Stay broke. Here’s the thing, you’re already staying broke. You just don’t make any money from it. When I say stay broke I am referring to saving 100% of your excess income at a minimum rate of 40% of your pre-tax income. The purpose of this article is to teach you how to guarantee an increase in your savings rate. I accomplish this with all of my clients and today I am going to share with you, how I do it a 3 easy steps.
1. Commit to a savings number. I preach that you must save 40% of your gross income. Why? Because the top 1% of wealth in our country have done it for over a century now and it is the key to how they’ve gotten where they are. It is called the 40% rule. Save 40%. If you can’t, save as much as you can up to that number and then go increase income.
2. Cut your DITI. I’ve talked about reducing your debt payments to your minimums, cutting your insurance costs and raising your deductibles, claiming as many exemptions on your W4 as possible while deducting as many expenses as possible, and halting your retirement contributions. As a result, you should free up at least $500/mo if not more, of your earned income. Save ALL of this in addition to the 40% you’ve already committed to.
3. Setup a PROPERLY structured, high cash value, dividend paying whole life insurance policy. What?! Life insurance?? Isn’t that a scam? I understand why that is your first reaction. Let me suggest that a scam is giving 3-10% of your income to historically one of the most dishonest industries in history (Wall Street), to contribute to a plan designed by a government collection agency (401k and the IRS), where Wall Street will speculate on invisible ownership “shares” in companies that you have no control over, and the only guarantee is the fees you will pay to Wall Street. THAT is a scam. In fact, the top 1% have used life insurance for centuries now (Walt Disney, Ray Kroc, J.C. Penney, and others).
Life insurance has been the savings vehicle of the wealthy for CENTURIES. Now, there is only 1 type of life insurance, structured 1 specific way, and used properly it is legitimate. In my opinion, all other types of life insurance savings strategies are a scam (IUL, VUL, standard whole life). You need it structured 1 way and 1 way alone.
Life insurance is your sacred account. You need a sacred account that you can save into and forget about and until it is time to invest (meaning you have $50,000-$100,000 or more). Your sacred account needs to be SAFE, meaning it 100% guaranteed cannot lose money. Your sacred account needs to earn interest. Your sacred account must be LIQUID, meaning you can access it anytime. Properly structured life insurance does this.
Extra benefits of using life insurance as your sacred account.
Your money will grow tax free. Life insurance cash value growth is not taxable.
Leverage. You can grow each dollar in 3 locations at once. If you put $1 into a properly structured policy, $0.30 of that dollar will purchase shares of death benefit. These pay a dividend annually of typically 6-8%. The other $0.70 goes into the cash value which grows at a rate of 1-3% annually (never less than 1%). You may then borrow 90% of your cash value amount from the insurance company, using your cash value as collateral, and go buy income producing assets. This means your money never left the account. It is still earning 6-8% in dividends, and 1-3% in interest all the while you go earn 8-12% on the investment you borrowed it for. When you pay the money back, you have more in the account than you borrowed because the money was still growing the whole time! This is what banks do and it is called fractional reserve banking.
You are in a private contract with an insurer. This means that there is a strong layer of protection on your money and the government cannot seize or regulate your funds in the account. On the other hand, when you give money to a bank, they are going to do fractional reserve banking with your cash and if they are too risky and in a tight spot, they legally do not have to give you your funds. That’s right. The bank can restrict your access to your own money. It happened in Europe in 2011 if you don’t believe me!
The bottom line is this: You need to be committed to a savings account. This requires the right account (dividend paying whole life insurance), accountability (me having the ability to see your account contributions and balances), and a reason to do all of this (a personalized Wealth Creation Formula exclusively from me and my company, Wealth DynamX)! Click here to schedule a call to talk about your Wealth Creation Formula, our personal coaching strategy with you, and how to setup your Sacred Account.
Own Your Potential,
Jerry Fetta believes everyone has the God-given right to own their potential. Most of us don’t because we spend 40 hours per week serving the 40 year to life sentence, trading our precious time for worthless paper called money.
We live on an economic planet and time and money do need to be exchanged. But it doesn’t need to be your time or your money. Jerry teaches his clients to secure income producing assets that make the time and money exchange for you so you can buy your freedom back and live a life of abundance and prosperity. To get there we must know how to make money, how to keep it, and how to multiply it.
Jerry provides coaching, education, accountability, and community to help you build wealth. Join the Wealth DynamX coaching program, get educated on Wealth DynamX University, and begin networking with the Wealth DynamX Mastermind Group today.