Using the Infinite Banking Concept to your Advantage

Let's say I have the money here, obviously should I spend this money or should I use a policy loan? Well, I want to spend their money. I recycle the money through the system and they go, well isn't that just make work? Why would I do that? It's subtle and I know you get this already but it's not just about the fact that I'm now using equitables money. I'm also becoming a customer, a borrower from my own company. And then I'm taking the money I worked for and I'm giving it back to the company that I now co own so that they have control of that volume of money. And I can't illustrate the difference that that's going to make, but we know just by virtue of understanding how a business works, we're contributing to the profitability of that company and they have to share the profit with us.

So the one thing I wanted to kind of like go over was like the policy loan repayments and then like the interest that we're paying back to our policy. So last time we spoke you had like broke down some of your loan amounts into like smaller amortized portions. So a lot of times I'm taking stuff like it's a larger dollar value, like 10 grand, 11 grand. 10 grand. And then there has been some smaller when I did repay.

Real quick before you do that, like when you take let's say 10 grand, like are those because you're doing like lump sum, like debt recapture or do you know specifically what they were just going on the line of credit and stuff?

Yeah. So this like the first four here were to my truck and then we paid for a trip to Toronto, Vancouver island and just some smaller other things.

Okay, perfect. Yep.

When I repaid. So I did two or three repayments in 20, early 2022. One was for $7200 and then one was for $2500 and then there was another smaller one for just over 600.

And is that going to premium or is that going to loan?

That was loan repayment. These two here, the 7205 and 2538. So then I mark it if it's policy loan repayment. So I would probably most likely be doing like the larger lump sum repayments.

And is that just because is that you know what you pile up from just extra cash flow and whatnot, then you just lump it in.

It's about 1,500 every two weeks we're kind of putting away for policy like IBC and stuff. Right now. So I was calculating, like, the interest expense, let's say like 6.2% and then interest expense. I'd say 10% if we were going to repay it. Then I was like, kind of getting, like, confused if I should, like, do it your way, like breaking it down, amortize it, and then you can do, like, different prepayments or whatever. But then I was like, well, maybe if I just do lump sum, and then at the end, say I pay off this 10 grand, just throw 900 in as policy loan interest. I'm not sure what's the best way or what's the.

Yeah. When you say typical way, 900 in as policy loan interest, are you saying, like, would that go back in against a loan or as premium. Do you have any premium that can even go in at this point? Or. No, you're so. I mean, the Edo. Yeah.

So I just did, like, Monday or Tuesday. I might have sent, like, 11 grand for Desiree. ZDO.

Okay. And is that just curious, like, where does that come from? Like, what's that pool?

Or that was just what we saved up over the last couple months. And then I fired it in there. So I did this bottom four. Here is what I've done in the last few months. So July, August, September, October.

Oedo.

So no. So the 7,500 was Desiree's base premium, policy premium. And then I did Edo for Desiree, then we did Margo's base premium, and then I did Desiree for Edo there and then.

And then you're able to track that against, like, you know, how much could go in. So you're able. You're basically just subtracting that somewhere.

So this is how much we. I've put in already. And then we can put in, say, 77,000 each year.

Is that Edo alone or is that total?

Total. So, yeah, total premium in Edo, 77,795.

So, you know, policies. Yeah. And you know, roughly, like, you know how much. For example, you could look somewhere, you could break it down. You know how much can go into the Desiree specifically. So you can look back and go, okay, I put in 15 or whatever.

And yeah, that's this page here is where I have it.

Yeah, I mean, to me, like, look, here's the thing. I can give you a guidance. The good news is what works for Tyson is the way to do it. So if you're doing lump sums and I mean, if you're. As long as you feel like, hey, I know I'm putting money because let's Face it, like the money that you're saving up. A lot of it, not a lot of it, but some of it, because I know you have good cash flow, you're saving money anyway, but you're not making, you're not making the truck payment anymore. So a part of that savings, it's being, you know, you're building up more savings because the what would have gone to the truck is being added to your savings.

Yeah.

And then you're lump summing it back into the policy as loan and or premium. And so I'm not if that feel like that's literally what I did for up until six months ago. So if that works and that feels good, then great. Even the whole like tracking of interest, I mean, it depends on you. Like, that's why I started using the policy loan tracker, because it was more for things like this one here with the truck. I mean, that's pretty simple because you pulled out the loans, you paid off the truck, then you're sending a bunch of money back, and then you're taking out loans and lump sumin it onto your line of credit. Right. Did you use the line of credit to pay off the truck initially and then you used policy loans?

No, I just lump summed it to General bank who had the original truck home. And then like some of this other stuff. So, like this 11,000 that we just sent as Edo for Desiree, I'm gonna, as soon as it's at Equitable, I'm gonna pull a policy loan and use it to pay for the painting for the new house.

See, this what I don't do. Like, because obviously I use the capital for living expenses, right?

Yeah.

So if I just spend my regular, you know, gas, groceries, lights, whatever my income comes in, I lump sum it into the policy. Like basically money that I would have used for living, lump sum that back in the policy and store it there until I need to use it again. So I don't follow a loan tracker for that specific use. What I add to my loan tracker is things like what you're talking about. Oh, we went to Toronto, we went to Vancouver, we borrowed money for painting. Okay. Because then at least now you're going, okay, I borrowed money over for paint. And you just kind of act as if, how would you have paid it before it would have came from savings? Well, that's fine. You would have fairly regularly, you would have been saving money again to replace that 11 grand that you use for painting. So just think for yourself. Okay, if I use that for savings, how soon do I Want to pay that 11 grand back? What's a payment that I'm okay with? I could put it in my tracker. I could divide it up over 24 months, add my 10%, and now I know every month I'm paying whatever that number would be. You know, 250 bucks or whatever is going back into the policy as a loan repayment. And you could pick a specific policy. So, for example, if you're lump sum in money in anyway. Yeah, you may be. And I need to just put money into Desiree's for Edo. I'm trying to make this clear. So let's just say you're focusing right now on topping up Desiree's Edo, right? So you could use your loan tracker and just be paying the loan tracker back to your policy, because I'm assuming there's either premium or a loan balance outstanding, right?

Yep.

So take this is. This is just what I do. The loan tracker that I'm following, I'm literally putting it in one specific policy because I have a specific reason why I'm doing that. But that loan tracker, whatever it tells me I have to pay, I pay it to that policy. If I have lump sums and whatnot, I'll put it in different places. So if you're doing, like, lump sums anyway, you could put your lump sums, let's say, in Desiree's policy, and then you're following a loan tracker, you could be pumping that back into your policy just so that you're. I mean, you don't have to do that either. You could all put it all into one. But that's just what I do. I kind of. I kind of break it up just so I can. Part of it. So I can show clients. Right. Like, I'll show them, hey, I borrowed out this much at a certain day, and here's how much paid back in July, here's how much I paid back in August, here's how much I paid back in September, and here's how much I can borrow. Right. So I can show them I paid back 15 grand. I can borrow 17. Isn't that good? Right? That's kind of why I was doing it. But if you wanted to track it differently, you could be like, hey, I'm focusing on loans on my policy and premium on Desiree's. Desiree's premiums paid up. Great. I'm going to focus on premium and mine and loans from Desiree's. But I personally always do my very best to prioritize premium over loans. Again, not saying not to pay back the loan. But I always. Even if I'm doing a loan tracker, sometimes that loan tracker will go back in as premium.

Yeah. See, that's what I've been kind of doing too, is doing the lump sums as Edo. Because you told me that last year to prioritize premium and EDO policy loans. Then I was just like, curious how to capture like that interest expense if I can. Just as long as you're putting money back in, you're pretty much covered.

Yeah, that's just it. Like, harder to track the interest unless you're following a specific payment. And even, even lump summing, like, unless you're paying back the entire loan. I borrowed out 10. I can pay back 11 because I know 10% is 11 grand. Right. So if you're just doing. It's harder to track it and make sure that you're paying back more. But at the end of the day, you're recapturing as much as you can. Like, you're slamming a lot of money in there. You know what I mean? Like, I don't know if that kind of makes sense to you, but can you put.

So say like our total. Our total premium and Edo that we can put in is 77,000. Can I put more than that in or is that the absolute max for premium?

It would be no, but could I.

Put like, say three grand back in as interest?

Well, you could. Okay. So. So I'm looking at your policy. Right. Just because I happen happen to have it open. So I noticed that there's like almost 27,000 is the outstanding loan. Yeah. So if you and I in your premium. Oh, sweet. You and I are almost on Track. Mine's November 3rd. Third, I think. So your. Your premium is coming due here soon.

Yeah.

So that means that you're going to have a bunch more. Almost 29,000 bucks a year that can go back into yours if you don't put the whole 41 in. So you're just. You're just need to put in 12, 12, 6 now. Yep. If you max out the premium, if you put in your, let's just say the whole 77,000 for that given year, even though there's different anniversary dates or whatever, your premium is maxed out in all the policies and you wanted to put a bunch more in, you could, but it would, it wouldn't go in as premium. It would go in as a loan repayment. That's the only thing you can do. Unless we expand, which we don't. We're not going to do that now. So it's like on stage, I shared Nelson Nash's six golden rule, which is create capacity for windfalls. Well, if you have a windfall, if we have all our premium paid and no loans outstanding, just take a big loan out and do something with it. And then the windfall can go into policy against the loan. At least it gets stored in your private system. Right, so that's the idea. That's why. Yeah. Sometimes people say to me, like, oh, I have a loan outstanding, I really want to get it paid back. I go, yeah. And then, well, I have loan balance, paying it down, paying it back, paying it down. Like I always have a loan balance outstanding somewhere. Yeah.

And like I've had. I think we have about 57,000 outstanding right now.

Yeah, there's about. And have you just curious, not that it matters, have you actually. Have you used Margo's policy as well or no.

Yeah. For.

For loans and stuff.

Yeah, I did one. I pulled one loan from hers for my truck. So like my plan for the next couple months is probably like for the next little bit, save the next month, ours, pay my premium and then the rest of the year will be Edo.

Yeah, like she's got. So Margo, for the second year here, you paid the base only for now.

Yeah.

There's another, another three, almost three grand that can go in there. And then. Yeah. If I look at Desiree's got. She's got about 27, almost, not quite. But your loan and her loan are very similar in terms of what's outstanding. So there's like 26, 9, 25. Hers is 26, 899. And then when did you. So her base is 75, so almost 32 is almost just over 31 is the total. So that would bring you to like 39,000 of premium because you paid the base and then you paid another 11. Right. Okay, sweet. Yeah. So like her paid up additions is like 212,000. There's also something else called an in force illustration, which is kind of cool. But the only problem with the in force illustration is it, it shows you that like what would happen projected forward in the policy. But if there's a loan outstanding, it assumes that you're never paying the loan back. So it shows you how it capitalizes. But it's kind of cool because it shows another column that shows net cash value because it's basically your total cash value minus the loan, which isn't how it goes, but you know what I'm saying. But the only problem with those, the reason why those in force illustrations aren't really that great is because it assumes that only the base went in. It says that there's a note at the top of it that says this is assuming that no EDO has gone in like for this year or moving forward or something like that. But it's still kind of cool to look at them.

I can already see like the, I guess the power of it always having money available. Like even like, like this move was expensive, but it was like we were able to paint a house and I was like, well we're going to have policy loan available. It's not how I wanted to do it. Like banks were incredibly difficult to deal with. Like I wanted to include it in the mortgage. But anyways I was like, oh, we can do it with policy loan. So I've used it. So a couple trips, painting taxes, used it to pay house insurance for this, for an annual, used it to pay my truck, our enclosed trailer and our side by side insurance for the year. I had already done our RRSPs and redirected them to policy loans and then now I'm doing our TFSAs to policy loans too. So the money that we were putting into those two TFSA RRSPs are now going into policy. So what I do is every two weeks, like right after, so we get paid Thursdays, Friday morning, there's an automatic withdrawal from my checking to just a savings account. I build that up for a couple months and then I fire it off to equitable.

Okay, so you said, just quickly you'd said that you used the policies to pay off your truck, home and auto insurance. And you also said like a trailer and a side by side.

Right, the insurance for those. Yeah, that was just like September. I used it to pay for that.

Nice. And so again like it's up to you. But those are things too. Like even if like the truck payment, let's say I don't know if you normally do it annually anyway. You probably did. Did you pay your insurance annually before? Anyway, just with own cash inst loan, you paid it monthly. Okay, cool. So that again that's up to you. Like you can do it. Doing it lump sum the way you're doing it, it's fine because you're just basically saving the money that you would have been paying them anyway. Because I know you're disciplined that way. Most people just aren't disciplined like that. So you're already saving the money and lump suming it back in. But that's what I'd add to my trackers. I'd say, okay, I just used whatever 3,600 bucks for insurance policy, loan, put that in there. I busted up over 12 months. I add my 10%, and then I just look at my one single payment that needs to go in. And I do that again, partially because I kind of want to have that track record, that evidence to show people, hey, here's how you could do it. Not everyone's going to connect with that. Some people look at it and they get overwhelmed and they just want to do it, you know, as long as you're sending money to the system. So that would be an example. But so you. So you've used that, Used it for truck, a bunch of different types of insurance, property taxes, a couple of trips and painting. Did I miss anything?

No, that's pretty much it. I used it to pay my taxes this year and.

All right, you're your personal income tax.

Yeah.

And did you basically have that because you stopped putting money into RSP or what?

Yeah, and then I had. I don't know what happened, but my work savings plan, so non registered savings plan through Sun Life. Sun Life rebalanced the portfolio and I had like a $27,000 capital gain in that account. And I. They just rebalanced the portfolio, but it was okay.

I was non reg. So you basically pay the tax annually on the growth.

So then I got the tax. It was $27,000 in capital gain. And then combined with not putting in RRSPs, and I had higher income last year from our rentals. So like, they were all net positive, not negative. So then I got a big tax bill.

What was the tax bill? That sounds pretty hefty.

It's just over eight grand.

Oh, that's not too, too bad. But yeah, still, you know, that's just it. Right. Like, I say that to people. And the thing is, is people are so conditioned, they go, oh, like, you know, what if I, you know, I might have to pay taxes or whatever, you know, because I stopped putting money in my RRSPs or whatever. And it's like, well, what are we getting on the back end? Like, look at the things that you're able to achieve rather than putting the money into the prison, because you were probably doing. You're savvy already. You're already creating cash flow and stuff. You were putting it in there probably just to offset taxes for the most part. Is that pretty much 100%?

So I'll show you. I've created the sheet here. You see that it says like premium and EDO savings. We had a. We have a joint Savings account, Desiree and I. So 500 monthly goes into that. So we're going to use it as premium or Edo as well. My RRSP, I was putting 1,000 months into that, which is now going to premium truck payment, now going to premium my vehicle insurance. So I just did my annual premiums for this year. How much I need to send bi weekly to make sure I'm still.

Oh, you're sending that to like some kind of an account and you're lump suming it from the account. Is that what you said before?

Yeah. So I just took whatever I used, whatever I use policy loans for, divided it up bi weekly, came up with an amount, and then I'm sending that to the savings, the new house insurance, the new property.

If you're doing it that way, it's up to you what you could do. Because remember, we're talking about the interest. What you could do is if that's what you normally save, let's say, for example, your Premium Vehicle Insurance, 187.75 was the monthly premium. Is that right? You could take that and you could multiply the total amount or whatever you want to do, you could multiply that number by 1.1 and that's basically 10% on top of what you would have been paying. That's. That's one way you could do it. So you go, oh, okay, I'm still putting my 10% extra back into the system type of thing.

Right?

You could do it that way you beef up all your payments because again, all you're really doing is saving more in your own system type of thing.

But yeah, and then property tax. Desiree. So Desiree's vehicle insurance comes up in December. So we'll do the same thing there. Use a policy loan to pay that.

Yeah, this is perfect.

Like the only thing directed her RSPs, two different RSPs, and then her TFSA and then any other, like lumps keeping space for windfalls. Well, I've noticed like cash value, I guess, how much it goes up by daily. Well, it's even different than the values you said like earlier today, what they were a few days ago, because I wrote them down so I could know what they were for this call. And they've already changed. And that was warranties.

Yes, of course, because they'll go up every day. Right. But here's what I wanted to point to, what you should look at. So if you look at your policy, right. 240 and change, and then if you look at your loan balance, and then tomorrow, obviously the loan Balance will increase by whatever the simple interest rate is, and then the loan availability will increase by whatever your daily accessible growth is. Less the interest. Do you remember we talked about that? Yeah.

Because that interest is always getting paid.

Yeah, that's right. So the interest, obviously we structure the policy so that the interest is still always lower than the daily growth so that it's efficient. Right. What you can look at is you take those two numbers, add them together, and then you can say, okay, my total accessible growth every day is whatever, 20 bucks or whatever that number is. Right. So track that for a couple days and then you can see what the total growth is and then track it for a few days in a row, like give it a week something. So November 22nd is your policy date. Wait till you pay your premium and like wait for those values to update or whatever. So let's say December 1st. Start tracking it a couple days in a row in December 1st. Because if you had any values, I might even have some saved. If you looked at the daily growth in Desiree's policy this year versus last, you'll see that already the daily growth is becoming more efficient as well. Yeah, right. So it's nice to see you get a raise. Right. Every anniversary, your. Your policy will, will improve.

So yeah, it's. It's neat. And I'm like, I guess understanding it more like, it takes a while to like, wrap your head around and get like theory behind it. Last year I was like, well, even still this year I was getting money and then say, paying off my credit card. And then the last little bit, I was like, well, send it to Equitable and then pull it back out. And then that money's doing way more that way than just going from my bank account to BMO or RBC or whoever.

Yeah, totally. And that's the other thing too. Like the people ask me about, you know, they say, well, hey, Vern, if I. Let's say I have the money here and like, should I, well, obviously, should I spend this money or should I use a policy loan? I'm like, well, I want to spend their money. And then I recycle the money through the system. And they go, well, isn't that just make work? Why would I do that? Like, I have the money available. I go, well, it's subtle and I know you get this already, but it's not just about the fact that I'm now using Equitables money. I'm also becoming a customer, a borrower from my own company. And then I'm taking the money I worked for and I'm giving it back to the company that I now co own so that they have control of that volume of money. I can't illustrate the difference that that's going to make, but we know just by virtue of understanding how a business works, we're contributing to the profitability of that company and they have to share the profit with us. And I shared that with one of Jason's older clients. It was funny because at the event she kind of walked up to me after I presented and she said, hey, like that's what she said. Isn't that like a make work project? Like why are you doing that? And then I said exactly what I said to you back. And she goes, I think I just got a light bulb. I was like, chew on that for a while. That's pretty cool.

And like what helped me understand it because I understand the Smith maneuver a lot more than I understand IBC because I've been doing it for a bit long. But anyways, they're very similar. It's just where that money's flowing to first.

Exactly. Did you watch the replay or were you on that Smith maneuver webinar or.

No, I didn't get a chance to watch it yet. So my last couple night shifts I was able to watch a bit of the September client coaching.

It's interesting, right? Because again, I mean, I'm no expert at it, but it's. It's relatively straightforward. Right. You're paying down your mortgage principal, you're getting access to a readvanceable line of credit and you're using that line of credit specifically for investment purposes to make that interest tax deductible, right? Yeah. So the only thing we're doing that's different, people say that to, oh, it's kind of like a Smith maneuver or should I do this or should I do that? And exactly what you said, it's just where the money goes forward first. If I'm going to sum a bunch of money onto the principal, my mortgage anyway, why on earth wouldn't I use a policy loan to do that? And then I can, you know, replace that money or whatever. But now I still have access to the line of credit. I can still invest, I can still get my tax deduction, I still have daily growth and a death benefit like and momentum on that money that's now trapped in the property. Well, technically, you know, the principle of it's accessible, but you're picking up what I'm bringing down. That's just it. You're just doing it's the end asset, Right. I have a client right now who I finally have a meeting with. The guy's had a policy now for over a year for him and his wife and I think his kids, if I remember correctly. He makes too much money and he's too smart. He doesn't understand. He just go, oh, yeah. And he just puts a huge amount of money in the policies and the cash just sits there. Meanwhile, he's spending 20 grand a month to live his life and do whatever he's doing. Right? And so the next time I meet him, I'm going to be like, man, like you. Let's.

Let's flow through it.

It's great that you like you good that you have the life insurance and you're saving money. But, like, let's use it. Let's put it to work, right?

So, like, moving to this new house because we're able to put. We put 20% down on it. So then able to do the Smith maneuver on it. So I'm going to use our sort of three rental properties now do the cash flow down on it with the Smith man. So that's going to be a huge. Combined with IBC and our policies. Like, and then you said, like, use it to pay your vehicle insurance and your home insurance, property tax and all that. So then you're just redirecting that money because it was like, between insurance and property tax and whatever. Say it was like a thousand bucks a month. How many debits now I have?

No, I mean, even with that, right, you have. You have probably three different policies for those different types of insurance. You have property taxes, right? Like, you know what I'm saying? Automatic debits that were just coming out of your bank. Retirement, right? Yeah.

Like, so say Fridays, after I get paid, it would be. My RRSP would be gone. My TFSA would be gone. Start of the month was like vehicle insurance, house insurance, Desiree's vehicle insurance.

You got your trailer side by side.

Yeah, trailer and side by side. That was all in one payment policy. But still same thing, like a large amount, like 300 bucks a month or something. And then utilities and the mortgage.

Yeah.

And then I'm putting 1250 every two weeks into a savings account for premiums. And then des is doing 300 every two weeks right now for her part of it. So then that, like, at 1500 bucks every two weeks, that grows fairly quickly. And then. Yeah, fired in there.

You feel like. I know. You feel. You feel good, right? You feel good about all that and having more control. Like Less money flowing away. Put money to work. And again, like I said, you're making a habit out of it. You're using the system. Yeah, that makes a big difference. And like I said, for me, I talk to clients. I call it the debit to deposit ratio. We want to shift your debit to deposit ratio. When I have more deposits than debits. You know, I've had that. You might not deal with that, but I've had that before where I had so many automatic debits. I have money in this account and I forget to move it to this account and then they get a frickin nsf and it's like so annoying. I don't have to think about, worry about any of that stuff now. I just, when I get paid, I do look at my tracker. I take the amount that goes to my loan tracker, I put that in a specific policy and then the rest of the cash, I just store it somewhere. When I need cash or when I'm getting low or whatever, I'll just look at my policy values. I'll think about how many months or how long I want this last me. What do I have to pay for access? Big loans. And then 100% of my money goes back to the system.

So then are you using separate checking accounts to kind of keep that money separate? Like say your paycheck comes into one account, goes to equitable, and then you pull a policy loan to something, a different account?

Yeah, I tried it. Exactly. I put, I like to keep the, you know, I call it co mingling. I don't want the money comingling. I try to keep it separate so I, I know specifically what money I'm using. So I have policy loans that go into one account and I get paid into a different account.

Okay.

Yeah.

So next step for us to make it a little more efficient, what do you think we should do? Should we start using some for our utilities, TV and Internet bills? Yeah, I'm starting to do it for like, well, paying for that painting which is on not our credit cards. So we had, we both had offers through BMO to do balance transfer.

Okay, what does that mean? Like your debtor?

Yeah, So I paid for the painting with just a bank draft from my line of credit. And then we both had offers on our BMO credit card from the bank to do a balance transfer. So you are charged 2% of the amount you're transferring and then it's interest free for a year. Okay, so I just say I pulled 18,000 for on my line of credit to pay for the painting. And then I sent $9,000 from each of our credit cards to pay off the line of credit. So I was charged $180, $180, but then it's interest free for the remainder of the year, so you only pay 2%. So, yeah, I'm just letting that sit for now. And then I'm going to use policy loans to pay that off.

See, you're working the game because again, you're disciplined and you, you know how it works. The sad thing is, how many people are going to get screwed as a result of that? Because most people are going to have 9, 10, 12 grand, whatever. Oh, yeah, it's interest only or no interest or whatever. And then when it comes time to pay the bill, they're not going to have the cash to do it. Then they're going to work their tails off to try and pay that off for the next God knows how long and pay interest.

My dad showed me that credit card balance transfer because he does that every once in a while, too, just like with his investments, because he's like, pay 2% or 3% and then I get. I can make nine or 10 throughout the year doing whatever paid off. I can make a spread. So he's pretty crafty like that, too.

Yeah, that's cool. And then just real quick, I was going to ask you, like, are you. Your credit card and stuff, Are you like a points guy or no?

Do you care? Yes, we do emo air miles and then we have an RBC, the WestJet, if you want.

Just another thing that I do. But just the ones like you said, your utilities and stuff, like I strap those to my credit card. Just do the. I do the automatic debit. The only small risk. It's not a big deal. The only small risk is very rarely, you know, they'll overcharge you by accident and they don't give you the money back. They give you a credit. That hasn't happened to me in like a year, like long time, but it happened one time a long time ago. But that's the only other risk. So you can. That's what I do. I have three automatic debits that are strapped to my credit card as well, just for those ones that I can't pay the annuals or whatever. So I do, I do that as well. Get the extra points and stuff.

Utilities are still coming out of my account. And then Telus was like, our TV and Internet was on my credit card. And then they send a notice that they're adding 2% fee to credit card transactions. So I switched it back to my checking account.

Right. Yeah, my wife told me about that. And now I'm like, it's almost like, you know, maybe it's Parkinson's law. Right. A luxury once enjoyed becomes a necessity. Now I'm like, nah, I think I'll just use. Keep doing what I'm doing. But you had said something about becoming more efficient and what to use it for. Now. It depends on your specific objectives. You have a pretty good amount of capacity in the system, especially like this next year, you know, it'll grow more and whatever. You know, again, it depends on what your demand for cash is or what you're going to be using it for, some of those annual expenses and whatnot. But you could do that. You could, you know, either one of two things. Like you probably have a specific account that your mortgage comes out of. You just set the money there and leave it there and then it pulls it out. You could look at your, let's just say as an example, roughly, do you mind sharing, like what's the mortgage payment? Roughly?

1800.

1800, great. Oh, it's 18 bi weekly. Oh, baby. Yeah.

Big house, like pay to get them out and then put it on. I put it on accelerated bi weekly payments too.

Okay.

And then I started it at a 30 year amortization, but on the accelerated bi weekly it drops it down to 26 years. And then the reason we were able to do it is real estate investments. We sold some of our condos to our corporation. We're able to get the equity that way a for the down payment. And then the whole objective is that I wanted to use the rental properties and then cash flow, down the mortgage, paying it aggressively and then we can afford that mortgage payment.

So here's a thought. 1800, I mean, I know it's a little bit more if you average it out, but 1800 basically twice a month. So we have $3600 basically that we're paying for the mortgage. So if I multiply that by 3 so just under 11,000. So maybe it's a little bit more because of the biweekly. Maybe there's an extra payment and in the month dep depending on where it lands or whatever. So what you could do potentially for now the thing that you could do is say, okay, you know what that specific account that you're is, anything else come out of that account? Do you get paid into that account where the mortgage comes out of?

Yeah, it's my checking account. So utilities, whatever. If I was paying my credit card, it would come out of that premium policy. Premium is debited from that my savings.

It wouldn't be that much work just, just to make it easier. But what you could do, you could, you know, call the mortgage company or the bank or whatever. You could change the bank account that they pull your mortgage out of. So we have this mortgage account. You build up your policies, take 12 grand out of a policy loan, plunk it into that account. Now your bi weekly payments for the next three months are looked after. Same thing. How do we get an extra $29,000 into your policy as premium? Well, there's 1,800 bucks bi weekly that can go back into your policy as premium. And you're going to be able to be that much easier to make sure you sustain your premium and have a lot more cash to replenish policy loans. And then every three months you take a quarterly loan out specifically for mortgage payments.

I think that'd be like the next probably logical one because like utilities.

Now what you're doing is you're still paying your mortgage at the regular pace that you were paying it, but you're literally using the life insurance company's money. And again, same deal, your money's going back to work in the policy and then just, you just keep recycling it out. And you could use that. And your policy might be a good place to start because, or maybe even Desiree's because there's a little bit of cash in there. But if you're, I don't know what you're going to put in your policy. Policy, you could settle the base.

That was my plan is do the base premium and then lump in the Edo throughout the remainder of the year.

Yeah, and you could do that once you, I mean, if you wanted to do it, let's say, I don't know when, what month, but let's say whenever you have a target, let's say you have a target of a loan availability of, let's call it 12 grand. It could be January would be great. But let's say you just take your time, build that up and as soon as you have that 12 grand, let's say available, you know, do a little bit of work, maybe change, change that. I'm only saying to do that just to co again, the co mingling, maybe maybe change the account for your mortgage, access a loan, plunk it in there and then now, like I said, now you can start slamming more cash back in as premium. And then every three months you just recycle that cash take another 12 grand and you're going to see that obviously you're building a surplus now on those dollars. Right. Making your system work harder and you can use the life insurance company's money to pay your mortgage. These are the little ideas, not right away, but these are the little ideas that come up where people go, how do I expand my system? How do I pay more premium? Well, we just have to get creative about how do we re shuffle the cash. That's already. So once you start doing that and you're building a surplus in your system, we're paying down your mortgage, eventually there'll be capital available to sustain, you know, more deposits.

So the amount we're saving biweekly now works out to about 50 grand a year. So there was, on my sheet, I had a shortfall of like $26,000. So I was kind of just like, say, well, we'll get some cash flow back from our rental properties will get. Usually I get a tax return. Desiree had a tax return last year, put that in as premium and then just kind of leave that as for like space. But now I redirect the mortgage that's well above the amount we need to put into the premiums without coming up with any extra cash.

Yeah. So your base premiums for your system are easily sustainable, plus additional premium. And now essentially, for lack of better terms, foundation an additional pile of cash that we can go in to easily capitalize the rest and then work on the rest going back for policy loans.

I guess we're buying a vehicle for DES too in the probably the next few months.

Yeah, and that's just it too, because you would have, if you're recycling the money for the mortgage, that's just a payment that's happening anyway. There's going to be additional cash building up in the other policies. You could be using that for the debt recapture process to repay the car loan. And that's good because, you know, you have those tools available. That's why I say to clients all the time, it's like we might not be able to do everything with the policy, but we can still do things because we have access to those other tools like alliance of Credit or whatever. We can still achieve the objectives that we want to achieve with a lot more control and put more money to work and still achieve the objective of paying off the debt. You're not going to be stuck with 5, 6, 700 payment for the next five or six years because you had, oh, I had to go finance it through the thing or I don't want to pay 50 grand cash, blah, blah, blah. Right. So we can still achieve the objective just by shuffling things around a bit.

So yeah, Then like with the, so the Smith maneuver, the cash flow down, you know that side of it, the cash flow down. So like there's the plain Jane Smith maneuver, which is you use your annual tax return, repay your mortgage and then you borrow it back to invest. That's just plain Jane is what Robinson calls it. That's basic. And then there's six different accelerators that they have. So the cash flow dam, you have to have proprietorship, like business owned by yourself, not incorporated. So rental properties, perfect example. So you say you have two rental properties. Your rental revenue or your rental receipts per month is $5,000. So you take that $5,000, prepay your mortgage, reborrow that back on the line of credit, and then that line of credit pays your expenses for the rental.

Property, like the mortgage or the mortgage.

Utilities, insurance, property tax, whatever. So you're, you're borrowing to invest. So it converts that non tax deductible debt to tax deductible debt. So you're prepaying your mortgage at five grand a month.

You're like enhancing the Smith maneuver, essentially.

Yeah, so, yeah, like so that he has six accelerators. So this cash flow down is like one of the biggest accelerators. Like it has the most impact.

Yeah, I would say if you have that, especially properties and stuff, you can.

Prepay your mortgage five grand a month, you can convert that tax to non tax deductible debt to tax deductible in six, seven, eight years.

Do you have to look at, you know, the overpayment, the mortgage penalty or do you even care about that or do you just make sure you do within that limit? You do.

But the other thing is if you do overpay your prepayment, so you work with like a Smith, So they have. Do you know much about his program? Like Robinson, his dad created the strategy Fraser in the 80s.

Right.

And he passed away. And then Robinson, his son has like taken over it, rewrote the book, and now he's training professionals like mortgage brokers.

That's cool.

Financial planners, real estate lawyers, conveyancers, whoever else to like learn the strategy and do it properly. Because there's much so, so much misinformation out there about it.

Talking about those, the accelerators. And you said, hey, do you know much like, much about like the actual process? And that's what you coaching.

So they have these six accelerators and the cash flow down is like, by far the best. So you can convert your mortgage and then it's completely tax deductible, and you maintain that debt level throughout. And then eventually, like Becky, I think, is your. One of your clients, she's taking. She's doing the cash flow down and then taking policy loans and paying off that line of credit balance and then recapturing it back into your policy. So that's what we're able to do here is. So we have three rental properties that we're going to use. We'll be able to pay over prepay, over 10,000amonth on our mortgage.

Wow. But then again, how. How long can you do that for? Like in a year, though? Is that only like a few months then or so?

That's where I was going. The mortgage. If you work with a Smith Maneuver certified mortgage professional, they know which products are the best. And then they can set you up with like an automatic re advance. So, like the Scotia Step product automatically advances when you PrePay. You're allowed 20% repayment annually of your base mortgage amount.

The balance remaining or the original mortgage.

The original balance.

Oh, sweet. So it's bigger, it's more.

Yeah. So we're with ours, we're able to repay 20%, which is 146,000 a year.

How much cash?

146,000.

Oh, okay. Yeah. So you have a good 12 months.

100,000 year with it, 120 grand. So there's still space there.

Man, that's awesome.

Prepay. So we'll be able to like, convert this mortgage in just under six years.

So you're literally. That whole mortgage is basically going to be a line of credit in six years, is what you're saying.

Is that what you're.

What you mean by that?

Yeah. Like, it'll convert to a flex line, and then I'll eventually lock it into an amortizing loan, which will drop my payment. And there's no new cash needed from you to, like, sustain this at all.

So basically, because by then, like the asset, you mean the assets, the rentals are sustaining, Is that what you're getting at?

Yeah. And just the ever increasing efficiency of the mortgage. So you prepay, the mortgage, comes onto a line of credit, you pull that line of credit into a Smith Maneuver checking account.

Oh, because that's what you can do with the step or whatever. Right. Like, you can segment accounts and whatnot.

So then the interest payment for your line of credit will come from that Smith Maneuver checking account. So you're using borrowed money to pay the interest so you're capitalizing the interest so you never have to come up with new money to pay that line of credit. And then it's just each month your mortgage is more efficient so there's more available on the line of credit to pay that interest. So our rentals are cash flow positive. So say we pay 10,000amonth, there's $8,000 of expenses. Well there's $2,000 there of free cash flow that you can use to invest in like a non registered or just build up and use for other rental expenses. So the actual goal is like as we prepay I'll build up enough so there's like a good cash flow reserve for our rental properties and then start sending some to invest. Now after a conversation today, I'll probably redirect my mortgage payment to policy premium and then kind of redirect that way.

Well keep doing that, keep making that headway. That's a lot of cash flow. So I'm thinking like eventually you could probably add more policies. Do just keep doing what you're doing, add more policies. But then we're using that just one extra step with the policy loans. Right. But that is, that's awesome man.

The other ones like so the plain Jane is like you just use your tax return to prepay your mortgage, right. Then they have the cash flow down. So if you have a proprietorship, you use that revenue to prepay your mortgage. You borrow from the line of credit to service the expenses. Proprietorship or rental properties, cash flow diversion. So say this is another accelerator, you're saving $250 a month into a savings account. Send that $250 to your mortgage, you prepay, you borrow that $250 back out, invest it in a non registered account. Then you've brought that mortgage down, converted it to tax deductible debt swaps. The same thing like you're just converting bad debt to good debt from the pump is like you have extra equity available, you use that. Yeah. Like I think combining the two strategies is friggin that's powerful.

It's a no brainer because it's like what you said earlier, it's, it's where the money goes first but you're near not it's an end asset. You're not doing this or that, you're doing both. Right. Like that.

Yes. Yeah. That's like the Smith maneuver was able to click the light bulb for ibc. Like how it they have similar qualities. It's just that flow of money rather than coming in, going to Your credit card does one job, it's gone forever. Send it to your life insurance, pull it back out. Same with the rental receipts, because most people, they have rental property. I did it for the last six years. Rental income comes into an account, goes to pay the mortgage and all the expenses. But now with the right mortgage product, you can prepay that mortgage, reborrow it back out, and then the eventual goal will be to lump it down, I think with policy loans.

Totally. And that's just it. While you're doing your whole accelerator and you're converting everything thing, what's happening to the policies over the next six or eight years? They're just getting stronger. So when you're ready to do that, the policies will be really strong, have enough, a lot of cash in them, you can start recapturing that amortized loan debt back in your system. Yeah, that's powerful, man. Think about like you said, how much cash that is. I mean all the stuff you already talked about, Smith Maneuver and all that, but how much cash you're sending back, like what kind of an impact is that going to have in year 10? Like putting all that money to work and still achieving the same objective. Right. Like that's going to massively accelerate your program.

Well, yeah. And then like just the Smith Maneuver on this. So it's gonna save, it was like five years and four months it's gonna take to like convert this mortgage to tax deductible debt. It was gonna save like $450,000 in interest. Wow.

You have to earn pre tax dollars or like after tax dollars to pay your mortgage. So how much do you have to earn pre tax to pay that mortgage? Plus the interest and principal to piggyback.

Off, not only are you now in a position because you're marrying the two ibc, let's say in Smith Maneuver, not only that you're now going to not just save all that interest that you were going to save 450,000 bucks. How much interest that we're not giving up. Right. The opportunity cost on that money. You're not just saving the interest now, but you're also putting that cash to work in your system and recapturing the opportunity cost costs as well. Right. And building a huge legacy for your family all at the same time. It's pretty powerful.

So on a 30 year amortization with bi weekly. Okay, can you see that?

Yeah.

So this is the interest cost on a 30 year mortgage.

Good job.

And then, yeah, payments made, interest paid. So total, total interest.

Yeah.

400, say 72,000 and then this is how fast, I guess it's under five years. How fast we can convert it with.

The cash flow down the way that you've got. And they've got, I'm assuming, did that come from your team there? Like how did you sort that out?

So I just did it on. If you just go to like Scotiabank mortgage calculator.

Right.

And then I figured out our annual prepayments, like took our monthly rental revenue, times it by 12 and then do that as a prepayment annually, it converts it out. So we're going to only pay $66,000 in interest.

Okay, this is awesome. Can you go back to the other thing for a second just to make sure I'm capturing what I'm capturing? So the principle, the almost 744,000, that's basically the original, like that's the cost of the home, basically the amount that you mortgaged. Is that right? If I were to take. Remember that rate versus volume conversation. So this, what you're showing is already an accelerated pay down, is that right? So technically there's already less interest on this or no?

Yes, because this is a 30 year amortization, but on a bi weekly accelerated.

Right.

You're making those two extra payments. So it already dropped it four years, three months faster.

So we're. So this is already more favorable. But you have a 4.2. Is that your actual interest rate or did you customize that?

No, it's a lot higher now.

Variable. Okay, so if you scroll down, can you go back to that for one second? So basically if we take 471,000. Well, let's just call it 472. We take 472 and we divide it by. Let's call it 744. That means based on, if I'm seeing this correctly, that means based on this, the volume of interest. Yeah, you could look at it actually. Yeah, that's the way that we want to do it. I guess we'd want to take the 472 and divide it by 1.25. 1.25.

40%.

40%. So that is exactly what we're talking about where. Because how they structure the loan and all that kind of stuff, they can tell us on paper, the consumer mind looks at 4.25% and goes, oh yeah, whatever, okay, great, that's what I'm paying. What they don't realize is the volume, the percentage of every dollar that's flowing away, 40% of it. This is if you don't refinance this is if you actually follow the schedule. There's no change in the interest rate, yada, yada, Yada, you're paying 40% volume of interest, but then just by shifting what you're doing, shift in the process, you're paying. Now that's probably closer to, I don't know, 10% or something. And then on top of that, by implementing the process of becoming your own banker and putting money to work, like you said, the first place that it goes, I mean, you're. You're crushing the game. Like, you are massively getting ahead of where you would have been and massively getting ahead of your peers.

But what made this move, okay, right, was we had the equity available and then we were able to do the Smith Maneuver, had the rental properties in place to cash flow dam and paired it with Internet banking.

That's awesome, man. So. So no doesn't always mean never. Sometimes it means not right now. So you weren't able to do the Smith Maneuver. You hadn't discovered IBC because you kept doing what you're doing, obviously following the process, becoming your own banker. But you're, you know, you. The other thing that's important to point out is you're coached on multiple levels. You're obviously working with our team for ibc, but you didn't just like, I mean, I'm sure you made mistakes, obviously, but you're working with people who coach, you know, working for real estate investing. You're working with a certified, what's it called? Smith Maneuver specialist. Now, like, you're, you are coachable, you're learning, and you're expanding. And look how it's impacting your family and your program and probably your peace of mind too, right? Like, God forbid, you know, crap hits the fan. You've got options. You're not just like, you know, paycheck to paycheck or whatever. You've got options. You got policies, you got cash, you got lines of credit. You can change and modify your payments. You're doing all these other things. I'm not trying to pump your tires up too much, but you're doing, you're doing well, man. You're doing really awesome.