Mortgages and Aging... An Epic struggle: Part 4, The Cash in the Mattress vs The Cash in the Walls

What is David Talking About NOW?!?

Wow... the comments I've received and emails I've gotten regarding these posts have been very interesting. So now I have to deal with the dilemma facing taking the next step.

I remember years ago when someone close to me passed away, there was a man who had lived a very modest and frugal life. Out of the blue his family found out he had a safety deposit box! He had a HUGE sum of money (for someone who lived his way) stashed away... likely from customers that paid him in cash.

This was a great find for his family who had funeral costs and to think about his wife...but what had he really done by hiding that money?

Well... he depreciated it!

WHAT?!

Just ask Bernanke! Cash depreciates! How? Inflation... that horrible horrible word.

What he had is what I'll refer to as Mattress Money. I actually had a lender once tell me "Mattress Money OK!"...

The thing is, that this man was an immigrant and he learned to always have a stock pile. Higher Economic reasoning was not in his training or education.

There are many elderly who suffer from this glut of cash and don't use it to create a better living condition for themselves.

The other problem with this scenario is - most lenders DON'T COUNT IT. So what that it is well seasoned because Grandma got the bills when they were new and the dates on them are from the 60s!... it isn't SOURCED and it isn't SEASONED so it is hard to get a lender to move quickly on a loan if they can't trace this cash back to somewhere!

Sure there are loans that we can use to maybe get around this... but why in the world is that money just sitting there getting eaten by the moths and DEPRECIATING?!?

There are hundreds of vehicles that could be used to SECURE this money and make it not only available to the person who has it in a liquid form (High Yield Checking, Money Market) but also EARN some money to at least grow against Inflation's pull.

Which brings me to my second definition... The Money in the WALLS

What?!?! OOOOOhhh am I going to get flamed for this!

The money in the walls is this beast of a burden on the Elderly.... it is illiquid funds trapped in a house. It is that money that you know Grandpa worked hard for but now that he needs it, he can't get to it! If he CAN get to it, he's going to have to pay to get it...

What am I talking about?!?

EQUITY!! Equity in your home is money TRAPPED in the walls. Sure - the MMA is a great idea in ways - but when you need the money and you're having your credit issues as I discussed in a previous post, then having a house that is completely paid off means that the money is trapped in the walls!!

Just look at the great Douglas Andrew ... his whole wealth building empire is based in NOT LETTING YOUR MONEY GET TRAPPED. Why?

• Money trapped in the walls SHRINKS! it depreciates due to inflation...
• The House is an asset as well... and it can appreciate... it usually does in fact
• but MONEY - CASH MONEY - does not appreciate! It depreciates... unless... unless you INVEST IT.

OK... back off my tangent - how does this relate to seniors??

If you find a client that has some money stashed away - this is the time that family needs to step in and help them put this money away where it is secure - but liquid where they can reach it in an emergency. Find a financial advisor if need be. Don't put it in CDs or T-bills... focus on ready access and liquidity... and get a co-signor - an executor in case something happens and someone else needs to help out. Again - call an estate attorney!

If this is done properly - it can help seniors in need of refinancing to get to the money in their walls to help them in times of need. It can help the lenders see that they have money and a passive income so they will have a way to repay the loan. And that's what it is all about in the getting a loan game!

Here are Links to the Other Segments:

1. Introduction
2. Credit Issues for Seniors
3. For HELOC's Sake
4. Flow Flow Flow the Cash
5. If you've got it... Plan it!
6. As a last resort...