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1 Peter 4.10 Hi, I'm Rob West. The Bible has dozens of verses about stewardship. But have you ever wondered where stewardship begins?
What's it based on? I'll explore that with Chad Clark today 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. Well, it's always fun and educational to have Chad Clark on the program. Chad's executive director here at Faithfi. And lately he's been thinking about what stewardship means to this ministry. Chad, it's great to have you back with us.
Thanks for having me. So Chad, where does our definition of stewardship begin? Let's dive into that.
Well, I want us to start by just thinking of a target with three rings. And when we think about stewardship, we need to start in the inner circle of that target, the bullseye, if you will, which is our heart. And we talk about that a lot here on this program, about how our heart really influences a lot of the decisions that we make. But at the heart of a good and faithful steward, you'll find a love and devotion to Christ. Really, it's our identity that is found in Christ as Galatians 2.20 points out. It's no longer I who live, but Christ who lives in me.
This is contrary to the world, which is focused on self, where I am at the center. So we have to fight this temptation to put our self at the center and really make sure that Christ is at the center of our life. Which is really a differentiator for what we do here at Faithfi because that beginning point changes everything as we begin to move out from your bullseye.
Let's do that. As we move out in the bullseye, what comes next? Well, once we know that our identity is rooted in Christ, we then can move to the second tier of this target, which is really looking to the Bible for wisdom related to money management. We know that there are over 2,000 verses related to money and possessions found throughout the Bible. And here at Faithfi, we group those into five primary categories, which we call earn, live, give, owe, and grow.
And we're not going to go into the details of all of those here today. Rob, I know you talk about these all the time on the program, but we put together a great free ebook on our website, faithfi.com slash principles, where you can find the verses and the context related to earn, live, give, owe, grow, to just give you some better ideas around what does the Bible really say about these things. But again, it has to start with our identity in Christ, and then we can move into that second ring of the target, which is the biblical wisdom and what God's word says about managing money and possessions.
Yeah, that's great. So to get a copy of that free ebook, just again, go to faithfi.com forward slash principles, and you can read more about what Chad's describing here. So that makes us now, Chad, hearers or readers of the word, but that's not enough, is it?
No, it's not. We are in the world, but we're not to be of the world. And so the outermost ring of this target is what we call application. We still have bills to pay. We still have financial decisions to make. But when we make those decisions from the inside out, we recognize that God is the owner of everything. And our role as stewards is simply to glorify Him with what He has entrusted to us. This is why we built the FaithFi app. It really has this application layer in mind and is a great tool to help us better understand how we are stewarding God's resources. You can connect your bank accounts, managing your incoming expenses, and just better understand the financial decisions that you're making and that you need to make. But we don't want to be too quick to jump to the application layer.
We never want to start at the application layer and move inward. We always want to work from the inside out. And that's a really important principle when we think about what it means to be a good and faithful steward. Yeah, and perhaps this is the opposite of what we would typically be instructed to do by the world, which is start with the financial decisions we're making.
And, oh, by the way, is there a verse that goes along with that? And then we get to the middle and we're focused on self. And so we're flipping that upside down by starting with our identity in Christ and then going to the principles and ultimately making those real world decisions.
That's exactly right. And if you're looking to better understand how to make Christ that center point of your life, we've got an incredible resource for you. It's a book by our dear friend Michael Blue called Free to Follow.
And you can receive this book by going to faithfi.com slash give, and we'll send it to you as a gift with any amount that you give to the ministry. Excellent. Well, Chad, always great to have you with us, my friend. Thanks for giving us perhaps a different paradigm for stewardship today.
Thanks so much. That was Chad Clark, executive director at FaithFi. And again, we'd be happy to send you a copy of this book Free to Follow with a gift of any amount at faithfi.com. This is faith and finance biblical wisdom for your financial journey or to come just around the corner. We'll be right back. As 2023 comes to a close, we are thankful for the generous and faithful supporters of FaithFi who believe in the message of financial faithfulness found in God's word.
This season, we want to get back to you for your support. We'll send you the book Leverage Using Temporal Wealth for Eternal Gain. For just a few more days, you can request your copy with your gift of any amount at faithfi.com. Start the new year by aligning God's purposes with your finances. That's faithfi.com. God has entrusted his finances to you and we at FaithFi have designed our FaithFi app to help you live, give, owe and grow with that perspective. Our FaithFi app is the leading biblically based finance app. You can manage your money, get top biblical financial resources and interact with a community of like minded believers where you can ask questions, get answers and share what you're learning.
Go to faithfi.com and click the word app to get started. Welcome back to Faith and Finance. I'm Rob West. All right, let's take your calls and questions today on anything financial. We'd love to hear from you. The number to call is 800-525-7000. That's 800-525-7000 is the number to call. We'd love to hear from you. Lucinda, we'll begin with you. Go ahead.
Hi, thank you so much for taking my call. I have a beneficiary account 401 from my mother and it was split in half between my sister and I. And with the way that it was set up, we have five years to do something with that. Or if we roll it over, we still just have 10 years. And I didn't know how much taxes would be taken out if my portion of that was just put into, you know, not rolled over and just given to me. I already have a pension and a 403b, but I'm not even eligible. Yeah, I think we lost that color, but I got the gist of it.
Hopefully, you can hear my explanation, Lucinda. You're right. Yeah, the 10-year rule for a 401k, if the account owner passes away in 2020 or later, a non-spouse beneficiary has to withdraw all the funds by the end of the 10th year of the owner's passing. Or there's a pretty hefty 50% penalty on any remaining assets. So you'll want to take that out, of course, in that time frame. Money you withdraw from a 401k at any time, whether it's inherited or not, is going to be counted as regular income and taxed as such. So you'll just want to work with your CPA to determine the best timing on taking that out.
I see here in my notes, it looks like it was about $23,000 was the amount that you have available in that inherited IRA. And so I wouldn't worry about that too much. It doesn't sound like that amount is going to push you up into a higher bracket.
I wouldn't guess on the majority of it, if any of it. So I would probably just take it all in one year if you have another purpose for it. If you want to leave it in there and let it grow, obviously you can do that to benefit from the market's recovery.
I suspect this 401k is down like most investments are right now. So if you have the ability to wait, it probably makes sense for you to wait for the market to recover. And if you don't need it and you want to let it continue to grow, you could certainly do that and maximize this 10-year rule. But if you're looking to take it out regardless, I'd probably give it a year and let it recover. But from a tax standpoint, it's going to be added to your taxable income.
And given the amount, it's probably not going to have a huge bearing as to when you take it out. Does that make sense? Lucinda, it sounds like you're back with us. Yes. Yes, that does make sense. I just didn't know how much the government would take once that was cashed out. Yeah.
So whatever you take and whatever calendar year you take the withdrawal up to the full amount, that amount would just be added to your taxable income for the year and reported on your tax return. Okay. Okay. I didn't know how that would work out. And like last year, we did receive twice payments because she was over a certain age. But I have not as of this year.
So I don't know if they're going to make that happen or not or make us take that. So thank you so much. Okay. You're welcome. I'm sorry to hear about your mom's passing, but I'm confident you all will be good stewards of this. And if we can help further along the way, let us know.
God bless you. 800-525-7000 is the number to call. Let's head to Illinois. Hi, Betty. Thanks for calling. Go ahead. Hi. So I'm a small business owner.
I started two years ago and I wanted to know. I'm starting to endeavor in business credit, but I don't know where to start. I've gone to the bank, but they don't really they don't really give me that much information.
I've looked online. I have my business banking account. I have my EIN number. I have my articles in corporation. I have two years of taxes, but there's a lot of businesses out there talking about, hey, you know, you can get a business credit card or you can get like trade lines, etc. But I don't know where to start.
Yeah. Well, I think the first thing is to be really careful about borrowing with a small business, especially, you know, if just because a lender is willing to give you some credit doesn't mean you necessarily should take it. So just always balance that debt service with the revenues that you have and make sure you're being really smart about any borrowing. Try to keep your borrowing to a minimum.
You know, first of all, a lot of folks are going to want to look at you personally. And I would try to avoid that whenever possible, where you're personally guaranteeing any kind of business line. That, of course, is going to rely on your personal credit. With regard to the business credit, it's going to come down to outstanding balances, your payment history as a business, your credit utilization ratio, which is an important ratio for a personal credit score. The same applies for business as well, which just basically has to do with the amount you have outstanding versus the lines or limits that are available to you. And that general rule of thumb of 30% is going to apply here for a business as well.
You're going to want to keep the total amount you borrow under 30% of what's actually been available to you. You want to certainly register your business. Make sure you have an EIN number.
It sounds like you do have that. You can apply for a Dun & Bradstreet number as well. This is referred to as a D-U-N-S, Dun & Bradstreet.
You can Google that and just learn more about that. That's a rating that a lot of lenders will look at when it comes to a business. You can also open a business credit card, but again, be very careful with that. Of course, you'll want to pay creditors on time, if not early, and only borrow from lenders that report to credit bureaus. In addition to Dun & Bradstreet, Equifax and Experian all have commercial aspects to their credit bureaus.
You'll want to check those files for accuracy. You'll want to upload financial documents. You can even add trade references. This is a good way to improve your credit score. If you have a positive experience with your vendors and suppliers and always pay them on time, ask them to give you a trade reference on one or all of the credit bureaus' websites. If they don't want to, you can list them as your vendor and as a trade reference for your credit file. That will help to improve your standing along the way.
Those would probably be the biggest items. Does that all make sense, Betty? So, I have applied for the DUNS number. I apply and it's going to arrive in 30 days or so. But my thing is, we have not established any line of credit at all. And so, I just want to know where to get started with all that. So, I think the waiting place to get started would be to get a business credit card.
That would be one. Make sure they report to the bureaus. You're also going to want to only do business with people that report to the bureaus with regard to any vendors that you have and add those trade references to your credit file. All of those things in addition to the DUNS number is really going to help you. So, that would be the next step as you continue to grow your business and have more relationships with external vendors.
Make sure they're reporting and then add them yourself to each of those credit bureaus. That's going to go a long way toward you establishing yourself as an on-time payer. Thanks for calling. We'll be right back. We'll be right back.
Welcome back to Faith in Finance. I'm Rob West, your host. All right, we're taking your calls and questions. We've got a few lines open. We'd love to hear from you. 800-525-7000 is the number to call. Again, that's 800-525-7000. Let's head to Missouri. Hey, Brian, how can I help you today? Hey, Rob.
Hey, got a question for you and maybe it's probably an easy one for you. So, soon to become a grandfather for the first time and wanting to start some kind of savings other than traditional savings. I think there's probably more vehicles out there that are more productive for long term, something that I don't have to monitor every month to make additions. Some of it will just grow on its own until maybe child reaches a specific age. I knew there was plans out there like Gerber Life Plan had planned once upon a time, and I don't know if those things are even around anymore. It's not my first choice, though, and it sounds like, Brian, you don't want to limit this for use for educational expenses. Is that right? You know, Rob, probably anything that they would want that would help them, whatever that time may be, whatever they want to use that for.
Okay, yeah. If you said college specifically, I'd use a 529 college savings plan, but if you're not sure or you want it more widely available for their use, then I would say let's keep it outside of that. The other decision is what type of account. So you can either use a custodial account, which it becomes their asset at the age of majority, it takes it out of your name, and therefore you're not paying taxes on it personally, but you don't have control over when they get it and how they use it because it's automatically going to be their asset at the age of majority regardless of their financial maturity, their spiritual maturity, and so forth.
So a lot of folks, when they're doing something like this for little ones, and that's obviously your case here is you're just starting out, they would want to keep it in their name. So let's say you and your wife opened a joint account, you opened it separate from any other account, so you earmark it for this purpose, but then you start systematically making contributions to that account, and you know that it's set aside for this grandchild, so it's your asset technically, but you earmarked it for them, and then you have complete control over when you'd actually hand it off and under what conditions. In terms of where to invest that, I would probably use one of the robo-advisors. They tend to be very effective for situations like this. You could use the Schwab Intelligent portfolios, you could use Betterment. The nice part is it's fairly low cost, probably one quarter of one percent a year, and they tend to have no transaction cost, which just means if you're putting in $100 a month, every time $100 hits the account, it's automatically going to be rebalanced among all of those ETFs, and you don't have any transaction costs, which is nice, which is essentially what you're looking for. And then when the time comes to start thinking about handing this off, you would have hopefully not only your contributions, but quite a bit of gains in there.
You would have to pay capital gains along the way, because it's not in a retirement account or in a 529 account for college, but I think it would accomplish the purpose you're looking for here. Does that make sense? It does. I guess the days of taking X amount of dollars and putting that aside in a savings account and letting it accrue, and I know interest rates probably aren't really good on just traditional savings accounts within a credit union or bank or probably anything, but that's kind of a no-brainer. You don't have to think much about it.
It's the way I understood it, and I was just trying to find out what the differences were, if that's not just a very viable option to choose. Well, it certainly is viable, and it's more viable today than it was a couple of years ago, because we were getting virtually nothing in the way of interest on savings accounts, whereas today you can get 4% on a high-yield savings account at Marcus or Capital One 360, no fees, completely liquid, FDIC insured, and you get 4%. The challenge is you're just not going to do as well over time. I mean, we're in an unusual season right now where the Fed funds rate has gone up dramatically as the Fed tries to fight inflation. Their goal is to get those interest rates coming down as inflation comes down. So although it's somewhat attractive today, although it's relative given the inflationary environment we're in, I don't think it is going to be for long. And so the question is just how much growth do you want in this? Would you rather take a guaranteed approach and get your 4% a year? And a couple of years from now, let's say that's 2% a year that you're getting, but you're just using it as a savings account? Sure, that's a viable approach.
I think the thing that I'm talking about is given that your time horizon is 15-plus years, why not try to let this money grow by just owning some high-quality stocks and bonds and see if you can take this systematic contribution you're making and get over 8% to 10% a year in growth that compounded over time would add some significant additional funds to this portfolio. Okay. Rob, you're a blessing for your information, sir. You're very good at what you do and that's why I called. Well, thank you very much. I'm delighted to hear about your new grandchild. Congratulations on that, Brian. That's incredible. What an amazing season of life you're entering. And again, I think either approach is good.
If you wanted a savings route, I'd probably look at Marcus or Capital One 360 if you want to go with the robo-advisor and actually put this to work in stocks and bonds, I'd look at the Schwab Intelligent Portfolios or Betterment. Hey, thanks for calling, Brian. God bless you, my friend. Let's see, to Ohio. Hey, Mike, go ahead.
Hey, how you doing, Rob? Thank you for taking my call. I'm 56 years old and just got pre-approved for a house for a first-time home buyer. And I'm borrowing against my 401k and I'm able to get half, but I don't really need that much of it. I was going to use that as a down payment, but once I get that, is that taxable when I put that towards my down payment? It's not if you borrow it, but I'm not a fan of that, Mike, because here's why. Number one, you're pulling it out of the account and, yeah, you'd pay interest to yourself.
And I can understand why you might want to do that. The problem is the market's down right now. So that portion you've pulled out for the down payment is now going to miss the recovery of the stock market. Number one. Number two, the reason it's in there is to grow it for the future so you have it in retirement. Number three, if you ever separated from the company, that would all be taxable to you.
And if you're under 59 and a half, you'd have a penalty on top of it. So my preference would be that you would leave that money there and you'd just save for that down payment and then get a mortgage for the rest. But give me your thoughts. Well, yeah, I'm kind of in a money pinch. We're kind of being forced to move, so that's kind of like my only ditch effort. Okay. I get that. I just think there are some downsides here that you need to weigh. And so perhaps it's a season to rent and save if you can. But if you did take it, just understand it could all be taxable to you if you separate from the company or you can't pay it back in five years.
And that's a pretty big downside. Mike, we appreciate you calling today, my friend. God bless you. Hey, we're almost out of time, but I wanted to let you know that you don't ever have to miss a program. Just download our FaithFi app for your mobile device and take us with you anywhere. Thanks for joining us today. I look forward to talking with you again next time on Faith and Finance. Faith and Finance is provided by FaithFi and listeners like you.
