Posted by Becoming Your Own Bank Advisor – Nick Drzayich

According to Investopedia the term Hyperinflation means: “Extremely rapid or out of control inflation. There is no precise numerical definition to hyperinflation. Hyperinflation is a situation where the price increases are so out of control that the concept of inflation is meaningless.”  There have been some rumblings within the financial world of hyperinflation being a real threat to our country and something that would eventually lead to the collapse of the Dollar.  I want to talk briefly about what we know and don’t know about hyperinflation and the potential collapse of America’s currency.

First, it should be noted that the collapse of the Dollar would have catastrophic effects around the world.   Unlike in previous empires and kingdoms where we have seen the currency collapse,  the Dollar is the world measurement for  all major commodities such as oil, gold, silver, etc.  Also, many other countries’ currencies are pegged to the dollar, meaning when the dollar goes up many other currencies go up as well and vise versa.  So it is important to understand that the collapse of the dollar would have a huge impact on the worldwide economy, not just America’s.

I have been asked multiple times what will happen if the Dollar does collapse and we move to a world currency and America no longer uses the Dollar.  My answer is short and simple, I don’t know.  I don’t know how anybody can claim to know the outcome of something as drastic as that because it has never happened.  So what do you do to make sure you are covered either way?

Many people are cashing in their money for gold and silver, banking on the fact that when the dollar collapses they will still have something valuable to trade.  Buying commodities such as gold, silver, real estate, etc. is a great idea and a great hedge against inflation.  However going to the extreme and cashing in all your chips for these commodities may not be your best bet.  Allocating some of your investment money for commodities is a great idea, and it’s an even better idea if you use your private banking system to invest in those commodities because everything gets better with banking.

When push comes to shove it makes sense to try and cover all your bases the best you can.  Without having any way of knowing exactly what the outcome will be regarding hyperinflation and the collapse of the Dollar all you can do is prepare to the best of your ability and don’t jump to any extremes.  Infinite Banking is, in itself, an incredible hedge against inflation and when coupled with the purchasing of commodities like gold and silver if can help prepare for a future that is uncertain.

Posted by Becoming Your Own Bank Advisor – Nick Drzayich

We are all aware that for the past couple years tax rates have been incredibly low.  For a look at how the current tax rates compare to past tax rates take a look at this snapshot of the Truth Concepts Calculator. Many would argue that taxes are being held artificially low as our debts as a country continue to grow out of control.

Recently the state of Illinois increased its personal income tax rate by two thirds, from 3% to 5%.  This along with a corporate tax hike was introduced with the hopes of whittling down the state’s $13 Billion deficit.  Illinois is not the only state working to reduce a massive deficit.

California governor Jerry Brown is looking to extend tax hikes passed in 2009 for five more years in order to close the state’s  huge budget gap, estimated at $25.4 billion.  In Florida more tax cuts could be on the horizon regardless of the looming $4 billion shortfall.  In Georgia there is a proposed ‘workaround’ to tax cuts – to make up for lost revenue a tax could be placed on groceries (for the first time in 15 years) and other services.

Simple economics will tell us that at some point in the future, either sooner or later, taxes will need to go up in order to pay for the debt our country has racked up.  Whether it’s a blatant hike in the state and federal income taxes or a subtle silent tax on goods and services there is no way around the fact that your taxes will, in some way, need to rise in order to bail out our country.

The question is do you want to continue to defer or postpone your taxes until a later date?  Of course there is no guarantee that taxes will go up but judging by the current deficit status of the nation I’m not going to take any chances, I would rather pay my taxes now, at the current rate, than put it off and pay an unknown tax rate at sometime in the future.

Posted by BecomingYourOwnBank.com Advisor – Nick Drzayich

I ran across this graphic today and thought I’d share it with everyone…it is a great depiction of what has happened to the average savings rate in America. Along with this apparent problem of lack of savings there is also a problem with the location of our savings.  We’ve been raised to believe that putting money into mutual funds, qualified retirement plans and other traditional vehicles is considered ‘saving.’  In reality the money contributed to these vehicles is injected into the market and is very much at risk of diminishing….just ask all the people that planned on retiring during the past couple years, they have watched as their ‘savings’ were cut in half or maybe more.

More and more people are beginning to realize that the traditional methods of financial planning are failing and are looking for risk free, predictable ways to actually save their money instead of investing it and hoping for the best.

Posted by BecomingYourOwnBank.com Advisor – Nick Drzayich

There is a reason why Infinite Banking is hinged on the foundational principles of the banking industry.  When these principles are understood it makes perfect sense why banks are some of the most profitable institutions around.  It is also easy to see why there has been an increase in the number of bank failures over the past few years.

Banks take advantage of the principle of velocity of money which is the rate at which money is exchanged from one transaction to another (investopedia.com).  Lets look at how this is done:

Say you deposit $1,000 into your local Wells Fargo or US Bank, the bank will promise to give you a small return on that money as a reward for letting them use it, we’ll say 1%.  The bank then turns around and loans out that $1,000 to a business or individual for a variety of different loans.  The borrower will have to pay interest on the loan because they are using the bank’s money, we’ll say 10% for ease of numbers.

Looking only at the percentages you would be right to say that the bank is making 9% on their money (10% paid from the borrower less the 1% paid to you, the depositor).  However the dollars tell a different story.  Over the course of a year the bank has paid you 1% on $1,000 or 10 dollars.  During that same  year the bank has collected 10% of $1,000, or $100, from the borrower.  So essentially the bank invested $10 and made $100.  What is the rate of return that will turn $10 into $100?  The answer is 900%.

Understanding the mechanics of banking will help solidify the reasoning behind why it is used as a model in the Infinite Banking Concept.

The failure of hundreds of banks over the past few years (161 in 2010 alone – www.fdic.gov) is a valid point that is raised.  However the reasons behind bank failures are “man made,” the system is sound and based on solid concepts, but the individual players involved are not always as solid.   When borrowers are unable to repay their outstanding loans the bank suffers and if this continues the bank will implode.  We saw this happening left and right due to large portfolios of risky loans.  The key to understand is that as the owner of your own private banking system you take the place of all the players in the banking equation.  You are the depositor, you are the borrower and you are the banker.  The only way your private banking system will fail is if you are not honest and accountable with yourself.  The success or failure of the system is contingent on you.

In conclusion, you are always a depositor, and always a borrower, why not become the banker. After all, the banker makes the profit.  Think of the difference it would make if you could put the velocity of money in your corner and use it to accelerate your financial situation.

Posted by BecomingYourOwnBank.com Advisor – Nick Drzayich

Maybe you are someone who has been extremely disciplined with your finances and you’re thinking that implementing the Infinite Banking strategy won’t better your situation. Most likely you have no debt, and feel that paying cash is the best option, you probably even have some investments on the side that you assume with steadily grow, maybe real estate, gold or another commodity. I want to explain why running those investments, as well as your cash purchases, through your private banking system will only make things better.

Lets say you’ve accumulated $100,000. Now you want to go out and buy some gold or a piece or real estate. Normally you would have saved that money in something like a mutual fund, but by having that money in your banking system you create a tax advantage that normally you would miss out on.

Here’s how someone implementing You Be The Bank would buy that gold or real estate.
1. Accumulate the required amount of money inside their banking system.
2. take a loan from their banking system in order to purchase the investment.
3. Using the return on investment they pay themselves back plus interest.
4. Have the ability to write off the interest they are paying TO THEMSELVES.

So not only will they be able to replenish their banking system with the principle and interest of the loan but they will be able to save on taxes by writing off the interest they are paying on the loan, the great part is the loan is being repaid the their bank!

This is just one of the many inherent advantages to implementing the Infinite Banking Concept.

Posted by BecomingYourOwnBank.com Advisor – Josh Thompson

Tis the season… And surprisingly, in the midst of all the decorations, I’m shocked at how much of the exact same advice is being given out in the entire blogging world.

Everything I read is about “saving money this holiday season.” Articles on cutting down expenses by a few cents here, a few cents there, and don’t get me wrong saving money can be great.

But I’m just so surprised by how hard people will work to save a few cents, and how little they work to save hundreds of thousands.

What am I talking about, well I’m talking about You be the bank, also known as Becoming Your Own Bank or Infinite Banking.

With be the bank, or Infinite Banking, you can start getting your money to work for you, by getting the velocity of money on your side. By doing this you stand to save a great deal of cash that you would normally send right over to the bank on purchases that you finance, be it big purchases like cars, boats, etc or just credit card interest.

The car example is the most common You be the bank example. You are losing out on the banking equation, or the velocity of money, if you are financing cars through the bank, OR if you are PAYING CASH for vehicles.

Now I know that is usually where people stop me. “I always pay cash for my vehicles, isn’t that a good thing?” Well I won’t say it’s a BAD thing, I will only say that with You be the bank there is a better way. And that way is by financing your own purchases.

By financing your own purchases you become the banker. Now, by treating your money like you would treat the actual banks money, you can build wealth by paying yourself interest.

Now couple this with a secure and tax deferred life insurance policy, setup correctly by a You be the bank professional, you can build wealth by doing what you already do…spend money.

By using the You be the bank concept, you put yourself in a much better overall life situation. Watch our video series to learn more about how to be the bank.

Once you have your own private banking system, then you won’t feel so bad about that 10 extra cents you spent on that bag of chips.

Post by BecomingYourOwnBank.com Team

We are often asked here at BecomingYourOwnBank.com to recommend the most concise overview of the infinite banking concept. Because infinite banking is truly a system it will take some explaining no matter how you slice it.  Eventually you will need to sit down with an advisor who has helped individuals implement the system and who can explain the ins and outs and mechanics of the process.

In the meantime one of the best ways to get your feet wet is to watch through our  video series. You can sign up on the form to the right or at our website Becoming Your Own Bank to receive this video series for free.

The first video is about 15 minutes long, and it explains Infinite Banking in a solid and easy to understand fashion. After that there are a few more videos that are more specific to different way you can use Infinite Banking to increase your wealth.

I could type for an hour and give you something to read as an overview of Infinite Banking, but the video series is just so much easier to understand, and it gives you the visual understanding as well, which helps solidify your knowledge as opposed to just reading an overview about Infinite Banking.

So sign up for our video series and learn everything you need to know about Infinite Banking.

Guest Post by Dallon Christensen

According to Small Business Trends and CNNMoney.com, small business lending suffered mightily during 2009.  The decreased level of lending could be expected as the Small Business Administration’s loan failure rate increased to 12% in 2009.

General Dwight Eisenhower once said, “Plans are nothing; planning is everything.”  No business has created a great business plan without a detailed planning process complete with financial analysis and careful review of assumptions.  Your goal should never be to create a business plan.  Your objective should be to develop a great planning process that results in a professional business plan.

You should remember three key points about about a business plan to make it reasonable and realistic.

• Business planning forces you to write your assumptions and calculations on paper – Veteran Inc. magazine columnist and entrepreneur Norm Brodsky counsels fellow entrepreneurs to write out their projected numbers with pencil and paper first.  While you may not need to start that way, it is important to develop your calculations somewhere than in your head.  You must review the numbers to see if they make as much sense on paper as they did in your thoughts.
• Business plans demonstrate the level of thought related to your business goals – Business plans need not be small books.  In 2009, I helped a client create a detailed startup business plan of less than 40 pages, including all spreadsheets and graphs. Bankers and other investors want to see that you understand your market and how you will make money.  A well-prepared business plan naturally comes from a well-done planning process.
• Business plans help you tie your business results to your overall financial situation – No banker will cover 100% of your funding needs.   Just as you make a down payment on your house, you also need to provide a portion of your funding to align your interests with risk.  The business planning process helps you identify where your business and personal financial goals align or do not work.

Business plans may not be the difference between business success and failure, but business planning may be a key factor.  The attached graph from Palo Alto Software founder and business planning expert Tim Berry shows three examples of how business planning creates stronger, more profitable businesses.

Dallon Christensen is a business coach and contract finance executive based in Bettendorf, Iowa.  Dallon helps entrepreneurs and small businesses see around the corners of their businesses and turn financial numbers into plans of action.  You can find Dallon at his blog, www.dallonc.com, or on Facebook, Twitter, LinkedIn, and YouTube.

Post by BecomingYourOwnBank.com Advisor – Nick Drzayich

If you’ve done any research on The Infinite Banking Concept you know there is a sea of information online about the concept.  Not to mention plenty of books written to explain the intricacies of Becoming Your Own Bank.  Of all the books written there isn’t one that gives an overview of the concept in laymen’s terms that are understandable by the average person.  This was the task that Dan Thompson, President of BecomingYourOwnBank.com, set out to conquer – write a book about Infinite Banking that everyone would understand.

Dan’s 25+ years of experience in the financial industry and nearly 10 years experience helping clients implement the Infinite Banking Concept would help shed some light on why Becoming Your Own Bank is such a sound financial decision.  As with any financial decision, one has to be comfortable with what is happening with their money and that is exactly why Dan decided to write a book focused on Becoming Your Own Bank.

Not only is there an overview of the necessity behind Becoming Your Own Bank but also an in-depth, easy to understand explanation of how the mechanics of the concept work.  Getting educated about Infinite Banking is something everyone should do, we’ll be the first to say that it may not be a good fit for everyone, but understanding right now what most people wish they would have known 5,10 or 15 years ago can be crucial in creating, maintaining and transferring wealth.

You can find Dan’s book, The Banking Effect,  on amazon.com or by clicking here

Post by BecomingYourOwnBank.com Advisor – Nick Drzayich

Becoming Your Own Bank is often referred to as The Infinite Banking Concept, and for good reason, the ways Becoming Your Own Bank can be used truly are infinite. There are over 100,000 families and individuals across the country using Becoming Your Own Bank for thousands of different reasons, many of which use their ‘banks’ to fund vacations.

How do you pay for your vacations? I’m guessing you use one of two methods
1. You save and save and save until you have enough to pay cash for everything from the plane tickets to the souvenirs.
2. You put it all on your credit card and pay it off over the next few years.

Becoming Your Own Bank offers a third option that combines the 2 options above and puts you in a spot to leverage your own money.

If you decide on option 1, that is commendable as you are not going into debt to vacation, however, after 2 weeks in a tropical paradise what do you have to show for it besides some pictures a souvenirs? The cash you used to purchase everything is gone. You will never see it again and it will never be available to make you any more money.

If you choose option 2 you are able to enjoy the option of paying off your vacation over the next few years, but as we all know, a large portion of that payment is interest that you are paying to the credit card company. Your vacation just cost you more than it should have, and again you have no chance to ever use that money again, it’s gone.

Becoming Your Own Bank positions you on both sides of the banking counter. Much like option 1, you spend the time to build up your ‘banking reserves.’ When the time comes to take that dream vacation you put your banking suit on and loan yourself the money needed to pay for your vacation (everything from the plane tickets to the trinkets). Seeing as how you have just received a loan from your ‘bank’ you will need to pay it back, a loan repayment plan is drafted and you begin making payments back to YOUR bank.

To compare to options 1 and 2 – after all is said and done you have all your souvenirs, pictures and memories PLUS all the money you spent on your vacation back in your account along with the interest you normally would have paid to the credit card company. To make option 3 even better let me share with you a little known fact about Becoming Your Own Bank:

When you took that money out to fund your vacation it was as if you never touched it. So, not only were you able to go on a dream vacation but your money continued to steadily grow as if you had not touched it. In other words your money was able to do double duty.

In this simple example you can see the wealth building power behind Infinite Banking. Understand that the vehicle used to house your banking system must be set up properly and by someone who has spent the time learning the intricacies of the vehicle.  The advisors at BecomingYourOwnBank.com have been tirelessly studying this concept and understand how to use it.  Take the time to call or email and you’ll be offered a zero obligation chance to see what your specific situation would look like implementing Infinite Banking.