Page 62 - Workbook1E

3 Power Payment Plan
The Power Payment plan follows the same pattern as the Debt Rollup plan but it provides an even faster payoff simply by adding an additional payment. The Power Payment consists of any additional amount of money you’re able to add to your current Total Monthly Payments.
This reduces the overall interest you’ll pay and speeds up your debt elimination even more.
It works best when you combine the Power Payment Plan and the Debt Rollup plan. Power Payments are only truly effective if the increased payments are consistent, and like the Debt Rollup plan, you must carefully follow your Spending Plan and NOT incur any new debt. You also need to continue making the minimum payments on all your other debts each month.
When Erik and Tracy’s credit advisor discussed this option with them, they decided to add an additional $200 monthly Power Payment to their Debt Rollup Plan. Look at PART III of their Credit Summary Sheet at the end of this section to see the results of their new Power Payment plan.
PART III—Power Payment and Debt Rollup Plan: Credit Summary Sheet Steps 8 and 9.
Recalculate Your New Savings—Step 8
When the new, larger payment amounts were added to Erik and Tracy’s credit advisor’s analysis, it again changed the order of the most cost effective way to pay off their Creditors. Again the key to Power Payment with the Debt Rollup Plan is the analysis used to determine the best order to pay off debts.
Their advisor helped determine the new order by calculating each debt and considering a combination of the smallest balance with the highest minimum payment (now adding the $200 Power Payment to the monthly payment,) and taking the interest rate into account. The beginning and ending payment months were also recalculated, along with each creditor’s Real Debt.
Great Results—Step 9!
You can see this time the Total Monthly Payments increased $200 to $3,185. Once they totaled all their Real Debt, Interest, and Months to Payoff, they were thrilled with the results!
Power Payments allowed them to save $178,183 in interest, nearly $10,000 more savings than Debt Rollup alone. Using
this incredibly effective debt elimination plan they’d reach
their Debt-Free Day nearly one year sooner in only 8 years and
8 months—over 21 years earlier than when making only the minimum monthly payments. Ten of their 13 Creditors would even be paid off in only 24 months versus the original 68. That’s amazing debt elimination, and it’s available to you!
“The only way to predict the future is to have power to shape the future.”
~ Eric Hoffer
58 Workbook 1: Building a Spending Plan that Works