OK, now that you have an understanding of 1 EQUALS 5, and even better, 2 EQUALS 1,000, let’s take the next step.
Not everybody has $10,000 just sitting around that they can apply to their mortgage and save $50,000. But that’s exactly why the formula is 1 EQUALS 5. It all starts with $1. Every $1 makes a difference! The financial magic happens when you make a cut and save/invest!
The following numbers are for Shawn in the book and are used for illustrative purposes. Check out the 1=5 calculator for your own scenario.
Let’s look at the first example. Lunch. You can’t just cut lunch from your daily diet, right? But do you have to spend $15 on lunch? When you have a mortgage, a $15 lunch actually costs you $104.31!
That designer outfit for $299? Yeah, it’s pretty boujee! But when you have a mortgage, its actual cost is over $2000!
How about a new gadget (i.e. iPhone). It’s only $823, right? Well, you could have paid that extra towards your mortgage and saved over $5,600!
No way. Right?
Well, it’s just math!
Let’s keep going! You’ve saved up $15,000. You deserve a vacation, right? Well, that $15,000 dream vacation is actually worth $89,000! But not only that, you could have paid off your mortgage 4.6 years earlier. Daaaang!!! (But you can’t just be a complete miser. You need vacations! But, just take a cheaper vacation now, and then splurge later, when you’re not making interest payments!)
New boat? (This is on the cheap end…..)
- $40,000 boat = 10.25 YEARS of mortgage payments
- $40,000 boat = $195,000 in savings
How about a new EV? Think of all the gas money you’ll save!
- $66,000 EV = $276,000 in savings
- $66,000 EV = 14.5 years of mortgage payments
The point is: $1 is worth A LOT more than $1, when you’re prudent. Every $1 extra added to your mortgage payment is a fabulous investment. Yes, you need lunch! But do you need a $15 lunch? Yes, you need transportation, but do you need $66,000 transportation?
1 EQUALS 5.