You may have heard a term going around recently – velocity banking. You may have even heard used in conjunction with “it’s pretty complicated” or “it just sounds too good to be true – it must be a scam”. Well no, the most complicated part of velocity banking is exercising enough discipline to stick to your strategy. And as for it being a scam? Well, not only is it completely legal, but the lending system is actually structured to help you with it.
The first thing to note with velocity banking is that it is the first step to not only a significant positive lifestyle change, but the first step towards financial freedom. Essentially velocity banking is an efficient way to make your money work for you. It does this by using available financial and banking products to manage and increase cash flow, and minimize or completely eliminate interest charges.
Known affectionately as ‘The Finance Geek’, Denzel Rodriguez spends the majority of his time helping people use velocity banking to build a lasting financial legacy for themselves and their loved ones. Born and raised in Queens, New York by a single mother, Denzel did everything he could to learn about finance from a young age. His first student was his own mom, and he now specializes in helping other moms become debt-free, by increasing cash flow and building credit through velocity banking.
The first thing Denzel tells his students to consider when starting velocity banking is to know your 4 major numbers; income, expenses, debt, and cash flow.
Income and expenses are pretty straightforward – what do you get paid and how much are your bills? Debt and cash flow may require a bit more examination. In regards to debt, not only do you need to know the timeline and monthly minimum payments, you need to be aware of current interest rates and repayment schedules on all individual lines of credit. Finally, the key to velocity banking is cash flow. At first, the process will be slow and can be started with as little as $50 a month, which will progressively increase to at least $500 each month.
To help you decide if velocity banking is right for you, Denzel outlines some pros and cons below.
Pros to Velocity Banking
You pay a lot less interest
Many people are unaware that the interest they pay on a 30-year mortgage can actually equate to more than the initial amount they borrowed. Because the velocity banking strategy requires cash flow, the length of your mortgage is significantly shortened, as the upfront payments made generate less compound interest on the principal amount owed.
You can pay off your debt a lot earlier
Velocity banking is essentially a debt repayment strategy that will work to help you pay off your debt more quickly. Depending on cash flow amounts, the majority of people will typically be able to pay off their loans within 5-7 years.
You free up your equity
Mortgages don’t allow you to tap into your equity. A home equity line of credit (HELOC), however, when combined with velocity banking lets you use money that you wouldn’t ordinarily have access to, helping increase your cash flow amount.
Cons to Velocity Banking
Lack of Education & Support
You will find it difficult to communicate with employees at the bank, sharing with friends, family, co-workers because the concept and strategy is completely foreign. Finding a community and working with a coach is a critical component to achieving maximum success with this strategy.
To qualify for a HELOC or other line of credit, you do need to have a solid credit score preferably 700 or higher, you will receive the best interest rates on your credit lines. Although, there are other lines of credit you can use that will help you rebuild your credit score if you are unsure of how to recover from previous shortfalls.
Requires cash flow
Velocity banking requires extra money (cash flow) to pay off your outstanding balance. I recommend having at least $500 of cash flow to make velocity banking work efficiently for you.
The great thing about velocity banking is there are a lot of case studies out there. To help you make a more informed decision, check out Denzel’s YouTube channel to learn more about how to use velocity banking and other financial strategies. To work with Denzel, get in contact here, or take advantage of his free coaching opportunity, only available for a limited time.