Your Balance Sheet

Asset & Liability Accounts

Restructuring The Balance Sheet For Cash Flow

Reference to Money Quadrant - 4 Types of Assets/Liabilities

Adding Accounts


Debt Payoff (CDE)

Compound Debt Elimination (CDE) System

Set the values below for your personalized debt freedom plan.


  1. Increase your Accelerator Amount to eliminate debt even faster

  2. Increase your Earned Income to apply more Accelerator towards debt via ND1 ratios

  3. Roll FCF from debt payoff into T2 Cash Flow Assets to compound and accelerate your Unearned Income growth and reach your Freedom and Lifestyle Numbers even faster

Below is your debt payoff order. Start with the first debt on the list (the initial “target debt”). You'll pay the minimum payment plus your Accelerator Payment (ie; the New Monthly Pymt) until paid off at which time you'll roll debt 1 payment into debt 2 and so fourth. Continue making minimum payments on your other debts while paying down and accelerating your "target debt". Print or screen shot a copy of this plan as it may change as you update your Liability account balances monthly.

Capital Allocation (ND2)

Wealth Account Rules Based System

ND2 is the second formula in our non discretionary rules based system. It is how we manage our ND1 “Wealth Account” capital to generate Unearned Income (money that works for us: ie; interest, dividends, capital gains, rents, royalties, profits) and over time, build a fortress balance sheet.

Assets on your balance sheet are either making you richer or poorer, adding or decreasing risk, maximizing or minimizing liquidity.

ND2 rules consist of T1 cash and cash-like assets (liquidity), T2 cash flow assets (investments), T3 appreciating assets (speculations) - see TWF Money Quadrant.

Our TWF system recommends the following target Capital Allocation ND2 ratios (these are the defaults but you can customize it per your needs):

  1. 10% - T1 Liquidity (and/or chaos hedge, safety)

  2. 70% - T2 Cash Flow Assets (and/or long term core, income)

  3. 20% - T3 Speculations (and/or short term trades, growth)

Keep in mind your ND2 rules are high level “target” ratios meant to act as a key “instrument” on your Wealth Dashboard, letting you know how far on or off track you might be, when you might be taking on more risk than you want. You may rarely if ever have a balance sheet that matches your target ratios perfectly as things will always be in flux. They can also be used to help “tilt” your capital allocations during certain market conditions.

Why does my "Wealth Account" balance not equal my Net Worth on my balance sheet? When you add Asset accounts to your Balance Sheet (via Accounts), for each account you select either Consumer, Depreciating Asset, Appreciating Asset, Cash Flow Asset (ie; see TWF Money Quadrant). Only Assets marked Consumer or Depreciating with “T1 liquidity/chaos hedge?” checked will be included in your T1 ratios. Cash Flow Assets get included in T2 and Appreciating Assets get included in T3. These are Assets identified as part of the “Wealth Account” portion of your balance sheet with strategic importance towards helping you achieve financial freedom. Not all “assets” on your balance sheet will be included. An automobile for example will be marked as a Depreciating Asset but should not be part of your T1 allocation.

Another note. If you have a primary residence valued at $250,000 (a Depreciating or Appreciating Asset) and a mortgage with a $200,000 balance (a Liability or debt attached to the residence), the difference of $50,000 equity can show up 3 different ways: a) part of your “Wealth Account” and T3 if marked Appreciating Asset, b) part of your “Wealth Account” and T1 if marked Consumer or Depreciating Asset AND “T1 liquidity/chaos hedge?” is checked, or c) not at all if marked Consumer or Depreciating Asset and “T1 liquidity/chaos hedge?” is NOT checked.

Another example: If you have a primary residence but part of it is rented out and generating positive cash flow income, then you can simply add 2 separate Asset accounts both representing the total value of the home. Mark the first account as you would normally for a residence (either Depreciating or Appreciating Asset) but mark the second account as a Cash Flow Asset with its respective values (ie; yield). In this example, the same asset can take on more than one characteristic and be displayed accordingly in your ND2 ratios. The Cash Flow Asset portion and its values will also show up in your Compound Return (MOAC) projections and charts (if not marked “Exclude from compound return calc?”).

Compound Return (MOAC)

Building A Base Of Cash Flow Assets - Compound Asset Growth System

The Compound Return module is a powerful visualization tool to create passive income through cash flow and other types of assets. Its unique flexibility gives you ability to see present and future value of money and to forecast unlimited scenarios on virtually any combination of asset and investment types.

Start with the balance sheet. Once you have your assets fully accounted for you can start running some very interesting projections and simulations to answer many questions and help make better decisions.


Select Balance Sheet: Select the balance sheet you want to use; either Default (your actual balance sheet) or run a simulation with a new or previously saved experiment.

Freedom Number: The calculator will check every month if income from existing assets matches or exceeds your Freedom Number. If your Freedom Number is not met during the Years Invested provided, an error message will appear. Otherwise, the calculator will display the exact month and year this goal is reached.

Lifestyle Number: The calculator will check every month if income from existing assets matches or exceeds your Lifestyle Number. If your Lifestyle Number is not met during the Years Invested provided, an error message will appear. Otherwise, the calculator will display the exact month and year this goal is reached.

Years Invested: The number of years results should be calculated.

Earned Income: The amount of monthly Earned Income or Wealth Account money from your ND1 budgeting ratios, to be applied towards compound asset acquisition, growth and income.

Unearned Income: Monthly income from Assets that are not automatically reinvested (ie; rental property) to be applied towards assets that can be (ie; stocks).

Annual Contribution: A lump sum added each year to purchase new assets (will be calculated at the end of the year cycle).

Annual Increase: The percent yearly increase of the annual contribution.

Annual Withdrawal: To account for annual income received, it will be withdrawn and deducted from the balance of the asset(s). If Portfolio, this amount will be subtracted from the year-end-balance. If Individual Stock or Unit, the asset will be sold and share or unit count reduced in order to pay out the withdrawal.

Starting Year: The year the withdrawal will begin.

Volatility/Drawdown: The percentage decrease the asset(s) are expected to encounter in a severe market correction. The decrease is calculated at the end of the year based on time frame selected.

How Often: How often (in years) the volatility/drawdown decrease is applied.

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