E42: How to Make Money Do Multiple Jobs

Nate: In this episode we will discuss why it is so important to have your money work for you in multiple ways at the same time. If you’re thinking that you have far too little to show for all the work you’ve done over the years, maybe it’s time to have your money pick up the load and start doing the work for you.

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: All right, so this is going to be a fun episode I think. At least I hope so because it’s an interesting topic today because most people … we’ve kind of been taught to compartmentalize our money, I guess you could call it. Where we have a box for emergency fund. We’ve got a bucket for retirement. We’ve got a bucket for vacation. And we’ve been kind of told to compartmentalize our money so that typically everyone’s dollars are only doing one thing at a time, but Holly and I, we’re here to try to share some ideas for money to do more than one job at a time. And can be doing two things at the same time and hopefully that will help you guys make more money and stretch the dollars further.

So Holly, what’s one way, if we want to start and kind of talk about maybe the world of investing or something like that, how have you seen people use the same one dollar to do multiple things by leveraging it and trying to expand what they can do?

Holly: Well, take real estate, Nate, for example. So typically with real estate if you’re using it as an investment or to supplement your income or create extra cash, even rental income, often people will leverage that property so there is money in the property. They buy the property and get rent or that, but they also use what’s called a home equity line of credit or the value or growth in the property to leverage that to purchase a new property.

They have more than one dollar working for them. They put money into one property and they’re going to leverage that property and the value, whether it increases or the worth of that property and the growth of it and they’re going to take that money and they’re going to go purchase maybe another property. So they have more than one dollar working for them in the sense of they put money into one property and then they use that same property then to help finance a new property.

Nate: Absolutely. And that’s a big one that I’ve seen quite a bit too. That might be more of what people are used to as well is hey, I can go buy and I can make a down payment on one property. I can have it rented so it’s producing income. I can have it be appreciating. So it’s all inside that one property. It may be doing multiple things. Maybe appreciating. It may be producing income, but then as Holly said, you can throw in the fact that we can leverage that property and still keep it. It can still appreciate. It can still produce rent and I can go use the equity that’s building up to buy another one and I can keep doing it and I can have the same dollars really doing multiple jobs at the same time.

It doesn’t have to be in the world of real estate. It can be anywhere, but it’s thinking of I want assets that are doing more than one thing and that I can then put somewhere else. Real estate’s one of those. We know it can be leveraged. The money can move from one property to another. And increase your returns, but typically it stays there. For the most part, like in real estate if we’re leveraging one property to buy another and it’s kind of staying in that bucket. Now we’re leveraging it to do multiple investments, but it’s still kind of in that bucket and that’s one of the differences you could say for how we teach that infinite banking concept. It works really similarly to real estate, but with a policy and how we’ll teach people to use on this podcast, you can have your money do multiple things all the time all over the place versus just in the world of investments I guess you could say.

Holly: We don’t actually have the concept that our dollar can actually do more than one thing for us. It doesn’t just have to sit in the rainy day account earning interest if you use a policy and I think that, that’s the mentality and breaking out of that mold of my dollar can only be used to pay for that vacation or only for the rainy day account or only for this versus can your dollar do multiple things.

And I think the one of the only ways that can do that is if you actually invest in a life insurance policy that’s set up correctly. And I think you can expand a little-bit more on how do we make one dollar do more than one thing for us.

Nate: Absolutely and I think now is a good time to take a quick break and hear a word from our sponsor and we’ll be right back and Holly and I will delve deeper into how a policy can help you in your goal of stretching your money, having it do more than one thing at a time.

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Nate: Hi everyone, welcome back. Holly, right before the break it asked me to kind of expound on how a policy works in a way that lets us use one dollar and have it work for us in multiple ways. Just like in the world of real estate with leverage, policies can be done very similarly and it’s really pretty neat what you can accomplish with it and I’m sure Holly and I, we could spend an hour or more on this or try to tailor it down. I’m trying to do that with my mind right now. Just tailor it down to what I really want to get across.

Typically, when we start talking to people who may be interested in doing infinite banking and getting a policy and starting working in that world, they bring it into the compartment idea. Where okay, I’ve got my IRAs. I’ve got my 401K. I’ve got my real estate. I’ve got my money I pay taxes with. I’ve got charitable giving. I’ve got an emergency fund. And now I’m going to dibble dabble and put a little-bit of money into this policy because once again they’re thinking that if I put my money into the policy then it’s just going to serve one purpose.

Or maybe they come in just thinking it’s going to serve one purpose. Like maybe, I’ll build this policy to help fund the down payments I’m making in real estate and what I want to try to teach today is you don’t have to put it in a compartment. You can actually make this a lifestyle. And put a lot of money into policies and pull a lot of money out and by doing so you can have a whole lot of money working for you in more than just one way.

Holly: Most people view the policy either as I’m going to buy this policy for the death benefit. I’m going to buy it so I can only maybe purchase a car or be able to take over real estate, instead of realizing that the policy actually can do more than just that. It can actually be used not just only to purchase a car. It can be used for those dollars you’re using for charitable giving. It can be used to help pay taxes, but the reality is, is that when the dollar goes in the value of that is that the money stays in there, but then you’re actually able to borrow the money out and use it for many different areas. Whether it be for charitable giving. Whether it be for loaning money to buy a car or loaning money to other individuals.

I think the thing is we don’t realize that we finance everything in our life and in order to be able to do that, you really have to have your dollar doing more than one thing for you. You can’t just take it and park it in the policy. Or park it in a retirement program and expect to have residual income or even be able to make money if you don’t have your dollar doing more than one thing.

Nate: When people grasp it, it’s a total game changer completely. In other words, if I can put ten thousand dollars into my policy, have it buy me a huge death benefit, and have it produce me cash value immediately, that’s going to be earning dividends and interest that’s totally tax free, and if I can then borrow against it without impacting anything at all inside my policy and I can go use that to go invest in a property, well now I’ve got my money doing two things at the same time.

So right now, typically we think of once again, money doing one job. It’s a compartment. I have to save up money throughout the year to pay taxes at the end of the year or however you do it. And that’s the only thing that money’s doing. It’s just paying the taxes. It doesn’t actually produce any wealth for you and the money’s gone as soon as you write the check. Well, if we can flow it through the policy, have it hit the policy first and for the rest of our lives it’s going to be earning, whether or not we leverage it out or not … well, let’s say we leverage it out to pay the taxes, then we can pay our policy back over the course of the year and do it again the next year and have this be the source, but that initial money is going to be working in there earning returns for you, even while you’re using it.

That’s why we’re saying it’s not just having your money do multiple things in the world of investment, but we can show you how no matter what you’re spending money on, that you can use a policy to have the policy be the hub for what you’re doing so that all of your money can work for you at any given point even if we’re going to use it elsewhere.

Holly: It’s like viewing this as the product you’re going to use as whole life insurance, but the purpose of buying it is not just the death benefit, but it’s to be able to have those dollars to use again. To put it in, but be able to borrow out and use it. Most of us, when we go borrow from a bank, that is a liability to us, but what we don’t see is that if we borrow from our life insurance policy, we’ve created an asset for ourselves.

And so not only is your dollar working for you, but now you’ve actually been able to leverage that to be able to take over and pay those taxes and then pay yourself back because honestly the government isn’t going to say, “Oh, I’m sorry you can’t pay your taxes today.” They’re going to want their money and if you can’t pay they’re going to charge you interest.

In the same way, why not put it into a policy and earn interest and leverage that out to be able to pay those taxes. So you did actually have your money doing more than one thing. Number one, it provided death benefit and some cash value. Number two, then you were able to use that to pay your taxes.

So not only did the same dollar go in, but you’re using actually the same dollars to an extent to pay taxes. So your dollar is doing more than one thing.

Nate: So many people work hard, earn a lot of money, and they kind of wonder where it all goes. And that’s really probably because their money, only a very tiny portion of your money in the grand scheme of things, is working for you at any given point. That’s just typical. If you’re saving let’s say 10% of your income, then each year only 10% of the amount of money that goes through your hands is ever going to earn for you. The rest of it’s just spent.

If we can transition some of that through a policy you can start earning money, even if you have to leverage it out and use it to live, of course, but it can be there and earning for you for the rest of your life. And you can start earning money on money that you’ve spent. It’s a whole new idea that we’re really hoping that people can grasp is this banking concept that we’re not trying to change your lifestyle or change what you’re doing with money. We’re just trying to change the process and show you how much wealth can be built by changing how you’re doing the banking side.

So instead of just thinking I’m going to go put a little dibble dabble of money into a policy and use it for these little purposes and yet I’m still going to leave the bulk of my cash flow and assets somewhere else, once again, then you’re only going to have a very small portion that’s able to do double dip for you. When in reality, if you’re talking to me, I try to put as much of my income into policies first. And then divvy out from there to go do, all of the things I’m trying to do in life.

And you look over a five year or 10 years, 15, 20 years, the amount of money that I will gain because of that is enormous compared to if I would have just compartmentalized and just put this as a little piece to the puzzle and then used my money to go buy and spend everywhere else. I mean, the compounding growth of its unreal. It’s huge and you don’t have to work any harder or change your cash flow to be making more money if you just maybe change how you’re spending it and how you’re building wealth up.

Simple process, but have your money work for you more than one way and I promise you, you’ll like it more than what you’re doing right now.

Holly: What you just said there was key is that you’re not working really any harder. And you’re not really having to change your cash flow and you don’t even have to reduce your lifestyle to do this, which is typically one of the things we have to do if we want our money to grow and make more for us. We kind of have to take from our lifestyle in order to add somewhere else. And what we’re really telling individuals and our listeners out there is most of the time when you compartmentalize your money, you’re sending that money away from you every single day. It’s going away from you and once it’s gone, it’s gone.

And you’re losing the buying power or the interest off that money and just by putting it through the policy, you actually are changing the direction instead of away from you, it’s going to be able to come back to you. And you don’t have to reduce your lifestyle to do that, and you can still maintain the cash value and your cash flow as well as not have to work any harder is kind of like working smarter, not harder in my viewpoint. You’ll get better results than if you kept the money compartmentalized.

And what you will see is that the cash flow actually might increase because you’ll have more cash to work with yourself versus if you just kept giving it away to other people.

Nate: To give an example of some things, we’ve already mentioned some, but we’ve had people come in and say, “Well, should I pay off all my debt before I get started with IBC?” Well, once again that’s the compartment idea of my money can just do one thing. I can either build me a policy or it can pay off my debit. Well, in reality the best thing for most people to do is to actually use the money that you’re trying to pay off debt with, put that into a policy first and then leverage the policy to start taking over the debt. That way when two, three years, four years down the road, whenever you have all the debts paid off, you’re not starting a policy from scratch four years from now. You’ve already got one that’s four years old.

If you understand how policies work, it’s going to be way more profitable doing that than if you waited those four years. The same thing could be said, should I invest money elsewhere. Should I build up money to invest in real estate or wherever it is that you enjoy investing in. Should I do that first or should I buy the policy first? Well, once again it’s not a compartment. It’s not just one little plug-in. It’s the lifestyle. In fact, our course is called lifestyle banking. It’s how to make this a lifestyle.

Why don’t we put the money into the policy first and then pull it out over a 15 year period, 20 years, I mean, I’ll just show it to you. The numbers are astronomical what you can build by making sure that money’s doing more than one job. We know that it can be done in like the world of real estate as we talked about. People are aware of that. People do margin debt in their portfolios and you can see doing multiple things, but that’s normally just on the investment side we thought of it.

Holly and I we like to share with you how to do multiple jobs with not just investment money, but lots of your money. Money you want to use to pay for taxes, buy cars, go on vacation, can we have that money work for you while it’s also affording your lifestyle at the same time. And if so, that’s a whole game changer for most people.

Holly: And I think one of the big keys is that we have to understand how our money works. And you want your money working for you in multiple ways and areas. I mean, it’s the same as somebody asking about education. Do I fund it into an education program? Do I put it into savings for my kid? I had a client asking their daughter had gotten out of college and she’s trying to pay off the debt really quick. And she’s putting $2,000 a month into paying off the debt and yet realizing if she’d just put that money in and she starts a policy and does that with a policy, that it actually will be more beneficial to her versus she’s currently has given $24,000 away, just gone. Boom. Over the course of the last year.

And she’s never going to get that money back and she lost the interest and buying power, but if she’d put it through a policy she could have reduced her debt and earned tax free growth on it and had her dollars working more for her. So when you look at it that way, what do you want to do? Do you want to put the $2,000 towards something that actually yields you no rate of return per month. I mean, really on the debt she’s paying off for education at 0% rate of return or do you want to earn a little-bit and use those dollars and do the same thing? And she could have literally done the same thing.

And so now, the daughter’s like, “Wait, let me change my mindset.” What we really have to start thinking about is even extra house payments or I’m giving charitable giving. I’m giving it so that I can get a deduction, but because I believe in a cause of this non-profit organization, but wouldn’t it be better to have it go through a policy and earn tax free growth for you and then take that money and give it to the charity or the organization that you want to?

So we really have to start thinking about the fact, can my dollar do more things? And you don’t want to compartmentalize it. Same thing, talking to a client or individuals who realize how much money a month is going out to other people versus if they could put it into the policy first and then take it out and use it, how much better their lifestyle will be as well as the cash flow that comes back to them and they don’t have to change that lifestyle regardless of what happens in life.

Nate: It would be nice for everyone listening to us to start earning more money. I think that’d be great. I wish everyone is blessed as they live their life, but without even having to earn more money, if you just simply have your money do a few more things than it’s doing right now you can build wealth at a faster pace regardless of how much money you’re earning and how hard you’re working simply by having it do more than what it’s doing right now. Have it do a couple things at the same time and I think you’ll be surprised.

We’ve come up here at the end of this episode. This is Dollars and Nonsense. If you follow the herd, you will get slaughtered.

Holly: For free transcripts and resources, please visit LivingWealth.com/E42.