Dave Says: Should you borrow your own money?

Dear Dave,

I have a question about self-banking with whole term life insurance. The way I understand it, you can accrue a cash balance, borrow against it, and then pay interest to yourself. Is this worth it, or should I stay away from it and continue using a bank?

Kunal

Dear Kunal,

Actually, it’s a whole life policy, not a term policy. And it’s an absolute scam.

Basically, with whole life you pay about 20 times more for the same amount of insurance that you would with a term policy. The extra money goes into a savings account, and you earn next to nothing on it, even after you finally start to build it up. One of the ways they’re pitching it now is the self-banking concept, where you can use your own money. It’s nothing magical or anything, because with a regular checking account you use your own money.

My advice is to stay away from the company that’s offering it and anything else they have. It’s a really bad product, and it’s a scummy way to sell whole life insurance — which is an awful product to begin with. No one, except for folks in that business, believes in it or talks positively about it anymore.

Being able to borrow your own money? Really? Why on earth would anyone want to borrow their own money? It’s ridiculous!         

— Dave

Should I tithe on my business?

Dear Dave,

My wife and I are Christians, and we own a successful small business in our town. Should businesses tithe?

Barker

Dear Barker,

This is a good question. Giving is never a bad idea unless you do it irresponsibly and to the point of putting your family in financial danger. To the best of my knowledge, the Bible only addresses the topic of tithing by individuals — not businesses.

Personally, I don’t give a tenth of my business gross or net until I receive my paycheck. When that happens — meaning it’s profit that I’m going to pay taxes on, or it’s salaried income out of my business — I tithe on the profits.

So, I can’t really tell you I’ve found Biblical instruction to give a tenth of your business. Hope this helps!

— Dave

* Dave Ramsey is a seven-time #1 national best-selling author, personal finance expert, and host of The Ramsey Show, heard by more than 18 million listeners each week. He has appeared on Good Morning America, CBS This Morning, Today Show, Fox News, CNN, Fox Business, and many more. Since 1992, Dave has helped people regain control of their money, build wealth and enhance their lives. He also serves as CEO for Ramsey Solutions.