With the New Year often comes a refresh and what better way to start off the New Year than refreshing your finances so that you have more cash flow to do the things that you want to do, especially in these times of rising inflation and interest rates.
Let’s face it, none of us wake up in the morning and say, “Hey, how can I mess up my finances today?” But the fact of the matter is, a lot of the things that conventional wisdom teaches us about finances and how to use our money can leave us out of control. And it could take years for us to feel the effects of that.
Simple things like maxing out your 401k, putting as much as possible on your mortgage, paying off that mortgage as quickly as possible, paying off your student loans, paying off your high interest credit card debt when not done properly, could leave you feeling pinched down the line when you are trying to achieve other, bigger financial goals.
Now, keep in mind, every one of those strategies, paying down your mortgage quicker, maximizing your retirement plan, paying off your debt in and of themselves, they are all what we want to do. They are all the things that we should be striving for.
However, it’s not what you buy, it’s how you pay for it. And the way or the manner in which you’re addressing these issues could be costing you hundreds of thousands, if not millions of dollars over your lifetime.
You want to be in control of your money. You want to create financial independence. You have enough cash flow to do it. But it seems like you’re never getting ahead. It’s sort of like you’re driving down an icy road, slam on the brakes. But what happens? You’re going faster because of the relationship between the tire and the ice. And it’s the same thing with our finances. If we’re not careful, we could be doing things that we want to accomplish on a short term basis. But we’re missing completely the big picture.
You see, we’ll never see the interest we don’t earn, the opportunity cost on the money that we’re freely giving away, to these finance companies. By making some simple shifts and making your cash flow more efficient so that you’re in more control of that cash flow, and you have it working for you instead of other entities like the banks, Wall Street, and the government, could make all the difference throughout your entire lifetime and your financial journey.
We found there are two different ways that you can be in control of your money and your cash flow.
The first way is the strategies or the choices you’re making to actually save your money. Where you save your money makes all the difference in the world. You want to save your money in a place where you have complete liquidity, use and control of that money.
Putting all of your savings in a qualified retirement plan like a 401k or a 403b, puts your money literally out of reach when you need it most. So there’s no liquidity, there’s no use, and there’s certainly no control on your side for doing that. So where you decide to save your money is a very big factor on you being in control or not being in control.
You see, we believe that there’s more opportunities in making your money more efficient and avoiding the losses than there is in picking the winners. With the retirement plan, for example, a lot of people put all of their savings into these qualified plans.
But what about the short term financial goals? How are you going to fund those if all of your money is tied up in the retirement plan?
What we see happen a lot of times is people having to dip into their retirement plan. That money is fully taxable. And if you’re under age 59 and a half, you also get hit with a 10% penalty. So with this example, even if you’re earning a huge rate of return on that money, after the taxes and the penalty are you even breaking even? That’s why we preach that it’s so important to make your money more efficient and to use and save your money as efficiently as possible so you don’t have to experience that.
That brings us to the second area where you may be giving up control of your money, and that’s how you’re financing major capital purchases. You see whether you finance or a loan or credit card or you’re paying cash, every purchase we make is financed. And the question becomes, how do you use that financing as efficiently as possible? So you come out ahead instead of behind.
What if there was a way so you could be in control of the lump sum and still finance the purchase? The way we do this for our clients and for ourselves is using a specially designed, whole life insurance policy designed for cash accumulation.
And the reason is simple we have complete liquidity use and control of the money. We control the financing function as far as how much we’re paying back towards the policy loans and we are able to earn uninterrupted compounding interest on the money even after we access the policy loan.
So the specially designed life insurance policies accomplish two areas where we’re giving up control of our money.
Number one, where we’re saving our money because now we’re going to be saving it in a place where we have complete liquidity use and control of the money. And number two, we’re going to use that cash value to make the purchases that we need to make, whether it’s paying for our children’s college, going on vacation, buying a car or starting a business.
If you’re interested in learning about how to put a specially designed, whole life insurance policy designed for cash accumulation to work for you and your financial goals, be sure to visit our website at Tier1Capital.com and feel free to schedule your free strategy session today. We’d be happy to chat with you.
If you’d like to learn more about how we put this process to work for our clients, check out our free webinar that does a deep dive on our concept: The Four Steps to Financial Freedom.
And remember, it’s not how much money you make, it’s how much money you keep that really matters.