But even those few turned out to be disappointments. What sounded great in theory and looked seductive on paper simply didn’t show up in reality.
Did They Fix What Was Broken in Financial Products?
The financial products that played a role in the crisis are coming back. In just the first quarter of 2013, banks sold about $1 billion of synthetic collateralized debt obligations (CDOs)—the same stuff that caused the credit bubble to burst in 2008. The former head of the Troubled Asset Relief Program, which oversaw the $700 billion bailout, said, “History is repeating itself. Because banks profited from the credit bubble and then faced no jail time when it popped, there’s little reason to think that [these instruments] are going to be significantly better this time around.”5
Finally one of my financial advisor clients said, “Pamela, have you ever heard about this?” This turned out to be a little-known twist on a financial asset that’s increased in value every single year for more than 160 years: dividend-paying whole life insurance.
Okay, so now you’re ready to throw this book in the trash! But hold on. Don’t tune me out, because this is nothing like the whole life insurance policies Suze Orman, Dave Ramsey, and most financial advisors love to hate.
Properly structured, the policies I’ll show you grow cash value as much as forty times faster than the ones Suze and Dave, et al., talk about. They pay the advisor or insurance agent 50–70 percent less commission. And you can use them as a powerful financial-management tool right from the start to fire your banker, bypass Wall Street, and have financial security for life.
I’ll explain it all in detail in this book.
About the Bank On Yourself Revolution
This isn’t a pitchforks-and-bayonets kind of revolution. It started quietly and without a lot of fanfare. People who were tired of doing “all the right things” financially and ending up with little or nothing to show for it simply decided that enough was enough. They didn’t throw Molotov cocktails or storm the castle walls of the Federal Reserve. They just quietly stopped putting their money into financial vehicles that didn’t deliver.
They put less money into their 401(k)s and IRAs, and some stopped funding them altogether. They pulled back on their mutual funds and stocks and bonds. They pulled the plug on some of their real estate investments. They stopped letting their futures be determined by the hysteria of Wall Street and the seductive advice of financial gurus.
They took back control.
For the first time in their lives they had a solid financial foundation to build their futures on. They could move forward without the stress, worry, and uncertainty they had lived with, in the past.
And even though everyone from Bloomberg to MSN to Yahoo Finance swore up and down that there was no place to hide from the recession that rocked the world, these quiet revolutionaries found one.
Hundreds of thousands of people embraced the Bank On Yourself method and saw their money grow safely and predictably every single year—even when the markets tumbled.
• Their plans never even skipped a beat when the stock and real estate markets crashed.
• They didn’t have to gamble on Wall Street to accumulate a sizeable nest egg. They didn’t have to worry about when the next crash would come and wipe out their life savings again.
• 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