Control Your Money

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.

How do banks operate?- Implementing the infinite banking concept

Have you ever found yourself wondering how banks make money? Do you want to learn how to regain control of your money? In this video we break down the process behind running a bank, and then we break down how you can keep your money flowing! While this process isn’t easy, we are here to guide you through the process. The four rules we have learned to live by are as following. 1. Always think long-term. 2. Don’t be afraid to capitalize. 3. Don’t steal the peas. 4. Don’t deal with bank if you don’t have to.

Make no mistake, although we park our money at banks, they don’t let it sit there.”

 

Are you thinking about implementing the infinite banking concept to regain control of your money? Well, it’s important to know how commercial banks operate and make money so you could duplicate their process using the infinite banking concept. The first thing banks need to do is, file for a charter. Once the charter is approved, then they have to capitalize the bank. But, understand banks don’t lend you their money. The next step is for them to go and solicit deposits. They usually charge higher interest rates than the neighboring banks in the community, but that’s only step one. Then, step two is to identify borrowers. You see, in order for a bank to make money, they need to have depositors and borrowers.

The third step is for the bank to solicit depositors and how do they do that? They generally do that by enticing you, by offering a higher interest rate on savings accounts and CDs to get you to deposit money with them. Most people are depositors and borrowers from the bank and understand banks can’t make money if they only have depositors and they can’t lend money if they only have borrowers, so they need both depositors and borrowers.

The bottom line is, banks make sure that money is always flowing. The same laws apply in nature. Water has to flow or else it stagnates, and you can’t drink it. Water has to flow through the body or else you die. Blood has to flow through the body, or you die. The same laws apply to money. It needs to continuously flow. Just think of all the ways that we make our money stagnate. We put money in retirement accounts, and we don’t touch it for 30 or 40 years. We pay off our house early and we have this huge amount of our wealth tied up in real estate that we really can’t access without getting permission.

Make no mistake, although we park our money at banks, they don’t let it sit there. They follow the same laws as nature, and they keep that money flowing. They keep that money flowing by using a basic business concept called, inventory turnover. Every business owner knows that, the faster they turn over their inventory, the more profits they make. It’s the same thing for a banking model. The only difference is their inventory is depositors’ money. So, let’s take a look at a real-life practical example of how banks make money. In 2016, Bank of America had $860 billion worth of deposits. Based upon that, they paid $1.9 billion to the depositors. Wow, that’s a lot of money to pay the depositor, but it’s nothing compared to what they earned in interest from borrowers. They earned $44.8 billion from things like mortgages, home equity, loans, fees, business and personal loans. That’s over $42 billion more than they paid out in interest to depositors. Bank of America had no skin in the game. They loaned borrowers, depositors’ money. The only risk they had was to pay the depositors $1.9 billion. By keeping money flowing, they were able to generate $44.8 billion in revenue.That’s why it’s important to keep money flowing, and that’s why it’s important to own the banking process.

Now that we know the benefits of owning the banking function in your life, let’s get started and look at the rules. My mentor Nelson Nash had four basic rules. Number one, think long-term. Number two, don’t be afraid to capitalize. Number three, don’t steal the piece. What did he mean by that? Basically, what he meant was if the insurance company is charging you interest, pay yourself more than that amount of interest. Your money is worth more than Bank of America’s or anybody else’s. The fourth rule was, don’t deal with banks if you don’t have to.

Now that we understand how banks operate and the basic rules for the infinite banking concept, let’s take a look at how we help our clients regain control of their money using the infinite banking concept. The first step is to identify where they’re actually giving up control of their money. We look at places like their mortgages, taxes, how they’re funding retirement plans, how they plan on funding college tuition for their children, and how they’re funding major capital purchases. Step two is really easy. They just agree to stop doing those things where they’re giving up control of their money so that they can go to step three. Which is to capitalize their policy, capitalize their bank. This leads them to step four, where they’re actually borrowing against their own cash value and paying interest back to an entity that they own and control so that they can control the process and make the profits.

Why Are We So Passionate About Helping Our Clients?

What makes us so passionate about helping our clients become financially independent?

 

With over 35 years of experience in the financial services industry, we have seen how following conventional wisdom can lead you astray. What makes us so passionate about helping our clients become financially independent? Growing up in a family that lived paycheck to paycheck really changed Tim’s perspective on life. After following some great advice from Don Blanton and Nelson Nash, Tim realized, maintaining the efficiency of your money and maintaining the liquidity use and control of your money, will let you have financial freedom. It is our goal now to help as many people as we can, become financially independent.

 

“It’s become our mission to help our clients become financially independent by using these concepts so that they could release the financial stress and pressure and maintain or attain financial engines”

 

 

At tier one capital, our mission is to help our clients become financially free. We believe that you should be in control of your money, not the banks, not the financial institutions, and certainly not the government. Today we’re going to tell you a little bit about why we’re so passionate about helping our clients to become financially independent and why liquidity use, and control of your money is the key to becoming financially independent.

 

A lot of times when we meet with clients, they say, this is so simple and so different, how did you guys come up with this process? Let me tell you a little bit about my journey over the past 35 years in the financial services industry and in order to do so, I want to take you back to my childhood. Growing up in Wyoming, Pennsylvania in a blue-collar family, my dad worked in the coal mines and Thursday night was pay day. On Thursday nights my mom would get my dad’s pay, go to the grocery store and cash the check to pay bills for the next day. Sometimes, however, my dad would come home on a Thursday night and he didn’t have his pay.

 

So now let’s fast forward to the Christmas of 1993, sitting around my parents kitchen table with my family, reminiscing about the good old days. It certainly came up about the few times where my dad would come home without his pay. It was those times when my mom would load my brother, sister, and I into the car and sit in front of my dad’s boss’s house waiting for him to come home, to get my dad’s pay. Now, as a kid, I had no idea why we were there. I asked my mom, what were we doing there? She said, waiting for dad’s pay. I asked, why didn’t you just wait until the next day? She replied, we lived pay to pay, we needed that money to pay bills. It was at that point that I realized that I was living pay to pay, despite the fact that I was making 10 times what my dad had ever made, despite the fact that I had no dependence. I had a 15-year mortgage, and I was maxing out my 401k. 

 

Yes, embarrassingly, I had credit cards and there were even times when I had to go to my dad and borrow money to pay my mortgage. Why? Because I didn’t have any access to money. It was at that point that I realized that I was living pay to pay, despite the fact that I was making good money and I was following conventional wisdom by the book. I knew at that point that things had to change. It became, from that point forward, my mission to find ways to help people to become financially independent. I was able to figure some things out on own and then in 1995, I was introduced to a guy by the name of Don Blanton, who developed a whole financial planning system around making your money more efficient. 

 

With this system, we’re able to identify where our clients are giving up control of their money, unknowingly and unnecessarily. We look at the five areas of wealth transfer; taxes, mortgages, how you fund your retirement plan, how you fund college tuition for your children and how you make major capital purchases. It was Don’s system that proved that the process of how you use your money is way more important than where your money is. Then in July of 1997, I met a gentleman by the name of Nelson Nash. Nelson taught me that the importance of having access to capital when opportunities come about. Being in a position to take advantage of opportunities only comes to those people who have access to their money. Nelson taught me the importance of being in control of the financing function in your life. 

 

Think about conventional wisdom. It tells us to max out our 401k’s and put extra on our mortgage. But by doing those things, it only makes you look financially free on paper. You don’t actually have access to that capital. When opportunities or emergencies arise, our clients come to us, they look good on paper, they’re making great income, but they’re financially stuck because they don’t have access to capital when they need it most. 

 

It’s in the combination of maximizing the efficiency of your money and maintaining the liquidity use, and control of your money so you have control of your cashflow. You have access when you really need it. Then financial freedom can emerge. It’s become our mission to help our clients become financially independent by using these concepts so that they could release the financial stress and pressure and maintain or attain financial engines.