The Cost of Work

People go to work for many reasons, but when asked, most people would say for the paycheck, of course. What we often forget is that work also costs us money. Working, especially working outside the home, has hidden costs and some not so hidden. Today financial planner and teacher Rob West goes over some of the things that eat into your paycheck and will take your financial calls at 800-525-7000. Your calls on anything, 800-525-7000.

I'm Steve Moore. The cost of work. We'll explore that next here on Money Wise. Rob, it's the rare person who doesn't have to work, almost all of us do, so really what's the point of knowing how much it costs us?

That's a good question, Steve. The point is deciding whether to work is largely a financial decision, just like any other. Knowing the true cost of work, how much you're spending to bring home that paycheck, is information you need to make that decision wisely.

By subtracting those costs from your paycheck, you discover your actual take-home pay. And why is that important? Well, depending on your situation, it could make all the difference. For example, if you're a parent deciding whether to stay in the workforce or stay home with your child. But there are other factors as well, of course. If you're a two-paycheck couple without children, job satisfaction is another consideration. If you don't like your job and you can afford to live without it, well, maybe it makes sense to spend your time making your home a better place to live or pursuing volunteer work that's more satisfying. In other words, the paycheck doesn't all always have to be the deciding factor. But you don't know if it's the deciding factor or not if you don't really know how much you're making, how much you're bringing home, how much it's costing you. So I think I understand here. So let's start with some of the more obvious costs of venturing out into the working world.

Alright, sounds good. The first thing you'll have to decide is how you'll get there. In most cases it will be a car, so you have to consider the cost of buying and maintaining a vehicle, of course putting gas in it. Don't forget about the cost of registering the vehicle and insurance. Now in many cases you'll still need a second car if you're a stay-at-home parent, but in that case many of your vehicle-related costs will be lower.

For example, you won't spend as much on fuel and insurance if you're not commuting. That's right. Speaking of, have you seen the new 2021 Corvette? I have not, no. Come on, you bought one already, didn't you?

No, of course not. Okay, what else? Well, in most cases you'll need to buy clothing that's appropriate for your job, and very often the higher the paycheck, the more expensive those clothes will be. It costs money to look professional. That is, of course, if you're in the tech industry, I think they get a pass on that one.

Gotcha. Okay, you know, a paralegal working in a law office may not spend or may spend more on clothes than someone working in retail or maybe even in radio, but you haven't named the biggest obvious expense to working outside the home yet. Well, that's a keen observation, Mr. Moore, and that of course is the cost of childcare, and it really takes a bite out of your paycheck.

You know, you may end up paying around $1,000 a month for someone else to take care of your child while you work, but then there are many other smaller costs of working unless you're very disciplined. You may spend money on coffee and lunches more than you would at home. You may also have dry cleaning costs for that professional wardrobe or maybe you need a very nice looking late model vehicle. You were just talking about that, specifically if you're meeting with clients, that sort of thing.

So it just all adds up. All right. All right, well, let's talk about some of the other less obvious costs to working outside the home.

What do you have? Well, it'll make you a very busy person. You might get takeout meals more often or buy more expensive pre-packaged foods.

You also won't have time to shop for deals or clip coupons, perhaps, and you might end up going to stores that are convenient but more expensive. Some of those costs we've mentioned might seem trivial, but small things add up. If you treat yourself to a $7 lunch once a week, well, that's $350 a year, and that's just a small expense compared to maybe $12,000 a year for childcare, as we said. Yeah, so now we total up all these expenses.

Okay, then what? Well, you get a much clearer picture of how much you're actually making. If you take home $30,000 a year after taxes, but your costs are $20,000, you're actually bringing home $10. That comes to a little less than $5 an hour, and then you have to ask, is it worth it? So what are we trying to do here? Convince people not to work?

Not at all. No, what we're just saying to make an informed decision, and in some cases, those who can live without that second paycheck may decide it's not worth it, especially if doing without means you can stay home with your children or pursue other interests or opportunities. On the other hand, if you need to work, knowing how much it's costing you could motivate you to finally ask for that raise you deserve. We'll be right back with more money wise live. Many people are experiencing financial challenges such as credit card debt, downsizing, debt in jobs and depleted savings.

In fact, more than half of all divorces are the result of financial pressures at home. But there's hope in your money counts. Biblical financial expert Howard Dayton shows that the Bible is a veritable blueprint for managing your finances, and you'll discover the profound impact it has on your relationship with God.

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Soundmindinvesting.org. Changing the world one grandchild at a time. Here's Ken Canfield for Grandkids Matter. Harold Valis Quest is a friend who remembers many great times he spent at his grandparents' home in Utah. He says his most vivid memories are from those times at seeing his grandfather and grandmother at their bedside praying or in the living room with their Bibles open.

And so today, Harold takes every opportunity to make prayer a priority whenever he gathers with his extended family. It was such a powerful part of his childhood, and now he wants to pass that legacy on to his children and grandchildren. Grandparents, I hope you share that passion. Make prayer a priority and live out your faith in front of your grandkids. You can go to grandkidsmatter.org or get a lot more encouragement for your role.

Once again, grandkidsmatter.org. Do you feel like your hands are tied with debt preventing you from serving God? If you have credit card debt, Christian credit counselors can help. Through our debt management program, we can get you out of credit card debt about 80% faster while honoring your debt in full. For more information on how Christian credit counselors can help, visit christiancreditcounselors.org. That's christiancreditcounselors.org or call 800-557-1985, 800-557-1985. Great to have you with us today on MoneyWise Live. Rob West, your host. I'm Steve Moore and we're taking your phone calls today on anything financial, no specific topic, anything that's of concern to you, anything you're wondering about, anything we can help you with when it comes to your money, your finances.

Give us a call right now while we have at least three different lines available, open lines, at 800-525-7000. Chatting for just a moment about working outside the home, we're not suggesting you should or shouldn't, we're just suggesting, in fact we know it to be a fact, that working outside the home often comes with a lot of extra costs, costs that some people don't really add up and we've already mentioned a few, but you know here are a couple of others. Wear and tear on your car, the extra mileage involved when you drive, also extra car insurance.

If you redo your insurance every year, every couple of years, every two or three years, typically they ask you how many miles do you drive each day. Well if you're honest and you put down the number of miles, the chances are really good that they're going to charge you more if you're driving to work each day as opposed to not driving to work. And then there's just small things like parking and you know Rob, you and I have been doing this long enough to know that when both people are working outside the home, sometimes you really don't stop to add up the expenses and you really don't know how much each spouse is bringing home and sometimes it's less than what you think and then you have to kind of balance that off and compare it one against another.

Is it worth it to stay at home, raise the children that way or hire child care or babysitting and go to work in the office each day, but that's for every husband and wife to consider ideally once you have all the facts. Well that's right and regardless of the scenario, I think just going into this decision, knowing the true cost of work is really critical to the decision making process and in some cases folks don't have a choice and that's fine, but if they do, given this consideration or even factoring it into a job that you're looking to perhaps accept, looking at the added costs that go with one job versus another before you make the decision to accept the position, I think is a critical piece of the equation we often leave out. So hopefully this sheds some light on it and it will cause people to think differently about the true cost of work. And one other interesting wrinkle that has to do with COVID, now many, many more people are working for home where that wasn't an option before, even if you presented it to your boss, now we've never done it that way before, we're not interested, but now with COVID lots of people are working for home and they find that it's working for them and even working for the boss, so that saves you some money along the way. Well that's right and more and more employers are offering the work remote option, so be sure to check on that and make sure you understand whether or not that's an option as you're considering taking a position. Yeah, I'm sitting at home right now wearing my jammies, it doesn't cost me a thing. Yeah, if you hear the dog start barking you'll know why. 800-525-7000, I really am not at home.

I am wearing my jammies, but I'm not at home. Harrisburg, Pennsylvania, hey Gina, how can we help you? My husband is semi-retired at 67 and I'm 57 and have another 10 years of working before I can collect full social security. So my question is how much life insurance should I have for these next 10 years in case something would happen to them and it's before I can collect his social security? Yeah, well the purpose Gina of life insurance is to care for dependents by replacing lost income, so caring for you in the event of your husband's passing would certainly be right in line with the purpose of having that kind of death benefit available to you. If your husband's retirement assets will be passed on to you then there would be no need to replace the income they generate, so you wouldn't need life insurance for that. Regarding social security benefits, a widow or a widower at full retirement age or older generally gets 100% of the deceased worker's basic benefit amount or the spousal benefit, whichever is higher. But just to be sure I'd check with your local social security office or review your statements to determine your survivor benefit. If it's less than what your husband receives now and you need that income then of course that's where insurance could be helpful by having that death benefit until such time as you know you would have the proper amount coming in as income. You could get a term policy equal to that period of time while you all are still saving and providing other provision for your income after his passing.

Keep in mind it will likely be rather expensive given your husband's age so that's why you'll really want to think through this but I think as long as you're comfortable and understand what your survivor's benefit will be and it's equal to what you need to cover your household expenses if something were to happen to him then at that point there's really not a need for insurance and that significant added expense that you'd have to roll into the budget. Gina, thank you very much. We appreciate that call today.

Let's go to South Carolina and Jennifer you're on with Rob West. Hey, good afternoon guys. I hope you are doing well on this Thursday. We are, thanks. I for one am not in my pajamas unfortunately but I have a quick question.

So a little bit of demographics. I am, my husband is in his early 40s. I am not quite there.

We won't talk about that but I'm getting there. We both work full time. We just purchased a home. My credit is, I have good credit.

I think I'm close to 8 or a little over 8. My husband not so much. He's had some bad history in the past. We are wanting to increase his credit. The home we just moved into, it's not in his, his name is not on it. So we would like to add his, refinance in a few years and add his name and just to help build his credit he just would feel better, you know, personally if he was in a better stance. So the question is we are looking, his car is on the verge of death and so we need to get another car. We're considering purchasing a car, maybe getting a small loan in his name to purchase a vehicle.

We're kind of wondering what your recommendation is on dollar amount, you know, based off of where we are and this may be too involved for you to answer over the phone today. I don't know but what would be your... Well, the bottom line, Jennifer, is just to improve his credit. I mean the key is you want to replace the negative history which as it gets older is going to be less and less of a factor in terms of determining your credit score now. You want to replace that negative history with positive credit history which means he needs some sort of revolving or installment account that's being reported to the report every month with him as an on-time payer in good standing and where the debt-to-limit ratio of the amount extended in the case of a revolving account which would be a credit card or secured or unsecured where the balance is less than 30% of the limit or what's available because that really will begin to boost his credit over time. So what are the options there? Well, what we know we don't want to do is start paying interest or taking on debt just to improve his credit.

That's going to be counterproductive. So you would only want to do it either with an unsecured credit card if you all are living on a budget and you really don't feel like it's going to be a temptation to live beyond your means where you'd perhaps add a recurring charge that's a budgeted item every month, maybe a subscription that's a small dollar amount where it's going to hit the card, you pay it off in full every month and that's being then reported as an on-time payer. Something more extensive could be a car loan if that was something you were going to buy anyway and you can work that into your budget, you have a plan to pay it off in a reasonable period of time, adding your husband to that account so that that's being reported to his credit files in addition to yours would certainly do the trick and if it made sense to refinance I wouldn't do it for this purpose only because it's expensive but if it made sense to refinance you're going to stay in the home for a while, you're not going to increase the term, you're going to save at least 1% on the interest rate, then a refi might make sense and going ahead and putting him on that loan so that's reported to his credit file as well could work. You could also add him as an authorized user to your credit card as long as you check ahead of time and make sure that your particular card company does in fact report authorized users to their credit history.

In most cases they do but not in every case so you'll want to look at those options. But give me your thoughts, obviously I've thrown a lot at you there. So I guess ultimately he wants to just improve his credit, that's really where he falls. He does have some bad history, I guess we also really want to know like based, again this is where I guess it's getting a little more involved in my thoughts, you know how much we are bringing home and then what is a reasonable amount to have outgoing compared to in going, you know incoming. You know so based off if we're bringing home I think it's like $52, $54 a month and then we've got you know our new mortgage is at $13 a month and you know our other car is paid for. Sure, well here's what can be helpful there is looking at some percentage guidelines. So basically when we're putting together a spending plan we've got to start with capturing what are all of your expenses. You've got to know what are the ones you get the bills for every month, those are your fixed expenses, what are those discretionary expenses that you have that you don't get a bill for but you do spend you know eating out, groceries, entertainment, things that just happen through the course of a month.

You've got to capture a really accurate record of what those are. I would do that over a 60 day period if you haven't already. So you can build a budget off of that then you need to get a good understanding of what's actually coming in to the household that's available to meet those obligations after any deductions from your paycheck for taxes or insurance or you know perhaps any retirement contributions you're making. Then you need to build the budget on that take home pay and you need to do it by covering the minimums on the credit cards or any debt that you have with your giving and with all of that fixed and discretionary spending including the non-recurring, those things that come once or twice a year. Then at the end of the day you want to make sure there's margin there because that's what you're going to use to achieve your goals, building your savings or paying down debt or increasing your giving. Let's do this. I think the MoneyWise app could be really helpful to you.

It's brand new. It's the best envelope system we've ever had and we're going to give you six months free. Stay on the line.

We'll give you access to that. Many people adopt an attitude toward marriage and finances that it'll all work out somehow but sadly it often doesn't. Financial woes can devastate a marriage but there is a better way. God's Way. Money and Marriage God's Way by Howard Dayton will help you discover God's approach to growing your finances, strengthening your relationship with your mate and cultivating Godly joy.

Money and Marriage God's Way is available when you click the store button at MoneyWiseLive.org. Hebrews 4-12 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. Worldliness will cause the will of God to remain elusive. Worldliness. You know I just again I say this to you as one standing beside you, as one just kneeling below you.

I've messed up so much worse than you but I do want to tell you something. If we're thinking we so desperately need to know the will of God but we're down in carnality we're not going to know it. So we're going to constantly be guessing. We're going to be looking to see what is the general will of God but we won't know what the specific will of God is because it's going to be given to the renewed mind. He was going to give it to you in the Spirit.

I want to say this to you. You just sit tight but I want you to write down 1 Corinthians 2, 9 and 10. I've said it to you so many times but I'm going to read it again. No eye has seen, no ear has heard, no mind has conceived what God has prepared for those who love Him. Listen, you don't even begin to know how this thing would turn out if you just really honestly seek and follow the will of God for your life. But verse 10 says this, but God has revealed it to us by His Spirit, by His Spirit. We will never live in carnality and know the specific will of our life about anything but repent. You understand what I'm saying? That we can know.

We can know that will quickly, quickly. You've been listening to Beth Moore with a quick word for today. The study of Galatians is now available as an online experience.

Sign up today at BethMoore.org or join Beth in January 2021 for the release of the printed workbook edition. Glad you could join us for a quick word with Beth Moore. 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-packed 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. The Treasure Principle is available when you click the store button at MoneyWiseLive.org. Hey, thanks for joining us today on MoneyWise Live, God's principles and wisdom when it comes to your money and your finances.

Maybe it's debt, maybe it's budgeting, maybe it's God's plan for your life, your job, your career, your housing, your car. Give us a call. Let's talk about it. 800-525-7000. And we have open lines right now.

Chicago, Illinois. Hello, Sean. What's going on? Hello, gentlemen. How's it going this afternoon? Great. Thank you.

So, kind of a dilemma. So for the past 10 years, my wife has stayed home. I've been the breadwinner.

Now all the kids are in school for eight hours of the day in private schooling. She's got no desire to go back to work, but I would like her to get back to work. Just to help with the second income would be nice.

It would definitely be beneficial. Sure. And I just don't know how to approach it. I've tried to ask her and persuade her, but it's not going well.

Yeah. Well, Sean, I appreciate the question and obviously what you're wrestling with here and it can be on both sides of the equation. You're talking about your wife.

It could be somebody else who's talking about their husband in the same situation. I think it's really a values and a lifestyle question that we need to start with. Perhaps I think the first step is to take the spotlight off of this decision of one income or two and I'm working or you're working and really back up and say, first of all, recognize that God is your provider. Everything you have is his.

You're stewards of what he's entrusted to you. And I think you need to have a lifestyle conversation to say, what do we feel like God is calling us to? What lifestyle in terms of the type of home we live in and how much discretionary and disposable income we want? What are the goals that we have beginning with our giving goals, but then also consumption goals and in terms of the way we want to be able to live as a family and do we want to be able to take vacations if possible, if we were to have the resources to do so. And what about schooling?

You mentioned private schooling. That's a decision that we all have to make prayerfully on our own. And I think as you begin to talk about that, the lifestyle that you feel like God has called you to and the income that it will take to fund that while still meeting your other goals and objectives, because remember, it's not just about do we have enough money for the here and now to be able to pay the bills and get through this particular month in the black. It's also can we have enough margin after the bills are paid to pursue our longer term goals, recognizing God gives us more today than we're to consume today. And so do we have some margin to pursue a life where we can ultimately be debt free if you're not already? Do you have margin to be able to save for the future for a college education or retirement? Are you wanting to increase your giving or adopt a child or something that's going to require some savings down the road?

And margin is the only way you're going to be able to fund that. And I think as you have that values conversation around lifestyle and provision and what God is calling you to, then as you all settle into and prayerfully consider together what that should look like, then you have to say, Okay, now how are we going to bring in the income that's required to do this? And if we are going to do it based on one income, and that income is capped, meaning there's not a way to pursue additional income from that one particular person who's working, then we're going to have to make some adjustments to this lifestyle to those expectations. But if together, we want to be able to do certain things, and it requires more income than you would need for one of you to be working, then perhaps that's when you'd consider the second person going to work. But I think that needs to be approached prayerfully with the right spirit and heart attitude together as you look at this larger conversation. And the last thing I would say, Shawn, is just recognize some of these other things we talked about at the top of the program today.

And that is, if your wife goes back to work, there's a cost to that, not only a real financial cost with increased commute and clothes and maybe eating out, but a cost to the family where, you know, perhaps there's not somebody there to prepare the meals and those types of things. So factor all of that in before you make this decision, and we'll be praying that God gives you some wisdom here. And Shawn, we're going to send you a complimentary copy of the book, Money and Marriage, God's Way. This might help you guys talk it through.

Thanks so much. We'll be right back. ... How should we as Christians think about investing? What if we could invest our money in a way that aligns with what we believe? At Eventide, we believe it is possible to love God and love our neighbor in the very practice of investing. We design investments for performance and a better world so you can invest for the future with a sense of wholeness and purpose. We call this investing that makes the world rejoice.

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That's Matthew 4, 16, the Moody Radio Verse of the Week. If you're about to throw in the towel on homeschooling, it's time to leave the second guessing behind and quiet the voices of not good enough. Step courageously into guilt-free homeschooling by reading Home School Bravely. In this book, Jamie Erickson teaches you to see homeschooling as a calling. She helps you overthrow the tyranny of impossible expectations and guides you through many of the common bumps in the road. Get your copy of Home School Bravely today.

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With SRN News, I'm John Scott. Election officials in key battlegrounds pressing forward with vote counting two days after Election Day. President Trump's path to reelection has become very narrow, though still possible.

The president needs victories in all four of the remaining battlegrounds, Pennsylvania, North Carolina, Georgia, and Nevada. The Federal Reserve kept its benchmark interest rate at a record low near zero and signaled its readiness to do more if needed to support an economy under threat from a worsening coronavirus pandemic. The Fed announced no new actions after its latest policy meeting today. U.S. productivity increased between July and September. The Labor Department reports productivity advanced 4.9 percent. Stocks rallied again on Wall Street. Today, the Dow gained 400 – that's 542 points.

The Nasdaq was ahead 300. This is SRN News. in your area, how to connect with a budget coach. Also, how to hook up with our brand new app. And Rob, what's the easiest way to find the app? Because I know, I mean, you're all excited about it.

It's going to be something else. Well, I'll give you a couple of ways. First way is to go to your app store. So if you have a smartphone or a tablet, you have an app store right there built in, whether it's the Google Play Store or the Apple App Store.

Just go there and type in MoneyWise Biblical Finance. You can download it. It's the budget envelope system that I've always wanted on my smartphone and I could never find. So we built it ourselves and I think you're going to love it.

You can also go, if you can remember this, easier to app.moneywise.org and you can read all about it and you can also get a link to download it there. You know, some people are saying they found your picture. Other people are saying they haven't been able to find your picture on the app.

Any idea what's going on there? I don't think my picture is on the app. Really? We didn't have the money for that, huh? Well, I know you wanted to be there, but I don't. I did.

I would have come up with 20 bucks myself to make that happen. All right. Bradenton, Florida. Hi, Mary.

What's on your mind today? I have an IRA and I am wanting to donate my required minimum distribution to a charity and as I understand it, that if I had it go directly to that charity and not even come to me, that would, I would not have to pay taxes on it. Well, that's exactly right, Mary. Go ahead. Is that also tax? Can I use that as my tax write-off for my charities? Yes, absolutely. So a couple of things there. Number one is I just want to make sure you know required minimum distributions have been suspended for 2020.

So, you know, that's because of the CARES Act and the pandemic. So there is no RMD for this year. But moving forward, obviously, you would have your typical required minimum distribution next year unless some provision is made otherwise. And that would be according to the IRS table and the way to make that contribution directly from your IRA, satisfying your required minimum and allowing you to have a deduction without realizing the income, meaning the full amount going to the charity for their benefit or your church or whatever nonprofit you send it to, and you getting the full amount of the deduction is through something called a qualified charitable distribution. So whoever is the custodian, whoever sends you your statements for your IRA, you'll just want to contact them and say, I need a I want to do a qualified charitable distribution. They'll tell you how to do that either online or through a paper form. You'll want to alert the nonprofit, the charity that the gift is coming. And that gift will not be counted as income to you.

It will satisfy your RMD once you have that back in play next year and everybody wins. So it's one of my favorite tools. Does that help you, though, Mary? Yes, I think so, because I understood. Does it vary from state to state, the requirements? No, it's an IRS table, so it's based on your age and the amount in your IRA as to what you would need to take out each year.

And it's a federal requirement from the Internal Revenue Service. Yeah, OK, so it's all right. Thank you so very much. I appreciate your help. You're welcome, Mary. Thank you for listening.

God bless you. Eight hundred five, two, five, seven thousand. We have an open line or two available. Eight hundred five, two, five, seven thousand.

Let's go to Tuscaloosa, Alabama. And Phyllis, you have a question about a savings account, huh? Well, actually, it's a savings bond. I would like to transfer to my godson who will turn one year old on the 14th of this month. OK. And what is your question specifically related to that savings bond, Phyllis?

Well, I would like to know, is that a wise idea and how do I transfer it from me to him? Yeah. Well, is it a paper bond or is it electronic? Do you know? It's paper.

I've had it about seven or eight years. OK. All right. Well, yeah. In order to determine the value of it, you can go to the government's Web site for savings bonds, which is Treasury Direct dot gov, Treasury Direct dot gov. If it's a paper bond, you'd be able to just sign it over to him in which you can do. Or you could have it reissued in his name. Again, Treasury Direct dot gov would be the place to do that. As to whether or not that makes sense, you know, savings bonds aren't my favorite tool.

The interest that you're earning is just so low on them. So I think one option would be to redeem it and to take that same amount of money, perhaps talk to his parents about making a contribution to a 529 plan, which is basically just a college savings plan where the money could be put into a stock portfolio through mutual funds. And then it could grow for him over time. And if you or his parents or anybody else, for that matter, wanted to add anything to it, you'd be able to do that. But I think that's going to give you all and specifically him a better return on this money than just hanging on to this savings bond. So the answer to your question is yes, you can absolutely do it. And more information is available at Treasury Direct dot gov.

But I might consider repurposing that into something that's going to perform a little better. And I think, you know, perhaps considering a 529 plan could be great. Thank you, Phyllis. We're glad that you called today. Cleveland, Ohio.

And Tom, what's in your mind, sir? Yes. I'm 41 years old. I just recently paid my house off. I'm self-employed and I have a little bit of money in stocks and a little bit of money in my savings. But my question is, what is the best way I should be saving money for retirement?

Yeah. So, Tom, you're self-employed. You said you have a little bit of money in stocks. Have you opened any kind of retirement account, either a SEP IRA or a Roth or something like that?

No, I have not. OK. Yeah, I think that would be the thing to do. I mean, you've got to start with making sure you have the margin to make the systematic contributions to the retirement plan. And that's going to require that you have really clear delineation between your personal expenses and your business, hopefully separate books, where everything's real clean and you're paying yourself a specific, hopefully, salary, and then building up profits and then maybe taking distributions periodically, but where you can really get on a nice budget both for the business and you personally. Then, out of that monthly cash flow that you'd transfer over, hopefully on a more conservative basis, so you're not transferring huge amounts in a high month and then a lot less in low months, you want to try to even that out by retaining those earnings in the business. But then you want to build into that plan on a monthly basis a systematic contribution to a retirement plan. You're probably going to max out an IRA pretty quickly because if you're under 50, it's going to be $6,000 a year, over $57,000 a year. That's where a SEP, S-E-P-I-R-A, is going to allow you to put a little bit more away with lots of flexibility, very low fees and ultimate control over the investment options, or you can open what's called an individual 401k.

And I think either of those could be a great option for you to have plenty of money going into retirement as you continue to save moving forward. So hopefully that's helpful to you, Tom. If you have any other questions, don't hesitate to give us a call back. And Steve, before we head to our break, we had a caller calling back about the question about the gentleman who was saying his wife doesn't want to go back to work. And they said maybe she's lacking confidence in her skills. And I think really asking enough questions to get to the underlying issue, is it a lack of confidence? Is it she just wants to be able to spend more time at home with the kids?

Asking those questions will uncover that. So we appreciate Celia calling today. We certainly do. Thank you, Celia. We'll be back with more right around.

That's available when you click the store button at MoneyWiseLive.org. Most unbelievers are reaching out to God for help like never before and doing it with desperation. That's the good side of what's happening today and why God is allowing it to happen. Most of the time, most of the people around you are unbelievers.

And whether they show it or not, most are hoping that there's a God who can make sense of the chaos and are looking for somebody to tell them. And when you become that someone, your joy in the Lord will explode with rock-solid faith. There's nothing more exciting than knowing God is using you to move people closer to Him.

Join us at IgniteAmerica.com. And now, a discipleship moment. Here's Phil Downer. I asked Jason, do you bow down to the work of your hands?

Beware if you do. Wow, Phil, a little intense today, wouldn't you say? Well, I went on. Week after week, you devote an hour with me in discipleship. It's not about God.

It's not about your family. It seems to be always about your work. Could it be that you worship your work and that's why your life is in such turmoil?

Or, well, Jason was kind of quiet. You see, God has said in Micah 5.13, Jason, to those who are not following Him, I will cut you off, your secret pillars, so you'll no longer bow down to the work of your hands. Say, friend, confess today, as Jason did that day, that what you do could be more important than who you are in Christ. Bow down to Jesus, not your work.

To learn more about Discipleship Network of America Resources, go to Downer.org. 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. Hey, here's a verse that applies to your money and your finances and the rest of your life as well. 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. Hebrews 11, verse 6. Let's go out to Idaho. Land of potatoes, I'm told. Kate, do you have potatoes right there in your yard? Are there that many potatoes? No, that's southern Idaho, and I'm in northern Idaho. We have mountains and lakes here. I'm so sorry. He thinks everybody's walking around tripping over potatoes there in Idaho. I mean, I don't think it's kind of like that. I'm dumb. I'm sorry.

Hey, Kate, how can we help you? So I heard earlier the woman who called in regards to credit ratings, and one of you mentioned only utilizing about 30% of your overall credit available on a card, which I hadn't realized. I pay mine off every month, but I utilize quite a bit of it because I don't want a huge amount of credit just sitting out there in case someone would get my card or my identity or something. Anyway, my question is, is it only 30% of that individual card, or can I look at the umbrella of all the credit on all the credit cards and then only use 30% of that umbrella? Yeah, well, there's multiple credit scoring algorithms out there from different versions, and even among those versions, there's different companies that all have their own credit scoring processes that these lenders use, so there's not kind of a one-size-fits-all solution. But the general rule of thumb here, Kate, that you're referring to does apply to both the individual cards or accounts and the total credit utilization.

So I think the scoring factor really looks at every particular account. Is there any one that's over 30% debt to limit? And then across all of the credit available to you, is that total also above 30%? So it really is anything over that 30% on an individual or a collective basis is going to begin to decrease the score. And the idea is that lenders might be concerned that you're overextended and may have difficulty repaying new debt. But keep in mind, it's not that as soon as it trips over that from 30% to 31%, it's automatically going to crater your score or anything like that. But it's just a rule of thumb to keep in mind that the scoring algorithms are built around that 30% number, so if you can make sure, even if you're paying it off every month, that as you charge it up, you're trying to keep it under that threshold, that is going to serve you well if you're trying to boost your score. Here's the thing, though. If you have an 850 versus an 800, are you really going to improve your situation that much more?

Probably not. I mean, anything in those numbers are going to qualify for the top tier of credit. And remember, the goal over time is to get out from underneeding credit at all.

But we live in this world, so I realize why you'd want to keep a good score, and hopefully that sheds some light on how this credit utilization idea works. Kate, thank you very much. We appreciate your call today from Idaho all the way across the country to Florida. Miguel, what's your scenario there? How can we help?

Hey, how you doing? My scenario is that I just moved recently to Florida, and in the transition, a lot of money was spent to get settled in and what have you. And the house that I have, I paid off.

It's all paid off. And I was wondering, maybe I should refinance so that I can pay off all these credit cards and what have you. But I also heard something on the radio about the reverse mortgage, but I have no idea what the difference is and if it's a good idea, or perhaps just refinancing the house for the amount of money that I owe on credit cards.

Yeah, a couple of thoughts there, Miguel. Basically, a reverse mortgage is just what it sounds like. It's the opposite of a traditional mortgage. With a traditional mortgage, you might borrow $100,000 at a stated interest rate over 30 years. You have a monthly payment and a portion goes to the principal reduction, a portion goes to interest. With a reverse mortgage, instead of paying that amount in, they pay it to you. And the portion of it that would have been for the interest is actually reducing or creating what is ultimately going to be the loan amount that would have to be repaid when the property is sold. So it creates an income stream out of the equity of the home for a person over a certain age. Now, keep in mind, there are pros and cons for somebody in those age ranges where they're in retirement, let's say, and they're needing some additional income and they don't want to move from their home. It can boost their cash.

They don't have to move. It's not taxable income, and you continue to own the home. The downside is it's not free. There's an interest rate associated with it, and you have to still keep up all the expenses related to it, property taxes and insurance, those types of things. And you're funding essentially your lifestyle by accruing debt in small amounts month by month. So my preference for somebody who's looking to add a stream of income to their life in that season of life would be to look at other options. How do we perhaps downsize or could we sell some assets? What can we do to reduce our lifestyle so that our income matches our monthly need without having to tap into the home equity?

But it is certainly an option for some folks. I don't know that that's necessarily what you're talking about here in terms of paying off credit card debt. I'm not a big fan of using home equity for credit cards, and here's why. So often the reason we have credit card debt in the first place is we're living beyond our means. We need to live on a balanced budget within God's provision, and when we live beyond that, we rack up debt. Well, when we come in and wipe that out with a home mortgage through refinancing with the cash out, number one, oftentimes we don't treat the underlying issue, meaning we continue to overspend.

It's just that the pressure's taken off, but often the credit card debt re-emerges a year or two later. The other issue is even though the interest rate's coming down with the mortgage, the home mortgage, we're stringing it out over a long period of time, maybe 30 years. And keep in mind mortgage refinances aren't cheap. It could cost you one to two percent of the loan value.

So I'd separate these issues. With your home mortgage, I'd only refi if it makes sense, and that would be because you're going to stay in the home for a while and you can save at least a point on the interest, and it fits into your budget without increasing the term. With that credit card debt, let's go back to that spending plan and fix the budget, if you haven't already. And then if you want to get that paid off faster, I'd look at a credit counseling program. Our friends at ChristianCreditCounselors.org can help. Miguel, thank you very much, sir. We appreciate that. Casper, Wyoming, Kevin, a little bit of time.

Let's squeeze it in, okay? Yes, I've heard you speak of the long-term care insurance that would take care of you if you needed to be in a nursing home or something, and I was wondering, instead of doing that, how you feel about those QLACs? Yeah, so you're talking about what's referred to as a QLAC, which is a qualified longevity annuity contract, so it's just a type of annuity specifically designed to keep you from outliving retirement savings. So it provides a guaranteed income stream later in life, and it reduces the required minimum distribution that you have to take, which is mandated for those 72 and older.

Some of the downsides would be lack of control. I mean, you have that with any annuity product, QLAC certainly being one of those. The money might never get used, so some people fear that they won't live long enough to get their QLAC income, and so you have to select a reasonable start date for the payments. There's also a lack of inflation protection, so it doesn't offer inflation protection, so you want to be careful to think through how much income you need down the road to purchase a QLAC, an annuity contract that will cover inflation needs, because remember, your purchasing power is declining over time as inflation affects your spending power. And then obviously, you want to make sure you select your carrier or insurer very, very carefully. So I might look, Kevin, just to reduce the complexity and not deal with any of those downsides that I mentioned at perhaps not using that for an income stream and considering first that long-term care insurance policy, which would kick in if you need it.

But if you don't, you know, you at least have the coverage, and then making sure you have thought through your income options that fits with the lifestyle you have and the needs that you have on a monthly basis and solving for that first as opposed to going toward an annuity contract as a solution. Kevin, thank you very much. Interesting question, and we're glad you made it through today. Thanks. Craig in Ohio, a little bit of time, sir, but let us know what's going on in your life.

Okay. I'm about 71 years old. I get a total of $22.96 a month. That's with security, pension, and a job. I got $15,000 in checking.

I owe about $15,000 on my home at 4.99% interest for a 15-year mortgage. All right. $85,000 I'll be getting for an insurance claim here and was wondering what I should do with it, where maybe I should put it, you know, Vanguard or something, Merrill Lynch.

Sure. All right, Rob, what do you think? Yeah, Craig, I would say the first thing is to make sure you have at least three to six months in your reserves. I heard you say you had $15,000, but I don't know how much of that is money that you're spending on current expenses. The second is I would perfectly consider just wiping out that mortgage, just taking care of the remaining $15,000.

Now you're debt-free and you can recoup the full amount of what you are paying in terms of a mortgage payment, principal, and interest back into the budget. In terms of what you might have left over, if you're working, I'd try to get as much of that into a qualified plan so it can be growing on a tax-deferred basis, but with whatever's left, if you want to invest it, I'd look at Schwab Intelligent Portfolios, you could look at Betterment, or you could connect with a Certified Kingdom Advisor there in Ohio if you want a little more proactive, hands-on approach. Just go to our website, MoneyWiseLive.org, and click Find a CKA, but those would be my priorities moving forward, Craig. That's MoneyWiseLive.org. Craig, thanks so much for your phone call today, and thank you for listening. MoneyWise Live is a partnership between Moody Radio and MoneyWise Media. Drive safely and join us again next time for another edition of MoneyWise Live.