This is part 4 in a six part series.
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Defeating debt strategy #4; Using what you own and earn as a bank and borrow from yourself
Our economy, our culture, is built upon debt. No one ever asked us if that’s how we wanted it, it is simply how the system was designed when we came into it. Consider all the money one spends in a lifetime to finance their lifestyle and home and you’ll see why most households in America operate at a steep loss, trapped constantly building cycles of liability and interest. Without the right strategy in place you could get caught in a perpetual cycle of debt that will cost you a lifetime of interest.
Borrowing from yourself enables you to finance your lifestyle and real estate without having to create new monthly payments and sign long and costly contracts for repayment. Understanding this concept will allow you to recapture hundreds of thousands of dollars in interest costs while keeping your monthly expenses to a minimum. How do you borrow from yourself? First, you have to become your own bank. Second, you have to have the right vehicle and third you have to seek expert advice if you are not currently practicing self-banking strategies.
Imagine your home as a bank and every day you came home you deposited any money you earned or gained into a deposit box at the front door. You do this every day for the next five, ten, twenty years and in just a short time, the debt you owed on the home itself is paid off. At the same time all the money you placed into your deposit box is still available. In the future when you need a new car or want to send the kids to college you simply reach into your home and withdraw what you need. Over the course of your lifetime you could save hundreds of thousands of dollars in interest in financing costs since the rate at which future debt can be paid back to yourself is significantly less.
Let us look at some examples: Three years from now you need a new car that cost $20,000. If you had to finance this the conventional way you would probably take out a five year loan and create a payment obligation of $350 a month. Self bankers would pay cash and only see an increase in payment of $83 a month. How about a rental property that stumbles across your path for $75,000? If you had to finance it the conventional way it would be very costly, thirty years of payments, closing costs, etc… Self bankers would pay cash for it which would equate to a payment of only $375 a month. Plus, the entire $75,000 could be paid back within 3-5 years. Practice this strategy over the course of your lifetime and the amount of money you could redirect back into your family and community would be life changing.
Unfortunately, this is not for everyone and there are some risks associated with self banking. With the right guidance you can take the necessary steps to implement self banking strategies to defeat debt, enrich your life and become bigger givers. Contact me today at 727-502-7157, email firstname.lastname@example.org, or visit my website, www.faithandyourfinances.com to start a personal economic profile.