“Hey Mom – I saw this really sweet bike I want to buy. The bank will loan me the money and interest isn’t that high, only six years to pay off…”
When I heard a friend’s son talking about that, I cringed. When my husband was thinking of retiring we had a similar conversation. My husband was looking at a trading in his 20-year old motorcycle for something newer, with a higher price tag. Even though the interest rate wasn’t that high, the bank offered a low down payment and low monthly payments. We knew both were mistakes we couldn’t afford. Ultimately we decided not to go to the bank and borrow money. Who wouldn’t want low interest, low payments and to be able to pay for a new bike for six years? Us. By the time we paid off the motorcycle we would have paid about a quarter or one-third more than the price. The cost wasn’t worth it.
What I related to my friend was that rather than taking on a bank note, we became our own lender. Sure, in the past we’ve purchased cars and paid the interest over time, but that was before we learned that we can lend ourselves money and not take on more debt. We’ve spent the last few years cleaning up our debt, so we don’t owe much of anything, and when we want to make purchases, like a motorcycle, a car or make renovations to our home, we try to save for a significant down payment or to pay cash. When we can’t, we have our own bank we can rely on.
As I explained to my friend we used my permanent life insurance as a way to be our own lender. I’ve had life insurance all of my adult life and along with it comes many benefits. My life insurance policy accumulates cash value, which I can make policy loans against. When I take out a policy loan, I pay myself back rather than the bank, and my life insurance policy is still there when I need it. My husband got his new “retirement” present, and I have the peace of mind of knowing we don’t have another bank note hanging over our heads.
My friend said she didn’t have permanent life insurance, with which to be her son’s lender, but after our discussion, she’s calling an AC Financial Adviser at (877) 435-2283 to get started, just like you can.