A COVID Economic Update

There's an old joke that if you lined up all the economists in a single file, they'd still point in different directions.

But they're all in agreement on one thing today. The U.S. economy has taken a very big hit. But how big and where and what are the prospects for recovery as the coronavirus pandemic plays out? Today host Rob West chats with economist Jerry Boyer to find out and how the big picture may affect you. And we'll take your calls at 800-525-7000.

800-525-7000. I'm Steve Moore, a COVID Economic Update. That's next right here on MoneyWise Live. Rob, Jerry Boyer is chief economist at Vidant Financial, but we like to call him our favorite economist because he always breaks down the complicated into things we can all understand and because we don't know any other economists.

You had to add that in there, huh? We always learn a lot and I always appreciate how Jerry gives us everything through a biblical lens. Jerry, great to have you back.

Great to be with you. Harry Truman's version of that joke, by the way, was he wanted to find a one handed economist and someone said, why? He said, because economists are always saying to me on the one hand, but on the other hand, you get a straight answer if you find one with only one hand.

One handed. I got it. That's great.

All right. Well, let's actually get into the economics and the data, Jerry. Obviously, with the resurgence of coronavirus cases, many businesses went into a second phase of shutdown. So I'd like for you to take a step back as you do so well and just describe the state of the overall economy as it stands right now. The state of the overall economy is that it's recovering quickly.

And this is not on the one hand. On the other hand, or, you know, lining up economists about conclusions, about predictions, about the future. I'm just talking about what we're observing, what's actually happening, looking at the data. Remember, data is Latin or Greek for givens or gifts.

It's a gift. It gives us knowledge. Headlines generally don't.

Conversation and punditry generally is spun. But data is a different situation. So if you look at broad based data, like the coincident indicators, which look looks at a wide range. I know that's economic ease, but it looks at a wide range of metrics, a wide range of measurements of how the economy is doing. Over the past three months, 45 out of 50 states are growing.

Some of them are growing quite quickly. So we're definitely in a kind of a recovery mode here with the economy. Now, that's that's over the last three months.

That's after the worst of it. I mean, what we really had here was a very, very terrible contraction. But that contraction was a March and early April contraction. Since then, almost everything has been pointing upwards rather quickly.

So, you know, now sometimes there's a little bit of stuttering. Sometimes something goes up and then maybe slows down a little bit as states kind of experiment with opening and then pulling back a little bit. But nobody's pulled back all the way.

I am doing a little bit of predicting here. I don't think it's likely that the citizens of the United States would stand for any kind of broad based lockdown again. So I think there's a lot of political resistance and people ignoring, in some cases, these some of these lockdown procedures. Scott Gottlieb, who's the former head of the FDA, was on TV recently, and he said he doesn't think that there's any there's political will for any kind of broad lockdown.

So you'll have certain governors who will lock down certain parts of the economy. But there doesn't seem to be anything wide, you know, and large scale in terms of lockdown unless we have a really very serious, you know, resurgence of the disease. But we we haven't had anything like that. And that's not the normal course with these diseases. There's a peak and then it kind of hangs on for a while. And you with the peaks after the big peak are little peaks. So I really don't think we're going to anything like what we saw with the with the with the worst of this.

So so far, the data is showing us the economy is improving rapidly. Now, we went into a very deep hole. So imagine like you're like a meteor goes into a crater. Right. And then you come up out of that crater.

You can come up pretty fast and still not clear the lip of that crater. And in many ways, we haven't. And I don't think we will this year. I don't think we'll be back to our normal output this year.

But we are very much improving, like coming up out of the crater quickly. If you'd like to speak with Rob West today about this topic or any financial topic, give us a call. Eight hundred five two five seven thousand. Also, remember that our question line is open 24 seven. Even when we're not on the air, leave your question and we'll see if we can line you up for a future program.

Eight hundred five two five seven thousand. This is Money Wise Live. Your host is Rob West.

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That's Christian credit counselors dot org or call 800-557-1985. Good to have you with us today on MoneyWise Live. Our guest is economist Jerry Boyer, and he comes today bearing an economic gift, an economic update, if you will, in regard to COVID.

Rob West. Jerry, just before the break, you were talking about the significant recovery we've seen economically. We went into a crater. We're coming up the other side. Perhaps we won't crest the crater this year, but the recovery has been stark.

Would you describe it as a V or a U? Because there was so much talk about what kind of recovery we would see, and I'm just curious, just given the time that's passed, what is it looking like? Certainly significant parts of it are looking like a V. I just did an article about the really strong improvement in durable goods. The title is that today's durable goods report is brought to you by the number 230 billion and by the letter V. And it's because, you know, I actually showed the chart, it looks like a V. So this is something we've been talking about over the past few months, which is that a lot of the economy takes place outside of the places that you're looking at and which are the places where there's a lot of social interaction and the places that get a lot of coverage. So restaurants shutting down or stadiums shutting down or, you know, concert halls shutting down or nightclubs shutting down or whatever, that's visual, that plays on TV, plays on the news, and it looks really important.

But that's like the tip of the iceberg. Most of the economy is under the water. Most of the economy is like manufacturing supply chain production. Most of that didn't shut down. And the parts that did shut down were not shut down for long, so they're coming back. So the invisible part of the economy, the production part of the economy, not the consumption, but the production part of the economy is coming back very, very strongly. It absolutely looks like a V, with the bottom of the V right there in April, March, really, and early April.

Essentially, a three-week bottom and then upwards from there. Now, there are other parts of the economy that might be like an L. Like if you own a nail salon parlor, you know, God have mercy on you, right? I mean, those are places that aren't going to be opened up very easily. They're higher risk, but they're also not big economic input, right? They're very important to the people who operate them. I haven't had a mani-pedi this year.

Now, I haven't had a mani-pedi any year, but this year, I'm not able to. So there's a lot of the highly visible. You know, the Bible talks about the visible and the invisible. The economy is kind of like that, too.

The kingdom metal is largely invisible. Our productivity is largely invisible. And so we can recover even with restaurants and, you know, haircut places operating at like a third of their capacity, and the mani-pedi salons and all the rest of it, and the spas not in operation.

You can have 90 or 95 percent of a recovery with a lot of that high visibility stuff still shut down or in impaired opening mode. Yeah. Jerry, was the consumer just that strong, or do we have the Fed to think for most of this recovery or both? The producer was that strong. And this is where I differ from a lot of the economic commentary. And it's because of being grounded in the Bible that God is a creator, he's a producer, and he produced us to be producers. So that's the difference between demand-side economics and supply-side economics. And I think supply-side economics is closer to the biblical vision. Demand-side economics says what you need to do is to get people to want things. The Christians know that people have infinite wants for material objects.

We have infinite desires. You don't have to get people to want things, to want to buy things. We're consumerist by nature. We have demand built into our fallen nature. There's no shortage of demand. What you always have is a shortage of supply. So the most supply-oriented and productive stuff is actually doing pretty well.

The other stuff isn't doing so well. So what's the Fed doing? Well, the Fed is holding up the stock market. I mean, the Fed is buying bonds, and then people sell the bonds and buy stocks. So the Fed is directly introducing money into our capital markets, into our investment markets. So they're holding the stock market up. I don't think the – and the Fed, when it lowers interest rates, it helps somewhat with home buying.

See, it doesn't build new homes, so it's not really productive, but people will go out and buy sooner. Like, for instance, just so happens our daughters, you know, one of them got married, and she's moving into a new house, and the other bought a new house. So they're selling their old house.

They own together. The market's actually really hot right now, even though people don't want to come visit. The market's hot. Well, why is the market hot?

The market's hot because mortgage rates are low. Well, these people were not – it's not that they were never going to buy a house. Maybe they would have bought a house in January or February, but things shut down. Maybe they would have bought – but now they can, so it was deferred demand. Or maybe they would have bought at the end of the year, but, hey, interest rates are low.

Maybe we should do it now. That interest rate manipulation is all about the timing of the purchase, not the fundamental productivity. What drives our economy isn't buying houses. It's building houses. It's the builder function, the producing function that's the real long-term driver of economic growth. Well, that's really helpful, Jerry, and I know that's something you talk about often and really, as you said, is underscored by God's design for economics. Let's talk about the market just for a moment.

It's a leading indicator. It's obviously been moving upward quickly. Do you think we've gotten ahead of ourselves? What would you expect over the next 12 months? Markets almost always get ahead of themselves, so what I ask of the market and a multitude of counselors, they're a safety. I ask markets as their advisors, and it's like, what direction do you think things are going, and how many of you, my advisors, think that?

So I looked at the stock market, the treasury market, the investment-grade market, the copper market, and the oil market. Those are together the best forecasters of the economy. They are all forecasting growth. They're all forecasting better growth. I'm not saying they're always right. They're made up of people, so they're not omniscient.

Only God knows the future. But the thing about markets is they're made up of all the people, so they incorporate all the knowledge that's out there. As an economist, I can only know one person's worth of knowledge, but if I look at a market, I'm seeing billions of people kind of coming together and reflecting in a market price. They're pulled wisdom, and they're all pointing towards growth and towards accelerating growth.

So there's kind of unanimity among the market indicators about the growth prospects. Very good. We're going to have to leave it there. Jerry, always great to have you. Thanks for stopping by today. God bless you, buddy. Always an honor. God bless you all.

And you can read a lot of Jerry's regular contributions when you visit townhall.com. Your call is next at 800-525-7000. Stay tuned.

This is MoneyWise Live. We'll be right back. No one. She accepts no correction. She does not trust in the Lord. She does not draw near to her God.

Her officials are roaring lions. Her rulers are evening wolves who leave nothing for the morning. Her prophets are arrogant.

They are treacherous men. Her priests profane the sanctuary and do violence to the law. The Lord within her is righteous.

He does no wrong. Morning by morning, he dispenses his justice and every new day he does not fail. I'm reminded of that portion in scripture in Genesis 18 when God shares with Abraham about what he knows and wants to see eye to eye about Sodom. And this friend of God, Abraham, says to him when he begins to say, But but would you destroy the entire city? I mean, if there were 50 righteous. And then he just keeps going down a little bit further. And God said, No, I'll spare it. There's 50. Well, OK, but would you do it with would you do with 40? And it goes on. I mean, it's stunning. It is stunning how God allowed man in that chapter.

To call back to him and continue to say, But if there were 10. You've been listening to a quick word with Beth Moore. There are two ways to experience a study of Galatians. You can join Beth for the online experience releasing September 15th at Beth Moore Dot org. Or you can join us in January 2021 for the release of the printed workbook edition.

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800-525-7000. Rob, I just always love it when Jerry Boyer stops by. He gives us so much great wisdom, don't you think? Oh, he sure does, Steve. He's just one of those unique individuals who just has a wealth of knowledge economically speaking, but just really is a student of the Scriptures as well. And you put those two things together and it's fascinating. It also doesn't hurt that he's brilliant, which always makes you and I feel less intelligent.

That said, he's the kind of guy you want to hang with, have a cup of coffee with, sit back and let him enlighten you on things you didn't even know you needed to be enlightened on. Wait a minute, I don't know. Let's take a call.

Jacksonville, Florida. Hi Elizabeth, how can we help you today? Hi Rob. My name is Elizabeth and I'm trying to get a much needed divorce. I need to remove my husband from my beneficiaries on my trust. But my trust attorney, I can't get a hold of him. He just has his phone message on his phone saying that he will call you back, but I've called him several times.

He does not call me back. And he also has power of attorney over my estate. I'm 72 with many medical concerns from cancer and have to have an attorney who is responsible to handle this trust, but I don't know what to do now.

Yeah. Well, I'm so sorry to hear Elizabeth about the situation you're in and I know this is just adding to the things that are creating some stress and you're trying to work through. And yet, I think this can be solved fairly easily in the sense that if this trust was created the way it should have been and we have no reason to believe it wasn't, it's going to be in line with the laws of your state of Florida and can be easily updated and be updated by any attorney for that matter. And so I think this perhaps time, just given this inability you've had to communicate with your previous attorney as of late for you to perhaps think about making a change and somebody else should be able to pick right up where you left off, take the document and bring it up to date with the changes that are necessary. So what I would recommend you do is if you want to make one more attempt, you could perhaps leave a message either over the phone or by email just saying, listen, I need to get this updated.

I'd like to do it quickly. I've not been able to make contact with you. If I don't hear from you in 48 hours, I'm going to have to move on.

If you feel like you've already kind of been down that road and now is just the time to move on, then I would do that. One way you could go about that if you don't know a godly estate planning attorney is to go to our website, MoneyWiseLive.org and just search for a certified kingdom advisor. If there's not a CKA in the legal space that specializes in estate work, you could connect with any one of the CKAs and ask for a referral to such a person. This is going to be an attorney who specializes in these types of things, wills and trusts and so forth, and who also shares your values and can really help you navigate the decisions that you need to make related to wealth transfer and just all of these decisions that a trust and trustee would bring into the picture.

So I would go ahead and proceed, but I just want to encourage you, it's not going to be a challenge for somebody to pick up and make the changes that you need even though it wasn't the person who drafted the documents initially. Elizabeth, thank you very much for calling and if in 48 hours nothing happens and you're really concerned or confused at that point, feel free to give us a call back. You might also want to include your pastor in on this. That sounds like you've got a number of working parts there that you may need some local help down the road. Thank you very much for your call. 800-525-7000 Oak, Washington. Hello Steve, what's on your mind?

Hey, appreciate you guys taking my call this afternoon. I've got a mom approaching her 80s with some pretty substantial investments. She owns her own house, she's got no debt.

We live right next door to her so we foresee her coming to live with us here sooner than, probably sooner than later. But her will stipulates that she wants me to end up donating all her money to charity and I'm trying to encourage her to do that to her by herself right now while she's still alive. And so I don't want to give her any foolish advice but I need to know what are some things that I need to be thinking about as far as financial reserves, taxes and just all that.

Sure, yeah. Well, Steve, do you or she have a financial professional that you work with, a planner, an investment advisor? Well, you know what she does, it's not one of your kingdom advisors and so the advice is, I think the guy that she's dealing with seems to have a real hard time with storing up treasures in heaven rather than here on earth.

And so he's really kind of trying to put the gabash on her, giving her money away like that. Sure, and I can certainly appreciate that. You know, I think that's one of the benefits of seeking out a certified kingdom advisor and not that you can't get good advice from somebody who's not a CK. I'm not saying that in the least bit but having somebody who shares your values really speaks right to the heart of what you're getting to because really when we look at financial decisions from a biblical perspective and we weigh it against the Council of Scripture, oftentimes there are planning differentiators. And that has to do with both how we approach giving to financial finish lines, to accumulation, to retirement, wealth transfer and the like.

And so perhaps bringing somebody else into the equation who understands what she's trying to accomplish, what you're trying to accomplish on her behalf would go a long way to giving her peace of mind. And to your point, which I like, really beginning to accelerate this because so often the person who is the steward can miss out on the blessing of the giving while they're living. Ron Blue has a famous statement that he wrote in his book Splitting Heirs, do your giving while you're living so you're knowing where it's going. And I love that.

But there's also the joy side of it. You know, I have a good friend who before he went through, he's an advisor, before he went through the CK training, he said that his mom really had this passion for giving, but she never activated it. And it was all going to happen at death. And he was able to have a conversation with her where they calculated her financial finish line, meaning what does she actually need to live throughout the rest of her life? Ultimately, our trust is in the Lord, but you can go through the financial exercise of that and come up with a number. And then once you establish that, you are then free to give the rest away. And she was able, she only lived six months longer after that in his particular case, but she was able to experience the incredible joy of being able to give this money beyond that finish line they had established away to the ministries that were near and dear to her heart.

And she had an absolute blast. And I'd love that for your mom, but it's more involved than we could get into here on the program. And that's why I'd love for a godly financial planner to help come alongside you to answer that question. What does she need to protect her and to provide for her for the rest of her life in the event she needed care beyond what you and your wife could provide? It's a blessing she has you and hopefully she won't need to use this money.

But there is probably a number by which you could say, you know what, she could start giving a big part of this away and then using a donor advised fund to do that would be a great choice. And our friends at ncfgiving.com could help you with that. That's the National Christian Foundation. Steve, stay on the line. We got to hit a break and we'll talk some more and we'll be right back after this. This is MoneyWise Live taking your calls at 800-525-7000.

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Go to mymoodyradio.org, mymoodyradio.org. God cares a great deal more about our money than most of us imagine. In fact, Jesus says more about our use of money and possessions than about anything else, including both heaven and hell. In Managing God's Money, author 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 when you click the store button at moneywiselive.org. Wall Street ended solidly higher today following a burst of big corporate deals.

The Dow today gained 327 points. This is SRN News. Hey, here's some real wisdom from our good friend and the former host of this program, the late Larry Burkett. There must always be a balance in the area of material things.

The common measure for all of us is to reach that balance between using material things and being controlled by them. 800-525-7000, Nancy's in Quad Cities and you're on the air with Rob West, Nancy. Thank you. Thank you. So enjoy your program.

Don't get to listen to you all the time, but when I do, it's always good. Thank you. Well, I hope you can sort out this question because I think you could word it better than I can. But it has to do with saving cash and having cash on hand, whether in a safe or in a lockbox at a bank or something like that, and how much you should do that and how much should be in precious metals or in some other form. Because my question is being it's coming from a sense of the market is shifting to electronic type of currency. And I don't understand this whole electronic type of currency, but it seems to be moving away from paper, paper money, dollar bills and things like that. So I'm not sure in what direction to go or to head to save things. Does that make sense?

It does. And so is your question related to how much is the appropriate amount to keep as cash on hand and cash in the bank? Or is it kind of how you navigate this accelerating trend? And it's accelerating because of covid away from physical currency to digital currency. Where's really the heart of your question in that? I'm not sure.

I have three hearts in that question. One has to do with long term and one has to do with short term. I was told recently that if you take all your financial assets and you should have a tenth of it in things like gold, silver, that kind of precious metals. And but he didn't have anything to say on what you should do with the upcoming trend towards electronic everything going. You know, is it wise to save money in a lockbox or not? Yeah. Yeah. OK. Well, let me try to provide some some context here.

There's a couple of dynamics at play. The first is how much cash on hand should you have at home? And what you'll find is a lot of experts say you need somewhere between three hundred dollars and a thousand dollars for the average person.

You'd probably want to be able to weather in the event of a natural disaster or something, you know, somewhere between three days in a week for, you know, living expenses and so forth. You probably wouldn't want to keep much more than that at home just because of the safety of it. And, you know, do you have a safe and kind of how are you going about that?

But I think each person needs to establish their own conviction around that. How much should you have in cash readily available? You know, I'm not a big proponent of keeping large amounts of physical cash in safe deposit boxes. Yes, if there was a disruption in the financial system, there may be a delay in your ability to get it. But ultimately, you know, with FDIC insurance, you're relying on the full faith and credit of the United States government to make sure that you will be able to get access to your cash. And if you felt more comfortable having whatever you were keeping beyond what is at home physically secured and stored in your in your home, you could use the safe deposit box as an extension of that, perhaps to keep just a bit more if you needed to get to it.

But I don't think, you know, for the average person in a normal situation, you're going to need to have much more than that in physical cash on hand, whether it's at the bank or in your local home. You know, beyond that, we are certainly seeing this growing trend brought about by and accelerated by COVID in terms of a move away from physical currency to more of a digital currency and a cashless society brought about in this current pandemic. By just safety, folks not wanting to interact physically with changing dollar bills and coins. And that's why we've seen just an incredible rise right now in the cashless payment systems, whether that's through cards or online or even through smartphones. And that's a trend that is going to continue to accelerate. I don't think we've seen the demise of the physical currency and coins by any means, and I think we're still a long way from that, if ever.

But we will continue to see more and more moving in that direction. And so that's where we have to really be comfortable with and stay on top of proper safeguards and protocols for transacting business in an online digital environment. Making sure we don't click on links and emails, make sure we're not transacting business using public Wi-Fi, make sure we have proper safeguards in place for passwords and we're changing them regularly.

And by the way, they're long strings generated by probably a password generator, things like that that are going to keep you in the best situation for not having your information compromised. And it's also why you need to stay on top of your financial accounts to make sure there's not any transactions you didn't authorize and why, frankly, we all should be looking at our credit reports, probably quarterly at the least, just to make sure there's not accounts that have been opened in our name without our authorization. So I think the bottom line is ultimately we place our trust in the Lord.

We don't want to get overly anxious about this. I think you need to come to a conviction and decision on how much to keep at hand. And again, I think that would be somewhere between three days and a week's worth of expenses.

Beyond that, I'd recommend three to six months expenses in a savings account that's liquid, although it's electronic, but where you could transfer it to your checking account with probably one to two business days. And for most of us, that's going to do it in terms of what you need available. As to gold, I'm not a big advocate of more than probably 5% of your investable assets in gold, and I wouldn't typically use physical gold for most people. I would use probably an ETF or a mutual fund that's attracting security to the underlying price of the precious metal.

And that's just simply because it's a hedge against a falling dollar and rising inflation. So hopefully that helps. I know I've answered probably all of your questions, but at least gives you some sense of where I'd head in this whole area. Nancy, thank you very much. Great question. I'm sure it's a question that others were thinking about as well, and we appreciate your phone call today.

Thanks. Let's try to squeeze in Chris in Dayton, Tennessee. Chris, we're so glad you called today. You're on MoneyWise Live. Yeah, go ahead.

Thanks for taking my call today. My wife has got some high ambitions. We're looking to buy a house at about $140,000 is what we'll be financing. And she wants to pay it off in about five or six years. How do we figure out what our monthly bill, our monthly payment should be roughly to get to that? I know that if we pay extra on top of what we're supposed to, it'll definitely shorten the term. But how do I figure up that versus just a regular mortgage?

Yeah. Well, there's two ways you can go about this, Chris. One would be to call your mortgage lender or servicer, whoever services your mortgage, and ask them to run an amortization schedule. That's the word amortization schedule based on a stated payoff date or period. So if you say to them, listen, I want to have this mortgage paid off in five years. Please run an amortization schedule and provide it to me, showing me how much I need to send over and above my minimum payment every month to get there. The other approach is to actually do that yourself.

And this is probably the easier way. If you just go online, you could go to bankrate.com. They have some wonderful calculators. But frankly, Chris, you could just Google mortgage calculator or amortization schedule and you'll find a hundred calculators where you can put in the current value of the mortgage, your current interest rate, your current payment. And you can put in your desired payoff period and have it solved for the amount that you need to send every month to reach that. And it'll actually break it down and show you the entire period, what's going to principal, what's going to interest. So you're going to want a calculator, a mortgage calculator. You can find that online.

Again, bankrate.com. Would you like your life to be infused with joy? Would you like to interject an eternal dimension into even the most ordinary day? Author Randy Alcorn says you can when you discover the treasure principle in a concise power pack style. This newly revised and updated book offers a six step plan to finding the immediate pleasure and eternal rewards of the treasure principle. And once you discover it, life will never look the same.

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So all of that and more when you visit us online, MoneyWiseLive.org. Mary in Indiana, hello Donna, thanks for holding, and you want to go to Colorado, huh? Yes, our son and daughter-in-law live in Colorado. They've been there for three years, they're ranting right now, there's no way they can at this point make a down payment on a house because everything's going for rent. So our thought was, we own our home here in Marion, we'd like to move to Colorado in about seven years when my husband retires. We've got a sizable 401k, we're wondering if we should draw some money out of our 401k and put a down payment down on a second home in Colorado. Our children would live rent-free in that home, and all they'd need to do is pay utilities and internet service and whatever, but we would let them live in the home, kind of mow the lawn, make sure somebody's in the house. But I can see that might be the only way that they can get ahead in order to buy a house someday for themselves.

I'm wondering, is this a wise move on our part, or should we just give them a down payment on a house right now, and then just keep our house here in Marion? Sure. Donna, when do you all think you are planning to move to Colorado at this point?

Probably not for seven years. Okay. All right.

And so you would obviously be doing this a bit early. Now, do you own your home there in Marion Free and Clear? Yes, we do. Okay. So if you were to... It's like... Go ahead. Well, it's like Ron Blue, we'd like to do this while we're still alive, and we feel this is a way to help our children. Yeah, yeah.

Very good. Well, I think it's ultimately going to be a decision that you need to make prayerfully, and I'm sure you have thought and prayed through this quite a bit. I think the question I would just ask is, because you're making this purchase seven years early, and so much can change in a young couple's life in terms of where God is leading them, and what does work look like, and when are they going to start having kids, and is this the right home for them, and perhaps are we setting them up, or by putting them in a home beyond where they would have normally been in terms of lifestyle at this point, and that's not necessarily kind of starting them out in reality of what it takes to get to that place. I mean, there's just so many considerations here that I would probably, and obviously I'm just hearing about this and not thought about it at the length that you have, but I'd probably opt for if you want to bless them with a gift toward a down payment, assuming they don't have other goals that precede that, like debt reduction or building up an emergency fund, but if you wanted to help them with a down payment, I think that's great, because then whenever they're taking on in the way of a mortgage, they're qualifying it for them themselves, they're going to have to think about what type of home is the right home for us and where, you know, they're going to have to really build all of that into their longer term plans and begin making decisions that are right for them, as opposed to you kind of deciding where they're going to live and buying this home that you ultimately want to occupy, albeit not for seven years, and then them moving into it. If it was for 12 months and this was kind of a stopgap, I think that might be different, but this is a long period of time where they're going to be living in your home and you're going to be buying it prematurely, and what if God redirects them, and now you've got this second home that you don't intend to occupy that you need to maintain and take care of, and now you've got to hire somebody to cut the grass, and now there's potentially, you know, creating some conflict there in the relationship, and Lord willing, none of that will happen, but I just think seven years is a long, long time. So I would probably opt for you praying through how you want to bless them, but I would do it in such a way that they can take what you're providing and factor it in to what God has for them, as opposed to them kind of dropping into some of the decisions that you're making that are in line with your future.

Tell me if all that makes sense, though, to you. It does, and that was, my husband and I have been discussing that, I just came up with that idea of them living in a house that we buy, but he had been talking for a while about just giving them from our 401k and letting them make the down payment. The thing is, housing is so expensive in Colorado. It's just like a house for $300,000.

We'd have to give them a sizable down payment in order for them to be able to pay the mortgage, because right now they're paying roughly $1,200 a month for rent, and they're going to need a bigger down payment if that's what, I mean, to make a mortgage payment for $1,200 on a $300,000 house, it's going to take them a while, and I don't know if they can afford that. And plus, there's tax repercussions for us if we take from our 401k, isn't there? Well, are you all, what is your age, if you don't mind me asking? Well, I'm 10 years older than my husband. I'm 73 and he's 63. Well, so the tax implications would be that this would be added to your taxable income, which is why I don't love the idea of you pulling out a substantial sum of money, because it's going to be a pretty big hit on it right off the top.

It won't be any penalties because you're past age 59 and a half. I guess the only other thing I would throw out here, Donna, just as you all pray and think through it is, you know, there's something to be said about when you're starting out as a young couple, I realize they're in a challenging part of the country, but there's many parts of the country that are like this right now where the real estate market is red hot. There's something to be said about, you know, not being able to buy right away and continuing to rent and keeping your lifestyle low and not being able to eat out and really, you know, working on that spending plan and being diligent and saving and working hard toward a goal that perhaps five years from now they can realize that dream of owning a home. I mean, all of that goes into our financial and spiritual maturity, I think, as we exercise delayed gratification and kind of work all of that out spiritually. And so I just want you to think through about how you want to intersect with what God may be doing in their lives as they get started and work through some of these decisions, albeit very challenging and time consuming.

So I wouldn't rush into anything and I'd be real hesitant about buying a home seven years early with the hopes that they're going to live in it for the next seven years. Donna, that's our best advice for you today. We'll pray with you about this. Colorado is a wonderful place, but you are indeed correct.

It can be expensive to live there. Thank you very much. Louisville, Ohio. And David, we have a couple of minutes left here.

How can we help? Hi, I appreciate you taking my call. Just a quick question. I understand for personal finances, it's good to have three to six months of expenses on hand, you know, for emergency fund. Just wondering if that works the same way for a church. I'm on the board of stewards at our church and just wondering about that, what your thoughts were.

Yeah, it's a great question and I think absolutely. The whole idea of reserves and the principle of that would be absolutely something that applies to churches in addition to individuals. You know, Proverbs 21, 20, the wise store up choice food and olive oil, but the fool gulps theirs down. Proverbs 6, go to the ant, consider its ways and be wise.

It has no commander, no overseer or ruler, yet it stores its provisions in summer, gathers its food at the harvest. The question is, what is the right amount for a church? And I would say this would be cash reserves, not counting any restricted funds or any kind of mortgage reserves that are required in the mortgage note. ECFA, E-C-F-A, the Evangelical Council for Financial Accountability at ECFA.org has a great article on this, David, that I would encourage you to read. It's called Church Cash Reserves, How Much Is Enough?

It's by Dan Busby and Michael Martin and I would read that. They make the case that, you know, having nothing is inadequate and having probably 12 months is generally considered excessive. And that church needs to strike the balance somewhere in the middle, which would be probably at that six month mark. But ultimately, the church needs to come together under the leadership of the pastor and the lay leadership and really establish a criteria by which they determine how much they want to set aside and for what purposes, recognizing we don't want to withhold too much because part of the reason the church has it is to do ministry. And so we don't want to necessarily keep too much back. At the same time, we need to be able to navigate effectively. And we realize, especially in light of what we're going through right now in the COVID season, that there can be some challenges and unexpected events that can make it difficult for a church to operate. And so we've got to establish an ability to flex and move in the midst of that. And so establishing a criteria for how that reserve amount is determined somewhere between that, I think, three months and nine months of reserves is the right place.

And ultimately, there's not a right or wrong answer. So check out that article again. It's called Church Cash Reserves, How Much Is Enough?

And you'll find it at ECFA.org. Interesting question at this time in our history, Rob, maybe a year and a half ago, churches might not have had that much in reserves and wouldn't have felt the need. But I would think now there's heightened interest, would you? Well, I think so, Steve.

Yeah, absolutely. Especially in this season where people haven't been able to attend in person. Hopefully, they're still giving regularly online and dropping off checks at local churches and realizing that their systematic giving needs to continue whether they're there in person or not.

But it has certainly created some challenges. In fact, we're going to be talking very soon with our friend Brian, who is going to be sharing a bit about what's going on in the church world related to giving. Brian Cluth, that is.

Yeah, we'll look forward to that. He's a great guy. A real expert in this area. MoneyWise Live is a partnership between Moody Radio and MoneyWise Media. Thanks so much for joining us today. If you enjoy the program, would you do us a big favor? Let a friend know so they can enjoy it as well. I'm Steve Moore. He's Rob West. We'll be back tomorrow with another edition of MoneyWise Live.