How to turn Debt into Wealth - How home owners become wealthy with debt

Wealth is not about how much money you earn. It's about what you do with the money that you do earn. You're about to learn how John and Judy reorganised their situation to turn their debt into wealth and all without changing a thing to their current lifestyle.

Let's first understand what debt and wealth is because there are various forms of both.

One form of debt is money that is costing you more than it should. Money lent at 12. It could perhaps be referred to as debt by percentages and obviously the less the better.

Paradoxically... one form of wealth is to save money on an appreciating asset by owning it sooner and thereby avoid ongoing interest payments.

So how could you as a home owner save on debt and turn that debt into significant wealth?

To demonstrate just how easy this is to do for most people, we'll take the debt into wealth case of John and Judy Smith. Yes their names have been changed to protect their privacy but could your name have been used to fit with this article? Don't be surprised, many people can mirror this example to varying degrees.

All figures are rounded to approximate values for simplicity.

John and Judy purchased their home that they are living in 6 years ago and have a 30 year home loan of $190,000k @ 7.25 with repayments of $600 /month

Car loan of $20,000 @ 11 with repayments of $297 /month

Total debt of consumer loans = $40,000

Total repayments on consumer debt = $1344

Now John and Judy's total repayments = $1344 consumer debt + home loan debt (which is an appreciating asset) of $1296 = $2540 /month

So how do we turn this debt into wealth?

As John and Judy have been owners of their home for 6 years, it has realised significant equity growth. This allowed them to increase their current home loan by the outstanding consumer debt of $40,000. This consumer debt was attracting significantly higher interest rates than their home loan rate. Consumer debt is debt on items that have no value or loose value. Consumer debt could also be termed lifestyle debt.

Their home loan moved from the old balance of $190,000 to a new balance of $230,000 at their current home loan interest rate of 7.25 John and Judy saved 9 years and 11 months off their home loan and will save themselves more than $127,997.00 in doing so.

Now this presents a wonderful new opportunity. Not only will they save $127,997.00 which by anyone's definition significantly increases your wealth, but now for option 2 of Turn Debt into Wealth to capitalize on the debt that you have just saved yourself from having to pay for 9 years and 11 months!

Do you think that if you then invested the same money that you now do not have to pay off in interest for almost 10 long years, into a capitally appreciating asset, that you could great significant wealth?

The very simple answer is yes you can easily turn what was debt into wealth. In fact take the time to learn how to build wealth with investment property and I promise that you'll sleep less and think more about the possibilities you open yourself up for. Turning debt into wealth is not hard and becoming wealthy is not hard, however taking action is way too hard for way too many people. And it shouldn't be.

More detail about turning this debt into new found wealth can be found at WealthWithProperty.com which is the ultimate info site for property investors explaining the what, why, when, where, who, and how of property investment, money, mortgages, rentals, insurance, loan brokers, tax savings and deductions.