CHEAPER Third Party Collateral Loans for Your Infinite Banking

What’s up investors now on today’s podcast. We’re going to be talking about a little bit of an advanced topic on infinite banking, a little trick that the folks in the HUI have found and have been utilizing to get a little bit better interest rates on the cash value portion of their life insurance. Now, if infinite banking is life insurance stuff, and there’s a lot of terms for this, a lot of marketable terms, you’ve got to love the financial industry with all these marketable terms on all these things. That’s essentially the same thing, whole life overfunded insurance. I know people don’t like their whole life. It’s different when you crank those insurance portions down and that’s where the commissions come. If you create these products with high insurance like how most people do and the commissions are going to be high.

 

But the way that people do it in our world to make the infinite banking way is very different. This is a new concept to you, and you’ve been turned off because you happen to read Dave Ramsey, which kind of goes over the whole idea in the wrong way. Go to simplepassivecashflow.com/bank.

 

Read that quick tutorial there. We even have a free e-course that most of you guys can bum rush through and take two to three hours. And then you’ll be IBC experts at this point, but check out that website and we have a lot of other free eCourses too, that you guys can access them all by joining up with our clubs, simplepassivecashflow.com/club.

 

Filling out that quick form there takes people most like one to two minutes to just do it. Before we get going with the show, just a little bit of a market update, something I’ve been seeing lately. We were talking about interest rates popping up since the start of the year.

 

And it’s creating a situation where a lot of these bigger players now, the bigger players, as you guys know, just like in the stock market, the big players move the markets. And in the real estate world, the big players, these big, large institutions invest people’s lazy, retirement money, just buying whatever, because that’s how they get paid.

 

They get paid when just deploying their silly capital around. A lot of these guys have taken the foot off the gas pedal a little bit with the interest rates going up. And I took the same position myself so I’m going to release a video to the people in the club. Again, you guys can get signed up for that insider access where we talked a little bit more in depth about what’s happening in the market.

 

And it wasn’t that uncertain for us. And we’ve got some other projects that don’t really need to get the debt and entire interest rates. So it was a nice little break from having to go to the normal sources for lending from Fannie Mae, Freddie Mac and community banks, but what this has created, and this is very counterintuitive because these large institutions have pulled back from the market has actually created a sort of buyer’s market, a vacuum in the seemingly uptick in the market.

 

Where there are some deals out for sale out there. Personally, I haven’t really been actively getting anything, but I’ve been looking, after realizing this. And so that’s what’s happening in the market by the time you guys are listening to this, maybe in July or whatever, it’s probably over, or this little vacuum is closing up.

 

And, eventually the institutions will come back and come back to play and because they need to deploy capital because that’s how they make money. And that should sicken you guys out there. These large institutions are spending and investing lazy retirement funds, pension funds. And all they gotta do is just deploy the money and that’s how they get paid.

 

They really don’t really care about buying the best assets out there. And that’s just how the financial system works. That’s just a little bit of what’s happening out there. Do you know if you guys are looking for properties to buy, maybe I dunno if this carries over to the residential, a little mom and pop rental properties or under 40 units.

 

Maybe you’re finding a bit of a buyer’s market there amongst the global sellers market because of the interest rates popping up and maybe just people are a little scared or about the affordability. Affordability is the ability to have a bigger mortgage payment because of interest rates or lower, but now they’re higher.

 

So the affordability goes down, but that’s, what’s happening in the commercial world. We talk a little bit more in depth. I sent out a newsletter to some folks that were impacted more about this. We actually are looking to trade Some deals because of this kind of phenomenon that’s happened and we’ll see how that goes.

 

But a little bit of a buyer’s market in a sellers market and the thought is from the industry experts, not all the YouTube influencers are the people trying to sell stuff , that 2022, 2023 is going to be a little bit of a slower uptick here. Won’t see rent growth 5, 10, 20% rent growth, but still growth.

 

And I think that’s the major thing. So if you’re underwriting your deals to assume for the normal 2 to 3% inflation. You should be fine. And I think some people are reading into that and maybe news centers are trying to sell headlines that call this recession in 2023, which to me, the recession is defined as negative GDP growth for two consecutive quarters. That’s just not going to be happening in my opinion. Again, in any case, you buy for cash flow. Doesn’t really matter if it’s up or down market, but anyway, here’s the show.

 

We’re going to be deep diving into a little bit more technical tactic here that a lot of the folks within the group have been uncovering and this technique is basically using your infinite banking policy, taking that cash value loan to go on, invest in it. But, they’re, you’re typically paying maybe 4 or 5% on that. But what if you could get something a little bit better than that just makes the arbitrage gap a little bit better. So I don’t know what the term for this is. And typically when there’s no term for these things, it’s probably a good technique that, or do it before it goes away.

 

Although I don’t think it’s going to be going away, helping me unpack this is Chris Miles from moneyripples.com. Hey Chris, how’s it going, man? Awesome. Lane, good to be here again. For those people, let’s start with a little basics, so we don’t leave anybody behind. I’ll let you define infinite banking and then I’ll take a stab at it because I think we define and explain a little bit differently.

 

So for some people who have never heard about this stuff, what is infinite banking, and then we’ll get into the cash value arbitrage. Yeah. If we strip away all the terms and all the cute little names that people try to give it. Because they got like infinite banking, be your own banker, cash flow banking, wealth formula banking, and everybody’s got their own little thing, simple, passive cash flow banking or whatever.

 

I call it max ROI when we do it, that’s all, basically what we’re doing is we’re taking life insurance, specifically, whole life insurance, not term insurance. Cause you can’t, there is no cash in term insurance. You have to die to get it. And we’re not talking about universal life because that doesn’t work as well either. We talk about using whole life insurance, something that’s boring in and of itself, but here’s the key thing is that if you get it designed where you put the lowest death benefit costs coming out and the highest amount of cash that you’re putting in what happens now, you create this tax-free supercharged savings account.

 

You have this money that’s able to build and grow tax-free just like a Roth IRA, but you don’t have all these 59 and a half rules. You don’t have to worry about the government changing the laws on you. You kept figuring what to do next. All this stuff is set and the money is accessible from day one where traditional whole life, the stuff that Dave Ramsey and Susie Orman hate.

 

We’re not talking about that. That traditional whole life is crap. Okay. That’s the stuff where you have to pay in tons and insurance costs tons of commissions and it’s not worth it. And so that’s what we’re really doing here is that we’re creating this tax-free super-charged savings account with this life insurance.

 

Yeah, there’s a death benefit, but we get this minimal death benefit needed to allow this X amount of cash to go in tax-free ,growing tax-free coming out tax-free. And here’s the coolest part. This is the part that we talk about all the time and kind of the topic today is that we’re taking this money and we’re not just letting it sit there and earning the five plus percent a year tax-free right.

 

That’s great. But that’s never going to get you to your freedom. The way to get to your freedom is you can take this money, leverage it. You can get a bank line of credit against it, whether it be through the insurance company or through a separate bank, you get a line of credit against the money that’s in this policy to then go and invest outside.

 

So you can take that money and use it for whatever you want. You can go and buy properties. You can go invest in the syndication. You can put your money in apartments or whatever it might be. You can take this money and invest it wherever you want. The cool thing is because you get this line of credit against it.

 

The money’s still earning tax-free dividends inside of the life insurance  and at the same time, you’re also earning money in your real estate. So you’re really, double-dipping on the same money that you’ve been saving up in the first place. You give an example, we’re going to talk about this here. There’s a line of credit you can get right now as low as 3%.

 

Now, if you’re earning 5% of your life insurance, you pay 3%. That means you just create arbitrage. Like the bank did when they loan you money, they make more off of you. You’re doing the same thing off the bank. Now you’re making a net 2%. Plus whatever, earning on that investment. So if that investment’s paying you 15% and you have 2%, now that’s 17%.

 

You’re now earning again with the money you’re already going to be investing anyway. But now we’re, instead of just pulling out savings, we’re using our life insurance to be the thing that funds those investments. Yeah. So there it is folks, but we’ll break it down a little bit slower for some of you guys who’ve missed it.

 

Maybe we could do a little role play here because I think that’s what this stuff is. It’s very different from what anybody else talks about. And, it takes a while for people to realize that it’s not crazy nonsense, but going back to just the general idea of infinite banking, you know what I’ve been explaining lately.

 

If you buy a house and you put a whole bunch of equity in there and it grows up. Essentially. It’s like the same thing, folks, right? You’re using this whole life policy like a heloc kind of house right now. You can take a loan off of your whole life insurance, and then use that as you see fit.

 

Just like if you have a house and you’re paying it down, but then you can take that equity out. Think of it as the same thing here now pays you interest. And the house in the house example, the house is obviously appreciating. And in the IBC example, the insurance policy is also appreciated too.

 

Now there are some like I think the biggest thing against this stuff is you’ll see a lot of YouTube videos or your whole life is a scam. I think Chris and I will both agree that yes, whole life insurance is the biggest scam if you are working with somebody, who’s creating this stuff with a high percentage, going to the commissions and the insurance part.

 

Now the key to this is using the bare minimum of life insurance. And the dirty little secret is this is how the insurance agents make this type of money if they ratchet up those commissions. So we’ve had a client we’ll, what we looked at is I think it was for like I don’t know if we can say the name, but I think it’s like Snoopy’s brand or something like that.

 

We’ll just go with that. But we looked at it and they’re like, yeah. We can’t, it doesn’t really work. And it’s oh we’ll look at what is the percent split of the life insurance portion. And it was a hundred percent the whole damn thing, and yes, but it’s done like that. It is a kind of a scam.

 

It’s not a good deal. And that’s exactly what they all are talking about. Dave Ramsey sees the armed men, but we’re talking about, yes, we’re talking about whole life. But we’re talking about it very differently. I don’t know. Maybe I can think of an analogy on the fly here. It’s saying, like all cars are dangerous, right?

 

Yeah. If you’re like driving around a little Plaza, Miata, it’s pretty freaking dangerous. But if you’ve got like a big truck, it’s not right. But people think in generalities, I think cars are dangerous in a way, same thing here, full life insurance. Don’t plump the type of specific type of design policy with a low insurance portion, which happens to have the lowest commissions for that agent, which is why they don’t want to do it for you.

 

That’s why you gotta work with people. Don’t care about money. It’s more bulk volume in a way, but that’s infinite banking in a nutshell. So we’ll go into an example here, right? So like I say, you have. So you’re putting in like a hundred grand a year for several years and you’ve built up a cash value of maybe 300,000.

 

And I want to go, and the way people will use this, the use case is to pull the money out and go into a deal. We put in 50, a hundred grand into the next deal, pay it down. As, you can make money from your day job and replenish a lot, or just take out the whole loan for forever. That’s another way of doing it.

 

When I do that, if I go and take the loan from my current insurance policy, it’s like the house loan in a way, I think I’m paying what, like 5% or something like  yep. And, but now you’re, let’s go into like, all right what does somebody need to do to not get this house alone, but go to a kind of party and be aftermarket.

 

Yeah. Once you have at least 50,000, $70,000 in cash value built up, you start to have more options open up to you. Most people just use the insurance company and that’s fine. Even some of the insurance companies, because they’ve lowered their guarantees. Some of them were loaning at 4% right now.

 

But at the same time like that, can, that sometimes can affect your dividends, right? How much you’re getting paid. So these third parties would allow you to do it and allow your money to keep growing, doing its thing, but you get a line of. That’s separate. Right now the lowest ones I’ve seen are either three or three and a quarter percent.

 

There’s a few banks like coastal states bank, which have a bottom floor rate of three and a quarter percent when I just set up for myself after I had coastal states bank as the bank court. I actually have them at 3%. So the cool thing is I can do the same thing I do with my life insurance, where I went to the lecturers company, asked for a loan. It would take about a week or so to get the loan from the insurance company, before the money’s in my actual bank account. But with these banks, you can actually have them set up electronically with your checking account where you can actually just do it yourself.

 

You don’t have to go through the company or a middleman to request it. You can actually go and click a button online and move the money over. And it’s there in a few days, which is great. Especially if you have a deal that’s coming, you’ve got to fund it in 48 hours or something much better to be able to click a button and say, Hey, let me call my insurance company and wait a week for it to come.

 

There could be worse things, but it’s nice when you have these third parties involved because, and it’s not just the banks, like I mentioned, sometimes your local. We’ll offer options too. It could be a credit union. It could be a bank. It really could just ask them, say, Hey listen, can I do, what’s called a collateralized line of credit specifically against my life insurance policy.

 

And some banks won’t touch those because they just don’t do it. They don’t specialize in it. They specialize. In other words, others will. I had somebody, a client who’s getting three and a quarter percent or three and three quarters percent through their local bank. And even though they could get a cheaper rate, they said, Hey, I love the convenience.

 

I can walk in, get to be able to pull the money out of my line of credit physically, or I can do it electronically. It’s just for ease. I’ll do that. There’s lots of different ways you can do it that most people just don’t realize and insurance agents are there too. They just don’t realize that you can go to banks and actually get these collateralized lines of credits and really be able to get a better return on your money, by doing that, by making more than what you’re having to pay on these loans.

 

Yeah. And an actuality, like it’s actually a good deal. Good loan to keep on the balance sheet for the bank. What do I know? I don’t want a bank, but the problem is a lot of these banks don’t know what the heck you’re talking about, especially when you’re working with the junior employee at the front facing, you’re going to have to get past that first or second round of bureaucratic thinkers.

 

And we were followers, but again, what was that terminology? , what were you asking again? So we can sound foolish. They walk into a bank , hopefully you’re wearing. Polo shirts that just come from the gym and walk in, like you just got off the golf course, yeah, just asking for that collateralized line of credit or secured line of credit is another name that the bankers might understand.

 

Most times when they do a secured line of credit, they take your savings account and they give you a line of credit against your savings. This is no different, just, that’s not what their institution it’s going to be with the insurance company. Here’s the key thing. It does need to be whole life. In many cases, it does have to be a whole life policy because whole life insurance is guaranteed where I know there’s several banks, including the ones I mentioned, like Bank Corp or coastal states bank.

 

They will not land on indexing universities. Which has become the hot topic since the market started booming again in the last decade plus, so index universal life is not guaranteed, even though they have a floor rate, they could still lose money because insurance costs are coming out so many banks will not give you a loan against that.

 

So you gotta be careful. Now. The cool thing is that you can use this in a variety of ways. If you’re just looking for that line of credit, it’s very easy to ask for another example of how you can use this if I had a client out in Minnesota. They wanted to buy an office, build a commercial building that they were leasing themselves, but they want to go and lease out different units essentially to turn into a rental property for themselves.

 

The total of the building with the build out was about 375,000. They had about 320,000 inside the life insurance. So they went to their local bank and said, listen, we could pay this in cash almost with our life insurance, but could we get a line of credit? Can we basically get a mortgage using this as collateral?

 

And the bank said, yes. And not only did they give him the loan, they gave him the build-out. So they gave him 375,000 more than they had there in their cash value in their life insurance. And they gave them such a nice rate, such a low rate that their payment was like 1800 bucks a month on a commercial building.

 

So they had excellent terms and made bank, no pun intended. They made bank easily. They made good profit on this rental cause they took one tenant and they made their mortgage payment. What’s really cool is a year and a half later after the build-out was done after they started renting out the property, they went back to the bank and said, Hey, can we have that lien taken off our life insurance?

 

Because they just put a lien on it. So they couldn’t touch the money that was there. That was the collateral. They took the lien off, kept the terms exactly the same. They still have the same monthly payment. They still had all of the same terms. But now that 300,000 plus I was in their life, insurance was freed up to use again.

 

However they had. So it actually gave him much better terms on their mortgage than they would’ve got just getting a normal commercial loan using the building as collateral. So there’s lots of different ways to use this more than we’ve talked about. I know you did a post on LinkedIn about using us with 529 college plans, doing this instead of bills, where you have more control of the money and it’s off the books.

 

So you qualify for things like that. There’s so many ways to use us but ultimately if you’re going to leverage this, you want to be able to pay the least interest possible. And that’s why we always try to encourage one, make sure you design it like you were talking about earlier and then to make sure we get the lowest interest rate on that collateral loan so that you can actually go and create that double dip effect, making more profit on your life insurance and making more money in your real estate investments.

 

I like that idea though. So we have some plants that are quitting their jobs because this journal stuff works and it allows you to quit your job. But the problem there is you can use that high W2 income and, maybe walking into the bank, talking to somebody with half a brain and putting this on the table as collateral.

 

I’m also worried that they would not just put up in the United States, but they wanted to put in escrow and that another account that might not be as good, but these are the types of things that you can have a conversation with your banker. If you have that personal relationship and kind of put this on the table which again, just speaks to  the validity and the security of this insurance policy.

 

It’s backed by a huge plumber. Sometimes in investing in apartment buildings, themselves to back the collateral. These are just examples overall, like these techniques that we talk about here, or like the 5 29 technique or the whole mortgage technique using this type of stuff that you want to get.

 

People in the weeds doing this type of stuff. Ain’t no banker, ain’t no financial planner. I know you aren’t financial planners at all, but like these guys aren’t, they don’t do this stuff, this comes from interacting with other people and that kind of tinkering. The optimizers. Yeah. It’s, it comes from us having experience doing this kind of stuff, and, cause you’ve got them too.

 

It really does come down to that financial advisors see, understand that financial advisors are not financial experts, right? Even insurance agents are not financial experts. They are just trained by the insurance company or by the financial institution. They work. To teach you what they want to be taught to you.

 

So they’re always going to make it seem like it’s something that’s forever out there. Like even with these infinite banking policies, most people will say their whole life. Oh no. You don’t want to do that. Infinite banking stuff. You want to use this as a supplemental retirement? 30-40 years down the road, not today, not a way to create wealth and pre massive income now.

 

There’s a guy that you and I both know, we won’t mention his name. He’s a fund manager right here. He owns this, as his own fund that he managed. Brilliant guy. And then he told me he had a MetLife whole life policy. He said, oh, I’ve got a whole life policy through MetLife. It’s great. I have been planning for 20 years. And then for 10 years, it’s a tax-free pension. And he’s so happy about it. He’s yeah, I’m putting in 20 grand a year. I’ll be able to pull out 60 grand a year for 10 years. And it’s tax-free and I’m like that’s cool.

 

That’s the traditional way of doing things. Oh, like you’re a fund manager, like this is money. That’s now out of your life that you’re not touching because you’re totally locked up. And I showed them. I said, what if we just made a crappy 10% return on your fund? Which I know he makes way more than that. I was like, what if you just made 10% on your money?

 

And you actually used that money and invested out here while it was still growing inside here. And I showed the same 20 years. The difference was instead of having $60,000 a year tax-free as what the insurance agent taught them at MetLife. He was actually going to get about $178,000, pretty much tax advantage.

 

Because most of it’s for real estate, while the rest of it’s coming from life insurance, the flood insurance income was almost the same. It was extra 120,000 a year of passive income. He was getting from using that same money. And so that’s the thing is that again, these guys are not financial experts.

 

Even the people out there are telling you infinite banking is the way to go be your own banker. And then they. Oh the first year you put in 20,000, you only have 12,000. It’s that 60, 40 split guys. When they try to tell you that’s the best design, I’ll tell you from an investor perspective, I’ve never seen that as designs ever be anything that we’ve done.

 

That’s the kind of promise we always have is that we’ll beat anybody’s numbers out there and the whole 60, 40 split. They’re like, oh, it’s the best way to. But it’s the best way for them to go to still do infinite banking and still get paid more commissions. It’s just, you gotta really be careful of what’s out there.

 

There’s so much misinformation. No wonder Dave Ramsey and Susie Orman think it is a bunch of crap because there’s so many people conflicting with their self-interest or they’re just not taught many insurance companies how to do it right. The first time anyways, because insurance companies have their own self-interest, it’s so hard to find it done the right way.

 

It’s very simple. Like it’s hard for the consumer, like it’s a series summit to a lending broker, right? If I’m trying to shop for mortgages, I get this like term sheets, supposedly, but it’s just all convoluted. And it’s hard for me to pick out the fees that are consistent among agents and et cetera.

 

And what are the variable ones that really should be comparing the rate in this case, you don’t see how they’re going to, configure it with either a 60-40, 90-10, 80-20, but you don’t see that. Until like you, is it that comes on after the physical? Oh no. That’s a total sales tactic.

 

That’s taught out there. Like when I showed you numbers, I showed you them upfront before even putting in an application. And that’s one of our promises while we show the numbers, but there’s a sales tactic out there taught me insurance industry that you only show numbers after you get the approval and they’ll use the excuses, which is a half-truth, they’ll say things like we want to make sure you get the right health ratings.

 

So then we give you real hard enough. But the truth is I can ask you a few questions about your health. And I would say 98% of the time, we’re going to come up pretty close to the right health rating. There’s been a few exceptions where somebody omits some information. I was like, whoa, okay.

 

That’s a different health rating. But for the most part, it’s okay, you’re probably going to be about this health rating. And then the numbers are exactly the way they expect. There’s no mystery. It doesn’t have to be that mystery. So just know that’s a sales tactic. You don’t, you can know numbers upfront and be able to know exactly what.

 

And you want to make sure they’re apples to apples too. That’s another issue that I had with one of our friends. This is, one of his friends, personal friends, they are in the same church and everything. He had two policies with me, and that friend convinced them to try to cancel the two policies with me.

 

And I was like, whoa. And I finally got them on the phone. I was like, what’s going on? Oh he says the numbers are better. I said, listen, I can’t even beat your old numbers, just like your years lane. I couldn’t beat your numbers anymore because you’re older and things change as time goes on, it gets less of a return.

 

I was like, there’s no way he’d beat those numbers. Come to find out the only way he beat those numbers, it wasn’t apples to apples. It was actually him putting in $80,000 more just to catch up. So he would have to cost his family $80,000 just to finally say, oh, look, now I have as much as what I would have had with Chris anyways.

 

And he’s a smart guy.  He owns multiple real estate companies. He has a non-profits smart guy, but again, like you said, you just never know. Because those agents, they don’t always make things apples to apples. You have to really find something you can trust. They’ll say, Hey, this is good. Or this is not that sales technique.

 

I was like shopping for a car and they just wanted me to come in and drive a thing. And I’m like, dude, I don’t want to come in and drive, I have not driven a car. I don’t need to like, feel it, drive it around the block, like wasting my time. But they want me to have some kind of skin in the game for me. Time is my currency.

 

So the same thing, right? You got to go to this BS of having the physical. Have you got to do that eventually, but they want you to do it first with the house. Yeah. That’s it’s the nose. It’s like the camel’s nose in the tent right there. Just trying to get you to walk that path. I remember seeing that in the mortgage industry, when I was mortgage licensed, they would get you to go through the whole process and your rate about time, you’re supposed to close your mortgage.

 

And then they say, oh, by the way, the rates actually lower than I quoted you are not lower, but it’s higher than I quoted you on the mortgage rates. So you’re like do I go back to that other person that could meet low. We’re after this whole month of going through this process, am I just going to go with them?

 

You’re usually going to go with them and that’s the kind of cells that they use in the insurance industry that you really just gotta watch out for. Yeah. So let’s talk a little bit about the downsides of this particular technique in elite. There isn’t anything other than how much, like how much pain and effort and brain damage do you want to go through, like sitting up a little bit better, aftermarket low, if you want to call it.

 

And this is why I ask people. It depends on how big your policy is, right? I think average investors, a lot of investors are putting in maybe a contract book a year for several six years. So let’s just say they have maybe $200,000, maybe even five up and down the vendors to say 200,000, because that makes the back, it.

 

Say they’re getting like a 2% Delta in that better rate. Like 2% of 2000 is what is that? Four or yeah, $4,000 a year. Is that worth it? I dunno. Some people will say that $4,000 is what they spend, going out with some friends, some people will say that’s.

 

One 10th and I can buy a rental property. Probably if you get that big of a policy, you’re probably not buying little rental properties at that point, that’s one 10th that you are going into the next, that’s the one month that you buy in the next deal we have may not be that useful to you.

 

But there is a little bit, maybe talk a little bit about like, all right, so what I do, Chris, I gotta go find the bank. I gotta talk to the person that, let me talk a little about. How much pain is pain. How much time is this? Take this out of here. If you’re trying to do it on your own, it’s going to be a pain in the butt.

 

It’s going to be horrible. That’s why I just tell my clients, listen, just come to us, ask us, like, where’s the best place to go. You go to one bank, you know exactly where you’re going to get the best rate, and just make it easy. Because we always have those relationships too. And we don’t get paid for those relationships.

 

Good connections. It’s a value add for our clients. You bring up a good point: it’s 4,000 bucks worth it on a couple of hundred grand. It’s when you look at a value add deal, when you’re looking to buy an investment property, you’re looking at it.

 

If you just look at it from year one, you’re going to say, okay, Cash flow is okay, but obviously you never do that as an investor. You’re looking at, Hey, what can we do if we start doing value, add stuff and start up the brand on different doors and whatnot and increase the value and the profits, then it starts to build it to be more money.

 

That’s true with life insurance too, because it’s not just that 2% simple. It’s actually a 2% compounding rate that adds to it. So give me a real life example. I was showing some of the difference between putting in a quarter million dollar down payment on a small apartment, right? For a million dollar apartment, quarter million dollars down.

 

Versus, using their savings account versus using their life insurance. Now, if you use this county, you earn 0.1%, which is pretty decent right now. You’re in 0.1% and then you pay taxes on that point. 1%. The crazy thing is after 10 years, right? 10 years of that, that with that 250,000, you ended up actually not even 10, it was nine years, nine years.

 

You only end up profiting about 1200. That’s the, all the interest you made, taking all that cash flow from that property and putting it back in to build up your savings account that you liquidated, because most people just, they take that quarter million dollars. They use that as a down payment and they just take the cashflow to build up their savings slowly over time, and I use the example that you’re only cash flowing 2,500 a month.

 

That same thing. If you’re to do that with life insurance, where instead of paying back into a savings account, you just pay it back towards that line of credit. Now you’re paying down that loan that’s at 3% while you’re earning five plus percent, here’s the difference? Same as count or about 1200 interests.

 

The life insurance in nine years earned 145 grand of it. So it was about a hundred times better, even though yeah. It’s like 0.1 versus 2%. It seemed like it was like 20%, but that compounding effect over those years is huge. And so it’s a no-brainer when you think about it. If I’m going to make 1200 bucks, I might as well make 145 grand.

 

Is that worth, one time, getting something set up and making it easy. And again, if you have team support, like with our team, it makes it easier because you’re not in it by yourself. You’re able to have that stuff. Yeah, and it is the sole financial journey is like it’s a game of inches.

 

These are the little things that kind of get you down the football field to where you want to be, unless your net worth is over a few million dollars. You take it easy at not optimized, but. I bring this up because a lot of people in our family office,  our inner circle. Like we’re a bunch of like over optimizers, which is like propeller hats in a good way.

 

Yeah I got the one hand, like the dude with his little teeny tiny, like 10, $20,000 policy, like really how much money does this equate to. But then again, that’s the person that needs to be doing this type of nonsense, you’re saying, right? This is the person that needs every single little inch because they need to get down the football field point.

 

So he knows I didn’t bring up the strategy that some people talk about online when they talk by internet banking, which is using this like your own check checking account, right? Like your own bill pay account. And they’re trying to pay all their monthly expenses. That, to me, that is you’re trying to get an inch.

 

It’s just not worth it. Like you save, you might make. A few hundred bucks or so a year and interest, despite trying to pay all your bills using this and money’s going in and out, back and forth. That to me is ridiculous. Oh, are they just setting that up? Cause people will do that with their Healogics, right?

 

Somehow they’re able to pay their bills. And I think he looks a little easier. You could do it with life insurance, but the problem is this is that the insurance salesman, they’re trying to sell it to you. And I do say salesman when I say it, because they’ll try to say, yeah all your income goes into this.

 

And they said the humongous policies first off you’ve pretty much have to lie. On the application, just to be able to put in that much, because most companies won’t let you put in more than 25% of your stated gross income every year. For someone that says put in their whole paycheck, they’d have to say I’m putting a hundred percent of my income.

 

That’s that they would never go for that. And insurance companies will never say yes to that. So theoretically it sounds great. But as much as bull. And then when you really ask those insurance sales and I’m like how do I really fund this every year? Oh, we just put your whole paycheck into it.

 

That all that does is just make this huge, massive policy that you’re paying a crap load and insurance costs too, and getting very little benefit. It’s not worth it. You really have to have a lot of surplus cash to do that. And like I said, like just that strategy alone really just doesn’t save you much money and same thing with he locked the velocity banking, that kind of thing.

 

From a number standpoint and calculator sure. It might make sense to a little bit, but what’s the time, what’s the cost of your time and energy is one, two. What about reality? My, for example, doesn’t work like this. Isn’t a much of a threat with your life insurance because life insurance it’s guaranteed.

 

Banks are willing to lend against them, but on a house, if you tried to get a hilar and you try to charge it up and then pay it down and aggressively really fast, the risk you run, especially when times get hard and recessionary times is that those banks will take those lines of credit, but limits and cut them down to your bank.

 

They will break them, cut them all the way back. So all that money you paid into it you just pull it back out again. It’s gone. So in a practicality standpoint, even though, yes, I know I can save interest on a heloc by paying it down. I don’t, I leave it maxed out. I let it stay up at the limit because I know banks cause I watched it happen in the last recession.

 

To me personally, banks will cut down your lines of credit and not give you a warning. Now with life insurance, the good thing is they don’t worry about market risks. They don’t worry about your house depreciating. It’s not based on that. So you really don’t have that kind of threat. So it’s a different game.

 

And that’s the one big point why this IBC stuff is superior to the helocs getting out there. But yeah, some of this takes a little time, but first they seems like a lot of work to me, but, I was also the guy at one time who would like, those rewards credit cards or debit cards where you get to do 12 transactions while I would go to four different gas stations out in the freezing cold, I’d do three at a time.

 

If not, they would show off my card. I would also fly back from life, get out. I was being like Montana, wherever, but I would fly out of. I forgot what it was, Denver or salt lake, but we’d always go through there to go back to Seattle, but I would always go to the more farther one to get more miles so stupid. All these layovers and you’re tired all the time. I like simplicity. I think simplicity really means that energy saver is the ultimate ROI. You can use these strategies and get really complex with them. I like to use them just for the bigger stuff. The stuff that really makes it makes an impact.

 

That really makes a difference. Everything else doesn’t even have to become a master app.  You don’t have to be that smart just to be able to use this in a simple way, which is I’m gonna use this money and invest if that, and just take the cash flow and use the paid bachelors in my line of credit.

 

And that’s all you do. Yeah. I think the one thing I liked is Chris does coaching. So Chris he’s really good. He’s a lot more patient than I am. And there were actually a couple of people this last week, I talked to Chris that we’re like, all this stuff we’re talking about is like the sand and they have big rocks, which are problems, right?

 

They have $500 million plus of dead equity in their house. This stuff we’re talking about is like the way high up in the tree for them for now. But they just, a lot of people, especially people who’ve been doing this long. But people have harder, worse habits, money habits who think that they should have big equity positions in their house.

 

It’s just a big mindset shift. And so I was like mentioning, yeah, I should go work with Chris because Chris will actually hold your hand and walk you through this type of stuff. Where I’m a little bit more impatient and it’s what’s the problem here. See what, they’re all they’re doing it.

 

Here’s this group we’re doing it. Jump off the cliff too, in a way but yeah, Chris once you get your contact information or how can people get a hold of you? Yeah, two different ways. You can do that. And I’m one, you can always follow our own podcast. We have a podcast called the Chris Miles Money Show that you find on iTunes, YouTube, wherever you go for podcasts.

 

And then you can also go to our website moneyripples.com. And we even have a playlist on infinite banking that’s on there. You can go and check out and be able to watch different videos and learn and go deeper down that rabbit hole. If you want to take the red pill. All right, folks. Thanks for listening. Join the club, check out the website simplepassivecashflow.com/club. I will see you guys next.