5 Secrets To Eliminate Your Mortgage, Loans and Credit Cards

Transcript

Unknown Speaker  0:01  

The purpose of wealth talk is to educate, inform, and hopefully entertain you on the subject of building your wealth. Wealth builders recommends you should always take independent financial tax or legal advice before making any decisions around your finances.

Christian Rodwell  0:19  

Welcome to Episode 115 of wealth talk. My name is Christian Rodwell, the membership director of wealth builders. And I'm joined today by our founder Mr. Kevin Whalen. Hello, Kevin. Hello, Chris. Good to be with you again. Yes, here we are. And we're kind of touching on a topic today that was first covered back in February 2019. Can you believe it Episode Four, where we talked about how to uncover hidden money in your life using debits, which is one of our famous acronyms that that we have inside the academy program. But we're focusing on just the D today, which stands for debt.

Unknown Speaker  0:56  

love a good acronym. As you know, Chris, and I spent my life trying to manufacture good acronyms for easy teaching. Debit is a great one, and we'll get to that. But the thing, I think it's really important to sometimes revisit things. I think for two reasons those who've followed, the process will have changed by now. I mean, if you were listening in February 19, and you're still listening, thank you. We're still committed to delivering great content and value for free for anybody. Because we want 50,000 people to become completely financially independent. And often people don't start because they're a bit overburdened. They, they think they don't have enough money, when in fact, there are things they can do now. And the obvious one, and it sort of came to me, Chris, when I was talking to one of our members the other day, and is interesting. She said to me,

Unknown Speaker  1:54  

you know,

Unknown Speaker  1:56  

she's making great progress. She's got to financial security now. And she said, I need to tell you something. And she went all quiet on me. And I looked on zoom, this was and she said, I'm going to get a job. And she said, You're not going to like it, are you? And I said okay, what's the logic? She said, because I've got some debt in my life, right? So we know, debt is good debt, bad debt, double edged sword, and we'll talk about that. And I need to be at a point where I can refinance my home. And the best way to do that, and the only way I'm going to be able to do that is is if I have the security of a job. And I thought about that for a moment. And we laughed, and she kind of and I said, Look, if if getting a job, you see it as temporarily playing on a team delivering value getting back into the workplace, knowing it's temporary, enjoying playing for another team, and allows you to refocus your debt and get a lower interest rate. So for the long term, because you've got an employment now, how bizarre is that somebody thinks you're more secure in a job, when the very fabric of work is so much harder now, when people losing jobs, and furlough and all those sorts of things. When building wealth is the most secure thing you can do. So we laughed about that. I said, just play the game. You know, if it works for you, and you get a big difference in your debt. And you can dramatically cut your costs. And you do so temporarily in the full knowledge of what you're doing. I think it's not a bad thing. So she was very doing kind of quite a smart thing. But most people don't do smart things with debt. They do dumb things with debt. And it's not taught in school. And it's nobody's fault. The whole kind of system of the UK and US and other countries is kind of wired for people being in debt, really, from the very early age. And as we reflect Chris, in the coming weeks, we're working on the wealth builders for teens. In one of the key things we need to get across is, is having kids not see debt as an automatic thing in their life, you know, the fact that you pick up a bit of plastic, like a library card, you know, they can think and think that plastic pays things. But But in reality, plastic by removing the connection to real money, you know, you could hear the Kuching or the or the clean, or the clang of money and the touch your notes that that's all been removed and, and the pandemic has done that too. So everything is touch, isn't it everything is you know, you just tap you just tap, you just tap. And I think the removal of the connection to money is going to make it harder for teens, because everything they'll do will will be online, and I think this is going to make the matter worse. So I think It's great that we revisit this subject, it's good that we're going to be putting putting some of that into the, the kids wanted the wealth builders for teens, which is coming up. So, you know, if you're interested in being a great steward for your own kids, you know, get in touch with us and register your interest in that. join the Facebook group, you know, just get in touch and let us know you're interested in, in helping your kids. But the other thing, of course, is to remind people, that if you have any debt in your life,

Unknown Speaker  5:33  

money's flowing out. And the principle of wealth is money flowing in. So you've got to be very careful when you think about how debt works in your life, and be ruthless in the attention to it, which is why it's front and center, in our debits process, because it's not just the money flowing out. But if you think about it, whatever you buy on debt, whatever, it could cost you more, because you got to add that interest cost to it. Now we know there's good debt and is leveraged debt. And I said, we'll touch on that. But when, when, when people are using and proliferation, you know, cards, to pay for things that are wasting assets, they're, you know, they're not assets at all, actually, you know, their, their cars, their TVs, their things of live consumption, and just forget that the cost is being loaded up. And just because you can afford to make the monthly payments, doesn't make it a good thing. And I think that's the important basic context for this in and I cover this actually, Chris, in a book I wrote some while ago now, actually, you talked about this episode, being a couple of years old, I think I wrote this book 2004. If I recall it, I paid my own mortgage off in seven years flat and, and wanted to teach other people how to do the same. So I kind of coined the term debt free day, the day when you own everything and owe nothing. And that's a simple mantra, but it's it's really aimed at people who perhaps want to focus on the elimination of debt, and then build their wealth, I think it's best to do them side by side. Because if you can reduce your debt, and therefore increase your monthly inflow, because you've eliminated something, then I think you should plant the seeds of the money you save and build wealth with it, as opposed to just waiting till you paid off all your debt and then start because all of that money that you saved on the journey has been lost and is dissipated in like seeds just drifting on a on concrete, you know, they're not going to germinate at all, you get the point. So as a long rambling context, but but it really shows how important this subject is. And thanks, Chris, for suggesting we should revisit it.

Christian Rodwell  7:59  

Yeah, no, I think that's that's the same very well, and we've been talking obviously, on previous episodes about our nine step recurring roadmap. And this sits firmly in step two, which is foundation. So debits is part of that step to process and reviewing your outgoings. So yeah, referring to the book and Kevin. So save a fortune fast 12 secrets to eliminate your mortgage loans and credit cards, as you say, first published 2004. And, and we've got a free PDF copy as well. So we're actually going to run through some of those secrets in today's episode. So we'll go through the first few. But if anyone would like to download a copy of that book for free, then you can just head to wealth builders.co.uk forward slash save a fortune. So shall we dive into secret number one, Kevin?

Unknown Speaker  8:47  

Yeah, secret number one. So it's, you know, always pay the lowest interest rate you can. And that just means like anything else in life, there's so much information out there. There's so much data, then you can shop around to get the lowest interest rate on whatever debt you have. So the first thing to do is take stock, right? So, you know, if you're not sure what you've got, you're not sure what you're doing. Because time has kind of moved on and you've just forgotten. And you're just living your life, just get get you. You know, I know everything's online. So stop things online, get these statements or print the statements from your bank and get a highlighter pen, and just highlight anything that's going out for purposes of debt, and then resolve to find the lowest interest rate. And just like you can switch other things in life, you switch and you switch to a lower cost whenever you can. And there's so much information out there. There's brilliant search engines now on there and supermarkets and all sorts of things, Chris that people can use. And, you know, when you move to, to a different debt, you know, what you're going to be doing is, you know, making sure that you've either pay that debt off quickly. Or you're just, there's other process I'll talk about when you when people got credit card. So sometimes that can kill people when they're drowning in, in consumer debt. So and, and, you know, one of the ways to do that sometimes is to, is to think about, you know, merging, instead of having lots of different things when you lose control, just consolidate to get your debts in one place. But do it once, you know, don't do it 50 times and keep doing it. It's a one off exercise. And it's a very powerful thing to do.

Christian Rodwell  10:45  

Yeah, and make a note of the date that you've done it. So when that you know, naught percent, or that low rate perhaps finishes, you make sure that you don't want to forget about that as well. Is that the right? Yeah. Okay, so moving on to the next secret

Unknown Speaker  10:58  

secret number two is, you know, pay the same monthly payment, when you've reduced So in other words, you are paying something before. So you've, you've assessed what your total cost of debt is, you know, you've added up. And then instead of going, whoo, I've saved some money, you know, either plant the seeds of that money in assets and start building wealth. Or, if you want to keep accelerating your debt, just keep the payments the same. So if you're spending x, then keep spending x, but redirect the saving to some of your other debts, so that you essentially, maintain the payments. So you're not changing your overall income and outgoings, and if you have to do a bit of both, you know, but always, always, always do something with the money that that hard research. And it's valuable time, by the way, because when you analyze it, and you spend a little bit of time, as we always do in debits, you spend a bit of time, but it's not just the money you save, it's the impact on the money, you say that you move forward. And I would say anybody, and everywhere should be doing this, because it's not just about those people with consumer debt. You know, it's also the same principle, if you've got leveraged debt, you know, so those people who will accept that, actually, you know, they're borrowing money at a low interest rate. So the different types of interest rate on there. So consumer debt is the high end, credit cards and overdrafts and those sorts of things. And also hidden fees. So, you know, always be aware of what you're getting into, don't just blindly fall into those things, but those who manage that got out of that, and perhaps they've refinance their home, and they've got buy to let property, say, or other types of property that's mortgaged, it's still important every now and again, to review those rates. Because even if the interest rate you're paying is say, 3%, and the money you're making is, say, 8%. So you make an arbitrage you're, you're gaining from the use of the bank's money for your benefit. But in the end, you're not in control of those interest rates. So you know, interest rates will go up at some point. So it's best when they're down, to pay as much as you can, and try and gradually reduce the percentage of your overall life that is in debt. So if you've got you as often we'll, we'll talk about thing called LTV or loan to value. So if you've got a portfolio and, you know, you're typically when people are building their portfolio, Chris, they're building it fast, you know, they want to, they'll maximize their leverage, they'll go, sometimes 75 80%. So they'll have a portfolio of a million pounds, but that of 800,000 pounds in debt. Well, if interest rates were to suddenly go up, or gradually go up, you know, they're going to eat into their profit. But also, it means, you know, if property prices were to fall and interest rates go up, you know, the, they're getting in a worse position, so they're not really improving their position. So I encourage everybody, including our clients and members who, who build property portfolios, to have a plan to do this very same thing, review their interest rates, and try and gradually move their overall reliance on debt gradually down from 80 to 70 to 60 to 50. And get to a place where you're bulletproof. So there isn't an interest rate that could change that would dramatically impact on your ability to be financially independent. So it's not just a matter I don't want people to switch off on this podcast Chris because they're already our I've sorted out my credit cards. I don't have those anymore. I've got those up. You know, I've just I'm just using my card is as a flexible tool. And I'm paying the payments every month, which is all I do really just have credit cards for the convenience of the payment and the convenience of the record keeping, but I never pay interest rate on on on anything. And that's important to get that psyche. Alright, so that's that's the importance of that.

Christian Rodwell  15:18  

Alright, so we covered secret number one, which is always pay lowest interest rate on every penny you owe, then secret number two maintain the same monthly payment after you've reduced the cost of your debts. So what's secret number three? Kevin? Well, don't you knew I knew the secret Chris rose. Could it be Don't underestimate the risks risks of being in debt.

Unknown Speaker  15:39  

It's good, you're on the same page. Yeah, you know, when when you're in debt, the money's flowing out, okay. So when money is flowing out, it's going to flow flow out no matter where you are on your journey. Now everybody's on a journey. And the roadmap that you talked about Chris, and episode elegantly put together is a roadmap that helps people move from financial insecurity through the milestone of security, from security, to independence, and then onwards and upwards to abundance and so on. But on that journey, things go wrong, don't they, and they go wrong, not just in terms of interest rate changes we're talking about now, or job changes and changes in business things. But things can happen, also, to our health. And in some cases, you can lose your health. And sometimes you can lose a family member or even lose your own life. And that's also part of the foundation, Chris, which is step number three, which really talks about protecting your roof, so being watertight from the beginning of your wealth journey. And I just like people to imagine that if wealth is an up escalator, you know, you stand there, you build your assets, you've done a great job. And you're standing on the up escalator. And it's pretty easy. You know, you manage your debt every now and again, you get it down to a manageable level. But once you build your wealth, if you've done it well, if you've done in line with the principles we teach, you're standing on the up escalator, it's really not hard anymore. But while you're in debt on while you're not yet wealthy, you haven't yet established that. In truth, you're on the down escalator, you know, that's fun. When you're a kid, you remember in shopping centers and stuff. When the days when we could go into shopping centers, of course, you see kids, the escalators going down, and they're running up, right. And that's what's happening in life. So the cost of life is forcing you, it's pushing you down, and you're working hard to get ahead and to go upwards. So it's really important that when you think about what could go wrong, if you're not quite wealthy yet, but you're seriously intending to do so make sure that you've got some form of really solid insurance to almost to mitigate the gap. So it says, you know, if if I were to get ill, I've got an insurance policy that pays my income until I get well again, if I were to die, I wanted my family to be financially independent. And those people who connect with me, Chris will know my story and my father dying at 46. And consequently, at a very young age, you know, he didn't have the chance to build wealth anymore, did he he stopped. And consequently, he didn't have insurance. So there was no gap, there was no lump sum, essentially, to make a payment to keep the family safe. And consequently, a family we're not so and I don't want that to happen to anybody. So if you if you've committed to building wealth, and this is the key,

Unknown Speaker  19:04  

then you will be wealthy for your family, even if you don't make it because you can insure yourself. And some of the things you can do when you start to think about this really is if you're really focused on your debt, you're eliminating the cost of debt, some of the savings in that debt that I mentioned earlier on, if you're still not yet at financial security or independence, redirect the savings you make and put it into insurance so that you're covered, no matter what happens. So treat the premiums that you pay as a cost of being in debt. So that as your debt reduces, you then start to cut the cost. I see so many people take out a life insurance policy. Well they get sold in the in reality, Chris Donnelly for like 25 years. I start a plan. That's just life insurance. Well, if you've got a plan to be financially indignant, In five years, you only need insurance for five years, you don't need it for 25 years, you see what I mean? So you can save costs everywhere. So we're not just saving costs on debt. We're protecting our family. And we're reducing the long term cost of insurance because it's your wealth builds, your need for insurance diminishes. And we get very small, don't we in wealth builders, where we actually encourage people to be business owners, and when they are legitimate business owners as so many of our members, Arcturus, then they become eligible for something called relevant life, which is where you can use the government to give you a tax relief, a tax break to pay for the insurance. So it's not just the savings on the debt, but the government giving you a tax break to do it. Come on, guys, this is really good stuff. So there's so many things you can do. So secret number three, is make sure you've taken care of the risk to yourself and the rest of your family. Because you want that debt to be paid off. And you want to be financially independent, no matter what. That's secret number two.

Christian Rodwell  21:07  

Okay. And we actually covered off relevant life there for anyone that's interested in finding out more about that. That was Episode 66, with SAS director Paul Brooks talking about six tax saving tips for business owners. So I'll put the link to that in today's show notes. Well, Chris's are not did he not write a little guide on it? Yep. Yeah, absolutely. So yeah, we'll make sure we link to the guide as well. And so we have three secrets in and we noticed 12 secrets in the cyber fortune, but Kevin, so why don't we pause for a second and head over to trustpilot. and have a look for one of our latest reviews over the last seven days. And a short and sweet one here from friend of Ted, but a lovely one. Nonetheless, it says Kevin and Chris have put together a phenomenal program full of content, community, network support, knowledge and deep dive specialisms across all the pillars of wealth. There we go.

Unknown Speaker  22:04  

Thank you. You know what I like the simplicity of that one. So you know, we have sometimes you know, very effusive comments, don't we, and we have some very nice ones, as well as short and succinct. So and they're all very genuine, of course, from people who work with us. And we're thrilled and delighted that our reviews are so outstanding, because I think people are getting the message that we're committed to helping you, whether you pay to be a member or whether you don't, we want to help as many people as we can, as I said, 50,000 people. So if you've been putting it off, you know, just join in, join in and find out more join the Facebook group, and you'll be able to tune into some of the things we're doing. And when you're ready, come work with us a bit more.

Christian Rodwell  22:49  

Okay, so I've got time for a reckon another couple of secrets. And secret number four. So this is a process called Marshal the forces Kevin. So what's what's this all about?

Unknown Speaker  23:00  

Yeah, so you remember I spoke earlier on and I talked about the possibility, sometimes it makes sense on a one off only, you know, one time only deal consolidate your debt. Because mortgage debt, for example, is much cheaper than credit card debt. And it always will be massive differences on there, really, in terms of the the rates, but sometimes, you know, you can't do that, it isn't possible to transfer into a mortgage, or a consolidation, it's, you just can't do it. So this is the way to do it. You basically, you know, get all skin it's all about data. So you've got to put yourself in a place where for an hour or so maybe that's all it'll take, you just kind of line up your debts, put them on a spreadsheet, or put them on a piece of paper, if you don't fancy your spreadsheet and line them up with in order of the interest rates, right, so the most expensive at the top. So look, find out the interest rate 15% 16% 13%, then 12, and then 10, whatever it is. And then once you know what they are. The thing to do then is without changing the overall payment. So whatever you're paying, you're paying, but what I want you to do is make the minimum payments on any card you have. And take all the money that you were paying and paid off the highest cost debt. Right? So you focus on the one that's charging you the most, you send as much money to that and the minimum to everything else. And when that's gone, celebrate up the bloody card, move on to number two, and then do that sequentially until you've moved and eliminated that consumer debt. So that's how you do it. And it's really Simple, it's quite powerful, because it allows you to see what's happening. It gives you a physical sense of success and moving. And and it wants you to do once and you don't then go back into using cards again. At least, if you use them using it for the convenience, as I mentioned before, and that's what you do. So it's really quite a simple thing, because most people don't do that. Either. They just pay whatever they can afford, if you see what I mean. Well, don't do it randomly focus like a laser on highest cost, then second highest, then her third ice and so on. That's martial law forces secret number four.

Christian Rodwell  25:42  

Yeah. And that is absolutely by far the fastest way to pay off those debts. Also, I've heard that referred to as like the snowball method, just keep on rolling and bigger and bigger and bigger. So yeah, I've heard I've heard that won't be four. Okay, that's good one. So secret number five, then Kevin. So this is about checking your income and expenditure. And looking for all the different opportunities to make improvements.

Unknown Speaker  26:05  

Yes, and it's twofold rulings. On the one hand, there are ways that you can improve the net tax position on your income, we won't talk about that right now in detail, because everybody's tax position is different. But you know, there are always ways, always ways where you can increase your net income. And if you increase your net income, then you know, by understanding tax concessions, tax breaks, things that you can do, I just mentioned relevant life, for example, you know, many ways that you can do something, and we'll cover that on another episode. But nonetheless, at the moment, focus on expenditure. Because in the same time, you know, you've got your, you got everything out, you know, have a look at and we do this in debits, every, every year, we encourage our members to do it annually. Most people don't like doing it, right, because it's a pain in the ass. And we don't like Penny pinching. We don't want budgeting, we don't have conversations about you know, don't have a cappuccino and don't enjoy life. We're not saying that. Definitely not not not saying that. What we're saying in his saying is, you know, you know what money is coming into your life. And you know what money is going out of your life, and whatever's going out of your life, there's an opportunity to change that. And that's the process we teach in debits. And every line of your expenditure, especially again, now with technology, doesn't matter who you are, doesn't matter how wealthy you are, there are ways that you can do something that will reduce the cost of that the competitive nature of all sorts of expenses that are in your life, from utilities to phones to, you know, the things that you do every day, there's always ways to make them a bit cheaper. It's not that we're trying to find 10 quid here, 20 quid there, it's the money you save, you redirect to either eliminating they're paying for insurance if there's a gap, or building wealth. And you can choose, and you can choose a combination of all three, if that worked, but either way, what you're doing is the consequence of the action is it has a tripling triple whammy impact on your wealth. And a lot of people tell me, I'd like to be wealthy, but you know, I've got enough money, I'd like to be wealthy, to know where to start. Start a home, start there, get a detailed summary of money in and out, identify areas where competition can definitely save you money. If you find an improvement, no matter how small, take action, and then take note the money you've saved, and take the money you saved, to do something to reduce your debt. insure yourself, build your wealth.

Christian Rodwell  28:53  

And we're talking about some significant savings. We see our members obviously submitting their savings after they've been through that process every week. And it's, you know, from several 100 to several 1000 in some cases. So it's a worthwhile exercise for sure.

Unknown Speaker  29:08  

Yeah. And if you do that, yes, of course, then you're gonna make the most money, the first pass. But if you just do once a year, I think you know, that's that's a good way to do it. So yeah, I think you know, is that enough secrets for one day,

Christian Rodwell  29:24  

I think we've covered five there and that's, that's enough for someone to get stuck into now. And of course, we said that if you'd like to download a free copy of the cyber fortune book, then you're more than welcome. You can head to wealth builders.co.uk forward slash save a fortune. And it's a pretty, pretty easy read. Kevin, it won't take long for someone to go through that but it could have a huge impact.

Unknown Speaker  29:47  

Yeah, and and definitely, you know, some of the lessons and then it was good to revisit it actually, Chris, you know, will want to try and give more powerful illustrations about how this powerful this system of manipulation, we have one designed to get us deeper into debt to pay more profit to financial institutions. You know, it's it's kind of education but in the wrong direction. And I want to change that. And I want the kids to be more aware of this and to, to help parents help them understand that there's a big difference between tap tap convenience, and paying interest rates. You know, for some people, you know, particularly if you will, the whole point about me paying a mortgage or fast is, if you, here's the thing, right is let me leave you with this one. For those of you who have a mortgage, get your mortgage offer out, go back, find it, get your mortgage offer, and doesn't matter what the cost of your house is, what the cost of the mortgages. But let's, let's take an average, let's say, you know, the, I'll make some numbers of Chris, I'd say the price of your house was 400,000 pounds, and you borrowed 300,000 pounds. You okay, I've got 75% loan to valuation, don't feel too bad. Go and add up on the last page of the mortgage offer, which says, you know, over the term of the mortgage, this is how much you will have paid in total. Now, I don't have a mortgage offer in front of me to compare, but but let's say for the sake of an argument, it was 800,000 pounds total in terms of your debt, then you pay twice as much for the house that you just bought, so you didn't pay 400 Grand Prix paid 800 grand for it. Now, it doesn't matter what the numbers are, they're always massively different. So the reason I wrote this book, is I wanted people to pay off their mortgages and not see mortgages, just a convenient debt, you know, one that everybody has, so it's alright, but it's not all right. Or at least it's not a right to think about it is okay. Because the word mortgage is really a French word, which means a pledge until death, you know, more is French for death. So, you know, you end up somebody else owning your property if you don't pay it. So having a mortgage, Okay, I get it, it's important, and we all need it. Most people need a mortgage to be able to get started. But that doesn't mean you stick with it for 25 or 30. I've seen young people today, buying properties with mortgages for 40 years. Car, 40 years, crumbs, you know, and they're doing it just because they can afford the payments. So I want to change that thinking that just because you can afford the payments, make it okay. Because in the end, if you're not reducing and eliminating debt, you're going to be paying more for life and you're going to be have to work a lot harder to be wealthy. And we want everybody that we meet to be wealthier than when we when they came in contact with us, Chris. So here endeth the lessons on debt, at least for today.

Christian Rodwell  32:58  

Yeah, well, we hope you enjoyed listening to today's episode. And if you did, and you'd like to leave us a review, that would be much appreciated. And we'll be back Same time, same place next week, Kevin, and until then, my friend so yeah.

Unknown Speaker  33:15  

We hope you enjoy today's episode. Don't forget that we are constantly updating our resources inside the wealth builders membership site to help you create, build and protect your wealth. Head over to wealth builders.co.uk slash membership right now for free access. That's wealth builders.co.uk slash membership.

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