Real Estate

Book Summary: Bank on Yourself – The Life – By Pamela Yellen

You have to go where the money is: the bank. Bank on yourself describes a sound financial method for money flowing into your economy instead of out of it. These principles are very sound and they work.

A special note: Pamela is an excellent marketer. She has done a great job creating a valuable system under the tutelage of Dan Kennedy, she monetized it well. This is a complement because she through her marketing is freeing people from our traditional banking system that is max leveraged.

Why is this important to me?

I always want to ask this question like I’m sitting in your shoes. Will this summary benefit you if you review it? People today do not have robust savings. The savings rate in the US is the lowest it has ever been. The financial community has been launching 401K plans, 529 education plans, and other retirement vehicles. The problems with these instruments are numerous. People who wanted to retire in 2008 couldn’t because of the financial crisis.

Traditional banks use fractional reserve lending and with the debt crisis at record levels, there is risk with the largest banks. The actions have been like a roller coaster and the insiders have done well, the little one, not so much.

Bank on Yourself is full of testimonials from people who have used the system. What I’m going to describe are some of the high-level, long-term strengths of this system.

1. Insurance – The vehicle to create your own banking system is Whole Life Insurance. I know Dave Ramsey and Suzie Orman make fun of insurance all day, but the fact remains that this is the safest vehicle to invest in and with discipline it can be the best. Insurance is guaranteed tax-free growth and has been around for 200 years. These policies are 100 years older than those of the IRS. Using this vehicle to create a banking system would have eliminated all the bankruptcy cycles that have plagued the economy in the last 25 years.

2. Taxes and Liability: Any financial plan should be full-cycle, which means if you get sued, you won’t lose your fortune. This is the case with insurance in most states. If you are a doctor and they sue you, they can NOT touch your life insurance banking system. Taxes give another great advantage to this system. You can take out a loan from your policies to buy a rental property and at a rate of interest and pay off the interest like a typical mortgage. The strongest concept is that you are paying yourself. The volume of interest goes to you and not to the bank. Like any business, it takes time to build up these reserves.

3. Habit – The key concept to remember is that if you finance purchases, then you pay interest. If you pay for your purchases in cash, you waive interest. If you pay the interest yourself with your own banking system, you can achieve compounded results. It is said that 34 cents of every dollar goes to interest expense. The critical point here is to understand that the “volume of interest” is what is important. On a conventional mortgage, the first 10 years of payments go almost entirely to interest. That’s the secret money maker for regular mortgage banks. The habit with this system is that you have to pay yourself like any creditor. The only reason this system will fail is if you steal from yourself. I cannot stress this enough, you have to pay yourself.

I have briefly touched on this subject, but I strongly suggest that you study it and implement it. You can check out other resources on the site for more information.

I want to give you a personal example of the power of this system. I have been using it since 1999 and each year my policies have grown and the money has allowed me to buy other businesses. (My insurance banking system hasn’t been affected by the tech crash of 2000 or the financial crash of 2008. They’ve grown every year because it’s guaranteed growth.) This strategy has allowed me to capitalize my own business without traditional bank loans. This is a big problem and the key to adding economic value. Banking on Yourself is a long-term strategy. If you are looking for a quick investment solution, this is not the tool for it.

I hope you found this short summary useful. The key to any new idea is to work it into your daily routine until it becomes a habit. Habits are formed in as little as 21 days. One thing you can take away from this book is that cash is always flowing. The real question is where. The goal is for it to flow to you.

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