Wealthy People Never Skip This Rule for Financial Control

Speaker C: 00:00:00

Welcome to make youe Wealth Work, the podcast where wealth becomes your greatest ally in achieving your dreams. Hey, guys. Welcome back. You're listening to the second part of last week's episode. Let's jump back in.

Joe Pantozzi: 00:00:14

If you're creating value for people, if you have a good business model, if you study to improve yourself and your skills and your gifts and your vocation every single day, if you seek to improve the lives of your clients, if that's the.

The vernacular I could use, if you're trying to do the best you can and more for clients, then why would you ever be afraid of not having enough to capitalize tomorrow? Because if your model works, then it's going to continue to work. If your model's not working, you need to change your model.

Curtis May: 00:00:51

Right? Right. And to be clear, when we say capitalization, I think I've heard in another talk, don't be afraid to pay premium.

I want people to understand what we're talking about here. Is that what you mean or is that part of it? Capitalize means save, right? To put it today, I said capital.

Last night I was doing a call, I was doing a webinar, and I said, look, I want to say capital. I mean, and I put in a parentheses money. Because I want you all to begin to use the language of money.

Joe Pantozzi: 00:01:24

You know, people who may be in a different category, let's say somebody who's a W2 wage earner, somebody who's an employee who works for someone else, they might use the word cash, you know, but people who own a business, Curtis owns a business, I own a business. We own several businesses. People who are business owners, you know, we're very sophisticated and we don't use the word cash. We use the word capital.

Right? But guess what? It's the same thing.

And yeah, since my thinking process has been taught to me very, very prominently by Nelson Nash in the last 25 years, where he's taught us that if you're controlling your own banking system and your capital is available to you inside your life insurance policies, and you can access that virtually at will with nobody else's permission, and you're able to obtain the best borrowing rate on the planet, which. Which contains several features, number one, it's on demand.

Number two, you don't need anybody's permission, you don't need a FICO score, you don't need a credit application, you don't need a loan committee. If you have capital, you can borrow against it. The other another thing is you can take an interest only loan.

Interest only at A fixed rate that you know in advance, and that rate and that policy will be fixed at your option as long as the policies in existence, which could be 50, 60, 70 years depending on your age. Right. So you're in control of that capital.

If you knew that you had this availability of capital, then the more you capitalize your policies, the more assets you can obtain, you can invest, businesses you can build. What is the amount? Or I should say it this way, how much of a limitation do you want to have on your capital?

Well, for me, the answer is there's no limit on the amount of capital I want to build. And Nelson taught us there is hypothetically a time where you can actually be putting 100% of your net income in your policies.

Now, I haven't reached that, but I'm pretty close. Or let's say I'm above 50%, but who cares if you're at zero right now? You want to get to 5% right away and 10 and 15 and 20.

How much of your capital you want to control? I want to control all of it. I don't want to have to go to institution.

I don't want to have to take a margin loan where the rates would fluctuate or could fluctuate wildly and my margin loan could be impacted by what the market's doing. And I may have to have a margin call and write a check for 30 grand next week to cure that loan to value ratio. Right.

It's capitalizing like Curtis said, in premiums in an account or multiple accounts where you can control all the pieces and all the attributes of that thing.

Curtis May: 00:04:36

Control is key. You know, wealthy people want control. So if you want, if you, if that's your, the outcome, then you have to do what they do.

And they want, they understand and they want control. They know where the cash flow is. I have people say, well, I don't know where my money goes.

And okay, if, if, if you were, if I was going to buy stock in your family, your company, would I want to invest in you. And you don't know what's coming in and what's going out. That's not a good bet. But that's how most people run their corporation.

You know, I tell people you're the CEO of your life and that's your responsibility to know where your money's going and to be a good student of your resources, to expand your resources. That's all we're talking about.

Joe Pantozzi: 00:05:23

So let's talk about, let's pivot on that. On the topic of control.

I Think that rule number three from Nelson, which is don't steal the peace, I think is one that people really resist because they figure if I pay cash for everything, like some financial entertainers are saying, if I pay cash for my cars, if I eventually pay my house off, if I pay cash for my vacations and the things that I want to buy, my, my next fourplex that I want to want to own for income, if I only pay cash, then I'll have control. But what happens when you pay cash in that way, what you're giving up is the earnings that you could have obtained had you invested the money.

So I guess a basic premise of the infinite banking concept is we're creating two assets. We've built up a capital account and a capital, a base that we can borrow against anytime we have equity in that capital account.

Now we can use that to pay down debt. We call it recapturing debt. I haven't financed a family car in over 20 years with an outside lender.

I've only financed it with my family bank or my family banking system or my family fund, if you want to call it that.

Because I write a check at the dealership and then I come home and I set up an amortization schedule and I pay myself back, not only interest rate that the insurance company charges me, very often I pay an excess amount, which is my profit, to my family bank.

So I'm saying if you're not going to steal the P's, what you're doing is you borrow against your account which is growing all the time because you're capitalizing on all the time.

And now I'm going to take a loan, I'm going to buy another asset, hopefully a cash flowing asset because I've gotten past the point where I've learned to recapture all my debt and I don't have any debt outside. All the debt I have is good debt owed to my own family banking system.

So I've got my family banking system and I have new assets that I'm buying and leveraging and collateralizing and financing with my family banking system. I've got my banking system, my life insurance policies, equity therein, cash values there which are growing and guaranteed and always accessible.

And I have the new assets that I'm buying without that system. Without that dual system, I only have one asset, which is the asset I'm buying by paying cash.

I'm giving up the delta, the excess earnings that I'm building up in my life insurance policies. And if I'm only paying cash, I'm giving up lost opportunity cost. If I'm borrowing from a bank, then the bank is making profits.

Curtis May: 00:08:21

You know, people don't. What I'm finding is people don't really understand opportunity costs.

And so in the book Nelson, one of the ways he says that, he says, look, you finance everything you buy.

Joe Pantozzi: 00:08:32

Yes.

Curtis May: 00:08:33

Right. Because you either pay cash, I mean, I'm sorry, you.

You borrow from somebody else and they understand, they understand they're paying interest, use other people's capital. But what they you don't get is when you pay cash, all that means is your self financing it and you giving up interest. You could be earning.

Don Blanton would run and say a joke. He would say, you don't like paying interest, but you must not like earning it either.

Joe Pantozzi: 00:08:59

That's good.

Curtis May: 00:09:01

And so componentials works best over time, uninterrupted. But you got to put it somewhere where you can use it. It still grows.

You can do either buy a major capital purchase like a car, tuition, estimated taxes, or opportunities, preferably to make new cash flow. And it's like the third lesson in rich dad, poor dad is mind your own business, which is your asset column. And so what, I extrapolate from that.

So listen, once money hits your asset column, never let it leave.

But you have to capitalize so that, you know, I said, look, if you had a hundred thousand dollars, $200,000 cash that you had access to, what could you say no to? And the flip side is that what could you say yes to? But you got to think long range. So they build on each other. You got to be. You got to.

You can't be afraid to capitalize. And you've got to stop stealing from yourself, you know, because people resent the discipline.

Feels like, oh, if I gotta, if I borrow against this, I gotta pay it back, you know? Yeah, dummy, you gotta pay it back regardless.

Joe Pantozzi: 00:10:10

So I stop resenting. I put it this way.

I want you to learn the virtue of paying yourself back, which also involves paying another financial institution, which is now your financial partner. Life insurance company becomes, in my view, a friendly partner because they're interested in your success. The bank could care less. Right?

But the thing is, if I have a car loan with bank of X, I'm making my car loan diligently on time every month because I want to honor my commitments number one and number two, because I want to keep my credit score clean. And so what I say is you're actually respecting that bank and that bank's money more than you're respecting your own.

Yes, so leads me to rule number four, which is don't do business with banks.

Curtis May: 00:11:09

We have a hard time with that one.

Joe Pantozzi: 00:11:11

Okay, Right. And this is something you will want to wean yourself off of.

Even in the past year, I've come across clients who I've begun working with and they're having to wean off of toxic debt. I have a client whose business involves machinery and it's almost every time I turn around, he's taken another loan from this toxic company.

It's a high interest rate, double digits of interest rate, and it's got a severe prepayment penalty. He has to satisfy half the schedule, whether it's 48 months, 60 months, 72 months.

He has to satisfy half the schedule before he's allowed to prepay the rest. And if he doesn't, then all the interest for the entire schedule is payable and becomes an obligation to him. So don't do business with banks.

Any institution that's, that's charging you an unreasonable rate. I mean, if you want to borrow money at 3% and it makes sense, well then that's fine.

Curtis May: 00:12:22

I said you want to borrow out of opportunity and not out of necessity. So if you borrow, if you have 50,000 in your bank and you want to use third party capital, that's a choice.

See, most people, they're borrowing out of necessity because they don't have any money. They have to use other people's money. And then you want to be in a position of choice. We call it.

The other thing I was thinking about, remember that there's a book, a case for ibc and Carlos goes over the timeline of a business owner and how you're getting all this money and you personally guarantee it. And if you get behind, the bank could end up owning your business.

That's, that's the, to me, the expansion of the don't, especially for y' all business owners out there don't do business with. I spoke at the Laundromat Millionaire and you know, they're getting these, you know, boilers, cost 20,000 and financing the machines.

But I believe it's all personally guaranteed. So stuff goes sideways. You know, the bank owns your, your, your mat. Your business, right?

And so if you could build up again, what is banking creating a pool of capital that you control that can move at cost to meet some needs you have. And that's why you don't, because you just don't want to get upside down where somebody can put your, the thumb on you now.

Joe Pantozzi: 00:13:41

And I want to, I want to go back and Underline something Curtis just said a minute ago. If you had capital, what are the things that you could say no to and what are the things that you could say yes to? And I'll give you this example.

How often have you had someone come to you, close friend, relative, charity, distant friend, somebody you at least respect and they have a legitimate need, not a need that they have because they overspent. They have a legitimate need. And you said, you know, If I had $5,000 that I didn't have to pay bills with next month, I would give it to this friend.

I'm not talking about lending it, this person is worthy, I would give it. But you know, I don't have $5,000. And that bothers me when I see these situations come up.

And this is just me personally, this is how I choose to honor the faith values that I've been given. This is how I feel about it. You don't have to feel this way. This is how I feel.

I want to be available to give when it's appropriate and give without strings. So don't do business with banks.

Have enough capital that can satisfy your needs and your desire to grow your financial world, whatever that looks like, but also be in a position to give when it's appropriate, where is appropriate, according to your personal values, when you see a legitimate need out there.

So what I'm going to do, if you don't mind, Curtis, I want to set up a follow up on this and talking about rule number five and six and I think we've given a little bit for people to chew on. And again, this is a 50,000 foot view. I mean we could talk for hours about Nelson's six rules because they inspire.

A lot of people have inspired probably by now hundreds of thousands of people who have now made a decision. I'm going to control my own capital. I'm going to create a different world than I lived in the last 30 years.

I didn't necessarily get great results by chasing the things I was chasing before. These things are pure, they're honest, they're innocent, they're based on facts, they're based on actual data that I can look up that I can verify.

They're based on how actually human beings work and how institutions work and how I can maybe relate to those institutions and maybe create some distance and some freedom and some control and some independence. So I appreciate the time that you've taken with me.

I always enjoy, I probably write so many things down that Curtis inspires me with and look forward to.

Curtis May: 00:16:40

This is great. So now I want to just say this. Remember that where we're getting this from is from the.

Just so y' all came in late becoming your own banker by R. Nelson Nash. Right? So if you're. You heard about this banking thing, you need to go to the source, okay? And so I would say become your own banker.

A case for ibc, building your warehouse of wealth. I would. I would start with there. And now you've got the fundamentals. And now between the two of us, you've got coaches.

I've studied with Joe for seven years, but Joe studied with Nelson for darn near 20. Right? So we got you covered now, you know, go to these charlatans out there, I should say.

Joe Pantozzi: 00:17:22

And, you know, like I said earlier, we don't stop learning. We got to keep on building and perfecting and practicing what we preach.

Curtis May: 00:17:30

People say, I'll read a book. I got it. We study this stuff every day. Every book, every week, every day. We read a little bit of the book. So you don't got it. Trust me, I love it.

So I can burn my butt when people say that. And then one of the things Nelson would say, and this is a good close. The more you see, the more you see. You didn't see.

And we just talked about the five rules. We ain't got into banking yet. And we'll only talk to four out of six.

Joe Pantozzi: 00:17:59

That's good. That's good. Let's keep it going. Contact us if you. If you want more information, like, and share. You want to talk, talk through situations.

Curtis May: 00:18:09

Yes.

Joe Pantozzi: 00:18:09

And we'll talk to you next time.

Speaker C: 00:18:13

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