March 2007

Being your own banker

by Bruce Rhymer

Note:Ninety five percent of all chiropractors will reach age 65 either dead or dead broke. Not a happy thought. But, why is it that just five percent of all Americans achieve financial freedom?

We know the financial institutions and their soldiers ‑‑ the CPAs, tax attorneys, certified financial planners, certified financial life underwriters, stockbrokers, mortgage lenders and bankers ‑‑ are telling you the "story" that says it's possible to achieve financial freedom IF you follow their advice, and purchase their products.

Yet, in almost a century, the percentage of people attaining financial freedom hasn't changed. Ninety five percent of all Americans will work and labor an entire lifetime only to end up in failure and destitute. Try as you may, unless you possess some very specialized knowledge, you won't reach financial independence.

It's not the product

While A 12‑year‑old could give you an adjustment, at best you wouldn't get any results from it. At worst, you could be hurt. It isn't the what, it's the how. Only through extensive training and practice can you implement effective chiropractic skills to help your patients to wellness. Only through specialized financial knowledge and extensive training can you become effective in the utilization and implementation of financial knowledge.

Self-referral

Relying on someone else to make your financial decisions is extremely hazardous to your wealth. Just as the allopathic medical model is destroying the nation's potential for optimum health, the traditional financial model is costing you millions of dollars by you not understanding how the game works.

Core of the problem

Have you ever wondered why banks and financial institutions have such large buildings? The term used by economists is "velocity of money," and banks take full advantage of the concept (using your money) while they recommend that you, the customer, compound your money. Did you know that banks make 2,000% or more in your money?

Let me explain how it works.

You deposit $10,000 in the bank, which offers you a four percent rate of return on your money annually. Banks are allowed, (through the monetary reserve system) to leverage the $10,000 ten to one. In other words, they can lend out $90,000 against the $10,000 that you deposited and it only costs them the interest they paid you...in this case $400.

Let's say they gave you a home‑improvement loan of $90,000 at 10% interest. That would be $9,000 annual interest. Remember, this is your hard‑earned money ($10,000) that was deposited into the bank. It cost the bank in this example $400 and they made $9,000. That's more than 2,000%. But, it gets better.

Where do you think that $90,000 goes? It doesn't go under the builder's mattress! It goes back into the banking system (the builder, suppliers and laborers at this point put up their effort for the $90,000). And, the $90,000 goes back into the banking system. The story multiplies exponentially! In other words, banks get "velocity" on your money. They keep the money moving as it gains momentum and speed and in the meanwhile they teach the consumer to keep his or her money "stagnant." What's wrong with this picture?

Have you ever wondered who pays for the financial institutions, for their beautiful marble buildings, their gorgeous landscaping, their waterfalls? You do!. The banker sits waiting for the fruits of your labor.

@Column Head:Did you know...

@Body text:The average American is paying out 34.5% of every disposable dollar toward interest. The average savings per capita in America is less than three percent. Consider those who save 10% of their income, (over three times the average savings rate in America). They're in a three to one ratio of interest expense to savings.

Here's a suggestion. Rather than fighting to get a higher rate of return on your savings and investments, it might make a lot more sense to change the environment in which your money operates, and capture all of the lost interest by creating your own banking system.

How our monetary system works

There's only one source of money in the world's banking system. It circulates from banks to lenders and borrowers to banks and so on. We finance everything we buy. We either pay interest to someone else, or we give up interest we could have earned.

What if you could create your own bank? Or, your own pool of money so you could become your own banker and begin to get "velocity" on your money?

First, you'd have to have a funding vehicle. Then you'd need to fund it. This would take four to seven years depending on how fast you built equity. Once your bank was funded, you could begin to make loans to yourself (or others) and you'd need to pay the bank back.

Borrowing and repaying at current or better interest rates, you'd be building a banking machine that could eventually handle all your family's banking needs ‑‑ homes, real estate cars, education, whatever. You'd be able to create an asset pool to take the place of Social Security, retirement plans and other market driven assets. It would be tax‑free growth and it would be a source of tax‑free retirement funds.

Infinite banking concepts

The essence of the "infinite banking concept" is to recover the interest you normally pay to a banking institution and by lending those funds to yourself or others you begin earning what a banking institution earns. The funds may be lent to any party, including you. Earnings grow tax‑free, thus reducing your tax burden and capturing money for you that the banking institution would normally receive.

Principles

A foundational principle of the concept is eliminating the payment of interest to others and redirecting that same market rate of interest to an entity you own and control. You have now improved your wealth‑generating potential significantly.

A concept or principle that must be understood is that we're not talking about investing. We are talking about financing. Financing is a process, not a product. It involves both the creation and maintenance of a pool of money and its use.

However, when a financing system is combined with an investment system, the combination of the two will always outperform an investment system. When the system combines reduced tax liability with a financing engine, it allows complete control over your investments. There appears to be no system capable of generating wealth with as much consistency or speed.

A second concept or principle we must all agree on is that you finance everything. When you make a purchase, you either finance by: a) paying interest to someone else (a bank, lender, etc.); or b) give up interest you could have earned (when you pay cash, the interest on the money you could have earned is forfeited).

For these reasons, in discussing investment alternatives, we mustn't only weigh the return we receive, but also evaluate what we're forfeiting or giving up. This mindset will become more important as we reevaluate the infinite banking concept and expand our understanding of financial engineering.

For all the reasons mentioned above, every person should be fully engaged in two businesses: one's occupation and banking. Of the two, banking appears to have the greatest potential for enabling an individual to generate long‑term wealth.

The average American spends about 34 cents (or more) of every dollar on interest expense ‑‑ i.e., loan interest on homes, cars, boats, credit cards, student loans, etc. For instance, on a home mortgage, approximately 85% of the money paid during the first five years of the mortgage is interest payments.

Also, about 30 cents out of the average American's dollar goes to taxes.

Summing up these quantities, we see that out of every dollar earned, the average American is paying 64 cents or more on interest expense and income taxes. This doesn't include sales, excise, property and other forms of tribute. If you're in a higher tax bracket the number jumps significantly.

In short, if these two sources of revenue could be captured, you'd be much further along in generating wealth for yourself and your family than if you concentrated on investments that might or might not generate a future profit.

A secure financial future

When each chiropractor can begin to grasp the idea that the accrual or creation of wealth is less related to an interest rate of return than it is to making integrated financial decisions, the formulation of a bullet proof financial future can become a reality. When all aspects of one's financial life are coordinated and integrated using infinite banking as the heart of the plan, a secure and probable outcome becomes the norm.

(Chirowealth learning systems has developed a personalized wealth coaching process that is affordable to all chiropractors willing to look for new direction and accountability in the wealth building process. Chirowealth learning systems offers a complementary Quantum Wealth Analysis to help any DC determine his or her true wealth potential. For information, call 800‑892‑3107 or visit www.quantumwealth.org)