The Family Banking Strategy can transform how business owners manage debt, seize opportunities, and build lasting wealth. In this episode, Wade Reed sits down with Dr. Justin Southall, chiropractor and entrepreneur, to share how he used whole life insurance policies to pay off loans, purchase real estate, and grow his clinics without relying on traditional banks. Justin explains how family banking provides financial flexibility, why he chose this strategy over conventional retirement accounts, and how being in a position of cash has allowed him to act quickly on life-changing opportunities. Whether you’re a small business owner, real estate investor, or just exploring alternative wealth strategies, this episode will show you how to take control of your finances and turn liabilities into assets.
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Building A Family Bank: Real-Life Strategies For Financial Freedom With Dr. Justin Southall
We are continuing our topic of the family bank strategy. In this episode, I want to bring some practical applications. I have a guest with me. His name’s Justin Southall. Justin, welcome.
Thanks for having me, Wade. I appreciate it.
You’re welcome. The relationship I have with Justin has been since of December 2016. Justin and I have just connected. We have similar family dynamics. We’re small business owners. We had a lot of interesting conversations over the years about money and the different practical things that come up from car purchases to debt repayment to commercial building purchases of lot and building and developing the land into a building and many other things. If you don’t mind, tell us a little bit about yourself, your family, and your business. Go from there.
From Pole Vaulting To Chiropractic: Dr. Southall’s Unlikely Path
I’m Dr. Justin Southall. I have two chiropractic clinics in the State of Alabama. I’ve got a wife and three kids. We decided to move to Alabama in 2009 after a couple of years in Baton Rouge practicing a different chiropractic that I didn’t love. We ended up finding Fairhope, Alabama and fell in love. We started our practice at the very beginning of 2010. We grew it. In 2017, I decided to open a second clinic across the bay from us. It’s about 30 minutes. As we did that, we started growing even more, then we got into where we needed to build a building and it’s taken off.
What is it about chiropractic that got you interested?
When I was sixteen, end of my sophomore year in high school, I was big into sports and thought I was going to play college football. I had offers to play at West Virginia and Duke. That summer, I was at BMI basketball camp with my team and sprained my ankle badly. That week, I had no access to any trainers or anything like that because I was far away from where my parents worked.
I got back home and my mom said, “I’m going to take you to your athletic trainer.” That was our team trainer as an eighth grader. Here I am getting ready to be a junior, I can’t walk with a sprained ankle and all swollen up. I walked into this chiropractic clinic called Worldwide Chiropractic and Sports Medicine. I was going for sports medicine and knew nothing about chiropractic.
I walked in and the trainer was right there. She greeted me and was like, “You got to meet our chiropractor.” He is Bon Jovi’s chiropractor. He ends up also traveling with Guns N’ Roses. He was also an Olympic trials pole vaulter. He said, “You’re a pole vaulter.” I’m like, “What? We don’t even have a pole vault.” It’s very odd. He was like, “How fast are you? How tall are you?” He was quizzing me like crazy. He knew from my frame that I was a pole vaulter. He said, “I’m going to turn you into a state champion.” I was like, “Sure, you are.”
I called him my coach. I’m like, “Coach, we got to have pole vaulter.” He was like, “Why? We haven’t had a pole vaulter in years.” I said, “I’m going to win states this year.” He was like, “Who’s going to coach you?” I said, “This chiropractor.” Long story short, I won states two years in a row, full-ride division on track and field for pole vaulting, which was a good decision. Sometimes I regret it when I’m watching Saturday college football but it was a free ride and I couldn’t pass that up at the time.
While in track and field, I had chronic injuries. I was going from just being a pole vaulter to a decathlete. Decathletes stay chronically injured because of all the overuse and training. The athletic trainers, the medical doctors, and all the staff there at the school were not being able to help me. I had a hamstring or groin injury. It was always like, “Here, take this Celebrex or this and that.”
I ended up going back to my chiropractor. He would fix me up, come back healthy, train until overuse injury happened again, and then go through that same process. I tore my ACL. After the surgery, I came back for spring break and rehabbed it at his clinic because I was back home and that was the only place to do it in town. I came back the week after rehabbing and saw the surgeon. He’s like, “Your knee is amazing. What have you been doing?” I was like, “It’s my chiropractor.” He’s like, “That’s awesome.”
My plan was to be an orthopedic surgeon but after seeing the results that I was getting with this chiropractor, I went back home and had a conversation with him. I was like, “I’m discouraged with orthopedics. I don’t know which route I want to go.” He said, “Why haven’t you thought about chiropractic? You’ve lived in here. We’ve helped you. You perform better.” That got me started in the chiropractic world.
It sounds like the experience of chiropractic isn’t just about the neck and spine but the extremities as well.
That’s right. Our clinic is in Fairhope and I was practicing a different style in Baton Rouge. In Baton Rouge, we were mainly treating pain and car accident patients. It didn’t fit my persona. I still treat it here occasionally. We may have 5% of our patients who do that. Most of them are patients we’ve already treated but we specialize in soft tissue injuries, sports injuries, fascia, and things like that that the average chiropractor doesn’t do.
It has to do with sports medicine. I don’t quite get the extent of it because it’s been a while since we’ve talked about it but that’s pretty incredible. It’s fun. You guys get a lot of good results, similar to what you got for your patients.
I would say 80% of our patients get well with the techniques we do when on average it’s 50% to 60% percent in the profession.
I bet you feel fulfilled in the work you’re doing.
I do. Occasionally, I wish I could still be a surgeon when I’m in the hospital but that doesn’t happen very often.
Unlocking Financial Freedom With Whole Life Insurance
Let’s transition to the family bank strategy. As I recall, when we first met in December 2016 as my notes reflect, you had already set up a whole life insurance policy. Tell us what got you into the idea of having a whole life policy in the first place.
We opened our clinic in 2010. After a year or two, we started making some profits. I was trying to figure out how to set up retirement for my family. I met with an advisor. They wanted me to get an IRA and start putting $11,000 into that. You have diversified stocks and bonds. I wasn’t seeing the results I wanted. My wife is a chiropractor as well. We still had her $162,000 and my $158,000 chiropractic loan.
It wasn’t budging. We’re making huge debt down payments chunking our way. I didn’t feel comfortable with it because I didn’t know what to do. There was a chiropractor I listened to on a show. He talked about debt reduction and how to pay off loans. I was like, “You got me hooked.” This particular guy had paid off over $1 million in loans, including his clinic building and all that, within a couple of years. It struck some good interest.
I spoke and learned from him. I still didn’t buy into the whole life policy because I was still trying to understand the concept. For a lot of people, it’s difficult to understand. From there, I bought Nelson Nash’s book then I read another book that Dwayne Burnell wrote, which helped me understand it a lot more. Once I grasped that concept, we started our first two policies with Toby, my wife, and myself.
Whole life policies are assets and thereby, they can be collateralized.
It was the desire to pay up debt. The whole idea was how we somehow use a whole life policy to help with debt repayment. That’s the concept. Tell us more about how that became a practical thing. How could that work out and help pay off debt?
I was already paying the debt and these loans every month. I was paying for my car and my wife’s car. I was paying our student loans, which were several thousand dollars a month. The first thing we did, my policy was $60,000 a year and $24,000 in premium. I would put in an extra $36,000 a year. The very first thing I did was I took the loan I had on my car, paid the policy, pulled the money from the policy, which I took a loan, and paid my car off and my wife’s car.
What I was already paying towards that, I paid back into the policy each month. I was paying that back. When I’m taking that loan, that policy continues to grow with that 4% rate plus the dividends. That was the first thing I did. I was testing the waters. It was $60,000 to test the waters but I felt comfortable. From all the research I did, I knew that I was going to be in it for a long-term process. That long-term process was going to give me the financial future and the retirement security that I was looking for.
Building A Family Bank: Your Money, Your Way
Let’s break that down a little bit better, perhaps more clearly. You bought a whole life policy that had the ability to hold $60,000 a year. Part of that is $24,000, which was the premium. That’s often what we call the base premium. This other $36,000 goes into what’s called the paid-up addition rider. That’s what builds the cash value quickly in the policy. You had enough savings that you could fund that quickly, perhaps in a lump sum, and then immediately take a loan against the policy. All $60,000 is in the policy. You’re taking a loan for what you need to pay off the car and then you pay off the car loan.
In essence, you refinance the car. That’s what’s happening. You’re refinancing the car from the bank to yourself through the policy. You take the same payment you were making to the bank. Instead, you take that payment and replenish the loan you took against the policy. You have more control over your debt. You’re not forced to make a principal and interest payment to the bank. Instead, you have the freedom to pay back the loan at your preference. We want to do at least what we were doing but if you had a tough moment, you could stop doing that for a while so you have more control over it.
What’s cool about the whole life is the money that gets in the policy is used as collateral. The car that you had a loan on, you still have the car and all its use, even though you had a loan against it. Homeowners have loans against their houses and those appreciate in value. We have full use of the house. It also has a loan against it. It’s the same way with a life insurance policy that can have a loan against it and it continues to grow in value. We have full use of it in the event of death. The death benefit pays out. The cash value builds up and grows, even though there’s a loan against it.
We have this compounding positive growth while we have the accessibility of the money to do these larger purchases like paying off a car or buying a new car, and financing it yourself rather than going through a traditional bank. That’s one of the most practical use cases of whole life insurance, those reasonably priced car purchases, $15,000 to $50,000, depending on what you get. Fast forward, I remember looking at that plan that Dwayne Burnell put together for you. It included paying off the student loans as well.
That was the biggest thing. We started that policy in 2015. In ‘17 or maybe ‘18, we had been able to keep funding it. We had enough money to pay off the student loan. I remember the day my wife and I were flying out to the Wealth Factory seminar. That’s where we met you. That was a fast-forward year because I remember us sitting in the parking lot. I made the call to the student loan department and got my payoff. Right there on the phone, I paid it off, utilizing the policy.
It was a happy dance. My wife was so excited. That was a giant gorilla on my back for years. I graduated in 2007. I was like, “I’ll never going to pay this massive amount of student loan debt away. I’ll never going to pay it off.” We paid it off using the policy and started paying that back towards the policy. Within a couple of years, it was truly all gone. All of the money was back into the policy.
I get the question a lot, “What do we do first, savings, debt repayment, or investing in retirement plans?” The answer to the family bank strategy with the use of whole life insurance policies specifically structured for high cash value quickly, often what we call high early cash value, is this ability to take control over your long-term savings. It’s in your name. It’s private. It doesn’t have any government control over it.
When you choose to use it, it acts like cash. You refinance the student loan into the policy. You have control over the amount of payment. You can accelerate it and do it slowly. If you have a lump sum come in from a windfall of a good month in business, maybe you’re flipping a real estate property, or you get an inheritance, you can funnel that money into the policy. You’re able to save, protect in case of early death, and have tax-advantaged growth and tax-free access.
Eventually, we can talk about this as a retirement income source as well. It could be a tax-free retirement income source for us. You accomplished two major things that virtually all my clients have been dealing with, which are student loan repayment and car payoff. There are things that become more interesting like business growth and real estate for your business. Let’s talk about what you’ve done with the policy to support those things.
In 2018 and ‘19, we started looking to expand out of our clinic. We were in 2,500 square feet and were outgrowing the place. Locally, I couldn’t find a place to build and searched forever. Finally, this random vacant lot showed up that was wooded. No one knew it was available. It was two blocks from our other clinic. We were able to make an offer on it quickly. I was able to pull from the policy without needing to go through a bank or anything, avoiding delays, and making a cash offer, which was huge because the seller was very interested in not having delays or anything like that.
In conjunction with that, we were able to buy a full acre, allowing us to put two buildings on it. We were able to have a lease tenant in one of the buildings as well as use our clinic in the other building. We were able to structure separate LLCs and do different things like that. The whole time, we were able to put the money back into that policy through the repayment.
It’s through rents that tenants were paying I love this concept of when you’re in a position of cash, opportunities seek you out. You put yourself in a position of cash, both bank accounts and whole life policies. When this opportunity showed up for land, you got to snatch it up quickly. Since you were in that position of cash and didn’t need a loan, you were able to acquire land at a discount that was perfect for your needs.
I remember when we first talked about this. You were thinking about a single building. Some mentor in your life said, “If you’re going to do one, you might as well do two.” You thought, “I suppose I could think a little bigger than what I originally thought,” so you did that. You got a ten-year lease on that second building for the tenant.
He’s paying $6,000 a month. Do the math.
There are three pillars to personal finance: cash flow, protection, and wealth creation.
You got the space that you needed that was bigger than what you had. You had another tenant in that same building that you’re in.
Here we are again with another chance to purchase an almost-acre lot where our second clinic opened up. Within days, I had two possible extra tenants, PT and our athletic trainer, who both were like, “I want to join you.” If possible, I’ll have two extra tenants helping pay down that mortgage.
The Domino Effect: How Assets Build Upon Assets
There’s power in the compounding effect of money. You start an asset. The asset that we first start is ourselves and our knowledge base. We then apply that to employment or business. In your case, you chose to be in business for yourself as a chiropractor offering a specialized skillset and servicing athletes. That’s produced healthy income for you and your family, applying that income and not spending it all, but setting it aside purposefully using whole life policies and allowing that cash that’s built up in there to give you a chance to make careful decisions about these expansion activities like the second clinic and the office buildings that you built. You’re in a position of cash again.
It worries out to do those buildings. Sometimes we buy assets, get them stabilized, go through the difficulties of those types of bigger projects, take a breather, and then get ready to do another one. You’re on the cusp of this second round of development of a building that will add not only the value of the asset and the rents that come in but also other tax advantages of owning real estate. A lot of my audiences are thinking about what kind of real estate ventures to be involved in.
Developing your building is extensive and challenging so you may or may not choose to do that. A lot of the doctors I work with want to do something like that. You get accelerated depreciation on that building. Depreciation is one of those powerful tax advantages because it’s a paper transaction but it’s real. It reduces your taxes dramatically. When you build a building, you can accelerate its depreciation based on tax law called a cost segregation study. The costs of building are recovered quickly. You get the cashback in tax savings to help replenish the coffers. The building becomes self-sustaining through the rents being paid into it.
It’s an exciting time. We’re seeing the compounding effect, batting assets on assets and the pile is getting bigger. As the pile gets bigger, total growth is exponentially bigger. It’s not just about money in a savings account. It’s about the practical application of what assets you choose to purchase. If we stay in the stock market and experience the ups and downs, it can be devastating and exciting. There’s not a lot of progress.
We’ve got to do more interesting things. I can’t say it better than buying assets that produce cashflow for you and tax advantages where possible. There’s a little bit of a conundrum we were talking about. You’ve got this second home you built, this dream lake house, because you love to be on the lake as a family. You found a property and built it up. How did you fund that?
Using the cash value we have through the policies, we joined with Coastal States Bank and did a cash value line of credit, where I’m able to pull from it at any time using the cash values of my policy. We were able to build this $800,000 lake house. I bought the lot initially, built the lake house, and never once went to a bank. The builder was like, “I need to see some bank stuff.” I‘m like, “I’m the banker and I’m paying you cash.” He didn’t ask any more questions. I said, “Give me anywhere from 72 hours to a week if you need a deposit or a drawdown.” He was good with that. It was simple utilizing the policy, paying back what I would be paying a typical mortgage for that lake house. I don’t have that debt sitting on some bank’s note or affecting my credit at all.
It’s being in a position of cash. What’s interesting about what you said is Coastal States Bank specializes, at least in part, in recognizing whole life policies as assets. Thereby, they can be collateralized. Not only did you have the policies set up with the other agent but in 2020, you and I worked together in setting up some additional policies for you and your wife. You’ve got four life insurance policies. Generally, if you need access to a policy, you have to go to each individual policy and request a loan from each of them. What Coastal States Bank and some other institutions do is collateralize all four together into a single line of credit.
For those reading, if you have multiple policies and a significant amount of cash value built up in there, that’s something you might look into a single line of credit with an external bank to offer simpler access to those policy cash values through a single line of credit. You utilized that to get this lake house. As you consider the land purchase for the possible building of the second clinic, this question comes up, “Does it make sense to get an actual mortgage on the lake house, repay some of the line of credit against the cash value, and then have more liquidity for this next project?” Walk us through that thought process and possibilities.
My thought process was second home interest rates are about six and a quarter with good credit, which we have. That’s what I’m paying into the cash value on the credit from the amount drawn out. A business or commercial loan is typically higher than a second home. Luckily, this building I’m sitting in was locked in at 4% in 2020 when COVID hit and all the rates went crazy.
The home mortgage was 2.25% to 2.5%. That’s what my mortgage is at. I have no desire to get rid of that debt because 2.5% is nothing. If I have to finance this building that’s going to be $1.5 million to $2 million for the next clinic, I don’t want an interest rate above 6.25%. The commercial loan will probably be 7%, 8%, 9%, or 10%, which makes a $1.5 million project a $14,000 to $15,000 a month payment.
Beyond The Balance Sheet: The 3 Pillars Of True Wealth
We’re considering what to do to reorganize the financial cash position. Your line of credit is about 6.25%. You can get a mortgage at 6.25% and lock in a 30-year mortgage to keep the cashflow cost on that second house mortgage low, freeing up a bunch of cashflow that was otherwise going into repaying the line of credit. The lump sum from the mortgage can repay the line of credit, freeing up available cash that can allow you to incrementally pay toward that building project.
Maybe we’ll see lower rates in the next 6 months to 1 year as this project moves forward. You can lock in when the timing is right. The commercial mortgage on that building will be from 15 to 25 years, depending on whether you’re using a traditional bank or SBA financing. Using policies like this buys us options to shift things back and forth. If we manage things well, we can choose the type of lending, whether it’s commercial lending, mortgage lending, a bank loan, or a life insurance loan. In all these cases, the intention is to be proactive and acquire assets while maintaining a healthy cashflow.
I want to remind you that there are three pillars to personal finance, cashflow, protection, and wealth creation. We’re working on cashflow through possible discussions of refinancing the loans. We’re looking at wealth building by acquiring assets and protection by having life insurance in place, which also, as a side note, means money in the policy as cash value is protected against lawsuits and bankruptcy. If you got into a tough situation as a business owner or with a tenant and they sued you, the money in your policies is protected. Whereas, if it was in the bank, it would be available. That’s called asset protection, in addition to the income protection from the death benefit.
Justin, I appreciate your time and open session. It’s so cool to see the real practical applications of this family bank strategy. We didn’t get into the long-term but being in your early 40s, about 20 to 30 years before a formal retirement might happen, you’ll have a substantial amount available as tax-free income, in addition to the cashflows from your business and real estate ventures.
If you’re a chiropractor or need chiropractic services, he’s in Fairhope, Alabama with an incredible clinic. He’s open to sharing ideas with other chiropractors. Let me know. I can help connect you. If you’re interested in whole life policies, I’m happy to support you. Reach out and we’ll get some time scheduled. Thanks for reading. Please like, subscribe, and leave comments on the YouTube page. Leave us a review. I love you, guys. See you in the next episode.
Episode Resources
- Justin Southall on LinkedIn
- Eastern Shore Chiropractic & Sports Clinic on Facebook
- Eastern Shore Chiropractic
About Dr. Justin Southall
Next, he pursued his dream of chiropractic at Parker College of Chiropractic in Dallas, Texas, where he graduated cum laude in 2007. Before relocating to the Fairhope chiropractic clinic and the Eastern Shore in 2010, Dr. Southall practiced chiropractic for 2 years in Baton Rouge, LA at Sonnier Chiropractic Clinic.
He is currently the Team Chiropractor for the University of South Alabama for all sports, and he was formerly the Team Fascial Distortion Model specialist and chiropractor for the 2014 Fairhope Pirate football team. He was an instructor for Fascial Distortion Model where he helped teach the Arizona Diamondbacks and LSU’s athletic training medical staff, as well as practitioners across the nation.
He is full body certified including complex protocols, nerve entrapments and Master’s in Active Release Technique (ART) and has completed training in SFMA and Functional Movement Systems.
Dr. Southall met his wife, Dr. Tobie Southall, at Parker College of Chiropractic in Dallas in September of 2005 and was married in November of 2006. The two of them are proud parents of Kaden ‘Fisher’ Southall, Killian Lancaster Southall, and Sadie Madden Southall.