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The Truth Behind Your Finances!
By Jay Ball, Thu Dec 8th
Between 15 - 20% of people in our country own there ownbusinesses. This statistic is on the rise thanks to theincredible invention of the Internet. The staggering truth isthat of these only 5% are genuinely financially free! You maywell see lots of expensive cars driving on our roads and bighouses inhabited by the seemingly wealthy, but these houses andcars are not yet paid for. Never in our history has it been so easy to lend money. Banksand building societies are falling over backwards to lend usmoney. You can sign your life away to a 50-year mortgage thesedays if you choose! Banks and building societies are offering125% mortgages to first time buyers and business is lookingoutwardly great. The credit card companies also love today’s economy. You canborrow enough money on a credit card nowadays to buy a brand-newcar! The loan companies are also cashing in on ignorant andnaive individuals and this really concerns me. The advertisementmarketplace is going wild on media adverts for consolidationloans. You know the type? “We will help you to consolidate allof your existing loans into one affordable monthly payment” Theycall this type of loan a HOME OWNERS loan. Yes you canconsolidate all of your existing debts into one affordablemonthly loan, but what do you call affordable? People areconsolidating their present debts into one huge debt and loaningthe money to repay this new debt. To actually repay this debt infull will take these people years. What’s more they’ve securedthis loan on their one and only ASSET - their HOME!
These unfortunate people aren’t thinking about the future andtheir long-term future plans, they’re thinking about theimmediate and present situation. In the meantime what happenswhen the interest rates begin to rise? The interest rates on aconsolidation loan will take years to pay off and whilst you owemoney to your lender you’re not secure at all because yourconsolidation loan is secured on your home. What does this mean? If you cannot pay your loan the Loan Company will TAKE YOUR HOMEas payment! The reason it is so easy to lend money at present is because theinterest rates are so low. At the time of writing this web pageour present government has set the base rate of lending so lowthat people are dangerously getting themselves into debt throughtheir own ignorance towards the economy. What is reallyhappening will become all too apparent in the next few yearswhen the tide turns and the interest rates begins to risesharply. If you’re not financially free or in control of yourassets when the tide turns you will lose everything. Historyalways repeats itself and sooner or later a recession will hitthe world trading markets and all of those people who borrowedhuge amounts of money to buy their big house and their BMW orMercedes will be in big financial trouble. Wait, it gets worse! SHOCK – HORROR! Once the tide turns the interest rates will sawand if you’re not secure your financial world will come crashingdown. The mistake that people have made is to foolishly believethat their loan rates will remain the same, they won’t. Let meexplain in simple terms to you my theory by giving to you asimple example: If you have a current ‘interest only’ mortgage of say £100k andthe interest rate applied is £5% your monthly payment
willincrease with the interest rate. What happens if the interestrate climbs to 10%? Your mortgage could double. In 1989 theinterest rate sawed to 15%. If this happens (and it could) yourpresent mortgage payments could treble! How will you survivefinancially? Your mortgage payments could increase by 300% inside 12 monthsand any other loans you may have will also require payment. Ifyour wage doesn’t allow sufficient funds to meet these demandsthan you will lose everything slowly and painfully. When theinterest rates do begin to rise (and they will) the debtconsolidation companies will cash in on you. Before you know ityou could owe money for the rest of your life and if you can’tpay what you owe than your lender will take your car your homeand the clothes off your back to meet their demands. SO WHAT’S THE ANSWER? My advice to you is to pay off yourexisting debts as quickly as possible. If you are driving aroundin a car that is financed by a finance company pay this loan offas quickly as possible. Contact the finance company and ask themfor a final settlement figure. This way you’ll know exactly howmuch debt you’re in. If you can afford to settle your financeearly than take advantage of this and settle immediately. Thisway you’ll own your car outright, you’ll have paid less ininterest and you’ll have some equity if you need it. If youcan’t afford to settle the finance at the present than checkwhat interest rate you are currently paying and search around onthe Internet or in the high street for a lower rate of interest.Whatever you do, don’t delay in taking control of your financestoday. Another mistake people make is to fall into the trap of ‘falseeconomy’. They begin with the right intentions by searching fora lower rate of interest for their mortgage. What this means isthat their monthly payments become lower. The mistake they makeis to think they’ve got more money in their pocket. In affectthis is a false economy. Instead of settling for more money inyour pocket and still enduring a 10 year (or whatever) term loan,why not use this extra money to increase payment on the capitalof your loan? This simple technique is called ‘Mortgage Acceleration’ TheBanks and Building Societies know all about MortgageAcceleration they just don’t mention it because it loses themlots of money in interest payments! If you increase the capital payments of your mortgage everymonth you’re paying off the entire loan quicker. If you canshave 2 years off your loan you’ve not only shortened yourmortgage by 2 years you’ll have saved yourself a packet ininterest charges. A 25-year £50k mortgage repaid 16 years earlycould save you over £60k in interest! (dependant on the interestrate) Ask your Bank or Building Society about ‘MortgageAcceleration’ and see the look of loss on their face! Don’t settle for a lower rate of interest and extend your loanpayments thinking that you’re saving money, you’re not. You areonly extending your debt! You need to pay off this loan asquickly as possible whilst the interest rates are low. Thelonger you take to pay off your mortgage the more interest ratethe Bank or Building Society will take from you. Whilst theinterest rate is currently around 5% accelerate payment NOW andsave even more money! Take advantage of the fact that if theinterest rates are currently low than the amount of interestthat you pay on top of your loan will be also low. If you canafford to increase payment whilst the rates of interest are lowthan I urge you take advantage of this immediately. If there isany way that you can accelerate your loan and pay it off earlythan I would strongly advise you to begin your financialorganisation here and organise this today. A simple increase of£50 per month in mortgage payments will save you money ininterest payments in the long run. Your first step to takingcontrol of your financial world is to pay off all of yourexisting debts as quickly as possible. When you have no debts,you’ll be financially free and you’ll feel as if a huge weighthas been lifted from your shoulders. POSITIVE PLAN OF ACTION: Contact the bank or building society that you have your mortgagewith. Ask for a final settlement figure on your mortgage andalso enquire into the current interest rate that you are paying.Chances are that if you’ve not checked the interest rate you arecurrently paying in the past 12 months than you could saveyourself money immediately by choosing a better deal. There arecurrently plenty of lenders all willing to offer you competitivedeals on your mortgage and I would advise you to check them allout before you commit yourself to one. A simple saving of 1% ininterest can save you pounds every month. With this saving ininterest payments, use this extra money to increase your capitalpayments. If you only manage to shave a year off the length ofyour mortgage it will be one less year that you are in debt andone year sooner to becoming financially independent. Talking of your mortgage, if you currently have an Endowmentpolicy running alongside your mortgage than investigate thispolicy thoroughly. Most endowment policies are useless intoday’s interest market. What this means is that when yourmortgage term ends there may be insufficient funds in yourendowment policy to pay off what you owe to the lender. If thisis true than your lender will be knocking on your door for thisshort fall. If you can’t afford to pay than you could lose yourhome after 25 years or more of payments! Recently I read thatsome Endowment policies were running a short fall of up to£13000! If this happens to you you’ll owe your lender £13k plusinterest! The smartest mortgage you can take is a straight ‘repayment’mortgage. As well as paying the interest back to your lender youare also paying the capital off from the offset, thereforereducing the total amount you owe quicker. My advice is toaccelerate your mortgage and pay it off as quickly as possiblebefore the interest rates sky rocket and your payment doubles oreven trebles. When the tide turns (and it will) you’ll besmiling in the content that you own your home and you own yourcar and nothing can take these away from you. -------------------------------------------------------------------------------- These ideas have been taken from Jay Ball’s brilliant ’10 simpleseeds to success’ 334 page paperback book, 12- hour CD course,and 334-page e-book. About the author:Jay Ball is a recognised Success Mentor in the UK. His visionsand inspirations have helped many accomplish amazing results.Jay Ball is the author of '10 simple seeds to success' and'Believe & Achieve' Check out his website and download over 8hours of FREE self-development seminars!www.successacademy.co.uk
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