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Now let's dive into the podcast. Train up a child in the way he should go. Even when he is old, he will not depart from it. Proverbs 22 six.
I am Rob West. That verse applies to managing money as much as anything else. But how should Christian parents train up their children? We'll hear some great insights on that today from Brian Holtz. And 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 journey. Brian Holtz is the chief executive officer at Compass, well versed in finances. Brian had some great teaching for us at the Kingdom Advisors Conference in Orlando about financial discipleship for families, and we thought we'd share just a bit of that with you right now. We're going to introduce a concept that's foundational. So Howard Dayton came up with this acronym and it's really catchy. The idea behind it is not all that new. You'll find it in any sort of educational theory, but we call it MVP parenting.
MVP parenting consists of three things. You're going to provide modeling, meaning you're going to do it in a way they can see. And so the important thing here is that they have to be able to see it, right? If you want your child to learn how to pray, but you only pray in your prayer closet, all they know is that you're in your prayer closet. All they know is that you're in the closet.
You got it? As parents, we know that our kids are always watching, aren't they? Especially when you don't want them watching. They are constantly absorbing it and soaking it in, and that's what modeling is. And whether we think we're modeling or not, we are modeling. They are learning our behavior. They're either learning how intentional we are with money or how we handle it kind of haphazardly, right? Either way, they're learning. So we want to model the right behavior and model it in a way that they can see. Second, we want to provide verbal instruction, which is explain it in a way they can understand. So, all right, I'm praying after I've done my Bible reading.
I now want to say to my kids, now that I've reflected on God's word, I'm now praying because. Because otherwise they're going to guess. They're going to fill in the blank, right? Imagine how many explanations my four-year-old daughter could come up with for why I put money in the plate at church. Do I have to rent the seat? Is this like a pay it forward thing?
And if I get to heaven and I haven't paid enough, they're going to kick me out and take my shoe. These are the kinds of things my daughter thinks about, right? And so I can close that gap by actually telling them why I do it. I explain the what and I explain the why. Third, we provide practical opportunities, which is inviting them in a way that they will try. We want them to actually engage in this, right? It's not enough that they've seen us do it and they know what and why.
We want to give them opportunities under our supervision where they can actually give it a try in a way that's appropriate for their age group. All right, now let's get into how we have these conversations. What is your experience? Document your experience.
This is a little bit of the modeling part, right? What have you done to prepare this wealth that is now in front of us? How can you have this MVP experience with the next generation? Now these work, by the way, with adult children, it works with little children, it doesn't matter what their age is. Modeling verbal explanation and inviting practical experiences are all very effective ways to help anyone. I've done this in the corporate world at work, right? I've got to make a presentation to the board. And so I bring my junior member along and I say, here's how this went down and here's why. Now next time I'm going to have you do 30 seconds of presentation. Or I say, you're going to pretend to do a board meeting. What am I doing? I'm raising up the next generation and this is a grown being, right?
This is an adult in the workplace. We can do the same thing with our kids, but it starts with the family vision. It starts with why are we doing this? Why do we exist? Why has this wealth been entrusted to us? And why do we make the decisions that we do, right?
If we don't have core values and a family vision, it's all going to fall apart. Good depends on purpose, doesn't it? If I ask you if my book is good, I know you're all going to say yes. But if you're a person who likes to read biographies, then it's not a good book to you, is it? But if you want to learn how to teach your kids biblical financial principles, it's a very good book.
But whether or not it's good depends on its purpose. And so if our family is going to be good stewards, we have to define what that means. What has our family been called to do? That was Brian Holt, CEO of Compass, well-versed in finances at the Kingdom Advisors Conference in Orlando. His new book is titled Financial Discipleship for Families, Intentionally Raising Faithful Children.
You can buy it wherever you get your books. Your calls are next. The number 800-525-7000.
That's 800-525-7000. I'm Rob West, and this is Faith and Finance. When you hear the phrase rich toward God, what comes to mind? Surely it doesn't mean making God rich. Is it about us becoming rich so we can give?
Or maybe it's an invitation to something much bigger. In the new Rich Toward God study, Faithfi has created a way for you to explore and reflect on a well-known biblical parable about a very rich man with a very big problem. Request a copy of the Rich Toward God study today with your gift of $25 or more by going to faithfi.com slash give. As the leading advocate for the Christian financial industry, Kingdom Advisors serves the public by promoting the integration of a biblical worldview across every aspect of the financial services industry. And we serve a growing network of thousands of Christian financial professionals, equipping and empowering them to carry biblical financial wisdom to the clients, peers, and community. For more information, visit kingdomadvisors.com.
That's kingdomadvisors.com. Great to have you with us today on Faith and Finance. That number to call, 800-525-7000. We'd love to hear from you today. Again, 800-525-7000. You can call right now. Let's go to Texas. Hi, Stan. You'll be our first caller, sir.
Go ahead. Yes, we've got a custodial traditional IRA inherited from my wife's dad. And there's around $100,000 in that. And we've been taking the RMDs since he passed. And now that we've been told we've got to have this thing liquidated sometime next year. So that means we'd have to take the whole 100,000 out and I guess pay taxes on that. And I was just wondering if there's another option besides just because we don't really need this money. It's just money that, like I said, we've been taking RMDs and we don't use it to live on. And, you know, we've got 70,000 in our rainy day fund and money in the bank. And we're retired and we take, we get about $6,000 a month. And we live on that and we don't really need this money today.
It's just a savings. Yeah. Let me ask, did the account holder pass away in 2020 or after? It was before 2020. Okay.
Yeah. So the rules changed in 2020, where we moved to the 10-year distribution rule where it has to be zero. The account for a non-spouse beneficiary has to be zero by December 31st of the 10th anniversary of the owner's death.
Prior to that, we, you know, this does get a little complicated. So I'd rely on your CPA to help you think through this. But prior to that, we were in a situation where often the distributions were based on your own life expectancy, which would allow you to stretch it out over your own life expectancy for a non-spouse beneficiary, again, prior to 2020, where everything changed. So you could, you know, take it out over your own life expectancy, or you could follow the five-year rule on that as well.
But, you know, there are a couple of options there. And so I think that's where, you know, you need to check with your CPA. Who's advising you on this? And who said that it has to be out by next year? Well, we just got a letter from, it's with Wells Fargo. And we got a letter from them that the 10 years was up. Oh, okay. Next year. Yeah.
Okay. And that's where, you know, I think I would check with your CPA because just because Wells Fargo is saying that doesn't mean it's necessarily the case. You know, the 10-year rule is for, as I said, you know, based on the SECURE Act, the current law on the books is related to a 10-year distribution. But that's where the death of the account holder occurred in 2020 or later.
So you're, you know, talking about a death that occurred prior to that, and therefore you've got other options, and that may just not be noted correctly in their system. So do you normally prepare your own return? Or do you have a relationship with a CPA? No, we've talked to the CPA and he was suggesting we just kind of decide what to do actually after November of this year, if you get my drift there. He may not have been aware of when this was prior to 2020, the death. So I guess we could just visit with him some more about that. I think you need to.
And I think you just need to make it clear. Listen, this is a non-spouse inherited IRA. And as a non-spouse beneficiary, if the death occurred prior to 2020, you know, then you've got a couple of options. And one of those options typically, and again, he's going to need to advise you in your specific case, but typically one of those options is you could take these distributions based on your own life expectancy. So whoever was the beneficiary that inherited this, I assume that was your wife, then potentially you could spread this out over her life expectancy and the IRS would publish that table. But I think this is worth digging into a bit more, Stan, and you need a tax professional to do that. You don't need to go based on, you know, my advice because, you know, somebody needs to get in there and look at the actual code based on your situation and your account and help you decipher, first of all, what distribution method are you taking and what options do you have? And then based on that method, how do you ensure that you stay on track with those distributions so the IRS can't ever question the amount coming out. And so you get to the right landing point where, you know, the account has been completely distributed by a certain date. But if you take the life expectancy method and it's available to you, again, you could stretch that out over her life expectancy and that would go back to the table from the IRS.
So I would take a little bit more look at this and I'd go back to your CPA and just ask him or her to explain your options based on when the date of death occurred. Stan, we appreciate your call today, sir. May the Lord bless you and your wife. Let's go to Indianapolis. Hi, Steve, go ahead. Okay, here's my situation, Rob. I am going to retire first quarter next year at which point I'll be 61.
I've really been blessed. I have quite a bit of assets and I want to use them optimally and efficiently. I don't know.
I'd like to run my retirement plan through either a CPA or a planner. I don't know which is the right one. I could give you more of my details if that would help. Yeah, okay.
And so what is it you're looking for in particular? Well, the interaction between required minimum distributions, Roth conversions, donor advised funds and when to start Social Security because I know they all interact with each other and I do have a high amount of assets. Yeah, exactly right, Steve. Well, that's very astute of you because you're exactly right.
I think, you know, given the fact that you do have substantial assets, you are going to want to think about the best way to do that. I mean, we've got a number of factors converging, not the least of which is and we don't know, of course, the outcome of the election. We will after November. But, you know, currently the Tax Cuts and Jobs Act is due to expire. And so that's going to drive tax rates up. It's also going to drive the gift exclusion down substantially from the 13 million back to 5 million where it was.
You're right. You've got when to take Social Security. I love the donor advised fund. That can be really effective, especially with appreciated assets, but also once you're 70 and a half to satisfy your RMD. So, yeah, I think what you need is an advisor who could take the lead on this, who has a CPA that he or she works with very closely that could put a plan together for you considering all of these factors.
And I'd prefer for it to be somebody who shares your values that can really bring a biblical perspective of this. I know you mentioned a CPA specifically, but do you have an advisor that you work with on the asset management piece of this already? No, I do all of that myself. And I have worked with a CPA, but they want to use assets under management. I don't like that model.
No, I get that. And there's plenty of advisors out there, Steve, whether it's a CPA or maybe the financial advisor, the planner becomes the lead on the relationship, and then he or she pulls in the CPA can go both ways. But what you're looking for is based on an engagement, either a fee based. Generally, this would be a set fee to do the comprehensive plan.
And then you might go in and update that and pay along the way as things change in the future. It could also result in an hourly engagement once the initial plan is done. But there's plenty of advisors that can do that. And many of them do work on an assets under management percentage. But what you're looking for is somebody who can just do a specific planning engagement.
I have a couple of thoughts on that. I mean, you could look up, go to our website and search for the Certified Kingdom Advisors. They're in Indianapolis at faithfi.com. And just ask them as you inquire with them, you know, how they're compensated and whether they can do just a planning engagement. If you stay on the line, though, I'd be happy to get your information and get you connected with some folks specifically that could serve in this area. That'd be great.
Okay, absolutely. Steve, stay on the line. Our team will get your information and I'll get in touch with you. Thanks for your call today, sir.
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That's chministries.org slash faithfy. Thanks for joining us today on Faith and Finance. All right, phone lines are open 800-525-7000. You can call right now. Let's see. We'll go to Alabama. Hi, Margaret.
How can I help? Yes. Looking at getting a new vehicle, our mortgage has been paid off for a while now.
And I'm wondering if it's worth taking the equity line out because the interest rates on new cars and what you got to pay for a new car is astronomical. Yes. Yeah, there's no doubt about that. Are you looking to buy a new used car or are you looking to buy a new car at this point?
Either or. I think we prefer a new because we don't want somebody else's problems. Yeah.
Well, I certainly get that. Well, the nice thing you have going for you with the new car is there are some incentives coming back to the table. And so, you know, I think you might be able to find an incentive that would allow you, if you're going to finance it, to get a more attractive interest rate. I mean, we're starting to see the 0.9 and the 1.9 and the 2.9% interest rates coming back as these new car inventories are building, which would give you, you know, some ability to go and buy that new car that, to your point, doesn't have any mechanical history. You could service it the way you want. You keep it and drive it for a long, long time and get a more effective rate. That's going to be my preference, Margaret, than you taking on a home equity loan.
And here's why. Number one, the home equity loan rates are not going to be attractive either. Rates right now are pretty abysmal. You know, I mean, we're seeing the average interest rate for a home equity line of credit right now at 9.5%.
And then a home equity loan, the average interest rate right now is about 8.6%. So, I mean, these are not attractive rates, so you'd do much better with a new car dealer incentive, number one. But number two, even if it was better, I still don't like you encumbering your home for the car. I'd rather you, if you had something unexpected, and I realize there's a remote chance of this, but if you had something unexpected that caused you to not be able to keep that payment up, I don't want you to put your home at risk.
I'd rather you just have to walk away from the car. And so I'd rather keep that separate from the house. And especially because these home equity loan and line of credit rates are just not appealing right now.
I'd much rather you do the legwork on finding out which make and model is desirable to you, gets good reliability ratings, but also, you know, maybe you could look for a dealer incentive that might bring that rate down, which could help you out as well. Does that make sense? Yeah, Bob, look, they're not bringing those rates down, at least not here. Okay. Yeah, I mean, I do a little bit more homework. I think we're seeing more and more of that, but the bottom line is, I mean, what rates are you seeing today for a new car? Eight percent. Okay, but that's excellent credit. Yeah, but you're going to get that's you're going to pay that or more for a home equity loan.
So you're really not going to save anything there. And actually the average new car rate right now, again, for a new car and where you have, you know, super prime credit is around six. And so it could be that, you know, you just need to do a little bit more shopping. Have you looked at some of the online lenders, Margaret, as a part of this?
No. Okay, so you may want to, you know, do some homework there. For instance, you could go to bankrate.com or nerdwallet.com and just see which of the car lenders specifically for auto loans has the very best rates. And then you could compare that to what the dealer is going to offer you.
But I would, I would still rather given, you know, where we find ourselves today, I'd rather you not put that on the house. I'd rather you keep it just collateralized by the car. And I do think you're going to have a better time finding some incentive rates in the car space, the auto loan space more so than you are in the home equity space. Those rates are really high and there's just really not the same incentives out there on the home loans as there are on the car loan.
So that's my best advice today. I'd steer clear of putting it on the house and I would probably look at a few online lenders, use that at the very least as some negotiating power to try to get the dealer to give you their very best rate. And then if you've got the ability to be patient, just continue to watch, especially as we get into the back half of the year, you're going to see more and more of these incentives because they're wanting to hit their numbers for the year. So they're wanting to move more cars and we're going to see not only the possibility of rates starting to come down with the rate cut, but you're also going to see continued building of new car inventories and all of that points to the ability for more and more of these manufacturers to offer the loan incentives. So if you can wait until the back half of the year, I think you might even do better than you can do today. We appreciate your call. Thanks for being on the program. Let's jump quickly to Chicago. Hi, Jackie. Go ahead.
Hi, Rob. My question is about when to start taking Social Security benefits and specifically I'm trying to understand the spousal benefit. I'm 62.
I'm no longer working. My husband is 63. He's planning to work till 65 or 67. It was always our plan to defer Social Security until at least probably 67. But I just read something that talked about how I might consider taking my benefit now currently at age 62 and then once my husband retires and starts taking his benefit, my benefit would then convert to a spousal benefit and I've tried to do some research on my own and I'm just not understanding this spousal benefit conversion.
So here's the thing. You can receive up to 50% of your spouse's benefit so long as your spouse is taking their benefit and if you're full retirement age when you take it. If you take it before full retirement age, you're going to get some percentage lower than 50%. Now, if you delay your benefit, so let's say you start taking your spousal benefit but you delay taking your benefit based on your own work record, that benefit can continue to grow whereas the spousal benefit does not.
So typically what people do is as soon as they're able to and their spouse is receiving their benefit, then they begin collecting the spousal benefit they're due and take that, let theirs continue based on their own work record to grow up until full retirement age and then even beyond that to age 70 and at that point, switch because you can do that to the higher benefit which at this point is now not only what you would have gotten at full retirement age but about 25% higher than that because you let it continue to grow. Does that make sense? Yeah. Okay. I see.
I understand. But in order to get the full 50, your spouse needs to be collecting his benefit. You can't take it unless he is and you need to be full retirement age. Your spousal benefit won't grow beyond 50%.
That's the max you can get but your own benefit can grow and will grow as long as you delay it and you can switch one time and take the higher of the two down the road. So hopefully that helps. We appreciate your call today. I know this can get complicated but thanks for being a part of the program. That's going to do it for us today. I hope you found something encouraging and helpful today. A big thanks to my team. I certainly couldn't do it without them. Amy, Dan, Taylor and Jim. May the Lord bless you and I hope you'll come back and join us next time on Faith and Finance. We'll see you then.
