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The Nuts and Bolts of HSAs

MoneyWise / Rob West and Steve Moore
The Truth Network Radio
August 12, 2020 8:03 am

The Nuts and Bolts of HSAs

MoneyWise / Rob West and Steve Moore

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August 12, 2020 8:03 am

The Affordable Care Act of 2010 made health savings accounts (or HSAs) more popular.  But now, they’re almost a necessity. The need to offset the rising costs of deductibles has made HSAs an appealing option for many Americans. On the next Moneywise Live, hosts Rob West and Steve Moore explain how an HSA can save you money now and decades into the future. It’s the nuts and bolts of HSAs on the next MoneyWise Live at 4pm Eastern/3pm Central on Moody Radio.

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Ever since the signing of the affordable care act in 2010.

Health savings accounts have become more popular for many Americans. There were no an absolute necessity has the dockable sword. The need to offset those costs have also risen sharply. Enter the HSA today financial planner and future. Rob West explains how they can save money now and decades in the future that your calls on anything financial 805 five 7800 525-7000 times more the nuts and bolts of HSA's next right here on moneywise I Rob so the basic idea behind these behind these health savings accounts. Well, simply put Steve there intended to help folks cope with high health insurance, specifically high deductibles.

But the really more than that.

That thinking HSA is also a qualified retirement account, like a 401(k) or traditional IRA that you can tap into for health related expenses at any time.

I will, that sounds great. So I guess everyone will health insurance should have one of these accounts are how that would be nice, but unfortunately not everyone is eligible for an HSA, you have to have what's called an HD HP to give you some more letters.

That's a high deductible health care plan. But for many people. That's not really an obstacle since deductibles in both employer health plans and private plans in the Obama care exchanges have really increased quite a bit in recent years. I will what qualifies as a high deductible health care plan after 2020. The minimum deductible for an individual policy is $1400 for family policy. It's double that 2800. There's also a maximum annual out-of-pocket expense requirement. It's $6900 for individuals 13,800 for a family. Unfortunately, it's not difficult to meet those thresholds with the cost of medical expenses. Today, yeah, I suppose not. Okay, but that's where the HSA comes in.

So how exactly does work you put into an HSA isn't counted toward adjusted gross income on your tax return. So when you use those funds for qualified medical expenses you're paying with pretax dollars. That means if you're in a 22% tax bracket. Your dollars are worth 22% more. It's a big deal like that. They keep saying our qualified medical expenses.

One of those yeah there's a long list of qualified expenses that would of course include Dr. visits, deductibles, coinsurance, prescriptions, dental and vision care will have a link to a more complete list and today show notes to set over the moneywise live.org and click on today's broadcast okay but what if I use the money for something other than a qualified medical at some sort of medical expense but is not qualified what happens. Well, you can withdraw any amount from an HSA at any time, but if you use it for others something other than a qualified expense, it subject to regular taxes plus a 20% penalty so you won't want to do that. By the way, this is where the retirement angle comes into the discussion.

Steve once you reach age 65. You can use HSA funds for anything without incurring the 20% penalty. You would only have to pay regular income tax or money used for nonqualified expenses.

Of course you can still use the money for medical expenses after age 65 and those withdrawals would continue to be tax-free and again the definition is pretty liberal when it comes to medical expenses. So by and large most things would be covered. So what prevents this from being a giant tax loophole that we just for all of our money and that would be the contribution limits. We mentioned for 2020. You can contribute up to $3550 to an individual HSA or 7100 for a family account but there's also a catch-up provision like traditional retirement account. If you're 55 or older. You can contribute an additional $1000 per year to your HSA okay I will and how to huddle a set up an HSA yeah pretty easy if your employer offers one. Once you sign up and designate how much you want taken out of each paycheck. That amount will go into your account before taxes.

If you have a high deductible health care planning your employer doesn't offer one or if it's a private plan, you can set up an HSA with any of the major brokerages so that would include Vanguard fidelity Schwab will be happy to talk to you about the process of setting it up, and in many cases, you'll just get a debit card to use for qualified expenses, which makes paying for them, and keeping track of things much, much easier bet okay so I can use that money for qualified expenses would otherwise adjust the justice in the account I know and that's another great benefit of the HSA Stephen can act like a retirement account in that you have many options for investing the funds. Also, if you switch employers your HSA is portable and will travel like it there, you have at the nuts and bolts of HSA's health savings accounts. These Rob West times more. Here's a phone number if you'd like to talk about anything.

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Today it's moneywise live with Rob West times more.

It's 112 in the shade here in Georgia actually write you when you're in Atlanta.

I'm a bit north of Atlanta, but I presume it's pretty much the same there.

When you factor in the yeah little better today. 94. My son was out running cross-country this morning and go home, and yet poor guy from back-and-forth that he passed away. I know my exit since I'm inside for a while to be young again to be young today. Let's see 800-525-7000. Let's begin. Rob Tampa Florida. Vernon what your questions are all you hear me yes or okay offering my quite only if you have a high deductible plan because they cancel now we only have one not like don't have money in an eight count is there any way to add father added 658 years old.

Vernon correct couple thoughts or you do have to have that high deductible health plan so you cannot make a contribution to it. If you do not have been in place so you would have to go outside and you may or may not make sense for you to do that in order to have the HD HP which then makes the health savings account an option for you.

You know, in terms of whether it's beneficial at age 58 for somebody who's relatively close to retirement. It's not as powerful. You know the best option for an HSA is when your relatively healthy so you never get sick and you can fully funded so you can max it out every year and therefore and then you got a long period of time to let that money continue to accrue and grow so that you're not using it up every year and therefore it becomes an asset alongside a retirement account that's growing in a tax-deferred manner, and then after age 65 it's there for you to add and supplement your retirement assets. That's where it's most effective. It's you lose some of its power at age 58, but in your case if you don't have that high deductible health plan available to you it's it's not even an option at this point, unless you put that in place are yes sir, thank you for calling. Thanks very much.

We appreciate that Sir Jackson, Mississippi hello Jeff, well, what's on your mind today sir not been contributing for quite hear me yes or okay talk about been contributing money court to that wonder if I ever lost my job or Jane's job and decided something like medical sharing plan, Samaritan parts or something like that. What happens to your at your site. Can you medical expense programs you can get.

Once the funds are deposited into the HSA Jaffe account can be used pay for qualified medical expenses, tax-free. Even if you no longer have the HD HP coverage, you just wouldn't be able to contribute new contributions at that point the funds in your account or to rollover automatically each year and remain in the account indefinitely until its use.

There is no time limit on using those funds, which is really a clear distinction between the HSA and the FSA which is another type of account that has to be used up annually so you're in good shape in terms of this continuing to be available to you and if you did opt for health hearing, like Christian healthcare ministries. One of the others that would obviously just take over and then you have the HSA alongside Jeff were glad you call thank you very much sir Rob someone who doesn't want their name used on the air is calling from Indianapolis. They ask is it possible to make a one time conversion from a 401(k) to an HSA of 65 or older. Yeah, I'm not aware of any kind of provision. There were, you would be able to make a conversion from a retirement account to an HSA HSA's act like a retirement account in that after age 65. You got that tax deferral you can pull the money out and use it for any expense at that point but you cannot do a rollover into one from a retirement account. Good question. Yeah it is Chattanooga, Tennessee Steve, I think we may have already answered your question but go ahead, give it to us.

Let's see if the we can help you out.

I'm employed been self-employed for about 12 years. Her current businesses I've been using Christian healthcare ministries for about five years and I think I know the answer from listening to you that I question was going to be. Am I eligible for an HSA, but I think you probably kind of answered that that I would not be being self-employed and having a Christian share program. Yeah. So if you print currently participate in an Christian healthcare ministries you would again have to have that high deductible health plan in place for the HSA to be an option for you. Of course you can have both and use the HSA ghetto per incident for that first let's say $500 and then you know the Christian healthcare ministries would kick in. At that point but you would have to have the HD HP Christian healthcare ministries, or any of these health hearing ministry options would not suffice. In place of the high deductible health plan so you would have to add that in order to have the HSA possible yeah mixture. It would not be cost-effective or maybe even have a high deductible plan the expense of those is still far surpassed what my wife and I am and one 20-year-old child are paying for. You know, just Christian healthcare ministries are how we we love the hell sharing Steve some of our staff have been on that. It's been which worked out tremendously well and because of the savings you're experiencing.

Even though it's not insurance it's medical sharing.

But the savings you're experiencing with a typical insurance plan obviously is allowing it up set money aside that hopefully is there to cover the per incident charge up to $500 or whatever it might be. So I think you're in good shape.

I'd stay the course and mention Steve briefly on somebody asked about rolling a 401(k) to an HSA.

There's no provision there, but I should mention you can roll a traditional IRA to an HSA, which basically allows you to load that HSA immediately for medical expenses tax-free so that is an option in and of course if you separate from the company where you had the HSA, then you could do the rollover to the IRA and then into the HSA take a little bit paperwork and get it done so that option is there. Okay good deal. Let's squeeze in one more. Kyle is in Palm Beach Gardens, Florida, and what your question, yes that's a good question. I'll have the team look on idea of the flexible spending account you we don't like as much for two primary reasons.

Kyle and I realized it may be the only option you have available to you, but it works in a similar way for pretax dollars but you have to declare how much you put into it each year and you use it or lose it, and there's no investment element, but let us check on that. With regard to how it affects Social Security and just keep us in the program and and will try to get that in the mix here before the end of the show we will indeed Kyle will glad you call thank you very very much. And with that, let me just quickly remind you of something to moneywise with Rob West, I'm Steve Moore were checking your calls and questions and comments today on any financial topic. In fact, coming up we have a question about mortgages another person wants to know as a person really need to credit question was who brought has to say 800-525-7000. Do you know if you have enough money of house.

Do you know how much is enough. If not, one blue can help with this book. Master your money a step-by-step plan for experiencing financial contentment. Learn how to save and invest and give wisely to create a long-term financial plan and how to get out of debt. Find it all in master your money by Ron blue available when you click the start button moneywise to work is click separately to each doing here is a quick way one compound Greek word used in the great attachment which makes it really cool you know God is very very specific. He always says that one time he means to put it in the exact what you got right here with me to verse 31 because we seen this work before verse 31 says what we say in response to these things that God is what Cooper the word picture behind that birth is that God is the parsonage trying to bring something down charging jealousies who were not child it means more than can be translated more than I want you to pick back up in verse 31 what shall we say in response to what he can be against us. We know this is the financial wealth you leave behind could be the best thing that ever happened to your loved ones or the worst in splitting hairs, giving your money and things to your children without ruining their lives. Ron blue explains why it's important to make these decisions now, instead of forcing your heirs to do it later.

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Click the start button moneywise love I.org pleases this today taking your calls and questions on any financial topic mortgages saving giving training your children, you name it we love to chat with you about it. But before we do that Kyle was with us just before the break up and you have follow-up.

I think you Kyle was asking about FSA accounts and whether contributions negatively impact Social Security benefits. Mr. Jim Henry is the help and research today and he did uncover that it does negatively impact Social Security benefits. Here's the idea since the money deposited to your spending account is deducted from your pay before the FICA taxes are figured that would of course affect future Social Security benefits because they will be slightly less. The reason is that Social Security benefits are based partly on the amount of FICA taxable wages you earn so therefore if the FICA wages are reduced. That would obviously have an impact should be very minor but yes to answer your question Kyle, there would be an impact right Chicago, Illinois hello Darren, what's on your mind. I'm also guy that talked about a month ago about seeing Jupiter and Saturn, the planet telescope and see if I can I didn't but I was I was able to access a high performance level pair of binoculars and saw all those planets and then the following comment a couple of weeks after that so dear and of course of those other people might be wondering who was the sky what the talking astronomy well because Darren's a little weird. He likes to look up into the sky is who I and we have this Astro now make a relationship dear used a birdwatcher but you just kind of expanded your horizon a bit more and I don't know yet yeah right up into the up into the heavenly as if you and you and you know what about you during would agree one year when you when you're at midnight looking up into the sky and all the billions of stars you can't help thinking about the God who created them all, and in this speaks to me in a certain level. Would you agree Darren know what you are still there. I see him every night you right across the brightest star you like the luckiest Saturn and Mars as a man, not later. I see the red planet. Farther down the horizon about 1 o'clock or so, that late so that the heavens are beautiful. I have a lot of light out here so I don't see building a star like you can on the country on your mind, all the diamonds in the sky but I still think you simply want this thing you hear a billion there.

It's kind hard anyway so you have a financial question for us. Yes, I do. I am on the verge of yet. My pension rate set up in their offer me a one-time accelerated pension benefit payment and and then in exchange for that I have to waive a 3% compounded annual increase and instead only receive a 1.5 noncompounded annual increase that sticks in six years later so now with that with that payment when I was considering doing first monitor stand on this annual on this compound annual increase amount.

I got to figure said that they show me some figures on it, but thought I was going to do with that one time payment without thought I would pay off my mortgage to get done with that that set up 4.375% and then also a car note so I would. I would basically pay off mortgage in a car and be free on that. I do have a second home. I would do it in on just depend on one home because an event that out or sell it on figuring that out right now but you think you think it would be beneficial to take that and there is a 20% federal tax and I respected that and but still have money left over to play off the home and mortgage and car note on well you know I like the idea of you leaving that money there and keeping the interest working for you with this benefits you have coming to you. I think the question is really just how interested are you in becoming debt-free is this really a conviction.

Is it something that is weighing on you and you just feel like you want to be completely out of debt and if so, then this would be worth it but purely from a kind of a math standpoint I think if you can keep this money working for you continuing to grow be living within your means, so that you have access where you can perhaps accelerate the payoff of that mortgage or even refinance it.

You know you got rates is just talking to a family member just refinanced around 2.75% and rates are at historic lows right now so I don't want to keep you in debt any longer than you want to be or should be, but I also want to avoid you missing out on the gains and taking this big tax hit. So I think it really just comes down to what your convictions, what are your values and we feel like the Lord is is leading you to do with regard to becoming debt-free and and how important is that to you.

To some extent. I just thought you said get rid of the mortgage payment with higher interest in the 3% I get here I'm paying a 4.375 and and on the one home. I am seeking refinance at about 3% rate.

So that'll drop that mortgage down so but yeah I guess that I thought it might at least get rid of one mortgage in a car note, then you know Sarah you know I'm on Seo myself X amount per month times out by the year I'm saving that and leave it compounded interest deal does you know what give me almost 3000 more a month at age 80, at 60 right now, 20 years from now I would be getting three grandma month, which is significant. So you want to do.

If you have a tax preparer to visit with him or her. If you don't I would connect with one just to understand the implications of putting it out pulling it out and then factor in the taxes you have to pay so that that can be a part of the equation.

You have all the information to make the best decision possible.

What you do that if you have a follow-up call back there but I wouldn't rush into it. I'd rather keep this money working for you, but I also like the idea of you sinking of the payoff of this mortgage to your retirement. Thanks so much for your call back. God bless your brother.

Have a great remainder of your day and will be back with the remainder of our program. After this investing is more than just return. It's an expression of who you are and what you value is the way you invest your money reflect your identity as a Christian, and even tightly designed investments for performance and a better world so you can invest with the confidence to reach your financial goals while remaining true to your Christian values and commitments. We call this investing makes the world rejoice more is available@investingeventide.com invest even to.com Christian healthcare ministries enables believers to meet their healthcare costs affordably, biblically and compassionately is not insurance but a voluntary cost-sharing ministry based on the biblical example of Christians sharing each other's needs and members are defined under the law for not having health Christian healthcare ministries might be your health cost solution call 800-791-6225 or visit CH ministries.org hey this is Chris Brooks I'm so excited to share the movie radio verse of the week which is found in Philippians 212 if you have any encouragement from being united with Christ, if any comfort from his love any common sharing in the spirit any tenderness and compassion, my joy complete by being like-minded, having the same love, being one spirit and in 19 that's Philippians 212 radio verse of the week one. In describing Scott to focus on Christ starting with reading word that also carries over into the father also be there for somebody that might be seeking like this one, 800 DL Moody visit March family wagon this month.

Somebody likes the magazine were giving your family to sent closer together closer to true financial freedom, practical advice to shrink the financial mutation in your marriage, budget friendly family activity since your free money wisely magazine subscription is waiting for you wife's.org/site, with answer reviews on ball Agnew in Washington former VP Joe Biden making his first appearance along with his newly chosen running mate, Laura Harris, the former primary rivals appearing together today at a high school nearby Delaware home at the White House this afternoon present Trump VP Pentz convened a roundtable discussion on reopening schools in the US the White House is a strong advocate of reopening schools.

Critics say they're concerned about corona virus transmission among children and school employees problems in Georgia dealing with the return to school, the largest school district struggled today to launch online learning for its 180,000 students with parents complaining students cannot log into the county system. Meanwhile, Cherokee County has quarantined more than 1100 students at the trike in school learning, adding about 332 yesterday still this is excellent news. They have today is live also talking astronomy.

I suppose we could full plumbing or any other topic into it. If you'd like 800-525-7000 Evanston, Illinois, Jane, thanks so much for holding in your for your patience. How can we help you follow up question about the IRA rollover into the HSA account okay. I apologize that I wondered you said to clarify that that you could will money overcome your traditional IRA into the HSA 65 EQ factor other thing aside, healthcare, is there a limit on not content to how much I want to overthink a yearly limit or out of yeah interestingly Jane you can only roll funds from an IRA to an HSA once during your lifetime and the maximum amount you can roll over is the same as your annual HSA contribution limit for that year. So be $3550 for an individual 7100 for a family. If you're over 55, you could have $1000 to that, but that's all. So you you would be able to drop this huge lump sum of money into the HSA because again one time and based on that years limits.

It would be pretty fairly small amount but but definitely still possible point that might make absolutely yesterday.

Thanks for going.

Thanks very much. If you haven't visited us visited us online yet. We encourage and invite you to do that, you'll find us on all the social media platforms and of course our own homepage own website is moneywise.org that's updated on a real regular basis. You'll find lots of helpful information there.

That's also where our stores located lots of free resources of things like budget templates and then ways to track your spending in your saving. It's also where our radio archives from the last year or so were located and it's an easy quick way to find a certified kingdom advisor in your area, or a way to connect with the budget coach at no charge. Again, it's money wise.

The.org to our phones northeast Kansas miles what's in your mind this week remind me of something I wanted. Preachers are useless to all time on radio talk when I'm about all the litigation going on in the country and that sometimes bring up your house, you might well leave a note on it. Case you have a frivolous lawsuit against you, that they cannot access your property with the with the loan. Still true or not is a great preacher. I don't how much of financial merit was requested. That really is a legal question miles and I wouldn't want to weigh in on that because I'm not an attorney but let me just say first of all, I'm delighted to hear that you paid off your home. Congratulations. I'm sure there wasn't any nights since then that you woken up in the middle and I thinking that I wish I still had a mortgage probably did happen that way you what I would say is in terms of the ability to qualify for a future mortgage. Of course if damages are sought. You had a judgment against you, that obviously could affect you but in terms of the ability to attach the get the asset of your home, whether or not that changes with the mortgage without a mortgage. Really, would be for an attorney to answer. Again, I would want to weigh in on that interesting question but I would just say I am always in favor of you owning your home free and clear. I think your following biblical principles. When you do that, I think the peace of mind that comes with that is tremendous, not demented, not to mention the flexibility you gain by just being able to move in whatever direction the Lord would lead so congratulations on that significant might happen for you. Fantastic. Thanks very much. Miles Cleveland, Ohio.

Benjamin what your infant or what your question about credit for us.

I think you might call much for all the information I share your personal finance. Pretty amazing. Thank you. My question for getting out of credit card that was it. Have them. The biggest impact on the on me emotionally, mentally and all that. So you guys pretty regularly and I do listen to another Christian nonfinancial Lord that you I don't need credit score at all. So I know you guys here moneywise talk about credit score, how to maintain that and all of that so I was just wondering do I really need a credit score or not. It's a great question and here's what I would say I mean obviously what our heart here moneywise is all about understanding God's heart as it relates to our money putting ourselves in the proper position as steward, not owner. Recognizing God is the owner being found faithful in managing his money. According to his principles and by the way, there's a bunch of them in God's word and that's what we try to mine every day and clearly one of those is that there's a change in the relationship when were a borrower to the lender and there's clear warnings about that. I don't think borrowing is a sin, but there are clear warnings, and so I think we should pursue a life of being debt-free and I think that really is the primary motivation or should be, so how does that then relate to our credit score well, I think what we just have to recognize was so many things is that no with there's trade-offs right and so what I'm most concerned about is you not getting yourself into financial trouble by using credit living beyond your means, you mentioned yourself just the emotional toll that credit card debt is taken and how that's been lifted since it's been paid off.

That is far more important to me than your credit score now will you have some challenges. Perhaps qualifying for a future loan. If you need one. Hopefully you don't, or perhaps with insurance rates are you know when somebody checks your credit for a potential job or you need to.

You don't lease an apartment or something like that. It could you we know the credit scores are being used for more and more things these days, but there are also other ways to get around that.

For instance, you could use some of the utility companies will now report to your credit report so there are other ways to establish the fact that you're an on-time payer that you're responsible for handling the resources that you have but you do have to recognize a lack of credit is going to impact you, because there's just not the date of its current to be able to feed in and keep that score up there and that could affect you in certain areas like the areas that I mentioned.

But again, what's most important to me is that your following biblical principles you're aligning the way you use God's money with what's important you your values and that you don't have this emotional toll of these encumbrances over you that's preeminent in my mind, but there are going to be some trade-offs just because we live in a global digital society that is using credit scores more and more all the time.

Benjamin, we hope that information helps you great question. People of essence before. Do I really need credit now obviously Rob a couple of decades ago. This really wasn't much of a question.

There weren't any any credit scores to speak of and it sets a new a new day and not credit scores impact as you pointed out just about everything in your life, you may not like it but that's just the way the system has evolved what exactly right. You know it was relationship-based transactions.

You'd shake a person shake a person's hand and they'd know you and know your family and you might have a reputation as somebody who's going to honor their obligations or not, but it was known and now we want to be able to do things instantly. We want to be able to spend money all over the world and the only way someone can determine whether you are going to repay as agreed or whether you're responsible in other areas of your life is been reduced to this all-important score. Call the credit score so we just have to recognize the dynamics at play in the world in which we, in these days you can even check the person's hand so we know he's listening to moneywise live. Here's a number 805 five 7000. Please many people are experiencing financial challenges such as credit card debt downsizing that in jobs savings.

In fact, more than half of all the courses are the result of financial pressures at home, but there's hope in your money counts biblical financial expert Howard shows that the Bible is a veritable managing your finances will discover the profound relationship with God, your money count is available when you click the start button moneywise will I hi I'm very tired. I'm here to help you understand the urgency and how much fun it is to share your faith in the eyes of a layman elected official of the mirror image of the people who elect them if you want to know what's happened to America. Satan blinds the minds of godless politicians who are elected by godless people were equally delighted that's what happens in a post-Christian society is literally the blind leading the blind, being manipulated by people who were equally blind. Meanwhile Satan is playing us all for fools tearing down America achieve his goal of one world government led by the antithesis of Christ, the Christ, that is engaged before the Lord. Meanwhile, over 80% of the unchurched notes America's out-of-control would like to believe there's a God who can end the chaos are looking for somebody to love and already have a Christian friend that's an open invitation to make America Christian again. One person at a time.

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That sounds good at first, until you stop and think about why hasn't had a bigger impact on our culture just to believe something isn't the final step. It's the first. If you believe a fire extinguisher fire doesn't do any good to stand there while the fire burns to act on your belief put out the fire so do you believe in the God of the Bible on your belief in God has a plan and it's written down in the Bible so you can read God's son, Jesus Christ, is the plan. He came to earth and made a way for you to act under believe Jesus is the way the truth and the life. Many people adopt an attitude toward marriage and finances. Then it will all work out somehow. But sadly, it often doesn't financial woes can devastate a marriage but there is a better way.

God's way, money and marriage God's way by Howard Dayton will help you discover God's approach to growing your finances strengthening your relationship with your mate and cultivating godly joy, money, and marriage God's way is available and moneywise live.org questions Fairmount, Indiana hello Julie and what's your question hi Julie Willis hello Julie, okay. You are true yeah that's a good question Julie a big believer in assessments in a variety of context. Certainly career assessments can be a great tool. Let me send you one free of charge our friends and career direct have made a number of their assessments available to us to give away periodically and I'd love to send you one free of charge. You can try it out. Let us know how you find it with your highschooler and if it's effective we'd love to know. But if you just stay on the line so to get to your information will get the career direct assessment out to you and be would be delighted to do that okay thanks for going and listening. We appreciate Rob you have children who are going to very quickly become of college age you feel about tests assessments are reviews like this to help a young person figure out what you want to do with their lives. You know I think it's it's really important to me. We want to live by design.

We realize we were all created uniquely by the Lord, and especially as were heading off paying astronomical amounts to get an education in the degree to be able to sink that up with what were passionate about what were gifted in being able to come out with the degree that we can use to fund our expenses and if we have some debt pay back quickly.

I think is critical and I think assessments can really help with. That's on the big believer in Hollister, California hello Ellen, know what you question for Rob West today my card. I got going on in her retirement have been answered.

God's accelerated weight within the last three months we were able to purchase a home as a primary red state were selling our home in California currently in escrow and with the proceeds. I need some help.

I'm in the union. I will give union pension also planning on Social Security both the wife and I particularly were about 64 years old, doing all the members and crunching the numbers a million times in all it's going to work. Actual fixed income with the pension and Social Security and the annuity that is my union if I take an automatic monthly draw will actually be able to save about maybe 30 to 40% of that income monthly income that way on paper and about 10 pencils. But anyway, my question guys is to come away with about $200,000 after all that said and done, you have a mortgage in Arizona. It's about 380,003%.

Able to purchase a home in the primary residence and we plan before the end of year to be there. That said, this house that we are now in California is closing at the end of the month will stay with our kids for a while. I'm still working and putting my retirement together with the union.

That's all in and play right now so back to the question with this $180,000 after getting debt free other than the mortgage and in doing some improvements to the house in Arizona. I need to know what to do with that one. Maybe if I should roll it up, some apps annuity out of the union, which is another 180 so you like $360,000 savings that we will have the life of our end in terms of the new property you you said Yorty have the mortgage in place. It's in excess of 300,000.

Do you have savings just liquid savings and emergency fund that separate from these accounts you been describing probably about a 30 in all my life scenarios also, so it can change drastically but is about $30,000 cash yeah okay will given the fact that she's been essentially self-employed and I realize that can ebb and flow in terms of her compensation. You may want to be on the steel closer to six months worth of expenses in savings if you need to bump that up a bit. I would do that. But beyond that, it sounds like you really given thoughtful consideration Alan to what your expenses are to be what income sources you have.

I like the idea of you will becoming completely debt-free including your home as soon as you can. And really this 180 or whatever is left over after you sure up your emergency fund. Finish the improvements I think would be a meaningful step toward getting you debt free. So I put it against the house just based on what I'm hearing from you today and then take that access, you can have while you're working, and even beyond your working years and keep piling it against the mortgage so you can be completely debt-free and just have no encumbrances, you have the freedom and flexibility that comes with that.

Not to mention the peace of mind. So I think given everything I've heard, I would certainly go in that direction.

Now if you and your wife said you know what we really don't mind carrying the mortgage. We know we want to be responsible, but we have been and we'd rather take this money and put it to work. I couldn't argue with that but I just think you know if you have a goal of being debt-free completely. I think this is a great opportunity to make a meaningful step in that direction from how do you feel about both of them taking their Social Security at age 64 yeah you know you're going to take obviously a reduction in about 8% a year early and then for every year you way past the full retirement age, you can give up a potential increase of 8%. But if he's sinking it up with his retirement date and is Artie done the math and it's going to cover his expenses and it would prevent him from retiring before that date.

Then I think he can proceed. It's gonna be a pretty minimal amount because he's gotten to 64 as opposed to starting six and two and Alan I'm sure you're used to lease a couple of your pencils working on that aspect of it so sounds like you guys are heading in the right direction and I will keep you in our prayers as you continue along God's road for your lives.

We appreciate your call today. Thanks.

Let's quickly go to Palm Beach, Florida. Karen what's on your mind will call should come home and have a car payment. The bearing year car so my question to you much cheaper car payment. In order to quantify what I got. Karen I don't like the idea of you turning in the car if it's more car than you need, and perhaps you feel like it's doesn't fit well within your budget. And given that you want to buy a home. Yeah, I think a private sale would be a better option where you try to maximize the value of the sale of the car, pay off the note hopefully come away with something that you could then use to buy. Perhaps a less expensive car that will free up some of that debt ratio so basically when you go to buy a house any debt. Your Karen will affect what lenders call your debt to income ratio DTI and it's expressed as a percentage is calculated by dividing the total recurring monthly debt by your monthly gross income. And they like to see the lenders that is debt to income ratio smaller than 36% and you generally 36 is best for a conventional home. You can go up to 40 to 45 but again that's going to be the determining factor there, but I think you know what you need to focus on is your budget and you could talk to some lenders, but I wouldn't turn in and I would like to do a private sale is at sunken cart. You think that's going to eat my credit if I can impact your credit negatively to sell as long as you pay off that existing notes and I think it's can reduce the overall debt that you have outstanding which is gonna pull that debt to income ratio down and make you more eligible to qualify for mortgage so it's all going to depend on the numbers you need to perhaps have a mortgage broker or lender may be someone in your church run the numbers for you figure out what your debt to income ratio is and how big of a factor.

This car is but it sounds like perhaps if you can reduce the debt that you owe by selling it outright.

That's certainly gonna put you in a better position as to the specifics you can have to get into somebody can actually crunch the numbers Karen we wish you the best with that. Thank you very much for your call today and will return a lot of time but I tell you what Mike, we know you're holding that if you stand alone. I will try to talk you a bit off the year Rob, thanks very much will come back tomorrow and do it all over again, but probably was some different calls and questions I would imagine so thanks to the right. If you haven't heard or received a copy of our new moneywise EE magazine. You might want to check it out that this is a new quarterly EE publication really designed to help you in your journey to true financial freedom to print true financial freedom. It contains special podcasts that you won't hear anywhere else articles and stories of real people that we think will inspire and challenge you on how to live victoriously when you're living under God's plan for your money. It's called our new moneywise EE magazine and you can find out more and even get a free subscription.

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