Velocity Banking On 275,000+ Debt

Foreign.

Today we have a case study using First Lien HELOC over at First Savings bank, arguably one of the best First Lien HELOCs in the marketplace today. Here we have on the board a real life case study of a client that started working with me back in December of 2020. Here were their four major numbers that then making 9487 78amonth. Expenses were high 876765 total debt a little over 275k and their cash flow starting out was $720. Through that period of time we've done a combination of debt snowball velocity banking with credit cards, personal line of credit, personal capital to eliminate debt. At the same time focusing on increasing our income via promotions other opportunities in the marketplace. So since then it's now this is when I last spoke with them September 20th of 2022 and I'm recording this video a few days after. Their income is now $10,594.82. Expenses have dropped all the way down to 3,849 89. Debt is at 183,911 80 and that is just one debt which is the first lien HELOC. So they, they replaced their first lien mortgage, whatever the balance was and they shifted it over to a first lien heloc which is what you see right here. The credit limit is 238,000. They were able to lock in a 5.9% fixed rate simple interest for the next three years, which is really cool in this environment where interest rates are continuously rising. That leaves us with a cash flow in 2022 now of $6744. 90. So we're sitting very pretty as of right now. Initially their goal was to become debt free within five years. We're easily going to accomplish that within three or less just looking at their situation and numbers. Now they want to build an Amazon store. They tried in the past, had some complications and so now they are in a position where they now have invested in themselves and they're working with a partner of mine by the name of Alex Albaran. A phenomenal asset in my business and for a lot of my clients. He, he can help you build an Amazon store, Shopify store, he can help you with Facebook ads, marketing, Google Ads, very knowledgeable in the marketing space, building a YouTube channel, all the things that you see me do, a lot of those strategies. I will discuss it with Alex and so he is a business partner of mine. Phenomenal guy, you can look on my resources page on my website or you can look in the description below. You will see his his link there under all my videos Regarding, you know, building the top line, right? Velocity banking shows you how to manage your four major numbers. Shows you how to increase your cash flow without increasing income by eliminating debt faster, fixing our credit and leveraging debt. Velocity banking can also be a phenomenal tool to increase our income. But that's not typically what we cover on this channel all the time. We're usually focused really heavily on, on the debt situation because it's the biggest, you know, burden. It's the hot thing that everybody wants to, you know, get rid of in their finances. It's a grounding, it's a foundational place to begin, but it's not where we stay. At some point we want to shift to increasing that top line. And a guy like Alex is very effective in that department. This person is building an Amazon store while simultaneously doing velocity banking on their debt tool, right? So they're in the position now where they don't have any more debt. All the debt is in their debt tool. So it's. So velocity banking is now automated, right? With a first lien heloc. They're automatically sending their paychecks into the line automatically. Expenses are coming out. This thing's on autoplay. And their goal, in addition to getting out of debt on the debt tool itself, but also building the Amazon store that generates at least 20,000 a year passively. They want to get into real estate investing as well. And they want to live the four hour work week. I think there's a book called the Four Hour Work Week or something like that. I think it's by Tim Ferriss. So if you want to check that out, interesting way of lifestyle, all of what you see here, the strategies that we're implementing is going to complement the these goals and help them reach them that much faster. First lien HELOC 238,000 credit limit 5.9% fixed interest rate for the next three years. Current balance 183,911 80, you times that by 5.9% you're going to get $10,850.79 in total interest. If all I did was make interest only payments on the first lien heloc without making any principal payments to the balance, that is what I would pay. Our goal in velocity banking is to bring that number down as low as humanly possible. In most cases we're able to bring our borrowing costs to near zero. Some cases, it'll be 1% cost 2%, costs 3%. But what I can assure you is whatever the interest rate is from the bank, whatever your debt tool is, whether it's a P lock, credit card, heloc, all in one loan, whatever it is, we're never going to actually pay whatever the rate the bank gives us. So if I have a 10% rate on my personal line of credit. Understand you're not actually paying 10%. So when you're trying to decide, should I use this personal line of credit at 10% to pay off this amortized 6% loan, you're like, wait, 10 is more than 6. If I move 6 to 10, wouldn't I pay more in interest? Well, on surface level, yeah, 10 is more than 6, but 6% amortized is more than what is advertised 6%. You're actually paying more than 6%. On the other hand, a P lock at 10% is not advertised the correct rate. When we're actually doing velocity banking, that 10% can become 4, can become 3, can become 2, less than 6. So when you map out what is my actual effective rate that I actually pay each and every month over a 6 month, 12 month period and you come to find out, oh, my actual borrowing cost was 3.5% for the whole year. Well then technically what you did was you consolidated that 6% loan and you moved it to three and a half, hence paying it off faster. It's a game of interest. Who pays the least amount of interest if all numbers are the same, right? If you've got the same exact amount of income I have, same amount of cash flow I have, same expenses, same everything, and the only difference is interest rate. That's the game changer right there is understanding how to reduce your interest costs of borrowing when paying off debt. How do you cancel interest?

Right?

The faster I cancel interest, the stronger my cash flow dollars become toward the debt. That is very, very key to pay attention to when you're running your own numbers. And in this case study here, right, so 5.9%, that's the rate. 10,000 DOL. 850 79. The goal is to reduce that as low as humanly possible. What I did here is completely overestimated on borrowing costs. Just to show you how powerful the concept is of velocity banking when implemented properly. So what I did was I took whatever the balance is 183 starting out and I'm going to, minus the income, 10,000, 5, 9, 4, 8, 2, you're going to get a number. That number I times by 5.9%, I get a number. I then divide that by 365 days to get my average daily simple interest rate that I pay per day. Then I add expenses. 3849,89, you're going to get a number. That number will end here 177, 166.87. Times that by 5.9%. Divide by 365, you get a number. So you'll have two numbers, two daily borrowing cost to daily rates. I then added those two numbers and divided by two, then times that number by 30 days. That is an estimated borrowing cost in one month. You should end up with this number right here, 849.68, which is taking this balance minus income. That number times by 5.9%. Then add expenses, you get this number times that by 5.9%. Add the two, divide by two times 30 days. That is assuming that for 15 days I owe 177 166.87 and for 15 days I owe whatever 183 minus 10,594 82 is. That's not actually what's happening in velocity banking because this person does not get paid in one shot. They get paid in a series of paychecks and their expenses do not come out in one shot. It comes out over a period of time. On top of that, that 3849 89, $2065.89 are bills that can be paid with a credit card where I can get 2% average in cashback rewards, which will result in and $41.31. That is extremely helpful in offsetting or reducing our borrowing costs tremendously. So CBR stands for Cash Back Rewards every single month. Moving forward, we're going to get roughly over $40 in cashback rewards. And understand that that 2065.89 is being swiped on the credit card, which means 2065 $89 stays in the HELOC, does not come out for roughly 20, 25 days or so up until the due date of the credit card. That's when it comes out pays the bill. So when you factor in how long money stays in the heloc, that is manipulating the rate even lower. Okay, and with this specially designed First Lien HELOC at First Savings bank, you can click the link in the comment section below. You'll see four First Lien, HELOC Resource and you can check them out. First Savings Bank. They have a very unique way that money flows in and out of The HELOC to truly maximize every single dollar to principle rather than interest. So it is a bank that is pro helping you get out of debt. That is pro helping you offset your borrowing costs. That is pro you investing, acquiring more real estate and more business. There's just a really, really good bank to keep your eyes on. So with that being said, just going month by month, that's what's occurring. Money goes in 10k, expenses come out 3849. Also what's included in this 38, 4989 is the interest costs.

Okay.

This 849.68 is an overestimated number.

Okay.

It is factored into this which simply means that when my first because I have this first lien heloc when my paychecks are automatically going in in regards to the payment itself, okay, it's an interest only HELOC payment. Which means that on the due date, each and every month, only the interest is due. The interest will get pulled from the equity in the HELOC itself. It's not getting pulled from my paychecks. Technically it is, but it's like I'm not, it's not an additional expense. What's outside of this number, does that make sense? So that 384989 is factoring in the interest each and every month moving forward. And that number is actually overestimated higher than this number that I illustrated. This is just to illustrate the overestimated room for error. At the end of the day when this is actually in practice, the client will beat my numbers by a lot by quite a bit. So in the first month you'll see 84968 estimated overestimated borrowing costs minus $41 cashback rewards ending balance 177. 16687. This is October 2022. Client. We're in September as I'm recording this. So I'm not even factoring in the cash flow for September, right? Or what cash flow remains of September beings that we spoke around this time. So there's still another week or two left. November balance drops, income goes in, expenses out, boom, 170 to 163. January 2023, we're already at 157. Look how each and every month after the first, the borrowing costs goes down each and every month. So if we were to look, this is a 12 month borrow period. It goes all the way down to $492.33 by September of 2023. If you were to add up all these numbers right here, 8498-177847-52719. Add all these numbers up, add that 492, you're going to get $8,052.21. Not bad. So you go from 10,008, 850, 79, 5.9% to $8,052.21 minus 41 times 12. So minus 492 bucks in cashback rewards. By the way, that number could be higher. You're down to $7,560.21 ladies and gentlemen. That is around 4% borrowing costs. So you went from 5.9 and you knocked off 2 points. Tremendous. You knock off 2 points in reality. In practice this person will actually net around less than 3% in borrowing costs because of how the money's going in, how it's coming out. Using credit card or credit cards for cash back rewards, that strategy could be enhanced as well. That person could get a 0% credit card, run a bunch of bills on it for 12, 15 months, 18 months, whatever it is, get a 200, $300 statement credit for spending 3,000 or more in the first 90 days and get $200 back on top of the cash back rewards. That's going to help reduce their borrowing costs. So that's a very strategic thing that we can do. Income can go up as they're building their Amazon store that generates 20,000 a year passively. That's not going to happen overnight. But we can definitely in a one year time frame we can build an Amazon store that at least generates a couple thousand a month and maybe, maybe nets in profit a good thousand 1500 bucks. That money can sit in the HELOC again accelerating the debt while also focusing on increasing income and increasing cash flow. End of the day this person has a capital line of credit here, 238,000 that they can use for whatever they desire and they know how to effectively borrow and at what less than 3% cost. So if they borrow at less than 3 to generate 20 plus thousand, they can basically use this 238 as the funding mechanism for this cash flow vehicle. An Amazon store pay less than 3% in costs to build a 250 plus thousand dollar stream of income per year that probably will net 40% of that 250 in profit after expenses and fees is an online e commerce store. So no brick and mortar required. So costs are even less. I mean my goodness, what, what a position that we can put ourselves in here. So some key takeaways you got to know your four major numbers. Extremely important. You got to know where you stand. Where, where do you want to go? Got to know the four major numbers. Income, expense, debt, and cash flow. From there, we need a debt tool that could be a credit card, that can be a line of credit, that can be a combination credit card, line of credit, home equity line of credit. First or second position, all in one loan. First lien, HELOC with First Savings Bank.

Okay.

We have to build a relationship with a bank or banks to acquire these debt tools. We need to know the goals. We need to know who you are, how you operate. I'm a very adaptable financial coach, so if you tell me, denzel, I don't want to use debt to get out of debt. Okay, cool. I'll teach you. Dave Ramsey, debt snowball. Seven baby steps, Frugal, minimalistic lifestyle. I can share all of that with you. In fact, I can point you to different YouTubers that specialize in that area. Or if you're like, you know what? I want to learn how to borrow effectively, right? At 0%, at 1%, at 2%, 3%, while inflation's over here at 9, 10% plus. In reality, it's like 15, 18% inflation rate. Taxes are going nowhere but up. So becoming an effective borrower in the 21st century is an incredible skill to have while you're building your career, while you're building your business, building your credit. It's an incredible position to have where you can. You can have cash flow capital to work with and be effective with. Borrow at 3 to earn 15, borrow at 5 to generate another 5000 in cash flow per month. My name is Denzel Rodriguez, your personal finance geek of the 21st century. Hope you found this case study very helpful. Illustrating the beginning, where we're at now, where we're headed over the next year. Take a look at the playlist where it says velocity banking scenarios. You'll see all kinds of scenarios. Incomes as little as 30, 40, 50,000 a year here to as high as six and seven figures.

Right?

So this concept really works for everyone. But you have to align with the principles, with the rules. You have to really understand what is going on here, what the goal is, what we're trying to accomplish, Right? Velocity banking can be used to accelerate debt extremely fast, or it can be used to create more income and cash flow, or combination of both, like we just showed here, right? So taking a look at the board one more time. Last recap. Got to know your numbers. This is where we started this is where they're at. They have a debt tool, First Lien HELOC at First Savings Bank. I have a link below that can connect you to that bank. You check them out. They got a 5.9% fixed interest rate for three years. This is me illustrating money going in, money coming out, what the overestimated borrowing costs would be each and every month. We reduced 5.9 to less than 3. Mathematically proved it showed a what the next 12 months would look like from September, from October 2022 over, over September of 2023. Not bad at all. I recommend taking a look at the resources, the links below. There's many different steps to this puzzle, to this process. A lot of pregame work. If you're brand new, check out the playlist on velocity banking pregame work. That's a great starting point. From there you're going to want to check out the playlist on all about the line of credit, finding the best debt tool for your personal financial situation. Then from there, as you're doing pregame work, as you're finding the best debt tool, you're going to want to look at the case studies, right? You want to see what a P lock looks like in action, a HELOC in action, credit cards, a combination of the two, even cash value life insurance policies. Combination of velocity banking and infinite banking together, you're going to find that in the velocity banking scenarios, those case studies, right, that's all free, that's all available to you. You don't got to pay me a dime, right? If you want to support this channel, you can do so in the super chat. You can give, you can contribute to. On my website there's a contribute page. You can become a client, right? You can help me by helping yourself by making an investment in yourself where we tag team together. I hold you accountable. I'm your financial coach, your financial consultant. I'm very adaptable and let's make it happen. Let's create financial freedom in the next five to seven years or less. You have to do it. We're in that time now, 2022, stepping into 2023. Now's the time when the markets crash, when everything goes goes on sale, when tightening gets restricted. If you're positioned properly, my goodness, you just might thrive. You just might see your harvest. My goodness, things just might occur again. My name is Denzel Rodriguez, personal finance geek of the 21st century. Have a wonderful day, God bless and we'll be talking soon.

Sam.