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June 10, 2020 8:03 am
Future is below the mother's needs and businesses slowly leave XI with questions on how deep the recession first quarter numbers early on shutdown five Rob is the chief economist at financial Jerry Bowyer is known for giving a balanced and objective view of the state of things and we can certainly use that right now while you're right about that Steve Jerry great to have you back with us today.
Always a pleasure Jerry before we dive into the Q1 GDP numbers. I'd like to start today with a biblical perspective for those who are Christ followers who are trying to operate from a biblical worldview. Look at the world through biblical lands. How should we think about economics and God's design.
While God's design goes back to the very beginning, God made things he made a world that was a process of of the spleen of rearranging things, creating space because the world was formless. Benny filled it because it was void and then he looked at what he had done and he evaluated.
He said it was good and then he appointed lieutenants a man and a woman in the garden do continue that work so he delegated it. So basically, the economy starts before there's any human beings. All that is already an economy that God's economy already started. So when I look at economics. When I look at the latest statistic or statistic from a month ago or whatever I'm always asking most asking the statistic.
This one are you telling me about how well we're doing at filling the earth and subduing at the way God told us to do. How well are we doing it imitating the creator and being creative and improving things. So whenever I look at any particular economic statistic, no matter how arcane I'm really asking. Are we fulfilling what is this telling us about how well were fulfilling the mandate that God gave us to do regarding the world and designed the world and us to do together. I love that. Thank you for that explanation, and let's do just that. Today, as we think about what were seeing around us in the light of God's original design. Jerry give us an idea of what the economy was like before the pandemic hit government at all levels began to shut things down.
It was really interesting because the glide paths were generally upward in almost every metric. Almost everything was saying, whether you know surveying supply managers are looking what actually is coming out factories or goods and services actually being delivered that we had had a little bit of uncertainty in 2019 over the trade war. We talked, we talked about that a lot last year so that the tax cuts and been really good for the economy to trade war and made things uncertain and was sort of slowing things down and making the more volatile, but by the end of the year and the beginning of this year. That was all cleared up and we were on a glide path back to what I would consider a booming economy so almost every way. We measure economic performance in the beginning of this year was trending upward hadn't been that bad, but was already trending upward. So we had a strong growth. We had a phone call to recession we had little slowdown in 2019, and we were on our way to a good recovery from that little mini slowdown. Up until everything changes a little bit in February, but everything really changes in March. That's when everything starts to fall off a cliff. Yes, it will get into that after the break. Jerry was a bit surprising because if we look at the normal cycles of how economies function. There we were 10 years plus into a bull market with a raging economy, which would have normally been expected to roll over by then. And yet it wasn't what you think that is because economies booms don't grow old and die. They die because of bad policy. If you do if you behave in a productive way. You have good policy. You can have it expand for 100 years. If you're following the right principles when you might stumble a little bit here and there. What tends to happen is we have recessions, not because the growth.
Got old. It doesn't we have recessions because we did foolish things as the voice of Jerry Boyer Howell has a covert, 19 impacted our economy so far. Where might we be headed. That's why we have Jerry Boyer with us to be the answers things when we don't.
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Jerry Boyer is with us today.
Some of his insightful posts you visit Townhall.com. Jerry just before the break you give us really biblical primer on God's design for economics and then you are discussing really the strength of the economy through Q1, even though perhaps 2019 wasn't as strong as the years before we were still in a very strong economy and obviously the market was hitting new highs will then all the sudden we have a pandemic, the government shuts down everything for good reason. GDP numbers for the second quarter will be out in about a month and almost all forecasters predict will be horrific about what can we learn from the first quarter January through March, which was certainly impacted by the coronavirus, just not to the degree that Q2 was obviously I think we can learn to the first quarter that you know since the first quarter only contracted by less than 5% only like that's a small thing, but it is when you think about what we were going through.
You shut down everything and you still produce more than 95% of what you produce the same time last year a part of that is a tribute to the resilience of the US economy but a big part of that is the shut down didn't start in January. That wasn't a shutdown quarter. That was a shutdown. Let's say three weeks of the quarter right so that gives us some sense I think of two things. One, that the shutdown really is big really has short-term output. It affects no doubt about it I'm you basically shutting everything down. Everything shuts down.
You turn on the off switch, the lights go out. It's as simple as that. But on the other hand, it gives us some idea what things might look like when we come back because it shows us what the glide path was before. It shows us what was the policy mix the policy mix was a progrowth policy mix. What were the circumstances. Apart from the fact that we have this pandemic and a quarantine in response to it. Everything else was aligned properly, which is suggestive that when we get past that quarantine and we don't do anything foolish that we can go back to that policy mix which was a good policy mix for growth when you have your life you're going along and things are going well, and then something happens that has a certain fixed duration, then it's over you, it's reasonable to think we might go back to the way things were before, at least somewhat like the way things were before and that really leads us to how this recession is different from most others we've seen in the past is not right you think about. I mean, some of the really bad ones are wars right so you have like a total war like World War I or World War II.
What happens is the country gets flattened, factories are destroyed roads and bridges are destroyed. You don't just come roaring back from something like that. You got a rebuild but this is different. This is a pause button. The fundamental infrastructure is still there. The other thing is now on the negative side, a lot of times recessions are caused by situation where we suddenly contract the money supply.
The Fed says all the parties getting a little out of hand were probably going to get inflation. Let's take away the punch bowl and what happens is that hard money creates a credit contraction, and then businesses start going bankrupt well you you can help that by putting the money back in the economy. If the central bank causes a recession by being too tight with money. It can undo that a little bit by loosening up a little bit. They overreacted to help here.
No amount of money creation is going to make coronavirus go away.
No amount of money creation is to make us spend if we really can't spend for lockdown so this once. This is a weird one. This is something we have not like we haven't seen this before. For a long time, which means we can't just depend on the same old playbooks and same old correlations. We actually have to use the gift of reason to think about what is happening here. Jerry could you suggested that because the country made it through two world wars that the country can make it through this or is this so different that it really is a different ballgame. Well, I would suggest that because the country made it through two world wars.
There were worse than this. There's no doubt about it, they actually destroyed economic infrastructure not so much for the United States because we weren't getting what we want the ones being bombed.
But in some sense they were because we had to take all our productive capacity and turn it into military hardware making tanks rather than cars. Russell Reeves is jarring for the US economy this it in my opinion, is not nearly as bad. Although it's a more rapid decline so that ghetto World War II didn't put us into a depression. Some people I think wrongly argued World War II took us out of the depression, wars don't take you out of depressions, wars are destruction of value there not increase the value but I think what you have here is a situation where right now from looking at the numbers. Probable numbers for the second quarter, which were now I will probably fit the definition of the depression, but a short depression is something that a country can actually come back from pretty well. So if our policy mix moves towards opening up the economy in smart ways we gotta do it right. But there's nothing that says that we can't come in terms of her economic capacity that if we have the right policy mix that is nothing says we can't come out of this fairly strong, and fairly quickly.
Yeah that's right you're in obviously aware the devastation has occurred in our economy has been widespread, but it's also in many cases the deepest declines have been relegated to certain sectors, so help us think about that. Where some may have fared better than others and how that relates to this yeah and this is important because when we look at GDP, we gotta remember or maybe don't remember if you don't know. So let me tell you. GDP doesn't really measure the whole economy attends to measure the last stage, the purchasing stage gross output measures all of it right so you know you mind the box. I get turned into aluminum you turn that into components you turn that into a car ball that's in gross output. None of its and GDP it when the car hits the showroom then it's GDP so if you look at the economy from that standpoint.
From all of the jobs and all the productivity the things that are going to have a lot of trouble opening up like the stadiums and concert halls and you know the Disney worlds and all that stuff all that stuff together really adds up to somewhere in the neighborhood of 1% of gross output just 1%, meaning if it if it never came back.
If it disappeared forever. That would be a 1% loss to our total economy. Now be a tragedy for people on those businesses would be a tragedy for people who work for those businesses but in terms of real economic output and high wage jobs and things that drive the US economy. It's not water parks and is not, nail salons and is not movie theaters in its business services it's manufacturing, it's the big-ticket value-added items, which is good news for the economy in general, because those are the kinds of things that we can unfreeze first the things that will probably want to unfreeze last the large gatherings of people say in a nightclub for a concert like a mosh pit you what were putting a mosh pits for a while but but you don't lose a lot economic output from MOSFETs going away Jerry go just a few seconds. Love talk to the person who perhaps is a bit fearful during these uncertain times and perhaps re-center them on the truth that God is in control.
Well first, if you know that God is in control through Jesus Christ.
Then whatever happens to you going to spend eternity with him in bliss. So were dealing with small ball here with this world. Compared to eternity. Now that doesn't mean we don't ignore the risks of this world.
Also God's on our side. So when bad things happen. It's not because he wants to hurt us when you think causes them when he think he allows them there there in some sense to make us better softly receive this in vain.
Better Jerry, thanks for being with us today unless Jerry Bowyer, chief economist of financial calls next and 800-525-7000 years agree with you more about money than most of us imagine Jesus is more about our use of money and possessions and about anything else, including both heaven and hell and managing God's money on the radio breaks it all down in a simple, easy to follow format that makes it the perfect reference tool if you're interested in gaining a solid biblical understanding of money, possessions and eternity managing God's money is available when you store moneywise live.org to which the spirits prompting.
It makes us more, not less. Remember that the entire law.
Christ himself said when he was in Mark chapter 12 verse 30 when he was on the Pharisees where the most important commandment number one most important thing you can tell us to Dave. He said love the Lord your God with all your heart, soul, mind and strength and love your neighbor as yourself on the birth that follows right after everything else hinges on so the bottom line.
Everything will be will never lead us to be unloving never, never asked to get away from somebody wanting a relational situation that is toxic for it also means it's toxic for them.
And remember, you and I learned some weeks ago that… How long I got is always letting best interest not letting common interest. I motioned prompting on that topic for you.
Listening to always buying a home is the largest most nerve-racking perches. Most of us ever make. It doesn't help that you're entering a maze of unfamiliar words and confusing options that can leave you intimidated frustrated and afraid to been taken advantage of navigating the mortgage amazed by Dale Vermillion help you clear up the confusion on rack your nerves and make the best mortgage decisions possible with confidence navigating the mortgage made available when you click the start button moneywise live.org today and then join us today. He always brings great wisdom and knowledge whenever he joins her program. Here's some more great wisdom and knowledge because it comes directly from God. In Philippians 4 we are reminded to do not be anxious about anything, but in every situation, by prayer and petition with Thanksgiving present your requests to God and the peace of God, which transcends all understanding, will guard your hearts and your minds in Christ Jesus.
And don't we need the peace of God during the this time of the year don't do well.
We always do Stephen. Certainly, when things are uncertain and we can count on God's promises we see his faithfulness is very reassuring that well if we can help you today with anything financial, anything you been wondering about any plans you have that are concerning you. Anything financial.
Let's chat about it. Let's see what the Bible might have to say about it. Our phone number is 800-525-7000. We have a whole bunch of open lines right now so it's a great time to call 800-525-7000. Let's begin. Robbie going to Belleville, Illinois.
And let's say hi to Gloria, Gloria, were so glad you called today your on moneywise live good so I not for one I wanted to know the Karabakh and I want to know how I find that money and you know whenever you had your paycheck was not a paycheck into the 401(k) you take money out you wired it high that I'll tell you. Let's back up your one of the things you're referencing here is just your idea and thought about being found faithful in the area of giving and I love that clearly we want to be givers we should be very generous being able to take a portion of what God gives us and helping those who are in need, perhaps advancing the gospel around the world helping her brother and sister. Our neighbor who might be in a desperate situation being the hands and feet of Jesus helping to support the work of the local church which we know was clearly a part of God's plan as well. We can certainly apply the principle of the tithe and that's where we give off of the increase and we would actually give 1/10 and I love that as a starting point, but certainly we should be systematic in our giving not legalistic giving with a cheerful heart giving is an act of worship and so all that is great. If we want to give proportionately and that's what we see in the New Testament, then proportionate giving does in fact happen in proportion to what you've received and going back to the.
The Old Testament principle of the tide. We would tithe off of the increase. So whatever comes in your hand is God's provision. It's part of God's increase to you. So returning a portion of what all is his right. It's not 90% ours 10% is it's all his were his manager, but returning a portion of it to be put into circulation into the kingdom for the work in the local church and to help our neighborhood around the world.
That's a great thing.
So how do we define increase. Well I would say first of all, you would never tithe on the loan because that's not your increase even one to yourself because you're eventually going to take it back now. If you took a distribution then that's not alone necessarily and that's money that you're then capturing, then the question is how much of that is what you put in originally versus the game now if you were typing on a gross basis, meaning before money was taken out for contributions to your 401(k) tax withholdings and perhaps a portion going to your health insurance premium, but your typing on a gross basis that you've Artie essentially tithed on the increase. Prior to it going in and then at that point you want to look at. Well, what portion of that is my gain over and above that which I have put in myself and therefore already tithe on so again I think the first distinction is is alone or is it a distal withdrawal and in the second distinction is if I want to truly give. Based on my increase. What is the portion did I give on a gross basis and what portion of that is what I've already printed put in versus the growth of that money in the stock market. Let's say you since you made those contributions. I realize that I can get a bit technical, but does that make sense to you, though Gloria okay that's the way to think about it again, starting with if I was giving off the top. I've already given based on the money that the total of all my contributions over the years and then anything beyond the total of all my contributions and your 401(k) plan administrator could tell you that is your game, and at some point you're going to be pulling out more than you put in because the whole reason you put it in there was to grow it and that growth is your increase and so I think that's the way perhaps to wrestle through that it might take a little bit of math if you really want to figure that out. Figure out your increase but I'm confident the Lord sees your heart and will certainly honor your desire to be found faithful Gloria were glad that you called today, great question.
Lots of people. I ask that having a regular basis and were happy to shed some light on it. We appreciate your call today.
800-525-7000 know I always kinda love those types of questions Rob because you never quite sure what the motivation is mean if your motivation is love and obedience to God.
That's great. Perhaps your your motivation is love for God and that you want to be helpful to someone else that you might want to give your time to.
But maybe, just maybe, your motivation is some sort of fear of God. Fear that God will get angry with you fear that your disappointing God, and obviously those are somewhat culture to the love side of things.
I guess when it comes to tithing and giving it something we all have to examine our hearts about and obviously if there other Christians in the family or spouse friends. Maybe even Christian radio. Good place to get some insight what's exactly right Stephen, we see clearly in the New Testament just the early church and how they were giving out of their provision giving to support one another to support the work of the church and helping one another. Those their brothers and sisters that were in need and saying you know what I want to take a portion of what God's given me and return it to those that can either do work in the name of Jesus or those that have a legitimate need, and I think that's our opportunity to say, Lord, what is my part much you want me to keep, how much do you want me to give put in everything I'm doing I'm doing it to worship you and I'm doing it with a grateful and cheerful spread from a management from a stewardship standpoint, it's always a good thing to regularly ask God how much is enough. 41 will be right back. How should we as Christians think about and testing. What if we could invest our money in a way that aligns with what we believe that Eventide we believe it is possible to love God and love our neighbor in the very practice of investing redesign investments for performance and better world so you can invest for the future with a sense of wholeness and purpose. We call this investing that makes the world rejoice. More information is firstname.lastname@example.org Christian healthcare ministries enables believers to meet their healthcare costs affordably, biblically and compassionately. It's not insurance but a voluntary cost-sharing ministry based on the biblical example of Christians sharing each other's needs and members are defined under the law for not having health Christian healthcare ministries might be your health cost solution call 800-791-6225 or visit CH ministries.org by this is more of moneywise live in this verse week three therefore written yourselves of all malice and slander of every kind great spiritual milk by your salvation tasted that the Lord is this first Peter 213. The movie radial verse of the week.
We've all heard we've all heard others. That's why forgiveness is critical for our spiritual and emotional well-being. But how do you forgive when it's hard in forgive your way to freedom. Gilmer shares his inspiring story of forgiving is difficult, and distant father, and lays out a practical biblical process of forgiveness. Learn to forgive and be set free. Forgive your way to freedom more Moody publishers.com Romans 13 for all joint trust microbrews and financial hands-on study showed 4 inches of financial wisdom help my power of God's word right now. Financial support moneywise. Not the gift of $25 or more moneywise. My dental is drugs would render overseeing US forces in Afghanistan says the Taliban have not yet met conditions required for complete US troop withdrawal.
Gen. Frank McKenzie says the US is ahead of schedule for initial drawdown by July the 8600 troops he stressed, however, that going to zero troops by May 2021. As envisioned in the US television deal signed in February is dependent on conditions, consumer prices dropping in May for the third straight month.
The labor department says it's consumer price index fell 1/10% last month.
Stocks ending up bumping a mix despite assurances from the Federal Reserve that it would keep interest rates low through 2022, but all fell 282 points. The NASDAQ gained 66 points the S&P 500 down. 17 this is SRN news. Time flies when you're having fun and that's what we're having today would like to pursue the fun factor with you when you call us at 800-525-7000 toll-free 800-525-7000 with anything financial that might be in your mind Rob when they say time flies who are of the who are the they who are you still trying to figure that out. I let me know and I will St. Louis mole hello Mark, how can we help user I know you more here about my 401(k) investment all day, equity indexed ability by yeah and I'm wondering are you aware of no value.
Advisor recommended want to check it out.
Well, it's certainly a legitimate products and a lot of people use them. I'm not a huge fan for a few reasons. But let me back up and basically what this is is a it's an annuity contract. As you said, with an insurance company were a rate of interest is linked to the return of an index, like the S&P 500 at the rate of growth of the contractor was typically set annually by the insurance company issuing and guaranteeing the contract and essentially they can be complicated and often they're not quite totally understood, although a good insurance agent or advisor can explain the nuances of you, and you can always read all of the fine print.
But there are number of different methods to calculate the index return which is one of the reasons why with you giving that they are complicated I'm I'm not a huge fan. Also, they don't typically reinvest the dividends when calculating the index returns and dividends have historically accounted for nearly 40% of the market's total return so by leaving the dividends out. Obviously you're leaving a good bit on the table and then they can carry some steep surrender charges so you if you want to get out of it. You're going to have to pay you know the penalty, the surrender charges and pending or whether you put in the money pretax or post-tax or maybe a penalty there as well.
If you're under 59 1/2. Obviously the reason that they're sold is because you do participate based on the formula in the upside of the underlying index. Let's say at 80% you might get 80% of the upside, but you potentially limit your downside so they might say working to guarantee you never lose money on the contract, but in exchange for that, you're only going to get 80% of the upside, so you know if if the market let's say were to do 15% in a given year. You know then you're going to get 80% of that are 12%.
So that's kind of the nuts and bolts of how it works. I think you know. In lieu of that, if you said I'm willing to assume some risk, you could essentially keep the access to your money and not have to use an insurance contract that would have the surrender charges and so forth related to getting that money back, but if you said you know what I just really don't want to eliminate the risk. I'd rather give up some upside. I rather have my money locked up and willing to pay some fees and commissions that come a thing in exchange for knowing that I can never lose money on this contract value. The amount that I put in while those of the people that really like these particular products does it make sense that Mark I have a plan.
And I've dallied back and forth between bonbon and the bond below along with the times that I did throw money in the box on.
I chickened out and then I lost a few grand all and all that's not a good idea, but this guy Sherry. He says you have the option want to hear them by an option on the index and it goes up low so I have about $150,000 in 401(k) and pretax rollover to an IRA go from there. So I think the decision you need to make is number one in either case you don't need to be trying to time the market moving in and out based on the overall moves of the sentiments of the consumer. What you see on the headlines that you need to have a long-term strategy which means you gotta start with the financial plan. Given that your 65 Holland you plan to continue to work. What is the need that you have in terms of funding your lifestyle so you need a detailed budget. So when you get to retirement. You know how much your needing to support yourself and cover all of your expenses and then looking at your guaranteed income sources you'll figure out what portion this hundred and 50,000 or whatever. It grows to between now and retirement will play in generating the income you need to cover your expenses and I think out of that will then come a strategy that says okay I like this particular approach using an insurance contract. The next equity indexed annuity because I can get some upside. I don't participate in the downside and am willing for my money to be locked up and sit at some point down the road I can convert that to an income stream or you would say no, I'd rather keep access to my funds put it in that IRA and then hire an investment professional to manage it for me into a portfolio that makes sense, given your age, goals and risk tolerance where the goal might be an old Ford is six or even 8% a year depending on whether you are living on that money, but it that point, I think, really, given what you just said about trying to move in and out of the market. You don't want to try to time the market you want to be able to turn it over to somebody and give oversight and stay fully involved in knowledgeable but really let the investments do what they do over a longer period of time as opposed to trying to react emotionally or second-guess your decisions along the way so make a prayerful decision if you want a second opinion.
You could go to kingdom advisor skews me moneywise live.org. Click on find a certified kingdom advisor and a somebody there in St. Louis could give you a second opinion. Mark, thank you for your call today. We appreciate that McDonough Ohio hello Brian what's on your mind. Well, let's check in late February my recent background March 9 I did electronically check check online attire site and every time I checked that I get a patent not available equipment and not get married okay and you had your refund come directly to you electronically that when you filed my bank right okay so they didn't go to holding account with your tax preparer or anything like that. I actually found myself you do yourself okay and you did get a refund and you've already filed your 2019 return okay yesterday should have your information you I saw just the other day that there were still 30 million checks that did not gone out. I know, given that it should come to you electronically. I would've expected that you would've already seen something by now, but it's certainly not out of the realm of possibility that it's just hasn't gotten to you yet, so I would keep checking back to the IRS website.
You probably know the site to its IRS.gov/coronavirus/get my payment and there's the – between each word you can Google and find it pretty easily. You may want to also call the IRS and see if you can get somebody on the phone. I find them to be fairly helpful with these kinds of things but hopefully the information will be updated here very soon and that money will show up in short order, but everything yourself.
You're telling me Brian indicates that you've done it properly and that money should be on the way, how much money or how many checks did you say still are yet to be delivered 30 million million so it wouldn't be out of the ordinary okay to call more calls right after this you know the seven things not to do with your money and uncertain times, and would you like to know the 10 ways to trim your budget amid the current pandemic you get those answers and much more. When you subscribed to the moneywise magazine will receive valuable expert articles to follow advice leaving get access to exclusive podcast episodes and your subscription is free, get access to the moneywise magazine moneywise live.work/lineup Barry McGuire.
I will guard you and I'm here to help you understand God's purpose for your life to the eyes of a layman, even though it's unscriptural. The term substandard. Some goal remains one of the most dangerous mindsets of the church today perpetuated by ministry leaders who allow their need for funding to overcome their need to minister to those supplying the fund so seductive for lady would enjoy a proliferation of entitlements from luxury resorts and cruises the names on building for Megan, giving an elevated status for exceptional giving of local churches, making it exceedingly easy to be honored by Christians without being a Christian without either side knowing tragically blessed to have all your church attendance have accepted Jesus Christ as their Lord.
That's why they share your faith actually begins inside your church with the people you know your job is ignite revival outside the walls in church by moving everyone every day closer to Jesus. You need help doing that.
Go to RTW.com you conversation why do you think that I'm handling.
I think they feel that way sometimes because we know that words are important and why is he staying in our own life and the Bible tells that James three puts it like a small flame that can quickly take over our lives, but it also has incredible influence. The question I always have my tongue from taking over is a really good example is someone who uses his words and writing songs like himself about God influences don't be deceived. Plaintiff follow me on Instagram natural radio.
Do you know if you have enough money of house. Do you know how much is enough. If not, one blue can help with this book. Master your money a step-by-step plan for experiencing financial contentment. Learn how to save and invest and give wisely create a long-term financial plan and how to get out of debt. Find it all in master your money by Ron blue available when you click the start button moneywise live.org moneywise live for God's direction for your money Mary Jane career all together with your phone calls were happy to have today. Robert Guy I'm just you and I just daydream a lot.
But here's what I'm thinking. It's been think anyone would would argue with the fact that so far it's been a year, a challenging year and you being the computer guy we just reboot 2020 center we just unplug and plug know if you just hold the power button down long enough to just power cycles and that's again and when it when it does.
Everything seems to be better so on which this is the problem with an analog guy living in a digital world. I decided to look and find that power but find a 10-year-old, and will help you figure already Atlanta, Georgia Haley, thanks so much for your patience, my friend. What's on your mind. I can call in her early 30s, and we only live for income.
This verse only do we have hundred $90,000 mortgage on a house worth about $500,000. We have about hundred 40,000 should grow to around 200,000 year planning on paying off $100,000 a year in refinancing one would use to get you in that waiting another year and potentially having all the money at all, keep about $60,000 cushion all safety and in the second thing is financial and bothers that as young as I am that they would not recommend doing that at all. Invest in the money in the market without percent interest rate that I currently have.
What did you say your age. Leslie, 32, 32, well, well done. You obviously are living well within your means. I think I heard you say you living on half of your income. Your purpose and yourself to be debt-free and on your way to being completely debt-free including your home you got plenty of liquid savings hopefully are really thinking about what the Lord would have you to do in the area giving which is a key part of this whole thing is that breaks the power of money over our lives and allows us to participate in God's work in your community and around the world, but in terms of the paying off the house, you know, I think there's the purely financial side, which is kind of the computation that we can do in terms of comparing predicted rate of return based on historical average averages in the stock market over a long period of time versus a guaranteed return in paying off the debt that carries a particular interest rate so can you.
On average do more than 4% a year over long period of time with a well diversified stock portfolio well history would indicate that you can however there is not only the financial side there's the nonfinancial part of this equation, which is either a you just feel the conviction you and your wife to be debt-free because you read the Council of Scripture and you see what the Bible says, which happens to be not much good that it says about that that make it a sin, but it does say there you need to be heat some mornings related to the use of debt and if you have that conviction that I would say that would trump the financial side every day of the week in my book. I think the other side of this is just the security you'd like to have a knowing that you own your own home and that you hold title to and no one else does and it gives you great amount of freedom and flexibility to be able to do whatever the Lord calls you to do and often times one particular spouses as so carries a little bit more weight and interest in that security of knowing that we don't have any outstanding obligations.
In some cases in a marriage. It's both and the opposite can be true were both are little more comfortable with risk and say you know it because were in a such solid financial position we could in effect pay off the mortgage and any time we are okay taking that money and putting it to work in seeking an appropriate return on that money not trying to get rich using sound biblical principles, but we know that anytime we could liquidate those assets and pay off the mortgage were comfortable carrying that and I think that's ultimately Lee which you and your wife need to pray through and think through because what your advisor is saying is true about what might be expected on the financial side, but I don't want you to discount the significance of either a conviction toward being debt-free or just a real desire to be completely unencumbered because so those are significant and if that's the way the Lord's leading or the two of you just feel like that's the direction you want to head that I wouldn't hesitate to say you go that direction and that that's can help you sleep better at night then then that's a good thing and I can tell you in all the years I've been doing this I'm sure Steve would concur. We've never got a call from somebody that said, I paid off my mortgage and I woke up in the middle the night and I just thought that was a bad idea if we just don't get those goals. But tell me your thoughtfully note the boxes will have a conviction about where we can, but also just the freedom of not having the burden or the way you allow my mind to free up some time and also allow me at the other opportunity that I might not see focused on all-year-old well yeah, that's incredible. Obviously, I think the Lord will honor that. It's think that's a bad decision by any means, and so I would say, given what I just heard today. You should go fully in that direction and don't look back. Lee God bless your brother we appreciate your phone call today and I was the rabbit on the pink with too broad a brush year, but given the last couple of months as we look at economics and the market Wall Street, a personal finance. The people who are struggling the least.
Whether it's a personal finances or or business are people who were unencumbered with debt, and that's not because we place our faith in debt, but because God's word reminds us that the person who's in debt is slave to the lender.
We don't want to be slaves to any other one than God himself. So it's a great position to be in, if at all possible. Pinellas Park, Florida hi Melissa what you question for Rob West, my call today.
Whole life insurance policy that had a cash value and my husband and I are looking to relocate to another county. We have another home. There is no property without mobile home on it. We have a home in Pinellas Park and right now with the market values dropping in everything I wanted to capitalize on borrowing maybe 85% of that to help with relocating paying down some current debt and being able to renovate what we have up there. What are your thoughts on borrowing from Holland.
Your insurance policy… I mean, certainly you can in the pros would be that it's it's convenient and available if you don't have other assets to draw on. Obviously you don't have to qualify for in terms of credit Jackie Mayville to get out more than a bank would lend you just on a personal loan and the interest rate is usually better than bank loads. The downside is obviously the death benefit could be reduced or eliminated bidding on how much it taken so I want to know, what piece that plays in your overall financial planning do you have the proper insurance coverage death benefit that would provide assistance to let's say your husband in the event that you die, or vice versa.
If you're counting on his income to fund your lifestyle, then obviously something would happen him then you would have a real financial challenge and so that's where you want to make sure you're properly insured. You know, so you also may create a taxable event.
If you're forced to surrender it. So I think you just got a look at all of these options and consider. First of all is the insurance policy still necessary because if you have adequate life insurance other in another place their Alexia term policy may be able to just surrender the policy and take the cash value out and you don't need that death benefit anymore. But if you do need the death benefit you're taking 85% of the value you just need to make sure you understand the implications of that in terms of whether the death benefit is going to be reduced. Have you looked into those particular pieces of it. I borrow 5000 years ago it was 85% of the cash value back and and the insurance company charges 2%. You know, yeah it does reduce the death benefit. The death benefit right now is reviewed and only by like 77 granite with the hundred thousand dollar policy though and then my husband had a $75,000 policy term life insurance and then I have another 50,000 through my work which, if I relocate that I will lose that shirt now. Okay alright well I think that's where you need to look at the have the right amount of insurance. A good rule of thumb to mean this is right for everyone is that you want 10 to 15 times your income in the form of the death benefit. Obviously your financial circumstances are going to cause that to vary but that's just you know a good rule of thumb that says you could take the payout. The death benefit and convert that to an income stream that would make up during the working years.
The income that was lost, so I might look at whether you need to go out and get a pure term insurance policy much less expensive but get adequate coverage and then just surrender this policy altogether.
Take the cash value. Do what you need to do in terms of moving and then make sure you build that new policy in your budget. I just want make sure you have what you need.
If something happened to either of you Melissa Bergen have to let you go because were pretty much out of time here, but we appreciate your patience and for you hanging and I hope that information helps you. Thank you so very very much. And with that, Rob. I think were going to have to put on a put a bow on it for another day. But to have a good night will come back tomorrow. Do together all right see look forward to this reminder moneywise live is a partnership between Moody radio and moneywise media. If you haven't visited our website and while you might want to check that out. It's moneywise live.org and my thanks to our correct technical crew today that would be Amy and Judy and Aaron and of course Jim Henry our own Jim Henry in charge of radio research and in charge of designing and hand making it official moneywise live coven facemask. Thanks for listening.
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