Stop Chasing Financial Tactics
Master These 3 Principles Instead
TL;DR
My experience being laid off during two tech busts taught me a hard lesson: financial tactics fail, but principles endure. This article breaks down why chasing tactics is a losing game and how focusing on the core principles of Control, Safe Leverage, and Liquidity puts you in a position to win, no matter what.
I spent 20 years working in the tech world, specifically at startups. In 2000, and then again in 2008, I lived through major market corrections. And as you might guess, startup employees are often some of the first people to get laid off during those downturns.
At the time, my whole financial plan was the same as everyone else’s. I had some stock options and put everything else into a 401(k) and just kind of hoped it was all going to work out. But when the market crashed and my job disappeared, of course, I had to liquidate my retirement savings to pay the bills and found myself back at square one.
My strategy was built on a tactic, the startup hope-and-pray strategy, and when that tactic failed, the lack of a solid foundation was painfully obvious.
This is the critical distinction I want to talk about today: the difference between financial principles and financial tactics.
The Trap of Ever-Changing Tactics
When we talk about Infinite Banking, people often get caught up in the tactics. Tactics are the specific applications: using policy loans to invest in real estate, pay off debt, or do personal lending. They are simply ways to deploy capital.
The problem is that tactics are always changing. To give just one example, we don’t know what interest rates will be in the future. Economic conditions constantly shift, and the optimal tactic of today can become a liability tomorrow. If your entire strategy is based on a tactic, you end up living and dying by that tactic.
The Infinite Banking Concept is built on principles, not specific tactics. The principles stay the same, always.
Principle 1: Control
The creator of IBC, Nelson Nash, identified the fundamental problem we all face: we are caught in a perpetual cycle of financing through outside parties. We’re constantly prioritizing someone else’s financial system—sending our money to outside institutions where we give up control.
Just look at LEAP’s “4 Rules of the Financial Institutions”:
They want us to send them money.
They want us to send it on an ongoing, regularly scheduled basis—preferably on autopilot.
They want to hold onto that money for as long as possible.
And when we want it back, they distribute it back to us in a limited manner.
If that sounds extreme to you, just look at the typical qualified plan and you’ll see that this is true.
Most people are on autopilot, sending money away to systems that lock their money away, out of their control, for decades.
Control also means getting a handle on your cash flow.
Ask yourself this: how much money were you making five years ago? Now, ask yourself, are you saving the difference today? Almost no one can answer yes to that question. We all let our expenses grow in proportion to our income. That’s Parkinson's Law. To build wealth, you must create a system to capture the difference between your income and expenses first. That is the essence of control.
Principle 2: Safe Leverage & Liquidity
Investors love leverage, but most are using a risky form of it. They borrow from a bank or hard money lender and become subject to their terms and repayment schedules. If you're a house flipper, for example, any delay in the process of the flip puts you at massive risk because you’re on the lenders’ clock.
Most people are in what I call a “permission-based” system, where they must obtain financing by asking permission from outside lenders and then having to prove they qualify for it.
Infinite Banking provides a form of safe leverage through policy loans. The underlying collateral for the loan is your cash value, which the insurance company itself guarantees. Unlike the value of your house or your stock portfolio, the collateral can never go down; it’s guaranteed only to go up. You have guaranteed access to loans and complete control over the payback terms. This ensures your money is always doing more than one job at the same time.
This provides you with unparalleled liquidity and frees you from the system where you have to essentially "beg" for financing, provide all your financial information, and hope they approve you.
Principle 3: A Long-Range Mindset
This is the biggest shift. You have to learn to think long-range. So many people get “FOMO” (fear of missing out). They’re stuck in a short-term mindset, looking for a “hack.” This is how they get talked into super high PUA policy designs, and then coached to immediately borrow out all the cash value to chase the investment of the day. I’ve seen it too many times—when one thing goes wrong, the whole thing blows up.
The first part of IBC is what I call "strategic capital accumulation," which is just a fancy term for saving money. It’s the boring part. But we focus on consistently building our pool of capital first, before chasing investments.
This requires discipline. First, the discipline to build your foundation by paying premiums. Second, the discipline to repay policy loans to recapitalize your system for the next opportunity.
This is how you become proactive instead of reactive. You know, every time there’s a market correction, I hear typical investors say things like, "I’m too scared to even look at my 401k right now." That’s a reactive mindset. Real investors don't hide when the market goes down; they go out and buy stuff.
People love to quote Warren Buffett about their investing, but they rarely actually do what he says... WB has a great line about buying when there's "blood in the streets." The problem is that most typical investors are never in a position to do that because they're the ones bleeding in the street!
By grounding your financial life in the principles of control, liquidity, and leverage, you put yourself in a position to take advantage of the changes we know are coming, rather than reacting to them. Infinite Banking allows you to build a system that can adapt to any tactic that is right for you at the right time.
I’m John Perrings, an Authorized Infinite Banking Practitioner and founder of StackedLife. Instead of taking high risk to get a high return, we help our clients implement the principles and strategies that create multiple safe returns with the same money repeatedly.
I’ve implemented IBC for hundreds of clients and educated thousands more via my podcast, articles, and courses at StackedLife.com.
Want to work with me? Schedule a free consultation here.