Wilma reviews the basic types of the extra fuel version of the debt destruction engine. She and Ted will run a type I extra fuel version of the debt destruction machine to destroy 8 accounts: 4 prestige cards, 2 store revolving accounts, and 2 finance company accounts. (See my previous articles to see how to set this up and get it running.) She fires up the boiler on her debt-annihilating locomotive. It is slow at first and takes a while to destroy Bill 1, but keeps construction momentum and finally obliterates Bill 2 and then Bill 3. As it starts tearing into Bill 4, everything, at first, is chugging along smoothly.
Then right about here, when Wilma is in the middle of destroying Bill 4, something goes wrong. Yes, things can go wrong with this strategy, just as things can go wrong with anyone else. So many financial disasters hit all at once, that the accident fund is overwhelmed. If they had been operating the way they do now for the last 10 years, they would have a large sufficient accident fund to deal with any contingency. For 4 out of 5 citizen who control a debt destruction engine, the new accident fund will not be overwhelmed.
Hard Drive
Wilma is one of the "lucky" 1 out of 5 for whom this is not true. She has a pretty good idea of what to do, but has another problem. Ted, her "Clyde," wants to quit. He wants to chuck the whole thing and go back to the prairie chicken life of prestige cards and mere survival. "I told you this wouldn't work!" yells Ted. Wilma wonders if she should have put the whole 0 a month into the accident fund at the beginning. Wilma realizes, though, that it is too late now to cry over spilt locomotive fuel.
(Back when Wilma started this process, she found 5 a month "hiding" in her daily life. She applied per month as extra fuel to the debt destruction engine. This left 0 a month. She put part of it each month in her 401(k), part in Ted's 401(k), and part in the new accident fund. Many financial planners propose that you build up the accident fund first before doing anyone else. The accident fund should, agreeing to approved financial planning wisdom, equal at least the estimate of your salary for 6 months or even as much as 8 months. This could take a long time, a year or 2 years or more, but it is something to think about and is, of course, a strategy decision that is entirely up to you.)
Wilma calls me and tells me about the crisis. "I believe I can get through this if my 'Clyde' doesn't throw in the towel." I tell her that I have an idea about something that might help, but I can't tell her what it is. After I hang up the phone, I call the 'Em Brothers. I have heard that the 'Em Brothers have started a new company called Cac Inc. The letters "C - A - C" stand for Clyde Attitude Correction. They would usually fee ,000 for this service, but agree to help Wilma for free as a way of advertising their new business.
The 'Em Brothers capture Ted, blindfold him, and bring him back to their office. Ted is handcuffed to a chair in a dark room. The blindfold is removed and Ted is left alone.
Then the lights come on and suddenly, the first brother, Rock 'Em, bursts into the room. "Thank you, thank very much! Thank you, thank you, thank you very much!"
Ted screams, "An Elvis impersonator? Oh, God, save me! Sweet Jesus, help me!"
To say that Rock 'Em filled out his Elvis costume would be an understatement. Rock 'Em had once dove into a swimming pool and the concrete splashed out.
After 3 hours of Rock 'Em's rock and roll "singing" of 86 renditions of "Don't Be Cruel," Ted is sobbing uncontrollably.
Then when "Elvis" has left the building, the second brother, Sock 'Em, waddles into the room wearing a purple Barney suit. Sock 'Em loads a video in the Dvd player, a Sesame street collage, that extols the virtue of cooperation for 3 hours as "Barney" goes round and round Ted whacking him in the head with a giant dirty sock once worn by Mr. Snuffelufagus.
"Mommy! Mommy! Mommy!" cries Ted, shaking hysterically.
"Barney" leaves and then the third brother, Shock 'Em, charges into the room wearing a giant Energizer Bunny costume. A long arc of electricity crackles from him extending to the head of Ted every time the Energizer Bunny says the words "not going." Shock 'Em says, "So, your wife asked you to continue with her in this new path, but you said your not going not going not going not going not going not going not going not going not going not going not going not going not going not going not going not going not going not going not going..."
For 3 hours, the words "not going" are repeated 27,000 times and Ted is jolted with a shot of stun gun electricity 27,000 times until he looks like Kramer from Seinfeld with his big toe in a light socket!
Ted, once Wilma's "Clyde" the rebellious, is now a crispy critter of compliance. After being returned home, he sits staring into space saying, "Yes, dear" in talk to every examine and sometimes when no examine has been asked.
Now that the qoute of Ted's resistance has mysteriously disappeared, Wilma is free to once again recognize her problem. In the midst of attacking Bill 4, the accident fund has been overwhelmed and they do not have the money to deal with everything that has gone wrong.
Wilma tries to get a bank loan. She intends to just plug it into the debt destruction engine. She knows this will increase the distance of time required to destroy the debt, but is patient and considered to not give up on her dream of debt freedom. She finds that she, however, cannot get a bank loan. It has not been long sufficient since the bad prestige description days of their past. The bad prestige history of the past will haunt them a wee longer before they are free of it.
She can, though, use a prestige card to get the resources to survive the present crisis. (Yes, she can get another prestige card, even though she cannot get a bank loan.) She hates doing it, but does. She continues putting money in the accident fund in the same way she has since she started out and she continues the debt destruction engine. She plugs the new debt into the debt destruction engine. It now takes 6 years and 1 month to kill the Type I debt instead of the 4 years and 10 months that it would have taken if the overload of the accident fund had not occurred.
When you control your debt destruction engine, it may take longer to annihilate your debt than you originally planned. Things may go wrong that require more than the accident cash you have on hand. These things might occur before you have had a occasion to build up the cash to deal with them in your accident fund. You may have to go back into the prairie chicken world and use prestige to deal with these problems. If this happens, just plug this new debt into your debt destruction engine. It may add an extra year or so to the process.
And there is no guarantee of success. The first time I ran a debt destruction engine, the locomotive jumped off the track after 21/2 years. I had made the mistake of driving 2 cars that were too old, 14 and 15 years old. These machines kept breaking down, which depleted our accident fund down to nothing. Then, at the exact same moment, they both broke down again and both required new engines. We could not get a bank loan or a prestige union loan because, like Wilma and Ted, our prestige was not yet good enough.
I could have and probably should have gotten a prestige card like Wilma did and had an machine installed in one of the cars. (Yes, we could have gotten a prestige card. They hand out these things like Halloween candy to citizen with marginal credit.) We had never used prestige cards up to that point. Our debt consisted of store revolving accounts, finance company accounts, prestige union loans for cash and for a car, and the mortgage. At the time, I was adverse to the idea of using prestige cards and I plan we could not qualify for one. The point here is plainly that you do anyone you have to do, even if it is a "prairie chicken thing" like using prestige cards. If you have to break the usual rules in order to win, you do it.
We had to borrow the money from a high-risk lender to buy a car. I detest buying a car the approved way from a dealership. If you infer the lifelong impact of the payments you make in terms of what these payments would grow into if put into an investment stream, you will see that an astonishing estimate of wealth is destroyed while you drive your new car.
In your 20's, over 5 million dollars disappears from your wealth at age 70 when you pay car payments instead of investing the car cost money.
In your 30's, over 1 1/2 million dollars is vaporized from the elder version of you at age 70.
In your 40's, at least 1/2 million dollars is kept from the grandma or grandpa version of yourself at age 70.
In your 50's, you deprive your 70 year-old self of "only" 0,000. You do not want the elder You to hate the younger You, do you? Have you been robbing a senior citizen, yourself?
We do a U-turn now on Digression Lane and drive back to the story of Wilma and Ted. So, they have done it! They have destroyed their Type 1 debt. They still have the car loans: one with a finance company and one with a bank. They still have the mortgage, but they are free of the prestige cards, the smaller finance company accounts, and the store revolving accounts.
After 6 years of raises, their pre-tax deposits into 401(k)'s and Ira's are at the maximum level now. (See page 111 of "The Debt Destruction Engine", ready for free by request at website indicated below, for a conference of the "Walk Up" strategy for increasing contributions to the 401(k) and to the Ira.) Now they look into self-directed withdrawal accounts. When you have maxed your contributions to the 401(k) and to the Ira, you are permitted to conduce to self-directed withdrawal accounts and enjoy tax-free growth. The rules and limits convert on this from time to time. You can go to the library or crusade the Internet to find out about this when you are ready to look into it.
After Wilma sets up their contributions into self-directed withdrawal accounts, she arranges for the remainder of the money that was going to bills to be automatically deposited into mutual funds. These funds are not pre-tax accounts, but are for salvage for long-range purposes, vacations, and big-ticket purchases. To recap then, part of the previous bill money is used for self-directed withdrawal accounts and part is invested by self-operating deposit into after-tax mutual funds. Of course, the estimate of money fed each month into the accident fund is adjusted up and down as circumstances convert through the years.
Then Wilma and the now compliant Ted (thanks to Rock 'Em, Sock 'Em, and Shock 'Em) go to see a Certified Financial Planner. They should have gone years ago, but there was the matter of Ted's previous resistance and just general procrastination. The Cfp helps them fine-tune their financial plan. They and the Cfp staff generate a plan which helps them get ready for the children's college expenses; save for vacations and other major expenses; get ready for all inherent contingencies such as disability, inherent nursing home care, inherent long hospital care, and death; and get ready for retirement.
The Cfp advises them on the significance of having a will and refers them to an attorney who will help them write this document. She advises them as to whether or not they should set up a living trust. The Cfp helps them set up their financial affairs so as to sacrifice taxes: earnings taxes in this life and the taxes that need to be avoided after death. She helps them dispose to have their assets conveyed to their heirs after their deaths, without being reduced by probate and other taxes. The Cfp and her staff propose them on asset protection strategies and liability issues. There are a great many citizen who lose a large part of their assets through lawsuits. She helps them protect themselves from these liability dangers.
As Wilma and Ted head home after looking the Cfp and the attorney, they can hardly believe the way their lives have changed. As they drive home, Wilma says, "I started paying in extra amounts on the car payments to pay these loans off early. With the money we are salvage now, we will soon be able to pay cash for our cars, if we want to. All that money going to car payments can be invested and grow and we can just pay cash for what we want to do or buy. And then we could pay an extra estimate every month on the house and wipe out the mortgage in, oh, 5 to 10 years, if we want to just kind of take it easy. Fantasize the thrill of then having all that house cost money each month to invest. We will genuinely get ahead of the game then!" And to think, they owe it all to Rock 'Em, Sock 'Em, Shock 'Em, and the Debt Destruction Engine.
"Yes, dear" says Ted.
Rock 'Em, Sock 'Em, and Shock 'Em Save the Day
