The Thirty Thousand Foot View – Episode 104

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[00:01] Welcome to the Prosperity Podcast, fresh alternative personal finance talk for independent thinkers who prosper outside of Wall Street. Here’s your host, bestselling author, Kim D.H. Butler and No BS Money Guy, Todd Strobel. Hey everybody, welcome to another edition of the Prosperity Podcast. This is No BS Money Guy, Todd Strobel. Once again, we have our co-host and bestselling financial author, Kim Butler with us today. And today we’re going to be talking about the 30,000 foot view. And what we mean by that is, is it means when you are looking at your money, you can either be right on the ground with it, or you can be so far above it that you can’t even see the paper that the financial transactions are written on.

[00:52] And the 30,000 foot view allows you to see not only the environment that you’re in, but the environment that is around you and the opportunities and quite frankly, the dangers that exist in the neighborhood, as well as your little protected piece of paper. Hey Kim, how are you? Very fine, thank you. Yeah, this is a great discussion and it’s coming at a perfect time because I’ve spent the last two or three months really working on something that will enable our clients, those that want it to more easily have that 30,000 foot view, which is you’ve identified it, is the perfect place in the middle. You’re not too close to the ground where what’s the saying, you can’t see the forest for the trees, and yet you’re not too far up in the clouds where you

[01:47] clearly don’t know what’s going on. And one of the biggest challenges that a typical person has in their financial world is looking at everything together because they’ll probably have a checkbook. Well, that shows some cash flow in and out, but that doesn’t have the whole picture. They might have a balance sheet. That is something where assets are listed. Assets are everything that you own and liabilities are listed. That’s everything that you owe. And then those are put together to create what’s called a net worth This is something a bank usually asks for, a list of your assets, a list of your liabilities, and then a net worth statement. But that doesn’t tell the whole picture. Then you might have a list of your life insurance policies, but that doesn’t

[02:38] tell the whole picture. And oftentimes, those life insurance policies are not listed on either the balance sheet or the checking account environment. And then you also have all of your other protection mechanisms, things like car insurance, home insurance, a liability umbrella, wills, trust, safe deposit boxes, medical powers of attorney, et cetera. And then, of course, you have investment real estate while it may show up on the balance sheet. That’s not the full story. And so we try to pull this thing called an income statement, which is designed to be a little bit bigger than the checking account. It’s designed to show what’s coming in and what’s going out. And cash flowing investment real estate looks great on there.

[03:24] But that’s not the whole story. And consequently, nothing is the whole story. And so this is a danger. It’s a challenge when you as an individual or a family are trying to get a handle on your finances and you have all these separate pieces of paper or online accounts and you cannot see the big picture. Do you think we’ve laid that out enough or you want to go a little further and laying out the challenge? No, I think you’ve done a great job of defining what it is. My question to you is, is how do you get there? So one of the things that, as I’ve indicated, we’ve spent the last two or three months reworking and we had this in one form, but we’re trying to make it more available to everybody, is something called a

[04:09] prosperity profile, which is literally a single eight and a half by 11 piece of paper. And it’s actually done horizontally so that you can view it on a computer screen whereby you can get a sense of your overall assets. In other words, not the nitty gritty account. So not this IRA and that IRA and this Roth and that brokerage account, et cetera, but the big picture of how many dollars total are in retirement funds, how many dollars total are in non-retirement funds. So those are typically your assets on the paper side, paper assets. And then the prosperity profile also has investment real estate and regular real estate. In other words, your home and then if you have any investment real estate, it has just some basic facts pictured about that.

[05:04] And then it also has a bit about your cash flow. Now cash flow is one of the biggest challenges that people have. I just spent the weekend with Carrie Putman, who is our bookkeeper. And she was telling me about a client that she just brought on who said that they spent about $1,500 a month on groceries. And so Carrie is thinking in her head, okay, yeah, let’s see. And so Carrie went in and over four months figured out that they spent about $5,000 a month on groceries. Now, maybe their grocery store is like a Target or something that has a few other drug store type items. But nevertheless, there’s a big difference between $1,500 and $5,000. If those numbers are too big for you or too small for you, just

[05:48] take away a zero or add a zero. The fact is that so often people don’t really have a very good sense of their cash flow. Well, the prosperity profile is not actually the place to get that. What the prosperity profile wants you to do is go get a sense of your cash flow at mint.com or whatever other online system at your bank you want to use. What the profile does then is annualize that. And it’s a really interesting number to look at. It shows us how much total is coming in, how much total is going to taxes, how much total is a tax refund if we have one, because that is a dollar figure that often just gets swept away and spent on nothing. And then how much is going to savings every single year.

[06:37] Now, this is a fun part of this picture, because the savings component in most financial environments does not include any premiums to whole life insurance, because most financial environments like mint.com and other places don’t understand whole life insurance. And yet the premiums and the paid up additions that you contribute to your savings component, to your life insurance policy, excuse me, are a part of your savings component. And so that absolutely should be included when you’re trying to figure out the percentage of your income that is saved. You want to include your whole life premiums and your whole life paid up additions. And so we’ve got, again, on this prosperity profile, one little box that shows the percentage of the income that

[07:30] you’re saving every single year. And you know what really interests me? Every financial advisor out there says you should be saving 10 to 15 or 20 or whatever their percent is per year. But no financial advisor that I’m aware of actually helps you do that. Now, I’m sure there’s some prosperity economics advisors that do, but many, many times this is a stated quote rule, but then an overlooked fact. Like how do we actually calculate this? Do we figure out how much of our income is going to savings? So the prosperity profile will help with that. And then there’s an entire protection mechanism piece. And again, this is all at that 30,000 foot view. It’s not real deep. It’s not real detailed, but it’s got enough detail for

[08:12] you to identify areas that are really red flag, like let’s say you don’t have a liability umbrella or let’s say you don’t have an entity like an LLC or a C corporation, and you could benefit from that. Not everybody can, but we should at least look at it. Or let’s say that you have really, really low deductibles on your car insurance, and it’s an area that you’re spending way too much money and you didn’t even realize it. So the protection mechanism portion of the prosperity profile lets us identify all those things. And then of course, at the bottom, which is the foundation, which is exactly where it should be, is the life insurance. Term insurance, whole life insurance, universal life, whatever type you have, it’s all listed out.

[09:02] And then we help you be really, really clear what amount of death benefit is actually potentially going to pay if you die at normal life expectancy, like in your eighties or nineties, because as we’re all well aware, term insurance and universal life insurance will not pay during that time, whereas whole life insurance will. So this is not going to be available to everybody, but I want to lay out what it is so that if you’re interested, it’s something that you can be on the lookout in terms of hearing from us very shortly about how you might get one. And then if it’s not something that would be available to you, because it is something that we’ll be charging for, then you could even create your own, because I’ve laid out all of the

[09:50] pieces and you could just write it out on a yellow piece of paper, a summary of all those various areas so that you can look at your finances from the 30,000 foot view and see again, the income, the outgo, the savings, the assets, the liabilities, the combination of the two, which is typically called net worth, the life insurance, and all the protection mechanisms, car insurance, home insurance, liability. I didn’t mention it earlier, but disability, long-term care, and then the protection mechanisms that are legal, like wills and trusts, and medical powers of attorney, and then also your home, as well as any secondary investment property you have, could be vacation or otherwise, and it’s all on a single sheet of paper.

[10:44] That is the proper way, the 30,000 foot way to look at your finances. Super, just as an example of that, I’m working with a lady and her son, her son is graduating and she’s of course providing a graduation party, so on her side, you know, all of a sudden she has $1,500 additional grocery expense that’s not normal for her, and of course, on his side, he’s receiving gifts of a couple thousand dollars, that’s not really consistent income that he can count on, and just showing them that how from the 30,000 foot view, this is really just kind of an anomaly, it means nothing. Right, yep, it’s a great way to look at it, and it’s so helpful when you have something objective to look at, because right there

[11:33] in the moment, of course, that mom and that boy are so excited about graduation, they’re not seeing the 30,000 foot view at all, so not only does a person help you get that objective viewpoint, but sometimes a literal piece of paper can help you get that objective viewpoint, and remove some of the emotional aspects, which are so heavily centered around our decisions around money. Well super, I encourage everybody to go to partners, the number four, prosperity.com, please check out all of the resources there, sign up for the auto responders, these are not things that try to sell you things, these are things that will just send you thoughts and questions, and for some uncanny reason, they seem to arrive in that mailbox

[12:21] exactly when they need to be. We didn’t pay extra for that service, I think it’s being run by a little higher power than us. So. Auto responder heaven. Anything else before we wrap up, Kim? Always a position of gratitude, and I wanna give a shout out to a gal named Carmen Abascal at ilovebluepencils.com that has been so helpful in the creation of this prosperity profile, and just encourage our listeners to stay tuned for it, cause we’ll definitely be having more information via email as we progress, and it should be just right around the corner. Super, well again, this is No BS Money Guy Todd Strobel, wanting to hear your comments, wanting to hear your questions, so grateful to all of you, see you on the next show.

[13:09] Thank you for listening to the Prosperity Podcast. To take control of your money and have it work for you, visit us at partnersforprosperity.com. If you liked this episode, make sure you subscribe and leave a review.