How to Create Positive Cash Flow by Opening Your Own Bank

Creating Positive Cash Flow
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Guest Post by John Jamieson from Additional commmentary by Brian T. Edmondson denoted in italics.

Editor's Note: This is part 2 of a 2 part article. You can see part 1 here.

Yes we pay out 40% to banks and 2.5% to our families for our future. Who’s getting rich in that business model? Two institutions are getting rich with this model and they are banks (who keep us making payments out of our cash flow most if not all of our lives) and Wall Street. You see any money we do put away goes inside our 401k or IRA and gets invested in mutual funds which Wall Street loves.

Do yourself a favor and add up all the money you’ve paid out to banks on any loan over your lifetime. Then compare that figure to how much you have saved in your IRA or 401k. Which figure is bigger? With very few exceptions it works out to be banking payments a huge number and our savings a small number.

Brian Edmondson: Even if you are currently making payments on a loan (such as a mortgage) you can do the math and determine how much you will pay over the lifetime of that loan versus how much you actually borrowed. Do this exercise - you may be shocked at the amount of interest you are paying.

In other words, we are letting our most important asset (cash flow just in case you forgot) get systematically sucked out of our lives by the truckloads. Please understand it doesn’t have to be that way even though the traditional financial world will tell you there is nothing that can be done. What could we do to start to immediately flip these numbers around in our favor?

Open Up Your Own Bank!

No not a brick and mortar bank but rather a system of finance that you control. Either pool existing funds together or begin to put away cash flow in this pool of funds if you have very little funds to start. Now use these funds to finance your own life. Instead of putting money in your 401k fund your own financing pool and then make loans to yourself to say buy your next car.

Then pay yourself back the same interest rate and payment you would have had to pay an outside lender. This system will allow you to maintain and maximize your cash flow. Let’s say you figure out your payment would have been $400.00 per month over 4 years if you would have pulled a loan to buy the car from your local bank. Let’s also assume you borrowed $25,000 today to buy your car. Now project out 5 years in the future and say your car is now worth $5,000 which means you lost $20,000 of capital over that same 5 year period.

If you financed this car through a traditional bank let’s say you paid out another $3,000 of interest over that same 5 year period which means your total loss was $23,000 when combined with the depreciation.

This is an insidious wealth stealer that very few people even think about but you’re not most people. By keeping control of your cash flow and paying yourself back you have recaptured the depreciation you have suffered on the car ($20,000) and picked up the $3,000 in finance charges you would have paid an outside bank. Your internal bank that you own has picked up the $3,000 that would have been lost to a traditional lender. When you pay off your internal loan of $25,000 you have recaptured the entire depreciation amount that the car will eventually experience.

Brian Edmondson: This is a unique way of looking at purchasing and financing. In it's simplest form, it's the concept of not financing anything you can't afford and purchasing everything in cash. With this unique twist, not only are you doing that, but you're also paying yourself the interest you would have been paying to another institution. In a nutshell, you are transferring the wealth into your own pocket instead of a lender's pocket.

Remember that huge figure you have paid out in payments? This is the way to start to make your cash flow work for you and not for the banks and Wall Street. Tune into the next article where we will discuss where to begin to pool those funds that will help you create tax-free generational wealth.

John Jamieson is the author of two bestselling books with the latest entitled “Wealth Without Stocks or Mutual Funds”. He is a sought after national speaker on wealth creation and preservation and has spoken to thousands of people in every major city in North America. John is the author of dozens of articles on finance, business, and real estate. You can find him at