Stop Getting Back to Broke » E-Book

Guide to Financial Freedom

Stop Getting Back to Broke is a professional guide to help you understand the private family finance system and achieve financial freedom.

Book front page

Start

Stop Getting Back to Broke

Get off the Hamster Wheel

Build a Private Family Finance System with Life Insurance

Copyright © 2023 Gregg Cook

All rights reserved. No part of this publication may be reproduced, distributed, or
transmitted in any form or by any means, including photocopying, recording, or
other electronic or mechanical methods, without the prior written permission of the
publisher.

ISBN: 979-8-88759-952-6 - paperback
ISBN: 979-8-88759-953-3 - ebook

Foreword

Money is a tool. Did you know that? As a builder of things I have many tools. Without them I could accomplish nothing, for it is these inanimate and lifeless contraptions that bring the ideas of the genius, through the hands of common men, into existence. Money is really, no more than that. A tool. It is a difference maker that men use to compensate themselves for the expenditure of life’s most precious gift......time. We sell ourselves every day for a wage. It may be a salary, or a commission, but money, subjected to Root Cause Analysis, is no more than a barter for life lived in the service of others. Once we own money, this tool bought so dearly, we must learn to use it as we would any other tool in our tool pouch. For almost 30 years Gregg has been my friend. We have worked together, been my neighbor, prayed together as our children have grown and matured. His children, and mine, have become productive prosperous citizens who have an understanding of Banking as a process. And money as a tool, as a means to an end, I’m excited to be a part of building the next generation. Read Gregg’s book. Then read it again. Gain knowledge of the tool......of money. No one I’ve ever met, who has ever talked to Gregg felt like it was a waste of time. Donald W. Brown
“My people perish because of lack of knowledge:” (Hosea 4:6)

The Problem

Today, 34 cents of every after-tax dollar in America goes to servicing debt. Couple that
with a tax environment where the citizenry celebrates “Tax Freedom Day.” The first
day that Americans work for themselves. That’s right, the exact day varies by person,
state, and tax year, but it is usually in early or mid-April. Every dollar earned before
that pays for federal, state, and municipal government services.

book image 2
Stop Getting Back To Broke With this picture in mind, and the accumulation-potential compounding of this money over a lifetime. No, over generations. The capturing of the financing position in every family is really the conversation of net earnings. We are a society who will go to great extremes in education and training, sacrificing years, spending fortunes, and very often financing great portions of this “education” on the promise of higher earnings. It is the intention in these pages to illustrate a method of financing major purchases over a lifetime using a time-proven product, whereby one dollar performs multiple jobs. This puts the owner in a position of financier, turning major purchases/expenses into wealth opportunities to build real wealth.
A slave is one who waits for someone to come and free him. Ezra Pound

Introduction

The masses, myself included, were never taught about the accumulation of capital.
The proverbial hamster wheel is very real, and, for the most of us, from a very youngage we are coaxed by well-intentioned parents, into a school system teaching uniformity and, groomed for the corporate world to regurgitate the “Correct,” answer. It does make for a nice, uniform shape to fit the cogs in the Industrial Machine. “And for the most of us, how has that been working out?”

There are hundreds of excuses for why wealth eludes people. And volumes have been written to list the habits, mishaps, poor choices, and plain dumb stuff we have all done with money. That fact set aside; it is my intention to detail what is not really a complex process in which you the Owner/Operator use a series of Life Insurance Policies, as a storage of money.

This short illustration is built on the concept R. Nelson Nash pioneered; he coined the title “Infinite Banking Process.” Infinite in that the growth within the system is limited only to funding and the financing options are limited only to the owner’s imagination.

This is not a get rich quick, Ponzi or pyramid scheme, it’s not an investment. Say that with me, “It is not an investment.” This is the Swiss Army Knife of your financial portfolio. Cash Value in a properly designed life insurance policy is liquid. As a matter of fact, when you understand the characters at play here, this is the vehicle where one dollar can do multiple jobs.

Stop Getting Back To Broke

This system is not for everyone. If you have a lifestyle of spending more than you
earn, wealth will forever elude you. This is not magic. Although there is cash available within your system within thirty days of starting a policy, realistically it is a seven-to-ten-year process to get to a place where the disciplined has captured his or her financing position. With that said, if you approach this concept with an open mind, this will not only change your life, it is something you will be teaching your children and grandchildren.

I thank you in advance for your time and attention here. This is not a “Have I got
an idea for you!” This is what I use in my own life and how I am coaching my own
children.

Discovery
Seeing what everyone has seen and
Thinking what none has thought.

Chapter 1

Banking as a process, and our relationship to it.

Currencies have taken on many forms in history. From seashells, beads, stones, and
furs, to metal coins, gold, silver, to print. Now, present day, moving digital values
through time and space.

It is true that at some level there will always be the function of barter, but barter demands a very limited scope of trade. That is, both parties must have in their posses-
sion goods desired by each party and in a volume of agreed upon quantity. This hurdle alone excludes all but the simplest of exchanges.

The apple farmer trying to buy a truck would certainly be at an impasse, trying to find a seller who would want the volume of apples needed to trade for the truck.

Banks, or, at least, the act of banking has been around since the first currencies were
adopted and people wanted a safe place to store their money. In fact, the business of
banking is even older than that, with merchants in the ancient world some 2000BC making grain loans.

From home loans, car loans, education, business credit, the storage of money, “The act of Banking,” is a necessity to function in the modern world.

For the sake of time and to keep focus on the subject matter, by definition: we are not
talking about a bank in the conventional sense, the subject at hand is financing.

Experience is a hard teacher
because she gives the test first,
the lesson afterwards.

Vernon Law

Chapter 2

You’re already a Banker “timeline”

The characteristics of Infinite Banking: 1. You control your own money 2. Earn guarantees on deposits 3. Grows tax-free 4. Penalty-free access To have an appreciation for the financing function of our daily lives, we must first examine ourselves. It is an awkward-sounding but true statement that everything in our life is financed, we either save, save, save and spend the money, or we borrow and make payments, make payments until we are back to broke. Either way, both lead back to the same place: “0” and one step farther down the timeline. Everything in our life is financed. Either we save and pay cash, giving up the future compounding of that capital. Or we borrow and pay interest to someone else. Either method leads back to the same financial position, and farther down the timeline.
book image 3
Private Family Financing through a series of Life Insurance Policies is pretty simple. The Cash Value inside the policy is a guaranteed interest-bearing account. In this process, we take loans against the CV, repaying the loans. With every payment, the CV is immediately available to use in your system again. Having the discipline to pay back the loans, and pay “ourselves” interest, insures perpetual compounding of accessible money. Now for the “spender” who is shaking his head at the “Pay yourself interest part,” the fact is that you have spent your life paying the bank interest. Why frown on paying yourself interest? You are telling yourself that the bank’s money is more valuable than your money. Nelson makes the statement that each person really has two vocations: the day job that we make our living and banking. Problem is, having never known that we have been bankers, as individuals we have all performed pretty poorly at it. Because we didn’t know we were owners of the bank.
The problem in America isn’t so much what people don’t know; the problem is what people think they know that just ain’t so. Will Rogers

Chapter 3

Why Life Insurance?

The store of money in Life Insurance Policies is nothing new. There are several US based Mutual Whole Life, Life Insurance Companies that are over a hundred and fifty years old. And using the cash in these policies is nothing new either. Walt Disney, Ray Kroc, J.C. Penney, were a notable few who used this product, which was safe, guaranteed interest-bearing, liquid, and available when they needed it. You can see the results today.

Another thing that isn’t common knowledge today is what’s called BOLI, Bank Owned Life Insurance. Banks hold cash value life insurance policies. According to Investopedia, as of 2020, US banks held over $182 billion in cash inside these policies. “That’s right, where the brick-and-mortar banks have cash stored.”

The first cousin, COLI, Corporate Owned Life Insurance, is a vehicle where businesses use the same product. The byproduct being, steady growth with guaranteed interest, safe from market risk, in most cases judgment-proof, liquid, the boxes checked, leave little wonder why companies like Walmart, Home Depot, and the like use this vehicle to fund everything from liquidity issues to executive compensation.

More gold has been mined from the
thoughts of men than has been
taken from the earth.
Napoléon Hill

Chapter 4

Bank vs Life Insurance, is there a difference?

“The sign over the door” Let’s examine the difference between a brick-and-mortar bank and a life insurance company. Both are tasked with accumulating “OPM,” Other People’s Money. Both have employees, infrastructure, business overhead, and liabilities, where they each must produce a profit to stay in business. For the sake of our conversation, the big difference between the two is where those profits go. In the Banking System that we are accustomed to, the profits go to shareholders, usually in the form of dividends. In the Mutual Life Insurance Company, the same transfer happens. But, in this case, the Owners of the Policies within the Mutual Life Insurance Company are the shareholders and are entitled to this same luxury of dividends.
Compound interest; He who understands it earns it..... He who doesn’t..... pays it. Albert Einstein
book image 4
Both activities require Borrower and Hired Help – so, those items are a “wash.” The only thing at issue is “how earnings are allocated.” The CD owner gets interest. The Stockholder gets dividends. The Life Insurance Policy Owner gets both interest (Guaranteed Cash Value) and Dividends!!
We would not remember the Good Samaritan if all he had was good intentions; He also had money.

Chapter 5

Where the rubber meets the road

To understand what makes this system work, we must look at the basic mechanics of a Dividend Paying, Mutual, Whole Life, Life Insurance Policy. The design of the policy is such that the policy owner makes premium deposits. This Cash Value held inside this policy has guaranteed growth, “and potential dividends.” In our prior illustration depicting the Bank and the Insurance Company both doing the same job. The Insurance Company must invest this capital to make a profit to pay overhead and death claims that will happen over the year. In the contractual relationship between the Insurance Company and the Policy Owner, The Policy Owner is in the first position to borrow these funds. It is within this caveat that the win-win situation is in the details. 1. The highlight to understand is that the Cash Value in the policy, never leaves the policy. The compounding is never interrupted. 2. The loan, is directly from the Insurance Company. The Cash Value in the policy is, in fact, collateral for the loan. 3. For the Policy Owner, this is accessible capital, limited only by the total Cash Value accumulated within the policy. No approval process, credit check, explanations, nothing. As a matter of fact, it is a guaranteed interest-only loan for life. The repayment schedule is completely controlled by the Policy Owner. 4.But it is not a one-sided deal. This is a very good position for the Insurance Company, also. They are not tasked with looking for a place to put this capital to work. The loan from the Insurance Company is collateralized one-to-one by the Cash Value within the policy. The Insurance Company charges interest on the loan, satisfying the need for a profit on the capital. Worst case scenario, if the Insured dies, the loan is satisfied with proceeds from the Death Benefit and the balance is paid to the Beneficiary. Now for the “I pay cash camp,” who just read interest paid to the Insurance Company and went into a tailspin. The standard finance charge on a policy loan in the insur ance industry is proportional to the guaranteed interest paid on the Cash Value, “Guaranteed, by the insurance company.” Yes, there is a profit margin for the insur ance company, but remember “you,” the Owner of a Dividend Paying Policy, are, in fact, an owner in the company. It is in your best interest for the company to make a profit. This is, where the dividends come from. Let’s interpret that statement on the me and you level. There is interest paid inside the policy on the cash value, and there is interest charged for the loan, much like using a conventional bank. Only with this vehicle, you, as the owner of a Whole Life Policy held within a Mutual Company are, in fact, proportionally entitled to dividends as paid by the company.
book image 5

The Detail of Guarantee.

Back to our timeline, now, from day one, our capital has guaranteed growth. If we look back at the example in Chapter 2, the saver now is in the win-win scenario. His compounding of the capital is never interrupted, although when in the borrower role, he is in a position of paying interest. But that’s not the whole story. The detail in the building of our Private Family Financing system is using a Dividend Paying, Mutual Owned Life Insurance Company.

Dividend Paying, Whole Life, Life Insurance Company

A “Mutual Life Insurance Company,” is, by definition, a company that is owned by the policy owners. Dividends are profits. Once all the obligations have been met by the insurance company and the management is satisfied that there are ample reserves to meet the death claims and corporate expenses, the profits are divided among the shareholders. In a Mutual Life Insurance Company, it is the Policy Owners that are the shareholders of the company. And, proportional to deposits, the profits are divided, this is a dividend.
A man with a surplus can control circumstances, but a man without asurplus is controlled by them, and often has no opportunity to exercise.judgement. Harvey S. Firestone

Chapter 6

IBC it’s for the Saver

Whole Life Insurance was created for an accumulation product. In IBC, the product becomes a Cash Flow System, controlled by the owner. The loan on the Cash Value, does not stop the compounding of the CV. Additionally, interest and dividends continue to be paid. The terms of the Loan are different from any other place. 1. There is no lean on the asset. 2. There’s no credit check. 3. No waiting, for any kind of approval process. 4. You control the payment schedule. We have already made the comparison of the conventional banking system and a life insurance company, for the accumulation of our money. Now, let’s compare CV in a life insurance policy to a conventional checking account. What we are building here is an “alternative” cash flow system. Monies in our life move in a constant flow, money in and money out. The insurance companies might very well have better served the client spending these past two generations since WWII educating agents in selling programs that provide for a lifetime of financing, instead of focusing on death benefit. For the vast majority of the population, the need for financing throughout life far outweighs the need for life insurance.

Policy Illustration below

Looking at the Policy Illustration. Below is a, breakdown of a properly designed Infinite Banking Policy belonging to a 28yo female. designed specifically for maximizing Cash Value. Far left is the age of the Policy Total Premium, “annual premium total” Total Cash Value, “total cash held inside the policy” Increase in Total Cash Value, “year after year the increase in cash after the premium deposit.” 2nd from right Total Death Benefit far right
Year Deposits Total Cash Value Yearly Increase Death Benefit
1 $12,000 $7,215 $7,215 $500,686
2 $12,000 $15,124 $7,909 $535,694
3 $12,000 $24,528 $9,404 $570,551
4 $12,000 $37,150 $12,622 $605,313
5 $12,000 $51,402 $14,252 $640,138
6 $4,200 $57,957 $6,555 $644,582
7 $4,200 $64,980 $7,023 $649,930
8 $4,200 $72,459 $7,479 $655,964
9 $4,200 $80,437 $7,978 $662,647
10 $4,200 $88,902 $8,465 $670,022
11 $4,200 $97,713 $8,811 $678,146
12 $4,200 $107,029 $9,316 $687,109
13 $4,200 $116,877 $9,848 $696,710
14 $4,200 $127,300 $10,423 $706,938
15 $4,200 $138,320 $11,020 $717,797
16 $4,200 $149,214 $10,894 $729,301
17 $4,200 $160,697 $11,483 $741,416
18 $4,200 $172,812 $12,115 $754,125
19 $4,200 $185,578 $12,766 $767,455
20 $4,200 $199,041 $13,463 $781,424

The eighth time God says it is good. Gen 2:12 The gold of the land, it is good.

Chapter 7

Financing for Life

Building your Private Financing System is a process more than a product. True, it all starts with a properly designed Policy. A Policy from a Mutual Dividend Paying Whole Life, Life Insurance Company. There are many Insurance products, and plenty of opinions about different types of Insurance Policies, that will do the “banking function.” And claims of Universal Life products and Variable Life doing the same thing or outperforming Whole Life. In these pages, the product we are using is for Life. Nelson’s original Infinite Banking Concept was built on the use of Whole Life, a product of guarantees. For the life of the insured, this could be the bigger part of a century. Building with the proper product, means the difference in Infinite Banking, and Infinite Speculation.

Building a series of policies with a Cash Value big enough to start capturing your Family Financing is not an overnight process. First, the building of cash within the policies model the snowball effect, the first years are the least efficient. The total Cash Value available is not equal to the Premium. It is years three, four and five when this machine starts to pick up speed. The first years are saddled with administrative costs, insurance costs, commissions, “ultimately here we are purchasing Life Insurance, Permanent Life Insurance.” The question here is not “if it will pay, it is when it will pay.”

Another detail of a properly designed policy, the Cash Value is proportional to the death benefit. The longer and more efficiently the Policy Owner uses the system, the death benefit will continue to grow as a result. That’s right, this is not the product that is typically designed by a Life Insurance Agent trying to provide a death benefit. In a properly designed policy, the older the policy, the better it performs. Later in life, these policies can become income streams.

book image 6
Back to the comment of IBC making the Capital Accumulation System of Life Insurance into the Cash Flow System of everyday life. Over the course of a lifetime, the capital flow through a series of policies develops a snowball effect. The older the policy, the better the performance.

Do you Believe

The Saver goes into the bank, the Banker knows the Saver is shopping for a new car. The Banker approaches the Saver and says, “You can take a car loan at 5%, leaving your cash in a CD that makes 3% and makes money.” The Saver doesn’t want a payment, but, after a quick math lesson, concedes, the Banker’s math is right. He can borrow the money at 5%, while his is parked at 3% and is better off. As his cash accumulates, the compounding is growing every year. As the payments are made on the car, the balance is descending every year. For the Saver, the $50k at 3%APR, over 5 years matures to $58,080. At the same time, he takes a loan from the bank for $50k at 5%APR, over the same 5 years, total payments are $56,613. There is another option. Outlined in these pages is an old and proven financing option. By building a system of cash-accumulating Whole Life, Life Insurance Policies and using the Cash Value to finance purchases throughout the life of the policy, a properly managed system allows one dollar to do multiple jobs. Providing both compounding of principal and liquidity. Simultaneously, that’s right, AT THE SAME TIME! Think how much wealth this adds to the family and generations to come.
Pay yourself first. Pay yourself interest. Recapture debts. Build yourself a system that doesn’t change your cash flow. Where you are not working harder. Not taking chances. In a favorable Tax environment. Ray Poteet

Chapter 8

Where the rubber meets the road

In America today, our relationship with conventional financing is a peculiar scenario. It is commonplace for a young adult to start their working career with student loans hanging over their head straight out of school. Couple this with housing, in most cases, a car, oh, and welcome to the big leagues, with your own utilities and taxes, and on that list somewhere is living expenses, food, clothes and the like. And, in most cases, conventional financing is there to meet the need. Now we are not going to dive into the “Good debt, Bad debt,” lesson. Suffice to say, all debt could be “better” if you own it. This may seem impossible, and, true, from this view, it is a monumental task, but how did the ant eat the elephant: “one bite at a time.”
book image 7
In this scene of finance, wealth, the storage, and the building of it, is all relevant. When stopped at the stoplight, this young person we were just depicting is stopped right beside a young family who has twenty-seven years left on a thirty-year mortgage. Two car payments, a teenager in the backseat who was just fitted for $5k worth of braces, and the list goes on. Two cars back is another Lady who owns a small business. She needs to put $30k together by the end of the week to make payroll and expenses this week. And, of course, somewhere in this line, or maybe they already went through the intersection-is another guy who is rolling a much bigger ball than that. Anyway, you get the picture. Truth is, these imaginary people in the intersection all face the same hurdle: Cash Flow, money in, money out. Back to that “Peculiar Relationship,” statement. Nowhere else in the transaction of business is the balance of control more one-sided, than in our relationship with con ventional financing. Let’s examine the mechanics of a car loan. First off, by the very definition, banks do not loan money, they collateralize money. The car must have a value that justifies the lender. Starting with the premise that the car has a greater value than the amount financed, from the first payment, the lender is in a better position with every payment. Oddly enough, anywhere else in a healthy business cycle, when there is a percentage of the contract met, the entity performing the work is recognized as having a stake. For the W2 employee that has two days’ work toward their work week, from an employee/employer relationship both parties understand that the employee has payment coming for the two days, whether the work week is finished or not. With the contractor, when an agreed upon percentage of the job is complete there are draws, or payment for services rendered. We as a populous have been conditioned to work within the parameters of conventional financing. Until the last payment is made on the car, the borrower’s position never changes. At payment 47, the contract has been no more satisfied than at payment 2. Until the conditions of the contract are fully satisfied there is no percentage of ownership. From beginning to end, it is the borrower who shoulders the exposure. Now let’s contemplate the value of capturing the position of financier, in our family, businesses, and charitable giving. Over a lifetime, the word is astronomical.
book image 8
book image 9

Conclusion

Thank you for your time, use this QR code to access an ever-increasing library of resources, illustrations to assist you in your Private Family Financing journey. There is a contact page if we can be of assistance. Every person is an individual with unique needs/goals, living in different seasons in life. Make sure you are working with someone who is qualified to help you. “Are they doing it themselves?”
Money is only one of two things, It’s either an excellent servant or a bad master. Sir Francis Bacon
QR Code