Paying Off $70,000 of DEBT by Christmas Challenge! (Part 3)

Holy snap, have you ever totally missed something?

This is unbelievable.

You know, as coaches, as advisors on the team, we're implementing the family banking process. We're talking about this all the time with clients talking with their family members. And we are still learning and growing and thinking differently and rethinking our thinking. Just like you, right alongside you. We're going along the exact same journey. We might be a little further ahead, but that doesn't mean that we don't miss things. That doesn't mean that we're not still learning.

And I was reading this book called.

Cash Follows the Leader. Straightforward, simple, kind of expands on what's shared in Nelson's book. And something just hit me. I can't even believe I didn't think of this.

This is video number three of our family banking series where we're going to attempt to pay off $70,000 worth of family debt by Christmas of 2023 using our own personal family banking system.

Right now we have 11 policies in our system. We're starting to expand beyond what I call the core four. Seen me share a little bit about my wife Crystal, my son Aneus, my daughter Eliza. Divide and conquer. For lack of better terms and thinking, oh yeah, we'll be able to pay a bit more premiums or replenish some policy loans or work together as a family and use the existing system to recapture the third party debts that we currently want to recapture, like the line of credit, the student loan from Evan and DEZ and the truck loan from Chris's pod there. And I'm thinking none of us are ever going to be this age again. We are never going to be younger than we are today. And when's the best time to capitalize your policy system? Well, the age old saying says 20 years ago. Well, the next best time is right now. And when you put policies in place, you have to have a reason for it. The policy has to have merit. And I just got thinking, I'm like, holy smokes. I am missing a huge opportunity to expand the program and potentially put a policy on my brother in law Chris's life. Chris runs a construction company which I.

Actually have a background in construction technically. I actually started that company many, many years ago.

Chris took the business over basically and expanded it and now he's running that.

Company and as a result my wife.

And I own shares in the business.

And he's the CEO. Well that means that if something were.

To happen to him, God forbid we could be left liable with any kind.

Of business liabilities that are left behind.

These are the things that happens when death occurs. Right. This is the type of planning that.

We have to do.

This is outside the banking process. This is just smart planning as a.

Family that makes sure that, you know, if somebody passes away, we have life.

Insurance in place to make sure cash shows up when we need it the most, which is when someone's sick or hurt or dies so that we don't.

Earn, we're not left with a liability. We're not left having a bad financial day. We want to make sure nobody has bad financial day as long as we're.

Here or after we're gone. I have to have a phone conversation.

I don't know what this is going.

To look like yet. I don't know where the money's going to come from. I don't know how much premium we're putting in. But what I got to do first is build a case. I got to determine how much death benefit should be required because of the way that the policy structured right away, we're going to be able to access value from that policy right away. So although it takes, you know, many years of building and capitalizing a policy before it's efficient to the point where either a, the policy could literally sustain itself and it could pay its own premium, that's not ultimately what we want to do.

We want to keep capitalizing the policy.

Long term because the more you capitalize the policy, the more you put into it, the more you'll be able to access out of it to achieve more objectives. The more it's going to grow, the.

Harder it's going to work.

With some life carriers that we work with, they actually allow us to backdate a policy. So what do we mean by that? Well, normally in the life insurance industry, now I'm just giving you a Little Life Insurance 101 here about aging and age nearest. This is kind of a generic. Okay. I'm not talking about any one specific life carrier. So if you hear this and you.

Go, oh, wait, my life insurance company.

Allows me to do this, or I heard about that. It doesn't mean that this is not a catch all here. I don't like to speak in generalities, but in this case I have to. Generally speaking, life insurance companies have something called age nearest. That means when you are within six months of a birthday, they're going to age you to the next nearest age. So if you're 40 years young today, let's say it's November and your birthday's in December. Well, if you're 41, you're 40 years old in November and your birthday's in December. Well, the life insurance company is going to say, hey, you are age nearest 41 because your birthday is a month from now. What you can do with the life insurance companies is you can backdate the policy to June. If you backdate it to June, whatever the day of your birthday is, let's say it was December 11th, you could backdate the policy to June 11th. You even know you applied, let's say in November.

You apply in November, the policy gets approved.

You backdate the policy to June 11, you're saving age 40. Now the policy has to get issued or approved before your actual birthday in December. In this example, what that means is you're now six months already retroactively into that policy year. So, so that means that you would only have a December, January, February, March, April, May, June, and then premium would be due again, which is a good thing because now you only have to wait six or seven months to capitalize your second year in your policy. You receive your first year dividend right away and the policy is now more efficient in year two than it would be in year one.

So that's a good thing.

You've shortened the time horizon before you can pay your next premium. And premium is the way to make the policy work harder. So the sooner we can pay premium, the the better. Well, we have a preferred carrier that we work with now. They've loosened their guidelines on the backdating. Now you can backdate by up to 364 days. What does that mean? Even though if you applied today, your policy would be issued and you'd be one year younger than what you are today at the issue date. So the policy is approved, let's say September 2023. The policy date would actually be September 2022. So that means you would pay or you'd capitalize the first year premium boom, which would be the 2022 year. And we've already talked about how the cash values grow every single day that the policy is. Every single day from the policy date, it would grow every single day the cash value is increasing. That means all of the cash value accumulation retroactively from 2022 all the way up to September 2023 would be retroactively added to the policy. You'd receive your first year dividend right away, which would buy more paid up insurance and create more cash value. And now in year two, the policy would be growing better than it would be in year one. But in this case for the applicant, you, it would technically be their first year, but retroactively it'd be their second year. And so you'd be able to capitalize the second year premium right away as well. So that means that now because of the way we structure the policy, when you pay that second year premium, it's going to buy even more death benefit and create more cash value and create more growth and have more accessible cash right away. So I'll give you an example of the type of policy that we're going to put together for Chris. I need to do some thinking on that and show you the type of policy design that we're thinking about here and give kind of a ballpark of how much cash we'd be able to access. And we're going, we can come up with the premium, we can get the policy approved, capitalize the system, and we can actually show you how much capital would be available in the policy through the magic of editing. And you won't have to wait as long as we have to wait to get this all done. So I don't think he's going to have a problem with it whatsoever. But give him a call and say, hey, I think I should put a policy on your life so that we can protect the business and expand the family system. What do you think? I'm going to have that conversation.

Let's get it.

Hey, bro, can you hear me? Yeah, hey, I need to. I need to make an important phone call. I don't want to take up too much of your time. I've just been thinking. Okay, so we're talking about the whole family banking system. We have a whole plan to capitalize the system, repay some loans, try to get some more premium in there, access some loans so we can execute the plan.

Yeah.

Yeah.

So sounds great. You know, I always know, we're always learning, but like, at some point you kind of think you have it figured out. And then I realized I missed a huge, huge opportunity. But the good news is we can clean it up. Are you ready?

I'm ready. Let's hear it.

So obviously you're running the construction company. Crystal and I own shares in the construction company. So it's like, wouldn't it make sense if we had a policy in place on your life to make sure that if obviously, God forbid, something were to happen, nobody has a bad financial day.

Yeah, that sounds like a reasonable idea.

Okay, well, I'm thinking. Okay, well, you know, I don't know exactly what the premium is going to look like. I have no idea how we're going to pay for it yet. Or what any of that looks like. But I'm like, man, we're missing a huge opportunity to expand the family system, because whenever you put a policy in place, obviously you have to have a reason for it. The policy has to have merit.

And to me, that sounds like we.

Have a pretty damn good case with an underwriter. If we put a reasonable amount of death benefit in place, we should be able to easily get a policy in place. I just wanted to check with you first to make sure that you were game for it. Like, no pressure. We can talk more about it if you want, but I just want to make sure you were game for actually going through that process and putting a.

Policy on your life.

Yeah, no, I think that's a great idea. I'm totally game for it. I think it's a, you know, moving and expanding the system is, you know, that's absolutely one way to do it. And why not take advantage of this? Right?

Okay, sweet. Well, we can chat more and. And, you know, you know, make sure we have the terms all kind of.

Laid out, how we want it to.

Go and all that kind of stuff, but. Cool, man. I just wanted to make sure that you were down for it first. So I get the ball rolling on maybe putting together some ideas, and I'll run over it with you, and then we'll. We'll get the underwriting rocking.

God, man, you're a smart guy.

That's why I love you creating all.

This opportunity for us. I love it.

Oh, man, you're awesome. Well, I appreciate that. I. I always need a little boost in the morning. I need my tires getting pumped, so. I appreciate you, man.

Well, this is a good way to start the day.

Yeah, no doubt. Well, hey, I don't want to keep you, cuz I know you. You got a big day of travel and whatnot as well, so I'll let you get to it and we'll connect again soon.

Sounds good.

Okay, bro.

Take care.

Cheers.

Okay.

I knew he was going to be on board for it, but I was just like, okay, let me be. Let me not get too pretentious and. And, you know, get the cart in front of the horse too much. I got to make sure I actually make the phone call.

And.

And this is what it comes down to, right, is. Is actually having phone calls and having conversations, meeting with the family.

Guess what?

Sometimes there's going to be disagreements. Sometimes you might have an idea and your family member is not on board with that or whatever. Those kinds of things can happen, and they will happen, and that's just part of life. Welcome to life. And in life you have an opportunity to either retreat or move forward.

Right?

And so we choose to move forward.

And we choose to, to, to push ahead.

So now that we've submitted the application to the life insurance company, we've provided the preliminary information that they need to get started and then here's what usually happens. We now need to justify and build the case with them. So here's the feedback that I've received from the underwriter so far. And the insurance carrier comes back and says, please advise why Vern is listed as the owner and the beneficiary of the policy on his brother in law's life. Why is the brother in law not the owner of his own policy? I, I'm not taking a shot at the underwriter or anything. This is something that's very common the way that we're structuring the policy. I have ownership stake in the business. The business obviously owes me money and I would be left liable if something were to happen to my brother in law if he were to pass away and he's not there as the CEO generating revenue. So the way that we're justifying the case is that I own and control the policy. I'm not actually listed as the beneficiary. I'm going to respond to the underwriter and help them understand that my wife is actually listed as 75% beneficiary and Chris's wife is listed as 25% beneficiary. So I'm not, I'm not technically the beneficiary, but they're probably looking at my wife and I as one. So that's why she probably said that I'm listed as the beneficiary. I'm the owner of the policy because I want to have total and absolute control over the policy. Like if it wasn't my brother in law who was just a regular joint venture partner or a business partner, I.

Can own the policy on that, that person.

You know, if I had a joint venture or in this case, it's a business ownership, if something's, if I'm liable for something, I can own the policy on my brother in law and I could be, I could technically be the beneficiary. Same as, you know, my brother in law could own a policy on me.

If the roles were reversed. I'm not really actively working in the.

Business, I'm not doing anything in the business. So my wife would be more of.

A key person in the business if.

Something were to happen to her. So he could put a policy on her life because she does all the scheduling and she does the payroll and she manages a lot of different things within the business that if something were to happen to her, Kris would be left high and dry because he doesn't have the time or the energy or in some cases the skill set to do a lot of what my wife does. So she's a key person in the business. Right. So the company can own a policy on her. We can, we can easily justify the need to put a policy on her life, which is. I'm not sure why I'm getting these questions because it's a very common situation.

That we're, that we're applying for here.

So I'm a little on edge. I'm a little worried that, you know, we might not get the policy approved or we might not get it approved and structured the way that I want to get it approved. And that's just how it works. But my job as the coach, as the advisor for my clients, or in this case in my own family situation, I need to just share some specific details and just better help them understand and paint a picture as to why I own the policy. And I'm going to go from there. So I'm just going to let her know I own the policy because again, I want total and absolute control. We should be the beneficiary so that we get all of the money that we put into the business, the capital we put in the business back and that we can cover any liabilities that are left behind if God forbid, something happens to my brother in law. So that's what I'm going to do is respond to them with that and we'll see what their feedback is from there.

Hey, there you go. We're all caught up with my brother in law, Chris. Let's go check out what's going on with my brother in law, Evan.

So we have some, you know, just like most people, right. Young people starting out live.

Yeah.

You guys have your, the house, obviously, you have a couple cars. We have, you know, lines of credit and whatnot. But you guys are really diligent about. That's the first step, right. Like is being diligent about A, you go to work, B, you're diligent about putting money aside. And see, you're obviously managing those debts and then some at this point.

Yeah.

So the idea is, is coming up with a game plan where it's the family system so it's not just your own policy or your own cash or.

The structure of the background where we.

Pull the cash from the system and then we deploy that capital and we'll.

Write out the terms.

And then it's sort of like, say, just keep things real simple. Let's say you had to deploy like 15 toward it from your system. And let's say I put the other.

Amount, or Chris put some.

Or whatever.

Yep. And let's just say that that freed up like. Like a payment of like a thousand dollars a month, as an example. Right. So then we would just divvy that up and say, okay, well, if 30% of the. Of the debt that was recaptured was funded from your portion of the system, then 30% of that payment would be recaptured and redirected back to your policy system. Then we look and go, okay, well, where are we at with the system? We check in, we meet, and then we look and we go, okay, we have another whatever car payment. Oh, there's only 20 grand left on that car payment. But as you pay down the car balance, we know that that doesn't affect the payment.

So that's where they get you.

It doesn't matter.

It's not a rolling credit.

As your balance goes down, the payment stays the same.

So you might only owe 10 grand on something, but it's still however much.

Money leaving you that you don't have control over. So as that payment comes down, we can then deploy that capital. And we're now recapturing those liabilities are a lot of their liabilities to us, but they're now. They're now assets within the system because the payments keep flowing. Because obviously you guys have car payments and stuff, those cars, like, you plan on keeping those.

Right.

For, like, long, like a fairly decent period of time.

Well, once the lease is up on my.

Hers.

Yes, Mine. Once the lease is up, we're gonna pay for it outright. And then I was thinking either, you know, finance it or whatever, Whatever I have to do to take it and then pretty much sell it for more than I bought it for is ideal.

Oh, you think, do you think. Is it going to hold some value, like.

Oh, yeah, 100.

So the buyout for my car will be 9980 something.

Dude. Yeah, that'll be easy.

Easy to sell it for?

Well, not even. Not even to sell it, but I mean, just to be able to take the buyout will be, you know, from the system.

Yeah.

And probably by that time, you'll probably have the capital available to sustain that with your own policy system. Yeah, you pay that out and then take whatever payment that you already have and just keep redirecting that back to the system. Yeah, keep the car as long as you need to or want to until you sell it. If you go in and you're able to take a loan from your own system to take care of the lease payout, you take your existing payment and you just redirect that back to the system, you sell the vehicle. So then hopefully between the money that you get back from selling the vehicle and whatever retained in the system, you can go get the vehicle that you actually want with no financing. And then you just keep doing what you're doing. The payments just keep coming back and now you're collecting and accumulating those payments. And then we get together as a family once the debt is controlled. Yeah, that's when we get together as a family and we look for opportunities. We look for opportunities to deploy capital, create passive income. Ideally, we figure out what we want to do long term in terms of where do we want to live, what do we want to do, and then we can, we can get a property.

You know what I mean?

We can, that, that's the idea that we can have way more control, way more freedom, you know, spend time with as a family.

I know what you want. You want to have an amazing opportunity to contribute to an amazing cause. Well, you have an opportunity today. Operation Feed is a charity that my friend Pat, this man has done three tours in Afghanistan. He's a Canadian hero. Years ago, he had a. A broken soul and he found himself. And now he fills this cup by feeding the minds, bodies and souls of veterans and emergency workers. These men and women sacrifice their lives, they sacrifice their mental health, they sacrifice everything so that we can live the quality of life that we live. And Pat is building a facility to give them the support that they need to continue to fill their cup. And those folks are now contributing to the cause of Operation Feed, which feeds the bellies of the most vulnerable kids in our community. Quick reminder to hit the link in the post description below to donate to Operation Feed. St. John.

Remember, we don't want you using your money.

We want you to use the life insurance company's money. While your cash keeps growing in your system day in and day out, donate anything that you possibly can would be much appreciated.

But if you want to go high.

Level and donate a thousand dollars, we'll send you these two really nice gifts. If you donate $10,000, Pat and I will jump into a frozen lake and.

Do a cold plunge and post it.

On YouTube for you to see. If you donate a whopping $50,000. We will immortalize it forever and get a permanent matching tattoo to commemorate this awesome, awesome occasion. Don't want to do a really good deed, but you're not in position to donate right now? Maybe you don't have a family banking system set up yet?

That's okay.

All you have to do is click the subscribe subscribe button. Share this with your friends. Have them click the subscribe button. Every new subscriber that is generated from this video series for this month, Ascendant Financial is going to match that number by donating a single dollar for every new subscriber. So let's get that number really high for Ascendant Financial and do a big thing for Operation Feedback.