I found you Denzel on infinite Banking with Darius and Carmen. I'm so excited to do infinite Banking but realized I was not ready to jump in yet because my financial life was not healthy enough to start but when I heard you speak about velocity banking I knew I needed to become educated and clean up the mess and mindset before I move on to anything. God bless you Denzel for sharing your gifts and talents 🙏 Blessings also to Darius and Carmen too without them I wouldn't have found you. God is good!!!
The other major advantage that Velocity Banking has over Debt Snowball is the emergency fund. In this scenario the individual never had less than $10,200 in their emergency funds because the highest chunk out of the HELOC was $19,800. Debt Snowball you would have to wait about 3 months to save up 10k before implementing the strategy.
This makes sense when you think the 6k goes in at once. Like you said at the beginning, he is paid twice per month as are the rest of us. I'd like to see how that works before I jump in
Hi Denzel I came across this excellent well described video. I am currently using a HELOC to pay for education. My questions are 1. Would it be feasible to use the VB technique to pay down the balance & lower interest? 2. Once I place my income into the HELOC, how do I set up my HELOC to pay expenses? Thank you, Shaun
If he has $3,800 in cash flow per month and a $35,000 mortgage he could still pay off the mortgage via CF in ~9-10 months. All $3,800 can go to principal (as his normal expenses include the regular mortgage payment covering the interest) thus $35,000/$3,800 = 9.21 months not 15-16 months. So using this method it would take 3-4 months LONGER to pay off the house
@@DenzelNapoleonRodriguez Interest is paid in their normal living expenses as $3,800 was CF after all expenses. But I did forget the principal paydown from the normal payment...so it would be less than 14 months including that.
This strategy works a lot better if the HELOC has check writing abilities and/or ACH ability. I use this to pay down my rental property mortgages faster. It involves a lot of "transfers" if you have a lot of transactions like I do. I wish I could find a 2nd HELOC to use with a credit union etc. any suggestions?
THANK YOU BEEN HAVING HARD TIME TRYING TO UNDERSTAND , U EXPLAINED REALLY GOOD. KINDA WHAT I WAS PLANING TO DO WITH MY EXPENSES ,LOVE IT, ONLY QUESTION WHAT IF WE DONT HAVE A HELOC?
You can start with a credit card or a PLOC if you don’t have a home. Check out my PLOC and credit card case studies on my playlist. That will help you out a lot
So, are you using the HELOC to pay living expenses and other debt or a credit card? I would assume the HELOC since the interest rate is probably lower than the CC.
Yes but technically the HELOC is connected to a checking account so we still pay our bills normal it’s just our HELOC is a parking place for our paycheck until we are ready to Deploy the money
Denzel, Excellent video! The content is awesome. I do have a question. I heard you say that in the chunk payment months on the mortgage the regular payment is not required meaning some of the chunk will go to PTI and escrow if you have it. Or should you make ur regular payment and have the chunk payment specifically for the principal? Thanks in advance!
You are almost right. Basically on the chunk month, part of that chunk will pay the mortgage payment for that 1 month. So that means your cashflow will temporarily go up for this 1 month which will be equal to your mortgage payment. Example: If your cashflow is $1500 and your mortgage payment is $1500, your total cashflow for that chunk month is 3k. Then it will return to that $1500 again the following month and the months that follow until you chunk again. Rinse and repeat. Hope this helps and good day to you.
It depends if if they choose principal payment or regular payment when making the chunk. If principal only they would still need to pay their regular payment. Otherwise chunk would pay the regular payment and the excess would go towards principal
Is there a scenario where velocity banking works with a negative cash flow? My account is never negative but when I do my calculations for the month my cash flow is negative...does that make sense? My account is never negative but my cash flow is negative. I couldn't believe it when I saw it. It didn't make sense to me.
Yes and no. If I am running a net negative cashflow each month it’s only a matter of time before I run out of credit in my line. The goal is to always have a gap between what I spend and what I make. No concept will work long term if I spend more than what I make. That is a foundation principle that you don’t want to break. Can velocity banking help someone out of negative cashflow yes but it still involves consistently having that healthy gap between what I make and what I spend.
@DenzelNapoleonRodriguez thank you for a quick response and thank you for all your free financial advice and all the work you do and put out. I've learned so much watching your vids and continue to watch daily. Very much appreciated.
Hey danzel. This is what my banker wrote back to me after I asked about a heloc. it’s a 10,000.00 minimum, 15 yr term (interest only), and must be primary residence. We can loan up to 80% to 85% (depending on credit score) on the value of home. The bank pays up to 2,000.00 of closing fees (which I’ve never seen over that amount). There is a 50.00 annual fee and an early closing fee of 500.00 if the loan is closed within 3 years. Does that sound right? Thanks !
Hi Denzel. I reversed an online payment made from my credit card into my personal loan because I didn’t realize there will be a fee and a higher interest rate on cash transfer. Now that I understand the concept, I tried to do it online again they are not allowing me to. What do you recommend in this case?
based on what you said so far it does not sound like you understand the concept yet. Before making any moves I would recommend getting coaching first on this concept and creating a plan that maps out every move to achieve what you want in your finances is my answer. Simple mistake like this can lead to more mistakes costing you money
so you get a HELOC at 0%? Pretty smart for a bank to lend money at no interest, they should be in business for quite a while. $3,800 positive cash flow a month would apy off the mortgage in 9 months. You did it in 11 months - pretty good.
Hi Denzel, I have an interest only payment HELOC for the first 5 years. Can I use that to do velocity banking to chunk down my mortgage? Also, it only gives me 10 checks at a time (ask for more each time you need more checks.) So, how can I pay my bills out of it? thanks.
DT D doesn’t sound like the best debt tool for the concept might want to consider using something else there is research to be done on your part before making any moves of course
The question is why not pay the 3800 to the heloc each month? This is truly what I am going through. I have been just paying 3800 a month into the heloc, but if I can learn this way what is the difference.
dedric bullock the difference is simply paying less in interest. If you dump all your income the minute you get paid you reduce the daily interest rate on the HELOC. In addition if you use a credit to run some of your bills that can be paid with a credit card without fees you end up saving a significant amount of interest on a daily and monthly basis which positions you to move further and faster than just paying extra each month. You also get cash back rewards which just adds more flavor to it all.
I agree with you to an extent. Depending on where you are at on your mortgage we can still accelerate results. In some cases you are right Velocity Banking will not make sense
Thats the money left over after paying all your expenses. Example you make $5000 per month in income, and your expenses are $3500 per month. You are "Cashflowing" $1500 per month.
No that would be debt snowball or debt avalanche which are well known concepts for paying off debt. Sometimes debt snowball goes faster than debt avalanche and vise versa as well as velocity banking sometimes beats out both snowball and avalanche.
Correct, if you use the $3,800 to pay the HELOC and CC, you’ll pay them off in ~6 months. Then just applying the $3,800 to the mortgage starting on the 7th month it will take another 7 months for a total of 13 months to pay the entire debt off, the same amount of time as the Velocity Banking example. It all comes down to finding a loan that has less interest than your current loan. Even Dave Ramsey recommends, for example, to use a Credit Card to pay off a payday loan. Once debt free, find the loan with the lowest interest to start real estate investing, etc. Some use whole life insurance or “infinite banking” but that’s a different topic. Look at videos from the Real Estate Investing Unmasked guy on these topics and he explains it further…
I would like to see this broken down while factoring in INTEREST. This is great if everything had 0% interest. And to get a heloc you have to be quite a way into paying off your debt to qualify.
Charles Simmering I have videos where I show interest breakdown and how to calculate from month to month. But what I do in almost all of my vides is a low ball the income and cashflow to cover the interest so in this case the income and cashflow in the example is and will be slightly higher than what I displayed. When it comes to obtaining a HELOC you need at least 10%-20% paid toward the property before you qualify which is not that much. So if you put only 3-5% down on your home maybe a year before you can qualify for a HELOC. And if anything we can always look at credit cards and PLOC to qualify for
@@DenzelNapoleonRodriguez so you are saying that in your strategy that having a higher interest rate (usually 2.5 - 3x higher rates) on a heloc for the money you borrow is going to be cheaper over time than a lower interest rate over time? In order to qualify for most HELOC you need to have less than 80% of your property value and can only borrow up to 80%. To get to that point will take about 7 years just to get to 80%. Instead of the HELOC circle, why not just take that extra money outside of your expense and put it straight to your mortgage? Skip the middle man and extra steps?
Charles Simmering yes when it comes to the interest rate on a HELOC vs an amortized mortgage interest rate you will pay less interest on the HELOC. Simple interest vs amortized interest I would look that up so you can get a better understanding of how that works. When it comes to getting a HELOC it does not take 7 years I have so many clients across the whole US that have HELOCs within the first year or 2 of paying there mortgage. I would do more homework on qualifications for HELOCs so you can get a better understanding with that. It is not as hard as you think. And I did also mention getting credit cards or a personal line of credit if you don’t qualify for a HELOC.
@@charlessimmering9015 If you put the money straight to your mortgage, it's gone. Sure, you're paying down your mortgage, but you lose the leverage of using that money over and over again. When you use a line of credit, you essentially are dumping your income in to pay that line down and then pay your bills from there. You're going back and using that same line of credit over and over again. If you pay straight to the mortgage, you can't use that money again...it's paid on the mortgage and you lose the advantage of "recycling" that money. The beauty of this is, you're paying bills on time and raising your credit score while having flexibility to pay huge chunks and saving tons of interest. I hope that helps
@@DenzelNapoleonRodriguez the only way you are getting a heloc faster than 7 years is if you put down the 20% and avoiding PMI. There is no way you are paying 15% of your home loan in 1 year without doing what I initially said, paying extra into your mortgage. Once you reach 80%, you still have to be below that to qualify for a HELOC and then only qualify up to %80 Honestly my friend it sounds like you are mixing and matching scenarios. You do a semi explanation of simple loans vs amortization loans. But bottom line is you still do not factor in to this equation or others the interest on simple interest loans. Lots of missing pieces here. HELOC is only useful and good for debt consolidation due to the interest being lower than what it is on other debts (credit cards, PLOC, etc...) and for tax purposes. You can not get yourself out of debt with other debt with a higher interest rate. I would seriously like to see you do this with someone who just purchased a home or a year after they purchased it. And your equation requires someone to live like a hermet for many years. AND requires all the stars to align with perfect scenarios like (0% loans, credit cards, life and kids to not happen). So many things missing.
It consisted of the 35k mortgage, the amount he principally had outstanding on the HELOC (15.5K) and the rest on a 0% credit card. He tackled all three, 1) mortgage with the first 2 chunk payments 2) HELOC down to 0 by depositing income and removing expenses 3) credit card with the last chunk payment
I found you Denzel on infinite Banking with Darius and Carmen. I'm so excited to do infinite Banking but realized I was not ready to jump in yet because my financial life was not healthy enough to start but when I heard you speak about velocity banking I knew I needed to become educated and clean up the mess and mindset before I move on to anything. God bless you Denzel for sharing your gifts and talents 🙏 Blessings also to Darius and Carmen too without them I wouldn't have found you. God is good!!!
The quality videos are back :D
Thanks for the comparisons. Looking forward to your infinity banking example brother
Love the blue & red added detail!
The other major advantage that Velocity Banking has over Debt Snowball is the emergency fund. In this scenario the individual never had less than $10,200 in their emergency funds because the highest chunk out of the HELOC was $19,800. Debt Snowball you would have to wait about 3 months to save up 10k before implementing the strategy.
Drop that mic!
Right on time man! Thanks for this
Fantastic demonstration. Thank you.
This makes sense when you think the 6k goes in at once. Like you said at the beginning, he is paid twice per month as are the rest of us. I'd like to see how that works before I jump in
Hi Denzel
I came across this excellent well described video. I am currently using a HELOC to pay for education. My questions are
1. Would it be feasible to use the VB technique to pay down the balance & lower interest?
2. Once I place my income into the HELOC, how do I set up my HELOC to pay expenses?
Thank you,
Shaun
If he has $3,800 in cash flow per month and a $35,000 mortgage he could still pay off the mortgage via CF in ~9-10 months.
All $3,800 can go to principal (as his normal expenses include the regular mortgage payment covering the interest) thus $35,000/$3,800 = 9.21 months not 15-16 months. So using this method it would take 3-4 months LONGER to pay off the house
You forgot to count the existing balance on the HELOC from the beginning that is the first debt to tackle before you start to pay down the mortgage.
So if you do debt snowball starting to pay off the HELOC first then the mortgage you should get 15-16 months
@@DenzelNapoleonRodriguez Yeah you're right. Counting the HELOC and CC debt it is 14 months in total.
That’s without counting interest
@@DenzelNapoleonRodriguez Interest is paid in their normal living expenses as $3,800 was CF after all expenses. But I did forget the principal paydown from the normal payment...so it would be less than 14 months including that.
This strategy works a lot better if the HELOC has check writing abilities and/or ACH ability. I use this to pay down my rental property mortgages faster. It involves a lot of "transfers" if you have a lot of transactions like I do. I wish I could find a 2nd HELOC to use with a credit union etc. any suggestions?
THANK YOU BEEN HAVING HARD TIME TRYING TO UNDERSTAND , U EXPLAINED REALLY GOOD. KINDA WHAT I WAS PLANING TO DO WITH MY EXPENSES ,LOVE IT, ONLY QUESTION WHAT IF WE DONT HAVE A HELOC?
You can start with a credit card or a PLOC if you don’t have a home. Check out my PLOC and credit card case studies on my playlist. That will help you out a lot
Thanks for the knowledge man.....🙏🏾
Do you have a video for someone with a cash flow of a few hundred dollars a month & using a heloc?
Hello you will find those videos here - th-cam.com/play/PLnF-b0Fck4Lg0Je7fzPsLpyhVZV3HDmSN.html
So, are you using the HELOC to pay living expenses and other debt or a credit card? I would assume the HELOC since the interest rate is probably lower than the CC.
Yes but technically the HELOC is connected to a checking account so we still pay our bills normal it’s just our HELOC is a parking place for our paycheck until we are ready to Deploy the money
@@DenzelNapoleonRodriguez Thank you sir!
Beautiful plan!!!
Hi Denzel, I love your videos! how can I get in contact with you can I call you?
Hello. I just heard about AVEN HELOC card. Can you review this? Thank you.
Is it okay to use a HELOC that has the home as collateral?
Denzel,
Excellent video! The content is awesome. I do have a question. I heard you say that in the chunk payment months on the mortgage the regular payment is not required meaning some of the chunk will go to PTI and escrow if you have it. Or should you make ur regular payment and have the chunk payment specifically for the principal? Thanks in advance!
You are almost right. Basically on the chunk month, part of that chunk will pay the mortgage payment for that 1 month. So that means your cashflow will temporarily go up for this 1 month which will be equal to your mortgage payment. Example: If your cashflow is $1500 and your mortgage payment is $1500, your total cashflow for that chunk month is 3k. Then it will return to that $1500 again the following month and the months that follow until you chunk again. Rinse and repeat. Hope this helps and good day to you.
It depends if if they choose principal payment or regular payment when making the chunk. If principal only they would still need to pay their regular payment. Otherwise chunk would pay the regular payment and the excess would go towards principal
is this the same as speed equity system? use heloc to payoff home, and or debt, pay expenses with credit card?
Correct I’m just teaching it without a software
How does this compare to simply investing excess cash flow and holding the relatively low interest long term debt?
Is there a scenario where velocity banking works with a negative cash flow? My account is never negative but when I do my calculations for the month my cash flow is negative...does that make sense? My account is never negative but my cash flow is negative. I couldn't believe it when I saw it. It didn't make sense to me.
Yes and no. If I am running a net negative cashflow each month it’s only a matter of time before I run out of credit in my line. The goal is to always have a gap between what I spend and what I make. No concept will work long term if I spend more than what I make. That is a foundation principle that you don’t want to break. Can velocity banking help someone out of negative cashflow yes but it still involves consistently having that healthy gap between what I make and what I spend.
Here is a video breaking down a negative cashflow case study - th-cam.com/video/Q6oNkcHXf8Y/w-d-xo.html
@DenzelNapoleonRodriguez thank you for a quick response and thank you for all your free financial advice and all the work you do and put out. I've learned so much watching your vids and continue to watch daily. Very much appreciated.
Hey danzel. This is what my banker wrote back to me after I asked about a heloc.
it’s a 10,000.00 minimum, 15 yr term (interest only), and must be primary residence. We can loan up to 80% to 85% (depending on credit score) on the value of home. The bank pays up to 2,000.00 of closing fees (which I’ve never seen over that amount). There is a 50.00 annual fee and an early closing fee of 500.00 if the loan is closed within 3 years.
Does that sound right? Thanks !
sounds too small for a HELOC 10k minimum I would keep looking
Also, that sounds like equity loan, not a HELOC. Keep looking.
Hi Denzel. I reversed an online payment made from my credit card into my personal loan because I didn’t realize there will be a fee and a higher interest rate on cash transfer. Now that I understand the concept, I tried to do it online again they are not allowing me to. What do you recommend in this case?
based on what you said so far it does not sound like you understand the concept yet. Before making any moves I would recommend getting coaching first on this concept and creating a plan that maps out every move to achieve what you want in your finances is my answer. Simple mistake like this can lead to more mistakes costing you money
Hey Mr Rodriguez how can I open and velocity account
so you get a HELOC at 0%? Pretty smart for a bank to lend money at no interest, they should be in business for quite a while.
$3,800 positive cash flow a month would apy off the mortgage in 9 months. You did it in 11 months - pretty good.
Numbers are conservative on purpose leaves room for error client did better than my numbers. Most do
Factor in the balance of the credit card debt
They get paid semi-monthty if the dates are fixed
Hi Denzel, I have an interest only payment HELOC for the first 5 years. Can I use that to do velocity banking to chunk down my mortgage? Also, it only gives me 10 checks at a time (ask for more each time you need more checks.) So, how can I pay my bills out of it? thanks.
DT D doesn’t sound like the best debt tool for the concept might want to consider using something else there is research to be done on your part before making any moves of course
The question is why not pay the 3800 to the heloc each month? This is truly what I am going through. I have been just paying 3800 a month into the heloc, but if I can learn this way what is the difference.
dedric bullock the difference is simply paying less in interest. If you dump all your income the minute you get paid you reduce the daily interest rate on the HELOC. In addition if you use a credit to run some of your bills that can be paid with a credit card without fees you end up saving a significant amount of interest on a daily and monthly basis which positions you to move further and faster than just paying extra each month. You also get cash back rewards which just adds more flavor to it all.
Napoleon is chingone 👍🏼👌🙌🏼❤️🙏🏽
It's almost like velocity banking doesn't work now that HELOC interest is way above first lien mortgage rates lol
I agree with you to an extent. Depending on where you are at on your mortgage we can still accelerate results. In some cases you are right Velocity Banking will not make sense
Does the HELOC have an amortized interest rate ?
MyKallil in this video no some HELOCs are some aren’t
hi Denzel, the one number I don't get is "cash flow". Where does that number come from?
Thats the money left over after paying all your expenses. Example you make $5000 per month in income, and your expenses are $3500 per month. You are "Cashflowing" $1500 per month.
I have a car loan 13,000 should I use my Capital one card to do velosity banking or just pay straight toward the car loan, car loan is 8%,
Unless a pandemic hits the world's economic system which is almost impossible to happen right?
Engine Performance Practice and even then the concept still works which is good to know
Engine Performance Practice it may not work for everyone I will agree to that
I wish i understood this a little bit better.
Can you do velocity banking with a mortgage refinance to a 1st position heloc?
Jeremiah coyle I recommend watching this video th-cam.com/video/3yWdMjTaGeE/w-d-xo.html
If you just put your cash flow on to your debt wouldn't that be the same as velocity banking
No that would be debt snowball or debt avalanche which are well known concepts for paying off debt. Sometimes debt snowball goes faster than debt avalanche and vise versa as well as velocity banking sometimes beats out both snowball and avalanche.
Correct, if you use the $3,800 to pay the HELOC and CC, you’ll pay them off in ~6 months. Then just applying the $3,800 to the mortgage starting on the 7th month it will take another 7 months for a total of 13 months to pay the entire debt off, the same amount of time as the Velocity Banking example.
It all comes down to finding a loan that has less interest than your current loan. Even Dave Ramsey recommends, for example, to use a Credit Card to pay off a payday loan.
Once debt free, find the loan with the lowest interest to start real estate investing, etc. Some use whole life insurance or “infinite banking” but that’s a different topic.
Look at videos from the Real Estate Investing Unmasked guy on these topics and he explains it further…
Hey Denzel, can we do this is Australia?
yes
You keep saying that you get to keep all your cash flow. It's not cash flow is capital.
I would like to see this broken down while factoring in INTEREST. This is great if everything had 0% interest. And to get a heloc you have to be quite a way into paying off your debt to qualify.
Charles Simmering I have videos where I show interest breakdown and how to calculate from month to month. But what I do in almost all of my vides is a low ball the income and cashflow to cover the interest so in this case the income and cashflow in the example is and will be slightly higher than what I displayed. When it comes to obtaining a HELOC you need at least 10%-20% paid toward the property before you qualify which is not that much. So if you put only 3-5% down on your home maybe a year before you can qualify for a HELOC. And if anything we can always look at credit cards and PLOC to qualify for
@@DenzelNapoleonRodriguez so you are saying that in your strategy that having a higher interest rate (usually 2.5 - 3x higher rates) on a heloc for the money you borrow is going to be cheaper over time than a lower interest rate over time?
In order to qualify for most HELOC you need to have less than 80% of your property value and can only borrow up to 80%. To get to that point will take about 7 years just to get to 80%.
Instead of the HELOC circle, why not just take that extra money outside of your expense and put it straight to your mortgage? Skip the middle man and extra steps?
Charles Simmering yes when it comes to the interest rate on a HELOC vs an amortized mortgage interest rate you will pay less interest on the HELOC. Simple interest vs amortized interest I would look that up so you can get a better understanding of how that works. When it comes to getting a HELOC it does not take 7 years I have so many clients across the whole US that have HELOCs within the first year or 2 of paying there mortgage. I would do more homework on qualifications for HELOCs so you can get a better understanding with that. It is not as hard as you think. And I did also mention getting credit cards or a personal line of credit if you don’t qualify for a HELOC.
@@charlessimmering9015 If you put the money straight to your mortgage, it's gone. Sure, you're paying down your mortgage, but you lose the leverage of using that money over and over again. When you use a line of credit, you essentially are dumping your income in to pay that line down and then pay your bills from there. You're going back and using that same line of credit over and over again. If you pay straight to the mortgage, you can't use that money again...it's paid on the mortgage and you lose the advantage of "recycling" that money. The beauty of this is, you're paying bills on time and raising your credit score while having flexibility to pay huge chunks and saving tons of interest. I hope that helps
@@DenzelNapoleonRodriguez the only way you are getting a heloc faster than 7 years is if you put down the 20% and avoiding PMI. There is no way you are paying 15% of your home loan in 1 year without doing what I initially said, paying extra into your mortgage. Once you reach 80%, you still have to be below that to qualify for a HELOC and then only qualify up to %80
Honestly my friend it sounds like you are mixing and matching scenarios. You do a semi explanation of simple loans vs amortization loans. But bottom line is you still do not factor in to this equation or others the interest on simple interest loans. Lots of missing pieces here.
HELOC is only useful and good for debt consolidation due to the interest being lower than what it is on other debts (credit cards, PLOC, etc...) and for tax purposes. You can not get yourself out of debt with other debt with a higher interest rate. I would seriously like to see you do this with someone who just purchased a home or a year after they purchased it. And your equation requires someone to live like a hermet for many years. AND requires all the stars to align with perfect scenarios like (0% loans, credit cards, life and kids to not happen). So many things missing.
Who in the hell makes $6600 a month im gone
👌👍👍
This sounds like a good plan, but I don't see where the total $56,500 was paid off...
It consisted of the 35k mortgage, the amount he principally had outstanding on the HELOC (15.5K) and the rest on a 0% credit card. He tackled all three,
1) mortgage with the first 2 chunk payments
2) HELOC down to 0 by depositing income and removing expenses
3) credit card with the last chunk payment