hey YouTube welcome back we're going through the five systems of wealth today we're on number two we're going to be learning all about the banking system we're gonna be learning about a term called get for this velocity banking this is an amazing strategy that teaches you how to pay off your debt in one-third the time and we're gonna go over this in great detail today but velocity banking is a term that's used by an education system called Renatus and so we're giving you an overview of all of this but I'm so excited for what we're going to share with you today because you are literally going to have your brains melted by the time we're done you're going to learn how to do this for yourself the great thing about today's jate today's training is you can immediately start implementing this in your life let's jump on in you do paucity banking we must first start with a budget yes I said the b-word budget right now I'm gonna go over a budget here on the board it might not match yours that's okay it's still gonna work you just take what I'm doing on the board here and plug in your own numbers sound good okay so the numbers that I'm going to use come from the Bureau of Labor Statistics this is information that's that comes from the US Census on the average two income American household okay so after you get paid right Uncle Sam gets his taxes out of your paycheck what happens well the two income family here in America brings in $5,000 after taxes okay so that's great but so where does it all go well it all goes into this lovely little vortex we like to call the bank either into a checking or a savings account all right so far so good you're all picking the picking up with I'm laying down so when you put money into the bank you're living on what's called a cash basis mentality cash basis mentality what do you mean it means you have $5,000 in write and then that's all you have to work with so you begin to divide up your money into wedges like a pie so much money goes for so low so months so you have a certain amount of money that goes for the mortgage right or it could be rent now what happens to you if yeah you were driving along you get in a car accident or maybe not even a car accident but you're the tire blows right which then sends you careening off the road and then you've ruined you know your other tires and your axle and before you know it you've racked up a $12,000 repair for your car like this is hard hard stuff to deal with but we all have things that happen life happens okay so when you have to pay for something that was unexpected but you're living on a cash basis mentality where do you get the money well you can say hey mom can I borrow money right might not work friends sometimes can help you or you get a loan or you use a credit card all right those are typically how we trying to do this now if you don't have access to loans or or credit cards no it gets kind of interesting okay now we're trying to see what bills can I float for maybe the next 30 days and see you know you start playing this musical chairs kind of thing like huh well we we skipped the water bill last month so let's pay that one but let's skip the electric and it if I'm if no one's ever done that and I'm the only one then so be it but I do think that I'm talking to some of you and that hits home okay so cash basis mentality right we want to teach you how to get off of this type of mentality and how to start taking more control over your finances it's all about learning how the banking system works now everything you think you know about banking was taught to you by who mom and dad or where did they learn it from the bank now is the bank a fiduciary what's that mean fiduciary is somebody who gives you financial advice irregardless of how they how they get paid or anything from their goal of the fiduciaries to give you the right financial advice so that you make the best choices for you now as a bank of the do Sherri mm-hmm no no Bank is in business for themselves they make money how do they make money they lend money out and then you pay it back with interest right so that's their business model so they're always going to give you advice that helps them do what make money okay so we're gonna this is a thing that there's some repeating themes that are going to keep coming but we're talking about living on a cash basis mentality something happens to you what are you gonna do well here's here's let's break down first before we get into the nuts and bolts of how velocity banking works let's just establish a budget okay so we're looking at the money that comes in and then we have to kind of keep track of well we're talking about that mortgage here well how much goes towards the mortgage well if we take an average over the entire United States from Hawaii to New York down to Florida up to Chicago to Houston you know all across the country the average to income American household is living in a 3-bedroom 2bath house that the average price is $200,000 in the average mortgage payment across the United States is $1,200 a month that's a lot to stay so there's a loan here that has to be paid loan this is the first banking product that we're going to talk about today loans we all have heard of loans we might have some so a mortgage right we're going to go off of the national average $200,000 is is the costs of this mortgage you probably got this at 6% now some of you might have way better percentages memory these are averages so some people in the United States have a higher mortgage interest rate and some people have lower so the average across the entire country is 6% you following me so far okay next thing that people are paying for to income American family paying for car now two incomes two cars two car payments so the average car payment for a two-income family is about $600 a month so let's go back over here so there's usually some kind of auto loan an auto loan right carrying a balance the average balance is about $13,000 again some are a little higher some a little lower because typically you trade in a car and you get some of the value towards the towards the purchase price and so on and so forth so again that's probably also at about 6% the term on these can go anywhere from five six I've even seen seven-year terms on Avalos alright this next number I'm gonna share with you might shock you right here credit cards liens a credit this is another banking product we're gonna right over here lines right different than a loan but credit cards we're all familiar with credit cards that some people don't understand all the different lines of credit that might be in your life you there could be a personal line of credit like a what's called a HELOC or some there could be things like an overdraft account we all know of credit cards these are different forms of lines of credit so the average to income American family has a fifteen thousand dollar limit not bad fifteen thousand dollar limit on all of our lines of credit however I mean we're talking about even retail cart like let's say you have a Macy's card you know that counts so but the averaging I mean this I'm talking here's the thing we are carrying a twelve thousand dollar balance whoa twelve thousand dollar balance you get this at twenty one percent interest yikes twenty-one percent interest I mean think about that that is a lot twelve thousand dollar balance now I'm gonna take a break for a moment here let's talk about lines of credit let's talk about credit cards because how many here on this YouTube channel think debt is bad I'm sure a lot of you are like yes that's what I've learned I've listened to other people on other channels and my my church taught me that or mom and dad taught me that debt is bad well okay let's put that in perspective is fire good or bad well let's put it into context if I take a book of matches and give that to my five-year-old is that good or bad that's bad all right now if I take the same matches and I go to the barbecue and I started and I make a wonderful barbecue you know chicken and steak and you know I love working the grill baby that's good all right as you can tell I love working the grill so good bad it all depends because you see here's the deal just like fires a tool it depends on how it's used when you have a little kid and you know they don't know how to use it they could get and they could die right but if you know what you're doing not only can you cook food you can heat your house you can send rockets to the moon all right fire is an incredible tool that we've used to do so many things in our society so to say credit is bad is well if you don't know how to use it then it's bad you're like a little kid and somebody just handed you a batch book that would be bad but if you start learning how to use credit here's an amazing thing how do you eliminate your debt you're going to debt to get rid of your debt because there is what's called good debt and bad debt it all depends on the efficiency of the debt now you're like what was all that yeah okay we'll go over a debt efficiency in another training because that is something that will knock your socks off but you need to be able to look at your debt and by evaluating what's good and bad you can decide which debts need to be paid right now and which ones I can keep because that's good debt that helps me what what can I do with good debt well I can grow my credit score what do I use my credit score for to get more availability of mines of credit I can use more lines of credit to eliminate more debt and so on and so forth we'll go over this more but okay so is we're talking about credit cards they're bad most people have learned that oh they're bad well here's why here's why we hear that because here you are going along some day and then all sudden oh man I've got this $300 purchase I need to make and you're like oh I didn't know that this was going to come up it's my daughter she's going to the prom and I'm gonna split the cost with her it's like $300 for her shoes yes I have a daughter she's going to prom and that's expensive but she took care of it on her own I'm very proud of her so but let's say you have this unexpected expense come on $300 now look at this budget $5,000 is coming in you take $300 you swipe it on the card right take my card swipe it at Macy's okay got myself my daughter's prom dress whoo-hoo I'm feeling good but now what did the bank do the bank took 300 dollars out of their lending pool and set it aside so that they can cover that amount but you have a couple options here can I pay that off this month sure I could pay off I could figure out a way to scrimp and save and pay off that that that dress now if I pay it off before 30 days before the billing cycle how much money did the bank make on me zero now they made a 3% merchant fee at the point of sale but they had to reallocate funds they had to set it aside and those funds that they set aside they don't make any money on well that's bad for them because they could have lent it out to somebody else and made money so does the bank once you're doing that think about that if I'm gonna if I'm a bank I use my money and I lend it out to make money so if you use the card and then pay it off before I can bill you the interest on it now I'm not making any money I don't want you doing that so I'm gonna tell you that if I'm a bank I'm a financial institution I'm anybody related to the banking industry I'm gonna tell you that it's bad okay that's bad because here's what happens we teach you to only use your credit card in case of a what merchants emergency see you've been trained you already knew how to fill in that blank see they've been you've been well trained to do this so even though you've got a credit card and you could make that purchase you don't you're saving it for the rainy day now here's what happens we go back to that example I talked about earlier tire blows and then go off the road and then before you know it you're driving over some cactus if you're out here in Tucson like this and all your tires are now wrecked and you ruined your suspension all at the same time wonderful now you've got this great big old hunk and Bill right what are you gonna do you think of yourself ah that's ten thousand eight thousand ten thousand could be twelve thousand huh how the heck am I gonna pay for that well you put it maybe you get a good deal maybe somebody you got somebody it's gonna fix it for you but they you need to pay them parts whatever it is all I said now there's 500 600 700 you think about all the tires all that so you have to put all that in there that's easily over a thousand dollars okay so you paid for all of that how do you pay for it because you don't have any extra money you put it on the what put on the credit card yeah but that was only a thousand or that was only twelve hundred bucks but now now thinking about how how easy is that to pay off no can't quite do it and then of course does it is that always ever just one thing then it's something else then like oh my gosh I didn't know I somebody slaps you with this bill that's been passed do like what you didn't pay in a dental bill I thought we paid that and then it's all back in the rears and there's all all the sudden you've got all these extra Spencer's really okay that on the credit part of that on the credit card put that on the credit card you know I'm so stressed up I need to go get myself a big-screen TV right if it takes the time before you know what what has happened you've racked up a $12,000 debt now can you pay off with $5,000 can you pay that off in one month no no you can't and this is where they got you because what are you gonna do now well you can't pay can't make all the payments in fact you can't even make a huge chunk you just got it you're like what's the minimum right let me just figure out what's the minimum I can pay right so I'm gonna pay the minimum here and I'm gonna pay the minimum here and you stretch this out for how long how long do you think it's gonna take pay off a twelve thousand dollar balance folks it depends on the fine print but it could take you seven years good I mean here's the reality is do we ever stop using the card oh so we're gonna keep even if we pay it down a little bit then we're gonna use it and it's like it never goes away if it metastasizes is like some kind of financial cancer you know uh it's horrible I believe me I've been there I've gone through that I have been ill-educated much of my life when it comes to finances and so I've screwed up because let me tell you something folks a full disclosure I've gone through two foreclosures which led to a bankruptcy I've had issues before I had to get educated I had to have a reassociation in my brain to teach me because I was sitting there thinking wow I'm doing everything everybody taught me to do why is everything blowing up in my face it's because I didn't understand the banking system I mean like well who has time I mean what class did you take in school where they said okay today boys and girls are going to learn all about financing here's amortize interest your simpler oh here's terms and loans and doc they don't go over that you just you know do what you're supposed to do and you eventually rep you go from school to college and then you go get a job and along the way you've racked up so much debt that you just don't have any way to pay it back you're like a mini version of the United States you've just got this huge astronomical debt and you're like well I'm hoping we can pay that off you know maybe in the by our third generation maybe my great-great grandkids can pay that off you know that's not that's I mean that's how dead is working these days and like no no no do you want to pass on a legacy of debt to your posterity or do you want to pass on the legacy of wealth well if you get educated you have the opportunity to change a whole history of bad financial choices right here now so here's think about that each payment that you're making minimum payment 21% inches 21% interest remain they got you right where they want you so now that we're talking about this what's the minimum payments that Aaron's paying well it comes to about $600 and this is over about five to eight different individual cards and lines of credit man so the next number in this budget right I call this what I want to call this maybe cost-of-living this is different for everybody I'm gonna put $1,200 here why 1200 cuz it just depends are you are you single right are you married married with kids did your kids move out and then they boomerang became right back I mean and then they brought more kids with them I mean what is your budget all right this is this number fluctuate based off of how much food that you need to feed everybody how much power is being used water we're talking about do you watch Netflix do you go out to the movies you know our are you buying a whole bunch of apps on your phone right this is this is just what is it what is your what what does it cost to live the life that you want to live that's this number here now if we're going off of all these national numbers according to national numbers the to an average two income American families putting away in savings $1,400 a month that doesn't sound right do you know anybody who's putting away $1,400 in savings a month or better yet had you ever put away $1,400 in the savings right now I'm not talking to the 1% of you that maybe did something like that because you won the lottery I'm talking about just your average two income American family no one's putting this kind of money away so why this big number because if you break it down it's not just savings accounts they're talking about they're talking about the 401 K which isn't really a savings account but it's looked at as long-term savings saving for your retirement so every paycheck and the to income American family so we're talking about a total of four times there's a certain amount of drug could be four percent of their pay could be up to six percent some people are putting away 10% so once you start looking at those numbers and then what people are putting away in the savings then maybe somebody actually has a savings account and they're putting fifty hundred two hundred dollars away in a savings account now when I said savings account why am i using the quotations why would I say that because they can the banks can call it whatever they want to Tama they're calling the savings account so you well don't you want to be responsible what were you raised in a barn does money grow on trees you ever heard these things now you need to put your money in the savings account save for your future gets it get interest on your money sounds like the responsible thing to do so whether we do we go put money into a savings account because if the bank really called it what it was would you want to put money into it the statements account is the banks lending pool think about that for a moment the banks lending pool the banks lending books this is where they pool all of their money from everybody that banks with them that also has this brilliant idea of say let me put money into a savings account so look at these loans these loans that come out from the bank hey look at this car so you might put money into your savings account you might have a thousand in there you might have ten thousand who knows but you give money to the bank and then when you go and buy stuff like a house or a car student loan whatever might be out there what happens well they lend you basically your money back at a higher interest rate right because they're making 6% on average well what does a savings account payout anybody know you're a point like 0 1 to 5% yippee Skippy ok don't you feel so good about that now look at this business model they make 6% off of your money right you can you gave them money because you're being responsible putting it in their lending pool I mean savings account so they take the money they take your money and then go out and they make money and then they pay you 0.01 to 5% I'm telling you I want to be a bank doesn't this make you want to be a bank I mean think about it hey everybody on YouTube come bank at the Bank of Joseph give me your money and I will lend it I'll pay you 1 percent on your money and I'll lend it back to you at six that's great and it's totally legal to do that you're called a bank when you do that so Wow let's look at another number right now anybody know what inflation is now I don't know at what time you're going to be watching this video but we've seen historically inflation be as high as 4% as low as 3% 2.5 at one point we've had some good economic times but let's just say depending on when you're watching this video it's somewhere between two and a half percent to 4 percent that could be what inflation is because that's what it's been saved for the last decade or so well ok so what does the happening that means let's go off of the 4 percent for a moment if you have $100 in the bank a year ago was it worth today it's worth $96 even though you never touched the money you never pulled in hangout it devalued but we are the inflation of the cost of everything going up in the deflation of the dollar at the same time you lost six bucks just by putting your money in the bank you automatically lost six dollars now oh oh ho ho oh wait you got paid 1% on that so go ahead and add back in one more dollar so you only love us three dollars wait a minute okay so inflation if inflation is 2.5 to 4% and the banks making 6% so depending if it's high inflation or low inflation is the bank making money you bet they are you bet your sweet bippy they are all right so but you regardless of if the inflation is lower high you're always losing money think about that you already know before you put money into the savings account that you're going to lose money I mean you already know that it's already mathematically shows that you're already going to lose money just from doing that so if you're a wealthy person millionaire billionaire how many savings accounts do you want to put your billions of dollars into knowing that you're gonna lose money every year let me do wealthy people even do that do they even have savings accounts no are you kidding me if they got to the point where they have a billion dollars and they earned it they didn't do it by putting it into a savings account uh-huh no they they learned how to invest their money right they wouldn't knowingly invest in something that automatically loses the money think about that if a billionaire would not put his money into the statement account why do you that's a real question folks look we need to start thinking for us but hey it's ok maybe we'll make up for it here on the 401k because I mean some of you are just putting so much money into that 401k because you know what someday you're gonna retire and you're gonna want that nest egg right all that sweet golden juicy nest egg that you can retire and live in the life of luxury maybe in the Virgin Islands sipping pina coladas and watching the sunset it doesn't that sound great that's what you have to do you only have to work 150 years to get there right but I mean what is a 401k think about this it's not a savings account it's not the bank when you send money into your 401k it goes off to the magical wonderful world of Wall Street think about that think about the people that are there on Wall Street what are they doing you're giving them your money and what do they do they take your money and they go out and try to make money and then they pay you based off of the money that they make what's wrong with that that sounds like a good deal now based off of that model if they don't make money to do the people in Wall Street lose have you ever heard too big to fail right even if they lose money we're still gonna as taxpayers bail them out I mean think about what happened what happened back in 2008 does anybody remember housing market crisis right what happened overnight to your 401k just like that 401k is now one on one K right think about it the brokers in Wall Street they could pay per transaction now some of them might have some incentives to actually do more for your money but in reality they're going to get paid regardless of your performance maybe they don't get paid as much but they're still gonna get paid but let me ask you this question seriously think about this do you even know when you put money out into your 401k where's it invested what companies are you in are you even investing in United States companies are investing in foreign companies I mean my mutual fund I don't know is what's your return on that I mean if you're an aggressive investor and you know what you're doing you might be making eight nine ten percent on your money possible what's the average person making the person who's like I just said it in there and I don't even want to look at the statement I just hope that you know in 40 years from now 20 years from now that there'll be something in there right the average people average person is making somewhere between 1 to 3% return there's so many people that are making low returns now the stock market's surging right now and then if you watch this video next week the stock market's plunging ok it's up it's down it's up its down it's got you can get whiplash watching watch it's like a Geiger counter very medically right what are you gonna do with the stock market well think about this they're investing your money now who do you think has who do you think is is is better at making decisions for your future finances you or that broker out there in wall street we might be like well I don't know how to do any of this well get educated learn about this figure it out because I guarantee you that you care more about your financial future in your success then the broker does now I don't mean to knock brokers in fact there might be a broker listening right now and you're wonderful people and I love you and I love what you do and I think you've got great products and if you know what you're doing go out there you know what you're worth go get what you're worth right I love it but for many many folks I think that they might if they got educated could make better choices than letting somebody that they don't know handle their kids college fund right there the retirement fund that they that they're gonna live on for the rest of life so I only spent a lot of time on that we're talking about a budget here but this is where the average Americans are at so this is represents five thousand dollars in and it represents five thousand dollars out of you add it all up so the cash flow on this is what a big goose egg so what's that mean well if we strip this all the way if we we're not looking at this in terms of it being a to income American family right if I just came to you and I was like okay here's the deal I got a deal for you I've got this investment it makes $5,000 a month I mean it is bringing in the cash but in full disclosure it costs $5,000 in service fees every month just to maintain this investment on top of that if you buy this investment in full disclosure you take all the risks and liabilities if anything goes wrong now what is your average investor gonna say if I say hey you want to buy this now I always get somebody on the line says well it depends on the appreciation of the asset it depends on the market trends in the future like you need more information make the decision yeah I mean if you have time to be that academic about it shirt you can always say it depends but if somebody today said hey I've got this deal $5,000 my five thousand going out are you nay up your gut reaction which is right almost all the time just say zero no no I don't think so and you'd be right let me think about this those of you who are parents or remember back when you were a kid and you had parents right so that should be about everybody on the line here when you went to school you what happened at the end of the quarter or the end of the semester you got this sheet of paper and it told you what they told you what the grades were right you saw that you got an a a B C hopefully not FS right well that was how you did math and science and history and all those English you would take that home and your pants would be so proud of you or maybe your parents and New York come in and you're like let's see the report card here Johnny alright good job keep up the good work well what if your kid came to you and said hey mommy hey daddy can I see your report card well folks this is your report card right here what grade would you give yourself right I mean think about it hey son hey daughter I want you to grow up and be just like me where you two could have zero cash flow No think about this we need to learn if we wouldn't invest in ourselves why would other people invest in us we need to learn how to take there's a lot of strength here in this budget but it just needs to be refocused that's all so that we can eventually look at our budget look at our finances and say yeah I got an a key and check this baby out look at my cash flow now look at look at how much debt I have her look at how little debt that I have right that's going to be the report card that we care about now when we look at this this is just your basic budget I haven't even we've been talking I don't know for how long now and I haven't even gotten over one thing a philosophy Bank e because I had to set the stage I have to set the groundwork here you have to understand now your numbers might not be the same but they're similar okay so stay with me now let's go back to that scenario where the car tire blew went off the road and then the tires all you all don't need replaced and you got to fix the suspension maybe you snapped an axle whew that's a lot and repairs now all of a sudden you need 12 15 18 housing you know wait a minute at some point you know fixing the car it might be cheaper just go buy another one depending on how much damage there is but let's say you need let's say you just need $12,000 you need it like right now but you don't have time to wait you don't have time to go through the loan process that there isn't any money available on your lines of credit and here walks in Joseph hey I'll lend you the money in fact I'm such a great guy I mean just go ahead and ask me I mean you can ask me in the comments below hey Joseph are you a good guy I'll tell you yes because guess what I'll let you choose do you want to pay me back at 21% interest or would you like to pay me back at 6% interest you pick it doesn't matter to me what would you pick now for those of you who said six that's the smart choice you're like yes of course who wants to pay 21% interest when you can pay 6% I get you I'm with you well let's take a look at this now if if I can I want to shift gears just for a moment here I want to take you back to the magical time in your life when you were in junior high school earth science class remember that there was there was a time when you would say fresh water at sea level freezes at zero degrees Celsius I mean do you agree with that fresh water at sea level freezes at zero degrees Celsius true look folks I'm not trying to trick you here on this one okay well come over here we're gonna compare that does that mean that fresh water at sea level also freezes at 32 degrees Fahrenheit look close I'm not trying to trick you public answer no 32 degrees Fahrenheit fresh water at sea level freezes at 32 degrees so 32 degrees Fahrenheit and zero degrees Celsius they're equivalent right right okay now if I just make one little change here and I change it from zero degrees Celsius to one degree Celsius right we're just going up one degree compare one degree Celsius to 32 degrees Fahrenheit which one is hotter right which one is 1 degree Celsius hotter than 32 degrees Fahrenheit yes yes you're right one degree Celsius is than 32 degrees now now I'm gonna see if I can trick you let's look at this six degrees Celsius and I'm gonna change this one over here watch out folks 21 degrees Fahrenheit all right which one's hotter which one's hotter folks if you said six degrees you're correct but wait a minute huh and that over here it's a 21 I can't be right but it is now why why is 6 degrees Celsius hotter than 21 degrees Fahrenheit is it because they're different scales Yeah right come on I didn't flunk earth science I mean I got an A huh so if so wait a min so they're different so you mean oh wait a minute if they're different scales do you think the bank is doing the same thing to us over here on inches when they say 6% on your loan is that the same as 21% on your credit card not all folks this is a different type of interest this is a more Ty's amortized and it's a one directional loan I'll explain that in a minute but come back over here what's this 21 this is called simple interest and the money here is a revolving line of credit advertised and simple here's why this is confusing because when we went to high school right after we got out of our science we later went on to high school and we learned all about math and all the wonderful things that algebra taught us and how we I mean isn't everybody using algebra today I was just asking my business partner radio today if he could help me calculate the the right triangle in this other room and he was really I mean come on we learned so many things that we forget goblets and in high school but hey one of the things we understood was simple interest because if I said this credit card is 21% interest and I have $100 balance on the card how much do I have to pay an interest hmm let me think twenty one dollars yeah we all figured that one out and we all use that we all understand that but you know what they didn't teach you in school they didn't teach you about amortized adjust in fact I can't even say it in a normal voice it's amortized interest because it's so sinister it's so so yeah we'll get into that a little bit more but what do I mean by one-directional well here's what I mean I mean if I want to get a mortgage loan for my house for $200,000 that means I borrow $200,000 all at one shot and I pay it and now I own my house and now every month what do I do I make my $1200 payment it blows the bank $1,200 payment goes the bank now what happens if oh you know what the air conditioning broke and I go to the bank and say hey look I know I just made that $1,200 payment but my air conditioning went out okay and I mean I don't have to get the whole unit replace but I got to replace the small module I need about six hundred can I get six hundred dollars of my last payment back or I'll make it up at the end what's the bank going to say it just makes you keep making your payment's well you're like but wait a minute I've got equity yeah you got equity try going to the HVAC guy when your shows up and says see do you take equity oh he takes Visa takes a check right so amortize you borrow the money once and then you just keep making the payments you don't get access to those funds again I'll become this way over here think about this I have a fifteen thousand dollar limit right now the balance is at twelve thousand man I can put another three thousand dollars on to the limit as long as I keep making my minimum payments right I could still use that so every time I make a payment see 21 percent goes to interest which means 79% pays down the principal its revolving these I could significant I could pay that all the way back down to zero I could pay a part of it I could keep going up and down up and down I can keep using it as long as I'm making the payments and every time I make a payment I'm paying principal down enough so that if I paid $600 well 21 percent of that went off to interest but the 79 percent of this is something that I could use again so if I racked it up racked up my card all the way to $15,000 but I made my minimum payment do I have enough on my credit card to go get a tank of gas well I do it unless I live in Hawaii because I mean I was up there man it's like they asked for you're like kids is a deposit I mean a gas is so expensive out there but anyway you know what I'm talking about you can use it pay it down use it again that's what we mean by revolving and it's that simple interest now this is all well and good but let's see how much 6% amortized interest costs because what are we gonna do we're gonna look at an amortization schedule those of you with weak constitutions you may want to shield your eyes okay fair warning this is purely evil so we are making a $1,200 a month payment so let's put $1,200 this is our total payment now of the payment we have interest and we have principal now over the life of the loan over the life of the loan you will pay this a lot how long is your average mortgage 30 years no on payment number one nine hundred and fifty dollars is going to go towards interest and two hundred and fifty dollars is going to go to your principal so folks let's take a look at this twelve hundred dollars your twelve hundred dollar payment nine hundred and fifty dollars goes towards the interest is that six percent I don't know I'm not really that good at math but I'm thinking maybe not but if you if you see here all the interest is front loaded and then the principal gets back loaded in fact there's this magical amount when you start paying more towards principal this is usually somewhere into like twenty twenty two years into your loan whoa well let's give the bank the benefit of the doubt because they wouldn't try to deceive us with the six percent would they no I'm sure there's some sort of Truth in Lending statement that you would have signed right let's say hey 60 months 60 months in which is what five years five years what happens at five years if you have a house five years from now what's gonna happen now some of yours thinking yeah maybe I refine my loan and give those cheaper payment that's what some people do or maybe a move because every five to seven years Americans we move because we get bored right so we move and then what happens well you just reset all the way back to zero and you start paying all over again but look at this look at this area now how much of the principal did you really pay off not that much in fact let's look at where you're at in sixty months in sixty months all right sixty months you've made seventy one thousand dollars in payments paying you're like you're twelve hundred dollars a month every month seventy one thousand dollars good for you all right let's see you have paid exactly we're not exactly he's not but you've paid about $13,000 in the principal hey thirteen thousand nothing that sneeze that but down here what about your interest fifty-eight thousand dollars of interest whoa fifty eight thousand dollars of interest but hey it's it's it's six percent you know I'm starting to feel like I'm starting to feel like that doesn't seem like six percent anymore in fact you want to know what the reality is that it's amortized interest and we need to because we think and we learned in school about simple interest we need to think of this in terms of simple interest now is there a way to convert from Celsius over to Fahrenheit is there some mathematical equation where I could take and figure out what actually is six degrees Celsius and Fahrenheit or can I calculate what is 21 degrees Fahrenheit and Celsius yes of course there's a formula in fact I'm gonna teach you a formula on how you can look at an amortized interest rate and figure out what is that in simple interest now this formula I'm gonna teach you is not a hundred percent accurate but just see it's pretty close so here's what you do when you see your interest rate right so we're gonna go over here let's do six and then multiply that by two multiply that by two what do you get folks get twelve right now here's what I want you to do multiply that by ten well you get one hundred and twenty percent the real the real conversion or those are you one hundred and sixteen percent but you see how you could just I thought look hey if you have a five percent amortized interest on your loan let's say five times two and see that that's ten and then ten times ten it's a 100 percent interest you know it's really like around maybe something but still could you imagine what the bank would do you're sitting at the bank you're across from the banker and this as well we're looking over your documents and I think we got it all about wrapped up here hey congratulations on your hundred and sixteen percent long you'd be like one hundred and sixteen percent get out of here I'm not paying hundreds is never said and the bankers like yeah should do what I'm saying yes to this Hey Joe has this idea let's call it amortized interest okay Huddle's hey congratulations you got approved for six percent no you're like hey I'm gonna go back and brag my buddies hey hey I got a six percent loan everybody's like I got four dude you're like oh it's like guys even if it was four percent I think about it that's somewhere around eighty percent in in simple interest so I mean if you look at that what what are you gonna pay if you if you were to hold on to this loan for this house for 30 years what's the total amount you're gonna pay total amount you're gonna pay for hundred and twenty thousand dollars four hundred twenty thousand so I'm asking you is that six percent because you know sometimes when I think of six percent you know I'm kind of doing my math and I'm thinking well 10 percent would be like twenty thousand so six percents got to be less than that I don't sit down and think oh yeah six percent I'm for four hundred and twenty thousand dollars folks let's go back in time to when I asked you the question hey remember I'm a nice guy you needed that money and I was gonna lend it to him and let you pay do you want to borrow the money at 21 percent simple interest or would you like to borrow it at six percent advertised interest you pick now how many of you are picking hey I think I'll borrow that money from you because I needed at 21 percent simple inches think about that think about that now that you know the difference between simple interests amortize interests can you go out and immediately start making better decisions but you're like how am I to know which is which it's really easy if it says loan its amortized your home loan right your auto loan your student loan that's all amortized interest lines of credit they that's simple interest credit cards overdraft accounts things like that they're happening at and at a simple interest rate all right now still I haven't even yet started talking about velocity banking like I know I have to help you I have to set the right mindset because see this is what the wealthy know and understand about the banking system so if somebody's gonna go buy a house then they get a loan and you're a wealthy person then you get a loan you're doing everything you can to get out of that loan right because sometimes you have to buy a house with a loan it's what makes sense but as soon as you get that maybe a lease option it maybe you find a way to refinance out into a different line of credit but whatever it is you're not going to hold on to a loan because look at how expensive they are and we're ties interest is raking over the coals it might be good for an acquisition strategy but there's got to be an immediate plan to get out of this in the next five years or less right now look at lines of credit yeah I mean this is so convenient to be able to again use 15,000 pay it off and it goes up and down no but you can have so much more control over this in fact here's something I'm gonna do I need to erase something here because I want you to feel like you got I want you to feel like you got your money's worth today alright and what I mean by that if you only learn one thing from the day it's this okay your w-2 folks what's a w-2 it's your employees your employees right you filled out the w-2 for me working paycheck-to-paycheck maybe you're on the 40 40 40 plan right you work 40 hours a week for 40 years of your life to eventually one day retire on 40% of your income you know that might be you well what did they do well the w2 folks they use their cash as currency for ends well what's that mean that's what I said earlier you're living on a cash basis mentality cash comes in and then you spend it and it's gone what what are the wealthy do well they use leverage as punch they use leverage as currency think about that leverage is great what's that mean it means a line of credit is somebody else's money OPM right we love OPM other people's money I'm gonna leverage other people's money and use that to pay for things that's currency now here's the second thing that wealthy do they use cash as velocity now you're following along you're like yeah I got that yeah I got that and then I said cash is velocity and he just went or what does that mean cash as velocity they use cash the cash flow in their life as a means with which to pay down the debt and the more cash flow there's the the faster the more velocity is used and paying down the debts and when you pay down those debts the greater your leverage becomes which means more currency you have the more you're able to do stuff whatever stuff is and for you in your life all right that right there this is really the whole the whole crux the whole foundation the cornerstone of what velocity banking is now you to see how to actually do velocity banking good because we're still here with me that means you must have said yes or your mouth fell asleep on you and you can't click it to get off all right so stay with me now folks because at first you're going to be like huh okay this $5,000 right before it came in and we put it straight into the bank now here's what I want to do I want to take $5,000 and all we're gonna bypass the bank and we're gonna put it right here onto our line of credit all of it naw you're like what are you a crazy madman how are we gonna pay the rent our mortgage how are we gonna pay the guy how do we eat all we've done is give all our money to the credit card well guys stay with me I said stay with me okay so how does that work come on over here take a look so let's say this is our $15,000 limit all right and we'll say that this represents our $12,000 balance well if I put $5,000 on to this line of credit what happens to my balance hmm it goes down doesn't it but wait a minute I've got so many expenses over here to pay well what what are we gonna do well come on over here let's feel it so if I put $5,000 on to this line of credit do I need to make the $600 minimum payment anymore no you don't have to make that anymore now we've spent a lot of time talking about savings accounts and 401ks and I'm telling you I can see right through the camera lens out there through the digital universe right through your computer yes I see you anyone not you know what I see I see intelligent people because who else would be listen to me there's no idiot listening to me there's only smart people intelligent people who want to make their life better and that's you and you're not dumb and you're not you're you're looking at this and you're not gonna put any more money into savings account because you know that automatically loses you money and you know what you're the kind of person you're watching this video to get educated to learn about velocity banking so don't stop there keep learning about all kinds of investments and what's right for you because you want to know something you are better at managing your money than somebody else so you know what we're not going to put money into that 401 K anymore we're not gonna put money in the savings account and people are like oh good what about savings what about my best egg hold on there turbo we'll get to there but hey if I don't have to budget for $1400 in the savings and $600 to that credit card hey I can change I can change what well we have to pay in fact if I add up the mortgage the car payment and then just my my living expenses that's three thousand dollars right so now I have five thousand dollars coming in and only three thousand a month in expenses to pay now did I did I get an extra job how do I do this did I do we have to cut back I mean are we on the beans and rice diet right no no we haven't we haven't touched our our way of life right our conditional life so but what is this done for a cash flow I mean instantly by restructuring how we pay for things we just five thousand dollars in three thousand pounds we just created for ourselves two thousand dollars in cash flow whoa well what can we do with that well we can do velocity banking so here's what we do now three rules three rules that I'm gonna give you I mean there's probably more like 72 rules but I'm gonna go over the three big ones first of all what is how we need to learn how to use credit the right way as the tool it was meant to be so first rule is this is for emergency's now do we have any emergencies praise God hopefully we don't god forbid that something bad happens to you in your family but that's what the line of credit is there for number two what else it's for debt payda and number three it's for ash cents is there anything there about buying a big-screen TV is there anything there about going on a vacation now that doesn't mean you can't have fun you can't go do the things you want to do but how do you pay for the things you want to do you pay for it over here out of your cash flow so if $2,000 cash flows enough for you to live it up and go on the wild vacation you always wanted to admit your Gulf land then yeah that is right but if you're like hey I actually want to do something I'm gonna go someplace I I have this dream car house vacate whatever it is and your cash flow doesn't doesn't fit it then grow your cash flow uh-huh but right now this is what you use your credit for so we just go through our list do I have any emergencies right now no do I have debt yes there's a lot of debt here so $5,000 in $3,000 out so what I'm gonna do is have to put $3,000 back onto the card I put $5,000 on and then $3,000 off what was the net pay down where am I at right here I make 10,000 I just paid that down now that that was month one well anything we did once we could do twice right unless it was skydiving and your parachute didn't deploy you can only do that once all right so 5,000 down then we have to put 3,000 back up you know now we've paid it down another 2,000 we're two months into this are you starting to see a pattern right so boom boom boom boom boom so if we're paying this line of credit down every month by two thousand and we're starting at a twelve thousand dollar balance how long is it gonna take me to pay it down for all my math geniuses out there six months six months that's that's cool alright but but you're like there's so many questions right now I mean I'm already anticipating them wait how do we you can't pay a mortgage with the credit card come on and you know what some of you actually you sound like that I've heard you okay no I'm kidding but you're like wait but wait a minute hold on how do you do that and you you eliminated all of our savings accounts what do we do if something happens okay well let's see if we can take on sir you know how do we pay for things what's going on here this is crazy so let's take a look at it so there's couple ways that we could easily take care of this 5,000 we could actually put 12 thousand dollars into the checking account and then we have enough to write the check for the mortgage easy peasy lemon squeezy but another way is you could have an overdraft account in fact you could have a credit card that's attached to your checking account as overdraft protection and when there's nothing in the account and you write the $1,200 check to the bank and then go to cash it they actually put it on to your credit card as the overdraft and then someone always raises their hand says yeah well that comes with fees and penalties and you know that there's an interest rate attached to that you're absolutely right but look your pain if you do nothing you're paying a hundred and sixteen percent simple interest what is you know by using this method paying a fee and into a simple interest rate you're still saving money anyway you're going to all look at what is best for you in your financial situation and do that I mean I'm showing you an overview of how to do this we actually work with people every day and we go over their specific information you should in fact be thinking to yourself if I'm like making any light bulbs turn on in your head right you need to contact the wise guys and ties you need to get with us because we'll sit down and we'll go through this with you we'll introduce you to an entire education system that will literally blow your socks off I mean you're gonna have to go buy more socks because they just keep getting blown off every time you work with us so now let's adjust the well what about Siemens what if something goes wrong no problem here we are in month two and then all of a sudden my son he climbs up the tree falls out and breaks his arm breaks his leg whatever it is and then I don't know the ambulance has to come pick him up and we rushed him off to the hospital and you know insurance only covers so much and then it turns out that I have to pay out of pocket $2,000 for this whole ride to the to the emergency room and the cast and all of that well can I mean let me ask you a question what can you pay for with the credit card these days maybe the better question to ask is what can't you pay for can I put the hospital bill on the credit card of course I can so right here put that $2,000 you know emergency remember emergency put that 2k back up here $2,000 and then we just add an extra month add an extra month to my velocity banking and so now all my debt is paid off in seven months here's the real he your line of credit is both your checking account and your savings account because we're never going to use more than half of our line of credit at any one time why because it's for emergencies we always want to leave some room in there all right follow you followed me this is amazing stuff my line of credit is both my checking and my savings account this is good stuff okay so Wow look at what just happened twelve thousand dollar credit card balance immediately is all paid off in six months oh my goodness six months but we've got a problem you're like how is that a problem I mean yeah there's a fifteen thousand dollar limit here you're thinking to yourself hey it's time to go to Vegas baby unless you already live in Vegas then it's time to go to somewhere other than Vegas bracket okay so that's the problem with what we do that's why debt is like claim afire in American society whether we want to do we want to spend our money we are the biggest consumers we just gotta buy it Oh red ball I gotta go get that squirrel I gotta get that and we spend money we have to stay focused on the rules so even though we paid down our line to zero we immediately have to say is there any emergency no now we got to pay down debt what we eliminated all our credit card debt is there any other debt in this budget that we need to eliminate yeah look at all this debt I mean we're paying one hundred and sixteen hundred and sixteen percent here on that so well tell you what we're going to do first of all when you start using your credit card this way you're keeping your balance under fifty percent you're using the card every month but you're paying it down more than what you use it every month and six months you can call your credit card companies and you can get a credit limit increase and now you're at $25,000 I mean that's a ten thousand dollar increase imagine if we were putting money into a savings account yes crimp and you save and you cut back and you're like hey can we go to Disney might know we're saving we're saving oh hey I want to get this new car no no I'm denying myself no well hey let's go out to dinner and a movie no no let's stay in watch Netflix and have some popcorn all right wait right I mean that's that's what happens to us and we save it was in and finally the day happens and we look at that bank statement we see we have saved $10,000 and the bank they they show up at your door like Publishers Clearing House with balloons and everything they've got this big huge check and they say congratulations we're giving you another $10,000 what dream world do I live in I don't know any bank that does that do you I mean if you do leave in the comments below and we will all on this YouTube channel Bank they're no they don't do that to you right but but if you know how to use a line of credit the right way will they give you more of their friends to play with Hey look at this we like this this guy knows what he's doing is responsible they either think he's responsibly and those are these doing so let's give them more money so we can make more money or they're thinking that's God it'd be a fluke oh my god this guy is gonna screw a big-time I'm just waiting for let's just give him a little bit more rope to hang himself there one of the other things but either way you give you the credit limit increase so here we are and now we're at $25,000 and total lines of credit now here's how we're gonna play with that following along with me here we're gonna come up here and you know we're gonna remember we don't want to go over half so we're gonna take 30 tubes that was 12 we're gonna have $13,000 here okay if I can make it look pretty pretty ugly okay so here's $13,000 we have $13,000 and we're just going to take that because it's a little bit over half but as soon as we put the five thousand dollars on there it's immediately going to take us well below half but for the purpose of what I'm trying to say is we're going to take $13,000 on this credit card and we're gonna apply it directly to the principle of this loan in fact when you go to do that at the bank you got to make sure that you will say that this is a principle only payment and still they're going to be confused because they're gonna be like wait a minute you're gonna put $13,000 towards this if it's a principle only payment that means you still have to pay your mortgage next month you know like uh-huh yeah I don't know that's what I want to do because what are they trained to do you gave us $13,000 we're gonna we're gonna give you the next you know a couple of months off from paying your mortgage but you know one pad you want a principal only reduction in the principal that's kind of double you just want a principal you want to make a principal only payment apply that straight to the principal so now if we're talking about this in this scenario you're five years into it right you've made 71 thousand dollars in payment but you've only paid this principal down you're at like 186 thousand dollars 87,000 right in there total uh but here's what you're gonna do we're just going to start velocity banking so if we have two thousand dollars here to work with if it took us six months to pay down twelve thousand how long is it gonna take us you know to pay down thirteen thousand how long six and a half right well but I mean you know seven months six and a half seven months Wow we've just paid off thirteen thousand what happened we just skipped ahead in time and when we skip ahead like that you don't have to pay the interest at all over the point that you skip and so I'm going to fast forward for you but we keep doing this another 13 another 13 another 13 and we've velocity Bank it down every 7 months you know what happens and a little over 5 years you've paid off the entire house what what yeah look at where you're at here if you just kept making the payments you're five years into this it would take you 25 years of paying that off but if you do this you've paid your house you took five years to get to here and then we just accelerated over the last five years using velocity banking and know your house is paying off what I'm serious do the math on this folks I'm not in fact if you don't understand this what I'm saying is you put thirteen dollars as a principal only payment you skip ahead you don't have to pay all that extra interest you're saving over a hundred thousand dollars of interest saving it right you're paying down the principal faster but let's not take my word for it so every time you're paying thirteen thousand dollars down right I want you to know it's one thousand four hundred and forty dollars in interest right you're still paying the bank right the bank's making money on there's no way around that but you for seven months you're paying one thousand four hundred and forty dollars on that interest now let's come back over here over the first five years sixty months we paid down thirteen thousand dollars in principle and it costs us fifty eight thousand dollars of interest with velocity banking we paid off thirteen thousand dollars in principle in seven months and it costs us one thousand four hundred forty dollars to do that look at this sixty months seven months fifty-eight thousand dollars in interest $1,440 in inches not only is it faster but it's cheaper hence the lost city banking no wait did I get an extra job am i working overtime I mean it am I on some kind of government subsidy or what am I know we've made no change but but obviously we're cutting back right no look at this I haven't cut back on our way of living right what you're still watching your Netflix you still you're still eating food power still on water funding but nothing is changed except for how we pay things we are using our lines of credit to pay off our loans transferring basically all this principal and aunt for it's over here that's been amortized and putting it over here where it's simple simple interest well in five years we've probably paid off the auto loan but you know what it's probably been it's five years I'm gonna get another car another couple of cars so what are you gonna do well thirteen thousand dollars right on the line of credit pay that off in six months and we got ourselves a couple more cars how cool is that so we've eliminated this debt got a couple of new cars so I don't have to pay for that anyway I don't have to pay for that anymore oh my goodness what is going on here so my total expense is near $1,200 which means guys get this my cash flow is now $3,800 $3,800 oh now now we can go to a lot of miniature golf parks now I mean that no we're growing our cashflow we're being more efficient but guys we've got another problem we have got another problem problem is is we're all out of debt go back here in the Emergencies nope any debt no I'm gonna go to number three assets because we stopped putting money into that 401k but there's somebody on this line saying I don't know if I want to give up the 401k i getcha I feel with you I'm with you all right we're gonna create our own investments now and we have the money to do it because are we at $25,000 and lines of credit no and five six years from now if we keep following this plan we probably have access to about $75,000 worth of lines of credit we also have a house that we own free and clear oh my goodness can anybody say HELOC yeah let's go get a key lock on that bad boy I'm running out of room to write on here but here's what we're gonna do we're gonna go get a HELOC h-e-l-l-o see go get ourselves a HELOC now when you're working with us we'll help you find banks that combine anywhere from 90 no way to a hundred percent loan to value no way yeah I was just I just had dinner with a guy the other night and he got a hundred percent loan to value through this credit union I'm telling you this is great stuff so if our house is valued at $200,000 and let's say we're gonna get 90% loan to value that's access to a hundred and eighty thousand dollars now we also had access to 75 over here on a regular lines of credit but hey do we like he locks home equity line of credit line of credit is it a loan or is it a lines is it amortized or is it simple is it one directional or is it revolving guys we love helix line of credit it is simple interest its revolving oh we're gonna have access to this with these funds so with a hundred and eighty thousand dollars on that line of credit and then seventy five thousand with our credit cards that we've amassed over the last six years of doing this think about what we could do we have access to two hundred fifty thousand dollars can we go buy a house outright sure if we want to do we could take all of this that line of credit and we could take this line credit combine it and go buy a $250,000 house average rents $1,200 a month now we're creating some cash flow how cool is that right we could just do that but we don't have to think small either because we could get loans on those houses not loans that we want to stay into for any length of time but we could put down payment on two or three houses with that kind of money right and then put tenants in there and they could pay off the loans for us or you could get a little crazy and you could use some creative acquisition strategies like contract for deed subject to you could do an option you could do an all-inclusive trustee also known as a rap you could do a master lease a land contract there are so many different ways where you can get into property with no money no credit but do you once you get into those properties do you need money to pick them up right do some of them come with some outstanding debt that needs to pay it off sure do we have the lines of credit to take care of that and do we have the velocity banking to pay it off you bet your sweet bippy we do oh yeah guys at this point we have so many trainings one of the next lessons we're going to do in this series is the real estate system and we're gonna show you how to leverage this I mean do you want to get 10 doors 20 doors a thousand doors we're gonna go over how you can get all of these as rentals maybe you like fix and flipping and you want to put together I mean a huge business model where you use other people's money and you use lines of credit when you start understanding this system right the system is awesome because here here's what appears here's what the truth is folks I'm gonna close on this this is the banking system I've showed it to you this is what the wealthy know this is what they understand and because they understand it they leverage this system to their advantage and you should too because if you don't know how the system works the banking system you don't know how it works the guarantee the system will take advantage of you and we don't want that to happen so get educated get off your butt and I want you to come and click on the link that's on the screen and you get on our website you give us a call and we're gonna help you implement this in your life we're gonna show you how you could if you're in this situation I'd like to pay off a house in five years without changing your income without making extra payments imagine what your life would be like if you look dead free imagine once you're debt-free if you had the ability to use lines of credit to invest in all kinds of opportunities and make your dreams come true folks there's no shortage of dreamers out there there's only a shortage of those who will do whatever it takes to make their dreams come true I challenge all of you click on the link below and come work with us and let's make your dreams come true you
