Saving large sums of money or using them immediately as payments to debt is a waste of a great opportunity.
Let’s say you sell your house and make $100,000 on the sale of that home. You decide you are going to use that $100,000 as a down payment on your new mortgage so you can get your house paid off sooner. If you do that, you lose the ability to make interest and ever use that money again! Poof, gone, the bank got it.
Compounding interest is very powerful, so much so that Einstein called it the eighth wonder of the world. How powerful is it? It is so powerful you could turn $100,000 into $480,102.
Below is an example of what this money could do for you if it compounded at 4% over 40 years. Let’s say you are 40 years old and expect to live to age 80.
Over those 40 years, your money is compounding and you now have an extra $380,102.
You CAN have the best of both worlds by using the Infinite Banking Concept. If you put that $100,000 into the policy as a premium payment it will earn you the compounding interest but you will also have access to the money for use. You can still put a large payment on the mortgage by borrowing against the cash value of the policy.
Before dumping large sums of money into debt or investment purchases you should be considering what you will lose over your lifetime by missing this one step. Putting money into a policy as premium and then using it afterward is key to getting ahead.
Stop losing compounding interest by paying off debt when you can do both. Waiting to start a policy has the same effect. Each year you wait for the more interest you have given up.
Don’t think you have to have a $100,000. Any amount of money compounds and creates wealth, $5,000 will earn you the same rate of return the $100,000 did. If you want to play with some numbers there are plenty of free future value calculators online you can use. Here is a link to a good one: http://www.moneychimp.com/calculator/compound_interest_calculator.htm
Stop thinking about debt free and start thinking wealth building and storage.
As always I look forward to comments, emails or calls.
Mary Jo