After Understanding Proportionality, The Debt Destruction Engine Springs Into Existence

I have always had the knack, the gift really, of being able to take the circumstances that I find myself in and somehow find a way to gain some advantage therein. I can sometimes take a problem and turn it inside out and find an advantage hiding in there somewhere.

I have previously described the moment in the wee hours of a winter morning in 1979 when I looked at our bills and discovered the principle of proportionality. I then began to experiment a little further to see if there might be a way to find an advantage residing in the disadvantage of just barely having enough money to pay bills.

I reasoned, "We have to live on $75 a week, which is tough. If we can live on just $75 a week, could we not then also live on just $70 a week? What if I take a measly $5 a week and add it to the smallest bill until this bill is paid off?

Then take the $20 a month ($5 a week) and add it and the money that was being paid on the smallest bill to the 2nd smallest bill?

After this 2nd smallest bill is paid off, I take the previous total amount that was being paid on the 2nd smallest bill (the original $20 + the money that was paid on the smallest bill + the money that was paid on the 2nd smallest bill) and add it to what I pay on the 3rd smallest bill."

I projected this forward and found that this approach would pay off all the bills including the mortgage in LESS THAN 5 YEARS! (Our mortgage began years earlier with just a $14,500 balance. Remember, this was 1979.) It was 4 years and some number of months. As I look back now through the foggy mists of eons of time, I cannot remember if it was 4 years and 7 months, or 9 months, or 10 months, or whatever, but it was definitely less than 5 years.

Now, please note that, at the time, I knew nothing about the Weenie Tax or LEX Cash or Fluff or Temporary Extreme Measures or Inherent Momentum, all the things I talk about in my books and articles. I did not figure out these strategies until several years later. We would have to do this with old fashion discipline and sacrifice. We had to pay $175 a week on bills anyway, every week, without fail, no matter how difficult that would be. So in the beginning it became a hunt for $5 a week.

If we could just do what we had to do every week anyway and scrape up a measly $5 to add to our bill paying each week, we could be debt free in less than 60 months. Please note that it would only take $20 a month because our income was low and hence our debt was also relatively low so that $20 was a lot of extra fuel.

By the way, today there are at least 20 other individuals and organizations in America teaching essentially the same strategy. (One of these is http://www.FaithLifeNow.com which is a Christian financial ministry website. I am not an affiliate marketer for these guys and I mention them only because I believe they could help you understand your debt relief possibilities. They state that 90% of families can be out of debt, including the mortgage, in 5 to 7 years.)

Please do not just dismiss this. It works. It is hard, but it does work over time. You might get this strategy going and it may very well collapse because anything you do can and sometimes does fail. Just crank it up again and go after debt relief freedom with this approach until you achieve success. Even if it took you 2 or 3 shots at this to pull it off, it would be well worth it to make this transition.

Several years after that winter morning in 1979, I came to call this strategy the Extra Fuel Version of the Debt Destruction Engine. The debt-destroying process moves like an old time steam driven locomotive, ponderously slow at first, then eventually building great momentum. The extra money applied to debt destruction is like additional fuel, extra wood or coal, thrown into the burner to stoke the boiler.

There are 2 other versions of the Debt Destruction Engine called (1) Inherent Momentum and (2) Inherent Momentum with Extra Fuel. These other versions destroy debt even faster than the Extra Fuel Version. All 3 forms of the Debt Destruction Engine are explained in "Your Wealth is Hidden in the Fragments of your Life" and in "The Debt Destruction Engine", available at the Debt Free Relief website shown below.

Request a free copy of one or both of these books on debt destruction. I will not put you on a mailing list nor will I call. You will just get the book(s) sent to you attached to an email and you will never hear from me again unless you specifically ask me to contact you.

http://www.DebtFreeRelief.net Deal debt a deadly blow today.

Debt Free Relief Starts by Understanding Proportionality

I started thinking about how to achieve debt free relief over 30 years ago. One Sunday morning at 2:30 AM in the winter of 1979, I was looking at our bills trying to figure out how to find a way to gain some control over a disorganized mess. We had been practicing the financial discipline of Congress and the stick-to-it-ness of a salted leech. Our take home pay was only $1,000 a month with both of us working. Our bills came to about $700 a month. We were both paid weekly, but most of our bills were due in the 3rd and 4th weeks.

We were sailing along spending most of our money in the first and second weeks and then did not have the money to pay all the bills. I know this sounds stupid, but it is a problem that a lot of couples have when they first start out. Since our bills were $700 and we had only $1,000 coming in, I realized that we had to live on $75 every week.

$1,000 (Take home pay) - $700 (Monthly bills) = $300 (To live on for a month)

$300 divided by 4 = $75 (To live on for the week)

We were a real high-income power couple, obviously. Seriously, even such a low-income situation can serve to illustrate some basic concepts.

This meant that we had to pay $175 a week ($700 in monthly bills divided by 4 = $175) on bills as regular as clockwork. There was no choice in the matter. If we paid less than $175 in a particular week, we would fall behind.

If we paid just $100 in the first week, for example, we would have $600 of bills left to pay in the 3 remaining weeks. We would then have to pay $200 a week in the last 3 weeks of the month.

$250 (weekly take home pay) - $200 (bills paid per week) = $50 (a week to live on)

It was hard to live on $75 a week even as far back as 1979. But it was really tough to live on $50 a week.

Since 1/4 of our take home pay came in every week, we had to pay at least 1/4 of our monthly bills every week. This had to be done without exception. This is proportionality.

Suppose there is a couple and both work. One of them is paid once a week and the other is paid every 2 weeks. Their income is just enough to pay the monthly bills with very little left over.

The first week 18% of the monthly take home pay comes in.
The second week 32% of the monthly take home pay comes in.
The third week 18% of the monthly take home pay comes in.
The fourth week 32% of the monthly take home pay comes in.

Since their income is just enough to pay bills with very little left, this couple would have to pay:

18% of the monthly bills in the first week,
32% of the monthly bills in the second week,
18% of the monthly bills in the third week,
32% of the monthly bills in the fourth week.

This is proportionality and this is not even a strategy to get ahead or attack debt in any way. The bills must be paid in this ratio or this couple will fall behind. There is no choice in the matter. It is important, especially for lower income folks, to understand proportionality.

After understanding proportionality, it is possible to move on to bigger and better things, such as true debt free relief by destroying all debt, as you will see in an upcoming post.

http://www.DebtFreeRelief.net

Wealth Building Power Strategy - The Walk Up

When you get a raise of 1 %, increase withholding 0 %.

When you get a raise of 2 %, increase withholding 1 %.

When you get a raise of 3 %, increase withholding 1 %.

When you get a raise of 4 %, increase withholding 2 %.

When you get a raise of 5 %, increase withholding 2 %.

When you get a raise of 6 %, increase withholding 3 %.

When you get a raise of 7 %, increase withholding 3 %.

When you get a raise of 8 %, increase withholding 4 %.

When you get a raise of 9 %, increase withholding 4 %.

When you get a raise of 10 %, increase withholding 5 % and so on.

What does this do for you?

You still get more take home pay every time you get a raise.

The money you invest is never in your hands, so you never have to exercise will power to make yourself invest it.

You painlessly walk your 401(k) withholding up to the maximum allowed.

Then, you open an IRA and follow the same “walk up” approach every time you get a raise until your yearly contributions to your IRA are at the maximum level allowed. Edward Jones, Charles Schwab, and other brokerage operators can help you set this up when the time comes.

Then, you set up other retirement accounts after allowed contributions to the IRA are maxed out. You may be permitted to contribute up to a certain amount in other accounts. The contributions each year will probably not be exempt from taxes in that particular year, but the growth of these accounts over the years should be tax free. The law and the contribution limits change on this from time to time. Edward Jones, Schwab, and others can advise you on this. After maxing the 401(k) and IRA contributions, you employ the same painless “walk up” method with every raise until you max out contributions to these other retirement accounts as well.

After maxing out all of your retirement contributions in a few years, you then, with every raise, “walk up” deposits to after-tax accounts, “buy” and “do” accounts, such as mutual funds, so you become a cash-on-the-barrel guy or gal instead of a credit-card-on-the-counter guy or gal.

You, in a sense, do have to exercise discipline whenever you get a raise to make yourself increase contributions in the “walk up” manner shown above, but you also do not have to exercise discipline moment by moment, week by week, month by month, in order to force yourself to make deposits into investment accounts. As long as you are faithful to the “walk up” when you get a raise, the wealth building deposits are automatic the rest of the time.

http://www.HushDoNotTell.com The impossible is made possible! Hold a standard size piece of copy paper up to your chest and you will see that it is not as wide as you are. When you request the free book by going to this website, you will learn how cut a hole in this sheet of paper and pass your body through it without tearing it. You will also learn how to destroy your debt with the money you already make.

Wealth Building Power Strategy - Plummeting to Prosperity

There are certain areas all over the United States or any industrialized nation that are economically depressed. Some of these locales are in breathtakingly beautiful regions. Because of their economic woes, the people in these areas make every effort to improve the recreational resources of the region in order to attract sportsmen and vacationers. They float bond issues and obtain federal grants for this purpose. The efforts applied may have not yet worked their economic magic, but the result is a beautiful area in which to retire with a very low cost of living. Many of these low-cost-of-living areas are recreational paradises with nice golf courses, tennis facilities, boat docks, hunting lodges, lakes developed with fishing and water skiing opportunities, and the most amazingly beautiful scenery.

This is an example of a problem that is also an opportunity. Economic distress of such an area is a problem for those who have always lived there, but it is an opportunity for the person who is trying to accumulate the resources to retire. Prices tend to chase the amount of money circulating in an area so these regions have low costs of living. Property taxes are lower because property values are lower and tax rates are lower. The cost of auto insurance, based partially on the number of accidents per capita in a region, tend to be lower in one of these areas. Houses can be purchased for a fraction of the cost for the same house in a booming area. The equity in your existing house may be enough to buy a house like it for cash with money left over. Imagine that you then pay off your car loan and the two largest components of your debt are gone!

You can retire in such a place with less money than required elsewhere. You may be able to build your retirement nest egg much quicker simply because you need a lot less money to live. This is a way to go up by going down. Ask for assistance in any good library or large bookstore and you will find several books about retirement locations. These books deal with the cost of living and every other factor you would need to consider in deciding on a place to retire. One such book I found, for the USA only, is “Retirement Places Rated” by David Savageau.

There is an emotional cost to "plummeting to prosperity" that most of us are probably unwilling to pay. A beautiful, low cost retirement area may be far away from beloved friends, children, and grand children. (Of course, the children are probably not ever going to come see you anyway.) You may forfeit the social contacts you have cultivated for several decades in order to "plummet to prosperity". It is, nevertheless, an option to consider as you build your retirement plan. If it is so late in the day for you that your situation (as to preparing for retirement) is desperate, you may decide that you have no choice and must "plummet" even with the emotional cost.

This low cost retirement area might even be the very county in which you grew up. Millions of folks long to get away and go to the big city to seek their fortune. The economic vacuum left causes a region to be financially depressed and this produces a low cost of living and low property values. Then later in life, the same people sometimes long to live in that same place they were so desperate to escape when they were young. It is one of the ironies of life.

http://www.HushDoNotTell.com Impossible made possible! Hold a standard size sheet of copy paper up to your chest and see that it is not as wide as you are. Yet I will show you how to cut a hole in that piece of paper and pass your body through the hole without tearing it. If you understand the feat I am describing, you would have to agree that this is seemingly impossible. This simply shows that there are things that seem impossible that can be done with the right information. I will also show you how to destroy your debt in a surprisingly short period of time with the money you already make.

Wealth Building Power Strategy - Guaranteed High Return

There is a way to lock in a high rate of return that is 100% guaranteed. If you have a credit card, store revolving account, or finance company account that charges high interest, you can “invest” in this account and receive a guaranteed high rate of return. If you are paying 18% interest, you are being hurt and are experiencing a return of – 18% (negative 18%). Your hole, that you are digging, is getting 1 ½% (18% divided by 12) deeper every month.

When you pay extra amounts that reverse this damage by reducing the principle, you are gaining at the same rate of return. If you have an account that charges 22%, you can get a guaranteed rate of return of 22% by paying extra amounts into it. The only way to kill the Debt Dragon is to feed it to death. You stuff it with the junk food it enjoys until you manage to force that last Ding Dong into its mouth and it explodes. Give your self a guaranteed high rate of return by investing in the destruction of your debt.

In fact, the return, if you look at it a certain way, can be even higher than the stated interest charged. If I have an account with a stated rate of 22.9% and I owe just $1830 and I pay an average of $122 a month, I pay 12 X $122 = $1464 a year. $1464 divided by $1830 = 80%. If I paid $1830 to pay off this balance, I would have 80% of that amount a year in extra money to spend or invest. If I can find a way to destroy this debt quickly in a few months, the money I put into its demise will give me a “return” of 80%. (I know I’ll get letters about this. Come on, guys. We’re just having some fun.)

If I have an account with a stated rate of 23% and payments that will average $160 a month and I owe $6880, the “return” for the extra money I put into attacking it is actually 27.9%. (12 X $160 = $1920 divided by $6880 = .279) I am benefited at this rate for every extra dollar I put into eliminating this debt.

http://EzineArticles.com?expert=David_Unger Articles on building wealth and destroying debt.

The Secret Weekly Meeting

This is Why You Need an Emergency Fund

Once a week at 3:00 AM, there is a secret meeting.

The car, the fridge, the stove, the cat,

The roof, the sinks, the thermostat,

All give the secret greeting:

“Down, down,

We break down

At just the perfect moment.

We meet to scheme,

To our owners bring

The utmost trial and torment.”

Every appliance, machine,

Animal and thing,

That you have in your life,

Will here attend

To plan to send

To you the greatest strife.

TV No. 2: “What if we have the cat get sick…..”

Dishwasher: “And the roof to start to leak?”

Roof: “The fridge quit…..”

DVD Player No.1: “The foundation split…..”

Car: “And all this in one week?”

Central A/C: “No, no, if you recall, we did all that last year.”

Toilet Bowl: “If we repeat, then our deceit might to them be clear.”

Hamster: “Could we, perhaps, have the car, mayhaps, run into the cat?”

Cat: “No, we can’t because I ain’t willing to do that!”

They hash it out

And thrash it out

And write it on a chart.

THE OVEN SMOKES.

THE SEWER CHOKES.

THE DRYER SHOOTS OUT SPARKS.

THE LAWNMOWER QUITS.

THE HAMSTER GETS SICK

WITH A MURMUR IN HIS HEART.

Just before sunrise

They all arise

To end the weekly meeting.

TV No.1: “Good work tonight!”

Fridge: “Good plan! Just right!”

Central A/C: “Let’s close with the secret greeting.”

“Down, down,

We break down

At just the perfect moment.

We meet to scheme,

To our owners bring

The utmost trial and torment.”

Here you are thinking that if you can just make it to 2020 without any new problems, then you will be alright. 2020? There are 5 major disasters already planned for next week!

http://www.HushDoNotTell.com Learn how to set up an Emergency Fund and destroy all of your debt.

Your Wealth is Hidden in the Fragments of your Life: Part 10

This is the 10^th in a series of 10 “fragments” articles. Let’s find the “fluff” and use it to beat our bills to death!

I have noticed that there are at least 7 other individuals or organizations scattered throughout North America that are teaching about the debt destruction engine, although they do not call it the same thing. Since I discovered the debt destruction engine in 1979, I have heard of John Cummuta’s “sequential debt elimination system,” the “Debt Doctor,” the “Debt Wizard,” and Dani Johnson’s teaching on debt destruction, to name a few. I just mention this so you can see that this is not just the bizarre idea of one weirdo speaking out of obscurity. There are confirming voices out there.

I was flipping through TV channels, as the male of the species is wont to do, when I came upon Dani Johnson standing in front of a chalkboard, drawing on it, teaching on the Benny Hinn program. “You watch,” I said to myself. “I bet she is going to talk about the debt destruction engine.” Sure enough, that was where the discussion was headed. She mentioned something she called “fluff.” You realize that you buy a shirt, a pair of shoes, a blouse, a pair of pants, on an impulse, several times a month at Wal-mart or elsewhere. When you get home, you sometimes find the same article that you just bought hanging in your closet. You have adequate clothing for you and your family, but just constantly add to the wardrobe impulsively.

You realize that you have enough groceries in your pantry to live for a month. You could just not buy groceries this month, except for bread, milk, and such, here and there. You identify unnecessary spending, duplicate purchases you make all the time of items that you already have in your bathroom, bedroom, kitchen, and all through the house. This is “fluff” that you could just cut out. Dani Johnson said that some people have told her that they have found as much as $500 of fluff in one month.

What if your smallest bill had a balance of $500 or less? You could wipe out that bill in one month with a fluff attack. Then, imagine the possibilities if you further reduce your living expenses with the LEX Cash strategies we talk about in another article, you cut out the survival crutches, and you change your income tax withholding so that you took your income tax refund throughout the year.

Fluff + LEX Cash (Reduced Living Expenses) + Cut Out Survival Crutches + Change Tax Withholding = All Out Fluff Attack

God asked Moses, “What is that in thine hand?” There is great potential power in knowing what you have in your hand, whether it is a rod such as Moses held or the control of monthly finances that you hold. What is that in your hand? Could it amount to $300, $400, $500, $600, or more? Could you wipe out your smallest bill in one month? Could you destroy your second smallest bill in just 2 more months? Could you obliterate your credit cards, store revolving accounts, and finance company accounts in 21 months, 18 months, 15 months, or less with an all out, insane, going-for-the-jugular, fluff attack?

Then further imagine the possibilities if you become completely radical in this assault by such things as cutting out your cable television, cancelling magazine subscriptions, cancelling gym memberships, stopping visits to Starbucks, cancelling book club memberships, stopping rentals of movies, cancelling DVD club memberships, cancelling newspaper subscriptions, buying MagicJack so you never pay a local or long distance phone bill again for the US and Canada, not feeding the vending machines during breaks at work, and not paying someone else to detail your car or change your oil. You cut out all things extraneous and apply this bonanza to killing bills. Remember, this is just temporary, not permanent. You only do this until the enemy is vanquished and the good guys win.

A Fragment that is Necessary for Your Success

There are 3 books, a mere “fragment” of a library, which I recommend you read so as to equip yourself to find the fragments of wealth hidden in your life. Please read:

“The Wealthy Barber” by David Chilton,

“24 Essential Lessons for Investment Success” by William J. O’Neil,

“Wealth without Risk by Charles S. Givens”.

Please forgive me folks, but I must once again give the following warning.

Do not, I repeat, do not just "haul off" and cancel your life insurance coverage!!!!!!! Read chapter 5 of "The Wealthy Barber," talk to several knowledgeable advisers about life insurance, and make sure you understand what it is that you are going to do.!!!!!

If you decide that you want to replace your whole life insurance or universal life insurance with a term life insurance policy:

Obtain the term life insurance policy from a company with a solid financial rating in the appropriate amount as explained in "The Wealthy Barber" and have the documentation in hand that proves that the insurance on you is in force

Before

You cancel the old whole life policy or cancel the old universal life policy!!!!!!!!!!!

The 3 books I recommend should be taught in our schools. These give a solid education that everyone needs to achieve financial independence. “Wealth without Risk” was published in the 1980’s and some of the data in it is out of date, but a great many things that I mention in my articles will click when you read Givens’ book. A light will go on in your attic, for sure, I promise you.

I know we get weary with the heavy load of information that is thrown at us today, but can you, one more time, dare to believe and dare to invest in …yourself? Can you dare to invest your time in reading 3 books that will help you transform yourself from a leaf floating on the river of life with no control, no destiny, into someone who knows where she or he is going and knows how to get there?

Come on! Reading 3 books won’t kill you!

OK, if you’re a guy, it might kill you, but isn’t it worth the risk?

Take a shot at believing you can do something with your life.

Do not let the prairie chickens tell you that you are not an eagle.

Be an eagle! Bolt up out of the prairie chicken world and soar high!

http://www.HushDoNotTell.com Destroy your debt with the money you already make.