Have you ever wondered where does all your money go each and every week or each and every biweekly or even monthly? Here is a thought that I want you to consider and ponder while you read this article. This is only example. You take out of the bank $10,000 out of your savings account and they give you all one dollar bills. You take the big stack of money which are all in one dollar bills that equal $10,000 which happens to be your hard earned savings account that took you many years to accumulate; and you stacked them on top of your dresser uncovered where you could see that big stack of money that are all in one dollar bills. What do you think would happen over time if you Walk past that big stack of money which by the way all in one dollar bills that equal $10,000?
My friends you and I both know what would happen after a period of time if you keep walking past those one dollar bills. You will eventually start to take one dollar then maybe a few more dollars because there is a large stack of money and nobody will miss it. At least you tell yourself that! Then one day it finally dawns on you that that big stack of money which was really high and almost tipping over is now standing straight up and yet you keep walking past your dresser and take a few more dollars each and everyday. The bottom line is this, your $10,000 will be spent in just a few moments of time, even though you pretend that you have never touched the money in the first place.
Today I want to teach you the power of compounding. You will need to make a few more changes in the way you make your payments but the outcome will put a smile on your face.
This is only an example: One of your payments on your monthly, you owe approximate $5,000 and your monthly minimum payment is $100 per month. Now I know for a fact, that $5,000 making the minimum payment, will take approximate 25 years seven months to pay off making the minimum payment each month.
Now if you change the way you make your monthly payment each month, and take that $100 monthly payment and divide it into four payments, you will get approximate $25. You are at the beginning of the month. Make your monthly payment as promised and wait a few days and send $50 on your payment bill. Then wait another week and then send $25. Then wait another week and send another $25.
I am going to repeat myself again but in a little different way. You take that $100 divide by four and that equals $25. You are going to take the first $25 and multiply it by two and that equals $50 bucks. And you are going to send that $50 payment to the people you owe. You are going to wait approximately one week and send $25. Then you are going to wait another week and send another $25. This will equal approximate $100 which is your minimum payment on a credit card.
Now I need to make this very clear. To start this program using my example you must make the hundred dollar payment and make the $50, $25, and $25 the very first month. The second month and all the other remaining months, you will only be making at the beginning of the month, the $50 payment, waiting one week, and making that $25 payment, waiting another week, and making another $25 payment. Which will equal $100 for your monthly payment.
If you follow me so far, you have not paid any more money on your monthly payment except the way you are now making your monthly payment. We will break this down even further. You are making more installments on your credit card that equal $100. Or another words, if you wanted to, you could pay every single day that will equal $100 on that credit card bill.
Now I need to give you one advice. You need to have approximate one week of no payments. Now why am I telling you this? Because credit card companies are notorious of holding onto your payments. And if they could hold on to your credit card payments and it goes late, they now have made interest on your payment.
Remember my example when I broke the payments into three payments? On average if you are making your payments, you will have one to two weeks of no payments on your credit card even though you have made your full payment on your payment. This one example that I have shared with you will stop the bank from adding interest onto your loan.
Now that you understand how to make your monthly payments by dividing it into three payments, your monthly bill will be paid off in approximate five years eight months. And guess what? You never paid any more money toward the bill other than, making more frequent payments that equal the minimum payments.
Are we on the same page? Every Visa, Master Card, student loans, car payments, line of credit; the interest being charged on these items that interest is compounded daily and not yearly. Do not get mixed up when the bank is telling you that our cards or your car payment or your student loans is compounded yearly. This is hogwash! The bank is only playing with words. I am sharing the facts with you for a fact that monthly bills or any form of a card, car payments, student loans are all compounded daily and not yearly.
What does this mean to you and I? It means that we as individuals are paying a tremendous amount of money toward interest that should be going into our own pocket, instead of the bank! I need to be honest with you right now, the way I have taught you how to make your new monthly payments on your cards that charge you interest called compounding. You will make the bank very nervous, and they are going to try to persuade you to make only one monthly payment instead of more frequent payments.
Here is another thought that I must share with you while making your new monthly payments on your cards that charge you interest. Here is an example and person owes $5,000 on a card. What you need to do is get your calculator out and multiply $5,000 times 3% this will equal $150. If this was your card, and you look at your minimum monthly payment and you see $97 you are in big trouble! Why am I telling you this? Because these banks know how to make money and they do it really well when they use compounding. Remember the example that I gave you that you multiply 3% on whatever you owe on one of your cards. If the minimum payment is less than the 3% it will take even longer than 25 years eight months to pay off that card off.
Now the reason I wanted you to get out your calculator and check the minimum payment is because banks are now stretching the amount of time it would take you to pay off your cards. By using the 3% rule that I have shared with you and dividing the payments into three payments or another words more frequent payments, you will have the credit card paid off in approximate five years seven months.
If you have the drive and the motivation to stay on track, I promise you that you will be able to reward yourself in time in having no more credit card payments. I personally have taught hundreds and thousands of people all across the United States how to do this one simple program called compounding.
I have to be upfront with you not everyone can discipline themselves in taking this kind of action. Nobody is going to remind you, nobody is going to call you, nobody is going to send you any e-mails, or send you a reminder in the mail, to make more frequent payments on your credit card payments. This takes real guts to make a change in your life and the way you make your payments. It is not going to be easy and there will always be things that will get into your way that will stop you from time to time. Do not let this happen!
Source by John Schepcoff