In addition to covering the technical details of setting up a personal banking system via dividend-paying life insurance, Nelson Nash also writes about the human behavior-related issues that must be overcome to successfully create such a system. In this regard, he cites Parkinson’s Law, which goes as follows: “expenses rise to equal income.” In Nash’s opinion, allowing your expenses to consume all your income is no way to manage your finances. He feels so strongly about this that he writes that if you do so, if you can’t overcome the urge to spend every penny you make, “you are destined to become a slave!”
While Nash uses histrionic language to make his point, he is right on the mark here in stressing the importance of moderating spending when it comes to building up your savings. Whether an individual uses the IBC or any other method to save money, keeping your expenses in line is essential.
Government Sponsored Retirement Plans
For those who can save some of their income, Nash is skeptical of the vehicle many Americans use to invest such sums – government-sponsored retirement plans.
Because government does not produce things itself, he sees it as a parasite which extracts resources from the productive parts of society. At the same time, if governments raise taxes too high, it can hurt economic production.
Thus, Nash says, they resort to setting up retirement plans like 401(k)s, IRAs, and the like to reduce the impact of the taxes they have passed.
However, he warns, the government can change the rules regarding these plans if they like.
Therefore, Nash feels that the superior choice is the “magnificent idea” of dividend-paying whole life insurance, which has been in existence for more than 200 years. In his view, it has the advantage of not being a government-sponsored program and being private property.
Arrival Syndrome
When it comes to factors that prevent people from achieving their financial goals, Nash cites what he calls “The Arrival Syndrome” as probably limiting “the achievements of mankind more than anything else.” This syndrome revolves around the sense of complacency often exhibited by individuals or companies who have achieved some level of success, which thereby prevents them from continuing to improve and adapt. They fall into a comfort zone that prevents them taking the steps necessary to adapt to new developments.
Willie Sutton’s Law
Nash also mentions Willie Sutton’s law, which refers to the famous bank robber who said he robbed banks because “that’s where the money was.” In this regard, dividend-paying whole life can become like a bank only if you design it properly and fund it as necessary.
The Golden Rule
Nash also cites the Golden Rule, as in he or she who has the gold makes the rules, to make the point that if you save up enough money using the IBC you, rather than the bank or a finance company, control your financial destiny.
These ideas, along with the idea of Use It or Lose It, and the idea that your own capital has a financial cost like funds borrowed from the banks, make up what Nash calls the Infinite Banking Concept Basic Understandings. All these understandings are based on the idea that success is dependent upon being able to overcome human nature.