Ok. I finally understand what you are saying. If we request a line of credit, it will have a monthly payment associated with the line of credit. For example, if our limit is $20k and the payback is $286 /mo, we deposit our paychecks into the line of credit balance (which satisfies a line of credit payment made each month) and then withdraw the $ we just deposited to pay the monthly expenses. Most credit cards and amoritization payments will have a higher interest rate than a line of credit, so essentially we are able to save $ and pay off debt at a lower interest rate by shuffling our normal paycheck $ into the loc and withdrawing the same $ to pay monthly bills.
I get everything except one thing. Does the bank still take the $286 from your account each month? Is that $286 payment still figured into the monthly expenses? I cannot wrap my head around this one point.
The payment on the lock is satisfied when you deposit your paycheck into. Then you withdraw the money as needed and put into other accounts to pay bills.
Your take is quite informative. I wish more RUclipsrs would put the same effort into producing a video. Anyway, thank you for explaining on how to use HELOC for debt payoff
As a landlady wanting to buy rental property and the interest on the Mortgage being a tax write off. Is it still a good idea to get a HELOC line of credit? I am interested in borrowing 100 K
I understand it now,,but I need to improve my credit so I can get a 25000 equity line,,by summer .thank you much and it is so nice that you dont make people pay to watch viedos,,God Bless you fir helping all of us,Charlotte 8:288:28
Hi Van. Will the bank let you use a HELOC to pay down the mortgage you have with them? Apologies I am just now learning this whole velocity banking thing thanks to your channel. I am now in year 15 of a 30 yr fixed @ 4.5%
simple answer is yes. She has several videos on how to do that. I am just 2 months into this myself. It is best of you watch as many videos as you can to get the overall understanding. Good Luck
Great video. I actually just closed on a heloc today. I plan to use it starting off to pay off credit cards. In your scenario, do I need to use that same heloc account and set up online banking with it? Or do I just write a check to myself and deposit it in the bank I usually pay my bills from? I'm still confused with that part.
I just got approved for a large heloc on my home. One of the different things about their terms is they are offering a fixed rate for 5.15 but the draw and repayment periods are both in the same 10 years. The payment is a minimum of 100 per 10k withdrawn. So if I withdrew 20k, the payment would be $200. Should I be concerned about these terms? I don’t plan on just sitting on large debt in the heloc anyway but I haven’t seen anyone else with terms like these.
For what i get is the line of credit amount will be deposit in your checking account from there you start moving your money the point is not to end up broke and have money in you account
So, if you put your paychecks into a heloc, do they still charge you interest ? I still don't see how the balance comes down, just by depositing paychecks. or, is it because the paychecks brought the total down for a little portion of the month?
This is a great video! And you're so down to earth when explaining. Thank you!! Closing on a HELOC tomorrow and trying to figure out the best things to do to pay off credit card debt, i need a new vehicle, etc. I still struggle with understanding how the min monthly payment for the LOC "goes away" when you do this though. I feel so dumb. Isn't that payment still coming out of the income amount somehow?
Great video...I have a HELOC that I will pay down using this method, however, I am confused as to how I will use it i.e. Will I get a debit card connected to the HELOC account and transfer funds from the HELOC to pay my bills every month? I am trying to automate as much as possible. I know I can't have the bills directly coming out of the HELOC. Please advise and btw, great videos. I have viewed a ton on yours.
my HELOC is through my credit union that I also have a checking account at. They give me checks but I can also just transfer the money electronically back and forth between the HELOC and checking.
I almost have it. But I need to know, (example as shown above) when you park your income in the HELOC that is going towards all principle? I don't think I've seen a video that states this, or I missed it. So if I take out a $20000 Heloc and direct deposit my income into it (example income $5000), then my principle has just gone down $5000 minus the HELOC payment and mortgage payment? Forget everything else, say had zero monthly expenses that month except the HELOC bill and the mortgage payment.
@4pieceoriginal I just always transferred my income as I was paid into the HELOC and didn’t bother applying principal only payments because any income transferred into the line reduces the balance regardless.
I understand the simple interest is better than amortized interest, but after heloc jumps after it’s low interest intro period, should you use your 9% heloc to pay off your 3% mortgage?
I have a line of credit with my bank, how do I pay bills from it each month if I put my pay in it? Do I transfer it to checking as bills come in? Thank you.
Most HELOC (Line of Credit) offer A debit card to use to pay bills. Some people just transfer the funds from HELOC to Checking account as well. but the Debit card is most popular. Hope this helps.
Your line of credit has an acct number and your card is a credit card. Just be careful on when those transactions happen because it could make interest payments higher. Also you have to be super discipline with spending.
If you were struggling to make the $2786 monthly payments ($2500 expenses plus $286 HELOC), then how will it be easier to make a $3500 payment to the HELOC? Why would you not just pay your $2500 expenses then make a $1000 payment to the HELOC. What needs to change is the discipline needed to steadfastly pay down debt without incurring any new debt. If that discipline doesn't change then you will find yourself drawing out more money from the HELOC than you are paying it down and you will still be incumbered by debt.
It’s the same thing as just paying down $1000 a month. From my understanding, you add the $3500 to your HELOC because it reduces the interest because it shows your balance as a $3500 lower vs $1000 lower.
@@CarrieFinley-g1mok now I see! If rates increase the person is screwed. Why not just do a debt consolidation in the first place and not risk losing the house over 20k 🤷🏿♂️
the only issue i have is you said you didn't know where you were going to get the 280 for the Heloc loan payment but somehow you had 3500 income and only 2500 expenses. Well, there is 1000 buck to pay on the loan and your interest payment. So im not understanding the logic
Why would you pay your utilities with anything with interest? They don't have interest to begin with. And if your car payment has lower interest, why would you put to a higher interest? I did use heloc and only put home principle on it
😂😂😂 Because youd want 3500 off of the 20000 balance as opposed to just 1000 where daily compound interest off of the balance and simple interest as opposed to front loaded interest for mortgage or car lol
If you had $20,000, then you would need to make a monthly payment on it to satisfy the line of credit. She is saying that you can deposit the amount of money you normally use to pay your bills every paycheck (in this example $3500) into the loan. Technically the 20,000 balance - 3500 payment leaves a loan balance of 16,500. Although the line of credit itself is to be paid back at $286/mo, you satisfied the payment by depositing the amount you would have normally paid for your bills anyways. This way, you pay less in interest and have a large sum of $ available to use at one time. As far as your monthly bills, you are withdrawing the amount needed for your bills from the loc. Yes, it will temporarily increase the loc balance amount again, but at a lower interest rate than if you paid the minimum on a credit card or mortgage.
I think it's because it's a "loan" and you owe that. So by putting your paycheck in, you are basically making a payment to pay back the full 20k you owe. It's not you have spent the 20k...it's that it is money you owe a bank and so you don't add to that, you pay it back.
Remember, this method isn’t just about the loan amount, it also accounts for cashflow. The cashflow from applying your entire paycheck to the balance ($23.5K) will be a faster payoff then trying to pay off each respective debt month to month.
The reason why the $20,000 debt went to $18,000 in month 2 because there is a $1000/month difference between income and expenses. TLDR: income should be more than expenses
The whole math is wrong imo. When you take out that $20k you're -$20k. When you put back $3500 all you can operate are those $3500. And in order to go to zero balance with putting the $1000 cash flow you need 20 months to do it...
@@stanlystanly9964 that’s how I was. But I put together spreadsheet and eventually after 2-3 times going over on paper… it made sense. But you have to stay discipline to spending because you will be left with a lot more cash flow each month. Also if you get paid biweekly then definitely you have to be know when the interest day hits or closing day on credit card because you want the amount reported to be the lowest every month. You’ll get it once you write it down and figure out expenses.
I know my numbers! This is game changing Christy! 😮😊
@colette It is a game changer!! Thanks for watching!
Ok. I finally understand what you are saying. If we request a line of credit, it will have a monthly payment associated with the line of credit. For example, if our limit is $20k and the payback is $286 /mo, we deposit our paychecks into the line of credit balance (which satisfies a line of credit payment made each month) and then withdraw the $ we just deposited to pay the monthly expenses. Most credit cards and amoritization payments will have a higher interest rate than a line of credit, so essentially we are able to save $ and pay off debt at a lower interest rate by shuffling our normal paycheck $ into the loc and withdrawing the same $ to pay monthly bills.
I kinda get it but I'm still a little confused. I am really thinking hard on how to get rid of debt.
I get everything except one thing. Does the bank still take the $286 from your account each month? Is that $286 payment still figured into the monthly expenses? I cannot wrap my head around this one point.
The payment on the lock is satisfied when you deposit your paycheck into. Then you withdraw the money as needed and put into other accounts to pay bills.
@@ralphwilkins1326ahhh.. well said. I get it now. Thanks.
@@meggo301 that payment is satisfied......your cash flow is what pays it down because your not taking it out the line of credit.....
Best explanation I’ve seen. I just started my first month leveraging this.
Your take is quite informative. I wish more RUclipsrs would put the same effort into producing a video. Anyway, thank you for explaining on how to use HELOC for debt payoff
Thank you! And thanks for watching!
As a landlady wanting to buy rental property and the interest on the Mortgage being a tax write off. Is it still a good idea to get a HELOC line of credit? I am interested in borrowing 100 K
Id say yes.
I understand it now,,but I need to improve my credit so I can get a 25000 equity line,,by summer .thank you much and it is so nice that you dont make people pay to watch viedos,,God Bless you fir helping all of us,Charlotte 8:28 8:28
Hi Van. Will the bank let you use a HELOC to pay down the mortgage you have with them? Apologies I am just now learning this whole velocity banking thing thanks to your channel. I am now in year 15 of a 30 yr fixed @ 4.5%
simple answer is yes. She has several videos on how to do that. I am just 2 months into this myself. It is best of you watch as many videos as you can to get the overall understanding.
Good Luck
My question, too. Waiting on a response from my bank.
Great video. I actually just closed on a heloc today. I plan to use it starting off to pay off credit cards. In your scenario, do I need to use that same heloc account and set up online banking with it? Or do I just write a check to myself and deposit it in the bank I usually pay my bills from? I'm still confused with that part.
email her on her web site
I just got approved for a large heloc on my home. One of the different things about their terms is they are offering a fixed rate for 5.15 but the draw and repayment periods are both in the same 10 years. The payment is a minimum of 100 per 10k withdrawn. So if I withdrew 20k, the payment would be $200. Should I be concerned about these terms? I don’t plan on just sitting on large debt in the heloc anyway but I haven’t seen anyone else with terms like these.
What bank was this?
For what i get is the line of credit amount will be deposit in your checking account from there you start moving your money the point is not to end up broke and have money in you account
So does the HELOC have to be on a fixed payment? Right now we're paying interest only, so it wouldnt put anything to principle?
I guess I'm confused about pulling the expenses out. It's not a checking account. How do I pay the bills?
Move/transfer the funds from HELOC into checking account and from there you can write checks, take cash, or Zelle transfer etc.
So, if you put your paychecks into a heloc, do they still charge you interest ? I still don't see how the balance comes down, just by depositing paychecks. or, is it because the paychecks brought the total down for a little portion of the month?
This is a great video! And you're so down to earth when explaining. Thank you!! Closing on a HELOC tomorrow and trying to figure out the best things to do to pay off credit card debt, i need a new vehicle, etc.
I still struggle with understanding how the min monthly payment for the LOC "goes away" when you do this though. I feel so dumb. Isn't that payment still coming out of the income amount somehow?
No…it’s satisfied. Only interest applies…
Great video...I have a HELOC that I will pay down using this method, however, I am confused as to how I will use it i.e. Will I get a debit card connected to the HELOC account and transfer funds from the HELOC to pay my bills every month? I am trying to automate as much as possible. I know I can't have the bills directly coming out of the HELOC. Please advise and btw, great videos. I have viewed a ton on yours.
my HELOC is through my credit union that I also have a checking account at. They give me checks but I can also just transfer the money electronically back and forth between the HELOC and checking.
I almost have it. But I need to know, (example as shown above) when you park your income in the HELOC that is going towards all principle? I don't think I've seen a video that states this, or I missed it. So if I take out a $20000 Heloc and direct deposit my income into it (example income $5000), then my principle has just gone down $5000 minus the HELOC payment and mortgage payment? Forget everything else, say had zero monthly expenses that month except the HELOC bill and the mortgage payment.
@4pieceoriginal I just always transferred my income as I was paid into the HELOC and didn’t bother applying principal only payments because any income transferred into the line reduces the balance regardless.
I understand the simple interest is better than amortized interest, but after heloc jumps after it’s low interest intro period, should you use your 9% heloc to pay off your 3% mortgage?
Amortized loans are interest front loaded. Paying into the principal early on will reduce your total payoff.
How do you put money in and take money out for expenses if it's not tied to your bank account
I believe You’re supposed to get a heloc that’s tied to a checking account. She always says make sure it’s the right heloc. They aren’t all the same
I have a line of credit with my bank, how do I pay bills from it each month if I put my pay in it? Do I transfer it to checking as bills come in? Thank you.
I’ve been wondering the same thing.
I have this question too
Most HELOC (Line of Credit) offer A debit card to use to pay bills. Some people just transfer the funds from HELOC to Checking account as well. but the Debit card is most popular. Hope this helps.
Your line of credit has an acct number and your card is a credit card. Just be careful on when those transactions happen because it could make interest payments higher. Also you have to be super discipline with spending.
If you were struggling to make the $2786 monthly payments ($2500 expenses plus $286 HELOC), then how will it be easier to make a $3500 payment to the HELOC? Why would you not just pay your $2500 expenses then make a $1000 payment to the HELOC. What needs to change is the discipline needed to steadfastly pay down debt without incurring any new debt. If that discipline doesn't change then you will find yourself drawing out more money from the HELOC than you are paying it down and you will still be incumbered by debt.
It’s the same thing as just paying down $1000 a month. From my understanding, you add the $3500 to your HELOC because it reduces the interest because it shows your balance as a $3500 lower vs $1000 lower.
@@CarrieFinley-g1mok now I see! If rates increase the person is screwed. Why not just do a debt consolidation in the first place and not risk losing the house over 20k 🤷🏿♂️
I have a HELOC for $200,000 but how much should I send to the mortgage?
She has videos on the paydown of a big HELOC on mortgages. I've seen one that shows $100k payment every year.
the only issue i have is you said you didn't know where you were going to get the 280 for the Heloc loan payment but somehow you had 3500 income and only 2500 expenses. Well, there is 1000 buck to pay on the loan and your interest payment. So im not understanding the logic
Exactly. Looks like in those 2 months they could have tossed 2 grand at it coming to same total
She said she didn’t remember exactly what her income was at the time and also this is just an example to show us how it works
How does the mortgage comes out of the Heloc? Through a check payment? Because you cannot pay it with a credit card.
Why would you pay your utilities with anything with interest? They don't have interest to begin with. And if your car payment has lower interest, why would you put to a higher interest? I did use heloc and only put home principle on it
So basically your paying like $1k a month on it?
How does one apply for a heloc?????
How do I get started with this?
Just checked and my HELOC only offers 10 checks at a time, NO debit card. Help!
Why wouldn't you just only deposit the $1,000 that you have left over and leave the rest of the money in your account?
Yea this is the part that I’m confused on.
😂😂😂 Because youd want 3500 off of the 20000 balance as opposed to just 1000 where daily compound interest off of the balance and simple interest as opposed to front loaded interest for mortgage or car lol
😂😂😂 So in other words the $3500 per month shaves off more interest than just $1000 lol
Its funny how since youve been doing this everybody and his brother has a video on valosity banking.
Getting in to debt to pay off debt. lol. Smart plan.
So you had $20,000 if you add $3,500 to it that is $23,500 balance Right? So I’m lost from the start. Lol Please explain that.
Watch the video again it will explain it. It took me a little while to understand this concept. God Bless you.
If you had $20,000, then you would need to make a monthly payment on it to satisfy the line of credit. She is saying that you can deposit the amount of money you normally use to pay your bills every paycheck (in this example $3500) into the loan. Technically the 20,000 balance - 3500 payment leaves a loan balance of 16,500. Although the line of credit itself is to be paid back at $286/mo, you satisfied the payment by depositing the amount you would have normally paid for your bills anyways. This way, you pay less in interest and have a large sum of $ available to use at one time. As far as your monthly bills, you are withdrawing the amount needed for your bills from the loc. Yes, it will temporarily increase the loc balance amount again, but at a lower interest rate than if you paid the minimum on a credit card or mortgage.
I think it's because it's a "loan" and you owe that. So by putting your paycheck in, you are basically making a payment to pay back the full 20k you owe. It's not you have spent the 20k...it's that it is money you owe a bank and so you don't add to that, you pay it back.
Remember, this method isn’t just about the loan amount, it also accounts for cashflow.
The cashflow from applying your entire paycheck to the balance ($23.5K) will be a faster payoff then trying to pay off each respective debt month to month.
So stop using my debit card instead use the line of credit to pay off my stuff?
The reason why the $20,000 debt went to $18,000 in month 2 because there is a $1000/month difference between income and expenses. TLDR: income should be more than expenses
You're just moving your debt, not paying anything off.
I need to know what to ask the bank for in terms of a heloc and allowing us to move money in and out several times a month.
My heloc is from a different bank than my mortgage. So I transfer the payment from one bank to another.
WOW
The whole math is wrong imo. When you take out that $20k you're -$20k. When you put back $3500 all you can operate are those $3500. And in order to go to zero balance with putting the $1000 cash flow you need 20 months to do it...
You’re confusing yourself. If you’re trying to find the bad side of this, it’s not being disciplined with expenses. It works
@beebegotti5540 its not that im looking for the bad side, I just don't get the math.
@@stanlystanly9964 that’s how I was. But I put together spreadsheet and eventually after 2-3 times going over on paper… it made sense. But you have to stay discipline to spending because you will be left with a lot more cash flow each month. Also if you get paid biweekly then definitely you have to be know when the interest day hits or closing day on credit card because you want the amount reported to be the lowest every month. You’ll get it once you write it down and figure out expenses.
What is meant by "a 10 year draw, and 10 years to pay it back?"
This is what I don't get either
The first ten might be interest only and the next ten years is interest and principal
I did not understand this at all!!!!