As a visual learner your video is very helpful. This is my first month on VB and at times it’s clear then it becomes muddy at again. You explained it quite well. Thank you!
Thank you for showing the math regarding the interest. I hate the idea of using a credit card if there's any hanging balance past the due date because it just means that there's interest accrued on that purchase, but to illustrate that the average daily balance does go down by putting the cash flow toward the credit card, it makes a little more sense to me. Thankfully, I'm not in any CC debt and currently don't pay interest when I use my CCs, but I'm always interested in seeing ways that people can try to pay down debt. We are so programmed to compartmentalize our money that we forget about money's fungibility and then we make decisions that turn out to be less than optimal. You have my sub 😃
Thank you for the warning at the end!! I really would like to try this but my big fear is that I will just overspend, max out my credit card, and then not be able to pay any of my bills
You have made a math error. If her income is $4,000 and her mortgage is $1,250, that leaves her with $2,750 per month in income, not $2,850 as you have indicated in your video.
Good question. We have another video on our channel that goes in-depth on the differences between Velocity Banking and making an extra payment. This will likely help clear up your confusion. ruclips.net/video/LsBQBVnKsTE/видео.html
@@jessicadufford3740I continued to watch for you and he makes a very good point of how less interest is accrued using the velocity banking method. I would strongly recommend you watch the rest of the video and ignore the one time math error.
@@user-qk4tm7nn1q I meant more in terms of how it affects the interest I can save. All the examples assume the credit card balance is reduce by full salary on one day. Therefore the average daily balance is reduced by $2,800 for several days. In the most common case, people are paid twice per month, just like me..Doesn’t that reduce the benefit achieved?
Basically take care of any expenses you have to take care of through the bank on the first. Then put the rest towards your credit card as soon as you get paid.
You can use a hybrid approach. You make minimum payments on all debt except the "one" LOC c/c (option) and any other bills & expenses that you cannot pay with a c/c. You then put your remaining income on that "one" LOC. You use that LOC as your checking account switching all your bills/expense (like food/gas/cellphones/cable) to autopay from that (you have to have an available limit of course). When that "one" LOC (line of credit or c/c) gets paid down, you then swap to your 2nd c/c and rinse and repeat the process. I was fortunate to snowball pay off several c/c's because I was always between 10-30% utilization. But now I paycheck park all $$$ into the main LOC. When rent is due (which can't be paid with LOC), I move rent amount from LOC to regular checking (with a transfer), then pay rent from the checking. My rent is $725. My LOC limit is $14,500 at 18% (not great but not terrible either). By parking my income in LOC instead of leaving in a regular checking, I effectively lower interest paid by $11/mo. That money when it sits idle in a regular checking account with effecively no interest gained vs. being used to pay off LOC which saves me 18% interest is HUGE when you consider the interest paid out over multiple accounts.
Not to the same extent. It can help in the sense that you will likely earn either cash back or points on all credit card purchases, but since no interest is being paid, it can not help lower an expense that does not exist.
As a visual learner your video is very helpful. This is my first month on VB and at times it’s clear then it becomes muddy at again. You explained it quite well. Thank you!
Thank you for showing the math regarding the interest. I hate the idea of using a credit card if there's any hanging balance past the due date because it just means that there's interest accrued on that purchase, but to illustrate that the average daily balance does go down by putting the cash flow toward the credit card, it makes a little more sense to me. Thankfully, I'm not in any CC debt and currently don't pay interest when I use my CCs, but I'm always interested in seeing ways that people can try to pay down debt. We are so programmed to compartmentalize our money that we forget about money's fungibility and then we make decisions that turn out to be less than optimal. You have my sub 😃
THANK YOU SO MUCH! This video made velocity banker easier to understand for me. Be blessed.
Glad it helped!!
This was a great lesson. Thank you.
Thank you for the warning at the end!! I really would like to try this but my big fear is that I will just overspend, max out my credit card, and then not be able to pay any of my bills
Good explanation!
You have made a math error. If her income is $4,000 and her mortgage is $1,250, that leaves her with $2,750 per month in income, not $2,850 as you have indicated in your video.
Good catch and thanks for letting me know. I will make a note in the description :)
Bilt card allows u to pay rent with cc
Great, simple easy presentation...new subbie! #eliminatedebt
What's the difference whether I pay off my loan out of my checking or line of credit? I'll still have to pay off my loc out of my checking.
When should I make the payment on the credit card, a day before the due date a week? does it makes a difference?
I’m so confused! Why not just pay the extra $500 with the mortgage payment and just budget $500 less for your expenses? I’m so lost
Good question. We have another video on our channel that goes in-depth on the differences between Velocity Banking and making an extra payment. This will likely help clear up your confusion. ruclips.net/video/LsBQBVnKsTE/видео.html
But most people can't put their whole month of income on the credit card at once! What if you get paid weekly?? How do you do this then??
Monthly income is the total of your paychecks. So it would be x amount deposited per payday. Your monthly income is the total of these deposits.
Weekly is even better. Because you lower your Avg Daily Balance every week vs. once a month (I get paid weekly).
4000-1250= 2750, not 2850…
I couldn’t continue watching because of this hiccup. Sad.
@@jessicadufford3740I continued to watch for you and he makes a very good point of how less interest is accrued using the velocity banking method. I would strongly recommend you watch the rest of the video and ignore the one time math error.
How can I use this strategy if I get paid $2,800 per month, but $1,400 on the 1st and the other $1,400 on the 15th?
@@user-qk4tm7nn1q I meant more in terms of how it affects the interest I can save. All the examples assume the credit card balance is reduce by full salary on one day. Therefore the average daily balance is reduced by $2,800 for several days. In the most common case, people are paid twice per month, just like me..Doesn’t that reduce the benefit achieved?
Basically take care of any expenses you have to take care of through the bank on the first. Then put the rest towards your credit card as soon as you get paid.
but you cant pay credit cards with credit cards, so how do you do this?
You can use a hybrid approach. You make minimum payments on all debt except the "one" LOC c/c (option) and any other bills & expenses that you cannot pay with a c/c. You then put your remaining income on that "one" LOC. You use that LOC as your checking account switching all your bills/expense (like food/gas/cellphones/cable) to autopay from that (you have to have an available limit of course). When that "one" LOC (line of credit or c/c) gets paid down, you then swap to your 2nd c/c and rinse and repeat the process.
I was fortunate to snowball pay off several c/c's because I was always between 10-30% utilization. But now I paycheck park all $$$ into the main LOC. When rent is due (which can't be paid with LOC), I move rent amount from LOC to regular checking (with a transfer), then pay rent from the checking.
My rent is $725. My LOC limit is $14,500 at 18% (not great but not terrible either). By parking my income in LOC instead of leaving in a regular checking, I effectively lower interest paid by $11/mo. That money when it sits idle in a regular checking account with effecively no interest gained vs. being used to pay off LOC which saves me 18% interest is HUGE when you consider the interest paid out over multiple accounts.
Yes you can
Will this work on a credit card with a zero balance
Not to the same extent. It can help in the sense that you will likely earn either cash back or points on all credit card purchases, but since no interest is being paid, it can not help lower an expense that does not exist.
Very dangerous method