This faith and finance podcast is underwritten in part by Guidestone Funds. Guidestone envisions a world transformed by Christian investing through screening, corporate engagement, and impact investing. Our investment strategies allow investors to be more intentional with their investment dollars to make a meaningful difference in the world while preparing for their financial future. Learn more at faithby.com/slash-guidestone. Having an emergency fund is great, but how can you ensure it's there when you really need it?
I am Rob West. It's easy to set aside money for a rainy day, but what happens when we start dipping into that fund for things that aren't truly emergencies? Today, we'll consider three questions you should ask before dipping into your emergency fund to ensure that the money is there when you need it, and then it's on to your calls. At eight hundred five two five seven thousand, this is Faith and Finance: Biblical wisdom for your financial decisions.
Well, the Bible is filled with pointed messages that we should take to heart and memorize, so they pop into our heads when we need them most. One such verse is Proverbs twenty-one twenty, which, as you might expect, we cite fairly often here on the program. It reads, "Precious treasure and oil are in a wise man's dwelling, but a foolish man devours them." It's a warning against spending everything we earn, calling it foolish because it leaves us unprepared for the inevitable. Inevitable mishaps of life on Earth. Most of us have experienced a financial emergency at some point in our lives.
They may be relatively minor—a tire goes flat—or they could be significant—a huge medical bill hits. But whether minor or major, we all run into unexpected expenditures. Whether it's our cars breaking down or a random house repair, we can avoid stressful times through some financial preparation. An Emergency fund is one of the best tools around in financial management because while it's important to have a strong offense in building wealth, you equally need a strong defense. You want an introductory emergency fund, generally between a thousand and fifteen hundred dollars, that sufficiently covers most minor emergencies.
However, once you've paid off all your debt besides your mortgage and you're receiving your company's match if you have one. It's crucial that you increase that emergency fund to three to six months' worth of living expenses to protect yourself from a more significant financial crisis, like a job loss. This larger fund acts as a safeguard, helping you avoid unnecessary debt when major financial disruptions occur.
However, having an emergency fund is only half the battle. The other half is knowing when it's appropriate to use it. It's easy to dip in. Those savings for non-emergencies, but doing so can leave you financially vulnerable.
So, how do you determine if an expense qualifies as an emergency? Here are three questions to ask before tapping into your emergency fund. Question one: Is it urgent? Does something need to be fixed or bought right now, or can we wait and save up for it? If a so-called emergency can wait, it most likely doesn't fall into the emergency.
Category. If you're unsure whether something constitutes an emergency, try waiting 30 days before using your emergency fund. Obviously, that doesn't work if it's a car repair job and you only have one car. But if you have two cars, maybe it can wait until you've saved up something to put toward the repair. Question number two: Is this necessary?
Sadly, our purchases and debt struggles demonstrate that many people struggle with discerning between a. Need and a want. For instance, buying a new car is a want, not a need. If you need transportation now, opt for a cheaper used vehicle and save up for a more reliable one over time. Question number three: Is this really an unexpected expense?
There's a huge difference between getting fired and forgetting to save up for Christmas presents. Birthdays and Christmas happen at the same time every year, so these are not considered unexpected expenses. No matter how poorly we've prepared, these questions will prevent you from using emergency funds on things that don't fall into that emergency category. If we can honestly answer yes to each one, then go ahead and use the fund. But does that mean you should just wave your debit card at it and make it go away?
Not at all. You still have to be careful, even when emergency fund spending is justified. Make sure you spend as little as possible. Use the car example again. You may have an accident and need major repairs that are not covered by insurance.
Hopefully, you've been saving for a new car anyway. You can then use some or all of that money for repairs or replacing the vehicle if need be. That will minimize the hit on your emergency fund. Also, before using emergency funds, take a serious look at your budget to find any areas you can trim. Can you temporarily reduce regular?
Spending to make your emergency money go further. That will also help you rebuild your emergency fund as quickly as possible and back up to the ideal three to six months of living expenses. And one final and important note: you always want to have sufficient savings so that in times of scarcity, you can still give generously and save what you need to and live with peace of mind. I hope that's helpful. All right, your calls are next eight hundred five two five seven We'll be right back.
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A registered investment advisor. Nor do they provide investment advice. Rising health insurance rates are pricing millions out of the market, and Christian Healthcare Ministries is here to help. CHM is affordable insurance, allowing believers to share the burden of medical bills together. You get simple, low-cost pricing, regardless of health history or location.
Plus, you can enroll at any time with no contracts. Break free from the huge costs and hidden fees of traditional health insurance. Learn more at FaithBuy.com. Com slash chm. Thanks for joining us today on Faith and Finance.
We're taking your calls and questions today. We've got plenty of room for you. Still some lines open.
So, if something you're wrestling with in your financial life, call right now. Eight hundred five two five seven thousand. Again, that number eight hundred five two five seven thousand. Texas Lee, go right ahead, sir. Thank you, Rob.
My question is about when I should retire.
Okay, I'm 63. I currently work. I've got a nest egg as far as Roth, 401k, etc. All I have left is my house. And frankly, I'm just I'm getting tired of working.
You know. Yeah. And so anyway, I was just curious of your take and how you would look at it, basically. Yes.
So, have you already retired, Lee? At this point. No, no, still working.
Okay, got it. Yeah, so you know, at the end of the day, you know, I think a good framework in terms of your options at this point, Lee, would be number one, you know, claim at sixty three. You'd start Social Security. Your benefit would be permanently reduced because you're claiming early. And then if you continue to work full time, you'd have that earnings test, and you'd have that temporary reduction.
The second option is you retire now, but delay Social Security, and if you Have enough savings, you could stop working without immediately claiming Social Security. But ultimately, you know that's going to come down to what you have saved and perhaps seeing your savings and retirement accounts as a temporary bridge to allow your benefits to grow. The third option is wait until full retirement age. The earnings test ends, and you'd at least maximize what you had coming. And then finally, wait until seventy, where it would grow by about you know twenty four percent higher than full retirement age, but You'd have to, you know, wait about twelve years to be repaid, and then you'd have that higher check for the rest of your life.
So, give me your thoughts on that, and then give me a sense of if you did retire and delayed Social Security, you know, what would that mean in terms of the income sources you'd have and the assets you'd have to be able to access to be able to support your lifestyle.
Well, I mean, you know, I don't understand if I was continue to work at the age that I am now. And I waited, you know, say two years. I mean, why not go ahead and wait instead of it being at that 63 age and losing that extra money? Or would I? Oh, I agree.
Yeah, so you're gonna have a permanent reduction for each month you take it before full retirement age, which is sixty-seven.
So you'd have a pretty steep permanent reduction on that benefit if you were to take it at sixty-three. And I would agree that I would encourage you not to do that. I would either continue to work or use retirement assets, which we haven't talked about what you have saved, but you know perhaps look at that as a bridge to get to full retirement. Yeah, we have over a million savings, and you know we we've done our due diligence in that area, and so the biggest issue we don't have any bills other than our house note currently.
Okay, and so the house is supposed to be done in twenty thirty two. Is when the house note is supposed to to be finished. Got it.
So you know, if I retire at sixty seven, that's twenty thirty. You know, I've always planned. My plan was to have that house paid off. It's just something about it. But yeah, you know, if if I can't make it, you know, it's weird.
You feel your body going downhill. Yes, sir. You know, and it makes you think about things, right? Absolutely. Part of, and that's just part of it.
You know, thank the Lord that that I listen to His precepts and in His Word, and you know, and I don't have to worry about, you know, do I have enough money as far as retirement's concerned? You know, so I'm thankful for that. Yeah, well, I couldn't agree more. And you've you've heated these principles, and you're enjoying the fruit of that. And I would say you're exactly right in terms of you know the the opportunity you have.
If you were to be able to let's say sync everything up to 2030, if the you know you would have the physical stamina to continue until then, you know you could run an amortization schedule on that mortgage on any free mortgage calculator. Online to be able to say, okay, how much extra would I need to send per month or per year to be able to shorten that payoff by two years, so that you hit full retirement age at the same moment your biggest expense comes out, and based on the fact that you're living modestly, you all would need very little, you know, to to live on at that point, and you'd have, you know, now let's call it three more years of additional savings and growth, and you'd be max. Maximizing at least your full retirement age benefit—that may be the sweet spot of everything. You know, if you guys were to add a little bit more to that principal reduction each month. Right.
So hypothetical for you, say say if I did, if I worked to twenty twenty thirty and retirement retirement age, and I still had say thirty thirty or forty thousand left on the house note, okay. Would would you continue to pay it through retirement? If I retired, would you would you can continue to to pay for it out of you know your your monies that you're getting from Social Security, your investments, etc., or would you just pay it off? Yeah, and save the the interest that's left. Yeah, it's a good question.
What is the interest rate?
Well, two and a half. Yeah, so I wouldn't be in a rush. I mean, you know, a lot of that will come down to if you had enough in savings that you had a fully funded emergency fund, whatever that is for you. You know, maybe that's six months, maybe it's as much as a year, and you had additional money. And when we got to twenty thirty, let's say interest rates were much lower than they are today, it might make sense.
But in today's environment, it doesn't make any sense for you to pay that off unless you just have a conviction to do. That I would just continue to pay it off out of monthly cash flow and just ride that two and a half percent very low interest rate mortgage.
Now I suspect, just given the way you all live, you know, you could add enough on a a monthly or annual basis so that you don't even have the twenty or thirty thousand if you set your mind to it. But if you did, I would just pay it out of current cash flow, unless interest rates were you know way down. Even below your your mortgage interest rate, but even then, I don't know that it's worth, you know, the the savings to give up that liquidity if you don't have to. Sure, yes, understood. We just, you know, we we we feel pretty good right now physically, and and we just took the my I broke my back years ago.
Five years ago, and and it just scared us, right? You know, and and so we we we talked. We said, you know, honey, we scrape and save all our lives, and we put things off, and let's go ahead and do some of those things now while we're physically able, right? Instead of waiting until you know we've we're seventies and and we can't go and do those things. Yes.
Yeah, that's exactly right. That's the path we're taking, you know. Yes.
Yeah, very good.
Well, listen, Lee.
So thankful to have you on the program today, sir. It sounds like you've got a great plan. You're a living testimony to when you apply these principles and you do it over a long period of time, and you live modestly. You you see the fruit of that, and you know that's what we talk about each day on this program. Does that mean you won't have challenges along the way?
Absolutely not. You're you're going to have plenty of challenges. We live in a fallen world, but we do our best to live with. Then God's provision with contentment. We understand He owns it all.
We're stewards, and we work hard. And remember, that's part of God's design: is that we were to be workers before the fall, before sin entered the world. We were created in God's image, a worker to be workers to co-create with Him. Except He creates out of nothing; we create out of His creation, and we order it, and we improve it, and we we put it to work, and we work with the sweat of. Brow, and when we do that, we experience human flourishing, and we contribute to the overall, you know, blessing of of mankind.
and And that's the way it should be. And that's why when we cease all productive work, our health declines, and I think we lose some joy in the process because that's not a part of God's plan. But you can transition to what God has next for you, and use your wisdom and experience to love and serve others. Thanks for your. Lee, we'll be right back.
I was in ministry full time, and I was always looking for a way to integrate my faith with this new industry around money and finances. This is Mark. He is a Certified Kingdom Advisor. As a CKA, one of the best things I offer my clients is trust in knowing that they're working with a professional that understands their values, and I think in all of the different challenges that clients go through, if we can go back to trusting God. Then he'll make the path straight.
You can find an advisor like Mark at findacka. dot com. Faith in finance is grateful for support from Sound Mind Investing. For more than thirty years, SMI has been helping Christians reach their financial goals by offering do it yourself investing guidance for investors at every stage, just getting started or getting close to retirement. Financial wisdom for living well.
More information, including the short video webinar, profit and peace of mind, no matter what's happening in the market, is available at soundmindinvesting.org. Hey, glad to have you with us today on Faith and Finance. What a treat to encourage you each day as you manage God's money. We want to point you back to God's Word. Hey, if you love the program, we'd love for you to consider becoming a Faith Five partner.
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About the partner program, or become one, just head to faithfi. dot com slash give. That's faithfi. dot com slash give. All right, we're going to head back to the phones here.
We've got a few lines open, so if you have a financial question today, go ahead and call right now eight hundred five two five seven thousand. I'd love to tackle whatever you are thinking about, David in Iowa. David, you've been waiting very patiently. Go ahead, sir. Hi Rob.
Hey, thank you for taking my call. I spoke to you a few months back, and I was going up to Alaska to work. Yeah, a job. Yeah. Well, I thought I'd give you an update.
I was really hoping that I was going to come back and tell you that I got my entire debt paid off, but Things slowed down up there a little bit, and so I didn't get to where I wanted to. But I still have my plan B. I'm back back in Iowa working, and so in two months we paid off about fifteen thousand dollars in in credit card debt. Wow!
Well done. Yeah. So it was it was really worth it, and I still have about fourteen to go. And if if I stay with my plan, my my boss is a Christian guy, and he told me he said, "Dave, come back. We'll help you get.
You know, he's got plenty of work that I can get. Be very aggressive paying off the rest of that." Yeah.
So my goal is to do it by the end of the year. That's a pretty aggressive goal, but that's my goal to get that paid off. And then you did recommend that we start working on building that emergency fund. Yes.
And I got about a thousand dollars, so I didn't get that built as much as I could.
So, what's the best way to proceed forward here? Do you think about Your debt relief plan that you mentioned on the radio a lot. Yeah. Would it make sense to go through that, or if I can pay this off as fast enough, do I continue that? That's really what I, I kind of want to do.
Sure.
So yeah.
So what would be you know what what are your thoughts on that? Yeah. Well, first of all, well done. Um, you know, even though you didn't get quite where you wanted to be, congrats on paying that fifteen thousand in credit card debt down. That's a big deal.
I love that you're going to stay focused on it, even though things didn't materialize exactly the way you you expected. What's the balance remaining at this point, David? We're at about fourteen, little under fifteen thousand dollars. Fourteen. Five somewhere around there.
And where is the money going to come from if you are able to pay it off by year end?
Well, what I've reached full retirement age. I took early retirement, and so I was. That's part of the reason we built up some debt. If you get penalized, if you yeah, you know, you make too much money.
So I. I can work full time now, so that's really my plan. Is I'm just going to try and until that debt's paid off, I'm just going to work full time and pour as much as I possibly can into paying off that debt, which I'm hoping is between fifteen hundred and two thousand a month.
Okay, but that's not going to get it done by the end of the year. I mean, we're basically talking four months. You'd need thirty five hundred a month in order to hit fourteen thousand.
So, is it more realistic to think it might be, you know, middle of next year before you have this paid off? It's more realistic, probably, to think about March. March, yeah, okay.
Well, here's what I would do. Yeah, I mean, I like the fact that you've got the thousand dollars in emergencies. I might try to add five hundred more to that, but then I'd freeze it right there. You know, the reason we want something there is we want to break the cycle of the borrowing, and so you've got something to fall back on. We'll get that up to three to six months expenses when the debt is gone.
But I think a six month runway, maybe nine months, if things don't go quite as expected, is long enough for. You to go ahead and put this with Christian credit counselors because you can prepay it. Even though you're on the program, you're just going to get a lower interest rate while you're doing it. And this is enough debt that you know, with you somewhere between 22 and 30 percent on those interest rates, you know, let's go ahead and get that down to between zero and 10.
So I'd reach out to ChristianCreditCounselors.org. They'll get you set up on a credit counseling program. They'll drop the interest rates. They'll give you one monthly payment. But don't just automatically.
Settle into the payment they give you. Let's stay focused on getting this paid off. You know, between three and six months from now, and you know, you'll be in a whole new position here. You can build up your emergency fund, and then you can redirect all that toward long-term savings and investments.
Okay.
Well, I'll tell you what I'm going to do too. I'm going to keep you updated on what's going on because you've been a real blessing. Your show has been a real blessing to me, and you know. I don't feel. Guilty.
I feel convicted that this is something that God is saying you need to get this taken care of, and that's how I know that your show is God ordained.
Well, thank you. I'll tell you, it's not about wagging fingers at anybody because we all make mistakes along the way. We're all just trying to answer the question: What is the next faithful step based on where we are today? What does faithfulness look like right now, and what is that next faithful step that I can take? And you're doing it.
You're living within your contentment. You're you're working hard. You're prioritizing the right things. Getting out of debt, saving, honoring the Lord in that. You know, recognizing He owns it all.
In even the ability to earn money comes from Him. Deuteronomy eight eighteen tells us so.
Well done, David. Stay at it. You're going to do this. And yeah, keep us posted. I'd love to be able to celebrate with you when you get to the end of this.
God bless you, my friend. Thanks for calling today and checking in. Folks, thanks for being along with us today. What a treat to have you join us to take your questions, to be able to engage around managing God's money, God's way, and that's the big idea here at Faith and Finance each day to help you live so God is your ultimate treasure, and money is a tool, a gift, a good gift to be used to enjoy and to provide and to give and to invest in a way that promotes human flourishing and even advances the gospel. You know, my.
Experiences that money management is actually spiritual formation at its core. It's one of the ways we work out our faith on a daily basis. Where is our trust? What do we value? And what ultimately is our treasure?
I hope you see true riches, God's riches, as your ultimate treasure. The fact that you have been adopted into His family when you surrender your life to Jesus—that's the most important decision you'll ever make. We're so thankful. Grateful for our team that makes this possible each day, Devin Patrick. Grateful for Sandy, Patty Pumphrey, Taylor Stanich, and everybody here at FaithFi.
Have a wonderful weekend, and we'll see you next week. Lord bless you. Bye bye. Faith and Finance is provided by FaithFi and listeners like you.
