Cash Flow Banking Explained Simply / Garrett Gunderson

the game is freakin rigged against us you know I mean it sounds so like intense but the reality is you could save and scrimp and delay and you could put your money away for 30 years and you do everything that you've been taught to do thinking it was alright and it turns out to be wrong let's put more money in your pocket increase your financial IQ and create more peace of mind clarity and certainty in your life welcome to money matters a weekly segment of the wealth lapse podcast where we tackle the money topics that matter it's too late you're now supposedly going to be in retirement it was supposed to be a dream it turns out to be a nightmare interest rates might not have cooperated taxes might rise inflation might confiscate your purchasing power but there is an alternative there's something else you could do and as you can tell I'm really passionate about it because I'm tired of people feeling this pain I'm tired of people not becoming economically independent thinking it's 30 years when it's 3 to 7 thinking that they have to have their money in a taxable account think that they have to just take whatever the stock market gives to them and if it's risk or lost then you just wait for the long haul the long haul sounds terrible instead Dell Clarke the human ATM is gonna teach you about cash flow banking this has been my just my framework that I unintentionally started to a certain degree at age 19 and it has never failed me it's been the way that I've capitalized buying a company putting in a TV studio paying off high interest rate loans funding my first New York Times best seller and then it's a place that I can go store it again that I burned around 5% without having to pay tax so it's outperforming my savings account because it's the same thing the banks do when you put money in there's they take a percentage and then they just put it in the same place why not cut out the middleman so that you can get those returns and then you can have that safety so Dell tell us how we do it so cash flow banking is just a more elegant simple system to help you not only capture wealth but also you know create wealth and so you get a well capture account which is the savings account right pay yourself first into that that starts to build up but instead of leaving that taxable and exposed right we're just gonna have automatically move to another account you have the opportunity to put that in a different account and the account makes four to eight hundred percent higher rate of return that you might be getting in a savings account we use a very specifically a specific type of product called a whole life insurance policy it's a permanent life insurance policy now again 90% of a mark designed properly than right at work they're gonna be too slow it's got to be designed properly let's talk about right and you know talking about improper design before I even met you Garrett my dad set up a policy I mean it was an in I think was a universal life policy variable universal life and after about owning it for a couple years he handed over to me I got married I moved to Michigan and he's like hey Dell here's this present for you and being young and naive I didn't know what to do with this and so I'm like well this is a perfect thing to buy myself a big-screen TV and so I cashed it out and I bought a big-screen TV and you would not believe how mad my dad was because he'd been saving for years and years and he's like working so hard for you doing right so that's not the right way to do that I was being a spender in that moment right there um but yeah the Craig you know setting up the specifically type you know specific type of life insurance the banks use that institutions use called over funded whole life insurance allows you to boost your returns by four hundred eight hundred percent it allows you to have asset protection on that money it allows you to have flexibility so that you can contribute more or less depending on you know certain situations that you're in how it's designed correct this is how it's designed and you can access that money to 50 men in half there's no penalty you can there's multiple ways to access that money correct so there's a couple different strategies to access the money one of which is you know the flat-out withdrawal and it's not a strategy that we typically recommend but you know if you ever wanted to go and take money out of a policy and never put it back in you could withdraw the money the downside to it is it could be a taxable event yeah any money goes into going into it above the basis becomes taxable yeah and you can't put the money back in with a withdrawal look I actually wrote a book on this and if you just you're gonna want to just click where the arrow is and grab this book for free now you'll pay the shipping and handling but it's minimal like very miniscule amount but I'll cover the cost of the book so that if you want to dive into this we're gonna talk about it here but if you want more information on it because this is gonna be maybe 10 or so minutes on it that will give you kind of like your own pacing right so the other way to access the cash in the account is through taking out a policy loan and when you take out a loan you're not actually take you're not actually borrowing your own money you're borrowing money from the insurance company and my name is calab and your money and your money is collateralized you know collateralized by your credit score just matters how much cash is in the policy you don't have to go through a loan application there's no credit check payback period that's firm that you have to do either correct yeah exactly so and the money that when you take out a loan there's no taxes on the loan there's no penalties now there are situations where it could be taxable on the loan if you step above a guideline called the modified endowment contract so much of our funding beyond what the government really wants you to be and people used to do that back in the 80s and 90s where doesn't matter back this yeah they could put in a million bucks and have it grow all tax-deferred and really loaning it out tax-free and the rules changed a little bit that's right a bit abusive right so we're talking about instead of having money in a savings account cut out the middleman of the bank put where they put some of their reserves which is this overfunded higher cash value life insurance that once it earns interest it's locked in as a minimum guaranteed it has depending on the state you're in 100 percent liability protection or partial liability protection in bankruptcy or lawsuit and it's available or accessible either because you just take a withdraw or you get a loan and that you could always pay that back on your own terms or if you die the death benefit will tax-free pay it back and let's talk about that for a second because typically when you think of a loan it's a four-letter word but the reality is that when you take out a loan against your life insurance policy it's an unstructured loan meaning you have full you know control over when you trap a doctor or you may not even decide to pay it back you you when you borrow don't you set up a schedule so I usually set up a schedule where you know if I borrow a hundred thousand dollars I'll just do an amortization over five years and pay back a certain amount of dollars every month we're all like this go oh I just sold the cabin let's go ahead and put some money back in the cash values from borrowing to buy the other cabin right I'm more just like when there's a windfall of money you're more of a structured way of doing it money personality do whatever works for you there but yeah that's that's the really nice thing about this is because there's no structure to the loan it can be dangerous if you don't repay the loan if you you know end up using all the cash value and then the policy will require another premium it could collapse on you and so it's important that you you know stay with you know above a certain threshold typically you can borrow up to 95 percent of your cash in the account so if there's a hundred thousand you can have access to about 95 but the other 5% you got to leave in there just to make sure that the policy doesn't one of straights change or the economy or there's a major opportunity right where opportunity really comes is when people are focused so heavily on their net worth and trying to build it and neglecting cash flow they eventually when there's a tough economy have to cash out that net worth of that asset to cover their cash and they have to sell it at a discount well you could actually pull your cash value out because it's not gonna go down during a downturn and capitalize on that so I've done that I bought remnant rate which is it was full-page ads in New York Times and Wall Street Journal for killing sacred cows at a major discount because I nice at because of the timing and through that remnant so that was an example or in 2014 there's an opportunity to buy a business that was in distress that actually increased capabilities of my main business so like I was able to pull that cash value out pay it back when I wanted to I was able to negotiate a better price on this newest cabinet I bought because I hated cashed out of the policy so I look at it as if I don't touch it for years no problem because it's just the opportunities aren't right but I'm still getting a good return through my dividends but if there is an opportunity it's there well it's just a much better place just a better place and let me be clear about this cash flow banking is not the name of the life insurance policy no it's a it's the whole system and so the system includes finding and fixing your money leaks understanding your money personality setting up your proper account structure having live living wealthy and wealth capture accounts so it's the whole system that allows you to be more elegant and you know have more control over your finances the vehicle that we use in this particular strategy is called a you know whole life insurance and there's a lot of you know negative information about whole life and I think a lot of its merit because it's either not designed well it's high commission the way it is it takes forever to get cash it's with the wrong companies or just a lot of people not understanding what's going on because there's something else priced cost and value price is what we pay it's the price tag cost is the economic impact so something can have a high price in a low cost like the right accountant is the best example they might save you way more tax even though you pay twice as much than another but it saves you 10 times more in tax and then value is our overall fulfillment joy perspective you know that we personally get from it so when I think about it yes whole life is gonna have a higher price tag than term insurance but we're not looking at something that's just gonna be temporary and go away we're looking at something that's gonna be permanent and then it's creates a funding structure for cash value correct right I mean you can travel from Utah to New York on a bike and it's gonna be a lot cheaper to buy that bike than buy a nice first-class plane ticket but it's gonna take you a whole heck of a lot more time to get to New York and so price and value are two different things so many other sentiments or statements around cash flow so I would just say that this is a tool that you want to consider as part of your financial plan this is not the only piece of it we highly recommend that you're you are your best investment that you invest in yourself and your business but you when you make a lot of money you got to have a place to store that cash there's got a way to take business wealth and make it personal wealth it's something that whether you're a business owner or whether you're a college student or whether you're me at nine years old can start I started at 50 bucks a month oh my god I started yeah right so I think I started at 600 bucks a month so yeah well thanks for one-upping me yeah you bet look the bottom line is we want you to take back control of your personal finances and make it personal good we want you to have a system to capture wealth and create it with less risk and more certainty so that you can build and live a life that you love [Music] you [Music]

Channel: Garrett Gunderson

Views: 61,171

Keywords: Garrett Gunderson, Wealth Factory, Wealth Building Strategies for Entrepreneurs, Financial Freedom, Financial Independence, Getting to economic Independence, what would the Rockefellers do, business, success, entrepreneurship, Robert Kiyosaki, Matt Clark, Ryan Daniel Moran, Tim Ferriss, Grant Cardone, Cash Flow Banking Explained Simply / Wealth Labs Podcast With Garrett Gunderson, Cash Flow Banking Explained Simply

Id: EVoqtxnHiKk

Length: 10min 33sec (633 seconds)

Published: Wed Jan 15 2020