If you got a bunch of credit cards that are maxed out or near maxed out and you're scraping by every month and you have no idea where you're going to get the money to start knocking down these debts, this video is for you. A few weeks ago I released a video on Velocity Banking teaching you how to pay off your maxed out credit cards when you had no cash flow left over each month after expenses. Now to this date that video has over 165,000 views so I want to thank you guys for your support.
Now while there were over 350 comments on that video, a lot of the comments were asking me questions about how to pay off multiple credit cards using the same system. Well, don't worry. As usual, I got you.
Come on. Now, when attempting to use Velocity Banking to pay off multiple maxed out credit cards instead of just one, all you need to do is make sure the math is mathing. The splits work almost exactly the same way. But for the purposes of teaching you guys and creating a visual for those of you who can't just imagine it, I'm going to go ahead and run through a very similar scenario to the one I ran through in the other video. So let's go.
Now, the model we're going to use today is a person who has $6,000 of monthly income, but also has exactly $6,000 of expenses every single month. leaving them completely maxed out with absolutely no money left over in cash flow after all bills have been paid. Now to make this as realistic a scenario as possible, we're going to use a person who has a rent slash mortgage, as well as multiple credit cards that are all maxed out with varying limits. Now the initial credit card that we're going to attack is going to have a $20,000 balance with an $800 monthly payment due every month. This $800 that's due every month will only represent the minimum monthly payment, which as you can see is typically only 4% of the overall balance or interest plus 1% of the overall balance.
Either way, paying is 800 bucks a month, ain't going to be doing much. So how do we knock that balance down faster? But before we get into that, let me show you guys a few stats. Now, the two examples I have right here is something that people don't take into account almost ever. And that is exactly how long it might take to pay off debt with only making the minimum monthly payments every month.
Now, I did a little bit of research to see exactly what these numbers look like and even I was astonished. On a $10,000 balance with just an 18% interest, which is pretty low for a credit card that's accruing interest, it can cost you over $16,000 in interest and take almost 350 months just to pay this thing off with making minimum monthly payments only. Let me make it plain, just in case you didn't do the math.
Just making minimum monthly payments on a $10,000 balance will take you 29 years to pay that bad boy off. Now, if we drop that $10,000 debt down to $2,000 and we just add a couple of points of interest, you can see it can take more than 11 years to pay it off. So it's hyper important for you to as soon as possible get a plan of action in place and start to exercise some discipline in your financial life. Let's get to it. So we've already reviewed credit card number one.
Let's take a look at the other three cards that we're going to be dealing with here. Now, based on some of the comments that were left in that last video, some of you guys are dealing with real life scenarios like this, where you have varying balances with varying monthly payments and also varying interest rates. But for the sake of this video, I'm going to stay away from dealing with interest rates altogether and just let you know that if you want to knock this thing down a little bit faster, get you a little side hustle.
Do some Uber, Uber Eats, Instacart, Craigslist for some odd jobs. You can do pretty much anything to earn a couple of hundred dollars extra a month to help start knocking this thing down quicker. So we're going to stay away from the interest topic.
Now, the person we're going to be talking about today makes about $6,000 a month out of all deductions. The money's been deposited in their bank account and it's ready to spend. Now, in this case, I'm going to use a majority example because most people in America cannot pay their rent, their mortgage or other credit cards using credit cards. I realize some exemptions, but we're not going to go with the exceptions. We're going to go with the rule.
Now our rent payment in this model is going to be $2,000 a month and our other credit cards minimum monthly payments are going to be about $1,200 a month. This leaves us with about $2,800 a month to cover all of our other expenses. Gas, fast food, restaurants, groceries, cell phone bill, cable bill, other utilities, things of that nature.
Pretty much anything else that you can use a credit card to cover you want to leave in this account. Now once we've factored in all of those expenses that we've calculated before we ever started this process that leaves us with zero dollars cash flow at the end of the month. We have no money.
And just so we can keep the information at the top of mind throughout this process, we're going to go ahead and put the credit card information that we're attacking at the bottom here. So let's start off at month number one, where we have a $20,000 balance on a maxed out $20,000 credit limit. You're going to take every single dime that you have left from your paycheck after you paid all of the other expenses that cannot be paid using a credit card. You're going to take that and put it into this credit card.
Now, I know a lot of you are not going to be hyper comfortable putting every single dime that you have into this credit card. But for this particular example, to cut this down as fast as possible. we're going to do it like this.
My advice to you is to do as much as you can possibly stomach. Now, once we've used all that money to pay down that credit card, we're going to be left with a balance of $17,200. The key thing here is to pay attention to when you pay that credit card. Now, I've released as many videos as a credit guru can possibly release teaching you when to pay your credit card properly to affect your credit score.
So I'll leave it to you to go check out those on my channel. But all I'm going to say here is make sure you pay it down a couple of days before the statement date and try not to do any spending before that reporting date of that credit card to the credit bureaus. I realize this will be difficult, but try to keep the spending to Now, if you start to make a habit out of this, what will happen as you start to get that balance lower and lower is you will start to see it affect your credit score immensely.
One of the main goals here is to start to build the right habits that will help you carry this forward as those balances drop, your credit gets better, and your score continues to skyrocket. Now, if you do it this way, you're going to hide all of the expenditures that are going to come throughout the month from the credit bureaus, keeping that credit score as high as it could possibly be. Now, throughout the month, we're going to realize about $2,000 in expenses.
These are things that cannot be avoided. They cannot change. They do not go anywhere. Beware, these are your monthly bills that are static.
So we know for an absolute fact that we're gonna be charging at least this amount of money to this card every single month. Now, I know at this point, you're probably a little bit confused because I told you in the beginning that we had 2,800 bucks of expenses every single month. Well, we do.
But what you're not taking into account is that once you move this money from here to here every single month, you actually satisfy this monthly payment without making it a separate bill. Thus eliminating this as a bill altogether. This essentially goes away. Now, like I told you in the other video before, this will create about $800 of cashflow every single month. Now, every single month that you continue to do this and move this $2,800 over from your bank to the credit card, you will realize an $800 drop in the balance every single month as long as you continue to stay disciplined, which in month number one will bring us down to $19,200 at the end of the month.
Now, I told you that we're not going to address the interest rates for these cards in this video, but just for your edification, every single month that you keep this $20,000 balance, they're trying to add $500 of interest onto that. Because in month number two, the interest that they're going to add to that 19-2 is going to be a little bit less than it was for that $20,000. So it behooves you to knock it down as fast as possible.
Now, let's take a look at month number two where we have a beginning balance of $19,200. We're going to do the exact same thing as we did in month number one. We're going to take out all of the money to cover the things that we cannot use a credit card to pay for. Once again, rent, mortgage, car note, other credit cards.
and once we get rid of all of that once again we'll be left over with our 2800 for our monthly expenses now right before the statement that we're going to make sure we go ahead and drop all this money into this credit card once again doing our best to make sure that the credit bureau see the lowest number possible for our utilization making our credit score do what go up now because by depositing this whole 2800 we automatically satisfy this 800 minimum monthly payment we only have two thousand dollars of monthly expenses left to pay for throughout the month leaving us with an ending balance of eighteen thousand four hundred dollars the progress should be exciting at this point Now, if you can stay disciplined and continue to do this month after month after month after month after month at month seven, you can see we're already down to fourteen thousand four hundred dollars on this balance. Remember the information I told you earlier on that ten thousand dollar balance with just a monthly minimum payments being made. Twenty nine years to pay it off. I think it's clear at this point we're going to get this done a lot quicker than that. Now, unlike in the other video where I told you to pay attention to that balance drop, because once you get to a certain point, you're going to want to go look for an interest free twelve, eighteen or even twenty four month balance transfer credit card.
Well, in this particular case, you have three other maxed out credit cards. So the possibilities of you finding an interest-free transfer credit card willing to offer you a significant amount of money are slim. So at this particular point in time, we're not going to do that portion of it.
We're going to stay diligent and pay down the bills with the money that we have. I want you to take a look at our balance at month seven. Now, we started off with a $20,000 maxed out credit card, which means at this point we have about $5,600 of available credit. Now, we all know what happens when you're making a concerted effort to get something done and you're being really diligent about the process.
Life is going to throw something at you. It's going to throw a wrench in the process. You're going to get a flat tire. Brakes are going to go out. Water heater is going to bust.
The kids are going to have a big project or some kind of school trip. What I want to encourage you to do is to continue to use this credit card. For whatever reason, if anything pops up, know that the money in the credit card is there.
As long as you have this process in your brain, you can always return to it, kind of like a GPS rerouting system. If you get off track, all you got to do is continue to pay attention and at some point you'll get back on course. Now, I want to take the opportunity right now to address something that's really scary with this process that I did not address in the last video.
And that is the possibility that the credit card issuer based upon your history with them could lower your credit limit after you've put all of your money into that card. This is an obvious risk that can scare a lot of people away from this process, and it's understandable. But there's a couple of things that you can do at the beginning of this process to help mitigate this issue.
When you know that you're going to start paying down these credit cards like this, the first thing that you need to do is call your credit card issuer. Let them know that, hey, life got off track for a little bit. and I was struggling financially, but I continued to make my payments to you guys and now I'm at a point where I can start knocking this thing down in chunks. Let them know that they can look forward to payments of a certain amount each month and that you'll continue to use the credit card and hope to maintain a good, healthy relationship with them.
Now, this doesn't guarantee that they won't lower your credit limit, but I can tell you right now that thousands of people have used this system over time to help knock out massive debts quickly and efficiently. But y'all know me, I gotta give you all the facts, I gotta give you all the options, I gotta give you all the information. I'll let you do with it what you will. Back to the video.
I know this slide is a little bit overkill, but I wanted you to be able to realize and visualize what it looks like month after month after month as you continue to knock these balances down. As you can see on my example, with no interest being calculated, of course, you knock this out at month 25, $0 left on this card. Now, if you add in the interest, even if you double the amount of time and put it to 50 months, you're still way below that 350 months that we looked at in the beginning of the video.
Now, the question becomes, what are you going to do at this point? What is the next step in the process when you have three other maxed out credit cards? Maybe it's not as obvious as you think.
You see, once you're done paying off card number one, no matter which card it is that you choose to make card number one, you're not going to increase your lifestyle. You're not going to change your spending habits. The very next thing you're going to do is take all of that money that you were applying to card number one and then choose your next card to attack wisely and simply apply this principle all over again. But this time you're going to be adding the amount of money that you were already dedicating to card number one to card number two.
This will help you exponentially decrease the amount of time that it takes to knock that card's balance all the way out. And then you'll replicate that for card number three and card number four, five, six, and seven if you need to. The system doesn't stop or change.
It just gets exponentially better. And depending on exactly which way you choose to do it from the very beginning, this method can be called the snowball or the avalanche method using velocity banking. This is not something that's new. I did not invent it. Other channels that produce it on YouTube did not invent it.
This method of paying down debt has been around for decades, but the information for you to be able to do it has not. So if you like this kind of content from me and want to see more of it, I want you to go ahead and like the video, subscribe to my channel, and make sure you turn on your notifications. This way you'll be notified of any time I drop a new video. And last but not least, I know a lot of people that are in this situation have credit issues. Maybe you have late payments, collection accounts, other negatives that might be plaguing your credit score.
I want to encourage you to check out my new DIY credit repair platform, BeatsDIY.com. There I offer you two of the most advanced, comprehensive, and convenient ways that you can attack your credit repair process. All on your own terms and for a lot less money than full-service credit repair will ever cost you. I ain't never bought you guys no BS to the table and it ain't gonna start now.
And the very last thing I always gotta do with you guys is let you know how much I appreciate you for your support. Like I know you guys can go anywhere on the internet for your credit information, but you're here with me. Be blessed.