Becoming Your Own Banker, Part 3: Your Need for Financing
Your need for financing is greater than your need for saving. Most people try to make more money or get a better return on their investments to get further ahead. But these strategies fail because they focus on the wrong problem. In Becoming Your Own Banker, Nelson Nash identifies the most prevalent problem with most Americans’ financial lives is that they are spending 34.5 cents of every dollar on interest, turning the wheels of the banking industry, yet hardly saving even 10 cents of every dollar.
The answer isn’t to stop spending but to spend differently. To learn how to control your financial environment, and turn a financial drag into financial fuel… tune in now!
Table of Contents
The Need for Financing
[2:30] “What Nelson is saying is that the need for finance is much greater than the need for savings. And that sounds weird, but what he’s saying is if you really calculate how much money goes out the door for financing things, then you’re going to see that that’s a lot greater amount than how much people actually put away for savings. So if you can eliminate the need for finance, then that money can obviously be shifted into savings.”
Nelson believed that if everyone got control of their own need for financing, it would also be great for the economy. It’s also just a great way to live your life. When you control the need for financing, you have much more safety, certainty, and security. And that’s priceless.
Becoming Your Own Banker: Start with Good Habits
The thing about Infinite Banking is that you’ve got to go into it with good money habits already. You can’t start a policy with the intention of financing your life if you have bad money habits. Or, you can, but you won’t have the results you want. If you’re becoming your own banker, that requires a certain level of personal and financial responsibility. You’ve got to start with good habits.
For example, let’s imagine you have out-of-control spending habits and have racked up some credit card debt. If you buy a policy, you’re now responsible for those credit card payments and your insurance premium. If you then take a policy loan to buy something new, You’re going to have an additional payment. This can quickly get out of hand if you don’t already have good habits of paying down debt and living within your means.
IBC isn’t going to magically cure your financial woes. It’s a system and a concept that has to be built on a firm foundation. This doesn’t mean you can’t have an Infinite Banking policy if you have credit card debt. However, you might need to be honest with yourself about where you’re at and where you need to be in order for IBC to be right for you. (And there are still other insurance options for you in the meantime.)
[08:10] “I tell people all the time [that] Nelson’s book is more about the human condition and the mindset than it is about the numbers. And yet everybody tries to make it about the numbers.”
Financing and Interest Cost
What we often see is that the catalyst for someone to transform their money habits is to be so fed up with paying interest that they’ll do whatever it takes to stop. Whether that’s credit card interest, or interest to the banks, everyone has a threshold. And while interest is always going to be a factor of money, there are ways to reduce your interest cost and increase your interest earned.
The problem is that many people are often focused on the wrong thing. For example, you may want to pay off your highest interest rate card first, but you also have to consider volume: You may have a high interest rate on a card with a low balance, and a high balance on a card with a moderate interest rate. At that point, you might save more actual dollars by paying down a high balance first.
This, hopefully, helps you put things into perspective. When you finance anything, it’s a good idea to ask yourself how much of your income is going toward the cost of financing the purchase you’re making? It’s more if it takes you time to pay down a credit card. You’ll likely find you’re spending way more than you think just for the privilege of buying something, not even the actual purchase itself.
The Cost of Financing
[22:10] “If every dollar you make, you’re spending 34 and a half cents for finance costs, and you’re saving only 10 percent of your income, that’s only 10 cents of that dollar.”
If you eliminate some of these financing costs, you can really gain momentum with your savings. And you can eliminate those costs by delaying gratification (even temporarily) until you can build up your own personal banking system with cash value life insurance.
[32:18] “People try to solve [the financing problem] by one of two things that are both not very effective. One: just make more money and it all solves every problem. [This] doesn’t work because you still carry those same money habits with you… And secondly, just trying to get a better rate of return on the small amount that you’re saving does not overcome this finance cost. [Nelson] says the most profitable thing you can do is learn to control the environment. If you can control the environment that you’re flying your plane in, or you can control the environment that you’re doing your financing in… then you’re in a position of having the most profit.”
How to Solve Your Need for Financing
[36:26] “It’s not that there’s no hope. What you need to recognize is that there’s no tactic or strategy or… strategic method of manipulating what you’re doing well enough that will overcome that. Really, what is needed is a complete mindset change about money in general.”
You can get yourself out of the hole you’re in, if you’re in one. It’s not hopeless. Nor is it magic. It simply takes a serious desire to change, and a willingness to put in the work. It can take time to correct your habits and get to a good place. But once you do, and you can take control of your banking function, you open up a world of possibilities and opportunities for yourself, your family, and the generations to follow.
If you don’t know where to start, try reading Becoming Your Own Banker, and see what happens.
Book A Strategy Call
Do you want to coordinate your finances so that everything works together to improve your life today, accelerate time and money freedom, and leave the greatest legacy? We can help! Book an Introductory Call with our team today https://themoneyadvantage.com/calendar/, and find out how Privatized Banking, alternative investments, or cash flow strategies can help you accomplish your goals better and faster. That being said, if you want to find out more about how Privatized Banking gives you the most safety, liquidity, and growth… plus boosts your investment returns, and guarantees a legacy, go to https://privatizedbankingsecrets.com/freeguide to learn more.
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