December is a strange time for money.

You’re wrapping up the year…
You’re reflecting on what worked and what didn’t…
And maybe — just maybe — you’re realizing things didn’t move forward as much as you hoped.

Here’s the good news:
It’s not too late to course-correct.

In fact, how you finish the year could be the biggest factor in how you start the next one.
And there’s one strategy that quietly helps people finish stronger — while creating unstoppable momentum for what’s ahead:

It’s called the Infinite Banking Concept.

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🌀 The End-of-Year Trap Most People Fall Into

For most people, December looks like this:

• Year-end spending spikes
• Retirement accounts are reviewed with crossed fingers
• Resolutions get scribbled down with good intentions
• Nothing meaningful changes

They wait until January to “get serious”…
Then life happens, and nothing sticks.

But momentum isn’t built on dates.
It’s built on decisions.

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💡 Infinite Banking: The Strategy That Doesn’t Hit Reset Every January

The Infinite Banking Concept, introduced by R. Nelson Nash, is about building a personal financial system that gives you control, flexibility, and growth — no matter what time of year it is.

It starts with a properly structured whole life insurance policy from a mutual company.

And when used the right way, it helps you:

• Grow cash value consistently (even in down markets)
• Access your capital at any time — without penalties
• Use your money without interrupting compound growth
• Avoid end-of-year tax pressures or market timing traps
• Start the new year from a place of control, not chaos

This isn’t a flashy year-end hack.
It’s a long-term system that works year after year — with more power the longer you use it.

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📈 Real-World Impact: Finishing Strong Looks Different with a System

Imagine this:

Instead of scrambling to spend down accounts or max out random tax shelters, you end the year by:

• Paying off high-interest debt using a policy loan
• Moving idle cash into a vehicle that grows tax-deferred
• Setting your 2025 financial plan using a tool you fully understand and control

You’re not reacting anymore — you’re strategically redirecting your money.

And that kind of clarity at the end of the year?
It sets you up to win from day one of the next.

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🔁 Momentum Is a Decision — Not a Date

You don’t need to wait for January 1st to start building momentum.
You can start right now — even with something small.

What matters is building a system that:

• Works in the background
• Grows while you use it
• Gives you peace of mind all year long

That’s the power of Infinite Banking.

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🧠 Final Thought: Don’t Just Reflect — Realign

It’s fine to look back.
But what matters most is what you do next.

Because momentum doesn’t come from wishing.
It comes from building a foundation that works every single day — not just when the calendar flips.

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👉 Ready to finish strong and start smarter?

🔘 Download the Free Guide to Infinite Banking
🔘 Schedule a Call and explore how to make this your most strategic year yet

Let’s make this the year you stopped hoping — and started building.

You may have seen the recent news about NASCAR champion Kyle Busch and his wife, Samantha, claiming they lost $8.5 million inside an Indexed Universal Life (IUL) policy strategy. When something like this hits headlines, it spreads fast and it can leave people wondering whether IULs are “good,” “bad,” or something to avoid altogether.

Before jumping to conclusions, it’s important to understand what actually happened because the problem wasn’t simply that the policy was an IUL. The core issue appears to be how the policy was designed, illustrated, and communicated.

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First, a Quick Clarification

I work with families and business owners to help them control the banking function in their own lives, which is the heart of the Infinite Banking Concept. True Infinite Banking requires:

• Stable, guaranteed growth
• Contractual access to capital
• Predictable costs and performance
• No dependence on market conditions

This is why the Nelson Nash Institute teaches that Infinite Banking is best implemented using dividend-paying whole life insurance from a mutual company because it provides control and certainty.

Now, yes, you can take policy loans and repay them inside an IUL. It can grow. It has cash value.
But because IULs are tied to market index performance and cost-of-insurance adjustments, you cannot fully control the banking function the same way you can with properly structured whole life.

This distinction becomes very important in the Busch situation.

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What Went Wrong Here

According to the lawsuit, the Busches were told:

• The policy would become “self-sustaining” after a short period
• It would later generate large tax-free income
• Risk was low
• Costs would not dramatically change

However, the complaint states that the policy:

• Was built with high multipliers and rising internal costs
• Used performance illustrations that were unlikely to hold up in reality
• Was not structured to maximize cash value
• Included a 1035 exchange that triggered significant charges

To quote an industry attorney reviewing the case:

“If the allegations are true, this policy is a case study in how not to design and sell an IUL.”

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So Are IULs Automatically Bad?

Not necessarily.

The better answer is: It depends on the purpose and the design.

But we should not lump all “life insurance” into one bucket.

There are major structural differences:

Whole Life	IUL / UL / VUL
Guaranteed, contractual growth	Performance tied to indexes or investments
Premium and cost structure is fixed and predictable	Costs can rise over time
Designed for stability and control	Designed around market movement and variability
Ideal for Infinite Banking	Not built to support banking control long term

They are not interchangeable tools.

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Why Properly Structured Whole Life Avoids These Problems

When whole life is designed for maximum cash value, minimal necessary death benefit, and long-term flexibility, you don’t run into the same deterioration risks that are common in IUL over time.

In my personal experience reviewing policies from new clients over the years:

Less than 10% of the IUL policies I’ve reviewed were on track to sustain themselves long term. The majority showed increasing internal charges that eventually caused the policy to collapse unless the owner injected more premiums later.

This is the opposite of control.

Which is why whole life is the foundation of Infinite Banking – not because it’s “better” emotionally, but because it is more stable structurally.

When you are trying to control the banking function, stability matters more than hypothetical upside.

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If You Have an IUL (or Were Recently Shown One)

This situation is your cue to review what you actually own:

• How have cap rates changed historically?
• What triggers cost increases?
• Was your policy designed for your benefit or for commissions?
• Does this structure support control?

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In November, we pause to give thanks.

We gather around the table.
We think about family.
We reflect on what really matters.

But here’s something few people are ever taught to be thankful for:

👉 Control over their financial life.

Because let’s be honest — most people don’t have it.

They’re stuck reacting to bills, markets, loans, or unexpected expenses.
They’re following financial advice that’s often outdated or generic.
And deep down, they’re wondering if they’re doing any of it right.

But when you implement the Infinite Banking Concept, something shifts.
You move from a place of uncertainty to a place of strategy.

And that kind of clarity?
It changes everything.

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📉 Why Most People Lack Financial Peace

Traditional financial planning is built on a few core ideas:

• Save what’s left after spending
• Hope the market performs
• Delay access to your money
• React when emergencies hit

That leaves people in a constant state of waiting, worrying, and hoping.

And it’s hard to feel gratitude when you’re not confident.

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🔁 How Infinite Banking Reframes Gratitude Through Control

Infinite Banking, introduced by R. Nelson Nash, flips the script.
Instead of depending on external systems, you build your own.

Here’s what that means:

✅ 1. You always know where your money is

With a properly structured whole life policy, your capital is stored safely, growing with guarantees — and available when you need it.

✅ 2. You have access without penalties

Need to fund a project, pay for an emergency, or take advantage of an opportunity? Borrow against your policy and keep your system intact.

✅ 3. You’re not riding the market rollercoaster

No sleepless nights over economic headlines. Your system keeps compounding — calmly and consistently.

✅ 4. You’re building wealth and mindset

Infinite Banking isn’t just a financial tool — it’s a mindset shift. It teaches stewardship, patience, and long-term thinking — the same values we celebrate every Thanksgiving.

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🧠 What Nelson Nash Said About Control

“When you control the banking function in your life, you win.”

Control brings peace.
Peace makes space for gratitude.
And gratitude shifts your entire financial experience.

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🕯️ Final Thought: The Best Way to Say Thanks? Steward Well

Gratitude isn’t just a feeling — it’s a responsibility.

When you take control of your financial life, you’re not only blessing yourself…
You’re creating a legacy of clarity and confidence for your family, too.

So this season, give thanks for what you have.
Then take the next step toward building something even better.

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👉 Ready to build financial control into your future?

🔘 Download the Free Guide to Infinite Banking
🔘 Schedule a Call to learn how this strategy can bring peace and purpose to your money

This November, be thankful — and be intentional.
Take control.

👻 It’s spooky season — but the scariest thing for most people isn’t ghosts or goblins.
It’s money.

Fear of inflation.
Fear of interest rates.
Fear of losing it all in the stock market.
Fear of not having enough.

But here’s the thing:
Fear thrives in uncertainty.
And the traditional financial system is full of it.

What if you could step out of that system — and into one built on clarity, control, and calm?

That’s what Infinite Banking offers.

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😱 Why So Many People Fear Their Finances

Most people were never taught how money actually works.

Instead, they were taught to:

• Put money into 401(k)s they can’t access for decades
• Keep savings in banks that earn less than inflation
• Rely on credit cards when things go wrong
• Ride the emotional rollercoaster of market investing

That’s a recipe for anxiety.
No wonder financial fear is so common.

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🔐 How Infinite Banking Shifts You Into Control

The Infinite Banking Concept, developed by R. Nelson Nash, is all about creating a personal banking system using a properly structured whole life insurance policy.

Here’s how it helps replace fear with confidence:

✅ 1. Your money grows every year — guaranteed

No more wondering if your portfolio is up or down this week.

✅ 2. You can access your capital anytime

No early withdrawal penalties, no lock-up periods.

✅ 3. Your money keeps growing — even when you use it

By borrowing against your cash value instead of withdrawing, your system keeps compounding in the background.

✅ 4. You’re not at the mercy of banks, interest rates, or stock swings

You become the banker — and set your own terms.

This isn’t a “get rich quick” trick.
It’s a process that creates predictable, long-term control over your financial future.

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💡 What Nelson Nash Said About Fear

“The Infinite Banking Concept is a peaceful, stress-free way of life.”

When you control the banking function in your own life, the panic disappears.
You don’t have to hope. You don’t have to guess. You just follow the system.

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🔄 Real-Life Example: Emergency Expense

Most people fear emergencies because they don’t have access to cash.

With Infinite Banking, you build a system where you do — and when something comes up, you can borrow against your policy, handle the need, and repay yourself on your schedule.

No begging for a loan.
No draining a 401(k).
No credit card roulette.

That’s not just financial security — it’s peace of mind.

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🧭 Final Thought: Fear Fades When You Have a System

You don’t have to live at the mercy of markets, media, or megabanks.

When you use Infinite Banking, you build a system that:

• Grows regardless of market swings
• Gives you access and flexibility
• Offers peace of mind instead of panic
• Works now and for generations to come

And that… is nothing to be afraid of.

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👉 Ready to stop fearing your financial future?

🔘 Download the Free Guide to Infinite Banking
🔘 Schedule a Call and take the next step toward clarity and control

This October, make the shift from fear to freedom.
Be your own banker — and never be spooked by money again.

🌅Legacy.
It’s not just about what you leave behind — it’s about what you build into the next generation.

When people hear “generational wealth,” they usually think of trust funds, real estate empires, or massive investment portfolios. But there’s another way to pass on wealth — and it’s more accessible than you think.

It starts with control.
It continues with strategy.
And it’s powered by the Infinite Banking Concept.

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🧬 Generational Wealth Isn’t Just About the Money

Let’s be real — you don’t pass on wealth just by handing over a bank account.
If your children or grandchildren don’t understand how money works — or how to control it — the money will disappear.

What really matters is what comes with the money:

• Financial habits
• Access to capital
• Knowledge and mindset
• A system they can grow into

That’s what makes Infinite Banking different.

It’s not just about accumulating money.
It’s about building a family financial system that becomes a tool — not just a gift.

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🌳 The Infinite Banking Advantage for Legacy Building

A properly structured whole life insurance policy from a mutual company does more than provide a death benefit.
It becomes a living financial engine you can use now — and your heirs can use later.

Here’s how it helps you build lasting wealth:

1. It grows steadily over time

Guaranteed cash value growth and potential dividends increase the policy’s strength the longer it’s in place — setting up the next generation with a strong foundation.

2. It gives your family access to capital

Your children or beneficiaries can take policy loans, use the death benefit, or continue the system themselves — helping them fund life events without relying on banks or lenders.

3. It teaches financial stewardship

When you model the process of borrowing, repaying, and using your own money efficiently — you’re teaching your kids how to be responsible, independent, and strategic.

4. It creates generational momentum

Imagine each generation building their own policy — and becoming the “bank” for their own children. That’s not just legacy. That’s a dynasty in motion.

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💡 What Nelson Nash Said About Generational Planning

“The Infinite Banking Concept is not about the life insurance. It’s about the process of banking — and how families can recapture the banking function within their own lives.”

This means your policy is more than protection.
It’s a blueprint.

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🚀 Final Thought: You’re Building a Legacy Whether You Realize It or Not

Every financial decision you make either strengthens or weakens your legacy.

The beauty of Infinite Banking is that it gives you the power to:

• Build wealth with intention
• Access your capital during life
• Pass on financial confidence — not just money

You don’t need millions to start.
You just need the mindset and the right structure.

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👉 Want to start building your family’s financial ecosystem?

🔘 Download the Free Guide to Infinite Banking
🔘 Schedule a Call and learn how to make Infinite Banking part of your legacy plan.

The best time to plant a tree was 20 years ago.
The second-best time is now.

We all know we should save money.
But where you store that money?
That decision can change everything.

At first glance, it might seem like a traditional savings account is “safe.” It’s easy. It’s familiar. But if you’re looking to grow your wealth, maintain access to your capital, and create long-term financial control, it may not be the smartest place to park your cash.

This is where the Infinite Banking Concept comes in — and why a properly structured whole life insurance policy can outperform a traditional savings account in ways most people never consider.

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🏦 What a Traditional Savings Account Really Offers

Let’s be honest: Savings accounts at big banks offer three things:

1. Security (FDIC insured)
2. Liquidity (easy access to funds)
3. Simplicity (almost everyone has one)

But that’s where the benefits end.

• Interest rates are abysmally low (usually under 1%)
• Your money is exposed to inflation
• The bank uses your money to make loans — and keeps the profit
• You get no growth beyond the bank’s generosity

Worst of all, you’re not in control of how your money is leveraged. The bank is.

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🔁 What Infinite Banking Offers Instead

When you use a properly structured whole life insurance policy from a mutual company (the foundation of Infinite Banking), you unlock a system that functions like a high-performance savings vehicle — but with far more advantages:

• Guaranteed growth every year
• Tax-free access to capital via policy loans
• Liquidity when you need it
• Dividends (not guaranteed, but historically consistent)
• No market volatility
• Death benefit protection
• Control over the repayment schedule of loans

Your cash value continues to grow even when you borrow against it — and the longer your system is in place, the more efficient and powerful it becomes.

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🔄 Real-Life Parallel: Emergency Fund vs. Opportunity Fund

Most people keep an “emergency fund” in a bank account.

They tap into it when something unexpected happens — then spend months trying to build it back up.

With Infinite Banking, that same habit becomes more powerful:

• You borrow against your policy’s cash value
• You handle the expense
• Then you pay your policy loan back over time
• Meanwhile, your cash value keeps growing

You’re already acting like a banker — Infinite Banking just makes you an honest one.

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💡 Bottom Line: It’s Not Just About Safety — It’s About Strategy

Both savings accounts and Infinite Banking offer safety and liquidity.

But only one offers:

• Growth while your money is in use
• Tax advantages
• Control over how funds are accessed and repaid
• The ability to recapture money that would otherwise leave your financial system

And only one allows you to be your own banker — instead of handing that privilege over to someone else.

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🔓 Final Thought: Where You Store Your Cash Determines Who Profits From It

You’re already setting money aside.
You already have expenses and opportunities that come up.

The question is:
Do you want your cash flow to enrich a bank?
Or do you want to build your own financial ecosystem?

That’s the power of Infinite Banking.

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👉 Ready to move your savings to a smarter system?

🔘 Download the Free Guide to Infinite Banking
🔘 Schedule a Call to walk through the numbers and get your questions answered

Let’s make your money work for you — not the bank.

As we celebrate Independence Day, it’s a good time to think about freedom—not just political freedom, but financial freedom.

According to Becoming Your Own Banker by R. Nelson Nash, one of the most powerful and overlooked opportunities in your financial life is hiding in plain sight.

It’s not about investing.
It’s not about earning more income.
It’s about how you finance the things you already buy—and who profits from those transactions.

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💳 The Truth: You’re Already Financing Everything You Buy

Here’s the reality: whether you pay cash or take out a loan, you’re financing everything you buy.

If you use cash, you’re giving up the ability to earn interest on that money.
If you borrow, you’re paying interest to someone else.

In both cases… you lose.

But what if there were a third option?

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🔄 The Shift: Recapturing Debt with Infinite Banking

Nelson Nash teaches that the most profitable thing you can finance is your own debt — because most people are already paying interest to someone else for the majority of their lives.

Think about it:

• Car loans
• Credit cards
• Student loans
• Business financing
• Equipment or renovation costs

These are all expenses that flow away from you and into someone else’s banking system.

When you implement the Infinite Banking Concept using a properly structured whole life insurance policy, you create your own personal financing system.

You can:

• Borrow against your policy’s cash value
• Finance purchases through your own system
• Repay yourself over time—while your cash value keeps growing

You don’t avoid interest…
You just change who earns it.

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💡 Real-World Example: Car Financing

Let’s say you typically finance a car every 5 years at 6% interest. Over your lifetime, that adds up to hundreds of thousands in payments to a bank.

Now imagine building your own policy early on.

When it’s time for your next vehicle, you borrow against your policy, make the purchase, and repay your system (on your terms). The cash value continues to grow, and the interest is redirected within your financial world—not someone else’s.

This is how wealth is quietly built over time—without chasing risky investments or hoping the market cooperates.

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🔓 Final Thought: The Door to Freedom Is Already Open

You’ve likely been taught to focus on investing.
But investing without control is gambling.

Infinite Banking puts you in the driver’s seat by addressing the biggest leak in most households: interest lost to outside institutions.

If you’re already financing major areas of your life, why not build a system where that money flows back to you?

That’s what Nelson Nash meant when he said:

“You finance everything you buy. You either pay interest to someone else, or you give up interest you could have earned.”

And now that you know, you get to choose.

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👉 Ready to reclaim your debt?

🔘 Download the Free Guide to Infinite Banking
🔘 Schedule a Call and let’s walk through how this applies to your life

This Independence Day, start your journey toward real financial freedom — by becoming your own banker.

🕶️We’re six months into the year.

Some people are on track.
Others are behind.
And some are realizing they never actually set clear financial goals in the first place.

Wherever you’re at — there’s still time.

This isn’t about catching up. It’s about leveling up.
And with the right strategy, the second half of the year can become the launchpad for lasting momentum.

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📉 What Most People Do Mid-Year

Let’s be real:
Most people either…

1. Ignore their finances and hope everything sorts itself out by December
2. Double down on bad habits out of stress
3. Make a few surface-level changes — then fall back into the same old pattern

But there’s a better way.

The truth is, you don’t need a miracle or a market rally to make progress.
You need a system — one that puts you in control.

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💡 Mid-Year Reset Starts With a Better Tool

This is where the Infinite Banking Concept comes in.

Instead of relying on banks, credit cards, or unpredictable investment accounts, you can build your own personal banking system using a properly structured whole life insurance policy.

When designed the right way, this policy allows you to:

• Grow wealth consistently (even during market dips)
• Access your money anytime without penalties
• Use your money while it continues to grow
• Avoid taxes on your policy’s growth
• Replace your need for outside financing

It’s not magic.
It’s a system. And it gets stronger the longer you use it.

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⏱️ What You Do Now Determines How You Finish the Year

Here’s the cool part:

When you implement Infinite Banking now, you’re not just finishing the year strong —
you’re setting up every year after that to work even better.

This isn’t just a one-time fix.
It’s a foundational shift that helps you:

• Stop leaking interest to banks
• Keep more of what you earn
• Take control of how money flows through your life

🚀 Final Thought: Use the Calendar as Fuel, Not Pressure

Don’t let the halfway point make you feel behind.
Let it remind you: you still have time to take charge.

Whether your goal is to improve cash flow, get rid of debt, save for something big, or build long-term wealth — Infinite Banking gives you the tools to do it.

And the best time to build momentum?

Right now.

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👉 Let’s Make the Second Half Count:

🔘 Download the Free Guide to Infinite Banking
🔘 Schedule a Call to explore your options

You don’t need another year of hoping it’ll all work out.
You need a strategy that puts you back in the driver’s seat.

🎓 Most people spend the first 20 years of their life learning how to make a living—but not how to build wealth. You might have studied algebra, Shakespeare, or U.S. history… but chances are, no one taught you how money really works.

That’s not an accident.
And that’s why so many hardworking people still feel like they’re spinning their wheels—earning income, paying bills, and watching wealth slip through their fingers.

Let’s change that. Starting now.

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📚 Lesson #1: The System Wasn’t Built for Your Freedom

From student loans to credit cards to 401(k)s, most traditional financial advice teaches you one thing: hand control of your money over to someone else.

• Banks lend you money—and charge you interest.
• Investment firms hold your money hostage until age 59½.
• The IRS sets the rules—and moves the goalposts.

You’ve been taught to save what’s left after spending.
You’ve been taught to “hope it all works out in the long run.”

But real wealth builders? They flip that model upside down.

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💡 Lesson #2: Real Wealth Is About Control

Wealth isn’t just about income.
It’s about what you keep, what you control, and how your dollars work for you.

This is where the Infinite Banking Concept comes in.

By using a properly structured whole life insurance policy, you create a system that gives you:

• Guaranteed growth — not tied to the market
• Liquidity — access to your money when you need it
• Tax-advantaged growth — no capital gains or income taxes
• Use without interruption — borrow against your cash while it still grows

This isn’t theory.
It’s a time-tested strategy that many wealthy families and entrepreneurs have used for generations—quietly.

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🧠 Lesson #3: It’s Never Too Late to Start Learning

The good news?
You don’t need a finance degree, a Wall Street broker, or a six-figure income to start building wealth the smart way.

You just need to:

• Learn how money flows through your life
• Redirect that flow to work for you
• And start building your own banking system

The earlier you start, the more powerful it becomes—but the key is starting.
Even a small policy, used the right way, can create long-term momentum.

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🎓 Final Thought: Graduate to a Smarter Strategy

You’re not behind. You’re just stepping into the real classroom now.
And this time, the lesson is clear:

Take back control of your money, and you take back control of your future.

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👉 Ready to keep learning?

🔘 Download the Free Guide to Infinite Banking
🔘 Schedule a Call to see how this strategy could work for you

Let’s rewrite your financial future—starting now.

Spring cleaning isn’t just for closets and garages. It’s also a powerful time to reevaluate how you handle money — what’s working, what’s not, and what habits are quietly draining your financial potential.

Here are three outdated money habits worth tossing out — and smarter alternatives to take their place.

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💸 1. Saving Money Where It Can’t Grow

The Habit:
Leaving your savings in a traditional bank account “just in case.”

The Problem:
Your money sits still. You’re earning next to nothing in interest, and with inflation rising, your dollars are quietly losing purchasing power every year. That’s not to say you shouldn’t have some money stored away in this fashion. You should! But perhaps just enough to get you through immediate emergencies, today.

The Shift:
Start warehousing your wealth in a system that grows and works for you — even while you use it.
The Infinite Banking Concept uses a properly structured whole life insurance policy as a powerful financial engine:

• Guaranteed growth
• Tax advantages
• Liquidity when you need it
• The ability to use your capital without interrupting compounding

Your dollars shouldn’t collect dust. They should multiply.

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💳 2. Using High-Interest Credit to Cover Gaps

The Habit:
Relying on credit cards, lines of credit, or personal loans to handle unexpected expenses or to finance big goals.

The Problem:
You’re paying interest to someone else — which means your future earnings are already spoken for.

The Shift:
Build your own personal financing system.
When you implement the Infinite Banking Concept, you create access to capital you own and control, allowing you to finance life’s needs — on your terms. You pay yourself back, not a lender.

It’s about changing the flow of money so it stays within your ecosystem.

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⏳ 3. Waiting for “The Right Time” to Start Building Wealth

The Habit:
Putting off financial strategies until the timing feels perfect, or income feels “high enough.”

The Problem:
Time is your most valuable asset — and the longer you wait, the harder it becomes to build long-term momentum.

The Shift:
Start with what you can now.
Many people begin their Infinite Banking journey with modest monthly premiums and scale up over time. It’s not about perfection — it’s about direction. Even a small system, started today, can grow into something powerful over time.

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🌟 Final Thought: Make Room for Growth

Spring is a season of fresh starts — and your finances are no exception.
By ditching old habits and building new ones through the Infinite Banking Concept, you’re not just cleaning house — you’re setting the foundation for a smarter, more sustainable financial future.

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👉 Ready to learn more?

🔘 Download the Free Guide to Infinite Banking
🔘 Schedule a Call to Talk Strategy

Let’s clean out the financial clutter and build something that lasts.

To understand the unique approach of the Infinite Banking Concept (IBC), it’s essential to first delve into the foundational practices of the modern U.S. banking system – particularly, fractional reserve banking. This system, where banks are required to keep only a fraction of their total deposits in reserve and are free to lend out the remainder, is a cornerstone of contemporary finance. While the theory is that it fosters economic growth through increased lending (and most certainly enables banks to generate significant profits), it also introduces significant risks such as bank runs, asset bubbles and destabilization of the financial system at large, as we’ve seen time and time again.

Fractional reserve banking effectively creates money out of thin air. For every dollar deposited, only a fraction is kept on hand, and the rest can be used for loans. Before 1992, banks were required to keep 12% of deposited amounts on reserve. This meant they could loan out the remaining 88%. In 1992, that reserve was lowered to 10%. This now meant that 90% could be loaned out. In March of 2020, following the shockwave of COVID-19, the Federal Reserve lowered that requirement to an unprecedented 0% (Zero Percent), where it has remained to date. We all know what this means.

This can lead to a multiplicative effect in money supply creation, potentially leading to inflation if not carefully managed. Through the lens of Austrian Economic theory, we would argue that it leads to unsustainable credit expansion that can cause economic bubbles and crashes. Austrian economists advocate for a banking system based on sound money principles – where money supply expansion is tightly controlled and closely tied to real assets like gold, thereby promoting economic stability and reducing inflation risks.

Transitioning to Infinite Banking Concept

Against the backdrop of these potential instabilities inherent in fractional reserve banking, R. Nelson Nash introduced the Infinite Banking Concept. Nash proposed that individuals could become their own bankers, thus sidestepping some of the systemic risks posed by traditional banking practices. By utilizing dividend-paying whole life insurance policies as financial tools, individuals can build a personal banking system. This system allows policyholders to borrow against the cash values of their policies rather than depending on commercial banks for loans.

Here’s how it works: a policyholder pays into a properly structured whole life insurance policy designed specifically for the purposes of Infinite Banking, which over time accumulates a cash value. This cash value grows at a guaranteed rate and also earns dividends. Policyholders can then borrow against this cash value for personal (or business) financing needs – whether for buying a car, investing in real estate, or funding a child’s education – without having to go through a traditional bank. Now you, the policy holder, is in control of the banking function in your life. Imagine a life without the bank.

The beauty of this system lies in its simplicity and control. Loans taken against a life insurance policy come with no mandatory repayment schedule, and the interest rates are typically lower than those of bank loans. Moreover, since the policyholder is borrowing against their own savings, they are essentially paying themselves back, thus keeping the money within their personal economy.

Infinite Banking as a Sound Money Solution

From an Austrian Economic perspective, the Infinite Banking Concept resonates strongly with the theory’s core principles. Austrian Economics favors systems that minimize the risk of inflation and promote fiscal conservatism. By encouraging individuals to save and build their wealth within a life insurance policy – a historically stable and non-volatile asset – IBC promotes financial self-reliance and stability.

Moreover, by reducing reliance on traditional banks and their loan products, individuals using the Infinite Banking Concept mitigate the risk of being adversely affected by broader economic downturns or banking crises. They create a buffer against economic uncertainty by leveraging their life insurance policies to fund their borrowing needs.

In conclusion, while fractional reserve banking has facilitated economic expansion and prosperity on a massive scale, it is not without significant risks – risks that are amplified by the very nature of the banking practice as critiqued by Austrian Economics. The Infinite Banking Concept offers a compelling alternative that not only aligns with Austrian principles of sound money but also empowers individuals by making them their own financial managers. By building wealth in a controlled, self-sustained banking system, individuals can achieve greater financial security and independence, making the Infinite Banking Concept a prudent choice in an uncertain economic landscape.

—Jason K Powers is a Multi-Business Owner, Real Estate Investor and an Authorized IBC Practitioner. In an exclusive partnership with the National Real Estate Investor Association, Jason is the go-to expert for all aspects of Infinite Banking and Life Insurance. Connect with Jason today to explore how life insurance can empower you to reach your financial goals.

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Written by R. Nelson Nash / Originally published on infinitebanking.org / Used with permission

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If you missed previous Lessons, go back and read that first HERE.

Basic Understandings

YOU “FINANCE’ everything you buy. You either pay interest to someone else or you give up interest you could have earned.

CREATE AN ENTITY— A plan — which you control and it makes money on your loans. One such entity can be a life insurance plan. Life insurance companies hire actuaries who design plans of insurance and then market those plans through agents. When someone buys one of these plans, the contract is very specific to point out who owns the plan (or policy). It is not the insurance company! The company is simply the administrator of the plan and must collect premiums—and must lend money out or make investments of one kind or another in order to be able to pay the death claims promised. Money is lent to any number of places and types of borrowers, including the owner of the policy if the owner so desires. The amount of money available to the owner is the entire equity in the policy at the time. In the hierarchy of places where money is lent, the owner ranks first. That is absolute CONTROL!

Content: Page 26, Becoming Your Own Banker Fifth Edition {Get your copy here}

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Written by R. Nelson Nash / Originally published on infinitebanking.org / Used with permission

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Written by R. Nelson Nash / Originally published on infinitebanking.org / Used with permission

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If you missed previous Lessons, go back and read that first HERE.

Creating Your Own Banking System Through Dividend-Paying Whole Life Insurance (continued)

In the previous lesson it should be obvious that this young man is paying $310.00 per month to the pool of money — $50.00 directly, in the form of premiums, and $260.00 indirectly, in the form of car payments. If he could understand what is really happening and pay the $310.00 directly to the insurance company in the form of premiums for around four to five years, he could now make a policy loan and pay cash for the car.

But this is the most important part – the insurance agent must make him vividly aware that he must repay the loan at an interest rate that is at least equivalent to the interest rate of an automobile finance company – not what the policy calls for. In this case it should be at least $260.00 per month. If the owner of the policy does this, then he will effectively make what the finance company would otherwise make and do it all on a tax-free basis. If the agent is really good and understands the principles of banking, he will encourage the policy owner to pay $275.00 per month because the “extra” dollars will go to his policy (or policies) to increase the capital that can be lent to other parties.

You have now had an explanation of all the essential principles of “banking” through the use of dividend-paying life insurance, but to understand the infinite qualities of The Infinite Banking Concept requires a much deeper look. In the previous example of car financing, the capitalization really needs to be more than four years. Many college business professors estimate that corporations expect it to take at least seven years to make a profit on a new product. This is an understatement in certain circumstances. For instance, I have a degree in forestry, and I know it takes much longer than that!

So, why not capitalize at least seven years on each policy that one purchases, to the point where dividends will pay all the remaining premiums on the policy. The mechanics of this will be covered later on in this course, so let’s not bother with it at this time. Remember, I’m describing how all this works with the example of one policy—but you should be thinking on the basis of a system of many policies.

Would you have much of a grocery store if you were the only customer? You must build it to the point where you accommodate the needs of others in order to prosper. The same principle applies to banking. Have you not noticed that when a grocery store becomes successful in one location, then it tends to establish another store in another location?

Have you not noticed that banks have branch offices? There must be a reason for this.

Then, why not expand your own potential by buying all the life insurance on yourself that the companies will issue? And then, on all the people in which you have an insurable interest? At present, does not all your income go through the books of some banking institution?

Don’t the banks lend out the deposits of customers?

All banks do is capitalize the bank (Capital Stock) to make it a safe place for customers to deposit their money and then the banks lend out the money left on deposit. If they don’t lend it out, they will go out of business.

It will take the average person at least 20 to 25 years to build a banking system through life insurance to accommodate all his own needs for finance – his cars, house, etc. But, once such a system is established, it can be passed on to future generations as long as they can be taught how the system works and suppress their baser instincts to “go out the back door of the grocery store” with goods. Or, to put it bluntly – to steal!

Content: Page 24-25, Becoming Your Own Banker Fifth Edition {Get your copy here}

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Written by R. Nelson Nash / Originally published on infinitebanking.org / Used with permission

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Written by R. Nelson Nash / Originally published on infinitebanking.org / Used with permission

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If you missed previous Lessons, go back and read that first HERE.

Creating Your Own Banking System Through Dividend-Paying Whole Life Insurance (continued)

Now, let’s go back to our scene on John Doe’s policy – he has had it for a few years and the Directors of the company ask the accountants, “How did we do on John’s policy this year?” They say, “We collected $1.10 but, after calculating all the earnings and expenses we found that it took only 80 cents to deliver the promised death benefit in the future.” This means that the Directors can make a decision with 30 cents. There is no way that they can calculate whether this was a good year or not and to be prudent, they put .025 cents in a “contingency fund” (this does not show up in cash values) and distribute .275 cents as a dividend.

These dividends can get to be very significant over a long period of time. In 1959 I bought a policy from a major insurance company and the annual dividend is now over eight times the annual premium. It would be even larger had I not used the dividends to reduce the premium during the first fifteen years of the policy. I should have been using them to buy additional paid-up insurance during that time. These things are just not adequately explained by life insurance folks because of the limited understanding of their home office personnel. A tragedy!

So far, this is a pretty simple, straightforward business. The complication is in the perception of it by the general public. We all see things through a filter of prior understanding – and that filter is awfully cloudy as it relates to life insurance!

Life insurance agents are taught to help clients calculate their human life value, (the now value of their future earnings, less their personal upkeep. This is their value to family and others that are closely associated) and insure for that figure. It really is a quite nebulous concept because there are so many variables that change with time. Once a figure is agreed upon, the agent shows “how little it will take in premium for my company to insure that amount.” This premium figure could be as high as 15% of income, after taxes.

My word! If you will take an honest look at what the average young man is doing – paying over 35% of every dollar of after-tax income to interest alone (see p. 19 in the book) – it should be obvious that his need for finance during his lifetime is much greater than his need for life insurance protection. If he will solve for his need for finance through dividend-paying life insurance, he will automatically end up with more life insurance than in any other concept and he will recover all the interest he is now paying to someone else.

But this almost never occurs because of the “cloudy filter” implanted by financial geniuses that “life insurance is a poor place to store money.” What a limited outlook of just what is going on in the banking world! Again, if you know what is happening, you’ll know what to do.

So, the typical young man puts $50.00 per month into life insurance premiums and complains about it. Then he goes down to an automobile dealer, makes a purchase, and gets a loan from a finance company to pay for it. Remember, there is only one pool of money out there in the world. The fact that a number of organizations and individuals are managing a portion of that pool is incidental. It is even more specific when it comes to car financing. I have never seen a monthly list of investments of a dozen life insurance companies that did not include finance companies as a place where they have loaned blocks of money. The finance companies simply buy blocks of money, and retail it to consumers after adding a fee for their work.

So, this young man pays $260.00 per month for 48 months for his $10,550 car loan. He repeats this process, every four years, because that’s the way his peers are doing it. If he would take a deeper look, he might notice that he is paying $50.00 per month into a pool of money (the life insurance policy) and paying $260.00 per month to an intermediary (the finance company) who got the money from the same pool. Furthermore, he complains about the premium he pays but thinks nothing of the much larger amount he pays the car finance company. Strange, isn’t it?

We learn how to recapture all this money in lesson 14.

Content: Page 23-24, Becoming Your Own Banker Fifth Edition {Get your copy here}

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Written by R. Nelson Nash / Originally published on infinitebanking.org / Used with permission

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Written by R. Nelson Nash / Originally published on infinitebanking.org / Used with permission

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If you missed previous Lessons, go back and read that first HERE.

Creating Your Own Banking System Through Dividend-Paying Whole Life Insurance (continued)

As a result of what you learned in lesson 11, the company now has an ever-increasing pool of money. Your premium payments are pooled with that of all other policy owners, but all the accounting is separate. Every policy has the potential of being different. From time to time an insured person dies. It doesn’t happen very often, but when it does, the company pays the beneficiary from the pool of money and the cost of doing so is allocated among all the participants on an equitable basis.

We must remember that an actuary is a kind of engineer and that all engineers “overbuild” everything they design. I think about this fact every time I am at the controls of an airplane. I have never seen an instrument panel that does not contain an airspeed indicator with a red mark somewhere on the face of it, telling you, “Don’t go past this point or the airplane will come apart on you!” That is not really true! It won’t come apart until the airspeed is some 20 to 30% greater than the red mark. The engineers have put a “fudge factor” into the equation.

But, if you operate the airplane just beyond the red line on a regular basis, you are inducing stresses on the wings that are cumulative in their effects and one of these days it will come apart on you. Unfortunately, it will be too late to correct the error of your past behavior!

The actuaries and rate-makers in a life insurance company have done, essentially, the same thing. They have collected more premium than is necessary to do the job. This is because the results of a life insurance plan is all predicated on (1) collection of premiums, (2) earnings on the investments, (3) mortality experience, and (4) business expenses. There are no stockholders in the kind of company that I’m describing so the “extra premium” is the capital that assures the success of the plan.

Furthermore, the policy is engineered to get more efficient every year, no matter what may come. This is a strange phenomenon to most folks, so let’s go back to the airplane world to make an analogy that will help us understand it. Imagine that we are going to make a very long flight in a Boeing 747, and so we load it with all the fuel it will hold. This means that it can fly about 10,000 miles. By the time we have flown 8,000 miles the airplane will now be able to do things that we would never attempt at takeoff – all because we have burned up an enormous quantity of fuel and the airplane weighs that much less. But the engines are capable of producing the same power as when we took off. Therefore, every mile that we fly, the airplane will get more efficient – and you can’t do a thing about it! It gets better – no matter what!

In comparison, a life insurance policy with a mutual (dividend-paying) company enjoys a similar phenomenon – it is engineered to get better every year, no matter what happens (that is, if the Owner does what is called for in premium paying, loan repayments plus interest that is at least equal to or better that the general investment portfolio of the company). In designing a life insurance policy, the rate-makers have taken into consideration the advice of the actuaries that their assumptions (i.e. interest earnings, death claims and administrative costs) are not set in concrete. Over a long period of time the actuaries will be very accurate, but from time to time the results can be better or worse than predicted and can affect the dividend scale declared for the next year. In fact, you can safely say that the real results will never exactly match the illustration provided at the beginning of the life of a policy. But, once a dividend is declared, it is now guaranteed from that point on. It can never lose value in the future.

A significant period of lower than expected earnings of interest, or a period of more than expected death claims and/or administrative costs can result in a “downer” for the company. When this happens in a regular corporation it is the function of the stockholders to “take up the slack.” But, in the case of a mutual life insurance company there are no stockholders! So, the rate-makers are cautioned by the actuaries, “if we calculate that it would take $1.00 per year for a given plan – don’t collect $1.00 – collect $1.10.” This extra .10 is the capital that makes the whole system viable.

We will continue this examination of what is happening in a life insurance contract in lesson 13.

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Content: Page 22-23, Becoming Your Own Banker Fifth Edition {Get your copy here}

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Written by R. Nelson Nash / Originally published on infinitebanking.org / Used with permission

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Written by R. Nelson Nash / Originally published on infinitebanking.org / Used with permission

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If you missed previous Lessons, go back and read that first HERE.

Creating Your Own Banking System Through Dividend-Paying Whole Life Insurance

At this point it is worthwhile to remember that “you finance everything that you buy,” whether you like the idea or not – you either borrow money from some other source and pay them interest or you use your own money and give up interest that you could have been earning. Some folks call this “opportunity cost.” Yet, it is amazing how many people give this idea lip service but do not put it into practice in their financial dealings.

In the September 1993 issue of FORTUNE magazine there was an article entitled, “The Real Key to Creating Wealth” by Shawn Tully. He is describing the concept of Economic Value Added (EVA) developed by Stern Stewart & Co. of New York. Tully says, “Understanding that while EVA is easily today’s leading idea in corporate finance and one of the most talked about in business, it is far from the newest. On the contrary: earning more than the cost of capital is about the oldest idea in enterprise. But, just as Greece’s glories were forgotten in the Dark Ages, to be rediscovered in the Renaissance, so the idea behind EVA has often been lost in the ever-darker muddles of accounting. Managers and investors who come upon it act as if they have seen a revelation.” We do live in a strange world!

The engineers in life insurance are “actuaries.” They are dealing with a field of 10 million selected lives – persons that have been through a screening process (underwriting). And they are working with a theoretical life span of 100 years. Then they turn their information over to rate makers who determine how much to charge clients in order to be able to pay the death claims and make the whole system work over a long period of time.

Then the whole matter is turned over to lawyers who make legal and binding contracts that are offered to potential buyers through a sales force. The glue that holds this whole process together is the administrative and executive personnel. The finished product is a unilateral contract, that is, the company promises to do certain things if you meet the standards of acceptability and make premium payments. Read the contract and it will tell you very plainly that you are the owner of the contract — not the company. The Owner is the most important character in the scene.

To make the plan work the Owner must pay premiums into the contract and the Company (your hired help) must put the money to work in order to produce the benefits that are promised. Those with the responsibility of investment will do so in a number of ways in financial instruments that are fairly conservative, e.g. bonds, mortgages, etc. Look at the investment portfolio of a number of life insurance companies and you will see what I mean. One place that is speculative that some companies do invest in is in real estate developments. Some large developments of urban office buildings have been entirely financed by a single insurance company. The Golden Triangle in Pittsburgh would be an example. This can often include shopping centers.

But, upon reading the contract you will find it plainly stated that the Owner outranks every potential borrower in access to the money that must be lent! And what he can borrow is 100% of his equity in the policy (the amount that the company can lend at any one time). If this is true – which it is – then this amounts to absolute control over the investment function of the company. In essence, money can be lent to the other places only if the Owner of the policy does not exercise his option to use the money (and pay interest) instead.

We will resume this look at how life insurance works in lesson 12.

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Content: Page 21, Becoming Your Own Banker Fifth Edition {Get your copy here}

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Written by R. Nelson Nash / Originally published on infinitebanking.org / Used with permission

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Written by R. Nelson Nash / Originally published on infinitebanking.org / Used with permission

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Creating a Bank Like the Ones You Already Know About (Cont…)

Continuing our study from lesson 9 of The First National Bank of Midland, TX, it is apparent from the report of the December issue of the drilling magazine that a number of the directors of the bank were in the oil business.

There was quite an aberration in that business at that time. Many people had to wait in line for hours to get gasoline. In those days I was still flying with the Alabama Army National Guard and on drill weekends we flew patrol over the Interstate Highways for convoys of gasoline trucks. It was an interesting time. The best that I can remember it lasted a couple of years.

So, these directors of the bank were making loans to themselves to invest in the oil business where they were going to “make a killing” and not bothering to repay the loans. They were listening to pseudo-economists that were telling them, “Real money is natural resources like land, timber, coal, minerals, oil, etc. Borrow all the money from your bank that you can and put it in the oil business! You can really get rich!”

People behave on the basis of their understanding of things and are strongly influenced by the idea of getting rich quickly. Read Extraordinary Popular Delusions and the Madness of Crowds by Charles Mackay. It is a collection of stories of weird behavior of people down through history. People listen to “financial experts” and my own observation is that we have more financial geniuses per square foot today than in all of history combined! If those pseudo-economists were correct that “real money is oil” then tell me how much oil does Switzerland produce? None, but those folks have known something about banking for a very long time. Banking is the best business in the world.

So, you have now seen two examples of how a business can be destroyed — the grocery business by taking groceries out the back door of your store and the banking business by making loans to yourself and not paying them back.

Again, I warn you, if you want to kill the best business in the world then go to it. But your blood will not be on my hands. You have been adequately warned.

You must admit that getting into the banking business the way we have studied in lesson 9 & 10 is very costly and time consuming. It will be a long time before you show a profit, probably as much as 10 years. But it must be extremely profitable over the long haul for people to go through the gory mess you have just studied.

There is a much easier way to accomplish it and the mechanism has been around for over 200 years. It is tried and true. It is called participating (i.e. dividend-paying) whole life insurance. The problem is that very few people know how the business works, including the home-office folks at life insurance companies.

At this point, it will help if you understand the word, “co-generation,” a term used in the production of electrical power. Most everyone knows that this power is produced in plants using fossil fuels, nuclear fuels or water to turn turbines. But there is another source of power that is significant – the wood products plants – paper mills and sawmills. Trees are harvested for the wood they contain but the bark on the outside of the tree and the sawdust from sawing lumber has little economic value. But these things make a very good fire, and thus produce steam to turn dynamos that produce electricity. Every paper mill and all large sawmills have a “co-generation plant.”
Suppose that you own a paper mill and your co-generation plant can produce 125% of your needs for electrical power. What do you do with the surplus? You can sell it, of course! But you don’t have to erect power lines and get a sales force to sell it. You simply understand the distribution system is already there and you simply tie into that system and sell it to them!

Creating your own banking system through the use of dividend-paying life insurance is much like co-generation. All the ingredients are already there in place. All you have to do is understand what is going on in such insurance plans and tap into the system.

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Content: Page 20, Becoming Your Own Banker Fifth Edition {Get your copy here}

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Written by R. Nelson Nash / Originally published on infinitebanking.org / Used with permission

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Written by R. Nelson Nash / Originally published on infinitebanking.org / Used with permission

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Creating a Bank Like the Ones You Already Know About

As in the grocery business that we discussed earlier, you must first study the banking business so that you have a firm grip on what it is all about and feel that you can run such a business. Without this confidence you are fighting a losing battle. This, too, is a very competitive business.

Next, you must come up with some capital – money. In today’s world it should be in the order of $20 million or more and it must be on deposit at some other bank in a very liquid form — i.e. earning a very low interest rate while you are trying to get the Banking Commissioner in your state to issue you a charter. This is not all that easy to do. The odds of your getting a charter at this point are less that 100 to 1. There are a lot of other folks in your state wanting to get into the banking business too, and you must wait your turn. This could easily take 10 years!

If you missed previous Lessons, go back and read that first HERE.

Now you are finally in the banking business! You must make your bank known by lots of advertising and trying to induce other people to deposit money in your bank. This is going to cost you a lot of money. Banks are in the business of lending money. Adam Smith, in his book, Paper Money, says, “A banker cannot make a loan unless he has a deposit. It seems a little silly to state that so baldly, but if three college educated Americans in ten don’t know we have to import oil, I don’t feel so bad about saying something bald. Banks do not lend their money. They lend the money someone else left there.” He goes on to say, “When you start up a bank, you have to put in some capital. Then you get some deposits, and then you lend the deposits. In a proper bank these three items bear a prudent relation to one another. If you are a little country bank with a capital of $100,000 it would be imprudent of you to loan Brazil $50 million. So, you want a prudent relationship between the capital and the assets, which is to say the loans on the books, and between the loans and the deposits. In the Western countries the financial agents of the government are there with a definition of prudence.”

Even with such government oversight banks can, and do, still fail. There were massive failures in the 1980s. A case comes to mind. In September 1983 the First National Bank of Midland, TX (the richest city in America per capita at that time) had a loan portfolio of $1.5 billion. And 26% of the loans were non-performing, i.e., they were not getting the money back. When this happens in a bank someone must support the situation, and this is normally the function of the stockholders. Because of the losses the stockholders’ equity lost 87% of its value down to $12 million. This is in relation to a $1.5 billion loan portfolio! That’s a shaky bank! Guess what happened when the depositors learned of this? Right! They withdrew $500 million! Remember, this is what bankers lend, the deposits.

This sounds ominous, but you haven’t seen anything yet! You must add the “multiplier effect” of bank lending practices. Practically no one knows that when one makes a deposit of $1,000 at a bank, the bank can now lend out $10,000. Where did the other $9,000 come from? They are creating money out of thin air! It is called the “fractional reserve lending system.” I call it the world’s largest “con game.” It is all predicated on the theory that “everyone is not going to withdraw their money at the same time.” For a complete understanding of all this, read The Creature from Jekyll Island by G. Edward Griffin, and also, The Case Against the Fed by Murray Rothbard.

So, First National hired a new CEO to come in and “put out the fire,” but it was too late. Two months later they were out of business. More under-standing of what really happened appeared in the December issue of a drilling magazine. Reading “between the lines,” it was pretty evident that a lot of those non-performing loans were made to the members of the board of directors.

Does this remind you of the grocery store example that we studied earlier? If the owner and his family go out the back door without paying for them, he will probably go bankrupt. The same think happens in the banking business!

Remember this, because in the banking system I am going to tell you about, you can also destroy it by not obeying the basic rules of banking. Loans have to be paid back or you can kill the best business in the world. It is all up to you, but don’t try to blame others when it happens. We will continue this in lesson 10. I’ll see you then.

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Content: Page 19, Becoming Your Own Banker Fifth Edition {Get your copy here}

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Written by R. Nelson Nash / Originally published on infinitebanking.org / Used with permission

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Written by R. Nelson Nash / Originally published on infinitebanking.org / Used with permission

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The Problem (continued)

There is an analogy from the airplane world that helps us to see the absurdity of what we saw in lesson 7 of how the average American handles his money.

I’ve been a pilot for over 56 years, and it was obvious to me from the start that you can’t fly an airplane through a vacuum. It must go through an environment.

You have seen the weather maps with the “highs” and “lows” on it. The best flying weather is in the “highs.” Bad weather is associated with the “lows.” In the northern hemisphere the “highs” turn clockwise, and they will move from west to east over the face of the earth.

If you haven’t kept up, go back and start with Part 1!

Have some patience. Let the air mass move on — it will — they always do – and it will move from west to east. When the “high” gets directly over Birmingham, now get in the airplane and head to Chicago. There is no headwind and you are covering the ground at 100 miles per hour. At this stage, what I refer to as “the arrival syndrome” comes into play. “Whee, we are making progress toward our goal and you just can’t do any better than this!” Nonsense! Stay on the ground and let the air mass move on further east.

Now you have an airplane that can fly at 100 miles per hour, but it is being pushed toward your goal by a tailwind of 345 miles per hour. Your ground speed is 445 miles per hour! Fantastic! This is a dramatic improvement over the first two situations. But, you see, it is much more dramatic than what most folks think.

Everything you do in the financial world is compared with what everyone else is doing. In America, most folks are doing the equivalent of flying with a 345 mile per hour headwind. Isn’t it obvious, if you have a 345 mile per hour tailwind, that the difference between you and them is 690 miles per hour? In all three examples the capability of the airplane is the same — 100 miles per hour.

Translate this example into the financial world and it is pretty obvious what is really going on. Many financial gurus are concentrating on encouraging people to “get out of debt” and that is a wonderful thing to do. In our airplane analogy that is the equivalent of flying with no headwind. But, I have yet to hear one of these folks recognize that the most profitable thing one can do is to create the perpetual “tailwind” to everything that you do financially. It seems that this thought never registers in their consciousness.

But most financial gurus spend all their time “trying to make the airplane fly at 105 miles per hour” or something like that! Controlling the environment in which the airplane flies is far more effective.

You can’t do anything about the environment in the airplane world, but you can do it in the financial world. It must be done by creating a banking system that serves all your financial needs.

This course is about how to create a perpetual tailwind to your financial world that will, eventually, serve everything you do. You can’t do it without getting in the banking business. In the next lesson we will see what it is like to get in that business.

Pleasant dreams! Use your imagination. It can be a wonderful world for you!

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Content: Page 18, Becoming Your Own Banker Fifth Edition {Get your copy here}

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Written by R. Nelson Nash / Originally published on infinitebanking.org / Used with permission

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Written by R. Nelson Nash / Originally published on infinitebanking.org / Used with permission

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The Problem

Several years ago, I did a study on the spending habits of American families. The results are depicted in the graph on page 17 of the book. Since that time, I have kept an eye on the proportions on income allocated to each category and I’m convinced that the situation has become worse — they are spending more on interest and saving less.

I build my scenarios around the “average person” because I don’t want anyone to think that you have to be rich to create a banking system that can handle all your needs for finance. This young man is 29 years old and is making $28,500 per year after taxes — that is all he can spend. What does he do with the after-tax income? 20% is spent on transportation — 30% on housing — 45% on “living” (clothes, groceries, contributions to charitable causes, boat payments, casualty insurance on cars, vacations, etc.). Many of these items are financed by credit cards or bank notes. The balance is financed by paying cash for them — and thus, giving up interest that could be earned, otherwise. He is saving less than 5% of his after-tax income! (At the time of this writing he is saving absolutely nothing!) It is the first time in the history of America that this has happened. This scenario has all the ingredients for an impending disaster!

If you haven’t kept up, go back and start with Part 1!

The problem is that the cars, housing and much of the “living” items are financed by other banking organizations. The typical financing package for an automobile for this hypothetical person is $10,550 for 48 months with an interest rate of at least 8.5% and this produces a monthly payment of $260.00 per month. It is a fact that 95% of the cars that are traded in are not paid for. This means, at the end of 30 months, that 21% of every payment is interest – and this is a perpetual factor. It never seems to dawn on him that the volume of interest is the real issue, not the annual percentage rate.

What’s more, ask the sales manager of the high-priced cars, “What percentage of the cars that leave your agency are leased?” He will probably tell you 75% or more! That is even worse than having them financed!

Now, let’s move to the housing situation. This young man can qualify for a 30-year fixed-rate mortgage of about $93.000 at 7% APR with payments of $618.75 per month and closing costs of about $2,500.00. The problem is that within 5 years he will move to another city – maybe just move across town – or even refinance the mortgage. Something happens to a mortgage within 5 years. During the 60 months he has paid out $39,625, including closing costs but only $5,458 has gone to reduce the loan. This means that $34,167 has gone to interest and closing costs. Divide the amount paid out into the interest and closing costs and you find that 86% of every dollar paid out goes to the cost of financing! If he sells the house is less than 5 years, it is worse. This situation is also perpetual. He thinks he is buying a house, but all he is really doing is making the wheels of the banking business and the real estate business – in that order – turn. But, all the “financial experts”are advising him to indulge in this activity.

In the next segment of the spending pattern graph – the living expenses – you will find the interest on boat payments, credit cards, plus the cost of casualty insurance on cars, etc. will rival in volume the interest he is paying on the two cars in the family that we addressed earlier. Later on, in this course you will learn how to self-insure for comprehensive and collision insurance on cars.

Now, add up all the interest he is paying out and you find that 34.5% of every dollar paid out is interest. For the average All-American male this proportion never changes. Let’s assume that he is saving 10% of is disposable income (which he is not doing!). This would mean that we have a 3.45 to 1 ratio of interest paid out as compared to savings.

Now, get this young man together with his peers at a coffee break and have one of them suggest that they discuss financial matters. You can rest assured they will all talk about getting a high rate of return on the little dribble they are saving. Meanwhile, all the participants are doing the above! What a tragedy! But that is how they have been taught to conduct financial affairs.

We will continue this in lesson 8. See you then!

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Content: Page 17, Becoming Your Own Banker Fifth Edition {Get your copy here}

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Written by R. Nelson Nash / Originally published on infinitebanking.org / Used with permission