_MWL

Have you ever wanted to read through some of these wonderful stories? Your true family are everything.

Hi, I'm Rob West. Family memories take on a special meaning at this time of year when we gather for the holidays. One of the best memories you can make involves Giving. I'll talk about that today with Becky Cullum. Then we have some great calls lined up, but please don't call in today because we're prerecorded.

This is MoneyWise Live, biblical wisdom for your financial journey. Well, some of you in the Lone Star State may know Becky Cullum. She's Executive Vice President of the National Christian Foundation in North Texas, and Becky has a passion for helping individuals and families create giving strategies so they can be more generous. And Becky, it's great to have you on the program.

Thank you so much, Rob. It's an honor to speak with you. Becky, I love this topic and I'm so excited to have you on the show today. How did this become so important to you in particular and your loved ones? You know, my husband and I were both raised in Christian homes, and so tithing and generosity were a part of our upbringing. So, of course, as we started to raise our own family and kids, we wanted them to know and love Jesus. And like many of your listeners, we want to be good stewards of all of our resources and our family.

And we didn't have a great plan when we got started. And the topic of money and generosity really came out of our kids' questions and topics that they wanted to discuss. And it came out of need, really, that we dove into this.

I love that. Well, I'm excited to be able to share some practical ideas today on how folks can do that. But first, let's go to Scripture. As you think about the passages of family generosity, what Scripture inspires you to take on this challenge? You know, there are so many great passages throughout the Bible, instruction in Proverbs, great ways to train up your children. But when I think about what really inspires us, we've got to go straight to the Gospel. You know, if we look at John 3 16, it's that God so loved the world that he gave. He gave us a son so that we can have eternal life. It's a free gift of God, not by works. And so when I think about this, it's really once I get in touch with my own sin and God's generosity and grace, that's what compels us. That's what inspires this generosity.

I love that. All right, well let's get practical then. So tell us what you're doing about this in the Cullum household. Well, I've always heard that about 80 to 90 percent of communication is more. Unfortunately, I think our children learn more from what we're modeling than what we're saying. So Christian and I, we really had to get serious about our own thoughts on this topic.

And so we're work in progress. We're looking at different books, resources, talking to older, wiser parents. One thing that we've been reading recently is a book called The Opposite of Spoiled, Raising Kids Who Don't Have Money. And that has had just a great number of tips and topics on everything from allowance to generosity, to chores, to how to talk to your kids.

And when things come up, questions, friends, driving past the homeless person, all of those things. Absolutely. What about this time of year in particular, Becky, as we head toward Christmas just a few days ago?

What are some of the things that are going to work at this time of year? Certainly, there are loads of practical options out there, whether it's buying gifts for a child from an angel tree or serving at a soup kitchen. But I think the things that are more impactful is when you really can get closer to that need. So we are going to go tomorrow and box up food for families in need, but on a personal level, when you get to meet that family or engage with that child. I think that's going to be more effective. Oh, I totally agree because then they put a face with their generosity.

It's not just a check that's being written or something put in an envelope. Although that's important to teach as well. We want to teach that they should be regular givers to the local church. But I love whenever we can attach the real need and the impact to the giving.

And I think you're exactly right with what you're saying. We're talking around the corner about how your kids are responding to this. We'll also continue to get really practical about ways to do this in terms of inspiring family generosity and what this has done in your marriage between you and your husband as you all have gone on this journey together. Folks, we're talking family generosity today with Becky Cullum of the National Christian Foundation. We'll be back with much more just around the corner.

Stay with us. It's great to have you with us on MoneyWise Live today, but unfortunately, today we're not live. We're pre-recorded and therefore won't be taking your calls. However, we've lined up some calls in advance that we think you'll find helpful. So stay tuned and enjoy the rest of the program. Let's begin today in North Carolina.

Christine, you've been very important. I was hoping that you can tell me how to get income very fast. I declared, I'm 62 years old, almost 62, long-term unemployed and I told the Obamacare people that I would have an income of $15,000 for this year.

That hasn't materialized. So my question for you is, should I withdraw the $15,000 from my Roth IRA? Currently, I have $700,000 in my IRA. I am desperate. I do have to... You broke up there for a second. You said I am desperate and I missed the rest of that.

Yes, I am desperate to get to $15,000 and I was wondering if the better option is to just withdraw it from my IRA or from my Roth IRA. Okay, so are you trying to qualify for that? Is that what you're after? Yes.

Okay. You know, because you can go back and change what you have reported in terms of what your expected income is. You know, with regard to Obamacare, they use the income that's for the current year. So not the prior year's tax return but your income for the current year to determine whether you're eligible for subsidies for your premiums and if 400% of the federal poverty level, you know, they will offer subsidies to you and oftentimes that modified adjusted gross income that you report which is your AGI and then you add back in non-taxable Social Security benefits, tax exempt interest and then certain other types of income, you know, that will, you know, get to your modified adjusted gross income but that does change periodically if you go back and change that. If you wanted to, you know, hit a certain number then IRA distributions, you know, are a part of that adjusted gross income because it's added to your taxable income for the year. So if you're long-term unemployed, you know, you have obviously this IRA both Roth and traditional that you could take distributions from to basically be added to your taxable income for the year and would be a part of this calculation for the reportable income under the Affordable Care Act.

So yeah, that would be an easy way to do it. I guess the bigger question is do you need that income and if not, what is it you're living on currently? My parents passed away and I wiped out 16, excuse me, I already wiped out $600,000 of my savings from my parents inheritance.

All right. So how much do you have remaining in investable assets? I have $40,000 left in my checking account and I have the $300,000 that I inherited from my parents and then that's it. Okay. And so what are you needing to pull per month to cover your expenses? I spend on my living expenses. Okay.

So once you go through the $300,000, you will have depleted all the assets that you have? Yes. And I know the question, Rob, I can read your mind already. Christine, why don't you get up and go out and get a job?

Why don't you try that? Yes, I know that that's the problem. But for right now, I just need to come up with the $15,000 to satisfy the Obamacare people. Sure, sure. Yeah. And that's easy to do an IRA distribution because that's all taxable income. So there's no problem there. I think the key is and what I'm thinking about is just sustainability here. And you're right, we're gonna have to find another source of income.

But in terms of meeting that target number, you can easily do that by taking an IRA distribution. So I hope that helps. We appreciate your call.

800-525-7000 is typically the number to call. But as I said, we're not here today. So let's do time to time from those of you who listen to the program and we don't often get ample time to take as many as I would like.

So let's get a couple done today. This one comes from Larry and Larry just writes, my aunt has run up a ton of credit card debt. We want to consolidate it and get it paid off. How can I help her without just giving her money to pay her bills? And I'm not a big fan, Larry, of consolidation loans debt.

I love the fact that you want to help your aunt get this taken care of. I'm gonna recommend a credit counseling program. Our friends at ChristianCreditCounselors.org would be a great resource for a couple of reasons.

Number one is, this is my preferred way to pay down debt simply because it ensures that you do it with lower interest rates, which is going to allow you to pay through one fixed monthly payment. But here's the other piece, is they're gonna spend some time with her and go over exactly what she's got, pray with her, encourage her, help her develop a spending plan. So now there's some third-party accountability, which if you're gonna turn over some money to help her get out of debt, I think that should give you some peace of mind to know that she's accountable to somebody and there's somebody helping her working through her spending plan. And then once they determine that she's able to do this out of her budget, they get the monthly payment, perhaps you agree to take half of that monthly payment and you could send it direct to Christian Credit Counselors so you match every dollar she puts into this and so maybe between the two of you, you cover that monthly payment to get that credit card debt coming down and ultimately paid off. So that would be my best advice for you today is to check out ChristianCreditCounselors.org and get her know once she gets enrolled in the program, you guys will cover half the payment. We appreciate your email.

Let me quickly take one more. This one just says we're trying to find a financial coach. Where should we start? Well, MoneyWise.org would be a great resource for you. We have financial coaches here that would be delighted to help you with a spending plan or giving plan, perhaps a debt reduction plan, whatever you need.

Our coaches can help. Just head over to the free MoneyWise account. That will ensure that you get our MoneyWise Weekly Wisdom email and you can check out all of our great content there as well. We aggregate content from 14 content partners, the best in Christian finance.

It's all there at MoneyWise.org. All right, we're going to pause for a break when we come back. Much more on the program, so don't go too far. Delighted to have you joining us today on MoneyWise Live. Let me remind you, our team is away from the studio enjoying the Christmas season, so we're not here, but we lined up some great questions in advance that I know you'll enjoy. Now, before we head to the phones, here in our final moments of this year, I wanted to participate in this radio ministry. We're still working towards our year-end fundraising goal to meet our obligations this year, as well as make ministry plans for next year.

By the Lord's grace, we've seen tremendous growth and listeners like you have helped make it possible. So, would you consider sending a monthly or a one-time gift by December 31st? You can head to MoneyWise.org and click Give. December 31st, that would be very helpful. Thank you for your generosity, and it's a privilege to serve with you. Hey, before we go back to our phones, let me take a couple of emails we've received recently, and thanks for writing to us at questions at MoneyWise.org.

We try to get as many of them on the air as we can. This one from Pete, he says, I think my property value has increased beyond 80% loan to value, and I'm still paying private mortgage insurance. I don't have the conventional. What can I do to drop the PMI? Well, just based on your scheduled payments, if you reach 78% loan to value, meaning you started at something higher than that, and through just regular payments without any appreciation of the home, you've reached that 78% mark, they have to drop it. You can request it at 80%. Now, the reason you're trying to count appreciation of the property in that loan to value calculation, so you believe your property has increased in value, which is the case for most folks out there. If you've had this home from, you know, more than just this calendar year, and you're counting on that appreciation to get you to this 80% target, then your lender may drop it if they're willing to take a look and take a look at the market analysis, or they may require an appraisal, which would run you somewhere between 200 and $500. But if you're fairly confident that you have reached that 80% mark, certainly if you think you've reached the 78% mark, then it might be worth you spending the money if they're going to require it to do that appraisal, because now with a conventional mortgage, if you can document that, you could drop that PMI, which does nothing for you. That is a benefit of the lender only, and so that's just an unnecessary expense you could get rid of. So Pete, I would start by contacting your lender, seeing if they'll do it automatically without any documentation. If not, that's where you may want to just inquire as to whether or not they would like you to pay for an appraisal, and if it comes out that you are right, that they would agree in advance to go ahead and drop that PMI.

By law, they have to drop it. All right, let's take some phone calls. Asher in Texas, thanks for calling. Go right ahead. I'm just calling with a question about my 401k. I was wanting to know, could I borrow from it to pay my son's college tuition?

Yes, so tell me a little bit about what you've got here. So this is a 401k you're looking to borrow as opposed to a withdrawal, is that right? Well, I borrowed from it prior, but I just wanted this particular time, could I just draw from it?

Yes, you can. It's not your best option in my view. You know, I would like for you to see that 401k really as your retirement source. You know, there are other ways to pay for college. You know, there are not other ways to pay for retirement, and so I would love to see you not touch this. There is a situation where, you know, you'll have to certainly, no doubt, pay the taxes on it. You can avoid that penalty for an early withdrawal if you are using this for direct higher education expenses.

So if you're under 59 and a half, whereas you normally would have had a 10% penalty, you can avoid your taxable income for the year. And beyond that, you have to recognize that again, this money is now no longer available for your retirement. And the key there is, you certainly want to be able to, you know, miss the, or have the opportunity for that money to continue to grow for you. So I think from that standpoint, I would be looking for other ways, scholarships and grants. You know, maybe getting in the summer, maybe getting an on-campus job at the, as a last resort, you know, borrowing is an option as well. But give me your thoughts on that.

Oh, well, I enjoy what the feedback I've got as well. But I would look into that. I was trying to avoid going to the grants or, I mean, all the student loans of that nature. Yeah. I was kind of looking for a way to help him without having to have to pay it back or have him have to pay it back.

But I understand what you're saying. Yeah, and the other thing I would just keep in mind is, you need to contact your planned administrator just to confirm, in fact, that you wouldn't have that 10% penalty. And you definitely can take it out of an IRA penalty-free for qualified expenses. The key with a 10% penalty is to see whether your plan allows for what they call hardship withdrawals.

And that's where this would fall. So you may or may not be able to miss that 10% penalty. If you can't, then that 10% on top of it all being added to your taxable income is really going to make it expensive money, if you will.

So as much as I know you want to just be able to say, listen, those expenses are done and we can move on and he doesn't have to pay. So perhaps a 10% penalty could go either way, plus the taxes, plus this money no longer being available to grow for the next, you know, however many years between now and retirement, I think makes it a pretty unattractive option. So I would look at every other possibility, Asher, and let me just encourage you, there are some great options out there for scholarships and grants. If he hasn't really set his mind to trying to find these and apply for a senior right now and he spends a good bit of time in the evenings just applying for scholarships and grants all over the place. There's hundreds of them and don't miss that opportunity to access some of these funds that are out there and, you know, take the easy route of just withdrawing from that 401k.

So hopefully that's an encouragement to you. Thank you for calling today, sir, and all the best to you as you look for college funding sources. To North Carolina, Judy, you're up next. Hi, Rob. Okay, I'm very ignorant to this investing and but I've heard a lot about the I bonds and my husband and I, we are very behind the times. He's recently been investing in his mutual funds that his job offered him, so I called them.

I didn't know if we could switch some money over to the I bonds with paying them, but it was like discouraging me that you wouldn't even get, I wouldn't even get but half of that because the way I understood it is you have to, you know, it's for a year and then if you withdraw it, and correct me if I'm wrong, after the year the last three months of earning that, I'm using even, you know, rounded numbers, 10%. Why is he saying this, basically is my question, like that I'm not gonna, because I have all faith that you all are telling me the truth, and I want you to go to that and do that. Well, let's do this. I've got to take a quick break, Judy, but if you can hold on, I will absolutely weigh in on all of that. There's some truth to that, but whether it makes sense for you. This is MoneyWise, we'll be right back.

Welcome back to MoneyWise Live, I'm Rob West. Just before the break we were talking to Judy who has some questions about I bonds, inflation bonds from the U.S. Treasury. She's getting some mixed messages and just wanting to know how she should think about whether or not the I bonds are a good option for her. The penalty that you have to recognize if you pull the money out after a year but before five years, you give up the prior three months worth of interest, and that's absolutely true. So the way these bonds work, they're 20-year bonds with a 10-year extension, so 30-year bonds. You have to keep it in for a year. If you pull it out in less than five years, when that interest is credited on redemption and that's how it works, as soon as you redeem it, all the interest that you're entitled to for the time that it was in the bonds is credited. If it's less than five years, there would be a subtraction of three months worth of that interest, so that would not be credited. And the question is, does this make sense?

Well, the answer is maybe. It really just depends on what money we're talking about. So if you want to think about the assets that you have, the investable assets, think about it in terms of buckets. So bucket one is I would typically say you need to have three to six months expenses in a liquid savings account for the unexpected. That's not I-bond money because that, by definition, you need to be able to access immediately because you don't know when the unexpected is going to come.

And with the I-bonds, you've got to leave it there for a year. Bucket two might be short-term money. Maybe you're saving for a big vacation a year from now. You're saving for a down payment on a house. It's sitting in a savings account, but you don't have that money for one or two or three years. That's a great option for this money. It's not inside a retirement account because you can't put qualified money into an I-bond. This money you don't need right away, but you're just looking to get a little bit more yield, a little bit more return on the money.

That's what we're talking about. Bucket three and beyond would be money that you say, this is for the long term. It's really for my retirement.

It's five years plus. I wouldn't put that money in a diversified stock and bond portfolio. That is going to perform better over the long haul because recognize that what we're experiencing in terms of this temporary bump in the I-bond yield, now 6.8% back in, you know, a month ago, it was 9.62%, which made it really attractive.

That's temporary. It's going to come back down to where it normally is once inflation gets under control. So we don't want to, you know, make a recovery with our long-term money for something that really is temporary. But if you've got some money that fits in what I call bucket two, which is a one-to-five-year time horizon, you're saving for a specific purpose, you don't want to take any risk, then why not get that 6.8% while you're waiting, at least what it's paying today for the next six months. Now, what about that reduction of three months worth of interest?

Well, let's just run the numbers here. You know, you're getting 6.8%, you know, that's basically a little more than a half a percent every month and you were to take three months of that, that's 1.7%. So 6.8% minus that 1.7% that's going to be withdrawn for an early withdrawal, less than five years, you're still getting 5% on the money with zero risk because it's backed up. Is 5% yield with no risk a good investment for $10,000?

Absolutely. You're not going to find 5% with US government backing anywhere else. So again, as long as it fits the right parameters, I think that's still a very attractive rate. Now, the only asterisk at the end of that is that 6.8% is what it's paying for the next six months. That will change again and it may come down which could take that overall 12-month yield from the 5% that you would get after the penalty down to something like, you know, three and a half or four and at that point, you might say, well, I could have just gotten that in a savings account and you'd be right. So I think, you know, it's getting to the point now that we've lost this 9.6% yield to where, you know, there is some question as to whether, you know, that was a month ago but it's still fairly attractive if all that makes sense. Right. It does make sense and you answered a question too because so in the long term and that when May comes the interest rate can change and it can go down or it could go up and that's what I was wondering just because you enter it at a rate, it's just good for you to see the word or how y'all, whatever the word is.

Yeah, let me clarify that though. Once you enter, once you purchase the electronic bonds and you do have to do it electronically and so we would have to address the question you asked before about, you know, my husband and I are behind the times, how do we do this? But once you purchase those bonds, you get the rate that's being offered at that time for a full six months.

So it doesn't change automatically as soon as they come in. It's going to change for you once your six months is up. So you will get that rate for six months.

The question is, we don't know what the next six months will hold until we find out in May and that's going to be based on what's called CPI, the consumer price index, which is just what inflation is doing on the goods and services most Americans use at that time and I will say the Federal Reserve, the reason they're raising rates is they want to see that number coming down and they're saying that it's a lot lower in May than it is today. Right. I understand now. Thank you so much. I'm just so grateful that I found this radio station.

I'm new to it but I'm telling everybody about it. Thank you so much for taking my call. Yes ma'am, happy to do it. To Texas we go. Hey Mark, thanks for calling today.

How can I help you, sir? I have $300,000 in cash sitting in an online savings account for 30%. I just did it maybe a few months ago. Is that a good move on my part or is there any suggestion you can make to make my money work that make more do better? It totally depends, Mark, on what the purpose of the money is. You know, if you were to say to me I've got $300,000 and next month I'm going to buy a home for $500,000 and I'm going to put it in all of that $300,000 into that home purchase, then it's a great place. If you say I've got $300,000 and I don't need to touch it for the next 25 years, it's a terrible place because you're not even keeping up with inflation at 3% and so we probably ought to deploy it in an investing account. If you said well a portion of it is my emergency fund but I'm going to put it up into buckets if you will and say you know we're going to put a little bit over here and we're going to put the rest of it over there. So it really all depends on the time horizon and the purpose of the money.

So clarify that for me. Well, I am 16 years old. I'm going to be 62. I'm going to work maybe a couple more years and then go home to the Philippines. Although I'm a US citizen, I'm thinking of going home to the Philippines.

I have to keep or sell as well. Now I have nothing in the Philippines except the land that I want to build a home in but that's the only expense I can foresee because of course my daily survival and medical care just in case. Okay so if let's say you were to head to the Philippines and retire in what three years?

Two years or three at the most. Okay and if you were to buy a home when you get there or build a home would you need to use this $300,000 to do it? The house that I have here in Texas. Okay so I think that's the decision you need to make is are you going to keep or sell the house and what proceeds might you expect and how much do you need to keep available for a major transaction like a home purchase or construction in less than three years? I'd want to keep that money very safe, very liquid in probably a money market fund where you can get money that is not going to be deployed then. Are you going to use it to generate income? Are you going to start taking withdrawals from this to support your income when you get to the Philippines or will you have another income source? Well I'm looking at my security to sustain me while I'm there which would be sufficient and so this money that I told me in my regular back here at the in the city where I am in was making like 0.01 something percent and over the years I thought wow I have been wasting time letting this money sit in here. My son just told me daddy you're wasting, you're not putting it wisely away and that's how it came about that I put it in a online savings account. I think I heard it from your program. Yeah very good.

Well we're having at least a little bit of interest on it Mark. Are you self-employed currently? No sir I am full-time therapist with a home health agency. Okay and are you funding a retirement account through your job? Yeah we have a 401k plan at work and I am participating in it. Okay I'd max that out to get as much going into that as possible even if you have to supplement your income by pulling from the 300,000 to get as much of that 300,000 into a tax deferred environment between now and when you retire as possible.

Apart from that I would do some planning to decide whether or not you're going to keep the house, how much you need to set aside for the home purchase in the Philippines and the rest I'd connect with an advisor here before you go who can manage this for you and invest it and not take more risk than you're comfortable with but get it growing for you so you're outpacing inflation. I'd find a couple of certified Kingdom Advisors on our website Mark and MoneyWise.org click find a CKA interview two or three find the one that's the best fit and go ahead and hire them now. We appreciate your call Mark all the best to you in this next season of life sir God bless you. Well we're about out of time today but before we wrap up let me remind you as we head toward year end we could use your assistance and support as we close out the year financially. We rely on your listener support here at MoneyWise Media to do what we do through this radio broadcast and through all of our other ministry offerings as a result of your faithful support.

So would you consider a one-time or even a monthly gift starting before the end of the year that would be really helpful if you made a gift before December 31st. Just head to MoneyWise.org and click give and thanks in advance. Let me say thanks to my team today so grateful for Amy and Jim and everyone who helped out without them. Thank you for being here as well. Enjoy the rest of your day and come back and join us next time for MoneyWise Live. God