Get out of debt soon!

It is a sad state of affairs today when some many people in our society are riddled with debt and just not sure what to do about it. Credit cards are often easier to get than are jobs and impulse spending is sky high. I have long believed that our school systems do little to offer much in the way of true financial education or how money actually works. I wanted to share with you a great system I have picked up over the years. I would love to tell you I invented it but alas I did not. I would also love to give credit to its creator; unfortunately, I do not know who created this system as I have learned it from a few different sources. One thing I do know for certain however is it works every time in every situation if used properly. So if you would like to be able to rid yourself from debt and save thousands in interest please read on.

When it comes to money the most powerful force in the universe is compound interest. This is a neutral force that can work for you (accumulating wealth) or it can work against you (keeping you in debt). The choice is up to you if it is working in your favor or not. So, let’s go about getting you out of debt so you can use this great power to your advantage.

The key to this system is what is called your accelerator fund. In very simple terms this is an every growing amount of money used to quickly and easily get you out of debt. This is extra money if you will used to pay off your debts faster. To best illustrate this let me use a fictitious example of a random Joe. Joe takes home $3000 each month and has the following debts with the following monthly payments:

Visa $1000 balance $25 minimum payment
MasterCard $2000 balance $50 minimum payment
Car payment $10,000 balance $250 minimum payment
Mortgage $165,000 balance $1000 minimum payment

If Joe makes his minimum monthly payments of $1325 he will be out of debt in about 30 years, hardly something to be thrilled about. Let’s say Joe needs $1500 to live on each month and he has $1500 available to pay his debts with, this means Joe has $175 in his accelerator fund. I know I am using round numbers here but the principles remain the same regardless of the numbers you use or your situation. To determine which account to apply the accelerator fund to you simply use the account with the lowest balance as it will be the one to be paid off first. In Joe’s case it is the Visa card with the $1000 balance. So to follow the system Joe would add his accelerator fund to his monthly Visa payment so he would be paying Visa $25 + $175 for a total of $200 per month. This would pay off the Visa card in month 5. Step 2 of the plan is to take the new accelerator fund (original $175 + the $25 per month which was going to Visa for a total of $200 per month) and apply it to the MasterCard bill. This means the MasterCard payment is now $250 and will be paid off in another 5 months.

At this point in the game we are 10 months into the program and the first two debt are gone and the accelerator fund now becomes $250 which is added to the car payment for a total car payment of $500. When Joe keeps on this path his 5 year car loan will be paid off in another 17 months meaning it was paid off in half the time and Joe is left with only his mortgage 27 months into the program. Now Joe takes the $500 per month in his accelerator fund and applies it to his mortgage. This will allow Joe to pay off his mortgage 15 years faster and save over $100,000 in interest payments.

There you have it the simplest way I have ever heard to eliminate your debt in the fastest possible way without paying a penny more than you are already. To make the system work faster simply find ways to add funds to your accelerator fund and by all means once you are out of debt do whatever it takes to stay that way.

Cheers,

Chuck