SAVE A FORTUNE · No credit card debts. No monthly repayments. Nothing. Your income would be yours....

SAVEA FORTUNE

FAST12 secrets to eliminateyour mortgage, loans

and credit cards...

Take back control of your money

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SAVE A FORTUNE… FAST is a short and snappy pocket guide that makes sense of money. It explains how we are all victims of a powerful system of manipulation, one designed to get us deeper into debt without showing us how to get out of it. A system perpetrated and proliferated by some of the world’s wealthiest businesses – those who lend us money.

Having revealed the full extent of the problem, this book provides the solution by way of 12 simple secrets. Secrets that offer you a guaranteed formula to bring forward the day on which you’ll own everything and owe nothing.

You’ll learn how to:

4Get completely out of debt, including your mortgage, in the shortest time possible.

4Save thousands of pounds of interest in a low risk, tax free, guaranteed way.

4Quickly and safely create wealth, so you can stop work and live off the interest.

If you owe money to anyone, this book is a “must have”!

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This book has been co-written by Kevin Whelan and Brian Bennis. Over the years, they’ve helped thousands of people manage their money, particularly those who have mortgages, loans and credit cards.

They discovered that most people’s financial arrangements are rarely planned, created more by accident than by design. Yet, when given a basic understanding of money and a simple plan to follow, people not only thrive, they often become wealthy.

Spurred on by the realisation there is precious little unbiased information available about the one subject that touches us all – money – they produced this book. It’s the result of their years of research and experience, succinctly revealed in plain English.

Their philosophy is simple.

“When you owe money to anyone, you need to follow a plan to repay it as fast as possible.”

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This book will challenge your thinking about borrowing money. It’s dedicated to highlighting the real cost of being in debt, and that includes your mortgage, loans and credit cards.

Borrowing money is not wrong. But unless you have a plan to repay it quickly, it could seriously damage your chances of building wealth.

As you read the book, you may be struck by a realisation leading to an irresistible urge to repay every penny you owe as quickly as possible.

Take your time.

Experience that moment.

Read the secrets and then take action. Action that could literally save you a fortune.

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Debtfree Day LimitedFelcourt FarmFelcourt RoadEast Grinstead

RH19 2RRUK

Telephone: 0845 200 1842

Email: [email protected]

www.debtfreeday.com

Published by Debtfree Day Limited© 2004 Debtfree Day Limited

ISBN 0 9547050 0 9

All rights reserved. No part of this publication may be reproduced, stored in a retrieval

system or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the written

permission of Debtfree Day Limited.

tm

http://www.debtfreeday.com


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SAVEsave, sãv, v.t. avoid the need to use up or spend: store up for future use.

“Take an interest in savingand you will save interest”

FORTUNE FASTfortune, för’chun, n. a large amount of money or assets.

“Wealth is not just about money,it’s also about having the freedom to do what you want, when you want”

FASTfast, fäst, adv. within a relatively short time.

“Time is the most valuablething you can waste”

4 5

Imagine ...How would you feel if you ownedeverything and owed nothing? . . . . . . . 9

A journey to real financial freedom . . 10

ThinkThe world’s gone mad . . . . . . . . . . . . . 13

It doesn’t matter what it’s called,it’s a debt! . . . . . . . . . . . . . . . . . . . . . . 14

Mind your language . . . . . . . . . . . . . . 16

Accentuate the negative . . . . . . . . . . . 19

Your home is your own.Or is it? . . . . . . . . . . . . . . . . . . . . . . . . . 20

Fight the force that works against you 22

Now you see it, now you don’t . . . . . . 24

Why don’t they teach us this at school? 26

Who are you really working for? . . . . . 28

Your Debtfree Day . . . . . . . . . . . . . . . . 31

It’s not what you say,it’s the way that you say it . . . . . . . . . 33

The greatest mathematical discoveryof all time . . . . . . . . . . . . . . . . . . . . . . . 34

Don’t fall into the monthlypayment trap . . . . . . . . . . . . . . . . . . . . 38

CONTENTS


4 5

The real cost is hidden in thesmall print . . . . . . . . . . . . . . . . . . . . . . 41

Borrowing money means payingover the odds . . . . . . . . . . . . . . . . . . . . 42

The down escalator . . . . . . . . . . . . . . . 44

A promise is a promise . . . . . . . . . . . . 46

Good news, bad news . . . . . . . . . . . . . 48

A word about crisis . . . . . . . . . . . . . . . 50

The big messageFocus on your Debtfree Day . . . . . . . . 53

12 secrets to eliminate your mortgage loans and credit cards... fastChris and Amanda . . . . . . . . . . . . . . . . 56

Secret 1Always pay the lowest interest rateon every penny you owe . . . . . . . . . . . 58

Secret 2Maintain the same monthly repaymentafter you have reduced the cost ofyour debts . . . . . . . . . . . . . . . . . . . . . . 65

Secret 3Don’t underestimate the risks ofbeing in debt . . . . . . . . . . . . . . . . . . . . 70

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Secret 4Marshall the forces and use the fullpower of your monthly repaymentto eliminate your debts . . . . . . . . . . . . 74

Secret 5Check your income and expenditureand look for every opportunity tomake an improvement . . . . . . . . . . . . . 77

Secret 6Use money you own to repay moneyyou owe . . . . . . . . . . . . . . . . . . . . . . . . 81

Secret 7Pay more to your lender than youwere paying before . . . . . . . . . . . . . . . 85

Secret 8Connect your income to your debts . . 89

Secret 9Four ways to use a credit card toyour advantage . . . . . . . . . . . . . . . . . . 93

Secret 10Make the most of payrises andother income . . . . . . . . . . . . . . . . . . . . 98

CONTENTS...

6 7

Secret 11Become a great sales person . . . . . . . 102

Secret 12Review Review Review . . . . . . . . . . . . 106

The biggest secret of them allCombine together as many of the12 secrets as possible . . . . . . . . . . . . 110

Life after debtNow the fun really starts . . . . . . . . . . 116

A snapshot on building up wealth . . 122

Teach your children the benefitsof a debt free life . . . . . . . . . . . . . . . . 124

It’s time for actionAre you ready to become debt free? . 127

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IMAGINE...

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HOW WOULD YOU FEELIF YOU OWNED EVERYTHING AND OWED NOTHING?

NO MORTGAGE. No loans. No credit card debts. No monthly repayments. Nothing.Your income would be yours. Think about the freedom you’d have. You wouldn’t have to work. You would have time to do what you want to do and not what you have to do. You’d have more money to spend on things that are really important to you. You and your family wouldn’t be at the mercy of interest rates. You’d be in control.Guess what? It’s not a dream. It really could be yours. Much sooner than you think. The secrets revealed in this book will demonstrate how you can repay every single penny you owe incredibly quickly.Without scrimping or saving. Without completing time-consuming budgets. Without changing your lifestyle. Without taking any risk. All with the money you currently bring home.It’s knowledge companies who lend money would rather you didn’t have. Because it’ll leave your money in your pocket and not pouring into theirs.

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THIS book conveys a big message. One that will help you to a point of financial freedom, when you can stop work if you want to. With money flooding into your life, automatically. Sometimes the message is explicit. Sometimes it’s subtle. But in every case it’s the same.When you owe any money, you need to follow a plan to repay it as fast as possible.Borrowing money isn’t wrong. Countries do it. Businesses do it. And people do it. But you’re unlikely to reach your goal unless you have a plan to follow. Without it, you may find yourself drifting under the influence of a huge system designed to keep you in debt.One thing is certain. You’ll have fun on your journey. Lots of it. You’ll have the satisfaction of beating those who lend money at their own game. But more importantly, you’ll have no debt to hold you back. You’ll build up wealth really quickly, and without risk.As the message unfolds, think. Is this me? Could I benefit? If the answer is yes, do something positive. The 12 secrets will give you the blueprint. Take action and you’ll be on the way to a debt free life. And in the process, you’ll save a fortune.

A JOURNEY TO REALFINANCIAL FREEDOM

10

Where are you heading?

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THE WORLD’S GONE MADTHEY say it’s the best of times. We’ve never had it so good. We have more income. We’re better travelled. Our homes are worth more. We have more possessions. We’re wealthier.But are we?You see, it’s the worst of times too. The world is deeper in debt than at any other time. Countries owe trillions. And so do the people within them. Many leave higher education massively in debt. Committed to a life owing money. People even borrow to buy food. Paying interest for years after they’ve finished eating.It can’t be right.Who taught us to live like this?This is the problem. We’re victims of a powerful system. One of manipulation. A system so big it’s become the norm. And we’ve accepted it.But you don’t have to.If you change your thinking.

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HERE’S the reality. When you owe money to anyone, you’re in debt. Don’t be fooled by the labels. It doesn’t matter whether it’s called mortgage, loan, overdraft, finance, credit card or store card. It’s not even relevant that they may be charged at different interest rates. They are all debts! You want to buy a home. You’ll borrow a vast sum and take many years to repay it. Your lender can charge you a low rate because it has plenty of time to make a profit. It even takes extra security by putting a charge on your home in case you don’t pay. This debt is labelled “mortgage”. So you want to buy a car? It depreciates in value over a short term. Your lender has to make its profit in less time, perhaps five years. It charges you more and labels the debt “car loan”.You want ready-cash to buy Christmas presents. Flexible, easy access money. Your lender may have very little time to make a profit. So it charges big money and labels this debt “credit card”.The simple truth is that being in debt

IT DOESN’T MATTERWHAT IT’S CALLED,IT’S A DEBT!

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seriously damages your wealth. It doesn’t matter whether you can afford the payments. The real issue is this. When you’re in debt, you’re voluntarily giving your money to someone else. Help yourself bring it into focus. Get out six month’s bank statements. Grab a highlighter pen – the brighter the better. Then look through your statements and underline every entry where you make a repayment on money you owe. Then add up the numbers and see just how much you’re spending on debt. You might be in for a shock!No matter what it’s called, if it can be paid off, then it’s a debt!

Don’t worry!We’re all in

the same boat!

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MIND YOUR LANGUAGETAKE the word credit. It’s a very positive word. “It does you credit”. “You’re a credit to your family”. When it comes to money, you find phrases like this. “A good credit rating”. “30 days credit”. It’s all good news. So what about the word debt? It’s completely the opposite. “Severely in debt”. “You’re in their debt”. The very word implies bad news.“Credit” is positive.“Debt” is negative. If you were lending money, would you really give your piece of plastic its true name? A debt card. It wouldn’t really conjure up the image you’re looking for. A credit card sounds much more friendly. It does you credit to have one. Wrong. It does them credit for you to have one!What about the word mortgage? It literally translates from French as “Death Pledge”. So next time you think about your mortgage or read your mortgage statement, remember you could end up owing money for a very long time. Maybe the whole of your working life. Perhaps until you die.That’s nice!

16

“The borrower isslave to the lender”

Proverbs Chapter 22

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MORTGAGEMISCONCEPTIONS

“I’m not in debtI’ve only got a mortgage”If you have a mortgage,

you’re in debt!

“It’s good to have a mortgage”Not if you want to build wealth!

“A mortgage usually lastsfor 25 years”

But if you move home and take out a new 25 year mortgage, you’ll be in debt for longer!

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ACCENTUATE THENEGATIVE

A MORTGAGE has the appearance of an acceptable debt. In fact, a large mortgage is often portrayed as a status symbol. A sign you have a substantial income to qualify for it. But here’s the reality. It’s a noose around your neck. And it could have a tight grip on your money for years and years. Is that acceptable?Here’s a funny thing. When some people are asked if they have any debts, they say “no, only my mortgage”. It’s incredible. The lenders have successfully conveyed their potent message.Prove to yourself the word debt has negative connotations. Tell your friends you have debts of £100,000. And watch their reaction.Remember this. All debt is bad, even a mortgage. And the sooner you repay it, the better.Here’s a thought for you. Always refer to your home loan and any other money you owe as debt. It’s a constant reminder your cash is gushing out of your pocket. Highlight the negative and you’ll want to become debt free much quicker.

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YOUR HOME IS YOUR OWN.OR IS IT?

BEING in debt means you’re not in control. You’re committed to others for as long as you owe them money.When you take on a debt that’s secured, you lose control of what you’ve offered as security. Your mortgage is secured. You may think it’s your home. Think again. It’s not. When you have a mortgage, your home is owned by your lender. If you want proof of this, stop making the payments and you’ll soon see the real owner come and claim it. This is the point. You only own your home when you’ve paid off your mortgage. Before then, it’s not yours. Credit cards and store cards could see you in debt forever! These debts are “revolving”. You charge up your card. You make some repayments. The card company sees you’re able to reduce your balance. So it increases your limit. And you do what it wants and borrow more. It’s a powerful system. Well it is if you’re the card company! It’s a merry-go-round. And it’s very difficult to get off unless you’re aware of the problem.

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FIGHT THE FORCE THAT WORKS AGAINST YOU

COMPANIES who lend money are very creative. They wrap up their debts in all sorts of packages. They work with retailers. Together, they promote their wares with attractive incentives, discounts, interest free periods, cashbacks and easy terms. You’re made to feel good. You’ve been personally selected. Your credit limit is “pre-approved”. You’re sometimes sent cheques with your name on them. Just cash them in. It’s so easy. You can’t resist. Why would you? And it’s much more sophisticated than that. They use state of the art technology to help them in their quest to lend more. They track your spending patterns. They use loyalty cards for their benefit, not yours. They record every transaction on powerful databases. They match your profile against others like you. Their computers predict what you’re interested in buying. When you’re likely to buy. How much you’re likely to spend. Then they bring you offers on easy terms they know you won’t refuse.It all sounds a bit “big brother”. And arguably it is. But it’s real.

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“An investment inknowledge always pays

the best interest”

Benjamin Franklin

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NOW YOU SEE IT,NOW YOU DON’T

CONSUMER borrowing has mushroomed in recent years. The major reason is electronic money. Gone are the days of clanky loose change and crisply folded notes in your pocket. Many transactions are now conducted without seeing anything that looks remotely like cash. A mortgage. An electronic transfer from your lender’s bank account to the seller’s. A debit card, credit card or store card. A piece of plastic that represents money in name only. Automatic transfers. Direct debits. Standing orders. The list is endless.With the rise of the internet, it’s getting worse. You log into your bank account. And with the click of the mouse, you can transfer money almost anywhere. Instantly. It moves at the speed of light and you don’t see it happen. It’s magic. Companies who lend love virtual money. They say it makes your life easier. But they know it makes it more difficult for you to see what’s going on. Invisibility removes the pain of the spend. It’s part of the system.Reflect on this. When you buy anything, envisage you’re paying cash for it. As you count out the imaginary notes, you’ll have plenty of time to assess whether you’re getting good value for money.

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WHY DON’T THEY TEACH US THIS AT SCHOOL?

HAVE you ever been taught about debt? The different types. Where to get it. The costs. The penalties. The annual percentage rate. Secured. Unsecured. What does it all mean? What about the small print? When you sign on the dotted line, do you really, honestly read it? In full? Have you ever been shown how to get rid of your debt? More importantly, why you should get rid of it?There’s not much taught in schools on why you should be debt free. There’s less information available at college. Many leave university seriously in debt. And there’s almost nothing explained when you need it most. In your adult life. When you’re under pressure to borrow. But there’s tons of information on borrowing. It’s not education and it’s not advice. It’s advertising from those with a vested interest. Companies who lend. They spend millions on it. They teach a powerful system of borrowing money. But it’s education in the wrong direction. Channelling your money out of your life. Don’t be mistaken. They are brilliant at it. Just look at their profits. Billions and billions.

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WHO ARE YOU REALLY WORKING FOR?

WHEN you’re asked what you earn, what do you say? If you’re like most people, you quote your gross income. That’s fine. But is it yours? Well, certainly not all of it. Look who’s after a share.The first is the taxman. He charges a range of taxes on your income, your spending and your home. On average, it takes until the end of May to pay him off. How do you feel about working five months for the taxman?Then there’s food and drink. You have to buy these to survive. You need to keep warm, so there are bills for light, heat and clothes. You travel to work. It might take you another month to cover these costs.What about your debts? With borrowing running at record levels, it could take you until the end of October to earn enough to meet the repayments.That leaves only two month’s money. That’s an awful lot of work you’re doing for others!If you had no debts, you’d have much more choice. More of your income to spend on the luxuries of life. To save for a special purchase or an event. Or to invest to make your retirement more comfortable.

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January Taxman

February Taxman

March Taxman

April Taxman

May Taxman

June Bills

July Debt

August Debt

September Debt

October Debt

November You

December You

There is onemajor milestone on

your journey tofinancial freedom...

It’s the day youown everything and

owe nothing...

The day you pay offyour last debt...

We call it your“Debtfree Day”


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YOUR DEBTFREE DAYIT’S the most important day on your journey to financial freedom. A milestone to mark the day you own everything and owe nothing.It’s a great day. A day for celebration. The day the tables turn. When money stops flowing out of your pocket. From now on, instead of paying interest, you’ll earn it.It you don’t know your Debtfree Day, don’t worry. You’ll know how to work it out later. It should be an enlightening experience. But you could be in for a shock.If you have a mortgage or a loan, the day it’ll be repaid is shown on the paperwork. Providing, of course, you keep up the payments in the coming years. And that any investment linked to it, like an endowment or pension, is not facing a shortfall. But what about credit cards and store cards if you’re only making minimum payments? Or if you’re just paying interest on a bank overdraft? It might just dawn on you that the final repayment date could be ...wait for it ...

33

NEVERHow do you feel about that?

(Maybe that’s why borrowing is sometimes called the “never never”)

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IT’S NOT WHAT YOU SAY, IT’S THE WAY THATYOU SAY IT

YOU can express your Debtfree Day in three different ways.

I’llbedebtfreein25yearstime

I’llbedebtfreeon4May2030

I’llbedebtfreewhenI’m65

The first two sound so far away, they’re difficult to appreciate. As a result, you may fail to notice the considerable time you could be in debt. In reality, you may owe money for most of your adult life. The third is very clear. It’s easy to understand ages. “I left school when I was 18”“My son was born when I was 32”“I want to retire when I’m 55”Funny that. How old you’ll be when your debt is repaid is rarely quoted by companies who lend money. Always relate decisions to do with money to your age. You’ll find it’ll bring the true cost of borrowing into focus.

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THEGREATEST MATHEMATICAL DISCOVERY OF ALL TIME

SO SAID Albert Einstein. And he knew a thing or two about maths. He worked out that compound interest has a magical life of its own. Getting out of debt and building up wealth is not rocket science. It’s mathematics. Compound interest to be precise. And because it’s precise, it works. Every time. Guaranteed. Here’s a fun example which illustrates how compounding works. You breed rabbits. Every year, your rabbit population increases by 30%. At the start of the first year, you have 1,000 rabbits. At the start of the second year, you have 1,300 rabbits. But during the second year, you don’t just breed another 300 rabbits. You also breed 30% on last year’s 300 baby rabbits – another 90. So by the start of the third year, you have 1,690 rabbits. Look how the population grows.

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Now 1,000 Rabbits

1 1,300

2 1,690

3 2,197

4 2,856

5 3,713

6 4,8277 6,2758 8,1579 10,60410 13,785

25 705,641

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Once compounding gets a hold, it can quickly get out of hand. In 25 years, you could have 705,641 rabbits! Wow!

Compound interest is governed by only two factors. The first is time. The longer you let compound interest run, the greater the effect. Just look how the rabbit population exploded from 13,785 after 10 years to over 700,000 in the next 15 years. The second is rate. High interest makes a massive difference. Compound interest takes on a life of its own when interest is added to interest on interest. To prove the point, have a look at the rabbit population size at different interest rates.

Year 5% 15% 30%

10 1,629 4,046 13,785

25 3,386 32,919 705,641

Now imagine your rabbit population is your money. At an interest rate of 30%, £1,000 will grow to nearly three quarters of a million pounds after 25 years. Would you like to make this kind of money? Impossible, you might say. Well, actually, it could be possible, if you’re a store card company, charging its penal rates. It’s high street robbery!

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These figures are alarming when you consider the bank rate could be just 4%. Anything over 4% is profit for the money lender. These rates tend to move in proportion. So if the bank rate rises, the money lenders increase their rates to maintain their profits.Compound interest works massively for you when you have no debts. Money pours into your life and not out of it. But when you’re in debt, it works severely against you. And the longer you stay in debt, the greater the force you face.Think about it. It’s obvious what to do. Remember the two factors – rate and time. Put compound interest to work for you. Cut your interest rate. Get debt free fast.The 12 secrets will show you how.

Mortgage 6%

Secured Loan 10%

Overdraft 12%

Unsecured Loan 14%

Credit Card 18%

Store Card 30%

Look at the relative difference in the typical cost of labelled debts.

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DON’T FALL INTO THE MONTHLY PAYMENT TRAP

THIS is the big one. The single most profitable trick used by those who lend money. It’s very difficult to avoid this trap. Don’t underestimate it. It’s incredibly powerful. For them that is. When you buy anything on borrowed money, your thoughts are being focused on one number only. The monthly cost of the debt. Look at the adverts. Check out the shops. Easy terms. Low payments. Zero interest. Affordable? Yes. Costly? You bet. It’s appalling. You see, no matter what the interest rate, almost anything becomes affordable if you spread the cost over a long term. It’s the monthly payment trap. Avoid it like the plague. Always work out the total cost of what you’re spending. If you don’t, you run the risk of getting hooked into debt after debt until together, they’re no longer affordable. And that’s when your problems really begin. Particularly if interest rates rise.

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THE REAL COST IS HIDDEN IN THE SMALL PRINT

THE law requires any company offering you money to reveal the true cost of the borrowing. When challenged, companies argue they tell you everything. They may do. But sometimes you need a microscope to work out what’s going on. Occasionally, it would be helpful to have a first class honours degree in economics or law.It might be all there. But it’s often hidden in the small print. In terminology only an expert would understand.Here’s the problem. There are 10 ways a credit card company can calculate the true cost of the debt. There are at least three ways of calculating how a capital and interest mortgage is repaid.Do you know on which basis you’re being charged and how it compares to the other methods? Are you satisfied you’ve got the best arrangement?This is the key. When you’re asked to sign on the dotted line, read the small print. If you can’t make sense of it, ask for help. Work out the overall cost of the debt. Compare it with other deals. Check whether you could raise the money in a more effective way. Take your time. It could save you a fortune!

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BORROWING MONEY MEANS PAYING OVERTHE ODDS

BORROW £100,000 on a mortgage and it might only cost you a few hundred pounds each month. But over 25 years, you may spend over £300,000! You probably won’t change your decision to buy. But if you focus on the huge cost, you might want to clear it more quickly!A car may be on sale for £10,000. If the salesman offered it to you for an “unbelievable price of £13,780”, you’d think he was mad. But if he came up with easy terms of just £53 per week for five years, you may say yes. Work it out. You’ve still paid £13,780 for a car worth £10,000. What’s worse, when you drive it away, it’s worth much less than £10,000. Borrow £2,500 for a holiday-of-a-lifetime on a credit card charged at 15%, pay a minimum £37.50 (1.5%) and it’ll take you over 56 years to clear it. You’ll pay nearly £10,000 interest. You could still be in debt when you tell your grandchildren about the great time you had!Buy anything on borrowed money and you’ll pay more than it’s worth. Put mathematics on your side. Add up the total cost of the debt.

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THE DOWN ESCALATORWHEN you contemplate borrowing money, it’s like standing at the foot of the down escalator, looking up. Notice how it comes at you relentlessly. It’ll take you some effort to get to the top.Think before you take on a debt. Any debt, no matter how small. When you borrow money, you step onto the escalator. You have to start walking at a reasonable pace just to stay still. If you want to make progress, you have to walk briskly. Getting to the top of the down escalator takes a real effort. You must maintain your progress without a break. Stop for a moment and you go backwards. And quite quickly.Consider what happens if you have £5,000 in a bank account earning 5%. And at the same time, you owe £5,000 on a loan being charged at 15%. You’re losing 10%. Throwing away £500 each year. You’re walking up the escalator but you’re going downwards faster!Stop making payments on your debts for any reason and you could end up right at the bottom. Who knows what’s around the corner. You can see how vulnerable debt makes you and your family. It’s a sobering thought.

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A PROMISE IS A PROMISE

MONEY lenders run an incredible business. When you take on a debt, you may be committing yourself to remain in work for tens of years. You promise a share of your future income for virtually your whole working life.What a commitment. What if you’re ill? What if you lose your job? What if you have to look after others? What if there’s a recession? What if rates rise? Your lender won’t let you off. You might worry but your lender won’t. It has a charge on your home. Don’t pay and you could lose it.Visualise the down escalator. You’re walking up. Your income stops and you stop walking. The result is obvious.Don’t underestimate the importance of making a long-term pledge. You put yourself in an incredibly vulnerable position. For years and years and years.While you’re in debt, make sure you hold adequate protection for your life, your income and your health. Without it, if something goes wrong, you could be right back to the bottom of the down escalator with nothing to show for it.Remove the risk. Take back your future income by clearing your debts as fast as you can.

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GOOD NEWS,BAD NEWS

EVERY decision you take that involves money affects your Debtfree Day. Not just the money you borrow. View all your money as a series of pluses and minuses. It’s mathematical. The pluses bring your Debtfree Day forward. The minuses push it back. If you spend cash that could otherwise be used to repay money you owe, you’ll push back your Debtfree Day. Your decisions add time or take it away. Remember the lesson of compound interest. That time is crucial if you want to save a fortune.If you increase your mortgage to carry out home improvements, you have one of two choices. The positive decision is to pay more and keep your Debtfree Day the same. The negative decision is to pay the same and watch your Debtfree Day disappear into the future, extending the time you’re in debt.Think about every financial decision. It doesn’t mean changing your lifestyle. It doesn’t mean cutting down. It means checking you’re not wasting money that could be better employed reducing your debts. Getting you closer to your Debtfree Day.

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GET OUT OF DEBT

BORROWING AND DEBT

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A WORD ABOUT CRISISIT CAN happen to anyone, almost at any time. Your payments may currently be affordable. But if interest rates rise, you could find yourself just a few months away from a real problem. If you’re plunged into crisis, don’t feel guilty. It’s not necessarily your fault. Below are some of the dos and don’ts!Don’t hide the problem. Talk to those you owe money to. They’re often sympathetic. They have good reason. They may get nothing if you go bust. They could get something if they work with you. Your priority debts are your mortgage and secured loans. Protect your home.Don’t rush to turn unsecured debt into secured debt. You could run the risk of losing your home.If you consolidate several debts into one, do it once only! If you build up debt on your credit cards again, you’ll only make matters worse.Don’t sign up to expensive credit agencies that promise to solve your problems and repair your credit rating. You could throw good money after bad. This book is not about solving serious debt problems. But the secrets that are revealed could provide invaluable help.

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THE BIG MESSAGE

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You can’t solveyour problem if you usetheir solution

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FOCUS ON YOURDEBTFREE DAY

YOU’VE seen how the system works to keep you in debt.You’ve learned about the monthly payment trap. Just because you can afford it doesn’t mean you should borrow!Compound interest is your worst enemy when you’re in debt. But it’s your best friend when you’re debt free.Borrowing money is fine. But repaying it quickly will help you save a fortune in interest. And speed you well on your way to building real wealth.Change your thinking.Start your journey to own everything and owe nothing.Focus on your Debtfree Day. How old will you be? The time has come. The secrets are waiting. Are you ready to begin your journey to financial freedom?To take the first step towards your Debtfree Day?

If you are not convinced that being debt free is the best way to build wealth...

...please don’t read on

There’s no point

The secrets won’t help you

You have to change your thinking FIRST

12 SECRETSTO ELIMINATE YOUR

MORTGAGE, LOANS AND CREDIT CARDS

...FAST!

CHRIS AND AMANDASAY hello to our virtual family. Chris is 40 (he’ll be 41 in two months time). Amanda is 39. They’re married and they have two children, Dominic aged 7 and Kirsten who is aged 4. They live in Slough. They’ve just moved to a lovely new home. They took on a repayment mortgage to buy it. They have £5,000 saved for emergencies. They own two cars, one of which is new. They bought the new one with the aid of a loan. They have a credit card and a store card. They pay more than the minimum. Here’s a summary of what they owe.

Type of DebtAmount

OwedTermLeft

Interest Rate

Monthly Cost

Total Spent

Mortgage 125,000 25yrs 6% 805 241,500CarLoan 12,000 5yrs 14% 279 16,740CreditCard 5,000 7yrs 18% 105 8,820StoreCard 2,500 6yrs 30% 75 5,400TOTAL £144,500 25yrs n/a £1,264 £272,460

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They both work. Together they earn £40,000 per year gross. They pay tax at the basic rate. When it comes to the money they owe, they’re perfectly happy. They manage all the repayments with ease and they’ve never missed a payment. They are comfortable. They see no reason to change anything. As the secrets unfold, you’ll see just how good the companies they’ve borrowed from have been in manipulating them. Chris and Amanda are wasting a staggering amount of money. And they don’t even realise it. Chris and Amanda will reach their Debtfree Day in 25 years time, when the last payment on their new mortgage is made. No problem. Or is there?Chris and Amanda changed their thinking. They no longer refer to their money in years. They recognise it’s too easy to be mislead. Here’s the result.Chris and Amanda will own everything and owe nothing when Chris is 65. Actually, to be more precise, when Chris is 65 years 10 months. Immediately, they saw a problem. Chris retires on his 65th birthday. So they’re facing almost a year of mortgage payments after Chris has stopped work! Whoops!

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SECRET 1

Always pay the lowestinterest rate on everypenny you owe

IF YOU’RE borrowing at 12% when you could borrow at 6%, you’re paying twice as much for nothing! This secret is obvious. Always ensure your money is charged at the lowest possible rate. It’s that simple. It’s pure mathematics. That said, you must always check the small print. Sometimes you’re offered a fantastically low rate for a short period. Then a really high rate for a long period. This could mean you paying much more in the long run. Look at every penny you owe. Check the market. If you find a more competitive deal, switch. But before you move your debt, check the terms to avoid bumping into charges and penalties. Time your move to make every penny count.Don’t be a slave to the labels. It’s the price that counts. Check the rate and never, ever pay more than you need. This is what you should do. Merge your credit card into your mortgage and slash the rate. Then pay the same as you were before. You’ll clear the amount on your credit card in much faster time.Don’t worry about the term. If you merge your credit card into your mortgage, should you worry that the debt is going to last for years? Of course not! Who says you have to keep it going for 25 years? Your mortgage company would love it. But you won’t.

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You owe £5,000 on your credit card. It’s being charged at 15%. You pay £75 per month. It’ll take you 142 months to clear. Put it on your mortgage at 5%, pay the same £75 per month and it’ll be gone in 78 months. Obliterated in roughly half the time.With today’s flexible loans and mortgages, there’s no need to pay high interest on any money you owe. Merge high cost debts into lower cost debts.If you own a home, combine everything you owe into your mortgage. If you can’t achieve this because your income is insufficient or you’re tied to a particular mortgage that would cost you dearly to leave early, merge your debts into your next lowest, perhaps a secured loan. Work through all your debts and convert them into the lowest cost possible.But don’t just do it blindly. Read the small print. Beware of the exit charges and penalties that prop up the lender’s profits. Make sure you have answers to these three questions:1. How much am I borrowing including set up costs and associated insurance?2. How much will it cost me over the full term of the debt?3. What extra charges will the lender impose if I miss payments or pay off the debt early?

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Think carefully before turning unsecured debt into debt secured on your home. It’s nothing to worry about if you have a plan to become debt free.Don’t be caught napping. You know what will happen. When you merge and repay an expensive debt, you may receive a new offer. Don’t fall for it!Don’t be persuaded by the man on the TV advert that you can consolidate your debts, slash your outlay and borrow more too! Quite simply, it’s propaganda to keep you in debt for longer. Don’t fill the void. Merging your debts should be a one-off exercise. If you borrow more in the process, you’ll make it worse.When you repay any debt, destroy the evidence. Cut up your credit and store cards. Shred the paperwork. Tell your friends you’re making progress. The more people you inform you’re on your way to financial freedom, the easier it’ll be to stay on track.Small savings add up to huge sums. Compare prices. Research thoroughly. Take days. Weeks. Even months. Better still, ask an expert. Here’s why!The difference between one mortgage and another could be 1% and often much more. Doesn’t sound enough to worry about, does it? Wrong. A saving of just 1% on a 25 year life of a £90,000 interest only mortgage is £22,500! That’s very well paid research!

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CHRIS AND AMANDACHRIS and Amanda shopped around for a flexible mortgage. They found one offering a rate 1% cheaper than their current mortgage. The interest rate was 5%. They borrowed enough to repay their more expensive debts. It effectively slashed the interest they paid on every penny they owed.

Type of DebtAmount

OwedTermLeft

Interest Rate

Monthly Cost

Total Spent


Type of DebtAmount

OwedTermLeft

Interest Rate

Monthly Cost

Total Spent

Mortgage 125,000 25yrs 5% 731 219,300CarLoan 12,000 5yrs 5% 226 13,560CreditCard 5,000 7yrs 5% 71 5,964StoreCard 2,500 6yrs 5% 40 2,880TOTAL £144,500 25yrs 5% £1,068 £241,704

After

Before

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note the lower interest rate

Chris and Amanda saved £30,756

They slashed their outlay by £196 per month

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Key points in Secret 1:

• Always switch to a lower cost debt whenever possible.

• If you move a debt to cut its interest rate, time it to minimise charges and penalties.

• If you merge any debts, don’t increase your borrowing.

• Keep all your debts as flexible as possible so you’re well placed to move them again to save more interest.

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SECRET 2

Maintain the same monthly repayment after you have reduced the cost of your debts

YOU’VE done your research. You’ve merged your debts. You’ve cut your monthly repayments. You’re better off per month. But are you really making it count?If you simply accept the lower payment you found in Secret 1, you will be better off. But you won’t have moved your Debtfree Day. You’ll still owe money for exactly the same number of years. You see, we all live to our means. Your monthly windfall will quickly disappear and you probably won’t feel the benefit.Think about this. If you weren’t missing payments on your former higher cost borrowings, it proves you can afford the payments. Here’s the secret. Make the same repayment on your new debt as you were paying before and you’ll reach your Debtfree Day more quickly. Much more quickly.As a rule, your monthly payments will rise and fall in line with general movements in interest rates. Whenever rates fall, pay the same. Your Debtfree Day will move forward to meet you. And you’ll own everything at a much younger age. But when rates rise, go with the flow and pay more. This way, you’ll never extend your Debtfree Day, you’ll only bring it forward.One word of caution. If you overpay, check the small print to ensure you won’t be charged a penalty for reducing the balance too quickly.

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CHRIS AND AMANDAIN SECRET 1, Chris and Amanda cut the interest rate on every penny they owed. This saved them £196 per month. In Secret 2, they put this saving towards their new mortgage.

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Type of DebtAmount

OwedTermLeft

Interest Rate

Monthly Cost

Total Spent


Type of DebtAmount

OwedTermLeft

Interest Rate

Monthly Cost

Total Spent

Mortgage 125,000 16yrs7mths 5% 731

196 171,327

CarLoan 12,000 5yrs 5% 226 13,560CreditCard 5,000 7yrs 5% 71 5,964StoreCard 2,500 6yrs 5% 40 2,880

TOTAL £144,500 16yrs7mths 5% £1,264 £193,731

After

Before

Chris and Amandasaved £78,729

Their Debtfree Day arrived 8 years and 5 months early

They owned everything and owed nothing when

Chris was 57 years5 months

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• When you switch to a lower cost debt, maintain your former payment.

• Unless you put money saved towards becoming debt free, it’ll be lost in your living costs.

• When interest rates fall, pay the same as before.

• When interest rates rise, increase your payment.

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SECRET 3

Don’t underestimate the risks of being in debt

IF SOMETHING unforeseen happens, your finances can quickly be thrown into turmoil. Imagine for a moment what happens if you stop walking up the down escalator. You’re carried to the bottom with surprising haste. It could be a bumpy landing. And sometimes there’s no way back.Many events can affect your financial security. Lose your life and your family may lose a large part of its income. Your home could be at risk. But the down escalator keeps coming, speeding them to possible disaster. If you die while you’re in debt, the quickest way to get your family to the top of the escalator is to hold adequate life cover to repay every penny you owe in full.You could suffer a serious illness preventing you from working. The predicament you face is that you’re still alive, so your life cover won’t pay out. Critical illness cover could solve the problem. It could repay every penny you owe in one fell swoop. What if you lose your job through redundancy or unemployment? The good news is that there’s cover available for these events too.Here’s the secret. Always carry full protection for your life, your health, your income and your job. Comprehensive cover in every area. After all, you never know what tragedy might befall you or your family. Think about this. Your mortgage lender

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insists the building is fully insured. It doesn’t want to take a risk. You may have fully insured your contents. But is your life or your health properly covered? Which is more important for you and your family to replace if you cannot work? The sofa? Or the income you bring in each month if you die or become ill? The good news is that the cost of protection is always a fraction of your monthly repayment, which is always a fraction of the amount you owe.You’d have the protection if it were free. But consider this. You may be able to afford it. Here’s why. If interest rates rise, would you pay the extra interest or would you sell everything to repay your debts? You’d almost certainly pay extra without a second thought. And that means you could probably afford the cost of the cover. Simply include your protection costs when you calculate your monthly payment. And you’ll secure proper peace of mind.To get the right balance, you have to establish exactly what cover you need. Then thoroughly research the market to ensure you don’t waste money that could be better used to bring forward your Debtfree Day.

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• Don’t put yourself and your family at risk when you owe money.

• Fully insure your life, your income and your health.

• Treat the premiums as part of the cost of being in debt.

• As your debt reduces, cut your cover and use the premium savings for debt repayment.

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SECRET 4

Marshall the forces and use the full power of your monthly repayment to eliminate your debts

THIS secret works on those debts you can’t transfer into your mortgage or loan. Its purpose is to eliminate what’s left.You’ll kill off your most expensive debt first. Do it like this. Put all your debts onto the minimum payment. Then without altering your overall monthly payment, channel your money into your most expensive debt. You’ll have compound interest working at its hardest. Over the months, this debt will disappear before your very eyes. And when it’s gone, you’ll feel great. You’ll have cleared your most expensive commitment. Don’t forget to cut up the card and shred the paperwork!Now comes the good bit. Take the money you were paying into your most expensive debt and add it to the minimum payment on your second highest debt.It’s obvious what will happen. You’ll have much more money working hard to eliminate this one.When it’s gone, move onto the next debt.Repeat the exercise until they have all disappeared. This secret will bring forward your Debtfree Day surprisingly quickly.

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• Put each debt onto its minimum monthly cost.

• Channel the balance of your former payment into your most expensive debt.

• Maintain this plan until the debt has gone.

• Then work on the next most expensive debt.

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SECRET 5

Check your income andexpenditure and look for every opportunity to makean improvement

REMEMBER the concept of seeing your decisions as a series of pluses and minuses? Well, this secret is all about making sure your money is working hard in every area. But one thing’s for certain. It’s not about budgeting or penny pinching. Unless you check, your money could be leaking away without you even noticing. You could be haemorrhaging cash. If you don’t pay attention, how can you be sure?The devil’s in the detail. If you’re serious about owning everything and owing nothing, you need to check every part of your money.Here are the steps.Get out a large piece of lined paper. On the top of it, write “Money In”. Include every area from which you receive money (eg work, investments, pensions, State benefits). Leave space for other possible income.Underneath it, write “Money Out”. But be warned, this is likely to be a big section. List all your payments. It may help to group them together (eg tax, debt payments, insurance, home expenses, utilities, travel, household). Convert annual payments to monthly payments so you miss out nothing. Check your paperwork. Read your bank statements. When you’re sure you’ve listed everything, deduct one figure from the other. The number you’re left with is hopefully positive. Money over each month. Your aim is to make that number bigger.

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Money you could use to bring forward your Debtfree Day by paying off your debt.Now the fun starts. Line by line, challenge every entry. Match it against your lifestyle. Ask yourself question after question. “Do I pay too much tax?” “Are my allowances correct?” “Am I paying for a club membership when I no longer go?” “Was my life assurance started when I was a smoker and now I’ve given up which could make the premiums cheaper?” “Do I send a lot of texts and would get better value by switching to a more appropriate contract?” The list is endless. But if you do it thoroughly, you’ll find a small fortune. You could be staggered with the result. It could knock years off the time you’re in debt!Whenever you find an improvement, take action. No matter how small the saving. And here’s the reason.It’s not the £20 per month you find by switching to a more competitive company that’s important. It’s the fact that over time, used to repay money you owe, it’ll make a massive difference. You’ll have compound interest working at full power for you. If you put an extra £20 per month into repaying a store card charged at 30%, you earn this rate on your money. Save £20 per month at 30% for 10 years and you’ll turn £2,400 into a mind-blowing £13,297.28. That’s a fortune in saved interest.

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• Compile a detailed summary of your money in and your money out.

• Identify areas where competition could save you money, then research the market.

• If you find an improvement, take action, no matter how small the saving.

• Add the money saved to your debt repayments to bring forward your Debtfree Day.

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SECRET 6

Use money you own torepay money you owe

WHAT you owe and what you own are connected. It’s obvious really. After all, it’s all your money. If you hold it separately, you can lose out twice.When banks and building societies first came into existence, they encouraged wealthy people to deposit money, which they lent to others. The loan rate was higher than the savings rate and the difference was profit. The same differential exists today. So if you have savings in one account at the same time as owing money, chances are you’re earning less than you’re paying out.But it’s worse. The dreaded taxman has his say. He treats the money you earn on your savings as income. And as such, he wants his slice. And you lose again.Here’s the secret. Take the money you have in savings and use it to repay your debts. Don’t worry about losing control. If you have flexible debts, including your mortgage and loans, you’ll be able to draw the money back at any time.Here’s a typical example. You have £10,000 on an overdraft at 12%. In the year, you’ll pay out £1,200 interest. You have £6,000 saved for emergencies. You earn 4% before tax. After tax at the basic rate, you’re left with 3.2% - or £192. Over the year, you’ll pay out a net figure of £1,008. This is how the secret works.

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Take the £6,000 and repay your overdraft. You’ll only owe £4,000. At a rate of 12%, you’ll pay out total interest of £480. The result - you keep £528 that you would have previously given to your bank. That’s £528 each year!What’s more, you haven’t lost control of your money. You see, it’s an overdraft. You can draw it back at a moment’s notice if you have an emergency.And the moral? Don’t throw your money away holding cash for an emergency that may never happen. The simplest, most tax efficient, guaranteed, risk free solution to making your money work hard is to repay what you owe with cash you own. It might be boring. It might be unadventurous. But it works. Every time.In short, with today’s flexible solutions, the best way to save is to eliminate your debts!

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• Work out the rate you’re getting after tax on any investments you hold.

• Check the interest rate you’re paying out on your debts.

• If you’re paying out more than you’re earning, use your invested money to reduce your debts.

• You don’t need a separate emergency fund if you have flexible debts.

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SECRET 7

Pay more to your lender than you were payingbefore

THERE’S nothing magical about this secret. To become debt free more quickly, pay more per month. Yet so few people do it. Most people believe they have to keep their borrowing going for the whole term. Others believe they can’t afford it. If you want to save a fortune, you can’t afford not to pay more.Here’s the point. Unless you have fixed rate debts, you’ll be subject to the ups and downs of the market. Interest rates rarely remain level. When rates rise, you’ll pay more. You might moan about it. You may blame the politicians. But you’ll pay more because you don’t want to lose what’s dear to you – your home, your car, your furniture.Ask yourself this question. “If interest rates went up by 3%, would I have to sell my home to repay my mortgage?” For most people, the answer is no. If you’re not really sure whether you could cope with higher interest rates, practise! Pretend rates have risen. Consider this. You have a 25 year capital and interest mortgage of £130,000 charged at 6%. It costs £837.59 per month. Pretend the rate has risen to 9%. You’ll have to pay £1,090.95 per month to keep your home and clear it in the same time. If you put the extra £253.36 per month towards your mortgage now, while rates are 6%, you’ll clear it in 15 years 2 months. That’s almost

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10 years early. And you’ll save a staggering £52,724.10 in interest payments!Remember the monthly payment trap? The one that focuses you on the low monthly payment. The example above shows exactly why the lender wants to keep you in debt at a lower monthly cost. Do the opposite. Pay more!You may have to if you want to keep your home! So do it now and stop giving away your hard earned cash!Here’s another way to look at it. Rather than relate the extra to interest rates, add a fixed percentage of your gross income to your monthly payment. 10% is a good starting point – you’ll be amazed at the effect it’ll have.Don’t be worried about paying too much. If your borrowings are arranged on a flexible basis, you’ll have complete confidence in this secret. The reason is simple. If you find you’re paying so much that your standard of living is suffering, reduce your extra payment to a more manageable level. And if things get really tough, remove it completely.Don’t forget. When your position improves, pay what you can afford again. Watch your debts diminish quickly. And your Debtfree Day get closer.

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• Don’t pay what your lender tells you, pay as much as you can afford.

• Practise paying a higher interest rate than is currently being charged.

• Allocate a fixed percentage of your income to help reduce your debts.

• If you have flexible debts, you can get back any extra money you’ve overpaid.

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SECRET 8

Connect your income to your debts

IT’S BACK to labels again. This time, a label called bank account. Generally speaking, it pays little or no interest. And as a result, you lose money and your bank wins.Here’s what happens. Your income arrives in your bank account. It sits there for a while. At worst, it earns nothing. At best it earns a bit. And if it does, the taxman takes his share. No matter how much you receive, it’s almost always lower than the interest you pay out on the money you owe.But it doesn’t have to be this way. Nowadays, a number of forward thinking lenders provide banking facilities. A bank account that’s linked to the money you’ve borrowed. It’s sometimes called “offsetting” and it works like this.You have a flexible mortgage of £72,000. Your interest is calculated, often on a daily basis. But before it takes the payment, your lender looks at your linked bank account. You got paid yesterday. Today, you have £2,000 in your account. It offsets the £2,000 you own from the £72,000 you owe. It charges you interest on the difference – on just £70,000.So you pay less.Here’s the benefit. You effectively earn interest on your £2,000 paycheque at the mortgage rate. And you pay no tax!It’s not just mortgages that can link to bank accounts. Some innovative companies offer

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links to credit cards and personal loans as well.This is a great secret. It’s low cost, tax efficient and flexible. But above all, it’s simple. You don’t have to do a thing to make it happen. It won’t waste your energy or your time. Brilliant!

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• Link your bank account to your borrowings.

• Ensure all your money coming in is immediately offset against your debts.

• You’ll minimise your interest payments and save tax too.

• Keep your arrangements as flexible as possible.

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SECRET 9

Four ways to use a credit card to your advantage

IF YOU’RE thinking debt free, why would you want a credit card? It’s contrary to everything you’ve read so far. Well, when you understand how the system works, you can use a credit card to your advantage. This is fun. Real fun. And the card companies won’t like it because it costs them money. There are four ways to profit:

1 “Balance transfers”Competition has forced credit card companies to offer introductory incentives. The most attractive is the “interest free period”. Here’s the secret. Transfer your credit card balances to the new card company and receive several months interest free. Fantastic. You pay 0%. Zero! Zilch! Zip! So if you have debts being charged at a higher rate, use the money you were paying on your credit card balances to clear your higher debts. You can even do this when your credit card is your only debt. Maintain the highest balance possible and invest any money you don’t need in a low risk deposit account. You’ll pay out no interest and you’ll earn money from your savings! At the card company’s expense! How satisfying.But heed this strong word of warning. Don’t ever spend any money on these cards. With most of these balance transfer deals, as soon as you spend anything, you lose the

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interest free incentive. That’s the catch. At the end of the introductory period, switch your balance to another card. There are so many available, you can do this time and again. And contrary to popular opinion, it’s unlikely to affect your credit rating. Because each new credit card company is keen to win your business.

2 “Cashback and other incentives”Use a credit card for all of your spending. Credit card companies encourage you to run up a large balance with the promise of incentives such as airmiles, loyalty points and even cash. Maybe up to 2% cash, which could be worth hundreds of pounds a year to you. Use your card to the maximum. But here’s the secret. Pay it off in full each month. That way, you take their incentives and cashback and they take none of your money.There’s another useful benefit. Once a month, you receive a fully itemised statement detailing all your purchases. You won’t have to maintain an inventory yourself. Your card company has done it for you, at its cost. As revealed in Secret 5, you should check this statement to ensure you’re not wasting money in any area.

3 “Up to 56 days interest free credit”You use your card daily. But you only receive a statement once a month. It could be 56 days before the money leaves your

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bank account. In the meantime, you pay out no interest. If your bank account pays you interest, you’ll make money at your card company’s expense. And if your bank account is linked to any of your other debts, as explained in Secret 8, you’ll save interest automatically.

4 “Low interest periods”It’s back to incentives again. Once you’ve played the “Balance Transfers” game, you should look for “low interest periods”. Companies often offer you longer introductory periods providing you pay a low interest. And the rate could be less than the cost of your mortgage. Certainly it’s usually cheaper than loan and overdraft rates. So if you’re considering further borrowing, check out low cost credit cards first. You could find they offer some of the keenest rates of all debts.The moral with all four of these areas is read the small print. If you’re prepared to spot the opportunities, you can save big money. Money that will speed you on your journey to debt freedom. Go for it. But with caution. Avoid the traps the card companies set. It’s like walking a tightrope without a safety net. But it’s like any trick. Once you’ve learned the secret, it’s easy to operate.

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• Take advantage of 0% balance transfer credit cards but don’t spend on them.

• Spend everything on a cashback credit card but clear it in full every month.

• Make the most of interest free credit by settling your credit card on the latest date possible.

• Switch higher charged debts into “low interest period” credit cards.

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SECRET 10

Make the most of payrises and other income

IF YOU receive an increase in your income or a one-off windfall, you have to take positive action to avoid the money disappearing. It happens far too easily. The money arrives in your bank account. But mysteriously, it vanishes into thin air, being absorbed into your day to day expenditure. Unless it’s a large sum, you probably won’t feel better off at all.You need a positive reward to mark the event. Perhaps you worked hard and earned a bonus or a payrise. You may have inherited money. You could have won a prize. Put your good fortune to work.Here’s the secret. Whenever you receive an increase to your regular income or you collect a one-off payment, allocate a fixed percentage of it towards repaying money you owe. Agree the rate now. It could be 10%. It could be 25%. It could even be all of the money you receive. It doesn’t really matter what the figure is, as long as you apply the same rule to every extra penny you get. Then, when the money arrives, you’ll have nothing to think about. Just the comforting feeling that you’ll reach your Debtfree Day more quickly.On the subject of work, you may be given the opportunity to put in some extra hours. If you have the time and the energy, do it. This is the reason. When you owe money, you’ve given up your future income. You’ve

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pledged to maintain your interest payments for years. But you may not always be healthy enough to work. You may not want to work. Or the economy may be so poor, you may not have a job at all.Get out of debt at the youngest age possible. Earn more now and allocate some of it to repaying your debts. And in the process, you’ll take back ownership of your future income.There are plenty of opportunities. You could do overtime. You could take on a part-time job. You could start a small business from home. You could turn your hobby into a profit centre and trade throughout the world. Through the internet, the prospects are virtually limitless. Whatever your decision, remember this. None of us knows what the future holds. Don’t jeopardise yours by being in debt for any longer than is necessary.

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• Allocate a fixed percentage of any extra money you receive towards debt repayment.

• Work a few extra hours each week to take back your future income.

• Start a new business and use the extra money to reduce your borrowings.

• Turn your hobby into a profit centre.

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SECRET 11

Become a greatsales person

WE’RE continually bombarded with offers and incentives to purchase gadgets, gizmos and other goods. Advertisers realise children impose amazing pressure on parents and grandparents for the latest toys, clothes, games and sporting equipment. The bad news. Your possessions become out-dated quickly. And you suffer with clogged up cupboards, roof spaces and an unusable garage.The good news. You could reclaim your storage space and turn your unwanted items into cash. Cash you can use to bring forward your Debtfree Day.Take a look around you. See what you own and more importantly, what you no longer need. You might be surprised. Even shocked. Make a list. Then set about becoming a great sales person. Sell the things you no longer need! It’s easier than you think. The internet is a god-send. It offers a huge market for the sale of pre-owned goods of all descriptions to a worldwide audience running into millions. The world has shrunk beyond all measure. And if you take advantage of this, what you owe will shrink too. There are many “virtual” auction and resale sites. Of course, there are all manner of conventional methods of selling your goods including newspaper small ads, free distribution sheets, specialist magazines, markets and car boot sales.

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Don’t underestimate the value of this – when you use the proceeds to reduce what you owe, the compound effect of your actions over the coming years could be immense.

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• Look around your home and identify unused items of value.

• To maximise the benefit, make a list and include everything you don’t need.

• Carry out research to find out how much you could raise.

• Sell your goods or auction them and use the cash towards repaying your debts.

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SECRET 12

ReviewReviewReview

ONE thing is certain. It’s as sure as eggs are eggs.On your journey to your Debtfree Day, things will change. Sometimes your Debtfree Day will move towards you. And sometimes, it’ll be put back.Here’s the secret.You must check your money on a regular basis. And unless you do, you won’t know whether you’re losing a fortune. Money leaking out of your life instead of repaying money you owe.Without question, it makes good sense to give your money a comprehensive check-up at least once a year. You see, it could be subject to many changes. External influences such as variations in taxation. Movements in interest rates. The effect of inflation. Personal changes involving your children, your job or inheritance.You may need to borrow money to make significant purchases. Perhaps a new car. A dream holiday. A wedding. Events that push back your Debtfree Day. Don’t worry. A regular review will help you take action to put yourself back on track. Competition between those who lend money could benefit you. Exciting new products could be launched that may save you interest. If your borrowing is flexible,

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you’ll be ready to take advantage of any new opportunity. Then there’s special deals from utility companies, from phone and internet providers. In fact, you may find savings in many areas of your money. Check your money in and money out summary revealed in Secret 5. And make sure it’s working hard. Don’t forget to include your life cover and other insurance. As you repay what you owe, your need for cover diminishes. You might be able to replace your cover at lower cost. And the money you save could be used to bring forward your Debtfree Day.Remember this. What’s great value today may be bettered tomorrow.Reviewing your money doesn’t have to be an onerous task. You don’t have to spend ages on it. Take it in steps. Bit by bit. Over the course of a year, divide your money up and check a little of it at a time. You could do it monthly. Or once a quarter. However you do it, you’ll be certain you’re giving yourself the very best chance to become debt free.

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• Update your money in and your money out summary at least once a year.

• Review this list on a regular monthly or quarterly basis.

• When you identify areas for improvement, take action no matter how small the saving.

• Check for saving opportunities when interest rates change or other external events occur.

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THE BIGGEST SECRET OF THEM ALL...

Combine togetheras many of the 12 secrets as possible

COMPOUND interest works best when the secrets combine. You save interest on interest on interest. Just look how much Chris and Amanda saved.

Secret 1They merged all their debts into one flexible mortgage, cutting the interest rate on every penny they owed to 5%.

Secret 2They could easily afford their former repayments. Although their borrowings were costing less, they decided to maintain their former outlay.

Secret 5They looked through their expenditure. They switched some insurance plans and utility contracts, saving £147 per month.

Secret 6They repaid the £5,000 in their emergency fund to reduce their overall debt to £139,500. They no longer needed it. Being a flexible mortgage, they could draw back “emergency money” should the need arise.

Secret 7They agreed to allocate 5% of their combined income towards repaying their debts. A sum of £167 per month. Money they were formerly popping into their emergency fund.

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Secret 8They linked their bank account to their flexible mortgage, had their salaries paid into this account, which reduced the overall mortgage rate by 0.25% to 4.75%.All the secrets were deployed with money they were bringing home. They simply reallocated it more efficiently. And the result was incredible. Take a look at the tables below.

Type of DebtAmount

OwedTermLeft

Interest Rate

Monthly Cost

Total Spent


Type of DebtAmount

OwedTermLeft

Interest Rate

Monthly Cost

Total Spent

Mortgage 139,500 9yrs1mth 4.75% 1,578 172,002

TOTAL £139,500 9yrs1mth 4.75% £1,578 £172,002

After

Before

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Chris and Amanda’sDebtfree Day arrived in just

9 years 1 month

When Chris was49 years 11 months

That’s 15 years11 months early

They saved a fortune in interest - £100,458

Entirely within the money they brought home

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LIFE AFTER DEBT

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NOW THE FUNREALLY STARTS

HOW was your Debtfree Day party? The one to celebrate the fact you now own everything and owe nothing. Did you have fun?Your journey’s not over. For sure, the trickier part has gone. You’ve passed the major milestone. Your Debtfree Day. From now on, it’s no more debts. You simply have the pleasurable task of building up cash. And you’ll be surprised how quickly this can happen with no more money draining out of your life.You’re ready to focus on your final destination.Freedom Day. Financial Freedom Day to be precise. That amazing day when you have the choice to stop work if you want, knowing that you’ll have enough money coming into your life to maintain the lifestyle you want. No longer are you reliant on an employer. On your family or friends. Or on the Government. Complete financial freedom. Your money is working, so you don’t have to!Guess what? Nothing’s changed. It’s still all about compound interest. But you’ve left the down escalator and stepped onto the up escalator.

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The best bit about the up escalator is that you can do absolutely nothing and see your money grow. Money rushing into your life instead of out of it. It’s easy. It’s a breeze. If you leave your money in a bank account that earns even the lowest rate of interest, tomorrow it will be worth more. And the day after that, it will be worth more still. That’s compound interest.When you put your money into a bank or building society account, something incredible happens. The tables turn. You stop being a borrower. You become a lender. You lend your money to the bank or building society. In return, it pays you interest. And compound interest works in your favour. Making you money. Automatically.But it can be even more powerful. You can walk up the up escalator. Or even run up it. And if you’ve ever done that, you know how fast it feels. It’s as easy as this. Just redirect the money you were spending on your debts into your savings. You’ll earn compound interest. And you’ll speed your way to your Freedom Day.The effect is staggering. You really should do it. If you don’t, there’s a danger that your former debt repayments will become absorbed into your normal expenditure, to be lost forever. Let’s see what happened to Chris and Amanda.

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Their last monthly repayment on money they owed was £1,578. They finished their mortgage and became debt free 15 years 11 months early, when Chris was just under age 50. Chris and Amanda didn’t like to take risks with their money. They worked hard for it. And they didn’t want to lose the impetus of saving £1,578 per month - money they could clearly afford. So they popped it into a low risk building society account. It earned them an average of 4% before tax. But the taxman wanted his share. They pay tax at the basic rate, which meant they earned just 3.2% net.It doesn’t sound very much, does it?Do you know how much money they had amassed when Chris reached 65? Are you ready to be shocked? Well prepare yourself.

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£392,362

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You know, it’s such a huge number, it’s worth repeating.£392,362.That’s a fortune by any standards. Hard cash in the bank. Real money. And they thought they’d only just have finished paying off their mortgage.No wonder Einstein thought compound interest was fantastic. But think about it. It’s totally shocking too! Why? Because compound interest is the reason why those who lend money are rich at the expense of those who borrow!Don’t let it happen to you. Don’t prop up their profits for a moment longer than necessary.If you haven’t changed your thinking yet, use this massive number as your wake-up call.It certainly made sense to Chris and Amanda. Instead of just being debt free after 25 years, they had the comforting prospect of facing life’s longest holiday with well on the way to half a million pounds in their bank account!Just imagine what fun they could have with that sum of money!

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A SNAPSHOT ONBUILDING UP WEALTH

THIS is a major subject in its own right. It’s far too involved for this book. But here’s three great principles worth highlighting when you’re debt free.

Principle 1:Hold an emergency fundWork out roughly what you spend in six months. That’s about the right amount of cash you need in a ready access account for unforeseen events. An alternative is to retain a flexible mortgage. But at the lowest level your lender will allow, so you don’t incur unnecessary interest. It’ll enable you to draw money for emergencies, only if the need arises.

Principle 2:Fund a pension plan to the maximumA pension plan pays you income when you stop working. It pays you for life. Sometimes it can continue to pay beyond your life to your spouse or children. Most pensions and retirement plans enjoy generous tax incentives. You’ll miss out on these if you don’t save the maximum. Find out how much you’re allowed to save. And start there if you can afford it.

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Check out the arrangements at your work. And don’t forget pensions you’ve left behind in your former jobs.Don’t put it off. When you reach the day you want to stop work, it’ll be too late to do anything about this. Do it as early as possible. And you’ll have compound interest working at full power for you.

Principle 3:Consider low risk investments firstBefore you begin building wealth, know your numbers. How much income you’ll need when you reach your Freedom Day. At what age you want this to occur. What your pensions and State benefits will be. But don’t forget tax and inflation. Remember this. To secure a higher return, you may need to expose your money to greater risk. But if you know your numbers, you may not have to take any risk whatsoever. It might be possible to reach your destination by saving in a low risk bank or building society account. It may be boring. It may be safe. But if it produces enough income, don’t gamble with your future. There’s no point. Life’s too short to worry whether your money might disappear. If you need to seek a higher return, then spread your investments to reduce your risk.

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TEACH YOUR CHILDRENTHE BENEFITS OF ADEBT FREE LIFE

HABITS are easily copied. Being in debt is proof of that. Take a different view and teach your children. Start as early as possible. Involve them in your journey and they’ll pick up a good habit from you.After all, during their life they could face many financial problems. Many of which could start with the fact that there’s so little cash about. And it’ll get worse. Digital pocket money. Top-up swipe cards for their mobile phones. Internet transactions. “Smart” cash straight from their piggy banks. Have fun with your junk mail and the adverts you see on TV. Together you should look for the hidden messages. Highlight the traps so they’ll avoid them later. And when you’ve finished with the paperwork, shred it and line the hamster’s cage.It’s not just children who can benefit from this knowledge. Adults can too. When you’ve got the message, share your good fortune with others. Tell your friends and family. Help everyone prosper by teaching them about the real cost of being in debt.

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It’s time for action


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ARE YOU READY TOBECOME DEBT FREE?

ON THE journey to your Freedom Day, the simplest, most effective way is to become debt free as quickly as you can. In the process, you’ll save a fortune in interest. Leaving you perfectly placed to save a fortune in cash.There’s nothing more to it. Don’t put it off any longer. As they say, time is money! Think about yours. Then take action. Because knowledge without action is pointless.Get out your paperwork and work out how old you’ll be on your Debtfree Day. Then look at each secret, make savings and watch your Debtfree Day come forward to meet you.You can do it yourself. Or you could find a guide for your journey. Someone to help you to your destination.Call your financial adviser and tell him or her what you’ve learned.Or visit www.debtfreeday.com. It’s a source of useful advice to help you become debt free quickly.Now it’s time to put compound interest to work in your favour. Einstein would be proud of you.

SAVE A FORTUNE · No credit card debts. No monthly repayments. Nothing. Your income would be yours....

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Transcript of SAVE A FORTUNE · No credit card debts. No monthly repayments. Nothing. Your income would be yours....