101 financial mortgage paydown

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101 financial mortgage paydown

Ryan MurakamiPro Member
Professional 路 Las Vegas, NV 路 Member since 2008 路 45 posts 路 8 votes

I just watched a video today about a company called 101 financial. Most of it was basic stuff about how banks make money off our money etc. But there was something very interesting technique the company founder (Alan Akina) brought up. He didn't go into too much detail (as they charge 3900 for the "secret system"), but he called it a "Debt Checking Account." 

He claims you can pay off you mortgage in as little as a few years by putting all your money in this account (which somehow is connected to your mortgage balance) to keep the balance down, thus decreasing daily calculated interest, then pay bills using the checks that come with this account. 

To me it sounds like you would have to:

1. take out another line of credit

2. pay your mortgage off completely with that new line of credit

3. save on interest by putting your whole paycheck in right away (temporarily decreasing daily interest), then using the same line of credit to pay bills

Has anyone ever heard of this technique??

He calls it a debt checking account but I think it either has a different name or is made up. You can watch the video if you have time www.101financial.com/video skip to about 23:00

Tell me what you guys think. Does this exist? 

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Steve Vaughan
Rental Property Investor 路 East Wenatchee, WA 路 Member since 2014 路 10k+ posts 路 16k+ votes
9y

Paying $3900 or whatever for a secret system is stupid.  If you have the $3900, pay it against your debt!

I paid off $87,000 in consumer debt over about 40 months.  I used to write 0% interest credit card checks for down payments on my seller-financed purchases.  It got up there.  I also had lines of credit and some student loans, but no car loans.

I chipped away at them one at a time, lowest $ amount to highest, and snowballed the payment into the next one.  Basically like Dave Ramsey.  I had a thermometer chart on the fridge and would take the fam to Costco for hotdogs to celebrate pay-offs as we went.  It was a 'fun' family affair! 

Lumping it all into one line of credit or into your house mortgage won't change your habits or mindset.  You'll feel like you did something when it's just a shell game.  You moved the pee. Woo-hoo.

Sell the cars and buy beaters.  Brown bag your lunch and brew your own coffee.  It's not that hard, but simple isn't always easy.  Shortcuts and secret systems are for chumps and suckers. 

Take the debts down one at a time by punching them in the face and change your life! 

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  • Brent Coombs
    Investor 路 Cleveland, OH 路 Member since 2015 路 6k+ posts 路 2k+ votes
    10y

    @Ryan Murakami, yep, variations of that have been around for many years. 

    Your 1 2 3 summary was perfect! All you have to do now is pad it out into slide shows complete with testimonials, and invite guests to pay... Oh, wait, Alan Akina beat you to it!

    But here's the rub: spending less than you make takes DISCIPLINE!

    Almost the same result can be had by paying every surplus dollar into extra PRINCIPAL repayments on your normal mortgage, every (next) pay day! 

    Banks love giving lines of credit. Why? Because borrowers keep SPENDING to their limit!

    4Reply
  • Ryan MurakamiPro Member
    OP
    Professional 路 Las Vegas, NV 路 Member since 2008 路 45 posts 路 8 votes
    10y

    @Brent Coombs

    Thanks for the reply! This seems like a good idea for people who are good savers and not in to investing. I think I do have the discipline to use this technique but would rather the bank give me money for more cashflow properties.

    0Reply
  • Brent Coombs
    Investor 路 Cleveland, OH 路 Member since 2015 路 6k+ posts 路 2k+ votes
    10y
    Originally posted by @Ryan Murakami:

    @Brent Coombs

    Thanks for the reply! This seems like a good idea for people who are good savers and not in to investing. I think I do have the discipline to use this technique but would rather the bank give me money for more cashflow properties.

    I agree with you on that. ie. Use lines of credit for INVESTING, for higher returns than their cost!

    That means your (historically low interest) mortgage costs will carry on, but should be MORE than offset by the cash flow/appreciation of your other investments - all dovetailing nicely for retirement!

    0Reply
  • Rex Mortensen
    Fillmore, UT 路 Member since 2017 路 4 posts 路 3 votes
    9y

    I am also looking into 101 Financial. I am looking at the aspect of eliminating debt though. I have $40k total in credit cards, signature loans, and two vehicles. This 101 financial video made me get excited to possible learn how to wipe all that out quicker. I also have $120K left on my mortgage. But mostly focused right now on the other debt. Would anyone consider doing the program for those reasons? Or am I better off spending countless hours trying to figure out financial management via Internet research and hoping I run into some people along the way that do not mind offering up free advice?

    0Reply
  • Brent Coombs
    Investor 路 Cleveland, OH 路 Member since 2015 路 6k+ posts 路 2k+ votes
    9y

    @Rex Mortensen, in keeping with my previous comments, if you and the equity you have in your primary qualify to refinance your mortgage up to $160k (ie. $40k cash out), then you wouldn't NEED the 101 Financial system, you'd just need to NOT build up high-interest debt, EVER again!

    Could you DISCIPLINE yourself to pay those other loans off, and - not borrow at those rates again?

    On the other hand, if you don't already have enough equity in your home to borrow another $40k at a low mortgage interest rate, then oops - was THAT purchase not the wisest either?

    (I am trying to be encouraging). Welcome to BP. Feel free to debate the issue further. Cheers...

    0Reply
  • Rex Mortensen
    Fillmore, UT 路 Member since 2017 路 4 posts 路 3 votes
    9y

    Thanks for the response. I will contact my bank and try moving that direction to have them appraise and see if the equity is there to borrow against. It will run the mortgage payment up a bit but if I do not have all those other monthly payments going out then I can pay on that new $160K like it is a 15 year term instead of a 30. And all the debt will be lumped into one place. I think I can wipe out $650-700 in recurring payments in exchange for a $200-250 per month mortgage payment bump. At least I hope that is how it will all pan out. Thanks again. 

    2Reply
  • Steve Vaughan
    Rental Property Investor 路 East Wenatchee, WA 路 Member since 2014 路 10k+ posts 路 16k+ votes
    9y

    Paying $3900 or whatever for a secret system is stupid.  If you have the $3900, pay it against your debt!

    I paid off $87,000 in consumer debt over about 40 months.  I used to write 0% interest credit card checks for down payments on my seller-financed purchases.  It got up there.  I also had lines of credit and some student loans, but no car loans.

    I chipped away at them one at a time, lowest $ amount to highest, and snowballed the payment into the next one.  Basically like Dave Ramsey.  I had a thermometer chart on the fridge and would take the fam to Costco for hotdogs to celebrate pay-offs as we went.  It was a 'fun' family affair! 

    Lumping it all into one line of credit or into your house mortgage won't change your habits or mindset.  You'll feel like you did something when it's just a shell game.  You moved the pee. Woo-hoo.

    Sell the cars and buy beaters.  Brown bag your lunch and brew your own coffee.  It's not that hard, but simple isn't always easy.  Shortcuts and secret systems are for chumps and suckers. 

    Take the debts down one at a time by punching them in the face and change your life! 

    9Reply
  • Dave FosterBusiness Member
    Qualified Intermediary for 1031 Exchanges 路 St. Petersburg, FL 路 Member since 2013 路 9k+ posts 路 9k+ votes
    9y

    That is wisdom from @Steve Vaughan.  Those who don't make a connection between what you make, what you don't spend, and what you save as all being parts of "investing" are missing a huge part of the equation.

    Now for some fun let's have a "who in the financially disciplined crowd got the most beat up beater"?  The only requirement to enter is that it's paid off.  I'll start - 2005 Chevy Suburban, 228K miles, more rust than not but the rust compliments the original forest green color.  

    The 1031 Investor5137 Reviews
    WebsiteView Page
    4Reply
  • Steve Vaughan
    Rental Property Investor 路 East Wenatchee, WA 路 Member since 2014 路 10k+ posts 路 16k+ votes
    9y
    Originally posted by @Dave Foster:

    That is wisdom from @Steve Vaughan.  Those who don't make a connection between what you make, what you don't spend, and what you save as all being parts of "investing" are missing a huge part of the equation.

    Now for some fun let's have a "who in the financially disciplined crowd got the most beat up beater"?  The only requirement to enter is that it's paid off.  I'll start - 2005 Chevy Suburban, 228K miles, more rust than not but the rust compliments the original forest green color.  

     LOL, Dave.  I hate to hijack a thread - but this is just too tempting!

    '95 Mercury Villager Van bought 12 years ago for $2500.  178k. Reliable and hauls everything.  Lovingly referred to as the 'overheater squeaker beater'.  Gets me to closings just fine!  

    2Reply
  • Dave FosterBusiness Member
    Qualified Intermediary for 1031 Exchanges 路 St. Petersburg, FL 路 Member since 2013 路 9k+ posts 路 9k+ votes
    9y

    @Steve Vaughan You win!

    The 1031 Investor5137 Reviews
    WebsiteView Page
    0Reply
  • Jeff B.
    Buy & Hold Owner 路 Redlands, CA 路 Member since 2015 路 5k+ posts 路 2k+ votes
    9y
    Originally posted by @Dave Foster:

    Now for some fun let's have a "who in the financially disciplined crowd got the most beat up beater"?  The only requirement to enter is that it's paid off.  I'll start - 2005 Chevy Suburban, 228K miles, more rust than not but the rust compliments the original forest green color.  

    '60 Ply Valiant - - ran it 15yrs, 250k miles- - almost like a Sherman Tank.

    1Reply
  • Rex Mortensen
    Fillmore, UT 路 Member since 2017 路 4 posts 路 3 votes
    9y

    Alright, one of my last questions then. Thoughts on debt consolidation companies? If my balance to limit ratio is close to capped anyway then it does nothing to my credit. My score is in the 700's but taking the rates from 18-21% to 9% by using IN CHARGE debt solutions (a non profit), just sounds really good right now. They lump it into one payment and when one gets paid off they roll it onto the others. Debt stacking. Not a new concept. So the question is, any draw backs that I haven't thought of to this approach? I can pay disinclined in the same fashion. But I cannot negotiate the rates down like they can. Thanks folks. 

    0Reply
  • Edmund Ricker
    Gorham, ME 路 Member since 2016 路 224 posts 路 116 votes
    9y

    @Rex Mortensen,

    You don't need no stinkin' debt consolidation company.  Many of these companies are scams.  Organize your debt and attack either highest interest rate first (mathematical approach) or lowest balance first (Dave Ramsey approach.). Cut expenses, increase revenue, and ATTACK the debt.

    It won't be easy but if it's important enough to you, you can make it happen.

    Ed

    6Reply
  • Ronny Gomez
    Lancaster, PA 路 Member since 2017 路 1 post 路 1 vote
    9y

    Dave Ramsey/ money make over. 

    1Reply
  • Lorna Kaaloa
    Honolulu, HI 路 Member since 2017 路 28 posts 路 11 votes
    9y

    Hi all...I've been down that familiar road too. Listened to the Ramsey and Chris Hogan podcasts and some others...and decided to get rid of the small balances first versus tackling the big interest rate balances...Getting rid of the small debts and then compounding up to the bigger ones was the motivating kicker to keep me on track and got me to soon reach debt free status. I just have a $47K balance on my mortgage left to go at 4.65%. I checked into getting a HELOC on my residence to starting investing in properties and found out that I have $200K equity if I want it with terms at .65% the first year and for years 2-5 3.50%, then market rate thereafter. Does that sound like a good first step to make my first plunge into REI?

    Thanks in advance...Lorna

    1Reply
  • Rob Golob
    Investor 路 Valparaiso, IN 路 Member since 2015 路 84 posts 路 47 votes
    9y

    In 2008 looked at a 2004 loaded Impala for my wife.  It was just traded in at 113K miles and they wanted $7900.  I said no thanks.

    2 months later the salesman called me and said car was headed to auction and asked if I was interested.  Would sell for $5500.  I took it.

    Today it has 298K and is running strong.  My wife is an executive and still drives it in "business" situations.

    Unfortunately, I told her maybe we would move up when it hits 300K......

    1Reply
  • Rex Mortensen
    Fillmore, UT 路 Member since 2017 路 4 posts 路 3 votes
    9y

    I have been listening to various Dave Ramsey talks on you tube this morning. What I got out of it mostly is that I am going to attempt the Debt Snowball. Sounds like a good approach to my situation. Thanks for the info folks. 

    1Reply
  • Janice Rivera
    Waipahu, HI 路 Member since 2017 路 6 posts 路 0 votes
    8y

    Hello, my cousin has intro me to 101 Financial and after reading your post, I have a few question on whether I should move forward or stay with what I'm doing. My cousin posts that she's been on the 101 Financial for 2 months and been able to pay off $6700 of debt. She has no mortgage, works as a reception at a hotel, and has 4 kids. In 2 mths with my pay as system admin, I am not able to pay that debt; which causes me to rethink my plan. 

    i don't have a mortgage, I live with my parents and pay their utilities; I have 3 kids and my pay is $60k/year. I have a debt total of $57k which includes car loan, bank loan, and 4 credit cards.  I made a strict calendar plan to pay it all off in 3 years by spending less and putting all that I get from paycheck into the debts.  Paying off the least to the most expense.    Literally to a point where if I need to spend, I need another way of income. 

    My question is my 4 credit cards?  After I pay it off, should I get rid of 3 and keep 1?  I don't want to lower my credit score which I am working on by staying close to the utilization of the credit card. (Very strict discipline!)

    Now, after hearing the 101 financial and how much she is paying off her debts, $3900 is wayyyy off my budget!!  But she says it's not a regular payment?!?!  Should I keep doing what I'm doing?

    Also, do you know of others ways to earn income than a job?  I was thinking of stocks, blog, but these all include additional cost 馃槓  

    0Reply
  • Brent Coombs
    Investor 路 Cleveland, OH 路 Member since 2015 路 6k+ posts 路 2k+ votes
    8y

    @Janice Rivera, I'm glad you found this thread. If you were paying close attention to most of the responses, you'll understand that paying out $3k+ for such a "secret system" should be seen as pure nonsense. (But for those who have HIGH Income already, but ZERO self discipline, it can be that lazy person's answer. I'm sorry that your cousin felt the need to do that, before giving herself a chance do the same thing WITHOUT being an extra $3.9k out of pocket).

    I particularly like @Steve Vaughan's responses. eg: "Sell the cars and buy beaters. Brown bag your lunch and brew your own coffee. It's not that hard, but simple isn't always easy. Shortcuts and secret systems are for chumps and suckers".

    Welcome to BP. All the best...

    2Reply
  • Janice Rivera
    Waipahu, HI 路 Member since 2017 路 6 posts 路 0 votes
    8y

    @Brent Coombs thank you for your reply!  Hopefully my next post will be questions on investing real estate!!!

    0Reply
  • Brent Coombs
    Investor 路 Cleveland, OH 路 Member since 2015 路 6k+ posts 路 2k+ votes
    8y
    Originally posted by @Janice Rivera:

    @Brent Coombs thank you for your reply!  Hopefully my next post will be questions on investing real estate!!!

    BIGGERpockets isn't exclusively about Real Estate. Discussing financing methods and debt reduction IS good too.

    I'm curious how your cousin got 101Financial to loan her a lot of money at MORTGAGE Interest Rate, if she doesn't have her own home? Even more curious as to why she thought you would be a good contender to get the same low interest?

    I'm a bit suspicious that your cousin might be on some bonus reward system from 101Financial, by "recruiting" others?...

    0Reply
  • Janice Rivera
    Waipahu, HI 路 Member since 2017 路 6 posts 路 0 votes
    8y

    @Brent Coombs- I'm not too sure either. She had posted "paid off $6700 as 101 student for 2 months."  Which made me curious as to what is 101 class she is taking. Thus how I found "Bigger Pockets" as i researched.  I use to be a person who jump on any opportunity to gain more $. But I learned my lesson and now that I am on a strict budget, I have to be cautious on what I spend.  

    I'm not sure what level she is in, maybe I should do a training just to understand it? How they are doing it without mortgage.  She stated that "it's not a regular payment". 

    I'm thankful I found Bigger Pockets, I have done a fix up, short sale and foreclosure in the past. It's been my desire to quit my job and do real estate for life. However, I have 3 young boys to support and I have put that on the side.  Just the thought  of investing in properties, being with my kids at any time.. gives me hope. 

    0Reply
  • Brent Coombs
    Investor 路 Cleveland, OH 路 Member since 2015 路 6k+ posts 路 2k+ votes
    8y

    @Janice Rivera, here's my FREE summary of what you'd be told: "Under our special proprietary program, you put ALL of your pay into your/our debt-paying check account, so as to start lowering the amount you're paying interest on, from the very moment you're paid. Then, you only withdraw money from the account at the very last moment you can. And when you do, the interest we charge will be at a much lower rate than you were paying before!" [Applause].

    But Janice, this can only work effectively IF you ALREADY have the ability to spend a lot less than you make!

    And my first point is: If you do, why aren't you ALREADY doing so?

    They'll ask you what you're already paying of course. Their primary targets will be those with several credit cards maxed out, student loans, and (especially) car loans. So what does that come to? eg. $50k, at say 8%-21%.

    My next point is: they'll make it seem better than it is. Whereas, it's still YOU who have to be disciplining yourself!

    They might tell you: ok, we'll pay ALL your debt, and you can pay us back at 7.5% (or whatever Interest Rate they think will be tempting to you, but still much higher than mortgage) which would normally save you (say) $600/m. Then, so long as you don't spend that $600 per month from then on, that saving would be paying off the debt that much quicker!

    Others can get the same (if not better) effect by applying for those "No Interest for a year on amounts transferred"-type Credit Cards, IF they STICK with a well-disciplined plan of not buying ANYTHING unnecessarily. (And then, repeat the process with a different bank the following year, etc, until debt disappears). [ie. No $3.9k up-front fees EVER needed!]

    0Reply
  • Janice Rivera
    Waipahu, HI 路 Member since 2017 路 6 posts 路 0 votes
    8y

    @Brent Coombs thank you for that wealth of knowledge!!!  

    I will go with the no interest for a year with amounts transferred type credit card!  However, after a year, do you close the credit card?  That will bring your credit score down. Right?  If you keep repeating, won't you end up with multiple credit cards?

    0Reply
  • Brent Coombs
    Investor 路 Cleveland, OH 路 Member since 2015 路 6k+ posts 路 2k+ votes
    8y
    Originally posted by @Janice Rivera:

    @Brent Coombs thank you for that wealth of knowledge!!!  

    I will go with the no interest for a year with amounts transferred type credit card!  However, after a year, do you close the credit card?  That will bring your credit score down. Right?  If you keep repeating, won't you end up with multiple credit cards?

    Keep 'em! If they work the same as mine, you only pay interest on the balance outstanding at the end of each monthly cycle, right? So, with your REQUIRED/acquired discipline, just make sure each balance gets back to zero every month.

    It's not rocket science. Rule #1: Spend less than you make. (Having 5x Credit Cards does NOT change that mantra!)

    1Reply
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