HOW TO GET COMPLETELY OUT OF DEBT, INCLUDING YOUR MORTGAGE, IN 5 10 YEARS OR LESS. by Michael Harris

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1 FINANCIAL FREEDOM BLUEPRINT DEBT FREE LIVING QUICK START GUIDE HOW TO GET COMPLETELY OUT OF DEBT, INCLUDING YOUR MORTGAGE, IN 5 10 YEARS OR LESS by Michael Harris DISCLAIMER: I don t give financial advice. I'm essentially a math teacher, showing you the mathematics of debt and pointing out the reasons why you should want to get out of debt fast. I'm going to give you a lot of good ideas here today, and it's going to be up to you to take those ideas, investigate them further, and see if they're going to work for you. And I think you'll find out that they'll work very nicely.

2 GET OUT OF DEBT! STEP 1 STOP CREATING NEW DEBT! STEP 2 REVIEW CURRENT EXPENSES PAYOFF BOOSTER An amount of money you will use every month to speed up your debt elimination program. Try for 10% of your monthly income for your Payoff Booster This can be gross income or net income. The program works very well without a Payoff Booster but if gives you a nice jump to getting out of debt if you can come up with one. The easiest place to find Payoff Booster money is to stop paying extra on ALL your debts. Why? This will be clear in a few pages, but for now, simply stop paying anything but the minimum required payment on your debts. To clarify as we go forward, DEBTS are those obligations that you can actually pay off some day. Mortgages, credit cards, student loans and car loans are great examples. Debts do NOT include bills such as utilities or groceries. WHERE ELSE CAN WE FIND PAYOFF BOOSTER? $ Don t buy new cars buy used cars for CASH $ If you must finance, do a 36-month maximum. Anything more and you can t afford it. $ When buying cars don t pay for anything except the essentials - You can get car mats at dollar stores - Cars come from the factory with rust proofing -You can get better deals on stereos outside of the dealership $ Never lease a vehicle

3 $ Buy groceries in bulk. $ Shop with a list (not when hungry!) $ Bring a bag lunch to work $ Consider store-brand groceries $ Look to buy things second-hand $ Never buy extended warranties - Only 4-12 cents of every dollar put toward these, ever go to solve a problem - If you do buy them, find out what company backs the warranty. Use well-known companies. $ Negotiate everything. Play one company off another. $ Get new quotes for insurance $ Hold a garage sale $ Shop out of season (buy winter stuff in July and summer stuff in January) $ Car pool $ Limit movie going to matinees or rent them $ Use the library $ Save your loose change $ Add windfalls to your Payoff Booster (tax refund or inheritance) Adjust your withholding at work so you aren t getting tax refunds greater than $500. It s a free loan to the government. FINDING EXTRA MONEY STILL A PROBLEM? Keep track of your spending with a chart like that on the next page. After 30 days you ll have a good idea where your money is going and where you could cut back if you had to.

4 WHERE DID IT ALL GO? EXPENSE WORKSHEET HOME DAILY WEEKLY MONTHLY Rent/Mortgage Electric/Heating Telephone Water/Trash/Sewer Cable TV Computer Services FOOD/ENTERTAINMENT Groceries Eating outside home Movies/sports, etc. INSURANCE Life Home Health Auto TRANSPORTATION Gas Maintenance Parking fees INSTALLMENT DEBT Credit cards Student loans Car payments OTHER Vacation Education Child care Gifts Donations Clothing Periodicals (newspapers, mags) Retirement plan Savings/Investing Miscellaneous

5 GET THE DEBT SNOWBALL ROLLING! STEP 1 Fill out the first three columns of Worksheet on the next page. Add your debts starting with the lowest total BALANCE first. NAME OF DEBT = Visa, Mortgage, Car, etc. All items that can be paid off someday. TOTAL BALANCE = What it would cost if you were to pay it off TODAY. MONTHLY PAYMENT = The minimum required by the creditor. If you voluntarily pay extra, STOP and add that amount to your PAYOFF BOOSTER. STEP 2 Add your PAYOFF BOOSTER to the debt ranked number one. In the example on the following pages, Mastercard was the debt ranked #1. The normal required monthly payment is $25. In this example $200 is the PAYOFF BOOSTER. When we add that $200 to the $25 regular payment, we are now paying $225 on Mastercard every month. When we are done paying off Mastercard we now have $225 every month to play with. Add this dollar amount to bill ranked #2, in this case, Student Loan. Now instead of only $25 per month we ll be paying $260 per month. ($225 + $35) NOTE: While we concentrate on paying off one debt at a time, we continue to make the minimum monthly payments on all our other debts. Continue building your snowball as you move down your list of debts, until you are concentrating all your financial resources on your final debt, usually the mortgage. Redo your charts any time there is a change in your situation, for example, you have to increase or lower your PAYOFF BOOSTER or you absolutely must go into further debt. Add this new information to your chart and keep going.

6 DEBT PAYOFF! WORKSHEET NAME OF DEBT (A) TOTAL BALANCE (B) MINIMUM PAYMENT (C) RANKING (D) PAYOFF BOOSTER (E) NEW PAYMENT (C + E)

7 NAME OF DEBT (A) MASTER- CARD STUDENT LOAN TOTAL BALANCE (B) DEBT PAYOFF! WORKSHEET (SAMPLE) MINIMUM PAYMENT (C) RANKING (D) PAYOFF BOOSTER (E) NEW PAYMENT (C+E) $1,200 $25 1 $200 $225 $2,000 $35 2 $225 $260 VISA $3,500 $70 3 $260 $330 CAR 2 $7,300 $379 4 $330 $709 CAR 1 $17, $709 $1,084 MORTGAGE $120,000 $800 6 $1,084 $1,884 DEBT-FREE = IN 9 YEARS, 3 MONTHS 20 YEARS 7 MONTHS FASTER THAN NORMAL! YOU WILL SAVE $116,750 IN INTEREST! RETIREMENT FUND = INVEST $1884 FOR 20 YEARS, AVERAGE 10% YOU WILL HAVE $1,400,000!

8 What about interest rates? Interest rates didn t get you into debt, human nature did. We will use human nature to get us out of debt. We focus on the smallest debt first because we want to build up momentum and good feeling to stick with the process. 96% of Americans end up financial failures thinking they should pay off the highest interest rates first. Focus on getting the small ones paid off first and be among the 4%. WARNING!!!! The credit cards have started doing something that throws a small monkey-wrench in the plan you just learned. Unfortunately there are no hard and fast rules we can offer to combat it because they can change the rules at any time. If you make the minimum payment for some extended period of time, (we don t know how long) some cards will raise your interest rate because they judge you to be a greater risk. So, don t go longer than two months in a row without throwing some extra amount on your cards how much? Unfortunately we don t know. $20?..$50? If you have a good sized Payoff Booster, make it a percentage of that. In a perfect world you d be able to come up with your 10% Payoff Booster AND throw some extra on the credit cards. This applies only to credit cards.

9 HOW LONG WILL IT TAKE ME TO GET OUT OF DEBT USING THIS SYSTEM? USE THE FORMULA BELOW Step 1 Figure the total of all your minimum monthly DEBT payments...(a) Step 2 Figure your monthly PAYOFF BOOSTER, if any...(b) Step 3 Add Line (A) + (B)...(C) Step 4 Figure the total of all your DEBTS...(D) Step 5 Divide Line (C) by Line (D)...(E) Step 6 Multiply Line (E) by (F) Step 7 Find the number closest to Line (F) on the chart below: Example: If Line (C)= $1,549 and Line (D) = $75,000 $1,549 divided by $75,000 =.020 Multiply.020 by 100 = 2>>>>Look for this number on the chart below Year Years Years Years Years Years Years Years Years Years In our example, we see that 2 comes between 2.1 and 1.8 on our chart. That means it will take between 5 and 6 years to get out of debt using this method.

10 HOW MUCH MONEY WOULD YOU HAVE? 3% PER YEAR RETURN MONTHLY INVESTMENT AMOUNT $300 $500 $1000 $ Years $19,394 $32,323 $64,646 $129, Years $41,922 $69,870 $139,741 $279, Years $98,490 $164,151 $328,302 $656, Years $174,821 $291,368 $582,737 $1,165,474 5% PER YEAR RETURN MONTHLY INVESTMENT AMOUNT $300 $500 $1000 $ Years $20,785 $34,641 $69,282 $138, Years $47,073 $78,456 $69,282 $138, Years $124,106 $206,843 $413,687 $827, Years $250,974 $418,290 $836,581 $1,673,161 10% PER YEAR RETURN MONTHLY INVESTMENT AMOUNT $300 $500 $1000 $ Years $23,000 $39,000 $77,000 $155, Years $62,000 $102,000 $205,000 $410, Years $228,000 $379,000 $759,000 $1,519, Years $678,000 $1,130,000 $2,260,000 $4,521,000

11 Review Stop creating new debt Review your monthly expenses Determine your payoff booster Rank debts in order from smallest balance to largest balance Payoff each debt in the order that they're ranked Become completely debt-free and within 5 to 7 years Use the money that you were wasting on debt payments to save for your future retirement

12 Disclaimer: This report makes no warranties or guarantees express or implied, as to the results provided by the strategies, techniques, and advice presented in this report. The publishers of this report expressly disclaim any liability arising from any strategies, techniques, and advice presented in this report. The purpose of this consumer report is to educate and guide. Neither the publisher nor the author warrant that the information contained within this consumer report is free of omissions or errors and is fully complete. Furthermore, neither the publisher nor the author shall have responsibility or liability to any entity or person as a result of any damage or loss alleged to be caused or caused indirectly or directly by this report.