remove your debtslivelikeabanker.com/wp-content/uploads/2015/04/remove-your-debt… · 12/20/2014 9...

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Remove Your Debts

Copyright 2014 Content and Design, Inc.

• In Session 2 we tightened down your spendingto maximize your Accelerator Margin™.

• In Session we 3 used your AcceleratorMargin™ as premium dollars to capitalize yourPrivate Bank.


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• In this session we’ll methodically use yourPrivate Bank’s cash value to pay off yourdebts, one by one.

• But first we’ll build a solid understanding ofconsumer debt and its effect on you and yourloved ones.


According to CreditCards.com

• Nearly 1 out of 5 respondents to a recentsurvey said they expect to be in debt for therest of their lives. That is double thepercentage who expected that a little morethan a year earlier.


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A recent report from TransUnion

• Nearly one in three Americans age 60 and olderhas debt, and the average balance is more than$60,000.

• That's way up from 2005 when 22 percent ofthose 60+ had debt and the average balance was$40,000.

• Carrying debt payments into retirement obviouslyleaves you less to enjoy life with.


But, even before retirement…

• Being in debt means being vulnerable tounexpected costs or income changes.

• When my finances crashed in the 1980’s, Iremember being stunned when the bills keptcoming as usual.

• I was so stressed, I’d lost my perspective.


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• I was like, “Don’t they know I don’t have anyincome?”

• Of course, the banks didn’t care that I didn’thave any income.

• They still wanted their money on time.

• The pressure was intense for more than ayear.


• And I came to realize that the pressure wasn’treally caused by my temporary loss of income.

• It had been caused by me committing to makefuture payments on debts, as if my incomecould never be interrupted.

• In other words, the problem was the debts,not the income interruption.


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• I had m ademyself vulnerable to an incomeinterruption, by promising away income I couldhave no way of knowing I would always have inthe future. It’s a high risk commitment.

• Now some risks are unavoidable, but there’s noreason to pile more on yourself than youabsolutely have to.


• Being in debt also means missed wealth-building opportunities.

• I remember opportunities to get in onbusiness deals or invest in real estate whenthere was a lot of upside.

• But I couldn’t do it because my income hadbeen promised away to my creditors.


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• And being in debt means being vulnerable tothe economy’s ups and downs.

– You watch the financial news and worry aboutyour employer or your job.

– Or you worry about your 401k investments.

– All because you can’t live without every penny.

– Because your creditors demand every penny.Copyright 2014 Content and Design, Inc.

• And being in debt means being unable toinvest sufficiently to build a secure retirement.

– This is probably the main reason you’re taking thiscourse.

– You see yourself in the 92% who are unpreparedto ever stop working without dramaticallyreducing their lifestyle.


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• The bottom line is that being in debt meansbeing a slave to the banks.

• You live your life in one of their pods, like inthe Matrix movie, working to provide financialresources that the banks end up with.

• And where does all this debt damage showup?


• In your marriage.

• In your stress level.

• In your health.

• In your children, and the example they follow.

• In your retirement – its proximity and itsquality.


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Time to downloadyour worksheet


• We’re going to look at the major areas youmay be in debt, and how bad the effects are.

• Remember, the effectshows up as yourcurrent financial circumstances.

• The causewas signing up for each debt alongthe way.


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Major damage – your mortgage

• A $200,000, 30-year mortgage at 5% fixedinterest rate.

• You will pay $386,640 in total payments

• That’s $186,640 in interest alone!

• Do you think you could find a better use foryour $186,640?


But wait. Before you answer that…

• Evenly dividing the $186,640 of interest across the 360months of the mortgage would give us $518 a month ininterest cost.

• By comparison, investing $518 a month for those same360 months at 5% return in your Private Bank’s cashvalue, would grow it to $431,110!

• But that’s not the worst of it.

• From a $186,640 loss to a $431,110 gain would giveyou a $617,750 swing in your ultimate wealth!


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Here’s the truth about mortgages

• A Mortgage Is Not…

– A good investment

• Investments pay you money.

• They shouldn’t cost you money.

– A 4, 5, or 6 percent loan


• A Mortgage Is…

– A 77 percent loan

• Just look at your payment statement!

– Calculate what percentage of your monthly payment isgoing to interest versus principal.

• Every time you move or refinance you start over!– Interest charges are the greatest in the first decade of a new

mortgage.


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Here’s some more mortgage damage

• Home equity loans and lines of credit.• Home equity is – for most people – the majority of their

accumulated wealth.– You should be extremely careful about trading equity for

home improvements.– You certainly don’t want to surrender this wealth to buy any

depreciable asset, like cars, boats, and other stuff that’sworth less every day.

– Do not surrender home equity to buy any speculative asset.– Do not surrender it for a child’s education.


More damage – credit cards

A $2,000 Furniture Purchase

• M aking m inim um m onthly paym entsat17.2% interest,you’llpay $1,557 in interest alone!

• Itw illtake11years,1month topay offthebalance.• You w illpay atotalof$3,557inpaym ents.

W hatdoyou thinkthatsofaw illlooklikeafter11 years?


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Here’s the truth about credit cards

• A Credit Card Is Not…– Free money

– Extra cash

• A Credit Card Is…– An income stealer

– A wealth siphon

– Consumer cocaine


Paying off your credit cards

• Priceless!


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Here’s more damage – car payments

• Paying an average $350 monthly car payment,over your 40 year working life adds up to$168,000.

• But if you had invested the $350 a month at5% return instead,

• You’d end up with $534,107


• So buying cars with money borrowed from abank – whether that’s directly from a bank orthrough the dealer’s financing office – willcost you more than a half million dollars inlifetime wealth!

• That half million dollars will not be available toyou in retirement.


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• So, how do you drive to work?

• We’ll show you how to buy cars through yourPrivate Bank in the next Session.


OK…who’s causing all this damage?


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Remember the Coalition of Four?

• The Advertising industry

• The Media

• The Merchants

• The Banks


Let’s review how the Coalition works

• The Advertising industry, Media, andMerchants are all beholding to their Bankingindustry partner for supplying loans to thesebusinesses and credit cards and auto loans tocustomers of these businesses.

• The Bankers are in the Coalition driver’s seat.


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• They use the other 3 partners to create moreborrowers.

• The Advertising industry and Media aretasked with making us desire the new stufftheir Merchant partners are serving up.

• It doesn’t matter whether or not we need it.

• They know exactly how to make us w antit.Copyright 2014 Content and Design, Inc.

• The Merchants are simply tasked with comingout with new versions of “stuff,” so we can beconvinced that we need the new versionrather than the current version we alreadyhave. It’s called “planned obsolescence.”

• Often Merchants will just recycle old stuffthey sold us years ago.


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The Bankers stand in the shadows

• They wait patiently until their Advertising andMedia partners manipulate us into spendingall the money we make on the latest versionsof the “stuff” and experiences Merchants areshoving at us.


When our income is used up

• The Banks – usually through credit cards, cardealer finance offers, mortgage brokers, etc. –step up and say…

• “Poor baby! You mean you don’t have anymore money to buy more stuff? Well, we’lllend you some of ours…for a sm allinterestcharge.”


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• But, over time, those “small” interest chargescan add up to a large enough piece of yourlifetime income that it can rob you of yourability to ever comfortably stop working.

• This is chiefly why 92% of Americans will neverbe prepared to retire!


• Remember the $186,640 of mortgage interestthat actually ends up costing you $617,750 offuture wealth?

• You can’t be gushing this kind of money out ofyour life and ever expect to enjoy your post-employment years.


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Think of debt this way

• Imagine your household as a business andyour household income as your business’revenue.

• When you take on a debt of any kind, you aretaking on a partner in your business to whomyou are promising a piece of your business’revenue every month.


• If you take on enough partners, you becomethe just a junior partner in your ownhousehold business.

• Take on a few more credit partners and youbecome nothing more than the bookkeeper.

• Your household income now belongs to yourpartners, not to you or your loved ones!


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So let’s fire your debt partners!

• We’re going to use your Private Bank as apipeline to pay off your debts.

• Because this will allow you to eliminate yourdebts and build wealth with the same dollarsat the same time!

• It’s what I call the “Magic Bean.”


But before we eliminate debts

• We need a better understanding of how theloan facility in your Private Bank policy works.

• It’s at the heart of how your specially-modified policy will function like a bank.

• We briefly discussed this in the last session.

• This time we’ll take you through the process.


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Your Private Bank

Deposits(Premiums)

Full cash valuecontinues toearn interestand dividends

InsuranceCompany

Loans andRepayment

Fin

anci

ng

Wealth BuildingCopyright 2014 Content and Design, Inc.

• You’ll remember that your Private Bank has twosides:– The wealth building side– And the financing side

• Wealth building within the policy happens as yourcash value earns interest.

• Plus, annual dividends, which are calculated onyour policy’s death benefit, are also paid into yourcash value and compound along with the interest.


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Deposits(Premiums)

Full cash valuecontinues toearn interestand dividends

InsuranceCompany

Loans andRepayment

Fin

anci

ng

Wealth Building

Collateral

Your Private Bank


• Meanwhile, you can borrow against yourpolicy’s cash value whenever and for whateveryou choose.

• You borrow from and repay directly to theinsurance company, not from and to your cashvalue.

• Your cash value is simply used as collateral.


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• This means your cash value is undisturbed,and can grow with interest and dividendsirrespective of your borrowing and repaying.

• Since both the wealth building and financingsides are components of your Private Bank,this means you can borrow out money to payoff a debt AND leave it in your bank to grow.


• This is the “Magic Bean” I told you about in thelast session, using a $100,000 loan example.

• Let’s say this policy loan was taken out to payoff a $100,000 mortgage balance.

• Over 10 years, the $64,701 earned in your cashvalue covers the $27,268 of loan interestcharges with a $37,433 profit left in your bank?


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• This is paying off debts AND building wealthwith the same dollars at the same time.

• We’ll go through a few examples of how itworks in a moment.

• But first, let’s see how easy it is to get yourmoney out of your Private Bank.


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An typical Insurance company’s process


• Lafayette Life Insurance is a highly ratedinsurance company that many Private Bankagents use to build these policies.

• We use Lafayette.

• Once you have a policy, you can log in tocreate a profile which connects to your policyinformation.


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Once you’ve created your profile


• I’ll use my policy login as an example.

• My policy name and number are a link on theright side of the page.

• If I had more than one policy, they’d all showup here.

• I just click the appropriate policy link.


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How much do you need?


• That would take me to my Policy Values page,which would show my death benefit, myAllowable Loan Value, and my Net CashSurrender Value.

• The important number for banking purposes isyour Allowable Loan Value.


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• It represents how much of your cash value iscurrently available to borrow.

• It is a few percent less than your full cashvalue, minus any outstanding loan balances.


• So it starts out as nearly your whole cash value,and is reduced when you take out a loan, becausethe amount of the loan is marked as “Being usedas collateral.”

• The amount is not removed from your cash value.

• It’s just not available as collateral until it’s paidback.


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• But this means that every time you make aloan payment back to the insurance company,that amount of tied-up collateral is releasedback into your “Allowable Loan Value.”

• When you want to take out a loan, there’s noapplication process or qualifications.


Just type in the number and hit submit


And the money shows up a few business days later in yourlocal bank account.

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• OK, it’s time to use this powerful system topay off your debts!

• And let’s start by saying something thatshould be obvious.

• If you want to become debt free, STOPADDING TO YOUR DEBTS!


• You can’t lose weight if you keep shovingdown pizza and ice cream.

• And you can’t pay off your debts if you keepadding to your debts.

• Over the years we’ve heard all the excuses.

• Just look the older you in the eyes and see ifyour excuse floats with them.


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• OK, let’s get started using your Private Bank topay off your debts.

• And to be sure we’re accurately focusing onyour debts, let’s identify them.


Debts are expenses that can be paid off

• Credit card payments

• House payments

• Car payments

• Department store payments

• Equity loan or line of credit payments

• Student loans

• NOT monthly living expensesCopyright 2014 Content and Design, Inc.

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• Step 1 in the payoff process is prioritizing yourdebts in payoff order.

• Download your Debt Prioritization worksheetfrom the Session 4 Lesson area.

• It’s available both as an Excel® spreadsheet and ablank PDF file you can print and then fill out byhand.

• Here’s an example filled in.


Step 1: prioritize your debts

Download DebtP rioritizationExcel spreadsheet or PDF from Session 4 Lesson area


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• First enter all your debts with their currentbalance and monthly payment.

• Then simply enter a “1” in the Payoff Prioritycolumn across from the debt with the lowestbalance.

• Enter a “2” across from the next-lowestbalance and so on through all your debts.


Step 2: monitor your Bank’sAvailableL oanValue

• When it’s enough to completely pay off your#1 priority debt.

• Take out a policy loan and pay the debt in full.


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Step 3:

• Take the payment you had been sending tothat debt and make that your monthlyrepayment to your policy loan.


Step 3:

• Now continue monitoring your AvailableL oanValuemonthly.

• When there’s enough to fully pay off thepriority #2 debt, take a policy loan and pay thatdebt off in full.


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• Then take the payment you had been sendingto that debt and add it to the monthly loanpayment you’re sending to the insurancecompany.


• Continue this process of paying off eachsubsequent priority debt when your AvailableLoan Value is sufficient.

• And add each paid-off debt’s monthlypayment to the monthly payment amountyou’re sending to the insurance company.


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• Do this until your debts are paid off.

• Adding the payments of paid-off debts to yourpolicy loan repayment amount is where thecascading or snowballing happens when usingyour Private Bank to pay off debts.

• Your loan repayment gets larger and larger,accelerating the payoff of the remaining balance.


• During this process, remember that 2 thingsincrease Available Loan Value.

• (image)


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Allowable Loan Value


Allowable Loan Value(Cash Value minus about 5%

reserve minus any unpaidloan balances)

PremiumpaymentsincreaseALV by

increasingCash Value

Loansdecrease

ALV bylocking upCash Valueas collateral

LoanpaymentsincreaseALV by

releasingcollateral

• Paying your premiums increases your AllowableLoan Value by increasing your Cash Valueavailable to be used as collateral for future loans.

• And making loan payments increases yourAllowable Loan Value by releasing Cash Valuedollars that had been assigned as collateral forprevious loans.


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• Let’s say you have $10,000 in Available Loanvalue, and you take out a $5,000 loan.

• That would mean your Available Loan Valuewould be reduced to the remaining $5,000.

• Then let’s say you add $1,000 to yourAvailable Loan Value by adding more cashvalue through premium payments.


• And then let’s say you repay $1,000 on yourloan balance.

• Your Available Loan Value would increase from$5,000 to $7,000.– $1,000 came in through the premium door.

– And $1,000 came in through the loan repaymentdoor.


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• And remember that all this happens withoutchanging your cash flow.

– You’re already making your premium payments.

– You’ve been making your debt payments all along.

– And when you pay off each debt, that debt’spayment amount is just redirected to theinsurance company.


• And even though you’re taking outconsiderable amounts to pay off your debts,every penny you’ll ever put into your PrivateBank cash value will remain in there earninginterest and dividends…as long as you live!

• Your money is paying off debts and buildingwealth at the same time!


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• By the way, since loans are not taxable, you’llowe no income or capital gains taxes on themoney you’re taking out to pay off your debts.

• And when your death benefit is eventuallypassed to your heirs, that event will also be taxfree!*– * If your estate is less than $5.43 million for an

individual or $10.86 million for a couple.Copyright 2014 Content and Design, Inc.

• One more important feature of policy loans isrepayment flexibility.

• If you can’t make part or all of a payment in agiven month, just don’t.

• No one will chase you or report you to thecredit bureaus.


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• The insurance company will simply add theunpaid interest to your balance and life goeson.

• Resume your payments as soon as you can.

• And there are no penalties for prepaying yourloan balance.


OK, let’s see how debt payoff worksthrough a Private Bank


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• This is an example of a “Debt Input” form youwould receive from us, or from one of ouraffiliated Private Family Banking™ Partners.

• When you give us this information, we canperform an analysis that will show your currentdebt payment breakdown, including how much ofyour total monthly payments are going to interestcharges. We call this a “headwind analysis.”


• If you’re working with an agent who is notaffiliated with us, they may or may not offerthis proprietary debt-elimination analysis.

• Here’s an example of a headwind analysis.


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Almost half their monthly paymenttotal is interest!


Principal Interest

• In this case, the headwind or money lost tointerest each month, is nearly half of their totalpayments.

• This real-life example includes more credit cardsthan held by the average consumer, who has 4cards according the latest Census data.

• However, the percentage going to interest – theheadwind – would be similar regardless of thenumber of cards.


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• This is a high cash flow example, where thePrivate Bank policy holder had run up a lot ofconsumer debt, but they also had $2,000 amonth available for premium.

• The point is that their debt was proportionate totheir income, which is almost always the case.

• And the headwind or interest percentage wouldbe even higher if a mortgage was included.


Paid offin 4 years1 month!


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• Even with more than $130,000 of consumer debt,their Private Bank was able to pay it all off in just4 years and 1 month!

• And keep in mind that every penny that went intotheir Cash Value – to then be taken out to pay offthese debts – is still in their Cash Value earninginterest and dividends…and will remain their forthe rest of the insured person’s life!


• Now let’s look at another real-life examplewhere the policy holder was able to pay $500monthly premiums, and add some dollars atthe front end out of their savings.


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9 years to complete debt freedom


• This example DOES include a mortgage.

• The first 5 ½ debts in their prioritization arepaid off in year one because of the largepremium including some from savings.

• 3 more debts are paid off in year 2.

• And the mortgage is paid off in years 3-9.


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• So this household is completely debt free injust 9 years.

• They’ll have no debt payments of any kind inretirement.

• And they’ll know they can stay in their homeas long as they live.


• Now if you have a home mortgage, there are afew questions to ask yourself before decidingto pay it off through your Private Bank ratherthan using the money you freed up frompaying off your other debts to build morePrivate Bank cash value.


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1. Your home’s market value stability.

2. How long you intend to live in your home.

3. The value – to you – of liquid cash versushome equity.


1. Your home’s market value stability

• Real estate is a market, like the stock market.

• A market is a transactional environmentwhere buyerslargely determine sale prices bywhat they’re willing to pay.

• Prices in a market can go up AND down.


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• So before paying off your mortgage, understandthat you would be using Private Bank cash valueto buy your home’s remaining equity from themortgage bank.

• The value of that equity could go down.

• You’d be trading cash value that only goes up forequity value that could go down.


2. How long will you live there?

• If you know you will sell your home and movein the future, it may make more sense tomaintain regular mortgage payments whileusing your Accelerator Margin™ to build liquidcash in a Private Bank that could be used fordown-payment and other relocation expenseswhen you move.


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3. Liquid cash versus home equity

• Try taking a shingle or brick from your home tothe local supermarket to buy food.

• Home equity is captured wealth.

– To turn it into cash you have to get a home equityloan or sell your house.

• Private Bank cash value is liquid wealth.

– It’s available with the click of a mouse.Copyright 2014 Content and Design, Inc.

• It’s really a personal and often emotionaldecision when it comes to paying off yourhouse through your Private Bank.

• It depends on which direction would give youthe most peace, now and in the future.


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So, let’s summarize

• In this session we methodically used yourPrivate Bank’s cash value to extinguish yourdebts, one by one – while simultaneouslybuilding your wealth in your cash value.

• We also reviewed how the Coalition of Fourmanipulates you into consumer debt and howthat affects you and your loved ones.


• We covered the 3 steps to using your bank topay off your debts:

1. Prioritize your debts from lowest to highestbalance.

2. When your Allowable loan value can pay off thelowest balance, take out a loan and pay off thedebt


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3. Redirect the paid-off debt’s payment to loanrepayment back to the insurance company.

• We gave you a couple real life examples ofdebt payoff schedules.

• We discussed the issues to consider whendeciding whether to pay off a mortgage.


• So now it’s time to consider whether a PrivateBank is the answer you’ve been looking for topay off your debts and safely build yourwealth.

• If you don’t personally know a life insuranceagent that represents the right kind ofcompany and knows how to engineer abanking policy…


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Contact your Private Bank Agent

• Their contact information is at the bottom ofall the emails associated with this SMARTcourse.

• They’re a trained and state licensedprofessional

• They’ll custom design a Private Bank for yourconsideration at no charge.


Enjoy the Session 4 bonuses

• Audio: Debt – Your Biggest Obstacle toWealth.

• Audio: Whose Wealth are You Building?


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In Session 5

• We’re going to explore how you can TransitionInto Investing Like a Bank.

– We’ll see what banks invest in.

– How they enjoy a lower risk profile.

– How they stack their investment returns.

– Why they always win.


remove your debtslivelikeabanker.com/wp-content/uploads/2015/04/remove-your-debt… · 12/20/2014 9...

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