Wisdom Over Wealth with John Cortines

This faith and finance podcast is underwritten in part by Praxis Mutual Funds. They are a leading faith-based family of mutual funds helping people integrate their finances with their values since 1994. With Praxis, your investments can make a difference for you and the world around you. Learn more at Praxismutualfunds.com. It's often said that wisdom may create wealth, but wealth rarely creates wisdom.

Hi, I'm Rob West. What's more valuable, wisdom or wealth? Before you answer, consider that wealth is fleeting, but wisdom is never lost. John Cortenez joins us today to talk about why wisdom over wealth is always the right choice. 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, I've been looking forward to having John Cortenez back on the program. He's the director of grant making at the McClellan Foundation and the author of True Riches, What Jesus Really Said About Money and Your Heart. John, it's great to have you back. Good to be with you, Rob.

Thanks. John, you have an article in our new quarterly publication, Faithful Steward, titled Wisdom Over Wealth. And this is actually really an excerpt, if you will, from a study you've been working on for us on the book of Ecclesiastes.

So before we dive into this particular article, I'd love for you just to paint a picture of what's coming. Well, I'm so excited about partnering with you all on this Ecclesiastes study. You know, it's a mysterious book. It's a meaningful book. There's a lot of wisdom in there, and so we've titled this study Wisdom Over Wealth, 12 Lessons from Ecclesiastes on Money. And it has been a joy and transformative for me to get into that book, and I can't wait for people to experience it as well. As you know, God's Word always has power.

It sure does. And to your point, this is a book that's often missed, and there's so much in there about the brevity of life and really what it means to find our ultimate treasure in God. And this is one of those deeper dives that we're going to be making available a couple of times a year through studies and devotionals, allowing you to go deeper into God's Word and really align your faith with your financial decisions. And there is so much rich material in the book of Ecclesiastes that Jon has unpacked, and today will just be a taste of that. Now, as I mentioned, you have an article in our first edition of Faithful Steward.

It's called Wisdom Over Wealth. And you start, Jon, by illustrating your message with, I think, just a really powerful story that sets this up. So why don't you share that with us? I would love to do it. And before I jump into that, Rob, I just want to say that what you guys are putting together in Faithful Steward, I got to see an early edition of that when you were having me check that article I submitted for you guys.

And man, it looks awesome. So I can't wait for people to experience that. I think it's going to be fantastic for people who love the topic of faith and finances. So, yes, that story you just referenced, this was a real life experience or conversation I had. And I was with somebody who is a part of three siblings, and each of them had a substantial inheritance that they received that was in today's dollars about a million bucks. And so a lot of money at age 18.

And it's amazing. The first one was kind of like a prodigal son story. So really sad. They did not go down the right path and it was squandered and they ended up in a very poor position, metaphorically and literally. The second sibling, there was some mismanagement, but also a little bit more maybe good decision making as well.

And they ended up in a house that at least they had, but the rest of the money kind of went away because expenses exceeded income. And so then here comes the third and the third child in this family started having lunch with wise, godly leaders in their community and just asking, look, here's my story. Here's what happened to my siblings.

I don't want it to happen to me. They actually hired a Christian financial advisor and I was one of those lunches. And it was such a privilege to talk to this young person who is saying, look, I don't want what's happened to my older siblings to be my story as well.

I want to honor God. I want to learn what investing looks like. And ultimately there's a happy ending for this person because they finished a college degree. They learned about generosity. They learned about investing. And their life is one that is glorifying God today.

And John, I couldn't agree more. I mean, what a picture of this idea that wisdom can generate wealth, but wealth rarely generates wisdom. This really underscores that, doesn't it?

Yeah. If you look at this story, it's three people from the same family and they all got the same wealth input right as they entered adulthood. And there are three radically different outcomes. And I would argue that the difference was wisdom.

That's exactly right. And we're going to explore this right around the corner. In fact, we'll dive into the book of Ecclesiastes, where we see this idea that wisdom and wealth are both good things, but only one of them can preserve your life. We're talking today with John Cortenez, our friend, frequent contributor and the director of grant making at the McClellan Foundation. Wisdom over wealth on faith and finance today.

I'm Rob West and back with more right around the corner. Stay with us. Look at the birds of the air. They don't worry. And yet our Heavenly Father feeds them in. 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 faith by dot com slash sparrows and begin your journey with look at the sparrows today. 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 funds 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 for side fund services LLC. Thanks for joining us today on faith and finance. What's more valuable, wisdom or wealth? We're talking about that today with our friend John Cortenez. He's director of grant making at the McClellan Foundation, and he's also a frequent contributor here. And his article, Wisdom Over Wealth, is in our first edition of Faithful Steward.

You can sign up to be a partner and receive a copy of Faithful Steward each quarter at faithfi.com. Just click give. Now, John, before the break, you told us this story that's actually a true story. You were involved in this of three siblings that each inherited roughly a million dollars in today's dollars. They had three different outcomes. One of them was tragic.

Another didn't turn out the way we would have wanted. And yet the third was very God honoring. And you really suggested that the difference was wisdom. So take us into the book of Ecclesiastes to explore what you witnessed. Thanks, Rob.

Yeah. So if we look at Ecclesiastes 7, 11 and 12, this is what it says. Wisdom, like an inheritance, is a good thing and benefits those who see the sun. Wisdom is a shelter, as money is a shelter. But the advantage of knowledge is this wisdom preserves those who have it. Yeah, a powerful truth. I know you've seen that play out time and time again. Now, we're not saying that wealth is bad, right?

Of course not. Yeah, Scripture is clear that God has given us these things for our enjoyment. As Paul says, wisdom and wealth are both good, as we just read in Ecclesiastes.

But only one of them preserves our life. And so if we want to have life, wisdom has to be ahead of wealth. If you think about this, when you and I are born, when anybody is born, we're born without any wisdom, but we've got a crib to sleep in and there's people taking care of us. So we've already got some wealth, but we've got no wisdom yet.

And we've got to flip that as soon as we can. Yeah, that's exactly right. And I love how you put a couple of charts in this article to demonstrate this interplay between wisdom and wealth. And it's really all about ensuring that wisdom is accelerating faster than wealth. Otherwise, we're going to be in a danger zone, right?

That's right. You know, if you think about over our lifetimes, the traditional path, wealth grows exponentially. There's compound interest. And so we can end up with a good deal of wealth. And yet if we're not intentional to grow in our wisdom, the wealth is going to run ahead and that creates risk. But the better way would be to prioritize wisdom, because as we just read in Ecclesiastes 7, that will give us preservation. If wisdom's ahead of wealth, our life can be preserved. Yeah. And John, this can be pretty pronounced if we receive an inheritance or have a sudden wealth experience. It may not necessarily just play out over our lifetimes. Isn't that true?

That's right. And that's where we can follow the example of the young person whose story we just shared a bit of where he said, Oh, my goodness, I have all this money. I need some help. I need to talk to mature believers. I need a Christian financial advisor to help me navigate this and not blow things up.

Yeah. I love that you unpack this idea of obtaining wisdom, because that's the natural next question then. If it's wisdom over wealth, how do I obtain wisdom? What would you share with our audience?

I love that. And the first question I would ask is, what is wisdom? You know, we might think of a list of best practices or some good ideas or a checklist I can follow, but I would submit that wisdom is both a perspective and a person.

In 1 Corinthians 1, Paul refers to Jesus as Christ, the power of God and the wisdom of God. Yeah, that's right. And so, you know, as we think about those in our life, we obviously need to prioritize wisdom. But I know you've worked with a lot of matriarchs and patriarchs thinking about transferring wisdom to the next generation. You're thinking about that in your own family.

What counsel would you give them today around this idea? You know, absolutely. I think there's so much biblical financial wisdom in Scripture, but again, I would say it's not a checklist.

It's not a list of things that I need to do. The question that's first and foremost is, do I know Christ? And anybody listening, I'd say, have you encountered wisdom himself? He's the power of God and the wisdom of God. We each got the amazing opportunity to know Jesus and his wisdom through praying, through diligently studying his word. And in doing so, again, hearkening back to that Ecclesiastes passage, he can preserve our life and he'll redeem our journey with money through his grace.

Yeah. And when it comes to our kids, you know, clearly those who are listening today that are wrestling through this wealth transfer conversation, thinking about passing wisdom before wealth is really paramount. And if you haven't considered it, perhaps this is that time to stop and think about that before you execute your plans. How would you speak into that dilemma that some are facing right now? You know, this is such a huge question.

The great wealth transfer, of course, is talked about in media, popular media all the time. But man, as believers, we have such an opportunity to open up the conversation earlier. I would just encourage anybody out there thinking about this. I mean, we're trying to talk to our grade school children about this now. And so if we start the conversation about wealth and wisdom and faith and legacy from a young age, wherever you're at today, open up the conversational door. And that will give more time for things to play out. I'd say the way not to do it is make a will, wait for you to die and hope everybody figures it out.

Let's start the process today. Yeah, I think the key there is intentionality. Now, John, we mentioned in the first segment that this was one piece, one topic under this bigger study that you're writing for FaithFi right now. And we can't wait to release it on the Book of Ecclesiastes. So connect this to the larger theme that you've really pulled out of this amazing book in God's Word. You know, spending so much time in Ecclesiastes to prepare this, there are two huge themes that jumped out at me studying all 12 chapters of that book. And the first one is not money, actually.

The first one is death. Eleven out of the twelve chapters of Ecclesiastes mention death in one way or another. But I would argue that the author of Ecclesiastes and God is communicating to us through this book, not to make us sad as we think about death, but actually to recognize that life is short and he's given us the breath in our lungs today. It's an opportunity to enjoy him, to glorify him and to seize the moment for his glory. And that actually feeds into the financial wisdom of Ecclesiastes as well. And so realizing life is short, wanting to honor God and fear him and obey his commands with the time we're given on earth, and then trying to manage our money in accordance with that. And we spend these 12 lessons unpacking that in this study that we've put together.

Yeah. John, as we begin to tie a bow on today's message and returning to this idea of wisdom over wealth, what's the big idea that you'd want to leave with our listeners today? I would just point once again to Jesus. It's all about him and he is the source of wisdom. And so I'm so thankful for what you guys are doing through this, through FaithFi, through Kingdom Advisors, and putting that message out there that when we connect our faith and finances, it actually starts to shape our heart and make us more like Christ. These are not two areas of our life that should be separate. We should bring them together in the short number of days that we've got for the glory of God.

Yeah, that's exactly right. Well, John, I'm so excited about this new study that's coming out here in the next month or so. It's called Wisdom Over Wealth, 12 Lessons from Ecclesiastes on Money. Let's finish today with your hope and prayer for anybody that picks up that study. I would say recognize that your life is a gift. You've been given a brief moment of life. You can spend it in bitterness. You can spend it complaining or you can recognize that God has given you a gift even in the challenges you face. So seek after him and make every day count for the glory of God.

Yeah, that's right. Well, that's certainly our objective here on this program every day, to help you see God as your ultimate treasure and money, a tool to accomplish his purposes. John, thanks for stopping by. Thanks so much, Rob.

Great to be with you. That's John Cortenez, director of grantmaking at the McClellan Foundation. Back with your questions after this 800-525-7000. I'm Rob West and you're listening to faith and finance biblical wisdom for your financial decisions.

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For licensing information, please visit nmlsconsumeraccess.org. Great to have you with us today on faith and finance. I'm Rob West. We're taking your calls and questions. 800-525-7000. You can call right now. Let's head to the phones.

Nebraska is where we're going next. Hi, Erin. Go ahead.

Hi. I have the opportunity to buy an apartment building from a family member. And I it's a 19 unit building and I just I'd have to get a loan for a million dollars.

So I'm in my 30s. I believe that I'm able to build up the equity of the building as the rents are pretty low right now. So I would raise the rents and get equity that way and, you know, eventually build the equity and then borrow against it or whatever to get more properties.

I have a couple of single family units right now. So this is a big step and a big debt. So it's kind of see what you think.

Yeah. Well, I appreciate that. Well, I like real estate a lot. And I think there's you can absolutely build wealth there. But you do have to be careful. You don't want to get over levered. You don't want to make too many assumptions.

And especially if this is not an area that you've been in for a long time and you're just kind of getting your feet wet. I think you need to be careful about the assumptions you're going to make. And keep in mind, we're in a even though it's a higher interest rate environment right now. We're in a pretty robust economy. And you have to anticipate, OK, what happens when we're in a recession? I mean, we're way overdue for a recession, despite, I think, some of the positive things that will come out of the Trump presidency.

Economically speaking, you know, we're still in a great economy and that could be well, it will be different at some point in the future. We just don't know when the million dollars is less of a concern to me than how does that million equate to what is the value of the property today? So what is that loan to value ratio you'd use going in? Typically, lenders look, you know, want to see somewhere between 70 and 80 percent loan to value.

So you're going to be 20 to 30 percent in cash going in. And then you're going to want to start by calculating the property income. So what is that gross rental income, which is basically just the average rent per unit, even though I know you're saying you're going to increase it?

What is it today times those 19 units times 12 months? And then what other income do you have? Is there laundry or parking or storage? And then you need to have a really good understanding of those operating expenses, because that gross rental income plus other income minus the operating expenses is what they call NOI, the net operating income. And then you use that to apply the debt service. So typically, you'd want to make sure that net operating income covers somewhere between 120 and 150 percent of the annual debt payments.

And then you kind of move through from there. But I think that would typically be a starting point. But give me your thoughts on that, both in terms of what is the value today and therefore what are you going in with in terms of loan to value? And then do you have a good understanding of the income and the expenses?

Yes. So it would be about 1.2 for the purchase price. And it's probably worth that, maybe up to 1.4. I see the I have their P&L and it shows that they were bringing in 146,000 about. But then the expenses, they dumped a lot of money into it. They pay for a lot of things that I know I can get cheaper. And then their rents again are low, like in the 600s, and I should be able to get them in the 900s. So the P&L looks grossly different.

And like what you say, you know, you can't just project it because things could change. But I feel even with a mortgage at 20 year at 8 percent, you know, it's not a lot. But I bring in about 55,000 a year just with all the like the grossly inflated repairs and maintenance items. So, you know, that's so do you know what your and we're going to get technically over a second what they call your debt service coverage ratio. So, you know, typically lenders want to see somewhere between again that net operating income, the gross rental income, plus the other income minus the operating expenses that should be, you know, 120 to 150 percent of the total debt payment. So do you know what you're going to spend annually to service the debt based on the rates today? It looks like annually it'd be about 99,000. Okay, and what are you projecting you'd bring in in terms of gross?

Yeah, about, oh sorry, 155,000. And that's after operating expenses? That's after expenses, yes. Yeah, and that's with what you said as higher expenses and lower income.

Right. Okay, so yeah, I mean, I think again, you need professional help here and I'd get somebody who really depending on and I don't know if you said this is your first time doing this or not, but if you if you don't have a lot of experience, I definitely get somebody to walk alongside you who can look at the actual numbers and walk the property with you. And all of that, I think the other, you know, issue beyond what we just talked about, which is cash flow and debt service is the capital reserves. So how much after you put this couple of hundred thousand in to buy it for 1.2 and finance a million, you know, how much are you going to have set aside for emergencies and major repairs and a downturn in rental income? You know, so I think you just need to make sure that you've got enough, you're not kind of living right up to the edge, hoping to generate the cash flow to cover all of that. But you do have enough in the way of working capital because that's usually where people get in trouble.

They make a lot of assumptions that don't pan out and they just don't have the staying power because they don't have any liquid assets. Okay. Yeah. So I think those are the things to consider, but it sounds like you've done your homework here. You've got a great opportunity. You know, perhaps you're buying it because this is family a little bit under market. I'd get professional advice on that to make sure you understand what is the true market value of this property. Maybe you are getting a great deal, but I would just be careful.

But I don't want to completely discourage you at all because I like real estate a lot and this may be, as you said, a great stepping stone to quite a portfolio over time that could be a great blessing for you and a great income and asset generator over the long haul. So sounds like a great thing, Aaron. I would just get a little bit more counsel along the way, but I like what I'm hearing. God bless you.

Well, folks, as we round out the broadcast today, first of all, thank you for your time, for tuning in and listening to the broadcast each day. I'm grateful for your questions and your testimonies because here's the reality. You know, my experience in doing this for a long time is that our financial journey is one of the key ways that God shapes our spiritual journey.

Now, you might say, how is that, Rob? Well, here's the reality is, you know, the way we handle God's money is one of the most tangible expressions of what we value and where we've placed our trust. You know, money is just symptomatic of heart. And so we want to be thinking about the story we're telling with regard to what's most important to us. And if our spending doesn't align with that, we'll take a step back and say, you know what, maybe I want to be doing more, giving more, saving more, blessing the people on my path, using money as a tool to accomplish God's purposes, not spending so much on interest on the debt I've accumulated. Well, each day we want to help you make steps in that direction so you can give generously and hold God's money loosely and live simply.

And it's a real honor to be able to come alongside you. By the way, lots of great resources at our website, faithfi.com. Not only can you find a certified kingdom advisor, but you can click on the button there at the top of the page that says app and learn about the Faithfi app and how we can actually help you put in place a spending plan, even a system to manage your money using the envelope system and a modern digital expression. It's all there in the Faithfi app.

You can download it today at faithfi.com. Big thanks to my team today, Devin Patrick, Jim Henry, Sandy Dickinson and everybody here at Faithfi. I hope you have a great rest of your day and come back and join us tomorrow. We'll see you then. Bye bye. Faith and Finance is provided by Faithfi and listeners like you.