Preparing Kids for Financial Responsibility with Ron Blue

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Learn more at chministries.org faithbuy. A recent survey shows that most parents think they should teach their kids financial literacy. The good news is that many are actually doing it. I'm Rob West.

Still, other parents may not know how to teach their kids financial responsibility. Ron Blue joins us today to discuss how he and his wife, Judy, did it. 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, if you're new to the program, you may not know that our guest Ron Blue is the co-founder of Kingdom Advisors and the author of many books on biblical personal finance. Ron, always great to have you with us.

As always, Rob, I enjoy it, so thank you for inviting me. Absolutely. Well, Ron, the survey I mentioned was done for the Bank of Oklahoma Financial, and it shows that 85% of parents think they should teach their kids financial responsibility and that money doesn't grow on trees. About the same percentage said kids should be learning this in school, but about a third said that isn't happening. So it's encouraging that 65% said they're actively teaching money management to their kids, but you haven't always observed this, have you?

No, I really haven't. I'm kind of surprised at these numbers because it has become more and more difficult to teach your children about money as we entered the credit cards culture. You know, I was asked one time by my father, he said, how do you teach your kids to manage money? And my response was, well, Moore's caught and taught, and you learn to manage money by managing money.

Yes. So I think that parents have good intention, but they may not have the process and maybe the encouragement to do it in such a way that you can teach kids that money doesn't grow on trees. But it is the parent's responsibility really first of all.

No doubt. Ron, let's talk about two big phases of raising children to be future adults in this area of financial management. How did you and Judy do it with elementary kids earning, saving and giving? And then how did you do it as high schoolers? Well, we were fortunate from this standpoint in that our kids grew up at a time when cash was used.

Yeah. So we taught our kids beginning, the youngest beginning at age eight through an envelope system where they would have an envelope for giving, an envelope for saving, an envelope for spending, and an envelope for giving, you know, within the family gifts and so forth, and an envelope for clothes. So we were able to do that. And then when they entered high school, we began to let them experience credit cards to some extent and began teaching about credit cards and how to use credit cards responsibly. And I remember when our oldest went to college, it was the first time I had seen credit card companies on campus, on a campus, selling their credit cards. Because when I went to school, if you had a credit card, you were in trouble.

Yes. But you have to teach them early, one, that there's a limited supply money. And secondly, when they get into high school, you've got to teach them how to manage life now in the digital society. So you know, like the app that you've got could be used to teach children how to budget.

Yeah. And how to plan a bit. Most parents that I've talked to use a debit card. And they may have, you know, more than one debit card for certain types of expenses. And the parents put the money in the account each month, a certain amount. And that's probably the way to teach them about credit is, is the use of debit cards because they're paid, you know, as they're used.

So that would be my thoughts right now. We're talking to a parent that I know my kids are using with their kids or our grandkids debit cards for the most part to manage money, and having a savings account. Yeah, very good. Well, just to summarize, that was great counsel, more is caught than taught. Use the envelope system when they're young, give, save, spend plus clothes and gifts for family.

And then beyond that, get them involved with a debit card and building their own budget, perhaps using the faith fi app, which you can download at faithfi.com. Ron, always practical, always rooted in biblical truth. Thanks for sharing with us today. You bet. Enjoyed it. Thank you, Rob.

All right. That's Ron Blue, author and teacher and co founder of Kingdom Advisors back with your questions after this 800-525-7000. And if you prefer not to call, keep in mind, you can always send us an email at ask Rob at faithfi.com. I'm Rob West and this is Faith and Finance, biblical wisdom for your financial decisions.

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That's chministries.org slash faithfi. Well, thanks for joining us today on Faith and Finance. I'm Rob West. All right, we're ready to turn the corner today. We're going to spend the remainder of the broadcast taking your calls and questions on anything financial. We want to help you tackle those things in your financial life you're thinking about, praying about, you perhaps don't know the best next step.

We certainly can wrestle through those with you. We'll do that when you call 800-525-7000. We've got lines open and we're ready for you. 800-525-7000. You can call right now. Let's go ahead and dive in. We're going to begin in Maryland today.

I bet it's pretty in Maryland. Josephine, how can I help? Thank you, brother Rob, for taking my phone. I'm a little bit nervous. No reason to be nervous, Josephine, just you and I having a conversation. So tell me how I can help you.

Okay. I'm just wondering, I did everything that I could to save on 401k when I was working, but something happened. I had a stroke and then I'm going through a lot of challenges. So I don't have any more 401k and then I retire early and I don't know the only thing I have right now that it's my home. And I received a letter from AAG asking me if they can help me to have a reverse mortgage. But I know one week I was listening to you and you were talking about a reverse mortgage. Do you think it will help me? It might.

It's definitely a tool to consider in this season of life. You're the right age for it. The question is how much equity you have in your home. Do you have a home mortgage? I have a home mortgage. I never touched the equity as it went up and down, up and down, but I still pay the same thing. So that's where I'm at.

Okay. Do you have any, what do you think your home is worth today, roughly? I don't know. I think it's gone down. I got it at 220.

So I don't know, maybe 180. I don't know. What makes you think it's gone down? Because homes have been appreciating quite rapidly, especially the last several years. Yeah, but the only thing is I'm receiving a lot of people try to make me sell the house.

And my own mortgage company told me that I have an equity for 72,000. So I don't know how true that is. I don't know anything. Yeah. Yeah. So what do you owe on it today?

I think it's like roughly like 130. You think you owe about 130? Okay. Yeah. Yeah. So we are going to need to see how much equity you have in there and what it's actually worth. One way you could do that, this isn't a definitive number, but it could be a starting point is are you comfortable using the internet, Josephine? No, because of my site.

I see. No problem. There is a website, maybe you have a friend or a family member that could check this out. There's a website called Zillow.com. You could go to that website and without giving them your email or anything, you could just type in your address and it would give you a rough estimate, what they call a zestimate for your home value.

And it would be by pulling all the comparable homes in the area and then coming up with a value. The key is one kind of standard rule of thumb is that you need 50% equity in your home to qualify for a reverse mortgage. That would mean that if your mortgage today, you think you owe 130,000, you're going to need your home to be worth at least 260,000 to qualify for a reverse mortgage. Now, you do sound like someone who's a good candidate for it, because typically what we see is in this season of life, if folks are ill-prepared for retirement because they had a major medical event and had to deplete their retirement savings like you did, or they just started late, or just because of lifestyle creep, they were not able to prioritize saving. And now they're in this season of life, they're living off of social security, they barely have enough to cover their bills, certainly not any extra, but they're sitting on a large amount of home equity.

I do like a reverse mortgage as a possible planning tool, because unless you're going to sell it and downsize, and that has its challenges, if you're planning to stay in this home for the foreseeable future, a reverse mortgage will convert that equity to either a line of credit, but more importantly for somebody like you, to a monthly income stream. And they would determine how much based on the equity in your home and your age, which would give them your life expectancy. And then they would give you a set amount for the rest of your life every month.

And that could be the difference between you not really barely getting by and having enough to pay your bills with even a little left over. And the nice part about a reverse mortgage is, if it's what's called a HECM, a home equity conversion mortgage, which is a kind of reverse mortgage, then the Federal Housing Administration is going to guarantee the loan. Meaning, if for some reason you live to 150 and they paid you out more than your home was worth, and when you sold the home or you passed away, if you owed more than the home can be sold for, the US government would step in and make up the difference. You're not personally, or your state would not be liable for it.

So that's a nice thing. It's what they call non-recourse debt. Normally when you borrow something, if the collateral doesn't satisfy, they come after you personally. That's not the case with a reverse mortgage. But if you don't have 50% equity, you may not qualify at all. So what I would do, Josephine, is normally I'd send you to our friends at Movement Mortgage online at movement.com slash faith.

But because you don't use the internet, our team will get your information. And I'll have somebody to get in touch with you to do a little deeper dive and help you determine whether or not you qualify for a reverse mortgage. Okay? Thank you. Thank you so much. You're welcome. I really appreciate your call.

Listen, you were nervous, but you did great. So thank you for being on. Please, please call me back anytime and you stay on the line.

We'll get your information and get somebody in touch with you. Okay? Thank you. May God bless you for whatever you're doing right now. Thank you. Thank you very much.

May the Lord bless you as well. Let's go to Lakeland. Hi, Phil. Go ahead. Yes, sir. I'm just curious your thoughts on Fisher Investments, and if one and a quarter percent is, you know, too much. Yeah. For what amount of money? What would be the assets under management? About 1.4.

Okay. You know, it's maybe slightly high for 1.4 million. It's certainly not, you know, out of bounds. I would say anything, you know, one and a quarter down to maybe 80 basis points would be appropriate. I would say if you get up to one and a half percent, that would be too high on nearly one and a half million dollars.

As to Fisher, I wouldn't be able to comment on that one directly. I don't have any working knowledge of the organization. I knew they do a lot of marketing.

They're very heavy in marketing, both online and on TV. I would just say it's probably worth considering somebody who shares your values. We recommend the Certified Kingdom Advisor designation. So, perhaps alongside the organization you're looking at, you could interview a couple of CKAs there in Lakeland. You just go to our website, faithfi.com, click find a professional.

But as to the fee, one and a quarter is probably at the higher end of the range, but certainly in the normal and customary zone. All right. Well, thank you. And tell me one more time that website. Yeah, it's faithfi.com, faithfi.com. And then right there at the top of the page, it'll say find a professional. And then if you go through the questions there, you'll get a list of Certified Kingdom Advisors there in Lakeland. Thank you very much.

All right. Thanks, Phil. By the way, CKAs have met high standards in character and competence, met regulatory requirements, pastor and client references. They've met an experience requirement and they've been trained to bring a biblical worldview of financial decision-making. It's the only financial services industry designation focused on biblically-wise financial advice. Again, you can check it out, faithfi.com.

Just click find a professional. Hey, folks, we've still got a lot more to go. We're just getting started here. Call right now, 800-525-7000.

We'll be right back. Are you searching for a way to become a better, faithful steward of the resources that God has given you? Well, download the Faithfi app and join the 37,000 others who are already using our app. The Faithfi app will provide you with wisdom, community, and simply help you stay on track with your finances. We have three money management options to choose from, so find an option that fits your unique needs.

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Financial wisdom for living well, soundmindinvesting.org. All right, we're going to round out the broadcast today with your questions, 800-525-7000. Let's go to Louisiana.

Hi, Randy. Thanks for your patience, sir. Go ahead. My question is, I'm on permanent disability and I'm eligible for social security, but I can't draw both at the same time. My social security is substantially higher than what my wife's would be.

Okay, she's drawing mine. Yes, so she does not have enough benefits, or if she does, it's obviously quite a bit less. She would be able to get up to half of your benefit, and if I'm understanding correctly, half of your benefit would be more than her own work record benefit. Is that right?

More than likely. Okay, yeah, so that would be the question, and so she would need to be at least 62 years old to claim spousal benefits, unless she's caring for a child who's under the age of 16 or disabled, and then she could get it at any age. You have to be eligible for social security retirement benefits or disability benefits, even if you're not currently receiving them, and then your wife can get up to 50% of your full retirement benefit amount, but that would require that she waits until she reaches full retirement age. If she claims that her spouse will benefit at an age less than full retirement, then she would receive a reduced benefit, but if she waits until her own full retirement age, then she would be able to get up to half of your benefit. Yeah, she's approaching full retirement now.

That's why I'm trying to figure it out. Yeah, so thank you, sir. Absolutely, and what I would do, Randy, is reach out to social security or use their online tools, and you can get a personalized estimate based on your specific situation, your work record, and then her spousal benefit based on the fact that she'd be waiting until full retirement age, and she'd know exactly what she's going to be receiving.

SSA.gov is the place to go, and if you can do it online, you'll save yourself from some hassle just because it's it's a bit challenging to get through and and actually get somebody on the phone or even harder to get somebody in person, but hopefully that helps you, sir. Thanks for being on the program today. Ifedayo in Indiana, go right ahead. Hi, Rob. How are you?

I'm very well, sir. Thank you for calling. Yeah, thank you for what you do. I listen to your program every day when I'm going from work to home every single day.

Thank you for all you do. Absolutely. Yeah, my question is, I was able to get a second mortgage, so after moving from the old house to a new one, and after like about two months, I was able to sell the old house, so my problem now is I'm looking into because of the interest rate is very high at this point, so I would like to refinance, but unfortunately I don't know or nobody knows when the interest rate will be coming down, and at the same time I don't know if I should wait to refinance or try to do a recast or put a lonesome amount of money down towards principal, so I don't know which of those three options that I can go for right now.

So what are the advantages of those and what do you think? Very good. Ifedayo, so you have two mortgages on the new property, is that right? No, I was able to sell the other one, so I only have one mortgage. Okay, so you have one mortgage on the new property and what is the value of that mortgage? What's the loan balance currently? The current right now is about I think it's 645,000.

645,000. Is that the property value or the amount of the mortgage? The property value is about 700,000. Okay, so you borrowed 650,000 roughly and you think it's worth about 700,000?

Yes. Okay, and how much do you have available that you could put down on it if you wanted to pay down the principal? Yeah, I'm looking towards around 150,000. All right, you have 150,000 in savings from the sale of your other property, is that right? Yes, yes. Okay, and then do you have any other emergency savings separate from that or would that be included in the 150,000? I have up to at least seven months of emergency savings. Separate from the 150,000?

Yes. Okay, very good. And what is the interest rate on the mortgage that you have?

It's about 6.8. Okay, and do you have any other debt? Except for student loan, I don't have. Okay, how much do you owe on student loans? I would say approximately 50,000. 50,000. And what are the interest rates there? Correct, like about 6%.

About six, okay. Yeah, I mean, I like you putting this money toward the house and paying it down. I wouldn't refinance right now.

You actually couldn't do any better than you have. You may go up, plus you've got the cost of the refinance and this is a pretty sizable loan, so you're going to be paying those jumbo interest rates, which are higher than the regular conventional rates, and then you've got the fees on top of it, which could run you three, four, five percent. I mean, it's 680,000. I mean, you could be talking $25,000 in fees. So I'd leave that mortgage right where it is. If it were me, I'd probably go ahead and pay off the student loans, unless, do you think you have any forgiveness coming?

Not that I know of. Okay, well, if you wanted to wait and just kind of see how that shook out, you could, but anything you don't pay toward the student loans, I'd put toward the house. You know, if that's what that money came from, if it was equity from your old home and you don't have any other debt other than the student loans, are you saving for retirement out of your paycheck?

Yes. All right, so I would focus on getting that mortgage balance down by just putting that money toward the mortgage. It's a guaranteed 6.8 percent return, which you're not going to get anywhere else, equal to the interest rate you're eliminating by paying it down. And then when you can save one and a half percent at a minimum, so we're talking of an interest rate of around five or less, that would probably be the time to refinance. If, unless you wanted to wait and give it, you know, you probably, I'm guessing, and this is all it is, you could get around that five percent rate in the next 24 months.

Perhaps you could get down into the fours, you know, in the next three years. I think it's going to come down slowly, but somewhere in that four or five percent range is probably when you want to refinance, not until then. So in the meantime, I would put whatever you think you want to against the student loans that you're not going to get any forgiveness on, and then I'd put the rest toward the house. Okay, so you think recasting for the house would be better than putting towards the principal? Yeah, when you say recasting, are you looking for them to adjust your monthly payment?

Yes. Are you unable to afford the current payment? I'm able to.

I mean, I don't have problems. Okay, so I would just continue paying on it. I don't think you need a recast. I would just, yeah, because that'll involve them re-amortizing it. And so if you just leave it the way it is, continue paying your scheduled payment, but put, let's say, a hundred thousand on it because you want to pay off your student loans, that's just going to save you a bundle in interest. But avoiding the recast will allow you to pay it off even quicker versus trying to get that mortgage payment down.

So if you can continue to afford it, I'd probably just stick with it and just pay the principal. Oh, okay. All right. Thank you. Appreciate it. Thank you.

All right, Iffidayo, thank you for your call. God bless you, my friend. Folks, I hope today's been an encouragement to you. I'm so grateful you've been along with us. Thank you to my team today, Robert Youngblood, Devin Patrick, Jim Henry, and the rest of the team here at Faith Buy. Have a great day and a wonderful weekend. See you on Monday. Bye-bye. Faith and Finance is provided by Faith Buy and listeners like you.