So a lot of people say they're recapturing their interest and Or they're you know running their expenses through their infinite banking These are I want to have an authentic combo with you. You've you've I mentioned the expenses thing I think those are two areas that we got to be very careful about and there's a lot of people that just That's where they get confused. It's like they read a book They're like, oh, I'm gonna go buy a car and go on vacation I'm gonna make money and I'm gonna run my expenses on my premiums gonna equal my income and then my Policy's recapturing interest and I'm paying interest back to myself and I'm like, okay half truth Right because it's like I yes Is it more efficient to buy a liability with the policy versus cash? asterisk yes, and I'm I hope we understand the core principles and I would go out and get a bank loan and and if I could if I'm okay with the payment if it's more efficient than borrowing from the insurance company and Recapturing interest is essentially my money is able to grow But my interest is going to the insurance company not me So these are some of the things I just want to talk about because I think it will be a really interesting discussion I feel like we can talk about anything in this space So I'll hand over the floor to you and we'll we'll further this convo Yeah, so I Have also made tweaks on this strategy as well and I've come to the conclusion that the only expenses that I see valuable Running through a policy is anything that I can earn cash back rewards on and Any bill that I can actually reduce the bill by switching it from a monthly to an annual and I laid this out in Quite a few videos with my own numbers and I'll do it here quickly because it's still fresh in my mind and again, I go back to the root of Which dollars I am allocating to the cash value life insurance on me personally in my business. I've been blessed I'm saving a little over six figures a year in in cash value life insurance. I have two policies myself Which equal 85,000 a year. So just dealing with one policy that I'm funding 70,000 a year, right? Yeah, it's it's $70,000 of Savings dollars money that has no purpose yet sits in a bank account has no purpose now Instead of me sending all of that to my cash value life insurance policies Right. I I do I have like a rule where I do like a portion right of all of my Income that I make have like a 10 10 10 type of rule that I that I do um But I also was experimenting with the whole expense Right running expenses. I'm like a lot of insurance guys talk about this and they're recovering and they're talking about recovering 50 opportunity costs and these wild numbers and I'm like something's not adding up for me because I'm not getting the same results So I you know before I practice Before I teach a thing I like to try to practice it and experiment it with first to see what I get So from my 70 grand that I'm putting into this one whole life insurance policy contract $26,000 of bills expenses I'm going to Put in the policy first Then borrow out And pay the expense Right and I want to see what is the net result from that Um, and the other thing I let my clients know is right off the bat When you start a policy the first one to two years Your most expensive years. So you're already negative Maybe 18 percent Or more depending on how you split the premiums and the cash value dollars Right. So if you did a 50 50 split Where you got 50 of 70 grand going to cash 50 of your 70 grand going to um, whole life insurance based premium You have a net loss technically on the cash value in the first year of more than negative 50 percent. It's like negative 60 percent or more which is why I always tell my clients listen. That's a bad strategy. There's agents that are designing policies that way for infinite banking calling it infinite banking And it's it's not ideal. It's not efficient. So I say, you know, lower those premiums down increase the cash value a little bit more To help with your negative starting point in year one. So that's the first thing And I account for that 26 grand I've identified in my bills and my expenses. This is money per year that I can run through a credit card Okay Earning anywhere from two to three percent in cash back rewards and the net number that I recapture is 12 Which is three thousand one hundred and twenty dollars. Where's that 12 percent coming from? Is that from points? From point. Yeah cash straight up cash back rewards and points that I can convert to statement credit, right? Okay, the the real more realistic number is somewhere anywhere from three to five k But I went with the lower number, right? So 3,100 so technically I've reduced my expenses from 26,000 Right minus the three 120. So now I'm at 22 is really What I'm actually pulling from the policy as a loan Act Say five percent Right. I know the loan interest rates have gone down to three to four percent as of late um, but in 2018 2019 is when I established my policy. So loan rate is is say five percent and you're and you're pulling out when you say pulling out You're borrowing against to pay off the credit card balance pay off the credit card. Yes, it would credit card balance be at you 26 Because the points would come at a later date so the points I can uh Accumulate this it your points are accumulated immediately. So I can just every every um due date I can apply it. Okay, right. So uh, was it 320 divided by 12? It's like 260 a month that I can apply to the different credit cards So it lowers the bill. Okay, right and then my net my actual net Out of the policy is is this number, right? So in addition to this 26 grand the actual when I look at the actual cost of my bills, it's a little bit higher than 26 grand because I was paying say a monthly expense of um, a lot of the business subscriptions that I have And you know how when you sign up for zoom or kajabi or convert it when you pay annual you save 10% say 15% Netflix pay for the year right whatever it is. So I look at all those things and I convert everything to annual run it on the card The card that I get is usually a 0% for 6 12 18 24 months I'm paying the monthly minimum Right, you're you're paying a monthly minimum on the card on the card. Yes, because there's no interest, right? Okay, fair and then I let the money in the policy season in the policy for as long as humanly possible And then I'll pull it out in one shot pay the credit card off in one shot do it again the next year Right, how are you paying that loan back though? See that is the issue So what I do is I actually don't pay the loan at all I let it stay outstanding. I just cover the interest. So 22,880 times 5 simple interest is 244 so in this example technically, I'm okay It didn't cost me any more dollars because This money offset my borrowing costs for the policy. Does that make sense? I'm tracking what you're saying. Yeah yeah, so that right there is technically a win. Okay, that's cool But I'm still negative on the policy itself that that's going to take maybe four to seven years before the cash value starts to break even and start producing a positive one two three four percent return. So The conclusion I've come to is that this can only work for a few years Before it don't matter because I'm saving on average average Roughly 15 percent by switching from monthly to annual. So it's a 15 percent savings on average and I'm getting 12 percent us a total off the cashback rewards right a total Uh net savings right or cashback rewards Of everything that's uh running through the card itself right So i'm earning three to five k off the bills. So that's If i'm doing the math right, it's 12 percent of that number. I okay cool yep You know i'm in with Okay, even with that that Still negative and eventually This number starts to get pretty high The year your borrowing costs on the loans. Yeah, I do it again The next year and your spending loan is bigger and your interest charge number is growing. Yeah So eventually this supersedes this So now I am coming out of pocket And then there's a whole notion of yes when you pay interest back to your policy That you know it goes to the company and the company pays you in the form of dividends Okay, but that's That's not a reliable measurement for me Like I know what i'm getting from the insurance company. This is a completely different cost So I've come to the conclusion that it only works for a period of time It should not be a lifetime type of thing in the policy Uh I don't see the full value in it. Um, well, I know I can I know I can do better Yeah other things. Yeah, so So I'll I'll give you my two cents on this and I appreciate you breaking this math down um I I think I think number one What is the main goal when you read infinite banking? Um, and what Nelson talked about it actually came in the form of a of a shot analogy where he talks about volume versus rate It doesn't matter You know how fast the the Liquid goes into your arm. It's it's the volume that can really get you in trouble And so my I think we can both agree that the volume Of savings Is a good thing if we can help our yes save more money They're having a greater volume Growing hopefully and by nature they all have control over those dollars Which I'll be the first to say some some people will do worse with control because of bad behavior and habits But we're making the we're making the assumption that if you have control, it's going to be a positive thing That's why this is not for everybody And I simplify it as much as here's my principle The most efficient way in whatever scenario is what is allowing me to save more money now If we if i'm borrowing at five to use your example And I am buying a cd at four percent in one year What my policy is going to grow regardless we can agree on that Yeah, my policy is going to internally give me all the benefits of life insurance, which which is is amazing But if I'm borrowing at five and earning four I just created a negative 20 Arbitrage on my money in that year. Yes, like here. Let me pay. Let me pay you five dollars and you give me four back I'm not I'm not a genius and you would say some people would say well I'm a genius because my policy is growing and I got four dollars. Well your policy is going to grow regardless So so you'd be better off Not doing that transaction Um, and so I and this might be this is this why I want to have a discussion and that's scenario that you went through Mathematically, you'd be better off paying cash for those expenses. I love what you're doing annualizing using credit cards Mathematically, you would actually be better off paying cash And and allowing yourself to take that extra savings versus the monthly since you're saving that 12 plus 5 percent all those things And just saving more in the policy You know what i'm saying So that's like, you know, and then the other thing is the other thing is um, and I this is I get People that don't like when I say this but it's like if I'm going to make a purchase Let's say it's a car If I'm going to make a purchase the first first thing I need to do is I need to say should I buy this car? It has nothing to do with do I have the money? Do I have the credit capacity? It's like should I buy this car and you we need to have some kind of framework to decide that a lot of times we Dave ramsey puts that you know how you should buy something with what you should buy So i'm going to buy this car. It's ten thousand dollars and I have 200 000 of cash value I have money in the bank And I have a credit union that I could borrow a borrow from And it really comes down to i'm looking at my scenario and saying okay payment is not an issue in this case So i'm either going to take a policy loan At five percent now a lot of these companies are four percent so four percent policy loan My I could take a zero percent. I could take my cash money out of cash um, or I could take a You know a bank or a credit union and let's say it's a two point five In my head I'm going to take the two point five Take take that pay the credit union because I respect that my money and my policy And my money in the banking I I have a more respect for liquidity and control more than two and a half percent Got it, you know, and so it's just it's it's um That's the thing where where you know if we have if we have a hatred for banks life insurance can be a Okay, bad. Yeah, so you just brought up a good point. So there is a sector of people that I Don't want to deal with dealerships Don't want to deal with borrowing from banks and taking loans. So I so I say well in that case Yeah, you could save save your money in cash right life insurance and borrow from yourself to finance something right and if you were to compare it to um getting a five percent car loan seven percent car loan versus a four percent simple interest Loan on your policy. Yeah, there is a a benefit there um, so I I definitely work with a lot of different clients that um do that and I've also created content Where I talk about right running bills through your policy In the most in my in my thought process. I'm okay if you're gonna do it because I can't stop you right if you're gonna do it At least do it in the most efficient possible way you can right and you're still gonna net a negative Right and I appreciate my numbers right. I use my numbers to prove it Like you're eventually going to net a negative in the first couple years. Maybe not if you do it right But you're eventually going to net a negative especially when you compare it to something else you could have done like maybe Like I'm at a point now where I use my policies for Uh syndicating right and I also use it to actually run the personal side of of my life and even the the business side so I know my business is going to produce 30 40 profits Let me you can then argue that oh well, he ran his Business expenses through his policy is cost him x but he's producing a 30 40 return Okay, well then he made sense of it. So right as long as you're growing your business It's it's just as long as you're growing your business. How many people one of those things how many people are gonna do that You know exactly. It's like invest in your number one asset which I'm a huge fan of like I'm we're gonna double our business and you know, we go out of business But here's here's what I'll say and I want to say two other things is is Like I really appreciate this combo because I think we're I think we're gonna help a lot of people and just because there's gonna be some people That really relate with how you're articulating and there's gonna be some people that relate with I With how I I articulate it and the hope is to increase the financial literacy of just both of our communities So the so the thought process is number one Um, if if like I'm not a huge fan of using, you know policy to pay off debt or to buy lifestyle stuff I've made that clear and the asterisks That might be the right thing that someone needs to do because they will never start saving They like they'll never start. Okay. And so they're like, okay Okay, so what's what's better and this goes back to Dave Ramsey There's some people that should pay off their mortgage There's some people that should crud up their credit cards Because it's the mortgages in the credit card that are like They're they're not like it you have to put in human behavior. So while I'll make it very clear I'm not going to go on record saying like do this and pay personal expenses and you know, you know Necessarily pay off that it would does mathematically make sense if you're borrowing at five to pay off higher debt That's that's mathematically a more efficient way to do it I will I will say that you know, there are some people that That works we just have to be super conservative because normally those are the same type of people that get In financial pinches and then their policy could be at risk because they're over leveraged and then we have that uncomfortable conversation Then the next thing I'll say whether it's a a debt or an investment and let's just suppose for the moment that it could be 12% And you're able to borrow at five And make 12% let's let's let's do the math here You're you're getting all the benefits of life insurance and you're going to get those benefits regardless It's costing you 5% in my book. I talk about it being a control cost And you're able to earn 12 so going back to the equation if I give you five and you give me 12 back That's 140 return on my money And my cash value is still doing its thing because my policy I'm using it's collateral So when we talk about giving your dollar more than one job I like that's So it's my whole philosophy is if we're gonna take a if we're gonna take a borrowing if we're gonna borrow I call it control cost whatever that control cost is we got to make sure that whatever activity we're doing It's creating a greater result a greater outcome than the cost Of controlling capital whether it's at us bank life insurance policy or if it's paying cash And there's a cost of paying cash because it's when we pay cash We're taking this money and now we're we're surrendering it. We're never able to have it back So it's not just free. There's a cost to giving up control. And so again, man, like I appreciate this because we're you know The hope is yeah, we're being real transparent. Yeah. Yeah Which and and we're not you're and you're doing in a way where you're not like really uh Shunning or hating on what others have done Okay, or pretty good or not so good with their policy You know the other argument to defend those who do run their cars and I mean run anything and everything do their policy In their defense, they're looking at it as like That was money I was gonna spend anyways So by having it go through the policy first and that money is gonna grow forever I'm willing to pay that quote-unquote control cost and I've done videos in support of that But just like the evolution of my youtube channel, you know, there were things that I've said in 2018 That I don't necessarily align with all the way in now 2022 Finance is very, you know, you got to be adaptable Very fluid with it and willing to be wrong So that you can course correct. So I've been wrong so many times In the past and I keep those videos up and I even comment. I'm like, hey, I was wrong. I made a mistake here on this video I'm showing you. I'm human. I'm showing you. I make mistakes um Don't rely on everything I say don't just take it as Gospel but rather trust but verify trust but rare verify and even in those videos where I've made mistakes. I'm like Run these numbers prove me wrong Run the numbers prove me and then I have people come back and say hey, uh, you made a mistake here or hey um instead of saying barring maybe you should say uh Uh, I still get that wrong Barring from a barring against. Yeah, and that was another little epiphany I had My mentor Steve Parisi actually took me to the language Of what insurance companies use in their actual language and so Barring from and barring against is more of like an insurance agent. It's like an agency agent language Um, that's used but from what I understand the insurance language. They actually say barring from your cash value policy so Don't beat yourself up. I think I was beat myself up a little bit. I was like wait. Am I guiding people wrong on this? But I've now told my clients. I'm like, you know, I'm not going to beat myself up if I say bar from bar against You know what I mean if you don't know Here's what I say in the video. I'm borrowing. I'm taking from here Is here this policy that we call infinite banking or the and acid is allowing you to create a loan and you could say I'm borrowing from my infinite banking strategy. So Yeah, so I try not to let the client Beat themselves up right because I'm like as long as you get the the fundamentals Um, you're gonna do okay. Here's what a matter of Mastering it. Here's what I'll say dude is we're talking. We're able to have a deep conversation There's not a lot of people that are willing to get deep and talk about Certain things a lot of times I feel like people are pretty surface level and like all this stuff So I appreciate that about just our friendship and and our ability to speak on this and I hope we can do more of this And so that that's first thing I'll say and then and then the second thing I'll say is We're talking about some deep powerful strategies And let's be let's be frank. The fact that someone's watching this right now Is is um, the fact that they know what infinite banking is or potentially knows what inf Our velocity banking is and understands leverage creation like We're going back to our example. It's like, yeah, we could we could negotiate like what is the better way to do this thing? And the majority of the world is doing the 3% or 4% rule and will never become wealthy because they're not they don't have an ounce of leverage working in their favor And and yet You know, so it's just one of those things perspective tells you that um pat yourself on the back Um, give us a follow like this video share it with people that need to hear this Hey, I want to thank you for watching till the end if you enjoy our content Please like share subscribe it helps other people find our channel and we really really appreciate it I also want to let you know that we have this thing called the better wealth efficiency quiz And um, our goal is to give you a wealth efficiency score in less than three minutes And really highlight and get you to start thinking about the potential inefficiencies that you have in your life So if you haven't taken the quiz go check out it'll be the link below check that link out Take the quiz and then let us know your score