Transforming Debt into Wealth is the Secret to Wealthy Living

You're about to see why transforming debt into wealth is so critical to your financial success.

The best way for me to explain this is to use one of the biggest and most potentially devastating forms of debt. The mortgage.

Did you know that in 1929 only 2% of the homes carried a mortgage and only 30 years later by 1998 that 2% grew to 98%?

Because of this fact, most of us are already experts at transforming debt into wealth. Someone else's wealth that is.

What I'm about to show you hasn't always been the case in America. We didn't used to be in the bondage we are in today.

According to money.cnn.com, the typical American family's mortgage situation is as follows:

Before I go any further, you need to understand a little bit more about the financial world and the way they operate.

These folks understand that transforming debt into wealth is one of the easiest ways to earn money. Therefore, they use tricks to put us into debt so that they can increase their wealth.

An analogy is very helpful here. You see, financial institutions operate a lot like a magician. A magician uses 2 techniques to perform an illusion.

First, they use distraction. They might say something like "here is a plain, white, ordinary handkerchief". They may even ask someone from the audience to inspect this handkerchief to make sure it has no hidden pockets, sticky formula, so on an so forth.

While everyone's attention is diverted to the handkerchief, they use the 2nd technique - manipulation. They manipulate the coin or the card or whatever it is they are going to make "disappear".

The setup for the illusion is the most important part. This is where they put the object into position so it has the illusion of disappearing. Any adult knows the object didn't really disappear, but they still might not know how the trick was accomplished.

Financial companies work the same way. Only difference is.. their not too concerned with disappearing coins or cards. Their focus is to make our money disappear.

Financial companies distract us with things like interest rates, rebates, cash back, etc. While most people are concerned with the distractions, they are manipulating the figures to suit their own needs. Key #1 to transforming debt into wealth is to understand that debt is the enemy of wealth. If our money has been made to disappear through trickery and slight of hand, we cannot use it to build wealth.

Mortgage Fraud is Universal!

As a matter of fact, the home with it's accompanying mortgage, is the biggest and deadliest enemy to transforming debt into wealth. Here's why...

What if I was to tell you that that typical American family will actually pay 82% interest - not 6, 7, or 8? Would you be outraged? I would too! Let me show you what I mean.

First we need to break down what actually happens on a mortgage.

On your first payment, $158 goes to principal and $1,035 goes to interest.

That means that 87% of that first payment is interest!

If you jump down to the end of 5 years, the principal payment is $221 and the interest is only down to $973. That means that 82% of the payment is still going to interest.

NEWSFLASH: Interest means you are flushing money down the toilet!

With that in mind, consider this… according to the 2000 census the average family moves every 4.7 years. According to the American Home Survey, the average mortgage is only 4.2 years old.

Between moving and refinancing, it is unlikely that a loan lasts more than 5 years.

In fact, the origin of the word mortgage means “until death”.

Transforming debt into wealth is nearly impossible under this scenario.

If we keep going, it is not until almost the 20th year that we are paying 50% interest and 50% principal.

One final snapshot reveals that when we get to 29 years we finally make a payment where 6% of our payment is interest.

In this case the manipulation is in the numbers. The way the formula is designed allows the relatively small looking interest rate to eat us alive.

If you take the average amount of interest on all payments made over the life of the loan it comes to 57%. The total interest paid is $245,632.

Free Debt Reduction Calculator - Click Here

How You Can Beat the System

One last analogy before we move on. In the game of football there is a well known defensive strategy called the blitz.

This means that instead of guarding their man they will go directly after the quarterback.

The natural consequence of this is an open man for the offense because one or more of their men are not guarded.

If the offense recognizes the blitz and acts properly it can result in large gains. If it fails to see the blitz, large losses are inevitable.

Financial companies blitz on every play. Their tactics are extreme. Because the public is not aware nor prepared, they are usually very successful.

Here's how you can begin transforming debt into wealth.

• Don't go into debt
Now that you understand how much money debt drains from your pockets through interest - Do not incur any more. Cut up your credit cards and pay for your expenses as you go.
• Understand the effects of extra principal
What would happen if we were to add $100 to each of these payments? It would save $58,279 in interest and be paid off in 24 years. If we add $200 it would save $92,330 in interest and be paid off in 20 years. If we paid $300 per month extra it would save $115,187 in interest and be paid off in 17.6 years.

• Understand Wasted Opportunity Cost
What would happen if we took that $1,193 payment once the home was paid off and put it in the bank earning 3%?

It would grow to $215,066 by the time you would have been making your last payment. We call that wasted opportunity cost.

In other words, it will cost you $215,066 because you wasted the opportunity.

• Get a Plan!
You can formulate a plan on your own or you can get some help through a debt reduction software program.

I recommend doing both and comparing the projected results.

Transforming debt into wealth begins with the realization that your debt = wealth for somebody else.

The sooner you get out of debt, the sooner you can begin building wealth for YOUR family.

Please feel free to contact me and I will be happy to coach you through your specific situation.