There are four basic steps to True Wealth Transformation:

1. Need to set aside twelve months worth of net after tax monthly income to cover unexpected expenses. (Car expenses, unpaid illness, etc.) Paying cash will become a habit as all personal finance decisions are based on good habits.

2. Payoff any non-preferred debt. (Non-preferred debt is debt that is not tax deductible or has a >0% interest rate.)

3. Quick access is needed to liquid funds for both the good and the bad…

Examples of Good: a. Real estate opportunities
b. Investment opportunities

Examples of Bad: a. Job Loss (unexpected long term)
b. Disability

4. Set-up a strategy to pay your home off.

A fifth step that is usually an excellent idea is:

5. Meet with a Certified Financial Planner to set up a sensible plan.

Focus on cashflow. Make sure that if you decide to quit working completely you have enough cashflow to cover all your monthly expenses.

Step 1: This could be a HELOC that you have opened. This way the funds are readily available, no interest is being charged during the good times. (This can also be the source of Step 3 funds)

Step 2: After paying off non-preferred debt (using equity), use the difference between your total old payments and your new payment to set aside in investment vehicle. This will help in Step 4 of setting up a strategy of paying off your home.

Step 3: Using a HELOC (as mentioned in Step 1) is one option. Another option is using another investment vehicle that has easy access: Mutual Funds, Investment Grade Insurance, and Annuities.

 

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