Gabriel B. Ajak | September 14, 2024 

Are You Poor or Is the Banking System Robbing You?

“If you don’t own gold, you know neither history nor economics.” – Ray Dalio.

In the United States and in the Western hemisphere, most people understand financial institutions as the houses of cash or vaults that serve their financial best interests. Unfortunately, the banking system isn’t just a tool for saving; it’s a profiting machine designed to siphon wealth from those who don’t understand how to navigate its operating intricacies –often profiting from your lack of awareness about how money works. In this article, you’ll learn how the bank exploits traditional financial habits and discover actionable strategies to take control of your finances in 2025.

Why Traditional Mortgages Are Financial Traps

Let's consider a hypothetical scenario for a newly wedded couple earning $7,200 monthly and spending $6,100 on living expenses, leaving them with $1,100 in cash flow. After their amazing honeymoon, they purchased a home for $150,000 to start a family, putting down 10% or $15,000 and securing a 30-year mortgage for $135,000 at 7.75% interest. Though this couple finally reached the tip of their American Dream of homeownership, there is a catch.

Here’s what happens next: their 30-year mortgage at 7.75% interest will cost them an additional $213,176 in interest alone. In the first month, for example, out of your $967 payment, a staggering $871 goes toward interest – leaving only $95 to reduce their mortgage principal. That’s not an interest rate; it’s a financial prison, and what was meant to be a happy dream is now a route to a concealed financial trap.

Does that sound fair? Let’s uncover why this happens and how you can avoid it.

Breaking Down the Real Cost

Most people assume that their stated mortgage interest rate—7.75% in this case—is the full story. However, the fine print in mortgage documents reveals the truth. Over the lifetime of a loan, the effective interest rate can easily exceed 150% due to amortization schedules, which front-load interest payments.

For the first several years of the mortgage, nearly all payments go toward interest. This structure benefits the banks by ensuring they collect the bulk of the interest before you even start chipping away meaningfully at the loan’s principal.

Why does the bank frontload interest payments? Banks front-load mortgages with interest because they know most people either sell their homes or refinance within seven years. This ensures you pay them the maximum amount of interest possible before you ever touch the principal. It’s a rigged game, but there’s a way to turn the tide. As the genius Einstein says, “He who understands interest earns it; he who doesn’t pays it.”

The Velocity Banking Solution

Velocity Banking Solutions (VBS) is a strategy that allows you to reclaim the money the bank stole from you. VBS method leverages lines of credit to disrupt the amortization schedule, slashing decades of payments and saving tens of thousands in interest. Here’s how it works.

1. Access a Line of Credit (LOC)

Most banks and credit unions offer personal or home equity lines of credit (HELOCs) at higher interest rates than mortgages (e.g., 14%). But don’t be alarmed – the math is on your side. Unlike mortgages, lines of credit charge interest based on the average daily balance rather than amortization.

2. Use the LOC to Make Principal Payments

For example, assume you borrow $10,000 from the LOC and apply it directly to your mortgage principal. This single chunk payment skips years in the amortization schedule, saving you thousands in interest.

3. Recycle Your Cash Flow 

Redirect your monthly income into the LOC to rapidly pay it down while covering monthly expenses directly from the LOC. With $1,100 in positive cash flow, for instance, the $10,000 balance can be paid off in just six months.

4. Repeat the Process

If you apply another $10,000 to your mortgage principal every seven months, this approach will allow you to pay off a 30-year mortgage in just over six years.

Unlike traditional loans, the VBS and LOC tools provide flexibility and enable you to control your repayment schedule.

Why Velocity Banking Works

The secret lies in how banks calculate interest on loans versus lines of credit. Mortgages operate on amortization schedules, where interest is front-loaded. LOCs, however, use simple interest, calculated based on the average daily balance. By continuously cycling your income through the LOC, you minimize interest payments while maximizing principal reductions.

The Power of Arithmetic Math

Let’s revisit the scenario of our newlywed couple. By making nine $10,000 payments every seven months, they would reduce their total interest costs from $213,176.35 to just $31,644. Including the minimal interest on the line of credit, their total cost would be $36,803—saving $176,373. That’s not just a financial win; it’s a transformative shift in how you handle debt.

The Bank Refinancing Trap

Many homeowners are tempted to refinance their mortgage to lower their monthly payments. However, refinancing restarts the amortization schedule, resetting your interest payments and extending your debt burden. Before refinancing, calculate whether the potential savings outweigh the long-term costs.

Remember, the bank thrives on your ignorance. You’ve been conditioned to think mortgages and long-term loans are the only paths to financial security. This couldn’t be further from the truth. By leveraging the tools banks offer—like LOCs—you can reclaim, control, build wealth, and achieve financial freedom decades earlier than planned.

Your Secret Weapon –Use Line of Credit

1. Stop Refinancing

Avoid refinancing unless it aligns with your long-term goals. Each refinance resets your interest clock, locking you into another cycle of front-loaded payments.

2. Understand Your Mortgage

 Study your mortgage documents carefully to understand the true cost of borrowing. Check your loan documents for the “real” interest rate. When factoring in amortization schedules, it’s often double or triple the advertised rate.

3. Explore LOC Options

Leverage lines of credit to eliminate debt faster. Speak to your bank or credit union about LOCs or HELOCs. Use these strategically, not recklessly, to attack high-interest debts or your mortgage principal.

Now that you have learned how the bank profits from your hard-earned money, you can take decisive action to build a financial house on your terms, and VBS will give you that opportunity. Velocity Banking is not just a method; it’s a mindset shift that empowers you to see beyond the traditional banking narrative. The VBS strategy isn’t magic—it’s arithmetic math and works for anyone willing to implement it. Take control today, apply the Velocity Banking principles, and break free from the grip of high-interest loans; save yourself years of stress, thousands of dollars, and countless sleepless nights worrying about debt. The banking system has been robbing you for too long. What’s your first step to taking control of your financial destiny today?

VBS Frequently Asked Questions

1. What is Velocity Banking?

Velocity Banking is a debt reduction strategy that uses a line of credit to pay down principal quickly, bypassing years of interest payments.

2. Is a line of credit risky?

While lines of credit require discipline, they can be powerful tools if managed responsibly. Always ensure you have the cash flow to cover monthly payments.

3. Can Velocity Banking work for low-income households?

Yes, the strategy is scalable. Even small extra payments toward your principal can significantly reduce interest costs over time.

4. What’s the difference between a HELOC and a mortgage?

HELOCs charge simple interest based on the average daily balance, while mortgages use amortization schedules that front-load interest payments.

5. Should I refinance my mortgage?

Refinancing resets your amortization schedule, often increasing the total interest paid. Before refinancing, consider alternative options like Velocity Banking.

6. How do I start implementing this strategy?

Calculate your cash flow, research your line of credit options, and consult a financial advisor if necessary. Use the VBS and make 2025 the beginning of your financial independence. Take control, leverage the VBS resources, read this article, save it, read it more, and finally declare: “I am mortgage-free in 2025.”

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About the Author

Gabriel Ajak is the founder and editor of thinkninvest.com, a website focused on exploring entrepreneurial opportunities, investment strategies, and financial growth for aspiring entrepreneurs. Follow him on X, LinkedIn, and Facebook for more commentary on wealth building and financial education content.