7 Steps To Recession-Proof Your Finances

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That's faithful.com slash sparrows. Are you worried about a recession? Some economists say there's still a 35 percent chance it could happen in 2024.

Hi, I'm Rob West. People often ask, will we have a recession? The answer, of course, is yes, we'll always have another recession. The real questions are when and are you prepared for it? If you're not, now's the time to get started. I'll talk about that today 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. So far, the GDP is still in positive territory, although not by much, and the unemployment rate remains relatively low.

That's a blessing. But since more and more indicators suggest the economy is slowing, it's time you recession-proof your finances. How do you do that? Well, step one, check your credit score and get your credit reports. This will give you a base point and will allow you to accurately judge the effect of any late payments if you're forced to make any in the future. You can get a free credit report from each of the three bureaus, Experian, TransUnion and Equifax at AnnualCreditReport.com. With those reports in hand, you'll be able to show creditors that you've made timely payments on your various accounts in the past.

That could help you negotiate better terms if you find yourself temporarily out of work. Step two, familiarize yourself with the May Day budget. It has only four categories. The first is food. You have to eat, but keep it simple and no eating out. The next May Day budget category is housing. Make your mortgage a rent payment. Then comes utilities and finally transportation. So food, housing, utilities and transportation come first in the May Day budget. With anything left over, you can pay other bills. Step three is to look for other sources of help. Your unemployment benefits may run out, but other resources will probably be available. Check out nonprofit organizations and local government agencies that may have assistance programs.

You can call 2-1-1 to learn more about services in your area or go online to 2-1-1.org. Step four, make a list of all your creditors and their contact information. Be ready to call them and explain in detail whatever financial situation you may be facing. And then pray you don't have to use it.

But if you do, it's ready. If you can't pay a bill, call your creditor before it comes due. Run toward your creditors, not away from them.

When you call and speak to a representative, have your latest pay stubs handy so you can show how your income has been reduced. Tell that person how much you have available to pay on the debt for the time being. Ask if you can temporarily stop payments or make partial ones. Let them know how long you expect to be in your current situation. You may not know for sure, but try to give a reasonable estimate of how long it will take for you to begin making full payments on time again.

Make sure you get the person's name and keep a record of what you talked about and any agreement you may have reached. Also, ask to have a copy of the agreement sent to you in writing. Creditors will usually do this anyway, but ask for it just to be sure and hang on to that email or letter when it arrives. By the way, scam artists will use tough times like a recession to victimize folks who are already in dire financial circumstances. So don't respond to emails or give out information to anyone who calls you claiming to represent one of your creditors. Step five, get professional nonprofit help for managing credit card debt. Contact our friends at ChristianCreditCounselors.org if you are starting to fall behind in payments or expect you're about to. They have arrangements with many creditors to lower your interest rates. You'll make one payment that covers several creditors, making things much simpler. It's not debt consolidation, it's debt management, and that can help you pay off your creditors 80% faster. You can make arrangements to speak with a counselor at ChristianCreditCounselors.org. If you are laid off and lose your health insurance, check out Christian Health Care Ministries. They offer a medical cost sharing alternative to health insurance, almost always at a much lower cost.

You can find out how they do it at CHMinistries.org. Now, step six is to save as much as possible. It's four times like a recession that we always tell you to have three to six months living expenses in your emergency fund. There's no better way to recession-proof your finances, so start saving today. And finally, step seven, pray. Pray that God will provide wisdom for managing your finances in difficult times.

James 1-5 assures us, if any of you lacks wisdom, let him ask God, who gives generously to all without reproach, and it will be given to him. So those are your steps to recession-proof your finances, and we'll put links to all the resources I mentioned in today's show notes. Your calls are next.

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That number, 800-525-7000, that's 800-525-7000. We'd love to hear from you. Let's head to Mississippi.

Hi, Steve. Go right ahead, sir. I just encourage your and our listeners to not retire, if they can, because I've never read retirement in the Bible except for Levites and priests. And unless they're in a physically demanding job, I plan to work until Jesus comes back or until he takes me home.

I'm a pharmacist, so I don't have a very hard physical, hard job. I've also been so thankful that I can take any kind of IRA money and send it directly to my church without any taxes. That just thrills my soul. So I just want to encourage our listeners to do that.

Yeah, I love that, Steve. I think you're right on. I mean, clearly, you're right. The only instance of retirement we see in the Bible is on the Levitical priests.

And I think that's a different scenario here than what we see in our culture, which is this never-ending vacation. And clearly, that's not a part of God's plan. We know that work was a part of creation before the fall. Adam and Eve were workers. They were not only to cultivate, but they were also to keep the garden.

And they had a job to name the animals, and they had a lot of work to do. And I think what's great is that God invites us in. He's a worker. He creates out of nothing.

We're workers. We create out of His creation by taking that latent natural resource and improve it for the common good and for human flourishing, and to spread the gospel and to bless our neighbors. And we're to do that through the whole of our lives. I think the idea here is to replace the cultural view of retirement with perhaps a different view, which is a rhythm of, I think, rest and renewal and re-engagement that says, when I get to that season where either God redirects me to something else, perhaps away from paid work if that's what He ends up doing, or if I stay right where I am to continue to be a blessing and to be productive right where He's planted me, or because I can't work physically, that I have taken a portion of what God has entrusted to me, and I've set that aside. And I think the Bible affirms that idea. I mean, Proverbs 21-20, among other passages, the wise store up choice food and olive oil, but fools gulp theirs down. So, you know, this passage highlights the wisdom of planning ahead and saving resources for future needs. But again, I don't think that never-ending vacation was ever a part of God's plan, and ultimately our dependence needs to rest on God rather than our own financial security.

Saving for retirement I don't think is inherently unbiblical as long as we do it with the right motives and balance with generosity and trust in God. The key is to view it as a tool for continued stewardship rather than an end in itself. But you also bring up a great point, Steve, and that is look at ways to do more giving both now and during that retirement season of life. I think part of that is setting a financial finish line and capping your lifestyle so that your lifestyle doesn't continue to increase as you have more resources. But secondly, I think we need to be planned up. And what you're talking about with giving from your IRA is a wonderful tool for those folks 70 and a half or older who can use this qualified charitable distribution.

It's the only way to get money out of an IRA without creating a taxable event as long as you send it right to charity or ministry or your church. So I think those are all great thoughts and a great reminder for us today, but anything else before we let you go? Just say, me, brother, keep preaching. You can come preach at our church. Thank you so much for all you do. Absolutely, Steve.

Lord bless you. Appreciate you being on the program today. Eight hundred five two five seven thousand is the number to call again.

That's eight hundred five two five seven thousand. You can call right now with your financial questions today, or perhaps you want to weigh in on this topic of retirement. You know, one of the things I think we fail to recognize when it comes to retirement is just the impact on our health negatively when we cease all operations. It increases the chances of clinical depression by 40 percent.

It can, of course, accelerate aging. And so, you know, I think there's part of God's design for work with rest and proper rhythms is to keep us productive, to keep our mind sharp, to keep us engaged in blessing others. I think there's a reason that we talk about businesses producing goods and services.

They're supposed to be good for people and to serve our neighbor. And when we do that, remember, the way we advance God's creation and bless those around us is by engaging in productive work. I think, again, that's part of God's design throughout our whole life until he calls us home. And so something to consider because we certainly don't want to buy into the message of this culture that there is a date by which we just need to stop all productive activity.

I don't think that was ever a part of God's plan. Let's go to Nashville. What a great city. Hi, Laurie. Go ahead. Hi there, Rob.

And thanks for taking my call. A question about the pattern of insurance rates. I'm reluctant to start shopping again for insurance, auto, home. And my premiums went up like 31 percent this year and I had just changed over to another insurance company last year.

I have no claims. And I just wondered if that seemed to be the pattern across the country or maybe for this region. No, it is. It's nationwide.

Yeah, it's nationwide, Laurie. And here's the reason why. I mean, the top three reasons I've been reading about lately, there's maybe more than this that contribute to this. But number one is just increased vehicle repair costs. So, you know, cars these days have advanced technologies. They're basically you're driving around a giant computer. You've got sensors and cameras and electronics and, you know, computer chips. And it just makes repairs more expensive.

I don't know if you've been to a repair shop lately. It's kind of hard to get out of there without spending a thousand dollars. Second thing is we've had more, I think, severe accidents in medical costs based on what I've been reading. And the consensus is it's partly due to distracted driving. We've got just more people looking at their phones while they're driving. And, you know, then you've got congestion and larger vehicles like SUVs, which end up resulting in more medical claims, unfortunately. And then you've got inflation and supply chain disruption. So, you know, inflation has driven up the cost of goods and services, including the vehicle parts and the labor. And then you've got global supply chain disruptions, which cause shortages, in particular shortages in chips, which they've kind of worked through that. But there's been other shortages. You put all that together and it's just resulted in higher claims because the insurance companies are passing along their higher costs.

So what do you do about that? I mean, I think one of the things you can do, which is not fun, and you're pointing to this, is you can shop, you know, your rates every two to three years. Because we tend to see that, you know, folks or insurance companies in that first year will price it a little more aggressively. You always, you know, want to try to take advantage of safe driving discounts. Bundling can help.

But unfortunately, what your experience is is definitely not isolated. All right. Well, I did take one move, though. I thought if interest rates are increasing, I went ahead and bought a mutual fund in insurance. And you know what? It's going up. There you go. I like it.

You're getting creative there, Lori. Hey, the other thing you can do, obviously, is push that deductible up and then take the difference and put it in your emergency savings. And that way, if you need it, it's there. But on a monthly basis, you're paying less. You're right.

The deductible I increased to $5,000 on everything. Oh, wow. Yeah, there you go. Listen, you're way ahead of me. Next time I'm away, Lori, you're hosting the program. You've got this under control here. Hey, God bless you.

Only because I'm listening to you. Thanks. Well, I'm glad to hear it. I'll take that.

God bless you. Well, folks, we're up against our next break here. We come back. We've got some great questions coming up. We do have some lines open. We'd love to hear from you. That number, 800-525-7000. You can call right now. By the way, if you count on this broadcast, it's been an encouragement to you.

Maybe you've learned something along the way. We'd invite you to be a FaithFi partner. All the details on supporting our ministry at faithfi.com slash give.

You can check that out today. Look at the sparrows, a 21 day devotional. You'll find peace by focusing on God's faithfulness as you discover how to overcome financial anxiety with faith.

Visit faithfi.com slash sparrows and begin your journey with look at the sparrows today. Paying too much for health insurance? Frustrated by high deductibles and increasing premiums?

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To Kokomo we go. Hi, Chris. How can I help you? Hi. Thanks for your show.

I enjoy it. Thank you. I was wondering, my husband opted out of Social Security back in the 80s. He's a pastor. And he's working part-time now.

He's retired. And I wondered if he gets enough credits, can he get back in Social Security? Yes, he can. So he can qualify so long as he has enough work for long enough to qualify outside of his work as a pastor. And so ultimately that would mean he'd have to pay into the system for at least 40 credits, which is you get a credit for every quarter that you pay in.

So that's equivalent to 10 years of work. So he would have to have one credit, which he would get for every $1,730 in covered earnings up to four credits a year. And then if he gets those 40 credits or 10 years, then he's eligible for retirement benefits at that point. So how far into his work where he's paying into Social Security is he currently? He's probably about, I think he would have to work two or three more years. He had some credits, like when he was in college, he worked in a factory part-time in the summer. So he did have a few credits before. Yeah.

Okay. But then when he gets ready to go on Social Security, if we get that far, then will he, like right now, my Social Security benefits are paying his Medicare. So would he get a benefit on top of that? And would I get more money on Social Security?

Yeah. So you each have your own work record that determines what your benefits are. And then you have the ability to take a spousal benefit if it's higher, and that's equal to up to 50% of your spouse's benefit. So he could compare whether a spousal benefit at 50% of yours is higher than what he would qualify for on his own, because his is going to be fairly low. Even if he gets to that 10 year mark or 40 credits, you know, it's based on your high 35 years. So the highest 35 years, and obviously the vast majority of those are going to be at zero. So that means the benefit, even though he will qualify for something, is going to be fairly low.

So it would be interesting to look at whether, you know, taking a spousal benefit for him would actually be higher than his own benefit, even if he qualifies. Okay. Alrighty. Okay. Well, thanks a lot.

I appreciate your help. Absolutely, Chris. Thanks for your call today.

Let's go to Florida and Prudencia. Thank you for calling. How can I help? Yes, Rob.

Thank you so much for your time and your program. My mom just passed and she left the house. She still has a mortgage of $125,000 on it. And the loan is a VA loan and I don't really know what to do with this property. So I just said, let me reach out to you and see if I can get some advice from you. Yes.

Yeah. So the challenge is here, you know, VA loans are assumeable. So that would be the first option is to see whether you could assume the loan. But let me just clarify. Are you wanting to hang on to the property for some reason or would you rather just go ahead and sell it? That's the thing I don't really know.

If I could just sell or I should hang up. Yeah. Okay. Yeah.

Yeah. So let's let's think through that here for a moment. Give me just kind of a rundown of your financial situation. What do you have in just what I would call emergency savings? Yeah, I have almost like $30,000 in emergency savings. All right. And what do you have in investable assets?

Yeah, I have about $270,000 in stocks. Okay. Is that in a retirement account or in a taxable account? IRA. IRA. Okay.

What else? Yeah. And I also have about $50,000 in another investment like annuity. Okay. All right. And then do you have any debt? Yeah, I have my house. I still have about $180,000 mortgage on it. All right. And what is that worth?

I think it should be about $300,000 by now. Okay. And then in addition to that property that has the $180,000 that you're living in, you've got now your mom's property, which is a separate property, correct? Correct. Okay. And what's the value of that, do you think? Maybe it could be about $200,000. It could be about $250,000 to $300,000 in value.

Okay. And what is the mortgage? $170,000 or $125,000, right?

$125,000. Right. Okay. Now talk to me about your cash flow. What income sources do you have?

Yeah. I'm a nurse. I'm still working to actually have about seven years before retirement. I make almost like $5,000 a month. Okay. And is that enough to cover your bills? Yes.

And do you usually have something left over? Yes. Okay. About how much?

About $1,000, $1,500 every month. Okay. Do you know what the mortgage payment is on your mom's VA loan? Yeah. She's paying.

She just got a new insurance, so she's paying almost like $1,800 a month. Okay. So I guess that's the first thing. I mean, assuming you could assume it, right? Because you wouldn't want to go out and get a new mortgage with rates where they are. But assuming you could assume it, which VA loans you typically can, can you afford, you know, an $1,800 a month payment?

Well, I'm thinking if my son and wife could move in there and be paying that... Okay. Anyway, keep the property, that's another option that I was discussing with them. Okay. Yeah.

Well, here's the thing. I mean, you're in pretty good shape. I love that you've got the IRA money. You've got a healthy savings account. You've got an annuity. You're on track for retirement in seven years. You don't have a lot of debt other than your primary residence.

Let's make a goal to get that paid off by the time you retire, if you can. And so you've got options. One is you can make this a rental property and get a renter in there. The second option is you put your son and your daughter-in-law in there and they pay the mortgage. And that's great because that keeps the property and then eventually you could sell it and make it a part of your retirement assets. The third option is you go and sell it now and you don't have to fool with it.

And then you hire an advisor to manage that roughly $125,000, the difference between what it's worth and the mortgage. So I think you just need to pray on this, talk to your son and daughter-in-law, see if they actually want to live there. If they do, then that sounds like a great option. If they don't, then I think you just need to decide, do you want to be a landlord? Because that requires some work. It's not a passive investment. You're going to have to deal with maintenance and plumbing issues and the things that come up along the way.

And you just want to make sure you don't put yourself in a situation where you're overextended if you lose the renter for a period of time. Hope that gives you some things to think about, Prudencia. God bless you. Thanks for calling.

Well, we covered a lot of ground today. Hey, before I let you go, let me remind you, if you're looking for an advisor that shares your values, we recommend the Certified Kingdom Advisor designation. Fifteen hundred men and women across the country have met the high standards and character and competence, but they've also been trained to bring a biblical worldview of financial decision-making to their professional advice. They've also had pastor and client references. You can find a CKA in your city when you head to faithfi.com and click Find a Professional. I hope you'll come back and join us next time on Faith and Finance when we go back to God's Word and look for biblical wisdom for your financial decisions. Faith and Finance is provided by Faith Buy and listeners like you.