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Paying Off Credit Cards Without Cash Flow
Nov 8, 2024
How to Pay Off a Credit Card with Zero Cash Flow
Introduction
Discusses a method to pay off credit cards without additional cash flow.
Emphasizes potential to improve credit score through this method.
Understanding the Situation
Assumes a scenario with $3,000 income and $3,000 expenses, leaving no extra cash flow to pay down credit card debt.
Example credit card: $10,000 balance, $10,000 limit, 21% interest rate.
Key Concepts
Velocity Banking
: A method to use a credit card effectively as a cash flow tool.
Utilization
: The percentage of your credit limits that you are using.
Steps to Pay Off Credit Card
Redirecting Income
:
Pay essential expenses like rent in cash.
Use remaining cash to pay down credit card balance.
Using Credit Card for Expenses
:
Use the credit card for all possible monthly expenses (e.g., groceries, utilities).
Avoid using a debit card.
Monthly Cycle
:
Continue the cycle of paying with cash and using the credit card, gradually reducing the balance.
By managing cash flow and credit card utilization, the debt can be cleared in about 17 months.
Improving Credit Score
Suggests spreading the balance over multiple credit cards to improve credit utilization.
Example: $10,000 spread over four $5,000 limit cards reduces individual utilization and improves credit score.
Additional Strategies
Business Credit
:
Start a business with an LLC and EIN to access business credit.
Higher limits than personal credit cards, beneficial for transferring personal debt.
0% interest offers on business credit cards.
Support Services
Recommendation for Creative Credit Solutions for credit repair and advice.
Offers a mentorship program (Portfolio Launch Formula) to teach credit and funding strategies.
Conclusion
Emphasizes the importance of good credit and financial literacy.
Encourages reaching out for help and using available resources for financial success.
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Full transcript