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The Cost of Work

MoneyWise / Rob West and Steve Moore
The Truth Network Radio
November 5, 2020 7:03 am

The Cost of Work

MoneyWise / Rob West and Steve Moore

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November 5, 2020 7:03 am

People go to work for various reasons. And many might say they just go to get a paycheck. But what we often forget is that work also costs us money, especially when we work outside the home. On the next MoneyWise Live, hosts Rob West and Steve Moore go over some of the things that can eat away at our paychecks. We’ll explore the cost of work on the next MoneyWise  Live at 4pm Eastern/3pm Central on Moody Radio. 

Rob West and Steve Moore
Rob West and Steve Moore
Rob West and Steve Moore
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Rob West and Steve Moore
Rob West and Steve Moore

People go to work for many reasons, but when I asked, most people would say more than a check. Of course, what we often forget is that word also costs us money, especially working outside the home had costs and some not. Today financial planner and Futurama West over some of the things that paycheck will take your financial calls at 800 525 7000 falls on anything 800-525-7000 nine Steve Moore cost of work for that next year moneywise. Robert 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.

It'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 could make all the difference. For example, if you're a parent to 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 too paycheck couple without children. Job satisfaction is another consideration. If you don't like your job, you, 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 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 are 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 heart sounds good of the first thing you 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 course putting the gas in it I don't forget about the cost of registering the vehicle and insurance. Now 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 straight speaking out. Have you seen the new 2021 Corvette. I have met that no come on you bought one already. Did you know 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 close will be cost money to look professional. That is, of course, if you're in the tech industry. I think they get a pass on that draft. Okay, you know, a paralegal working in a law office may not spend or may spend more in close and someone working in retail or maybe even in radio, but you have a name. The biggest obvious expense to working outside the home. Yet that's a keen observation.

Mr. Moore and that of course is cost of childcare and it really takes a bite out of your paycheck. You may end up paying around $1000 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 lunch is more than you what 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 your meeting with clients that sort of thing so it's just all adds up. I will talk about some of the other less obvious costs to working outside well. It'll make you a very busy person. You might get to take out meals more often or by more expensive prepackaged 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 mention might seem trivial but small things add up. If you get yourself to a seven dollar lunch once a week. Let's $350 a year and that's just a small expense compared to maybe 12,000 a year for child care is reset yes and I would total up all these expenses okay. Then what well you get a much clearer picture of how much you're actually making a few take-home 30,000 year after taxes but your costs are 20 you're actually bringing home 10 that comes to a little less than five dollars an hour and then you have to ask is it worth. So what are we trying to do here. I convince people not to work, not at all know what were 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 range will be right back more money. Many people are experiencing financial challenges such as credit card debt downsizing that in jobs and savings.

In fact, more than half of all the courses are the result of financial pressures at home, but there's hope in your money counts biblical financial expert Howard shows that the Bible is a veritable managing your finances will discover the profound relationship with God, your money counts is available when you click the start button moneywise you have money in a retirement account for just a general investing. You know, the stock market can sometimes be possible to enjoy both profit and peace of mind and investing no matter what's happening. You can see a short video webinar on sound mind since 1990 sound mind investing in stocks offer financial wisdom for living well sound mind investing.Margie changing the world one grandchild at a time for grandkids matter. Harold Fallis quest as a friend who remembers many great times spent at his grandparents home in Utah he says is most vivid memories are from those times that seeing his grandfather and grandmother at their bedside, praying, or in the living room with survival. So and so today Harold takes every opportunity make prayer a priority whenever he gathers with his extended family was such a powerful part of his childhood and now he wants to pass that legacy onto 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 grandkids or give a lot more encouragement for your role once again grandkids you feel like your hands are tied with dad preventing you from serving God. If you have credit card debt. Christian credit counselors can help through our debt management program we can get out of credit card debt. About 80% faster while doing your debt info.

For more information on how Christian credit counselors can help visit Christian credit Christian credit or call 800-557-1985, 800-557-1985 with us today. I moneywise live route west your house times more and were taking your phone calls say anything financial I know specific topic. Anything that's of concern to you anything and 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 and 800-525-7000 chatting for just a moment about working outside the home were not suggesting you should or shouldn't we just suggesting effect 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're here a couple of others wear and tear on your car of the 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 you put on the number of miles of the chances are really good that you're going that they're going to charge you more if you're driving to work each day as opposed to not driving to work and is just small things like parking in your rug and I've been doing this long enough to know that when both people are working outside the home.

Sometimes I really don't stop to add up the expenses and you really don't know how how much each spouse is bringing home and sometimes it's less than what you think. And then you have to kind of you'll balance that off and compare it one against another visit was it worth it to stay at home, raise the children. That whaler hired childcare were babysitting and in good 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. Regardless, the scenario I think is 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 except 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 shed some light on it will cause people to think differently about the true cost of work in one.

One other interesting wrinkle that has to do with coalbed. 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 were not interested but now with coalbed lots of people are working for home, and they find that it's working for them and even working for the boss so that that save 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. Make sure you understand whether or not that's an option as you are considering taking a position I'm sitting home right now wearing my jammies. It doesn't cost me a thing yeah if you are the dog started barking you'll know why. 800 555 7000. I really am not at home.

I am wearing my jammies but I'm not in Harrisburg, Pennsylvania hey Gina, how can we help you and I retired another 10 years of working before I can collect all social security.

How much life insurance and I had 10 years in case something would happen to them before I can collect her carry 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 would need life insurance for that. Regarding Social Security benefits. A widow or widower at full retirement age or older generally gets 100% of the deceased workers basic benefit amounts or the spousal benefit, whichever is higher. But just to be sure, I'd check with your local Social Security office to review your statements to divert 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 is income that you could get a term policy equal to that period of time while you are still saving in an providing other provision for your income after his passing. I keep in mind it will likely be rather expensive given your husband's age so that's what you 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 Point is really not a need for insurance and that significant added expense that you 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 doing well on my thing, unfortunately. I know a little bit demographic.

I early 40s. I am not quite there. We will talk about that, but I'm getting there.

We both work full time we get home. My credit and good credit. I think I moved close to eight are a little over eight not that much.

It had some bad history in the past and we are wanting to increase credit only get moved into not not on it so we would like to refinance in a few years, and at his name to help build his credit, he just would feel better. You know personally if he was in a better Stansell. The question is we are looking car is on the verge of death, and so we need to get another car working for hearing purchasing a car, maybe getting a small loan in his name to purchase a vehicle were kind of wondering what your recommendation is on dollar amount you know based off of where we are maybe too involved for you to answer the phone today. I don't know why Jennifer is just to improve his credit. 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 the limit or what's total what's available because that really will begin to boost his credit over time. So one of the options there. Well we know we don't want to do is start paying interest or taking on debt just to improve his credit. That's gonna be counterproductive. So you would only want to do it either with an unsecured credit card. If you are living on a budget and you really don't feel like it's gonna be a temptation to live beyond your means where you perhaps add a recurring charge of. That's a budgeted item every month, maybe a subscription. That's a small dollar amount. Words can hit the car 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 to buy anyway and you can work that in your budget.

You have a plan to pay it off in a reasonable period of time, adding your husband 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 it made sense to refinance, you can stay in the home for a while now can increase the term to save at least 1% on the interest rate that a refi might make sense in going ahead and putting him on that loan. So that's reported to his credit file as well. Good 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 and in most cases they do, but not in every case so you want to look at those options, but give me your thoughts obvious after a lot after their credit credit. That's really where he where he fall.

We also really want to know, like where I get more involved in my thought, you know how much we are bringing home and what that reasonable amount to have outgoing compared to ingoing NLN coming so they stop it for me for bringing home. I think eclectic before 50 to 54 months and the lead guy in our new mortgage is 13 on my know I don't have a car.

Other cars paid for sure. Well, here's what can be helpful. There is looking at some percentage guidelines.

So basically when were putting together spending plan would gotta start with capturing what are all of your expenses. You gotta know what are the ones you get the bills for every month is your fixed expenses. One of those discretionary expenses that you have that you don't get a bill for but you you do spend euro eating out groceries, entertainment things that just happen through the course of a month, you gotta capture a really accurate record of what those are. I would do that over 60 day.

If you haven't already, so you can build a budget off the bed 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 perhaps any retirement contributions or 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 include them, including the nonrecurring those things that come once or twice a year. Then at the end of the day want to make sure there's margin there because that's what you can use to achieve your goals. Building your savings are paying down debt or increasing your let's do this. I think the money wise and could be really helpful to you. It's brand-new.

It's the best envelope system we've ever had to give her six months free line will give you access to that many people adopt an attitude toward marriage and finances that it will all work out somehow.

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Let's talk about it. 800-525-7000, and we have open lines right now. Chicago, Illinois hello Shawn what's going on with you.

I've been the breadwinner. All the kids are in school eight hours a day. She's got no desire to go back to work but I would like to get back to work to help with the second would be nice to be beneficial.

Sure, just don't know how to approach it.

I tried after her, but it's not 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. You could be somebody else is talking about other husband in the same situation. I think it's really a values in a lifestyle question we need to start with. Perhaps, I think the first step is to take the spotlight off of this decision have one income or two 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 your stewards of what he's entrusted to you, and I think you need to have a lifestyle conversation to say what what we feel like God is calling us to what lifestyle in terms of the type of home.

We live in your how much discretionary 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, you know, the way we want to be able to live as a family and want to be able to take vacations of 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 her own, and I think as you begin to talk about that the lifestyle you feel I got is 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 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 were to consume today and so do we have some margin to pursue a life where he 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 adopted child, or something that's gonna require some savings down the road and margin is the only way you can build a fund that it I think is you have that values conversation around lifestyle and provision in what God is calling you to then as you all settle into 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 net income is To meaning. There's not a way to pursue additional income from that one particular person is working then were 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 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 Sean is just recognize some of these other things we talked about the top of the program today and that is if your wife goes back to work.

There's a cost of that not only a real financial cost with increased commuting close and maybe eating out but the cost of the family where you know perhaps is not somebody there to prepare the meals and those types of things so factor all of that in before you make this decision and will be praying that God gives us wisdom and Shawn were going to send you a complimentary copy of the book money and marriage God's way. This might help you guys talk so much. How should we as Christians think about investing.

What if we could invest our money in a way that aligns with what we believe that Eventide we believe it is possible to love God and love our neighbor in the very practice of investing we decide 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. More information is Christian healthcare ministries enables believers to show love for one another by sharing each other's health costs through CHN's voluntary health cost-sharing programs members uplift each other spiritually and financially. CHN was an eligible option under the affordable care act and a Better Business Bureau accredited charity interested.

Learn more by calling 800-791-6225 or online at CH ministries.more training and communications major reason. If you are about to throw in the towel on homeschooling. It's time to leave the second-guessing behind and quiet the voices of courageously homeschooling by reading home this book Jamie Erickson teaches you see homeschooling as a calling she helps you expectations, and bumps in the road bravely to homeschool playfully available now Do you know if you have enough money house. Do you know how much is enough. If not, one blue can help with this book. Master your money a step-by-step plan for experiencing financial contentment. Learn how to save and invest and give wisely to create a long-term financial plan and how to get out of debt.

Find it all in master your money by Ron blue available when you click the start button moneywise live to work. Use on drugs God election officials and key battlegrounds pressing forward with boat coming two days after election day resident from spouse to reelection is become very narrow, though still possible. The president needs victories in all four of the remaining battlegrounds, Pennsylvania, North Carolina, Georgia and about 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 worsening coronavirus pandemic ounce note elections after its latest policy meeting today was productivity increase between July and September.

The Labor Department reports productivity advanced 4.9%. Stocks rallied again on Wall Street today very down game 400.

That's 542 points.

The NASDAQ was ahead 300.

This is SRN news online. You'll find us when you type in moneywise that's our home website and you'll find lots of resources there. Many of them for free radio archives how to find a kingdom advisor a certified kingdom advisor in your area how to connect with the budget coach.

Also how to hook up with her brand-new app and Rob what's the easiest way to define the gap because I know I'm now excited about.

It's going to be something else. Well give you a couple ways.

First way is to go to your app store.

So if you have a smart phone or tab 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 smart phone 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 and you can read all about it.

You can also get a link to download some people are saying they found your picture other people are saying they haven't been able to find your picture in the app.

Any idea what's going on.

Don't think my pictures on the really didn't have the money for that. I know you wanted to be there but I did. I want to come up with 20 bucks myself to make that happen right Bradenton Florida I Mayor he fits in your mind today and I wanting to donate my required minimum distribution to the charity 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 all blank all night write off for charity yes absolutely so couple of things there. Number one is just one make sure you know the required minimum distributions have been suspended for 2020. So, that's because of the cares act in 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 who ever send you your statements for your IRA. You just want to contact them and say I need, I want to do a qualified charitable distribution they'll tell you how to do that either online or through paper form you 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 went so it's one of my favorite tools. Does that help you know Mary from state to state the requirement. I know 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 okay I very much I for you. Thank you for listening. God bless you 800-525-7000. We have a open line or two available 800-525-7000. Let's go to Tuscaloosa, Alabama and Phyllis have a question about the savings account for well okay and what is your question specifically related to that savings bond Phyllis yeah well is in the paper binder is an electronic do you know about okay alright well yeah in order to determine the value of it. You can go to the government's website for savings bonds, which is treasury treasury If it's a paper bond you be able to just sign it over to him, in which you can do or you can have it reissued in his name again treasury would be the place to do that as to whether or not that makes sense you don't 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 stock portfolio through mutual funds and that it could grow for him. Over time, 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 then now just hanging onto the savings bond. So, answer your questions yes you can absolutely do it and more information is but I might consider repurchasing that into something it's can perform a little better and I think you perhaps considering a 529 plan could be great.

Thank you Phyllis were glad that you called today, Cleveland, Ohio and Tom what's in your mind's or when you're out employed and I have a little bit of money in stock and little bit of money in my leaving my question to be money for retirement. Yeah, sometimes 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 separate IRA or Roth or something like that. No I have not okay yeah I think that would be the thing to do. 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 in your business. Hopefully separate books where everything is real clean and you're paying yourself specific hopefully salary and then you know building up profits in the make maybe taking distributions periodically but where you can really get on a nice budget. Both of the business and you personally. Then out of that monthly cash flow that you transfer over, hopefully on a more consistent conservative basis so you not tell you know not transferring huge amounts and in a high month and then you a lot less and 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 or an IRA pretty quickly because you're under 50, it's going to be 6000 a year, or over 57,000 a year. That's where a set up a SEP IRA 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 401(k) 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 time giving other questions, don't hesitate to give us a call back and see before we had 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 the lack of confidence is she just wants to be able to spend more time at home with the kids asking those questions will uncover. That's we appreciate certainly you, thank you so you will be back with more right around the financial wealth you leave behind could be the best thing that ever happened to your loved ones or the worst in splitting hairs, giving your money and things to your children without ruining their lives. Ron blue explains why it's important to make these decisions now, instead of forcing your heirs to do it later. Splitting hairs will foster a real appreciation for the precious resources that God has entrusted to you, and it's available. Click the start button moneywise hi I'm very tired. I'm here to help you understand the urgency and how much fun it is to share your faith in the eyes of the layman after 40 years of sharing my favorite daily basis. I can honestly tell you it's never been so easy.

This is how life works is easy to forget about God when you're soaring with Eagles on the bad times go were far more prone to reach out to God for help in right now most unbelievers are reaching out to God for help like never before and doing with desperation.

That's the good side of what's happening today why God is allowing it to happen. Most the time.

Most of you around. Your unbelievers will be shown or not Moser.

Hopefully there's a God who can make sense of the chaos and are looking for some. I did tell them. And when you become that someone your joy in the Lord will explode rocksolid. There's nothing more exciting than knowing God is using you to move people closer to join his no moment here's build owner Jason back down the work of your hand.

Where do while still little tense today would say on week after week. About an hour with me and discipleship is not about God is not about your family 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 are well. Jason was kinda quiet. God is said in Micah 513, Jason, to those who are not following him. I will cut you off your secret pillar you will no longer bow down to the work of your hand, say friend confessed today.

Jason did that what you do could be more important than who you are and crying not to learn more about discipleship network of American resources for 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 moneywise is a verse that applies to your money in your finances and the rest of your life as well and without faith is 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 six. Let's go out to Idaho land of potatoes, I'm told, Katie had potatoes right there in your yard that many potato am so sorry I using surveys walking around tripping over potatoes there and I kind of I'm, I'm sorry Kate. How can we help the woman who called in regards to training only utilizing about 30% of your overall credit available on a card I pay mine off every month but I utilize Clay Bennett and I don't want a huge amount of credit for fitting out there, when I card my my question is only 30% of that individual card or can I look at the umbrella of all the credit on the credit card only use 30% 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 process is 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 DS scoring factor really looks at every particular account. Is there anyone 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 collective basis is going to begin to decrease the score and the ideas that lenders might be concerned that you're overextended and may have difficulty repaying new debt. But keep in mind it's not that you know 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 know here's the thing though you know if you have an 850 versus an 800 and are you really going to improve your situation that much more probably not mean anything. You know in those numbers are going to qualify for the top tier of credit and remember the goal over time is to get out from under needing credit at all, but we live in this world, so I realize what you want to keep a good score. And hopefully that shed some light on how this credit utilization idea works. Kate, thank you very much we appreciate your call today from Ida Hall way across the country to Florida Miguel what Sierra scenario there. How can we help you I will Florida and in the transition. A lot of money was spent to get settled and what have you and the house that I have paid off all paid all.

I was wondering maybe accurate refinance can pay off all the car one that you, but I also heard something on the radio about the reverse mortgage but I have no idea what the different fit than admit but that idea. Or perhaps just refinancing the house for you know the amount of money that I owe on credit card a couple of thoughts or Miguel. You basically reverse mortgage is just what it sounds like it's the opposite of the traditional mortgage with a traditional mortgage, you might borrow the hundred thousand dollars at the stated interest rate over 30 years, you have a monthly payment in a portion goes to the principal reduction portion goes to interest deal with the reverse mortgage you get instead of paying that amount then they pay it to you and the end portion of it, that would have been for the interest is actually reducing or or creating what is ultimately going to be that 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 amine for somebody you know in their those age ranges where there in retirement.

Let's say in their needing a some additional income.

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 of those types of things, and your funding, essentially your lifestyle by accruing debt in small amounts, month by month so you're my preference for somebody was 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 what can we do to reduce her 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 not so 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 your so often the reason we have credit card and the first places were living beyond our means.

We need to live in a balanced budget within God's provision and when we lived beyond that we rack up debt only come in and wipe that out with the home mortgage through refinancing with the cash out number one. Often times we don't treat the underlying issue meeting we we continue to overspend is just that the pressures taken off, but often the credit card debt reemerges a year or two later. The other issue is, even though the interest rates coming down with the mortgage.

The home mortgage were stringing it out over a long period of time, maybe 30 years and keep in mind mortgage refinances are cheap, you could cost you 1 to 2% 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 your to stay in the home for a while and you can save at least a point on the interest and you know it 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 if you want to get that paid off faster. I look at a credit counseling program. Our friends are Christian credit can help Miguel thank you very much sir, we appreciate that Casper, Wyoming Kevin a little bit of time. Let's squeeze it it okay yes I speak long-term care insurance that would take care of you if you needed to be in nursing home or something and I was wondering in doing that how you feel about sexual acts. Yeah so you're talking about what's referred to as acute lack 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 that which is mandated for those 72 and older you know some of the downsides would be in a lack of control that mean you have that with any annuity product to kulak.

Certainly, being one of those you the money might never get used to some people fear that they won't live long enough to get their kulak 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 acute lack of 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 want to make sure you you select your carrier or insurer very, very carefully, so I might look Kevin, you know, just to reduce the complexity and and not to 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 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 in the needs that you have on a monthly basis in solving for that first as opposed to going toward an annuity contract is a solution. Kevin, thank you very much interesting question and I will glad you made it through today. Thanks, Craig in Ohio a little bit of time served, but to let us know what's going on in your life okay one years old. Total of 20. Job tracking owe about 15,000 home at 4.99% interest 15 year mortgage.

85,000 insurance claim here and was wondering what I should do with it. Where I should put it, something sure yeah Craig, I would say first thing is to make sure you have at least 3 to 6 months in your reserves. I heard you say you had 15. How much of that is money that your spending current on current expenses. The second is I would prayerfully 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 try to get as much of that into a qualified plans or 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 to score website moneywise and click find a CK those of the my priorities. That's moneywise Thanks much for your phone call today and thank you for listening moneywise. Live is a partnership between Moody radio and moneywise you drive safely and join us again next time for another edition of moneywise live

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