Seth: Hey everyone, how's it going? This is Seth Williams. Welcome to episode 249 of the RE Tipster podcast.

Today I'm talking with Danielle McKinley. She is an intuitive money coach who helps people master their money in ways that go beyond the traditional financial advice that most of us were taught.

So Danielle has built and sold software companies, had a major nine-figure exit, and later realized that money alone was not creating the sense of purpose or contentment that she expected.

And that realization caused her to do a deep dive into money stories and behavior and how our financial decisions either support our lives or they quietly undermine them.

Danielle teaches several non-traditional finance strategies, including the infinite banking concept, which is something I've used myself for the past five years.

And if you've never heard of it, this is a great chance to understand what it is and how it works and why some people swear by it and others say to avoid it.

This is not meant to be a pitch. It's an honest look at a strategy that real estate investors talk about a lot, but often misunderstand.

And it's also a chance to hear the pros and cons and the parts people rarely talk about, like some of the huge commissions that agents can earn and how to avoid being sold the wrong thing.

We're also going to talk to Danielle about her contentment filter. It's a simple idea that helps people build financial plans that line up with the lifestyle they actually want instead of chasing numbers that don't really make them any happier.

So with that, let's get into this. Danielle, welcome. How you doing?

Danielle: Hey, Seth. Thanks for the intro. That was awesome. I'm good. How are you?

Seth: I'm doing really good. Yeah. Glad I got a chance to talk to you here. So first off, tell me more about this software company you built and sold. What kind of software was this?

Danielle: Yeah, it was a HIPAA and OSHA compliance company. So it was designed to solve for the problem that doctors have as they get licensed, they open a practice, and they get going.

And then they have all of this business stuff that they have to take care of that wasn't taught in school. And so it automated the process of becoming HIPAA and OSHA compliant, and then protecting them if they had an incident.

And we dabbled in cybersecurity and things like that. So it was a really fun journey and taught me a lot that I now incorporate into the work I do today.

Seth: What was your role in that? Because I've actually been in the SaaS world myself this past year, and I've learned that I absolutely cannot do everything. So I'm wondering, what did you do in the company?

Danielle: So I wore a lot of hats, but as any startup, you begin to peel them off as you scale and grow, right? So I was fortunate enough to experience all levels, building out the customer experience, building out the sales force, helping really design the UI UX of the software and everything that needed to be in there.

And then towards the end, I had three business partners. I really focused on managing our referral partners and helping that help feed leads to the team. But I got to experience a lot of all of it.

What I will say to you in the SaaS world, you are going to experience a little bit of every hat. And that's a good thing because then you know how to build out that lane of your business and not run it yourself.

Seth: Was I seeing that right? That you had a nine figure exit from this company?

Danielle: Yeah, that's correct.

Seth: What does that feel like? Is that just like the high of all highs or so like this euphoric thing or what was that like for you?

Danielle: That's what we imagine, right? That's certainly what I imagined it would feel like in the building stages and working up towards it. You kind of picture this like champagne confetti moment of like, wow, and just feeling so fulfilled.

And it was the total and complete opposite of that. It really felt like nothing. And I hate to say that, but is what led me to what I do now. So I'm forever grateful for it.

And really it feeling like nothing is what led me on a journey to discover my own money story. And I didn't know that that was the journey that I was on when I was going through it.

But for me, it didn't feel like at all what people picture it would feel in their head when they hear you say it or me say it or anyone else say it and when you envision it for yourself it was quite the opposite for me.

And that was really jarring and confronting and surprising and I knew that it was honestly was a wake-up call for me because I'm it should feel good.

And I think that when you're walking in your purpose and you're doing things that really are aligned for you, it would feel like what we think it would in our head. It was just the opposite for me because I had a lot of work to do in understanding my relationship with money.

Seth: Well, it's really interesting because I've heard from other people, I mean, not your exact story, but they've built up a real estate portfolio or a level of income where they just are kind of okay.

And they almost lose their purpose. It's like, there's nothing really to struggle for anymore. Like I'm just kind of existing here, taking up space and psychologically in your situation, did it feel like nothing because you already had a substantial net worth?

So it wasn't really moving the needle anymore. Like how could that feel like nothing?

Danielle: There's a certain level of income that you hit that you don't necessarily need more. Right. And so then you really wrestle with what impact am I making? How am I showing up? How am I serving?

How am I behaving with my family? What's my nervous system look like, right? Because you get so obsessed with the thing.

And it also comes down to like, not wanting to celebrate, right? So one thing I always like to be super transparent about is I didn't make nine figures. Okay, that was the exit.

I had three business partners, we had a team, we shared with everybody on the team, we had expenses, we were bootstrapped, and I wasn't the sole owner of the company, right? So I didn't make nine figures.

I imagine if I made nine figures, it might have felt a little bit different. But I think that we all individually have different relationships with money and a different idea of what we want our life to look like.

It's morbid, but it's true. Like, what do we want people to say about us in our eulogy at our funeral?

And for me, I had burnout. I dislocated my shoulder in my sleep in early 2021 because I had severe stage four adrenal fatigue. And it's like, what was I doing all of that for?

Right? Was it for the money? Because that doesn't make any sense. So it was this huge, like confronting reality of we got to reassess what this looks like.

So for me personally, and everybody's journey is very unique. For me, I was fortunate enough to be able to go into like a super, I call it my cocoon season, where I got to really explore, you know, why didn't it feel good?

Why, what am I, what was I doing it all for? And in that journey, I started doing a bunch of things like hypnosis and brain spotting and meditation and yoga and therapy and all of these things.

And I was fortunate enough to have a therapist that was very open-minded and she was like, you know, I'm going to refer you over to this one woman. She does money coaching.

And I'm like, what is that? Because you would think that the exit would solve for money problems, right? And it doesn't and it didn't. And I met with her and I sobbed through the first session, like just like tears.

And it was so healing and it was so confronting because I realized I didn't have a healthy relationship with money and I didn't understand why I had this perception or how I looked at money and why that is.

And so we started pulling on that thread. And then throughout the last three years, I have been able to work through a ton of that.

And now I am in a place where I'm like, I need to shout this from the rooftops because I don't think anybody should feel shame when it comes to money.

I don't think anybody should be walking around with misaligned financial plans because it becomes detrimental to everything you do in life.

And like what you were saying earlier about purpose, because if you don't feel like you're getting to do the things that you love to do and money isn't supporting that, then you're just like, what the hell am I doing this for?

So that's where I'm at now. And the money coaching component married with the infinite banking concept and life insurance planning, which people are like, that is the oddest pairing.

And I'm like, you know, I used to think that too until I realized that they're literally the same conversation because if we don't start with behavior and what does your life look like and what is your contentment level, then how the hell am I supposed to structure a financial plan for you, right?

Seth: Yeah, you can have all these spreadsheets and numbers, but if it doesn't address the right issues, the things you actually care about, it kind of doesn't matter.

Danielle: Exactly. And a lot of times, like it's the things that make you feel a little scared or bring up a little bit of like uncomfortableness that you should probably lean into and explore because it's like uncovering those secrets.

Like for me, I have such a heavy scarcity like bone in my body. I grew up with a scarcity mindset, which when you exit and you have been doing well and you're like, why do I still feel this way?

You got to explore that. You got to explore that. And so that's really where all this came from. And like, I don't like to use the word passion or whatever, but like, I get so fired up when I have these conversations with people because I'm like, you're not alone.

Like, let's talk about it. Let's confront it. So that's how it all came to fruition.

Seth: Yeah. And I can definitely relate to some of this. I think, I mean, it's almost like everybody has had some kind of money trauma in their past or something that's kind of messed them up or given them the wrong perception about things.

And I know like my upbringing was just like, I didn't really experience. I mean, I wasn't like abused or I was always fed and had clothes and all that stuff.

But I also like just didn't really learn anything about investing or like how to actually build wealth in the right way. And so it was like, that was a hole in my upbringing.

And I've kind of had to like figure that out on my own as I've gotten older. But I know other people had it way worse than I did. And it's like, of course that affects how you think about it and how you use it and all this stuff.

Danielle: Yeah. And the thing is, is that we want to put like a positive or negative connotation on it.

And a lot of times people don't realize the positive things that we were taught or shown can also have a negative impact, right? So like my, you know, my family always said like, you know, get a good job, like get something stable, have benefits, you know, all of these things, right?

Like they wanted what was best for me. And so they were handing me a blueprint for success based on what worked for them.

But as we go out and we live our lives and we experience what we experience, it doesn't always hit the same. And you don't ever want to put an unfavorable spin on like it was their fault that you ended up this way.

That's not the conversation. The conversation is to just recognize oh, like they were doing the best with what they had and that's how it got translated to me.

And now I can make a different choice because I'm an adult and I can do whatever I want, essentially. So it's that level of like freedom that you start to unlock as you explore these things and you're like, oh, I get to decide now.

Seth: Yeah, that's cool. So on this contentment filter that you mentioned, how does that work? Like what are the steps involved in figuring that out?

Danielle: Yeah. So contentment as a word is really interesting because a lot of people misinterpret it as complacent or giving up or settling or like we're just, I don't know, lazy, kind of just existing, right?

And in reality, like contentment is actually a state of happiness and satisfaction and choosing to be fulfilled with what you have. And I think that there's this like inner knowing that you can have when you have that contentment.

And we all have different contentment levels that we should be honest with ourselves about. Not I should be content with this because, you know, my religion said this or my family told me this or societal norms or keeping up with the Joneses.

Like none of that. Like truly honest contentment level for you. And so the contentment filter is a way of looking at everything that you do in your finances through that lens of like, is this supporting my contentment or is this degrading my contentment?

And a lot of times the things that we think support our contentment actually aren't. And so I always like to use like a really simple example.

Like, you know, I never wanted a luxury car. I never cared about a luxury car. And when I bought my first luxury car, I genuinely liked it. I liked it in that moment.

But then the maintenance bills and the worry of like, oh, is somebody going to scratch it in the parking lot? And like, you know, I have to make sure it's always super clean.

And it's like all of this upkeep of it became more of a burden and it degraded my contentment and I didn't even realize it. And after like several months, I was like, I hate this. Like I hate worrying about this car.

And so I sold the car and I like downgraded and I was so much happier because there was no like anxiety related to worrying about the car. And it's such a simple little example.

But that's like the contentment filter. It's like really assessing, you know, does this bring me happiness or is it degrading my happiness?

And so whenever I'm working with a client, we pull this out because I'm like, you want to build a real estate portfolio. Great. Are you content managing multiple properties?

Are you content rehabbing? Are you content going and looking at the thing? Or is that actually a burden for you? And does that take away your time from something else?

And so it's a constant like state of reassessing because what content you today may not be what contents you three years from now. And that's totally fine. That's called evolution.

So it's using it as a baseline assessment of like, am I making money decisions that support this or am I making money decisions that go against it? Because sometimes we do.

We make money decisions that go against it because of an outcome we're trying to create. And that's totally fine too. It's just awareness around it so that you know going into it like, okay, this is going to suck for a little bit because I'm trying to hit this goal.

And that's okay because I know what's on the other end. But being honest with yourself about what your contentment level is and not trying to like meet somebody else's idea of contentment.

Seth: That is a really good filter. I mean, it's interesting. Some people wouldn't even think to look at financial decisions that way. It's more just like the numbers, you know, does this cash flow? Is it a good deal? You know, what's my return?

But that's kind of like a whole nother level that some people don't even think about. Have you ever talked to somebody who like just can't be content? Like they're always like pushing and needing more and like dissatisfied with everything?

Danielle: Oh my gosh. All the time. And it's so interesting because when you're in it, you can't see it. You cannot see it when you're in that pattern. And so a lot of times what I do is I'm like, okay, we need to take a step back from the numbers.

We need to take a step back from the income goals and the real estate and all of that. And we need to assess what matters to you right now, today.

What actually matters to you? Like, is it the time with your family? Is it the impact you're making? Is it like what? And a lot of times people can't answer that question.

And so when you can't answer that question, how are you supposed to build a financial plan around something you can't answer? And so what I always say is like, you know, let's zoom all the way out and let's just talk about your life.

And let's talk about like what a day in the life actually looks like. Not what do you think other people want to hear. Not what you think you're supposed to be doing.

Like, what do you actually want your life to look like? And that's where we start. And from there, the numbers and the strategies and the tools all fall into place because they're supporting what you actually want.

And so for those that, like, can't be content, it's like, have you ever taken the time to ask yourself what would make you content? And a lot of times the answer is no.

Seth: Yeah. Yeah. That's a great question to start with. So let's talk about the infinite banking concept because that's what originally got us talking. And I know you had mentioned like how this is connected to the money coaching and stuff.

But for anybody who's never heard of this, like what is the infinite banking concept? And for people who know nothing about this, how would you explain it?

Danielle: Yeah. So the infinite banking concept is essentially using a dividend paying whole life insurance policy as your own personal bank. And I know that sounds weird. So let me explain.

When you have a whole life insurance policy, it builds cash value. And that cash value is something that you can borrow against.

And so instead of going to a traditional bank to get a loan for a car or a real estate deal or whatever it is, you can borrow against your own policy and you become the bank.

And the reason why people love this strategy is because when you borrow against your policy, the cash value in your policy continues to grow as if you never touched it.

So you're essentially like double dipping, right? You're using the money and it's still growing. And then you pay yourself back with interest. And that interest goes back into your policy.

So you're recapturing the interest that you would have normally paid to a bank. And over time, you're building this like wealth snowball where you're just constantly recirculating money through your own system instead of giving it to a bank.

And so that's the concept in like the most simple terms. Now, there's a lot of nuance to it. And there's a lot of ways that it can be structured improperly.

And that's where people get burned and they're like, this is a scam. This doesn't work. And I'm like, well, did you work with somebody that knew what they were doing?

Because if it's structured properly, it is an incredible tool. If it's structured improperly, it can be a really expensive mistake.

Seth: Yeah. And I mean, it sounds really cool. And I know you and I have both used this, but I also know like not everybody agrees with this. Like Dave Ramsey is very much against it. Suze Orman, I think is against it.

And I know a lot of that's because of the way it's sold and the way agents make money off of it. And so there's just like a lot of bad examples out there.

But I'm curious, like for somebody who's considering this, what are some of the things they should know going into it? Like what are the pros and cons?

Danielle: Yeah. So the pros, like I mentioned, is that you're building a tax-free wealth vehicle. The money that grows inside of your policy is tax-free. When you borrow against it, it's a non-taxable event.

And when you pass away, the death benefit pays out tax-free to your beneficiaries. So it's a triple tax advantage, which is incredible.

The other pro is liquidity. You have access to your cash. A lot of people think of life insurance as this thing that you can't touch until you die. And that's not the case with this strategy.

You have access to your cash value relatively quickly, depending on how it's structured. And you can use it for whatever you want. Real estate deals, business investments, emergencies, whatever.

The con is that it is a long-term strategy. This is not a get rich quick thing. This is not something where you're going to put money in for a year and be like, oh my gosh, look at all this growth.

It takes time for the cash value to accumulate. And in the first few years, it can feel like your money's not really growing that much because the insurance company is taking their fees and expenses off the top.

And so you have to be committed to it for the long haul. And I always tell people like if you're not willing to commit to this for at least ten years, don't do it. It's not worth it.

The other con is that if it's structured improperly, you could be paying way too much in premiums for not enough cash value. And that's where working with the right agent is so critical.

Because a good agent is going to structure it in a way where you're maximizing your cash value and minimizing the death benefit. Because the goal is to build cash, not to build a giant death benefit.

And a lot of agents don't know how to do that. Or they don't structure it that way because they make more money off of a higher death benefit.

And so that's where the conflict of interest comes in. And that's where people like Dave Ramsey and Suze Orman are like, this is a scam. Because they've seen so many examples of it being sold improperly.

Seth: Yeah. And I mean, I think that's fair. Like I've definitely heard horror stories of people who got sold policies that just did not make sense for them.

And they were paying like huge premiums and not getting any cash value. And it's like, well, no wonder you think it's a scam. Like that is a scam the way it was sold to you.

But when it's done right, it can be a really powerful tool. So what would you say to somebody who's like on the fence about this? Like how do they know if this is right for them?

Danielle: Yeah. So the first thing I would say is you have to have a solid financial foundation first. If you're living paycheck to paycheck, if you have high interest debt, if you don't have an emergency fund, this is not the right strategy for you right now.

Because this is a luxury strategy. This is a wealth building strategy. And you have to have the basics covered before you can even think about implementing this.

The second thing is you have to be willing to commit to it long-term. Like I said, if you're not willing to commit for at least ten years, don't do it. It's not worth it.

The third thing is you have to work with the right agent. And this is so critical. You need to work with somebody who understands the infinite banking concept, who knows how to structure policies properly, and who is not just trying to push a product on you.

And the way that you can tell if somebody is the right agent is if they're asking you a ton of questions about your financial situation, your goals, your lifestyle, all of that.

If they're not asking you questions and they're just like, here's the policy you need, run. That's a red flag. Because a good agent is going to take the time to understand your unique situation and design a policy that fits you.

And the fourth thing is you have to be willing to use it. This is not a set it and forget it strategy. You have to be actively borrowing against your policy and paying yourself back in order for it to work.

If you just put money in and never touch it, it's not going to be as effective. The power of this strategy is in the velocity of money. It's in the constant recycling of your dollars through your own system.

Seth: Yeah. That makes sense. And I think that's a good point about like you have to use it. Because I know for me, like when I first started doing this, I was kind of hesitant to like borrow against it because I was like, well, what if I mess it up?

But once I started actually using it and seeing how it worked, I was like, oh, this is actually really cool. And it's kind of fun to like be your own bank and have that control over your money.

Danielle: Yeah. And I think that's the other thing that people don't realize is it gives you so much control. Like you're not at the mercy of a bank's lending criteria or their interest rates or their timelines.

You can access your money whenever you want. You can pay yourself back on your own terms. And you're not giving all that interest to a bank. You're keeping it for yourself.

And so it's like this level of financial independence that you don't really get with other strategies. And that's why I love it so much.

But again, it has to be done right. And you have to have the right mindset going into it. You can't just like throw money at it and hope for the best.

Seth: Yeah. So I'm curious, like when you're working with somebody and you're helping them set up a policy like this, what does that process look like? Like how long does it take? What are the steps involved?

Danielle: Yeah. So the first thing we do is we have a conversation about their financial situation. We talk about their income, their expenses, their debt, their savings, their goals, all of that.

And we also talk about their contentment level. Like what do they actually want their life to look like? Because that's going to inform how we structure the policy.

From there, we look at their budget and we figure out what they can comfortably afford to put into a policy. And I always tell people like don't stretch yourself thin for this.

If you can only afford a hundred dollars a month, that's fine. We can still make it work. It's not going to grow as fast as if you were putting in a thousand dollars a month, but it's still worth doing.

And then we design the policy. And this is where the magic happens. We structure it in a way where we're maximizing the cash value and minimizing the death benefit.

And we add what's called a paid-up additions rider, which basically allows you to overfund the policy and build cash value faster.

And then we submit it to the insurance company and they underwrite it, which means they assess your health and your risk. And depending on your health, you may or may not qualify.

And if you do qualify, the policy gets issued and you start making premium payments. And then within the first year, you already have cash value that you can start borrowing against.

And from there, it's just a matter of using it and paying yourself back and building that wealth snowball over time.

Seth: Yeah. And I mean, I know for me, like the underwriting process was probably the most annoying part because you have to like do the medical exam and answer all these questions and all that stuff.

But once that's done, it's pretty smooth sailing. And like you said, you can start borrowing against it pretty quickly, which is cool.

Danielle: Yeah. And the underwriting process can be intimidating for people. But the thing to remember is that they're not looking for perfection. They're just trying to assess risk.

And so even if you have some health issues, you can still qualify. It just might be at a different rate. And a good agent will know which carriers are more lenient with certain health conditions.

So like if you have diabetes or high blood pressure or whatever, there are carriers that specialize in that. And so it's just a matter of finding the right fit.

Seth: Yeah. That's good to know. So I'm curious, like you mentioned that agents make a lot of money on these policies. And I know that's one of the big criticisms.

Like people hear that an agent can make 80% of the first year's premium and they're like, whoa, that's a huge conflict of interest. So how do you respond to that?

Danielle: Yeah. So like I mentioned earlier, agents don't work for free. And you wouldn't expect to work for free. So agents get paid for their services.

And the way that the compensation structure works is that agents get paid a percentage of the death benefit, not the premium. So if you're paying in $10,000 a year, the agent is not making $8,000.

They're making a percentage of the death benefit, which is much smaller. And the reason why agents make more upfront is because you're going to be paying into this policy for a long, long time.

And so the insurance company is essentially paying the agent upfront for the lifetime value of the policy. And then if you cancel the policy, the agent gets charged back. So it's not like they just pocket the money and run.

Now, the reason why this becomes a conflict of interest is if the agent is structuring the policy with a high death benefit because they make more money off of that.

And that's where you have to be careful. Because a good agent who understands the infinite banking concept is going to structure it with a low death benefit and high cash value.

And they're actually going to make less money doing it that way. But they're doing it because it's the right thing for the client.

And so that's where finding the right agent is so critical. You want to work with somebody who's willing to make less money in order to give you the best product.

Seth: Yeah. And I think that's a really good point. Like you have to find somebody who's not just in it for the commission. They're actually trying to do what's best for you.

And I think that's where asking questions and doing your due diligence and like really vetting the agent is so important. Because there are a lot of bad actors out there.

Danielle: Yeah. And I think the other thing that people need to understand is that this industry is not regulated the way that other financial industries are.

Like if you're a financial advisor, you have a fiduciary duty to act in the best interest of your client. But insurance agents don't have that same duty.

And so you really have to advocate for yourself and ask the hard questions. Like how are you getting paid? What carriers do you work with? What types of policies do you typically write?

And if they're not willing to answer those questions or if they're being evasive, that's a red flag. You want to work with somebody who's transparent and who's willing to educate you.

Seth: Yeah. And I think that's great advice. Like don't just take somebody's word for it. Do your own research. Ask questions. And if something doesn't feel right, trust your gut.

Danielle: Exactly. And I always tell people like you're the CEO of your financial life. And you can fire your agent at any time. You can get a second opinion. You can shop around.

And so don't feel like you're locked into working with somebody just because they gave you a quote or because you had one conversation with them.

You have the power to choose who you work with. And you should choose somebody that you trust and that you feel comfortable with.

Seth: Yeah. Absolutely. So let's talk about some of the criticisms of this. Because I know like one of the big ones is that the returns are not as good as other investments.

Like if you put your money in the stock market or in real estate, you're going to get better returns than you would with a whole life policy. What's your response to that?

Danielle: Yeah. So this is a common criticism. And it's true that the returns on a whole life policy are not going to be as high as the stock market or real estate.

But the thing that people miss is that it's not an apples to apples comparison. Because a whole life policy is not just an investment. It's also insurance.

And so you're getting a death benefit along with the cash value. And you're getting guarantees that you don't get with the stock market.

Like the cash value in your policy is guaranteed to grow. It's not going to go down. It's not going to be subject to market fluctuations. It's stable and predictable.

And for some people, that peace of mind is worth more than chasing higher returns. Because they know that no matter what happens in the market, their money is safe.

And the other thing is that this is not meant to replace your other investments. This is meant to complement them. So you should still be investing in real estate and the stock market and whatever else.

But this is a tool that you can use to fund those investments. So instead of going to a bank to get a loan, you borrow from your own policy.

And so you're not giving up the returns from your other investments. You're just changing where you're getting the financing from.

Seth: Yeah. And I think that's a really important distinction. Like this is not an either or situation. You can do both.

And I think for me, like one of the big benefits of this is just having that liquidity and having that safety net. Like knowing that I have access to cash whenever I need it is really valuable.

And I'm not having to liquidate other investments or go beg a bank for a loan. I can just borrow from my own policy and keep moving.

Danielle: Yeah. And I think that's the biggest benefit that people overlook. It's the liquidity and the control. And the peace of mind that comes with that.

Because when you're building wealth, there are going to be opportunities that come up where you need to move fast. And if you have to go through a bank's lending process, you might miss the opportunity.

But if you have access to your own capital, you can move immediately. And that can make all the difference.

Seth: Yeah. Absolutely. So let's talk about like who this is not for. Because I think that's an important conversation to have.

Like not everybody should be doing this. So who should not be using the infinite banking concept?

Danielle: Yeah. So the first group is people who don't have a solid financial foundation. If you're living paycheck to paycheck, if you have high interest debt, if you don't have an emergency fund, this is not for you right now.

You need to get those basics in place first. Because this is a luxury strategy. And you can't afford a luxury if you can't afford the basics.

The second group is people who are not willing to commit long-term. If you're the type of person who likes to jump from strategy to strategy and you're not willing to stick with something for ten plus years, this is not for you.

Because you're not going to see the benefits of this strategy until you've been in it for a while. And if you bail early, you're going to lose money.

The third group is people who are not going to use it. If you're just going to put money in and never touch it, this is not the best use of your dollars.

You'd be better off just investing in other things. Because the power of this strategy is in the velocity of money. It's in the constant recycling of your dollars.

And the fourth group is people who are not healthy enough to qualify. If you have serious health issues, you might not be able to get a policy. Or if you can get one, it might be so expensive that it's not worth it.

And so in that case, you're better off focusing on other wealth building strategies.

Seth: Yeah. And I think that's all really fair. Like you have to be realistic about where you're at financially and what your goals are.

And if this doesn't fit, that's okay. There are plenty of other ways to build wealth. This is just one tool in the toolbox.

Danielle: Exactly. And I think that's the most important thing to remember is that there's no one size fits all approach to building wealth.

What works for me might not work for you. And what works for you might not work for somebody else. And that's okay.

The goal is to find the strategies and tools that align with your unique situation and your unique goals. And if this is one of them, great. And if it's not, that's fine too.

Seth: Yeah. So I want to go back to something you mentioned earlier about like how agents are paid and the death benefit versus the premium.

Because I think there's still some confusion around that. So if somebody's paying in $15,000 a year, how much is the agent actually making off of that?

Danielle: Yeah. So it depends on the death benefit. So let's say you're paying in $15,000 a year and your death benefit is $500,000.

The agent is going to make a percentage of that $500,000 death benefit. And that percentage varies depending on the carrier and the agent's contract.

But let's say it's 80%. So the agent would make 80% of the death benefit, which would be $400,000. But that's not all upfront.

They get about 9 months worth upfront, which would be like $300,000. And then they get the other 3 months after the policy has been in force for a year.

And if you cancel the policy, they have to pay back whatever you've paid in. So if you paid in for 6 months and then you cancel, they get charged back for those 6 months.

And so it's not like they're just making free money. There's risk involved for them too.

Seth: Wait, so they're making 80% of $500,000, which is $400,000? That seems like a huge amount of money.

Danielle: No, no, no. I'm sorry. I misspoke. It's not 80% of the death benefit. It's 80% of the first year's premium.

So if you're paying $15,000 a year, the agent would make 80% of that, which is $12,000. And that's spread out over the first year.

So they get about $9,000 upfront and then $3,000 after the policy has been in force for a year.

Seth: Okay, that makes way more sense. So it's 80% of the first year's premium, not the death benefit.

Danielle: Correct. And the reason why it's based on the death benefit at all is because that's how the insurance company structures their compensation.

But it's not 80% of the entire death benefit. That would be insane. It's 80% of the first year's premium.

And then in subsequent years, the agent makes a much smaller percentage. Like 2% or 3% of the premium. So it's really front-loaded.

Seth: Okay. And so when you're structuring a policy for the infinite banking concept, you're trying to minimize the death benefit and maximize the cash value.

So that means the agent is actually making less money because the death benefit is lower, right?

Danielle: Well, it depends on how you look at it. Because the death benefit is still based on the premium you're paying in.

So if you're paying in $15,000 a year, the death benefit is going to be whatever it needs to be to support that premium. But we're structuring it in a way where the death benefit is as low as possible while still meeting the IRS guidelines for what qualifies as life insurance.

And so yes, the agent does make less money structuring it this way compared to if they were to structure it with a higher death benefit.

But a good agent is okay with that because they know it's the right thing for the client. And they're building a long-term relationship with the client.

And so they're not just trying to maximize their commission on this one policy. They're trying to do what's best for the client so that the client refers them to other people and continues to work with them over time.

Seth: Yeah. And I think that's where you really see the difference between a good agent and a bad agent. Like the good agent is thinking long-term and they're thinking about the relationship.

And the bad agent is just trying to make as much money as possible right now and they don't care what happens after that.

Danielle: Exactly. And unfortunately, there are a lot of bad agents out there. And that's why this strategy gets a bad rap.

Because people have been burned by agents who sold them the wrong thing or who structured it improperly. And then they're like, this is a scam. This doesn't work.

And I'm like, no, it does work. You just worked with the wrong person. And that's really frustrating because it gives the whole strategy a bad name.

Seth: Yeah. So how do you find a good agent? Like what should people be looking for?

Danielle: Yeah. So the first thing is you want to work with somebody who specializes in the infinite banking concept. Not just somebody who sells life insurance.

Because there's a big difference. A lot of agents don't understand how to structure policies for this strategy. They're just trained to sell life insurance in general.

So you want to find somebody who specifically focuses on this and who can explain it to you in a way that makes sense.

The second thing is you want to ask them about their compensation structure. Like how are you getting paid? What percentage do you make? What carriers do you work with?

And if they're not willing to answer those questions, that's a red flag. A good agent is going to be transparent about how they're compensated.

The third thing is you want to ask them about their philosophy. Like what types of policies do you typically write? How do you structure them? What's your approach?

And you want to make sure that their approach aligns with the infinite banking concept. Because if they're just trying to sell you a standard whole life policy with a high death benefit, that's not what you want.

And the fourth thing is you want to ask for references. Like can you connect me with some of your clients who are using this strategy? Can I talk to them about their experience?

And if the agent is not willing to do that, that's another red flag. A good agent should have happy clients who are willing to vouch for them.

Seth: Yeah. And I think that's all really good advice. Like you got to do your homework and you got to ask the hard questions.

And if the agent is not willing to answer them or if they're being evasive, that's a sign that you should probably look elsewhere.

Danielle: Yeah. And I always tell people like trust your gut. If something doesn't feel right, it probably isn't right.

And don't let anybody pressure you into buying a policy. This is a big decision and you should take your time with it.

And if an agent is trying to rush you or make you feel like you have to decide right now, that's a huge red flag. A good agent is going to give you the time and space to think about it and ask questions.

Seth: Yeah. Absolutely. So I know we've been talking a lot about the pros and cons and how to find a good agent and all that stuff.

But I'm curious, like for somebody who's brand new to this and they're just hearing about it for the first time, what would be your like elevator pitch for why they should consider this?

Danielle: Yeah. So my elevator pitch would be that this is a strategy that gives you control over your money. It gives you access to capital whenever you need it.

And it allows you to become your own bank. So instead of giving all your money to a bank and paying them interest, you're keeping that money for yourself and you're building wealth over time.

And it's a tax-free wealth vehicle. So you're not paying taxes on the growth. You're not paying taxes when you borrow against it. And you're not paying taxes when it pays out to your beneficiaries.

And it's a safe place to park your money. It's not subject to market fluctuations. It's guaranteed to grow. And it gives you peace of mind.

But it's not for everybody. You have to have a solid financial foundation. You have to be willing to commit long-term. And you have to be willing to use it.

But if you meet those criteria, it can be an incredibly powerful tool for building wealth and creating financial independence.

Seth: Yeah. And I think that's a great summary. Like it's not a magic bullet. It's not going to solve all your problems. But if you use it right, it can be a really valuable tool.

Danielle: Exactly. And I think that's the key. Like it's a tool. It's not the only tool. And you have to use it in conjunction with other strategies.

But when you use it right, it can really amplify your wealth building efforts. And it can give you a level of financial control that you don't get with other strategies.

Seth: Yeah. So what would you say to somebody like Dave Ramsey or Suze Orman who are very much against this?

Danielle: Yeah. So I respect their opinions. And I understand where they're coming from. Because they've seen a lot of examples of this being sold improperly.

And when it's sold improperly, it is a bad deal. Like I'm not going to argue with that. If you're paying huge premiums for a policy that's not building cash value, that's a bad deal.

But when it's done right, it's a completely different story. And I think that's what they're missing. They're painting with a broad brush and saying all whole life insurance is bad.

And that's not true. There are good policies and there are bad policies. And it all comes down to how it's structured and who you're working with.

And so my response to them would be like, yes, there are a lot of bad examples out there. But that doesn't mean the strategy itself is bad.

It just means that there are a lot of bad agents selling it improperly. And so the solution is not to avoid the strategy altogether. The solution is to find a good agent who knows what they're doing.

Seth: Yeah. And I think that's a really fair point. Like you can't judge the strategy based on the worst examples of it.

You have to judge it based on when it's done right. And when it's done right, it can be really powerful.

Danielle: Exactly. And I think that's what frustrates me the most is that people like Dave Ramsey and Suze Orman have such a huge platform and they're telling people to avoid this altogether.

And so there are people who could really benefit from this strategy, but they're not even considering it because they've been told it's a scam.

And that's unfortunate because it's not a scam when it's done right. It's a legitimate wealth building tool.

Seth: Yeah. So what about the cost? Like how much does it actually cost to set up one of these policies?

Danielle: Yeah. So the cost is going to depend on your age, your health, and how much you want to put into it.

But as a general rule of thumb, you want to be able to commit at least $300 to $500 a month. And ideally, you'd be putting in more than that.

But the more you put in, the faster your cash value is going to grow. And the more effective the strategy is going to be.

Now, some people are like, I don't have $300 a month. And my response to that is then this is probably not the right strategy for you right now.

Because if you're struggling to come up with $300 a month, then you need to focus on getting your financial foundation in place first.

And once you have that foundation in place, then you can start thinking about this strategy.

Seth: Yeah. And I think that's really important. Like you have to be realistic about what you can afford.

And if you're stretching yourself too thin to make the premium payments, that's going to stress you out and it's going to degrade your contentment.

Danielle: Exactly. And that's the opposite of what we want. We want this to support your contentment, not degrade it.

And so you have to be honest with yourself about what you can comfortably afford. And if that's $100 a month, that's fine. We can still make it work. It's just going to take longer to build up the cash value.

Seth: Yeah. So I think we've covered a lot of ground here. Is there anything else that you think people should know about the infinite banking concept before we wrap up?

Danielle: Yeah. I think the biggest thing is just to do your research and ask questions. Don't just take somebody's word for it. Educate yourself on how this works.

And don't be afraid to shop around and talk to multiple agents. Because not all agents are created equal. And you want to find somebody who really understands this strategy and who has your best interests at heart.

And if something doesn't feel right, trust your gut. Because this is a big financial decision and you want to make sure you're working with the right person.

Seth: Yeah. Absolutely. So on a different note, I wanted to touch on something you mentioned earlier about the difference between the insurance and the savings component.

Because I think a lot of people get confused about that. Like is this insurance or is it savings? And how do you think about that?

Danielle: Yeah. So it's both. That's the beauty of it. It's a life insurance policy, so you're getting a death benefit. But it also has a cash value component that functions like a savings account.

And so you're getting both the protection of life insurance and the wealth building benefits of a savings vehicle. And that's what makes it so powerful.

But I think where people get confused is they think of it as one or the other. Like either it's insurance or it's an investment.

And it's really both. It's a hybrid. And that's what makes it unique. Because you're not sacrificing one for the other. You're getting both.

Seth: Yeah. And I think that's a good way to think about it. Like it's a multitool. It's serving multiple purposes at the same time.

Danielle: Exactly. And that's why I love it. Because you're not having to choose between protection and wealth building. You're getting both.

Seth: Yeah. So let's talk about like the minimum amount you need to have in order for this to make sense.

Because I know you mentioned like $300 to $500 a month. But is there like a minimum net worth or income level where you'd say like, okay, now you're ready for this?

Danielle: Yeah. So I don't think there's a specific net worth or income level. It's more about your financial foundation.

So if you have high interest debt, like credit card debt, you should pay that off first. Because you're not going to make 4% or 5% in your policy and pay 20% on your credit card debt. That doesn't make any sense.

And if you don't have an emergency fund, you should build that up first. Because if something happens and you need cash, you don't want to have to borrow from your policy right away.

So I would say once you have those basics covered, once you have your high interest debt paid off, once you have an emergency fund of at least three to six months of expenses, then you can start thinking about this.

And in terms of how much you need to be putting in, I would say at a minimum, you want to be able to commit to at least $200 to $300 a month.

Because if you're putting in less than that, it's going to take a really long time for the cash value to build up. And it might not be worth the effort.

Seth: Yeah. And I think that's fair. Like you have to have the basics in place first. You can't skip over those steps.

Danielle: Exactly. And I think a lot of people want to jump straight to the sexy strategies without doing the boring stuff first.

But the boring stuff is what gives you the foundation to be able to do the sexy strategies. So you got to do the work first.

Seth: Yeah. So I know we've been talking a lot about the pros and cons and who this is for and who it's not for.

But I'm curious, like what are some of the common mistakes that you see people make with this strategy?

Danielle: Yeah. So the first mistake is not funding it properly. Like if you're putting in the bare minimum, you're not going to see the benefits of this strategy.

You really need to be overfunding it as much as you can comfortably afford. Because the more you put in, the faster your cash value is going to grow.

The second mistake is not using it. Like I mentioned earlier, the power of this strategy is in the velocity of money. You have to be borrowing against your policy and paying yourself back in order for it to work.

If you just put money in and never touch it, you're not getting the full benefit. And so you really need to be actively using your policy.

The third mistake is canceling too early. Like if you cancel in the first few years, you're going to lose money. Because the insurance company takes their fees and expenses off the top in the beginning.

And so you really need to be committed to this for the long haul. And if you're not, then you shouldn't do it in the first place.

And the fourth mistake is working with the wrong agent. Like if you work with somebody who doesn't understand the infinite banking concept or who structures your policy improperly, you're going to have a bad experience.

And so you really need to do your due diligence and find the right person to work with.

Seth: Yeah. And I think those are all really important points. Like you can't just set it and forget it. You have to be active with it.

And you have to be patient. Like this is a long-term strategy. It's not going to pay off overnight.

Danielle: Exactly. And I think that's the hardest part for people is being patient. Because we live in a world where we want instant gratification.

And this is not an instant gratification strategy. This is a slow and steady wins the race kind of strategy.

Seth: Yeah. So I want to ask you about something that I've heard before, which is that like the insurance companies can change the terms of your policy.

Like they can lower your dividend rate or they can increase your costs or whatever. Is that true? And if so, how do you protect yourself from that?

Danielle: Yeah. So the insurance companies can change the dividend rate. Because dividends are not guaranteed. They're based on the performance of the insurance company.

And so if the insurance company has a bad year, they can lower the dividend rate. But the good news is that the cash value in your policy is guaranteed to grow.

So even if the dividend rate goes down, your cash value is still growing. It's just growing at a slower rate.

And in terms of the costs, those are locked in when you buy the policy. So the insurance company can't just randomly increase your premiums or your fees.

The only thing that can change is the dividend rate. And the way that you protect yourself from that is by working with a mutual insurance company that has a history of paying dividends.

Because mutual insurance companies are owned by the policyholders, not shareholders. And so they're more focused on paying dividends to their policyholders than they are on making profits for shareholders.

And so companies like Northwestern Mutual, Mass Mutual, New York Life, they've been paying dividends for over a hundred years. And they've never missed a dividend payment.

And so that's a pretty good track record. And that's the type of company you want to work with.

Seth: Yeah. And I think that's a really important distinction. Like you want to work with a mutual company, not a stock company.

Danielle: Exactly. Because a stock company is beholden to their shareholders. And so they're more focused on making profits for shareholders than they are on paying dividends to policyholders.

Whereas a mutual company is owned by the policyholders. And so they're more focused on taking care of their policyholders.

Seth: Yeah. So I think we've covered a lot here. Is there anything else that you want to touch on before we wrap up?

Danielle: Yeah. I think the only other thing I would say is that this is a marathon, not a sprint. And you have to be committed to it for the long haul.

And if you're not willing to do that, then this is not the right strategy for you. But if you are willing to commit to it, it can be an incredibly powerful tool.

And it can give you a level of financial control and independence that you don't get with other strategies.

Seth: Yeah. Awesome. Well, I think we covered a lot of ground here. And hopefully people listening have a better understanding of what the infinite banking concept is and whether or not it's right for them.

Danielle: Yeah. And I just want to say one more time, like there's no shame in where you're at financially. Whether you're just starting out or whether you're killing it, like everybody's journey is unique.

And the most important thing is to just be honest with yourself about where you're at and what your goals are. And find the strategies and tools that support that.

Seth: Yeah. Absolutely. So Danielle, one more question before we wrap up. You mentioned earlier about like the contentment filter and how you use that with clients.

And I'm curious, like how often should people be reassessing their contentment level? Like is this something you do once a year? Is it something you do quarterly? How does that work?

Danielle: Yeah. So I recommend reassessing at least annually. Like at the end of the year or the beginning of the year, just take stock of like, what am I content with? What am I not content with?

And what changes do I need to make? And then I also recommend reassessing whenever there's a major life change. Like if you have a baby or you get a new job or you move or whatever.

Because those things can really shift your contentment level. And so you want to make sure that your financial plan is still aligned with your life.

And then I also think it's good to just check in with yourself on a regular basis. Like every few months, just ask yourself, am I content? Am I happy with where I'm at?

And if the answer is no, then you need to figure out what needs to change. Because life's too short to be miserable.

Seth: Yeah. And I think that's such an important practice. Like it's so easy to just get on the hamster wheel and keep running and not stop to ask yourself if you're actually happy.

Danielle: Exactly. And I think that's what happened to me with the exit. Like I was so focused on the goal and the money and the success that I didn't stop to ask myself if I was actually happy.

And then when I reached the goal, I realized I wasn't. And that was a really hard wake-up call. But it was also the best thing that ever happened to me because it forced me to reassess everything.

Seth: Yeah. Well, I think that's a really powerful story. And I think a lot of people can relate to that. Like chasing the goal and then realizing it's not what you thought it would be.

Danielle: Yeah. And I think that's why the contentment filter is so important. Because it forces you to check in with yourself and make sure that you're actually building a life that you want, not just chasing numbers.

Seth: Yeah. Absolutely. Well, Danielle, this has been a really great conversation. I've learned a lot. And I think people listening have learned a lot too.

So before we wrap up, I just want to ask one more time, like if people want to learn more about infinite banking or work with you or just connect with you, what should they do?

Danielle: Yeah. So like I said earlier, I'm most active on Instagram. So you can follow me at Life by Danielle. Everything is linked there. You can also go to my website, DanielleMcKinley.com.

And if you have any questions or anything landed and you're feeling like, I feel dumb asking that question, there is no dumb question. And I am obsessed with helping people around money and future planning and protection.

So please reach out to me. I would love to connect with you.

Seth: Awesome. And I'll be sure to include links to Danielle's Instagram and website in the show notes, which is retipster.com/249.

Danielle, again, it's great talking to you. Thanks for coming on the show and everybody listening. We will talk to you next time.

Danielle: Thank you.