My favorite way to pay off debt fast is to use Velocity Banking. Velocity Banking is a strategy where you use a revolving line of credit as your primary checking account to help pay off your student loans or mortgage. In this strategy, you use your line of credit to pay off a huge lump sum of your loan. Using your line of credit as your primary checking account helps you use your extra cashflow towards paying down your debt so you can “chunk” another lump sum towards your principle.
I purchased a new home and started making payments on my $282,000 mortgage on January 2019. Based on my amortization schedule and chunking history, I expect to pay off my home by 2026 (In Just 7 years).
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Check out Full Throttle, a Net Worth Growth Strategy that combines the concepts of Velocity Banking and F.I.R.E.
The idea behind Velocity Banking is to use the HELOC (Home Equity Line of Credit) to pay off high-interest debt, such as credit card balances, and then pay off the HELOC more quickly than you would be able to pay off the original debt. By doing this, you can potentially save money on interest charges and pay off your debt more quickly than you would have otherwise. Here's how it works in practice: Take out a HELOC on your home,…
With inflation, interest rates have jumped up along with home prices. Historically, home prices go down when interest rates go up. When you hear the term housing bubble, that means home prices are inflated and the bubble may soon pop. This will send home prices crashing back down. If you really need to buy a home in current market conditions, consider an ARM. An ARM, or Adjustable-Rate Mortgage is a loan with a variable interest rate that fluctuates throughout the…
Velocity Banking is a strategy used to pay off debt really really fast, hence the name velocity. In essence, it is the strategy of paying off your debt in large principal chunks every "x" number of months. For example, you put $5,000 extra towards principal now, then don't pay any extra principal until you save up $5,000 again. That is the simple explanation of Velocity Banking, but it involves more than just that. Debt Snowball is the process of paying…
Here at Finance Throttle, we often talk about the concept of Velocity Banking, a strategy used to pay off your $80,000 student loans or $300,000 mortgage in as little as a few years. To use the Velocity Banking Strategy, you need certain tools to be successful. You will need a HELOC OR a no annual fee, 0% introductory "MasterCard" credit card OR extra savings above & beyond your emergency savings account OR Plastiq. In this post, we will focus on…
I recently stumbled on Figure who claims they are the fastest at approving and funding for HELOC's, or Home Equity Lines of Credit. Before I continue, Finance Throttle is not sponsored by Figure. I just found them interesting as an alternative to the traditional bank. Figure's HELOC is powered by the blockchain and operates in 43 states with more coming. With a short online application, you can get approved and gain access to your home equity in as little as…
Knowing your net worth is important in tracking your financial goals. To calculate your net worth, you simply add up the value of all of your assets and subtract all of your liabilities. Let's define these terms below: Assets are items of value. They include cash, crypto, personal items, and your properties. Calculating your total assets may involve adding up all of your cash on hand, cash in bank accounts, cash in investment or retirement accounts, pensions, and more. Liabilities…
Everyone with a mortgage has heard of refinancing, but did you know there is an alternative to lower your mortgage payments? While refinancing is the popular choice, recasting may be a better option depending on your circumstances. What is a Mortgage Recast? If you meet the criteria below, recasting may benefit you. You are well ahead of your loan re-payment schedule because you have made extra principal payments.Current interest rates are similar to your mortgage interest rate. Within 0.5%. You…
Step 1: Create a Budget The first step to creating your velocity banking system is to develop your budget. I know you probably hate hearing that word, but you really need to know how much positive cashflow you are bringing in each month. How much money can you really devote to paying off debt? What is a reasonable budget for groceries and eating out? What about entertainment? Check out my spreadsheets to help you budget. Step 2: Identify Wants Versus…
For those not subscribed, Finance Throttle started as a personal finance blog that mainly focused on the concept of Velocity Banking. Velocity Banking is a method used to pay off debt quickly and grow your net worth through investing in income properties. Using Velocity Banking, you could own up to 5 properties outright within 10 years while earning rental income on each property. It utilizes lines of credit, like a Home Equity Line of Credit (HELOC) or a Portfolio Line…
Let's assume that you just bought a house and took out a 30 year conventional $250,000 mortgage at 3% interest. At closing, they showed you that you would end up paying $129,443 in interest over the life of the $250k loan. Isn't that crazy? Let's also assume that you can save up to $500 per month. Instead of putting that $500 in your savings account, you decide to pay off your 30 year mortgage early. To calculate how much you…
