BiggerPockets Podcast 005 with Neal Frankle Transcript

Link to show: BP Podcast 005: Dealing with Death - a Financial Discussion with Neal Frankle

Josh: This is the BiggerPockets Podcast, show 5. Today we’re going to talk about death.

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Josh: Hey Everyone. This is Josh Dorkin, founder of Biggerpockets.com, here with my cohost, Brandon Turner. Hey Brandon!

Brandon: Hello Josh. How are you today?

Josh: I’m doing great. Yourself?

Brandon: I can’t complain.

Josh: Excellent, excellent. Like you I’m very excited about today’s guest but before we get there this is Show 5 of the BiggerPockets podcast and you can review your show notes at BiggerPockets.com/Show005.

Today we’re going to talk about something that a lot of people don’t really like to talk about – death.

It seems dark and depressing but this might be the most important lesson that we’ve covered yet on the podcast. Why? Because sometimes this podcast is going to be about flipping, subject to lease options, it might be about commercial real estate, might be about how to be a good landlord. Each of these topics are important but they actually don’t apply to everyone that’s listening. However, the one thing that we all do have in common is death.

This show is not about you and me, this is about our spouses, our kids and our family. It’s such an important topic. Don’t you agree, Brandon?

Brandon: I do and it’s something that as a young guy I don’t actually pay that much attention to because I’m going to live forever right? Nothing can happen to me. And that’s definitely the way, I mean I might not outwardly say that except for here on the podcast in front of thousands of people, but that’s how I live my life. I wrote a post the other day about how I don’t want to grow old, and I was making fun of people who drive 15 miles an hour under the speed limit. But the fact is I drive too fast because I’m invincible, and that will catch up with me someday. So I think this is going to be a great podcast because of that.

Josh: Absolutely. It’s funny. Actually the way I live my life comes from the discussion of death. One of my best friends back in high school used to tell me, his big piece of profound advice, which is probably one of the most important things I’ve ever heard was, ‘You want to live your life like you’re on your deathbed.’ What does that mean? To me it means I want to live my life for those people that are going to be around me, surrounding me when I’m dying. I’m old and sick – hopefully that’s when I go and not just from some car accident or some angry BiggerPockets fan or something – but when you’re dying, you’re on your death bed and you’re surrounded by people. Who are those people you’re surrounded by, Brandon? Typically?

Brandon: Your wife or your husband if you’re a lady, your kids.

Josh: So it’s going to be the people that are closest to you.

Brandon: Correct.

Josh: So the way he explained it to me and the way I really see it is you want to live your life for those people. You want to live it for your closest friends, you want to live it for your family, you want to live it for those people who are really going to be there in the end. You want to be able to say, ‘I did well by myself, I did well for you, I lived a really good life.’

That’s the philosophy I take and that’s behind everything I do with my business, with BiggerPockets and my life in general. That’s why I can’t go and rip people off. That’s why BiggerPockets is not an upselling destination. It’s because I couldn’t look at my family when I’m about to kick the bucket and say, ‘I did good by you. I whored myself out but I did really good by you.’ So that’s the philosophy I have. I’m sure everybody’s got their own.

Anyway the bottom line is death is one of these things where it’s a topic we don’t talk about. It’s a topic we’re afraid of, but it’s a topic that anyone in business has to, absolutely has to plan for. And that’s why this show is so important.

Brandon: You know one of my biggest fears in life? Unrelated maybe, but my biggest fear in life above almost everything is being buried alive. When I was a kid that freaked me out more than anything else. I once read a story that they used to tie a rope to people’s legs in their coffins that were buried six feet down and the rope went up to the ground to a bell that was above the graveyard. That way if a person was accidently buried alive the bell would start ringing in the middle of the cemetery.

Josh: That would be nuts. Imagine one day you’re working at the cemetery and all of a sudden one of those bells starts ringing. Time to run.

Brandon: That would freak me out. A huge fear of mine. But as I get older and have more assets and things to my name one of my newer fears is what happens if I go to my wife? How is she going to go on? Not just emotionally but how is she going to go on with the rest of her life with the business? Will everything fall apart?

When you talked to me about this podcast, about having our guest on today I thought it was terrific idea because I don’t know what to do about that. I have never covered it so this is going to be an actionable podcast and that’s what BiggerPockets is all about. So I’m looking forward to it.

Josh: Absolutely. Absolutely. I’ll make sure the next time me and you go to the beach that we won’t bury you up to your head.

Brandon: Thank you. I’ll start to shake and get scared. You don’t want to see me in a bathing suit anyway so we’ll avoid the beach.

Josh: Yes. The Sasquatch in a bathing suit. A threatening sight. Alright let’s get to this.

Brandon: Alright. Why don’t you introduce us to our guest today, Josh?

Josh: With us to talk about death is our good friend, Neal Frankle. Neal is a certified financial planner with twenty-five plus years of experience and Neal’s actually got a really, really amazing story. It’s somewhat tragic but he’s really overcome that and it’s fantastic. He’s a great guy.

Neal teaches people how to plan for their financial future and he blogs at wealthpilgrim.com. He’s one of the top guys in the financial blogging space. He’s incredible, he’s got great advice, he’s very responsive. If you hit him up at Wealth Pilgrim he’ll be there to take your answers. But without further suspense or anything else, welcome Neal.

Neal: Thanks a lot. It’s great to be here. I appreciate the opportunity.

Josh: We’re very, very happy to have you. As I mentioned in your intro there you’ve got somewhat of a story here. You overcame huge adversity. Maybe you could tell us about your upbringing and how that lead you to become who you are today?

Neal: OK. Well unfortunately by the time I was out of high school both of my parents had passed away. My mum died when I was fifteen and then my dad was in an airplane crash two years later. They were in their forties, we were four children, they didn’t do any planning whatsoever; no trusts, no will. My dad, by accident – in fact he was doing a real estate deal so he had to have life insurance to make sure he could perform. He made one premium payment on life insurance. The deal didn’t go through but the life insurance did. Because of that we were able to go to college. But the family was basically decimated because neither parent did anything to plan for the unexpected.

Josh: Unfortunately that is something that - I’m sure you know some statistics – a good number of people do not plan. Do you have any data on that by chance?

Neal: Actually I do. Something to the tune of about 80% of the people don’t do any planning. At least 80%, it could be higher than that. They might have life insurance but a comprehensive plan, not many people do it.

Josh: What does that tell us about our education system? Financial education is not a priority is it?

Neal: I don’t know if it’s a function of education, it might be a part of that. I think more of it is putting the big boy pants on, grow up, do what’s required. People just don’t want to do it. They know what they’ve got to do.

Josh: Absolutely. I got you. We’ll get into some of that stuff later on. The big thing, the reason I wanted to have Neal on the show; Neal and I attended a conference. It was a bloggers conference of financial bloggers. We had this incredible discussion with a bunch of really sharp guys about death. It sounds morbid but the conversation really got me excited because I realized I had not done any planning for my own death.

Sitting and thinking about it gets me a little freaked out, in fact it gets me a lot freaked out. I’ve got a wife, I’ve got kids – to think one day something’s going to happen to me.

But the folks listening to this show are business people. Whether or not they’re business people or they just work for somebody else, I thought it would be really important we get into planning for death. So Neal, let’s talk about that discussion. One of the things that really sparked my interest was planning your business for your death. So, what happens? Are you ready today? Is your business ready today, in the event that you kick the bucket?

Neal: That is a phenomenal question and it’s actually in my view really powerful, even if you think you’re never going to die. Let’s face it, most people don’t get that someday they’re going to be gone. They know it intellectually; they don’t really get it in their heart. But the reason that I think that’s a great question is because if you can make your business run without you then your business becomes all the more powerful and profitable.

Josh: Absolutely. One of the things we really delved into was having a plan. I know, for me we talked – because a lot of us run web companies – we do want this to apply for those folks who’ve got a real estate business and other businesses – but what I realized was, God forbid something happened to me, does my wife know how to run my business? Does she have the plans? Does she know where the important paperwork is? Let’s get into that a little bit. Maybe you can talk about what is it somebody needs to do, what do they need to have prepared, particularly for their business, for some kind of transition?

Neal: I think there’s two or three parts of it. It’s funny because after we’re done I’m going to be talking to my lawyer specifically about my transition plan, so it’s timely.

The first thing is to ask yourself what happens if I can’t come in tomorrow, if I’m gone? How does the business run? Your spouse has to have all the documents. What I’ve done, Josh, is I’ve recorded myself on video showing my wife where on the C drive on our computer all our documents are. I just got a screen recorder and it shows her exactly where the files are. I also tell her what these files do and what to do. I’ve written out a plan but I’ve also got an audio plan for her.

Josh: That’s a great idea. You’ve got this thing. I hate to be morbid, but is it literally, ‘Hey honey. If you’re watching this I’m dead. This is what you need to do.’ Is that kind of how it goes?

Neal: Well I don’t say that but it’s pretty obvious. I just say here’s what you do. I don’t go into that part of it. ‘It’s been wonderful. Thank you for your-‘ None of that. It’s very factual stuff.

Josh: ‘If you’re listening to this and watching this video you’re probably smiling because you’re the reason I’m dead.’

You put together these videos. You’ve got the written documents. What’s included in those written documents? I’m talking specifically for your business.

Neal: In my particular business you have to have licenses. I have arrangements with a custodian, which is TD Ameritrade. I’ve got the State of California. So there are three or four legal requirements that have to be met to continue the business. I’ve also appointed a broker to sell the business. So I’ve already set that all up.

But there’s got to be things that she does to actually execute the plan. So I explain to her what should happen and who’s going to do what and what she needs to do to make that legally possible. In every business it’s different. Maybe interview a lawyer for your own business and say what’s required to keep this thing going?

Josh: We’ll bring this back to real estate for everybody in a bit but I think a lot of these issues are relevant to anyone who might be listening, so before we do that let’s keep digging into this thing. I look at my business for example. I say on the day to day there’s certain things that need to be done. For me I know that I need to plot some kind of chart – here’s what you do every day. I guess this would apply for real estate or non-real estate. Here’s the day to day stuff, here’s the week to week, here’s the month to month, here’s where the paperwork is, here’s how to find stuff.

You talked about planning for selling the business. I think that’s a really good point. How do you do that? How do you prepare? Presumably a lot of people don’t really think what happens if I die to the business. Do I sell it? Do I keep running it? Well I can’t run it – I’m dead – but does my spouse run it? Finding that next person. Get into that a bit.

Neal: First of all, specific to your own business, my wife is not a financial planner. My clients are not going to hire her – they’re going to go. So that’s number one. What I’ve done is, number one contracted with a company that specializes in succession planning for financial advisors. The second thing I do, which is more applicable for your listeners is to network with local business people and say, ‘Look. If I go, I have a dry cleaning business, you’re a dry cleaner. Let’s set up a reciprocal arrangement where if something happens to you I’ll buy your practice or your business and so forth.’ You’ve got to look around.

Brandon: That’s a really good idea. I wonder if you could do the same thing with real estate. If I go I’ve got a good friend who invests. He has about the same amount of properties as I do. We’ve kind of talked about that. If one of us dies we hope the other person will come in and at least settle the problems so our wives, who are grieving, won’t have to because we have that kind of inside information already on how that real estate works. So that makes a lot of sense to me.

Neal: The nice thing about real estate, in my opinion, is it’s not as time sensitive as an ongoing retail business that needs daily attention. For real estate you can get a manager to do it. You don’t need to make buy/sell decisions on an hourly basis. So you have a little more time.

Brandon: What other things should I be doing as a real estate investor to plan for my eventual retirement, followed by death – hopefully much later. What should I be doing in your opinion?

Neal: In my opinion the first thing you’ve got to do is look at your estate plan because if at the time of your death you have a taxable estate by setting up proper trusts you could take a huge chunk out of the estate tax and the transition or you could create a world of problems for yourself.

The first step would be setting up appropriate trusts. If you have multimillion dollars worth of real estate then you might want a family limited partnership and it gets complicated but the first step is getting your trusts and limited partnerships in place.

Josh: Can you talk a little bit about that please, Neal? As somebody – admittedly I know very little and I’ve been reading and studying real estate but I know very little about trusts, I know very little about inheritance and heirs and all this stuff.

Brandon: I know nothing.

Josh: So school us. We’re the listeners and we’re here. I want to learn. What is a trust? How does it protect you? How does it protect your family?

Neal: The first thing is to name me as your beneficiary. That’s the first rule in setting up a trust.

Josh: That was a given.

Neal: There’s really two elements of a trust. Number one is you need a mechanism by which stuff you own gets transferred to someone else when you’re dead. If you do nothing there’s a mechanism for that, it’s called probate. It’s a very bad concept. I could do a lecture on that, but OK.

The second way is joint tenants. Joint tenants is good because the stuff automatically – depending on the state your in and also, a disclaimer, I’m not a lawyer and I don’t want to give anyone legal advice but I’m just going to give general concepts.

Joint tenants has some nice benefits because when you die all your assets that are in joint tenancy go to your survivor.

There’s problems because if you die and your spouse gets everything, what happens when she dies or gets sick or something? That’s why the trust can be helpful.

The trust is a mechanism by which assets are transferred.

Josh: So are both you and your wife in the trust? And your kids? How does that exactly work?

Neal: My spouse and I are owners of the trust. We’re also beneficiaries of the trust and we’re also trustees of the trust. If something happens to one of us we could name someone else as a trustee but they’re not an owner. So they hold control for our benefit but they don’t have ownership rights. That’s the big difference between a joint tenant and a trust.

So the first part of it is it’s a mechanism by which assets are transferred. The second element is that depending on the size of your estate and the estate taxes at the time of your death the trust could potentially help you to save hundreds of thousands of dollars in estate taxes.

Brandon: Do you have a minimum for what – if a guy owns one single house, one rental house – should he be looking at getting a trust? Or is that something for the millionaires only?

Neal: Well because I’m a pessimist and a conservative and my experience, all kidding aside, is that you never know when you’re going to die – and unfortunately I was a recipient of that. My parents had they had a trust, even though they didn’t have much money, would have saved a lot of grief.

So the trust also does a lot of things even if you have no money. It has power of attorney, if you have children and you want to name a guardian for your kids the trust can help you do that, it does a lot of other things. So I wouldn’t wait to be a rich guy before I got a trust.

Josh: Can you talk about the difference between for example a guy has one rental property and he’s got $50,000 in the bank. Say the property is worth $100,000. He kicks the bucket versus his friend who has the exact same finances but puts that in a trust. What’s the difference? How does that work?

Neal: First of all let’s say the guy dies without a trust. Assuming he had the property in joint tenants with his spouse and the money in joint tenants, then it goes to his spouse. If he’s single and it’s just in his name then the lawyers have got to get involved. It’s probated and then the lawyers are going to eat it all up.

Versus the other guy or woman, because we all know women are smarter than men-

Josh: 100%. I agree.

Neal: So if the woman has the trust set up, she passes away. Her trustee would basically divvy it up. It would probably take two or three weeks, maybe a month, it’s all done. It’s very simple, very easy.

Josh: Is there a tax implication on that? You’ve got the property. Are you now paying cap gains tax or death tax or any of that weird stuff?

Neal: There are some benefits of having- It’s going to get a lot more complicated than you want but let’s put it this way; depending on the size of someone’s estate it could save a lot of money in estate taxes but for most of us it won’t right now because we have an estate tax exclusion of $5 million.

Josh: Very nice.

Neal: It drops back to $1 million. Basically the trust can allow you to double your estate tax benefit. If you have an estate worth $10 million then the trust would basically shield $10 million of assets but if the estate tax drops to $1 million then the trust could help you shield $2 million of tax free assets.

It’s complicated. I would definitely recommend at this point your people not make a decision based on what we’re talking about but make the decision to talk to a lawyer about this if it sounds of interest.

Josh: I was going to say that. This is a pretty heavy conversation. There’s a lot of really important and detailed concepts. So definitely talk to your lawyer, definitely talk to a CFP. Don’t go out there and try to figure out this stuff on your own. That’s my disclaimer to your disclaimer. I know Brandon wanted to jump in with some stuff here.

Brandon: I’m just curious Neal. I know this is a real general question but if I wanted to set up a trust what am I looking at to have? Does a lawyer do that or does a financial planner do it? Also what is the general range that it’s going to cost? Is this a $5,000 thing or a $500,000 thing? Or twenty bucks?

Neal: Good question Brandon. I would not recommend that anyone do this with a CFP. I would recommend one of two things – a lawyer if your situation is complicated or you just have more piece of mind that way – and, really important, make sure the lawyer specializes in estate trusts.

A quick story: I was friendly with a lawyer who knew nothing about estate taxes and he would take people and charge double. He would take money, charge $5,000. He would pay another lawyer $2,500 to do the trust and he would pocket $2,500. So it’s a great way to waste a lot of money if you don’t go directly to a trust attorney.

The other way to do it is you can use a service like Legalzoom.com and I’ve done some reviews on places like that before and I think that Josh probably has to or may in the future. Self service companies could be good as well depending on how complicated your situation is. But a company like Legal Zoom, I don’t know what they charge. Maybe $100 or $200 or $300. A lawyer could charge between $500 and $3,000 or $5,000 or $10,000 depending on if it’s very complicated.

If you have lots of real estate and/or lots of beneficiaries and a second marriage and this or that you really should talk to a lawyer in my view.

Josh: That’s good advice. We’ve covered cost, we’ve covered kind of vaguely what it does, it sounds to me like a trust is something that probably everybody wants to put together.

You mentioned earlier probate. Maybe we could talk a little about probate – what it is, how it works, from the perspective of protecting yourself against your estate going into probate, and then I think we should actually tackle it from the other side; as an investor there are lots of families and there are lots of people who unfortunately have to deal with probate. How can you come in as an investor and help those families dispose of the assets that they probably want to get rid of so they can get some cash on hand? Let’s take it from both sides. Let’s start with what is probate?

Neal: Probate is the mechanism by which the state, the courts decide where your assets are going. If you have a will you die testate, meaning the court will take your will and interpret it. That’s going to take time and money and lawyers. If you die without a will you died intestate, meaning you have no will. So the court will use the state laws and decide where your assets go.

It’s a lengthy process, courts are involved, the court makes decisions for you, lawyers are involved, it takes a lot of time, a lot of money and it’s completely public. It allows a lot of people to fight over your money. For example Elvis, when he died his estate was worth $10 million and his heirs got £3 million. Guess where the other $7 million went?

Josh: US Government?

Brandon: Lawyers?

Neal: Lawyers and courts, right.

When John Wayne no one knew what the size of the estate was because he had a trust. So it’s private, it’s quick, it’s cheap. Probate is exactly the opposite of that.

Josh: So trusts and wills, how do they work hand in hand? There might be a little confusion. You want to have a will obviously.

Neal: No you don’t.

Josh: You don’t want to have a will?

Neal: Here’s what you should have – again depending on the estate and your situation – I’m not a lawyer.

Josh: He’s not a lawyer! Talk to your lawyer! Good one.

Neal: OK. A trust sort of does the same job as a will. You’re better off having a trust, all things being equal, than a will. However, what people generally have is a will in case you forgot to put something into the trust. Then you have what’s called the pour over will, which is if you forgot then everything you left out of the trust goes into the trust via the will.

Josh: So would that be the ultimate set up that you would think our listeners would want to have? To have that trust and have the pour over will as the optimum?

Neal: Yes.

Josh: OK. I’ve never heard of a pour over will. This is fantastic. A lot of great info.

Let’s get back to probate then. We know how probate is; it’s public, it’s open. What does that mean to somebody who is an investor? I know a lot of investors market to the probate market. They send mailers out, it’s kind of a grim thing but unfortunately a lot of times people who pass away leave assets and they don’t know what to do. How can somebody who is an investor come in and help out?

Neal: A, I don’t know a ton about this but B, this proves the point. The reason that some investors aggressively market to probate attorneys is because they know that the people who mistakenly went through probate are screwed and they’re going to take advantage of that. That’s where they’re going to get a deal.

Let’s say an asset gets probated, the family wants the money quick. They need to pay for legal fees, estate taxes possibly; they’re in a tough situation. How you would pursue that specifically I don’t know exactly but I can tell you again unfortunately probates are public record. So you could find out about probate and contact the lawyers and the families and make yourself available as an investor.

Josh: There have been a bunch of articles if you go to the BiggerPockets blog at biggerpockets.com/blog. You can look up some articles on it. We’ll actually put some links into the show notes at BiggerPockets.com/Show005.

It sounds like we don’t want to end up in probate, that’s for sure.

Neal: Absolutely not.

Josh: We also don’t want to end up passing on without being prepared in other ways. I think one of the things you and I have talked about, Neal, is on life insurance. Maybe we can cover that a little bit now. What is it? How does it work? Why do we need it?

Neal: Life insurance basically pays off a big lump sum in case you die prematurely. And note to self, everybody dies prematurely.

Josh: Yes. What is prematurely?

Neal: I just say that to make everybody feel good. But if you die you get a lump sum and then the family should use that lump sum to invest it, to generate the income to replace the income that you’re no longer here to provide. So you need it, Josh, if people depend on your income.

Josh: OK. And there’s various kinds of life insurance, correct? I know there’s term and there’s whole life. What’s the difference?

Neal: One is good and one is evil.

Josh: Which one is the evil one?

Neal: The evil is whole life, in my opinion, for most people, but not always. But 99% of the time. If you’re a life insurance agent whole life is wonderful because you make a ton of commissions on it.

Josh: Keep it real, Neal. I love it.

Neal: For most people term insurance is far better. It’s a whole lot cheaper, gives you a lot more coverage for the same dollar and it’s amazingly cheap; much cheaper than you think. So term insurance is the way to go, absolutely. I’m a big fan and I’m a big believer in it.

Josh: OK. We’ve got term insurance. We’re not going to get whole life because we don’t want to make the insurance salesman rich. We want to take care of our families. How much term insurance should somebody get? Say I’m a real estate investor who’s got ten or twenty properties bringing in income. Maybe I work a 9 to 5 on top of that. I guess we could come up with a million scenarios, but ultimately what are people looking for in terms of how much they should purchase?

Neal: This is a really good question. The way to do it is, to really break it down. If you die you want to pay off all your real estate. Or pay off your house. Let’s say you owe a mortgage of £300,000 – that’s the base amount. Then you want to provide $100,000 of income for your family – let’s just say. Rule of thumb, 5% return on your investment, you would need $2 million invested to generate £100,000 in income – and that’s pretax. So you would need £2 million life insurance. It’s really rough, it’s really broad, but you just work backwards on your income.

Josh: So working backwards is something you do as an investor regardless when you are planning. I know Brandon and I have talked about that in terms of building up your portfolio and plotting but it sounds like that’s a great idea for this as well.

Brandon: One thing that I did for my life insurance, and I’d like to get your opinion on this. I got a policy a couple of years ago. It was a term life insurance but then they gave me the ability every year to up the amount I have because as I buy more and more properties I need more and more money. So my theory was I would always have enough life insurance to pay off all the mortgages that I have so if I were to die at least my wife knows she can pay off everything we own and then just hand it over to property management or over to my other investor friends.

Neal: Conceptually you’re in the right neighborhood. I want you to think of your life insurance needs as a bell curve. On the one hand you will need more as your family grows and as your exposure grows, agreed. But as your net worth grows and you pay off properties and you have more equity, more passive income and your kids get older you actually need less life insurance.

Brandon: That makes sense.

Neal: So you first have to plot out what your life insurance needs are over the next twenty/thirty years. Of course it’s going to change and you have to make assumptions and you have to be able to build to buy more insurance and then taper it down. So what I’ve done, rather than do what you did, is I bought more policies at the beginning but I bought them for different periods of time. So when I was thirty I bought a thirty year policy – it expires when I’m sixty. And then I would buy different policies that would extend for different periods of time to tailor my life insurance needs or plan to my needs.

Josh: So you can buy multiple policies is what you’re saying.

Neal: Not only can you but I recommend it.

Brandon: So you can have one expire when your kid has graduated for college. One of them could expire because you no longer care about that extra money.

Neal: Right.

Josh: That’s great. Let’s get into some overall ideas – you’re a CFP, you’re talking to an audience of actual real investors and would be investors. Give us some big, broad, sweeping advice that you can provide to us; whether you’re somebody just starting or somebody who has been around for a while. What are your best tips for CYA, covering your back side, making sure your family is ready to go financially. What do we need to do?

Neal: The first thing is to have enough liquidity and to be tracking your spending. Very important because people spend about 30% more than they think they spend and if you simply track it by virtue of tracking your spending you’re much more conscious of how you spend money and you’ll be able to catapult your financial future, your success. So track your spending.

Number two, make sure you have a good emergency fund and enough life insurance because you don’t know, and guess what – you really don’t know – and if people are depending on you do the responsible thing – get enough life insurance.

Then, from there on, I actually like Brandon’s post – he wrote a post for me a month or two ago. It was wonderful. It was about looking at your life, building up plans and going backwards. What do you want it to look like? When do you want it to look like that? And then invest accordingly. Not getting caught up in this year or what President Obama is saying now or what’s going on in Congress.

Have a plan and execute it and understand if it’s a twenty or thirty year plan and execute it.

The fourth thing, which I’m not sure if Brandon mentioned but I always do is to always have an accountability partner and a mentor to run your ideas off someone who has what you want.

Josh: That’s a great idea. How often should somebody be reviewing these plans?

Neal: At least once a year. Talking to your accountability partner once a month.

Josh: Really quick, the post that Neal talked about we’ll have at the show notes at BiggerPockets.com/Show005.

Brandon: One thing you said, Neal, that I just wanted to point out a real life example of – you said track your expenses and what you’re spending. Probably three or four years ago I sat down with my wife and we decided to take our finances more seriously. We figured out we were spending £1,000 a month that we had no idea where it was going. So we sat down and plotted it all out, created a budget and nothing changed in our life after that but all of a sudden we had an extra $1,000 a month.

Neal: Exactly right.

Brandon: It was like magic. After that I told every one of my friends, ‘You’ve got to do this. I was spending $1,000 a month more than I thought I was.’ Great advice.

Josh: We got him off the Starbucks.

Brandon: Oh no. Not that.

Josh: We’re running out of time here so let’s knock out a couple of really quick questions. Neal, what is your favorite personal finance book?

Neal: My very favorite personal finance book is Money Academy For Couples written by Neal Frankle.

Josh: How about your favorite personal finance book not written by Neal Frankle?

Neal: That’s a tough one. Dave Ramsey wrote a book, I forgot the name of it –

Brandon: The Total Money Makeover.

Neal: The Total Money Makeover. That’s great. But the most important business book I ever read was The EMyth by Michael Gerber. Phenomenal. That changed my whole business life.

Brandon: I think that’s the fourth time on this podcast that we’ve had somebody say the same book and I haven’t read that one.

Neal: Well Brandon, what do you conclude from that, buddy?

Brandon: I’ll pick that up this week.

Josh: OK let’s talk about what’s your favorite hobby? What do you do for fun? Besides giving me grief!

Neal: Believe it or not I play drums and I’ve played in a few bands. I’ve even toured a little bit all over the country once in a while. Even though I’m pre-death I still play rock.

Josh: So do the Rolling Bones.

Brandon: That’s cool. I play drums too. I’m pretty terrible but I enjoy it quite a bit.

Josh: I’m a former terrible drummer as well.

Neal: Wow. OK. So we’ve got a lot in common here.

Josh: Shocking.

Brandon: OK. This is the last question I have. I ask everybody and I’m going to tailor it a little for you. The question I have is, in this industry a lot of people do really well and make a lot of money and they end up retiring with a huge portfolio and other people end up with nothing and end up living off family and friends and the government until they die. What’s the one thing or one or two things that sets people apart – the top performers from those who are just scraping by?

Neal: The three things that come to mind are number one, commitment. Two, a plan. Three, execution. There’s a saying in the Israeli army that goes, ‘There is no such thing as impossible; there’s only I don’t want to do it’. It sounds better in Hebrew. But the reality is when I talk to people who are successful it’s because not only did they have a plan and they were committed to it but they actually took action. Other people have excuses.

Look at yourself Brandon. You’ve executed your plan and you continue to do so. Same with you, Josh. Look at what you’ve done. BiggerPockets didn’t fall into your lap. You had to work tirelessly and you continue to do so. It’s called commitment and execution. That’s what it’s about.

In America I honestly believe you can do anything, you’ve just got to do the work. It’s not going to fall into your pocket – even if you have BiggerPockets!

Josh: That’s great, Neal. Thank you.

Neal: It’s really my pleasure. Thanks for having me on the show.

Brandon: No problem.

Josh: No problem. Great having you.

And that was our show today, everybody. I hope you enjoyed our discussion on death and near death with certified financial planner, Neal Frankle. If you haven’t yet left us a review please do so. As of now we’re up to sixty-five five star reviews on Itunes. These reviews really help us rank better on itunes, help us get more people to see us. Also subscribing to the show on itunes is really, really important, so please jump on Itunes and make sure you click the subscribe button so you make sure you can subscribe to the show – again, another way that we can help get the word out about what we’re doing here.

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Finally, just remember all the information talked about on today’s podcast can be found in the show notes at BiggerPockets.com/Show005. This is Joshua Dorkin signing off.

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