MFREE 111 Full Episode with Jeremiah (JDew) Dew: Is Infinite Banking the Secret to Long-Term Wealth?

Unlocking the Power of Infinite Banking with JDew

In this episode of the Multifamily Real Estate Experiment podcast, host Hutch discusses the concept of infinite banking with guest JDew, an advocate for financial literacy and entrepreneurship. JDew shares his journey from eliminating debt to discovering and leveraging the infinite banking concept, which tripled his net worth in just two and a half years. The episode breaks down the fundamentals of infinite banking, utilizing whole life insurance for financial growth, and its benefits over traditional banking methods. Visual aids like the 'three cup setup' are utilized to explain cash value, death benefits, and dividends. Additionally, the discussion touches on how infinite banking intersects with trust and family legacy planning, making it a transformative strategy for generational wealth. The episode concludes with insights on applying these concepts to personal financial planning, especially for military veterans transitioning to civilian life.

00:00 Introduction and Guest Overview

00:35 JDew's Financial Journey and Infinite Banking Concept

01:36 Understanding the Infinite Banking Concept

04:38 JDew's Background and Current Focus

05:42 Explaining the Save and Spend System

06:07 Breaking Down Whole Life Insurance

08:08 Visualizing the Three Cup Setup

09:48 Leveraging Whole Life Insurance for Financial Freedom

20:11 Eligibility and Practical Applications

29:43 Understanding Deposits and Contributions

30:09 Life Insurance and Liquidity

30:45 Policy Limits and IRS Regulations

33:16 Managing Multiple Policies

33:51 Warehousing Money in Whole Life Insurance

34:10 Accessing and Using Cash Value

42:21 Generational Wealth and Trusts

47:39 Final Thoughts and Contact Information

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hutch@hsquaredcapital.com

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Transcript

JDew: 0:00

Wah Gwan all you multifamily enthusiast. Welcome to another episode of the Multifamily Real Estate Experiment podcast. Today we have an awesome guest for you. He is a, maintainer a sustainer of culture. In Jamaica we say roots and culture. And today we're gonna talk about things that, are transformational. how to set things in process to ensure that your wealth can transcend your own lifetime. See, we'll talk about, we're gonna talk to JDew today. In fact, I just learned that his entire family is JDew, his brother is JDew, his kids are JDew, all that good stuff, All right. So for JDew, after earning a communication degree in 2006, he focused on eliminating debt inspired by financial gurus. However, when he left his day job to pursue entrepreneur and started a family in 2013, 1 of the things he faced was, rising expenses and struggling to save. So fast forward to 2015 as a business partner introduced him to the infinite banking concept. This infinite banking concept is something that if you understand how it works, it will disrupt everything you have ever known about the way the financial system work, right? So he learned about, infinite banking, which tripled his net worth in just two and a half years. The concept and complexity motivated him and his brother, to create an education platform in 2019. So we're gonna dive into some of those things today and how you can implement some of those, concept into your own financial journey to ensure that your wealth continue to grow. So today I want to welcome JDew to the podcast. Thank you for joining us today, brother. Hey, Hutch, appreciate you having me. So happy to be here and to educate the community and keep spreading the good news, Yes, sir. Appreciate you, brother. Now I'd like to talk to my guests a little bit before we jump into the meat and potato of the podcast, brother. Do you have a favorite real estate quote or mantra that drives you? Or it could be a financial quote. Yeah. Well, I think it's going to be, so for me, it started when I read Kiyosaki's book, right? Rich Dad, poor Dad. I stole it off the shelf of a guy. That I was working for. And I was finishing college around that 2006 era. And he was moving from a mid-size house in a suburban area. To the top of the mountain and building a house with an elevator in it. So I saw that book on his shelf and I stole it from him. I started reading it and one day I was in the truck with him. I said, while we're moving your stuff I stole this book. I read it. I'm sitting in the cab with him and I need you to explain this. I'm gonna give you the book back, sorry if you were missing it, something like that. He really helped me understand a few things. In that book the idea that you saver, one of the things that Kiyosaki said, he said, savers are losers. I did not understand. I wasn't a spender. Some people might say, Hey, they're savers and they're spenders. Savers are losers. You've got to leverage money. You've got to get money to work for you. You can't just save it. You're losing out to inflation. You're losing out to taxes. You're losing out to what the market can do for you by producing leverage and getting income to come in. I was lost. Savers are losers. What does that mean? Now I understand it, but like that for me, wasn't a crack in the door to be able to realize, man, there's a whole other world out there or something. I must be missing it.'cause my mom told me, save my money. so maybe savers are losers. Yeah, no doubt man. And for a lot of folks, that is a paradigm shift for them, right? Because how do you expect to accumulate money if you're not saving, right? But the accumulation of capital and leveraging capital, I think it's widely misunderstood. Where people think about, you know, saving for rainy day is having a stack of money inside your savings account where you can see it every day and it's generating, you know, 0.000 something, percent, right? Which is actually, you are losing money, right? If inflation grows, say the fed's able to perfect their inflation rate and they grow it at 2% per year, your money is already growing negatively in your savings accounts, you are actually losing money, So identifying how to accumulate capital and how to leverage a capital to create or to invest at a high yield. I think it is definitely the thought process in what we want to dive into and the paradigm shift. We want to give a lot of people, so look. I'll ask you this first question, brother. actually, before I ask you the first question, can you tell me a little bit more about yourself that we didn't cover in your bio, and what is your current focus? Yeah, man. my brother and I have the cash compound and our current focus is to help people understand the infinite banking concept, or as we have called it, the save and spend system, right? Where Hutch, we gonna help people understand how they can save and spend money at the exact same time. Saving is important, but we gotta save it in the right place, and that's what we help people understand. We're talking about guaranteed income for life, not just money, but spendable income. We're talking about income tax free in most cases, spendable, tax free, private guaranteed money with legacy attached to the end of it. So we live in South Carolina, on the mainland, as you guys say down there. We're over here on the mainland, on the east coast and helping people all over the country. With the save and spend system. we're teaching and preaching this concept through social media, through the bankingbros.com. Some see us as the banking bros. We're helping people understand those financial concepts where your money can grow and cash flow for you guaranteed. That is awesome, man. that leads me to my first question, can you talk to us about this save and spend system and how can it replace, traditional banking? Yeah, man. the save and spend system utilizes infinite banking, but that may not mean anything to you, or it may be already distorted. Right. I may have even had people gloss over mentally because they think they know what's going on. If you really knew what was going on, you'd know what to do. That's another great quote. Tell us about what's going on. What's really going on is that in life insurance, whole Life insurance, Hutch Capital W, put some respect on it. Whole life insurance has five letters. Everybody out there wants to do a three letter thing. That's a different product, but whole Life Insurance buys money. When we give dollars to Jacob State Farm, or Flow Progressive or Mayhem, the guy on Allstate commercials with the bandaids all over his face, if we give dollars premium to an insurance company, it buys us their money. But Hutch, there's only one type of insurance, one type. Of all the insurances we're talking about, vision, car, house rental. There's one type of insurance that guarantees a loss, so it guarantees a payout, and that is whole life insurance. We gotta die man. That's the bad news. The good news is there's money coming, income tax free. If we buy the insurance company's money, there's an ever increasing pool of paid up, paid off, or paid for money we can get to. And real estate, everybody knows that's called equity. The part that's paid up, paid off, paid for. How much of that property or real estate or whatever is taken care of so far, that's equity, cash value, and whole life insurance is the part that is liquid, income tax free, and guaranteed to grow. So we're gonna leverage those dollars. We're gonna save our money and spend the insurance company's money. The save and Spend system is helping people understand the product and the process of using that pool of ever increasing cash. You talk about some things right now that could, could've confused a lot of people when he start talking about banking and insurance, right? Can you break that down a little more? In the Marine Corps we say break it down. Parade rescue. It's simplest form for us about how that works. This podcast aimed to speak to, military veterans who are accredited investors who own a small business. What does that mean to them on a granular level? as they seek to use this as a tool. Break it down at, Parade rest for us. Yes, sir. So we also have a, very simple way to visualize this, which can be really helpful. if anybody out there can visualize this idea, it's called the three cup setup. We have this on lots of things that we do. We own that domain, things like that. If you look at our stuff, the three cup setup, my man, is when premium goes in, that's cup 1, Dollars You give an insurance company, we're already all doing that. Car insurance and everything else. Premium buys a cup of money from the insurance company. That's gonna be We're gonna skip over to cup three. Cup one is premium and premium buys you a policy, paperwork. Peace of mind. A pool of funds, cash in whole life insurance cup three, all of those P words, that's death benefit. Your little money buys their big money cup. One is your money. Cup three is their money. We buy that and it must come to our families. Must come to the Hutchinson family or the Dew family at death. We know it's coming. It's guaranteed it's whole life insurance. Cup two in the middle is how much equity we have so far. How much of that big pool of money that we bought from the insurance company is liquid today? So this is, the way I say it, guaranteed, is cup one. It's guaranteed to grow cup three, death benefit, and cashflow cup two. So we have that pool of money ever increasing income tax free, private equity cash that we can get to that's available for leverage. So we're gonna save our money and spend their money on our investment opportunities. Now, where people get hung up and confused is not understanding what I just said. Cup one, two, and three, we get that. It's the fact that we have to unlearn what we thought was going on. And number two, none of those words were investment. This is a guaranteed system. It's a guaranteed pool of money you can buy, everyone either has to spend time unlearning what they think insurance is supposed to do or could do. Even though I said whole life 20 times already, none of the things that I said was an investment. This is where I Keep my money instead of USAA and Navy Federal. Now I use that for Costco membership, Sam's Club and Amazon, but I don't save or keep money there. Hopefully that was helpful. we've got visuals to explain and visualize it to go, oh yeah, I can buy their money, that's insurance, and then I can use it as well. That's equity so far now that is, a unique breakdown, right? That is really gonna force a lot of people to unlearn some things, right? So, for the average folks, The idea is to have some insurance, to cover bills and debt that we might have racked up throughout our lifetime, right? Have money to bury us, but also in some cases, in most, I guess in some cases, for those who understand how insurance can give the future generation a leg up in life. I think what you're talking about is the ability to use that insurance while you are still living to benefit your financial journey and way of life. You got it, man. So when we're talking about infinite banking, that's what's going on. We're talking about using it, but of course it does all those other things too. Now let's talk about that piece of it, right? So in a bank, infinite banking concept, what is the real, financial freedom, right? That's surround that? And why is it not just a hype? well, it's the oldest financial tool that exists on a private level. Number one, a lot of people may be hearing this concept in the information highway in the world we live in now. Think it's new, it's actually the oldest tool that exists in the us. You can buy whole life insurance starting 200 years ago. There is no market correction that makes it go up or down or fluctuate. It's a guaranteed product. The insurance company is now on the hook. The moment you pay premium to pay out. the freedom there is private capital control because there's equity, a term we all understand in real estate. Cash value is how much of the total pool death benefit is liquid. We don't have a credit check or income verification To get the cash so we can go get that cash today and use it. Leverage our policy to go make income or pay off debt without stopping the compounding of the money we contributed leveraging your policy does not stop the growth of your cash value. We're borrowing against that pool of money and we put it in motion and put it to work while we still have compounding capital and equity. So we are doing what the rich do. We're borrowing against the asset income tax free. It's insurance and it's a loan. We're borrowing against it, but the value keeps going up. So that's what we're doing. That sound like some illegal stuff, man. It's life insurance. What do you mean illegal? It's older than anything we've ever talked about. But people say that all the time. It's like, no, you can borrow against a watch. I totally understand what you're saying. 100% in line with what you're saying. So when you start talking about having your money, it's like having you cake and eating it too, right? So you're talking about having your money growing in your infinite banking policy, right? Yeah. But also be able to leverage the cash value without pulling your capital out, right. To invest in another income producing asset or whatever. Sustain your lifestyle. Now, can you walk us through how that works? What does that financial system or structure look like? as far as, leveraging the capital in your infinite banking? So my understanding is that. You have your policy, right, which is your debt benefit portion of it, but every contribution you make, a portion goes towards your debt benefit. And a portion goes towards your equity, for lack of better words, right? this is a real estate podcast. People understand equity. So a portion goes to insurance, a portion goes to equity, and as your equity stacks up, it's kind of like paying down your mortgage, right? Where you now have a balance and you don't have to refinance your house, but you can have a line of credit against the equity in your property. is that something that you can explain to where our listeners can understand? Yeah, man. I wish I had brought my three cup setup in here for our recording. I would really love to go get it. Can I grab them real quick? Yeah, let's do that Okay. I'm gonna go grab that. everybody hum a few bars here. We'll go to commercial until I grab it. That might be helpful and I'll explain exactly what you said. He literally brought us some cups We got'em. Okay, so, hey man, that's a great question and I will break it down for you. Visually, I've got the three cups set up here on the table. For those of you who are actually able to watch us have this conversation, it could be really helpful for you to understand. So, premium cup one is the dollars you decide to contribute to a policy. notice I said you decide. That means you can pick the premiums if you're old and ugly, it'll buy you some death benefit. If you're young and beautiful and female, it'll buy you more death benefit, but you pick the premiums. Whole life insurance premiums have four guarantees on them, and one of those guarantees is the premium does not rise. premium cup one buys death. Benefit cup three. this is blue. And the reason for that hutch is because one day it has to come out when you're blue in the face. one day there will be a homegoing service. I'm Baptist, so we call'em homegoing services. my grandkids will pretend to be sad at the funeral'cause they know the check's coming. This is guaranteed insurance. Cash value, is simply how much of the total is paid up, paid off, or paid for. my line of credit, cash value is when I open up the app or I log in. You wanted to know the process and I see how much cash value is there. If I call the insurance company and ask for the money that I purchased from them, they're gonna say, Hey, this is the death benefit and you're not dead so you can't get it yet. I said, okay, that's okay. I wanna borrow how much I can get. Well, they're going to look at the cash value and they're gonna send me a loan. A lien against the death benefit they owe my family and I have no questions asked. Unrestricted funds that I can leverage for my lifestyle or investments, but I still have a policy. So here's what's important to understand. If you got it so far, which a lot of us don't get right away, we have to unlearn some things we thought were true I did not withdraw any of my money. My money is still in Cup One. I still have a policy, I still have death benefit. But the insurance company allowed me a line of credit against part of the pool that they have to pay. They owe me money. So that's why they asked no questions. And I said, Hey, I'll pay it back. And they said, whoa, not our business. We owe you money. You don't have to pay it back now. I think that's a very important, we're gonna get to that, right? We're gonna buy income producing property or whatever we're going to do, and we're going to leverage this policy. But see, our dollars have four guarantees on them. Number one, our dollars cannot go down or backward. I know everybody decided to throw away the idea that this is life insurance. At some point, your brain might have tried to say, this is an investment. It's not. So our dollars do not go down or backward. Number two, our dollars have to buy a big pool of money. Guaranteed. If we give an insurance company premium, it has to buy a bigger portion. Death benefit. We know that. Number three, there is interest accruing compound interest on our dollars. Therefore, there's more cash value there's more equity. Just like in real estate. There's just more and more and more. But it's guaranteed. It cannot fluctuate with the market. It is a part of the total that has to be there. They must pay. They must pay liquid today, so there'll be more of it tomorrow. And these dollars. as I mentioned already, premium does not rise in whole life insurance. You will not, you lose it. It cannot go away because the premium is level, so it doesn't cost more as you get older and uglier. So hopefully that's helpful on the visual once again. Now the process. Call the insurance company and say, show me the money. remember Jerry McGuire? Show me the money, right? Cash value is liquid and available. They'll send it to you. They'll ask where do you want it? Two questions. direct deposit, or do you trust the mailman? There are no other questions. Yes, this is money they owe you. Yeah. Yeah. 1 question though. There's a shot glass there. What is going on there, man? You found the fourth cup right in the three cups set up there is a fourth shot glass. And what that is it's representing annual dividends. From the mutual insurance company. Notice I haven't said names of companies yet. There are probably a dozen companies in North America, US, and Canada, that you might wanna use for this process. We set them up for people custom, but dividends are coming from mutual companies. Stock companies will pay their dividends or profits at the end of the year to stockholders, mutual companies don't have any of those. So at the end of the year, as long as not everybody dies, not every building burns down. Not every claim of every car crashed. Then they took in more premiums than they needed, and those premiums are redistributed to the policy owners at mutual insurance companies. At the end of the year, a mutual company will send me a letter and say, Hey, you're a shareholder with us. Where do you want your profits? We came out on top, we're still in business, and I say, Hey, just Put your money. On top of my money, which buys more death benefit, giving me more equity and access to cash. I got more deals to do. Those cups are a great visualization Of what's really going on, with this capital. You mentioned that there are, very few companies that do this in America and Canada. So why isn't this available to every working person? Well, the stipulations around the product are where it's not available to every person. Anyone can do this. But the stipulations around utilizing this product is its whole life insurance. If you're missing an arm and a leg and an eye and you got the neck, the back, and the sugar, you might not be able to qualify for the product. Gotcha. So if you are above 80 years old or are unhealthy, you may not qualify for the product. That does not mean you should not use the product or be a banker. Everyone should be in two businesses. It's the business of what they do for money, and it's the business of banking with that money. If you don't qualify, we're gonna start a policy on your spouse, on your children. I did not get asked any health questions when I started policies on each of my four children. I was the owner. I'm also the beneficiary. God forbid they die when they're in my house. I'm gonna be crying at that funeral and I'm gonna have to pay for it. So I'm the beneficiary, but I own the policy. So they were the qualifiers. If I was unhealthy, overweight, I had preexisting conditions that kept me from doing it, then I would not be the body. But everyone should use this as a bank. That makes sense. So, if you have some disqualifying, ailments, then may not be able to use it. However, if you are a young person, enter into the working class, right? this is a great choice for you to start with, right? We have some insurance coverage and you also get to build a cash value. By the time you are halfway through the workforce at age 30, you have accumulated a nice nest egg where you now can, use that capital to invest at a higher yield. Now tell us typically the growth in the policy Cash flow usually is. That's a great question. Maybe not so much how much you put in, but, the rate of growth, on average over the years. So that is very important to understand, right? And it's very important to understand, in the context of a policy because the context of a policy is, remember this is a separate pool of liquid cash. Now, is there anywhere else? Let me ask you a question really quickly is there any place that you know of where there is a separate pool of cash you can utilize unrestricted on payback income tax free that's guaranteed to go up. Is there any other place where you know that exists? No. So it doesn't matter what the growth is then because it's already better. Isn't that crazy? Now I'm gonna tell you, okay? So I'm not trying to avoid it. But we have a system like no other, a private entity that's income tax free, liquid unrestricted on payback that is guaranteed to get higher now. The growth rate over the course of the lifetime of a policy, the lifetime of the policy is the lifetime of you. The lifetime of me is going to be about 4%. In a whole life insurance policy, the cash value growth on the money you've contributed is gonna grow about 4%. Yeah. Okay. That's 4% annually average. Correct. Over the lifetime of your policy. cash on cash return each year is going to vary as your dollars compound the annual or monthly contributions that you put in your policy, the growth cash on cash each year. Is going to get astronomically different. So day one of something going in the cash value available is relatively low But every year it's getting better and better. So the longer you live or the longer you have a policy, cash on cash return each year is going to become very significant I have a policy that is nine years old. I've personally been practicing since 2016 when I got a policy in March. for every dollar that I put in this year, in the ninth year of owning this policy, every dollar that went in premium cash value when I logged in the next day was a dollar 64. So that cash on cash return in that year was awesome. That's liquid cash available for me to go do a deal with my buddies down there in Hawaii. Yeah, I got you. That, makes sense now. When we leverage cash, what kind of interest are we expecting to pay and how does that fluctuate? that's also a great question and very much important. It is Very much important. Guaranteed to grow in cash flow. When we borrow against these policies, the insurance company has a set rate annually. They can change it annually, and you can see it. I can log in right now and know what that is. Remember, when I borrow against this cash value and the clock starts with my simple amortized annual interest, my compound interest didn't stop. That's huge. Most people don't understand how to do two different things at one time. My compound interest did not stop on the dollars that I've contributed. While now I have a simple amortized annual interest against. The policy that they owe me money for. So that number is right around 5%. If we're utilizing some of the best whole life insurance companies, that number's gonna be about 5%. So while my dollars are compounding, my simple annual interest on what's outstanding is five. Okay. So you got your money growing up, typically 4%. Yes. And you are leveraging the cash value line of credit, for lack of better words. Yes. Real estate podcast people understand that. line of credit against the cash value. Your cash value has grown at 4%. You're leveraging that, line of credit against it. And the loan, the interest in that will be typically about 5%. Now we're taking that 5%, right? And you invest in that at a high yield save annualize around between 14% and 18%, which is our typical syndication growth, for capital inside a farm. Inside our syndicate investment, when you look at the delta there, we're looking at anywhere between, you know, nine to maybe 13% growth in your capital, right? you got it? Yes, sir. So that's where the power, of leveraging it is for an outside opportunity investment. But I wanna make sure that nobody missed it because I'm sure lots of listeners for hearing about this for the first time or trying to understand it you said, of course you're right. 4% growth, 5% interest against that loan. we're already winning because 4% is compounding and 5% is simple amortized interest. most people miss that completely because five is bigger than four. So they think we're losing, we're not losing. 4% is compounding and 5% is amortized. So we're winning in the policy already. And we have the ability to go do a syndication and get arbitrage on top of that. I love it. So we're going to win big time. Our dollars and our dividends are still growing, And the cool thing you are telling me, when we leverage the cash value, we're typically pulling out a line of credit against the cash value, which is a loan that doesn't trigger a tax event. Not at all. This is life insurance. life insurance is a product that is not government sponsored. insurance replaces a loss. Your death benefits will go to your family, friends, church or charity income tax free. And it is a loan against it. we all know that loans are not income. IRS doesn't qualify that they should not, that's not how the loans work. So we are also borrowing. No taxes, no triggering event, no outside, nobody knows about it. It is a private thing and it's all happening at the same time. You're exactly right. Okay, cool. If I'm a retired veteran, leaving the military and I have a big chunk of money and I'm just learning about this concept, How do I get my capital into purchasing whole life insurance for me and my family if I don't want to use the SGLI, offered to veterans or VGLI. And I have a big bulk of money that I want to roll into a system like this. Right. What would be the process to do that? am I capped at any year, 40 months of capital I can put into this, account? Great question. It was kind of complicated there. There's several things going into it. But I got the answers for you. if you're in that position, our dad is still in the service and, he's in the Air Force and he was just asking us some of these questions. So a couple of things going on. You got your TSP, you're ready to move on or something like that. You're getting your, out processing right now. You've got some money. number one, you work with someone who already knows how to do it, So out of the 750 insurance companies in North America, we're only working with mutual companies, We eliminated Prudential and Affleck and Geico. We are not using those, they don't pay. Dividends. They're not mutual. Number two, we're buying whole life insurance. Remember once again, that's a capital W. Put some respect on it. I did not say term, I did not say universal. Some of you just got shocked'cause you've been listening to this entire podcast and you decided that you heard the word universal. It's not universal life insurance. then number three, you have to have a customized contract for cash value. That is not something every company can do. That is not something everybody understands. That is one of the writers. The bells and whistles we're putting on it on purpose. So you can have leverage ability. okay, so that's the type of company we're setting up. Number two, we are going to pick the premium you want to put in, this if you're thinking of it as a bank, which is hard to do in the beginning. You pick deposits. When you open up your Navy, federal USA account, they ask you how much you. Would like to put in, that's called deposit. You pick that number, that number will be consistent. You need to think of it as every year or break it down into months. I'm contributing that in just like the military used to contribute to your bank account. Every couple of weeks you are gonna contribute it in here. It's, of course, gonna buy life insurance, big money, and it's going to become more liquid all the time. So we are going to be able to help people through that in a one-on-one conversation. We're authorized with the Nelson Nash Institute as practitioners of this. I have nine policies myself. We've helped hundreds of people, including military, including people who wanna do investments, including people who are sick and unhealthy. We're going to help you do your goals and hit your, income, dreams. We're just gonna teach you how to be your own bank. Yeah, that makes sense. Now how do I, is there a cap on how much money I can put into this system on an annual basis, to stack up my cash value at a rapid rate? Yeah. Great question. Let me answer that in two ways, just because you could be questioning this from either way, right? You're probably using one thing in your mind, but your community may be thinking one of two things, right? So number one, let me go the way that I don't think you were asking, just to be more general, Yes is the answer, but generally no. So if there was a place, where you could contribute money and every dollar you put in there turned into 5, 10 times more money and there was an ever increasing pool of that money, not yours that you could use. Lose abuse in Vegas, income tax free, unrestricted, and it kept going up. How much of your money do you think you'd wanna put in that system? a lot of it. All of it? Yeah. There you go. Okay. Very good. So in that sense, there's no limit. That's why I said that one's a no. Okay. No, you pick the premium, but here's where the Yes comes in. The yes comes in is once you pick that premium, whatever that number is good for you or good for me. There's a limit on how much extra you can put in on top of it any given year, any given month. Because it is a product that grows income tax free. And the IRS came in, in the eighties and said, wait, rich and wealthy people are not paying taxes'cause they're putting their money in insurance and not in the bank. They're earning money from non-taxable ways like real estate. Dividends, investments, and notes And they're putting it in life insurance. there's a limit on how much extra you can contribute to whatever number you picked. So any given year, any given month, we actually ask the insurance company, Hey, I don't want to go above the limits that would trigger my cash value to be taxable for the rest of my life. Interesting. So then, okay. Yeah, yeah. So, so that's gonna be specific. Okay. Based on what we picked, who you were, how old you were when you started, and a seven year lookback period, it's a rolling seven years. You can't contribute more than this to that policy in a seven year time period, or else cash value becomes taxable. So no. Pick your premiums. Yes. Once you pick your premiums, there's only so much extra you can do on top of it. Interesting. If you are approaching the limits of risking the cash value to become taxable? It's called a mec. It turns the life insurance into a modified endowment contract, and that's a taxable event. Gotcha. So in that case, you just start another policy, right? Yeah. I just start another policy. So I come coast to the limits all the time on purpose. I ask the insurance company, how much can it fit? And they tell me, and that's not a bill. I don't have to give'em anything. I don't have to be scared. I just go, oh, if I have it, I'm gonna contribute. But if I still have extra money, we just did a flip, we just got a sale, we just did our, reno, and I have extra money. It won't fit in this one, buy another one. I'm not gonna keep my money in. USAA. they're nice over there, but they don't gimme nothing. So, yeah, they're nice over there. Yeah, they're very nice. Yes. Okay. All right. got you. All right. So in all actuality, that's where the whole idea of warehousing money comes around. I warehouse my money inside whole life insurance and I just use a bank and an ATM card for transactions. But I keep my wealth inside whole life insurance. It's ever increasing all the time, income, tax free. And it's always more and more liquid private. Let me ask you this, when you want to use a cash value, do you have to take a line of credit against a bulk amount or do you have access to that value that you can use, until you run out of it? Yeah, yeah. I've got right here. So let's say I've got some money in here. I got 200,000, well I need 20,000. I'm gonna buy a new truck. It's no different than if it were a bank. So I go take whatever I want, so I take it, I buy a truck, maybe I pay off the truck, 20 grand buys me a new truck or a used truck, and then I pay it. In full to the dealer, whoever I bought it from. And then I'm gonna make up payments back to myself. Gotcha. I'm gonna make up like a bank. I did borrow the money, but I borrowed it from a bank that I own. But I'm gonna pay those payments back. The interest or extra that I would've paid. Third parties, I pay to myself too. I replenish the loan. I pay the interest here. Extra money, which makes the policy bigger. Now I can go buy new trucks. So I'm going to do that. But while I have that loan out, hey, I found a computer. I need a new computer. I take out five grand, buy a computer. It's my money and my bank to utilize. I can have as many loans out as I want. This is the capital that's available. me and Hutch wanna go into a syndication together. He said he wanted 300,000. So I take that loan out, they're all out at the same time, no questions asked, no repayment schedule. It's my private system. And when Hutch and I get that syndication income coming back in 15, 16, 17, 18%, I decide to replenish plus interest that goes here. Some goes off to the insurance company, we had simple amortized interest, but the extra I put here and the extra, the interest that I paid to the insurance company, It's coming back in dividends, right? It's coming back in annual dividends and proceeds from the company. The extra interest I might choose to pay to fill my policy up as full as I can. makes the policy bigger, gives me more cash, and then I ask Hey man, let's do another deal. So, let's do one quicker. you mentioned this a couple times. You were saying that when you pulled the loan out, or when you leveraged the cash value, you don't have to pay that back. That's correct. What are the consequences of not paying the back? Great. So remember the insurance company owes us money, not the other way around. Correct. if we decide that we're going to, let me ask a question to the general idea who's thinking through this real quick? No, you don't have to pay it back, but I think you should. a bank will go broke eventually if it sends out loans and nobody repays ever. Obviously that's not a good plan, not a good banking strategy. But we've got a hundred grand here. let me ask a question just to make sure we're thinking, well, is there ever a time where you or I will need our own death benefit on a policy we have on us? Is there ever a time we will need money at our funeral or after more than we will need money today? I don't need money at my funeral. My family needs money, not me. If I always need money, I always need income tax free money. I always need more money. I always have stuff I wanna do. Will I die with loans out? Potentially, yeah. 100%. yes, I'm gonna die with loans out. I always need money. I gotta buy glasses every year. I will always die with money out. But remember that the insurance company owes me more. I'll always die with loans out. Totally fine. Remember the insurance company will then give my family the rest. I took 10 grand out to buy the most expensive pair of glasses you've ever heard of. But my family will get the rest, I'll die with the glasses and they can bury me with the glasses, but my family will get the rest so you don't have to pay it back. So the consequences are, of course, the death benefit is reduced. You have a lien against it. Gotcha. Your death benefit's reduced by what was out? hopefully when I die, I got 10 DA deals out with you. my family will inherit the deals, but they'll also inherit what was remaining of the entirety of the death benefit, But they'll inherit the deals. Hopefully we'll get the paperwork right. There is simple interest due every year on what was out. if I had a thousand dollars out and there was a 5% interest on that outstanding loan, that's$50. Of interest due every year. So I've got a thousand dollars out. I give it to you. We're gonna do a deal. You say the deal's not doing well, it's going slow. We don't have the money back. the insurance company will send me a note that says you borrowed a thousand dollars from us. The interest due on that note on day 365 is 50 bucks. Now, any good investor listening to your show, doing deals with you or I is gonna answer this question pretty well. Would you make it one 800 phone call for an unrestricted$1,000, no questions asked? No payback schedule, and pay$50 to make the call? I would. Yeah, that makes sense. It costs$50 to get a thousand and they don't ask questions. I'll do that every year. Well then my suggestion is, be a good banker and pay the 50 bucks then if the loan is still out, pay the interest every year. Yeah, that makes sense now. so you got a million dollar life insurance and you have$300,000 out as loan whenever you die. That benefit now becomes, 700 K granted that you made all the interest payments. Right. And also continuous yearly contribution to the policy to keep it active remember a million dollar policy is kind of a misnomer. Don't lose track of the fact that every year when they put dividends in, every contribution to these types of policies that have premiums going, all of it gets death benefits. Some of it turns into immediate cash. Remember, million dollar policy is not true. It goes up every time you put money in. So next year it's not a million dollar policy, it's 1,000,001. The year after that, it's 1,000,001 and a half year after that, it's 1,000,002. My death benefits climb every time I put money in. Every year they put dividends in, it just gets bigger, which means I'll have more equity, just moves faster all the time. So maybe you didn't know that either. I didn't know that that's why I picked them up. Every time I put dollars in death benefit goes up. So when I bought a policy originally in 2016 on myself, the policy, at that time was probably something like$350,000 of death benefit. Well, it's$200,000 higher now. Goes up all the time and I'm still alive so far. So yeah, it's good. Cash value is going up. however, your premium on a monthly basis does not have not changed. It was one of the guarantees, remember, premium doesn't change. Correct. So my same contribution just makes it go faster. That's why every year when I put in a dollar this next year, there'll be more cash on cash return. Every year it's compounding. So say my, assets that I don't want my family to be obligated to pay off whenever I die is half a million dollars, right? What would that cost me, for a policy that will meet that initial threshold? Depends. Are you old and ugly and female? Are you young and beautiful and male? So remember, we are gonna treat it as a bank. You pick the premiums. Obviously, when we're coaching people and going through it, we're gonna look at those numbers, we're gonna help them, but I'm 32 and I'm male. And if your listener is 18 and female, it's not the same number. We can give the insurance company the same premium, but it'll buy a different death benefit. Makes sense? So we'll look at that specifically on a one-on-one free consultation. When we help people understand, so if their obligations minded at the outset, we'll help them understand what that buys. Most people are not. If they're gonna be investors, what they're trying to do is have an unlimited line of credit that keeps going up, which is fine. It's all of these things at the same time. it's the Swiss Army knife of financial strategy on a private level, it's going to do all of them. Even if you say, I don't have children, I don't have anybody I want to give it to, I hate church and I'm not going anymore. Those people are hypocrites. It's like, there's still a death benefit. So find your favorite nonprofit to give it to. It's also going to do those things on top of what you actually are focusing on. Gotcha. So before we wrap it up man. I got a few more minutes with you. Lemme know when you have to go. I'm good, man. Okay, so we're talking about family legacy and financial education rights. I preface this conversation with how this system can transcend your lifetime. how does this fall into, trust family office and an effort to create generational wealth? How, how does this system transcends our lifetime? Most people are generally familiar with trusts, right? like they're generally familiar with life insurance, but they don't really know specifics and they don't know how to put them together, right? So the ownership of your life insurance policy or policies, your family banking system can be owned inside your trusts. Some people understand that it's a piece of private property that can go inside your trusts. at the point of your death your. Death benefits can dump straight into your trusts, income tax free, no probate. All those types of things can be set up. Life insurance is a trust. Most people don't understand it generically enough to really understand that there's a grantor. The person who started and contributed, there's a beneficiary. The person who gets the money when it's over and there's the trustee, the person who uses the money, This is a trust. Right. That is awesome. I've never thought about it like that that makes sense. People don't think about it. This is a trust. It's a private family piece of property you can pass down and things like that. So when you hear about the waterfall method or the Rockefeller method, this is what you're seeing. You're seeing life insurance policies that are guaranteed to dump into the trust and the next generation of family members manage it. So I would highly suggest those of us who are out there doing deals, doing real estate, doing JVs and things like that, wrap this into your trusts at the appropriate time. It doesn't have to be wrapped in day one. You don't have to have it all figured out. It's another misconception from people is it's a private asset. So with a stroke of a pen and two pieces of paper, I change the ownership from me personally to my trust. Done. No taxes, no implications. It's private. So how easy is that? It's still gonna dump an income tax free and decide whatever, you know, there's lots of different types of trusts, but we'll work with professionals and estate planners and trust attorneys to figure out what types of trusts you need or want or how it should flow. But this is private. You can leave your shirt. your car your life insurance to your trust. It's two pieces of paper. That is cool, man. I appreciate you breaking that down. Because a lot of folks who are in real estate, they are thinking in generation, right? The rate you can grow your capital in real estates, right? and benefits the future generation is astronomical, right? If you're investing with the right partners, and understanding how to warehouse your capital and understand that the long-term benefit, understanding like, what exactly are you doing here right? Are you doing here just to live your life? Or are you taking on a family and also taking on the responsibility to ensure that your bloodline, like for me, we talk about this in our initial conversation, like, my goal is to ensure that my kids great-great grandkids, all my, anyone in my bloodline never walk to school bare feet again. And if that happened, it needs to be like some world changing event, a nuclear blast or whatever, where all this stuff goes to crap. You know what I mean? However, it should not be because of our lack of planning. You know what I'm saying? Once you're educated, now you have a responsibility. You have a responsibility to do this. And the other thing about family legacy, and you know this as a dad, as a husband, a person who's really trying to do something special and different that can get started with you or continued with you from your parents. And I'm doing the same thing with four kids, is we can have the conversation now. We can talk about it and say, when you work for the family business and contribute we take your money and put it here. Now we have it forever. Your money's never going away. We've got it. It's going to make money for our family now and when we need to spend it, we get to cash value. We don't need to spend it right now. Of course, there's death benefit, which we'll pass on, but that conversation now can start really early. I have a 3-year-old and he has a policy growing and cash flowing, and a 9-year-old when he wants to buy Lego and go to summer camp. We borrow against it and utilize it. Right now, those aren't investment deals. Those are investments in our lifestyle, what we are trying to do, what we want to do. We do all of it. So we don't spend our money, we spend the money. Our money makes this sound like almost a better plan to like a 5 29. 5 29 has, so you tell me, is a 5 29 guaranteed to increase? No. Does a 5 29 plan have a guaranteed death benefit and legacy? No. If we use our 5 29 in the wrong way, will it be taxable? 100%. So now I'm with you, man. We have to just think, and I'm not making fun of anybody because I started a 5 29 on my daughter. She's the oldest. And when she was born, I started a 529. Nobody told me about this till she was two. And I was like, wait a minute. There's no guarantee that it goes up. I cannot use it unless it's qualified educational expenses. Correct. It's not guaranteed to rise. I cannot leverage it for any reason. Just some reasons. There is no legacy play. It's not private. It's a government qualified rapper. Holy cow. We've got exactly what we want here and the use of it the whole time. I'm with you. While you still living. Man, I wanna wrap this up I gotta go do some things and get off the Marine Corps stuff. Yeah, man. I appreciate your dad's service. I wasn't tracking to you that I was in the Air Force. That's dope. Yes. he's in, Germany. Went to Span Goum this summer. it's our stepfather actually. Our dad was in the Army. He's passed on now, couldn't handle things when he transitioned back to civilian life. So he's been gone, for a long time. another thing that we're doing here is we're trying to make sure the trajectory of families like ours and military families like ours, as they transition out, they have a plan, they know what to do. So, unfortunately, our story was different there, but we've got second chances here in our generation, and we have a second great stepdad who's also, paying attention to the stuff we're telling and teaching. Sad to hear about your loss. a lot of us are too close to, what I'm perceiving happened to your dad, right? Thank you for sharing. Appreciate you, man. A lot of good information with us today, we have what's called a focus round and we can make it lightning fast. It takes about two minutes. What do you do for fun? I'm involved in a lot of speaking and I mc a lot of things. I actually, I no man, actually see those pictures of Molokai. That sounds good. So, I've done a lot of, personality work. I have a one man black history show. I get to perform that on stages and I do a lot of nonprofit fundraisers and other events from the stage I get to host. That's awesome, man. What is one opportunity that was an absolutely transformation, opportunity for you? I would say that, I mean, I could name a dozen, but here's one that's crazy. When I was 18, I finished school and worked at a special needs summer camp. For the summer. I was 18 going into college and, changed my life. I was not around people with special needs, cognitive, physical, disabilities or things like that. And that summer was a wonderful summer, changed my life, helped me be, more, emotionally there and empathetic to other people. That is awesome, man. You are a speaker also, you know, teaching folks about life and educator as well. Right? A, a dad, you know. What would you say is your most important communication tip? it's to communicate to yourself first, to figure out who you are and why you wanna be there. Before you try to get that out to the world. if you have not spent enough time in quiet, in solitary, trying to figure out who you are and your connection to God and other people, don't go out there and. Go too hard in the paint, as we might say, playing basketball until you've communicated with yourself, who is it you wanna be? And I've made some egregious and gregarious, errors in my life. Errors, sins, faux PAs, party fouls, because I didn't know who I was at the time. So, make sure you have some communication with yourself and with God before you try to tell everybody else what's what in the world. Thank you so much for that, man. that is so important. now what is one thing when once you understood it, it was a game changer for the way you look at just life in general? For me, with this financial life, it helped me with my fitness, my family, it helps me with my faith, helps me with my fun, helps me with my philosophy. All those F's or pH words, when I learned to put my money PUT warehouse, as you have said, which is a wonderful word, put my money, save it, or keep it in the right place. Everybody wants to know, man, I've got money. Or when I get money, what do I do? Keep it. Maybe we just told you where, keep it. That is awesome, man. You talk about some things, it sound like he was going through a, a Marine Corps, mentoring session about fate, fidelity, finance, fitness, future family, right? Yeah, man. See? So that's awesome. I appreciate that. Now, for the last one, you have been around the country, doing speech. We talk about, you going to Mordecai and tea and, doing speech, even different speeches at school. And my wife went to. You know, small island in a small part of America that not a lot of people get to travel to. You got to see some things. You are also talking to people, educating them, understanding their financial setup, their family setup, their plan for their future. I want to ask you this last question, brother, with that perspective, And your own life journey with your family and as being a dad, your journey and also your interaction with other people. What does success look like to you nowadays? Success. You know, I think it was Napoleon Hill and several other big thinkers of the earliest 20th century who wrote down things for us. They said things like, success is a progressive realization of worthy dreams, worthy ideals. And that's what it is. If we're not living, we're not dying. We cannot be stagnant. You would not drink water from a pond. It's gotta be flowing. So we're moving towards something. So success is moving toward things that are worthy ideals for you. Why Communication to yourself and to God has to be there first. Why am I here? What's my purpose? Where am I going? So success is moving toward those things. It's not achieving everything. Achieving everything is impossible. That is a dream life. That is the gap in the game, right? We have to continue to strive for things, but we don't reach everything. We want more things than we'll ever get. But success is moving toward those things systematically or periodically stopping along way and saying, I'm moving in the right direction. I'm headed toward the right things. on my Journey, I heard President Obama said recently that, you can have everything you want in life. You may not be able to have it all at the same time. be patient, and do things. I appreciate you brother. thank you so much for spending a little bit over an hour with us this morning, and educating us. listeners, if you listen to this podcast and want to dive deep into understanding this more because I think we barely scratch the surface of the amount of information that you will need to make a clear decision on what's in the best interest of your family. So we're talking about. A paradigm shift in, your understanding of the banking system. The way insurance is supposed to work for you and with you. The, the way that you can save for the rainy day I'm pretty sure this broke a little bit of paradigm. That, you may have been given. we also talk about trust. We didn't even dive into family office and what does that mean and how this all ties in together. if you listen to this podcast, and you want to get some information, JDew. Yeah. It's, can you let a our listeners know how they can go about getting in touch with you? What's the best way to get in touch with you? Yeah, if you, want to go to thebankingbros.com, me and my brother call ourselves the Banking Bros, and you can find that on Instagram on TikTok as well. So the banking bros.com will get you a free video to watch, and a cash consultation, as we call it. Let's have a conversation about your needs, your goals. Make sure you understand that you can use this process for hitting those goals quicker and faster. So the banking bros.com. Appreciate it, man. So look, this is not reserved for just wealthy people. last time I talked to a professional about this, they're telling me that, our previous presidents have several policies of their own. these are things that people have been using for Century, right? We all heard about the Rockefellers, right. and the way they have able to maintain their wealth through generations. Right? And these are just one of the vehicle that they use that we all have access to, if you want to learn more, reach out to, JDew. banking bros. To get more in depth information as far as how this can apply to your family. So until next time, thank you. Thank you so much for taking the time to listen to another episode of the Multifamily Real Estate Experiment podcast. Thank you so much for spending time with us today, brother. Appreciate you all. Thank you.