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

  1. Redirecting Income:
    • Pay essential expenses like rent in cash.
    • Use remaining cash to pay down credit card balance.
  2. Using Credit Card for Expenses:
    • Use the credit card for all possible monthly expenses (e.g., groceries, utilities).
    • Avoid using a debit card.
  3. 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.