I just listened to episode 129 of the podcast today and it really caught my attention. One minute I think it makes sense and then the next I’m back to confused. There was some conversation in the forum about it right after the episode aired, but I didn’t see anything posted by anyone who had tried it yet. So my question is- has anyone actually tried it at this point? If so, what’s your experience with it?
@tinab I used the shred method as one of the funding sources for my self-storage development, and it works exactly as Adam explains it.
The one catch is that I have a variable interest rate (that’s usually how HELOCs are set up), and our interest rate has gone up since then… but I’ve also paid down the balance by about 60% too, so it’s not a big issue.
With this kind of accounting and finance stuff, I usually can’t fully grasp it until I can visualize how the money is moving in my head. I actually played around with trying to create an infographic to demonstrate it visually… I don’t think I got 100% there (something seems to be missing, though I can’t put my finger on what). You can see my attempt here…
@retipsterseth That infographic is VERY helpful to me! Now I just need to relisten to the episode to understand it even better. Thank you and @TinaB for asking!
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@retipsterseth Thank you so much! I’ll have to consider getting one set up. Did you use the actual Shred program that tells you how to apply your funds or did you just run everything through your HELOC and apply your funds on your own?
@tinab I didn’t use the software much to do this because I understood the concept pretty well… but I can see how the software could be useful in pointing out exactly what needs to be done.
I was in the program for a bit, but I’m a little more cavalier with my finances and don’t really feel like tracking my budget/spending/HELOC transfers to the degree that those in the group do. That being said, Adam is awesome, the program and software definitely work, and I still enjoy attending their monthly Q&A member meetup sessions. He has since begin instructing the group on bringing in a whole life insurance policy (infinite banking) to really accelerate your trajectory towards financial freedom. Basics of the concept as I understand it: use a credit card for expenses, pay it off monthly with HELOC-- use HELOC to pay down mortgage(s) so you drop down on the amortization table and pay more principal than interest every month (taking advantage of HELOC’s average daily interest vs mortage’s compound interest)-- apply paycheck/profits against HELOC balance instead of having it sit in the bank and do nothing for you… once I could conceptualize those principals, I’m able to apply it to my life/business.