Congratulations for already living debt free! It really is a good thing. It shows a lot of financial discipline. You are far ahead of the average person. Chances are, however, you will need to borrow money in the future for some reason. Let me give you something to think about. You finance everything you buy. What do you mean Victor? I paid CASH so how can you say I financed it. Well…you either pay interest to a lender to borrow money and buy an item, or you give up the interest you could have earned on that money.
Let me give you an example. You decide to buy a car cash. You spend $20,000 of hard earned cash money. And you feel pretty good about it. Four years later what do you have? An old car worth a fraction of what you paid for it. You spent $20,000 on something that depreciates significantly. Soon that car will be history and you’ve lost that $20,000 forever, AND all the money it could have earned for you throughout your life. By the way, where will you get the money you need for the next cash purchase of a car. You have to save it, every month, earning next to nothing. And even that little bit of interest is taxed. Plus inflation works it’s magic after time. It’s a losing proposition.
Now what if you had your own private family bank? This time you borrow from YOUR bank. You pay it back with interest over four years. At the end of that time you’ve recaptured the principal and interest. Plus the assets in your bank are already earning interest and dividends, tax free, giving you a good return on your money. After four years you have an old car worth a fraction of what you paid for it. But your wealth in your bank grew so that you have much more money than before. That’s a powerful asset that continues to grow throughout your life. This applies to anything you would normally finance or pay cash for.
So…..which way makes more sense to you? Pay cash for your major purchases, or create your own private family bank? Contact me and let’s talk. By the way, this works great for businesses as well.