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Jesus and the Wealthy

Faith And Finance / Rob West
The Truth Network Radio
April 26, 2024 5:58 pm

Jesus and the Wealthy

Faith And Finance / Rob West

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April 26, 2024 5:58 pm

If you make $65,000 a year after taxes and have no children, you’re in the wealthiest 1% of the global population. If we begin to think of ourselves in the top 1%, how will that affect our financial decisions as stewards of God’s resources? On today's Faith & Finance Live, host Rob West will welcome John Cortines to share some interesting insights about Jesus and the wealthy. Then Rob will answer your calls and financial questions. 

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Rob West and Steve Moore

If you make $65,000 a year after taxes and have no children, you're in the wealthiest 1% of the global population.

I am Rob West. If we begin to think of ourselves in the top 1%, how will that affect our financial decisions as stewards of God's resources? John Cortenez joins us today with some interesting insights about Jesus and the wealthy. And then it's on to your calls at 800-525-7000.

That's 800-525-7000. This is Faith and Finance Live, biblical wisdom for your financial decisions. Well, our guest today is my friend John Cortenez, the director of generosity at the McClellan Foundation and the author of two books on biblical giving. John, it is so great to have you here today. Thanks for having me on, Rob. John, you spoke at the recent Kingdom Advisors Conference and told an amazing story about some friends of yours and an inheritance decision they made. I'd love for you to start with that story.

Well, this was incredible. Yeah, I've got some friends who are a very sharp young couple in their 30s. And they got some news from his father that he was about to give them a huge multimillion dollar inheritance, which sounds kind of amazing.

Yeah. But they've been reflecting very carefully on money and their faith for months, actually, been on this journey with the Lord. And they ended up saying, hey, we're so grateful for this, but we're actually already OK. And we think if we got this money, we'd start to rely on the shifting sands of wealth for our security instead of the firm foundation of Christ. And so long story short, they worked with his dad to put that money to work in God's kingdom through giving. And I was just blown away by that decision.

I'm not sure I would have done the same thing. What an incredible story. And it really shows the kind of decisions we can make when we think of ourselves as already wealthy. Now, John, you talked about the three ways that Jesus interacted with wealthy people and how he seeks to interact with us today. So I'd love for you to share that with our audience.

Absolutely. So if we go through the four gospels and find all the times Jesus interacted with a wealthy person, it happened more than you might think. And he had this amazing pattern that was three things—love, invite and challenge. So for us in our wealth today, Jesus loves us, he invites us and he challenges us. You know, Jesus also said you can't serve God and money. And if we think about it, money promises us pleasure, possessions, protection, position in society, but it can't give us those things in eternity. We have to look to God for that.

Oh, that is so true. And you called out the parable of the rich young ruler where Jesus challenges the rich young ruler to sell all of his possessions and give everything to the poor. Now, Jesus isn't necessarily challenging us in that way. But how would you say he is challenging us? That was definitely a unique challenge from Jesus to the rich young ruler.

And he might ask you or me to do that. But we should know that's the only time in Scripture Jesus tells anybody to sell it all. Zacchaeus, as another example, gave away half of his wealth.

Peter left his boats and changed careers to follow Christ. And Nicodemus spent a fortune on the burial spices for Jesus after the crucifixion to honor the Lord and go public with his faith. So I think the beauty of this is it will look different for each of us as we read Scripture, as we listen to the guiding of the Holy Spirit. But what we can be sure of is that God will challenge us to mobilize our wealth in this world to bless people and to bring him glory.

Yeah, there's no doubt about that. So John, share with us just a few ways that we can use our wealth to honor the Lord and bless others. Well, we want to invite people ultimately into a deeper right relationship with God and others.

And I just share four quick ways where we can do that. Number one is family. You know, taking care of those we are responsible for is godly and right. Number two would be generosity. You know, Scripture is so clear that we're called to invest money into God's kingdom work all around the world and in our local communities. And then third would actually be hospitality. In today's culture that's more and more isolated, it's a radical and good step to open our home and share meals with people and the love of God.

And finally, this applies for some of us. If we own or control a business, God calls many of us to employ others in a great job and a healthy God honoring work environment. And doing that is a godly and good decision. And each of these four are ways where we can use our wealth for the benefit of others. And that makes us richer spiritually as well.

God is with us in that. Well, we're just about out of time today, John, but I'd love for you to leave us with perhaps a practical way that people can learn more about biblical generosity. Well, there's an awesome ministry that actually works closely with Kingdom Advisors, and they've got video stories of Christian givers and amazing teachings that could be an encouragement to anybody that wants to learn more. They're called Generous Giving. And if you just go to, you can find dozens of sermons and stories and resources and all of that is available for free. Oh, that's incredible. Well, John, thanks for stopping by and challenging us with these insights you gleaned right out of God's Word. Grateful to have you, my friend. Thank you, Rob.

That's John Cortenez, Director of Generosity at the McClellan Foundation. Again, if you want to check out that resource John just mentioned, go to Back with your questions after this, 800-525-7000. We'll be right back. The opinions offered during this program represent the personal or professional opinions of the participants given for informational purposes only.

Any information provided is not intended to replace advice from a financial, medical, legal, or other professional who understands your specific situation. Great to have you with us today on Faith and Finance Live. I'm Rob West. It's time for your phone calls today. Your questions on anything financial when you call 800-525-7000. We've got some lines open. We're just getting started with your questions today.

So plenty of lines open at the moment, but they will build quickly. The number again, 800-525-7000. We'd love to tackle whatever is on your mind today. I'll also be covering a couple of questions that were asked of me today. I actually just finished recording a podcast with my good friend, John Putnam.

He hosts the podcast called Money Made Faithful. And at the end, he asked me to respond to three questions. Number one, what comes most naturally to me related to money? Number two, what has been most challenging for me about money? And number three, what's the best money advice I've ever received? Those were interesting questions.

I'll tell you what I said a little later in the broadcast. Also today in the news, you know, we're constantly scouring the news to try to figure out what's relevant to you. Well, in the news today, the median selling price of American homes has hit a new high despite a recent increase in mortgage rates, as you well know, to over 7 percent. According to the real estate firm Redfin, the median price, meaning half of homes sold lower, half higher, reached $383,725 over the last month. The median asking price rose 6.7 percent to $415,925.

And again, that's with an average 30-year fixed rate mortgage at 7.1 percent. So things are definitely not getting easier for prospective homebuyers. Inflation and low inventories of homes for sale are keeping prices high. Nearly 30 percent of homes, this is interesting, are still selling above the asking price, while only about 6 percent are selling below.

Now, there is a bit of good news in this. New listings rose over 10 percent in the last month, and that could have a cooling effect on prices as the inventory of homes increases during the summer buying season. We know that one of the reasons driving the fact that home prices have stayed elevated even with these high interest rates is just a lack of inventory. So building those inventories certainly will help keep the pressure off as you're out buying a home.

But no doubt it's a challenging environment. Home affordability is really in a difficult spot right now. All right, let's take some phone calls today. We've got, looks like three lines open, 800-525-7000. Let's go to Brentwood, Tennessee. Hi, Rodney. Go ahead, sir.

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

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

Yeah, it's a great question. That would not be my investment of choice for you. Mixing insurance and investing can make some sense.

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

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

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

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

If you were to die before her, that's where life insurance comes in and term insurance is the best way to buy the amount you need for the lowest cost. Then I would save, not in an insurance product, but I'd save in just a straight investment plan. Are you able, I know you don't have the means to right now, but do you have a retirement plan at work? I don't. They don't offer a 401k, no.

Okay. Well, what you could do, which would be really simple, is to open a Roth IRA and basically just put in the maximum amount every year. For 2024, that would be $7,000 that you could put in. And you could do that anytime between now and when you file for your 2024 taxes. And then if you did that every year, you'd have a ton of money when you get to retirement. So I would make that a goal that as quickly as possible get that Roth IRA opened, open it at Fidelity or Schwab. You could choose some of the faith-based investing mutual funds like from Eventide or Crossmark or One Ascent or Praxis or the others, Timothy. You could use index funds.

I mean, there's a couple of different approaches you could take, but the key is, you know, once you have your emergency fund in place and once you're on track with saving for any short-term savings goals like buying a house or replacing a car, then I think the next thing for you, assuming you're doing the giving, the Lord's leading it to, is to start making a systematic contribution to the Roth IRA, even if it's just $100 a month, $1,200 a year. You know, I think that's far better of a solution than an IUL policy. Okay, gotcha. Is that helpful? Perfect. That's super helpful. Thank you so much.

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

Again, it's called the Sound Mind Investing Handbook. We'll send it to you as our gift. So stay on the line, Rodney. We'll get that in the mail to you, and call any time if we can help you, my friend. Folks, we're going to take a quick break, but back with much more just around the corner. Bill, Patrice, coming your way.

Lines are open, 800-525-7000. Stick around. All right, so I recorded a podcast today with my friend John Putnam. It's called Money Made Faithful, and he finished the interview with three questions. Here's question number one that he asked me. He said, what comes most naturally to you when it comes to money?

Here's what I said. If you think about the temperaments, there's four of them. I'm kind of a couple of them, but one of them is the sanguine temperament, which means I'm outgoing, which also means that for me, I like to spend money. It's not hard for me to do, especially for experiences, which means I can have a tendency to overspend. I'm also not a planner by nature just because of my personality, and so obviously I'm in the planning business, and so I've had to learn to be a planner, but that doesn't come naturally to me. I kind of like to live more in the moment. I'm kind of a visionary type of guy. People who have my personality type often can say, you know what?

I don't have time for a budget. That's just going to bog me down. I've got too many things to do, people to see, places to go, so you got to be really careful there. So I've learned over, you know, throughout my life to understand how God has wired me, to understand what comes with that. Now there's some great things about my personality type. I give generously just because it comes very naturally to me. As I mentioned, I love to kind of create memories and experiences with my family and my kids, and I'll spend money to do that, and that's great, but there's always a flip side to that, right? And so we each have our own tendencies related to our personalities, and we've just got to be careful on what does that mean if we allow it to get out of balance, and the big one is what does that mean for money and marriage, and that gets into the second question that Jon asked me, but I'll get to that in the next segment. All right, let's go back to the phones.

Chattanooga, Tennessee is where we're headed next. Hi, Bill. Good to have you, sir. Go ahead. Hi, Rob.

Thanks for taking my call. I have a fiancée that is 60 years old, and her father just passed away a couple months ago, and he left her an IRA annuity, and it's about $52,000, and she's in Chapter 13 bankruptcy and has been in it a couple of years, and it's a five-year repayment plan. From what I understand, this annuity is exempt from the creditors on the bankruptcy. Her bankruptcy attorney, she's emailed and called, and she's not got any response back, and she's asking me these questions, what should she do? All right, and so that's the first part of the question, whether if you know if the IRA, if a beneficiary of an IRA annuity, if that's exempt from Chapter 13. The second part is when her father's probate gets wrapped up, she's going to probably have a couple of hundred thousand dollars or more for me, and at that time, I'm pretty sure she's going to have to pay off the bankruptcy, and that's fine, but then there's going to be some left over, and I kind of would like to know how to direct her what to do with it. She's on Social Security and Disability and receives a pension. Okay, very good.

Well, thanks for that background. Bill, I am not an attorney, so this would be a great question to ask her bankruptcy attorney, but what I will say is just in general, my understanding is that, of course, IRAs typically are exempt from bankruptcy, but that does not translate to inherited IRAs. They do not qualify for the same protection, which means they would be available to be attached by the court for repayment of the bankruptcy, and then separate from that, I would say, is just kind of the biblical perspective that just says, regardless of what the court is going to require or not require, what is my responsibility? Even though I was using the legal protection of the bankruptcy, the Bible is very clear, the wicked borrows and does not repay, and so I think there should be, whether it's a Chapter 7, Chapter 13, the reason you got into the bankruptcy in the first place, a desire to repay as agreed, perhaps a negotiated repayment that's lower, or some other agreed-upon repayment, but I think that should be our goal as God's people.

But I think to answer your question, number one, check with your attorney, but just in general, I would agree with you that my understanding is the same as yours, that inherited IRAs do not qualify for that protection. Now, to the second part of your question, you said, okay, let's say she fully satisfies and repays out of the proceeds of what she receives from the inheritance, but she has something left over. Where do I go with that?

Let's start there. So let's say the bankruptcy is taken care of. At that point, what would she have in the way of assets and liabilities?

I would say at least $300,000, and there may be more. Okay, so that would be the remainder of the inheritance that she's receiving, about $300,000, right? Yeah, after the bankruptcy is paid off, yes.

Okay, and would there be any other debt that was outside of the bankruptcy that she has? Just her mortgage, her home mortgage, and she had asked whether I thought it was a good idea to pay it off, and I actually kind of do think it is a good idea. Well, after you all get married, where are you going to live? Well, I have a house and she has a house, so more than likely we'll be selling a house.

Okay, but you're not sure which one yet? I'd probably be selling hers because mine is larger, so probably hers, and I would definitely want the bankruptcy paid off before I did anything like that. Yeah, and then are you all planning to join your finances from that point forward?

Yes. Okay, good. Well, I think the good news is you can get the bankruptcy satisfied, you get her home sold at the right time, you've got the proceeds after the mortgage is paid, and now you're kind of starting with a blank slate. I think starting with some premarital counseling, starting with understanding each of your money backgrounds and how you bring that to the marriage, and then how together as one flesh you move forward, setting God-given goals for lifestyle, for accumulation, for the retirement season of life, for your giving, and then order your finances in such a way that matches up with that because money is a tool to accomplish those purposes. I'd also connect with a certified kingdom advisor at, but hopefully that gives you some thoughts there, Bill. We'll be right back. This is Faith and Finance Live. I'm Rob West.

Our goal here on this program, well, that you would see God as your ultimate treasure and money, a good gift from God, a tool to accomplish God's purposes. We're taking your calls and questions today, 800-525-7000. All right, I shared in the last segment that I was the guest on a podcast today, a good friend of mine, John Putnam. His podcast is called Money Made Simple, and at the end he asked me three questions. The first was, what comes most naturally to you when it comes to money? And I was sharing about my temperament and what that means for me personally in terms of managing money. The second question was, what has been the most challenging about money?

And this really goes back to just the call that I had a moment ago with Bill. You know, what was most challenging for me is Julie and I came to the marriage relationship with completely different money backgrounds. So she grew up in a single family home. Money was really tight. Her mom made it very clear from the early on.

And she's a wonderful, godly, amazing woman that I have the utmost respect for. But she made it clear, if you're going to go to college, you're going to have to figure out how to pay for it. And that was just the reality of the situation.

For me, money was a little bit more plentiful. And, you know, my parents versus her mom modeled different things about how to handle money and generosity. And then you've got us being wired so different. You know, she's wired completely different, differently with a temperament than I am. So she holds money more tightly.

I hold it more loosely. It's not that one's good or bad. They're just different. And so we had to appreciate those different backgrounds from growing up, but also how we were wired and then bring that into our marriage and figure out what does that mean for how we're going to manage money together and set goals and make decisions. And that's not easy. And it wasn't easy. And it often is still not easy. And yet we figure it out and we've got a plan and we operate on a budget. And even though that's not part of my personality, we do it and it works.

And so, you know, I think that's what was most challenging for me. And I find it's often really challenging for others is, first of all, we don't do the hard work to say, what do we need to understand about each other that can help us appreciate one another and make decisions together in light of what we know about our spouse? And then how do we get on the same page and stay on the same page? That requires a lot of communication. Hey, I'll get to that third question he asked me in the next segment, but let's head back to the phones.

Dallas, Texas is where we're headed next. Meg, thanks for your patience. Go ahead. Hi, Rob.

Thank you so much for taking this call. I am 67, a single woman. My full retirement age was last October. I have not taken social security, but I have recently applied for it. It's not finished, but I have a nephew who's vehemently against.

I want to tell you my thinking because he loves me and he wants to do what's best. But I am planning to continue to work as long as I can. I'm not, you know, I have a decent income.

I'm not hurting for money. I have a mortgage that I took at age 65, which was unusual, but I've been able to pay down quite a bit. I still owe 87,000 approximately on that mortgage. So my thinking was to take my social security. Now I'm going to get six months retroactive back to October.

So I'll have a little chunk of money there. I would take that minus taxes, put it right on the principle of my mortgage, and then every month take my social security payment and put it right on my principle. And I did the calculators on the mortgage calculators and I think I could have my house paid off in two years instead of when I'm 95. But my nephew still thinks I would be smarter to wait until I'm 70.

And I don't understand completely why because the money difference per month and my social security income on the statement is $700 a month between what I would be getting now and what I would be getting at age 70. Yeah, yeah. All right. What is the interest rate on the mortgage?

5.75. All right. And you said how quickly would you have it paid off if you start taking social security and apply 100% of it to the mortgage principle? Two years.

I was shocked, but that's what the mortgage calculator said. All right. And if you don't and you just keep on your current track, are you adding anything else to it? Yeah, I am making extra payments as I can. Okay. So if you just continue doing only what you're doing without adding the social security, do you have a sense of how long it'll take?

No, I didn't really figure that in. Well, here's why I think he's saying that. I mean, you said the difference is $700 a month. I mean, that's $8,400 a year that you'd get for the rest of your life by waiting until age 70. And you don't need the money because you're continuing to work and you're planning to continue to work until at least age 70 based on everything you know today. Is that right?

Yes. So the question is, should I take the guaranteed increase of 8% a year, assuming you live long enough to get repaid for everything you're giving up between full retirement age and age 70, which is probably going to take about 12 years. So if the Lord tarries, if he doesn't, it doesn't matter. If the Lord tarries and you live to at least age 82, then you're going to get repaid for everything you gave up between 67 and 70 in the form of a higher check by you said $700 a month. And then from 82 forward, as long as the Lord would have you be here, you're going to have an extra $8,400 a year in your check.

And so, I mean, that's a big deal. I mean, especially if you need long-term care down the road and it's expensive or, you know, you have something that causes you to need more income. It'd be one thing if you said, I'm struggling to pay my bills right now, but I'm not hearing that because you're continuing to work.

This would just be surplus. And so even though every principal payment you make is a principal, you're no longer paying five, roughly 5% interest on, but you're also gaining 8% every year on that, you know, payment, that social security check. And so I think the benefit, the future benefit of having an extra $8,400 a year for the rest of your life by waiting, you know, supersedes the benefit you're getting right now of paying off that mortgage a few years earlier by getting a check from social security that you don't really need that you're going to apply to the principal. So I think that's what you need to consider. Now, if you have prayed about it and you feel like the Lord has just convicted you that, Meg, you need to get out of debt as soon as possible and that's a conviction, then I'd say go for it and don't look back. But if you're comfortable hanging onto this mortgage a little bit longer and you see the value of having that extra $8,400 a year for the rest of your life starting at age 70, then that's where I think that does have some merit.

Okay. I thought perhaps the interest that I would save on my house, you know, having it paid off that much factor would kind of be a wash for that extra $84,000. But you're saying and he's saying, no, it really wouldn't. It wouldn't if you play depending on how long you live. So if you lived age 95, you're going to get a lot more money by waiting and paying it off once, you know, three years from now when you get your higher check, which you could pay off much quicker because now instead of whatever you were going to get, you're going to get that plus $700 a month.

So come age 70, you could attack that mortgage and maybe get it paid off in 12 months. Okay. I got this.

I hate to say it, but my nephew was right. Hey, tell him I said great job and he needs to call me sometime. Maybe he can fill in next time I'm taking a break or something. Hey, God bless you, Meg. Thanks for being on the program today. This is Faith in Finance Live. I'm Rob West.

We're going to take a quick break when we come back. More of your questions and that third question that John Putnam asked me, I'll tell you what it was. Here's what it was. He says, what's the best money advice you've ever received? I'll share it right around the corner. Stick around. This is Faith in Finance Live. I'm Rob West.

All right. The best money advice I've ever received. Well, I've had some incredible money mentors in my life. I remember when Larry Burkett said, the way you handle money is the clearest indicator into what's going on in your life spiritually.

That's a big deal. You know, you can tell as a barometer into your spiritual life the way you're relating to the Lord, I think, so often by how you're handling his money. Do you trust him or you say you trust him? Does the story your money management is telling actually reflect what's most important to you? Are you treasuring the things of this world or are you treasuring God? All of that is apparent in the way you handle money. Howard Dayton told me God owns it all, and that's a game changer because now all of a sudden your role changes and you're then a money manager of the King of Kings, which has implications for every spending decision. You know, that's a key idea. Ron Blue said, spend less than urine and do it for a whole long time. And you know, that's a big idea as well.

You know, when you it's harder to do than it is to say, but when you spend less than you earn, that's the key to every financial success. So we try to take some of those nuggets of wisdom and bring them to you always in light of a biblical worldview on this program each day, and I hope it's an encouragement to you along the way. All right, let's head back to the phones.

Crown Point, Indiana, Beatrice, thank you for calling. Go right ahead. Thank you for taking my call.

I have a question. I own a condo that's free and clear, and I want to invest in investment property, but I've been told by two different bankers where they're both trying to get me to take equity out my time to either do an e-lock and along with a loan, and it's not making sense to me. And they're also telling me I can't keep my condo if I'm purchasing investment property. So it's not making sense to me that they want me to take equity out and do a loan. Wouldn't it be best if I just did an FHA or a conventional loan?

Yeah, yeah. So talk to me about the investment property. How much are you looking to spend on that?

Approximately $140,000 max. Okay, and do you have some money? I know you have equity in your condo that you own free and clear, but do you have some money to put down on that property in cash? I do have some money to put down, but the property I'm looking at is actually cheaper than what they said I qualify for.

And the one I'm looking at is actually on the 105. That's what they said I qualify for, $140,000. Okay, I missed that.

You broke up a little bit. Say that again. They said I qualify for $140,000, but the property I'm looking at is only $105,000. So I'm looking at a lot lower than what they told me I qualified for.

Okay, very good. So you're looking at buying a property, an investment property that you would purchase for $105,000. How much do you have to put down on that in cash? $5,000 to $6,000. I'm doing 5%.

Okay. Yeah, I mean, that would not be my preference. And that's perhaps why they're asking to take the home equity loan, but I wouldn't do that. Because, you know, normally, I mean, even though you can get away with putting down 5%, you're going to have private mortgage insurance, which is an extra expense, probably about 1% of the mortgage. And, you know, you're just going to have a much bigger mortgage. And because it's, you know, rates are already high, but because this is a not your primary residence, they're going to be even higher. So let's say you're getting a mortgage at 8%, and you got it 95% loan to value, because you're only putting down 5%, it's going to make it difficult to cash flow this property, just based on the rent. And what if we get into a recession, and it's harder for you to come by a renter, because, you know, maybe the recession is a little deeper than we expected. So, you know, I would really rather you wait at a minimum until you had 20%, which is going to be 28,000.

Now, you might say, Well, Rob, I'm going to miss it. Well, I would rather you miss out on an investment opportunity, then you get overextended and find yourself where you can't make the mortgage payment on the property because you can't get a tenant in there and you got a big mortgage. And let's say the housing market dips slightly, you could even be upside down, where after expenses, you're selling it for less than you bought it for, if you had to get out of it, which is all the reasons why we want to put as much down as we can. I like 20% down on a primary residence, I like even more than that 30% plus on an investment property. So I would probably hold off on this and do two things. Number one, wait for interest rates to come down. And number two, continue to build up your savings so that you can put down, you know, 20% or more.

But how does that sound to you? They owe me a 6.6% interest rate. And then also suggested to what my rules were saying, I can live in the property for a year or two myself before even considering flipping it or renting it out. Because my thing is flipping. But she said, because I'm in Indiana, they'll allow you to live in a year and then flip it if you choose to flip.

Okay. But you still got the challenge that even regardless of how much they're willing to loan you, you're still going to add a pretty significant mortgage payment. Do you have the cash flow to support the mortgage payment? Oh, I have the cash flow. I'm literally debt-free other than a car note and $260 in my student loan. I don't have any other debt and I make about $67,000 a year. Okay, but why do you have only 5% to put down?

Where's that money been going? I can put down more. I didn't know if it would really make a difference in the mortgage. I can put down more than, yeah. Okay.

All right. And they're offering you that, Ray. I mean, rates are up at 7.1% right now. Are they quoting you this as it being your primary residence? Yes.

They said if I should take that out, I should live in there for that one year and consider that my primary residence. Yeah. Yeah.

So I didn't realize you were moving in. Okay. Well, I mean, I think the bottom line is, yeah. I mean, you got to go back to your budget, right?

I agree with you. I'd rather you not get the home equity loan on top of the conventional mortgage. So I would just get the conventional mortgage on the new property alone.

I'd put down as much as you can personally. I'd check your budget. It sounds like because you're living modestly and you're debt-free, you could support the payment. But I'd double check that and make sure that you're not relying on a renter. It sounds like you're not because you're going to live in it. But just make sure you're playing out kind of the worst case scenario.

And what if we get into a deeper recession here? But other than that, I think you're right on track. And I would agree, I would not get the HELOC. So if we can help you further, don't hesitate to call Beatrice. But all the best to you in this new endeavor. Let's head to Chad a new guy. Tracy, go ahead. Hey, how are you? I'm great. Thanks for calling. Listen, I don't know if you got my question or not. So I'll repeat it to you.

Okay. I used to work at a hospital, and I have a 401k there. And I've been unemployed now for about 90 days. So I really could use maybe 1000 to 2000 of those dollars. They told me that if I cash the 401k out, then I'll pay 35 maybe even 40% in taxes. If I roll it over to another IRA, then I will only pay taxes on what I borrow from it. Is that true? All I need I want to borrow from it because they told me I could.

So tell me what's the best thing for me to do? Well, I don't like borrowing from it. And typically, once you're separated from the money, you can't borrow it from it anymore. So if it's a previous employer's 401k, you're typically not allowed to borrow from it. So you'd have to take a withdrawal, which would be taxable. Let me ask you, though, what is your age, Tracy?

55. Okay, so under the rule of 55, if you separate from your employer, because you leave the company or you're, you know, you're relieved of your duty, then you can pull the money out of the 401k without a penalty. So it would still be taxable on your income taxes, but you wouldn't have a 10% penalty on top of it, which means you shouldn't be paying anywhere from 38 to 40%. I mean, the tax brackets today are, you know, 10, 12, 22, 24, I mean, all the way up to $200,000 in income, you're paying 24%. So, you know, not anywhere near 30 plus. And especially given, you know, unless you're making $200,000 plus, and then maybe, but, you know, and that would be if you're filing single.

Other than that, you're going to be in the 22 to 24% range, probably. And because of the rule of 55, you wouldn't have any penalty on top of it. Okay, so then if I need the money, I don't need it all. If I just cash it out, then I can put what I don't need into an IRA. Is that right? Or no, I could actually do a Roth IRA if they go ahead and tax me on it.

Is that correct? Well, no, see, I wouldn't take anything out and try to pull as little as you can. And I understand you're in a desperate situation because you're without a job. But I wouldn't look at this as a source of savings, unless you have to. Because the goal here, Tracy, as you know, is let's keep this inside the tax-deferred environment, let it keep growing so that down the road when you're no longer working, it's there to supplement Social Security.

But if you have to get it, you have no other alternatives, I wouldn't want you putting your expenses on a credit card while you're looking for a job. So in that case, you might want to pull a little bit, but I wouldn't pull any more than you absolutely need. And you wouldn't want to pull it out just to turn around and put it in a Roth IRA. You know, what I would do is roll it to a traditional IRA, all of it, that's not a taxable event. And then you could invest it there.

But I, you know, in terms of what you'd pull out of it, I would only pull it, you know, absolutely what's essential. So your suggestion would be before I touch it at all, roll it from the old company to a regular IRA. And then if it became necessary, and I needed it, then I can pull it from that regular IRA? Yes, that is correct.

Okay, well, I know I need it, but I'm not in dire need at this point. So okay, well, here's the thing, the only caveat to that is this, the rule of 55 only applies to 401ks. And so if you want to avoid that 10% penalty, you actually don't want to roll it out, you want to leave it in the 401k. And that way, you wouldn't have the 10% penalty, you would only have the taxable income on the amount you take out. Does that make sense?

Oh, yes, yes. Okay, whatever's left, I can roll it over to the 401k. That's right. That's right. Because if you roll it to the IRA, you're gonna have a penalty until you get to 59 and a half in the 401k.

Because you've left your employer, you get the rule of 55, which means no penalty, you just add it to your taxable income. And then once you no longer need anything, roll it out to the IRA. Thanks for your call, Tracy. That's going to do it for us today, folks. Faith and Finance Live is a partnership between Moody Radio and Faith Buy. Thanks to my team today, Tahira, Amy, Laura, and Jim. Have a
Whisper: medium.en / 2024-04-26 18:27:09 / 2024-04-26 18:44:28 / 17

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