The Road To Financial Freedom

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Go to faithfi.com and click App to get started. It's the Fourth of July, the day we celebrate our nation's independence. It's also a great day to take stock of your financial independence.

Hi, I'm Rob West. Are you on the road to financial freedom or falling under the bondage of money? It's one or the other. Either you control your money or your money controls you. I'll talk about that today, and then it's on to your calls at 800-525-7000.

That's 800-525-7000. This is faith and finance, biblical wisdom for your financial journey. Independence gave our nation freedom, and financial independence also gives freedom, the freedom to make choices. But to get there, you must gain control over your money.

When you do, you'll have a greater ability to decide many things, where and how you live, where you work, and how much you work. Now, when we talk about financial freedom or independence, we are definitely not talking about independence from God. He owns everything and provides everything we need to live and to serve His kingdom.

James 1-17 reads, Every good gift and every perfect gift is from above, coming down from the Father of lights, with whom there is no variation or shadow due to change. Even our ability to earn money comes from God. Deuteronomy 8-18 tells us, You shall remember the Lord your God, for it is He who gives you power to get wealth, that He may confirm His covenant, that He swore to your fathers as it is this day. Now, to be sure, God wants you to be financially free, because that allows you to be more generous and to serve Him more fully. Sadly, folks often say they'd love to give more to God's kingdom, but they just can't afford to. The more you control the money flowing through your household, the more generous you can be. And that's why we should all be on the road to financial freedom.

So, how do you know if you've made a wrong turn somewhere? Look for a signpost that says, debt. The greater your debt, the less freedom you have. Proverbs 22-7 puts it rather bluntly, The rich rule over the poor, the borrower is the slave of the lender. That's because when you're in debt, you're really working for someone else, not yourself, and certainly not for God. The more you have to pay out each month to service your debt, the less freedom you have to use that money in other ways, like serving God more fully. Now, there's more to being financially free than just avoiding debt. Unfortunately, debt is just one form of financial bondage.

There's another that's more difficult to recognize. With this form of financial bondage, you may have no debt at all. That's because you can be rolling in money and still be slave to it. This bondage is the mindset that material things will make you happy. When you think that way, you strive to acquire more and more. But the truth is, after a certain point, you no longer own things, they own you.

You have to care for them, clean them, store them, secure them. The more you acquire, the more restricted you become. Money, of course, is just a tool to be used wisely or not. Having a lot of it can enslave you just as effectively as having debt if you're not careful. And while wealth itself is not evil, the Bible has clear warnings about your attitude toward it.

It comes down to a heart issue. 1 Timothy 6, 10 tells us, For the love of money is a root of all kinds of evils. It is through this craving that some have wandered away from the faith and pierced themselves with many pangs.

Here are the danger signs for this type of financial bondage. First, you think so much about money that you have no peace with God. Your focus is day to day rather than eternal. You can't give as generously as you would like or think you should. An opportunity comes along to be more generous. You have the money, but you just can't make yourself do it. You think, I might need that money for something else, so you don't act when you feel God is leading you.

If that happens repeatedly, you're in financial bondage. Then there's a lack of contentment. You always want bigger, better, faster. You're not content with God's provision.

You crave more. When you think that way, it doesn't matter how much money you have, it'll never be enough. Ecclesiastes 5, 10 reads, He who loves money will not be satisfied with money, nor he who loves wealth with his income.

This also is vanity. So how do you get back on the road to financial freedom? Well, obviously, if you're in debt, you have to stop borrowing, get on a budget, and start paying down your debt. The Faithfi app can help you set up your budget quickly and easily. Learn more at Faithfi.com If you have the other form of financial bondage with plenty of money and possessions but no peace, try giving more. Giving actually breaks the power that money has to enslave us.

And if you follow God's principles for managing money, avoid debt, save diligently, and give generously, you can experience true financial freedom. All right, your calls are next. Call right now and we'll be right back.

You can find a local CKA professional in your area by going to Faithfi.com and clicking Find a CKA. on that topic at soundmindinvesting.org. Since 1990, Soundmind Investing has sought to offer financial wisdom for living well.

Soundmindinvesting.org. Great to have you with us today on Faith and Finance. It's time for your phone calls today. Your questions on anything financial. When you call 800-525-7000, we've got some lines open. We're just getting started with your questions today.

There's plenty of lines open at the moment, but they will build quickly. The number again, 800-525-7000. We'd love to tackle whatever is on your mind today. Let's go to Brentwood, Tennessee. Hi, Rodney. Go ahead, sir.

Hey, thanks for taking my call. So I'm 26 and I'm single, and I've been thinking a lot about just investing in retirement lately, even though I probably wouldn't be able to do it until maybe six months to a year from now. But I've been completely ignorant about all things investing and retirement and everything. So a friend hooked me up with a financial advisor, and I've been meeting with him.

I've been doing a lot of research. He has suggested that I do an IUL, like a universal life insurance plan, to start out. And as I've researched, it seems like a lot of people are skeptical about that, or I'm not sure if that's the best move. So I was wondering what your advice would be for someone in my position and if you have any experience with IULs and who they're for, and if you think that might be right for me.

Yeah, it's a great question. That would not be my investment of choice for you. Mixing insurance and investing can make some sense in my view, certainly not in your situation. I mean, this would be for somebody who's exhausted all other investing vehicles, retirement saving vehicles, that is. So they're looking to put away more money on a tax deferred basis, and they've fully subscribed everything available to them. Or it could be for somebody who needs permanent life insurance.

I would argue you don't. And then thirdly, it would be for somebody who's completely risk averse. But with you being 26 and single, I mean, let's say you switch away from paid work to whatever God has for you in that retirement season of life at 65.

We're nearly four decades away from that. So you have the ability to take, not throw caution to the wind, but you do have the ability to take a good bit of risk knowing that you've got a long time horizon. And that's where investing is so powerful. It's the reason that Einstein called compounding the eighth wonder of the world because compound interest working for you, not against you in the form of debt, but working for you in investments growing and paying dividends and appreciating. And then the growth on top of the growth on top of the growth, that compounding effect is incredibly powerful.

I mean, just run the numbers, put in any systematic contribution. I don't care whether it's 100 a month or 500 a month and run that out for 40 years compounded with an 8 percent rate of return. And you'll just be blown away at how much you can put away. So I don't think you need an IUL, an indexed universal life policy. So what I would do is once you have somebody depending upon you for your income, let's say the Lord leads you to get married or you have a dependent of some kind, then that's the time where you need life insurance. And I'd buy term insurance and I'd get plenty of it, probably at a starting point 10 to 12 times your income so that your wife, let's say down the road, would be able to offset the loss of your income and maintain her lifestyle at your death.

If you were to die before her, that's where life insurance comes in and term insurance is the best way to buy the amount you need for the lowest cost. Then I would save, not in an insurance product, but I'd save in just a straight investment plan. Are you able, I know you don't have the means to right now, but do you have a retirement plan at work? I don't. They don't offer a 401k.

Okay. Well, what you could do, which would be really simple, is to open a Roth IRA and basically just put in the maximum amount every year. For 2024, that would be $7,000 that you could put in. And you could do that anytime between now and when you file for your 2024 taxes.

And then if you did that every year, you'd have a ton of money when you get to retirement. So I would make that a goal that as quickly as possible, get that Roth IRA opened, open it at Fidelity or Schwab. You could choose some of the faith based investing mutual funds like from Eventide or Crossmark or One Ascent or Praxis or the others. Timothy, you could use index funds. I mean, there's a couple of different approaches you could take.

But the key is, you know, once you have your emergency fund in place and once you're on track with saving for any short term savings goals like buying a house or replacing a car, then I think the next thing for you, assuming you're doing the giving, the Lord's leading it to, is to start making a systematic contribution to the Roth IRA. Even if it's just $100 a month, $1200 a year, you know, I think that's far better of a solution than an IUL policy. OK, gotcha. All right. Is that helpful? Perfect. That's super helpful. Thank you so much. You're welcome.

Let's do this. I'm going to send you a copy of a book called It's the Sound Mind Investing Handbook, and it really will help you understand investing. But through the lens of biblical principles, it's written by my friend Austin Pryor.

Again, it's called the Sound Mind Investing Handbook. We'll send it to you as our gift. So stay on the line, Rodney. We'll get that in the mail to you and call any time if we can help you, my friend. Nancy, thank you for waiting patiently there in Port St. Lucie. Go ahead.

Hi. First of all, I want to thank you for all the years of advice that you have given us, Christian and non-Christian. I am so thankful for you, and I'm thankful for this call that I finally got through.

My questions were both answered with previous guests, but I want to get your opinion. I owe $24,000 in credit cards, and I want to stop that. And I contacted Trinity Council, and they told me that instead of 20-something whatever I'm paying interest, they can lower it to 12%. But I would have to pay $540 a month, but I want to reduce that because I really cannot afford $540. So I asked her if I would get $6,000 out of my Roth account.

I'm over 59. My income is not really high, so I know that I'm not going to pay any taxes on that. If I take $6,000 and put it towards those at $24,000, reducing it to $18,000, how much would I pay? And she said $415,000. Now that I can do.

So I'm thinking I've really never done this before, but what do you think? Yeah, I'm not opposed to it because the key is you don't want to go into a debt management program when you can't afford the payment because then it's not sustainable. Even though debt management is my preferred way, there is a set amount you'll need to send every month as a minimum, and clearly it's beyond what you have available. I like the idea that you're over 59. The Roth money is able to be pulled tax-free.

That's great. What would that leave you with? Are you drawing from any of these retirement assets currently, or are you just living on Social Security? I'm living on Social Security and I'm still working. Okay. All right.

And what would that leave you in retirement accounts altogether? Well, not enough. I need to up it somehow, but God's going to have to give me another job. You answered my question. I feel better now that I can trust them. Thank you so much. God bless you.

Well, thank you, Nance. Let me just say one quick thing, and that is I'd love for you to get to the place where you have a plan for if you were to have to stop working, how you would cover your bills. Obviously, one key to that is the ability for you to pay off this debt because then that would get rid of $400 a month and maybe that would do it. But I think the extent to which you can work as long as you can so that you can get out of debt completely and let's start working on that non-working budget, that retirement budget.

If that's part-time income goes away, I'd love for you to have a plan on how you're going to balance the budget from that point forward. So thank you for calling and for your kind remarks about the program. Please call back anytime. Folks, we have room for a few more questions before we round out the broadcast today. The number to call, 800-525-7000. That's 800-525-7000. Give us a call right now.

A quick break and back with much more right after this. Stay with us. Get top biblical financial resources and interact with a community of like-minded believers where you can ask questions, get answers, and share what you're learning. Go to faithfi.com and click the word app to get started. Are you a financial advisor or CPA seeking to build your practice on biblical wisdom? Not only does the Certified Kingdom Advisor Education provide you with deep biblical insights, the CKA designation sets you apart. Each year, almost 50,000 people search for a Christian financial advisor. Join our community and share your expertise with clients looking for someone who shares their faith and values.

Find more information at kingdomadvisors.com slash get certified. Great to have you with us today on Faith and Finance. I'm Rob West. We're taking your calls and questions today. I've got lines open.

Perhaps you have questions and we'll try to give you some answers. Give us a call. 800-525-7000. Again, that's 800-525-7000. You can call right now. Let's go out to Mississippi. Hi, Ann.

Go right ahead. Yes, I'm getting ready right now to go meet with my financial advisor I'm not happy with and I'm going to check into some that you've recommended before calling. But my question is, now I'm 71 and I only have, I like to shop, I'll admit, I only have 265, 265 left in my Wells Fargo. So how should I allocate it when I go see him? What percent in stocks, bonds, gold, whatever, ETFs, UITs, I don't know what all that means. Yeah, a lot of acronyms there, Ann. Well first of all, I'm delighted you're going to see your advisor.

I think whether you get on the same page together and stay right there or you choose another advisor, the big idea is just around what you're asking. How do I best steward what God has entrusted to me so I can live whatever lifestyle I believe God has called me to, balance the budget. And if the Lord tarries and you're in good health, let's pray that this money needs to last a couple of decades or more from this point forward. Ann, if you really kind of dial into your spending and get really careful, maybe look for a few places to cut back, what do you think you could get away with pulling out of this every month in terms of the minimum amount?

Well, let me tell you this. They include taxes, so I'm withdrawing now $2,222. That's a good easy number to remember, but I only net $2,000 a month. That's what I'm getting out now, which is way too much, I think.

It is, yeah. I'd rather you be down at around $900 a month. That would be 4% a year, and that's about $10,600 over 12 months. And the idea there is that if we pull more than that, you're pulling 8% plus, closer to $9. We're just in this season of life where we're trying to preserve your capital.

We need to get more conservative. The challenge is with a conservative portfolio, typically with folks living longer, we're keeping a higher allocation to stocks just to try to offset the effects of inflation and longevity. And so even at age 70, often we'll see what's called a 60-40 portfolio where you've got 60% fixed income, 40% stocks. If you're going to shave maybe 5 to 10% of that off for gold, then you'd probably pull that from maybe 5% from each, so 55, 35, 10, something like that. And the goal would be that that stock portion would create the growth engine, and then the fixed income portion would be more stable and provide a lot of income.

Now, the challenge in the last couple of years with these rising interest rates has been that the bond portion, which is normally the most stable, has been under pressure. And so that's probably been part of the culprit of bringing your portfolio down. I have no idea how it's allocated.

And then that's the big allocation. Now, the investments that are utilized to drive that let's call it 60-40 or 50-30-10 portfolio is really going to be dependent upon the advisor. It may involve mutual funds. It may involve stocks and bonds. It may involve ETFs. You mentioned an insurance product as well, and that could be an option, but you're going to give up access to the money other than a monthly income stream, and you're going to limit your upside potential. So I think to answer your question, you're probably wanting to think about somewhere around 50% fixed income, 30% stocks, and up to 10% precious metals.

I would say typically for somebody who's around 70 years old, but it's got to use that as a starting point, and then you make changes based on your real needs. And I think the big idea right now is we want to try to limit what you're pulling out every month as best we can, trying to get as close as possible to that 900 a month target so that you can allow this money to last for as long as possible, and we don't deplete it. I realize that's easier said than done, and a lot of times folks have a retirement asset like you have with this $265,000, and then they have home equity that they're sitting on because they paid off their house, and that's great.

And that's where some folks will use a reverse mortgage to systematically pull that out, boost cash flow on a monthly basis, and not have a mortgage payment, and that can be another planning tool. But give me your thoughts on all that. Well, I jotted that down.

As you were talking, reverse mortgage, my house has been paid for for years, and it's probably valued at, I'm just going to say $225,000, but it's probably more than that. But anyway, I might consider that. I've already written down movement.com slash faith. But let me tell you this right quick. The way it's allocated right now, I have that in front of me. It says cash and sweep balances 3%. I'm just rounding this off. Stocks, options, and ETFs is, I don't know, 18 or almost 19%.

That doesn't sound right. Fixed income is zero. Mutual funds is 54 or 55%, and UITs is 23%. Okay. So that should total up to close to 100%.

Yeah. And that makes sense. The question, though, is what types of ETFs are in there? Because there can be bond ETFs or stock ETFs or both. What type of mutual funds? So 55% of that portfolio is mutual funds. Those could be stock funds, they could be bond funds, or they could be what are called balanced funds, where it has both.

So that really doesn't give us enough information. I think the question for you is, as you go see the advisor, is to say, listen, what have you been working with and what is it today? And he's going to tell you how much you've pulled out. And then he'll tell you what's been the performance of what he's had left to work with.

And you can compare that to a similar portfolio or to a market index and just kind of get an idea of how your portfolio has performed. But then secondly is the bigger question is, where are we going? And what's the ideal target allocation for somebody who's 70 years old, who's living off this, pulling a little more than you should, and trying to preserve it?

And I think that's where you and he need to come to some decision on that. And I'm saying, forget ETFs, mutual funds, stock, UITs. We need to think about the big allocation. And I'm thinking probably somewhere between 50 and 60 percent in fixed income, somewhere between 30 and 40 percent in stocks, and somewhere between 5 and 10 percent in gold would be my recommendation.

Okay. And when you say fixed income, that's not going to make very much money, is it? Well, it's making a decent amount today. I mean, you can get a 10-year Treasury, a 10-year U.S. government bond for 4.6 percent. And if you hold the maturity, you'll get your money back, you'll get 4.6 percent a year. And that's with a government bond, so the government's guaranteeing it. The nice thing about the bonds is, as these interest rates come down, not only do you get that yield, but the prices of the bonds will increase because they work inversely to interest rates. And even though it may not happen in the next three or four months, sometime in the next year, rates are going to start coming down. They're going to have to.

And when they do, these bonds will do well, whereas they've been under pressure as the rates were rising, they'll perform much better as the rates fall. So hopefully that gives you some things to talk about as you visit with your advisor today, and may the Lord bless you. Thanks for being on the program today. That's going to do it for us. Let me say a big thanks to my team today, Anthony, Amy, Dan, and Jim.

Couldn't do it without them. Also, the rest of the team here at Faith Buy. Come back and join us tomorrow. We'll see you then. Bye-bye. Faith and Finance is provided by Faith Buy and listeners like you.