By OBBM Network Editorial Staff

Derived from an episode of Velocity Channel.

What if you could pay off $100,000 in debt and build $100,000 in passive income at the same time? This may sound like a pipe dream, but CJ Wallace of Velocity Channel claims it’s possible with the right strategy. In a recent discussion, Wallace outlined a dual approach that combines velocity banking and the income snowball to achieve financial freedom.

Understanding the Problem

Conventional wisdom says to pay off debt as quickly as possible, but this approach can leave you without any passive income for years. Wallace argues that this approach is flawed, as it focuses solely on debt repayment without considering the potential for building wealth. According to Wallace, ‘You are not waiting. You are not choosing. You are doing both.’

The problem with the conventional approach is that it can take years to pay off debt, during which time you’re not building any wealth. For example, if you have $100,000 in debt at 7% annual interest and pay $1,500 per month, it will take 85 months (7.1 years) to pay off the debt, with a total interest payment of $27,000. Meanwhile, your passive income will be zero.

The Dual Strategy

Wallace’s dual strategy involves using velocity banking to pay off debt and the income snowball to build passive income. Velocity banking uses a home equity line of credit (HELOC) to pay off debt, while the income snowball involves investing in short-term, income-producing investments. By combining these two approaches, you can pay off debt faster and build passive income simultaneously.

For example, if you have a $100,000 debt at 7% annual interest and pay $1,500 per month, you can use velocity banking to pay off the debt in 73 months (6.1 years), with a total interest payment of $23,000. Meanwhile, you can use the income snowball to build passive income, starting with a $10,000 investment that returns $220 per month for 24 months. By reinvesting the returns, you can build a snowball of passive income that grows over time.

Executing the Strategy

To execute the dual strategy, you need two tools: a system for velocity banking and a system for the income snowball. Wallace recommends using the MoneyMax account for velocity banking and the income snowball developed by Tanisha for building passive income. These tools can help you map out your cash flow, sequence your debt paydown, and invest in income-producing assets.

By following the dual strategy, you can achieve financial freedom faster and build wealth more efficiently. As Wallace notes, ‘You are earning while you eliminate. Every dollar of passive income gets redirected back into the HELOC, which accelerates the debt payoff, which frees up more capital, which launches more investments.’ This approach can save you years of waiting and thousands of dollars in interest payments.

Closing Thoughts

The dual strategy presented by CJ Wallace offers a promising approach to paying off debt and building passive income. By combining velocity banking and the income snowball, you can achieve financial freedom faster and build wealth more efficiently. Whether you’re struggling with debt or looking to build wealth, this strategy is worth considering.

The full episode of Velocity Channel is available on OBBM Network TV.

Watch Velocity Channel on OBBM Network TV: https://www.obbmnetwork.tv/series/velocity-channel-208307