Your Private Family Banker
Your Private Family Banker is the no-fluff guide to building your own family-controlled banking system using dividend-paying whole life insurance.
If you want to stop relying on traditional banks, control your family’s money, and build generational wealth, this podcast is your blueprint for becoming the banker for your family.
Each episode, we cover topics ranging from what Private Family Banking is, to how it compares with other options out there, to why it makes sense. We'll show you how to create uninterrupted cash flow, finance everything debt-free (cars, real estate, business, education), and build a family legacy that survives taxes, lawsuits, and market crashes — all while keeping full control in your hands, not the bank's.
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To learn more, you can go to our website at https://plginsurance.com/.
Your Private Family Banker
Are You Looking At The Wrong Number?
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5-ish Minute Private Family Banking Podcast.
Are You Looking At The Wrong Number?
Private Family banking is a long-term financial strategy. We teach people how to leverage a high cash value permanent life insurance policy to take control of their household finances.
In this episode, we continue the discussion around eliminating debt using the most efficient strategy out there. In this one, we discuss what number to look at when you look at your debts and determine that the interest rate might not mean what you think it does.
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https://plginsurance.com/
Hey everyone, Mike back here with another episode of the Five-ish Minute Private Family Banking Podcast. Last time I introduced the idea of using your private family banking policy in order to pay off or eliminate outside debt. We're going to continue that today. And last time I promised you that I would show you a couple of examples to illustrate how this strategy works. I didn't lie to you, I'm going to get there, but before I decided to push that back to next time because before we go through that, I kind of wanted to cover something that a lot of people misunderstand about how debt works. When people look at their debts, they often look at the wrong thing. They may see that they have a low interest rate on their mortgage, for example. And they might think that because they have a low interest rate and they can earn a higher interest rate on their money by investing it somewhere else, that they're getting ahead. And that's not necessarily true. To illustrate this, I'm going to talk about a mortgage that was taken out in October of 2024. The loan was for $200,000 over 30 years with a 3% interest rate. So pretty good, right? To illustrate, the interest rate is good, right? But again, many people don't look at the right number. What they should be looking at instead of what the interest rate is is the volume of interest that they're paying. Now, at the beginning of this loan, $200,000 over 30 years for 3% interest, their payment is going to be about $850 a month. And at the beginning of the loan, only about $310 of that is going to go toward paying back the loan. The other $540 is paying interest. That's $63.5% of your m payment going away to someone else in the form of interest. As the loan gets paid back, the portion of the principal increases and the portion going towards the interest decreases. But for this loan, it takes almost eight years before 50% of your payment is actually going towards paying down the principal of the loan. Now, that's with a 3% rate. What are we looking at today? Closer to 6%, maybe a little bit higher on those traditional loans. So what does it look like with that same $200,000 loan? Well, to start, only about $200 of that payment is going to be going to pay off the principal. Sorry, let me back up. Your payment is actually $1,200 in this case, and only about $200 of that is going towards paying down the principal. The other $1,000 is paying interest, sending interest payments to the bank. That's 83% of your payment going to someone else in the form of interest on the loan. Further, it's not until April of 2043 before 50% of your monthly mortgage payment is actually going to paying down the principal of the loan. Now, I hope you now understand a little bit more about why looking at the volume of interest matters more than looking at the interest rate. Okay, and why that's important. So, what do people typically do to combat this problem? Well, there's a couple of different things strategies that people use. Some people take their uh and throw maybe an extra hundred or $150 or whatever they can afford on the principal pay or on the payment every month. So instead of the $850 payment in the first instance, they're paying maybe $950 or $1,000. This and other people say, well, I'm just gonna make an extra payment every year, and that's gonna go directly towards the principal. These strategies do help speed up the process of paying down the principal, and they will reduce the overall amount of interest that is paid over the life of the loan. But I would argue it's not the most efficient way to do it, and we'll talk about that in a minute. Others just accept the fact that they're paying a lot of interest, or maybe they don't know that they are, and they just look at the interest rate and they say, Well, I can earn 6% over here, I'm paying 3% over here, so I'm gonna invest it. Um, especially if they have that lower interest rate, right? Now they can invest their money and get their money working for them today, and you know, the compound interest that they will earn over that same 30-year period of time of the mortgage hopefully will outpace the amount of interest that they've paid, right? So, what are the cons of these strategies? If you're paying extra on the loan or making an extra uh mortgage payment every year, what you're doing is you're liquidating your money today. This means that you're giving up the interest that you could have earned on that money. You also leave yourself less wiggle room in the budget in case something big happens and you need to take care of it. Similarly, when you choose to invest, you're using cash today, so you're you're losing the liquidity there, but at least you're getting something for it. Ideally, a compounding effect that lasts until you start to use it. But are you giving anything up when you do this? And I I would argue that you are, because you're still paying a huge amount of interest on the loan, and that interest is going to somebody else instead of going to you. What private family banking does is it combines these two ideas into one efficient one. You can rapidly pay down your debt without giving up the growth that you're wanting to get when you choose to invest it. Now that you understand the problem a little bit better, I'll get into the nuts and bolts of it next time. Come back and find out what that looks like. But until then, I'm gonna leave it there for now. Please like and subscribe, share it with a friend, and I'll see you next time. Until then, out