Banking On Yourself

Along time ago my Father explained to me that life insurance could be structured to provide tax free income, along with many other benefits. I started reading into structuring and funding life insurance to provide tax free income. One of the most intriguing books that I read was Becoming Your Own Banker: Unlock the Infinite Banking Concept by Nelson Nash. The basic concept of the Infinite Banking concept is to purchase a Participating Life Insurance Policy (Which means the company pays out part of its excess earnings each year to your policy).  Inside your policy there is a “savings account” building a cash value. Also, with the infinite banking concept you want to pay for the policy as quick as possible. You capitalize your Bank (life insurance policy) as soon as possible, but typically it will take a few years to get funded just like starting any other business. Building your own bank becomes more efficient the sooner you pay it off. Once your Infinite Bank is funded you can begin financing things in your life and paying the interest back to yourself while avoiding paying interest to the bank.

Mrs. Freedom and I decided that we were going to start funding the Cents of Freedom Bank. So I contacted a New York Life insurance agent (I decided that in my case New York Life had the best policy available for the Infinite banking concept). When you talk to your agent they will talk to you about you budget, and what you are trying to accomplish with your insurance coverage. They meet with you and provide you with what’s called an illustration. It shows three different scenarios that could happen inside your bank (your life insurance policy) 1)A guaranteed value 2)Middle of the road values (based on some projected returns in the policy 3) High end values for a better case scenario for returns in your policy.

The policy that we settled on was called the 25yr Custom life, meaning we will pay the policy up in 25 yrs. The face amount of the policy was $100,000. The policy costs $133/mo for me to be a health 25 year old male. I had to complete the application with my agent and set an appointment to have a medical screening done. We were recently issued our policy and began capitalizing our Infinite Bank.

Be sure to check back for updates on how our little self owned bank is growing (as well as  a more detailed summary of our policy), and many other new and exciting items going on in the Cents of Freedom household. For more information on the infinite banking concept read Becoming Your Own Banker.

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Mr. and Mrs. Freedom are on our way!

So Mrs. Cents of Freedom and I will have been married two months this upcoming week. Let me tell you it has been one hell of a ride. We recently moved out of the house we had been renting for six months because the roof was leaking and we found mold growing. Our land lord wasn’t particularly interested in fixing the roof or dealing with mold remediation, and asked us to move out. We were tenants at will which means we paid her rent we lived there, but there was no paper lease. Let me tell you from experience this is a BAD idea. That piece of paper protects the both of you, and Mrs. Freedom and I definitely could have used it since our land lord was crazier than a bed bug. Luckily, Mrs. Freedom and I were blessed with great friends that allowed us to rent a room in their house while we close on our house.
Married life brings about a lot of changes in life; Mrs. Freedom and I are no exception. Luckily we have implemented a lot of synergies in our financial life to move towards financial freedom. The first thing we did before we got married was implement a budget. We use budgeting software called YNAB (You Need A Budget). It is AWESOME!! It works like an electronic envelope system. We have it installed on our smartphones and whenever one of us spends something out of one of our “envelopes” it updates automatically through the cloud to our smartphone.
YNAB has been invaluable because the other change we have implemented. Since we got married we started living off of one paycheck. We use Mrs. Freedom paycheck to build our emergency fund and pay down our student loans.
Currently our net worth is $(26,040). Our goal is to get our net worth in the positive territory in the next 12 months. We will be sure to keep you updated as Mrs. Freedom and I move forward.

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A New Life

Hello everyone! Happy 4th of July. It’s been a long time since I have visited, but life has been full of changes. On May 25th I married Ms. Cents of Freedom. That same week I started a new job with Jones Petroleum company. So far the married life and the new job have been great. The Mrs. and I have been busy working on our financial situation since we got married.Luckily, I married a woman who aspires to being financially secure and is financially savvy.

After the wedding we decided that we would live off my income and user hers to build our emergency funds and pay down student loans. The first thing we did to make this work was to get on a budget. We use YNAB (You Need A Budget) and have it installed on both of our phones. It has been great.

Just over a month into our new marriage we have close to $6k in our emergency funds and around $45k in student loans. We have a car payment on one of our vehicles buut we are looking for a way to rearrange our vehicle situation and get a vehicle without a loan. We had been renting a small house for $400/month which includes utilities. It was a great deal until the roof started leaking and we found mold growing in our bedroom. We started looking for a new place to rent, but the going rate for rent in our area is $650 and up. So we started looking for a house. We made offers on three different houses and the third time was a charm. Our loan recently went into processing and hopefully we’ll be moving in by the end of August.

I don’t know that we will be able to get our net worth to the big fat $0 by November as I stated in this article , but we have our goals aligned and we are moving in the right direction. We are currently evaluating ways to save money in our budget and earn more income.

Be sure to check back soon I will be highlighting what it is like being a first time home buyer and our path to paying back our loans and building wealth.

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Road Map to Financial Freedom

I have talked many times about the steps to take to achieve financial freedom. However, I found this awesome little graphic on @r/personalfinance on reddit.com. I thought it may be beneficial for you readers that learn visually. The following visual gives you a basic road map for financial freedom.

https://mail-attachment.googleusercontent.com/attachment/u/0/?ui=2&ik=a4b088aa6d&view=att&th=13d8d6e9f3be1df5&attid=0.1&disp=inline&safe=1&zw&saduie=AG9B_P_trrbqQ7Wo1qDRtT8__PEW&sadet=1364149205445&sads=hGYdbJ2XIPk57GkLle2F9G3yrYI&sadssc=1

The first thing to do is to build yourself an emergency fund. The emergency fund should be a savings account or money market account. You want this money to be very liquid (easy to convert to cash). This money is here for… well emergencies i.e. you get laid off, your car breaks down, you have a medical emergency, your washer goes on the fritz. This account is a buffer between life and your finances. The emergency fund is an important foundation for your financial financial freedom, because let’s face it Forrest Gump said it best when he said, “Shit happens.” The emergency fund will prevent you from turning to a credit card when an emergency happens. Trust me they will happen

The next stop on your path to financial freedom is paying down your debts, i.e. your credit cards, student loans, and car notes. The problem with these debts is you are lining someones pockets with your money. These lenders aren’t really there to help you buy that new TV or car they are there to make money and they are making it off of you.

The next steps on the road to financial freedom are outlined with dashes, and they deal with saving for retirement. Let’s face it you and I don’t want to work the rest of our lives. I mean work is a four letter word. The first step is to contribute to your 401k @ work up to the amount that the company will match you. The match is basically free money, well not basically… it is free money. After you receive the match from your company its time to fund an IRA ( Individual Retirement Account). I prefer the Roth for reasons I will outline in something I call “The Seed or the Harvest.” After you max out your IRA, go back and try and max out your 401k.

This is by no means a comprehensive road map to financial freedom however, it is a good guide.If you want to see how you are doing as you move towards financial freedom use this roadmap as a guide and see how you are doing. Personally, I am building my emergency fund and paying off my student loans.

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My last CPA Exam

So, I just wantes to let everyone know that I took and passed my last CPA exam on 2/25/13. What a relief, but there is no rest for the weary. I have got eight more months of work experience to get before I can apply for my license.  In the mean time I am looking to find a tax firm to work in or I eill dtart writing my business planbto open my own. As much as I preach seeking freedom I am clawing for
a way out of the corporate structure I sit in now. Be sure to check back in soon I am going to outline the steps it takes to be a CPA.

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