Teaching Kids About Debt with Howard Dayton

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Explain why it's especially important to teach kids about the dangers of debt. 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, it's always a pleasure when Howard Dayton joins the program. He's the former host of this program. He's the author of several books on biblical finance and the founder of Compass Financial Ministry. Howard, my friend, what a treat to have you back with us.

Wonderful to be with you, Rob. Howard, you've not only taught your own kids how to handle money wisely and avoid debt, but you've also counseled untold numbers of parents on how to do it. You base this on certain biblical principles, so I'd love for you to start there today.

Sure thing, Rob. Well, the best strategy for training children to handle money is what I like to call the little big principle. It's found in Luke 16 verse 10.

It says, He who is faithful in very little thing is also faithful in much. And I believe parents should be as systematic in training children to handle money as teachers are in teaching them to write. You know, they first learn the alphabet, then how to spell cat. You know, each year they learn more and more complex words.

Eventually they're going to write a turnpaper because learning is a process that happens in stages. Yeah. And so the big idea here is to start small, right, Howard?

Exactly. Start small. And the goal is to steadily increase responsibility so that eventually your children are independently managing all their finances by their senior year in high school. And this is the way, Rob, that parents are available to advise their children as they make financial decisions and then turn more and more responsibility over to them. Unfortunately, most children graduate from high school ill-equipped to handle money. I mean, you know this. That's right. I met with one college student not too long ago and I admit it, I was shocked when I learned that he didn't understand that credit cards, the purchases actually had to be paid for at the end of the month.

Oh, no. So they needed to learn some basic principles and to do that on a systematic way is really important. Yeah, I know it is. And you've taught us this model for training our kids. It uses the letters MVP parents.

Share that with us again. Yeah, I like to encourage parents to be MVP parents. MVP is an acronym that stands for the three methods that teach children. The first is to model ourselves, then the second to use verbal communication to teach them, and then practical opportunities to give them the ability to apply what they've been learning.

And all three of those are really key. Howard, talk about modeling for a moment because this is so essential. We know more is caught than taught. And so what we're living out in terms of our own financial management is undoubtedly affecting the way our kids will ultimately handle money, right?

Absolutely. I love what 1 Corinthians 11 tells us. Paul recognized the importance of modeling when he said, follow my example as I follow the example of Christ. And as you just mentioned, nothing is more influential with our children than watching their parents live what they actually teach, which they actually believe. So that would be the number one thing for a parent to think about.

And then next is verbal communication. We should instruct our children in the ways of the Lord. And the Lord tells us in Deuteronomy 6, these commandments that I give you today are to be on your hearts. Impress them on your children. So talk about them when you sit at home, when you walk along the road, when you lie down, when you get up. So Rob, consistently telling our children about the financial truths of the Bible is huge for them.

There is no doubt about that. And then you finish up with that practical opportunity to apply what you've learned. Howard, this is a great model, MVP model, verbal communication and practical opportunities. We so appreciate you, my friend. Thanks for spending a few minutes with us. Loved it, Rob.

God bless you. Folks, Compass has a great new book on this topic. It's called Financial Discipleship for Families.

You can check it out at compassfinancialministry.org. All right, your calls are next. The number 800-525-7000.

That's 800-525-7000. I'm Rob West and this is Faith and Finance. We'll be right back. Faith and Finance is grateful for support from Soundmind Investing. If you have money in an investment account, you know sometimes the stock market can seem like a roller coaster.

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Whatever you're thinking about in your financial life, living, giving, or owing, perhaps even growing God's money, call today with those questions and we'll help you process those decisions in light of biblical wisdom. The number to call today with lines open is 800-525-7000. Those calls will build throughout the program, so now's a great time to get through without waiting any question at 800-525-7000.

We're going to dive in today and we're going to begin in Great Falls, Montana. Pat, you'll be our first caller. Go right ahead. Hi, Rob. Thank you so much for taking my call.

Yes, ma'am. I've had some health issues the last seven months and my kids live in Washington State. And they'd like me to move out there and I was just out there for about 10 days and found a lovely place, a condo, which I'm interested in. But it's a co-op and I didn't know anything really about cooperatives and I just wondered if you have any words of wisdom for me.

Yeah, I'd be happy to weigh in on that. You know, I think the basic understanding you need to have is that units in a co-op are actually owned by the co-op nonprofit corporation. Correct. There's several types, but generally the owners are merely shareholders of them. So typically the thing you want to make sure you understand above everything else is that there are fees and requirements with your co-op. You want to know what are those and then how difficult is it for the governing board to raise those fees because they will do that from time to time.

And so what does that look like? You may even want to ask them for kind of a trailing, you know, five year look back at what those incurring fees or those increasing fees are if they've been going up. You'll also want to look at the rules and regs. And so, you know, how strict are the rules and, you know, what are there any that that would be concerning to you? Probably not, but, you know, ultimately the board is going to be responsible for managing and enforcing the rules of the building, but you certainly want to know what those are in advance. What is the co-op responsible for and what will you be responsible for? That would be kind of another piece of this that I think it would be important for you to know, just so you can get a good sense of, you know, what the expectations are and any costs that go along with that.

I would probably, you know, talk to a real estate agent or two to find out how quickly these units sell in case, you know, you want to do that later and that there's not any kind of red flags there with them sitting on the market, you know, longer than you would like to see. But apart from that, you know, I don't have any issue with you being in a co-op. I've lived in a co-op early in my married life. Julie and I, our very first place was a co-op and it was a wonderful experience. I actually was on the board and had a lot of fun.

Julie thought I had more fun than I should have going to those meetings once a quarter, but I really enjoyed it. But I think, you know, as long as you understand the fees, you understand the application process can be rigorous. You know, you understand, you know, if you were wanting to sell it, you have to know that the buyer has to be approved by the board. I mean, you're just going to want to read all the fine print, but apart from that, the amenities typically are more robust.

And, you know, they can be great to live in because they can harbor a sense of community and long-term, you know, housing security because they're well-maintained. Correct, correct. Yes, that's what we were looking at. And I did have another question. My six months that I've got the money set aside for, I've just got it in my regular savings account and I'm not earning very much on that.

It's about $40,000. And I wondered if you could recommend some place that I could get perhaps the higher interest rate, maybe about 5%. Yeah. Are you comfortable doing business online in terms of having an online checking or savings account?

Well, kind of. I know it sounds scary, but here's the reality is that, you know, for most folks, they have a brick and mortar, even if they have a brick and mortar checking account, let's say, you know, most often they would still have, you know, an online access point. And so for most people, there really is no difference in terms of, you know, if your account could be compromised, your brick and mortar is just as susceptible to, you know, the online only. I think the main difference is really not in the level of security. It really comes down to just convenience.

If you are somebody that likes to be able to walk into a branch and look at somebody face to face, obviously that's not going to be an option. But what I typically recommend for something like this is you maintain that normal banking relationship that you already have in place for your checking account. And then you open the online savings specifically for the savings portion, and then you have the ability to link them electronically, which would allow you to move money back and forth with a couple of clicks of a button. And that's what's going to allow you to access these better interest rates. What I would do is go to a website, Pat, called bankrate.com. You'll click the button that says high yield savings. And what you'll find there is that, you know, you'll find rates between four and a half and five percent today with, you know, close to five star rated banks, all of which will be FDIC insured.

And that's going to be a really important piece to this. So that would be my next step bankrate.com choose from among those in the list, open one that will be basically just your online savings account, link it up electronically, and then you can just move money back and forth. And the good news is with, you know, $40,000, you'll be able to make a couple of thousand dollars over the next year or somewhere close to it.

Even if rates start heading down, we don't think it's going to happen anytime soon. Does that make sense? Okay.

It sure does. And I really appreciate your help with this. So thank you for all the people that you help. Well, thank you. I appreciate that. That's very kind, Pat. All the best to you.

And I love the idea that you're moving closer to family. I know you'll enjoy that. I will.

I'm sure you will. Well, God bless you. And thanks for being on the program. Chuck in Indiana.

Go ahead, sir. Great program, Rob. Just a quick question. For the past three years, I've been giving to the R&D program. You know, you have to require a bit of distribution. And, you know, obviously my church has been happy because I don't have all the talent.

But then the guy at work said, Why are you doing that? If you're still working, you don't have to give this, you know, take out requirement of distribution money. Is that true?

Well, partially. So if you're still working for the company sponsoring the plan and you don't own more than 5% of the plan, then you don't have to take the RMDs. But this does not apply to IRAs. You would have to take RMDs from your IRA, even if you're still working. But where you do not have to take them, even if you're of the age where they're typically required, would be if you're still working for the company sponsoring the plan.

For that plan, you would not have to take the RMD. Does that make sense? Got it. Yeah.

Seriously. So take it from my IRA because that still counts. That's exactly right. And it would be based on your life expectancy and the balance of the IRA.

But for a retirement plan at a company that you're still working at, as long as you don't own more than 5%, you would not have to count that in to determine the required minimum because it doesn't apply until you separate from employment. Got it. All right. Bless you, Chuck.

Absolutely. By the way, if you're looking for advice from a financial professional and you'd like someone who shares your values and who has met high standards and character and competence and ethics, well, we trust the Certified Kingdom Advisor designation, the only financial services industry designation out there that is around biblically wise financial advice, pastor and client references, annual continuing education, experience, character and ethics requirements all having been met, you can find a CK in your area and I'd interview at least two or three. Just go to faithfi.com. Click find a professional that's faithfi.com. Hey, back with more in our final segment right around the corner.

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You can find a local CKA professional in your area by going to faithfi.com and clicking find a CKA. Every day is a nightmare for girls being trafficked and abused. It's an evil that must be stopped. That's why India partners rescues girls into safe houses so they never have to worry about this again. Because I was young, I was in high demand.

So the owner would bring in 30 to even 40 customers per day. Thank you to those who have invested in the safety and care of girls being trafficked, but there's still time to end the nightmare for another little girl. Rescue her now at India partners.org slash faith. Great to have you with us today on faith and finance from Rob West. We're looking forward to taking your calls today.

If you have a financial question, this is the time for you to get in on the conversation. We've got lines open, perhaps one waiting just for you. You can call right now 800-525-7000. Again, that's 800-525-7000.

Let's go back to those phones to Ohio. We'll go next. Elizabeth, go right ahead. Yes, I have an IRA and a retirement account that right now is set up and signed up so it will be divided equally between my son and my daughter and one other child. And I have the one child that her spouse does not handle money well. And is there any way to set up a trust for her part if there's any, you know, any left when I die between the three of them?

How would I do that? I tried to get my son who's executive to be over her share, but he doesn't want to do that because, you know, it can cause problems. Yeah, I think that's right.

Yeah. So a revocable trust could serve this purpose. And you'd want to go to an estate planning attorney to talk through this, Elizabeth.

But essentially, the revocable trust could ensure that your assets pass to your daughter directly without going through probate. And you could set conditions on how the funds and property are to be distributed. But to some extent, what she does with them after they're distributed would be up to her.

So that would part of it would prove to be difficult. I think the key is just to make sure that it gets to her. And then at that point, she's the steward of that money. And so you're going to have to leave that up to her. You can put some conditions on the money you give your daughter.

It's much easier while you're alive. The problem is that there's nothing to prevent her from turning them over to him once she receives them. But I think the attorney could help you explore those options. I'd also love to send you a book that could help you think through some of this. It's called Splitting Heirs. I think it's the best book on this topic. It's written by our good friend Ron Blue, and it explores kind of the soft side, if you will, of wealth transfer, not the tactical side with the legal documents, but really the why before the how.

And I think it could give you some things to think about. But then your next step is to reach out to a godly estate attorney, Elizabeth, to talk through your options, and then the attorney could put that trust in place to make sure your wishes are honored. I have a financial advisor and he could probably get me a Christian attorney because it's a Christian organization. Okay, thank you for those ideas. You're welcome. Stay on the line and we'll send you a copy of that book. It'll be our gift to you, Elizabeth, and thanks for your call today.

Let's go to Ohio. Craig, thank you for calling. Go ahead. Yes, I want to know about if you can take a revocable trust and just get rid of it. I have copies and the attorney had a copy. It's over 40-some years old and there's hardly anything there that would be the same.

Ah, yes, very good. Well, I will just tell you generally, obviously, I don't know the provisions of that trust, but the whole point of a revocable trust is it can be dissolved or changed. And so that's the idea behind it as opposed to an irrevocable trust, which cannot or at least it's much more difficult to.

So you would typically take certain steps. So you'd want to look over the trust document for any specific instructions on how to revoke or dissolve it. And then you would typically write up a document describing your intention to dissolve the trust.

You would normally inform the co-trustees if there are any or beneficiaries of your decision to dissolve it. And then if you're the sole grantor and trustee, then you can usually dissolve the trust without approval from anyone else. And then you would transfer any remaining assets out of the trust back into your name. So you might have to change titles or deeds or accounts if there is anything that's still in the name of the trust. And then you could close those trust accounts.

And then you're going to want to keep good records of all this. And I always recommend that you get the counsel of an attorney to kind of walk you through it. But generally speaking, at a high level, absolutely, with a revocable trust, you can make changes, you can dissolve, but you do want to follow certain steps. You do want to follow through in steps in what seeing an attorney to do it?

Well, it's the ones that I mentioned. So first, you know, I would always recommend an attorney. But if you want to do it yourself, you could start by just reviewing the trust document for any specific instructions on how to revoke or dissolve it. So you'd want to see if that's referenced in the trust documents themselves. And then again, you'd write up a document describing your intention to dissolve, inform any beneficiaries or co trustees if they are there any transfer assets out of your name out of the name of the trust, if there are any that are titled in the name of the trust, transfer them out, and then those accounts could be closed, and then keep basically good records of everything that you've done. Those would be the steps.

But I would also recommend you just have the advice of an attorney just to look over everything and make sure you've done it properly. Okay. All right.

Well, thank you very much. Yes, sir. We appreciate your call from Ohio today. God bless you.

Let's head to Indiana and welcome Tom to the broadcast. Go ahead, sir. Yeah, I was just wondering if there's any way that I can get my in a life situation done with a lawyer without having to spend three to $5,000 like they're asking, because just turned 64 and I see it kind of slapped me in the face. It's coming up real fast and I don't want to leave my wife with nothing to lean on when when I'm gone and having to go through court to go through probate and all that good stuff if you understand where I'm coming from.

I sure do. When you talk about end of life documents, I mean, are you seeing the need for a trust? Are you just talking about a basic will and power of attorney? I'm talking about what's going to keep her out of probation or out of probate.

I'm sorry. And the one other thing is, is that her credit rating was so bad that she was never on the house and that needs to be done also. And it seems like I can get the paperwork, but it seems like I can't find anybody to help me fill it out. I'm not a lawyer.

I was a mechanic before I retired and I don't do paperwork like that very well. So I get it. Well, I mean, there certainly are plenty of online services.

I would say they're not all created equals to do your homework. That'd be better than nothing. And it would save you some money. I mean, I think this is one of those things that's just worth you spending some money on just because it really is important. And if you do want to make sure everything passes outside of probate, it does require a trust. And that is going to run you a couple of thousand dollars. And when you add in the other things you need, like the power of attorneys and the health care surrogates and living will, plus just a last will and testament to cover anything not inside the trust, you know, you are going to be up three thousand plus. But I think it's worth it. I mean, the only other way to avoid probate would be, you know, to make sure that you have a if it's permitted there in Indiana.

T.O.D. to transfer on death deed on the house. You can add beneficiaries to accounts. But, you know, the only way to kind of do a catchall would be to have that trust in place. I guess the other option is you do it online and hire an attorney just to look it over. And I don't know if they'd be willing to do that. Usually they want to do their own stuff. I just think this is one of those things that's probably worth the expense.

But, you know, if you would be looking to do it less expensive, I think the online option would be a better approach there than nothing for sure. So hopefully that helps, Tom. We appreciate you calling today, sir. God bless you, folks. Thanks for being along with us today. Such a joy to hopefully offer some encouragement, some hope and some sound biblical wisdom as it relates to your role in managing God's money. Hope you have a great weekend and come back and join us next week. We'll see you then. Bye bye. Faith and Finance is provided by Faith Buy and listeners like you.