Poverty: More Than a Lack of Resources

The dictionary defines poverty as having little or no money or possessions, and no means of getting them. Hi, I'm Rob West.

That definition of poverty is certainly true as far as it goes, but there is more to poverty than a lack of resources. Brian Fickert certainly thinks so, and he joins us today to talk about it, that 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 journey. Well, our guest today is Brian Fickert, Professor of Economics and Community Development and the founder and president of the Chalmers Center for Economic Development at Covenant College in Lookout Mountain, Georgia. Brian is also the co-author of the bestselling book When Helping Hurts, How to Alleviate Poverty Without Hurting the Poor and Yourself. Brian, really great to have you back with us.

So wonderful to be with you again today. Brian, in your book, you write about how the Allied powers established the World Bank to rebuild a shattered Europe after World War II. How can that lesson inform us about treating poverty today?

Yeah, it's a great example. You know, the World Bank pumped money into Europe after World War II and was able to help with Europe rebuild very quickly. And then the World Bank said, you know what, let's try the same thing in the majority world of Africa, Asia and Latin America and pumped in a lot of money and the results weren't as good as they had been when they pumped money into Europe. And the issue is that the underlying conditions were different. On the surface, things look the same, you know, a lack of infrastructure, devastated economies and so on, but the underlying conditions were very different. And the same is true when we work with individual people who are poor. I think we can all sense there's something different between a person who's homeless on a street corner in an American city and perhaps a person who is poor as a result of a tsunami that's devastated their country. Both parties are lacking adequate food, clothing and shelter, but the underlying conditions are different. We've got to do is ask what's going on underneath and stop focusing on the symptoms of a lack of clothing, a lack of food or lack of housing.

Yeah. So what are some of those distinctions that can really help us determine the best way to provide assistance? It's really difficult. It takes a lot of discernment. But one of the things we should ask ourselves is why is this person in this situation?

What's going on underneath? And you know, the World Bank did that number of years ago. They actually went around the world and asked tens of thousands of people who were materially poor. What does poverty look like to you?

And they were shocked to find out that the answers were things like this. I feel less than human. I feel shame. I lack dignity. I don't feel like I'm really part of the team. I feel like I'm ignored by society.

I feel like I have no voice, no agency. And so what the World Bank realized was that we tend as Westerners to think of poverty in material terms, a lack of some material thing. And certainly it is that. But the poor experience poverty in far more social, psychological, and even spiritual ways that have to do with their sense of who they are, their relationship to the larger world and their sense of ability to impact the world around them. It's a different set of issues. Well, Brian, that's helpful and really heartbreaking at the same time. So what then is poverty and why are definitions so important?

Let's start off with the second question. Why are definitions so important? You know, when you go to the doctor, the first thing the doctor does is try to diagnose what's wrong with you. If the doctor misdiagnoses what's wrong with you, he can give you the wrong treatment and you might get worse instead of better. Or what if the doctor focuses on symptoms rather than underlying causes? That can actually really kill you. Imagine going to the doctor and say, I've got a headache.

The doctor gives you a couple of aspirin and the headache goes away. But what if you actually had a brain tumor? So treating the symptoms rather than the underlying causes can actually kill you. So we've got to get the diagnosis correct. The same is true when we work with people who are poor. We've got to get the correct diagnosis and we have to stop treating symptoms rather than underlying causes. So getting the answer to the question, what is poverty is absolutely fundamental.

Well, there's no question that it is. And just around the corner, we'll get that definition of what is poverty. We'll also talk about how you can help. We know that you want to do more to help those in need to care for the poor.

That's clearly on the heart of God in scripture. How can we do that in a way that's life giving and actually solves the underlying issues and not the symptoms? We're joined today by Brian Fickert. He's professor of economics and community development and the founder and president of the Chalmers Center at Covenant College in Lookout Mountain, Georgia.

We're talking about alleviating poverty without hurting the poor. And we'll continue that just around the corner. Stick around. So grateful to have you with us today on Faith and Finance Live. My guest today is Brian Fickert. He's professor of economics and community development and the founder and president of the Chalmers Center for Economic Development at Covenant College.

You may know him for his best selling book, When Helping Hurts, how to alleviate poverty without hurting the poor and yourself. Brian, before the break, we were talking about not treating the symptoms when we're helping those in a desperate situation, but really addressing the whole person, the underlying issues and the importance of that. Brian, you finished by saying it's important that we understand, at least through the lens of scripture, what is poverty? So define that for us in light of God's word. Thanks so much for that question.

It's really important. What we try to do in our work is go back to the biblical story, starting with Genesis chapter one, because understanding what the human being actually is, what the human being is created to be, is really the issue. And we think that what the Bible teaches is that human beings aren't just physical creatures who just need more physical things. Rather, we're a highly integrated creature that is a body and a soul and a relational creature. God is inherently a relational being, and he's wired us in his image. And so we're hardwired for relationships with God, with ourselves, with others, and with the rest of creation. And of course, the fall happens, which distorts all of those relationships and distorts our bodies and our souls. And so when we are working with a person who is materially poor, we should ask ourselves, what's going on here? Is it primarily a physical condition? Because there could be health issues. Is it a spiritual condition?

Is it a relational condition? Because materially poor people, just like all of us, are suffering from the effects of the fall on our bodies, our souls and our relationships. Yeah, that's so helpful. Now, clearly God's Word directs us to care for the poor.

So let's get really practical, Brian. How can Christians do that more effectively than by just sending money or material things? Yeah. So you can't solve what are typically relational problems with money. You imagine your child comes home from junior high and says, you know, I got beat up on the playground today and you open your wallet and hand them $10. That's not going to solve the problem.

Okay. So what we have to do is walk with people who are materially poor in highly relational ways that help them to rediscover the relationship with self, dignity, relationship with others, community, relationship with creation, being stewards over creation, having the ability to unfold and impact the created order through work. And ultimately all of us has to be rooted in a deep relationship with the triune God. And so it's a relational approach.

It's walking with people across time. I don't want our audience to hear that they should stop giving money. In fact, my suggestion is that you write far bigger checks than you've ever written before, but write them to organizations that are working with poor people in highly relational ways that help them rediscover who they are as image bearers of God almighty. Some organizations do that well, and some don't. Hmm.

Well, that's so helpful. Now, clearly there's a spontaneous element to this often where we feel the prick of the Holy Spirit. We see somebody in need. We want to help. The most tangible way we can think of is just to hand them some money. And we of course don't know what the underlying root issues are related to that person we see that might be homeless or otherwise.

So how would you help us think about that? Yeah, typically pray hard. You know, the most difficult situation is when we are approached by a person who is homeless on a street corner. That's quite frankly the hardest situation because there seems to be an immediate need and they're expressing an immediate need and we don't really know what's going on. And so what I typically do is just pray for discernment. That doesn't always get me the answer I need.

If a person is able-bodied, they look like they're able-bodied and they're not in a crisis, I will typically refer them to an organization in my city that I know does good work and so you have to kind of do your homework ahead of time. Once in a while, if it's super cold out and I think the person might really be destitute, I will then give money. And I know it's not going to solve all the problems, but it'll buy time. You know, buy time until the next day. And so it depends on quite frankly what's happening in the environment. What's happening is cold.

Just by assessment, does the person look able-bodied or not? Those kinds of things. Sure. How can we actually do harm inadvertently?

Yeah. So often, you know, I mentioned at the beginning of our dialogue here that one of the primary features of material poverty is a sense of shame, a loss of dignity, a sense of incapacity. And so when we rush in with lots of resources and we take over in situations, it actually exacerbates the very problem that poor people are already experiencing, that they're less than human, that they can't do anything, that they need outsiders to fix them. This is particularly problematic in the majority world of Africa, Asia, and Latin America, where the worldview that people are coming out of is a worldview of traditional religion, which says that human beings aren't actually in charge of the created order, demonic forces are. And so when we rush in with lots of outside resources and power and instructions, we actually can add to the problem in the very process of trying to help people. And so we need to use far more empowering approaches. If we're working internationally, quite frankly, it's very difficult for us as Americans who are not there to be able to do this in relational and empowering ways. And so what we want to do really is find local organizations that are doing good work and support them. They're the front lines of ministry, not us. So support them. Be willing to take a backstage role. If you want to go on a short-term trip, that's great, but go to encourage those who are there over the long haul not to put yourself on center stage.

That's really helpful. It strikes me it's all about intentionality. You've got to do the legwork to find the organizations, to find somebody in your backyard who's doing great work in the name of Jesus, to have that coat on hand in your car that you could hand off or go get one and come back.

I mean, these are things that take time, and yet I think clearly it's on the heart of God. And so it's a worthwhile endeavor. Brian, before we wrap up today, I know you all are doing some incredible work there through the Chalmers Center for Economic Development, and you have resources for those who want to be able to help in this area. Explain a bit about what's available.

Yeah. The Chalmers Center is trying to help God's people to adopt a more biblical paradigm for poverty alleviation and to engage in more effective practices towards that end. And so if you go to our website, you'll see a host of resources there. We've got books. We've got online courses. We've got live training events. Regardless of whether you're trying to help people who are materially poor in the United States or around the world, you'll find quite a few resources there to help you.

Very good. And if somebody wanted to get their church connected and perhaps offer as a part of a benevolence ministry, you have resources for that as well? We do. We have actually a book called Helping Without Hurting and Church Benevolence, and of course an online course by the same name. And so we've got people all over the country walking together through a training process in which they learn more effective strategies for helping that person who walks in off the street asking for help with his or her electric vehicle. That's the situation everybody faces.

And what you do in that moment really flows out of your answer to the question, what is poverty? Wow. That's so helpful. Again, that website, Brian?

Chalmers, C-H-A-L-M-E-R-S dot O-R-G, Chalmers.org. Very good. Brian, so appreciate your time with us today. We'll have to have you back real soon. Thanks so much, brothers.

All right. That's Brian Fickert, co-author of When Helping Hurts, How Do You Alleviate Poverty Without Hurting the Poor and Yourself? A quick break and then back with your questions. 800-525-7000. And if you prefer not to call, keep in mind, you can always send us an email at AskRobatFaithFi.com.

That's AskRobatFaith, the letters F-I dot com. I'm Rob West, and this is Faith and Finance Live, biblical wisdom for your financial decisions. We'll be right back after this break. 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. Hey, great to have you with us today on Faith and Finance. We're so thrilled that you've joined us today. We've got lines open. We're ready to take your calls today. 800-525-7000. That's 800-525-7000. You can call right now. Always fun to have Brian Fickert, our good friend on the broadcast today. By the way, again, if you need that website to learn more about how you can help the poor deal with perhaps financial issues or beyond that, understanding how to serve the whole person and even connecting your church to great resources and training for their benevolence ministry, just head to Chalmers.org.

That's Chalmers.org. Before we head to the phones today, some interesting info in the news today. Americans can't stop apparently spaving. That's right. This is essentially spending more to save more, also known as spaving.

That's exactly right. It's a common pitfall. The opportunities for so-called spaving are nearly everywhere, whether it's the lure of a limited time deal or a buy one, get one free or tacking on additional items to get to bigger discount or simply to reach the free shipping threshold. But spending to save can actually lead to excessive buying habits and high interest credit card debt if you aren't careful. By nearly every measure, Americans are financially strained, yet even as inflation and high interest rates squeeze budgets, consumers continue to fall for these financial traps.

So what do you do about this so-called spaving that is spending to save more? Well, here's a couple of ideas. Create some shopping hurdles.

If you're shopping online, delete stored payment details. That can create a purchase hurdle that forces you to think through your buying decision so it's not just the instant click of a button. Set some time rules. When in doubt, sleep on it. Give yourself 24 hours to think through a purchase before you hit that buy button.

Chances are you will have moved on. Do the math. For some, buy more, save more deals. The percent discount is often the same, but disguised as a greater value. For instance, getting $20 off $100 is no better than $10 off 50.

So don't let this fool you into buying more. And then finally, pay with cash. Buying big ticket purchases in cash can also help to avoid impulse spending. You're less likely to part with your hard earned dollars on something you didn't plan to buy or don't really need when you're handling handing over actual bills. In fact, the studies say you'll spend 30% less if you spend with actual cash. So something to keep in mind. Maybe a new term for you. Spaving. Just keep on your keep on the lookout for them luring you in to save more by spending more.

It doesn't always work out in your favor. All right, we've got some lines open today. We're ready to take your phone calls. 800-525-7000 you can call right now. Let's dive in. We're going to begin in Missouri.

Hi, Steve. Go ahead, sir. Okay, I cashed out $16,000 in stocks that I have for the purpose of giving $50,000 into our church building fund in the balance of that 50,000 is going to come from our savings account. So will I have any tax liability for cashing out the stock that I should be aware of?

You certainly could. What type of account did it come out of? What is it from a taxable account? Or was it a retirement account? No, it was well, I got a disbursement every year from from the stock before I cashed it out. And they gave me the option of cashing it out.

So it's not a retirement stock as such. No. Okay. So eventually, so you've already been taxed on this as a part of your compensation. Is that right?

No, I don't think I have been no. Okay. So you just need to understand the implications of that. So typically, you know, if it's a part, so would it be like a stock purchase plan? Is that right? Or was this just a part of your compensation as they gave you shares of the company? That's right, the latter. That's right.

Okay. And so did these vest over a period of time? When did they become available to you?

I mean, they will probably became available 30 years ago. So I was fully vested back when I worked at the at the former employer. Okay, so what you're probably going to have is capital gains that you will have to pay on this, you're going to want to check with your CPA just to see, depending upon how this was structured, you know, when you receive these stock awards, they're typically taxed on their value as of the vest date.

That's the date they became available to you. And then they're treated as income and you pay tax on them. And then from that point forward, if you don't liquidate them, you then can incur a capital gain.

And that is only based on the sale. So what we would have to do is your CPA would help you establish the cost basis, which was the value when you received it, or when it became taxable to you if it was a stock option that was vested. And then any gain from that point forward is a capital gain. And that's going to be based on the amount of taxable income you have in the year of the sale will determine whether you pay zero, 15% or 20% on the appreciation, the difference between what you sold it for and what you bought it for or received it at.

So there's a couple of kind of hoops to jump through here. And then with regard to you being efficient in this gift, I think given that you're going to be giving a large gift in one year, there's a good likelihood that you're going to, you know, be able to go over well, certainly with a $50,000 gift, you will, you'll go over the standard deduction, which means you'll be able to itemize your taxes and claim this charitable contribution to a not for profit. In this case, it's I think you said it was your church, and then take a tax deduction against that. So the first question is, talk to your CPA about the taxation related to the shares of stock, have you already recognized them as income previously? And then do you now have to recognize a capital gain? And then secondly, make sure you get the deduction for the amount that you are giving. In the future, what I'd rather you do is send the gift of the stock to the church before you sell it, let them sell the stock, you get the full tax deduction for the full amount, and you miss the capital gain.

But you have to give it before you sell it in order to do that. I've got to take a break, stay on the line. We'll talk a bit more off the air, Steve. We'll be right back. Let's have you with us today on Faith and Finance Live.

I'm Rob Last. We're taking your calls and questions today. We've got some lines open. So if you have questions, we'll try to find you an answer.

We'll promise to do it in a way that's encouraging to you, but also in light of biblical wisdom. Call right now, 800-525-7000. That's 800-525-7000.

Let's go to Nashville. Hi, Lori. Thanks for calling. Go ahead.

Hi, Rob. To diversify my portfolio, is there an insurance stock fund? Hmm. Yeah. And then the second question, second question would be, what do you think about fixed index annuity? But I really am interested about the insurance stock fund if one exists. Yes.

So let me just make sure I'm understanding. So you want a mutual fund or exchange traded fund that primarily invests in companies within the insurance industry as opposed to an insurance product that just has investments in it. You specifically want to invest in the industry of insurance.

Yes, sir. Yeah, there absolutely are. So again, these would be both in the form of mutual funds, which the only difference between a mutual fund and exchange traded fund is they're both a basket of investments. So they can allow you to be, you know, to pick a certain sector or segment of the stock market or a specific asset class and invest just in that.

But do it in a diversified way so you're not having to pick all the individual companies. You just invest in the fund itself. Now, mutual funds just trade a little differently. You get the price of at the end of the day called the net asset value.

And you can only buy it after hours. You can place your trade during the day, but you'll get the end of the day's net asset value. Whereas an exchange traded fund is similar in that it's a basket of investments, but it trades like a stock. So you can buy and sell it at any point during the trading day. But in your case, you would be looking for those that specifically invest in companies within the insurance industry. So this would include various types of insurers like property and casualty, life insurance, health insurance could be also brokers and service providers. And so you would be getting exposure to the insurance sector. And you would do that because you think this particular industry has potential for growth and stability. They also generate a lot of steady cash flow and tend to be fairly resilient during economic declines just because most people don't drop their insurance because they need it. They can, though, be affected by things like natural disasters or a large scale economic shift. So they do have some sensitivities just like any sector does.

But yes, the short answer is you absolutely can find those. And you would just want to do a search probably at one of the big exchange traded funds platforms like iShares or one of those. Okay. And then now what is your what are your general thoughts about a fixed index annuity?

Yeah. You know, I'm not a big fan of a fixed in indexed annuities. Just, you know, it depends on, you know, what you're looking to accomplish.

So essentially, and let's just make sure we're talking apples to apples here. You know, this is where you are looking for steady retirement income based on the performance of an underlying index. And so it could be any number of indexes.

So, for instance, take the most famous like the S&P 500. So unlike owning stocks, you are protected against most losses, but your total upside return is limited. And that's how they protect you on the downside by taking some of the upside. So once you annuitize this during your accumulation period, it's growing based on whatever the underlying index is. So that could be a generally a stock market index. And again, you get a portion of the upside with a floor on the downside. And then at some point, what typically happens is you would annuitize this, which would convert it to an income stream.

Who are these for? Well, they're for people who want to really protect the downside. And so it's very common for that floor to be a 0% where at the worst case, you would break even, but you'd never lose money. And if that's really important to you for this part of your investment portfolio, then this could be an option. But you do have to take with that the minimum return because they might pay a small guaranteed interest rate or return no matter how the market performs. But again, you're not going to get the full upside. There are quite a bit of fees.

So you know, those are going to weigh on your performance for sure. And there's a cap on the return. So they're going to set a limit on the amount of returns you can receive on the upside. So for instance, and this is not every fixed index annuity, but one example would be they might say, no matter how high the index goes, you can only get at best 5% on your money, even if the index is up 15% or 20% or more.

So I think that's the downside. So my preference is to assume that risk and then build a properly diversified portfolio, take the full upside. But yes, with that, you take the downside, but you mitigate against that risk by having a properly diversified portfolio. And as you age, you'd move more toward fixed income type investments like bonds and CDs and, you know, corporate and government bonds, things like that.

But if you feel like you could get more peace of mind by having a guarantee from an insurance company, and you're willing to lose access to your capital in part, and you're willing to take the limited upside in exchange for that downside protection, then that's where this could be an effective tool for you. Does that make sense? It does.

It does. So thank you so much. And I'll check the iShares platform for the insurance stock fund. Yeah, that's one of the big ones. You know, if you're looking for other ETF companies, you probably want to look in addition to iShares, you could look at Invesco, you could look at State Street, and then perhaps Vanguard would be the other one. You could also check Charles Schwab. I like Schwab a lot.

Any of those will likely have an insurance sector ETF. Hey, thanks for your call today, Lori. We appreciate you being on the program. We've got lines open 800-525-7000.

Let's go to Montana. Hi, Jerry. Go ahead. Well, hi. Thank you for taking my call, Rob. I enjoy listening to your program quite often. And I would like to ask you a question that I haven't heard before, but this is my particular issue.

I have a balance due at the hospital, and I have been trying to whittle that down $100 a month. And when I get my statement, I get the same balance that I had the last statement, and I don't have them show any credits that I have put on that account. So I have put two different calls into them. They said, well, we'll call you back within three days. I never get the call. So I put in another call and say, I really would like to know if you can show me where my payments are being reflected. And then my other thought was, well, why don't I call the office of the administrator? It's a corporation. Why don't I call them and say, hey, how come I can't get any response when I'm trying to whittle down my bill?

Yes. Well, I'm so sorry to hear that you're going through this, Jerry, and you're doing all the things I would have said. First of all, you absolutely want to take an active role in resolving this payment discrepancy. You know, I would continue to call because I'd love for you to be able to do this electronically.

It's certainly more expedient. But as a second measure, perhaps you send copies through the mail with payment proofs to the hospital's billing department and ask that they either email you or through the mail, acknowledge the discrepancy and show you documentation that your payments have been applied because this proactive step is going to take that step toward getting this resolved. It could be that they're being misapplied to a different patient's account or not processed due to errors in entering the information.

Although the fact that it's happening over and over again tells me that it's something bigger going on here. But whether it's through the mail or over the phone, you just need to stay on it and continue to hound that billing department until you get an answer. I would have said as a next measure, and you've done this, let's go to the hospital's administration as a next step. I've got to take a break. Stay on the line. We'll talk a bit more off the air. We'll be right back.

Great to have you with us today on Faith and Finance Live. I'm Rob West. We're taking your calls and questions today, 800-525-7000. That's 800-525-7000. You can call right now. Let's go out to Montana and welcome Toby to the broadcast. Go right ahead.

Hi, thanks for taking my call. I have a recently sold a property and I'm going to, what I'd like to do is reinvest the money from the sale of that property into my business and possibly another investment property. My question is, how can I, what are my tax obligations going to be for the sale of that property?

Is there a way that I can put that into something like a 1031 or similar to best use that money for reinvestment and not be taxed on it as income? So that's really my question. Yeah, I appreciate that. So let me just clarify, Toby, this property in Montana that you sold, it was not your primary residence. Is that right? No, that's correct. I built it 10 years ago.

Okay, very good. And so have you been renting it out or what kind of, what have you been doing with it? No, I'm just using it.

It's a, it's a recreation property and with the cabin. And so we've just been using it. Yep. Okay.

Very good. And you said your, um, your gain on it was 225,000. Go over those numbers for me, if you will, just kind of your selling price and your original cost basis, plus the improvements you put into it. Yes. Um, so I, um, spent about $90,000 in total on the property and the building that's on there.

It's a cabin. Um, and I sold it for 250,000, uh, left the money to my real estate agent, which actually comes up to 235, not 225. Okay. All right.

Very good. And, uh, did you put a lot of money into it? Have you factored that in? Um, just that initial investment, uh, to buy the property and build the building.

So, um, it's, uh, other than my annual taxes, um, and, uh, general upkeep, um, I don't have a substantial amount of investment other than that initial investment. Okay. Got it. All right.

And, uh, yeah. So the question here is, and, and I would probably talk, uh, to, um, you know, a, uh, 10 31 exchange expert, because you're going to need to use someone that specializes in that anyway. What is your intention? Are you wanting to roll it into a, a similar property? Uh, and would that be a vacation home? Um, or would that be, you know, a rental property now?

Okay. So what I'd like to do is take a portion of that money and invest it into my business and then, um, have the remainder used, um, for a, an additional property, which I haven't determined what that will be yet, but, um, we're thinking about something that will generate income. So, um, a rental property would be okay. Something we'd be looking at. Yeah.

The challenge is that, you know, my understanding is that, uh, and I'd want to check with it. You'd want to check with the CPA on this. If the property was used exclusively as a vacation or a second home, it can't be sold as a part of a 10 31 exchange. Um, and so I think the key is this was not used, um, by you, uh, for, you know, the, I think the words are productive use in a trade or business or for investment.

And, uh, you know, a vacation home or a second home is neither held for a productive use in a trade or a business or for an investment. And so I think for that reason, uh, this is not going to qualify for a 10 31 exchange, which would mean that you would just then treat this as a longterm capital gain for whatever the appreciation, the gain was in the property. It sounds like you've already calculated that. And that would fall under the, uh, the longterm capital gains, uh, rates for 2024. Um, you know, if this is the year in which you sold it, um, and those rates right now depend upon, of course your taxable income for the year. Um, so for 2024, uh, if you're married filing jointly, if your income is between 94,051 dollars and 583,750 dollars, you'd be in the 15% capital gains rate below 94,051. You'd be at a 0% rate above 583,000. You'd be at 20%.

And that would be just on the gain in the property. Okay. Sounds good. All right. Very good. We appreciate your call today. Thanks for being on the program. Uh, let's see, we're going to go to a Shorewood, Illinois. Hi Eric.

How can I help? Hi Rob. Uh, just a quick question. I refinance my car and I'm paying an extra $115 over what was, uh, the amount.

And I call recently or I've been receiving statements and realize that my bill is not changing the extra $115 and not doing anything that doesn't seem right to me. Hmm. Okay. So you're paying the extra payments, but you're not seeing it reduce the principal balance. Is that right? Yes.

Okay. Uh, and so have you called your, uh, loan servicer to inquire about that? Yes, I called and they are basically saying, I finance for 72, 73 months. I've paid 32 more payments and I have 41 more payments to make.

And I'm like, that doesn't sound right. I should have less payments because I'm paying an extra $115. That should go towards the principal. Yeah. Do you have online access where you can log in and see kind of a running balance and the payments that are being applied to the account? Yes. And when I go in, I see that every time I pay the tech interest of the total amount I'm paying, right off the bar. Yes.

The amount, the extra amount I'm paying, they are taking interest out of it. Okay. Yeah.

Something's not right there. Um, because what should happen is as long as you're covering at least the monthly payment, the scheduled payment should cover the, cover the principal and interest based on the schedule. Um, and then anything you send above that, which you're sending something in excess of that, right?

That should go directly to principal. That's the argument I've been trying to make on the phone with one of the customer service people that they are telling me a story that it doesn't seem right. Yeah. And so they're basically taking, they're only applying a portion of the extra amount to the principal because they're taking interest off of, uh, even the amount you're sending above the monthly payment, correct? Exactly. I'm supposed to be paying the final, the loan for $385.

I'm paying $500 that you are taking interest out of the $500. Yeah. Yeah. And did they have a place online when you're, where you can make a payment where you can indicate a portion of it going to principal reduction separate from your monthly payment? I have to look into that.

But when I started, uh, that when I refinance, I talked to somebody and I actually told them that's what I wanted. Yes. Okay. Uh, yeah.

Yeah. What I would do, um, is, is two things. One is check to see, um, where online, if they have a place specifically for principal reduction, um, and because what happens is when you pay an auto loan, typically your monthly payment is first applied to any fees due if you have any late fees or anything like that. And then the next portion is applied to whatever interest is due, but they're required for anything beyond that for it to, to go against principle. So I would, um, probably ask for a manager or somebody to get on the line to say, here's what I'm trying to accomplish. I'm willing to pay the minimum payment for the month, but I need the extra amount I'm sending to go directly to principle.

I'm not prepaying the next month or anything like that. How do you want me to do it? Do I need to do it in two checks?

Is there a special way to do it online and see if you can get beyond just the person who picks up the phone to maybe a next level of management that could help you navigate what it is you're trying to accomplish. Thank you. I appreciate that. All right. Let us know how it turns out. Eric, God bless you, sir.

Uh, we're going to finish today in central Illinois. Hi, Carl. Go ahead. Yes. Uh, I want to thank you for the job you do.

It's a wonderful service. And, um, my question is I have a government pension from a police department and I was not married the day I retired. I am now married. So the day I pass my pension ends and because I have a government pension, my social security is cut in half from what it normally would be. So my question is, if I was to pass before my wife, would that social security go back up to the normal rate?

Uh, no, it wouldn't. And I would check with the social security because this gets pretty complicated, but basically you get spousal benefits if you're married to the, uh, you know, to the spouse for at least, uh, you know, one continuous year prior to applying for benefits. And then with the, the government pension offset, essentially my understanding is, uh, you know, your spouse would likely be eligible to receive benefits if you have that, that GPO, which you do, uh, you know, then the government pension offset reduces the social security benefits of spouses, widows and widowers, um, with pensions from a federal state or local government like you have where you didn't pay the social security and they would re it would be reduced by two thirds of the government pension offset amount.

So whatever that government pension was, uh, two thirds of that would be reduced by what would otherwise be eligible spousal benefits. Does that make sense? Yes. Okay.

Okay. That's typically the way it works. But again, I think that's never a replacement for you, you know, scheduling a visit with the social security administration, having them pull up your actual work record and giving you the specific numbers so you can build a budget around it because I think you're wise and thinking about, Hey, what is the income sort? What are those income sources going to be for my wife? If you and I pass away, like on average, we will before our wives do, we want to be able to build a budget around that.

And so having that information is a great starting point. Listen, all the best to you, Carl. Thanks for calling today.

Larry and Deborah. Let's see if we can get you scheduled for a future broadcast. I'm sorry we didn't get to you. Faith and finance lives partnership between movie radio and faith five. Big thanks to my team today. Dan, Amy Taylor and our call screener day. Amy, we'll see you tomorrow.