He saved $220,000 in Interest and Paid It Off Seven Years Early!

What if you could erase $701,000 in debt, save $220,000 in interest payments and finish the job 7 years early?

That’s exactly what one client did by using private family banking. His premium payment was only $608 per month and he had $150,000 in cash value available when he was done.

Hit play to find out how.

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Transcript

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Hey everyone, Mike here, your private family banker, and I'm back with another episode. I'm continuing my mini-series on debt reduction and making the argument that private family banking is the most efficient way to take care of your outside debt. In the previous episodes of this little mini-series, I've introduced the idea, I've talked about one of the biggest misunderstandings that people have about debt, and hinted that most people aren't looking at the right number when it comes to debt. That's a powerful lesson. So go back and listen to that one if you haven't already. Last time I talked through the first of two real life examples of how someone used their private family banking policy in order to wipe out their personal debt using a fraction of the money that you would think it takes. In that example, someone paid off $111,600 of outside debt. It would have taken six years to get rid of making the minimum payments. They did that using only $16,200 of premium payments, and they did it in four and a half years instead of six. Today I'm going to walk through the second case study. In this case, our subject only has three debts, but because they're a truck and two mortgages, they total $701,000. Similar to our previous example, we list them in order of smallest to largest balance. The smallest balance is the truck at two at $24,000. Then the first mortgage at about $147,000. And then we have the second mortgage at $530,000. The total of the monthly payments for these three loans is $5,090. Now, of that $5,090, $3,160 of that is paying interest to someone else. That means a whopping 62% of all payments that are paying interest of that he's paying are paying interest to someone else. So we need to get that interest, recapture that, and get that coming back to himself. Now, if he just made the required payments, the longest term is the second mortgage, and that would take about 25 years to pay off. So what is he able to do? Well, he starts out, he starts a private family banking policy, and he's able to contribute $608 per month. Okay? Doesn't seem like a huge amount of money. After the first year, he has $4,644 of cash value available. So what does he do? He takes out a loan for that amount, a policy loan, and he uses that to pay down his truck loan. He continues to make his premium payments and his minimum payments on all of his debts. And after year two, he has $5,354 available. At this point, he has only $5,196 left on his truck loan. So he uses that much of his policy loan in order to pay off the truck. And he takes the remaining $158 and he pays it towards his first mortgage. Now, because the truck is paid off, he had a $604 a month payment that was going to someone else. He now takes that money and he starts paying off the policy loan with it. He continues to make his premium payments as regularly scheduled. And because of this, at the end of year three, he has $13,000 of cash value available and he uses that to pay down his first mortgage. He continues this process, paying down chunks of money at the mortgage every year until at the end of year eight, he's able to finally pay that mortgage off completely. If he had just made the regular mortgage payments, it would have taken him 16 years. So that's eight years instead of 16. And now he gets to take that first mortgage payment along with the truck payment, and he's going to pay back the policy loan with that money. Because of this, each subsequent year he is able to throw close to $24,000 per year at the second mortgage. Now at the end of year 17, that loan is paid off. He then takes all of the monthly payments, including the second mortgage payment, and he uses them to pay off the policy loan completely. The policy loan is gone in just over a year. Now, at this point, he has only paid about $132,000 in premium payments. That's over 18 years to remind you. So $608 a month over 18 years, and he was able to pay off $701,000 in debt using that $132,000 of premium payments. That's about 5x times his premium payments, and he was able to pay off all of his debt seven years early. Plus, because his cash value kept growing while he used it, he has about $150,000 in cash value available to use for other strategies that I'm going to talk about down the road. Now, by continuing to make his premium payments, that pool of money will continue to grow. And just like in the previous example, he's had his death benefit as a backstop along the way. So, to recap, he's wiped out all of his debt seven years early, using a fraction of the money relative to the debt amount. While he was doing that, he was building a pool of capital that will long outlive his debt elimination, and he had the death benefit as a safety net while he was working through the process. One more number to highlight, and that's what I alluded to a few episodes ago when I talked about people looking at the wrong number. You can have a low interest rate, but the volume of interest is what matters. He was paying 62% of all of his payments were paying interest to somebody. Had he continued along that path, he would have paid about $540,000 in interest over the 25 years. By taking advantage of private family banking, he cut that number down to approximately $320,000. That's $220,000 of interest that he doesn't have to pay to someone else. The numbers speak for themselves. You don't have to continue to send your money away to someone else. Get your money working for you instead. That's it for today. Please like and subscribe and share these uh episodes with your friends. And I'll see you next time. Until then, out