July 2012 Archives

The Richards had a goal to volunteer as missionaries for their church.  In order to do this, they needed to be out of debt and in control of their finances.  They were in their early 50s, and Jim could retire with a decent pension at age 63.  His wife would take early Social Security, and if they had no debt, they figured that financially they could make it happen.

The one problem remaining was how to get out of debt in 10 years or less?  They had about $36,000 of debt spread over cars and credit cards, and a mortgage of $189,000 that was 24 years away from being paid in full.  They tried to pay a little bit here and a little bit there as extra principal, but it was hit and miss, and there was no system to their approach and little progress.

Here is how Jim described his reasoning, “When I learned that I could reach our goals on the same money we were paying right now towards our debt, I had a wave of hope roll over me.

When the plan showed me that our effective interest rate was 2.92%, I was jumping up and down with excitement.  I felt as if an angel investor had come into my life.  He said, ‘I’ll pay off all your debt.  I’ll become your single creditor.  You pay all your bills to me from now on.'”

“What were the repayment terms of this new angel investor?  Here is what they were; 10.2 years, which is the length of the plan, at 2.92%, which is the effective interest rate.  The monthly payment is exactly what I was paying towards my debt before.  And the closing costs?  They are the enrollment fee, already figured into the plan.  Who wouldn’t take that deal?”

I can’t tell you how excited Jim is with his 9 Year Mortgage Financial Plan, and now his goal is to beat the plan’s debt-free date by a year, so he and his wife can leave for their church service a year earlier than planned.  They are focused on that goal, and will not let up until they get there.

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