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That's 800-525-7000. This is faith and finance, biblical wisdom for your financial decisions. When you think about it, the amount of interest you pay over the life of a 30 year mortgage should be plenty of incentive to pay off the loan as fast as possible. Let's say you take out a $250,000 30 year mortgage at 7%, which is about the going rate now. At the end of that term, you'll have paid almost $350,000 in interest alone, making the true cost of the home closer to $600,000. But let's say with 25 years to go, you decide to put an extra $250 a month against the principal. That will actually shave off 6 years and 10 months worth of payments and save you just over $83,000 in interest. So the potential payoff for getting rid of your mortgage early is huge and it really needs to be a priority in your financial decision making.
There are four steps to getting there. First, you need a spending plan, not just because it's a good idea and everyone should have one, which is true. You need a budget because you can't start the process of accelerating your mortgage payments without one. And setting up your spending plan is now easier than ever with the Faithfi app. It uses a digital envelope system to make budgeting easy. It will also track your spending and reveal things you can cut out to free up more cash.
Download the Faithfi app wherever you get your apps. Here are a few budget cutting ideas by the way. Dump your cable or satellite service and go with the streaming package. You can probably save $50 or $100 a month just doing that. Take a break from eating out. Try to go a month making all your meals at home. You'll probably save a few hundred dollars at a minimum.
Finally, see how long you can go without buying new clothes. That would probably save you many hundreds of dollars as well. You can probably come up with some great ideas yourself to save money that you can then apply to your mortgage. Once you know how much extra cash you have to put on your mortgage, you can make it a budget category all by itself. Remember, even a hundred dollars a month applied to the principal on your mortgage will shave off a few years of payments. So you'll want to put as much as possible into that mortgage payoff category. You may start to feel deprived because you've cut out a lot of your fun spending.
It helps to celebrate milestones along the way. A special dinner out maybe whenever you've paid off another thousand dollars in mortgage principal. Just keep celebrating within the budget. Now, the next step is something anyone can do even if you've been thinking up to this point that you have no surplus cash to put on the mortgage. It's using money that comes your way outside of your normal paycheck. Some call it found money or mad money. Make a commitment to put that unexpected cash on your mortgage principal as well as the surplus money from your budget. Where does this extra money come from?
Well, it could be just about anywhere. Overtime pay or a work bonus. Money from work you do on the side, a tax refund, gift money, or cash you get from selling stuff. The trick is to apply that money to your mortgage principal as soon as you get it. Don't think of it as mad money that you can spend any way you like.
Don't let it sit around tempting you. If you haven't set up an online account with your lender, do that now. Most lender websites now make it easy to apply extra payments to the principal just by clicking a button or two. And while you're logged in, you'll be able to see the running balance of your principal. Keep track of it. Watch it go down faster as you make extra payments.
That'll help you stay motivated and again, celebrate your progress. This isn't something you want to delay. The sooner you start, the more money you'll save. And that's money you can put to better uses. Be patient. You're in this for the long run.
Proverbs 21 5 says, slow and steady plotting brings prosperity. Oh, and by the way, in addition to all the interest you'll save, having that mortgage paid off by the time you enter retirement will ensure that you can meet your bills with your monthly income in retirement. This is your biggest expense.
So when you eliminate it, it's going to help you balance the budget that much easier in this season of life where income is at a premium. Okay. We hope that helps you get started today on your early mortgage payoff plan. Let us know how it's going. We'd love to hear from you in our faith by community. You'll find it in the faith by app.
Download it on our website. Your calls are next. Eight hundred five two five seven thousand. That's eight hundred five two five seven thousand.
I'm Rob West and we'll be right back. 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. Want to send 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 dot one ascent dot com. That Web address is investments dot one ascent dot com. 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 C.K.A.
professional in your area by going to faith by dot com and clicking find a C.K.A. Welcome back. This is faith and finance. I'm Rob West. We're taking your calls today. Eight hundred five two five seven thousand.
That's eight hundred five two five seven thousand. Let's dive in. We're going to begin today in Aurora, Illinois. And Jeremy, you'll be our first caller.
Go ahead. So me and my wife were in our in our 30s. We have a lot of work left to do. We have a 401K, but I want to have something extra that we can draw from when I want to retire. OK. So we have a little more income coming in. Just want to get your thoughts on anything that you suggest.
Yeah, very good. So you say you're in your 30s. How much of your income are you putting toward your 401K right now?
Do you know? As far as I just I max whatever my my work. So they match, I think, up to a third percent. So I'm doing the max.
OK. And when you say the max, what are you referring to? Because you can put in up to twenty two thousand five hundred dollars for twenty twenty three. So it's it's whatever the percent is. I think it's like two and a half percent or three. I mean, it's it's whatever the company is offering.
OK. But typically, even though you would take full advantage of their match, they'll allow you to put in as much as you want, as long as you don't go beyond the IRS limit, which is twenty two thousand five hundred. So you would just specify what percent of your income you want to come out and then they're going to match up to a certain portion. We recommend 10 to 15 percent of your pre-retirement income. Now, you may not be in a position to do that.
And that's fine. But that would be a goal, because ultimately what you'd like to have is I mean, you know, by thirty five, you'd want to have two times your income in in retirement savings by forty five, four times by fifty five, seven times. And then ultimately ten times your salary, pre-retirement salary in a retirement account by the time you retire. So that that amount at a four percent withdrawal rate plus Social Security could cover your living expenses in retirement, which is probably going to be 70 to 80 percent of your pre-retirement income. Now, if you say, well, that's great. I'm just not sure I'm going to be able to do that, because if I'm making six hundred thousand sixty thousand a year, that means six hundred thousand in the bank. If I'm making one hundred thousand a year, that's, you know, a million dollars in the bank.
Well, that's fine. But we just need to right size your expectations of what is going to be available for your spending in retirement based on what you believe you can accumulate. But if you could get 10 to 15 percent of your pre-retirement income going to your 401k or whatever retirement accounts you and your wife have available, then if you do that for the next 30 years, you should be well on your way to meeting these targets. Does that all make sense, though? It does. OK, so I wouldn't need to worry about anything extra to put in just focusing on my strictly on my work 401k make hit that 10 percent and then just stick with that until I retire.
Yeah, I think that's right. I mean, the only other option you could look at would be another strategy is to say, OK, I'm going to fully max out whatever matching portion they give me. Then I'm going to pivot outside of my 401k to what's called a Roth IRA, R-O-T-H. Benefit of that is it grows tax free and that you would you would be able to put in, for instance, sixty five hundred this year or you and your wife each in two IRAs, one for you, one for her could put in thirteen thousand. And then if you fully fund that and you still have more to do, then you'd come back to your 401k and increase it up to what you're able to put away. That would be a great option. Let me ask you, though, do you know if you happen to have a Roth 401k option available through your employer or is it only the traditional?
It's only the traditional. I was looking into a Roth. We have an appointment, maybe open up one. I don't know if we could just open up that one or transfer everything from what we have into a Roth. Yeah, well, you wouldn't be able to transfer into a Roth unless you already had a Roth.
So anything else that would go into a Roth would either be a contribution or if it's coming from a traditional IRA or old 401k, it'd go through a Roth conversion, which means you'd have to add it to your taxable income for the year as it goes in. But I think the big idea is if you guys could focus on getting 10 to 15 percent of your income into a retirement account, whether that's all in the 401k or a combination of the 401k and the Roth IRA. That's the ultimate target that you're shooting for.
And if you can do that over a long period of time, three decades or more, then you'll be well on your way to having what you need. Awesome. Thank you so much. I appreciate it. All right, Jeremy, thanks for being a first time caller today. We appreciate it. To Spring Hill, Missouri. Spring Hill, that is.
Aaron, go right ahead. My wife and I, we just started our own business back in March. And the question of taxes came up, and we're not really sure. We've heard, you know, some businesses do quarterly, some do yearly.
We just don't know where, you know, what exactly we're supposed to do. And I was just hoping you might have an answer. Yeah, very good.
Happy to. Yeah. So the IRS requires most small business owners to make those quarterly estimated payments if you expect to owe tax of $1,000 or more. So that would include income taxes and the self-employment taxes that you would have as a sole proprietor. So I would connect with the CPA at least first to set this up and determine how much to pay in quarterly taxes.
They can run some calculations to basically come up with an estimate on what you would need to pay in. And then you can either download the estimated quarterly tax payment form at IRS.gov, or you can submit it electronically through the Electronic Federal Tax Payment System. The short for that is the EFTPS, Electronic Federal Tax Payment System.
And you'll find that online at EFTPS.gov. But yeah, you do want to make those quarterly payments just so you don't have any penalties or interest. And I think especially just as you're getting started here, having a CPA or accountant not only help you determine that quarterly amount that you owe, but also help you set up the books. So you can really keep your personal finances separate from the business. So you can truly evaluate how the business is doing, keep your deduction, your business deductions separate, so that you can justify that before the IRS.
Whereas when it gets mixed in with your personal finances, it's a lot harder to document what was truly a business expense and therefore is not taxable. So that would be a great thing for you to do just as you're getting started here. Does that all make sense, though?
Yeah, yeah, absolutely. Thank you so much. Okay, very good, Aaron.
Well, listen, all the best to you. What line of work are you in? What is that new business? We started a Christian organization. We send out Bibles to people. So that's mainly what we do. Oh, wow.
That's incredible. Is it a 501c3? Have you gotten a nonprofit status? We're currently in the process of doing it. Okay.
But we're in the early stages. Yeah, I love that. Well, I think that would be well worth your time. You may want to get a CPA to help you with that. It can be a little complicated. And it's not hard if you've done it before. But if you're doing it for the first time, being able to fill out all that documentation to get that nonprofit status is not easy. But it'll be worth it because then folks will be able to come alongside you and give a tax deductible gift to your work. How do you find the folks that you actually send the Bibles to?
What does that look like? I had an experience in marketing. So I do all the back end marketing to reach them through Google Bing. We do social media ads and campaigns like that. And we reach them that way. And they fill out a form on our website.
And we send them a nice Bible with some extra resources and kind of just stay in touch with them and try to help them as much as we can. That's incredible. I love that. Well, give us the web address for what you're doing.
It's madeitknown.com Okay, madeitknown.com. Well, listen, all the best to you, Aaron. I'm excited to hear about this great work that you're doing.
What a blast. And we'll just pray that the Lord expands your borders and allows you to reach more and more people with His Word. We appreciate you being on the program today. If we can help further, don't hesitate to reach out. God bless you, my friend, and call back anytime. Wow, that's really cool.
We'll be right back. We're grateful for support from Movement Mortgage, who provides residential home loans in all 50 states. Guided by a mission to love and value people and a goal to redefine the mortgage process, Movement seeks to help others achieve their financial goals. You can find out more at movement.com slash faith. Movement Mortgage LLC supports equal housing opportunity and MLS number 39179.
For licensing information, please visit nmlsconsumeraccess.org. Do you feel like your hands are tied with debt preventing you from serving God? If you have credit card debt, Christian credit counselors can help through our debt management program. We can get you out of credit card debt about 80% faster while honoring your debt in full. For more information on how Christian credit counselors can help, visit christiancreditcounselors.org. That's christiancreditcounselors.org, or call 800-557-1985, 800-557-1985.
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 head to Mundelein, Illinois. Thanks for calling, Linda. Go right ahead.
Hi, Rob. Thank you for taking my call. Yes, ma'am. God bless you for what you're doing. Thank you.
I have a quick question. Yes, ma'am. I'm 62 and a half, and I was thinking about changing my career. I'm still working, and if I have a 401k where I am, and if I went going into a new one, new company, what would I do best when it comes to my 401k? Should I roll it over to something else, roll it over to the new company?
Yes, ma'am. I like the idea of rolling it out, the current 401k, and once you separate from your employer, you have the ability to do that. I would typically recommend you either roll it to an IRA, where you then have unlimited investment options.
You could either manage it yourself or hire someone to do that. Or, for simplicity's sake, just roll it into your new 401k, if the new 401k plan administrator will allow that. And that would just keep it all in one place, and then you could invest it all, what you roll in plus what you add to it moving forward in the same investments. And then once you ultimately retire, you could roll it out to an IRA and hire an advisor to manage that for you. How much do you have in that old 401k that would be coming out? Right now, it's almost like $190,000.
Okay, so it's a significant sum of money. So I think, you know, it really depends on the direction you want to go. With $190,000, you can absolutely have an advisor manage that for you. And we would recommend that you interview a couple of Certified Kingdom Advisors there in Illinois. You can find the CKAs in your area that stands for Certified Kingdom Advisor.
Just go to faithfi.com and click find a CKA. The benefit of that is you wouldn't be limited to the investment options inside the 401k. And that advisor could really understand your goals and objectives, your age and risk tolerance, and then build a portfolio that's uniquely suited to you, but he or she would have the full gamut of investments to choose from. Now, you'd have to pay them for that, but they'd be able to have certainly more in the way of investment options than inside your 401k.
But if you didn't want to hire an advisor at this point and you wanted to do it yourself, then it's probably easier to roll it into the 401k and just pick from the investment options inside the plan. Thank you so much. All right. Thanks for calling today. 800-525-7000 with a few lines open.
Lake Zurich, Illinois. Hi, Kyle. Go ahead, sir. Hey, how's it going?
Thanks for taking my call. So I am 29 years old, about to turn 30 in November, and I have a good amount saved up in my savings right now. And I'm just looking for better return on investments instead of just letting it sit in there, not really accruing much interest and an investment in something that would be safe even with this. It seems like it's almost inevitable, this transition that's going to come with digital currency down the road. So, yeah, just looking for best ways to invest instead of letting it sit in the savings.
Yeah. So we have to define the time horizon on this savings. You know, I would want you to keep at least three to six months expenses in that savings account. If it's not in a high yield saving, earning at least 4%, I'd consider moving it there. If it is great, I'd leave at least that much behind. But tell me, do you have more than what would be equal to three to six months expenses?
Yeah, I do. Okay. What do you have roughly that would be available beyond that to invest?
I have about $15,000. Okay. And do you have a retirement plan available at work?
I don't, not currently. Okay. All right. And so are you actively putting anything away for retirement currently? Not right now, no.
I'm taking everything I got, most of it, and just throwing it all in my savings until I know what to do with it. Okay. Great. Yeah.
So I think getting that working for you on a tax deferred basis is really going to be key. I mean, you hear what you're saying about the digital currency. I don't like that thought either. A lot of congressional leaders don't as well or state governors, which is why we're seeing a lot of debate against it. I think probably even more against it than for it. It's going to have a hard time getting through a divided Congress just because this is a congressional decision, not something the Treasury can do. I don't like it because of the loss of privacy and control by the government over financial transactions, but it's a long way off. And it's not a foregone conclusion because of the fact that it would require Congress to get involved. Coinage is a congressional function. But even then, especially with some of the challenges we have in this country with the national debt and our spending and the control of the Federal Reserve, not to mention the possibility of a digital currency.
Despite all of that, we're still in the best position in the U.S. The U.S. dollar, no one's even a close second and by any stretch to be a world reserve currency. And that's for reserves. I'm not talking about trade.
I'm talking about for reserves. There's nobody even close. The euro is not an option.
None of them. And we're still the strongest and best economy in the world, despite the fact that we've got 30 trillion in debt. So I think the very best way for you to overcome inflation and as a 30-year-old guy, grow your wealth for the future so you have something in retirement to fund your lifestyle beyond Social Security. I think investing in stocks and bonds is still the way to go. I wouldn't get out of the banking system.
I wouldn't get out of the stock market. I think that's your very best place to invest. And I'd rather you do it on a tax-deferred basis. So at a minimum, as a 30-year-old guy, I would open a Roth IRA and fully fund it every year at $6,500 for this year.
And we'll find out if that's going up to $7,000 next year in the fall. But I would absolutely fully fund that this year. And maybe you start by using that excess beyond what you have for emergency savings. In terms of where to open that and how to pick the investments, our friends at soundmindinvesting.org are equipped to help you as a very beginner investor and could actually help you with some mutual fund selections. If you'd rather go with more of a robo-advisor solution, I'd look at the Schwab Intelligent portfolios. But I think the name of the game is get three to six months expenses in a high-yield savings account and then start fully funding your Roth IRA every year. Get that invested on a low-cost basis and some high-quality mutual funds or ETFs.
And do that every year between now and retirement. Thanks for your call. 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. Before we go, I'd like to thank our incredible production team, Amy, Devin, Jim, Robert, Brandy, Rob and Ben. Couldn't do it without them. Have a great rest of your day and I'll see you again next time for another edition of Faith and Finance. Faith and Finance is provided by Faithfi and listeners like you.
