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good morning folks welcome to organ cash flow Pro I am your cash flow consultant James barber and I'm here to help you take control of your finances so for today we are going to do a deeper dive into a case study with dynamic banking utilizing a home equity line of credit to really attack this debt and make the most out of our cash flow so let's jump right into this here you can see here we've got $5,000 income $4,000 a month expenses we've got three hundred and forty thousand in debt and cash flow $1,000 a month okay we've got a credit card at 18% $140 a month would call this credit card two credit card one five thousand dollar balance $75 a month payment fourteen percent interest we've got an auto loan three hundred and sixty dollars a month twenty eight thousand dollars four percent interest and we've got a mortgage again four percent interest three hundred thousand dollar balance 14:32 month we're gonna be utilizing a line of credit that has a fifteen thousand dollar available balance and the interest rate is six point two five percent and talk to you just for a minute about the what what's going on here and what we're planning to do so with dynamic banking utilizing this line of credit what we're gonna do is we're going to put a big chunk of the line of credit at the credit cards to begin with so that we can free up that cash flow and stop paying that really high interest rate okay yesterday's video we talked about how utilizing dynamic banking by depositing your paycheck right into the line of credit our average daily balance down by quite a bit you can see that here the bottom of the screen and I'll just briefly touch on this again and if you want to see a little more in depth you can go back to yesterday's video called beat the bank we got $7,000 balance to start out with our payday comes in it goes down to 5,000 halfway through the month we pay our mortgage and then at the end of the month we pay off a credit card that we've been using to live on just because we can use that interest-free throughout the month and that ends up bringing down the daily balance in this case our interest for the month because this new daily balance ended up it will end up being between eleven and thirty seven dollars thirty-seven is a high in this case our average daily balance was around 3700 a month and our interest charges about 20 bucks for the month so we save on interest just by doing this but with the whole strategy of dynamic banking we end up saving a boatload of interest on everything and we pay it off really early so jumping into this here's you can see my note up here credit card we want to pay it off each month whatever the billing cycle is so that we don't end up paying any interest we use it for all expenses possible and earn points if you can those are free points if you pay it off each month so try and use a rewards card get the best rewards you can what however you think you're gonna use it cash backs always good because you can put that right at the debt you've got okay so to begin with we've got this $7,000 balance and we've got this $5,000 balanced credit cards one and two so we want to pay those off right away because these are really high interest rates especially compared to and credit now when I'm trying to decide now when I'm trying to decide which order we're gonna pay things off we always want to look at the high interest first but we're also going to compare how do these interest rates compare to the line of credit if the interest rate is a lot higher then we're okay to take a big chunk of the line of credit as long as we leave some space available for emergency funding so we're never gonna use the whole line of credit we want to be a little bit conservative when we take our chunks but if we're attacking a high debt high interest debt like this with a low interest line of credit like this we're gonna knock that out the first month so what you see here we ended up doing $12,000 we did $12,000 the first month chunk two credit card one and credit card two which frees up two hundred fifteen bucks cash flow each month so our cash flow goes from $1,000 a month to 1215 and we're gonna see how that gets impacted here we've got our totals we pay this our balance goes down if we utilize the line of credit like this where we deposit our paycheck in pay our bills throughout the month we end up with twelve hundred fifteen dollars less at the end of each month okay so we go through a month two we're down to nine thousand five hundred and seventy month three balance drops to eight thousand three hundred and fifty-five month for 7140 month five fifty nine twenty five of an month six forty seven ten okay so six months we've brought the balance of the line of credit down below our monthly income now we want in order to maximize the use of this line credit we want to be able to put all of our income into the line of credit each month so what I set this up as is anytime this balance drops below 4000 or below $5,000 any time this balance drops below $5,000 we're gonna throw another chunk at a larger debt now one of the things you're gonna notice is now that we've got those credit cards paid off we've got this next chunk coming in we're now shifting from attacking high interest debt to lower interest debt lower than lower than what the line of credit is so we're gonna change our strategy a little bit and what I mean by we're changing our strategy is we no longer want to take huge chunks we want to take smaller chunks so the line of credit is optimized if we're paying a lower interest rate than we are if we're using the mortgage okay so we need to keep this balance as low as possible preferably as close to zero as possible because we're paying a little bit higher interest than we are on the auto loan and the mortgage so to do that our chunks are gonna be $4,000 okay we're gonna do $4,000 chunks anytime this drops below $5,000 for the month we're gonna throw a chunk at that so month seven is our first chunk we got four thousand bucks we're gonna throw that at the car okay - start 1215 dollars and brings us to 74 95 and now because I don't have any more room I'm at board we're gonna fast-forward it takes us 24 months month 20 for this $4,000 chunk pays off the car pays off the car which was originally on a 45 month loan schedule and it puts some towards the mortgage we end up with a cash flow increase of plus 360 and now our now each month we're putting fifteen hundred and seventy five extra approximately towards our home loan we just keep going with it every time the balance drops below 4000 or below five thousand dollars throw another chunk at it so now we're attacking the mortgage here's where that takes us okay here's the result of all this beauty and this effort we put in we went with our line of credit by being able to knock out these credit cards in the first month we said we're gonna pay off in one month total interest paid on the credit card number two was a hundred and five dollars that saved us almost seven hundred dollars almost seven hundred dollars based on if our original payback schedule if we were just gonna pay minimum payments pay these things off okay credit card number two or credit card number one $58.33 total interest paid on that that when we saved nine hundred just over nine hundred and seventy five dollars we paid it off in month one okay our car loan by paying it off a month twenty four we ended up paying thirteen hundred and eighteen and sixty five cents in interest which saved us one thousand three hundred and eighty six dollars in interest and our mortgage we end up at eighty three thousand six hundred and seventy seven an interest and it took us eleven point seven five years to pay that off one hundred and forty-one months this was a 30-year mortgage and we ended up saving on interest just the mortgage 130 1900 $29.70 so at the end of all of this the interest that we saved was about one hundred thirty three thousand dollars in interest the interest we paid is about eighty four almost eighty-five thousand a little bit less than 85,000 in interest powerful staff here now what about the interest on the line of credit well right here I'm a one hundred and forty months one hundred forty one month's worth of interest at most it will have cost you about five to six thousand dollars in interest so we saved one hundred and thirty three thousand dollars in interest and it only cost us an extra five to six thousand dollars of interest at the most now if you're actually extending this out quite a bit if you're if you're getting those payments stretched out and bringing that average daily balance as low as possible this number could be well below five thousand probably I don't know around four thousand if you're really running at a good speed keeping these balances down so if this is why I'm excited I think hopefully you can see the potential in this for your particular financial situation this puts you in control when you pay off these debts you're in control you can start diverting this money to whatever is going to work best for you you can invest it in real estate you can invest it in life insurance you can really start to put your money to work for you and not just be trying to beat the bank which is where we're starting off here so just a quick refresher on dynamic banking for you folks we've got our paycheck that comes in goes right into the line of credit Chunk goes out to pay debts from the line of credit we pay our bills we pay our credit cards and during the month we use our credit card to pay as many bills as we can and that's how we're optimizing the line of credit and bringing that average daily balance down thank you for joining me today I know that was a lot of numbers thrown at you but you can see that this works it's simple math so be sure to leave any questions or comments in the section below be sure to like the video and subscribe so you can follow along and if you have a financial situation you would like me to show you a plan for how to use dynamic banking for your debts or for your wealth accumulation fill out the form below I'm happy to help you out that's what we're here for take care have a good day