In this episode, we will discuss when it makes sense to stop paying premiums towards your whole life policy when you’re using it as a banking tool, We’ll also share why you’ll probably have to change your perspective on the word “premium” if you want to be successful at Priviate Family Financing in the first place.
We are asked all the time: “When can I stop paying premiums?” Where does that question even come from typically?
We’re raised with a scarcity mindset of holding on to as much of our money as we can. This then translates into a belief that if we are paying into premiums, then it is money leaving. We have this “paid off” mentality, and we lump our banking policies in there too, unfortunately.
The trouble comes in when people view their whole life insurance policy as just another insurance. If I make a $500 payment towards car insurance, home insurance, and different things, we all know I have less money the next day. I’m poorer now.
Premiums are Different
But Priviate Family Financing is actually a different type of premium payment. The money doesn’t vanish into someone else’s pocket.
With Priviate Family Financing you’re the banker. The reality is this: It’s not money leaving. Premiums paid into a whole life insurance policy under Priviate Family Financing is money being deposited into your private bank, and banks never want you to stop making deposits.
We need to change the way we see these premiums from adding into the payment side of the budget to the asset side of the budget. Then you get to see what happens when you pay the premiums.
Podcast transcript for episode 48: Stop Paying Premiums
Nate: In this episode, we will discuss when it makes sense to stop paying premiums towards your whole life policy when you’re using it as a banking tool, and why you’ll probably have to change your perspective on the word “premium” if you want to be successful at IBC in the first place. 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: We get this question asked of us quite a bit. For those of you who are new to the podcast, you might want to look back at some of the previous episodes to learn about what this whole infinite banking concept is and how we teach people to use whole life insurance differently than most people could ever have imagined it could be used for. As a banking tool, financing new cars, investments, weddings, you name it. Using policy money to do that. One of the questions we get asked all the time: “When can I stop paying premium?” Where does that question even come from typically?
Holly: When we are raised and we grow up, when do we stop paying the car payment? When do we stop paying our mortgage? When do we stop paying health insurance? When can I go on Medicaid? We’re ingrained in our society with this ability to want to have to stop giving money out, and the belief, really, that we’re taught is that if we are giving and we’re viewing this premium as a payment, then it’s money that’s leaving or hindering our lifestyle, or the ability to really make money with it. I often ask individuals when they ask me, “When can I stop paying premiums?”, I say, “Well if we’re really using it for banking, would a bank ever want you to stop making deposits into your bank account?” The answer is no. They couldn’t make money if people stopped making deposits, and the same is very true of their policy. If you stop making premium payments, then you basically are stopping depositing into your bank and so you have no money available.
Nate: Yeah, the only way to deposit money into your bank is really a premium. We can talk about repaying policy loans and things [as kind of 00:02:20], but the best way is paying the premium. You’re absolutely right. As an owner of a bank, do you ever want people to stop making deposits? That would be crazy. We don’t see ourselves typically as the owner of the bank now. We still see it “everyone is out to get us.” Like “the insurance company is out to get us with this premium, they want to bleed us dry with a premium” instead of being like “no, I’m the owner of this company and if I pay this premium, look at how much money I’m going to get back.” We’ll get into that, but I totally agree with you, Holly, whenever you said that. It’s like, we live our whole lives trying to get our cars paid off. We can’t wait until the day we get our mortgage paid off, our credit cards paid off. We have this “paid off” mentality, and we kind of lump our banking policies in there where it’s like, “When am I going to get my policy paid off?”
We still don’t see it as a bank, I feel like. In other words, we [want that to 00:03:07] be happy, big numbers in the bank account. Whenever I write a check to my policy, my bank account has less. The reason that it feels worse that way is because we need to make the hurdle, the jump to actually see the policy as the bank account. If you can’t get there, then it’s going to get hard to get to the point where the premiums don’t seem like a burden, I guess I would say.
Holly: You really have to start thinking like you are a bank owner. This is your bank. Would you ever want anybody that is a client of yours or a customer ever to start depositing? The hard part is, you are the owner and the customer. We have the mentality like Nate said, that life insurance companies are out to get us, but when you are a shareholder in that, the life insurance company isn’t out to get you because the benefit of the premiums being paid benefits you and the other shareholders. They kind of are managing the money, if you want to say, and the policies, but really in reality you reap the benefit of continuing to pay those premiums. I think the mentality just that we don’t think of ourselves as a bank, and we’re going to be making less when we get older, so, “Oh no, I’m making less so I can’t afford as much” instead of having the mentality of, “Well what happens actually when I put that premium into my policy?”
Nate: What we don’t want to get across here is that there’s a time when the policy can pay for itself and you can stop paying premiums, but the reason I don’t like to stress that ever with someone is because, why would I show you how you could make less money? Why is it even an option? People come to me and see me as an advisor, not just as an order taker, and you really want my advice on how to be the best banker and how to make the most money, I can’t tell you it’s a wise decision to stop paying premiums after your five, six, or seven because you’ll be missing out on the growth that I can show you how to do. It’s very easy. As Holly said, many times we lump it into this “payment” mentality. You have car insurance premiums, you have term insurance premiums, disability. We have all these different premiums, and Holly, whenever we pay those premiums, do we have more money or less money after we’ve made the payment?
Holly: We have less money, and it doesn’t do anything for us.
Nate: Right, unless we make a claim, and we don’t ever want to make a claim, but-
Holly: Because then we pay more money-
Nate: And deductibles and stuff, but you’re right: if I make a $500 payment towards car insurance, home insurance, and different things, we all know I have less money the next day. I’m poorer now. I’ve got less money after I’ve made this premium payment. It’s hard to get your brain to think outside of that because that’s what we’ve been so used to. We lump the policy premium with all the other payments in our budget. We look out at like age 70 and we look at when we’re retiring, and Nate’s saying, “Pay your premiums because it’ll help you” and you’re thinking, “Well if my premium’s $10,000, at age 70, I don’t work anymore. I need money. You’re essentially me to live off $10K less than I would have otherwise. How can I afford to keep paying this?” The issue is that it’s lumped in to the expenses, not into the assets.
Holly: And the mentality that you’re worse off.
Holly: You’re automatically believing what you’re been told. “I’m worse off-“
Nate: “After paying this.”
Holly: “Or giving this money away” because you haven’t differentiated that it actually is a different type of premium payment. What Nate and I are trying to tell you is that we’re trying to make your money as maximum efficient as possible. We want that money to grow exponentially for you. If you knew you could put $10,000 in and get more than $10,000 out, not only did you not live on $10,000 less, you actually now have more in your bank account to maintain your lifestyle.
Nate: Right, so if you pay $10K and now the policy cash value increases by 20, and we take the 20 out of the policy and put it right back in that same bank account, you now have $20,000 instead of $10,000. Did you make a $10,000 payment? Yeah, but did they send you $20K because of that? Yes. How many times do you want to do that? If the answer isn’t “as many times as possible,” then you don’t need our help. That’s what we’re trying to help you do, but that’s absolutely right. In other words, you need to see what happens when the money goes in. Does the insurance company confiscate it or is something else happening? Of course with IBC, with infinite banking and doing policies this way, we make a premium payment, we get cash in return. The longer the policy’s enforced, the more that will be due to compounding and different things will have a lot more.
We do need to change the way we see premiums from adding into the payment side of the budget to the asset side of the budget and see what happens when we actually pay the premiums. It can really free people up, I think. If you think of it as a liability and as “a payment that I just want to get paid off at some point,” you’re going to be very limited on how far you can take IBC and how much money you can make.
Holly: Most of us call it a “premium payment,” and because we call it a “premium payment” it automatically goes into our mind as a payment. It’s a mental block. It’s a premium payment. I call mine “premium deposits.” Why? Because I want to view it as a deposit. I don’t look at it as, “Oh, a bill came in the mail.”
Nate: How many other people are excited to pay premiums? I must be mentally out of control or something to look forward to that premium bill. I can tell you guys, I don’t really look forward to my car insurance premium-
Holly: Oh, I hate it.
Nate: Bill or my home insurance premium. I’m not nearly as cool with those, but whenever I get a premium notice for one of my policies, I’m looking forward to moving money into my bank as much as I can at any point. I look forward to the premium. I tell you this: when I’m 75, I have a feeling I’m going to look forward to paying premiums then, too. I’ve seen what my policies are going to do and how much they’re growing by age 75, and I’m just trying to get more of them. The more premiums I have, the more money I’m going to get back tax-free, guaranteed from the insurance company during that time frame. I want as much back. If you knew you could get all the money back you put in plus some with no risk, how much [inaudible 00:09:25] do you really want to be doing?
Holly: Are you tired of being stressed about money? The Dollars and Nonsense podcast is sponsored by Living Wealth. Visit livingwealth.com/freedom to get your free “Smart Money” eBook and sign up for our personal wealth presentation today. Living Wealth is a family-owned and operated business which works with individuals, families, and even businesses to slay the money stress dragon. Our clients receive individual coaching regarding wealth creation and how to create a retirement income. You’ll be enabled to have cash today and in the future. Since 1972, Living Wealth has been committed to educating smart people on basic money principles to assist them in becoming debt-free and finally find financial freedom. Let us help set you free. Remember to visit livingwealth.com/freedom to receive your free eBook and even sign up for an individual wealth presentation today.
I think, too, the fact is that you’re actually adding money to your lifestyle to live, Nate, but also it’s money that’s not taxable because it is a loan. When we get older, it doesn’t affect social security, it doesn’t affect our income tax because it’s actually a loan from the insurance company. It’s not income that you made that you’re having to pay that could affect other areas of your life. Now I don’t think social security’s going to be around when I get older, but if you’re one of those individuals and that is something you think about, the fact that a policy actually helps you and doesn’t hurt you in regards to the money, I tell people all the time, “If you have zero dollars in your pocket and you were able to come up with $10,000 to pay the premium at 65, 70, and then they gave you $20,000 back, did you just make money?”
Nate: Absolutely, by moving it.
Holly: By moving it. All you did is move it, I say, from one pocket to the next and then back. Really, all you did is change the way the money was going; instead of away from you, it comes back to you and you just made money, of which you don’t have to pay taxes on because it’s a loan. All in all, you got ahead even if you had zero income-
Holly: Because you can find that money. Trust me, if you know you’re going to get it all back and more money, you can find it.
Nate: Even if you got to pull it from a different policy that you own, because hopefully at age 70 you’ve got a couple of them. Move money from one to the next and make money. That’s always fun, too. If you’re listening to this and you’re and IBC-er, if you have questions or concerns and you don’t look forward to the day that the premium notice comes due, then you probably need to change something in your mentality or need a little bit of education, or have someone run through the numbers because I look at these things and look forward to it because I’m crazy. I drink way too much Kool-Aid, but I look forward to the premium. We feel like you guys can get there too. To me, it’s absolutely not a liability in my mind because I’ve just been around it for so long. Our goal is to help you guys see that whenever you buy a policy, you’re not buying into a liability; you’re buying an asset, and all of the money that’s going in there is working for you.
The flip side, and we wanted to mention this as well on policy loans, so we’ve talked about the premiums but many of us also mis-characterize policy loans where we lump it into other debts that we have. As Holly and I were talking about, policy loans are a totally different animal in how they really work. How should we be thinking about the policy loans that we take?
Holly: Well I like to tell individuals that often they view, just like Nate said, the loan as a debt, and a policy loan is a debt. They categorize it just as if it’s a loan to a bank or a car dealership, or whoever it is that they owe money to. They view it as a liability. “This is a loan that’s a liability, I’ve got to pay it off,” and yet I’ve just asked them, “Does a bank view a loan as a liability or an asset?” To a bank, a loan is an asset on their books. That’s a good thing. A bank never wants to stop making loans; they want you to keep making deposits and they want to keep making loans. On the same hand, we should be viewing our loans from our life insurance policies as an asset, not a liability, but we still have that same mentality. It’s “oh, just going right into the same column as all the other debt or the liabilities,” and we never ever tend to view it as an asset. Like Nate, I guess it’s the Kool-Aid; I’ve drank too much of it. I don’t mind taking a policy loan.
I want to know when I can take my policy loan and be able to use it for something. The reason for that is just because I want to keep my money in motion, but I know it’s an asset. As my loans come out, I’m using my good dollars today. I’m keeping them in motion. I just feel like we have to change that mentality.
Nate: It’s also different than any other loan you have, because the same thing could be said about policy loans as we just talked about policy premiums. We’ve talked about car insurance, home insurance, all these different premiums that when you pay them, you don’t have any more money. With a banking policy, you pay the premium and you instantly have more money to utilize. We’ve had car loans before, we’ve had mortgages before, we’ve had credit card debt, student loans. All of us know what it’s like to pay on those, and we don’t like paying on those because as soon as we pay on those, we’re worse off than we were before. We make the car payment, $500, money’s gone. We don’t get it back. It’s in the bank’s hands. Same thing for the student debt, credit card, mortgage. Money’s gone. For those of you who are doing IBC, I dare you guys to do this: have a loan out, write a check, sent it to the insurance company as a loan repayment. Before you send the check, ask them how much cash value you have available, and then after the check clears, call them back and ask them how much is available.
You’ll see that all the money that you just sent them is available to you to borrow right back out again. When you’re paying your policy back and you write the check, the money’s not gone. That’s why it’s so beautiful; whenever you borrow money to buy a car from your policy and you pay you back $500 a month, it is completely different than when you borrow $25K from a bank and pay them back $500 a month. When you’re paying you back, guess what? At the end of 60 months or however long the time frame you pay you back, you’ve got all the money back plus the interest in your account as opposed to when you used to borrow money from the bank and make payments to them. They had all the money. You had nothing but a car. It’s totally different. Policy loans are assets to you, and you don’t have to stress out about them 99% of the time. Now I’m hoping you’re wise with money; there can be times when you’re just blowing money and you want to be productive, but for the most part, it’s a totally different animal and you don’t have to stress like you probably do about your policy loans.
Holly: Even with loans, like when a client’s taking out a loan, “What’s my interest rate? How long do I have to pay it back?” When you tell them, “Well you can control how long you’re going to pay the loan back.” The interest rate yes, we can tell you the interest rate very easily what the insurance company is charging depending on the insurance company you’re using, but if you want to take two years or you want to take sixty months, whatever it is, it truly is up to you. I had a client: “I missed a loan repayment.” Well that’s okay. We can add it on at the end-
Nate: You put a pink slip on your car.
Holly: I’m like, “Are you going to go repossess your car because you missed the-“
Nate: Did you call the tow truck to get it taken away? No.
Holly: They’re like, “No. We’ve been having it automatically drafted out, but we changed bank accounts so we had stopped it and it just hadn’t been added back in.” The beauty of it was, when she did just what Nate said, she called and made a payment over the phone, and then the next week she said, “Hey, how much do we have to borrow out?” They had all the money that they just paid for a loan repayment to be able to use. She was like, “Oh, this really is not costing us anything,” and her mindset, because the money went in and then it was available to borrow it out. Now they didn’t borrow it out because they didn’t need it for anything, but she was just blown away. “I didn’t get a pink slip, I didn’t get a late notice from the bank. Nobody came and locked my car or towed it away. It’s easy to do.” If it’s a tight month, when the money’s owed to you, you don’t actually have to make that payment.
Nate: The only reason you’re paying is to help you. No one else is knocking on your door. That’s probably my favorite about IBC. When you boil it down to the simplest form, I do not like to be out of control and I don’t like the way the world treats money. I don’t like how so many people are in debt to other people. The borrowers are a slave to the lender; I don’t want to be anyone else’s slave. I don’t like how mutual funds and 401ks and IRAs are governed by other people or I don’t have use of the money. It’s risky, there’s things that go [inaudible 00:18:26]. When I boiled it down, for me it was about “I want to be in control. I want to determine how much money I can pull out, and I want to be able to pull it all out if I want. How can I put it back in? I don’t want to be risking it. I don’t want to have some other money manager handling the money that could lose it all for me.” I just wanted to be in control, and it’s a simple life. It really is, I find it.
It’s the simplest way to live if you understand the tool. If you don’t know what you’ve got, then it can be confusing, but you’re probably overthinking it, to be honest.
Holly: [Well 00:18:58] it’s so simple. I heard a client say, “It really is third-grade math” the other day to me. Because it is so simple that you kind of sometimes do overthink it and are looking for “where’s the-“
Holly: “Catch?” Where’s the loophole? I’m like Nate, too; I really want to know where my money is, but I want to have complete control and access to it. I don’t want somebody telling me what I can and can’t do with it. I even had somebody ask me, “What do you invest in?” I actually said, “I don’t invest. I just like my policies-“
Nate: “I like my policies.”
Holly: “And my lifestyle, so I kind of just use them for everything I’m doing.” I guess I’m investing in me and my family, if I really want to be honest. [I’ll loan to 00:19:41] us and make the loan repayments, and I’m really okay with that. I’m not a risk-taker, real risky. I don’t really want to invest in something and have a fear of “I’m losing the money,” but actually with my policy, it would give me the ability to do that because I really don’t feel like I’d lose anything because it’s still growing. The beauty of it is that total control. You own it. Even when we deposit money in our banks, we don’t own that bank. They can change the terms and conditions whenever they want.
Nate: For you to be successful, you’ve got to see premiums correctly. You can’t be of the mentality that “I want to have my policy paid off. I want to have it paid up. I don’t want to deposit any more money.” It’s impossible to live without money, without cash. The question is, where is it going to be? If it’s in your bank, you want to have as much as you can, but if you don’t see premiums right, if you don’t see policy loans and loan repayments right, then this whole thing is just going to confuse you, irritate you, and trouble you. You’ve got to see the picture as a whole. We can help you do that, but if you’ve been one of those who have seen your premiums as payments and you’ve been seeing loans as a liability and not as an asset, the system isn’t broken. It’s probably just the perspective that you have. It’s missing some elements, and you may not see the whole picture very well. Whoever you’re working with, you probably want to ask them, “Can I see what my policy looks like after I pay premiums? What my policy looks like after a loan?”
It’s pretty easy to figure that out, but if you see it rightly, you see premiums as more of a deposit or as an asset, you see loan repayments as more of a deposit than a liability, this whole thing can make a lot of sense. It could put you truly back into control financially, a lot more so than anything I know of honestly. This gives you the most control of your finances than anything else that I can think of.
Holly: I’m in agreement with Nate; I don’t know anything else that works this way. I hope you really heard our hearts today, that we really want the best for you. We really want to help you, whether it be changing your perspective on that premium and not lumping it into all the other premiums we pay, but actually differentiating it out, and to really understand that a loan is not a liability to you; it’s actually an asset to you. Just changing those two concepts, it brings such freedom, like a weight off your shoulder when you’re able to actually do that. It’s easy to get stuck back into it, but it’s really simple to just move it back over and say, “Okay, this is a different type of premium,” or don’t call it a “premium payment.” Call it a “premium deposit,” and all your other ones are premium payments-
Holly: Because you don’t get anything from them.
Nate: Right, exactly.
Holly: You’re out the money.
Nate: Well that’s probably all the time we have for today. This has been Dollars and Nonsense. If you follow the herd, you will get slaughtered.
Holly: For free resources and transcripts, please visit livingwealth.com/e48.
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Podcast transcript for episode 38: Break Free From Federal Reserve
Nate: In this episode, we have special guest Ray Poteet here to discuss the importance of grandparents in the lives of their grandchildren, how they can help them grow with understanding about money and how Ray has helped his grandchildren by what he’s done with them and for them, especially financially. 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, everyone. Welcome back. Today we’ve got Ray Poteet here with us. As many of you know from last time, he’s the founder of Living Wealth and Holly and I’s mentor at IBC. It’s just a privilege to have him here. We also have Holly. Typically, I don’t know if you guys know this, but Holly and I are shooting from different locations, but today we have the whole family back together for now, so we thought we’d get a good family podcast shoot in.
That’s what we’ve got going on today, and the topic that’s been on Ray’s heart for a while is him being a grandparent and now a great-grandparent, teaching other grandparents and those who have grand parenting in their future what he’s done and what he’s learned that you can do as a grandparent. Ray, what have been some things that you want to share with the audience about your journey of learning about what it means to be a grandparent, and especially how has IBC potentially even helped you communicate with the grandkids and do things with them?
Ray: Well, first of all, the first thing I did as a grandparent was get a mentor to be a grandparent. I probably should have done it being a dad, but I didn’t. I noticed family. That’s what my mentor really emphasized to me, that you have to see it as a family rather than an individual. It put it into perspective because I hadn’t seen it.
Now that we have a business that have grandchildren working in it, I’m glad that he gave me that emphasis to see it as a family because we truly have a family business that emphasizes the ministry of IBC to not only individuals but especially for me being a grandparent and a great-grandparent, to those individuals, how they can use this tool to really create a legacy and a benefit for their grandchildren and great-grandchildren into the future that nothing else will do.
Nate: Yeah, exactly. What were you doing before IBC with the grandkids, and what changed when you started doing IBC and starting thinking more family? Before IBC, you really weren’t really super focused on family, is my thought at least. What changed when you did Infinite Banking as opposed to just doing everything else when dealing with kids and grandkids and the legacy mindset?
Ray: Well, the major thing that changed is where your wealth is parked. Wealth has to be someplace. It has to reside someplace. Before IBC, the wealth for myself and my children and grandchildren resided in stocks, bonds, mutual funds, things that I had been programmed were the place to put wealth.
Ray: Since IBC, I put no wealth there, and I put it all into the policies that we’ve created for our children, grandchildren, and great-grandchildren because that is the true place that it can grow and be used effectively, under the teaching that we now give the kids that we didn’t before because I didn’t know how.
Nate: Yeah. Money wasn’t a thing that was talked about a lot before IBC, but then that’s changed. I’ve been a part of it.
Nate: I think I’ve been seeing the evolution of it. That was a mentor type of deal that taught you, “Hey, maybe we should talk about money more often.”
Ray: Yes. It sure was. Not only did we not talk about it, we stressed about it. I made sure that those individuals around me knew how stressful it was that they were making me over this thing called money because I didn’t understand it, and therefore I felt betrayed by my industry when I realized it was something that was so important that I had not even taken the time or energy to focus on it for my children, but I have had the time to share with them and talk to them about my grandchildren, which they are, of course, the parents of.
That really has been I can’t say anything but miraculous. I’ve enjoyed it so much. You’ve been able to be a part of it. The things that we have been able to do as a family unit, not just me and my children, but me, my children, my grandchildren, and now the great-grandchildren are being a part of that, especially in our family outings and at times what we can do and how we can do things, whether it is in an investment together or whether it is in a giving together or whether it’s just individualized for one of those children, grandchildren, or great-grandchild’s needs or purposes.
I don’t say a lot about it, but it has actually been one of the greatest blessings I can see. I don’t hesitate to pay the premiums because I know what they’re doing, how they’ve been used and a way of putting braces on grandkids, as well as buying cars, as well as taking trips, as well as paying for education and knowing the reality of it, that that’s staying in our family unit to be reused.
Holly: When would you say is it the most important time for a grandparent to start a policy on a grandkid?
Ray: While it’s in the womb if you could, but you can’t. We have started all the policies on our grandchildren since we’ve known about banking the 14th or 15th day after they were born. You came to the US, I think, on about the 12th day.
Holly: She had to be 14 days old to travel, so yeah.
Ray: Yeah, and so the day after you got here, we took an application.
Ray: That’s been pretty much the guideline. Nate, you’ve had two children, and those are my great-grandsons. I know I’m third in line on those, whereas before I was first or second, and that we have gotten policies for them as well because I see the same thing being passed on that the legacy from the parent to the grandparent to the great-grandparent, that they’re learning in a process that we all believe the same thing.
Like the Lord Jesus Christ, we believe he’s the most important thing to guide our lives. This is the most important thing to guide your life financially. We are in a world of money as Rabbi Daniel Lapin teaches us, and God put it as an emphasis next to love as the second most important thing he spoke about in the word of God. Literally, we have not known about it or how to use it properly because nobody sat down and told us.
Ray: Okay, so that fell on me, I guess, as the patriarch to try to teach my daughters and them to try to teach their husbands and you as a grandson-in-law. We do believe in it. We do use it. What the neatest part is, is to allow them to use it, the earlier, the better, to get a handle on it and sort of things. I mean I was blessed this year to watch and hear about a granddaughter that borrowed money to get a surfboard. Okay. I was blessed when I saw you buy a car and buy a house using it.
The things that we can pass on, what is really important and how to use it, the questions they ask and the misconceptions that can be cured right now rather than those times when I learned about money by trial and error and in the world. The industry I was in, even though I was working with this tool called money, it didn’t teach me what it was or how to use it properly, as I think we’re doing with our children today, our grandchildren and our great-grandchildren.
I don’t say my children a lot because if they really mess up now at this point in time, the hounds of Heaven will be after them because of how much we talk about it, discuss it, not because we’re besieged by it, but because we see the importance of it in lives and in their lives, that we’re not trying to accumulate money, but we are trying to be wise and good stewards of this gift that God has given us.
Nate: Yeah. I think what we’ll do real quick is take a quick break for a word from our sponsor, Living Wealth, then we’ll come back and maybe ask a little bit more detailed questions of Ray and what’s he actually done for the grandkids and his advice for other grandparents out there or even parents who are dealing with their children. So a quick break with the sponsor, Living Wealth, and we’ll get right back at it.
Holly: Are you tired of being stressed about money? The Dollars and Nonsense Podcast is sponsored by Living Wealth. Visit livingwealth.com/freedom to get your free Smart Money e-book and sign up for a personal wealth presentation today. Living Wealth is a family-owned and operated business, which works with individuals, families, and even businesses to slay the money stress dragon. Our clients receive individual coaching regarding wealth creation and how to create a retirement income. You’ll be enabled to have cash today and in the future.
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Welcome back to the podcast. We have special guest Ray Poteet here today. Before we left, we were talking about the importance of grandparents and passing on a legacy even to grandchildren. What are some examples of what you’ve done personally with the grandkids or even your children in regards to IBC and teaching the importance of it and making sure it’s a point in passing on that knowledge and family legacy that other grandparents or parents could learn from?
Ray: I’d say the first thing I did, I bought policies. Why? Because I believe in them. Me and my bride had from 49 years of marriage our three insurance policies my dad gave me when I got married, and they’re two-dime-a-weeks and a nickel-a-week policy. That was a quarter a week. I pay them annually. Now they’re nine bucks, but it was a lot of money to my parents.
The gifts and the way we design these programs can guarantee that our grandchildren and great-grandchildren, when I say ours, my bride’s and mine, will use a bank just for a checking account, hopefully never to borrow from as I have or to need the bank except as a tool to use it for their banking system.
Ray: We were able to design some things. What I say, it can be one child, $6,000 a year, $500 a month. It could be two children at $3,000 a year. It could be three children at $2,000 a year. It could be six children at a thousand. The importance is not the amount but the doing and getting into practice so that as they grow and ask questions, you’re very comfortable in saying why you’re doing it.
I mean it was during this process that I realized the way I originally started with our normal 40/60 split was totally wrong for children and correct for adults, but it was through, you might say, totally screwing up with those originally and then having to buy additional policies created the right way to try to teach them what they really have. What happened … Nate, you’re not even 30, but I’m 70.
The reality was I can see a child age 30 when he gets to Heaven telling me how bad I screwed up on his policy, so I looked at it. I think today of looking at policies I bought in the ’70s and ’80s and how well they’re performing with what I didn’t know, and I can see that those same policies are the policies I created for my children and grandchildren and great-grandchildren, and they’re looking at them.
I just see that without any question, they put in a dollar, they can have three dollars, four dollars, so the amount that they can have with no taxation is very, very important because taxes are the true destroyer of wealth. We have a tool here we can use at very small dollar amounts that can protect them from that destruction.
Nate: Yeah. As you’ve already mentioned on this podcast before, the first thing you did on every grandkid pretty much that you own a policy on, great-grandkids you do, and recently you’ve been in a group dealing with how to become a grandparent. You’ve given them advice and things. How can you help people see who are listening to this the importance of Infinite Banking as a bedrock to growing up as a grandkid and getting taught something, I mean not only providing the policy but also the education?
I mean what kind of advice would you tell the grandparents out there that they could do if they got a policy and started using it as a teaching tool?
Ray: To makes sure that the grandchild or the child is involved as early as possible. I mean really, maybe they don’t understand. I’m saying four, five, six, seven years old is not too young, but as they get older, you get to grow with them. I mean we got to see many of our grandchildren grow up every day eating at our house as they grew up and right in the next lot next to us. That’s continuing today.
We see a lot of them, is to show them and go back and experience … grandparents understand time better than kids do, and they can picture something that they had a long time ago that they wish they knew about today 20 or 30 years ago. One of the common questions I think we all get asked that are teaching IBC, “Where were you 20 years ago?”
Ray: “Where were you before? Why didn’t I know about this?” Well, you can see that pretty much in my face and my attitude when I was in the industry that the product we use I was in and didn’t know about it.
Nate: You knew that you had the product. You just didn’t have the process of the Infinite Banking.
Ray: Well, I had a product, but I didn’t know how to use it so it was no good. It was like having a computer and not knowing how to use it. That was me. With our grandchildren, as they ask questions and we say things to them, I think grandparents have time. I see that that’s the importance that parents don’t have today that is time with their kids, really. Grandparents can watch the kids. They can be there. They can cover for things.
Why? Because they’ve went through time. They have more wealth. If they don’t have more wealth, that’s unusual. Why? The kids have grown. 90% of wealth is created after age 50 in the United States. Why? Kids are grown up. Okay. Now that’s not as true as it used to be as people are waiting longer to have children right now. I think that’s just a cycle that will go back the other way. But what do we teach them?
We teach them how to drive. We teach them how to run on a computer. You use a cell phone, various things, but we don’t teach them about money. Yet it took money to have a car. It took money to have a cell phone. It took money to go out to eat. It took money to take them to Disneyland. The item that we needed to do all those things we forget to talk to them about.
Ray: That to me is the greatest joy I have right now. I have the tool to be able to teach them. The longer I’m doing this, the more amazed I am at what it can do. I mean we still haven’t touched all the things it’s doing. Every week, every month, something comes up, and we go, “Oh, we could do that.”
Ray: I mean I’m just seeing … like right now I made a decision to make a major investment in Arizona last week. I’m going, “Oh, I wouldn’t have ever done that if I hadn’t learned about how money works, why it works, and how important cash flow is.” I was so used to storing money. “How much can I store? Oh, I don’t want to remove that. The world might come to an end,” or whatever it was. I was very fearful of not having enough.
Now I’m more concerned if money is sitting and not moving rather than an amount of money.
Nate: Yeah, that’s good.
Ray: Very few children have the privilege of learning that. I’ve talked to grandparents that have set up huge 529 plans, have done all kinds of things but haven’t bought an insurance policy on them. What we’ve seen is we have children right now due to autism, diabetic, heart conditions, medical problems, that cannot have a policy. I’m so blessed that all our living great-grandchildren have policies.
Ray: If they never get another policy, they’ll be protected and their family will be protected, maybe not as much as they want, but a lot better than most families just because of what we’ve done.
Nate: One of the things that we hear all the time, especially for adults, is that it’s hard to catch Infinite Banking or we’re having to pull all these weeds out of people because they got used to living life a certain way. Then IBC came in, and it was totally different, and now they’ve got to learn to ride the backwards bicycle and relearn everything about it. But one thing I have learned just with dealing, of course, with the family that I got married into was that most of the grandkids, Infinite Banking is already a way of life.
So they don’t have to relearn or unlearn things in order to do this. A lot of people say, “Why is everyone not doing this?” Probably the answer is because their mom and dad never told them that this type of thing existed. What are you guys doing? A lot of times the same things that your parents are doing, which is just the mainstream things. As you said, I think life is way more simple using Infinite Banking, and the grandkids can catch on to it rather quickly.
It’s not as difficult to understand if you didn’t have a preexisting notion about money, and you’re going to teach them motion of money instead of money sitting.
Nate: You’re going to teach them replenishing and recapturing instead of just spending money. These principles that we know as really important aren’t normally taught. We get to go on vacation as a family together, and everyone knows how it’s being paid for and that we’re paying ourselves back for it, and that just becomes a way of life, and it’s a simple way of life that guarantees financial success.
It just guarantees it for the grandkids and everything. We know that if you want to go invest money and take risks, you can, but at least you’re guaranteed in the banking side to have success.
Nate: If you want to go invest in Arizona at a more volatile place, you certainly can do that, but you have this system in place to get the money back regardless. I just think it’s been great seeing firsthand what it’s like when a family teaches the kids what this is all about and introduces money concepts. Almost you’re guaranteeing they’re going to be more successful with money than most people having to learn with the school of hard knocks.
Ray: I think the thing I see … and I see a really good picture of it right now with Katie, one of my granddaughters. I told her what we need in our business and what we could do for her if she would do that, and she said, “I think I just found a new vocation.” I hope that she continues in that because we would definitely use her. She is working at the office. She’s going to school.
But the greatest school we have for her is right in our office, as she experiences. I mean right before I came here, I got a call from a lady that is celebrating her 55th wedding anniversary with her husband, who has Parkinson’s. She’s a beautiful lady, loves the Lord and loves her kids. She said, “I want to get a policy on my 55-year-old daughter and my one-year-old great-grandson.”
It was like, “Okay, here’s a daughter. Here’s a great-grandson. Quite a spread in ages. They don’t get it, but I do, and they’ll appreciate this probably when I’m in Heaven.” I was going, “They will.” If they don’t, I said she gets to remind them when they get there. It’s a tool that we joke a lot about, but I can tell you that holidays or vacations were very stressful in our family prior to banking.
I would think about what a waste of money it was, or “Why are we spending this much money, or how can we do it cheaper?”, or things we don’t have to buy when we go. That’s changed, not to be wealthy. I’m not saying blowing money. I’m saying the things that we stressed about we don’t stress about, not because, oh, we’re just throwing money away. It’s because we know we can recapture it.
You do approach things differently when you recapture rather than pay off. Everything. I mean I look at everything as cash flow now, and I see how many people suffer because they don’t have cash flow. They have storage.
Ray: It’s really a demon. It’s not of God. Motion is the natural law of God, and if we can teach our children, our grandchildren, our great-grandchildren that theory, they will not have the stress that many people around the world have because of this thing we call money, not because we’re rich, but we’re very knowledgeable in how it works. The word God says knowledge is power. It also says in Hosea, “My people perish for lack of knowledge.”
Well, we don’t want to perish. We want to flourish. We want to pass on the power of God’s word and how it is used even in the world of money, in this world. We’re not of this world. We’re in it, and why we should be the leaders and not the followers.
Nate: Yeah. As we kind of close this one up, if you were to go talk about just one of the grandkids and what you’ve set them up … I see you’ve got this year. But what do you really think that you’ve built? You mentioned some things about grandkids never having to go see a bank except for a convenience and if they wanted to get some money to fund their banking system or something like that.
Nate: But what is it that you’ve seen long-term? What is it that you’ve created for them that you really think … if you could paint a picture for the listeners of what you’ve done, and maybe they could try to model after it.
Ray: I think the best thing as I see it, I’ve given them a legacy why to stay a family, why to stay close to one another. We were taught to be independent. I was very not close to my brother or sister. There was no reason to be because Mom and Dad said, “You’re independent.” If anything, I’ve seen how we can be close, love one another, be close to one another, and not be separated because one has more than another or is doing better than another.
We’re still a unit, and we’re a unit because it is more powerful to be a unit. When Jacob went to Egypt to see Joseph, who he thought was dead, who went with him? His other 11 sons. They stayed a family. We don’t even see that now. God promoted family in a tribe, in a system. If anything, I guess that’s the best thing I think that banking has done for us, is kept us close together.
Nate: Yeah, it’s very easy to keep money in the family. Actually, you’ll probably learn about that in our next episode, too. We’ll have Ray back on our next episode. We’re actually going to talk about his IBC history and what he’s done and some practical things that he’s done to incorporate the family. But yeah, as you’ve said, the family has grown much closer since IBC than it was beforehand, and we’ve got some advice to give, and you’ll see that on the next episode, what Ray has actually done with his policies and how he got started with this and the history of learning about it.
Holly: I think the one thing I would just add on is that it actually has allowed you to be champions of each other. It’s not about who has more or less. It’s more about, “We’re a family, and we’re going to stay together no matter what.” You champion one another to reach that next goal and to reach that next potential, and that I think is the greatest thing, is there is a true love of knowing it’s not about who has more or who has less.
It’s about knowing that the family is going to be provided for long after my dad is gone, long after I’m gone. It’s that hope. I guess I have more hope now that there is a legacy that goes far beyond what we could have ever imagined and that it’s not a competition anymore. It’s not a one up on somebody. It’s great. You run with that, and you do that. I think that that’s even transformed, is IBC allowed us to be champions of one another and encouraging one another versus competing against one another.
Nate: Yeah, that’s great. Well, everyone, thanks for being on the show today. This is Dollars and Nonsense. If you follow the herd, you will get slaughtered.
Holly: For free transcripts and episodes, please visit https://livingwealth.com/e34Read More
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In this episode, we will discuss how you can discern whether or not something is really too good to be true. We’ll share some tips and thoughts so that you don’t swindled by the next fly by night salesman.Read More
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