How to Pay off Debt Part 2 - Cash Flow Index скачать в хорошем качестве

How to Pay off Debt Part 2 - Cash Flow Index

How to Pay off Debt Part 2 - Cash Flow Index https://themoneyadvantage.com/cash-fl... 👉👉 Want the Exact 🏦Privatized Banking🏦 Strategies Our Clients Are Using to Build Financial Freedom? CLICK HERE For the #1 Secret: https://privatizedbankingsecrets.com/... 👉 👉 Listen to The Money Advantage podcast: https://themoneyadvantage.com/subscri... Here's the secret. Which loan do we pay off first? I mentioned all the problems, but now let's talk about which one to pay off first. We're going to use a very simple calculation to figure out which one is the most advantageous and frees up the most cash flow for you. It's called the cash flow index. You can also think of this as a cash flow efficiency calculation. You're going to take the balance of the loan divided by the minimum monthly payment. That is going to give you a cash flow index number. Let's take for instance a $10,000 loan divided by a $1000 monthly payment minimum. That $10,000 divided by $1000 is going to equal 10. 10 is the cash flow index of that loan. What does the cash flow index tell you? We really, this is going to be on a scale of between zero to 100, and sometimes loans will even be a cash flow index higher than 100. The higher numbers are better loans to keep. The lower numbers are better loans to pay off. What does this mean? This means that the lower the cash flow index, the more cash flow it's going to free up for you, and the more you're going to have left over each month to save. Let's take a look at an example and compare two amounts. Say we had that same $10,000 loan with a $1000 monthly payment. Even if it was a low-interest loan, we don't want to pay attention to the interest rate. We know that the cash flow index is a 10. Now let's look at a separate loan, $10,000 balance. So it's the same balance amount. Let's say this payment is $250. 10,000 divided by 250 is what, 40. So that means the cash flow index is 40 on the second loan. Again, we're not looking at the interest rate. We want to know which loan will free up more cash flow if I pay it off. What I want to do, is I want to pay off the first loan. The one with the lower cash flow index, the 10. My $10,000 is going to yield me $1000 of new cash flow because I don't have to make that $1000 monthly payment anymore. Do you see how it's more advantageous than paying off the second loan that only had a $250 monthly payment? That same $10,000 in the second loan example will only give me $250 of free cash flow. What I want to do is I want to not pay attention to the balance of the loan and the interest rate as much as the cash flow index. Again, that calculation is: BALANCE / MINIMUM MONTHLY PAYMENT = CASH FLOW INDEX. Cash flow index that's lower should be paid off first. Cash flow index that's higher should be held. This will help you see that if you calculate a typical mortgage, that's going to be a high cash flow index. Maybe 100 or even above. A lot of student loans also fall in this category. When we look at those types of loans, they're less of a priority to pay off because while they might be a loan, it's not taking out proportionately very much cash flow from our personal economy. It would be much more efficient to pay off other loans instead. That is how we want to have a well-designed loan payoff system or debt reduction strategy in our financial life. First, make the minimum payments. Second, build up savings. Make sure you don't dump any cash into paying off loans until you have that safety and security of an emergency fund. Then build up enough capital beyond your emergency fund and pay off the loans with the lowest cash flow index first. I hope this helps give you some clarity around how to pay off debt the safest and most efficient way. #cashflowindex #howtopayoffdebt #payoffdebt