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@Joce123
Ай бұрын
I am smart enough that velocity banking is not complicated for me.
@TheEducatedHomebuyer
Ай бұрын
It's not complicated....it just doesn't work for 99.99% of people. If you're in the .01%, congratulations.
@claykorth7244
29 күн бұрын
Get this guy a cookie
@mygoodlife204
Ай бұрын
not true! It shaves off quite a bit of interest! anything worthwhile is more complex!!!
@TheEducatedHomebuyer
Ай бұрын
Yeah...it actually doesn't unless you have a massive inflow of cash at the beginning of the month and all of your bills are due later in the month. The people who could actually benefit from this strategy know how to invest and don't waste time stepping over dollars to pick up pennies. The math is out there in hundreds of videos from people who actually understand finance but the true believers still think there's a magic answer for people with more debt than income to wish it all away.
@Peter_Wang
Ай бұрын
I NEED this! I’m a saver. Trying to figure out the taxes into retirement planning, estate … is a magical yet very illusive formula!
@TheEducatedHomebuyer
Ай бұрын
Be very careful Peter....without large free cash flow, the juice isn't worth the squeeze. Just keep saving and investing.
@Peter_Wang
Ай бұрын
@@TheEducatedHomebuyer Ty, I’ve got 1.m retirement, 30 yr Fed retirement, and about $50k cash left over. Sooo many numbers, I’m just trying to make it work.
@dixielandproductionco.6989
Ай бұрын
Smashed the thumbs up good stuff guys
@TheEducatedHomebuyer
Ай бұрын
Appreciate it!
@joeycowboy14
Ай бұрын
The velocity banking strategy is not a scam. And it is not a bad strategy; especially for those with high debt or those that would sleep better at night by eliminating debt at an accelerated pace. However, it definitely is not the right strategy for everyone. Paying off lower interest debts is not always the best decision. Especially when someone can get a much higher return in the market or on other investments.
@TheEducatedHomebuyer
Ай бұрын
People with high debt are exactly the folks that should stay 1000 miles away from this strategy. The spreadsheet shows it can work but you better be very disciplined and have more free cash flow than the typical homeowner.
@joeycowboy14
Ай бұрын
@@TheEducatedHomebuyer Discipline and education on strategy and other alternatives are definitely critical. Im general, I would not advise someone to do velocity banking on a mortgage, but it could be effective on other consumer debts that have high interest cost or are significantly impacting someone's monthly cash flow.
@Joce123
Ай бұрын
Velocity banking is ultra easy.
@Joce123
Ай бұрын
Most loans are amortized where is alignment credit is simple interest and there in lies the magic.
@TheEducatedHomebuyer
Ай бұрын
The easiest way to tell someone has drank the Velocity Banking Kool Aid is when they tell you the magic is in simple interest vs compound interest. The ONLY difference in interest accrual between a mortgage and a line of credit is that the LOC accrues interest on the average daily balance. Velocity Banking ONLY works if you receive a large influx of cash at the beginning of the month and slowly pay out your living expenses over the course of the next 30 days thereby reducing the average daily balance. If you get paid on the 1st and 15th and most of your bills come due between the 1st and the 15th, you will have a miniscule reduction in the average daily balance that will be more than offset by the increased rate of interest on the LOC. So, if you are a business owner with large monthly revenue that you can apply to your mortgage, then use the "float" before paying your bills to reduce the average daily balance AND you have the discipline to not screw it up, it can work. That accounts for about .01 percent of the population. This isn't hard math. There is no magic.
@007_pewpew
Ай бұрын
"velocity banking" is a catchy name. kudos to the marketing team. However, i still dont understand it. folks borrow more money to pay off previously borrowed money?
@TheEducatedHomebuyer
Ай бұрын
Check out the video we linked in the description. That gentlemen has several spreadsheets walking through the math. It works in theory but rarely in reality and only for very specific borrowers.
@davekohler5957
Ай бұрын
I have a fixed heloc at 5.74%. Using a fixed heloc to pay down your mortgage is safer then increasing your payment amount. The problem is in the complexity when you live out of your heloc and applying all your money to pay it down. The other problem is you have a large low interest credit card and you are tempted to spend more then you normally world.
@TheEducatedHomebuyer
Ай бұрын
Great points Dave. Thanks for sharing. It's important to note, HELOC's that allow you to fix the rate on a portion of the balance typically have limits on how many times you can fix a chunk.
@winniethepoohandeeyore2
Ай бұрын
I just overpay my 2.875% 30 year fixed by $40 every month, each COLA we add another $10 ever since our first mortgage payment was due, In Jan 25 we will overpay by $50, Knocked years off the life Of the mortgage already, we have the double home exemption. Once we claimed it our property taxes almost halved, once we turn 65 and bring in less than 25k a year as a single person or 30k for married couples property tax freezes. We paid down 1 credit card, paying down another, Also we Add to savings so wouldn't make a lick of sense for me to get a HELOC
@TheEducatedHomebuyer
Ай бұрын
@@winniethepoohandeeyore2 That's great that you're aggressively eliminating debt. Have you thought about taking the extra principal payments on the 2.875% mortgage and allocating them to the remaining credit card until it's paid off? Since it's likely at a much higher rate, that would help you get to the debt free finish line sooner. Thanks for watching.
@winniethepoohandeeyore2
Ай бұрын
@@TheEducatedHomebuyer I only owe less than 5K Which I overpay on that too. I'm not 1 of the maroons with 10's of thousands of dollars in cc debt
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