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Click on Analyze My Investments on the homepage to tailor your portfolio to what truly matters to you. Myth's can be a persistent thing. For a long time, people thought the world was flat.
I'm Rob West. The investing world has its share of myths that persist to this day. Rachel McDonough joins us today to go over three myths about wealth that many Christians believe.
But should it? Then it's on to your calls at 800-525-7000. That's 800-525-7000. This is faith and finance, biblical wisdom for your financial decisions. Well, our good friend Rachel McDonough is back with us today.
She's a frequent contributor here at Faithfi, a certified financial planner and a certified kingdom advisor. Rachel, great to have you back with us. Hey, thanks for having me, Rob.
It's great to be here. Rachel, I've got to ask, how is it that the flat earth myth relates to wealth and investing? Yeah, well, we all know the earth isn't flat.
Hopefully, we all got the memo on that one by now. But I do think wealth planning, like financial planning for how to steward wealth is really similar to planning a journey. And if you wanted to think of planning your journey, operating under the assumption that the earth is still flat, you probably would not successfully chart a course, right? Like you just have the wrong assumptions baked into your plan, then your plan is not going to work. And similarly, there are some wealth assumptions, some myths or some false assumptions about wealth itself that can really get in the way as we're trying to plan out our financial journey. Well, let's build on that. I know you've got three myths related to wealth for us that we don't want Christians to believe. So get us started. All right. All right.
So the first one, this is challenging because it's going to sound right at first, but it's actually a myth. So the first one is that when it comes to investing, performance is the ultimate success. So if you think of, I've heard people say they like investing in the one sense because it's very scorecard based. You can sort of analytically and objectively decide if your investing has been successful or not just by seeing if you beat your benchmark, right? Like if you beat your S&P 500 benchmark, then your investing was successful. And if you fell short of your benchmark, then you were not very successful, right?
I mean, it kind of sounds logical at first, doesn't it? Sure. Yeah.
Yeah. And so a lot of portfolio managers certainly, but even advisors kind of get judged on that benchmark or even do it yourself investors. They judge their own success by whether they won or lost relative to their benchmark. The challenge is for a Christian investor that how we generate those profits matters to God. And it's part of his definition of success for those who are stewarding the master's money on his behalf and want to hear that well done, good and peaceful servant. So where we can run into trouble is if we end up not being very discerning on how the profits are generated in those investments and we end up inadvertently investing in things like tobacco, pornography or abortion. Anything that comes to kill, steal and destroy, according to John 1010, is really the work of the enemy. So that's not part of successful investing, even if it's highly profitable. And even if we do it within like lower risk parameters, it still just isn't a win at the end of the day.
Yeah, that makes me think of Mark eight. What does it profit a man to gain the whole world and forfeit his soul? That's great advice. All right. Take us into myths two and three.
All right. Myths two and three are both related to risk. The first one is that you should avoid unnecessary risk.
And the third one is that you only want to take risk when you can earn a higher return. Now, as believers in Jesus, we want to follow Jesus's example. And I don't know about you, I'm really thankful that he decided to take some risk that was not in his own selfish best interest. We see people who are motivated by love as disciples of Christ, willing to take risk for the sake of love and to extend God's love to those around them in a way that might cost them something. For example, busy parents already with packed schedules and tight budgets might choose to adopt or foster a special needs child who's been stuck in the system.
You probably know someone like that who's done that in your life. Another example, some friends of mine fly halfway across the world to set human trafficking victims free from a lifetime of indentured servitude. So taking risk for the sake of love is one way that we as humans get to reflect God's nature and his image to the world around us.
And God gave us everything by sacrificing his only son to redeem a world that still had the free will to reject him. Oh, Rachel, that was so good. I love how you help us think about the why of our investing. Thanks for stopping by today.
Hey, thanks for having me. Folks, that was Rachel McDonough, certified financial planner and certified kingdom advisor. We covered three of the myths about wealth today, but Rachel has uncovered seven of them. You'll find the rest at Rachel McDonough dot com.
That's Rachel McDonough dot com. Back with your questions after this. Stick around. God has entrusted his finances to you and we had faith. I have designed our faith by app to help you live, give, owe and grow with that perspective. Our faith by app is the leading biblically based finance app. You can manage your money, get top biblical financial resources and interact with the community of like minded believers where you can ask questions, get answers and share what you're learning.
Go to faith by dot com and click the word app to get started. If the heavy burden of debt is robbing you of freedom and peace of mind, Christian Credit Counselors can help. We're a nationwide nonprofit credit counseling organization that has helped over 300000 individuals in the last 27 years. Get out of credit card debt 80 percent faster while honoring that debt in full to learn how Christian Credit Counselors can help you. Visit Christian Credit Counselors dot org. That's Christian Credit Counselors dot org or call 800-557-1985. Great to have you with us today on faith and finance for taking your calls and questions now on anything financial. I've got some lines open, although the calls are coming in. So we'd love for you to get in the queue. The number to call is 800-525-7000. That's 800-525-7000.
You can call right now. If you think about it, money issues or heart issues. Jesus talked about this when he said, Where your treasure is there, your heart will be also. We know underneath living beyond our means is a self-discipline issue and underneath debt is a discipline issue. And, you know, there's heart issues underneath all of the outworking of that. You might think about it like an iceberg. You know, only about 10 percent of the iceberg is above the waterline. That's probably most akin to the how of financial decision making those actual decisions you make each day.
But that 90 percent below the waterline is the why. It's our values and priorities. It's our heart condition.
It's how we let sin enter in to the decision making process and let greed or covetousness or comparison take over and really take us away from God's design, which is around contentment and faithfulness and ultimately generosity, open handed living. And it's convicting, but it's also encouraging. All right. Let's turn the corner and take your questions today. We've got lines open.
We'd love to hear from you again. That number 800-525-7000. You can call right now.
Let's begin in Savannah, Georgia today. Hi, Donna. Go ahead.
Hi, how are you? Thanks for taking my call. You're welcome.
Thank you. So I'm 64 and I recently applied for Social Security and got my first check on Valentine's Day and I went to work part time at a local hospital just like 25 hours a week. Then they offered me a position doing what I had done before I retired at a substantial increase, much more than the twenty three thousand I could make with Social Security. So my question is, I know I have to call Social Security and tell them what I'm doing, but do I just let them do the penalty or do I stop my Social Security? And I know I have to pay like the eight grand back, which I don't have eight grand to pay back. So I'm really just not sure what to do.
Yeah. Well, you're exactly right. I mean, you are in this kind of perfect window of time, if you will, because you just started to suspend your Social Security benefits and pay back what you've already received. And then you would continue to increase your benefits by that one twelfth of eight percent or roughly eight percent a year for the years that you wait until you restart them up to age 70. And you'd have to contact Social Security to do that. You have to have been receiving benefits for less than a year to be eligible for this.
And you can only do it once. But if you don't have the money available to do that, then that would kind of take that option off the table. What do you think in that regard? Well, I mean, I don't know if they let you make payments back or I'm just not really sure. But if we just take the penalty, from what I understand, they because this is going to be substantially it's going to be way, way over, like about 40,000 over what I can make. So they just suspend my they just don't pay me Social Security from what I'm reading. They don't pay me Social Security because I'm over.
And it's like two dollars for every dollar or something of that nature. Yeah. What is your age? 64. OK, so you took it this year. You took benefits early.
Yeah. So they're actually going to reduce your benefit by a dollar for every two dollars. You go over the limit. And so there's an earnings limit for Social Security. And when you get above that and for twenty twenty four, you know, that earnings limit in the year that you turn for retirement age is fifty nine thousand. Prior to that, it's lower than that.
It's twenty two thousand three hundred twenty. But here's the reality, though, Donna, you will get whatever they reduce it by. So the dollar for every two dollars you go over that limit, you will eventually get that money back at full retirement age in the form of a higher check. Are you aware of that? Yeah.
Yeah. That's what my husband was saying. You don't lose it. You don't have it right now. Just yeah, you don't lose it. And that's what he was saying, too. But it's like, I'm going to call and find out.
Yeah. So you definitely don't lose it. You will get it back later. It'll be over a period of time, over a number of years in the form of a higher check. But that's different than you paying the Social Security back and restarting the growth of that check.
Those are two different things. You see, you know, for every year you take it early before full retirement age, which for you is probably close to sixty seven. You're getting a reduction. Ten months. Yeah.
OK. So you're getting a reduction in that benefit by about eight percent for every year you take it early. And by paying it back and suspending it, you essentially restart that clock that's going to keep your benefit growing toward ultimately your full retirement age benefit that you can see at my SSA. That's different than the reduction you're going to get by working beyond the earnings limit, because by taking it early, you've locked your benefit. You're not going to ever get those increases.
That's separate than the reduction by earning more than the limit, which you eventually get back. Do you understand the difference between those two things? Yeah. Yeah. Yeah. Yes, I do.
Yeah. So I would prefer that you just suspend and pay it back and wait and take it closer to Social Security. But if you can't do that, then that's not an option. So then the second piece of this is, OK, just recognize you're going to see a reduction and that's going to be as a result of you earning more than the limit. But just know that's going to come back to you down the road in the form of a higher check. Once you're paid back for everything they reduced you by, that will stop.
And then you'll get that benefit check plus cost of living adjustments that was locked in at age 64. So hopefully that's helpful to you, Donna. Thanks for your call today. We appreciate it. Let's go to Texas. Hi, Susan. Thanks for your patience.
Go ahead. I have a son who is a graduating high school senior and he has earned some money and he wants to invest some of it. And he's planning to go to college, but he wants to invest some of it, maybe like a thousand dollars or so in a Roth IRA because he has learned about the value of compounding interest. And so he's not I'm guessing he probably wouldn't be investing in it, adding to it every year.
It might be just like keeping it until he gets out of college and can start contributing maybe again. But I want to have him kind of start doing the investigation and figure out where is it, what does he need to do. So can you give us get us started on that?
Yeah, I'd be happy to. You know, probably the best way to go would be for him just to open an account like a Charles Schwab. A discount brokerage house is going to be very little in the way of fees.
He can open it online in a few minutes. There's a couple of options in terms of how he would invest it. A lot of times when younger investors are just getting started, they like the idea of researching the companies they're buying.
And that's great. And it's a great way to learn. The downside is you're highly concentrated. And so there's a lot more risk there because if you invest in X, Y, Z tech company because he likes their products and they have a bad quarter or technology is out of favor because it's been just going so sky high as of late, then he could, you know, see some considerable downside in a very short period of time. Whereas if he buys a basket of investments like a exchange traded fund, he's got a lot more diversification with lower risk. So my recommendation would be have him look at the Charles Schwab. It's called the intelligent portfolios. It's what's called a robo advisor or as an alternative, have him look at the smartphone app Betterment or online at betterment.com Schwab intelligent portfolios or betterment.
Both would allow them to open the Roth IRA. All right, folks. So we're just getting started today.
Plenty more time for your questions on anything financial. We'll help you apply the wisdom from God's word to those decisions and choices you're making. Call right now.
I've got a few lines open. 800-525-7000. By the way, if you want some help in your financial life, maybe it's a professional you need. You can find a certified kingdom advisor on our website at faithfi.com or maybe it's budgeting or communicating with your spouse. That's where a certified Christian financial counselor comes in. You can find a cert CFC on our site as well. Just go to faithfi.com and click find a professional back with more after this.
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More information is available at oneascent.com and by clicking analyze my investments. Well, thanks for joining us today on faith and finance. It's time to take your calls and questions today on anything financial.
Eight hundred, five, two, five, seven thousand. You can call right now. Our team is standing by. Let's go to Ohio. Hi, Rita. Thanks for calling today. Go right ahead. Hello.
Thank you and God bless you for doing this. I have two lines of credit. Twenty thousand dollars each. One line of credit has an interest rate of six point four. The other 14 percent, the lower when I've had for years. So that's why that's so much lower.
I have about twenty eight thousand dollars in credit card debt, different cards, and each of them are in the 20s. The interest rate. So I'm trying to make sure I'm making the right choice to use these two line of credits. I didn't want to max either one out. So I was thinking of just using seventeen thousand out of the one for six percent and the remainder out of the other. Pay those off and then I have to bill.
Is that smart to do? I haven't touched these lines of credit. Yeah. Well, I appreciate that.
I'm not a fan of this, Rita. Let me ask the one question. You said you've had that one for six percent for a long time. Do you know how long you have that available to you? Because often that sunsets and closes and then you just automatically convert to paying it back at that point.
No, the one that's twenty thousand, that line of credit, both of them are balance zero. Yeah. And I've just had it for forever. And I've used it when I did a home improvement in the house or a little here and there. I will use it for like one hundred dollars just to make sure it has activity on it. But I really don't use it. My other cards I kind of used because I was getting points for air travel and stuff like that. Like one card is kind of I'm using the miles to pay for that right now. I'm able to pay for bills, but I want to be wise about it. Yeah.
OK. Yeah. The main thing I was pointing out there is most home equity lines of credit have what's called a draw period, which is the time when you can access your funds from the open line of credit. It's typically 10 years.
It can be as short as five and as much as 20. And so normally that draw period will come to an end and you can no longer access additional funds. And then it just converts to a predetermined payback period at that point. But you can't continue to access it. But let's get to your original question.
No, I'm not a fan of this. I realize it makes sense on paper because you're looking at the six point four and the 14 and you're comparing that to this. Probably sky high interest rate on your credit cards and thinking, why wouldn't I just move that over?
But it's going to do a couple of things. Number one is that unsecured debt, which is what the credit card is. Meaning if you had a major life event and I know you're you're able to pay the minimums or maybe even more than the minimums now. But let's say something happened and you were not able to make that payment with a credit card. You know, there's limited recourse there. I mean, they could seek a judgment against you in a court. Obviously, it'll go into collections, but that's about it.
Now, biblically, we want to honor our debts. But I'm talking about if there was kind of a catastrophic event that just prevented you from paying for a season. You know, that's about the worst that can happen. The problem is, as soon as you move that over to the line of credit, the worst thing that can happen is you lose your home. And so I just don't like taking unsecured debt and securing it, especially to your house.
That's number one. Number two is often these payback periods, because we get a lower interest rate as soon as you move it to the line of credit. You know, you're paying it back over a longer period of time or you may even just be paying interest only. And so you don't actually reduce the debt. And so it hangs around for longer. And what you end up is paying as much or more interest, even though it's at a lower interest rate, because you just no longer have the incentive to get it paid off. The third thing that happens, and I'm not saying this necessarily would happen with you.
I've just seen it too many times not to bring it up, Rita. And that is that as soon as we do that, it kind of takes the pressure off and we're like taking a deep breath like, OK, I'm no longer at 22 percent. I'm at six. And so we just don't make the lifestyle changes that resulted in the credit card debt in the first place. And so we continue to spend beyond our means. And then I get a call six months later that says, hey, guess what? Now I've got twenty eight thousand on two lines of credit. And guess what? The credit cards are back up to ten thousand.
And I've just seen that too many times. So given all that, where would I go from here? Well, I wouldn't put it on the line of credit. What I would do is call my friends at Christian Credit Counselors. You'll find them on the web at christiancreditcounselors.org. You'll go into a debt management program. What does that mean? Well, it just means that each of your creditors, your credit card companies have a credit counseling rate that's probably half or more lower in terms of the interest rate.
If you're a 22, it might be a 10. And they're going to have a scheduled monthly payment that the credit card companies will tell them. Very consistent to your current minimum payment. But the difference is with that reduced interest rate and a level monthly payment, meaning it doesn't decline as the balances decline. And so over time, you're sending a higher and higher percentage of the debt, you know, even if you don't add anything extra to it. And the combination of those two things will help you pay it off 80 percent faster. But the big things is, you know, the bigger thing is that you'll leave that right there with the existing creditors. So it remains unsecured debt. And secondly, my experience is that when you go that route and do the hard work and build it into the budget and stick with it over time, that you're reinforcing the right disciplines that hopefully will allow you once you get out of debt to stay out of credit card debt forever. But give me your thoughts on all that, Rita.
I think that it makes sense what you're saying. The one thing is that these lines of credit are not associated with my home. That is the one thing.
What are they associated with? Is it just a... I mean, normally you wouldn't have... My credit union, I took out a line of credit to do some stuff around the house and they gave me a $20,000 limit. And then when I was thinking of doing this, that was some years ago. But I just reached out to them, like, you know, to see how much it would be if I could get that raised. And they said, well, no, we would have to do a separate line for you because we can't guarantee that interest rate any longer. And I didn't want to lose that.
Yeah. Well, there are unsecured credit lines and you may have one. I would confirm that just to be sure what you were thinking is in fact correct. But I would still hold true to what I had said earlier.
And that is that my experience is that that just doesn't reinforce the right behaviors. But if it's truly unsecured and you can get a lower interest rate, I mean, I think you could do better than 14 on credit counseling. And so what you may want to do is is look at moving to the six point four. And as long as you're willing to stay disciplined and continue to pay on it and pay on it in such a way that it's going to get it paid off as quickly as possible. And that doesn't cause you to kind of back off in your sense of urgency to get this paid off once and for all. But given all of that, I'd still prefer you to go the debt management route with Christian credit counselors dot org.
But if it's truly unsecured, at least for the portion on the six point four, you know, I could get on board with that. OK. All right. OK. Thank you so much again. Help and prosperity to you.
And she's the same. You guys are great. Well, I appreciate it, Rita. May the Lord bless you. We appreciate your call today.
That's going to do it for us. Big thanks to my team today. And again, it's just so thankful for Devin Patrick, my producer for Autumn, our call screener today. Really thankful for Taylor as well and his research and all the things he does and being our production manager here at Faith by. We're so grateful you were here as well. Hope you have a great day and come back and join us tomorrow. Faith and finance is provided by Faith by and listeners like you.
