Death Certain, but Taxes...No!

Death and Taxes

Benjamin Franklin has a famous quote stating that "the only certain in this life are death and taxes". This is true for the most part, but there are legal ways to avoid taxes and ensure that the money you saved and worked so hard for isn't gobbled up by the Government upon your death.

Taxes are the number one expense in our life time. I am not against paying taxes, but I also don't think the government has a right to tax all your assets that you spent a life time working for just because you die. I would personally like to see my hard work passed on to my children and grandchildren.

In 2002 The New York Times ran an article titled "Death Still Certain, but Taxes May Be Subject to a Loophole". In the article, David Johnston, the author, gives some powerful insight into how the wealthy are using Life Insurance to protect their assets and avoid paying the hefty death taxes. The proceeds of a well constructed Life Insurance plan are paid out to beneficiaries Tax Free. For the record it isn't a loophole if it is part of the IRS tax code. Those that know the code and use it to their advantages will be better off.

Read New York Times Article Here.

Depending on the year and the state you live in, death taxes can be as high as 50%. Can you imagine saving money, paying off your home and building a retirement plan in a 401k or IRA just to have half of it disappear after your death due to taxes? Anyone that doesn't like the idea of giving their money to the government after death should be holding adequate amounts of death benefit to cover their assets.

Best-selling Author Ed Slott has an incredible lecture series called Stay Rich Forever and Ever. In that series he talks about how people can lose most of their money and assets without proper planning due to Death and Estate Taxes and Final Year Income Taxes. He gives the example of someone with 10 Million dollars having nothing within 9 months because of the tax booby trap their money fell into. This could leave your family with nothing because you didn't have a plan in place to protect your money.

Watch Ed Slott's 10 minute video here.

Ed Slott does not sell Life Insurance. He is a tax planner and CPA. He shows people how to strategically protect their assets and how life insurance he says, "is the single BIGGEST benefit in the tax code". He makes a joke that he actually personally owns so much Life Insurance that he's afraid to eat at home with his wife.

As the video shows, your money can get trapped and eaten up in taxes. He recommends using life insurance to cover that asset and leave money completely tax-free to your heirs. So why would someone buy life insurance and pay for this tool? Taxes and a legal way to protect yourself against them.

If you would like to learn how to safely grow your money without the worry of future taxes and also protect the assets you have worked so hard to accumulate, contact me and we can build a plan to protect your future. There is a way to create a stream of tax-free income in retirement (living benefits of life insurance) and a way to pass money on to future generations tax-free (death benefit) and I can show you today.

Cheers,

Stephen Gardner
888-638-0080 

Seed Saving For Future Ventures.

We live in such different times that for many of us this won't make sense, but for thousands of years people saved the seeds from their fruits and vegetables for the following years planting. It was a practice called "seed saving" or "brown bagging". Planting seeds in the Spring and harvesting in the fall was all people and farmers thought about or else they starved to death. Today I see many financially starved people.

It used to be that a farmer would plant in the Spring the crops he wished to have in the Fall. Whether it was corn or squash or soy bean. He would then watch over his crops to make sure they weren't drying up, being over-watered or letting the birds devour his hard work. He wouldn't plant his seed and then not check up on it for several months. If he could make it through the Summer he would then have the chance to harvest his crop and eat what he planted or sell it for a profit. However he wouldn't eat it all and he certainly wouldn't sell it all. He would guard it with his life against the coming Winter until he could find another Spring to plant them.

So many of us depend upon the grocery store and food manufactures to make our food that saving seed has become foreign to us. The seed of our day is "Money". Yet we don't seem to be following the principle of saving our seed for future opportunities. Today NBC News released an article that 25% of Americans will be raiding their 401k's and IRA's this year just to cover their basic monthly bills. Most people are saving something in their work fund or personal accounts, but usually not enough. As I speak with people from all over the country about saving and investing their money, so many are so focused on the interest rate that they forget to do their part and save money. Don't get me wrong, you want to get the highest interest rate you can, but I don't hear many talking about the amount of money THEY are saving. I see a pattern of relying too heavily on the interest rate and not enough on the volume of money we personally put away.

So how much should we be saving? Some say 10% minimum. While others are now saying 15%. I think you should save as much as you can with a goal to save a little more each year. Perhaps the most you can do right now is 1%. With some effort and focus you would probably get that up to 5% and then 10% pretty quickly. It's amazing what humans can do when they have a purpose behind something. Figure out what you are saving for and get serious about it.

There is a great story in the Old Testament of the Bible that talks about saving seed for the future. Remember Joseph and the coat of many colors, who was sold into Egypt? Well, once he had gained favor in the land, he was asked to interpret Pharaoh's dream of 7 fat cows being eaten by 7 skinny cows and 7 healthy ears of corn being devoured and eaten by 7 sickly ears of corn. He told the Pharaoh that they needed to save 1/5th or 20% of the grain for the years of famine. After 7 years of plenty and saving the grain, the 7 years of famine hit the land hard. They were able to survive because they had saved during the years of plenty.

We all have months and years of plenty. Do we save during those months or do we go on shopping sprees and eat out more? Are we prepared for the months and years of famine and hardship in our own lives?

One important reason you want to have money (seed) saved, is inevitably an opportunity (a Spring) will come upon you and you will have the resources to take advantage of that. I know a guy, let's call him Ben, that had just such an opportunity come his way. He had been saving money in his life insurance plan for many years when one day he was approached by his neighbor. The man told him that his family was on the verge of losing their home if they couldn't pay their mortgage. Ben asked him what savings he had or other resources, that could be used to make sure this didn't happen. The man mentioned that he had several hundred acres of land that he couldn't sell because the economy was so poor. Ben asked the man what was the lowest he would let the land go for? The neighbor told him $50,000. Because Ben had the money saved in his life insurance plan, he told him he would buy it.

The money saved the neighbors home and gave them some cushion while their money situation improved. The neighbor was grateful because it saved the home he and his wife had raised their children in. Because Ben didn't have to make payments back to his life insurance plan, he was able to sit on the land until the economy improved. 3 years later he was approached by a land developer and sold the land for over $250,000. Luckily he had saved some seed for that particular Spring because it resulted in an incredible harvest.

The truth is that the cost of living has gone up tremendously in America and we need to get wise with our finances and more disciplined with our saving. Unfortunately many people have confused the term saving with investing. Savings is money that you don't intend to lose. While investing is money you are willing to lose in an attempt to get a higher rate of return. Risk verses reward. The problem is that 401k's and IRA's have become the No. 1 place for Americans to save their money. 401k's are not a savings vehicle when your money is in the Stock Market and at risk to be lost. How many trillion's of dollars have been lost to hard working Americans each time the stock markets drops? CBS News has a great article on how trillions of dollars evaporated in 2008.

With a properly structured Cash Value Life Insurance plan you can safely save money for major purchases or even to supplement your retirement. You can borrow against the policy without any fees or penalties for touching your money before age 59 1/2. You can use these plans to make major purchases like cars, start businesses, pay medical bills or create a stream of tax-free income for life.

Remember a good farmer woundn't:

• Lose his seed
• Eat all his seed
• Gamble with his seed
• Sell all his seed

To see how much your saved money could grow to and all the ways a life insurance plan could benefit your life, contact me and I will go over a personalized plan just for you. I can show you how to get plenty of life out of your life insurance plan.

Cheers,

Stephen Gardner
888-638-0080 

Life Insurance to buy cars, really?

I bought Life Insurance to buy cars

When I was 27 years old I was invited to come meet a man, R. Nelson Nash, that would show me some creative ways to safely grow my money and invest for the future. I was shocked when the product he was describing was Cash Value Life Insurance. I actually laughed with disbelief. Once he got done showing me how powerful this strategy was and how the wealthiest families in America had been using it for over 100 years, I stopped laughing and got serious about learning how to use this plan.

I actually bought my first Life Insurance plan to buy my future cars, not for the protection of my family and my income. Since then I have learned how important Life Insurance is to cover the risk of my family losing my income, building a cash reserve for retirement and having money I can use to do other investing. But today I want to show you why at 27 I bought a plan to buy cars and now in my 30’s how I am ready to execute on that plan.

According to latest reports the Average American spends $25,000 on a new car about every 5 years. Some pay less than that and others pay significantly higher for their cars, but I like to stick with the average American. If you have ever researched Forbes top list of companies by assets you will quickly see that Banks make up the lions share of names on the list. Why are banks so rich with assets? One reason is they are on the winning side of the interest equation.

When I was in Boy Scouts as a teenager I used to ask my wealthy Scout Master to teach me about money. He recommended the Richest Man in Babylon and also gave me some sage advice I wouldn’t understand until later. He told me that there are two types of people, those that pay interest and those that earn interest. He then told me to figure out how to earn interest and be on the winning side of the equation.

Most people finance their cars through the local bank or credit union. There are 5 ways to get into a car. You can lease a car, finance it through your bank, pay cash, pay cash and establish a sink fund that saves up to pay cash for the next car or you can use your Life Insurance plan. Let’s take a look at traditional financing through a Credit Union or Bank.

Let’s say you found your dream car and it was going to cost $25,000 and you have average credit. You go to the bank and they pull your credit, verify employment, check your debt to income ratio and ask for your first born (just kidding). They then establish a pay back plan and your interest rate. For this case study let’s look at 5 years with 7% interest.

CLICK TO MAKE ME LARGER

You can see from the picture that your payment will be $495 a month and you will pay $4,702 in interest fees. I don’t think this comes as a shock to anyone that has purchased a car. What may come as a shock is how much interest you really pay and how much the car really cost you. You think you paid 7% because that is what you were told at the bank, but the truth is, that how much you pay each year until the balance is paid off. In this example you are actually paying 18.8% interest and a total of $29,702. $4702 divided into $25,000 is 18.8% interest. For me that came as a BIG SHOCK. But that’s not the worst of it. Have you ever sold a car after 5 years or more? You don’t get anywhere near what you paid for it. After 5 years and 85,000-100,000 miles on the car you are lucky to sell it for $12,000.

Let’s recap this Bank purchase:

You bought a $25,000 car and paid $29,702 total.
After 5 years you sell it for $12,000.

So you lost $4,702 to interest and $13,000 in depreciation.
After 5 years you lost $17,702 total on your car purchase 
and have $12,000 to roll into the next car.

What if you could be the Bank and never lose money on your car purchases again? With a cash value Life Insurance policy you can. With these plans you can borrow against the money you have built up in your plan and use it to purchase cars. Plus your money continues to earn interest as if it were never gone. Imagine never losing money to interest or depreciation.

The numbers we used above are the same for the example of using your Life Insurance plan to buy your car. The major difference is instead of taking money out of your pocket and paying it to the bank, you are taking money out of your pocket and putting it into your other pocket. You have to make the monthly payment to someone, why not to yourself?

CLICK TO MAKE ME LARGER

Let’s recap this Life Insurance Money purchase:

You bought a $25,000 car with money from your Life Insurance Plan 
and paid $29,702 total.
After 5 years you sell it for $12,000.

So you recouped $4,702 in interest to yourself and recouped $13,000 
in depreciation by being the bank. The $25,000 you borrowed continued 
to earn interest as if it were never gone and you have $12,000 from the 
sold car to put back into your plan.

After 5 years you put $29,702 back into your plan plus the $12,000 from selling the car for a total of $41,702. That is $41,702 to roll into the next car.

CLICK TO MAKE ME LARGER

Math is the Universal Language. It is pretty plain to see that you come out significantly further ahead by being your own finance source. We spend too much money on interest and lose too much money in depreciation. Too many of us are on the losing side of the interest equation. You can change this today by starting a plan where you can build up a reserve of cash to use on future major purchases.

Here is a link to a 4 minute video that explains this. Finance Your Own Cars

If you would like to learn more contact me to see what a plan would look like for your unique situation.

Cheers,

Stephen Gardner
888-638-0080 

My trip to Disneyland

My trip to Disneyland. 

For many people Disneyland is the most magical place on earth. I loved my trip to Disneyland as a kid, but It wasn’t magical for me until I took my wife and our 2 young children for their 2012 Christmas present using my life insurance policy. That’s right my life insurance policy. Many people think life insurance is only for when you die, but I will show you that it is a great place to safely grow your money and design an incredible life for yourself and family.

It had been about 15 years since I last went to Disneyland. It was so long ago California Adventure didn’t even exist yet. I remember loving my time there, running from ride to ride and closing the park each night. It was like no place I had ever been before. I wanted my own family to experience it and so I started to save money towards the trip.
On the Sunday after Thanksgiving a friend of mine posted on Facebook that her Sister-in-law had passed away unexpectedly, leaving the husband to raise 5 children under the age of 12. My heart went out to them and I felt a sick feeling come over me. As someone that does retirement planning and sells life insurance my first thought was I hope the wife had life insurance to help the widowed husband take care of the kids. My next thought was I hope they made enough memories together to last a lifetime.
This got me thinking about my own family. We had not been on a real family vacation and we didn’t have enough BIG memories if something were to happen to me, my wife or heaven forbid one of our children. So on Sunday December 2nd, 2012 I did something spontaneous and out of character. I went online and booked a week long vacation along with 4 days at Disneyland. I wanted to make some memories.

So how does someone without a lot of money go on a nice Disneyland trip? Here is how I did it. Many years ago I started saving money inside of a specially designed life insurance plan that couldn’t lose money and would earn interest. I had been saving to be able to finance my own cars down the road so I wouldn’t lose money on interest and depreciation. I had saved enough money to pay off my car and become the bank, but instead I decided to go live and make memories.
You see with these specially designed life insurance policies they have more living benefits than they do death benefit. You can borrow the money you have in there to do whatever you want, it continues to earn interest as if it were never gone and you can use it later in life to help supplement your retirement. Best of all if something happens to me the loan is repaid and my family gets the death benefit money tax-free to help replace my income.
So here is how it worked out: Disneyland Tickets and Hotel were $1,400, Gas to drive down $300, Hotel in Las Vegas there and back was $100, Food and extra’s at Disneyland was $300. The total was $2100 for the entire trip.

The credit card I would have carried the balance on has an interest rate of 14% APR. I hate credit cards and I hate debt, so instead I borrowed the money out of my life insurance plan and will pay myself back at 14% interest over 1 year. At 14% interest the total paid back in is $2,394. That means I will actually recoup the entire cost of the trip in one year and have $294 extra back in my plan. I will repay my plan $200 a month for a year. Meanwhile my plan earned interest as if the money I borrowed out were never gone. Plus we got the reward points for buying the tickets online with my wife GAP Visa card and actually got a $30 gift card for making such a large purchase and paying it off in less than 30 days. Bonus!

Remember the clever Mastercard ads? 2 mini vacations in Las Vegas $100, your kids first time seeing the ocean $40, 4 days in Disneyland $1400, a Magical memory filled vacation with your family-PRICELESS! I can’t even begin to write how much fun we had. To see my sons face as he met Rapunzel (his first crush), to see my daughter ride the Winnie the Pooh ride, to kiss my wife with my children holding on to my legs under the firework show was truly the highlight of my life. My son is now obsessed with Pirates of the Caribbean, my daughter finally understands her Cinderella Castle and dolls and my wife and I talk about our magical vacation all the time. This trip was filled with memories and inspired ideas for our families future.

Ironically around 1950 Walt Disney had dreams of opening a family amusement park where families could come together in a clean park and make memories. Unfortunately his idea was rejected by dozens of banks. He eventually borrowed money from his life insurance plan to get the financing started. In 1955 Disneyland opened it doors for the making of lifetime memories for million of families.

There are so many things you can do with the specialized life insurance plans I build for clients. Only your imagination will hold you back. In a future post I will tell you how I used my life insurance plan to start a house cleaning company that cleaned over 500 homes and did almost $50,000 in revenue its first year. With my memories made and my repayment plan in place, who knows I may be going back to Disneyland next year. I know I will have the money to do it thanks to my life insurance plan.
To learn more about these plans, how they work and how they can be used during your lifetime, contact me to set up a time to speak.

Cheers,

Stephen Gardner
888-638-0080
Safe Money Specialist
http://about.me/StephenEGardner