedom Ratio, I’m going to work (and spend) smarter. It just makes sense.
At the end of the week, we will:
Take any leftover money and put it in our investment savings account, and then review the receipts and make a plan to spend even less money next week (if possible).
Like I said, this is Week One. I’ll let you know how it goes in future weeks.
What do you think?
What questions do you have?
Do you and your family want to do this with Lily and me?
If so, let’s do it!
Post any questions or comments you have, and by next week, I’ll record a conference call with the most asked questions and ideas.
I will teach you what I’ve learned… and at the same time, teach me what you have learned.
Let’s rock this idea and become free! Isn’t that what life is about?
Philip Tirone
P.S. David Fenton, my CPA and the creator of the Freedom Ratio, is a rock star. I’ll have him do a blog post in the future.

This blog post is about something near and dear to my heart…
Sales.
No, that’s not a joke. See, sales has a dirty reputation—our culture says it is a bad thing.
But the truth is that a salesperson should give the buyer something he or she really needs—and that’s a good thing.
Plus, what most people don’t realize is that even if they aren’t in a sales position, they are still in sales.
If you ever apply for a loan, you will need to sell yourself to the loan officer. If you ever apply for a job, you will need to sell your talents to the employer.
If you ever want to woo a significant other, you have to highlight your positive qualities.
So I’m a big fan of improving the sales process.
This is why I interviewed my friend Eric Lofholm, a master sales trainer (in fact, he once trained Tony Robbins’ people).
If your job is sales-related (real-estate, insurance, pharmaceutical, service-providers, etc.), you must listen to this recording and learn how you can tweak three systems to massively improve your results.
The recording is at the end of this blog post.
And remember … even if you aren’t in the sales business, you are in sales, so I encourage everyone to listen to this recording below!
Philip Tirone
P.S. Ever wanted to be a better communicator? Master sellers learn excellent communication skills, so be sure you listen to this recording if you want to improve your relationship with your spouse, friends, or family members.

To learn more about Eric’s Selling System, click here for more information.
To purchase Eric’s system at a special discounted price for all of my followers, click here to purchase.

My wife, Lily Tirone, and I just welcomed Baby #4 into the world (read about it here: “Thank You, Mrs. Lily Tirone”).
Little Emma is about six weeks old.
Suffice it to say, we aren’t getting a ton of sleep in my household.
The other morning, I was mulling over the fact that sleep-deprivation is used as a torture device when Lily reminded me of something …
I’m not really going to remember this.
So much life has happened between now and when my other kids were born, that those first few months are a fog. I look at my older kids, and I just remember the good stuff.
This reminder helps me make it through the tough times. Some much life is going to happen between now and six months from now. I can do it. I can wake up for all those midnight feedings.
… and 2:30 a.m. feedings.
… and 5:00 a.m. feedings.
In fact, not only can I do it, but it won’t even be important in six months. I’ll barely remember what it was like. So I can do it.
And so can you. If you are in a financial mess, it might seem unbearable—at times even torturous.
But if you do what you are supposed to do—take the tough steps now—you will work your way out of the mess. And so much living will happen that eventually … it won’t seem to bad.
You know what you have to do: Start rebuilding your credit. Cut wayyyy back on your expenses—downsize if you have to. And if it’s really, really bad, maybe you even need to declare bankruptcy and give yourself a fresh start.
Whatever it is, take that step now. You can do it!
That Lily Tirone is a smart cookie, isn’t she? If you want to comment on her wisdom, leave a message below.
Philip Tirone

A few weeks ago, I wrote a blog about the importance of family meetings in building a strong family unit.
One of my readers posted a blog about how her family used the family meetings to resolve problems.
It’s a wonderful idea, and I wanted to pass it along because I think a family can use this to resolve internal conflicts (like a fight between siblings), as well as external problems (like a bill that needs to be paid).
A lot of siblings never develop close bonds with each other, so even as adults, they aren’t very close. Some even carry their rivalry into adulthood.
It seems to me that if a family member presents a problem, and then the rest of the family works together to come up with a solution that works for everyone, each member of the family will feel honored, respected, and a valuable member of the family.
And then, the family will work together to execute a solution as a team, making the family grow closer together.
My kids are still young, so I am ironing out the kinks, but here are some of my thoughts on how families can solve problems together and build an atmosphere where family members work together:

• When a family member presents a problem, make sure that each person in the family has a chance to add to the context.

Explain that the family meeting isn’t a time for fighting, but rather to state the problem as everyone sees it.

• Then, explain that because you are a family, it is important that you find a solution together. Explain that the family is not going to focus on the problem; instead, it is going to come up with a way to make the problem go away.

Tell your kids that you all love each other and want to get along, and that resolving conflict by looking for solutions together is an important part of this.

• Then let everyone brainstorm for solutions.

Write everything down, and don’t criticize people’s ideas, even if they are absurd. After all, your children need to know that you respect their opinions.

• Then, ask the family members to discuss the solutions that seem the most fair.

• Then talk it out, and try to come up with a solution that works for everyone.

Like I said, I think this works for internal conflicts as well as external problems. If Suzy is mad at her brother because he didn’t help with the chores, this can be resolved during family meetings.
And if Suzy really want to go to soccer camp but she doesn’t have the money, this is a great time to problem-solve and teach your children about goals, savings, and “opportunity costs.”
Suzy might say, “I want to go to soccer camp, but I need $500 and I don’t have it.”
Then the family can throw out solutions.
“You can start saving your allowance. That will get you a little bit of money.”
“You could sell your bike.”
“How about a part-time job?”
“Could we look for a cheaper soccer camp? If so, maybe Mom and Dad could pay for your soccer camp as an early birthday present.”
I love this idea because it reinforces the idea that a family is a unit—a team that supports each other, cheers each other on, and looks for solutions together. (Thanks to my reader, Andy, for the idea!)
What do you think? Let me know if you have any other ideas, particularly if they have to do with solving financial problems.
Philip Tirone

I’m generally a healthy guy, but I gotta confess…
I love ice cream.
I can clean out a pint in less than 25 minutes.
And… I’m a busy guy, so I let fitness slip through the cracks here and again.
Then ten months ago, I made a commitment to get into the best shape of my life. I’ve been taking pictures in regular intervals documenting my transformation.
If you look at the pictures*, there isn’t much difference from one picture to the next. But if you hold up Month One against Month Ten, it’s like you are looking at two different people.
Here’s another related thought…
My oldest daughter, Ava, is five. And I swear that from day-to-day, she looks exactly the same as she did the day before. But even though the growth from day-to-day is undetectable, she’s been growing like a weed.
In fact, when I look at Ava next to my newest baby (Emma will be two weeks old tomorrow), Ava looks more like an adult than a baby!
My Coach Tim Wood has said to me, “People always over estimate what they can accomplish in a year, and GROSSLY underestimate what they can accomplish in five years.”
Here’s my point: Transforming your credit score or your finances is possible—it’s even easy once your behaviors become second nature.
But don’t measure your progress daily—you’ll only get frustrated. Give it some time, and then look back in a month or six months. Just keep piling on small changes, and see what happens!
–Philip Tirone
* I was going to post the pictures, but one of my staff members said, “No thanks, Phil. We don’t need to see you with your shirt off.”
So I’m not going to post the before and after pictures, but please leave a comment on my blog if you have any thoughts!

On September 3, at 10:17 a.m., Lily Tirone made me a dad… for the fourth time.
The birth of all of my children has been unique and beautiful.
Ava was our first. From her, two parents were born.
Dominic was the fastest. Lily labored a long time with Ava, so she expected the same with Dom. We stopped by Mass on the way to the hospital, but when Lily went into active labor in a church pew, we decided it might be time for a trip to the hospital.
And Lucas surprised us and came six weeks early. He was tiny, but healthy and perfect in every way. For the past three years, he’s been our baby. Now he has the privilege of being a big brother.
Little Emma Therese Tirone was born in our home.
We planned it that way. Lily awoke from a contraction in our bed around 7:00, and 3 ½ hours later, she was a mom for the fourth time, and she was taking a nap in our bed.
It all felt so … familiar. The familiar feeling of family.
At my 40th birthday party, Lily gave a toast. She told everyone how amazing it was to bear witness to another person’s life. She was talking about me, and how she had the privilege of watching me succeed, fail, pray, laugh, grow, and struggle.
But the privilege is mine.
Being a spouse is hard work—and Lily and I both sometimes joke that the celibate, lonely lifestyle of our priest is probably a lot easier than ours. We have to keep a solid, vigilant commitment to keeping our relationship on track.
I know for certain that I’m the one who is harder to get along with.
So today, there’s no post about credit or your finances. Instead, I want to thank my bride for letting me bear witness to her life, and all the miracles that have unfolded over the years.
Thank you, Mrs. Lily Tirone, for giving me our growing family.
Phil

Since it’s back-to-school time, I want to share this great story I heard on NPR …
You can listen to the whole thing here, but the gist of it is this:
A mother of three (who is also an astrophysics graduate) wants to promote a cultural-makeover when it comes to math.
“You hear educated adults say, ‘I’m just not that good at math’ or ‘I’m kind of afraid of math.’ And that’s a totally acceptable thing for a well-educated person to say,” said Laura Overdeck in the interview.
“But you never hear them way, ‘Well, you know, I’m just not that good at reading.’”
She also said that the more parents talk about numbers, the better students perform in math.
This got me thinking about MONEY!
If parents talked more at home about money, the cost of things, their savings’ goals, and their investments, would kids be more money-savvy?
Probably. After all, you are your child’s first teacher. The culture you establish at home (or the culture you fail to establish at home) will have the largest impact on your child’s habits as an adult.
So why not start telling bedtime money stories? Or, if you are worried this will keep your kids up, how about giving them snack-time money stories?
Let me know what you think below!
Be sure to listen to the whole interview and subscribe to Laura’s blog.
Philip Tirone

Pop quiz!
If you had to raise your FICO score quickly, and you had a choice—either pay off your charge cards or pay off your mortgage—which would you choose?
Most people say they would pay off their mortgage to increase their credit score the fastest.
But when it comes to FICO scores, eliminating charge card debt is far more powerful than eliminating mortgages or car loans.
And if you think about it, it makes sense. When assigning a credit score, the scoring bureaus assess risk by asking a question: How likely will this borrower default in the next two years?
Most people prioritize their mortgage payments; they would rather skip a few meals than lose their home. So having a balance on your mortgage isn’t really that risky.
But people aren’t quite as responsible with their Visas and MasterCards. In fact, even the most financially responsible people make a few bad decisions when it comes to the allure of credit card spending.
So keeping a low balance (or no balance at all) on your credit cards is a far better indicator of your financial situation, and your ability to pay upcoming bills.
The moral of the story: If you want to increase your FICO score, get your credit card balances under control!
Philip Tirone
P.S. If you want a few ideas on increasing your credit score by lowering your credit card balance, here are a few articles you should read:
The Dirty Little Secret
Do-it-Yourself Tricks
A Penny-Pinching Tip

I’ve been saying it for years, and I stand by it!
I think you should add your children as an authorized user to one of your credit card accounts.
I know you probably think I’m nuts, so let me back up …
A couple of weeks ago, I sent an email encouraging parents to use family meetings as an opportunity to teach children about certain values (like financial responsibility). Otherwise, they might be influenced by peers, credit card companies, or banks … and the results might be ugly.
After all, schools don’t teach this to our children, and banks prey on people who are financially vulnerable.
So if you have children, you would be wise to start teaching them now about credit, money, and financial responsibility.
Teaching children about credit, as well as how to manage credit, will help you raise financially responsible adults, and it will open doors for your children down the line.
Okay, so why do I think you should add your children as authorized users? Let me explain a four-part plan:
1. Add your child as an authorized user but do not give her/him a card! Here’s the important part: Add your child to a credit card that is in good standing. This will allow your child to “borrow” your good credit score, which means his or her credit score will begin to increase.
2. Use family meetings as an educational platform where your children learn about interest rates, budgeting, savings, and credit scoring.
3. Once your children begin demonstrating that they understand the value of money and are financially responsible, you might want to provide children with credit.
You can do this by establishing something that I call “Bank of Mom” or “Bank of Dad.” If your daughter wants to buy something for $30, lend her the money (assuming you can afford it), and create a weekly or monthly payment plan.
Then insist on timely payments, and tell your daughter that she will pay interest if she is unable to pay within a specified time frame. If your daughter is late making a payment, assess a late payment fee as part of your strategy for teaching children about credit.
The goal is to replicate the credit card companies as closely as possible.
4. Once your children prove themselves by continuously repaying debts, you might want to give them actual credit cards. Now, I know this sounds crazy, so let me explain …
I suggest that you allow your child access to the card only long enough to hand it to a cashier, and only if you are present. This way, your child will not be able to memorize the credit card number, nor will he or she have prolonged access to your account.
Then, make sure that your children pay their debt to the credit card company. I suggest that your children pay you instead of the company; this way, you can preserve your credit by making payments on the account regardless of whether your children are paying you.
Then, when the credit card statement arrives in the mail, sit down and go over it with your child. Explain the annual percentage rate, fees, late penalties, over-the-limit fines, and minimum payments. Then ask your children to verbalize their plans for paying their loans in a timely manner.
Expect your children to make mistakes, and help them create plans for correcting their mistakes. If they splurge and end up owing more than they can afford, perhaps they can do extra housework in exchange for an increased allowance. And, of course, teaching children about credit means that you call their cell phones—perhaps at 8 on a Saturday morning—to inquire about any late payments!
What do you think? Do you like this plan? If so, you can get more details by downloading my book Your Teen’s Credit right here.
Do you think I’m crazy? Do you love this plan? Leave me a comment below and let me know!
Philip Tirone