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 faithfy.com/slash CCC or call 800-557-1985.
Inflation may have cooled, but for many households, the credit card balances built up in recent years are still very real. Hi, I'm Rob West. For many years, many families navigated rising costs by relying on credit cards.
Now, even though inflation has eased, the balances and the interest remain. Today, Mealy Simon joins us to share how credit counseling can help. And then it's on to your calls at 800-525-7000. That's 800-525-7,000. This is Faith in Finance, biblical wisdom for your financial decisions.
Well, it's always a joy to have Neely Simon with us. She's a certified credit counselor and director of strategic partnerships at Christian Credit Counselors, an underwriter of this program. Neely, great to have you back with us. Thank you, Rob. It's great to be here.
Neely, inflation may have eased from its peak a few years ago, but many families, of course, are still feeling the pressure. Budgets remain tight.
Some people feel stuck financially. Is that part of the reason you're seeing more individuals reach out for credit counseling right now? Yeah, we believe over the last three to four years, families have really felt real financial pressure. I think we all can relate to going to the grocery store and having to spend money. Our insurance bills have gone up.
Housing has gone up. Utilities have also risen, and wages are just simply not keeping up. And so, what we're seeing is that many households are relying on credit cards to cover their everyday basics just to stay afloat. And then with the credit card interest rates often running between 22 to 30 percent APR, real progress can feel almost impossible. Then you add to that, a lot of people are also having to restart their student loan payments, and many budgets that were already tight have become even tighter.
Mm. Yeah, that's exactly right. And so now many families, even if they've rightsized the family budget, and that's a big if, but let's say they have and they're in the recovery phase, it's time to pay what was accumulated, right? That's exactly right. And what's happening is that many people are making their payments every month, but because of the high interest rates, they're not making much progress, really leaving them feeling stuck in a cycle of making payments with very little progress, which can feel discouraging and even defeating.
Yeah, is there any encouraging news in the midst of all this? What positive trends are you seeing? Any? Yes, absolutely. Financial literacy is growing, and more people are becoming proactive about learning what their options really are.
AI and online resources have also really been helping consumers learn responsible ways to pay off their debt, but also understand the risks of debt settlement programs.
Now, keep in mind, online tools are helpful for education, but every situation is unique.
So it's really wise to get help from a trained counselor who can review your specific situation and circumstance and really help you come up with a plan. And then keep in mind that early action can really make a significant difference. Yeah, and that's why this is my preferred approach for paying off credit card debt, credit counseling.
So share with our listeners why credit counseling can be such a valuable resource in a season in particular like this. Yeah, so credit counseling helps break that cycle of high interest payments that never seem to move the needle. but it also can help consumers avoid charge-offs, collections, or even bankruptcy. Keep in mind, Christian credit counselors can put together a structured debt management plan that will allow people to pay off their debt responsibly. And the way that we do that is that we reduce interest rates.
Between 1 and 12% APR. And the good news is that those interest rates are fixed for the entire program. Not only that, but the program will also lower monthly payments, which will create more breathing room in your budget. And then for those people who have fallen behind, keep in mind credit counseling, once getting enrolled, will stop late fees and credit calls. But more importantly, our clients are repaying their debt the right way by honoring their debt in full.
Yeah. And the reason we love the organization is all of those things Neely just said. Plus, they're Christian. They care about their people. It's not transactional.
They build relationships with their clients. They come alongside them. They pray with them. The entire mission is to ease the stress and strain of credit debt by offering solutions that are God-honoring. And that's why we love our relationship with Christian Credit Counselors.
Neely, so thankful for you and the team there. And thanks for your time today. Thank you so much, Rob. Have a great day. Folks, debt may feel overwhelming, but with the right plan and wise support, you can make progress.
Visit faithfi.com slash ccc to learn more. That's faithfi.com slash CCC. We'll be right back. Have you ever started a budget only to watch it fall apart a few weeks later? You're not alone.
The FaithFi app is the leading Christian budgeting app, combining smart budgeting tools, automated budgeting, and personalized insights with daily rhythms of scripture, short devotionals, and guided reflection. Manage God's money God's way. Start your free 30-day trial today to lock in 25% savings for a limited time at faithfy.com slash app. 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 faithfi.com slash CCC or call 800-557-1985. Uh Taking your calls today here on Faith and Finance, 800-525-7000.
David, glad to have you on the program today, sir. Go ahead. My father recently passed away less than a year now, and he left. uh some money for his kids. And I've been living paycheck to paycheck my whole life.
Um, my wife, she wants to, you know, buy a house and get a truck and And I don't want to do any of that. I feel like we need to plan for the future, have this money work for us, leave something for the kids. And then You know, see what where we are at with the buying a house and so on and so forth.
So. I was hoping to get your ideas on that, sir. Yeah, well, I appreciate that. You know, this is a great opportunity. You are now the steward of these resources, you and your wife together, and you can use that to break the paycheck to paycheck cycle and create long-term stability for your family.
Done poorly, it could disappear in a hurry. And so I think that ongoing conversation between you and your bride and really developing a path forward where you all start with what are our values and our priorities. You know, we want to be able to be good stewards of what God has entrusted to us. We want to be able to live within our means. We want to have some cushion, and that includes an emergency fund, but we'd also like to buy a home.
I mean, let's get all of those values and priorities out on the table, and then let's think about how a well-thought-out financial plan could support that. We may not be able to do everything at once, but we can at least begin to have a productive conversation and move forward with intentionality. I think the first. First step is really to pause. And maybe you've already seen this amount of time elapse, but I would say at least 60 days where you don't do anything.
You don't invest it. You don't do anything other than park it in a high-yield savings account and avoid the emotional or impulsive decisions. You know, sudden money plus stress. Often equals poor decisions.
So we want clarity first, especially in the case where we've got a married couple, because we want you guys to be on the same page about this, and we don't want this to create any kind of division or disunity. I think what's undoubtedly going to be a priority is to build your foundation first. And maybe this is what you've been lacking, but that three to six months of expenses and savings, what we call an emergency fund, this can really stop the paycheck to paycheck cycle. It's not money sitting idle, it's buying you peace and margin because you now have the ability to fund the unexpected. And this really needs to be truly the unexpected because things that are known, like you know, we know that the tires are going to wear out on the car, we know there's some level of maintenance that's going to be needed in the house, those need to be built into the budget.
And if you don't have a budget, that really needs to happen very quickly. But those things that we could not have anticipated that come out of left field, that's where that emergency fund comes. And that's going to avoid you getting into a place where you have to borrow from the unexpected. And then to the extent you have any high interest debt, credit cards, you know, you certainly. You're going to want to pay those off because that's a guaranteed return, often 15 to 25% in the form of a guaranteed return, the interest you're going to eliminate, and that's really key.
You can't out-invest bad debt. And then we need a simple plan from there. We've got to see where are we at on the budget. Can we make it balanced with some cushion? And then beyond that, really the best thing we can do is beyond that and beyond any giving that you're wanting to do on a systematic basis, which hopefully is in that budget.
But let's make sure we're putting something aside for the future. Because, you know, keep in mind the best gift you can give to your kids is financial health right now. That you all are stable and in a solid position where you have the resources you need not only now, but you will in the future for the rest of your life, for no matter how long the Lord has you here. And I think, even more than an inheritance, your ability to really have a stable and solid financial foundation under you is key for the rest of your life. And that means we've got to be putting something away that could be there to support your income needs into your 80s and 90s if the Lord tarries and you're in good health alongside Social Security.
And so I think making sure you're contributing to a retirement plan, whether that's one at work or a Roth IRA, something like that. And then to the extent you have something left over, maybe we go ahead and earmark that for a down payment on a house that we begin, that we carve out into a separate savings account, begin adding to it. And when you're ready, maybe you make that purchase, which I can imagine is something that would be huge for your wife. I mean, it's your home, it's a place of security and safety, but also a place to build memories, and it's an asset that will grow for the future. But let me stop there, David, and get your thoughts on all that.
I would love to buy my wife a house right now, but I just think you're right when it comes to waiting the thirty to sixty days just to let everything calm down, let the shock kind of just carry over us. And I was thinking about going to see a CKA, but I don't even know if the amount of money I have is worth the CKA's time.
Well, I think the key is backing up and really saying what are the most important priorities. And it's got to start with that spending plan. I mean, your most powerful wealth building tool beyond this $120,000 is your income. The key is, how do we order our finances in such a way that you can live within the income that you have? And not only cover the monthly bills, but have the margin to support those longer-term objectives, whether that's increasing your giving over time or being able to save for the future, you know, things like that.
You know, maybe we start with a certified Christian financial counselor. I'd be happy to provide one to you at no cost. This would be somebody who could really help you look at the spending plan side of things, give you and your wife through maybe several virtual meetings, a third-party objective perspective on, you know, here's what it looks like to put the budget in place, to make sure we've got everything in it, to make the changes that need to be made in order to bring it in line so that it balances. And I think once you have that, plus the emergency fund, which you know, the budget will tell you: okay, when we put everything in, here's what it takes for us to fund our household on a monthly basis. And then we multiply that by three, or in best case, multiply that by six, and that's the emergency fund.
So let's say that's, I'm going to pick a number, 5,000 a month. Maybe we take 30 of this 120 and we say we're going to go ahead and put that into our high yield savings, call that our emergency fund, and we're not going to invest that. And now we've got 90K left. And maybe we're going to take $50,000 and put it into the down payment fund for the house. And that's going into a separate high-yield savings.
And then the rest of it, we're going to use to fund two Roth IRAs this year. I mean, those are the kinds of decisions I think that, you know, as you all talk about your values and your priorities and your goals, we can make sure we address all of those in this plan, but we do them in an order that makes sense. You know, we give first, we build our financial foundation, we get our budget in place, we build our emergency fund, we pay off high interest debt, we save for the future, and then we start funding kind of short and medium-term goals. And maybe that first goal is that house purchase.
So if you're interested, I'd be happy to provide that certified Christian financial counselor to start with the budget and make sure we've got that dialed in. And then depending on how much is left, if it's anywhere close to $100,000, you absolutely could go see a CKA and have them invested for you. But I think what you're going to end up with is probably. You know, carving off a portion for the emergency, a portion for the down payment on the house, getting the budget right, and then you're probably not going to have enough left to hire an advisor, but we still could get funded a Roth IRA that could work alongside any other retirement plans you have. Does that make sense?
Absolutely, sir. Thank you. All right, you're welcome. Let's do this. Hold the line.
We're going to get you connected with a certified Christian financial counselor. We'll pick up the tab, and hopefully, that'll get one of these key building blocks in place because spending less than you earn and having a budget is really the key to every financial success. Hang on. Back after this. Stay with us.
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We're taking your calls today. We've got just one line open: 800-525-7000. All right, let's head back to the phones, Tennessee. Melissa, go ahead. Hey, um, okay, so I have two children, six and eight.
They are in school activities. I've overloaded myself with credit cards. Yeah. And it's to the point where with the gas like it is, the groceries like it is, I'm to the point where I just don't know what to do. Is it either I've heard of the debt management on the radio, I've considered bankruptcy.
I just don't know where to go right now. Yes. Yeah. Well, I'm so sorry to hear about your situation. I want to kind of talk you through the when a debt management plan makes sense.
And that's going to be my first choice. When bankruptcy may be necessary. We don't find the word bankruptcy in the Bible. It's not that it's a sin. It's just that it's a last resort.
But there are cases where, from a legal protection standpoint, it can make some sense. But it is absolutely a last resort. Where it may be necessary as a tool is when you can't meet your minimum payments at all, when you're choosing between food and rent and debt. When you have no realistic path to repay in, let's say, five years, when your debt is two to three times your annual income, when you're facing lawsuits or garnishment, you know, if there's no path forward, bankruptcy can create one, and you could still honor those obligations. I've seen many do it.
But our better option is really a debt management plan where you have steady income, where even if everything is really tight, you can get your budget down to the essentials, what I call the big four. We got to keep gas in the car to get to work. We've got to keep a roof over our head. We've got to keep utilities on. We got to keep food on the table, but everything else is negotiable.
And we find a way to build that monthly payment in usually 2% to 3% of the balance. To the creditors, but through a debt management program, which allows the interest rate to drop, and now we're actually every month making progress toward paying it off, typically in three to five years. You repay it by creating healthy rhythms in terms of budgeting. And when you get out of it, you're done. You don't ever go back there.
And that's why debt management through our friends at ChristianCreditCounselors.org is really the first choice that I would pursue. And Melissa, I'll get you connected with a certified Christian financial counselor to look at your budget. We'll pay for it. They'll help you plot a path forward. But do you think if you were to just really dial back your spending, how much credit card debt are we talking about here?
Well, it's credit card and loans.
Okay. Different kind of the loans.
So it's probably $25,000. In Credit Card or Together. Together. Um about seventeen Okay. Um I have called the Christian Counseling and they do not do um most of the the like the loans that I have.
Yes. Not the credit cards, just the loans.
So what is the minimum payment on the loans, not counting the credit card debt? The minimum probably seven fifty a month.
Okay, and that would cover all the loans excluding the credit card debt, correct? Yes, sir. All right. And then if we needed to add five hundred to that, so seven fifty plus five hundred, that'd be one thousand two fifty. Is there any possible way you could reorient your budget to cover a one thousand two hundred fifty dollar monthly payment?
Not at this time.
Okay. All right. And I've tried like everything, thinking and calling the Christian counseling. They've been really helpful helping me, but there's just nothing they can do. Yeah.
No, I get it. All right. Let's do this. I'm going to get you connected with a certified Christian financial counselor who's just going to kind of go over all the numbers with you, look at your budget, maybe bring some new ideas to the table. Could we be headed for bankruptcy?
It's possible, but let's try to avoid that if we can. It's costly, and you know, nobody wants to go through that if you don't have to. Let's at least start with somebody who can objectively walk alongside you, encourage you, pray with you, look at the plan, evaluate your situation, and give you some steps forward. And we're going to pay for it so it won't cost you anything.
Okay. Oh, my goodness. Thank you. Happy to do it. Melissa, stay on the line, and our team will get you connected.
Thanks for your call today. We'll be praying for you. Let's finish up today in Texas. Christine, you'll be our final caller. Go ahead.
Yeah, hi there. Thank you so much for this program. First of all, I listen all the time. Great. My husband and I are in the process of buying our first house, and everything we're looking at seems to be at the upper end of our budget.
Um I'm wondering if you know, with the uncertainty in the market, Is it better to buy now and just lock in for our future family? Or should we wait and try to save a larger down payment to lower the monthly cost? I appreciate this question so much, Christine, because you're right. If it feels tight on paper, it's going to feel tighter in real life. You know, the mortgage is just the starting point.
We have to add taxes, which are higher now because of these higher valuations on homes, insurance, which is up, maintenance, repairs. You know, home ownership always costs more than expected.
Now, I love the fact that you would own your home and you're building something for the future, and you know, that's a real asset that should appreciate over time, not to mention the security that comes with that, and just that it's a home where we build memories. And so, it's so much more than just an investment. But if there's no margin in the budget, it's too much house. I mean, that's just the rule of thumb. And so, I think we need to prioritize margin over maximizing the purchase because we don't want to be what you call house poor.
You still need room for giving and saving and unexpected expenses, which also means just because we're approved for it doesn't mean we should buy it. And a bigger down payment, to your point, changes everything. It lowers your monthly payment, it can eliminate, if you can get above 20%, your private mortgage insurance, which is like 1%. Of the mortgage as an expense every month that doesn't help you at all. It also reduces stress and risk.
And so I would say the reasons to consider waiting are: if you feel like you're stretching to make the payment, you have no emergency fund left after closing, or you have to pause retirement or giving to afford the home. But don't wait forever either. The goal isn't perfection, it's what I'll call wise readiness. If you have a stable income, if you have an emergency savings, if you have a reasonable payment, then I think moving forward can make sense. I just want you to strike that balance.
Does that make sense? Yeah, it does. That's great. Thank you. Yeah.
Just some rules of thumb. I would say: one is: let's try to shoot for that 20% down payment, which I realize is more challenging now with home values where they are. And then we really want to keep. If we can, that mortgage payment, the principal interest, taxes, and insurance. Under 30% of your take-home pay, preferably 25%, because that's going to leave enough for everything else.
If those are, you know, are not true, does that mean it's an automatic showstopper? Not necessarily, but at least your red flag should be up to say, let's re-crunch the numbers, let's make sure we've got accurate numbers for the taxes and the insurance, because they may be higher than what the previous owner was paying, because a lot of times those reset. Let's make sure we've got a true cost of utilities. Let's make sure, especially depending on the age of the home, that we have a realistic number in there for repairs that maybe you haven't been responsible for as a renter.
So let's put all that in the equation. Let's look at those rules of thumb, pray about it, and then I think you'll be able to make a good decision moving forward, okay? Fantastic. Thank you. You're welcome.
Thanks for your call, and thanks for being a faithful listener of the program. We appreciate it. Big thanks to my team today: Sandy, Devin, Taylor, and everybody here at Faith By. Come back and join us tomorrow. We'll see you then.
Bye-bye. Faith in Finance is provided by Faith Buy and listeners like you.
