Windfall Alert: What Farmers Miss Every Single Year (Ep. 338)

Nelson says it in here several times.
It's all about the way you think.
If you think this is a luxury,
it's always going to be second fiddle
to everything else you do.
If you think of this as a necessity,
like gases to a vehicle,
then you will always make sure that this is paid first.
This should be in every single person's expenses.
You can't expense it.
It's not a business expense,
but it should be in your books as an expense.
There is no questions asked.
You need death benefit on you,
your spouse, your kids, whoever.
You need death benefit.
Hello, hello, hello, and welcome back to the podcast.
Thank you very much for being here.
All right, we are back with Warehouse of Wealth,
Chapter 7.
This is a good one.
This one is really good and going to clear up
a lot of questions about windfalls of money.
Nelson talks about that here and there,
and a lot of people have questions on it.
It even cleared up some things for me.
So let's get into it.
Nelson says,
sometimes in life,
everyone experiences a financial windfall
of significant proportions.
Nelson sold some land
that he calls a frozen asset,
which I think is kind of funny
because it is a bit frozen to some extent.
He sold some land
and he had a large loan
inside one of his policies, right?
And he paid that loan off.
And he had bought the policy 18 months before.
He borrowed the cash value
to pay off some of his bank debt.
That he was preferred plus on that policy.
So the best health rating that you can get.
He paid that off.
And he says,
the net result of this process
is when I paid off the policy loan,
the result was the same
as buying a new policy
that year
and backdated the policy 13 years
at preferred plus rating.
That is an enormous advantage.
So Nelson bought the policy.
13 years later,
he has a full loan in this policy.
He sells land
and he's like,
what am I going to do with this money?
I can't buy another policy on myself
because I'm uninsurable.
So I'm going to use this money
to pay the loan off.
When I paid the loan off,
it's like buying insurance
and backdating it 13 years
because he now has the full death benefit
of that policy, right?
Had he died,
the death benefit minus the loan
is what would have been paid.
So now that he paid the loan off,
it was like backdating the policy
and buying more death benefit
at a cheaper rate
or any rate for that matter
because he was uninsurable.
So he is saying,
you're going to have a windfall
at some point.
You're maybe going to have land to sell.
He then goes on to talk about,
let's just say that you have a daughter
and she,
I think in his example here,
she's six years old
and he said,
in 16 years,
she's going to be 22.
She will move out of the house.
She should be self-sufficient
at that point.
And as you guys know,
some of you may know,
others may not know,
here's a little insight.
Kids get more expensive
as they get older,
not cheaper.
And so now you've got kids
that are gone,
but the last four years,
she's been quite expensive.
So Nelson is saying,
that's a windfall
because she's gone.
You no longer have to buy her groceries.
You no longer have to buy
face cleaning supplies,
clothes,
whatever it was
that you were purchasing for her.
As soon as you quit doing that
for your kids,
you have a windfall.
Where does that money go?
That can go to pay back a loan
in your policy
if you have a loan.
He said,
if you don't have a place
to put the windfall money,
two things can happen.
And both of them are bad.
First of all,
Parkinson's law.
You will spend
what you make,
right?
I talk about Parkinson's law
all the time.
Necessities,
something that's not needed
becomes a necessity.
Second,
the possibility
of you decide
to create a place
to warehouse
this newfound wealth
and you choose
the best place
and that is a life insurance policy
and you have got
to start that policy
at this point in time.
So your kid moves out,
you have excess money,
Parkinson's law
is going to eat it up
because we're going to spend
what we have
or we're going to take that money
and we're going to start
a new policy with it.
So if you didn't have a policy,
this is the time
to be starting a policy,
right?
If you had a policy
that has a loan
in it,
what was the loan
for?
Because if that loan
was for something
that's a cash flowing asset,
that should be
what's paying back the loan.
The newfound money
should go to start
a new policy
if you can.
The real penalty
of delaying
getting a policy started
is a huge difference
in cash value
when one elects
to get income
at passive income time.
The earlier one
starts a life insurance policy
and the longer
it stays in force,
the more efficient
it gets.
People don't
understand that.
I want you guys
starting policies
when it makes sense
to start a policy
and there are some times
when people want
to start a policy
and they have $20,000
of credit card debt
and I don't see that
to be a good time
to be starting a policy.
I would like
the $20,000
or more
of credit card debt
gone,
right?
But as soon
as that's gone
we need to start
a policy.
We need to put
a plan in place
to get that paid off
so we can start
a policy.
I see this happen a lot.
I've paid off
a combine.
I've paid off
a tractor.
I've paid off
some land.
Something gets paid off.
As soon as that
payoff comes
then I get told
nope,
I can't use
all of that
payment amount
for a policy
because Mary Jo
it was really
tight before
and so
I made those
payments.
I always got
the payment made
and I didn't
borrow from operating
to do it.
We're borrowing
from operating
to do it.
Different story.
I always got
the payment made
when I sold grain
or when I sold
cattle or whatever
we're selling
but it was really
tight.
So I don't want
to live that tight.
I don't want
that money to go
all that money
to go into a policy.
So let's say
it was a $100,000
payment.
Almost everybody
will say
oh maybe I can
do 40
maybe 50.
You're going
to cut it
in half?
50,
40 to 50%
is all
that you're
going to move
over to a policy.
What's going
to happen
is exactly
what Nelson
is saying.
Parkinson's law.
Right?
And he goes
on to say
that when his
mother-in-law
passed away
they no longer
had the $60,000
bill of the
nursing home
and lo and behold
stuff started
showing up
at his house
because even
for Nelson
Parkinson's law
stepped in
and if we
don't truly
understand
how the
policy works
and why we
should be
running it
through the
policy
Parkinson's law
is going
to come
into play.
I have
talked to
people about
daycare.
Daycare is
very expensive.
As soon as
the kids
start going
to school
why do
we not
take the
money that
was going
to daycare
and move
it into
a life
insurance
policy?
We all
of a sudden
say oh
no now
we don't
have the
money to
do that.
Why don't
we have
the money
to do
that?
That doesn't
make sense
to me.
You were
paying it.
The kids
are going
to school.
We no
longer have
the daycare
expense.
When kids
are little
it's not
that expensive.
It's when
they get
older
that's
expensive.
So then
people will
say well
Mary Jo
as they're
getting older
and they're
in all
these sports
and all
this stuff
we're going
to need
that money.
Yes but
you're now
giving up
and Nelson
is talking
about this
you're now
giving up
how many
years
before they
start doing
some kind
of sport
that you
would need
that money
for.
And typically
you're going
to be what
six years
in.
Granted I know
kids are doing
sports much
younger now
but it still
shouldn't be
that expensive
at that point.
And daycare
is ridiculously
expensive.
So why
are we not
starting the
policy and
then borrowing
from the
policy to do
the sports
later?
Makes sense
in my head.
But we want
to live our
life and then
we want to
have the
policy.
When in fact
the policy
is a necessity
not a luxury.
And that is
something that I
am very
adamant about
about at
this time
because I am
seeing people
dying without
life insurance.
guess what?
You're going
to die.
You're not
getting out
alive.
I hate
to break
that news
to you.
And so
it's not
a luxury
to have
a life
insurance
policy.
It is
a necessity.
If you
are out
there farming
and you're
ranching
and you're
in the
business
of farming
and ranching
it's a
business.
Why are
you also
not in
the business
of banking?
There are
certain things
that are
necessary in
life.
One is
money.
It must
flow through
something and
it has to
go through
a banking
system.
So you
are deciding
that you're
going to
use somebody
else's bank
always.
Never your
own.
Always
somebody else's
bank for
savings,
for checking,
for loans,
the whole nine
yards you're
using somebody
else's bank.
So we
should be in
the business
of banking.
That is a
necessity.
We should
also be in
the business
of death
benefit.
That is a
necessity.
We are
going to
die.
This is
not a
luxury
item.
We should
be building
that in
to the
price of
our
commodity.
How much
do we
want to
pay?
I talked
to a guy
yesterday
and I
suggested
maybe about
a $20,000
premium.
$15,000,
$20,000.
And I
said,
you're doing
everything in
cash right
now.
If you're
selling hay,
this guy
was putting
up hay
and selling
hay,
how much
do you
have to
mark up
your product
to the
end
consumer
that they
probably
wouldn't
even notice
for
trucking,
for per
ton cost,
whatever that
is,
that you're
marking that
up so that
you can
create your
own bank
and you
have some
death benefit,
right?
And he's
saying,
well,
no,
I can't.
I can't
afford that.
And I
said,
okay,
if you
needed a
new
bailer
and that
was a
$20,000
payment a
year,
would you
find the
money for
that?
And of
course,
he was
being a
smarty
pants and
said no.
And his
wife said,
yeah,
you would.
Absolutely,
you would.
She's like,
look at where
we spend
money.
Between your
cigarettes,
your chew,
your bourbon,
and all the
things that I'm
spending money
on,
she's like,
I'll let my
hair go
gray.
Hair color is
the biggest
scam on the
planet,
says the
person that
gets her
hair colored.
But it
is where
are we
spending
money and
what are
we doing?
How are
we going
to beat
Parkinson's
law so
that we
can get
this started?
Do we
need to,
if we're
selling
cattle,
say what
do we
need to
add to
our calf
prices?
How many
cents per
pound do
we need
more so
we can
start our
own banking
system?
If we
don't,
we have
Parkinson's
law.
That's
exactly what
this chapter
is about.
And Nelson
says it in
here several
times.
It's all
about the
way you
think.
If you
think this
is a
luxury,
it's
always
going to
be second
fiddle to
everything else
you do.
If you
think of
this as
a necessity
like gases
to a
vehicle,
then you
will always
make sure
that this
is paid
first.
This should
be in
every single
person's
expenses.
You can't
expense it.
It's not a
business expense,
but it
should be
in your
books as
an expense.
There is
no questions
asked.
You need
death benefit
death benefit
on you,
your spouse,
your kids,
whoever,
you need
death benefit.
I just
found out
some people
that I
talked to
a couple
of years
ago lost
their son
in an
accident and
he was
13.
It is so
important to
have death
benefit on
children.
It is not
about getting
rich on
having death
benefit on
your kids.
It is about
having the
money so that
you can mourn.
It was a
very interesting
conversation.
I have had
other clients
that have
lost children.
Everybody
mourns
differently.
This
particular
couple,
it's tough.
They're in
a very
tough spot.
Their jobs
have to do
with people's
lives and
they're both
going to have
to retire
because mentally
they're not
going to be
able to do
the job the
same as
they did
prior to
them passing
away.
People don't
think about
that.
People do
not think
about that.
They just
think,
oh,
I'm going
to get
up and
go back
to work.
No,
you're not.
You absolutely
are not.
So,
death benefit
is a necessity
and we look
at it like
it's a luxury
and we have
to be
Parkinson's law.
How are we
going to
start the
bank?
How are we
going to
make sure
that our
family is
taken care
of?
It's
really a
pretty simple
question,
but it's
a question
that we
want to
just
ignore.
So,
there you
go.
That's
that chapter.
Let me
know if
you guys
have
comments,
questions,
concerns,
maryjoatwithoutthebank.com.
Grab your
books,
schedule your
appointment,
and have
your information
ready when
we have
the appointment.
You guys
are going
to get
an email
of everything
that I need
for the
appointment.
That is
not a
suggestion,
that is
a necessity.
If that
is not
ready,
I will
cancel
the meeting.
I will
stop
the meeting
because I
can't
help you
if your
numbers
are not
ready.
So,
have
that
ready
for
yourself,
for
your
business,
for
the
farm.
I
want
all
the
numbers.
All right,
let me
know if
there's
anything I
can do
for you.
Otherwise,
you have
a fantastic
rest of
your day.
Thanks for
listening to
the Farming
Without
the Bank
podcast.
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today's
episode has
inspired you
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control of
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in new
ways.
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