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The Shred Method Articles

Our goal is to make sure our clients (as well as perpetual information seekers) are well educated. You'll find The Shred Method™ Blog to be a mix of articles about financial literacy, infinite banking, investing, crypto, and a host of other topics related to our way of managing cash flow. If you're curious about thinking differently, you've come to the right place. We're contrarian in all the right ways.

Is this like... replace your mortgage?

May 09, 2022

This one is a hard no in similarity. The Replace Your Mortgage model is utilizing a HELOC in the 1st lien position. What this means to you is you’ll no longer have a 30 or 15 year fixed mortgage, but instead just a simple interest line of credit. It could be hundreds of thousands of dollars, just like your mortgage, but the difference is it’s not amortized over a certain period of time. Instead, your payment is likely interest only (or 1-2% of your balance) and it’s charged based on the average daily balance of the account. 

There are instances where The Shred Method™ might recommend paying off your mortgage with a HELOC, though it’s typically once you’ve knocked the mortgage down to a much smaller number and it makes sense to lower your payment dramatically. (This is another strategy taught in the course for people who want greater control of their expenses and cash flow to achieve freedom far faster.)

By and large, we see the value in the 1st lien HELOC (Replace Your Mortgage), but have found that there are psychological benefits of knocking down large balances with smaller lines of credit. In essence, you’ll feel like you’re making progress much faster using The Shred Method™. 

Is this like an Australian Mortgage?  Let's find out...