Revamp Your Farm's Finances: The Game-Changing Method

You can just see the power of becoming your own banker and how much difference you can make to a farm family. They were practicing banking. Yes, they were utilizing their access to capital. They were paying it back, using it for those input costs each year. But over time, that pool of capital grew. They could have used it for other things. They could have bought equipment. It was their choice. No one was going to tell them what they could do and what they couldn't do. Growing up on a farm, I learned all about hard work. However, like many farmers, my parents didn't have a plan. And we never talked about how money worked. As a kid, I can remember thinking, there's got to be a better way. Well, this led me to a 36 year career in the oil and gas industry. And on the side, I was trading stocks, investing in real estate, buying precious metals and stones just so we wouldn't end up like my parents. Then one Saturday morning, I was driving west along the Yellowhead highway. The radio was tuned to my favorite talk show channel when a strange infomercial came on. Be your own banker. The announcer said, yeah, right. I thought, how's that going to work? But instead of changing the channel, I listened. Then he said, come to our event next week and learn more about becoming your own banker. I was skeptical, but intrigued. I had to work that day, so I called my wife Barb, and I asked her to go next week. I'm pacing my kitchen floor waiting for her to come home, thinking, I wonder if she'll think it's a scam. Finally, she walks through the door and I can feel her excitement across the room. Dan, she says, I think this will work. So in 2013, we began the process of becoming your own banker. And as the value of her money grew, I often thought, I wish I'd have heard about this 20 years ago. I was so inspired by I held this process with helping my family that I attended an event hosted by the founder R. Nelson Nash. Over time, I saw people's faces light up as they discovered what my wife and I already knew. This works. It was then I realized I want to teach others how to do this. This is my calling. So in 2017, I became an infinite banking practitioner and it was one of the best decisions of my life to today, my clients are farmers, business owners, T4 employees ranging in age 24 to 72. But the one thing they have in common is a growth mindset. They're always looking for a better way to do something and are not comfortable with the status quo. And they often ask me when it comes to money, how can I be better tomorrow than I am today? Teaching them how to become their own banker is the answer to that question. Because it allows my clients to reach a place of financial peace, a place with enough money to sustain them later in life and and ones that make sure their family is looked after for generations to come. This is why I do what I do. So this presentation that I'm going to do is all about enhancing your wealth by farming or ranching with ibc. The infinite banking concept. You will gain clarity on the difference that becoming all four characters in a financial play will make to your business. How by adding one additional asset, you. You will increase the stability and the profitability of your business. We will look at a case study that will show you how you can change your access to capital. How that same asset could support you later in life. How that asset will support the transition of your business to the next generation using tax free money. So why would you want to practice a concept called becoming your own banker? And what difference would becoming all four characters in the financial play make to your business? For our world to go on as we know it, banking must go on. The founder of the infinite banking concept, Arnel Sanass, stated in his book called Becoming your own banker. As time goes by, interest rates are up and interest rates are down, but the process of banking goes on. No matter what is happening, everybody needs to understand banking is the most important business in the world. Let's take a look at the four characters in banking. The depositor is something we're all familiar with. Most of us, if not all, have been a borrower. The third character is the banker. The banker is the person that gets to make the decisions at the bank. They decide whether you get the loan or not. They decide things like terms of the loan and amount of each payment. They have control over the process. The fourth character, and I want to emphasize this character, is the bank owner. They get the profits from the bank and in most cases it's the shareholders of a commercial bank. Becoming your own banker is about becoming all four characters in the financial play. All of us are already banking, but most of us are only the first two characters in the play. We just don't control it or profit from it. You may be asking, well, if I do become all four, what difference will it make? We're going to look at that. To do so, I'm going to focus on on the third and fourth characters because today you're already the first two. How important is control to you? How much value Would you get from being able to decide when you make a payment on a loan and what size that payment would be? What would it be like to decide if you can take a loan and no one's going to ask you what you're going to use it for? When do you plan on paying it back? Think about that. When you become the banker, you get control. Now, let's talk about the value of being the fourth character, the bank owner. As we said earlier, the bank shares their profits with its shareholders. But when you use someone else's bank, the bank and its shareholders are profiting from you. Now, there's nothing wrong with that. After all, they have gone to the trouble to build that business and capitalize it so it can operate. So it's only fair that they make the profits. Would it be better if you could enjoy the profits from your banking? Well, to help you understand that difference, you could make for your business by being all four characters. I'm going to use an example that Nelson had in his book called Becoming youg Own Banker. We call it the twin sisters example. This is about twin sisters who used two different methods to help them fund the purchase of their cars for the rest of their lives. Even though this example, we use cars as the objective, it could be anything. So we're not going to focus on cars. Going to focus on the difference it will make when one of them was all four characters and one wasn't. First, let's just let me give you a little background. Both sisters made the decision to accumulate money for the purpose of buying cars. And they both committed to putting in the same amount of money to do that. So the first sister put $5,000 per year into a guaranteed investment certificate. Now, if you read the book called Becoming youg Own banker, Nelson uses CDs because it's an American equivalent to GICs. Now, she did that for seven years and she was able to get a rate of return of 4% on her money throughout all the years that example was shown, which would be an extremely good outcome. Once she had finished capitalizing her account at the commercial bank, she started to practice banking by taking part of her savings out to make a purchase of a car. She paid herself back by making payments to new GICs. And by the time she needed to buy the next car, she had paid, paid everything back that she borrowed from her system of GICs. She was the first three characters she was depositing, she was borrowing and she was acting like a banker. She got to decide what to take it out and for what. For and she got to decide how to pay it back. She controlled the repayment terms. Think about the sound money principles this sister followed. She was disciplined enough to save money for seven years. She was disciplined enough to use money and then pay it back that she took from her savings account so that she would have the money available when she needed it again. Now those are very good behaviors. And when you think about how most people buy cars, she would come out ahead. Now, the second sister had learned about the process called becoming your own banker. And she pits the same $5,000 into a dividend paying whole life insurance policy instead of a gic. And she puts it into a policy that's been designed for the purpose of banking. She also puts that 5,000 into her policy for seven years. And then she uses the value in her policy to purchase the same car as her sister. And they both make the same monthly payments back to their systems over the next four years. Then the sisters continue to repeat that process for the rest of their lives. What are the sisters doing that is the same and what's different? They're both depositors and they're both borrowers. And third, really, they're both bankers. They get to decide how much and over how long they were going to take to pay back their loan. The sister with the GIC earned interest from the commercial bank where she had her accounts. The sister with the life insurance policy gets interest via guaranteed cash values. The sister with the GIC does not get the share in the profits of the bank, but the sister with the dividend paying whole life insurance policy gets dividends from the profits of the life company. So what difference does that make over time? So I'm just going to show a few years as a snapshot for you to help see that. So 15 years in the GIC sister has $58,000 in her account. And remember, these girls are banking with this. They've been using it and they've been paying it back. And the IBC sister, she's got slightly more. They're really close at that point. A few years later, four to be exact. You can see there's starting to be a bit of a gap between what the two of them have. But another four years and that gap is increasing. And then if you jump all the way out to the 39th year, you can see there's quite a substantial difference in the value of their two different types of accounts. Well, what would be the difference if one of them became an angel? No one has a leaf on life or a best before date stamped on Their body somewhere. Again I just took a few years to look at because there would be a big difference right from the start. But here at year 15, the sister that has the GIC, God forbid something happens to her, her beneficiaries are going to get what she has in account. And for the IBC sister, well, she's going to get the death benefit from that dividend paying whole life insurance policy. Quite a difference. And you can just see as time goes on, that difference will expand.

That's the difference between being all four characters in the financial play and not just three. Both sisters were doing well by being the first three characters. But in this example we Nelson demonstrated the difference it makes when you become all four. Now think about what the difference would have looked like if they'd have put in more capital. Remember, these girls only put in $35,000 to start their systems. All of us are already banking, but most of us are only the first two characters in the play. We don't control it or profit from it. Now we're going to speak about how adding one additional asset will increase the stability and the profitability of your business. So to do so, let's start by talking about, well, what is an asset? Here's one from the International Financial Reporting Standards. An interesting way to word it and I like this second one better. Put another way, assets are valuable because they can generate revenue or be converted into cash. They can be physical items such as machinery or intangibles such as intellectual property. I always appreciated this comment by Robert Kawasaki. And Robert is the author of the book called Rich Dad, Poor Dad. An interesting comment. He just said you need to know the difference between an asset and a liability and buy assets as farmers and ranchers. You get this. You're always looking to add assets to your business that can generate cash flow. Think about all the assets you already have and use in your business. I couldn't think of a farmer or rancher that I knew who didn't use land in some capacity within their business. So I wanted to take a few minutes and look at what it would take to acquire that type of an asset. This example walks through that. I did a bit of research into buying a quarter section of land. I looked at a very specific area of our country and I talked to farmers in that area to get a sense of what it would take to buy land and and then put it into production. So here's what I found. The average purchase price of a quarter section of good farmland in that area was $750,000. They purchased it by putting 20% down and they financed the rest. The financing cost for that quarter of section of land was $42,000 a year. That's based on taking a $600,000 debt and amortizing it over over 25 years at a 5% interest rate. I also learned that on average, the input costs for a cash crop were around $56,000 per year. On average, returns for a cash crop were $120,000 a year. Based on those numbers, the net profit for a cash crop was $22,000 a year. But don't forget, we haven't accounted for the cost of the down payment. Farmers use other assets they already own to help with this type of a purchase. Over time, this quarter section of land will typically go up in value. And that's one thing that helps farmers and build assets and to build access to capital. Remember the asset that the twin sisters who practice becoming your own banker used? This is the same asset we're going to talk about now. To practice the infinite banking concept, we use dividend paying whole life insurance as the tool for this example, going to use the same amount of capital that it took to purchase that quarter section of land and take a look and see what it would look like. With this example, I used a 40 year old farmer and in the first year he put $150,000 into this asset. That's the same amount as a down payment on the land. And then for the next 24 years this farmer put in an additional $42,000 a year, which is the same amount as in that previous example. The farmer was paying 40 financing for the for the next years. Could he have put in more? In this case? Yes, he could have, but I kept the inputs the same as the land purchase example. After 10 years, this asset has a cash value of 629,000. After 20 years it's gone up to 1.4. And after 25 years, and this would be when farmer stops putting capital into the system, stops putting premiums in. It has a cash value of $2 million. And again, no more capital was going to be put in. Now we're going to take a few minutes just to hear what Arnelson NASS said about capital. And then we're going to speak about how that asset could be used by a farmer.

My oldest daughter worked for Auburn University Extension Service. And I say to Debbie, Debbie, you guys are out there teaching farmers today how to grow crops with scientific precision. But every farmer today is highly capitalized. Nowhere are you guys teaching people how to Grow their own capital. Let's contrast that with you teaching people how to grow cattle. Cattle consume feed cow chow. If I were a farmer growing cattle and I bought my cow chow off the market, you guys would laugh me out of the county. You need to be growing your own cow chow. Well, don't you need to be growing.

Your own cow till it makes a really interesting point. You as farmers and ranchers are already focused on doing things like growing the feed and that you need to produce something and doing different things for production. But no one's ever taught you to grow capital. What would that look like if we talked about growing capital? Banking is not about dividend paying whole life insurance. It's about becoming all four characters in banking. Do you think this farmer could now be all four? This farmer was definitely the depositor. But could he borrow? Let's have a look at what this farmer could have borrowed. In the first year he could have borrowed $113,000 to use on his farm. After 10 years, this farmer could have borrowed 566. After 25 years, he could have borrowed up to 1.8 million to use. Now. Is that more or less than what the farmers put in over those 25 years? And by the 30th year this farmer could borrow 2.2 and it continues to increase every year thereafter even though he has stopped putting more capital in. Can he decide what to use the money for? No questions asked? Can he pay it back on his terms? Could he borrow it again? The answer to all those questions is yes. And doesn't that sound like control? Do you think this farmer is now the bank owner? This farmer owns a dividend paying whole life insurance policy which means he shares in the profits of the life company via dividends. Doesn't that sound like ownership? What if this farmer became an angel? No one likes to talk about it, but in reality it's going to happen to all of us. We just don't know when. So again, I just took a snapshot of a few years is he'd have good protection on his life right from the start. In the year 15 he would have over $3 million of death benefit. Year 23.457 or 4, 75 I should say year 25. It's pretty much 4 million. The 30th year it's over 4 million. He year 40 is 4.8. Do you think that tax free death benefit would be an asset to that farmer ranch? According to the Canadian farm data from the 2016 Census of Agriculture, over 70% of farmers plan on passing the farm on to the next generation. Do you think that death benefit would help pass the farmer ranch on to the next generation? You might be thinking this all sounds good Dan, but how could I start to do this? After all I'm already spending all the financial resources to it on what I think is best. It's going to take desire to do it and the recognition that controlling the banking function is the most important thing that you can do for your business. You don't have to start based on the numbers that I used in that example. Later we're going to look at an actual case study where the depositors deposit I should say were lower. There's a few books out there and this one I happen to find very interesting and very good insight as to how to run a business. And farming and ranching is a business no different than any other business. It's a business. Mike in his book Profit first he speaks about the advantage for you or anyone that practices a principle of taking profits first and putting those profits somewhere safe. And hey, that works really well with this concept. You can take those profits and put them, you got a warehouse em somewhere warehouse them in a dividend paying whole life insurance policy because it's going to grow after that uninterrupted because it has to by contract and guarantee. And what Mike points out in his book is that if you do that you take those profits first. Well your business, you learn to operate your business on what's left. Now you get to decide how much you want to start with for a profit, how much profit you want to take. That's going to be a decision that you get to make as the business owner. But as Mike describes from his countless experiences with business owners, people that practice that are more likely to have a sustainable business. And it's sort of like even in your personal life I've known and I've done this just to take and pay myself first. So I take money as soon as it comes in. I take something off the top and I put it away. Well what do I learn to do? I learn to live on what's left. There's another book that I read recently that I wanted to share the title with you. It's called the Richest man in Babylon. So if you think about that, that book was written years and years ago and it takes you back to a point in time really it's biblical time when Babylon was the richest city in the world. And hey, today you can go and see the ruins of the city of Babylon. So it was the Richest city in the world just happened to be built on a pile of sand. And it was the richest city in the world. And one of the things that you learn from reading that story is when people asked him, how did you get to the position you're in? The thing that he shared that I thought was so powerful was that he said, it doesn't matter what your level of income is, what, whether it's big or smaller. You need to take a part of that and put it somewhere safe where you can put it, where it's going to grow uninterrupted, put it to work in a way and reinvest it. Put it to work, reinvest it. Well, as I was reading that story, I go, well, if that doesn't describe good behavior and if you're using the infinite banking concept, that's kind of what you're practicing. You're putting money away, it's going to grow uninterrupted and you can still access it to use for things like we just looked at with this farmer. He gets the opportunity to utilize that capital whatever he wants. And like those twin sisters, he's going to put it to work on his farm and he's going to make a difference for his business or ranch, whatever it is that he's operating. You might be thinking, hey Dan, can you connect me with the right person on your team to take a look at my situation and show me how this could work for me? Well, the answer is yes. We have what we call a becoming your own call designed for that. Just text the word schedule to 780-809-4599 and just reserve a time that works best for you. When you do, here's what you can expect from us. We'll stay in touch via email and you can unsubscribe at any time. You'll receive an invite to a schedule, a time to meet. If we don't hear from you, the right advisor in our team will extend a courtesy call to find a mutually convenient time and place to meet. If you prefer not to meet, simply let us know. As long as you leave happy, that's okay. Here's a case study of a farm family who put this concept into practice. Meet Sarah and John. Please remember this case study is very specific to them. Everyone's different and it's based on their objectives and their plans. They have both been around farming for, for their whole lives and their family life and their farming business. Business keeps them very busy. They are predominantly cash crop farmers. Sure they have a few horses and chickens. But it's their cash crops that pay the bills. Like a lot of farmers, they also lease some land that they farm. As you know, farming comes with lots of challenges. The costs of goods and services are always going up, and who can predict the weather? Sir and John love the lifestyle and how every day is different, and they wouldn't trade it for any other. This young couple has taken the time to understand the infinite banking concept, and they decided that there was something they wanted to do. So we met and we talked about their objectives. So here they are. They wanted to be able to control their operating loan in 10 years. They also wanted to free up the Clairol that was presently being used for that loan for other purposes. They. They wanted the farm and the family to be okay if, God forbid, one of them passed away. They decided to pay their premium deposits for 14 years. Could have they paid them for longer? Well, the answer is yes. Could have they paid them for less years? Well, the answer is yes. It was a decision they made based on the objectives they had. They wanted to supplement their retirement income. That was another objective. Their hope was to pass the family farm on to the next generation and to have funds available to be fair to those children who are not part of the farm. So what did they do? They both started policies that would allow each of them to deposit $15,000 each year. Yeah, that was a lot for them. That was something that they had the desire to do. And then a month later, they took out their first policy loan to help with their input costs. And at that point, right at the start, they both had over $700,000 of. Of death protection on their lives. So what were the outcomes for this family? They were able to reduce their dependency on the bank within the first month. Sure, it was only 7%, but it was a start. And like with their commercial bank loan, they paid off their policy loan prior to the next growing season. The biggest difference was they got to decide when, whether it was November, December, January, February, or March. They got to make that decision. Six short years later, they're in control of half of their annual operating costs. By the end of the 10th year, they have achieved the goal of controlling the amount of money they need each year to put in their crops and to maintain them through the harvest. They had achieved that goal, and they'd freed up collateral that they'd wanted to free up way back at the start. As they continue to add deposits to their bank, their access to capital increased. Even after they stopped making deposits, their access to capital continued to grow. That is based on the guarantee that cash value has to grow to equal death benefit by age 100. So in other words, it has to grow. It has to. You remember that one of their objectives was to have access to passive income later in life and to reduce the burden on the farm at that time. Well, their behaviors and this process allowed them to do that. Remember, they had access to an ever increasing pool of capital for the past 30 years that they could use for much more than just their input costs. Even after taking capital out of their policies for 20 years for passive income, they still left a legacy for the family and the farm. What do you think the next generation would do with this tax free money if their parents taught them the value of control and ownership, you think they might continue with the process of becoming your own banker just using other members in the family? Quick summary. They had complete control of their operating loan for 20 years and partial control for the first 10 years. They were able to supplement their income or their retirement income by taking a passive income of 1.1 and they transferred 1.2 million tax free to their children. Here's a high level summary of this case study. During the passive income years, did they take out more than they ever than they put in? Did they pass on more to their family than ever put in? You can just see the power of becoming your own banker and how much it can difference you can make to a farm family. They were practicing banking. Yes, they were utilizing their access to capital, they were paying it back, using it for those input costs each year. But over time that pool capital grew. They could have used it for other things, they could have bought equipment. It was their choice. No one was going to tell them what they could do and what they couldn't do. I just wanted to let everybody know about a in person event that we're holding coming up in March. And this is a family banking summit related to farming and ranching. Now we're going to hold it in the city of Regina. We haven't picked the venue yet, but there'll be more information coming out. It's going to take place on March 17, 2020 and it's going to be a four hour long event and really it's just we're going to talk about a number of things. Things. I'm going to be there, I'm going to speak about what is family banking and how does it relate to farming. And after that we've got a special guest that's joining us that evening. His name is Chris Thompson. Chris is going to go through an overview of the farm data from 2016 Census of Agriculture. He's going to give you a personal story about transitioning the family farm and how advisors like myself are involved in the process. Going to do a high level overview of rollover rules and capital gains exemptions and talk about where life insurance may be useful for that whole process. And he's going to go through some case studies now just to give you a little bit of insight as to who Chris is. He works for a life company, but he's got 39 years of experience in not only life insurance, but the financial services. And Chris comes from a farm in Saskatchewan. That farm is still active today and he still has very good contacts with the family farm. He's just a great speaker and he speaks in with great information about that part of your business. So if it's something that's important to you that get into how to transfer my farm because like I said earlier, 70% of farmers plan on transferring their farm to the next generation. One of the things I've Learned is only 12% actually have a plan to do that. So we're going to give you some good insight into not only how family banking works, but how you can effectively transfer your farmer ranch business to the next generation. If you know anybody that would be a great person to attend that event, please let them know about it. We'll be giving you more information out there as the venue becomes selected and all those good pieces. But I just encourage you to take advantage of that opportunity to be live and to hear about how this concept could make a difference for your farm or ranch. And Chris's talk is going to be extremely valuable. You don't have to put your money in prison for decades. I talked about that. You're going to get access to more and more of your capital in a short few years and at some point you're going to get access to more capital than you've ever put into that system. And it won't take that long. Why rely on someone else to achieve financial budgets when you can do it this way? And hey, you don't have to be rich to get into the banking business. You can start wherever it works for you and your situation. There's only one way to find out if this process will work for you or not. It's to schedule that call. All you have to do. Text the word schedule at 780-809-4599 and if you do, you will get a one on one conversation with an authorized infinite banking expert and I get a Clarity meeting. You might be thinking, this all sounds great, but I don't want to do it alone. Well, we provide lifetime mentoring and quarterly group coaching sessions. Even the best athletes have coaches. We've got a lot of valuable resources for you and we're just going to take a bit of a tour through what you can find just on our actual website. There's all kinds of content that you can get through our website. We have great information. I just wanted you to go through and meet some of our team members. So these are our advisors. The numbers are growing. We're adding more people. We're just trying to support all of Canada very well. We have a lot of people working behind the scenes to help us and our new business teams. We got a great administrative team and we. We've got a few people in our Quebec team now that's getting bigger and bigger all the time. Then we have lots of great resources to help you on your journey. So there's just all kinds of things you can find. And when you get here, if you want to get access to the books that we have, you can just click on it and it gives you access to all those books. You don't have to get a policy or a system of policies from us. There's lots of great people you can work with. But please don't try to do this alone. Farmers and ranchers who do this right all have a good coach. I recommend you get a coach. And if all this process did was keep more money in your family farm or ranch, would it be worth it? Picture a day when financial control for your farm or ranch is in your hands, not a bank or the government. When your finances are exactly where you want them to be. When you have control and ownership again, I'm just going to encourage you to schedule a time to speak with one of us.