Thread by @tradersushma

🌻 HOW TO CLOSE ALL YOUR LOANS USING PAYOFF PRIORITY TECHNIQUE 🌻

A Thread🧵
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#FinancialFreedom
#financialliteracy
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Payoff Priority Technique (PPT) is a unique & exceptionally good method to make all your loans disappear from your life.

I came through this technique while reading this extraordinary book called

“Safe Strategies for Financial Freedom” by Van K Thorpe.
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Loans & EMIs have become an integral part of our life. Our salary payments are already pre-defined towards the debt obligations each month. In case our incoming cash flow gets disturbed, the EMIs will pile up each month & it might even lead to default.
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Due to our loan obligations, we are not even free to invest our cash. In fact, whenever we get any lump sum payments, we tend to payoff some loans with that extra cash.

Go through this thread below to read more on this topic.
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https://twitter.com/tradersushma/status/1421869701160792064?s=20

Life would be so peaceful & happy if these loans could disappear from our life. Blissful thoughts! 😇

Is it possible???

YES

In this thread I shall explain how can we do this.
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One doesn’t need to spend all his savings, close all his investments to payoff the loans.

Just one small commitment is required. One has to spare some extra cash each month in addition to the normal EMIs being paid.
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That extra cash has to be up to 10% of the total amt he is paying on all his loans towards their EMIs.

Eg. If total of all your EMIs is Rs 50,000 pm, u have to spare Rs 5000 extra each month.
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METHOD EXPLAINED STEP BY STEP

1. Enlist all your existing loans along with their present o/s amt, EMIs & tenor remaining against respective loans.

Let us take an hypothetical example of person A.
His table is presented below.
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2. Give the payoff priority ranking to each loan. Loans with least tenor shall be ranked no 1 & vice versa.

3. Allocate 10 % extra funds pm to the loan with 1st rank. It means add the committed 10% extra cash towards payment to debt with least tenor.
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In A's case it is appliance loan & Rs 4600/ i.e. 10% of Rs 46K is allocated to payment of appliance loan in addition to its normal EMI of Rs 4200/.

So, pm instalment becomes Rs (4200+4600)
=Rs 8800/

This will help A pay off this loan within 6 months.
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4. After appliance loan is paid off, Rs 8800/ becomes free cash flow available for paying next priority loan.

So now add the instalment which A was paying towards appliance loan + 10% committed cash for payment on the loan of 2nd priority.
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In A's case it’s Personal Loan.

So, pm instalment of personal loan becomes Rs (8800+9300) = Rs 18100/

This will again help A to completely pay off his personal loan within 14 months i/o 24 months.
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5. Now again after 14 months Rs 18100 is available as free cash when personal loan is closed. Here again we add this fund to the existing EMI of the next priority loan i.e. Vehicle loan.
So EMI for vehicle loan = Rs 18100+9900= Rs 28000/
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Similarly

EMI for 4th priority loan after 3rd one is paid off will be Rs (28000+6100) = Rs 34100

EMI for the last remaining home loan after completely paying off all other loans will be Rs (34100+16500)
= Rs 50600
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Tentative period by which A can completely payoff all his existing loans are
🔹Vehicle loan = 28 i/o 60 months
🔹Education loan = 20 i/o 20 months
🔹Home loan = 100 i/o 360 months

*Period may differ from bank to bank in actual scenario.
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So now we can see that all loans r completely paid off in < 14 years including home loan which otherwise would have continued up to the age of retirement.

All one had to do was commit an additional Rs 4600/ pm to their existing monthly payments.
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This simple yet effective tool will help u remove all the debts & its obligations from your life sooner & will bring u much nearer towards the ultimate goal of Financial Freedom.
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Some points to be considered-

1. No credit card balance o/s should exist. If any amt is due for payment, it needs to be cleared before starting this method.
2. All other loans to be included for this method to work.
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I request all the readers to do this simple exercise of collecting the details of their existing loans in the format as provided above. This step will be the 1st move towards executing this PPT technique.
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With little additional financial commitment every month, regularity & discipline, the goal of freeing yourself from all your debts much earlier is POSSIBLE & ACHEIVABLE.
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That’s all for this thread.

If u found it useful retweet for wider audience.

I keep sharing useful threads on #trading & #investing
Stay tuned for the forthcoming ones!

Thank you!

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