Capitalize Your Way To Opportunities

If you have access to cash, when you have an opportunity coming by you, then you can take advantage of that opportunity and maybe create passive income, maybe create an asset, maybe create something valuable for your family and yourself. Think about how many opportunities they are passing on today and they have been passing on for their life.

You want to create more financial peace of mind, a stress free financial life. How do we actually do that? See, there's a problem that the typical Canadian family is facing and, and guess what? They don't even really know that there's a problem. You've seen this book, becoming your own banker, Unlocking the infinite banking concept by this gentleman, the founder, the pioneer, R. Nelson Nash. A lot of people watch content on our channel. They will read this book and they'll show up and they'll say, hey Roman, I want you to show me how to become my own banker. Let's look at some numbers. And the problem with that is there's no point in looking at a solution if you don't clearly understand the problem. So my colleague Rowan and I are going to dive deep today and we're going to show you a great story that highly illustrates the problem that the typical Canadian family is facing. They've worked their entire lives and they have a problem that they don't even know that they have. Stick around to the end because we're going to show you a solution. So Roman, you came across a pretty amazing article, didn't you?

I found a very interesting article and I decided, you know, it will be very good to, to actually react to this article. It's an amazing article about a couple who have their dream come true. They had the dream of having a house in maritime and they actually realized this dream. They're not happy. But the way they implemented it, the way they achieved it is through accessing bank credit and now they're paying it down as soon as possible. Why? You'll find out later.

You're basically going to position and just share a little bit about some of the highlights about this family's story, what their problem was and the solution that they decided to implement. Nothing wrong with this solution. It's not that we're here to bash anyone or say there's anything wrong with this. We're just sharing with people this situation. Very common. And what a potential solution could have been for a family just like this one. Is that right, Roman?

Yes, that's right. Okay, first off, I wanted to say that there's a slogan or motto here by the way. This couple, they had a dream and then they bought the way to the dream, meaning that they paid money to have this dream come true. And where's the money now? The money is gone. So it's kind of cool slogan to have, but at the same time it's showing that they have the dream, they have the house, but the money is gone.

That's fascinating, right? Everything begins with the way that you think, hey, you can buy anything you want. Nobody's talking about capitalizing your way to your dreams, right?

This couple, their names are Tom and Marsha. Tom St. John, New Brunswick. And for more than 30 years, the kitchen and Ontario based couple would travel east with their two daughters to visit family. But when the grandparents passed, we had no easy place to go, says Marsha. Our hearts were there, but our wallets were not. They wanted to go to Maritimes, but their wallets were not prepared for that. And why is that do you think?

Because Canadians are really good at paying their bills and we're always taught to send all of our money to everybody else free first. We're not taught to pay ourselves first. So that I didn't actually catch that. When we first read the article, you said Tom and Marsha's parents were in the Maritimes, so they had parents that they could go visit with their two daughters. And then when those parents died. That also points to something else very interesting, doesn't it, Roman? Again, I don't know this family situation, but if the, if their wallets weren't there, if the parents died and they could no longer go and easily stay somewhere, that kind of points to the fact that maybe those Tom and Marsha's parents actually didn't do very good planning either. Or they could have done better planning. Right. In order to create it so that they could have a place to stay.

When Tom's sister sent them the listing for a cottage on in May of 2021, their first instinct was to shrug it off. But when we looked at the place, we just saw ourselves there, says Marsha. Which is great. I mean having a dream is awesome. Especially if you see yourself there. It's amazing, right? So it means that you really, really want this place and you will do anything it takes to, to be there.

This pulls up my heartstrings, right? Like this is why we do what we do, right? To help families create a peaceful, stress free way of life. But listen to that. Hey, we saw the listing and their first instinct was to shrug it off. They immediately not possible.

Yeah, because they didn't have money. Right? That's the reason.

That's Sad. You work your whole life and then you see a dream and you shrug.

It off what they've got. So it was a modest two bedroom, 621 square foot bungalow listed for 199 and 900 across the street from the ocean in Fernwood. Oh, very nice place. Sounds like very, very nice place. Just 20 minutes from Summerside and a spot known for the sea Cow Head lighthouse from the 1985 and of green Gables movie. They hadn't been looking to buy anything, but they still had some bank credit available from when they downsized from their house in Kitchener to a condo nearby a dozen years ago. So here's the story. 12 years ago they had a house in Kitchener and then it decided to downsize to a condo. So what they've created, they created a capital inside of their equity. So now they didn't want to buy anything. They kind of looked, someone sent them like a listing and they just kind of, you know what, we don't really need it. But then they saw themselves there and they decided, you know what? We have access to capital, which it's not actually capital. It is capital that is buried inside of the walls of this condo. So why don't we tap into it and then use it? So think about what was the main place for them to create wealth within their property.

Solid asset.

That's what the most Canadians do, don't, don't they? Right?

Absolutely. Jason, our founder of the Ascendant Financial, would fondly refer to that as a financial prison. Because it's interesting that you're saying, like they had bank credit, it's their equity, it's their capital, but it's bank credit. Only way to access it is through the bank's credit. Very fascinating.

Come to the bank with a hat in hand and just ask for a credit. Provide your credit score, provide your income. Make sure that you can pay down this credit in some time because they want to make sure that you pay it back. And bank will dictate the terms, bank will dictate the payment schedule and everything like that. A light went off for them. So we could use the home equity line of credit we established when we bought a condo, says Marsha. A home equity line of credit is a revolving line of credit that allows you to borrow against the equity you've already accrued in the property. We all know that now they decided to use the line of credit. Their fixed interest rate was decent at 1.8%. It was beginning to look like the perfect time. They didn't know anything better. For them it was perfect because they had access to credit. Even though it was not in their terms, they were not controlling it, but they decided to do that anyways. So within a few hours they found a realtor and put in an offer of just over $200,000. By the next morning, the place was theirs. Oh, congratulations.

I just find that fascinating too. Like the turnaround time, they're like, hey, let's get this thing done. Emotional decision, right? This is part of the problem too, right? Thinking about your thinking, rethinking your thinking. And to your point earlier, it's like this is just a typical normal thing. There's nothing wrong with what we're describing here. This is what people are used to. They actually have, generally speaking, no idea that there's, that there's any sort of alternative. Well, what else do you do? Right? So we're going to talk about the solution right now. They're used to someone else being the banker. See in this book, this is a great book by Jason Lowe, Richard Canfield from the Wealth Without Bay street podcast and from a Senate Financial. They we release these quarterly books that are just little bite sized books. I read this on the trip from Calgary to Toronto. You could read it inside of a couple of hours. But inside the book here, they do a great job of describing on page 22 the four characters in the financial play. The four characters are the depositor. Roman and I are depositors. All of you in Canada, here or North America, watching this video, we're all depositors, we are all borrowers because we're all accessing money, whether it's your own cash or somebody else's cash. Like in Tom and Marsha's situation, accessing the bank's pool of money. Even if spend your own cash, Roman, you're giving up the opportunity to earn interest or you're borrowing money and paying interest. So one way or the other, there's interest either paid or lost. So it's always borrowed money. But the problem that Tom and Marcia are seeing in the typical Canadian family or people in North America, they're not the banker. That's the third character. The banker is the one who grants you access to the cash. They set all of the terms, the interest rate, the repayment schedule, the level of cash you can access, and so on. That doesn't sound like a peaceful, stress free way of life. Right?

So yeah, exactly. And the money is now flowing away from them, not to them. The money they have, whatever income they generate is flowing away to who? To the banker.

And that's a Segue to the fourth character in the financial play. Who's the one making the most amount of money in the entire financial play? Well, that's the bank owner. The money is flowing through the books of someone else's bank in order to generate credit or in order to generate profit for that bank, which they're not sharing with you, but you're the one doing all the work and taking all the risk and sending all the money over. That's the problem.

The cottage is just what they'd hoped it would be. Their daughters, now 34 and 39, host friends in the spring. In the spring. And the couple spends their summer there as well. Of course, there's always a hiccup. The septic tank couldn't be repaired. The family switched to a holding tank that filled up faster than they realized. To offset pressure on the tank, daughter Amelia immediately got to work building an outdoor shower, which they love even more than the indoor setup. Now something happens and they need access to credit again. It's all about making extra payments now, making payments to fix this problem. It just made sense for us financially to buy it this way, says Marsha. And we're pretty happy to have this means for a family to stay rooted in a maritime.

Did it make sense or was that the only option?

They probably didn't know anything better. That's the problem.

Yeah. And if you're watching this right now, just put yourself in this position. You might not be in this exact situation, but whatever it is that you're dealing with financially, those situations are never going to go away. They're only going to expand. Right. Whether it's aging parents or the loss of a loved one, or if it's an economic, economic downturn or a job loss, the need for ready access to capital is only going to be needed more and more as time goes on, as cost of living goes up, as tax rates go up, as uncertainty. And I'm not trying to be doom and gloom, I'm just trying to point to it's actually possible to create that pool of ready access to cash so that you can a take advantage of opportunities when they show up, but also easily solve problems in a very stress free, seamless kind of way. And the solution is the process of becoming your own banker. The infinite banking concept. So go to watchibc.com there's a link in the description. Go to watchibc.com and you can get access to a 90 minute webinar where you'll get some insight of how this process of becoming your own banker works. Because the first step is to educate yourself. Take time to actually go through the learning journey.

Some tips from the financial counselor. So he says that be careful about interest rates, especially if you're on a variable mortgage. In the previous interest rate environment, HELOC would be a lot more appealing or much lower risk than it is today when interest rates are much higher, says Mitchell, who's based in Vancouver. Marsha and Tom have a low fixed interest rate and are currently paying down their principal as quickly as they can before their mortgage and Hillock renews in a few years, likely at a higher rate. That's a strategy Marcia and Tom have decided to implement. Paying as much as possible, this principle down. So what they're doing right now is from their income instead of saving, instead of supporting their life, instead of supporting their children, maybe even grandchildren, if they had grandchildren, they are giving up all the financial resources to a bank. Why? Because they have a fear of renewing this HELOC at a higher interest rate at some point.

Yeah, see, isn't that typical? So think about that as it relates to your objectives in life and where is the money flowing today? How much of that capital is accessible? How many of your assets can be quickly turned into liquid cash? They're taught to send all the money away. They're given all that financial energy to the commercial bank. Now we're not saying not to necessarily recapture or pay off the debts, but what we're suggesting is there might be an alternative way for them to put money to work, still have access to capital and still achieve the objective of not being fearful of the interest rate change. So I think that's a good segue, Roman, to switch to just some of the highlights of a potential solution. This is not advice, this is just showing what is possible by using a tool called the dividend paying participating whole life insurance contract as a warehouse to store your capital as you're going through life. An alternative place to store capital so that you can build, first of all, an immediate tax free windfall of a death benefit. God forbid something were to happen to Tom or Marcia, there's going to be a lot more cash coming out of the system than what was put into it to solve all kinds of problems that will inevitably show up.

Imagine what would happen, Vern, if they don't have life insurance at all. Tom or Marcia pass away before they pay down this mortgage, would they still need to pay it off?

Absolutely, of course.

How much money do they have? Less after someone passes away or more after someone passes away?

Absolutely less.

Less. Absolutely less. So would that be harder for Tom or Marsha to pay this mortgage down by themselves?

But absolutely. And, and also if they, God forbid, if they were both to pass away, then their children will be left to sort of figure that all out, potentially fire, sell the assets and all the rest of it, have to jump through all those hoops. It's a very stressful situation. It just doesn't have to be that way. Of course, we're not going into the in depth details of how the process of becoming your own banker works. Assuming you've gone through the book, we're on page 65 here at the top of the book. He says, assuming by now that you were sufficiently convinced that this is the course of action that you would like to take, the question becomes, how do I get started? The most important word that comes to mind is desire, because without it, you probably can't do it. And he says, remember Parkinson's Law from part two. Now, Parkinson's Law, Roman, just from a high level, says that a luxury once enjoyed becomes a necessity. The work expands to match the time allotted or your expenses rise to match your income. People actually believe that that's not true. It's a relative truth. It certainly can. If you don't have desire, if you don't understand that I got to whip Parkinson's law so that I don't wind up in, you know, God bless him. This sounds like an amazing story, sounds like an awesome situation. I hope it all worked out for them. They're in this situation where now they're sending all of their money back to the bank. And that's probably what they did most of their life. Everyone is already spending all financial resources on what he or she thinks is best. And there's got to be some honest introspection at this point. Commitment to get out of financial prison must be a burning passion. And this is what they're talking about. Even though they were able to access that line of credit, there's no guarantee because someone else is the banker. So they're in a financial prison. And if they get permission, they can access the money, but otherwise the bank could call that loan, they could deny it or what have you. And again, this isn't doom and gloom. It's to say we can do for ourselves exactly what the banks are already doing for you by building our own pool of capital, stored ideally in this tool called a dividend paying, participating whole life insurance contract, ideally with a mutual insurance company. And I just wanted to point out with that, Roman, in this book, cash follows leader on Chapter in chapter three, Richard and Jason dive deep into. Well, that all sounds well and good, Vern, but where's the money coming from? So we created a solution for a 30 year old male. Let me paint a picture here, Roman. A 30 year old male putting $10,000 per year aside. In a policy system, that $10,000, that might seem like a lot of money to some people, might not seem like very to a lot of people. Now without getting into the details, he's not necessarily committed to $10,000. He has a contractual agreement to put half or maybe a little bit less than that. So maybe 4, 3, 4, 5,000 bucks is his contractual agreement. But he's planning to put 10. Well where else would he be putting the 10? Maybe a TFSA, maybe an RESP, maybe register equity in house, equity in that house. So he's probably, probably accelerating the payments on his mortgage anyway. So in this chapter they talk about finding the money to get started. An idea exactly would be that maybe it's my tax return every year, maybe it's the biweekly accelerated payments that I'm sending to my mortgage because I'm taught to pay it down sooner. It's not that we're not going to pay it down, we're just going to pay ourselves first and build our own alternative pool of cash that we could be accessing money from that pool during that whole 30 years of accumulation. When my kids get sick or when they get need dental work or they need to go to university. See there's all these things that we need to finance, not just the dream.

And we can actually create passive income if we would, we decided to, to use capital, create passive income, maybe to buy property and then just cash flow.

It would life be easier or harder or better or worse if you had more options and more access to cash from alternative places?

Of course it will be easier, much easier. I mean if you have access to cash, when you have an opportunity coming by you, then you can take advantage of that opportunity and maybe create passive income, maybe create an asset, maybe create something valuable for your family and yourself. Think about how many opportunities they are passing on today and they were, they have been passing on for their life not having access to cash.

Yeah, you couldn't take advantage of them because you didn't have the cash available. So, so we've taken a 30 year old male, healthy non smoker, he's chosen, it was his number, he's chosen to put $10,000 per year aside into a permanent participating dividend paying whole life insurance contract that Makes him a co owner in the life insurance company, so he gets to participate in the growth with the insurance company. What would be the initial starting death benefit at age 30 when he makes that deposit? Now, keep in mind, our focus here is to build cash. If we were, our focus was primarily death benefit, we would, we would structure the policy completely differently. So the death benefit's super important, but it's a secondary benefit in this situation. So what's the starting death benefit, roman?

At age 30, male, the starting death benefit is $251,000.

$251,000. Okay. You put 10k into the policy and you immediately give rise to a quarter of a million dollars of death benefit benefit right away. So God forbid something happens, a whole lot more is coming out than what we put in. Now let's imagine we're, we're storing the money in this policy for the next 30 years and again being able to access it, or God forbid, if something happens, that death benefit's only going to grow. So let's fast forward out to. I don't know how old Tom and Marcia are, but I'm assuming they talked about 30 years. Well, they're probably in their late 50s, early 60s. So let's fast forward to age 60, Roman. So we're putting $10,000 per year for 30 years. That's $300,000 of total deposits in the policy system at this point. What would be the total death benefit at this point?

The death benefit at age 60, in 30 years after, after they started the policy is 1.3 million. Exactly.

Okay, 1.3 million. So we started with 250. We've got a 1.3 million tax free windfall at age 60. That's only going to continue to rise. That's inevitably going to pay out at some point. So God forbid if something happened to Tom. In this case, that means. Is Marcia ever going to have a bad financial day?

No.

Are the kids going to be looked after? Are they going to have a problem when Marsha goes.

No, no problem.

No, what we really care about is how much cash can they access. How much, what was the total cash value projected to be at age 60?

So the total cash value is $606,900.

What's the contractual guarantee? How much can they access out of that? $600,000. With no credit check, no income verification, no agreeing to a repayment schedule. How does that work, Roman? How much can they access?

They can access 90% of that amount, which is $545,000.

So we can contractually guarantee that you can access up to 90% of the total cash value, which is over half a million dollars. And how much did they need for the condo or sorry, not the condo.

Not the condo, but the housing and NPI?

199,000.

They made an offer for 200,000.

Is 545 bigger than 200?

Oh, much bigger. They can actually buy two houses.

Okay, I was just, I was just checking. Okay, good. So this is the point that we're trying to make here is just by if you think about your life journey and where all your money's flowing today, how much of that capital is flowing into a system that works for you 24 hours a day and that gives you a whole lot more benefits, a whole lot more out than what you've put in. That's the idea of the process of becoming your own banker. The infinite banking concept, a dividend paying, participating whole life insurance policy is not becoming your own banker. It's just a tool that we use to implement the process. So if you go to watchibc.com you're going to learn a lot more about this process and how it works and you will get yourself eventually a lot more tools and resources that will help you better understand this process. And then you get together with an amazing coach like somebody from the Ascended Financial Team or my great colleague Roman here, and they'll easily walk you through how this process could work for you and help you and your family capitalize your way to a dream instead of having to always buy it on somebody else's terms.