In this episode, we discuss the four big reasons why people decide not to implement infinite banking.
Topics Discussed:
- How it is worthwhile to make it through the capitalization phase
- An analogy of implementing infinite banking and starting a business
- Why do people often get stuck in the details, and how to avoid this the self-sabotage
- Why you should investigate the Infinite Banking Concept
- Why your advisor that you’re working with is probably misleading you
Episode Resources:
- Gain access to our Beginner’s Course now FREE to listeners of the podcast here now
- What is Infinite Banking
- Who was Nelson Nash?
- CREDIT: Episode art background by Tim Gouw
Podcast transcript for episode 154: Why People Avoid Infinite Banking
Nate: In this episode, we discuss the four main reasons people decide not to implement infinite banking. 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. Well, welcome everyone back to the show. We’re excited to be here. We’ve got another fun topic to go over. This one is going to be more focused on infinite banking, than just finance in general. Obviously, it’s a topic we talk about a lot, Holly, as that’s what we do for a living and that’s what we love to do and we believe it shines a lot of light on how to make money in this world. So we’re excited to talk about it. And we felt we needed to do this type of episode because there are real
reasons why people who get introduced into the banking, why they end up not moving forward with it. Some of them we believe have more validity than others. In other words, some of them I think are unfair. In other words, it would actually obviously would be able to help them and they would actually enjoy it but something occurs in the educational process that turns them off for whatever reason. And it’s not exactly a fair accusation.
Nate: Other ones are relatively fair. It may just not be the right time or they may not even be the right fit for it depending on it. And these are not the only reasons why. These are just the ones that you come across the most often. There’s probably some
not on this list, Holly, that are even the most fair actually. In other words, just the person doesn’t totally fit for very distinct reasons. But obviously you just don’t run across that all the time. And one more thing to note, nobody’s actually a cookie cutter.
So these are just the overarching themes and the people who decide to not practice infinite banking, these aren’t going to be perfect characters, caricatures of them. So everyone will have their own reason.
Nate: I would tell you a couple of things I guess right off the bat to set the stage for this, we are referring in this podcast the main reasons people decide not to implement infinite banking. And we are assuming in these reasons that the people who are
deciding not to do it have spent some time investigating it themselves. There’s a whole bunch of reasons out there why people may not even give it the time of day.
Obviously the word life insurance can be a turnoff pretty darn quick. So there’s plenty of reasons why people may not even attempt to investigate it. We’re not going to dive into those reasons. We’re mainly saying, oh, you’re here on this podcast, you’re
probably investigating. You probably know people who may want to investigate it.
What would be the reasons why once you actually go through a decent amount of research and investigation into what we’re doing, why would people decide, oh, this isn’t for me? There’s four main ones. There’s probably a whole bunch of others.
Nate: There’s probably more distinct ones that we’re not going to get into right now that would actually probably be the most fair reasons in a lot of ways, but they just don’t happen all that often because it would be for very distinct financial situations. So
with that being said, Holly, you want to dive in?
Holly: Let’s dive in. Let’s dive in with reason number one, Nate, what is our biggest reason? We’re going to talk a little bit about baking a bit or cooking, but we’re going to refer it as if you’re baking a cake. But basically our biggest reason number one is we
look at the ingredients and not actually what is the cake. So you have to see infinite baking as the cake and the ingredients or all the details or what it takes to make that cake really.
Nate: First thing is obviously people get stuck in the details a lot of times. This one I would say is not always the most fair, right Holly?
Holly: Right.
Nate: These are not the most fair accusations, but it’s certainly one of the main reasons why people don’t move forward, is it’s very easy to get stuck in details and decide, Oh, it’s not for me. And the same thing goes as Holly mentioned, we were
talking about this beforehand. It’s kind of like when you were trying to bake a cake, you’re putting a whole bunch of ingredients together into this thing that’s going to be this delicious cake. But some of those ingredients by themselves, if you isolated those
ingredients, you’re like, what is that doing in my delicious dessert? What is that doing in my cake? I don’t know who here has tried to take a spoon full of vanilla, but it’s disgusting. You can barely swallow it. Why is that in my cake?
Holly: But it makes the taste, adds great flavor to the cake. So just like being caught up in the details, the details are what makes the infinite banking process the cake. So just cause it doesn’t taste good in your mouth doesn’t mean it doesn’t add flavor or some
major component to make it function or work.
Nate: That’s right. And this is not just true of infinite banking, this is true with almost every financial strategy in general. Is that almost every financial strategy, I would just probably say everyone of them has a list of ingredients of the things that make up the
strategy. Whether it’s just basic retirement program, saving for retirement in the IRA’s,
401ks, there’s a list of ingredients that make up that. And there’s a list of ingredients
that go into real estate investing. There’s list of ingredients that go into… I mean
everything we do as a strategy will have an ingredient list that’s going to make up the
strategy. And I think it’s a bit foolish to start with the ingredient list to then determine
if you like the cake, because you’re going to find things in the ingredient list that don’t
taste good.
Nate: And you’re going to wonder why anyone would ever make a cake. If you think
why would I make it? What are eggs doing in there? How could this be a dessert if I’m
making… I like eggs scrambled with breakfast, I’m not going to put it in my cake.
Vanilla is disgusting, baking soda why would I… This stuff sounds gross. I’m not going
to mess around with it. And I don’t think we need to beat the dead horse there per se,
Holly. But I’m just saying this one is very common that people get stuck in the details.
They never even give the cake a chance. They won’t even take a bite out of it. It’s just
disgusting from, or they get hung up. One of the big ones obviously, Holly, on the
ingredient list is policy loans. You get hung up on them. It happens all the time where
you’re investigating this and you’re isolating whether infinite banking as a concept is
worth implementing by determining whether or not it makes sense to ever use your
money as collateral and pay interest to someone else.
Nate: Why would I pay interest to borrow my own money? These common little marketty criticisms of infinite banking that are not fair, because they’re a simple ingredient in the entire cake. But if you make that, that’s putting vanilla in the cake,
that stuff doesn’t taste good alone but man, it makes the cake taste really good. It makes a whole bunch of sense, but if you get stuck on that detail it’s the very obviousone that will push people aside. They get stuck in the details or they’ll say, well, is the
rate of return of the policy bigger than the policy loan rate? And if it’s not, then why would it ever make sense? And all of these things that you hear that are simply on the ingredient list that are not actually the cornerstone of the concept.
Holly: It’s just one of the moving parts of it.
Nate: It’s like one little brick on the one side of the building. It’s not the foundation of the concept, but people will make the list of ingredients. They’ll choose one that doesn’t settle well with them, that they can’t quite comprehend at the moment in
time and put essentially the ability of making to make sense on that one ingredient. And I’ll say, nope, not for me. This one as I said, is not totally fair honestly. This one is not exactly a fair accusation but it’s one of the main reasons. And so some people may
say, well Nate, it’s fair if I feel it. Well, not everything you feel is fair.
Holly: Well, not everything you feel is true.
Nate: Yeah, it’s like saying you don’t want to get into real estate investing or something of that sort because most real estate investors say you really want to use other people’s money. And you’re back to this thing, oh, I’m not doing that. I hate dealing with banks and I hate paying interest and I ain’t going to do it if I have to borrow money. And well, that’s fine. I’m just saying you can’t say the cake’s bad cake, you can just say you don’t want to do it. So I’m saying it’s not exactly a fair accusation of real
estate investing, it’s perfectly fair to say you don’t want to do it. That same thing goes for infinite banking, it’s perfectly fair to say you don’t want to do it because of these ingredients. I’m just saying it’s not actually a fair accusation of the cake per se. So
because obviously you can do real estate investing without using other people’s money, you’re just not going to be as successful as the people who do, so be it.
Holly: Yeah. And I think one of the things, Nate, is that it’s like you want to taste the cake before it’s completely ready. But if you separated out each of those ingredients like we’re saying, each of the parts that make this infinite banking a process for you,
the total cake, if you separate out each of that it doesn’t work together unless it’s all in motion and moving together. And so I think that’s why it’s not fair too, because you
have to understand each part of that moving process and the cake that creates the
final product is essential in order for it to work and do exactly what it’s designed to do
and work for you. If you want to focus on, and we’re focusing on policy loans because
that’s one of the biggest things we get pushback from I would say, Nate, is well, why
should I pay interest on my own money? And yet what most people don’t realize is
you’ve been doing that your whole life because even if you’re borrowing from a bank
and it’s your money in that bank typically, and then you’re paying them to use your
own money.
Nate: Exactly. We are the depositors and we are the borrowers. We fund every single little angle of the bank, that’s exactly right. And it’s just a shame that people get stuck on that unfortunately, because in other words they’re saying I don’t want to do it because of that. But then you’re like, well, what else are you going to do financially to pay for every vehicle you buy, to go on vacation to make investments to do these things? Does the rate return the policy greater than the loan rate? That actually has nothing to do with infinite banking unfortunately, and I know maybe that might pain people to hear. It’s far bigger than that. So the first thing is you get caught in the details, you’re isolating the different elements of the concept, especially the elements of the policy itself. You get very analytical, you get stuck in details, you’re isolating the
ingredients and you don’t understand why some of the ingredients are in the cake.
Nate: Well, so be it but understand that IBC is the cake, it’s not the list of ingredients
and that’s the same thing that goes for every single financial strategy that exists. You
can always find ingredients of every financial strategy that you don’t like. That doesn’t
mean you shouldn’t implement it because it just a lousy way to look at it. And I have to
say this to myself, Holly, because I have a tendency to do this same thing. So it’s not a
judgment. In other words, I have to purposefully take myself out of being an
ingredient looker because I believe this and it’s slow coming, but I’ve had people tell
me this for years now, if you understand why the details don’t matter. And if you don’t
understand why the details don’t matter. And I’m a very analytical, detailed person, I
fall prey to this where if I’m investigating of starting a new venture or investing money
in something where I can easily get stuck in the ingredient lists.
Nate: And I take myself back out because if you look at every ingredient list of every
financial choice ever, you can always spot some ingredients that you don’t like. I make
a little change to that by the way, Holly, that saying I said I didn’t invent the saying but I
think that the deals can matter a little bit. So in other words what I say is, if you
understand why, the details matter a little bit. If you don’t understand why, the details
definitely don’t matter because there’s no point in doing anything you don’t
understand why you’re doing it in the first place. So that was number one, you get
stuck in the details. That was also the biggest one so those of you look at your watch
like, you guys said four. Reasons people decide not to implement, that one was
definitely was encompassing many different areas. The second one is I would say a
potentially a more fair reason for some people.
Nate: And that is that they really don’t like the capitalization phase of the policy, which
is what we refer to in the early years of opening a policy with the intention to practice
infinite banking with it. You’ll pay premiums into the policy and not every premium
goes straight into cash value. So not every dollar or premium goes straight into cash
value. This is typically the case for the first two to three years. And a big portion of it
does, but not all of it. And this can be a turnoff. And this would be the natural one I
would say to people, Holly, if they ask, well why does… They learn about it, they’re
excited about it and they ask you a question, why doesn’t everyone do this? This is
often one of the biggest ones. Well, some people are just not interested in starting it
because they’re not very patient that they don’t have the long game in mind, and
they’re mainly focused on short term gains and this is obviously not that.
Nate: Now, of course we think it’s very much worthwhile to make it through the
capitalization phase of a policy for what, the benefits you’d reap for forever. But that is
our subjective per se decision. This would be maybe a more fair accusation they could
say is that they’re just not interested in doing it at this time because of the
capitalization phase for whatever reason.
Holly: Well, and I think, Nate, in that capitalization phase we have gotten to a point
where we want instant gratification or instant [inaudible 00:13:43]. And so it’s why
can’t I have all the money out that I put in, and having to really explain that, you have
to look at the policy. I say this a lot, Nate, is that life isn’t 100 yard dash, life’s a
marathon. And so it’s going to take those 26 miles. It doesn’t take 26 years, but it’s
going to take a lot longer, one to two to three years to pass that capitalization phase
before you really have access to the premiums you’re putting in. And I think most
people just want it instantly. Well, if I give you $10,000, why can’t I take $10,000 out?
And so really it’s a matter of literally learning that just like when you start a business
and viewing it, I think it’s the capitalization phase, Nate, and viewing it as a business
that typically a business isn’t profitable in the first one, two, three, four years.
Holly: It takes a few years for our business to become profitable, in the same way the
capitalization phase is one to three years typically before you really see that growth
start to play out within the policy
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livingwealth.com/beatinflation. Now back to Nate and Holly.
Nate: I do like the analogy to a business. If you’re interested in starting a business…And one of the reasons I want to use the analogy is because I want people to understand that infinite banking is not like its own little thing, that the decision making process to implement infinite making is somehow different than decision making processes to make other decisions. We’re using the same types of things for every single decision we make. Same types of things go into our mind. So the things that you can relate to banking can also be related to a lot of things. One of them being in starting a business. So whenever you compare owning a business to just being an
employee of someone else’s, as Holly has mentioned, a lot of times in the short run it makes sense to just be an employee for someone else because you have to put in less efforts, no money to get going, you’re just getting paid right away. And there’s no effort involved as far as you get something moving, it’s already moving you’re just joining in on the ship.
Nate: And get things moving instantly. And so when you’re comparing whether you should start a business to not you have to understand, well, I could have instant gratification here. And so why would anyone ever start a business? Well, obviously it’s
because they believe that starting the business is going to help them make more money and have more autonomy maybe, have more freedom, be able to decide their own schedule and all sorts of things that business owners love about being business
owners. People who decided to do the business said, I want the end result of it, even if it means in the short term I have to be the one to get things off the ground and that’s going to take time, money, and effort. And that is how we feel about infinite banking and it’s fair. That’s what I’m trying to say. It’s very fair to say that obviously if you were to just put money in a checking account, you’d have more money for the next few years than if you put it directly into a policy because not every dollar premium’s going
to cash value.
Nate: But that doesn’t mean that the checking account is a better solution long term
for establishing your banking system in life that you’re going to establish no matter
what. Just because it starts off faster it’s not mean it’s better for everyone. But I do
think it’s fair, Holly, in a lot of ways I keep using that term. But I think it’s fair to say
that not everyone wants to be a business owner. And there’s reasons why they’ve
decided that and they can be very fair reasons. And it’s just not for everyone, that’s
totally fine. The same thing I think goes into this idea too with capitalizing what we
believe is your own banking business that you’re going to operate till the day you die. I
think a lot of people in this they can see the value of it, but they’re just not ready to
commit to capitalizing the banking business at this time for maybe a few other
reasons. One of them being they’re unsure and unsteady about having a portion of the
premium dollars they’re paying not going to immediately available cash value.
Nate: And as I say, I don’t think it’s a fair accusation. In other words, most people can
get over this. By the way, one more thing I’d say, Holly, is most people who actually
investigate IBC decide to do it because it makes so much sense. And that’s not just me
drinking the Kool-Aid and being biased. It makes a lot of sense because it helps people
achieve things in a more efficient and profitable way that they were already going to
do anyway. Most people it’s a win-win situation for them. However, this is one of
those situations where it’s not for everybody because not everyone’s willing to do this.
Just not everyone’s willing to start a real estate investing business, or go into business
for themselves in any sort of way because they don’t really want to build it up in that
way. So we can relate to it in many other forms is what I’m trying to say.
Holly: And then we have our third reason, Nate. And really our third reason is that the
timing is not right, that you’re just not at a place where the timing’s right to start. Or your finances are not in order or we just like to say out of whack. If you are spending more than what you are making, I’m just going to say the timing is not right for you to
start infinite banking. It’s not going to rescue you from overspending, Nate.
Nate: Yeah, exactly. So this one is probably the most fair of all in a lot of ways if we don’t get into very specific scenarios which you said we wouldn’t. But as far as someone who’s investigated for a while, they may actually really like it and they actually may want it but they can’t move forward right now for a few reasons. One of them as you said, the timing isn’t right. Maybe they have some really big life-changing things about to occur, they’re going to take a lot of money and they just really can’t focus on building this out. And it’s going to complicate things for them to get started right now. And so they just decide maybe later, but right now I really just can’t do it. Or as Holly said, your finances are just so far out of whack that you can barely make ends
meet. Well, yeah, you would actually want to maybe go to Dave Ramsey first and then come to us.
Nate: You’d want to get your financial life in order before practicing infinite banking, because infinite banking is not going to save you from being a poor steward of money or a poor manager of money. I’m not meaning to be judgemental, I’m just saying they don’t teach people in school to manage money well. We’re all thrown out into the world and we’re hoping something sticks and you may have made some decisions that you regret. But either way, number three sometimes it’s simply a timing thing, that right this second it just doesn’t make sense. Maybe in a few years things will turn around and you may change your mind and decide to get started. Last one, Holly, did you have anything else number three?
Holly: No, I’m going to stay right what you are. The last one’s pretty simple and there’s not much to explain, so go ahead, Nate.
Nate: The last and the fourth one, and this is actually more common than we would wish, is that your advisor that you’re working with is just a schmuck. The guy or the gal just sucks. They’re over salesy. They don’t give you the right information, you’re not comfortable with them. They’re trying to teach you this concept and they’re persuasive, and they’re annoying, and they’re belligerent. Or you get the vibes they don’t really understand what they’re doing. The policies that they’re offering to you doesn’t seem right based on your other research. And so you’re like, this does not make sense to me and you walk away. That’s very common. Now, obviously with Living Wealth we hope we never are in that position to somebody else. Of course, we strive to never be the schmuck, but in the whole world of infinite banking you are essentially entering into a trust based relationship with someone who’s supposed to be holding your hand and helping you implement this business.
Nate: And obviously that can be a huge turnoff if the person you got plugged in with this is not the right fit at all. They can just totally sour people. Your experience with one advisor can totally turn people off for the entire concept. And it’s totally fair
because that’s the way life works. If you get plugged in with the wrong person in many different things, you could just be totally turned off and never come back.
Holly: And really what it designate is, it’s kind of like I’m going to go back to that cake
analogy, but it’s like something was off in the cake mixture and it just leaves a bad
taste in your mouth. So you never want to pursue it because of that experience. So
just be aware a lot of financial advisors don’t necessarily understand the infinite
banking concept, so it’s you trying to convince them that it’s something good when
they don’t understand it. And so you’re pushing against that grain, kind of following
the herd versus stepping outside of the herd mentality. And thinking for yourself and
doing something for yourself, because a financial advisor does to an extent want the
best for you but they’re going to make money one way or the other.
Nate: Yeah, and the life insurance industry gets a bad rep for a reason because there’s
a lot of schmucks out there. So this would be one of the reasons too that people
would just avoid even investigating it is simply because of the stigma that’s been fairly
placed on life insurance is being this pushy, used car salesman’s style experience for a
lot of people and they don’t love it. And nothing we can do about that, but the baby sometimes gets thrown out with the bath water. They’re trying to get someone to get going with infinite banking which I believe is the baby, but that person’s the bath
water. It’s dirty and mucky and I wish he or she wasn’t in the business to begin with,
but there’s bad apples in every industry. So just be on the lookout for it. We strongly
recommend on this light, you really only want to work with someone who is a
specialist in the infinite banking world.
Nate: It is a specialty strategy. It is not a general strategy. If you actually want them to provide value to you, you would hope that they are practicing it themselves and that they are a pioneer in it. And there’s plenty of them, not just us. There’s plenty of people out there who would be great help to you to get started. But you want to avoid working with your uncle’s cousin who’s part of the family and he’s got a life insurance
license, because you’re going to be teaching that person about IBC more than they’re going to be teaching you. Which is just not a fair value trade on your behalf, so keep that in mind. Well, I think we did it. I guess we’re here at the end. We did four, we could have kept going. There’s certainly more distinct situations that would push people to one side or the other of being able to practice it.
Nate: But the four reasons why a lot of people decide not to move forward, number
one they get caught up in the details. They get stuck in the ingredient list and they
don’t know why that ingredient could possibly be in a good tasting cake, so they run
away. It’s not exactly the most fair thing to do but obviously it’s probably the most
common one. You get stuck in something like a policy loan, or the growth of the policy
compared to the policy loan rate, or the different types of premiums where they’re
going, the different types of insurance companies just get bogged down. It’s like, nah,
it’s not worth it. The second one is just not wanting to get into the banking business
and have to go through the capitalization phase where not every dollar premium goes
to cash value. And that can be a concern to some people and it can be relatively fair.
Nate: The third one is the timing isn’t right. Your finances aren’t in order. Something’s
happening in your own personal life that would just say, hey, let’s not move forward
right now at the very least. And lastly, your advisor can just be a total schmuck, just a loser who you should run from the hills from. And that gives you a bad taste and obviously that’s a big reason why people won’t do it. Those are the four reasons. Holly,
any last words?
Holly: Just remember IBC is the cake.
Nate: Amen. It’s not a list of ingredients, it’s the cake. That’s absolutely right. Well
guys, this has been Dollars and Nonsense, if you follow the herd you will get
slaughtered.
Holly: For free transcripts and resources, please visit livingwealth.com/e154.
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