HOW TO CREATE YOUR OWN PERSONAL BANK: An Overview

Do you know that we can become our own source of financing and recapture the majority of the interests we pay to banks and lending institutions?

Here are the basic steps we need to take.  I will discuss each step in detail in subsequent postings.

1. Get a whole life dividend-paying insurance coverage;
2. Capitalize your coverage (which is your “bank”) for at least five (5) years;
3. Establish several “bank branches” during your lifetime

 By doing the above and becoming our own banker, we can get back every centavo we pay for our big ticket items such as a house and lot, cars, vacations, college education, retirement pension fund, credit card payments, mortgage redemption, etc.

By properly establishing your own personal bank/s, you can have a rock-solid financial plan and a predictable income during your retirement years, with NO luck, skill or guesswork required!

In fact,  our personal bank will spare us from the stomach-churning twists and turns of stocks, mutual funds, real estate and other investment vehicles.

I will discuss the first step on  my next posting.

The Infinite Banking Concept (IBC):  The Basics

The Infinite Banking Concept (IBC) was first conceptualized by Nelson Nash in the year 1994.

The basic premise is that instead of taking out loans from banks and other lending and financing institutions, why not create your own personal “bank” where you can get a loan from, for whatever you need it for.

In the traditional banking system, when you take out a loan and starts paying your amortization, you will be paying the principal plus the interest.  Take note that the principal and the interest will not go back to you. Take note, also, that interest expense alone can go up to millions. [see previous post on housing loans]

In infinite banking, since you are the “bank” the principal and the interest will go back to you. You will be making all the money, instead of the banks making money on your money. You will be making the big profits that banks would have made!

Sounds, interesting?  You bet!

When I found out this concept, the way I looked at banking, lending and financing was totally overhauled. 

Do you know that we are paying an annual interest rate of forty-two percent (42%) on our credit cards?  If we are late in our monthly payments, the effective interest rate can go as high as 70%!

In the first quarter of this year alone, documents from the Bangko Sentral ng Pilipinas (BSP) showed that consumer loans on auto, house and credit cards reached P413 billion!

Can you picture now how big  is the interest income for the banks and the credit card companies?

By being our own “bank”, we can recapture the interest expense we are paying to banks and credit card companies, thereby increasing our net personal income by several, if not, hundreds of thousands of pesos.

How is this done?

Be a follower of this blog and you will know the answer. J

Introducing:  The Infinite Banking Concept (IBC)

This blog is primarily dedicated to introducing the Infinite Banking Concept (IBC) to Filipinos, both here and abroad.

The Infinite Banking Concept  (IBC) is a creative way of financing our purchases, especially large ticket items like house and lot, cars, motorbikes, vacations, business expansion, credit card repayments, and even charitable donations and giving.

When you want to own  a house and lot, for example, the traditional route is to have it financed by a government financing institution such as  Pag-ibig or a private bank.

When you pay your monthly amortization, you pay your principal plus the interest.

Assuming you will qualify, if you take out a P1.0 Million loan @ 8.5% interest for a term of  25 years, your monthly payment is P8,052.00.  After 25 years of religiously paying your monthly amortization, you will have paid a total of P1,000,000 for the principal and P1,415,682 for the interest, for a total of P2,415,682.

Notice that the interest is 141.57% of the principal!  The true cost of your house and lot has more than doubled!  If your loan has a term of 30 years, your interest expense would be P1.768 Million!

This is why we need the Infinite Banking Concept (IBC)  and have ourselves become our own banks and financing institutions.

The IBC will enable us to recapture all the principal and the interest we would have paid to Pag-ibig or to a bank, and much more! Just imagine what you can do with the P1,768,000 interest expense if we can have it rather as an interest income!

How is this done?

Be a follower of this blog and you will know the answer. J

Filipino Household Income Grow 19% (1)

A family income and expenditure survey (FIES) conducted by the National Statistics Office (NSO) showed that Filipino families increased their income from P173,000 to P206,000 in three years time, from 2006 to 2009.  This translates into a 19% family income growth.

However, with the increased in family income comes increased family expenses.

The same survey showed that  expenses grew from P147,000 in 2006 to P176,000 in 2009, or an equivalent of  19.7%.

The survey, though, is only preliminary and did not include the poor families.  In some cases, the increased income of P206,000 is a combination of the earnings of the husband, wife, and children.

The 2009 FIES showed that the average Filipino family has an annual savings of only P30,000, which is equivalent to P2,500 per month savings.  [If you and your family are unable to save P2,500 per month, does it mean  you are in a  worse position  than the average Filipino family? J]

Question:  when the breadwinner or one of the income earners of an average Filipino family  is unable to work due to illness, accident, disability or death, would the family picture be brighter or dimmer? What should the Filipino family do in order to avoid financial catastrophe in case an  income robber comes, i.e., accident, illness, death, emergency or disability (AIDED)?

Your comments are most welcome.

1. Sun.Star Cebu, December 14, 2010, p.A8