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Now let's dive into the podcast. The web portal Excite once passed on buying Google for just $750,000. Today, Google's parent company is worth over $2 trillion. That, my friends, is a legendary financial blunder. Hi, I'm Rob West.
Most of us won't miss out on trillions, but we've all made financial mistakes. Today I'll share 10 common ones to avoid. and how biblical wisdom can help you recover when you've taken a wrong step, then it's onto your calls at 800-525-7000. This is Faith in Finance, biblical wisdom for your financial decisions. Before we dive into the list, let's recall what Scripture says about failure.
Proverbs 24, 16 tells us, For the righteous falls seven times and rises again. Falling isn't the end for those who walk with God. He lifts us up, forgives us, and helps us grow in the process. Psalm 86, 5 says, For you, O Lord, are good and forgiving. Abounding and steadfast love to all who call upon you.
and James 1.5 reminds us that if we need wisdom, all we need to do is ask. With that encouragement, here are 10 common personal finance mistakes and how to avoid them. Number one, borrowing from your 401k. It may seem like borrowing from yourself, but it often masks deeper issues, such as overspending or debt. While repaying the loan, you're likely not contributing, missing out on compounding growth and employer matches.
If you leave your job, the unpaid balance may become taxable income, subject to a 10% penalty if you're under 59.5. It's a short-term solution that can lead to long-term problems. Number two, claiming Social Security too early. You can start benefits at 62, but it comes at a cost. up to 30% less per month for life.
If you live into your 80s or beyond, that reduction adds up. If possible, wait until full retirement age or even later to receive a larger monthly check. Number three, only paying the minimum on credit cards. A $5,000 balance at 20% interest with minimum payments can take nearly 10 years to pay off. Costing over $8,000 in interest alone.
Instead, pay more than the minimum and use a snowball or avalanche method to quickly eliminate high interest debt. Delaying retirement savings is number four. Time is your greatest ally in building wealth. Thanks to compound interest starting early, even with small amounts can result in a substantial nest egg. waiting until your thirties or forties can make it much harder to catch up.
Aim to save 10 to 15 percent of your income starting in your 20s if possible. And if you're starting later, don't panic. Just start today. The fifth mistake is overextending yourself for your kids. We all want to bless our children, but covering college, weddings, or a down payment shouldn't come at the cost of your own financial stability.
Your kids have time to earn, you don't. If you sacrifice retirement now, you may end up relying on them later. Generosity must be paired with wisdom. Number six. Going it alone without wise counsel.
Many people panic during downturns and sell low because they lack guidance. Proverbs 15 reminds us: Without counsel plans fail, but with many advisors they succeed. A certified kingdom advisor at faithfy.com can help you create a financial plan that aligns with your faith and values. The seventh mistake, co signing alone. Scripture offers a strong warning.
One who lacks sense gives a pledge and puts up security in the presence of his neighbor. When you co-sign, you're legally responsible for the debt if the other person can't or won't pay. And it happens. About forty percent of cosigners end up repaying the loan themselves. Be generous, yes, but be wise.
The eighth mistake, quitting school too soon. While a four-year degree may not be for everyone, education remains important. The key is choosing a program, whether it's a college, trade school, or certification, that equips you with marketable skills. Education is an investment, not just a cost. Number nine, buying a timeshare.
They're often marketed as affordable luxury or great family investments, but they come with hefty fees, limited flexibility, and poor resale value. And number 10, falling for scams. Fraudsters prey on fear, urgency, and greed. Whether emails, calls, or fake investment pitches, their goal is the same, to separate you from your money.
So there you have it, 10 financial mistakes to avoid, but more than that, a reminder, stewardship is a journey. Jesus said in Matthew 10, I am sending you out as sheep in the midst of wolves.
So be wise as serpents and innocent as doves. With God's help, you can learn from the past, make better decisions, and walk forward in freedom as a faithful steward. All right, your calls are next, 800-525-7000. I'm Rob West, and we'll be right back. Stay with us.
At FaithPhy, we believe that money is a tool to advance God's kingdom. When you become a FaithPhy partner, you help more people discover the freedom of biblical stewardship and the joy of seeing God as their ultimate treasure. As a thank you, you'll get early access to our newest studies and devotionals, our quarterly Faithful Steward magazine, and the pro version of the Faith Phi app. Become a FaithFi partner with your gift of $35 a month or $400 a year at faith5.com/slash partner. We are grateful for support from Timothy Plan.
Since 1994, Timothy Plan has shared good news with investors and advisors by offering faith-honoring mutual funds and exchange-traded funds. More information is at TimothyPlan.com. The investment objectives, risks, charges, and expenses are contained in the prospectus and summary prospectus available at TimothyPlan.com. Mutual funds distributed by Timothy Partners Limited and ETFs distributed by Forside Funds Services LLC. Investing involves risks, including possible loss of principal.
Great to have you with us today on Faith and Finance. I'm Rob West. Delighted you're along with us today. Looking forward to taking your calls and questions today on anything financial, whatever you're wrestling with in your financial life, we'd love to hear from you. Again, the number 800-525-7000.
Calls are coming in quickly, but we've got room for you today, so call right now. Again, 800-525-7000. Crystal Lake, Illinois, Bob, go ahead.
So Uh the question I have Uh is regarding to um If oh Yeah. account I had with my former employer, but I no longer worked for them.
So I'm trying to figure out what's the best course of action to take with that money.
So one advisor advised me to move it. From the former, from the 401k into a traditional IRA. My question is. One, is it a wise move? Uh and two could I withdraw some cash?
in the process of that transfer Uh without paying penalty. No, you would not. What is your age? I am currently thirty four.
Okay. Yeah.
So if you're under 59 and a half or by leaving your employer, even if the rule of 55 applied, you're automatically going to have a penalty of 10% plus the amount that you pull out of that 401k as a distribution is going to be taxable to you.
So that's going to be expensive money. I mean, that's probably 35% right off the top between the taxes and the penalty at a minimum. And so if you want to roll it to an IRA, I think that's great because that gives you more control over the investment options and less potential fees, depending on how you choose to manage that. But if you take it out as a distribution rather than rolling it to an IRA, You're absolutely going to have a penalty and taxes.
Okay. So basically I I can go with the that that transfer from for one care with IRA. And that's going to be a better option for the money. That's right, because that's going to keep it in a tax-deferred environment, so no taxes due. But it's just going to give you more flexibility because now instead of just being limited to the menu of investments in the 401k, you can essentially invest in anything.
Stocks, bonds, mutual funds, precious metals, even through a self-directed IRA, you could put it in real estate ventures if you wanted to.
So, yeah, you've got a lot more control and flexibility and control over the costs when you roll it to that IRA, and you are not creating a taxable event at that point.
So once I move it to the IRA, Am I able to contribute to it? I guess like because I move it, it hasn't been IRA contribution. am I still able to contribute more to it this year and moving forward? Absolutely. As long as you have earned income up to the amount you put in, you certainly can.
Okay. Sounds good. That's very helpful. Thank you so much. All right.
Thanks, Bob. Appreciate your call. Betty is in Chicago. Hi, Betty. Go ahead.
Hi, thank you. I purchased the house in twenty nineteen, so it's been six years. My husband's retired. I'm 60. The value of the property is about $595,000 to $600,000 right now.
We've put in about sixty thousand But we need a loan to fix some repairs that were not disclosed when we purchased the house.
So we need $20,000 to $30,000. because our basement keeps flooding. Yeah, I know how difficult that is. And we have both have really good credits, so I wanted to know what's the best option as far as getting a loan out there. Yeah, sure.
So y your current mortgage, what do you owe on it? How about four? Yeah.
All right, and you probably have a pretty good rate on that, is it? It's three hundred and seventy three thousand.
Okay. And you probably got a pretty good rate, is that right? Yeah, we got it uh I think uh A two and a half. Wow. Yeah, incredible.
So, you don't want to touch that.
So, really, what you probably want to do is a home equity line of credit. Uh so it it works like a credit card secured by your house. Um it's going to be a variable rate. And the good news about that is, as interest rates come down, and it looks like they will be coming down, then the rate on the line of credit will fall with interest rates. And you know, it gives you the ability to access the money as you need it.
So, let's say you were to get a $100,000 line of credit, or maybe $50,000, whatever you wanted to do there, and whatever the bank would approve. You don't have to.
Now, in some cases, they'll give you a better rate if you take a certain amount at closing.
So, maybe you get a $50,000 line and you take $10,000 at closing, and they're going to knock a tenth of 1% off the interest rate. But then, from that point forward, you don't take the money against the line until you need it and you pay it back, and then it becomes available to you again. And so, that's usually the best way to do it. It's going to be secured by your home. And it will allow you to tap into that money as essentially a second mortgage.
As you need to for those repairs. And then you'll pay it back over time and eventually pay it off. I would look for a home equity light of credit lender. that offers uh no closing costs and no fees. And there are many of them out there.
I know Bank of America had some special offers like that recently, and there's probably others.
So shop it around and see what you can find. But you want a home equity line of credit. Thanks for your call, Betty. Let's go to Tom, who's holding patiently in Rhode Island. How can we help?
Try it. Thank you very much for taking my call. Appreciate it. Yeah.
I told the call screener, I'm pushing 80 years old. I'd like to close a bunch of accounts. I almost don't even care about my credit score at this point. But how much of a hit does it put on my credit to close? If I wanted to close three or four accounts Yeah.
It shouldn't be a big deal, Tom. The biggest issue is the potential change in credit utilization, but I suspect that doesn't apply to you. Are you carrying any balances on any of these accounts?
Well I have a couple of balances, but I primarily use my ATM card. And we've been doing some remodeling on the house.
So as soon as I get caught up. I'll be paying those couple of cards off in the next month or two.
Okay. But I have some airline accounts, you know, that I got flyer miles for. These things cost a couple hundred dollars a year to even keep open. Yeah, I would wipe those out. I mean, the two primary issues that would affect you when you're closing an account: the first is credit utilization.
So, let's say you're carrying $5,000 in credit in debt until you pay it off because of the renovations. And let's say you have. You know, $30,000 available to you across all of the cards.
Well, you don't want to go above 30% of the limit.
So if all of a sudden, you know, your limit or 30% of that $30,000 and available credit was $9,000.
So you're well below that in my example. But let's say all of a sudden now that $30,000 that was available to you because you close a bunch of accounts is now $10,000. And now you're 50% of that limit in the aggregate.
So now your credit utilization just went from a pretty small number to now all of a sudden it's 50% of your total available credit. That would be the primary thing that would pull your score down. But to your point, I mean, in your season of life, you're not out looking to buy a house or a car or take on new debt. Your credit score really doesn't matter. I think the bigger issue for me is that you're paying hundreds of dollars in annual fees for cards you don't use.
So I would probably go ahead and close those immediately and not look back. Does that make sense? It surely does. And that figure you used throughout about the thirty percent So I'm just going to do a little math and make sure I'm below that. Yeah, debt to income or debt to credit ratio and then uh I can proceed from there.
So, I truly appreciate this program. We listen all the time, and that's where we get used.
So, thank you very much. Excellent.
Well, so glad you called, Tom. Please call anytime if we can be of assistance to you. May the Lord bless you. Folks, we're going to take a quick break. When we come back, more of your questions.
We've got lines open. You can call right now, 800-400-800-800- 525. 7,000. Stay with us. When you hear the phrase, rich toward God, what comes to mind?
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Great to have you with us today on Faith and Finance. We're taking your calls and questions today. We've got lines open for you: 800-525-7000. Call right now with your financial questions. We're going to go to Ohio and welcome Lee to the broadcast.
Go ahead. Hey, Rob, really enjoy your show. Been listening ever since we're Burquette was the host back in the day. My question is, I have about $80,000 invested in C D's with Marcus Goldman Sachs. Because I'm single, I decided to put my sister in as a joint owner in case I should pass away.
My sister and her husband are concerned that if I were to get sued for some reason, such as an auto accident or whatever, That not only could they get the money from my invested CDs, but they could also go after my sister's investments because her name is listed as a co-owner of my investments. I've looked into taking her off as co owner and putting her as a beneficiary like she is on my other investments, but the only way to do that is to close the C D's and then reopen them. And if I do that before they mature next March, I will lose a lot of the interest, which would be about $2,000.
So do we need to be concerned that she can be liable if someone came after my portfolio? Yeah.
I mean, is there anything kind of pending here legally? Is this all just hypothetical and being well planned? It's all hypothetical. Yeah, yeah. I mean, it's something to consider.
I'm not an attorney, and so I would always, for legal matters, just in terms of what whether somebody could attach holdings and what your exposure is, I would always direct you back to an attorney. I think if it were me, Lee, I'd probably let this ride just given that the chance that something's going to happen is very small and not give up those couple of thousand dollars. And then maybe the next go-around, whether it's another CD or some other type of investment, you just transition it to ownership in your name only with her being the beneficiary. Because anything else would involve retitling it. I mean, you could put an LLC in place that could, you know, hold the assets and, you know, try to protect from creditors, something like that.
I just don't think it's worth the hassle here on something like this. But again, if you, you know, I don't want to minimize your desire to make sure everybody's protected and none of us know what could happen at any point.
So I'm not saying, you know, we should just throw caution to the wind, but I. I would say if you are really concerned about it and it would create a real problem if something were to happen for either of you, then you could talk to an attorney about it. I think for me, I would say this is a very low risk. We're accepting some level of risk, knowing that, yes, there is a scenario where this could happen and it could be attached, but we realize it's pretty small. And so we're going to let this ride out to the end of the period.
And then next time around, we're going to solve for it differently.
Okay, that sounds like good advice. All right. I appreciate it, Lee. It's a good question. And so I don't minimize that at all.
What they're saying has merit. I think it's just a matter of, you know, there's a cost-benefit analysis we have to do here. And is it worth giving up $2,000 or $3,000 for the very remote chance that with nothing on the horizon, there's just out of left field a lawsuit that gets all the way to the point of attaching shared assets and taking claim to it is very small.
So maybe the other thing you could do would be to get an umbrella policy for a small amount of money for two, $3 million that could be another way to offset risk.
So, before any assets are attached beyond the limits of existing policies like homeowners and automobile, any kind of lawsuit could be covered through that umbrella policy. They're fairly inexpensive to get, you know, so for you to add a couple of million-dollar umbrella policy until the end of the period, I don't think is a bad idea for you to have anyway. And that's probably something you want to hang on to.
So, that would be another way to go about this: to say, listen, I put another layer of protection in here to cover any kind of suit that goes beyond the limits of my existing policies. And so, you know, that's something that is going to be helpful to me regardless of the situation, but would also kind of shield you as well, because hopefully, you know, we would exhaust those assets or the coverage of that umbrella policy before we would get anywhere close to other assets that you hold. Hopefully, that's helpful, Lee. Thanks for your call today. We appreciate it.
Let's go to Virginia. Hi, Ellie. Go ahead. Hey, Rob. Thanks so much for taking my call.
My husband and I have looked into Christian Credit Union. I believe you've talked about them before, but we noticed that they are not FDIC insured and wondered if that was a concern at all. You know, it's not. And we love Christian Community Credit Union. You know, more and more believers like you, Ellie, and your husband are concerned about who their banking and financial partners are and whether they're aligned with their values as believers.
You point out a good distinction here, and that is that Christian Community Credit Union is not insured by the NCUA, which is kind of the FDIC equivalent for credit unions, but they are insured by American Share Insurance, which is private.
Now, they're 50 years old, which is only four years younger than the NCUA. It covers the same $250,000 per account, but it is per account. It's not per tax ID. No holder of ASI insured accounts has ever lost a dime. And they actually at CCCU have chosen to go this route.
Because it gives them the freedom to lend to churches and ministries, which is key to their mission as a credit union, it's actually a bit more robust even than the federal deposit insurance. For example, and this doesn't apply to you, but a ministry with a million dollars in working capital could put it into four accounts and get each of those insured up to 250,000. They also require them to maintain higher deposit ratios than NCUA, which just gives them greater resources and liquidity if they were ever in a time of trouble.
So, you know, I think it's perfectly appropriate. You know, if you're concerned about being insured by a non-federal agency, I mean, I think it's important to remember that your house isn't insured by a federal government entity. It's a private company. And private insurance companies have been around a lot longer than federal insurance corporations. They go back to the 1700s.
So I would say I have comfort with this personally. And hopefully, those are just a few things to consider as you and your husband make the decision that's best for you. Is that helpful though? It is. Thank you so much.
That may be the case, but just wanted to check back before we made any permanent decisions. Absolutely. For those folks who are out there interested in learning more, you can go to joinchristiancommunity.com, joinchristiancommunity.com, a wonderful partner that is really focused on serving God's people, but also taking a portion of their profits as a credit union and getting that to work in God's economy and funding some really incredible mission work around the globe and even here domestically. Ellie, Lord bless you and your husband. Thanks for being on the program today.
We appreciate your call. It was a great question. God bless you. Folks, we so appreciate you being along with us each day, and we look forward to taking your questions and hearing your stories and being invited into your stewardship journey. It's our privilege to come alongside you.
I couldn't do this without an amazing team behind me each day, certainly contributing to today's broadcast. Mr. Devin Patrick, our producer, handling our phone calls today, Pat Montague. We're so thankful for Pat and also Mr. Jim Henry on research, plus the entire cast and crew here at Faith Phi.
It's an amazing group of men and women committed to equipping you as wise stewards of God's resources. If you want to check out our work, you can learn more at faithfi.com where you can give and download the app and check out some great content as well. Have a wonderful weekend and we'll see you next week. Bye-bye. Faith in Finance is provided by FaithFi and listeners like you.
