How to create your own private banking system

I think we're all wired in a way that we like to be able to see an outcome. And you start to practice something and you get results. It's easier to continue on that path than if you have to put in this energy. Energy before you get to a point. It just helps you understand how this works.

Have you ever wondered if there was another option of, of financing the things in your life? Stick around. In this video you're going to learn about how to finance things in your life through a method that you wouldn't have thought of. Hi, I'm Tarant Souza and I'm here with Dan Allen. And in this video we are going to show you how you can finance the things in your life by using a process that gets you ahead in the long run.

What we help people with is really building their own private financing. That's what we help with. And it's called, very specifically, we base it on this book. It's called Becoming your own banker, the infinite banking concept. There's a lot to take in. This is a pretty small book, it's only 92 pages long. But there's so much in here that, hey, you know, this few minutes that Taran and I are going to spend with you, you're not going to be able to get everything that you need to know of it. So hey, I'm going to encourage you to get a copy of the book. You can find a link down below. And secondly, we're going to encourage you to go to watchibc.com. yeah, that's a 90 minute video that you can just take in more information about how this works. But today Fran and I have a very specific topic that we wanted to go through with you. And it's right out of Nelson's book. What better place to go than Nelson's book? So we're going to jump to, you know, page 41. It's called how to build your own banking system. Right off the top there, Nelson starts to talk about the average family in North America. And he says one of the things that he coaches there is that when he studied that, what was found that the average family was spending out of every dollar that they earned. They were spending 34 and a half cents of that dollar on interest. And he looked at a couple of examples to really, you know, major costs that a typical family will have. And that's what he kind of built. This round I'm going to show you, you know, just a quick little slide on how that looked. This is the slide that quite often that we Used is to help explain what Nelson was speaking about when he got to page 17. That's all, you know, this family and the money that was going towards interest, because he said for a typical family, for their automobiles that they're purchasing, they were spending 20 cents out of every dollar. So just think about this percentage, because this is all based on $1.20 cents of that dollar was going to finance that automobile. And then he said 30 cents out of every dollar that they were taking home. And this is take home after tax was going to home the cost of housing. And then 40% was other costs of living. So when you add those all up, 20, 30, 40, well, that gets you all the way up to 90. And then Nelson said, you know, we're going to give everybody the benefit of the doubt because, hey, the average is not this high. We're going to say that that same family was saving 10%. And what he really encouraged us all to do back there in page 17, the problem is that there's this big volume of interest. The five here out of five cents out of every dollar you're bringing home going to pay interest on the vehicle. 25 cents out of every dollar is going to finance your home, and 5 cents out of every dollar that's coming home in this category around living expenses is going to interest. So what he's found through his study is it's 34 and a half cents out of every dollar. This is again an average North American family. So when you think about the challenges ahead of you, and he says, well, if you simply are able to move some of this cost, so this 5 cents, say you're moving this 5 cents of this automobile to where you. Now we're not paying interest to someone else, but you are actually able to gain that advantage in your own system because you have built capital to a point where you don't have to go to someone else to finance what you're doing there, well, you can Effectively take this 5 cents and put it on top of the 10 cents over here that you're actually earning or putting into savings. Your savings went up by 50%. So he really encouraged us to think about how do we. The advantages we get if we can start to own our need for finance. Not all of us, but for a lot of us, that's the biggest cash flow deduction that we get every month is that money going out to pay for our mortgage. And a big chunk of that's interest. So how would you get that? And people look at that and they say it looks like a Mountain, because it's such a big number. Now, depending on where you are in our great country, mortgages vary for different people. Some people have, you know, $800,000 mortgages. Other people will have $400,000 mortgages, although. So everybody's going to be different. But it's a huge mountain decline. People look at that and go, well, if I, if I wanted to, you know, really get a hold of my mortgage, that seems overwhelming. And what Nelson went on to say in his book, one tends to look at the huge amount being paid to the mortgage on his house and concludes, that is where I should start because it's a significant drain on my situation. No, that one is overwhelming and involves such a radical change in lifestyle that it becomes practically impossible. It is much better to attack an area that is attainable in a fairly short time. And he said, probably the one about financing automobiles. I just thought that was really interesting. Why would he say, tackle something that's attainable in a fairly short period of time? I think we're all wired in a way that we like to be able to see an outcome. And you start to practice something and you get results. It's easier to continue on that path than if you have to put in this energy. Energy before you get to a point. It just helps you understand how this works.

In the paragraph that Dan read, Nelson Nash talks about, try the one about financing automobiles. And so what we're going to talk about is something other than automobiles. If you wanted to check out financing automobiles, we actually have another YouTube video that talks about that and you can view it right here for that. But what we're going to talk about now is how we could finance a vacation. Okay? And this is another common item or thing or service that we tend to spend money on. For some people it's once a year. For some people it's twice a year, whenever that time is. But we spend money on some sort of travel. So let's look at how we could finance that using our private banking system. What we're going to go through together is three ways that you could finance vacation or any travel plans that you may have. So for the example, we are going to take an individual. So in this case, the individual has chosen to save 10,000 of his income and set aside for luxury purchases, travel, and other entertainment that he would like to use it for. So the first method everyone knows about is utilizing your own cash. So in this case, the individual takes his 10,000. He takes a portion of it. So it takes 3,620 of his savings, and he uses it to purchase tickets for a trip. Now, I did actually search up a trip on the website. They actually had a deal going on where you could purchase tickets, two tickets or two adults and two kids, for a trip to Varadero, Cuba. The cost of the trip was $905 per person. If you multiply that by four, that's 3,620. So in this case, for the first example, the individual uses, uses their cash for the trip. Pretty straightforward, right? You, you pay for it, you use your cash, or you pay your credit card and then you pay off your credit card, right? And you're done, you have your tickets, and now you're waiting to go to Cuba. All right, so that's number one for the second method, this was interesting. I didn't know this, this existed until I searched up the tickets on the website. And the website, the travel company actually offers a financing option for the trip. So these are for people who may not have the cash right up front to put down, but they're able to sustain monthly payments. In this example for that trip, what I found was on their website for the same trip, if I were to finance it monthly, what I could do is I could finance it monthly for up to a year, so 12 months. And so the cost is the same in terms of the, the, the starting cost, but then with the interest, the interest charge over the 12 months, it's at a rate of 15. So that ends up being an extra $268 in interest that you're paying on top of the $3,620. Okay, so there's another option of how you could finance it, and some people like doing that and others would rather choose another method. And that's what we're going to get into now. So with the third option, the third option, the same individual, instead of using the 10,000 in the above two methods, they use the 10,000 to start an insurance policy. And the purpose of starting the insurance policy is in order to practice the infinite banking concept. The insurance policy is the tool that allows us to practice this process. So in this case, we take the 10,000, we start a whole life insurance policy, and now we're not going to get into the weeds of how the policy works. For that, there's another video right here. You wanted to dive into the anatomy of a policy, but we're going to get into just the basics of it. When you take the 10,000 and you start an insurance policy, this 10,000 acts as a premium which you give to the insurance Company. In exchange, the insurance company gives you a whole life policy with a death benefit coverage. Along with this death benefit coverage, you also have what is called cash value that grows every single day. The reason why it grows every single day is because the insurance company has a contractual guarantee that by age 100, they must match the death benefit and the cash value. As soon as this individual gives the $10,000 and gets this insurance policy right on day one, they would have cash value built in your policy already. The amount that they get to use right away is 90% of $5,500 in cash value. How do I know this number? I have a policy that is $10,000 a year in premium. And in my first year, I, on day one, I got access to $5,500 in cash value. And then that gives me access to borrow against that cash value up to 90% of that amount. Okay, so in this example, we don't need 90% of 5,500. We just need 3,620. So we're good in this, in this scenario. So what we're going to do is we call up the insurance company or we send them an email and we let them know that, hey, we want to take out a loan against our policy for this amount. And the amount being 3620. The insurance company and Dan can attest to this. What are they going to ask us then? They're just going to ask us the amount. They're going to ask us to fill out a little document, sign it, and then they're going to ask us, hey, how do you want this money? Do you want it in a check? Do you want it transferred directly to your bank account? And that's it. Once this amount lands in your account, you can now use it to purchase the trip. Let's say we went ahead and did that. In this scenario, when we do that, whose money are we using? If you're thinking the insurance company's money, you're correct. Because the insurance company's money is using your 10,000 as collateral, and they've given you 3620 to use. Do you think they're going to charge you interest on it? Most definitely. Right. So in this case, the interest rate as of today, with this particular insurance company that we're talking about, the interest rate is 6.2%. For that 6.2%, the interest charged for the year would be $224.44. That's your charge for being able to use 3620. So now you Might be wondering, okay, this is pretty similar to a travel financing method. Not really seeing the benefit. Okay, yeah, my interest rate might be low, but I'm still out to 24. I rather just pay the cash and done with it.

You know, the difference between, you know, the travel financing 15% and the volume of interest that a person ends up paying after one year is that if it was a, if you had that borrowed that amount of money borrowed for, for the full year at 15%, that number would be higher. It'd be over 500 and some dollars. But because with the amortization of your loan and you know, paying it back as you pay monthly payments, you drop the principal and you know, the principal amount goes down then you're paying 15% on a smaller amount now. So when you look at this example at D1 when he talked about the policy loan, it shows 6.2% at $224.40, $0.44 a year, volume of interest. That's leaving that loan outstanding for a full year, not paying the interest. And if he, if we had practice the same principle that the person that financed it and paid back that every month, that number would go down too. The other thing that I always like to point out to people when they use cash, there's a cost and we don't even have it, we don't have it expressed here. There was a cost. If the person chose to take out of their, you know, out of their 10,000 that they had saved up, they chose to take out $3,620. Well now they have less money that's in their warehouse, their savings. And so there's a cost to that. They have taken some of their capital and they've deployed it. And when they did that, they no longer have access to that capital for the rest of their life, that money's gone. So there's a cost to do that. And we haven't even demonstrated it here because if we put that in there, there's always a cost and it lost opportunity for that money to grow. And so even when you think about the guy in the first row, if he wants his 10,000 back, what does he have to do?

Save.

Yeah, I like this little example because it really shows that this is exactly using that travel agency's financing. That's what it would be. Even though it's 15%, that's the number it would be. Well, if you practice the same behavior with the policy loan and you started paying it back monthly, that 224 would be a lot less.

What we are now going to talk about is the unseen that people don't see when they're trying to learn or understand how this process of becoming your own banker works. All right, so so far we talked about how we're going to finance it. Okay? We're using the three methods. And now what we're going to show you is why the infinite banking concept method sets itself apart from all the other methods of financing. And so looking at what's happening after you have made the purchase, okay, so after you made the purchase with the cash, as Dan said, now you got to go save those funds again so that you can build up that cash fund back up to 10,000 so that the next time you can go on another trip. Right. For the third method, not only do you get to go on your trip, but what is happening to your money? So if you remember, the money that we used to purchase the trip was the insurance company's money. Your money is still inside the policy, and guess what it's doing. Your money is still growing every single day. Okay? I had mentioned earlier in the video about the contractual guarantee between the insurance company and the policyholder, which again, I'm going to repeat, is by age 100, the cash value and the death benefit must match. So that means every single day, your cash value is going to climb up in order to match the death benefit. Okay? And so because of that contractual guarantee, your cash value inside your policy will keep growing every single day. And in this example, what I used is $3.65 of daily growth times 365 days. How did I come up with $3.65? Again, I used my own policy as an example. Okay. The policy that I currently have, I. I don't look at it every day, but every now and then I'll take a look at its growth. And what I noticed is it grows $3 and roughly $3 and 60, 65 cents a day. So multiplying that by 365, that gives me a cash value growth of $1,332.25. And that's happening as you're spending your day. You don't, you're not doing anything. You're. You've gone on your trip, you've enjoyed your trip, you're back from your trip, life goes on, but your cash value is still growing every single day. And now if we use the same time frame as if we were to finance it through the travel company, so we fast forward 12 months, you are now ahead by $1,332.05. Why? Because that amount of cash value growth, you can re access that amount again.

We do this all the time. Both Tran and I, we use our banking system. We know every dollar that we put back in we can access again, plus more. And it's just, you know, when I looked at that chart that you built around, it's just like, you know, we talk about a financial tailwind. Well, that's what's happening here. If you took this trip using the concept that we call the infinite banking concept and this practice that we help people with, well, you're starting to create a tailwind in your financial world because even though there was a cost to the life company of, you know, $224.44 a year, your money grew at a greater rate. And Tran did a great job of showing that it grew $1,332. So even when you deduct take the cost of that interest out of that, you gained more than $1,000 of value in that same period of time. We're talking about 12 months. The best part about this is that you can do it with those things. Anything that you are going to do in life, start with something like Nelson said that you can do in the shorter term to help you get ahead in life. And as you can see from that great example that Taran had up, that's going to help that person that's using the concept get ahead financially compared to those other ones. And that's what this is all about. How do you create a tailwind financially to help you over time? Now, one of the things that's in Nelson's book is that, and that's one thing we always want people to know. This is not about a get rich quick scheme. But Nelson says if you do this, it'll be the most profitable thing that you do over your lifetime. That's the opportunity that you have is to do something that's going to change things for you in the near future and even more in the long term. I just, you know, the more I learn about this, the more I appreciate what our mentor put into his book and he wanted other people to see. R. Nelson, Ash and again, if you haven't got a copy of the book, I'm going to tell you, you know, you've got an opportunity we'll encourage you to do. If this is something new to you is go to watchibc.com when you got 90 minutes. It's going to be a 90 minute video and it's really going to give you some really good insight as to how this process works.