Rapidly Eliminate Debt

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. On our last podcast, we talked about the four things that Infinite Banking can do for somebody. The first thing we talked about is how it can eliminate debt rapidly. Which for most of our clients, that happens in about three to eight years in general, for some it’s sooner. For some it’s actually the first month, which sounds crazy. For us, for my family, it took us 26 months. But in general, for most people, it takes somewhere in the range of three to eight years. And we talk about that, being able to do that by turning our headwind into a tailwind. And we’ll talk more about that today. The second thing it does is it teaches us how to finance everything in our life.

The third thing that Infinite Banking can do for folks is it can give us tax-free retirement. And then the last thing, the fourth thing, is tax-free wealth transfer. And that’s passing on our assets to our future generations or other philanthropic organizations that we care about, churches, organizations and such. So on this podcast, what I’d like to do is really dig into that first thing. And that is, how do we eliminate debt rapidly using Infinite Banking? And we talk a lot about shifting the headwind of interest through financing and shifting it to a tailwind. For those listeners, I’m a runner, and at my age, when I’ve got a headwind that I’m facing, when I’m out running on the lobby, instead of feeling about 47 years old, now I feel about 67 years old. But man, when that wind changes and it comes around behind me, all of a sudden I’m feeling 37 again. So that wind makes a huge difference. Can you explain a little bit about shifting that headwind that people are facing and financing to a tailwind?

Mike Everett:

Well, when people come to us, usually their debt load is pretty heavy. Let’s just talk about some of the things that they’re spending their money on. They’ve got mortgages, they’ve got car loans, they’ve got credit card debt, usually multiple credit cards. They’ve also got some student loans and even business owners have business loans, equipment, vehicles, et cetera, et cetera. So, changing the headwind into a tailwind is kind of a big deal, because if you think about all the things that we’re sending money out on, we’ve got all these things that we’re … we get paid on Friday, what do we do? We send our house, our car, our credit card, our student loan payments. How much is left over for us? Not very much. So imagine if there was a way to shift the wind current to where all of a sudden you weren’t making those payments to somebody else, but you were making those payments to yourself. What kind of freedom would that create?

Chris Bay:

Yeah.

Mike Everett:

It’s pretty incredible.

Chris Bay:

Yeah. Nelson Nash, in the book, Becoming Your Own Banker, which we always recommend people get a copy from our website, lifesuccesslegacy.com and read that book. Nelson talks about the wind current in the context of airplanes. Can you talk a little bit about that?

Mike Everett:

Well, if you think about it, you were just talking about it as a runner. A perfect example is, imagine if you had a plane and you were flying into a 345 mile an hour wind.

Chris Bay:

Mm-hmm (affirmative).

Mike Everett:

Your efficiency of your plane wouldn’t be very good. But if all of a sudden you wait for the winds to shift and all of a sudden you’ve got that 345 mile an hour wind behind you, how fast are you going to get there?

Chris Bay:

Pretty fast.

Mike Everett:

Pretty quick. It’s amazing when you get to explain that to a customer when it comes to their finances.

Chris Bay:

And I remember when I was first learning about all this, we didn’t have a huge headwind because we were really a save up and then pay cash for things.

Mike Everett:

Right.

Chris Bay:

So we really didn’t have a wind going at all, either a headwind or a tailwind. But our problem was, let’s say our airplane’s traveling 100 miles an hour, we’re trying to figure out how to make it go 105 miles an hour by, let’s not go out to eat quite as often or let’s cut our cable bill, those kinds of things. That’s pretty hard to get excited about when you’re going from 100 to 105 miles an hour. When reality is, if we can turn that headwind completely into a tailwind, we can really get going.

Mike Everett:

You change the tailwind quickly if you can control the cash flow. But most of the financial industry does not ever explain it that way. You said something about getting the airplane to go 105 miles an hour. That’s just like the financial professional trying to tell you, oh, by the way, we can give you three to 5% more on your investments. When in fact, all you’re doing is, you’re stopping the headwind from 345 miles an hour into 340. You see, it still doesn’t change the wind current that much and so you’re still fighting it

Chris Bay:

Just to clarify for the listeners, you’re using 345 miles an hour of a headwind or a tailwind, where does that come from?

Mike Everett:

That comes from the interest rate that Nelson says the average family is paying towards debt. It’s just house, cars, credit cards, student loans, et cetera. Add them together and you usually have an average of about 34 and a half percent that people are spending on interest alone after they pay their income taxes.

Chris Bay:

When I first read about that, I found that fascinating. So when I think about every dollar that passes through my hand, right off the bat, 20, 25, 28% goes to taxes.

Mike Everett:

Correct.

Chris Bay:

I never even see it. Right?

Mike Everett:

Yep.

Chris Bay:

Then on top of that, let’s add 34 and a half percent that’s going to interest. So you’re adding that up in your head?

Mike Everett:

Yeah.

Chris Bay:

Then let’s say I’m trying to send money to my company, 401k or IRA, which by the way, is not guaranteed to grow and I don’t have control of it. And they’re using it-

Mike Everett:

That’s correct.

Chris Bay:

… while it’s sitting over there. So I am now trying to live on the remaining amount.

Mike Everett:

Which isn’t very much.

Chris Bay:

Whereas, if I can turn the wind current and I can add that 34 and a half percent of interest going my direction, it’s dramatically changing our cashflow.

Mike Everett:

Let’s just pretend that you only have access to not the 34 and a half percent, but let’s say you have access to 10 to 15% of that.

Chris Bay:

Yeah.

Mike Everett:

It’s gigantic.

Chris Bay:

Yeah. Okay. So we talk about how we design plans for people and that we can eliminate debt and build capital at the same time, without changing their cashflow. How is it possible? Explain a little bit about, how is it when we do plans for people that we’re able to eliminate debt rapidly without changing their cashflow, we’re just changing where it’s flowing.

Mike Everett:

Well, part of that comes from having assets or what we call an activator. If you have an activator or an asset that’s sitting there doing nothing for you and we’re able to access that to be able to eliminate a car or a credit card or a student loan debt, then all of a sudden you have the payment that you were making to somebody else, but now you have the availability of making that payment to yourself. So the bottom line is, what we’ve done is, we’ve changed the wind current of those one, two or three items that you were sending money out the door. Now you’re getting the opportunity to send the money in the door.

Chris Bay:

Wow.

Mike Everett:

Changes things pretty dramatically.

Chris Bay:

I was just working on a plan the other day for a client, where we were able to eliminate all of their debt, including their mortgage, in four years and one month, without changing their cashflow and recoup everything tax-free within the fifth year. So not only are they debt free, but they have all the equity in their home and everything else within five years. I mean, when we get to share that with people, it really inspires possibilities for them.

Mike Everett:

A lot of times you’ll get calls like we did just a little bit ago, where people are having trouble sleeping.

Chris Bay:

Yeah.

Mike Everett:

Because they’re looking at these things and they’re going, I can’t believe that you can do this for us, but we do.

Chris Bay:

Yeah. Well, as always, we want to encourage our listeners to go to our website, lifesuccesslegacy.com. If you don’t have a copy of Nelson Nash’s book, Becoming Your Own Banker, we again really encourage you to purchase one of those. Also, we have a free downloadable e-book called Financial Planning Has Failed. And the next podcast that we’re going to tackle is the second element of Infinite Banking. And that is, how do you finance everything in your life? So if you’re debt free, then what do you do? Please join us for our next podcast. Thanks.

Mike Everett:

Thanks Chris.