Financial Independence Dollars Definition:
Financial Independence Dollars, or FIDs, is a WizeFi term for the extra cash that has been created by either reducing your budget or increasing your income, also known as cash available for redistribution. This extra cash is then applied to a 4 step wealth-building plan. WizeFi recommends you create enough FIDs to be equal to or greater than 20% of your income.
Why FIDs matter:
The purple line on the graph is an indication of how much FID WizeFi recommends you apply (20% of your income) to your 4 step plan. The blue line represents how much FID you have actually created and applied to your 4 step plan. The dotted line running horizontally on the graph represents sustainable wealth. Attaining sustainable wealth means you can continue spending the way you currently are without working because you are living off the interest (averages 4%) from your productive assets (assets that pay you money like a Roth IRA).
In order to match the WizeFi projection (purple guideline), your goal is to create as many FIDs as possible and apply it in the suggested order of the 4 step plan.
How do I create FIDs?
FIDs are created by either reducing your budget or increasing your income. Let's focus on how to create FIDs from your budget. Login to WizeFi and follow these steps:
Click "Plan" in the upper left.
Be sure the "budget" toggle button is activated and proceed to click any category (i.e. food). Notice when you click the category a drop-down of subcategories appears (i.e. groceries).
In the drop-down subcategories, click in the grey field entries and reduce your spending. WizeFi recommends a strategic amount to spend for each category. Your goal is to reduce your spending in your subcategories (i.e. groceries) in an effort to match your category (i.e. food) spending to the WizeFi guideline.
Notice that each dollar you reduce from your budget will be added to your FID meter (at the bottom of your screen). Your goal is to match or exceed the FID meter amount. This amount is equal to 20% of your income. Also, note that when you create FIDs, the graph will ask to be refreshed, however your actual projection (the blue line) will not show improvement until you apply the FIDs.
How do I apply FIDs?
Once you have created FIDs, you now have the job of applying it to your 4 step wealth-building plan. So, click the 4-Step Plan tab and follow these steps:
Currently, you have FIDs waiting to be applied to your 4 step plan and you can see how much you have in the FID meter. When the FID meter is empty, then all your FID has been applied. If Step 1 is not complete then click Step 1.
In the drop-down subcategories, click in the grey field entries and apply as much FID as you can. If you have FID left over, then apply this extra FID to *Step 2 and so on.
Click refresh on your projections graph and see how much your actual projections have changed. The green numbers on the projections graph represent the change in your projections since the last time you saved your plan.
If you are satisfied with your new wealth potential and plan, then click the save button. If you are not satisfied, then click the discard button to revert to your previous plan.
*Step 2: Each debt is in the order, top to bottom, for which debts WizeFi recommends you apply FID to first. WizeFi also recommends that you apply ALL your FID to the first debt and only the minimum amounts to the rest of your debts. Once you pay off the first debt, you will have more FID (from the minimum payment) to apply to the next debt. This is similar to what is known as the snowball effect.