Page 58 - Workbook1E

Erik and Tracy calculated the Total Interest You Will Pay by subtracting the Total Current Debt from the Total Real Debt and found they would pay $265,148 in interest if they didn’t change the way they paid debt. The Total Number of Months to Pay Off all Your Debts would be 360 since that’s how long
it could take to pay off their mortgage—their largest debt. Dividing 360 by 12 gave them the Total Number of Years of 30 to reach their Initial Debt-Free Day.
Paying or Earning Interest?
Erik and Tracy realized how much their debt would really cost them, and thought about how much wealth they could build if they had that money to invest instead. The true impact of the quote, “Those who understand interest earn it; those who don’t pay it,” really hit home.
Good News... if you’re discouraged by how far away your Initial Debt- Free Day seems, you can make decisions and take action to bring it significantly closer. Erik and Tracy decided to learn and practice healthier methods of paying off their debt in the shortest time, with the least amount of money. Once you reveal your Total Real Debt, you may
also wish to take a proactive approach to eliminating your debt. Next you’ll learn some options to help you get on the right path to a healthier financial future, which can give you a terrific feeling of self-mastery and confidence in many areas of your life.
C Options for Eliminating Debt
Several options are available to accelerate your debt elimination. Some are faster than others, and each has different advantages and disadvantages. Carefully review them and utilize the ones best suited to your financial situation and goals. Again a financial calculator will be helpful in determining which option works best for you.
1. Credit Counseling
2. Debt Rollup Plan
3. Power Payment Plan
4. Debt Management Options
a. Lump Sum Settlement
b. Reduced Payment
5. Bankruptcy—The Final Option
Remember no matter the option you choose, the goal is to eliminate debt. Then you’ll free up your financial resources so you can build your wealth—contributing to your well-being and peace of mind.
“Just think...Only 30 more years to go!”
“His brow is wet with honest sweat, He earns what’er he can,
And looks the whole world in the face, For he owes not any man.”
~ Henry Wadsworth Longfellow
54 Workbook 1: Building a Spending Plan that Works