Did you know that there is a proven financial strategy that has stood the test of time – even during the great depression? I am referring to the Infinite Banking Concept. If you haven’t heard of this strategy it is most likely because those that typically give financial advice do so for maximum profit and the financial educators that help individuals and business owners benefit from the Infinite Banking Concept do not earn as much money as traditional financial advisors.

It is a simple concept and it involves using dividend paying permanent life insurance policies to build and then borrow from the accrued cash value .  This process is better known as “becoming your own banker.”  I know what you are thinking; you’ve been taught the term life is better because it is less costly .  What you haven’t been told is that less than 1% of people with term life policies ever use them. So this is good news in one sense because people are living longer, but the problem is that all of that money paid out in insurance premiums over the years is wasted.

There is also a problem with most whole life insurance policies; they focus on the death benefit. Who wants to wait until they die to benefit from that? So why do most insurance agents focus on the death benefit? Because by crafting the insurance policy in favor or a death benefit versus cash value they make higher commissions .  There is a financial revolution sweeping across the nation where individuals, families and business owners are using the Infinite Banking Concept to become their own banker. Don’t be the last to get on board !

According to the article, money issues account for 5% or less of divorces. Other issues – incompatibility, lack of emotional support, abuse, and sexual issues all rank higher than money problems as causes of marital problems and divorce. Except for sexual issues though, it’s been my experience that disagreement on money issues can be a big contributing factor in the other 3 issues mentioned.

People view money differently. Some think of it as security, some think of it as freedom, some people just like money for it’s own sake. I tend to think of money as freedom. Having money gives me the freedom to buy things, go places, and generally do what I want to do. If someone (for example my wife) prevens me from using money like this, I feel like they’re trying to control me. My wife, on the other hand, looks at money as security. It’s something to be saved in case you need it in the future. From her point of view, not saving money is akin to not having emotional support.

In our case, we had to reach a compromise. I can’t spend as much as I want and she doesn’t get to save as much as she wants. The magic number seems to be $10,000. As long as we have this much in reserve savings, my wife is happy and feels “safe.” She lets me spend pretty much what I want (within reason). When our reserve drops to less than $10,000 we start having problems. Every little purchase I make is second guessed, she finds other things to pick at or fight about, etc. As long as we keep $10,000 in reserve though our marriage is very smooth.

When I got this month’s bill, I new she’d freak out again. Besides some stuff for my car, I’d also bought a model airplane engine and some books without telling her. I knew she wouldn’t be happy, because I hadn’t mentioned the purchases – yet I feel I have the right to buy stuff without getting her approval for every little thing. To fix it this time, I used money from my cash stash to pay part of the bill and paid the rest from our bank account.

This kept my wife happy because she only sees a withdrawal of about $300 or so for the Discover payment. I’m not happy about it for several reasons. First, I don’t like doing things like this because I know it only leads to problems. Second, it does nothing to help us resolve our differences over how money should be spent. Third, I shouldn’t have to do it – I should be able to spend some money without being questioned about it. We’re not living paycheck to paycheck any more.

I haven’t decided the best way to handle this yet. For now it seems like I dodged a bullet, and I don’t like dodging bullets. Doing so is a good way to get hit.

First of all, according to the report, you’re required to give “accurate” information when filling out the offers. I don’t have a problem with giving out my mailing address, but I have a huge problem with giving out my phone number. I work as a PBX technician at a community college, and bogus charges on phone bills by illegitimate companies is a problem that I deal with every single month.

Second, it seems that in order to successfully complete the offers, you must set up your computer and browser in such a way that it would be especially vulnerable to viruses and other mal-ware. If you have a spare system you can dedicate to freebie trading, this might not be a concern for you. I don’t, and I’m not willing to risk my home system.

Finally, and this is the biggy, participating in freebie trading requires you to give the companies either a live credit card number or a live ATM/debit card number. According to the report, the companies don’t allow you to use prepaid cards. Some of them even consider it “fraud” to use a prepaid card. To me, this is a HUGE red flag. If the offers are really free, then why do the companies need my credit or debit card information? Even if not completely free, for example shipping charges on an otherwise free item, what difference does it make to the companies what kind of card I use? Given this condition, I don’t think I would touch this one with a 10 foot pole.

I could just be overly paranoid, and I’d love to hear from people who have actual experience with freebie trading. For those who want to try it, I would make the following recommendations:

1. Have a dedicated computer and email account just for freebie trading.
2. Check your phone bill each month for unexpected charges. report any that you find to the phone company and try to get them reversed.
3. Keep a separate, low limit credit card to use for this activity. alternatively, keep a dedicated bank account with a really low balance.

When it comes down to it, there are many other ways of making extra money that don’t expose you to the risk that this method would seem to.

Cheers,

Ken

Let’s do the math. The cheapest loan I could find advertised anywhere is a 3/1 ARM at 4.125%, while the highest yielding account I could find pays 6.01%. The 6.01% is not guaranteed (it could go down at any time) and the amount of deposit is limited to $25,000. So let’s borrow the $25,000. Let’s assume that we’ll be able to get our loan at the best possible rate, there won’t be any loan origination fees, and the interest we earn will never go below the initial 6.01%. Our net earnings will be 1.885%, so on a $25,000 deposit we’ll earn about $471 per year, or less than $40 per month. I’m not a big fan of taking equity out of one’s primary residence unless it’s for a very good reason – and to me, $40 per month doesn’t seem like a very good reason.

So, how could we do better? One easy way is to use a credit card that pays cash back. For example, my American Express card pays 3% on gas purchases, 2% on restaurants, and 1% on everything else. My partial budget looks something like this:

• Gas – $120 ($3.60)
• Restaurants – $200 ($4.00)
• Groceries – $400 ($4.00 + $4.00)
• Other – $980 ($9.80)

We buy most of our groceries at Costco, so we get an extra 1% back on those. By using my American Express card, I’m not doing too bad compared to borrowing money to put into a high yield savings account. In fact, by the time loan origination fees, etc are considered, I’m probably doing better.

There are other ways you can do better than $40 per month as well. Consulting. EBay. Freelancing. Writing. All of these can earn you more than $40 per week with just a few hours invested. To me, this is a much better return for your time and effort than borrowing money to get a very low net rate of return.

Cheers,

Ken

Phillipians 4:19 And my God will meet all your needs according to his glorious riches in Christ Jesus.

The Housing Crisis – Are you upside down? If you can still afford to make your payments, then keep making them. Are you behind on payments and in danger of losing your home? Maybe your lender would be willing to do a loan modification. Remember that earth is just a temporary home – our true home is elsewhere.

John 14:2 In my Father’s house are many rooms; if it were not so, I would have told you. I am going there to prepare a place for you.

Unemployment – If you are unemployed, I am sorry for you. Realize that there are resources to help you get through this period. It might be a good chance to cut a lot of dead wood out of your life. It also might be an opportunity to find a better job or a better situation than what you had previously. Also remember here is another type of work besides a job.

1 Corinthians 15:58 Therefore, my dear brothers, stand firm. Always give yourselves fully to the work of the Lord, because you know that your labor in the Lord is not in vain.

What if you’re not a Christian? I think the same principle applies – don’t let yourself become overwhelmed. If you do, you short-circuit your ability to deal with the problem. As the matter of fact, I don’t feel you should focus all your energy on just solving problems. Change the way you see your situation. Spending all your time and energy solving a problem solves the problem, but it doesn’t give you a way forward to where you want to go in life, especially when new problems can keep coming at you. Invest in yourself right now. Gain knowledge. Make new friends. Expand your social and professional networks. Look for new and different opportunities. Your ability to connect with others and make adjustments are valuable assets during hard times.

Cheers,

Ken

• You, and you alone, are responsible for your own life
• You control your life; your life does not control you
• You are not responsible for the state of the world, and the world is not responsible for you

Sounds pretty simple, but sometimes it’s hard for me to put into practice. Sometimes things will happen that I don’t like – an argument with my wife for example. I’ll say to myself “she’s too controlling,” then I’ll go out and spend some money just to prove to myself that I still control some things. The problem with that attitude in my case is that it leads to more arguments over money, which leads to more resentment, which leads to more spending, which leads to more arguing, and eventually last time it led to over $17,000 in credit card debt.
Blaming my frustrations on people and events that I can’t control hasn’t exactly been beneficial to myself and my family. I know from experience that taking responsibility for my life has definite, positive results for our family – but it’s still hard work sometimes. I wonder how much better off we would be today if 5 years ago I had insisted on marriage counseling instead of drowning my frustrations in consumption.
Maybe I’ll find out soon. I can see where we were 5 years ago, where we are now, and how much we lost in between. Next week, I’m going to insist on counseling. We’ll see how much better off we are over the next 5 years, compared to how we’ve done over the past 5.

Cheers,
Ken

I disagree with him on one minor point: he says some people have “little access to 401(k)’s or financial planning” which to me implies that these people are unable to invest. I don’t think that is correct. While many people don’t have a 401(k), anyone can open a Roth IRA account with Fidelity or Vanguard and start their own retirement account.

How do you determine what class you are in? It depends on your financial behavior. Do you cut expenses as much as possible? Do you spend less than you earn, saving and investing the rest? If so, then you’ve placed yourself in the Investor Class. On the other hand, if you spend more than you earn, carry a high debt load (especially debt from “anti-thrift” institutions), waste money on lottery tickets, etc, then your behavior places you solidly in the Lottery Class.

Cheers,

Ken