113. Building a Financial Steam Engine With Whole Life

You are listening to the Wealth Without Bay Street Podcast, a Canadian guide to building dependable wealth. Join your hosts, Richard Canfield and Jason Lowe as they unlock the secrets to creating financial peace of mind in an uncertain world. Discover the strategies and mindsets to a financial future that you can bank on. So Jay, we are going to be having some fun tomorrow and what exactly do we have going on tomorrow morning? Should we chat a little bit about that before we dig into anything else?

Yeah, for sure. We've got, we got the boot camp going on which is the, the, the deeper dive, the gosh, the, the intensive, you know, where we do a lot of real examples of how the practicality of implementing the process and we've got a great format, I think a really great format for tomorrow that gives people exposure to the problem, early exposure to a practical example, back to framing up the remainder of the problem, diving into the solution with just a ton of great case study examples and then group Q and A and opportunities to interact and engage and ask a lot of great questions from our team who are all going to be sharing and presenting, including the both of us, which we always get excited about and look forward to. So we get underway at 9:30am Mountain time tomorrow and we run straight through until 1:30pm Mountain time and we break, we try to get a break in every, no longer than every 90 minutes or so and gives people a chance to just rest their, their brain. Cause there's, it's like drinking out of a fire hydrant. But I'm excited, I'm looking forward to it. We have 95 people enrolled. That may be more now cause I checked it this morning but we've got 95 people enrolled so far and there's no cost to attend other than the investment of your time. And so it's going to be a great, a great event. And I don't know if we can post a link to it in the, if we in this street yard thing.

Here go to wwbs training.com and that will, if anybody wants to register that would take them right there. Training.com I'll put that in and just put it in the comments. And so the, you know, the beautiful thing about this, I'm really excited because I mean we always have fun doing these events. Yes, it's a lot to put on an event. It's, even though we're not having the same, you know, we, we're accustomed to having to go and like set up banners and you know, make sure the whiteboard and line up a projector so that, you know, remember how, remember how much of a, like, how, like anal I would get over, like, the projector not being lined up correctly? Just like, oh, my God, we need matchbooks and snapkins. We got to lift this thing. And I'm just like, lose my, lose my brain because of fricking projectors crooked or whatever. So I'm glad we don't have to do all those things because of Zoom. But there's, there's, like, other challenges required when you're doing an event. And it's a whole learning curve. I mean, we've, we've, thankfully, we've been, we've been having enough practice at it now I think we're getting it dialed in pretty good. But it's, it's just so amazing that we're going to be able to have people from all across the country joining us tomorrow. We even have some of our American friends that will be joining in as well. And so that'll be fun. And it's going to be. There's always great commentary, there's always great questions. But here's the thing. You know, when we do these events, especially a long event like this, you know, people, a lot of times we want to get into the, like, just, just give me the quick and dirty information. Like, we kind of want those, like, snippet pieces in our learning. And unfortunately, that's, that's not something that we provide in this session. It's about actually going deep. And, you know, Jason, we talk about a foundation and the importance of having a solid foundation. If you want to build a house, you're not going to build the house just on the ground. You're going to pour solid foundation made out of concrete so that that house is solid and strong. That's what we're talking about. In your financial life, your financial house needs a strong foundation when you implement the process of infinite banking. So we spend time at the beginning really trying to lay that, you know, we're pouring concrete into your financial foundation so that all of the information that we're going to share towards the end of the session when we talk about, you know, some examples of passive income, we're going to talk about some examples of using a, using a policy to invest capital in different ways. We're going to use an example of a real estate investor buying a property. We're going to show an example of recapturing, you know, $420,000 of debt in under seven years into a system because of controlling the flow of capital that was going to third parties. You're going to be talking a little bit about the family banking system and, you know, some stuff that you've, you've done in the last 10 years. I'm going to do something fun, something new. We're going to be showing an example of using IBC over an entire lifespan, starting from a child's age, but having two generations be able to interact with that capital.

Yeah.

And I'm actually going to use, I'm going to talk about a policy on my son and I'll show an example of what kind of additional passive income I'll be able to generate using that policy, should my wife and I choose. And, and, and how we're setting that up and, and how we'll, we'll be able to use it. We'll use it throughout the lifespan. We'll be able to use it at the end. But also we're gonna, it's still gonna be around for my children when, when I'm gone. And so we're gonna do a little example kind of early in the day on that and then we're gonna go back into that.

That's exciting. I am looking forward to it big time. Big time. Boot camps are always fun because it's. Especially when, you know, attendees have those moments of clarity and they. Because it's more caught than it is taught. So when the, when an attendee catches it and says, okay, I know exactly how this can work for me, that is, that's a fulfilling moment. And yeah, it'll be a great day. We're pretty, pretty pumped about it, as we always are. So one of the things that I wanted to touch base a little bit on today is, you know, for the benefit of our community. So Nelson, Nelson describes in his book titled Becoming youg Own Banker. And there may be some new folks to the community who are either maybe have heard about the book or maybe just recently purchased a copy of the.

Book and, or they were waiting two months for stock because we were out of stock for the book.

Yeah, the, the paper mill that supp these books to the Institute actually went out of business. And I thought to myself, gosh, this book sold more than a half a million copies. How can the paper mill be going out of business? Like they should be expanding their operation to keep up with how many of these we need, but we're fully restocked. This is my original copy that I got many years ago. And one of the things that really strikes me in the book is when Nelson talks about. And he would expand on this when he would, you Know, meet with us, Rich. He would meet with our client community. And on page 15 of the book, he's right in the grocery store example. But in, in the bottom right hand corner of that page, he talks about a phenomenon in physics. And what he's describing here is that he said, look, I want you to take a pail of water to seaside. I want you at sea level, I want you to heat it up to 210 degrees Fahrenheit and all you have is very hot water. But if you heat it up to 212 degrees Fahrenheit, you have live steam with unbelievable power. The steam engine changed the world, but it doesn't happen until you get past 212 degrees. Lots of heat goes into the process up to the boiling point, but the dramatic power comes suddenly. Now what he meant by that is when you're, when you're capitalizing, you're putting in money in the form of premium, you're following Nelson's golden rule, which is don't be afraid to capitalize. Now he has five golden rules. And Rich, you're going to love this. And I honestly did not know this. Nelson never mentioned it this way. But I was talking to David Stearns earlier this week and he told me at the end of our call, he said, hey, I wanted to tell you something. I said, what? He goes, you know the fifth golden rule? I said, yeah. He said, rethink your thinking. I said, yeah. He said, that came from you?

Wow, that's awesome. Isn't that amazing?

My heart almost burst with joy and gratitude because in one of the talks at the think tank that had come up where we were talking about, you have to. And this has resurfaced recently where we talk about developing the ability to rethink your thinking. It's one thing to say it, but it's another thing to develop the ability to do that. And David told me that Nelson latched onto that and said, that's the fifth golden rule. I never knew that. Nelson never told me that.

Wow, fantastic.

Yeah.

And for those of you listening in, David Stearns is Nelson's son in law who is now the president of the Nelson Nash Institute. And we've had some, we've had some great presentations done by him over the years. Of course, we've had two amazing podcast interviews. I think some of our best podcast interviews that we've done on the Wealth Up Bay street podcast have been with David because of what he's able to share from his personal life experience. Spending so much time with Nelson and How they've really embraced this process as a lifestyle in their family's life. And yeah, really, really amazing, wonderful guy. I can't wait because we're gonna go see him next week in a couple of days. I'm so amped up to get to go down to Birmingham, Alabama and be with our, with our friends and our colleagues, our fellow practitioners of this process. We have some wonderful people we get to go see when we go. And pretty amped up about it. And Jason, you get to talk a little bit about the family banking meeting and how you host that and conduct that. And you're going to be sharing some of the things that you've learned in that process with the members of our, of our institute so that, you know, maybe there's some things they can take away and begin implementing with their own clients and in their own lives. It's going to be a lot of fun, I think.

Absolutely. And I shared, I shared with David that, you know, all the credit for developing the ability to rethink your thinking goes to Dan Sullivan. It was Dan Sullivan who inspired me with his encouragement to, to set about doing that and that you've. Cause he would talk about, you know, he would say the problem isn't the problem, the problem is how you're thinking about the problem. And so, so David Serves was like, yeah, yeah. Cause you've been chatting about Dan Sullivan and that's come up in a few talks. And so I give credit to Dan Sullivan completely for that. And I, I shared with David that if Nelson and Dan had had the opportunity to meet, they would have been kindred spirits, you know, and best friends for sure. God, all day long. And so it's just a moment of serendipity, as Nelson would say. And.

But something you mentioned here, Jay, I just want to bring it up here. So I don't know if you can see that this is my copy of the book. And Nelson signed this book in February of 2012. So 10 years ago is when I had this book in front of Nelson to get a signature on it. And that came up for me here the other day as well. And so it made me think fondly of Nelson and just remembering the very, the very first time we sat through his seminar and how incredibly impactful it was to just. To be in his presence and to hear him deliver and the uncanny ability he had to convey a message is just. It was awe inspiring. Really? Absolutely.

Yeah. This will be our 11th on a consecutive think tank.

I. I missed one because my son was born.

This'll be my 11th consecutive think tank. But you know, the time, the time flies by so quick and yeah, and it's a just an honor to be able to contribute to the community. And so I'm looking forward to that with yourself, Jen and I on, on stage together having a great conversation and sharing some really good value with the community. And what I wanted to talk about was the phenomenon in physics that Nelson was describing because just to give folks maybe a bit of a glimpse into what we coach when we're talking about that. I don't know, am I able to share my screen on. On this?

Yeah, there's a down below, Jay. You should see where you're making camera settings are and then let you pick which window that you want to use as well.

Okay, I got it. And let's do the entire screen and so just let me know once you can see my screen. Rich.

Yeah, I just got to click add to the stream. There we go. We got the mirror effect.

Okay, can you see this?

Yep, got it.

Is it nice and large on the screen?

Yeah, it's pretty good. Yeah, I think so. Yep. Yeah, because I see premiums paid by dividends there and etc. Cash.

Okay, so here's, here's what Nelson was referring to when he talked about this phenomenon in physics and how the dramatic power comes on suddenly once you get to 212 degrees. Now I'm not sure if I'm able to, to annotate on here, but if I'm not, forgive me, I'll just highlight things. Nelson said that if you show me somebody who pays premium for a period of seven years. So you can see alongside here in the cash premium column, we have seven years of premiums going into the policy. And Nelson would often say, show me somebody who's paid premium for seven years and I'll show you someone who's conquered Parkinson's law, which is something that Nelson describes in his book becoming your own banker. And here's what I want to point out when you look at this policy. So, Rich, if you took a look at the cash value, the increase in cash value from year 7 to year 8, can you help me figure out what that annual increase in cash value is?

It looks like it's about 13,000, maybe a hair over 13,000.

Okay, so this policy at this point has achieved 212 degrees. Because after that seventh year, I'm showing that the minimum premium. So you can see the amount that he was putting in was 40,000, but the minimum amount required was only 10,004,33 and so that's being covered through a combination of dividends and paid up additions of death benefit, which you can see me highlighting here. But the total cash value continues rising every single day uninterrupted because it must grow on a daily basis so that by age 100, the total cash value and the total death benefit are the same. So let's just scroll through.

Well, before you go there, Jake, all the way. There we go.

Look at this. Oh, yeah, they're both the same. And so let me go back up here.

Let's go back up. Way up. There we go.

Go ahead, Rich.

Now, the cool thing about this is that if we, you know, you're showing potential of, okay, we stopped paying in year seven, which year eight, I should say, which we wouldn't recommend anyone to do. You always want to continue paying. If you had a machine that's producing the way that this is, you wouldn't want to stop putting energy into that. You wouldn't want to stop putting fuel in it totally. But the year prior to that, they put in 40,000 and the increase was 50,000. So every time you put in 40 into a bank and at the end of the year, there's 50 in there, that's the kind of account I think you would want to continually contribute into because it's doing that repeatedly for the rest of time. As long as you're taking air into your lungs, why would you ever want to stop putting money into something that does that for you?

That's a great point. And so Nelson says, listen, in the early years, as you're depositing premium into the policy, what you're doing is the equivalent of being at seaside with that pot of water. And you're starting with room temperature water and you're gradually increasing the temperature of that water. And when you get to 210 degrees, all that you have is a really hot pot of water. But once you get past 212 degrees, you've created live steam. And that's exactly what's happened inside of the policy. That the policy illustration that you're seeing here is that live steam is being created. But to Richard's point, if you really want to follow Nelson's golden rule, one of five golden rules, which is don't be afraid to capitalize. Richard just gave you a sharp example of what not being afraid to capitalize looks like. Even if after that seventh year, if all, in this case, the policy owner's name is Ted. If all Ted did was deposit 10,433 out of his own Capital, then the annual increase in the cash value is going to be even greater than what it is with Ted having no capital outlay and the policy taking care of the minimum required premium through the dividend and a portion of paid up additions. So this goes on to further highlight the key that I wanted to share. And that that key is that the policy owner's behavior is far more critical than the behavior of the life insurance company. I'll, I'll just repeat that one more time. The policy owner's behavior is far more critical than the behavior of the life insurance company. The illustrated values that we looked at there, that just shows the insurance company administering that contract all on their own. But if Ted decides that he wants to exhibit the behavior of being the banker in his life and recognizing and honoring that, his capital must reside somewhere. Well, what better place to have it reside than inside of an entity that is producing live steam? What would he rather do? Take that money and put it into something else that is at room temperature? Or does he want to take that money and put it in rate to fan the flames of that 212 degree live steam that he's created? Well, of course you want the money flowing in to where it's, you're already producing live steam. And so it's, it's just remarkable when we, we talk to even existing policy owners, right? You can fall back into that old way of thinking. Hey, Walt. Yeah, I understand, Jes. I remember you were telling me something about year seven, I can stop paying the premium. Well, you didn't remember everything I said. What I said was, is that you possess the contractual authority to do that. But the question will be, will you want to do that? When you see what happens if you continue depositing the premium, we don't want you to stop capitalizing.

Right? And when people say that they're thinking of stopping, it's a direct indication that they haven't been reading the source material, because that means that they've completely glazed over pages 48, 49 in Nelson's book and page 85 of Nelson's book. Point number two, if you're new at passive income time, you would get back every single dollar you put into a system potentially tax free. Would you ever object to putting more money into it? So when you, when, when our brain. And the reason that that can happen for people is because we are constantly bombarded by marketing from all other areas of the conventional financial system. And additionally, we bump into people, we have friends and family that we still interact with and they may not be receptive to learning this idea. And so what happens is they're stuck in their paradigm and they try to infuse their ideas onto you, even though that you've chosen a different path. And then what we get, you know, it kind of puts us out of place. We can get a little discombobulated with all that. So it's really important that you become active in the community. You become engaged in the client membership portal that's been put together by a Senate, but that you listen to materials like the podcast at Wilco Bay street and our videos on the Bankers Vault and read Nelson's book. If you, if you did nothing else but just read from the source material and you read Nelson's book a minimum of one time per year, ideally you, you read it from it maybe a couple of pages a month or something. You got something to chew on. It keeps you in energized and invigorated, and it sparks your brain into action mode because it shares new possibilities of thinking that weren't available to you. Like, our brain is a very powerful tool. It's malleable. And when you feed it the right information, it has an ability to go out and like, attract new things into your life. And as far as I'm concerned, Nelson's book is the right information.

Oh, all day long. And what I wanted to point out in addition to that with, with Ted, his example is that if we go back here for a moment and we just take a look at. Just let me know once you're able to see this again. Rich.

There we go. It's on, on the screen now.

Okay, awesome. So what Nelson talks about again in his book, and he's in the equipment financing example, and on page 58, he says, actually, this interest is not really interest. It's additional premium that has been paid into the policy that equals the interest that was being paid to the finance company. That is the reason that it is adding to the cost basis of the policy. If you have trouble understanding this, go back to the grocery store on page 15. If you still don't understand, then contact me well inside of this policy. With Ted, if he took out a policy loan and, or if he collaterally assigned this policy to a commercial bank, we prefer that he access the capital through a policy loan. If he says, look, I'm. I took out a policy loan or I have plans to. I'm going to take out a loan for $150,000 to take advantage of a real estate investment opportunity that has tracked me down. While he now has A system to flow capital back through his policy. And it should be going back through as a combination of policy loan repayment and then the extra interest that he is capitalizing his system with, it should go back in to the policy as premium. So in the eighth year, if he decided, hey look, I'm going to cover the minimum required premium, I'm going to keep doing that. But I also have $4,000 of extra interest that I want to pay back into my system. Well, that extra interest is not really interest. It's going to go in as additional premium. So instead of 10,433 going in, he's going to have 14,433 go in. What is that going to do to the rest of the numbers in the cash value and the total death benefit column for the rest of his lifetime?

Rich going to ramp it up and it becomes even more efficient. And every single dollar of financial energy that enters this machine is now actively working for him for every single day that he's alive on planet Earth. And the day he walks off planet Earth, which will happen, more capital is available for the people he loves or the things he loves and cares about. He, or in this case, it's Ted. So he, no matter what, by making that voluntary decision. Here's another thing, I was looking at that, that same chart. And so, you know, right up until that point, there was about 299in the, in the cash bucket. So let's say he, let's say he had a mortgage, primary mortgage, and he wanted to get rid of that mortgage and it was around 250,000. He goes and takes a policy loan and he just, you know, pays off the loan in one shot and says waves goodbye to, you know, his commercial bank. Now if he was making a $2,500 a month mortgage payment to them, he could redirect that financial energy to the, to the policy. And he could do it in a couple of ways. He gets to decide, he could say, I'm going to take a chunk of this and I'm going to allot it to paying the premium that I, that I was, you know, the 10,444 and I'm going to take the other chunk of that mortgage payment that I was making and I'm going to use that to repay the policy loan. He can structure and dictate that however he chooses. And again, it's the key is that he's taking the same. He made a commitment to have money walk out the door to some third party bank for a very Long period of time he had an amortization that was going to happen no matter what. If he does not take that same payment allotment, at least that amount, and redirect it to a. To a system he owns and controls, he's not being an honest banker.

Yeah, that's. That's precisely it. And the late Bob Shields, you know, who we met before, you know, we ever met Nelson, the late Bob Shields would say, if you truly want to save money. So if you're, if you're a saver, if you really truly want to save money, repay policy loans.

It's such a. Such a powerful statement because if Ted, at that seventh year, if he already had a policy loan balance outstanding of 250,000 bucks because he took advantage of an opportunity, or like you said, he extinguished the mortgage on his principal residence or on a rental property or combination of both, if he wants to not be paying premium while he can't offset the policy.

He. What he needs to do, if he collaterally assigns it to a commercial bank, the commercial bank will. Will take over that loan balance. And the best thing that he can do is repay that loan balance. That's the best way for him to save money so that when he gets to the tail end of it, he can release the assignment and take control of the policy again, if he ch. Chooses to do that. Or he can maintain access to capital from someone else's bank, which wouldn't make any sense if he's planning to resume the repayment of, or resume the payment of the minimum required premium, he should take over the assignment of the policy again. So there's a way to navigate those traffic cones, but you have to recognize that you're the. You can be the banker in your life. And when you choose to do that.

You'Ve got to. You have to be continually exposing yourself to the process. And the best way to do it is to simulate it. That's the best way to stay engaged, because otherwise you could lose that sense of it. And now you're just looking at the policy as a product. Hey, I've got a product. What should I do with it? Versus I've got a warehouse of wealth that's producing live steam. Do I want to accelerate the steam, or do I want to cap it off and shut it down? Do I want to slow it down? Well, if you still need to use some money, A, you shouldn't be slowing it down, you should be speeding it up. And B, you've got to. You're the one that has to become your own banker. It's not Nelson described in the book. He's like, hey, if you get to a point where you've borrowed everything that you can access in the policy and you're unable to pay the premium or something happens that's on you, that has nothing to do with anybody else. You're.

And it doesn't happen overnight. That circumstance doesn't happen overnight. That's, that's a combination of probably accumulated years. And you know what, things happen to people. Bad things happen to people where it does cause issues that we have to recover from. We've all been in that situation.

Yeah.

But if you don't notify your coach, the person you're working with, they have no ability to help you. The time to talk to them about that isn't, isn't when your back's against the wall. It's when you see that there's a truck on the other lane coming towards you. Now it's time to make, pick up the phone and say, hey, I think I'm going to get into a bit of a financial accident here. Can you give me some ideas and some guidance on how I can fix this problem I've created for myself?

Absolutely.

You got to get ahead of that sort of thing by being proactive, not reactive. Yeah. Don't operate your financial life in a reactive way. That's part of what our training and our coaching and our, our membership portal, all the resources that we're building are to help you get into that mental state of proactiveness around all of your financial decisions. And I'm going to give you a sharp example of that. Jay. Young gentleman reached out to me recently. He just shifted from being, he's, you know, it's in a sales position. He just shifted from being employed to now being able to set up contracting to the company, a long term company. And he got great bonus from his sales. A pretty consistent about $20,000 a year, has no coverage, no insurance, young family and he knew he needed coverage and insurance. And now he's going to be getting paid into a corporation which is new. He sought coaching and guidance because he knew I already was familiar with that. And the end result is we're going to be able to apply this capital into a policy for him. He's going to be able to save and maintain it versus their plan was to take that 20,000 of financial energy and pay off a couple of debts. That would have been a permanent transfer away of that capital and he would still have no coverage for his family. Right now he's going to have well over a million dollars of coverage for his family. And he's going to be able to input that capital and have access to approximately, I don't know, 13 grand or something, give or take, that he's going to be able to utilize to pay off two credit cards which he wanted to get rid of $400 a month to credit card payments that used to go at the door. Is now going to go back to his company as a repayment into the policy.

Yeah.

And he knows he needs to set aside for his GST and his, his taxes and everything for the upcoming year. He's going to commit to sending $1,000 a month into a separate account for that, which is going to be there to help fund the policy and give him access to pay the tax bill, which is still a bit of an unknown event. But he's controlling the circumstances now right out of the gate because he thought enough about reaching out to someone and engaging in conversation to see what was possible that he himself could not see.

That's awesome. That is really awesome. And so, man, these live streams are a lot of fun, especially when we just say, hey, we're gonna go jam. Because at the top of the hour we're like, hey, aren't we supposed to be on the live stream right now?

Probably get the link for that.

So we appreciate our community and we'd love to hear your insights, your thoughts, your requests on topics that you would like us to to chat on. And hey, if you'd like to hop into to a live with us and share your experience with the process or, or just get involved in the conversation, just let us know. We'd love to have you be a part of it. And yeah, have a great Friday and hopefully we get to see all of you on the Bootcamp tomorrow.

Thanks for listening to the Wealth Without Bay street podcast where your wealth matters. Be sure to check out our social media channels for more great content. Hit subscribe on your favorite podcast player and be sure to or rate the show. We definitely appreciate it. And don't forget to share this episode with someone you care about. Join us on the next episode where we continue to uncover the financial tools, strategies and the mindsets that maximize your wealth.