Hey guys, welcome back to our channel. We are recording this Tuesday, November 20th
and it’s Matt’s birthday today so say happy birthday to Matt in the comments below,
he is 29. Getting up there babe almost 30. Soon, big three next year. It is yeah. So this video is all about how to pay off
your debts fastest using our debt Tornado strategy. If you watched last week’s video, we broke
down the Snowball, the Avalanche, the Tsunami and introduced our Tornado and now we’re
diving deep and showing you exactly how the Tornado works. So
you’re here because you want to learn how to pay off your debt the fastest. So we did it in this Power Point presentation
because it is a little bit easier, it’s more visual than just us sitting there talking
and you can still see us in the corner over there chatting with you. So yeah, guess how much faster you can pay
off your debt using the Tornado than the Snowball. Leave it in the comments below how much faster
you think if it is 10%, 20%, 30%, 50% maybe. If I know. Up to 20% faster with a little bit help from
yourself. we’ll go into detail about what that means
specifically. So the Owen Your Future method of debt paydown
can get you out of debt ip to one year faster than the Snowball method. And we coined this phrase the Debt Tornado
because all of it is weather-related and just wanted to jump on board for that weather party. So meet Debbie. She recently joined our Own Your Debt program
and has 40 000 dollars in credit card debt spread across 5 different cards all with different
balances and different rates. She’s yeah, just like your typical American. We’ll go into a little more of her financial
situation here. So she has 5 different credit cards and they
all have different balances on them and they all have different interest rates on them
and the total amount of debt she has is about 40 000 dollars as we said previously and her
average interest rate is about 21% which is fairly typical, 27% is high for like your
travel rewards credit cards, 12% is on the lower end like connected to your bank account
normally or something like that. So yeah, her minimal payments all add up to
be about 1 130 dollars per month which is a lot, it’s like a mortgage payment. I mean, look at Debbie’s income. After she pays for all of her housing and
food, all of her needs, she has an another 1 200 dollars leftover that’s gonna be going
towards this debt. So as you can see that’s not much more than
her minimum payment, really. Definitely. And a lot of people are in that situation
where they’re really just like pressed to the limit as fast as what their creditors
demand to them for payments and what they can make. Definitely the biggest thing to start with
is to try to distance that gap between your income and your expenses so you have more
and more money to put towards your debt, it’s going to help you eliminate a lot faster,
but we really use Debbie as this example she can kind of see how the strategy plays out
for her. So yeah, Debbie came to us not really knowing
what to do, she had a lot of questions like should she focus on building an emergency
fund, like a lot of people recommend building 1 000 dollar emergency fund even before you
start tackling your credit card debt, she wonders if she should follow the Snowball
method and pay off the smallest balance first as that what’s a lot of people recommends
too, and a lot of people had success doing that too. And she also wonders what she should do if
an unexpected expense comes out you know, if she doesn’t have an emergency fund where
she should take that and yeah, how should she go about tackling this debt. So Debbie feels overwhelmed and out of control
when it comes to her credit card debt which is absolutely understandable, I think there
are a lot of people in the same place especially if you have like 40 000 dollars’ worth and
you’re paying almost 1200 dollars a month towards your payments. It can seem really overwhelming really hard
to know, what to do, where to start and how to tackle it most efficiently. So thankfully, Debbie joined her program and
she is now as a step-by-step guide in tackling her debt. And we’re going to show you our recommendations
for her so you can get preview of how you can apply our strategies to your personal
situation. So here you can see Debbie’s timeline to
debt freedom. She joined the course November 2018 and that’s
when we put this projection together. You can see if she used the debt Snowball
method, she would pay off her debt in November of 2023. If she used the debt Avalanche method with
a 1 000 dollar emergency fund, she would pay off her debt about 3 months earlier, in August
of 2023 and using the debt Tornado strategy, she would be able to pay off her debt in March
of 2023, which is almost 6 months earlier that the debt Avalanche method. And 9 months earlier than the Snowball method. So how much money does Debbie save even doing
this method? So Debbie would save almost 8 450 dollars
in interest payments by using the Tornado method. Imagine what you would do with an extra 8
400, 8 500 dollars sitting in your bank account. You could take a trip to Europe. Get invested. Mhm, do a lot of cool stuff. So now we want to talk about who the debt
Tornado method works and why it’s able to get you out of debt faster and save you so
much money on interest. So Debbie pays down her debt by highest interest
rate first. The debt Tornado is basically a little tweak
on the debt Avalanche strategy. The biggest tweak is that she does not keep
an emergency fund and I know a lot of you are throwing some red flags there and you’ve
been taught you know, you have to have an emergency fund that’s there to keep you
out of credit card debt. But here is the situation, you’re already
in credit card debt so by keeping this money you’re actually causing yourself to pay more
in interest than you would if you put this towards your debt immediately and started
just tackling that top interest rate debt from day one and we’ll go into a little
bit more detail about that. Now without an emergency fund people will
ask what happens when we have an unexpected expense. So in Debbie’s case we estimated that she
would have 1 000 dollars expense every 6 months and that would account for some of those random
unexpected expenses. Now Debbie would put that expense on her lowest
interest rate credit card. So here’s why we think that emergency funds
are pointless when you have credit card debt. So with a 1 000 dollars sitting in a savings
account, how much interest are you earning on that money, maybe 1%, 2%. Two if you’re lucky. Yeah, two if you have a high interest rate
savings account. So you’re not earning much money on that 1
000 dollars, but yeah, your credit card balance is racking up interest at over 20%. So if you put that 1 000 dollars to work you’ll
be making more money in the long run. Yeah, think of it this way. You’re saving yourself that 20% interest that
you’re paying on that credit card balance because you could have reduced it by a 1 000
dollars, but instead you’re keeping this 1 000 dollars in your bank account to prevent
yourself putting a little bit extra money on your credit card when you have an unexpected
expense. We don’t think that makes sense mathematically
and we’ll talk a little bit more about the psychology and the emotional aspects of the
strategy. So why do so many people recommend the Snowball
method of paying down debt when the Tornado is clearly more advantageous? That’s because paying down debt is exhausting
and you have unexpected expenses come up that make you feel like you’re derailed and off-track
and make you want to give up on your debt pay down game. So psychologically, if you have that emergency
fund it helps people to feel like “okay I’m not derailed, I have this, I’ve prepared
for this, I’ve planned for this”, which makes sense. So given that it’s obvious that so many
people suffer from fatigue and paying out debt and feel like they’re overwhelmed and
get off course, how do we at Owen Your Future prevent debt pay down fatigue while following
the strategy that makes the most sense mathematically. So we really stress community, accountability
and identifying unconscious money habits. So the first part of our course or the first
thing to do with any coaching clients is it really try to tackle how you relate to money,
how you think about money and dig up any past traumas or any past money experiences that
can impact you negatively and cause you to have some of these reactions when you meet
obstacles because that’s going to happen. And the community aspect obviously they’re
just to support you and keep you going, keep you motivated, people show their wins, people
share their failures and struggles and it really helps everyone just understand that
there are other people going through the same thing you are, a lot of people are in it together
and by working together and supporting each other you can get to the other side. So if you want to join our community make
sure to download our money checklist which is what we do and what we recommend our clients
to do every single week, it just takes 10 minutes, it gets you on track to achieve your
financial goals and it’s super quick and easy and it’s all at the link in the bio
below. You can also if you are ready to take the
next step you can book a free call with us, we do 15 minute discovery sessions to really
help you to understand those unconscious money habits and patterns that might be sabotaging
your goals. So here’s what some people are saying who
have coached with us and have taken our course, that they’re finally feel on the same page
financially that their wife and them are able to talk about money better and that we have
shifted the way that they think about money. So if you’re ready to own your debt and tackle
the Tornado method strategically and with care and confidence, you can schedule a call,
talk to us, we’ll see how we can help you best, whether that’s coaching courses, just
you know, our free material we always are going to give away free material that will
always be available, so wherever you are at your journey we have something for you. Definitely. So leave us some comments below, we want to
know what you think about this method, about this video, if you’re interested in other
finance videos definitely subscribe and ring the little bell to be notified every Wednesday
when new videos come out.