Where to Give with Sharon Epps

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Hi, I'm Rob West. If you have some money you'd like to give to God's kingdom before the end of the year, you might be swamped with requests. So how do you decide where to give? Sharon Epps joins us today with advice on how to make those decisions, and then it's onto your calls at 800-525-7000.

That's 800-525-7000. This is faith and finance, biblical wisdom for your financial decisions. Well, it's always a pleasure to welcome Sharon Epps to the broadcast. Sharon's president of Kingdom Advisors and has a real burden for giving back to God's kingdom. Sharon, great to have you. Good to be here, Rob. Thank you. Sharon, we said that late December can be a time of confusion for some folks who aren't sure where to give funds.

So how does your family deal with this process? Well, Rob, really, I was reminded just the other day, Joel and I were out on a walk and just talking about our giving in general. And this time of year, we start asking the question, have we met our giving goals? And if we have not, you know, the funds we have set aside, what would we like to do with them? And I realized that this giving portfolio approach that we were taught several years ago could be really helpful to other people.

So I just wanted to share it today. I'm so glad you are because as we said, a lot of folks wondering, how does my giving line up with my passions, but also God's Word. So how would God's Word in particular give us guidance on this giving portfolio approach? Well, as you know, there are so many scriptures on generosity and giving. But I think one that we don't often think of is the words of Jesus himself from Luke 4, verses 16 to 19, where he gives his mission here on earth and says, The Spirit of the Lord is on me because he has anointed me to proclaim good news to the poor. He sent me to proclaim freedom for the prisoners and recovery of sight for the blind, to set the oppressed free and to proclaim the year of the Lord's favor. And we believe this is actually a model for a giving portfolio, all the different areas that he's talking about.

I love that. Okay, so how would you then take Luke 4, 16 to 19, and apply that to your giving decisions? Well, he really talks about three categories of giving. The first one would be the ministry of what we call God's mercy. It's the people that are in need, poor and needy, the prisoners, basic recovery ministries, and just basic human needs like water and food, shelter and those kinds of things. Then the ministry of God's justice, the people that have been oppressed, widows, orphans, more the helpless, the victims. And then finally, the third one is the ministry of God's word. And as you know, here at Faithful, we encourage you to do your first giving to the local church, but then also to other evangelism and discipleship ministries.

I love that, the ministry of God's mercy, God's justice, and God's word. So, those are the key themes from God's word, but now we use this word portfolio. So, how do you treat your giving like it's a portfolio? Well, I don't want the word portfolio to be a scary word. In fact, it shouldn't be scary for investing either, because a portfolio simply means that there are multiple buckets to put money in with intended multiple purposes. And so, when you put multiple buckets and multiple purposes, it makes a portfolio.

That's what your financial advisor does is they help you structure your investment portfolio. But you can do that with your giving as well. And I might also mention that God calls us each to give according to what we've been given. And so, where we choose to give around these themes can be done whether we have a widow's mite or whether we have multiple hundreds of thousands of dollars to give, the portfolio idea still works.

And it helped us several years ago. We realized that we were missing in our giving portfolio any giving to widows and orphans. And that led us to begin sponsoring a compassion child for years and had another outcome of allowing our daughters to be involved in that process and they began to care for orphans and give to them regularly as well. This is powerful because it really gives you a filter or a lens to look at your giving, evaluate it in light of your passions, but also God's word, and then see if there's any gaps.

Yes. And I need to thank one of our faculty members, Jim Wise, for pointing out this portfolio construction because it has been an essential tool for us. Oh, that's so good. Well, Sharon, I really appreciate you sharing with us here at Year End. Folks, I hope and pray that this will be a great tool for you as you think about your year in giving and perhaps as you head into the new year, think about your giving in 2024 in light of these as well and maybe be more intentional than ever before. Sharon, thanks for stopping by. It's great to be here.

That's Sharon Epps, president of Kingdom Advisors and frequent contributor here at Faith and Finance. Your calls are next 800-525-7000. We'll be right back after this break. Stick around. As 2023 comes to a close, we are thankful for the generous and faithful supporters of Faith by who believe in the message of financial faithfulness found in God's word.

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This is Faith and Finance. I'm Rob West. We're taking your calls today, 800-525-7000. That's 800-525-7000. To Chattanooga. Hey, Ethan, go ahead. Hey there. Thank you so much for taking my call.

I'll be super brief. My wife and I are a nurse and a teacher, and we make a decent income, but we are in the middle of paying off some student loan debt, so we're trying to find the most financially efficient way to obtain health insurance. Now, my work and her work both offer separate insurance plans that we could either go on together or go on opposing insurance plans. Her plan is a zero dollar deductible plan with a high out-of-pocket cost, and my plan is a low deductible cost of around $1200 with an out-of-pocket maximum of around $5,000. We just want to find the best health insurance plan that's also financially cost efficient to help us as we go through the process of getting out of debt. Yeah, I can certainly appreciate that, and so when you're trying to get out of debt, you're looking for any opportunity to cut spending so you can free up margin to apply to debt reduction. The challenge with any kind of insurance is just it's offsetting a risk that's unknown, right?

So we just don't know if we're going to need it or not. I think when it comes to medical expenses, the bottom line is it comes down to estimating your need for medical services. The more services you think you'll need, the lower deductible you'll want, and the more you're willing to pay in the form of higher premiums. At the end of the day, though, it's probably cheapest for you to buy a single policy from each of your employers rather than one policy as a family, especially if your employer is covering a portion of it. But at the end of the day, I think typically folks who anticipate they'll have a lot of medical expenses will go with the lower deductible health insurance plan. Those who think we're just in for an annual check-up and we're in a season where we just don't have a lot going on medically, well, then you don't care if your deductible is sky high because you don't anticipate paying it, and so you'd rather have the low premium.

So some of it's just unknown, and other parts of it are just assessing your current need for medical services and then making an educated decision at that point. Does that make sense? Yes, sir, it does, and I appreciate that. Absolutely. Thanks for your call today to Hamilton, Michigan.

Hi, Nancy. Go ahead. Okay, this is a budgeting thing. We're thinking about changing our living situation, and we're trying to figure out the monthly expenses, what we should be thinking we can afford, because I know some of them will be different, like if we live in a condo. We know what we, I wrote down what we now spend, but there's, don't know how to figure for inflation, don't know how to figure things, for things that are not regular expenses. I know we'll have to be putting some things aside for savings, which might not be the same as what we're saving aside now, but probably won't, actually. Yes, yeah. So that's, that's the beginning, and I have another, there's something else besides that.

Okay, let me tackle that first. You know, I think with the inflation piece, I'd probably not try to factor that in, and the way you would typically account for that is you would probably update your budget once or twice a year by going in, and you know, you could do this annually, you could do it more frequently than you want, and go in and, and just adjust your budget categories based on the actual expenses. The idea being that, although we do have inflation, which is normally low, the Fed's target, Federal Reserve's target for inflation is 2% a year, so fairly modest.

They've been successful at that. Now, we could argue whether or not that's a good idea for them to keep interest rates so low and keep the money supply flowing in order to accomplish that 2% inflation, but that's what we've had until these last couple of years where all of a sudden inflation spiked for a variety of reasons. The reason you wouldn't try to factor that into your budget is typically you're going to get cost of living adjustments in the form of either a cost of living adjustment on your social security or a cost of living adjustment on your salary or your income, you know, built in every year, so you would be able to have the funds to then go back in and update your budget categories based on the effects of inflation, and so you might do that once a year as opposed to trying to, you know, factor that into the budget, which just makes it really challenging. In terms of those unexpected expenses, I think that's just where, you know, you really need to be thoughtful about how you craft your budget because it's really easy to account for those expenses in your budget that you get a bill for. If something comes in the mail or you get an electronic notification of a bill, it's more difficult or maybe just takes more time to account for those things where you don't get a bill. So, you know, you buy Christmas presents for friends and family every Christmas, but you don't get a bill for it, so you could total up last year's Christmas spending and divide it by 12 and, you know, put that into savings. You might get a semi-annual insurance bill that doesn't come every month, comes twice a year.

If you pay your own property taxes or homeowner's insurance, that might come once a year. You know, you're going to have clothing, which again, will happen sporadically. So, I think to the best of your ability, you want to try to, you know, use a budget template like we have in the Faithfi app, which you can get at faithfi.com and find a link there to your app store. But that would at least help you with all the categories, and then you could put in, you know, amounts that equal what you think, you know, would be one twelfth of that year's expenses for that particular budget category, and then you adjust it along the way to make sure that you have an accurate number there. And, you know, I think that's where you have to recognize that budgeting is an ongoing process. Those numbers are changing regularly, you're learning more, maybe you start with one budget, and then you decide you need to free up more margin to fund your long-term goals. So, you go back and start cutting things, you know, we're canceling subscriptions and, you know, cutting in our cable and, you know, there's so there's always changes that are going to take place, but your ability to budget effectively is going to really come down to the work that you do to get an accurate reflection of your spending, not just for a 30-day period, but what it's going to take for you over 30 days to plan for all of the expenses you're going to have over 12 months. Does that make sense?

I already did that. I'm thinking about things that don't come up every year. For, like, if one of us needs a crown, a dental crown, or if we have to buy a new phone, those don't come up every year.

And so, how to divide that by 12 doesn't make sense. So, how do you budget for those things that are really irregular, they don't come every year, even? Yeah, so I think there's two categories that are there, and thanks for clarifying that Nancy, I think category one is those things that are truly unexpected and we shouldn't have necessarily planned for them. So, for instance, you have your emergency fund, we recommend having three to six months worth of expenses in your emergency fund, and that would be for those things that just absolutely come out of left field. You have a temporary loss of income, you have, you know, an unexpected, you had a car accident and you got to, you know, pay for your deductible, you had a medical emergency or a crown that was, as you said, was completely unexpected. That, I would say, would come from your emergency fund. There's other non-recurring expenses that you should plan for. So, you should probably put at least one percent of your home value each year in a home maintenance fund. You might have some appliances that are at the end of their useful life, and that's not unexpected. You know they're going to run out, same with the tires on your car, and so we're putting an estimated amount in a reserve account every month for those things that we know we're going to have to spend money on, but again, we don't get a bill for. So, I think it's a combination of planning where you can plan and then the emergency fund where you can't plan. Does that make sense? Yeah, just kind of figure ahead of time that you're going to have to pay for this sometime and then, even though you have no idea how many years will be, just kind of figure, or you just re-figure your budget.

Yeah, you would, because there's going to be expenses that change along with the income changes. Hang on the line. You and I will talk a bit more off the air.

I've got to hit a break here, Nancy, but it's been a delight to talk to you today. So, you stay right there. The number to call is 800-525-7000.

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800-525-7000 to Minnesota. Hey Jim, go ahead. My wife and I retired two years ago. I moved all of my 401k into an IRA, combined it with my traditional IRA. I have a small amount in a raw IRA. I'm wondering if it's a good idea to slowly convert a traditional IRA to a Roth.

Yeah, so here's the thing. I mean, the Roth really shines when you have a lot of time on your side for it to grow tax-free on a compounded basis, and where you believe that the taxes in the future will be higher than they are today. Now, oftentimes you drop down in terms of your tax bracket in retirement because you're earning less. You have less adjusted gross income because pre-retirement, you're in the peak of your earning years, paying perhaps the higher tax brackets.

You go into retirement, now you're living on passive income, so dividends and social security, and then maybe your withdrawals from your IRA, but perhaps you're living on less because your mortgage is paid off and the kids are off the payroll and so therefore you're paying less tax. Now, the variable there, the wild card, if you will, is what's going to happen with tax rates in the future. Well, they're likely, if they're going anywhere, they're probably going higher because we know that Trump Tax Cuts and Jobs Act is going to expire in 2025 unless the new administration continues it. We probably aren't going to see rates lower than they are today.

They're probably going up, if anything. I think that's the consideration, is whether or not you want the current year deduction with new contributions and tax deferred growth, paying taxes later, or in the case of a conversion, are you better off paying the tax now and then letting it grow? Now, did you say you're still working or are you fully retired?

Fully retired two years ago. Okay, so what would you be looking for out of this? Are you looking for avoiding the required minimum? Are you just looking for the tax-free growth? What's your primary objective and why you'd go ahead and pay the tax now? I think tax-free growth. Yeah, because right now the taxes aren't providing a drag on the returns because you're in a tax-deferred environment and you're going to pay taxes at some point. So the question is, are the tax rates going to be higher in the future than they are today?

There's probably a good chance that they are. So I like that idea of you perhaps converting some of it. I would just be, you know, the key, I think, Jim, is to work with your CPA on this because you wouldn't want to do too much in one year and push yourself up into a higher bracket without intending to do so. All right, let's go to New Orleans. Jack, go right ahead.

Hello, Rob. This is Jack and I was calling because earlier this year I was listening to your show and you had some experts on there that were talking about the coming recession and it seemed like the prevailing opinion was that there was going to be recession this year. The only question was whether it was going to be a small recession, a medium one, or a very deep one. But as it turns out, it looks like we're not having a recession at all this year.

So I just wanted to hear your comments on that situation. Yeah, it's a great observation and what we've been talking about as of late on this is that most economists still expect a recession. I think the key is that it's been delayed.

And why is that? Well, I think it's true two primary reasons. One is just the overall strength of the consumer has really allowed this economy to hold up in such a way that has kind of delayed this recession. You know, most folks thought that a combination of the high inflation, which has been coming down but still high and we remember inflation is cumulative, so that 9% we had last year, even though we're down at four, that four is on top of the nine.

And so we experience that at the grocery store and a variety of other places every day. But the thought was the combination of that plus these rising interest rates, rapidly rising interest rates would cause us to push into a recession quicker than we have seen it happen. And by the way, the official recession definition is two consecutive quarters of negative GDP. So the economy is still in positive territory, which is why we technically have not slipped into a recession.

So I think again, you know, how did we get there? Well, I think that is the result of just how strong the consumer was following COVID. Their balance sheets, the amount of savings they had from just the lack of spending has allowed this economy to stay propped up. That on top of the fact that the job market has held up pretty substantially has caused this recession to be pushed out. Now, keep in mind the effects of these higher interest rates, which were put in place by the Federal Reserve to slow the economy, is going the longer they stay high, the more people will actually feel the effects of them. So just think about in your own life, if you haven't bought a house or a car and borrowed money to do it, you're not carrying interest on credit cards, then you're largely not feeling the effects of those higher interest rates. And you may be positively feeling them in the form of high yield savings account. But the longer this goes on, the more people will have to move because of a job situation, or they'll be buying their first home or they'll be out to buy a car because it's the end of its useful life. And they're going to have to roll those, you know, two or 3% mortgages over to seven and a half that on top of the, you know, the putting the student loan payments back in place, which have been deferred since the pandemic, you know, all of those things on top of high inflation are going to cause the erosion of the financial health of the American consumer, that's going to begin to show up in spending and consumption.

And all of that is going to lead to, you know, some of these corporate profits beginning to roll over. So the question is, can the Fed engineer that soft landing? Most economists would say probably not, just given all of the factors that are going on right now. But I think you're right.

I mean, clearly most economists would have expected we would have already been in the recession. We're not. So it looks like by all accounts, it's just been pushed out into 2024.

That, of course, all remains to be seen. But I appreciate you checking in on that, though. Thanks for your call today.

Quickly to Chicago. Danita, I've got just about 30 seconds. Yes. Thank you for taking my call. My question is, with the interest rates going up in the home buying market, is it a good idea to buy a home right now? Yeah.

You know, it's so hard. I think the key is, are you ready to buy the house? Do you have that 20% down payment? Is that mortgage interest rate or is the mortgage payment with these high interest rates going to be more than 25% of your take home pay? If it is, I'd probably wait. If it isn't, you may decide it's time to go ahead and buy. I think we're probably looking at interest rates in the next year around five and a half percent.

That would be my best guess. Thanks for listening. I hope you'll make plans to join us again next time for another edition of Faith and Finance. Faith and Finance is provided by Faith Buy and listeners like you.