iloveyoga
Thinks s/he gets paid by the post
I agree with the recommendations for Dave Ramsey for reducing or eliminating debt. That was step 1 for us for being able to FIRE.
Everything I was sent from my brother in law was from you tube. These are the ones he used to learn how to do it. See below:
*Denzel Napoleon Rodriguez (finance geek)
*Randall Cloud - Debt acceleration
Both make it sound great but in reality it's just consolidation.
Do you have a specific program you use to track everything? Or is it just in say excel?
.... I know it goes against the snowball method, but I would be paying down higher rate debt and trying to replace it with lower rate debt.
Everything I was sent from my brother in law was from you tube. These are the ones he used to learn how to do it. See below:
*Denzel Napoleon Rodriguez (finance geek)
*Randall Cloud - Debt acceleration
Both make it sound great but in reality it's just consolidation.
Well it's been a year and it's great however DH has decided that he wants to try Velocity banking. His brother turned him to it and that is all I hear about.
DH is a 33 y/o working in the trades as a union Ironworker. He keeps telling me that he doesn't want to bust his butt and have nothing to show for it.
I know we live paycheck to paycheck (he brings home about 4k/mo) but he has a "vacation fund" from the union that we can use monthly. I've been using it to slowly pay down some bills. The care credit will be paid off next week.
Has anyone heard of velocity banking?
I was on the fence wrt the Velocity Banking concept. It seemed sketchy but maybe it could help some folks attack their debt in a focused disciplined way. Digging in a bit more, I see Mr Rodriguez would like to get paid hundreds of dollars for a “masterclass” webinar and annual fees of $1k. No Way!!! I hope your DH does not intend to pay for the VB program. In any event there’s nothing better than making extra principal payments but you don’t need an LOC for that. I consider myself a numbers guy and I am stunned that many people take the bait on this.
Welcome, Robocp4. Would you trust the advice of a neurosurgeon with a name like Denzel Napoleon or Randall Cloud?! Not I, never. Also, "Debt Acceleration" seems to describe what the velocity banking really does. I WOULD STAY AWAY FROM THESE GIMMICKS. Someone is making money from selling them. You can be sure of it...
You and hubby can do that too. Commit and recommit often to a shared vision. Decide on your financial (and other) goals. Make a budget that will guide your spending. Track what you spend and why first, then incorporate that into your budget process. With clear eyes, separate "needs" from "wants" and be sure that your budget is filled with "needs" with only a sprinkling of "wants."...
One last thing. This Velocity Banking scheme is a clear and present danger to your goals. NO reputable financial guru or advisor backs this hare-brained idea. There is only loss, regret, and tears at the end of it.
Try telling my husband that. He doesn't think velocity banking is a problem. He raved about it because his brother is doing it. It's not for everyone and we are one of them it's not good for. He just will not see my side of things.Unfortunately, some folks in financially difficult situations look for quick-fix cures like "velocity banking" rather than slower but steady and realistic methods of change.
You need to get to a state where you aren't living paycheck to paycheck. The only realistic way to do that is:
- more income
- lower expenses
- some combination of both
You chose to have a baby while being in debt. And you chose to give up 700-900 per month in order to stay home with baby. Now you need a car for baby. Sounds like something has to give here.
Clearly your should exchange your sports car for something more practical but not new. You both should be looking for other ways to cut back on expenses.
And you should think seriously if you can contribute to the income side by working. Perhaps your husband needs to consider a second job - at least until you are out of debt.
I am also a numbers person and I just can't see the future with doing velocity or debt acceleration as some have called it. You're just moving debt to pay debt. Robbing Peter to pay Paul in my eyes.
Try telling my husband that. He doesn't think velocity banking is a problem. He raved about it because his brother is doing it. It's not for everyone and we are one of them it's not good for. He just will not see my side of things.
Q3: Velocity banking
Can you explain how velocity banking works? It seems like a good idea for getting rid of your debts quickly.
– Ana
Velocity banking is an idea that seems to become popular once every few years, usually because some financial guru is pushing the idea. It’s an old concept with a new name. I’ve heard it called the “Australian mortgage” and “mortgage accelerator,” among other names.
Basically, the idea is that you turn your entire mortgage into a line of credit that you can draw from freely, like a bank account. When you withdraw money, the balance goes up, meaning you have more to repay over the long run.
Then, you have your entire paycheck deposited into that line of credit, knocking the balance down by your full paycheck, and you then live off of that line of credit, with the balance creeping upward as you spend money.
Initially, you could use that line of credit to pay off a bunch of high interest debts, effectively reducing their interest rate. After that, you can just make all of your purchases right from that line of credit. The only problem with this scheme is that now your house is the collateral for everything, so if you run into job troubles, you have an enormous mortgage and no way to keep paying it off.
I generally don’t recommend this system as it can go very bad very quickly. It only works well if you have a very stable job and you’re genuinely committed to spending less than you earn even when you have an enormous credit line sitting there for your convenient use. (emphasis added)
...First, you and your husband are not on the same page. This is no exaggeration, you need to treat this like living with an alcoholic. Him wanting to buy a 70” tv while you’re in this level of debt is proof enough that you have a serious problem on your hand. I would take this opportunity, his interest in Velocity (scam), and see if he will go to a Dave Ramsey meeting with you. If not, many other non profit credit counseling programs are out there. Don’t do anything but pay down your existing debt. Transferring money to another loan is just a shell game that will get you into trouble. My prediction is that if DH went on Velocity’s program, he would realize that he now has more credit available and that 70” tv would be in your house in no time. Get serious, because this is serious.
Budget. A budget makes no sense until you get a DH on the same page, but you do need a budget and he needs to be committed to it.
If you ask people on this site how they got financially independent, I’m sure none of them did it with a spouse that wasn’t on the same page. In my time here I’ve seen stories that mention their first spouse not being compatible financially. Sure, there can be some tension between spouses, but if you’re not walking in the same direction, you’re walking apart. Use this time to work with DH to get together on this...
What am I missing that seems obvious to everybody else?
He said we would get a personal line of credit not a heloc. Of course there are possibly more stipulations because it would be unsecured. I have no idea I haven't looked into it because I'm against it but he is really ready to go to the bank and get one.Also found this:
https://www.thesimpledollar.com/questions-about-velocity-banking-tipping-podcast-basics-and-more/
You could much more easily accomplish the same result by just periodically writing a check for the balance of your checking account over $x as additional principal payment on your debt.... with less risk of losing your home.
In your case you don't have enough home equity to get a HELOC so I'm not sure how you could do it even if you wanted to.
Lot of good advice here. I’ll focus on a few. First, you and your husband are not on the same page. This is no exaggeration, you need to treat this like living with an alcoholic. Him wanting to buy a 70” tv while you’re in this level of debt is proof enough that you have a serious problem on your hand. I would take this opportunity, his interest in Velocity (scam), and see if he will go to a Dave Ramsey meeting with you. If not, many other non profit credit counseling programs are out there. Don’t do anything but pay down your existing debt. Transferring money to another loan is just a shell game that will get you into trouble. My prediction is that if DH went on Velocity’s program, he would realize that he now has more credit available and that 70” tv would be in your house in no time. Get serious, because this is serious.
Budget. A budget makes no sense until you get a DH on the same page, but you do need a budget and he needs to be committed to it.
If you ask people on this site how they got financially independent, I’m sure none of them did it with a spouse that wasn’t on the same page. In my time here I’ve seen stories that mention their first spouse not being compatible financially. Sure, there can be some tension between spouses, but if you’re not walking in the same direction, you’re walking apart. Use this time to work with DH to get together on this.
It was also mentioned that you should consider making some income. I agree that staying home is ideal and that it can seem hardly worth it if you have to pay for child care. However, $700 per month is a nice chunk to put down on your debt every month. Try to find ways to bring in some money. Maybe you could watch someone else’s child. Get creative and put all that money down on your debt.
I hope the best for you.
Another analogy that might help: think of it as moving a bunch of IOU's from your left and right front pockets to your back pocket.
As others have mentioned debt consolidation by itself is not a bad thing, but as always the devil is in the details.
1. How much does this "service" cost?
2. Could you not do the same by paying the higher interest rate debt first?
3. And most importantly - once your debt is consolidated off, will you then be tempted to spend more and potentially acquire more debt?
Rather than confronting DH head on why velocity banking is a bad idea, perhaps you can get the number$ for VB and then do a side by side comparison ?
I wish I could just tell him that but he will not listenThe sacrifices are all temporary. Suck it up in the short term for the long term win.