This faith in finance podcast is underwritten in part by Guidestone. Guidestone envisions a world transformed by Christian investing.
Through screening, corporate engagement, and impact investing, our investment strategies allow investors to be more proactive with their investment dollars to make a meaningful difference in the world while preparing for their financial future. Learn more at guidestonefunds.com slash faith. Have you ever had a family member or friend ask you to lend them money?
Talk about being put on the spot. I am Rob West. It's a tough situation to be in, and you should think and pray about it before deciding whether to lend or not. Today I'll give you some advice from God's Word to guide you. Then it's onto your calls at 800-525-7000.
That's 800-525-7000. This is faith in finance, biblical wisdom for your financial decisions. Well, it's probably safe to say that being asked to lend money makes people uncomfortable.
It's often a big decision that has consequences no matter how it turns out. When you lend money to another, it changes the relationship. Proverbs 22-7 reads the borrower becomes slave to the lender. Lending money can hurt a relationship, and that can happen whether you lend the money or not. You're between a rock and a hard place, and it seems like either way someone may end up resentful.
There are really only three things that can happen, and only one of them is good. If you decide not to lend the money, the other person could be upset. If you do lend the money and the other person doesn't repay it, you'll probably be upset.
It's only the third possibility that makes everyone happy. You lend the money and the borrower pays it back. But consider carefully why they asked to borrow in the first place.
They may not be able to repay the loan if they're already in bad shape financially for whatever reason. Fortunately, the Bible has much to say about this predicament. First, God's Word tells us to help those in need, lending money if necessary. Deuteronomy 15-8 says, you shall open your hand to him and lend him sufficient for his need, whatever it may be. Turning to the New Testament and the Sermon on the Mount, Matthew 5-42, Jesus says, give to the one who asks you and do not turn away from the one who wants to borrow from you. And finally, a verse that might make you think the only proper response is to lend money to a family member in particular is 1 Timothy 5-8, which reads, but if anyone does not provide for his relatives and especially for members of his household, he is denied the faith and is worse than an unbeliever. So do those verses mean you always have to lend money when asked?
Not at all. They imply two things. First, that there must truly be a need, and second, that lending the money would actually help the borrower and not simply allow that person to make more unwise financial decisions. Here scripture has more to say. Proverbs 13-11 warns about one possible outcome with lending money. It reads, wealth gained hastily will dwindle, but whoever gathers little by little will increase it.
Getting a loan is often the easy way out. Maybe the borrower tells you the loan would be a lifeline, which it may be, but it's also easy money, and the borrower may not appreciate the effort it takes to create that wealth. When you have to work hard for something, you tend to want to hold on to it. Hard work produces character and wisdom.
Proverbs 21-20 reads, precious treasure and oil are in a wise man's dwelling, but a foolish man devours it. So before you go get out the checkbook, think carefully about whether there's a real need. You also have to be sure that lending the money will actually help the borrower.
Here are some questions you can ask yourself. Can the borrower repay the loan? If there's not sufficient income or ability, promises to repay will come to nothing. Then ask, what shape will you be in if the money isn't repaid? If you can't afford to lose it, then you can't afford to lend it.
Then ask, can you help in another way? If the person needs money to repair a car, for example, could you give rides to work until they've saved enough for repairs? And last, ask yourself, can you make the money a gift instead of a loan? That way you're not expecting it to be paid back, so you can't be disappointed and your relationship won't suffer. But again, only do that if you can afford it and the gift doesn't encourage more financial mismanagement. Finally, if you do decide to lend the money, draw up a written agreement specifying the amount, interest rate, payment structure, and collateral.
This will help eliminate misunderstandings later on. We've covered this topic in our brand new quarterly publication, Faithful Steward. Featuring insightful articles and contributions from leading voices in Christian finance, Faithful Steward will help you view money not as an end in itself, but as a tool to glorify God and serve others. You can receive this inspiring publication every quarter in your mailbox by becoming a FaithFi partner at $35 or more monthly or $400 a year. Just visit faithfi.com slash give to get started today. That's faithfi.com. Just click give. All right, your calls are next, 800-525-7000. That's 800-525-7000. I'm Rob West and you're listening to Faith in Finance, biblical wisdom for your financial decisions.
Much more straight ahead. We're grateful for support from Guidestone, whose diversified suite of investment solutions align with Christian values to create positive change in the world. More information is available at guidestonefunds.com slash faith. Investing involves risk, including potential loss of principal. Carefully consider the investment objectives, risks, charges, and expenses of Guidestone funds before investing.
They're distributed by Four Side Funds Distributors LLC, which is not an advisory affiliate, a registered investment advisor, nor do they provide investment advice. If the heavy burden of debt is robbing you of freedom and peace of mind, Christian credit counselors can help. We're a nationwide nonprofit credit counseling organization that has helped over 300,000 individuals in the last 27 years get out of credit card debt 80% faster while honoring that debt in full. To learn how Christian credit counselors can help you, visit christiancreditcounselors.org.
That's christiancreditcounselors.org or call 800-557-1985. I'm so glad to have you with us today on Faith in Finance, helping you see God as your ultimate treasure and money, a tool to accomplish God's purposes. Do you have a question today in your financial life? Well, we've got lines open. We're ready for you. We'd love to take your call at 800-525-7000.
We've got, it looks like four lines open right now. 800-525-7000. Whatever is on your mind today, whether it's your lifestyle and your budget, maybe it's the best way to pay off debt. Maybe you're struggling with that credit score. You're getting ready to buy a house or get a car loan and it's concerning you.
Maybe you want to give wisely, especially this time of year, and maybe you want to do a qualified charitable distribution out of your IRA. Well, any of those topics and more, we'd love to chat with you about. The number 800-525-7000 you can call right now. Let's go to Tennessee, Allen. Go ahead.
Yes, sir. We have a mortgage at 5.92. We've only been in the home since June of last year, making payments on the principal every month, $200 a month since then. And the question is, when would be a good time to consider refinancing it to get a lower rate when the rates fall? And then the second question is, will we lose any equity that we put in the home already, the down payment and so forth?
Yeah, great question, Alan. You really need to be able to save a point and a half really is what my target would be. So for you guys, you'd be looking at a rate of about four and a half percent before you would want to refinance.
And the challenge is right now, we're still at 6.8. So you're a solid point lower than where 30 year rates are right now. And so I'd stick with what you got. You definitely don't want to refinance.
And that leads to the second point around. Will you lose any equity? The only reason you would lose equity is if you roll the costs of the refinance into the mortgage, which would increase the mortgage balance and slightly decrease your equity. Now, you could always opt when that time comes. And let's say, you know, a couple of years from now, perhaps maybe it's sooner, but let's say it's two years from now you find we find ourselves with rates around four and a half and you say, well, I want to go and take advantage of this. You know, at that point, you could decide just to pay for those refinance expenses out of cash and not add it to the mortgage. What's the balance on your mortgage? Roughly $307,000. Okay.
Yeah. So I mean, you could easily have expenses of 3%. I mean, that could run you $9,000. You know, just to refinance, it could be 4%, which would be about $12,000.
So it's not insignificant. Now, even if you did roll it into the loan, it would still make sense to do it if you could save at least a point and a half, you know, better yet 2% because over the life of that loan, you know, you would make plenty more than that. I think the key is to try to not extend the term either. How old is this mortgage? A year and a half. Okay. And is it 30 years? Yes, sir.
Okay. So what you may want to do is, you know, look at an odd term, you know, so could you get a 27 year or a 25 year now that would make your payment go up a little bit. But what you want to try to avoid is, let's say two years from now, you're three years into that mortgage, you don't want to start over with a new 30 year mortgage because in the very early days of a mortgage, almost everything's going to interest. And by starting over that 30 year clock, you're going to get back into that same situation. So you want to come down a point and a half at a minimum.
And you want to, you know, at least lock in the same length or shorter, if anything. Thank you, sir. We're gonna we'll be able to pay I think the mortgage expense to refinance. Good. We have that cash set aside. So we're fine on that. All right. Good work, Alan. We'll keep it up and keep paying on that principle a little extra than the payment.
That's always a good thing. And we can help you with anything else in the future. Let us know.
To Indiana. Hi, Sandy. Go ahead. Hi, Rob. Thanks for taking my call.
Yes, ma'am. My husband and I recently retired and we are having a healthy discussion about what amount should we tithe now and off of what since we really don't have an income coming in. We're taking our investments and our pension, which we save from our income before. Right. So we we are trying to figure out what that looks like.
He thinks we're double paying. And I think we should continue to get what we have. So we're on opposite ends of the spectrum.
Yeah. Well, it's a great conversation to have. And listen, it all springs for from a generous heart. And you all are wanting to honor the Lord with what he's entrusted to you.
And yet you're right. If you're giving a tithe, which is a tenth on the increase, then if you've been giving on the gross throughout your working years, in a sense, you've already tithed on a portion. And that's a key, a portion of what is coming out to you, whether it's Social Security or a pension, you know, a portion of what you're taking out is your original contributions.
In the case of Social Security, you paid half of the FICA taxes, your employer paid the other half. And then there's some sort of growth component to that. Some of that is, you know, money you tithed on. In other cases, it's money you haven't tithed on with a pension. The same is true. It's a return of a portion of what you've paid in.
But there's a compounded growth factor in there as well. So, you know, given that, you know, the tithe, I think, should be the training wheels of giving the beginning point and not the ending point. I think, you know, one approach is just to say, listen, everything we receive is a gracious gift from God.
We can't outgive God. And so we're just going to continue giving systematically on the full amount, recognizing that we are going beyond the tithe because we're essentially tithing off of, let's call it a half of it, just in round numbers. Let's say a half of it is what's being returned to you that you already paid in. The other half is some sort of growth component or the portion your employer paid. And I think at that point, you know, you're giving beyond the tithe, which is never a bad idea. The other approach is to say, no, we're going to apply some factor here with regard to the tithe portion of our giving. And maybe it is that 50-50 where you'd say, we're just going to give an automatic systematic gift on half of everything we receive, because that's just kind of a round number way of saying we just want to acknowledge there's our portion and then there's the growth portion, which is yet to be tithed on, and then treat any additional giving beyond the tithe of offerings or sacrificial giving, you know, just based on a prayerful decision, either annually or periodically as opportunities present themselves. Does that make sense?
It does. And I think it's more fear for him because we both retired early. And so we're just still trying to figure out how that works and paying for private insurance and all that. So I think that it's unknown right now. So we're figuring it out. And I appreciate that.
That's really good advice. Well, I think just coming together and praying through that and just saying, listen, Lord, we want to trust you in this. We also, you know, we know that this is early in this whole retirement season and, you know, we're trying to figure it out as we go. And so I think, you know, there's an element of we're just, you know, there's a portion that we're just going to do systematically and we're going to commit to it. And there's a portion where maybe, you know, we're going to have to trust the Lord because it's a little bit of a faith gift as well. And wrestling through the tension of that is always a good thing as long as you do that together and as long as you make prayer at the center of that. But ultimately that's between you and the Lord. There's not a right or wrong decision here. I think you just guys need to work that out as you go and watch the Lord respond. But I appreciate you asking the question, Sandy.
It's a good one. And hopefully this has been helpful to some others as well. May the Lord bless you. Thanks for being on the program today. 800-525-7000 is the number to call. We're going to continue taking your questions here in the final segment of the broadcast. Maybe room for one more question here in this next segment.
800-525-7000 is the number to call. This is faith and finance biblical wisdom for your financial decisions. We'll take a quick break and then be back with much more right after this. Stick around. Have you downloaded the faith by app yet? You need to do that today because this is going to make your life easier. Yes, you can manage your money through the in app envelope feature, but also plan out future goals. I want to buy a house in five years and I'm on track to do that.
Here's also what I like. You can connect with people around the country. It's like social media, but better. Ask a question, get an answer and share what you're learning about money and investing. So why don't you grab your phone right now and download the faith by app. Are you a financial advisor or CPA seeking to build your practice on biblical wisdom? Not only does the certified kingdom advisor education provide you with deep biblical insights, the CKA designation sets you apart. Each year, almost 50,000 people search for a Christian financial advisor. Join our community and share your expertise with clients looking for someone who shares their faith and values.
Find more information at kingdomadvisors.com slash get certified. Great to have you with us today on faith and finance. Hey, we've got lines open today. Taking your calls and questions on anything financial. That number to call 800-525-7000. That's 800-525-7000. Any financial question in play today, you can call right now. To Wellington, Florida. Hi, Maria.
How can I help? Hi, Rob. Thank you so much for taking my call. My question is this. I'm looking to close out some credit cards that I have not used in like the last couple of years at least. And I really don't want these, you know, open cards out there because just because I'm not using them, I put them away.
You know, I just fear with all the internet stuff that someone could get hold of a number somehow. And so anyway, my question is, what is the best way, the safest way to close out credit cards? I remember years ago, one would cut a credit card up and send it to the creditor in the mail. But I'm worried about doing something like that because I've heard that people can, you know, put your card back together again somehow and take the number and use it. So yes, very good. No, I understand completely now. How many cards are we talking about? I've got about four or five that I would like to just close out because I really I only use a couple of cards and I don't need anything else. And I've been listening to your show like forever and praise the Lord.
I am debt free and I want to stay that way. And yeah, I'm just thankful. I love it.
Well, I'm so glad you're a faithful listener and it sounds like you're a wonderful steward of God's resources. So that's great. Let me ask you, Maria, do any of these cards have any unused rewards, points or benefits of any kind? No, nothing. Nothing that would matter. Like I think I saw one the other day that maybe had like about $10 worth.
Okay, yeah, very good. So, you know, that's just something to think about if it's something sitting out there that you might want to redeem before closing it because once that account is closed, you're going to likely lose any unused rewards. The other issue we always think about is just what's called credit utilization, which is the key, a key factor in your credit score, but it doesn't sound like it applies to you because, you know, if the card you're closing has a high limit, and you're carrying balances on other cards, it could increase your credit utilization because those balances would be a larger percentage of the now lower total available credit, since, you know, many of these cards available credit will come out of the equation.
But if you're not carrying any balances, it doesn't matter. And then the last thing we want to do before we close it is just think about automatic payments doesn't sound like you have any, but if you did, you know, automatic payments tied to that card, you'd want to, you know, turn that off and cancel those to avoid any missed bills. Once you're ready to close them, you would want to contact the card issuer. And generally, what I recommend is just you call the customer service number on the back of the card and inform them that you want to close the account following the instructions they give you. And then you want to ask them for written confirmation that your account has been closed and a zero balance is there and this can protect you in the case of any future billing errors, just hang on to that documentation.
So you'd have that for reference. And then you may want to check your credit report 30 or 60 days down the road, just to make sure that it's reported as quote, closed by consumer, rather than by the issuer, which can negatively impact your credit score. So what you're looking for on that credit file is a zero balance. And then the words closed by consumer. If it says closed by issuer, then you'd want to dispute that because that's not what happened. But those are really the key steps.
The only last thing I might finish with is just asking whether you are anticipating seeking a new loan for any of any kind, you're not going out to buy a new car in the next couple of months that would require you to take out a car loan or anything like that. Is that right? Right.
Nothing like that. I have a vehicle that is a few years old. It's from 2017. But it is just fine. And I'm retiring. So I'm going to be using it even less. So Okay, yeah, got it.
Yeah. So I think you could go and do them all at once. I mean, if you wanted to, you could do two of them now and then wait six months and do two or three more. But if you're not going out seeking credit, you're probably going to see with all these coming out of the equation, because part of your score is based on the history that you have. And if these are no longer a part of your history, because they're not active, you know, you could see your score dip a little, but I'm not hearing that you have a whole lot of need, you know, to have a credit score of 820 versus, you know, 770 or something like that. So even if you saw the 20 3040 50 point drop in your credit score, it probably doesn't matter because you're not out looking for new credit.
And even though it's used for other things, I would imagine you're, you know, you're still going to have a fairly high credit score, even though you may not have the best one. And there's not really any benefit to that. And I like the idea of, as you said, getting those close because now that's just one less account that has the potential to be compromised. Does that all make sense? Yes, absolutely. Thank you. All right. We appreciate your call, Maria.
Thanks for being a faithful listener. And you call back anytime if I can assist you to Mississippi. Hi, Tammy, go ahead.
Hi, Rob. I have two daughters that financed the house together less than 10 years ago. Of course, the interest rate was phenomenal then. So now they have gone on their separate ways and don't live together. One of them's rent and one of them stayed in the house without the one that stayed in the house refinancing. Is there a way to get the other one off the mortgage? There really isn't because that lender is not going to want to let go of a potential source to recapture, you know, funds if one of them were to default. And so typically refinancing is the only way to actually get that other person off. And, you know, as you said, she's got a phenomenal rate. And that would no longer be the case if she refinanced it. Is she, you know, is her sister, you know, needing to get off of it as soon as possible?
Well, no, not as soon as possible. It's just anytime she tries to finance anything, of course, her debt to income ratio shows the how. Yeah.
Yeah. And that's that's a problem. Well, I think the next step is to reach out to the lender and just see what's possible and see if they may be willing just based on her, you know, good credit and so forth. But I think eventually, you know, it's ultimately going to require a refi, which is not going to be ideal right now. It may come down to it if her sister is just really running into some problems by, you know, the debt to income ratio that she has and just needing to get that off.
But if she could wait another 12 months, 24 would even be better. But it'd be worth a phone call to see what the lender will do. I hope that helps, Tammy. Thanks for being on the broadcast today. We appreciate your call. Folks, such a privilege to come alongside you each day. We count it a privilege that you invite us into your journey as a steward of God's resources. And our goal is to be hopeful, to be encouraging, to be reverent as we deal with and approach God's word, but always to point you back to Jesus.
Here's my experience. When we get this area of our lives right, our finances, it has a ripple effect through every other area of our lives and ultimately will lead to a more intimate relationship with the Lord. That's our goal. A big thanks to my team today, Taylor, Devin and Pat, and we'll see you next time right here on Faith and Finance. Faith and Finance is provided by Faith Buy and listeners like you. Music
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