Harj Gill: How to Own Your Home Years Sooner & Retire Debt Book Summary

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  • If you lost your job today, are your skills as current as those of the younger generation that are graduating tight now and who will work for less money than you?
  • Are you so confident that the industry you work in is not going to be affected by events taking place on the other side of the world today?
  • Being broke does not mean you are poor.
  • Being broke is temporary, but being poor is usually a permanent predicament.
  • People’s lifestyle somehow always rises up to meet their paycheck.
  • You see it all comes back to mindset of being wealthy. People with a wealthy mindset do go broke from time to time because not all their calculated business ventures pan out. However, they don’t stay that way for very long. They quickly move on to their next enterprise, apply the lessons from all their previous ones and voila! They’re back in the high life again.
  • The biggest mistake that people make, for whom this statement is a daily mantra, is to believe that: Making money is more important than managing money.
  • A case of lifestyles rising up to meet a paycheck.
  • Take Response-Ability.
  • Poor = Passing Over Opportunities Repeatedly.
  • You see, responsibility really means the ability to respond. It’s the ability to choose your response. If we choose to take responsibility for our lives it means that we are Response-Able. It’s accepting that we are the creators of our own circumstances by choosing our responses to them. Which means that we can also change those circumstances if they unsatisfactory.
  • Know thyself.
  • The second step to financial freedom is to become aware of your money habits and change them where necessary.
  • The millionaire next door by Thomas Stanley. Four traits millionaires have in common.
  • 1) They live well below their means. They are frugal and take extraordinary steps to save money. They don’t live lavish lifestyles. However, they’re willing to pay for quality, but NOT for image.
  • 2) They allocate their time, energy, and money efficiently, in ways conductive to building wealth. Millionaire’s budget. They also plan their investments. They begin earning and investing early in life. The authors also note that, “there is an inverse relationship between the time spent purchasing luxury items such as cars and clothes and the time spent planning one’s financial future”. In other words, the more time someone spends buying things that make them look good, the less time they spend on personal finance.
  • 3) They believe that financial independence is more important than displaying high social status. The authors found millionaires don’t have fancy cars and don’t buy top of the range designer clothes. They drive mundane domestic models that they keep for years and buy quality clothes off the rack.
  • 4) They are proficient at targeting opportunities and quickly take action rather than waiting for the perfect deal.
  • If you try and have an intellectual discussion with someone that has not done sufficient research on a topic, yet wants to argue for their opinion, is simply a pointless egotistical exercise and a waste of your time and energy.
  • A mortgage casts a shadow on the sunniest fields. (R. G. Ingersoll)
  • In order to own your home years sooner and save tens to hundred of $1000s in interest, you have to understand three things: 1) The type of mortgage that lenders want you to apply for. 2) How lenders want you to service your mortgage. 3) Why lenders want you to do the above?
  • Principal & interested (P&I) Loan is the commonly offered loan.
  • Compound interest is the eighth wonder of the world. He understands it, earn it…he who doesn’t…pays it. (Albert Einstein)
  • The key banking principle: The interested on your mortgage is calculate on the daily outstanding balance and charged at the end of the month. (called monthly in arrears)
  • Paying fortnightly also called bi-weekly in some parts of the world, will cut years off your home loan.
  • Making lump sum payments and increasing your repayments.
  • Making Bi-Weekly, Weekly, Lump Sum and increasing your repayments.
  • Although different lenders have different names for these new types of loans, basically they fall into one of two categories, “Interest Saver/Offset Accounts” and “Redraw Accounts.”
  • The biggest disadvantages with these types of accounts are: 1) You have to have a minimum amount before the interest is offset against your home loan, and/or, 2) You have to pay a fee to withdraw your money, and/or, 3) You are restricted by how much you can withdraw each time.
  • Empower yourself with knowledge so you know exactly what to do, how to do it, and right mindset to take change of the home loan in order to pay it off years sooner.
  • Have a system in place to see the savings on interest you make.
  • Examining your spending and finances constantly to see the impact.
  • If you have high interest bearing loans, then it may be a good idea for you to consolidate them with your HEL. (Otherwise referred to as Home Equity Loan)
  • Loan to Valuation Ratio LVR.
  • One of the great features of a HEL is that it allows you to withdraw funds back up to the original limit of the loan at any time, without you having to spend thousands of dollars reapplying for finance.
  • HELs are interest-only loans.
  • You are not making the most efficient use of your money, time and energy.
  • There are two ways to get ahead in life: work harder or work smarter.
  • These loans are commonly called Home Equity Loans (HEL). They allow you to deposit all of your income directly into your home loan and to withdraw your living expenses as required, at call. In effect, this transforms your home loan into a day-to-day transaction account, enabling you to take full mathematical advantage of our Key Banking Principle. That’s because now, every dollar that is left in the HEL reduces the Daily Balance of your mortgage, thereby reducing the amount of interest you are charged. In effect, you are using your existing cash flow to take away the bank’s ability to make a profit and using those same funds to Own Your Home Years Sooner and Retire Debt Free.
  • Allocating your time, your energy, and your money efficiently in ways conductive to building wealth.
  • Remember, it’s all about those humble little pennies.
  • Instead of taking out a P&I loan, you have to use a different type of home loan called a Home Equity Loan (HEL). That’s because with a HEL you can directly transfer all your savings, surplus funds and income directly into it rather than having those funds sitting in a separate checking or savings account. By doing the above, you will take full mathematical advantage of the Key Banking Principle because you will immediately reduce the Daily Balance of your mortgage by the amount of money you inject into it. Remember, it’s all about those pennies. The best part is that with a HEL, you can draw out your money for living expenses from your mortgage on call.
  • Numbers don’t lie.
  • Saving Interest is the same as Earning Interest.
  • Brokers may not get clients the best deal because they get 10 times more commission than bank staff for writing new loans.
  • Typical characteristics of Home Equity Loan.
  • 1) Income can be paid directly into your home loan
  • 2) Interest-only payments
  • 3) No early payout/exit fee
  • 4) Fully transferable to other properties
  • 5) Same interest rates for personal & investment loans & ability to spilt loans
  • 6) Monthly statements
  • If you want to own your home years sooner & retire debt free, you must take full mathematical advantage of our key banking principle. You can do this by having every cent that you earn being deposited in this type of mortgage that will in turn reduce the daily balance, and therefore, reduce the amount of interest you will be charged. This will make the power of compound interest work in your favor to significantly reduce the term of your home loan thus saving you ten’s to hundreds of $1000s in interest.
  • Depositing your income directly into your home loan to keep the daily balance as low as possible and therefore, paying less interest.
  • Allocate your time, energy and money efficiently in ways conductive to building wealth…as well as to budget and create a smart plan for you to own your most expensive investment your home.
  • You have the right tool that helps you effectively keep track of money.
  • SMART = Specific Measurable Achievable Results with a Timeframe.
  • Goals: The aspirations we want to achieve, or a destination we want to reach.
  • Millionaires budget and they also plan their investments.
  • How is your HEL balance paid off if you’re ONLY making interest-only payments?
  • 1) The money you don’t use stays in your mortgage to keep your daily balance low for the following month.
  • 2) The money you do need, also saves you interest by keeping the average daily balance of your mortgage down for the month until you use those funds.
  • 3) These interest savings act as a principal reduction toward your HEL.
  • 4) It is the combination of the interest savings plus the surplus funds left in your HEL that accelerates the pay down of this type of loan to a $0 balance.
  • And if you only pay the interest each month, you never actually pay this type of loan off – and that’s the danger.
  • Turning your home loan into a day-to-day transaction account with income posed was how is your HEL balance paid off if you’re only making interest-only payments.
  • The size of your home loan, the amount of your current debts, the amount of your income and the amount of your regular expenses.
  • Use the bank’s money for your monthly living expenses via credit card, while your money is left in your HEL – which reduces your daily balance – and therefore reduces the amount of interest you have to pay. When you get your credit card statement at the end of the month, pay if off IN FULL by writing a check from your HEL or using online banking.
  • Using a credit card will also help you to refine your forecast.



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