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A Conversation with Dave Ramsey

MoneyWise / Rob West and Steve Moore
The Truth Network Radio
November 17, 2020 7:03 am

A Conversation with Dave Ramsey

MoneyWise / Rob West and Steve Moore

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November 17, 2020 7:03 am

Millions tune into his daily broadcast. And he speaks from the heart, his message laced with God’s financial principles that his audience might otherwise never hear. On the next MoneyWise Live, hosts Rob West and Steve Moore sit down with financial expert and radio personality, Dave Ramsey. He’ll talk about how his life changed dramatically after applying God’s financial wisdom. That’s on the next MoneyWise Live at 4pm Eastern/3pm Central on Moody Radio.

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Millions tune into his daily broadcast. His message is blunt, but laced with God's financial principles the audience might otherwise never hear. He is, of course, Dave Ramsey. Hey, a special program for you today on Money Wise. Host Rob West sits down with financial expert and radio personality, Dave Ramsey, for a different look at teaching wise money management. Then it's your calls and questions on any financial topic at 800-525-7000, 800-525-7000. I'm Steve Moore, reaching a general market, secular audience.

That's next, right here on Money Wise Live. Well, Rob, if ever the phrase needs no introduction were true, it would be with our guest today. Some 15 million people every week hear his financial program, second only to Rush Limbaugh and Sean Hannity.

So he must be doing something right, I guess. That's absolutely true. And Dave, what a joy to have you on the program today. Thanks for being with us. Well, thank you, my friend.

Love you guys. We've been friends a long time. I'm honored to get to spend all time with you.

Well, we're grateful as well. And you know, here's my goal today. I'd love for our listeners to really get to know you a bit and the heart motivation that really drives you. But then, of course, also come away with some new insights based on your observations of thousands of hours of delivering financial advice over the radio.

So we can accomplish both of those things. That'll be great. And by the way, any idea what episode you're on? How long have you been doing this?

It's coming up on 30 years, so probably 25,000 hours or so on the air at this point. Incredible. Incredible. Well, God is using you, my friend, in incredible ways to share his principles with millions, as Steve said. And I'd love to go back because many folks are listening to your program, of course, but maybe they don't know the back story. Why don't you start out by telling us what led you to become such an evangelist for Wise Money Management? Well, I got my PhD in DUMB.

I messed it up royally. And Sharon and I got married, started off broke like most people. You remember, we ain't got money, honey, but we got love. And I started buying real estate, nothing down. I had a real estate and finance degree from the University of Tennessee and all these other letters and licenses after my name because I started collecting certifications and so forth.

And I was enamored with money and math and that kind of stuff. And I got rich, at least by a kid from Antioch, Tennessee standards. I ended up with about a million dollar net worth with about $4 million worth of real estate. I made $200 and something thousand dollars at 26 years old. And the bank came in and said, there's a boy child owes us millions of dollars.

He's current, but this is scaring us and they got sold to another bank and they got really scared and they called our notes. And we spent the next two and a half years of our life losing everything we owned. And finally with a brand new baby and a toddler and a marriage hanging on by a thread, we were at the bottom and we filed bankruptcy.

Incredible. Along the way, I got saved and met the Lord. And so we always say, I met God on the way up. I got to know him on the way down. And so I dove in and started studying Larry Burkett and Howard Dayton and Ron Blue.

In other words, what the Bible has to say about money, because apparently what I had been taught was wrong. And then it all began. And actually, Larry intersects a couple of places into this story. Talk to us about the impact Larry Burkett had on you.

Well, I mean, in those days, this was 30 years ago, Larry was, his influence was in its prime. And so if you turned on Christian radio, you got Dr. Dobson and you got Larry Burkett, you know, and a couple of other folks, but that was it. And I was learning how to be a daddy because I didn't know how to be a daddy. I was learning how to be married. I didn't know how to be married from the scriptures. And so I'm all in Christian radio as a brand new believer trying to get tooled up because I didn't know anything. I mean, I was dumber than a rock, biblically speaking. And so Larry became, as soon as I picked him up on the radio, then of course I bought everything he ever wrote, read it all, watched those old videos in front of that lectern that he did, and actually came down to Dahlonega to one of the counselor training things. And I really, I had to scrape the money together to do it because we were broke, but I was so sure in my new faith, and I was right, that God had the answer to my problems.

And if I could learn how, what the Bible says and what God, what my daddy says about marriage and about money, my life was going to get better. And guess what? I was right. That's Dave Ramsey. He's with us today on our program. We're finding out all about who he is, why he does what he does, and we'll chat some more right after this brief break. Give us a call later in the program, 800-525-7000, toll free 800-525-7000. You're listening to MoneyWise Live. Your host is Rob West.

We'll be right back. Many people are experiencing financial challenges such as credit card debt, downsizing, dead-end 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.

Your Money Counts is available when you click the store button at moneywiselive.org. If you have money in a retirement account or just a general investing account, you know the stock market can sometimes be like a rollercoaster. But it is possible to enjoy both profit and peace of mind in investing, no matter what's happening in the market. You can see a short video webinar on that topic at soundmindinvesting.org. Since 1990, Soundmind Investing has sought to offer financial wisdom for living well.

Soundmindinvesting.org. A waiter! Waiter! Have you ever been at a restaurant for dinner and had bad service?

Hi, I'm Bernie Diamond. You know, you plan a special night out. It's not cheap. The food's good, but the waiters, well, they're not making eye contact as they bustle through the restaurant. The salt shaker's empty, but you just can't get anyone's attention. So you have a choice.

Go without salt or let your meal go cold while you wait. It's awful, isn't it? But I wonder if it isn't a sign of the times. These days, we're all so busy.

We don't have the time to make eye contact. And then we wonder why dealing with other people is so hard. It's interesting. Jesus talked about that. He made the point that if we want to influence other people, then we need to serve them. And it stands to reason. If someone's waiting for me or you to fill their salt shaker, they may not be too cooperative if they wait until the dinner's gone cold. Real influence happens when we serve other people.

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That's ChristianCreditCounselors.org, or call 800-557-1985, 800-557-1985. And welcome back. Joining us today on MoneyWise Live is a good friend who also does what we do just in a different area.

His name is Dave Ramsey, author, teacher, well-known financial authority. And Dave, it's just a great blessing. We talk every couple of years, and it's always a blessing to hear your voice.

And it always feels like we pick right up where we ended the time before. Amen. And thanks so much for joining us.

No honor. Thank you for having me. Dave, Steve was talking about your work in perhaps a different part of the orchard. God's given you an incredible platform, and I'm so grateful that you've used that so well. You really see yourself as a steward of that responsibility.

Talk to us about reaching a general market audience and how you've been so purposeful about really bringing scripture into that conversation. Well, I was that guy. I mean, I was unchurched and unsaved. And so, you know, and I sought out Christian radio after I met God.

But because I kind of come from that world, so to speak, I've always had a heart for Dave Ramsey, who's a little redneck hillbilly kid out there driving around, doesn't have a clue. And he might be 50, and he might be 25, and he might be 19 watching me on YouTube now, or she might be. And so I try to make what we're doing handsome for those folks, but also make sure that they know where the help that they are getting is coming from, which leads them to the feet of Jesus if I do my job. Some days I'm better at it than others. Yeah.

Well, you do an incredible job. And as we've said, you have shared these biblical principles with more people than we can imagine. And so God is using you, my friend. You know, we talked about Larry Burkett just before the break. Larry used to say something interesting. He would say that money, the way we handle it, is the clearest indicator into what's going on in our lives spiritually. Have you found that to be true? And if so, I'd love for you to reflect on that statement.

Absolutely. I quote him every week on that. And the other one is, his money problems are almost never the problem.

They're usually the symptom. And that was another Larry line. I've said it so much, I kind of think I said it, but he said it. But it is. We kind of took a sidebar on that and said, money is 80% behavior, 20% head knowledge.

Because the financial world has always tried to fix it with math, and it's not a math problem. Getting overweight is a calorie problem. Yeah. But it's also, why am I putting that donut in my face?

Well, that's right. And it's about a mindset so often. And as you said, perhaps 25,000 hours or more on the radio delivering financial advice. What have you observed, Dave, about the mindset of the people who get money right, and really understand what it is from God's perspective, but then translate that into the right habits?

What's the mindset that works? There is a humility that says, it's up to me. The Long Ranger and Tonto are not coming. Batman's not going to come save the day.

Who we elect into a political office is not going to save my life. It's going to be up to me, and me and thee. And so, as Christians, we all meet Christians who sit around and wait on God to do everything for them, when God is saying, if you're a farmer, you probably ought to put some seed in the ground, and then you ought to pray that I send the rain and the sun. And so we have this partnership with the Lord, and the productivity of wealth, or the creation of wealth, that is both faith and works. And haven't there been some wonderful books written on that subject? Yeah. Yeah.

Well, that's right. And at some point, we have to recognize our role as steward, that God is the owner, and therefore we have a big responsibility as the manager or the caretaker of his resources. And yet we know, Dave, and you experience this every day as we do, that there's some lies the world will tell us that will lead us down a path with our money that will cause havoc in our lives.

In your experience, what's the lie that creates the most problems that we buy into? I think it somehow falls under a lack of diligence. I call diligence excellence in the ordinary. And the diligent prosper, and why are we not diligent on something? It's kind of an arrogance, the opposite of the humility I was talking about a while ago, that has an entitlement to it that says, I'm breathing air, God owes me, or the world owes me, or somebody owes me, so I don't have to pay attention to this. And then under that, I don't do a budget, I get deeply in debt, I'm not organized, I don't do my will, I don't keep the life insurance in place, I don't do the tactical things because it feels like I don't have to. It's a type of arrogance. It's a different kind of an arrogance, but it's a real one.

Yes. Dave, your friend and ours, Ron Blue, likes to talk about generosity in the sense that he says giving breaks the power of money over our lives. If money is going to have a grip over our lives, generosity is going to break that. That's been a hallmark of your message as well. Talk to us about the role of giving as it relates to our money.

Yeah. And if you see Ron Blue's face, and as soon as he starts talking about generosity, he breaks out in this huge grin. He can't keep himself from it. And that's what generosity does. Generosity is a character quality. And character qualities are a decision. Integrity is a character quality.

It's a decision. It results in tactical things like actual giving. It results in smiling. It results in you hold the door open for someone who's got two bags of groceries. It results in, it's not all about me that creates this.

And so it is one of the most beautiful pictures of Christianity when we can say it's other centered rather than self-centered. And that does go back to, I don't own it. I'm just a manager. I'm just a steward. And that is, again, a level of humility. These things are all tying together.

There's a thread here. And that leads to outrageous generosity because that is the ultimate way of saying, hey, this whole thing's not about me. Oh, and by the way, generous people are highly attractive. That's so true. Well, I'm so grateful that you've allowed that to be a core part of your message over the years, that the reason we receive is not only just to be a bucket and allow that to stop with us, but to be a pipeline so that flows back into God's activity.

Dave, we have just about a minute left. I know there are some people that are discouraged. Maybe they've gone through this recent pandemic and it's left them in a really difficult spot.

Perhaps they think there's no way out. I'd love for you to finish today by talking directly to that person and providing a word of encouragement. I was 28 years old with a brand new baby and a toddler and a marriage hanging on by a thread, like I mentioned earlier. I woke up at four o'clock in the morning and couldn't sleep and I opened my scriptures trying to learn what the Bible says. And I was reading through the Bible systematically. I read through the Bible in a year. So randomly, which is not a word we use.

It wasn't random at all. I hit Romans five and it says, rejoice in your suffering. I was sitting there suffering.

I was not real pleased to read that. Me and God had an argument there for a minute and he reminded me he's God. Rejoice in your suffering. Suffering produces perseverance, which by the way is the number one character quality of successful people. Rejoice in your suffering. Suffering produces perseverance and perseverance character.

There it is again. And character hope. And hope is a gift of the Holy Spirit. If your hope is in your stuff, it's going to let you down.

Never saw a rider truck following a hearse. Wow. Yeah. That is a good word. Well, thank you my friend for joining us. We're so thankful for you and the impact the Lord is allowing you to have. We'll look forward to having you back real soon. Honored, my brothers. Love you guys.

Be good. Thanks so much. Dave Ramsey has been our guest today.

You can find out more about him in the ministry God has called him to at Dave Ramsey dot com. Your calls on any financial topic at 800-525-7000. This is MoneyWise Live. 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. I can remember when I wanted so much to stay home with my babies so badly. But we needed the money so, so much.

And Keith was kind of like, You got that education. You got your good brain. Baby, I think you're going to need to get a job. And I mean, I just was like, I mean, I just want to go home to mother.

You know what I'm saying? I'll make it half as expensive here for you. You know, I just was like, oh, you know, I did not want to leave my child so badly. So I thought paper route. I can have her in the car.

I'm going to do a paper route. And I thought, how hard can it be? I need you to know something. I lasted one day, one day, and I cried so hard. I had my arm was just killing me. Just absolutely killing me.

I mean, by the time I got home, I had to bring it in the house like this. It was awful. It was just awful. And it started pouring down rain.

I was absolutely drenched. Well, Keith just nearly cried. I mean, he just. And then he just brought me into his arms and said, baby, you don't ever have to throw another paper as long as you live. He said, there surely is something that we can do to keep your hair dry. It was just too much.

It was just too much. You've been listening to A Quick Word with Beth Moore. 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. And thanks for listening to 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 pack style. This newly revised and updated book offers a six step plan to finding the immediate pleasure and eternal rewards of the treasure principle. And once you discover it, life will never look the same.

The treasure principle is available when you click the store button at MoneyWiseLive.org. Hey, it's a real pleasure to be with you today. It's Money Wise Live taking your phone calls for Rob West at 800-525-7000.

Here's the good thing. We have open lines available to you right now. If you have a question about anything financial, 800-525-7000. I hope you enjoyed that little conversation with a good friend of ours. And, you know, Rob, we forgot to ask. There was one question I was hoping that we'd ask Dave, Dave Ramsey, and that was, do you or do you not agree with budgeting? And I say I thought you were going to ask him. Probably you thought I was going to ask him and then neither. We never got that information from him. You think there's a chance he doesn't agree with the budgeting? Well, but you know, we never really asked him.

So that's how things go sideways when you just make assumptions. Well, here's what I will say. You know, I started today by saying that I wanted folks to hear his heart.

And you know what folks may not realize is he's the same in private as he is on the radio in that he's genuine. And we were doing an event one time and it was at a country club. And Dave was speaking for the organization I was with. And after everybody had left, the room was clear. And Dave didn't know I was still there. I was helping someone tear down some things before we left. And I saw him sitting off in the corner.

Again, the place is empty. And a server had come over to him and stopped him and said, Mr. Ramsey, I have a question. And he sat with that gentleman for 45 minutes, nobody looking, and just got into his life and helped him process what he was dealing with. And that's the Dave Ramsey that I've come to really appreciate someone who is genuine, really sees his work as a ministry. And he means what he says, and he lives it out. Who someone is, when the lights are out, really tells you what they're really like, where their heart is.

In this case, the lights weren't out completely, but him being over there in the corner in the dark, not trying to impress anyone but God himself. So yeah, I appreciate you saying that, Rob. Thanks.

800-525-7000, Hagerstown, Maryland. Hi, Cliff. What can we do for you? Oh, hi, guys. Hi, Rob and Steve. Thanks for taking my call.

Hey, Cliff. Sure. Enjoy.

Enjoy listening to you guys here on the local radio station and the podcast when I can. Yeah, my question is, I'm learning a little bit about the momentum investment strategy lately. That's where we buy ETFs and mutual funds when they're trending up and so when they're trending down.

And I'm considering implementing that for my wife and I in our 401k and 403b. I'm trying to reconcile that with some other advice I've heard where it's not a good idea to try and time the market, but rather buy and hold. So I'm just wondering if you'd recommend this strategy as one of many strategies out there, or maybe the pros and cons of it? Yeah, you know, I wouldn't put it necessarily in the same category, Cliff, as trying to time the market. What you're talking about is a rules-based investment strategy, not relying on predictions about where the market's going and are we at the top and we're trying to, you know, sell out and we're going to buy in at the bottom because all of that is relying heavily on predictions of how the stock market will perform in a period of time, could be a week or a month or even a year. That I think is a losing proposition. What you're talking about with a momentum strategy is something where you need some expertise.

I mean, you need to understand what you're doing. But given that it's a rules-based strategy, I think it puts it in a different category. And the idea behind momentum investing is that recent past performance trends can tend to continue into the near-term future. So mutual funds that have performed well over the past several months tend to continue performing well for the next several months, just as funds with poor recent performance tend to continue to perform poorly. Now, this obviously runs counter to this idea that we hear often when it comes to investing, and that is past performance is no guarantee of future results. And that's certainly true, but recent past performance is more likely to persist than not. And that's why momentum is incorporated into a number of strategies, including the one that sound, some of them sound mind investing that we talk to often.

So what I would say is, although it's different, I'd be very careful. I wouldn't make that my core strategy, and I would make sure that I have some expertise, some training, and really understand what I'm getting into. My preference, apart from having professional money management, my preference for the average investor is not to try to do that. It takes a lot of time, and it involves you doing a good bit of research and a lot of hands-on type investing. My preference is to really buy and hold for the long term with a properly diversified portfolio, where you capture market trends or the performance of a particularly skilled money manager, and you let it go, only tweaking the allocation periodically.

And by periodically, I mean maybe a couple of times a year. But again, I don't think there's anything necessarily wrong with this. And I certainly wouldn't say that it's the same as trying to time the market, if you follow me, Cliff. Yeah, yeah.

Okay, I appreciate that. I mean, it looks like it was doing better than the 401k options, which are fairly limited, as you know, maybe 20 or 30 mutual funds. So I like the idea of maybe getting out of the target date funds that we're in and maybe implementing this momentum strategy with the limited mutual funds that we have available to try and do a little better.

Yeah. And I would just say, again, make sure you understand what portion of your total investable assets you're doing this with and go slowly. And again, my preference would be that you seek some wise counsel and take a long term approach. But I certainly can see why you'd want to give this a shot. Cliff, we're glad that you called today.

Thanks so much. And we're glad to hear that you're listening to our good friends at WCRH 90.5, the Compass up there in the Hagerstown, Tri-State area, great bunch of folks, and they've carried our programs for a long, long time. Rob, for those who would like to know more about the whole investing thing, I mean, what's the best way for them to contact us and what resources would be best for them to look at or look for? We now have a quarterly newsletter, we have a quarterly podcast just for subscribers, not to mention multiple resources.

What's the best place to get your feet wet with us? Yeah, well, I would visit with our friends and partners, long time partners at Soundmind Investing. And you can do that on the web at soundmindinvesting.org. A wealth of information for you to explore. And then we've got a great workbook, handbook, if you will, on our website, MoneyWiseLive.org. Just click in the store and look for the Soundmind Investing Handbook from Austin Prior.

Okay, great information. You're listening to MoneyWise Live, taking your calls at 800-525-7000. Ruth, Kathy, Jeanette, stay with us.

We're coming in your direction. 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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And members aren't fined under the law for not having health insurance. Christian Health Care Ministries might be your health cost solution. Call 800-791-6225 or visit chministries.org. Hi, my name is Ryan Koch, a youth ministry major at the Moody Bible Institute. The Moody Radio Verse of the Week is found in Galatians 2-20. I have been crucified with Christ. It is no longer I who live, but Christ who lives in me. In the life I now live, in the flesh, I live my faith in the Son of God who loved me and gave himself for me.

That's Galatians 2-20, the Moody Radio Verse of the Week. All Christian parents want what is spiritually best for their children. Knowing how to pray for them can often be as challenging as knowing what to pray.

I'm Drew Dick, host of Moody Publishers' Reading for a Change podcast. Erwin Lutzer's new book, A Practical Guide for Praying Parents, challenges you to become more guided in the prayers for your children. And how to pray more effectively for your children, even those with hardened hearts or those that are particles.

Pick up your copy of A Practical Guide for Praying Parents by Erwin Lutzer at moodypublishers.com. Do you know if you have enough? Enough money? Enough house? Do you know how much is enough? If not, Ron Blue can help with his book, Master Your Money, a step-by-step plan for experiencing financial contentment. Learn how to save, invest, and give wisely, how to create a long-term financial plan, and how to get out of debt.

You'll find it all in Master Your Money by Ron Blue, available when you click the Store button at MoneyWise Live. With SRN News, I'm John Scott. Almost half the states now have tightened their coronavirus restrictions amid a rise in the number of infections nationwide. 166,000 new cases reported yesterday. That news came amid reports of significant progress in work on a coronavirus vaccine. The CEOs of Twitter and Facebook defending their safeguards against disinformation in the presidential election. Testifying before Congress today, Twitter CEO Jack Dorsey and Facebook CEO Mark Zuckerberg told a hearing of the Senate Judiciary Committee they had strong programs in place to protect their platforms from being used to disseminate falsehoods or to discourage people from voting in the upcoming Georgia elections.

Stocks lower today, the Dow lost 167 points, the Nasdaq off 24. This is SRN News. Finding God's wisdom and direction for your money, your finances, your checkbook. Welcome to MoneyWise Live. Rob West taking your calls and questions today. And let's dive right back in, Rob. Medina, Ohio. Hello, Ruth.

What's on your heart? Yes. Hello. Thank you for taking my call. Hi. I am.

I just wanted to ask your opinion. My husband is going to be 65 in April. I'm 58. Our home is paid off. We have a whole life policy and we weren't sure if it's about worth 60,000 each. We're still paying on it.

And I was wondering if we should cash it in and invest it in retirement or what's your opinion? Yeah. Ruth, do you have a need for the death benefit or do you have that covered with other assets? We have that covered with other assets. Yeah. So we, you know, our home's paid for and we do.

But my husband doesn't have much in retirement put aside. So we weren't sure if we should just like put some money towards that. Sure.

Yeah. I think the question is what type of account would you put this into? I mean, obviously, inside the policy, there is some tax benefit, but you as you age, you're going to be having a larger and larger amount going toward continuing to carry that death benefit. So I think you're going to want to consider what else you might do with it. And I kind of like the idea of you all pulling this money out and putting it to work in a way that makes some sense where perhaps you could systematically over time, put it into a retirement vehicle as you're able to within the contribution limits, so that you could invest it, it could be growing over time and with some tax deferral inside that insurance policy.

Again, you've got the drag of the embedded expenses and charges inside the plan, not to mention, you know, whatever else you might have in terms of what generates the return. So, do you all have Ruth a financial planner that you sit down with once a year or an investment advisor of any kind? Yes, we do. Okay.

And have you asked this person that question as to whether it makes sense to cash these in? Yeah. And it sounded like he was kind of on the fence. I wasn't sure. And so, and at the same time, I know we're, you know, he kind of goes, we're kind of want to be safe, you know, we want to be safe with our money. So we, you know, went on taking chances.

So yeah, yeah. Well, I think the key for you is to understand how has it been doing in terms of the performance of this over time? And specifically related to this policy? What is it that generates the returns?

Are you getting? Is it a variable policy where you're getting a portion of the upside of the stock market? Is it some sort of stated guarantee return? You'll want to understand that and then compare that to what you might do with it once you pull it out. And I wouldn't pull it out and collapse the policy until you have a plan that you've both bought into. So perhaps I'd go back and visit with him and say, if we were to pull it out, let's explore what we would do with it. How much risk would we have to take? What type of return should we expect? How will taxes impact that both when we pull it out as well as moving forward, and then really get a better understanding of what the plan is.

So you have something to compare it to, as opposed to just automatically pulling it out. And then make sure you're willing to assume the level of risk commensurate with the return you're seeking versus what you have now, which is where the risk has been transferred to the insurance company. Now, what you're giving up is limited access to the funds.

And you're also giving up potentially return just based on how this has performed inside and what the yield is each year. So again, I'd probably revisit that and develop a plan that you all feel good about before you make a decision one way or the other. Ruth, we trust that will help you. And thank you very much for calling in today. Newcastle, Indiana. Kathy, you're next. What's on your mind?

Good afternoon. Something that was said last week was talking about a retirement fund and borrowing or against an account. My question is, which are you better to do? Borrow against it if necessary, or just withdraw the funds? And the fact that I am currently, I am retired now, so I am on a regular basis withdrawing from the fund each month. And the money that comes out, I'm having taxes held out at the time.

So that part's covered. So I didn't even know if borrowing against it for unexpected expenses was an option, or if that was even a good idea. What prompted the question, I had to put a new roof on the house this summer, and I just withdrew the funds from my account. I don't know if that was the right decision. Yeah, Kathy, is this a 401k, did you say? I think so. I apologize because I'm not really sure the numbers on it.

It was something that from my work that the money was put into the account pre-tax. All right. And are you still employed there? No, I'm not. You're retired? Yes.

Okay. You know, many plans allow participants to borrow from their account before they retire. Fewer plans, though, actually allow former employees to borrow from their 401k. There's not any IRS regulations that prohibit it, but it's uncommon. So you probably don't even have that option.

But regardless, I generally don't recommend that, Kathy. You know, I don't like the idea of borrowing from retirement plans. If in fact, you need the money and there's not another source of funds, especially if you're in retirement, that means you have less taxable income and you're not going to incur any penalties because you're over fifty nine and a half, then certainly that's what it's there for, to be able to generate an income from it vis-a-vis you taking systematic withdrawals from the retirement account and larger amounts as needed in line with your overall goals and objectives. Are the withdrawals from this retirement fund, Kathy, key to your monthly income to be able to cover your lifestyle and expenses?

Or is this just for extra? Yes. No, the withdrawals I'm taking now on a monthly basis are for my expenses. Okay. And do you know roughly what percent you're pulling out each year? No, I do not. Okay. What is the balance today, roughly? Do you have an idea of the account? No, but it's enough that I feel like the way it's running now, it would still hold me for what I need. Okay. Very good.

Well, that's the key. And if you don't have a good feel for that or you lack some peace of mind about how long all of this is going to last based on your current budget and the income sources you have, including this retirement account, I'd encourage you to get the counsel from a financial planner who can help you look at that, make sure your money is going to last the rest of your life. But to this particular question, it's probably not an option to borrow it, but even if it was, that's not the direction I would go.

I think the way you're approaching this and taking systematic withdrawals and then periodically a little bit more as you need it, paying tax on it at that time is the way to go. I think you're doing this just fine. Kathy, we're glad you called today.

Thank you very, very much. And we're getting a lot of calls in here about retirement, Rob. Not sure we have time before the break, but this whole concept of retirement is not one you really see in the Bible. I'm not saying you shouldn't be thinking about it and preparing for it, but other than the priests retiring in the Old Testament, there's just not a lot of information about preparing for retirement, whether it's biblical at all, whether it's something we should plan for, or just let God take us through it. What are your thoughts in that regard from a biblical standpoint? Well, and even your reference to the Levitical priest that was really not in any way consistent with what we would think of in terms of the definition of our culture's quote-unquote retirement today.

So I think you're absolutely right. We were created to be productive. We were to take God's creation and improve it.

We were to be workers even before the fall. And our calling doesn't have an expiration date, so we should retire to something and not from something and continue to ask the Lord, what do you have for me? Make it retired to something, not from something that includes bass fishing and golf. This is MoneyWise Live.

We'll be right back. The financial wealth you leave behind could be the best thing that ever happened to your loved ones or the worst. In Splitting Heirs, giving your money and things to your children without ruining their lives, Ron Blue explains why it's important to make these decisions now instead of forcing your heirs to do it later. Splitting Heirs will foster a real appreciation for the precious resources that God has entrusted to you.

And it's available when you click the store button at MoneyWiseLive.org. Hi, I'm Barry McGuire. I'm here to help you understand how urgent and how fun it is to share your faith at every opportunity through the eyes of a layman. How about you? Is your faith being shaken by all that's going on?

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Let's go to Cleveland, Ohio. Antoinette, we appreciate your patience and what's the problem you're having with your car? I have a Hyundai Sonata 2017 and just recently I found out they have a class action suit in the courts. Yeah. On my particular model and evidently they've been having some engine problems. I owe about $11,000 on the car and just trying to decide if this is something I should continue to have or to keep or if it's something I should trade out. Yes. And did you say you are having trouble with it or you're just wondering if you were to have trouble down the road?

If I were to have trouble down the road, I understand that there is some type of sensor that they could put on your car where it's some type of lifetime warranty. Yes. Not sure if I should take that chance. All right. Well, Antoinette, you've come to the right place because Steve Moore actually has some working knowledge of this situation.

Steve, what do you think? Well, just a little. Hyundai and Kia are both owned by Hyundai and this involves the Theta motor, T-H-E-T-A. It's a 2.0 liter motor with a direct injection and a direct injection means the motor runs hotter than non-direct injection cars. And Kia has been having trouble with these since 2012. Lots of trouble.

They've had class action suits of their own and you're having that kind of a situation. Now, if you love your car, I don't think that there's really a safety issue. What happens typically is that the car runs normally and perfectly and then just stops in the middle of traffic somewhere. Now, you would think that's safety and I'm not saying it couldn't be safety related, but typically people just pull over to the side of the road, then they have to have their car towed and that's a bit of a pain in the neck if you will.

But generally, there are not safety issues. And when there's a class action suit like this, they really do cover everything. They'll look at your car, they'll look at your motor and they'll say, yep, that's one of those and they cover everything and there's no expense to you. Generally, the car is in service for up to a couple of weeks and they give you a loaner car. So if you love your car and financially you can afford the car, there's nothing wrong with letting it run out and see what happens. But if all of that scares you a little bit, then you might want to trade the car. But then the question is, do you let the person you're trading it to or selling it to know that there's an issue? Because after all, who wants your car if there's a possible issue? So that's not much of an answer, is it?

No, I think it is. Hopefully that's helpful to you, Antoinette. And I think that's really the key is, you know, recognizing the reality of the situation, knowing that it will be covered because this is a known issue and you haven't had problems to this point. So if you do, you have to recognize you'll have to go through the process and drive a loaner car and wait for it to be repaired. But at the end of the day, the question is, apart from that, does it really fit into your current spending plan? So hopefully it gives you at least something to think about Antoinette. We appreciate you listening and calling though. Yeah.

And Antoinette, one last thing. It wouldn't hurt. I know people who've done this.

It wouldn't hurt to take your car into the dealer and let them know that you're aware of the class action suit and you'd like them to make a note of your car, your VIN number, just in case something happens. Then when you show up, you know, a lot of that work has been done in advance and it's not an issue at all. Not that it should be an issue. We wish you the very best. Sarasota, Florida. Hi, Ruth. What's on your mind? Hi. Hi, Rob.

Hi, Steve. I am a 70 year old widow with no mortgage, no car payment, no debt. My assets are divided between a number of CDs and investments with Northwest Mutual, a conservative risk portfolio to annuities and a life insurance. I also have an IRA as well as some savings. I'm planning on selling my house next year and moving into an all-inclusive retirement community.

One of those CDs has just matured and five more will be maturing next year. With the interest rate so low, I'm unsure of where to reinvest these funds. Should I increase my holdings with Northwest in the portfolio with a longtime advisor where the fee is 1.4% or but that might not be putting all my eggs in one basket, so to speak? Or should I open a different account, let's say with Merrill Lynch, where the fee is only 0.85%?

Or should I consider an altogether different option? Yeah, very good, Ruth. What would be the total of the five CDs? Well, six, I guess in total, roughly. Let's see. About 440,000.

Okay. And how has that conservative portfolio that you have been doing over the years? Well, it's had its ups and downs.

Of course, this year has been pretty crazy. After losing about 11,000, it came back to earn about 10,000. It's a very conservative risk tolerance that I have.

But let's say the year-to-date fees have been about 4,500. And I don't know whether I should be real concerned about that. Or I don't know. That's why I'm calling.

Sure. Well, I think the key here is that you want to have some peace of mind. I don't like you necessarily locking this money up into new CDs, given the fact that we're in such a low interest rate environment. So I think having a money manager, a professional investment advisor caring for these assets is probably the right strategy because he or she can deploy them in a conservative portfolio, as you have with Northwestern. And what that would tend to look like is a small allocation to high quality stocks, probably many of them with dividends, and then a larger allocation to probably bonds and preferred stocks and some cash equivalents. And then all together with a goal of probably generating four to 5% a year, ideally after the management fee. And I think, you know, if you can do that, that would be perfect because then you have proper diversification. Your focus is on really stability, preservation of capital. You've got a small allocation to stocks, which in the good years is going to provide a little bit of lift to the portfolio in a period of time where we were in a bear market or a recession, which we could have down the road.

We certainly will have another one at some point. The question is just when will it roll over? Then you wouldn't touch the stocks and you'd wait for them to rebound. But the income generating portion of the portfolio would continue to provide the income that you're looking for.

So I would tend not to go with more CDs. I tend not to lock it up in an annuity. I'd probably either put it with the Northwestern advisor or if you want to introduce a second investment professional into the equation, you could certainly do that.

There's nothing wrong with that. I don't think you're necessarily too highly concentrated, meaning you're lacking diversity just because you're with one advisor, because that advisor could have plenty of diversification, all that you need in the portfolio. But there's nothing to say that with an extra half a million dollars coming due from CDs, wouldn't make sense to have a second money manager also deploying a conservative strategy in the equation. And if you were going to look for somebody like that, it sounds like you already have one potential offer or opportunity. You could look at some other perhaps Certified Kingdom Advisors there in Sarasota by going to our website MoneyWiseLive.org and just doing a search. But bottom line, Ruth, to your question, I wouldn't renew those CDs. I probably wouldn't go with an annuity. I'd be looking to deploy this in an appropriately diversified and conservative portfolio of stocks and bonds. Ruth, God bless you. Thanks so much. Quickly, Tampa, Florida. Jeanette will have to be very quick.

How can we help? Hey, so just very briefly, then I'll be 65 in April and I'm going to retire. I have about $200,000 in a Roth IRA and I also would have that in a traditional IRA. So my question is, I'm thinking I'm going to take $100,000 of the Roth and just pay off my house with it when I retire. Or the other thing would be to just take it like $50,000 a year for a couple of years out of the traditional and pay the taxes.

Yeah. What will your income be in retirement? What income sources will you have? Well, we have other monies in Roth IRAs.

We have some properties that are rental incomes and we have other 401k that's invested. So yeah, we'll have. Yeah. Yeah. I would talk to your. Sure. I would talk to your tax professional, Jeanette, before you made that decision.

It's a great question. And really what you're going to want to look at is a couple of factors. Number one is what tax will be due. And I know you said if you took it from the traditional IRA, you would be taking it out over time systematically as to not push your taxable income up into another perhaps tax bracket.

And that's good. But the other issue that you're going to want to explore is, you know, whether or not you need this money long term. And if you want to be able to leave it there, one of the benefits of the Roth is you don't have the required minimum distribution. So that money could continue to grow and be available for your heirs as an inheritance or something like that. So what I would want to know before I weigh in on this and perhaps you take this up with your tax preparer is based on the income we're generating with our rental properties and other taxable income we have in our current trajectory with our retirement assets. Are we better off to pull from the Roth, the traditional or a combination of the two?

But what I know for sure is if you do it from the traditional, you definitely need to space it out over multiple years. And Jeanette, with that, we're going to have to say goodbye today. But I sure hope that that answers all your questions for you, at least most of the questions you had. And we're glad that you called today. Thanks very much. Please remember that this program, MoneyWise Live, is a partnership between Moody Radio and MoneyWise Media. Thank you so much for your partnership, for listening each day. We'll be back tomorrow with a brand new edition of MoneyWise Live.
Whisper: medium.en / 2024-01-27 00:32:07 / 2024-01-27 00:53:32 / 21

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