A Case Study To Illustrate:
Mark and Joyce are real couple who are clients. Here we have their financial worksheet. They’re 37 and 35 years old, they make about $7000 a month and would like to retire at age 65 with a $5500 monthly income.
They’ve listed their debts. They’ve got a $460 balance at 12% on their Visa card, a $2400 medical bill at 0%, a Discover card with a $4,236 balance at 12%, some furniture debts of $5,988 at 18%, one car loan of $13,313 at 8% and a mortgage balance of $152,395 at 6.5%. They do have some savings. They have $6000 cash in an emergency savings account and they’ve been making contributions of $3600 a year into their 401(k). They have $2,177 going out every month.
Power down your debt and power up your fortune
The idea here is that the more money we can take away from the institutions that we pay interest to and put back into our hands, the better off we are going to be. And this can have an amazing impact as you’ll see in a minute when we show you what we were able to do for Mark and Joyce.
Adding up all their debts they were paying $2177 a month. When they added up their debt they said it came to $179,000 which is a lot, but their real debt was $374,000.
The difference between those two numbers is $194,000. That is $194,000 more than they thought they were paying in debt and the reason that they are paying so much more is because of the interest going out to all those institutions.
The visa, the medical, the Discover card, furniture, auto and home. The average family has 34% of their incomes going out in interest paid to banks and credit card companies. So we prepared a report to show Mark and Joyce how to create a “power down” program for them.
By powering down their debt, and not paying any more money than what they were already paying, by using our power down program they were able to get out of debt in 7.75 years and instead of $194,000 they would only pay $61,000 in interest, and have $133,000 in savings.
Now let me ask you, is $133,000 a lot to you? So, by doing this we were able to create a savings for them equivalent to about $30,000 per year. Do you see where it’s coming from? It’s just coming from interest savings.
Now let’s make sure we get the picture here. Here’s Mark and Joyce, living their life doing okay. They have a pretty good income, they're living the dream if you will, but their debt service meant that they were going to be in debt for 29 years. Using our program we were able to help them get out of debt without spending one more penny, in 7.75 years saving them $133,000 in savings and if they then kept with the program for the remaining years have almost $1 million in savings. You think Mark and Joyce are excited about this? Now most people when they see this immediately make a decision that they want to be like Mike and Joyce.
Would that include you? It sure included me.