Cashflow Over Networth

We are live. Welcome to everyone that is tuning in live either on YouTube or hopping in on the Zoom. Thank you for joining in this evening. If you're brand new, my name is Denzel Rodriguez, personal finance geek of the 21st century. Tonight we're doing a case study. My hope is that this continues to build many of the videos that I am putting out that's either principle-based or case study focused on a specific topic, what I'm gonna start doing is giving the theme around what I've been doing the last 8 years on this, on this YouTube channel. And that theme that I am just echoing in every community I'm interacting with, collaborating with, All of my partners is the cash flow over net worth theme. This is super important. The cash flow over net worth theory, theme, concept. This is how I want everyone in the Finance Geek community to be thinking about their money when they go to make a decision. How does it improve my cash flow? How does this decision negatively impact my cash flow? And if I can operate off of that framework, this is gonna help me make better investment decisions, better retirement decisions, better upfront decisions, okay? And we're gonna be using case studies where you can relate to some of these scenarios that other people are going through. What's going through their mind, what they're thinking about, what their concerns are, what their fears are. And to overcome those obstacles, having the right financial mindset going into a particular obstacle or challenge, I believe it's what's gonna really help you get the results where you want to go in life. So predominantly over the last 8 years on this YouTube channel, what have we been doing? We've been helping people all across the country pay off their debt, Extremely fast, much faster than they ever thought that they could, because we implemented advanced debt payoff strategies. We use velocity banking, we use infinite banking, we use cash flow index, and we also incorporate some of the standard, most popular debt removal strategies: debt snowball and debt avalanche. Those are your two popular ones. But we don't just there in terms of debt snowball and debt avalanche. When it comes to velocity banking, and infinite banking, and cash flow index, this allows us to really expand our mindset, get more creative, introduce more options to whether it's create acceleration in the debt payoff timeline, or build wealth while getting out of debt so you really don't lose time. As it pertains to those of you who are in mountains of debt. All right, so with that being said, we're going to take it right to the whiteboard, get right into it, have some fun. Feel free to drop questions at any point along the way through, and I will happily answer them for those that are here live with me. So let's give you the scenario on the board here. This is a husband and wife Both W-2 income generating about $11,298 per month take-home. Total expenses, this is all their living expenses, all their debt payments, if they're saving money, if they're tithing, if they're giving, coaching services, you name it, all of it is included when I put people's numbers on the board. So $9,500 $50 is that total number. We're looking at total debt of $465,335.96 and a cash flow of $1,797.50. These numbers are really accurate because I just spoke with the client last week. So these numbers are very, very relevant. We're looking, we're in August of 2026, getting ready to close out the month. And this is a new family that I'll be working with. There's some additional information over here that I put. Credit score is currently at 520. This is husband and wife, as I mentioned earlier, all W-2. Husband does have a sole proprietorship where he has a side business. Over here on the right-hand side of my board, it's got a side business that's making about $2,000 gross per month. But I did not include that number in the $11,298. That's, that's just kind of off to the side. We're not even really counting that at the moment. Below the left-hand side of the board is a breakdown of all of their debts except for a car loan that they have. I'm just going to keep that out of the picture. It's not really a concern in this particular case. They have a really low interest rate on their auto loan, and there's not really much of an interest to accelerate that vehicle. Over the years, this is just a good way of thinking as it comes to, as it pertains to cars. When I first started my business back in 2018, and pretty much for the first couple of years, The way I looked at all debts for the most part was let's just get rid of everything as, as quickly as possible, get all that cash flow back, and then put that towards investment vehicles, opportunities, businesses, you name it. Over the years I've adjusted that. I've made improvements and considered how certain debts may not always be a problem in certain people's finances. Mortgages is one of those, and car loans and student loans are like the top 3 debts that in certain situations, certain family households, these debts are of no issue. Why? Most common reasons when it comes to a mortgage is Either they have an extremely low rate, 2%, 2.5%, 3%, 3.5%, under 4%. The mortgage payment, super low. The balance, oh, left on it, not that high. And they have a ton of equity in the property. They're either earning way more in a separate account, they're funding a whole life policy, they're earning way more than what their mortgage interest is charging them. So they look at it as, all right, this balance will come down over time. Instead of me driving extra payments towards this mortgage, I'm going to invest in a separate account, grow this separate account to a level that at any point I could write a check and pay off the house if I wanted to. They, they choose to keep that money there and liquid And again, if they wanted to, they could pay off the house. So they get to a point where on paper they're technically debt-free, because if the house is only $200,000 left owed, but they have $400,000 in this separate account that's liquid— could be a brokerage account, could be cash value in a life insurance policy, could be a mixture of the two, could be savings, whatever it is. So if you got $400,000 in it, In another account, liquid, that you can just boom, withdraw and pay off your house. On paper you're debt-free, even though you're still carrying the debt. So that's one of the most popular reasons why someone may not be interested in paying off their mortgage because A, it doesn't bother them, they don't lose any sleep, and B, they're earning more than what they are getting charged on the mortgage. Student loans. Sometimes you're in a career where your employer or the government will forgive those student loans or they'll pay it off for you. And all you have to do is just keep paying the regular payment. After 10 years or after a certain period, those student loans will either get discharged or your employer is going to pay them off for you as part of your comp plan or something to that effect. So from a cash flow perspective, would it make sense if I already know as long as I stay in this company, chances are my student loans are going to get forgiven or they're going to get paid off for me? So maybe I'll skip over that student loan and I'll target the next debt that I'm looking at. So that's one of the reasons why we would leave our student loans alone. Third, when it comes to cars, the reason why someone may not be interested in paying off their car, especially if it is a financed car from a dealer or bank, is because the car itself is a depreciating asset. As long as you have coverage, more than enough coverage on the vehicle, and you're looking at the cost to operate that vehicle, maybe we implement some tax strategy that would offset the interest costs on that vehicle. And so therefore, instead of me driving cash into this depreciating asset, I'm just going to ride this vehicle out until the wheels fall off, and I'm going to invest my money in a separate account. Again, whatever that separate account is, it's earning more than the car loan itself. Another reason why someone may not want to accelerate their car is either someone in the family, maybe someone else is paying it for you. But you're title, right? You're the person that is on the vehicle but you have someone else making payments. That's I have a similar setup in my household. I have a vehicle that it's in my name, but I have a family member that's making the payments on it. So therefore, I'm not interested in accelerating that car note even though it's a debt that I carry on my credit score, right? But because I have someone else paying for it, it doesn't hurt my cash flow. It would hurt my cash flow if I sent money to that. Makes sense. And another common reason is the, the loss of liquidity. So if I have $20,000 left on a car, and if I take my cash capital savings reserves and pay off the vehicle, Okay, and then tomorrow I get in a bad car accident, the car is totaled. What are the chances that I get all of my $20 grand back? There's no— from what I understand when it comes to insurance, no guarantee that you will get all of what you paid into the vehicle. So from a risk standpoint, I look at it as like, okay, it's if I total this vehicle and I had a loan outstanding on it, typically if I have enough coverage, then that would get wiped out and then I just go get a new vehicle. Versus having a car paid off early, like you accelerated the car note early, got in a car accident, totaled the vehicle, You get back, I don't know, 15 grand or 10 grand or whatever the value is at that point. Now I'm out of a car, I lost say 5K, 10K, and I gotta go get a new car. And so you're gonna take that 10K that you get from the insurance company or however much, and now you go buy a more expensive car, a newer car at that point, or maybe a used vehicle. To me it's a, it's a loss on top of a loss. So by not accelerating that car note, letting it ride out, and keeping liquidity to yourself, keeping the cash in your, in your bank account, and just earning an interest offset difference, then you're perfectly fine with carrying that vehicle out. Now again, It's not 100% of the time. There's so many cases where I work with clients that are paying off their cars because they have a really high note, car note, the 10%, 12%, or something like that. And you know, where am I going to safely get 10%, 12% in that short time frame? So they look at it from that perspective, or maybe they have a really high car payment. In this case, we have a super low car note, like 3.9%, $29,000 left on it. They're just going to keep that vehicle, ride it out, and we can do some tax strategy to offset that interest cost. So that gives you the full context. The theme as I'm working with this person, as I work with my clients one-on-one, the theme moving forward, and it really always has been, a cash flow over net worth approach. Cash flow first. As long as I have cash flow at the end of the month, every month, my bills are paid, expenses are paid, debt payments are paid. As long as I have cash flow coming in, I'm in an independent position. I'm in a flexible position. I'm in a liquid position. If you ask me, Denzel, would you rather have You know, $5,000 per month in surplus, just every single month, $5,000? Or would you rather have $1 million in an account that you can't touch, but it's growing at, I don't know, 8%? So it's technically more money, right? The million dollars is more money, but I can't touch it. It's illiquid. It doesn't do anything for me today, right now. So for me, I'm, I'm always leaning more towards cash flow. The beautiful thing about cash flow is net worth is a benefit of you focusing on cash flow first. If I have cash flow, I can buy any asset I want regardless of the price. And if I buy an asset, I want to buy an asset that produces more cash flow. So that if I need to carry a debt on it, as long as there's cash flow to pay the debt, we're good. Things are, things are well. So that's how I'm constantly educating the audience and clients as I'm working with them. And then I pair it figuring out their goals. So for this family, a goal there is, A, they want to keep their home. They are processing their current financial position as a tough one. That they're, they've accumulated a lot of debt in the past couple years, ever since COVID A lot of things happened to them. Before coming to me, they're thinking, hey, you know, I'm thinking about like consolidating all this debt. I'm struggling. Keep up with the payments. Although it looks like we have good cash flow, there's months where it may go to zero or spending more. So very basic. They want to keep the home that they're living in. They don't want to sell it. They don't want to downsize. They've been in this home for over a decade plus. So they want to stay there. They want to be debt-free and achieve financial freedom. As do Most of the people I work with and most of the people watching this YouTube channel subscribed and, you know, loyal. These are your typically your top goals. You want to be debt-free, you want financial freedom, you want more wealth. Here are the assets that we currently have. We have cash on hand about $26,000. We have a 401 $37,500. We have about $1.2 million of death benefit on the husband. We have a side business that's making extra cash. Cash for the— that the husband is operating. Married 19 years, 2 kids. Those are indeed assets. Marriage is an asset, kids are an asset. So I put that under the assets category here. This couple is in their early 40s, so we do have a nice time trajectory between The amount of years that they have been working and will continue to work to their retirement, say average retirement age in the mid-60s, okay? So we have a nice, call it 20 or less window here. I want to be a little interactive here. Based on what I've shared, looking at the board, Let's get a little interaction here. Based on what I've shared, 4 major numbers on the left. Here's all the debts that we have. We have loans, we have student loans, we have a bunch of credit cards, mortgage. We have a HELOC with a bank called Aven. And if you know my views on HELOCs, that there are good HELOCs And there are wrong HELOCs or inefficient HELOCs for the velocity banking strategy. Aven Bank is one of those HELOCs that are— that is an inefficient HELOC for the velocity banking strategy. Assets over here, goals, theme, cash flow over net worth. In your eyes, What's the very first step? And I'm gonna give a hint. I'm gonna put a theme over the first step. A hint. I'll give you a hint. But I want to see what would you do in this situation with these numbers, everything that's going on, based on their goals, what they're trying to achieve. What are you targeting first? There's so many different things that we can do based on these numbers here on the board. I want to see from your lens, what are some things that you would do initially, first step? And I'm going to share the hint now, is that As a financial coach, regardless of how much money someone is making, how high or how low, does not matter to me. First thing I'm looking at when I start working with a family, and I gather all the facts, all the numbers about their situation, I think about— What's the goal? How construction workers go about building, putting together a building, right? Or building a home, building a single-family residence. What is the first thing that those construction workers begin to work on first? What is that thing? Let me see, what do you guys think? In construction, in whether it's a large building, whether it's a single-family residence, talking real estate, what's the very first thing? Yes, foundation. So that's the hint, foundation. So the theme, first step, When I'm working with someone, I'm thinking foundation. How do I fortify what they already have in place to have a strong foundation to then build upwards? That anything we build on top of this foundation is going to hold. Things are going to, are going to stick together. So let me get some interaction. What do you think based on that hit I, I gave you? First step is foundation. That's the theme. The overall theme is cash flow over net worth. We start that by having a strong foundation. What would what would you do? What would you begin to focus on? What are some things that you would begin to target that you would consider a foundational move? Okay, we have someone that just said. Credit card debt. I like where your head's at. That's good. Credit card debt. What else? Let me see if there's anyone on YouTube. Got 10 people in the house on the YouTube channel. Let me know what you guys thinking. Get some insight from you. Credit card debt. What else? They're W-2 employees. Husband's got a sole proprietorship. We've got an inefficient HELOC. We got a credit score of 520 right now. Jamie says emergency fund. We do have cash, Jamie. $26,000 over here, cash on hand. So we do have cash. Keep that in mind. Got some cash. What else? But I like where you're— I like where your head's at, Jamie, because you're just thinking, you know, generally foundation. Yes, emergency fund is very important to have. What else? See what you guys are saying. How about credit score? How do you guys feel about that? Credit score. How do we feel? No. So this credit score is a 520. We are operating with all these debts over here at really high rates. Double-digit rates, high single-digit rates, and we have an inefficient HELOC. I like what Nita said in the chat, credit card debt. That's something that we're gonna target, so we're gonna star that. That's important. This is a multitude of credit cards, $21,000 across multiple credit cards. Total payments altogether is $582. With interest rates above 25%. Now, I put some additional numbers here. This is cash flow index numbers. This is where you simply take the balance owed on a debt and divide it by the monthly payment, and you get a cash flow score. 79, 118, 36, 33, 71, 84, 59, and 36. The lower the cash flow score, the more attractive it is to pay that off. The higher the cash flow score, the less attractive it is to pay off. And usually the, the theme is if it's above 50, you tend to leave it alone. If it's below 50, you want to tackle that first, and you go from lowest cash flow score to highest. Okay. Now, that's not Bible in this community. It's it's for me, cash flow index is a guide. It it helps. It's not gonna make me make every financial decision for me, but it is a helpful guide. It also can help validate a move that I'm considering doing. So I want to. Build a strong foundation, and create more cash flow in this household so that stress goes down, confidence goes up, more clarity, more vision, more purpose, and we can start looking towards a debt-free life and financial freedom. Keeping on with the theme of their goals, the theme of the proper financial mindset, building a strong foundation. Let me share with you some things that I notice, okay? And shout out to Dynamic Pursuit, says take some cash to put in a cash value policy. I like where your head is at as well. So part of the foundational steps, things that I, I identified that I think are areas of opportunity, easy tweaks, easy fixes that either do not cost a lot of money, and whatever the cost is, we get all of it back plus more in perpetuity. So step 1 is I look at some of the assets that they already have. I look at the fam. In this family, we have, we have a wife and we have 2 kids. The husband has life insurance, but the wife does not have any life insurance, and neither do the kids. So I immediately think in my mind, the most important asset in your life Is yourself. You are the most important asset. So I like to start with the individual. And I, seeing that there is cash flow, there is opportunity, there is some assets that we could peel off some cash flow to put towards protecting our most important assets, Spouse, kids. Let's get some life insurance on them. I'm thinking term. I'm thinking convertible term, something inexpensive to start off. So Dynamic, I like where, where your head was going in terms of take some cash, put into a cash value policy. I like that. And that would be great if Debt freedom was not one of their priorities, all right? So this household becoming debt-free is a priority. And if we're gonna peel off some cash and acquire another asset, a whole life policy, that's gonna take some time to grow. So it can either become a distraction for someone, or it mathematically will delay their debt-free timeline. So they may not be fully bought into that right away. So I keep that in mind. Next is credit score. What an amazing opportunity this household has if husband can jack up that credit score to 720 or higher. Because what's that, what is that gonna do for him? If I can get his credit score to 720 or higher, I can restructure and refinance all of these high interest rate debts that we, that we have at play. And if we were to run the math and see what is the average interest cost that we're sending out to institutions on a daily basis, Let's add it all up. We have 11.99, we've got 4.88, we got 25 plus percent, 10%, 9.9, 9.9, 9.9, and 5.13 divided by 1, 2, 3, 4, 5, 6, 7, 8, 9 debts. Okay, so 9.63 plus percent, that's average. In reality, the number is actually higher. The reason why it's lower is that 4.88 mortgage, right? So if I took that 4.88 out, 11.99, and we add the 25% plus across the credit cards, 10%, 9.9, 9.9, 9.9 and 5.13, divide that by 8. Now we're 10.22. So we're sending 10, 12+ percent average interest costs, which results in thousands of dollars. As you can see in the payments alone, we're sending thousands of dollars to institutions paying ridiculous interest rates because of our poor credit. This family makes really good income. They have pretty good cash flow. The $1,797, that's far more than the average American's cash flow on a monthly basis. So I said, hey, are you willing to peel off a little bit of cash flow Add an additional expense into our finances and deem that credit repair. So that was another thing that I identified as a foundation is credit score, life insurance, and then the third thing, huge opportunity, is tax strategy. Ladies and gentlemen, this is a lot of W-2 income. Between husband and wife, that's sick. That's over 6 figures because that's net. So this is a 6-figure-plus household. The husband has a sole proprietorship but there's no tax benefits. So if we properly set up this side business, we can unlock a lot of tax deductions on on their personal W-2 income. We can lower that tax liability by unlocking so many different tax deductions. So tax strategy, they're a homeowner, there's opportunity there. This person's a business owner, there's opportunity to deduct a lot of expenses that they're already dishing out. All right, so those are the 3 top things from a foundational perspective. And then I also like to throw in estate planning. Doesn't cost a whole lot of money to get a will done, have your power of attorney, healthcare directive, maybe a simple revocable living trust, just to have initial Groundwork, foundational type protection over this family. So top 4 things right there we're gonna work on. If we can successfully do that, estate planning, simple, may cost us about $1,500 or less. Convertible term, between a convertible term policy on the wife and 2 kids, both under 18, so they would have to be whole life policies, I'd say $300 to $400, you know, across 3 policies— 2 whole lives, 1 convertible term. And it could be even less than that, but say $300 to $400. Credit repair. Credit repair. I have a service, $99 a month, $99 startup fee. And then $19.99 a month for credit monitoring across 3 credit bureaus. So $120 a month, the first month it's like $220, and then $120-ish afterwards. So I've already baked that into their expenses, we've already counted that. And coaching and accountability, so We'll call— we'll just shorten it, CA, coaching and accountability. This person right now is starting off with $50 a month working with me. So $50 a month working with me, that allows for the interaction, allows for me to start working with them. They're using a credit repair service that I have, helping them with that. Our goal is to go from 520 to 720. Goal is to protect the household, get the estate plan in order. Let's get these initial steps done and accomplished. Then what? Second step. What do you guys think the second step is? Okay, hint. Cash flow. Let's see, let's see, let's see what you guys are saying. Perez starts with credit card at 25%. Yep, I'm a fan. If the HELOC is interest only, that's not moving and that's really bad. Yep, that, that $1,250 That's pretty much all interest. Pretty much. Literally like all interest. Nita says, so you don't hold with Dave Ramsey having zero credit score but lots of cash? I'd rather have both if I'm being honest, Nita. As a Puerto Rican Colombian coming from a minority family with no wealth being passed on to me, I'm already behind the 8-ball. By what, 40, 80-plus years? However long you want to, you know, throw on me in that sense. I look at credit, having a great credit score gives me access to capital that I otherwise would not have. And that's the only, that would be the only thing that is stopping myself from accessing capital. It's not my— Color my skin, it's not the color of my hair, it's not my height, it's not my expertise, it's not how much income I make. It's literally that, that darn credit score. If I have a great credit score as a minority, right, and Blacks and Hispanics need to wake up to this, having great credit levels the playing field. Period. It just does. So I like to level the playing field knowing that, hey, I have a little bit of a disadvantage. My mother's mother, my father's father, none of them took the time to teach me finance. So I'm behind the 8-ball on financial literacy, behind the 8-ball on implementation of financial education and strategies. And behind the 8-ball even more on credit score, because when I need something, I gotta go borrow it, and now I'm borrowing at higher interest rates. Whereas my fellow cultures across the country, my fellow Asians, my fellow Jews, my fellow whites, my fellow Indians, right, operating with great credit score. getting access to much better rates on the same debts. So they will pay less money over the same period of time, they will have more wealth. Even if we're making the same amount of money, doing the same exact thing. So yes, that is where Dave Ramsey and I will disagree. Because maybe there's a world if you make a ton of money, if wealth was passed on onto you and you compounded that wealth and you just never really needed to borrow, that's totally fine. I still would have a great credit score because why not? If all hell broke loose, at least I have capital that I can leverage. So those are my arguments for why I'm encouraging this household, this minority family, To get that dang $520,000 to $720,000 or higher. Because here's where the game changer is about to occur. Here's where we're gonna start putting on the boosters. Let's say in the first couple of months of working together, we get our estate plan in order. We have life insurance on the kids and the wife. We implement a tax strategy turning our sole proprietorship into a real business. Where we can unlock more tax deductions, reduce our tax liability, basically create more cash flow. And we go from a 520 to a 720 or higher. The next step is acquire the debt tool. Acquire the debt tool. We currently have a I have a second position home equity line of credit with a bank called Aven for $100,000. Aven is an online bank. There are no physical branches or locations, so therefore Aven does not offer a checking account, savings account option. So when any of you obtain a HELOC from Aven thinking you can do velocity banking, I don't care whatever videos you've seen out there, I'm gonna be the one that tells you over and over again, Aven and Figure are not the banks you want to use for velocity banking. I don't care what anyone else says. Please trust me on this. You're going to incur so many headaches if you try to implement velocity banking with those 2 tools. Reason being, Again, there are no physical branches. So if you do business with Bank of America, you're gonna have to wait days to transfer money from Aven to Bank of America and Bank of America back to Aven. Too many days, too many unnecessary days of paying ridiculous amount of interest. On top of that, Rates given by Aven and Figure are much higher than the rates that I'm gonna get you at local credit unions in your state. Watch my playlist on how to find the right HELOC in your state. I'm literally going state by state, so you're going to save so much money. So we're going to acquire the debt tool, and we have an option. We can either refinance that second lien HELOC for another second lien HELOC, or we could refinance the mortgage into a first position HELOC, getting rid of the 4.88% and the 11.99% and having a lower net interest rate. So we have 2 options. First lien? HELOC? Or second lien? Depending on the person's education and confidence will ultimately determine this decision. I would argue the superior product is going to be the first lien HELOC in this scenario. For this individual, they have— let me look it up real quick. I believe they estimated their home value is about $430,000. So mortgage, home value, $430K. We owe the $241,390, and we owe the $98,000. So we still have a good $80,000+ of equity. Let's say we could obtain An 80% loan-to-value, call it $340,000, I'll round down, credit line. And we refinance the $241,000 and the $98,000. So $241,000, and I'll just round up, I'll say $241,500. Okay. And I'll say 98,900. Okay, so that's 340,400. So we would have to get a little bit higher, so a little bit above 80% LTV. Let's, let's do 345 instead. So this would be a maxed out, pretty much. Maxed-out first lien HELOC. Okay, now if I were to project out 6 to 9 months to get all of this done, and then to acquire a first lien would take like another Month and a half, 2 months. It's safe to say that we could add 12 payments worth of mortgage payments, 12 payments worth of HELOC payments. So these balances will come down a little bit as well as all these other debts, right? So for now, because I'm being super conservative with the first lien HELOC. I'm gonna pretend as if the numbers didn't change and 1 year did not pass. Just to be super conservative, I'm gonna show you how we begin to create a steamroll effect if we were to acquire a first lien HELOC after a year of step 1, but again, keeping these numbers the same. We're gonna assume that the line of credit would be maxed out because it swallowed the mortgage and it swallowed the HELOC. And we're gonna project a, call it a 7.5% variable First lien HELOC with a 1-year intro, let's say, of 6.5%. So prime minus 0.25. Prime today, right now, is 6.75%. His HELOC is 5 points roughly above the prime. Prime rate. So 11.99%, go all the way down to 7.5% variable with an intro of 6.5%. So technically, even though this 4.88% is lower than 6.5%, when you factor in the total cost of the 2 debts, you bring it into one, and then we unlock Velocity Banking at that point. We're able to unlock Velocity Banking We free up this capital, and now we're able to drive all our income into this line of credit. That's gonna be the game changer that occurs. That would be the first step. Second step of this process, so first step, foundation. Second step, we're going after cash flow. In the first step, foundation, the first 12 months, we're focusing on repairing credit, getting the tax strategy in place, getting some life insurance, estate planning. These are all good things that just fortifies the foundation. Meanwhile, in those first 12 months, one thing I left out that we're gonna implement, this is part of first step here. So I'm gonna come down. This is part of the first step. We're gonna implement the 3-payment strategy. Had a video that's been doing pretty well lately where it goes over this in, in detail. The 3-payment strategy is gonna be a phenomenal way for us to boost our credit score on our own. This person has delinquencies, maybe some late payments, that requires credit repair. So I'm gonna come in and submit the disputes, get all that work done. 3-payment strategy says, take a revolving debt that we have. The revolving debts that this person has is the credit cards and the HELOC. So I said, we're gonna start with the HELOC because it's the biggest debt that you have. We're gonna take that $1,250 payment and we're gonna divide it by 3. So we get $416.66. I said let's just round up, call it $420. And you're gonna make a payment. 15 days after the due date, right? 3 days before due date, and then due date. That's how this works. This HELOC is due on the 22nd of every month. So you would count 15 days after the 22nd, you would make a payment. Right now it's August 28th. This person already made a payment to their HELOC on August 22nd. Instead of waiting till September 22nd to pay this $1,250, they're gonna make 2 payments before the due date, $420. And guess what? 100% of that is gonna go to principal. Without even trying to make extra payments on top of that, we are going to be paying off the HELOC slightly faster by having more of this $1,250 go to principal, right? And it parks in there and also satisfies the payment. It satisfies most of the payment in that, in that month. So we're gonna do $420, $420, $420, boom. On top of that, we are gonna take this cash flow in the first year of getting all the foundation in alignment, and we're gonna take a good amount of our cash flow, and we are gonna park it in the HELOC. Because at the very least, it is still somewhat liquid, right? I can, I can pull the money out if I need. So I am gonna park my cash flow by just making extra payments, but I really, I'm not encouraging this person to use velocity banking with this particular HELOC. But what I am saying is we'll drive some cash in there to park and reduce that 11.99% because it's setting us up to acquire the better debt tool, whether we go first or Or second. This is— in this example, we're going first. Before I go to the next part, let me know if there is a question on the 3-payment strategy, if that's clear. Alright, let me know if that's clear on the, on the 3-payment strategy. This is great if you're someone that does not have good credit right now and And you're looking to do things to boost your credit, naturally you just think, all right, I'm just gonna make an extra payment on the due date every single month. Okay, if you want to be a little more strategic to build your credit character, your credit profile, you can make 3 strategic payments throughout the month in that cycle of each debt that you have. On the utilization debts only, not your fixed loans. Your fixed loans are fixed. So you want to leave those alone. In terms of credit, sometimes those are actually in your favor to have those. As long as you're paying it on time, you're good. But when it comes to your utilization debt, that makes up 30+% typically of Of your credit score. So if you show the credit bureaus that your ability to pay is 3 times every single month, you're, you're compounding the amount of reporting that each institution will report to each credit bureau, all 3 credit bureaus. You're gonna get a boost. You're gonna thank me. All right, so Whatever your credit card payment is, you're carrying a debt right now and you're not doing velocity banking. This is for people who are not doing velocity banking. This is part of the pregame work to velocity banking. That one of the things that you can do is you can take any credit card, all your credit cards, and/or a line of credit, personal line of credit, home equity line of credit, And make 3 strategic payments throughout the month. For the HELOC, if you have a HELOC that's interest only and you make payments in advance of the due date, you're still gonna owe a level of interest, but that amount's gonna be far less. So by sending $420, $420, $420, It will satisfy most of the payment. They're still gonna owe a certain amount on, on the due date, and we'll use our additional cash flow on that day, on the due date, to drop those payments and to drop that interest cost. But by strategically making those payments, I'm telling you, your credit score is gonna jump. I'm gonna keep saying this over and over again for folks. Because you're literally gonna thank me in 60 days if you begin this. You'll notice literally after a full cycle, and you look at your credit score again after a full cycle, I'm gonna get thank-yous in the mail, in the email, or you give me a Google review, or you, you know, refer me business. Because when your credit score goes up, I'm telling you, you're gonna get more stuff in the mail, more offers. And you're gonna enjoy this. Perez says, is there an immediate need to improve credit? I'm thinking paying off lower credit card, car loan amounts will help with the score over a year or so. Yeah, Perez, so on top of credit repair, we're gonna do debt snowball, debt avalanche, cash flow index, we're kind of mixing it all in before we go full force with Velocity banking. So in those first 12 months of everything that I said, we're also paying down debt. We're targeting the HELOC because we want to improve the tool. That's the only reason why I'm skipping over the much smaller debts, right? And, and again, this is going to be a process that we get to figure out with the client. They may come back and say, you know what, can we do a split? Can we send some extra money to the HELOC and begin to knock off some credit cards? I'm in favor of that as well. In fact, through our credit repair strategy, we've already been told to target the credit card balances that have high utilization. So within that $21,000 that we, that we owe here, this is made up of like 5, 8 different credit cards. Yeah, about 7 or 8 different credit cards is made up of this $21,000 and the $582 of payments. What we're gonna do with each credit card that this person has is we're gonna try and bring those balances below 30%, but we're not just going to pay them off right away. We're gonna strategically pay them down all below 30%, drive the rest of our cash flow to the HELOC to bring that utilization down, to then get qualified for either a first lien HELOC or a second lien. Once that occurs, not only would we have the equity in the property available, because we can go as high as 90% LTV and have a $380,000, $370,000 line of credit. Again, being super conservative. For sure, we'll be able to consolidate the HELOC and the mortgage Into the new line of credit. I would also swallow up the credit card debts as well, if it's not already paid off within 12 months. Swallow that up, and we may even target some of these loans as well. But what'll begin to happen is we're gonna transfer all this debt into their home. Because right now they're equity rich and more on the cash poor side. Not super cash poor because they have pretty good cash flow, but they are more cash poor than— and they are— and they're equity rich. So they're very equity rich, not as much cash in this scenario. All right, so let me Eliminate this. Didn't see any questions about the 3-payment strategy. That's pretty straightforward. Literally, I'm putting money in your pocket. You're going to thank me, and I look forward to that. So now let's, let's show a little bit of velocity banking with the first lien home equity line of credit. Say we owe $340, and our credit line is $345. I'm gonna use the same income, $11,298 going in. We're gonna have a new expense number. Let's figure out what that new expense number will be. So we're gonna minus $9,550, we're gonna minus $1,250, and we're gonna minus $2,044.26 of the mortgage payment. So the money that will be coming out of the HELOC for other expenses are gonna be $6,000. $6,000. $2,0624. When we go from a 30-year fixed to a first lien HELOC, guess what? We're no longer going to have an escrow account. So part of that $2,044 includes taxes and insurance that we're no longer gonna have. We're gonna pay Property taxes and homeowner's insurance ourselves, but directly out of the first lien HELOC when it's due. And we're gonna pay those bills in full and actually save quite a bit of money. It's gonna be exciting. All right, so what do we have? $340, $11,298 going in. $6,206.24 outgoing with a 6.25% rate. Let's do— let's see this real quick. I'm gonna do some quick, quick, quick, quick, quick math. Let's do 340 times 6.25 divided by 12. So the highest amount of interest that we're going to pay is $1,770.83. All right. Interest by itself. But now do this: $340 minus $11,298, so that's money going in, times 6.25, divided by 12. Notice how that number goes down. $1,711.98. And then expenses coming out, $6,206.24, $334 times— boom, $1,744.31. So somewhere between $1,770.83 And as low as $1,711.98. So we could say somewhere in the middle of that is what we would pay in interest in the first month. Cash flow boost up right away from that move. $11,298 minus $6,206. Technically speaking, $5,000. Is being parked, waiting, sitting in the HELOC. And then on the due date, minus another, call it $1,750 of interest. So our cash flow is like $3,300. It's higher throughout the month, and then there's gonna be 1 or 2 months out of the year where we have to pay those property taxes and insurance in full. But we're getting the advantage up front. Of using those dollars twice. And actually the bills themselves go down. So our expenses go down when you switch over from a 30-year fixed to a first lien, just from property taxes and insurance alone. Because now you're paying it annually as opposed to monthly, and then having to deal with, having to deal with Late, not late payments, but shortage. That's the word, dealing with shortages on your escrow account and then getting blindsided like, oh, you owe this much, and if you don't pay it now, we're gonna roll it into your mortgage payment, and now your mortgage payment's higher. That happens to so many Americans. Whereas, hey, we could be using the equity in your home to pay for those things and also using the same dollars to pay down The property's debt. And getting a tax deduction on the interest that you pay inside the HELOC. All right, so let's say we now, we did the foundational moves, we acquired the debt tool, first lien or second, got a much better rate, much better product overall, we're implementing velocity banking at this point. Over time, We're gonna begin to shift all this debt, all this debt out of there, out of the institutions, into our line of credit. And that would be the play. This would be a couple years or less to knock that out. And back to, I think it was Jamie, Earlier that threw out the recommendation of doing a cash value policy. Let me see who it was. Let me see, let me see. Who was it? Was it Perez? No, it was Dynamic. It was Dynamic. Yep. That said, take some cash, put into a cash value policy. So one of the cool things now in terms of a third step— so acquire the debt tool and implement velocity banking. Acquire the debt tool, do velocity banking. Second step, we're gonna do that for 1-year plus, 2-year plus. Somewhere along the way, we can implement or begin to implement the third step, which would be infinite banking. And that's gonna be building wealth plus debt payoff. No risk. Because whole life insurance is not an investment, so there's no risk attached to the asset. As long as I pay my premiums on time, I'm getting a guaranteed interest rate, I'm getting dividends that have been paid for over 175 years plus in a row, I get security, I get tax-free growth, I get liquidity, and I get death benefit protection. Get a lot of things with just that one asset. By this point, I'm confident that this person would be very confident in themselves, in their ability to manage and steward their finances, spend less than what they make, cash flow. Their education is gonna be higher, their knowledge is gonna be higher, their wisdom is gonna be higher. That they'll be able to stack all of the good things that we're doing and finish it off with IBC, infinite banking. Starting a high cash value life insurance policy where we can use the first lien HELOC to basically fund our own bank. We use the bank's money to acquire a banking tool. To accelerate debt and create more cash flow. So we're basically recapturing all these payments— $240, $329, $528, $582, $114. We're recapturing all those payments. It immediately turns into cash flow when it sits in the HELOC because the debt's gone. Remember, I'm only obligated to pay interest on my my HELOC. So cash flow remains 100% principal, paying, paying down the balance. That's why it instantly becomes cash flow. That cash flow is now paying down the line. As the line gets paid down, more equity frees up. As more equity frees up, I would say a target would be if our max credit line is $345,000, I I'm gonna tell the client, hey, let's get the credit line below $227,000. If we can get the credit line below $227,000 over the next couple years, and all this debt rerouted into the first lien, or majority of it, then I would feel comfortable Now starting the IBC route where you begin to extract capital out of here to fund your own bank. So you use the bank's money to fund your own private bank and begin to build wealth there tax-free. So you're getting out of debt, but you're also building wealth. And as you build wealth, you're going to build capital of which you're going to be able to borrow from At much cheaper rates than what the banks would lend you money at. And we remain with our first lien HELOC, and we have our banking product. These assets over here would have continued to, you know, compound slowly. And notice how the theme kept cash flow over net worth, cash flow over net worth. And notice how net worth becomes a benefit. Where does net worth appear? Net worth appears in equity. The person's home appreciates, they have more equity available as we pay down the line. IBC is a net worth thing. We're buying our future net worth, the death benefit. Cash value is growing, net worth, okay? But it's liquid. We borrow against the cash value policy, We begin to make investments. We buy investments that create cash flow. The asset is a net worth. It'll increase in net worth over time, but it's producing cash flow today. That cash flow comes back into the line of credit, pays you back over time, or, or back into the policy, either one. And we'll figure that out step by step. Let me see what questions, um, are popping up. There was a question earlier about, can you do that 3-payment strategy on a credit card? Yes, Nita, absolutely. So any revolving debt, personal line of credit, business line of credit, home equity line of credit, personal credit cards, business credit cards, any debt that you're carrying, if you're not already doing velocity banking, because velocity banking would interrupt that. If you're doing velocity banking, ignore the 3-payment strategy because you're already doing a strategy. You're already doing the thing that's getting you out of debt, and there's really no reason for you to do the 3-payment strategy because your credit is where it needs to be. The 3-payment strategy is great for people who have terrible credit, low credit, they need to repair credit. And they don't have a debt tool. So they don't have access to a debt tool, therefore we're not doing velocity banking. In order to do velocity banking, you need a debt tool. Can't do, you know, can't finesse that. So you need a tool, you need credit. So it's part of the pregame work, all right? 15 days into the cycle, 3 days before the due date, and then the due date itself, making payments. When you're dealing with a personal line of credit, It's gonna be principal and interest each payment most of the time. Could be wrong. No, your— those 2 payments before the due date will be principal. Yeah, correction. But the overall total payment amount will be principal and interest included, whereas a home equity line of credit, it's just interest only. So when you make those 2 payments in advance, That's 100% principal, 100% principal. It's gonna lower that third payment required, which is interest. It's gonna lower that. What he'll do on here on the board is we're gonna take that excess cash flow and apply it on the due date. So that interest on top of more principal, paying down that, that line. And we'll be having fun along the way. Notice how this whole entire time in terms of Foundation. I didn't touch his cash, didn't touch the, the other assets, didn't touch anything from the business. So these are all external benefits that can improve what we do in the first foundation. This person might say, you know what, Denzel, I want to take $10,000 and just really pay down my credit cards to really boost that credit score. It's gonna shorten The foundation window from 12 months maybe down to 6 months. They may want to do that. They might say, you know what Denzel, I got $37,500 in the 401. I can borrow about half that. I, I'm able to borrow like $15,000. If I borrow $15,000 out of my 401 and pay off some debt, What does that do? It reduces your overall DTI. So the credit bureaus see that you have $15,000 less of debt. You're still in the same amount of debt, but when you take a loan out of your 401, it does not report to the credit bureaus. So now, from a foundation standpoint, from a credit repair standpoint, That might be something they want to implement as well. So we could do that. We can do a combination of 401, maybe use some cash, and basically take debt off the board so it no longer gets reported and get that credit boosted up. We'll, we'll clean up his credit history, any late payments, any delinquencies, with disputes, any hard inquiries that are still pending on there. We want to clean all that up. That's gonna boost credit. And then we just take our monthly cash flow and do a simple snowball strategy, or cash flow index, or avalanche. Anything that's gonna work best for this individual is how I'm going to like yield along the way, but I'm still going to be teaching them the strategies that will allow them to go faster. But I got to start them somewhere. That's the foundation part. We're spending a little extra money on some life insurance, some estate planning. Anything we pay towards tax strategy, we're going to get all that back in the form of more money because we paid less in, in taxes. From the business income over here, client might say, hey, you know, I want to, I want to take $500 off profits from the business and, and feed it to the personal and help pay down some debt. Or my— once I established the business, maybe I could get a business credit card or something and, uh, start to take debt out of personal and put it on business? What does that do? If I take debts out from personal, move it to business— some, not all— what that does will boost my personal credit score, and that won't get reported even though I still have the debt. So there's a lot of things that we can do here that would be external benefits that would enhance, shorten the timeline to get us closer to the HELOC. The closer we get to improving the debt tool, the more capital, the more debt we'll be able to consolidate. I was conservative about getting approved for like $340,000, $345,000. I'm pretty confident they can get closer to, you You know, $380,000. And then like I said, a year out, you know, these balances would be down. All right, so but I'm just acting as if nothing happened and what it would look like then. So it's like worst-case scenario. Fantastic. Clean. Great. Let's see, let me see if there's any other questions you guys have. Let's see. Denzel, I have a challenge for you. Can you create a video on how you would use velocity banking to balance the U.S. deficit? If anyone can balance the budget, it will be you. That is an interesting challenge that I will consider for sure. Won't the bank apply some of those payments to Say they bill you on the 1st of each month. So yeah, so it would depend on the due date. So for this particular debt, it's due on the 22nd. So any payment I make before the 22nd is going to be 100% principal, especially when you're dealing with an interest-only HELOC. Even if it was a principal and interest HELOC, still the payments you make before the due date will go 100% principal, and it changes the net amount of daily interest that you would get charged because now you owe less in the account itself. The other thing that isn't— is an option for this client here, and I'm not sure if Aven will, will do it, but some HELOCs out there, let's say for example we're making $420 payments principal 3 times per month. So that means $1,260 $60 is now available inside of the line of credit, okay? Throughout the month, that reduced the interest cost just a little bit. Some banks will, on the due date, can pull the interest that's due from the available equity in the line of credit. Some banks will allow this. So instead of you having to come up with another $1,250, they can just pull it from the available equity in the line of credit. Especially if you're someone that's putting extra dollars into the line of credit, either you manually just pull the money out of the HELOC and then make a payment interest on the due date, or some banks will will just automatically do it. The bank that I have my first lien HELOC, that's the case. But not every second lien HELOC is like that. I doubt Aven is like that. So again, in this case, what this person is gonna be doing is they're gonna be taking a portion of this $1,797. Say I cut it in half, $1,797 divided by 2, call it, call it $800. Okay. So they're making $420, $420, $420. The third $420 on the due date, the 22nd, plus $800, they're putting $1,220 on that third payment, which would be the due date of this HELOC on the 22nd. And then 15 days later, $420. 3 days before the due date, $420. $420. On the due date again, $1,220. They take the other half of their cash flow, apply it towards the credit cards to bring each credit card below 30%. So we're, we're strategically paying down debt with the intent of boosting credit score as fast as humanly possible. So that we can just restructure all this debt. Get a first lien, get a second lien, much better lower rate, intro rates, something attractive. And then just swallow all that debt up into the line of credit, get tax deductions, speed up cash flow, have liquidity, off to the races. And then that sets them up perfectly for infinite banking. And now they're doing velocity and And infinite banking together. Building wealth while paying off debt, taking on no additional risk. In fact, eliminating risk and reducing risk altogether. Those of you who are not clients, never worked with me before, okay, I'm gonna, I'm gonna drop my calendar link. I'm gonna start doing this. On live streams only. Okay, this is for people who are serious about getting that coaching and accountability, getting that support, but you want to have a conversation with me first, let's say. All right, so this is— again, this is being dropped in the Zoom room. And let me Drop it in the chat as well. All right, so I just dropped my calendar link. It's a 30-minute window that you can book on my calendar, whether you're a client, not a client, doesn't matter, for spending the time with me to improve your finances, learn these things, get it on repetitive, right? I'm gonna do Just keep doing case studies over and over again. It's an opportunity to figure out how we can work together. This person on the board, perfect example. We had a call for about 30 minutes, they were not a client. We looked at all the numbers, we identified all the opportunities. This person sent me all their numbers in advance, we communicated in advance. It's Started answering some questions. By the time we hopped on a call, we identified bump bump bump bump bump bump bump bump bump. This is what we're gonna attack. This is what we're gonna solve for. And then we figured out what we can afford to put towards coaching and accountability. And we worked we worked out a strategy that said, okay, Denzel, I want you as my life insurance agent. I want your help with tax strategy. I want your help with credit repair. I want your help with estate planning. And so we figured, I said, okay, look, let's get you on a subscription coaching, $50 a month. Easy, small, we can increase over time. Yeah. Credit repair, $99 startup, $99 a month, $20 monthly. For 3 credit bureau monitoring, get you signed up. That's enough for me to dedicate more time to this person. I'm connecting them to my tax person. If you sign up with my tax person, okay, that's more incentive. Let's stay in the ecosystem. You allow me to be, you allow me to have the honor of Being your life insurance agent. So now I write some policies on you. That's— this is like additional, like, layering of this person becoming a client in different areas that would, say, make up for my normal coaching fees that I charge. So I'm very, very flexible with folks. Yeah. I want to meet you where you're at. I obviously want you to have the majority of your cash flow going to where it needs to go to improve things. And then once we have that increased cash flow, you're like, here, Denzel, here's your coaching fee. Here, Denzel, let's bump it up. And now they're investing in that partner, that coaching partner, with that accountability partner to see this through. The whole way through, right? This this person, we're gonna work together for years. I already see that. So I'm excited about that. That's the link in the chat. Bring it up on the screen. That'll be valid. I'm gonna start really just just giving even more and more to the community. Those of you who are active. You're you're engaging in the live streams. You're coming with me every Friday. We're coming together. Twenty twenty six is going to be a very very strong year for a lot of folks. We're going to end the year very very strong. So I'm excited about that. Get on my calendar. Let's have a conversation. Let's figure out how we can work together. Over the last eight years, I've built an entire ecosystem, a financial ecosystem, and I'm also excited to share with you this is. This is like you're getting this first, that now I'm gonna be able to offer financial advisory services. So I myself, not a financial advisor because I am a content creator, so that's gonna— that'll be an issue. But I have financial advisors now on my team that can help on the wealth accumulation side of things to set you up perfectly. For retirement, having the right accounts, the right tax strategy, and the right stewardship and management cash flow strategy that we're working together. So if you've got old 401s that you just have no idea what it's doing, you've got old IRA from a previous employer, Roth IRA you don't know what to do with, just like stagnant retirement accounts, and you want to increase the rate of return, you want to have professional management and customer service, I'm going to be able to help you with that. So reach out. For those of you who are just kind of like sitting on these side accounts, you don't know what's going on, you're getting charged, I don't know, 2% or more, we're going to be able to beat what your current fees are, charging you less, and you're going to get coaching. Now And support, customer service, you know, reports, and just taking it to a whole nother level, a whole nother experience. So that's what I'm really, really excited about to share with you all. Get connected with me, get on my calendar. Let's have some fun. All right, God bless you. Enjoy the rest of your evening, and we'll be talking soon. All right, bye now.