Setting Financial Finish Lines with Rachel McDonough

What's most important to you when it comes to choosing your financial advisor? Someone who's aligned with your biblical values. How about someone who will take the time to explain your options? Certified Kingdom Advisors are professionals who meet high standards in competence and integrity, and have been trained to offer biblical financial advice.

To find a Certified Kingdom Advisor in your area, visit faithfi.com and click Find a CKA. Do you not know that in a race all the runners run, but only one receives the prize? So run that you may obtain it. 1 Corinthians 9 24. Hi, I'm Rob West.

The apostle Paul exhorted the early church at Corinth to run in such a way as to win the prize. But sometimes with finances, it feels like we're in a race with no end. Today, Rachel McDonough joins us to talk about setting financial finish lines. 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, I'm delighted to welcome my friend Rachel McDonough back to the broadcast. Rachel is a Certified Financial Planner and a Certified Kingdom Advisor, and she always runs a good race. Rachel, great to see you again.

Hey, thanks for having me, Rob. So Rachel, as we look into the new year and beyond, what are financial finish lines and why are they important? Yeah, financial finish lines are essentially the answer to the question how much is enough in different categories. And when we think about the potential different uses of financial resources, there are really only two overarching purposes or two buckets. The first is provision, and the second is kingdom impact. And I like this term buckets because it implies that, hey, they can get filled up, right?

Yeah. So the kingdom impact bucket is, of course, where all of our generosity occurs, and that's really the purpose is to further God's kingdom. And that doesn't need a finish line at all. But in order to do that job well of kingdom impact, we do need to get thoughtful and intentional about setting financial finish lines in all the different areas within our provision bucket so that we can get the clarity, confidence, and even a sense of permission to responsibly deploy more resources for kingdom impact. Rachel, those buckets are really helpful. Let's dial into the provision bucket for a second.

Help us think about setting a finish line in that area. Yeah, the first place we need to start is really defining how much is enough for our lifestyle spending. And one way to think of this, a client of mine said that he liked the idea of using this multiple of poverty line income. So thirty one thousand two hundred dollars for a family of four is the poverty line income for twenty twenty four.

We'll get the new numbers for the new year shortly here. And one way to approach setting that lifestyle spending is to say we're going to use a multiple of that number to say here's how much is enough for our family. And then that has to be first, because once we set parameters and put some guidelines and a finish line around our lifestyle spending, then it makes it possible for us to do things like calculate out how much we might need in retirement.

Yeah, that's really helpful. Now, another area that we need to think about finish lines is related to gifts to family members. That's often something we don't consider, but it's really important, isn't it? It is.

It is. And I think as parents or as grandparents, we love to step in and fix problems for our kids instead of letting them struggle through. But deciding how much is enough for the provision for our family members, you know, whether it's covering their education expenses or whatever it might be as they transition into adulthood, there can be really adverse effects to kids or grandkids getting unearned wealth, especially large gifts. So I love the Ron Blue quote. He said, if I love my children equally, I will treat them uniquely. And I think we need to prayerfully discern how much is enough for the provision for our kids. That's a big idea, and a lot of people struggle with it. So I'm glad you called that out.

All right. So we've talked about lifestyle finish lines, gifts to family members. What about over on our balance sheet? What about finish lines related to the accumulation of assets? Yeah, this is how much is enough for my future provision, right? And financial planning, of course, is the method that's used to determine how much is enough.

And we might want to, of course, set some type of margin or put a buffer on top of whatever that number looks like as we do a financial projection. But this one's really, really important, because if we don't set a finish line on our assets and our accumulation, what happens is those assets and resources that could be available for Kingdom Impact, they get stalled out in this, you know, potential future needs and wants category. And that one is, I would say, the number one finish line to set for really catalyzing your Kingdom Impact bucket. And this is where a certified Kingdom Advisor can really help, right, Rachel? That is correct. So Kingdom Advisors would have, of course, cash flow management tools, and they can help you with some budgeting.

But that financial planning calculation and figuring out how much is enough for future needs and wants is amazing for having an advisor partner with you on that. There is no doubt about that. Well, unfortunately, we're out of time. We'll have you back real soon. But Rachel, thanks for stopping by.

Hey, thanks for having me. That's Rachel McDonough, CFP, Certified Kingdom Advisor and a much-appreciated, frequent contributor here at Faithfi. Your calls are next, 800-525-7000.

We'll be right back. You can find a local CKA professional in your area by going to faithfi.com and clicking Find a CKA. We're grateful for support from Timothy Plan. For more than 30 years, they've served clients on a biblically responsible journey to invest in a way that honors God and gives dignity to people's lives. More information is at timothyplan.com. The investment objectives, risks, charges and expenses are contained in the prospectus and summary prospectus available at timothyplan.com.

The individual funds distributed by Timothy Partners LTD and ETFs distributed by Foresight Fund Services LLC. Hey, thanks for joining us today on Faith and Finance. My name is Rob West. I'm your host today. And I'd love to take your calls and questions helping you apply God's wisdom to your financial decisions and choices. The number to call to be on the program today, 800-525-7000 with whatever you're thinking about in your financial life, 800-525-7000. You can call right now. We're going to go to Levy in Texas.

Go right ahead. I'm married, but I want to me and my wife to be on the same page. I want a budget. I feel like we need a budget to like have better spending and the action bill savings, but she don't seem to be on the same page. And she's more liberal with spending than I am. Like we both spend money, obviously, but I think she's more liberal with it. And I kind of want to get us on the same page.

Yeah. Well, I could certainly appreciate that, Levy. And I think, you know, this is something when we think about managing money as a married couple, we have to recognize first we have to have understanding and we've got to recognize that we bring to the marriage relationship different backgrounds. So how you handle money, studies say, is largely in place by the age of nine, which just means that a lot of that is based on the environment you grow up, you grew up in, how much money was available, how scarce it was or how abundant, how money was handled. Was it spent frivolously or was there a careful budgeting in place?

What about debt? How much generosity was modeled? All of that kind of plays into how you view money today, how tightly you grip it, how loosely you hold it. Also, God's wiring on you, your temperament.

Are you someone who values people over tasks and you're someone who gets energy by being with others and you tend to spend a little bit more freely or are you somebody who's more measured and administrative and careful about goal setting and the details. And, you know, a lot of that just has to do with God's temperament and wiring in us and then all of that comes together and it leads into how we manage money and it can create conflict because we're two different people that come together. And so it takes work to be able to appreciate each other and what we bring to the table. Somebody who's a little bit more free and spending is a great part of the marriage relationship because, you know, it might help the other, the spouse appreciate spending as it relates to experiences and investing in relationships and just enjoying God's provision. And yet the other spouse who's a little bit more wanting to hold back and be a little more careful and a little more oriented towards savings can provide a nice counterbalance to make sure that we're not getting being spending beyond our means and that we are able to accomplish our goals because we have surplus that we can set aside and, you know, those kinds of things.

But together we're a more accurate reflection of Christ, I think, but it takes the hard work of communication and understanding. And I think what can be really helpful is for you all to first of all pray and invite the Lord into your financial life. Second, to really start with your values. You know, what do you want at the core of your marriage relationship as Christ followers? What are those guiding values that you want money to accelerate as a tool? So is it living a life of simplicity? Is it being able to give generously? Is it being able to, you know, invest in kingdom causes? Is it to be able to bless your kids? Is it to be able to enjoy it?

I mean, what are those things living simply? You know, I think having a conversation about that and then really talking about money as a tool to accomplish those things is really the starting point. And then after you have that prayerful discussion, you establish that spending plan. And I know that seems restrictive, especially to somebody who's a little bit more of a free spender, but it's essential. And it's not meant to be a tool to kind of necessarily limit someone.

It can have a reflection of both of you in it. So if there's things she enjoys or passion she has, let's build it into the budget, but let's make sure we do it within the context of a well thought out plan so that we're not getting ahead of ourselves and we get to the end of the month or the end of the year and say, wait a minute. We didn't accomplish any of our goals because we just didn't operate on a plan. And if we don't know where we're headed, we're never going to get there.

We're going to miss the mark every time. So I think it starts with prayer. It starts with a conversation about values and what God's doing in your family and where you're going. It starts with understanding who you all are in Christ and your wiring and your backgrounds and your upbringing. And then it translates ultimately into a spending plan that's a reflection of both of you, but that you both agree to in terms of how you're going to handle God's money on a daily and weekly and monthly basis. And then it requires a lot of communication because you've got to come together, I would say even weekly, if not weekly, monthly for a money date, not to point fingers, but to say, how are we doing? And what course corrections do we need to make? And where did we miss the mark?

And what's coming up next month? And when you have that kind of rhythm going on, it's a game changer. And now all of a sudden, money is not a source of conflict or frustration. It's a blessing and a joy because it's God's provision.

It's a good creation from the Lord, and it becomes a tool to further all that God is doing in your life. But I've thrown a lot at you there, Levy. Give me your thoughts on all that.

I agree on that. It's just I guess seeing what it actually looks like when we have the talk, because I've talked to her about finances, but it seems like almost like she gets defensive and she always goes to like, OK, whenever I bring up a budget, she kind of gets defensive and say, well, you can if you think you can do better and I'll just stop paying the bills and you can do all of it. I'm like, well, I didn't mean that. I love that she pays the bills because I drive trucks. And so I love the fact that she pays bills. She does a great job. I try to compliment her on that all the time. All I ask her about is can we have a budget so that we can know what's going on so she can have some money left over to do the things that she'd like to do? She'd like to go and have estate sales. And I told her, I said, I don't want to change that about you. I just want us to save also so we can have things set aside.

So if we want to do something, we don't have to take out a loan to do it. I think you're on the right track there. I think it's all in your posture. And I think you're doing many of the right things. I think the next time you have this conversation, I think you start by saying, number one, let me just say thanks. I mean, God has gifted you in this area of administration. You're doing a fabulous job. Number two, I don't want to limit you.

I love that you have some passions, including those estate sales. Let's get that into the plan. Here's my request. I just want to talk about what our goals are, you know, short term in the next year, longer term in the next three years, and then, you know, maybe 10 or 20 years down the road. And let's just create a plan that, you know, reflects both of us, but ensures that to the best of our ability, we're not always going to get it right. We're making decisions today that are going to help us accomplish the things we want to accomplish longer term. And how can we find common ground to do that together? You know, this is not an indictment on anybody.

This is not a finger pointing session. This is how do we work together to make sure we're driving toward what God ultimately has for us by way of goals and making sure that the money, the plan for that, the budget, the spending plan reflects those goals. So we don't end up at a destination that's different than what we originally intended. And maybe that part posture will be received a little differently.

It's a little more disarming when you start that way and say, you know, this is not about you doing anything wrong or me trying to shut down what you love. This is about us working together to accomplish our goals longer term because we can make better decisions today with a longer term perspective. I want to send you a book called Money and Marriage God's Way. I think that could be helpful for you guys to work through together. Stay on the line. We'll get your information.

Leave me and get it out to you. Hey, much more to come just around the corner. We're just getting cranked up here.

We still have a whole nother segment left and some great calls coming up just around the corner. We'll get to those here right after this break. If you want to check out prior broadcasts or download the Faithfi app, do that on our website, faithfi.com.

We'll be right back. We are grateful for support from Praxis Mutual Funds. Praxis Mutual Funds has seven impact strategies that are designed to create positive real world change. More information is available at praxismutualfunds.com. The fund's investment objectives, risks, charges and expenses are contained in the prospectus and summary prospectus. This and other information is available at praxismutualfunds.com. Investments involve risk.

Principal loss is possible. 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, but it's possible to enjoy both profit and peace of mind as a do-it-yourself investor, no matter what's happening in the market. A short video webinar about that is available at soundmindinvesting.org. Financial wisdom for living well, soundmindinvesting.org. Great to have you with us today on Faith and Finance for taking your calls and questions today. That number to call, 800-525-7000. That's 800-525-7000. We'd love to hear from you today. Whatever's on your mind and your financial life, go ahead and give us a call right now. Again, 800-525-7000. Let's go to Ohio. Kelly, thanks for your patience. Go ahead.

Hi. I just recently bought a car and now I'm having a hard time fitting it into my budget. On paper, it seemed like I would be fine on being able to afford it. But now that I'm in it, my insurance went up and so now I just have no extra money. I didn't know if there was any way.

I don't know, return it or get out of it. Just because I've done so well getting my credit good and now I'm afraid that I'm going to dig myself in a hole. Well, I certainly understand, Kelly, and this is really common.

We want to help you make a good decision here moving forward. The challenge is this is one of the big three budget busters that we just so commonly see. It's housing. We buy too much house and it may be fine initially or maybe not, but even if it is, as the escrows go up with increasing property taxes and insurance and maintenance and all the things we didn't factor in initially, it just becomes really problematic. The second is transportation. A little easier to get rid of than a house, but still creates some challenges.

And then food is the third one and that's obviously a little easier to rectify. In terms of your options here, the first option you could pursue is just to contact your lender and reach out, discuss your situation. They could offer some solutions like adjusting your payment schedule. So maybe extending it out further and therefore lowering your payment. A lot of folks used to automatically get a five year auto loan.

Now it's more common to see a six year. Just because cars are so expensive, people are pushing them out to 72 months. Well, they may be able to recast your loan, which would allow you, even though you're going to pay more in interest, it would allow you to bring that payment down slightly. You could consider a hardship program. That's going to be a little more challenging and could impact your credit, but it would allow you to potentially pause or reduce your payments temporarily.

If you're facing a hardship that you would have to show them, you're probably not there yet. You could refinance it. So you try to lower the payments by lowering the interest rate, extending the term on it.

There's going to be some cost to that and we haven't seen a whole lot of movement in rates, so you're probably not likely to get a lower rate unless you had poorer credit when you got it. Your credit is better now and if that could help you secure a better rate, that may help you save some dollars or at least get that payment down. Of course, going to your budget and looking for other places where you can cut back, reduce discretionary spending, find ways to lower fixed costs like insurance premiums. Budget adjustments that free up more money for you to focus on getting this car paid off would obviously be great.

The final step is one that can be a little challenging and requires you to consider a number of factors. That is, you could just sell the car and try to find one that you can afford a little more effectively. Assuming you're not upside down, perhaps you could unload this car for what you owe on it and then get into something that's maybe three or four or five years older.

Even though you may have a little bit more in maintenance, maybe you can get into something that's a little bit more manageable. Again, assuming you're not upside down where you owe more than the car is worth, but give me your thoughts on all that. That's kind of what I was thinking that I probably need to cut back on different things. I guess I thought about balance transfer cards where I have other credit cards that I'm paying a lot of interest on that I've been making higher payments trying to pay them off. I didn't know if those are recommended to eliminate some of the interest so that maybe in the long run I won't be so tight, I guess. What do you have in credit card debt right now? It's about $10,000. Have you ever looked into what's called a debt management program?

No. Okay, so my preferred way to get out from under credit card debt once and for all is through what's called debt management or it's also known as credit counseling. It's not factored into your credit score, so it wouldn't affect your score at all, but essentially what you do is you move the card into a credit counseling program. We recommend our friends at christiancreditcounselors.org.

They've worked with literally thousands of our listeners. What happens is the interest rates dropped, so whatever it is now, if you're on a balance transfer and you're at 0%, obviously it's going to go up, but you're not going to have to keep playing that balance transfer game. The average credit card interest rate right now is somewhere between 20 and 23%.

In credit counseling, it drops to between 0 and 12%, usually between 0 and 8%, and then it stays there throughout the life of the loan and then you just make your payment through Christian Credit Counselors. But the key is with that reduction in interest and the level monthly payment, you'll pay it back on average 80% faster. So that would be the way that I would go on the credit cards and then once you lock in that monthly payment rather than trying to send extra, especially with a lower payment, maybe now you could take that money that you were sending to the credit cards and redirect that to just making sure you can cover the car payment every month to get that paid off as soon as possible. And then the other step is to go back to the budget and just look for other ways you can cut. If you're not tracking your spending, that would be a key way for you to identify other areas that maybe you're not even aware of. Maybe it's subscriptions or just regular eating out or things like that that add up over time that you're not even realizing how much you're spending that you could cut back on if you knew they were there.

And then it could free up some other dollars that way as well. So hopefully that helps you. If you want to reach out to our friends christiancreditcounselors.org. And Kelly, we appreciate you being on with us today. You know, folks, as we finish out the program today, let me just invite you to partner with us here at Faith and Finance.

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