Use the 80/20 Principle to Crush Debt Fast!

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Today we are going to show you how to use the 80/20 principle to crush debt fast! The 80/20 principle works for almost everything in life, including paying off debt. When you focus on the most important 20%, the other 80% falls into place. Let’s break it down step by step with real examples.

The 80/20 Rule and Debt

Think of losing weight. Exercise helps, but 80% of weight loss comes from eating habits. The same idea applies to debt. Paying it off isn’t just about making extra payments—it’s about lowering the cost of your debt first.

Example: The Weight Loss Struggle

Mike tried to lose 15 lbs over three months. He hit the gym, worked hard, and stayed consistent. But he only lost 4-5 lbs. The problem? His eating habits. He still ate chips and chocolate, making his progress slower and more frustrating.

Debt works the same way. If you don’t tackle high interest rates first, your payments feel like running uphill.

Step 1: Get Into Better Debt

Before making extra payments, make your debt easier to pay off. Lower your interest rates first.

Example: High-Interest Credit Cards

Imagine you have $10,000 in credit card debt at 24% interest. That means you’re paying $2,400 in interest every year. But what if you move that debt to a home equity line at 8%? Now you only pay $800 in interest, saving $1,600 a year. That’s money you can use to pay off debt even faster.

Step 2: Choose a Repayment Strategy

Once you lower your interest, pick a strategy that works for you. Snowball or avalanche—both help, but lower debt costs make them more effective.

Example: Credit Card Balances

  • Card 1: $7,500 at 24%
  • Card 2: $7,500 at 19%
  • Card 3: $5,000 at 15%

Your total payment is $500/month. Using the snowball or avalanche method, adding $100/month will take 3 years and 8 months to pay off. Plus, you’ll pay $8,000 in interest on a $20,000 balance.

Step 3: Refinance or Transfer to Cheaper Debt

A lower rate makes everything easier. Options include home equity loans, 0% credit card transfers, and debt consolidation.

Example: Home Equity Loan vs. Credit Cards

If you roll your $20,000 credit card debt into a home equity loan at 8%, your monthly payment stays around $600. But now, you pay off the loan in 3 years instead of 3 years and 8 months, saving $5,000 in interest. That’s money back in your pocket!

Step 4: Use 0% Credit Card Transfers

Some credit cards offer 0% interest for 12-18 months. There’s a small fee (3-5%), but it’s still cheaper than paying 24% interest.

Example: 0% Balance Transfer

If you transfer $20,000 to a 0% credit card with a 4% fee, you pay only $1,500 in fees over two years instead of $8,000 in interest. That’s a huge savings!

Step 5: Mix and Match for the Best Results

You don’t have to choose just one method. Combining strategies can work even better.

Example: Hybrid Approach

  • Move $20,000 to a home equity loan at 8%.
  • Keep paying $650/month (same as before).
  • Now, your monthly payment drops to $540, giving you an extra $110 per month for other expenses.
  • Over three years, you save $4,000+ in interest while freeing up cash each month.

Make Debt Easier to Crush

Debt feels overwhelming because high-interest rates make it harder to escape. The 80/20 principle says to fix the big problem first—the cost of your debt. Then, paying it off becomes much easier.

Ready to take control? If you’re looking for a home equity loan or line of credit, check out SmartWithDebt.com for resources to help you find the best option.

Let’s crush debt—fast!

Watch our most recent video to find out more about how to: Use the 80/20 Principle to Crush Debt Fast!

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Debt Consolidation EXPOSED: Do It the Right Way!

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Today we are going to discuss debt consolidation exposed: Do it the right way! The numbers don’t lie. We’re going to show you how to pay less instead of falling into a massive debt trap. If you’ve been told that consolidating debt with a new mortgage is the best move, think again.

What’s the Goal of Debt Consolidation?

For most people, lowering their monthly payments is the top priority. However, here’s the problem. Most lenders and TV personalities only focus on monthly payments instead of total debt costs.

At Smart With Debt, we love debt, when it’s used the right way. We believe in good, healthy debt that keeps more money in your pocket, not the lender’s.

So, let’s break down the numbers as well as expose the real cost of debt consolidation.

The $200,000 Debt Mistake

Let’s look at an example of a homeowner trying to consolidate debt:

  • Original Mortgage: $300,000 at 4% interest (from four years ago).
  • Current Mortgage Balance: $277,000 with 312 payments left (26 years).
  • Credit Card Debt: $30,000 across three cards at 21-24% interest.
  • Total Monthly Payments: $2,432 (Mortgage: $1,400 + Credit Cards: $1,000).

The goal? Lower the payments. But watch how lenders trick you into paying far more in the long run.

Refinancing at 7%: A Costly Move

If you refinance your $277,000 mortgage today at 7% interest, your new mortgage payment would be:

  • New Mortgage Payment: $1,800 per month.
  • New Loan Term: 30 years (360 payments).
  • Total Interest Paid Over Time: $664,000!

That’s over $200,000 MORE than your current loan!

Now, what if you refinance both your mortgage and your $30,000 credit card debt into one new loan?

  • New Loan Amount: $312,000 at 7%
  • New Payment: $2,075 per month (Yes, slightly lower)
  • Total Debt Paid Over Time: $747,000!

You just turned a $30,000 problem into a $747,000 mistake!

This is what lenders aren’t telling you.

The Right Way to Consolidate Debt

fInstead of rolling everything into a new mortgage at a higher rate, try this instead:

First, Keep Your Mortgage Intact.

  • You already have a low rate (4%)—don’t touch it!

Second, Use a Home Equity Loan Instead.

  • A fixed-rate home equity loan at 8% costs much less over time than refinancing your whole mortgage.
  • Loan Amount: $31,000 (credit card debt + closing costs).
  • New Payment: $376 per month (over 10 years).

Third, New Total Monthly Payment:

  • Mortgage ($1,400) + Home Equity Loan ($376) = $1,776 per month.

You save money upfront AND in the long run.

Key Takeaways: The Smartest Debt Strategy

  • Leave your low-rate mortgage alone!
  • Use a home equity loan to tackle high-interest debt.
  • Lower your payments AND reduce your total debt cost.
  • Avoid the debt trap of long-term refinancing!

Calculate Your Best Option

Want to see how this works with your numbers? Use our free Smart With Debt Calculator to compare:
Refinancing vs. Home Equity Loan
Total Interest Paid Over Time
Monthly Payment Breakdown

Download the calculator today!

Watch our most recent video to find out more about: Debt consolidation exposed: Do it the right way!

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What Impacts Your Credit Score the Most?

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Today we are going to answer the question, “what impacts your credit score the most?” Your credit score plays a big role in your financial life. It helps lenders decide if they can trust you to borrow money. But what really affects your score the most? Let’s break it down.

Payment History:

The biggest factor is payment history. Paying your bills on time shows lenders you’re reliable. Even one late payment can hurt your score, so it’s important to stay on top of due dates.

Credit Usage:

Next up is credit usage. This means how much of your available credit you’re using. Experts recommend keeping it below 30%. For example, if you have a credit card with a $1,000 limit, try not to carry a balance higher than $300.

Credit Age:

Another big piece is credit age. Lenders like to see that you’ve managed credit responsibly over time. Older accounts can boost your score, so think twice before closing that old credit card.

Credit Mix:

There’s also credit mix. Having different types of credit—like a mortgage, car loan, or credit card—can work in your favor. It shows you can handle various types of debt.

New Credit Inquiries:

Finally, new credit inquiries play a role. Applying for too many loans or credit cards in a short time can make you look risky.

In Conclusion:

Each of these factors matters, but payment history and credit usage are the heaviest hitters. Keep an eye on these, and your score will thank you!

Contact Us Today! 

Do you need to boost your credit score? Contact us today to learn more about what impacts your credit score the most! 

Free Tools For You! 

We also have free tools available! Accelerate Debt Payments Calculator to see which debt option is best for you! 

Learn more!

Visit our YouTube channel to learn more about using debt instead of letting debt use you! 

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Hidden Wealth in Your Home: HELOC Qualification Breakdown

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Today we are going to talk about hidden wealth in your home. Unlocking the hidden wealth in your home starts with understanding how a HELOC (Home Equity Line of Credit) works as well as how to qualify for one. Let’s break it down step-by-step, so you can see if this option works for your needs.

What is a HELOC?

A HELOC is like having a financial safety net. It’s a second mortgage that lets you borrow money based on your home’s equity while keeping your existing mortgage in place.

Here’s the key: A HELOC is tied to your home’s lendable equity, which depends on your property value as well as how much you still owe on your first mortgage.

How Lenders Calculate HELOC Amounts

Everything comes down to CLTV (Combined Loan-to-Value). This calculation determines how much equity you can access.

Here’s how it works:

  1. Determine Your Home’s Value


    Find your property’s current market value. Use tools like Zillow or Redfin for a quick estimate or check with a local appraiser.

  2. Know Your Current Mortgage Balance


    Look at your latest mortgage statement to see what you still owe.

  3. Calculate Lendable Equity


    Most lenders allow between 80% and 90% CLTV. Multiply your home’s value by the lender’s CLTV percentage, then subtract your current mortgage balance.

Example:

  • Home Value: $400,000
  • Lender’s CLTV: 85%
  • Current Mortgage: $280,000

Calculation:

  • $400,000 × 85% = $340,000
  • $340,000 – $280,000 = $60,000 of available equity for a HELOC.

Why Choose a HELOC Over a Cash-Out Refinance?

To clarify, HELOCs are often better for smaller, flexible borrowing needs:

First, Lower Costs: No need to refinance your first mortgage, avoiding high closing costs.

Second, Keep Your Low Rate: If your existing mortgage has a great rate (e.g., 3%), you keep it intact.

Finally, Flexibility: Borrow only what you need, when you need it.

In most cases, you can access 5–10% more equity with a HELOC compared to a cash-out refinance.

How to Shop for the Best HELOC

  1. Compare Lenders: Start with local credit unions or mid-sized banks—they often offer the best terms.
  2. Focus on CLTV and Rates: Higher CLTV percentages and lower rates can save you money.
  3. Use Tools to Compare: Download our free HELOC Shopping Scorecard to track offers and find the best deal.

Take Control of Your Home’s Equity

In conclusion, a HELOC offers more than just money, it gives you options. Whether you’re funding home improvements, consolidating debt, or creating an emergency fund, your home’s hidden wealth can help you get there.

Start today by calculating your CLTV and comparing lenders. Smart debt is the key to paying less interest and keeping more money in your pocket.

Contact us today to find out more about: Hidden Wealth in Your Home: HELOC Qualification Breakdown

Watch our most recent video to see the calculations step by step! 

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What Affects Your Credit Score?

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Today we are going to discuss what affects your credit score. Your credit score can feel like a mystery, but it’s not. It’s just a snapshot of how you handle money and debt. Knowing what affects it can help you make better choices and keep your score healthy.

The biggest factor is payment history. Do you pay your bills on time? Even one late payment can hurt your score. Next is credit utilization, how much of your credit you use. For example, if your credit card limit is $10,000 and you owe $5,000, you’re using 50%. Keeping it below 30% is ideal.

Another piece of the puzzle is the length of your credit history. The longer you’ve had accounts, the better. Then there’s new credit inquiries. Applying for several loans or credit cards in a short time can lower your score.

Finally, there’s credit mix. Lenders like to see a variety, such as credit cards, car loans, or mortgages. It shows you can handle different types of debt.

Here’s a quick example: Sarah pays her bills on time, but she maxes out her credit cards. Her score drops because her credit utilization is too high. By paying down her balances, Sarah can boost her score.

Understanding these factors can help you stay ahead. A good credit score opens doors to better loans, lower interest rates, and more financial freedom.

Contact Us Today! 

Do you need to boost your credit score? Contact us today to learn some tips that can help you level up quickly and easily! 

Free Tools For You! 

We also have free tools available! Accelerate Debt Payments Calculator to see which debt option is best for you! 

Learn more!

Visit our YouTube channel to learn more about using debt instead of letting debt use you! 

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