Success Story: Meet Mark & Joyce

Debt Free Living Success Story

Mark & Joyce had a mortgage balance of $154,000 and personal debt over $26,000. With 3 children ages 3 to 8, the reality of college costs became a major concern for these parents.

How were we able to help? The family was free from lenders in about 7-1/2 years, saving them nearly $123,000 in interest. This freed up nearly $2,200 per month which they put towards retirement and save for their children’s college education.

Here is a snapshot of Mark & Joyce’s Financial Sheet when they began.

The basic steps in the snowball debt reduction plan begin by listing all assets and all debts.

Their assets looked like this:

(1) Mark & Joyce currently have $6,000 in an emergency fund. They are making monthly contributions of $25. Account is accruing .25% interest each month.

(2) Mark’s has a 401(k), currently valued at $36,500. He is contributing $300 each month to his retirement account. Rate of return is 5%.

Total Debt: $180,198
Total Monthly Payments: $2,177

Mark & Joyce’s debt looked like this:

Mortgage: They have a 30-year fixed mortgage rate of 6.5%. Their remaining balance is currently $153,781 with a scheduled payment of $972 per month.

Auto Loan: They have an outstanding balance of $13,313 on an auto loan, paying 8% interest. Monthly payment $417.

Miscellaneous Debt:
(1) Medical and dental bills totaling $2,420. Monthly payment $200.
(2) They carry a balance of $5,988 to finance new furniture, interest rate 18%. Monthly payment $237.

Credit Cards:
(1) Visa: Balance $460 with 12% interest. Minimum monthly payment is $55.
(2) Credit Card #2 with a balance of $4,236 with 16% interest. Minimum payment is $296.

Compound interest is a powerful tool for building wealth. It’s also a devastating tool that can destroy wealth. It just depends on which side of the financial equation you use it. On the negative side, it makes debt (credit cards) grow quicker and more substantially over time.

The math for compound interest is simple: Principal x interest = new balance.

For example, a $10,000 investment that returns 8% every year, is worth $10,800 ($10,000 principal x .08 interest = $10,800) after the first year.

It grows to $11,664 ($10,800 principal x .08 interest = $11,664) at the end of the second year.

In 25 years, that initial investment of $10,000 would grow to $68,484, thanks to compound interest.

As previously noted, Mark & Joyce have total liabilities in the amount of $180,198.

With the amount of compound interest accruing annually, Mark & Joyce’s real debt will total $380,157.

Remember, when you take money out of a traditional IRA or 401(k), the money will be taxed at your ordinary income tax rates.

Having said that, predicting future tax rates is an imprecise art at best! Most people believe taxes will have to go up. Why? Because our tax rates are some of the lowest they’ve been in our lifetimes, while our nation’s debt is the highest in history.

The best kind of retirement income is the tax-free kind, such as any return of principal or cost basis.

Taxes in retirement can vary tremendously based on where the income is coming from. However, with proper saving and planning, you can reduce the total amount of taxes you pay in retirement.

Mark & Joyce 5 - Look what we were able to do

What did we accomplish?

The family was free from lenders in 7.8 years, and they saved nearly $123,000 in interest!

As you would imagine, we need a lot of money saved and invested to achieve financial independence. But, maybe not as much as you might think. If we are able to put the money we’re paying each month to our debts into savings and investing, we may very well be putting ourselves on the path towards financial freedom. At the end of the day, it all depends on our expenses. Having paid off all their debts freed up cash flow for Mark & Joyce, giving them additional money ($2,177 per month) to save and invest.

Saving for retirement doesn’t have to be a chore. A few small changes can result in a much bigger account balance, given enough time to compound. With our plan, Mark & Joyce will have saved $1,004,387 in 30 years versus $306,668 projected in their current plan.

Debt is a serious threat to your financial security. It keeps you from making the most of your money. What you spend on debt payments could be stashed away for a rainy day, for your retirement days, or for your kids’ college days.

Find the exit off the debt highway and you’ll be able to work toward becoming financially secure.

VIEW MORE SUCCESS STORIES!

Our “GOOD” movement has one underlying theme: It’s time to step up and take control of your money. Like Mark and Joyce, we’ll teach you about cash flow and how focusing on this one aspect of money can give you and your family more money to enjoy each month while staying on your financial path.

Money set aside in funds for emergencies, education or other large purchases is usually untouched (it’s used for only one purpose). Like Mark and Joyce, we’ll teach you how to put these “flexible” dollars to work for you using a concept called “dollars doing many jobs” as opposed to doing only one job.

We’ll create with you a financial plan that is based on debt elimination and building personal wealth with predictable and guaranteed outcomes.

We’ll show you a new way to look at money and make it work for you, like Mark and Joyce. When your money sits or you’re paying off debt, it’s working for someone else, no you!