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Bank On Yourself
Posted on 4/6/10 at 9:26 pm
Posted on 4/6/10 at 9:26 pm
A friend told me about this last week and it seems legit from how explained it. Does anyone have any experience with this borrowing strategy or is currently practicing this?
Posted on 4/6/10 at 9:28 pm to kingfish25
Mind telling some of us what it is, I think I have an idea.
Posted on 4/6/10 at 9:36 pm to kingfish25
is it like ufirst, where you get a heloc and pay your bills on a schedule and they claim you pay your house off in 3 years or some shite? but when you ask how they just say it is a bunch of logarthims that you would not understand, just pay 3500$ for the program?
Posted on 4/6/10 at 9:36 pm to kingfish25
basically the way he explained it was that you buy a whole live policy that pays you dividends. You basically can borrow up to 40k per year from this policy. You then pay the policy back with interest. So essentially you are paying yourself back instead of paying that interest to the bank. You also receive dividends from your policy as if the money you borrowed was never borrowed.
Posted on 4/6/10 at 9:39 pm to kingfish25
quote:
is it like ufirst, where you get a heloc and pay your bills on a schedule and they claim you pay your house off in 3 years or some shite? but when you ask how they just say it is a bunch of logarthims that you would not understand, just pay 3500$ for the program?
makes no since
Posted on 4/6/10 at 9:43 pm to kingfish25
quote:
makes no since
sense
but anyway, I know it does not, it is a scam and I know plenty of people that fell for it
Posted on 4/6/10 at 9:44 pm to kingfish25
how much does the whole life policy cost upfront? What are the overhead fees for maintaining these types of policies? Do dividends get normal tax treatment? What is an expected/target annual growth rate for this method?
Is there a chart or some other evidence that this actually works?
Is there a chart or some other evidence that this actually works?
This post was edited on 4/6/10 at 9:45 pm
Posted on 4/6/10 at 9:53 pm to Feed Me Popeyes
quote:
sense
it was a joke buddy
Take a WL policy (or some other cash value policy), overfund it right up to the MEC limit and use the cash value to finance big ticket items that you would normally go to the bank or HELOC (or whatever) for.
In a little more detail...
You get a WL policy from a mutual insurance company. You add a PUA rider to the policy and overfund just up to the point where the IRS takes notice (the MEC limit). Since it's a mutual insurance company, your policy is earning dividends. Take the dividends and reinvest them (use them to buy additional PUA's). In about 5-6 years, the dividends you're earning are enough to cover the premiums. So you don't have to make premium payments anymore if you don't want to. This 5-6 year period is called the "capitalization phase". (You're capitalizing your own financing entity.)
Once the capitalization phase is over, go buy a car (my example). But don't finance through the dealership - finance through the WL policy. Take out a policy loan or withdraw CV and use that to pay for the car. Then figure out what the payments would be at 10% interest or so and make those payments back to your policy. The "pitch" is that in doing so, you're recapturing the purchase price and the interest that would normally go to someone else. (If you ask me, there's a *little* truth-bending going on there, but I'm just letting you know what the pitch is.)
Anyway, when you're done making payments, your policy has even more money in it to go buy another car or whatever.
Posted on 4/6/10 at 9:56 pm to kingfish25
I don't know anything at all about this latest, heavily-promoted fad. However, most such schemes are usually not scams, but they aren't all that great either. Normally they get people to do something that isn't necessarily a bad idea (and maybe a good one) but the promoter is pocketing a fee for a service anyone could do very simply for himself for free.
Case in point: the "pay your mortgage in half the time by paying once every two weeks" scheme. It *does* work - a payment every two weeks means 13 payments a year instead of 12. But anyone can do this for himself for free without having to pay a middleman.
People who have no idea how to handle their finances may not know how to do any better, which is okay, it could be worse. Personally I have no idea how to fix a carburetor. But honestly the best thing to do is study up, or find a more mainstream financial advisor.
Case in point: the "pay your mortgage in half the time by paying once every two weeks" scheme. It *does* work - a payment every two weeks means 13 payments a year instead of 12. But anyone can do this for himself for free without having to pay a middleman.
People who have no idea how to handle their finances may not know how to do any better, which is okay, it could be worse. Personally I have no idea how to fix a carburetor. But honestly the best thing to do is study up, or find a more mainstream financial advisor.
Posted on 4/7/10 at 4:52 am to kingfish25
If you are just going to 'bank on yourself', a simply way is through a 401K loan. Not recommending it, but you get the desired effect in a quick time period.
Posted on 4/7/10 at 8:01 am to kingfish25
I have done something similar borrowing against my CD's. You guarantee the loan and only end up paying around 2%.
Posted on 4/7/10 at 8:08 am to kingfish25
quote:It's a snake oil scam with the purpose of separating you from your money. Even Dave Ramsey says it's a scam.
Bank On Yourself
Posted on 4/7/10 at 9:06 am to LSURussian
I wouldn't necessarily call it a scam like foshizzle said. I've looked in to these things pretty heavily as I was approached to participate in it, but I'm always weary of the too good to be true deals.
The program does work, so I can't justify calling it a scam. My interpretation on the program is as such. It allows people who might not necessarily be financially aware/responsible enough to pay their debts down by themselves a program to do so.
The Ufirst program that I looked in to charges a $3,500 fee that sets your budget up and tells you when to spend every dollar. Could I justify spending $3,500 to do this. Hell no. But, if you don't feel like you're capable of accomplishing the same results on your own, then it's not a bad plan.
ETA: I did hear Ramsey's take on the program, but he didn't seem to know or admitted not having all the details on the programs. He was basically saying $3,500 for such a program was a sham if I remember correctly. Can't argue w/ that.
The program does work, so I can't justify calling it a scam. My interpretation on the program is as such. It allows people who might not necessarily be financially aware/responsible enough to pay their debts down by themselves a program to do so.
The Ufirst program that I looked in to charges a $3,500 fee that sets your budget up and tells you when to spend every dollar. Could I justify spending $3,500 to do this. Hell no. But, if you don't feel like you're capable of accomplishing the same results on your own, then it's not a bad plan.
ETA: I did hear Ramsey's take on the program, but he didn't seem to know or admitted not having all the details on the programs. He was basically saying $3,500 for such a program was a sham if I remember correctly. Can't argue w/ that.
This post was edited on 4/7/10 at 9:09 am
Posted on 4/7/10 at 9:26 am to LSUAfro
i don't understand how it's a scam? All you have to do is buy a policy. I guess it could cause more insurance policies to be bought. But as far as upfront costs, there are none.
Posted on 4/7/10 at 9:49 am to kingfish25
quote:Do you mean except for the three thousand, five hundred dollars up front?
But as far as upfront costs, there are none.
Posted on 4/7/10 at 10:02 am to LSURussian
Bank on MyBalls is a better program. and it's cheaper.
Send me $3000 and i will tell you exactly how to spend your money. and i will send you an autographed picture of my nuts.
Send me $3000 and i will tell you exactly how to spend your money. and i will send you an autographed picture of my nuts.
Posted on 4/7/10 at 10:54 am to kingfish25
It is not a scam, unless you actually pay a $3500 up front fee to get it set up. The key to the program, is setting it up through the right insurance company which provides all the features which make it work so effectively. Many financially saavy people, and high net worth individuals understand the benefits of this type of "plan" and take advantage of it, sometimes even have several of them in place. To get a more detailed look at how it works, read the book "Bank on Yourself" by Pamela Yellan. I have many clients who are taking advantage of the plan, and I have not once charged them an upfront fee. Before everyone jumps on this reply, saying that its life insurance, so a commission is made (which it is, as with just about everything), the design of the plan is overfunding, which actually minimizes the commissions made. If you are serious about it, feel free to email me, and I can explain it in more detail, and I even have a few copies of the book.
Posted on 4/7/10 at 11:02 am to kjheath1
Does overfunding it give it a positive CSV way earlier? IDK what PUAs and riders are.
Posted on 4/7/10 at 11:40 am to kingfish25
Do you factor in how whole life is a rip-off?
Again, simpler and cleaner is 401K loan if you are planning to overfund anyways.
Again, simpler and cleaner is 401K loan if you are planning to overfund anyways.
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