There’s a really good chance that on a monthly basis you have money that is mindlessly leaving your accounts with no real purpose in your financial plan. I’m not talking about the Hulu account you haven’t used in 8 months or the impulse decision to get that new pair of shoes either.
(Though if it’s an issue, you should definitely consider those as well!)
Instead, I’m talking about places that you have so routinely let your money go without second thought. There are 5 such places we look at when trying to help our clients properly fund their investment strategies and or infinite banking policy.
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In our last post, we gave out a PDF that included all the questions you need to ask your agent (if you are already working with somebody else) to make sure you navigate the lies and misunderstandings to get the very best policy.
In this post I will walk you through how you can find inneficient funds to contribute to your infinite bank without changing your current cash flow.
Let's get started with...
1. OVER PAYMENT ON DEBT
The first place that we look is at over payment on debts. Roughly 80% of Americans carry debt. (source)
Though some are leveraging debt to build wealth, most are actively pursuing a way to get out of it or at least have a desire to.
For a large percentage of the people that I have worked with, this attempt looks more or less like adding extra money, above the minimum payment, to some of their debts on a regular basis, particularly the debts they cringe at having.
Few people are doing this with a methodical approach. Most simply do what they think is best and then leave it at that. A lot of people don’t have goals for when they will eliminate their debts, they don’t really know if what they are doing is even best, but I have to give them credit, they are trying and that’s better than nothing.
Now, if you’re reading this post, I can only assume you’re probably above average. You may have a timeline, you may even have a methodical approach. But even at that, you may not be doing what is the very most effective for your financial picture as a whole.
If you’re looking to fund an infinite banking policy, or really even if you’re looking to get out of debt more effectively, I’d recommend you assess all the debts on which you are currently paying more than the minimum.
A lot of people will round up that $43 minimum payment on their credit card to 50 or $100 each month and will also put an extra $225/mo on their car payment and maybe another $500 on their mortgage.
I have seen a doctor who was throwing money in every direction, he had an extra $4000 every month being spread across his 8 different debts with no real plan. In many cases this money can be put to better use!
You may be saying, “..but Brody, I want to get out of debt!”
I would agree with you, I want you to as well, but let’s go over some numbers and see if there’s a more effective way for you to do that either within an IBC policy or simply by targeting one specific debt at a time.
I’ll be doing a video accompanied by a post in the coming weeks where I’ll give an exact example of how we show people how to use infinite banking policies to systematically get out of debt. We have a pretty nifty report we generate to show people the exact dates they’ll be out from under each and every one of them.
Most people are pretty surprised by their results!
2. DUPLICATE COVERAGE
If infinite banking is something that you are confidently proceeding with and you already have some existing life insurance, it may be providing you with unnecessary duplicate coverage.
You may already have a policy that is costing you a couple hundred dollars a month and is no longer needed.
I want to be clear, do not assume that your infinite banking policy should replace your existing life insurance, but do look into it. It’s not uncommon that with your new policy the other one becomes unnecessary, though it can also depend on your intentions with infinite banking.
You want to remember to consider your death benefit minus what you may possibly have loaned out at all times when considering if the new policy is enough coverage for you to be fully protected.
Ideally, this isn’t happening because of proper planning prior to committing to a policy of that amount, but life does happen and knowing the flexibility is important to plan for the unexpected life events that happen to us all.
3. DISCRETIONARY INCOME
In college, I fell in love with a principle known as Parkinson's Law. Parkinson's Law simply states that the work required to complete a task will take as much time as the time allotted to complete it.