If i acquire a line of credit less than the rate of the loan or a rate that is closer or equal to the loan then the conversation changes. Another thing to consider is a combination of velocity banking and debt snowball rather than one or the other for optimal results. ( Velocity Banking for a period of time then turn it off and snowball once you have maximized the strategy) Lastly is incorporating a zero percent credit card with a line of credit along with running bills which you hinted at toward the end of the video. Overall I agree with you in this video this is a good video for people that are obsessed with velocity banking and force the strategy to work in every situation rather than just running the numbers and being ok when the strategy doesn’t work.
People like to be absolutist with vb and say it's always the best or vice versa with debt snowball. It's just not that simple, and the waters have been very muddied on TH-cam which makes things worse. Thanks for taking the time to watch and comment!
A lender def won't recast a mortgage with a lump sum like most can afford using vb. And they def def won't do it every time. Recasting a mortgage is a tool for large payouts like insurance or the sale of another property.
Absolutely correct. Never replace lower % debt with higher interest debt. It is not cost effective Too many VB advocates disingenuously pretend that VB somehow creates money out of thin air and/or there is a math hack with LOCs that leads to paying less interest amd/or that there is such a thing as "amortized interest" In reality all VB does is redirect all available money to paying down debt, something which can be achieved more effectively by simply sending this money directly to the debt. The use of an LOC only makes sense IF replacing a higher % debt (such as CC debt). Otherwise it just creates more costs. The EXTRA payments on the debt are what helps to pay it down faster, something few VB advocates admit
I am really torn between the two. Initially I was planning on doing the debt snowball. However, one thing that concerns me is that once I send my money into my mortgage, I have no ability to ever access that cash again. It's a little scary since I would be putting thousands of extra dollars in monthly.
At 8:32, can you explain why the 5,000 extra payment for VB isn’t applied entirely to the principal? Shouldn’t the loan balance be decreasing by 5,000 vs the 2,728.79?
Debt snowball is putting all of your free cashflow each month toward he debt with the smallest balance. Then when that is paid off, adding that minimum payment to your "snowball" and the amount gets larger over time as you pay off your debts this way
Debt Snowball and Velocity Banking are using the same amount of money to pay down the debts until you gain the cash flow by paying off the cars with a LOC. Are you saying that The extra money from the car payments is a wash because the higher interest of the LOC eats it up?
You'd be trading car minimum payments for the loc minimum payment and the interest paid would be more because the interest rate on the loc is higher than the cars. So even if the loc minimum payment is lower than the cars, it would still be about the same over the life of both methods.
Folks, Velocity Banking and Debt Snowball are just two different tools to use to tackle debt. Each one can be better depending on your interest rate and DEPENDING ON WHERE YOU ARE AT IN THE AMORTIZATION SCHEDULE.
Vb is not faster than the debt snowball when it comes to car loans and mortgages (any low interest debt). In the video I explain how the roi changes of when you put money toward the debt in the amortization schedule but it doesn't make vb better than the debt snowball
God bless you. All the people buying into the VB stuff by Christy Vann and others should watch this video. One argument I can hear them making is what if I make a $10,000 chunk early in my mortgage with an LOC. Wouldn't that save the same amount of interest as paying $10,000 by working another job? It would take me a while to pay off the loc at 10% or more, but the savings on the total mortgage interest might be worth it?
The interest saved on the mortgage would be wiped out by the interest paid on the loc. (plus you'd pay more) I honestly wished it worked! There's just not a faster way than the debt snowball. I also hope that the people that are blindly following the velocity banking path start to be exposed to the actual math that's happening. I wouldn't trust anyone who doesn't teach me how to do this kind of stuff myself 🤷🏻♀️
Yes, they are all looking for magical math and some people are getting rich misleading them without doing honest comparisons like you have in this video.
0% does work if you can figure it out and stay on top of it! It's not the traditional velocity baking that's being taught and sold as the solution to mortgage debt though.
This is a great question. I think you just have to weigh the return on investment elsewhere. It's not a clear cut answer if you want the absolute best roi unfortunately. Something else to weigh is risk too. Obviously your risk plummets if your house is paid off. But there's risk to not investing, etc. very complicated question but a good one!
According to my mortgage companies' amortization schedule.... If I make a chunk payment of $5000 to my 2.99% interest rate mortgage ill save $7658.25 and 9 months of payments. The credit card I'll be using will charge me a 3% ($150) transfer fee and 0% interest for 12 months. I can easily pay the $5000 off before the card starts charging me interest on the $5000. I will easily recoup the transfer fee with the credit card sign up bonus and points, actually coming out ahead by a couple hundred dollars... I use the Snowball method in conjunction with Velocity banking...
Sounds like a solid approach! I would not have that kind of patience to go back and forth but if you're diligent and on top of it, I'm glad it's working for you!
We have an extra 27k right now that we weren’t sure where to put. We could pay off our car, putting 550 back in our pocket each month and save us 1,400 in interest OR we could put that 27k toward our second year of paying our mortgage… I haven’t looked at a calculator to see how much interest that would save us but I know it would be way more than 1,400! Seems like a no brainer after seeing your video! Thank you so much for sharing your knowledge ❤
Lower interest your comparing apple with oranges. There simple interest or mortgage interest at say 3% amortize. . 19 %simple inntrest is cheaper than you 3% mortgage
Did you watch the video? You've been lied to. When I show you the math, vb stair steps down and the debt snowball is a steady decline. They are almost identical, I show this a few times
at 9:35 VB is 5 months faster than the snowball. yet at 12:45 you say not to use VB. im confused how you reached that conclusion. please explain you reasoning.
If you look at the thumbnail, it is a perfect comparison that I explain later in the video. Vb stair steps the debt down while debt snowball is a curve. They both end up paying the debt off at almost the same exact time. So why take all the extra effort to do vb? It doesn't gain you anything over the snowball
@emojidinosaur7300 it's only 5 months momentarily but the payments don't stop. You still have to pay your mortgage and now all your free cash flow is going toward the loc so the debt snowball catches up after those 5 months and then you rinse and repeat. Loc jumps ahead and then while you pay off the loc, the debt snowball catches up so they finish the mortgage at the same time.
What do you think about my alternative mortgage payoff method? (it's at the end of the video!) Do you agree?
If i acquire a line of credit less than the rate of the loan or a rate that is closer or equal to the loan then the conversation changes.
Another thing to consider is a combination of velocity banking and debt snowball rather than one or the other for optimal results. ( Velocity Banking for a period of time then turn it off and snowball once you have maximized the strategy)
Lastly is incorporating a zero percent credit card with a line of credit along with running bills which you hinted at toward the end of the video.
Overall I agree with you in this video this is a good video for people that are obsessed with velocity banking and force the strategy to work in every situation rather than just running the numbers and being ok when the strategy doesn’t work.
People like to be absolutist with vb and say it's always the best or vice versa with debt snowball. It's just not that simple, and the waters have been very muddied on TH-cam which makes things worse.
Thanks for taking the time to watch and comment!
@@FinancialCoachJess I agree and they both work well together. We should make some content together to clean the waters up lol
What if he recasts the mortgage and then the payment will be decreased.
A lender def won't recast a mortgage with a lump sum like most can afford using vb. And they def def won't do it every time.
Recasting a mortgage is a tool for large payouts like insurance or the sale of another property.
We got out of debt years ago using snowballing along with 0% credit card offers. Those offers were such a blessing for us!
They are a great tool when used responsibly! Congrats!!😊
Absolutely correct.
Never replace lower % debt with higher interest debt. It is not cost effective
Too many VB advocates disingenuously pretend that VB somehow creates money out of thin air and/or there is a math hack with LOCs that leads to paying less interest amd/or that there is such a thing as "amortized interest"
In reality all VB does is redirect all available money to paying down debt, something which can be achieved more effectively by simply sending this money directly to the debt. The use of an LOC only makes sense IF replacing a higher % debt (such as CC debt). Otherwise it just creates more costs.
The EXTRA payments on the debt are what helps to pay it down faster, something few VB advocates admit
Perfectly said!!!
I am really torn between the two. Initially I was planning on doing the debt snowball. However, one thing that concerns me is that once I send my money into my mortgage, I have no ability to ever access that cash again. It's a little scary since I would be putting thousands of extra dollars in monthly.
I understand that. If you have a good sized emergency fund, I wouldn't worry. Debt snowball is really the only option with mortgage debt.
Loved this video! Thanks, Jess
Who was the company you mentioned for the excel spreadsheet?
Thank you! Vertex, here's the link to the download: www.vertex42.com/Calculators/mortgage-payoff-with-line-of-credit.html
THANK YOUUUU! 🙌🏻✨🤗 👍🏻
You're welcome!
Your Genius! I just realized something MAJOR.
Awesome! What clicked for you?
So helpful thank you!
You're welcome! Thanks for watching! 😊
At 8:32, can you explain why the 5,000 extra payment for VB isn’t applied entirely to the principal? Shouldn’t the loan balance be decreasing by 5,000 vs the 2,728.79?
Good question, because the 5k includes the monthly payment to the mortgage. The monthly payment is absorbed in the 5k transfer
Damn and hwre i thought i found a new weapon with velocity banking, what is dwbt snow ball?
Debt snowball is putting all of your free cashflow each month toward he debt with the smallest balance. Then when that is paid off, adding that minimum payment to your "snowball" and the amount gets larger over time as you pay off your debts this way
Debt Snowball and Velocity Banking are using the same amount of money to pay down the debts until you gain the cash flow by paying off the cars with a LOC. Are you saying that The extra money from the car payments is a wash because the higher interest of the LOC eats it up?
Correct, and the line of credit minimum payment also eats into the extra cash flow gained by paying off the cars so it's a wash
@@FinancialCoachJess I thought that the minimum payment goes away because the paycheck is satisfying the minimum payment?
It "goes away" because the deposit satisfies it but it's still coming out of your total cashflow
@@FinancialCoachJess I am definitely missing this. The only thing that comes out would be the interest because anything else is principal?
You'd be trading car minimum payments for the loc minimum payment and the interest paid would be more because the interest rate on the loc is higher than the cars. So even if the loc minimum payment is lower than the cars, it would still be about the same over the life of both methods.
Folks, Velocity Banking and Debt Snowball are just two different tools to use to tackle debt. Each one can be better depending on your interest rate and DEPENDING ON WHERE YOU ARE AT IN THE AMORTIZATION SCHEDULE.
Vb is not faster than the debt snowball when it comes to car loans and mortgages (any low interest debt). In the video I explain how the roi changes of when you put money toward the debt in the amortization schedule but it doesn't make vb better than the debt snowball
There is always someone who doesn't believe the math.
Always loll
I found a fringe group on reddit thats doing velocity banking with bitcoin. its been beating the dollar
Yikes
God bless you. All the people buying into the VB stuff by Christy Vann and others should watch this video. One argument I can hear them making is what if I make a $10,000 chunk early in my mortgage with an LOC. Wouldn't that save the same amount of interest as paying $10,000 by working another job? It would take me a while to pay off the loc at 10% or more, but the savings on the total mortgage interest might be worth it?
The interest saved on the mortgage would be wiped out by the interest paid on the loc. (plus you'd pay more)
I honestly wished it worked! There's just not a faster way than the debt snowball. I also hope that the people that are blindly following the velocity banking path start to be exposed to the actual math that's happening.
I wouldn't trust anyone who doesn't teach me how to do this kind of stuff myself 🤷🏻♀️
It works for me. Specially because I leverage 0% interest rates on all my cards.
Yes, they are all looking for magical math and some people are getting rich misleading them without doing honest comparisons like you have in this video.
0% does work if you can figure it out and stay on top of it! It's not the traditional velocity baking that's being taught and sold as the solution to mortgage debt though.
Exactly. I think the law will catch up with them honesty 🤷🏻♀️
So at what point in your opinion is it not worth investing the extra payments into the mortgage and switch over to saving it or investing it
This is a great question. I think you just have to weigh the return on investment elsewhere. It's not a clear cut answer if you want the absolute best roi unfortunately.
Something else to weigh is risk too. Obviously your risk plummets if your house is paid off. But there's risk to not investing, etc. very complicated question but a good one!
According to my mortgage companies' amortization schedule.... If I make a chunk payment of $5000 to my 2.99% interest rate mortgage ill save $7658.25 and 9 months of payments. The credit card I'll be using will charge me a 3% ($150) transfer fee and 0% interest for 12 months. I can easily pay the $5000 off before the card starts charging me interest on the $5000.
I will easily recoup the transfer fee with the credit card sign up bonus and points, actually coming out ahead by a couple hundred dollars...
I use the Snowball method in conjunction with Velocity banking...
Sounds like a solid approach! I would not have that kind of patience to go back and forth but if you're diligent and on top of it, I'm glad it's working for you!
Thanks for doing this. Hopefully is sways a few people who have been misled by the VB shysters.
There's a lot of misleading info out there for sure!!
When you say line of credit, are you paying off all your credit cards and actually getting a loan from a bank? Or are you using an actual credit card?
Not a loan, it's a line of credit from the bank. Vb is built on the "parking your paycheck" strategy
@@FinancialCoachJess thanks so much 🤍
No prob 😊
Thank you for your honesty.
Thanks for watching!
We have an extra 27k right now that we weren’t sure where to put. We could pay off our car, putting 550 back in our pocket each month and save us 1,400 in interest OR we could put that 27k toward our second year of paying our mortgage… I haven’t looked at a calculator to see how much interest that would save us but I know it would be way more than 1,400! Seems like a no brainer after seeing your video! Thank you so much for sharing your knowledge ❤
You're welcome! ❤️
Lower interest your comparing apple with oranges. There simple interest or mortgage interest at say 3% amortize. . 19 %simple inntrest is cheaper than you 3% mortgage
Did you watch the video? You've been lied to. When I show you the math, vb stair steps down and the debt snowball is a steady decline. They are almost identical, I show this a few times
Mortgages ARE simple interest. Vann and the others are shysters, preying on people who lack basic math skills.
at 9:35 VB is 5 months faster than the snowball. yet at 12:45 you say not to use VB. im confused how you reached that conclusion. please explain you reasoning.
If you look at the thumbnail, it is a perfect comparison that I explain later in the video. Vb stair steps the debt down while debt snowball is a curve. They both end up paying the debt off at almost the same exact time. So why take all the extra effort to do vb? It doesn't gain you anything over the snowball
@@FinancialCoachJess 5 months in that example or about 11k worth the hassle with VB?? for me ill take the 11k.
@emojidinosaur7300 it's only 5 months momentarily but the payments don't stop. You still have to pay your mortgage and now all your free cash flow is going toward the loc so the debt snowball catches up after those 5 months and then you rinse and repeat. Loc jumps ahead and then while you pay off the loc, the debt snowball catches up so they finish the mortgage at the same time.