Creating Financial Certainty

Creating  Financial  Certainty

 

We  believe  that  by  eliminating  risk  from  your  financial  model  and  focusing  on  financial  strategies  that  are  not  risk ‐ based  or  market‐ based,  and  by  recapturing  interest,  principal  and  lost  opportunity  costs,  you  will  virtually  guarantee  a  financial  wealth  building  system  “that  always  produces  the  intended  outcome”.

 Every  day,  we  unnecessarily  and  in  many  cases  unknowingly  transfer  wealth  away  from  us  in  the  form  of  what  we  call  wealth  transfers.  Wealth  transfers  consist of  two  parts.  The  first  part  is  the  actual  wealth  transfer  itself  for  example  :  a  property  tax.  Let’s  say  you  own  a  home  that  was  assessed  a  property  tax  of  $2000.

When you  write  out  your  check  and  send  it  in,  you  will  never  see  that  money  again.  It  becomes  a  wealth  transfer,  money  that once was  in  your  checking  account but  now  no longer  is  and  can  never  be  used  for  your  benefit.  But  there  is  an  additional  cost  involved  in  a  wealth  transfer.
And  that  cost  is  the  interest  you  could  have  earned  on  that  money  had  you  been  able  to  retain  it  for  your  use  and  benefit.
Had  you  not  been  required  to  pay  that  $2000  per  year  property  tax  and  had  saved  and  invested  it  at  5%  and  you  had  been  able  to  do  that  for  the  next  30 years,  you  would  have  nearly  $140,000!  The  tax  itself  would  amount  to  $60,000,  but  the  lost  opportunity  to  earn  interest  would  be  $80,000!

Financing  cars  is  another  wealth  transfer.  Every  payment  of  principal  and  interest  transfers potential  wealth  away  from  you.
Car  insurance  is  another  wealth  transfer.  Every  payment  you  make  to  the  insurance  company  is  a  wealth  transfer  with  lost  opportunity  costs making  it  even worse.  The  only  way  we  ever  get  any  significant  money  back  from our  car  insurance  is  if  something  bad  happens  and  I  don’t  think  we  really  want  that.
An  important  point  to  remember  about  wealth  transfers  is  that  they  are  eternal,  meaning  you don’t  get  them,  your  children  don’t  get  them,  your  grandchildren don’t  get  them,  no  one  in  your  family  ever  gets  them.  All  wealth  transfers  accrue  to  someone  else’s  bank  or  retirement  account!
We  believe  you  can  create  greater  wealth,  faster,  by  controlling  wealth  transfers  than  you  can  by  chasing  rates of  return  and  taking  more  risk.
Now  that  we  have  set  the  stage,  we  would  like to  introduce  you to  something  called  “The  Family  Banking  System”.
The  family  banking  system  is  a  unique  financial  strategy  that  teaches  you  how  to  recycle  money.  In  other  words  how  you  can  use  one  dollar  multiple  times.  It transforms  debt,  if  you  have  any,  into  wealth.  It  recaptures  wealth  transfers,  and  their  lost  opportunity  costs.
It  creates generational  wealth,  potentially  in  a  tax advantaged  environment.  And  it  is  a  way  to  transfer  wealth  generationally,  tax  free.

First  let’s  look  at  how  the  family  banking  system  recycles  money.  One  of the  first  things  you  need  to  understand  is  how to  think  like  a  banker.  Bankers  apply  a financial strategy  or  technique  called  “velocity  of  money”.

We  would  like  to  keep  this  explanation  simple  so  for  the time  being  we  are  going  to  avoid  discussing  the  Federal Reserve  and  its  role  in  our fractional  banking system.
Assume  for  a  moment  that  you  have  $100,000  that  you could  deposit  in  a  bank.  And  let’s  further  assume  the bank  was  going  to  pay  you  3%  interest.
On  the  same  day  you  deposited  your  money  with  the bank  they  approve someone  for  a  home  loan  at  6%.
By loaning  them  your  money  at  6%  and  paying  you  3%  the bank  also  made  3%  right?  That  3%  is  actually  what  is called  the  interest  spread.  The  bank  actually made a 100%  return  on  the  3%  they  paid  you.  You  earned  $3000 in  interest  and  they  earned  $3000  in  interest!
But  it  gets  even  better  because  the  new  homeowner  gave  the  $100,000  the  bank  loaned  them  to  the  seller  of  the  home, who  put  it  back  in  the  bank.  Now  the bank  has  the  $100,000  to  loan  again,  which  they  do  to  several  people  who  want  to  buy  cars.  Those car  buyers  in  turn  give  the  money  to  the  dealership,  who returns  the  money  to  the  bank.  Are  you  seeing  a  pattern  here?
Someone  comes  in  for  a  home  equity  loan  to  remodel  their  home.  They  give  the  money  to  a  contractor  who  puts  the  money  back  in  the  bank.
Some people  come  into  the  bank  wanting  to  consolidate  their  debt  and  so  the  bank  loans  them  the  money  to  pay  off  their  credit cards  and  the  credit  card company puts  the  money  back  in  the  bank.
As  you  can  see  the  spread  for  each  of  those  transactions is 3%,  4%,  5%,  8% for  a  total  of 20%  spread.
If  all  those transactions  happened  in  one  day,  the  bank  would  earn  well  over  500%  return  on  your  money!  No  wonder  banks  are  so  profitable.
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July 20, 2014 · Jennifer · No Comments
Posted in: BANKING with INSURANCE, Create Financial Certainty, L06) Tracking Velocity, VELOCITY

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