(Almost) Everything is Negotiable

As a young lawyer I worked at the Oakland County prosecutor’s office. I had a good friend in the office by the name of Paul. He was a big Italian kid, played football at Hillsdale College and had a low gravelly voice straight out of a Mafia movie. I learned two things from Paul: use ice cold water when you make coffee (he was a connoisseur) and never forget that you can negotiate the price of just about anything.

The first time it happened it was somewhat of a shock. Paul and I were on a lunch break at a shopping mall near the courthouse looking at shoes. The price was clearly listed but when the salesperson came up, Paul slowly and calmly began to work down the price. After I watched Paul do this in several different situations, I came to realize that just about anything is negotiable.

Now, I will confess, in my younger days I could take it too far. My wife still likes to remind me about the time that I was trying to negotiate the price of a kitchen table at a furniture store. When the salesman said he could go no lower I whispered to her “let’s head for the door, they’ll stop us before we get out.” Nothing happened and out we went…without the table. I didn’t tell Paul about that one.

The cost of negotiation is in time and energy, which some people would rather avoid. But too often people hear the price and think that’s the end of the conversation. In most instances you can, in a very polite and non-stressful way, probe for a little better deal. Remember the rule: the worst they can say is no. Here are some items worth trying to negotiate:

Rent: The advertised rent of an apartment is what the landlord hopes to get. It never hurts to work for a lower amount by showing market averages or considering a longer lease. My clients who are landlords tell me that they will give reduced rent in return for people that they think will take good care of things and will make a long-term commitment.

Medical bills: People get a complicated looking bill in the mail and think that’s the end of the discussion. That’s not necessarily the case. Simply indicating that you can afford to pay immediately if they lower the price sometimes does wonders.

Subscription services: Companies providing subscription services for cell phones, cable and even XM radio don’t want you to leave. If you shop the competition and go back to your current provider with the idea that you’re thinking of leaving, you’ll be amazed on how flexible they can be in changing your bill.

Airline miles: One of my sons came home last weekend from Chicago on a Delta flight. It was the second time in a row that his flight was delayed. He went to the front desk and explained how much trouble the delay caused (twice) and was initially offered 3,000 Delta miles for his troubles. He tells me he conveyed his appreciation and told the person he thought more miles were in order based on the length of the delay. Sure enough after the attendant talked to her manager he left with 10,000 Delta miles. No yelling, just a little persistence.

Negotiating prices is out of many people’s comfort zone. You don’t have to be aggressive or disrespectful to be effective. In fact, the nicer and calmer you are the better your chances of getting someone to give you some special treatment. Just be careful in furniture stores 😊.

Fun Fact: Speaking of negotiation, a guy named Ron Cobb was hired by Steven Spielberg to direct a sequel to Close Encounters of the Third Kind, called Night Skies. Eventually, Spielberg took over the directing and changed the name to E. T. Ron Cobb was able to negotiate a single percentage point from Spielberg’s share of the deal. Based on E.T.’s success, Cobb’s first check was for over $1 million, and he continued to get checks until his death in 2020.

Three Quick Ones and a Cold Fact

I usually stick to one topic in my Up Early emails, but today I’m going to try a quick hit on three topics I’ve run across lately.

Inherited IRAs: IRAs you create yourself have one set of distribution rules. IRAs you inherit as a beneficiary have a completely different set of rules that you need to know. Most people who inherited an IRA in 2020 or later have to withdraw the full IRA balance (and pay taxes) within 10 years of the death of the original owner. You can’t wait until you are in your 70s to start to withdraw, and depending on the age of the original owner at death, you might also have Required Minimum Distributions every year up until full withdrawal in year 10. There are some very complicated exceptions to the rule above so check with your estate planning attorney, financial planner, accountant and/or the financial institution holding the inherited IRA. The RMD deadline for 2025 is fast approaching.

Gift Card Planning: According to research by Bankrate, the average American has $244 of unused gift card balances. There are also lots of folks who lost money because of expiration, a lost card or the retailer going out of business. The best defense is organization: Register your card per the instructions on the card. Take a photo of the card (front and back) and see if you can transfer the card to your virtual wallet on your phone for ease of use. While you have your phone out, set a reminder close to the expiration date so you don’t lose out. Some states have a mandatory cash back requirement once the gift card balance gets low. Michigan does not, but Michigan does have a rule banning inactivity fees and requiring a minimum 5-year expiration period.

Free Money Awaits Infants: Watch for the details of “Trump Accounts” to come out in 2026. Any child born in 2025 through 2028 is potentially eligible to receive $1,000 in seed money from the Federal Government for the account which will then grow tax-deferred until the child reaches age 18. The details of the accounts are complex, and they don’t suit everyone’s needs, but I’d much rather see some of my taxes go to funding an account for your child or grandchild then I would for some of the “projects” the government takes on.

Those are three quick topics worth considering. Be safe out there in this weather (my trip to Florida over Thanksgiving seems like a long time ago).

Fun Fact: Yes, it’s been cold. But if it will make you feel any better, the coldest day on record in Michigan was February 9, 1934, when the temperature in Vanderbilt (just north of Gaylord) dropped to -51 degrees Fahrenheit.

Greasing the Skids for Your Inheritance

That old idiom derives from a time when heavy equipment had to be transported on giant skids and using grease made it easier to transport. It also applies to preparing for what happens after you’re gone and the details of your inheritance decisions are executed. People sometimes forget that they won’t be around to clarify intentions, sooth hurt feelings and misunderstandings, or to provide advice on how best to use money bequeathed.

I once had a client who died unexpectedly in his late 50s. He was a good investor, frugal, divorced and only had one child. That child, a son, led a rather simple life. He and his wife were hourly workers. They were raising their two teenagers at the time of the death. The son instantly became a millionaire, without any knowledge of how to invest or how to prioritize spending and saving. The next time I saw the son about a year later, he “retired,” bought a new bigger home, was driving a nice big pickup and was catering events at his house for extended family and friends. Something tells me that deceased father would have liked to prepare his son a bit better for handling a seven-figure inheritance. Maybe he would have told the son to be frugal and make sure the money lasts. However, I could also envision him saying “life is short – sometimes surprisingly short, so enjoy it while you can!” All I know for sure is that he didn’t grease the skids for his son’s very heavy responsibility of managing a large investment portfolio.

Don’t let that happen to you. Here are some factors to consider so as to make things “move” easier after you are gone:

1. Make sure your financial and medical decision makers know where the estate planning documents are kept. Don’t give them copies because that creates its own set of issues if you later change the plan. Giving them the exact location of the documents, along with any code or lock combination is enough.
2. If things are not going evenly to a group of people of equal relation (e.g. kids or grandkids) let them know up front. Whether you give them a justification is up to you, (I mean, it’s your money and you really can do what you want with it), but letting them know things aren’t going to be equal helps minimize tensions and challenges later on.
3. Letting kids know how much you have is a unique issue. It’s definitely a good idea if you begin to have trouble keeping track of it and managing it. But while you are still competent, giving details of your net worth can be good or bad. My experience is that children inevitably estimate what their parents are worth, if for no other reason than to plan how to take care of them if they need nursing care. If you think they are way off, you might want to at least give some hints so they have a better perspective.
4. Letting your kids know who will be in charge as the trustee or executor is helpful. Again, hurt feelings for silly things can come out of nowhere. Your medical decision maker should also know your feelings about end-of-life care.
5. If what you leave a child or grandchild will completely change their financial status, it might be best to start coaching them a bit now about how to handle investments and the types of help they can and should get from professionals. Money can overwhelm people, and many older children might not realize that Jed Clampett and his family weren’t just millionaires, they were more like decamillionaires in today’s dollars. A million dollars is not what it used to be.

Of course, you can eliminate all of these issues if you do what I used to tell my estate planning seminar attendees decades ago: Time things carefully so that the check to the undertaker bounces! Good luck with that!

 

Fun Fact: I was in Southwest Florida for Thanksgiving visiting family (and golfing, of course) and we visited the Thomas Edison museum. Edison and Henry Ford had winter homes in Ft. Myers. An inventor as prolific as Thomas Edison had to be an optimist. Among his 1,093 patents was the lightbulb, and it was a bumpy road to discovery. Ever the optimist, Edison used to describe his initial lightbulb failures as “discovering thousands of ways it did not work.”