Transcription
Have you ever saved up for 6 months, 7 months, put a down payment on a car, you finally get it, and then you look at your bank account the next morning and it's back to zero? Or maybe you're the person who saved up $20,000 to put a down payment on a house, you close, you get the keys, and then you look around like, man, we don't even have no furniture to put in this house. So now you got to save up for another 6 months, buy that expensive Pottery Barn furniture because that's what your wife like, and you're good with the Target stuff and the Walmart stuff.
Ask me how I know. I'm just playing.
>> [laughter] >>
But what if you could buy that car, what if you could make that down payment on that house, what if you could take that vacation, and your account doesn't go back to zero? What if every time you spent money, your money kept growing as if you never even touched it?
In this video, I'm going to show you exactly how to do that in four steps. I'm going to show you how to become your own bank using cash value life insurance so that you never, ever, ever, ever, ever, ever, ever have to start over from zero again. All right?
Now, to understand why we always go back to zero, we have to understand, like, why does it keep happening? And the reason why it keeps happening is because most of us fall into one of two categories: Savers and debtors.
Let me get my trusty whiteboard up here. Y'all don't look at my password, okay? Y'all looking? Don't look, okay? All right. All right.
So there's two types of people. You got savers and you got debtors. So let's just say that this line right here, this line represents your net worth. And everybody starts out, well, unless you're wealthy, come from a wealthy family, you start out with a net worth of zero. Right?
So let's look at the first type of person. I'm talking about the debtor. What does the debtor do? Well, the debtor, they'll go out and they'll borrow money that they don't have to pay for something that they can't afford with their own cash. And then they start repaying that money slowly over time. Let's say those are student loans. Right?
They borrow more money, go into more debt, and they slowly pay it off over time again. That's the car. They go into even more debt and slowly pay it off again. That's the house. And they go into more debt and slowly pay that off over time. That's the wedding. That's the vacation. That's the thing that you want to do for entertainment.
So what can we notice about this person right here, the debtor? Right? They're never actually building any true wealth. And actually, people like Dave Ramsey, they look down on the debtor. They call this person stupid for going into debt because they don't understand how to leverage debt. And so what they promote is saving.
And this is my grandfather. Like my grandfather, he was born in the 1920s, like literally, uh, on a sharecropper. He was like, well, he wasn't a sharecropper. Luckily, he was in the 1920s, so he was the youngest of like nine people. But this is going on during the Great Depression. And so his mother always taught him the importance of saving and like paying for everything in cash. So that's what he did his entire life. Right?
He went into the military, uh, did like 20 years in the between the Navy and Air Force, got out, got that good old pension, and immediately started cutting hair, getting that cash money under the table. And so all he would do is take his money and he would save it and save it while working really hard, and then he would spend it and he would go right back down to zero. That was the house.
Whenever he wanted a car, he would work really, really hard, stack that money, go down to the dealership, buy it in cash. Right? If you wanted to start a business, right? He would work really, really hard, save up that money, and invest it in the business. And then the same thing for fun.
So when we look at the saver, right? The saver is the disciplined person. The saver is the disciplined person, but if we really, really look at what the saver is doing, is the saver actually building any real wealth? Long-term wealth? No. Right?
So I don't know what if, if you guys are like catching this right here, because these people right here, the people who are borrowing money, where are they borrowing the money from? Somebody say the bank.
And these people up here who are saving the money, where are they saving the money at? Somebody say the bank. The bank.
So we need to take a page out of the bank's playbook and right here, play the middle. Play the middle and become the bank because the only way to really, really build real wealth is to not interrupt the growth of your money while not going into debt, at least bad debt.
So what we want to do is we want to buy assets. Buy assets and let those assets grow over time and just stack and stack and stack and stack. And instead of us spending our own money to buy something that we want, whether it's a house, a car, whatever that is, we want to borrow against this asset. And we can choose to repay it over time. And every time we choose to repay it over time, we end up at a higher place in line.
This is the concept. This is the become, be your own bank. Be your own bank. You buy assets, you borrow against the assets, and then you transfer those assets to the next generation. All right?
Now, when we think about assets, what kind of assets are there? We got stocks, bonds, real estate. What else? Gold, silver, cryptocurrency. Right?
And typically what we find is like the more risky the asset, the higher the return. The less risky the asset, the lower the return. And so the thing about investing in risky assets, especially if you're going to buy them to borrow against them, there's a limited amount of money that the bank will allow you to borrow against your assets because there's no guarantees. Right?
And so effectively what we want to do is we want to use an asset that is guaranteed to pay money no matter what. All right?
Now, in order for us to do this, I want to give you, uh, take you guys to a story. I got to give you. Some of you guys know my, uh, I'mma call him my mentor. He's like my big brother. Uh, he's a financial advisor. He's been doing this for 30 years now. I was about 25 when I, I wasn't 25, but he had been doing, been a financial advisor for 25 years when I first met him.
And one day we get on this Zoom call and he pulls up this, this piece of paper. I'mma show you guys right now. This piece of paper. Right? And, uh, true story. The reason why we were getting on this Zoom call was because he was like, "Hey, Brandon, I wanted to show you something. It's something I've been working on. I think you're going to really, really like it. You're going to really, really enjoy it."
So we get on this Zoom call and he pulls up this piece of paper right here. Hopefully you guys, can y'all see that okay? Hopefully you guys can see that okay.
And, uh, he starts telling me about this, this story about, uh, this woman who worked in daycare. She was making about $35,000 a year. Uh, her husband was 40. He was working in construction making about $50,000 a year. And if we looking at their after-tax money, like what they got to keep, they was keeping about $5,800 per month. And on top of that, they had $5,000 of expenses. So that's the rent, that's the daycare, that's the food, that's the car, that's the insurance and everything.
And then here were their assets. They had $50,000 in an IRA. The wife had $30,000 in her IRA. And he was telling me that these people were referred to him by a client that he had in Arizona because back in 2020, you guys remember when the market crashed, when the, when the world shut down, and everybody's retirement account dropped by 40%? All right.
So this happened to be a first generation family from Mexico who knows nothing outside of work hard, save money, take care of my family. Right? So when they looked at their account, all the money they had been saving lose 40%, they said, "Wait a minute. Time out. Time out. Time out. Time out. We got to find some help. We got to find somebody who could actually sit down with us and like show us like what we have." And so that's how they met Rich.
And so Rich goes to tell me, he says, "Well, Brandon, when I met with them, they had health insurance, but they didn't have any life insurance. They didn't have any long-term care, and they didn't have any disability at work."
And the wife was so, like, she was actually bothered by this because who's the primary breadwinner? The husband. He's bringing in $50,000 a year. And what does he do? Construction. Is construction high risk or low risk? In Arizona, in the summertime, on the roof. You guys getting that? Are you guys tracking?
And so when they looked at their, their, their entire financial plan, they're looking at their goals and their objectives, the number one thing they wanted to do was be able to retire at 65 and be able to keep 100% of their current income.
And so after I learn all that, Rich asked me a question, and this question literally changed my entire career. He said, "Brandon, if this was your client, how would you help them?"
And I said, "Excuse me?"
He said, "If this was your client, how would you help them? They make $5,800 a month. About 5,000 of that is going towards their expenses. They got about $80,000 in an IRA. And they want to retire at 65 and keep 100% of their current income."
So, I started doing the math in my head. I'm like, okay, they got $70,000 a year. If they were to retire at 65, average life expectancy is what? 80? 85? So, let's just plan for 20 years. 20 years of income. $70,000 * 20 years of income, that was like 1.4 million dollars. And we only had 25 years to get there with only $800 of discretionary money to save on top of the $80,000 that they already had.
So, I'm looking at all these pieces and I'm like, uh, "How would I help them?" Well, we got to start here. At least we got to do some life insurance. But we, maybe we can't even do an IUL because all they have is $800 a month and we can't put all $800 a month into an insurance policy. On top of that, they got no long-term care, no disability. So, we're going to have to, have to figure something out.
And so, I gave him my answer of what I would have did. He said, "Well, that's interesting. Let me show you what I would have done."
So, he pulls up this illustration. And I got to not use, I got to use layman terms. The illustration is basically a projection of what a life insurance plan would look like based on everything that we know: how old you are, how much money you putting in, all of these different things.
And when he pulls it up, I had never seen anything like it before. I'm looking at it like, like I knew what I was looking at, but I didn't know what I was looking at. Right? This is going to go over, like, if you're not in the financial space, this is going to go over your head.
But I looked at the illustration and I couldn't see a company logo. All I could see was the premium amount, meaning how much they were paying each year. And I could see the face amount, the death benefit for the policy.
And so, he pulls up this illustration and I see $50,000 of premium going to the first year. And he says, "All right. So, here's what we did, Brandon. You remember those, uh, those IRAs they had?"
He was like, "Yeah."
Well, in the first year, we took $50,000 from those IRAs because during this time, if you guys remember, uh, the government was making special exceptions for retirement accounts. They were letting people pull up to $100,000 out of their retirement account penalty-free. And they were allowing them to spread the tax liability out over 5-year period. So, they took that opportunity to pull their money out of that account and they used that to front-load in their policy here. And they immediately took a loan against their policy and they used that to pay down some debt that they were carrying to free up some cash flow. Is everybody tracking? All right.
Now, the next year, they put in another $50,000, and for the life of me, I'm like, where are they getting another $50,000 from? I saw how much money they were making. I saw how much money they were saving. Where is this $50,000 coming from?
And he says, "Well, Brandon, the way you got to look at this is you have to look at this as the money that's going in. And you got to look at this column as the money that is going out."
So, if they put $50,000 in their policy in the second year and borrowed $44,000 against that, that means they were really only out of pocket $6,000 or $500 a month. That's all they saved in this policy. But they were able to take this $44,000 and pay their mortgage, pay the daycare, pay the insurance, pay for everything that they was already going to pay for anyway.
And I looked at that, I said, "Man, you got to be kidding me. Are you serious? They can really do that?"
He was like, "Man, it even gets better."
So, we fast forward. We go all the way down to the eighth year. And once we get to the eighth year, I'm looking at this again. I'm looking at the screen again. And I see that they're putting in $50,000, but they're pulling out $50,000. Not leaving anything. They did the same thing the next year. Put in $50,000, pull out $50,000. How much money are they actually saving in the policy at this point? Nothing.
They were taking $50,000 a year of their income and they were flowing it through their own bank. Not a checking account. They were using their policy like a checking account. Are you guys understanding what I'm saying here? Are you guys catching that?
And so, some of you might be thinking, "Okay, well, why in the world would they, why would they do that?" Well, the reason why they would do it, if we, we revisit their primary goal, what was it? To retire at age 65, keep 100% of their current income, which was how much? $70,000 a year every year just to be able to live. Not even have fun, just to be able to live. Right?
Well, by using this plan and actually leveraging their cash flow, by the age of 66, they stopped paying the premium. And they started taking out $125,000 every single year tax-free from age 65 all the way through age 95. Are you guys tracking that? Are you guys getting this? 'Cuz this is how important this is. Right?
'Cuz we've been told that you got to make more so that you can save more or you got to spend less so that you can save more. But none of us ever, ever taught to look outside of the box and like take full inventory of what we already have. And all of us make enough money. They were making $50,000 a year, able to flow $50,000 a year through this policy.
So, when we look at the entire amount of money that they would have put in over 7 years, remember, they did that in the first 7 years, they would have only dropped in what? About $56,000. They're projected to get back what? In tax-free income, 3.7 million. And they leave behind what? 3.4 million.
So, when I saw that, when I saw that, I said, "Ain't no way that's real. Ain't no way that is real." I went home, I couldn't sleep, and I just kept replaying it over and over and over in my head. And luckily for me, I was already in, in finance. I already understood the products, but that right there, I said, "If this is what it is, what you say it is, this is going to change the game."
And a couple weeks later, I said, "Hey, man, I've been thinking about what you showed me. I got to get one of these. I got to get one of these. How do I do it? How do I set this up so I can do that?"
And so, that's what I'm going to share with you guys today. I'm actually going to break down four steps on how you can actually start setting this up so that you can start doing this for you, for your family, for your business, or whatever. Are you guys getting this? So, y'all, y'all don't want to go nowhere right now. Y'all definitely don't want to go nowhere right now. All right.
So, step one: find the money. Find the money. Find the money. Find the money.
When I first learned that, I was paycheck to paycheck. I was paycheck, I just had enough, I barely had enough coming in to just cover the bills and everything like that. But once I, once I saw that and I saw that I could, I didn't have to worry about like saving a bunch of money, I just needed to leverage the money that I already was using, I found the money. I found the money. Because I was saving money in the wrong places. And sometimes a lot of us think we're doing the right thing, but we don't know what we don't know. We never know what we don't know. Right?
And so, what I found out was that there's three ways that money can be taxed. We can pay taxes now, we can pay the taxes later, or we can pay the taxes never. Right?
So, when we say paying taxes now, what does that basically mean? It means that we're taking money out of our net paycheck. Right? The net paycheck. And maybe we put that money in a high-yield savings account. Maybe we put that money in our Robinhood account or our Charles Schwab or our brokerage account. And, you know, we're just buying stocks or we're just saving cash. Right? Nothing wrong with that. However, actually, the only thing that's wrong with that is taxes. Right? So, if we're saving money in a CD, a high-yield savings account, a brokerage account, we're basically saving money in a place where we end up paying taxes on those things. Right?
How about tax later? This is going to be 401k, IRA, 403b, TSP, like all of those other, like, most, most of the time it's going to be your retirement account that's held through work. Like it's just funded through work. Maybe your company is, is matching you something, something. Maybe they're not. If they're matching you, great. Go ahead, get your match. But if not, then what are we really doing? Like what are we really doing if we're not getting a match? And some would even argue even if we are getting a match, but that's a whole different conversation for a different day. We're not going to go down there today. Right?
Um, but tax later means we're not going to pay taxes today, we're just going to pay them later. And I'm going to say this because
>> [sighs] >>
I, I don't know about you guys, right? But there's never been a time in my life where I did not pay a bill on time and the bill got cheaper. Has that ever happened to any of you? Have you ever paid your phone bill late and they not charge you a late fee? Have you ever paid your mortgage late and they not charge you a late fee? Have you ever paid anything late and they not charge you a late fee? Have you ever deferred your student loans that you borrow and it sounded like a great idea at the time, like, you know, I'm just going to defer this. I don't got to pay it. Like what is that? That sound good. Defer? I don't got to pay it? Great. Right? And then by the time you got out of college you owe twice the amount of money you took out in loans. And now you just sitting there like, damn. That's, that's a lot of money. I didn't borrow all that. It's the same thing here. All we're doing is deferring, meaning we're procrastinating on paying the taxes 'cuz we're going to pay the taxes one way or the other.
So all I'm saying is I was saving money in these two places and once I learn about the tax disadvantages, I'm going to say that again, the tax disadvantages, I was like, man, let me go ahead and put some money over here where it's going to be taxed never. And the only two places where we can get taxed never is a Roth IRA. And the second one is cash value life insurance. Cash value life insurance, the only two. All right?
Now you can choose either one of those, but if you want to do what I just showed you guys a second ago, we not, we, we can't do that with a Roth IRA. It's not happening. So the only place that we can do this is going to be with cash value life insurance.
So what does this mean? What am I saying? When I say find the money, where are you currently saving? Are you putting your money in a high-yield savings account? Are you like maxing out your 401k? You know, just maxing it out and, and just saying, "Hey, you know what? Hopefully I live to be 60 years old so I can, I can actually enjoy that money, the fruits of my labor." Right? Because like I said, a lot of us already have enough money, but it may be sitting in a place where it is not benefiting us the best. Does that make sense? I want to make sure. There we go. Look like it was a little bit too bright. Hopefully you guys can see that a little bit better now. All right?
So find the money. And when you find the money, we got to move into the second part. This is structure. This is structure because I've seen horror stories with this. Like it can go wrong. I've definitely seen a horror stories with this, right? And so what I want to do is just break down a quick example and like actually just put some numbers to it real quick.
So we actually, we actually talked about, we talked, I talk about this all the time. Premium versus cost. Premium versus cost. Premium is what you pay and cost is just that. It is cost. They're not the same thing, right? They're, they are not the same thing.
But let's just say you find money. Let's say you find the money to be able to put towards the premium. And let's say that amount was $10,000. Okay. So when you pay it, that $10,000 is going to be broken up into two different things. Number one, it's going to cover insurance. Number two, it's going to cover cash value.
So the insurance is like actual fees and this is the way it should work. That's why I'm, that's why I'm saying generally. If your premium is $10,000, at most your cost of insurance in the first year, I'm talking about the total cost of insurance, should be no more than $1,000. Which means you should have $9,000 going over towards your cash value. And this is the money that you can leverage. This is the money that you can borrow against to pay for the vacation, pay for your mortgage, pay for your car payment, pay to get out of debt. That's the money that you borrow against and even as you borrow against it, that money is still growing and compounding for you like it never, like you never even touched it. Are you guys tracking that?
Now you get to control this number. You get to control this number. For example, if you want to get, if you want more money going towards your insurance and less money going towards your cash value, like if you wanted to do it this way, and actually most people never want to do it this way, but some people do. Right? Some people will say, "Hey, I want only a thousand going to my cash value and I want 9,000 going towards my insurance." So that means out of this $10,000 of premium that was paid, nine of it is going towards pure insurance and only a thousand would be going towards cash value.
Now this would be more of a protection play if you're putting more of your money over there, but if you're putting money, more money towards the cash cash value, that's more of a be your own bank play. And so when you're working with an agent, you or an advisor, whoever, you want to make sure that your numbers are coming out similar, right? Only, only again, this should only be about $10,000 or 10% of your total premium regardless of age 'cuz a lot of times people think, "Well, if I'm older it's going to cost more." That's true, but these numbers hold true regardless of age. Like they might vary from company to company. Might, it might be upwards of 15% depending on certain things, but generally it's going to be 10% of your total premium in the first year. And in the second year, it goes down. And in the third year, it goes down. It actually gets cheaper with age despite the false information, the misinformation out there, your insurance gets cheaper with age if you have it done the right way and if you have the right kind. Hopefully that makes sense, guys. Hopefully that makes sense. All right. Uh, all right.
So now once you figured out, oh, and another, this is important. When you're setting this up, you don't have to pay any premium to apply for it because that's another thing, right? You after you choose or after you find the money, the next thing you got to do is you got to, you got to apply for it, too. So what does that application process look like? Well, funny enough, it's kind of like shopping for a home. Anybody ever bought a house before?
So when you buy a house, you don't just wake up one day and say, "Hey, you know what? I'm about to go buy this house that's for sale down the street." No, no, no, no, nah, not happening. You got to what? Number one, if you don't got cash, you going to need a pre-approval. Which means your credit got to be right. Right? Credit got to be right, on point. Number two, you going to need to find a realtor because nine times out of 10, this is the first house you ever bought, you don't know what the heck you're doing. You get what I'm saying? And it's a big investment. Even though they say a house is an investment, I beg to differ on that, right?
So that is the process. No different here when you're being your own bank. This is something that you don't want to just try to figure out on your own and by the time you figure it out on your own, you might as well get a license and do this thing for a, do it for a living. Like that's how much work that you're going to have to do in order to make this happen.
But to qualify and to apply, number one, you're going to need to find an agent. And if it was me and it was my money, I would work with, I would work on finding an agent who doesn't sell life insurance. I would work with an agent who actually does this with their own money. Are you guys getting that? Are you guys tracking what I'm saying right here? Are you guys tracking what I'm saying? Because if they're not doing it with their money, how can you really trust them to do it with your money? Y'all get it. All right.
So a good question to ask your agent, "Hey, man, let me, let me, you mind if I see your, do you have a policy? Do you have, can I, can I look at it? You know, I, I really want to do this, but I, I just want to get a little bit more certainty. How long have you been doing this? Why did you set it up this way? Are you guys getting it? You get, you get what I'm saying here? All right."
And so after you find an agent who you trust, right? Then you apply. And that's when you start like working on the numbers where you're like, "Okay, this is how much I want to do. Let's apply for it."
Now as you go through that application process, the insurance company, they got to do some research on you. Right? They got to do some research on you. They got to check what kind of medications you've been taking. They got to check and see if you're a reckless driver because if you got a bunch of speeding tickets and moving violations, your risk, you can't even get that. Right, if you taking a bunch of medications, like if you knocking on death's door, you're not going to be able to get that, unfortunately.
Now, there's, there's workarounds that you can, that, that can potentially work for you, but there's a, it's a, it's an entire application process. It can mean pulling medical records. Like, you can literally sit in the application process for 2, 3 months. No different than when you buying a house, right? You get pre-approved and you go house shopping, you find the one you like, but guess what? It might be 5, 10 other people who like that house, too. And now y'all got to offer on the house. And now it's up to the seller to accept your offer. And accepting the offer is just half the battle, right? You got to go to close. That's a process, right? It's the same process here. It's the same process.
Once you apply, the insurance company does their research. They say, "Hey, everything checks out. You're approved. What you want to do now?" And they put the ball back in your court.
Now, this is where you can go in and you can fine-tune stuff. You can say, "Okay, I got approved for this, but my situation has changed a little bit. I think I want to do a little bit more than what I initially thought. Or, you know what? I just, you know, they just cut back on my hours at work. I don't know if I can do this right now, but I know I really need to do it because I've been putting it off for, for 10 years now. And I just need to start somewhere. So, can we start a little bit lower?" Absolutely. We can start lower at that point. You guys tracking?
And so, once you decide, right? Once you say, "All right, this is exactly what I want to do," that's when you move on to the last step, which is just fund it. Fund it. Put the premium in. Because it doesn't become a legal contract until you actually pay. You got to pay for it. Right?
And let's think about what we're actually paying for, guys. We're paying for what? We're paying for a place that can guarantee your money, can give you up to 10, 11% per year without paying taxes on it, will let you borrow against that policy anytime you want to without penalties, taxes, or restrictions at a rate of no more than 5% interest a year. Imagine being able to lock in a line of credit for the rest of your life. That's almost unheard of. But it's, but it's a real thing, right? So, that's what the contract is, but it doesn't become an active, real contract until you fund it. Everybody say, "Fund it." Right? Here we go. Here we go.
And after you fund it, here we go. After you fund it, now the fun begins. You can borrow that money that you just funded it with and go buy that investment property. Borrow that money that you just funded it with, go pay for your kids' college. Borrow that money that you just funded it with, go to Vegas, have a good time. Borrow that money that you just funded it with and just let it sit in your checking account just because you don't have anything else to do with it. Are you guys getting that? Are you guys getting it?
And you can do this as soon as 10 business days after funding your policy. As soon as 10 business days after funding your policy. Why 10 business days? Because that money got to clear. Y'all ever, y'all ever get a big check and deposit it and the bank's like, "Look, we only going to release about 100 of this. We need to wait for the rest of that to clear." That's why you got to wait 10 business days. All right? Are you guys tracking? All right. All right.
So, look, we, we covered a lot today, guys. We covered a lot, but like remember that feeling, right? Remember that feeling like when you, when you save up your money, you buy the car, you put down the down payment on the house, go on vacation, and just all your money is gone and you got to work and build that back up. Like you don't have to do that anymore. All you got to do is just start looking at your money differently. Be your own bank. Be your own bank.
Until the next time, y'all stay blessed and I'll catch y'all on the next one.