The Money Advantage® Podcast | Infinite Banking Concept & Family Banking

Do you want to leave a legacy for future generations to come, but worry about the gift corrupting them?  Are you hoping to pass on meaning even more than the money itself?  Do you wonder how to start the conversation? Do you worry if family dynamics will prevent you from communicating your points clearly and in a way that will be received and understood? 

https://www.youtube.com/watch?v=xH3B2d53bVg

Today, we're bringing Tom Michler into the conversation. As a psychologist, he's helped families navigate the multi-generational conversation about financial planning. In addition to transferring financial assets from one generation to another.

If you want to give a gift or legacy to the next generation, not just transfer money, to have it do the most good in and through them, and to have healthy communication in the family so you can create a deeply-connected family AND long-lasting wealth, tune in now!

In this episode about the conversation between generations, you'll discover:Where Generational Conversations Fit In The Bigger PictureAbout Tom MichlerBook A Strategy Call

In this episode about the conversation between generations, you'll discover:

Dynamics of multi-generational conversations about the transfer of wealth.

How to get rid of regret.

Why the transfer of wealth needs a conversation between the giver and receiver about what it means, and how without it, the wealth supply becomes depleted.

The difference between a wealth transfer and a gift.

How to shift into functional and healthy dialogue about money.

How a generational belief system becomes accepted and adopted, and how to remove your blockages to money.

Where Generational Conversations Fit In The Bigger Picture

Building family wealth and creating a legacy is the capstone of a life well-lived.  It’s the end goal of a life and business you love, and the greatest mission of our lives.  But we need an entire financial system to support our ability to do the most good.

That’s why we’ve put together the 3-step Entrepreneur’s Cash Flow System.  

The first step is keeping more of the money you make.  This includes tax planning, debt restructuring, cash flow awareness, and restructuring your savings so you can access it as an emergency/opportunity fund.  This step frees up and increases your cash flow, so you have more to save, and consequently, more to invest.

Then, you’ll protect your money with privatized banking, insurance, and legal protection.  

Finally, you’ll put your money to work and get it to make more by investing in cash-flowing assets to build time and money freedom and leave a rich legacy.

About Tom Michler

Tom Michler is a Licensed Professional Counselor with over 25 years of experience. He works as an Organizational Development Consultant and Professional Facilitator. The consistent theme in Tom's career is working with groups of people from all walks of life. Tom's work also includes working with an adult homeless population (Peter and Paul Community), sexual offenders, (Vianney Renewal Center) refugee children/families (New Dimensions Soccer), and homeless teenagers (Covenant House).

Tom's specialty as a counselor is Family Counseling. Tom is also a Certified Energy Medicine practitioner. An interest in metaphysical concepts has evolved Tom’s business toward the facilitation of what is known as The Law of Attraction. For instance, this is for clients looking to maximize their life experience.

As an OD consultant, Tom has worked with numerous organizations in the areas of Mission/Vision development and delivery. In addition, hiring practices, leadership development, group facilitation and communication skills. Tom brings an understanding from the field of science as related to the quickly evolving field of energy and Conscious Awareness.

Tom's professional facilitation experience includes working with the St. Louis Archdiocese in regards to parish mergers, hosting teleseminars, working with numerous groups of area grade school and high school Principals, and was the host of his own radio show from 2011-2013, entitled Mind Games: The Psychology of Performance.

Tom is the co-founder of a local nonprofit organization, New Dimensions Soccer, which utilizes sports as a mechanism for life skill development/instruction for children living in under-resourced areas of St. Louis. Founded in 2004, NDS serves well over 1,000 children per year, in both afterschool settings and soccer leagues.

Tom is married with 2 grown children. His hobbies include fly fishing and gem mining. Tom is a follower and practitioner of the Wim Hof Method.

Book A Strategy Call

Are you ready to take control of your finances and legacy? We offer two powerful ways to help you create lasting impact:

Legacy Strategy Call – If you want to uncover your family values, mission, and vision, and create a legacy that’s about more than just money, we can guide you through the process of financial stewardship and family leadership. Save time coordinating your family’s finances while building a legacy that lasts for generations. Book a Legacy Strategy Call to learn more about how we can help.

Financial Strategy Call – Discover how Privatized Banking, alternative investments, tax-mitigation, and cash flow strategies can accelerate your time and money freedom while improving your life today. Let us show you how to align your financial resources for maximum growth and efficiency. Book a Strategy Call with our team today.

Have you considered investing offshore, or even becoming an expat and living abroad?  Today, we’re talking with Mikkel Thorup, of The Escape Artist, about how to have more travel, freedom, and control. 

https://www.youtube.com/watch?v=9Ju5Jyt4zEU

So if you want to travel and live overseas, invest internationally, shrink taxes and grow your wealth, tune in now!

In this episode, you'll discover:

Why living abroad is easier and more attainable than you may think.

How to work in another country to fund your travel - stories from experience with international travel and work visas.

How curiosity and an obsession to understand the world fueled nearly 20 years of continuous travel.

What to think about before becoming an expat.

Why diversify your investments geographically, politically, across currency, and across time.

Who Is Mikkel Thorup?

Mikkel Thorup is an expert in expat living and investing offshore.

He's the Best Selling author of Expat Secrets: How To Pay Zero Taxes, Live Overseas & Make Giant Piles Of Money.

Mikkel has spent nearly 20 years in continual travel around the world. He's visited more than 100 countries, including Colombia, North Korea, Zimbabwe and Iran. He's lived as an Expat since early 2000's, making his home in Central America, South Pacific, Asia, the Arctic, and North America, as well as the Middle East.

Throughout his explorations, Mikkel Thorup has kept a keen eye on different investments and businesses. Putting money where his mouth is and finding some very interesting and often very different opportunities.

Mikkel Thorup believes people should understand that just because someone was born in one country it doesn't mean that they need to spend their entire lives there, and it certainly doesn't mean they need to keep their money and investments there. Often there are huge tax advantages and economic benefits to building your business and wealth abroad.

A high school dropout, Mikkel started failing out of school at 12 and completely left school by 15 years old. But he never gave up his passion for learning. Now, he still enjoys reading over 100 books a year on topics such as entrepreneurship, marketing, economics, and investing.

Mikkel is a firm believer in continual education and chooses to reinvest a large portion of his income back into himself through courses, training and coaching every year.

He has made it his mission to serve others and constantly gives back to the community by sharing his knowledge in Entrepreneurship with the hopes of impacting others in a positive manner.

Learn More About Expat Living and Offshore Investing with Mikkel Thorup

If you'd like to learn about offshore bank accounts, offshore companies, and offshore trusts, or explore residency, visas, second passports, buying property or working in another country, or even learning another language, follow Mikkel's work.

Check out EscapeArtist.com.

Listen to The Expat Money Show here.

Get his book, Expat Secrets: How To Pay Zero Taxes, Live Overseas & Make Giant Piles Of Money.

Want to Talk About Life Insurance?

To discuss your life insurance strategy, or implement Infinite Banking, alternative investments, or passive cash flow strategies to keep more of the money you make, book your strategy call with The Money Advantage advisors today.

Thanks for Tuning In!

Thanks so much for being with us this week. Have some feedback you’d like to share? Please leave a note in the comments section below!

Don’t forget to subscribe to the show to get automatic episode updates for The Money Advantage podcast!

And, finally, please take a minute to leave us an honest review and rating on Apple Podcasts. They really help us out when it comes to the ranking of the show. And I make it a point to read every single one of the reviews we get.

Thanks for listening!

https://youtu.be/FtpKs0X1SFs

Considering a 10/90 premium split (Base/PUA) policy design with a Blended Term PUA Rider for an IBC policy over a design truer to Nelson Nash's original 33/67 split?  Was it because someone showed you that you can get more cash value in Year 1? Or an earlier break-even point, and still outperform the cash value by Year 30? 

Unfortunately, this newest fad design hurts clients who want the best place to store cash and build investible capital. When you're looking for answers, it can be really hard to sort through what's best. And to separate what’s marketing vs. what’s true education.

We strive for simplicity but accuracy, disclosing without being confusing, breaking down without misleading. That's because our ultimate goal is empowering you to make decisions. 

It's tough to make decisions through all this marketing noise. Because it takes your attention off of what really matters: control.

Today, Bruce and I are talking with MassMutual Brokerage Manager, Rodney Mogen about the risks of a stripped-down 10/90 premium split design.

10/90 Premium Split & Blended Term PUA Rider

We’ll discuss IBC policy design, the blended Term PUA rider, base/PUA premium split, and ideal whole life policy structure and answer:

What are the risks of a policy with too much PUA premium?

What is a MEC, and why do you want to avoid it?

Why is a Blended Term PUA Rider used with a 10/90 premium split design and how does it increase your risk as a policy owner?

Why and how do you give up long-term dividend growth when you have minimal base design?

Policy illustrations and marketing vs. actual policy performance.

The difference between long-term policy performance vs. short-term cash value.

The trend of companies that kept their dividends high over the last decade, now lowering dividends.

So, if you want to get the best Infinite Banking policy, maximize early access to cash value, and get the most guarantees and growth so you can maximize the use of every dollar towards creating time and money freedom, tune in now!

Where The Infinite Banking Concept Fits In The Bigger Picture

The Infinite Banking Concept is just one step in the greater Cash Flow System.

It’s the peanut butter to your cash flow sandwich.

While it’s nestled into Stage 2, Protection, it also improves everything else around it.  Infinite Banking helps you keep more of the money you make in Stage 1, amplify your cash-flowing asset strategy in Stage 3, and accelerate your time and money freedom.

The Bottom Line About IBC and Premium Split

Nelson Nash, the Father of the Infinite Banking Concept, warned against people using the concept as a sales tool with improper policy design. No one should be nervous about IBC; they should be worried about policies that stray off course and take on risk.

Insurance is a risk transfer product.

The entire reason for using Whole Life Insurance over UL, IUL, VUL, EIUL, etc. is the safety and guarantees. So why would you add a rider that lacks guarantees?

Policies with too little base and Blended Term PUA riders are taking on more risk than is necessary. If you go the route of 10/90 premium split and Blended Term PUA’s, you are sacrificing safety and guarantees for a few extra thousand dollars in cash value today.

Stick with a ‘Pure’ PUA rider and a proper amount of base premium, and you can sleep well at night.

The safer approach will provide more certainty over a much longer time horizon and wider range of possibilities. Your cash value is supposed to be your safe tank to store cash in between the deals/investments you make outside your policy.

In general, the ideal funding ratio for a specially designed life insurance policy (IBC approved) is 33% base premium, to 67% PUA. This design gives you access to cash early, without compromising the ability for the policy to grow.

About Rodney Mogen

Rodney Mogen is a 20+ year veteran in the financial industry. He has been rated top planner quality by multiple organizations every year since 2001 through 2018 currently. He serves as the Brokerage Director for Mass Mutual South Texas and provides other strategies through Solve Ur Puzzles.

Rodney holds multiple doctorate degrees. As well as the LACP (life and Annuity Certified Producer), AAMS CRPC, CCS, and over 26 more designations.

Rodney has spoken in many state legislatures, and organizations to provide factual information to better serve you the client.  He has also worked tirelessly with state and federal leaders to craft legislation favorable to our clients and to us. He is continuing to work with the SEC to build a more comprehensive and favorable ruling for all.  Rodney is the Government/IFAPAC chair in Austin, and the state IFAPAC board.

Ready to Get Started with Infinite Banking?

If you would like to implement Privatized Banking, cash flow strategies, or alternative investments, we can help.  We’ll review your situation to help you decide what moves are best for you.

To start the conversation, book a call with our advisor team.

https://www.youtube.com/watch?v=RlydBGujc2k

Do you have money in a retirement account that you wish you could use to invest in real estate?  Today, we’re talking about self-directed accounts and investment strategies, with Edwin Kelly, the CEO of Specialized Trust Company.  

So, if you want to know how to best use qualified plan money to help you reach your financial goals and invest in real estate, figure out if you should continue funding self-directed IRAs, and maximize the ability to use your money and minimize taxes so you can best use every dollar towards creating time and money freedom, tune in now!

Who Is Edwin Kelly?

Edwin Kelly is America’s leading expert on Self Directed Retirement accounts and self-directed investment strategies. He has more than 24 years of experience in the Financial Services Industry. He worked for such notable companies like UBS and BISYS. Edwin is a Founder and currently serves as CEO of Specialized Trust Company. 

Prior to founding Specialized Trust Company, Edwin helped grow one of the largest Self-Directed IRA Custodians in the industry. 

Edwin is an avid educator. He adds value to clientele by developing significant knowledge assets at every company he has worked with. His passion for helping others learn about their Self-Directed IRA options has made Edwin a popular and engaging speaker. He is frequently invited to speak at seminars and workshops, in webinars, and as a radio guest. Edwin has made several special appearances on the Money Show, and his work and ideas have been featured in major national magazines and newspapers throughout the United States.

Topics he is frequently asked to speak about include:

What the average person can do to take charge of their finances so they can stop worrying about money and look forward to a comfortable retirement.Little-known investment strategies that have helped people retire sooner than they expected.Completely legal secrets to growing wealth tax-free.

Specialized Trust Company is a member of RITA (The Retirement Trust Association). Edwin attended The Ohio State University and holds an MBA from Franklin University. He is the co-author of the bestselling book Leverage Your IRA. He is currently writing his next two books: The Retirement Dilemma and 7 Specialized Strategies You Can Implement to Solve It, as well as The Shift.

Self-Directed Account Topics Covered:

The basic difference between plain vanilla qualified plans and self-directed retirement plans.How self-directed accounts provide a way to invest money inside a 401(k), 403(b), IRA, TSP, 529, Solo 401(k), SEP IRA, or Simple IRA into alternative investments like real estate, notes, precious metals, bitcoin, etc.Self-directed IRAs can be tax deferred or tax-free.Three steps to self-directing.The difference between tax deferral and tax free accounts.The types of alternative assets you can invest in with a self-directed account.Why you want to keep all self-directed investments at arms length to avoid self-dealing.When you would want to invest in real estate inside a self-directed IRA, and when you would want to invest in real estate outside a self-directed IRA.

Self-Directed IRA Top Takeaways:

Self-directed accounts are government-sponsored plans. If you use them, you have to play by the government's rules.If you defer a tax, you lose control because you postpone taxes to an unknown future tax environment.When deciding whether to invest in real estate inside or outside of a self-directed plan, you need to consider your goals. You can invest for appreciation inside a self-directed plan, but not for cash flow. That's because, inside a self-directed plan, you cannot depreciate real estate and you cannot personally receive the real estate cash flow. However, at the sale of the property, all income goes back into the self-directed account and you avoid capital gains taxes. So if you are investing for cash flow today to increase your net investible income, you would not want to use a self-directed IRA.Self-directed retirement plans are accumulation plans, with the objective to accumulate a dollar amount that will provide future income. This is in contrast with our cash flow goal to maximize your cash flow today.Comparing a Roth Self-Directed Account vs. Privatized Banking (also known as the Rich Man's Roth), both are tax advantaged. Here are the advantages of Privatized Banking: you can put in as much as you want, control the terms, invest how you want, and receive the cash flow. And Privatized Banking gives you the leverage to earn a return on the same money in two places at the same time. It also gives you a death benefit. No retirement plan allows you to do that.Depending on how much freedom is important to you, a self-directed account can be a good option to be able to use dollars you've already set aside in qualified accounts, if you don't want to pay the tax. However, if you want to continue building investment capital, our philosophy is that we would rather store money in Privatized Banking, where we can be the banker and have maximum safety, liquidity, and growth.

Self-Directed IRA Links and Mentions

Specialized Trust CompanyLeverage Your IRA

Find Out Your Next Step to Time and Money Freedom

If you would like to assess your complete financial picture and find your personal best strategy to maximize your cash flow and control, we can help.

By the way, we have a free Quick and Easy Privatized Banking Guide that outlines just how Privatized Banking gives you the most powerful storage tank for your cash, PLUS it boosts investment returns, so you can more quickly get to the point where you never run out of cash.

If you are ready to personally implement Privatized Banking, alternative investments, or cash flow strategies to keep more of the money you make, book your strategy call with The Money Advantage advisors today.

Thanks for Tuning In!

Thanks so much for being with us this week. Have some feedback you’d like to share? Please leave a note in the comments section below!

Don’t forget to subscribe to the show to get automatic episode updates for The Money Advantage podcast!

And, finally, if you like these conversations about building time and money freedom, please rate and review our show on Apple Podcasts to help more people like you find our show. 

Thanks for listening!

https://www.youtube.com/watch?v=_gXkzuxoWaQ

Are you looking for unconventional ways to get out of student loan debt? Today, I’m talking with Stephanie Bousley, millennial debtor-turned-success story and author of Buy the Avocado Toast, about how she's creatively tackling $289K of student loans. (Hint: it wasn’t with mainstream advice.)

So if you want to pay off student loan debt, build faith in yourself, and crush the feeling of failure and guilt that comes with debt so you can live the life of your dreams, tune in now!

In this Episode, You'll Discover:

Why the mainstream advice about paying off debt never resonated with Stephanie and would have kept her living in scarcity for 20 years.How she saved $20 - $30K in taxes by living as an ex-pat in Singapore.Why you shouldn't always pay the minimum on your student loans, even if you qualify for income-based repayment.How she fixed her credit and paid off $150K of student loan debt in 8 years, without putting her life on hold to do it.Why the internal work of finding your worth, asking for what you want, and removing external validation from your goals is so critical to making financial progress.The Cash Flow Index strategy for evaluating which loans to pay off, based on how much cash flow they use up monthly.The #1 piece of advice for students selecting a degree program to make sure you don't select a degree program that prohibits you from working in your chosen field.How to repair your credit and refinance your loans.Why your underlying opinions of having money or not having enough are mental constructs that you may need to change to accomplish your goals.Why your debt doesn't define you.

Who is Stephanie Bousley?

Stephanie Bousley is the author of Buy the Avocado Toast: A Guide to Crushing Student Debt, Making More $$$, and Living Your Best Life. 

She graduated from New York University’s Tisch School of the Arts with an MFA in Film Production with nearly $200,000 in student loan debt.

Three unpaid internships in the film industry later, the debt snowballed at interest rates of 8.5%, reaching $289,000 at its peak.

Then it all changed. A series of random events propelled her out of the U.S. to Singapore, where she got a job in finance, something she never expected to happen given her MFA degree.

A solid income and hefty bonuses rejuvenated her desire to get her life back on track on every level.  What she learned can help so many people who, like her, feel hopeless about their student debt.

Get Your Copy of Buy The Avocado Toast

Find out more about Stephanie Bousley and get a copy of her book, Buy The Avocado Toast today at https://www.amazon.com/Buy-Avocado-Toast-Crush-Student/dp/1641702389.

Start Building Time and Money Freedom Today

Are you trying to decide which debts to pay off, whether to make extra payments and where you can best store your cash so it's growing and you can use it along the way?

If you would like to strategically evaluate your debt pay-off plan so that you have the maximum certainty and peace of mind, book a call with our advisor team here. We'll help you prioritize the best use of your cash, so you can gain control and increase your cash flow.

Thanks for Tuning In!

Thanks so much for being with us this week. Have some feedback you’d like to share? Please leave a note in the comments section below!

Don’t forget to subscribe to the show to get automatic episode updates for The Money Advantage podcast!

And, finally, please take a minute to leave us an honest review and rating on Apple Podcasts. They really help us out when it comes to the ranking of the show, and I make it a point to read every single one of the reviews we get.

Thanks for listening!

https://www.youtube.com/watch?v=7HaB0RGNNJQ

Are you looking for practical guidance on how to create passive cash flow from real estate?  Today, we’re talking with Lane Kawaoka, of SimplePassiveCashflow.com about real estate investing for cash flow.

He's a second-time guest on our show. We've brought him back because his work is so valuable to help you build time and money freedom. You can find his last interview here: https://themoneyadvantage.com/lane-kawaoka-simple-passive-cashflow/.

So if you want to find your tribe, know how to evaluate and find the best deals, and invest in the right deals so you can build an asset portfolio quickly, tune in now!

In this episode on passive cash flow, you'll discover:

The most important thing you need to get started with building passive cash flow.

Why Lane doesn't flip houses.

The top two time-wasters that keep people stuck and not moving forward with building cash flow quickly.

The three things that determine your blueprint for passive cash flow.

Why you don't need to read every chapter of every book to figure out passive investing.

The one thing you need to find out what markets to invest in.

The one simple financial formula you can use to calculate whether a single-family turnkey property is a good investment.

Why you should nourish the property management relationship first.

How to find out the rubric, steps, and order to take to build passive cash flow quickly.

About Lane Kawaoka

Lane has been investing for over a decade and now controls 3,500+ units. 

As owner of CrowdfundAloha.com, SimplePassiveCashflow.com, and ReiAloha.com, Lane is responsible for finding investment opportunities, analysis, and marketing.

Lane obtained a BS in Industrial Engineer and MS in Civil Engineering and Construction Management from the University of Washington. In addition to an analytical engineering background, he has real-world experience in working as a project manager for over $250 million dollars of capital construction projects in both the public and private sectors.

Working as a high paid professional in Corporate America and frustrated by the traditional wealth-building dogma, Lane was compelled to inspire and mentor other working professionals via his Top-50 Investing podcast at SimplePassiveCashflow.com.

Speed Up Your Passive Cash Flow

If you want to get started with turnkey real estate, and your net worth is under $250K, check out Lane's free resources at https://thewealthelevator.com/, especially the first 12 podcasts.

To improve results and shortcut the process, get the curated rubric of what to look for and how to analyze properties with Lane's Passive Investor Accelerator eCourse.

Or, jump to the front of the line and join Lane's mastermind, too.

Find out what Lane is investing in and get access to deal flow through his real estate operations company and Hui Deal Investment Club, where he analyzes and purchases multifamily and mobile home parks for private placement and syndication. You'll get familiar with the vernacular like splits and reversion cap rates. It's free to join, and you don't have to be an accredited investor.

Want to Talk About Life Insurance?

If you have life insurance questions, we’d love to connect.

To discuss your life insurance strategy, or implement Infinite Banking, alternative investments, or passive cash flow strategies to keep more of the money you make, book your strategy call with The Money Advantage advisors today.

Thanks for Tuning In!

Thanks so much for being with us this week. Have some feedback you’d like to share? Please leave a note in the comments section below!

Don’t forget to subscribe to the show to get automatic episode updates for The Money Advantage podcast!

And, finally, please take a minute to leave us an honest review and rating on Apple Podcasts. They really help us out when it comes to the ranking of the show, and I make it a point to read every single one of the reviews we get.

Thanks for listening!

https://www.youtube.com/watch?v=YmwHe1SC70A

Want to pay off your house fast?  Considering Velocity Banking? You’re not alone. 

So many people are motivated, whether by culture, values, or something else, to pay off their house as quickly as possible. 

This desire is completely normal.  But it can leave you vulnerable to some pretty big unintended consequences.

When we’re emotionally driven to do something, we can be attracted like moths to a porchlight to anything that promises that thing.

When it comes to paying your house off fast, one such “porchlight” is Velocity Banking. The widely promoted strategy of velocity banking to pay off a mortgage uses a HELOC to replace your mortgage and pay off your house, usually within 5 – 10 years, and save interest.

The problem is that we can be misled when the messaging hits all of our hot buttons, even if it doesn’t entirely make sense to us. 

Save time, save interest? Sounds good, let’s go, right?

Unfortunately, math can be used to tell whatever story you want, depending on what information you skip over or leave out altogether.

When the claims don’t add up, but we’d like them to be true, we reason that someone else already figured it out, so we can just trust them. 

Unfortunately,

The lie is easier to tell than the truth is to explain.

Todd Langford

But when something doesn’t add up, it’s time to dig in and ask questions.  Your questions are likely more valuable than the answers you find.

When it comes to your money, you deserve real answers so that you can make informed decisions.

That’s why we’re digging into a case study.  We’ll answer the question: What is the fastest way to pay off your house?

At its core, Velocity Banking isn’t magic; it’s math combined with leverage and cash flow timing. While the strategy can accelerate mortgage payoff on paper, speed alone doesn’t determine whether an approach is safe or sustainable. 

Understanding how the velocity banking strategy actually works helps separate impressive projections from the real-world risks that come with trading predictability for faster payoff.

So, if you want to have the most financial control while paying off your house, tune in now!

Table of contentsWhere Paying Off Your House Fits into the Cash Flow SystemWhat Is Velocity Banking?The Case StudyA HELOC Is Riskier Than a Typical MortgageRisks of the HELOCVariable Interest RatesHigher Interest Rates Than MortgagesIncreased Payment Required During the Repayment PeriodThe Draw PeriodThe Repayment PeriodExactly What Will This New Payment Be?How Could You Solve This Problem of a Rate Increase?Why Does the Minimum Payment Matter if the Point of Velocity Banking Is to Pay Maximum Payments?Velocity Banking vs. Extra Payments: Which Is Truly Faster?What Is the Safest Way to Pay Off Your House?How to Pay Off Your House Fast and Stay in ControlVelocity Banking Isn’t Magic, It’s LeverageFind Out More: Build a Smarter Cash Flow StrategyBook A Strategy CallFAQsWhat is velocity banking?Does velocity banking work?Can velocity banking be explained simply?Is velocity banking a strategy or a system?

Where Paying Off Your House Fits into the Cash Flow System

Many people looking at velocity banking to pay off a mortgage are missing where this strategy fits (or doesn’t) in the broader Cash Flow System.

Owning a home requires paying for it. And paying for anything, no matter how you do so, affects how much of your money you keep. Making the best financing decisions gives you more to keep and put to work. But no matter how much money you keep, it’s just one small part in the bigger picture of building time and money freedom.

That’s why we have created the 3-step Business Owner’s Cash Flow System, your roadmap to take you from just surviving to a life of significance, purpose, and financial freedom.

The first step is keeping more of what you make by fixing money leaks, becoming more efficient, and profitable.  Then, you’ll protect your money with insurance, legal protection, and Privatized Banking.  Finally, you’ll put your money to work, increasing your income with cash-flowing assets.

Paying off your house happens right here in The Money Finder step of your financial foundation. When you find, recover, and keep more of the money you’re making, you put more gas into your cash flow machine. However, being debt-free isn’t the same as being in control of your financial future.

What Is Velocity Banking?

At its simplest, velocity banking is a cash-flow management approach that uses a home equity line of credit (HELOC) to accelerate mortgage payoff.

Income is deposited into the HELOC, everyday expenses are paid from it, and surplus cash flow is periodically used to make larger lump-sum payments toward the mortgage. This cycle is repeated to reduce interest costs and shorten the loan term.

Understanding what velocity banking is also requires clarity about what it is not. It isn’t a method for arbitrage interest rates, and it doesn’t eliminate interest through a special banking loophole. 

The velocity banking strategy relies on leverage, timing, and disciplined cash-flow behavior, which is why whether velocity banking works depends heavily on stable income, predictable expenses, and rising risk exposure as balances and rates change.

The Case Study

We’ll walk through Truth Concept’s report by Todd Langford and Elizabeth Hagenlocher, Are Accelerated Mortgage Programs Using A Home Equity Line of Credit Effective?

The full report is available for you at the bottom of this article.

The report analyzes a Velocity Banking example where a person exchanged a 30-year mortgage with 25 years left for a HELOC, paid the house off in 10 years and 8 months, and supposedly saved $217,874.12. This is where velocity banking vs. extra payments becomes a real-world decision.

In the podcast, we compared and contrasted four options:

Paying the existing 30-year mortgage with minimum payments

Using a HELOC (Velocity Banking), which included extra payments

Making extra payments on the existing 30-year mortgage

Paying the existing 30-year mortgage with minimum payments and storing the monthly surplus in a Privatized Banking system

Here is what we found:

A HELOC Is Riskier Than a Typical Mortgage

The crux of Velocity Banking is that you pay off your house fast by making extra payments.  But, rather than making these additional payments on an existing mortgage, you swap out the mortgage for a HELOC. 

If you’re comparing Velocity Banking vs. extra payments, it’s important to evaluate the HELOC’s risks and volatility. The stated advantages for using the HELOC over a typical mortgage are that you reduce interest, build equity faster, pay less volume of interest, and can take the money back out if you need it.

A traditional fixed-rate mortgage is a closed-ended loan with known terms: the interest rate, payment schedule, and payoff timeline are established up front. A HELOC, by contrast, is revolving credit with a variable rate and changing required payments over time. 

Knowing how this structural shift works is central to evaluating how velocity banking works in practice, and why the added flexibility of a HELOC also introduces uncertainty that doesn’t exist in a standard mortgage.

Risks of the HELOC

Velocity banking depends on a HELOC structure, and HELOCs carry risks that most homeowners underestimate. A HELOC is riskier than a mortgage for these reasons:

Variable interest rates creating potential open-ended rate increases

Higher interest rates than mortgages

Potential increase in required payments

And when it comes to accessing your equity, you may not be able to take your money out, even with an existing HELOC

Variable Interest Rates

With a mortgage, you typically have level, fixed interest rates for the term of the loan.  And fixed interest rates mean you have a level payment throughout your mortgage, so it’s easy to plan for that known expense.

With a HELOC, you don’t get that consistency.

That’s because most HELOCs have a variable interest rate that is pegged to the prime rate.  And the prime rate is based on the federal funds rate, which can change every six weeks.  With a HELOC, you’d always be hoping that rates would stay low, but you’d have no guarantee they’d do so. 

Just how variable is the prime rate? The current prime rate as of May 1, 2020, is historically low at 3.25%. But it was as high as 21.5% back in the ‘80s. History shows that you can’t project that the prime will stay unprecedentedly low forever. And if the prime rises while you have a HELOC, your HELOC rates will increase right along with the prime rate.

Higher Interest Rates Than Mortgages

And what kind of rates can you expect with a HELOC? 

Generally, expect to pay about 1 – 2% above the prime rate.  Today’s HELOC rates are hovering about 4.5 – 5.5%.

Now, you can fix the rate, so you don’t have the unpredictability of rate fluctuations, but you’ll generally pay about another 1%.  Today’s interest on fixed-rate HELOCs is about 6 – 6.5%.

All this shows that interest rates are higher on a HELOC than on a fixed-rate mortgage.  And the higher rate is where the bank makes its profit.

On two independent Velocity Banking resources, both project rate increases of 0.5% per year.  If rates followed that trajectory, in 10 years, interest rates could rise from 5.25% to 10.25% on your HELOC. 

Now, will the prime increase, pushing HELOC rates up? 

When you’re at historic lows, there’s really only one direction they can go. 

But couldn’t HELOC rates decrease as well? 

Sure!  The point is that you don’t have control when you don’t have a fixed, certain cost, so you’re gambling that everything you can’t control goes in your favor. 

Increased Payment Required During the Repayment Period

https://www.youtube.com/watch?v=5iloY--jnx4

Do you want to find out how to use short-term rentals to create cash flow right now?

Today, we're talking with J. Massey, CEO and Founder of Cashflow Diary, about how he built a 34-unit-and-counting short-term rental business from scratch.

So if you want to know why short-term rentals are the perfect fit for today's economic landscape, find out if they will work in your location, and how to get started, so you can start generating cash flow today, tune in now!

In this episode, you'll discover:

Why short-term rentals are the "gateway drug" for real estate investing.

How you can leverage short-term rentals without owning property.

How short-term rentals give you the opportunity to get your investment back in cash flow within 10 - 18 months.

The one and only thing you need before you can start a short-term rental business.

How to build a recession-proof business and scale by developing multiple points of distribution.

How to involve your kids in reaching business goals to transfer the one skill they need to be successful.

Who Is J. Massey?

J. is an expert in short-term rentals, who we're bringing back on the show for a second time. Check out his first interview about Creating Cash Flow with Real Estate here.

His accomplishments include:

CEO and Founder of Cash Flow Diary, a training and development brand for building short-term rental entrepreneurs.

Before Cashflow Diary, J. raised capital and invested in traditional real estate (single-family homes, note brokering and holding, cell phone towers, commercial real estate, and apartment buildings).

Eventually, he built his real estate investment training program to share what he learns continuously through his years of successful, real-world experience owning hundreds of traditional long-term housing units.

When one of his students asked him what he knew about the world of short-term rentals, the answer was, not very much.

Once J. started learning about short-term rental strategies, he saw a world of opportunity in front of him.

He built his very own 34-unit (46 bedrooms)-and-counting short-term rental business from scratch - which he still owns, grows, and operates - and has shifted his Cashflow Diary brand to focus exclusively on building and training short-term rental entrepreneurs.

Now he's built a community of thousands of like-minded people from 16 countries that he learns from every day and shares his knowledge through his Cashflow Diary podcast, YouTube channel, Facebook groups, and annual Short-Term Rental Summit training events.

Find Out Your Next Step to Time and Money Freedom

To secure a bunker to build investment capital that will magnify your investment returns, start your Privatized Banking System today.

By the way, we have a free Quick and Easy Privatized Banking Guide that outlines just how Privatized Banking is the most powerful storage tank for your cash, PLUS it boosts investment returns without taking on more risk.

If you are ready to personally implement Privatized Banking, alternative investments, or cash flow strategies to keep more of the money you make, book your strategy call with The Money Advantage advisors today.

Thanks for Tuning In!

Thanks so much for being with us this week. Have some feedback you’d like to share? Please leave a note in the comments section below!

Don’t forget to subscribe to the show to get automatic episode updates for The Money Advantage podcast!

And, finally, if you like these conversations about building time and money freedom, please rate and review our show on Apple Podcasts to help more people like you find our show. 

Thanks for listening!

https://www.youtube.com/watch?v=Nd1Q31lCczw

Are you a wealth creator with a need to have access to cash in the safest way that puts you in control?  Velocity Banking shows up again and again as a solution to pay off your home faster and save interest.  It even appears as the ideal way to store up equity in your house to use for investing.  And, to add confusion, it sounds a lot like Infinite Banking, with a similar objective of taking the banking function into your own hands, so you achieve independence from the bank profiting on your money and requiring their permission for you to use it. 

To further muddy the waters, Nelson Nash’s book, Becoming Your Own Banker, is often cited as the foundation for both strategies.  (However, Nelson wrote the book as the foundation for the Infinite Banking Concept, which he promoted through the Nelson Nash Institute.)

But what is the Velocity Banking strategy, and what are the risks?  How does it compare to Infinite Banking?  And which approach gives you more control?

This episode is for every wealth creator who wants to have access to cash in the safest way that puts you in control, so you’ll never get caught in a cash crunch.

Today, we’ll reveal the three reasons Velocity Banking is a poor alternative to Infinite Banking for building investible capital.

Velocity Banking doesn’t provide safety

Velocity Banking doesn’t guarantee access to your cash

Velocity Banking doesn’t give you a rate of return

Table of contentsWhere The Infinite Banking Concept Fits into Your Cash Flow SystemFirst, What Is Infinite Banking?And What Is Velocity Banking?Velocity Banking vs Infinite Banking: The Single Clarifying Question You NeedSTOP.  Before you read further, you have to know this:Here’s Your Quick Glance Comparison Between Velocity Banking and Infinite BankingThe Underlying Assumptions of Velocity BankingFinancial Principles and Truths That Put You in ControlLiability ≠ DebtDebt Payoff Should Be StrategicSaving Interest ≠ ControlHome Equity ≠ SavingsVelocity Banking Doesn’t Provide SafetyVelocity Banking Doesn’t Guarantee Access to Your CashYou Can Only Access Equity During the Draw PeriodThe Bank Can Freeze or Reduce Your Credit LineInfinite Banking Gives the First Right of Access to PolicyholdersVelocity Banking Doesn’t Give You A Rate of ReturnInfinite Banking Allows You to Earn A Returns on the Same Money In 2 Places at the Same TimeHow Infinite Banking Puts You in ControlFind Out More

Where The Infinite Banking Concept Fits into Your Cash Flow System

The Infinite Banking Concept (also known as Privatized Banking) is just one step in the greater Cash Flow System.

It’s the peanut butter to your cash flow sandwich.

While it’s nestled into Stage 2, Protection, it also improves everything else around it.  Infinite Banking helps you keep more of the money you make in Stage 1, amplify your cash-flowing asset strategy in Stage 3, and accelerate your Time and Money Freedom.

First, What Is Infinite Banking?

Infinite Banking is a strategy of using a specially designed, dividend-paying, high cash value whole life insurance policy with a mutual company as a place to store cash.  As you build up cash value, you have access to use it through withdrawals or policy loans.

The result of Infinite Banking is that your cash flow, or surplus, goes into a life insurance policy, where it is stored in cash value.

Here’s how you can find out more about Infinite Banking, the kind of life insurance policy that works for this strategy, and how to get high cash value and long-term growth.

And What Is Velocity Banking?

In short, Velocity Banking is a strategy of using a line of credit to pay off your house faster, while saving interest.

The strategy includes variations such as opening a 0% interest credit card and moving balances of debt from other liabilities to the credit card and then paying off the credit card fast, using a home equity line of credit (HELOC) or even replacing your mortgage with a 1st lien HELOC.  Depending on how you use this strategy, proponents demonstrate how you can fully pay off your home quickly, usually between 5 – 10 years.

However, the debt reduction isn't simply a result of the HELOC product itself. Instead, the results are achieved by the strategy of cash flow management you use with it. 

For the fastest debt payoff with Velocity Banking, you would use the line of credit as your bank account, putting all your money in each month and paying your bills out of the line of credit.  The difference between your income and expenses each month results in an extra payment to the line of credit that decreases the balance owed and increases your equity. 

Then presumably, you can use the HELOC as a checking account to pull out equity any time you need cash or investment capital.

The result of Velocity Banking is that your cash flow is directed into home equity, where it is stored.

Velocity Banking vs Infinite Banking: The Single Clarifying Question You Need

This article compares the eventual outcomes of the two cash flow management strategies of Velocity Banking and Infinite Banking.  This is the bottom-line question: Which is the better place to store cash?

If I had to choose just one of these strategies, I’d pick Infinite Banking, because of the guarantees, certainty, and control I gain, that Velocity Banking just can’t provide.

STOP.  Before you read further, you have to know this:

We are not anti-HELOC. 

Securing a HELOC might be a prudent financial move to provide additional options when you need access to funds or want to put lazy money to work.  For instance, you can use the home equity of your primary residence to purchase cash-flowing investment properties.  We’ve even helped people use their equity to buy investment property.

We call high cash value life insurance the “AND Asset” for a reason. 

Infinite Banking isn’t meant to be your only financial strategy in your toolbelt.  It’s intended to complement and accentuate your investing strategy, boosting returns and accelerating your cash flow. 

Infinite Banking is like a golden key that unlocks and enhances every other area of your financial life.

Here’s Your Quick Glance Comparison Between Velocity Banking and Infinite Banking

Now, when I say that Velocity Banking is a poor alternative to Infinite Banking, here’s what I mean:

The Underlying Assumptions of Velocity Banking

The mainstream financial thinking makes sweeping assumptions about what’s right and wrong for everyone to do with their money. 

Their power is that they sound like practical common sense. 

But the problem with conventional thinking is that it achieves typical results.  If you want to build uncommon wealth, you need to elevate your thinking.

Here are the underlying assumptions of Velocity Banking:

If you have a liability, you are in debt.

You should pay off all debt first before working on any other financial goals.

You should pay off debt as fast as possible to save interest.

Equity in your house is savings, and a HELOC is the best way to tap into that equity.

But, if you follow this logic, Velocity Banking’s assumptions are a landmine that robs you of control. 

We’ll quickly zip through the first three assumptions because we have volumes of content on these foundational topics. 

Then, we’ll dig into the last assumption because that’s where you discover the crux of the question: which strategy results in the best place to store cash?

Financial Principles and Truths That Put You in Control

Instead of accepting the common assumptions of Velocity Banking, let’s find the bedrock financial truths that will put you in control and help you to prosper.

Liability ≠ Debt

With Velocity Banking, the goal is to outrun “debt” as something bad that you feel guilty of having in the first place. 

This view altogether misses the real definition of debt.

DEBT = Negative Equity

Stated another way, you are in debt when your liabilities exceed your assets.

The typical approach has you needlessly trying to become "liability free."

Instead, you should evaluate each liability individually to determine whether to keep it or pay it off.

Just because you have a liability doesn’t mean you’re in debt.  And it follows that just because you have a liability doesn’t mean you should pay it off.

Debt Payoff Should Be Strategic

You should attack your debt strategically, not with a battering ram.

That's because not all debts are equal.

Some debts are more efficient than others, and it can actually slow you down to focus on paying them off. Other debts require immediate attention and should be paid off as soon as possible.

You'll want to pay off the liabilities that free up the most cash flow and keep the most efficient liabilities.  Find out how to do this with the Cash Flow Index.

You need personalized tactics because your strategy depends on where you're starting from.

If your big-picture objective is time and money freedom, you want to focus on creating as much cash flow now, having healthy savings, and acquiring cash-flowing assets.

That's why you should prioritize savings, even above paying off most, if not, all liabilities, depending on your specific situation.

If you try to climb out of a hole you aren’t in, you’ll never realize that starting now to build assets is possible, safer, and puts you in the most control, even with an outstanding liability. 

That's because when you have cash you control (asset), you’re in a much safer position than if you have no liabilities.  If something goes wrong, you have money that you can tap into and access for any reason.

Saving Interest ≠ Control

If you focus on interest, you won’t notice when your interest-saving strategy robs your control right out from under your nose. 

To be fair,

https://www.youtube.com/watch?v=UpA90RRTBUM

Have you wanted a way to share your greatest possible gift of love with your spouse, children, and loved ones, but weren't exactly sure how? The best gift requires out-of-the-box thinking because it's not something you can buy at Hallmark. Investments Don't Hug, by Mark Bertrang, shows you how. It's the most poignant, emotional, and compelling book about life insurance that demonstrates the real-life significance of an asset that is truly the embrace that outlasts you.

In this episode, we interview the author about the embracing power of life insurance.

So if you want to simplify financial planning with a disciplined approach that gives the most certainty, make the financial choices today that you will be most grateful for in the future, and take the absolute best care of your family so you can preserve your family’s respect and dignity even during the most challenging circumstances, tune in now!

In this episode on Investments Don't Hug with Mark Bertrang, you'll discover:

How life insurance offers the greatest reassurance, hope, and love when you go through your worst.How to plan as if you will die tomorrow, and live as if you are going to live forever. Why having a default plan allows great opportunities to present themselves today.Why the pandemic has reminded us of the importance of guarantees and ‘safe’, liquid assets.How life insurance allows you to begin with a Plan B, in the event Plan A fails.The whole life nonforfeiture options for the worst-case scenario, and why the safety net and flexibility can be a tremendous source of comfort and confidence.Why you can never be insurance poor.How life insurance embraces and carries you as you transition from one stage of life to another.How exactly you can do what's in your control today to gain certainty for your future.Why your family's estate plan should be refreshed at least once every ten years.How to store years' worth of income, so you never lose sleep about losing a job. Real-life stories of how life and disability insurance carried clients through life circumstances, so you can come face to face with your own mortality, and still have the final say.

Who Is Mark Bertrang?

Mark Bertrang, CLU®, ChFC® is the creator of the Financialoscopy®.

As a professional communicator, broadcasting was his first career. But for more than a generation, Mark has communicated the message of financial security.

In his book Investments Don't Hug, Mark shares stories of pain, anxiety, and joy that illuminate tools for clients to take charge of their own lives.

Important lessons are woven through the stories of real people living real lives, instead of imaginary tales where everything goes right and there’s always a happy ending.

Two values come through loud and clear.

The first is love: the love for your spouse and the love for your children.

The second is a belief that we are all called to a higher purpose, a greater good. It’s not about being centered on ourselves.

Instead, it’s about the giving of our time, our talents, our resources, and our love which can impact our family and our communities for generations into the future.

Want to Talk About Life Insurance?

If you have life insurance questions, we'd love to connect.

We'll help you make the financial choices today that you will be most grateful for in the future, and take the absolute best care of your family with the greatest gift of love that money can buy.

To discuss your life insurance strategy, or implement Infinite Banking, alternative investments, or cash flow strategies to keep more of the money you make, book your strategy call with The Money Advantage advisors today.

Investments Don't Hug Links and Mentions From This Show

Get your copy of Investments Don't Hug on Amazon, Audible, or HERE: https://www.investmentsdonthug.com.

Check out the Discovering Wisdom Over Coffee, with Mark Bertrang podcast.

Thanks for Tuning In!

Thanks so much for being with us this week. Have some feedback you’d like to share? Please leave a note in the comments section below!

Don’t forget to subscribe to the show to get automatic episode updates for The Money Advantage podcast!

And, finally, please take a minute to leave us an honest review and rating on Apple Podcasts. They really help us out when it comes to the ranking of the show, and I make it a point to read every single one of the reviews we get.

Thanks for listening!