How I Used Infinite Banking to Buy My Car | And Kept My Wealth Compounding

Most people can tell you what they spent the money on, but that's not the full story. The deeper question is, what did that money stop doing the moment it left your control? The biggest financial leak may be what your money stops doing after you spend it. When you use cash, it can feel like it's inexpensive because there's really no visible payment. And yet the hidden cost is the opportunity that you lost when you spent that cash. We're going to talk about 4 purchases, and all 4 of these purchases were made back in 2010. And in this particular case, there was a truck that was bought, there was land that was bought, there was a condo that was bought, an RV. Now, the total capital that was used at that point to make those purchases was $429,000. Now, as you can see in the footnote on this slide, those were not imaginary purchases. Those were purchases that, you know, I made, so I'm fairly familiar with them. This is my story. Back in 2010, I had no idea about the Infinite Banking Concept. I saved up money and I made some purchases that year, and these are the 4 major purchases I made in 2010. Real capital was used. And so was my money— well, my wife might argue it was our money, and that's true. So we spent $429,000 on those 4 items in 2010. So question came up, well, if you think about what we're talking about, the hidden cost of capital, how much is that cost in today's value. So I made a few assumptions here with this particular slide. I made an assumption that, eh, I could have earned 5% annual growth, and that's based on just a study that I did over long-term averages where people are averaging between 5% and 8%. So I use the bottom end of that number, and if that's truly what I was able to get if I took and used that $429,000 in a different way and put it to work where it kept on growing uninterrupted. I would have had $923,000 now, or a difference of almost $500,000. It's something I wanted to, to show you, and I'm, I'm going to bring up a spreadsheet because this is This is what a lost opportunity calculator looks like. So this one, it's set up so that every day since I made those purchases, the cost of interest that I could have, you know, received is being calculated. Now you can see if I change this 5% to 3%, yeah, the number goes down, goes down to like $250. And if I push it up to 6%, it again just going to change it and it goes up that much more. So you can see, even if, you know, if you think about interest, if your person would have, you know, been able to get 6%— not interest, taxes, I should say— and still had to pay taxes on that, you'd still be doing pretty well. Even if half of that went to taxman, you're still doing pretty well. So when you think about the range that I had up there, I just wanted to show you there's quite a spread between whether I got 5% or 8%. And yeah, it's just the lost opportunity for that money to have done anything and keep on growing uninterrupted for me. So that's what lost opportunity is all about. And I just wanted to show you, uh, what the calculator looks like. And so you can have a good understanding of that. This is one thing that I lived. I didn't really think much about how much that those decisions cost me back then. You know, it was really— wasn't painful. Wasn't until, you know, a few years later and I started, you know, learning more about money and I started, you know, to learn about what Nelson taught and how this Infinite Banking Concept can work that I thought, yeah, how much did I give up? That's when it got to be painful for me. Wasn't painful on the day of the purchase, but it became painful over time. Could have I done it differently? I kept asking myself, could I have done something differently? Because paying cash felt financially responsible. That's what it felt like to me. You know, I had done the debt side. I had lots of debts in my life and I paid interest up as, you know, as high as 23% at one point back when interest rates spiked in the 1980s. And so I knew all about paying interest and debt and I didn't like it. So I got, and I worked hard to a point where I could buy stuff and pay cash for it. And I was blessed to be able to do that. And, you know, things that people feel when they pay cash, huh? I didn't pay no interest to the bank. There was no monthly payment. There was no debt. The things I missed was, you know, the capital stopped working and the future value was given up. So those are the things. Yeah, I've thought paying cash, that was a best thing I could do at that point. So that's what I did. So here's a question for you: where did that $429,000 come from? Well, in my case, because I can speak about my case, is I had to accumulate that money over time. And where did I store it? Well, it was in bank accounts. I had some in a, you know, a brokerage account. I had some in GICs. I had it in different places, but it was not in my control. It was in someone else's banking system. And the purchases I made back in 2010 were not a mistake. It's really where the money lived beforehand that cost all that lost opportunity. Discipline for me, for saving after my experiences early in life was never an option. I was pretty disciplined. So the path I took, I had that $429,000 in the bank. I paid cash for those 4 items. And as we already talked about, that was the day the capital left my system, the savings I had, and those future growth dollars were gone. Now, If I'd have done it differently, somewhere where there was a different path, same discipline, still had to, you know, put my money somewhere, same dollars, just somewhere else where the opportunity cost stops bleeding out, where would I put it? Here's where I would have put it. What if I built capital this way by putting premiums into a dividend-paying whole life insurance policy Really? I've heard that's a really stupid thing to do. So we're going to just assume that I could have put premiums into a dividend-paying whole life insurance policy, and I could have started before 2010 to do that. So I want to talk a little about the, the product, which is dividend-paying whole life insurance. So what is it? Well, it's, it's permanent protection that grows with you. It's a contract is what it is. It's designed to combine lifelong coverage and a lot of good attributes that go with that. So we're going to look at it. What was it designed and built to do? Well, first thing it was built for was for protection. First and foremost, that's what the product's for. It's for lifetime protection. That death benefit is designed to stay in force until wherever the life insured is passes. Now, one of the contractual guarantees that's in dividend-paying whole life insurance is cash value. So I got a question for everybody: who believes that cash value is cash? So if you think it's cash, put Y. In the chat box. And if you're not sure, put N. Is cash value cash? So we're getting some Ys, we're getting some Ns. All right, thanks. That's, uh, all the participation. So cash value is not cash. It's a contractual right that you have to a value that's in your policy. Now, I kind of think about it, and the way I explain it to people, it seems to resonate, is it's similar to having a, you know, a block of gold. Gold is not cash, but you can convert it into cash. That's the same thing with cash value. You can convert it into cash through policy loans. So we'll get into that a little more, but that's part of what this tool is able to do. And yes, and there's dividends that come with it. And every contract you look at, you're going to see that dividends aren't guaranteed, even though all the life companies we work with in Canada and in the US, they've all paid dividends ever since they started issuing dividends on their product. They've all paid dividends all that time, but they have the— an out in their contract. That's why You can't guarantee that you're going to get a dividend, but man, their track record is phenomenal. The other thing I really like is owner control. The person that owns the policy has control over things like access to the cash value, and repayment decisions stay with the policy owner. So those are just a few of the features related to that product. And there's more of the key benefits, and we talked about them, a lot of them already. Lifetime protection, it's the guaranteed growth. Yes, that growth is guaranteed. Living benefits, annual dividends, and a tax-free legacy. Never take that one for granted. But when you put all these things together, you can see why this tool becomes the best foundation that has been found for the Infinite Banking Concept. It's the best tool for you and me to practice banking, practice banking at the you and me level. So let's take a look at, uh, what happens if, if back in 2000 I just, just started putting premiums into a policy. And what happens if I would have, instead of saving up that money in a bank account, I'd have been putting it into premiums for 10 years. Now, I'm pretty confident I could have done that. I saved up the $429,000 over, you know, by the time I got to 2010. So I'm pretty much 100% confident I could have put the $40,000 a year into premiums for a policy. So I ran an illustration based on that. When I was at the age I would have been in 2000. And I just say, well, what would that look like? I capitalized that system for 10 years, so I put $400,000 in premiums. I looked at what would the cash value been, and based on today's dividend scale, which is probably lower than it was back in 2000, I would have had $491,000 of cash value in that policy. Now, one of the things, if you've practiced in this concept, you know you can borrow up to 90% of that cash value. And if you're not, I'm telling you, you can borrow up to 90% of that cash value. So I could have easily made that— those same purchases— that same $429,000, I could have accessed it after 10 years of simply putting premiums into a policy. Different place than putting savings into the bank. I'm paying premiums into a policy. You can see even at the 10th year, God forbid if I'd have been, you know, taken off of Earth, the kind of death benefit that would have went to my family tax-free. Pretty phenomenal. I don't think, I don't think my family would have complained too much of me about me putting the $400,000 in over those 10 years. They would have, you know, missed me for a short period of time, and then they would have, uh, you know, thought, I think he did a good job to help us out here. But yeah, by the grace of God, I'm still here. The other thing that I, I did with this example tonight is I showed that after the 10 years of paying premiums, dividends cover the premium cost from there on. I did that very purposely for tonight's example, very similar to what Nelson did in his book where he showed capitalization and then utilization. And the reason you could do that is because at this stage of that policy, the dividends could have paid the premiums. Not something I would do, I, I own policies for more than 10 years now, and I haven't stopped paying premiums because I understand that the more I put in as premiums, the more access I get to cash value in the long run. So it just works out much better not to stop. But for tonight's example, we're going to work from a perspective that there was no more premiums that went in after 10 years. So next question is same discipline, different location. So we've already talked about this traditional versus policy capitalization, and we've covered this pretty well. I just put premiums into a policy, I capitalized the policy, and then I use policy loans. That's the opportunity I had to, to be able to buy those same items, and the policy cash values continue to grow all the way through that. Let's go to poll question number B, Ash.

Excellent. Excellent. Okay, everyone. So we've got poll question 2 going to be coming up now. And the question is, which stage best describes where you are in building your financial system? There's 4 options to choose from. Answers are coming in quite quick, which is good. But Dan, you wouldn't believe how quickly these percentages change. Okay, so it looks like taking the lead right now is response number 1, which is I'm still in the building phase, focused on earning and saving. All right, we'll just give it a little bit more time. For those that are on their mobile device, it may be a little bit more difficult to interact with that, but The number one at 36%, Dan, is once again, I'm still in the building phase, focused on earning and saving. And it looks like the second runner-up is the last response, which is I'm getting close to retirement and thinking about what comes next.

All right, great. Thanks everyone for participating in the poll.

You've covered a lot of your story up to this point. And we've got some, you know, two great poll questions. Do you mind if I, because we covered so much material to this point, do you mind if I ask you a question?

No, go right ahead, Ash. That'd be great. Ask me a question.

So going along the theme of capital, why would you want access to capital?

Okay, so why would I want access to capital? Great question. So as I, I was thinking back to, you know, why was I building all that capital? And, you know, because it was something I intentionally did. I mean, it's because I had understood, and I understood that, you know, at some point in life you want to be able to depend on, you know, passive income to help you instead of having to work for your income. If you had something else generating income for you So I was accumulating cash like that just for those purposes. And, and a couple of those purchases that we'll look at were very much based on trying to build a passive income. And, uh, we'll get into it a little further, but that was really the intent as to why I was doing it. And for other people, you know, it could be different, but for my intent at that point was I was thinking about At some point, I'm going to want to work less and still have income coming from assets that I owned. So that was my intent.

And I think there's people on this webinar that are probably looking at the same thing as well. So thanks for sharing, Dad.

Oh, you're welcome. Everything that we're going to look at now, again, I talked about it earlier, there's a lot of numbers. And if I'd have started the policy in 2000 and built access to that cash value, which is really— I can access it as capital by policy loans. So instead of spending the cash directly, if I'd have used policy loans to fund the same major purchases, that's what we're going to look at now. And all the examples that we're going to look at I showed and calculated all the loans at 6.5%, and that's, you know, a number that, hey, I pay 6.5% on my policy loans now. So I chose to use that number. So just be aware of that, and the purchases would have still happened. The difference would have been is the financing is now would have been connected to a system that I control. So we're going to take a look at those 4 different purchases I made back in 2010. And the first one we're going to look at was the truck. Now this is a— this was a nice truck. It was a GMC 1-ton Duramax diesel. It pulled my RV very nicely, got great fuel economy. It was a great truck just to own and drive and And yeah, it was something. Even when I ended up selling it, I was disappointed to see that truck go. And so what I borrowed, or what I'd spent initially in my own cash, was $62,000. So in this example, I show what happens if I'd have taken a policy loan for $62,000 and paid it back. Truck would still get purchased, and then I thought about how would have I paid it back. Now I know myself pretty well, which is I was always saving for my next truck anyhow. So if I'd have built up that access to capital, used it to buy that truck, I'd have made payments back over time. That would have been my call. And for this example, I said I'd have paid it back in 10 years by paying— making a payment of $704 $704 every month. And that's very similar to what I was doing before anyhow, where I had to save up money for the next truck. So I just changed that behavior. I paid— would have paid back the policy loan at $704 a month. So you can see that if I took those 10 years to pay it back, and at 6.5%, I'd have paid $22,480 in interest. Payment still would have been made, just different way, and I'd have got that truck paid off. Now I'm going to talk about the land. So the land was a really— is a quarter section of land really close to where I grew up as a child, and it came up for bid. And I talked over with my wife, we decided, well, let's, let's try bidding on it. And we were successful in getting that quarter section of land. It was a It was a nice piece of land. It had lots of hills on it, lots of water. It was a great wildlife refuge. There was all kinds of deer, coyotes, you name it, that used that land. And we could do it because we had the capital to do it. But even if I'd have built up my access to capital differently, I could have still purchased that land and borrowed the $87,000 from my policy to, to make the same purchase. So if I'd done that, what does that look like? Well, this is really how I bought that land in 2010, and I sold it in 2019. So I just thought, as I'm building this example for everybody, what happens if I just paid interest for those 9 years. What would that cost? Well, would have been $471.25 a month I would have paid on interest, and then I paid off the principal when I sold the land. So I did sell the land in 2019, and I sold it for $221,000. And, you know, reason why I sold it is it was no longer— when I first bought it It was really close to where I was working.

I—

it was handy for me. I could use the land. I camped there. I had my RV on that quarter section. I had a pad built, and it was just handy for me so I didn't have to drive so far back and forth to work. So I stay on that land. And after I left that career to join— to start this one, I no longer was commuting. And so I didn't get to use the land very often. I thought, well, someone else is going to be able to use it better than me. So I sold it and I got my capital back and then some. But I had done some improvements over the time. But if I paid it back the way I illustrated it here tonight, just with interest, and then paid it all off when I sold the land, I would have paid $51,000+ in interest. Over those 9 years on that loan. So that's just the way I showed my example tonight. Probably wouldn't have done it that way, just without paying any of the principal back, but I just wanted to show you I could have done it this way and what the outcome would be if I did. So that's the story of the land. Next, it's the condo. So this was the largest capital component of a of that cash that I spent in 2010. Now, this happened to be a, you know, kind of a major purchase. This is the actual property that we bought. It was in Mexico. This was our condo back here on the second building in. It was about 300 meters from the ocean, and it's a two-bedroom condo. It was a beautiful place to, to visit. And spend time. And it was in a rental pool. I rented that sucker out every chance I got, because again, I was starting to think about passive income. What happens if I didn't, uh, pay anything but interest on that one until I sold it, and then pay all the principal back? So I borrowed $240,000. If I would have used the system instead of just paying cash, I would have borrowed the $240,000, and if I'd have paid it back when I sold the property in 2024, because, you know, the reason why we sold this property was mostly COVID. When COVID hit, uh, income dropped off to nothing there for a couple years, and we thought, no, there's probably a better place to have our money. And so we ended up selling the property. But if I'd have just borrowed that money out of my system, if I'd have built the system and then paid $1,300 a month. I know I could have paid the, the interest at $1,300 a month. I would have paid back $215,800 in interest, and then that's a lot of interest. But anyhow, I would have had a choice. This is the way I illustrated and demonstrated it tonight. I wanted to show even if I was paying a lot of interest, how would this work out? Because I wouldn't— everybody would know if I'd have paid interest and principal, my interest cost would have went down, but my payment would have went up. So then there's the RV. So this was a, again, a nice RV. It was a toy hauler. The reason why we got it is, you know, our grandkids, some of our grandkids were really young, and quite often we go camping with their family, and they could have the, uh, the garage area of that toy hauler to themselves, and there was lots of room in there, and, and we could have the rest of the RV. So it was really a family thing, and it was a, it was a great way to spend time with, uh, grandkids and children, uh, just enjoying life. So we were blessed to be able to do that. And I did spend $40,000 on that, that RV at the time. And so it just shows that, you know, we were making different purchases for different reasons. Now, if I'd, uh, instead of spending cash, if I'd have borrowed that out of my system, this is the way I would have, uh, paid it back, because I would have paid both interest and principal and got that paid off in 6 years. And the reason why I showed that is that's the time I sold that RV, was after 6 years, and bought another one. So I would have just paid it off That would have been my plan because I actually, you know, bought another RV since then too, in fact. So, uh, yeah, I'm a bit of an RVer, but if I'd have paid them off this way, spending $672.40 a month, I'd have paid that whole RV off and with interest by the time I traded it off on the next one anyhow. So I just wanted to show you timelines. I could have done it this way, highly probable I would have done it, but it's just a case study of what could have been done differently, even if I'm still financing the cost of those policy loans. So this is just a summary of what it looks like. The $429,000, if I'd have paid back those policy loans the way I described them tonight This is what it would have looked like. Amount of monthly payments are making the total interest I would have paid over time. And by October 2024, I'd have had all that paid off because I'd sold the condo, I'd sold the land, I would have had the truck paid off because I was pretty good at saving for the next truck. I'd have used it to pay back my policy loan. And same thing with the RV. So by then I'd had all those costs back, paid back into the system. So here we are, 26 years after 2010. And so if, when I looked at it and I looked at, again, I paid premiums for 10 years, then I didn't put any more premiums in. I just utilized that policy. If I'd have used that policy, if I'd have had it, and utilize the way I described, what would I have today? Well, when I looked at that illustration, it would have been $1 million of cash value and still growing every day. That's what it would have been. The way I did it, I spent all that cash back in 2010, and I never I can never use that capital again. Yes, I sold some of those properties for more money than I made, but I would have had the same outcome if I'd used the policy to pay for them. So even if you think about, you know, even when I look at the principal and the interest and those high rates that I, you know, volume of interest that I paid, would I have been further ahead today Even if I paid that $300,000 of interest, would I be in a better position today than I am if I'd actually known and started a policy and put that $40,000 in for 10 years each year? So what did the— did the cash value cover the interest? So I just took a look at if I'd have done this over that 10-year, you know, from 2010 to 2024, what did the cash value grow in that policy while I was using those policy loans and would have been using those policy loans? What did that cash value grow? Well, it grew by $476,000 just in that period of time. And the interest that I would have paid based on those You know, the assumptions I made on how I would have paid them back— I made them assumptions where the interest was really high. I still would have been better off. And yes, the cash value would have more than recovered every dollar of interest. Cash value kept growing every year, even after I stopped putting in premiums. And again, I wouldn't personally do that. I would have kept in putting premiums in because I know enough about that tool. It would have just given me more and more access to capital. And as it is, I still ended up with a lot and a great outcome just doing it the way that I described here tonight. The policy would not have stopped working today. It would still be working. It would still work until as long as I lived. If I was the life insured. So before you buy, I want you to ask this: will this purchase permanently remove capital from my life, or can I finance it through a system that keeps capital working? Money flows. Once you begin to observe the pattern of flow, you start seeing something that most people miss. Money is always being worked somewhere and borrowed from somewhere. You've got car payments, credit card payments, loan payments. You're paying cash for things.