welcome back to my channel I am Christy van with fantastic finances and I teach velocity banking today we're going to be discussing a lady that has a zero cash flow yet she wants to begin debt elimination so rather than go out and pick up a pizza delivery job or any other second job or changing her lifestyle we wanted to give her solutions that could help her begin today on getting rid of some of her debt and raising her credit score at the same time so she has an income of three thousand dollars but her expenses
are three thousand dollars so that leaves her with a zero cash flow she has a credit card that has a ten thousand dollar balance on it already so it's to its limit with a four hundred dollar a month payment now her rent is one thousand dollars and besides that everything else she has for expenses can go on a credit card that being her electric bill phones water uh food gas and car insurance Etc so anything that can go on a credit card she is going to put it on it during this debt elimination of this
ten thousand dollars so the first thing that I suggested she do is and she has a ten thousand dollar balance she will bring her income and transfer it into this line of credit instead of to her bank so as soon as she gets paid she will have to leave the one thousand dollars for her rent in the bank because credit cards cannot be used to pay rent and mortgages usually unless you go through specific programs like plastique something like that and then the other two thousand dollars can go directly into this line of credit well
one thing that you will notice immediately the balance on that credit card comes down well what does that do to your interest and what does that do to your credit score everyone knows that if you want to raise your credit score very quickly you have to put money into those credit card balances and get them down every time you take down a balance your credit score goes up right so this is a terrific way for her to raise her credit score really quickly and help knock out some of the interest that she's paying on this
21 credit card now she automatically has everything set up to where it's coming out of the credit card she will swipe her credit card when she needs gas she will swipe her credit card when she needs food groceries if she has subscriptions anything that can come off of a credit card is going to come off of this one while she works on it so when her balance comes down to 8 000 of course she's going to have two thousand dollars in expenses coming out well not necessarily because when she started using the credit card in
this manner guess what happened that 400 payment went away so what does that mean what does that make get this balance do what happens to the credit card balance when you are satisfying this four hundred dollars a month by just putting in your income so since she satisfied that then her expenses to come out now will only be sixteen hundred dollars because the 400 stays in there so now when she adds this her balance will go to 9600. it's gradually growing back up to this 9600 which keeps the interest low because they are figuring your
interest on the average daily balance so when she does this and this is month one right and this is month one expenses then she's going to come in in month two and she is going to do it again so we'll put in the two thousand dollars and what happened immediately her balance is down to seventy six hundred dollars that is going down pretty fast that's two months she's already hit the 7600 now yes in her second month those expenses are going to start coming back out again right but remember this four hundred dollars is gone
now this satisfies that payment and she will only have the sixteen hundred dollars that she needs for her expenses okay so if we have the seventy six hundred dollars then we add back in her 1600 expenses that she will have for a month too then she is back up to ninety two hundred dollars so do you see how now she has a little bit of money to work with because her balance is at 9 200 in the second month so beginning her third month she will do it again so here comes her income two thousand
dollars immediately taken her balance down to seventy two hundred dollars and there's her low balance again so on one day she could have the average daily balance at seventy two hundred that's gonna look great on her credit report better than the ten thousand that she's had it standing at for about two years now and she's paying all of this interest right so we'll do it again her uh expenses will go back in again foreign beginning the fourth month beginning it the fourth a month she will have an 8 800 balance now this will happen every
month until this card is paid off so our balance at the beginning of the fourth month is eighty eight hundred dollars in the fourth amount that her income minus her rent of course is going to come off bringing that down to 6800 this is income month four then she's going to add back in her expenses and then she'll be back up to eighty four hundred dollars now this begins month five foreign again we're going to do the 2000. it's going to bring her to 6400 add back in her expenses of 1600 so she's at 7
000 right I am not a mathematician it takes me a minute so I have to add anyhow so when she's at the seven thousand dollar balance this gives her three thousand dollars that she now has sitting in her credit card in the event she has a flat tire in the event you know she uh wants a haircut and she needs a hundred dollars this is an emergency fund or a savings fund or just something to have in the event that you need money at any given time life happens so we need money and it's when
it's sitting in a credit card like this you don't have it just sitting in a bank doing nothing but as she continues to put her income in and this continues to bring this down four hundred dollars at a time because this now is her cash flow she has the four hundred dollars cash flow that is staying in this credit card so all you would do if you wanted to figure when every last dime of this credit card is going to be paid off you would take the 7 000 and divide it by 400 . so
in 17 and a half a month doing nothing but just putting her money into a credit card instead of letting it sit in the bank and Seventeen and a half a month this is going to be paid off the whole time she has an emergency fund building up that she doesn't have to stress out she's keeping all of her cash flow it's going into this card it's not just being thrown somewhere where she can't access it every time she makes a deposit the balance comes down her credit score goes up then she can work on
any other debt that she may have now this is an example of how you too can quickly bring down your debt even though you may not think you have any cash flow you might have cash flow you just want to wear but remember when you take your income and you transfer it into a credit card you satisfy that payment so whatever that payment was on your card is now cash flow in your card and it will grow every month and then to figure the interest on that credit card of ten thousand dollars if she was
letting it sit for a long time at ten thousand dollars and it was 21 you would take the ten thousand times twenty one percent which of course is twenty one hundred dollars a year okay then you would divide this by 365 days because remember they figure the interest on the average daily balance on lines of credit so 365 days that would be five dollars and seventy five cents a day that the interest would be charged on ten thousand dollars that sits but when we do velocity banking where we are taking all of our income and
throwing it in and we're knocking the 10 000 down to eight thousand I wanted to throw in there that yes you are going to have interest it is going to be based upon the average daily balance so the lower you keep the balance the less your interest charges will be if you left it at the ten thousand and it was 575 a day that could get expensive but if she keeps bringing it down to where you know it's 8 000 times 21 percent 1680 a year then you would divide that by 365. that would be
four dollars and sixty cents a day so the lower you get that balance the less interest charges that you will pay if you have any questions please feel free to ask you are always so kind I thank you for watching have a great night
