E57: How to Become Prepared for Unexpected Financial Crises

Nate: In this episode, we will discuss how to best position yourself to make it through the unexpected catastrophes of life, both on a small scale and a large scale, and how infinite banking can be a great foundation to have in place when the unexpected hits. She’s Holly and she helps people find financial freedom.

Holly: He’s Nate. He makes sense out of money. This is Dollars and Nonsense. If you follow the herd, you will be slaughtered. I know today, Nate, the topic is somewhat to do with infinite banking. But it’s also really to talk about catastrophes that are happening. I think we see that in our world every day that we live in, whether it be a hurricane hitting, wildfires in California, or the simplicity of a water heater going out or a dishwasher breaking the day before Christmas. Different things that happen in life all the time.

Sometimes, we are totally prepared for that. Then other times, we are so unprepared for it because we have a mindset of that really wouldn’t happen to me or we put it off. I’ll do it tomorrow. Yet, there’s really some things we should be thinking about. What is that going to look like? How’s that going to happen? We’re not just talking about natural catastrophes or things like that. We’re also talking about what happens not just to the breadwinner, but maybe the individual or the homemaker or the engineer of the house, as I’ve heard.

What happens to that loved one if they’re not able to look after kids or take care of certain things and how does that affect the breadwinner? So, really understanding the things you can do to really overcome catastrophes when they happen and to still walk away, I think, with hope and with some belief that it’ll be okay.

Nate: It’s hit me a little bit more of late, and especially with social media, by the way, where you are allowed to see these things go viral of actually bad things happening to people, whether it’s a pray or post of a baby who’s got cancer that’s going around that comes past your Facebook or your Instagram or something. We started seeing the effects of the wildfires and the floods and hurricanes more so than we have in the past. I guess it is becoming more of a common thing to say, “Well, what if something like that happened to me?”

But even though that’s coming to a thought in my head and I have tried to manage it, I think that a lot of us, maybe even though we do think that these things could happen, we’re not very well prepared, I would say, to make it through those things, or we know that those are probably going to happen at some point, something catastrophic, whether it’s something small, as Holly said, a dishwasher breaking on Christmas Eve, or whether it’s the next major financial crisis. Something’s going to happen and our goal today is bring some catastrophes that do happen to the forefront to get you thinking and how you’re going to manage it.

As big believes in infinite banking, we are going to throw some of that in there on how it can help get through some of these things, some of the ancillary benefits of doing something like infinite banking that puts you back in the driver seat financially. So, the first one we want to talk about, Holly, is some of the natural catastrophes or the unforeseen, unexpected issues. We at Living Wealth have just recently gotten through one that almost maybe stirred this. So, if you wouldn’t mind giving the background on one of the things that stirred this on an unforeseen expense that comes along that thank the Lord we had infinite banking to help with.

Holly: We had a water heater break in a condo that is owned. Luckily, the maintenance people called and we could get the water shut off. But we had to respond immediately. What we found out through that is it is a lot of time consuming effort. Even though we have renter’s insurance and we were able to get adjusters out there and stuff like that, it also affected the two condos below us as well, and instead of waiting for insurance adjusters to come out, they’re going to look at all the claims, take pictures, need new drywall, carpet.

If your place flooded, how long do you want to walk around on the wet, damp carpet for how many days before an insurance adjuster can come out and look at it and say, “Okay, yes. It absolutely needs to be replaced,” or do you want to be able to take action and say, “Hey. We can get this replaced. Here’s a check, keep the receipts,” and be able to submit it to the insurance company to be reimbursed? For us, it was the simplicity of being able to, because we had infinite banking, even to the homeowner below us to say, “Hey. Go get this fixed, keep the receipts. We’ll get those submitted over to the insurance company for reimbursement.”

But we could reimburse them even ourselves without having to wait for the insurance company. It changed from a lot of angry phone calls, Nate, to some very calm, “Oh, you can do that for us?” It was a very different conversation than the first phone call that started and a very unkind email that was sent.

Nate: We didn’t have to wait for any insurance to take action and get new things, get carpet put in, and all of that. We were fine to spend the money and get reimbursed by the insurance. That’s not the case for a lot of people. Many people will actually have to wait to make a purchase until their insurance check actually comes through so they can then go buy the new carpet, put in the new drywall, do all those things.

It’s going to be a pain no matter what, but that was one thing that we realized that, hey, as infinite bankers, having such a large pool of money that’s readily accessible to us at any point in time gives us a lot more freedom in those types of events, whereas we don’t have to wait for the 10, 15, $20,000 check, whatever it’s going to be from the insurance company, to actually make some moves and go back to our standard of living. I’ve met other people who’ve had those types of issues and are like, “Man. I’m so thankful for insurance.” But they had to go through some crap for a few weeks.

Holly: Well, and I think too, even with the natural catastrophes, and yes, this was a water heater, okay, but we have all experienced maybe a flood, a tornado, a hurricane, fires. I personally know somebody that went through the whole fact of, about five years ago now, their whole house and area was flooded and there was a whole community that basically was displaced with their homes. He basically used his policy to start getting contractors in and restoring the house and carpet and all of that because he couldn’t wait two, three months, nor did he want to wait two or three months to get the adjusters.

Because when he called the insurance company for the property damage, and they did have homeowner’s insurance, some people have renter’s insurance, which I would highly recommend if you’re renting. It basically allowed them the ability to get started while everybody around him, and he actually said all of his neighbors were sitting there waiting two, three weeks to get an adjuster out there to even survey the damage, to even start putting in a plan of motion. How long do you want to be displaced from your home if it does flood?

Or even if it is flooded, when you go back through, you’ve got to clear it all out and all that stuff. It can be unsanitary and unhealthy. So, then maybe you’re living in a hotel or you’re living with friends. But at least this way, they were able to get their work started and done. He said his was actually finished before his next door neighbor even got the adjuster to come out and start doing anything.

Nate: I know. It’s crazy. That’s one of the things we see. I know it may not be a huge deal to everybody, but it’s just these little things that you wonder why Holly and I are just so on board with infinite banking, we’ve drank so much of the Kool-Aid, and sang “Kumbaya” around the IBC fire. So, we apologize for that. But it is true that we’ve just seen things happen to people where it’s been such a big help beyond just the numbers.

So, of course, Holly, you and I both love infinite banking for how much money we can make and the things we can do with it. But just these side things, like being able to, whether it’s unforeseen collapse of something or a natural catastrophe or something that causes our lifestyle to be [inaudible 00:08:13], to not have to be super stressed for a period of time because you don’t have any money and you’re waiting for the insurance to come through. That is a stressful timeframe to be in.

Just being able to avoid that by having all your money, having a pool of money built up, a bank that profits you that we can utilize in these times is great. The second catastrophe, Holly, if we can move on to the second one, is, and hopefully, no one listening does have to experience this, but most of us are not prepared for the loss of a loved one, a spouse, even children. Not only are we not prepared most likely, emotionally or spiritually, mentally, for something like that to occur, but financially, I think a lot of times, we don’t understand the impact.

We can all see if it’s the breadwinner of the family, the one who, if you have one spouse, maybe earns the majority of the income for the family or all of it. We can see a financial burden taking place if that person was to pass away. But I don’t think that people really understand the financial impact of a nonworking spouse or even your children, how, of course, that’s going to affect you emotionally and spiritually.

But financially, many of us don’t understand how that’s going to affect us. So, that’s the second one that we wanted to put up on people’s radars. Of course, infinite banking helps because we’re dealing with life insurance. Have you ever even thought about what life would look like if something was to happen to those individuals?

Holly: You can see the impact a lot of times, I believe, with a breadwinner. But even when I talk to clients and I ask, “So, how long would the money last, should something happen to the breadwinner?” most of the time, most people, maybe a year. They say on average, it’s about 18 months and the money’s gone. After 18 months, everything somebody is going through, the whole grieving process and all of that is dramatically affecting the life of the loved ones and those that are left behind.

I think we don’t honestly think about, not just … Okay. So, 18 months. I’ve got 18 months and then something drastically has to change. It’s not like in 18 months, the mortgage payment goes away or the cost of living goes away or food and needing to be purchased. But I think we also don’t think about the one that is maybe not the breadwinner and the impact that that can have actually on the breadwinner because I know I would be dramatically impacted, should something happen to my spouse. So, I want to be prepared both ways.

I want to know too that if something happens to my kids that there’s something in place that we can pay for healthcare or we can pay to really be able to try and help their lifestyle, whether it be cancer or something horrific like that, that we’re actually prepared to lessen the burden. You were talking about social media. I see all these GoFundMe pages for so many people because they weren’t prepared.

Nate: I’m so happy for things like GoFundMe that can help raise money for these issues to help out. But it would be less stressful if people had in their mindset that they wanted to build up money to be able to afford these things. But as you mentioned, just me personally, I have thought of what it would be like if my wife, let’s say, was to pass away. She’s a stay-at-home mom. She’s a homemaker. She loves that. Some people say, well, because she’s not making an income, the need for life insurance, at least at a high level, is not quite as high.

I can see where they’re coming from, but for me personally, I’ve thought about it, and I wanted to make sure I had enough on her to where if something was to happen to her that I wouldn’t actually even have to go back to work, that I could fill the role as best I could. It would probably be pathetic compared to how she could fill the role as a stay-at-home parent, as it’s her natural ability. But I wanted to be able to essentially be the parent that is always there and is not having to work to survive.

So, for me, I wanted to make sure that, hey, if something was to happen to my wife, who’s a nonworking spouse, that I could have enough to where I wouldn’t even have to go back to work. I think that’s what some people don’t want to do because they think of life insurance as an expense, which it really is in the term insurance world. But inside IBC, it’s not an expense at all. We can talk about that another time, the difference between an expense and an asset. But all that to simply say for us, we love the fact that if something were to happen to either of us, the other person would never actually have to go to work, not in 18 months, not ever. That would be the goal.

The same thing for the kids. Maybe not quite to that extent, but I want to be able to take some time to grieve, as much time as I would ever potentially need out of the business world if something was to happen to one of my children. I rarely ever unfortunately hear of someone passing away in another family, I rarely ever hear someone say, “Man, I really wish he wouldn’t have left me as much as he did.” No, it’s always the reverse. It’s always like, “Man. I really wish we would have thought that this could be a possibility and would have prepared for that type of catastrophe.”

Holly: Well, and Nate, even as you get older, dealing with clients whose, maybe even their parents, right, or themselves, their parents are widowed and the children are understanding that there wasn’t enough left. So, at a certain age, Mom or Dad’s not going to have anymore money. What do we do? I would love to know anybody that’s ever heard somebody say, “Oh, they left me too much money.”

Nate: I recently talked to a client who was talking about the death benefit of infinite banking and how he didn’t need it. I’m thinking, “Yeah. You may not need it, but don’t you want it?” He was wondering if the policy would make sense because it had a death benefit and it’s not something that he needs. I’m thinking, “What? Wait, wait. Time out. You’re saying that if you bought this policy and were using it the way we talk about, and you would have died early, are you saying that your family would have rather you not had it because you already had so much other life” … It’s not a “need” question. For me, I want as much as I can possibly get because I want to leave as much as I possibly can. I’ve never experienced a single person say, “Man, he just left us too much money.”

Holly: Yeah. I agree 100% and I just think that infinite banking goes hand in hand with that, that not only can you use it in times of natural catastrophes for loans or cash value, but you also, that death benefit can bless your family in so many unforeseen ways that you would never have any idea of how they were able to use it and what they were able to do. I just know that my grandma, when she passed away, there wasn’t a single concern on my dad or his brother of having to worry about paying the funeral expenses and how the money was distributed. There was more than enough.

Not to have to even wait for the insurance to just come in, it was so smooth in how it took care of everything that I just was amazed at seeing it in motion. I’m going to say death benefit in motion in regards to, it took care of the expenses and it left something. My grandmother was able to leave way more than her or my grandpa ever made in this life to their children. The joy that I’m sure she has now of being able to leave them something more than they ever made in life is so much more.

Nate: I think maybe we should take a quick break, Holly, and move on to our third kind of catastrophe. So, real quick, guys, hang in there for a quick word from our sponsor and we’ll be right back.

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Nate: All right. Welcome back, everybody. We just discussed two catastrophes that we really feel, no one really likes to talk about catastrophes or unexpected events that cause a huge damage to you. But it’s something that IBC, we’ve found time and time again, can help with, whether it’s a death of someone who’s very important, very personal, or whether it’s a natural catastrophe, unforeseen expenses that come along, and just the stress of all those situations that can happen.

The third one is maybe more close to heart to a lot of people as well that I’m sure everyone has experienced because most people who listen to this podcast have already survived one of these. But that is a large economic crash and crisis. What are you doing today to prepare for the next one? I don’t think it’s an “if” question. I really think it’s a “when” question. I don’t think there’s very many people who would assume that we’re not going to have a large economic crisis like we saw in the tech bubble20 years ago and then the financial bubble 10 years ago. I think it’s something that’s going to happen. What are you doing to prepare yourself for the next economic catastrophe?

Holly: Well, Nate, I love the belief too that if you put your eggs all in one basket, what happens if that basket breaks and all the eggs break? What do you have left? It’s like you can look at the stock market, my dad used to say, 20 times a day and it doesn’t necessarily change when you’re in a down time or economic crisis because it typically just keeps going lower vs. going up. The reality is, is we don’t think about what happens if we don’t have as much money or there’s a run on the banks or whatever it may be, or half our income.

I know a lot of individuals who lost half of their retirement or more in 2008 because of the financial crisis that happened, because their retirement programs were tied with stocks and different things. Once those went, so did half of their retirement program. They’ve said, “I had to go back to work. I didn’t have another option. I hadn’t put my money somewhere else. I’d only done one thing or the other.” I’m just going to say I had personally one guy who said, “If only I had bought,” and he actually was in insurance and sold insurance, “If only I had bought a whole life policy, it wouldn’t have been affected at all by this economic crisis.”

Nate: It’s amazing how many people I talk to [inaudible 00:19:59] to me where, very concerned about the future of the stock market especially, but some of these other things that may be on a bubble, are still putting money in because that’s all they really know. That’s all they’ve been used to. That’s all large banks and money managers all say to do. The tailwind is to go that direction. The questions you should ask is do you believe that there is going to be another financial catastrophe on a large scale, and if you do, what steps are you taking right now to avoid getting blown to smithereens like you did last time?

If you are in agreement with that, what steps can you take? Are you prepared? As Holly said, if you’re prepared for it or if you don’t think it could happen again and it does, some people are still, especially with the real estate bubble, by the way, when real estate collapsed, I think that hurt even more people, Holly, on a huge scale. There’s so many bankruptcies that occurred. I’m sure the stock collapse probably impacted more people because there’s more people involved in it, but as far as a brutal awakening, I know so many people who I talk to who said, “I was doing really well. I was real wealthy, had $5 portfolio and $10 million portfolio and all of this, and I lost everything when the real estate bubble burst.”

That’s why were huge fans of infinite banking because nothing can wipe it out. But on that type of notes, it’s don’t just assume that good times are going to keep going because they typically, they go up and they go down. What are some steps you can take to avoid getting impacted so remarkably by the next financial catastrophe?

Holly: I would agree with you, Nate, on the real estate. I saw places where they said 50% of communities, the homes were foreclosed on. So, what do you do to prevent that foreclosure? For me, I truly believe one of the only things, if not the only thing, to prevent a disaster from happening when an economic crisis takes places is to own a life insurance policy, but an infinite banking one that actually has cash value and death benefit because you literally don’t worry about how the stock market’s performing today or what’s going on in the real estate world, did it totally collapse, if your money is secure and earning a guaranteed tax free interest rate.

I just think there’s so much better ways of doing it. Like Nate and I have said numerous times over, if you want to invest in real estate, go for it. If that’s your passion, make sure you’re passionate about it. But like we would say, before you do that investment, I’d take the money and put it in a life insurance policy first.

Nate: Exactly. So, even if the real estate deal goes down, the policy won’t go down and you still something to show for instead of just a loss. People lose a lot of money in financial catastrophes, but there’s also a lot of extreme wealth that’s built on the back end of those catastrophes by the people who had money and who saw it coming. That’s one thing that I tell everybody. It’s not that I’m against stocks or something like that. I just think that they’re very much overpriced and they’re on a bubble right now.

But if we have in the next catastrophe, would I like to ride the wave going back up and buy stocks for pennies on the dollar? I think I probably would. Same thing with real estate. Same thing with all of these things. I think that there is going to be a potential for another catastrophe as time moves on here. I don’t know when it’s going to occur or what it’ll look like. But a lot of people are assuming that’s going to happen at some point, and a rebound from the quantitative easing and these other things that we’ve had to deal with.

But just that being said, guys, opportunity comes to those people who have money that’s available for them to use. I plan on taking advantage of the catastrophe and not getting wiped out because of it. That’s because I do have liquid money that’s guaranteed and that’ll be there that I can access at any point and take advantage of those opportunities when they come and get extremely wealthy on the back end of the next bubble bursting instead of losing everything.

I think that whether or not you completely liquidate and get out of the market or the real estate or whatever it is, I’m not saying that’s a good idea or not, but I am saying it’s best to have something built up that is non-correlated with any of that that allows you to not only weather the storm pretty well, but also allows you to take advantage on the back end of cheap assets and things like that that you can purchase and grow wealth with without having to lose everything that you’ve built thus far.

Holly: As much as the economic crisis when it happens, like you said, for everybody that loses something, there’s a few, but they’re gaining and they were wise enough to have another alternative, whether it be buying up land or buying up houses and things like that. They actually end up being far better off because their money wasn’t just tied in one area or in one asset, but they actually had planned for the future.

If you look at history, it repeats itself. So, 20 years ago, we had the dotcom. Then we had this financial crisis 10 years ago. It’s not if, it’s when it happens. So, be prepared. Start thinking about these things. What do you do with a natural disaster or if a loved one graduates from this Earth? But last and most importantly, what happens in an economic crisis and are you going to be okay? Are you going to be one of those people that’s going to come out better on the other end or lose everything because you didn’t plan for the future, you only planned for today?

Nate: That was the main goal we had on this podcast, Holly, was to just bring the fact that catastrophes do happen, whether it’s something as small as a water heater breaking or even somebody else’s water heater breaking and messing your life up. We unfortunately had that experience when ours did and it hurt other people’s lives who were below us. All the way up to a loved one dying or a financial catastrophe, you may give lip service to the fact that you believe these things are happening, but what steps are you actually taking to avoid the consequences of it?

I would encourage you guys to understand that these things do happen and that with infinite banking especially, but I’m sure there’s other strategies, but Holly and I are big fans of infinite banking, of course, so that’s what we’re going to share, it can drastically change what happens during these types of catastrophe. Whether it’s financial, a family member, or just a personal unexpected expense, natural catastrophes type of thing, can we set ourselves up in a way that we can weather these, not be impacted financially as much, especially emotionally as much, and can we continue to grow with that?

But we’ve really run out of time, Holly, and so I’m going to go ahead and close this down. This has been Dollar and Nonsense. If you follow the herd, you will be slaughtered.

Holly: For free transcripts and resources, please visit livingwealth.com/e57.