Debbie has nearly 20 years of investigative experience and journalism on topics of insurance, mortgage, and financial advice.

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Money Strategies with Debbie

TDD 115 | Retirement Plan

Getting Rid Of Your What If With Disability Insurance And A Solid Retirement Plan

TDD 115 | Retirement Plan

 

There are a lot of uncertainties in life, and people can only prepare so much—whether it be a retirement plan, a well laid-out financial plan for stability and success, or preparing for the worst with disability insurance. Debbie Bloyd goes into the details of working with the right people and how to find them to make sure your future is in good hands. She also touches on the possibility of being disabled, either through an accident or a critical illness. This will make you think if the contingency plans you have are really enough. This episode also covers Debbie being interviewed in Jason Stancill’s podcast, After The Closing Bell, where she shares her knowledge about real estate auctions and reverse mortgages.

Listen to the podcast here:

Getting Rid Of Your What If With Disability Insurance And A Solid Retirement Plan

How do you pick a good financial advisor? How do you know if someone has been honest with you? It comes down to the tools that they use and what things they talk about. Are they talking about your money and products that you understand? Are they trying to sell you something? Make sure you hire an advisor that is a fiduciary. You want someone that their obligation is to you not to the products that they sell. Don’t hire the first financial adviser you meet. You need to take time to interview people, decide what the best fit is and talk to people that you can talk to and speak English to you. I hate people that talk down to me. If you don’t understand what they’re saying, can’t explain it to you and give you the information in writing that you can understand, don’t do it.

Don’t choose an advisor with a wrong specialty. Some financial advisors specialize in retirement planning while other work best for business owners. It’s best to find the right fit for you. Pick an advisor within a compatible strategy. Make sure you understand and agree with the strategy. Make sure you ask for credentials. It’s important to know who the people you’re working with. You can find them on FINRA if they’re FINRA licensed. If not, they may be a CFP, a certified financial planner. Find out who you’re working with. Don’t make assumptions when people are affiliated with a reputable brand. Just because they work for a big box investor or a bank doesn’t mean they’re smart, the right fit for you and they communicate with you.

If they don’t have any money, don’t listen to them. There’s nothing worse than going to a financial advisor that doesn’t have any money of their own. You need to learn from people and trust people that have already amassed their own money. Understand how people are paid. Don’t take for granted that everyone is paid the same because they’re not. You need to ask them how they’re paid and look for their fee structure. If you have questions about how this works, please give me a call. I’ll be happy to explain to you the various options and the way people are compensated. If you have questions about your policies, and whether it’s long term care or insurance, bring those in as well. I would love to help people before they are stressed out about it.

A gentleman brought me a life insurance policy and it was getting ready to expire. The problem is he was too old to get new insurance. He should have done that 10 or 15 years ago. Don’t wait until the last minute. Pull out those policies you’ve been paying for and see what they’re good for if they have a cash value and if there are long-term care is one of those older policies that don’t pay off. I’ve got this hybrid policy for long-term care. It’s a cool policy by OneAmerica. What it does is, it provides for me a certain amount of money every month. It’s $4,000 for long-term care for up to 24 months or a lifetime. You can get additional writer. What that means is, when you buy a basic policy and add things on top of it. I have a basic policy and I added an inflation writer. What that means is, if the price and cost of money go up, so does my policy.

I also have a rider in it that flips it, so if I don’t use all of it, it turns into a term policy when I pass away, so my kids receive what’s left of the policy that I haven’t used. Some people don’t have that. It’s long-term care of nothing. If you don’t use it, you lose it. Let’s change that out. Long-term care insurance is one of those things that they’ve morphed into different policies over the last few years and certain advisors only sell certain kinds if they’re in the life insurance arena. Not everybody has all the policies available. They’ll give you what they have, but you need to ask and check around to see what the best ones are available. That means going to someone like myself that’s independent.

TDD 115 | Retirement Plan

Retirement Plan: Make sure you hire an advisor that is a fiduciary. You want someone that their obligation is to you, not to the products that they sell.

 

I can sit down and run you out with different versions with different companies with all the fee structures with how it’s going to work. Some of them have inflation writers, have a hybrid policy or buy it, use it or lose it. You need to look at what your options are. Give me a call if I can help you compare your financial plan that you’ve got now with something that might be better for you could cost less and be better. You never know you might as well check it out. Get online to check out CD rates or savings account rates. You need to check out your long-term care and your life insurance policies as well. Give me a call. My number is (979) 220-3018. I’ll be happy to help.

I know we try to cover things that are important to your families. Mortgages are one of those things. Another thing that we need to talk about is disability insurance. I cover all kinds of insurance, like term life insurance, variable annuity life insurance, and long-term care. In this episode, we need to talk about disability income. This didn’t make a lot of sense to me until it happened to me and it made perfect sense. I was on my way to the radio station to record some stuff and this was several years ago. My kids were maybe 5 and 6. We’ve come a long way. I was sitting at a stoplight. It was raining and cars were speeding past. One car clipped the other’s fender. I look up and I’m in the turn lane, which means I’m facing oncoming traffic. This car starts spiraling around running circles in the middle of the intersection and spins right past me and hits the car directly behind me and throwing them into 3 or 4 more cars.

The accident, like a tornado wrapped around on me. It didn’t hit everybody behind me. It’s not, thank God for them, but it passed me. I was shaken up. I came to the radio station and I’m like, “I need disability insurance today.” This could have been a whole lot different day had I been hit. Had I been hit? Yes, my car is insured and my car would cover some medical expenses for me. What if I hit my head and I don’t know who I am or something happens and the glass breaks and it hurts me to the point that I can’t do my job anymore? My arms and legs I can do without but what if it takes my mind? I can’t talk, think and I can’t talk to you about money and finances anymore because I don’t know who I am.

You can say, “Debbie, that’s extreme. That would never happen.” Yes, it does happen and nearly 7 out of 10 Americans do not protect their paycheck with disability insurance because what happens if you don’t? According to the Northwestern Mutual’s 2016 Planning & Progress Study, half of Americans rely only on their job income to meet their monthly income needs. What that means in layman’s terms is, most of us have a job and we use our job money to pay for our living, lifestyle, our kids and everything else. We don’t have passive income.

Not everyone has investments that pay whether we’re there or not. Not everyone has rental properties, annuities, pension and if you’re too young, get social security. What happens to these half of Americans that, “If I were to quit today, how would I pay for my family?” You’d say, “You wouldn’t.” I don’t want that to happen. We need to figure out how to meet our financial obligations, yet 2/3 of us do not own disability insurance to protect this integral asset, which is ourselves to keep us working. This is concerning considering there are 1 in 4 odds of becoming disabled for three months or more during our work career.

Life Happens researched nearly half of Americans would find themselves in financial trouble in a month or less after incurring a disability. Say I can’t work anymore. How am I going to keep going? Yes, I may be able to get Social Security but what about the rest of it? “The risk of experiencing a serious illness or injury is more common than we’d like to believe and the impact extends way beyond the physical,” so said a Northwestern Mutual Vice President on disability income. “Our research shows that the majority of Americans,” let’s say 58%, “View financial security as a key aspect of the American dream. Unfortunately, a disability without income protection can quickly turn that dream into a nightmare by creating financial disruptions that may take years if it could even be repaired. Disability income insurance is specifically designed to replace a significant portion of income and what expenses and lifestyle needs if sickness or injury prevents a person from earning a living.”

Nearly seven out of ten Americans do not protect their paycheck with disability insurance. Think about what will happen if you don’t. Click To Tweet

“This can help preserve the existing nest egg. Provide financial flexibility to keep contributing to retirement savings in enabling an individual to focus on their health without added financial stress. However, despite the benefits of about 7 in 10 Americans do not own disability insurance and are most likely to manage the financial implications of income interruption by reducing expenses or taking money from their personal savings. These can all have a long-term detrimental effect on the rest of their lives and their families. As life expectancies and cost increase, people are already tightening budgets and stretching savings to prepare for the possibility of an extended retirement. Disability income insurance is an easy and affordable way to relieve some of the pressure of unexpected and to keep retirement planning and other financial goals on track.”

“Protect your assets and all the other assets could be protected.” You could say, “Debbie, this sounds expensive. How do I know that I can afford this?” You don’t put up any pie in the sky income. You have to tell them what your income is. That means you have to, number one, provide me with a W2 of last year or your tax returns, so they know what you make and what income they have to replace. It goes off of your age. How long are you going to need to be in those prime earning years and you keep going? It’s like a matrix, everything else is with insurance. It’s nothing scary. It’s easy to get quotes and you can get quotes back fast from lots of different companies.

There’s also something called critical care insurance. There are lots of different policies for that. The downside of today’s medical innovations being miraculous is, while it saves lives, they may also create long-term financial challenges for the survivor and the loved ones. We work hard for what we have, so why let an illness take it all away? Critical care insurance was designed to prevent this from happening. These are things that go in place to help protect your assets. The reality is most of us know someone who has had a heart attack, stroke or other serious medical occurrences, a relative, a business partner or a neighbor.

In fact, someone in the US will suffer from a coronary event every 25 seconds and nearly 62% will survive. You say, “That’s horrible. Only 62%?” That 62% when they survive, what shape are they in? Have a stroke every 40 seconds and many will survive with permanent stroke-related disabilities and being diagnosed with cancer every 21 seconds and 68 will survive and live at least five years. You say, “Debbie, that doesn’t sound good.” Let me tell you it’s not but I have personal stories to share with you. A great friend of mine. Her husband and she were only on a boat in the middle of the lake. They were fishing. They like to fish he’s in he was an engineer. That was until he had a stroke.

By the time she could get the boat into the dock, she had dial 911. The ambulance was waiting there. He had already had a stroke and was out. They brought him back to the hospital. A few years later, he no longer has a job. They kept him for about six months on the payroll to see if he could come back and do his job again. He still can’t walk. He still can’t use one side of his body very well. For a long time, he didn’t know who his wife and child were. Needless to say, they left his job and said, “I’m so sorry we can’t employ you anymore.” That’s it. He may get some Social Security benefits but that’s not like an $80,000, $90,000 or $130,000 a year income with benefits and 401(k). It’s only his wife with her job and her insurances to protect and to retire them.

I don’t want this to happen to you. She does a great job of it. She is with God’s help has done an amazing job juggling her work and her family. Her son has since grown up and moved away and it’s her and her husband. Her life is forever changed. He does get better from time to time and he’s slowly improving but that doesn’t mean he can ever have another job. He’s in his mid-50s and it’s done for him. His work life is over and their retirement dreams and hopes have been redesigned. People from their church help them. She’s got insurance and stuff on herself through her job, but their life has been forever changed. Financially, she’s still paying off some student loans of her son in college, her husband’s medical bills and trying to survive on her salary. That’s a lot.

Retirement Plan: Disability income insurance is specifically designed to replace a significant portion of income and what expenses and lifestyle needs if sickness or injury prevents a person from earning a living.

 

When a critical illness strikes the emotional and financial toll on the patient and the family is overwhelming. Even the best laid financial plans like hers can get waylaid and off track. Did you know that 62% of bankruptcies are medically related? Critical care insurance benefits are paying a lump sum that may become income tax-free and can be used for anything, like the mortgage, the auto loan, and home modifications. If he’s in a wheelchair, you need a wheelchair ramp, extra-wide doors or you may have to move. Things happen. Lost wages, expenses incurred during the elimination period of a disability policy. Maybe transportation and lodging expenses while seeking treatment away from home. Medical costs, deductibles, co-pays, prescriptions, maybe even experimental treatments all need to be paid. What about child care expenses? If you’re busy working with your husband all the time getting him back and forth to doctors, you’re not there to take care of the other kids in the family.

What conditions are covered? A few common things that are covered in this type of policy called Critical Care Insurance is cancer, benign brain tumors, heart attacks, comas, heart transplants, loss of speech, maybe it’s side hearing, maybe your limbs don’t work, independent living, aortic surgery, it’s anything to do with your heart. Heart valve replacement repair, major burns, stroke, major organ transplants, coronary bypass, paralysis, and advanced Alzheimer’s disease. Who should consider critical care insurance? Anyone that’s not covered by disability insurance. Someone who doesn’t qualify or maxed out on disability insurance. If you’re self-employed, work from home or have an erratic income if. The mortgage business that I do and other things would be erratic income. This is a lot, so give me a call (979) 220-3018.

I want to introduce you to Debbie Bloyd. She is the CEO of DLB Mortgage Services. Debbie, thanks for joining us.

Thank you. Thanks for having me.

Here’s the fun part about what we’re dealing with. I was talking about a little bit about the fear index and how things affect Wall Street like the media and those ancillary talking heads that you see when they come in. In 2017, the markets were pretty immune to all of that. Consumer confidence was good. Everybody was happy, so Wall Street didn’t see much volatility in the facts that the media is coming out with whatever they were doing. What was notable to me is the Kylie Jenner situation. She makes a tweet. If you don’t know who she is, because I had to look it up, she’s part of the Kardashian clan and apparently runs a hugely successful makeup brand and is a model at twenty years old. She made a tweet that she wasn’t using Snapchat anymore, and we saw that stock fall within a five-minute period. Call it coincidence or fear index but in your opinion, how do you see 2018 shaping up as far as what’s affecting Wall Street much more than we saw in 2017?

Everybody is trying to keep everybody all upset and I wish people would turn the news off. Turn off the talking heads, for the most part, because everything is local. You know as well as I know, being in the business you’ve been in everything is local when it comes to real estate. Money is no different. Mortgages are still going to be required, people are still going to be moving across the country, they’re still going to want to upgrade their house or get down to something smaller when they retire. It doesn’t matter. The real estate market is going to keep going.

You’re absolutely right and that’s the thing. I’ve been in real estate for years and approached it through an auction platform to traditional real estate. I’ve seen such an interesting turn. In a year alone, we partnered with Berkshire Hathaway but with the FED, it’s finally starting to move a little bit on the interest rates. This is still an incredible time though, even before the next two meetings take place to take advantage of amazing rates. If you’re talking about an end-user buying any level of home. This has got to be one of the best times to take advantage of a mortgage rate that we’ve ever seen.

It has been for the last few years, rates have been historically super low. We never thought interest rates would be 3% on a fifteen-year note ever. I’ve been doing this for years. It’s on the way back up but this is still below average. We were doing mortgages hand over fist at 7% or 8%. All of this means that mortgages are on sale.

When a critical illness strikes, the emotional and financial toll on the patient and the family is overwhelming. Click To Tweet

I totally agree with that. I love your comment about turning off the news and the talking heads. You’re right about that one. As a CEO of DLB Mortgage Services, you’ve seen a lot over the years, how does 2018 shape up for you? Also, can you explain what DLB does and who can benefit from it?

I have been in the mortgage business for years. I have been helping people buy and sell investment properties and a lot through auctions like what you’ve done and regular end-users, investors, specifically. I also do financial advising, which means when people come to me and they talk about putting money down on their house, we talk about the overall wellness of your finances. What is your whole life goal? What do you need to do with the money? Do you need a reverse mortgage to free up some more of that money to do something else with? Do you need disability insurance or long-term care? I’m looking at more than the mortgage. I’m looking at your financial wellness.

I love that about you because you take such a pragmatic approach to something that a lot of mortgage officers, and no offense to the industry, follow whatever the guideline that they get taught depending on where the company is and don’t fully want to take the time to understand the client’s full needs. By doing this 360-degree analysis of a person’s needs and wants is an incredible thing. I’m asking from a personal perspective because I was able to take advantage of the refis with some incredible rates on my personal property, the one I live in, I’m at 3.2%, which is incredible.

It’s never going to be that low again.

Here’s the question. Out of other services like the reverse mortgage or maybe taking an equity line out on the house or things like that. These are things that are so complicated for a lot of people but timing is so good if you’re in the market. What would you recommend as far as these things?

If you’re over the age of 62, you need to take a look at a reverse mortgage because there’s an investment caveat to that. If you leave money in that and you don’t take money out, it’s earning about 5% a year, which is a great investment for older people that don’t want to risk any of their 401(k), annuity money, stocks or mutual fund money. It’s a great way to put your house to work to make money for you. If you’re a first-time homebuyer, you’re going to want to look at a conventional loan with 5% down rather than an FHA loan with 3.5% down because FHA has this 2% lending fee. If you’re going to pay a 2% lending fee, you might as well put that money down and get a conventional mortgage. That way you’ll you won’t waste that money for the pleasure of doing business with the FHA.

That’s something that a lot of people forget about but here’s the kicker, you mentioned the reverse mortgage thing and I want to stay on that. Much like in my industry, it’s been hard for a lot of terrestrial agents to understand what the benefit of auctions is. There’s a lot of people, my parents included, that are in this demographic could benefit from this, but still have their hands out and going, “I don’t understand it.” That means they don’t want it. It’s getting more and more popular but people don’t understand the benefits of it.

It goes against our culture that says, “You’ve got to own it 100%. You’re free and clear. No one can take it.” We’re looking at that house as a third pot of money. Your first pot of money is your income. The second pot of money is your investments and your 401(k). The third pot of money is your mortgage on your house. If you can make that instead of sucking parts one and two down lower, two buy into pot three and make pot three make money for you. It’s a simple concept but it goes against the grain of what all the Baby Boomers have been taught. You have to own it. You got to have it paid off free and clear and that’s not the case. You need to get that equity working for you. It’s having a little mutual fund inside your house.

Retirement Plan: The downside of today’s medical innovations being miraculous is, while they save lives, they may also create long term financial challenges for the survivor and the loved ones.

 

I completely agree. That’s the thing, the more we get the word out about this the more that maybe we can change perception. I love having you on the program. Debbie, you have been helping clients for many years in the mortgage industry. Talking about reverse mortgages, Debbie. It’s not only reverse mortgages, but it’s also all the products that are out there that you can take advantage of historically low-interest rates that most people don’t even think, consider or want to acknowledge. If they don’t understand it, they don’t do it.

That is correct. Jason, it is so difficult to make people understand a little bit about a reverse mortgage. We spend a lot of time with the companies that I work with to educate our consumers and make sure that our clients understand that it’s not a sale of a house. It is tax-free money that you’re getting. It is not a lifetime commitment. The bank doesn’t own your house and you don’t give up your rights. It’s going against so much bad information out there. The people that need it most are the ones that need to learn to understand that the most.

I see that so much in our industries. We are right on the same page with this because these are the people, we’ve got to get this information out to. Especially at the tail end of this Baby Boomer generation who can benefit so much from this. My parents lived in the same house for 31 years and have paid it down. There’s so much of a benefit to this but it’s not the reverse mortgages. Debbie, I’m curious about that because with rates so low, there are other products. If I wanted to take an equity line out or things like that, can you help me with this?

That’s what we do. When people call me, they don’t they don’t know the name of what they want. I say, “What can I help you with?” They’re like, “I want to consolidate my debts or I want to take cash out of my house and put my kid through college.” It’s not always smart to take money out of your home to put on a consumer debt like your college kid’s education. What we try to do is find other ways to do that. I’m a more of a financial advisor on some days and more of a mortgage person on others. Taking equity out of your house is not always the answer. Sometimes it’s reshuffling the other debts that you have. Did you know that if you let your kids take out the student loans in their name, it’s not taxed every year and it doesn’t get any interest until they get out of college for six months?

Parents shouldn’t take out student loans for their kids. The kids should take out student loans. It’s interest rate free money, then for four years and six months. That saves parents a lot of money. The parents can go ahead and pay it off but don’t pay as you go necessarily. It doesn’t cost you anything in interest if you take out a student loan in your child’s name. Don’t take it out in your name. There are some tricks to the trade. If people would call us, we will get them in touch with the professionals that they need to get the right financial advice for them.

I didn’t know that. I have two kids. I’m taking notes on everything you said because this is the cool part about talking to you. The approach that you take with your clients is so comprehensive, that it’s not like, “Where do I fit this person into the standard mortgage industry box? Where do I check here?” You care about the overall financial health of the client and find out what product is great for them. I’ve got to go back to this because I am curious about it myself. The last time I did an equity line, I was probably 24 on my first house, so it was a long time ago, but it’s pressing me a little bit because I don’t feel that in a couple of years we’re going to have the same opportunity rate wise as we do. We know what the FED is going to do. We absolutely know and they put it off long enough that we will see probably two moves in interest rates at the least. We know that we can probably say that with some confidence. My question to you is, if I’m interested in this, which I, personally am, what do I have to do? How do I start?

What kind of money do you need and how long do you need it for? How much money do you want to borrow?

Maybe $40,000 for about six months.

In the real estate industry, auctions have a lot of benefits, but people either don’t understand it and simply don’t want to understand it. Click To Tweet

Get a line of credit. Don’t refinance and cash out your house. Unless you can roll in some credit card debt or something else that is at a higher interest rate. If everything else is clean in your finances, don’t jack with your house, don’t do anything like that. Go to the bank and do a signature loan for as much as that. That’s a big car note. You’re going to get a line of credit and you’re going to not have to exercise it. You want to make sure that you have a window of at least a year to exercise that line of credit. Some banks make you open it and you have to start using it or they take it away. If you don’t use it for six months, they shut it down. If you’re going to be buying a property with it, you need to let them know what you’re doing. Make sure you have a year window to use that money so they don’t shut it down automatically and you have to reapply all over again.

Let’s flip gears and go to a first time homebuyer. I still think 2018 and being in the real estate world is difficult to find, especially in Phoenix, Arizona. We’re one of the states that is a boom-bust town. Anything $400,000 or less is hard to find inventory. If somebody does find something they want in this market, you’ve got to move quickly. A lot of people get put off like what we were talking about with reverse mortgages from the process because they think that they’ve got to do this and all of this. What is your advice for new home buyers? What would they do?

They get pre-approved before they start looking for a home. They’ve got to have a pre-approved letter ready to go. When they find the house it’s going to be a bidding war. They’re going to have to offer full price and not ask for any seller concessions or extra monies. Take the house a lot of times as is. That makes the closing faster. You don’t have to have to go through all of that or, “I have to wait for the letters.” They can contact my office. I’m licensed in Arizona, Texas, Florida, in a lot of states. I can help them with a mortgage and we’ll get it done fast and in less than 25 days.

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