7 cash flow shifts to fund Infinite Banking

You already have the money

Money’s tight, and everywhere you turn, the advice is the same: save more, budget harder, sacrifice today for some promised tomorrow that never quite arrives.

Well, the real problem is that you lack control over your money and your cash flow.

Traditional financial planning prioritizes sending your money away to other people’s financial systems - the banks, Wall Street, and government-controlled retirement plans. It leaves you cash-poor and vulnerable, not only when life throws you a curveball but also when opportunities arise.

This is a bonus to a four-part podcast series on the top challenges people face in getting ahead financially. We’ve covered staying ahead of rising prices, dealing with financial instability and debt, navigating employment concerns, and challenging status quo financial planning. This article is a practical guide on the actual steps you can take to free up cash flow today.

“Buy low, sell high.” Everybody says it. Nobody does it.

Everyone knows the number one rule of investing is to buy low, sell high. Yet most people, because of the way their plans work, are just plowing money into the market over and over again, constantly buying regardless of price.

Warren Buffett famously said the best time to buy is when there’s blood in the streets, meaning it’s a good time to “buy low.” But the reality is that no one is actually set up to take advantage of these opportunities when they come along. They’re too hyper-focused on investing in whatever is in front of them, leaving themselves with no cash with which to buy.

Real opportunities aren’t just the next thing to invest in. Real opportunities are often once-in-a-lifetime moments. And they require one thing above all else: liquid capital under your control.

Liquidity changed my life

I can speak from personal experience. When I hit a crossroads in my career and wanted to shift from tech into financial services, implementing Infinite Banking for clients, I had the money because I’d already implemented IBC in my own life. I’d saved up a significant amount of cash, and it allowed me to change careers completely.

It’s a massive change to switch from a steady W2 paycheck into the sink-or-swim world of running your own business. There were significant challenges in changing careers and learning how to build a sustainable income from this business. My cash value life insurance was critical in getting through that period.

Now I’m in a career I love more than anything I’ve ever done professionally. I’m doing financially better than I ever did in my W2 career. I have a rewarding personal life with my family and relationships, and I’m doing exactly what I want to be doing.

Here’s the question: How do you assign a rate of return to that incredible improvement in life?

Not everything is about the dollars and percentages. The real opportunities that come along are usually very individual—they present themselves because of who you are, what you know, who you know, and where you’re located. You can’t necessarily predict them.

Luck is when preparation meets opportunity. With Infinite Banking, the preparation piece is capitalization. It’s being able to roll with the punches but also seize opportunities when they arise.

Dream cabin in Aspen

One of my colleagues recently bought his dream ski cabin in Aspen—right on the lift, ski in, ski out. It’s been his lifelong dream, and the only reason he was able to buy it was that he didn’t have to spend time securing financing like other buyers.

He had cash value in his whole life insurance policy. All he had to do was make a single phone call to the insurance company, and he had the cash within five business days. He bought the place while everyone else was scrambling through underwriting to get financing approved. He beat everybody else simply because he was liquid and had control.

This is what people miss. Everyone puts the cart before the horse, looking for high returns, cool investments, the next big thing, and financial hacks. Then, when one thing goes wrong, they either don’t have the liquidity to handle it and everything blows up, or worse, they’ve over-leveraged themselves without control over the payback terms, and it really blows everything up.

Back to the basics of Becoming Your Own Banker

All the details about policy design are secondary to having control over your capital. This is Infinite Banking 101. If this sounds foreign to you, you must read the book Becoming Your Own Banker by R. Nelson Nash. This is the source material for all things Infinite Banking.

There are people on YouTube, Instagram, TikTok, and elsewhere talking about Infinite Banking who have literally never read this book. They have no idea what they’re talking about. To them, it boils down to just designing high cash value policies, and boom, you’re doing Infinite Banking.

But that’s not the ultimate goal. What we’re doing is getting control over our capital so we can call the shots, roll with the punches, and take advantage of opportunities.

Ok - So where does this leave us if we need to find money within our existing cash flow to actually capitalize our own banking system?

Practical Strategies to Free Up Cash Flow

1. Eliminate or reduce retirement plan contributions

If you’re contributing to a 401(k) or any other retirement plan, that’s cash flow being diverted away from you today in exchange for the hope of some future benefit. It leaves you illiquid right now when you need it most.

Consider reducing or stopping those contributions and redirecting that cash flow to capitalize your own system through whole life insurance. You’re still saving, but now you have control and access to that capital.

2. Delay retirement plan contributions

You can also delay your retirement contributions for a period of time. One thing we know is that you can pretty much always contribute to retirement plans or other market-based accounts. What we don’t know is whether or not you’ll qualify for life insurance tomorrow.

A “401(k) delay” could be an appropriate strategy. Create some liquidity and guarantees today by redirecting cash flow from your 401(k) to whole life insurance. Over, for example, a 5-year period, two things will happen:

1. Your income will likely increase

2. The PUA portion of the policy will become less important for building cash value in the policy

These two factors will allow you to either stop paying the PUA portion of the policy and start contributing that cash flow to your 401(k), or you’ll likely then have enough cash flow to support both.

3. Additional Mortgage Payments

Many people make extra principal payments on their mortgage, thinking they’re getting ahead. But that money is now locked in your house with no liquidity. You can’t get to it without first getting a lender's permission.

Importantly, making extra payments to your mortgage is a very misunderstood strategy. Most people right now have historically very low mortgage interest rates, say 3%. Every extra payment you make over the schedule is, in fact, saving you interest on your mortgage. But it’s only saving you 3%. Those extra dollars are doing a “3% job.”

Those extra dollars could be doing a more important job of earning you more than 3%. Using those extra dollars to pay whole life insurance premiums would, for example, create maybe 4-5% growth (obviously, depending on age and health). And now you have some liquidity to deploy those dollars further to buy assets and create even more growth.

Rather than pre-pay your mortgage, instead, make your regular mortgage payment and redirect those extra payments to your life insurance policy, where you maintain control and access.

4. Credit Card Strategy

If you’re making more than the minimum payment on credit cards, that’s cash flow you could redirect. I’m not saying ignore your debt, but there’s a strategic way to approach it.

If you’re paying down a credit card faster than required, you’re reducing your debt but also reducing your liquidity. Sometimes it makes more sense to make the minimum payment, redirect the extra cash flow to build up your cash value, and then use a policy loan to pay off the credit card strategically.

When you’re done paying off all the debt, rather than resetting at zero, you end up with a bunch of cash value available to start working for you and creating growth.

5. 529 plans

Look at things like 529 plans. People put money into these college savings plans with all kinds of restrictions on how it can be used. What if your kid doesn’t go to college? What if they get a scholarship? What if you need that money for something else before they’re 18?

That’s cash flow going away from you with strings attached. You could fund a life insurance policy instead, and if you need the money for college, it’s there. If you don’t, you still have that capital for whatever else life brings.

6. Property taxes

Turn an annual expense into a wealth-building strategy. If you have annual property taxes due and you’re saving money for those property taxes anyway, you could divert that cash flow from your property tax savings and use it to pay premiums on your life insurance policy.

Then, at the end of the year, use a policy loan to pay your property taxes. You “save up” again for the following year by paying off the loan. Now you’ve freed up that capital all over again to pay your next property tax bill.

This is a way to find premium dollars that can be used to better capitalize your system, beyond just saving up and spending every single year.

7. What If There’s Nothing to Cut Today?

Let’s say you’ve looked at everything and there’s really nothing you can redirect. You’re not contributing to a 401k, you’re not making additional payments to your mortgage or credit card, you’re not contributing to a 529. You’re maxed out in terms of cash flow.

Here’s the one thing we can count on: everyone’s income typically increases over time. At a minimum, most people get a cost-of-living wage increase. But even more likely, promotions happen, you’ll move to new companies, or you’ll start a business.

So even though we don’t necessarily have anything we can do today to really divert cash flow to a place where it’s going to do more for us, we can still plan for tomorrow. We can start keeping track of our cash flow and, more importantly, start keeping track of the growth of our expenses in the future.

The problem with traditional budgets

The typical way people try to address cash flow is by putting themselves on a “financial diet,” also known as a budget, where they sacrifice their quality of life today. If you’re living paycheck to paycheck right now or struggling to save, that’s not a great option. It ends up being a short-term thing where you try to do it, then something comes up, and you can’t sustain it. The reality is that your standard of living is what it is right now.

A better way is not to try to change anything today. You don’t need to decrease what you’re doing today. If it can be done, great. But if it can’t, we want to make sure we capture the difference in the future.

Currence cash flow operating system

This is why I’ve rolled out Currence as a significant part of my practice. It’s a cash flow operating system for regular people like you and me. What it does is allow us to unconsciously save rather than unconsciously spend.

By using Currence, we’re able to slow the increase of our expenses in the future. We don’t have to eliminate the growth of our expenses, but we want to slow it down and not let it grow at the same rate as our income. By doing this, we can redirect freed-up money and start deploying it in ways that generate more income for us. Then it builds and builds from there.

When people use Currence, they find they’re saving about 600% more than the average American! By saving more, they can buy more assets that generate income. Even though they reduced the % growth of spending, the dollars they can spend are significantly higher because they have more income!

All wealth is created with the difference between income and expenses. So everything starts with your cash flow. If you don’t have control over this, nothing else really matters.

Process Over Products

This is what we want to focus on—processes, not necessarily investments or products. We want to operate with a process in mind, not just chase the next investment. Once we have the process in place, it doesn’t matter as much what the individual investments are.

As Nelson Nash says in Becoming Your Own Banker, when you have cash, opportunities have a way of finding you. Rather than searching for the next thing to put your money into, if you have money, you’ll almost definitely come across opportunities without even really trying.

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John Perrings is an Authorized Infinite Banking Practitioner who has implemented IBC for hundreds of clients and educated thousands more through the StackedLife Podcast and financial resources at StackedLife.com.