Debt Help And Credit Repair
Strategies

 

Here is a strategy for those who have ONE big loan such as a mortgage, a student loan, or a car loan. 

This strategy will help you pay off your one big loan 2x to 3x faster, saving you tens of thousands of dollars in interest—on your current budget.

Simply put, it’s most effective when you only have 1 BIG loan and a minimal amount of other debts.

If you have a lot of other debts in addition to your one major loan then click here to learn a strategy that’s more suitable for your situation. 

We’re presenting this strategy as clearly and precisely as possible and we’ve added an example to help demonstrate how it’s applied. 

If for some reason you find this strategy difficult to understand, or you need some  coaching in applying the strategy, Don’t Worry.  Just call our toll-free number 1-866-456-1348, or fill out the short form located to the right of this article and we’ll connect you with award winning debt professionals that are experts at helping individuals understand and apply debt eliminating strategies.

Remember: The ultimate goal here is to eliminate your debts and improve your credit—not destroy it.

For this strategy to work the following points must be present:

• You must be disciplined with your finances
• Able to get a line of credit—preferably one that’s secured by a property.
• Have at least $200 left after your monthly debt payments are made
• And have a credit card with a 0 balance on it.

How it works:

Here is a realistic example of how it works:

The goal is to pay off a $250,000 mortgage.  (Note: this strategy would work just as well against a $40,000 student loan or any large sum loan).

Step 1: Getting a Line of Credit

Get a home equity line of credit—or a simple line of credit if you don’t own a property. (Skip step 1 if you already have one)

Step 2: Figuring out your take-home Income

Figure out your take-home income for a period of 2 months.  In this example we’ll assume that our net monthly income is $4,000/month.

$4,000 X 2 = $8,000 (2 months of take-home income)

Step 3: Paying down our mortgage and saving thousands in interest.

 Take that amount (the equivalent of 2 months of your take-home income) from your line of credit and put it toward your one big loan in order to pay a big chunk of it.  In our example, we’ll transfer $8,000 from our line of credit and pay down our mortgage.

Important Note:  If you’re paying attention then you may have recognized that a mortgage is likely to have a lower interest rate than a line of credit.  Read this article in its entirety and you’ll see how the strategy works.

Understanding what you just did in step 3:

In our example, we have a mortgage of $250,000 with monthly payments of $1,448.20.

The Breakdown of our $1,448.20 monthly payments is:

•                $1,143.26 for paying the interest and
•                $304.94 for paying down our principal.

With our strategy we just paid $8,000 toward our mortgage.  Here is where our money went:

•                $1,143.26 still went toward the interest for that month, but…
•                $6,856.74 went toward paying down our mortgage.

If we had continued to only pay the $1,448.20/month, by the time we paid $6,856.74 toward our principal, we would have had to pay a whopping $25,707 in INTEREST!

By adding $8,000 toward our mortgage, we eliminated 23 payments—almost 2 years—and saved about $24,563 in interest alone.

  $25,707      interest we would have had to pay
- $1,143.26   interest that we still had to pay
  $24,563      interest that we saved

Step 4: Minimizing the interest paid on our line of credit. 

Turn your line of credit into a checking account by depositing your paychecks directly into your line of credit. 

Most checking accounts don’t pay interest, so you’re better off using your line of credit as a checking account and deposit your FULL paychecks directly into your line of credit.

Here’ s why...

In our example, we will deposit our paycheck of $4,000 into our line of credit, therefore lowering the balance of the line of credit from $8,000 down to $4,000. 

We’re now only paying interest on $4,000 as opposed to $8,000—and that’s how your line of credit ends up costing you less in interest than your mortgage.

But it doesn’t end here.

Step 5:  Keeping the balance of your line of credit low by using your credit card.

We want to keep that $4,000 in our line of credit for as long as possible.  In fact, we want to keep it there until we receive our next paycheck. 

That’s when our credit card comes into play.  Credit cards have a grace period where you don’t pay interest. 

We’ll use that grace period to pay bills and purchases.  Use your credit card to pay for as many bills and purchases as you can.

Keep reading this article and you’ll see what we do by the end of the grace period.

Important Warning:  It’s critical that you don’t overspend.  In our example we shouldn’t spend more than $3,800/month, total.  Remember that you must have at least $200 surplus per month after paying all of your bills in order for this strategy to work—and sometimes more, depending on your situation.

So if we have $400/month that we must spend using checks, then you should spend no more than $3,400/month on your credit card.

  $3,800   total spending
- $400      spent using checks
  $3,400   we can spend on our credit card

Step 6:  Paying off your credit card before the end of your grace period

A few days before the end of your grace period, use your line of credit to pay off your credit card. 

Ask your bank how long it would take for your payment to reach your visa.  If the transfer takes 2 to 3 days, then pay off your credit card 4 days before your grace period.  You don’t want your payment to reach your credit card late and incur interest charges. 

Tip: try using transfer methods that are instant.

With our example, by the time we pay off our credit card, we should owe $7,800 on our line of credit

   $4,000   what was on our line of credit
+ $   400   used to pay bills with checks
+ $3,400   what we owed on our credit card
   $7,800   what we now owe on our line of credit

$7,800 owing on our line of credit is perfectly ok since we should be getting our next $4,000 paycheck right about this time—if we haven’t received it already—this will be deposited right back into our line of credit.

Step 7:  Paying off your line of credit in full.

Continue to apply...

Step 4: depositing your paychecks into your line of credit

Step 5: using your credit cards to pay for your bills and purchases

Step 6:  paying off your credit card a few days before the end of your grace period.

...until your line of credit is paid in full.

In our example, we’ll deposit our next paycheck straight into our line of credit.  We’ll then owe $3,800 in our line of credit. 

  $7,800  What we owe on the line of credit after repaying the credit card
- $4,000  New check deposited directly into the line of credit
  $3,800  What we now owe on our line of credit

We’ll go on using our credit card to pay our bills.  We’ll pay off that credit card once again by the end of our grace period.

We’ll go on with step 4, 5 and 6 until our line of credit is paid off.

Step 8:  Paying off your one big loan in full

Once the line of credit is paid off, take another 2 months worth of your net income from your line of credit and make another payment toward your big loan.

In our example, we’ll take another $8,000 out of our line of credit and put it toward our mortgage and follow steps 4 to 6 again until our line of credit is fully paid off.  We’ll then put another $8,000 from our line of credit toward our mortgage and repeat Steps 4, 5 and 6.

The rate in which you can pay off your one big loan depends on the interest rates you’re being charged, and the surplus you have after paying your bills each month.  The minimum surplus is about $200/month.

Evidently, this strategy will work even better if your surplus is higher.

What If You Have An Old Credit Card And A Line Of Credit, And You Owe Money On Them?

Start by using your line of credit as a checking account.  There is no benefit for using your actual checking account.

Pay off your credit card as fast as you can, then pay off your line of credit using step 4, 5 and 6.  Once you’re done paying off your line of credit, you’re ready to start paying off your one big loan using the steps laid out in this article.

What If You Have a few other small loans?

If the total of your other small loan is less than 2 months worth of your take-home income, use your line of credit to pay them off.  Then pay off your line of credit as described in Step 7.

If the total of your other loans are more 2 months worth of your net income, use your line of credit to pay off the loans with higher interest rates.

Then click here to learn a strategy that’s more suitable for your situation.

Is your situation too complicated, or are you uncertain about what to do?

If your situation is too complicated and you are uncertain on what you should do, then request to speak to a debt professional simply by filling out the form to the right of this article or call our toll free number:
1-866-456-1348.

These Award-winners debt professionals will create a FREE debt elimination strategy for you with absolutely NO OBLIGATION on your part.  If you decide that this is right for you, you’ll then have the option to hire them to implement the strategy for you or provide you with financial coaching that fits your need.

To get started, fill out the form to the right of this article or call the toll-free number:

1-866-456-1348

To your prosperous future

Sheriff Guirguis
Co-Founder
PayItDownFast.com

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