Responsible Savings

Statistics show that many people aren't saving for retirement. Others may have far more than enough. How do you find the right balance? I am Rob West.

Yes, it is possible to save too much for retirement, although many more folks aren't saving enough. What does Scripture tell us about responsible savings? Brian Holtz fills us in today, and then it's onto your calls at 800-525-7000.

That's 800-525-7000. This is Faith and Finance Live, biblical wisdom for your financial journey. Well, it's great to have Brian Holtz with us again. Brian is the Chief Executive Officer at Compass Financial Ministry, and we'll get into that name change in a minute. But Brian, first, welcome back. It's great to be back, Rob.

Thank you. So Brian, this is an intriguing topic because we're always warning folks about not saving and investing enough for retirement, but it's just as misguided to make that a priority above all others, isn't it? Yes, it is, and the Bible gives us clear direction and wise counsel in both cases, all of course with the goal of finishing well. We find God encouraging us to save in places like Proverbs 21, Proverbs 30, and Genesis 41, just to name a few. But like everything else, saving should be intentional, and it should always have the goal of being a good steward, like Joseph did in Genesis, rather than living a life of excess or becoming less dependent on God, like we hear about in The Foolish Man in Luke 12.

Yeah, no question about that. We encourage our listeners often to ask the question, how much is enough? And that includes both your lifestyle, but certainly your accumulation as well. So what are some ways then, Brian, to ensure we're saving responsibly? Well, first we need to discern what God is calling us to do. He gives us these financial resources for a purpose.

What is that purpose? And that guides us on where we should save. Next, we determine what the cost actually will be. And now a lot of this is estimating, but we can pretty well ballpark what it's going to cost to start a business or to retire well, or to pay for college. Then we do the work by saving a little bit at a time for a long period of time towards those specific things and those specific goals.

Yeah. And finally, when you've saved enough to fulfill God's purpose, we then turn to him and ask him where he would have us shift new financial resources rather than just saving more and more than we need. Yeah, that's really helpful. It's not about the mindless accumulation of wealth at all. I would also say, though, it seems like it's important then to know what you're saving for, isn't it?

It absolutely is. I recommend never having savings set aside that doesn't have an actual purpose. You know, if it's an emergency, call it an emergency savings.

If it's for kids or grandkids college, call it that. Or if God has just put it on your heart that someday he's got something big for you and you're going to need some money, call it God's big idea fund. But giving it a name helps you remember the purpose God has called that money to so you can remain faithful in your stewardship, not saving too little, but also not too much.

That's really helpful. What about retirement savings though, Brian? It's really no different, Rob. In your retirement savings, we simply want to figure out how much money we expect to need to care for ourselves and our spouse in a life with limited income and then faithfully work towards that goal. When we reach that goal, we shift additional resources to another one of God's priorities in our lives. And with so many unknowns in retirement, it's easy to assume we can never have enough, but over saving can have two big negative outcomes. First, it can lead us to adopt a lifestyle that's inconsistent with our values. We can all point our fingers at the celebrities who clearly have way too much money, but we tend to do the same thing, even if it's to a lesser degree. But if I've already determined how much I should save in order to do what God's called me to do in retirement, I'm far less likely to get off track in my spending decisions.

And second, and I think most importantly is a point Ron Blue makes often. When we over save, we miss the opportunity to financially participate in the work God is doing right now. While we keep this extra money in our personal accounts, earning five, 10, maybe even 15% a year, it's not being invested in God's work. And we know in our heads and our hearts that God will always outperform the market. We're better off investing as much as possible, as soon as possible, directly into the kingdom.

But we can't do that if it's sitting in our personal accounts. Boy, those are great reminders, Brian. Now you've undergone some changes over there at Compass. I want to finish by allowing you to bring us up to date. Yeah, we've recently done some rebranding to help better communicate who we are and how we serve. We are now Compass Financial Ministry, Well-versed in Finances, and you can find us at compassfinancialministry.org. I love it. Brian, thanks for stopping by, my friend. Always a pleasure, Rob. That's Brian Holtz, Chief Executive Officer at Compass, Well-versed in Finances.

I love that new tagline. Go to compassfinancialministry.org. Your questions are next, 800-525-7000. We'll be right back. Great to have you with us today on Faith and Finance Live.

I'm Rob West. All right, it's time to take your calls and questions today. The calls are beginning to come in, but we still have some lines open.

We'd love to hear from you today. The number to call is 800-525-7000. Again, that's 800-525-7000. We'd love to help you be that wise and faithful steward of God's resources that we know you want to be through an encouragement and Bible-centered approach to managing God's money. So call right now. We'd love to hear from you.

800-525-7000. Before we head to the phones today, in the news today, and this shouldn't come as a surprise at all, car owners are hanging onto their vehicles much longer these days. A new study by S&P Global Mobility shows the average age of U.S. cars and light trucks rose this year to a record 12.6 years. We all knew this as the pandemic, supply chain interruptions, inflation, not to mention high interest rates all seemed to hit one right after the other, causing folks to keep their cars the last few years. A study indicated that the vehicles 6 to 14 years old will make up about 70% of those still on the road over the next five years. And by the way, as our friend and former host of this program, Howard Dayton says, the cheapest car to drive is often the one in your driveway. We will see prices continue to come down as those inventories build, but given the high price of cars, certainly used cars, but also new cars, on top of these high interest rates, I think a lot of folks are saying, I think I'll stick with this car a little bit longer, especially if it's paid for.

Make sure you do your homework before you set out to buy a car because it's one of the big three budget busters, housing, transportation, and food, so be on your guard. Don't let that get out of line. All right, let's turn to your phone calls today. Again, the number 800-525-7000. You can call right now.

Let's go to Portland, Oregon and begin with Wayne. Go ahead, sir. Yeah, good afternoon, and thank you so much for your ministry. Just had a question.

I guess I need a Christian gut check, if you will. My mother is currently living in Jacksonville, and she's been involved in a publisher's clearinghouse scam for about the last three years. My brother and I and police officials and other folks have tried to convince her that it is a scam, and she just won't believe us, continues to believe the scammers. Recently, we arranged to sell her house and put her in one of those types of environments where she's independent now but can go into assisted living or memory care if need to be in the future. She willingly went, and things seem to be fine, but we realize that she's continued with the scam. Since I have durable power of attorney, I went through the closing and I signed all the closing documents.

They did send the check to me, but it's in my mother's name. I guess I just want to make sure that you think that I'm doing the right thing. We're trying to save what's left, what she has left. She has given away a large sum of money at this point, and she just is going to continue to do this. I guess I just want to make sure that I think I'm doing the right thing by basically saving what she has left for her future. I forgot to mention, she is 83. She's in really good health so far, but just because of the conditions she's gotten herself in and just won't believe anybody else, I'm afraid to let her have this last bit of income that she would have. I'm just trying to be a good steward and a good son, and I just want to make sure that I'm doing if you feel like I'm doing the right thing here, and if you can offer any advice, maybe.

Yeah, no problem. Well, you're pointing out some legitimate concerns here. There are several, many now, scams targeting the elderly, especially those with physical or cognitive impairments. They're subject to financial exploitation in a number of ways from outright scams to just people looking to take advantage of them. I mean, millions of elderly people are victims of elder fraud and financial fraud and schemes targeting aging Americans each year.

You mentioned several of those tactics, including lottery scams or scams tied to a particular winning a certain type of offer. So you definitely do need to step in here, especially if there is cognitive impairment. And so I think you've done the right thing, you know, in taking greater control of the finances and or putting a monitoring system in place to keep track of their spending is the right approach. I'm delighted to hear that you have that power of attorney. And that really is the key to you being able to make financial decisions on your parents' behalf.

I think if you still have the ability, you can talk to them honestly about how much involvement they're comfortable with. But there is often emergency situations where you have to take over financial management, but to let them guide the level of involvement if you can. And, you know, I think you're taking the right steps here. So I would, in fact, keep everything separate. And if you're taking over full financial management, do you have an advisor or somebody else that you can use as a sounding board, or are you doing all this yourself? Yeah, we're pretty much doing ourselves.

I mean, we're talking with folks from our small group at church and, you know, we're keeping open to a lot of things. But I say our goal is to just minimize her being able to, you know, to get access to the funds because she will just continue. And even to now, her only source of income now is your retirement income. And she's giving that away every month that it comes into our account. Wow. Yeah. So is that the next step? I mean, I know you're concerned about the proceeds from the home sale, but what about just the recurring income?

Do you need to use that power of attorney to step in and, you know, perhaps even make a change as to where that's deposited on a monthly basis? Yeah, that's my next. I was actually hoping that she would get to the point where she realizes that this is a problem, you know, because she's going to be getting an eviction notice here soon. And I was, you know, sometimes you have to hit rock bottom before we actually believe things are going on or, you know, that's basically the point where I'm at right now. And I guess I'm just kind of waiting for her to make the next move because she's often been very manipulative and been lying to us and, you know, keeping us out of the picture as much as possible.

Yeah, yeah, very good. Well, I think you're doing the right thing here. I would encourage you to stay down this track. I mean, the last thing you'd want to do is, you know, to see these assets be depleted just because she doesn't understand the implications of what she's doing. And so your ability to safeguard these assets is just exercising the responsibility that's been given to you.

And I think the role that you can play as a son. And so there's no doubt you're doing the right thing here, Wayne. If you need help along the way or you could use the counsel of an attorney, I wouldn't hesitate to reach out to somebody just to make sure you understand what you can and can't do.

But just the general idea that given the situation, the evidence of the fraud, the cognitive decline, I mean, all of those things point to just a real significant problem situation if you don't continue down this path. So I would affirm everything you're doing here, my friend. All right, sir. Well, thank you so much, and again, I appreciate your ministry. Thank you very much. I appreciate that.

A quick break and then back with much more. We've got three lines open, 800-525-7000. Stay with us.

Great to have you with us today on Faith and Finance Live. I'm Rob West. All the lines are full, so let's head right back to the phones.

We'll go to Plainfield, Illinois and welcome Susan to the broadcast. Hi there. Go ahead.

Hi there. Thank you for taking my call. Sure. My husband and I are trying to decide the best timing for replacing my car. We're both retired, but he is now working part-time at least for a couple more years, and he is thinking that it's better to replace it now while he is still working.

But I have a 13-year-old car that's running great, and I am hesitating a little bit on trading that in, and I wonder what your opinion was. Yeah. What is his concern?

Is it that he would need to borrow to buy it, and because he's no longer working, he'd have a problem doing so, or something else? Yeah, we'd have to finance some of it. Okay.

Yeah. I mean, you know, when you get to that season of life, I mean, as long as you've got a good credit score, I would imagine you'll still have enough income to justify it at that point, especially if you're putting something down. I wouldn't be terribly concerned about that. You know, I think the cheapest car you can own is typically the one in your driveway, and so I like the idea, especially if this thing is paid for and it's in good condition. It's not costing you a lot of money. I mean, from a purely financial standpoint, it's going to certainly be more cost-effective to continue driving this car.

So I would kind of come down on your side. I mean, obviously there's nothing wrong with buying a new car if you can afford it. I mean, we wouldn't have any cars to buy if people weren't buying new cars, because eventually they would all be out of service. So I don't think that's a problem, but I think in terms of cost-effectiveness, you sticking with your car right now and just continuing to drive it because it's not creating unnecessary expenses, and we start to look at that in terms of, you know, if you're spending more than half the value in any year, that's certainly the time in maintenance. That's certainly the time to look at getting rid of it. But if it's reliable, I would say hang on to it. Okay. Yeah, it's reliable.

It's 13 years old, but it only has 107,000 miles on it, and the mechanic says it's in good shape. Yes. Yeah.

You know, absolutely. I think the mechanic's in agreement there, and you know, I would just let him know that while it might be a little harder to qualify to borrow in retirement, it's far from impossible. You know, you will be able to get that car loan, you know, with regular sources of income like Social Security and other benefits. Yeah. My other thought was that if we just took the money that he would like to make a payment with now and save that, then maybe we could just use it to buy the car later? Say that last part again.

What were you thinking? Well, instead of buying a new car now and having that payment, taking that payment now and putting it aside. Oh, yeah, absolutely. I mean, if you can work that into your budget, it's always a good idea to be setting money aside because even if you can't get to the full cost of the purchase, the idea that you would have a lot more equity going in, putting down a far larger down payment on the front end is certainly going to make it easier to qualify for that loan if you need a small loan and ensure that you pay as little interest as possible. The other benefit to waiting here, Susan, in addition to the fact that this is a reliable car, it's paid for it, you're just going to save money is hopefully when you get to that point, you know, we see an interest rate environment that's much more favorable. So you're not paying eight, nine percent interest on this car.

You know, you get down into the three or four or five where we saw car loan rates, you know, a few years ago. Yeah. Also, can I ask one more thing? Sure.

Go ahead. He would like to buy a new car and I kind of like to buy a car that's a year or two old. I wondered what your opinion was on that.

Yeah. You know, I think typically I would always say buy that newer used car because you're missing that depreciation that occurs when you drive it off the lot. There's been some flex in that just because used car prices were so much higher than, you know, proportionately the new cars, it actually made some sense to consider the new car, especially if, again, you're fitting it into the budget. You're not buying more than you can afford. But let's say if you are taking on a loan and you could get a dealer incentive at, you know, one point nine or two point nine percent interest versus, you know, eight or nine percent interest on that used car, not to mention that the new car inventories are building. And so we're seeing those prices level off much quicker than the used car prices. I think for those reasons, you know, you could at least look at the new car option and get that, you know, full warranty and perhaps not spend a whole lot more. But historically, I would align with you my preferences toward that newer used car for the reasons I mentioned.

But I think in this environment where things are kind of thrown out of whack a little bit just because of the chip shortage that led to the inventory shortage on top of these higher interest rates, you know, could cause you to at least explore that new car option and consider it. OK, well, that's great. Thank you so much. All right. Thanks for your call today. We appreciate it. Folks, we're going to be headed to a break here in just a moment.

Lucy will be coming your way after the break. And Kurt in Nashville has a great ministry to men who are reentering society after incarceration. He wants to talk about a good budgeting or money management app that he can recommend to these men. Looking forward to hearing about that as well. Also coming up a little later in our broadcast, we'll dive into the mailbag and find out what you've been thinking about. We always encourage you that when you have the opportunity, if you'd rather send a question electronically, we try to tackle those each week, a few of them each Wednesday.

And so Amy will stop by my producer and we'll we'll see what we have today as we tackle a few of those questions. Let me also mention to you before we head to this break, you know, as we head toward the end of our fiscal year here at FaithFi on June the 30th, it's a great time to remind you that this is a listener supported ministry. So perhaps you've found some benefit in this program. Maybe you listen regularly or you've been able to apply something you've heard in your financial life or you've just been encouraged to be a wise and faithful steward and you want to support our work. Well, we'd certainly be grateful.

We can't do it without you. This of any size would go a long way toward helping us reach our goals by June the 30th. Just head to our website. It's faithfi.com. You can click Give right there at the top of the page. That's faithfi.com and just click Give.

You'll see we're well on our way to reaching our June 30 goal, but we're not there yet. So check it out today when you head to our website. While you're there, be sure to check out the FaithFi app as well. It's a brand new edition, FaithFi 4.0 is out with some great new features you can download it today.

A quick break and back with more of your questions right after this. Hey thanks for joining us today on Faith and Finance Live here on Moody Radio. We want to help you make God your ultimate treasure because when we do, our lives will reflect God's character to the world. You know, as image bearers of our relational and generous God, one beautiful and tangible way we exhibit our love for God is through our financial decisions. You know, we were called to be the light to the world in Matthew 5 14. And as such, our finances can be a powerful testimony of our faith in Jesus.

You know, the way we earn money, our lifestyle, our generosity, even our financial priorities and our perspective of money and possessions become a reflection of who we are in Christ. Let that be an encouragement to you today as you think about your role in being a wise and faithful steward. Let's head back to the phones. We've got a few lines open today. We'll get to as many questions as we can between now and the end of the program. The number is 800-525-7000.

To Winter Haven we go. Hi Lucy, thanks for calling. Go ahead.

Hi. Yes, I just was hoping you could help me with Social Security after retirement. I was married 19 years. We both have always worked. In the last few years he—we're divorced now—in the last few years he's been making well over double what I make.

And I was just wondering if you could explain how it works if you draw off a spouse's retirement. Yes. All right. And so you have not remarried, is that correct? Correct.

Okay. And you said you were married for more than 10 years, so that's key. So you have the ability to claim up to—because you were married more than 10 years, you're 62 or older, is that correct? Not yet, but I will be by the time I retire.

Okay, got it. Yeah, so you well have the ability to collect a spousal benefit, so as long as the marriage lasted 10 years or more, you've not remarried once you're 62 or older. And as long as that spousal benefit is more than you would get on your own work record, then you'll get up to 50 percent of your ex's benefit if you wait until full retirement age, which is probably for you going to be close to 67.

If you take it earlier, you can, starting at age 62, you would just get a reduced amount. So you might get somewhere around 30 percent of his full benefit if you take it at 62 versus a full 50 percent, which is the most you can get if you wait until your full retirement age. And this doesn't affect his benefit whatsoever, but it will be based on his work record. So your benefit of up to 50 percent of his is going to be driven from his high 35. So as he's making more now, he's offsetting some of those lower earnings years, which raises his benefit.

And given that you can get up to 50 percent of his, it's actually increasing what you'll receive as he continues to earn more in this season of life. Does that make sense? Yeah. Does it matter whether who retires first, like if I had retired prior to him, does that make any difference? It does not.

No. And so it's really not driven off of retirement. It's based on the fact that, you know, you were married long enough.

You're at least 62 years old and, you know, you haven't remarried, so you're eligible for that benefit. OK. And it will not it will not take anything away from him. That is correct. Yeah. Your spousal benefit is based on his record, but it doesn't affect his benefit at all.

OK. All right. And when that time comes, you just reach out to like Social Security to tell them you want to do that. OK. That's exactly right. And you could even take your spousal benefit and let your own benefit continue to grow and you would have the ability to switch from the spousal benefit to a benefit based on your own work record further down the road and actually collect a higher amount. You can only take one or the other, but you can switch from the spousal benefit to your own benefit if you are entitled to one. OK. And then mine would be based on a full amount of my Social Security. That's correct. So as long as you've been paying in FICA taxes for at least 40 quarters or 10 years, then they take your highest 35 years of earnings and that would drive your own benefit based on your work record.

And what you will find is that one of those is going to be higher, either your own or your spousal benefit, and you'd have the option to take one or the other. OK, perfect. Thank you so much.

All right, Lucy. May the Lord bless you. Thanks for calling today.

Let's go to Nashville. Hi, Kurt. Tell us about your ministry to men coming out of incarceration.

Yeah, thanks for taking my call, Rob. So, yeah, I work with a ministry called Men of Valor and we're in prisons across the state, but we have two reentry facilities, one in Nashville and one in Knoxville, that house guys for a year plus who are coming out of prison. And we do, you know, A to Z helping them with everything they need for a successful reentry, including employment. But as you might imagine, so some of these guys have never had jobs before.

And when they start making money, the temptation to just spend and accumulate things is real. But our hope is to help them prepare for life after our reentry center. Right.

Yes. And really what I want to talk about, I know you've touched on this, I listen to you as often as I can. I've always appreciate your godly wisdom. I've heard you talk about apps and budget things before. But what I wanted to get your counsel on is, is there something that would help these guys because most of them get a cell phone after 30 to 60 days where they could have an app on their phone, log in their, you know, net pay and then divvy it up for everything that they need to spend, save, tithe, etc.

Yeah, absolutely. And that's really why we built the FaithFi app, Kurt, and you'll find it in your app store or they can at Google Play or Apple. And basically, it's just that it's the envelope system, but in a digital kind of beautiful, simple interface. So right there on their phone, either manually if they wanted to, they could log in their paycheck and then set up those envelopes and then allocate out the paycheck to various envelopes. And then the transactions that they would enter in manually would reduce those balances in each envelope. Or it could be done automatically where they'd connect to a checking account, savings account, maybe a credit card. And then all those, you know, their income would come in, you know, fund their various envelopes and that that could be tied to the various streams of income they're receiving. And then as those transactions come in, so if they're spending on a debit card, then it would either automatically go into an envelope once it learned where these various transactions go or they can manually apply them. But the nice thing is, you know, regardless of what's sitting in that checking account, it's really a matter of, OK, how has that been divvied up for my rent, for my food and eating out, for clothing, for entertainment?

And at any point during the month, they could see what's left in each of those digital envelopes, which just makes it really helpful to control the flow of money, but also to make course corrections along the way if spending has gotten out of line in any particular month in one category. Does that make sense? Perfect. It makes a lot of sense. That's exactly what I was looking for. Thank you for your help.

Absolutely. You can just send them to Faithfi.com and they can click app or they can head to their app store and just search for it. Faith Fi. And you'll find it right there. We just released our brand new version.

It's got a lot of great features. Hey, God bless you, Kurt. Awesome to hear what you're doing. And we'll we'd love to check in with you along the way, so don't hesitate to reach out. Folks, we're going to take a quick break. We're going to come back a few more questions and some of your emails right after this.

Stay with us. Hey, great to have you with us today on Faith and Finance Live. Here in our final segment, we'll be headed back to the phones in just a moment, but first it's our segment called Money Mail.

It's an opportunity for us to take those questions that were sent in at moodyradio.org slash finance. And that is my producer, Amy Rios. Hello, Amy. Hello, Rob. How you doing? I'm doing great. Hey, before we dive in today, I knew you and Marty have well, you always put into practice what we talk about here on Faith and Finance Live. You've done something specific recently. Before we dive into our questions today, I'd love for you to share that with our audience.

Yeah. Actually, we have been anticipating a big trip overseas trip we're going to take in just a little while. And so I was looking at things that we need to do to prepare. And one of the things that came to mind was the fact that all of our credit cards, the three that we have, are in his name. And so I'm the authorized user. So I'd heard you talk about in the past that that is maybe something you need to be careful of just because if something were to happen, like if we're overseas and something happened to him, then I would be kind of stuck without a credit card that would be usable.

So recently found one and you've always said to look for ones that are, if we wanted to get like a rewards card, make sure it was not one that had the annual fee attached to it. So I found one of those and I feel like I was just doing a real good job following your advice. You did do a great job. That's awesome. You know, a lot of people don't realize that, yeah, if you're the authorized user and your spouse passes away, that they're going to want to close that account.

And so although you'd be able to get one, it just could create a disruption. So having one in your name is never a bad idea. And I love that you did that as you're thinking about your trip. Now remind me where you're headed. Oh, we're going to Italy. It's going to be amazing. I'm so excited. It is.

We were there about 23 years ago in our honeymoon and I've always wanted to go back. So we're glad we're making it happen. That's great. All right, Amy, I know we have some great questions today.

Let's dive in. Okay. First off, Kimberly asks, I purchased several savings bonds back in 1998. We've moved several times since then and I cannot locate them. Is there any way I can cash them without having the actual bonds or am I out of luck?

Yeah. You're not out of luck. So since the bonds were issued, Kimberly, after 1974, you can replace them. There's a form for that. There's always a form for everything at treasury direct.gov. It's actually form 1048, but you don't need to remember that. Just go to treasury direct.gov and search for replace lost paper bonds. If you know the bond serial numbers, you'll fill that in on the form.

If you don't, you still want to go to treasury direct.gov, click that menu button, and then in the search feature, you can type in treasury hunt and it will take you to a page where you can answer some additional questions to get your bonds replaced. Okay, perfect. So next Robin writes, I'm 58 and I earned 98,000 a year. I'm currently renting, but it's very expensive. I want to buy a home, but I'm wondering if I'm too old at this point. What do you think? Do you want to make a biblically sound decision?

Yeah, I appreciate that Robin. And I would say no, you're definitely not too late to buy a home. I think the challenge is just something, finding something that fits your budget. Now with rental prices being so high is a good chance that assuming you have some savings, you might be able to get into a similar home and have about the same out of pocket. Two kind of rules of thumb you want to keep in mind. Number one is let's try to at least have 20% down. That's going to make sure you have some equity on day one and keep you out of pay in that private mortgage insurance, which is about 1% of the mortgage and doesn't do anything for you. It's just an extra expense.

The second is make sure the housing expense, and this would be for your rent too, doesn't exceed if possible 25% of your take home pay. That's going to ensure you have enough leftover to meet all your other obligations. Okay. And finally today, Jordan writes, my work hours will be reduced over the summer. Do you know of any ways I can cut costs and save money since I'll be working less?

Yeah. I mean, we've talked about the FaithFi app a couple of times already today. That would be my first recommendation. Go to faithfi.com, download the app, set up your budget so you know exactly what your expenses are, go over them carefully.

And I think this is an opportunity to say, what can I trim? So for instance, could you go without streaming services for the summer? Are there subscriptions you can cancel? Is there a way to cut your grocery bill? Do you bundle your errands to save on gas? Are we not eating out as much during the summer? I mean, these little things add up and the key is to make sure that you're budgeting a little more closely so you don't go into debt to make ends meet over the summer.

And if you have to always look to increase income, that may mean taking on a second job here for a few months just to help out. Okay. Thanks, Rob.

If you want to send Rob a question via email, just go to moodyradio.org forward slash finance and you'll see a form there. Awesome. Thank you, Amy. Appreciate your time today. All right, let's head back to the phones to West Palm Beach, Florida. Donna, you're next up.

How can I help? Oh, thank you so much for taking my call. I'm rather recently retired and I have a nine-year-old car, which I love, doesn't have all the bells and whistles, but that's fine. But I've had some friends recently purchase cars and I'm afraid that how much of an urgency is there because I don't really like the idea of having to be forced into possibly purchasing an electric car or a semi-electric car. I'm more comfortable with the other kind of car. Is there an urgency or can I just use my wisdom and stick with my older car that's running fine? And of course, I don't use it as much anymore.

Yes, ma'am. You know, I would say stick with your wisdom and stay with that car. You know, it's not completely without merit to say that we're not moving toward a day where we're going to see more and more electronic cars. In fact, what the Biden administration is putting forward and I don't think this is has come to pass yet, but they're moving toward forcing more than half of new car sales to be electric by 2030, I think was the last I had seen. But again, I mean, that's still quite a bit down the road. And even by 2030, we're talking about still half of new cars being, you know, not electric. So a typical combustible engine at that point. So I think we're still quite a bit, you know, of way of the ways off from this. And it's not going to go without a lot of folks saying that this is not the way we should go just for a variety of reasons, including the fact that all the claims about it affecting our climate, you know, a lot of folks feel are unmerited. So I would say let your wisdom prevail here.

Hang on to that car, save a bunch of money in them in the process, and know that if you get to the place where you need a new car, even, you know, five or six years down the road by then, if nothing changes and a lot could change, we're still going to have half of new cars that are not electric in 2030. Oh, wonderful. I did not know that, so I appreciate that information very much. All right. God bless you, Donna. Thanks for being on the program today. Let's go to Tampa. Hi, Nancy.

How can I help? Thank you for taking my call. Sure.

So I just had a question. Last month we sold one of our investment properties and we got like $200,000. My question is, because we're three years from retirement, should we buy another investment property to avoid paying the capital gains or should we invest somewhere else? Yeah.

Well, so you'd have 45 days to find one and then 180 days to close on it in order to do a 1031 exchange, which you may already be outside that window. In terms of your capital gains exposure, so this was not, this was an investment property, correct? Correct.

Investment. Okay. All right.

And would your, do you all file taxes married filing jointly? Yes. All right. And what year did you sell it, the property? This year? Yeah. Just last month. It's not 45 days.

Last month. Yeah. Okay. Got it. All right. And will your taxable income for this year be more than $94,000? Yes.

Okay. So you'll likely be in that 15% bracket. So what do you think your gain is on it? Not the selling price, but the selling price minus your original purchase price.

So I'm thinking, well, it was like 140,000 in profit. Yes. Okay. So it looks like you could have, and let me just check.

Your income is not over 580,000. Is it? No.

Okay. So if you're at 15% capital gains, you're looking at about a $21,000 tax bill at 15%. Now you could further reduce that gain if you had any substantial improvements to the property, not maintenance, but things that improve the value of it. So you may want to just check and think through that. So I think the question is, do we want to write that $21,000 check to the IRS or do you all want to continue to be a landlord? And I think that's a pretty significant decision. I mean, yes, there's some potential tax savings, although you're just going to push that down the road. You're not going to eliminate it. You're just going to kind of kick the can.

Number one. Number two is there's real talk that capital gains rates, if they're going anywhere, they're going higher. So if the Tax Cuts and Jobs Act expires, I mean, President Biden, depending on what happens in this next election, was talking about higher capital gains rates. So we're probably in the lowest capital gain rate environment that we will be in.

If they're going anywhere, they're going up. So I think the question is just how long do you all want to be landlords and having investment properties? If you're really looking to get out of it, you may want to just go ahead and pay that tax now.

If you think you may want to stick with it even well into retirement, well, then it might be worth considering buying another property. But again, you have to identify it within 40 to five days and you've got to close on it within 180 days and you're not eliminating it. You're just pushing it further down the road. Does that make sense?

Yes, it does. Okay. So I think that's the question for you guys to think through is, listen, if you're like, I think we're done with this, we're looking to kind of simplify our lives. You may want to just go ahead and pay the tax. If you're comfortable continuing to be a landlord and it makes sense in light of your overall investment strategy, I love the idea of you owning real estate and then it may be worth it to kind of kick that can down the road.

The other thing is when you sell it the next time, if you were to put it into another property, you could give a portion of it away to a donor advised fund before you sell it, you'd miss the capital gains on that and then you could give it to charity or ministry. So you guys think and pray about that. Hopefully that helps you Nancy. We appreciate it. That's going to do it for us. Faith and finance lives, a partnership between Moody radio and faith by thinking to Amy, Dan, Lisa, and Jim couldn't do it without them. We'll see you tomorrow.