The Freedom of Flexible Finances

Posted By: Olivia McGraw ICOR Blog & News ,

We all wish we knew what will happen in 6 months. Will taxes increase? Will the market drop? Will the housing boom bust? Will tenants renew their lease? No one knows for sure what will happen, and worrying is useless, so what is the best way to prepare for the unknowns? Quite simply—be flexible.

Flexibility is one benefit of the best financial decision my husband and I have made thus far… the decision to start our own private family banking system. Allow me to explain.

Privatized family banking has existed for over two-hundred years, but primarily used by the wealthiest families in America. It was a hedge against their riskier endeavors that also happened to work out, such as the Rockefellers and oil, or Walt Disney and his magical kingdom. It is the process of using a properly structured, dividend paying, permanent life-insurance policy to finance other purchases and investments and repay yourself with the interest. By using this process, the policy owner becomes the banker and sets the terms of the loan. The key to why this is better than a savings account, is that the money placed inside the policy grows even when there is an outstanding loan. If used for investments, your money grows in two places. For my husband and I, the flexibility benefit allowed us to pivot our plan when unexpected circumstances knocked on our door.

We started our banking system when our oldest daughter was six months old. Our policy was designed to have flexible premiums and flexible loan terms. A year and a half into starting our banking system we desperately needed a new car. We found a great deal, took out a policy loan, paid “cash” to the dealer, then set up regular payments back into our banking system. However, two weeks after bringing the car home, we were notified that Uncle Sam wanted a significant and unexpected sum for taxes. Our emergency savings now sat in the driveway. Rather than panic, sell the car, or moonlight at Starbucks, we stopped all payments on the car, because we were the bank. The good news is that we quickly recovered from the situation, paid our dues, and kept the car. Flexibility allowed us to only pay the loan interest for the first two years, and we recently restarted our original plan and monthly payments—almost two years after we purchased the car. Flexibility gave us options on how to approach the situation as well as peace of mind that we would not need to go into debt to pay taxes. As a bonus for using this system, our money will have grown by $11,000 while we drive our car!

When my team and I strategize for our clients, we take the unknown into consideration. Our clients did not panic when a global pandemic rapidly changed the financial climate of our country. Even for those who were laid off, had tenants unable to pay rent, or simply needed to change course and create a larger financial cushion, flexibility was the critical element in their strategy that allowed room for the unknown.

We don’t know what tomorrow will bring. But we can help you prepare and make wise decisions. Contact us today and schedule a free consultation:

Jason- jpowers@unbridledwealth.com  or Olivia- omcgraw@unbridledwealth.com

 

We look forward to strategizing with you!