In this episode of the Wealth on Main Street series, host Richard Canfield introduces advisor Mike Smella’s chapter‑by‑chapter study guide of the book Cash Follows the Leader. The discussion focuses on practical ways to locate and redirect existing cash flow so that it can be used to build a family‑owned “infinite banking” system. Key points include: identifying hidden inefficiencies such as over‑paying for insurance, conducting a full financial inventory (income, liabilities, interest paid, investments, insurance costs), calculating true net worth and asset liquidity, setting a savings‑to‑income ratio of at least 15 % (ideally 25‑30 %), and channeling the freed cash into dividend‑paying participating whole‑life insurance policies. The episode walks through a client case where a 55‑year‑old saved $2,000 annually by renegotiating insurance, and a personal example from Richard where cash from checking/savings, lump‑sum deposits, and paid‑up additions are used to fund three whole‑life policies that serve as the “branches” of a family bank. Policy loans are then used to pay off debts (“snakes and dragons”) and grow the internal wealth “aquarium.” The overall message is that most people can start infinite banking by prioritizing and repurposing money they already have rather than seeking new income sources.
Chapters
Something most people don't think about. They look at the interest rates, but not how much actual interest volume they're paying. How much money is leaving your pocket and going into someone else's? What if those monies were stockpiling in a warehouse you owned and controlled? How dramatically different would your life be? When we ask clients what their net worth is, many have no idea right away what they actually are worth. Virtually every situation, you don't have to go out and find another job, start another business. You just need to prioritize what you've already got. So instead of the money flowing out to somebody else, now it's flowing back in and it's getting bigger and bigger. And that aquarium just keeps getting bigger and larger and it's more under our control.
Hey everybody, it's Richard Canfield here. I want to introduce you to an awesome new series that we're excited to share with you on Wealth on Main Street. One of our incredible advisors, Mike Smella, has been doing something I really respect. He's been going through our book, Cash Follows the Leader, and he's going through it chapter by chapter and he's sharing his own notes, his insights, his highlights— man, does he have a lot of highlights— the key observations fundamentally that stood out for him as he read through this book. And he's done it with a number of books. We're excited about launching some of these series because Mike, not only is he a great reader, he's a great observer. And sharing those observations so that you can get a fresh take on this incredible content is really valuable. Now, this isn't just a summary. It's really more of a breakdown and the perspective of someone who's actually applying this in their own life and who's also sharing this with other people. And so he's having those interactions on a regular basis. He's also got a breadth of life experience, and it's really helpful to get his journey and through his eyes as someone who's had a lot of time in both blue-collar work, running multiple businesses, and helping people where they like to be helped, right there at the kitchen table. So Mike's a great guy, and I think you're going to get a lot of value with this. Now, if you're reading the book yourself, and we really think this will help deepen your understanding, or if you want to go through the book again and follow along, that's a great way to do it. Make sure as you go through the series, you leave a comment below on something that really connected with you from what Mike had to share in his observation or something that you took away from the book yourself. So with that, let's go ahead and jump right in to Cash Follows the Leader chapter by chapter with Mike Smela.
Yeah, hi, Mike again for Cash Follows the Leader, our study guide. So we are in chapter 3, we are on page 49. So yesterday we looked at one scenario of where people were able to find monies. So on page 49, another client at age 55 discovered with his coach that he could be saving on several existing insurance policies, including his home and auto, by simply changing the way— in which he paid for them. He had a mixed bag of insurance policies that he could not explain to himself and his wife. In one 30-minute call, he was given some homework to call these companies and ask some very specific questions. The result was almost $2,000 a year in extra cash flow that had been flowing away from his family for at least 15 years. That adds up to $30,000 of money that his family will never see, plus any earning potential along that 15-year period of time. Now, with this newfound awareness, he can harness that same $2,000 he was happy to give up to someone else for his own family system. While this may not be a large sum to most, a teaching point is that we all have little inefficiencies that build up over time. A well-trained coach on our team can help you identify these and work on solutions that optimize your cash flow. So here are the steps that we take when we work with prospective clients. We do a quick inventory. Where does all your money presently flow to? How much money do you owe in liabilities—mortgages, car loans, credit cards, lines of credit, business loans? What What dollar amount do you pay in interest on your debts? Something most people don't think about. They look at the interest rates, but not how much actual interest volume they're paying. Do you invest or save money? If so, where and how much? What types of existing insurance coverage do you have and how much do you spend on that? Now, of all the expenses you listed, how much money is leaving your pocket and going into someone else's? What if those monies were stockpiling in a warehouse you owned and controlled? How dramatically different would your life be? Think about it and we'll address it when we meet. So those are things that we do when we start to work with potential clients is where's the money coming in? Where's it all going? Is it efficient? Is it not? Is it going into somebody else's system? How can we leverage some of that to start building your own system? So really from a brainstorming standpoint, time to write down all the potential income events, bonuses. Maybe you have a side hustle, you do another business, tax refunds, inheritance, child tax credits, expected windfall events, like sale of a rental property. Cottage, maybe business, rental property accounts with cash flow, escrows, property taxes. Then you wanna isolate your essentials. This is where you and your spouse must agree what is truly important for your needs and what you can do without. Things such as housing costs, foods, utilities, kids' activities. You know, if you go through all the expenses and declare them all to be essential, go back and do it again. And more than likely it's not true. We can always find different things. So then you wanna define your percentage. What percentage of your gross income is set aside for your financial advantage? Rich. This is the total sum of all voluntary payments to savings, investments, and any extra you may have sent to creditors divided by your gross income. We recommend a bare minimum of 15%, but 25% to 30% would be optimal. If you're not in those ranges, then choose one and make it a priority. When you can apply this to a flexibly designed cash-creating machine like a dividend-paying participating whole life policy, you will be able to collateralize a large amount of equity in a short period of time.
Hey, it's Richard Canfield here. We're talking Cash Follows the Leader, led through by Mike Smella. Great observations that we're hearing. If you want to grab a copy because you don't have one, head over to CashFollows.com. That's CashFollows.com. The asset summary.
This is your true net worth calculation. Don't panic. When we ask clients what their net worth is, many have no idea right away what they actually are worth. Basically, it's the market value of your combined assets less what you owe at some point in time. So assets minus liabilities equals your net worth. Write down the market value of all your assets, of what you could sell them for today. Include anything you can think of, like real estate holdings, business accounts, business valuation, investments and savings accounts, cryptocurrencies, bullion, collectible. Deduct the costs to transition any of those into cash, such as real estate fees, taxes, legal expenses. Circle or highlight those highly liquid assets. Those are the assets you could turn into cash within 30 to 45 days. Write down all the debts you have. Include any private loans that you may have with family members or taxes that possibly may be owed. Then take the amount of the above points and subtract the liabilities from your assets, leaving you with your net worth. In summary, when you map out where 100% of your financial resources are already being allocated, you will find the money to get started. An advisor on our team can help you move forward and reach your goal of becoming your own banker. Honesty, Clarity, and the desire to change are the critical elements for this process to be effective for you. We're going to move on to chapter 4 next, what we can title the financial minivan. So hopefully you're seeing this makes sense. The vehicle makes sense. Now we want to start finding money. How can we create money or find the money to get this going? In virtually every situation, you don't have to go out and find another job, start another business. You just need to prioritize what you've already got and see how we can put it in. In my own particular situation this past last year, I had monies that were sitting in a checking account and a savings account that were basically earning nothing. So I took a portion of those and figured out what my ability was and comfort level was as far as putting together a base or how much I know I need to put in every month. Then what my flexibility is in terms of the paid-up additions on how much additional I want to be able to put in., and then I also took a portion of the monies that were in the savings account and checking account and included that in, in a lump sum deposit. So I had 3 different ways to be able to do that. The lump sum deposit ended up being virtually all cash. So it was virtually almost a dollar for dollar cash value or a loan that I can utilize. Same with the paid-up additions. The base becomes our base. So it all adds up onto that. And as I put more paid-up additions in over the course of time on policies for my my daughter-in-law, my bonus daughter, and my grandson. Those are all 3 policies that are now our 3 branches of the first bank of smella that we are creating for ourselves and our family. And it's only going to continue. And then we're going to use those takeout policy loans to get rid of the snakes and dragons, replenish our system, replenish our warehouse of wealth. So instead of the money flowing out to somebody else, Now it's flowing back in and it's getting bigger and bigger, and that aquarium just keeps getting bigger and larger, and it's more under our control. So we'll start with chapter 4 tomorrow. Have a great one, and we will continue on.
Thanks. I love hearing the observations that we get from Mike Smel as he goes through these books one by one, chapter by chapter. Stay tuned for the next episode.
