Sha Nacino | Trace Trajano

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This book is presented to:

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Sha Nacino | Trace Trajano

Think Rich,
Yuppies!
How to Overcome Credit Card Debts
and Start Becoming Truly Rich

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Copyright © 2011 by Sharon T. Nacino and Trace Wendell D. Trajano.

All rights reserved.

Published by The LLOYDLUNA Communications, Manila, Philippines.

No part of this book may be reproduced in any form or by any means without the
prior permission of the authors.

The information in this book was obtained from the authors’ personal experiences
and insights. While every effort has been made to make this book as accurate as
possible, the authors disclaim any liability or risk as a direct or indirect
consequence of the use of any contents of this book.

Edited by Jionette Clyde Arawiran

Cover Design by Marguelle Designs

Book Layout and Publication by

The LLOYDLUNA Communications, Manila, Philippines

Printed by KD Printing Corporation located at 2 JP Laurel St.

Dona Faustina Subdivision, San Bartolome, Novaliches, Quezon City
Tel. No. 9375935

Requests to the publisher for permission should be addressed to The Business

Evangelist, The LLOYDLUNA Communications, 1745 Dian St., Makati City 1235
Philippines, Tel. (63) 2 505.5336, Fax (63) 2 846.1089.

LLOYDLUNA also publishes its books in a variety of electronic formats. Some

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ISBN: ISBN 978–971–93474–5–3

Printed in the Philippines.

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Chapter 8

Deep in Debt: To Control

Your Debt, You Set it and
Forget it!

“I’ve grown my debt and now it’s haunting me..bank

keeps calling at my office..i thought having a credit
card is great but I’m wrong coz now my debt is
greater than my income..i hate this kind of life..”

—Anonymous’s comment on http://tracetrajano.com

When I ask the question, “What is the one thing

that is stopping you from getting out of the ‘rat
race’ and onto the fast track?” one of the most
common answers is debt. It’s a variation of “Hey
Trace, I’m earning enough for my family but I have
this big credit card debt… It’s ₱100,000… How will
I be able to get out of this?

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That’s one of the most common things that I’ve

read in my blog comments, so in this chapter,
we’re going to solve that problem. As the title of
this chapter goes, to get out of debt, you set it and
forget it. Later on, I will show you how you can do
that.

Is Debt the Death of Your Dreams?

The answer to that is “Absolutely Not!” You can

turn this debt — this stumbling block – into your
stepping stone. Because here’s the thing: debt is
finite but your income, if you set it correctly, is
infinite. Let me repeat that. Debt is finite but
income is infinite. Think about it.

Let’s say you buy a piece of property. Imagine you

have millions of pesos and you can buy a piece of
property i.e. five-storey building. It will produce
₱1million pesos a month in income or cash flow, so
whether or not you work, you get one million pesos
a month in cash flow; and that’s forever — until the
property is standing there. You can pass it on to
your heirs. That’s why your income is infinite;
whereas your debt is always finite. It will, at some
point, end.

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So take comfort in the fact that you can create

infinite income. As we know in Mathematics, no
matter how big a number is, it’s always smaller
than infinite. Here’s the other thing I’d like you to
think about. I want you to be undeterred by debt
and use it instead as your stepping stone to
financial success.

Here’s the truth: Your past does not determine

your future. You can change your future by
changing your present, by changing how you think
now.

And here’s another truth: what you think about,

comes about. This is called the “Law of Attraction.”
But here’s the problem: the Law of Attraction
cannot distinguish or understand if you put the
word “no” in front of it. It doesn’t see the “no.” It’s
like this: I tell you the statement, “Do not think of a
purple elephant” and you repeat that after me, “I
am not thinking of a purple elephant.” What color
of the elephant are you thinking of? Exactly —
purple. That’s how the Law of Attraction works. So
if you say, “I’m getting out of debt, I’m getting out
of debt.” Then guess what? You will get more debt.
You will attract debt because you are thinking
about debt.

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In order to eliminate debt in your life, as one of my

mentors, Bob Proctor said, “You set up an
automatic debt repayment program so you can
focus on prosperity.” Focus on the positive, which
is wealth or income, not the negative, which is
debt.

This sounds very good, but what exactly is a debt

repayment program? Let me illustrate this in an
example. We’re going to do a little bit of math.
Let’s say you’re a high earner, you’ve been working
for about ten years, you’ve climbed the corporate
ladder and now you’re earning ₱100,000 a month.
This is just an example so do not think that this
will only work for people who earn ₱100,000 per
month. It can work whether your salary is ₱10,000
or ₱5,000 per month, if it’s ₱1 million per month
or USD100,000. It works in any of those cases. I
just want you to get the principle. So going back to
our example, let’s say you owe three people or
three entities:

You owe Ram, the Hard Money Lender — maybe he

is the stereotypical “bombay” doing 5-6 or
whatever. You owe Ram ₱20,000 and you pay
₱2,000 pesos every month.

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You have a Visa credit card at 36% interest. You

owe ₱50,000 and you need to pay a minimum
amount of ₱1,000 a month

You owe ₱50,000 from MasterCard. Minimum

payment is ₱2,000 a month.

You are in deep debt in this example. You actually

owe more than what you earn every month. So let’s
say you are able to allocate ₱10,000 per month for
your debt repayment program.

I’d like you to do a little bit of math. Calculate what

I call the “Debt Cash Strain Factor.” This is your
total balance divided by the minimum payment you
need to make on a monthly basis.

Calculate the “Debt Cash Strain

Factor” (DF)

DF = Loan Balance
Minimum Payment

Lowest DF gets paid off first

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And what I want you to do is pay off the debt with

the lowest Debt Cash Strain Factor first. By doing it
that way, you’ll be able to pay off your debts a lot
quicker than you think.

So in this example, you owe Ram ₱20,000 but you

pay him ₱2,000 a month. The Debt Cash Strain
Factor (DF) is 10. MasterCard has 25 and Visa has
50. The idea here is you pay all of them the
minimum monthly payment required, except for
Ram, to whom you’ll have to pay more than the
minimum amount. I’ll explain why.

Ram: DF = P20,000 = 10
P2,000

MasterCard: DF = P50,000 = 25
P2,000

Visa: DF = P50,000 = 50
P1,000

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Recall that you allocate ₱10,000 per month but you

need to pay a total of ₱5,000 (₱2,000 for Ram,
₱1,000 for Visa, ₱2,000 for MasterCard) as your
minimum payment to all three. It would be a
mistake to pay only the minimum. If you do that, it
will take you forever to pay off your debt.

When you pay Ram first, you pay him ₱2,000 (that’s
the minimum he requires). In addition, you can pay
him another ₱3,000. We don’t want you paying the
minimum only, remember? That means you’ll be
paying him ₱5,000.

And then on Month 2, you do the same thing. But

notice that since you now owe Ram ₱15,000
because you have paid ₱5,000. The interest due, if
you do the math, is P1,500. Because your total
principal has gone down, your minimum payment
should go down as well.

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Introduction
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Month 2

  Ram MC Visa

Balance P15,000 P50,000 P50,000

Payment P1,500 P2,000 P1,000

Additional P5,500 --- ---

And then on Month 3, you do the exact same thing.

Now, notice this. On Month 3, you only owe Ram
9,500 pesos and your monthly interest due is only
950 pesos. Now you can pay Ram even more in
terms of principal. So can you see how your debt
gets paid off a lot quicker?

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Month 3

  Ram MC Visa

Balance P9,500 P50,000 P50,000

Payment P 950 P2,000 P1,000

Additional P6,050 --- ---

If you do the math, basically by Month 6, Ram

would have been paid off. You can now allocate
your payment towards paying off the next one,
which is MasterCard. Instead of paying ₱2,000
pesos only, you should be paying ₱7,000 in
additional principal payment. By the time you pay
off MasterCard, you will have to pay ₱10,000 a
month for Visa.

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Introduction
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Month 6

Ram MC Visa

Balance -- P50,000 P50,000

Payment -- P2,000 P1,000

Additional -- P7,000 ---

Can you see now how you can really accelerate

paying off your debts by doing it this way? It’s a
simple technique. It’s very, very powerful, and it
works! But what If you come up to me and say “Hey
Trace, what if I really made a lot of financial
mistakes and I can’t even afford to pay the
minimum payment anymore?”

Well, there are several things that you can do.

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Step 1: Cut down on living expenses

Forego that grand wedding you’re planning. Make

it simple. Postpone that expensive vacation or that
gimmick. Opt for free or cheaper place of
recreation. No movies, no dinner out. For a while,
seriously cut down on a lot of things. If you can sell
some of those things or gadgets that you’ve
accumulated over the years, do it. It will help you to
also get rid of all the clutter in your house as well.

Step 2: Renegotiate the debt.

Why not try approaching one of the credit card

companies to whom you owe and renegotiate your
debt. As an example, you can call and say “Hey
MasterCard, I owe you ₱50,000 and I pay you
₱1,000 a month. What if I offer you ₱10,000 now
and consider all the ₱50,000 debt gone?”

Some of you might be thinking, “Trace, no, that

doesn’t work in the Philippines.” Well, it does work
in the Philippines and I know because a relative of
mine did this. And in fact, he did this not just once
but several times across the different credit cards
he had. So offering them a big chunk of money
versus their receiving payments in little increments

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is always tempting to them. It could actually be a

Win-Win situation. Why? Because instead of
receiving a little bit of money on a monthly basis,
they can receive a big chunk of cash now. And
guess what — they can write that loan off and they
can lend again. They can lend that ₱10,000 or
₱20,000 that you paid them and so they can make
more money. So it can be a Win-Win situation.

Let’s say you a got a “No” when you offered

₱10,000 to pay off ₱50,000. They asked you to pay
₱25,000 instead and they will write off your
₱50,000 credit card debt. Heck, go for that if you
can raise the other ₱15,000. That would still be far
better than having to pay off ₱15,000. Try
renegotiating your debt. There’s no harm trying
especially if your debt is killing you. Who knows,
your credit card company might just agree to your
proposal.

Step 3: Look for other means of income

What if you’ve been trying to live below your means

and yet you still have a lot of debt? What if you
tried renegotiating your debt and the creditor said
“no”?

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Then now, you have to look for other sources of

income. One way is through real estate. Don’t think
that you need hundreds of thousands of pesos for
this. In fact, you can buy real estate with no money
down. It can be done, wherever you are.

Even in Singapore, there’s a guru who also teaches

people how to buy condos with no money down.
It’s possible in any country, in any market, as long
as homeownership is allowed. There are certain
techniques in buying a house with no money down
and selling it quickly for quick cash.

Jay Castillo, for instance, made 140,000 pesos in

cash — that’s not the equity. That’s cash in his
pocket in just seven days. Think about it: 140,000
pesos in cash. If you had such an amount, what
could it do for you right now? How much of your
debts will be paid off if you can generate that
amount of money in a very short span of time? And
maybe right now, it’s hard to believe it. But it can
happen.

You just have to get the know-how, and get the

right coach so that you’d be able to succeed as
how Jay and my countless students all over the
world have done. You can become my next
successful student if you just seek out the know-
how and the coaching.

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Let me end this chapter in the same way that I

started it, and that is to tell you it’s high time for
you to convert your stumbling blocks into your
stepping stones. One of the greatest motivational
speakers of all time, Norman Vincent Peale, said
that when life throws a dagger at you, you can
either catch it by the blade or by the handle.

So how does that apply to your finances? Well,

granted you have a lot of debt, but so what?
Welcome to the real world. There are a lot of
people with big debts and yet they’re able to turn
their life around. The thing is, there’s always an
advantage for every disadvantage. So you might be
thinking, “What is the advantage of having a lot of
debt?”

Well, having big debts forces you to simplify your

life. That’s one advantage. As I said, you’ll be able
to distinguish better the important things and
needs from your wants. It forces you to simplify
and to make the right priorities. It forces you to get
rid of clutter from your home, or your wardrobe.

Just look hard enough because if you have

accumulated a lot of debt, it’s likely that 90% of
them are things that you don’t even use or see or
enjoy. So it’s high time to simplify your life and
enjoy the things that really matter.

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Now, big debt also forces you to think big. You’ve

probably heard of this story before, but let me tell
you the story again. Donald Trump, as you all
know, back in the late 80’s to early 90’s, got into
financial trouble. In fact, he was in great debt. His
net worth became negative. Personally alone, not
including the debt that his company owed to
creditors, he’s liable for 900 million dollars of debt.

Think about it. How much debt do you have in your

credit card? Do you have 900 million dollars in
debt? I bet not!

When Donald Trump saw a beggar down the street

in New York, he said to himself: “This beggar is
richer than I am.” That beggar was richer than him
because he owed 900 million dollars. Yet he
utilized his big debt to simplify his life, focus on
the things that are really important, and return to
what made him rich in the first place.

He then went into executing and implementing

what needed to be accomplished, into getting more
deals done, and you know what? — in five years, he
was actually richer than before he got into financial
trouble.

If Donald Trump can turn his life around, convert a

900 million dollars of debt into billions of dollars

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of net worth, why can’t you overcome a fifty

thousand, eighty thousand, one hundred thousand
pesos credit card debt? That is nothing. Realize
that big debt gets the winners in life to think big,
to turn their greatest adversity into their greatest
victory.

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