My Reply to a Misguided Father
I just reviewed a wonderful letter from a good father to his “just married” daughter concerning advise on finances and how to start a financial life. I loved it… well, some of it… however, there were some points that made me cringe because of how it will affect their finances by reducing and risking their finances during their life. There are beliefs, taught by the financial world that have perpetrated lies upon the consumer to line their pockets with your money. Let me give examples.
He outlined things concerning purchasing major purchases like a car, house, insurance, education and investments. Here is what I agreed with…
He said to watch for sales and you don’t have to get the Name Brand items when other products are built as well without a label. You can also get them on sale or when they are second hand and still in great or like new condition. For instance, buying a car off the showroom lot is spending a considerable amount more than buying a great used car with low mileage, broken in, well maintained and still has warranty when just a year old. This is a huge cost savings idea.
He said to be sure and buy insurance, adequate insurance for home, auto, life, renters because it is a great insurance policy against catastrophic and you can only get it before you need it… And you will need it… sometime…
He said to take care of your health… stay away from Fast Food, take your vitamins, eat more fruits and vegetables and exercise regularly, with your partner as this will also bring you closer together… Nothing is more crucial for happiness than your health…
Practice being frugal… Make it a practice of looking for deals, sales and protecting your hard earned money from shysters who will try to steal or over inflate prices to take your money away… just be frugal… you don’t have to not spend but over spending or wasting money is a good way to lose your money. Save, protect and grow your assets into a nest-egg that will be used for your lifestyle and your retirement…
Get a good education and learn 3 different things that you can fall back on in case you can’t get a job in your profession. Learn a skill, trade or service that others will pay for so you can stay off welfare and feel satisfaction you are taking care of yourself and family.
Learn how to protect yourself and family in case of catastrophe and learn to prepare for challenges ahead with food storage, emergency supplies, self protection and preventative preparation such as fences, lighting, cameras, etc. so you don’t become a target.
Protect your relationships… if you are looking, keep your eyes wide open… if you are married, committed, keep your eyes half shut… in other words, ask the hard questions and see if you can be compatible in every situation, watch for signs of callousness, selfishness, envy, greed, impatience, unkindness… you know the traits… stay away from them… but when you are committed or married… then accepting the little things that could be a cause of irritation actually become the things we miss the most when they are gone. Forgive easily, then forget it and move on… we all make mistakes… Financially, it’s important to work together, don’t hide anything and make decisions on everything… then you will both accept the outcomes of the decisions you make and learn together…
He goes on to describe in 5 parts about how to invest… this is where I disagree because he talks about being cautious about the risk but learn how to minimize the risk…. Well, that is all well and good, but why have risk at all. He says to pay off your home early, as quick as you can… but I say that puts you at higher risk for 2 reasons. He says to learn how to invest in stocks and bonds, retirement accounts, mutual funds and gold and silver… I say, you are gambling in the stock market casino and should avoid at all cost.
I agree with him generally that the economy is in for a big decline, that we, as a nation have overspent and dumping that debt onto future generations and causing undo pressure and pain on people trying to retire right now, who were lied to about their retirement investments… I agree with his observation that the nation, state, city and Burroughs are looking for ways to increase taxes and add more fees or costs to services so they can gain more money to spend on… “social services”. This comes from you…
Lets look at what he says…
Investment part 1 – Getting and Staying out of debt. While it sounds good on the surface, let’s examine what that really means and see if it makes sense. For most people means they are overspending and in debt to credit cards, toys, junk and stuff! Bad news… and they should work on getting out of debt and staying out of that kind of debt. However, there is another kind of debt that will make and preserve your assets into a fortune when you do it correctly. This is debt for house, education and earning more interest than you are spending or acting like a bank and doing what banks do.
When you buy a home, you expect to pay for principle and interest and of coarse the other costs of insurance and taxes. But let’s look at the principle and interest costs that are accumulating. First, the interest costs can actually make the cost of the home double and triple in cost. You pay for them but they don’t increase the value of the home.
There is also the higher risk a home owner makes when they accumulate cash value or equity in a home in two ways. First, if there is ever a loss of income by the home owner and they cannot make the payments to the lender for 90 days, the lender will foreclose on the home faster if there is more equity in the home. I have a friends who dealt with different situations. One had high equity and lost their home 90 days to the day after they could not pay the loan. The second could not pay the loan and was in the home for over 3 1/2 years and never lost the home but renegotiated at the lower loan amount and lower payments by a half because there was no equity in the home. The equity was working somewhere else.
The lesson to learn here is that the equity in a home in volatile with the economy, and it does not earn interest… it is dead money… stagnant… not doing any good. Oh, I know and hear the same excuses that having a home paid off is good… safe… secure… but what about having someone come along, trip and fall, become permanently disabled and sue you and your home for the deep pockets they see in the equity that is there… you still lose the home because all the equity is gone and you have nothing… No safety there… no security… Taking the money that would normally go to paying off the principle and instead putting it to work in a risk free environment where you have safety, protection, use, control, certainty and enjoyment is far better than having it at risk whether known or unknown. Then, if needed, take the money at some future point and pay off the house with one check…
Investment part 2 – His thought… avoid overspending… I agree and we chatted about that above.
Investment part 3 – He says to invest in Gold and Silver. The economy is in the tank and when it goes below $900 an ounce, then buy as much as you can… well… that’s great for people with a lot of money to “invest” but for those who don’t then putting all your eggs in one basket and tripping and watching all those eggs get broken is foolish… OK, I like his idea of putting some money into gold and silver to hedge against inflation but it’s the same as putting your money into a home where it isn’t earning any interest and goes up and down with the economy. Not a good gamble with your money. Again, put a little away for a hedge but put the rest to work in a risk free, guaranteed rate of return and dividends with total liquidity, use, control, certainty and enjoyment.
Investment part 4 – I agree with him not trusting in the banks… However, we do need to use the banking system as everything moves through the banks. Just be cautious and avoid having your money where the interest rates are less than 1% and could be so much higher… without risk. Having some cash on hand for emergencies is also a good idea. Not too much, not too little depending upon your needs.
Investment part 5 – He goes into stock investing at this point and I totally disagree with his proposal. He does make the attempt to reduce risk… but it’s the stock market gambling machine for Pete sake. He said himself that the markets change hourly… they are very volatile… Why choose risk when you don’t have to and still make returns that beat the stock market by factors of 10 or more…? All without risk…
The answer to all the negatives that I have mentioned is a product that is poo pooed in the financial industry because of the lack of knowledge and the persistence in passing on bad and inaccurate information by those who stand to lose money in high commissions or fees. What I am referring to is called Mutual Cash Value Structured Whole Life policies used in an Infinite Banking Concept.
The Infinite Banking Concept or what we like to call the Family Banking Plan is just that… a concept but we utilize the most efficient tool available to us to maximize the efficiency so there are savings, protection and growth with liquidity, use, control, certainty and enjoyment of your assets while you living your life and preparing for retirement as well as using it for retirement without risk, without taxation and without loss of control… All the good without the negatives… It’s awesome and you should check it out here…
The concept is based upon what the banks do to gain enormous returns on their money based on 3 major things. Rates of Return, Volume of Money and Velocity of Money or how often can you turn the volume of money at the best rate of return… without any risk on your part. It is a very sound concept that has been used by the banks and big corporations for over 120 years for their liquid assets and they love it because of all the benefits and safety. I’m suggesting that you should too and save, protect and grow your assets without risk
Click Here to watch a short video series that explains concepts the banks do not want you to understand… cause it makes them look bad and stops you from giving them money month after month after month. They hate it!
Click Here to request more information on the Family Banking Concept and the tools that we use to save you money, protect your money and make more money.
Call us to reserve personal time with a team member who has expertise and personal experience in all the financial tools available today that will save, protect and grow your money safely, without risk and can still outperform the stock market. 801-404-2833
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