A Guide To The 4 Stages of Infinite Banking Concept

I just want to invite Nate Scott, living wealth. Mr. Scott, take it away, brother.

Jason. How are you, my friend? Good to see you.

It's great to see you too. Stages.

Yeah. I'm so excited to be here. Sage is mine. Well, everybody, welcome to the webinar tonight. It's gonna be so fun. Yeah, I would say. And I bet you there's so many people here, Jason, I don't know how you would know this for sure or not. How many people here are IBC studs and have been doing infinite banking and are, you know, rank as much Kool Aid as they can get their hands on versus how many people are new to the concept? I would say though, that as we get, as we start this whole webinar off, there's going to be a premise that I want everyone to understand and essentially believe in before we actually get everything moving in the right direction. And the premise is this. I really do believe that the infinite banking concept is so such a powerful concept that it can actually benefit pretty much anyone that implements it. It's not even a question I have anymore in my life. Maybe at one point when I first started, I was like, is this really for everybody? Now, essentially, I do believe, I think everybody can benefit from becoming your own banker. The question is typically not, hey, can this benefit me in some way? Can this help solve my problems or help me achieve the things I'm trying to achieve financially? That's normally not the question anymore. The question is really, at what scale does it make sense for someone like me to implement the infinite banking concept? At what stage of IBC does it really make sense to implement in my own personal life? And that is where we're going to dive in today. That's actually the whole purpose of the four stages of infinite banking, that framework. The problem that this solves, the framework does, is it essentially allows people to see that infinite banking can kind of mean different things to different people. And maybe you have an image of what it really means to you that will put you in one of these stages. But honestly, you may not understand that there's actually people doing something completely different with it and benefiting in different ways from it, and it can become as big as you want it to be in your life. So as we dive in, just understand this, that the premise is essentially, hey, infinite banking is extremely beneficial for pretty much everyone. And there is four distinct stages. After thinking about this, years and years of time and energy has been spent in kind of discovering this framework because I've met with thousands and thousands of people to implement Infinite Banking. And as they go from learning about it and seeing if they can trust the concept and they move into let's implement it, that there's, there's many of the same questions are, are asked and many of the same problems people run into as they get involved in infinite Banking. And so this is what I tell every one of my clients to go watch this, this webinar that I'm about to do for you guys. I've also got it on our YouTube channel, just recorded there as well. Of course, I tell them to watch this before they decide how they want to implement it. In fact, if you don't, if they don't watch this, I'm actually concerned that they maybe have no idea what it even means to implement infinite Banking just yet and really what they're ready for. So let's go ahead and dive in. The framework of this is going to be. I'm going to, as you can see on the screen right now, I'm going to dive into what essentially give the hallmark characteristics of what life looks like if you were to implement it in each of these stages. And then after this, I'm going to go into a hypothetical example, a hypothetical person like maybe like built kind of around my own life and essentially saying, what would it look like for me to implement Infinite Banking in each of these stages? What would it look like if I was to implement it in stage one, two, three or four? And then we're going to transition from there into, into actually showing the real, like the real examples of, you know, building policies to be utilized in these various stages. So let's go ahead and dive in. As you can see on the screen, there is four distinct stages and we've given them loving names for these stages. Stage one is what we call the saber stage. Stage two is the capital builder stage. Stage three is the entrepreneur stage. And stage four is what we call the lifestyle stage. And what is actually going to put you in each of these stages is not what you use your policy to do while you're doing infinite banking. What actually is going to put you into each stage is how much of your cash flow are you willing and comfortable to run through a policy first before you end up using it for the things of life. So keep this in mind. I think one of the first stumbling blocks for most people is they hear about IBC and they want to do all these amazing things with it, but yet they're, at their core, there is some sort of fear that keeps them bottled down and so they think well, it makes sense for Jason to go, you know, run all of his investments through policies. It makes sense for Nate to pay his taxes and charitable giving through policies. I should go do those things. But Jason and I, and I'm, I'm going to have to erase this. But we're probably over here in the lifestyle stage and you might find yourself over here in stage one, just kind of getting started and getting your feet wet. And so what. The biggest problem that we're trying to solve with this is that people try to cram different transactions that actually exist. For a, someone who is committed to IBC at a high level, what actually happens is a client may commit at a kind of a low level, but think that those transactions that all the, all the IBC pros are doing are things that they should be doing too. And that's where confusion reigns supreme. People get very confused and they, they honestly get a little upset. They think that there might be something that they're totally missing. So let's go ahead and dive into this. I won't spend any more time on the buildup. In the saver stage. This is the starter for most people. I actually think of the saver stage as essentially the most objective stage. This is at the point stage one where I really do believe that everybody can benefit from infinite banking. And in the saver stage, most of the time all you're really going to do is say to yourself, I, I believe that permanent life insurance, dividend paying, whole life insurance policies that are built to practice the infinitive banking concept, that they really are essentially the best place for my safe capital, my liquid capital. And so most of the time, whenever someone's in the saver stage, their main thing that they're going to do is they're going to move their emergency fund into their policies. This is, this is that, that's the kind of the style. Essentially they're going to take money that's already in the bank. Money that's already in the bank is what's going to end up going into a policy. So essentially you'll have somebody who has, has some liquid savings, has some, some cash, and they're just simply saying, hey, the banks kind of suck. It's almost not even an argument anymore. Banking itself is not built for us depositors to really over a lifetime receive much benefit. Of course, our deposits are what the bankers use to make a whole bunch of benefit. So essentially whenever they hear the message of infinite banking, they're like, well, maybe I'm not ready for the Nate and Jason style ibc. But what, at least what I know is that the policies and the infinite banking concept presents to me an opportunity to use my liquid money that's already in the bank, that's already is. It's already safe money. And it allows me to transition that into a place that's going to produce a lot more value to me inside of these policies, both for right now and for generations to come, than if I just left it in the bank. So this is money. You could also find people that are that think of IBC as maybe they're learning about it, but it's going to be kind of a diversification play, maybe where they're saying, I just need some safe place to store some money and all of this is fine. This is the saver stage, where we really just take a small slice of your overall financial pie and commit that to policies because we think it's going to be better there than it would be inside of a typical financial instrument like a bank account, savings account, things of that sort. And maybe you'll take some money out of other places to move in a diversification play to have a safe spot. Here's what I want people to understand about the saver stage of ibc. In this stage, a hallmark characteristic is that the. You will rarely ever use your policy. You will rarely ever use your policy in the saver stage of infinite banking. And the reason should be relatively obvious as we go along, but the reality is we rarely ever use the policy because there essentially would be no reason for the majority of us to end up using a policy because we have so much of our financial pie, our financial life, that is never even entering your own bank. We weren't ready for it yet most of the time. What this also entails, a hallmark characteristic of the sabre stage, is that you got started but you didn't have any intentionality. That word's going to come into play as we move forward. A hallmark characteristic of the saver stage is you got started believing that it was a great place to store some safe money. There's some. It was. The policies present a better opportunity than the conventional ways to store safe capital and diversify out of risky things. But the reason you're never going to use it is because you didn't start it with the intention of achieving things with the policy necessarily. That's really a hallmark characteristic of the saver system stage of life. There really is no intentionality. It's kind of getting your feet wet, saving a little money on the side. It's very similar to Having an emergency fund, really it is, or a little safe spot of your financial pool. There's not a lot of intention there. There's just, hey, money's got to sit someplace. And this sounds like a great place for a little bucket of my money to sit. There's very rarely ever intentionality. But as I mentioned at the very start of the webinar, it is true that this is what I call the objective stage, because I really do believe, and I'm sure that there's 100 people on this webinar right now that would, that would, who have been practicing IBC who would agree with me that policies really are, if you do the research, they are truly an objective li better alternative than typical banking transactions. So essentially all you're doing in the saver stage is saying, I'm going to get rid of anything that's not money. I need to pay for my monthly expenses. All of this safe excess that normally would be built up in some sort of cash or cash equivalent place. I'm going to move into policies because I expect to receive something better there. And it's very true. And so this is kind of the starter, this is the objective thing. This is really what I think everybody in Canada and the United States should get on board to do is at least to start saving their money, their liquid safe portion into policies. As you transition from this from stage one into stage two, there's a couple of things that are going to happen in stage two we call the capital builder stage. And in this case we're not just going to move a little bit of our safe savings. We're not just going to move kind of our emergency fund and have just a low level of liquidity. Here in this stage is when you start to redirect cash flow that used to go someplace else and you're, you start to redirect cash flow to pay for policy premiums and start funding a larger system. And obviously when you start to do this, I hope your mind starts to click as you start to commit to a higher stage and commit more money into funding your bank. The obvious thing that will end up occurring is you will find yourself using your policy more often. So you'll use the policy more often and it's by default. In other words, here's what I'm trying to get and it'll actually come more and more clear the further we get along. But some people in the saver stage, they really haven't committed to very much of their financial life into policies, but they think that IBC is This awesome thing. So they're, they try to force themselves to use policies to go do things. And so they take policy loans to go do things, but they also have all this other money that's sitting around maybe in banks or in, in other liquid places and cash flows coming in that they're not contributing to policies. And so they, they're the ones who end up asking questions like, well, I know that, you know, Jason talked about being able to finance his house from a policy loan. I know that Jason talked about buying cars, and that's what Nate's talked about too. And you can finance cars from this. But why would I finance my car using a policy loan when I actually have the cash to buy the car sitting in, you know, an account over here or something like that? That is, these are the questions that get asked by people in the saver stage. They think that infant making should, that they should use the policy, go do something because there's something magical about it. But in the reality is if they were to borrow money to buy the car, they'll pretty much just being paying policy loan interest to the insurance company in exchange for a higher, you know, cash balance someplace else, doing something else. And so the, the way it actually works is not that.

It'S not that every, in other words, every transaction that you can do within the infinite banking framework doesn't always make sense for, for you, depending on what stage of commitment you've decided to put yourself in. So in the capital builder stage, it's like the step up from the saver where you start to redirect money maybe that used to be saved to buy cars in a bank account. That money is now paying premiums into your policy. Money that you used to maybe go on vacation with is starting to pay premiums in policies. You're, in other words, you're starting to direct cash flow.

With intentionality. So I'm going to make that note. In stage two, you add, not only are you going to put more capital in compared to your capacity to put money in, but you start to add intentionality to the mix. It's not just a place to save some money just in case or to have the safe pool that is a wise decision for your life in general, but you start to add intentionality and say, I'm going to put more money into this policy so that I can do whatever else it is. So you redirect cash flow that could have been in your regular life and you start to add intentionality and start paying more premiums. So a lot of times that's the key hallmark of the stage. And oftentimes in the capital builder stage it is true. You're doing more personal things with your policy to some degree maybe. So those are things like buying cars, you know, making down payments on a new house, doing home remodels, maybe you know, funding your kids education. In other words, all these things that are relatively large ticket items that you normally would have to set money aside to do, you're going to end up doing inside the States. We could also throw in like paying down debt if we wanted to. That's, that's a pretty hallmark characteristic of people in the capital builder stage, what they're going to do if they have any debt that they don't want and maybe one day they'll have some capital in there that they'll use to make an investment. But for the most part, the capital builder folks, it is more of the high capital things that you normally would set money aside for. That's not exactly emergency fund money, but money that's set aside for, to pay for something. You're going to direct cash flow into policies to be able to fund that. Of course, as you move out of stage two into stage three, as you can tell, all we're doing is committing to higher levels of infinite banking. And as you commit to higher levels of infinite banking, there's a couple of things that are going to happen. But of course one of them is by default, you will end up using your system, your policies more often. As we go down the line, we increase levels of intentionality, we increase the total level of your cash flow going into policies before they're deployed. And thus we're going to end up using policies more often in the entrepreneur stage. The reason why we called it the entrepreneur stage had nothing to do with whether you had to be an entrepreneur to get into the stage or not. The entrepreneur stage was, was designed mainly because we like to think of the of stage three as you truly buying into becoming your own banker. You're truly treating your banking system like a business. It's no longer just a savings strategy. It's no longer a nice place to build capital to pay for the larger expenses of life. It is you committing to a level of saying I want to be in the banking business. And the hallmark characteristic of the entrepreneur stage is that every dollar of free cash flow is going into premium, is going into your policies. And so what this means, and I'm going to share what this looks like when I do the example here in just a minute, but essentially what this Means is that. No, this is actually what I think most people think of infinite banking. If every, let's say you're, you're, you make, you know, $200,000 a year and you, you have expenses, you have taxes, you have charitable giving, but you have some, of course, some money left over because you live on less than you make. And maybe that's 40 or $50,000 a year of leftover capital. That has to do something. In that framework, all of that free cash flow would be going into policies through premium, whether it's base premium or paid up addition rider or whatever it is, it would go into policies first and then you would deploy that cash flow into the various investments and large capital expenditures of your life. And so with this being said in the entrepreneur stage, you're essentially saying, I don't want any of my true free cash flow to go into banks. I want it all to go in through my own banking system because I'm in the banking business as well and I want to be as profitable in that business as I possibly can be. Now the reality is in this stage though, we haven't started using inside of our banking system any, any of what we call lifestyle money. That's going to be on stage four. In other words, we're still paying our bills from checking accounts. We're paying for all these annually recurring things, you know, you know, things from checking account money. We're not involving any of that. We're just using what we call free cash flow, which is the money that's left owned over after you've spent things, you know, spent money on your lifestyle and various things like that. In this stage, of course, what's going to end up happening is that you will use your policy very often.

Now is there anything magic in about using your policy often? Like in other words, all we're trying to describe here is that the people who it makes logical sense to use their policies often are the people who have a higher and higher amount of their total cash flow going into policies first. That's all there is. So as you go to the saver end of the spectrum, you will rarely use your policy not because it doesn't make sense for anyone to use their policy, but because it doesn't make sense for you to use your policy because you already have all these other cash flows. In other words, as I said, you have cash flow that can pay for your car, you have cash flow that's set aside for remodels, you have cash flow to buy. You know, that's not going to bother is going to buy your next home. You have cash flow to pay your kids education. You're not adding any of those in. In the saver stage, you start to add those in at least a chunk of them into the capital builder stage. But entrepreneur stage is the one that's fully defined as hey, every, I want my banking business to be as big as possible. I'm going to treat it like a business. I'm going to put all of the money I possibly can into it first. Which is going to then require me to by default to use my policy to fund the various things of life that are not just a part of my regular lifestyle. So this means that every investment that you make from here on out will be funded from your policy. Why is that? Why would every investment that you make be funded from your policy in entrepreneur stage? Well that's because there is no money elsewhere to fund investments. You have put it all into your own banking system already. It's already all there. So of course we're going to fund every investment from the policy. But we have no other choice. We've, we've, we got into the banking business, we're going to of course use our bank because we don't have money elsewhere to do it. And every large capital purchase, every capital purchase of course is going to be, is, is going to come from your policies in this stage. Now the only thing of course that we haven't really added in, in stage three is anything that's recurring, that's more of a lifestyle expense to some degree. So in stage three we really have a true banking business at hand. It's not just a savings strategy and it's not just like being able to fund our kids education strategy like we would bump it up. Now it's a true banking business when we branch into stage four, when we graduate into stage four. Now this is where things get a little bit complicated. Now in this stage, first off, by the way, you could ask a question like well Nate, if all of your free cash flow is already going in to policy premiums in stage three, what else do we have left for stage four?

Remember it's not just about whether like a stage three guy could choose to borrow money from his policies to do things that are, that are involving his lifestyle expenses, he certainly could. However, if you can follow me, and I don't, I don't know if I want to open this can of worms totally right now. But what I guess what I'm trying to say is it doesn't exactly make sense even in Stage three to start borrowing money to pay for your grocery bill. It doesn't make sense yet because we haven't transitioned what we normally would have spent on the grocery bill into the policies to then deploy it. So if all. So essentially, if I borrow money from my policy to pay for the groceries, what am I going to do with the cash that I haven't yet committed to my policy yet that I that is there to pay groceries? Because that's what I've been. I have money to pay groceries already. So if I borrow from my policy to pay my for my grocery bill, but what am I going to do with that money? And if I haven't committed it to premium, then I'm just going to borrow money. To borrow money essentially is what's going to end up happening. So in the lifestyle stage, this is where it gets complex. Not everybody, by the way, should even go into the stage four and you'll learn that here in a second. But stage four is a more complicated.

Stage. But this is when you start to redirect cash flow.

And that you normally would spend. So this is whenever you start to redirect cash flow that would normally be spent. And the most common couple of items for this are the larger lifestyle expenses that most, most of us have, which would be things like, you know, for me it's definitely charitable giving. You know, I give, I give quite a bit away. That's because my dad's a pastor, by the way. So giving is in my blood. I love to give, I love to be generous. So charitable giving, of course, things like income taxes and various other taxes, these big expenses that we are going to pay with money that normally we just pay cash for. We're going to start to redirect the cash flow that's normally spent on those items into policies before we spend it by you, by paying premiums, by adding to it. But here's what I want you to understand. This is why it's so complex.

If, let's say I Pay, for instance, $50,000 of income tax, let's just throw that out there. Let's say you have $50,000 of income tax and so you want to increase your total policy premiums across your system, maybe adding a new one, maybe dumping in extra PUAs, whatever it is to you at the time you want to add in an extra $50,000 to your policy premium system so that you can, you know, you're redirecting that cash flow so that you can borrow 50,000 to pay for your tax bill. The, if you can follow My train of thought here, what's going to end up occurring is if you already have all of your free cash flow going into premiums, and then you add this onto it, so you're paying an additional 50 grand above your cash flow into premiums, and then you're going to borrow $50,000 out to pay the tax. The, the logical conclusion is, technically speaking, you don't have another $50,000 to repay the policy loan that you just took out to pay the income tax, because you actually committed to paying an additional 50 grand, at least for a period of time, into a policy premium and then borrowed the 50 out to pay the tax. So here's what's going to end up naturally occurring pretty much almost exclusively in the lifestyle stage. You are going to create what we call a strategic loan balance. And the way we define a strategic loan balance is typically this is whenever you're borrowing money to do something within your IBC system, but you don't have a direct repayment schedule that's built up involving that loan balance. So of course, if I'm going to borrow money from my policies to purchase a vehicle, I'm going to set myself back a loan repayment term and sequence that makes sense for a car loan to myself. The same thing would go if I was going to borrow money from my policy to make an investment. Typically speaking, when I make investments from my policy, I use the proceeds that end up coming from the investment, whether it's cash flow or whether it's a future sale or whatever it is. I kind of tie the loan that I used and the returns of the investment together, so the returns end up paying the loan back. That's how I oftentimes do it. But in the lifestyle stage, there's going to be some period of time where you actually are creating a loan balance, but you don't have a specific plan to repay it. But most of the time, this is why, by the way, stage four is not for everybody, because that can make some people uncomfortable. And it can actually make. It can actually not make sense for some people to enter stage four. Because really what happens is whenever you have a strategic loan balance, normally it makes sense to do that if you're expecting in the future some sort of windfall event to take place. So most of the time when someone enters stage four, they start to redirect cash flow that's normally spent on typically heavier ticket items like charitable giving, income tax, but it could be even something so low as a grocery bill, if you wanted to do it that way. And that money is sent into policy premiums first and then it's borrowed out to go fund these various things of life. But there's no additional cash flow really left over to start paying back loans. So you create a strategic loan balance. But the reason why it would make sense to you is that if you expect a windfall event in the future, you have actually now prepared a place for it to go. And we actually have some content on our YouTube channel if you wanted to know specifically kind of that strategic loan balance concept, I don't have time to like dive into that. It takes its own 30 minute webinar to describe truly what a strategic loan balance really is. But normally speaking, the people that it makes sense to do that in are those that would have some sort of windfall event expected in the future, whether that's an inheritance, whether that's sales of, of an asset or a sale of a house or something like that, where they say, yeah, Nate, I'm, I actually want the, to build this, the strategic loan balance up for the next few years because I'm expecting something to occur down the line and I'd love to be able to just dump all that money back into my policies and I can do that by paying back my strategic loan balance. Of course, in stage four, this is a very complex stage and it's very, very strategic. Those are, those are the hallmarks, of course, of the stage. This is something you don't do on your own. This is something you definitely have an advisor with you. You know, you have Jason and his team or something like that to help you manage this to where it doesn't get out of hand. Because what we've all seen, not all of us, but certainly us who have been in the banking circles, we've seen people push too far too fast with no end game in mind, and it's actually caused some problems. So you don't want to just randomly enter your stage four life, but nonetheless, that's how the stages often work. And what I'm going to do now, now that we've covered each stage.

As I mentioned in the very beginning, most of the time it actually, what you want out of it will determine what stage you should enter in. And there's no right or wrong answer there. If you really do, if you don't want to get into the banking business the way that infinite banking is really supposed to be done, then maybe the saver stage of the capital stage will work for you. But if you are someone who loves to get their hands on money and achieve things with money, then of course you're going to want to commit to a high level of, you know, in the stages. And by the way, the stages themselves are not like a dollar amount that puts you in the stage itself. What will put you in the various stages is how much of your capacity you are choosing to put in. Technically speaking, we all have an objective total financial capacity called your gross income. And if you want to take some expenses out of that, you, your free cash flow at least we all have kind of an objective max amount. And in this model you're just really deciding how much of that you're going to contribute in. So if you're a guy who makes a million dollars a year, your savers stage might be larger than a guy who's making $100,000 a year, his lifestyle stage. In other words, it's all to scale per se, based on your own capacity. Here's one thing I know before we move on to the next step in this, in this process. What I see happen all the time, if we're, if we're honest, is that when most people learn about infinite banking, they envision life somewhere in stage three or stage four. When, when they really get saturated with infinite banking, they really believe that IBC in their mind, they see it occurring at the entrepreneurial lifestyle stage. They see themselves using policies all the time. They see themselves, you know, paying their charitable giving and their income taxes, making investments. They see all these wonderful things occurring in their mind. That's what they see. However, I as an advisor see them committing to a level of premium that actually puts them in a saver or capital builders, capital builder stage. The question is why, why does, why does people so often see infinite banking and actually buy into the vision of IBC as a stage three or stage four practitioner, but they actually commit, they actually start funding policies that would actually put them objectively in stage one or stage two. And I believe there's a line that goes right down here in between stage two and three. And that line is called, that indicates the fear of premium. I call this the fear of premium.

What typically keeps people stuck in stage one and two. First off, by the way, I don't even know if I should use the word stuck. It's perfectly fine to live your life there if that's what you want. But who I'm talking to is the people that really want ibc, their banking policies to become the default financial tool for the transactions of their life. That's what happens in stage three and stage four. So they want that, but yet they find themselves, you know, essentially at a, at a level that's in stage one and two. The what is that? It's because there's a fear premium. Somewhere along the way there is a fear where people will end up saying to themselves, you know, I don't want to over commit, I don't want to, you know, I don't want to lose my shirt in this somehow, some way. There's most of these, there's typically a fear of, of the premium. Maybe they still see the, the premium as a payment or an obligation. And, and everybody likes to keep liabilities low. Everyone likes to keep obligations low. And so whenever, whenever we use the word premium and there's like a bill that comes due in the mail, we think of it as an obligation in our, and our brain kind of deposits that into the slot that goes along with all of our other obligations. And they say, ah, that's too scary for me most of the time, those fears, excuse me.

I'm talking too fast, but I got a lot of ways to go still a lot of time. Those fears are not bounded on reality. So that's of course why you need an advisor to be able to ask questions to, to be able to talk to you. You need a coach in this to get you to those stages that you actually want to be in and have it make sense because there's a lot more money and profit being made in your banking system. Of course, in stage three and stage four, which I'm about to prove to you once we go into the actual examples.

But nonetheless, in this stage, normally there's some sort of fear premium. Oftentimes they're, they're misaligned fears. They're, they're a lot of times based on ignorance that we hope to kind of get you past so you can actually achieve what you want to achieve and, and get the benefit from infinity that you want to get. So with that being said, I want to transition now from this, from, from the four stages discussion into actually going into a hypothetical scenario kind of built on a relatively, you know, just someone who's in a similar stage of life as myself. Now, this was actually a year or two ago anyway. And of course numbers are very rounded. And so in other words, these numbers can be big to you, they could be small to you. It really just doesn't matter. I just kind of chose to fit someone who's, you know, at least walking in a similar stage of life that I am. And in this we're going to discuss an actual example of a hypothetical person and really help you see with clarity what does each stage look like? How much money is this guy in this hypothetical scenario putting into the policies? How big are they getting based on the stage of commitment they want to make? So in this example, we're going to assume a couple things. We're going to assume this individual is making $500,000 a year of income, that there are lifestyle expenses of $150,000, that he's paying about $150,000 a year in taxes in all of the tax forms that exist, and that he gives about $50,000 a year in charitable giving. You know, 10%, like a tithe amount of that would be given to charity. And so that's 500,000 of income, there's 150 grand of expenses, 150 of taxes. That's 350,000 to charity. So that's a total of 350 that was kind of spent of the 500,000. And that leaves him $150,000 left over. This is the term we've been using, by the way, called free cash flow. That really what the vast majority of those stages were based on, really, how much of this free cash flow are you going to commit to building your bank? If you commit a small amount, you'll be in the earlier stage. If you commit all of it, you're in stage three, or maybe even getting into stage four. So this is that number $150,000 that this person has that's going to be doing something. It's going to be working someplace. And so I just kind of created some hypothetical arrangement of what this person is doing before he learns about infinite banking. And then what it's going to look like as he starts to transition in the various stages to infinite banking. So in this scenario, he's got $150,000 a year of cash flow to work with. And we're going to assume that he has money up here saved up in an emergency fund. And I believe personally that everybody should really have at least about six months of their of their lifestyle expenses saved up in an emergency fund. So if he's got $150,000 of expenses, he really should have at least $75,000 liquid in his emergency fund. So we're going to assume he already has that money saved up, but we're also going to assume that he's adding about $10,000 a year of from his 150 pool into that emergency fund to continue to grow it. You know, inflation happens, his income's going to go up, his Expenses are going to go up and so forth.

So we're going to assume that he puts, that he's got 75 grand already in there and about 10 grand a year goes it back into savings in his safe, nice, safe place. We're also going to assume of this money that there's 40 grand a year going into kind of your more conventional retirement programs. I know here in the US that'd be things like IRAs, 401ks, I think in Canada, that's an RRSP, I want to say, correct me if I'm wrong with that, but nonetheless, going into some form of retirement program, retirement savings more conventionally, which will leave him with $100,000 left over. That's got to go do something else, of course. So that's going to be all of his other investments he may make that maybe he may also use those for different lifestyle things like remodeling a house. He may, you know, take the family on a nice vacation. There's going to be some other things involved with that other 100, but he's going to make, he's going to, it's going to be stored up to make investments, go into lifestyle expenses, you know, improve the life, I don't know, whatever it is. And so this is just a typical look for a guy who's making $500,000. The question should be, okay, here we have a guy, what should he do when he's going to get into infinite banking? Remember, I believe that everybody should do infinite banking. The question is not whether it would benefit you. The question is often, well, at what scale does it make sense for me, based on these parameters, to do it, based on what I want to do? So you really want to start with the end in mind. And so what I'm going to do is kind of give an example of what the different stages would look like if you were to implement infinite banking at those stages. And so we have here at the saver stage, all, remember, in the saver stage, all we really do. And I go back to the part one, remember, all we're really going to do in the saver stage is move money into the policy and to replace that, that emergency fund that he already had that was just sitting in someone else's bank doing nothing, essentially. And then that $10,000 a year of cash flow that, that our hypothetical person had that was going into that bucket. All we're going to do is transition that money that's already going into his safe pool of money into a policy. So, of course, what that means is we're going to direct $10,000 a year of cash flow into our policy as a placeholder for the saver stage. But he also has, remember, the $75,000 that's already saved up inside of his emergency fund. So we're also going to move that money in. But here in the United States, we have some. Some rules. I assume Canada does as well. Here in the U.S. it's called the modified endowment contract, or MEC guidelines, the MEC rules, which kind of limit us from just writing one check necessarily to fund 75 grand a year. There may be ways that we could, we could work it out, but it's pretty common if you have a lump sum to dump into a policy like that, to spread it out over a little period of time. And so in this case, in our little example here, we're going to move in ten grand a year from our cash flow, but we're also going to move in the emergency fund over a few years. So if we had 75 grand of emergency fund money in our model, we're going to move it in over four years. We're going to move it in 20 grand a year for years one, two, and three. So that's 60 grand of it in years one, two, and three dot and that leaves us $15,000 a year left over to dump in in year four. So we're going to move in 10 grand a year, plus we're going to start pulling money over the next three, four years into the policy from the emergency fund. And essentially this. I just built kind of a basic example of what this would typically look like. Excuse me. And so right here we have exactly what I was mentioning on that previous page. We have the $10,000 a year of cash flow. That's the money that he was already putting into the safe place. And then 20 grand for years one through three from the emergency fund and 15,000 in year four that came from the emergency fund money. And so that's what you'll see happening in here. You'll see we have 30 grand a year for the first three years. And the last year we he moved in 25,000 because we only had 15 from the emergency fund left to pull in that year. And then from then on, he only contributed the $10,000 a year of cash flow after that point. And so what you'll see here, I mean, this is just your basic policy, essentially what he's saying to himself is that in the sabre stages at least, I may not understand everything there is to know about infinite banking just yet. I may not understand how I could fund everything in my, in my business and in my life through the policies, but at least I can comprehend for at least now.

That for my safe money this is going to generate a better result for me and my family than if I did it inside of a bank. And that's actually why I added this column over here. This was just kind of a placeholder for what the money would have looked like in the bank account just sitting there. And I, and I let it earn some interest. In this case it was one and a half percent after tax, which would probably be closer to maybe about two and a half percent pre tax rate, which right now I know is a little bit low. But I also built this, this whole scenario in December of 2022. Really when that, you know, that was, that would have been a great rate back in December of 2022. But on top of that, I don't want to get into an argument here about all of this, but I would also say yeah, of course bank, bank saving rates have gone up, but, but insurance companies are also increasing their dividends now that we're in the higher interest rate environment. So I'm just saying it's, it's you changes have to be made to all sides to really compare. But essentially what you'll notice, and this is why I call this the objective stage as, as if you can remember from the very beginning, and the reason we call it the objective stage is because you take a look at this individual who's, who does this until age 65, let's say, and he has 1.25, you know, $1,225,000 of cash value and $2.2 million of death benefits sitting in this little safe savings bucket, whereas his bank of Savings account had $589,000 in at that time. So we're talking about $635,000 of, of additional gains to his family, tax free.

Not even including of course the extra death benefit that existed throughout that entire time and will continue to be there for his family. On top of which you'll just look at the growth of the policy right now.

On this last year that we have, you know, on the sheet and you'll see that the policy growth was $70,000. That's 1,155,000 to 1,000,225 at 70,000, of course he put in ten grand. But so in other words, if you take out the 10 that he put in, that means he made a $60,000 profit in this one year. And you compare that to the bank account. You compare that he had a $19,000 increase and he also put in $10,000. So that means he actually only made a $9,000 profit. And so you're sitting here looking at the two, you're like, man, of course, this is why we say policies really do provide the best, most objective place to store safe, liquid capital. And we believe, I mean, everybody should at least be doing this, at least. But this might not be enough for some people. Of course, some people would take a look at this guy and they would say, you know, we have all of this cash flow going into retirement programs, going into other investments. You know, we have a total of 150 grand, and we only are moving in 10 grand a year from this policy. By the way, one thing really quick, some people that I would meet, Maybe they're making 200 grand, 300 grand, 400 grand a year, and they look at, you know, putting in some money to a policy, and they really do see it as a payment. It comes off really quickly. In other words, you can tell really fast if someone wants to commit to doing IBC the way it was designed to be done, which is really stage three, stage four, or whether they just want a safe place to store money. But the biggest issue is when you commit to a low level, a lower stage, but think you should be able to do all the fun things that people are doing on stage three and stage four, and have it make sense. Okay, so you have a guy who's making 500 grand and it wants to start a 30 grand a year policy, moving some money from his emergency fund, a little bit of cash flow. And he comes to me and says, I heard you talking about funding your charitable giving and making money on that. I mean, how should I, should I take a policy loan to fund my charitable giving? No, this ain't magic. There's nothing magical about taking a policy loan just because you have a policy. Now the reality is money has to, you have to add intention. Money has to be put in on purpose in advance to be used for things. If you, if you don't, if you have money and you don't put it in and it's sitting over here, it will rarely make sense to pull money out of the policy because you already have the capital to do the things that you're already doing already. You haven't redirected any of it. That's the reality. So the biggest issue we're trying to solve with the stage mentality is just simply understand that if you have cash flows that you're not choosing to go into ibc. You're just going to end up using the policies less and that's okay, but just be okay with that. Be okay with that yourself too, because you'll get into trouble when you think you got to do all these fun things and cool things, but you haven't redirected the money yet. So we have some, you know, we have the saver stage done. The idea would be, of course, other people are going to look at this and say, well, yeah, I mean, I've got, I can move my emergency fund, but yeah, I really don't want to be in retirement programs stuffing a whole bunch of money and there. I'd rather transition that money into, you know, that cash flow and fund my policies with it so I can go open up new opportunities to myself. Or maybe they take a big chunk of the money that they were using that was funding other investments in their life and they start funding policies with that money. And so they essentially start to see some of the vision, see some of the picture. They start to increase their commitment level. And, and of course, when you increase your commitment level, you're going to start redirecting more cash flows. Maybe this person says, yeah, we're going to need to buy a home soon or we're going to upgrade our home. I'm going to save, we're saving money for that. We're building capital up for that. You know, I do like to invest in real estate or in businesses or my business had a lot of equipment that needs to be purchased. And you said, all we're saying in the capital builder stage is that you're going to start redirecting cash flow that used to be doing some other things by itself, invested, saved, whatever it is, and you're going to start using policies to, in order to do those things. So in that case, we just kind of put, we could have chose anything we wanted to. But we're going to say he's going to start contributing not ten grand a year. That was just the saver basic stage. Now he's going to contribute $80,000 a year of his, of his $150,000 of free cash flow towards policies that's going to include the $10,000 of, of of money that used to go in the emergency fund, plus another 70,000 of cash flow that used to fill either maybe the retirement program bucket or, you know, the other investment, slash lifestyle, slash car purchase, whatever it is, bucket of additional capital. And so with that being, by the way, in Every scenario, they kind of graduate from one to another. So it makes sense in any scenario to move your emergency fund money in as well. So if he wanted to get started in the capital builder stage, he would not only be contributing that cash flow, but of course we'd be doing the same thing with the emergency fund he would be doing. You know, he would move in 20 grand a year for three years and $15,000 in the fourth year to move out his $75,000 emergency fund. So we're going to do that in every scenario because once again, I really do believe it's addictive. It doesn't matter which stage you start in. You shouldn't have money sitting in somebody else's bank if you're going to open your own. So at least, at least let's move that money into the policy. And so what this looks like in reality when we actually go pull this up in stage two is we're going to end up funding a total of $100,000 a year for the first three years in premium. Of course, how did we get that money? Once again, we'd said that we, we had 80,000 of cash flow that was going in and we're moving our emergency fund just like we did the first time, where it's 20k for years one through three and 15,000 for years for year four, which you can see happening in the premium call. So now we simply have a much larger policy to work from. And I hope you can start to tell that compared to the entry level saver stage, a much larger bulk of this person's overall financial capacity is going to be housed inside of their banking system, which means that by default, not because of some sort of magic scenario, but by default, they're going to use their policies more often. It has nothing to do with whether it's magical to borrow money to buy a car or not. It has to do with the saver guy still has money to buy cars sitting in the car account that he already had. He's going to buy cars the same way as in redirected the cash flow. Well, this guy, maybe he did redirect the cash flow. So it starts, so it starts to make sense for him to do it. And of course, as we go down the line, we're putting more money, numbers get bigger. So if you can remember, the saver guy had 1.2 million of cash value at age 65. This individual has 7 1/2 million dollars of cash value at the same timeframe. Of course, he's putting quite a bit more Money, obviously, and also a $13 million.

Death benefit. Excuse me, what I. By the way, just, just as a caveat to all this webinar, the reality is it was going to be a bit too long and complicated to start to throw in random concepts of transactions that this person would have been using their policies to do over a lifetime. But just know that the more you use it, if you treat it correctly, the numbers will only get bigger, not smaller. So this is just him paying premiums. Of course, the idea would be that as we're building millions and millions of dollars of capital in your banking system, that that money is deployed to produce even more value to your financial life by investing and lending and, you know, getting rid of interest, expense to other banks, all of those types of things. So of course the money is going to be used. It just was going to be, it was going to be too cumbersome to try to just throw random transactions on the page and repay over time. And so, you know, the saver guy had 1.2 million. And now, of course, we've just created a much larger bank. We've deployed capital into the policy and it's going to generate a lot more cash value. If I erase this and kind of do that same scenario. If you look at what the policy is growing by at this time, it's growing by 4, you know, from 7,034,000 to 7,476,000. This is a $440,000 growth in one year given 80,000 that was from our own cash flow. So if you subtract out what you put in, that means that our banking system produced for us a $360,000 profit in this one, in this one year and this. It's almost like I'm doing a disservice to everyone, Jason, as well, just by simply leaving it up to your imagination what you would have end up accomplishing in your life if you had had this in place. But it was, once again, I already was going through so much information, I couldn't, I couldn't add those into stage two, stage three, stage for all of these different transactions.

Well, Nelson said that two things he said, one, I want everybody to know that you don't have to be rich to get into the banking business.

True.

And second, that your money must reside somewhere. And what better place to have it reside than here? And so we, we have clients that start their journey with as little as a hundred dollars per month. If they're putting policies in place on children, grandchildren, great grandchildren, and we have clients who are Putting in six figures every month because that is their capital capacity, that they're. They just have more money that must reside somewhere. So if for everybody on the webinar, if you have money and need the use of money, regardless of the amount, it must reside somewhere. This is a process. And so when we show these different scenarios with varying degrees of income, varying degrees of free cash flow, you have to utilize your imagination by just replacing the figures that Nate is outlining with your own 100%. And that's where you begin. Everybody must begin somewhere. But you can't learn how to swim unless you get in the pool.

Exactly right. And I, I don't even know if I did a good enough job clarifying that at the very beginning, too, is that the idea is this. If you make $1 million a year, or if you make $40,000 a year, either way, there is going to be four stages for you. There's going to be a saver stage based on how much you want to commit to. There's going to be a capital builder stage, an entrepreneur stage, and a lifestyle stage. And it's going to be the same concept. Doesn't matter how big or small the numbers are on the flip side. So I, and I knew I might have gotten some pushback at some point when I built this. I just wanted to build a situation that I could relate to myself because, you know, at my own. At my income level, paying big taxes and things, and I was just like, okay, well, Nate, think about your own life. How is this going to work for you? For you? Of course, you know, this is, this is a bigger system than maybe the vast majority of people are going to implement. That's fine. It's 100 true, Jason, that it doesn't matter whether you have a, Whether you're. You make $10 an hour or $10,000 an hour, IBC works for you, and it can work in different. Essentially in a different stage compared to how much you want to put in of your capacity overall.

Absolutely.

And so all that to say this was just based on my own life.

I built this for me almost as a way of training, not necessarily saying for anybody else. So in stage two, we just committed a higher level of cash, of higher. A higher level of cash flow, of course, than stage one. And stage three is really when you've committed to. To building the banking business. So remember, if you are an individual who makes $50,000 a year, just take zero off the end of it and end up in a similar spot or whatever it is. It doesn't really matter to you, but this was based on kind of my own life. So if you remember, if I'm in, If I make 500,000 of income and I have, I pay my expenses, I pay taxes, I pay for charitable giving, and I have $150,000 left. And I want to get into the banking business, and I want all of my capital to flow into policies before it's deployed. That's what stage three represents. That's like, that's, of course, that's what I've been doing for years. I'm sure that's what Jason's doing. Like, we don't, we don't deploy money to things that hasn't gone through our policies into our own banking system first. And that's the hallmark of stage three, whether you make 50 grand a year, 500 grand a year, 5 million a year.

The other, the other point, Nate, that, and forgive me if, if you had planned to, to share this as well. But the other point that's really important, worth noting, is that when we again, remind ourselves that our money must reside somewhere.

When we spend less than what we make. So if we. From a lifestyle perspective, because the infinite banking concept is a lifestyle, it's not a financial plan. And so as you are moving money through, if you are making $50,000 a year, which you're not really making, you're just handling it. And after tax, you have 40,000 a year to spend, and you only spend 30 of that 40.

The entire 40,000 must flow through the books of someone's bank.

Yep.

And so you're building a warehouse to store capital, and from that place of storage, you're living your lifestyle.

Exactly correct.

Isn't that good?

That's banking. Infinite banking is all about banking. It has nothing to do with investing money of any kind of. It has to do with how money is flowing through. And I, you know, the four stages is mainly, Jason, we use your example of 50,000 and then having $10,000 of taxes and $30,000 of lifestyle and netting kind of $10,000 of leftover.

What I would call free cash flow. Essentially, what infinite banking describes and the four sages describes is what are you going to do with all 10? Are you going to move it all into policies that would put you into stage three? Are you going to move a chunk of it in 6,7000 and have some money left over? Then you might be stage two. Are you going to move just, just kind of a safe savings amount that put you in stage one? Are you going to start committing even higher levels of money into policies and start going after some of the lifestyle expenses or taxes, in which case you enter into stage four, which we'll get to in a second. But in stage three, by itself, all we're really doing is saying, I'm going to commit to this banking business thing and I'm going to, you know, take my free cash flow that I have available to me and fund policies with that money. So in that, in that case, you know, in this case, it's going to be, you know, in my own life, I built this similar to what I'm, you know, going through. So that's $150,000 a year of my free cash flow. I'm saying that that's all I have. I'm going to dump it all in, because I want every investment that I make in the future to be funded from my own bank. Because essentially, when you do that, whenever you, let's say you fund an investment or you purchase a vehicle or you pay down debt or whatever it is you're going to do with your policy, when you decide to have the capital go into your policy first, before it's deployed, you actually start to make money from. In two ways. You start to make money as a bank, and then, of course, if you're investing money, you're making money in whatever you chose to invest that money into. And so you make money in two seats. We're not used to that. We're so used to money doing one thing, one job. So oftentimes, what can keep people in stage one or two instead of moving into stage three is they think, well, I don't want to put all the money into policies because I want to invest in real estate and I want to go get into business. And my, you know, I want to reinvest money to grow the business. And I want to. And the list goes on of things that we think we want to do. What we're saying is, yeah, that's all great, but whose bank is going to be the capital warehouse for those things to take place? Is it going to be yours that's funding everything, or is it going to be Wells Fargo or whatever it is funding all of these transactions for you based on you saving money in their checking accounts and using their tools? So the entrepreneur stage is really just simply saying, I'm committing to essentially opening a banking business and I'm going to have all of my cash flow go into my policies before it's deployed. And of course, as always, we also, if we're going to own a banking business, why would we leave our emergency fund kind of cash money sitting around in somebody else's bank? Let's go ahead and move that money in as well. And so that's really what, what you'd find happening in stage three. We're moving in $150,000 a year, which is all of our quote unquote, free cash flow in this little simplified hypothetical example. And we're also going to move in our emergency fund money. And so if we, and these, these examples are just meant to just kind of leave a quick example of what it's going to look like. I don't want us to look, spend too much time in the numbers because as Jason said, who cares about the numbers? You're in your own situation. I'm just merely saying this is what it would, this would look like, this is what the different scales kind of look like when they get implemented. And so just like I had mentioned, in this case, we're, remember, we're going to fund $150,000 of our cash flow. It's all of this person's free cash flow. And then $20,000 for, for years one through three and 15,000 from year for your four. That's all coming from just kind of taking some, some cash out of their emergency fund to max out the policy. And you'll see that corresponding here in these early years of, of the policy. And then it kind of, it situates down at 150,000 a year after that. But essentially the whole point of this is to say as you see the scale go up. In fact, by the way, Nelson Nash in his book, he did something, something similar when he wrote his book and he was going through equipment financing of just describing, hey, you can, in his way, it was a bit of reverse where he, he described how you could use a policy to finance equipment at different scales. Like the higher scale you, you choose to use the policy to go do you know, in his case it was equipment financing, buying, you know, different trucks for the logging business and different pieces of equipment that is needed. The more you, you use it, the better off things become. I'm not even going into how to use policies for specific thing. I'm just simply saying if you have cash flow that's going to be going somewhere, why not throw it into here and build this asset and then leverage this asset to go do the things you're going to do anyway. And so of course, at, at stage three, you know, the numbers obviously just keep getting bigger and bigger. Of course, I don't, I don't Care to spend a ton of time talking about the numbers? I'm just merely saying know now our cash value is up to, you know, $13 million of cash value and $24 million of death benefit. And you compare that to the individual who was the saver strategy, who was just going to save money into a policy and move on. Of course he had, you know, a million dollars in this little hypothetical scenario for himself after, at age 65 and, and you know, after 35 years. And so as you, and that's all logical. Of course as we pay more money in, we're going to receive more benefit. But all the while here we certainly hope money is being used to practice banking. This isn't just some place to store money like it would be with a safer strategy. This is of course, money being used. And as we, as we get, you know, towards the tail end, the very last stage of doing IBC is what we call stage four, the lifestyle stage. This is where it gets really complicated and if I haven't lost everybody on the webinar, I'm sure I will lose them now. But as you can tell, I talk fast and that's something that I, that I have to work on. But I also know we have, you know, we all have lives to live too. I didn't want to take up all of your time, but in the lifestyle stage, if you can recall.

It'S a level up from the entrepreneur stage. So you're, you have already committed to IBC at a high level. You're funding all of your free cash flow into policies. But we haven't really started paying attention to, as Jason said that the $50,000 a year example, the, the 30 grand of lifestyle expenses or the 10 grand of taxes that that person was paying, he's just continuing to pay in stage one, two and three, he's just actually continuing to pay those things out of his own bank account. We're only dealing with the free cash flow. It's when you enter the lifestyle stage is where you actually start to redirect cash flow that normally would be spent on something. Maybe it's just the tax bill of $10,000 a year, something that's already being spent. We start to redirect into a policy and fund it from a policy. It will end up creating a strategic loan balance. And I'll show you what that looks like here in just one second. So in this case, we don't fund $150,000 of cash flow every year. He's actually going to put in 200,000 of cash flow, which of course, you could say, well, Nate, if his. If his free cash was 150 and he's going to put in 200,000 of cash flow, where does all that money come from? Well, essentially, in this case, all we're saying is let's just. Let's just target the charitable giving item. So this person is receiving $50,000 a year of income that he's also giving to a charity throughout. Throughout the year. So the cash, as Jason said, is there. It's just. It's of course, earmarked to go to charitable giving. Well, what if we earmarked it for policy premium first and then use the policy to fund the charitable giving? Okay, so that now we have that concept, we're going to do that. So in this case, he puts in 200,000 a year. And of course, we're going to add in our emergency fund money just like every year to keep things scaling up. But we are going to add transactions into this example. So in this one, we know we have to borrow some money out by design. It's actually a part of the funding design. We already know we're going to be borrowing money out to fund charitable giving, and so that's what we're going to do. Now in this, I said, if you can remember, if we take the $50,000 of cash flow that's going to charitable giving and we actually use that to fund the policy premium, we actually don't have another magical $50,000 of cash flow to repay that loan throughout the year in this. In this example, because we're already committed that to premium as is. So this is going to create what we call a strategic loan balance that, normally speaking, whenever we add that type of, you know, complex arrangement in somebody's life, there normally is some sort of exit strategy with a windfall. You know, Nelson Ness talked about that all the time, you know, in actually both of his books, but especially the book the Warehouse of Wealth, where he describes having a place for windfall money to be poured back into the system. And I don't. Once again, I have content on our YouTube channel, the Living Wealth YouTube channel, specifically about strategic loan balances. I'm afraid in this webinar, the whole point of it is not to describe to you what that means and why it would ever make sense to anybody. But I will show you just briefly kind of how that would play out in life. So in stage, this would be an example of a stage four, infinite banking for this person's capacity. He'll have, you know, policy Premiums coming into the policy of, in this case, 200,000 of his cash flow, plus the emergency fund money that we've always been adding in to the mix as well, which was, I always like to reiterate, 20,000 for years one through three and 15,000 in year four to move in the $75,000 of emergency fund money that he had. And you can see this money accumulating for these few years here. But there's going to be some more complexity in this scenario what we start to do. Because we redirected the charitable giving money of $50,000, he's going to have to start borrowing money each year to give to charity. And so we do that for four years. So we're paying premiums and we're actually taking policy loans to pay for charitable giving, which is building up a loan balance over time that we really don't have the cash flow right now to pay for. That's the definition of a strategic loan balance. The way we define it is that, yeah, I'm going to borrow to create a loan balance, but I don't really have the means to repay right now, but I know it's likely I will due to some various events. And just to kind of give you some ballpark ideas, I'm going to flip back for one second. He's been saving for who knows how long and investing in retirement programs and in other investments. And so what is the likelihood of this person receiving, you know, selling out of some sort of asset at some point in time? Of course, for this individual, it's, it's, it's really pretty likely. And so it would make sense for him. But that's why I said at the very, very beginning, it actually, stage four does not even make sense necessarily for everybody in the universe to enter into stage four because it's very complex, very strategic, and it doesn't even make sense for everybody. But all this to be said, a loan balance will accrue. And we essentially just assume that in around year 10 or so, that loan balance is going to get paid off with a windfall event. Now, once again, remember this. This webinar itself was not designed to discuss all the ins and outs of what we define as at living wealth, a strategic loan balance. It was mostly defined to describe the four stages, but, but the idea for you is that in stage four, it will almost always end up some sort of strategic loan balance accruing. And as Nelson Nash says, you would use that strategic loan balance as a place to hold windfalls when they come down the Pipe. So essentially, whether you should enter stage four or not should be dependent on whether or not you expected to receive windfalls at some point down the road. Whether that's inheritance, whether that's investment payouts, whether that's, you know, selling assets or whatever it is, business, you know, sale of your business down the road. Any windfall it would be. Here's the idea just in a quick nutshell. It would be amazing to receive your windfall and be able to plug it right away in a loan repayment to a policy that's been in existence for 10 years than it would be to start from scratch 10 years down the road with a brand new policy using the windfall money to fund it. That's, in essence, that's exactly what Nelson describes. He called it in a kind of a insurance jargony way as simply a way to backdate a policy for 10 years.

That was his mantra, which I thought was really funny. And of course that's for the agents on the call. But all that to be said, in this scenario, he's having to borrow money from the, from the policies to give to the charity because he still has a commitment to do that and he doesn't have money to repay the loan balance until a windfall occurs. And we just kind of chose a hypothetical event in year 10 for the windfall to come in. You'll also notice, just by the way, that after. I should have mentioned this too, that after a few years of time, after the four years of time, we actually reverted back to this stage three style free cash flow funding of the premium. The. The truth is he could continue to borrow money and keep paying that higher premium for as long as he wanted to. But for most people, they kind of have a target amount that they want to create in a strategic loan balance. So we just kind of chose $200,000 for this example. But if it was $500,000, then he would have kept funding the higher amount of premium into the policy and he would have kept borrowing $50,000 a year to fund for charitable giving, you know, and create a larger strategic loan. So we just kind of chose, you know, a strategical amount of $200,000 as a net effect. So that's why you'll see us reverting back to the 150,000 after that point. And so as, as time goes on, of course, the policy, there's more contributed to it. So instead of having, you know, I think we had a little over 13 million in stage doing it, stage three, we added, you know, a decent amount Let me just check real quick to see what the number was. Yeah, 13,700,000 versus 14,500,500. So we added about $800,000 of additional capital here through the strategic loan balance model. By adding in the lifestyle, even though we had to take his policy loans back, we repaid him, but we essentially created a much larger system overall, and we could have done the same thing with his income taxes. It really would depend on how big of a strategic loan balance he wanted to end up creating. So this, you know, here we are in about an hour and 15 minutes long. This takes us through the entire discussion of what it looks like to commit to at. To IBC at various different stages. Remember, if I go back to the very beginning, the truth of the matter is one of these stages will fit almost everybody on the planet. Infinite banking is such a powerful thing. Whether it's stage one or stage four, what you should determine for yourself and what will end up helping you get put into knowing how you want to do IBC will be really determined by what you want to accomplish with it. The bigger your goals for your banking system, the higher level of commitment it requires to get there. But once again, remember, there's no objective number here that puts you in a stage. Also, remember that what you choose to use your policies to. To do also is not what puts you into these different categories. What really does put you into these categories is how much of your cash flow that goes into your life are you going to put into policies first and then deploy it versus, you know, the cash flow you're just going to kind of do the way you're already paying for things, financing things, funding things, and policies are going to kind of be on the side.

Jason, how are we doing? What are your thoughts at this point?

We're doing awesome. And hey, let's. Let's give some some chat appreciation to Nate for being generous with his time and for sharing the four stages of ibc. So in the chat window, everybody, if you just want to type in just anything you'd like to express in the way of gratitude to Nate, any feedback that you'd like to share. And then what I thought we would do, Nate, is spend a little bit of time jamming on Q and A because I think it's really important, you know, people.

We always express to attendees that their questions are everyone else's best answers. And so super important for everybody to feel comfortable to get your questions typed in if one of our teammates can hop in. Nate, if you want to stop your screen share, that'll kind of bring bigger in video. And then if we can invite one of our teammates maybe to come in via audio and just share any questions that you think would be helpful for Nate and I to tackle for the benefit of everybody who's in attendance.

Oh, hello.

We have a question from Gary, by the way. Nate, that was fantastic. It's great to see such different stages. You know, as the advisor is always stuck in my mind, you know, how different stages, especially clients, ask questions. So really appreciate your presentation. It's mind blowing. It's great. So we have a question from Gary. He has a few questions regarding your table.

He.

He answered that, you know, from your table. He says the policy made $800,000. But. But there the value was 13 million. So. So he's comparing with 13 million. If 13 million made 10%, then wouldn't it be better than the $800,000? Plus no premium payment was needed.

Okay, so I think what he's trying to say is, hey, Nate, the $13 million of cash value that built up, if it was earning 10%, it would have made 1.3 million. But Nate, you said your 13 million only made 800,000. And this goes back to. At least the way I would answer this is it kind of goes back to the. The essence of what we didn't really get to discuss in this webinar, but actually the essence of what infinite banking is all about, which is If I have 13 million of cash value and it's growing by $800,000 or whatever it is at the time.

In reality, I'm sure, Jason, you could chime in and do this too. I don't leave all of my cash value sitting in the policy. I'm using it at all the time to create value, to make investments, to do these various things. So it is true that there are investments in the world that are awesome to get involved in, and you happen to have $13 million sitting at your disposal to go take advantage of any of those that you would want. Well, but after you make the investment, you end up having both the policy and the investment both growing for you. So that's the way I know we didn't really get into that, Jason, today that the actual essence of infinite banking. We just were really here to discuss the stages you could implement infinite banking at. However, you know, to answer your question, Gary, it is true that, you know, if. Yeah, if there is. If you had an investment that was giving you 10%, I would love to move my $13 million into that. Jason, what do you think?

Yeah, I would just bring Gary back to Nelson's book titled becoming your own banker. So Gary, if you haven't read this book, you have an opportunity. It's a 92 page read. It'll take you a little less than an afternoon to get through it. And in the book, so Nelson Nash, who developed, pioneered this process.

He talks about on page 69 in his book, the chapter is titled but I can get a higher rate of return.

And Nelson describes what Nate just outlined to say that if you have ready access capital, because what's super important for people to understand, you don't already cash value is not money. Cash value is the net present value of the future payment of a death benefit. The way that you leverage cash value is by borrowing against it without interrupting any of its growth. So you have 13 million in cash value. You can borrow against that cash value to go participate in that investment that is generating 10% rates of return, whatever that investment may be. And Gary, if Nate participated in the investment by doing what I just shared and you just had 13 million residing somewhere and you earned that 10%, that 1.3 million, Nate gets both.

Nate gets the 800,000 increase in total cash value and he also gets the 1.3 million return on the investment. The difference is where all of Nate's money is going to flow to and who that money's going to be put to work for and for how long.

So that's the advantage. That's one of the fundamental understandings of the infinite banking concept. It's never going to be about addressing the yield of an investment because the infinite banking concept is a process. Nate's describing the tool where the capital flows to, which is dividend paying whole life insurance contracts, ideally a system of contracts. But this is not about addressing the yield of an investment. It's all a matter of where the capital is flowing to, who it's being put to work for and for how long.

Exactly right. And that's the idea here too. Gary. If I could piggyback on that, Jason, that's the whole, actually, the whole point of the four stages conversation is that technically speaking, Gary could just start a policy in stage one and build the $13 million the way he wants to, and that'd be perfectly fine. It's up to us as teachers to show, to show the world that technically speaking, if you deploy your cash flow into policies first and then maneuver money out of the policy from that vantage, you'll end up receiving more benefit. And that wasn't exactly the goal of this webinar. That's exactly right. I was able to expand on that a ton, but I was simply saying, hey, there is a world in which you are just at least saving money to policies, in which case you have your 150,000 of free cash flow. That's building wealth in whatever way you want to. That is an option. I'm just saying that in this example, stage three and stage four would show of an IBC would be that person has decided to not make a $13 million investment from a bank account, but he has decided in advance that he's going to store capital in policies so that he can make the $13 million investment from his banking system and benefit in more than one way.

Absolutely. And. And this is. This is about addressing how you finance the things that you need throughout your lifetime, which can certainly include investments.

Absolutely.

That's the point. Awesome. Thanks. Thanks, Gary. That's. Yes, Jerry. Gary, I. Please forgive us if we're pronouncing your name incorrectly, but thank you for asking a really insightful question.

All right, which. Who's next?

It looks like your team's just been answering questions left and right, Jason. There's so many studs out there.

Oh, there's.

They are studs. Yeah.

All the credit to my teammates, by the way.

That's right.

They're. They're absolutely incredible.

Any other questions? Can one of our teammates hop on and share?

Jason, I have one, Jason, if I may.

Absolutely. Come on in, Satish.

This is one of your favorites. I think you're going to enjoy answering this question. So Curtis has asked us, if this is to replace your bank, then how do you make your payments via cash?

Oh, I see. So I think, if I understand the question correctly, because the process of banking must continue in Curtis's life. And so how do you.

Become your own banker, which. This is so important to make sure that we articulate. Nelson wasn't encouraging people to become an institution. So we've heard people use that language, and we may have used it at times throughout the years as well, where we say, become your own bank. Be your own bank. That's not what Nelson intended. He wanted you to become your own banker. He wanted you to become all four characters in the financial play. The depositor, the borrower, the banker, the bank owner. He didn't add a fifth. Being an institution in becoming a bank. And so you are still going to need the convenience of debit. You are still going to need to transact and utilize a bank as an intermediary to facilitate those transactions. The matter becomes, whose capital are you using for that? And the answer is the life insurance company's capital, your money is flowing back into the life insurance company two ways, premium and loan repayment. That's how your money is flowing back into the life insurance company, which is the entity that you co own. And so Nate mentioned it earlier, I'll just remind everyone of the point that he was making. If you think about where you buy groceries. So if you buy groceries at Safeway and if Nate and I co owned a Safeway grocery store together, would we ever buy our food from Walmart?

I wouldn't Jason.

Not a chance. Because we want all of the financial energy flowing back to Safeway so that we could buy more groceries to sell to more captive customers at a profit. So think of the life insurance company correctly as an entity that you co own, which that entity is also in the lending business, you co own the lender. So how much of your financial energy do you want flowing to an institution that lends capital to captive customers? As much as you can. But you're still going to need to swipe the debit card, buy the food, fill up your car, pay the bills, take your family out to dinner. But you're utilizing the life insurance company's money to do that. At stage four, you're not utilizing your own capital. Your own capital is flowing back to the life insurance company in the form of premium and in the form of loan repayment.

Awesome.

Isn't that good?

It's amazing.

Jason, let me ask you a question.

Yeah, please.

When you got started in infinite banking, what stage do you think you were ready to commit at the day you heard it? I'm just curious.

Saving.

You were a saver staff.

Yeah.

And I agree.

Now the, the whole objective there. If I can just take everybody on a quick trip down memory lane.

Yeah.

So In July of 2008, I was first introduced to this process, but I was not introduced to Nelson's book or to Nelson until 2011.

So when I was first exposed to this concept and we began to implement it in our lives, our objective was to get rid of the conventional bank that held a mortgage on our principal residence as rapidly as possible. And Rebecca and I, our first policies were nowhere near the size of our family banking system. Today we will pay 1,056,000 in premium this year. In our very first year, the total premium in our system was just shy of 17,000. And so if you understand that this is meant to be achieved gradually and incrementally over a period of many years, Nelson said it will take the average person, 20, 20 years.

To become the banker, to take control of 100% of the banking function as it relates to your needs, your family's needs, your business needs. We got it done in 13.

Because we were rather aggressive in building our system. We had our own family objectives to take control of this function called banking as it relates to the needs of our family.

And I would say one thing to that too, Jason, really quick. Just because you are in a certain stage at one point in life doesn't mean you'll actually stay there in the future. In other words, if you did not expand your system, you would, you would automatically. As you increase your success in life and in business, you also have to expand your banking system accordingly. So you could be somebody who is stage three, stage four, high commitment, doing really well, and then you could start, you could go from making 100 grand a year to 500 grand a year. And if you don't expand the system, you'll find yourself actually paying the same amount of premium that used to put you in stage three or stage four. Now, as in you're back to stage one and you have all this other cash flow that you have, for whatever reason, not decided to go in. So there is this truth to it that as you know, maybe a 17 grand a year was maybe a lot of money to you, maybe it wasn't a lot of money to you at the time.

Well, it was just a start.

It was just a start. I remember when I got started, Jason, you would know. I was just, I was in college when I learned, you know, I was. It was 2012, and I got, I actually borrowed. I, I believed in it so strongly, I, I guess I probably was in stage four right at the beginning. But my stage four was a $5,000 a year policy.

Yeah.

Why? I was borrowing money from the US Government in student loans above what I thought I would actually need so that I could start my IBC policy. And.

But, but all that to say now that policy is 12 years old is doing amazing. I sure wish it was a $50,000 policy. You know, in other words, at the time, the, the. What I'm trying to get across is what you tried to get me to get across earlier, Jason, which is that the size actually doesn't matter. Absolutely. The size just doesn't matter. Of course it needs to be.

Scalable to who you are and what you're actually doing in life. So a million dollars is big to you, Jason, but there's people running this earth that would be their saver stage.

Absolutely.

And Nelson, it just doesn't matter how much capital, you know, cash flow.

You have agreed. And, you know, Nelson said that there's only one pool of money in the world, and the fact that you only control a portion of it is incidental. The money's. The money's flowing through your hands, not into your hands. That's the distinction. Anybody on tonight's webinar who is not yet implementing this process in your life, you need to get connected with the right person on my team. And one of our teammates will drop that into the chat window right now so that you can schedule a time to get connected with the right person on my team right now. It is true that all of the money that you are working so hard to earn is flowing right through your hands, not into it. I talk to people all the time. How much money do you make? Oh, I make 50,000 a year. No, you don't. You handle 50,000 a year. You don't make 50,000 a year. You're not making anything. You're working hard to earn it, and all you're doing is handling it. Someone else is getting all of it. How soon do you want to change that? Like, if we were at a live event, we have 94 attendees. If Nate and I went out into the parking lot and took a flathead screwdriver and jammed it into your gas tank and it started leaking all over the place, how soon would you want to fix it? We wouldn't have to ask you to schedule a time to connect with the right person on our team. You would be getting it fixed without being asked to get it fixed. So what are you going to do to plug that financial leak in your family or in your business?

The. Your next step and the reason that you want to book a time to connect with the right person on my team is because the longer you wait, the more you penalize yourself, the more gas leaks out of your tank. That gas is financial, energy, money.

So this is what we're really getting to the essence of. And then you can move through those various stages based on.

The objectives that you have that you want to turn into achievable realities. It's. And working with a great coach and Nate. Nate and I first met, I think it was in 2013. We met in Nuevo Vallarta at the Maraval Residences there. It was amazing. We used to go and mastermind there. And anytime I visit there to this day, I always get in touch with Nate.

It reminds you of me. And I get a picture from Jason in paradise. How you doing? Man.

And so it's, you know, pay close attention to Nate. You know, he's on this journey. I was 32 years young when I first got going with this process. I'm 49 today. And Nelson would often say, hey, listen, the time's going to go by anyway, so you might as well get started. I mean, if somebody in the chat window. Can you list all the disadvantages. Just take a moment and really process this question that we have for you in the chat window. I want you to type in all the disadvantages of controlling the banking function as it relates to your needs.

Oh, look at that.

Zero.

My thoughts exactly.

That's right.

And so if we tap into your logic for a second. If you know that you can contribute almost unlimited sums of capital, you pay no tax on the daily buildup of cash value.

You pay no tax on the death benefit proceeds. You pay no tax on the treatment of your annual dividends when you chunk them right back into that policy to make your warehouse of wealth even bigger. And you know that you have ready access, capital on demand, on your terms.

Logically. How much of your capital do you not want residing there?

I'm just curious.

And yeah, that's a great point, Jerry. Don't try to get past the confusion on your own, my friend. It costs you nothing but your valuable time to meet with the right person on my team. That's it. Don't bring any money. They're not going to ask you for any. They're going to share a conversation that's hyper personalized around your insights, your clarifying questions, your advantages to implementing this in your life. And you're among some of the very best infinite banking practitioners in North America, bar none.

And so get in touch.

What's the worst that can happen? You'll clear up the confusion, Jerry. That's the worst case scenario. So book that time.

And if. Jerry. Oh, Jerry. You're licensed, you're in the business.

Is that right? Where are you from, Jerry?

Toronto. All right. Beautiful city. My sister lives there. It's a great city. We have lots of team members there.

Excellent.

Good. Yeah, it's nice to. It's actually nice to have advisors who hop onto these and, and learn.

And advisers are the ones. Nate, correct me if I'm wrong. In all my years of experience, any of you advisers on the webinar, the reason that you're confused is because your head bone has been filled up with a bunch of.

100%.

So you're.

It's actually easier to talk to clients because they don't bring. They bring less weeds to pull out of the garden. There's no.

Yeah, yeah, no kidding. You know, your head's been filled with a bunch of nonsense. That's why you're confused.

You know, we've. We're a managing general agency here in Canada. We're the only managing general agency that specializes.

In the implementation of the infinite banking concept, the process of becoming your own banker. There's no other MGA that specializes in that.

Isn't that good?

Nate.

Am I putting our attendees to sleep? I don't know what. What we're doing. Do we have more questions?

Maybe we just did such a good job. They just don't have any questions. Jason, you cleared them up.

That could be. That could be the deal. Any other questions, team?

I think our teammates has answered all the questions. We did a good job on that.

They did it.

There's a lot of comments in the chat box saying how appreciate the audience are for you, Nate, good job.

Oh, thank you so much. And I'm sure there will be a replay, Jason, for everyone who's like, hey, we're still.

Contemplating understanding, letting it sink in. I think I've seen some people say that too. So I think even some people, it looks like they're asking questions about, okay, can we get a summary of, you know, the cash value? Can we see those again? I'm just saying I think it should all be on a replay, right?

They can just go, oh, absolutely.

Yeah.

And again, that's where advisors go. I want to. I want to examine the numbers so that I can clear up the confusion. The confusion is you don't understand the problem, the solution won't matter to you. If you understand the problem, the numbers don't matter. If you don't understand the problem, the numbers still don't matter. Jerry, stop focusing on the cash surrender value. The tables, the numbers, the percentages. Get clear on the problem and you'll know exactly what to do. And this is going to be tough for you because you're an agent who's got some degree of experience and you're just. Your brain's taking you in the wrong direction, my friend.

Okay, Nate, here we are. Jason, I appreciate. That was awesome.

I appreciate you very much. Sincere gratitude. And you know that you can call upon me to serve your community as well you can call upon any of my teammates to serve your community. And so if we can reciprocate and record some content that you think would be beneficial for your community, just say the word and we are in. And we will help serve your community in any way that we can. This is the power of collaboration.

It is. And I would love to, Jason. I would love to. And if you are on this call and you want to know how you can service, just go ahead and go to The Living Wealth YouTube channel and just hit the subscribe. Just let the algorithms know that there's good stuff there. That's the one thing that I would ask at the end of this webinar. And we're good to go.