Low Hanging Fruit

Welcome to another edition of Mr. Stillman's opus Walter Strozier alongside John Stillman, John doing well servicing Greg looking forward to our conversation today were talking about opportunities for improvement.

It's kind of funny. In addition to helping people here in the Triangle, John.

We also talk with financial advisors all across the country who have radio shows us we gets offers a really unique stories and opinions from so many different sources.

It's kinda one of the unique things that we get to be a part of, and a lot of times we get feedback that after advisors give a second opinion to somebody on their financial plan.

A lot of times what we're finding is that it's not necessarily somebody needs a complete overhaul of their plan and a lot of times it's just little tweaking that needs to be done little, little areas for improvement that need to be addressed, one for a lot of people. The idea of having a complex financial plan little bit overwhelming and that's a tough step for some people making and so what were talking about here today is to some about the low hanging fruit if you will. Some of the things that are easier to do and not quite as overwhelming as the big step okay with the big picture just a little almost transactional things that you can check off and start why did that and I improve my situation, like try to lose weight. If you think about it of dieting and then you also that exercise and you got it at discipline these other areas of your life.

It all gets overwhelming, but trying to just improve things. One by one, it becomes more manageable.

What illegal saying you eat an elephant one bite at times and I always wondered why anybody want to eat an elephant in the first place. But is that a delicacy anywhere. Maybe so, simply to be pretty gamy, pretty tough meat would be highly defensible part of the body get from another conversation for another day so so but some of those common areas for improvement that are relatively easy to address what has to be and I'm sure this is maybe pretty popular, especially right now way too much money in cash for folks that's identified a lot of the times is one of the top areas of improvement for folks you very often we see people with a lot of money in the bank and they're intending and they have intended for a long time to do something different with it. They just haven't done it yet and if you put it off too long. Suddenly that cash starts piling up. So for some people. They just you, as a matter of their monthly cash flow. They're putting two or $3000 a month over into the savings account with the bank. Well you do that for a few years and next thing you know you got hundred thousand dollars sitting in cash. I have a lot of clients with rental property and you have a lot of rental income coming in. The certainly they need a bigger emergency fund than the average person because of all these properties but very often they got five or 6000 a month going into the bank account and there piling up cash may be to buy a new property at some point, but if they don't buy that new property. Suddenly they have a lot of cash on hand sometimes you get an inheritance in use, part the money there in cash or could be any sort of windfall you get.

Maybe you sell a piece of property or something. You stick the money in cash intending to do something with it, but you never get around to doing it and so what we find is that those are very easy opportunities for some might say I look. I noticed cash is sitting there collecting dust. I can do something more efficient with it and so you know that's where there's some opportunities to be more efficient. Having a lot of money in cash isn't a bad thing.

It's just very inefficient. Certainly better than having nothing in cash right but certainly you don't want a refund that bucket.

Yes, that's a good way to put it. Don't let that bucket runneth over. King James version's and other in other ways where we see this kind of happen where people sort of maybe just by not paying attention or just it gets kind of pushed under the radar because this is one of those things that you just sort of you know, you purchase and then sort of forget about it and you never really look at it again.

That's life insurance policies and some of those old policies you have hanging around could be kind of in that same vein could be working more efficiently for you and it's counterintuitive because everything has gotten more expensive over the years right eggs and milk and cars, home cars, real estate, maybe electronically big-screen TVs have actually gotten cheaper but they still are expensive when they come out, but then as they're out for a couple months. He related it down, but if you compare 64 inch TV thing there is this you're probably right here that a decade ago. It's actually cheaper now and Sanibel.

I've not successful.

Whatever you get the point. So the other thing that's actually gotten cheaper over the years is life insurance. So, life insurance, and TV screen. For a couple reasons.

Life insurance companies are run a lot better more efficiently than they used to be 20 years ago and secondly actuarial tables so we used to call it life expectancy tables. Now there are more often referred to as longevity tables because people are living longer and so it what does that mean for life insurance. While the longer you live the longer the life insurance company has to collect premiums from you before they have to pay out a death benefit right so life insurance is actually gotten cheaper. What does that mean for that old policies you have very often will see people come in they have a policy that they got in the 90s or even 80s or maybe even just 15 years ago.

Or it could be a policy that their parents got for them when they were kids and they build up the cash value of let's say $50,000 within that account. Well, very often let's say they've got $50,000 as a cash value and their paying $2000 a year as their premium okay but very often we can take and let's say they've got $275,000 death benefit of $50,000 built up cash value their paying $2000 a year into that account death benefit of 275. Very often we can take that $50,000 moved to the new policy get rid of the $2000 in premium altogether. Moving forwards or just just done it fit at the 50 put in and then have that same death benefit still in place. So That's completely positive springboard. It could be that you reduce the premium or maybe you say what I want to keep everything the same, keeping what I'm paying but moving to a new policy and suddenly now get more death benefit that could go either way. Also certainly worth an analysis on those things. If you have old cash value life insurance policies very, very often there's an opportunity to have the same thing more cheaply, or pay the same and have a better policy.

The other thing is you can add the accelerated death benefit to those policies. Those that really exist a couple of decades ago, but now you can add the accelerated death benefit if you move into new policy. For instance, that if you get that $200,000 death benefit that basically means you have $200,000 to go toward long-term care. If you need it. Obviously, it no longer is a death benefit if you spend on that, but it allows you to get the death benefit earlier. The pay for your care.

People might be thinking well this a policy back in the 90s. I'm 20, 25 years older than I was back then. How is that going to be viable.

It seems like it would be miles more expensive, even if overtime is decreased because I'm so much older. Well, if it was a permanent policy.

Your age has nothing to do with it because when you got the policy they were banking on you paying for your whole life and then paying you out whenever you die is not a term policy. It is a permanent policy so they're still going to pay you out when you die, it's is now they're expecting you to live longer than they were expecting you to live in the 90s. Thank you very, very interesting. Is your century and see all the flexibility we want.

We will go further down the life insurance rabbit hole, but very interesting discussion about something that you would think would be so simple but, and there's lots of direction but again that's low hanging fruit. It's an easy thing that you can do to improve your situation. Excellent. These are the low hanging fruits. I like that of financial and debt retirement planning other way to put that easy opportunities for improvement in your financial plan.

Too much in cash. Old life insurance policies to good examples being of all things old 401(k)s left for the past employer very common thing that people kind of encounter. I see it all the time and it is one of those things where it's just so easy to make that something you do later and that a few years ago Biomet old 401(k)s still sitting a couple problems with that one. You just have that limited menu of investment options what that company says you can invest in those 10 or 12 mutual funds are your only choices. I've seen some situations where once you no longer with the company you don't even have access to the account you can't login and make changes to it. In some cases, not in all cases, but in some cases you can't even change your allocation so it's truly on autopilot and you can't touch it. In those situations, it makes so much more sense to roll that over to an IRA where you can invest in whatever you want and you can control the costs. Instead of being at the mercy of that menu of choices and the administrative costs of those funds so I get low hanging fruit really easy to take that old account you're not contributing to anymore. Nobody's managing it is just kinda dangling out there a vestigial organ to use a biology, how I did write where chronic come across that today. So very often you can take that money and be much more efficient with vestigial yeah so like they have snake skeletons from supposedly millions of years ago account with a the snakes had feet but no supposedly, like the effete defeat evolved away and so it's a vestigial organ at a no longer needed organ is that something is true definition of that's probably a bad example but studies are really organ space. You're right.

It's basically how I remember it from still interested in a vestigial body part doesn't have to be in organ if you listen to the podcast and you know the true definition of a vestigial organ guarantee somebody does right into John and please educate them on the absolute proper way to put that but that's good that they can be the clue question this week: you get a free something. What can we give you a free snakeskin snakeskin like that's but man we can. He has plenty of those lying around that can lead to yet every great bag.

Another get a snakeskin from that will hook you well those are some really good tips. Very, very easy opportunities to improve your financial plan. There are other ways as well.

But those are three quick tips on some of the things that might be dangling in your financial plan that are easy to grab that low hanging fruit and improve those three easy steps really will put you on the path of much better financial plan. If you have those opportunities to improve job thanks always for the help. I believe the human appendix will also be a vestigial organ.

It was at one time, theoretically used for something but now it's just kind of take it out just cause problems now so don't let other vestigial organs that might cause you problems like appendicitis in your body you want appendicitis and you're really stretching here what male nipples another exam this feel but I am reminded of the meet the parents clip I have nipples Greg can you look me.

Maybe in the past but not quite measure opportunities for improvement were to get out of the use before gets dodgy.

That's another episode of Mr. Stillman's opus. Thanks John for the time, for several talking next