E61: How to Keep Money in Motion and Make More

Nate: In this episode, we will discuss the difference between stagnant money and money in motion, and how infinite banking can help you make money in a whole new way. She’s Holly and she helps people find financial freedom.

Holly: He is Nate. He makes sense out of money. This is Dollars and Nonsense. If you follow the herd, you will be slaughtered.

Nate: All right, so today, Holly, we’re here to talk about something that if you’ve been around us for any period of time, you probably have heard us talk about plenty a times, which is our goal of not just letting money just sit someplace. Be able to use it and how you’re using it. Banking is all moving money, so I guess maybe the first thing we should talk about is, for those who are maybe a little bit newer, what is money that’s sitting. When we talk about sitting money or stagnant money, what are we referring to? What kind of money?

Holly: Typically that is money that either you’ve put maybe into a CD for a period of time that you can’t touch, you’ve put it into savings with no intention of touching, or it’s even in a retirement program or a annuity or something that you actually don’t have access to the money unless there’s penalty and taxation. So it’s anything that money is going somewhere but you honestly don’t have access to it for a period of time, and just because you don’t have access to it, it doesn’t mean somebody else doesn’t have access to it, so we’re going to talk about that in the second part, which is what do we mean by money in motion, Nate?

Nate: Exactly right, so sitting money, money that is forced to be stationary, or you have no intention of moving it, which we would try to tell you that that may not be the best decision overall. I think that most of the wealthy people have a good idea of how money can move, especially if you’re in business, but money in motion is money that, of course, it has to be accessible. So it’s kind of the reverse of that where typically retirement program money or annuity money or CD money is not really in motion for you. It may be in motion for somebody else like the bank, who is moving your CD money all cross the board, but money in motion is typically money that you are using and planning on using, you’re getting on your hands on. And typically what we’re alluding to is that how you move it and what you’re doing with it is going to determine your results, not just by letting money sit.

It’s kind of the opposite of maybe what some people would grow up thinking with the idea of compound interest, where compounding, we’re taught as this great thing, but the only way for compounding to work is money has to know sit someplace in a stock or a bond or a savings account or mutual fund, retirement program. You’re not really supposed to get your hands on it, whereas businesses are always trying to move money, and typically the more money they have sitting, the less profitable the business is. I think you as an individual or a business, you ought to operate your finances that way, so our goal is to try to paint a picture of the difference between the two and why the more you can keep your money

in motion, typically the more money you can make off the money. In the same way that the banks don’t like letting money sit in the vault, you shouldn’t want your money sitting anywhere else, even in a policy that we preach on for infinite banking. Money should be moving as best we can.

Holly: And like Nate said, the one thing, if you think about banks, they would be in the money business, and banks actually don’t let money sit, ever. When you go to deposit your money in the bank, they are going to go and loan that money out immediately. In fact, most banks say their biggest liability is the actual money that’s sitting in the tellers’ drawers because that’s money that they don’t have in motion, that they are tied to having to be in their bank, not in motion, moving. And as soon as you make a deposit, that’s open access for them to start loaning the money out, so even if we had a bank holiday and the bank was closed, the bank is still moving money. It doesn’t stop. It does it 365 days a year, 24 hours a day. In some way or another they are moving money back and forth.

Nate: Always, constantly, and the same thing could be said of a lot of the mutual funds and the Wall Street firms that manage our sitting money.

Holly: Yes.

Nate: You know, our money in this account may look like it’s sitting, but a lot of times it’s being used and is being moved by the wealthy and the people who are in charge of it. One of the biggest features of moving money is can your money do more than one thing as well at the same time? We’ve talked about that before on this podcast too, with infinite banking, how it allows you to do multiple things at one time, but part of the issue that I find with most people is they have all these expenses … So you make $100,000. Most of your money is being spent. It’s in the mortgage. It’s in the car loan. It’s in the taxes, the charitable giving, the food, the leisure, and we may carve out $10,000 or try to, and we’re going to save it. Most people think the only money that’s ever going to work for them is the $10,000 that they carved out.

Then we move that money into a place that we don’t plan touching for a very long time. That’s the conventional way. Retirement program, annuities, CD, savings, carve this out, let it sit. No motion. What’s so unique and what we kind of talked about at the beginning of how infinite banking can help you make money in a whole new way is that it’s not an investment when you’re doing IBC because not only … We’re going to expand on this, but not only are we going to make money just by letting money sit the way that we used, taking $10,000 of our income, setting it aside, hoping that it grows someplace by just letting it sit, but can we actually start making money off of the money that you’re spending?

In other words, so often we’re actually losing money just because money is sitting, we don’t have a plan for it, but with infinite banking what we’re trying to say is can we start actually making money on some of the $90,000 that’s being spent? It’s not just saving money and profiting, but making a profit on the money that we spend, is the key, at least I think.

Holly: Yeah, and I think one of the keys too is that you have to understand yes, you are taking some of what you’re saving and in a way you have to get out of the mindset, and when you put it into a mutual fund and life insurance policy you’re parking it, because what we find out is even though you’re changing the vehicle per se of where you’re storing the money, most people still have that hindrance of, “I can’t take a loan out. I can’t take that money out. It’s stopping it from growing,” instead of understanding that when it goes into that policy, even if it’s loaned out, it’s uninterrupted compounding. So in reality you are actually going to be able to make money in a whole new way. It’s shifting your mind to understand we don’t want you just to park it somewhere. That money that you typically pay for, like Nate said, mortgages, cars, clothes, taxes, whatever, by putting it into a policy and then taking the money out and paying those things and paying yourself back, you’re going to be able to keep it in motion.

Nate: We’re used to one way and we bring that baggage with us to the new way of thinking. The old way of thinking is, “I’m going to put my $10,000 in the place that’s going to generate the highest return,” let’s say with the least amount of words. We’re just trying to weave in, put the money down. I think people bring that in to the infinite banking world too when they start learning this new way kind of against the herd mentality way of building wealth, and they’re saying … I’ve been asked this many times, to kind of compare a policy to other investments.

The real key that we have to remember is that a policy is not an investment at all. What I’m trying to bring to the forefront here is teaching you to make money in a whole new way. The 401(k) and the IRA, you’ve never used the money inside of there. You kept it in motion to finance your own car loan, pay yourself back, and make a profit on your car loan. That’s not have been an option. It’s not even a possibility. The money stops there. What we’re trying to say is the policy itself is not the storehouse. It’s not just pay our premiums, let the cash build, let it sit just like it would in the IRA, and then pick and choose which one is going to end up with a high result, because it’s what the policy unlocks. All across the board that’s going to be the biggest help, at least I think.

In investments, you have to choose either one or the other. If you have a [inaudible 00:08:36] or $10,000 a year, you got to decide, “Do I want to put that into my 401(k)? Because if I put it in that, I can’t think of taking that same money and go put it into real estate. I’ve got to make a choice. Or putting in real estate versus the IRA or a 401(k)?” It doesn’t matter what it is. With a policy it’s just this unique tool, this money moving, doing multiple jobs, that we can put the 10,000 in the policy and immediately leverage that to go make an investment in any variety. That’s why you don’t hear at least me compare infinite banking to other types of investment very often, because I’m not opposed to you making an investment. I would just rather your money do as many things at time as it can.

Can we roll money through a policy, leverage it out, and go achieve the things we’re trying to do? Whether that’s buying a car, going on vacation, paying for a wedding, to buying a piece of property. I mean, I’ve even had a client who took money out to fund an IRA. I wouldn’t do that, but if that what he believes, sure, go for it. I’m not here to completely poop on that, but the whole thinking behind it is can your money be in motion? As opposed to just choosing one, can we move it around? I feel like the more you can move it, the better off you can be.

Holly: Yeah, and getting out of the mindset, like I said earlier in the podcast. Nate made a really good point of, it’s unlocking or changing your way of thinking. It’s like having the final combination to the lock and being able to unlock it to open up your mind to a whole other new possibility that you never thought, because all we’ve ever been taught is to take our money and park it somewhere. We really have never ever been taught to keep it in motion. I mean, I had a client last week talking, “Well, I’m looking into CD versus the life insurance policy, and this looks like it’s performing better initially.” I was like, “You’re absolutely right. It might be performing better initially,” but he had no access to money to where, the other way, he needed access to the money just to keep his overhead into running in the business and stuff. He’s like, “Oh, really I can put this in the policy, then take this out and then use that for what I need to pay, whatever that may be, and pay myself back?” I was like, “Yes, you’re getting it,” but he only ever been taught CD or Roth IRA and he was so suck in that, in the belief that that’s the only way to do it that he couldn’t at first get past that.

Nate: We’re so stuck. Yeah, we’re so stuck to think that’s the only way to make money. I got to deposit my money someplace and earn a rate of return and that’s the only thing my money can do. I think the wealthy have been doing this, by the way, with or without the tool of life insurance.

Holly: Insurance, for a long time.

Nate: You know, whether or not they’re using it or not, they’ve been able to figure out [crosstalk 00:11:15]

Holly: Well, I would bet money that they’re using life insurance in some way.

Nate: I think they are.

Holly: Whether we know it or not, I can’t think that they don’t have some type of permanent life insurance that’s doing more with their money than just the investment.

Nate: Just seeing how they’re working with it, whether it’s with a policy the way we teach or with other sorts of tools, just being able to leverage it. I mean, that’s the issue. He comes in. He says, “I got to put my money here to earn a rate of return.” That’s fine. I’m not against doing that per se, but what I am trying to bring to the forefront is that’s not going to help you make money on every time you purchase a car. That’s not going to help you make money when you finance your daughter’s wedding.

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Nate: 90% of your income, if you’re the average individual, is not making you a dime. All we’re used to doing is making money on 10% and there’s no way the other 90 are ever going to do anything, and that’s what we talked about with infinite banking being a totally different animal. You know, sure, we can move 10% of our income into a premium and build the cash value and it’s going to make us profit, there are some perks there that we’ve talked about plenty times, but it’s what that unlocks in the other 90% therefore if you can finance your own car loan, pay yourself back with interest, make a profit in the policy and not have to pay a car person for that at all, that’s huge. Or if we’re able to do the same thing with credit card debt that you’re in or mortgage or other investments where we can make money in more than one place. It’s unlocking the ability to earn more, and in the real estate world people do this quite often too.

You buy one property. You improve it. You refinance. You pull money out to go buy another property, and you’re keeping money in motion as much as you can. That’s what I was talking about the wealthy. They probably have been doing this type of thing for years, building these up, leveraging it, doing other things, and just continuing to grow it until it compounds on it pretty fast. Individuals are taught let money sit, don’t touch it.

Holly: Even in school. I mean, that’s the one thing they’re taught. If they’re taught anything about money, and I’ll take that from a parent that has a fifth grader who’s going through something called BizTown to learn how to be in a business. For one day they’re going to go run a business. Maybe they’re going to work in the bank, a nonprofit, TV, Humane Society, you name it, but the first thing that the kids have to do is they have to take their first paycheck and they have to go deposit it into the bank and put half of it into the savings account. That’s the very first thing they’re taught in regards to money and their paycheck. My daughter said, “But mom, that parks the money.” She’s been around me long enough to know. She asked her teacher the other day, “What if I don’t want to do that? I don’t want to go put my money in the savings account.”

Nate: I’ll go on to something better.

Holly: Yeah, and they actually cannot spent that money throughout the day. What they put in there, that first paycheck, they cannot spend. They have to put it and keep it for savings, and so [crosstalk 00:15:43] dollar back.

Nate: I mean, I guess I can understand what BizTown is probably trying to do, but I think it breeds this serfdom, this poverty mentality, I think. It’s like the Great Depression again where you’re just scrimping and saving. I think what they’re trying to avoid is another problem in America think is overspending, you know?

Holly: Yeah.

Nate: I mean, it’s true.

Holly: You got something in savings at least.

Nate: I would at least say if you’re going to carve 10% out, let it sit somewhere that’s better than spending 100% of your money and never having [crosstalk 00:16:10] over.

Holly: Or more than 100%.

Nate: Or more, so I guess I can see where they’re coming from a little bit, but there’s a side effect to that, that’s what we’re trying to say.

Holly: Yeah, it teaches you to park your money, not be able to use it, that the bank does, but as an individual, when you start realizing banks never park the money and they’re in the money business, yet that’s what we’re told to do, there’s got to be a better solution out there or a better opportunity not just to invest, like Nate said. It’s to have your dollar do more than one thing. If your dollar can go in as way of savings but also be used as another tool for investing or buying cars, like Nate said … I mean, it’s infinitely possible to do this with just about anything. It’s as simple as buying to me a surfboard versus going on a family vacation versus mortgaging a house. It’s just changing that mindset that don’t just take your money and put it in the bank, and then give the bank all the interest and pay them. I mean, really, that’s what we’re doing when we borrow money from the bank and that’s where we just keep putting it in retirement programs and in savings and in CDs, and we literally are giving all of the control over to somebody else.

Nate: That’s typically, I think, one of the biggest issues.

Holly: Yeah.

Nate: At least what I found is the dependency that’s trying to forced down our throat.

Holly: And the feeling of security.

Nate: Yeah.

Holly: A false sense of security-

Nate: Yeah, it certainly is false.

Holly: … but that it’s more secure there than somewhere else.

Nate: But they’re essentially saying, “You don’t know what you’re doing. Come leave your money with me. I’ll work with you. I’ll do what’s best for you,” and there’s this level of dependency where we’re very poorly educated when it comes to financial decisions as a population. We’re not making the best decisions. We’re just doing what the herd says to do, whether it’s the right thing or not, and what the big Wall Street marketing teams put together to convince us to let money sit with them. I think it breeds this dependency on the bank for taking savings accounts as well as loans, and on Wall Street to know what’s going on with your money. I think it’s dangerous. Part of the flip side of the coin, though, when you do keep money in motion, is typically you’re in control of it, which is good, but it can also be bad if you’re a terrible manager of money.

Holly: A manager of money, yeah.

Nate: And you do a bad job. So there is some discipline involved there, but what we’re trying to say is if you go look at how the wealthy operate, honestly I’ve yet to see someone get wealthy purely from depositing money into a retirement program and then especially not letting that wealth last for generations using retirement programs. You’re going to have to do something different. You’re going to have to be in control. You’re probably going to have to have your money do multiple things. You’re going to have to keep it moving, and you’re going to have to keep it growing, and infinite banking is kind of like the doorway into that type of world. It’s the starter kit, at least in my mind. It lets you learn, and the principles you learn here expand into other decisions that you make.

Holly: So you don’t just park your money, but you actually learn how to create wealth. Not just creating new wealth, but like Nate said, leaving every for a legacy, for not just this generation, but for generations to come, and it really starts with understanding how money works, and I’m going to suck it. Do you know anybody wealthy that kept their wealth and has passed it on for generations that know took it and put it in a bank or a retirement program and let it sit there?

Nate: If that’s you and you’re listening, and you say, “Well, my dad did that” or something like that, well, that’s great, but I’ve yet to meet someone who’s inherently wealthy because of how well the retirement programs did and then especially I have not met anyone who is looking really good with retirement programs passed into other generations and how much wealth [inaudible 00:19:44]. Normally you see people in real estate and business especially with life insurance, a big tool that the richer you get, the more is being used for those types of things. That makes you think maybe it’s time for a switch in the entire perspective on money from just depositing money and letting it sit, to how can we have it do multiple things, moving it around, have access to and control of it? I think that’s the future of money. I think that’s what more and more people are being drawn to and I think that’s where it should be going. Retirement programs are the low-hanging fruit there to pick on.

Holly: Yeah, or the one thing that you don’t realize, everybody is doing it and so you just do it. Especially, I’m just going to say, for W-2 employees. It automatically comes out of your paycheck, so you don’t even really realize it’s not money you had to spend. It’s gone.

Nate: Well, just think if we go back, Holly, like 100 years when there was not retirement programs. They didn’t even exist, and we stuck what I think has been an increase in overall wealth since then, the average individual, and we bring ourselves back to where retirement programs weren’t even an option for anyone. It could go two ways. I mean, we could spend everything we make, or it could have been, I think that it could have been a ton of wealth being created by the average individual if we were released from that retirement program mentality, if we were essentially going in as like, “I’ve got money and I’m going to learn how to use it to make profit, learn how to use it to invest, maybe invest in a business or in real estate or learn what stocks to pick. I’m going to become talented with it.”

Nate: The invention of the mutual funds and retirement programs, they’re essentially saying, “Let us do it for you.” They don’t care as much about your money and they’re not going to do as good of a job as you could if you actually were focused on improving yourself and knowing what to do with it.

Holly: And that created dependency, and I think like what Nate said is, look at 100 years ago. You didn’t have nearly as many people, “At this age I’ve got to retire,” first of all. That really wasn’t even part of the gamut, but the other thing is that people were so actively productive in society and you didn’t see so many older people going to workplaces because the retirement program didn’t pan out, because there wasn’t a dependency on something in the future that the government is going to do or provide for me or this company or bank, whoever is managing the portfolio of the retirement program, is going to produce more money for you. They might have parked their money, but they actually knew how money worked and they actually understood the importance of keeping it, I would even say, in motion even back then, whether they were taught that or not because they weren’t being dependent on the bank to create their wealth or a retirement program to provide for their lifestyle after they stopped working.

Nate: And whether they were good with money or not is beyond the point. What I’m kind of trying to say is if we took today’s age with all the information we have and the technology that we have, when we go back 100 years and we just get rid of the garbage financial programs that are out there, and we insert today where it’s not just simply buy into a mutual fund or into a retirement program. We’re earning money. We got to figure out something to do with it. I think we’d all be a lot more successful if we proactively tried to work with our money.

Holly: And we educated ourself. I mean, they had to go out and create their wealth. The mindset is so much different for me than 15 years ago where I was very concerned about the future and money for my family, to where now I’m not because I know who controls the money and I know what we have. So I think from that perspective of really understanding, like Nate and I say. Don’t follow that herd. Go out and do your research, but say, “Can I get wealthy doing this? Can I make my own wealth in different way that nobody has ever taught me?” And if you’re dependent on a retirement program to do that for you or a bank or an entity … You are the best person most of the time to control your own money and when you give control of that money away, you lose the power of the money as well. I don’t know, the negative 2%, negative 3% earnings that some people have now in their retirement programs means that the money they put in, they don’t even have that money back, and that’s what sad, is they thought they were doing a good thing. They believed what they were told, but they went and parked it.

Nate: What we’re trying to help you learn is a new way to make money, that’s what banking is all about, and then what it can unlock for you as you learn this whole motion mentality as opposed to just putting money into something and letting it sit. I think you’ll be very much thankful that you’ve started down this pathway.

Announcer: This has been another episode of Dollars and Nonsense. If you follow the herd, you will be slaughtered. For free transcripts and resources from episode number 61, visit livingwealth.com/e61.