Banking with HELOC vs Banking with Whole Life In Canada

If I borrow money from the heloc, I now have a minimum required monthly payment that I must make. On whose terms? On the banker's terms. Already I'm starting to see that this might not be the right tool for the process because money's falling away and I have less control.

Listen, if you're using the HELOC to practice the concept of becoming your own banker, you're making a huge mistake. Stick around to the end of this video and my colleague Roman and I are going to tell you exactly why. We know that the, the process of becoming your own banker is, is all about a process. It's an actual practice, isn't it? It has nothing to do with a product or a tool. Absolutely, yeah. We can use any tool that we want to practice the concept of becoming your own banker. Let's get a visual for a second, Roman, picture a glass jar. Couldn't I just take my hard earned capital money that I worked for, which Nelson called what? Real money, Right. The money that I work for is real money. So I go out and I work really hard and I take a portion of that capital and I start stuffing it into my jar or under my mattress in a tax free savings account.

Or in the shoebox.

Or in a shoebox. Or I'm piling it onto a heloc. Right? Because every time I make a principal payments on the heloc, what do I have? More access to? Equity, right?

More equity.

Yep, that's right. So then what do we do? We have an objective. I'm a huge LEGO fan. It's fairly expensive, right? So I say, okay, you know what, I want to go out and shop for some Lego or I want to buy a car or I want to invest some money. So what I'm going to do, Roman, is what I'm going to go and access, because I'm practicing becoming your own banker. I'm going to go access money from my shoebox or borrow it from my heloc, and then I'm going to go get the investment or whatever the objective is. Because guess what? Any objective we have, Roman, starts with what? The foundation of banking. Everything starts with banking. Here's the thing, I go and access money from the shoebox or the heloc. Let's just walk through it, Roman. If I access money from my shoebox, let's say I have $10,000 in there. If I access 5,000, how much do I have left?

5,000?

Yeah.

Yep.

And there's no growth, right? Okay, no growth.

And then you're losing opportunity to make money. If you spend that $5,000, then your money is gone and it cannot work for you and make more money in a different opportunity, right?

You're exactly right, Roman. We're saving money. I access it, it goes down. So I lose all that opportunity. Like Nelson said, I'm either going to pay interest to someone else or I'm going to give up interest I otherwise could have earned going back. With that, though, I access my, as an example, $5,000. I buy the thing. And now to practice becoming your own banker. I'm going to be a responsible banker. So what do I have to do next, Roman?

Make payments?

I have to make payments.

And replenish your system.

Exactly. And am I going to pay back just 5,000 back to my shoebox, Roman, or am I going to pay a little bit more?

I'm going to pay more because.

You want your system, your banking system grow, so you want to have more money in there, right?

That's right. So I'm going to pay back, let's say 5 or Nelson would recommend we pay back 10% of interest because that interest that we're paying back to ourself, back to our shoebox, represents the interest that we otherwise would have paid to somebody else. Right? So I borrow, I borrow. I'm borrowing from my banking system, my shoebox, and I'm paying back. I borrowed a five. I'm to pay back 5,500. Yeah, I could do that. So in scenario number one, using a shoebox, I have all the control. Right. Problem is shoebox not really a safe or secure place to save money. Is that right?

No, it's not. I mean, anyone can steal it, you know? Also, money is losing purchasing power only because of inflation. Would you not agree with that?

Absolutely. Exactly. God forbid, my house could burn down, boom, my shoebox is gone. To your point, the money goes up, it goes down. And yeah, at the end of the day, if I was just practicing the concept, and let's say everything went perfectly, I would have all of the money back. You know, 10, 20, 30 years later, I would have all that money back that I at least would have otherwise paid to someone else, plus the interest that I voluntary, voluntarily paid back to myself. Right? That's becoming your own banker. It's really as simple as that. The problem is, Roman, is that tool. We've just determined that that shoebox is a really bad tool. It's the wrong tool. Okay, so let's go to a heloc. I actually happen to have a HELOC in my own Home isn't the title, Roman, becoming your own banker. If I borrow money from my heloc, who's controlling that entire process?

Roman, I guess your banker is not yourself because. No, because the banker is the one who gives you his money and who dictates the repayment schedule and all the terms. And you have to provide your credit score, you have to provide your proof of your income and a lot of papers to kind of even open this account, right?

Exactly. So let's assume I jump through all those hoops, which is one of the reasons why we want to become our own banker. So we don't have to jump through all those hoops, but I jump through all those hoops. Let's assume I get approved, I have good income and I'm crystal clear credit and all that. Now I have the heloc. Well, even still, the problem that we're solving is that money is flowing away and I don't have control. Exactly what you said. If I borrow money from the heloc, I now have a minimum required monthly payment that I must make. On whose terms? On the banker's terms. Already I'm starting to see that this might not be the right tool for the process because money's flowing away and I have less control. Isn't it true, Roman, that any time, couldn't that banker ask me for all of the money back? Couldn't they take that HELOC right away from me if they wanted to? Even though I own the home, it's not up to me whether I get access to a HELOC or not. It's up to them. Right?

Yeah. And they can, and I believe it should be in your contract. If you read your contract, it actually should say that at any time, bank may, you know, make a decision to require all of his money back because of maybe you missed a payment, maybe you didn't pay interest on time, and.

Maybe something else came up, maybe the economy went bad. Who knows? But you just did something very interesting. It says it in the contract. And who's out there reading their HELOC or their mortgage contracts? People just sign those things and they don't even think about it because they.

Automatically show me where to sign.

They're going to sign. I just want the approval. Right. Fascinating. If you really study Nelson's concept, he's talking about not just growth or policies or these tools. He's talking about all four characters in the financial play. Who's getting the money? Who's that money being put to work for? As soon as I make an Interest only payment to my line of credit. That's a permanent transfer of money away from me and my family. Not to say that I couldn't use a HELOC for the same process. I could borrow money from the heloc, acquire the car or the investment of the lego, and then I just paid more back to the HELOC than I took out. Right. And the problem is, of course, if I pay the full balance of the HELOC back, There's, there's, there's a ceiling there. It actually, I have it now. I have a capacity issue. I can't even fit more money in if I wanted to. What am I going to do? Go get another piece, another piece of real estate and another heloc? That makes no sense to me. Roman, we sort of examined like, okay, we talked about heloc, we talked about the shoebox. You and I both know that Nelson taught us there's a very specific tool designed, a very specific way to implement the process of becoming your own banker. Because it's simply the best tool for the job. It's called a permanent participating dividend paying whole life policy. And we want to place that wherever possible, ideally with a mutual insurance company. Why are we using a dividend paying whole life policy? Can you give me an example, Roman, of how. First of all, why are we even having this conversation?

One of our YouTube viewers commented in under one of the videos that, hey, all you need to practice infinite banking is technically register a HELOC against your property and then you can make deposits, which is deposits into a heloc, and then you can borrow from it and then pay interest and practice banking. And it may look like it's a right statement, but when you think about it, then who's in control, right? Do you have any risks? Who is getting all your payments? Who's getting your interest? Can you recapture your interest? All those questions you should be able to ask yourself and compare it to something else. And what can we compare it to? Like you shared, we can compare it.

To technically the guy who made that comment or the person who made that comment. I mean, are they wrong? No, they're not wrong.

They're not? No.

Yeah. The reality of it is it's simply just not the best tool. What you're saying is, okay, you actually created an entity. You created a system. It's a legally binding contract that you actually own and you control. The life insurance company is on the hook to fulfill all of the contractual guarantees, and one of them is that the cash value in the policy, what you have. You and I have access to must rise every single day. So you were able to structure the policy specifically for that objective. Handy. To finance my daughter's braces, I need $5200 access right away. So you capitalized it such that you were able to access that money right away without interrupting the growth. And now, Roman, who's in control of the repayment schedule?

I'm in control.

Who gets all of that money back?

My system.

And who gets to reuse it again?

I get to reuse it again immediately as I make my payments if I want to.

And more importantly, every single penny that you pay back. We are co owners in that life insurance company. So who's that money being put to work for?

Yeah, for us. Because the insurance company. Like Nelson says in his book, by the way, if you haven't read this book, you should read this book because it's an amazing book. And then you'll get better understanding how exactly the system works. So like Nelson says in his book, the life insurance is just an administrator. It's not an owner of your policy. It's just an administrator of your contract. Their job is to make sure your cash value is growing. That's their job. It's like an administrator in a bank. You are the banker, but you have an administrator who places your money and makes profit.

We kind of talked about, okay, some of those advantages that show up using the whole life policy tool. And now we look back at the heloc. Well, we just talked about, well, they could take it away. They control the repayment schedule. Their money is being put to work when I make payments, even if I make principal payments back to my heloc. Yeah, I can go re access that money again, but that's the bank's money. If I make principal payments and interest, all of that money is being put to work for someone else's family.

Yes.

It just makes absolutely no sense in my mind. If you could access a whole life policy versus using a heloc, I mean, all the control and all the capital.

Then there's no guarantees in the bank. Right? Yeah, for now. You know, we have, you know, booming market where, you know, because of the low environment, interest rates, the housing market in Canada is growing like crazy. But it is not guaranteed. No one can predict what will happen in the future. So we all hope for the better so that our houses, you know, grow all the time. But it is not a guaranteed growth. And no one can make sure that this will go on forever because there's, you know, because. Because government Creates boom and bust cycles in economy all the time. And we, we've been there. We already had, you know, 2008.

Theory is, yeah, over time, maybe real estate increases, but to your point, there's no guarantee. And that growth in the real estate value, it's just tangible. It's not even real. Or, excuse me, what's that intangible? It's not actually realized until something's sold. It could drop tomorrow. But what's happening to my cash flow every day? It's growing enrollment. Can that ever be taken back or ever lose value or be repossessed?

No, no, no. It can only grow.

It can only grow. And so, you know, a question that we get often asked, Roman, is that, you know, we know roughly how to apply for a heloc, or unsecured line of credit, or a credit card. How do I get one of these policies? First things first, we want to make sure that we actually take some time to study and understand the process of becoming your own banker. I mean, I'm not talking about just life insurance. I'm talking about if we're considering implementing the process, becoming your own banker. Take some time. Binge this content. Make sure that you learn about the process becoming your own banker. Get a copy of Nelson's book. Get in touch with our team by hitting the post description below in the link below. To get in touch, schedule a call. You don't have to do business with Ascended Financial or the team here at the Banker's Vault, but just make sure that you're working with somebody who's an authorized Infinite Banking Practitioner through the Nelson Nash Institute. And this person should actually be able to show you their system of policies and what they've been able to accomplish. Now, that's how to implement the process. But to get a policy, it's not the same as a heloc, but there is an application process. Right? They're going to look at, am I a healthy person? Do I have a need for this insurance? And do I have the ability to pay the premium? There is a process, an underwriting process to get the policy in place. And once that contract is approved, it's guaranteed. It cannot be taken away. It can't be taken back. So there is a process. And once you have that policy in place, you have all the control. You become the banker or all four characters in the financial play. Right? The depositor, the borrower, the banker, and the bank owner. Very powerful.

Yeah. You should not do it alone. You need a good coach who can guide you through this process so that's why it is very important to work with someone who knows how this works, who is doing it in his own life, like Vernon Shared, and who is authorized by Nelson Nash Institute. And it is very important that this person knows how to properly set the system up.

There you go. Roman, if you're using the HELOC to practice the concept of becoming your own banker, you're making a big mistake. I know this video gave you a ton of value. This playlist beside me is going to blow your mind, so make sure that you binge that content and get in touch with us.