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repaid everything but the car and home-loan.

During this phase of the plan, all available funds are used to eliminate debt. Each time a debt is paid up, more funds are available to pay off the next debt. You are becoming one step closer to living a debt-free life!

STEP 6: WHAT ABOUT THE HOUSE AND THE CAR?

The same principle may be applied to the car finance, but check that you will save by repaying early. If you will be charged the full-term interest there is little point in repaying it now.

If you apply all of the freed-up funds to your home-loan, you could reduce the repayment term by 50% to 75%. Pay off your home in five years rather than twenty, and save a fortune on interest.

You will be living in a paid-up house with a paid-up car and no debt. You should have enough cash flow to buy major items with cash.
However, you may decide that it is time for a reward. Increase your mortgage repayments, but allow some extra for yourselves.

STEP 7 MAINTAINING WHAT YOU HAVE ACHIEVED.

Having achieved this step, it is important to maintain the new status quo. With the exception of a home purchase and perhaps a car, pay for everything with cash. Buy it when you can afford it. Spend only what you can pay for.

Set aside ten to fifteen percent of your disposable income for investments.

You have taken the first step to achieving financial independence. The journey may involve some sacrifices but the rewards are huge.

DOES THE PLAN ALLOW FOR FLEXIBILITY?

If followed to the letter, debt can be eliminated relatively quickly achieving massive long-term savings on interest.

Be flexible if you must it is your choice. Reward yourself each time a debt becomes paid-up. Add a portion of the freed-up cash to improve your living standard. It will take a little longer, but perhaps you need to feel the rewards as they occur.

Learn more about this author, Barry Marcus.
Click here to send this author comments or questions.

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