So I'm a married 37 y/o woman with a 9 yr old step son and a 1 yr old son. After baby was born we decided that I needed to stay home. (I only brought in 700-900/mo extra). 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. We need a new car for me with the baby and he would love his paid off.
A little about what we have:
*My car is paid off (2 dr sports car not baby friendly)
*DH has an suv that we bought used in 2017. We owe 12k on it still
*We have a house with a mortgage of about 180k
*we have a lawn tractor that he took a personal loan out for... We own 3k on it
* have 4 credit cards (2 store, a m/c and the care credit card) between them we owe 6k
*and I still have a student loan that I owe 12k on (I'm on an income repayment plan so I pay $0/mo right now)
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? Tried it? Does it actually work? I'm not so sure about taking a personal line of credit (LOC) out to pay off credit. Yes smaller interest rate and it's figured differently on the LOC but its basically consolidation with a reviving account.
Help please? I want to pay things off so that we can have a great retirement when the time comes. As of right now that won't happen quick enough for him.
P. S. I want to learn about stocks and bonds but have no clue where to start with that.
I haven't read all the replies, so I may be repeating some things, but...
1. Velocity banking might work for someone who already has good financial habits and is very strict about spending. However, for someone who isn't, it's a recipe for disaster. It's just an easy way to go further in debt. I'd avoid it.
2. Why aren't you working? You have student loans that are accruing interest and other debt and are living paycheck to paycheck. Get out there and work. I know this may sound harsh, and others may disagree, but the age of the stay at home partner is over, unless one spouse has a very high income. Get into the workforce and add money to the table. We have four children, ranging from 6 months to 16 years, and both my wife and I work. We wouldn't have it any other way. Even if you come close to breaking even on childcare costs (which only the 1 year old should be really expensive), you will presumably get raises and promotions and make more in the future. As long as you stay unemployed, you won't move up in pay scale or promotions. Oh, and stop having kids! As someone who has a lot, I know firsthand just how expensive they are!
3. Sell the tractor and buy a used one and pay off that loan. I have about 1.5 acres and use a $500 tractor I bought used five years ago. It isn't as nice as the newer or more expensive ones, and requires maintenance, but it works just fine. Of course I drool over the more expensive tractors, but I can't justify the cost. And for comparison, our annual household income is $330,000.
4. I will second (third, fourth, maybe) the recommendation to read Dave Ramsey's book The Total Money Makeover. I don't agree with everything he says, but his principles are sound, and whether you follow it loosely or to the tee, you'll get out of debt.
5. Once you're done with that book, read the Millionaire Next Door. It's hands down my favorite book and was life changing for me and my family.
6. Is he contributing to a 401K or does he have any other investment plans? Do either of you have any savings, retirement accounts, brokerage accounts, etc.? If he has a 401K with matching, I'd advise to start contributing to that up to the point of maximum matching. This is where I differ from Ramsey, in that he says to wait until debt is paid off to start contributing to a retirement account. I disagree because any funds that are matched earn far more than any debt you're paying off (usually 50-100% matching, depending on the employer).
7. I like the idea of refinancing high interest loans, AS LONG AS it's done congruently with a plan to change your financial habits. If you refinance and never change your financial habits, it won't make much of a difference in the long run.
8. Any thoughts on downsizing your house? I'm not sure how much your house is actually worth/cost you, just your mortgage. From a quick Google search, it appears northwest Indiana has low house prices, even lower than my area. And in my area a $200k house gets you quite a bit. Just a thought in order to put more money in your pockets both with a lower mortgage cost and lower utilities.
9. This should be obvious, but no nonessential big purchases. Especially not on credit, but if you have the cash saved up, put that toward paying off debt, not a new toy.
9. As far as stocks and bonds go, you're still a little ways from diving into that, but keep reading everything you can here, and pick up a beginner's investment book.
Good luck!