Wealth Secrets of Millionaires: Become Wealthy By Not Repaying Your Debt
By Loral Langemeier
Wealth. Does that sound like a foreign word to you? If youâ€™re saddled with loads of consumer debt the way so many Americans are, it is probably a very unfamiliar word. Commercial and consumer debts are the greatest barriers to wealth. And when youâ€™re suffocated by thousands of dollars of debt, it may seem impossible to get out.
Thereâ€™s good news! Itâ€™s not impossible to eliminate your debt and move toward wealth. Most people and small businesses simply donâ€™t have a system for paying off their debt, and as a result they perpetuate bad habits and remain stuck in it. By using the proper debt management system, you can get out of debt quicker than you probably imagined with minimal change to your existing lifestyle.
To top it off, there is a system you can use that will allow you to simultaneously create and feed the Wealth Cycle, a cycle of wealth millionaires use to consistently and exponentially build their wealth. In other words, you can simultaneously become wealthy and repay your debt.
Skeptical? You bet. But, youâ€™ll be surprised at how easy this is.
So whatâ€™s the best way to abolish consumer debt? Many financial advisors will tell you to scrimp, save and cut back on absolutely everything that makes life fun. Theyâ€™ll tell you to create a very tight budget and then pay off your debt before you can even think about making investments of any type.
Sounds a lot like a diet, one that will cause you to starve yourself and your children, depriving them of wealth.
So what does work?
To tackle consumer debt, Loralâ€™s five-step debt strategy includes the following steps (explained in considerable detail in her book, The Millionaire Maker):
– Create a debt elimination box
– Calculate a factoring number
– Make a priority payoff box
– Use a â€œjump start allocationâ€?
– Make your debt payments
By using this system, your debt payments start to build as you pay of your creditors, all of whom have been listed in order of priority. Your capacity to pay off your debt accelerates quicker and it does require you to shave down unnecessary expenses, but not cut out everything you love. In short, itâ€™s realistic – and mighty effective. You simply have to commit to it.
But wait, thereâ€™s more to it!
Earlier I mentioned that you can pay off your debt and at the same time actively build your wealth. Remember that Wealth Cycle mentioned earlier? This is where it comes in.
The Wealth Cycleâ„¢ used by millionaires consists of 12 steps:
– Gap Analysis
– Financial Baseline
– Freedom Day
– Debt Management
– Cash Machine
– Wealth Account
Itâ€™s okay if you donâ€™t know what each step means right now. The main thing to understand is that the key to success in using the Wealth Cycleâ„¢ is knowing which steps to take, and in what order.
Everyoneâ€™s financial situation will require its own order of sequencing. A wealth mentor can help you determine whatâ€™s right for you. For some people, the first step is to develop the proper legal entities for their business and investments so as to maximize tax strategies. For others it may mean first reallocating assets so you can bring in increased monthly income that enables you to start investing. This will in turn bring in passive income which will allow you to pay off your debt quicker.
Hereâ€™s an example of when entity structuring might be used first:
Letâ€™s say you have a graphic design business but itâ€™s not incorporated. This means your debt includes a lot of expenses â€“ cell phone, office supplies, postage, etc â€“ that you paid for out of your personal account. If you make your design business an entity, letâ€™s say a â€œSubchapter S Corporationâ€?, then the portion of your debt that includes those items can now be transferred over as business expenses. Now you can write off that portion of your debt against your income, giving you more money at the end of the year!
The interesting thing about the Wealth Cycle is, as stated above, that you only focus on debt management after you develop a Cash Machine, the proper Entities, and engage in forecasting.
Building wealth from a position of great debt takes courage, discipline, and positive energy. I realize this may seem a difficult scenario from which to create wealth, but my hundreds of successful clients prove that getting out of debt and building wealth is very doable. What it takes is a commitment to gaining awareness of your psychology, your finances, and a willingness to let go of old habits that no longer serve you.
Loral Langemeier is the author of The Millionaire Maker. For more information on uncommon wealth buidling strategies visit http://www.liveoutloud.com