Fundamental Friday Basic Zoom Calls
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| Responsible | Donald Pemberton |
|---|---|
| Last Update | 12/20/2025 |
| Completion Time | 19 hours |
| Members | 9 |
Fundamental Friday
December 19, 2025
Topic
The Philosophy of Saving & Using Infinite Banking for Family Wealth
Key Takeaways
1. Savings Build Confidence and Control
The “Save and Walk Tall” philosophy connects saving to self-confidence, independence, and principled decision-making.
Savings reduce economic pressure, allowing calm, candid, and values-based choices.
2. Insure Children Early to Lock in Insurability
Secures a child’s health rating before future medical issues arise.
Example: Jim’s grandson became uninsurable at age 24.
Convertible term insurance is a low-cost way to lock in insurability.
3. Children’s Policies Act as Financial “Training Wheels”
A sample $150/month policy for a 12-year-old teaches saving discipline.
Can be designed to be paid up in ~7 years.
Creates a small, growing asset for future needs (college, first car).
4. Fund Your Own Policy First (“Oxygen Mask Rule”)
Parents’ financial stability is the foundation of family wealth.
Prevents parents from becoming a financial burden on their children.
Topics Covered
I. The Philosophy of Saving
Budgeting vs. Saving
Budgeting: Allocating money.
Saving: Requires a clear why.
Without purpose, spending expands to exhaust available funds, creating a reactive, scarcity-driven mindset.
Scarcity vs. Abundance Mindsets
Scarcity:
Defensive and contracting
Focused on survival
Abundance:
Offensive and expansive
Focused on leveraging resources and creating opportunities
The “Save and Walk Tall” Philosophy
Savings directly build confidence and control over one’s life.
Without savings, people are always “running”:
Forced to take the first job offer
Dependent on others in emergencies
Savings provide the freedom to:
Calmly evaluate opportunities
Leave a job on principle (often increasing perceived value)
Speak honestly and make candid judgments
The ability to save is a habit, not a function of income size.
II. Using Infinite Banking for Family Wealth
Insuring Children
Why It Matters
Locks in insurability and health rating while young and healthy.
Underwriting Rules
Parent must have a policy with a death benefit greater than the child’s.
All children must be insured (or a stated plan to do so).
Age-Based Ratings
Under 20:
Standard rating
Higher insurance costs
Slower cash value growth
Age 20+:
Eligible for preferred ratings
Lower costs
Faster cash value growth
Policy Design & Funding
Convertible Term Insurance
Low-cost method to lock in insurability
Convertible to whole life later with no new medical underwriting
Minimum age: 20
Whole Life for Children
Example: $150/month policy for a 12-year-old
Cash value exceeds total outlay in ~7 years
PUA Catch-Up Feature (Penn Mutual)
Allows business owners to make up missed Paid-Up Additions from the prior year
Useful for capturing unexpected profits
Funding Strategy
Policies can be designed to be paid up in ~7 years
Creates a small, growing asset for future milestones
Teaching Financial Discipline
“Vitamin K & D”
Knowledge and Discipline
Involve Children
Have them contribute to premiums (e.g., from chores)
Builds ownership and responsibility
Use Policy Loans as Teaching Tools
Demonstrate borrowing and repayment
Teaches real-world banking principles
Transfer Ownership
Once mature and educated, the policy can be transferred to the child
Fundamental Friday
December 19, 2025
Topic
The Philosophy of Saving & Using Infinite Banking for Family Wealth
Key Takeaways
1. Savings Build Confidence and Control
The “Save and Walk Tall” philosophy connects saving to self-confidence, independence, and principled decision-making.
Savings reduce economic pressure, allowing calm, candid, and values-based choices.
2. Insure Children Early to Lock in Insurability
Secures a child’s health rating before future medical issues arise.
Example: Jim’s grandson became uninsurable at age 24.
Convertible term insurance is a low-cost way to lock in insurability.
3. Children’s Policies Act as Financial “Training Wheels”
A sample $150/month policy for a 12-year-old teaches saving discipline.
Can be designed to be paid up in ~7 years.
Creates a small, growing asset for future needs (college, first car).
4. Fund Your Own Policy First (“Oxygen Mask Rule”)
Parents’ financial stability is the foundation of family wealth.
Prevents parents from becoming a financial burden on their children.
Topics Covered
I. The Philosophy of Saving
Budgeting vs. Saving
Budgeting: Allocating money.
Saving: Requires a clear why.
Without purpose, spending expands to exhaust available funds, creating a reactive, scarcity-driven mindset.
Scarcity vs. Abundance Mindsets
Scarcity:
Defensive and contracting
Focused on survival
Abundance:
Offensive and expansive
Focused on leveraging resources and creating opportunities
The “Save and Walk Tall” Philosophy
Savings directly build confidence and control over one’s life.
Without savings, people are always “running”:
Forced to take the first job offer
Dependent on others in emergencies
Savings provide the freedom to:
Calmly evaluate opportunities
Leave a job on principle (often increasing perceived value)
Speak honestly and make candid judgments
The ability to save is a habit, not a function of income size.
II. Using Infinite Banking for Family Wealth
Insuring Children
Why It Matters
Locks in insurability and health rating while young and healthy.
Underwriting Rules
Parent must have a policy with a death benefit greater than the child’s.
All children must be insured (or a stated plan to do so).
Age-Based Ratings
Under 20:
Standard rating
Higher insurance costs
Slower cash value growth
Age 20+:
Eligible for preferred ratings
Lower costs
Faster cash value growth
Policy Design & Funding
Convertible Term Insurance
Low-cost method to lock in insurability
Convertible to whole life later with no new medical underwriting
Minimum age: 20
Whole Life for Children
Example: $150/month policy for a 12-year-old
Cash value exceeds total outlay in ~7 years
PUA Catch-Up Feature (Penn Mutual)
Allows business owners to make up missed Paid-Up Additions from the prior year
Useful for capturing unexpected profits
Funding Strategy
Policies can be designed to be paid up in ~7 years
Creates a small, growing asset for future milestones
Teaching Financial Discipline
“Vitamin K & D”
Knowledge and Discipline
Involve Children
Have them contribute to premiums (e.g., from chores)
Builds ownership and responsibility
Use Policy Loans as Teaching Tools
Demonstrate borrowing and repayment
Teaches real-world banking principles
Transfer Ownership
Once mature and educated, the policy can be transferred to the child
Friday Zoom Session — November 21
Meeting Purpose
Explain the Infinite Banking Concept (IBC) by analyzing how a bank operates.
Key Takeaways
Two Wealth Paths:
Wealth is created either through volatile market investing or through stable actuarial science (lending). Banks and insurers use actuarial science for its low risk and predictable cash flow.
The Banker’s Model:
Banks use depositors’ funds (a liability) to make loans (an asset), earning profit from the interest spread. Their own $10M Tier 1 capital serves only as a reserve—not for lending.
Controlling the Flow:
The banker controls loan terms (rate, length, payment schedule). By becoming your own banker, you can recapture this control and the interest, turning an external cost into personal profit.
The “And” Asset:
Whole life insurance is an “and” asset. You can borrow against cash value and the full amount continues to compound—creating a powerful wealth-building loop.
Topics
1. Two Ways to Create Wealth
Market Investing: Volatile; depends on buying low and selling high.
Actuarial Science: Stable; uses statistics to manage risk (e.g., predictable mortgage payments).
Banks and insurers choose actuarial science for its predictable, low-risk cash flow.
2. The Banker’s Business Model
Four Players:
Bank Owner: Provides $10M in Tier 1 capital (cash or equivalents like BOLI). This reserve is not used for lending.
Banker: Employee who sources customers and manages loans.
Saver: Deposits money for safety and liquidity, accepting low returns (e.g., 0.1%).
Borrower: Receives loans and repays with interest.
Core Function:
Transform a saver’s liability (deposit) into a bank’s asset (loan), using other people’s money (OPM).
3. The Banker’s Rules for Risk Management
Primary Rule: Avoid risk.
The 5 C’s of Lending:
Credit — Score & history
Character — Reputation & integrity
Capacity — Ability to repay
Capital — Skin in the game (e.g., down payment)
Collateral — Assets securing the loan
Higher-risk borrowers are charged higher rates, points, or less favorable terms to transfer risk away from the bank.
4. Becoming Your Own Banker
The Infinite Banking Concept replicates the bank model in personal finance.
How it works:
Change where you save: Put cash flow into a whole life policy.
Change where you borrow: Borrow against your cash value instead of using a traditional lender.
Benefits:
Recapture Interest: Payments and interest go back to your policy.
Control: Set your own loan rate, payment schedule, and terms.
“And” Asset: Cash value continues compounding even while borrowed against.
Example:
Use a policy loan to pay a $6,000 tax bill.
Your $6,000 stays inside the policy, compounding, while you repay yourself—preserving opportunity cost and improving long-term cash flow.
5. Managing Leverage and Risk
Leverage: Insurance companies typically allow loans up to 95% of cash value.
Recommendation: Do not borrow the maximum; start conservatively (around 50%) for new policies.
Risk: The tool is powerful—and can be misused.
If a bank wouldn’t lend to you, you shouldn’t lend to yourself.
Always have a repayment plan, even if your investment idea fails.
💻 Friday Zoom Session – November 7
Topic: Comparing Qualified Retirement Plans vs. Life Insurance Retirement Plans
🎯 Session Objective
To compare the structure, risks, and long-term outcomes of qualified retirement plans (401(k), IRA) with life insurance retirement plans (LIRPs), and explore a hybrid strategy to maximize retirement income and minimize taxes.
🧩 Key Takeaways
Qualified Plans Have Critical Flaws
Taxes are deferred to an unknown future rate.
Exposed to sequence of returns risk, which can drastically reduce retirement income.
LIRPs Offer Superior Control
Properly structured Whole Life (WL) policies provide:
Tax-free growth and withdrawals
Guaranteed returns
Immediate liquidity — use as your own “private bank”
A Hybrid Strategy Maximizes Income
Draw from your qualified plan first to stay below the standard deduction (≈ 0% tax rate).
Then switch to tax-free LIRP withdrawals after depletion.
Liquidity Beats Rate of Return
Prioritize access to capital over debt elimination.
Liquidity enables you to pursue higher-return opportunities, like funding a LIRP.
⚠️ The Problem with Qualified Plans
1. Origin & Purpose
The 401(k) (created in 1978) shifted retirement risk from employers to employees.
Its inventor, Ted Benna, later expressed regret, citing high fees and the transfer of risk to workers.
2. Tax Deferral Is a Gamble
The government favors these plans because it collects taxes later, when rates are likely higher due to national debt.
This creates a “tax time bomb” — future tax costs are unpredictable.
3. Sequence of Returns Risk
Market volatility matters more than average returns.
Example: Two retirees with the same average return can end up with drastically different results:
Portfolio A: $211K
Portfolio B: $693K
💡 The Solution: A Life Insurance Retirement Plan (LIRP)
Vehicle: A properly structured Whole Life policy from a mutual company.
Why Whole Life (WL)?
Guaranteed growth and dividends
No market exposure or volatility
Why Not IUL (Indexed Universal Life)?
Market-linked returns = more risk
Example: Recent $8.5M lawsuit against an IUL provider over misleading performance claims
Tax Advantages:
After-tax contributions
Tax-free growth and withdrawals (like a Roth IRA — but no contribution limits)
Liquidity & Control:
Immediate Access: Borrow against up to 95% of your cash value.
“Money in Two Places” Concept:
Continue earning dividends on borrowed funds.
Use borrowed capital for other purposes (e.g., debt payoff, investments).
⚖️ The Hybrid Retirement Strategy
Goal:
Maximize spendable income and minimize taxes using both qualified plans and LIRPs.
How It Works:
Draw from Qualified Plan First
Keep withdrawals below the standard deduction → effective 0% tax rate.
Switch to LIRP Withdrawals
Once the qualified account is depleted, move to tax-free income from your LIRP.
Example Outcomes:
$1M in a Qualified Plan → ~$28K/year (after 20% tax)
$1M in a LIRP → $40K–$70K/year, tax-free
🏠 Q&A: HELOCs & Home Equity
Q: Should I pay off my HELOC early?
A: Not necessarily.
Paying off debt stops interest but doesn’t grow wealth.
Prioritize liquidity — funding a LIRP can grow your capital and keep it accessible.
Alternative Strategy:
At age 62, a reverse mortgage can provide tax-free access to home equity — like a no-payment, tax-free HELOC.
🏠 Friday Zoom Session — October 31
Topic: Analyze Real Estate Investment Efficiency & Explore Alternative Wealth Strategies
Key Takeaways
Use a Schedule E for real estate analysis, not just rent vs. mortgage.
Many investors unknowingly subsidize tenants by ignoring non-deductible costs (e.g., principal payments) and over-relying on depreciation.
Sell inefficient properties to unlock trapped equity.
Example: A 2.6% return on $500k equity was converted into a tax-free income stream with a 9.6% tax-adjusted equivalent return.
The 1% Rule: Gross rent ≥ 1% of property value → indicates a strong deal.
Failing this rule often means poor cash flow and risky dependence on appreciation.
Use policy loans for down payments to make interest tax-deductible.
This converts personal (non-deductible) interest into a business write-off, improving cash flow.
The Problem: Inefficient Real Estate
The Schedule E Reveals True Performance
Principal payments are real expenses but not tax-deductible.
Depreciation is a tax credit, not a real expense.
Result: A property can show a tax loss on paper while the owner is still subsidizing tenants.
Two Rules of Thumb for Efficiency
1% Rule: Gross monthly rent ≥ 1% of property value
Example: $200k property → $2,000/month rent minimum.
4% Net Return Rule: Net annual cash flow ≥ 4% of equity
Rationale: If less, capital could earn more elsewhere (e.g., in a life insurance policy).
The Lending Impact
Banks use 75% of net income + depreciation to assess lendability.
A property showing a tax loss can hurt loan qualification.
The Solution: Convert Equity into a Policy
Case Study: Converting a “Lazy” Asset
Before:
Couple (age 67) owned two mortgage-free properties — $500k equity.
Net Income: $13,000/year (taxable).
Return on Equity: 2.6% (taxable).
Asset Profile: Illiquid, high-risk (tenants, market), inflexible.
After:
Sold properties → funded high-cash-value policy.
Income: $48,000/year for 15 years (tax-free).
Return on Equity: 9.6% (tax-adjusted equivalent).
Asset Profile: Liquid, guaranteed, flexible income.
Policy Benefits
Tax-Free Income: Distributions do not raise taxable income → may lower overall tax bracket.
Flexible Income: Owner controls amount, duration, and timing.
Guaranteed Growth: Contractual guarantees protect principal and provide predictable returns.
Case Study: A Successful Real Estate Deal
The Deal — Adam Edwards (Michigan Triplex):
Purchase Price: $90,000 (via HELOC)
Repairs: ~$30,000 over 6 months (DIY)
Total Cost: ~$120,000
The Strategy:
Cash-Out Refinance:
Appraised at $159,000 post-repair.
70% LTV refi = $111,300 → recouped nearly all invested capital.
Cash Flow: ~$1,700/month post-refi.
The Exit:
Sold after 2 years for $205,000.
Total Profit: ~$127,000 (cash flow + sale proceeds).
Key Insight:
A “home run” deal — it met the 1% Rule and was purchased at a deep discount, creating built-in equity.
Next Steps
For Property Owners
Analyze your rentals using Schedule E to determine true net return on equity.
If a property fails the 1% Rule or yields <4% net return, consider selling or redeploying equity into more efficient, tax-advantaged vehicles.
📅 Friday Zoom Session – October 17
Meeting Purpose:
To provide an overview of Creative Capital Strategies' (CCS) financial planning approach using specially-designed whole life insurance policies, and to address common client and prospect questions.
✅ Key Takeaways
Specially-designed whole life insurance is used as a tax-advantaged savings and financing tool, often outperforming traditional investments.
CCS’s strategy focuses on reducing taxes, increasing financial control, and providing more spendable income in retirement compared to 401(k)s/IRAs.
Policies can be leveraged to finance major purchases or investments at more favorable rates than conventional lending.
The CCS team offers a highly educational, ongoing support model to help clients maximize policy benefits.
🧑💼 Team Introductions
Jim Kindred (Founder):
Former securities advisor; transitioned after discovering the "living benefits" of whole life insurance. Trained under Nelson Nash.
Kristi Osmond:
Jim’s daughter; ex-real estate investor. Joined CCS after realizing policy performance exceeded real estate returns.
Adam Edwards:
Former tradesman; licensed during COVID. Drawn to CCS’s client-first philosophy.
Shane Osmond:
MBA holder with business consulting experience. Sees strong applications for policies in business strategy.
DJ:
Firefighter/paramedic; manages CCS tech and operations. Personally uses a policy and advocates to fellow first responders.
💡 Why Whole Life Insurance?
Living benefits: Access to cash value while alive, in addition to the death benefit.
Market protection: Guaranteed growth, independent of market performance.
Tax-free growth and income in retirement.
Policy loans: Finance purchases/investments at competitive rates.
Alternative to traditional plans (401(k), IRA, real estate) with better control and tax advantages.
🔧 Policy Design & Benefits
Designed for maximum cash value, minimum cost.
No contribution limits, unlike traditional retirement accounts.
Can supplement or replace other retirement vehicles.
Provides tax-free income in retirement when properly structured.
Allows for policy loans to fund real estate, business ventures, or large purchases.
🎓 Client Support & Education
Weekly Friday calls: Educational sessions and open Q&A.
1-on-1 strategy sessions to tailor policy use.
Investment reviews to coordinate whole life with other assets.
Ongoing financial mentorship.
📈 Real-World Examples
Client saved $250k in interest by using policy loan for a home purchase instead of a traditional mortgage.
Potential to reach a 0% tax bracket in retirement by combining policy income with Social Security.
Policy-backed real estate investing resulted in 277% returns vs 20% using only personal funds.
🧭 Next Steps
📖 Read Becoming Your Own Banker by Nelson Nash for foundational knowledge.
📩 Request a PDF of Live Your Life Insurance by Kim Butler (contact Jim).
📞 Schedule a discovery call to explore personal policy options.
🏘️ Attend next week’s client call on using policies for real estate investing.
Fundamental Friday — October 3
Highlights
Watch for phishing emails pretending to be the IRS.
New recurring Friday training cadence announced.
Framework for comparing asset classes.
Whole life insurance positioned as a stable savings/cash-value tool.
Using policy cash value to buffer sequence-of-returns risk.
Practical retirement-planning guardrails and tax-smart income.
Topics & Takeaways
Suspicious IRS Email
The “IRS” message was likely phishing.
Verify sender domains, avoid clicking links/attachments, and go directly to the official site when in doubt.
New Friday Training Schedule
1st & 3rd Fridays: Open intro sessions (public).
2nd & 4th Fridays: Advanced client training.
5th Friday (when applicable): Case studies + open Q&A.
Characteristics of Asset Classes
Evaluate options using:
Risk & Guarantees
Penalties & Liquidity
Creditor Protection & Leverage
Tax Treatment
Disability/Death Benefits
Match choices to personal goals and risk tolerance.
Whole Life Insurance as a Savings Vehicle
Beyond death benefit: cash value that’s generally non-correlated to markets.
Offers liquidity, can serve as collateral, and may supplement retirement income.
Mitigating Sequence-of-Returns Risk
Poor early-retirement returns can derail portfolios.
Drawing from policy cash value during down markets can preserve invested assets and improve income durability.
Retirement Planning Considerations
Save an appropriate % of income; don’t assume expenses drop dramatically in retirement.
Use tax-advantaged tools (e.g., whole life policies) to maximize net retirement income.
Recap & Next Steps
Whole life can provide stability, flexibility, and tax advantages alongside other assets.
Offer: Free consultation to review your situation and outline personalized recommendations.
Quick Action Items
Security: Review email-security best practices with your team.
Calendar: Add the new Friday cadence to your invites.
Planning: Schedule a consultation to map asset mix, income targets, and tax strategy.
Key Takeaways
IBC allows flexible, tax-advantaged funding of whole life insurance policies up to 25% of gross income
Policy loans provide access to cash value without disrupting growth, enabling efficient use and recapture of money
Starting policies early maximizes long-term efficiency and growth potential
Real-world example showed how policy was used to:
Pay unexpected tax bill
Consolidate high-interest debt
Topics
Introduction to Infinite Banking Concept (IBC)
IBC uses participating whole life insurance as a personal banking system
Allows use of money without losing growth via policy loans against cash value
Enables recapturing of spent money by repaying loans back into policy
Cash value grows tax-deferred and can be accessed tax-free via loans
Real-World IBC Policy Example (DJ's Policy)
Firefighter started policy 4 years ago at age 40
Initially funded $36k/year for first 2 years, then reduced contributions
Current cash value: $125k, death benefit: $1.49 million
Used $30k policy loan to pay unexpected crypto tax bill
Consolidated credit card debt with policy loan at 5.3% interest
Now repaying loans $1-2k/month from paycheck
Policy Flexibility and Features
Automatic Premium Loan (APL) prevents policy lapse if premium is unpaid
Catch-up provision allows making up missed PUA contributions
Dividends can:
Purchase paid-up additions
Reduce premiums
Repay loans
Can reduce premium payments and rely on dividends/cash value growth
IBC Strategy Insights
Start policies as young as possible for maximum long-term growth
Aim to save 25% of income (max allowed) vs. 7% national average
Use policy loans strategically vs. other debt/financing options
Recapture spent money by repaying policy loans when possible
📘 Session Recap: Lost Opportunity Cost & New Financial Planning Software Introduction
🔑 Key Takeaways
Lost opportunity cost is a critical but often overlooked aspect of financial planning—it represents money lost unknowingly and unnecessarily.
Time is one of the most valuable elements in wealth-building—delaying savings or investments can severely impact long-term results.
Whole life insurance policies offer tax-free growth, control, and flexibility—positioning them as powerful tools for efficient financial stewardship.
Small reductions in spending (e.g. 1%) can have a greater long-term impact than chasing high-risk investments.
📚 Topics Covered
🔄 Circle of Wealth
Financial world divided into three categories:
Accumulated Money – savings and investments (e.g. 401(k), IRAs, stocks, real estate)
Lifestyle Money – spending on needs and wants (e.g. food, clothes, vacations)
Transferred Money – money leaving your control unnecessarily (e.g. excess taxes, interest payments, fees)
Goal: Minimize wealth transfers and redirect those dollars toward building lasting wealth.
💸 Lost Opportunity Cost
Definition: The future value lost when money is unnecessarily spent or misallocated.
Examples:
$1,000 in avoidable taxes doesn't just cost $1,000—it could cost thousands in future growth.
$10,000 in credit card debt at 18% could grow to $78,000 in lost opportunity over 40 years.
Banks and lenders profit massively—potentially earning $13 million over 40 years from interest paid by consumers.
Every dollar leaving your control today has a compounding cost tomorrow.
🕒 Time Value of Money
Delaying savings by just 5–10 years drastically reduces retirement outcomes.
Illustration:
$5,000/year saved at 5% over 30 years = $353,804
Draining the account every 5 years drops it to just $71,000
Start early, save consistently—this leads to lower risk requirements later in life.
🛡️ Whole Life Insurance Policies
Serve as tax-advantaged, low-risk savings vehicles.
Key benefits:
Tax-free growth and tax-free access via policy loans
Guaranteed growth of cash value
Use for financing purchases without interrupting compounding
Flexible premiums and repayment terms
Can outperform market-based strategies when adjusted for taxes, volatility, and risk
Whole life policies help you retain control over your money while still building wealth.
🙏 Financial Stewardship
Emphasizes responsible use of resources, not just accumulation
Encouraged attendees to:
Cut spending by 1% and track the long-term impact
Consider giving, especially when expenses are reduced
Reflect on the Parable of the Talents (Matthew 25)—a biblical lesson in using money wisely and productively
🧰 New Financial Planning Software
Interactive tool introduced to:
Visualize lost opportunity costs
Track wealth transfers
Simulate “what-if” scenarios for taxes, investments, and insurance
Compare outcomes with/without whole life policies
Designed to support individual consultations and long-term planning
📌 Next Steps
Review the Parable of the Talents (Matthew 25) as a lens for financial stewardship
Look for ways to cut expenses by 1% and redirect savings to productive use
Evaluate your current strategy in light of lost opportunity costs
Schedule a consultation to explore:
How the new software can model your financial future
Whether a whole life policy aligns with your goals
