Biggest Financial Mistakes With Ron Blue

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That's 800-525-7000. This is faith and finance, biblical wisdom for your financial journey. Okay, once again, financial teacher and author, and my good friend Ron Blue joins us. He's a busy guy, so it's always a treat when he takes time from his day to join us. Ron, great to have you back on the program.

Well, as always, Rob, I look forward to it. Ron, we're talking financial mistakes, so let's be honest. I mean, you're Ron Blue, the money guy. Have you really made a financial mistake? Well, you see, this is Tuesday, so I haven't made many yet this week, but I have made probably some.

I love it. You're always humble. Hey, you've written about these mistakes that you and I have both made, and let's look at a few of them today from your book Master Your Money, a step-by-step plan for experiencing financial contentment.

By the way, if you haven't read it, it's a must read. So Ron, what's the first financial mistake on your list? Well, really, the first one is to establish your goals.

You know, if you aim at nothing, you're at it every time. And goals help put boundaries around your spending and put priorities in the right order around your spending. So Judy and I used to take two goal-setting weekends a year. I say used to, because when we had the children, it was more important or more urgent than it is today. But goals would be the first one.

Yeah, that's really important. I know another one you mentioned, Ron, is having what you call a consumptive lifestyle. What is that, and how do we avoid it? Well, a consumptive lifestyle is really one that is significantly beyond what you really need. And I was just reading this morning in my quiet time about greed, and all of us suffer from the temptation of greed. You know, for men, maybe it's a new car. For women, perhaps it's a new dress or something. And they're not wrong, but we tend to overspend in many ways and have a consumptive lifestyle. And by consumptive, I mean you're spending it on things that are consumed, therefore they're not building any equity other than perhaps memories, but they're not building equity in your finances. So that's a biggie.

Yeah, it sure is. Ron, you mentioned greed. Just one thought on that. Do you think it's possible to attempt to redeem greed in the name of the American dream?

Oh, I do. You know, I haven't talked a lot about greed over my career, Rob, but for some reason the last couple of years I've become more and more aware of the fact that greed really is existent. Tim Keller said, I've had every sin confessed in my study with the exception of greed.

We don't tend to look at things. The motive is something other than perhaps spiritual or family or something that's more important, so not having a budget is a way to avoid that. Well, let's talk about that, because I know you say that's another one of those biggies in terms of financial mistakes.

Why is that so key? Well, people tend to think of it as something being constraining, and yet it's not. It's something that's freeing, because it's pre-planned expenses. For example, I'm going to take a vacation. Am I saving for that vacation so that when it comes, I take the vacation, which is certainly okay, because it was in my budget. Do I have a budget for the emergencies that are going to occur? Car repairs, broken dishwasher, whatever it may be, I need to have the contingencies built into my thinking also to be realistic. And very few people operate off of a budget, but I say a budget is really just pre-planned spending, and it's a freeing thing to have rather than a restrictive.

Ron, just a few seconds left. You say giving is one of the mistakes that we make. Why so? Well, people tend to think of giving as giving out of surplus rather than out of income. And I think that if you don't tithe, you're not experiencing financial freedom. Wow.

And I think God wants us to tithe, not because he needs the money, but he needs your heart. Well said, Ron. We're going to have to leave it there. Thanks for stopping by. Well, thank you for having me, Rob. That's Ron Blue. He's been our guest today.

You can read a lot more in his book, Master Your Money. Your calls are next. We'll be right back.

We'll be right back. Great to have you with us today on Faith and Finance. We're taking your calls and questions today. The number to call, 800-525-7000.

That's 800-525-7000. Whatever's on your mind today, financially speaking, we'd love to hear from you. We've got lines open. You can call right now.

Let's go to Texas. Hi, Richard. Thanks for your call, sir.

How can I help? Thanks so much. My question is, my mother-in-law passed away and left a small inheritance in two forms, one in the CD. I understand that that's no tax implications because of the inheritance tax. The other one I'm a little unsure about, and that is an IRA, and the distribution is about $9,800. And I don't know if there is a requirement to have withholding taxes and what would be the tax basis, if any.

Yeah. No, there is no capital gains inside an IRA, so you're just going to pay tax as ordinary income on any distributions from the inherited IRA, and the SECURE Act 2.0 made some changes in the rules with regard to that distribution, and so you're just going to want to check with your CPA on that. As a non-spouse IRA, if the account holder died after January 1st of 2020, then the SECURE Act requires the entire balance of the inherited IRA to be distributed or withdrawn by the end of the tenth year following the original owner's death. There are a few exceptions, but that's generally the case. But as that money comes out, you are not going to pay any capital gains on any of that, so you don't need to know the basis. It's just every distribution is going to generally be taxed as ordinary income. Well, then when I've got to tell the advisor whether I want to lump sum or do the MDR, I'm just going ahead and do the lump sum and have her withhold, I think, 22%. That's the tax bracket I'm in and just have that done with, so when I file my taxes, that part's already been sitting in the treasury. I hate giving the government a free loan, but it's less painful trying to come up with it later. You know how expenses expand to fill funds available. That's a great rule of thumb.

I'm glad you said that because that's so true. Yeah, I guess the only exception would be, and let me just ask before I say this, what is your age, if you don't mind? Not at all. I'm 75. We're debt-free. We've got six months of savings.

I've got an income stream to my military retirement pay, Texas teacher retirement system, and Social Security. We've followed all the good advice, and the good Lord has blessed us with an ability to help others, which we really enjoy doing. Are you familiar with, and I'm thrilled to hear that. Thanks for sharing that.

Are you familiar with the qualified charitable distribution? Yes, I've been listening. We listen quite regularly.

My wife is quite interested in it. We think that's probably going to be something that we're going to do once we get resettled. We've got six adopted grandkids in Montana, and we're in the process of moving up there with a hand. So once we get the income stream figured out, I think that's an excellent way to do it for all the reasons that you so wonderfully advocate in a clear and concise manner. Yeah, excellent.

Well, thanks for that, Richard. The only reason I mention it is with that inherited IRA, the QCD applies there as well. So you can pull that out once you're 70 and a half from the inherited IRA as well. So if you need to start drawing that down to comply with the required minimum rules, that is an option. And you could use it, as we've talked about before on the show, to replace giving you were already going to do after or out of after cash funds from checking or savings.

But sounds like you're all over that. But yeah, good news is you don't have any capital gains. You're just going to have the ordinary income as it comes out. And I think having them withhold it is a great idea for the reasons you mentioned. You don't have to worry about it.

You may a little bit more or a little bit less, but at least the bulk of it has already been taken care of and won't catch you by surprise. So I appreciate your call today, sir, and for your kind remarks about the program. Well, the only request I would like is if a federal treasury in Congress would listen to your show as part of a required educational process.

We might get better decisions down the road. Well, thank you. That's just it. That's for you to think about.

All right. I appreciate that. It's funny you say that the business school at Liberty University is a part of their financial planning classes. Those undergraduate students seeking a degree in financial planning, they actually are required to listen to the show.

But I don't know if we could get that all the way up to the halls of Congress or Treasury. But it's noted, Richard, and you've been very kind today. I appreciate you calling and being on the program. You know, what's what's funny is Ron Blue, the popular author and teacher. He's one of my mentors.

He's a frequent contributor here on the program. He actually testified before Congress in a Senate subcommittee one time on low income Americans. And the senator asked him, I won't mention which one it was. Ron, what would you tell the average low income American related to their finances? He said, Well, Senator, I tell them to do four things. He said, I'd tell them to spend less than they earn, avoid the use of debt, set long term goals, and have some margin or some liquidity.

And the senator picked up his pencil and started writing those down. And he said, It strikes me that that would work at any income level. And Ron said, You're right, Senator, including the United States government. And, you know, I think it's so true. You know, when we look at God's word, and we think about these principles that we see in Scripture, you know that I just mentioned that we're to live within our income that we're to avoid debt because there's clear warnings that we should have some margin or some surplus because that's how we accomplish our goals that we should set long term goals because the longer term the perspective the better the decision today.

And Ron has since added one to that. And I would concur with this as well. Number five is give generously, because giving breaks the grip of money over our lives. And if we were to do those five things, we'll be in pretty good shape.

And guess what those apply to nations as well as individuals. So something to think about today. We've got lines open 805257 1000. Let's go to Montana. Hi, Jerry, go ahead. Well, hi. Thank you for taking my call, Rob.

I enjoy listening to your program quite often. And I would like to ask you a question that I haven't heard before, but this is my particular issue. Okay, I have a balance due at the hospital.

And I have been trying to whittle that down $100 a month. And when I get my statement, I get the same balance that I had the last statement, and I don't have them show any credits that I have put on that account. So I have put two different calls into them. They said, we'll call you back within three days. I never get the call. So I put in another call and say, I really would like to know if you can show me where my payments are being reflected. And then my other thought was, well, why don't I call the Office of the Administrator? It's a corporation. Why don't I call them and say, Hey, how come I can't get any response when I'm trying to whittle down my bill?

Yes. Well, I'm so sorry to hear that you're going through this, Jerry, and you're doing all the things I would have said, first of all, you absolutely want to take an active role in resolving this payment discrepancy. You know, I would continue to call because I'd love for you to be able to do this electronically.

It's certainly more expedient. But as a second measure, perhaps you send copies through the mail with payment proofs to the hospital's billing department and ask that they either email you or through the mail, acknowledge the discrepancy and show you documentation that your payments have been applied, because this proactive step is going to take that step toward getting this resolved. It could be that they're being misapplied to a different patient's account or not processed due to errors in entering the information, although the fact that it's happening over and over again tells me that it's something bigger going on here. But whether it's through the mail or over the phone, you just need to stay on it and continue to hound that billing department until you get an answer. I would have said as a next measure, and you've done this, let's go to the hospital's administration as a next step. I've got to take a break. Stay on the line. We'll talk a bit more off the air.

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For licensing information, please visit nmlsconsumeraccess.org. Thanks for joining us today on faith and finance for taking your calls and questions today on anything financial. Call right now 800-525-7000. Our team is standing by. Again, that's 800-525-7000 with any financial question, we'd love to hear from you. Back to the phones, we go to Arkansas.

Hi, Daniel, go ahead. Yes, I had a question in regards to a life insurance policy. It's term life insurance policy that my dad has had, and he has now outlived his policy. The question on renewing the policy, and I did check with the company and they said that something with a tariff or something that you have to, I don't know if it'd be beneficial financially for him to continue with the policy.

Yeah, probably not just because it's going to be very expensive. What did you say his age was? He is 97.

Yeah, yeah. So this is going to be a really expensive policy for you to try to renew that or replace it. Let me just back up though, Daniel and ask, what is the purpose of this life insurance? How are you looking at this policy in light of his overall finances? As far as for his finances, he just has like a credit card debt. I know still that would probably pay it if something were to happen to him, but that would be the only thing. Okay, then what assets does he have? He doesn't have any other debt. He doesn't have any home or anything like that. He doesn't own any home or anything like that. I mean the reality is at that age he probably won't even be able to get it.

I believe the limit is age 90 if I'm not mistaken, and even if you could find somebody to write the policy it would be incredibly costly. Just because he's well beyond the mortality tables, that's great. Obviously the Lord's not through with him, but he's just outside of the mortality tables that they use to determine the policy amount. Did you say he does have any assets? He doesn't have assets.

Okay, alright. Well the reality is that with the credit card debt, if it's in his name only, then no one's going to be responsible for that anyway, especially if there's no assets in the estate. So I think at this point I would just take whatever he was putting toward, assuming he was continuing to pay a quarterly premium on that, just take that and start socking that away, maybe use that to accelerate the debt payoff. But at this point there's not going to be a need for and probably won't even be an option to get another policy.

It's just going to be way too expensive and probably not even available. Okay, I appreciate that. That helps me.

Absolutely. Thanks for your call today, Daniel. We appreciate it.

800-525-7000. If we want to talk about paying off debt, giving wisely, whatever's on your mind today, we'd love to hear from you. To Indiana, George, you've been waiting patiently, sir. Go ahead. Yes. I just felt the Holy Spirit tug at me and wanted to share a little testimony. I do have a question. I'm so glad. Go ahead. Yes. A few years ago, the wife and I found ourselves struggling to make ends meet and through a lot of prayer and realizing if we do what Scripture says by tithing, let's see what happens.

And 10 years later, well, it's probably been a little bit longer than 10 years, but in 10 years through a lot of extra overtime and promotions for both of us, in 10 years our income has over doubled and we are going to be debt free, hopefully by the end of this year by paying off our mortgage. Wow. Incredible, George.

I'll tell you, crank it through your calculator. I'm not sure it makes sense. And yet in God's economy, it does. We can give generously and honor the Lord and follow these principles and do it over a long, long time. And we see the fruit. And it doesn't mean we won't have challenges along the way. I'm sure you and your wife had challenges.

We all do. But you've lived an applied biblical truth. You've done it faithfully and you've given generously. And that's just the way God's economy works.

And I appreciate you giving testimony to that today. Yes. We're getting a home paid off a year early.

And as we're entering our sixties, we're thinking, hey, retirement's not going to be too far away. And I've been hearing about this. You talk about the Irma score or that's tied in with Medicare.

Yes. And so, you know, I just through God's blessings, I've hit six figures just recently. And so I'm wondering, is that going to affect my retirement?

Yeah, it's a good question. So for the sake of our audience, Irma is what the Social Security Administration does. If you have a certain income, a high income, they add an adjustment to your Medicare premium. And so they determine that Irma based on what you reported as income on your IRS 1040 two years ago.

So it's not the prior year, it's two years ago. And that income is your adjusted gross income and any other tax exempt income. And then if you're over a certain threshold, they add something to your premium each month for Medicare.

So let me just give you an example. If you're filing as a married couple, and the first place that kicks in is when you have income above equal to or above $206,000 a year. And if you did, again, as a couple, it would add $174.70 to your monthly premium in 2024. And then it goes up from there when you get above a certain threshold that continues to move up.

But that that's the number that you need to focus on in terms of that, that premium being going up higher than than what everybody else pays for a standard Medicare premium. Does that make sense? Yes, it does. Yes. I'm just trying to get a good grip on what it's going to take for retirement. So just want to try to get as much information as possible before I make that choice.

That's a good, it's a good question. And let me just clarify one thing, I think I misspoke there. So up to 206,000 for a couple, you pay 174.70, when you get above 206,000, up to 258, it jumps from 174 to 244. So it's an incremental increase, you know, depending on you know, what level you're at, the starting point is that 174.70, and then it starts to go up from there. But it's only in you know, for a couple, it doesn't start to go up from 174 to the next level, which is $244 a month till you get above 206,000 in income, and then there's other thresholds going up from there.

So you could find that on the IRS's website, you'd see that table there and you could factor it in. It's not going to be a huge amount. I mean, I realize every amount matters.

But we're talking about from the, you know, first threshold, we're talking about maybe $65 a month or something that would be added, and then, you know, another $80 after that, and so forth. So, but listen, George, I really appreciate you calling today and sharing your testimony. It's been an encouragement to me. I know it has for others as well. Does that cover all of your questions, though?

Yes, for now. Okay, good. Well, listen, you call us back anytime, George. May the Lord bless you. Thanks for being on the program today. We appreciate it very much. Folks, it's been a true joy to help you be redirected back to God's Word, help you manage God's money with wisdom and diligence, but ultimately to be a faithful steward. Let me say thanks to our team today, Devin Patrick, Robert Youngblood, and Mr. Jim Henry. Couldn't do it without those folks and the entire team here at Faithful. May the Lord bless you and come back and join us tomorrow. We'll see you then. Bye-bye. Faith and Finance is provided by Faithful and listeners like you.