Building my bank

Posted: Sep 26, 2006 2:50 PM

When I was finishing college I started interviewing a number of companies in many industries, including the banking industry. The banking industry offered the biggest surprise. According to them I could rise quite quickly to bank manager, a position I held in high esteem, in a matter of a few years, even though I would have only been about 25 years old. It didn't seem right, or even possible but they assured me it could be done. Then they told me how much I would make and that ended it. So here I am talking about building my bank more than several decades later. What's come over me?

It isn't a bank as you and I think of a bank, it is just a place that has most of my money. It is my house(s). In fact, anyone who owns a house has a bank because most of the money under the control of the citizens of the United States of America is in their banks. It is pretty obvious that most of us realize that the number one topic at a cocktail party is where you live and the type of house you have. We are comparing our bank against their bank. How many times have you heard or even said, “If so and so lives there, he or she has to be pretty wealthy.”?

Before I go farther I must give kudos to my late father who believed in the American dream of home ownership. When I was born only about half of the people in the United States were homeowners, and as we have grown as a nation so has home ownership, each and every year. We are now up to 69% of home ownership by the people in this country. If my dad had been a renter I might not have gained the passion I have for owning your own home.

Now that I hopefully have convinced you that your house is your bank, let me reinforce the idea. More kids have gone to college from the withdrawals from individual banks than probably from any other source, except maybe college funds that were set up at birth. You will find that most home additions, including pools and spas, as well as new furniture, landscaping and remodeling have come from the funds in the individual banks. In recent years, automobiles and family vacations have also been financed from the home bank. It is yours to manage as you see fit and most people do a pretty good job of it. Those who don't err on the side of non-use, not miss-use.

To actually have credit card balances carry forward from month to month and own a house is the greatest non-use of your bank or any bank that I believe you could ever come up with. As a matter of fact, you shouldn't possess any revolving debt that isn't cured at the end of a month, except possibly student loans, if you own a house. Our rates are in the 5% to 9% range for the most part and the interest is tax deductible.

Those other rates are from where we leave off to as high as 33%, and the interest isn't tax deductible for the most part. Don't tell me your reason for having monthly credit card bills that carry over month after month, convince yourself.

The prime reason to build your bank, the one you never considered you would own when you bought your first house, is not to carry you during your active years (although it certainly helps), but to spill out the assets to you when you most need them, in your retirement years. When you are in your 20's retirement isn't a picture you could paint for yourself, but as you grow older it starts to come into focus.

What a surprise you have in store if you get to the retirement plateau and you have more than you dreamed possible and maybe even more than you will ever need.

I put these thoughts on paper because you can't hear this message too often: When it comes to retirement, a house that is free and clear of debt might be all you will ever need to exist for the rest of your life. This is why I have campaigned for years to get you to go the extra few yards to pay off your house as quickly as possible and enjoy a life without mortgage payments, a bank that is there to help during emergencies, and a fully vested retirement plan without rules or requirements for distribution.

In the past I have written about the many ways you can achieve a free and clear house with "Invest in your Mortgage-You Win" (9/14/06), "If You Think Holidays are Bad Check out the Weekends" (8/24/06) and "The Plan" (8/5/06). There are so many ways to achieve this goal that I am sure you can come up with some I have never thought about. Put your mind to it and I am sure you can secure your future as easy as anyone else can.

Then when you are ready, have a cocktail party and let everyone see your bank, even though you will be the only one to know that yours is second to none.

By the way, another reason I didn't consider banking was that my vision of a banker was a man with a big cigar. I hadn't even come around to the thought that it would be pleasurable in the least bit. The thought did come in subsequent years, but then disappeared about 15 years ago. Why? I really want to enjoy the assets in my bank!