TIP 4: Another View
another example to explain the program
Let's Use Another Example
We talked earlier (in Section 1) about making large, up-front payments to reduce the mortgage balance quickly so that more of your monthly payment goes towards paying the principal amount instead of interest.
But the question was asked:
where are the lump-sum payments of $5,000 going go come from.
That is where your BLOC comes into play.
The BLOC account becomes the money source that makes the lump sum payments to reduce your mortgage loan fast. Let's illustrate an example.
The program will instruct you when to advance yourself a lump-sum payment to pay on your mortgage:
Starting Credit Line Balance: $60,000
Date From To Advance from BLOC Payment to BLOC Ending Balance Aug Beginning Balance $2500 Aug BLOC
Pay down 1st Mortgage
$5000 $7500 Aug BLOC Living Expenses $4000 $11,500 Aug Pay Paycheck $5000 $6500 Total $9000 $5,000 $6500
What Does This Show
Line of Credit Available: $60,000 Balance Forward from July: - $2,500 An Advance from your BLOC - $5,000 Pay Living Expenses - $4,000 Balance Owned - $11,500 Deposit Payment + $5,000 Ending Balance Owned - $6,500
- Your starting balance was $2,500
- Your ending balance was $6,500
- you never made a schedule payment to the BLOC:
your income represented your monthly payment
- you borrowed $9,000 from the BLOC
- you only pay interest on the $6,500 balance
- your BLOC become an interest cancellation account
- your lump-sum payment of $5,000 to pay down your mortgage traded $23,304 of daily compound interest for a simple interest charge on $6,500