do to upload error, document needs to be downloaded.

1. DEBT SHRINK
PRINCIPLE
JOSHUA VAN DER NEUT

2. INTRODUCTION
I believe that everyone can own their home sooner, all it takes is a slight change in
mindset. Instead of opting for the quick wins, set a goal to earn the rewards.
Over the last four years I was shocked to find that many clients of mine were destined
to have a 30 year mortgage; this is due to only making minimum repayments and
constantly opting for the quick wins. When someone decides they want a new car,
they head straight to the bank to get a personal loan, when they want a new TV they
take out the 5 years interest free credit card. These are all quick wins, and therefor
they didn’t earn the reward.
In this book you will discover that by changing the way you approach the lifestyle
purchases, you will begin to earn the reward and the satisfaction that come with it will
be lasting.
By following the simple steps outlined in this ebook you will see a dramatic drop in the
mortgage balance and still have the opportunity for all the lifestyle purchases you
desire.
The idea is simple. but the benefits are great.
CHAPTER 1
1

3. UNDERSTAND
THE BASICS
CHAPTER 2
2

4. 3
Interest is Calculated
Daily

5. 4
Salary Credit – Income can be
credited direct to the home loan
account
Redraw – The difference between
loan limit and loan balance is
available to use, the option to
redeem these funds is called
redraw
Offset Account - An offset account
is like a transaction account
however the balance of your
offset account is deducted from
your outstanding loan balance
when your interest is calculated.
UNDERSTAND THE FEATURES

6. 5
2%
4%
Interest saved
Interest earned
INTEREST EARNED VS INTEREST SAVED
Interest bearing accounts on average offer returns of 2%,
which is classified as taxable income, therefor you will
likely pay tax on the interest earned.
Interest saved is simply the you don’t pay the banks.
Which is achievable when income is distributed to an
income saving account. (i.e. Home Loan or Offset)

7. 6
Wasted income
Wasted income is any income held
in a non interest savings account.
example ‘money held in a savings account’ or ‘cash
withdrawn from an ATM’

8. COMMON
MORTGAGE
REDUCTION
STRATEGIES
CHAPTER 3
7

9. 8
‘You simply take your monthly mortgage repayment – say $2,000 – and cut it in
half ($1,000), and then pay this amount fortnightly instead of monthly. Because
interest is calculated daily the interest is then calculated at a lower amount each
fortnight.’
This tip was likely introduced by the Banks to show they care about helping you
pay down your mortgage. Let me show a little calculation;
If Jo and Larry pay minimum monthly payments ($1,433) for a mortgage of
$300,000 @ 4% at the end of 30 years they will pay $215,608 in interest.
Now if Jo and Larry pay instead fortnightly ($661) for the same mortgage at the
same interest rate, they will end up paying $215,369 in interest.
Thats a whopping $239 in savings.
The way the Banks made this attractive is by stating to halve your monthly
payment and make it fortnightly. I agree that this reduces the mortgage quicker
but it is not because of the frequency it because you are now making higher
repayments.
Calculation examples
$1,433 x 12 / 26 = $661
$1,433 / 2 = $716
This calculation confirms increased repayments per fortnight of $55
Tip #1: More frequent payments

10. 9
By rounding up your home loan repayment even a little, you can make a
significant dent on your mortgage interest bill. Take Jo and Larry’s example
with a loan of $300,000 at 4% over 30 years. If the monthly repayments of
$1,433 were rounded up to $1,700 the loan will be repaid 8 years early and the
total interest would be reduced by of $62,329.
This is absolutely a great strategy, the more you pay into your home loan the
quicker it will reduce, however there is a better way.
Tip #2: Extra Repayments
An offset account attached to the home loan account acts as savings account
that can reduce the interest accumulated on the loan amount.
With $10,000 held in an offset account the loan term reduces by approximately
2 years saving around $20,000 in interest over the life of the loan.
Review your home loan every two to three months to make sure you loan is still
best in the market.
Keeping a pulse on the mortgage is always advisable because life changes, plans
change, and the market place changes.
Tip #3: Take Advantage of extra funds
Tip #4: Get a financial health check

11. 10
Introducing
the new way

12. 11
• New car
• New kitchen
• Family holiday
• Something else
What Do You Desire?
How much will it cost?
Follow the step outlined in the
following pages and you will find that
you will earn what you desire sooner
than you think.

13. 12
This guarantees that your income is held is an
interest saving account
Focus on your
Income Flow
Deposit income
direct to home
loan account

14. 13
Why Use Salary Credit?
Interest is calculated daily
therefor the sooner your income is
place in an interest saving
account the better.
Salary Credit enables the
employer to pay directly into the
home loan.
Interest
payable on
remaining
balance
Salary
Credit

15. 14
MACQUARIE
Income Income
T – Transaction a/c
HL – Home Loan a/c
S – Savings a/c
CC – Credit Card
Income flow
Liabilities repayments
$5 Account fee p/m
CBA
S
Other
CBA
CC
ANZ
CC
WBC
CC
CBA
T
ANZ
T
Bank
West
S
Macq.ME HL
ME HL
ExpensesBills
Income flow
Liabilities repayments
Funds used for deposit
ATM
From
Complex
To
Simple

16. 15
Limit the available funds in your transaction
account to reduce spending of non essential
Lifestyle products and activities
Give purpose to your
Money
Decide what you
want.
Set goals to
strive for.

17. How Does an Offset Account
Work?
16
An offset account is like a transaction
account or savings account however the
balance of your offset account is
deducted from your outstanding loan
balance when your interest is calculated.
This helps to reduce the amount of
interest you pay.
Offset
Balance
Interest
charged
on this
portion
only
Home
loan
Balance

18. 17
Spend the banks money so that more of your
income is held in a interest saving account for
longer
Why use your money,
when the banks
give you money
for free
Its not credit if
you pay it back
before you are
charged interest

19. Beat The Banks with their
own stick!
Interest
free
periods
Reward
programs
Most credit cards have
an interest free period of
up to 55 days
Earn rewards whilst
spending the banks
money
18
Spend the banks
money instead of
your own
!!!! Important to always clear the credit card before the
interest free period ends.

20. 19
Set up auto pay on the credit card to reduce
balance to nil at the end of each statement cycle
to avoid being charged interest
Simply don’t
spend money
you don’t have
It is important to
always clear the
credit card

21. Example one - $330,000 @ 3.86 - Single income
20
SHRINK
PRINCIPLE
W/
INVESTMENT
EXTRA
REPAYMENTS
STANDARD
Income $5,500.00 $5,500.00 $- $-
Rental $- $1,126.00 $- $-
Repayments $- $- $2,000.00 $1,500.00
Expenses $3,000.00 $3,000.00 $- $-
Rental Expense $- $600.00 $- $-
Total Interest $100,242.00 $77,029.00 $141,194.00 $244,427.00
Term 14.4 11.3 17.7 30
SHRINK
PRINCIPLE
EXTRA
REPAYMENTS
STANDARD
Income $9,000.00 $- $-
Rental $- $- $-
Repayments $- $3,000.00 $1,500.00
Expenses $5,000.00 $- $-
Rental Expense $- $- $-
Total Interest $189,520.00 $304,603.00 $419,681.00
Term 15.1 22.2 30
SHRINK
PRINCIPLE
EXTRA
REPAYMENTS
STANDARD
Income $9,000.00 $- $-
Rental $- $- $-
Repayments $- $1,000.00 $772.00
Expenses $5,000.00 $- $-
Rental Expense $- $- $-
Total Interest $13,096.00 $76,455.00 $116,608.00
Term 3.8 20.5 30
Example Two - $565,000 @ 3.86 - Dual income
Example Three - $170,000 @ 3.86 - Dual income

22. NEED HELP
Speak to your Debt Shrink Specialist
Joshua Van Der Neut
0421 423 598
CHAPTER 8
21