An important, yet neglected, aspect of financial success is organizing your paperwork. Melanie Cullen, author of Get It Together: Organize Your Records So Your Family Won’t Have To, explains why organized paperwork helps you manage your finances efficiently. Find out the best ways to organize your information and why storing it in the cloud is not always the best idea.
After your paperwork is organized, and you can see your financial situation clearly, it’s easier to think about retirement planning. This week’s show discusses how to plan for retirement when you there are so many unknowns. Special guest: Zack the Puppet, CFPP. What’s a CFPP? Listen to the show to find out.
Learn more about Melanie Cullen at: http://getittogetherbook.com
Contact Zack, CFPP by clicking here.
Read the Transcript
Interview With Melanie Cullen
Melanie Cullen, bestselling author of Get It Together, explains how to organize your financial records. Why is this important, not just for you during your lifetime but also for your loved ones later on? Find out how to take the first steps towards organizing your affairs.
Douglas Goldstein: I’m very happy to have on The Goldstein On Gelt Show, Melanie Cullen, who is the author of the fantastic book called Get It Together. I’m not the only one who thinks this is a fantastic book. It’s been published by Nolo and it’s in fact their best-selling book. It’s a guide to help you gather your records and prepare your most important documents. Melanie, the first question is, since this is a financial show, why are we talking about document preparation?
Melanie Cullen: Thanks, Doug, for having me on your show. Document preparation is because you want to be organized. You want to have your life simplified for the rest of your years. More importantly, it’s for when that handover occurs to your loved ones, when you become incapacitated, or when you pass away so that they can find what you have, where it is, how it is held, and what they are supposed to do with it. It’s in order to care for you while you are incapacitated, or to wrap up and distribute things afterwards. That’s why. It’s not enough just to have stuff; you need to tell people about it.
Keep All Your Statements and Papers in a Three-Ring Binder
Douglas Goldstein: It’s not only about dying or being sick. As a financial advisor, one of the tools that we give to clients is very simple: we give them a notebook like a three-ring binder and we set it up with dividers, and we tell our clients to put their statements in it. People loved this, and I realized years ago that never mind dying and being sick. People just aren’t organized in their day-to-day life. Have you seen that as well?
Melanie Cullen: Absolutely, and there’s a couple of benefits that I’ve found. Once you put your bank and brokerage records in a three-ring binder, with your retirement and pension records, your insurance, and your government benefits, etc., you can start to line those things up so you’ve got a good look at them. You can look at consolidating, where it makes sense to simplify your life. Consolidate things instead of having things spread out all over for your brokerage accounts. But also, how can you take a good look at who you’ve named as beneficiaries, whether transfer on death or pay on death beneficiary on some accounts, or as retirement beneficiaries, without having it all laid out in front of you, organized and printed out? It’s really hard to comprehend that and to organize it.
How to Organize Your Financial Records
Douglas Goldstein: What’s the first step? How should people start to organize their financial records?
Melanie Cullen: First is to appreciate what’s the problem. A lot of us don’t even think we have a problem because we’ve got a lot of it in our heads, and we know where the paperwork is most of the time. Recognize that even if you’re doing reasonably well with it, you can do better and two, think of those loved ones. If something happens to you, how are they going to know what you have, where it is? Two, manage your home, your property, and you, and then draw things out and distribute them. Your loved ones need to know three things: They need to know what you have, what are your financial assets: cash, securities, gold coin, gold bullion, silver bullion. What do you have, and where is it? It can be in a bank or a brokerage account. You could have a retirement account still at an employer, a safe deposit box, or you could have it in your home safe, including stocks and bonds. The gold and silver can be in your home safe or buried under the apple tree. It’s really helpful to leave a little bit of a trail of where your assets are and the contact information for these different banks, brokerages, or employers, etc. Also, what’s the access instructions if you’ve got something locked up that you’re holding personally?
Douglas Goldstein: That’s two things: what you have and where it is. What’s number three?
Melanie Cullen: The third thing is, how is it held? Is it held individually? Is it held jointly? Do you have a TOD or a POD named on those accounts? Is it held in the name of your trust or a trust? Is it held in a retirement account or a pension where you have named beneficiaries? Those are all really helpful tidbits to leave to document, not only for yourself, your own reference, and your own organization, but for your loved ones, too. It sounds like a lot, because if I was to pull all that out of the basket and shine a light on that, I’d think, “Well, that’s a lot of information.” That’s a great example of how Get It Together provides the structure for you today, and for your loved ones eventually. In Get It Together, there are also tips, not only for you organizing your materials, but for your loved ones with retirement accounts. We don’t want our loved ones just to pull the money out of my retirement account when I die and then go try and put it in theirs, or it will be no longer eligible for that retirement. There’s instructions in your Get It Together planner pre-built in there to your loved ones that says: “Wait. Hold on a second. Before you pull out the retirement, here’s what you need to know about the law.” Therefore that structure can be really helpful to you, to me, and ultimately to them.
Douglas Goldstein: That’s a great idea. I actually saw that in my financial planning practice. A woman came in and she was a widow. Her husband had died, and I asked her to tell me about the assets and she didn’t really know, which unfortunately is more common than people would believe. I said, “Would you bring me the statements?” and she said. “I don’t even know where the statements are.”
Melanie Cullen: Oh Lord.
Douglas Goldstein: I said. “Could you tell me a little bit about what you had?” These people were actually living outside of the United States, and she said, “My husband had set up accounts in various off-shore jurisdictions. “ I said, “You have money that you don’t know where it is. You don’t even know what country it is, and your husband was managing it, and you don’t even know where the statement is.” Ultimately I had someone on my team who is a very good investigator search for this, and ultimately she found hundreds of thousands of dollars. But I have to tell you to this day, maybe there was millions of dollars there, and the woman didn’t even know.
Melanie Cullen: A happy ending, but what a miserable position to be in.
Douglas Goldstein: Who knows how happy, because seriously there might be more and we’d never know because I don’t think some of these jurisdictions are going to tell you. It’s really important to keep track of where your assets are, and how they’re held. We’re talking with Melanie Cullen who wrote the book called Get It Together. She’s been talking a little bit about why it’s important to get it together. Let’s get down to nuts and bolts. If someone is listening today and says, you know I really better start organizing, what should she or he do?
Where to Store All of These Materials
Melanie Cullen: This is really important. Before they buy my book or do anything they should figure out where they will organize these materials. Into a file box or into an accordion file or a binder? This sounds really menial, but it is. Where are you going to put your stuff? Because before you start pulling together important records about your life and your assets etc., you don’t want to then leave it sitting on your desk. You want to put it together and store it somewhere securely.
Sometimes people’s very first step is to go buy a home safe because you want your organized information to be available to your loved ones, not only to you day in and day out, but to your loved ones when something happens to you like the first day, like the first hours. If something happens to me, say the afternoon before a holiday and the banks are closed for four days, my loved ones aren’t getting into my safe deposit box anytime soon. So that material has to be stored at home. I recommend a home safe - a fireproof, water-resistant, home safe.
Douglas Goldstein: We are talking about documents. What about keeping it on the internet? Aren’t there websites that allow you to do this?
Melanie Cullen: There are. Great question, and that just seems so obvious. My career, back when I had a real job, was managing IT, and it seems like a really obvious suggestion. Let’s get it all on the web so it’s available to all sorts of people. I organize all my materials so that every one of my kids and friends and kids can get at it if they need to. It’s small and it’s disappeared up there in the cloud, and that seems so easy. However, if you’ve ever been there when someone’s become incapacitated or has died, you know that you are a little fragile. You’re a little overwhelmed, you’re grieving, and the last thing you want to figure out is how to access this cloud thing and then start printing out all the materials I need. Then there’s the question of where are all the originals? Where did this person store all the original documents that I also need?
It’s just a whole complex process to me, and in fact technology in itself is really difficult when it comes to this handover to people that love us and want to care for us. My husband was telling me about one of his credit cards, and I said, “How do you pay that one?” He was working on his planner and he said, “I get an email.” And I said, “What do you do when you get the email?” “I go to the website …” and by the time he broke it down it was about 17 steps of what he does, with the sign on information, and the payment information. Technology, you can love it and hate it because it makes our lives more and more invisible to people outside of our brains.
Douglas Goldstein: Wow.
Melanie Cullen: Then there’s all that automated bill paying. So the bills are getting paid out of your checking account. But if something happens and you’re not adding to your checking account, it gets depleted. Then somebody notices, right?
What Should You Watch Out For?
Douglas Goldstein: Are there any great stories or surprises that you’ve seen that you could warn our listeners about?
Melanie Cullen: A couple of surprises that I run into often is that people are surprised by the amount of detail in their lives that’s important, that’s vital, but is in their head. A lot of it is related to these invisible transactions I just mentioned, like the electronic or online bill pay, and increasingly our online communities and our electronic assets. These include the music, books, and movies that you own the rights to, that you’ve paid a lot for, that you can pass on, but we often don’t think about it as it’s all become invisible.
The other one - and this is particularly in California and the United States, so you’ll have to filter this maybe for your audience - but we have this surprise of probate and how we can help our loved ones stay out of probate. It’s an expensive nuisance, and then the retirement accounts of those ones that, people just don’t realize that they should let their loved ones know there’s a little trick there for transferring those significant assets. Those are the big surprises.
We talk about probate a lot in my classes. It’s a nuisance and simple, but you need to be mindful of it.
Douglas Goldstein: I think being organized certainly helps, and as far as the IRA’s go, it is something we see even here in Israel. A lot of my clients are American, so their parents are Americans who have an IRA and they get the distribution, and then they realize that they can’t open an account in America because they have a foreign address. I’d like to hear how people can follow you, but if anyone wants to learn about that, they can go to my corporate website at profile-financial.com/toolkit where there’s an explanation about dealing with these accounts when you’re overseas. Certainly, the critical thing is to get Melanie’s book, Get It Together. Melanie, tell people how they can get your book and follow you and learn more about the work you’re doing.
Melanie Cullen: Thanks, Doug. My book’s available on all major websites, so you can get it online anywhere. You can buy it at bookstores. You can check it out at your local library. It comes with a companion binder and tab set, and both of those are also available at the book’s website, which is GetItTogetherbook.com. You can get a lot more information there about the book, the process, the binder, and ordering it. My contact information is there as well. I am so happy. This is my passion, it’s my life. I’m happy to answer questions about getting organized, what to do, and how to do it.
Douglas Goldstein: We will put links to all that at the show notes of today’s show at GoldsteinonGelt.com. Melanie, thanks so much for taking the time.
Melanie Cullen: Thank you, Doug. I appreciate it.