BYOB – Become Your Own Bank

Life is not just about knowledge but requires action as well. Please complete this life changing exercise before you read any further. Add up all the payments you have ever made in your life to a bank or finance company on every debt you have ever had during your life. This is on cars, real estate, business loans, business equipment, student loans, boats; anything motorized, etc. Now whatever that figure is for you (it will be largely a figure of age and income) double that number. So if your figure is $1,000,000 in total payments your number would be $2,000,000. Why do we double that figure? By giving up control of all your money in the form of monthly payments for all those years you turned over the growing power of that money to the bank. Depending on your age, even if you had kept that money and received even a modest interest rate of 4% to 6% your money would have easily doubled once and for many of you doubled a couple of times. Now that we have your “money lost” figure you need to add up your “money kept and invested”. To get that figure simply add up all the money you have saved up in your IRA’s, 401k and other retirement accounts. Grab your most recent statements and add them up quickly.

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This entire exercise can be done in 10 minutes and I challenge you to do it before you read one more word or at least immediately after you’re done. How much have you saved and invested for retirement? Now which of those two totals is bigger, the money paid to the bank figure or the money for your retirement figure?   Now ask yourself who is getting rich with that personal finance model. The answer is very apparent and that is the banks and Wall Street who love this business model. You borrow money your whole life and don’t care as long as the interest is low. This keeps you in financial bondage to the banks. Then whatever money you are able to put away is put inside of qualified plans and then given to Wall Street. Wall Street is flat out drunk with money and has been for many decades.

When I do this exercise in front of a room it produces laughter from the crowd because they are realizing that the monthly payments have deprived us of most of the wealth in our lives. My average participant might tell me $2,000,000 given in payments and lost growth and $70,000 saved for retirement.   Which figure would you prefer to have for yourself? This is math that any fifth grader can do and makes sense to anyone who has an open mind.

Now to be fair very few people could afford to self finance their first car or house so the numbers get skewed because you most likely would not have the option of self financing those early items. However, that is not an excuse for not moving toward that goal of being self financed. Think of your life as a giant income wheel. Income comes into the wheel and most of it gets spit right back out the other side of the wheel. Your goal is to keep as much money as possible coming in on the wheel for your accounts and to stop the 4 massive wealth drains we all have during our lives. Yes, there are more than 4 wealth drains but these 4 are the biggest and must be stopped so you can grow wealth regardless of what happens to any market. We will be discussing these wealth drains in depth in future articles.

It’s important to understand that I am not advocating just paying cash for items like many gurus incessantly preach.   I am talking about using your capital just like a major bank would use their capital. If you took out a loan from the bank would they be alright with you borrowing the money and not paying it back? Would they be happy with no interest paid to them? (Don’t get fooled by those 0% loan pitches because there is always a cost of money but sometimes it is hidden in the actual price and not the finance charges) The answer to both of those is, of course it wouldn’t be acceptable to not pay them back or not give them interest. Then it stands to reason that if you are acting as your own bank, why would it be acceptable to not pay yourself back or without interest? It is never acceptable just to pay cash (especially for anything over $10,000) and not pay the bank back even if you own the bank.

Wealth Without Stocks! Why haven’t I heard of this before?

The indoctrination of the stock market is most powerful

Turn on your television, your phone, your computer, and any other device you care to name and you will almost certainly be greeted by the day’s stock averages such as the Dow Jones, NASDAQ, and S&P 500, among others. You will be instantly updated as to the direction of the market. There are entire television channels that are on 24 hours a day and 7 days a week that do nothing but report on the stock market; such as CNBC. How boring to have to follow those for hours every day.

When that kind of media blitz has been happening now for generations it is small wonder why people are unaware that they can, in fact, create much wealth even without stocks or mutual funds. This philosophy is NOT about being anti-stock market; there is certainly a place in every wealth plan for stocks or funds somewhere along an individual’s stages of wealth. The problem is that the vast majority of people have no idea of the many other ways that are available to grow and protect wealth. When me or my teammates and staff work with our clients from all over the country they are always fascinated when we start to discuss many of the alternative options to grow and protect wealth.

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Most of the topics we will cover in future posts are not only virtually unknown to most of the world but when used properly they can be extremely powerful. I am so excited to put all these wealth vehicles in one place that I can’t wait to begin to put this powerful information in your hands. We are going to cover debt reduction strategies, creative real estate strategies, private pension and self-directed IRA strategies, just to name a few.

We talked earlier a little bit about why the stock market is such a major force in almost every investor’s life but there is also the fact that you don’t need any knowledge to put your money into the market. Most Americans simply select what kind of investor they are; which will include aggressive, moderate, and conservative (Translation is how much money you can afford to lose). Just like that, they are signed up for their employers 401k, which will be their main retirement savings and investing plan for the rest of their lives. More than 80% admit to really having no clue what they signed up for to any great degree and certainly no knowledge of how their money was being invested. They just get their investing amount taken out of every check and let it ride!

The good news with that philosophy is that you don’t need any extra knowledge; the bad news is that you are making one of the biggest financial decisions in your life blind. You are investing (not saving, in most cases) money and just blowing all of your income. Although this is far from perfect, it is better than not doing anything at all. It’s fast, easy, and painless to get started funding your future. So you don’t have to be a financial expert to begin to accumulate wealth. That system is hands off from you and will allow you to focus on other things that are important in your life. The money is given to Wall Street (most of the time) and invested through mutual funds into many different kinds of stocks. However, that system also comes with enormous costs in the form of market losses and huge opportunity costs that we will talk about more in an upcoming articles.

The wealth without stocks philosophy is not that simple (it is pretty easy but not that simple) and will require you to obtain some niche knowledge to take advantage of the markets that are available to you in your quest to build wealth. If you are reading this than I am going to assume that you are the kind of person who is willing to shut off the television to further their own education for even one hour per night. You are willing to sacrifice time on Facebook® and every other social media time suck that are available to us. If that is a true statement than you will have the opportunity to grow and protect wealth at an accelerated rate that should far outpace your colleagues who have bought into the old financial plan described earlier. I want to congratulate you for being one of the few that actually will take the time to design their finances and secure an abundant future.

You are about to be launched into a secretive world (in comparison to the stock market and mutual fund world) that will make simple sense to you. Think of these articles like your own personal wealth buffet and you are free to choose whatever is to your liking and leave the other strategies on the table untouched. However, what will happen for many of you is that you will implement one of two of the strategies and then come back to the well of knowledge to see what else might be a fit for your goals. Just because it is not a fit for you today doesn’t mean it won’t be a fit for you tomorrow.

Just be open-minded and ready to learn!

All the best to you,
John Jamieson