I was a little confused about Velocity at first but this video right here is spot on. And the reference to boiling water was Great!!!!! Thanks for the video!!!!
Great video. I've watched many velocity banking videos over past 3 years. This is first time I came across yours. Your explanation is so much clearer. Thank you. 😊
@@landa3121 yes it’s clear that it doesn’t save you money doesn’t pay off debt faster it only adds risk ! Adds risk but there is no upside so you have to be ignorant at math to think it works
It’s probably best to go on and pay your mortgage and car notes out of your income then whatever is left throw that at your credit card. Because most companies won’t let you pay a mortgage or car notes with a credit card. So in this example… you could take $1200 mortgage amount plus the $600 car notes $1800 off your $5,000 income and just use $3,200 as your income because you’re going to pay your mortgage and car payments first.
Exactly right. Also he misuses terms such as cash flow, amortization, simple interest and compound interest. Taking a loan at 21% to pay down a loan at 6% is beyond absurd.
Do you not see that paying 21% interest is far worse than 6%? Please compare apples to apples, like this: $10,000 at 21% for 6 months versus $10,000 at 6% for 6 months. Instead you’re comparing interest on $10,000 at 21% for 6 months versus $200, 000 at 6% for 30 years. Also, please Google the definitions of: cash flow, amortization, simple interest and compound interest. Read the agreement for any line of credit or credit card. They all use compound interest, just like a mortgage. Lastly, enroll in a college course on Finance so you can be properly educated and stop spouted objectively wrong information to people.
@@confusedzentradi the thing is, he’s saying you’d be paying the credit card in a large amount each month, so you’re cutting into the interest largely each month.
@@BeingErikaWhite It’s absurd because the math is wrong. Simple logic, 21% vs 6%. Specifically, he is not comparing the interest cost on the same amount over the same period of time Calculate $10,000 at 21% for 6 months vs the same $10,000 at 6% for 6 months. The former results in far higher interest.
You failed to mention to your class that getting a HELOC is NOT as easy as you implied. They'd have to clean up their debt BEFORE they can be approved for HELOC. (Debt to credit ratio)
He forgets to add the CC interest to the balance. Cash flow= income - expenses. He has $1,400 cash flow at the beginning. You most likely cannot pay mortgage and car loans via credit card.
Ive worked in the Casino industry and degenerate gamblers used cash advance from there credit cards constantly. Logic and common sense was thrown out the window. All they wanted was to " Get even " trying to win there $ back. The interest rates are insane but they didn't care. Some people used it to pay for hookers or almost anything BUT its limited. For instance, If you have a 5k limit on your card, the cash advance may be only 1k. Blessings
I just started watching VB videos. This is my first time watching yours. I understand paying your bills with the card and putting my paycheck onto the CC for payment ( I do that with some small bills now) but I'm stuck on the part of the LOC when it comes to paying on the mortgage. I'll have to pay on the LOC and the mortgage at the same time? As I'm writing this I think it's starting to click in my head. I think I'm missing or overlooking something possibly overthinking it. I'm ready to step on the gas to knock out my mortgage in the next 8-10years (sooner if able). Thanks for your video.
Velocity banking as a debt strategy has pros and cons .. it’s fast and it saves a lot of interest money (good presentation on that) .. the risk is that I need to be fully in control of my expenses or else the cc balance doesn’t come down .. using the example where 12k ends up at credit card debt, I’m not sure that shows good control of expense .. and also for risk I would do an e-fund of some sort ( job loss wouldn’t allow even minimum payments to the card)
Such a scam, he doesn’t add the $1,400 extra to the traditional mortgage as an extra payment. That’s more than double the regular $1,200 mortgage payments. Don’t be scammed people!
I won’t sit through this, but I remember watching a video a couple weeks ago. Basically velocity banking was a roundabout way of saying “pay your credit card off every month.” I don’t see the value in it.
@@meesc3556 Worse, a lot of the videos use a basic example claiming it is a good idea to use a credit card with 21% interest to pay down a 6% mortgage. My bad. Posted the comment too soon. He’s using that same absurd example.
The 6% mortgage is 6% on the total amount you borrowed originally, no matter how much u paid off. Even though 21% is insane..I agree with u...that 21% is only on the amount left...example 200k mortgage at 6% whatever is still owed say 100k is still 6% of 2ook not the left 100k this type of interest usage is called amorization. wheresa a c. Card is using "simple" interest meaning only on what u actually owe is charged interest...the more u knock off the amount u owe the less and less % of interest u buy. So even if u add that extra payment for ur mortgage the time length u pay is shorten by ....years...not months like c.card use...BUT ur still paying on the mortgage ...whatever is left..the FULL original amount u took out. Whereas if u paid a chunk on the cc you not only downed the amount owed NOW ur interest rate is applied to only what u still owe.! At today's rates of 7% and up on mortgages ....look at his example again on mortgages... and what the bank has rigged ... look at the money they made in THEIR system" and saying refinancing "helps" you.it just keeps you again for years in their system
@@Lambchop59 Hi Hopeful...actually you misunderstand all the terms that relate to loans. Interest is only ever charged on the outstanding balance. An amortized loan, paid off over many years, charges interest on the outstanding balance. An Amortization Schedule shows this in detail. Examples: 1. Simple Interest means you pay interest only on the original principal of a loan. Let's say you borrow $100 at 10% per year, for three years, interest accrues every year and you will pay the $100 at the end of three years: Date Principal Interest Total Outstanding 1-1-23 $100 $0 $100 1-1-24 $100 $10 $110 1-1-25 $100 $10 $120 1-1-26 $100 $10 $130------>you pay $130 at the end. Interest was 10%, or $10 per year, because it was only caluclated on the original loan, not the interest 2. Compound Interest charges interest on the original principal, as well as accrued interest: Date Principal Interest Total Outstanding 1-1-23 $100 $0 $100 1-1-24 $100 $10 $110 1-1-25 $100 $11 $121 (Interest is $110 * 10% = $121) 1-1-26 $100 $12.10 $133.10 (Interest is $121 * 10% = $12.10------>you pay $133.10 at the end because you paid interest on the interest as well as the original loan. Amortization means paying a loan off until the balance is $0 and the loan is "amort" or dead. The interest is highest at the beginning because your outstanding balance is highest at the beginning. As you make payments, the outstanding balance gradually decreases, meaning the interest gradually decreases, and more of your payment goes to the balance. For example, on a $200,000 mortgage at 6% for 30 years: Date Payment Principal Interest Total Outstanding 1-1-23 $200,000 2-1-23 $1100.43 $100.43 $1000.00 $199,899.57 3-1-23 $1100.43 $100.93 $999.50 $199,798.64 4-1-23 $1100.43 $101.43 $998.99 $199,697.21------>payment is constant, amount going to principal is rising every month, amount to interest is falling every month, because the outstanding balance is falling Follow the Amortization schedule for 360 payments and the balance is 0. Do the same for 21% and you will see the vast difference. As I always say, don't take my word for it. Please just Google: Simple Interest, Compound Interest, Amortization, Amortization Schedule. Happy to answer any questions you have.
@@Lambchop59 Misconception... You only pay interest on the balance owed. In your example when you owe 200K$ at 6% you'll pay a bit less than $12 000 interest during the year (a bit less because with each monthly payment the balance owed decreases). Fast forward to when you owe 100K$ you'll pay less than $6 000 interest during the year. You can verify that on any amortization schedule BTW IF you always paid interest on the original balance this concept of chunking would not help at all
@Sheryl Nygard he’s saying paying everything with your credit card because you’re actually putting your money from working (your paycheck) on your credit card each month.
Monthly expenses go to the credit card: Food, gas, bills... Income goes onto The Line: You pull from The Line to pay the credit card bill and the monthly expense (that can't go on a credit card) to make the payments. Then Income from the next check goes back into The Line. Keeping those interest payments low, low, low.
This is the most clear and thorough explanation of velocity banking that I have found yet! Thank you so much!!
He failed to acknowledge that he stole this exact example from someone else on RUclips
ruclips.net/video/4GonTct2WMk/видео.htmlsi=hSa9gIRAdOKlClyP
I think this was the most helpful explanation of velocity banking that I have come across yet! Thank you!
He failed to acknowledge that he stole this exact example from someone else on RUclips
ruclips.net/video/4GonTct2WMk/видео.htmlsi=hSa9gIRAdOKlClyP
I was a little confused about Velocity at first but this video right here is spot on. And the reference to boiling water was Great!!!!! Thanks for the video!!!!
Great video. I've watched many velocity banking videos over past 3 years. This is first time I came across yours. Your explanation is so much clearer. Thank you. 😊
Yes this is a clear explanation!
Yes this is a clear explanation!
Me too
@@landa3121 yes it’s clear that it doesn’t save you money doesn’t pay off debt faster it only adds risk !
Adds risk but there is no upside so you have to be ignorant at math to think it works
It’s probably best to go on and pay your mortgage and car notes out of your income then whatever is left throw that at your credit card. Because most companies won’t let you pay a mortgage or car notes with a credit card. So in this example… you could take $1200 mortgage amount plus the $600 car notes $1800 off your $5,000 income and just use $3,200 as your income because you’re going to pay your mortgage and car payments first.
Exactly right. Also he misuses terms such as cash flow, amortization, simple interest and compound interest. Taking a loan at 21% to pay down a loan at 6% is beyond absurd.
Do you not see that paying 21% interest is far worse than 6%? Please compare apples to apples, like this: $10,000 at 21% for 6 months versus $10,000 at 6% for 6 months. Instead you’re comparing interest on $10,000 at 21% for 6 months versus $200, 000 at 6% for 30 years. Also, please Google the definitions of: cash flow, amortization, simple interest and compound interest. Read the agreement for any line of credit or credit card. They all use compound interest, just like a mortgage. Lastly, enroll in a college course on Finance so you can be properly educated and stop spouted objectively wrong information to people.
@@confusedzentradi I disagree that it is absurd. He proved his point about the two methods. It’s just not for everyone but it’s not absurd.
@@confusedzentradi the thing is, he’s saying you’d be paying the credit card in a large amount each month, so you’re cutting into the interest largely each month.
@@BeingErikaWhite It’s absurd because the math is wrong. Simple logic, 21% vs 6%. Specifically, he is not comparing the interest cost on the same amount over the same period of time Calculate $10,000 at 21% for 6 months vs the same $10,000 at 6% for 6 months. The former results in far higher interest.
Very clear and concise explanation. Thanks Man!
He failed to acknowledge that he stole this exact example from someone else on RUclips
ruclips.net/video/4GonTct2WMk/видео.htmlsi=hSa9gIRAdOKlClyP
You failed to mention to your class that getting a HELOC is NOT as easy as you implied. They'd have to clean up their debt BEFORE they can be approved for HELOC. (Debt to credit ratio)
When I applied for one the bank was Going to require that I consolidate the cc’s on it and then close the cc’s
Great job explaining this concept Demaka!
He forgets to add the CC interest to the balance. Cash flow= income - expenses. He has $1,400 cash flow at the beginning. You most likely cannot pay mortgage and car loans via credit card.
Ive worked in the Casino industry and degenerate gamblers used cash advance from there credit cards constantly. Logic and common sense was thrown out the window. All they wanted was to " Get even " trying to win there $ back. The interest rates are insane but they didn't care. Some people used it to pay for hookers or almost anything BUT its limited. For instance, If you have a 5k limit on your card, the cash advance may be only 1k. Blessings
Literally went over the interest around the 27 min mark
🔥🔥🔥🔥🔥🔥🔥🔥💯
Absolutely the best explanation I've seen yet. Thank you so much for this video.
He failed to acknowledge that he stole this exact example from someone else on RUclips
ruclips.net/video/4GonTct2WMk/видео.htmlsi=hSa9gIRAdOKlClyP
I just started watching VB videos. This is my first time watching yours. I understand paying your bills with the card and putting my paycheck onto the CC for payment ( I do that with some small bills now) but I'm stuck on the part of the LOC when it comes to paying on the mortgage. I'll have to pay on the LOC and the mortgage at the same time? As I'm writing this I think it's starting to click in my head. I think I'm missing or overlooking something possibly overthinking it. I'm ready to step on the gas to knock out my mortgage in the next 8-10years (sooner if able). Thanks for your video.
Dam, this video app good, I legit just watched it 4 times in a row.
Velocity banking as a debt strategy has pros and cons .. it’s fast and it saves a lot of interest money (good presentation on that) .. the risk is that I need to be fully in control of my expenses or else the cc balance doesn’t come down .. using the example where 12k ends up at credit card debt, I’m not sure that shows good control of expense .. and also for risk I would do an e-fund of some sort ( job loss wouldn’t allow even minimum payments to the card)
You put your income on card and overnight, they cut your available balance down without notice you lose everything!
Yup an that can happen
👍🏽 Thank you for sharing your knowledge
Very informative!
I wish I knew this before😢
Excellent job 👍
Such a scam, he doesn’t add the $1,400 extra to the traditional mortgage as an extra payment. That’s more than double the regular $1,200 mortgage payments. Don’t be scammed people!
I won’t sit through this, but I remember watching a video a couple weeks ago. Basically velocity banking was a roundabout way of saying “pay your credit card off every month.” I don’t see the value in it.
@@meesc3556 Worse, a lot of the videos use a basic example claiming it is a good idea to use a credit card with 21% interest to pay down a 6% mortgage.
My bad. Posted the comment too soon. He’s using that same absurd example.
The 6% mortgage is 6% on the total amount you borrowed originally, no matter how much u paid off. Even though 21% is insane..I agree with u...that 21% is only on the amount left...example 200k mortgage at 6% whatever is still owed say 100k is still 6% of 2ook not the left 100k this type of interest usage is called amorization. wheresa a c. Card is using "simple" interest meaning only on what u actually owe is charged interest...the more u knock off the amount u owe the less and less % of interest u buy. So even if u add that extra payment for ur mortgage the time length u pay is shorten by ....years...not months like c.card use...BUT ur still paying on the mortgage ...whatever is left..the FULL original amount u took out. Whereas if u paid a chunk on the cc you not only downed the amount owed NOW ur interest rate is applied to only what u still owe.! At today's rates of 7% and up on mortgages ....look at his example again on mortgages... and what the bank has rigged ... look at the money they made in THEIR system" and saying refinancing "helps" you.it just keeps you again for years in their system
@@Lambchop59 Hi Hopeful...actually you misunderstand all the terms that relate to loans. Interest is only ever charged on the outstanding balance. An amortized loan, paid off over many years, charges interest on the outstanding balance. An Amortization Schedule shows this in detail. Examples:
1. Simple Interest means you pay interest only on the original principal of a loan. Let's say you borrow $100 at 10% per year, for three years, interest accrues every year and you will pay the $100 at the end of three years:
Date Principal Interest Total Outstanding
1-1-23 $100 $0 $100
1-1-24 $100 $10 $110
1-1-25 $100 $10 $120
1-1-26 $100 $10 $130------>you pay $130 at the end. Interest was 10%, or $10 per year, because it was only caluclated on the original loan, not the interest
2. Compound Interest charges interest on the original principal, as well as accrued interest:
Date Principal Interest Total Outstanding
1-1-23 $100 $0 $100
1-1-24 $100 $10 $110
1-1-25 $100 $11 $121 (Interest is $110 * 10% = $121)
1-1-26 $100 $12.10 $133.10 (Interest is $121 * 10% = $12.10------>you pay $133.10 at the end because you paid interest on the interest as well as the original loan.
Amortization means paying a loan off until the balance is $0 and the loan is "amort" or dead. The interest is highest at the beginning because your outstanding balance is highest at the beginning. As you make payments, the outstanding balance gradually decreases, meaning the interest gradually decreases, and more of your payment goes to the balance. For example, on a $200,000 mortgage at 6% for 30 years:
Date Payment Principal Interest Total Outstanding
1-1-23 $200,000
2-1-23 $1100.43 $100.43 $1000.00 $199,899.57
3-1-23 $1100.43 $100.93 $999.50 $199,798.64
4-1-23 $1100.43 $101.43 $998.99 $199,697.21------>payment is constant, amount going to principal is rising every month, amount to interest is falling every month, because the outstanding balance is falling
Follow the Amortization schedule for 360 payments and the balance is 0. Do the same for 21% and you will see the vast difference. As I always say, don't take my word for it. Please just Google: Simple Interest, Compound Interest, Amortization, Amortization Schedule. Happy to answer any questions you have.
@@Lambchop59 Misconception... You only pay interest on the balance owed. In your example when you owe 200K$ at 6% you'll pay a bit less than $12 000 interest during the year (a bit less because with each monthly payment the balance owed decreases). Fast forward to when you owe 100K$ you'll pay less than $6 000 interest during the year. You can verify that on any amortization schedule
BTW IF you always paid interest on the original balance this concept of chunking would not help at all
How do you pay the monies to your other bills… Do you take out a money/cash advance from your credit card?
He is speaking about a credit card. It's considered a personal line of credit
@Cristopher De La Cruz right and he’s speaking about a credit card line of credit.
@Sheryl Nygard he’s saying paying everything with your credit card because you’re actually putting your money from working (your paycheck) on your credit card each month.
How do you pay off the cars with the credit card?
Do you call them up and say I want to pay off my cars with my credit card?
Damn. I’m below average today based on 3 years ago. 😮
That avg is household income which is assumed it’s 2 adults
his math is off, right? pumping your 5k into your cc. However certain expenses such as home, car, insurance cannot be paid with the cc
I have the solution to debt. I don't have any. Been debt-free for 20 years.
But you can’t pay your mortgage or car payment with cc? So what are you actually charging to the cc? How are you actually making the payments?
Monthly expenses go to the credit card: Food, gas, bills...
Income goes onto The Line:
You pull from The Line to pay the credit card bill and the monthly expense (that can't go on a credit card) to make the payments.
Then Income from the next check goes back into The Line.
Keeping those interest payments low, low, low.
350 times 48 month = 16800 not 6000
How do you get the mortgage paid??? from a credit card
60k?
21:51 😂😂😂