3 Tips for Financial Wellness With Neile Simon

This faith and finance podcast is underwritten in part by Christian Credit Counselors. If you're struggling with credit card debt but don't know where to start, our trusted partner Christian Credit Counselors offers a debt management program that can get you out of credit card debt 80% faster while honoring your debt in full. Contact them to get out of debt today at ChristianCreditCounselors.org. Not following the Bible's financial principles is unwise and can be hazardous to your wealth.

I am Rob West. Financial wellness doesn't happen all by itself. It's something you have to take positive steps to ensure. This is faith and finance, biblical wisdom for your financial journey. We need to get our finances and make some adjustments where needed.

So where should we start? Keep in mind, your budget doesn't need to be an IRS audit for every little thing. But what you do need to have are the major things. Here's a list of the things you should be looking for. Track your housing, food, transportation, clothing, debt payments, utilities, insurance, medical bills, and recreation expenses. Now many people oversubscribe to entertainment services during the pandemic. Those are the automatic payments that are easy to overlook. Maybe you don't need five or six streaming services.

Just pick a few and cancel the others. A good way to see what's on auto pay is to review your bank and credit card statements. That'll give you a good idea of the big stuff and then you can fill your budget in the best you can with the small stuff.

The more accurate, the better. Well, that certainly is a key part of financial wellness. Take us to tip number two. Pay down your credit card debt because it is the most costly consumer debt you have. According to Bank Rate, the average credit card interest rate is now over 20% and the average retail credit card interest is 29% and some even go up to 32%.

Here's a good example. If you're only making minimum payments on a $6,000 balance, it will take you 17 years to pay it off and along the way, you'll pay $9,000 in interest. Now this is a good time for me to remind you, no consolidation of your debt. I recommend a debt management program, which is why we've partnered with Christian Credit Counselors. They'll help you get those interest rates down, a level monthly payment and get out of debt much faster.

All right, Neely, tip number three. Start an emergency fund. Everyone should have a cash reserve set aside for unplanned expenses that aren't in your monthly budget. These are things like car and home repairs or medical bills.

An emergency fund can also shield the blow of losing your job. Experts say saving three to six months worth of expenses is best. If you can't do that, start somewhere. Make a goal of $500 and build from there.

Another suggestion is to make it automatic. Split some of your paycheck into a savings account. Yeah, that's great advice.

All right, we're about out of time. Neely, so many people are feeling overwhelmed these days. It seems like what they really need is an action plan. I know that's where Christian Credit Counselors comes in. So give them a quick overview of what you do. Sure. So at Christian Credit Counselors, we help people every day set up that action plan that gets you out of debt 80% faster while honoring your debt in full.

For more information, you can go to christiancreditcounselors.org or by calling us at 800-557-1985 to talk to a certified counselor today. Again, the consultation's free. Great, Neely. Well, we always appreciate you stopping by. Thanks for the tips today and thank you for your partnership as well. Thank you so much.

Have a great day. That's Neely Simon with Christian Credit Counselors. This is my preferred way to get you out of credit card debt, folks.

The website again is christiancreditcounselors.org. All right, your calls are next. The number, 800-525-7000. That's 800-525-7000. I'm Rob West and this is Faith and Finance.

We'll be right back. 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. Are you looking for a financial professional who aligns with your biblical values? Certified Kingdom Advisors are trusted financial, legal, or accounting professionals who have completed a rigorous certification program to ensure they provide biblically wise financial advice as part of their practice.

You can find a local CKA professional in your area by going to faithfi.com and clicking Find a CKA. Welcome back. This is Faith and Finance. I'm Rob West. We're taking your calls today. 800-525-7000. That's 800-525-7000. By the way, you don't have to call. Just send an email, askrobatfaithfi.com.

That's askrobatfaithfi.com. Let's dive in today. We'll begin in Miami.

Hi, Marilyn. Go ahead. I have several investment accounts, stocks, and bonds. I also have equity in the home, but I also have some credit card bills and some two-car payments. I'm trying to figure out, should I take investment and pay them off? Should I take the equity in the house and pay them off?

Yeah, I'd be happy to. Let's start by just unpacking what you have here just a bit. You mentioned you have some credit cards. What is the amount that you're carrying on about?

Credit cards is about 20,000, maybe 30,000. Okay. How long have you had that? Has that been building over time or has that been with you for some time?

About the last sense of COVID, I think. Are you adding to that balance every month? No, no.

Okay. How did the credit card debt come about? Was it just lifestyle spending beyond your means? Was it a single event?

Yeah, one was a single event and just the others just opening up and paying off something else and then adding. I want you to get out of debt. The challenge is that I really want you to correct the issue that led to the debt in the first place, which is usually consumptive spending beyond your means. I realize life happens and there's challenges along the way, and that's why we really need to build a solid financial foundation. So I'd love for you to start by building up at least the beginning of an emergency fund.

So if you just pay the minimum on these credit cards and keep all the other debt serviced, and if you cut back as much as you can on your bills, do you typically have anything left over at the end of the month? Yes, a little left over, but not so much to say. Let me put aside. Sure.

Yeah, no, that makes sense. Do you have anything in liquid savings right now or have you put everything toward getting out of debt? Put everything towards getting out of debt.

Okay. Well, I'd love for you to start with the budget and really look at any opportunity to cut back so we can free up as much margin as you can. And I agree you need to get out of debt, but we also need to break the cycle of additional borrowing.

So I'm going to recommend you try to save between $1,000 to $1,500 just so you have something to fall back on when the unexpected comes, so we can get out of adding to that credit card debt once and for all. The other approach is not to pull from your home. That would be expensive money, plus it would take unsecured debt and now secure it or collateralize it by your home.

I wouldn't pull out of your investments either. I really would prefer that you go through what's called a debt management program. That's my preferred way to get out from under credit card debt. Essentially what would happen is you would contact our friends at christiancreditcounselors.org.

They would tell you how low they can get your interest rate. So each of these credit card companies will have the credit counseling rate, which is going to be significantly lower than what you're paying right now. The combination of one level monthly payment going through Christian Credit Counselors and the lower interest rates will allow you to pay that back, on average, 80% faster. But the key is that we're not taking out new debt or adding it to your home or even pulling out of your investments at a time, especially while the market is down. And in you paying it monthly, it really puts the emphasis back on getting that budget right and getting your expenses as low as possible and looking for ways to cut back. Because you also have the ability to send extra beyond just the scheduled monthly payment that you'll send through Christian Credit Counselors whenever you're able.

But I really want you to establish those new disciplines that allow you to make this sustainable. So once you get out of debt, you never go back there, at least with regard to spending on lifestyle expenses on credit cards. Does that all make sense though?

It makes sense completely, definitely. So what I would do is contact christiancreditcounselors.org. Tell them that you heard about them on the program. They'll take good care of you. They will work with you on getting that new budget set up and helping you evaluate your expenses and thinking about how to control the spending coming in and out on a monthly basis.

Then they'll review all of your creditors, tell you what they can do on getting those interest rates down, and then they'll tell you what that one new monthly payment is. And I think that'll get you on a good path forward. But I'd also love at the same time for you to at least get something going toward emergency savings every month, even if it's $25 or $50 a month. Let's just try to build up a little bit of a nest egg so that when something comes out of left field, you've got the ability to cover that and we're not adding to these credit cards.

So again, christiancreditcounselors.org is the place to go. Marilyn, we appreciate your call and we'd love for you to keep us posted as things progress down the road. Thanks for being on the program today. Let's go to Frankfort, Illinois, WMBI. Hi, Bill. Go ahead.

Hi. Just got a question about online auto refinance companies. We talk often about the banks. There's no brick and mortar to get better interest rates.

Same service kind of things. And I'm wondering how that works with auto refinance companies. I just bought a new truck and retiring and you're at the 4.9, 5.9 interest rates, but these online companies are advertising 1.9, 2.9. And I'm just wondering, is it legit? Are these companies good?

And then one sends me, it's like, well, the fees are 299 to 499, which I didn't know that. Are there companies out there as a good way to refinance a car for cheaper rates than just going through your normal bank or credit union? Yeah, absolutely. I would say you definitely want to take a look at these.

Now, here's the key. I mean, you just want to look at not only the rate, but you also want to look at the expenses and make sure that it actually is a good deal. I mean, I'd be looking to get probably three bids at a minimum. One of those could absolutely be your bank, but why not go online to LendingTree or one of the others and see who's offering the very best rates right now for your credit score on a auto loan refi and let them compete for the business. And if they're offering a more attractive interest rate, as long as you've compared all of the costs of the loan itself, not just the interest rate, but those other expenses, if it comes out better, I'd say go for it.

There's no downside there. I mean, they're going to go ahead and fund that loan right on the front end and they're going to service it or they're going to sell it. But at the end of the day, I mean, I would exhaust plenty of options before you make your final decision because it can add up to a significant amount of money. Now, you're not going to find a car loan right now at 1.9 or 2.9. I mean, that's probably going to be a dealer incentive, but I would certainly take a look at some of the online lenders and using one of those lending search engines is probably the way to go.

Okay. Because, yeah, like the one surprised me and they're like, well, others charge $299 to $499, which I never even considered. You know, then they're like, of course, we don't do that. So as you said about rates, you know, about fees, that $500 fee, you get a half a percent or a percent cheaper, is it really worth it?

Yeah, exactly right. Yeah, so I think you need to get that good faith estimate so you can see what is the total cost of this loan over the life of the loan, and that includes more than just the rate. But if you can, you know, find somebody with low fees and they're going to give you a rate that's a point or two below somebody else, you know, why not take it?

So absolutely, I'd do your homework here, but consider the total cost of the loan as you shop these around. Bill, thanks for calling today. All the best to you as you look to get that refinance.

Stick around. 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. We are grateful for support from sound mind investing in the faith and finance program. For more than 30 years, they've been helping Christians reach their financial goals with step by step guidance for investors at every stage, from those just getting started to those getting ready for retirement. Through scriptural principles and practical suggestions, SMI offers financial wisdom for living well.

More information, including the short video webinar on profit and peace of mind, no matter what's happening in the market, is available at sound mind investing dot org. We're back. I'm Rob West and this is Faith and Finance. Thanks for listening today. Thanks for taking the time as we head into our calls and questions. I want to take a moment to ask you if you've downloaded the faith by app.

You can use it on your desktop or your mobile device. All right, let's head to the phones. By the way, if you have a question, just call 800-525-7000. That's 800-525-7000. Viji is in Fishers, Indiana. Go ahead.

Hi, Mr. West. Thank you for taking my call. My question is, my required IRA withdrawal to go, I want that to go to my charitable distribution like church and other institutions before tax. So my tax bracket don't go up.

Is it possible? Yes, absolutely. So what is your age?

I'm 80 years old. Okay, very good. And you've got an IRA. Is that right? Yes. Okay.

Yeah. So you can do what's called a qualified charitable distribution. And basically what happens here, as long as you're 70 and a half, you can satisfy that required minimum. But instead of them sending you a check, you can have it go directly to a charity or a nonprofit of your choice, including your church. And they'll get the full amount.

You won't have to add that money to your taxable income, which you would otherwise, and you'll satisfy the required minimum distribution. So the way you'd go about that, Viji, is you'd call your custodian, whoever sends you your statements. So where is this account located? At Edward Jones.

Edward Jones. Okay, so you'll call either your advisor or if you're on the retail side, you'll just call Edward Jones customer service, let them know you're looking to do a qualified charitable distribution. They'll give you all the paperwork either electronically or physically, where you would, you know, give them the name of your of the charity and, you know, the tax ID number and the amount and so forth.

And then you'd want to alert them that it's coming so that they're not surprised by it. And then the money will never come to you. It goes straight to the ministry or the charity. And, you know, you'll have the proof that it was done for your taxes so you can show that you took your required minimum.

But as you said, you don't have to recognize that as income, which means you have more to give away. That's what I thought. But last year, I asked them to do that. But my Edward Jones did not. They withdrew the money. And then they distributed like I asked. So that means it was my tax bracket went up.

That's what I see. Okay, well then they didn't do it as a qualified charitable distribution. They just did it as a distribution. So you need to tell them, listen, this year, I don't want you to take a distribution and send me a check.

I want you to do a QCD. And that means that the money never comes to you. It goes straight from your IRA to that ministry or charity, which also will satisfy your required minimum but will not add to your taxable income. So you just need to get ahead of that.

Call your advisor or call Edward Jones. Let them know you want to do a QCD or a qualified charitable distribution. They should, I mean, they do it all the time. So this should not catch them off guard one bit. Okay? Okay. Thank you so much. You're welcome, Viji. Thanks for calling today. May the Lord bless you. You're listening to Faith and Finance where we talk about how we handle God's resources.

How are you using God's resources? We're talking about it and the lines are open to take your calls and questions. 800-525-7000 is the number to call. Vicki has been holding patiently in Ohio. Go right ahead, Vicki.

How can I help? Hi, thanks so much. My husband and I just recently downsized two years ago, and we are considering for an additional income at some point. We're actually wondering if we could use like a HELOC to get to build like a small Airbnb on our property would bring income. And I'm wondering how to pick the company that we would get the home equity line of credit with.

Yeah, it's a great question. So let me ask you, what is your home worth and what are you on the current first mortgage, if anything? Actually, we're mortgage free.

It's like 385 right now. I was just going to say that what we're looking at is probably going to cost us around 120 to put on our property. So it could do multiple things, whether my mom wants to come and visit, you know, there's a place for her to stay. But then also do put it up for an Airbnb to, you know, get some extra income and for it to pay for itself. Yeah, no, I like that a lot.

Do you have the ability, Vicki, out of current cash flow to service the mortgage even without a tenant? Yes, we do. Okay.

All right, good. Yeah, I think that's the key. And normally, I would say let's not get a home equity line of credit. Let's just get a home equity loan and lock it in. Obviously, with rates where they are, the home equity line of credit gives the ability to ride those rates down.

And we think that'll probably start to happen, you know, sometime next year. So I think, you know, that's a good option for you. The other benefit is when you with new construction, it would allow you to draw that money as you need to and hopefully cash flow some of it so you could borrow as little as possible. I would just think about a reasonable payback period, make sure you have enough to float and service that debt and also cover any kind of maintenance or upkeep, although with new construction and probably be, you know, pretty minimal in those early years. In terms of how to select that lender, I mean, really, you just need to look at the total cost. So there's not only the prime plus, so they're probably going to charge you prime plus one or, you know, 2%.

But then what are the fees around it? And that's obviously key so that you make sure that, you know, you look at the total cost of the loan over the life of the loan, not just get fixated on that interest rate. So I'd probably, you know, you could do an online search, I would definitely check with our friends at Movement Mortgage just because they're a faith-based alternative so you know you have somebody who shares your values and they're nationwide and would probably give you, you know, exactly what you're looking for. So movement.com slash faith is the place to go.

But obviously, you could get a couple of other bids while you're at it and I'd probably look at Lending Tree or, you know, one of the online search vehicles. Is that helpful? Oh, looks like we lost her.

So hopefully that was the information you were looking for. Thanks for being on the program today. We appreciate it.

And that's going to do it for us today. I really appreciate your taking time to listen to this program and to committing the principles we talk about each time to your financial life. You see, God's plan isn't difficult, but it does take discipline and I hope we can encourage you along the way as you listen to this program. Incidentally, if you've been helped by what you've heard here, would you mind helping us? This broadcast, the FaithFi app and the other great resources we provide wouldn't be possible without the financial support we receive from listeners like you. We offer a lot of our resources for free and even have a free version of the FaithFi app and that's only possible because of the generous gifts from listeners like you. If you're not yet one of our financial partners but would like to be, would you visit our website, faithfi.com, and then click the Give button to sign up. Thanks for listening and sharing and I hope you'll come back and join us again next time for another edition of Faith and Finance. Faith and Finance is provided by FaithFi and listeners like you.