Bank On Yourself

Mind telling some of us what it is, I think I have an idea.

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.

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makes no since

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sense

but anyway, I know it does not, it is a scam and I know plenty of people that fell for it

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sense

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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.

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.

I have done something similar borrowing against my CD's. You guarantee the loan and only end up paying around 2%.

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.

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But as far as upfront costs, there are none.

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Do you mean except for the three thousand, five hundred dollars up front?

Does overfunding it give it a positive CSV way earlier? IDK what PUAs and riders are.