27 Apr Picture Your Line of Credit – Part 4
Over the last three posts, I’ve been showing you how to use your line of credit to build financial wealth. Yes, for many of you this sounds like a scam and you wonder why you’ve never heard of this before. We all know the adage, ‘a picture is worth a thousand words’.
To show you that this strategy is for real and that it’s safe and simple, I created an example that you can see. Let’s began by reviewing your basic information.
Basic Information
You deposit $5,025 in the bank each month, your monthly expenses total $4,025 (This includes your mortgage payment of $1,364.40) and you have a $15,000 line of credit that charges an interest rate of 4.5 percent.
A Picture is Worth a Thousand Words
To view the picture, click on the following link:
Our Line of Credit Picture. If you have problems, copy and paste in your browser: http://sdrv.ms/18x1xVb.
Essential Elements of Using Your Line of Credit
In my last three posts, you learned the following.
1. You can use a line of credit the same way we use our checking account;
2. There are three ways to withdraw dollars from a line of credit: line of credit checks, overdraft protection and automatic bill pay.
3. In the first two months, you used $6,593 of the bank’s money and skipped 22 months of mortgage interest payments saving $22,100 in mortgage interest payments. It cost you only $5.23!
4. How did you get away with paying just $5.23 in interest? You scored big by doing two things. First, on the same day you received your income, you made a loan payment equaling the income deposited in your checking account ($5,025). Second, you paid your family’s living expenses as late as possible. You used your mortgage company’s 15-day grace period and you paid your remaining living expenses on the 28th of the month.
5. CashMap provides a personalized solution. On the next to the last day (In our example, this is the 29th day of the month.) of your line of credit’s billing cycle, whenever the amount you owe the bank is less than $5,025, withdraw $1,393 and make an additional loan payment.
CashMap’s Personalized Solution
Just two numbers and one date to remember: the amount you deposit in your bank account each month, $1,393, the number given you by CashMap and the next to the last day of your line of credit’s billing cycle. That’s all there is!
Let’s review our line of credit picture. Beginning with the second month, look at the balance owed on the 29th day of the month and then look at the amount withdrawn on the 30th.
1. In the second month, $1,693 was withdrawn on the 30th. $300 is for your ongoing savings program and $1,393 is the additional payment for your mortgage.
2. In months three, four, six, eight, ten and twelve $1,693 is withdrawn. $300 goes to savings and the additional loan payment of $1,393 is paid to the mortgage.
3. At the end of the year, you will have withdrawn $18,251 from your line of credit, paid just $73.39 in interest, saved $46,256 in mortgage interest and skipped 56 interest payments.
4. If you’d like to be a bit more conservative and pay a bit less interest on your line of credit, instead of looking at the balance owed on your line of credit on the 29th of each month, use the 30th instead. If you can withdraw the $1,393 and the balance is less than $5,025 (Your income deposited), make the additional loan payment. Your interest payment will be just $24.78; you’ll save $42,301 in mortgage interest and skip 52 mortgage interest payments.
You’ve seen the picture for yourself – I’ve used just simple math and you’ve gotten a tremendous return on your hard earned money. I’ve not done anything fancy. Admittedly, this is an unusual strategy. Your financial advisor, CPA and banker have probably never heard of this. In my next post, I’ll review what to expect when you visit your financial institution.
Ready to start your journey towards financial freedom? Get started today!
I’d love to hear from you. Please send your questions, topics or suggestions to dennis@cashmapconsulting.com. Thanks!
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