Thank you for making everything so much easier to understand. I've watched quite a few other personal application videos and they always seem more complicated, you made it simple, easy to understand and even easier to apply! Thank you for being so clear!
You must be a total idiot just like this dumb sss ! Amortization is not a term to describe interest it has nothing to do with interest mortgage interest is simple interest ! And you will not save money using this stupid idea
Yes it is easier to understand. It’s easier to see how she is scamming people. Applying he $2000 to the mortgage directly each month instead of this line of credit in such a dumb way, the mortgage would be paid about 6 months sooner and with over $11000 less interest. The interest numbers she is showing is a 30 year payment plan with no extra payments vs a payment plan with extra payments. Although she is excluding the interest on the mortgage while she is paying off chunks with the line of credit when she shows her line of credit interest number. Her plan actually costs over $50k.
You are the bomb! I never had someone explain it this way. I will try this strategy on my HELOC and my home loan and get back to you.Thanks again for your help!
You are doing a fantastic job! My husband and I are binge watching all your videos! Keep them coming and if you know of another channel we can binge watch and learn from, please share!!
You and your husband must be ignorant at math ! First mortgage interest is the cheapest interest rate you can get and it’s calculated just like any other loan it’s not any different! This does not save you money you have to be a total idiot to think it does
Thank you so much Laura for providing these inside information that only the 5% wealthy people uses. I Value and Appreciate you. I'm Looking Forward to your next video. I Bless You Abundantly. Amen!
I’m saying you are a liar , or you are just stupid ! Tgis does not save you money it cost you money and adds rusk so anyone that uses this is a total idiot
You are explaning the strategy as clearly as humanly possible. Great work. Some viewers might need more then one view to get the hang of it. With the strategy you explained I also use a cash back credit card for living expenses that get paid in full in the line of credit at the end of each month. I'm able to knock off another 100$ of the mortgage principale every 3 months with the cash back. Awesome job by the way and great math too.
She lied! Tgis dumb ads thinks mortgage interest is calculated differently than simple interest it’s just not true she is an idiot at math and you must be to
Hi. Thank you so much for the information! I noticed a rebuttal video was made to try to discredit you. Thankfully I can think for myself and I can do the number crunching on account of info I learned from you. Most of us realize that you were using numbers to focus on the concept, not to be confused by other relevant although less pertinent information to make your point. It looks like the bankers aren't happy that you are sharing this information... God bless you and keep up the amazing work!
You and your husband are idiots then ! Mortgage interest is simple interest amortization is not a term that describes how interest is calculated it’s a term describing how payments are structured! Tgis is not saving money you have to be a total idiot at math
Ken Jones It’s genius to borrow money from a credit card at 21% interest to pay down a 6% interest loan? I must not know what the word genius means. And don’t argue back about 21% simple interest vs 6% “amortized interest”. The credit card and mortgage both charge compound interest. She is incorrectly using the term simple interest. Search the Internet for definitions of Simple Interest, Compound Interest and Amortization. Then read the terms of agreement of any standard credit card to verify they charge compound interest. Have a nice day. ^_^
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Realistically for this example it would be worth it to open a Personal Line of Credit (LoC) in the first month to knock down interest to around 10%. A HELOC would have even better rates so I agree that it should be used as soon as your home has enough equity to qualify for one.
yes... at some point get another loc with a lower rate. She just kept it simple... but yes.. the better the rate on the LOC the more interest saved... but it still works is the point.
You are awesome....my mind is still swirling over a new way to think of interest payments....the question that I could not figure out in the first video was how much was remaining on the cc or HELOC at the end of the transactions..(pay off)....thank you
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Thanks for the clarification. I still think that my point that I commented on the other video is valid though. In your example, you pay about $750 in interest on the credit card to pay down that 12k. If you just pay the 2k a month to the mortgage directly as you get it you will pay an extra $210 over the 6 months in interest on the mortgage, but you don't accrue any of the $750 extra on the credit card. I do love that your video is encouraging people to pay down their debt and mortgages so keep up the good work in making videos to educate and inspire! I just think that the strategy can be tweaked a little to make it more effective and simpler really!
You need download the app to understand apparently....how can you compare putting down 12k to Principal on your mortgage compared to only putting down 2K to principal? Didn't you see how much the savings were get on the interest you would have paid!
Excellent presentation of this concept. I would assume that during the six year period the Auto and Credit card payments would disappear. At that point you have additional funds available to increase your 6 month payment to further decrease the interest in the Mortgage loan.
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To pay off 12K at 21% APR in 6 months would take monthly payments of $2,124 + 1,200LE + $1,200HM + $600 Car = $5,124. This was calculated on a TI BAII Plus Professional advanced business analyst calculator and on several online payoff calculators. If you paid the $600 minimum per month that is for some reason written on the white board it would take 24.83 months to pay off the 12K balance @21% interest and $2899 in interest over that time.
@ ondfritz2 What she's saying is that every month you dump your ENTIRE paycheck ($5,000) back in to the card. The $600 was just there to show you what your previous minimum monthly credit card payment used to be before using this strategy. She actually crosses the $600 card payment off the board at the 1:25 time mark.
If you put everything on the card now you are adding $3000 per month onto a 21% interest payment, you are literally paying someone 21% interest to use your own money. Now you have only compounded the problem and will incur even more interest. If you pay off that credit card in the beginning and put all $2000 saved per month onto the mortgage each month you would pay it off faster and with less interest than this nonsense. Also, I hope people look and realize you are not real, you set up a fake account to convince people this is real. There is a reason the ads before this video are a scam, because this is a scam.
So are you saying to leave our checking account at 0, link our credit cards to our checking and let the credit card pay for everything? Because I have heard of the same thing with troubles paying with plastic for mortgages and car payments
Great addition to the first video. Would also love to see a video that goes more into details about one and two dimensional credit. Keep on explaining!
Hi Laura, Great videos and even better teachings. Thanks for those. I have a HELOC. Interest rate is 4.2%. Is the interest on that calculated the same as a credit card? Do you think the bank will agree to me using the HELOC as my overdraft on my checking account? Thanks Denis
you are even in a better situation with the lower rate as you will save on the 194K and pay way less on the HELOC balance (21% vs 4.2%). and i believe you could withdraw in cash or check form the amount you need and use it to apply towards principal. the HELOC would not be restricted on how you spend it as long as you pay it back.
Hello Denis, yes the equation I gave is a line of credit interest equation you can use to estimate the interest on your Heloc. With a Heloc you should have the ability to transfer money into your checking account then use that money to pay bills as needed then what ever is left over of that money put it back onto your heloc, then when you get paid move all of your money into your heloc and then move the necessary funds for all bills expenses into your checking with the Heloc it is about the movement of money.
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Thank you so much. Can you make any videos on investing in real estate or any kind of investing you have a lot of experience in? I really love your videos and the way you present them
Velocity Banking Strategy Overview. This is literally the same numbers, examples, and same everything as Mike Adams’ video. He goes over this in more depth and clearer illustrations. Explains more of the terminology as well. Not saying this video is bad, still gets a like, but Mike’s is better.
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so I worked mine and I started in march but doing a $5000 credit card which will be paid off if 3 months in the end it does not come out to $5000 because at the end when I pay the balance off of the credit card my mortgage is still due in the 1st of the month so I have to borrow from the money but I am slowly figuring it out. plus I did not have enough things to pay with the credit card so I have to take cash out but I take it at the end of the month so that the bulk payment pays the cash off first because that's how my bank works did my research so far so good lets see how it goes in a couple months .it took me a few weeks to write everything down and work our pay checks around so far so good :)
did you read her disclaimer? she is a model, not finance advisor if you actually started following her strategy and your credit card's APR higher then your loan's APR then you already losing your money. couple comments bellow I tried to explain why
You can link your credit card as overdraft protection to your checking account that way you will be able to make loan payments electronically as if it is coming from your checking account, but the money will be taken out of credit card, also if you are using a personal line of credit or a Heloc account which is a home equity line of credit than you will get a lower interest rate and a higher limit, as far as your monthly minimum mortgage payments, yes you still need to make those every single month therefore you have to calculate that payment into your monthly expenses like I included that into the $3K expenses in my example I used in my video.
Thanks. How do you use credit card to pay mortgage ? I don't think mortgage companies let people do that , at least not without charging extra transaction fees. If you use cash advance on credit card, it has much higher rates and won't allow you to cash advance 12000 either.
Wow this awesome! But What if I already have line of credit with credit cards ex...one for 1,000 balance, another card has 800.00 balance and one from home depot for 3,000 left on that card...?
Great videos. Thank you so much. But how do you get past the road block of debtor not accepting a credit card as a form of payment? The only way I've found is by cash advance which blows the APR through the roof.
Link your credit card to your checking account as overdraft protection or look into getting a personal line of credit from your bank or a heloc (home equity line of credit) if you already have equity in your home those act like a checking account.
I had the same problem the only bills that would accept credit card were my phone, light , gas, gas for cars , groceries, and cable so I had used $950 of stuff then will have to take out cash $1050 but what I do is a strategize so I take that money out before the month is over because my bank pays cash advances before purchases so at the end of the month I take out $1050 and in a few days I pay the $3000 monthly so I am only getting charged %17 for like 2 or 3 days and my purchases don't start growing interest till 30 days so I don't really get hit with a lot of interest so far. its the initial $5000 you will pay a lot unless you find purchases my family were going to make some purchases so I paid with my credit card and got the cash from them and that's how I started my first one still on my first month and working so far good luck
You can also get a personal loan for the amount that you need. It will cost you more than a HELOC or Personal Lines of Credit but will be less than a cash advance from a credit card. But, you have to open an account that will only be used for this strategy and use that new account to act like a line of credit.
This is the fourth person I have seen on TH-cam using these exact numbers To Laura's credit, she is the only one to try to breakdown the 21% interest costs, even if she does it wrong. Everyone can agree that if you pay extra toward the principal of your mortgage, you will pay it off much faster, due to how compound interest works. Also, the MORE you pay and the EARLIER, the faster you pay down, the less interest you pay in total and the less total dollars you pay. The big flaw in this method is borrowing at 21% to pay off a 6% mortgage. To calculate the interest on a 21% credit card, you can do this: 21% / 365 to get 0.0575% daily on the NEW BALANCE. New balance means outstanding balance + interest cost, meaning they are charging interest on the interest. On day 1, you borrow $12,000 and get charged 0.0575% interest, which is $6.90. Your new balance on Day 2 is $12,006.90. Interest of 0.0575% on $12,006.90 is now $6.91 and your new balance is $12,013.81. See how interest increased by $.01? That's the extra interest on top of the first interest. Her calculation of $214.02 for 31 days of interest on $12,000 at 21% is simply wrong. The correct amount is $215.88. Not a huge difference, but the credit card company wants its money and get that money it will. Also, when paying down the 21% credit card she keeps saying you pay it down by $2,000 per month. She is ignoring even her own interest calculation of $241.02....when does that money get paid? To summarize, I ran the numbers in Excel. I can provide that file to anyone here. You will end up paying $780.60 in interest every 6 months on that $12,000 borrowed at 21%. This is $1,561.20. It will take 72 months or 6 years to pay off the loan. That's $1,561.20 * 6 = $9,367.20 of credit card interest. So you have to add that to your total payments at the end of the loan. In stead of saving $194,314.29 you are saving that amount LESS $9,367.20 which is $184,947.09. A great amount,but below I will show how you can save even more....by not paying 21% interest (and actually her calculations are off, so her savings amount is about $1,4000 higher than it should be. Calculations shown below are based on my numbers in Excel). Now, if instead of borrowing at 21%, you simply paid an extra $2,000 toward the principal each month, you save an extra $7,102.86 over borrowing on the credit card. That's because you didn't need to pay that 21% interest rate. Total saved $191,260.55 Even better, if you add the amount you would have paid in interest on top, an extra $215.88 the first month (total extra of $2,215.88), $177.80 the second month, $146.09 the third month and so forth, save an extra $9,131.56 overall by skipping the credit card loans. Total saved $193,289.25. Now, ladies, gents, content creators....don't believe me? No problem....look up the fee disclosures on any standard credit card where they will explain how interest is calculated. You will see her formula is not correct and mine is (some divide by 365 days, others by 360 days). I have the spreadsheet. I got so annoyed seeing this nonsense on so many channels I finally sat down and did a detailed spreadsheet including the interest. Welcome to share with anyone who wants it. ^_^
I saw a post where some people are worried about losing their tax rebate from their home loan after the home is paid off, but then you can just possibly re-mortgage on the equity or get a second property. If you re-mortgage, that money can then be used to invest into a business, and you can do the same 6-year payoff schedule to the mortgage.
johnnyitalia418. It doesn’t make sense to have a tax deduction and save couple of thousand of dollars if you are paying $194,000 in 30 years. Plus the rules have changed for 2018 in mortgage interest deductions.
lol, answered my question from watching your previous video. you've grown and this vid is much cleaner, but I do miss the x-mas lights around the board =)
Did anybody else watch this as SOON as they woke up excited to find the answer lol? You explain these things in a very easy to understand way. You're the first person i have seen that explains very clearly, in a simple way using terms we all understand. Your speaking pace is slow enough so that i am not having to rewind the video, but fast enough so that i am not fastforwarding either. Thank you! I too would like to see a video on how to grow my money. The problem i am having is that i dont make enough money and i am paycheck to paycheck. With a family. What can i do from home that will increase my income by about 500 to 1000 a month? I am interested in stocks, real estate, things like that. So that i can still be around my family. Also, what job could i possible do outside of the home that will allow me to bring my 2 kids, ages 4 yrs old and 18 months? Also, i have no retirement saved, any tips to grow my retirement as fast as possible to a reasonable amount to live off of with just basic bills and hardly any debt? These are all just suggestions for future videos. Thank you so much for your help!
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Laura, i love how gentle and confident your voice is. keep up the good work! but your stategy simply has flaws. at 7:00, «so now that we know that it takes us 6 years and it takes us 6 months to pay down this $12,000 balance...» No. we don't know that it takes us 6 months to pay down that 12K balance. as a matter of fact, this is where the critical mathematical flaw exists in this whole process. but because one wud be forsaking an emergency fund in order to increase one's cash flow, it does get paid much much quicker.
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Would I still have to make my monthly mortgage payment if I pay those 12k towards my principal? Also will a credit card outside a bank work if it's a private lender as well? Thank you!
the one expense that changes everything is property tax and possible PMI. property tax is most of the time figured in with the mortgage and can add anywhere from $600+ a month (and that is very low estimate)
Laura, nice vids... maybe i missed it, but for the credit card interest amount of $1498.20 per year, where did you factor that additional amount into this persons ability to service it?
It automatically gets paid as every month the entire net income gets added towards the credit card, so the interest for every month is different and since we are paying more than the minimum monthly credit card payment that interest for that month gets taken care of.
What country are you originally from? Or where is your accent from because if it is an American accent I have never heard it! Great videos! Super informative more than others! Keep making them!
Did you see John Oliver's skit on your original country? That is the most original marketing campaign ever! No wonder you are so smart! Thank you for your reply!
Hi Laura, a quick question. I currently have a student loan that is locked in without an option for early repayment. Thus i am instead putting this line of credit into an investment product that is giving me a higher interest than what the bank charges on my student loan. I can't do a partial repayment until i have the full loan amount for repayment. On that note, may I ask if it is wise to take up another loan that gives me an option for early repayment and use that money to pay off the existing loan or do continue to do what i am doing now? Line of credit does not provide me sufficient money to pay off full loan amount.
Your very clever , I don't believe some people are responsible enough to have a credit card, I use mine for everything attached to a rewards / points system and the difference is I pay off the total amount off every month.It does cost me a rewards fee but I get that back multiple times over,plus I use amex which gives me double rewards.Win win for me but for others its could be a problem.
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To pay off 12K at 21% APR in 6 months would take monthly payments of $2,124 + 1,200LE + $1,200HM + $600 Car = $5,124. This was calculated on a TI BAII Plus Professional advanced business analyst calculator and on several online payoff calculators. If you paid the $600 minimum per month that is for some reason written on the white board it would take 24.83 months to pay off the 12K balance @21% interest and $2899 in interest over that time.
Am currently doing this and saving all kinds of interest using my savings instead of a credit card. The credit card is used as leverage and a discipline method.
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Could you make another follow up video to explain how does the payment works to payoff the 12K in 6 months and cycle for the next 6 Months. Quite unclear with the calculation. Expectedly, we should payout our credit card on its 6th month. Thanks in advance!
I have a question if I use this method for my car payment should I make sure if for example ( Iam make a big chunk of money) towards the principal.? Do I do the same for any other credit card. With my on money I make big chunks of extra payment but I don’t call and ask if it going toward the principal? I’m not sure if you going to get my question? Thanks in advanced
Hello, the strategy suggests using your line of credit as your checking account, you will still maintain your regular checking account just you will move your entire net monthly income towards your line of credit, now a line of credit is either a credit card, a personal line of credit, or a home equity line of credit, you choose which ever fits your financial situation. Now when you have your line of credit in place and you have your budget and you know your cash flow, then you can determine your chunk amount which you will use to make a principal only payment towards your car loan this money is coming from the line of credit and yes it is good to call and check that the payment, the additional large chunk go applied as a principal reduction payment.
Please do! Just remember for this strategy to work you have to put your entire income into the line of credit every month and use it like your checking account. Keep me posted!
I plan on doing exactly that. I will only have one account and that is to pay bills. This line allows money to come and go with no penalty but I am keeping a zero balance checking account just to pay bills with. I transfer the money to that account and make the payment. I use Carl’s Calc as you showed us as well. My interest rate is not the best but much better than the 21% you were using in your example so it should work out fine. I’ll keep you posted. Thanks again :)
Wow I am super blessed to have watched this I truly believe God put me here and I thank him for creating you! Beauty and brains! Can't wait to see how his 6 months turn out!
if your paying your mortgage 1200 /m do you need to pre authorize the amount from your Line of credit or in your checking?remember the bank wont allow you to pre authorize from your LOC
but what if one month the money you "saved" had to be used for a e.g. car repair . And this happens every couple months for unforeseen circumstances would that off set doing this method or would it just take longer for this to be usable say 12 months?
If you have a financial emergency it would just alter the pay off time so for example unforeseen car repair expenses will increase mortgage pay off time.
I have few questions. How do you determine that you need 12000 every 6 months. Why not 10k or 20k? I would appreciate your answer. My balance is 440000.000
I was asked to watch your video because people who watched my response video to your other video thought I didn't understand how 21%was better than 6%interest. So let me point this out: if you were to simply make 2k/month additional principle payments toward your 6% loan, you'd pay it off even sooner and you'd save even more in interest than what you're teaching. Thank you for pointing out the process, because even though your process isn't the most efficient way to pay off a home, it's still faster than just saving your money each month while just making the minimum payments.
No, if you would deposit your whole paycheck to that card. Your income deposit will be counted as payment for that month. That is actually how you created the extra cash flow by not having the minimum credit card payment. Lines of Credit works the best though.
@@laurapitko6404 What if my line of credit is less than my net monthly income? I'm thinking cancel my checking and savings account and finding a good pre paid credit card and using direct deposit directly into this account and using your strategy to pay off my car loan? Is this possible? And if so do you have a good prepaid credit card suggestion? Thank you kindly! I Enjoy and appreciate your videos.
I don’t have 15k in one card, but I have it in 4 cards. I’m still trying to figure out how to use this technique. I hope you make a video soon about how to execute the payments.
start on a credit card that you do have I started on my $5000 and after I do it a few times I am sure they are going to increase it I will keep doing it till they increase me to $12000
You generally can't pay a home loan with at credit card. This is the reason for the LOC or HELOC. There are some services that allow you to pay on a bank loan with a credit card but there are usually 2-3% transaction charges for this which can also get costly. It is best to get a LOC. You lose the advantage of the credit card points but the points technically calculated are worth fractions of a penny when used.
Thank you very much for your helpful video. By the way, what is the name of the App for calculate the interest, principal, amount, etc.? If you don't mind, could you please write down the name of the App? Again, thank you very much.
Love the videos, I have a 15 year loan and own 185,000 and it says Interest will be charged on unpaid principal until the full amount of principal has been paid I will pay interest at a yearly rate of 2.875% my payment a month is 1,560 and I just went to the bank today and upped it to $2000 a month. I hope me upping my payment will help me. what do you guys think?
Shaun Beers I dont think thats the correct way. You need to make the additional payment separate and directly to the principal amount; in addition to making the regular monthly loan payment. Hope you understand the difference.
If someone had no debts would it be a great idea to use the strategy to be able to contribute maximum contributions each year in your IRA or Roth IRA (RRSP and TFSA in Canada)You could borrow in the line of credit at the end of the year just before tax seasons ends. You would get the tax deductions a month later after filling you income tax and could use that to repay the loan made on the line of credit even quicker.
Hi Laura, instead of using 12k as your strategy to pay down the mortgage, can I increase it to 20K? will it take shorter to pay off the mortgage? or will it cost more for credit card interest? Please advise. Thanks
the more you increase the bettter, you saave more on interest. your interest will be calculated on a lower balance and the time will be shorter where the lender will not be able to collect more interest on future dates
Hi John, yes you can do $20K at a time but keep in mind not to max out your line of credit account and leave some buffer, in my example I am using a really expensive line of credit account a credit card that charges 21% in interest to show that you can virtually use a line of credit most people already have available, but I would say if you get a little more sophisticated look into a home equity line of credit or a personal line of credit and most importantly calculated all the numbers and create your plan maybe discussing with a competent financial professional as everyones financial situation is different to see what will work best for you.
Sharifa Muhammad. Go to your bank and ask for HELOC. They will give you all the information you needed. But lost banks requires a minimum of 680 credit score.
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I've watched many videos on velocity banking and you're the only one so far that actually calculated the simple interest in your example. Great job!!!
Thank you for making everything so much easier to understand. I've watched quite a few other personal application videos and they always seem more complicated, you made it simple, easy to understand and even easier to apply! Thank you for being so clear!
You must be a total idiot just like this dumb sss !
Amortization is not a term to describe interest it has nothing to do with interest mortgage interest is simple interest ! And you will not save money using this stupid idea
Yes it is easier to understand. It’s easier to see how she is scamming people. Applying he $2000 to the mortgage directly each month instead of this line of credit in such a dumb way, the mortgage would be paid about 6 months sooner and with over $11000 less interest. The interest numbers she is showing is a 30 year payment plan with no extra payments vs a payment plan with extra payments. Although she is excluding the interest on the mortgage while she is paying off chunks with the line of credit when she shows her line of credit interest number. Her plan actually costs over $50k.
I hope you keep making these videos too, they are very clear unlike a lot of others and give some of us more hope than I think you realise.
It’s clear of you are an idiot !
It’s all lies you dumb sss
You are the bomb! I never had someone explain it this way. I will try this strategy on my HELOC and my home loan and get back to you.Thanks again for your help!
You are doing a fantastic job! My husband and I are binge watching all your videos! Keep them coming and if you know of another channel we can binge watch and learn from, please share!!
You and your husband must be ignorant at math !
First mortgage interest is the cheapest interest rate you can get and it’s calculated just like any other loan it’s not any different!
This does not save you money you have to be a total idiot to think it does
Just bought my 1st home in August 2022 and just started implementing this strategy. Thanks!
Your explanations are the most clear and easiest to understand.
Thank you so much Laura for providing these inside information that only the 5% wealthy people uses. I Value and Appreciate you. I'm Looking Forward to your next video. I Bless You Abundantly. Amen!
If you are the 5% wealthy, you get a real financial advice, not this nonsense. This girl will rob you of your money. Fair warning.
I was able to pay mine in 4 years using your method but altering a bit. Thank you for the inspiration.
I’m saying you are a liar , or you are just stupid ! Tgis does not save you money it cost you money and adds rusk so anyone that uses this is a total idiot
You are explaning the strategy as clearly as humanly possible. Great work. Some viewers might need more then one view to get the hang of it. With the strategy you explained I also use a cash back credit card for living expenses that get paid in full in the line of credit at the end of each month. I'm able to knock off another 100$ of the mortgage principale every 3 months with the cash back.
Awesome job by the way and great math too.
She lied! Tgis dumb ads thinks mortgage interest is calculated differently than simple interest it’s just not true she is an idiot at math and you must be to
Hi. Thank you so much for the information! I noticed a rebuttal video was made to try to discredit you. Thankfully I can think for myself and I can do the number crunching on account of info I learned from you. Most of us realize that you were using numbers to focus on the concept, not to be confused by other relevant although less pertinent information to make your point. It looks like the bankers aren't happy that you are sharing this information... God bless you and keep up the amazing work!
Excellent! I am buying my first home this year and will be implementing this strategy.
Thank you for your time and willingness to share this invaluable information. 💛
It's a joy listening to you. U could make money on this
Great job Laura! Thank you for giving me a new perspective for how to pay of my home loan!
It’s not true she lied because she is an idiot !
Mortgage interest is simple interest this will jut save you money
I love this... my husband and I are embarking on a mortgage and he loves the strategy and we're going to implement it.. great advice hun
You and your husband are idiots then !
Mortgage interest is simple interest amortization is not a term that describes how interest is calculated it’s a term describing how payments are structured! Tgis is not saving money you have to be a total idiot at math
Your video imparted so much knowledge, just made things alot more clearer
I hope you keep making these videos. Was glad to get a notification that you'd uploaded one today. Will connect with you in other social media.
Thank you , you are beautiful and smart . I'm slow at .learning ,but very interested to learn more in future videos .
Thank you Laura! You've saved us tons of money. God bless your heart ♥
Very good information, thanks for sharing. This information has changed the way I think about the income I earn and how I can be debt free. Thanks👍🏽
You are a genius 😁 Thank you for sharing this info! This is ultra helpful, wow!
Ken Jones It’s genius to borrow money from a credit card at 21% interest to pay down a 6% interest loan? I must not know what the word genius means. And don’t argue back about 21% simple interest vs 6% “amortized interest”. The credit card and mortgage both charge compound interest. She is incorrectly using the term simple interest. Search the Internet for definitions of Simple Interest, Compound Interest and Amortization. Then read the terms of agreement of any standard credit card to verify they charge compound interest. Have a nice day. ^_^
I agree w/ you…it makes no sense to me esp when you take the mortgage tax deduction into account as well
You did do a good job and I look forward to learning from you. I feel blessed. Thank you.
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Excellent, this makes sense when you see the big picture
By the second year stop using the credit card and apply for a heloc. Much lower interest rate.
Realistically for this example it would be worth it to open a Personal Line of Credit (LoC) in the first month to knock down interest to around 10%. A HELOC would have even better rates so I agree that it should be used as soon as your home has enough equity to qualify for one.
yes... at some point get another loc with a lower rate. She just kept it simple... but yes.. the better the rate on the LOC the more interest saved... but it still works is the point.
@@richardking4514 what limit do you normally apply for on loc
You are awesome....my mind is still swirling over a new way to think of interest payments....the question that I could not figure out in the first video was how much was remaining on the cc or HELOC at the end of the transactions..(pay off)....thank you
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Thanks for the clarification. I still think that my point that I commented on the other video is valid though. In your example, you pay about $750 in interest on the credit card to pay down that 12k. If you just pay the 2k a month to the mortgage directly as you get it you will pay an extra $210 over the 6 months in interest on the mortgage, but you don't accrue any of the $750 extra on the credit card. I do love that your video is encouraging people to pay down their debt and mortgages so keep up the good work in making videos to educate and inspire! I just think that the strategy can be tweaked a little to make it more effective and simpler really!
You need download the app to understand apparently....how can you compare putting down 12k to Principal on your mortgage compared to only putting down 2K to principal? Didn't you see how much the savings were get on the interest you would have paid!
love it!!! you rock!!! thanks for educating me and definitely the haters out there. you opened my eyes and I'm implementing it. thanks
Laura Pitkute thank you so much for the information. You have helped me big time. That is amazing!
Excellent presentation of this concept. I would assume that during the six year period the Auto and Credit card payments would disappear. At that point you have additional funds available to increase your 6 month payment to further decrease the interest in the Mortgage loan.
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To pay off 12K at 21% APR in 6 months would take monthly payments of $2,124 + 1,200LE + $1,200HM + $600 Car = $5,124. This was calculated on a TI BAII Plus Professional advanced business analyst calculator and on several online payoff calculators. If you paid the $600 minimum per month that is for some reason written on the white board it would take 24.83 months to pay off the 12K balance @21% interest and $2899 in interest over that time.
@ ondfritz2 What she's saying is that every month you dump your ENTIRE paycheck ($5,000) back in to the card. The $600 was just there to show you what your previous minimum monthly credit card payment used to be before using this strategy. She actually crosses the $600 card payment off the board at the 1:25 time mark.
If you put everything on the card now you are adding $3000 per month onto a 21% interest payment, you are literally paying someone 21% interest to use your own money. Now you have only compounded the problem and will incur even more interest. If you pay off that credit card in the beginning and put all $2000 saved per month onto the mortgage each month you would pay it off faster and with less interest than this nonsense. Also, I hope people look and realize you are not real, you set up a fake account to convince people this is real. There is a reason the ads before this video are a scam, because this is a scam.
So are you saying to leave our checking account at 0, link our credit cards to our checking and let the credit card pay for everything? Because I have heard of the same thing with troubles paying with plastic for mortgages and car payments
Great addition to the first video.
Would also love to see a video that goes more into details about one and two dimensional credit.
Keep on explaining!
You are as stupid as she is !
Mortgage interest is simple interest so doing it her way you will not save money and iou would be adding a lot of risk
GREAT video, I watched the previous one, and this definitely sums it all up.. Thank you.
Laura, you're a gem.
Hi Laura,
Great videos and even better teachings. Thanks for those. I have a HELOC. Interest rate is 4.2%. Is the interest on that calculated the same as a credit card? Do you think the bank will agree to me using the HELOC as my overdraft on my checking account? Thanks
Denis
you are even in a better situation with the lower rate as you will save on the 194K and pay way less on the HELOC balance (21% vs 4.2%). and i believe you could withdraw in cash or check form the amount you need and use it to apply towards principal. the HELOC would not be restricted on how you spend it as long as you pay it back.
Hello Denis, yes the equation I gave is a line of credit interest equation you can use to estimate the interest on your Heloc. With a Heloc you should have the ability to transfer money into your checking account then use that money to pay bills as needed then what ever is left over of that money put it back onto your heloc, then when you get paid move all of your money into your heloc and then move the necessary funds for all bills expenses into your checking with the Heloc it is about the movement of money.
Your information is very helpful and eye opening, thank you
Ma,am, thanks so much for sharing such a huge financial knowledge. Would you please explain how people can raise their credit line?
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Use your credit line and pay it down quickly.... they will increase your limits
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Very nice ! Hard concept but you made it simple to understand ... Thank you for the efforts !
If you think this was simple then you didn’t notice she lied ten damn times
Does the Karl's app work for Canadian mortgages
Thank you so much. Can you make any videos on investing in real estate or any kind of investing you have a lot of experience in? I really love your videos and the way you present them
The bitch can’t even do math and lies about how mortgage interest is charged and you think she knows how to invest ? Damn you are stupid
Velocity Banking Strategy Overview. This is literally the same numbers, examples, and same everything as Mike Adams’ video. He goes over this in more depth and clearer illustrations. Explains more of the terminology as well. Not saying this video is bad, still gets a like, but Mike’s is better.
Good on you Laura, keep up the good work
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So helpful, thank you for sharing your knowledge.
Question: what if you have two mortgages which should one focus on? Or split pay them both? Amounts are 83k and 122k
Laura, what are your thoughts on high risk peer-to-peer lending investments?
Question Laura: With your scenario, do I continue to make my scheduled bi-weekly mortgage payments?
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so I worked mine and I started in march but doing a $5000 credit card which will be paid off if 3 months in the end it does not come out to $5000 because at the end when I pay the balance off of the credit card my mortgage is still due in the 1st of the month so I have to borrow from the money but I am slowly figuring it out. plus I did not have enough things to pay with the credit card so I have to take cash out but I take it at the end of the month so that the bulk payment pays the cash off first because that's how my bank works did my research so far so good lets see how it goes in a couple months .it took me a few weeks to write everything down and work our pay checks around so far so good :)
did you read her disclaimer? she is a model, not finance advisor
if you actually started following her strategy and your credit card's APR higher then your loan's APR then you already losing your money.
couple comments bellow I tried to explain why
It works for me I tried just saving the money and it doesn't come out to the same
You can link your credit card as overdraft protection to your checking account that way you will be able to make loan payments electronically as if it is coming from your checking account, but the money will be taken out of credit card, also if you are using a personal line of credit or a Heloc account which is a home equity line of credit than you will get a lower interest rate and a higher limit, as far as your monthly minimum mortgage payments, yes you still need to make those every single month therefore you have to calculate that payment into your monthly expenses like I included that into the $3K expenses in my example I used in my video.
Beautiful and smart. Thank you for your information.
Thanks. How do you use credit card to pay mortgage ? I don't think mortgage companies let people do that , at least not without charging extra transaction fees. If you use cash advance on credit card, it has much higher rates and won't allow you to cash advance 12000 either.
Wow this awesome! But What if I already have line of credit with credit cards ex...one for 1,000 balance, another card has 800.00 balance and one from home depot for 3,000 left on that card...?
I would work on paying off those credit cards first.
Great videos. Thank you so much.
But how do you get past the road block of debtor not accepting a credit card as a form of payment? The only way I've found is by cash advance which blows the APR through the roof.
Willy B Hey you will have to get a cash advance however when you incorporate the fee it's still nowhere near $194k.
Link your credit card to your checking account as overdraft protection or look into getting a personal line of credit from your bank or a heloc (home equity line of credit) if you already have equity in your home those act like a checking account.
I had the same problem the only bills that would accept credit card were my phone, light , gas, gas for cars , groceries, and cable so I had used $950 of stuff then will have to take out cash $1050 but what I do is a strategize so I take that money out before the month is over because my bank pays cash advances before purchases so at the end of the month I take out $1050 and in a few days I pay the $3000 monthly so I am only getting charged %17 for like 2 or 3 days and my purchases don't start growing interest till 30 days so I don't really get hit with a lot of interest so far. its the initial $5000 you will pay a lot unless you find purchases my family were going to make some purchases so I paid with my credit card and got the cash from them and that's how I started my first one still on my first month and working so far good luck
You can also get a personal loan for the amount that you need. It will cost you more than a HELOC or Personal Lines of Credit but will be less than a cash advance from a credit card. But, you have to open an account that will only be used for this strategy and use that new account to act like a line of credit.
How to link the credit card to your checking account as overdraft protection?
Can you use this for a closed mortgage as well or mortgage has to be open.
What about the interest charge on the advance cash withdrawal for the $12,000?
This is the fourth person I have seen on TH-cam using these exact numbers To Laura's credit, she is the only one to try to breakdown the 21% interest costs, even if she does it wrong. Everyone can agree that if you pay extra toward the principal of your mortgage, you will pay it off much faster, due to how compound interest works. Also, the MORE you pay and the EARLIER, the faster you pay down, the less interest you pay in total and the less total dollars you pay.
The big flaw in this method is borrowing at 21% to pay off a 6% mortgage. To calculate the interest on a 21% credit card, you can do this: 21% / 365 to get 0.0575% daily on the NEW BALANCE. New balance means outstanding balance + interest cost, meaning they are charging interest on the interest. On day 1, you borrow $12,000 and get charged 0.0575% interest, which is $6.90. Your new balance on Day 2 is $12,006.90. Interest of 0.0575% on $12,006.90 is now $6.91 and your new balance is $12,013.81. See how interest increased by $.01? That's the extra interest on top of the first interest.
Her calculation of $214.02 for 31 days of interest on $12,000 at 21% is simply wrong. The correct amount is $215.88. Not a huge difference, but the credit card company wants its money and get that money it will. Also, when paying down the 21% credit card she keeps saying you pay it down by $2,000 per month. She is ignoring even her own interest calculation of $241.02....when does that money get paid?
To summarize, I ran the numbers in Excel. I can provide that file to anyone here. You will end up paying $780.60 in interest every 6 months on that $12,000 borrowed at 21%. This is $1,561.20. It will take 72 months or 6 years to pay off the loan. That's $1,561.20 * 6 = $9,367.20 of credit card interest. So you have to add that to your total payments at the end of the loan. In stead of saving $194,314.29 you are saving that amount LESS $9,367.20 which is $184,947.09. A great amount,but below I will show how you can save even more....by not paying 21% interest (and actually her calculations are off, so her savings amount is about $1,4000 higher than it should be. Calculations shown below are based on my numbers in Excel).
Now, if instead of borrowing at 21%, you simply paid an extra $2,000 toward the principal each month, you save an extra $7,102.86 over borrowing on the credit card. That's because you didn't need to pay that 21% interest rate. Total saved $191,260.55
Even better, if you add the amount you would have paid in interest on top, an extra $215.88 the first month (total extra of $2,215.88), $177.80 the second month, $146.09 the third month and so forth, save an extra $9,131.56 overall by skipping the credit card loans. Total saved $193,289.25.
Now, ladies, gents, content creators....don't believe me? No problem....look up the fee disclosures on any standard credit card where they will explain how interest is calculated. You will see her formula is not correct and mine is (some divide by 365 days, others by 360 days). I have the spreadsheet. I got so annoyed seeing this nonsense on so many channels I finally sat down and did a detailed spreadsheet including the interest. Welcome to share with anyone who wants it. ^_^
At least one person on here with common sense. She was comparing apples to expensive pears...and you showed the flaws.
Hello very informative could tell me the name of the app you mention on the video please?
itunes.apple.com/us/app/karls-mortgage-calculator/id1025852681?mt=8
I saw a post where some people are worried about losing their tax rebate from their home loan after the home is paid off, but then you can just possibly re-mortgage on the equity or get a second property. If you re-mortgage, that money can then be used to invest into a business, and you can do the same 6-year payoff schedule to the mortgage.
johnnyitalia418. It doesn’t make sense to have a tax deduction and save couple of thousand of dollars if you are paying $194,000 in 30 years. Plus the rules have changed for 2018 in mortgage interest deductions.
Hi so you don't save money ? You just use what you need from your credit card ?
basically then the sooner you can replenish the LOC and use it again, then the faster the mortgage will be paid off?
does this make sense with a %5 fixed rate mortgage, and a %6-7 interest HELOC?
How do you pay your car payment on your credit card and mortgage payment on credit card as well?
lol, answered my question from watching your previous video.
you've grown and this vid is much cleaner, but I do miss the x-mas lights around the board =)
will this method work when trying to pay off a car loan using a secured card?
M. Rodriguez Will this payment strategy work the same for a truck pay off ?
michael rodriguez. It should work on all kinds of debt.
Yes, will work just the same
Did anybody else watch this as SOON as they woke up excited to find the answer lol? You explain these things in a very easy to understand way. You're the first person i have seen that explains very clearly, in a simple way using terms we all understand. Your speaking pace is slow enough so that i am not having to rewind the video, but fast enough so that i am not fastforwarding either. Thank you! I too would like to see a video on how to grow my money. The problem i am having is that i dont make enough money and i am paycheck to paycheck. With a family. What can i do from home that will increase my income by about 500 to 1000 a month? I am interested in stocks, real estate, things like that. So that i can still be around my family. Also, what job could i possible do outside of the home that will allow me to bring my 2 kids, ages 4 yrs old and 18 months? Also, i have no retirement saved, any tips to grow my retirement as fast as possible to a reasonable amount to live off of with just basic bills and hardly any debt? These are all just suggestions for future videos. Thank you so much for your help!
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Laura, i love how gentle and confident your voice is. keep up the good work! but your stategy simply has flaws. at 7:00, «so now that we know that it takes us 6 years and it takes us 6 months to pay down this $12,000 balance...» No. we don't know that it takes us 6 months to pay down that 12K balance. as a matter of fact, this is where the critical mathematical flaw exists in this whole process. but because one wud be forsaking an emergency fund in order to increase one's cash flow, it does get paid much much quicker.
great going laura...keep it up.....thanks for the effort
Your videos are so so helpful! Thank you
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Would I still have to make my monthly mortgage payment if I pay those 12k towards my principal? Also will a credit card outside a bank work if it's a private lender as well? Thank you!
the one expense that changes everything is property tax and possible PMI. property tax is most of the time figured in with the mortgage and can add anywhere from $600+ a month (and that is very low estimate)
Laura, nice vids... maybe i missed it, but for the credit card interest amount of $1498.20 per year, where did you factor that additional amount into this persons ability to service it?
It automatically gets paid as every month the entire net income gets added towards the credit card, so the interest for every month is different and since we are paying more than the minimum monthly credit card payment that interest for that month gets taken care of.
Thanks Laura that was an eye opener... For me anyway...
Love them both,great tips.
What country are you originally from? Or where is your accent from because if it is an American accent I have never heard it! Great videos! Super informative more than others! Keep making them!
Thank you, I am originally from Lithuania.
Did you see John Oliver's skit on your original country? That is the most original marketing campaign ever! No wonder you are so smart! Thank you for your reply!
Hi Laura, a quick question. I currently have a student loan that is locked in without an option for early repayment. Thus i am instead putting this line of credit into an investment product that is giving me a higher interest than what the bank charges on my student loan. I can't do a partial repayment until i have the full loan amount for repayment.
On that note, may I ask if it is wise to take up another loan that gives me an option for early repayment and use that money to pay off the existing loan or do continue to do what i am doing now? Line of credit does not provide me sufficient money to pay off full loan amount.
Your very clever , I don't believe some people are responsible enough to have a credit card, I use mine for everything attached to a rewards / points system and the difference is I pay off the total amount off every month.It does cost me a rewards fee but I get that back multiple times over,plus I use amex which gives me double rewards.Win win for me but for others its could be a problem.
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To pay off 12K at 21% APR in 6 months would take monthly payments of $2,124 + 1,200LE + $1,200HM + $600 Car = $5,124. This was calculated on a TI BAII Plus Professional advanced business analyst calculator and on several online payoff calculators. If you paid the $600 minimum per month that is for some reason written on the white board it would take 24.83 months to pay off the 12K balance @21% interest and $2899 in interest over that time.
Am currently doing this and saving all kinds of interest using my savings instead of a credit card. The credit card is used as leverage and a discipline method.
Chico Sickofshit sounds interesting. I've been doing tonnes of research and found lots of tips like bi-weekly payments etc. What's your method that's working for you?
I've just started a 30year mortgage but fixed for 5years at 2.24%.
I don't have any consumer debt or student loans.
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Could you make another follow up video to explain how does the payment works to payoff the 12K in 6 months and cycle for the next 6 Months. Quite unclear with the calculation. Expectedly, we should payout our credit card on its 6th month. Thanks in advance!
Please see my latest video and your question will be answered: th-cam.com/video/vwxaVwjxyZg/w-d-xo.html
I have a question if I use this method for my car payment should I make sure if for example ( Iam make a big chunk of money) towards the principal.?
Do I do the same for any other credit card. With my on money I make big chunks of extra payment but I don’t call and ask if it going toward the principal? I’m not sure if you going to get my question? Thanks in advanced
Hello, the strategy suggests using your line of credit as your checking account, you will still maintain your regular checking account just you will move your entire net monthly income towards your line of credit, now a line of credit is either a credit card, a personal line of credit, or a home equity line of credit, you choose which ever fits your financial situation. Now when you have your line of credit in place and you have your budget and you know your cash flow, then you can determine your chunk amount which you will use to make a principal only payment towards your car loan this money is coming from the line of credit and yes it is good to call and check that the payment, the additional large chunk go applied as a principal reduction payment.
Well I got my Line of credit. I will let you know how it goes at the 6 month mark. Thanks again Laura.
Please do! Just remember for this strategy to work you have to put your entire income into the line of credit every month and use it like your checking account. Keep me posted!
I plan on doing exactly that. I will only have one account and that is to pay bills. This line allows money to come and go with no penalty but I am keeping a zero balance checking account just to pay bills with. I transfer the money to that account and make the payment. I use Carl’s Calc as you showed us as well. My interest rate is not the best but much better than the 21% you were using in your example so it should work out fine. I’ll keep you posted. Thanks again :)
Wow I am super blessed to have watched this I truly believe God put me here and I thank him for creating you! Beauty and brains! Can't wait to see how his 6 months turn out!
if your paying your mortgage 1200 /m do you need to pre authorize the amount from your Line of credit or in your checking?remember the bank wont allow you to pre authorize from your LOC
but what if one month the money you "saved" had to be used for a e.g. car repair . And this happens every couple months for unforeseen circumstances would that off set doing this method or would it just take longer for this to be usable say 12 months?
If you have a financial emergency it would just alter the pay off time so for example unforeseen car repair expenses will increase mortgage pay off time.
I have few questions. How do you determine that you need 12000 every 6 months. Why not 10k or 20k? I would appreciate your answer. My balance is 440000.000
Amazing and beautiful,,, what do you think of the heloc system ??
It is even better if you can get a Heloc, use a Heloc!
HELOC works the best. It’s the original way of eliminating your mortgage.
I was asked to watch your video because people who watched my response video to your other video thought I didn't understand how 21%was better than 6%interest. So let me point this out: if you were to simply make 2k/month additional principle payments toward your 6% loan, you'd pay it off even sooner and you'd save even more in interest than what you're teaching. Thank you for pointing out the process, because even though your process isn't the most efficient way to pay off a home, it's still faster than just saving your money each month while just making the minimum payments.
Could you explain how would this work when you have a balloon payment?
Claudia Kadiamada. Start now. Or refinance it to a fix rate mortgage. Unless you can afford the ballon payment.
well this route will begin to attack your balloon and reduce or eliminate it completely
Laura, after charging 12k of principle to my CC wont the Bank still send me a high monthly mortgage bill?
No, if you would deposit your whole paycheck to that card. Your income deposit will be counted as payment for that month. That is actually how you created the extra cash flow by not having the minimum credit card payment. Lines of Credit works the best though.
Cesar is correct.
@@laurapitko6404 What if my line of credit is less than my net monthly income? I'm thinking cancel my checking and savings account and finding a good pre paid credit card and using direct deposit directly into this account and using your strategy to pay off my car loan? Is this possible? And if so do you have a good prepaid credit card suggestion? Thank you kindly! I Enjoy and appreciate your videos.
You are so smart, How can I consult with you for advice
I don’t have 15k in one card, but I have it in 4 cards. I’m still trying to figure out how to use this technique. I hope you make a video soon about how to execute the payments.
start on a credit card that you do have I started on my $5000 and after I do it a few times I am sure they are going to increase it I will keep doing it till they increase me to $12000
starfamm yeah, but it takes time. It will be ideal to have enough credit to chunk bigger! Thanks for helping
Open some kind of Line of Credit. HELOC works best.
Use a personal line of credit instead of the credit card for the strategy, the banks give higher limits on personal lines of credit.
You generally can't pay a home loan with at credit card. This is the reason for the LOC or HELOC. There are some services that allow you to pay on a bank loan with a credit card but there are usually 2-3% transaction charges for this which can also get costly. It is best to get a LOC. You lose the advantage of the credit card points but the points technically calculated are worth fractions of a penny when used.
Thank you very much for your helpful video. By the way, what is the name of the App for calculate the interest, principal, amount, etc.? If you don't mind, could you please write down the name of the App? Again, thank you very much.
dajemu infin Karl's mortgage calculator
You did an awesome job! Thank you so much
Love the videos, I have a 15 year loan and own 185,000 and it says Interest will be charged on unpaid principal until the full amount of principal has been paid I will pay interest at a yearly rate of 2.875% my payment a month is 1,560 and I just went to the bank today and upped it to $2000 a month. I hope me upping my payment will help me. what do you guys think?
Shaun Beers
I dont think thats the correct way. You need to make the additional payment separate and directly to the principal amount; in addition to making the regular monthly loan payment.
Hope you understand the difference.
If someone had no debts would it be a great idea to use the strategy to be able to contribute maximum contributions each year in your IRA or Roth IRA (RRSP and TFSA in Canada)You could borrow in the line of credit at the end of the year just before tax seasons ends. You would get the tax deductions a month later after filling you income tax and could use that to repay the loan made on the line of credit even quicker.
Great job thank you very much for the information
Hi Laura, instead of using 12k as your strategy to pay down the mortgage, can I increase it to 20K? will it take shorter to pay off the mortgage? or will it cost more for credit card interest? Please advise. Thanks
the more you increase the bettter, you saave more on interest. your interest will be calculated on a lower balance and the time will be shorter where the lender will not be able to collect more interest on future dates
Hi John, yes you can do $20K at a time but keep in mind not to max out your line of credit account and leave some buffer, in my example I am using a really expensive line of credit account a credit card that charges 21% in interest to show that you can virtually use a line of credit most people already have available, but I would say if you get a little more sophisticated look into a home equity line of credit or a personal line of credit and most importantly calculated all the numbers and create your plan maybe discussing with a competent financial professional as everyones financial situation is different to see what will work best for you.
Great job!
love your video from Dublin Ireland u2 home town..
Hi Laura~How do I apply for HELOC? Can you please reply to this message or make a video? Thank you so much for this information!
Sharifa Muhammad. Go to your bank and ask for HELOC. They will give you all the information you needed. But lost banks requires a minimum of 680 credit score.
Yes, ask about it at your bank, depending on your situation you may get one or not, if not then ask about a personal line of credit.
Wow. This formula can be used to pay off anything early.
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Laura, the client would still continue need to pay their monthly mortgage in additional to the lump-sum $12k payments
Yes, correct the monthly mortgage payment is included in the total expenses which added up to $3K in the example.