If You Are Not Already Using Debt Stacking?
Debt stacking is not
Nor is it debt counseling or a debt elimination service.
It is not influenced by your credit score.
Anyone can do it. And... it is free of charge.
But even though it is free of charge... it is an extremely effective and powerful debt elimination strategy.
It can dramatically shorten how long it will take to be rid of all of your debt.
At the same time... the debt stacking process can save you a
mountain of money in interest.
I am sure you have heard the phrase... "knowledge is power?"
Well... debt stacking (sometimes called debt snowball) is a tremendous example of that...
a little wisdom that can truly change your
and therefore... change your life.
Here Is How To Start.
- stop creating new debt.
- Next... make a list of all of your debts... starting with the one that will be paid off the quickest and ending with the one that
will take the longest time to pay off.
A debt is something that can be paid off at some time in the future.
Do not include living expenses such as utilities, groceries,
insurance, gasoline, etc... these are continually recurring expenses and are therefore... not considered debt.
Do not sort your list according to interest rate.
Instead sort it in the order of... what pays off first to what pays off last.
Many advisers and most debt stacking calculators would have you sort your debt list starting with... the highest interest rate and ending with the lowest interest rate.
I disagree. Here is why.
The truth is that... almost without exception... whether you sort highest rate to lowest rate or whether you sort quickest payoff to longest payoff... the overall end result is for all practical purposes... the same.
In other words... your debt will be eliminated in almost exactly the same time period. And... you will pay almost exactly the same amount of interest to eliminate your debt.
However... I have found that people do a better job of staying on track when they can see tangible results as soon as possible.
Sorting your debt list by what pays off first to what pays off last will better excite you and inspire you to stay the course and eliminate all of your debt.
Determine how quickly you can be debt free using the calculator provided by the following link. Carefully read the link instructions before clicking to the calculator.
To determine how soon you can be debt free... first click here.
Then select "Roll Down Your Credit Card Debt".
Finally... you will notice that this calculator is designed to illustrate the effect of debt stacking on "Credit Card Debt".
It is typical, however, for families to have more than just credit card debt. There may be car loans, a mortgage, student loans, bank loans, etc.
The important thing to realize is that... the debt stacking concept works whether applied against credit card debt or against any type of debt.
Debt stacking dramatically reduces both your payoff time frame and the total amount of interest you will pay.
Now When You Have Your List... Do The Following Each Month...
- Pay the minimum amount required on all of your debt until the first one is paid off.
Exception #1: If you typically pay extra on some of your debt each month... apply that extra amount to the payment of the first item on your
list. This will accelerate the payoff of that first item.
Exception #2: If you do not have an emergency fund or rainy day fund established for yourself... then save the extra payment
amount into an emergency fund. Do not accelerate payment on your first debt until you have an emergency savings account with
a minimum balance of $1,000 first.
Click here for a detailed discussion on the emergency fund and why it is so important.
- Once that first debt (the first one on your list) is paid off... add the payment that you were making toward the first debt to the payment
that you are making toward your next debt (the second one on your list). This accelerates the payment of the next debt and causes
it to be paid off much sooner than it would with no acceleration.
- As each additional debt is paid off... simply add the accelerated payment amount that was being made on the previously
paid off item to the payment of the next item on the list.
- Continue this process until you are debt free.
Notice that the total monthly cash requirement is unchanged.
You will be spending the same monthly amount using this method as
you did before you used this method.
So you see... anyone can do this.
The only difference is that you will get out of debt much sooner and you will pay much less interest.
Let's Look At An Example...
Suppose that you have the following debt situation...
- Mortgage Balance of $139,000... Required Monthly Payment of $940... Interest Rate of 7%.
- Visa Credit Card Balance of $7,500... Required Minimum Monthly Payment of $150... Interest Rate of 16%.
- Car Loan #1 Balance of $10,800... Required Monthly Payment of $350... Interest Rate of 8.5%.
- Car Loan #2 Balance of $14,600... Required Monthly Payment of $365... Interest Rate of 7.25%.
So for this example...
The Total Debt Balance is $171,900.
The Total Required Monthly Payment of $1,805.
If you paid each debt only as required... which is what most people tend to do... it would take 32 years to be debt free.
That is... as long as you didn't create any more debt along the way.
And... are you sitting down? You would pay $205,485 in interest alone.
Your total cost would be... $171,900 plus $205,485 equals $377,385.
And just think... it would only take 32 years for you to be
How do you feel about that? What a plan, huh?
Now Let's Look At What Debt Stacking Would Do...
For the same Total Required Monthly Payment of $1,805...
the debt stacking approach would get you out of
debt 241 months (20 years plus 1 month) sooner than before and would save you $119,142 dollars in interest.
Your total interest cost... using the debt stacking method... would only be $86,343. $205,485 minus $119,142.
So now... the total cost to eliminate your debt would be... $171,900 plus $86,343 equals $258,243.
And how long would it take
to eliminate your debt with this approach?
Just 12 years. Whoa Nellie!
Unbelievable... the same monthly cash requirement... just a different approach. Wow!
Is there any reason that you would not want to take advantage of this sort of power? Knowledge really is power!
This is of course just an example... everyone's personal situation is different.
But just know that... the debt stacking process will work for anyone with debt.
The point is...
You must first understand the awesome power of the debt stacking technique.
Once you do... then you can use
that power to help eliminate the burden of debt in your life once and for all.
Suppose that after becoming debt free in 12 years... you then invested that $1,805 per month on a tax
deferred basis for the next 20 years.
And, let's say you averaged an 8% annual return on your investment over that 20 year period.
Your savings balance after 20 years would be a mere... $1,179,533.
WOW! You would be a millionaire.
So in comparison... per our example...
It would take 32 years without debt stacking to be debt free. During which you may not have been able to save at all.
However... using the debt stacking approach... you could be debt free in just 12 years.
If you then invested the $1,805 per month for
the next 20 years.
12 years plus 20 years equals 32 years.
The result would be that...
Over the same 32 year period...
You would not only have eliminated your debt... but you would have also created a nest egg
of well over 1 million dollars.
All due to the power of debt stacking.
You can... change your personal financial future.
"Because It Matters"... Jim
Are You "Genuinely Serious" About Debt Elimination?
If so... download this very powerful and totally FREE
Debt Stacking Software.
Find out just how quickly you can eliminate all of your debt... including your mortgage.
And then... evaluate what saving and investing those "freed up" debt payments could do for you.
Take Control, Stay On Track, Be Highly Motivated,
Change Your Future!
Do you Have A Debt Stacking Success Story?
Have you directly experienced the power of this technique?
Encourage others by sharing your story, your thoughts, your feelings,
and your results.
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