How To Handle Velocity Banking During A Financial Crisis

Today we're gonna look at an actual case study of going from doing good financially and doing velocity banking and doing infinite banking and doing all the correct things and then hitting a crisis, a financial crisis. And then I'm gonna show you how this particular person is operating in that crisis, how they're pivoting, what their mindset is, all the different things. And I think what I'm gonna do is I'm just gonna take the rest of the. Because it's like every other phone call I'm having as of the last 90 days, really like most of the end of 2023, it's like every other phone call and every other new client that I'm acquiring is doing negative cash flow out the gate. Or if there were an existing client doing well, they've now entered into a negative cash flow because of a recent crisis or whatever. That may be all the different reasons why we enter into financial crisis. So just throwing all that out there, then it's people on the verge of crisis. So getting really close, they're like, hey, this is going on. Death in the family, divorce. So I'm personally seeing the recession financial crisis already right now with clients and I mentioned the Kwok Brothers earlier and they hinted at potential recession crash going into 2024 next year. Most of your financial gurus and experts, like your Robert Kiyosaki's of the world, Grant Cardone's of the world, like all these other gurus that are in the finance space, in the finance industry, a lot of them are saying the same thing that, you know, we could very well see a crash and the way it affects the middle class. So majority of my clients are middle class, upper middle, lower middle class, right. And then I have finance geek ministry where I'm serving people for free that are in like 30, 40, so I would call that above poor, but very low middle class. So if you're in the 30, 40K range, I would say that's lower middle, right. Above poor, depending on how many members there are in the household and also just depends on your geographical location. If you're making 30 grand a year in Miami, Florida, South Florida area, you're poor. If you're making 40 grand a year in Georgia, you might be doing alright. So it's like geographically can, can have an effect, but also the way we manage and steward our finances also play a factor into this whole thing. So what we're going to be doing, I'm going to be bringing case studies to you showing you exactly how people are operating. What's Our move? What's our mindset? How do we stay positive? How do we pivot? How do we listen to God? If we're being removed from our steady paycheck, our steady career, and we get laid off or we get fired, we could look at it like a crisis or we could look at it like an opportunity, right? When I got fired, I initially saw it as a crisis. Oh my God, what am I going to do that at all? I'm scared, I'm crying, I'm fearful. Once I got over it, then I saw the opportunity. God was taking me out of that position, out of that steady paycheck job, to step into my unique ability, my area of gifting. And because I tapped into the gift, my gift made room, right? God made room for me in the marketplace. Hence, we're here today. Five years later, had I stayed at that job in food and beverage, probably none of you would have known me today and God knows how many other people would be in financial crisis right now if I was not coaching and working with those people in 2019-2020-2021-2022, and now 2023, right? So it has ripple effects, positive and negative, when we are not reaching for our purpose according to God's will, when we are not pivoting, when we are not entering into the space that we're supp least working towards it. And sometimes a crisis is what's required in order for you to make that change. So that's how I want to start really programming our mindset. And it's not every day we go into crisis. So sometimes what can happen is we're on a streak, you know, maybe a good 3, 4, 5 years, 7 years, 10 year streak of doing well. And you forget what it's like to be in a negative cash flow position or in a financial crisis. And so then when you finally enter there, sometimes you can be like, wait a minute, I've been doing so well last five years, 10 years. Did I just erase all that progress? That's one way of looking at it, right? Or it could be, hey, maybe I got too comfortable and God's trying to push me into the next level of my creative being using my unique skills, gifts and talents, right? So with that being said, let me stop on my rant, let's take it to the whiteboard and dive into this case study here this evening, and I'm going to give you the timeline. Okay? So four major numbers. When I first started working with the client, which was mid last year, they found me prior, but they booked Their very first phone call on June 6th of 2022. So they came to the table with these numbers. 12,000amonth in income, husband and wife. So combined income 12,000amonth. Total expenses $8,030.49. Total debt 468,116.65. And just under 4,000 in cash flow per month. Out the gate. We were snowballing using credit cards. Then we eventually got a debt tool to start doing velocity banking. And it was right around November of 2022, or a little bit sooner, they acquired a first lien heloc, a first position HELOC with First Savings bank, if I'm not mistaken. Yeah, I believe it's a First Savings Bank. First Lien HELOC. They got it for 539,400 as a credit limit. At the time in 2022, the rate was about a point and a half less than what I'm showing right now. So it was a little bit lower then between 1129. So from six six to 1129.

Right.

In 2022, this is how much debt they removed.

Right.

So that's how much the debt went down by. And then from November 2022 all the way to June 2023, the debt reduced down to 244,666. But then crisis hit. So what was the crisis in this particular situation? Husband lost his income, so he got laid off. And in doing so, he was given a. What is it called, a severance package. So you get a lump sum of money paid out to you to buy time. So that's what occurred. And wife is still working. So that's the income that wife is still bringing in, $4,200. Now, as you can see, when we first started out the gate, we're spending eight grand. Then it reduced down to 5,800. Their income increased. So at one point, we were doing really hot with. With the cash flow, about $7,500. And then boom, we lose our income. Expenses went down. He immediately went into conservation mode. So he started cutting some things off, right, to reduce expenses. Then he's just keeping in mind of all the other assets, other things that him and his wife have going on. And he's been without work for about a month or so now. So we spoke on November 2, right. This month that just happened a day or two ago or something. And so we're now working together. We still have the first lean heloc. Basically, all of this, most of this debt right here is right in the first lien HELOC so it's at 216, $632 owed. That's how much we owe on this first position HELOC. So if you do the math, there's about a $300,000 gap of cash. And when he got the severance, which I think was over $50,000, it you just dumped the whole entire thing into the first position line of credit, right? The rate's at 9.77% at the moment. So we're still doing velocity banking despite me losing my income. And the best way to prolong dollars in a situation when I go negative, when I lose my position is to live out of the line of credit. So we go from no longer paying off debt. So typically when I lose my job, I no longer have income coming in, so I'm no longer paying down debt. I need to survive. I need to get past this particular season that I'm in. So the way that we're gonna prolong the season, right, that severance instead of, you know, 50 grand or whatever he got, it goes in your checking account instead of me just spending that money from the checking. And then however many months that'll last, you know, if they have $5,000 a month and you have 50 grand, that's gonna last you, what, 10 months before you run out of money. So between 10 months or less, hopefully we're in a new position, right? We get that new career and we get it going. Or I can take that 50 grand and if I have a debt tool, I can just throw it in the debt tool, especially if I had an existing balance on it. So now I'm affecting and manipulating the interest costs, and then I'm pulling from the first lien month by month, week by week, to live, right? So now we're only bringing in 4,200amonth. We have the 5,000 of expenses, 244 total debt. Our cash flow is now negative $896.45. So that is a dramatic shift, right? Think about that. Go from positive 7576,43 to negative 896.45. I don't care who you are, that's going to affect you emotionally, spiritually, physically. Right now, us being able to process this, if we have an accountability partner, AKA Denzel Rodriguez, personal finance geek, and you're tapping in and you're booking your phone calls with me, and you're staying consistent, this is a very good way to stay on track. Now, what's really cool about this particular situation, this husband and wife And I'm specifically working with the husband. Let me give you some really cool context here in terms of what we were doing in the land of good over here when it was nice. Right now we're in the land of crisis, so we're operating, being effective with our dollars. So I'm going to share a couple of things that we were talking about in this period. And I love that God gave me the words to at least plant the seed to have this guy think in the future in this area and then in the future.

Right.

So typically when I'm doing phone calls with my clients, it's usually numbers based on logical analytical map out right where we're going, where we're headed. Cool. Once that's established, after the first couple of phone calls, then we go into typically I start planting an early seed where I'm like, hey, if money wasn't an issue, what would you be doing? Do you love your career? Yes. Okay. Where do you plan on taking this career? Are you looking for equity ownership in the company? Are you looking to exit, start your own business in that same industry? Or do you not love your career? It's a stepping stone for you to be able to start your own business. You're just trying to get the experience right now. So I'm just planting these seed, asking critical thinking questions for the client to answer. And I'm just taking notes, taking notes, taking notes. Then I'm talking about goals, right? I'm asking them, you know, big. Think here. Like big, you know, I want you to, you know, think big for me. What is it that you want in your life other than financial security, independence, passive income, enough money to take care of your wife and kids and all that stuff. Like that's little, right? And they're like, what? Like, that's little. Little. Think, think big for me. What is something like, like huge out the box thinking that, you know, you'd want to be doing. So these are seeds that I'm planting little by little as I gain more and more trust and comfort with you guys when I'm having these, these calls with you. So for, for this particular case, here's what we were talking about, what he shared with me. He had talked about how, you know, he is into art and self development. These are his interests. His wife, the two of them together like to cook recipes. So they're, they're putting together a cookbook. They like to cook, you know, different recipes. And then they'll, they'll take photos. So they, so they have Instagram where they take photos of the recipes that they cook together and they share it with their friends, family, audience, whatever it may be. And so we were talking about, okay, how do we, you know, build a business around that, around that passion? What are we going to sell and what are we going to, you know, offer to people to improve their lives, improve their recipes that they're cooking out? Okay, boom. It was a cookbook. Then we were talking about being a content creator to deliver that message, right? Maybe art and personal self development as well. So we, we talked about being a content creator.

Cool.

Then that stemmed into maybe having something of a media company, right? To be able to handle all these different ideas. So, you know, going back and forth, back and forth in this time, this time, then this happens and now this becomes priority. So now he has the opportunity here we have three distinct opportunities in this particular situation. You might resonate with this as well. So option one, look for a new job, right? That's typically what most people do, right? Look for a new job, career similar or more income compared to what you were making before, right? That's usually like, boom. First initial thought, gotcha. Two, start that business. That's always been in the back of your mind. Start that idea. It's always been in the back of your mind. So we're gonna put that here. Start your own biz, right? So that's very general, right? But that's essentially the scariest option that has the most technical risk, right? Boom. I'm gonna go do my own thing now. God, just put an opportunity in front of me. I now have all this free time. I'm gonna go all in on my business. And this idea or these ideas that we have been talking about, in the season of good, in the season of abundance, right now we're in a season of potential lack. We're in a season of maybe there's a, how the Bible will call it like a plague or something like that. In agricultural times, when there is no harvest, so there's no fruit being made. So whatever you call that season crisis. Crisis equals opportunity. Look at it that way, right? So start your own biz. And then three, this was something that was another thing that we were discussing over here. But dad has a business in bakery, so it would be helping dad build his business. And that'll be in bakery. So three distinct options. Easiest one out of the three is this one right here. Just look for a new job. We've got that severance. So you say, okay, within 10 months or less, I really should, I should be able to find a new Career easy, right? Get right back into the rhythm of things.

Get.

Get back to positive cash flow. And then, you know, this goes on the back burner again. But it's, you know, it's on the side. It's something that we're, you know, continuing to build. So I want you to decide. Put a 1, a 2, or 3 in the comments, right? And thank you, Latoya. Famine, right? So that's a. That's another word for it. So not really plague, but famine, right? Or crisis. That's. That's our. Today's version, right? When we hit a financial crisis, back then it was the agricultural crisis. Today it's financial crisis.

Right.

Because we don't have gardens in our back and, you know, cows and stuff. Unless you're a farmer. I got like one or two clients that are farmers, but other than that, most of us are in cities, right. Urban areas. And this is what a crisis means to us. So put a one, a two, or three in terms of what you would do, right? What are you. How are you processing a crisis when it. When it comes into your life? What's your reaction? How are you being proactive in that reaction? You know, how are you making decisions? I just want to see, you know, are you lose your job? Are you immediately going to go look for another career job or two? Are you gonna do the riskiest thing, which is start your own biz? Start that idea that's been creeping in the back of your mind that you didn't have time for because you're doing it on the side and you're in. Your job was taking up all your time, so you didn't have no free time.

Right.

Or three could be another version. Like, you know, doesn't have to be helping, you know, the family biz, but you could put your own option for three, right? Outside of look for a job or start your bizarre option. Three is like another version of two, but maybe slightly less risk.

Right.

Maybe it's looking at that opportunity that was presented to you five years ago, and now you're going to go revisit it, which is technically like a job, a position, not necessarily your own thing, right? So Antwan says three for him. Latoya is two and three. Eric is one.

Good.

Minor says two. But it takes a lot of faith. Absolutely. And then Sam is a 2 as well. So between Sam, Shannon and Minor are the biggest risk takers in the room right now, right? Biggest risk takers. And then the least risk takers are the people that chose one. So you're maybe Just kind of like just very, it's logical, like, hey, I need to have that steady, you know, paycheck coming in and I'm going to keep building my thoughts on this on the side here with the free time that I have. And then once that builds and is and it generates enough income to replace my job income, then I give myself authority and permission to quit that job and go full in that idea that's now making equal to what I'm making in my full time job. So it actually, it's hurting me to keep working in this career because it takes less time to make what I'm making in that business, right? So then you quit the career job and then you recover 40, 50 hours that you put into the business and you can easily explode, double your income. I'm by the way, I'm a number one. Like, like I'm kind of like a number one as well. Even though in my personal situation back in 2018 when I got fired, like my initial first reaction was I was looking for work elsewhere. In fact, I was actually trying to get back my job. I was trying to get it back, explain to the owners, hey, this has been a misunderstanding, right? Wrote a whole letter out and all this stuff. My mom probably remembers this. I was at the table all angry, pissed off, putting this whole letter together to deliver right to the, to the main decision maker, the owner, because the HR manager just, we did not connect, we didn't have a good relationship and felt like I was being demise and all this stuff. Terrible. So my first, first reaction was one, look for a job, look for a career. I tried to get that job back when that was not an option. I signed up for Uber and Lyft. I was getting my, I was uploading my, you know, licenses, insurance and car and all that stuff, getting it registered. I was gonna do Uber and Lyft, right? Get that side hustle going. I needed money right here, right now. I was looking through my list of contacts to see if there was any job openings anywhere in the food and beverage industry, because that's the experience that I had. But then, you know, option two really crept up on me where it was like, man, I think I'm gonna take a chance. Boom went in and that kind of happened. But notice how my first reaction was option one, right? So don't feel bad. Don't really, don't let emotions, emotions are not directions, right? Your emotions are not directions. Your emotions is just giving you data, right? It's like, oh, why do I feel like this? You capture that Data process it. But you don't let that influence a decision. Because emotions are not actually a part of us. Emotions are something we literally manifest and create in our brain and then it becomes our reality. So it's not something that like comes from within you, right? It's something you literally manifest and then it latches on to you. So if we just evaluate the emotion that I'm feeling when I enter crisis, what is my initial knee jerk gut reaction? Think about why am I responding like that? Is this actually right for me? Is this actually truth for me to move forward in? How do we validate that? Boom. Prayer, Especially if you're of the faith believer.

Boom.

We need to pray to the father, need to get orders from headquarters, taking a rest, time of rest, time to explore, build the base. Consider, consider this phase one of option two. When you go at option two, you can't, I don't want to say can't. You should consider not reacting the same way you would with option one. So option one is very logical, straight to the point you're looking for a job, career in the area of the thing you already know how to do, that you already have skill in, you already know how to do this particular job. You're qualified to an extent that employer hires you to do that job you already know how to do because of prior knowledge and experience and wisdom that you have. So it's kind of pretty straightforward. Now if we go with option two with the intent of making money as your initial like driver, even though you're in a crisis, negative cash flow, you may fall completely short of that path because you didn't do the, the initial ground game work. When you go at option two, start your own biz, start your own thing, do your own thing. Right when you go with that option, little did you know, you just made a, a decision to change your actual whole entire life. So if I'm going to go with option two and go into a whole new direction, I'm changing my life's course. So therefore whatever I was doing in career job over here, some of that I might pull from it. But my way of being completely needs to shift completely. How do you do that? We need to create the time to actually go through that, that change. So what that may look like is a sabbatical, time of rest, time of reflection, more time with, you know, masterminding and mindset training, growth training, exploration, reading books, going on a hike, building the base. That's really phase one. That's first step. And honestly this, this could be about a Three to six month process in and of itself, not even making any money yet, right? I'm not saying that we won't make money out the gate. That wasn't, that wasn't the case for me, right? Like I made money right out the gate when I made my switch. But also keep in mind that my foundation, I was building my foundation in the time of quote, unquote, good. Like when I was doing okay, right? So I was already building that base and taking that time. And then when it finally came, it came faster than I, I wanted it to. I wanted to come in my own time. And that usually don't happen. So I, boom, had to really move forward with it. And so when I out the gate, made a couple hundred dollars, a couple hundred dollars, then it was a couple thousand, then it was a couple more thousand, then it was, you know, 10,000. It kept increasing. So that may happen for some, but for others, it may take longer to rest, explore, sabbatical, build the base, read the books, get the mindset training, the growth training that you need in order to really go all in on that idea, that business that you have. So allow that, allow God to work on us. Because all work works. All work is profitable. It just depends on how the work worked on you, right? Either work is working on you to make you better, or work is producing some sort of revenue or profit, and then that's the profit. But both is profitable. So all work works. Keep cool. So that's phase one, right? You're studying. I'll throw that in there as well. So allow that to happen. Now, here's the thing. In this particular situation, we have a pretty, like, really nice, solid emergency fund, if you think about it, $300,000 emergency fund built in. Do I want to use all that? 300,000? Absolutely not. But he did get a severance and basically said, denzel, I'm going to take the next one year, 12 months. So he's taking 12 months to go all in on this project. And I told him, you know, in the beginning, boom, we need to build the systems and study. And he then also said, yep, I'm also going to, you know, I want to kind of rest here, allow my creative mind to flow, right? You got to give that. We're all creators in this room. You all have the authority to create. You're the author of your own life. You have the authority to create things. You've been authorized, right, to have dominion on, on this planet. And we get it from our author who is in heaven, right? That gives us Life here, the ability to operate, which is phenomenal. It's a great system, works. So you kind of got to let that mind actually stop because when you were working at that career job, putting 40, 50, 60 hours in, you really don't have a whole lot of time to put into that creative mind of yours. But now we do. So in his case, we're tracking for 12 months. Then I'm going to run the numbers over here on what that would look like in 12 months from now, making no income. So we can show like worst case scenario. Here's where we're at best case scenario. We're going to be making just enough money to get back to a positive cash flow position. I mean, if we really think about it like good enough is being able to take these ideas right here. Art, self development, content creation, taking photos on Instagram of the recipes, the best food that they're cooking, the media company and developing a cookbook within 12 months. Whether we do one or all of those things, all I really need to solve for is generating enough income to get back to a positive cash flow position, which is only about $1,000. So if I'm at $5,200, I'm cash flowing like a hundred bucks or so. And then from there it's just a matter of simply monitoring the finances and reinvesting the profits from the business to keep, to keep it growing, to get it back up and try to work our way back to that number. Will the, will the debt elimination process slow down? Of course, yeah, it's going to slow down. He is now, remember we went with option two, which is changing the direction of our whole entire, the rest of our life. He's doing it now as opposed to seven years from now. So the guy that goes with option one, they lose out on the opportunity of option two, right? Not to say that someone shouldn't do option one again. I'm letting you know, if I had to do this all over again, right, I still would probably have the first reaction of looking for a job or career. It's just how I'm wired. Solve for the immediate problem, right? I'm not that great at thinking long term. This is something I'm learning in my, in my business life. You take away my business life, put me back into being an employee, I'm going to be thinking like an employee again. So if you removed all my wisdom and knowledge that I've accumulated over the last five years, remove that, put me back in the same position again, right. I'm probably gonna go with Option one. And I would bet if you removed the business from me but kept the wisdom and knowledge that I accumulated, I would still have the fear. I already know it. I would still have this me being vulnerable, me being real, right. I would still have the fear, and I would look for that job or career because I am the type of person that needs consistency, steady flow, and then once I have a level ground, I feel like I can do my best work. So I'm not the type of person that actually works great under pressure. I don't think I might be good under pressure.

Right.

I'm just not the type of person that wants to put myself in that kind of position. If I can avoid it, I'm going to do my best to avoid it.

Right?

And when it comes to explosive growth, right. Unfortunately, into being an employee, I'm going to be thinking like an employee again. So if you removed all my wisdom and knowledge that I've accumulated over the last five years, remove that, put me back in the same position again, right. I'm probably gonna go with option one. And I would bet if you removed the business from me but kept the wisdom and knowledge that I accumulated, I would still have the fear. I already know it. I would still have this, me being vulnerable, me being real, right. I would still have the fear, and I would look for that job or career because I am the type of person that needs consistency, steady flow, and then once I have a level ground, I feel like I can do my best work. So I'm not the type of person that actually works great under pressure. I don't think I might be good under pressure.

Right.

I'm just not the type of person that wants to put myself in that kind of position. If I can avoid it, I'm going to do my best to avoid it.

Right?

And when it comes to explosive growth, right. Unfortunately, you don't have an option. You have to be in the world of being uncomfortable. But when we're just talking about entering a crisis, going into a negative cash flow position, my brain is only solving for that immediate first solution right then and there. I haven't figured out how to think big in crisis, like in terms of. And. And by the way, this is me, like, working through that, right? Because if it happens to me in 2024 or something crazy happens, that'll be the next test for me that, that God will put me through. So it's funny that, like, as I'm working with my clients, I'm also letting them know, like, look, you know, I'm not Like claiming like I know it all. I'm probably going to respond the same way you're going to respond if you were in this situation. We're both. I'm trying to create challenge for the both of us to think differently. Hopefully that we can think big so we don't have that block because that is hard to remove. I'm being totally honest. If I was, if I was in this Guy's situation, making 13,400 and my cash flow 7,500 and overnight I go down to 42 negative 89645. Man, I am looking for a career. I must do good work in the career that he's in. I'm looking for a new job, new career. I'm looking for the next entrepreneur that's doing amazing work in that industry. And I'm gonna go work for that guy or girl and I'm gonna recover, solve it right there. And then once I'm like, boom, I got my base back.

Right.

Then I can come back here to my creative mind when I'm under pressure. I don't think I do that well. So went over the three options. Let's run the numbers. All right, let's come into the numbers here in terms of what it would look like with option two, making no money for the first 12 months. So that means I'm only bringing in 4200. That's wife's income. And we have expenses of 5069.45. Understand this 56945 is going to increase. Why? Because each and every month that I owe 1000 more on the line of credit, that's more interest that's going to be pulled from the available credit limit in the line of credit.

Right.

So that means my interest is going to be rising each and every month. And that can creep up on us if we're not doing the things that we need to do to create that income.

Right.

So I'm going to run the math here. I'm just going to pull up their spreadsheet. I just want to make sure I have everything correct. Yep. So what they did was they. So in this 5006-6009-45, they already accounted for the payment on 216,633 cents owed. Already counted the payment of 2002 70.

Right.

I'm just going to run the math on that to see if that's the interest cost alone. So 26633 times 9.77% divided by 12 is 1,763,48. So of that 2270 interest only is 1,763 48. So 2270 minus 17,6348 is a 506 difference. So so technically what's happening here is what you have to do is you have to take their expenses of 506945 minus this number 1007 for. No, I'm sorry, minus that number. Right, because that's principal, right? Principal pay down. This is interest together, principal and interest. So 5006945 minus that principal, 50652. So it's actually 81. So technically that's their actual expense. That leaves the HELOC.

Right.

That's what's leaving the HELOC. And actually I think I've screwed that up too. Hold on, I think I messed that up. 2270.

Right.

And I was running on our next call together is what. I'm actually going to be doing this with him because we only got to this point on our call. Then we're going to run the numbers to kind of map out what we're looking at. So let me just process this real quick so I don't get myself confused. 5069.45 is what they put as all their bills and expenses. And then of that number is 2,270 is the payment to the HELOC. But because we're doing velocity banking, right, what's, what's actually coming out of the HELOC is those is their other living expenses and other payments that they, that they have.

Right.

So let me just go to their spreadsheet real quick. So we've got, we've got living. Make sure I do this correctly. Living expenses are 2000 365-87-87. Then debt payments. Outside of that, only debt payments we have is 142 and 291 58. So 20036587 plus 142 plus 2915 8. There we go. That's the number I was looking for. Knew I was doing something wrong. 2007-9945. Okay. That's what's actually gonna come out of the home equity line of credit. The first Lien HELOC.

Right.

And then when I add this number, 1,000 76348. Okay, I was right. Sorry guys. So I got that right. So sorry. Sometimes I confuse myself. I'm like, I do that, right? I move too fast sometimes. But so I have the number right? That's the real expense number, not the 5069 45. Because the, the principal is the principle, right? Of that difference, that's what's staying in the heloc. So technically their negative cash flow position is slightly lower.

Right.

Bringing in 42 spending 4000-56-293.

Right.

So we're actually negative 362.93. In my crisis scenario, it was 896.45. If we're not doing velocity banking then they're paying this 200270 principal interest. Then they're negative and that wouldn't make sense for them to do that.

Right.

So we're actually going to be negative 36293 but this number will increase.

Right.

I'm going to show you how, I'm going to show you why that is.

So.

Now that we understand what's going on, we're in November. Income 42 minus expenses 2,799 45. We're still going to do the same thing. In their particular situation they have 198254 of bills that can get put on a credit card. So 1009, 8254 for cash back rewards I'm going to assume a 1.5% cash back on all that. So 198254 times 1.5%. So let's round it up. You're getting about $30 in cashback rewards by continuously running bills through a credit card. So in this particular situation they don't have any credit card debt, they don't have any other loans. They have a solar loan and they have a small loan for equipment financing at 0%.

Right.

And then their solar loan is being offset by them not paying the normal electric bill that they were paying.

Right.

So that's fine. We're not touching that. Those two debts are going to leave be left alone. We don't got car debt, we don't got credit card debt, we got student loan debt, none of that. So when you don't have credit card debt and you're in a negative cash flow position and you have a main debt tool like a first lien HELOC and you have all that space available, I'm authorizing, you're good to keep running bills on that credit card because you're just going to pull from the HELOC and what this is doing is helping you pay less of that 9.77% rate.

Right.

Guys, follow with me on that. Just put in the comments. You get that, right? If you were in a negative cash flow position and you had existing credit card debt that you're paying interest on and you don't have a main debt tool, then I most likely would coach you to stop using the credit cards because it's actually not going to help you despite you getting cash back. Rewards not going to help you because you don't have the funds to replace it. In this situation, we have the funds to replace it. So we're going to be okay in that regard. So now let's map this out. We've estimated the interest costs on 216,600. I can assure you the number will be around. This number might be a little bit higher once it's all said and done. So 216, three minus income, this number 12 take out expenses. 279945 goes to 215. And then what we could do is we'll just take the median interest borrowing cost for these two numbers. 21519978 times 9.77% divided by 365. So that's $57.60 a day. 212 four, three, three. That's 56, 85. Add the two, divide by two times 30 days. 17, 16, 80. Pretty close, right? So notice how I would have paid that if I wasn't doing velocity banking in the negative cash flow position. If I do velocity banking, even though I'm in a negative cash flow position, I'm going to pay slightly less interest. Plus you can then minus that number by 30 bucks. That helps over here. And you'll probably pay this number instead somewhere around this number. 16, 86, 80. So add that number to that number. 215, 199, 78. You still owe more money, right? When it's all said and done and I owe more. So two 16,633. Now I'm at 216 886. Be honest, if I was it, if I was in this Guy's situation, making 13,400 entrepreneur that's doing amazing work in that industry and I'm going to go work for that guy or girl and I'm going to recover solving for right there. And then once I'm like boom, I got my base back, right? Then I can come back here to my creative mind when I'm under pressure. I don't 58, that's one month. So I'll do one more month and then between that difference by what it increases by, I'm just going to go fast and just like go quick with income in, expenses out. Just get an estimation just to see 12 months from now, how much do we rack up the line of credit by. We'll see where we go from there. So minus income again, 212, take out expenses. 2, 7, 9, 9, 45, 215. All right, set.

Boom.

12, 8, 56. Let's add those two up. 56 plus 57 divided by 2 times 30 minus 30 bucks. 1689 from 1686. 80. It's actually not that, not that bad. Think about it. You're like, Whoa, 9.77% every month. That's how much no interest I'm paying each and every month it's going up by about $4. If I do this 42 in expenses out. That's money. That actually leaves the HELOC and the other bulk of their expense. I don't think I do that well. So went over the three options. Let's run the numbers. Is there interest cost? So if we mitigate that as much as humanly possible. Keep doing this. All right, let's come into the numbers here in terms of what it would look like with option two making no money for the first 12 months. So that means I'm only bringing in 4200. That's wife's income. Owning bills through credit card. Credit card gets paid off by the HELOC in full.

Right?

Because it's coming from this number out of the 27-994-519-8254 is bills that can be paid with a credit card. The rest cannot. So I'm going to say so 1689 -1686, $82 and 20 cent difference. I'll round up, I'll say $5. Just be really aggressive, right? Super aggressive. And just double that. And say each and every month that I don't make any more money than 4200. And I keep spending this, you know, my, my cost of Living, the 456281 Technically, right. That it'll increase. So each month I'm losing $5. I'm going five more negative dollars per month.

Right.

In terms of what I make from what I spend. So my expenses are going up each and every month. But notice how it doesn't dramatically increase by that much. If I was not doing velocity banking at all. And let's just say I was pulling from the HELOC to pay the difference that I'm short in expenses. And then the HELOC covers we have expenses of 5069.45. Understand this 5000, 6945 is going to increase. Why? Because each and every month that I owe 1000 more on the line of credit, the interest you would dramatically be increasing your debt. So that's more interest that's going to be pulled from the available credit limit. Let me just give you an idea of that. So let's say because we can't even make the 2002, 70 payment because we're negative. So there is no additional money going in. The only thing that I'm that I can pay is the interest only payment. So If I stay at 2166033 and I make 4200 then I have to pull 36293 out because that's what I'm actually negative. So 26216633 plus 36293216 times 9.77 divided by 365. So 1742 24.

Did I do that right?

Yeah, I think it did. So yeah. So we'll roughly pay that in the, in the first month. Why is that number higher? Let me do that again. 21696326 times 9.77% divided by 12.

There we go.

So that's more of what the number would likely be. 1000-76644. Add that to this. 216-96326. Now you're at 28 in the line of credit.

Right.

So that means my interest is going to be rising each and every month. And that can creep up on us if we're not doing the things that we need to do to create that income.

Right.

So I'm gonna run the math here. I'm just gonna pull up their spreadsheet. I just want to make sure I have everything. 72970 owed. Big difference between where we're rocking. 215486 03. So I'm gonna write this number down right here. So we have it 218-729-70 here. 215 486,03 plus 1689,217. See the difference? So that's where we end off right here. 217 175.03 compared to 218. Let's look at the difference. 218-729-770 minus 217-17-1503. That's a $1500 difference ladies and gentlemen that we save by continuing to do velocity banking despite being in a negative cash flow position. And that is the power of velocity banking right there. When you're in a negative cash flow position. The fifteen hundred dollar difference there. So mindset of this individual, we keep doing Velocity banking as normal all income in expenses out more expenses came out than what came in. There is no cash cash flow. Despite that we're still going to pay less interest. We're taking one year to incorrect. Yep. So what they did was they. So in this 50006945 they already accounted for the payment on 216,006 rest explore build the base study build out phase one of starting his own business within content creation or cookbook art and personal self development. 133 cents owed already counted the payment of 2000. That's the move right. So I'm going to go fast I'm going to. I'm going to see what it would look like and honestly I could just, I could guesstimate it right Because I could say do with 1719 I'll do 1689 I'm just going to add $5 every month right So I can just do this I can do start from here the 216 give you a rough estimate of how much interest we'll pay over a 12 month period is we can just take 168680 times that by 12 plus 5 times 12 is 162 70.

Right.

I'm just going to run the math on that to see if that's the interest cost alone. So 26633 times 9.77% divided by 12 is 176348 so of that 2270 that's probably like a. That's probably a good accurate. You probably double check my math. 216633 so super, super overestimated here. By November 2024 on the HELOC we shouldn't owe no more than 240k 539400 times 2/3 is 356,000.

Right.

356 from 240 it's $116,004. I would say that is our leverage capacity to build option two out to what we need it. So that's marketing, that's personal development, that's coaching, that's mindset training, that's sales training, that's leadership training, that's systems and automations and software and AI upsells downsells offers continuity program et cetera et cetera et cetera to build that out 116 there's no reason on earth why we should burn through 116 in 12 months but we could totally stretch out that money quite easily over a two almost three year period. Because my borrowing cost is about 20ish something thousand dollars per year as long As I keep doing Velocity banking at that 4,200 interest only is 1,000 763 $48 of what's. Of what wife's income is.

Right.

Does everybody follow that? Is that clear? Put in the comments that if, if you're following me or so 2270 -17 6, 34 or if you lost me somewhere or if you got lost somewhere, if you did get lost, put in the comments the 8 is a 506 difference. So. So technically what's happening here is what you have to do is you have to take Zagat lost when you started or halfway in. Kind of got mixed up on how you got their interest costs. Let me know if not that was really solid and just a good way of. Here's how you operate in a crisis most effectively and efficiently while still doing velocity banking. This would be like best case. This is actually best worst case. This is assuming the guy makes no money. So this is worst case scenario. He owes no more than 240,000 on the, on the HELOC and we still have $116,000 of space of quote unquote leverage. Before I become over leveraged, where I have more than two thirds owed on my line of credit, when I have more than 2/3 owed on my line of credit, I'm completely over leveraged at that point. That's when the interest cost is going to get really scary. On 9.77%. So we really shouldn't get any of their expenses of 5069, 45 minus this number 1000. We're near that. If we're being cost effective in our startup cost to start a business, maybe we spend a couple thousand dollars, but we shouldn't be spending no 20, 30, 40, 50k. No way. Get as much free help as humanly possible.

Right.

There's so seven or no, I'm sorry, minus that number. Right, because that's print much free services out there in the marketplace. You got score principal, right? Principal pay down. This is interest together. Principal and interest. So 5006, 9, 45 minus that principal 506. You've got SBA stuff. You've got grant money out there. You've got gurus like myself that have free courses and free programs and free trainings and free mindset stuff. You've got entrepreneurs that give their book away for free when you go through their funnel and process. So I would be maximizing all of the free that I can get, not from 20 different gurus, but maybe one to two or three that I that can help me in the area that I'm trying to build in my business. You know, absorb all that free content, the YouTube stuff, absorb all that in that period of rest. Keep doing Velocity Banking because it's going to mitigate your borrowing costs as much as humanly possible. And I showed you that earlier. Earlier. That fifteen hundred dollar difference there is, is crazy compared to doing Velocity bank on a month to month basis, right?