1) The document discusses getting out of debt and focusing on experiences rather than possessions. It describes the author's realization that they wanted to use compound interest to work for them rather than against them. 2) Key concepts discussed include the Rule of 72 for investment growth and how to think of purchases as assets that generate income rather than liabilities that cost money. 3) The author provides an example of how purchasing an investment property can yield long-term profits compared to repeatedly buying a new car.

1. 12/18/09
CloakAzine
GettinG Out Of Debt
Issue 1
I am on my way home after a long weekend of goofing off in the great city of Chicago. As I sit
here gazing out the starboard window of the airline jet at the crystal clear winter sky, I am looking down
at the blissful, snow-covered earth and am asking myself whether or not I woke up this morning with a
purpose. I took a break from my work and had a very eventful weekend visiting with my childhood
friend, Joe, but it’s now time to get back to business.
My mind is cluttered with all the new and amazing memories I created this weekend. I am
thinking about the hockey game, the comedy club, the pub crawl, the shops, the food, and all the new
friendships I created while in the city. Even though I am exhausted from the wonderful weekend, I want
to feel a sense of accomplishment today so I decided to pull out my laptop and begin writing.
We have all had a weekend we can remember for the rest of our lives, and this past weekend
was one of mine. I work extremely hard every day so that I can afford to travel to new places to meet
new people and learn about different cultures. One of my long-term goals is to see the entire world.
Although I may never be able to travel to every place I want to, I’m definitely going to give it my very
best shot.
I have owned many nice things in my life, but nothing has ever made me feel the way I do about
experiencing life. When I’m old and gray I want to be able to reflect back on my life and be thankful for
being able to make a difference in many people’s lives, no matter how miniscule it may have been; I
want to be thankful for being able to make many new friendships and relationships all over the world; I
also want to be thankful for being a better person because of it.
In my opinion, too many people focus solely on material possessions, but the true treasure is
found in adventure and experiencing life. Not only do people admire others more for the things they
have done, rather than the things they own, but there is so much more self-fulfillment involved. I love
being able to share my experiences with other people. I always encourage my friends and family to go
with me, but most of them are living paycheck to paycheck and are so deep in debt that they can’t even
afford to miss a few days of work.
I spent the majority of my twenties in the same situation as most. I missed out on many trips
and events because I couldn’t afford to miss work, especially since I worked in sales and had to work
99% of all weekends for more than a decade. However, I woke up one morning and decided to do
something about it. I shredded my credit cards and decided to get out of debt so that I could build the
financial future I have always dreamed of. I got sick and tired of making other people rich by paying high
interest rates and compound interest.
To get in touch with us, visit www.CloakA.com or e-mail us at customer.support@cloaka.com.
Content Copyright 2009. CloakA. All rights reserved.

2. 12/18/09
Compound interest arises when interest is added to the principal, so that from that moment on,
the interest that has been added also earns interest. This addition of interest to the principal is
called compounding (i.e. the interest is compounded). A loan, for example, may have its interest
compounded every month: in this case, a loan with $100 initial principal and 1% interest per month
would have a balance of $101 at the end of the first month, $102.01 at the end of the second month,
and so on. http://en.wikipedia.org/wiki/Compound_interest
In other words, if you make the minimum payments on your credit cards every month, interest
will accumulate from the interest of the previous month, and so on. It’s even worse if you’re falling for
all the schemes of the credit card companies and making consistent purchases without paying off the
principle balance every month. Credit card companies want you to stay in debt to them forever, which
will be your fate if you don’t take control of yourself today.
In the beginning, it was very challenging for me to live within my means since I had had a credit
card from the age of 18. If I wanted something, I always purchased it without thinking about the long-
term ramifications of my decision. I always justified my purchases with excuses and promises I couldn’t
fulfill. Every time I bought something I promised myself I would pay off the charge at the end of the
month, but that never happened.
I always made all my payments on time, which was usually the minimum, and every few years
the credit card companies would give me a “reward” for being such a great customer. This led to a
disaster. They had me right where they wanted me. They had me deep into debt with them. I am just
thankful I learned what they were doing and caught myself before it was too late.
I was lucky enough to meet people in the financial realm and quickly learned what the term
Compound Interest meant and decided I wanted it working for me instead of against me. My financial
friends also taught me the Rule of 72. This is a mathematical formula used by financial experts to
determine how long it will take for invested money to double. It’s solved by dividing 72 by the rate of
return. In other words, if you have a rate of return of 12%, you can expect your money to double every
six years (72/12 = 6). It’s a very simple, yet powerful formula. http://en.wikipedia.org/wiki/Rule_of_72
Learning of this formula changed my life forever. I realized that if I had invested (and never
touched) $20,000 by the age of 25 at a rate of 12%, it would be worth approximately $1,280,000 by the
age of 61 (25 = $20,000, 31 = $40,000, 37 = $80,000, 43 = $160,000, 49 = $320,000, 55 = $640,000, 61 =
$1,280,000). Even if you are starting out at the age of 40, it’s not too late. That same $20,000 will be
worth approximately $320,000 at a rate of 12% by the age of 64. As you can see, the money grows very
little in the early years, but exponentially later in life, which is why you must begin investing as early as
possible.
Another fact of life most people don’t think about is inflation. The average annual rate of
inflation is approximately 4% per year. In essence, your money is worth less and less as time progresses,
and if you don’t stay ahead of the game, you will lose big time! Most bank savings accounts yield a
return of about 3% and CDs 5%. Just to make it worth your while, you must work really hard to find
investments no less than 12%, which is pretty conservative. http://en.wikipedia.org/wiki/Inflation
To get in touch with us, visit www.CloakA.com or e-mail us at customer.support@cloaka.com.
Content Copyright 2009. CloakA. All rights reserved.

3. 12/18/09
In 2007, I calculated how much money I would have to begin investing at that moment if I
wanted to retire at the age of 65 in 2044 with approximately $4,000 a month in 2007’s dollars, which
would equate to $14,000 a month in 2044’s dollars due to inflation. I was astounded to find out that I
would have to invest approximately $500 a month from that moment forward to accomplish my goal.
You may be thinking you don’t have $20,000 to invest, which may be true at this very moment,
but if you take control of your life now, you will have the money within the next few years. It’s never
too late. Most people spend a ridiculous amount of money on vehicles and get a new car every few
years; I was there too. Before I learned of the Rule of 72, I had two vehicles and spent $1,000 a month
between the two car payments and insurance. I was making everyone else rich, except myself. I finally
sold one of the cars, and paid off the other, but not before realizing that those two cars alone cost me
over $1,500,000 by the time I retire. Ouch!
If you start thinking about the long-term ramifications of your purchases before you spend the
money, you will quickly realize how much money that new car in the driveway, that new flat screen tv,
that new pool table, and all that new furniture is really costing you.
By no means am I telling you not to own those things, but a few years ago I was taught to buy
investments to pay for my toys. There are two types of purchases you can make: an asset and a liability.
An asset is something that puts money into your pocket (stocks, bonds, storage facility, apartment or
home rental property, etc.) and a liability is something that takes money out of your pocket (car, boat,
personal home (until the day you sell it and make a profit), etc.).
Instead of going out to buy a new car every two years, why don’t you spend the money to
purchase an investment property? Let’s say, for example, you purchase a small home in a quiet
neighborhood and are able to yield $300 a month profit from the tenants. You decide to buy a vehicle
with a car payment of $250 a month. After making your payments for five years, your car is paid off and
you are still making $300 a month indefinitely. Then, 20 years later, the real estate market is up and you
decide to sell the house and make a hefty $50,000 profit.
Although this example may or may not happen, it’s a tool to get you thinking differently about
money and to help you get out of debt. I am not a financial expert, but I have a team of experts
available to me. I highly recommend you do the same.
Please visit CloakA.com to get subscribe to the CloakAzine, learn about our
wireless products, promotions, and the CloakA Coaching Program.
CloakA President,
Shane Russell
To get in touch with us, visit www.CloakA.com or e-mail us at customer.support@cloaka.com.
Content Copyright 2009. CloakA. All rights reserved.