It was 2011, and I was still getting used to life back home in Alabama. My family had just followed me on a 4 year journey to Germany while I was in the US Air Force. While we were overseas, we got to witness the economic train wreck of 07-08 from a safe distance. I was young and did not have much money at risk in the market. I was also pretty certain that I was safe from any possible job cuts. After all, the post-9/11 wartime environment pretty much meant that personnel reductions were completely off the table.
In 2008 I was studying for my MBA at night after work. What a great time to take an economics class! We had some interesting discussions about stocks, the business cycle, and of course financial regulation. Things got really interesting when Dodd-Frank was introduced. At the time, I was in a graduate business economics course. I had a professor preface his lecture on the business cycle with a question: “Before we start, are any of you Libertarians or Austrian Economists? No? Well that makes tonight easier.”
My Cautious Experiment with IBC
Being a naturally curious person, I had to go home and Google this Austrian Economics thing to see what the big deal was. That started a journey down a rabbit hole that I fear I will never recover from! Over the next few years, I studied Austrian Economics and learned about the Infinite Banking Concept (IBC). That brings us back to 2011. That’s the year I took out my first IBC policy. The tie-in with Austrian Economics is what sold me on the concept. I was still cautious about the stock market and looking for a place to earn uninterrupted compounding interest at a rate that would preserve my wealth against the Fed’s inflationary policies. To me, IBC sounded like the safest place to put my money. However, I was very cautious and only took out a small policy to test the waters. I had heard all the “buy term and invest the difference” hype for years. I was skeptical just like you probably are.
Today I’ve thrown that caution into the wind. I’m firmly convinced that IBC works for me. Over the years my policy has grown and my goals have changed. Now I am much more concerned with liquidity, which is yet another advantage of IBC. In 2013 I started a part-time business developing websites and conducting online marketing campaigns. I got the entrepreneurial bug, and never looked back. I worked nights and weekends for three years growing that business into a respectable side income. I saved what I could and contributed to my IBC policy each year. The goal was to build liquid cash to fund my business and smooth out the cashflow. IBC works brilliantly for that.
I’m Sold! More Policies Please!
A strange thing started to happen to my policy in 2014. When I put a dollar in, it turned into a dollar of cash value I could borrow against! I had funded my policy beyond all the fees and reached the point where it functions more like a bank. So, I decided I liked the idea of having a liquid account earning a great interest rate. I took out two more policies and began aggressively funding them. Before long, I had built a sizeable nest egg. Unlike my 401k account, I could access this money at any time without having a tax consequence.
I realized at some point that year that IBC was my ticket to take my business to the next level. I had often heard just how difficult it is to start a business. You can’t expect to really earn a profit in the first few years was the common saying. So, we saved as much as we could as a family. We had a goal of taking the business full-time in five years. But then fate decided I should be a business owner much sooner.
Taking Webology Full-Time with IBC
Sometimes our plans get accelerated by life circumstances. But what can you do? At the time, we had moved out of town for work and things were looking good. The job paid more money which meant more savings, so we expected to be ready to go full-time with the business in four years. Instead it happened four months later…
Here’s what happened: We had some serious delays finding a house when we moved. It took four months, before we finally got through the lending process. The day before closing, we went to our new home to do a walk-through. I was immediately confronted by a neighbor questioning me about buying the home. “You do know this house floods every two years or so, right? Did they tell you about that?” That’s when we realized this move was just not meant to be.
So, there we were hours away from home facing the prospect of renting for a few months until we found another house. That would have us moving not once but twice. Lesson learned! Always talk to neighbors before you buy a house. There’s some stuff that even a good home inspector and title company can’t find.
I’ll be honest, at that point walking away was the easy way out. We had been living in hotels during the week and driving home most weekends. My family was tired of living as nomads. In the meantime, I had not sold our house in Birmingham because we planned on renting it. We took 24 hours to think over the dilemma we were in.
A Leap of Faith
It was 7:30 PM the following evening. I was sitting in the hotel lobby enjoying a cold beer and complementary dinner. Our minds were made up. I told my wife, “The math just works! We have enough in these policies to pay the bills back in Birmingham for over 6 months. Let’s do it!” I called and turned in my notice the next day. It wasn’t long before I was back in Birmingham chasing down leads and growing the business. Did I mention before that all this took place in September 2016?
Leaning on Our IBC Policy
I knew when I made the decision to quit my job that Christmas would be tough, and things got interesting over the holidays. Business just shuts down halfway through December. If we had not been savers I don’t know how we would have made it through that month. I had several contracts close in December, but most of that money wouldn’t come in until the work was completed. When my accounts receivable money was not keeping up with the bills, we just went online and requested a policy loan. Within 3 days, there was a check in the mailbox that we used to meet the immediate need. Why didn’t I just go to a bank? Well, for starters my policy cash value compounds uninterrupted despite the loan. That’s a key feature of IBC. I’m able to recapture interest costs that would normally go to a bank. Here’s a few other reasons I chose IBC over traditional lending:
- No credit check to borrow money
- No payment schedule or minimum monthly payments
- No tax consequences
- No time wasted convincing a lender that your business model is sound
Planting the Seeds of Success
Nelson Nash, who wrote the book Becoming Your Own Banker is fond of saying that, “Your need for finance, during your lifetime, exceeds your need for life insurance protection”. We put that theory into practice in 2016. We financed some growth opportunities and supplemented our income with IBC. Starting out in IBC back in 2011 was like planting a seed. We watered it each year when our premiums were due, and added Paid-Up additions to boost growth just like you’d apply fertilizer to make a plant grow faster.
IBC helped us get through the lean time. It allowed us to plant more seeds for future success. Those three months at the end of 2016 were spent planting different seeds. This time, I was fostering relationships and building trust among Birmingham’s business leaders. I had learned how to network pretty well by January. The relationships I built over the fall were beginning to generate a healthy yield.
We hit the ground running this year with new Search Engine Optimization (SEO) contracts and larger web development projects. Things are looking up. As the business grows, we are working to replenish the cash in our policies. We’re paying ourselves back instead of sending money to a bank. IBC helped get us here. Where are you going in life? Maybe IBC can help you along your journey?
About the Author:
Blake Akers is an Internet Entrepreneur and founder of Webology, a Birmingham-based online marketing consultancy. He focuses on building outstanding websites and then ranking them on Google so his clients get noticed.
The best time to start becoming your own Banker is today. Waiting just delays the efficiency effect of time. The Infinite Banking Concept is a long term savings vehicle that utilizes specially designed Whole Life Insurance from a mutual carrier. The companies that we uses have been in business for over 100 years and have paid dividends for over 100 years. While dividends are not guaranteed, cautious underwriting, efficient management and costs help keep our companies profitable year over year.
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