Interest Rates Rise

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Not licensed in Alaska, Hawaii, Georgia, Massachusetts, North Dakota, South Dakota, and Utah. Music. A growing economy and government spending are starting to have an impact on inflation. And what exactly does that mean for your finances? Post Rob West sits down with investing expert Mark Biller today to find out. And it's your calls on anything financial. 800-525-7000.

800-525-7000. I'm Steve Moore. Interest rates on the rise. That's next right here on MoneyWise Live. Well, Rob, our old friend Mark Biller is the executive editor at Soundmind Investing where they've been watching the recent rise in interest rates. And it looks like he has something to report. That he does, Steve.

Champing at the bit, as we like to say. Mark, great to have you back on the program. Thanks, Rob. Good to be back with you.

Well, we're thrilled to have you. And this is a topic, obviously, that a lot of folks are very interested in, especially if they find themselves in that season of life where they're relying on income. And, of course, we knew that interest rates had to rise eventually. So tell us where we are and even how we got here.

Yeah, sure. So we have to go back a year ago when the economy really went into the tailspin back in February and March due to COVID and the lockdowns. And the Federal Reserve responded to that the way they really respond to every crisis. They cut their short term interest rates down near zero. They started buying all kinds of different kinds of bonds to try and keep the lending markets functioning smoothly.

And generally speaking, any time the economy is very weak, like it was a year ago, interest rates can be very low without that causing any kind of inflation risk because there just isn't that much economic activity going on. But when we fast forward six months or so from there, maybe several more months out, certainly into November and the end of the year, we had a couple of significant changes. First, we started getting the positive vaccine news in November. And once that hit the stage and people really could start to see that maybe we actually were going to get out of this lockdown economy a little quicker than than anticipated, that really changed expectations about higher economic growth coming back sooner. And then right on the heels of that, we had the election results where the Democrats were put in a position where they could expand the borrowing and spending policies that they had been advocating. And the combination of those two things really shifted expectations pretty suddenly, pretty sharply, too, I would say. We went from having this lockdown economy to almost overnight, so to speak.

We had this expectation that maybe by spring or summer things would be opening up. Plus, we were going to have all this additional stimulus in the pipeline while the bond market woke up really quickly and started paying attention and longer term interest rates started rising very quickly. They had been as low as about half of 1% as late as August, and they hit 1% at year end. They're up over 1.6% today. So in about three months time, we've moved about three quarters of a percent, which is a really big move in interest rates. Yeah, very significant. Mark, you talk about the fact that, you know, on one hand, this rise in rates is partly healthy. On the other hand, partly unhealthy. Explain that for our listeners.

Sure. So on the healthy side, you know, this rise in rates is good because it reflects this much more robust economic activity. When the economy was really sick a year ago, that's why we had these really low interest rates.

But on the unhealthy side, of course, there are limits to, well, we say there are limits to how much the government can borrow. We know that the more that they borrow, the more pressure that puts on interest rates because it's like any supply demand dynamic. You increase the supply of all this new debt, and the price is going to go down. Anytime bond prices are going down, the yields are going up. So that's really the gist of it. And it's not just the absolute levels of interest rates. It's how quickly they've been moving. Yeah, interesting. Well, a lot more to come on this, Mark.

We also want to know how this is going to affect the stock market and the bond market. That and much more right around the corner. This is Rob West. I'm Steve Moore. Mark Biller, I guess, today from soundmindinvesting.org.

You really ought to check them out online. They do wonderful stuff. soundmindinvesting.org. Hey, it's MoneyWise Live with Rob West. I'm Steve Moore. And as I just mentioned a moment ago, Mark Biller is with us today.

He's a good friend, and he works with all the great people at soundmindinvesting.org. Now, today, we're talking about, well, rising interest rates. And what do they mean when it comes to your investing, your saving, your spending, maybe future big tag purchases, or maybe your summer vacation? Let's chat a bit about that.

Rob? Yeah, Mark, great information here as to the backstory on how we got here with interest rates, why we're seeing them move up and the bond market respond accordingly. Explain the relationship for our listeners between higher interest rates, though, in the stock market specifically.

Sure. So I think it's important first to state outright that rising interest rates aren't necessarily a bad thing for stocks if they're rising for the right reasons. And as we just discussed that what we're talking about there is if the economy is getting healthier, and if the pace of those rate increases isn't coming too quickly, then that can actually be an okay environment for stocks. There are lots of examples in the past when stocks did just fine even when interest rates were rising.

But there are some risks. We've also seen some cases where rates went up and eventually kind of torpedoed the stock market. We saw that in 2018 where we had the better part of a couple years of steady interest rates that didn't seem like a problem until all of a sudden they were a problem and the stock market kind of rolled over at the end of 2018 because of those rate increases.

One of the things that tends to happen is there's this kind of cute shorthand that's developed over the last decade or so called the TINA effect, and that's shorthand for there is no alternative. And the idea there is interest rates have been held so low, this idea has developed that there is no alternative to stocks because bonds just aren't yielding anything. And what happens is as interest rates creep higher, now all of a sudden you gradually do start to have an alternative to stocks. And someone who maybe a year ago when that 10-year Treasury bond was yielding one half of 1%, they might have said, well, it's not worth it.

I'm going to put my money in the stock market. But now today when that yield is 1.6%, they might start to change their thinking a little bit. Now, we've got to be careful here because, like I was just saying, we've had this big rise in interest rates, and yet today the S&P 500 index hit a new all-time high. So the impact on stocks has not been tremendous to this point, although we did see kind of a little wobble at the end of February in the stock market when those rate increases were really picking up. But that is one thing to be on the lookout for, that investors are getting a little bit concerned.

Hey, you know, at 1.6%, this isn't so bad, but what if this interest rate goes up to 2% or on to 2.25%, 2.5% at some point, that could be a problem for the stock market. Yeah, you mentioned the wobble that we saw at the end of February. It started to look like perhaps the stocks that were going to see increases perhaps would shift away from some of these high-flying tech stocks in a very limited portion of the market over to a more broad-based, even some of those sectors that have been out of favor, like small cap. Are you seeing any trends that are sticking there?

Yeah, that's a great point, actually. It wasn't so much that the whole stock market had trouble, but what we really saw was the beginning of a rotation. These big tech stocks that really carried the market through most of last year and, frankly, have been the driver of stock market performance for the last few years, they really took it on the chin, whereas, as you said, these other small caps, smaller companies, and particularly areas of the market like energy stocks, financial stocks, financials always tend to do pretty well when yields are rising because that's good for banks. The wider interest rate spread helps them because they can give us the low interest rates on our savings accounts because the Fed is keeping their foot on those short-term interest rates and keeping those low, but the rates that we've been talking about here today are rising, and they can charge those higher rates on their loan products, so that helps profitability in the banks. So it was really more of a rotation in stocks out of those big tech growth names, and all of a sudden, we were seeing a lot of interest in these kind of left-for-dead value and smaller companies.

Yeah. We'll have a chance to get some questions in for Mark Biller in just a bit. If you're a retiree, perhaps you're counting on the income portion of your portfolio, wanting to know how this rise in interest rates is going to affect you.

I know he'd love to speak to you today, 800-525-7000. We have some lines open. All right, let's switch to that bond portion of the portfolio and talk about how this rise in interest rates will affect bonds.

Yeah. So simply put, Rob, unfortunately, rising rates are bad news for anyone who already owns bonds. So we alluded to this a minute ago, but the cardinal rule of bond investing is that when bond rates move in one direction, bond prices always move the opposite direction. So these rising rates have been hurting existing bond owners by pushing down the prices of those existing bonds. Now, the flip side of that, of course, is that these higher yields make any new bond purchases much more attractive. You're getting 1.6% on that Treasury bond instead of one-half of 1%.

So it's kind of a mixed bag. If you're already in bonds, this isn't great. But at the same time, it actually helps future returns for bond investors to have these higher rates as long as they're not continuing to just go up, up, and away. So that's kind of the big picture for bond investors. You have to be willing to wait it out, though, because you may temporarily see a paper loss in the value of the bond, even though you're enjoying those higher rates longer term, right? Yeah, that's absolutely right. And as long as these rates continue to rise, those current bond investors are likely to continue to feel some pain.

Yeah, very good. All right, let's talk about in terms of protection from the rising interest rates. You mentioned specifically buying into the buying market on the longer end, especially if these are new investments.

What other options? Because I know you mentioned some really specific investments that are often not on folks' radar that might be helpful in this environment. Yeah, so there are a few things that bond investors can do to protect themselves. You know, the traditional advice in a rising rate environment is to shorten the maturities of the bonds that you own. So instead of buying long term bonds, you buy short term bonds, and those shorter maturities are going to move less as interest rates move, and they're going to hurt you less if we get more interest rate increases. Now, the unfortunate part of that is you're getting those lower short term yields on those short term bonds, but that's one thing people can do. Another thing is to buy individual bonds where you know exactly what your return will be as long as you hold that bond all the way to maturity. Then there are the specific types of bonds you mentioned, Rob.

One is called TIPS, that's Treasury Inflation Protected Securities, and those will help protect against rising inflation. And there's another tool that we wrote an article about that's actually up on our website for listeners to look at. But in this March newsletter, we wrote about this new ETF with a bond product called IVOL, that's ticker symbol I-V-O-L, and this ETF is specifically designed to benefit from these rising interest rates. It's been a great performer lately, and that's really the opposite of how most bonds respond, which makes it very unique, and that's why we wrote about it this last month.

I love it. Well, lots of great ideas there. Still some more to talk about. You mentioned inflation. Right after this break here, I'd like to come back and talk about that specifically, this expansion in the Fed's balance sheet, a fancy way of saying all this debt that we're taking on as a nation.

What are the implications of that in the form of prices and even as it relates to our economy in the market? Plus, questions from listeners, all that right around the corner. This is MoneyWise Live. He's Rob West. I'm Steve Moore, Mark Biller with us today.

We're talking about, well, as we always do, stocks and bonds today, of course, rising interest rates and anything related to that. Here's our phone number, 800-525-7000. If you'd like to join the conversation, we'd love to hear from you.

800-525-7000. We'll be right back. Don't go away. This is MoneyWise Live. Welcome back to MoneyWise Live.

This is Rob West. Mark Biller, our guest today, and we're talking interest rates, the rising rates, the implication of that on your investment portfolio, your bonds, your stocks and all that that means. We're also talking about inflation. And Mark, you brought that up. Talk to us about the implications related specifically to inflation in this environment.

Sure. There are two well-defined camps right now as far as inflation goes, Rob. There's the group that the Fed is kind of championing this point of view, and that is that the inflation that we're seeing right now is transitory. That's kind of the buzzword right now that we're seeing some inflation, but it's only a result of coming from these really depressed economic levels. And that once we kind of work through this initial reopening, that this inflation is going to go away.

And that's one point of view. That's kind of what the Fed is saying is they think is likely. And the implications of that would be if that's true, then there really wouldn't be any reason why interest rates would continue to keep increasing very much from the levels that they're at right now. There's another point of view, though, that is saying, look, we have not had sustained inflation for many years. We had a big inflation scare coming out of the great financial crisis in 2008 when a lot of people thought we were going to see huge inflation because of all of the central bank money printing and the debt and so on and so forth. Well, we didn't see inflation following that episode.

And so this camp kind of has to answer for that. And their answer is, well, coming out of that crisis, we were relying almost entirely on central bank policy to try to stimulate the economy. The federal government wasn't really doing much to inject money directly into the economy to help from that side of things. Whereas today, we have a very different situation where we're getting these checks cut directly from the government to individuals.

We're on, I think, our third round of those now. We're seeing a lot of direct stimulus from the government into the economy with unemployment benefits and so on. There's a lot of talk about a potential big infrastructure package coming down the line. And so the people who are not convinced that this is transitory and this inflation is transitory are pointing to the fact that we have everything that we had last time in place because the Fed has still got their foot on the accelerator doing everything they can do. But this time we also have these direct injections of money into the economy by the federal government. And so that argument is saying this may not be just a transitory thing.

This may actually have some legs and last a while. Now, it's so important for me to follow that up with we're not necessarily talking about hyperinflation like the German situation after World War I. But we don't need to be talking about that. We have not seen three and four percent inflation for decades. And so even just getting inflation up into that three or four percent per year and having it stick there for a little while, that would be a pretty big adjustment for the economy and for the financial markets because we just haven't had that for quite a while.

Yeah, fascinating. Mark, there's so much here we could talk about. We're headed to a break. So we're about needing to say goodbye to you. Let me ask quickly Sam's question.

We're not going to be able to get to it. He's an elected official in city government. He wants to know your opinion on government debt versus private citizen debt. He's saying there are city projects that need to be funded.

How should they finance that? Any difference in the two as we look at it from a biblical perspective? Well, I think the biggest difference is that, you know, a municipality, a city, a town, whatever, has a much longer lifespan.

It's kind of a continual entity. And there are projects that it's very reasonable for the community to band together in that project and even think about that as a project to benefit over time. An individual or a family has to be much more careful with that line of reasoning. Yeah, absolutely.

Biblical principles apply to everyone, but as you point out, there's a little difference there. Mark, really appreciate you stopping by today. Fascinating information and always a great joy to talk to you. Always my pleasure, Rob. Thank you. Folks, thanks for being with us. We're going to take your questions right around the corner.

800-525-7000. This is MoneyWise Live and we'll be right back after this. Stay with us. An honor and a pleasure to have you listening today. Thanks very much for that. And again, our phone number 800-525-7000 talking about anything that concerns you today, anything financial. Now is a great time to call 800-525-7000. Let's begin by going to Minneapolis. Hi, Evelyn.

Thanks for your patience today. What's on your mind? I have two little kids and my husband and I have been thinking about the best way to save for their college fund. So we're just kind of wondering what is the best way to save for college?

Yeah, that's a great question. And you know, the first thing I would always say, Evelyn, when you're talking about saving for a specific project or in this case, you know, college for your kids, which is obviously really important. I would want to make sure that there are other things in place first. So, for instance, I would want to make sure you have an emergency fund. I would want to make sure you have a high interest credit card debt paid off, that you are contributing to a retirement account, at least to the matching portion. But preferably, you know, north of 10% of your take home pay.

You know, because keep in mind, you know, those things are critical. There are other ways to fund college. But if you kind of have your financial foundation under you, then absolutely it's a great idea to be saving for some of those other medium term goals that are very expensive and college certainly is. In terms of the savings vehicle, you know, my favorite tool for this is the 529 college savings plan. Think of it like a Roth IRA in the sense that you don't get a deduction when the money goes in.

Although you may get a state income tax deduction, there is no federal income tax deduction. And then it grows tax free as long as you use it for, in this case, qualified educational expenses. And if you do, then all the gains inside the 529 plan, because it's going to be invested inside that account, all the gains over whatever period of time that money is in there is going to be tax free.

Again, assuming you use it for qualified expenses related to education. Now, which 529? Because every state has their own and each one will use a different plan administrator, meaning they have different investments inside their plans. And my favorite website to help you make that decision, Evelyn, is called savingforcollege.com, savingforcollege.com.

And here's why. What they will do is they'll go through a free process with you where you answer a series of questions, and then they'll look at the benefits of you staying in the state of Minnesota with their 529 due to any in-state tax benefits versus the better potential investment performance by a 529 outside of the state of Minnesota. And then compare and contrast the two and actually rank the various 529 plans for you in your specific situation. So that would be the direction that I would go. And then it's all about automating it. So you're systematically contributing to that 529 plan wherever you open it up and then letting that money grow until you need it. Does that make sense? Yes.

Yes. Thank you very much. OK. We appreciate your call today. Thanks. Evelyn, thank you very much.

Let's go up to let's stay up north, but a bit more to the east. Tom calling from Maine. And what's your situation, Tom?

Good afternoon. I received a letter in the mail from the IRS last week and it had me baffled. The title is Your Second Economic Impact Payment. And it said the U.S. Treasury Department of Treasury issued you a second economic impact payment, EIP2, as provided by the COVID Tax Relief Act of 2020. Then it went on to say an EIP2 payment of twelve hundred dollars was issued by direct deposit. So I didn't know I was getting another twelve hundred dollars. Yeah.

Well, here's the thing, Tom. It may be legitimate. In fact, it probably is. If in fact it came from the IRS and the information in the letter may or may not be correct.

Here's why. The IRS accidentally sent out letters back in February telling many thousands of people they wouldn't receive checks for the second round of stimulus payments and later had to admit those letters were in error. So the letter you received may have been an attempt to correct that if the agency felt you were still do something. At any rate, another round of stimulus checks is on the way.

The American rescue plan that President Biden signed last Thursday included fourteen hundred dollar stimulus checks to individuals making seventy five thousand or less. Twenty eight hundred couples filing jointly who make one hundred and fifty thousand or less with regard to whether or not you have to worry about it as long as it didn't tell you to take any action. Then you don't have to worry about whether somebody was trying to tell you something to compromise your information or get you to take some action that would be fraudulent. So I'd probably just disregard it. And if you have further questions as to whether or not you qualify for this latest round of stimulus checks, which again are on the way to Americans as we speak, you could certainly go to IRS dot gov. But if you're an e filer, that check or that payment, the IP payment would come right into your account.

Would it be OK for him? Well, it's not a check. It's just an announcement, right? It's so there's nothing he has to actually take to the bank or anything like that.

No, no. It would have just been notification that the check, the payment is on the way. Tom, we're glad that you gave us a heads up on that. There's a very good chance that some others out there may have received the very same thing, but yours is the first we've heard about. So we appreciate you bringing that to our attention. Thank you very much. Let's see.

Coconut Creek, Florida. Hello, Anne. What's your question for Rob? Hi, thank you for taking my call.

Yes. I got that same check that the previous call just talked about. But my question is, is about refinancing. I have a 30 year mortgage. I purchased my home in 2014. The rate was four point two five. Currently, my P.I. is at nine hundred and four dollars with my total payment with escrow and taxes about fifteen seventy seven.

And next, next, they're going to see an increase in another hundred dollars almost. So I'm looking to refinance with this home. I do have a HELOC and that's variable at four percent and it's fifteen thousand.

So I've been talking to different lenders and trying to get information. So my question is, if I give you well, actually, one one thing I want to ask is the always ask me, do I want to subordinate or not subordinate? And I'm not really sure if I should. And then my other question is, if I gave you two scenarios, which would probably be better or advantageous for me. Yeah.

Question here. Why is the first mortgage payment increasing because of increased escrows? Is that right? Yes, I think it's increased escrows. Maybe the proper taxes or something.

I see. And what do you owe on the first mortgage? A hundred and sixty one thousand.

OK. What is the home worth roughly? Two hundred. About two hundred ninety. Two hundred ninety. OK. And you said you have a 30 year mortgage. How long ago did you get this? Twenty fourteen.

So this August will be seven years. Got it. OK. Yeah. Have you looked into refinancing yet? And because here's what I'm thinking.

I mean, if you went with a new 20 year mortgage and you have a good credit score, you have good documentable income, you could get a much better rate. Perhaps, you know, save even a point and a half point and three quarters. Yes.

Or more. Go ahead. I have. I actually have two scenarios. So I had a lender tell me a 15 year mortgage, two point five percent.

And my PI would increase to twelve hundred and the fees would be about three thousand. OK. And I had another scenario to compare. Yeah. Let's do this. Let's we've got to take a quick break. You hold the line and we come back.

We'll get that other scenario and give your thoughts. We will indeed. And thank you very much.

Eight hundred five two five seven thousand. This is Money Wise Live. They were chatting with and calling from Coconut Creek, Florida. She's interested in refinancing her HELOC. We're examining several different options here.

Yeah. And I appreciate the information you gave us before the break. And then you and I had a chance to talk just briefly off the air for me to get a few more numbers. But essentially, you've got this mortgage in 2014, about seven years ago. It's a 30 year mortgage at four and a quarter. The principal and interest is nine oh four plus taxes and insurance.

And you've got a HELOC at a variable rate of four percent right now, but that's headed higher of about fifteen thousand. You've got good equity in the home in that, you know, you've you only owe one hundred and sixty one in the house is worth well over two hundred thousand. I think the key here with these options is let's go back to kind of the principles behind when a refinance makes sense.

Number one, we want to make sure we save at least a point to a point and a half if possible. Number two, we want to make sure we're going to save or excuse me, stay in the home for at least five to seven years so we can recoup the cost of the refinance through that saved interest rate. Number three, we really don't want to spend more than one to two percent of the loan in closing costs. So max on one hundred and sixty one thousand dollar loan, I'd be looking for you to spend, you know, around thirty six, thirty two to thirty five hundred dollars max. So these loans that you had quoted at six thousand in closing costs and nine thousand in closing costs, they're either charging you discount points to, quote, buy the rate down.

They're charging origination points. That's just way too much money. I would I would move on from those quickly. So what I would do is I'd go back and again, begin shopping this around with at least three quotes. I would get perhaps one from your bank. I'd look for two online lenders and I'd look for those at bankrate.com and see where you can save at least, you know, a point and a half, which you should be able to do it.

No problem. That'd be a two and three quarters percent interest rate for a 20 year mortgage, which is going to knock three additional years off your current 30 year that you're seven years into. It's going to keep your payment around a thousand dollars, which is only one hundred dollars more.

And you said you have room to go up eight hundred to a thousand because that's the margin you have every month. But I really want you to focus on not overpaying with those closing costs. And that's why I want you to get some of these more aggressive online lenders in the mix and make sure that just because they have a bunch of advertisements on television doesn't mean they're giving you the best price. And so that's why that one to two percent of the mortgage in costs is a good barometer to make sure you're not overpaying. And if they're not willing to do it, you just move on because you've got a great situation here with a really attractive environment. So that's going to be my best advice for you.

Your local bank plus bankrate.com. And let's see if we can find a new mortgage that lines up with all of those things. And thank you very much. We wish you the best. Rob, before we say hi to Joanne, I know you wanted to say something to our listeners because of their wonderful generosity last week. Oh, absolutely. You know, it was so much fun on share to be able to hear from so many MoneyWise listeners.

And here's the thing. God responded. You all responded. And we just want you to know how grateful we are. You know, here at MoneyWise Media, our partnership with Moody Radio is so important to us.

There is no better home for this radio program than Moody because it's all about God's wisdom and today's decisions and choices. And that's what we do here on this program. So we're just grateful that you were generous in your hearts and generous with your resources. And because of that, the Lord really provided. Amen. He certainly did. All right.

Down to Ridgeview, Illinois. Hello, Joanne. Thanks for holding. What's your question? Yes.

Couple of questions. My son took out some alone for some school courses and I guess he's behind or something because the company that they've been calling me to find out where he's been. I've given my son the name of the company and the number.

Now, apparently you use my name as a reference. They can't hold me responsible in any way, can they? No, as long as you haven't signed anything, Joanne, you're not on the hook. Now, not saying this would be the case with your son, but anytime you think someone might have fraudulently signed your name, you should check your credit report at annualcreditreport.com. And you might even want to consider freezing your credit, which is free and basically just applies a PIN number so that nobody can pull a copy of your credit report for the purposes of extending you new credit without knowing that PIN number. Of course, if they don't have it, then that would stop them right in their tracks. But as long as you haven't signed anything, you shouldn't be on the hook for it. And it's a good idea for all of us to continually monitor our credit reports.

And I'm talking about, you know, at least four times a year, if not every couple of months, just to be sure that we don't see an account pop up that we don't have any knowledge of, which means our information was compromised. Yeah. Great question, Joanne. We wish you the best on that. And your son. Thanks very much.

Lowell, Indiana. Jeff, how can we help you, sir? Yes. My wife just recently, we found out there's some medical conditions and we're going to have to either or have to add on to a home.

And so either I have money to pay for it directly, pay cash, or should I take a loan mortgage on it because interest rates are low, and then invest that money and just make payments. Yeah. What stage of life are you in, Jeff? Are you in your prime working years? Are you close to retirement, in retirement? Close to retirement. Okay.

All right. You know, I like the idea of you especially being close to retirement with your wife's medical situation. I like the idea of you being debt-free.

Now, if it's going to put you in a real bind in terms of being in a cash crunch, certainly I wouldn't want you to chew up your emergency fund or something like that. But if you've got a healthy emergency fund and you've got some surplus there kind of on the sideline, you know, keep in mind as you head toward retirement, you're going to get more conservative in your investment posture, which means, you know, you don't have as much upside, not to mention the fact that we're, you know, 12 plus years into a massive bull market. And, you know, we know the economy and stock markets tend to be cyclical. So at some point, this is going to roll over and, you know, we'll have a recession at some point.

Doesn't mean it's going to be this year or even next year, but we will. And you want to have time on your side when you're investing so that when those things come, you just ride them out. But if you have a chance heading into retirement to continue to remain at or near debt-free, I'd say you go for that and enjoy that flexibility that comes with being unencumbered.

Jeff, does that make sense? Cash for it. Yeah, because, I mean, we have no debt now. Yeah, yeah.

I wouldn't take on that debt unless it's going to put you in a real bind in terms of cash available to have for flexibility. Okay, great. Thank you. All right. Thanks, Jeff. All right, buddy. God bless. All right, let's go to Kristin and, yes, Kristin in Minnesota.

Kristin, how can we help? Yeah, hi. Hi.

I have a few real quick questions. I'll be short. So my husband and I are looking at purchasing our first home here soon in the next few months, and we know for sure we don't want to pay PMI. We want to put 20 percent down. We have a lot of people telling us, oh, why would you do that when you can just pay PMI and whatever? And our thought is that that's kind of a waste if you have the option to put 20 percent down. Somebody had mentioned to me something about down payment assistance, that there's grants and other options.

And I really don't exactly know what that is. I don't know if you guys would have a good explanation for me about what down payment assistance is. Yeah, you know, many states and the Federal Housing Administration, Kristin, have needs based down payment assistance grants. So you would just want to look into that to see if you qualify.

And you could do some quick research on the Web. And if you do qualify, then that's what it's for. And you could take full advantage of it. Most people don't. But there certainly is a possibility if you fit into one of these categories that you could get a needs based assistance grant. With regard to the PMI, you know, I don't ever think you should take on a mortgage without putting 20 percent down.

Here's the thing. When you get over 20 percent, you've got some equity in the house. Keep in mind, just like the stock market's been going straight up, so has the housing market. And if we were to get into a recession and housing prices were to take a dip, you certainly wouldn't want to be in a situation where you were upside down in the home. This is going to ensure that you won't be. Remember, the long term goal is to be debt free, including our home.

So why wouldn't we make a meaningful step in that direction? And there's no reason to pay PMI if you don't have to. It's not money you're ever going to get back. Doesn't do anything for you. It's for the benefit of the lender, not you.

So that's just an added unnecessary expense. So I would respectfully take their advice and pass on it and just continue on the track you're on, which was saving diligently to buy a home you can afford that you ultimately want to own free and clear. And we're going to let you go on that, Kristen. We appreciate your call today. I trust that information will be helpful to you.

Thanks very much. Just a little bit of time, Rob. So I want to ask you once again, if you don't mind about the Money Wise app, because we think that lots of concerns could be solved if everyone was living in some sort of a spending plan that they actually have written down, whether you want to call it a spending plan or a budget. And that's what the new Money Wise app does for you in spades, right?

Well, there's no question about it. You know, there's three components to the brand new Money Wise app. The first is the best digital envelope system I've ever used. You know, Larry Burkett talked about the digital envelope, not the digital, the envelope system back in the day using physical envelopes. And, you know, it's probably the best, most tried and true approach to controlling spending that I've ever seen, which is why you still hear about it today. And the idea is that if you put your resources and allocate them into envelopes, whether they're physical or digital, you can always know exactly where you stand during the month in each one of those categories. We just basically put it into a beautiful interface with the latest technology, put it in the palm of your hand in the form of an app, allow you to connect securely to all of your institutions to download transactions instantaneously, automatically categorize them, and just give you all that powerful information at your fingertips. You put that alongside the community where you can ask questions and have discussions with other stewards and our Discover tab where the best content biblical finance comes together in one place. And that's the Money Wise app. You'll find it in your app store today. Thanks, Rob. Money Wise Live is a partnership between Moody Radio and Money Wise Media. Thanks so much for allowing us into your radio today. Have a great remainder of your day and join us again tomorrow.