Six years ago, I remember sitting in the company conference room. The account executive from Macquarie Mortgage, a large Australian bank, was meeting with us to to introduce us to their innovative mortgage product.
Their mortgage was a line of credit. Macquarie clients used their line of credit the way they use their checking account. They deposited all of their income into their line of credit as a loan payment and pay their living expenses from their line of credit. It seemed too simple.
He began his presentation with two catchy questions. The first was, “How would you like to show your clients how they can pay off their mortgage in half the time without changing their current spending?” His second question was, “How would you like to show them that their interest rate doesn’t matter?”
Right away, I thought, “This sounds like a scam. I’d better listen close.” As he continued with his presentation, I began creating a few simple scenarios on my computer. I was shocked to discover that what he was saying was true.
It bothered me that I couldn’t get my head around why it worked. I knew that numbers don’t lie. What financial tool was being used? Why hadn’t I seen or heard of this before?
I was sold! I was so impressed with the product, that my wife and I refinanced our home using this mortgage.
Using Excel, I created a training program for our loan officers and clients. Instead of using the same example for my presentations, I created a few simple fields enabling me to create personalized scenarios for each client.
The majority of people saw they would save over a hundred thousand dollars. The more I looked at the model, the more I understood why it worked.
Two years later, I launched CashMap. My first goal was to identify the financial concepts at work and the second goal was to create a simple explanation and suite of tools.
Today, people around the world are using CashMap’s easy-to-use-interface applying a simple concept that is measured by using an overlooked financial tool called the average daily balance.
Financial institutions use it to either pay us interest or charge us interest. And now you can use it too.
What’s the simple underlying concept? Keeping our money working 24/7. Our average daily balance measures how effectively we are keeping our dollars working. The better we keep our dollars working, we are optimizing our average daily balance. Leaving dollars sitting in a checking account is great for the bank but not for you. I call these lazy dollars. As a matter of fact, the luxury of keeping my dollars at my fingertips is expensive.
Learning how to optimize your average daily balance can bring powerful results. CashMap provides easy to understand educational material in multiple venues to fit a range of learning styles.
At a time when financial scams have become far too common and investment opportunities have become increasingly complex, it’s sound advice to never invest a penny of your hard earned dollars until you understand why it works.
My goal, is to provide you with a simple and straightforward explanation. If I get it right, you too will see how simple it is and you’ll want to start putting your lazy dollars to work by optimizing your average daily balance.