Becoming Your Own Banker

In today’s present world of zero interest rate policies (ZIRP), ‘savers’ are penalized (not rewarded) for saving their money (in the traditional sense of earning some interest in a bank).

Additionally, and for those who have been paying attention, the reason that we are seeing zero interest rates is directly related to the underlying problems which nearly caused the end of the financial world as we knew it (back in 2008) and they have NOT been fixed. In fact, they are worse than ever before…

Other than those who have been fooled by the propagandized perception that everything’s ‘peachy’ today, the reality is that since the crash of 2008 (which wasn’t allowed to ‘really’ crash) we have been living on borrowed time.

The ‘solutions’ to date have simply been buying time.

Twisting the numbers, redefining the measuring sticks, funding (QE, etc..) with borrowed money, smoke and mirrors, artificially inflating the markets, suppressing truths, propagandizing untruths, devising distractions and shifting perceptions – it’s all temporary.

It’s not a strategy that will fix anything, it’s a strategy to prolong the inevitable. The inevitable being that someone always pays – eventually, one way or another.

-It’s Time To Return To Living Within Our Means

Given the apparent and building systemic risks within today’s twisted financial system, and given the apparent fact that TBTF banks will now ‘bail-in’ (keep) your money in a banking collapse, and given that you’re not getting any real interest in today’s banking system, and given that the FDIC has nowhere near enough insurance money to bail out a TBTF bank, perhaps it’s time for becoming your own banker…

During the next banking crisis, any ‘money’ that you and I have in the bank will be ‘bailed-in’ after a financial collapse.

During the recent G20 meeting (mid-November), the member nations decided that your bank deposits will become property of the bank if a crisis takes it down.

-New Banking Rules Will Devastate Depositors

Here are some thoughts on the notion of becoming your own banker – or at least making better decisions about your choices regarding banking in general:

The Federal Reserve and their governmental and global counterparts have been miraculously holding the financial system (house of cards) together. The past six years have been filled with an incredible array of financial props (and propaganda) while the fundamentals have been twisted and reshaped to support a perception of goodness. They KNOW that to a great extent, their success depends on your perception of goodness so that you don’t look under the rug, so to speak, and become horrified at the reality.

As each year ticks by, and predictions of economic and financial collapse go by the way side, one begins to wonder how many more rabbits can they pull out of that hat. We just don’t know. One thing we do know however is that they MUST keep interest rates VERY LOW (can you say ‘rigged’ LIBOR?) because the interest payment on our debt alone could bankrupt us very quickly (not that we’re not ALREADY bankrupt – an empty shell).

By the way, LIBOR is a benchmark rate that the world’s leading banks charge each other for short-term loans, and is set each day in London. It is the first step to calculating interest rates on various loans throughout the world – including yours. If it goes up, your payments go up, and given that so many are living on the edge – it will result in more defaults and a worsening economy.

So we KNOW that they MUST keep interest rates at or near zero for the foreseeable future. So why keep money in the bank? One thought is to only ‘use’ the bank for the convenience of processing your ‘churn’ of bills. If you’re using direct deposit for your paycheck (like most people today), you can utilize online electronic bill pay which most banks have available today. Convenience. You might keep a certain amount of reserve in the bank, but perhaps not too much. That’s about it.

You might draw off some excess (if you’re fortunate enough to have excess) and build a supply of cash at home. The money you’re losing by doing that (through the currency devaluation of ‘real’ inflation) is no different than the near zero interest return you will get in most banks today (or fractions of a percent). The risk at home is fire and theft. But a decent well hidden and secured fire-resistant safe can mitigate that risk for the most part.

Again, if you’re fortunate enough to have excess beyond that of building a cash nest egg at home, you might further diversify into some precious metals. Silver and gold. Keep it at home in your safe (or a second safe so as not to have all eggs in one basket). Physical possession is EVERYTHING in a collapse.

Maybe you put some of your extra money into tangibles that will help you achieve more of a self-reliant life. Things that will help you sustain your household during a time of hardship (for example). Think of your necessities in life and then come up with methods to augment your consumption in a more self sustaining way. Crops. Gardening. Alternative Energy. Investing into your own household.

Today’s credit unions are generally separated from some of the risks within the traditional banking system. Using a credit union is probably a good choice for many people. Have a look at their balance sheets to get an idea of their health (loans versus cash on hand, etc..).

Using a smaller local ‘traditional’ bank may be a better idea than a large (empty shell) TBTF bank. There are resources online to discover the general ratings and health of banks (but they probably won’t show you everything, like their exposure to derivatives, etc..).

Some people might decide not to use a bank at all. This becomes much more difficult though while trying to function in today’s world, however it is possible. Maybe you set up a bank account with minimums so that you can cash your checks.

On another note, transacting with CASH is a great way to reduce your expenses. The reason for this is because handing over cash (for whatever) ‘feels’ more like money than handing over a debit card for immediate withdrawal from your checking account (for example). Because of this real phenomenon, you will subconsciously spend less.

The banking cartel today is getting multiple benefits from zero interest rate policies. Although the Federal Reserve is a PRIVATE ENTITY, their government cohorts are able to pay less on their enormous borrowed debt. Additionally, since savers get nothing in return for their deposits (some places even have NEGATIVE interest rates), people are more encouraged to put their money into risky vehicles such as the stock market (similar with their 401k’s) which in turn helps to keep the system pumped up. Zero interest rate policies are also largely enabling many companies to buy back their own stocks, which in turn pumps up the market (rather than based on real company fundamentals). There’s more, but I’ll leave it at that.

What are some of your ideas around the notion of becoming your own banker?

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I am separated from federal service and have a thrift savings plan (401k for federal employees) and I’ve seriously considering cashing out to pay off my mortgage. I am too young to cash out without penalties and I can accept that. I was wondering what others thought of this plan. I would like to do this now while there is sufficient funds to pay off debt.
Thanks for reading

I cashed out my retirement accounts and suffered through the penalties I incurred. It was painful to think about but got easier once I realized it had to be done. If you sincerely believe the economic/banking system is going to collapse and the government will take what is yours then the decision is pretty easy. Once I had my checks cashed, I was sleeping better. Take the steps you need to and don’t let normalcy bias stop you from doing what you know has to be done. For what it’s worth, I invested most of the proceeds in home energy savings upgrades, so I will still get a return on my investments.

When I turned 59.5 I took out all but about 10 percent. Rolled 60 percent into a gold/ silver IRA, that saved taxes on that amount. The penalties, I thought as the taxes I would have to pay anyway. I am still working and just put in the matching amount.

My best advice is: sell your house and get into an apartment or travel trailer ( get out of debt). A travel trailer permits mobility to leave the city in times of turmol ( social unrest ) which is coming. Turn as much of your money as possible into coin ( silver if possible). Minimize your debt or pay it off with the proceeds from the sale of your house; do not be a creditor. Find as many like minded folks as possible and prove to them that you are trust worthy( dependable in times of trouble). If money permits purchase ( cash sale) a few acres in the country that you can safely relocate to in times of trouble. Purchase a few guns/ammo for self defense if trouble comes. Best of luck,

Everyone with 401s on survival blogs, etc. are doing this; even with the penalty, that loss doesn’t outweigh all loss…and it will come to that.

It can be a tough financial ‘hit’ to cash out a 401k (I’m not advising one way or the other). But I believe that the early withdrawal penalty is 10% off the top, plus the dollar amount of the entire distribution will be considered and taxed as ‘ordinary income’ (which will be added to your other income for that year) and therefore will all be taxed at the corresponding higher tax rate of everything added together. Generally, you might take an overall tax hit somewhere between 25 – 50% (depending of course on the tax bracket – plus penalty).

Adding insult to injury, you will probably be subject to the Alternative Minimum Tax. Didn’t know you were one of the eight richest families in America?

Most 401Ks have a loan provision that might suit your needs.

Thanks for all the replies. With all things considered, I would likely withdraw the amount sometime in the next few days. Come tax time 2015, the tax would be negligible since I’ve been unemployed for 2014. I can withdraw under a hardship which would cap that tax at 10%.

As far as loans go, I’ve borrowed against it in the past and repaid those through normal paycheck deductions. I have to be employed to take a loan.

The reason I’m considering cashing out is that there isn’t a whole lot in there to begin with and from what I figure, there would be enough to pay off my mortgage now. I’d think I’d rather do that now before any economic collapse.

again, thanks for all your input.

My wife and I have been withdrawing from our 401ks for the past few years and will do it again come next year and continue to do so till its all gone or the system crashes then we will lose what we have.

We closed my wifes already and would like close mine but dont want to get hit too hard with fees and taxes.

I am trying to get my wife used to only having minimal $$ in her account and pay cash for everything but it is a struggle.

Ken- Just want to say this is the first time, I have never commented on your site before but you are on fire lately with your info. I have been checking it out for the past several months and have to say you do a very good job, very informative and easy to load. No pop ups. Please continue your great work.

Hope everyone had a great Christmas and wish you all the best in 2015 (god be with us).

I am looking to start buying gold/silver. Is the best place a private owned jewelry shop? Anybody got some good advice or thoughts?

11HE9 out

No disrespect intended to any of you, but the inherited problem is that it is your money, you earned it, and still can’t do what you want with it w/o serious minus column ramifications. It shouldn’t be this way, like you didn’t already know that, right.

With what is coming our way, gold and silver, great or small quantities, won’t do us any good what so ever. All you are doing is taking your hard earned money and giving it to someone else for another form of currency. Has anyone ever stopped to think that if gold and silver are so precious then why do the owners sell them to you for money. Think about that for awhile.

porkybeans: I keep reading your comments and wondering whether your problem is a very low IQ, the fact that you´re completely delusional or perhaps even that you are one of the many trolls that work these sites for our corrupted government and TPTB. It seems like everything you say is completely offbase and contrary to the information most of us outside of the MSM believe. The excellent advice given in this article (and just about everything on this site) is extremely valuable, for that matter most of the comments tend to also be quite insightful. If you cant see that owning hard assets (gold and silver are ideal, especially at current prices) to ensure against future financial turmoil, then I suspect you will be even ¨poorer¨ when the coming colapse occurs – but then again, you´re probably just a troll anyway…

Is that personal attack really necessary? Forums are places to voice their opinions and maybe, just maybe learn something in the process.
Praise, Correct, Praise.
Let’s try to use more advanced communication skills in the future.


leave the city in times of turmol (turmoil)??
Even the smartest survivalist knows all headed out of the city using the same interstate is disastrous.
The ice forming on the interstates in a matter of hours in Texas last winter should have taught us something.

Thank you Ken for stating this so accurately.

We are hanging on by pure manipulation. That hasn’t worked in the past and won’t work this time.

I would be careful useing a 401k loan to pay down a mortgage. If you fail to repay the 401k loan as required, that ‘default’ may have nasty tax consequences at a time when you don’t have acess to the 401k cash to pay them. You uncle sam will be very angry with you then.

A lot to be said for no mortgage. Consider that the way things are going the penalty you’ll pay will be paltry when you consider the worth of the funds lost now will be miniscule compared to the worth of them in 10 years or so. We took early social security (age 62) as the likelihood of no funding for it in the near future is always possible. Bird in the hand versus two in the bush sort of thing. The feds say it is funded for now but who trusts them now anymore. I’d stay away from apartments as the landlord will always raise the rent to cover his losses and we are all taking losses. Travel trailers might be okay if you can find a really good one. Cheap ones fall apart. Having a workable piece of property to legally put it on is important. Best of luck to you and yours in the new year.

A travel trailer requires gas and the use of roadways. If martial law is declared, the government will take over all gas, modes of transportation, and roadways. (Executive Order 10997 and 10990) It is best to have it already parked at your desired location before disaster happens, especially if you live near large urban areas.

The government can also confiscate all food sources, Executive Order 10998. Best to have a food cache buried somewhere so they won’t leave you starving.

There is no theft or fire threat if paper money is buried in a plastic bag so metal detectors can’t find it. However, coins could be found this way and safes can be stolen, unless it is buried in a place no one would look or suspect.

What about a safe dposit box to keep your valuables in . If the banks bails in you can still get to it can’t you ?

Depends on how good you are at opening locked doors. The bank just might be closed. The vault just might be closed. Safe deposit boxes used to have two keys. You probably only have one of them.

What I mean is can they by the new law passed on the bail in keep you from getting your property from the box or claim it like they would your deposits .

Laws like that already exist for ‘dormant’ accounts. All they need to do is redefine the meaning of ‘dormant’.

What is inside the safe deposit box that you rent belongs to you. The bank has no claim on it. The recent G20 bail-in law only refers to confiscating uninsured deposits at the Too-Big-To-Fail banks. There is no bail-in law for other “smaller” U.S banks. Uninsured deposits are still at risk though if a bank fails.