FINANCIAL FREEDOM DEBT-FREE AND PROSPEROUS LIVING by John Cummuta The Strategy First of all, let us be completely honest: there is only one real definition of "Financial Freedom" — that is to be dependent on NO ONE. And that is the goal of the Debt-Free and Prosperous Living program — to help you be completely independent of any job, any person and certainly independent from any need for government support, EVER. It is what I call getting "Up-vulnerable." This program is built on the premise that the ideal situation would be to have NO bills and to have a substantial income at the same time — without having to work for it. In other words, I want to help you achieve, IN AS SHORT A TIME AS POSSIBLE, a situation where you own your home and your car(s), you have NO installment debt — and you have enough money in investments that you can live off the interest. That is True Financial Independence! To achieve this goal, you have to follow a new strategy. It is nearly impossible to reach this kind of freedom doing things the way you have always been taught — the way you see everyone else doing them. You first need to, understand how you have been misled over the years, then you need to design an efficient and sound strategy, to use the money you earn to get you to your goal in the shortest period of time. You will notice, as we go through the concepts that follow, that many of them run completely counter to "Conventional Wisdom." That is because conventional wisdom is wrong. And it is generally wrong because it is "wisdom" that has been promoted by the businesses that profit greatly from our doing what is good for them — not for us. These businesses have most Americans paying hundreds of thousands of dollars, over the years, for services they do not really need. Or, at least, for products and services that DO NOT provide the happiness, bliss and security that they're promised to give us. If you are like most folks, you will find yourself actually angry when you finish reading these pages. It will be as though a veil has been lifted from your eyes and you will see for the first time how the entire way our economy works is designed to make you work yourself to exhaustion — simply to accumulate wealth for the companies you do business with — NOT FOR YOU. The most staggering example of this is a home mortgage. If you buy a home with a 30-year conventional or adjustable- rate mortgage you will pay for that loan about THREE TIMES. Just multiply out your payment times 360 months and you will see that the total is about 3 times the value of the money you borrowed. That means that two-thirds of that total is INTEREST. Interest is the profit the mortgage company makes for lending you the money to buy the house. And they feel that you should pay them back THREE TIMES. That's 200% Interest! Let's put some real numbers to this. If you buy a $250,000 home, with a $200,000 mortgage, you will end up paying about $600,000 over 30 years. THIS MEANS THAT YOU WILL PAY NEARLY A HALF MILLION DOLLARS IN INTEREST! Now let these words soak into your mind and heart: You will have to work . . . week after week . . . year after year . . . to earn FOUR HUNDRED THOUSAND DOLLARS — Just so you can give it to the bank to make them rich! Ask yourself — do they deserve almost a half million dollars of your hard-earned wealth more than you do? Are they doing you such a tremendous favor that you should wear yourself out over three decades to generate nearly a half million dollars, to add to their wealth That's YOUR MONEY. You work for it. You pay taxes on it. Yet they end up with it. It's not fair. In fact it is legal robbery, and I am dedicated to helping you dump these leeches and begin turning the tide of your wealth- building power toward YOUR benefit instead of theirs. I am going to help you craft a strategy for yourself and your family that will keep the maximum amount of the wealth you produce IN YOUR HANDS. The power of retaining and investing the money you waste on mortgage interest alone could change your life completely. Just think about that $400,000. If you put it into mutual funds that averaged 10% interest per year, you could enjoy a $40, 000-a-year retirement income WITHOUT EVER TOUCHING THE PRINCIPAL! You would never have to work again, and the exciting thing is that we're not even talking about your having to make any extra money to make this happen for you. This $400,000 (or whatever it works out to for you) is money you are going to earn anyway We're just giving you control of who ends up with it: you or THEM. By the way, if you have an accountant who tells you that you should never pay off your mortgage, "Because it's the last tax shelter for the average consumer," GET A NEW ACCOUNTANT. Think about what they're saying. Let me translate it for you. They're really saying, "Keep on paying a dollar of interest to get back 28 cents in tax deductions. " Friend, if you are willing to trade a dollar for 28 cents, you can invest with me for the rest of your life! Car loans. Next to a home mortgage, the greatest form of legal robbery is auto loans. You will notice how the banks and finance companies are willing to give you up to five, six and in some cases even more years to pay off a car these days. That's because the loan is just like a mini home mortgage — ONLY THE INTEREST RATE IS HIGHER. If car finance companies thought they could get away with it, they would offer you 30-year loans on cars. They'd love to get three times the price of the car, and suck your wealth dry in the process. Insurance. It has been said that in no other expense area do people spend so much of their money with so little understanding of the value of what they're buying. The first thing you need to do is admit that your insurance agent (even if they are your brother or sister) is probably not trying to find a way to protect you from life's "icky" things — with NO concern for their own profit. And even if you do believe that they are completely selfless, let's consider the insurance companies they work for. INSURANCE COMPANIES DO NOT LOSE MONEY ON INSURANCE POLICIES! Sure, some of them-go out of business by making rotten outside investments — but they do not lose a penny on their insurance programs. That is a simple fact. The truth is that, when they sell you an insurance policy, they are gambling (with the odds in their favor) that bad things will not happen to you, and you (silly if you think about it) are gambling that bad things will happen to you. THE INSURANCE COMPANIES NEVER LOSE IN THIS GAME. Sure, there are a small number of people who pay a few dollars in premiums, then make a big claim. While it may appear that the insurance company loses money in this situation, the fact is that they have thousands of other people paying premiums, to whom nothing bad is happening. So they simply take the profit they are making on most people, and easily cover the benefits they have to pay out to the few unfortunate ones. And they know, whenever they sell you a policy, that you are thousands of times more likely to be one of the fortunate ones who cost them nothing, but make them thousands! They only bet on sure things. Which means that, if they are willing to sell you a policy, it is only because history has proven to them that they are going to win. Another way to say it is that, if they are willing to sell it to you — YOU PROBABLY DON'T NEED IT. In fact, their mathematicians (called actuaries) have statistically calculated that you probably will never need it, or they would never sell it to you. While there are some areas of your life that you do want to cover with the correct types of insurance, one thing you can be sure of is that you almost certainly do not want exactly what they want to sell to you. As I did the research for developing this unique Financial Freedom Strategy, I was amazed at how many of the financial "Rules" we are taught (or just pick up) ARE WRONG! And they are not just a little wrong. They can be deadly to our ever achieving real financial independence, in a desirable time-frame. The two untrue "Truths" that I found most difficult to break my own addiction to were the principles of "Saving money, a little at a time, as you go along through life, " and "You need to use credit to develop and maintain a good credit rating." Saving money as you go along. Every time you get financial advice, it usually includes instruction to build a little nest egg on the side, while you work your way through life. Many "Authorities" will counsel you to save 10% of your income as an investment for the future. They call it "Paying yourself first. " Now, in and of itself this is not bad advice. It is just the way it's most often applied that causes people to move sluggishly toward their goals — instead of taking the shortest, fastest course. Efficiency comes from focusing on one task at a time. Our Financial Freedom Strategy has proven the fastest, safest route to your financial goals: first you eliminate ALL debt — then you save. You need a good credit rating. Believe it or not at one point you won't care what your credit rating is, BECAUSE YOU WON'T NEED IT. You will HATE credit, and you will never need the assistance of a lender again. As you can see, we are already flying in the face of the "Truths" you've been led to believe all your life. Actually, most Americans were never taught — by family or by the education system — how to manage their financial resources throughout the various stages of their lives. So they have become the unwitting students (and slaves) of Madison Avenue advertisers and the money-lending companies behind them. Think about it. Where did you receive your personal financial training? Haven't you really been trained by TV and other advertising media on how you should live, what you should buy to show that you have arrived at a certain status level, and what kind of American Dream you should be chasing? Are you not instructed by the media what kind of car you should be driving to look successful? Are you not shown what kind of house you should live in to be really happy, or what kind of clothes will make you socially acceptable? And doesn't everyone who's anyone go on a cruise every year? Even if you watch supposedly "Information Only" financial programs, the experts you are listening to are usually just salespeople for investment companies. I, on the other hand, am a teacher without any investment products to tout. I simply wish to show you a strategy that can get you to complete financial independence in the shortest period of time. I am trying to help you put into play what you already know deep inside — a bigger home or faster car will not make you nearly as happy as will the absence of the pressures brought on by the monthly payments that come with these things. I want to help you reach a point where you are driving an acceptable, attractive car and living in a comfortable home — but you have NO PAYMENTS TO MAKE ON ANYTHING BUT FOOD, HEAT AND MINIMUM LEGAL TAXES. At that point you will be insulated from layoffs, economic downturns, inflation and all the other woes that mentally and emotionally squeeze the average worker. You will be beyond it, in a place that few people reach — because they are continually misled to waste their wealth. The new strategy I am proposing is not based on assumptions or generalities, but rather on pure mathematics and probability. Sounds scientific, doesn't it? Well it's really pretty simple and straightforward. It is founded on the premise that you want to get debt-free and start building wealth in the shortest period of time — while protecting yourself from the bad things that have a reasonable probability of actually happening to you. The key to achieving debt-freedom is the management of compound interest in your life. You will begin to see, as you study this course, that compound interest is more powerful than you probably imagine — and right now it is likely stacked 100% AGAINST you. Our system is based on a mathematical process that first shorts out this compound interest working against you. It then teaches you to turn the "financial funnel" around so you can later maximize the power of compound interest working FOR you. The key to protecting yourself from the bad things that might happen to you involves Mathematical Probability. This means that you "probably" need to employ only those kinds of insurance that protect you from catastrophic occurrences, where the expense could wipe you or your survivors out. It is "probably" more cost-effective to assume the risk of insuring yourself from life's minor illnesses and accidents by maximizing the deductibles on your policies. "Probability shows us that this is most often cheaper than paying an insurance company higher premiums, month after month, to cover those minor costs for you. The real good news about insurance is that, after you have followed the Financial Freedom Strategy's investment recommendations, you will soon have the resources to protect yourself from almost everything you are now buying insurance for — and you will need little or no insurance other than for personal liability. The three major stages of our Financial Freedom Strategy are: Stage 1. Pay off ALL debt first Stage 2. Operate strictly on a cash basis Stage 3. Then focus ALL available cash on wealth-building There's also a fourth stage that more and more Americans are choosing. We call it The New Paradigm. It involves not only leaving the fast lane, but taking the exit ramp. These people are choosing to leave fast-paced, high-pressure metropolitan lifestyles for more relaxed, less expensive and safer small-town lives. But this doesn't mean living off the land." I live in a small Illinois town, in a comfortable split-level home, on an acre of woods, with my boat in the river that's about a mile from my driveway. This is not a bad way to live. So . . . if it fits you . . . Stage 4. Move to a cheaper, safer, more enjoyable location By following the three or four stages of this strategy, you will attain REAL independence in a relative handful of years — and you will never need credit again. Most people following this strategy are completely debt-FREE, including their home mortgage, in 4 to 6 years. And then they're onto quickly building retirement wealth with all the monthly money they had previously been wasting on debt payments. Ask yourself how much better off will you be, 4 to 6 years from today, if you continue on the course you're on now? Excerpt from The Debt Free & Prosperous Living Basic Course by John M. Cummuta, Copyright @ 1994. ISBN 1-883113-07-5. Distributed by Financial Independence Network Limited, Inc. (FINL), 310 Second Street, Boscobel, Wl 53805; 608375-31 Oo. Table of Contents | 1995 Issues | Subscribe Truth Seeker | Feedback | Freethought.com Webmaster Credit card Orders call: 800-321-9054 or fax: (619)676-0433 Or send check or money order to: Truth Seeker / 16935 W. Bernardo Drive, Suite 103 / San Diego, CA 92127 $20.00 annual U.S. subscription ($35.00 international). Individual issues—$10.00 + $2.50 postage and handling Or be a committed freethinker and send $35.00 for a two year subscription. Truth Seeker is published by Truth Seeker Co., Inc. (ISSN 0041-3712) © 1996