POWER DOWN YOUR DEBT (5)
by adminA Systematic Approach to Paying Off Debt
We have painted a fairly bleak picture of the debt problem in the
United States, and if you are like the majority of Americans buried under a load of debt, you need to be aware of just how grim your own situation is before you can ever hope to do anything about it. While things may seem overwhelming, there is hope. We can promise that Principle 4 will have the most power to change your situation because it teaches a direct method for getting out from underneath debt. When you learn how to “Power Down” debt, you will be able to eliminate compound interest much more quickly and begin accumulating the money you need for future events.
What does it mean to power down your debt? Powering down is a
method of eliminating debt through a systematic approach to paying bills. Through this technique, you prioritize your debt, then work to entirely pay off the first obligation in your prioritized list. Once this debt with the highest priority is paid off, you then apply that debt’s payment amount to the next obligation on your list. As you work through your list of debts, paying off each one, you will continue to add the previous debt payment amounts on top of each other, allowing you to more rapidly pay off your loans by gradually increasing the amount available to you to make those payments.
To more fully understand how the power down method works, let’s
go back to Mark and Joyce. Take a look at their “Get Out of Debt” Report on page 65. This report is Money Mastery’s way of showing our clients the benefits of the Power Down method of eliminating debt as quickly as possible.
Mark and Joyce prioritized by putting the debts that can be paid off the quickest at the top of their list. You will notice on the report that the first debt listed is a VISA credit card. They began working to pay off the VISA card by applying a $55 monthly payment. When that was accomplished after nine months, instead of using that $55 they had been paying to VISA on other needs and wants, they began applying it to the second bill of $215. By applying the $55 to the $215 medical/dental payment, they were able to pay off this second debt in 11 months instead of 12. If they continue this process, adding the combined amounts from each of the previous
paid-off debts to the next prioritized debt, they will be completely debtfree in 8.7 years instead of the 29 years it would have taken them had they not powered down.
Taken from : Money Mastery “10 Principles That Will Change
Your Financial Life Forever
