How to Calculate Your Cash Flow Redistribution Matrix for Debt Freedom

Calculating Your Cash Flow Redistribution Matrix for Debt Freedom

As someone who’s spent years studying the hidden mechanics of debt systems, I can tell you that most people are misinformed about how to escape the cycle of debt. They’re led astray by bank-approved advice that focuses on “budgeting harder” or “cutting expenses.” But these strategies won’t get you out of debt – they’ll just slow you down.

The key to debt freedom lies in understanding cash flow redistribution, a concept that’s easy to grasp once you understand the underlying mechanics. So, let’s dive into the math and explore how to calculate your personal cash flow redistribution matrix.

What is Cash Flow Redistribution?

In its simplest form, cash flow redistribution refers to the act of accelerating debt payments by allocating excess funds towards your debts. The goal is to create a virtuous cycle where you’re paying off debt with interest while still enjoying some disposable income.

The Magic Number: Velocity

Velocity is a crucial component of cash flow redistribution. It’s the rate at which you’re generating or reducing debt. To calculate velocity, simply divide your monthly disposable income by your total debt balance.

Velocity = (Monthly Disposable Income) / (Total Debt Balance)

For example, if you have $2,000 in monthly disposable income and a total debt balance of $30,000, your velocity would be:

Velocity = 2000 / 30000 = 0.067 (or approximately 6.7% of the outstanding debt per month)

The Rate Decay Effect

Now that we’ve established velocity, let’s discuss the rate decay effect. This phenomenon occurs when you’re paying off debt with interest. As you make payments, the principal balance decreases while the interest balance increases.

To calculate the rate decay effect, simply apply a mathematical formula to your debt:

Interest Balance = Principal Balance x (Current Interest Rate / 100)

For instance, if you have $10,000 in outstanding principal and an interest rate of 18% per annum, the interest balance would be:

Interest Balance = 10000 x (0.18 / 100) = 180

The Cash Flow Redistribution Matrix

Now that we’ve calculated velocity and the rate decay effect, it’s time to create your cash flow redistribution matrix. This is a personalized plan that allocates excess funds towards your debts.

To construct your matrix, follow these steps:

1. Determine your monthly disposable income
2. Calculate your total debt balance and current interest rate
3. Apply the velocity formula to determine your target monthly payment amount
4. Use the rate decay effect formula to calculate the new interest balance

By following this process, you’ll create a cash flow redistribution matrix that accelerates your debt payments.

In conclusion, calculating your cash flow redistribution matrix is not rocket science – it’s simply about understanding the hidden mechanics of debt systems and applying mathematical principles to accelerate your debt repayment. Don’t believe the banks or the so-called “experts” who claim you need to budget harder or cut expenses. Instead, take control of your finances and create a plan that works for you.

As someone who’s reverse-engineered the debt system, I can attest that this approach has worked for me – cutting my payoff time in half. You can do it too, with the right knowledge and mindset.