Valuable Finance Insights from Tier 1 Capital

Learn about financial strategies to enhance business and personal cash flow. Get tips that will help counteract the effects of inflation. Discover unconventional wisdom related to life insurance, infinite banking, wealth building, and much more—here in the Tier 1 Capital blog.

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Money Management Tips: Save Money on Mortgage Payments

Some so-called financial experts recommend making extra mortgage payments on your balance. If you’re considering this, you need to stick around to the end of this blog because today we’re going to go over three reasons why this may not be the best decision for you and your financial security.

If you’ve been following our blog for a while, you know that we always preach how important it is to control your cash flow. A lot of times conventional wisdom will tell us debt is bad. In the case of a mortgage, that’s often several hundred thousand dollars of debt on your balance sheet, and that could feel heavy. So it makes sense that people want to pay that off as soon as possible.

But the number one reason why that may not be a good idea for your situation is that every dollar that you pay extra on that mortgage is a dollar that you no longer own and control. The question is, is that really leaving you and your family in a safe financial position. Thinking about this logically, today, you own a dollar and you take that dollar and you put an extra dollar on your mortgage. Today, you controlled it. The day you give it to the bank, they control it. Now, if you get disabled, if you lose your job, or if the economic situation in this country changes, now you’ve got to go to the bank to ask permission to get your money.

Are you in control or is the bank in control?

Here’s the first question you should ask yourself: Does paying off your mortgage faster increase your net worth? And the answer is basically no. Think about it. If you had a $400,000 mortgage and you had $400,000 of cash, your net worth is zero. If you pay off the mortgage with cash, your net worth is zero. So you’re not increasing your net worth. But here’s the issue. Before you paid off the mortgage, you owned and controlled, $400,000 of cash and you had a $400,000 mortgage. After you paid off the mortgage, you have zero in cash and a $400,000 house. If you need to get that money, who’s in control, you or the bank?

Here’s the second question to consider: Does paying off your mortgage sooner increase the value of your home? And again, the answer is probably not. So you see, your house will either appreciate in value or depreciate in value. It doesn’t matter whether you have a mortgage, whether you have no mortgage, or you have a big mortgage or a small mortgage. The value of your mortgage doesn’t increase or decrease the value of your home.

Here’s the third question to consider: When you pay off your mortgage faster, is it increasing your financial security or the bank’s financial security? And to answer that question, think of this question. When you go shopping for a mortgage, isn’t there a lower interest rate on a 15-year mortgage versus a 30-year mortgage? And doesn’t that tell you that the bank is incentivizing you to pay off your mortgage sooner? Why? For your benefit or for their benefit? Won’t they get their money back sooner and won’t they be able to turn that money over and loan it again? Is that making your position better or the bank’s position better?

Knowing what you know now, if you have extra money to put on your mortgage, does it really make sense to put it on your mortgage? Or does it make more sense to put it in a place where you have complete liquidity, use, and control of that money to take advantage of opportunities or in the case of an emergency? If you’re to lose your job or become disabled and unable to work, does it make more sense to put it in a place where you own and control it or where you have to ask permission from the bank to access that home equity again? And you see it’s all about control of your money and using your money to increase your security. Keep this in mind:

Whoever controls your cash flow controls your life.

 

So you want to guard it so that you’re not willingly giving up control of that money to the banks, the government, and to Wall Street.

If you have extra cash flow and you’re thinking about putting it towards your mortgage or you already are, and you’d like to learn more about how our process can help you regain control of your cash flow, visit our website at tier1capital.com to get started today.

And remember it’s not how much money you make, it’s how much money you keep that really matters.

College Funding Tips: How To Make Your Money Work For You

Wouldn’t it be great if you could get $1 to do the job of multiple dollars? Are you wondering how this could be possible? Well, stick around to the end of this blog, because today we’re going to talk about multiple duty dollars and how to get your money to work harder for you and your family.

For most of us, our income is limited every month. We only have so much money coming in, so it’s important, and this is why we always preach: 

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

 

It’s also very important to make that money as efficient as possible – to make it work as hard as possible for you and not for the other guys. 

Let me share with you an example of a client who got hit with some extraordinary expenses. He has two children. His first child was a junior in college, and for the first two years, no problem. $60,000 – he was easily able to afford that out of cash flow. But now when he had the second child in school, it was going to cost him $120,000. This was really choking his cash flow. He felt suffocated and the things that they had been accustomed to doing previously now became difficult. So he called me and said, “Hey, what can I do to get some cash flow relief?” So when he came to us, he was feeling suffocated. There was no way he got another $60,000 out of his cash flow this year. But what we gave him was cash flow relief. And that cash flow relief started by having him borrow against his existing life insurance policies to pay for college.

Instead of taking $120,000 out of cash flow to pay for college, he borrowed $120,000 against his life insurance. The $60,000 that he was easily able to afford went back into the policy to pay for policy loans and all we did in essence was extend his amortization schedules. But he was able to do this because he had access to his money. We got $1 to do multiple jobs.

How do we do that? Well, the same money that he was using to pay for college, $60,000 per year was now paying for college, paying for life insurance, a disability waiver benefit, chronic illness, terminal illness, and retirement supplement. That’s $1 doing five or six jobs. That’s the power of multiple duty dollars. 

The moral of the story is we transformed this guy’s problem into an opportunity. If you’re in a situation where you’re feeling stuck and suffocated financially and are looking for some creative ideas on cash flow relief, schedule your free strategy session today.

And remember, it’s not how much money you make, it’s how much money you keep that really matters.

 

How To Fund Your Retirement

Are you wondering what the best type of account is to use to fund your retirement?

There are so many accounts and so many rules, it could all get a bit confusing. But if you’re wondering how to use a cash value life insurance policy to help supplement your retirement income and why it’s a good move, make sure you stick around to the end of this blog.

Conventional wisdom tells us that we should be saving in tax-qualified retirement plans: 401ks, 403Bs, and IRAs. But keep in mind that these accounts didn’t come into fashion until the 1970s. Prior to that, everybody saved in passbook savings and cash value life insurance. Before the 1970s, only the “rich people” had financial advisers, had stockbrokers. But with the introduction of these new qualified plans, it made investments accessible to everyone. I mean, almost everyone either has a retirement plan or could very easily open one up. The way they enticed us to invest in these accounts is with the tax deferment – the tax benefits. 

What happens is we avoid the taxes today, but we are actually postponing them into the unknown future. Thinking about where our economy is, where our government is today, and where they could be going in the very near future, perhaps before we hit retirement or when we hit retirement age – is postponing taxes really a good idea for us?

It may be a good idea for the government because they get to determine what the tax rate is when we go to pull that money out. They say, “How much money do we need in tax revenue?” And then they say, “Oh, let’s just adjust the tax brackets to accommodate our needs so we could fulfill all these promises that we’ve made”.

The key is, that once the government gets us in these accounts, they can do whatever they want. Basically, there are two strategies you can employ for saving for retirement.

Strategy A is to take a tax deduction on a small amount of money today, put it in a place where you can’t touch it until age 59 and a half, and then the government could tax you on every dollar that comes out of there at whatever rate the government sees fit to pay its bills. 

Strategy B is to pay tax on a small amount of money today and let it grow on a tax-deferred basis, but you’ll have complete liquidity use and control of that money to use it for whatever you want, whenever you want, no questions asked. But then when you get to retirement, the government could never tax that money ever again unless you choose for them to tax it. 

Which strategy would be better for you? Strategy A or Strategy B? 

In case you’re new to this blog, Strategy B is a specially designed whole life insurance policy designed for cash value accumulation, and the key is to start this policy as soon as possible. Why? It’s simple: compound interest. Compound interest takes time and it takes money. Once time is gone, we can never get it back. But these policies allow us to save consistently – month after month, year after year. We’re stashing money away in these policies so we could build that compound interest curve. On top of that, there are added benefits like the disability waiver of premium, where if you were to become disabled and unable to work, the insurance company is going to pay your premium for you. We also have the death benefit, guaranteed cash value growth, and guaranteed liquidity use and control via the policy loan provision.

So how do you access your money in retirement from a life insurance policy? Well, it’s very simple. Tax-free distributions are available up to your cost basis. What does that mean? Basically, it means that the amount of money you put in will come back to you tax-free. If you put in 100,000, the first 100,000 that comes out of the policy is tax-free. Over and above that, you can access the money through a loan feature. 

Now, if your distributions from a life insurance policy are tax-free, what does that mean? It means that there’s no federal income tax, there’s no state income tax, there’s no Social Security offset tax, there’s no increase in Medicare premium, and in most states, life insurance death benefits pass outside of state inheritance taxes. So that’s five taxes you’ll be able to avoid in retirement.

Another way that life insurance can be used to supplement your retirement is to act as a volatility buffer in conjunction with your investment portfolio. So how does that work? Basically in a down year, instead of taking money out of your retirement account, you take the money out of your life insurance account. What that allows you to do is it allows your portfolio an opportunity to regenerate itself after a down year. One of the worst things you could do for your investment portfolio is taking a distribution in a down year. By instead taking money from the life insurance policy, it allows your portfolio a chance to regenerate and recover instead of taking that double hit in a down year.

As an added bonus if you’re saving for retirement using life insurance, you’ll have access to that money everywhere along the way. So you can use it to pay for a wedding, to pay for your children’s college, to buy a car, to invest in a business or the stock market. Again, complete liquidity, use, and control of your money. Complete liquidity, use, and control of your money on top of uninterrupted compounding of interest. That means the performance of your policy won’t be affected even if you have a policy loan. As long as you’re with a company that uses non-direct recognition, meaning the dividends credited to your policy won’t be impacted even if you have a policy loan. 

In conclusion, a specially designed whole life insurance policy for cash accumulation is a great way to save for retirement, but it’s also a great way to protect your family and your business along the way because you have full liquidity use and control of your money and the ability to access that money without interrupting compound interest.

If you’re ready to get started with a whole life insurance policy for you and your family, schedule your free strategy session today. 

Money Management Tips: Regain Control Of Your Money

Are you finally ready to get on track with your finances but aren’t quite sure where to start? 

Well, stick around to the end of this blog, because today we’re going to take a deep dive on how to budget and how to finally get on track to pay off your credit cards, your student loans, and how to finally start saving to accomplish your financial goals. 

The first step in any journey is to see where you are now. In the case of cash flow, that means seeing where your money is being spent every single month. We suggest that you track for three to six months where every dollar has been spent. Whether that’s in a journal, writing down every purchase you make, or in the case that you spend your money from a debit or credit card, you can take a look back in your history for the last few months and see where all your money is being spent every month. Here’s the rule of thumb, 

If it’s not monitored, it can’t be managed.

 

The next step is to manage. The way we do that is with a budget. First, you’re going to want to track your inflows. What money do you have coming in every month? Do you have child support? Do you have a job? Do you have commission income? What can you count on every single month coming in? And then on the other side, you want to be looking at what’s going out every month. How much do you want to be spending on entertainment, dining out, groceries, gas, bills for your home, your mortgage or your rent, or your car payment? You want to look at every single dollar that’s passing through your hands every single month. The point of the budget is to be making sure more money is not going out than is coming in. And then we could start looking at how to save, how to get on track financially, and how to manage our money so we could reach each of our financial goals. 

Once you’ve determined that there is excess cash flow, meaning that there is more money coming in than is going out, then you can decide how much you can consistently save on a monthly basis towards meeting your financial objectives. 

As a general rule, we suggest you should be saving at least 20% of your income. Now we understand, we’re American, and most Americans are spending 95% to 110% of what they’re bringing in every single month. I mean, think about the competition that’s going on to get in your checkbook every single month. We have TV subscriptions, drink subscriptions, and even subscriptions for dog toys these days. Everyone’s trying to get into our wallets and to add on top of that, the credit card debt that we’ve already accumulated and the thousands of dollars that many of us have in student loans. The competition is fierce to get in our wallets. It’s not an easy thing to regain control of your cash flow and that’s why we spend so much time focusing on that on our blog. 

The key is to spend less money than you make. If you’re doing that, then you’re in a position to create some financial security for yourself. But it’s been said in America that people buy things they don’t need with money they don’t have to impress people they don’t know, who in the end don’t care. The bottom line is that once you’ve determined a baseline of how much money you can save, then we can get you to the 20%. The key is eliminating inefficiencies in your current cash flow, and that’s where we can help you.

Speaking of inefficiencies in your current planning, we’ve identified five areas where people are giving up control of their money unknowingly and unnecessarily. Those five areas are: 

    1. Taxes
    2. Mortgages
    3. How they’re funding their retirement 
    4. How they’re paying for their children’s education
    5. How they’re making major capital purchases. 

Speaking of major capital purchases, if you’ve been putting yours on credit cards and you’re looking for the best way to pay off that credit card debt and start saving, check out our latest blog post on how to pay off your credit card in the most efficient manner, how to get on track for saving faster.

Here’s the secret, start saving now and start saving on a consistent basis. No matter how little, put some money away every single paycheck so that you can start your compound interest curve now and never let it stop. When you’re looking for a savings vehicle, you want a vehicle that is going to give you full liquidity, use, and control of your money so that you could have access when you want for what you want without incurring any penalties. 

When you’re ready to get started saving, schedule your free strategy session and we’ll be happy to guide you through this journey. 

“And remember, it’s not how much money you make, it’s how much money you keep that really matters.”

Money Management Tips: How to Reach Financial Freedom

Have you ever felt like you’re doing everything right? You’re paying off your debt as quickly as possible, you have a short mortgage term, you’re maxing out your retirement plans, you’re paying cash whenever possible, and you’re investing in the stock market as much as you can afford to, but you’re still not seeming to get ahead. You still can’t reach that feeling of financial freedom like you’ve finally made it? If that sounds like you, continue reading because we’re going to diagnose exactly why that may be the case and recommend some simple shifts you can make to reach financial freedom.

30 years ago, I was in my late twenties. I was doing everything the so-called financial experts were suggesting you do. I maxed out my retirement account. I was paying down my debt, I was paying cash whenever possible, and because I was doing all those things, I never had any access to money. I had to borrow money from my parents to pay my mortgage. Why? Because I was freely giving up control of my money to the financial experts, and to the financial institutions.

Whoever controls your cash flow controls your life.

That’s why we preach: it’s not what you buy, it’s how you pay for it that really matters. Our process has four easy steps: Step one is to identify where you’re giving up control of your money. Step two, the hardest step- you have to STOP doing it. Step three is saving some of that money, and Step Four is where the magic happens- Where you’re borrowing from your own pool of money and paying interest back to yourself, and when you’re doing that, your money never leaves your control.

You’ve essentially cut out the middleman and you’re able to earn continuous compound interest on your money. As you’re repaying yourself, you’re building a pool of cash, so you’re able to access that again in the future. When you’re doing all of these things, paying down your debt, taking short mortgages, maximizing your retirement, investing whenever you can, paying cash whenever you can- you’re literally giving control of your money to them. And who are they? Well, they’re the financial insiders. They’re the greedy 1%, if you want to call it that. They depend on our participation for them to make profits. They create the situation and they make the rules. They profit from our outcomes and so these institutions have rules and those rules are for them to make profits.

So what are the rules? Simple.

    1. They want to get our money.
    2. They would love to get our money on a systematic basis, every month.
    3. They want to keep our money as long as possible.
    4. When it’s time to give us back our money, they want to make sure that they pay it back to us over as long a period as possible.

So how do they get us to follow these rules? Well, they position it as if it’s in our best interest. But in whose best interest is it to hand over all of your money every month to them instead of paying yourself first? It doesn’t sound like it’s serving you, it sounds like it’s serving them, and I would agree. So when you play the game by their rules, you could win according to their rules, but in the end, you lose.

So if you’d like to learn more about how you could apply our process to your situation and how you could finally regain control of your cash flow and regain control of your life, please schedule your free strategy session today.

Mastering Your Money With The Infinite Banking Concept

Money is the master of our lives, or at least, that’s what it feels like when you’re looking into an abyss of debt, loans, and financial responsibilities. When it comes to getting and staying in control of our financial situations, it might seem overwhelming when you have no idea where to start or even what to look for in creating a better, more rewarding strategy of using, saving, and creating money.

In this blog, we’ll talk about how you’re using your money, how banks use it to make more (for themselves), and how you can replicate their model of money flow to make sure you’re generating wealth for as long as you live. We’ll talk about the infinite banking concept, how it works, and how you can apply it in your own, everyday transactions and money strategies.

Ready to get started? Let’s dive in.

What Does Becoming Financially Free Require?

It Takes Less Than You Might Think

When we think of what it means to be or start becoming financially free, we often imagine luxurious cars, lavish holidays, and an endless flow of cold, hard cash. However, financial freedom looks different depending on who you ask.

For some, it means having the security to enjoy their hobbies and passions without sacrificing their quality of life. For others, freedom simply means learning how to control your finances before they control you through impulsive spending and crushing debt.

The one common fact about financial freedom, no matter who you ask, is that it’s possible to unlock it – and the infinite banking concept is the key.

First Things First…

You Need to Understand It’s Not About What You Buy or Don’t Buy

When you think of saving, you might think of the things that you buy. Instead, you should be thinking of how you’re paying for the things that you buy. In most cases, you’re either paying or losing interest.

Take financing a business for example. When you finance a business, you’ll incur interest that’s paid to the financial institution or lender you’re working with. When you pay in cash, you’ll never see the money that you don’t earn. You’ll essentially keep the interest.

With that in mind, it’s important to understand that the secret to how to control your finances is to control your cash flow. You need to find the most effective, efficient way to earn compound interest on a regular, continuous basis, without halting the purchases that you want or need to make.

Now that you have a basic overview of what you need to know about interest and payments, let’s talk about how banks make money.

How Do Banks Make Money?

They Do It by Using Yours

Becoming financially free means thinking like a bank. No, not loaning out money and hoping you’ll get paid back. We mean keeping your money flowing every single day. To understand the infinite banking concept, you need to understand how a bank makes money in the first place.

The very first step to making money as a bank is starting your bank. This is done by applying for a charter and finding people who want to start depositing money. A new bank might charge higher interest than their competitors at first. Then, this new bank needs to find people who need money.

Starting The Flow and Keeping It Going Forever

Using Depositors and Borrowers in A Perfect Balance

Once they’ve identified a network of depositors and borrowers, the real work begins. They offer sky-high interest rates on savings accounts to tempt you and others like you to start saving your money with them. However, they won’t be losing out by offering you these “high” interest rates. Once they have your money, they’ll start lending it to qualified borrowers.

These borrowers will then be responsible for paying their money back at an interest rate much higher than what you’re getting, which means that Mr. Bank can pay you your interest and pocket the difference. Easy, right?

As you can see, when you’re a bank, “your” money never stays in one place for very long. It’s lent out and stays flowing so that it can grow forever.

How To Apply the Infinite Banking Concept in Your Own Life

Without Spending Years Learning How to Do It

It might seem strange to compare making money as a bank to becoming financially free as a parent, working professional, and/or recent graduate. While you won’t be able to lend out billions of dollars and reap the reward of high interest repayments, you can apply the principle of keeping your money flowing with the right life insurance, savings vehicles, and processes. By owning this banking process, you’ll be able to learn not only how to control your finances, but also how to use them to keep your wealth growing your entire life.

What Does Tier 1 Capital Do?

We Help People Just Like You

Tier 1 Capital provides our valued clients with the permanent life insurance they need to accumulate cash indefinitely. We connect you to a savings vehicle or pool of cash that you own and control.

We provide our clients with a range of financial strategies that cut down the risk and ramp up the accessibility of their money while keeping them in complete control. Our mission is to empower our clients with the strategies and insight they need to take conscious action regarding their finances and their overall financial future. We are committed to keeping you informed, educated, and up-to-date with the best financial practices and services in the industry.

We have worked with families and small business owners of all walks of life, and now, we want to work with you. Reach out to our team now here at Tier 1 Capital  and book a free strategy call today if you’d like to learn more. We’ll walk you through everything you need to know as part of a complimentary strategy session with one of our certified and professional team members.

 

Money Management Tips: Regain Control Of Your Cash Flow

If you have been following our blog post, you know that we are constantly talking about the importance of you being in control of your money or regaining control of your money. So why is it so difficult to accomplish despite it being a very simple concept? Today, we are going to talk about the unintended consequences that result from following traditional or conventional wisdom when it comes to your finances and how to regain control of your money by just knowing these things.

Now there are three main institutions that are trying to gain control of our cash flow on a monthly basis: the banks, Wall Street and the government. It is like a game to them in the sense that they set the rules. These rules are:
1. Gain control of as much of our money as possible.
2. Get that money on a systematic basis, meaning they want their hands in our checkbook every single month.
3. Hold on to or control that money for as long as possible.

We are going to take a look at how Wall Street gets us to act in their best interest. By following the rules that benefit them. Firstly, they want to take control of our money. So how do they do that? They will tell you that the only chance you have to beat inflation is to be in equities. They tell you that you have to be in it to win it. They tell you to employ strategies like dollar cost averaging. That’s how they get us to do things on a systematic basis. Also, they tell you that the higher the risk, the higher the reward. So these are things that they tell us to get us, to play the game by their rules so that they could win. Secondly, when the market is down, they tell you that you can’t sell now because you are going to be locked in losses. But when the market is up and you say, “Hey, I wanna sell because I think we made a pretty good profit”. They will say, “Geez, I don’t want you to miss out on this profit”. Plus if you sell now, you have to pay taxes on the gains. So if you don’t sell low, because they don’t want you to lock in losses and you don’t sell high because they don’t want you to pay taxes or miss out on a run, then, when do you sell? Well for Wall Street’s benefit, they never want you to sell.

You see, their job is to get you in the market and keep you in the market at all costs because that is what benefits them, but it doesn’t necessarily benefit you.

 

Now, how do the banks get us to do what’s in their best interest? Let’s take a look at the rules again. Rule number one is they want to get our money. So when it comes to a mortgage, we want to put a downpayment as high as possible. Because with a lower loan or a lower mortgage, you will pay less interest. Rule number two, they want to get our money on a systematic basis. So they will entice us with lower interest rates on shorter term mortgages. For example, a 15 year mortgage will have a lower interest rate than a 30 year mortgage. Rule number three,  they want to keep our money for as long as possible. So with the 15 year mortgage, we’re giving up more of our monthly cash flow to the bank. Even though we’re paying them less interest, we’re still losing control of that monthly cash flow. With the home equity, they tell us that it’s our home equity as if we have control of it and that we are more secure when our house is paid off. But in reality, we don’t have access to that money unless they give us permission to access that home equity. So who’s really benefiting from a shorter mortgage, us or the banks? The answer is clear. The banks are following the three rules and they are in control of our money by positioning it as if we are in control and that it is in our best interest.

Finally, the government gets us to play the game by enticing us to invest in retirement plans for our future. They give us a tax deduction on a small amount of money today so that money can grow on a deferred basis and then they have the potential to tax us at a much higher rate in the future.Think about it, you are putting money away today for a small tax deduction, but in the future, the government determines how much of that money you get to keep. Even if you earn a decent rate of return over many years, you don’t know how much of that money is actually going to be available to you to fund your retirement lifestyle. The government gets us to play the game, but they are also consulting with Wall Street and the banks to create the rules. Who else benefits when we participate in retirement plans? Wall Street, because they get to hang onto our money until 59 and a half, or we pay a penalty and tax. Secondly, the bank’s benefits because if we’re maxing out our retirement account contributions, that means our money is tied up. When the time comes that we have to pay for our children’s college education or buy a car or go on vacation, we don’t have access to our money as it is tied up in retirement accounts or home equity. Therefore we have to borrow more money and who benefits when we borrow more money? Obviously it’s the banks.

Now that  we have  looked at how the government, Wall Street and the banks get us to follow their rules so that they can win and can be in control of our money, what’s the alternative that is not following their conventional financial advice?

The alternative is to save in a place where you have full access and control of your money. A place where your money could grow on a continuous compound interest scale and never be interrupted even after you spend the money. We accomplish this by saving in a specially designed whole life insurance policy, where we get to control our money, where we have full liquidity use and control and access to our cash value for whatever we want, whenever we want. So that we will not be forced to go to the banks to borrow and give up control of our monthly cash flow.

If you’re interested in learning more, book your free strategy session today  to know exactly how we can accomplish this. Remember it’s not how much money you make. It’s how much money you keep that really matters.

College Planning: How To Save Thousands On Tuition

We have a team that specializes in the college application process. They will help you with everything from filling out the free application for federal student aid – FAFSA, to helping your child write essays for their college application. Also, they will help you negotiate for a better deal after you have received your initial offer on financial aid. All of these things are to help your student get into their dream school, a school that is a good fit for them. Not just that, it also helps parents not to overpay for their children’s college education.

This service includes a detailed report that assesses each of the schools that your child is interested in attending. This could even give suggestions for more school options that would be a good fit based on your child’s area of interest.

The report is everything you need to know about sending your child to school/college. It even conducts a financial analysis that breaks down the EFC for each of the schools and goes as far as breaking down the minimum EFC your family could expect for each school.

This report can help you save thousands of dollars per year. It can be a great resource to answer any lingering questions you may have regarding the college process. Keep in mind that not everybody pays the same price to attend the same school and that everything you have done up to this point to become successful financially might not be beneficial for financial aid purposes.

If you’re ready to send your child to their dream school without breaking the bank and without overpaying for tuition, schedule your free strategy session today! Remember – it’s not how much money you make. It’s how much money you keep that really matters.

What to pay first? Insurance Policy Loan Interest, Premiums or Paid Up Additions Rider

Last week, we got a call from a client who got an unexpected $25,000 tax bill. Coincidentally, at this came at the same time as his premium bill, loan interest bill and loan principal bill. He called us and he said, “Guys, do I really need to pay all of this stuff for the policy?”
If you are in a similar position where you have limited cash flow and are wondering what order and priority you have to pay first, stick around to the end of this blog post because  we are going over all of the details.

When you get a premium bill and your cash flow is limited, keep in mind that you should always pay the base premium first. When our client called, we showed him that his premium was about a little over $20,000 per year but his policy was over 16 years old. So his cash value increase was going to be over $32,000 from this 16th year to the 17th year. Once he did the math, he realized that he should definitely pay the base premium because for every dollar he put in the premium, he will get a cash value increase of $1.50.

So it makes sense to pay the base premium. And that’s the number one priority, pay the base premium. Especially as your policy matures. It will may seem to be more challenging to realize, but the more you pay into the policy at that time, the higher rate of return you’re going to get within your policy. So always pay the base policy first.

After you pay the base premium, the next thing you should look at paying is the paid up additions rider, if your policy has one. Especially in the first five years. By paying the paid up additions rider in the first five years, it will give you access to more cash sooner so that you can start using your policy to pay for the things of life. The reason why you want to pay the paid up additions in those first five years is because it takes a little bit of time for the policy to mature on its own. After those first five years are up, you may consider closing out the rider or opening the window so you could put money in at a later date.

The third priority to pay is the policy loan interest. The reason why this is third is because, if you don’t pay the loan interest, the loan interest balance will be added to the loan balance and it will may constrict the amount of cash value that is available in the future to access via the policy loan provision.

The fourth area to be paid should be the actual loan balance. By paying the loan balance and as your loan balance gets paid down, your cash equity increases. That puts you in a position where you will have more access to more money later on to accomplish your goals. With the loan balance, every dollar you put in is accessible via the loan provision. A lot of times, this is tricky for our clients to wrap their heads around with this idea because we are trained that debt is bad. But that’s not necessarily the case with policy debt. We are not taking money from the policy. We are putting a lien against the policy. So your cash value will continue to grow and earn dividends as if there is no loan against it. But by paying it down, if you have the cash flow to do so, you will have more access to cash as you pay back your loan. Also, there is less loan interest built for your next policy loan anniversary.

So let’s summarize the order of priority for paying policies. First base policy premium, second paid up additions rider, third loan interest, and fourth loan principle.

If you have more questions or would like to talk to us, feel free to schedule your free strategy session today! – and remember it’s not how much money you make, It’s how much money you keep that really matters.

Is Whole Life Insurance Too Good To Be True? The Truth About The Infinite Banking Concept

If you’ve been reading our blog posts for a while, you will know that we often talk about using specially designed whole life insurance policies to help our clients accomplish their goals. Sometimes, people come to us and say, “Hey guys! This seems like it’s too good to be true. What’s the catch and why aren’t more people doing this?”. If you’re interested in having those questions answered, stick around to the end of this blog post.

People come to us because they are generally frustrated that they’re making a good income and they are doing everything by the book according to the so-called financial experts. They are maximizing their retirement accounts. They are paying down their mortgage and they are saving for their two children for college. But they just don’t seem to be getting ahead. They feel frustrated because they don’t have access to money when there’s a financial or medical emergency, or they don’t have access to money when there’s an opportunity that they’d like to take advantage of. Because of that frustration, they seek assistance from financial advisers who could help them.

We met with a client who was a surgeon. He and his wife were very frustrated because they wanted to take their children to Disneyland. It was only going to cost $13,000. They make $800,000 a year and they were frustrated because they didn’t have access to their money. Why? It’s because they were maxing out their retirement accounts. They were saving money for their children’s college education. They were paying down their mortgage. So they didn’t have access to any of the money that they made.

Clearly it’s not the income that was holding the family back. It was how they were using their money. That’s why we always preach, “It’s not how much money you make. It’s how much money you keep that really matters”. One of the first things we do when we meet with clients is take a look at their personal economic model. We look for inefficiencies. Places where they are giving up control of their money unknowingly and unnecessarily. Unknowingly, meaning they’re not aware that they’re giving up control of that money. Unnecessarily in a sense that, they could actually change it. Although not necessarily that they could change it as quick as a snap of a finger. That’s one of the first things we look at and that’s really why we focus on regaining control of your money  so that you could get rid of those frustrations and you could accomplish what you want with your good income.

Regaining control of your money means putting you in a position where you could access your money when you need it. When we talk about plugging those leaky holes in your financial bucket, it’s literally identifying the five major areas where you are giving up control of your money. Those areas are taxes, how you fund your retirement, how you pay for your children’s college, how you pay for your real estate mortgages and how you make major capital purchases. We do a deep dive as to how you’re using your money in these five areas to show you exactly where you’re giving up control of your money.

Where am I giving up control of my cash flow?

It all becomes so simple. Whoever controls your cash flow controls your life. We find it very important to identify the exact places where our clients are giving up control of that cash. So they could regain control of their financial life. Keep this in mind, anywhere you place your money, besides under your mattress, is a financial tool. They are all financial products. But the products we use to help our clients accomplish their goals are specially designed whole life insurance policies, specifically designed to accumulate as much cash value as possible and as quickly as possible.

The reason why we do this is to help our clients accomplish short term, intermediate, and long-term financial goals;
Short Term Goals –  maybe it’s paying off debt or planning to go on a vacation.
Intermediate Goals – could look like saving for a wedding or a down payment on a house or sending your kids to college.
Long Term Goals –  would be planning for a retirement, supplementing your retirement, or using the cash value on a tax favored basis to supplement your retirement income, as well as leaving a legacy for your family.

When we’re recommending a financial product to our clients, we have a few things in mind.

Number one, they need to have access to that money, complete liquidity to use and control so that they can use it for whatever they need, whenever they need it, no questions asked.

Second, we want them to be safe. Safe from market losses and their money protected from Wall Street and creditors, if they are subject to a lawsuit or bankruptcy. Finally, safety from the government so that if the government increases or changes taxes, their money is protected.

The next thing we want is continuous compounding so that they could access their money, but still earn interest. As if their money is in two places at once. And think of this. What’s the rate of return? Getting $1 to do two jobs.

Finally, we want a reasonable rate of return. Let’s say somewhere around three to four percent.

If we can get all of those things with one product, then that really helps us to accomplish our client’s goal of having access to their money, but more importantly, making their money more efficient.

We believe that there is more opportunity in helping our clients avoid the losses than trying to pick the winners. Using this specially designed whole life insurance policies allows us to accomplish all of the things mentioned above and so much more. Because they are able to take advantage of opportunities when the stock market is down or when a business opportunity comes up. They are able to pay off their debts or buy a car. They’re able to use that money, however they want to use it without interrupting the compounding of interest. This is such a powerful tool.

Now that we’ve listed all of the benefits that you can get from owning cash value life insurance. Let’s talk about what it won’t do. It will not give you the highest rate of return in the shortest period of time. For a lot of people, that’s a deal killer. But that’s okay because you see, we’re worried about helping our clients who want to regain control of their money, who are sick of being frustrated from not having the cash to accomplish their short term intermediate and long term goals. The cash value life insurance gives them the opportunity to do those things we mentioned earlier.

We believe that there’s more opportunities in avoiding the losses and making your money more efficient and working for you consistently with no risk of loss than there is in picking the winners. That’s why we use this product so passionately.

Why aren’t more people doing this?

Well, it’s real simple. This is the way people used to save back in the seventies. But unfortunately the wall street model took over. IRA’s and 401k’s became popular or started in the seventies. The Wall Street model has pretty much taken over for the past 40 years. But prior to that, this is the way people used to save. But keep in mind, cash value life insurance has been around for over 200 years.

Ray Kroc used cash value life insurance to keep his business going when he was trying to figure out how to make money from McDonald’s. Sam Walton bought so much life insurance for many of his employees that he ended up paying a fine. Walt Disney borrowed against his life insurance when no bank would loan him money to start the theme park in Florida. Keep this in mind, banks are the largest purchasers of cash value life insurance. They take profits from their customers.They recommend the customer to put money in places where their money is tied up and then they take those profits. Put some of those profits in cash value life insurance.That’s very ironic.

So when the question is posed, “Why aren’t more people using this product?”. The answer is quite simple. Advisors today are not trained on how to use this product to its full potential. But for our company, we have been using this for several years with all of our clients, as well as personally. We use it to purchase cars, to invest in our business and send kids to college. All of the things that we’re talking about to our clients, we’ve done personally, and we’ve been doing it for several years. That’s the difference between us and most advisors. They are not trained on how to use this product and how to make it as efficient as possible for their clients.

If you are tired of feeling frustrated and stuck that your cash is pinched, or you feel like you’re doing everything right, but still can’t seem to get ahead and would like to learn about how you could put a whole life insurance policy, specifically designed for cash accumulation, to work for you and your family. Feel free to schedule a free strategy session or check out our web course where we go into great detail about how this process works. Remember, it’s not how much money you make, it’s how much money you keep that really matters.