Recent Publications | Moran Financial

You WIN, They LOSE – When You Buy a Car this Way!
Will Moran, IB Canada Group
Feb 13th, 2022

Spender, Saver, Wealth Creator, Who Wins?

SPENDER: Borrow, then repay and repay, then borrow again.

Problems with borrow, then repay and repay:
• I want a car; I take a loan; I pay it off. I take another loan… I lose $600,000 over a lifetime!
• I was sending money to those people, and I never saw it again.
• When the loan is paid, I borrow again for the next purchase.
• I have zero control and rigid payment schedules, and I live BELOW the zero line.
• Unless I save more than what you’re paying the lender, my life is in a continuous downward spiral where I’m continually giving up control of my money.

• There are credit qualification requirements like proof of income and assets. There is more red tape to get approved for a loan or mortgage: credit score, proof of steady income and assets, even your social media views, and political affiliations may be taken into consideration.
• But who’s getting rich? Not me. Not you. The lenders are, not to mention how it contributes to inflation.
• It is hard to break out of this financial bondage, but breakout you and I must!
• I LOSE. You LOSE.

SAVER: Save and save, then spend.

We became SAVERS! My wife Sue and I thought we were geniuses when we could pay cash for our next car.

What we did is we saved until we had enough money to pay for what we wanted to buy. We cut back our lifestyle. We ate out less. Shopped at Value Village, and Winners. For us it was all about scrimping and saving on stuff, sacrificing, budgeting, eliminating, and cutting back our lifestyle. We had a reductionist mindset when raising our three kids. We were trying to shrink our way to wealth like some gurus tell you. We were not happy about that. What good is money if you can never use it?

Problems with save, save, then spend
• So now I have enough to pay cash for a car, and I withdraw it all. How much compounding is happening on that money? How much am I losing?
• Einstein called compound interest the “8th Wonder of the World”. Did I just give up the eighth wonder of the world? I didn’t pay interest, but didn’t I lose the accruing interest for the rest of my life?
• Then I do it again. I’m saving for my next vehicle and paying cash.
• Over my lifetime I've been interrupting compound interest over and over.
• It’s like cutting down the apple tree to get the apples. No one would do that, yet we do it all the time with our money.
• This is why Canadians are facing a headwind where up to 34 cents of every dollar is going to paying interest or losing interest when we pay cash!
• All I’ve been doing is greasing the wheels of the banking industry and making them rich like they’ve trained us to do.
• I LOSE, even though some gurus say I’m winning.
• But I have slowly over time shifted that to my side of the equation. I’m now sending that money to me, and I get to reuse it.
• Would you like to learn about that?
• How quickly does my wealth grow if I’m reusing say $2000 per month?

WEALTH CREATOR: The Infinite Banking Concept

Wouldn’t it be cool if we could pay cash for our vehicles and NEVER interrupt the compound interest? “This sounds illegal…. It sounds too good to be true…. It’s not possible…. If this was true everybody would be doing this”. This is what people tell me when they first hear about Infinite Banking–-and it is exactly what bankers and lenders would like us to believe. Yet, the wealthy have thought this way and practiced this concept for generations.

• Infinite Banking is a blend of spenders, savers, borrowers, & bankers all at once! We become the bank!
• Instead of all our income going toward our monthly bills which include a mortgage, our utilities, food, gas, etc., like we have been taught to do, we added just one step to the process and changed where that money goes before it can be spent anywhere else.
• We put money into our Infinite Banking policy. That’s our “bank”. It’s where we store wealth. Question: If this was your “bank”, would you want your deposits to be small or large? You would want them to be as large as possible.
• Your money must reside somewhere. Rather than keeping it in a bank where it earns nothing, we put it into our whole life policy where it gets a competitive return and grows tax exempt. Hey, if you’re getting a competitive return to start with… AND we are not taxed on its growth is that better than most everything else out there? But we don’t just keep it there. We use it! (And we multiply it as I will describe in another article).
• The process is: We take a loan against our cash value, plop it into our bank so we can write a certified cheque and pay cash for our vehicle. Then, when I get around to it, I repay my policy. I set it up to pay all the principal back to me so I can use it again. All the interest goes to the insurance company. All the principal goes to me… AND they pay me a dividend.
• We get multiple uses out of one dollar: We get a death benefit, we create a pool of capital that grows and compounds tax-exempt so that it will be there to supplement our retirement, and when we borrow against our cash value, it continues to grow and compound without missing a beat as though we hadn’t touched a loonie of it.
• So, you’ve received the benefits of what you’ve used that money for now, and it will be paid off when you die.
• You’ve moved from a middle-class mindset: “I drained my bank account for a purchase” and moved to a wealthy mindset: “How can I make that purchase and get my money back”?
• You’ve made the switch from giving up your money, to NOT giving up your money for anything, ever! You are now treating your cash as capital and when we understand what capital can do for us, we never want to part with it!
• That's what banks do, and that’s what your policy allows you to do. When we don’t do it, it feels like we are stealing from ourselves.
• It does not contribute to inflation.
• I WIN! You WIN! We ALL WIN!