Velocity Banking is a Marketing Gimmick

#velocitybanking #schoolofpersonalfinance #personalfinance #financialeducation #financialplanning #financialfreedom #fire #financialindependence #richmccormack

Velocity Banking is a popular strategy we see all over YouTube with outrageous claims of paying off hundreds of thousands of dollars of debt in short periods of time because of the secret way of shuffling money around to eliminate debt.

Velocity Banking can save you small amounts of interest depending on what type of debt you have but at the end of the day it is your positive cash flow that is the real reason you are able to pay off the debt. If you do not have positive cash flow every month because you spend more than you make, velocity banking is not going to do anything for you.

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[calliephillips]

Actually, your amount of interest would be higher for the month due to not reducing your average daily balance as much as she did. The velocity would be 92. Your way, it would be closer to 135. May not be a huge savings to some, but 40.00 x 12 is 480 going to the line of credit. Also, if you are using this method with a CC, you gain points if that is kind of card u use. It's one way to do things, not a way everyone wants, and that is okay. For me, it has helped me dramatically reduce my debt, reduced my monthly interest 40.00 as well as gain another 60.00 a month with points. I'll take my 100.00 in savings thanks. I agree as she states as well not to hire her, and i believe that philosophy would be used for u as well.

[Yaak]

I'll make it simple to understand. I was paying the banks $1800 a month in interest. Now I'm paying my HELOC $250 a month in interest. I use the diference, AND my increased cash flow, to payoff debt. That's how it works.

[ericjones]

I have been doing velocity banking for years. It works. You just have to know what you’re doing. I never use a Heloc. I use credit cards and my open lines of unsecured credit. I invest, trade and buy crypto, buy vehicles and save all at the same time. People are so quick to discredit something they don’t understand. It’s human nature. When humans don’t understand or fear it, what do they do? Try to destroy it. It’s just your opinion but you shouldn’t try to grow your channel with false statements.Im debt free because of velocity. Not understanding your angle. Velocity banking will get people away from financial advisors 😂. She always says, don’t hire me, learn how to do this yourself. She has courses she gives but, she ALWAYS SAYS, YOU DONT HAVE TO HIRE ME. You shouldn’t attack others with false accusations.

[davidtoney]

I'm not saying velocity banking is or isn't the way to go. The only thing that I will say from watching her videos is that she isn't trying to sale anything. She actually tells people that they do not need to buy any service from anyone and to use the money on their debts. Figured you might want to know that because you are making false claims about her and it could be problematic for you.

[David-pnyp]

I could be wrong but I think the point is the difference between amortized interest and simple interest. It's not about the line of credit it's about the reduction of the principal with a lump sum payment as opposed to monthly extra payments. This way you knock out $10 000 of amortized interest up front. I believe that savings is much bigger than paying the line of credit.

[keithoshea]

Hi there.
She based her $92 interest rate on splitting the difference between the high and the low.
Where did you get your $92 interest rate from?

[mygoodlife]

1. She always encourages people to go view her videos so as not to have to pay for her services.
2. You leaving out the fact that by paying into a line of credit your dollar is working twice.
3. Your cashflow does increase, even if it is just by the amount that you're saving with the minimum payment that you do not have to make.

[CP-vify]

You're probably right that we don't need to hire velocity banking gurus. But wonder if you would also agree that "financial advisors" are also not necessary (except as you say, to get people to think and pay attention to debt). But if that were the only true reason to hire financial advisors, then it would apply to velocity banking gurus as well.

[ReynaDPerez]

Velocity banking allows you to see your whole financial picture and keep track of what’s going in/out as far as expenses. It’s an organization tool as well as a debt management and reduction tool.

[jstray]

You take a weird position in this video. You agree that she's correct, but then double talk to force the idea that there are scenarios where the interest savings may not be better than your way. That's not a debunking. The point of moving a balance from a low interest rate to a slightly higher rate is the difference between compound interest and simple interest. You spoke nothing of this point, you just tell people not to do it without context. What's the point of your video? Is it just to put doubt in people so they'll do nothing?

[sinabunnn]

WOW this guy is horrible. Why are you knocking someone else method of paying off debt like this? If it don't work for you say that. Clearly it's working for others very well.

[michaelb.]

I tried the Dave Ramsey snowball method and it didn't work for me, but then I discovered velocity banking as it worked better for me. I think one has to pick their debt payoff method that better fits their personality as at the end of the day it's just all about paying off debt. I loved that with velocity banking it was exciting and motivating for me to basically throw a paycheck into a debt and basically say F you to that minimum payment and then paid my monthly expenses from that credit card. If I mixed it up a little bit and threw a half a paycheck into a debt and threw the other half of a paycheck into another debt I got double payback on two minimum payments on the same check as that was extremely motivating for me as I almost turned it into a game which actually made it fun. I just couldn't hack the old Dave Ramsey approach of eat beans and rice (eat garbage food) and deliver pizzas in the evening (work a crappy 2nd job) taking more time away from family for years that you'll never get back. Dave says paying off debt should be painful and hurt as to me that's just weird. I don't think velocity banking is a "marketing gimmick" as what are they selling? Either way good video and perspective as I hit your subscribe button.

[FinancialCoachJess]

I agree that VB is overhyped for what it is 😆 I appreciate you breaking down the numbers!
but why must there be these two camps of debt snowball/cashflow vs vb? Can we support people getting out of debt no matter what they choose? Both methods are still worlds faster than only paying minimums

[isaiahreyes]

maybe i have this wrong but dont you have more liquidity in the heloc?

[rcbustanut]

Hahaa, that lady was the 1st video I watched on velocity banking. Since then, I have watched several videos on this method & I'm still not sold on it.

I am thinking about getting a heloc, but only if the interest rate is way lower than the small consolidation loan I currently have & the few credit cards I have with small balances. If I can make 1 payment & save $ in interest, then it can be worth it.

[jesseherrington]

Have you ever done a video on the All in One Loan? Seems like the same concept that you address with velocity banking. There are tons of videos and one lender in particular has what I believe is a very misleading calculator. I'm curious to hear your thoughts. It might be good for future liquidity, but for interest savings I just dont see it.

[MrLaceyLewis]

Dude.. Not cool to use her video!!! What has this world come to.. If you don't agree just say that but don't stomp on the lady with some fresh timbs for doing what she truly believes in. What if someone used your video to try and get views, likes and leads for new clients. No Youtube or business ethics at all young man... 😠

[GtheBarber]

It seems velocity banking method would be better for those with no Will Power. Being that the whole pay check goes into the line, you have to do the right thing versus leaving it up to someone to spend their last on paying extra towards a card

[DenzelNapoleonRodriguez]

at 8:41 the only thing I would say is the interest costs would in fact be slightly higher because of when that cashflow payment was made. When we look at when people actually make an extra payment it is usually after they received their paycheck and paid their normal bills then what is leftover goes to the BOA line of credit. It's not a huge difference but it wouldn't be the same because of the average daily balance that you mentioned earlier in the video. I agree with you that you do not have to pay anyone to learn the strategy it can be learned for free watching enough videos on actual case studies not the example ones.

[shmeepmeep]

A lot of this is timing based I believe, I could be wrong but let’s say you get a 8500 dollar line of credit from a bank at the end of the month. Being that all your bills could be due at the beginning wouldn’t you just take the 8500 and put most of the debt toward the capital one credit card which would drop your month expenses 320 dollars? Also, If it’s a line of credit doesn’t it have a closing statement where you could strategically pay after the statement closes? that way interest doesn’t accrue while you’re doing this and then you can just put the expenses back in the next month to satisfy the debt? Seems like there’s a few ways to attack this but to say the velocity banking doesn’t work or it’s the same thing is kind of a monolithic way of looking at it?