Builder To Contributor LLC

Pros and Cons of Velocity Banking

One thing I'm asked pretty regularly is if Velocity Banking will work for a specific circumstances, I always ask if they know their Four Major Numbers and from there we can get into the pros and cons.

Pros to Velocity Banking

Pay less interest: Because the velocity banking strategy requires free cash flow, the length of the mortgage is significantly shortened. Because you are paying more up font you have less compound interest on the principal amount owed.

Pay off your debt early: Velocity Banking is one type of debt repayment strategy that will work to help you pay off your debt more quickly. (Example in the video below)

Free up equity: Mortgages don’t allow you to tap into your equity, a home equity line of credit (HELOC) combined with velocity banking lets you use money that you wouldn’t ordinarily have access to.

Cons to Velocity Banking

HELOC adjustable rates: You may not be able to find a bank that offers fixed rate HELOCs. This may put uncertainty on the amount of...

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What is a Line of Credit?

One topic I'm questioned about nearly every day is lines of credit People ask about lines of credit in several different ways too, like the direct "Denzel, what is a line of credit?" or "How do I use a line of credit?" I even have people ask how they obtain a line of credit and what all the different types are.

This made me think that I should dedicate specific videos and blogs to the line of credit. So I decided to make a post explaining what a line of credit is, and your options when it comes to choosing a line of credit.

What is a line of credit? According to Investopedia, a line of credit is an arrangement between a financial institution—usually a bank—and a customer that establishes the maximum loan amount the customer can borrow. The borrower can access funds from the line of credit at any time as long as they do not exceed the maximum amount (or credit limit) set in the agreement and meet any other requirements such as making timely minimum payments.

This is a...

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Different Types of Lines of Credit

Since so much of Velocity Banking centers around the Line of Credit and Cash Flow, I thought we could talk about the 3 different types of lines of credit there are. As a refresher, a line of credit is an arrangement between a financial institution—usually a bank—and a customer that establishes the maximum loan amount the customer can borrow. Read more about lines of credit here or click on the video below to be linked to my YouTube Playlist all about lines of credit.

Types of Credit Lines

There are 3 types of credit lines – home equity, personal, and business. Business lines of credit work similarly to credit cards. The LOC comes with a credit limit, and borrowers make payments every month with interest based off of the amount they borrowed during that period. Your financial institution will most likely have more strict requirements for lines of credit than for business loans. If you think taking out a business line of credit is right for you to be sure to bring...

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Simple vs Amortize Interest | What's the Difference?

One thing you will notice about the blog is that I like to talk about the questions I get asked regularly. This is because of a couple of things: Velocity banking can be confusing, and I want to be sure you understand the intricacies when you start

  1. If there were excellent resources out there that explained this stuff, I probably wouldn't need to answer these questions all the time

  2. I want to have written accounts of the topics I discuss on YouTube, so I'm able to

A question I get near the top of my frequently asked questions list is:

"Denzel, is there a difference between simple interest and amortized interest?"

Well, the short answer is yes, but I've had conversations with people where they tried to tell me there was no difference. So what I'm going to do for you is layout definitions and examples of simple and amortized interest so you can see what I'm saying when I say there is a difference. Let's get into it.

Amortized interest is interest that is calculated on the...

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What is Investing?

Investing is a crucial part of personal finance, and understanding investing will give you a great starting point for the concepts of Velocity Banking.

Let's start technically - your standard dictionary (or Google) will tell you that an investment is "expending money with the expectation of achieving a profit or material result by putting it into financial schemes, shares, or property, or by using it to develop a commercial venture."

Now that you've read a definition that overcomplicates the topic of investing, we can get to a simple explanation.

A financial investment is to multiply money over time.
Principal x Interest + Time = Profit

Investing as a broad term can also mean putting in time and effort - not just money - into something with to gain a long-term benefit. My most significant piece of advice when it comes to investing hinges on this second definition.If you're going to invest in anything the main thing you should invest in is you.

Whether you do this by putting...

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What is Borrowing?

To get a grasp on a new to you financial concept, I recommend asking 3 questions:

  1. What does it mean?

  2. How does it work?

  3. How can it change my life?

So let's start with the definition answering the question "What does it mean?"

Borrowing is a temporary possession of money with the intent to repay the amount borrowed. In a financial sense, if you borrow money, you assume a debt to the lender, this debt contains the principal amount plus interest.

Time to break that definition down. We have two parties when we talk about borrowing - we have the person who needs money (borrower) and the person who has money (lender). When a borrower asks for money and is approved for an amount they sign a contract that states how much time they have to pay the lender back, but they have to pay the original amount they borrowed plus interest back to the lender.

there are two major ways lenders calculate interest simple interest and amortize interest - you can read more about the differences here.

...

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The Rule of 3

The "Rule of Three" is used in learning situations with young children, wilderness survival, mathematics, language, and so much more. I want to focus on learning and survival because both of these topics, when looked at from a big picture, also apply to your finances.  You need to learn how to use your money efficiently to pay for things that you need to survive (like I said, big picture).

Rule of Three in survival situations:

  1. You can survive for 3 Minutes without air (oxygen) or in icy water

  2. You can survive for 3 Hours without shelter in a harsh environment (unless in icy water)

  3. You can survive for 3 Days without water (if sheltered from a harsh environment)

  4. You can survive for 3 Weeks without food (if you have water and shelter)

The main point of this set of "Rules of Three" that you need to focus on the most substantial problem first. If the biggest problem is that you can't breathe we need to remedy that immediately.

I hear you asking "How does this apply to...

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Do I Need Life Insurance?

I hope you're enjoying your morning, afternoon, or evening, and you decide to hang out with me to learn more about a topic that most of us associate with less than pleasant issues, Life Insurance.

I choose to use life insurance; differently, I think life insurance can be used for wealth creation - as an asset tool. The goal of people like me is to minimize - minimize your premiums, which means the cost of insurance, and maximize cash value growth. If you want to know more about how life insurance works and what questions to ask when thinking about buying life insurance watch "What to Know About Life Insurance".

CLICK HERE TO WATCH THAT VIDEO

Now if you're here to get tips from The Finance Geek - here they are. I believe that to be able to coach you guys, I have to be using these methods on my finances, so I have an update on my journey and how I landed on my numbers. I've been working on this plan for myself for six months, and while I regularly update the YouTube crew on how...

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Creating Activity Income for Your Kingdom

My goal in life, through God's guidance, is to help as many people as I can reduce and relieve stress brought on by financial burdens like debt. I hear pretty regularly about how you guys are nervous about taking the next step in your business because you don't have the cash flow to spare right now. 

Since many of you are entrepreneurs, business owners, and people who are ready to start your own business, I thought today we would talk about how vital activity is when creating your Kingdom.

So, let's grab a cup of coffee and maybe even a notebook because I'm going to talk to you about how you can implement the steps I took to launch my business and build my Kingdom for yourself.

I started my business after seeing the Velocity Banking method work for my family - I saw how it worked and felt passionate about sharing the info I learned with as many people as possible. 

  1. The best advice I can give you about growing your business is to choose a platform - blogging, YouTube,...

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Creating Passive Income for Your Kingdom

Now that we have taken on creating Activity Income for your business, it's time to talk about Passive Income and the dream of "making money in your sleep" you hear so many entrepreneurs talking about.

Learning how to create Passive Income is the key to running a sustainable business. The goal is to have your Passive Income equal more than your Activity Income - when you get to that point, that is the true definition of financial freedom.

In the realm of Velocity Banking, your Passive Income is saving and investing. So when I refer to saving, I am mean establishing a tax-free asset. When I save money, I intend not to risk that money - the sole intention is to have an emergency backup. When I refer to investing your money, I mean literally putting your money to work for you - you don't have to do anything with it, and it is "making" more of itself.

So if I'm saving money, I cannot put that money at risk. I need to have that money stored somewhere safe where it'll grow - minimize or...

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