Are you stuck on the merry-go-round of the debt cycle? You don’t have access to cash and so you’re forced to borrow, and then you go and you earn profits, but all of your profits go towards repaying that debt. When something else inevitably comes up, you’re forced to borrow again. It’s a merry-go-round that goes round and round and round until you break the cycle.
It’s not hard to get into debt. In fact, it’s been quite easy up to this point. Whether it’s student loans, a credit card or a business loan, not to mention mortgages and home equity lines of credit.
Once you’re on the debt cycle, the key is not to stay in it.
The first step is taking that first step, determining what amount you can save on a monthly basis to build up a pool of cash that you own and control so that in the future you’re not dependent on financing to make major capital purchases. A major capital purchase is defined as anything that you can’t afford out of your regular monthly cash flow.
You see, understanding how the problem starts is the best first step. And basically the problem starts because you don’t have access to your own money. Therefore, you have to pay for the privilege of using somebody else’s money, a bank or credit company.
This problem is easily overcome if you just build up your own pool of money in which you can borrow or you can utilize for whatever you want. We’re talking about taking back the financing function in your life because let’s face it, every time we turn the corner, it seems as if we’re making a major capital purchase.
To start, you don’t need to know what your first goal is going to be. The goal initially needs to be to break the cycle, build up that pool of cash so when the time comes, because it always does, you are prepared.
We often talk about being in control. Being in control of your cash. Being in control of your cash flow, and what does that actually mean? What are the benefits of being in control? Well, let’s take a look at what life looks like on the other side of the debt cycle.
The first step is being aware that you’re on the debt cycle. The second step is to make a change, start building up that pool of cash. And then after you have enough money, you’re able to leverage that cash to make major capital purchases. What does that mean for you?
By leveraging the cash, number one, you don’t have to borrow from a bank or a credit company. You can either use your own cash, which we would recommend not doing or borrowing against your cash and replenishing that money over time so that you can make the next purchase.
What we’re talking about is the infinite banking process that uses specially designed whole life insurance policies designed for cash accumulation to help accumulate and keep your wealth. By using the specially designed policy, you’re able to place a lien against the cash value in the policy and access it via a policy loan. What does this mean for you? Well, it basically means that money never leaves your policy.
A lien is placed against the cash value and the death benefit of your policy, and a separate loan is taken out from the insurance company’s general fund. Again, the benefit of this is that your money is able to continuously compound and grow within the policy, and you’re still able to access cash with no questions asked from the insurance company.
And if that was all there was to it, that would be great. But that’s not all there is to it, because the loan you get from the insurance company is an unstructured loan and basically what that means is you determine how, if, and when you repay that loan. And because of that, you get to determine what the monthly payments are. And if they’re too large, you can back them down. If they’re too small, you can increase them. If things go well, you can finish the amortization schedule. If things don’t go well, you can extend the amortization schedule. You’re in complete control of that payback process.
So the two benefits that we see that most of our clients enjoy are, number one, their money gets to earn continuous, uninterrupted compounding of interest. And number two, they control the payback process.
So what does this look like using the policy? Well, you have premium deposits building up the policy’s cash value on a systematic basis, whether it’s monthly, quarterly, semiannual or an annual basis. So it’s building up the cash value over here. And once you leverage that cash value with a policy loan, you set up loan repayments. And so you have money coming in over here rebuilding that cash value, reducing the lien against it as you go.
What that does is infuse cash into the policy from two angles, from the premium deposits as well as the loan repayments. So you’re able to get out of debt faster by using this process because you have so much cash going into an entity that you own and control, not the banks, not the finance companies.
So instead of having that money going out or leaving your control, you have the money staying in and you maintaining control. And if you look at this from a big picture perspective, you never lose control of that money. And as time goes by and compounding interest continues to work for you, all of a sudden you have an ever increasing pool of money from which you can borrow for the next larger purchase.
If you want to learn more about exactly how we put this to work for our clients, check out our free webinar, The Four Steps to Financial Freedom.
And remember, it’s not how much money you make. It’s how much money you keep that really matters.
