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Some things change with the times, but God's financial principles never do. They're not only timeless, they work in every situation for every person and at every income level. Hi, I'm Rob West. Whether you're barely making ends meet or managing significant wealth, the Bible's wisdom for handling money is always right on target. Today, Ron Blue will unpack five proven principles for managing your money well, and then we'll take your calls at 800-525-7000.
That's 800-525-7000. This is Faith and Finance, biblical wisdom for your financial decisions.
Well, it's always a blessing to have Ron Blue with us as a nationally recognized financial expert, co-founder of Kingdom Advisors, and author of more than 20 books on wise money management and biblical stewardship. Ron has spent decades equipping God's people to handle their finances God's way. Ron, great to have you back with us. Yeah. Always, Rabbi, look forward to this.
Thank you for inviting me. Of course.
Well, Ron, before we dive into these five wise principles, you've got a great story that brings them to life.
So, why don't we begin there?
Okay. Many years ago, it's probably the early 90s, I was asked to testify before a Senate subcommittee. meeting to discuss various issues for the family and money and When it was my turn to speak, the senator said Timmy Sunder from Connecticut, he said, what would you recommend? And I thought to myself, he's going to laugh when I finish because it is so simple. But I said, Senator, I think that American families could benefit from just doing these things.
Number one, spend less than they earn. Secondly, avoid that. Third, build liquidity or margin or into their finances. and set goals, long-term goals, so that they prioritize their spending. And he said, well, it seems to me that that'd work for every family.
At any income level. And I replied, you're right, Senator, including the United States government. Ha ha ha ha ha ha ha. Boy, that is so true, isn't it? These principles, Ron, not only apply to individuals, they apply to nations, don't they?
Oh yeah, they're because they're financial principles, uh families, nation, businesses, the principles are the same and they're never going to change. Let's talk about a few of these. I know we have just a moment here together. The first one is really the foundation of all financial decision making. Once you know God owns it all, you've got to live within your means, don't you?
Absolutely. And if I were going to say One piece of advice that I would give. that spend less than you earn, keep doing it for a long time frame. And you're going to be okay. And I've seen that in hundreds and hundreds of cases where people took the slow road to wealth as opposed to the get-rich.
Road. Yeah, that's exactly right. Ron, the second is simple, but it's also very powerful, and that is avoid debt. And you've shared principles over the years, including spousal unity and don't deny God an opportunity to work. But from a financial standpoint, you've taught that the economic cost has to be lower than the potential gain, right?
Well, that's free. sure and so there are many kinds of debt but Uh some of it is good and some of it is not so good, but In any event, good or bad, debt always mortgages the future in the sense that it is the priority use of your money as you go forward. And the reason for that is that the lender is always going to get their money before anybody else gets their money. And the Bible says that. The rich rule over the poor and the borrower is a slave to the lender.
truth, the principle. It will always be true. Ron, the next one is build liquidity. This is the idea of margin. Why is that so important?
Well, margin gives you flexibility. You know, the unexpected always occurs. health issue that you didn't anticipate, the repairs that you didn't anticipate. And research has shown that people that have cash flow margin are always more secure because they know that they can meet the unexpected.
So building liquidity or margin is really important to have long-term financial peace of mind, peace of heart, and security. The fourth is set long-term goals because the longer-term your perspective, the better your decision today. Ron, 20 seconds. Give us this fifth one on giving generously. Why is that so key?
Well, because generosity is the only way that you break the power of money. And that's what Jesus said in Matthew, and he said, you can serve God or man, but not both. Yes.
So, to break the power of money, you need to give. Wow, that's incredible. Folks, if you do those five things, you will position yourself for God's best in this area of financial stewardship. Ron, thanks for your time. You bet, Rob.
Enjoyed it again. That's Ron Blue. We'll be back with your questions after this break.
So call right now, 800-525-7000. Stick around. What matters most to you when selecting a financial advisor?
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We're taking your calls and questions. Lines are open. Any financial question in play today, call right now, 800. 525-7,000. Again, that number 800-525-7,000.
The lines are open right now, they won't be for long.
So, this is a great time for you to call with your financial question. We're going to begin in Cleveland today. Tracy, go right ahead. Hi, thanks for taking my call. I recently started a new job and I have my 401k from my previous employer.
And when I called to get the check to be transferred to my new 401k, he mentioned because I am 55 and older, I It can take out money without being penalized. Um I think it's a good idea. if I wanted to.
Well, I mentioned it to my husband and he said, Well, you know, our Furnace and air conditioning has to be replaced in the spring. It's around 9,000. We have some other repairs.
So why don't you take fifteen thousand dollars to use that for these repairs? I have not done that. I'm a little nervous because I don't I'm a little shy about taking my retirement, but I know we need those things. Is it wise to do that? Or do I just say, no, we're going to have to use our home equity line?
Whatever it might be. Yeah, well, certainly, I mean, it's a great thought. I mean, it's worth considering. The benefit, as you said, is this rule of 55 that basically says if you separate from your employer for any reason, whether or not you go fully retired or get another job at 55 or older, you're able to get around that penalty that you would normally have for withdrawals from a 401k prior to age 59 and a half.
So you don't have to wait to 59 and a half. You've separated from your employer, you're 55 or older, so you miss the penalty.
Now, what's the downside?
Well, the downside is twofold. Number one is you still add that to your taxable income.
So you're going to pay taxes on it.
So you'd have to set aside that portion that would be equal to your marginal tax rate of the $15,000 because you're going to have to pay that at tax time. That's number one. Number two is that money is no longer there in the 401k or in the IRA, if you roll it out, to grow for the future. And so there's the opportunity cost that you're giving up of this money continuing to compound. And often, you know, if you don't need this money right now, because your husband's continuing to work or you're going to get another job, I mean, we're talking potentially at least a decade, maybe several decades before you'd need to start drawing this money.
And that's all that tax-deferred compounded growth that you would be giving up of this $15,000.
So it's more than just, you know, the lost amount of growth you'd have, you know, over the next few years. It's compounded growth for a long, long time that you're giving up.
Now, what's the alternative? And that's what we always have to look at this in light of. And, you know, is there an option number one for you guys out of current cash flow, whether that's existing cushion, meaning money left over at the end of the month, or by creating that, by cutting back expenses, could you fund these expenses over time? Maybe you don't do them now, but you do them over the next year or two, and you try to fund them out of current cash flow, or maybe a combination of that home equity line of credit and the cash flow. I think that's at least worth considering.
Yes, there's a cost to that. You know, number one, you'd have to potentially wait on some of this, and you may or may not be able to do that. Number two is there's the actual interest cost until you're able to pay that line of credit back for what you pulled out. And we've just got to weigh that against the lost opportunity cost. Of you not having this 15,000 growing on a tax-deferred basis for the next decade plus.
So, just given all of that, give me your thoughts.
Well Again, I'm I'm I was hoping you were gonna sway me, but one way or the other, but I I still have to pray about it. I'm just not certain that I want to take out $15,000. because I can't borrow from my retirement. I understand though We can't take it with us and things like that and things that we've been having have been happening in our family recently. A loved one going onto heaven, and now the money is gone, or they're using Medicare, Medicaid, and you have to get rid of all your money assets, anyways, when you go into a home.
We've recently seen that.
So my husband's like, Well, you lo you're going to lose it all anyways when you have to go into a home and But I'm torn. I don't know.
Well, you know, here's the thing. I mean, all things being equal, I would rather you not pull it out.
So let me just be really clear. But the reason I'm not saying that's absolutely the way to go is we have to compare that against the alternative. You know, if you all absolutely have to make these repairs in the next three months, then there's no time to save. And if you don't have the savings, it's all going on the line of credit. And I don't know about your ability to make those payments in a reasonable time period where you can pay it back in a relatively short period of time.
And so that may then force you to look at other alternatives. And of course, the 401k is one of those, and there is this benefit of no penalty. But all things being equal, either you delay those renovations and repairs or you do a combination of that plus a smaller amount from the line of credit and you've got the cash flow, the excess in your budget to cover a relatively short payback, let's say over three years at the most, then I'd say, great, let's do that and avoid pulling from the 401k.
So my preference would be either delay and pay cash or delay and pay part cash, part line of credit, so long as you could pay it back in three years. That would be my preference. But if neither of those work, then this perhaps could be a third option. Does that make sense? Yes, it does.
Thank you very much. You're welcome, Tracy. Thanks for your call today. We appreciate it. We'll head to Kansas.
Hi, Douglas. Go ahead. Yes.
Hello, thank you for taking the call. Sure. I am 51 years old. I retire at the end of next year. And I have uh a state pension.
In addition, I also have some 401ks and 403Bs that I've tapped into over the last 30 years that I've been employed or controlled. Yeah. My question is, is what do I do with those four one case and the four hundred three piece at that time of retirement. Yeah. Do you have an advisor, Douglas, that you work with, or have you kind of managed all this yourself along the way?
I've been managing it myself along the way. All right. Yeah, I think this is the time, perhaps, as you transition to this next season and what God has for you next, to engage with an advisor, not only on the planning side, and it doesn't have to be elaborate or complicated, but just looking at what your new retirement budget might look like based on where you feel like the Lord is leading, looking at the assets that you have, how to position them. Because what I would recommend, just to try to simplify your situation, would be to roll whatever you can, certainly the 401k and 403Bs from previous employers, into one IRA, individual retirement account. The benefit of that is you keep it in a pre-tax environment.
The other benefit is that you have unlimited investment options, which is also one of the reasons why I think it's time to connect with an advisor, because instead of just having this kind of limited menu of investments in the 401k and 403b, you have an unlimited option. Inside the IRA, which just gives rise to having an advisor who's kind of taking responsibility for this so that it's not a top concern for you while you're pursuing whatever is next. And letting somebody give active oversight to that. And you could even have that advisor make sure that the investments are aligned with your values. You're not investing in companies, whether you know it or not, that are.
Making abortion drugs or alcohol or tobacco, or involved in pornography, even in an indirect way.
So, all of that could come by you connecting with a certified kingdom advisor. I'd interview two or three, find the one that's the best fit. And then, once you establish that relationship, which now's a great time to do it, being about a year out. Then you'd let the advisor open the IRA and you consolidate all those accounts in one place and they're off to the races. Very good.
I like that idea. Thank you very much. Absolutely. Just go to faithfi.com, faithfi.com, clickfi. Find a professional at the top of the page.
Thanks for your call, sir. Folks, a quick break and back with our final segment just around the corner. Stay with us. We work, we earn, we save. But is that all there is?
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And we serve a growing network of thousands of Christian financial professionals, equipping and empowering them to carry biblical financial wisdom to their clients, peers, and community. For more information, visit kingdomadvisors.com. That's kingdomadvisors.com. Great to have you with us today on Faith and Finance, taking your calls and questions, 800-525-7000. You can call right now with any financial question.
Let's head to Sarasota, Florida. Hi, Margie. Go right ahead. Hi, yes, my husband and I were married about 12 years ago, and he insisted on a prenup and that his money would be his money, and my money would be my money. And since we've been together for 12 years, we both are increased in value our net stig, and he has a nice lump sum and I have about $700,000.
Well, I have cancer and I'm going to die probably in the next year. And you know, we don't have any children. We don't have any debt. We've got about 450,000 equity in our house. He's got plenty of money for himself.
We're about 60, 62 years old. And um I wonder how much of my nest eggs Should I leave? to the Lord and how much should I leave to him? Obviously, he would like me to leave it all to him. But if he dies, if he got ran over by a bus the day after I die, he doesn't have a will.
All his money would go into probate or go to his sister, his one sister. And I want my money going to the Lord as much as possible.
So how do you determine how much the largest leads you a spouse? and how much to leave to the Lord. Yeah, yeah.
Well, it's a great question, Margie, and I appreciate your call today. You know, normally what we would do is we would say, listen, to become one with a first marriage, and you know, that includes everything, including our finances. And we bring it all together and we say it's now not yours and mine, but ours. And we want to honor the Lord in finding His heart for how we plan and make decisions in light of our values and where God is taking us as a family. And then there's no question.
Now, when you come into a second marriage and you bring, in some cases, children, but also you bring to bear wealth that was created prior to that marriage, and especially where there's kids, where you might say, as a part of, and I love this term, there's a ministry called Family Life, and they have a division called Family Life Blended, specifically for blended families. And they have kind of what they would call a Christian version of a prenup, and they call it a togetherness agreement. And the name of it is togetherness because the idea. Is to drive and foster togetherness and trust, not division and separation, but out of a recognition that there was money created and there was family units that existed prior to this marriage. And so perhaps the wealth that was created prior to, because I've got an ex-spouse, I've got kids, I want to keep the money, you know, with those.
But then from this point forward, everything that the Lord entrusts to us, we're going to handle together. And, you know, these are now our assets, but we recognize there are other assets that we had prior to the marriage. I realize there's not a right or wrong answer there. That's a matter of discernment and conviction. But I think because you all made that prenuptial agreement and there was an understanding of how this was going to be handled, and that was agreed upon by both of you, I think you're now in a position where you can say.
Just before the Lord, Lord, what would you have me to do? I am the steward of these assets that I had prior to this marriage. And where are you leading me? And the Lord may lead you to give it away. The Lord may lead you to leave it to your husband.
And you're just going to trust that he is the next steward, whether he lives a day or two decades after the Lord calls you home. You're just going to trust that it's the Lord's anyway. It's not yours. It's not his. It all belongs to God.
You just have to decide who that next steward is. And you need to use discernment and prayer to make that decision. And then it's out of your hands. And the key, I think, idea here is that once we recognize it was never mine in the first place and it's not mine today, everything I have belongs to the Lord. He's just entrusted it to me.
And so you need to say, Lord, what would you have me to do with your money? And then you make that decision with confidence. And I think as you seek the Lord, let's just ask Him to make it clear to you what He would have you to do, given everything that's transpired, which is you all came to this second marriage making a decision about how you were going to handle this via a prenup. In fact, it was your husband's decision to do it. And now you all have to decide: okay, if in fact the Lord is calling me home, and maybe He's not, but if He is, you know, where is He leading me with regard to this?
And if He's put it on your heart to support causes in the name of Jesus that are gonna perpetuate the gospel. To God be the glory. And if he's going to lead you to give a portion or all of it to your husband, I think that's great as well. But give me your thoughts on all that. Oh, no, that makes so much sense.
Thank you so much for explaining it that way because you're absolutely right. It's what the Lord puts on my heart is I need to follow what the Lord wants me to do. And You know, I think that maybe the best thing would be, you know, a certain percentage to the Lord and a certain percentage to him, you know.
So I think that's great advice.
Well, I think the ideal situation, and I obviously don't know anything about kind of just how you all have approached finance to this. finances to this point. But for me, the ideal scenario would be the two of you would come together and just say, let's decide this together, how much we're going to, you know, and you could put the whole thing together and decide how much does he need to, because there's also a financial finish line involved here for each of us, right? And to your point, he's got more than he needs for the rest of his life. And so why are we holding on to it?
Why not get it into God's kingdom?
Now, if you all are misaligned with regard to your faith values, well, that's not necessarily going to be an easy decision. But I think at the end of the day, just start with the idea that this all belongs to God. And we had clear communication about how we were going to handle things. And for what God entrusted to you prior to that marriage specifically, there's an opportunity to present that to the Lord and follow his leading with regard to what you'll do with it when the Lord calls you home. And let's just trust him for the outcomes of that.
And we know he can be trusted with that. Margie, thanks for your call today. We appreciate it. I hope that was helpful. Bob, let's talk about your reverse mortgage.
How can I help you there in Lewisburg? Will Okay, I have a reverse mortgage. I've had a sense. 2010 and Uh I owe. On the house right now, a little more than 200,000, but the house I've had it appraised four times in this.
A half a million dollars, five hundredth K is what the house is worth.
Now, I think I'm told I can take 45% of that as equity. What I perceive to be true sometimes is not true. Did you get it as a line of credit? Uh, no, I r it's the whole house. Right, but are they paying you a month?
Did they give you a lump sum, or are they sending you a monthly check, or did they give you a line of credit? I guess a line of credit. I don't know.
It's been this was 15 years ago. I don't remember all the details. And the bank I got it with, I went back, they said, We don't know anything about it. I'm trying to get information. Yeah.
Well, did you have an existing mortgage when you took out the reverse that they paid off your existing mortgage, or did you own it outright? It was with the bank. Yes, I did have one. It was 71K. And I did have it with the bank, they'd give me the reverse mortgage.
Got it. Yeah, so the challenge is that often the borrowing limit is set based on your age, interest rates, and the home value. And if the home is appreciated and they just gave you a fixed amount, either in cash or in your case, as a payoff to your existing forward mortgage, then you generally have to refinance to tap into additional equity. If you had the credit line feature, well, they may be able to just expand the credit line, and often they do as the home appreciates.
So, your next step is to get in touch with that lender, get the details, and find out if they will allow you to do it without refinancing. Otherwise, that'd be your only option. Bob, thanks for your call today. Big thanks to my team today, Dev and Robert, and Taylor. We'll see you next time.
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