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How To Pay Off Your House In Less Than 10 Years

Many people believe that because they have a 30 year mortgage, it will take 30 years to pay it off. Some have been enticed by gimmicks (that cost thousands of dollars) purported to help speed up their home pay-off using some “little known” and “magical” formula. The truth is there is one way to pay your mortgage off earlier – by paying extra money toward the principal balance and less money toward interest.

Here’s an example:

  • $150,000 mortgage balance
  • 4.5% interest rate
  • 30 year mortgage
  • $760 principal & interest payment

If one were to pay $200 extra per month toward principal ($960/month), the mortgage would be paid off in 19 years 8 months (a full 10 years sooner)!

If an extra $790 per month were applied toward principal (1,550/month), the mortgage would be paid off in 10 years flat.

Use our “Early Pay-Off Calculator” to calculate the difference extra principal payments or interest rate reductions would make!

5 Ways To Pay Off House Earlier

  1. Refinance to a interest rate
  2. Rent out a room and use the rent to pay toward principal
  3. Use tax refund to reduce principal
  4. Use a bonus to reduce principal
  5. Eliminate PMI and use the money to apply toward principal

I applied this technique and paid off my house in 6 years flat, and you can read every month of my journey by clicking THIS LINK.

8 Ways To Speed Up Debt Elimination

In a recent live event, 58% of respondents shared that “reducing or eliminating debt” was their top goal for the year.

If this is one of your top financial goals, here are some key ways you can speed up your debt freedom date.

8 Ways To Speed Up Debt Elimination

  1. Reduce Interest Rates Many people with substantial consumer debt do not realize that 50% to 75% of their payments are merely going to the lender as interest – greatly reducing their ability to lower their debt. If you have high interest rate credit card balances, consider transferring to a 0% interest card (like these 0% Balance Transfer Credit Card Offers). Is your mortgage interest higher than those listed at BankRate.com? If yes, consider refinancing the mortgage. It is amazing what a few hours of focus on interest rate reduction can do to speed up your Debt Freedom Date!
  2. Pay Raise Are you being compensated fairly? Check out Salary.com for current pay rates of positions similar to yours. Take some moments to document how you are adding substantial value to your organization. If it makes sense to have a conversation with your leader, do it! Nothing like some more income from your current job to speed up debt elimination.
  3. Tax Refund A tax refund might be an “interest free loan to the government,” but it also represents an opportunity to impact debt in a big way.
  4. Bonus A bonus can also help kill some debt. One great thing about debt freedom is it allows future bonuses to be used to fund future dreams – instead of paying for things from the past.
  5. Found Money From Better Budgeting When I started preparing and living by a budget, it literally transformed my finances. I freed up hundreds of dollars that was going to “miscellaneous cash withdrawals” and impulsive grocery shopping trips.
  6. Sell Some Possessions Sell the boat, motorcycle, extra car, and collectibles. Eliminating possessions will free up space, eliminate stress, and greatly speed up your pace toward accomplishing debt freedom.
  7. Overtime If you have the chance to work overtime, it can really help speed up debt reduction. Plus, you’ll be too tired to spend the extra income on frivolous things.
  8. Second Job If you don’t have the opportunity to work overtime at your existing job, take a second job – or start a small side business. The key here is to focus on something that is short term. You don’t want to sign up for a permanent second job. Instead, commit to applying all additional money to your debt elimination plan. The reward when you become debt free? Quitting the second job and still prospering because you’ve freed up all of the money that was previously committed to payments.

You can do this!

Read the How To Pay Off Debt Series

OWE vs OWN – One Letter Makes All The Difference

Have you ever noticed that a single letter makes the difference between the words OWN and OWE?

OWE
vs
OWN

It takes FOCUS to exchange the “E” for the “N”.

There is nothing like fully owning something. You will see, feel, and smell things in a different way. A paid-for car will drive more smoothly. A paid-for house will look better when you pull in the driveway. A college degree is nicer when the student loans are paid off.

You can OWE with just a few conversations and signatures.

OWNERSHIP usually is the result of intense and diligent effort.

QUESTION: Do you OWN or OWE?

2nd QUESTION: If you OWE, what changers are you willing to make to exchange the “E” for the “N”?

You can use our Debt Freedom Date Calculator to find out how long it will take you to achieve debt freedom.

What To Do When You Are Behind On Bills

I’m behind on my bills. I feel stuck. What do I do to get caught up?

This is perhaps the most common question I experience during our live teaching events.

While the best answer for each family may vary, here are some of the most common ways to get UNSTUCK and gain financial margin:

  1. Sell something  What do you have that is worth $1,500 that would allow you to get caught up immediately? Put it on Craig’s List and generate cash to change your financial life!
  2. Work an extra job  Not fun, but this is not a “forever” option. Set a goal to produce an extra $2,000 within the next couple of months with a holiday type of job.
  3. Establish a budget  Without a plan, there will be no profit (Proverbs 21:5). Prepare a written budget for the month of December and make every dollar SCREAM!
  4. Go on a financial fast  Eliminate a monthly expense like Internet, cable, or Netflix. Perhaps you could eliminate dining out for one month.
  5. Eliminate a debt  If you have two cars, sell one! Eliminate the debt payment AND reduce your debt big-time. This might present some logistical challenges, but it sure helps speed up financial freedom!

Have you ever taken one of these steps? Please share your experience with us in the comments!

Save, Invest, or Pay Off Debt?

Suppose you happened upon a substantial amount of money all at one time. For discussion purposes, let’s say it was $10,000.

What would you do with this money? There are really five options available to you:

  1. Spend it
  2. Give it away
  3. Put it into savings
  4. Pay off debt
  5. Invest it

Most people will be faced with this type of situation at least once in their life. Here are some thoughts to consider with each option.

1. Spend it

This would certainly be a fun option! The money could be used to make much-needed home repairs, purchase a vehicle, or take a vacation.

2. Give it away

Being able to give $10,000 away is an incredible option! Consider the impact you could make on the world around you by giving money to support causes you really believe in.

3. Put it into savings

Financial margin provides something I call “financial confidence.” When I first achieved financial margin, it was as if scales literally fell from my eyes. I was able to “see” opportunities like never before.

4. Pay off debt

Debt increases a person’s operating costs and requires more income. If the debt is associated with a no-value or declining value item, it is literally the equivalent of “robbing yourself.”

5. Invest it

What if you could use the $10,000 to start a business that will produce $4,000 of income each year for the next 40 years? Consider the investments you might be able to make – it could literally change your life!

Your thoughts are appreciated. What would YOU do?

How 0% Balance Transfer Credit Card Offers Work – And Save THOUSANDS of Dollars!

NOTE: I wrote this post to help people who are paying high interest on their credit cards. I maintain a running list of 0% Balance Transfer Credit Card offers HERE.

Here’s a fact: Many people possess credit card debt they are unable to pay off each and every month.

They want to pay it off each month, but they are unable to. As a result, they feel stuck. The interest rate being applied to their credit card balance is one of the primary reasons they feel that way.

0% balance transfer credit card offers provide a way to eliminate a credit card debt very quickly and can provide HUGE savings over keeping a balance on a high interest card.

Here’s an example:

  • Credit Card Balance: $16,000
  • Interest Rate: 21.99%
  • Minimum Payment: 1% of balance plus interest charges (or $10 – whichever is greater)

If this person were to keep the balance on this card, they would pay $44,895.36 and take 36 years 4 months to eliminate!

By transferring the balance to a 0% transfer offer and making the same payment, they would pay $17,039.51 TOTAL (only $1,039.51 in interest and fees) – and they would be free of credit card debt in 49 months!

Rolling a high interest credit card balance to a 0% balance transfer credit card offer SAVED $27,855.86 and become debt free 387 months (32 years and 3 months) sooner!

Here’s the process of how this type of offer works:

  1. THE OFFER  An offer and application for a zero percent balance transfer credit card is completed ON-LINE or through a mail-in offer.  During the application process, the applicant is asked if they wish to transfer a balance.When this option is selected, the application process includes the opportunity to provide information regarding existing loan balances that they wish to be transferred.  This requested information is detailed including – current provider, account numbers, and loan balance.It is important to understand that the application process requires the applicant to provide their social security number and that a credit check will be performed.Once the application is submitted, a decision is typically rendered within a time range of a few minutes to a few days.
  2. THE EVALUATION  Once the application has been submitted, the credit card provider evaluates the information provided to determine credit-worthiness.  This evaluation is completed based upon several factors that vary between lenders.  It always involves a check of one’s credit score and the loan amount requested.This evaluation also ensures that the person listed on the application is really the person requesting credit.  This is an extremely important step to prevent identity theft and fraud and should make the applicant feel much more comfortable with this process.
  3. THE DECISION  Once this evaluation is complete, a decision is rendered.  The lender’s decision will be one of three alternatives:
    1. ACCEPTED:  ALL of the balances to be transferred to zero percent
    2. ACCEPTED:  SOME of the balances to be transferred to zero percent
    3. DENIED:  NONE of the balances will be transferred

    If ALL of the balance transfer requests are accepted, the new credit card provider will send money directly to each of the lenders.  Within a few short days, the balances due each previous lender will be lowered by the requested amount and that new balance will transfer to the new card provider.

    If SOME of the balance transfer requests are accepted, the new credit card provider will send money directly to some of the lenders.  IT SHOULD BE NOTED that it varies between lenders on which balances will be accepted.  On one of Discover’s applications, it stated the following in their terms and conditions:

    “We process multiple balance transfers in the order they are requested on the application. Your credit line may be less than the amount of balance transfers you request. In addition, balance transfers may be limited to a portion of your credit line. If a balance transfer will exceed the credit available for a balance transfer, you authorize us to process any balance transfer for less than the amount requested, up to the amount of your credit available for balance transfers.” – SOURCE: Discover’s website

    If NONE of the balance transfer requests are accepted, then it means that requested balance transfers will not occur and the current lenders will remain the owners of each debt.

That’s how this type of offer works – hopefully it can help you save tons of money!

Disclosure

Is Home Mortgage Interest Deduction A Good Idea?

Is home mortgage interest deduction a good idea?

This is one of the most frequently asked questions at our live events.  Below is my answer.

If you have a mortgage and are paying interest, it is ABSOLUTELY very important to take the mortgage interest deduction. BUT there are a few key facts to consider as well.

One thing I have heard commonly stated is “I am not going to pay off my mortgage early because I do not want to lose the mortgage interest deduction.” I believe this saying was initiated by banks because it is much more costly to keep the mortgage than to pay the taxes owed without the interest deduction.  See the example illustrated below.

The Mortgage Interest Deduction
Let’s say you paid $5,000 in interest on your mortgage last year. By taking the deduction, you effectively reduce your taxable income by $5,000. You receive back the tax rate on that home mortgage interest deduction. If your tax rate is 30%, you will receive a refund of $1,500 because of the home mortgage interest deduction (30% of $5,000). Of course, the bank keeps the $5,000 you paid in interest. Uncle Sam receives 30% of your taxable income which is now $40,000 because you were able to reduce your taxable income by the $5,000 interest you paid. The total net OUTGO from your bank accounts to Uncle Sam and the bank is $17,000!

The Paid-Off House Scenario
Well, you are living life pretty good in your debt-free condition! You have paid off your house, so now you no longer pay interest to the bank (yay!). This means you will be taxed on your full income of $45,000. If your tax rate is 30%, the total net OUTGO paid to Uncle Sam is $13,500!

NET RESULT:  By eliminating your mortgage, you have $3,500 LESS OUTGO from your bank account to someone else.

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The Race – Who Will Win?

As children, we’ve all heard the story about the tortoise and the hare challenging each other to a race.

We were shocked to learn at the end of the story that the slow-poke turtle beat the lickety-split rabbit.

Would it shock you to learn that people who choose the turtle approach with their finances usually end up much better off than those who choose the long-eared approach?

Those that choose the rabbit approach use the following two-step logic:

  1. “I wanted to buy a truck, and I was able to buy it that very day!”
  2. “Now, I want to get out of debt today, so I should be able to become debt free this very day!”

When their urgent desire to fix their financial situation wanes, the debt still remains and they give up.

Those that choose the turtle approach use the following two-step logic:

  1. “It was a series of decisions that put me in this financial situation.”
  2. “It will take a series of decisions that will take me to the financial situation I desire.”

Do you see the difference in the approach? Do you feel it?

I wanted to become debt free except for my house on December 2, 2002 when I experienced my IHHE Moment. But it took a series of committed decisions over 14 long months for my family to achieve debt freedom.

Which process will you choose? Or which process have you chosen?

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BROKE MENTALITY QUESTIONS: How Much Are The Payments?

I am passionate about helping people win with their money.  This means that I really focus on the statements that people make and how they make them.  I observe their body language, tone, pitch, and wording.

There are some statements that are particularly telling of what I call a “broke mentality” – the thinking of a financially broke individual.

One of those statements is “How much are the payments?

People who are not broke ask the better question – “How much is the total cost – the purchase price AND the ongoing operating expenses?

I have observed that people who ask “How much are the payments?” are more likely to:

  • Pay a much higher purchase price
  • Pay a much higher rate of interest
  • Be unaware of the ongoing operating expenses
  • Finance their purchase versus pay cash
  • Still be paying for their purchase even after that item has been discarded

We are ALL susceptible to falling into the “broke mentality” – Have you ever made decisions this way?  Would you mind sharing your story in the comments?

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Improving 0% Interest Balance Transfer Credit Card Offers

As regular readers of JosephSangl.com know, I am passionate about connecting people to ways to lower the interest rate on existing credit card debt.  This is why I was so excited to see that credit card providers have begun offering 0% Interest Balance Transfer offers with no transfer fees!

We have updated the on-line offers that we have found HERE (http://www.josephsangl.com/2011/07/19/0-percent-balance-transfer-credit-card/).

If you have existing credit card debt that you are paying a ton of interest on, this is a great way to reduce that interest to ZERO!

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Wants Vs. Needs – What We Can Learn From The Greece Debt Crisis

I was listening to the news broadcast coverage of the Greece debt situation recently, and here is how the information was being delivered in all of the coverage.

  1. Greece has a debt problem
  2. Because Greece is part of the “Euro Zone”, this means that the “Euro Zone” has a problem
  3. Because French and German banks are heavily vested in Greek banks and debt, they stand to lose the most if Greece defaults
  4. In order for the “Euro Zone” countries to “bail out” Greece, the government and citizens of Greece must accept restrictions and cuts – so-called “austerity measures”
  5. The Greek government and citizens don’t want these cuts and restrictions

My response (out loud many times) has been, “OF COURSE, you don’t want cuts and restrictions – NO ONE does!  BUT your economy is BROKE and everything has been financed and leveraged to oblivion – with OTHER PEOPLES MONEY!”  Based upon recent data I have seen, nearly 95-percent of Greek debt is owned by foreign entities.”

Let’s explore this in terms that we can all understand better.  Suppose you let your neighbor borrow $10,000.  Then your neighbor spent all of the money with no real plan for repayment, and when you approached them for repayment, they said, “But if I pay you back all of the money I borrowed from you, I will have to reduce or cut out some of my lifestyle.  I’m not willing to do that.”

How would that work for you?

I have said it 10,000 times if I have said it once. The day I stopped whining and complaining and started taking the tough and difficult actions necessary to get my financial house in order is THE DAY that I started winning with money!

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What’s Next After Debt Freedom

I meet a lot of people these days who are in the midst of their pursuit of Debt Freedom.  I call it a “Debt Freedom March.”

They have used a tool like our Debt Freedom Date Calculator to calculate their Debt Freedom Date, and they have realized just how much of their money is going to a bank or lender.  For the average family with non-house debt, somewhere between $500 and $1,250 per month is being paid in monthly payments.  If you include the house payment, that average amount is between $1,250 and $2,000 or more per month.

For those who remain focused and diligent, debt freedom is achieved, and it is incredible!

Then the inevitable question shows up – “What’s next?”

If you are one of those who is asking this question, here are a few things to consider using the newly-released money for:

  • Pursue a dream
  • Give more away to causes you really believe in
  • Build a larger emergency fund
  • Invest money into a dream
  • Invest money into someone else’s dream
  • Reward yourself with a purchase of something you’ve always wanted

What other things would you recommend using this money for?

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Words That Describe Debt Freedom March

I was pondering about my family’s journey to debt freedom, and it brought to mind the following words:

  • Worthwhile
  • Margin
  • Motivating
  • Freedom
  • Intense focus
  • Self-Control
  • Disciplined
  • Dreams
  • Abnormal
  • Effort
  • NO!
  • WAIT!
  • LATER!
  • Tiring
  • Exciting
  • Possible

Those are the words that I thought of.  What are some that you would add?

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Transfer A Balance – And Save BIG TIME!

If you are carrying a credit card balance or a furniture purchase with a typical interest rate of 14.00%, 21.99% or 27.99%, you can save an incredible amount of money by transferring your balance to a 0-percent balance transfer credit card!

Here is an example of savings that can be achieved.

Balance: $7,000 Interest: 21.99% Monthly Payment: $140

If this balance were transferred to a 0-percent balance transfer credit card with a 3-percent transfer fee, the calculations would look like the following.

This ONE MOVE could save $1,314.22 in ONE YEAR! If the balance would not have been transferred using a 0-percent balance transfer credit card, the actual balance owed would have dropped by a mere $141.47. By choosing to take just 15 minutes to fill out an on-line balance transfer application, a total principal reduction of $1,330 could be realized.

$1,314.22 saved for 15 minutes work. That’s like making $5,256.88 an hour!

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Companies That Are Debt-Free

What do the following companies have in common?

  • Apple (AAPL)
  • Fastenal (FAST)
  • Panera Bread Corp (PNRA)
  • Texas Instruments (TXN)
  • Bed Bath & Beyond (BBBY)

Besides being TOTALLY UNRELATED organizations, they are all 100-percent DEBT-FREE!  Google was 100-percent debt-free until 2010 and Microsoft was 100-percent debt-free until 2009.  Each company possesses more than enough cash to eliminate the debt without any financial margin issues.

Take a good look around at America’s businesses – they are almost ALL carrying some debt.

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