I found a debt elimination program course that was pretty simple and straightforward. It was founded on the premise that if you want to get debt-free and start building wealth in the shortest period of time, you must eliminate debt first while protecting yourself from the financial things that have a reasonable probability of actually happening to you.
How much better off will you be, 4 to 6 years from today, if you continue on the course, you’re on now?
WHAT IS THIS DEBT ELIMINATION COURSE?
The course I took by John M. Cummuta called “The Debt-Free & Prosperous Living” has taught me some strategies that could benefit others. I will share with you some of the strategies that I have learned and implemented from his course. This course was purchased many years ago, so I don’t know if it is still in circulation for those that may need additional information but the basic premise of eliminating debt hasn’t changed even today.
HOW DOES THE DEBT ELIMINATION COURSE WORK?
For definition purposes, a “Bill” is a debt that can be completely paid off. Monthly, ongoing cost such as utilities are “Expenses,” and although you want to minimize them, they are not to be included in this debt-elimination process, because they can never be totally paid off.
Step 1. Get all your bills together and write down the total account balances of each and then the required monthly payments.
Step 2. Divide the “Total Balance” amount by their respective “Monthly Payments.” For example, if you have a Visa Card with a $500 balance and minimum monthly payment of $25. You would divide the $25 into the $500 and get an answer of 20. The answer does not mean anything in and of itself, but it is the first step in determining the proper order in which to pay off all your bills.
Step 3. This is done to each of the bills, and then starting with the lowest division, the bills from “1” to whatever number of bills you have to pay off. For example, if you had two bills (say a Visa above and a department store charge) and the Visa division gave you the answer of 20, while the other came out at 17, the department store account would be number “1” and Visa account number “2.”
The numbers indicate the order in which you should pay off your bills. You would pay off the department store first and then the Visa account second.
- Don’t worry about accounts that have high interest rates, because this system will accelerate your bill payoff that you will not be paying enough months of interest for it to make a significant difference.
- You are going to beat the banks at their interest game and turn off the blood they have been sucking out of your financial life.
Step 4. “Accelerator Margin” is the money that will be used to help in the reduction of your debt. It is buried in your current monthly expenditures, and in your savings opportunities. The “Accelerator Margin” does not have to be a lot of money. It may start off as a small amount of money but in the end of the debt process it will substantially increase.
- To create this Accelerator Margin, look at places where extra money might be hidden, in wasted purchases or monthly expenditures.
- Even if you could only add a $200 Accelerator Margin, it would go toward the determined number “1” bill example mentioned above.
Step 5. For example, if you had a Visa account and it was number “1” and you had a $25 minimum payment, and if you were able to create a $200 Accelerator Margin. You would be adding a payment of $225 going toward the payment of the Visa account until it is completely paid off.
Step 6. Once the #1 bill is paid off, the amount of $225 in our above example would go toward the payment of the next bill plus whatever was paid on the #2 and the $225, until it was paid off. And continue this process until all the bills are paid off.
When you have knocked off all the regular revolving credit accounts, including any car payments, you will be ready for the big one, the mortgage payment. In many cases people have completely eliminated all their debt except their mortgage by the end of their first year.
Don’t be upset if it takes you a little longer to get through the bills that precede your mortgage. Many people take longer than a year to get to the mortgage and still end up debt-free in a total of between 6 and 7 years. That still beats 30 years by a long shot!
Summary
- List all your bill with the balance and the regular monthly payment
- Divide the monthly payment into the balance to get an exact schedule for determining the payment payoff schedule.
- Establish an Accelerator Margin
- Add the Accelerator Margin to the first payment, until it is paid off.
- Continue this process to each bill, including the payment of the next bill and payment made from previous bills, until all is paid in full.
- Don’t save any money until all debt is gone? The bottom line is that you will achieve a lot more, a lot faster, by focusing your total available dollars on bill payoff, than you would by spreading it thin, trying to pay off bills while simultaneously trying to save some of your income. Because once your bills are paid off, it will take very little time to create savings. Also, if there is an emergency, you can stop your process until it is taken care of and then resume the process.
- Beware of the initial urge to shut off all forms of fun completely. Because if you get frustrated and you may quit your plan entirely. So, be willing to indulge yourself now and again but just know what you are trading and make sure it is work it to you.
- Only your commitment will keep you on the course of your plan for “Financial Freedom.”
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