6 Big-Time Money Wasters

Many people are using the FaithFi app to help provide the wisdom, community, and money management to stay on track, financially speaking. To date, over 37,000 members are using its digital envelope system, participating in our community forums, and engaging in virtual workshops. And one of the most convenient features is the ability to keep all your accounts in one place for an easy-at-a-glance view. You can choose from one of three options, depending on your management style, and it's available on desktop or mobile.

Go to faithfi.com and click app to get started. Okay, before we get into the specific money wasters, there's a general principle you should be aware of. If you're buying things that provide only a temporary sense of satisfaction, you're probably wasting money. Doesn't matter what it is, if it's not a necessity and you grow bored with it, it was a waste of money.

Check your closets for examples. Now, I'm not saying you should take a vow of poverty. The Lord wants us to enjoy the resources he's given us, but that must be tempered by the principle that we're merely stewards and we need to use his resources wisely. But of course, we live in a culture that promotes spending.

It's a big problem. One survey showed that the average adult spends around $1,500 a month on non-essentials. No wonder so many Americans are living paycheck to paycheck.

Imagine what that kind of money would do if it were put into savings or invested for retirement. All right, let's look at our six money wasters for today and what you can do about them. The first is one of the biggest, but also one of the easiest to fix, not preparing your own meals. It's okay to eat out occasionally, but too often it's just for convenience and not really necessary.

By some estimates, a restaurant prepared meal will cost you three times what you would pay for the same meal cooked at home. Money waster number two, upgrading your smartphone as soon as a new one comes out. For example, the iPhone 15 could cost you as much as $1,600 or lock you into a long contract if your carrier provides it. Eventually, a smartphone will have to be replaced, but the longer you delay upgrading, the more money you keep in your pocket. This year's red hot phone is next year's discount model. And you have to ask just how smart does your phone need to be?

Most of us don't use the features we have now. Okay, number three, clothing is another biggie. Wearing the latest fashion is expensive. By some estimates, the average American spends nearly $2,000 a year on clothing, and in a few months, whatever you buy will probably be out of fashion.

Clothes do wear out and need to be replaced, so you have to include that in your budget, but those spending decisions should be practical, not a way to boost your ego. Money waster number four, buying lottery tickets. The ads say you can't win if you don't play, but that's nonsense. You definitely will win if you don't play. You'll get to keep your money. You have better odds of being hit by lightning twice than winning the lottery. Plus, you don't want to participate in something that disproportionately hurts the poor.

A bank rate report found that low-income households spend as much as 13% of their income on lottery tickets, far more than higher-income earners. Okay, number five, extended warranties, especially for automobiles. It's now a $40 billion a year industry, and it's really just an expensive form of insurance that you probably won't need. So instead of buying an extended warranty, do your homework to make sure you're buying a quality item to begin with. Most will have an adequate manufacturer's warranty anyway.

And then make sure you have enough money in your emergency fund to cover any repairs you might need to make. And our number six big money waster is your cable or streaming package. If you're still paying for cable, it could be as much as $200 a month for internet and TV.

Do you really need 568 channels? More and more folks are dropping cable and satellite TV and using only streaming apps, but even there, you can waste a lot of money. A new survey by Finance Buzz showed that a quarter of households have at least three more streaming apps than they had two years ago. And one in ten reported they have no idea how much they're spending on streaming. So keep track of what you're watching, and if you're not getting your money's worth from an app, drop it.

That's one great thing about streaming apps. No service contract, drop it anytime you like. Okay, those are your six big time money wasters. I hope you find this helpful. And by the way, the best way to identify how you're doing in each one of these categories is to live on a spending plan, and the FaithFi app can help with that. You can download it on our website at faithfi.com. All right, your calls are next, 800-525-7000.

I'm Rob West, and we'll be right back. Stick around. Are you searching for a way to become a better, faithful steward of the resources that God has given you? Well, download the FaithFi app and join the 37,000 others who are already using our app. The FaithFi app will provide you with wisdom, community, and simply help you stay on track with your finances. We have three money management options to choose from, so find an option that fits your unique needs.

It's available on desktop or mobile. Simply go to faithfi.com and click app to get started. We are grateful for support from the Eventide Center for Faith and Investing.

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So thankful to have you with us today on Faith and Finance. I'm Rob West. It's time to turn the corner and take your calls on anything financial. The number to call, 800-525-7000. We've got some lines open. You can call right now. Our team is standing by, 800-525-7000. All right, let's dive in today.

We'll begin in Cleveland, Ohio. Hi, Jennifer. Go right ahead.

Hi, how are you? Thank you so much for taking my call. You're very welcome. My daughter, who is 19, is looking to purchase a car this week. She has found the car that she likes. It has very low mileage.

We've had a mechanic take a look at it and he says it's good to go. She has the finances to purchase the car outright, but because she's 19, she doesn't have much credit. So my husband and I were thinking that maybe she should only put half down instead of paying for the whole thing and then establish credit. What are your thoughts? Yeah, I have a lot of thoughts on this one. You know what? I love the idea of her paying it in cash.

And for two big reasons. Number one, it just starts her off at this very early age of understanding the importance of delayed gratification, saving, and eventually buying what we can afford with cash and not using debt to fund purchases. Obviously, I would imagine she's worked very hard, unless she got this money as a gift, to put this money away. It sounds like she's done a lot of legwork to find a great car. As you said, low miles.

I love the fact that you all got it checked out by an independent mechanic. And so I'd love for her to make this first major purchase completely debt-free as the fruit of her labors. Secondly, I don't think there's any reason for the sake of building credit to pay a dime of interest, especially when you don't have to. There are other ways, Jennifer, for her to build credit.

We can talk about some of those. But taking out a loan specifically for the purpose of building credit, even though I understand at age 19 she has a lack of credit at this point, and that will come to bear in certain situations, this is not the way to do it. So how then do you build credit? Well, one option would be she could get what's called a secured credit card, where she would put a certain amount on deposit, let's say $500.

They would then issue a $500 credit line against it. She could set up to spend for one purchase a month, let's say a budgeted item that she's already planning on spending. It hits the card, she pays it off, and then it's reported to the Bureau each month as being an on-time payer. That's going to help her build credit. If you wanted to take it another step, you could add her as an authorized user to one of your accounts. You don't have to give her the card to use, but she would inherit all of your credit from that point forward.

Now, that runs both ways. If you all had a missed payment, that would hurt her. But if you're timely in your payments and you don't carry balances that are certainly above 30% of your limit, if you do, I wouldn't do this. But if you're paying it in full every month, that would be one way you all could help her establish credit. There are other vehicles, something called a credit builder loan, where she's paying interest but she's paying it to herself. That would be another way that she could go about this. So there are ways it will happen over time as she is out there just following good money management practices like she already is. But paying any interest, especially with these high interest rates right now, is not the way that I do it.

Does that make sense? It does, and she does have a secure credit card right now. She's had that for about six months, and she has been on our credit card probably for about two years now. Okay. All right. What is her credit score at this point? That I don't know.

Okay. It might be higher than you think. I mean, is she out looking for a loan? Obviously, she's going to have a newer, at least new to her, automobile. I would imagine she's not buying a home anytime soon. So does she even really need a good credit score at this point?

Probably not. We just always just thought that, you know, having that monthly payment other than because she couldn't get a credit card, like you said, because she had no credit. So we had to do the secure credit card. So we just thought this was just another vehicle for establishing credit. But if you're saying that it's best not to do that, that's why we're making the phone call. Yeah. No, I appreciate that.

And it's a great question. I can understand why you might want to consider it. But I think in this case, you know, that it's not worth it to go about that. That's where again, if you wanted, you know, you pulled the credit score, and that might be the next step, maybe you go to Credit Karma, or you go to annualcreditreport.com and just actually take a look at what her credit score is in this season of life for her. The only place this could possibly work against her is, you know, if she goes to get a job and they check her credit, but again, they're typically looking for something that's awry. A lack of credit would typically not be a way or a reason they would stand in the way of giving her the job, at least at this age. And then perhaps if she wanted to go get an apartment, they pulled credit, they were looking at her credit score.

And, you know, that was a reason. But ultimately, I don't think it's really going to harm her in any way at this point. She's doing all the right things. And again, this credit builder loan could be another way that you could go about this where, you know, you actually pay monthly installments, it's reported to the bureau. And then what you'd be looking for is where the lender returns that interest to you at the end. But again, I would probably just say, let's just stay on the track you're on with the authorized user for years. And with her using that secured credit card, you might find that once she's ready for it, she could actually go ahead and get approved at this point for, you know, a card that's unsecured, specifically that caters to students and, and younger borrowers. But I think you guys are doing all the right things here, Jennifer. But I wouldn't go to the level of paying any interest to build that credit score.

Go ahead and check that, though. You might be surprised it's higher than you think. Thanks for your call today. Let's go to Oklahoma. Hi, Evelyn.

Go right ahead. Yeah, I have a couple of retirement plans directly through one account. And I'm needing some cash like quickly. So I want to withdraw both of them. But there's only like 9000 in each account. So it's like 18,000.

But they're wanting to withhold the 20% plus fees. So that's like 2200 on each account. Is that normal? It is.

Yeah. So typically, you will have that withholding, you know, just because most plan administrators will require it. And you basically that's just being, you know, sent to the IRS, it is going to be taxable to you at a minimum. So it will be added to your taxable income.

So oftentimes, that 20% may not even cover the tax owed on the distribution. It's really a starting point more than anything. Are you under 59 and a half Evelyn? No, I'm over. Okay.

All right. So you're not going to have the penalty, but it is certainly going to be taxable. And this will just make sure that you've got a good head start toward paying whatever you owe. Now, of course, if you don't owe as much as their withholding, then you would get that back at tax time, based on your federal tax rate.

So you know, when you file your taxes, depending on your tax bracket, that would be the time that you get it back. But generally, you know, this is very common and often it is required. Okay. Yeah, unfortunately. All right. Are there other options Evelyn were that you could consider? I realize you said you kind of need this in a hurry.

I don't know of any. Okay. What is it you're needing to do?

Are these home repairs or something else? No personal issues. Yeah, no worries. Very good. Well, it's it's not unexpected. This is very typical. And, you know, it's it's just getting you started.

It's just getting you started toward making sure you have something paid into the IRS so you don't get caught with a big tax bill. Hopefully you'll get a little bit of that back, especially in this season of life where income is lower. Thank you for your call today. All right, folks, we're going to take a break when we come back. More of your questions lines are open.

I'm ready for him. Eight hundred five two five seven thousand with whatever's on your mind again. Eight hundred five two five seven thousand.

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We have room for maybe one or two more questions before we round out the broadcast today. Whatever you're thinking about in your financial life, living, giving or owing, perhaps even growing God's money, call today with those questions and we'll help you process those decisions in light of biblical wisdom. The number is 800-525-7000.

Also, maybe you have a testimony today you'd like to share about God's faithfulness, how you've seen these principles at work in your financial life. We'd love to hear that as well. 800-525-7000. You can call right now. Let's head to Tennessee and talk to Steve. Go ahead, sir. Oh, yes. This is Steve from Mississippi. Oh, okay. Mississippi. I'll take that.

Go right ahead. Oh, yes, sir. I had 135.

I thought it was 140. It's 135 in an IRA and it's going to be matured in July and I was wondering if you had an advice on something to do with it. Yeah. So when you say matured, do you have that in like brokered CDs or something? Yes, sir.

In the CD at the bank. Okay. And what is your age? Sixty-nine.

Sixty-nine. All right. And then in terms of other retirement assets, what do you have?

Well, nothing really. I mean, just little savings and just what's coming in from Social Security. All right. And so you're living off of Social Security alone at this point? Pretty much, yes, sir. All right. And is that enough to cover your bills every month?

Pretty much. We're going a little bit from the IRA, like 500 a month. Okay.

500 a month from the IRA. Now, that's been in CDs, so has it been paying interest and then you've been pulling the interest or something? Yes, sir.

Pretty much. Okay. Now, I mean, I like the number that you've got there at 500 a month because basically you're pulling about 4% a year, which is realistic. And you've been getting a decent interest rate on those CDs.

That's not going to be around forever. Do you have any emergency savings beyond the IRA currently? No, very little. Okay. And do you have any surplus on a monthly basis that if you're really buckled up or buckled down, I should say that on your spending, you could start to put something away a little bit every month?

Maybe a little. Okay. I mean, I think that would be key. I'd love for you to get up to six months worth of expenses.

It might take some time, but I'd love for you to get to a place where you've got something to fall back on. So if something comes out of left field, especially given that you're kind of living right up to the edge, that you've got the ability to cover that. With the IRA, I mean, given that you need, you know, five, six thousand a year, I think we do need to get this invested.

I mean, typically at 70 years old, I'd say you might want a portfolio of 30% in stocks, maybe 10% in gold, maybe 60% in fixed income type investments, high quality bonds, U.S. treasuries, maybe even some more CDs. So we've got a good stable portfolio. It's not very volatile. It's paying a good amount of interest, a nice yield. Those bonds will increase in value as interest rates fall whenever that comes.

Maybe it's next year at this point with inflation. And then the stock portion, even though, you know, that'll ebb and flow, you know, it gives you a growth component over time. Because here's the thing, I mean, depending on your health status, you might need this money to last the next 30 years if the Lord tarries and you're in good health. So, you know, we can still take a long term perspective, even at age 70. And I think, you know, getting this invested and I would recommend using an advisor, somebody who can manage it for you is so that you can take out that 4% a year.

And the goal would be over time, not in any given one month or quarter or year, but over time, you'd be able to maintain roughly that $135,000, maybe grow it a little bit for inflation, but still pull out the $5,000 or $6,000 a year you need to supplement. So that would be my best advice. And if you don't have someone, I'd recommend you connect with a Certified Kingdom advisor there in Mississippi to help you do that.

Okay. Well, I sure appreciate it, sir. Who is a Certified Kingdom advisor?

Yes, sir. So here's where you'd go. If you're comfortable using the internet, just go to faithfi.com. That's faithfi.com and click find a professional at the top of the page and then you'll do a zip code search.

CKA is the only designation in the financial services industry for men and women who've met high standards and character and competence. They've signed a statement of faith. They've signed the code of ethics. They've been trained to bring a biblical worldview and they've had a pastor and client reference and met an experience requirement. So they're highly vetted. And, you know, I think, you know, these are trusted folks that you could connect with.

I'd interview two or three there in Mississippi and then find the one that's the best fit. Okay. Well, I sure appreciate it, sir.

All right, Steve. God bless you and your wife. And thanks for calling today. We appreciate it. 800-525-7000. We're getting to as many questions as we can here before we round out the program in the next few minutes. Let's go to Iowa. Hi, Teresa.

How can I help? Hi. I have a question about Social Security. I am going to be 68 in September and have lived on savings for the last year. So I know about how much I spent over that year.

I started my Social Security and now I'm thinking I want to wait. I have about 42000 in savings. My house is paid for, cars paid for. I have about two hundred and sixty thousand in an IRA and another one hundred and five in a guaranteed annuity. Okay.

All right. So what is the total of the assets outside of the annuity? Outside of the annuity?

Probably close to three hundred thousand. All right. And then you have the guaranteed annuity or have you annuitize that yet or is that just growing?

It's just growing. It's guaranteed four percent. All right. And what's the value of that?

It's about one hundred and five thousand. All right. And so is your question, does it make sense for you to suspend your retirement benefits and let the check grow?

Yes. And where would you draw the income from that you're you're currently getting from Social Security while you're waiting? Probably the IRA. And how much do you need per month? Per month, probably about three thousand.

About three thousand a month. Yeah. So I mean, that'd be more than I'd like for you to take, although I realize it grow at eight percent a year. And so you'd pull, you know, quite a bit more, you know, about three times that's about 12 percent over the year year. And you do that for, what, another year and a half. Is that right? It would be about two years. OK. Yeah.

And then you get a check 16 percent higher, you know, because you get a percent a year for. So I think you just need to run the numbers on that. I like that option.

There's just a lot of moving pieces here. Unfortunately, I'm out of time today. So let's do this. I'd love for you to connect with an adviser, a certified kingdom adviser in your area on our Web site at faith.com. But I think you're headed in the right direction.

I'd love to just compute the numbers a little bit more and make sure this makes sense. So thanks for your call today. You know, before we go, let me remind you, we trust the certified kingdom adviser designation. If you're looking for an adviser that shares your values, that can bring the council of scripture to bear in professional financial decision making. You can find a C.K.A. in your city when you go to faith by dot com and click find a professional.

Again, that's faith at five dot com and click find a professional. Well, on behalf of my entire team, Taylor, Jim and Devon, I'm Rob West. We're so glad you were with us today. I hope you'll come back and join us next time for another edition of Faith and Finance. God bless you. Faith and Finance is provided by Faith by and listeners like you.