Industry sign banking north dakota living will myself
[Music] greetings hey thanks for joining us here on the business of agriculture to me Damian Mason got a great show for you today I have the author of farming without the bank her name is Mary Jo ermine she's a North Dakotan or as they would say North North Dakotan she grew up there in the Bismarck area she's a farm and ranch gal who now helps farmers and ranchers do better financially so whether you're a farmer or rancher maybe you own a seed company maybe you own an equipment dealership maybe you are self-employed doing something else whatever you do you are at the right place because we're going to give you ideas and information you can use to be better at your business from the financial side of it you know one thing that agricultural people do poorly in my opinion is they oftentimes fail they're cheap they're cheap cheap cheap cheap cheap but then they won't spend the money to do the right thing to perpetuate the business and this happens all the time you know especially on the farm and ranch thing well I got three kids and I don't know what's gonna happen well your 84 I can tell you what's not gonna happen you're not gonna live for another 20 years grandpa so get your together that's kind of my assessment of all this if you listen to the show you feel like I'm a straight shooter and so is my guest Mary Jo urban welcome to the show thank you very much for having me okay so Mary Jo ermine infinite banking concept she's certified to teach that she sells insurance she's from a ranch background North Dakota and she is she wrote farming without the bank that's what we got to go on but we're gonna need a loan no more give me the rest of the story I grew up in a farm ranch operation my dad was a purebred breeder and I came upon the infinite banking concept in 2010 that was at the same time that the market crashed and I lost 50 percent of my money prior to that I was always looking for something else to do with my money because I did not like the stock market so here comes infinite banking concept and I thought well that's too good to be true there is way you can use whole life insurance and build the cash value and these people are going to jail long story short nobody's going to jail it's totally legal been done for 200 years and so I was just it was the answer to everything I was looking for and then coming from that background I knew exactly what my family is going through constantly asking the bank for money constantly having to prove everything for new operating every year and I said well this has to work with farmers right and I listened to your other podcast as well and so I know that you talked a lot about businesses and working with the people that really that you really like to work with was not scripted dear listeners that was not scripted that was my girl mary jo saying that she listens to the do business better podcast because that's the place that we help entrepreneurs and business owners and business minded people do business better so anyway yeah so you're sitting there saying to yourself okay you're a financial minded person and you say why is it that we're not doing this on the air cultural side stuff then just tell me what is the infinite banking concept let's start there so the infinite banking concept is really just a thought process around money that we've not been taught so that concept was developed by our Nelson - from Birmingham Alabama but he it all stems around that you have the concept in the thought process around money and then you have the fact that we can utilize whole life insurance and we can create that policy so it's cash value rich and we're gonna borrow against that and we become our own banker so we're not going to the bank we become the banker we're borrowing from ourselves we're paying ourselves back we have 100% control okay so you you read this and then you got some certification is that the idea then you say I'm gonna go and take a class of hi construct to this curriculum pathing so the Nelson now instituted if you want to teach the concept you to be certified because it's not just oh I'm gonna go sell life insurance a lot of people say oh I can do that for you right they take my book into their local agent in their local agent says oh I can do that for you and I see those policies than they're all wrong right or the agent sold you a policy that may be workable but he can't help you with the strategies of how to do it because a lot of this concept is also based on Austrian economics so supply versus demand do we go to the bank do we go to the policy when do we use a policy are there different strategies of how to buy things all those things come into play as an infinite banking practitioner we're always looking at different ways of doing things in the economy to best utilize our dollar okay so besides it being a thought process that became a curriculum okay so I'm a rancher I'm a farmer okay so I got my business and then I say I may be not doing everything right Maryjo them have appointment with you tell me then what goes from there I've got this farming operation in Indiana which I do have and now I call you up and then what happens from there so first of all I won't talk to you unless you've read the book so I have a very I'm very stringent on who gets past the gates right because I want to teach you I want you to have control of your finances I appreciate that as an a writer and reader of books I appreciate that the statistics are abysmal the average American does not open a book after their last reading assignment in high school I had a guest on this very podcast last year his name is Brandon Webb he's from South Dakota smart guy and he's a business minded guy and he said you know what too many people in agriculture these farmers read a business book instead of pouring over the plat books I find it interesting that agricultural people Mary Jo say things like no time to read I said well it certainly shows based on your grammar but more importantly are we really okay the guy that rents my land works 100 hour weeks because he's got 2,000 cowberry he's got all this stuff going on he's got a newborn baby but the average grain pretending they don't have a mic you don't have time to read what because you got drive to the FSA office and sign up for your government program this week is there some other thing that's happening this week well get my equipment ready you have nine pieces of equipment if you spend one day on each one of them that's nine days what do you do the rest of February so anyway I appreciate you making people read books that make their business better so you start by saying you got to read my book do you want to tell me about the book you're gonna be tell about the meeting yeah so the book has the general concept of what I'm trying to teach you it goes over the mindset and then you can get into the numbers and how it's implemented because I have case studies in there so you can actually see how can we use it for operating how fast is the cash value why would I want to do this you can see the numbers and so if you don't read the book I mean the first thing that happens when you call my office is my assistants will answer the phone and if your name is not in our database and that doesn't show that you bought the book the next question is is have you read the book because you're not getting past them I don't care how much you want to talk to me I am NOT talking because what's gonna happen is you want me to read you the book you just told me that you can't read the book but you would spend two hours on the phone with me and it's a two-hour read you couldn't just rather the book yeah right it's like what you tell me what I didn't know okay well here's what you need to know once you read this then you'll know what you need to know all right so the book farming without the bank goes through as you said case studies and scenarios saying here's how you can do this now let's say on my farming operation I want to have a point with you I read the book and I say I'm not farming out of the bank I have a loan here with my local agricultural lending institutions for 1 million dollars then you say what to me so what we do in our first meeting is go over what is your girl's income where are you where what do you have for loans what how much are you borrowing I need to see where the money is going I don't need super detailed information just based on a few of those questions I can see exactly where your money is going I can see exactly what you're doing with it because even if you're farming with cash there's a lot of people that'll say I am already doing this yeah okay so you just buy the tractor with cash and you just through three hundred thousand dollars over the window last opportunity cost on that you can't put that anywhere to have uninterrupted compound interest so a lot of what the insurance policy allows us to do it is just the tool that allows us to have the uninterrupted compound interest so can I look at what you're doing and can we find some money some capital that we can start these policies with are they gonna be a hundred thousand a year I don't know I mean I just started one today for a young kid at 3,000 a year I started one a few months back for somebody with a half a million a year premium okay all right so tell me now Mary Jo all right so I read the book I got this situation yeah you talk about money how is it what is the benefit so rather than using a bank I because right now I can get cheap money I mean or cheap money like you've never seen before I mean you get you know three four or five percent kind of money why not go ahead and utilize cheap money right now and you might want to so you might not want to go to the bank or you might not want to borrow against your policy you might want to go to the banking and grab a loan at the bank so I bought a new vehicle two percent why would I wrap up my liquid money in my policy because that's liquid cash value you can get it you can have it in 24 hours so why would I wrap up liquidity in a chunk of metal when I can go to the bank and get it at two percent because I might one of my firm ground I might want to buy cows whatever that I want to take advantage of an opportunity when somebody is selling I have the liquidity to do that at five percent so now I you get me one of these insurance policies and I put in a set amount of money and then this is a there's a whole life thing it's not turn like for instance my life insurance policy is a term policy I bought it 15 years ago and it's got another 15 years on it so it has no cash value it's just it's just like my car charts whatever but you're saying no let's go and get you a whole life policy where it's actually got cash in and you're saying you can grab that money 3 years from now if you want is that what the idea is yep so you can pay your premium in seven to ten days you have access to 75% of your premium so if you put a hundred thousand in us in seven to 10 days you have access to 75 thousand dollars and once you put it in the policy it never leaves the policy you're borrowing against it and your money is collateral the life insurance company sends you their money so your money stays in earning a guaranteed rate and we're using whole life I'm going to be very clear here whole life with a dividend pain a mutual pain comfort mutual company that's paying dividends hey not universal life not variable eyes not indexed it is not tied to the stock market I don't like those policies in their crack in most cases they don't they're sold to you so it's cheap and then they fall apart and you're dead before they ever pay out I see so we lost for life and we want it to pay a dividend okay all right so I want to have a meeting with you I'm a farm guy in Indiana and then you say you gotta read the book you sent to me for free ride to pay for how to pay for it now you got to pay for it oh I thought you're gonna say you gotta pay for the book okay I think I think you should charge people for the book and then refund it to them when they go and do business with you but okay so I read the book then you meet with me skin in the game Damien I do and I have lots of skin state and remember I have skin in the game trust me sister you know what it's interesting this is something you can appreciate probably and you know I've got my farm properties I've had investment properties I've been self-employed for 25 years although exponent there's no such thing because you work for other people and I remember who's about two years ago I was having a discussion with someone and they were just on pins and heels just terrified about some potential transactions and well you know if I do this I'm gonna be all in on this what would you do I said I've been all-in since I was a kid every single thing I do is my money like well that's my money I'm like yeah everything I do is my money when I when I buy this invest in that print books buy new computers jump by a chunk of farm ground it's I'm all-in you're gonna be personally on that note ever started saying yeah I'll be personally on that note like well welcome to my club I've been pushing on every note I've ever had okay so well tell me some good stories and some bad stories tell me a success and a failure tell me and not your failure but maybe it could be but somebody that you know you really help them get to being much more financially ahead of the head of the pack than they would have been or somebody that didn't do what they should have done and ended up having some problems so the not doing what you should've did is easier right because and why didn't they do it they should've did because they never read the book yep because early on I didn't make them read the book and part of the concept is use it or lose it if you don't use it you forget why you have it and you lose that knowledge on the success side do I have anybody completely away from the banking system nope not yet the book is only about six years old and so we have to slowly get there it's a process just like building your operation as a process so is getting away from the banking system and so that with that comes a process but have we been able to alleviate the stress especially in a year like last year when a lot of guys are late Maryjo I can't pay my policy long back and we used it for operating or we bought of a piece of equipment and all of a sudden we couldn't pay that back or we couldn't make a payment on it that's okay the life insurance company does not care I just ask hey just pay your interest only so it doesn't hurt your policy the rest of it not a big deal you own and control that so here's the question I mean like you said you know people are away from the banking system I need more than I could possibly ever get from my own insurance policy so what's what's the right thing to do then you know do you have recommendations on that borrowing money just get started with the policy it doesn't matter even if I talk to a lady just this morning she's like well I just think I'm too old I'm 60 I said well why do you think you're too old and she said well you know we're just never gonna be able to get rid of operating the worst thing I ever did was put a scenario in the book for operating expenses because we put ourself in this box and that's all we can think about is well I gotta use it for operating I'm like what if you buy your next piece of equipment with it what if you buy your side by side with it what if you lend money to the kids to get started in farming with it I mean what have you lend money to the grandkids to go to college it doesn't mean they it can only be used for operating yeah we put ourselves we have these fabulous people like Dave Ramsey not who put money in envelopes and so we think of this policy is just for this and this policy is just for this it's money flows it's one big pool when you can grab that money and use it for different things and pay it back first off are you saying you're not a Dave Ramsey fan I am not a huge Dave Ramsey fan I don't mind Dave Ramsey in the aspect of hey we need to be smart with our money and we need to not buy things we can't afford but Dave Ramsey is a whole you should be debt-free well guess what Damian the bum on the street is debt-free we need some cash flow farme
s need cash flow and they do 15-year mortgages and 20-year mortgages to get it paid off sooner and they strap themselves with cash flow can we do a longer term note pinned to the difference and start a policy so that we've got some money flowing earning uninterrupted compound interest best thing you said so far you've said some good stuff you said Mary Jo you said the bum on the street is debt-free you know that I remember several years ago I was with someone that was more of the shall we call unsophisticated agricultural person they had an agricultural operation but they were definitely more of the bumpkin variety it's like I'm not being mean it's not about your educational attainment it's about your outlook is about your view exactly it was well you know it is big farm around the road they'll be in debt until they die and I'm like yeah they have like eight million dollars worth of agricultural operation going on so if they have two million dollars worth of debt against 8 million dollars of capital and assets as a 25% debt to equity ratio you dumb so big big deal that is not the problem and you know you're right about that that there's some farm people that just have hoard that they're like ok debt word worked well obviously is an expansion tool you know so that's dead on but we need cash flow right dad we can have no debt but no cash flow and we're not getting anywhere so do we do we want to grow or do we want to stay the same and then we see people that are upset with big farms right you're a big farmer am I because I grew because I read a book because I leveraged my dollar or am i because I screwed somebody along the way we don't we associate that as it's a bad thing when in fact that person is just leveraging their dollar and utilizing their money correctly creating cash flow so that we've got money to buy other things and not just cash flow to buy groceries and then we're good and then we can stay the same forever right so I loved your comment yeah that even the bum on the street I don't think you're supposed to call them bums a more I think you call them a person experiencing homelessness yeah they don't hang out in Bismarck too much so yeah the vagrant on the street is probably debt-free but that debt-free it doesn't mean well-off the other thing that you talked about Ramsey has some other flaws they talk about putting money in envelopes that's somewhat of a rudimentary old finance teaching in the old days the long time ago I learned about what they call pocket accounting which is exactly what you're talking about and I see farmers do this again it's it shows a level of lack of financial wherewithal or at least not wherewithal understanding they'll say like my mom was this way I said I started handling her affairs after my dad you know 20 years ago and I said what the hell do you have why do we have a life insurance policy or I said you're spending like $600 a year for a $5,000 return on this lighter polish's well so I can pay for my funeral I said yeah yeah a hundred and thirty acres and you got cows you got savings account that's earning you know they said that to her mind it was five hundred dollars here and there's $1,000 there and so there's this lack of sophistication Maryjo that many people do where the word you're looking for of course is fungible money is fungible there's a purist commodity on earth whether it's a dollar in your left pocket a dollar in your cigar box or a dollar your savings account or a dollar a day life insurance policy is you're talking about it's all your dollars and so the pocket accounting idea that it's this pocket versus this pocket when it's really big picture right yeah and the other thing Dave Ramsey gets wrong is he says whole life is bad whole life is bad when in fact he talks about fees and charges and all this other BS and that is all in a universal a variable in an indexed and in my book I have a whole section on crappy policies and why we don't want to use them and so I agree with Dave in that aspect and it's funny because some of my best clients are Dave Ramsey fans and he's got them to where they can manage their money and they their budget conscious but they also understand that they're not gonna get a 15% rate of return in the market they know that I need cash flow I can't be debt-free farming if I want to expand and so they get the fact that and they and they understand last opportunity cost but if I give you a dollar I no longer have the opportunity to make anything on that dollar I exchanged it for cows I exchanged it for land what if I put it in the policy earn a guaranteed rate and I borrow against it and buy my land and my cows and my tractors and go to college and do whatever yeah okay so what when I look at the big picture here mistakes that you see you know what are we getting wrong besides pocket accounting besides worrying too much about debt versus cash flow what else what's another mistake you see the biggest thing that I have seen is we are not passing it off so the next generation can take over and be successful we're passing it off so every single generation buys it from the farm so can we and we're not utilizing and again I'm going to go back to life insurance but we're not utilizing life insurance that's income tax free money so if we can create generational wealth if you're my dad and you die and you're and you say okay I'm going to leave you six hundred dollars great I now have $600,000 that I can operate with I can expand with I can buy my siblings out list whatever needs to happen or can I have $600,000 that goes to the off the farm kid and I get the farm right can we utilize it in some sort of an estate transfer and it's funny because I've talked to farm family mediator type people and they said it was a huge thing in the 80s and it's gone away and the reason why is because of these crappy policies people behind the policy was gone before they died you know well actually I don't know as much because when my my mom died my inheritance it was a bad back pretty much that's it but now so you're talking about you some of your job now is Mary Jo you sit down with these people and say you're which egg people really have a hard time with this most people do but I people like admitting that they're going to die and then doing the planning these are some of the worst succession planning oriented minded people they all want to talk about keeping the family farm keeping the family farms and they wonder why a Damian Mason comes in and buys it at auction you know three years later you carry it on and went to the coop and talked to all the other unsophisticated agricultural neighborhood people where you gossip every day over coffee one of those days is to have going to gossip you know you should then gonna met with an estate attorney and insurance professional like you because as you just said so you help people do the transition and insurance a big part of that but also you can see I help them see that there's a possibility for a transition right or what can we do for and there really is discounted dollars Damian if we're and I have a blog on my website if you go to farming without the bank comm and you can go to generational wealth I show what happened when we start rolling death benefit we're buying a dollar for 18 cents income tax free by the third generation do you think like I don't the mindset that I don't understand is you get up you work your ass off every day just so the next generation can buy it just so that you don't pass it on why are you getting up if you're not protecting it I don't understand why you work so hard to build something to not protect it yeah you know you're preaching the quiet here I always say that in my book do business better I point out that I always look at it I was a factory worker I did the overtime because at time and a half or double time like I already did the hard work of the 40 hours that next 16 is getting paid 50% more per hour that's what I look at estate planning and meeting with your insurance person and all the stuff that you're talking about if you're gonna do the hard work of doing the work and then of saving the money and acquiring the asset let's not try and do the right thing about it although it's not really anybody's job to give to work all their life to give something away either you know there's that reality no can we sell it because we're not planning for retirement as a farmer we were this badge of honor that it's important to be broke because then work well then we have humility right so we work to be broke that's what farmers do and the next generation should buy it because that's what we have to do but how about how about we take a two million dollar operation and we sell it to the next generation whether that's your kid or not your kid 5% interest over 30 years you made four million dollars capital gains is going to be less because you're spreading it out over time instead of just selling it for two million and guess who gets the other two million the bank and interest all you have to do as a contract for deed it's not I'm not saying it's gonna be without flaws but doing your documentation correctly create the contract for deed with and I just did my Podcast on this what should be coming out on Friday about this very same thing so many people don't are so terrified of a contract for deed well now I can if I'm buying something from you on a contract for deed I can now have a life insurance policy on you so if you die before my contract is up I have the death benefit for your heirs okay go through that one real quickly because I think that's something that a lot of people don't fully get so do that real quick structure just explain it real quick well I yeah that's a contract to buy a property so yeah your contract would mean you're selling selling a property or a farming operation it could be hog barns it could be acres it could be orchards whatever selling on contract so are you saying okay I'm selling this to not even my son but maybe not even my daughter but the guy down the street here whatever but then tell about the insurance portal so if I'm buying a property from you if Damien you and I have a contract for deed I am buying your property I now have insurable interest in you so I can buy a policy on you because it's a key man policy you and I are in business together I can buy a policy on you so if you pass away before the contract is up I now have death benefit to buy out your family and/or give them a big enough downpayment that I can go to the bank and buy and have money for the rest if I am and we do this I do this a lot if I have a young couple farming with mom and dad I want you to buy a policy on dad and then work and I want you to buy a whole life on dad today because he's getting older every day we might buy some convertible term insurance on you because you're young but if we only have $15,000 we need to be buying that dad so when he passes you have the money to buy out the siblings you have the money to expand to take over operating expenses all of these things happen when mom and dad passed away and if mom and dad ideally mom and dad should have the insurance to take care of the estate but a lot of times they don't want to so if the younger generation has seen the benefit great now we're gonna do it on mom and dad and then we're gonna buy one on ourselves and then our kids and our grandkids and that's the generational wealth this is what the Rockefellers do this is what wealthy banks owned bank owned life insurance they that is their tier 1 capital the wealthy people understand that you can buy discounted dollars income tax free it grows income tax free and you use it at retirement income tax free what if we could use it for operating today and retire on that same money later win-win sounds like you keep saying just because I want you to explain this then we're gonna head out you said about buying on discount of dollars just explain that so the person is saying why does she keep saying buying it on this kind of dollars you used to use the exact numbers of 18 cents to pay for a dollar can you explain that yes so when I buy the life insurance policy on somebody that typically I look at this when I'm looking at somebody that's 55 60 years old when we look at how much premium has been paid in to likely death of say 85 - how much death benefit gets paid out I have probably paid in 50 cents out of pocket for every dollar that goes to the next generation and they get that dollar income tax free so we are buying a discounted dollar we're paying 50 cents for a dollar for we're paying 30 cents for a dollar and that and when we keep when we take the death benefit and we roll it into a new policy that grows income tax free now we we keep paying our premium once once our premium is due out of pocket and when we keep rolling that we get down to about 18 cents for every dollar yeah and so obviously and as opposed to me with a term life insurance policy whole life it's you could be 90 and it still is there because that's the difference so whereas mine when the 30 years is up its up well life actually is going to 121 no okay so you can live to be 121 so there's like one japanese person that is over 121 years old as clean as I live I don't know if I'm gonna make it 221 but I don't know I think there's gonna be some evidence as Coors Banquet actually probably is a longevity the Luxor looks or so all right her name is Herman name is Mary Joe and there you can find her at farming without the bank calm calm hey it's Mary Joe urban farm without the bank calm she's around on some social media formats is there anywhere else they can just go there good a farm without the bank and find you there right yeah yeah buy mine Fuhrman without the bank Facebook Linkedin podcast for me without the bank so everything is farming without the bank except YouTube that is Mary Jo ermine she is her own podcast also so be sure to check it out I brought around here because I think it's important to manage your money and run your business as a business if you're in the business of Agriculture you listen to this podcast because you understand is a business you don't have a lifestyle you don't have the the beautiful old barns and the meadows and the Sun going down over the pasture with the grazing sheep out there unless you have the business part of a handle first am i right correct thanks for being here you're welcome thanks for having me bet til next time it's the business of Erica [Music]
