How to Engineer Financial Outcomes With Certainty!

If I know that the need for financing is never going to end, wouldn't it make sense for me to start setting money aside on a regular basis and building up a system that would allow me to have more control over how I go about acquiring the things in life? Okay, Canada, you have some objectives that you want to achieve, and you wouldn't be on this channel right now if it wasn't likely a financial objective. What would it be like if you could predict with 100% certainty out in the future when you would have the capital available to achieve that said objective? Even that sounds pretty simple. I just have to put a certain amount of money in a bank account every single month, month after month after month. And then I could do the math and figure out when I'd have the cash. Well, what if you were not necessarily the only one that was growing the capital? What if there was a system that could grow the capital for you and you could predict with certainty when you could access the cash to achieve the specific objective? And you're going to want to stick around to the end of this video because my colleague Dan and I are going to show you exactly how you can create predictable engineered outcomes to achieve your financial objectives. So, Dan, I'm excited about this topic.

Yeah, that's a great topic. Because, you know, one thing that we hear a lot of from people is what are they looking for? Certainty.

Absolutely.

And yeah, this process can definitely help with giving you certainty. And it's just one of the things we're going to speak about today. How would we describe to you certainty? And we're just going to do a simple little review of how you can engineer an outcome.

So, Dan, let's talk about some of the things. I mean, you've got children who are adults. You've got grandchildren. I know you're an investor, and you're obviously implementing the process of becoming your own banker, and you're building a system to create generational wealth for your family. But between now in those objectives, the need for things is never going to go away. See, the whole idea behind the process of becoming your own banker is not about what you're trying to do. It's about how you go about doing it. Dan, I'll just share a quick story. I'm sitting on my deck with my wife. She's hanging laundry, and she says to me, hey, what are we going to do about this dryer? She goes, should we get Evan here to fix it again or should we just go ahead and replace it because it keeps breaking? I said, well, what's that thing cost? She goes, oh, for the one I want, it's about a thousand bucks. I go, a thousand bucks? She goes, oh, by the way, she goes, our washer's leaking, so if we're going to replace the dryer, we may as well raise the washer, too.

Oh, boy.

I said, okay, well, what's the cost for a washer and dryer? She goes, well, they're about 2,100 bucks. And I said, okay. She goes, oh, but there's a sale right now at Costco for 1800. I say, ah. I asked her. I go, are you okay with hanging the laundry while the weather's nice? She goes, yeah, it doesn't bother me. She goes, I'm just kind of planning ahead for when it gets cold for September. Said, see, that's the interesting thing, Hunt. They want you to come in.

They want.

They want you to use your credit card or spend money you might not have, or bend over backwards and inconvenience yourself so that you can get the deal. Eighteen hundred bucks. But if we're patient and if we plan ahead and if we wait, see, we don't play by their rules, when I was telling her, I said, we can actually sit back and I can predict with absolute certainty how many days I have to let go by before I'll literally grow the $2,100 in our banking system so that I can go and access that money, finance the deal, and then it's up to me to be responsible about replenishing my pool, just like I would if I was financing it from a store. Right. Because they have payment plans. Or if I saved money in someone else's bank and then drained my bank account and spent the money, wouldn't I go back and replenish that pool? Right. And so, Dan, is there anything different about accessing a policy loan and replenishing that policy loan than what I just described, Paying back a regular loan or replenishing your savings account?

No, it's. The behaviors are very similar, Vern. So it's just a plan a person has. And like you say, whether someone decides, okay, I need the $2,100 or whatever it is in some kind of timeline, now they're going to go about getting access to that capital in a few ways. Either they're going to save it up. So that's a process, Right. You got to put money away to do that, or you're going to borrow that money, which, you know, you talked about that. Yeah, that's just a process going and use someone else's money and pay them, you know, the interest on their money because, hey, they're the ones that had that capital. So if you're going to use it, they're going to want something for it. Or using a policy loan. If you don't understand what policy loans are, it's very much a contractual, agreed upon right that you have. If you have a dividend paying life insurance policy that you can acquire up to 90% of the cash value that builds in that policy, you have that right. And that's a first rate of refusal. You get that first right to that. So it's, that's when we talk about policy loan. I just wanted to make sure you understood that so you could go and use a policy loan and purchase whatever it is that you were going to purchase. That works just like those other process. But the big difference being is you're using other people's money. Great point. I love where you're going with that.

Vern.

I love your story. That's just, you know, a really good example of how life goes and those are the things that are coming at us all the time.

There's a couple of things I want to point out as it relates to mindset. And we always talk about this, Dan, with our clients and our webinars and on our videos, that everything begins with the way that you think. This process is not about a product. It's about understanding that there's a problem that you need to solve. You and I'm talking to you. Every person is facing this problem and that includes you, that is that there's a financing problem. There's things that you need to acquire throughout your entire lifetime. And again, when I say things, I mean something as simple as a washer and dryer. I mean income tax, property taxes, investment opportunities, vehicles, vacations, homes, all of those things are financed. You're either financing it with cash, borrowed money, or in this case, the process of becoming your own banker. And so, Dan, wouldn't it make sense? Like, this is a mindset. You don't necessarily know when your wife is going to come to you and say, hey, Dan, it's time for us to replace our dining room table. But you know it's going to happen. So that's the idea is, I know right now I have a beautiful Ford F150 that I absolutely love. And if you're not a fan, leave a comment. Let me know your thoughts. But I have a beautiful truck that I enjoy. I don't know necessarily when I'm going to replace it but I know I'm going to. So with that in mind, if I know that the need for financing is never going to end, wouldn't it make sense for me to start setting money aside on a regular basis and building up a system that would allow me to, to have more control over how I go about acquiring the things in life? I talk to a lot of clients. How many times have you talked to a client, Dan? And they said, oh, you know what, we've got X amount of dollars set away just in case there's urgency or a problem. Right. So people are already kind of doing these things. But the problem with it is, is you need to build a better warehouse for your wealth, your capital must reside somewhere. And for you real estate investors out there, you're saying, yeah, well Vern, it's fine, I put money to work, I don't save money. I don't really save a lot of money either. I capitalize my system, but I have to store capital between now and the next time I use the money. So if you refinance a property or sell a property or you're putting money away because you're managing your properties and you're being responsible, that means you're putting money away for vacancies and maintenance and taxes and insurance and doing all of those things. Where is that capital living today and how hard is it working for you? See, that's the idea is we must store capital. And so if I know I need it for these things, what you have to do prior to what Dan and I are about to show you is you have to set up your system and we're just building an alternative warehouse to store our capital, which happens to be this tool called a dividend paying participating whole life insurance contract, ideally with a mutual insurance company. Because you become a co owner in the life insurance company and you actually get to now co generate and participate in the growth with the insurance company, you just get to tap into that already existing system and just a few features and highlights to point out to you. Part of the reason why we use this tool is because yes, we get ownership, we get participation in the growth, we get a death benefit. So we guarantee that our family is protected if something happens now. And we guarantee that we have a legacy to leave behind if we live a long healthy life. But every day between now and those two events, there's something called cash value that builds in the policy. And Dan, it's not because it's a fancy investment, it's just, it's an actuarial tool. That has an engineered outcome. And that outcome is the total cash value has to rise to match the total death benefit. So if you're curious where the growth is coming from, that's where the growth is coming from. A contractual guarantee that the life insurance company is on the hook to make sure it gets done. And so what Dan and I are going to talk about is how our systems are growing or in general how these systems grow. And, and you can literally look at the system today and go, okay, I have X amount of dollars today. You look tomorrow you'll see that you have access to X amount of dollars tomorrow, which will be bigger than today. And so now you just subtract tomorrow's number from today's number and you can see exactly how much your policy's growing by. And Dan, we've got good news.

We do.

Whatever your policy looks like today, it's literally the worst you can do.

It's going to get better.

It's only going to get better for you out there.

If you don't know about becoming your own banker, then I'm going to encourage you just to go and look at this. Click on this link below. It's called watchibc.com it's about a 90 minute video and it'll help you understand what we've been speaking about because, you know, it's something we work with all the time, Vern. And if you're really new to this channel, this video, then you may not understand some of the things we're speaking about. That video will really help you get a better understanding of what becoming your own banker is all about. When it comes to mindset, things will happen. Whether you're a real estate investor or whether you're just a Consumer Living T4 employee, you name it, Unexpected things will happen in life. People that have a good mindset have thought about that. They'll have some emergency fund built up or they'll be building just a contingency into their budget. And the ones that don't, well, they are the ones that end up, you know, having to put it on a credit card and then try to make those monthly payments on the credit card. And it's just not a really good outcome for those people because quite often that burden gets bigger and bigger. So when it comes to mindset, I always speak to people about if you got a mindset that says either you pay yourself first or if you're running a business, you have two take profit first, that's going to put you in a better position because if your expenses are greater than your income. That's a slippery slope. It takes you into trouble and it really becomes a difficult thing to get out of that. So mindset matters. It all begins with the way you think. It all begins with a behavior and having the discipline to do something that's not about today. It's about forward looking. And that's what I think people need to have. Mike Nelson, the author of the book called becoming your own banker. And again, if you haven't got this book, I highly recommend it. One of the things that he spoke about is you need to think long range. So if we have a short term view of everything and we're just living from day to day, probably not going to turn out so well if you start to take steps and plans to change things over time. And it's always, you know, like, how do you eat an elephant? Well, it's one bite at a time. How do you build a brick wall? It's one brick at a time. That's what life kind of feels like to me. It's like you have to take steps each and every day in life to get yourself to an outcome that you want. And that's where we get around to an engineered outcome related to, you know, using this concept, this process called becoming your own banker to get to an engineered outcome. And now, you know, if we want to talk about just the $2,100 that it would take to have access to, to be able to purchase that washer and dryer set, why don't we just bring up a Google sheet fern and we're taking a look at what that would look like. This is just one of my smaller policies. So right now it grows at $30 a day. So that's $27 that I can access through a policy loan on a given day basis. So what I've simply done is say $27 per day, take the $2100 for that unit divided by 2778 days. I know uncertainty in 78 days I would have a increase in my access to capital that I control. In 78 days, I could access that $2,100 that I need to buy that washer and dryer. That's if I had used all the capacity that I already had in my policy at that point, this would still happen. We've all often said, vern, if you can do this for a washer and dryer, what can't you do it for?

And let's imagine now we've actually gone and we financed the opportunity. So if we finance the opportunity. Would you mind doing me a favor? Let's go 2100-times-065. And now Dan, do me a favor, just divide. I think you're probably already going to do it. Divide that by 365. So when you are a co owner in the life insurance company that means the life insurance company has a responsibility. They have a duty of care to put money to work to grow capital so they have profit to share with the owners. And guess who those owners are? It's you. I'm talking to you. You are an owner in the mutual insurance company. They're going to put money to work so that they have profit to share with you. So Dan, if you borrow money from someone else's bank and you pay interest to that bank, who's getting the money?

The bank.

Who's that money working for?

The bank owner.

And who gets to access and use that money again?

Banker. And the bank owner.

Okay, so now that's pretty brilliant. So if I was thinking like a banker I'd be thinking well how do I become the banker and the bank owner now that's what this process is all about. So Dan, if I have one of these policies, I co own the life insurance company, you don't think a whole lot about the interest rate, is that right Dan? Like I'm not real concerned about it.

No I'm not.

Here's why Dan. If I co own the life insurance company and I own the policy and I'm paying interest to my own policy, who gets the money goes to the.

Life company and then they share with us for.

Okay, so that money is being put to work for me and my family then.

That's correct.

Now here's really, really key. I want you to pay really close attention to this part. When I pay interest back to my own policy, who actually gets to use and access that capital? Again not just the principal but the interest itself, who actually gets to access and use it again?

Well you will learn.

So I'm recapturing the interest that I'm actually paying within my own policy. So Nelson says in his book, if you knew with certainty if you could get every penny out plus more, would you ever object to putting more in? This is ridiculously simple.

It is. And it's, you know, the whole idea is to recapture the interest that you're paying to other financial institutions and this process allows you to do that. Just like we looked at that little Google sheet, there's good cost of interest per day but with that $8 per day growth, I'm going to be recapturing that interest in more. And so, yeah, the process, like you said, Vern, simple, and it's about creating energy in your financial world that you can't do some other way because, you know, your money continues to grow uninterrupted and you get to use access to your capital via policy loans and not interrupt it. Yeah, there's a cost of interest, but you will recapture that interest cost.

You know, let's face it, sometimes I've been caught worrying about and thinking about things that I cannot control. What I cannot control is the $72 million worth of bonuses that the bank of Canada has handed out to their employees over the last three years. I can't control that. I can't control interest rates or inflation or the economy or any of those things. But I do know that what continues to thrive and never goes away during all of these good times, bad times, and anything in between is the banking process.

Right.

What I can do is I can control the environment through which I do my banking. And that's what Nelson talks about. I can create a financial tailwind just by implementing this process. And that's what we're going to attempt to illustrate to you right now. If we're going to borrow $2,100 from our policy system and again, Canada, think like a banker and think like the way that you're already doing things. You're either a going to save the $2,100 in someone else's bank and they're going to withdraw it and spend it and then you're going to replace, you're going to go to work to replace that money so you can buy your next thing. The same thing occurs if you borrow money from someone else's bank. And what we want to do now that we are the banker, these policy loans are completely unstructured. So, Dan, in this example, how soon would we like to replenish our policy loan? Let's pretend like we borrowed the money out of our own policy. So we're going to create our own payment schedule to replenish the value. So what do you think, Dan? How many months or what do you think? What do we could do it this way too? You can engineer it with your own budget. What's our budget hypothetically, in this example, Dan, what do we want our payment to be?

Now, if I'm going to pay back this washer and dryer, what, what is it fits in my budget? What's a comfortable number that would fit in my budget? That's usually what I start With. So whether that number is like 100 bucks a month or whether it's 200 bucks a month, I get to decide that what I typically do. Vernon. Maybe I'll just do it. I would. I use a calculator. And, you know, so I just go to a calculator like this. And you can see this one's pretty straightforward, like 20 $100 interest rate. I got to update that. So it's right. 6.5%.

The insurance company charges a 6.5%. That's the simple interest rate. And we'll walk you through that in the spreadsheet, how that works out. Let's follow Nelson's rules. Dan, why don't we make the interest rate 10%?

Sure. So that's what I do. I usually do two. I do.

Oh, I see. Okay.

Yeah, I usually do one at the cost that the life company is going to charge me, and then I do one at 10%. So we'll just work this way first. So. Well, let's do the 10% first. I'm good with that.

Okay.

I'll just expand on that as well, Dan. So the insurance company is going to charge us a. An interest rate, but what Nelson taught us to do is actually pay back at a higher rate of interest than the insurance company's asking for, because, again, the more capital we put into our system, the more capital we have access to. And you're kind of building the habit, aren't you, Dan? If I get used to paying back more than what they're charging me, aren't I going to end up with a surplus of capital that if it can't fit in my existing system, I'll have cash available now to actually expand my system and start more policies eventually.

Exactly. So this would be one based on the 10% that Nelson always taught us to pay yourself back at a higher rate than what the life company's charging you. So if I decided that I was going to put in $100 a month to pay off that loan, this would be an idea. Gets you pretty close. If I'm making monthly payments, it's pretty close to 23 months to pay it off at 100. Now it's $100.71. So I would just say, okay, I'm going to pay the $100.71. So what I would do is this is what I would.

Awesome.

Yeah. This is what I would build is just this, you know, shows that starting principal payment. These are, you know, the amount I'm paying each month. And I would simply just you know, what I do is as I just copy this and this particular tool just allows me to copy all this stuff. And I put it into a document that, you know, I would save because that's what I do every time I have and take a loan, I just copy that information. I'm going to go and see if it'll let me put it on my Google sheet now. And I have it. So I make reference to the fact that this one was down at 10%. That's the way I'm going to plan on paying it back. And then the other thing, what I'll do quite often is I'll just go and change the parameters to say, okay, this is what the Life company is actually going to charge me. Right. And then I just, you know, look at the report again and hit, you know, View. And there's a couple of ways you can do this. You can, you know, change the number of months to get it back to, you know, that $100. And this never works out 100%. So it's in somewhere between 22 and 23 months. Right, right. So 23 months, it's 97 and 22. It's 101. So I just take a look at. Okay, so I'm not going to get this number to the exact. You could, but this just means it's not equal in months because you're paying it monthly. So then I just again, whether I choose that one or this one, I just hit the View report. I go down and again I just do the same process. I just copy this information.

And do you just do that, Dan? So you have a reference of how much extra you're putting into the system versus what they're asking for.

That is correct. So it's just a behavior I started. So I do certain things where some of my loans are for basically private lending. Right. And what I want is to know how much kind of deal.

Oh, I see what you're saying. So if you're getting a cash flow, you want to know basically what your net profit's going to be from the deal. Even though you're recapturing the interest and all that, you still want to see what the net profit is from that private lender or something like that with the.

Exactly. So I'll do it for different reason. But this is at 6.5. So I just keep this information and I'll just. Part of my banking business. I'll. I'll know this is what the life company would look at it and yeah, the numbers are slightly different. And then, you know, from what Nelson would have taught is, like, you pay this amount, even though you got that paid off earlier using this process, you still honor what you set up. And that's where you talked about Vern having a way to put that incremental interest that you're paying into a premium somewhere. And Right. This is just a process I use. It just gives me an idea. So I would keep something like this on every loan that I'm paying off just to give myself an idea of how am I doing it, how much of my monthly payments. And there's lots of different tracking tools I use to look at tracking my payments. This is just something I pull together one time. Each time I take out a Pacific move.

Sometimes we have situations, Canada, where a client, maybe they're putting, let's say, $20,000 a year into their policy, but let's say their policy can hold 25,000 per year. So maybe they take that. Now they go, I can only put the 20 because that's what I'm comfortable with. That's what I'm able to do because I've got other obligations and so on and so forth. Well, what they could do is borrow from their policy, finance their washer and dryer, and finish their loan repayment schedule like Dan pointed out. And then all of a sudden, they've got two extra months of payments that have to go back in for their amortization schedule. Well, those last two payments could go back in the policy as additional premium to make the system work harder. But I want to show one last thing. Here's what the insurance company does. The reason why we're able to recapture the policy loan interest is because in this case, Dan worked out the policy loan interest for a year, in this case would be $136.50. So we're only going to show the first year. What they do is they divide that by 365 days and they calculate the interest on a daily basis. So in this case, it's 37 cents, a whopping 37 cents. But our cash value that we can access is $27 a day. Now, what they do is they're going to subtract and they're not going to interrupt the growth on the cash value. That's the key. The cash flow is going to keep on growing and compounding uninterrupted, as if you never touched it. But what they'll do is they'll withhold 37 cents. They'll withhold the interest cost back from your accessible cash if you've got 27 a day of accessible cash, because that's 90% of your growth, they're going to withhold 37 cents from that dollar 27 per day. The net accessible cash is going to be $26.63 per day. If we multiply 2663 by the average month, say 30 days, that means our accessible cash in the policy system every month, net of interest 798, 78 plus the 171 cents that he's paying back. So this is what Nelson's talking about when he. When we create a financial tailwind where Canada are you storing your capital today that allows you to have access to that money without interrupting the long term growth. And every time you replenish that pool and pay back $100 in this case to your system, because that's the loan repayment that we decided. Every time dan pays back $100, he can go back and access $998 because he's paying it back to his own policy system. Dan, if that's not a financial tailwind, I don't know what is.

Yeah, you're exactly right, Vern. That's exactly what happens as I make this $100 payment, even though it increases that $798 to $898. So you're right. So I pay back 100. I can now access $898. The next month this interest rate is going to go down because I paid this $100. Right. Simple interest. And over time it just gets better and better. This is all based on a view of not paying any interest back. But every time I pay the $100, that number is actually going to be influenced. And so over time it just gets better and better. But this is a real simple one view, kind of snapshot of how the process works. Yeah, when I make my payment, I'm going to get access to more money. And on top of that, I'm going to get access to more money just because of the daily cash value growth. And this number's all been corrected for the 90% that I'll get access to because that's what we get access to is 90% of our cash value when we're using policy loans. Very good outcome. It's an engineered outcome. I know when I put this $100 back into my system, I'm going to get access to this amount each and every month. And it's going to get better the next month because I paid down principal. So.

So what if you had a family vacation that you were trying to plan in a year from now, and you knew it was going to cost you approximately 10,000 bucks. Now you're paying, you're saving $100 a month back toward your policy loan to go toward your trip. But after 10 months, because your policy system is engineered as such, you can predict with certainty 10 times 89, you've got nine grand right there. So 11 or 12 months, boom, you could go on your family vacation. And this is what we're talking about, Canada. If you borrowed the money of someone else's bank, you're sending 100 bucks away, and it's just being permanently transferred away from you and your family. And you have to keep going to work and trying to find more money to go on that vacation or take that next investment. Or if you save money in a commercial bank and you're replenishing your savings at a hundred dollars a month, well, all you've got is what was there plus what you put in. But now, in this case, you're doing all of the same behaviors, except you've got a financial tailwind that's going to make it easier and easier and easier for you to continue to do all of the things that you already know that you want to do, that you might be struggling to figure out how you're going to do today. If you thought this video was amazing, and I know you did. I know you got a ton of value out of this video. These next videos here in this little playlist are going to blow your freaking mind. And don't forget to go to watchibc.com to learn more about the process.