Debt hindering your wealth building journey? In today's episode we build upon last week's episode and discuss some more ways in which you can manage your debts. Make sure you tune in.
Managing debt in your life is very important as it takes off some pressure from your monthly budget and helps you accelerate your wealth-building journey. In last week’s episode we covered 5 secrets to eliminating your mortgage loans and credit cards fast. This week we discuss some more ways in which this can be done, all based on Kevin Whelan’s book ‘Save A Fortune Fast’, available as a free download.
>> Episode 115: 5 Secrets To Eliminate Your Mortgage, Loans and Credit Cards
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Unknown Speaker 0:01 The purpose of wealth talk is to educate, inform, and hopefully entertain you on the subject of building your wealth. Wealth builders recommends you should always take independent financial tax or legal advice before making any decisions around your finances.
Christian Rodwell 0:19
Welcome to Episode 116 of wealth talk. My name is Christian Rodwell, the membership director for wealth builders. And I'm joined today by our founder, Mr. Kevin Whalen. Hello, Kevin.
Unknown Speaker 0:30
Hi, Chris. Good to be with you. Again. I think this is a continuation of the previous theme.
Christian Rodwell 0:35
We had so much fun last week before we just keep on going. So yeah, last week, we covered the five secrets to eliminate your mortgage loans and credit cards fast and Well, we know it all comes from the book that you wrote, Kevin, which is save a fortune, and there's 12 secrets in there. So we thought well, we still got some more why not share another five on this week's episode? Yeah, I'm bringing them up to date as well. Yeah. So well, I guess you know, if you didn't listen to last week's episode, which was 115, then head back, check that one out first, and then continue on with this. But let's just keep on rolling. Kevin. So if we did one to five last week, let's carry on with secret number six that we're going to share. And this one is linking money you owe to money you own? Yeah, that's a good play on words, isn't it? What do we mean? Well,
Unknown Speaker 1:29
what you mean by that is, when you think about let's just go with basic principles, right. As an economist, you know, I kind of know these things, but it's definitely worth just reflecting right? Think about banking principles, right? Just think about banks, when they were set up what they do how they do it, they kind of have this arbitrage, meaning profit in the middle between the people who have savings, and the people who borrow those savings. And we know that's how banks make money, right? Yeah, do it yourself, do it your self. What that means is, there are ways that you can take the savings that you have, or indeed the income you're earning month by month, the money that arrives in your bank, not while you're asleep. But certainly while you've done the work, you know, you're getting paid afterwards. But you can link those together through a tool, which is known as off setting. So offsetting. Now, I used that tool. In the 90s, when I paid my mortgage off discovered this tool of offsetting is kind of like a mortgage that says this is the amount of money you owe on your mortgage. But electronically, any money you have in your life, in your bank account in your savings account, in linked accounts, we will treat that money as if you paid off the mortgage. The trick is you haven't. So you still got access to the money, you still got control of the money, you can still spend the money, but every single day, it's in your bank. It's repaying your interest, it's reducing the cost of your interest, a very, very powerful tool indeed,
Christian Rodwell 3:24
of comes down to that word leverage again, doesn't it really,
Unknown Speaker 3:27
everything about wealth, Chris will always come down to leverage, you cannot build wealth without it. Now I know when we're talking about that, you know, we always talk about making arbitrage on debt. And while we're not going to talk today, about the opposite of this, which is when you can use debt, you can borrow cheaply, and use that money to get much higher rate of return, we know you can do that. But we're not talking about that. So we're not saying don't do that. We're not saying do use leverage debt. We're just saying if you don't want to do that, these are the ways that you can do certain things that will help you reduce what you owe, increase what you own. And if you do that, you're gonna get wealthier might be slower. But it's certainly a pathway that people can follow or build in to their leverage as well. So you're doing a bit of both,
Christian Rodwell 4:24
just so for anyone who maybe is not aware of offset mortgages. Kevin, can anybody get one? And what's the process anything they need to know about that
Unknown Speaker 4:33
any good mortgage broker will will understand the principle of offsetting and many institutions will provide an offset facility. The other good thing about that, you know, when you talk about that leverage is you can take money out of the facility, if you want to go and buy something like a deposit on the property or whatever. And then when you refinance that property, you can repay yourself back so you can own Create a short term banking funding line for self. So look up offsetting, talk to your mortgage broker about offsetting facility. If you can make it work for you, obviously some lenders don't do it. wonder why they don't do it? Maybe because they own less money? Who knows? Who knows?
Christian Rodwell 5:19
Okay, well, that's a good one to kick us off with there, then Kevin. So our next secret then. So number seven is overpaying so that you can reduce the term of your debt.
Unknown Speaker 5:30
Yeah, so just as offsetting, as I mentioned earlier on, is kind of a byproduct of you just living your life, you know, you've got money in the bank, you've got money coming in from your wages or your business, the byproduct of having the money is the interest, essentially, is repaid off your mortgage. So you're paying mortgage quicker. But you know, you might not have very much money in you might not have very much money, it's not repaying the debt, it's just the interest part is is helping you. But what you could do is if you're making more money, if you're doing something where you're earning more money, or you're in some other ways, and we'll talk about some other ways, you can make money, as well, Chris, but whenever you overpay, you can make the decision to overpay with the deliberate intention of reducing the term. So if you reduce the term of a debt, you're going to pay less interest. So instead of paying a mortgage, over 25 years, if you can pay it over 15 years, but you don't be up enough to commit to me just make an overpayment. So you're not having to force your monthly payments up every month, you just making periodic, either regular or one off payments. And when you do that, you ask them to take this off the capital, which reduces the term, right? So similar, in many respects, to the mistakes people make with live cover, you know, they buy live cover, take it out over 25 years, you know, their mortgage might be going down, but they're not changing the life cover alongside, it makes sense to try and match cover to the term of your mortgage. And if you start reducing your mortgage, you can start reducing your cover, and then the savings you make on the reduction and cover, you can then apply to further still accelerate the repayment of your mortgage. So the real skill in this is understanding that you're doing things consciously, you know, whereas most people with their mortgage, it's a subconscious thing isn't it's like, my mortgage payment goes out. Yeah, that's just perpetuating debt. What if you could do something, think about it differently, and make conscious overpayments so that your mortgage is coming down and down and down and down and increases your security piece by piece by piece?
Christian Rodwell 7:51
Yeah. And of course, everyone's got different loans and mortgages and credit cards with different terms, conditions always worth of course, just double checking, making sure that you know, you're not going to get penalized or charged or anything for for any of these things. So
Unknown Speaker 8:05
just do double check that first Oh, yeah, always important to say don't make any changes before you work out the consequences of those things. But these are just ideas, right for anybody to could look at and decide, is this an idea for them? Or is this not an idea for them? Okay. All right.
Christian Rodwell 8:21
So secret number eight, then is playing the credit card game. So what sort of game is this fun?
Unknown Speaker 8:30
Well, it's a temporary game, it's not a long term game, because if you play it long term you get caught. The short term gain is to recognize that, look, there's a lot of money in credit card companies make on the fact that when people slip up, that's when the problem happens. Right? That's when you have to pay interest. So the scale is there are lots and lots of incentives and, and ways that you can participate relatively short term in introductory incentives, or credit, free interest free terms, you know, things like that, or even 0% for a fixed period of time, you can take advantage of those things to start to, you know, maneuver your credit cards, go back to marshal the forces, and start to really focus on the elimination of that debt. And also, there are some, excuse me cards you can use, if you use them for conventional living, you can earn cashback and if you can learn cashback then it can reduce the cost of your life either by vouchers or some other method. But then you can use that money the danger with all these games as you forget your playing your interest rate period ends, you know the introductory incentive ends instead of just using it for cashback and paying off the card every month. You spend too much You know, you, you overdo it, and then you can't afford to pay it off in full, and then the game starts to work against you. So this only works, if it's a principle of a temporary game, when you repay the payments in full, otherwise, just don't play the game.
Christian Rodwell 10:16
Now, one of the best resources out there, which I'm sure almost everyone will be aware of, but certainly worth mentioning is, is of course, money saving expert, Martin lewis is just put together the most fantastic website there with with all of these kinds of deals really easy. well explained. Lots of kind of calculators that he's created. So you can put your own numbers in and see how it all works out. So, you know, worth checking that out. If you want to start, you know, putting some of these tips into practice. Yeah, that's a good one. Yeah. Okay, well, we're kind of at the halfway mark of today. So why don't we pause for a second, and go and read out one of our latest reviews from trustpilot. And this week, we've had a review come in from years and years says we are business owners who approached Kevin for business mentoring in 2020, and then join the wealth builders Academy. Following that, we have found the expertise and the support and community led by Kevin and Christian, and through monthly mentor meetings and buddy groups. And of course, their well structured course, it's been overwhelmingly positive and inspirational. And it's transformed our mindset with regards to our future, and opened our eyes to the many pillars in which we should be investing rather than relying on our business. And goes on to say, we've taken the first steps now towards building financial security, and a legacy by setting up a SAS for wealth builders. And we're now looking at other strategies and pillars to achieve financial security within the next three to five years, and we would not have started on this journey without being members of wealth builders. How about that? That's great, isn't it? Yeah, really nice,
Unknown Speaker 12:00
lovely couple, you know, yards and Tom and just love working with them. You know, they got a good business, and they needed to move. And one of the great things is they now combined the business with property. So instead of paying rent to a landlord, they're paying rent to themselves. And instead of that money going to pay for the profit and the wealth of the landlord. They're building their wealth themselves. So it's like a circular economy. So they're doing a great job. very humble people. Lovely, lovely family. And they've introduced us so kindly to other members of their family to such as their high regard for us, and likewise, our regard for them.
Christian Rodwell 12:41
Okay, then rise. So we are now on where are we number nine? Okay, so this is paying off your mortgage on the side. And that kind of, you know, reminds me of an episode we did back in Episode 42, which was a little bit on the side. Can you remember all the way back then? Was it spare time?
Unknown Speaker 13:04
Yeah, so look, whenever you're building wealth, it's all about capacity. It's all about leverage. So putting aside whether you choose to follow this tip to build your wealth, or whether you choose to use this tip, to build savings, you know, build an emergency fund, whether you choose it to reduce your expenses or to reduce your debt, it doesn't matter. The principle that we shared in Episode 42, is still a good principle. And basically, it says, wherever you can make some money on the side. So as always, Chris, I try and find an interesting acronym for people to use or a pneumonic, whichever way, you want to, to interpret that. So S stands for spare time. Now, assuming you've got some spare time, it's trying to get into a discipline into a process where you find some spare time, and you make a decision about how you're going to use that to create some extra money. It doesn't mean then, for those in jobs, or those in businesses where you're needed in those things. You're chucking those things in your second the boss, you're escaping the rat race, you're doing something in addition to what you're doing. So as long as you can control it, what we want you to do is think about that and find some spare time you can dedicate now, assuming you can do that, then try and find something that reflects you. Your personal interest. That's the eye interest. What are you interested in? everybody's interested in something is it a hobby? Is it a pattern, we got a new member of bar community Chris who just is mad, mad mad about baking cakes, and there's actually a patisserie chef. You know. So, so much as It's her commitment to be able to do something that she just loves doing it. So why wouldn't you make money on things that you're interested in? There's increasing culture. Isn't there a declutter? I think we covered that on the episode I told you about how my kids decluttered my CDs, I don't think I've got a CD left in the house, Chris, all gone to some funky magpie, or is it bad? Oh, no. Oh, yes. I think they kept the money, or maybe I don't know. But anyway, you know, that was for a different purpose. But nonetheless, all of those sorts of things are useful to know. So it isn't that you can just do things for yourself, you know, you can sell stuff in so many different ways. Look, we've all been through lockdown, we might have some things we don't want any more, we might have some clothes, we don't want any more, we might have some gadgets, we don't want any more. And you can sell stuff, you know, and use the money you sell, to build your wealth, build your savings, reduce your expenses. So that's the key there. The the D is like everything in wealth growth, we don't want to be a drifter. We don't want to be a DIY unnecessary, we want to do and the doers. So the didymos that's where energy happens. So we want you to do something. And what I'm suggesting is you do it regularly. So it's once a month or once a week, or once every period of time that works with you. So you do it religiously. So you don't just do it once. It's a continual process that you're creating regular on the side income, a side hustle, anything at all, that generates more money, and the E is eliminate, eliminate something, either eliminate your expenses, eliminate your debt, or the flipside of that is build some savings and build some investments. So either way, make money on the side.
Christian Rodwell 16:54
So definitely worth checking that down. I'll link to the show notes to that in the show notes. Okay, and secret number 10 is quite simple. Just keep reviewing.
Unknown Speaker 17:06
Yeah, and I don't mean review every week or review every month, but review of a year, you know, picker, anytime you got a big change going on in your life, take take time to review you know, if you've got a mortgage, and it's got a fixed rate, and it's got to set review it review that and review the whole process, review your term, you know, review your insurance, you know, review your whole debits process. And you know, we'll obviously relate back to debits many, many times, because we encourage people to do their debits at least once a year. So not every week, not trying to get people to penny pincher, as I mentioned, on the last episode, Chris, we don't do budgeting, we don't do Penny pinching. It's just nice easy things you can do that will have an impact. And if you choose, and you want to eliminate or reduce debt and expenses in your life you can do so if you choose to plant those seeds and build your wealth, you can do that too.
Christian Rodwell 18:00
Well, thanks for sharing those. And if you'd like to actually read through all 12 secrets, then you can download a free PDF copy of Kevin's book, save a fortune fast. And you can grab that now head to wealth builders co.uk forward slash save a fortune. And yes, a good little read that Kevin and could save our listeners many, many 1000s of pounds.
Unknown Speaker 18:24
Well, that's what it was designed to do. So I wrote that book before. Wealth builders in the whole process, it did come into my mind. But it definitely stimulated it because the the flip side in the sort of parting chapters in the book, talk about a number of things, which are themes that are picked up. One of those is once you become let's say it was a very simple process of becoming mortgage free. Then you imagine the day imagine it was just simply like that. There was just a day that debt free day when you owned everything, you wrote nothing. Now, you got all that money that you were spending on things that were expenses, insurance, you needed debt payments, you needed all of those things. Once you eliminate those, you can then use that money to start flowing into your life to stop building your wealth. So that's kind of the germination of that. And the other part of it was to watch out for the habits that are easily copied with your kids, you know, so kids watch what you do. And I mentioned that so many times it's the history studies use of cards that kids see. It's almost like I remember the story of a kid. You know, mom was in the supermarket, frantically looking at a purse for card to tap. And the little kid gave the library card to the mom and said Mom, you can pay without you know, it's like kids see weird stuff and we need To educate our kids that, you know, being at least in control of your debt, and not be seduced by hidden messages they see on TV and on other places that perhaps you don't get a chance to see, we want to get our kids to prosper from knowledge not to succumb to it, which is what kind of happens these days.
Christian Rodwell 20:19
So we're midway through July and we're going to be taking a break in August Kevin as we do just to recharge and obviously focus on our members, we've just had a big intake for the Academy. So just give you listeners a heads up that for August we'll we'll be taking you know a much needed break and give you some time to catch up if you have a few more episodes that you need to listen to and you're actually going on a break next week having so we won't have a gap in our podcast but you'll be taking some time out so hope you enjoy that.
Unknown Speaker 20:50
Thank you very much looking forward to that. I mean obviously we're not going to the sorts of places that we're used to going we're going to be spending some time in my roots up in Northumberland enjoying the the coast up there and enjoying the seabirds and and the whole culture and probably my sons will persuade me to buy them some Newcastle United Football gear. They always do dad can we go to Yeah, they're in their 20s and they still want me to buy stuff for them. But somehow when it comes to Newcastle United, I can't resist but then again, you know a fool and his money are easily parted. And that's the only time I'm foolish with my money to my team.
Christian Rodwell 21:28
Okay, well, we hope you enjoyed listening today to today's episode and Kevin we'll be back Same time, same place next week. Until then, my friend co
Unknown Speaker 21:40
We hope you enjoy today's episode. Don't forget that we are constantly updating our resources inside the wealth builders membership site to help you create, build and protect your wealth. Head over to wealth builders.co.uk slash membership right now for free access. That's wealth builders.co.uk slash membership