Becoming Your Own Banker by R. Neslon Nash

I just have finished my third book touching on the concepts of the Infinite Banking Concept (IBC), Becoming Your Own Banker by R. Nelson Nash. This book however is deemed the bible of IBC. Nash developed the concept in the early 1980’s and I think he’s incredibly clever for it. He started to use Whole Life insurance policies (from MUTUAL insurance companies) to run his finances through. And in this book he analyzes this process under multiple lenses.

This concept seems so crazy to me because I’ve been relatively close to insurance products, as I’ve been working in actuarial roles for about ten years now, and yet am relatively new to the IBC scene. Nash says this concept is an exercise in creativity and that people should try to look at things differently than how they were intended to be used. Moreover, spend time finding the best environment to fly in and not necessarily making the fastest plane. We’re taught to just make more and more money instead of how to identify which environment would grow our money the most efficiently.

While this book is full of insurance illustrations showing premiums going into a policy and the corresponding cash values that accumulate over the years I think the psychology that one needs to master in order to succeed with this long term is what I’ll take away. He mentions 5 factors that one must master/overcome:

  • Parkinson’s Law
    • Work expands to meat the time envelope allowed
    • A luxury, once enjoyed, becomes a necessity (think being exposed to air conditioning and then feeling like you can’t live without it)
    • Expenses rise to equal income
  • Willie Sutton’s Law
    • Willie Sutton was a bank robber, 1901-1980, who robbed banks because, “that’s where the money is.”
    • Whenever wealth is accumulated someone will try to steal it
    • Who’s the biggest thief: IRS
    • All of this started by income tax law in 1913
    • Good quote by Frederic Bastiat, “The state is that great fiction whereby everyone tries to live at the expense of everyone else.”
  • Golden Rule
    • Those who have the gold make the rules
    • We’ve somehow given up the banking function in our lives
    • Americans are moving towards a tendency to think many problems are outside of your control and look to government to fix
  • Arrival Syndrome
    • This occurs when you stop learning because you think you know things
    • Daniel Boorstin: “The greatest obstacle to discovering the shapes of the earth, the continents, and the oceans was not ignorance – it was the illusion of knowledge.”
    • There was something that Ray Dalio had said about when he’s going through decision making. He said he never says I know something, he asks how do I know that what I think I know to be true?
    • Need to constantly be learning and be insanely open-minded. Don’t get caught in your old thinking. Be open to using things in a different way than they were originally intended.
  • Use it or lose it
    • Thinking it’s just a matter of interest rates is a FATAL ERROR
    • “It has to do with recognizing where money is flowing to and the failure of charging interest to yourself for the things that you buy using your own banking system.”

There’s an analogy he uses throughout the book comparing starting a banking policy as running a grocery store. Something where you are the owner, but at the same time a consumer.

The bottom line: The more of those interest payments, that you’re paying to other banks, that you can recapture and direct to YOUR bank the better off you’ll be. It will take extreme discipline and desire to not live like the herd.

I now have two policies that I’ve started capitalizing and can see there being many benefits down the road:

  • I won’t have to spend so much time going through underwriting when looking for financing.
  • Save on acquisition costs (think closing costs to refinance property)
  • Major passive income

We’ll be releasing a podcast episode on this book next Sunday which will be posted here

If you want to join the “weird” people and get out of this traditional banking system, the book is a wonderful place to start:

Amortization Tables – Visualize your Mortgage/Loan Payments

I thought it would be nice to provide some visuals for your loans and mortgages and as a tool to help your decision making. This workbook can help answer some of the following questions, and many more:

  • How much more interest would I pay on a 30 year mortgage vs a 15 year mortgage?
  • What rate would I have to lock in to hit my target payment of $X/month?
  • At what point is the amount going towards principal surpassing the amount going towards interest?
  • Does it make sense to pay cash for my next car?

Dynamic amortization table and graphs included in the downloadable excel file below

Please download the Excel file and watch the accompanying video to get an understanding of the workbook structure and features.

If you want a further deep dive on some of the topics discussed here are some links

Weekend Thoughts

I’ll keep this short and sweet. I’ve been listening to some great podcasts and have some ideas on things I can provide you all. I’m going to be adding some downloadable excel files for helping people with their finances and analyzing deals. For now I’m making Make Better Bets free today and tomorrow so click below!

Free this weekend!

Sanity is the Future of Wealth

Although Aaron Clarey has struck many as being quite pompous and arrogant I found his book “Sanity is the Future of Wealth” not just entertaining but thought provoking. I’m going to put down some of my notes. I will say this book is very short and definitely worth the read.

Gist of the book: Despite having effectively unlimited resources human pettiness, jealousy, envy, and greed springs eternal, and thus damns most people to a life of misery, anger, hatred, and envy.

I: De-Coupling Money from Wealth

People that have 1 million times more wealth don’t really have 1 million times better lives, or live substantially longer

II: What Happens Post-Unlimited Wealth?

Key to zen like state is realizing only thing in the world that matter is other humans. Other’s company is the true source of happiness.

III: Forever Lazy = Forever Envious = Forever Inferior

At core Leftists are lazy. Our society, while able to somewhat redistribute money and wealth we are not readily able to redistribute intangible items like talent, friends, love, sex, etc.

Leftists will: 1) Redefine excellence, accomplishment, and achievement. 2) Irrationally and falsely value traits. 3) Participate wholly in professional victimhood

IV: Redefining Excellence, Accomplishment, and Achievement

Lying to themselves protects their feelings. Examples include not keeping score at sporting events, eliminating GPAs, fat acceptance movement, etc…

V: Irrationally Valuing Traits

Putting value on things one is born with.

Examples would be born male/female, being Jewish/Christian/Muslim, being white/black/brown.

INSTEAD of actual talent or hard work

VII (VI didn’t really have anything to say on): But at What Cost?

“Reality Principle” – The further removed your decisions are from reality, the less effective they will be.

VIII: Sanity as Wealth

Resolving income inequality only removes income inequality from society but leaves other aspects on the table: BEAUTY, STRENGTH, TALENT, SKILL, EXCELLENCE, CREATIVITY, LOVE, PRIDE, SEX

Notes/Takeaways

It seems like every so often I lose track of what is truly important and that is your time and your interactions with people. I have been a victim sometimes of trying to optimize my balance sheet (since that’s what I track) at the detriment of other parts of my life. I’m not saying I will stop tracking my net worth but perhaps I need to revamp my balance sheet. Maybe I need to look at my assets and liabilities under a time component, and not just in dollars. Think not just of ROI of my money but the ROI on my time for undertaking certain activities. And maybe I need to take stock in important things like number of days I’ve spent with my family and friends.

I have felt pressure lately, through inflation, that does have me looking at money very differently. But the idea that this book brings up on how a group could try to redistribute intangible items is quite thought provoking. It really just makes me think even more that I need to put the blinders on and just focus on myself, because if I just try to be better no one can take that away from me.

When I read about the reality principle I started really thinking. What decisions am I trying to make in my life, might be too far removed from reality? I landed on making some remodels to my rentals, which I still haven’t actually been in over the last four years. I’ve been removed from reality, and thus decided to line up time to go in each of them the next two weeks.

Thanks Aaron Clarey:)

I will be doing a podcast episode on this book soon so stay tuned to The Brothers on Books Podcast

Get and Stay Money Fit – House Hacking


The housing markets seems crazy now but it may be as good of a time as any to reevaluate what you’re doing for housing. Should you keep renting? Should you sell your house? Should you move to a lower cost of living area (maybe with your new found remote job) and buy something? I think many people are asking themselves these questions.

I was listening to a stressed caller on the Dave Ramsey Podcast explain that her rent was now over 50% of her take home pay. She was making 40k gross working at an insurance call center near Phoenix, AZ. She didn’t want to go too far away because of her child’s father, her family, and questions over certain surrounding areas’ safety. This type of story seems to be becoming more and more common, fears of inflation and stressed out over what to do to get some breathing room.

Stories like these make me feel very grateful that I discovered house hacking when I did. “House Hacking” is when you use your primary residence also as an investment, through renting room(s) out to offset one’s normal living costs. It allowed me to greatly lower my living expenses, create a more robust life, and put those savings into passion projects that will hopefully flourish into something great down the line. I’m a huge fan of house hacking. I know it’s not for everyone but think everyone can learn something from the concept. If nothing else, it can at least give you a moment to pause and evaluate whether certain things are needs… or just wants.

Todd Chistensen, of The Money Fit Show, was nice enough to let me come on and describe my experience with house hacking. We explore the good and beneficial knock-on effects, like learning more about real estate as well as the bad, like hours spent cleaning the pool and having to go to a mediation.

Listen to the show: https://open.spotify.com/episode/7y3hNjOzk9CzYeDL8KdAWP


If you want to get connected with cool people like Todd, whether you’re a host or a guest, Podmatch has been the best I’ve experienced thus far: https://podmatch.com/signup/mbb

I LOVE ME SOME MATCHA! THE SAVINGS AND RATE OF RETURN OF MAKING YOUR OWN DRINKS

I admit I was sucked into the Starbucks life while studying. I’d get bored of being in deathly quiet environments, like the typical library, and would need a change of scenery, and some matcha… I’d go through phases where I’d be getting matcha frappuccino’s every day. Those frappuccino’s today cost just south of $7.

After I passed my last actuarial exam and received my FSA my wife got me a matcha starter kit as a present. This included a matcha mixing bowl and a whisk, and of course some matcha from the matcha cafe. At first I was only using it for regular tea, nothing fancy, and I noticed the quality was really quite excellent. I then thought maybe I could make the frappuccinos myself. I found some recipes and started experimenting.

Since I’ve started making the frappuccinos myself I’ve noticed a couple of things. I spend a lot less money, both in the actual frappuccino cost and the gas that I was spending every morning driving to and from Starbucks, and the quality is much better. Some of you may be rolling your eyes and saying, “well duh dude.”

Sometimes we get caught up in habits, and I originally got sucked in because Starbucks was the only place I knew that had matcha, and they’re hard to break. Sometimes we need an outside force, like a matcha starter kit, to generate a change in mindset. This did get me thinking though, how much money is this change in habit worth to me today?

For this analysis I’m assuming I’m saving $7 each day from going to Starbucks but need to pay the following over time to make my own frappuccinos (these are estimates as I haven’t been doing this for long). I’m also assuming all costs go up 7% each year:

My question is what is this habit worth over say a five-year period?

Cash flow:

Cumulative cash flow:

If we were to discount these cash flows back to today at 7% the net present value would be $7,036 and if you think I should be discounting at a higher rate, say 15%, the net present value would be $5,900. Regardless this is a lot of money. I did exclude blender costs and the savings in gas but I would guess for me that would only cause those estimates to increase.

This change in habit is worth a lot to me today! The IRR is out of this world, albeit on relatively small amounts. In fact I feel so much richer that I may go put 5k into something useful, maybe a course or two:)

New Goal Needed

I’ve gone a few weeks now, after getting COVID again, we’re I’ve had little to do with any real goal setting, and I think every so often one needs a break. I typically use a journal I made, 15 Weeks to Pass an Actuarial Exam, that asks questions oneself questions while (hopefully) reaching a goal every 105 days. Two goal journals ago I wanted to get another rent property, and we did exactly that in Myrtle Beach, SC right as my 105 days were coming due. This past goal journal I made it my goal to reach out to 100 different podcasts to try to get on their shows and provide value to their audience. I can happily say that I was able to do that and in the process got to talk to some very cool people. When I broke the goal down to just reaching out to two podcasts a day it was a cinch. “Inch by inch is a cinch, yard by yard is hard.” I even included some of these episodes below:

I’m still tinkering around in my head with what I want the next goal to be. One thing I know for sure with dealing with myself is that journaling, and keeping myself responsible daily, has truly had a life changing impact.

If you have a goal you’re working towards please share with us in a comment. If there’s anyway I can help you attain your goal let me know, would be glad to help:)

Change Your Mind, Change Your Future

Apologies for not posting in awhile but I’ve been on a reading rampage. I wanted to share links to some of the material I’ve been looking at. My last post was a summary of Garrett Gunderson’s What Would the Rockefellers Do? I have a link to the last post here and below it a video summary of my big takeaways.

Second Change by Robert Kiyosaki was also a great mindset shift book. It talks of how what worked in the past may not work so well going forward and the “rich” could end up poor while those who understand the changes and incentives could profit heavily:

Hopefully this unlocks some thinking to pursue what is possible. It’s all in your head…

What Would the Rockefellers Do?

I just finished reading What Would the Rockefellers Do? by Garrett Gunderson. This book talked about how the Rockefellers banked and how they preserved their wealth going through generations. Gunderson speaks on the overfunded whole life policy concept, or what we’ve called the infinite banking concept. It’s the concept of putting money, instead of into a traditional bank, into a whole life insurance policy. These are best utilized through a mutual insurance company, as opposed to a stock company, because the policy owners share in the profits of the company, in the form of dividends. One can put money into the policy and then take a loan out against the policy. The cool thing is the original money in the policy continues to grow with uninterrupted compound interest, as the loan you’re taking out is against the policy (used as collateral) NOT from the policy!

This is a total game changer as it provides another asset to borrow from and is super liquid. If you’re like how I was and thought it was wise to pay cash for a car, and it may still be for some, you might start thinking differently. When I paid the 11k for my last car the money was gone like that! Poof! The future interest that that money could have created has now vanished, never to be seen again. If I would have financed it I’d be paying the principal back to the lender with interest, but a pro in this case would have been that I wouldn’t have needed the cash at the start.

With one of these banking policies one does need to save up the money but once it goes into the policy the future opportunity cost is no longer lost. It keeps growing with uninterrupted compounding interest. If one were to die the outstanding loan amount would just be deducted from their death benefit. See it as an advance of your death benefit.

I actually just started my first Mass Mutual high early cash value whole life policy through the help of Chris Naugle and his Money Multiplier group. It came at a good time because we have been thinking about refinancing our house but wanted to update some things in the house first, including a new kitchen and new paint, to be able to (hopefully) pull a bit more cash out during a refi. I deposited 15k into the policy, which I’m scheduled to do for the next nine years, and immediately borrowed 13.5k against my policy. If I had just paid the 13.5k for the start of the kitchen and paint the future earnings of those dollar soldiers would have immediately evaporated but now that earning potential has been locked into the policy and will grow with a guaranteed 4% (by law), and more typically around 6% with dividend.

One thing I have loved about this experience so far is just how easy it was to request the loan. It was literally a button push and in about 48 hours I received the loan right into my bank account. No dealing with banks and/or underwriting documents. No fees or closing costs. It was easy.

Another aspect I like from this book is that Gunderson really comes from an abundance mindset, not a scarcity mindset. He talks about not restricting yourself so much, and putting the things you love and enjoy into your “spending plan”. Don’t feel bad about spending and living for today, but at the same time have a respect for your future and legacy that you’d like to leave.

One aspect of the book that I hadn’t really thought of is trusts. He talks on this mechanism that helped the Rockefellers control the wealth that was originally created by John D. Rockefeller. From the explanation it sounds like one could setup a governing body, or board, that is in charge of allowing disbursements from the trust. For example you probably wouldn’t want your grandkids taking out money to go do drugs and harmful activities, so that might not be allowed. Alternatively if they wanted money for a trade school education or were seeking capital for a business venture, maybe with approved business plan, that might be allowed by the trust.

I definitely enjoyed the book. It’s a quick read but I definitely appreciate what he’s getting at now that I have some hands on experience with dealing with these overfunded whole life policies. I honestly think I should start another one soon.

Here’s our discussion with Chris Naugle where we get a brief look into the infinite banking concept:

Going to The Moon Eating Tendies; A Review of WallStreetBets by Jaime Rogozinski

While WallStreetBets, the Reddit group, started in 2012 by Jamie Rogozinski it was really the GameStop short squeeze in the third quarter of 2020 that brought it to primetime. Tendies, diamond hands, degenerates, apes… These are some of the terms that are frequently used on the reddit group. I went into this book thinking it would be around the fiasco that was the GameStop short squeeze but I was wrong, and pleasantly surprised.

While other investing groups are very conservative, with a long-time horizon, WallStreetBets fills the void for many risk-taking hombres who want to make a short term, oftentimes highly risky play, in search for equally crazy high returns.

What I liked about Jaime’s approach with this book is that he paints a picture early on for what has cultivated such an environment of risk taking. I would summarize as the following: Many of the people in this group look at Wallstreet as an exclusive casino, which most of society is not invited to. Secondly, taxpayers had to bail out the banks in the great financial crisis in 2008. Lastly there are “safeguards” that have been put into place, like the classification of a “pattern day trader” which requires 25k in an account, which create an access issue while not really saying anything about the knowledge of the trader. And that’s not even with the trillions of dollars that are being printed as a macro backdrop, causing inflation and, once again, incentivizing excessive risk taking.

You want to make a bet? What better way to go all in than with options, the leverage instrument of choice it seems for the members of WallStreetBets. Options are instruments that derive their value from an underlying asset. The option to buy a 100 shares of Tesla in one week’s time at a price, referred to as the strike price, of $1400. That option there is what the industry calls a “Call” option. The option to sell is referred to as a “Put” option. These can be very safe or very risky depending on the type of option one is buying or selling, and many cool combinations can be put together for intricate payoff diagrams. Can you scream Iron Condor?

One thing about WallStreetBets is that people share a lot, many people would characterize as excessive. It’s not uncommon for members to share five and six figure losses, referred to as loss porn. While those people often get ragged on it creates a forum for members to seriously learn strategies and methods of investing, and dealing with the psychology of money, which I don’t think gets talked about enough.

I thoroughly enjoyed this book and I hope that you’ll listen to The Brothers on Books Podcast review of it:

I will also leave you with an epic compilation of YOLO bets performed and then shared on WallStreetBets: