• They could tell banks and finance and credit card companies to go take a hike and still have access to the money they needed, whenever and for whatever they needed it.
• They didn’t need to depend on their employer or the government for their financial security.
• They finally had control over their own financial futures.
I wish I could take credit for this revolution, but I can’t. It had started way before I was fortunate enough to learn about the financial tool and concept I now call “Bank On Yourself.” Why did I name this strategy Bank On Yourself? Because I could see how people were using it to pull themselves out of economic bondage and move toward freedom and economic sanity. Where they had been seduced into banking on the government, Wall Street, and financial institutions to cover their backs, Bank On Yourself revolutionaries were now banking on themselves—their own effort, resources, and good sense—to keep their families safe and financially secure. They were no longer pawns being manipulated by faceless fat cats around the globe with self-serving agendas.
And I needed a phrase that I could use as a rallying cry, because when I realized the sheer power and potential of the Bank On Yourself method and how few people were aware of it, I knew I just had to spread the word. There really is a better way! It became my mission to help educate others about it so they, too, could break free of their economic chains and bank on themselves.
Did They Fix What Was Broken in the Housing Market?
In 2013, the same kind of subprime loans (high-rate mortgages for high-risk borrowers) that brought the housing market to its knees made a comeback. And in April 2015, it was reported that risky mortgages are increasingly being underwritten by thinly capitalized non-banks and guaranteed by the Federal Housing Administration, which could bankrupt the companies and leave the FHA holding the bag.6 In some cities, houses hit the market and receive multiple bids above the asking price on the first day, often accompanied by tearful letters from the hopeful buyers pleading to be given a chance (shades of 2007?).
In 2004, then president of the Federal Reserve Alan Greenspan claimed that adjustable-rate mortgages, rather than fixed-rate mortgages, could save homeowners tens of thousands of dollars. That speech came at a time Greenspan had been cutting or holding rates flat for years—but only a few months later, he proceeded to raise rates at every single Federal Open Market Committee meeting, more than quadrupling interest rates within two years.7
How to Use this Book
My first book introduced many people to the Bank On Yourself concept. This book goes much further into debunking myths of conventional financial wisdom as well as explaining the nuts and bolts of the Bank On Yourself structure and how and why it works. I’ll also show you how this vehicle can provide you with everything from liquidity to finance major purchases or a college education, to a safe, predictable way to grow your retirement fund, to how to leave a significant legacy while still having access to money when you need it.
What are your top concerns about money? Here’s where I address them:
• Worried about having enough money to retire? Afraid that you’ve started too late? See Chapters 2, 5, and 10
• Anxious about how you’ll pay for your children’s college education? See Chapter 8
• Nervous about having too much of your nest egg on the roller coaster we call Wall Street? Disgusted with the poor results your investments are producing? See Chapter 2
• Uneasy about the economic landscape your children will be entering? Concerned about how they’ll ever be able to make it financially? See Chapters 6 and 11
• Stressed about finding the capital you need to start your own business or keep your business going? See Chapter 9
• Feeling strangled by credit card debt? Or trying to avoid piling up debt in the first place? See Chapter 7
• Feeling strapped because you’ve retired but your nest egg isn’t earning enough income for you, and you’d rather not take more risk with your money? See Chapter 10
• Fed up with feeling stressed about money in general? See Chapter 6—then read the whole book!
How Almost Anyone from Age Zero to Eighty-Five Can Benefit
No matter what age you are, from zero to eighty-five, Bank On Yourself can be a powerful financial tool. To get the most benefit, I suggest you read the whole book, even sections that you don’t think apply to you. But I also recommend that you focus on specific chapters depending on your age:
• If you’re in your twenties: You may be struggling with student debt, a tough job market, and salaries that don’t seem to leave room for savings. You may have seen your parents and grandparents struggle during the financial crisis and want to avoid making the mistakes they made. You need a strategy where you can start small and build it up. (See Chapter 6 for financial basics to get you started off on the right foot and Chapter 11 for an example of how starting small can end up being big.)
• If you’re in your thirties and forties: You might be growing a family, maintaining a home, and starting to think about how to pay for college. You may have incurred a lot of debt and feel like it’s all you can do to keep your head above water. You need a strategy that will help you turn the ship around and reduce your debt while growing money you’ll need for the kids’ college expenses and your own retirement. (Chapter 7 will show you how to become your own source of financing. See Chapter 8 for a smarter way to pay for college.)
And if you’re starting to get serious about saving for retirement, don’t miss Chapters 2 and 5.
• If you’re in your fifties and early sixties: You may be in your peak earnings years, but you also may have parents and kids you’re helping out financially. Yet it’s time to make serious headway on your retirement savings, and you need to plan to cover the enormous health-care costs you know are looming. You need a strategy that will enhance your retirement savings yet remain liquid for potential emergencies. (See Chapter 5 for ways to build a healthy retirement fund that lets you access your money whenever you need or want to—while it continues growing as though you hadn’t touched it.)
• If you’re in your late sixties, seventies,
