Power Down Debt

I have sold hundreds of homes while being a realtor. One thing I have done is help people get millions in loans. Although, it is exciting that someone will loan you a lot of money, wouldn't it be even more exciting to actually have no mortgage payment?

I have been approached by several people. There is a software that will tell you which bill to pay first for only $3500. There is another company that will pay your bills for you and it only costs $12,500. But you don't need this, you are smart enough to get out of debt yourself.

Take the money you would have spent on these programs and power down your debt.

Basically it is simple, you take your lowest owed debt first and pay it off. Say I have a $1000 credit card and my payment is $20. I know that if I make the minimum payment on this, it could take as long as 20 years to pay off this debt. But what if I cut spending $3 per day out of my budget and used an additional $90 that I saved to make a principal payment. I could have this paid off in less than 10 months.

Now that I have it paid off, I could use the $110 that I was using to pay off this credit card towards the next one, and so on and so on.

So my next bill is $200 per month with a $2000 balance. Instead of paying $200, I pay $310. I can have this bill paid off in about 8 or 9 months depending on the interest rate.

Now I work on the next bill which is $200 per month with a $3000 balance. Instead of paying $200, I use $110 plus $200. I pay $510 and pay this off in 7 months.

Now I work on the next bill which is $200 per month with a balance of $4000. Instead of paying only $200, I use $110 plus $200 plus $200 for a total of $710 per month and pay this off in 6 months or so. You get how easy this is?

Your money out stays the same. Your debt gets powered down. It is also called snow balling the debt. Your snowball (payment) gets larger and larger as your momentum for paying down debt gets faster and faster.

You start building equity which is true wealth.

I have heard people paying off their high interest stuff first. This is always a good idea, but I have also heard that you should pay off your lowest debt first and then use the money you free up to pay off the the next lowest debt and so on. According to the gurus, you should pay the lowest thing off first and then move to the next one. That way you can get your snowball growing faster.

I use to use a credit card to pay for everything. I would get my credit card statement and find out that I had spent $1000 more that month than I thought I had. Every month was a surprise and I really didn't care because "my card payed me up to 3% back."

So every year for the first 16 years of my marriage I would waste thousands of dollars per year because I never did a very important principal in money management called "tracking."

You have got to know where every penny is spent.

I recently switched to a debit card. I like it because I have a paper trail, but I can watch money go in and out of my account daily. I know instantly how much money I have and there are no surprises.

So let's say you have a 30 year mortgage. This means if you make the minimum payments, you will make 360 payments and pay about 3 times for your original purchase price.

So this is how you get out of debt faster by powering down your debt.

On a $250,000 mortgage at 6.25 interest, your payment would be $1571.31 not including taxes and insurance.

You would only have $272 go toward principal and you would pay $1298 towards interest on payment 24. I am looking at my actual mortgage to get those numbers.

I have made payments for two years and have had only paid down my loan $6000, but I have paid over $30,000 in interest. Holy cow!!!!

So what if instead of just making the minimum payment, I mailed in $274.30 or the principal amount on payment 25? I just saved $1297.01 in interest.

You have to specify that you want the extra to go towards principal.

Some banks won't apply it unless you ask them.

So for an extra $274.30, I knocked one month off my mortgage.

I hear all the time, but I don't have extra money?

What about getting a tax refund, or the two months out of the year you get 3 payments per month at your job instead of two? What about a bonus? Could you use that to knock off a few months of bondage?

What about if you track your money and find out that you are spending over $4000 per year just eating out.

Can you eat cheaper?

I know co workers who will spend $10 extra per day just on lunch.

What if you packed a lunch and only spent $2?

$8 saved times 20 days per month of work is $160 times 12 months=$1920 saved per year.

If I took $1920 and paid down my current mortgage, I would save over $8400 in interest

So be smart. Free yourself from bondage.

The secret to financial happiness is to spend less than you earn. How many marriages would have been saved if people would just understand that one statement?

And if you cut your wasted money and power down your debt, you can be free faster than you know it.

Could you get better and cheaper insurance? Can you cut your power bill? Can you give up your pop or whatever it is you have to have per day to free yourself from debt?

I have a brother in law who we use to make fun of for eating baloney sandwiches, and not buying things such as nuts to save money so his grocery bill would be low.

He was able to get out of debt very early in his marriage.

He is still considered pretty young, but loans money to people now and has money working for him instead of against him. I wish I would have followed his example the first part of my marriage. My life would be so different if I had been debt free the last 10 years.

How would your life be changed instead of having $2000 in debt payments per month and actually saved $2000 per month and got paid interest on this money?

Wouldn't it be cool if you were rich instead of your banker?

Would your life be different?

So join me as my challenge is to be out of debt in 4 years.

As I get extra income and cut my expenses, I use this money to free myself and create a better future.

The fourth leg of retirement that no one ever talks about is getting out of debt.

I swear some of the people would love you to stay in debt until you die.

You will never know freedom till you break the debt cycle.

So should you go into debt to buy a home in SE Idaho?

I think so.

Not only will your real estate appreciate, but you will create a vehicle of wealth whereas rent just gets you to the next month with nothing really to show for it.

I look forward to helping you find a home in SE Idaho.

Email me for a list of homes in the price range and area you are looking for, and I can email you everything on the market. I would also love to help you get out of debt and create real wealth.

Thanks Burke Bennett
http://www.seidahohomes.com/
208 589 5599
burkebennett@hotmail.com