A Journey To Faithful Stewardship

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That's faithandinvesting.com slash faithfi. We know that our old self was crucified with him in order that the body of sin might be brought to nothing so that we would no longer be enslaved to sin. Romans 6.6.

Hi, I'm Rob West. Being born again in Christ changes a person. We're given a new nature that fights against our old corrupt nature. Sometimes the evidence of this is in the area of finances. Straight ahead, a journey to faithful stewardship, 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. You know, it's a great privilege to be able to interact with you folks answering your financial questions and helping whenever possible. That was especially true recently when Bobby in Nebraska called into the program. Bobby is in a lot of debt. He's had a car repossessed and was delinquent on medical and credit card debt.

He'd failed to pay back overdraft loans with a credit union, and they'd been sent to collections. But now, Bobby is committed to turning his life and his finances around, and he wanted advice on how to do that. I asked him if there's been any kind of change in his life since accumulating that debt. Quite a bit of change, as it turns out.

Bobby tells it better than I could, so let's hear him in his own words. Back then I was big into partying, and I was addicted to drugs, and I sold drugs, and I went to prison for it. Well, now I'm clean and sober. I don't do none of that kind of stuff.

I actually have money in my bank account. Praise God. December 10, 2021 was the biggest start of it, and that's when I gave my life to Jesus Christ. And now I'm just trying to get everything back in line, or get everything to where it needs to be.

Man, to God be the glory, Bobby. That's incredible. I'm so thrilled to hear that you've invited Christ into your life as your Savior, and that you're sober, and God has rescued you from that. And you're wanting to get back on track as a steward of God's resources. That's amazing.

So I'm just delighted to hear that. Okay, so that was a few weeks ago. We advised Bobby to pull copies of his credit reports from Experian, Equifax, and TransUnion, because at that point he wasn't even sure of who all he owed money. We also recommended that he contact Christian credit counselors for help with some of his debt, mostly credit cards.

Getting on a debt management plan with one monthly payment would help him pay off those debts faster. We offered to connect Bobby with one of our certified Christian financial counselors, that's CERT CFC for short, at no charge, to work with him one-on-one to develop a budget and a plan for paying off those debts. Finally, we took a moment to pray for Bobby, thanking our Heavenly Father for miraculously intervening and extending to him the gift of eternal life. There's no question that accepting Christ as his Savior has dramatically changed Bobby's life.

He took drugs, got out of prison, began saving money, and felt a burden to repay old debts. Now, several biblical principles are at work here. First, the body has a temple, leading Bobby to give up drugs. 1 Corinthians 6, 19 reads, Do you not know that your body is a temple of the Holy Spirit within you, whom you have from God?

You are not your own. Next, humility. Bobby humbled himself and asked for help on a network radio program. This isn't easy to do, but Proverbs 22, 4 tells us the reward for humility and fear of the Lord is riches and honor and life. Another biblical principle now guiding Bobby is honesty. God hates dishonesty so much that he codified his disapproval in the 9th commandment, found in Exodus 20, 16. It warns, You shall not bear false witness against your neighbor. And the Apostle Paul teaches in Colossians 3, 9 that dishonesty should have no place in those who are born again. It says, Do not lie to one another, seeing that you have put off the old self with its practices. Bobby felt a burden to own up to his debt.

He didn't deny it. The Bible tells us that if we owe someone money, we should pay it back. Psalm 37, 21 reads, The wicked borrows and does not pay back, but the righteous is generous and gives. And Romans 13, 8 tells us, Let no debt remain outstanding except the continuing debt to love one another, for whoever loves others has fulfilled the law. Now all of those are important, but perhaps the biblical financial principle that most guides Bobby's life now is stewardship. He wants to get his finances in order.

First Corinthians 4, 2 reads, It is required of stewards that they be found faithful. And we were so grateful to be able to help Bobby on his journey to faithful stewardship. Now, if you need help getting your finances in order, getting on a budget, developing a plan to pay down debt and to save, well, we hope you give us a call as well. We would love to help you. That number, 800-525-7000. That's 800-525-7000.

Back with your questions after this, stick around. Have you ever wondered where your money goes when you deposit it in a bank? Christian Community Credit Union believes in helping advance God's kingdom through everyday financial transactions. For over 67 years, they have provided values-aligned banking solutions to thousands of Christians and ministries. Consider Christian Community Credit Union as your banking institution by visiting joinChristiancommunity.com. Membership eligibility required. Each account is insured up to $250,000.

This institution is not federally insured. As the leading advocate for the Christian financial industry, Kingdom Advisors serves the public by promoting the integration of a biblical worldview across every aspect of the financial services industry. And we serve a growing network of thousands of Christian financial professionals, equipping and empowering them to carry biblical financial wisdom to their clients, peers, and community.

For more information, visit kingdomadvisors.com. Great to have you with us today on Faith and Finance. All right, it's time to dive in and take your calls and questions today on anything financial. We've got lines open for you at 800-525-7000. That's 800-525-7000. You can call right now with any financial topic, whether it's your lifestyle, your savings, maybe it's giving wisely, paying down debt, or investing for the future, whatever it might be. You can call right now. We're queuing those questions and we'll get to those in just a moment. Again, the number 800-525-7000.

All right, let's go to Texas and welcome Charles to the broadcast. Go ahead, sir. I have a question about how to help my children buy their first house. I'm 70 years old. I'm completely out of debt. I make enough each month off my annuities and my pensions to actually clear money each month and everything. I've been contributing to my IRAs and 401Ks since the 70s.

I have a sizable chunk in there. I realized that when I put money into my 401Ks that I would pay taxes at this time in my life. I'm not opposed to paying taxes.

I feel like it's my obligation, it's my contract, my end of the deal to pay taxes. My daughter and son-in-law, they're in their mid-20s. They got pinched in the housing crisis. They're expecting a second child, and I'd like to get them out of an apartment and into a house somehow. I'd like to be able to gift them the maximum amount I can by pulling down some of my 401K, but I want to do it wisely.

I don't know if there's a wise way to do that. My children have demonstrated to me that they're financially responsible. I think I could give them this money and they'd say it aside and not use it for anything but a house. So if there's any kind of advice or wisdom you could give me as far as timing, who knows the market and the interest rates, but the housing market in Texas is crazy, how to pull this down, you'll count as income towards me, of course, and then to gift it to them anyway. Any way you can help me here, sir?

Yeah, I'd be happy to. So there's the financial side and the non-financial side. Let's start with the non-financial side. I love that you've already addressed one piece and that is their financial maturity. That's obviously key. I think second is just making sure, I don't know whether it's, did you say it's your son and your daughter-in-law or your daughter and your son-in-law? Which one? My daughter and son-in-law. That's my youngest daughter. My first two children were able to get in before this pinch happened and everything, but yeah.

Great. So the only question I would ask on that is just have you considered or even talked with them about just the gift itself that you're considering this, and here's what I'm, many sons-in-laws would see this as a great blessing and be incredibly grateful. There would be a small number that might say, well, you're taking away my ability to provide for my family and kind of do that on my own. I mean, is there any element of that that you need to consider or have you already? We already have done that. About 18 months ago, I was trying to copy and I said, I'll just buy a house outright for you, and then I'll sell it to you with the mortgage and everything, and y'all can pay me back that way. We can work something out with a no gain on the transaction at all. So I kind of wear their appetite that I'm wanting to help them. And that was received well by him and her? Yes, sir.

Yes. Okay, great. He works for a religious organization, so his income is kind of capped and everything, so I think he's well aware of that and not infringing on his pride or ability to provide.

Okay. Yeah, well, I think that's important just to think through because what we might see is a blessing and may be received differently, but it sounds like you've already considered that, so I'm delighted to hear that. In terms of just the financial side of this, the annual gift exclusion is $18,000. If you were married, you could give $36,000, you could give $18,000, your wife could give $18,000 to each of them, and so you could give them a total of $72,000, essentially, because you could give $18,000 to him, you could give $18,000 to her, your wife could turn around and do the same, so $72,000. And if you did it that way, you wouldn't even have to tell the IRS. Now if you wanted to do more than that, you can absolutely do that because the lifetime gift exclusion right now is sitting at $13.61 million. So by you going over the $18,000 apiece and your wife going, if she were to go over the $18,000 apiece, there's still no tax due. You would just have to file gift tax form 709 with the IRS just to notify them that whatever exceeds the $18,000 per person is chipping away at that $13 million lifetime gift exemption, which you're going to have to give them a lot of money and have a pretty big estate to ever get anywhere close to that. So essentially what I'm saying is, as long as you're willing to file gift tax form 709, again, not creating any taxable event, but notifying the IRS, you can essentially give them as much as you want. And there really is no way to structure this that's going to be tax advantaged because as you pull it out from either the pension or the 401k or IRA, you're creating a taxable event and you can't get around that and then there is no tax for you or them on the gift.

It really is just whether or not you have to tell the IRS because you went over the annual exclusion. Does that make sense? Yes, sir.

It does. I think you, I think you actually helped me see something I had overlooked so far as gifting is gifting per social. So I could gift 18 off of my social to them and my wife to gift 18 off of her social to them. That's right. I can't gift two 18s off of my social to them in one year, even though it goes to their own socials.

Well, you actually could. You can give 18,000 per person to as many people as you want. So that's how I'm getting to 72,000 because you can give 18 to her. You can give 18 to him. Your wife can give 18 to her and 18 to him. And so you can get all the way to 72 grand with the two of you giving to the two of them and you don't have to tell the IRS anything. But again, if you go beyond that, you decide you guys want to give them a hundred grand, you can do that.

You just have to chip away at that 13 million dollar lifetime exemption. Okay. Exactly. Okay. That's very helpful. Very helpful. Yeah.

Cause my wife's all, my wife's all tied up in PRS with that. And with Ross, you know, I took the 401k early in my years and you know, did like that. So okay. So definitely. Okay. Great. Excellent. Thank you so much. Very helpful.

You're very welcome, Charles. Let me just also mention, uh, I'm sure because you sound like you're a pretty astute guy. I'm sure you're familiar with the qualified charitable distribution, but doing your giving once you're 70 and a half out of your IRA, replacing giving you're doing with after tax dollars is the only way to get that money out of the IRA without creating a taxable event. Are you familiar with that strategy? Yes.

I have several members of my church that do that. I assume that direct distribution, I cannot claim it in my itemized charitable contributions. That seems like a double dipping if I would. It is.

And you are correct. Yeah, no. So you don't get to deduct it, but you get to get it out, satisfy an RMD if you have one.

But even if you don't, you get it out without creating the taxable event, which means more dollars for the kingdom and you know, you, uh, you don't add any taxable income as that money comes out. Exactly. Exactly. Very good advice. Thank you. All right. Thank you, Charles.

God bless you, sir. By the way, here at Faith and Finance, we want to not only give you a godly counsel on this program each day, but we want to help you find a community of godly folks who can come alongside you because we realize that part of your stewardship journey is seeking that wise counsel along the way that can come in many forms. If you need help with, you know, making sure you have offset the cost of healthcare and you can do that in a way that's affordable. Christian Healthcare Ministries can be a great resource. If you're looking for a professional advisor, think financial planning, investment management, accounting, insurance, estate planning, and you want somebody who shares your values, who's met high standards and character and competency. They've had a pastoral reference and a client reference and a regulatory review. Well, that's the certified kingdom advisor designation. It's our go to here for godly professionals that can serve you.

You can find a CKA in your area when you go to faithfi.com and click find a professional. We're going to take a quick break, come back with more questions just around the corner. Again, a few lines remaining open, 800-525-7000.

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That's faithandinvesting.com. Well, it's a great day here at Faith and Finance for taking your calls and questions today. We may have room for one more question at 800-525-7000.

Let's head to Nashville, Tennessee. Hi, Eric. Go ahead.

Hey, Rob. How's it going? Thank you so much for what you do. First off, I just wanted to say that. I appreciate that.

And so, yeah, basically, here's my situation. I'm 47 years old, and I'm an investor, and I've been working on renovations. I just finished a renovation on a very large duplex, and I'm having a little trouble renting it out. I'm trying to decide if I should sell this property, because it's been my primary residence, so I've lived there two out of the last five years, so I wouldn't have to pay the capital gains. So, I'm trying to decide if I should just cash in, reinvest that into either a money market account for the next year or so, or just keep on trying to push through and trying to find tenants to get it rented out, because I know the long play, it makes more sense to keep it and to rent it out, because in time, the value will keep increasing over the years. So, I'm just at a crossroads trying to decide if I should sell or if I should just keep trying to find tenants to rent it. Yeah.

It's a great question. So, if you were to sell it, do you have a sense of where you would go? Yes. I have a house that I would be moving into. Oh, so you already own the home? Yes. Okay. And so, you live in one side of the duplex right now, and then the other side is what you're trying to rent out, but you're having some trouble? Yes. Okay.

Very good. Have you consulted with a real estate professional? I mean, you may have been doing this for a long time and maybe you know yourself, but I realize you mentioned one scenario, but we're still in a fairly strong real estate market. I mean, is there something else related to the property or the location or is it overpriced? I mean, have you considered what it might take to get more folks in there to at least consider it?

I think I'm just super picky and since it's my property, I just want to find the highest quality and since the location is decent, but it's not like Bellmead or Green Hills, one of the top tier locations. That's the only thing. So, I'm kind of stuck with what I can get kind of thing, you know? Yeah.

Exactly. Well, I mean, I think ultimately it's going to come down to what is the better investment. And so, if you were to sell it, both sides of it, move into the other property that you own, what would you net out of that sale?

Let's see. Paid $400, looking to get $650 and probably invest. I did a really good job on the amount I had to pay for the full renovations.

It only came out to $33,000 for renovating both sides, which is kind of a miraculous thing. So, all in all, I think I'd be profiting around $350-ish, I want to say. Okay. All right.

Very good. And if you had that $350, what would you do with it? Would you buy another piece of property or would you invest it in the stock market?

Temporarily for the next year, what I'd look to do is probably put it in a money market account until I can find a nice piece of land because I want to eventually do homesteading and grow my own food. And I want to do that now, but time-wise, I'm just not able to, but that would be the next play. Okay. Got it.

Yeah. I mean, I think the key here is, first of all, you'd need to check with the CPA. I mean, typically, if one half was a rental property, you would typically only get the exclusion on the principal residence from your portion, so you just need to understand the implications of that on the portion that was not your primary residence. But beyond that, I think the key is what are your long-term plans and what is the better opportunity? And if you're looking to redeploy this money elsewhere in the next few years anyway because you have plans to buy some land, this might be a good time to go ahead and get out. We know inventories are building quickly, and so it's quickly moving from a seller's market to certainly more of a buyer's market. We also know that there's the potential for a recession down the road. The economy is already slowing.

We still have inflation that's a little stickier than the Fed was hoping for, around 3%, not near their target of 2% yet, and the question is whether they can even get there. And so if perhaps a red-hot real estate market like Nashville, which has been really strong, is going to, you know, not necessarily see a lot of declines but at least a lot more competition in terms of buyers, this may be a good time because your time horizon is already fairly short given the other goals that you have in the next several years. And on top of that, because you're having trouble renting it out and because you're an owner there as well, you have potentially a little bit higher scrutiny that you're imposing upon your potential renters because you're their neighbor. I think for all those reasons, maybe this is the time to go ahead and sell it, account for any taxes you would owe, capital gains for the portion that wasn't your primary residence, and then take advantage of these high interest rates and get ready to make that next purchase.

That at least makes sense to me based on what I heard today. Yeah, it's my understanding that I wouldn't have to pay capital gains because I did not rent it out for the two years I was there on the other side. Does that sound about right? So you never did, is that right?

Yeah, because I was renovating both sides. Okay, and you didn't depreciate that side of it either? I think I did on this last year, the standard deduction. Okay, so that's all you took is the standard deduction.

Yeah, potentially that's the case. I'm not a CPA, so I think this would be a good question to run by a tax professional, but certainly that does change things. I would imagine, given that you never did rent it out, you had the intention to do so, but you never did. You've been working on, you've been living there and one half of it, you've been renovating it. And so perhaps there is a way to take that exclusion on both sides, but I would check with a tax preparer just to be sure. But hopefully that helps you listen all the best to you Eric, sounds like a great plan you have in the future. The question is just how to get between here and there, and I'm confident you'll determine that by prayerful consideration. Thanks for being on the program. Let's go to Oak Brook, Illinois and finish up with Leanne.

Go ahead. Hi, I have a three unit apartment building that I rent out, and I was wondering if there is a benefit to applying for an LLC. Yeah, there are several benefits for a rental business. First is what's called personal asset protection. So the members of the LLC, the owners, are generally not personally liable for business debts and liabilities. And so you've got some level of protection through the LLC, which is embedded in the name, Limited Liability Corporation. You have some management flexibility, so you can choose to manage the LLC yourself, or you could appoint a manager who may not have an interest in it. There's also what's called pass-through taxation. So the business income is then reported on the members' personal tax returns, and it avoids the double taxation that you would have if you had a C corp. And then it's often easier to attract investors if you're looking for investors because it sends a more professional image, and then you may even have a few banking benefits where you could open a business bank account and establish credit under the company name, that type of thing. So those would be the primary benefits.

So I'd reach out to an attorney in your area and just talk through that, and they can share with you whether or not it makes sense in your situation. Okay? Thank you so much. All right. You're welcome. Thanks for calling today.

That's going to do it for us. Let me say a big thanks to my team today. I certainly couldn't do this without them. Handling our phones today was Adam Suddath, producing and engineering today, Mr. Devon Patrick, and providing me with great research today and just helping navigate the program as Jim Henry, my partner in crime here on Faith & Finance. Thanks to you for being along with us today, and we'll look forward to having you back tomorrow. God bless you. Bye-bye. We'll see you next time on Faith & Finance, provided by Faithfi and listeners like you.