It’s June, and in between the rain, we’re feeling the heat already!
Last issue, we discussed the Rule of 72 and how it can work against you through debt. If you missed it, you can scroll down in the Features section and catch up on the previous issue.
This week, we’re shifting from understanding debt to creating a plan to eliminate it.
The Problem Isn’t Always the Debt
Many people finance possessions, education, entertainment, and other purchases without fully counting the cost or looking at the total interest they’ll pay over time.
Let’s look at a real-life example of a debt analysis and how debt payments and extra payments can be used strategically.
When I sit down with people, many are already paying extra toward multiple debts. Most are making their payments on time.
The problem is that many don’t have a definitive plan on paper to eliminate debt in a way that maximizes interest savings and shortens their payoff timeline.
A Real Client Example
This client had refinanced their mortgage to pay off existing debt and, within six months, accumulated new debt. It was time to get serious and build a plan.
This was the original debt structure when we first met:
| Debt | Balance | Payment | Extra | Rate | Payoff Date | Interest Paid |
| Mortgage | $124,239 | $765.59 | $0 | 6.125% | May 2055 | $140,722.09 |
| Card #1 | $6,260 | $145.41 | $54.59 | 27.49% | Sep 2035 | $8,083.02 |
| Home Card | $750 | $35.00 | $15.00 | 31.99% | Sep 2028 | $286.83 |
| Bank Card | $3,982 | $80.00 | $20.00 | 12.90% | Nov 2034 | $1,965.83 |
| Timeshare | $16,440 | $414.72 | $0 | 15.99% | May 2031 | $7,097.14 |
| Card #2 | $2,941 | $49.16 | $50.84 | 19.24% | Dec 2030 | $1,329.41 |
The total debt was $154,612.
The total monthly payment was $1,489.88, with an additional $140.43 being applied as extra payments.
The weighted average interest rate was 8.588%, and it would take 28 years and 11 months to become debt-free while paying $159,484 in interest.
One Small Change Creates a Massive Difference
The first thing we did was examine the extra payments.
Instead of spreading the extra money across multiple debts, we redirected the entire $140.43 toward a single debt and built a strategy that maximized both interest savings and time savings.
Starting in July 2026, this became the new plan:
| Debt | Start Date | New Payment | Payoff Date | Interest Saved |
| Home Card | July 2026 | $175.43 | Nov 2026 | $229.42 |
| Card #2 | Dec 2026 | $224.59 | Feb 2028 | $709.95 |
| Bank Card | Mar 2028 | $304.59 | Feb 2029 | $982.62 |
| Timeshare | Mar 2029 | $719.31 | Apr 2030 | $720.57 |
| Card #1 | May 2030 | $864.72 | Dec 2030 | $923.75 |
| Mortgage | Jan 2031 | $1,630.31 | May 2038 | $78,975.13 |
The Results Speak for Themselves
Debt Freedom Date: May 2038
Total Interest Saved: $82,541.44
The total amount applied toward debt remained exactly the same:
- Regular payments: $1,489.88
- Extra payments: $140.43
Nothing new was added.
Nothing magical happened.
The money was simply applied differently and in a specific order.
How the Strategy Works
This type of debt elimination plan can be accomplished by following a few simple rules:
- Commit to taking on no additional debt.
- Consistently make the planned payments.
- When the first debt is paid off, roll that payment into the next debt on the list.
- Continue repeating the process until every debt is eliminated.
This approach is often called the “snowball effect” because the payment grows larger each time a debt disappears.
Discipline Changes Everything
It takes discipline and, for many people, an accountability partner.
But it can absolutely be done.
As each debt is paid off, celebrate the win. Just don’t use new debt to do it.
Depending on your personal goals and financial situation, some of those freed-up debt payments can eventually be redirected toward retirement accounts, college savings, investments, or other long-term goals.
The sooner debt stops consuming your income, the sooner your money can begin working toward your future.
Market Insights
- April 2026 was the best single month in more than five years.
- The S&P 500 rose roughly 10.5%, the Nasdaq surged over 15.2%, and the DJIA rose 7.1%.
- Stocks bounced back last week as enthusiasm for AI investments continued and rumors of a Middle East peace agreement bolstered investor optimism.
- Last week marked the ninth consecutive week of gains for the S&P 500.
- Kevin Warsh was sworn in as the new Fed Chair while continued enthusiasm around AI and technology stocks added to a bullish market sentiment.
Thought for the Week
“If you don’t like the road you’re walking, start paving another one.”
– Dolly Parton
About Frederick Hogsett, Jr.
Frederick Hogsett, Jr. is a licensed financial coach with almost 30 years of experience helping individuals, families, small businesses, and nonprofit organizations.
He recently opened an office in Savannah, Georgia, and can be reached at (803) 463-2773 or through his website at www.livemore.net/fhogsettjrclient.
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