This episode of the Faith and Finance podcast is brought to you in part by Christian Credit Counselors. If credit card debt is weighing on your heart and you're unsure where to begin, our trusted partner, Christian Credit Counselors, is here to help. Their debt management program can help you pay off your credit card debt up to 80% faster, while ensuring you honor your financial commitments in full. Take the first step toward financial freedom today. Visit ChristianCreditCounselors.org or call 800-557-1985.
Yeah. We know that our old self was crucified with Him in order that the body of sin might be brought to nothing, so that we would no longer be enslaved to sin. Romans 6:6. I am Rob West. Being born again in Christ changes a person.
We're given a new nature that fights against our old corrupt nature.
Sometimes the evidence of this is in the area of finances. Straight ahead, a journey to faithful stewardship. And then it's on to your calls at 800-525-7000. That's 800-525-7000. This is Faith in Finance, biblical wisdom for your financial journey.
You know, it's a great privilege to be able to interact with you folks, answering your financial questions and helping whenever possible. This was especially true a while back when Bobby in Nebraska called into the program. Bobby was in a lot of debt. He had a car repossessed and was delinquent on medical and credit card debt. He'd failed to pay back overdraft loans with a credit union and they'd been sent to collections.
But now, Bobby is committed to turning his life and his finances around, and he wanted advice on how to do that. I asked him if there's been any kind of change in his life since accumulating that debt. Quite a bit of change, as it turns out. Bobby tells it better than I could, so let's hear him in his own words. Back then, I was big into partying and I was addicted to drugs, and I sold drugs, and I went to prison for it.
Well, now I'm I'm clean and sober. I don't do none of that kind of stuff. I actually have money in my bank account. September 10, 2021 was the biggest start of it, and that's when I gave my life to Jesus Christ. And now I'm just trying to get everything back in line and or get everything to where it needs to be.
Man. To God be the glory, Bobby. That's incredible. I'm so thrilled to hear that you've invited Christ into your life as your Savior and that you're sober and God has rescued you from that. And you're wanting to get back on track as a steward of God's resources.
That's amazing.
So I'm just delighted to hear that.
Okay, so we really wanted to help. We advised Bobby to pull copies of his credit reports from Xperian, Equifax, and TransUnion because at that point, he wasn't even sure of who all he owed money. We also recommended that he contact Christian credit counselors for help with some of his debt, mostly credit cards. Getting on a debt management plan with one monthly payment would help him pay off those debts faster. We offered to connect Bobby with one of our certified Christian financial counselors, that's CERT CFC for short, at no charge, to work with him one-on-one to develop a budget and a plan for paying off those debts.
Finally, we took a moment to pray for Bobby, thanking our Heavenly Father for. Miraculously intervening and extending to him the gift of eternal life. There's no question that accepting Christ as his savior has dramatically changed Bobby's life. He gave up drugs, got out of prison, began saving money, and felt a burden to repay old debts.
Now, several biblical principles are at work here. First, the body as a temple, leading Bobby to give up drugs. 1 Corinthians 6:19 reads: Do you not know that your body is a temple of the Holy Spirit within you, whom you have from God? You are not your own.
Next, humility. Bobby humbled himself and asked for help on a network radio program. This isn't easy to do, but Proverbs 22, 4 tells us the reward for humility and fear of the Lord is riches and honor and life. Another biblical principle now guiding Bobby is honesty. God hates dishonesty so much that he codified his disapproval in the ninth commandment found in Exodus 20, 16.
It warns, you shall not bear false witness against your neighbor. And the Apostle Paul teaches in Colossians 3.9 that dishonesty should have no place in those who are born again. It says, do not lie to one another, seeing that you have put off the old self with its practices. Bobby felt a burden to own up to his debt. He didn't deny it.
The Bible tells us that if we owe someone money, we should pay it back. Psalm 37, 21 reads, the wicked borrows and does not pay back, but the righteous is generous and gives. And Romans 13, 8. Tells us, let no debt remain outstanding except the continuing debt to love one another. For whoever loves others has fulfilled the law.
Now, all of those are important, but perhaps the biblical financial principle that most guides Bobby's life now is stewardship. He wants to get his finances in order. 1 Corinthians 4.2 reads, It is required of stewards that they be found faithful. And we were so grateful to be able to help Bobby on his journey to faithful stewardship.
Now, if you need help getting your finances in order, getting on a budget, developing a plan to pay down debt and to save, well, we hope you give us a call as well. We would love to help you. That number? 800-525-7000. That's 800-525-7000.
Back with your questions after this. Stick around. Yeah. We're grateful for support from Guidestone, whose diversified suite of investment solutions align with Christian values to create positive change in the world. More information is available at guidestonefunds.com/slash faith.
Investing involves risk, including potential loss of principal. Carefully consider the investment objectives, risks, charges, and expenses of Guidestone Funds before investing. They're distributed by Four Side Funds Distributors LLC, which is not an advisory affiliate, a registered investment advisor, nor do they provide investment advice. Feeling burdened by credit card debt? As faithful stewards, we are called to manage our finances wisely.
Christian Credit Counselors can help with a debt management program that allows you to pay off debt up to 80% faster while honoring your commitments with integrity. Don't let debt hold you back from the life God has planned for you. Take the first step toward peace and financial freedom today. Visit ChristianCreditCounselors.org. That's ChristianCreditCounselors.org.
Hey, great to have you with us today on Faith and Finance, helping you see God as your ultimate treasure and money as a tool to bring Him glory and accomplish His purposes. We're taking your calls and questions today. Anything financial, whether you're thinking about your budget and how you stay on track, maybe it's investing for the future or giving wisely. Perhaps you have some debt you've never been able to pay off. We'd love to tackle those questions, help you process those through the lens of biblical wisdom.
And you can call right now. We've got some lines open, not for long, but for now, you can call 800-525-7000 is the number to call. Let's begin in Fort Myers today. Myra, thanks for calling. Go ahead.
Hi, Rob. Thank you for taking my call today.
So, I am a 60-year-old single retiree. I must admit, I'm a little bit ashamed that I'm financially illiterate.
So it wasn't until two thousand three when I was forty five that I opened an annuity account without really understanding what I was doing or what it was about.
So I have two accounts. One is a Roth IRA that has sixty three thousand And I have another one that's diversified. I've begun to be more diligent in the past years to put money into my Roth IRA. And the diversified account, which I have eighteen thousand, I placed it as fixed After 2008, after the market plunge. and I left it as fixed.
Now, I was a healthcare professional, and now that in my senior years, I carry a lot of shame for not being in a better financial place. even though I do have zero debt, I live strictly off my Social Security income, but I believe I've heard you say in your past program that you're not a big fan of annuities.
So I wanted to know if I should get out of This annuity, should I stay and diversify, or what other options do you feel I have? It's a great question, Myra, and I'd be delighted to help you with it.
Now, you mentioned the Roth IRA. You can have a Roth IRA annuity where essentially you're combining the tax-free growth of the Roth and then placing that inside an insurance contract, an annuity that offers the guarantees, and that's typically why people do that. Is that what you have, or is the Roth separate from the annuity? No, no, both accounts are part of the annuity.
Okay. All right. Yeah. So, in terms of getting out of those, you know, you have a couple of options. You can surrender it or cash it out, but you've got to watch for the surrender charges and the taxes on any gains.
You can annuitize it, which essentially converts it to an income stream, or you can do what's called a 1035 exchange, which is where you transfer it to another annuity product because you found something that you like a little bit better. What are you ultimately trying to accomplish in this? Is it really about repositioning the investments, or do you need to use the money for some other purpose? No, no, it's just that, you know, just realizing that I didn't save for my senior years and. just a way of maybe continuing to save, but I wasn't sure because again, I have not I don't have a lot of understanding about the annuity or financial.
I'm I'm financially illiterate, to be honest with you.
So just moving forward in my old in my old years, I wanted to know how to save and Yeah, for whatever amount of to life I have. Do you know what the cash value is in the Roth annuity? The Roth on in Woody is sixty three thousand. All right. Do you have other investable assets?
No, sir.
Okay. Yeah. So I think the first thing would be just to see about repositioning the assets that are already there. The reason I say that I'm not a big fan of annuities is they tend to be complex, they tend to be a little bit more expensive, and you lock up your money because you have a harder time getting to it without surrender charges. If you've had this for a long time, there probably are no more surrender charges.
And it could be that this is a great place for you to be, especially since you're already in there. I mean, you could look at rolling it out, but at that point, you'd have unlimited investment options. And I think given just the fact that you don't have a whole lot of confidence in this, it probably warrants an advisor to come alongside you to help you make those investment decisions. Do you have more that you could be adding to investments, or is it really just about maximizing what you've already got? No, it's really maximizing what I have because like I said, right now, I'm just living off Social Security.
Now I don't know if I should just in my diversified account, which I have it fixed, If I should just try try to diversify, start diversifying it again. After 2008, I got scared and I just fixed it and never did anything with it. Yeah, yeah.
Well, you want to get it growing for you, especially if this is money you're not planning on living on. If you've fashioned your budget so you can live on Social Security alone, then you've got the benefit of letting this continue to grow. But you're right. In that fixed account, we probably don't want 100% there because, well, let me ask: what is your age? I'm 67.
Okay. So if we were to round up to 70, essentially, we'd typically, someone approaching 70 years old, we would often want to have about 40% in stocks, maybe 60% in bonds.
So it could be that 60% of that 60-something thousand is appropriately in the fixed portion, but then we take 40% of it and move it into something that has more stock exposure, which gives you more growth potential. But I would love for somebody to look over that annuity and just see what you have and see if there's not a better option for you, just as you consider perhaps moving it somewhere else. Do you have access to the internet? Yes, sir.
Okay. I would go to faithfi.com. That's faithfi.com and click find a professional at the top of the page and reach out to a certified kingdom advisor there in Fort Myers. And here's what I would have them do: just look over and read the annuity contract that you have to help you understand what options you have. And it could be that you leave it right there and just reposition it, or it could be that they have a better option for you to kind of roll it out into something else that has the more potential to grow.
In either case, let's take a long-term perspective and just try to not touch this and let it grow for the future. Again, that website is faithfy.com. Myra, thanks for your call. Kenosha, Wisconsin. Hi, Jacob.
How can I help? Hi, I had a question.
So I've been thinking about purchasing a rental property, and I have recently been wondering if it might be a wiser decision to meet with a financial adviser and maybe invest it into the market instead of purchasing a rental. Yeah, so tell me kind of the decision-making process you've gone through to arrive at this.
So I would like to have passive income. Right now I'm single and I'm doing well. Thank God for that. But I'm trying to plan for the future and try to have a little bit more income coming in for when God does bless me with a family. And so that's what has me thinking about a rental property.
But I started thinking about maybe investing into the stock market because I know there's a lot of time being caught up in a rental property, you know, maintaining it, taking uh dealing with tenants, all of that. And I'm already pretty busy.
So I was thinking that maybe Investing into the stock market might be a better option, and I don't really need the passive income right now, so it would have time to grow. Yeah, I like that a lot, and you're right, that can take time. I mean, if you were to hire a property manager, that's just an additional expense you'd have to cover. Historically, rental properties yield somewhere between three and six percent annually in net rental income after expenses, and then three to five percent in the property appreciation.
So, that's not bad. You know, with 150,000, depending on how much you want to take on, you could buy you know something five or six hundred thousand with 20 to 30 percent, 25 to 30 percent down. But you are going to have you know the upkeep and the oversight, and there's risk there because you're highly concentrated in one asset versus the diversification of the stock and bond portfolio. And on top of that, as you said, you know, there's the Do you want to put in the time and attention to be a landlord? I think if you're not looking for that, you got plenty on your plate without that, and you want good broad diversification, I think getting an advisor who could manage that for you on a passive basis probably fits the bill a little better.
Hope that helps. If you have a question, now's the time to call 800-525-7000. Again, that number, 800-525-7000. We'd love to hear from you today. A quick break and back with much more after this.
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Soundmindinvesting.org. Hey, thanks for joining us today on Faith and Finance. I'm Rob West. We're taking your calls and questions today. We have a few lines open.
If you have a financial question, you can call right now. That number 800-525-7000. Again, that's 800-525-7000. Let's head right back to the phones down to Florida. Hi, Avis.
Go ahead. Hi, yes, I have a question. Sure. Yeah, my husband was thinking about we are retired and we're thinking about having that doing a reverse mortgage.
Okay. And a home. And I was wondering about what is the best way to go about it. You mentioned previously on your program about two different types. of rebirth mortgage.
And you I said about there's one that was better, that we doesn't lose our home in the process. I was wondering um which one Yes. Which one is the best one? Yeah. Well, first of all, just kind of my perspective on reverse mortgages.
You know, we love the idea of getting out of debt and staying there. And there's a lot of people, in fact, I'll tell a lot of folks that call this program that if you can have your house paid off by the time you retire, that is great. I mean, there's a lot of warnings in scripture around the dangers of debt. I will say, though, that as we think about how to fund our retirement years, that fourth quarter of life, a lot of times, and I get these calls all the time, we hear from people who say, listen, I just haven't saved enough. And so now I'm entering retirement.
I've still got a mortgage. And in fact, where that used to be half of retirees entered retirement with a mortgage, now it's two-thirds. And that's my biggest expense. And because I didn't save enough, and all I have is Social Security and maybe a small 401k, I'm just struggling to make ends meet. And I'm not able to enjoy this season.
And so at that point, we say, okay, what are your assets? And when we begin to look at your assets, you know, you've got your income. Income stream from Social Security. Maybe you got a small investment account. For most people, their biggest asset is their home.
They may be sitting on a home that's free and clear or has a lot of equity. Maybe it's two, three, four, maybe $500,000 or more in equity and they can't get it out. And so the reverse mortgages of today, there's really only one kind, and it's what's called a heckum, a home equity conversion mortgage. And it's essentially where, just as you said, you do pay a 2% fee to the FHA, the Federal Housing Administration, but in exchange for that, they guarantee that you'll never owe more than the house is worth. And then at that point, you have to decide, as long as you have at least 50% equity and you're 62 years old, do you want to receive a monthly check for life or do you want to get a line of credit where the equity in the home becomes available to you and you can pull it out as needed?
The great thing about a reverse mortgage, though, is that there's never a payment. And so if you get a check for life that could supplement Social Security or At the very least, maybe you just pay off your existing mortgage with a reverse, but again, that payment goes away. For many people, that could be a game changer in terms of them having enough to maintain their lifestyle in retirement.
So, if that's you, this could be an option. But let me just ask: are you all at least 62 and do you have at least 50% equity in your home? Yeah, we have sixty five.
Okay. At least 50%. What is your home worth, do you think, today? Yeah, about four hundred thousand.
Okay, and do you have a mortgage? Yeah. And what is it? $104,000.
Okay, yeah.
So you got quite a bit of equity there. And so what you could do is you could essentially refinance the home and pay off the $104,000 mortgage with a reverse mortgage, except now you'd no longer have a payment. And then you could just do nothing but that. And that may solve the problem in terms of you having enough available to cover your living expenses. If not, you could then get the remaining equity or some portion of it available to you either as a monthly check or a line of credit that you could tap into as needed.
But again, you'd never have a payment.
Now, whatever balance is outstanding would grow with interest and fees. And then at your death, when both of you pass away, or if you move, then the home would be sold, the mortgage would be paid, and then whatever is remaining would go according to your wishes in your estate.
Okay. So how that would affect a living trust, like the difference? We go to like The kids. Yeah, so the home would be in the living trust. It could have a reverse mortgage on it.
They would just need to review the trust documents and make sure that the trust allows for that. Generally, they do. And then once you pass away, the home is sold. The proceeds after the reverse mortgage is paid off would go into the trust, and then your trustee would distribute what's remaining based on the instructions in the trust document.
So do you have a particular company that you can recommend for the reverse mortgage? We do. Yeah, we have good friends. It's a Christian company, and they really are one of the leaders in this. It's called Movement Mortgage.
I would go to movement.com/slash faith. Again, that's movement.com/slash faith, F-A-I-T-H. And somebody will get in touch with you. The gentleman who runs their reverse mortgage division is on this broadcast regularly. His name is Harlan Akola.
He'd be delighted to connect with you, answer your questions. Let me also send you a copy of his book, just as our gift to you, to explain reverse mortgages in detail, okay?
Okay, I appreciate that. Happy to do it. All right, you stay on the line, Avis, and we'll get your information, send you that book, and then just go to movement.com/slash faith to learn more. Thanks for your call today. Let's go to Ohio.
Hi, Amy. Go ahead. Hi, I wanted to ask, I made a just a personal personal loan through my own checking account and everything to my cousin. help them out between jobs. And they paid it back, and it was just a handwritten IOU.
Uh but it it ended up with um three hundred dollars interest that I got. I could, you know, report that or yes, you do.
So the $300 of interest income is taxable. And so therefore, you'd have to report it on your tax return as interest income, even though it was a private loan.
So it would go on the form 1040. You'd usually report that as other income if you don't have a 1099 INT from the borrower, which you wouldn't if it's a personal loan.
So it would just be up to you to report it. You're going to want to let your CPA know that, or if you file your own taxes, you'll see that place as other income on the 1040, and you'll just want to make sure you keep records about that private loan and go ahead and pay the appropriate tax. Hope that helps, Amy. Thanks for your call. Quickly to Antoinette in Illinois.
You'll be our final caller. Go ahead. Yes, quickly. What's the difference between a rough IRA and a regular IRA? And the second question is for one K, can an individual open without being an employee?
And what's the max for all three? Yeah, great question.
So the difference between a Roth and a traditional is just in the tax treatment.
So they're both the first letter I for individual. They're both set up by an individual. And with the Roth, you put in after-tax dollars.
So you make $7,000, you make a contribution of $7,000, you go ahead and pay the tax on the $7,000 you made, and then you get tax-free growth.
So as that money is invested, you don't pay any tax on the gains. With the traditional IRA, you put the $7,000 and you get a deduction.
So that's now excluded from your taxable income. And then you let it grow. And then as you take it out, you pay the tax on it.
So that's the main difference on that. We'll have to get to that second half perhaps tomorrow. Thanks for your call, Antoinette. Folks, thanks for being along with us today. I hope today's been a blessing to you as well as very practical and helpful.
Big thanks to my team today, Taylor Standridge, Sandy Dickinson, Devin Patrick, and everybody here at Faith. By for the entire team, I'm Rob West. We'll see you tomorrow. Bye-bye. Faith in Finance is provided by FaithFi and listeners like you.
