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Welcome to the Infinite Mindset Podcast,
the show where we explore the power of
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the infinite banking concept and how to
take control of your financial future.
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I'm your host Andy, along with
Scott and frequent guest Jared.
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We're here to help you think
bigger, build smarter, and
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create freedom on your own terms.
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Let's get started.
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Hey, welcome everyone to another
episode of the Infinite Mindset
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Podcast, myself, Jared, and Scott today.
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Uh, yeah, we'll be jumping into first lien
HELOCs and some other stuff here as well.
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Before we do that, what's
going on with you guys?
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Spinning Jared or,
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first
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me first.
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I got a, I got a lot going on.
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got all the stuff from, From the NNI.
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so I started going through that.
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I got the, they break it
into three sections, so I'm
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through the first section.
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I got some reading on a book that's called
How Privatized Banking Really Works.
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there's, there's four chapters
in there that I gotta read.
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I started reading those last night just
'cause it's easier that with, and it is
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to lug everything else along with me.
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The binder's pretty thick.
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There's a lot of material there.
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But, basically it's just
starting with the problem.
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There's, there, there's
actually so far very little to
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do with life insurance itself.
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They're addressing the problem, how
money works, you know, what it, what
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it does, what it doesn't do, how it
just gets basically any more created
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at a thin air after, dismantling
everything from the Great Depression.
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So it's, it's a very interesting read.
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the first section's pretty interesting.
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To see exactly why we are where we
are, how the housing bubble popped.
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it's, it's all, it's all exact opposite
of what I was taught in my macroeconomics
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class in college, which is kind of funny
'cause our professor, I'm kind of rambling
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at this point, but our professor was a
huge, huge supporter of Alan Greenspan.
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then you start reading about and that
was just a small part of what happened
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in 2008, but you just start reading like
the different figures and how things
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happen, why they happen, and all the stuff
that was at play to make that happen.
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And it's, it's interesting
to say the least.
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So, but I guess to to n NI's point,
you gotta understand the problem so you
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understand why you're doing the solution.
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So it's good.
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I like it.
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I when, you know, looking on that book,
it's been a little bit since I read
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it now, but you've got a PhD level.
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Economist that has a different take
on how things work compared to your
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standard economists that you're gonna
have if you go to most universities.
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And so it's never to say
anybody's a hundred percent right?
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There's always different things and
variables and opinions that you're
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gonna see, but I thought it was
refresh refreshing to get a different
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take on it, and not just the bog
standard, this is how things work.
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It opens your eyes a little bit to let you
do your own analysis, compare everything
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you've seen, and then try to come to your
own conclusion as to what's going on.
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From an economist standpoint, it's
pretty cool that they cover different
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schools of thought and why some
parts of it work, but the whole, the
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whole thing doesn't work, but the
good points and bad points of each.
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And exactly, what was involved
to get us where we are.
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So, I don't think there's a biased
opinion one way or another on
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the three schools of thought.
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I mean, obviously the, the Austrian School
of Thought, is kind of where we're at, but
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I, they don't really knock the other ones.
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it's, it's, this is what it is, this
is what works, this is what doesn't,
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and this is why we, look at this
side of things more specifically.
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So I thought it was really good.
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Thus far anyway.
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was one of my, that was one of my
favorite parts about going through that,
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that class or that course is, Nelson
doesn't say, rethink your thinking and
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then rethink your thinking like this.
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He just says, rethink
your thinking and he.
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Here's what's out there.
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He
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Mm-hmm.
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go analyze it for yourself.
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He doesn't say, this is
how you should think.
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He just says, here's some of
the stuff that's out there.
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Let me provide the data.
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So, it's interesting if you get into
some of the, i, the pundits or the,
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the folks that are gonna to ppo, the
system or the idea, they're, they're
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unwilling to, to go rethink their
thinking or just step outside the box
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and look at something a different way.
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So.
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If that's the way some folks are cool.
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Not gonna hate on 'em.
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But at the same time, if you do
take the time to analyze what's
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out there, it's pretty eyeopening.
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It's, it's a, it's clear.
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I couldn't agree more.
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It's very well said.
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we'll keep this moving just in
the interest of time, to get this
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going, but it's kinda the same
thing with rethinking your thinking.
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It's how we kind of approach debt
and financing and how we actually
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fund the different things in life.
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Those major purchases, whether investments
or, you know, cars or whatever, it's.
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so with that in mind, we
actually had somebody brought
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up, I, I really appreciated it.
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first lien HELOCs and the advantages
of doing that or disadvantages
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and then comparing that with IBC.
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And so, you know, stepping back
for a second, we have the process,
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which is what this guy is doing.
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You're looking at something, you're
leveraging it in the hopes that
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that's gonna build in the background.
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so you don't interrupt that on,
excuse me, you don't interrupt
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the uninterrupted compound growth.
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However, there's different
products that we can use.
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And so we're gonna get into the
products a little bit and just
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compare that first lien heloc.
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To IBC, and then a few
other things as well.
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So, background on this, what's going on?
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Everyone's trying to
solve the same problem.
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They want to use money more
than once and they wanna do
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without blowing themselves up.
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And so we have a few different
things we're gonna compare here.
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We're gonna look at mortgages, we're
gonna look at the first lien heloc,
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kind of a velocity banking type
mindset, IBC, security, back lines
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of credits and some other stuff.
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And all of 'em claim to
be the most efficient.
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But today's episode we're gonna
do, we're gonna look at the
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same cash flow, the same debt.
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But look at different capital structures
and see which one comes out on top
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when you start seeing what the needs
of the person on the other end are.
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And so the real question is what still
works when things don't go right?
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And what do the numbers actually show?
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So we're gonna try and answer that.
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So obviously when you start with some
kind of baseline to look at this.
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So.
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The baseline we used, I looked
at real numbers, I looked at the
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current mortgage rate that I have.
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I looked at actual rates right now for
a first in heloc and the actual numbers
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themselves, I just use very round numbers.
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So this doesn't actually illustrate
anything other than the math is
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very, very easy to do with these.
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So we're gonna start
with the $1 million loan.
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And then we're gonna look at about a
$10,000 a month cash flow that you can
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either use going all to a loan or to
IBC or some kind of combination thereof.
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And so you're free to pay the
mortgage, save, invest, whatever it is.
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But the apples to apples comparison
is we're gonna look at that money
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through the traditional mortgage first
lien HELOC with the Velocity banking,
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and then the mortgage plus IBC.
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And then once we get through that, we're
gonna go into the brokerage security
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back line of credit, and a few other
advanced blends we'll look at as well.
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Okay.
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So for the traditional mortgage, this will
be the baseline that we're looking at.
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I use the current interest rate
that I have, which is 5.625.
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I think you could actually even
do slightly better than that
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from what I've been seeing.
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But I thought that was a fair estimate.
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And then the required payment on
that, so you know, is five thousand
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seven hundred fifty a month.
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you can do more in
principle if you wanted to.
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Up to 42 50.
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I left insurance and taxes out of it.
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'cause I thought that would
just kind of muddy the water.
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So we're just looking at the principal
and interest on the loan itself.
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And so if you were to actually.
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Do a full 10,000 a month, not the, you
know, fifty seven fifty , but adding
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that extra 42 50 in, you would actually
pay off that mortgage in about eleven
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to twelve years the total interest
would be about 470 K that you would pay.
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However, if you account for tax
benefits, and so you know, you have
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the max reduction and everything else,
there's certain deduction limits there.
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You'd actually have after.
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Tax interest of 350 K is
what you're looking at.
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But the key point in all this, and
you can't really argue it, this is
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the cheapest, cleanest debt, right?
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So you can pay it off the soonest.
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The problem really
becomes liquidity though.
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and so that is one thing that capital
is locked away and you either are gonna
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have to sell that home or go get some
kind of HELOC or new, lien against it in
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order to actually access that capital.
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And so this is where this kind of
hurts you a little bit, but as far
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as a baseline, everything else must
justify why it's better than this.
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so, all right, let's look
at the first lien heloc.
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And, you know, somebody else brought
this up and it really interested me.
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'cause what I wanted to see was like,
Hey, if I put that same principle and
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interest towards this versus a mortgage,
is this actually a better product?
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And is this gonna save me in the long run?
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And then I can put my delta, my
difference towards an IBC policy.
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Or maybe if it's that.
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You would even consider
this as a new tool?
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I didn't think I would get there,
but I wanted to give it a fair
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shake and kind of see what happens.
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So what's promised in this, when
you look at the first lien HELOC,
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is you're gonna have daily interest
savings, 'cause you're reducing the
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overall principle that's having the
interest, uh, You're gonna have a faster
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payoff, is what it says, and it's.
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Technically in quotes, using your income
more efficiently is what it's showing you.
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And so the big thing here is I use
the 7% rate, realize it's variable.
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It's typically tied to a T-bill, but
with the 7% variable rate, the way that
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the interest is calculated, the first
month alone, the interest is 58 point 33.
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So if you just paid your 57 50
per month like you did compared
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to the regular mortgage, you
actually would be falling behind.
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So let that sink in for a second.
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Based on the rates there.
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Now you can play with the rates.
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I tried to use real market stuff, but
from what I've seen, if you go with the
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traditional mortgage versus the first
lien heloc, the traditional mortgage
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is typically gonna have a lower APR
compared to the first lien heloc.
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So that's where you get in trouble.
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If for some reason I'm not talking about
the little teaser rates that they have,
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I'm talking about the longer term rates.
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If you could find one that was much
lower, you might have an argument for it.
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But remember, it is variable and that
might change the, and that will change
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the equation if it goes back up.
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So you're barely amortizing
with 10 K a month as well.
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but you go, hold on a second.
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You're talking about the Ten K , what if
I park my additional principle in here?
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So what I did was I assumed that
somebody had a 25K after taxes a
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month going into this thing, and you
would quotes park the 25K for 20 days.
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I figured that was a fair assumption.
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And then for 10 days I would be
out paying bills or doing whatever.
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so what you're doing though, you're
only saving 96 bucks, a month when
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you do that, or $1,100 a year.
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So the higher interest rate
is really what matters here.
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It's not that you're parking the money
and that's where this thing falls apart.
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And so the key lo, the key thing
here is velocity helps the cash
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flow around debt, but it doesn't
overcome the higher interest rate.
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And so if you can understand that
problem, that's what's going on.
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And so the actual numbers here,
just to kind of summarize it, if you
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look at a 5.625 mortgage rate versus
a velocity HELOC at seven, I just
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fixed it there just for easy math.
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I know it is variable.
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The payoff time is 11.3 years for the
mortgage, but it's 12.6 for the heloc.
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The interest paid is a little
over 350 k on the mortgage.
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It's over 500 K on the HELOC,
and the extra interest is a
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little over 150 K in 15 months.
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So you got more interest, more
risk, and the balance sheet
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00:10:16,097 --> 00:10:17,177
actually doesn't improve.
228
00:10:17,177 --> 00:10:21,022
So if you have expensive debt out there
that you're trying to get under control.
229
00:10:22,022 --> 00:10:25,172
And the only liquidity you
have or the only capital you
230
00:10:25,172 --> 00:10:26,432
have is locked up in your home.
231
00:10:26,612 --> 00:10:27,602
This could make sense.
232
00:10:27,602 --> 00:10:30,782
I will say that if you want to get
to it to try and tackle that debt,
233
00:10:31,142 --> 00:10:34,832
but it doesn't outperform the cheaper
debt in your straight mortgage.
234
00:10:35,012 --> 00:10:37,592
And so, but the big advantages
here, you do have liquidity.
235
00:10:37,592 --> 00:10:40,472
So it is a tool that you can use if
you have, credit cards or something
236
00:10:40,472 --> 00:10:43,022
else that are running away from you,
it would be a better way to do this,
237
00:10:43,022 --> 00:10:45,662
but it's not gonna beat the mortgage is
kind of what I found to do in all this.
238
00:10:45,842 --> 00:10:46,502
What do you guys have?
239
00:10:47,487 --> 00:10:50,287
Yeah, I was just gonna add in, in
the community that we know real well,
240
00:10:50,437 --> 00:10:52,152
through the, the widget room, there.
241
00:10:53,617 --> 00:10:56,047
We're not talking with a lot of folks
that have a ton of credit card debt.
242
00:10:56,447 --> 00:10:59,987
So if, if you're trying to create
a process outta thin air, that's,
243
00:11:00,047 --> 00:11:05,477
that's making something both more
complicated, locking up your capital and.
244
00:11:05,897 --> 00:11:07,907
Really isn't, you know,
all that complication.
245
00:11:07,907 --> 00:11:09,107
Is the juice worth the squeeze?
246
00:11:09,107 --> 00:11:12,137
Are you getting, is, is all
of that process and all that
247
00:11:12,137 --> 00:11:15,297
paperwork and all that excess
worth, a thousand bucks a year?
248
00:11:15,687 --> 00:11:17,367
Maybe it is in that case, cool.
249
00:11:17,547 --> 00:11:19,887
But that's just using the first
lien you're talking about.
250
00:11:19,887 --> 00:11:20,067
Right?
251
00:11:20,067 --> 00:11:24,147
If it's, if it's capturing a ton of
credit card debt, hey, good on you.
252
00:11:24,247 --> 00:11:25,657
maybe that's one way to beat that up.
253
00:11:25,877 --> 00:11:29,267
but I guess I just, I would, I
would only add that that's not.
254
00:11:30,197 --> 00:11:32,312
I, I guess that's not the
norm in the community that we,
255
00:11:32,372 --> 00:11:33,812
that we work in often, right?
256
00:11:33,962 --> 00:11:35,432
So, don't know.
257
00:11:35,477 --> 00:11:37,202
I, I don't want to, I don't
wanna speculate, right?
258
00:11:37,202 --> 00:11:41,012
Everybody has their own specific instance,
their own specific circumstance, and we're
259
00:11:41,012 --> 00:11:45,152
all for meeting you, where you are talking
about it, coming up with a great solution.
260
00:11:45,842 --> 00:11:49,472
But I don't, based on what you've
shown here and what I've learned in the
261
00:11:49,472 --> 00:11:52,682
past, this would definitely not be the
first solution that I would reach to.
262
00:11:53,821 --> 00:11:54,716
I think you hit the nail on the head.
263
00:11:54,716 --> 00:11:58,286
It depends on what your goals are,
and so you need to have the end
264
00:11:58,286 --> 00:12:00,896
in sight and then understand what
product you're using to get there.
265
00:12:01,466 --> 00:12:01,781
And so.
266
00:12:02,561 --> 00:12:05,111
For a lot of people, they wanna
store capital and have access to
267
00:12:05,111 --> 00:12:07,301
it to use over and over again,
especially in the community that
268
00:12:07,301 --> 00:12:10,331
we're talking about, whether it's
a major purchase or financing.
269
00:12:10,571 --> 00:12:14,231
And the irony is here is when you
actually start leveraging against
270
00:12:14,231 --> 00:12:15,521
your home based on these rates.
271
00:12:15,521 --> 00:12:18,191
And the way I'm looking at it, I mean,
this is assuming that you're doing
272
00:12:18,191 --> 00:12:21,161
that 10 K per month and you're never
actually accessing that capital again.
273
00:12:21,191 --> 00:12:23,981
Once you actually access that
capital to go do something else.
274
00:12:24,366 --> 00:12:25,716
It's gonna blow it up quite a bit.
275
00:12:25,976 --> 00:12:29,276
and it's not gonna perform the same
way that a whole life policy will
276
00:12:29,276 --> 00:12:31,256
designed specifically to practice IBC.
277
00:12:31,256 --> 00:12:32,876
And so we'll jump into
that in the next section.
278
00:12:32,876 --> 00:12:34,736
But before I do that, Scott, do
you wanna add anything there?
279
00:12:36,243 --> 00:12:39,663
That's pretty much Jared said, in
the past, I've looked into this, and
280
00:12:40,533 --> 00:12:44,883
you're floating around 20% credit
card debt or something that, I just, I
281
00:12:44,883 --> 00:12:48,303
could never make it make sense at the
interest rates that they always had.
282
00:12:48,723 --> 00:12:51,843
but I don't have a house anymore,
not a homeowners, so, no.
283
00:12:51,987 --> 00:12:52,147
variable.
284
00:12:52,263 --> 00:12:54,003
Yeah, yeah, exactly.
285
00:12:54,208 --> 00:12:56,073
I, I just, I could never make it work.
286
00:12:56,073 --> 00:12:59,263
I looked into it a couple different
times, just to see if I could use
287
00:12:59,263 --> 00:13:00,673
it for investing or anything that.
288
00:13:00,673 --> 00:13:00,763
And.
289
00:13:01,913 --> 00:13:05,388
it, you'd have to be offset in some
pretty hefty interest rate debt.
290
00:13:06,846 --> 00:13:09,096
And, and you know, we've talked
about this before as well.
291
00:13:09,306 --> 00:13:12,456
The ones that I'm, I was looking at
had about a 10 year draw period, and
292
00:13:12,456 --> 00:13:13,926
then it converted to a 20 year fix.
293
00:13:13,926 --> 00:13:16,896
And it does say, you know, you can
refinance and go and requalify again, but.
294
00:13:17,356 --> 00:13:19,276
Who knows what you're gonna be
like, you know, 10 years from
295
00:13:19,276 --> 00:13:20,866
now Requalifying and doing that.
296
00:13:20,866 --> 00:13:24,646
And if you can't, I don't know that that
fixed 20 year that they're gonna give
297
00:13:24,646 --> 00:13:27,486
you is gonna beat, you know, the, the
typical mortgage that we have right now.
298
00:13:27,486 --> 00:13:28,746
So all these things are
different variables.
299
00:13:28,746 --> 00:13:29,796
Just understand what you're getting into.
300
00:13:29,796 --> 00:13:30,606
That's the whole point of this.
301
00:13:30,606 --> 00:13:33,486
We're not telling people what to do, we're
just trying to give the full landscape.
302
00:13:33,486 --> 00:13:35,106
And like I said, once you know
your end goal, you can see
303
00:13:35,106 --> 00:13:36,216
what product is best for you.
304
00:13:37,051 --> 00:13:39,991
So moving on to the mortgage plus the IBC.
305
00:13:40,051 --> 00:13:41,491
This is personally how I run it.
306
00:13:41,541 --> 00:13:43,551
Jared, Scott, you guys do the same thing.
307
00:13:44,271 --> 00:13:45,231
I wanna be very clear here.
308
00:13:45,231 --> 00:13:47,391
IBC is not a mortgage
replacement in this case.
309
00:13:47,391 --> 00:13:50,541
It's a way to have a capital system
layered beside it is how I work it.
310
00:13:50,871 --> 00:13:54,771
Now, if you do go into the infinite
banking community, there are
311
00:13:54,771 --> 00:13:56,931
definitely people that just wanna
get banks completely outta their
312
00:13:56,931 --> 00:13:59,541
lives, and I understand that for
everything that comes with it.
313
00:13:59,841 --> 00:14:01,251
We've talked about this before.
314
00:14:01,251 --> 00:14:04,971
I worry about having all of my
equity locked up in my home and I'd
315
00:14:04,971 --> 00:14:07,701
rather have a situation where I have
that capital on the outside and if
316
00:14:07,701 --> 00:14:09,201
need to, I could pay off that debt.
317
00:14:09,451 --> 00:14:11,581
but I don't wanna necessarily
have that in the home itself.
318
00:14:11,581 --> 00:14:13,051
So there's different ways to skin the cab.
319
00:14:13,051 --> 00:14:14,371
This is definitely our spin on it.
320
00:14:14,371 --> 00:14:15,031
My spin on it.
321
00:14:15,031 --> 00:14:16,591
I'm starting to talk for Jared Scott.
322
00:14:16,591 --> 00:14:17,701
I wanna be very careful there.
323
00:14:17,991 --> 00:14:19,581
but realize that depending on who
324
00:14:19,941 --> 00:14:20,171
you talk to.
325
00:14:20,698 --> 00:14:22,168
had a mortgage, it'd be how I do it.
326
00:14:22,861 --> 00:14:23,151
Right.
327
00:14:23,151 --> 00:14:25,881
But yeah, depending on who you talk
to in the community, you are gonna
328
00:14:25,881 --> 00:14:27,471
get different answers and that's okay.
329
00:14:27,471 --> 00:14:29,871
I just wanna be very clear that
I'm not speaking for the community
330
00:14:29,871 --> 00:14:30,951
as a whole When I say this.
331
00:14:31,776 --> 00:14:34,746
So the way we set this up,
we kept it really clean.
332
00:14:34,776 --> 00:14:38,986
We kept the cheap mortgages where it
was at, but we redirect that surplus, so
333
00:14:38,986 --> 00:14:42,466
that 42 50 a month that you were going
to either use to pay down the mortgage
334
00:14:42,466 --> 00:14:46,266
quicker or, go into your heloc, we're
gonna use that to build policies instead.
335
00:14:46,266 --> 00:14:48,036
So that's gonna be
redirected towards premium.
336
00:14:48,396 --> 00:14:51,276
And then we could use policy loans
strategically to access that capital.
337
00:14:51,276 --> 00:14:53,826
We need to, and the big thing,
we've talked about this before,
338
00:14:53,826 --> 00:14:56,226
the cash value is gonna compound
uninterrupt in the background.
339
00:14:56,646 --> 00:15:00,096
one thing I did want point out here, if
you didn't listen to the last podcast,
340
00:15:00,096 --> 00:15:03,546
understanding true Interest Cost, you
may look at the policy loans right now.
341
00:15:03,546 --> 00:15:05,406
Right now they're about 6.5%.
342
00:15:05,406 --> 00:15:08,256
For the non-direct recognition company
that I work with for direct recognition.
343
00:15:08,256 --> 00:15:10,986
They're a little bit lower and they will
slightly vary with different companies.
344
00:15:11,286 --> 00:15:14,016
But let's say just for argument's
sake, you have a 7% loan
345
00:15:14,016 --> 00:15:15,546
rate and the HELOCs at 7%.
346
00:15:15,576 --> 00:15:17,256
Remember that is not the same thing.
347
00:15:17,496 --> 00:15:18,666
I just wanna highlight this here.
348
00:15:19,026 --> 00:15:21,576
Even though the interest
is accruing daily.
349
00:15:22,176 --> 00:15:27,246
On the heloc, it's compounding at least
monthly, but on the loan against your
350
00:15:27,246 --> 00:15:29,766
policy, it's compounding annually.
351
00:15:30,006 --> 00:15:32,676
And so the difference is
staggering when you look at that.
352
00:15:32,676 --> 00:15:36,366
And so that's why when you practice
infinite banking, you don't have this
353
00:15:36,366 --> 00:15:38,826
runaway compounding interest that
you get with many of these banking
354
00:15:38,826 --> 00:15:40,056
products that we see out there.
355
00:15:40,596 --> 00:15:42,996
And so I ended up running
this out to about a 20 year
356
00:15:42,996 --> 00:15:44,436
view, trying to figure it out.
357
00:15:44,496 --> 00:15:47,136
And so 20 years from now, we hit
on this already with the heloc.
358
00:15:47,906 --> 00:15:49,766
I don't wanna get into the
actual numbers, but just more,
359
00:15:49,766 --> 00:15:51,236
conceptually what's going on here.
360
00:15:51,446 --> 00:15:54,116
You'd either have to refinance
that HELOC or you'd be stuck with
361
00:15:54,116 --> 00:15:55,616
the 20 year fixed after that.
362
00:15:55,856 --> 00:15:58,916
But in this case here, you'd have
policy cash value that is growing
363
00:15:59,186 --> 00:16:01,346
uninterrupted, and you wouldn't
have to worry about doing that.
364
00:16:01,346 --> 00:16:03,849
You would have that access to
liquidity, which is your goal Here.
365
00:16:04,119 --> 00:16:05,229
It's permanent liquidity.
366
00:16:05,469 --> 00:16:06,549
You don't have the rate risk.
367
00:16:06,549 --> 00:16:09,729
So the max that the company that
I underwrite with, it could go
368
00:16:09,729 --> 00:16:12,429
up to 8%, but the interest rates
would have to get pretty high.
369
00:16:12,429 --> 00:16:15,399
If you had a variable rate on the
heloc, that would run away quite a bit.
370
00:16:15,789 --> 00:16:16,929
You don't have any forced decisions.
371
00:16:16,929 --> 00:16:17,889
There's no timing issues.
372
00:16:17,889 --> 00:16:20,229
It's not like, man, I better get
this thing paid off in 10 years,
373
00:16:20,229 --> 00:16:22,659
or I have to access this now,
otherwise I'm gonna be in trouble.
374
00:16:22,839 --> 00:16:25,599
If everything on your time, you
don't have to qualify, like I said.
375
00:16:25,599 --> 00:16:26,919
And all of it comes with guarantees.
376
00:16:26,919 --> 00:16:28,809
There's no guarantees on the HELOC side.
377
00:16:29,109 --> 00:16:31,329
You mentioned oh eight before when
we were talking about the housing
378
00:16:31,329 --> 00:16:33,149
crisis, Scott, that popped up.
379
00:16:33,459 --> 00:16:34,389
do I think this is gonna happen?
380
00:16:34,389 --> 00:16:34,899
I don't know.
381
00:16:34,899 --> 00:16:36,189
The truth is nobody knows the future.
382
00:16:36,189 --> 00:16:38,679
It's unknown, but I'm in a
position where it doesn't matter.
383
00:16:38,709 --> 00:16:41,349
I know my liquidity is gonna be there
and I can get to it when I need to.
384
00:16:41,349 --> 00:16:41,739
So.
385
00:16:42,079 --> 00:16:45,229
Overall, I think, you know, this is
a fairest comparison to this point.
386
00:16:45,469 --> 00:16:48,739
the big thing is we're talking about where
to warehouse our wealth and pay off debt.
387
00:16:48,919 --> 00:16:52,219
And I normally get in questions, excuse
me, about investing in the rest of it.
388
00:16:52,219 --> 00:16:54,769
So we are gonna tackle that, but at
this point, I think this is the best
389
00:16:54,769 --> 00:17:00,079
apples to apples comparison as far as
a product to implement the process that
390
00:17:00,079 --> 00:17:01,339
we talk about with infinite banking.
391
00:17:02,889 --> 00:17:06,909
And just like anything else,
it's always the choice of where
392
00:17:06,909 --> 00:17:08,589
you access your capital, right?
393
00:17:08,769 --> 00:17:14,469
So like I think, a very powerful
position to have a cash value
394
00:17:14,469 --> 00:17:18,909
available, of which I could finance
my entire home if I chose to yet.
395
00:17:19,614 --> 00:17:24,594
Since the bank refied me for a
15 year rate at like 2, 8, 5,
396
00:17:25,284 --> 00:17:28,284
I'm just gonna keep that and let
that sit there and let that roll.
397
00:17:28,284 --> 00:17:29,279
I'm gonna pay them their minimum.
398
00:17:30,204 --> 00:17:33,834
Because I think I can make more
than 2.85% with my own capital
399
00:17:33,834 --> 00:17:35,124
outside of their product.
400
00:17:35,424 --> 00:17:37,374
So let that sit, let that roll.
401
00:17:37,584 --> 00:17:40,704
Plus, once you get through the first
five year of any amortized product
402
00:17:40,884 --> 00:17:44,124
you've made, you've made the bulk
of the interest payment anyways.
403
00:17:44,214 --> 00:17:48,044
So unless you're in the first year or
two, there's no rush to get out of that.
404
00:17:48,254 --> 00:17:49,814
So once you're past the five year mark.
405
00:17:50,879 --> 00:17:52,349
I, I'm just gonna let that roll.
406
00:17:52,349 --> 00:17:55,919
I'm gonna pay the absolute minimum,
and now I have that pool of capital
407
00:17:55,919 --> 00:17:59,969
of which I can do whatever I'd
like to on my choice, on my terms.
408
00:18:00,239 --> 00:18:03,629
If at some point I decide I'd like to
take over the mortgage of the house.
409
00:18:03,809 --> 00:18:04,229
Cool.
410
00:18:04,529 --> 00:18:04,859
Great.
411
00:18:04,979 --> 00:18:06,334
It's an option, but why would I do that?
412
00:18:07,379 --> 00:18:10,259
Right now at the current rate
that it's previously set at.
413
00:18:10,259 --> 00:18:10,469
Right.
414
00:18:10,469 --> 00:18:14,609
So it's, it's, it's just like you
said, it's the, it's the ability for
415
00:18:14,609 --> 00:18:19,379
forced decisions or your choice to
do what you do with your capital.
416
00:18:19,599 --> 00:18:23,469
if I'd rather be in a position of
power than in a position of, oh, crap,
417
00:18:23,499 --> 00:18:27,339
X happened, now I can't make that
payment, and now someone comes and takes
418
00:18:27,339 --> 00:18:29,199
my house and now fill in the blank.
419
00:18:29,199 --> 00:18:31,659
All the things that the commercial
lender has the access to,
420
00:18:32,139 --> 00:18:33,579
you're not locked into that.
421
00:18:34,074 --> 00:18:36,204
When it's your capital and
you're making the choices.
422
00:18:37,378 --> 00:18:37,558
Okay.
423
00:18:38,158 --> 00:18:41,548
Um, so I know, and I we're starting
to get into the apples and oranges
424
00:18:41,548 --> 00:18:44,518
comparison, but I want to go here 'cause
I know somebody's listened to this.
425
00:18:44,548 --> 00:18:46,678
They're gonna bring it up and they're
gonna go, well, hold on a second.
426
00:18:46,888 --> 00:18:49,108
Instead of putting the
42 50 into the heloc.
427
00:18:49,743 --> 00:18:51,783
Or you know, in this case you're
reviewing the straight mortgage,
428
00:18:51,783 --> 00:18:53,043
putting it into policy premiums.
429
00:18:53,223 --> 00:18:54,813
Why not just go into a brokerage account?
430
00:18:55,353 --> 00:18:59,163
And so we actually don't say don't
invest, we're just saying sequence
431
00:18:59,163 --> 00:19:00,393
it through your policy first.
432
00:19:00,603 --> 00:19:03,753
And so the reason we say
that is you're also gonna get
433
00:19:03,753 --> 00:19:04,893
the long term growth, right.
434
00:19:05,193 --> 00:19:07,833
And I know with the brokerage there
are certain tax efficiencies can get if
435
00:19:07,833 --> 00:19:11,103
managed well, but those tax efficiencies
are there on the whole life side as well.
436
00:19:11,103 --> 00:19:13,233
If you, you know, when you set it
up, you don't even have to manage it.
437
00:19:13,233 --> 00:19:15,783
It's just there, there's
no extra work but.
438
00:19:16,563 --> 00:19:18,933
We're not telling you never to not
invest, it's just how you do it.
439
00:19:18,933 --> 00:19:20,223
So you have access to that capital.
440
00:19:20,223 --> 00:19:22,713
If you go straight with the
brokerage, the downside you're gonna
441
00:19:22,713 --> 00:19:23,973
see there is you have volatility.
442
00:19:23,973 --> 00:19:26,523
So let's, the whole point of this, I'm
assuming if you're doing the heloc,
443
00:19:26,523 --> 00:19:30,093
was not just to pay it down, but it
was to have access to capital as well.
444
00:19:30,303 --> 00:19:32,973
And so what happens if you're in
a down market all of a sudden?
445
00:19:33,048 --> 00:19:34,638
And now you need to access that capital.
446
00:19:34,638 --> 00:19:36,648
You probably don't wanna
sell with the loss.
447
00:19:36,698 --> 00:19:38,258
and that comes to sequence of return risk.
448
00:19:38,258 --> 00:19:41,048
If you have a little bit of capital on
your whole life side, and let's say the
449
00:19:41,048 --> 00:19:43,568
brokerage account is up and you do wanna
access it, great, go ahead and do it.
450
00:19:43,568 --> 00:19:46,718
But if there's a drop now you can access
your policy loans and avoid that sequence
451
00:19:46,718 --> 00:19:48,218
of return risk and let that keep going.
452
00:19:48,458 --> 00:19:50,468
And so you don't have that forced
selling and retirement is where
453
00:19:50,468 --> 00:19:51,758
we're gonna have there, but.
454
00:19:51,793 --> 00:19:53,173
And I know where this is gonna go next.
455
00:19:53,173 --> 00:19:54,223
They're go, well, hold on a second.
456
00:19:54,223 --> 00:19:55,183
I don't need to sell.
457
00:19:55,183 --> 00:19:56,863
I can do a security back line of credit.
458
00:19:57,013 --> 00:19:58,873
And so that's the next thing
where people are gonna go.
459
00:19:58,873 --> 00:20:01,663
So if we look at that, the advantage
is, and I totally get it, you can do
460
00:20:01,663 --> 00:20:03,583
liquidity without selling your assets.
461
00:20:03,583 --> 00:20:04,243
Stay invested.
462
00:20:04,243 --> 00:20:06,793
And if you, well, it's very
useful if you do it tactically.
463
00:20:07,153 --> 00:20:09,733
And the truth is, if you have a whole
life on the side as well, you can actually
464
00:20:09,733 --> 00:20:12,313
do the security back line of credit
and have that buffer in the background.
465
00:20:12,313 --> 00:20:14,173
But if you're just doing
security back line of credit,
466
00:20:14,173 --> 00:20:15,313
you don't have that buffer.
467
00:20:15,613 --> 00:20:18,133
And so the problem is, and we
talked about it, there's gonna be
468
00:20:18,133 --> 00:20:20,593
ups and downs, and when everything
is up and going swimmingly.
469
00:20:20,848 --> 00:20:23,848
The security back line of credit does
work very nicely, but the second you start
470
00:20:23,848 --> 00:20:26,878
having drops and the collateral reprices
with the market, you're in trouble.
471
00:20:27,148 --> 00:20:27,898
And so.
472
00:20:28,433 --> 00:20:30,923
If you're borrowing capacity
shrinks when there's a downturn, and
473
00:20:30,923 --> 00:20:32,123
that's when you need your capital.
474
00:20:32,333 --> 00:20:34,163
Is that really liquidity
at that point for you?
475
00:20:34,163 --> 00:20:34,943
Are you in trouble?
476
00:20:35,243 --> 00:20:36,113
We've talked about it before.
477
00:20:36,113 --> 00:20:37,343
You might have a margin call risk.
478
00:20:37,343 --> 00:20:40,673
So if you're really leveraging this
thing to the, you know, right to
479
00:20:40,673 --> 00:20:42,593
the limit, you're gonna have some
issues there and you're gonna have
480
00:20:42,593 --> 00:20:44,273
to come up with money elsewhere.
481
00:20:44,483 --> 00:20:46,523
And then the lender controls,
well, we already talked about this
482
00:20:46,523 --> 00:20:47,573
with banks and the rest of it.
483
00:20:47,573 --> 00:20:52,043
So the whole thing here is security back
line of credit is conditional, right?
484
00:20:52,043 --> 00:20:54,173
That liquidity is conditional
depending on what the market's
485
00:20:54,173 --> 00:20:57,573
doing, whereas with Infinite banking
and using a whole life product.
486
00:20:57,603 --> 00:20:58,593
It's contractual.
487
00:20:58,623 --> 00:21:00,933
It's gonna be there regardless
of what the market is doing.
488
00:21:01,083 --> 00:21:03,303
And so this is kind of the
one phrase to sum it up.
489
00:21:03,363 --> 00:21:06,843
If the liquidity disappears when
markets fall, it's not real liquidity.
490
00:21:07,833 --> 00:21:09,243
It's situational dependent.
491
00:21:10,289 --> 00:21:10,954
Amen to that.
492
00:21:11,284 --> 00:21:11,794
Well said.
493
00:21:13,271 --> 00:21:13,661
Yep.
494
00:21:14,081 --> 00:21:14,651
Pretty much.
495
00:21:15,119 --> 00:21:18,149
Yeah, and, and so, but with all this
stuff here, I wanna be really clear.
496
00:21:18,179 --> 00:21:21,479
We're not telling people to pick
whole life or something else.
497
00:21:21,479 --> 00:21:22,469
It's an and asset.
498
00:21:22,469 --> 00:21:24,959
So it could be brokerage,
it could be whatever it is.
499
00:21:25,019 --> 00:21:25,589
Absolutely.
500
00:21:25,589 --> 00:21:28,799
Go invest, make money, having your
money just sit in a whole life.
501
00:21:28,799 --> 00:21:30,809
Policy is not practicing infinite banking.
502
00:21:31,154 --> 00:21:31,904
That is not it.
503
00:21:31,964 --> 00:21:33,674
At that point, you just
have a whole life policy.
504
00:21:34,004 --> 00:21:36,764
We leverage that policy to go
do whatever we're gonna do,
505
00:21:36,764 --> 00:21:39,914
so leverage it and go do those
investments and make money elsewhere.
506
00:21:40,124 --> 00:21:42,434
But it's gonna be in a position
when you have that whole life policy
507
00:21:42,434 --> 00:21:43,394
where you're gonna have that buffer.
508
00:21:43,394 --> 00:21:45,194
So if something does happen,
you're not in trouble.
509
00:21:45,614 --> 00:21:46,504
That's really where
we're getting at There.
510
00:21:47,546 --> 00:21:51,266
Nelson's laws is the last
one is use it or lose it, so,
511
00:21:51,349 --> 00:21:52,309
You said or lose it.
512
00:21:52,309 --> 00:21:52,489
That's
513
00:21:52,676 --> 00:21:53,036
yep.
514
00:21:53,149 --> 00:21:55,579
and know that, that there's a
startup cost there too, right?
515
00:21:55,579 --> 00:21:59,479
You don't jump into a business and go,
Hey, I'm gonna drop down 10 grand and I'm
516
00:21:59,479 --> 00:22:03,289
gonna put all 10 grand into everything
that I need for assets for that company.
517
00:22:03,549 --> 00:22:05,949
There's a little startup cost
involved, so make sure you're
518
00:22:05,949 --> 00:22:07,029
planning for that accordingly.
519
00:22:07,029 --> 00:22:08,019
Think long term.
520
00:22:08,169 --> 00:22:09,219
Think long range.
521
00:22:09,429 --> 00:22:12,669
Plan this out because you're definitely
ahead of the curve when you're,
522
00:22:12,729 --> 00:22:13,779
when you're doing so in planning.
523
00:22:15,684 --> 00:22:16,494
That's exactly it.
524
00:22:16,604 --> 00:22:18,074
yeah, I mean, I, I couldn't
have said it better.
525
00:22:18,129 --> 00:22:21,069
if you can think long range and see
what's going on here, it's very hard
526
00:22:21,069 --> 00:22:24,609
to beat this scenario, especially with
the peace of mind that you get with it.
527
00:22:25,119 --> 00:22:28,424
You know, you, 'cause you, there are gonna
be downturns, there's gonna be phenomenal
528
00:22:28,424 --> 00:22:31,514
upturns as well, but it's those downturns
when most people lose sleep at night
529
00:22:31,514 --> 00:22:32,474
and that's when people are in trouble.
530
00:22:33,318 --> 00:22:36,498
that in mind, I decided to look at
kind of that lost decade, right?
531
00:22:36,708 --> 00:22:39,438
You were bringing up oh eight before
and that was a long time to recover.
532
00:22:39,438 --> 00:22:43,548
So if you were to time this very poorly,
not see what's going on, let's say you
533
00:22:43,548 --> 00:22:47,868
have a ton of, uh, in your whole life
policy and you decide to deploy that
534
00:22:47,868 --> 00:22:50,838
into the market and then boom or whatever
investment, we just keep using the market.
535
00:22:50,838 --> 00:22:53,448
'cause I think it's one of the
easier things for what most listeners
536
00:22:53,448 --> 00:22:55,668
are looking at, but it could
be any investment and it drops.
537
00:22:56,058 --> 00:22:56,998
But let's say you have
a market that drops.
538
00:22:58,290 --> 00:22:58,620
I say.
539
00:22:58,620 --> 00:23:01,230
It seems to be what everybody
compares this to as well.
540
00:23:01,230 --> 00:23:01,680
So
541
00:23:02,268 --> 00:23:02,538
Right.
542
00:23:02,628 --> 00:23:05,538
And it, it's a poor comparison, but
just kind of showing how it works.
543
00:23:05,538 --> 00:23:08,898
Can we, we've kind of hit on that, but
let's say the market does drop 30%.
544
00:23:08,898 --> 00:23:11,358
You have that flat decade after
oh eight that we're talking about.
545
00:23:11,688 --> 00:23:14,898
And quite honestly, let's see,
the policy loan rate is 7%, right?
546
00:23:14,898 --> 00:23:17,808
And your brokerage is maybe
getting a, you know, zero to 2%.
547
00:23:17,808 --> 00:23:20,748
And quite honestly, if you do have a drop
like that, I don't think the policy rate
548
00:23:20,748 --> 00:23:24,078
is gonna be 7% is probably gonna be lower
based on what we've seen in the past.
549
00:23:24,288 --> 00:23:25,788
But I'm trying to put IBC.
550
00:23:26,283 --> 00:23:28,323
In the least favorable position.
551
00:23:28,323 --> 00:23:30,393
So people have a tougher
time arguing against it.
552
00:23:30,843 --> 00:23:34,293
And so if the brokerage does drop early
and your policy loans are growing, it's
553
00:23:34,293 --> 00:23:37,503
gonna feel terrible emotionally, but
you're not gonna have the margin calls
554
00:23:37,503 --> 00:23:38,763
like security back line of credit.
555
00:23:38,913 --> 00:23:41,583
You're not gonna have to force, you're
not gonna be forced into selling it.
556
00:23:41,583 --> 00:23:43,023
You're not have any kind of tax events.
557
00:23:43,053 --> 00:23:46,593
And so time actually becomes
your ally here, hence long range
558
00:23:46,593 --> 00:23:49,323
thinking, which we've been talking
about nonstop in this entire thing.
559
00:23:49,713 --> 00:23:52,173
And so you have a couple
ways you could handle it.
560
00:23:52,173 --> 00:23:53,853
You could at least just
service the interest.
561
00:23:54,198 --> 00:23:58,098
Right, or you can actually ignore it
completely and that it will be a little
562
00:23:58,098 --> 00:24:00,708
bit worse in the long run because
you're gonna have to service more debt.
563
00:24:00,978 --> 00:24:03,708
But at the end of the day, it's still
not gonna completely collapse as long
564
00:24:03,708 --> 00:24:04,908
as you don't let it get away from you.
565
00:24:05,148 --> 00:24:08,028
Really what's gonna set this up
is you're not 100% leveraging
566
00:24:08,028 --> 00:24:10,708
every single loan, and so the way
I would do this is probably have.
567
00:24:11,413 --> 00:24:14,623
X amount of my loan out, but I would
definitely have a buffer, whether that's
568
00:24:14,623 --> 00:24:16,272
emergency savings or something like that.
569
00:24:16,273 --> 00:24:20,263
If you're completely leveraging this
thing to the tilt and to putting it
570
00:24:20,263 --> 00:24:22,183
in something where things don't go
well, you're gonna be in trouble,
571
00:24:22,183 --> 00:24:23,623
then obviously that's a bad thing.
572
00:24:23,623 --> 00:24:26,143
And we talk about human behavior and
talking to your practitioners and stuff
573
00:24:26,143 --> 00:24:27,283
to understand what you're getting into.
574
00:24:27,283 --> 00:24:29,203
But the big thing is here is.
575
00:24:30,288 --> 00:24:32,718
Based on the amount of money you would
take from the security backline of credit
576
00:24:32,718 --> 00:24:36,528
versus what you would take from policies
through practicing infinite banking.
577
00:24:36,738 --> 00:24:40,157
If you have a downturn in the market,
especially a 30% one like this,
578
00:24:40,398 --> 00:24:42,858
you're probably gonna fall apart with
security, backline of credit that's
579
00:24:42,858 --> 00:24:45,588
gonna get called away unless you
have a source of funding elsewhere.
580
00:24:45,588 --> 00:24:47,118
But I'm assuming all the funding is here.
581
00:24:47,328 --> 00:24:50,238
However, with IBC, you're gonna
survive and make it back, and so
582
00:24:50,238 --> 00:24:53,356
the goal here isn't to make leverage
work in every single decade.
583
00:24:53,741 --> 00:24:56,176
But it's to make sure that when
you have a drop in one of 'em
584
00:24:56,176 --> 00:24:58,546
like this and it's really bad, it
doesn't kill you and it will not
585
00:24:58,546 --> 00:24:59,986
kill you if you're practicing IBC.
586
00:24:59,986 --> 00:25:01,846
So that's a big lesson learned
to take away from here.
587
00:25:03,405 --> 00:25:03,645
Okay.
588
00:25:04,935 --> 00:25:07,755
so really where this all kind of comes
together and we're starting to get
589
00:25:07,755 --> 00:25:10,125
to be a little bit broken record, but
I think it does really help us when
590
00:25:10,125 --> 00:25:12,765
you get to that retirement point in
life and you're figuring out, hey,
591
00:25:12,765 --> 00:25:14,385
you know, you're getting to the.
592
00:25:14,760 --> 00:25:17,520
Area where you're, you know, for us
in the career we're in, you're at
593
00:25:17,520 --> 00:25:21,300
65 to 70 type time period, and all
of a sudden you have a drop there.
594
00:25:21,480 --> 00:25:24,920
The nice thing is when you have this
account, this infinite banking, set
595
00:25:24,920 --> 00:25:27,770
up with a whole life policy, you're
not gonna need to force selling.
596
00:25:27,950 --> 00:25:29,930
You're not gonna have
these massive tax spikes.
597
00:25:30,080 --> 00:25:31,880
You're not gonna get into
an issue where you have.
598
00:25:32,295 --> 00:25:32,685
Irma.
599
00:25:32,685 --> 00:25:36,375
So income related monthly adjustment
amount, meaning that, you know, if you
600
00:25:36,375 --> 00:25:38,895
have a drop or something like that and
you need to make up for it elsewhere,
601
00:25:38,895 --> 00:25:41,835
you're not hitting these accounts and
crushing 'em when they're down, hence
602
00:25:41,835 --> 00:25:43,665
the sequence return risk issue as well.
603
00:25:44,025 --> 00:25:46,905
And so really the way this works
is you combine it, and this is
604
00:25:46,905 --> 00:25:48,255
why we call it an And asset.
605
00:25:48,435 --> 00:25:50,835
When you have one of these up
markets, use that brokerage
606
00:25:50,835 --> 00:25:52,005
account, take advantage of it.
607
00:25:52,005 --> 00:25:55,515
But when you have the down market, use
the loans against your whole life policy.
608
00:25:55,575 --> 00:25:57,975
And then when the markets recover,
use that brokerage account to
609
00:25:57,975 --> 00:26:00,165
then not only live on it, but
pay back the loans as well.
610
00:26:00,165 --> 00:26:01,695
And you're gonna be in
much better position.
611
00:26:01,815 --> 00:26:02,860
And there's graphs out there.
612
00:26:02,860 --> 00:26:05,380
If you just Google sequence a return
risk and see what it's like if
613
00:26:05,380 --> 00:26:08,140
you hit these at your retirement
or any kind of brokerage account.
614
00:26:08,260 --> 00:26:10,780
It doesn't even have to be retirement, but
any account at the wrong time when there's
615
00:26:10,780 --> 00:26:13,060
a downturn, it just crushes the long run.
616
00:26:13,155 --> 00:26:13,995
Performance of it.
617
00:26:13,995 --> 00:26:17,355
You need to be able to leave that
investment in the market or wherever
618
00:26:17,355 --> 00:26:18,360
it is so that you don't interrupt it.
619
00:26:20,263 --> 00:26:21,273
Yeah, that's perfectly said.
620
00:26:21,603 --> 00:26:24,993
I've had a lot of different conversations
about this and really at the end of the
621
00:26:24,993 --> 00:26:26,403
day, just like we said at the beginning.
622
00:26:27,123 --> 00:26:29,613
Who's in the control
of your capital, right?
623
00:26:29,613 --> 00:26:33,123
If the market is way up and you
wanna start pulling some of that
624
00:26:33,123 --> 00:26:34,713
off in the retirement years, great.
625
00:26:34,983 --> 00:26:38,883
Keep the pool that you've created setting
right where it is continually growing.
626
00:26:39,363 --> 00:26:44,343
If the market is way down, maybe you start
to pull from the pool that you've created,
627
00:26:44,343 --> 00:26:50,613
the one you control, and allow that
sequence return risk to, itself back out.
628
00:26:50,853 --> 00:26:53,193
Maybe it just stays there and
stays level for a whole decade.
629
00:26:53,193 --> 00:26:55,713
Like you were talking earlier,
maybe it slowly creeps back up and
630
00:26:55,713 --> 00:26:59,473
either way you were not forced to
pull out of this, brokerage account.
631
00:27:00,118 --> 00:27:04,298
At some time that they said you're
supposed to, you're able to pick
632
00:27:04,358 --> 00:27:05,858
when you control your capital.
633
00:27:05,858 --> 00:27:10,628
So I, you, you said broken record and,
and, and continually beating that drum.
634
00:27:10,718 --> 00:27:11,738
Yes, yes.
635
00:27:11,738 --> 00:27:12,518
That's what we're doing.
636
00:27:12,518 --> 00:27:15,188
do you control your capital
at the end of the day?
637
00:27:15,188 --> 00:27:20,118
That that's what the whole purpose of IBC
is, if you, if you practice this style of,
638
00:27:20,298 --> 00:27:22,118
of, of, just set up for your household.
639
00:27:23,033 --> 00:27:24,473
You're in control of your capital.
640
00:27:24,563 --> 00:27:26,423
That's, that's the goal of all of it.
641
00:27:26,513 --> 00:27:28,883
And so who, who's in
control of your capital?
642
00:27:30,081 --> 00:27:32,901
And, and you know, we hit on
the qualified there, but the
643
00:27:32,901 --> 00:27:34,131
goal was not to mix that in.
644
00:27:34,131 --> 00:27:36,951
It's just any kind of investment
or brokerage qualified, I think
645
00:27:36,951 --> 00:27:37,881
is the best way to look at it.
646
00:27:37,911 --> 00:27:40,941
'cause people feel like they have to
live off that at that point, 65 or on.
647
00:27:41,181 --> 00:27:43,761
But if you have a brokerage account
and you know, you're where we are
648
00:27:43,761 --> 00:27:46,641
right now and we have a drop and you
were saving that for something, it
649
00:27:46,641 --> 00:27:49,701
could have been a down payment on a
home or a second home or whatever toy
650
00:27:49,701 --> 00:27:53,031
you have or something serious that was
coming up and it's in a dropped market.
651
00:27:53,451 --> 00:27:55,971
You're gonna crush the long-term
performance of that asset
652
00:27:55,971 --> 00:27:59,331
versus having the policy loan to
actually, you know, weather that
653
00:27:59,331 --> 00:28:00,711
storm and wait until it recovers.
654
00:28:02,067 --> 00:28:02,367
Right.
655
00:28:02,577 --> 00:28:02,697
And
656
00:28:02,718 --> 00:28:03,448
If you're in a, if you're in a,
657
00:28:03,717 --> 00:28:04,077
we could,
658
00:28:04,863 --> 00:28:05,023
go ahead.
659
00:28:05,037 --> 00:28:06,177
if till the day ends, right?
660
00:28:06,177 --> 00:28:10,012
But if, if, Maybe, maybe you've been
putting into the brokerage account
661
00:28:10,132 --> 00:28:13,732
and or the qualified plans for the
last 30 years and it's up right now.
662
00:28:14,182 --> 00:28:15,802
Well, now you go, okay,
cool, I can retire.
663
00:28:16,162 --> 00:28:19,562
Well, what happens five years from
now when that tanks, I'm not saying it
664
00:28:19,562 --> 00:28:24,602
will, I'm not predicting the market,
but what, are you still living the
665
00:28:24,602 --> 00:28:26,162
same lifestyle that you have right now?
666
00:28:26,492 --> 00:28:28,952
Or are you switching to,
ramen and beef jerky?
667
00:28:28,952 --> 00:28:32,082
Because that's the only thing that can
pull in your, pull you in your weak, what?
668
00:28:32,082 --> 00:28:34,502
So it's, it's who's in control of
your capital at the end of the day.
669
00:28:36,206 --> 00:28:37,296
It's a volatility buffer.
670
00:28:37,296 --> 00:28:40,566
It's very simple and it makes it so
that you can weather these storms
671
00:28:40,656 --> 00:28:43,281
and they're coming, you know,
your, the up times are coming too.
672
00:28:44,637 --> 00:28:48,387
you, can, you could be able to take
advantage of these storms too, 'cause you
673
00:28:48,387 --> 00:28:53,172
could pull out just a little bit extra,
put it in your after tax brokerage.
674
00:28:54,087 --> 00:28:56,397
And now where were you gonna take it from?
675
00:28:56,397 --> 00:28:58,737
Are you gonna take a security
back line of credit on a down
676
00:28:58,737 --> 00:29:00,357
market to put back into something?
677
00:29:00,407 --> 00:29:02,177
no, that's not an option.
678
00:29:02,597 --> 00:29:05,957
But you could take extra outta
your whole life policy and put it
679
00:29:05,957 --> 00:29:07,997
into that brokerage on the upswing.
680
00:29:09,437 --> 00:29:11,597
it goes back to that money
doing more than one thing.
681
00:29:11,597 --> 00:29:14,417
You now, you're double dipping
in a really good spot too.
682
00:29:16,579 --> 00:29:16,799
Yep.
683
00:29:17,113 --> 00:29:19,123
So just to sum it up, so
we've got everything here.
684
00:29:19,123 --> 00:29:20,653
So people are kind of on
the same sheet of music.
685
00:29:20,653 --> 00:29:23,743
'cause I know we were talking about a
lot of stuff, but the mortgage, that is
686
00:29:23,743 --> 00:29:26,953
gonna be the cheapest option if you're
just looking at paying off the debt.
687
00:29:27,193 --> 00:29:30,373
But the problem is you don't
have liquidity at that point and
688
00:29:30,373 --> 00:29:32,983
you're at the mercy of the bank
to go access that down the road.
689
00:29:33,613 --> 00:29:35,893
The Velocity banking or
the first lien heloc.
690
00:29:35,923 --> 00:29:38,923
Looking at the math here, it really
doesn't add up unless we talked about it.
691
00:29:38,923 --> 00:29:41,623
You've got some other debt on the
outside that you're trying to tackle
692
00:29:41,713 --> 00:29:44,623
and for whatever reason, this is the
only instrument that you have that
693
00:29:44,623 --> 00:29:46,513
you can use to actually pay that off.
694
00:29:46,933 --> 00:29:48,673
looking at the IBC type setup.
695
00:29:48,853 --> 00:29:52,063
I think it's the best of both worlds
because not only are you paying down
696
00:29:52,063 --> 00:29:55,243
the debt, but you're setting yourself
up for future liquidity and growth.
697
00:29:55,243 --> 00:29:58,723
And you have this asset that is gonna
be having so many benefits for not
698
00:29:58,723 --> 00:30:01,123
only you, but future generations
as well if you do it right.
699
00:30:01,463 --> 00:30:03,753
in this case here, we looked at
the brokerage, but it could be
700
00:30:03,753 --> 00:30:05,073
any kind of investment vehicle.
701
00:30:05,073 --> 00:30:05,493
I agree.
702
00:30:05,493 --> 00:30:06,393
You do need to invest.
703
00:30:06,393 --> 00:30:08,343
You do need to have some
kind of growth out there.
704
00:30:08,343 --> 00:30:11,553
If you are just letting money sit in a
whole life policy, you're not doing this,
705
00:30:11,703 --> 00:30:13,413
so you need to figure out what that is.
706
00:30:13,843 --> 00:30:16,303
Right ratio is where do you
wanna deploy that capital?
707
00:30:16,643 --> 00:30:17,783
and for me, the security
back line of Reddit.
708
00:30:18,798 --> 00:30:22,638
I could see that potentially working
if I had enough whole life on the
709
00:30:22,638 --> 00:30:25,608
side and for some reason the rate
was better there, and if something
710
00:30:25,608 --> 00:30:28,608
went wrong, then I could go ahead and
use my whole life policy to tackle
711
00:30:28,608 --> 00:30:29,868
that if something went outta control.
712
00:30:29,868 --> 00:30:33,108
But if that is my sole source
that I'm relying on, that's
713
00:30:33,108 --> 00:30:34,068
where it really scares me.
714
00:30:34,368 --> 00:30:36,168
And so we've talked about that before.
715
00:30:36,198 --> 00:30:38,478
You know, if You go out on
the market, you see something.
716
00:30:38,998 --> 00:30:39,868
Is out there, that's better.
717
00:30:39,868 --> 00:30:42,508
We're not stopping you from doing it,
but you're doing it from a position
718
00:30:42,508 --> 00:30:45,448
of power because you have that capital
in your, in your whole life policy.
719
00:30:45,898 --> 00:30:48,928
And so the whole kind of thing to
put this together, wealth isn't
720
00:30:48,928 --> 00:30:50,878
built by maximizing returns.
721
00:30:50,908 --> 00:30:53,248
It's built by minimizing
the forced mistakes.
722
00:30:53,398 --> 00:30:57,358
And when you have this buffer there, you
can force or you can make it so that you
723
00:30:57,358 --> 00:30:59,278
don't have to make those forced mistakes.
724
00:30:59,278 --> 00:31:01,468
And you can weather that storm and
get to the point where you're back on
725
00:31:01,468 --> 00:31:04,318
your feet and then riding it out while
everybody else is still recovering.
726
00:31:05,599 --> 00:31:06,049
Well said.
727
00:31:06,365 --> 00:31:08,525
when the notes came out,
I love that last quote.
728
00:31:08,915 --> 00:31:10,920
That's a really good one.
729
00:31:13,034 --> 00:31:13,304
Yep.
730
00:31:14,294 --> 00:31:18,454
one, last thought was, thank you Andy
and Scott for doing the deep dive on
731
00:31:18,454 --> 00:31:22,024
this, because I've looked at some of
these products on a real scratch the
732
00:31:22,024 --> 00:31:24,994
surface type of level, and I look at
it and I go, yeah, that doesn't work.
733
00:31:24,994 --> 00:31:26,614
But I never did the deep dive to see.
734
00:31:27,274 --> 00:31:28,564
Does this really make sense?
735
00:31:28,564 --> 00:31:30,574
Dollars for dollars comparison.
736
00:31:30,574 --> 00:31:31,444
Try to get it to apples.
737
00:31:31,444 --> 00:31:32,044
To apples.
738
00:31:32,284 --> 00:31:33,784
And kudos to you guys for doing that.
739
00:31:33,814 --> 00:31:36,524
'cause that's, I mean, the numbers
you came up with, the research
740
00:31:36,524 --> 00:31:38,774
that shows there, it's pretty
straightforward, pretty clear.
741
00:31:38,994 --> 00:31:40,164
but I, I never took it that far.
742
00:31:40,164 --> 00:31:40,794
So kudos.
743
00:31:41,603 --> 00:31:42,023
It's neat.
744
00:31:42,023 --> 00:31:42,383
I
745
00:31:42,915 --> 00:31:43,665
credit for that.
746
00:31:43,695 --> 00:31:46,545
That was, Andy's math and
747
00:31:47,243 --> 00:31:47,813
I like it Now.
748
00:31:47,813 --> 00:31:49,613
If something goes, if something
goes wrong, I like this.
749
00:31:49,613 --> 00:31:50,243
No, it was all Andy.
750
00:31:50,243 --> 00:31:50,753
It wasn't me.
751
00:31:53,148 --> 00:31:53,718
That's perfect.
752
00:31:53,778 --> 00:31:56,988
No, but actually what did this, and
I like it, is you have people that
753
00:31:56,988 --> 00:31:58,398
are trying to rethink their thinking.
754
00:31:58,398 --> 00:31:59,508
They're looking at different stuff.
755
00:31:59,508 --> 00:32:01,068
They're not just taking our word for it.
756
00:32:01,368 --> 00:32:03,798
And I didn't, you know, quite
asking the people bring stuff up.
757
00:32:03,798 --> 00:32:04,668
I don't shoot it down.
758
00:32:04,668 --> 00:32:06,678
I actually do look into
it to see what's going on.
759
00:32:06,678 --> 00:32:08,808
And we've said it before, if
there's something that makes
760
00:32:08,808 --> 00:32:10,098
sense, I'm gonna go do it.
761
00:32:10,368 --> 00:32:11,658
I wanted to see if this made sense.
762
00:32:11,658 --> 00:32:14,298
And for me, in my end
game that we talked about.
763
00:32:14,593 --> 00:32:15,913
This does not make sense.
764
00:32:16,003 --> 00:32:18,433
I could see, like we said, for
some other people, there might be a
765
00:32:18,433 --> 00:32:19,783
situation where it does make sense.
766
00:32:19,783 --> 00:32:20,262
There's no one
767
00:32:20,323 --> 00:32:23,203
Size fits all, but I'm gonna keep
doing what I've been doing and I, I
768
00:32:23,203 --> 00:32:25,573
think it's gonna probably be the best
for me and my family in the long run.
769
00:32:26,910 --> 00:32:27,390
Awesome.
770
00:32:27,934 --> 00:32:28,084
All right.
771
00:32:28,084 --> 00:32:28,624
Thanks guys.
772
00:32:28,684 --> 00:32:30,814
Hopefully we'll see you again on
another podcast, and please tell
773
00:32:30,814 --> 00:32:31,744
your friends if you like what you're
774
00:32:33,605 --> 00:32:33,965
Cheers.
775
00:32:33,965 --> 00:32:34,385
Have a good day.
776
00:32:38,413 --> 00:32:40,213
Thanks for tuning into
the infinite mindset.
777
00:32:40,693 --> 00:32:43,783
If you found today's conversation
valuable, share it with someone who's
778
00:32:43,783 --> 00:32:47,293
ready to think differently about
finances, and don't forget to subscribe.
779
00:32:47,653 --> 00:32:50,413
Your journey to financial freedom
starts with the right mindset.
00:00:03,090 --> 00:00:07,470
Welcome to the Infinite Mindset Podcast,
the show where we explore the power of
2
00:00:07,470 --> 00:00:11,370
the infinite banking concept and how to
take control of your financial future.
3
00:00:11,940 --> 00:00:15,240
I'm your host Andy, along with
Scott and frequent guest Jared.
4
00:00:15,810 --> 00:00:19,200
We're here to help you think
bigger, build smarter, and
5
00:00:19,200 --> 00:00:21,090
create freedom on your own terms.
6
00:00:21,270 --> 00:00:22,170
Let's get started.
7
00:00:27,797 --> 00:00:30,317
Hey, welcome everyone to another
episode of the Infinite Mindset
8
00:00:30,317 --> 00:00:32,867
Podcast, myself, Jared, and Scott today.
9
00:00:33,647 --> 00:00:37,157
Uh, yeah, we'll be jumping into first lien
HELOCs and some other stuff here as well.
10
00:00:37,157 --> 00:00:38,477
Before we do that, what's
going on with you guys?
11
00:00:39,398 --> 00:00:40,148
Spinning Jared or,
12
00:00:40,231 --> 00:00:40,801
first
13
00:00:41,263 --> 00:00:41,983
me first.
14
00:00:42,103 --> 00:00:43,933
I got a, I got a lot going on.
15
00:00:44,293 --> 00:00:45,988
got all the stuff from, From the NNI.
16
00:00:46,058 --> 00:00:47,408
so I started going through that.
17
00:00:47,588 --> 00:00:50,228
I got the, they break it
into three sections, so I'm
18
00:00:50,228 --> 00:00:51,398
through the first section.
19
00:00:51,788 --> 00:00:55,478
I got some reading on a book that's called
How Privatized Banking Really Works.
20
00:00:56,228 --> 00:00:58,748
there's, there's four chapters
in there that I gotta read.
21
00:00:58,748 --> 00:01:02,858
I started reading those last night just
'cause it's easier that with, and it is
22
00:01:02,858 --> 00:01:05,048
to lug everything else along with me.
23
00:01:05,048 --> 00:01:06,098
The binder's pretty thick.
24
00:01:06,098 --> 00:01:06,908
There's a lot of material there.
25
00:01:07,778 --> 00:01:10,598
But, basically it's just
starting with the problem.
26
00:01:10,598 --> 00:01:13,238
There's, there, there's
actually so far very little to
27
00:01:13,238 --> 00:01:15,338
do with life insurance itself.
28
00:01:15,428 --> 00:01:19,808
They're addressing the problem, how
money works, you know, what it, what
29
00:01:19,808 --> 00:01:23,738
it does, what it doesn't do, how it
just gets basically any more created
30
00:01:23,738 --> 00:01:27,888
at a thin air after, dismantling
everything from the Great Depression.
31
00:01:28,338 --> 00:01:31,508
So it's, it's a very interesting read.
32
00:01:31,628 --> 00:01:33,308
the first section's pretty interesting.
33
00:01:33,683 --> 00:01:39,623
To see exactly why we are where we
are, how the housing bubble popped.
34
00:01:40,183 --> 00:01:45,223
it's, it's all, it's all exact opposite
of what I was taught in my macroeconomics
35
00:01:45,223 --> 00:01:49,693
class in college, which is kind of funny
'cause our professor, I'm kind of rambling
36
00:01:49,693 --> 00:01:54,538
at this point, but our professor was a
huge, huge supporter of Alan Greenspan.
37
00:01:55,333 --> 00:01:58,533
then you start reading about and that
was just a small part of what happened
38
00:01:58,533 --> 00:02:03,093
in 2008, but you just start reading like
the different figures and how things
39
00:02:03,093 --> 00:02:07,323
happen, why they happen, and all the stuff
that was at play to make that happen.
40
00:02:08,013 --> 00:02:10,653
And it's, it's interesting
to say the least.
41
00:02:10,683 --> 00:02:16,173
So, but I guess to to n NI's point,
you gotta understand the problem so you
42
00:02:16,173 --> 00:02:18,423
understand why you're doing the solution.
43
00:02:18,453 --> 00:02:20,103
So it's good.
44
00:02:21,170 --> 00:02:21,650
I like it.
45
00:02:21,650 --> 00:02:24,000
I when, you know, looking on that book,
it's been a little bit since I read
46
00:02:24,000 --> 00:02:26,790
it now, but you've got a PhD level.
47
00:02:27,615 --> 00:02:30,885
Economist that has a different take
on how things work compared to your
48
00:02:30,885 --> 00:02:34,215
standard economists that you're gonna
have if you go to most universities.
49
00:02:34,575 --> 00:02:37,395
And so it's never to say
anybody's a hundred percent right?
50
00:02:37,395 --> 00:02:39,975
There's always different things and
variables and opinions that you're
51
00:02:39,975 --> 00:02:42,975
gonna see, but I thought it was
refresh refreshing to get a different
52
00:02:42,975 --> 00:02:46,035
take on it, and not just the bog
standard, this is how things work.
53
00:02:46,035 --> 00:02:49,665
It opens your eyes a little bit to let you
do your own analysis, compare everything
54
00:02:49,665 --> 00:02:52,050
you've seen, and then try to come to your
own conclusion as to what's going on.
55
00:02:53,773 --> 00:02:57,783
From an economist standpoint, it's
pretty cool that they cover different
56
00:02:57,783 --> 00:03:01,753
schools of thought and why some
parts of it work, but the whole, the
57
00:03:01,753 --> 00:03:04,498
whole thing doesn't work, but the
good points and bad points of each.
58
00:03:05,413 --> 00:03:08,513
And exactly, what was involved
to get us where we are.
59
00:03:08,633 --> 00:03:12,923
So, I don't think there's a biased
opinion one way or another on
60
00:03:12,923 --> 00:03:13,883
the three schools of thought.
61
00:03:13,883 --> 00:03:18,273
I mean, obviously the, the Austrian School
of Thought, is kind of where we're at, but
62
00:03:18,723 --> 00:03:21,123
I, they don't really knock the other ones.
63
00:03:21,173 --> 00:03:25,193
it's, it's, this is what it is, this
is what works, this is what doesn't,
64
00:03:25,553 --> 00:03:29,433
and this is why we, look at this
side of things more specifically.
65
00:03:29,823 --> 00:03:31,383
So I thought it was really good.
66
00:03:32,463 --> 00:03:33,303
Thus far anyway.
67
00:03:33,361 --> 00:03:35,951
was one of my, that was one of my
favorite parts about going through that,
68
00:03:36,371 --> 00:03:41,231
that class or that course is, Nelson
doesn't say, rethink your thinking and
69
00:03:41,231 --> 00:03:43,421
then rethink your thinking like this.
70
00:03:43,811 --> 00:03:45,396
He just says, rethink
your thinking and he.
71
00:03:45,641 --> 00:03:46,811
Here's what's out there.
72
00:03:47,201 --> 00:03:47,471
He
73
00:03:47,493 --> 00:03:47,763
Mm-hmm.
74
00:03:47,951 --> 00:03:49,331
go analyze it for yourself.
75
00:03:49,541 --> 00:03:51,611
He doesn't say, this is
how you should think.
76
00:03:51,671 --> 00:03:54,251
He just says, here's some of
the stuff that's out there.
77
00:03:54,251 --> 00:03:55,301
Let me provide the data.
78
00:03:55,511 --> 00:03:59,601
So, it's interesting if you get into
some of the, i, the pundits or the,
79
00:03:59,601 --> 00:04:03,461
the folks that are gonna to ppo, the
system or the idea, they're, they're
80
00:04:03,461 --> 00:04:07,991
unwilling to, to go rethink their
thinking or just step outside the box
81
00:04:07,991 --> 00:04:09,161
and look at something a different way.
82
00:04:09,641 --> 00:04:10,091
So.
83
00:04:11,021 --> 00:04:12,581
If that's the way some folks are cool.
84
00:04:12,611 --> 00:04:13,391
Not gonna hate on 'em.
85
00:04:13,451 --> 00:04:16,511
But at the same time, if you do
take the time to analyze what's
86
00:04:16,511 --> 00:04:18,401
out there, it's pretty eyeopening.
87
00:04:18,401 --> 00:04:19,871
It's, it's a, it's clear.
88
00:04:22,290 --> 00:04:23,135
I couldn't agree more.
89
00:04:23,135 --> 00:04:24,215
It's very well said.
90
00:04:25,075 --> 00:04:27,395
we'll keep this moving just in
the interest of time, to get this
91
00:04:27,395 --> 00:04:30,095
going, but it's kinda the same
thing with rethinking your thinking.
92
00:04:30,095 --> 00:04:33,755
It's how we kind of approach debt
and financing and how we actually
93
00:04:33,755 --> 00:04:35,195
fund the different things in life.
94
00:04:35,195 --> 00:04:38,855
Those major purchases, whether investments
or, you know, cars or whatever, it's.
95
00:04:39,665 --> 00:04:41,405
so with that in mind, we
actually had somebody brought
96
00:04:41,405 --> 00:04:42,665
up, I, I really appreciated it.
97
00:04:42,715 --> 00:04:46,525
first lien HELOCs and the advantages
of doing that or disadvantages
98
00:04:46,525 --> 00:04:48,355
and then comparing that with IBC.
99
00:04:48,415 --> 00:04:51,385
And so, you know, stepping back
for a second, we have the process,
100
00:04:51,385 --> 00:04:52,555
which is what this guy is doing.
101
00:04:52,555 --> 00:04:55,105
You're looking at something, you're
leveraging it in the hopes that
102
00:04:55,105 --> 00:04:56,725
that's gonna build in the background.
103
00:04:56,975 --> 00:04:59,555
so you don't interrupt that on,
excuse me, you don't interrupt
104
00:04:59,555 --> 00:05:01,025
the uninterrupted compound growth.
105
00:05:01,625 --> 00:05:03,845
However, there's different
products that we can use.
106
00:05:03,845 --> 00:05:05,705
And so we're gonna get into the
products a little bit and just
107
00:05:05,705 --> 00:05:07,265
compare that first lien heloc.
108
00:05:07,470 --> 00:05:09,390
To IBC, and then a few
other things as well.
109
00:05:09,930 --> 00:05:12,250
So, background on this, what's going on?
110
00:05:12,250 --> 00:05:13,750
Everyone's trying to
solve the same problem.
111
00:05:13,750 --> 00:05:15,730
They want to use money more
than once and they wanna do
112
00:05:15,730 --> 00:05:17,080
without blowing themselves up.
113
00:05:17,380 --> 00:05:19,480
And so we have a few different
things we're gonna compare here.
114
00:05:19,480 --> 00:05:22,450
We're gonna look at mortgages, we're
gonna look at the first lien heloc,
115
00:05:22,450 --> 00:05:25,810
kind of a velocity banking type
mindset, IBC, security, back lines
116
00:05:25,810 --> 00:05:27,040
of credits and some other stuff.
117
00:05:27,040 --> 00:05:28,900
And all of 'em claim to
be the most efficient.
118
00:05:29,350 --> 00:05:31,420
But today's episode we're gonna
do, we're gonna look at the
119
00:05:31,420 --> 00:05:33,100
same cash flow, the same debt.
120
00:05:33,400 --> 00:05:36,610
But look at different capital structures
and see which one comes out on top
121
00:05:36,640 --> 00:05:39,640
when you start seeing what the needs
of the person on the other end are.
122
00:05:40,090 --> 00:05:43,240
And so the real question is what still
works when things don't go right?
123
00:05:43,420 --> 00:05:44,740
And what do the numbers actually show?
124
00:05:44,740 --> 00:05:45,910
So we're gonna try and answer that.
125
00:05:45,910 --> 00:05:48,880
So obviously when you start with some
kind of baseline to look at this.
126
00:05:48,880 --> 00:05:49,240
So.
127
00:05:49,885 --> 00:05:52,255
The baseline we used, I looked
at real numbers, I looked at the
128
00:05:52,255 --> 00:05:53,845
current mortgage rate that I have.
129
00:05:53,845 --> 00:05:58,405
I looked at actual rates right now for
a first in heloc and the actual numbers
130
00:05:58,405 --> 00:06:00,295
themselves, I just use very round numbers.
131
00:06:00,295 --> 00:06:02,725
So this doesn't actually illustrate
anything other than the math is
132
00:06:02,725 --> 00:06:04,105
very, very easy to do with these.
133
00:06:04,105 --> 00:06:05,785
So we're gonna start
with the $1 million loan.
134
00:06:06,035 --> 00:06:09,785
And then we're gonna look at about a
$10,000 a month cash flow that you can
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00:06:09,785 --> 00:06:13,475
either use going all to a loan or to
IBC or some kind of combination thereof.
136
00:06:13,865 --> 00:06:16,535
And so you're free to pay the
mortgage, save, invest, whatever it is.
137
00:06:16,535 --> 00:06:19,145
But the apples to apples comparison
is we're gonna look at that money
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00:06:19,145 --> 00:06:22,355
through the traditional mortgage first
lien HELOC with the Velocity banking,
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00:06:22,355 --> 00:06:23,825
and then the mortgage plus IBC.
140
00:06:24,035 --> 00:06:26,765
And then once we get through that, we're
gonna go into the brokerage security
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00:06:26,765 --> 00:06:29,225
back line of credit, and a few other
advanced blends we'll look at as well.
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00:06:29,325 --> 00:06:29,615
Okay.
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00:06:30,775 --> 00:06:33,355
So for the traditional mortgage, this will
be the baseline that we're looking at.
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00:06:33,415 --> 00:06:36,625
I use the current interest rate
that I have, which is 5.625.
145
00:06:36,625 --> 00:06:38,785
I think you could actually even
do slightly better than that
146
00:06:38,785 --> 00:06:39,505
from what I've been seeing.
147
00:06:39,505 --> 00:06:40,945
But I thought that was a fair estimate.
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00:06:41,485 --> 00:06:44,169
And then the required payment on
that, so you know, is five thousand
149
00:06:44,169 --> 00:06:45,586
seven hundred fifty a month.
150
00:06:45,746 --> 00:06:47,527
you can do more in
principle if you wanted to.
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00:06:47,527 --> 00:06:48,637
Up to 42 50.
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00:06:48,637 --> 00:06:50,467
I left insurance and taxes out of it.
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00:06:50,497 --> 00:06:52,207
'cause I thought that would
just kind of muddy the water.
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00:06:52,207 --> 00:06:54,667
So we're just looking at the principal
and interest on the loan itself.
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00:06:55,177 --> 00:06:57,187
And so if you were to actually.
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00:06:57,412 --> 00:07:01,295
Do a full 10,000 a month, not the, you
know, fifty seven fifty , but adding
157
00:07:01,295 --> 00:07:05,215
that extra 42 50 in, you would actually
pay off that mortgage in about eleven
158
00:07:05,215 --> 00:07:10,021
to twelve years the total interest
would be about 470 K that you would pay.
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00:07:10,021 --> 00:07:13,501
However, if you account for tax
benefits, and so you know, you have
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00:07:13,501 --> 00:07:16,231
the max reduction and everything else,
there's certain deduction limits there.
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00:07:16,231 --> 00:07:17,641
You'd actually have after.
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00:07:17,861 --> 00:07:20,351
Tax interest of 350 K is
what you're looking at.
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00:07:20,681 --> 00:07:23,321
But the key point in all this, and
you can't really argue it, this is
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00:07:23,321 --> 00:07:24,881
the cheapest, cleanest debt, right?
165
00:07:24,881 --> 00:07:26,201
So you can pay it off the soonest.
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00:07:26,201 --> 00:07:28,241
The problem really
becomes liquidity though.
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00:07:28,581 --> 00:07:31,821
and so that is one thing that capital
is locked away and you either are gonna
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00:07:31,821 --> 00:07:35,681
have to sell that home or go get some
kind of HELOC or new, lien against it in
169
00:07:35,681 --> 00:07:37,301
order to actually access that capital.
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00:07:37,306 --> 00:07:40,211
And so this is where this kind of
hurts you a little bit, but as far
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00:07:40,211 --> 00:07:43,451
as a baseline, everything else must
justify why it's better than this.
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00:07:44,901 --> 00:07:46,881
so, all right, let's look
at the first lien heloc.
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00:07:46,881 --> 00:07:49,641
And, you know, somebody else brought
this up and it really interested me.
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00:07:49,671 --> 00:07:52,611
'cause what I wanted to see was like,
Hey, if I put that same principle and
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00:07:52,611 --> 00:07:55,971
interest towards this versus a mortgage,
is this actually a better product?
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00:07:55,971 --> 00:07:57,381
And is this gonna save me in the long run?
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00:07:57,381 --> 00:08:00,261
And then I can put my delta, my
difference towards an IBC policy.
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00:08:00,621 --> 00:08:01,396
Or maybe if it's that.
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00:08:01,786 --> 00:08:03,706
You would even consider
this as a new tool?
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00:08:03,856 --> 00:08:05,626
I didn't think I would get there,
but I wanted to give it a fair
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00:08:05,626 --> 00:08:07,006
shake and kind of see what happens.
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00:08:07,306 --> 00:08:10,326
So what's promised in this, when
you look at the first lien HELOC,
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00:08:10,326 --> 00:08:13,236
is you're gonna have daily interest
savings, 'cause you're reducing the
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00:08:13,236 --> 00:08:17,256
overall principle that's having the
interest, uh, You're gonna have a faster
185
00:08:17,256 --> 00:08:19,146
payoff, is what it says, and it's.
186
00:08:19,201 --> 00:08:22,591
Technically in quotes, using your income
more efficiently is what it's showing you.
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00:08:23,041 --> 00:08:27,211
And so the big thing here is I use
the 7% rate, realize it's variable.
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00:08:27,211 --> 00:08:31,111
It's typically tied to a T-bill, but
with the 7% variable rate, the way that
189
00:08:31,111 --> 00:08:35,881
the interest is calculated, the first
month alone, the interest is 58 point 33.
190
00:08:36,151 --> 00:08:39,811
So if you just paid your 57 50
per month like you did compared
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00:08:39,811 --> 00:08:42,871
to the regular mortgage, you
actually would be falling behind.
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00:08:43,496 --> 00:08:44,996
So let that sink in for a second.
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00:08:44,996 --> 00:08:46,106
Based on the rates there.
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00:08:46,166 --> 00:08:47,246
Now you can play with the rates.
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00:08:47,246 --> 00:08:50,186
I tried to use real market stuff, but
from what I've seen, if you go with the
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00:08:50,186 --> 00:08:53,126
traditional mortgage versus the first
lien heloc, the traditional mortgage
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00:08:53,126 --> 00:08:56,066
is typically gonna have a lower APR
compared to the first lien heloc.
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00:08:56,066 --> 00:08:57,176
So that's where you get in trouble.
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00:08:57,446 --> 00:09:00,206
If for some reason I'm not talking about
the little teaser rates that they have,
200
00:09:00,206 --> 00:09:01,346
I'm talking about the longer term rates.
201
00:09:01,346 --> 00:09:04,076
If you could find one that was much
lower, you might have an argument for it.
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00:09:04,256 --> 00:09:06,986
But remember, it is variable and that
might change the, and that will change
203
00:09:06,986 --> 00:09:08,216
the equation if it goes back up.
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00:09:08,936 --> 00:09:12,145
So you're barely amortizing
with 10 K a month as well.
205
00:09:12,145 --> 00:09:13,070
but you go, hold on a second.
206
00:09:13,825 --> 00:09:16,892
You're talking about the Ten K , what if
I park my additional principle in here?
207
00:09:16,892 --> 00:09:20,132
So what I did was I assumed that
somebody had a 25K after taxes a
208
00:09:20,132 --> 00:09:24,692
month going into this thing, and you
would quotes park the 25K for 20 days.
209
00:09:24,812 --> 00:09:26,072
I figured that was a fair assumption.
210
00:09:26,072 --> 00:09:28,592
And then for 10 days I would be
out paying bills or doing whatever.
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00:09:28,962 --> 00:09:31,802
so what you're doing though, you're
only saving 96 bucks, a month when
212
00:09:31,832 --> 00:09:33,902
you do that, or $1,100 a year.
213
00:09:34,142 --> 00:09:36,452
So the higher interest rate
is really what matters here.
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00:09:36,452 --> 00:09:39,302
It's not that you're parking the money
and that's where this thing falls apart.
215
00:09:39,602 --> 00:09:42,962
And so the key lo, the key thing
here is velocity helps the cash
216
00:09:42,962 --> 00:09:45,602
flow around debt, but it doesn't
overcome the higher interest rate.
217
00:09:46,052 --> 00:09:48,842
And so if you can understand that
problem, that's what's going on.
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00:09:48,842 --> 00:09:52,382
And so the actual numbers here,
just to kind of summarize it, if you
219
00:09:52,382 --> 00:09:56,702
look at a 5.625 mortgage rate versus
a velocity HELOC at seven, I just
220
00:09:56,702 --> 00:09:58,082
fixed it there just for easy math.
221
00:09:58,082 --> 00:09:59,042
I know it is variable.
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00:09:59,357 --> 00:10:04,127
The payoff time is 11.3 years for the
mortgage, but it's 12.6 for the heloc.
223
00:10:04,427 --> 00:10:07,517
The interest paid is a little
over 350 k on the mortgage.
224
00:10:07,577 --> 00:10:11,267
It's over 500 K on the HELOC,
and the extra interest is a
225
00:10:11,267 --> 00:10:13,607
little over 150 K in 15 months.
226
00:10:13,787 --> 00:10:16,097
So you got more interest, more
risk, and the balance sheet
227
00:10:16,097 --> 00:10:17,177
actually doesn't improve.
228
00:10:17,177 --> 00:10:21,022
So if you have expensive debt out there
that you're trying to get under control.
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00:10:22,022 --> 00:10:25,172
And the only liquidity you
have or the only capital you
230
00:10:25,172 --> 00:10:26,432
have is locked up in your home.
231
00:10:26,612 --> 00:10:27,602
This could make sense.
232
00:10:27,602 --> 00:10:30,782
I will say that if you want to get
to it to try and tackle that debt,
233
00:10:31,142 --> 00:10:34,832
but it doesn't outperform the cheaper
debt in your straight mortgage.
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00:10:35,012 --> 00:10:37,592
And so, but the big advantages
here, you do have liquidity.
235
00:10:37,592 --> 00:10:40,472
So it is a tool that you can use if
you have, credit cards or something
236
00:10:40,472 --> 00:10:43,022
else that are running away from you,
it would be a better way to do this,
237
00:10:43,022 --> 00:10:45,662
but it's not gonna beat the mortgage is
kind of what I found to do in all this.
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00:10:45,842 --> 00:10:46,502
What do you guys have?
239
00:10:47,487 --> 00:10:50,287
Yeah, I was just gonna add in, in
the community that we know real well,
240
00:10:50,437 --> 00:10:52,152
through the, the widget room, there.
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00:10:53,617 --> 00:10:56,047
We're not talking with a lot of folks
that have a ton of credit card debt.
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00:10:56,447 --> 00:10:59,987
So if, if you're trying to create
a process outta thin air, that's,
243
00:11:00,047 --> 00:11:05,477
that's making something both more
complicated, locking up your capital and.
244
00:11:05,897 --> 00:11:07,907
Really isn't, you know,
all that complication.
245
00:11:07,907 --> 00:11:09,107
Is the juice worth the squeeze?
246
00:11:09,107 --> 00:11:12,137
Are you getting, is, is all
of that process and all that
247
00:11:12,137 --> 00:11:15,297
paperwork and all that excess
worth, a thousand bucks a year?
248
00:11:15,687 --> 00:11:17,367
Maybe it is in that case, cool.
249
00:11:17,547 --> 00:11:19,887
But that's just using the first
lien you're talking about.
250
00:11:19,887 --> 00:11:20,067
Right?
251
00:11:20,067 --> 00:11:24,147
If it's, if it's capturing a ton of
credit card debt, hey, good on you.
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00:11:24,247 --> 00:11:25,657
maybe that's one way to beat that up.
253
00:11:25,877 --> 00:11:29,267
but I guess I just, I would, I
would only add that that's not.
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00:11:30,197 --> 00:11:32,312
I, I guess that's not the
norm in the community that we,
255
00:11:32,372 --> 00:11:33,812
that we work in often, right?
256
00:11:33,962 --> 00:11:35,432
So, don't know.
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00:11:35,477 --> 00:11:37,202
I, I don't want to, I don't
wanna speculate, right?
258
00:11:37,202 --> 00:11:41,012
Everybody has their own specific instance,
their own specific circumstance, and we're
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00:11:41,012 --> 00:11:45,152
all for meeting you, where you are talking
about it, coming up with a great solution.
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00:11:45,842 --> 00:11:49,472
But I don't, based on what you've
shown here and what I've learned in the
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00:11:49,472 --> 00:11:52,682
past, this would definitely not be the
first solution that I would reach to.
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00:11:53,821 --> 00:11:54,716
I think you hit the nail on the head.
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00:11:54,716 --> 00:11:58,286
It depends on what your goals are,
and so you need to have the end
264
00:11:58,286 --> 00:12:00,896
in sight and then understand what
product you're using to get there.
265
00:12:01,466 --> 00:12:01,781
And so.
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00:12:02,561 --> 00:12:05,111
For a lot of people, they wanna
store capital and have access to
267
00:12:05,111 --> 00:12:07,301
it to use over and over again,
especially in the community that
268
00:12:07,301 --> 00:12:10,331
we're talking about, whether it's
a major purchase or financing.
269
00:12:10,571 --> 00:12:14,231
And the irony is here is when you
actually start leveraging against
270
00:12:14,231 --> 00:12:15,521
your home based on these rates.
271
00:12:15,521 --> 00:12:18,191
And the way I'm looking at it, I mean,
this is assuming that you're doing
272
00:12:18,191 --> 00:12:21,161
that 10 K per month and you're never
actually accessing that capital again.
273
00:12:21,191 --> 00:12:23,981
Once you actually access that
capital to go do something else.
274
00:12:24,366 --> 00:12:25,716
It's gonna blow it up quite a bit.
275
00:12:25,976 --> 00:12:29,276
and it's not gonna perform the same
way that a whole life policy will
276
00:12:29,276 --> 00:12:31,256
designed specifically to practice IBC.
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00:12:31,256 --> 00:12:32,876
And so we'll jump into
that in the next section.
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00:12:32,876 --> 00:12:34,736
But before I do that, Scott, do
you wanna add anything there?
279
00:12:36,243 --> 00:12:39,663
That's pretty much Jared said, in
the past, I've looked into this, and
280
00:12:40,533 --> 00:12:44,883
you're floating around 20% credit
card debt or something that, I just, I
281
00:12:44,883 --> 00:12:48,303
could never make it make sense at the
interest rates that they always had.
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00:12:48,723 --> 00:12:51,843
but I don't have a house anymore,
not a homeowners, so, no.
283
00:12:51,987 --> 00:12:52,147
variable.
284
00:12:52,263 --> 00:12:54,003
Yeah, yeah, exactly.
285
00:12:54,208 --> 00:12:56,073
I, I just, I could never make it work.
286
00:12:56,073 --> 00:12:59,263
I looked into it a couple different
times, just to see if I could use
287
00:12:59,263 --> 00:13:00,673
it for investing or anything that.
288
00:13:00,673 --> 00:13:00,763
And.
289
00:13:01,913 --> 00:13:05,388
it, you'd have to be offset in some
pretty hefty interest rate debt.
290
00:13:06,846 --> 00:13:09,096
And, and you know, we've talked
about this before as well.
291
00:13:09,306 --> 00:13:12,456
The ones that I'm, I was looking at
had about a 10 year draw period, and
292
00:13:12,456 --> 00:13:13,926
then it converted to a 20 year fix.
293
00:13:13,926 --> 00:13:16,896
And it does say, you know, you can
refinance and go and requalify again, but.
294
00:13:17,356 --> 00:13:19,276
Who knows what you're gonna be
like, you know, 10 years from
295
00:13:19,276 --> 00:13:20,866
now Requalifying and doing that.
296
00:13:20,866 --> 00:13:24,646
And if you can't, I don't know that that
fixed 20 year that they're gonna give
297
00:13:24,646 --> 00:13:27,486
you is gonna beat, you know, the, the
typical mortgage that we have right now.
298
00:13:27,486 --> 00:13:28,746
So all these things are
different variables.
299
00:13:28,746 --> 00:13:29,796
Just understand what you're getting into.
300
00:13:29,796 --> 00:13:30,606
That's the whole point of this.
301
00:13:30,606 --> 00:13:33,486
We're not telling people what to do, we're
just trying to give the full landscape.
302
00:13:33,486 --> 00:13:35,106
And like I said, once you know
your end goal, you can see
303
00:13:35,106 --> 00:13:36,216
what product is best for you.
304
00:13:37,051 --> 00:13:39,991
So moving on to the mortgage plus the IBC.
305
00:13:40,051 --> 00:13:41,491
This is personally how I run it.
306
00:13:41,541 --> 00:13:43,551
Jared, Scott, you guys do the same thing.
307
00:13:44,271 --> 00:13:45,231
I wanna be very clear here.
308
00:13:45,231 --> 00:13:47,391
IBC is not a mortgage
replacement in this case.
309
00:13:47,391 --> 00:13:50,541
It's a way to have a capital system
layered beside it is how I work it.
310
00:13:50,871 --> 00:13:54,771
Now, if you do go into the infinite
banking community, there are
311
00:13:54,771 --> 00:13:56,931
definitely people that just wanna
get banks completely outta their
312
00:13:56,931 --> 00:13:59,541
lives, and I understand that for
everything that comes with it.
313
00:13:59,841 --> 00:14:01,251
We've talked about this before.
314
00:14:01,251 --> 00:14:04,971
I worry about having all of my
equity locked up in my home and I'd
315
00:14:04,971 --> 00:14:07,701
rather have a situation where I have
that capital on the outside and if
316
00:14:07,701 --> 00:14:09,201
need to, I could pay off that debt.
317
00:14:09,451 --> 00:14:11,581
but I don't wanna necessarily
have that in the home itself.
318
00:14:11,581 --> 00:14:13,051
So there's different ways to skin the cab.
319
00:14:13,051 --> 00:14:14,371
This is definitely our spin on it.
320
00:14:14,371 --> 00:14:15,031
My spin on it.
321
00:14:15,031 --> 00:14:16,591
I'm starting to talk for Jared Scott.
322
00:14:16,591 --> 00:14:17,701
I wanna be very careful there.
323
00:14:17,991 --> 00:14:19,581
but realize that depending on who
324
00:14:19,941 --> 00:14:20,171
you talk to.
325
00:14:20,698 --> 00:14:22,168
had a mortgage, it'd be how I do it.
326
00:14:22,861 --> 00:14:23,151
Right.
327
00:14:23,151 --> 00:14:25,881
But yeah, depending on who you talk
to in the community, you are gonna
328
00:14:25,881 --> 00:14:27,471
get different answers and that's okay.
329
00:14:27,471 --> 00:14:29,871
I just wanna be very clear that
I'm not speaking for the community
330
00:14:29,871 --> 00:14:30,951
as a whole When I say this.
331
00:14:31,776 --> 00:14:34,746
So the way we set this up,
we kept it really clean.
332
00:14:34,776 --> 00:14:38,986
We kept the cheap mortgages where it
was at, but we redirect that surplus, so
333
00:14:38,986 --> 00:14:42,466
that 42 50 a month that you were going
to either use to pay down the mortgage
334
00:14:42,466 --> 00:14:46,266
quicker or, go into your heloc, we're
gonna use that to build policies instead.
335
00:14:46,266 --> 00:14:48,036
So that's gonna be
redirected towards premium.
336
00:14:48,396 --> 00:14:51,276
And then we could use policy loans
strategically to access that capital.
337
00:14:51,276 --> 00:14:53,826
We need to, and the big thing,
we've talked about this before,
338
00:14:53,826 --> 00:14:56,226
the cash value is gonna compound
uninterrupt in the background.
339
00:14:56,646 --> 00:15:00,096
one thing I did want point out here, if
you didn't listen to the last podcast,
340
00:15:00,096 --> 00:15:03,546
understanding true Interest Cost, you
may look at the policy loans right now.
341
00:15:03,546 --> 00:15:05,406
Right now they're about 6.5%.
342
00:15:05,406 --> 00:15:08,256
For the non-direct recognition company
that I work with for direct recognition.
343
00:15:08,256 --> 00:15:10,986
They're a little bit lower and they will
slightly vary with different companies.
344
00:15:11,286 --> 00:15:14,016
But let's say just for argument's
sake, you have a 7% loan
345
00:15:14,016 --> 00:15:15,546
rate and the HELOCs at 7%.
346
00:15:15,576 --> 00:15:17,256
Remember that is not the same thing.
347
00:15:17,496 --> 00:15:18,666
I just wanna highlight this here.
348
00:15:19,026 --> 00:15:21,576
Even though the interest
is accruing daily.
349
00:15:22,176 --> 00:15:27,246
On the heloc, it's compounding at least
monthly, but on the loan against your
350
00:15:27,246 --> 00:15:29,766
policy, it's compounding annually.
351
00:15:30,006 --> 00:15:32,676
And so the difference is
staggering when you look at that.
352
00:15:32,676 --> 00:15:36,366
And so that's why when you practice
infinite banking, you don't have this
353
00:15:36,366 --> 00:15:38,826
runaway compounding interest that
you get with many of these banking
354
00:15:38,826 --> 00:15:40,056
products that we see out there.
355
00:15:40,596 --> 00:15:42,996
And so I ended up running
this out to about a 20 year
356
00:15:42,996 --> 00:15:44,436
view, trying to figure it out.
357
00:15:44,496 --> 00:15:47,136
And so 20 years from now, we hit
on this already with the heloc.
358
00:15:47,906 --> 00:15:49,766
I don't wanna get into the
actual numbers, but just more,
359
00:15:49,766 --> 00:15:51,236
conceptually what's going on here.
360
00:15:51,446 --> 00:15:54,116
You'd either have to refinance
that HELOC or you'd be stuck with
361
00:15:54,116 --> 00:15:55,616
the 20 year fixed after that.
362
00:15:55,856 --> 00:15:58,916
But in this case here, you'd have
policy cash value that is growing
363
00:15:59,186 --> 00:16:01,346
uninterrupted, and you wouldn't
have to worry about doing that.
364
00:16:01,346 --> 00:16:03,849
You would have that access to
liquidity, which is your goal Here.
365
00:16:04,119 --> 00:16:05,229
It's permanent liquidity.
366
00:16:05,469 --> 00:16:06,549
You don't have the rate risk.
367
00:16:06,549 --> 00:16:09,729
So the max that the company that
I underwrite with, it could go
368
00:16:09,729 --> 00:16:12,429
up to 8%, but the interest rates
would have to get pretty high.
369
00:16:12,429 --> 00:16:15,399
If you had a variable rate on the
heloc, that would run away quite a bit.
370
00:16:15,789 --> 00:16:16,929
You don't have any forced decisions.
371
00:16:16,929 --> 00:16:17,889
There's no timing issues.
372
00:16:17,889 --> 00:16:20,229
It's not like, man, I better get
this thing paid off in 10 years,
373
00:16:20,229 --> 00:16:22,659
or I have to access this now,
otherwise I'm gonna be in trouble.
374
00:16:22,839 --> 00:16:25,599
If everything on your time, you
don't have to qualify, like I said.
375
00:16:25,599 --> 00:16:26,919
And all of it comes with guarantees.
376
00:16:26,919 --> 00:16:28,809
There's no guarantees on the HELOC side.
377
00:16:29,109 --> 00:16:31,329
You mentioned oh eight before when
we were talking about the housing
378
00:16:31,329 --> 00:16:33,149
crisis, Scott, that popped up.
379
00:16:33,459 --> 00:16:34,389
do I think this is gonna happen?
380
00:16:34,389 --> 00:16:34,899
I don't know.
381
00:16:34,899 --> 00:16:36,189
The truth is nobody knows the future.
382
00:16:36,189 --> 00:16:38,679
It's unknown, but I'm in a
position where it doesn't matter.
383
00:16:38,709 --> 00:16:41,349
I know my liquidity is gonna be there
and I can get to it when I need to.
384
00:16:41,349 --> 00:16:41,739
So.
385
00:16:42,079 --> 00:16:45,229
Overall, I think, you know, this is
a fairest comparison to this point.
386
00:16:45,469 --> 00:16:48,739
the big thing is we're talking about where
to warehouse our wealth and pay off debt.
387
00:16:48,919 --> 00:16:52,219
And I normally get in questions, excuse
me, about investing in the rest of it.
388
00:16:52,219 --> 00:16:54,769
So we are gonna tackle that, but at
this point, I think this is the best
389
00:16:54,769 --> 00:17:00,079
apples to apples comparison as far as
a product to implement the process that
390
00:17:00,079 --> 00:17:01,339
we talk about with infinite banking.
391
00:17:02,889 --> 00:17:06,909
And just like anything else,
it's always the choice of where
392
00:17:06,909 --> 00:17:08,589
you access your capital, right?
393
00:17:08,769 --> 00:17:14,469
So like I think, a very powerful
position to have a cash value
394
00:17:14,469 --> 00:17:18,909
available, of which I could finance
my entire home if I chose to yet.
395
00:17:19,614 --> 00:17:24,594
Since the bank refied me for a
15 year rate at like 2, 8, 5,
396
00:17:25,284 --> 00:17:28,284
I'm just gonna keep that and let
that sit there and let that roll.
397
00:17:28,284 --> 00:17:29,279
I'm gonna pay them their minimum.
398
00:17:30,204 --> 00:17:33,834
Because I think I can make more
than 2.85% with my own capital
399
00:17:33,834 --> 00:17:35,124
outside of their product.
400
00:17:35,424 --> 00:17:37,374
So let that sit, let that roll.
401
00:17:37,584 --> 00:17:40,704
Plus, once you get through the first
five year of any amortized product
402
00:17:40,884 --> 00:17:44,124
you've made, you've made the bulk
of the interest payment anyways.
403
00:17:44,214 --> 00:17:48,044
So unless you're in the first year or
two, there's no rush to get out of that.
404
00:17:48,254 --> 00:17:49,814
So once you're past the five year mark.
405
00:17:50,879 --> 00:17:52,349
I, I'm just gonna let that roll.
406
00:17:52,349 --> 00:17:55,919
I'm gonna pay the absolute minimum,
and now I have that pool of capital
407
00:17:55,919 --> 00:17:59,969
of which I can do whatever I'd
like to on my choice, on my terms.
408
00:18:00,239 --> 00:18:03,629
If at some point I decide I'd like to
take over the mortgage of the house.
409
00:18:03,809 --> 00:18:04,229
Cool.
410
00:18:04,529 --> 00:18:04,859
Great.
411
00:18:04,979 --> 00:18:06,334
It's an option, but why would I do that?
412
00:18:07,379 --> 00:18:10,259
Right now at the current rate
that it's previously set at.
413
00:18:10,259 --> 00:18:10,469
Right.
414
00:18:10,469 --> 00:18:14,609
So it's, it's, it's just like you
said, it's the, it's the ability for
415
00:18:14,609 --> 00:18:19,379
forced decisions or your choice to
do what you do with your capital.
416
00:18:19,599 --> 00:18:23,469
if I'd rather be in a position of
power than in a position of, oh, crap,
417
00:18:23,499 --> 00:18:27,339
X happened, now I can't make that
payment, and now someone comes and takes
418
00:18:27,339 --> 00:18:29,199
my house and now fill in the blank.
419
00:18:29,199 --> 00:18:31,659
All the things that the commercial
lender has the access to,
420
00:18:32,139 --> 00:18:33,579
you're not locked into that.
421
00:18:34,074 --> 00:18:36,204
When it's your capital and
you're making the choices.
422
00:18:37,378 --> 00:18:37,558
Okay.
423
00:18:38,158 --> 00:18:41,548
Um, so I know, and I we're starting
to get into the apples and oranges
424
00:18:41,548 --> 00:18:44,518
comparison, but I want to go here 'cause
I know somebody's listened to this.
425
00:18:44,548 --> 00:18:46,678
They're gonna bring it up and they're
gonna go, well, hold on a second.
426
00:18:46,888 --> 00:18:49,108
Instead of putting the
42 50 into the heloc.
427
00:18:49,743 --> 00:18:51,783
Or you know, in this case you're
reviewing the straight mortgage,
428
00:18:51,783 --> 00:18:53,043
putting it into policy premiums.
429
00:18:53,223 --> 00:18:54,813
Why not just go into a brokerage account?
430
00:18:55,353 --> 00:18:59,163
And so we actually don't say don't
invest, we're just saying sequence
431
00:18:59,163 --> 00:19:00,393
it through your policy first.
432
00:19:00,603 --> 00:19:03,753
And so the reason we say
that is you're also gonna get
433
00:19:03,753 --> 00:19:04,893
the long term growth, right.
434
00:19:05,193 --> 00:19:07,833
And I know with the brokerage there
are certain tax efficiencies can get if
435
00:19:07,833 --> 00:19:11,103
managed well, but those tax efficiencies
are there on the whole life side as well.
436
00:19:11,103 --> 00:19:13,233
If you, you know, when you set it
up, you don't even have to manage it.
437
00:19:13,233 --> 00:19:15,783
It's just there, there's
no extra work but.
438
00:19:16,563 --> 00:19:18,933
We're not telling you never to not
invest, it's just how you do it.
439
00:19:18,933 --> 00:19:20,223
So you have access to that capital.
440
00:19:20,223 --> 00:19:22,713
If you go straight with the
brokerage, the downside you're gonna
441
00:19:22,713 --> 00:19:23,973
see there is you have volatility.
442
00:19:23,973 --> 00:19:26,523
So let's, the whole point of this, I'm
assuming if you're doing the heloc,
443
00:19:26,523 --> 00:19:30,093
was not just to pay it down, but it
was to have access to capital as well.
444
00:19:30,303 --> 00:19:32,973
And so what happens if you're in
a down market all of a sudden?
445
00:19:33,048 --> 00:19:34,638
And now you need to access that capital.
446
00:19:34,638 --> 00:19:36,648
You probably don't wanna
sell with the loss.
447
00:19:36,698 --> 00:19:38,258
and that comes to sequence of return risk.
448
00:19:38,258 --> 00:19:41,048
If you have a little bit of capital on
your whole life side, and let's say the
449
00:19:41,048 --> 00:19:43,568
brokerage account is up and you do wanna
access it, great, go ahead and do it.
450
00:19:43,568 --> 00:19:46,718
But if there's a drop now you can access
your policy loans and avoid that sequence
451
00:19:46,718 --> 00:19:48,218
of return risk and let that keep going.
452
00:19:48,458 --> 00:19:50,468
And so you don't have that forced
selling and retirement is where
453
00:19:50,468 --> 00:19:51,758
we're gonna have there, but.
454
00:19:51,793 --> 00:19:53,173
And I know where this is gonna go next.
455
00:19:53,173 --> 00:19:54,223
They're go, well, hold on a second.
456
00:19:54,223 --> 00:19:55,183
I don't need to sell.
457
00:19:55,183 --> 00:19:56,863
I can do a security back line of credit.
458
00:19:57,013 --> 00:19:58,873
And so that's the next thing
where people are gonna go.
459
00:19:58,873 --> 00:20:01,663
So if we look at that, the advantage
is, and I totally get it, you can do
460
00:20:01,663 --> 00:20:03,583
liquidity without selling your assets.
461
00:20:03,583 --> 00:20:04,243
Stay invested.
462
00:20:04,243 --> 00:20:06,793
And if you, well, it's very
useful if you do it tactically.
463
00:20:07,153 --> 00:20:09,733
And the truth is, if you have a whole
life on the side as well, you can actually
464
00:20:09,733 --> 00:20:12,313
do the security back line of credit
and have that buffer in the background.
465
00:20:12,313 --> 00:20:14,173
But if you're just doing
security back line of credit,
466
00:20:14,173 --> 00:20:15,313
you don't have that buffer.
467
00:20:15,613 --> 00:20:18,133
And so the problem is, and we
talked about it, there's gonna be
468
00:20:18,133 --> 00:20:20,593
ups and downs, and when everything
is up and going swimmingly.
469
00:20:20,848 --> 00:20:23,848
The security back line of credit does
work very nicely, but the second you start
470
00:20:23,848 --> 00:20:26,878
having drops and the collateral reprices
with the market, you're in trouble.
471
00:20:27,148 --> 00:20:27,898
And so.
472
00:20:28,433 --> 00:20:30,923
If you're borrowing capacity
shrinks when there's a downturn, and
473
00:20:30,923 --> 00:20:32,123
that's when you need your capital.
474
00:20:32,333 --> 00:20:34,163
Is that really liquidity
at that point for you?
475
00:20:34,163 --> 00:20:34,943
Are you in trouble?
476
00:20:35,243 --> 00:20:36,113
We've talked about it before.
477
00:20:36,113 --> 00:20:37,343
You might have a margin call risk.
478
00:20:37,343 --> 00:20:40,673
So if you're really leveraging this
thing to the, you know, right to
479
00:20:40,673 --> 00:20:42,593
the limit, you're gonna have some
issues there and you're gonna have
480
00:20:42,593 --> 00:20:44,273
to come up with money elsewhere.
481
00:20:44,483 --> 00:20:46,523
And then the lender controls,
well, we already talked about this
482
00:20:46,523 --> 00:20:47,573
with banks and the rest of it.
483
00:20:47,573 --> 00:20:52,043
So the whole thing here is security back
line of credit is conditional, right?
484
00:20:52,043 --> 00:20:54,173
That liquidity is conditional
depending on what the market's
485
00:20:54,173 --> 00:20:57,573
doing, whereas with Infinite banking
and using a whole life product.
486
00:20:57,603 --> 00:20:58,593
It's contractual.
487
00:20:58,623 --> 00:21:00,933
It's gonna be there regardless
of what the market is doing.
488
00:21:01,083 --> 00:21:03,303
And so this is kind of the
one phrase to sum it up.
489
00:21:03,363 --> 00:21:06,843
If the liquidity disappears when
markets fall, it's not real liquidity.
490
00:21:07,833 --> 00:21:09,243
It's situational dependent.
491
00:21:10,289 --> 00:21:10,954
Amen to that.
492
00:21:11,284 --> 00:21:11,794
Well said.
493
00:21:13,271 --> 00:21:13,661
Yep.
494
00:21:14,081 --> 00:21:14,651
Pretty much.
495
00:21:15,119 --> 00:21:18,149
Yeah, and, and so, but with all this
stuff here, I wanna be really clear.
496
00:21:18,179 --> 00:21:21,479
We're not telling people to pick
whole life or something else.
497
00:21:21,479 --> 00:21:22,469
It's an and asset.
498
00:21:22,469 --> 00:21:24,959
So it could be brokerage,
it could be whatever it is.
499
00:21:25,019 --> 00:21:25,589
Absolutely.
500
00:21:25,589 --> 00:21:28,799
Go invest, make money, having your
money just sit in a whole life.
501
00:21:28,799 --> 00:21:30,809
Policy is not practicing infinite banking.
502
00:21:31,154 --> 00:21:31,904
That is not it.
503
00:21:31,964 --> 00:21:33,674
At that point, you just
have a whole life policy.
504
00:21:34,004 --> 00:21:36,764
We leverage that policy to go
do whatever we're gonna do,
505
00:21:36,764 --> 00:21:39,914
so leverage it and go do those
investments and make money elsewhere.
506
00:21:40,124 --> 00:21:42,434
But it's gonna be in a position
when you have that whole life policy
507
00:21:42,434 --> 00:21:43,394
where you're gonna have that buffer.
508
00:21:43,394 --> 00:21:45,194
So if something does happen,
you're not in trouble.
509
00:21:45,614 --> 00:21:46,504
That's really where
we're getting at There.
510
00:21:47,546 --> 00:21:51,266
Nelson's laws is the last
one is use it or lose it, so,
511
00:21:51,349 --> 00:21:52,309
You said or lose it.
512
00:21:52,309 --> 00:21:52,489
That's
513
00:21:52,676 --> 00:21:53,036
yep.
514
00:21:53,149 --> 00:21:55,579
and know that, that there's a
startup cost there too, right?
515
00:21:55,579 --> 00:21:59,479
You don't jump into a business and go,
Hey, I'm gonna drop down 10 grand and I'm
516
00:21:59,479 --> 00:22:03,289
gonna put all 10 grand into everything
that I need for assets for that company.
517
00:22:03,549 --> 00:22:05,949
There's a little startup cost
involved, so make sure you're
518
00:22:05,949 --> 00:22:07,029
planning for that accordingly.
519
00:22:07,029 --> 00:22:08,019
Think long term.
520
00:22:08,169 --> 00:22:09,219
Think long range.
521
00:22:09,429 --> 00:22:12,669
Plan this out because you're definitely
ahead of the curve when you're,
522
00:22:12,729 --> 00:22:13,779
when you're doing so in planning.
523
00:22:15,684 --> 00:22:16,494
That's exactly it.
524
00:22:16,604 --> 00:22:18,074
yeah, I mean, I, I couldn't
have said it better.
525
00:22:18,129 --> 00:22:21,069
if you can think long range and see
what's going on here, it's very hard
526
00:22:21,069 --> 00:22:24,609
to beat this scenario, especially with
the peace of mind that you get with it.
527
00:22:25,119 --> 00:22:28,424
You know, you, 'cause you, there are gonna
be downturns, there's gonna be phenomenal
528
00:22:28,424 --> 00:22:31,514
upturns as well, but it's those downturns
when most people lose sleep at night
529
00:22:31,514 --> 00:22:32,474
and that's when people are in trouble.
530
00:22:33,318 --> 00:22:36,498
that in mind, I decided to look at
kind of that lost decade, right?
531
00:22:36,708 --> 00:22:39,438
You were bringing up oh eight before
and that was a long time to recover.
532
00:22:39,438 --> 00:22:43,548
So if you were to time this very poorly,
not see what's going on, let's say you
533
00:22:43,548 --> 00:22:47,868
have a ton of, uh, in your whole life
policy and you decide to deploy that
534
00:22:47,868 --> 00:22:50,838
into the market and then boom or whatever
investment, we just keep using the market.
535
00:22:50,838 --> 00:22:53,448
'cause I think it's one of the
easier things for what most listeners
536
00:22:53,448 --> 00:22:55,668
are looking at, but it could
be any investment and it drops.
537
00:22:56,058 --> 00:22:56,998
But let's say you have
a market that drops.
538
00:22:58,290 --> 00:22:58,620
I say.
539
00:22:58,620 --> 00:23:01,230
It seems to be what everybody
compares this to as well.
540
00:23:01,230 --> 00:23:01,680
So
541
00:23:02,268 --> 00:23:02,538
Right.
542
00:23:02,628 --> 00:23:05,538
And it, it's a poor comparison, but
just kind of showing how it works.
543
00:23:05,538 --> 00:23:08,898
Can we, we've kind of hit on that, but
let's say the market does drop 30%.
544
00:23:08,898 --> 00:23:11,358
You have that flat decade after
oh eight that we're talking about.
545
00:23:11,688 --> 00:23:14,898
And quite honestly, let's see,
the policy loan rate is 7%, right?
546
00:23:14,898 --> 00:23:17,808
And your brokerage is maybe
getting a, you know, zero to 2%.
547
00:23:17,808 --> 00:23:20,748
And quite honestly, if you do have a drop
like that, I don't think the policy rate
548
00:23:20,748 --> 00:23:24,078
is gonna be 7% is probably gonna be lower
based on what we've seen in the past.
549
00:23:24,288 --> 00:23:25,788
But I'm trying to put IBC.
550
00:23:26,283 --> 00:23:28,323
In the least favorable position.
551
00:23:28,323 --> 00:23:30,393
So people have a tougher
time arguing against it.
552
00:23:30,843 --> 00:23:34,293
And so if the brokerage does drop early
and your policy loans are growing, it's
553
00:23:34,293 --> 00:23:37,503
gonna feel terrible emotionally, but
you're not gonna have the margin calls
554
00:23:37,503 --> 00:23:38,763
like security back line of credit.
555
00:23:38,913 --> 00:23:41,583
You're not gonna have to force, you're
not gonna be forced into selling it.
556
00:23:41,583 --> 00:23:43,023
You're not have any kind of tax events.
557
00:23:43,053 --> 00:23:46,593
And so time actually becomes
your ally here, hence long range
558
00:23:46,593 --> 00:23:49,323
thinking, which we've been talking
about nonstop in this entire thing.
559
00:23:49,713 --> 00:23:52,173
And so you have a couple
ways you could handle it.
560
00:23:52,173 --> 00:23:53,853
You could at least just
service the interest.
561
00:23:54,198 --> 00:23:58,098
Right, or you can actually ignore it
completely and that it will be a little
562
00:23:58,098 --> 00:24:00,708
bit worse in the long run because
you're gonna have to service more debt.
563
00:24:00,978 --> 00:24:03,708
But at the end of the day, it's still
not gonna completely collapse as long
564
00:24:03,708 --> 00:24:04,908
as you don't let it get away from you.
565
00:24:05,148 --> 00:24:08,028
Really what's gonna set this up
is you're not 100% leveraging
566
00:24:08,028 --> 00:24:10,708
every single loan, and so the way
I would do this is probably have.
567
00:24:11,413 --> 00:24:14,623
X amount of my loan out, but I would
definitely have a buffer, whether that's
568
00:24:14,623 --> 00:24:16,272
emergency savings or something like that.
569
00:24:16,273 --> 00:24:20,263
If you're completely leveraging this
thing to the tilt and to putting it
570
00:24:20,263 --> 00:24:22,183
in something where things don't go
well, you're gonna be in trouble,
571
00:24:22,183 --> 00:24:23,623
then obviously that's a bad thing.
572
00:24:23,623 --> 00:24:26,143
And we talk about human behavior and
talking to your practitioners and stuff
573
00:24:26,143 --> 00:24:27,283
to understand what you're getting into.
574
00:24:27,283 --> 00:24:29,203
But the big thing is here is.
575
00:24:30,288 --> 00:24:32,718
Based on the amount of money you would
take from the security backline of credit
576
00:24:32,718 --> 00:24:36,528
versus what you would take from policies
through practicing infinite banking.
577
00:24:36,738 --> 00:24:40,157
If you have a downturn in the market,
especially a 30% one like this,
578
00:24:40,398 --> 00:24:42,858
you're probably gonna fall apart with
security, backline of credit that's
579
00:24:42,858 --> 00:24:45,588
gonna get called away unless you
have a source of funding elsewhere.
580
00:24:45,588 --> 00:24:47,118
But I'm assuming all the funding is here.
581
00:24:47,328 --> 00:24:50,238
However, with IBC, you're gonna
survive and make it back, and so
582
00:24:50,238 --> 00:24:53,356
the goal here isn't to make leverage
work in every single decade.
583
00:24:53,741 --> 00:24:56,176
But it's to make sure that when
you have a drop in one of 'em
584
00:24:56,176 --> 00:24:58,546
like this and it's really bad, it
doesn't kill you and it will not
585
00:24:58,546 --> 00:24:59,986
kill you if you're practicing IBC.
586
00:24:59,986 --> 00:25:01,846
So that's a big lesson learned
to take away from here.
587
00:25:03,405 --> 00:25:03,645
Okay.
588
00:25:04,935 --> 00:25:07,755
so really where this all kind of comes
together and we're starting to get
589
00:25:07,755 --> 00:25:10,125
to be a little bit broken record, but
I think it does really help us when
590
00:25:10,125 --> 00:25:12,765
you get to that retirement point in
life and you're figuring out, hey,
591
00:25:12,765 --> 00:25:14,385
you know, you're getting to the.
592
00:25:14,760 --> 00:25:17,520
Area where you're, you know, for us
in the career we're in, you're at
593
00:25:17,520 --> 00:25:21,300
65 to 70 type time period, and all
of a sudden you have a drop there.
594
00:25:21,480 --> 00:25:24,920
The nice thing is when you have this
account, this infinite banking, set
595
00:25:24,920 --> 00:25:27,770
up with a whole life policy, you're
not gonna need to force selling.
596
00:25:27,950 --> 00:25:29,930
You're not gonna have
these massive tax spikes.
597
00:25:30,080 --> 00:25:31,880
You're not gonna get into
an issue where you have.
598
00:25:32,295 --> 00:25:32,685
Irma.
599
00:25:32,685 --> 00:25:36,375
So income related monthly adjustment
amount, meaning that, you know, if you
600
00:25:36,375 --> 00:25:38,895
have a drop or something like that and
you need to make up for it elsewhere,
601
00:25:38,895 --> 00:25:41,835
you're not hitting these accounts and
crushing 'em when they're down, hence
602
00:25:41,835 --> 00:25:43,665
the sequence return risk issue as well.
603
00:25:44,025 --> 00:25:46,905
And so really the way this works
is you combine it, and this is
604
00:25:46,905 --> 00:25:48,255
why we call it an And asset.
605
00:25:48,435 --> 00:25:50,835
When you have one of these up
markets, use that brokerage
606
00:25:50,835 --> 00:25:52,005
account, take advantage of it.
607
00:25:52,005 --> 00:25:55,515
But when you have the down market, use
the loans against your whole life policy.
608
00:25:55,575 --> 00:25:57,975
And then when the markets recover,
use that brokerage account to
609
00:25:57,975 --> 00:26:00,165
then not only live on it, but
pay back the loans as well.
610
00:26:00,165 --> 00:26:01,695
And you're gonna be in
much better position.
611
00:26:01,815 --> 00:26:02,860
And there's graphs out there.
612
00:26:02,860 --> 00:26:05,380
If you just Google sequence a return
risk and see what it's like if
613
00:26:05,380 --> 00:26:08,140
you hit these at your retirement
or any kind of brokerage account.
614
00:26:08,260 --> 00:26:10,780
It doesn't even have to be retirement, but
any account at the wrong time when there's
615
00:26:10,780 --> 00:26:13,060
a downturn, it just crushes the long run.
616
00:26:13,155 --> 00:26:13,995
Performance of it.
617
00:26:13,995 --> 00:26:17,355
You need to be able to leave that
investment in the market or wherever
618
00:26:17,355 --> 00:26:18,360
it is so that you don't interrupt it.
619
00:26:20,263 --> 00:26:21,273
Yeah, that's perfectly said.
620
00:26:21,603 --> 00:26:24,993
I've had a lot of different conversations
about this and really at the end of the
621
00:26:24,993 --> 00:26:26,403
day, just like we said at the beginning.
622
00:26:27,123 --> 00:26:29,613
Who's in the control
of your capital, right?
623
00:26:29,613 --> 00:26:33,123
If the market is way up and you
wanna start pulling some of that
624
00:26:33,123 --> 00:26:34,713
off in the retirement years, great.
625
00:26:34,983 --> 00:26:38,883
Keep the pool that you've created setting
right where it is continually growing.
626
00:26:39,363 --> 00:26:44,343
If the market is way down, maybe you start
to pull from the pool that you've created,
627
00:26:44,343 --> 00:26:50,613
the one you control, and allow that
sequence return risk to, itself back out.
628
00:26:50,853 --> 00:26:53,193
Maybe it just stays there and
stays level for a whole decade.
629
00:26:53,193 --> 00:26:55,713
Like you were talking earlier,
maybe it slowly creeps back up and
630
00:26:55,713 --> 00:26:59,473
either way you were not forced to
pull out of this, brokerage account.
631
00:27:00,118 --> 00:27:04,298
At some time that they said you're
supposed to, you're able to pick
632
00:27:04,358 --> 00:27:05,858
when you control your capital.
633
00:27:05,858 --> 00:27:10,628
So I, you, you said broken record and,
and, and continually beating that drum.
634
00:27:10,718 --> 00:27:11,738
Yes, yes.
635
00:27:11,738 --> 00:27:12,518
That's what we're doing.
636
00:27:12,518 --> 00:27:15,188
do you control your capital
at the end of the day?
637
00:27:15,188 --> 00:27:20,118
That that's what the whole purpose of IBC
is, if you, if you practice this style of,
638
00:27:20,298 --> 00:27:22,118
of, of, just set up for your household.
639
00:27:23,033 --> 00:27:24,473
You're in control of your capital.
640
00:27:24,563 --> 00:27:26,423
That's, that's the goal of all of it.
641
00:27:26,513 --> 00:27:28,883
And so who, who's in
control of your capital?
642
00:27:30,081 --> 00:27:32,901
And, and you know, we hit on
the qualified there, but the
643
00:27:32,901 --> 00:27:34,131
goal was not to mix that in.
644
00:27:34,131 --> 00:27:36,951
It's just any kind of investment
or brokerage qualified, I think
645
00:27:36,951 --> 00:27:37,881
is the best way to look at it.
646
00:27:37,911 --> 00:27:40,941
'cause people feel like they have to
live off that at that point, 65 or on.
647
00:27:41,181 --> 00:27:43,761
But if you have a brokerage account
and you know, you're where we are
648
00:27:43,761 --> 00:27:46,641
right now and we have a drop and you
were saving that for something, it
649
00:27:46,641 --> 00:27:49,701
could have been a down payment on a
home or a second home or whatever toy
650
00:27:49,701 --> 00:27:53,031
you have or something serious that was
coming up and it's in a dropped market.
651
00:27:53,451 --> 00:27:55,971
You're gonna crush the long-term
performance of that asset
652
00:27:55,971 --> 00:27:59,331
versus having the policy loan to
actually, you know, weather that
653
00:27:59,331 --> 00:28:00,711
storm and wait until it recovers.
654
00:28:02,067 --> 00:28:02,367
Right.
655
00:28:02,577 --> 00:28:02,697
And
656
00:28:02,718 --> 00:28:03,448
If you're in a, if you're in a,
657
00:28:03,717 --> 00:28:04,077
we could,
658
00:28:04,863 --> 00:28:05,023
go ahead.
659
00:28:05,037 --> 00:28:06,177
if till the day ends, right?
660
00:28:06,177 --> 00:28:10,012
But if, if, Maybe, maybe you've been
putting into the brokerage account
661
00:28:10,132 --> 00:28:13,732
and or the qualified plans for the
last 30 years and it's up right now.
662
00:28:14,182 --> 00:28:15,802
Well, now you go, okay,
cool, I can retire.
663
00:28:16,162 --> 00:28:19,562
Well, what happens five years from
now when that tanks, I'm not saying it
664
00:28:19,562 --> 00:28:24,602
will, I'm not predicting the market,
but what, are you still living the
665
00:28:24,602 --> 00:28:26,162
same lifestyle that you have right now?
666
00:28:26,492 --> 00:28:28,952
Or are you switching to,
ramen and beef jerky?
667
00:28:28,952 --> 00:28:32,082
Because that's the only thing that can
pull in your, pull you in your weak, what?
668
00:28:32,082 --> 00:28:34,502
So it's, it's who's in control of
your capital at the end of the day.
669
00:28:36,206 --> 00:28:37,296
It's a volatility buffer.
670
00:28:37,296 --> 00:28:40,566
It's very simple and it makes it so
that you can weather these storms
671
00:28:40,656 --> 00:28:43,281
and they're coming, you know,
your, the up times are coming too.
672
00:28:44,637 --> 00:28:48,387
you, can, you could be able to take
advantage of these storms too, 'cause you
673
00:28:48,387 --> 00:28:53,172
could pull out just a little bit extra,
put it in your after tax brokerage.
674
00:28:54,087 --> 00:28:56,397
And now where were you gonna take it from?
675
00:28:56,397 --> 00:28:58,737
Are you gonna take a security
back line of credit on a down
676
00:28:58,737 --> 00:29:00,357
market to put back into something?
677
00:29:00,407 --> 00:29:02,177
no, that's not an option.
678
00:29:02,597 --> 00:29:05,957
But you could take extra outta
your whole life policy and put it
679
00:29:05,957 --> 00:29:07,997
into that brokerage on the upswing.
680
00:29:09,437 --> 00:29:11,597
it goes back to that money
doing more than one thing.
681
00:29:11,597 --> 00:29:14,417
You now, you're double dipping
in a really good spot too.
682
00:29:16,579 --> 00:29:16,799
Yep.
683
00:29:17,113 --> 00:29:19,123
So just to sum it up, so
we've got everything here.
684
00:29:19,123 --> 00:29:20,653
So people are kind of on
the same sheet of music.
685
00:29:20,653 --> 00:29:23,743
'cause I know we were talking about a
lot of stuff, but the mortgage, that is
686
00:29:23,743 --> 00:29:26,953
gonna be the cheapest option if you're
just looking at paying off the debt.
687
00:29:27,193 --> 00:29:30,373
But the problem is you don't
have liquidity at that point and
688
00:29:30,373 --> 00:29:32,983
you're at the mercy of the bank
to go access that down the road.
689
00:29:33,613 --> 00:29:35,893
The Velocity banking or
the first lien heloc.
690
00:29:35,923 --> 00:29:38,923
Looking at the math here, it really
doesn't add up unless we talked about it.
691
00:29:38,923 --> 00:29:41,623
You've got some other debt on the
outside that you're trying to tackle
692
00:29:41,713 --> 00:29:44,623
and for whatever reason, this is the
only instrument that you have that
693
00:29:44,623 --> 00:29:46,513
you can use to actually pay that off.
694
00:29:46,933 --> 00:29:48,673
looking at the IBC type setup.
695
00:29:48,853 --> 00:29:52,063
I think it's the best of both worlds
because not only are you paying down
696
00:29:52,063 --> 00:29:55,243
the debt, but you're setting yourself
up for future liquidity and growth.
697
00:29:55,243 --> 00:29:58,723
And you have this asset that is gonna
be having so many benefits for not
698
00:29:58,723 --> 00:30:01,123
only you, but future generations
as well if you do it right.
699
00:30:01,463 --> 00:30:03,753
in this case here, we looked at
the brokerage, but it could be
700
00:30:03,753 --> 00:30:05,073
any kind of investment vehicle.
701
00:30:05,073 --> 00:30:05,493
I agree.
702
00:30:05,493 --> 00:30:06,393
You do need to invest.
703
00:30:06,393 --> 00:30:08,343
You do need to have some
kind of growth out there.
704
00:30:08,343 --> 00:30:11,553
If you are just letting money sit in a
whole life policy, you're not doing this,
705
00:30:11,703 --> 00:30:13,413
so you need to figure out what that is.
706
00:30:13,843 --> 00:30:16,303
Right ratio is where do you
wanna deploy that capital?
707
00:30:16,643 --> 00:30:17,783
and for me, the security
back line of Reddit.
708
00:30:18,798 --> 00:30:22,638
I could see that potentially working
if I had enough whole life on the
709
00:30:22,638 --> 00:30:25,608
side and for some reason the rate
was better there, and if something
710
00:30:25,608 --> 00:30:28,608
went wrong, then I could go ahead and
use my whole life policy to tackle
711
00:30:28,608 --> 00:30:29,868
that if something went outta control.
712
00:30:29,868 --> 00:30:33,108
But if that is my sole source
that I'm relying on, that's
713
00:30:33,108 --> 00:30:34,068
where it really scares me.
714
00:30:34,368 --> 00:30:36,168
And so we've talked about that before.
715
00:30:36,198 --> 00:30:38,478
You know, if You go out on
the market, you see something.
716
00:30:38,998 --> 00:30:39,868
Is out there, that's better.
717
00:30:39,868 --> 00:30:42,508
We're not stopping you from doing it,
but you're doing it from a position
718
00:30:42,508 --> 00:30:45,448
of power because you have that capital
in your, in your whole life policy.
719
00:30:45,898 --> 00:30:48,928
And so the whole kind of thing to
put this together, wealth isn't
720
00:30:48,928 --> 00:30:50,878
built by maximizing returns.
721
00:30:50,908 --> 00:30:53,248
It's built by minimizing
the forced mistakes.
722
00:30:53,398 --> 00:30:57,358
And when you have this buffer there, you
can force or you can make it so that you
723
00:30:57,358 --> 00:30:59,278
don't have to make those forced mistakes.
724
00:30:59,278 --> 00:31:01,468
And you can weather that storm and
get to the point where you're back on
725
00:31:01,468 --> 00:31:04,318
your feet and then riding it out while
everybody else is still recovering.
726
00:31:05,599 --> 00:31:06,049
Well said.
727
00:31:06,365 --> 00:31:08,525
when the notes came out,
I love that last quote.
728
00:31:08,915 --> 00:31:10,920
That's a really good one.
729
00:31:13,034 --> 00:31:13,304
Yep.
730
00:31:14,294 --> 00:31:18,454
one, last thought was, thank you Andy
and Scott for doing the deep dive on
731
00:31:18,454 --> 00:31:22,024
this, because I've looked at some of
these products on a real scratch the
732
00:31:22,024 --> 00:31:24,994
surface type of level, and I look at
it and I go, yeah, that doesn't work.
733
00:31:24,994 --> 00:31:26,614
But I never did the deep dive to see.
734
00:31:27,274 --> 00:31:28,564
Does this really make sense?
735
00:31:28,564 --> 00:31:30,574
Dollars for dollars comparison.
736
00:31:30,574 --> 00:31:31,444
Try to get it to apples.
737
00:31:31,444 --> 00:31:32,044
To apples.
738
00:31:32,284 --> 00:31:33,784
And kudos to you guys for doing that.
739
00:31:33,814 --> 00:31:36,524
'cause that's, I mean, the numbers
you came up with, the research
740
00:31:36,524 --> 00:31:38,774
that shows there, it's pretty
straightforward, pretty clear.
741
00:31:38,994 --> 00:31:40,164
but I, I never took it that far.
742
00:31:40,164 --> 00:31:40,794
So kudos.
743
00:31:41,603 --> 00:31:42,023
It's neat.
744
00:31:42,023 --> 00:31:42,383
I
745
00:31:42,915 --> 00:31:43,665
credit for that.
746
00:31:43,695 --> 00:31:46,545
That was, Andy's math and
747
00:31:47,243 --> 00:31:47,813
I like it Now.
748
00:31:47,813 --> 00:31:49,613
If something goes, if something
goes wrong, I like this.
749
00:31:49,613 --> 00:31:50,243
No, it was all Andy.
750
00:31:50,243 --> 00:31:50,753
It wasn't me.
751
00:31:53,148 --> 00:31:53,718
That's perfect.
752
00:31:53,778 --> 00:31:56,988
No, but actually what did this, and
I like it, is you have people that
753
00:31:56,988 --> 00:31:58,398
are trying to rethink their thinking.
754
00:31:58,398 --> 00:31:59,508
They're looking at different stuff.
755
00:31:59,508 --> 00:32:01,068
They're not just taking our word for it.
756
00:32:01,368 --> 00:32:03,798
And I didn't, you know, quite
asking the people bring stuff up.
757
00:32:03,798 --> 00:32:04,668
I don't shoot it down.
758
00:32:04,668 --> 00:32:06,678
I actually do look into
it to see what's going on.
759
00:32:06,678 --> 00:32:08,808
And we've said it before, if
there's something that makes
760
00:32:08,808 --> 00:32:10,098
sense, I'm gonna go do it.
761
00:32:10,368 --> 00:32:11,658
I wanted to see if this made sense.
762
00:32:11,658 --> 00:32:14,298
And for me, in my end
game that we talked about.
763
00:32:14,593 --> 00:32:15,913
This does not make sense.
764
00:32:16,003 --> 00:32:18,433
I could see, like we said, for
some other people, there might be a
765
00:32:18,433 --> 00:32:19,783
situation where it does make sense.
766
00:32:19,783 --> 00:32:20,262
There's no one
767
00:32:20,323 --> 00:32:23,203
Size fits all, but I'm gonna keep
doing what I've been doing and I, I
768
00:32:23,203 --> 00:32:25,573
think it's gonna probably be the best
for me and my family in the long run.
769
00:32:26,910 --> 00:32:27,390
Awesome.
770
00:32:27,934 --> 00:32:28,084
All right.
771
00:32:28,084 --> 00:32:28,624
Thanks guys.
772
00:32:28,684 --> 00:32:30,814
Hopefully we'll see you again on
another podcast, and please tell
773
00:32:30,814 --> 00:32:31,744
your friends if you like what you're
774
00:32:33,605 --> 00:32:33,965
Cheers.
775
00:32:33,965 --> 00:32:34,385
Have a good day.
776
00:32:38,413 --> 00:32:40,213
Thanks for tuning into
the infinite mindset.
777
00:32:40,693 --> 00:32:43,783
If you found today's conversation
valuable, share it with someone who's
778
00:32:43,783 --> 00:32:47,293
ready to think differently about
finances, and don't forget to subscribe.
779
00:32:47,653 --> 00:32:50,413
Your journey to financial freedom
starts with the right mindset.
