I’ll admit, the first time I heard that advice it shocked me. Were the advocates for Infinite Banking leading some kind of revolution that included boycotting all banks? Was I supposed to go back to storing my money in creatively shaped piggy banks instead of having a checking account for my family and my business?
It definitely got my attention. As I continued to listen, and then did my own research, which included reading Nelson Nash’s Becoming Your Own Banker, I realized that he was talking about me actually becoming my own banker.
It’s not that borrowing is necessarily bad. It’s who I was borrowing from. I often paid cash for things and thought I was “getting ahead” and “beating the system” by doing so. I wasn’t! I was losing the opportunity cost – the ability to use that money elsewhere. Maybe not AS BAD as paying interest to a bank, but still putting me behind. And that brought me to the real question: Who controls the banking function in my life?
By financing my truck, my home, and my business (and unfortunately, as a younger man, occasionally floating some credit card balances) I was giving control of the banking function to outside institutions. I was feeding a system designed to profit off of me and everyone else who did not understand how to take back that banking function for themselves.
I’d often thought about how, in any size city or town, it’s typically the banks that have the nicest buildings. Why? Because they understand how to use money. To multiply money (with the Federal Reserve’s help, but that’s another article). And banks are really good at controlling the banking function. And most of us have NOT been trained in how to leverage this banking function for ourselves.
Most people pay interest most or all of their lives. They interrupt or ignore the compounding of their money. They recycle interest payments to outside lenders. And this, unfortunately, is considered normal.
The truth is that we finance everything we buy. We either pay interest to someone else, or we give up interest we could have earned by spending our own cash to buy things.
But there is a way to take control of the banking function and steer the flow of interest BACK to ourselves. And it is fairly simple. Through properly structured, participating, dividend-paying whole life insurance from a mutual insurance company, a person can build GUARANTEED cash value, receive historically reliable dividends, and borrow against one’s OWN cash value WITHOUT hurting the total value that is generating the interest and dividends.
In other words, uninterrupted compounding interest for life, even when you use the money!
