Creating A Plan Debt Elimination Strategies

Fast, Faster, Fastest! I. Strategic Realignment of Debt II. Restructure & Consolidate Debt III. Restructure, Consolidate & Accelerate

Program 1: Restructure Debt - before Visa$ %$33 Visa$ %$65 M/C$ %$98 Sears$ %$203 Car$12, %$387 Home$238, % Consumer Debt Total Payment$786

Restructure Debt – After Pay the highest interest items first Sears$ % Visa$ % Visa$ % M/C$ % Car$12, % Home$238, % (4.25%)

Need Motivation to Stay Focused? Debt Roll-Down Program Pay the accounts with smallest balances first. Apply the “ payments ” from the paid off accounts to pay off the next largest balance, and so on …

Debt Roll-Down Program Visa$ %$33 Visa$ %$65 M/C$ %$98 Sears$ %$203 Car$12, %$387 Home$238, % Consumer Debt Total Payment$786

Program 2: Restructure & Consolidate Debt Consolidate highest interest accounts into a Home Equity Line of Credit to... Reduce overall payments. $35,000 = $240/mo vs $786 Gain tax deductions (deductible up to $100,000).

Credit Score Tips Don ’ t close all your credit card accounts. Keep 2 or 3 of the oldest accounts. Ask those creditors to reduce their rate. Can ’ t pay everything off? Reduce card balances to 1/3 of their credit limit.

Arbitrage Definition Attempting to profit by exploiting price differences of identical or similar financial instruments, on different markets or in different forms.

Arbitrage Examples Borrow 4.5% Invest and earn 8% Buy a Call option Write a Put

Banks use Arbitrage to Create Wealth … Your Bank “ borrows ” money from to 3% on checking & savings accounts. Then, “ lends ” it back at 6.25% to 18%. Shouldn ’ t you?

Better to Save or Earn? $2500 in Savings earning 4.5% (3.3% after tax) $2500 on Visa paying 14.9% (non-deductible) Better to Earn 3.3% or Save 14.9%?

Creating Arbitrage – Step by Step 1. Consolidate non-deductible consumer debt to HELOC (Home Equity Line of Credit). 2. Deposit bi-weekly or monthly pay check into HELOC. 3. Use HELOC as your primary Checking Account to pay monthly bills.

Bank on Your Terms! Each time you deposit a pay check into your Line of Credit, it registers as a decrease to your average daily balance. By decreasing this balance, you now lower the amount on which interest accrues.

By decreasing the balance on which interest accrues, you increase the portion of your monthly payment which is credited toward your principal. $$$$$$$$$$$$$$$$$$ $$$$$$$$$$$$$$$$$$ $$$$$$$$$$$$$$$$$$ $$$$$$$$$$$$$$$$$$ $$$$$$$$$$$$$$$$$$

The amount left over, after bills have been paid, remains against the balance of your HELOC until you need it, keeping your balance as low as possible, further reducing mortgage interest charges.

Before: Consumer debt = $30,326 with $786/mo. payment After: HELOC 8.25% (5.5% after taxes) Assumptions (for next example): $4,000 monthly Net income deposited. $3,000 monthly expenses Average “ float ” between deposit and withdrawal = 15 days

The Results Interest saved in 1 st year = $2, Consumer debt completely paid in 3 years vs 30 years. $786/mo (former debt) now available for investment in your future!

Isolate Investment Funds or Pay Off 1 st Mortgage HELOC $$$$$$$$$$$$ $7,000 $4,000 $1,000 Side Fund or 1 st Mortgage $3,000 $$$$$$$$$$$$ $$$$$$$$$$$$ $$$$$$$$$$$$

HELOC Strategy or MMA can reduce a 30yr mortgage to 8 to 10 years! Bi-Weekly Mortgage can reduce a 30yr mortgage to 23 years.

Benefits of HELOC Strategy Replace high-interest, non-tax deductible debt with tax deductible funds. Instead of earning.25% to 3%, you are saving 8.25% (5.50% after taxes). Maximize saving power of “ checking account ” by minimizing the average daily interest paid in the HELOC, and …

You eliminated the need to make “ payments ” on your new Line of Credit! Your payroll deposits act as your monthly payment! You are now in control.

No HELOC Payment? Minimum interest payment on 8.25% is $ When you deposit your payroll check, the bank considers this minimum payment covered. However, you only “ parked ” your money there until needed to pay your bills. Furthermore, interest is calculated by averaging the daily balance, which you just reduced!

Program 3: Restructure, Consolidate & Accelerate Maximize your earnings through Self- employment! Benefits of Self-employment Increase Cash Flow Increase Tax Deductions Create Business Equity

Watch the Bottom Line Without Self-Employment Gross Income - Standard Deductions = AGI - Living Expenses = Net Cash Flow With Self-Employment Gross Income + S/E Income - Standard Deductions - Business Deductions = AGI - Remaining Expenses = Net Cash Flow

Consider the Internet! Benefits of e-Commerce Unlimited Potential Low Overhead of time & $$ No geographical restrictions Create your own “ Amazon.com ” Go with a proven business model Create extra $1,000-3,000 in 3-6 months

Combining the Strategies 1. Reorganize to pay off highest interest first. 2. Maximize interest & tax savings with an aggressive HELOC strategy. 3. Accelerate the payoff by increasing income, while reducing taxes, through Self- employment!

What should you do with all the money that you are now saving? Create Wealth by utilizing some of these very same principles!

We ’ ll follow the Path of Money with an emphasis on... Safety Liquidity Rate of Return