Financial Freedom Friday – Assets & Liabilities


Hey everyone! Welcome back to Financial
Freedom Friday where we discuss tips and strategies to help you achieve financial
freedom. My name is Nate Scott, it’s great to be back again. Today we’re gonna
discuss something pretty exciting and it’s something Robert Kiyosaki calls
turning liabilities into assets. Now, I don’t know if you know Robert Kiyosaki,
he’s the author of the Rich Dad Poor Dad series, he has a lot of great books and
material. Outside the box thinking, I love him and what he writes and it helps a
lot of people. I don’t know if you’ve heard from him, if not you should go
check him out. But anyway, when he says turning
liabilities into assets I believe he’s probably most of the time referring to
borrowing money from a bank to go buy an asset, maybe a rental property or to help
you fund something in business. Something like that where the asset that you
purchased will actually produce a profit far above and beyond what it costs to
borrow the money. And so that’s what he’s talking about when he turns liabilities
into assets, for the most part. But I wanted to bring something that I think
can relate better to the average person because not a lot of us have those types
of assets. Not a lot of us are doing those things. If you are, great! I
encourage everyone to do that type of thing and to really focus on using the
bank as an asset to you, but most of us just have liabilities. That’s all we have.
We we haven’t been thinking in that way so we’ve got… and before I go into it I
think I should define it for, you know, assets, liabilities, fancy words. An asset,
Robert Kiyosaki and I agree with him, describes it as something that puts money
into your pocket. A liability is something that takes money away from
your pocket. And so when we’re talking about liabilities and assets most of us
just have a lot of liabilities. I mean when you think of, you know, the
car loan, that takes money out of your pocket each month. The mortgage, the
credit cards, the student debt, the business debt. I mean we have all these
different liabilities that we owe money on and we’re making payments and writing checks out and every time you make a payment to one of those liabilities you
have less money than you did the day before you wrote the check.
So in other words it’s taking money out of the pocket. Every single one of the
payments you’ve ever had is essentially a deposit into somebody else’s account
and the money’s gone. But we’d like to share with you today, what I’m trying to
get to, is that there’s a way that you can turn your liabilities into assets.
And that’s why it’s the greatest thing you could do is start to focus on owning
your own debt through this concept we call becoming your own banker. And so
what I’d like to share with you today is how you can use a life insurance policy
to essentially create a debt that you own and you can profit from it and turn
the liability into an asset. So here’s how it works: let’s say, you know, right
now let’s say you have a car payment. It’s $500 a month and you’re just
normally writing that check out. As we said, every time you write the check you
have $500 less. That’s why we don’t like payments, that’s why we don’t like debt, because we
have less money because we’re sending it all to the bank. And so you’ve got this
payment and you say, you know, I might give Nate a chance here to, let’s see
what he’s actually talking about with this whole banking strategy. So you just open up a policy, you build it up, and now you have enough money to take
over the car loan that you owe. Let’s say it’s like $25,000
on the car and we now have $25,000 in our policy and we
borrow against our policy to pay off the car loan. And we start making that same
payment, what used to be a payment of $500 a month, instead of going into a
bank we just started sending that back to our policy. So you haven’t changed
your lifestyle at all. You haven’t changed your cash flow. The only
difference is where you’re sending the payment to and whereas it used to be
money that was leaving your pocket, now every time you write that $500 car payment it’s just back sitting into your policy where you
found it. And so each and every month that used to be getting $500 a
month taken away from your overall financial picture, now you can have $500
a month be adding back into your financial picture. You get all the money
back for those payments essentially turning the liability
into an asset. But not only that, the reason we use the policy to do this is
we don’t just want to have our money back, we want to get all our money back
and make a profit. And the power of it is inside that policy the cash value is
going to be earning interest and dividends the whole time whether or not
you borrow against it or not. So by the end of the timeframe not only have you
gotten all your car payments back because you’re now the bank. but you’ve
made a profit on it. You’ve gotten more than what you’ve put into it. So you’ve really
turned a depreciating asset like a car into an appreciating asset, where you
have all the money plus a profit back at the end of the term. Totally different
way to live, it can take a little while, especially even for those of you who are
practicing this with us, to have this click in your brain. But it’s a powerful
thing to be able to turn liabilities into assets and to own your own debt and
profit from it. It also makes life pretty simple, I would just say, you know,
being able to fund everything on your own makes it more peaceful. And that’s
what we want to help you do. It’s much easier to achieve financial freedom if
banks aren’t getting all your money. And remember, if you don’t fight for your
freedom nobody’s gonna do it for you. So let’s get to work. We’ll see you next
Friday.

Leave a Reply

Your email address will not be published. Required fields are marked *