Greetings, Money Multiplier Members! This post covers the advantages of using a miscellaneous account when following your uniquely created MAP for paying off debt.
Your MAP which is designed for you by your Money Multiplier Mentor will suggest paying yourself first and paying yourself into a miscellaneous account.
This miscellaneous account is one that you would open at your existing banking facility as either a separate checking or savings account from your checking account for everyday expenses. Once your insurance policy is approved and you are able to take your first loan from your policy, we recommend being an honest banker and paying yourself the interest that you would normally pay a third party creditor if you had taken a traditional loan from a creditor.
For example: If you borrow $5,000 from your first policy and are following a lending rate of 5%, you would deposit $250 into your miscellaneous checking account at your bank (Checking Account B). You may be wondering why we wouldn’t simply suggest paying this back into the policy directly with the insurance company. That is a possibility but to gain access to the funds, you need to request another loan from the insurance company, instead of having the immediate access yourself. By depositing the funds into a checking account, you have immediate access to the funds to use to pay off creditors according to the payment schedule set in your MAP.
Another thought might be: Why can’t I just deposit it into my regular checking or savings that I already have set up? This is also a possibility. However, the reason we suggest a separate account is to make every transaction transparent. Obviously, you have daily or monthly living expenses that are being paid for out of your regular checking – grocery stores, dining out, gasoline, etc. that is not related to paying off debt. By having a separate account, you are able to track payments and deposits specifically related to debt reduction. This keeps you accountable to not misuse the funds and it will make your accountant happier when it’s time to create tax documents for the year.
Thank you for becoming a Money Multiplier Member. If you have specific questions about your policy or are not yet a member and would like to have a consultation with one of our mentors, please contact us.