True Financial Freedom
Go to school, get a good job, find the cheapest APR for your mortgage, auto loan, and credit card, find the cheapest insurance, contribute to your tax-qualified plan…
This is of course very banal. The above is the American Dream in the mind of most folks, and it certainly was in my mind (if you include church and family but I’m focused on finances here). Isn’t there something about it that makes you question its veracity though? The Bible says that a debtor is a slave to the lender, and this was essentially what slavery was, see Genesis 47:19. There must be a better way than living off of credit. Conventional wisdom tells us to save more. This is only half of the truth.
The Dave Ramseys of the world tell you to just pay cash for things. While this is cheaper in the short term than buying toys with your credit card, he seems to be living quite well off of his advice. What does he tell you to do with the extra cash you keep from paying in cash? He tells you to save it, which sounds good, but savings are only as good as the vehicle in which you save them. So, logic tells us to ask this next question, where does he tell us to save it? In the market with mutual funds of course!
Why is it that everyone, including Christians (e.g. Dave Ramsey), promote investing in the market like mutual funds we know that the government will tax us exorbitantly through capital gains (with money already taxed via income tax), inflate the money supply and therefore prices, and the managers of those funds will also take their fair share? What happens when the market goes down, which completely halts and reverses compounding growth? “Just keep it in the market, because it will go back up,” they say. That’s not even a guarantee, losses are always faster than gains, and what if you need it now? Do you have any control over the capital you put in the market while it is there? If you take some out for use, does it continue you to grow and compound? Does any of this solve the problem of massive debt (Look at the amortization of your mortgage and divide the total interest paid by the total amount paid…the number will stagger you as it will be in the range of 60–90% interest by volume...That is the real cost of borrowing for your home)? Surely, there is a better vehicle for savings.
The problem is that the financial gurus of the day only see half of the picture, or they are hiding one half from you. The government has created a problem in unnecessary taxation which is just theft, and the robber is “giving you a break” by making some exceptions to their thieving rules. The solution is to refrain from participating in their scheme altogether! If you haven’t been red-pilled yet regarding the market, its managers and manipulators, ask yourself these questions: 1. Do you control the market? 2. Do you control the fees? 3. Will income tax increase or decrease in the future? 4. Is your dollar worth more or less in the future? 5. Do you want to pay taxes on the small amount of your money, or on the large amount after it has grown? With the obvious answers to these questions, it should be clear that if there is a better way, then one should seek for and find it.
The solution, better way, and escape from this is actually quite simple. It comes from one understanding: cash is not king, cash flow is king. Since the invention of central banks, the IRS, the income tax law in 1913, and most importantly getting off of the gold standard in 1971, your cash is worthless fiat money and subject to legalized theft. Saving cash is not enough, and there is a reason the government is fine giving you exceptions to the rules via tax-qualified plans in the market. Stagnant cash is dying cash, but flowing cash is living cash. The solution is understanding, and therefore controlling, cash flow.
To study cash flow, we should look to see if there are any entities who have already mastered this concept, see how profitable they are, and try to emulate the practice. The question is, who controls cash flow the best? They’ve been around for millennia, they are obviously the most profitable entities wherever you go, and they are right under your nose controlling your own cash flow. They are the bankers of course! Banking is the process of controlling and utilizing the flow of money from one source to another and back again endlessly. You see banking is like the water cycle: water evaporates from the oceans, flows to the earth through rain and snow, flows through rivers, animals, you and me, produce, and then flows right back to the oceans. There is only one pool of water on the earth, and it merely flows through and to different parts of the world. Likewise, there is one pool of money on earth and it flows via different currencies and denominations through entities and individuals. It always flows back to the pool though. The key is to control that flow, to control the banking function. If you can control part of the water cycle (i.e. irrigation, indoor plumbing, etc.), then you profit and benefit greatly. Thus, controlling the flow of money is in the same way vital for the life of your finances.
Having a lot of money with little to no control is worth a lot less than having a little money with total control over it. The bankers control the flow of cash and are very profitable (they are profiting off of controlling your cash flow, mind you). Our endeavor to financial freedom must start with taking control of the banking process in our life, controlling the little portion of the pool of money we have access too. Everyone banks, it is all a matter of how much of the banking function you control. Until you do, there is a troll taking a toll from you at the gate to your pool.
It is possible to manage cash flow efficiently like a banker. In fact, it has already been discovered by R. Nelson Nash in his book Becoming Your Own Banker. That 92 page book teaches private persons and businesses how to take finances and the banking process to the private sector. The strategy to manage your cash flow that he invented is called the Infinite Banking Concept®. It is actually not new, but age-old practices and understanding of money utilizing the oldest and best financial tool in American history. That tool and how the IBC method works for financial freedom will be the topic for next time.
For more information, check out the Righteous Wealth podcast on Spotify, Apple podcasts, YouTube, and GabTV. Check out the Life Success and Legacy webpage to learn more about IBC and how it can work for your family and business. All financial coaching is completely free of charge both before and after you become a client. You can also find Becoming Your Own Banker on Amazon, Kindle, and as an audiobook. Check out the Nelson Nash Institute for more information about IBC: The Official Site for the Infinite Banking Concept — R. Nelson Nash — Becoming Your Own Banker.
Disclaimer: All content is for informational purposes only. Please consult your tax professional before taking any action.
