Slides 1 through 5

slide2: how money works

Making Your Money Work for You

If you have any debt (or if you are financing home improvement), you should never let your money sit idle in a bank checking account.

Money sitting in your checking account is not working for you; it is only making money for the bank.

For this demonstration:
let's say that your monthly net income is $5,000 (paid in two increments bi-monthly) and your monthly living expenses are $4,000.

(we will demonstrate how this program can be used for home improvement)

Your bank checking account would look like this:

Date	From	To	Withdrawal	Deposit	Balance
July	Pay	Direct Deposit		$2500	$2500
July	Checking	Mortgage Pay	$1250		$1250
July	Checking	Living	$1000		$250
July	Pay	Direct Deposit		$2500	$2750
July	Checking	Auto Loan	$500		$2250
July	Checking	Living	$500		$1750
July	Checking	Living	$750		$1000
Ending Month			$4,000	$5,000	$1,000

 

 

Why Let the Bank Use Your Money?

What the diagram illustrates is that the bank had access to your positive account balance throughout the month paying you zero or little interest for that use.

Banks then turn around and use that money to lend to consumers and businesses at higher rates.

How About Letting You Use That Money

The "Banker" credit line program will work just like a bank by using your positive cash balance to finance home improvement and other life-events.

slide3: use as checking account

Using Your BLOC Like a Checking Account

Instead of using your checking or savings account to manage and hold money, use your BLOC as your primary money account.

Understand these concepts:

• the BLOC is not a savings account
• the BLOC functions as a tool to manage financing
• your BLOC should not drop below a zero balance
• use your BLOC to payoff debt and to finance needs
• payments made into the BLOC will force an adjustment to the principal balance

Your BLOC account would look like this if you had $3,500 in credit card debt to pay off:

BLOC Account Starting Credit Line Balance: $60,00
Date	From	To	Advance from BLOC	Payment to BLOC	BLOC Balance Due
July	BLOC	Payoff Credit Card Debt	$3500		$3500
July	Pay	Deposit Paycheck into BLOC		$2500	$1000
July	BLOC	Pay Out Living Expense	$1250		$2250
July	BLOC	Pay Out Living Expense	$1000		$3250
July	Pay	Deposit Paycheck		$2500	$750
July	BLOC	Living Expense	$500		$1250
July	BLOC	Living Expense	$500		$1750
July	BLOC	Living Expense	$750		$2500
Total Ending Month BLOC			$7500	$5,000	$2500

 

 

What Does This Show

	Opening Credit Line Balance	$0
	Paid Off Credit Card Debt	- $3,500
	Pay Living Expenses	- $4,000
	Balance Owned	- $7,500
	Deposit Income Payments	+ $5,000
	Ending Balance Owned	- $2,500

 

 

In Summary:

• your starting balance was $3,500
• your ending balance was $2,500
• you paid off all credit card debt
• you never made a schedule payment to the BLOC:
• your income represented your monthly payment
• you borrowed $7,500 from the BLOC
• you will only pay interest on the average daily balance
• (in this example, your avg. daily balance for the month approximated around $2000. Interest charges would be about $10-12 per month at 6%).
  

slide4: funding options

Another "Funding Option" Example

Let's say that you need to install new windows in your home. The cost for the windows and installation is $10,000.

You can get a home improvement loan through the window supplier to finance the cost at the following terms (sample only, actual terms may differ):

Loan Amount: $10,000
Fixed Rate: 7.50%
Repayment Term: 120 months
Monthly Payment: $118.70

The total amount of interest and principal paid over the 120-month term at 7.50%:

Total Payments	$14,244
Total Interest Paid	$4,244
Total Principal Paid	$10,000

Your loan repayment plan would look like this:

Month	Starting Balance	Monthly Payment	Interest	Principal
1	$10,000.00	$118.70	$62.50	$56.20
2	9,943.80	118.70	62.15	56.55
3	9,830.34	118.70	61.80	56.91
4	9,773.08	118.70	61.44	57.26
117	467.48	118.70	2.92	115.78
118	351.70	118.70	2.20	116.50
119	235.20	118.70	1.47	117.23
120	117.96	118.70	0.74	117.96
Total:		$14,244	$4,244	$10,000

 

 

In this Example

An amortization schedule is calculated that shows that the borrower must pay $118.70 each month for 120 months in order to meet the interest obligation and to pay down the borrowed amount to $0 over 10 years.

The interest charges for the first month is calculated as such:

$10,000 X 7.50% (divided by) 12 months = $62.50

In the first payment, the borrower pays the lender $62.50 in interest. The remaining amount of $56.20 will repay the loan and reduce the borrowed amount to $9,943.80.

The interest charges for the second month is calculated as such:

$9,943.80 X 7.50% (divided by) 12 months = $62.15

In the second payment, the borrower pays the lender $62.15 in interest. The remaining amount of $56.55 will repay the loan balance and reduce the borrowed amount to $9,830.34.

This will continue all the way through the 120th payment, where the borrower pays the lender $0.74 in interest. The remaining amount of $117.96 will repay the loan balance and reduce the borrowed amount to $0. The loan obligation has been paid off.

 

slide5: fund using BLOC

Let's Use Your BLOC to Pay Home Improvement

Let's take the same example and use your BLOC to finance home improvement. Total cost: $10,000.

Your BLOC account would look like this:

BLOC Account Starting Credit Line Balance: $60,000
Date	From	To	Advance from BLOC	Payment to BLOC	Balance Owned
Aug Beginning Balance					$2500
Aug	BLOC	Pay Contractor	$10,000		$12,500
Aug	BLOC	Living Expenses	$4000		$16,500
Aug	Pay	Paychecks		$5000	$11,500
Total BLOC			$14,000	$5,000	$11,500

 

What Does This Show

	Balance Forward from July:	- $2,500 (tab3)
	An Advance from your BLOC	- $10,000
	Pay Living Expenses	- $4,000
	Balance Owned	- $16,500
	Deposit Payment	+ $5,000
	Ending Balance Owned	- $11,500

 

 

In Summary:

• your starting balance was $2,500
• your ending balance was $11,500
  
• you financed the windows,
• which saved you from taking on other debt
• you never made a schedule payment to the BLOC;
• your income represented your monthly payment
• you borrowed $14,000 from the BLOC
• you only pay interest on the $11,500 balance,
• which included a credit card payoff of $3,500
• (in this example, your avg. daily balance for the month would approximate around $13,000, which included the credit card payoff. Interest charges would be about $80-85 per month at 8%.
  
  Without the credit card payoff charges, your avg. daily balance for the month approximate around $9,000. Interest charges would be about $60 per month at 8%).
  
  let's review this further in the next slide

 

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