Financial Freedom Dollars Definition:
Financial Freedom Dollars, or FFDs, 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 FFDs to be equal to or greater than 20% of your income.
Why FFDs matter:
The purple line on the graph is an indication of how much FFD WizeFi recommends you apply (20% of your income) to your 4 step plan. The blue line represents how much FFD you have actually created and applied to your 4 step plan. The dotted line running horizontally on the graph represents the A Wealthgrade (aka 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 5%) 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 FFDs as possible and apply it in the suggested order of the 4 step plan.
How do I create FFDs?
FFDs are created by either reducing your budget or increasing your income. Let's focus on how to create FFDs 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 FFD meter (at the bottom of your screen). Your goal is to match or exceed the FFD meter amount. This amount is equal to 20% of your income. Also, note that when you create FFDs, the graph will ask to be refreshed, however your actual projection (the blue line) will not show improvement until you apply the FFDs.
How do I apply FFDs?
Once you have created FFDs, you now have the job of applying it to your 4 step wealth-building plan. So, click the FFD toggle button in the upper right and follow these steps:
Currently, you have FFDs waiting to be applied to your 4 step plan and you can see how much you have in the FFD meter. When the FFD meter is empty, then all your FFD 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 FFD as you can. If you have FFD left over, then apply this extra FFD 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 FFD to first. WizeFi also recommends that you apply ALL your FFD 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 FFD (from the minimum payment) to apply to the next debt. This is similar to what is known as the snowball effect.