Will your program work for me with my income or debt load?
Lenders lend out money based on what are called "ratios," which essentially compare your income to your debts or your income to your monthly payments. What this means is that if you have a small income, they will lend you a comparatively small amount of money. If you have a larger income, they will lend you a larger amount of money. But the ratio of that loan, or credit card credit limit, or financed amount on a car compared to your income will be the same, whether your income is high or low.
For example, if your income is say $30,000 a year, a lender might offer you an $80,000 mortgage. A credit card company might offer you a $1,500 limit on a credit card. But if your income was $60,000 a year, that same lender might offer you a $160,000 mortgage, and the credit card company might up the charge limit to $3,000. The numbers get bigger, but the ratios of the incomes to the debt amounts are the same.
This means your income will generally be able to pay off your debts in about 5 to 7 years, no matter what that income is, because your debt load will be proportionate to your income. Bigger income, bigger debts. Smaller income, smaller debts. The program will work for you in either case. The only requirement is that you are at least able to make the minimum required monthly payments on all your debts each month.
How can I pay off my debts and save for my children's education at the same time?
This is probably the most emotionally charged issue I deal with, but the fact is that — to a certain extent — you will have to choose between building a secure future for yourself and your children's educations.
What I did was to "help" my kids with college expenses, amounting to about half what it cost them to go to school. They not only worked some, but they took their classes very seriously, because they had personal dollars invested in them.
The idea that we "owe our kids a college education" was started by colleges, just like Hallmark creates holidays so they can sell more cards. What we do owe our kids is a realistic perspective on how life works. And, in life, no one gives you anything for nothing, so not getting a totally free education helps "educate" them for the reality that you have to WORK for everything of value you want in your life.
The bottom line is that — unless you can get your kids to sign a contract guaranteeing that they will take you in and support you in your old age, because you invested your retirement into their educations — I suggest you take care of your retirement first. Help them as much as you can, but don't sacrifice you for them.
Should I get a consolidation loan to pay off some of my debts, or should I just pay them off as they are now?
Debt consolidation can be a useful tool in your debt-elimination plan, as long as the newly freed-up monthly cash flow is used to accelerate the pay off of all your debts. If it's used to just buy more current lifestyle stuff and experiences, you haven't improved your life one bit.
And, I also recommend you cut up the credit cards you paid off or you'll be tempted to charge them back up again...leaving you far worse off than before your consolidation.
The important element you need is a debt-elimination PLAN. Consolidation is just a temporary monthly cash flow relief mechanism. It doesn't reduce your debt at all. You still owe the same amount of money...probably more if any fees were rolled into the new loan. The Transforming Debt into Wealth System provides a solid, proven plan. If you use consolidation as part of a TDIW debt-elimination and wealth-building plan, it can be helpful. Otherwise it's likely just temporary relief.
Should I tithe to my church while I'm trying to pay off my debts?
My wife and I tithe, and we now contribute above our tithes to ministries, organizations, and individuals we feel led to help.
But for many people the issue is that they cannot mathematically afford to tithe and make the monthly payments on their debts. This is a slightly more complicated situation to which I have given a lot of thought and prayer, and I believe that God expects us to meet our obligations and honor our commitments IF POSSIBLE (Matt 5:37, James 5:12). I interpret that to mean that if we can at least make the payments on money we agreed (credit card application form) to pay back, we should do that.
If we cannot make the payments — our income is insufficient — we can then explore other options such as debt settlement or bankruptcy.
But let's get back to the tithe. I believe, based on the Bible, that God would want us to honor our obligations until we've freed up enough monthly cash flow to tithe AND make all our remaining debt payments. Once a person has reached that point, I would recommend they begin tithing while they continue eliminating the rest of their debts.
Should I lease a car?
My entire money philosophy is based on a foundational belief... There are two ways for an income earner to use their income stream:
1. To RENT a lifestyle. 2. To build a financially independent life.
In my way of seeing the world, leasing is renting. When I experienced the financial crash that led me to write my first book on the subject, I was leasing a Corvette for me and a big luxury car for my wife. Both payments caused us heartache when crunch time came.
My philosophy is that a car is "Transportation," not self-image, professional image, or anything else. Of course we all want dependable transportation that doesn't look like a refugee from a salvage yard. But you can keep yourself in good, clean, used vehicles that will give you years of service for $10,000 or less each...leaving a lot more of your income to build a life...because you're not wasting it on renting a lifestyle.
Should I close my credit card accounts as I pay them off?
I recommend you do not close the accounts. The reason is that your credit score (FICO score) will actually be higher if you have open credit lines without balances on them.
Today your credit score can be a factor in much more than just qualifying for more credit. It is frequently used by employers considering you for a job, phone companies in determining your deposit for phone service, insurance companies assessing your "risk" likelihood for having an accident or getting sick, and a lot more. So keeping your score in good shape can still have value for you even after you're debt-free.
The one discipline you'll have to maintain if you keep the accounts open is to cut up the new cards when your creditors send you replacements as your cut-up cards expire through the years ahead.
How can I determine my Accelerator Margin if my income is inconsistent from month to month?
My suggestion for planning purposes is to average out your annual income into monthly chunks, so you can at least estimate how long it will take you to pay off your debts. Take last year's income (or this year's projected income) and divide it by 12 to come up with your average monthly income.
From a practical standpoint, you'll probably need to pour extra Accelerator Margin into your debt-elimination payments in the months when money comes in, and then back off to maybe just making your minimum required payments when cash flow is low. In fact, you should probably look at some ratio, like 75/25, where in a month when your income is high you use 75% of the extra amount for Accelerator Margin and put the remaining 25% aside in case you have a shortfall the following month.
I'd think that after a few months of this you'll be able to see what percentage you need to apply to your circumstances.
Your situation makes the Transforming Debt Into Wealth process a little more challenging to manage, but it will still work for you.
What do I do if my spouse/partner is not interested in cooperating with me in implementing your plan?
I'm not a marriage counselor, but the issue usually revolves around "right now" thinking versus "long term" thinking. You might want to have a discussion with him or her about your marriage's long term dreams and goals. How do you want your golden years to look?
Once the long term goal or vision is clear, then ask, "What steps do you think we'll need to take to get there?"
If that doesn't bring about a useful response, you might try, "Do you think we can continue using money the way we do now and get to this vision we share for the future?"
If he or she comes to a place where they too can see that continuing your current financial patterns will not get you to where you want to end up, then you could suggest they listen to the CDs as one possible alternative strategy.
If that doesn't work, I'd seriously consider suggesting to him or her that you visit with a counselor, because a relationship that's incongruent on the issue of money is one that can be a time bomb ticking away. Money disagreements are one of the leading causes of divorce, so it's nothing to be trifled with.
If your relationship is otherwise strong, you should need very little counseling. The problem many couples have is that they talked about a lot of things when they were courting...unfortunately, how they view and use money was probably not one of them. So they end up sharing income and expenses, but not a common philosophy on how they should be managed.
You have to get to as common a money philosophy as possible or you'll continue experiencing minor and potentially major conflict in this area.
What about using mortgage debt to buy investment real estate?
My position on mortgages for real estate investing is that you can and should use debt to leverage a real estate investing business, but you should NOT mortgage your personal residence to buy investment properties. Real estate investing is a BUSINESS. It is not just a personal investing activity. If you want to invest in real estate, start a corporation or limited liability company (LLC) to house the investing activity.
Creating this business entity will build a legal wall between your personal finances and your investment properties, so that if anyone gets injured or for any other reason decides to sue one of your properties, they can only get to your business, not your personal assets. But be sure of what a real estate investing business should accomplish for you before you start down that road.
The purpose of any business is to flow cash over the legal wall into your personal finances. If money is flowing from the personal side into the business side, you don't have a business, you have a welfare program. The business should exist to give you life, you should not exist to give the business life. If, after the first 6 months to a year, you are supporting the business out of your personal funds, seriously consider shutting it down. It is diminishing, not improving, your personal financial life.
What about just declaring bankruptcy?
Bankruptcy laws were principally written for the person who finds him- or herself in an untenable financial situation, through no fault of their own. Bankruptcy is for people who CANNOT make their monthly payments.
If you CAN make your monthly payments — even if that's all you can do — bailing out on your creditors because that's an unpleasant or restrictive circumstance is not what the law is for.
And if you CAN at least make your monthly payments, my Transforming Debt into Wealth Program will work for you. It will help you pay everything off as fast as it can be paid off. At that point, you will have a substantial net worth because all your assets will be YOUR assets. And your monthly cash flow will be YOUR monthly cash flow. That's the purpose of the TDIW system.
Do I need to own a home for this program to work for me?
No, you don’t need to own a home for the program to benefit you. If you do not have a mortgage, you should be able to get debt-free that much faster. Then, if you wish to buy a home, you’ll have a cleaner credit rating/FICO score when you're debt-free, and you’ll be able to more quickly save up a down payment, because most of your monthly income will be available for saving.
What if I can't even make all my payments each month?
If you truly cannot even cover the minimum requested monthly payments to all your creditors each month, a suggestion would be to contact Tower Financial Services™ for a free, no obligation cash flow analysis that will suggest the best course of action for your unique circumstance. You can obtain contact information for Tower Financial Services under “Partners” at this website.
How can I possibly pay off a 30-year mortgage in 5 to 7 years?
I’ve heard this question many times over the decade and a half I've been teaching my system. The mortgage companies live on making people believe it takes 30 years to pay off a mortgage, "because it's so big an amount you need 360 bite-sized pieces to be able to handle them on a monthly basis."
The truth is quite different. They want 360 payments, because that kind of amortization allows them to charge you total interest in the range of 1.5 times the amount of the loan. So you end up paying them back 2.5 times what you borrowed.
The Transforming Debt Into Wealth System first helps you pay off all non-mortgage debt. When that is gone, by taking the monthly payments you’d been making to those now eliminated non-mortgage debts, and adding those dollars onto your monthly mortgage payment, you substantially decrease the loan balance, and thereby substantially shrinking the amount of time until the mortgage is paid off.
Should I cash in my IRA or other tax-sheltered retirement account to use the money for debt-elimination?
My standard answer on that is "No," especially for Baby Boomers or older. What I suggest is that you stop funding any investments (with the below exception) until you've paid off all your debts, and that you achieve that payoff using your monthly cash flow without depleting any money already saved up.
The one exception to the above is that I suggest you continue funding any 401(k) up to the amount your employer will match, but no more. If you're currently funding your 401(k) above the match percentage, reduce your contribution to the maximum match percentage and use the rest for debt elimination.
The problem with taking money out of a tax shelter is that you'll pay penalties AND taxes on the withdrawal. That's taking two steps backwards to take one step forward. You're better off just leaving that money in there and eliminating your debts monthly from your income. You'll probably sleep better too, knowing you haven't depleted your retirement account.
What if my budget is so tight that I have nothing extra available to apply to debt-elimination?
The program does not require any up front or any extra monthly amount (Accelerator Margin dollars) to work. Obviously, having some extra to put into the process each month will get you out of debt faster, but you don't have to have it to start. When you pay off your first debt, what used to be its monthly payment will become your starting Accelerator Margin. And that will build, like a snowball rolling down hill, as each subsequent debt is eliminated, recovering its monthly payment.
Doing the plan with zero Accelerator Margin can take a couple years longer, but that's still a lot sooner than just making the regular monthly payments over decades.
And your budget may not be as tight as you feel it is right now. In the Transforming Debt into Wealth System, I show you many areas of life where money can tend to leak out of your finances...and how to plug those leaks so you can recover more monthly money to focus on debt-elimination. But extra money is not required to get started.
How does your system compare to a bi-weekly payment schedule?
Biweekly mortgage plans can take several years off a 30-year mortgage, and save you several thousand dollars in interest. However, my Transforming Debt into Wealth approach will generally take more than two decades off a 30-year mortgage, and save a typical household $150,000 or more in interest.
The reason is that a biweekly payment plan simply adds the equivalent of one extra payment a year. But the Transforming Debt into Wealth plan adds a lot more. After all your other debts are paid off, which is typically what happens before the plan focuses on your mortgage, you will have recovered enough monthly payment money to be able to double, even triple your monthly mortgage payment. That kind of power chews up a mortgage's principal balance in just a handful of years.
Shouldn't I pay off my debts in interest rate order...highest interest rates first?
The debt-elimination prioritization in the Transforming Debt into Wealth System is based on what debts can be paid off the fastest. It puts those debts first, so that their monthly payments can be recovered more quickly and added to your Accelerator Margin. A growing Accelerator Margin is the key to paying off your debts quickly.
The Transforming Debt into Wealth system generally has you paying off debts so rapidly that interest rate is not a significant issue. The affects of interest rates are most onerous when you're making the minimum monthly payment, because the interest component of each payment is calculated on the remaining loan balance, which isn't going down very fast. But when you're paying down that balance in big chunks, the interest calculation has less and less unpaid balance to work with each month until it soon has nothing at all to calculate interest on.
However, if you have a couple debts that have similar balances, but one has a higher interest rate, you can certainly reverse their order and pay off the higher interest rate one before the other. If their balances are substantially different, don't switch them.
Should I include my car lease in my debt-elimination plan?
You can contact your leasing company and see if there is any provision for accelerating the payoff of your lease. If not, your choice is to simply leave it out of your debt elimination plan, pay off everything else, and when the lease is complete BUY a used car to replace it (or buy out the car you've been leasing).
If you'd like to explore having someone assume your current lease, check out https://www.leasetrade.com/.
I've been contacted by a coaching company called Prosper. Are they representing you?
The professional financial coaches at Prosper are working with me to provide Transforming Debt into Wealth coaching for those who would benefit from having a knowledgeable mentor lead them through the Transforming Debt into Wealth process.
Think of it like a celebrity who hires a fitness coach to help him or her get back in shape. It's not that they don't know how to eat less and exercise more on their own. It's that they know they'll be much more likely to succeed with the coach's knowledgeable advice...and their own ongoing accountability to their coach.
Plus, the Prosper program covers much more than debt-elimination. It's a "Financial Mentoring" program where your coach guides and instructs you every step of the way.
I've personally trained the Prosper coaches, and have received many favorable testimonials from Transforming Debt into Wealth students who have worked with them. Click under “Partners” to obtain Prosper’s contact information, and see more about Prosper Coaching/Mentoring under the tab “Prosper Coaching/Financial Mentoring”
What do you think of what's called an "Inverse Mortgage?"
I do not recommend the "inverse mortgage." It is a wolf in sheep's clothing. The bottom line is that it is nothing more than a multi-level marketing scheme disguised as a mortgage reduction plan.
Just put your mortgage into the Transforming Debt into Wealth debt payoff plan and you'll get rid of your mortgage fast enough...and in a way that won't have any liabilities.
Is it really a good idea to accelerate the payoff of my mortgage?
Your mortgage interest tax deduction, even if it’s partly a business deduction, is not a good reason to keep paying interest. As explained in the Transforming Debt into Wealth Program, for every dollar of interest you pay, you will save about 25 to 33 cents of income tax, depending on what tax bracket you’re in. Trading a dollar for a quarter is not a good deal. So, choose. Build your wealth, by transferring the equity in your home from the “Owe” side of your net worth statement to the “Own” side…or have some fun right now and just hope things will “work out.”
They won’t.
Isn’t it true that credit is OK if they give me a low interest rate?
The credit card companies aren’t giving you anything. The only thing they are giving you is an opportunity to pay more money for items than they are worth. You still have to pay the creditors back with your own money. You simply have to pay more than the price of whatever you purchased. Using credit just makes things cost more.
I just use my credit cards during the month and then pay them off as soon as the bills come in. Why should I cut them up?
The truth is that using a credit card – even with the intention of paying the whole thing off when it comes in – causes the average consumer to spend 30 percent more than they would if they were writing a check or laying down cash, because plopping down the plastic is too painless and too convenient for impulse buying. Impulse buying destroys your financial health.
I’m going to retire in a few years. Do I really need this?
By following the Transforming Debt Into Wealth System, you may be able to retire earlier and have a higher quality retirement than you would by continuing to give your wealth to the credit card companies.
Am I going to have to become a miser to make this program work? Will I have any enjoyment in my life for the next five to seven years?
Transforming Debt Into Wealth is not a program of austerity. We aren’t going to tell you to reuse your plastic bags or dry your clothes outside on the lawn to save money. This program is about YOU having control over your finances, about you making informed spending decisions. It’s a managed-spending plan, not a non-spending plan.
Can’t I just pay a little extra on each credit card each month?
No. If you were the General of an army, you wouldn’t send 10 soldiers to each city to conquer a country. You would mass as many soldiers as possible to go into a city and take it over, gather the resources, and go into the next city. This “massing of the forces” is the best way to win the war on debt.
Won’t my kids have a lousy childhood if they don’t get all the latest toys?
By spending yourself into debt, you are jeopardizing your children’s future. Not only are you giving their inheritance to the credit companies, but you are also teaching them the wrong things about money. You are dooming your kids to a lifetime of debt themselves.
I have been putting 15% of my gross income into my 457K retirement fund. Should I stop making contributions until my debt is paid off?
I do generally recommend that people stop funding retirement funds until their debt is gone, then max all available funds.
I do not recommend taking any money out of a fund to pay off debt.
Is it wise to consolidate my credit card debt while implementing the TDIW system and using the accelerator margin?
Consolidating may help increase your Accelerator Margin, thereby shortening your debt payoff timeline. The thing to do is add in the costs of getting the consolidation loan (that will increase your overall debt in the short term), and then run the debt-elimination numbers both ways -- without the consolidation loan and its costs...then with the loan, its costs, and your increased Accelerator Margin. See if the difference in time to payoff is worth the trouble.
Wouldn't it make sense to pay off the higher interest debts first, regardless of the balance?
This is perhaps the most frequently answered question, and the answer is that interest rate has surprisingly little to do with the best order for paying off your debts.
The plan is designed to prioritize debts so you most rapidly accumulate the largest Accelerator Margin by paying off debts and recovering their monthly payments. The “Debt Free” software in the Transforming Debt Into Wealth System offers you the opportunity to try different payoff scenarios with the click of your mouse. My experience has been that selecting "Highest interest rate first" does not make any difference in the overall payoff timeline.
I run a business that requires my marketing to primarily come off of credit cards. Will this system help with that? What I would like is to get to where I am paying off my marketing debt instead of carrying some over every month while eliminating other debt as well.
The principles you'll learn in the program will apply to business as well as personal debt. There are some situations where business debt can be OK, such as mortgages on real estate investment properties. But credit card debt being rolled over from month to month is NOT one of those OK business debts.
I will be 50 years old in a few months. Is it too late for my wife and I to get started in the program, as we don’t own a house, and our assets are almost nil?
It's never too late to begin working towards and living a debt-free lifestyle. No matter your age, being debt-free is an easier way to live than with debt. It will also maximize your cash flow so you can save up for a down payment and get into a house if you choose to.
My wife and I have cut up all 8 credit cards. Should we call the companies of the credit cards that we cut up and close the accounts?
I recommend you do not close the accounts. The reason is that your credit score (FICO score) will actually be higher if you have open credit lines without balances on them. You may want to keep your score up there until you're completely independent of credit.
The one discipline you'll have to maintain, however, is to cut up the new cards when your creditors send you replacements as your cut-up cards expire through the years ahead.
I recently ordered your TDIW package. Will I have anyone to walk me through anything that I need to know about any of the transformations? I already have questions, I just need to know where to get the answers.
Your Transforming Debt into Wealth System package came with a free Quick Start Consultation card. Look through the papers that came in the box, both in the large envelope and loose. You should find a bright, yellow certificate with the information about your free consultation. Your Quick Start coach can answer your questions for you.
My wife and I filed for Chapter 13 last year. We really don't have debt other than the mortgage and the bankruptcy payment. We are still way behind on the mortgage and can't seem to figure out why our "ends" don't meet. What can we do to fix this?
The chapter 13 process should have considered all your expenses and allowed you a payment plan that would let you cover all your monthly bills. If you can't make your monthly payments, you may want to contact the trustee and ask for a readjustment of your Chapter 13 payment.
The other area to look at is your expenditures. Are you spending money each month on things for which there are less expensive alternatives? For example, I have friends who recently told me they can't get by and are struggling each month, yet BOTH of them go out for lunch every work day. That costs them about $200 a month!
Look for money leaking out of your life that you could use to catch up on your mortgage.
We owe money to IRS. Should this be paid off first?
The only reason for putting a debt to the IRS ahead of its normal position in the Transforming Debt into Wealth debt-payoff plan is peace of mind. Or, possibly, if they are charging a horrendous interest rate or penalty that gets worse over time.
What do you suggest we do if we find ourselves in need of some cash, eg, home repairs, while in the middle of eliminating debt?
Perhaps you could divide the repairs into "Critical" and "Desired." Do the critical ones before starting on the program and the desired ones afterwards. If you could refinance and get enough cash to do the Critical repairs, and then put the new mortgage into the debt-elimination plan, that might work. You need to run the numbers and see how that would affect your debt-elimination time line.
Is there a real advantage to using an interest only loan mortgage to pay off my mortgage earlier?
If you're disciplined to follow the plan, an interest only loan can work as well as any other...possibly better if it gives you more Accelerator Margin. The potential downside is that you may have to refinance before you get the entire mortgage paid off, because it's usually last. That may cause you to have to incur mortgage and closing costs again. Run the numbers and see what it tells you. Whichever way gets you debt-free faster is the better way.
When does my 30 day trial of the program start?
Your 30 days starts the day you receive your shipment.
How do you know when I receive my shipment for my 30 day trial to begin?
Our method of shipment allows us to trace the delivery of our shipments so we have the exact date you received your shipment.
I’ve heard the old phrase, “You can’t teach an old dog new tricks”. Aren’t I too old to change my ways?
George Burns reportedly said, “If I knew I was going to live this long, I would have taken better care of myself”. Think of it this way. What is it going to cost you financially, emotionally, and even spiritually if you don’t change?
No one knows how long they’re going to live. Why shouldn’t I live my life to the max, spend my money now, and let the creditors pay the price when I die?
You answered your own question. No one does know how long he or she will live. What’s going to happen if you finance your life to the hilt and you live to a ripe, old age of 99? The creditors will have all your money and you’ll be too old to do anything about it. Isn’t it better to take a few years now and get financially free so you can really live comfortably without having to worry about paying the bills?
I have the kind of job where it’s very important that I drive an expensive car. I can’t be seen in a used car; it will detract from my image. What do you suggest?
This is a common fallacy. Many self-help ”experts” advise people to go out and buy a Mercedes so that they can feel wealthy, which is then supposed to attract wealth. What really happens is that people free great for the 1st month or two until that huge car payment shows up and they have to struggle to pay it. Who can feel wealthy when a large chunk of their income is going to creditors? If you really feel the need to have a fancy car, buy one that is a couple of years old. The bottom line is that “feeling wealthy” comes from your attitude, not your vehicle. The attitude of success is what you project to your clients, and you don’t need an expensive new car to do that.
How come everyone isn’t accelerating his or her mortgage payments?
The reason is that most people don’t know they can! They don’t see anyone else doing it; there isn’t any peer pressure to accelerate payments. And the mortgage companies certainly won’t suggest it as an option, since that would mean less money they would earn in interest!
I don’t have a mortgage. In fact, I’ve been saving for a down payment. How does this apply to me?
If you’re not yet making mortgage payments, you should use the Transforming Debt Into Wealth System to pay off all your other debt (bank cards, store charge cards, gas cards with any balance on them, car loans, student loans, and so on). Once your debts are gone, put all your money you’ve freed up for each month into a money market account or Certificate of Deposit (CD), to more quickly build up a down payment for your home. As soon as you get into your new house, immediately start the process of paying off the mortgage using the Transforming Debt Into Wealth System. Notice that the suggestion was to pay off all your debts first…then begin saving for your down payment. This is the sequence that will get you into your home the fastest, and without any debt still hanging over your head.
Someone recommended keeping your mortgage and investing what you would call the Accelerator Margin. Why would someone recommend keeping a high mortgage?
I can’t explain it. It doesn’t make mathematical sense. Some “wealth-building gurus” advocate mortgaging your home to the hilt and investing the money to get rich! If you do that, you end up paying 92-95 percent interest on each monthly mortgage payment, just so you can make 10,20,or 30 percent in the market. And, of course, that’s assuming you make money in the market. There are no guarantees in the market, so you could lose 10,20, or 30 percent, while still having that home mortgage. |