Case Study: Money to Send Kids to College

After the Stoddards came to Tier 1 Capital and we analyzed their financial situation, we could see that how they were using their money was holding them back. They already had everything they needed between their home equity and cash flow, but they were caught up in a debt cycle by giving money away on their interest payments.

The debt cycle starts and ends without having access to capital. It’s a vicious loop where you’re forced to borrow money to pay expenses, earn money to pay off the debt, and then start right back where you started if you need additional cash for anything else. The only way to break the debt cycle is to reduce your debt payments down to the minimum and start saving in an account where you own and control that money. 

Jim and Mary already had the capital they would need. All they needed now was to change their mindset to access and control that money. We asked, “What if you didn’t have to wait until your youngest graduated college to build your cabin? You have enough within your reach to start the process of building your cabin today.”

They were elated but also a bit skeptical. What had seemed like an impossibility yesterday was suddenly a very real opportunity. After we explained the Tier 1 Capital Growth Process™, they were surprised to learn they didn’t have to pay banks for the privilege of using their money, and that taking control of their money could increase their cash flow and accomplish all of their goals.

The plan they enacted worked by redirecting their cash flow into new whole life insurance policies that would give them access to the money they had previously made inaccessible. Indeed, the traditional tactic of borrowing from a bank or other outside entity was keeping their money inaccessible during times of need—even though it was their money. By applying the Tier 1 Capital Growth Process™, Jim and Mary learned a better way to keep their money at their fingertips when they needed it, and without extra taxes or penalties.

By taking out loans against their life insurance policies instead, the Stoddards were growing their savings in a way where any interest payments would come back to serve them and where capital was always readily available.

By changing their mindset, the Stoddards were empowered to meet their financial goals and then some.

• When it came time for college, they sent their first child to a private university and were able to pay $60,000 a year—nearly half their annual income—without dipping into their savings or retirement.
• Just a few months after working with Tier 1 Capital, they were able to pay cash for their cabin’s land and afford the monthly down payment. After a few years, the cabin was complete!
• They started saving an additional $500 per month in long-term savings without pinching their cash flow even one penny.
• By building a pool of cash that was growing, safe, and accumulating on a tax-favored basis, they could inevitably use it to supplement their retirement income without being impacted by unknown costs from things like Medicare, Medicaid, or social offset taxes. In short, they were able to guarantee a legacy for their children.
  

However, some outcomes are too valuable to quantify. Since they could start on the cabin years earlier than planned, Jim decided to build it with his father by his side. Together, they pounded every nail into the cabin, spending countless hours together during what ended up being his father’s final years.

After Jim’s father died, he told us they never would have had those precious moments building the cabin together if he hadn’t come to Tier 1 Capital when he did. It goes to show that, while there are always financial aspects to our client’s goals, the real reward goes so much deeper.

Similarly, when their first child graduated from college, Jim and Mary were able to enjoy their son’s accomplishment rather than complain like other parents about how much it had cost them in retirement savings.

By borrowing against their own money, the Stoddards were able to achieve new heights without adding additional income streams or reducing their lifestyle. Most of all, they were able to spend precious time with family when it mattered most and give their children the future they wanted despite how impossible it all seemed.