Brought to you by the Ramsey Network App, download today to go further with Ramsey. So, right now, the main problem, not a problem, but I have a house right now. It's worth about 400, 400 to about 440. I want to say around that range, 400 to 440,000, and I took out a whole equity line of credit on the house for $50,000.
Now, I watched this one video about, if you put there 50,000 back in on the house, it will drop, it will make it so that you pay more on the principal and left on the interest, which is somewhat true. I put about 40,000 on back into the house, which the mortgage payments stayed the same. I want to say that instead of the principal, me paying like, is basically only $100 difference that I save myself, that goes towards principal versus the interest for the whole $50,000. Now, the $50,000 costs about $250 a month in interest.
I have to pay about $250 a month on interest on the $50,000, and it only saved me $100, $100 more goes towards principal versus the interest. So, in all us, almost like I'm losing $150 for like no reason. So, I'm kind of curious as to which I'll think about that, because I am thinking about kind of like, I don't see myself really paying back in that $50,000 anytime soon. So, I'm thinking about trying to sell the house.
Bijon, here's how I'll tell you how I think about this. Go back and watch this clip and just listen to yourself. You're going to go, what have I done? This is madness.
I did all these back flips in order to try to pay down the house early when I could have just paid down the house early. So, what you're describing is called velocity banking, and I know you saw like a guy on Instagram and be like, here's what they don't want you to know. Here's how to pay off your house early. Take out a HELOC, and it's going to apply more to the print, right?
You saw this one guy and you went, all right, I guess I'll take out a HELOC. Easy enough. And here we are, spinning in circles chasing our tail. What you could have done, what you should do is just pay extra to the principal every single month.
That's the simplest way and the least risky way to do this. What you've done now is added risk, because that HELOC, if you don't pay it, they can take your house. Right. Your house is collateral, and so your goal should be to knock out the HELOC and then just put extra toward the principal to do this the right way.
Mm-hmm. And yes, on paper, does velocity banking, if you play it perfectly, can you technically save it? Sure. But the juice ain't worth the squeeze, as they say.
You're good, dude. We've got people working for you today. Oh, we've got somebody else piping in here. We've got some commentators.
We've got some commentators. You're good. Is that your wife? No, not dentist office.
Oh, here we go. He's at the dentist office. I'll tell you what. He's an old tiktasker.
I respect that. This guy's in the chair. Got a quick call for some advice. Getting a lot done today, Bijon.
I'm impressed. Yes, velocity banking, it remains incredibly stupid, especially when HELOC rates are as high as they are. I mean, this could be nearly double your mortgage rate, and they're generally variable with the HELOC. So, for a thousand reasons, I'm out on this whole velocity banking scheme where you take out debt to pay off other debt a little bit faster.
Just say, if you want to pay off your mortgage, just apply extra to the principal. That's it. That's how I did it. It's how millions of others have done it.
It remains to be the simplest way. And yet, Ken, as humans, we try to find the most complex way because it sounds smarter. Yes. It feels like the more hoops we jump through, we're doing more.
We're just wasting time. You're burning calories in your tail. But you're not getting any further. But I got to respect the hustle from Bijon to the dentist.
I like Bijon a lot. I've tried so hard not to get a church get going. I thought we were about 20 seconds from the dentist's hand being in his mouth while he's talking to you. I thought, well, you hear that?
I thought it was his wife. He wants to pipe in. No, it's the dentist. And then we hear Bijon right before putting him whole PTSD cryptic.
Go ahead. I was waiting to hear the drill start. He's like, oh, I thought we were headed towards that before we knew it, you know? Guys getting his fillings checked out, and you got to appreciate the hustle.
That warmed my heart. That's just another life lesson here. Never take out a HELOC because you saw a 60 second video on TikTok. Just general life advice, not a wise move.
And Bijon, I hope you pay off this mortgage aggressively. I love the spirit behind it. But never think that using debt to pay off other debt faster is going to be a wise strategy. You know, I'm going to get rid of debt is to get rid of debt.
And while we're on the life advice, glad he called us in the dentist's chair before they gave him a laughing gas or whatever it is. That would have been a much more interesting call. Oh, that's the first time ever, James. First time ever that I recall taking a call on the crazy show with someone who was at the dentist's office.
That right there. That made my day. Why about that? Brought to you by the Ramsey Network App.
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