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September 7, 2020 8:03 am
The stock market. The stock markets down the economies up that it's down, jobs are created and jobs are lost. Can you imagine having to go through troubled times without God's word. Jesus never promised us a rose garden in this life. So what comfort does God's word offer for difficult times that we might apply to our finances. Most Rob West explores that first today.
Now we are accorded to please hold your calls until next time we have some questions already lined up on Steve Moore. The Bible on troubled times.
Next, moneywise line chart listeners a happy Labor Day we started hasn't been a happy year as far as jobs are concerned with the coronavirus pandemic but at least we can do that and I think very few people go through life without experiencing some sort of financial difficulty from time to time will we might even say that the more money you have, the more trouble you can get him to when you agree, I certainly would Steve I just look at the Hollywood celebrities, professional athletes and even lottery winners who end up in bankruptcy court. You know there's an old joke about a guy who knew that money can't buy happiness, but he'd still like to give it a try. So the amount of money we have really doesn't matter, we still have to be prepared for financial troubles now and then will versus can help us prepare spiritually. Well Steve, let's start in the Old Testament, we certainly know that the Israelites were no strangers to trouble was God led them out of Egypt and into Canaan which they were to conquer. We can take comfort in many Old Testament verses that reveal God's faithfulness to do exactly what he says I'll take us to Deuteronomy 31 verse eight. It is the Lord who goes before you.
He will be with you.
He will not leave you or forsake you. Do not fear or be dismayed when we pray and ask God to be a part of our finances, asking for his guidance as we weather our financial storms we can find peace and contentment. When we commit to following his financial principles. I believe will lead us out of the wilderness.
Remember, it's his money in the first place, not ours were simply managers stewards called to manage his resources. According to his will, and God has promised to provide for all of our needs and he is always faithful. Amen to that. But of course the key there is understanding about the difference between a need and a want and that certainly another reason to pray for God's guidance. Where else can we find comfort in troubled times while staying in the Old Testament, let's go to Psalm 9419 which reads when my anxious thoughts multiply within me, your consolations delight my soul. You see, the psalmist lived in a time when the righteous were persecuted in Israel but God provided comfort and consolation to the faithful.
So how does one living in troubled times.
Obtain those things. Well, I would just say through prayer and the study of God's word instead of worrying about things you can't control the spend time on your knees and in God's word to find comfort. You see, he knows what you're going through and is absolutely in control of all things and that alone is a comforting thought, okay, I can we move to the New Testament.
Sure, let's look at the Beatitudes in Matthew 54 Jesus says, of course, blessed are those who mourn for they shall be comforted.
This verse isn't simply about grieving the loss of a loved one. It applies to all who are broken in spirit and cry out to God, it's about humbling ourselves before God admitting our wrongs and committing to do things his way in our finances, and in all areas of life. And when we do that, God says we will find comfort and contentment and how much better would it be if we reached out to God in prayer first and not to let anxiety overwhelm us.
When the event happens a lot better as the apostle Paul writes in Philippians 46 be anxious for nothing, but in everything by prayer and supplication with thanksgiving let your requests be made known be made known to God and just a few verses later, my God will supply all your needs according to his riches in glory in Christ Jesus, and we tend to think that our problems are our problems unique to us, but it's amazing how many verses in the Bible talk about trusting God to care for his people in troubled times. Well really is. You know, many times we tend to worry about things that haven't happened yet and often even won't happen. Jesus addresses that to in Matthew 634. He says don't worry about tomorrow, for tomorrow will care for itself. Each day is enough trouble of its own.
The message there is.
Do what you can today and don't worry about the things you can't control that might not even happen tomorrow. Great news from the Bible itself today.
On Labor Day he's Rob West reported call-in stick around much information. This is money and life run on the same track. Unfortunately, sometimes it seems like your money is heading in a different direction from your goal, and never enough three keys to financial contentment. Author Ron blue helps you to break down all your financial options to a basic floor 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 moneywise live out of work if you're investing for retirement or any other goal you may be wondering if it's possible to enjoy both profit and peace of mind, no matter what's happening in the market. Sound mind investing is a short video webinar on that topic. Sound mind investing.org SMI has helped tens of thousands of Christians learn to be wise and faithful stewards in the area of investing profit and peace of mind matter what's happening in the market. Sound mind investing.org do you remember that old and from the 1970s, the chitinous, it's the drink you have when you're not having a drink on Benny Donna Crites is become part of the language chitinous drink looks as I was alcoholic but really it isn't a chitinous anything is something that looks real seasoned question. Is it possible to have a Clayton's person person is not really a person biting his mother's womb is that a chitinous person. Or maybe the street people. We walk around on the footpath almost always smelly. I chitinous people as workers in the factories across Asia who make the toys and kids play with the clients we we offer a few cents now I chitinous people.
Jesus said I've come to bring good news to the poor and to set the captives free.
I wonder when he looks around with. He sees any chitinous people on this earth. I wonder if that is robbing you of freedom and peace of mind. Christian credit counselors can help where nationwide nonprofit counseling organization has helped over 3000 individuals in the last 27 years get out of credit card debt 80% faster while honoring that data and phone to learn how Christian credit counselors can help you visit Christian credit counselors.org Christian credit counselors.org or call 800-557-1985 two moneywise your hostess was more today's program is recorded taking any of your life calls. Don't push that button.
We have lots of great information coming up biblical practice and I think you will find it helpful.
Thanks so much for hanging out with us today. Let's go right back to our phones, Hudson, Ohio hello Ellie, what's on your mind today. How can we help you make sure mine which was a good time to convert a regular IRA to a Roth IRA and pay less taxes on it.
Technically I married, I do not work. My husband died and he that with me at the idea that we would filing taxes separately thinking that if we did that and if I kept my conversion income and rolled over from my regular to a rock and pay the taxes on that I would be in a lower tax bracket. I've been here on and we would each take our our deduction separately. Does that sound like that would be a better idea than just filing jointly. You know Ellie you have to run the numbers on that and that would be more complex than we be able to do quickly here on the back of the envelope but do you have a tax preparer that you will work with no TurboTax okay separately way. So far, coming out, you know what this doing it jointly. Yeah, yeah, I suspect you may find that that's better.
In this case now. The benefit to moving to a Roth in terms of conversion would be that you would no longer have the required minimum distribution which is been pushed out to age 72. If you're if you were age 70 1/2 by the start of this year and also the money would grow tax-free. And so if you're not planning to use this money to be able to take it out in retirement. Down the road and not pay tax on that time.
The challenge is that arguably your in a higher tax bracket. Now I realize this is assuming you file jointly your higher tax bracket now because he's working whereas you know if you were to keep this in the traditional IRA and pull it out in retirement when neither of you are working as long as we don't have considerably higher tax rates at that time, you would be paying less in the way of taxes because you don't have any more earned income, or if you do it's much lower than it is now what your husband's at the peak of his working life. So it really just comes down to.
Does this idea that you have a filing separately allow you to make the conversion and not pay as much more tax or perhaps not anymore tax. I'm not sure that would be the case.
I'm just speculating you have to run the numbers to see.
But given that you're in retirement. You don't have like Francis, if this was 20 years ago when you're trying to put decide whether put money in a Roth to have tax-free growth. Now that's where the Roth can really shine. But what were doing it later in life, especially when were nearing retirement and I were at the peak of her earning years and considering the fact that work required minimum distributions have now been pushed out a couple years later. I just don't see the benefit for somebody in your position to do that I'd probably and this is probably what you find when you do the method probably just stay the course on the traditional IRA run the numbers and see but I think that's where you're going to end up coming out that makes sense to you, Ellie market value of my counseling would be happy paying a lot less tax than I might be you now hopefully been 10 years from now when I yeah I I see what you're saying, sure, and so you'd hold on to the same investments pay less tax and then let the account appreciates you can run the numbers on that as well just to say where we today what level where do we expect to be, once this recovers five years down the road and then you could factor in the tax savings on that as well because essentially you be realizing the value of this at a discount so to speak, because the market sold off versus paying the tax on it at full value later assuming and historically speaking, it will assuming the market comes back. So I like the way you're thinking that is an added consideration here.
So you'd run the numbers both on you all filing separately but then also factor in the savings so to speak that you would have on paying the tax. Now, on stocks that are quote unquote on sale and I think you could look at the numbers you and your husband think and pray about it and make a decision. Ellie, thank you very much God bless another call Millersburg Ohio Kevin.
We appreciate your patience, my friend and what's your question today for Rob. My question is a teacher in a public school system and you know that we have the option of purchasing a 403B or Roth IRA house wondering if vendors are dispatched either of those investing in one of the yeah that's a great question, Kevin D. Roth IRA wouldn't have any matching does the 43B, have some matching associated with. I don't think I did read to end up ended email that that okay very good I guess.
Well I'm really really basic at this sure yeah no problem did what we would generally say in terms of retirement contributions. This first make sure you don't have a credit card debt. Make sure you have 3 to 6 months expenses saved up in an emergency fund, but then be great to less you have any other pressing priorities. It be great to start saving on a systematic basis for retirement. The earlier the better.
That's where compounding is most effective in terms of the account to choose.
I like the idea, especially when you're young of. If you have matching available start there. A lot of times they'll match up to three or five or 6% of your pay on a pretax basis going into a 43B, your 401(k) will that's free money you put in 3% and they match it with another 3%. That's 100% immediate return on your money and I can get that anywhere else.
If that's the case, by all means, start there, and fully max out the matching portion of your contributions then as a young person. I like the idea of you pivoting over to the Roth or if there is no matching to start with because that's can allow you to put in more money toward retirement in the sense that the Roth is already taxed so you will of already paid the tax on the Roth and that money will go in and then grow tax-free between between now and retirement and ill for this year. You can put in $6000 if you're under the age of 50 and you and your wife could each have a Roth IRA. Now if you fully fund that between the two of you $12,000 for the year and you want to be able to do more then you'd you go back over to the 43B because that's can have a much higher contribution limit on an annual basis, but I really do like that Roth assuming there's no matching because the tax-free growth is really going to benefit you over time is when you get ready to take all those gains out in retirement. You pay zero tax on any of that which is what makes the Roth so powerful okay okay thank you for calling having a bless you.
Thanks, Kevin. Thank you God bless Aarti quickly to Miami. John, we have just a couple minutes let's see if we can squeeze it in right. Thanks, Rob very well. John, thanks for calling. Good and wonderful man. The last order in which we do it all out yet.
Back in January, February, about old and all closing old really crazy for me and I found out that my credit school work was not wanted, increase my mortgage payment now, but the that's going on with the market. How would that help me anything or meet in the cold atmosphere you got documents to well John see you if I understand correctly, you have not closed on this home yet know right in the middle got my loan papers from the bank. I see okay yes what you want to look at is whether or not you have a float down option in the paperwork.
Often times there will give you a one time what's called float down option which is basically within a period before the mortgage you can take advantage of a lower mortgage interest rate in the. Like were in right now where rates are moving down and keep in mind they don't run exactly parallel with the Fed funds rates of just because the interest rates were lowered to half a point or a point like they were over the weekend doesn't mean mortgage rates are automatically going to drop by that same amount. In fact, they won't.
Now the general trend on mortgage rates is down with the Fed funds rate, just not as much but nope, no doubt, they are lower. So the question you would want to call and ask the mortgage company is do I have a float down option within this mortgage. If you do, you should be able to take advantage of that lower interest rate. They may make you pay a fee for it.
Hopefully not for the other option which is a bit more drastic is you cancel it and you switch lenders but you got a factor in that.
That's another hard inquiry on your credit report.
That's probably gonna pull your credit score down even a bit more and that may work against you because now you're actually proud.
Perhaps in the lower range of scores.
This can result in a higher rate so you may not have that option.
So my first call with your current mortgage company. Just ask if they can float that rate down the market in general, you have to run here.
We are pretty much at a time for this segment that you got through glad to hear that things are moving in the right direction for you. Thanks very very much. You're listening to moneywise live your hostess, Rob West, I'm Steve Moore' brief break and then will come back to stick around. Do you know if you have enough 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.
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Click the start button moneywise live.org money talking finances is talking the Bible today and moneywise live with Rob West, I'm Steve Moore. Let's go back to our lines were in Ohio hello Adam, thanks for holding my friend how can we help you secular a lot talk about between whole life and term life I was wondering is why cancer our whole life with the pending surrender and create term life instead. We just well and you generally speaking, I do like her better.
I'd rather you have pure insurance. It's less expensive and you can get the amount of coverage that you need, which that's the whole point behind the life insurance is to make sure you have the death benefits are your families provided for in the event an income earner is goes home to be with the Lord and that money is not available for a spouse that's depending upon it, or a dependent child. It's also to cover any added expenses take care of debt. Perhaps a college education that might be just a few years away. Things like that and I want to make sure you have enough coverage to buying the pure insurance or the term insurance is the most cost-effective way to do that now whole life takes that in bundles whether the savings vehicle but with that becomes income some illiquidity because you have the surrender charges and see you don't have access to your capital.
Number two, there's often note to some pretty steep commissions and expenses that are going to put a drag on all of this and so that's why I grab you by the pure insurance and then save outside of it, but you've Artie got it.
So the question is, does it make sense for you to collapse this policy pull the cash value out while first is you never want to cancel the death benefit before you have something else in place to replace it. And so you would go and put the term policy in place and then cancel the whole life, take the cash value out. I guess that it is a consideration.
But given that you mentioned the surrender penalty. I guess my first question be have you evaluated how quickly that might go away and if you were to wait just a little bit longer you does that make some sense of the that surrender value is at least less than it is today. Or perhaps nonexistent not know right now my wife Lisa lately could still take out three or $4000 out of like cumulative values like maybe 12.how remind my friend invited like 5900 seems like you given up a lot, which is again one of the reasons why don't love insurance do you have enough death benefit.
What is this payout as a death benefit 390,000 440,000 okay and does she have most of the income coming into the household little more on teachers retirement STRS and she is associated also retirement.
One way to think about. This is typically just as a starting point, you would want to think about having 10 to 12 times your income annually in the form of a death benefit and then you might add to that any debt you want to build a payoff and if you have kids going to college with a major expense. You can add that to it. That would give you kind of a ballpark without some additional planning on how much death benefit you mean need so you may find Adam that you're a bit underinsured, perhaps both of you were at least you are, but given the surrender charges you're talking about in terms of the accumulated value versus the cash value that's a pretty significant amount. So I think what I would want you to do. Number one is get a bit more information as to how quickly that death benefit steps. Excuse me the surrender charge steps down so that that hopefully the next couple years will go away and I think it would be helpful for you guys to visit with a certified kingdom advisor there in Akron just to look at your whole financial situation. Evaluate these policies help you figure out how much life insurance you really need look at any other planning considerations including your investments and even do a retirement calculation to determine. Are you on track ahead or behind Jesse you have that information.
It will cost you a little something, but I think it'll be well worth it so short answer to the whole life is I wouldn't do anything until you get a bit more information and you'd always want to make sure you put the new term policy in place first before you cancel it you would want to be in a situation we have no insurance and then you find out you have a pre-existing condition and then secondly I recommend you get some financial advice in the form of a financial plan and to find a certified kingdom advisor there in Akron just got moneywise live.org. Click on find a CK God bless you and your wife. Thanks for your call today will be back with more right 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 at eventide. We 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. Best eventide.com invest eventide.com Christian healthcare ministries enables believers to meet their healthcare costs affordably, biblically and compassionately. It's 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 hi my name is Ryan, a communications major at the Moody Bible Institute Moody radio verse of the week is found in second Chronicles 714 if my people who are called by my name will humble themselves and pray and seek my face and turn from their wicked ways, then I will hear from heaven and I will forgive their sin and heal them that a second Chronicles 714, the Moody radio verse of the morning ritual world changing morning morning buying a home is the largest most nerve-racking perches.
Most of us ever make.
It doesn't help that you're entering a maze of unfamiliar words and confusing options that can leave you intimidated frustrated and afraid.
You can take advantage of navigating the mortgage mates by Dale Vermillion help you clear up the confusion on rack your nerves and make the best mortgage decisions possible with confidence navigating the mortgage maze available when you click the start button moneywise live.org son John Scott, Pres. Ron says he's expecting a strong rebound in the third quarter of 2020 with a good economic report coming out just in time for the November election is spoke at a Labor Day news conference to talk up the economy's recovery. The president claims Democrat Joe Biden's policies would destroy the economy while bars are burn more than 2 million acres in California this year, setting a new state record temperatures of also been soaring in the state Los Angeles recording 111° on Sunday. British judge has rejected a request by lawyers for Wikileaks founder Julian massaged her delay his extradition hearing until next year to give his lawyers more time to respond to US allegations that he conspired with hackers to obtain classified information the US is indebtedness on John 18 espionage and computer misuse charges.
This is SR it with us today. I moneywise live Psalm 3721 reminds us, the wicked borrow and do not pay, but the righteous give generously and if we can help you today to be righteous and to be forthright and to be wise with your money and your possessions.
That's why were here.
Let's go right back where phones Nashville, Tennessee hi Gary, how can we help you sir, you you for direction. I have a dear sweet mama cancer is right now and her home has a balance on the mortgage of about I think 58, $59,000 and I'm curious.
Can I do purchase of her home to relieve that from her and not have to worry about gift tax think that sort of stuff yeah are you planning the by home at fair market value or just to the basically the value of the outstanding mortgage you know I was thinking the outstanding mortgage and that's why I called you because someone said you have to pay whatever that value market value.
Essentially you do if you if you were to sell it to nonfamily member at below for market value. The IRS considers that an arms length transaction usually would let it slide. When a family member does it to another family member. It's a non-arms length transaction. It does can't write because red flags to pop up with the IRS with the gift tax not far behind doesn't mean you can't give a family member, a good deal but if your mom or to sell that home to you by you know I knew it would be by let's say less than 25% or more than 25% of foot below fair market value and that would be allocated to or considered a gift that make sense and I would get it done well then what I've been be obligated to attacks for the difference know well you need to work with your tax preparer just to see what the implications are that I suspect that would go against your lifetime exemption or hers because it's her property and she's the one making the gift to you in a sense because she's selling it to you well below fair market and, based at the current levels that wouldn't be an issue. The question is just as that at some point you changed in the future. Would that create a gift tax situation down the road that's entirely possible so I think you just need to visit with a tax professional really understand the implications this from a tax standpoint and then if you're comfortable with that and decide to go ahead with it that I would have a real estate attorney draw up the docs for you to make sure that it's done properly and it's recorded in all those types of things but make sure you look into both of those before you make a decision to proceed. Thank you so much Christian. Thank you Gary thanks Gary S, but let's see, Chicago, Illinois hello Frank what your question for Rob West today. I am 55 years old and I am a caregiver and I don't work full-time I work for client and all the cats when I'm out of work for year straight time six months straight right now I'm actually working before I started caregiving job. I lost my job in retail. I was selling jewelry for many many years but I don't have a 401(k) never did never thought about all you know the future saving money and all that stuff doing it on my own and I little by little. Try to put some money aside every time I could like skip and save every penny I can. And I never go out to eat. I never do anything that I even spend hardly any money on him about 50 maybe $55,000 of cash that I don't even have in the bank, which is not a good idea, but I don't know what to do it at my age. Like what what would huddle even do anything with stock like what what I invest in America. I don't know what to do. Sure since Frank, I think the key is we want to try to normalize as much as you can on a variable income, cash flow that you have coming in and during those seasons where you are working and you have some steady paychecks coming that you're putting some surplus aside in savings such that when you are not providing you know those services you don't have any income then you we got money available and you'd want to have more reserves than someone who's on a paycheck or salary where they can count on that.
Every month, so I think that's the first step for you is to determine what is it take to fund your lifestyle. All of your expenses and even the nonrecurring expenses and the things you need to be your saving for because they come once a year in a P&L to take a vacation every now and then what you need to put away to maintain the car. All of those things.
What is that mean what you need for 12 months and then look at, you know, based on historical trends and how many months a year. You will find yourself typically working yelp being able to set aside that amount and and set a goal for that so that you can pay yourself a consistent income so you're not seeing these wild fluctuations.
Then once you determine okay yeah I know what I need for the year and I've got a plan that helps me get there and, for instance, you know, I've already been able to put away a few extra months this year and so I'm on track with what I know today and you can adjust it if you have to then decide. Okay what's actually available to invest for the longer-term, but that would be beyond Canada's cash flow reserve that you have and the emergency savings of probably 3 to 6 months expenses that you need as well until you have those in place know I wouldn't be putting money away for the 10 year time horizon because you may find that right at the time you're starting your two investor year two in Nellis on your having to sell your investments to pull the cash back out because you needing to fund your lifestyle. That's what I want to avoid with that portion. The truly though can be earmarked Frank for the long term. If you're you being paid as an independent contractor you considered self-employed, you probably can want to look first to the Roth IRA and then beyond that I would look to the set up SEP IRA the raw fit 55 is good ally to put in 7000 this year and then the set up you'll be able to put in a lot more than that, I would look at opening those it either a Schwab or a fidelity where you can have very low expenses they can get you set up with an ETF portfolio that matches your risk tolerance investment time horizon goals and objectives and will use very low cost, but very broad-based indexed investment options that will just capture the performance of the market over the long haul and this is a great time to become a systematic investor because were a. Where the market is down, but again I wouldn't go into that until you do a bit more work to figure out what I need in terms of the annual amount to put aside to normalize some of my monthly cash flow and I need to build up that emergency fund in the liquid savings does it all make sense to you. I all right again for the those were the raw for the SEP. The setup IRA and private look at the Schwab intelligent portfolios or you can look at Fidelity or Vanguard Frank were glad that you called today and we trust that will work for you going forward. Thanks so much and I've had people tell me before I just want to know what to do with my investment money. I don't really want to get onto a budget which I know you guys recommend it is not a prerequisite. Do I have to be in a budget in order to begin investing.
Well, you really do because you know if that point if you're not, how do we control the flow of money in and out, and we don't know how much we need have available to be putting toward investments until we really quantify what we need to fund her lifestyle. Okay, you're listening to moneywise live except were not here prerecorded today so don't try to call in. Don't go away. We have some interesting calls coming up right after this moneywise live what you like your life to be infused with joy. Would you like to interject an internal dimension into even the most ordinary day. Mother, Randy Alcorn says you can when you discover the treasure principle and a concise powerpack style is newly revised and updated book offers a six step plan to finding the pleasure and eternal reports of the treasure principle what you discover. Life will never look the same treasure principle is available when you click the store, but moneywise live.org hi I'm here 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.
The great commission is our responsibility, not her.
Pastors were the ones to go to the world, not our pastors.
Their jobs equip us for ministry house were going to Nola. Someone tells him, but who's going to tell the listener sent. Problem is no one said when's the last time you heard a pass to give you a great commission message encouraging you to love people into heaven with 80% of our population living outside the influence of the church. The only hope for America's Christians igniting American survival, one person at a time is through your one like can't like the world, but it can light your world with over 80% of the insured already having at least one Christian friend of their life.
We can evangelize American 30 days. We want to. The question is you want to. There's nothing more exciting than knowing God is using you to move people closer to join firstname.lastname@example.org, the notion of right and wrong. Well it's not too popular these days.
I saw a bumper sticker recently that said, there are no rules on Benny Donovan. But imagine a society without rules, without consequences. We have to look very far in this world to see what we can be when we think there are no consequences.
People sometimes look at God and think old man stick a bunch of rules that none of us can live up to the concrete testing will he breathe life into us. He kind us a free will choice to choosing, rejecting, but at the end of the day. The consequences justice goes hand-in-hand with left side is forgiveness. That's why he sent his son Jesus to pay the price and find it, and whoever believes in him will receive eternal life.
One day we will stand before him, and will not die. The choice we make today will have consequences, and here's a great deal more about our money than most of us imagine Jesus says more about our use of money and possessions and about anything else, including both heaven and hell in managing God's money on the Randy Alcorn breaks it all down in a simple, easy to follow format that makes it the perfect reference tool if you're interested in gaining a solid biblical understanding of money, possessions and eternity managing God's money is available in the store but moneywise live.org moneywise and were certainly glad that you are this is a calling program wouldn't be much of a call-in program there now.
Today's broadcast is prerecorded, so please don't try to call right now, but earlier we set up some calls in advance of let's continue. I let's go back to our phones Irma and Laura, we are coming in your direction, so don't go anywhere. But first, Lawrence, Indiana and Paula.
What's on your mind and I are nearing retirement now and I work with FHA care. They offer 35 years. I know engine letter will not want to take my life or you.
I want to take out about a month for the rest of my life or to invest in my out and leaning toward my lifestyle and other factors account way now at your back. Okay you broke up there right at the end and see said give me the six month provision you're talking about going that went down next month waiting monthly 30 day that you're eligible to restart yes yes very good okay well you know this is obviously a choice that you need to give a lot of careful consideration and prayer to and it really comes down to your life expectancy which you the real question we can ask. There is just based on her health and longevity in the family things like that that would be one consideration and then your retirement income does this monthly check. In fact, cover what you would need to cover your lifestyle moving forward in essential expenses, and if so having that piece of mind moving forward would be something that a lot of people like to have access to. So you're not ultimately responsible for making sure that this last throughout the rest of your life you would know that at least that portion is covered now. The lump sum the benefit there is gives you more control over your money obviously allowing you the flexibility of spending in her investing and how you see fit as long as you can in fact make it last the rest of your life. You have access to the principal. In the event that you needed access to a larger sum of money may be a major medical event you needed some long-term care for a period of time something like that. So I think those are really the considerations you need to look at, but assuming you have.
You expect longevity and information health standpoint and Paula you really see this is something that would really help. You have some confidence that you would be able to fund your lifestyle for throughout the rest of your life and whatever the Lord has for you moving forward then you know that can be quite attractive. The only other consideration. There is no if a pension administrator were to go bankrupt, which is obviously for most companies, very low risk that something you often would think about, but it's a possibility of the pension payments could stop although there is pension benefit guarantee company insurance that would cover most situation so that would be the only other consideration. But given that give me your thoughts on which way you're leaning in and whether you have any questions on what I shared. Well I'm glad you find out about the long-term care and income situation. It would cover about five. I know when you're carrying and then I have ever not quite hundred thousand dollars. Sure, no, all along that me in planning, sound financial help that you say you're leaning toward taking the monthly payout of the pension yeah yeah you know that's again comes down to those considerations and sounds like you have thought through this one thing that might be helpful because this is a pretty significant decision is for you to take care some time and visit with the financial planning professional who could really take a look at both of these options take a look at what the. The lump sum payout would be. And what a reasonable expectation would be in terms of the income that you could generate from that without touching the principal which from a wealth transfer standpoint would give you something to pass on to your heirs. If that's appropriate versus taking this monthly pension that obviously would not pass on beyond your life and just consider really the imputed kind of the interest rate there that you would have to achieve to accomplish the same thing although you have to consider the fact that you are assuming that risk and if you're investing in the market to do that, then you have to be comfortable with assuming the risk that comes with that. So I think at the end of the day. It sounds like you're leaning toward the monthly payout if it does, the things you're looking for and gives you that added peace of mind.
That's real and that's something that needs to be factored in here beyond just the numbers of it but I'd probably take some time to visit with somebody who can really help you run these calculations and look at both of these decisions in light of your overall financial plan more than we would be able to do just here quickly on the radio today so if you want to move in that direction. I recommend you go to our website moneywise live.org. Click on find a CK a certified kingdom advisor there in Indiana and just spend a couple of hours with somebody who can really help you look at this from both perspectives. This will also be an advisor who shares your values so they can factor in that as well. Paula, I pray God will give you wisdom and direction as you seek him in this regard. Thank you very much for calling in today. I let's quickly moved to Grand Rapids and Irma know you been holding. I understand you want to get rid of some credit cards, or maybe I will write going to hire 74 years ago I worked on the title V program and I have my credit card that I would keep one and you made it to, but I don't want it. My credit who are here about you a lot like that. I do have a heart that I can pay off probably not. I don't know what I should do, how I should go about sure Irma, are you carrying a beyond this one that you pay off next month. Do you carrying the other balances you pay them off in full. One credit card balance under $20 okay very good so the biggest issue that happens when you close a card that will affect you negatively is something called credit utilization which is basically means when you reduce the available credit, which is what can happen when you close the accounts because that money is no longer available to you that if you're carrying a balance. The balance you're carrying is a higher percentage of the total credit you have access to, and if he gets above 30% that really can impact you negatively.
That's not going to be a factor here because you're not caring about, so if you take three of them off the table. You're not any higher percentage because you have no balances of the other issue is just the longevity of the accounts that you have. The average length of the accounts, but most of the credit scoring models now still factor in the age of the history of the account even though the account is closed.
So what I would do is just close to every six months so I'd probably close to now and then wait six months and do the third one. Other than that I wouldn't have any concern over your credit if you saw a minor drop in your credit score. It would bounce back within a couple of months.
Irma we wish you the best. Thanks very much Laura, we know you been holding were almost out of time given to us quickly. If you can, well working on paying off your mortgage and would like to do that with the next 10 years before we retire. We have enough surplus that we could make considerable monthly payment and I don't know whether it's to our advantage to keep putting that money back and then pay it in a couple times a year, likely have been or better for us to set an extra amount each month and just make that payment intelligent part of the mortgage and yeah Laura love this idea as long as you have your emergency fund in place you're on track with your other savings goals.
I think starting to really focus on reducing that mortgage is a great idea. If you have the money to do it you build it in your plan. There's no reason to wait, you have no benefit of sending a larger amount twice a year versus sending as much as you can with your regularly scheduled payment because as soon as you pay toward principal as long as they're applying it that way and you want to check with your mortgage servicer to make sure you send it in such a way that they're applying it immediately. But as long as they are. That's money that you're not paying interest on for the life of the loan and the quicker you reduce that principle, the quicker you reducing the overall amount of interest that you're paying.
So I would go ahead and send it monthly and I would just make sure you contact your servicer to find out how they want you to do it so it can be applied to the principal of the mark. Yes Rob but over the years.
How many people have we spoken to who regretted paying off the mortgage early on account of 00 and that's the correct answer. And with that, we're pretty much at a time. Thanks Rob, thanks much again for being with us today.
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