Learn How to Finance Everything!

Chris Bay:

Welcome to the Life Success & Legacy podcast. My name is Chris Bay and I’m joined today with the founder of Life Success & Legacy, Mike Everett. Hey Mike, last time when we were talking on our podcast, we talked about how to turn the headwind into a tailwind and designing plans, where we get people a debt-free in a short amount of time, typically three to eight years, without actually changing their cashflow. Today what I’d like to do is deal with the second aspect of what infinite banking can do for people and that is actually, once you’re debt-free, learning how to finance everything in your life or your business. So we talk a lot about the concept of EVA, economic value added. What does that mean? Where did it come from and why is that important when you think about creating your own banking system? Can you talk a little bit about that Eva and why it’s important?

Mike Everett:

Economic value added is probably the second most important topic that we talk about. Obviously changing the wind currents number one, economic value added would be number two. The bottom line is all the concept amounts to is the recognition of the fact that your capital has a cost, as well as that which you have borrowed from banks. So the easiest way to explain that is on this side of the scale, and I always do this with folks, on this side of the scale, you’ve got your house, your cars, your credit cards, et cetera, you have to make those payments, correct?

Chris Bay:

Correct.

Mike Everett:

Okay. So what if in this relatively short time we can move all of that debt to your side of the scale, meaning that means that you own the debt, the house, the cars, the credit cards, et cetera. So imagine if infinite banking is not a part of your life right now, do you have to make the payments for your house, cars, credit cards, et cetera?

Chris Bay:

Absolutely. We call that outside debt.

Mike Everett:

That is correct. So what happens if we shift all that debt to inside debt, economic value added, what we’re doing is we’re adding value to your dollars by giving you the opportunity to make those payments to yourself.

Chris Bay:

So I’m interested, when we talk about if we have a loan at the bank, are they going to give you that money for free?

Mike Everett:

They are not.

Chris Bay:

Okay. So I always ask people, do you care more about your banker than yourself? And obviously they chuckle and they say, well, no, of course not. So if the bank is going to charge you whatever percentage, then wouldn’t, you care more about yourself and charge yourself at least that amount. So let’s take a car loan. Okay. Talk us through how you might apply EVA with a car loan.

Mike Everett:

Okay. So let’s just take a conventional bank to start with. They charge you, let’s say, anywhere from 1.9 to 8%. Okay. Do you have to make those payments?

Chris Bay:

Absolutely.

Mike Everett:

Okay. So if all of a sudden you got yourself to where you own the debt, let’s say we used the activator that we talked about in the previous podcast, or we utilized an asset to pay off that debt. Imagine if you were making that car payment to yourself, would you want to pay yourself a small interest rate or a large interest rate? Remember, it’s your money. Part of the thing is getting people to make the mind shift, to pay themselves whatever interest rate they are comfortable with. I personally, when I borrow money from myself, I charge myself 10% on every loan and people go, you charge yourself 10%, and I go absolutely, because it’s my money and I’m paying myself. So it’s huge.

Chris Bay:

Yeah. When we do our boot camps for folks, I always try to say if the most important thing we could do today is if I could take a banker’s brain and plop it inside your skull so that everything that we’re teaching you today, you would look at it from a banker’s perspective, it completely changes everything. If you’re a banker, don’t you want everybody to bring their loans through your bank?

Mike Everett:

Absolutely.

Chris Bay:

And don’t you want to charge them interest?

Mike Everett:

As much as you can.

Chris Bay:

Exactly. So why not charge yourself that interest? Because now that’s additional capital going into a system that is guaranteed to grow and compound and you have access to it again. So the more you put into it, the more it’s going to grow and be available to you and know, by the way, when you pull that money out, your policy is still growing and compounding as if you’d never touched it.

Mike Everett:

It’s unbelievable.

Chris Bay:

I don’t know another financial vehicle that allows you to do that.

Mike Everett:

There’s not one out there.

Chris Bay:

That’s the brilliance of Nelson Nash and earlier you referenced a quote from Nelson when you were talking about EVA…

Mike Everett:

Right.

Chris Bay:

…Direct quote from the book, Nelson’s book is Becoming Your Own Banker and we have a copy of that available for you on our website at lifesuccesslegacy.com, and again, we always encourage people to get a copy of that and read it. In the book he will reference, and we’ll talk just a little bit about it, but to learn more about it, you’re going to want to get a copy of Nelson’s book and read it, but he talks about putting the peas back on the shelf. Just touch on that real quickly.

Mike Everett:

Well, basically if you own the grocery store, you want to be able to go to your own grocery store to purchase groceries.

Chris Bay:

Right.

Mike Everett:

Nelson used a can of peas in his book but what we do is we literally show people how every dollar that flows through their hands can be just like that can of peas. But we would really encourage people to get a copy of the book so they can go into a little bit more detail on the grocery store, in the book.

Chris Bay:

Yeah, absolutely. Because the principle is we always teach people is don’t steal the can of peas. That’s actually Nelson’s number three principle.

Mike Everett:

That’s correct.

Chris Bay:

Number one is, think long-term. Number two is…

Mike Everett:

Don’t be afraid to capitalize.

Chris Bay:

Don’t be afraid to capitalize. And number three is…

Mike Everett:

Don’t steal the peas.

Chris Bay:

Don’t steal the peas. So if you want to learn more about not stealing the peas and how to finance everything in your life, once you’re debt-free, encourage you to get a copy of Nelson’s book off of our website, lifesuccesslegacy.com. So today we talked about how to finance everything in your life with economic value added or not stealing the peas. Our next podcast, we’re going to be talking about something that I think would be important to a lot of people. Don’t miss that podcast. It is about how to get to tax-free retirement, or as Nelson calls it, passive income. Thanks for joining us.

Mike Everett:

Thanks Chris.