How to Transform Your Debt Into Wealth – Part Two

Many people fail to realize that paying off even a low home mortgage interest rate is a legitimate investment. Transforming your debt into wealth should begin with paying off your mortgage.

In my seminars, I show people how to get completely out of debt and pay off their mortgages in five to ten years. I teach them how to pay for everything with cash and use the money they were squandering on debt payments to build real wealth.

I use a simple linear math and critical path system to show them how to pay off all their debts in the shortest possible time-without getting a raise.

In my article, “How To Transform Your Debt into Wealth – Part One,” I addressed the most common question I get from homeowners is, “Why should I pay off my seven or eight percent mortgage when I can get a better return investing in the stock market?”

The second most common question I get from homeowners is, “Why should I pay off my mortgage early and give up my home interest tax deduction?” “Don’t the experts say your home is your last tax shelter?”

The mindset behind these questions is another example of the “conventional wisdom” we’ve been taught to believe by so-called “financial experts.”

I concede that your home can provide a temporary tax shelter if higher interest credit debt is consolidated into a home equity loan or second mortgage. If you no other debt, however, you would have no need for help with shelter credit interest.

In a best case scenario, this would involve temporary restructuring, but if you have to restructure credit debt into your mortgage equity, you’re already behind the eight ball and finding a tax shelter should be a less significant concern for you. Remember, you are mortgaging or re-mortgaging your home!

Sometimes, knowing the original meaning of a word, such as mortgage, is helpful. Mortgage comes from two Latin words, “mortus,” which means “death,” and “gage,” drp 債務舒緩 meaning “pledge” or “grip.” In other words, your mortgage has you in a death grip!

Is it any wonder that most Americans will never own their homes? We call ourselves homeowners, but only 2% of Americans have paid for their homes. Although in most cases, buying a home is still superior to renting because of the tax benefits, tax law changes since 1986 have diminished those tax benefits.

If an average American family went the conventional route and invested 10% of their income ($390) for the length of their mortgage, they would earn, hypothetically, $494,531 in a mutual fund investment earning 10%. If instead, they put their $390 into their debt-elimination first and then into that same mutual fund, they could eliminate all their debts, including their mortgage in 7.7 years and end up with $1,278,260 in that same mutual fund! Their first investment was the only guaranteed one: transforming your debt into wealth. In both strategies the Luckys paid out a total of $550,800 to service their debt and build a retirement nest egg, but the DFL strategy came out $783,729 ahead!

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