What's up, what's up, everybody? Welcome back to part three of Becoming Your Own Banker. This one is the shortest part, and so we shouldn't take don't jinx us, Austin. It shouldn't take an hour and a half for us to discuss this next part. This part three of the book I think is where a lot of misinformation comes out. like a lot of people like these two chapters of this book create a lot of confusion and i'm sure we're going to have some uh good discussions around this i also if time permits have a video queued up from todd langford this was 11 years ago when he went through the car financing example didn't use these real the numbers in the book but used similar numbers and uh i think that gives sheds a lot of light on some of the things that nelson was talking about in this book. And then obviously the... The other chapter on, you know, where income equaling premiums, I think that is that one, that one chapter alone, I'm sure many insurance companies wish were not included in becoming a grown banker. And there's, there is some insurance companies who don't like the words infinite banking. And in fact, like they really push back. And one of the reasons is, is this chapter of income equaling premium. idea and people being really aggressive with like buying everything with their policies and almost having the goal of running all their money through the life insurance. It makes insurance companies nervous and some people have abused the message and as a result kind of tainted the whole thing for many people. So Dom, we'll let you lead this thing off. The thought processes, takeaways or questions that came from part three of becoming your own banker. Yeah. I'll also start by the reasons why insurance companies really do get nervous. There's two folds. It doesn't benefit the insurance companies for policies to lapse. Even for them, and Nelson really talks about a lot of it in the books of the beginning phases of capitalization to make your money back and starting a business. With your policy, it's the same thing for these insurance companies a lot of the ways. If a policy lapses in the first few years, then it's not advantageous from a balance sheet perspective for these insurance companies. When there's a high lapse ratio, then it essentially affects the balance sheet. So that's the first thing. Secondarily, insurance companies really don't like the idea of having a high percentage of their book being policy loans. The reason being is because the policy loan rate is always going to be lower than what it is that they could go get somewhere else. So essentially, if it's 5% right now in the loan rates for you and I, well, they could likely go get 6%, 7% somewhere else in a different type of vehicle. And when they have the percentage of that going to the holders, us, they're missing out on lost opportunity cost of getting greater returns in a different bucket. And so when they hear people are putting all of their money, then those two risks that they're inherently worried about become an issue. So even MassMutual a few years ago, They even said like, hey, we're banning people that don't want to do infinite banking to some degree or another. It was like a quick memo. I think it was more of a scare tactic than anything because it's really hard to police it at the end of the day, right? And so Caleb and I did a whole video on it, actually on the Better Wealth channel that I thought we did a very good job trying to be unbiased about what they meant and why they did it. And if you want to go watch that, feel free to as well. But overall, I think that the video that you're going to share with Todd is going to do a really good job of talking about the numbers and so on and so forth. And so there's a few things that I would like to just address. One, I really do still like how Nastian communicates around the mindset and how to view these policies. I think it's very consistent throughout the book and that what he's trying to do is make change. And I do think that the people that can escape some of these laws or choose to be disciplined and do it well. will be in a better place than people that don't. I do have some questions in regards to just some of these that mathematically, before we even get to the illustrations that I have questions around, around like break-evens and policy capitalizations and the wording that he meant. I'd love to hear your guys' views on some of it. But outside of that, again, if you look at the first part of it, I do appreciate it. I do appreciate the out-of-the-box thinking. And This really is the whole... thing that I think blew this concept up. Because when you look at social media, this is the one thing that people talk about the most is using policies for cars, right? All the time. Yeah, I think a couple notes, and we'll go to you next, Austin. But a couple notes is at the addendum, he said, note, the illustration on page 46 and 47 does not show any policy loans to make the car purchases. The purchases are made by use of dividend withdrawals. And he you know i can read the whole thing he goes in there to try to simplify everything and i think in in the long run the potentially has done more damage than good showing the illustrations because i don't know about you but like you could really analyze this and and then you're like okay how does this all like i know when i first started i really want to know how things worked and i'm looking at this i'm like how is this all making sense and there's like a perfect storm because Because on one hand... He's using 25, 30-year-old illustrations, which back in the day, the illustration, like, it just from an interest rate standpoint was more attractive. And then he's not using loans. He's using dividend. And so, like, there's that aspect. And so when we do this review, we're not even going to touch the numbers that he uses. And that would be, like, my recommendation when you read this book is don't try to read too much on the numbers. You'd be better off. going to YouTube or some other places and seeing Todd Langford or some of our videos to understand the math, but really read this book from a philosophical standpoint. What is he talking about? He talks about seven years of capitalization. He talks about that many times and continues to go back to if you were a banker, if you were a banker. One of the reasons he's doing that is probably one of the biggest pushbacks in insurance is it takes a few years, in this case seven years, to get more money than what you've put in. So he's constantly reassuring that's like, hey, this is like when you start a business, when you start a bank, it's going to take years to capitalize. And then the main point of this whole section three was talking about the five different ways to buy cars. And the leasing and the bank method are people that aren't planning ahead. They have no money to their name. And they're either getting a bank loan or getting a loan from the leasing company, but not having. Not owning the car. And so you take those two things, and then you have the three other examples, the cash method, the CD method, and the IBC method, are all people that, like, the difference is they're not able to buy the car immediately. They need to save up. The Dave Ramsey method, you know, save up, either pay cash for the car, save up in CDs, get a better interest rate, and then pay for the car in cash, and then use the infinite banking. And there's pros and cons to all. three of those methods but over time the infinite banking con product being whole life insurance is just going to outperform the cd and the and that the cash method long term because long term it's just a way more productive asset than comparing to a cd and cash method so uh austin what are what are your thoughts on on the on the whole thing yeah it it makes sense that this is going to be the part of the book that gets maybe the most pushback so far because This is the first time in the book where we actually see an illustration where he's actually using numbers. He goes beyond some of his ideas that he's presenting. He's been building on it, part one, part two. Now he's saying, okay, now we're going to explain these ideas and what kind of the engine, like what is driving the bus, right? What is causing this to work? And so he's presenting his case here. Now, I was, as I was kind of going back through this chapter, I was just, I was. going over figure one and in particular, and we'll get more into this when we get there, but it's like, it might, you might have a difficult time reading this chapter if you hold, um, a, if you hold a standard to, in particular, like figure one, which is looking at the five different methods that you talked about, Caleb. And because ultimately he's comparing, he's not just comparing one variable against itself, against all methods. Like he's also comparing different decisions. that are getting made by each person. And he's really, he's almost more so not comparing an equivalent dollar amount just done in different ways, but he's comparing just a different mindset. And so like, it's not like a perfect graph for that reason. And you have to kind of go into it realizing that this is not, this is like, he is advocating a mindset change. He is advocating the system-wide approach to being your own banker. And something that I probably see that gets missed by most people when they call in wanting to do like you know something infinite banking style and i talked with them is a lot of times they'll discuss like, oh, you know, like I can get a better rate of return on like a car purchase, for instance. But ultimately, like I think that that person, once again, if that is the only thing that they're calling in about, they're missing Nelson's point. Because ultimately they're doing they're being the version of the grocery store and they're stealing from their self. They're like, you know, like you have to be an honest banker and pay yourself the same rate. Pay yourself. Right. We're going to go huge scarecrows around that. pay yourself the same rate that it costs your neighbor to finance his car. So this is just, we definitely need to go in the math a little bit more here, but this is where rubber meets the road. People start to really disagree with him because he's going to start to explain what's driving the bus. Yeah. Dom, do you have any thoughts on the five methods? I mean, I think it's important to know that it's not apples to apples, but it's human behavior. Most people do not save up. And so they are a slave to the system. And then the people that do save up, we can then talk about the next step of being an honest banker and paying yourself back. And I think that's really the secret here. And then you could make the argument that life insurance, when set up and used properly, is the better long-term vehicle to do that. But overall, it is the human behavior of delaying gratification and self-control. And you could almost summarize most self-help books by learning self-control and boom, you don't have to read all these books. But most people don't have. They can't, they don't have self-control. They can't think long-term. And as a result, they make a lot of poor decisions because of that. Yeah, no, I agree with you. Like human behavior is the number one key with all of it. And that's really money at the core of it all, which is why you mentioned the other day, you love the book, the psychology of money is because it really just turns down to your mindset and your heart. I think that from the methods perspective, yeah, I think long-term for sure that infinite banking will be the best choice. But I also think that everything is dependent on seasonality and the human in the season that they're in. You know, he talks about that the person may need four years to save up if they're using cash. It's like, well, sometimes people don't have four years to save up for money for a vehicle. And so we we kind of need it in today's society. So that's just one thing. And then when you start looking at interest rates and CD rates and, you know, CDs maybe are higher today because interest rates are higher. But before they were a lot lower and like a couple of years ago. but back in his time. They're probably closer to the 7%, 8%, 9%. So I think it all is dependent on seasonality and the economic environment. But long term, we could all agree that likely IBC is going to be the best method if you're disciplined enough and have the right human behavior. The method that I actually like the best would be called Method F, which is not in the book. Method F by Dom. Yep, it's the Method F by Dom, where you essentially take the dollars, right, from Something like your infinite banking type policy and you go buy an asset and the asset then produces cash flow and then take that cash flow to then pay off your loan payment from the one that is financed from a bank or some sort. That way you have an asset that's growing, you get tax advantages, and then when that's paid off, you still have the asset that's producing cash flow. Because at the end of the day, the thing that matters the most is financial freedom, having more cash flow above your expenses. And one of the best ways to do that is getting your dollars to do multiple jobs and having assets that produce that type of benefit. Yeah. So buy the asset, produce the cash flow, have the cash flow, pay for the car. And now you're buying assets that get you closer to financial freedom versus delaying gratification. But at the end of the day, you're still kind of stuck on that treadmill. Yep, exactly. Yeah, I think that's well said. I think that's well said. I know for a fact that Nelson wouldn't disagree because that's what our friends with Wealth Without Wall Street, friends Russ and Joey, a lot of things that they teach are that. And they're using infinite banking to acquire assets with the whole goal of becoming financially free. Austin, anything you want to add to that? No, I think Dom's got it. I'm just kind of hearing the whole time Dom's kind of real estate syndication. the kind of the things that dom likes to invest into um i'm just i'm i see very much how that kind of fits into that framework where before we jump into the todd langford deal let's uh let's go to the next chapter where it's it's expanding the system to accommodate accommodate all income and he starts off this chapter by saying it always sounds a bit strange to people when i say premiums and income should match and you know he again nelson's drawing a lot of the same you know parallels to your money's got to reside somewhere and it's like the con it's again the philosophy of of your premiums should equal income And this again, this is a, yeah, I don't know. I'd love to punt this to you guys. I don't, I'm trying to give him the benefit of the doubt here. I think in context, as you become more financially free, as you're building up a system, it is possible to have a large chunk of the money that you're running to be saved. And the idea of like the death benefit being like the idea. Without understanding the math, the idea in itself is not bad. And I think this is a good concept of we should, as we get more financially free, be saving more in life insurance as a foundational asset and having the death benefit protect us and all. But overall, this one's a tough one to get behind, essentially because the insurance companies do not endorse this. No insurance company that I know would be okay with even a game plan of having all your money equaling premiums. And then he talks about the idea of self-insuring some insurances, which is legit, even like health insurance. You have capital. You potentially get a high deductible health plan and be able to save some money there. So I have no problem there, but not all self-insurance is smart. And then he talks about replacing your mortgage, and that's like, okay, Nelson isn't the goal to have as much money saved as possible. And then we could get all technical with him. I'm not going to do that. But I just like. Like the reminder that I wrote down is the goal, remember, the volume of cash. We want as much money saved in our control as possible, and that needs to constantly be the goal for our clients and people watching this is how do we get as much money saved? How can we create that pool of capital? And so while this chapter is something that I just straight up disagree with in a lot of cases, I think If on the other side, I'm grateful for Nelson talking about like, don't be afraid to capitalize. And, you know, we're not going to get anywhere by putting a few percent like you got to save. And maybe it's like the anchor. It's like all your income, maybe now 20 percent doesn't feel that extreme or 30 percent. And I think we would all agree on this call that people need to save a lot more than they average five or 10 percent. Then you save a lot more. Part of the way that they can accomplish this is is through infinite banking, if you want to call it that. Can we just talk about this logistically? And if this was actually possible, maybe at a different season of insurance life or how this is actually plausible in today's world, because I know that the limitations with insurance companies is you're only allowed to put in about 25 percent of one's annual income. So you can't have income equal premium, first and foremost. And then as the death benefit increases, your human life value of what the amount of death you can even accumulate. is capped at a certain point in time. So if I have limitations on what the insurance comes on me to put in and the amount of death benefit I could actually get is capped based off of my income, I don't understand how it's possible to be able to have income equal premiums at any point. It just mathematically or logistically doesn't make sense unless I'm unaware of something, which I would love to hear. I don't think you're unaware of anything. I think there's power of cover letters, as you know. you can get insurance companies to give you more. And it's also net worth based. So income and net worth could be totally different. Someone could be worth a lot of money, but their income doesn't necessarily reflect that. There's always exceptions to saying, okay, we'll give you, we'll look at your net worth as it relates to that. And I think over time, you create a system of policies. It's not, it's a... One thing at a time. And the other thing is you could be insuring multiple humans. And so like your kids and grandchildren, you could you could be the owner, but the underwriting is based on the kids. So I think there is ways around this. But then the other question is, it could fall apart if you don't if you do this too aggressively, because it's like you're almost banking on your pool of capital to bail out the inefficiencies of the first couple of years. And so overall, it's not. Does that make sense? Like it could be possible. You could maybe work it around. Like you said, Dom, it's very hard to be able to do, but I do know people personally that... have a large chunk of their income into life insurance. It's taken a lot of time and it's also taken lots of different people, but I don't think any of us on this call would even endorse that. Like I, I'm not saying that's even a smart strategy. Yeah, no, that, that makes sense. I would say that if for people that are listening, it's not like when you start a policy, you have essentially the ability to do more than essentially the capped at the start. So if you startup policy and you know let's just say you're premium was $25,000 per year. The insurance company is going to max you out at $25,000 per year. Let's just pretend that was the ceiling. You don't get to a place like 10 years down the road or like, hey, you can now put more than $25,000 into that policy because then it becomes a modified and down the contract, which then you lose the tax advantages. So then what you have to do is start a second policy. And that's where Caleb's then saying, okay, well, let's get it on the kids. And now we're not looking at your human life value, which is what you're worth. You're not looking to other people, which would be your business owners, partners. people that have an insurable interest, essentially if they die, you're affected, right? And so I could see that you could slowly start getting there, but you know, putting money in kids' policies is very little. Putting money in business policies is very little, whether it's a buy-sell or, you know, key man employee, like they all are very little. And so you're creating this policy to essentially increase income because you're doing other activities. So your income's always going to keep growing likely, especially with this type of mindset. So it seems just so difficult for me to fathom how that's possible. Maybe like you said, at the very late stages of life where you're like now in your 50s, 60s, and you have a massive amount of net worth. And so then therefore they're allowing you to get a massive amount of insurance and therefore your income can then create that delta. That would probably be the only way that I'd see it. But the idea of putting this in this book, especially early on when people are trying to think about starting policies, I think is. I don't want to call it inappropriate, but I think it's not a very good headspace to put people in when they're just trying to understand, how do I even do this to even get started? Because this is for probably like the 1.001% of all people that could ever potentially pull something like this off. Most people have no idea where to start or how to really evaluate whole life insurance. That's why we've built The Vault. It's all of our best life insurance resources and educational tools all in one place, all for free. We have calculators, handbooks, crash course, deep dive videos on numbers. If you want to learn more, click the link in the description or tag comment below to unlock the vault. All right, back to the video. And it has created a lot of confusion, these two chapters, because you look at the illustration. You're starting to look at the illustration, trying to read too much into it. And then it's like the income equal premiums kind of deal is another, whether it's an anchor, whether it's a philosophical standpoint or whatnot. If you read too much into it, which I know I did when I first read this book, I was like, oh, like trying to figure out the mathematical way to get to there. And we've known people that try to get very creative around like, oh, I'm going to borrow from this policy. And that's that's another way that people accomplish this. And it's called laddering policies. And it's like highly it's not illegal, but it's highly not appropriate. And if insurance companies found that you were borrowing from one insurance policy to pay another policy, they would can you. It's just not. It's not like you that should not be part of someone's strategy and we know people that that's part of their strategy. I don't think that they intentionally know that it's trying to like they really believe in it and part of it is because of some of the teachings that come from from this chapter. So before we pull up Todd's video, is there anything that you want to say Austin? Following up what you're what you were saying, Caleb is that there's really no way to to do at least at least this easy to do to have your income equal uh the premium you'd have to ensure other lives just like you said and the the one of the easiest ways probably is if you have a spouse is that you know if you have a spouse there is a reciprocity agreement that almost all carriers have that are that is like you your spouse can qualify for as much as you qualified for or at least as you applied for as long as it's within your human life value and you could then theoretically double the amount that you applied for. So let's say... you made a hundred thousand a year and you had a you wanted to put 25 000 the maximum amount of premium you could put in well then theoretically if you insured your spouse and your spouse is also ideally kind of healthy all right in good health condition same age as you you could also have a similar sized policy with them um that would probably just be the easiest most straightforward way but yeah you would just you would need to use other lives not just yours And again, it goes back to save more money. That's the key concept here. And don't try to create something that should be a great foundational thing for your family and create risk. And where you create risk is if your premium outlay is creating stress and pressure. And that obviously would not be great. All right, so I'll just give you a little bit of context. I found this gem. This is a video that I watched back in the day, and it was part of my journey of just learning this whole thing. And this is 11 years ago. Todd's at a conference. You can obviously hear his voice going through this. He's at a conference with Nelson Nash. So you'll even hear him referencing Nelson. And he talks about the different ways to buy a car. And these are, from a mathematical standpoint, some of the differences. And at any time, you guys can say stop, and we can talk through this. But I have it. Without further ado, let's jump in. So we looked at the funding calculator earlier and saw the rate of return on the life insurance contract. But the thing about it is whenever we're making a comparison between assets, we have to remember that most other assets are all or assets, whereas the life insurance policy is an and asset. And what do I mean by that? I can put money into my qualified plan or into real estate. or into a CD or wherever else. But because of the loan provisions built into my life... A lot of people give me credit for coming up with the and asset, and I did not. There's many people, even before Todd, that would talk about this being the and asset. I think we were just the ones that capitalized on it, built a brand around it, tried to flesh out that idea more. But that was one of those things when I was learning about infinite banking. That was one of the... silver linings that really helped me understand this is looking at insurance as an and. And so I just letting you know, it's like fun to go full circle because at 18 years old, I'm watching this video and that was part of the journey behind the and asset in the book. Insurance contract. I can put money into my life insurance contract and I can put it into the market or into a real estate deal or whatever else it is that I want to do. But it's the order that I do it that makes it important. If I put it in a place that's locked, I can't come back and do it the other way around. So whenever I'm looking at the returns on a life insurance policy against some other asset, reality is I'm looking at it as the minimums of that life insurance contract against the maximums of everything else. My 401k can never be any more than whatever I eke out of the market, right? But my life insurance policy has some guarantees in it. and I have access to the cash, so when that opportunity of a lifetime comes along, I have a place to get cash to make that happen. How do I quantify that? How do I put a dollar amount on what that value is for having access to cash? I can't. It's as big as our imagination, whatever we can come up with. So I'm looking at the minimums against the maximums. Right here, I want to start to look just to give an idea, maybe, of some of the things that we might be able to do. And along through this, the other thing that I want to do is Nelson said that becoming your own banker is all about a product, right? That's pretty good. Everybody, nobody in here agreed with me. So you are listening. Good. OK, it's not about a product. It's about a process, isn't it? Does it take a life insurance contract in order to. Do the becoming your banker strategy. If I apply this strategy to my shoebox, which really is the same as my savings account, CD, or anything else, right, with current rates. So what he's going to do is he's going to go through the becoming your own banker process with a lot of different scenarios, similar to what we talked about with the five different examples. And you will start seeing some of the pros and cons of… paying back your loan versus not paying back your loan. And so this is just setting the stage for what we're about to watch. Could I make that better by applying the strategy to it? Okay, so let's look at that. And I want to start from that standpoint. So let's put a shoebox in here. So let's say that I've got $10,000 a year that I'm putting into my shoebox slash checking account. at 0% and at the same time I'm paying 8% car loan And I'm buying cars. So let's say I'm buying $30,000 cars. I'm going to buy the first one in another four years. I'll buy six cars and I'll repay these over four years. Let's make this. That's fine. And I'm going to pay back. Go ahead and put a market loan rate in there at 8%. Yeah. OK, so I'm paying my baker $9,058 a year. In order to have my cars, as soon as this one's paid off, I trade it in. I get enough trade-in value to cover the base, and I'm borrowing another $35,000 on top of that for the next car, and this just continues on. It didn't affect this. At the end of this time frame, I end up with $300,000 and six cars purchased over this time frame that have been traded on through the line. Now I decide I haven't learned enough. to go to hear if Dave has any enlightening news for me. Dave Ramsey. So I'm going to go listen to Dave Ramsey again. And Dave gives me the same advice. He says, you know what? Everybody knows cash has no value. Here you are with your shoebox and zero. What in the world are you paying your banker 8% for? You can take money right out of here. Avoid all that interest cost. So we do that and change that to account cash. And thanks to Dave's help, I'm now down to $120,000. And to be fair, this is not apples to apples, but this is human behavior. It's like the obvious part would be like, well, what's all that money that you're paying your bankers? You should be paying yourself back. That's part of the process of becoming your own banker is understanding that idea. So for all the people that are jumping in the comments saying this is not apples to apples, I know. We know. Todd knows. But it's… This is human behavior, and it's a good way to illustrate becoming your own banker. Okay. Well, what is I know it's not the first. I don't know what law it is actually of banking. It's about the third, I believe. What's one of the most important ones? Don't steal a piece? Okay. Become an honest banker? Here's the thing. Do you think more highly of your banker than you do of your family? I mean, that's kind of rough, obviously, because we don't think of it in those terms. But the reality is, I was willing to pay my banker $9,058, and now I'm not willing to take that money and put it back in my own account for my family. Instead, I'm blowing that. Don't my actions show that I like my banker better than I do myself? What if... We decide not to steal the peas, and we pay back the car dollars that we've taken out of here, and we change this to zero. Well, I put that back in. I end up with my $300,000. I mean, that's better than what I was before, but I might be an honest banker at this point. Again, I was willing to pay my banker, and I—what's that? That's it. Barely. I always love when Todd laughs. It always makes the video that much more enjoyable. There you go. All right. So to really be an honest banker, don't I need to be paying myself at least as much as I would be willing to pay my banker? And if I do that, then what's going to happen is I'm going to shift some dollars to my side of the ledger. And now the $37,383 that would have gone to my banker. is in my pocket over this time frame? Have I made my shoebox more efficient? Have I gotten out from underneath the control of my banker? All right, well, I see that we've got this account, and every four years is the only time we need the money. So could we maybe lock this up in a CD for four years and maybe get something for it? rates will get reasonable. Maybe we could get 2% again on a four-year CD. Obviously, at the time of shooting this, rates were a lot lower. Remember, the principle is the same. Life insurance over a long period of time will outperform high-yield savings accounts and CDs. Anything you guys want to say so far, or should we continue to watch? No, I think you said that best. There will be seasons where high yields... will outperform in a year or two but long-term uh overfunded whole life when designed for cash accumulation will outperform in the uh the 30-year window so let's do that let's change our earnings rate to and we can see it pushes us up to 451 000 but do we have to pay income tax on the earnings off that cd this is key guys annually understand this all right so let's put in a tax bracket say 35 So that's still pretty good. We've got $406,924 down here, and we have our cars paid for, and we don't have to answer to our banker. We don't even have to take him to lunch anymore, do we? Okay. It was funny. I was talking to some people in this last training that I'd done in Houston, and we had some people from the... Northern Minnesota, North Dakota area, a lot of farming land up there. And they talk about the amount of money that these farmers are borrowing. And they've gotten in this cycle of they were told you don't want to pay any tax on these dollars. So instead, if you'll just buy equipment, you're okay. So these guys have $2 million combines, and they're replacing them every single year because somebody told them they didn't want to pay any tax. And so they're just wasting money here. And then the result is... They have to go see their banker at least once a week and sit down with them and talk to them in order to get him to give them seed money when it comes in time because they're just totally, totally under the whip. Hey, Caleb, for clarity's sake, for maybe anybody that may be confused, is Todd in this saying that the CD is getting 2% growth, but they're borrowing against it and they're actually paying interest back at 8%? As well in this scenario. Yeah, in this scenario, they're withdrawing their money and then paying themselves back in 8% like they would. And instead of their money earning zero, they're earning 2%. But they do have to pay ordinary income tax on that because you have to pay ordinary income tax on any interest that you make in a bank. So that's how this is being laid out. Okay, amazing. All right, what if, and I know this sounds way out there, what if we use the loan provision provided us by our mutual life insurance carrier, and instead of doing this, what if we borrowed money from my life insurance carrier and financed these cars? Well, let's see. Let's load in the life insurance values. And if I do that, now I'm up to $540,766. How could that be? Because Dave told me a life insurance policy couldn't do more than 2% return. Do I have to pay income tax on the earnings on that account every year? So if I eliminate my tax bracket, Actually, I've got $706,927. Did I spend any more than I did on my shoebox or on my CD? Do I have any fewer cars than I would have had the other way around? How could that be an asset that's looked at like Needlenose Ned? And it's because of lack of understanding. It's not just a lack of understanding. And here's what you have to really go away with. And that is it's not the general public that doesn't understand. It's the insurance companies and the people at the insurance companies and the people that are selling life insurance. That's the reason that Universal Life came out that caused people so much trouble when those policies came apart and other things along those lines. We'll stop there. And he has some other great statements. And he actually talks later in this video about equipment financing and about how other people we're using a car as an example. And it's because Nelson brought this up in his book. But obviously, like what you mentioned, Dom, there's way better ways to think about this, especially when you include it, buying an asset that's actually producing cash flow. But I think the key thing to look at is the checking account. Plus paying yourself back with interest. The CD. plus paying yourself back with interest in the insurance policy, plus paying yourself back with interest. The last three examples, the cash flow is exactly the same. It's just where your money is stored. And in this example, the only difference is life insurance is just going to grow a lot more efficiently than the other two examples. Now, lots of devil's advocate opportunities here. But the point is, from a cash flow perspective, $300,000 difference is... is nothing to sneeze at and nothing really changed. The only thing that changes where your money is being stored, but you can see just a big difference between being an honest banker versus not. So thoughts on this. And, um, for those of you that are reading this and like, we just want to better understand like why insurance versus other avenues. This video was helpful for me opening my eyes to like insurance is just a better longterm place to store and use your money. Not just because of the growth rate, because What's not even mentioned here is the death benefit and other benefits you get with life insurance, which should was not mentioned, but could could have been. And that just makes it that much greater of a reason to why if you're going to do a strategy like this, why life insurance makes sense long term to be able to do that. Yeah, I think it's important if you look at the examples that Todd used, they were all fixed accounts as well. And what I mean by fixed accounts, it's not accounts that are like tied to the equity market. And so it's really more of a very conservative place that has guarantees built into it. And I think that's important when you're thinking about places of storage of capital to be able to utilize. It's different than I'm going to go get an investment rate of return to produce a different result. And so I think that is important, which was why we clearly always try to say, hey, it's not an investment, not an investment. This is life insurance. It's a safe storage of capital because then there's other things you can do outside of that. So I just wanted to make that very clear as well as there are other things in this calculator where you can start comparing it to 401ks and other things like that. But also there's cool calculators that show if I put it into this and then go buy real estate, what is the returns, right? So there's a gazillion things that you can do and compare. And this is just one example that we wanted to make very clear of storage of capital, safe place, and what it would do if you just redirected capital to something different than what you're used to doing. Yeah. Um, ultimately the, Big difference with the final example that he had from the first two, the life insurance policy with paying yourself back interest is that, and Nelson Nash hits this time and time again in part three, is that you're getting, you're not just getting interest on where you're putting your dollars, but you're also getting the money that otherwise would have gone to the stockholders in a stock company. So you're getting dividends and interest. And so like, that's the thing that he keeps coming back to in this chapter is that like, it's, it's more. effective than other conservative asset classes because you're getting kind of both sides you're getting the interest and you're getting what would have otherwise gone to shareholders in the form of profits and so um that's just something that he keeps coming back to that's why it's a the most efficient kind of safe place to store capital and kind of why we're so strong on it here yep i the more i i just think through just the power of this book is This book would be awesome if someone was already sold on the concept of using life insurance as a part of their strategy. And then you give it this book, and then it just re-emphasizes the importance of mutuality. It re-emphasizes the philosophical reason around this. It gives some really good lessons that apply across the board to just life in general. And so I'm a fan of this book, and I'm a fan of people understanding it, reading it. And I think like we'll see in the next part that we break down, the more examples we get and when we look at numbers, that's where there creates more confusion because I think when Nelson was writing this, he wanted to make it simpler. So he didn't, he wanted to like make the examples even simpler, but then it's like, well, you're not even going to do this in real life. And so the, the people, the technical side of people are like, this, this is getting more confusing. And again, if I had to tell my younger self anything, it would just be. Don't take yourself too seriously. Go read, what was that, the lesson, the math lesson. Just like don't take yourself too seriously. Get the point and then understand where this helps you, where it doesn't. And remember, the whole goal is to be able to save more, have more control of money. And the solution that gives you and your family more control of capital should be the thing that you should lean towards. And so, Domini, any final words before we wrap this section up? Yeah, the last thing I'll say is Caleb did mention like a... When you're looking at the numbers, the illustrations, don't take a figurine of salt if you're reading this book, there's tons of content on our channel that you can go through on the Better Wealth channel, on this channel to essentially go back and like, look at illustrations. Also, if you are interested in something that's personalized for you, based off of your cashflow, what it would look like, you can also talk to somebody on the team, be more than happy to just be like, Hey, here's what the numbers will look like based off of accuracy in today's environments, today's rates and today's companies. Design max efficiently for what it is that you're trying to accomplish. That can be one of your best educational lessons versus actually trying to just gather it from the book, knowing that it was written many years ago. Well said. We'll have links down below on any videos that were referenced. And then if you want to see your numbers or get a policy review, there'll be options for you to be able to take action down below. Awesome. One last thing I'd like to say, and just once again, for people who might, you know, hit us up in the comments about Todd's videos that he. He uses a similar train of thought that Nelson uses when he kind of creates his comparison between, you know, method A, B, C, D, and E, I believe. And then he was, you know, he prefers method F. Is that like when Todd was like showing you like, oh, look what this account has grown to if he just paid himself back the 8% interest, life insurance. You have to realize that like that full 8% interest or whatever is that like that is using policy loans. So like you're not actually going to get. the full 8% back, like you're going to get obviously a delta over the policy loan. But like you're not going to get that full 8%. So at one point in page, you know, 48, Nelson says, you know, the interest that he pays never leaves his account in control. Like, once again, like you just had to take that with a little grain of salt, because like, you're using a policy loan, it's not your profit, it's the carrier's profit, you only indirectly experience it, just kind of realize that that it's, you know, some of the gains are going to to be different. than what Todd Langford showed us. It is. It also is a stretch. Being a mutual company, you can say that you're like an owner of the company and that it is true, but it is a stretch because you could also say that anytime you buy in an index fund, you know, I'm an owner of all 500 of the top, you know, companies. It's like, okay, yeah, but good luck. Like you don't have much power, you know, kind of deal. So I think it's like, I'm not trying to belittle that idea, but it's It's like there, Nelson does really put a huge emphasis on some of these aspects, which I think from a philosophical standpoint is key. But then you try to put like numbers to it and you're like, okay, maybe like, you know, I don't know where like he's really strong when it comes to it. And I think there's a reason, but then the analytical brain could try to like try to overthink it, which I do appreciate you mentioning that. With Todd's video, you're totally right. Not even Todd's video. He's just giving the different examples of where you could store your money. But some of that interest would be going directly to the insurance company versus your account. And later in that video, he actually acknowledges that. I just didn't want to watch more, but I appreciate you mentioning that. If you're a high income earner or own a successful business, you're already creating real value in the world. The real question is, are you keeping that money, protecting it, and growing it the way that actually supports your long term goals? At Better Wealth, we help people like you better keep, protect, and grow their wealth through various tax strategies, estate planning, specially designed life insurance, retirement planning, and even a fractional family office service. If you're interested in one or more of the areas we can serve and want to learn more, the next step is to book a free clarity call with us. Click the link in the description or tag comment below to get started. Back to the video. And it's actually funny because on page 44, he states that. So there's a lot of times where he states what it actually is, but then mathematically tries to maybe sound it where it's a little bit better than it. We would think comprehensively because he even says at the very top, when you make a policy loan from the life insurance company, you are borrowing from the cash value. Therefore, when you make loan repayments, it is going to the life insurance company. Right. So it's very clearly stated when he's when he's communicating this stuff. Yeah. Yeah, and he also, I mean, he talks about in this chapter, even about retirement income, which we all know, it's like we try to avoid because there's, that can also be misleading. Not like purposefully, but it's like anytime you're showing something 30, 40 years out, it's just... tough. It's like we try to avoid it at all costs, understand that this asset can be used in retirement. So he's talking about the CD versus the retirement income and how you can take out $50,000 and yada, yada, yada. And it's like, yes, and time will tell. And you should be very careful. Anytime you see a life insurance policy that shows income, be cautious. Again, Nelson is just laying out all the pros and cons. He's not trying to like overcomplicate this and say like, this is why you should buy this policy. He's just talking about. how life insurance not only helps you up up front but on the back end and then what i loved about it is even like talking about the legacy of the death benefit getting being able to get paid to to your spouse and i know this for a fact that nelson did pass before his wife and his wife inherited a lot of money and their kids are are doing quite well because of these systems of policies that were in play and so thinking long term going back to the forester days I think there's a lot of wisdom in just thinking long-term, and Nelson gets 100% on his long-term thinking there. So without further ado, we'd love to hear from you in the comments, and I appreciate both you being on here. And this is going to be fun to continue to wade through this book and then also tackle lots of other fun and exciting topics to come on the show.
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