Become 100% Debt Free In Canada

You don't need our help to eliminate debt. You need our help to build wealth while eliminating debt. So imagine this, if this is your debt number right now, it's high and you're right here in terms of wealth building. And imagine if you're able to build wealth as you're eliminating debt, would that put you in a better financial position?

This is Henry Wong, chartered accountant and authorized infinite banking practitioner at the Nelson Nash Institute. And I'm joined today with my colleague Sarbal Gill, authorized practitioner from the Nelson Nash Institute. And what we're here to introduce to you is a different way that we look at how we tackle paying off debt so that you can become debt free.

And one of the values which is really near and dear to our heart at financial is education. Now we come from a source of providing education to Canadians coast to coast on the process of becoming your own banker. Unlock the infinite banking concept. And we will provide that education via webinars. We provide that education via virtual boot camp sessions, which is more like an in depth educational program or some folks may just want to order a copy of the book and after they've read the book, it's a very simple, easy read. They have an opportunity to connect with us on a one on one basis and see how this process can be implemented in their life. And when they meet with us, we talk about goals, we talk about objectives, and we work backwards from your goals and objectives to to design the becoming your own banker strategy. And I've been doing this for several years and mostly majority of the time in those meetings I always hear debt elimination. And the reason why they're connecting with us when it comes to debt elimination is because their goal is not just to eliminate debt. They want to add efficiency and they want to build wealth as they are working towards eliminating debt. You don't need our help to eliminate debt, you need our help to build wealth while eliminating debt. So imagine this. If this is your debt number right now, it's this high and you're right here in terms of wealth building. And imagine if you're able to build wealth as you're eliminating debt, would that put you in a better financial position? If the answer to that question is yes, then you do want to check out the video which is popping up right now. And this is a case study on debt recapture. And debt recapture is a strategy that we use to build wealth while eliminating debt. Now click on the case study. Don't watch it yet. Watch this video first before you watch that case study. Because this video where we're going to talk about how to eliminate that. This is the step before we dive into debt recapture, execution plan. This is the planning phase. This is the most important step in building that strategy. And you're going to love this video because this is going to answer one of the most frequently asked questions that is coming into your mind when you're looking at better, smarter ways to pay off debt is, well, cerebral. I have all these debts, I have a line of credit, I have a visa, I have a car loan, I have a mortgage. How do I even start? Where do I even start? Which debt should I focus on first? So this video will answer that question. So stay till the end. Why do we spend so much time planning the debt recapture, Henry? Why do we work and spend a lot of energy on the planning phase versus the execution phase? So why would we do that?

We've got to know. Because if you fail to plan, then you're planning to fail.

Absolutely. Benjamin Franklin. And you must have heard this so many times, if you fail to plan, then you're planning to fail. So we spend a lot of time planning the debt recapture. And one of the most core important aspect of planning the debt recapture is prioritizing which debt are we going to eliminate first.

Now which debt should be prioritized? Now the question that we get asked this is based on the interest rate on that debt, is it based on the balance of that debt? Is it based on the payment amount? So how do you prioritize which debt to eliminate first? That's one of the most frequently asked, most frequently asked question is, well, here's the answer to the question and we're going to be very transparent sharing with you this secret. Well, the secret is it's a combination of many things. And here's the secret. It's called a formula and the formula is called cash flow index. So what we do is we look at all your debts. We know we want to know what the balances, we want to know what the interest rate is, we want to know what the monthly payment is. And once we have all that, we put all those debts into this formula and then ease debt gets a number which is called cash flow index. And based on that number, we prioritize which debt are we going to focus on first? And here's the formula. Cash flow index is equal to loan balance. You take your loan balance. So for example, if we have a credit card Debt balance of $10,000 and your credit card interest rate is 21%, the minimum payment. So in the bottom we put in the Minimum, it's not the payment that you are paying the debt, it's the minimum payment required by that creditor. So if your credit card has a loan balance of $10,000 at 21% annual interest rate, your minimum payment required may be 170 to $180 a month, which is interest only. So that would come in the denominator. And so loan balance divided by the minimum payment, that's going to spit out a cash flow index number. And where that number falls on a scale that will tell us the priority that debt is going to be in terms of executing the debt recapture plan. Now that cash flow index number is going to fall on this scale. Now if that number is less than 50, that debt is going to be a priority. If that number is over 100, that debt is not going to be a priority. So here, you know, here you go guys. This is the secret formula. Now to demonstrate this, we're going to dive into a case study. Now in this Excel sheet we're going to use an example. And you know, let's just. So the first thing is a creditor. So type of the debt. So Visa, unsecured line of credit, secured line of credit is a private loan, car loan and mortgage. And then the next column is balance shares that just talks about what the balance is on that debt. So 10,000 on Visa, 3,000 on unsecured line of credit, so on and so forth. The next column is the interest rate. So the Visa, you know, usually Visas, a master cost, they're at high interest rates. So this particular person has 21% interest on his visa, 10%. On unsecured 3% secured line of credit, he has a private loan balance of 12,000 which has an interest rate of 12%. That's hard money loan. He has a car loan balance of 0%. And then obviously there's mortgage. Now this is a column on minimum monthly payment. Now based on what kind of debt it is, the minimum monthly payment that the creditor may need is interest only. It may need principal and interest. So what we have have here, for example visa is interest only of 175 unsecured line of credit. Based on this, the minimum payment per month is 25. For secured line of credit is 15. For your. For this person's private car loan, sorry private loan, the minimum monthly payment, which is a combination of principal and interest is 398. For car loan it's 0%. It's all principal, 833. And for mortgage is 1270. And the last column here talks About. Okay, if this person just keeps making the minimum payment, how many months will it take or how many years will it take for them to pay off the debt? So I'm not showing any years on any timeline for the first three debts, because what we're doing is we're just putting in the minimum payment, which is interest only. So if you keep paying interest, you're not going to be able to pay it off. Right. But for the last three debts, there's a timeline because you're paying down principal or principal and interest. Now, Henry.

If this is what we see so far, where would you go in terms of your mindset?

Okay.

Which debt would you prioritize based on the conventional way of doing things?

Well, if I were to look at the interest rate, Sarlo, I would look at the visa, the $10,000 balance.

Yeah. And why so?

Well, I don't want to pay so much of my money out to interest because it's so high. I think I'm going to finish my payments much faster.

Yes. So human brain, and maybe this is how we were conditioned, is we really focus on the interest and say, hey, this debt is the worst debt because this has the highest interest at 21%, and I should use my cash flow that I have available per month to start paying down this debt. So I'll continue making 175 per month because this is the minimum payment. But now I'll take my discretionary cash flow and I'll add it to the minimum payment to pay off this debt, because this is costing me the highest in terms of interest rate. And that is what I get asked all the time. Hey, this is my interest rate. So based on my debt recapture plan, I hope you're going to focus on Visa first.

And here's the surprise. No, we're not going to focus on Visa first. We're going to follow what I just taught you in terms of my secret recipe, which is the cash flow index number. So now what we're going to do is we. I'm going to unhide some of the cells that I've been hiding from you guys because I didn't want anybody to jump into looking at the cash flow index number. So based on the cash flow index number, which is the formula that I just shared with everybody. So here's the formula as a repetition again. So you take your loan balance and you divide it by minimum monthly payment, and I'll give you a number. And based on the scale, if it's less than 50, that's a priority. If it's above 100, it's not a priority. So let's go back to that Excel sheet. Now, based on that cash flow index formula, this is the number attached to these debts. So you can see Visa is actually number three in terms of priority. The priority is actually this debt. Now you may think, okay, this may be a priority because of 12%. Well, no, 12% has nothing to do with it. 12% is not even in the formula. The formula is based on cash flow. The reason why.

Private loan is coming up as one, because the formula says, and the scale says, based on where this index falls as compared to other debts, is if we take this 500 bucks per month and we add it to 398, we're going to be able to pay off this private loan. But now we're going to free up 398 and 500 to add to the next debt on the list, which is the number two car loan. And we're going to snowball the debt payoff because we want to think in terms of what is costing you in terms of debt and adding efficiency. This is where the cash flow index number comes in. So we use this index to prioritize the debt, but our objective is not to pay off the debt. The objective is to use this cash flow index just as a priority in terms of where the debt is going to end up. Which debt are we going to tackle first? But the strategy that we're going to use is called the debt recapture. We're going to use these, we're going to use this as a framework. But the strategy that we're going to use to attack this framework is the debt recapture. Because remember, the wealth doesn't lie in paying off debt. If you have high debt, you pay it off, you're down to zero. That's it. The wealth lies in recapturing the debt, which is based on the process of becoming your own banker. Because if you just pay off your debt and your debt is right here and you pay it off, you're down to zero. Whereas if you recapture debt, you're starting right here in terms of the loan balance that you have and all these debts. And based on the debt recapture plan, we're going to build wealth as the debts come down so that you are way ahead in life financially versus just being at zero. Now go ahead and collect that link or click that link if you already have clicked that link on top. On the debt recapture case study, go ahead and watch that case study because now it's going to make sense to you. But If I may also add, hey, make sure you get a copy of Nelson's book and read this book and gain more understanding on the process of becoming your banker. There's a reason why this book has over 400,000 copies of this book being sold. Why? Because this works. To get yourself a copy of this book, just click the link below underneath this video description and get yourself a copy of the book.