Want to know how to save money without reducing your lifestyle? In today’s video, we offer tips on how you can tell if you’ve lost control over your money. An example is, needing permission or approval in order to access your money. How you use your money is more important than were your money resides. Watch the full video for 5 areas on where you should check to see if your money is leaving your control.
Our process shows them how to start saving now and pay off their debt in an efficient manner. “
You want to save more money but can’t afford to reduce your current lifestyle? Before we get started, let’s identify how you’ll know you’re not in control of your money. A lot of people have money on paper, but when it comes to accessing their cash, they have no liquidity use or control of that money. Here’s some examples. You’ll know you’re not in control of your money when you have to get permission or approval in order to access your money. For things like home equity, you’ll know you’re not in control of your money when you have to pay a penalty in order to access your money.
For accessing your retirement plans before age 59 and a half, you’ll know you’re not in control of your money when you have to pay a tax on the annual growth or gains of your savings or investments. For things like stocks and mutual funds, I think of capital gains and 1099 is a carrying charge for the privilege of owning those investments. Finally, you’ll know you’re not in control of your money when you move money from one account to the other and it doesn’t increase your net worth.
This occurs when you pay extra on debts for cars, installment loans, or credit cards. When searching for money that’s leaving your control, you should look at five areas. If you optimize these five areas, you’ll increase your access to cash, reduce your debt, and increase your net worth all without having to reduce your current lifestyle.
There are only three places where you can put your money. Number one is tax deferred, but when you take the money out, it’s taxable in the future. Number two is currently taxable where you get a 1099 or a capital gains tax at the end of the year, and number three is tax-free, where you never pay tax on your money. Because you have a choice as to where you save your money. Paying taxes on your savings and investments is optional. Most Americans are saving any of their tax deferred or currently taxable accounts.
Let’s face it, the safest and sure way to maximize the efficiency of your money is to eliminate taxes. It’s not how much money you make, it’s how much money you keep that really matters. We’re trained by wall street to focus on rate of return instead of control and efficiency. The problem with the wall street model is that it leaves your money at risk to market volatility and ever-changing tax rates and laws.
The second area we look at is how you choose to fund your retirement plan. Conventional wisdom tells us that from the day we start working until the day we retire, we should maximize contributions to our qualified retirement plans. The problem with this is it leaves our money inaccessible and in order to access it, we need to pay taxes, penalties, and sometimes fees. Also, we don’t know what the final cost is going to be to get our money in retirement so we don’t have access to our money now and we don’t know what it’s going to cost to get our money in the future.
The third area is mortgages. When buying a house, it may seem appealing to get a 15 year mortgage because the interest rates are lower, but by doing so, you’re giving up control of more of your monthly income to the bank and true, you’re building more home equity, but remember, you need to qualify in order to access that equity. By extending the term of your mortgage, you’re giving up less control to the bank, less control of your monthly income and less control of your net worth. We suggest you save in a place that you own and control, such as a specially designed whole life insurance policy built for cash accumulation rather than death benefit. For more information on how to choose the best mortgage for you, check out our video in the description box below.
The fourth area is paying for college funding. Tuition could cost more than a house, in some cases. It’s important to build a plan that not only pays for your children’s college, but keeps you on track for your retirement lifestyle. Nobody should have to choose between paying for their children’s college and funding their own retirement.
The fifth and final area where you give up control of your cash flow is how you choose to fund major capital purchases. A major capital purchase is anything you can’t fund using monthly cash flow. Things like cars, vacation or even a home. We finance everything we buy. By that I mean we either pay interest to a bank for the privilege of using their money or we pay cash and give up interest on our own money so we either pay up or give up. We teach our clients how to use whole life insurance to continually earn interest even after they make major capital purchases.
By using the policy loan provision, our clients are able to access their money, no questions asked in order to make the major capital purchase. By doing it this way, their money enjoys the benefits of uninterrupted compounding. Many people come to us and ask, should I pay off my debt before I start saving? Our process shows them how to start saving now and pay off their debt in an efficient manner.
By looking at the five areas, we’re able to help our clients find money within their current cashflow to begin saving now without having to reduce their current lifestyle. In order to do so, how you use your money is more important than where your money resides. Think of it in terms of golf. Where your money resides is the equivalent of the golf club. How you use your money is the equivalent of the golf swing. If you wanted to improve in golf, doesn’t it make sense to focus on the golf swing rather than the golf club? Regaining control of the money you’re losing to these five areas will leave you in a safer financial position where you’ll have more control, more access to capital, and less dependence on banks.