E70: How To STOP Being Your Worst Financial Enemy For Good

Nate: In this episode, we will discuss what it means to be an honest banker and how you can protect yourself from being your own worst enemy as you’re trying to become financially independent. 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.

Nate: Hi, well as always, welcome back to the Dollars and Nonsense podcast, everyone. It’s great to be here with you and just a reminder, for those of you who are new, we release a podcast every other week for you to listen to you on different tips and strategies to help build financial freedom. Most of them are outside the box and against the grain, so if you like that type of thing, you’ve come to the right place. If you are enjoying it and want to get the word out, the best thing you can do is review and rate the podcast and also spread the news on social media if you would, and things like that. So we’re always happy to have new listeners.

But you’ll hear us talk a lot about this becoming your own banker strategy, and we love it. It’s one of our favorite strategies. It’s something that we specialize in here at Living Wealth helping people achieve it that’s what our business really is based on. One of the things that we’ve found, and Holly can probably attest to this, is that sometimes whenever you become your own banker as you’re doing it, you never maybe realized that it takes some discipline or there’s going to be some new found freedom with how you can use your money when you do it and there need to be some responsibility alongside that to make sure you don’t shoot yourself in the foot. That’s what we mean by being an honest banker. One that doesn’t steal from themselves.

How you treat yourself is really going to determine how wealthy you are. It’s not going to be the stock market or mutual funds or all these sorts of things like it would otherwise. You can actually dictate how well you do and how good of a banker you are can actually determine how wealthy you become. So it’s kind of hard to break the system I guess I could say it’s possible, but the more honest you are as a banker and the more you follow the system the way it’s supposed to be set up, the better off you’re going to be.

You’re a banker, you’ve got to view it as you can’t cheat yourself. If we’re late on payments and things like that with banks, we don’t cheat them. They’re going to come and take over our house or our car or whatever that is. So on the same hand, you’ve got to treat yourself as a bank. It’s not a get rich scheme. It literally is learning to actually practice what it means to be an honest banker.

Absolutely. And I think you’ve hit on the key thing, and we’re going to get into what we call the three rules of banking. And if you follow these three rules, you are going to be an honest banker, and you’re going to be very successful. So we’re going to tell you what they are and how to do them in reality and give you some examples. In essence, we are training people how to build a business. It’s a banking business. You want to think of it as a business because if you think of it as a real banking business, you’ll do certain things differently. You’ll behave differently because you’re trying to build your little business here. You’re a little banking business. If all you’re trying to do is just fly by the seat of your pants, you’re not going to succeed well in any type of business. And not even in this one too.

So treat it like a business. Think of it like, “This is my banking business. I’m going to do what it takes to become as successful as I can be.” And it starts with the foundation. So the three rules are the foundation of being an honest banker and really doing this to its fullest. So the first thing that you have to do, I’ll get started here on rule number one. The first rule is something that we call pay yourself first or live on less than you make. So, Holly, can you expound on that and kind of tell us what does that look like when would he say to someone, “Well, if you can’t pay yourself first this probably is a no go for you.”

Holly: I’m going to take it a step farther. Pay yourself first because most of the time we’re doing all the work and we are spending all of our money. And oftentimes, more than what we make on other things, whether that be food, cars, clothing, you name it we’re spending that. And when we say, “Pay yourself first,” we literally mean pay yourself. Save some of that money for you. Just because you’re making all this money don’t spend every dollar you make. You literally have to pay yourself first. My Dad says this a lot, but he says, “Are you worth $2.50 an hour?” And if you would say yes to that and you paid yourself just $2.50 cents an hour, you would be saving $100 a week. I don’t know about you, Nate. I talked to so many people, they can’t even do the $2.50 cents an hour because they’ve learned to, like Nate said, live within your means, but they’ve spent so much more outside of that they don’t know how to curb the spending.

So paying yourself first is literally putting aside money that that is your paycheck. You did the work. What are you giving to yourself? You’re paying yourself. Think of it as a savings if you want, but I say, “I’ve never made too many deposits into my own account.” Notice I didn’t say bank account. I’ve never made too many deposits. I’m the one doing all the work. When you’re doing all the work and everybody else is getting all the money, you literally are not paying yourself and you’re just a hamster spinning on the wheel.

Nate: You’re right. And that’s one of the biggest problems with America is people have a hard time paying themselves. We earn our money, and we hope that there’s money leftover at the end of the month after everyone else gets paid. And that’s what we’ll take for ourselves and keep and start to build something with. And if you wait ’til the end of the month then it may not be there, so we call this, pay yourself first living on less than you make. That’s the first fundamental step in being an honest banker. If you cannot get to a position where you’re able to live on less than you make than this is not a good system for you, this is not a get rich quick system. You have to put money in to be able to use it and that money’s got to come from someplace. The easiest place is to start paying yourself first. So that’s rule number one.

Rule number two is when we get into banking really. Rule number one, paying yourself first has to be done before you can even get started. Once you are started, now we’re going to start using our money. And we are a bank. So whenever I put money into my policy, I think of it as potentially my bank and whenever I want to borrow money from it or use money from the policy to let’s say go buy a car or go on vacation or pay my taxes for the year, or invest in something, I see that as a business. So if I’m going to pull money from it, and I’m a banker now, banks make money by receiving interest from other people. So when I pull money from my bank, I want to make sure that I pay myself back with interest. And since it’s to my bank, the higher the interest is actually the better.

So whenever we borrow money from anyone else where we’re paying interest, we want the interest rate to be as low as possible because we’re going to lose all the money that goes to interest obviously. But when you’re the banker, you want the interest to be as high as possible and if you’re going to get all the interest you paid back, why not charge yourself more? So rule number two is we have to start paying ourselves back not only just what we took out, but also pay ourselves back with interest because we’re running a business here and we want that business to be profitable.

Holly: It goes back to what we started with, this is a business. But when you borrow from the bank, you have to pay them interests. So even if you’re borrowing from yourself, you should pay yourself interest. Your dollar is just as valuable as the bank’s dollar. It’s probably more valuable because it’s going to stay in your family, in my opinion. So why not pay yourself the interest? You need to have that mentality. If you went and borrowed from somebody else, you’d have to typically pay them interest. And so pay yourself that interest. Have the belief that this is growing the money, not only for me but my family and a legacy that you’re leaving.

And if you are a business, that is one of the best things to do is to be disciplined to say, “Hey, when we take deposits out, even from our savings accounts typically or we take a deposit out, we normally have every intention of paying it back.” But even if we saved up for a car or something, normally all we do is save up for the next thing and we never replenish the money with interest. We only put back the money we took out over time.

Nate: Exactly, and I think this is why people can get broken. This actually, I guess, Holly, can roll into the third rule that we talk about, which is we want people to start recapturing money in a way that they’re normally not used to. There’re two things that we can recapture is we can recapture debt, and we can recapture what we spent, and they both work really hand in hand. So when we say rule number three is to start recapturing money, so, Holly, if we go in, we talk to somebody who has some debt and then we use this policy to help them get out of debt really to them, their whole goal, Most of our brains, when we talk about having debt that we want to get rid of, is just paying it off. That’s all we want to do. In our mind, it’s just pay it off.

And what most people want to do, unfortunately, they want to pay off as soon as possible, which I agree with. Let’s just get rid of it. But then all the money that they were devoting to paying down the debt, all the payments they were making, for some reason there’s a hesitancy to pay us back with that money. So when we worked hard, we build the policy, we devoted money to, we pulled money from the policy, we paid them off. Essentially what they say now is the reason they didn’t want the debt is not because they want to use that cash flow to build wealth. What they really wanted to do was just increase their lifestyle. They were tired of making payments because they wanted to have the money so they could spend more.

That is one of the biggest issues that goes against being an honest banker is we got to stop just paying off debt just so we can have more cash flow to spend necessarily, but our goal as a banking business would be to recapture debt. It’s almost like you’re refinancing your own debt with the bank of you and then we’re going to pay the bank of you back, and we’re going to build wealth there without having to change your cash flow. But we do have to do change where the cash flow’s going. So if I pay off a credit card that you are paying 500 a month to the best way for you to be an honest banker and be successful is to take that payment and pay you back with it, not go blow it. And that can be a big thing for a lot of people is they’re not used to recapturing money. They’re just used to paying things off or spending money. They’re not used to paying themselves back.

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Holly: That’s one of the keys when we talk about being an honest banker, it’s not just about the debt and seeing a zero balance because when we get to that zero balance, most of us just go, “Okay, let’s charge it back up on the credit card.” But there’s also those of you who pay cash for everything, and Nate said it’s also expenses, okay. Can you imagine getting back and I do this, your property tax, right? Or being able to get back the money you spent on a vacation. Just because you had that money doesn’t mean you just blow it all out the door. But on the same hand, could you imagine if we gave you a system that it actually teaches you how to even recapture your expenses, whether it be your grocery bill, whether it be a vacation, whether it be your car insurance, whatever that may be, that you actually have a system in place that does that.

Nate: Exactly right. And that’s one of the things that we talk about to you where when you start being a banker, especially for the things you paid cash for, I actually think that maybe the biggest jump for some people, Holly, is to think about that because they’re not used to paying themselves back. One of the things I think about is if you go pay cash for a car or cash to go on a vacation, I think those are great things. Let’s say you went out and let’s do the car first. And we go out and we buy a $25,000 car and that’s what we’re used to doing. You’ve been saving up money to pay cash for it. Most of us do that because we don’t like having a car payment.

So then whenever they started coming into this banking circle, we take a loan out to do it. Now, they have this “payment” that they’re paying back themselves. They say, “Well, what am I going to get that money? I haven’t had a car payment in years. Aren’t I creating a payment for myself?” And their mind goes to these jumps that it really shouldn’t. And what I mean by that is, of course, they’re so used to paying cash for the car, spending the money. We’re not used to recapturing the money, getting any of the money back.

And how you can relate to this a little bit, Holly, is, I mean you can ask a few questions, “If you don’t pay yourself back for the car, even when you’re just doing your cash lifestyle, where are you going to get the money to buy the next car?” If you’re paying cash for cars and you have been, the money does not magically appear in the account. You’ve had to build it up over time, whether you consciously did it or not, and if most of the time it’s definitely unsystematic. You’re not paying yourself back on a consistent basis. You’re just hoping that there’s going to be money there in the future.

If you do it on a systematic basis, that’s really what recapturing is. It’s developing a system. That’s what we’re trying to do and if you can develop a system to recapture debt, it’s going to be recapture debt and what’s your spending. Many times it doesn’t impact you at all. It doesn’t change anything you’re doing. It just adds a systematic element towards it. And when you use the policy, there’s a perfect marriage here where you can not only get the money back but also make a profit on everything that we do, but it does take a system.

You can’t just pull money from a policy, blow it on a vacation, then not pay yourself back and do that every year. You’re just going to spend all your money. It’s not a business anymore, it’s just you spending your money, and you don’t need a policy enforced to spend money. So I guess that’s one of the big things of being an honest banker is getting into the element of paying yourself first. Paying yourself back with interest and when you spend money or take over debt, recapture that, so we can use it again and get into that process, that system and it’s a guaranteed way to build wealth.

Holly: And, Nate, I’m going to use a real-life example. We have a storage unit, and we actually just had to renew our storage unit, right, for the year. We can either pay it in monthly increments, or you can pay it all up front and you get 10% off per month. Typically, what you do if you’re going to pay it annually, you just put it on the credit card, which is what we did and all I did was then set up a way where we start paying back monthly what we would have paid them.

Actually, we’re charging ourselves what they would have charged us without the discount and next year we’ve done this, this is our second year doing it, so the next year we’re going to have all the money to pay it even if the rent goes up for the storage unit. But it was a systematic approach of instead of drafting money monthly out of my account, I’m going to put it on my credit card and now we paid that, and we’re paying ourselves back every single month. And it’s just changing the mindset. Like you said, your money is constantly going away from you and you’ve got to turn the direction around, so it’s coming back to you.

Nate: And that’s what working with us does. I think for people, Holly, is we try to help you think of ways to do that. That’s most of our planning and strategy as time goes on, is how can we redirect money to not really impact your lifestyle at all, but just change how you’re paying for things, how you’re building money up to do certain things? And by doing so, getting more money flowing back to you and more money growing in your policy and that’s going to build wealth for the future. But if all you want to do is just spend the money and you’re not interested in recapturing it, then there’s no reason to use a policy to do it. Honestly, just go do it somewhere else. But if you’re interested in recapturing and being an honest banker, discipline, not focused on just spending it, but getting it back, if you can change your mentality, it makes a lot more sense when you’re doing IBC.

Holly: Absolutely, and it gives you a freedom. Just try it. I mean, I was talking to a client yesterday and just the joy of changing the direction of the money and the freedom it has brought her and her family in less than six months. And just the excitement she had because we had to think of how we can make this money work for her and how do we change the direction and what do we do? It was so amazing to talk to her, but it also just brought such joy because you hear about start hearing about the successes and what they were able to do and what they’re able to plan on in the future versus, “My kid couldn’t go to camp or whatever it is because we didn’t have the money to do it,” and literally just the only thing they’ve done differently was change the money from constantly going away to back to them.

Nate: This is a new way of working with money. This is a process. You hear us say this, “Becoming your own banker is a process, not a product.” We do use a product. The product just helps us make more money while doing the process. It’s the best place we know of to do privatized banking. Banking that profits us in our family that we own, that we can control and that can make us money. So we do use the product of participating whole life insurance too as the kind of the crux of it, the cornerstone. But the question is do you want to be an honest banker? Do you want to do the process? That just means you want to follow the rules. Are you ready to start paying yourself first to recapture money, to pay yourself back with interest and make a profit doing so through the policy on a tax-free basis?

All we’re saying is if you do these rules, and you use a policy as your cornerstone piece here, you can make a lot of money without taking any risk at all, without ever losing any control. And in a tax-free environment, it can make a lot of sense to control everything the way we talk about, but it’s going to be up to you once you have the policy, how you treat it. Because how you treat it at the end of the day is going to determine how far you can take and how successful you can become. Or you can just use it and stay in the status quo.

So if you’re willing to kind of build a new lifestyle around this banking system, that’s how you’re going to get the most benefit from it. And it’s guaranteed to work if you follow the rules. If you follow the rules, pay yourself first, pay yourself interest and recapture, and you use the policy as your source there’s no outside source that can come in and wipe you out. It’s a great place. We love it, but it puts some pressure on you, or some discipline on you to make sure you see it through and that you’re not just going to blow the system.

Holly: Exactly right, Nate. The hardest part I think in this is understanding that there are rules that it’s not a overnight change. It takes discipline, and it takes practice and reminding yourselves of how to do it and what to do it. And I think that that’s one of the things we’re really here for. We want to help you be an honest banker, and we want to see you succeed and grow. And three rules, they’re not that hard either. In life, if all you had to do was follow three rules. It’d be a lot more simpler than all the rules that are thrown at us. So three rules to actually bring joy to your life, give you financial freedom, and actually teach you that process of being anonymous. Banker.

Nate: Absolutely. Well, guys, this has been another episode of the Dollars and Nonsense. If You Follow The Herd, You Will Be Slaughtered.

Holly: For free transcripts and resources, please visit livingwealth.com/e70.