Covering the Cost of That Awful Monthly Expense

Is there a monthly expense you despise?

Perhaps a car payment? A student loan? Or a medical bill? Maybe it’s something bigger such as child support. You know if you can cover this expense, your life would be so much easier.

Yesterday I was speaking to a family member who had to get a new furnace for her house. She decided to finance it over six years. The payment wasn’t high at all (a little over $200 a month). A single promissory note would have the furnace pay for itself.

Here’s another story.

I was talking to a friend of mine yesterday. She is amazing. She is a teacher, not young, and has very little saved up for retirement. Her only source of income is (you guessed it) her job. And although teaching can be a very secure profession, she’s basically month-to-month, being forced to lived an extremely frugal lifestyle.

“Would an extra $300 a month make a huge difference in your finances?” I asked her.

“Absolutely. That would cover my student loan.”

Our program could get her that $300 a month in a little over 30 days. Monthly expense, covered!

Keep in mind two things.

First, $300 a month would be an interest-only promissory note of about $15,000 for three years at our cap APR of 25%. For people who are just starting to do business with us, I actually do not recommend an interest-only promissory note. Yes, they are bit more lucrative. Yes, you get all of your money back at the end of the term. However, I always, always, always encourage people to start off with a principle-and-interest promissory note for a shorter term (12-18 months). Why?

Having peace of mind is very important when loaning anyone money. When someone is getting repaid their loan with principle and interest, they understand that they are getting all of their money back in a short amount of time. It gives someone a wonderful sense of peace knowing that they are getting repaid in full as the loan progresses. Now, to the second point…

Not everyone has $15,000 lying around. According to the Motley Fool, only 71% of Americans actually have a savings account. Most of those accounts range from $1,000 to $5,000 with the average being $3,500. Drat.

Here’s some good news.

We have an amazing program at our company called the J-Program. The J-Program helps offset the early withdrawal penalty of taking money out of an IRA or a 401k. Although this results in a slightly lower interest rate for the client, minimizing that penalty goes a long way in regard to creating a profitable note. Suddenly, money that was inaccessible to an individual now becomes accessible, and an entirely new world of financial possibilities opens up!

If you’re wondering more about private lending, you’re welcome to schedule a time to talk. If you’d like to read more of my cyber-etchings, more posts can be found here.

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