Becoming Your Own Banker | Exploring the Depths of Nelson's Book

Nelson's book doesn't need to be reviewed in a page by page basis. I don't really read it cover to cover. I read bits and segments. I'm looking for certain things or certain sections and I'm reviewing them on a regular repetitious basis. You have a copy of the book, open it up and pick any page, read that page and then you got something to chew on mentally for the day and think on this book, the.

Process of becoming your own banker, the infinite banking concept, authored by our mentor, the late R. Nelson Nash. We're going to do a bit of.

A deep dive, so we're going to go ahead and jump right to the introduction of the book. Nelson created this book originally as a course for a 10 hour seminar. When Nelson first started doing this, he was teaching it, as you know, over about a five week period. Now Nelson never phoned people to come back to the session. They either showed up or didn't show up. What he found is that some people that were there one week didn't show up the next week. Others that showed up brought friends with them. So it was a really interesting experience. So this isn't about you creating a brick and mortar bank. This is about who the banker in your life is right now. Someone's playing that role. It can and it should be you. He goes on to say that the book demonstrates that your need for finance during your lifetime is much greater than your need for protection. What he's saying there is, hey, everyone should have some protection to protect their family. We have a responsibility to do that. But your need for buying things and acquisitions vehicles, the things that you need to acquire throughout life and where you're spending all your money is more important than the amount of protection. It's probably a bigger amount of money that's going to flow through your life than the protection that you need. But if you solve for that financing aspect, those major purchases throughout life using this beautiful mechanism of dividend paying whole life insurance, you'll end up with so much of it you might not even get it past the underwriters.

When you get to the point where if you're expanding your system to accommodate all income, especially when you're dealing with a mutual company where there's no stockholders, you can be listed under a category called significant ownership, meaning you are a significant participating policy owner. So there's a difference between what someone is buying participating whole life insurance versus what someone is implementing. The process of becoming your own banker. There are only two sources of income. You've got people at work or you've got money at work. He talks about passive income time, retirement. He talks about how banks work. Right. So here are a couple of key fundamentals that I want you to really think about as you read page 85 over and over again. Because each time you read it, you are going to see something that you didn't see the last time that you read it. Because everybody that we interact with earns income from some supply source, whether it's T4 income, W2 income, interest income, dividends. Isn't it interesting that all of that money flows onto the books of someone else's bank? Some organization must perform the function of banking as it relates to your needs. If you understand that, you can become that character in the financial play, you can become the banker as it relates to your needs, you can stop someone else from getting all your money. That's the problem, is that you're doing all the work and everyone else is getting all your money. And what Nelson said so often is that unless you understand the problem, the solution just won't matter to you. Now, when he says if you owned a banking system, he's referring to an entity, and he referred to that entity as dividend paying, participating whole life insurance contracts, which plural means ideally a system of contracts that you grow and develop over time.

If you knew it passive income time, you would be getting back everything you paid into a system tax free. I always say potentially tax free. Would you object to putting any more money into it? Obviously it's a rhetorical question. We're talking about a system. So just imagine that for a moment. You have a system, you put money into it. Every time that you put money in, you have the ability at some later date to take that money back out. And it, it can constantly provide almost like a refilling resource for you. Essentially this to me, you know, there's a lot of amazing stuff in Nelson's book. The whole book is incredible. But this one, when I first read the book, this really hit home for me. And so when I talk about reading the book for people and I, I have in my instructions, I always say, look, you're going to read these first couple pages and then you're gonna skip to the end, page 85, you're going to read all this and then you're going to go back to the beginning again. Because this really does summarize a lot of the key components. The other one that I personally am a big fan of is number five, wealth has got to reside somewhere. Where would you prefer to have it? Reside. Now, you know, I'm a real estate guy. We have a lot of real estate investors who obviously get attracted to this concept as well, and people that we work with. Nothing wrong with real estate, but when you think about where the wealth is going to reside, where do you want it to be if you put it in real estate? Take a look what happens when one needs liquidity. Real estate is very much a frozen asset. Nelson talks about the stock market he has at the back of the book. And in fact, if you go to Nelson's website, he has a whole list of recommended reading about the stock market. Nothing wrong with the stock market. Lots of people do really well in that category. What's interesting is just that we're talking about the volatility in that marketplace. And if that's a wealth storage location, then the liquidity changes quite a bit on a day to day basis because markets could be up and they could be down. Nothing bad about it. But is that the place that you want to store your wealth? That might be a place you want to grow it. It might be a place you want to spend time getting educated so that you can become a ninja at, you know, some unique strategy there. But is that where you want to warehouse everything? Probably not the best thing. Now the last one on the list that Nelson talks about is free contract with other free persons which is the basis of life insurance from this base of financial operation. So a base financial operation base. It doesn't mean, you know that everything is stored in there. You don't do anything with it. It means it's a place where you store it and activate it somewhere else in your life. You can do all the other things in life that you desire. I think this is so beautiful. Free contract with other free persons. Insurance was originally created as a way to reduce risk for other people, to pool risk. So we have a risk as human beings that at some point in time we're going to stop taking air into our lungs. So, so when that happens, there's clearly a risk, a financial risk that happens to the rest of the family members. And that problem was solved with insurance a long time ago. They said, hey look, if we pull a little bit of money in from everybody, not everyone's going to die at the same time. So we'll have a big pot, we'll bet that get that pot to grow. And every once in a while when someone does die, who's paying into this pot, we'll have enough money to make sure their family is looked after. So it really is one of the original social goods that was ever created because it was designed to solve a need. The general public demanded something to solve this problem and insurance was created. It's a beautiful system because it solves real issues for people. And coincidentally, when you get the right stuff, the participating whole life set up in an appropriate way. With the education that we're going through today, you can now take this vehicle, your knowledge, you can smash those things together and you can create peace of mind and financial prosperity through the utilization of capital throughout your lifespan.

Last point on page 85, which really struck out to me is something that Nelson said many years ago. He said, you just don't have to play their game. And what he meant by that is he was referencing these tax qualified plants. And so if the government creates a problem, too much taxation, and then turns around and grants you an exception to the problem that they created by enabling you to store money inside of an entity that is tax qualified, aren't you just a little bit suspicious that you're being manipulated? If these plans were all created under the guise of giving you a tax break, all the government really needs to do to achieve that objective in simplicity is cut taxes. Do you really believe that they want to do that? And every single year that you file a tax return, right, you're on the government's radar and so are your qualified plants. Respecting the truth that your money and your wealth must reside somewhere. Because money and wealth are two completely different things.

So this is about even distribution of age classes. I think it really boils down to the diagram that he's got here. This is based on a forestry principle. And if you start planting, you have a, a huge amount of land, you're going to start planting trees. The purpose of that is to cull those trees eventually so that you can have the lumber, you can sell it and you can have a very profitable business. Trees take a long time to grow. So you divide the land into 40 compartments, 100 acres each. And you plant these things at different schedules so that when you, you make cuts and then you're doing that every couple of years so that you're creating a constant stream of cash flow and then replanting so that that grows for the next one. If you had this land and you want to turn into something productive because otherwise it's just sitting there. It's not the type of land maybe that you can farm in any way. So forestry makes sense. This is a long term objective. This is something that takes 40 years to, to accomplish. But then you've created perpetual motion as long as you maintain the system, that is, you cut the lumber, you sell it, you have an area to replant, you replant it so that you can cut from that section again. Meanwhile, you're cutting another section the following year, replanting, lather, rinse and repeat. Lather, rinse and repeat. And that's really what he's trying to talk about here. And so the purpose of this one two pages is all about talking about grandchildren and turning in the same concept into this distribution of continual financial value as it rolls through Life. Here's page 72. And Jay, I know there's a number of pieces you want to cover here. I'm sure it's going to be, you know, primary along these advantages, but I think I want to really just hit on this diagram. This is a follow up kind of example using Nelson's forestry connection. But now talking about how generations are buying on the, you know, grandparent, buying on the grandchildren, okay, now this person becomes the next grandparent and it's buying on the grandchildren. Then this person becomes the next grandparent, buying on these grandchildren and so on and so forth. So you're always creating this distribution mechanism that allows for efficient capital to be accumulated, not just from, from, from the grandchild's perspective, but the grandparents perspective. They own and control that contract. They only pass it off in the way that they determine at the time that they go. But you're creating this cycle of constant motion effectively on money.

We want the loans, the mortgages, the borrowing, the business acquisition, expansion, proceeds of sale, real estate growth. We want all of that money flowing back to the family, not flowing away. And in order to do that, you've got to think three generations past your own, which was one of Nelson's six golden rules. And in order to think three generations past your own, you got to start with your own. That's where it all begins.

The grocery store. These two pages here, page, this is page 15 and 16 on the fifth edition of the book. The understanding and the constant rereading and the recognition of this particular section of the book is instrumental, I repeat, instrumental to your fundamental understanding and your implementation. And the reason he uses a grocery store is because he wants to assess a business that you are both a consumer and a seller of the same thing. One of the things that I really want to highlight at the grocery store that stands out for me is Nelson spends a lot of time talking about essentially capitalization. But the importance of capitalization is so key. He talks about getting in a grocery store in order to do that. You first you need to research where you're going to do, why are you doing that, what market are you going to be in? You need a building to get it done. You got to research where that building is going to be. You need some capital or some investors. You need some way to have the dollars to go and acquire the land to build the building or to get an existing building and renovate it so that you have a nice grocery store. Nelson says you have to construct a, a nice looking building, a nice property. It must be well arranged, attractive equipment, and it has to have everything in place so that people will actually come. Otherwise they won't come. You must stock it with good quality, attractively displayed and competitive prices. If you don't do these things, people will just stop attending. And if they stop going, the result of that will be your grocery store will fail. So Nelson's trying to teach us important fundamentals about growing a simple business. And if you are in the banking business, you need to apply some of these principles of looking after the business, making sure it's well stocked. Well stocked in the banking business means you have capital access, means you're funding premium. It means that you're making loan repayments, you're restocking the shelves. So as an example, you have, you know, he talks about a can of peas here. You buy a can of peas, you go to the till, you pay for it. That can is now gone. Doesn't matter who pushes it. Another can has to come from the back room, the storeroom. It has to land on that shelf so that the next shopper can see and buy canopies as well. If it's not being restocked or it's not being purchased and ordered and showing up on a truck in the back room, eventually you're going to run into a problem. All the people who want peas aren't going to be able to buy them at your store and they're going to stop coming to your store and your store is going to begin to fail. And that's what ends up happening in these situations.

Nelson wants you to think about being both the buyer and the seller of the same goods. Right? Because everybody needs to eat, everybody needs the use of money. So if you go to page 16, the mantras and postures are both the same. The more money you make, the more we take. So if you're just operating a grocery store in the truest sense, the more money and the more profit that your grocery store makes, the more the government takes. And so that can create an Incentive for the owners of the business to take the cans of peas out the back door. Because, hey, if we don't go through the front door and pay retail, then we're essentially circumventing IRS and cra. But suppose there was a situation, as Nelson went on to say, where the profits from the sale of your groceries weren't subject to income taxes. So when you create a policy or a system of policies, you're paying no tax on the buildup of cash value. This does that not create an incentive to never steal the peas? This process of becoming your own banker is meant to ensure that you understand the advantages of not stealing the P's. The product, the entity, is your store. That's your warehouse of wealth. That's where you store money. And if you have multiple lives insured, you're in a position now where you're not just transferring wealth without a warehouse to store it in, you're transferring wealth. And you already know that there are multiple warehouses to store it in. And those warehouses belong to the family. When death happens, the windfall of money shows up. Remember, money must reside somewhere. Where are you going to put it? Your grocery store is gone. It's not in business anymore. So you want to have multiple locations so that you always have a place to warehouse the wealth. That's the key.

There's another risk to that too. Jay, I want to highlight again the idea of one person, one policy, that you lose that individual, hey, yeah, you're going to receive a tax free benefit, that's great. However, if you have this windfall of money and you want continuity on that for generations to come, now the remaining family members need to go and apply for the insurance to duplicate that event. And they may or may not be insurable. We've dealt with many people who have not been insurable. And then it creates a problem. Whereas if we begin and we get people insured as soon as we can, or at least we lock in their health insurability, we're creating an option on their future tomorrows. And so that's another reason for multiple policies. It's not just limited to expanding the size of your system. It's also ensuring that we're creating the best possible outcome with uncertainty of events in life that do come about that do happen.

You're creating a new business where no business existed before. You have to run the business so that it achieves profitability. If you steal the P's, meaning you access policy loans and you don't repay them, you're stealing. That's a Polite description of theft. And when you request policy loans, pay them back and put a little bit more capital back into the cash register of your own store. In other words, the simple interest that the insurance company calls for is a direct contribution to the net profitability of that insurance company that you co own. But if you put even just a little bit more capital back in in the form of premium, because that extra interest is not really interest, it's premium. If you do that, you create another shelf in the grocery store to put more products on for more captive customers. So these are key takeaways that Nelson didn't expand on in the book, but we're sharing it with all of you because we were blessed beyond good measure to have been coached and mentored by this man for so many years. Nelson talked about in the grocery store example, he referred to a phenomenon in physics when he said. I think it was on page 15 in the bottom left hand corner when Nelson said it all reminds me of a phenomenon in physics. Take a pail of water to seaside. I want you at sea level and heat it up to 210 degrees Fahrenheit. All you have is very hot water. But if you heat it up to 212 degrees Fahrenheit, you have live steam with unbelievable power. The steam engine changed the world. But it doesn't happen until you get past 212 degrees. Lots of heat goes into the process up to the boiling point. But the dramatic power comes on suddenly. Here's a sharp example of that. This policy was created in 2012. The annual premium payment is $20,000. The minimum required premium is $15,000. That wouldn't be the case today. The minimum required premium would be much less than that. But at the time Nelson said work with what you've got. So the minimum required premium $15,000. The accelerated deposit option or paid up additions $5,000. I want you to see what happened over the years in this policy. In 2012, the policy began accumulating cash value immediately and continues to grow. Can cash value daily what most people don't understand, cash value is not money. Cash value is equity in the contract because the policy is a unilateral binding contract. In 2013, at the first anniversary a dividend was declared and paid, the policy grew, hence the tree stump. Each one of these rings represents one year of uninterrupted growth and it cannot go backward. The second year we took a family vacation utilizing a policy loan. Second dividend was paid, paid up additions were added to the policy. Third, third year dividend paid again, paid up. Additions grew. Policy grew in circumference. Cash value grows every single day. The very next year, another dividend, more paid up additions. We purchased a car the year prior. With a policy loan, we control the repayment schedule. The very next year, we bought another vehicle. Dividends paid again, paid up additions added to the policy. Family vacation, more dividends. You can see the trend. The policy never stopped growing. Here's where page 15 is highlighted. In my own real world policy example, when we started the policy on day one, we had a starting death benefit of $721,177. Eleven years in, the death benefit is now 1,159,939. That death benefit grows with every premium paid and every dividend paid. The total cash value was $4,500 on day one. It's $237,673 today and it's going to be higher tomorrow and every day after that. The loan amount available is $213,906. When I deposit my next 20,000 in October of this year, the cash value growth for the one year. This one year is more than $30,000. This is live Steam. This is what Nelson talked about when you get to 210 degrees Fahrenheit. So year four, year five of paying my premium, all that I had was really hot water. But the moment that the total cash value began growing at a rate that exceeded the premium I'm paying, that's live steam. That's 212 degrees Fahrenheit. If I put $20,000 into this policy and the annual increase in cash value exceeds that 20,000, and it cannot go backward, it can't be repossessed, it can't be taken away. When would I ever not want 20,000 more of my money residing here? Never. Nelson said that this is meant to be a system of policies. This is not meant to be a single policy. Here's our system. As of March 3, we got 63 policies, 20 lives insured, 76 policies. By the end of this year, you started with 16,800 a year in premium. This year we'll finish the year at 700,000 in annual premium. Total death benefit was 32,043,000. It's just shy of 33.5 million today. Total cash value 3,064,507. It is significantly more today. Loans 664,000. That is also higher today. Loan amount available, 2,093,000. Also hired today have in excess of 55,000amonth coming back to the family in the form of policy, loan repayments. This is financial energy that we would have been transferring away from the family. So when you talk about why couldn't I just have one large policy on me versus multiple policies on a variety of lives insured, I just demonstrated that to you. Where do you want the family's financial energy flowing to? Where do you want the business's financial energy flowing to? You want it coming back to an entity, a system of policies that you own and that you control.

So you know, here fundamentally Nelson talks about, you know, the problem that everyone in North America faces. It's who's the pay, you know, who's who they doing their banking business with now basically, and the interest earnings going someplace else or the potential interest capacity that they could be earning going someplace else versus to their family and where it belongs to. And I specifically want to isolate the pattern of spending that Nelson talks about here in the book. And this is from a great deal of his own research. And you know, from, I suspect, I think if we did similar research today, we'd find the numbers very similar. But Nelson wanted to look at, you know, he called the all American young man age 30 making $28,500 a year. So he always said that you didn't need to be rich to get into the banking business. You know, he talks about the spending for automobiles. Roughly 20% of out of $100 that you make, 20 of those dollars go to service automobiles is, you know, often very common. And specifically the interest cost of those vehicles. Well, if you look at the graph, he's not talking about the interest rate, he's talking about the interest volume. You know, that's one fourth of that total line. So the total payment is the, you know, the tall bar and then this one is the actual interest component of that. So almost one quarter of every dollar spent is actually going towards interest. That's interest volume. He talks about the housing and the housing he's specifically isolating, you know, like the first five, six years of a mortgage. Because what's common even still today, although now with the rates rising, it's going to be a very interesting situation. What happens here in the next couple of years as people's five year terms and stuff in Canada begin to renew. A lot of times people are resetting or refinancing or breaking a mortgage contract. You move across town, you go somewhere else, these types of changes take place and then people are breaking those mortgage contracts and resetting them, often at a higher value. Because house prices have gone up or what have you. So this is the interest cost represented in that housing allotment of, you know, 30% of your annual spending. Then he's talking about, you know, living, hey, this is your day to day living expenses in the fun things you do, etc. And the interest costs on that. So that's interest on things like whether it's the boat, the credit cards, the lines of credit, the things that you're using on a day to day basis. And then we're talking about savings. Now in Nelson's example, he's trying to give everyone the best benefit of the doubt. He says ideally everyone is saving 10%. Well, that's what we're told. So everyone must be doing it right. Well, in his experience, that actually wasn't the case. He found a lot of people weren't saving 10%. It does range. Everyone's in a different situation. But what was really interesting about this is he says, look, if all we could do is eliminate this interest cost right here on the living side and we could go and move that onto the savings category, we would add 5% to the savings. So if you're saving 10% and you increased it by 5%, how much does your savings rate go up? 50%, because we went from 10 now to 15. So that's a 50% increase from the original amount we were saving. It's a huge, huge game changer for a lot of people. And then if you were able to take that, that power, that financial potential and begin to continue cascading it to create volume and velocity in a system or a warehouse that was efficient and allowed you to access it, Nelson's trying to teach us. That would be a really powerful example. Ultimately, this is part of the problem, is that we're earning the money and the money's disappearing to other people. We want to be able to harness and control that, to create a tailwind where we can take these interest dollars and we can tack them back here into that savings value to create something larger and bigger for your future by controlling the circumstance.

Text the word schedule to 780-809-4599. I'll make sure that you get connected with the right person on my team, whether you're Canadian or American, we're going to take care of you and we'll help you get started on this journey or we will help you grow or amplify your system, your program. Nelson taught us to understand the characters in the financial play. You've got the depositor, you've Got the borrower, you've got the banker.

And then.

You'Ve got the bank owner who has an expectation of receiving proceeds called profit in the form of dividends or more ownership in the company. Let's pull up page 45. We'll have one twin sister who's going to save money on the books of someone else's bank in a certificate of deposit. And that certificate of deposit is going to be guaranteed to earn 5.5% interest that is taxable and taxed at the highest rate. Twin sister B said, well, I met this guy named Richard and he told me that my money must reside somewhere. I understand the problem, the solutions become clear to me and I'm going to put the very same amount of money into a participating dividend paying whole life insurance policy. But I don't want to access policy loans. So each twin sister decides to commit $5,000 a year to the processed the program for seven years. In the first year, Twin Sister A puts $5,000 into that product, that financial product and a year later has got 5200 bucks. Twin sister B, who decided to go down the path of purchasing a policy from Richard only has $1,933. So both Twin sisters are out to lunch together. Let's just compare balances. I've got 5,200, you only have 1,933. And twin sister who implemented infinite banking said, just give it a little bit.

Of time in year eight, it's time to go and buy some cars. The assumption here is that they haven't touched this system at all for the beginning. Because Nelson says at the beginning that you have to recognize human factors. You have to learn how to conquer Parkinson's law. Show me someone who will put money repeatedly into a system for seven years without touching it. I will show you someone who has conquered Parkinson's law. So the financing balance that they would have been financing would be $10,550. So here they're self financing. So you can see that the balance of the account goes down in both scenarios because the infinite banking sister also did withdrawals. Both are taking, they've built up their account value. Now they're actually, you know, the GIC sisters redeeming some of those GICs, pulling their value out. They're not earning interest on that value. They're paying cash for the balance of the car and then they are each going to commit car payments for a four year period of time and they're going to put those car payments back into the respective systems. The IBC is putting it back into premium. The GIC sister is putting it back into new GICs basically each and every time. So they continue to repeat that process. And if we scroll down we can see okay, there's 1, 2, 3, 4, 10, 11 vehicles that they purchase over their lifespan. They only put their original $5,000 a year in. They stopped when they did that for seven years. They put 35,000 in original capitalization, they did withdrawals. They continue to be an honest banker and make car payments back to their system equivalent to what they would had to pay some other finance company. And they reinvested that or put it back into what they were using the GICs or the AS Premium. And then those values continue to increase. Just take a look at the values in the account. At which point does the IBC sister have a larger account balance than the GIC sister? So here, $59,000 versus $48,000. Do you see the CD sister catch up once the IBC sister crosses that level, the other twin never catches up. She's ahead for the rest of time, for the rest of her life. She was far behind for that first 15 year period. They started getting closer and closer but it wasn't until they hit the end of that year 15 where she overtook and then she began to do continue on forward. So it's kind of like that. In the CD sisters example, we're showing the net after taxes paid because there's going to be a, you know, a W2 or a T form, a tax form sent every year for that interest earnings. Whereas the infinite banking sister isn't going to have a tax form in that format. In both of these examples we're talking about the same capital flow, the same flow of financial energy. But what is the death benefit for the GIC sister the entire time it's only whatever the account balances. The infinite banking sister has the death benefit plus the account value working for them. So the we go down to line 51 and this is after they've made their final car payment. They've bought their final car. No more car purchases after this point. The CD sister has $259,000 of accumulated capital and the infinite banking sister has $964,000. So the gap between these two and I'll just round it is $706,000. That's the difference between the two people. But they did the exact same thing. They followed the exact same flow of financial energy. Both of them are going to begin the process of withdrawing our retirement income. They're going to take the same amount. Obviously, if you've got 260 grand and then you're taking 50 grand a year out, you're going to deplete that balance pretty quickly. The earnings on that account will just won't keep up with the withdrawal rate that you have. So you'll see that the CD sister runs out of money. She doesn't even have 50 grand in that final year, and she depletes her capital fairly quickly. Both of these twin sisters came out really, really well. They both self financed cars, they used a system, they practiced honest banking. They both created an environment where they accumulated the equivalent value greater than the equivalent value of all their car purchases. In other words, they had all the money that they spent on vehicles available to them in the account value. That's where we would say that they recaptured the cost of those, those vehicles. It didn't mean that they got rich buying cars. They still had to pay for those vehicles. Right? But the system created an environment where equivalent greater than equivalent value was still stockpiled for them to utilize as a passive income.

If you look at the GIC or CD sister, she is depositing that money on the books of someone else's bank. That bank has already been capitalized. It's already been in business for a very long time. So that's why she's got 5,200 after year one and 10,608 after year two, et cetera, et cetera. The infinite banking concept twin sister is starting a new business where no business existed before.

She is paying premium into a life insurance company that she co owns. Her money must reside somewhere. When you compare $964,000 to $258,000 at year 51. He asked what was the banker's reward for all of her effort, the difference between $964,000 and $258,000. Because the twin sister who's implemented the infinite banking concept without accessing a single policy loan just purchased a policy and stored money there. Practiced the concept to the degree where the money that she would have transferred away to someone else for a car, she's paying in premium, not policy loan repayment. The twin sister who was only two of the four characters in the financial play didn't make out as well as the twin who was all four characters. We're dealing with the exact same amount of input in money, but the output and the outcome is much different.

People would really struggle with the word loan. People get a mental baggage connotation with words. The word loan being Bad loans are bad. Loans are bad. Loans are bad. Well, no, that's not true. If you're the borrower, loans might be bad, but if you're the bank owner, loans is good.

That's right.

Loans are an asset. Every loan is an asset on someone's balance sheet. It's a liability on someone else's. So it's a matter of what side of the equation of the balance sheet are you sitting on.

It's really just a way of thinking and it's a way of behavior. Your behavior is far more critical. The insurance company is going to administer this contract with no loan activity. That's exactly what Nelson is showing you here. So super, super important to grasp that and something that is often overlooked when people first read his book.

There's lots of great behaviors here, but one of the critical key behaviors is this continual honest banker repayment schedule. Both of these individuals are not stealing the piece. They're returning capital on a schedule at a regular basis to refund intentionally their pile of capital for the same purpose on a repetitious basis. This behavior of the car payments and, and recapitalizing to create the outcome for the next major purchase is one of the most critical components of the behavior. That's what Nelson was telling us in the grocery store. So we're seeing an example of that here in this chart. Because if they hadn't done that and then they went pay cash for this car because they have this big pot of cash, well, their balance would have dropped to 34 grand. Yeah, they would have earned a little bit of interest. But then when they went to buy the next car, the balance would deplete and eventually that balance would go to zero, and they wouldn't be able to continue that process. So the repayment and the recapitalization for the next capital asset, the next thing you're going to acquire or the next major purchase is extremely important. It's integral to the fundamentals of what you're doing in life. Anyway, someone's going to get the flow of that money. The more intentional you are about it, the more capital accumulation begins to happen to your advantage. Talking about the income draw here in this example, Nelson's not talking about policy loans, he's talking about withdrawals. Here they both take out a retirement income. Obviously they both did well. They both got more than the capital they put in. There's a summary here down here at these totals. If we add up all of the car payments and all of the original deposits, the $5,000 a year for seven years the 30, 30 a year for all the car payments. The total amount of money in the, the capital inflows, the flow of money going into the system for each sister is $168,000. However, they used money, they did withdrawals, so they actually pulled out 116,000. When we do, as Nelson would say, the third great arithmetic, we take this number and subtract this number. The net amount of money that they have left in that system is 52, 2 70. This would be their net real cost. That's the net amount of money that they still have tied in because they put it in and they withdraw it along the path. So They've only got 52 grand in this deal. Well, the very first year they each take out 50,000. So pretty much they get almost all of their net capital back at that point, which means every year afterwards was all gravy. That's the advantage that they created in both of them for creating the system. So when we say recapture doesn't mean that you're getting the money back for the cars. You still had to spend the money in the cars. The car dealer got the money. Okay, but your system creates a capitalization impact over time where the equivalency of that money is available for you to reuse at a later date in life before you're dead. Oh, and if you're dead, well, the money's available then too, usually a lot more of it.

He's indicating that the 50,000 coming out each year is just dividend withdrawals.

So on page 44, there's an addendum section that was introduced here. And on the addendum again, he says right here that he would have recommended policy loans to buy those cars. And he goes on to explain that. And I think that's a really important piece of Nelson's book right here is that there are only two hard, fast rules in building and in carrying out this concept, in the building of it and the implementation. Don't be afraid to capitalize. The more you put in, the more you get back tax free. A passive income time. Don't make policy loans without making provisions for paying them back. That is the equivalent of stealing from your system. A lot of people will do, and a lot of our clients, they'll do an amortization chart. We always recommend an amortization chart and a regular payment schedule. It may be, hey, if you're, maybe you're, you're purchasing an investment or a business structure and then you're going to create revenue stream, and that revenue stream is Going to make the repayments, whatever that is, but have a clear intent of how you're going to repay that back. And you should have it documented, because if you did business with a regular bank, you better make sure you can guarantee they're going to make you sign a whole bunch of documents, lots of them. So you should be prepared to do that for yourself so you can manage and track the commitments that you make so that you can be successful in this process. This page talks about, you know, hey, how do I get started? Et cetera. Well, Nelson talks about the importance of desire. Without that desire, you probably can't do it. And everyone is already spending all financial resources on what he or she thinks is best. There has to be introspection at this point, and a commitment to get out of financial prison must be a burning passion. So this is where we recognize that people who are exploring this process, yes, you need to understand and learn about it. You need to do the homework to bring this in to make that decision. Is this something that you want to do? But you also have to get clear why it's important for you to do that by understanding the problem and then how that's really going to impact you going forward. He goes on to say that it requires a change in priorities in life. In other words, adjusting your budget or the way money's flowing through your life. That's where our coaches come in to help you figure out how to implement that in your specific situation. But then making the commitment to go ahead and start doing that. They mentioned finding a life agent or someone who's familiar with the concept. Of course, obviously someone who's authorized Nelson Ash Institute practitioner, and in all probability, those people will be familiar with the questionnaires and they'll be able to help you figure out how you're spending money in cash. This happens all the time. We find out there's things happening in people's budget where all of a sudden, oh, well, what about this? What about that, what about that? And all of a sudden, over the course of a year's budget, we find a bunch of capital that's flowing somewhere that could be redirected and repurposed for the concept while still being able to implement the usage of capital and other things in your life. But the real reason I wanted to highlight this page is that it's going to take years to get started in commitment. And it's like developing a regimen of exercise. You got to go and see where you're at and you got to make a goal of where you want to be. And then you have to put in the work. The coach can't exercise for you. Nobody can do that work. You have to do the reps, lift the weights, et cetera, to see the result that you want to achieve. That's what implementation is like. He talks about getting involved in a wealth club that meets periodically. Here you have the support of others working their way out of darkness. Be sure to include members that already have a track record of practicing the principles of infinite banking concept. This part of the book, page 65. He kind of says this is almost like the end of the book. But the remaining components are to help stimulate your imagination, to help you figure out how you can capitalize your system. So Everything past page 65 is extremely valuable, but it's really about helping you craft and think through the ways that you might go about by seeing some other examples, starting the implementation journey for yourself.

Any process has pros and cons, risks and benefits. Can you present pitfalls, risks that could occur with this process?

Yeah, the first pitfall would be not doing it. The second pitfall would be stealing the peas. When you know the significance of not doing that, that's your choice. And if you are in the process and you start stealing the peas and you wake up one morning frustrated because you're killing the very business that you want to provide for, you don't point the finger at anyone else because you're the only person who's accountable for that.

I would say, you know, the pitfall, Jay, is actually in the human conditions. And because the pitfall is not following through on Nelson's instructions in the book. Right. And getting pulled down some other financial rabbit hole and then thinking that that's the next best thing, getting really excited, not making a long term commitment, thinking that this is going to solve all your problems and then you yourself not doing anything to help that along by adjusting your behavior.

So there's the, there's the pitfall. The pitfall is that you're human and you're fallible. That's a pitfall. But if you just purchase a policy.

And you pay premium and you do nothing more than that.

The insurance company is going to administer that contract and you are going to achieve a very good outcome. But the moment that you begin to introduce human behavior, you can create a far better or a far worse outcome. That's why it's important to have a great coach. And so a pitfall would be not having a great coach. And Nelson told us repeatedly, infinite banking concepts does not need to be sensationalized. The process of becoming your own banker is ridiculously simple. We shouldn't take such a great thing and sensationalize it.

The other pitfall is not communicating with your coach.

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