In this episode of The Tactical Empire, Jeff Smith talks with Shawn Rider about infinite banking strategies to achieve financial independence and high achievement. They discuss the initial setup of small policies, leveraging term convertible policies, and the importance of building a strong financial foundation. Topics include the benefits of using high early cash value whole life insurance, strategically paying off high-interest debts, and the value of maintaining control over one's financial situation. They also emphasize the significance of having the right support and guidance when setting up these policies for effective wealth building and risk management.
In this episode of The Tactical Empire, Jeff Smith and Shawn Rider delve into the intricacies of high early cash value life insurance policies. They discuss the benefits of these policies as foundational assets for wealth building, Jeff's personal experience with starting and leveraging his own policies, and the strategic use of loans against the cash value to pay off debt and invest in real estate. The episode underscores the importance of proper policy structuring and considerations for long-term financial security for one's family. Jeff and Sean also highlight the flexibility and control these policies provide, making them essential tools for achieving financial stability and growth.
00:00 Introduction to The Tactical Empire
00:30 Guest Introduction: Sean Ryder
01:36 Infinite Banking: Getting Started
03:29 Understanding Policy Funding and Usage
09:57 Strategic Debt Management
11:45 Real Estate Investments and Policy Loans
18:53 The Importance of High Early Cash Value Life Insurance
23:11 Conclusion and Final Thoughts
207 Full
[00:00:00] How do you find the will to fight back against a world that wants to keep you sedated, averaging, stuck in place? Join us for the tools and strategies you need to create a life of abundance, discipline, and high achievement. This is The Tactical Empire, with Jeff Smith.
Jeff Smith: Welcome to another episode of The Tactical Empire. I am joined by Sean Ryder. How are you, man?
Shawn Rider: I'm good. Everything's going well. We are rolling right along with the year. Coming up on I keep saying that it's end of Q1 because the brick and border business is wrapping up its first like rolling quarter, but it is not the end of Q1.
We got a whole nother month to go, but, but we're rolling right along, man. How are you guys?
Jeff Smith: Oh man. Fantastic. Fantastic. I'm trying to [00:01:00] make some moves and get some things done. So it's been a busy time, busy time.
Shawn Rider: Good stuff. All right. Well, we've been knocking out some good episodes. I was thinking something over the past weekend is the last few episodes.
We've gone into a few different, um, areas of real estate. And then we talked about small business owners and we talked about risk. And I don't want to glance over the foundation of what we think everything should be built upon, whether you're building a business. Or buying real estate, or again, trying to be a high achiever and build wealth.
I was thinking today, we're going to talk in the next two episodes, one specifically for you and one specifically for me about how you got started in infinite banking. And the progression you've gone through from like day one, first policy, how long you went before you used it, what did you use it on [00:02:00] to where you're at X amount of years later on the banking system you've created.
So you don't have to go back and tell the whole story, uh, but start where you feel comfortable on when you got started with infinite banking. I know it was a smaller policy, um, but talk about what that policy was. What if you want what you funded it with and how long did it sit there internally inside of the policy before you used it on something and what was that first thing you used it on
Jeff Smith: man?
I don't remember the first thing I used it on. I do know exactly. I, I started a 10, 000 policy annually and, uh, it took me a while to do it. I bought a couple 10, 000 policies in the first like year. Because like I said, and like everybody we talked to the number is scary at first when you when you think about like, I think the there's two overwhelming things you're like, I have to get this money after taxes into savings [00:03:00] and have it to apply and deploy once a year.
Right. So like, it can be daunting. It feels like quite a commitment. And then the second thing is. The, the amount is scary to people, like whatever they're on the hook for. You feel like it's just another bill. And then the other thing that's scary is that like it's every year and people worry about that stuff all the time.
Like all the what ifs that come up. And, uh, so early on that, that is frightening. So I bought a 10, 000 policy first, and then I supplemented, I will say this cause I don't think enough people talk about this. As I learned the process, I did supplement with term policies for my death benefit, because for me, part of the education that I went through for all of this was like, why am I doing this?
But ultimately it was to make sure that like my wife didn't have to work and like, and then we were having all these [00:04:00] kids and like, what does that look like to support, like me being the primary breadwinner, if you will, and so like. I think that that's the most important thing is making sure that your family is set up first and foremost, and the one thing that they don't talk about nearly enough is, is supplementing with term to make sure that you've got the death benefit where you want to be, and then also buying term convertible.
Early on because term convertible is the absolute shit and like people don't talk about it nearly enough because You can you can do your medical tests at whatever age you buy into this thing Let's say you're 30 years old 25 years old and you're starting this process Um, if you have a target death benefit you want but you don't have a huge income maybe at that point in time so maybe you want to do the ten thousand dollar policy, but like You want 5 million worth of death benefit or whatever you feel like, right?
It's like, you're not going to get that with a 10, 000 policy, most [00:05:00] likely, unless you're real young. Um, and so as far as high early cash value policies, now, some of them do have decent death benefits, but like for what we were looking at at the time, like, I think I was buying half a million dollar death benefit for 10, 000 with the higher early cash value policies.
Maybe a little more, something like that. And so like, I would have had to buy a lot of those, which is also daunting when you're coming in and looking at this and trying to learn the process. Right. Cause if you do the math and you're like, I want 5 million, that's a hundred grand. On. Um, worth of death benefit or I mean 100 grand worth of funding the policies, right?
Annually. And so, but you can take your 30 year old health tests, blood tests and screening and you can buy term convertible for that amount of money that is affordable. And then as your income rises or as you feel more and more comfortable with these policies, you can transfer or convert, [00:06:00] convert more of the term into high early cash value.
And not have to do new health screenings, not have to do new blood tests or anything else. And I don't think people talk about that nearly enough, especially as prevalent as like certain things like cancer and shit are, because like, once you get sick, you can't go back in time and do this shit all over again.
You're you're now, your medical records are dirty now for lack of a better term. And you don't have the buying power that you once had. So like, I'm just putting this out there for education purposes. Cause I think more people should understand that and know that. Like, even if you want to do a 5, 000 annual policy for high early cash value, you should buy term convertible as soon as you can so that you could start turning this stuff into high early cash value once you understand it a little bit more.
Shawn Rider: Yeah. Just to reinforce that. I mean, a principle that we live by at the tech empire is like a lot of these strategies aren't either, or it should be this. And you can do this and that. Whereas [00:07:00] some of the other personal personal finance gurus, they're like term insurance only screw a whole life. We are big fans of high early cash value, whole life insurance.
That doesn't mean we scoff at term insurance. You absolutely Lee. Should use life insurance for its purpose, which is death benefit first and term insurance is super, super cheap, but we do believe in high early cash value as the banking system. So you in your first year, which what you're probably how many years in eight, nine or more.
Are you, are you 10 year mark with some of these policies
Jeff Smith: right at nine? I think nine is our oldest ones.
Shawn Rider: Okay. So nine years ago, you got started, you opened up a 10, 000 just because it felt more conservative and comfortable. Uh, you know, early on, a lot of people view these as expenses instead of storage units for their money.
And, but early on, you realize that you had extra capital that was just sitting elsewhere. So you started funding other 10, 000 policies. How long did [00:08:00] those, how long did the money sit internally protected inside the policies? Before you ever used the loan provisions to get access to the life insurance company's cash reserves How long do you think it sat there for
Jeff Smith: probably not very long like 60 days, maybe Um, I really I really wanted to learn the process I wanted to see it.
And so I wanted to cycle the money out Put it back and, and like understand the timing of those things, because even to this day, I've got multiple policies across multiple companies and the companies are different, how they handle things and the timing between companies is different too. And so like.
For me, every policy I buy, I cycle money out of it pretty quickly within the first month. Um, now, because I want to know the transaction time and the time that it takes to hit my bank, how fast I can put money back in there, how fast they credit that, what it looks like, because I've made like all the mistakes of like, [00:09:00] Where I sent the money to the wrong place within the company and they held it in like a holding reserve tank or something and it made like some minuscule amount of money and then they applied it to my policy like 60 days later.
Um, and I was like, that's not what I intended to do. I was trying to pay back loans and like, so. I, I've made some mistakes with regards to that. I mean, nothing's catastrophic because your money's still there and it's protected. But like, did you do the wrong thing with it?
Shawn Rider: Just for clarity, for some of these new people that may be early on in the journey, did you literally just pull a loan to get the money, hold it for a few days and then send it back?
Or early on, did you use that to pay off 20 percent credit card debt? No. Yeah.
Jeff Smith: Yeah. I paid off credit card debt with it. Um, a hundred percent because like I took it from whatever, 25 percent or 20 percent down to zero, if you will. And then, and then just wrote checks back to my policy from that.
Shawn Rider: Yeah. And not to, not to make a huge aside here, but this is [00:10:00] definitely something that Jeff opens people's eyes to early on.
If they're not thinking big enough in terms of like using capital into life insurance, into real estate, he asked if they have credit cards that are 19 to 21%. And you see that with the other, like I said, personal finance gurus, they're like, pay me down credit card debt. We are big fans of paying down materialistic, uh, consumerism, credit card debt, but going from, if it's going to take you a year, two years, three years to pay down 20 percent credit cards.
Or you're trying to hoard cash or you have emergency funds that you haven't touched in six to 12 months and they're just sitting there You can fund a policy pull a loan pay down your 19 credit card debt You now have an outstanding loan with most of these companies around five and a half percent But your money's making more than six percent internally That's why jeff said taking it down to zero because from a from a mathematical perspective You're still winning financially your money's earning more than what's accruing on the interest.
So this is definitely something that jeff Promotes in regards to get started on building your foundation to your banking [00:11:00] system, to build longterm wealth. Even if your short term strategy is to pay off debt, we are fans of paying off the right debt. We want you to do it strategically, not letting all your dollars disappear.
And then saying, Hey, I'm going to build my bank on the backend. You and I both have been, and I'm currently still in the fitness space, Jeff. And you hear it all the time is. I'm just going to go work on my health before I sign up at your gym. Well, that's the same shit we hear people say is I'm going to pay off debt before I start my banking system and it's no start your banking system, then strategically pay off debt.
Right? You can work out, you can work out and work on your nutrition at the same damn time. You don't need to do one first, then the other, you can do both of these positive things. at the same time. So how long did you go building the banking system until you felt comfortable or enough leveraging it for what you're doing now, which is, uh, buying real estate?
Jeff Smith: How [00:12:00] long did I go? Probably, probably within two years. Like I said, I bought a couple of policies or a few policies within a year. And so, like, it took a little while to get the money available to do anything significant. I used it for rehabs first, um, as, as cash reserves for rehabs. Um, and then, um, then I was able to put it, use it as, for purchasing as well.
Um, and so, I mean, the other thing I would say is like, to your point, like, not even just credit cards, because a lot of people don't have credit card debt. I mean, some people don't, but, um, even, any fixed I
Shawn Rider: mean, there's people with 1. 2 trillion dollars United States credit card debt right now. Most people don't have credit cards.
That's a fucking crock of shit.
Jeff Smith: Since, since we are talking all the time about cash flow though, like, you have to look at, like, even if, let's say you have truck payments, thousand bucks a month. And if you're on the [00:13:00] back end of that truck payment and you've got 18 months left or something like that, like that's something you can utilize your policy for and increase your your monthly cash flow instantly and you can then start paying yourself if you want things like that.
Any, any sort of fixed. Um, like term payment thing is also a great option because what it does is it takes the pressure off your family. So, like, am I am I advocating not paying yourself 1000 a month? No, but like, no one's going to repo your truck once you buy it through your life insurance policy, right?
And if you pay it on the third of the month instead of the first of the month, no one's calling you, no one's sending you fees for late fees and shit like that. So, I mean, you still need to be a good steward of your money, but like, It can really release a lot of pressure on your family through taking care of these term payments, because I mean, a lot of people have stuff that [00:14:00] they buy that adds up to a lot of payments every month.
I mean, so your monthly nut is significant, right? And like anything that you can take the pressure off of not owing anyone else and just owing your own system. It's, it's a lot of peace of mind, even though in your mind and on paper, it's not truly. Paid off as people would say, see it, right. Cause you've taken a loan, but you took a loan from yourself.
And so you're, you're still in a much better position because you are the collections guy.
Shawn Rider: Yeah. You're in a much better position because you're in control and that's why building your banking system is important. It's about being in control. Now, if people are, are consistent listeners, go back a couple of episodes.
They can hear that you and I both. Uh, bought new, new vehicles within the past year and we put absolutely zero money down and we financed the ass out of them using someone else's money, probably at higher percent interest rates. Okay. And that's what like, and then you get on an episode like this and it's like, Hey, you can use your life insurance to buy cars.[00:15:00]
That's the point, right? What position are you in right now with your family? What strategy are you implementing to build wealth? And if you need that capital or want that capital to go buy more properties, then use someone else's money to buy the cars. And that's what we did right now is like, we use someone else's money to buy the cars cause we need them for our family.
Yes. The monthly payment is high for both of them and they're going to start here next month. I'm going to wait a few months. Because I'm trying to buy more properties, but I know if any, if any, if at any given point in time, the monthly cashflow that we need to like live the life that we want is being hindered because of X amount of dollars of car payments, then I will pull a life insurance loan to pay off the cars, reduce the interest rate and take back control of when I make those payments.
I just don't, you'll. Like it's necessary for me to do that. Now, other people would be super comfortable with doing that right away. Cause that's the best plan for them in that [00:16:00] moment. So I don't want people listening that listen consistently to say, Hey, you guys said something different the other week.
Yeah. That's the point. Like, where are you at right now? And do you have guidance to make the right decisions that are in the best interest of your family in this moment? Okay. So, so right now, Jeff, I mean, you probably have a pretty big system. What percentage you don't have to use dollar amounts. So what percentage of your cash value, cumulative aggregated cash value, life insurance, what percentage is currently having an outstanding loan against it?
So if you had a million dollars of cash value, not that value and you had 300, 000 of loans, that's a 30 percent loan outstanding. What mathematically in your head. I know you're not prepared to answer this question, but ballpark, what do you think is outstanding against your asset?
Jeff Smith: Man, um, I just paid a couple annual premiums. Uh, blah, blah, blah. So your cash value went [00:17:00] up. Your cash value went up,
Shawn Rider: reduced your ratio.
Jeff Smith: We, we have, we have a lot of loans out. I mean, I'd say it's 60, 70 percent, um, of loans. Um, because I do different stuff with it all the time, but I'm also constantly, like, I'm moving strategically.
I'm, I'm trying to pay off real estate now. So I am putting money back in there because I want to, I want to take some chunks, um, into our rental portfolio. Um, so that we can start. Having more and more cashflow from, from there. Cause it's kind of seasoned long enough in my opinion. And some of them are really getting down there to where they're in like easy striking distance.
Like when we sell this, like. When we sell the storage facility, I'm looking at like, how many, how many of our rental properties can we take down free and clear with the proceeds from the storage deal? And then what the, what's the cashflow monthly that [00:18:00] that's going to generate that I can then plow right back into the life insurance.
Um, I'm obviously not paying off any houses if I can't pay them off a hundred percent, um, because I don't believe in paying ahead on your mortgage. Ever. You should not, you should not do that. That is ill advised. So, um, but I, I'm strategic, like I told you on, on the last few calls, I'm kind of all over the place with my real estate strategy right now.
Um, but, but getting some of that property paid off a portion of our portfolio paid off. Then I can run lines of credit against the paid off properties as well. Um, so that, that will be the next step. So I'm going to have a bunch of paid off houses, given us a bunch of cashflow monthly, but then I'm also going to have.
Okay. Big lines of credit open to keep on doing the bigger equity rollups that we talked about on the previous show, too
Shawn Rider: This is a loaded potentially final question Is is [00:19:00] high early cash value life insurance That's the greatest asset you've ever taken control of or put your money in, in your life.
Jeff Smith: Foundationally. Yeah. Like there's, there's no better foundational product to then build upon. Like we talk about all the framework and structure that we build in the tactical empire, like from a financial standpoint, that is, that is the foundational piece of should be the foundational piece of everybody's financial stack.
that they're putting together. Um, in, in my opinion, from, from my perspective, a hundred percent, my kids will have them, they'll have significant cash value in theirs as soon as they're adults. Um, I, I think that it gives you a significant advantage. When you actually start learning about monetary policy and finances and all of it, like it's just a, it's [00:20:00] the best way you could possibly go from a foundational level.
And then on top of that, there's obviously a million other investments that you can be great and utilize your skills and talents at to really multiply what you're doing
Shawn Rider: at
Jeff Smith: a base level. That's where you should definitely be plowing money in there.
Shawn Rider: I think the safe answer is other, other assets will have greater ROI.
Other assets can put more money in your pocket, but using the life insurance as the foundation puts all of that on steroids while giving you protection and control. So it makes. Every move you do after that better overall in the aggregate forever. And that's why, that's why, again, it's a, it's a loaded question, but I like that you added foundationally, cause I don't want people.
To think that it's the greatest asset that they should only be holding. It should not be the only [00:21:00] asset you're holding. It should be the foundational asset that everything else is built upon in our opinion.
Jeff Smith: Yeah. And I think that comes from years of working with different entrepreneurs. I've seen, I mean, I've, I've helped and been a part of a bunch of people's journeys that, that make really good income and they know how to like.
Print money and, and what they do, um, but what that does sometimes is give them a narrow level of like kind of blinders on how it's always going to be. Or like this is always and forever going to be my money train that gives me 100, 000 a month or whatever and like the fact of the matter is like seasons change, things change, and and you always want to make sure that you're building like you're carving off some of that to make sure that you're building for like the long.
Like even personalities change. You could be the greatest salesman on earth and like 10 years down the road, you might hate fucking selling. Like I'm never going to pick [00:22:00] up the phone again is like maybe your, your mindset. And if you haven't carved off part of your profits and built something built true wealth, like I, I consider that being rich.
Like if you have a big income, That's rich. And like you, you have a huge active income coming in, but like, are you truly building wealth? And I think foundationally, that's what the life insurance stuff does. Uh, it's, it starts your journey to actual meaningful wealth building stuff. And, and the, the thing that it does is it builds the front end and it solidifies the back end.
Because of what I talked about earlier, right? So like you're building your foundation of access to cash and, and some interest coming that builds into perpetuity, uninterrupted compounding interest. But you're also solidifying that death benefit, which allows my wife not to work and me to have peace of mind that my kids are going to be fine if something happens to me at any point.
So it allows me to go out and operate on a regular basis with [00:23:00] like a high level of peace of mind and certainty on what's going to happen eventually. Right.
Shawn Rider: So I appreciate it. Good stuff, man. All right. Well, if you feel like that encapsulated what you're using High Early Cash Value for, where you started, where you're at, and how your mindset is viewing it right now with your portfolio, why don't you send the people out?
Jeff Smith: Well, yeah. I mean, guys, follow us on YouTube. Give us a like, give us a follow, subscribe, um, tell your friends about this if this is helpful. Um, you can always come to us if you have questions about High Early Cash Value. Um, it, the policy has to be written correctly. I mean, we, we say that caveat all the time.
Don't go down the street to your local agent that you know, and, and just get it from anybody because that they generally are not going to structure them properly. And, uh, there's a lot of rules around them and most of the agents are making a lot of commission on them. And if they're structured properly, the commission's a little bit lower and the cash value is a lot [00:24:00] higher.
And so, um, just be careful about that. If you want to reach out to Sean or I and ask any questions about these, or you have interest in getting any policies, let us know. Um, we're happy to help you guys with that end of stuff and have a great week, kick ass, and we'll talk to you soon.