Valuable Finance Insights from Tier 1 Capital

There’s no doubt that having an emergency fund is a good thing, especially as a small business owner. Today, we’re going to talk about how to build an emergency fund outside of the bank to put you in more control of your finances as times get tough.

According to a study by Intuit, 61% of small business owners suffer from either chronic or cyclical cash flow issues. And here’s the key what we’ve found working with small business owners for over 40 years is that all of these cash flow issues are self-inflicted. They emanate from how we’ve been trained to use our money. And the key here is, we have a process where we can show you how to reverse the flow of your cash. That is, you’ve been trained to have that cash flow move away from you now we just reverse the flow so the energy is flowing back to you.

And the best part about this condition being self-inflicted is that you are the one making the decisions that led you down one path. And by changing how you’re using your money, you’re able to lead yourself down another path, a path that gives you more access to capital so you’re not at the mercy of the bank anymore. Not only does it give you access to capital, it gives you independence from the bank. It also gives you the freedom to be in control of the repayment process because you’re borrowing against your own reserves rather than asking permission and getting approval from somebody else to tap into their reserves.

So using these whole life insurance policies designed for cash value accumulation is really taking a step to build up a private pool of capital that you have full liquidity, use, and control over that you’re able to use to self-finance in your business. So now, instead of making payments to the bank, you’re making payments to the insurance company and rebuilding that access to capital as time goes on.

That’s such a strong point because again, as you’re paying down your loan, you’re also simultaneously increasing your equity. So you really continue to keep this process and this momentum growing. The financial energy is incredible. And now that puts you at a distinct advantage against your competitors, against your peers and it also positions you for growth to be able to take advantage of opportunities.

And you know, there are a few things a business owner could use that capital for that I can think of. First, we have the emergency fund. If cash flow becomes tight and we need to cover monthly expenses, we could certainly tap into that cash value. Second, we have the ability to use that cash value to self-finance purchases. Whether it’s inventory you’re able to buy it at a discount or a large piece of equipment, you can tap into a life insurance policy loan. You’ll have much more control over, number one, whether you’re able to access the money, and number two, the repayment schedule that goes along with it. Third, if you want to expand your business maybe open a new location you’re able to use the life insurance policy loan to take advantage of those opportunities.

You know, all we’ve discussed so far in this blog post are the practical applications of the cash value. But you also have to realize the death benefit is important. Whether you purchase the policy for succession planning, exit planning, or key person retention planning, you’re now getting one dollar doing multiple duties. And that’s the way you beat recessions and inflation you get one dollar to perform multiple duties.

Let’s take a step way back here. Because when we talk about whole life insurance, people think about premiums. How would a business owner start funding a whole life insurance policy especially if they are cash flow pinched, don’t have access to capital on a monthly basis, and feel like they need that money to get out of their current situation?

That takes what Nelson Nash taught me: honest introspection. You have to really take a look at how you’re using your money. Because we’ve been trained to transfer control of our money and our cash flow unknowingly and unnecessarily. Those are the two key words: “unknowingly” means we don’t even realize it’s happening. We think it’s moving us forward, but it’s actually holding us back. “Unnecessarily” means you could stop doing it. And when you look at things with honest introspection, you’re able to discern whether or not it’s actually moving you forward. And if it isn’t, and you’re not in control, all of a sudden if you just stop those strategies or uses of money, now you’re in control. And that’s the key.

One of the things we’ve been trained to look at when evaluating how we use our money is interest rates. We’re trained to think, “How much is it going to cost me in interest?” and “How can I pay less interest?” And the thought becomes, “I don’t want to give up control of that money. I want to pay it off as soon as possible.” But a lot of times, by taking that step for example, putting $1,000 extra on a loan to save on long-term interest what you’re actually doing is giving up control of that $1,000 today. And that leaves you feeling pinched. So it doesn’t necessarily matter that you’re saving a few bucks on interest if it’s not giving you a feeling of financial freedom. The better question is: how could we use that $1,000 to move us forward today, meet current needs, and set up the business for a stronger future?

Ultimately, the bottom line is you have to be in control. Because if you’re not in control, somebody else is. Right?

So when you give that $1,000 to the bank, you no longer have liquidity, use, and control over that money the bank does. And if you want to get your hands on it, you have to go back and ask for permission. That’s not a great position to be in when you’re striving for financial freedom.

It’s funny, a lot of times when we’re sitting down with business owners talking about funding their succession, exit, or key person retention plan, they’ll say, “Well, we don’t have the cash flow for it.” I always tell them, “You probably do. But you have to make some changes in how you’re using your money.” And sometimes people take exception to that. We don’t mean it critically. We literally mean you’ve just been trained to use your money a certain way. If you unlearn those bad habits, all of a sudden, you can be in control.

What we’re really doing at the end of the day is moving money from one pocket to the next. Instead of giving that money to the bank, we’re just putting the money into a life insurance policy to build up a private reserve a pool of capital that you own and control, that you’re able to access to take advantage of opportunities, to move your business forward, and to get yourself out of a cash flow pinch instead of trying to save a couple of bucks on interest. So at the end of the day, the choice is simple: do you want to get out of debt as soon as possible and be cash poor, or do you want to build an emergency fund that you have full liquidity, use, and control over?

At the end of the day, there are only a few places where you can store that emergency fund.

You know, there are a lot of similarities between banks and insurance companies. Think about it—they’re both financial intermediaries. They take our money, invest it for profit, and stand in the middle guaranteeing us against loss. Both banks and insurance companies are insured by some form of government program. Banks are insured by the FDIC. Insurance companies are not but they are insured by each state’s insurance guarantee fund. For example, the FDIC insures your bank account up to $250,000. Here in Pennsylvania, the state guarantee fund insures your insurance account up to $250,000.

So there are a lot of similarities between banks and insurance companies. But there’s one key difference: how they’re allowed to reserve money. A bank is set up on a fractional reserve system, which means for the bank to guarantee your deposited dollar, they only have to set aside about 10 cents. Insurance companies operate on a 100% reserve requirement. That means if you have a dollar with the insurance company, they can only loan out that same dollar they can’t multiply it like a bank does. That makes your money much safer with an insurance company than a bank, because of how they’re regulated to reserve your funds.

If you’d like to learn more about how to build an emergency fund using a whole life policy designed for cash value accumulation that could also serve other benefits for your business, check out our website at www.tier1capital.com and click the “Schedule Your Free Strategy Session” today.

Thanks for reading, and remember it’s not how much money you make, it’s how much money you keep that really matters.

When it comes to owning a family business, there’s no official job description. But there is a lot of responsibility. You’re providing for your family and not only that, but also for your employees. Especially now, it’s important to think about how to recession-proof your business and how you could utilize whole life insurance to do so. Whether you have an existing whole life insurance policy from 20 or 30 years ago that’s been accumulating cash value, or you’re considering how you could use whole life insurance in your business now and moving forward, there are a few key components that make it perfect for setting up your small family business to weather a recession. Today, we’re going to talk about how to set yourself up to recession-proof your business using a whole life insurance policy.

When it comes to owning a small business, there’s no formal job description that comes with the title but there is a lot of responsibility, especially in times of economic hardship. Lately, people are throwing around the word “recession” more and more. So you might be wondering, “How do I set my business up so that I can take advantage of opportunities and not be pinched when the economy is down?” According to a U.S. Bank study, 82% of all business failures are due to poor cash flow management. That makes sense, because as we always say: It’s not what you buy it’s how you pay for it that will impact your business.

The reality is, we’ve been trained by banks, large corporations, vendors, and even the government to use our money in ways that are detrimental to us but beneficial to them. If we could unlearn that process and relearn a system that puts us in control and redirects the flow of money back to us instead of away from us, we suddenly have an unfair advantage over our competition and our peers.

Many people see whole life insurance as an expense or a bill a way of using money that leaves them out of control. But in reality, the way we design these policies is for cash value accumulation. That holds true for older policies, too those from 20 or 30 years ago still have guaranteed cash value growth. You can tap into that growth on a guaranteed basis. Whole life policies also have a guaranteed loan provision, and in many cases, dividends that accumulate over time.

With all of these benefits, whole life insurance allows you to recession-proof your business because you can access that money without questions, without credit checks, and without a required repayment schedule.

Here’s the key question: What’s the first thing to dry up in a recession? Simple, access to capital. The first thing banks do is tighten up lending. In 2008, during the financial crisis, banks froze credit lines whether it was a home equity line or a business line. They simply said, “You can’t tap into it anymore.” Then, they often changed repayment terms, requiring principal and interest instead of interest-only payments, forcing borrowers to scramble for new banking relationships.

Knowing this happens, doesn’t it make sense to set up your own pool of capital that you can tap into at any time, for any reason, without permission? Your right to a policy loan is a contractual guarantee. You aren’t seeking approval you’re giving instructions to access your money when you want it. That puts you in control. That’s what we advocate: keeping our clients in control of their money and cash flow at all times.

The beauty of policy loans is that you’re not actually borrowing from your policy you’re borrowing against it. Your accumulated cash value remains in the policy, still growing, while the insurance company issues you a collateralized loan against it. Your pool of capital continues to earn guaranteed growth and dividends as if you hadn’t touched it. And as you repay the loan, your available borrowing power increases dollar for dollar.

For example, if you make a $500 payment toward your policy loan, your loan balance decreases by $500, and your available equity increases by $500. If you wanted to, you could call the insurance company the very next day and request that same $500 back. They’d simply ask how you want it mailed as a check or sent via ACH to your account.

Compare that to a mortgage or bank loan. If you make extra payments to a bank, you can’t just take the money back. You’d have to reapply, face credit checks, and possibly be denied. That’s the huge advantage of a policy loan especially during uncertain times. With a bank line of credit, you may have access to funds today, but tomorrow they could decide to freeze it. With a policy loan, the terms don’t change just because the economy does.

And here’s the kicker you can be the bank’s best customer: never late on a payment, always in good standing. But if the economy shifts or the bank perceives new risks, they can still reduce or cancel your access to credit. That’s why you need to be prepared for both good times and bad. As the saying goes: A banker will sell you an umbrella when it’s sunny, and take it back when it starts to rain.

We’ve seen it happen time and time again. With whole life insurance, you keep the umbrella.

If you’d like to learn more about putting this concept to work for your life, your business, and your family, visit our website www.tier1capital.com and click the “Schedule Your Free Strategy Session” today.

Thanks for reading, and remember it’s not how much money you make, it’s how much money you keep that really matters.

When it comes to life insurance policies, especially whole life, there are a lot of details to understand especially when it comes to policy loans. This isn’t something most people deal with every day, so naturally, it raises a lot of questions. One common question is about how interest is charged on policy loans: specifically, whether the insurance company charges interest in arrears or in advance.

Interest in arrears means the interest on your loan accrues over time and is paid at the end of the period just like how a bank typically charges interest on a mortgage. In most cases, if you take out a policy loan, you’ll receive a bill for the accumulated interest at the end of the policy year. For example, if you borrow $10,000 in the middle of the year, the insurance company will charge you interest on that balance for six months. At the end of that time, you’ll be billed for the interest let’s say at 5% annually, that would amount to $275 for six months.

This is simple interest, meaning it’s calculated straightforwardly based on the loan balance and duration. Over a full year at 5%, you’d pay $500. Over half a year, you’d owe $250 pretty straightforward.

On the other hand, some companies charge interest in advance. That means the full interest is added to your loan at the time the loan is taken. If you took the same $10,000 loan at 5% interest for six months, the company would charge $250 in interest up front. So your loan balance from day one becomes $10,250, even though you’re technically borrowing $10,000.

In the end, the total interest paid is the same either way. Whether it’s charged upfront or at the end of the year, it’s just a matter of when the interest is assessed not how much. So this common question about interest in arrears vs. advance is really a non-issue. It’s just a difference in billing timing, not in financial impact.

But what happens if you repay the loan early? Say you took the $10,000 loan and paid it off in just three months instead of six. In the case of advance interest, you’d be refunded half of what you paid upfront roughly $125 in this example since you didn’t keep the loan for the full period. So yes, even with interest in advance, early repayment can reduce the total cost.

This is often just a minor confusion people run into when searching online, but it doesn’t really affect how you use your policy loan. These are contractual guarantees, and the interest is simple and often fixed for the policy year. It’s a reliable, transparent structure, regardless of how the interest is charged.

Here’s the most important part: policy loans are unstructured loans. That means you, the policyholder, have control over how and when you pay them back. You decide whether to pay just the interest, pay down the principal, or do nothing at all so long as there’s enough cash value to cover the accumulating charges.

Of course, we always recommend paying back the interest to avoid it compounding and eating into your policy’s cash value. But if you’re in a cash flow crunch, you’re not required to pay immediately. You retain flexibility, and that’s one of the greatest benefits of using a whole life insurance policy as a financial tool.

So again, whether your interest is charged in arrears or in advance, it’s not something to stress about. What matters most is that you’re in control of your repayment schedule. That flexibility allows you to adapt based on your financial situation whether you’re flush with cash or experiencing a temporary crunch. And in times of economic uncertainty or personal financial pressure, access to liquid capital like this can make all the difference.

If you’re exploring policy loans, that’s a sign you’re thinking proactively about cash flow. And that’s a great move.

If you’d like to learn more about how to use policy loans to benefit your family, your business, or your personal situation, visit our website www.tier1capital.com and click the “Schedule Your Free Strategy Session” today. We’ll review your situation and help you understand exactly how policy loans can fit into your financial plan.

Thanks for reading, and remember it’s not how much money you make, it’s how much money you keep that really matters.

Do you realize that life insurance contracts are unilateral contracts? This means that we, as the policy owners, have only one obligation, paying the premium, while all of the other obligations lie with the insurance company. But what happens if you can’t pay your insurance premium? What are your options?

When it comes to life insurance contracts, especially whole life insurance policies, you’re entering a long-term commitment. It’s a contract between you and the insurance company, where you agree to pay the premium. But life doesn’t always go as planned. What if cash flow is tight? What if you don’t have access to the money? As a policy owner, what can you do to keep the policy in force?

This question comes up a lot, especially when people are considering purchasing a policy. And when you do find yourself in a cash flow pinch, the key becomes how much equity or cash value you have in the policy. For a term policy, you don’t have any equity. If the premium isn’t paid on its due date whether that’s monthly, quarterly, semi-annually, or annually you may have the flexibility to change the payment frequency to suit your cash flow better. But if you don’t pay it within the grace period, usually 30 or 60 days, the policy will lapse and you’ll lose your coverage.

That loss can be a big issue for your family. But with permanent life insurance like whole life, there’s a very different dynamic. The question becomes: how much equity have you built up in the policy? In the early years, there’s usually very little equity. However, when structured properly especially with the use of paid-up additions riders you can build significant equity in the early years. This can provide you with the option to borrow against the policy’s cash value to pay your premiums going forward, or at least cover a portion of them.

The key is having that option available. If you have a standard whole life policy with no additional funding beyond the base premium, it will still accumulate cash value each year. So, in the later years let’s say year four, five, or six you should have built up enough equity to cover one, two, or even three years of premiums if needed. That can absolutely be a lifesaver if you’re facing a temporary cash crunch.

We had a client who was 67 years old when we met him. His father had purchased a policy on him when he was 13, but tragically, his father passed away when the client was 16. Only three years of premiums had been paid on the policy. Decades later, the client contacted us because he was still receiving premium notifications and wasn’t sure if the policy was still active. He sent over the documents, and it turned out the policy was indeed still in force. We helped him obtain an in-force ledger to understand the current status. Sure enough, there was a $7,500 loan against the policy, but he was in a good financial position and chose to repay it.

The policy his father had bought was a “life paid up at 65” plan. By repaying the loan, the client restored the policy to its fully paid-up status. Originally, the death benefit had been $5,000, but it had grown to $12,000. On top of that, the policy continued to earn dividends and interest, meaning both the cash value and death benefit would keep growing. All in all, his father had paid premiums for just three years, and the client ended up with a strong, active policy decades later thanks to the built-in safety net of whole life insurance.

Most people in these situations don’t want their policies to lapse. They reach out because they’re trying to find a way to maintain their coverage. One option is to take a policy loan, provided there is equity available. Another option is to surrender dividends or some portion of the cash value to cover the premium. That choice has more of a long-term impact, though. When you take a policy loan, it reduces the available cash value and death benefit dollar for dollar. But when you surrender dividends, it reduces not just the cash value and death benefit, but also impacts future growth, since you’re no longer earning dividends on those surrendered dividends.

Another possibility is to reduce the policy. For instance, if you’re in a long-term cash flow crunch and can only afford half the original premium, you might be able to lower the face value of the policy and pay a smaller premium based on that reduced death benefit. The key here is that you have options, and the insurance company has built in safeguards to help you avoid losing coverage due to situations beyond your control.

One more option is what’s called a “reduced paid-up” policy. Let’s say you’ve had your policy for 30 years and accumulated a healthy amount of cash value. You want to retire and stop paying premiums. While not always recommended, you do have the choice to convert your policy to a reduced paid-up policy. This freezes the current cash value and uses it to purchase a smaller, fully paid-up policy. You’ll never pay premiums again, and the policy will continue to grow, just on a smaller scale. It’s kind of like a limited-pay policy—you start with the intention to pay over a certain period, but cut that period short when you hit your desired milestone.

With a reduced paid-up policy, you may go from a $500,000 death benefit to a $300,000 benefit, but you eliminate the need for future premiums. Many people like this option in retirement, especially if they’re living on a fixed income. It doesn’t trigger any taxable events, and you continue earning dividends and interest on the new, smaller policy.

Finally, there’s the option to surrender the policy altogether. If you decide not to keep the policy, you can surrender it and receive the accumulated cash value. You’ll get your premiums back on a tax-free basis, and anything above that amount will be taxable as income in the year of surrender. If you’re struggling to afford premiums, your best move is to contact your insurance agent or company to review the specific options available for your policy.

Don’t wait until a cash flow crisis catches you off guard. Visit our website www.tier1capital.com and click the “Schedule Your Free Strategy Session” today. We’d be happy to chat with you about your specific situation.

Remember: It’s not how much money you make, it’s how much money you keep that really matters.

You’re planning on exiting your business. How do you go about doing that? Well, it starts with finding an advisor who’s experienced. You only get to leave your business one time. You don’t want to mess it up. Today, we’re going to talk about the critical questions that need to be asked when you’re planning your exit strategy so you can find the right advisor for your situation.

There are so many financial advisors out there, and not all of them are the same. If they were, we’d all be doing the same job in the same exact way, there’d be no deviation, we’d all be earning the same returns and using the same strategies. So when it comes to picking an advisor who’s right for you, it really comes down to a few critical questions that need to be asked.

The first question you need to ask is: does the advisor specialize in exit planning? Most advisors are only concerned about managing your assets. They want to provide investment advice on the assets that you’ve already accumulated. And it’s a totally different skill set for the exit strategy. It’s about making sure that the business is in a position where it’s able to be sold and sold for the highest price. Your blood, sweat, and tears went into this business for however many years building it so it could provide for you, your family, and your community. But when it’s time to step back, how do you make sure you’re able to recoup your investment for the most amount possible?

The key is preparing you for that ultimate day when you’re going to walk away from your business. Most business owners—80 to 90 percent—have their wealth tied up in their business. And when they leave the business, they are typically only getting 24 cents on the dollar for the value of their business. Clearly, something needs to change in that dynamic because you’re setting yourself up to be in a situation where you may not be able to get the most out of the value of the business from what you’ve done over the years.

It all comes down to proper planning. You only get to do this one time. You only get one shot in most cases, unless you’re a serial entrepreneur, to leave your business and to get the most out of it as possible. You want to have someone on your team who’s experienced with this type of situation and who’s able to help you navigate these waters.

We had a situation where a client of ours had been planning with us for 32 years for the exit he was hoping to have somewhere down the road. Thirty-two years ago, he had no idea what that would look like, but every year he put money away, and we prepared him for that exit. Over the past five years of his business career, he was getting offers to buy his business. And those offers were lowball offers. He was in a position where he could reject those offers because his financial wellbeing in retirement was never going to be predicated on selling the business.

It all comes down to having money. And when you have that money, you have options. When you don’t have money, you could be scrambling for it. You want to get out of the business, you want to retire, and there’s only one way to do it and that’s to take an offer that someone’s giving you. But when you have money, you’re able to negotiate better.

Being prepared really puts you in a position where you don’t have to jump at the first offer. And by the way, the offer he got was incredible. It was over 50 percent more than the best offer he had received previously. He had the patience to wait it out for the market to be just right. That put him and his family in a very good position financially for retirement.

The second question you should be asking is: can the advisor show you ways to improve your cash flow so that you can find additional money within your cash flow to direct toward the exit plan? Think about the dynamics of that. There’s money within your cash flow that might be being utilized inefficiently, and if we can redirect that cash flow to fund your exit plan, it doesn’t have to come out of your current expenses.

The first step is to have that awareness that, “Hey, I’m going to want to exit my business one day,” but that doesn’t necessarily solve the problem. Awareness of the problem isn’t going to give you the solution to the problem. In fact, it may impose another problem and that’s that you don’t have the money to fund the solution. That’s the case in most people’s situations. But having an advisor who is able to step back and look at your position from a different perspective, perhaps through the perspective of control and getting your money to do multiple duties so a dollar that was only performing one job is now able to do that job plus fund that succession or exit plan is going to be a good thing. You’re going to be able to achieve two goals with one dollar.

We had a situation where a client wanted to do his exit plan. He was 64 years old and hadn’t done any planning previously. When we told him that it was going to cost about $20,000 to $25,000 per month to set up this exit strategy, he said, “I can’t do that.” I told him, “I’ve already looked at your financials. You have over $20,000 of recurring revenue that is being utilized inefficiently. If I can show you those areas and prove to you that they’re being used inefficiently, would you put that money toward your exit plan?” He said absolutely. And that’s exactly what we did. We found about $22,000 per month of recurring revenue that was being used inefficiently. It was things like debt, inefficient planning, and taxes. We designed a plan to redirect that money to create his exit strategy, while still addressing all the issues that the money was previously being used for. The key is we were creative enough to find the money within their current cash flow to fund their exit strategy.

The answer isn’t always as simple as reducing overhead or increasing revenue. There are other ways to look for inefficiencies within a business’s cash flow that can be used to achieve a huge goal like an exit planning strategy.

The next question you should be asking your advisor is: what is their position on debt? Seventy percent of small businesses have some form of debt. Not being well-versed in debt strategies could really hinder your ability to set up an exit strategy. There’s good debt and bad debt. What we try to do is analyze your debt situation and maximize the efficiency of your debt service. That’s another way you can improve the efficiency of your money and your cash flow.

Most business owners don’t want the burden of debt on their shoulders, so they pay as much as possible and direct as much revenue and cash flow as possible toward that debt. But what that might be doing is actually holding you back. By putting all of your money in one bucket, you no longer have anything left to fund the things that really matter and the things that are leaving you exposed long term.

The next question you should be asking is: what is the advisor’s attitude on risk? Specifically, are they recommending strategies for your exit that increase the amount of risk you’re taking? I don’t know about you, but when I’m doing planning, I want a plan from A to B that’s going to work no matter what. Because otherwise, what’s the point of doing a plan? I don’t want to risk my way to a possible reward. I want to make sure that, especially with something as precious as a business, I’m able to achieve the goal I’m working so hard to reach.

We have found that there are a lot of advisors in the exit strategy space who recommend strategies that increase your risk. These strategies are often predicated on financing to set up your exit. If you’re taking on additional debt to fund your exit, that’s not always the best case scenario. Others are recommending products that pass risk back to you, and that’s not a good situation. We’ve seen those situations and called attention to them, whether it’s a strategy or a product or both, that are adding additional risk to your situation risk you may not even be aware you’re taking on.

It all comes down to awareness, knowing what you’re doing, and making sure your advisor is aware of what you want and how you want to achieve your goal of exiting the business. If you’d like to learn more about how to put these strategies to work for you and if we’re the right fit for your business exit strategy visit our website www.tier1capital.com and click the “Schedule Your Free Strategy Session” today. We’d be happy to chat with you about your specific situation.

Remember: It’s not how much money you make, it’s how much money you keep that really matters.

According to Intuit, 61% of business owners around the world experience either cyclical or chronic cash flow issues. What we’re going to talk about today is how to use the infinite banking concept to put you back in control of your finance payments, even when you have these cyclical or chronic cash flow issues.

When it comes to owning a business, a lot of times people go into building a small business because they want to be in control of their destiny. They don’t necessarily want to answer to anyone, right? And they think that they could profit more on their own than working under someone else.

And everything goes smoothly until they have to get a loan for their business. And then the bank comes in and makes them sign two times once for the business and once personally that personal guarantee. And it’s at that point, at that exact point, that they realize, oh, I’m not in control.

Because the bank is now controlling the finance function in your life. And here’s the deal. They’re not just controlling the finance function; they’re controlling the cash flow. And that’s why Intuit, when they did their study, realized that 61% of business owners around the world are literally suffering from chronic and cyclical cash flow issues. Why? Because the business owner is not in control of the financing function. I bet that closely correlates to the other study that said 68% of business owners either sleep less or lose sleep over cash flow because of that cash flow issue and the stress that’s caused by it.

Because now they owe the bank. When you get a loan, you get a coupon booklet. Or if you get a credit line, you’ve got to pay the interest every month. And so you’re obligated to make those payments. That brings us to the subject of our blogpost today, which is unstructured loan payments.

When it comes to the infinite banking concept, one of the best features I feel there is, is number one: guaranteed access to the cash value. As long as there’s cash value built up in your policy, you have access to it. And number two: when you take a policy loan, it’s an unstructured loan. Right? So you tell the insurance company, “Okay, insurance company, send me X amount of money.” And they say, “Okay, where do you want me to send it? I could send you a check to your house, or I could put it in your bank account. No big deal.” But the key here is there’s no coupon booklet. You get to pay that loan back as quickly or as slowly as you see fit. We do recommend you pay back at least the loan interest on an annual basis, but other than that, it could fit into your cash flow.

So it’s recommended that you treat your money just as you would treat the bank’s money and have those intentions. So maybe that looks like setting up a loan for 10 years and paying 10% interest back to the loan. Okay? But let’s say five years down the line, cash flow changes. Maybe you’re expanding your business, and so cash flow is tight for the time being. You’re able to cut back if you wanted to reduce those payments or stop the payments for a period of time with no penalty. Right? The only thing you have to consider is the loan interest being charged on that loan.

But the key is because the loan is unstructured, you have the option to fit the monthly payment if you choose to have a monthly payment into your cash flow, rather than the bank dictating what your monthly payment is going to be. That’s number one. But number two is you also have the option of not paying, of paying interest only, of paying it back in a short window let’s say a two- or three-year period or a longer window at, let’s say, a seven- or ten-year period. The key is that it’s your choice, and that’s the value of an unstructured payment fitting those payments into your cash flow rather than making your cash flow fit into the payment.

This is a huge deal, right? Because think about it: if you own a business and you have cyclical cash flow issues let’s say you are a shed business owner, and people buy sheds in the summer mostly, right? That means all of your cash flow is coming in those summer months. But during the winter months, it’s not so cash-flush. So maybe you make higher payments during the summer months when you have that cash flow and then you cut back during the winter months. But the key here really is once you make those payments back to the policy, you have access to that money again, right? So it’s not like you’re making these payments and they’re going to the bank and then you’re never going to see them again unless you qualify for that money. Again, with the life insurance policy loan, you’re rebuilding your pool of cash that you have full liquidity, use, and control over, that you’re able to access again if and when you want to.

And again, that’s not a small distinction. You get to access the money that you’ve already used to pay down the loan, and you get to use it again no questions asked. You know, when you go to a bank, you’re asking permission and seeking approval. When you get a loan with an insurance company, you are giving an order. That’s not a small distinction.

Another thing to consider is that all along the way, you are paying your premiums, right? Whether it’s on an annual, monthly, quarterly, or semi-annual basis. So when you pay back your policy loan, plus you’re paying the interest, again, you’re building that pool of cash. So you’re able to finance larger and larger purchases as time goes on, and that policy becomes more efficient.

And not only does it become more efficient, but now your cash flow becomes more effective. And that’s the key. You’re now in greater control. And the control issue we’ve talked about it a lot in this blogpost but the control issue is paramount. That’s why business owners went into business: to be in control. But now, when you control the financing function in your business life, now you’re in complete control.

Well, I think another factor that needs to be placed in this and emphasized is the death benefit, right? Because now, in either situation whether you have a policy or not you’re making that purchase. There is the debt, right? Whether we’re financing from a bank or we’re financing from the policy. But when you have that policy, now you have a death benefit associated with that. So whether that’s your family or your business owner who’s going to come into the business after, they don’t necessarily have to worry about coming up with the money to pay off that loan. They don’t have to worry about liquidating assets or selling the business. They have a death benefit that’s going to be reduced dollar for dollar for any outstanding loan. Plus there’s going to be death benefit associated with it. So exactly when they need money, they’re going to have it. So they’re not forced into those hard decisions of selling off assets and selling the business.

And that’s a great point because literally built into their financing mechanism is a mechanism to extinguish the debt at their death. That’s an awesome feature. Would you rather a death benefit or a personal guarantee, right? Because if you have a personal guarantee—Well, now you put it that way, I guess I’ll take the death benefit. If you have a personal guarantee, doesn’t that mean your estate’s responsible for paying back that loan? And that’s a lot of pressure for the executor of the estate, right?As if there wasn’t enough pressure.

If you’d like to learn more about how to implement the infinite banking concept and these policy loans into your plan, visit our website www.tier1capital.com and click the “Schedule Your Free Strategy Session” today. We’d be happy to chat with you about your specific situation and how we could put this to work for you to make your cash and your cash flow as efficient as possible.

Remember: It’s not how much money you make, it’s how much money you keep that really matters.

When it comes to thinking about investing, people not only have to consider the risk of their money but also the risk of time. How much time do you need to be invested in order to earn a reasonable rate of return? And is that time commitment worth the risk associated with the investment? That’s what we’re going to talk about today, the importance of thinking long term when it comes to your finances.

When it comes to thinking about money, saving, investing, it’s important to think about timeframes, right? And think about what to expect over a certain amount of time. There’s an old Chinese proverb: “The best time to plant a tree was 20 years ago. The second-best time is today.” That really outlines that you can’t go backwards, but you can make decisions today that will set you up for success going forward.

And you know, when Nelson Nash wrote his bestselling book Becoming Your Own Banker, he had the human factor. And one of them was thinking long term. I’ve got to tell you, Nelson Nash was trained as a forester, and they think 70 years in advance. Like Nelson would say, “I’m probably not going to be here, but somebody is going to benefit from my long-term thinking.” That gets me thinking about infinite banking because it is definitely the long game, right? You’re going to finance things over the entirety of your life. And just think about the amount of interest you’re going to pay if you’re borrowing, or the interest you’re giving up if you’re paying cash. That’s going to be a huge pile of money, and somebody could recapture that interest. You’re either going to pay up or give up through the death benefit of the policy you set up to finance all of those things that you’re buying over your lifetime. That got me thinking that we live in a society where we want instant gratification. And infinite banking is the long game. You have to think long term.

Exactly. And I think a key component of that is starting now and starting where you’re comfortable, right? Whatever your cash flow will allow you to save comfortably on a monthly or annual basis, start with that, and you can always build from there. As circumstances change, as your job changes, as you earn more money, maybe you start a business, maybe as we clean up your debt, your cash flow becomes more efficient. And especially as you see how this process works and how it could impact your life going forward, you’re going to want to put in as much money as possible into this extremely efficient way of saving for the future, saving for every single purchase that you make in your life. You could purchase through the life insurance policy loans with no questions asked. And that’s freedom. And not only those purchases, but also take advantage of opportunities, especially as that cash value grows and your banking system grows.

But these are just ancillary benefits of thinking long term. Right? You have access to money, you have tax benefits, you have the ability to recall the flow that was previously going away from you. Now that flow of cash is coming back to you. All of this emanates from the initial decision to think long term. And thinking long term is never a bad thing.

Your future self is going to thank you for the decisions that you’re making today, right? You want to put yourself in a position in the future where you have this pool of money. And with that pool of money, it’s not just any pool of money it’s sheltered from taxes, it’s sheltered from creditors, and it’s accessible all along the way. Because you know, you need to be saving. Ideally, the magic number is 20%, but maybe you start at 5% or 10% and you build from there. And as you do that on a consistent basis and build up that compound interest curve, money and time, you’re going to have access to more and more money and have access to more and more opportunities as time goes on. And that’s really the key of thinking long term starting now and setting yourself up for the most options in the future.

That’s a good point, right? Your future self will be thanking you for the decisions you made today. Now, there are a lot of things my future self needs to talk to like the guy who was a teenager and a lot of those stupid decisions that we made. But I’ve got to tell you, there are certain decisions that I did make thinking long term that have actually paid off. Those instant gratification decisions I’d like a couple do-overs on those.

We don’t necessarily know the outcome when we’re making those decisions, but I can tell you with the life insurance policy, we have little to no risk, right? We have guarantees by the insurance company with this life insurance contract associated with it. We have guaranteed access. We have tax benefits. Like I said, we have the creditor protection not to mention the death benefit that’s going to go on to our family, named beneficiary, or business at the time of our death to recapture the finance costs for our entire life, right? So think about that pool of money that we talked about earlier of all the interest paid and all the interest you didn’t earn. Think about getting that huge pile of money back and passing it on and leaving that legacy behind. That’s really the key, right? The family banking system. How do we set this up for generational success, right? And it comes down to having multiple generations involved in the banking system. And as you build up those pools of money, actually using it, right? Putting it to work. You have access to that money. Yeah. Why not use it so that everyone can finance their purchases through this banking system? And then as windfalls come in, i.e., death benefit, we’re able to roll it into more policies because the family knows how to put this process to work for them.

Here’s the thing this is the key, right? Thinking long term. You can’t think intergenerationally without thinking long term. So it goes hand in hand. And this concept has generational wealth built into it. Exactly that. I mean, it is such a tight system. It’s amazing.

And then some of the most valuable dollars that your family will be able to put their hands on, right? Think about it. If you’re passing on an IRA or qualified plan, the family has rules on how quickly or how slowly they are going to access that money. They have to pay taxes at their tax rate when they access that money. So it looks like you have, let’s say, $100,000, but you really only have $60,000. And it’s increasing the taxes, right? Yeah. So it doesn’t feel good to pull money from those qualified plans when people have to or want to do that. But when it comes to life insurance, that money automatically gets passed on tax-free to the named beneficiary. And they have options, right? They don’t have to take into consideration income tax or state tax or going through probate.

Again, these are all the ancillary benefits of thinking long term.

If you’d like to start thinking long term and put this process to work for you, your family, and your business. Visit our website www.tier1capital.com and click the “Schedule Your Free Strategy Session” button to get started your no-obligation strategy session today. We’d be happy to chat about your specific situation, how we can make it as efficient as possible, and how to put you in the most control possible.

Remember: It’s not how much money you make, it’s how much money you keep that really matters.

When it comes to the Infinite Banking Concept, you may be wondering, did you miss the boat? Are you officially too old to get started with this concept? That’s exactly what we’re going to talk about today.

When you think about life insurance especially whole life insurance you may be considering the cost of insurance. Quite frankly, as the insured gets older, so does the cost of insurance. So, you may be wondering: is it too late to take advantage of this opportunity?

And the reality is yes the older you get, the cost per thousand dollars of life insurance death benefit definitely goes up. For example, I’m 62. Olivia is 33. So the cost for, let’s say, $25,000 of death benefit is going to be much more for me than it is for her. And there’s a reason why.

Let’s say we’re looking at a life insurance policy that is paid up at age 100. That means the insurance company has a 38-year window to put money away for me so that the policy is fully funded by my age 100. But for Olivia, they have 67 years a much longer window. So the annual premium will be lower and the amount they reserve each year will be lower as well.

With a whole life insurance policy, any off-the-shelf policy, the insurance company is making two guarantees. First, they promise to pay the death benefit if and when the insured dies so long as the policy is in force. Second, they promise that the cash value will equal the death benefit at the age of maturity. That means by age 121, the death benefit and cash value are the same.

There’s a trade-off between cost and risk. I may die sooner than Olivia simply because I’m older, so the insurance company is taking on more risk and that’s reflected in the cost. But the trade-off is that they’re also putting more money away each year for me to meet that guaranteed cash value at maturity. For Olivia, with a longer time frame, they can rely more on compounding interest and require less annual contribution.

It’s like a compound interest curve. To get the most out of compound growth, you need two things: time and money. The less time you have, the more money you need to contribute to get the same result.

Now, let’s shift to Infinite Banking. You finance everything you buy. So the question becomes: am I too old for Infinite Banking? That depends. We always ask people: are you done buying things?

You’re either going to borrow money and pay interest, or you’re going to pay cash and give up the opportunity to earn interest. You’re either paying interest or giving it up. There’s no way around it except through the Infinite Banking Concept.

The key to Infinite Banking isn’t just recovering interest although you might recapture it through the death benefit. The real key is being in control of the financing function in your life. Once you reach that point, it truly is a different lifestyle. It’s a life with less stress, more access, and more flexibility.

Most of life’s frustrations come from not having access to money when you need it whether that’s in an emergency or an opportunity. That lack of access can be paralyzing. I once had a friend whose grandfather had the chance to buy an entire city block in upper Manhattan for $45,000, decades ago. But he didn’t have the money and was afraid to borrow. Every time my friend passes that street today, he thinks about what could have been.

That’s the power of Infinite Banking having access to capital when you need it most, through a structure that you own and control: your whole life insurance policy.

When we talk to people about setting up policies, we don’t always start with the death benefit. That part becomes a bonus. We focus on premium dollars—how much can you contribute without negatively impacting your lifestyle? The death benefit is then calculated based on what that premium can buy for your age.

The death benefit guarantees that your family or business recaptures the value of all the interest you’ve paid—or given up—over your lifetime. And it’s paid out tax-free. That’s what makes Infinite Banking such a strong strategy. And that’s why you’re never too old.

We have a client who started Infinite Banking at 83. He’s now 91 and recently built a new home using policy loans. He’s thrilled because he got the home he wanted—and his family will still receive the death benefit down the road. Plus, they’ll get the house too. It’s a win-win.

Now, age is only one factor. Insurability is another. As we age, health issues can arise. That doesn’t mean you’re uninsurable, but some conditions—like recent cancer or heart procedures—can affect whether you qualify and at what rate. In some cases, we may be able to offer a rated policy, which means the premium is slightly higher. In others, we may suggest using a spouse or child if they’re insurable and you have an insurable interest in them.

There are options. The key is starting the conversation early enough to explore them.

If you’d like to learn more about how to put Infinite Banking strategies to work—no matter your age—hop on our calendar. Visit www.tier1capital.com and click the “Schedule Your Free Strategy Session” button to get started today. We’ll help you explore your options, assess your insurability, and build a plan that puts you back in control of your money.

Remember: It’s not how much money you make, it’s how much money you keep that really matters.

When it comes to building a legacy, there are a few ways you could go about it. And quite frankly, there’s actually one way where you could guarantee a legacy being passed on to your family members or charity of choice. And that is with whole life insurance.

Many people want to pass on a legacy but may be wondering how. When it comes to building enough wealth to actually pass on a legacy, you come into some risks. You have investment risk, you have longevity risk—the risk of outliving that money—and taxation risk. So the question becomes, how do we guarantee this legacy that we want to be passed on to the people we care about instead of the government, the markets, or a nursing home?

The point is, when planning for a legacy, you need to plan. And that doesn’t mean you all of a sudden wake up at age 75 and say, “Okay, let’s start planning.” It’s really something that has to be done throughout your life in preparation for the day when you pass on your legacy to the next generation or to the charity of your choice.

Now, I guess if you are age 75, you would be able to pass on a legacy—assuming you’re still insurable. But usually by the time people start thinking about legacy, it’s after their health has diminished and they’re no longer able to qualify for whole life insurance. So what happens is it ends up costing more to give the same amount of money to your family or your charity of choice. That’s why planning in advance—even just enough in advance—can make a big difference. And of course, the sooner, the better.

With life insurance, you’re purchasing dollars for the future with discounted dollars today in the form of premiums. It’s literally paying pennies for dollars of future delivery. And that’s a key point, because life insurance puts you in a position where you can leverage your assets.

For example, if you have $500,000 in investable assets and you plan to leave that to your children or grandchildren, that’s $500,000 of legacy. But technically, it’s less—due to taxation and the cost of transferring that money through traditional means, especially if your state has an inheritance tax.

With whole life insurance, you can use the interest from those investable assets to potentially pass on an even greater amount—say $1 million—by pairing the $500,000 in investments with an additional $500,000 of life insurance coverage purchased using that investment income.

It all comes down to making your money as efficient as possible. By combining whole life insurance with smart legacy planning—whether that includes naming a beneficiary, designating a charity, or setting up an irrevocable life insurance trust—you create the structure that ensures your intentions are carried out.

And that’s the real power here. If you leave your wealth to the uncertainties of the market or a potential long-term care event, you can’t be sure that what you want to happen will actually happen. But with whole life insurance, you’re working with one of the only financial tools that guarantees that your legacy will be fulfilled—even if you’re not here to see it.

If you’d like to learn more about how to put these strategies to work for your specific situation and guarantee your legacy, hop on our calendar. Visit www.tier1capital.com and click the “Schedule Your Free Strategy Session” button to get started today. Remember: It’s not how much money you make, it’s how much money you keep that really matters.

As a business owner, so much focus is put on building your business. How could you get that business up and running, generating profits for you and your family? Well, because of that, 90% of a business owner’s wealth is actually tied up within their business. But you can’t necessarily spend that money. It’s tied up in inventory and equipment and paying expenses. Today we’re going to talk about the importance of building wealth outside of the business so that you could both benefit your family and your business to experience the financial freedom that comes with actually being a business owner.

So much advice that’s given to business owners is actually putting them out of control of their cash flow. When it comes to cash flow, it’s important to make sure you’re in control of it because that’s how you’re able to build a pool of cash that you’re able to access because with access to cash flow comes the feeling of financial freedom which so many business owners are after.

You know, and 83% of business owners basically feel the stress from running the business is more than the freedom that they wanted when they went into business. Well, money problems are a big issue, especially when it comes to sleep at night, right? If you’re not able to pay your bills, you’re not sleeping. You’re trying to come up with a solution as to how you could get by and how you could continue to move forward with this huge burden on your shoulders.

So imagine having a business that’s worth a million dollars and further imagine having a million dollars of capital outside the business. That gives you so many advantages going forward. And they’re two separate things. It’s the same value, but having the million dollars value on your business, it’s being rich on paper. It’s being able to say, “Okay, I’m a millionaire. My business is worth this amount.” But it doesn’t feel like it, right? Because you can’t put your hands on any of it because it’s tied up in so many things. Whether it’s inventory, whether it’s expenses, whether it’s equipment, all of those things, they’re valuable, but only if you liquidate. And the problem is if you liquidate, you don’t have the business.

Well, kind of. Yeah. So now if you don’t have the business, you don’t have the income or the revenue that’s generated from the business. And that creates a big problem. But again, putting yourself in a position where you have access to capital outside the business that’s equal or greater than the value of the business. Now, that’s where the rubber meets the road.

But here’s the problem. Everybody says, “Well, I don’t have enough money to do that.” Right? The cash flow that you’re earning within the business is enough to keep the business going. Not much more. Right? Otherwise, you wouldn’t be in this position. But the reality is you do have the wherewithal to be able to create that second pile of money.

So, we said this in a blogpost. You want to view your business as a firecracker hut. Everything in that business you want protected so that it doesn’t explode. But you also want to create a second firecracker hut that’s completely liquid. So that if the business does explode, your retirement, your standard of living, your ability to get to retirement is not predicated on selling that firecracker hut that just exploded.

Exactly. So when it comes to positioning yourself, it’s real simple. The first step is to change your mindset. Change your mindset from getting out of debt as soon as possible or investing all of your profits back into the business or doing other things that really aren’t putting you in control of that money and instead redirecting that money to an area where you own and control. You still have the same net worth, right? You still have the same assets. You still have the same cash flow, but the difference is you now have access to a pool of cash. And that’s where that financial security and freedom comes from.

And we put this in practice and we’ve been putting this in practice for years for our clients. Recently, we had one of our clients who had been with us for about 30 years. He decided to retire. And it was probably a little premature, but what gave him the ability to pull the trigger and decide to retire was the fact that he was sitting on several million dollars of liquid capital that he had built up over the years with our advice. And because of that, he didn’t have to get the best offer on his business.

Now, here’s the irony. Because he had that money, he always turned away people who were trying to buy his business at a huge discount because they felt and thought he might want to get out of business. The reality was he wasn’t under any duress to sell the business. But all of a sudden, one day, somebody gave him an offer literally that he couldn’t refuse. And because he was in such a great financial position outside of the business, he was able to wait around to get the absolute best offer. Now, it doesn’t always happen that way, but it does happen when you have access to capital.

And this is what we talk about all the time. People who have access to money have access to opportunities. If you don’t have access to cash, the opportunities may pass you by. Or in this case, he would have taken a lesser opportunity because he would have been desperate for cash because the only money that he had or the only wealth that he had would have been tied up within the business.

Exactly. So now because he had that second firecracker hut, all of a sudden he didn’t have to take those lowball offers. And lo and behold, somebody came by with again an offer that knocked his socks off. And they pulled the trigger and the next thing you know, he’s living in retirement.

So, when it comes to building that wealth outside of your business while still running your business, it can feel challenging, especially when 61% of business owners are feeling chronic or cyclical cash flow issues. But what it comes down to is changing those daily disciplines of how you are using your money to get that money back inside of your control. You’re able to regain control of that finance function. You’re able to regain control of that cash flow and make better decisions for yourself and your business so that you’re able to build that pool of money on the outside while still having the value of your business on the inside.

And that’s a great point because you may be sitting there saying, “Well, geez, Tim or Olivia, we would love to be able to build that second pile of money, but we’re having cash flow problems ourselves. How do we do this? We can’t bring in more money.” Well, you don’t need to. The point is, the money is there. It’s just hidden in plain sight. And our process shows you how to uncover that cash flow that’s being used inefficiently. You think it’s moving you forward. It’s actually holding you back from having that second pile of money, that second firecracker hut, if you will, that is outside the value of your business.

If you’d like to learn more about how to build this wealth outside your business, hop on our calendar. Visit www.tier1capital.com and click the “Schedule Your Free Strategy Session” button to get started today. We’d be happy to chat with you about your specific situation, your specific cash flow, and how we could help you move forward to put yourself, your business, and your family in a more secure financial position. Remember: It’s not how much money you make, it’s how much money you keep that really matters.