The short and oversimplified answer to this question is simply once you have the cash flow to do so. In reality, there’s a little more that goes into it but don’t overcomplicate it. If you have implemented the Infinite Banking Concept into your own life, you understand the incredible power of this process. A question that often comes up is, how do I know when its time to open another policy? There are a couple of different roads to explore, but really it comes down to one thing. If you have the sustained cash flow to support another policy, its time to open another policy. There are many ways to increase your sustained cash flow, many of which work extremely well when coupled with IBC.
- Debt Recapture. Debt recapture is one of the most powerful ways to use IBC. It refers to taking back control of your finances and re-directing money that was originally flowing out of your family banking system, and directing that money back into your system of policies. Once you have enough capital in your system to capture a debt, for example a car payment, you take a policy loan equal to the amount of the outstanding balance, use the loan to pay off the balance, and then continue paying your original payment, just redirect it to repay the policy loan.
- Pay Yourself First. This strategy is slightly more labour intensive. It pertains to taking your income, putting the entire amount into your system, and taking a policy loan equal to your monthly expenses. You will have to allocate some of your income to paying back the policy loans when using this strategy so you don’t end up stealing the peas! This will ensure that the entirety of your income is used to building and creating compounding wealth without the need to set aside a portion for savings.
- Restructuring Payments. Small cost saving opportunities exist when you restructure how you pay for things. For example, paying for things like auto insurance annually vice monthly will generally create savings. This can also work for subscription services that you use. Though each restructure may only create 5-10% in savings, that number can add up quickly when utilized across multiple different items.
Things to consider:
- Don’t Steal the Peas! Make sure that you have dedicated some of your cash flow to repaying policy loans. If you dedicate all of your cash flow to paying premiums, leaving none to repay your loans, you are missing the point of the Infinite Banking Concept!
To go back to the original question, it really does not need to be complicated. When you have sustained additional cash flow, you have the means to open a new policy. Not every policy needs to be a blockbuster sized cash cow. The goal is to create a system of policies to maximize their efficiency over time. The most important thing to remember is you are not alone in this process. We are building a community focused on creating financial freedom for all. If you need advice, all you have to do is ask!
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