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That's faithfi.com slash give. Now let's dive into the podcast. Most people understand that time has value. Maybe that's why we often use the expression, spending time. Hi, I'm Rob West. What a lot of folks don't realize is just how valuable time really is.
Because if they did, it just might change the way they spend money. Today I'll help you figure out what your time is worth so you can use it more productively for yourself, your family, and God's kingdom. 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 decisions. Well, before we dive in, I want to mention a great book on making the most of your assets. It's titled Leverage Using Temporal Wealth for Eternal Gain by Ken Bola and Russ Crossan. It's a blueprint for putting the Bible's financial principles into practice for God's kingdom.
In other words, taking something that's temporary and making it eternal. In fact, we think everyone should have this book, so we're making it available for a gift of any amount to Faithfi until December 31st. Just go to faithfi.com.
Click the Give tab and we'll get a copy of Leverage right out to you. Now then, to start, I think it's important to point out that God values our time. Like all the other resources He provides, He's given each of us only a certain amount of it. He wants us to be faithful stewards of the days and hours we have. Psalm 90 verse 12 reads, Teach us to number our days, that we may get a heart of wisdom. And James 4-14 admonishes us to make the best use of our time today. It reads, You do not know what tomorrow will bring. What is your life?
For you are a mist that appears for a little time and then vanishes. And of course, since most of us have to work to provide for ourselves and our families, it's important to understand what our time on the job is really worth, so we can be faithful stewards of it. To figure what you really earn per hour, take the total or gross amount you put down on your last tax return.
Jot that down. Then subtract anything you paid in taxes, including Social Security and Medicare taxes, plus the income tax you paid. You're left with your net earnings.
Here's an example. Let's say you earned a total of $52,000, and you paid $10,000 in Social Security, Medicare, and income taxes, leaving you with $42,000. Next, you divide that $42,000 by 52 weeks, and you get roughly $800. That's what you're netting in a week. Now, assuming you work a 40-hour week, divide $800 by that number, 40, and you get $20 an hour. That's your real hourly wage. Of course, if you typically work more than 40 hours a week, it means you're earning even less than $20 an hour after taxes.
Now, all this might seem a little disheartening, especially if you've always thought you earn more like $25 an hour, which of course you do, but that's before taxes. That's why it's important to understand what your time is worth in real dollars, dollars that you can actually spend, because then you begin to see how long you have to work to buy something. Let's say one night you're tired, and you don't feel like cooking, so you pick up fast food for the family, and that costs you $50, which is pretty easy to do, by the way.
When you realize that you had to work two and a half hours to pay for that meal, you're much more inclined to spend one hour making dinner at home and cleaning up after. When you know what things really cost, it really can change your spending habits. You'll be far less likely to give in to impulse spending. If you look at your last several months of checking account statements, you'll probably see a purchase here for $10, another one there for $20, maybe one for $50, and so on. Did they really add value to your life, especially knowing how long you had to work for them?
Probably not, because you realize that you can never get those hours back, so you probably want to make some changes. Just cutting out impulse spending is a huge step forward. As your time becomes more important to you, you'll free up money that you can spend in areas that have more value, and one of those, hopefully, will be increased giving of both your time and money to the Kingdom, which has eternal value. And remember, if you want to read more about making Kingdom impact, a gift of any amount to faithfi.com until December 31st, we'll get you a copy of the book we referenced, Leverage, Using Temporal Wealth for Eternal Gain by Dr. Ken Bola and Russ Crossan.
And by the way, we thank you in advance. All right, it's time to take your phone calls just after this break. The number, 800-525-7000.
That's 800-525-7000. You can call right now. I'm Rob West, and this is Faith and Finance, biblical wisdom for your financial decisions.
We'll be right back with much more. Have you downloaded the FaithFi app yet? You need to do it now. We are grateful for support from One Ascent Investments on the Faith and Finance program. They manage a comprehensive suite of value-based investment strategies designed to help Christian investors live aligned with what they value most. One Ascent believes that if your values inspire the way you live, they should also inspire the way you invest.
This can be a unique form of worship. More information is available at investments.oneascent.com. That web address is investments.oneascent.com. Welcome back to Faith and Finance.
I'm Rob West. Hey, if you want to support the work of Faith and Finance here on this broadcast and on our website and then our app, well, we'd invite you to be a financial supporter of the ministry. We are a 501c3 not-for-profit ministry. Your gifts to FaithFi go a long way to helping us bring you this broadcast every day and all the other resources and ministry offerings to help God's people be wise and faithful stewards. So, a gift of any amount can be made at our website, faithfi.com. That's faithfi.com. When you get there, just click Give at the top of the page. And I'm serious when I say gift of any amount, whether it's $40, $400, or $4,000, whatever you can do would be a real blessing to our team here.
Again, faithfi.com, just click Give. All right, back to the phones. We go to Ocala. Hi, Mary. Go ahead. Hello. Can you hear me? I sure can. Yes, ma'am. Okay.
Yes, I have a question. I graduated from college about four and a half years ago, and I had a student loan. I had several, but all combined, the total was about $45,000, okay? I started out paying them off kind of rather aggressively. I just hoped that I could really just get them paid off, but as time has proceeded, I've just seen I'm really not getting very far, because I think in the four years, I've only paid $4,000 towards just reducing the loan. So I want to know, what is the best approach?
Is it to try to pay the loans off aggressively or to just put a decent amount towards the payment and just pay it out through the years, whether that be 20 or 25? Yes, ma'am. Yeah, it's a great question. Do you mind if I ask how old you are? I'm 55.
Okay. Well, look at you going back to school. I love that, that you graduated four and a half years ago. That's tremendous, and I can understand why you'd want to get these paid off, and I think all things being equal, I'd love for you to pay them off as soon as possible, and yet we have to balance other competing priorities. Namely, we don't want you to miss out on opportunities to do, for instance, giving currently. We don't want you to be without any liquidity or cushion. So I want you to have your emergency fund of three to six months expenses.
I'd also love for you to be investing and taking these years while you're working to be growing something so you have a nest egg in the future that's compounding and growing, preferably in a tax-deferred environment. So we have to balance all of these priorities. I want to give first. I want to save appropriately.
I want to be able to live and enjoy what God has provided for me, and yes, over time I want to be completely debt-free, and if we could do all of them simultaneously, that's great, but usually there's just, because of limited resources, we can't do everything. So I think as you look at this, let me just ask you a couple of questions. Number one, do you have that emergency fund that I talk about of three to six months expenses? Yes. Okay, and how much surplus do you have on a monthly basis, Mary, after all the bills are paid and just counting on you putting the minimum on the student loans that's required?
Probably about two thousand dollars. Two thousand extra. Okay, great, and then are you putting anything away for retirement?
Yes. And is that through a plan at work or some other means? That's through a plan at work. Okay, and do you know what percent of your income is going into that retirement plan? Probably, I would say maybe ten percent. Okay, and does that include a match of any kind? Do they give you a match? Yes, that does not include the match, but yes, I am given a match. That's on top of it, and how much have you built up in that retirement plan, do you think, roughly?
I would say roughly right now, probably about, I think, seventy-eight thousand. Okay, very good, and do you know what your ultimate goal is to be able to save while you're working so that you have enough that you could convert that to an income stream alongside Social Security? Yes. Okay, what do you ultimately think you need in there? Oh, okay, I would say probably, probably, I would think three thousand dollars a month. Okay, three thousand a month. All right, yeah, so that doesn't include Social Security or it does include Social Security?
No, no, I'm thinking beyond Social Security, I'd like to have that match. Okay, so that would mean you'd like to try to throw off about thirty-six thousand a year, and you know that, I mean, that's going to require about eight hundred thousand saved up in order to, about eight hundred and fifty thousand would throw off about thirty-six thousand a year or three thousand a month, because we typically like to pull about a four percent a year. Now you may listen to that and say, well, Rob, I don't know how I'm going to get to eight hundred and fifty thousand, and you may not, and I realize that's a lot of money, but I think it just gives you some sense of you need to be aggressively saving toward retirement so that you can build up a nest egg, and if we want that to last, because remember, when you get to age sixty-five, if, you know, that's the Lord's will and he tarries and doesn't return, you know, your life expectancy is going to be eighty-six, just based on life expectancy today, so you need this money to last perhaps decades, and we typically look at a four percent withdrawal rate so that you can invest it conservatively in retirement and allow you to maintain that principal balance over time and then pull the income that you need. Well, four percent of eight hundred fifty thousand is roughly that thirty-six thousand, you know, a year that you're looking for, so if we can't get there, then the alternative to that is, well, we're going to need to pull less, and so the idea would be that, you know, with your social security and maybe with you being debt-free, maybe you don't need a full thirty-six thousand a year on top of social security, and then, you know, maybe your goal comes from eight hundred fifty thousand down to something less than that, so I think what I'm hearing is you've lived modestly, you've got plenty of surplus every month, you've got your emergency fund, that's great. I wonder if what we do is you try to target the payoff of this student loan with your expected retirement, so if you're planning on working another fifteen years, maybe you call your student loan provider and say, how much would I need to send every month so that when I get to age sixty-five, this is gone, and they'd say, well, send this amount over the monthly payment, great, I'll do that, and then try to bump up your retirement contribution so you're maxing that out every year so that you're getting closer to that ultimate retirement savings goal, and then we're working on both things. We're entering retirement with your expenses as low as possible because now you don't have that student loan payment, but we're also prioritizing you continuing to fund your retirement savings so that you've got something working for you over the next fifteen years or so. Does that all make sense? Yes, it makes sense to me, yes.
Okay, very good. So just to recap, I think the goal is let's max out your retirement plan every year, and then let's call your student loan servicer and say, how much would I need to have this paid off around my retirement date, which I'm just using sixty-five, so that'd be, you know, roughly thirteen years from now if you're fifty-two, and then they can tell you how much you need to send, and I think that's going to keep you moving in the right direction so that we're accomplishing all of your goals. You've got plenty of liquidity, you're saving as much as you can for retirement, and you're trying to get out of debt by the time you retire, so that expense is not a part of your budget anymore, and hopefully that'll take some of the pressure off.
Listen, Mary, you sound like a wonderful person trying to honor the Lord with your finances, and we so appreciate that. I hope what I've shared with you has been helpful. Thanks for your call today.
Back with much more just around the corner. Stay with us. Because of my past health history, finding affordable health care was nearly impossible, but then I found CHM, where costs are not adjusted based on medical history. Christian Health Care Ministries even provides the freedom to choose my own providers, and the best part? CHM members pray for me. Too good to be true?
It's not. I'm a proud member of Christian Health Care Ministries, and if you think it could be right for you, learn more at chministries.org faithfi. We're grateful for support from Eventide Investments on the Faith and Finance Program. Eventide's approach to values-based investing is grounded in the belief that humankind was created in the image of God, with intrinsic dignity, value, and worth. Eventide calls this investing that makes the world rejoice. More information is available at eventideinvestments.com.
That's eventideinvestments.com. Welcome back to Faith and Finance. I'm Rob West. All right, let's head back to the phone. So we've got two lines open, 800-525-7000.
To Lincoln, Nebraska. Hi, Tammy. Go ahead.
Thanks for taking my call. So my husband and I are both disabled. He's 72, and I'm 65. I've been out of work because of my disability, and I'm a permanent and total disability, unable to find another job. So we had a settlement with my work, and we purchased a condo, and it's completely paid off. We have about $260 a month we use to pay for our HOA fees. We don't have any Roth or any kind of savings whatsoever and things like that, but our car's paid off.
Everything's paid off. We have $3,000 coming in monthly, and that's all of our insurance and everything's paid for. And then out of that, we have attempts to tie things, and we have about $80,000 liquid and don't know what to do.
I don't know what to do. Okay, all right. Well, I'm sorry to hear about the disability that's keeping you all out of work, and I know that that can be stressful, and yet I'm delighted to hear that your bills are covered. And so it sounds like given the fact that you were able to buy the condo free and clear with all of your expenses, you are able to cover everything, and do you have a little bit left over in a typical month, Tammy? Usually, I mean, we're probably able to put about 700 in the savings. That's great. Yeah, so I think let's talk about that for a second.
I mean, you know, here's the thing. I mean, I think the first question is how much do we want to have liquid and completely secure, you know? And normally, we would say three to six months.
I mean, I think in this season of life, especially given some of the medical issues you have and the disability, you know, maybe you want to take that up to a year. So if you're spending $2,300 a month because you said on $3,000, you know, sometimes you have $700 left over. So $2,300 a month times 12, I mean, you could say, we want to have $27,000 or so, maybe as much as $30,000, maybe as little as $25,000, but we want to hang that, you know, put that in high-yield savings. We're going to get 4.5%. As long as it's FDIC insured, you know, we've got the backing of the U.S. government.
It's safe and protected. And then that would leave us the balance that we could say, okay, maybe we want to actually take a little bit of risk on this and, and invest it prudently, you know, not irresponsibly, but where you, you know, maybe you take a portion of it, 20, 30, 40% and put it in a stock mutual fund, put the balanced and fixed income type investments like a bond mutual fund, which will do well as the interest rates fall. And you might take $50,000 and try to grow it so that you've got something there to fall back on if you need it either as an additional income stream or if you need to pull from it for something unexpected.
But how do you feel about that? Are you interested in investing a portion of this or do you really want to keep it more guaranteed? Maybe as a percentage, I could do that. That sounds interesting, yes. One, I just don't know how to put that, you know, if the government wants to go to digital currency, how does that work with your savings?
I just don't. Yeah. Well, let me tell you, first let me say, if you're interested in investing, our friends given that you're talking about maybe 50,000, our friends at soundmindinvesting.org could be a great resource to help you pick those funds. And that would be a great place to start. With regard to the digital currency, I don't think there's anything to worry about there in the sense that if even if we had a central bank digital currency, it's likely years away.
There's obviously if we had it, the possibility for a loss of privacy in a significant way, and that's why there's a lot of folks that are opposed to it, including me, just because it could violate personal liberties and just a whole host of other things. But I think just given what it's going to take to bring it about, it's years down the road. So I don't think you need to do anything different today. Tammy, thanks for your call today. All right, we're getting short on time. We know we've got some folks that have been waiting patiently. So let's try to sneak a few more questions in here to Akron, Ohio.
Hi, Erica, go right ahead. Yeah, so my husband and I purchased a house a couple years ago. And we had paid we've been paying extra on our mortgage, we have a 3% fixed rate for that for a 30 year loan. And we've been paying about 75% extra of the payment consistently one week after our payment is due. And what I'm wondering is if we should take that extra payment and put it like towards mutual funds, or invest it in some other way, if it would be more beneficial, it would be more beneficial, even if we eventually took the earnings and then applied it to the mortgage later.
Yeah, I just needed some help. It's a great question. And it's especially important just because as you mentioned, it becomes a little more difficult to make this decision when we have these low interest rates. So three years ago, interest rates were at 3%.
We've been even some people in the twos, I even saw one person at 1.99, which is just amazing. Now, obviously, today, it's a lot easier decision because it's seven and a half percent. That's a guaranteed return of seven and a half percent whenever we pay down the mortgage. But at three, we can kind of go either way. So when we've got these competing priorities, we have to take a step back and say, well, it's a good thing to give, it's a good thing to pay down debt, it's a good thing to save, which do we do first?
And perhaps the answer is somewhere there in the middle. But let me ask Erica, do you guys have an emergency fund of three to six months expenses? Yes, we do. And we don't have any other debt other than the mortgage.
Awesome. And how much are you putting away in company sponsored retirement plans? What percent of your income?
Myself, I think I'm required because I'm a state employee. So I think that they're putting like 10% away, but not paying towards Social Security. So that's something that we're keeping in mind. And then my husband is putting away 6% and his company is matching 6%. Okay, got it.
Yeah. So I wonder if maybe the balance here, assuming you're giving at the level you feel like the Lord is leading, and you've already got your fully fund emergency fund, you know, then apart from maybe you funding a college plan out of some of this two to 3000 a month, like a 529, or any other kind of funds that you're saving for in the short term, like a car replacement, I kind of like the idea of him bumping that up. So you're putting 15% in.
And as long as you're doing 15% there, plus your state retirement, plus your emergency fund, plus any other funds, like for car replacement or college, then if you have surplus beyond that, I'd say keep paying down that mortgage because there's a financial benefit, but there's also a non-financial benefit to you being debt free. And that's peace of mind and flexibility. And if you guys can do that sooner rather than later, I'd say, go for it. You won't look back. So I hope that helps you, Erica. 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 Faithfi and listeners like you.
