$200,000 Debt Balance 6% Interest Rate 30 Years $1,199.10 Monthly Payment

$200,000 Debt Balance6% Interest Rate 30 Years$1,199.10 Monthly Payment $231,677!!! Effective Interest Rate =116%

Prepayment Example $200,000 Debt Balance at 6% 30 Years $1,199 First Monthly Payment $5,000 Additional Principal Payment $6,199 Total First Payment

Prepayment Savings $195,000 New principal loan balance 6% Interest rate $ 1,199 Monthly payment 337 Months $231,677 Original interest paid $203,373 New interest paid $ 28,304

Sample Family $5,000 Monthly income -$4,000 Living expense (mortgage, car payment) $1,000 Discretionary income

Month 1 $3,500 Starting Balance (LOC) $4,000 Expenses $7,500 $5,000 Income $2,500 Average Monthly balance Month 2$4,000 Expenses $6,500 $5,000 Income $1,500 $20.83 $12.50

Month 3 $1,500 $4,000 Expenses $5,500 $5,000 Income $ 500 $3,675.77 Lump Sum Payment $4,175.77 Average monthly balance Reduced loan by 18 months 3 month total $68.13 $34.80 Interest Cancellation $17,249 $220.48 $201.10 $ 19.38 ` PrincipalJump

Month 12 $2,003.68 $4,000 Expenses $6,003.68 $5,000 Income $1,003.68 $2,917.67 Lump Sum Payment $3,921.35 Average monthly balance 12 month total Reduced loan by 53 months Reduced mortgage by 14 months 12 month total $297.89 $32.68 12 month total Interest Cancellation $50,862 Interest Cancellation $ 10,184 $275.04 $199.10 $ 75.94 ` Principal Jump

Income Income Money Path With LOC Pay Bills LOC Checking Minimum Reserve

Income Income Income Income Optimal balance after Lump Sum Payment Optimal Lump Sum level – pay bills Critical Level How to determine Lump Sum Payments With LOC Strategic Debt Payoff Checking LOC LS Debts PAY Minimum Reserve

$200,000 Debt Balance 6% Interest Rate 30 Years $1,199.10 Monthly Payment