7 Things Not to Do in Uncertain Times

Don't be afraid. Rob West tells us how to steer clear of the pitfalls ahead, and we'll take your calls on anything financial at 800-525-7000.

800-525-7000. I'm Steve Moore. Seven things not to do with your money. That's next, right here on MoneyWise Live. Well, Rob, recently you had a conversation with two very qualified people to talk about financial ups and downs during uncertain times. Ron Blue and Howard Dayton, both real veterans of personal financial counseling.

I know that they shared what they think are the seven most common money mistakes people make when things look kind of bleak. Well, that's right, Steve, and it goes without saying, first on the list is responding out of fear. Your first battle is against the fear that arises during times of uncertainty. Even though it says fear not over 300 times in God's Word, unfortunately that fear can lead to irrational thinking and ultimately irrational behavior. So, how do we combat that? Well, the most effective way to overcome fear is to have God's perspective. He's not surprised, and he's in total control of this circumstance. He's going to use it for his purposes and kingdom growth.

If you have a long-term financial plan, consider whether your plan will stand the test of time. And I think that's probably one battle best fought on our knees in prayer to God that he'll show us the right path, the right direction. Yeah, that's exactly right. Okay. All right. What's next? Well, next is focusing on what you can't control. You can't control the Federal Reserve, the stock market, or the GDP, but you can control what God provides you to steward or manage. You know, when we look at what Scripture says about money, Steve, God plays a role, and we play our role. He's ultimately the owner and controls everything. He's also responsible for our provision.

On the other hand, our part is confirming that we have a good spending plan that includes giving and debt reduction and all the things we can control. Yeah. Okay. Good. Focus instead on what we can control.

What's number three? Well, it's watching the daily moves of your investment accounts. Remember, these are the things not to do. Don't fixate on the daily headlines.

It's actually detrimental to your decision-making process. Balance watching the news by focusing every single day on your Bible study. Instead, refocus on having an awe of God.

Are you in awe of God? Well, if so, all of the short-term concerns come into proper focus. Yeah, I like that.

Great advice. In fact, recently Marcia and I have started watching the news every second or third day, believe it or not. I know there's a lot going on these days, but I don't have any great sense that we miss anything when we do that. So that probably gives us a little bit more peace than we had before.

All right. What's next? Number four. Yeah, the fourth thing not to do with your money in uncertain times is cutting your giving. Unfortunately, it's one of the first areas many people cut during times of uncertainty. We've challenged you not to do that here on this program, but instead to trust God as an act of obedience and worship, even in a difficult season. You know, giving is what breaks the power of money over our lives, and it really shows where we've ultimately placed our trust as we hold loosely to everything that we have. As the body of Christ, we should give more if we're doing okay, because many people aren't.

God's given us resources, financial or otherwise, to be used for His honor and glory. That's right. I like that.

Hold what you have loosely with an open hand. All right. Number five. Well, it's veering off your long-term spending plan. One of the fundamentals of planning is that it helps us make better short-term decisions today. A long-term perspective of our finances can be interpreted as an eternal perspective.

Generally, we shouldn't have to change in times of uncertainty, because we have a plan that anticipates uncertainty. Let's jump to number six, and that's hiding from your creditors. You know, sometimes when we're facing financial challenges, we may not want to face creditors.

We avoid phone calls and don't reach out to the creditor directly, and yet this is something we want to avoid doing. So take the initiative. It pleases the Lord when we communicate clearly with our creditors. All right. Great.

Okay. The seventh thing not to do with your money in uncertain times. Well, this one is key, and it's ignoring what God might be saying to you. Spend time with Him and listen for His guidance and wisdom.

We have daily opportunities to be salt and light in this world, so pay attention. You know, the best plan is placing your faith in the eternal God who created everything and has all wisdom and knowledge. He has your best interests at heart. Study His word and spend time with Him. This is MoneyWise Live with Rob West.

We'll be right back. Your family and your money are two very important subjects. That's why in this month's MoneyWise e-magazine, we're giving your family tips and tools to grow closer to God, closer together, and closer to true financial freedom.

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Hello, my name is Harold. I want to offer our assistance to help you in planning for your future. Oh, planning for the future, huh? Uh-huh. Does it guarantee my future for all eternity? Well, no, but we can discuss both your short and long-term options. Oh, I see.

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We'd love to chat 800-525-7000. Now, for the first part of today's program, we've been talking about seven things not to do during uncertain times with your money, and we're down to number seven, Rob. You want to review number seven for us again, and then we'll talk about this conversation you had recently with a couple of friends of ours. Well, it's ignoring what God might be saying to you. Here's the big idea, Steve. You know, I find, and I've said this before, that our financial journey is often one of the key ways God shapes our spiritual journey. And so the question is, as you work out your values and priorities with the way you allocate God's money, there's often ways that God speaks to you in that process. And so I think we need to be looking at having our eyes open for not only his guidance and wisdom, but exploring the truth and the scripture for the principles that we need to be pulling out, and we need to be asking, Lord, what might you be saying to me about where I've placed my trust? And perhaps an uneasiness, perhaps even a concern or a fear around money may reveal that you have misplaced trust.

Maybe you're trusting too much in the things of this world, your bank account, your stock portfolio, when in fact God's trying to redirect you toward total dependence on him. I think these are some of the key things we need to be looking for. Well, as we mentioned, you had a conversation with two real heavyweights when it comes to this topic, guys that have spent their lives teaching biblical principles as it pertains to our personal finances. That would be Ron Blue and Howard Dayton. Howard, the founder of Compass, finances God's way. And we'll have a link to that interview, the entire interview in our show notes today. It was part of our part of a recent podcast, right?

Well, it exactly absolutely was, Steve. And these are two giants of the faith. Both have been mentors to me personally. These two men have really played a key role in applying God's truth to modern personal finance through their writing and work alongside Larry Burkett. They really pioneered this space. So, yeah, it's a wonderful interview. And these guys really know their stuff.

Yeah, they really do. You know, I have to chuckle because, as you know, I started working with Larry Burkett back in 1985. And at that time, Larry was the most prominent person teaching these principles. He had the first one to have a radio program and he did a lot of radio appearances and other people's programs. His book and resources were offered by Billy Graham on television.

So very quickly, you know, he sort of established himself as the expert on this. But at the same time, when I would talk to radio stations and other people about who we were and what Larry did and what he stood for, people would just shake their heads. They would say, well, I mean, how often can you talk about, you know, money and the Bible? I mean, you tell people to be generous and give and that pretty much covers it. And, you know, here, 30 some odd years later, we're talking about it.

It's more germane than ever before. And I think people finally have caught on that there's a reason that the Bible says that money is God's greatest competitor. And it's because if we give our love, if we give our attention and our energies to making money, keeping money, storing money, then we don't have any of those energies left to serve God.

Well, that's exactly right, Steve. And the 2300 verses in the Bible, I believe, are there for a reason. Everything in God's word is there for a reason. And as you said, it's one of the chief competitors to lordship. And it's how we work out what's important to us day in and day out. We all spend money all the time. It's the common denominator.

So we should orient our lives to do it God's way with his perspective. I love it. Here's our phone number again. If you'd like to speak with Rob today, 800-525-7000. Or you can always send Rob a brief email, just a couple of lines. We may have a chance to read some today. The address is questions at MoneyWiseLive.org.

Questions at MoneyWiseLive.org. All right, let's go to our phones. Elgin, Illinois. Hi, Linda. What's on your mind? Linda, are you with us? I am. Thank you. I am on the phone if you can hear me. Yes, ma'am.

Go right ahead. Okay, my question today has to do with how to move forward with additional monies that I'll have coming in. I am 67. I work two part-time jobs in addition to receiving Social Security. With my one part-time job, I literally took it on just to pay off a loan.

That's already done. But I know I need to rebuild my emergency fund. Should I use all my additional money to rebuild that fund? Or should I use part of it to also pay down additional on my mortgage? I see.

Yeah, Linda. Well, I'm delighted to hear what you're doing here. Obviously, you've been able to keep your spending in check such that this extra part-time job is able to be applied fully toward advancing your goals. And clearly debt reduction, having some margin and some savings, vis-a-vis an emergency fund are clearly two great goals to have. When you talk about your emergency fund, where is that now?

Where does it stand? It was depleted back in last fall because of a remodel in my bathroom due to mold. Okay. All right. And how much do you have extra coming in per month? I have about $3,000 in emergency fund at this point. Okay. And what would be the surplus that you'd have on a monthly basis moving forward? About $400. Okay.

Excellent. And so you've got about $3,000. When you total up all your expenses over a 30-day period, what would you estimate those to be? About $4,500 a month.

Okay. So $4,500, we would say three to six months expenses. So ideally, we'd like to have a minimum of around $13,500 in that emergency fund.

If you wanted fully funded and go for a full six months worth of expenses, we'd be talking around $27,000, which that's going to take a while from $3,000 to get there at $400 a month. But I'm delighted to hear that you've got that extra $400 a month. So I think the key here right now is how many months do you want before you would be comfortable allocating perhaps a portion of that extra $400 a month toward debt reduction?

And it sounds like the only remaining debt is your mortgage. I would say let's get to at least two months worth of expenses because it sounds like you have some reliable income sources. So we really don't need to worry about perhaps a disruption in income as much as we need to a major unexpected expense, a major home repair you weren't planning on, although we should be setting aside something for home repairs and maintenance, a major medical event that was outside of your planning, something like that. And so that would mean that we'd need, you know, another $5,500 in order to get there, or so maybe $6,000. And so if we were to break that $6,000 down by $400 a month, it would take you a little over a year, a year and three months in order to get there. So I would say while you're rebuilding that, let's just focus entirely on this the emergency savings.

But once you hit two months expenses, perhaps at that point, you split it, and you take half of it to continue to build the emergency savings and half toward debt reduction. There's not a hard and fast answer here, a right way or a wrong way. This is just kind of my thoughts on it. But tell me your thoughts and reactions to that. I think that's a good plan, actually.

Okay, right. I need to build that emergency fund again. Yeah, I think that'll give you some peace of mind and certainly allow you to have something to fall back on in the short term. We certainly don't want to have to tap into and you wouldn't unless it was a line of credit.

But once we put it against the house, obviously, it's not going to be available without a significant cost to refinance or something like that. So we want to make sure you have plenty there. And by the way, if you felt more comfortable getting to a full three months worth of expenses, then you know, you would obviously just extend that out a little longer. But I think that sounds like a great plan. You're on a good track here and we appreciate your call today.

We do indeed. Thank you, Linda. God bless you.

Cleveland, Ohio. Hello, Pete. You're on with Rob West. Hi.

Hi. My question is, I'm thinking about refinancing maybe with the traditional savings alone, like Third Federal or the company on the radio I heard called Fellowship Loans. Yeah.

And it's probably for like 10 years. I'd probably be in the house more. And right now, my rate is at almost 5 percent.

OK. What are your thoughts? Well, let me ask you a couple of follow up questions, Pete. So you've got a 5 percent interest rate. What is the home worth and what do you owe? A home is probably worth about $180. And I owe $110. And I also want to get like $20 cash out to pay off one credit card and do a little work on the house. OK. And how many years do you have remaining on this $110,000 mortgage? I think about 20.

About 20 years. OK. And so were you planning to refinance with a 20-year term? I was thinking about doing another 30-year mortgage just so I'd have something I could afford.

Yeah. OK. Well, a couple of things. Number one is I'd make sure you can save at least a point with a 5 percent interest rate. As long as you have a good credit score, that should be no problem. You should get a rate below 3 percent. Number two, I'm not crazy about you extending the term. In fact, that would be a deal killer for me. I would only do this if you refinance at a new 20-year term so we don't extend it because if you extend it, you're essentially going to take all that savings in the form of a lower interest rate and now a lower payment. And you're going to miss out on all of that because you're going to end up paying all of that back probably and then some in interest. The third thing is I'm not excited about you pulling the money out for credit cards because so often that's just masking an underlying issue which is overspending. I really want you to solve that issue first through a spending plan as opposed to taking on more debt. So I'd push the pause button on this. If you're going to do it, let's get the 10-year term and I'd really be careful about paying off the credit cards unless you know that you've solved the underlying issue. Thanks, Pete.

We'll be right back after this. Money and life run on the same track. But unfortunately, sometimes it seems like your money is heading in a different direction from your goals. In Never Enough, Three Keys to Financial Contentment, author Ron Blue helps you to break down all your financial options to a basic four and then shows you how to keep it all chugging along in the right direction on the same track.

Never Enough, Three Keys to Financial Contentment, available when you click the store button at MoneyWiseLive.org. Pete Blues 412 says, for the word of God is quick and powerful and sharper than any two-edged sword. Here's Beth Moore with a quick word. I want you to see lastly, it says then, those concluding phrases, for those who are called kleitas, for those who are called according to his purpose. I am so anxious to be able to share with you what this word purpose means. It's only used just a couple of times in Romans and we'll see it soon after this. It's a wonderful word, a Greek word, that is spelled P-R-O-T-H-E-S-I-S. Prophesis is the way you would say it. Prophesis. Now do you see that P-R-O in the beginning of it?

I want you to look at that for a second because that's going to give us a little bit of a clue here. What this word means is, the word prophecies is the act of setting before oneself. It's a word that means to set forth. The purpose, called according to God's purpose. Purpose is the act of setting before oneself. Now make sure you understand that the self we're talking about is God. It's not just him setting it before us. What I'm saying is he works all things together according to his purpose.

And that purpose, the word purpose means something that is set forth in front of oneself, before oneself. Beth and the team are thankful for the grace gift to serve you. Your letters, prayers, and support are a vital part of this program. To request this month's thank you gift, text the word GIFT to 57682. Again, text G-I-F-T to 57682 or go to bethmore.org forward slash donate.

And thanks for listening to A Quick Word with Beth Moore. Do you know if you have enough? Enough money? Enough house?

Do you know how much is enough? If not, Ron Blue can help with his book, Master Your Money, a step-by-step plan for experiencing financial contentment. Learn how to save, invest, and give wisely, how to create a long-term financial plan, and how to get out of debt. You'll find it all in Master Your Money by Ron Blue, available when you click the Store button at MoneyWiseLive.org.

Here's a great verse from the book of Hebrews, Hebrews 11 and 6, and without faith it's impossible to please him, for he who comes to God must believe that he is, and that he is a rewarder of those who seek him. Grand Rapids, Michigan, hello Hazel, thank you so much for holding on, and what's on your mind today? Well, thank you for taking my call.

Well sure. A while back, a couple, three months back, I had gone into a department store to make a purchase, and put it on my credit card, I don't usually carry it with me, and so the girl looked at them, she says, it's been cancelled from inactivity, she says, but we can open another one today if you want it, and I said, well okay, she said you would give a little discount from whatever it was I was buying at the time, so I said okay, and then I did receive the card in the mail, and I was, I had not activated it because the credit limit was $8,000. There's no way I want to carry a credit card with that kind of credit limit on it, and I didn't know what to do, I don't want to get a negative effect on my credit, if I asked them to reduce it, which I've heard in the past anyway, I don't know if it's true, but that it could go that way, so I'm not sure how to handle this, could you help me with that please?

I'd be delighted to. You know, the reason that you've heard that lowering a credit limit can hurt your credit score is all about something called credit utilization, so the lower your utilization, which is the balance you're carrying versus the limit that's available to you, the lower that utilization rate, the less risk you represent to the lenders, and the credit scoring models use 30% as kind of a key threshold, so if your balance is greater than 30% of your limit, then you are, it's actually going to ding your credit score. Now if you're paying it off every month, that shouldn't be an issue, it's only for those who are carrying a balance month to month. Now here's the other issue though, as long as you are paying it off, there's really not necessarily any risk, Hazel, of you having a limit that you never intend to fully use, because you should only be using this card for budgeted expenses, you should be paying it off, and if you just feel better having it a little bit lower, you could call them and ask them to lower it, and it's really not going to affect your utilization because I suspect you're putting very little on this card on a monthly basis and you're paying it off, so if you just feel better, just place a call to them and ask them to lower that limit for you, and they should be able to do that, but otherwise, I don't think it's a real issue to have it out there, as long as again, it's not a temptation for you to spend money you don't have that you can't actually pay down.

Does that make sense though? It does, yes, and I always pay mine in full so there's never a balance, and I'm not tempted. And even if your score were to drop slightly as it's lowered, it'll bounce right back, they'll probably try to talk you out of it because the game the credit cards play is they want to keep raising that limit until they get you to start carrying a balance month to month, because that's when the real benefit kicks into them. But the bottom line is, if you'd feel more comfortable, place that call and ask them to lower that limit for you, otherwise, I wouldn't worry about it because you're paying it off anyway. Maybe that's a problem that lots of Americans ought to have, having their cards canceled because of inactivity. I don't know how often that happens, but it is interesting that the credit card companies keep an eye on that, and I guess they just don't want to keep you on the books if you're not going to be a loyal customer, or a good customer actually is the way they see it. If you're not spending and using that card, they don't consider you a good customer. There's no merchant rebate coming back, so yeah, they're not making any money by holding on to that account. Hey, we consider you a good listener, and we'd love to have you as a good caller.

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That's 800-801-2171. The financial wealth you leave behind could be the best thing that ever happened to your loved ones or the worst. In Splitting Heirs, 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.

Splitting Heirs will foster a real appreciation for the precious resources that God has entrusted to you. And it's available when you click the store button at MoneyWiseLive.org. With SRN News, I'm John Scott. The energy industry is assessing damage caused by storm surges and high winds as Hurricane Laura cut a dangerous path across the coastlines of Texas and Oklahoma, making landfall early today. Oil and gas producers evacuated platforms and rigs in the Gulf. Companies shut down refineries in the storm's path. More than 700,000 customers now without power in Louisiana and Texas.

In Louisiana, four deaths attributed to Laura, which is now a tropical storm in southern Arkansas. The Commerce Department reporting that the U.S. economy shrank at an alarming annual rate of 31.7 percent during the April-June quarter as it struggled under the weight of the viral pandemic, the sharpest quarterly drop on record. Stocks finishing mix that now gained 160 points. The Nasdaq dropped 39.

The S&P 500 was up five. This is SRN News. It's MoneyWise Live. I'm Steve Moore. That guy over there answering all your questions.

He's Rob West. We would love to chat with you today. In fact, we have callers all lined up in Miami, Chicago, Idaho, and right now it's Donna calling from Florida. Rob, I think she has a comment for us.

All right, Donna, we'd love to hear it. Thanks for calling. Thanks for being there. I just want to add to the list of things not to do, and that is to forget his faithfulness. He's brought us through so many things in the past, and when things go sour, sometimes we panic and tend to forget, and of course, that's the enemy working against us. I'm really grateful that he's taught us to hold onto his promises, and sometimes we wonder if our kids get any of it as they're growing up. I just wanted to say that my daughter and her husband live in Iowa, right in the epicenter of that disaster from a couple weeks ago, and looking to the Lord to ask what they could do, they were able to take in a couple and another gentleman who lived one above the other in an apartment that got destroyed, and they've been able to help those folks out while they're waiting to have a place to move to, and I'm just so grateful that God instilled in their hearts that trust, that they can do that.

Yeah, that's very good, and I appreciate you mentioning that, Donna. We absolutely do need to remember God's faithfulness all throughout our journey. We need to be good at celebrating that, and we think celebrating the progress that you're able to make when you apply these principles and move in the direction of really shoring up your financial foundation is key. Celebrating doesn't have to be expensive, but it allows us to acknowledge what we've been able to do through God's provision, and I think just remembering is a theme we see throughout the Bible.

We see the Israelites gathered a pile of rocks to recall God's mighty work, and Joshua, the same thing, and so we see that idea of marking and remembering God's faithfulness and then passing that down through the generations by telling stories of what God has done to provide and protect us throughout the generations. So thank you for that reminder today, I think you're exactly right. God bless you, Donna. God bless your family as well. Thanks so much. Coeur d'Alene, Idaho, Maureen, what's on your mind? Yes, hi, thank you.

I enjoy your program and listen to it regularly. My husband and I are in retirement years, and we want to invest in CDs, and they come with various rates of return. Is there a way, other than calling each and every institution, bank, saving someone, whatever, a way to find out what rate of returns there would be? And then also a little concern is the quality of the CDs, if they have any catches to them. If we want to invest, but we also want to have our money available to us.

Yeah, let me direct you to a website, Maureen. I would send you to bankrate.com, bankrate.com, a great resource for you to check rates on for borrowing, so mortgage rates and home equity loan rates and those types of things, but also rates of return for banking products, including CDs. So when you click on banking and then you click on CDs, you'll see the best three-month, six-month, nine-month, one-year, two-year, three-year, five-year CD rates out there, and what you will find is they're not very good. With historic low interest rates, unfortunately, CD rates follow, and there's no reason right now to lock up a long-term rate. So for instance, you might get three-quarters of a point on a six-month CD, which, by the way, there's no reason to do that because you can get the same thing in high-yield savings without any kind of lock-up period, but if you go out three years, that three-quarters of a point might go to a point and a quarter at the most. Five years, you're barely going to get 1.5%, so there's no reason to lock up your money for a long period of time at those low, low rates. The only reason you're going to do any better than that is if you find, perhaps, a local credit union that's adding some sort of bonus to attract money in, and it's generally for a very short period of time, might be for the first six months or a year, but Bankrate.com is a reliable source. Unfortunately, you're not going to be thrilled with what you see, but you will be able to find the very best options. Now, as to the safety, they also rate the banks. I will tell you, though, you don't really need to worry much about that. As long as it's a bank with FDIC insurance, there's going to be protection there.

So if something were to happen to the bank, and that's very uncommon, the Federal Deposit Insurance Corporation will step in and make sure you're protected. So Maureen, sorry for the bad news as far as looking for 3%. If you do find 3%, we would love it if you contact us so we can alert the rest of the country, because we're not sure that's happening out there. But God bless you. Thanks so much for calling in today.

Chicago, Louise, you're on with Rob West. Hi, thank you for taking my call. Huge fan. Thank you.

Appreciate it. So my question is, my husband has $122,000 in profit sharing from a company that he used to work for 10 years ago, he was laid off, and they have been reinvesting his money. He refuses to pull it away from them and take it to, you know, another agency or company. And I've been urging him to really think about this.

And it's the godsense that you're taking my call today, because it's really been kind of a conflict between the two of us, so very curious what you have to say about that. What is his resistance, Louise, to rolling it out to, let's say, an IRA and taking over the management of it there? He said, basically, why should he bother to upset the apple cart when they're doing such a great job?

And I said, but they might be doing a job, but you have no input in it. And he's worried about fees, and he's worried about, you know, the whole transfer process. He's basically very, I guess, complacent. And I don't want to be too critical. But I do feel like in these times of some uncertainty, he should really be a little bit more proactive, especially with a huge amount of money like that.

So yeah, it is significant. Well, do you have a sense of what the return has been since it's been there since he left? Up and down, up and down, very up and down. He doesn't show me the statements. I did push pretty hard.

And he finally showed me something. And of course, again, with everything going on, currently, I think there was some type of loss. But again, it just concerns me.

Okay. And do you have other investments, other retirement accounts? And are you managing those yourself? Or do you have an investment professional helping you? We do not have an investment professional. I work for a very large corporation, 18 years, and I've got a very small amount of retirement, 37,000.

And am I allowed to pay the company that's managing it? It's not necessary, but that's okay. So are you contributing or is he on a regular basis to a new retirement plan?

No, he's only working very part time, which is another concern in regards to this, but I'm contributing about 2%. Yeah. Okay. All right.

Well, a couple of things. Number one is I do like the idea of rolling it out to an IRA. I'd love to see you all have more direct involvement in the investments that are being used. I would hire an investment professional to manage that for you, just so you have control over it. I'd love somebody giving thought to how much risk is being taken. Is it consistent with your goals and objectives?

And I would explore how much you're putting in retirement moving forward. Stay on the line. Let's talk a bit more while we hit this break, and we appreciate your call. Hang in there, Louise. We appreciate it.

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Good to have you back with us today. It's MoneyWise Live. If you haven't checked out our website in a while, you might want to do that.

There are additions on a regular basis, lots of great information that's free, things you can download to help you with your personal finances, and much, much more. It's MoneyWiseLive.org. It's also where you can make a donation or a gift if you'd consider that. This is a ministry, and as a ministry we really do depend upon your partnership, your generosity, and like I said, you can make a donation there. Just click the donate tab at the top of the page when you're on MoneyWiseLive.org. Miami, Florida, hi Marilyn, how can we help you?

Hi, thank you for taking my call and for all the great information. I'm not retired yet, I just turned 62, and I'm in a pension plan with the school board. I'm clerical personnel, and that's my only source other than social security of retirement.

However, with that pension plan, they do give you a COLA and all that, however, if you don't live long enough, you don't get to leave any money to your heirs. And I've had this thought, and I've been preying on it, and I don't even know where to start, but I've had thoughts of, well, I'll pull it all out, and I don't know the lump sum yet, I'm trying to find that information out, and put it in, I don't know what kind of investment plan. But I was thinking of even, I don't know how much of a hit it would be, but to take it out and to move out of Miami, somewhere in northern Florida, and buying a duplex or something, and renting one side out and living in the other side, and then, you know, but I don't know how much of a hit it would be for me to draw that money all out in one lump sum like that.

Yes, all right, well, I think I understand where you're going with this, and a couple of thoughts. Number one is, you know, you want to be really careful about pulling this out because of the tax considerations, it would all be taxable, and you don't want to push a good bit of it up into a higher tax bracket inadvertently by taking it all at once. Number two, you could roll it out to an IRA, and then you could use something called a self-directed IRA to inside the IRA, put it into a piece of real estate.

And I'd be real hesitant about that unless you have some experience in that. You know, becoming a landlord involves, you know, quite a bit of work just in terms of selecting the right property, making sure you can keep it rented, market it, taking care of the maintenance and the upkeep, keeping, you know, somebody in there, and what if somebody moves out unexpectedly, and now you've got a big, you know, perhaps a property with no income on it that you're maintaining, and it's bigger than you need. So you're trading the guaranteed income of the pension for the lump sum, but you're taking on a lot of risk with that in terms of now you're responsible for that money to work for you and produce the income that you need. Now, granted, you have access to the principal, but you've just got to really think about what is my plan when I get this money.

If you're going to invest it, I would make sure you hire an investment professional and I would have that individual compare the internal rate of return on taking the lump sum and converting that to an income stream versus the monthly payout they're going to give you on the pension to make sure that it makes sense, first of all. And then secondly, what is that investment strategy either through stocks and bonds or through real estate? And again, I'd be real careful on without any experience becoming a landlord and trying to make that work for you, because, again, you're trading what is kind of guaranteed for something that involves quite a bit of risk where you're assuming that yourself.

So I realize you want to be able to have something to pass on. You just need to count the cost, both from an investment standpoint, a risk standpoint and a tax standpoint before you make that decision. So let me encourage you to reach out to a certified kingdom advisor there in Miami.

And once you get all the information, have that individual walk through your options with you to explain what you would get in a lump sum versus the monthly pension payout and talk through the various options for managing that money and giving you a recommendation on what makes the most sense. Just go to MoneyWiseLive.org, click on Find a CKA and I'd schedule an appointment to do some planning. Maryland, thank you very much. We appreciate that call. Hope that works out for you well.

Ohio, Keith, what's on your mind? I have two granddaughters, both of them are under two years old. And what I'm thinking about doing is take like a thousand dollars, put it in an account where it can invest in some mutual funds and just let it grow till they're like 20, 21 and then give it to them at that age. I was just wondering, what's the best idea of putting that money into and how do taxes work with that, et cetera?

Yeah. Would this money, Keith, be specifically earmarked for college or is this just money you want them to have outside of perhaps college expenses? It won't. It'll be for their discretion. That's why I'd like to wait till they're like 21 and then they can decide what they want to do with it. So it'll be theirs and they just do what they want to do with it.

Yeah. And are you set on putting this in their name now or would you be OK keeping it in your name even though perhaps it's in an account that's earmarked for them and you certainly know that? I could do it either way, whichever way is the best.

That's one of the reasons why I'm calling is just to find out what's the best idea. Well, I would avoid putting it in their name. Some people will do a custodial account or what's called a uniform transfer to minor act. The problem with that is that at the age of majority in your state, they can use the money for whatever they want.

Now you may be OK with that, but if they were to perhaps not be at a good place in terms of their decision making process or maybe in some behavior that you don't condone, certainly we pray that's not the case. But they would have access to the full amount of the money to do whatever they want with and you wouldn't have control over that. So I think there's a control issue here when we're talking about a lump sum of money and an 18 or a 21 year old that might not be making good decisions.

Number two is the financial aid implication. So if they have the potential to qualify for financial aid, you could actually hurt their financial aid eligibility because if you put it in their name, it's going to be counted as their asset versus it being counted as your asset, which is factored in at a much lower percentage in terms of the expected family contribution. So I think keeping this money in your name, earmarking it for them, perhaps in a separate account and putting it to work is probably the best way to go. You are going to have some taxes on it. You'll have some capital gains because it's in a taxable account.

So each time you sell, you would generate either a capital gain or a capital loss and that money will be taxed accordingly. But the bottom line is it gives you the ability to see this money grow over time. And then when you're ready to give it to them, for whatever reason, you would have the ability to make that decision at that time. Does that make sense? Yeah, that makes a lot of sense.

I was thinking about making sure that I had control or at least their parents had control until they were old enough to make the right decisions. And if they're, like I say, if they're pulling their life where they're not going to, then obviously they're not going to see the money. So yeah, I don't want it to be a burden more than a blessing. Well that's exactly right.

And it could be. Money has a way of doing that depending on what's going on in their lives at the time that they would be receiving it. I think the other issue is, just keep in mind, you have the ability on the account to make each of these granddaughters the beneficiary of the account.

So if something were to happen to you, it automatically passes to them and so you can set that up in advance. Keith, you sound like a generous guy and we'll pray that God gives you the right direction there. But I think Rob's suggestions today were really good ones. God bless you. Thanks. Thank you, Illinois Rose. You are our final caller today.

Let's squeeze it in. What's on your mind? Thank you for taking my call.

Happy to. I just found out a few weeks ago that I will be out of a job December 31st. I've been working for a major medical center for 32 years and with that said, I'm going to have my pension and my retirement from the 403k. And I want to know, what should I do with the pension money because I could take one lump sum, I could take some whenever I want.

I was thinking about property for investment to generate income, but what should I do? I have no idea. All right.

What do you have? Do you know what the lump sum would be for the pension if you were to elect that option? It's $132,000. Okay. And what would you receive monthly if you were to just take the monthly pension payout? Off the top of my head, I don't know because I just don't know, but I'm not old enough to retire.

I'm 60 and I was hoping to retire at 67, so I don't know. I see. Okay. And what do you have in the 403b, do you know? No I don't.

Okay. I think what would be best here, Rose, is for you to do some planning because obviously these are major decisions and I want you to really think through these carefully with some wise counsel and obviously pray through this because this really has implications for your future as you move beyond your working life into this next season, asking God what he has for you as you redirect your time and energy. I want you to be able to factor in this pension, recognize the implications of taking the lump sum versus the monthly payout, you're assuming the risk associated with that versus just the guaranteed payout monthly. You'd also need to have a plan for how it's going to be invested and can you generate that money.

You mentioned real estate, so you'd want to go with your eyes wide open on what are the implications of that, how much work is involved in that, are you willing to commit the time to make sure that that is handled properly and then you have the 403b, where is that going to be managed? You also need to figure out what is your budget going to look like during this season so you can compare your social security plus the pension plus the 403b to make sure that you've got the income stream that you can count on as you move forward. All of that could really be great in a discussion with a financial advisor who could really give you a plan around that.

So I'd head to MoneyWiseLive.org, click on find a CKA, I'd interview a couple of them and find a financial planner who can really help you do a retirement plan to make these decisions and perhaps advise you on the management of these funds moving forward. Rose, thank you very much for your call. Sorry to hear about your job, but God has a plan for the rest of your life as well. Thanks so much for calling in today and thank all of you for listening, for joining in today. If you enjoy the program, please tell a friend and remember that MoneyWise Live is a partnership between Moody Radio and MoneyWise Media. Thanks to our technical crew today, Amy, Deb, Gabby T., Maria hanging out too along with Rich Rossel. Join us again tomorrow.