John Burley's 'Get out of debt' technique

From: Dale Gatherum-Goss


Hi

I have attached John Burley's brilliant article on "How to get out of debt (including car and house) in 5 to 7 years"

This is brilliant and I have seen many people put it into action and make it work for them.

Good luck and I hope that this helps someone.

Dale
 
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Reply: 1
From: Rick Gibson


Dale,

I will agree with you there. John Burleys DEP is something I use almost every day in my advising of clients and it has helped many of them immensely.

Rick
Brisbane Freestyler Co-Ordinator
 
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Reply: 1.1
From: Chris Legg


I have to disagree with the tactics used.

People in the situation described where they are paying half the gross income in loan repayments simply would not be able to find the extra 10% without putting further incredible strain on their lifes.

There are two ways to do this with no extra repayments.

Sorry this is going to be a long post and I would suggest if you want to work through this example print off a copy of page ten of Burleys Document

1 If property equity is available consolidate all the loans into a new P & I for $149600.
Maintaining the existing payments of $2675 per month would enable the loan to be totally paid out in 5.5 years.However to ease the strain a 10 year loan would reduce the monthly payments to $1670 leaving an extra $1000 per month of income.

2 If no equity
Assuming an interest rate of 16% per annum on the credit cards then the monthly interest on the $10,000 credit card debt would only be $133 per month but the minimum repayments shown are $550 therefore each month there is credit available of $420 which can be redrawn to pay down the other debt.So after two months the $600 Hardware debt could be repaid freeing up a further
$30 per month to be paid into the JC Penny account which after a further two months would also be repaid freeing up a further $40 and so on.
At the end of 10 months or so
all the five smaller accounts would have been paid off making available an extra $240 per month for debt reduction. By this time (10 months) the Wells Fargo account would also have been finished.
At this point there is available $70+$50+$50+$40+$30+$300= $540 per month from finalised accounts.
I would then address the credit cards which should then be paid off using the minimum payments of $550 plus the $540 from above
$1090 less the interest of $133
I personally would pay off the smallest first as this would take three months adding a further $100 per month paying off the second in another three months then increasing the other finally paying off all credit cards by month twenty two.

Choices could then be made about refinancing the remaining car loan, second mortgage and home loan.These of course would also have been reducing by possibly as much as $15000
at the same time

I think apart from the no extra cost the debtors would get reinforcement of their tactic every every two or three months as the smaller loans would be paid off giving them an incentive to continue.

Should anyone wish to discuss their own situation with me please feel free to email me direct.

chrislegg25@hotmail.com

I think after that I will go for a walk on the beach

Chris
 
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Reply: 1.1.1
From: GoAnna !


Hi Chris

I believe that your way works far better on paper but less well with the kind of human beings that get themselves in this kind of debt in the first place.

Many people who end up with piles of debt, usually on high interest rates, have achieved this by consistently living beyond their means and spending all of their money (and some!) on a heap of non core items.

I suspect that the huge majority of people could find that extra 10% if they kept a money spending diary for week.

I agree that consolidating the loans might mean huge interest payments and allow then to spread the payments over a longer period of time. HOWEVER what this overlooks is the behaviour that caused these people to have these crippling debts in the first place. I have personally witnessed people consolidating their debts and as soon as the financial hiccup was over they were off happily spending on their credit cards again. Scary stuff!

Unless money habits are addressed no debt reduction plan will be successful long term.


GoAnna !
"The pure and simple truth is rarely pure and never simple"
-Henry Ford
 
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Reply: 1.1.1.1
From: Mark Laszczuk


Chris,
Good post on debt reduction. But I'm a little confused. How is it that you make the statement that you don't think Burley's debt reduction could work when in Dale's post, he states quite clearly that he has seen it work for many people? Please explain.

Mark
'no hat, some cattle'
 
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Reply: 1.1.1.1.1
From: Michael Croft


I have seen it work more than once, however it is not easy to stick too or apply - like any budget or diet; it only works if you do.

Michael Croft
 
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Reply: 1.1.1.1.1.1
From: Paul Zagoridis


Like alcoholism and other addictions, compulsive overspending is normally cured when people hit rock bottom (wherever that is for them).

Without the commitment to stop adding to their consumer debt, no system can get them out of hock.

This approach has also worked for people I know.

Paul Zag
Dreamspinner
The Oz Film Biz site is archived at...
http://wealthesteem.dyndns.org/
 
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Reply: 1.1.1.1.1.1.1
From: Chris Legg


In the example used by Burley he has more than half the household gross income being directed to loan repayments.
I would have thought in those circumstances it would have been impossible to find the extra ten percent.

But then in the past I have taken out a 3 year $5000 personal loan and immediately invested it in a 3 year term deposit.At the end of the three years I had $5000 which I would not have had if I had tried to save the same amount.

Lifes a beach at Caves

Chris
 
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Reply: 1.1.1.1.1.1.1.1
From: Dale Gatherum-Goss


Hi

Burley's technique is not perfect for everyone, but then again, not everyone is perfect or people would not find themselves in a situation with more debt than they can handle.

The good part about this technique is that there are quick results which inspire people to keep going.

Let's face it, if you are in this much trouble . . . anything that makes a difference is a good thing.

If anyone has other techniques that work, I would love to hear them as I always have clients who look for quick answers.

Have fun

Dale
 
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Reply: 1.1.1.1.1.1.1.1.1
From: Mark Laszczuk


I think I should mention that in his excellent book 'Money secrets of the rich', Burley emphasises that you don't need to start with 10% of income, just what you can afford. Whether that's 10% or 3% doesn't matter, as long as you're doing aomething, and as you can afford to do so, increase the amount of money that pays off the debt. But like others have stated, you only succeed when you really want to.

Mark
'no hat, some cattle'
 
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