Transcription
Hello and welcome back to my channel. I am Christy Van with Fantastic Finances and on this channel I teach philosophy banking. Today we are going to be discussing how the banks are sucking the life out of your finances and how you can stop it. You have a choice after you see this video today. You have a choice. You are choosing to throw your money out the window if you continue doing what I'm about to speak on in this video. It's your choice. We need to wake up and we need to take control of our money. When we are setting back letting stuff like this happen, it's our fault. If you are broke, if you are living paycheck to paycheck, maybe it's because you are in this situation right here.
This is a real life scenario. I worked with a couple today that is in this exact scenario. I want to share it with you because I want you to see how angering it is that you are not aware of the different tools that's available at the bank to help you come out of debt. You instead have been trained to make payments. You have been trained to believe mortgages are your way to buying your home. I want to show you a different way. I hope that you have ears to hear and that you will pay attention to how much money this couple is throwing out the window if they allow this to happen to them.
They currently have an income of $5,200 a month. They have $4,100 in expenses coming out every month. This includes their home. This includes their food, their gas, all their living expenses. So, after all of their expenses come out, they are left with a cash flow of $1,100 per month.
Now, let's go over here. They have purchased a home. The purchase price was $150,000. They put down $15,000 which left them a balance of $135,000. Then of course they got a mortgage because that's what they tell us to do. You want a home? Get a mortgage. You can buy your home. You can have little bitty baby payments for 30 years. Let's see where that's going to get them.
So they started their payments this month, December 1st, 2023. So the mortgage is a 30-year mortgage at 7.75%. Guys, if you're in these ridiculous interest rates, I don't care if it was going on in the 80s or not, it's going on right now. If you didn't have the knowledge in the 1980s and you went ahead and you paid this ridiculous interest, then I'm sorry. It was only because you weren't taught the truth. This video is going to teach you the truth about what that 7.75 interest rate means to you.
I want everybody that has a mortgage to go get your contract documents right now. I wait. Go to the closing document section. Look in your closing documents section of the contract. You're going to see where it says your interest rate. I don't care if it's 2% or 8%. Then look in the small print below your interest rate. It's going to say in capital letters, this is not your interest rate. Now go down to the next line. You're going to see another line that says this is your actual interest rate. And if you're at 3%, it's going to be approximately 60%. This 7.75% that's not 7.75%. Take that times two and then add a zero. They're going to be paying over 150% in interest on this mortgage. Look at your mortgage papers and see if I'm telling the truth.
This couple is going to have a monthly payment of $967.16. In month one, they're going to pay $871.87 in interest alone. How much actually goes towards the house they just bought? $85.28. Are you seeing where I'm going with this? Month two balance $134,900. Monthly payment $967.16. Interest $871.26. Principal payment what actually went to the house that they're paying for? $95.90. How long do you think it's going to take them to pay this home off paying these small little payments towards their actual principal amount? 30 years, right?
So, I have Carl's mortgage calculator up. You're going to see it here. This is going to show you that the actual interest that they're going to pay throughout this 30 years on this mortgage is going to be $213,176.35 interest only. Let's teach you a way that you can beat that and be excited to pay for your home, not paying for the bank's home first.
When you're paying this much interest in every single payment that you're making, you might as well drive down the street, roll your window down, and throw $871 out the window going down the street. You know what? At least it will help some people on the street that need the money. This is going to the banks. This is just you making them richer. How can you stop that?
What if you took a $10,000 chunk and put up on this mortgage? And I know some of you naysayers out there are saying, "Well, who's got $10,000?" Guess what? There are things called lines of credit at the bank. And you can use the lines of credit any way you want to. Most banks have them available. Most credit unions have them available. Check it out. See if you can't find you a line of credit to do what you are getting ready to see here. This is not magic. This is just math.
So, we talked about getting a $10,000 chunk and paying it onto this mortgage principal. We also discussed that they have $1,100 in cash flow every month. So, when they get the $10,000 line of credit, you can use that to put all of your income in and pull all of your expenses out. So, this is how that will look. You have a balance of $10,000 on the line of credit that you got from the bank or credit union. Your income goes in. When the income goes into this line of credit, it satisfied any payment that was due that month. You can also pay your expenses straight out of this account. So, when the income goes in in month one, the expenses come out, the balance comes down to $8,900. Now, remember, the expenses are the home and all of the living expenses, the food, the gas, utilities, whatever it is that they have to pay every single month can come out of this line of credit.
Now, we have to figure in some interest here. So, I figured this line of credit at a high of 14%. Remember what this was? 7.75%. This is 14%. How in the world is this a better deal than just making those mortgage payments? So, I figured the 14% interest on the $10,000. Is that the way the bank charges? No, absolutely not. They charge interest based on the average daily balance. So when this balance came down to $4,800 after putting in the income, that was a low. This is the high. It would be averaged at the bank before they figured in the interest rate of 14%. I went ahead and figured the interest rate off of the high $10,000 just to leave room for error. And just to show that it doesn't matter what your interest rate is on a line of credit, you can still beat whatever loan that you're paying over here. So, the interest at 14% on the $10,000 comes to approximately $117. That brings their balance back up to $9,117. Month two, the income goes in, the expenses come out again, and so does the interest. And the interest at 14% was charged off of the balance of $9,117. Month three, the income goes in, the expenses come out, so does the interest. Now, we're back up to $7,170. Month four, the income goes in. The expenses and the interest come back out. Month five, same thing. Look at here. It's month six, it's paid off. It's gone. It's over. You have paid off the $10,000 that you put on this home. So, in six months, doing nothing at all, just putting your income in, pulling your expenses out, leaving this cash flow sitting in there, you're going to pay off the $10,000 within six months.
So, what happens if we decide to put $10,000 on this principal amount every seven months? So, if we have the $135,000 balance and they put $10,000 from the line of credit on here, that of course is going to bring their balance to $125,000. If you know anything about an amortization schedule, and I'm showing you one now, that is what every loan is set up on, an amortization schedule. So every month you have a set monthly payment, right? This schedule will show you how much of your payment is going towards interest and how much is going towards principal, which is what I showed you right here. So, according to the amortization schedule, a $10,000 chunk on this $135,000 mortgage brings it down to $125,000, but it skips from December 2023 all the way to July of 2030. Yeah, you heard me right. 2030. That means that because they were allowed to skip almost 7 years on the amortization schedule, they are going to save $65,520 in interest for a onetime $10,000 chunk that they are going to pay off in 6 months.
So, let's see what a $10,000 chunk every seven months is going to do to this mortgage and to the interest that they're going to pay throughout the time they spend paying off the mortgage. If we go ahead and do a second chunk, it skips the schedule to April of 2035, over five more years, saving $37,681 more in interest. Two chunks, 7 months apart, $10,000 each. They've saved over $100,000 in interest alone. So what does that mean? If they make nine more $10,000 chunks onto this mortgage, this mortgage is going to be paid in full in 77 months or 6 and 1/2 years.
So, remember what I said at the beginning of the video. The total mortgage interest that they were going to pay in this 30-year mortgage was $213,176.35. Remember, the total interest that they're going to pay doing these chunks in every seven months is going to be $31,644 of mortgage interest. Because remember, in between each $10,000 chunk, they're still making the mortgage payment. How much interest are they going to pay using this $10,000 line of credit every six months? How much are they going to pay? Well, they're not going to pay any more than $5,159 in interest on this line of credit throughout the 77 months that they have this mortgage. So, that means that they are going to pay a total on the mortgage and the line of credit of $36,803. How much were they going to pay on the 30-year mortgage? $213,176.35. So, what does that mean that they saved? They have saved in interest alone, people. That's in interest alone. Not only that, they have saved 23 and a half years. 23 and a half years on their mortgage, they're done. 77 months, it's over. Is that insane? I mean, I even do these scenarios and I think to myself, "Wow, I must have done something wrong because those figures just aren't right." No. No, it's right.
This is the difference of allowing a mortgage to absorb your hard-earned money and moving into a line of credit that you can control because you're putting your income in, pulling your expenses out, letting your cash flow work this down every month, saving tens of thousands of dollars in interest. This is simple math. You have to run the numbers yourself. I don't care if you're two years into your mortgage. You can still save a killing and get out of that mortgage fast by using a line of credit. There are personal lines of credit. There are home equity lines of credit. There are lines of credit that can take over your whole mortgage called a first lien HELOC. You have options. You just didn't realize you did. And for goodness sake, know what you're getting into before you refinance that house. It is exactly what you saw here. They are just resetting all of that interest for you to pay it again. Please think before you refinance. Please ask me questions. I'll be glad to help you. But for goodness sake, save your wealth. Put this $871 into an account for yourself. Put this $65,000 back into your infinite banking policy, back into your own bank to where you can serve yourself, and you'll never have to go to another bank to get a loan like this. I want you to hear what I'm saying. This is something you can control and the bank gives you the tools to control it. It's just that you have been programmed to receive loans.
There are lines of credit that are simple interest. Loans are amortized schedules with the interest front-loaded, meaning you're going to pay most of the interest within seven years. Why are you going to pay it within seven years? Because they know statistically every American family moves out of their home within seven years or they refinance within the first four years. You are programmed to do exactly what you're doing, buying your home with a mortgage. We all grew up in this. Now, we have the information we need to change our minds and to get back into control of our finances. That is all I want for you guys. I want everybody out there to understand you can control what's happening to your finances. You just weren't aware before. You are aware now. Pick the ball up and run to your side of the court and score.
When you get into a line of credit and start working off this debt quickly, this went from 30 years to 77 months. That's 6 and 1/2 years. There is nobody watching this video right now that wouldn't run and jump on that deal. If you thought you could get out of this $967 a month payment in 77 months, there is no one watching this video that wouldn't jump and do it. You have the option to do it. I'm not selling you anything. I don't want to counsel you. I'm not a counselor. I'm not even a financial advisor. I'm not a tax attorney. I am nothing but someone who has been there and done that. And I'm trying to share it with you. You too can make a difference in your finances. You can get control. You just weren't aware you could. I'm here to show you how.
This is a prime example of what the banks are doing to you today. If you have a 2% mortgage, you are paying 40%. Look at your paperwork. They're not going to point it out and show it to you, but they have to disclose what it is they're actually charging now on these mortgages, and it's in your closing documents. Go look at it yourself and take control. The ball is in your court. You know now, and I am tickled to get to tell you about it. I just hope that you know 2024 can be your best financial year yet when you learn how to use lines of credit and get out of these loans. Let's get out of debt. Let's make a declaration. I am poor no more in 2024. I am so excited to say that and I know you are too. It was my pleasure to bring this to you today. If you have any questions or comments, please leave them below. I'll be glad to answer them. You have seen the math. You know the truth. And now you have the power to go get what you need to get out of these amortized schedules and get into simple interest and get that debt gone. We're done with living paycheck to paycheck. I want to be free and I want to see you financially free and in peace. Thank you so much for joining me today. I hope you guys have a wonderful Christmas holiday and I look forward to seeing you in the next.