Jayson Lowe tells how Nelson used dividend-paying whole-life insurance to become his own banker, borrowing at 6-8% to pay off high-rate debt over 13 years and eliminate commercial mortgages. The idea: control the banking function instead of letting banks control your money.
Chapters
This isn't something you can do overnight. And when he did it, everyone thought that he was crazy, including his wife. What's interesting is that when people understand this process and they embrace it, most people get very ambitious. They want to be very aggressive in the implementation of this process in their lives.
Well, back in the 1980s, inflation rate jumped to 18%. What happened was if you were a prime customer of the bank, you were offered an interest rate of 21.5% in interest. Now, I haven't met anyone who's prime. It's usually prime plus. And Nelson found himself in a situation where he owed 500,000 in mortgage debt because he was quite active in the real estate investment. Now, what's interesting is that even to this day there are many gurus who talk about how to use leverage for the purpose of acquiring and amassing a real estate portfolio. However, there's some things that, especially in Canada when we think about as you amass that wealth, and Cherry's made a great point when she shared her own story, was how much of that is the CRA going to get a percentage of that? And as you're amassing that portfolio, well, what Nelson thought at the time was, gosh, you know, Nelson, why don't you just sell the real estate and if you have half a million dollars in debt, you're going to be paying a lot more in interest than you've just planned. So just sell the real estate. And I'm sure, you know, under that type of environment that if everyone is panicked the markets and if they have to borrow money from the commercial bank. Well, Nelson thought to himself, what fool is going to buy this real estate for me if they have to borrow money from the commercial banks at such a high rate? While he had a choice at that time, him and his joint venture partner had a decision to make. Do we work our way through this or do we throw in the towel and start fresh and file an assignment for bankruptcy? Well, Nelson's joint venture partner did just that and filed an assignment for bankruptcy. But Nelson decided he was going to work his way through it. He decided a different route. So he recognized the problem and for sure it kept him up many, many late nights with very little sleep, with a lot of stress and a lot of anxiety. What he didn't realize is that the solution to the problem was right there in front of him. He had already put together a system of dividend paying, participating whole life insurance policies where he had accumulated value and he had already accumulated loan amounts that were accessible directly from the Life insurance companies that were actually charging him between 6 to 8% in interest where he could pay off the snakes and dragons, as he would rightfully refer to that debt. Now, it took him 13 years to get rid of the snakes and dragons. And that's how this concept was born. He identified the solution to the problem, and the solution was to take control of the banking function as it relates to his needs. This is what gave birth to the infinite banking concept. And after that 13 year period, Nelson and his wife Mary did not need to see a commercial bank for anything other than the convenience of using debit. For the rest of his lifetime, all the way through March of 2019, his family had no mortgages in the family, no loans from the commercial bank in the family. Everything that he had and what he needed the use of money for flowed through the family banking system of policies. He was able to significantly disconnect from someone else's banking system and rely on his own banking system. Now, I wanted to ask all of you that everyone needs a heart. Would you agree? And so I wanted to tell you a story that Nelson experienced something that you may know someone in your life who's gone through something similar. Well, Nelson had to undergo quadruple bypass surgery many years ago. And when he was under anesthetic and on the operating table, the only thing keeping him alive was a heart and lung machine. So Nelson's heart was actually removed from his chest cavity and they replumbed it in four different places and then put that heart back into his chest cavity. And while this surgery was going on, obviously Nelson was unconscious. He said, you know, I was kept alive, but I wasn't truly living. I was just existing. It was the heart and lung machine that was keeping me alive. And I want you to think about this as it relates to who's controlling the banking function, as it relates to your needs, someone else is performing that function for you. The reason why Nelson utilized this story that I'm sharing with you in his talks is that he wanted people like you to know that in order for you to change, you must take control. Now, thank goodness he survived that surgical procedure and went on to live for many, many more years and creating many more happy memories with his growing family and with his wife Mary of 63 years. And I just want you to know that Nielson often said to us that banking is the most important business in the world. Without it, everything comes to a grinding halt. And when we look at it, the banking system, much like the heart and lung machine, pumps money to where it's needed and at some point it flows through your hands and mine. Right, well, where does that flow of money all end up? It goes right back into the banking system. Now the issue here is in that banking system, how much of the banking function do you control as it relates to your needs? Remember, there's only one pool of money in the world. And what Nelson saw was he was pumping money in the wrong way. When he needed to use his money, he had to go through bankers, toll takers, gatekeepers who were all making money off of him and abuse him. So just to ask you, has that ever happened to you people? Every single day when we meet with them or when I meet with them, tell me that they've had some poor or stressful or, or high pressure experience dealing with a bank. When they needed access to money and in some cases their own money, they have to go through quite a lot of hoops and hurdles. And for those of you who are using money from someone else, let's say in terms of real estate investment, you can relate to it. When it comes to getting financing for a real estate deal, you can relate that getting money from the bank can be extremely difficult. Not only do you have to provide a boatload of information for income verification, you may even be restricted because you've reached the personal limit a banking institution is going to lend you. If you're incorporated, you probably run into circumstances where you need to provide reviewed or audited financial statements which by the way, they flip the equation and make you pay for instead of them. And it doesn't have to be that way. You're going to learn how to take back control so that you don't have to rely on someone else to create your financial abundance that you deserve today. Now when it came to Nelson, he realized that what he needed to do was crank up his large life insurance premiums in his dividend paying whole life insurance policies. And this isn't something you can do overnight. And when he did it, everyone thought that he was crazy, including his wife. What's interesting is that when people understand this process and they embrace it, most people get very ambitious. They want to be very aggressive in the implementation of this process in their lives. When I work with real estate investors, they share that deals can be lost by not having financing. Successful real estate investors understand the importance of being independent from the banking system. They embrace it and are very ambitious in having their own banking system because of the importance of being their own source of financing for real estate deals instead of relying on someone else. When people understand this process and get the coaching that we provide. They want to implement this process in their lives. And what I'm here to share with you is that this is not about getting rich quick. This is about accumulating wealth in a place with certainty. And it has to be done incrementally and gradually. Before I get began implementing this in my own life, I was doing everything that mainstream was telling me to do financially. So how is it that I ended up being in the situation that I was in if I was doing what I believe was right, which was what mainstream was telling me what to do? And if we kind of look at the bigger picture, if the minority of people on Planet Earth are the ones accumulating and controlling the wealth, why shouldn't I do what the minority are doing financially? This is what makes much more sense to me when it comes to the banking system. What most people don't understand is that when it comes to the components of a banking system, and Nelson described this extremely well in this book titled Becoming youg Own Banker. He goes on to describe that most people don't even recognize that there's a financial plan play that's going on, let alone who the characters are. And if you think about this in your own life, there are four characters in the financial play. Now, the first one, all of you who are in attendance are depositors. You earn the income, and that income flows in the form of something like T4. Interest income, dividend income, rental deposits, business revenues. After the tax system takes a bite off of that income, it gets deposited onto the books of someone else's bank. And I'm just going to repeat this again. This money is getting deposited into someone else's bank. If I were to ask you to deposit money with me, you wouldn't do that without charging me an interest rate that is beneficial for you, right? But for someone else's bank, you comfortably hand it over to them for free. And in most cases, you're the one who actually pays them to hold onto your money. Now, the second character in the play is the borrower. This is the character most importantly of the four, because without this character, nothing happens. Now, we are all borrowers when we pay cash for things. So some of you might be the type of person who just has a distaste for debt and prefers to save everything that needs to complete a purchase, whatever it is you want to buy. And there's nothing wrong with that. But it's just important to understand that you're still working with borrowed money because you're either paying interest to someone else to access their pile of capital, or you are permanently giving up the opportunity that you own the money and could have earned interest otherwise. The borrower is the most important character in the financial plan. Now, most of you, if not all of you, you're only two of the four characters in the financial play. So I want to introduce to you the third character, which is the banker. The banker is the individual who decides who gets access to the pool of money and what the criteria is to gain access to that money and who is credit worthy. And this is all including things like getting income verification, all of these steps that you're all accustomed to to have to go through in order to gain access to that pool of money. The fourth character in the financial play is the bank owner. And the bank owner is the stockholder of the bank. The stockholder of the bank has an expectation of participating in profit. And so most of you, if not all of you, you are doing the depositing, you are doing the borrowing, but you are not the banker and you are not the bank owner. You are feeding someone else's bank system by being the depositor and paying for it. Being a borrower, someone else is setting the rules for you, and you're making someone else rich, which is the bank owner, and that's not you.
