Single Parent Finances

Raising children and managing money are challenging in the best of times, but those challenges may seem like insurmountable obstacles if you suddenly find yourself a single parent.

It's an unfortunate condition that plagues the United States far more than most other countries' single-parent households. Today, financial planner and teacher Rob West has financial advice for parents who are on their own. Then it's your calls on anything at 800-525-7000.

800-525-7000. I'm Steve Moore, single-parent finances, next on MoneyWise Live. Well, Rob, in many cases, people do become single parents through no fault of their own, and we want to be clear that we're not advocating divorce in any way. But sometimes it is thrust upon folks, and then often they need some special help.

Well, that's exactly right, Steve. People often become single parents, not by choice, so we want to address their needs today. Okay, so where would you like to start? Well, I think a good place would be with organization. If you suddenly find yourself taking on the role of a single parent, maybe you weren't the one doing the bills and handling the finances. So get a folder or a binder to start gathering your financial documents. You can expand that to a more extensive filing system as you go. Then gather up all of your unpaid bills and paid bills, keeping them in one place. You could use another folder for that. Even a shoebox will work.

Okay, folder, shoebox, check. What's next? All right, now you need to make up a chart or a calendar for all of your bills and the days of the month when they're due. If you see dates coming up soon and you know that you won't have the money to pay one or more of those bills, always contact the creditors, let them know about your situation. They may be able to give you an extension or help in some other way. That's right.

It's never good to hide from your creditors and these days creditors seem much more amenable to working with folks than they ever have before. All right, next. Well, now you're ready to drop a spending plan. Don't worry about it being perfect.

Just do the best you can and know that it will change as time goes on. To develop your spending plan, I'd encourage you to get the new MoneyWise app. It's free and it has a simple to use budgeting feature based on the tried and true envelope system.

Just go to your app store and type in MoneyWise Biblical Finance. You'll input your total monthly income and then you'll load money into the various envelopes or categories. Besides your recurring bills, those would include your giving, groceries, debt, other expenses.

You have to keep spending in the various categories within your limits for this or it won't work. I won't give you a percentage for every category but just know that you'll have problems if more than 30% of your take-home pay goes to housing. 25% would be even better. Food, for instance, shouldn't exceed 15%.

Auto, another 15%. The goal, of course, is to have money left over. You need that margin or discretionary income to start building your emergency fund of 3 to 6 months living expenses if you haven't already and, of course, to invest for the future. But what if your budget reveals that you're already in the red with not enough to cover your expenses? Yeah, if that happens, don't worry.

It's not the end of the world. You have two options. You can find ways to trim your expenses or look for ways to bring in extra money or both. Let's start with cutting your expenses. I'd go over each category in your budget one at a time and think of ways you can cut spending. The grocery budget is often a place where you can trim without sacrificing nutrition, avoid processed packaged foods, and prepare your own meals. Make a list before you go to the store based on a menu plan and stick to it.

Always avoid eating out. That's going to be more expensive. Now, if you can't cut in that category alone, you could look at cable. Maybe you could go with a more basic package.

The same with your phone. Maybe you can get a less expensive plan. You want to have adequate insurance coverage for your home and auto, but if you combine the two, you can probably save some money. If you haven't shopped it in a while, you may be able to save some there as well. Once you've trimmed all of your categories, you may find that your budget is balanced now.

Well, let's hope so, but what if not? Yeah, then you'll have to look at the income side of the equation. Of course, you'll either need to pick up some more hours on your job or look for a second one. If you feel you deserve a raise but you were putting off asking your boss, well, now might be the time to do it. But beware of work at home opportunities because a lot of scam artists work in that space.

The best way to earn money working from home is to find a company that would pay you to work on site and then convince them that they can save money, no office space needed, by letting you do it from home. More and more companies are doing this these days. All right, we'll come back and chat some more with some final thoughts on this. We're discussing finances for the single parent.

We'll be back with more in your calls to 800-525-7000. That 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. For 30 years, Sound Mind Investing has been helping Christians reach their financial goals with step-by-step guidance for investors at every stage, from those just getting started to those getting ready for retirement. Through scriptural principles and practical suggestions, SMI offers financial wisdom for living well.

More information, including a short video webinar on profit and peace of mind, no matter what's happening in the market, is available at SoundMindInvesting.org. Some say that the world is spinning out of control. Maybe you feel like your own little world is doing the same and that no one cares about what happens to you. But when you read the Bible, you'll discover that God knows exactly what's going on globally and in your life. In Matthew 10, 28-30, we're told, Do not be afraid of those who kill the body but cannot kill the soul. Rather, be afraid of the one who can destroy both soul and body in hell. Are not two sparrows sold for a penny? Yet, not one of them will fall to the ground outside your Father's care. And even the very hairs of your head are all numbered. So don't be afraid.

You are worth more than many sparrows. To me, that sounds like a God who knows exactly what's going on in the world and my life. Am I concerned about what's happening in the world?

Of course. But worry? Well, I'm learning to put my trust in the God that made the universe.

An encouraging word from this station and Moody Radio. Do you feel like your hands are tied with debt, preventing you from serving God? If you have credit card debt, Christian Credit Counselors can help. Through our debt management program, we can get you out of credit card debt about 80% faster while honoring your debt in full. For more information on how Christian Credit Counselors can help, visit ChristianCreditCounselors.org. That's ChristianCreditCounselors.org. Or call 800-557-1985.

800-557-1985. Good to have you with us today. It's MoneyWise Live. Your host is Rob West. I'm Steve Moore and for just a couple of minutes we're taking a look at the challenges of being a single parent when it comes to your money and your finances.

And any final thoughts for us, Rob? Well, I think if you suddenly become a single parent, the key here is don't go it alone. Find a friend, perhaps someone at church that you can share your struggles with and accomplishments at the same time. They may be able to give you some good advice along the way. Also consider getting a financial advisor who can go over many of the things we've talked about in more detail.

Make sure you understand exactly what you have, what it's doing, what you should expect from it. Covering everything from insurance to what your investments look like. Making sure that you're properly protected but also that you understand the plan. And if there's things you are uncertain about, you want to know that.

And having some competent counsel to walk alongside you as well as a friend and a support system, that can be key as well. So reach out to our budget coaches if you need some help in this area putting your spending plan together. Our MoneyWise coaches are available to you at no cost.

You can connect with one at MoneyWiseLive.org. And Rob, our Facebook question of the day is, How can Christians better meet the needs of single parents? And this afternoon we've had two or three responses, right?

Yeah, we sure have. Alexandria said having child care available at church services and small group activities is always helpful. Lorene said my children are now adults, but when I was raising them alone I needed help with food, clothes and shoes, field trip costs, the list goes on. So just make sure you're looking for opportunities to be of help.

And then one from Scott as well, Steve. Scott says, Most need money. All need our love and time. Adopt their kids as your nephews and nieces. But most of all, don't offer unsolicited advice.

So that's something worth considering and thinking about. And make all of this bathed in your prayers as well, especially at this time of year. If there's a single parent, mom or dad, listening right now as we move in on the Christmas holiday, this has got to be tough. And our prayers go out to you.

And we trust that God will provide some people in your life to help you, support you not only financially but emotionally during the Christmas season. Now, if you have a question for Rob West today about anything financial, give us a call right now because we have about eight open lines. I didn't pass math, so maybe it's like three.

But nonetheless, there are some open lines. 800-525-7000. 800-525-7000. Call right now. Let's begin, Rob.

Phoenix, Arizona. Hello, Marie. How are you doing today?

I'm doing well. Thank you. I appreciate your show. Oh, thank you. How can we help? I have a two-part question. If parents have to file for bankruptcy, how are the funds in a 529 plan impacted?

Yes. Marie, there is some good news there with regard to 529 plans. And you'll always want to check this in your state to make sure this still applies. Generally speaking, there's protections in the event of a bankruptcy, but it has to do with when the money went in. So money deposited into the account two years or more before bankruptcy should be fully protected. Money less than two years but more than a year is partially protected up to, I'm told, $6,425. Unfortunately, funds deposited less than a year from filing have no protection. The idea here is that they want to make sure you're not kind of, quote-unquote, sheltering money in a very short period of time to avoid it being taken by the creditors. And so if this was a part of a long-term plan, it's been in there for some time, you should have that protection. Now, to qualify for these protections, the account beneficiary must be the debtor's child, stepchild, grandchild, or step-grandchild. You can't use a 529 set up for yourself to get bankruptcy protection. But as long as you meet the time test and the beneficiary test, then you should be able to have some protection there.

Okay, thank you. And then regarding a 529 plan, what resource is available that educates a person about a 529 plan? Yeah, my favorite website for 529 plans, and I love this tool for college savings, is savingforcollege.com. Not only is there a lot of helpful articles and content there to help you understand the 529, how it can be beneficial to you, but for many folks, they're trying to determine would I be best to go with the 529 in my state, especially if their state 529 offers a tax deduction for state income tax, versus a 529 in another state where I wouldn't get that deduction, but they may have better performance just based on the fund families or investment options inside the 529, and that would obviously be looking at historical performance.

So, savingforcollege.com, I think, will give you the information you're looking for. Marie, thank you very much. We're glad that you got through today. In fact, you are our first caller.

Let's go to Birmingham, Alabama. Jimmy, what's your situation with your truck, sir? Yes, sir. I currently owe around $23,000, $24,000 on my truck, and all my credit cards are just about paid off. I have one with $1,800 balance. I am, well, the best way to put it, the type of thing threatened by where I work at all the time.

Everybody here gets threatened about, well, you can walk out the gate or we can walk you out. So, I'm debating on starting my own company and paying for the LLC and the insurance and everything, and I do have a little bit put back in savings, but would it be a better idea to go ahead and pay off the credit card or utilize the money I have in savings to start my own company? Yeah. Tell me a little bit about what you have here, Jimmy, in terms of the actual amounts you owe in the credit cards and the total of your savings. My savings is right around $3,500.

I just did go through a divorce, and so this is what I got to walk away with, basically. And my credit card balance is, it's a capital one and it's $1,800. Okay.

All right. And then the only other debt that you have is a truck note, is that right? Yes, sir, and I'm thinking about at the end of the year going ahead and refinancing the truck so I can have a lower payment because it's right around $575 a month.

Yeah. And what is the interest rate that you have? Seven percent. My credit score is right around $690, in between $690 and $700. Okay. Yeah, you may or may not be able to improve that with that credit score.

I mean, obviously, there are more attractive rates out there, but you've got to, in many cases, be over $700 to qualify for them. You know, I like the idea, Jimmy, of you thinking about having something where you have a little more control over your situation in terms of business. What is the trade that you're in?

Right now, I work for a major company moving trailer from one plant to another. Okay. All right. So you do the same kind of thing, you just do it on your own and go out and get your own jobs?

No, sir. I had an overbearing wife and I attempted to do foreclosure, clean out, property preservation, and me making $2,500 a week doing that, she said it wasn't stable enough, so she convinced me to quit and go and get a stable job. And so I enjoyed it and I want to get back into it. And most of the items that I was getting through the foreclosure clean out, I was taking and donating to needy families and to charities.

Yeah. Well, it sounds like, obviously, something you've done in the past, you've had some success with, so I like that. You know, the thing I don't like is starting a new business, especially when you're giving up stable income, although I realize perhaps you're making less and not in the most conducive situation in terms of what you're describing with the work environment. But I'd like to have a lot more in the way of reserves than $3,800 with an $1,800 credit card debt as you're going out and starting a business. Now, the key is putting together a business plan, and that could be as simple as figuring out what are your estimated expenses, what is the revenue you can count on, how are you going to cover your health insurance, really dealing with all of the things that are going to be critical in terms of you being able to operate this business and be able to make a living.

And so I think I'm happy to hear that you've got some experience in that. You've been down this road before, but at the same time, there's not a real solid financial foundation under you. So what would be best in this situation, if it's possible, would be to keep your day job, so to speak, and try to start this perhaps a little bit slower on the side, prove it out. Again, if you have a lot of confidence that you can kind of pivot to this new job and come right out of the gate and begin earning some income, that's great.

But oftentimes, it takes longer than we expect, and it's more costly than we expect to get things started. And so walking away from something without having at least six months, preferably a year of income in the bank to be able to support you while you get everything up and running, invest in the business and marketing and kind of figure out all the things you need to do, that would be my best advice for you. In terms of that credit card debt, any time you're looking at making a change, you want to preserve cash. And so this would not be the time to pay off that credit card.

It'd be a time to really hunker down and pay the minimums. But if you can delay this business move or do it on the side, then I'd probably draw that savings down to $1,500. Make sure you preserve that and then try to pay off as much as you can of the credit cards.

And then by living well within your means, try to take care of the rest of it in the months following that so you can get completely out of debt except for that car. Jimmy, we wish you the best as you work through that decision. Thank you for your call today. 800-525-7000.

Give us a call if we can help you. This is MoneyWise Live! You probably have a strategy for your finances, your career, even your retirement. But do you have a strategy for your giving? At the National Christian Foundation, we can help you create a giving strategy to inspire your family, maximize your resources, and leave a lasting legacy of faith.

To learn how, visit MoneyWise.org slash ncf. And this morning, he read to me an article called New York Sings Blues Over Bed Bug Invasion. Both rich, poor kept scratching in their sleep. The city has been infested with bed bugs and the blood-sucking night crawlers aren't discriminating between swank high-rises and low-income tenements, the daily news found. And what I just love about it is that they're biting everybody from the high-rise to the tenements, everything you can imagine. Everyone is getting bitten by bed bugs because bed bugs are equal opportunity pests.

And isn't there just always a bed bug? One of the biggest revelations I've had in the last couple of years is it just really won't fix, will it? I don't know, maybe you just have to pass up 45 to realize that you've kept working toward getting something fixed.

Haven't we? And we're supposed to keep working. We're supposed to keep pursuing freedom and wholeness and all of these things that God has given us. That is the will of God. But I'm going to tell you something, you're not going to fix life.

Because you get one thing fixed and something else is going to break because that is how it works. You have had a divine set up to know El Olam. 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 comic workbook edition. Money and life run on the same track. But unfortunately, sometimes it seems like your money is heading in a different direction from your goals. In Never Enough, Three Keys to Financial Contentment, author Ron Blue helps you to break down all your financial options to a basic four and then shows you how to keep it all chugging along in the right direction on the same track.

Never Enough, Three Keys to Financial Contentment, available when you click the store button at MoneyWiseLive.org. Hey, whether it's saving, giving, getting out of debt, managing what you have or investing what you have, we're here to discuss it and help you with it. I'm Steve Moore, the guy answering all those hard questions. That's Rob West.

I mean, here's a question we've never tackled, Rob, but I think you're the man to probably handle this one. You probably carry a money clip, don't you? I see you as the kind of guy who carries like a solid gold money clip with a silver dollar on the outside, right? No. Is that you?

No, not me. You sure? No money clips.

Yeah, I never have carried a money clip, actually. All right. Well, you have my permission, should you care to do that? Okay, maybe a Christmas gift for me, Steve.

Maybe, so check your stocking. There you go. Tampa, Florida. Hello, Duane. What's on your mind today, sir? Hi, guys.

Love the show. Hey, my question real quick today is I'm leasing a vehicle, and I was wondering, I have my own company, and how would you go about leasing a vehicle for the company? Can I like sign over the existing one or like to do that, or would it be on my next lease to do it on the company now? I'm really not sure how to do that.

Sure. Well, Duane, this would be something I would talk to your accountant about, but the bottom line is, I mean, you could approach the lender that you're getting the lease from, ask if they'll do a transfer. Be prepared, though, for them to say no if the business lacks a proven record for revenue and doesn't have the history that they're looking for. They also may require you to sign a personal guarantee, which partially defeats the purpose of putting it into the business in the first place. But there may be another way, and that's why I want you to talk to your accountant, because perhaps even if it is something that continues to be in your name now and in the future, depending upon what is going to be permissible given the history of the business, you may just be able to charge the vehicle mileage or the vehicle expense to the business if you can meet kind of the test on that in terms of it being used exclusively for business purposes, and that may be the simplest solution. I assume the objective here is tax deductions or deductibility. Perhaps a secondary objective would be to not be personally liable for the full cost of the lease over the term of the lease.

That's, again, going to be whether the business can really stand on its own with regard to longevity and being seen as a proper credit risk versus you personally taking that on. So I think it involves two conversations. One is with the leasing company, and then second would be with your accountant, specifically related to how you could maximize the deductibility of this moving forward. Dwayne, thank you very much. We hope that you worked through that and that it works out well for you. We appreciate your call. 800-525-7000. Melanie in Tampa, Florida.

What's your question for Rob West? I just retired, and hello. My husband is retired, and currently we're withdrawing a monthly income from one of our investments.

Is it better to draw monthly, or is it better to draw for the entire year during January? Yeah, that's a great question, Melanie. Tell me about the income that you're taking out and the investments that are in it. Is it a stock and bond portfolio, or what do you have?

It is. It's stocks and bonds. And what is the total of the portfolio, roughly? Well, there are about four, so I guess all together it would be about 800-900,000. Okay, and how much are you pulling out each month?

1,500. Okay. All right. So, yeah, I mean, you're pulling a modest amount out. I would rather see you take that monthly because that way the money that's in there, if it's in fixed income type investments that have a yield on them, you're going to continue to earn money while that money is working for you, as opposed to pulling that out and just parking that in a savings account that's not going to do a whole lot for you. So typically you're better off converting that to an income stream and taking that throughout the month as opposed to a lump sum. Okay, Melanie, thank you very much.

Keith and Biola, Illinois, we're heading in your direction, so don't hang up on this. We'll be right back. Investing is more than just returns. It's an expression of who you are and what you value. Does the way you invest your money reflect your identity as a Christian? At Eventide we design investments for performance and a better world, so you can invest with a confidence to reach your financial goals while remaining true to your Christian values and commitments. We call this investing that makes the world rejoice. More is available at investeventide.com.

That's investeventide.com. Christian Healthcare Ministries enables believers to show love for one another by sharing each other's health costs. Through CHM's voluntary health cost sharing programs, members uplift each other spiritually and financially. CHM is 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 chministries.org. Hi, my name is Ro, and I'm a communications major at the Moody Bible Institute. The Moody Radio Verse of the Week is found in Micah 5, 2 to 3.

But you, Bethlehem Ephrath, though you are small among the clans of Judah, out of you will come for me, one who will be ruler over Israel, whose origins are from old, from ancient times. That's Micah 5, verses 2 to 3, the Moody Radio Verse of the Week. During a pandemic, spiritual lull, or midlife crisis, you may be asking, what now? I'm Drew Dick, host of Moody Publishers' Reading for a Change podcast. In his new book, What Now?, Moody Bible Institute President Mark Jobe will help you move into your next season. Learn how to break free of stagnation, re-envision your life story, and step out in faith.

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That's moodypublishers.com. How did you feel the last time you made a not-so-good decision? As Pastor Andy Stanley points out, Our decisions are like the steering wheel of our life, so you get decision-making right, you get life right. In his new book, Better Decisions, Fewer Regrets, you'll learn five critical questions to apply to every decision you make, so you can feel confident you're getting it right. Request your copy with any gift to MoneyWise of $25 or more at MoneyWise.org.

With SRN News, I'm John Scott. U.S. hospitals slammed with COVID-19 patients are trying to lure nurses and doctors out of retirement, recruiting students and new graduates who have yet to earn their licenses, and offering eye-popping salaries in a desperate effort to ease staffing shortages. The number of U.S. patients in the hospital with the virus has more than doubled over the past month to a record high of nearly 100,000, pushing medical centers and healthcare workers to the breaking point. U.S. health officials say staying home for the upcoming holidays, that's the best way to stay safe and protect others. But for those who ignore the advice, COVID-19 testing before and after trips is an option many Americans did not follow.

The CDC guidance over traveling over the Thanksgiving holiday. On Wall Street, stocks finishing mix, the Dow gained 59 points. The SEC down 5, the S&P picked up 6. This is SRN News. Music Pleased to have you with us today. It's MoneyWise Live.

Rob West, I'm Steve Moore. We're taking your calls on any financial topic. That includes, well, I don't know, maybe things like Christmas shopping. Perhaps you're listening to us in the car right now as you charge out to the mall, or maybe you've been at the mall for an hour or two just circling the parking lot looking for a space.

Nonetheless, before you enter the store, please consider, prayerfully consider, having a budget so you know what you're going in for and how much you can afford to spend. Hey, let me ask you a question, Steve. You're talking about shopping and parking lots and parking spaces. Are you the guy that just goes right up to the front because you assume there's going to be a spot there, or are you like, no, forget it.

I'll never find one. I'm going all the way to the back. I'm the guy who is always trying to find ways to exercise without actually going out and exercising. So to me, finding the spot is exercise within the car.

The emotional angst that provides an increase to my heart. And then walking the 6 to 7 miles into the store from the parking space. Now, my wife, my first wife, Marsha, my only wife, my only wife, I shouldn't make that joke, my only wife, Marsha, doesn't like that. She does not want to walk 6 miles. And she says, why do we have to do that?

And then by the time we get into the mall, her idea for a gift for me has diminished substantially. So there are pros and cons to that. Well, apparently I've touched a nerve here, so maybe we ought to move on. But I've told you before, I don't want to talk about personal things on the air. Okay? All right, Rob? I got it. All right.

Biola, Illinois. Hello, Keith. How you doing, my friend? Keith, maybe we're not friends. There he is. This is Keith from Iowa, actually.

Keith, we have a horrible, horrible, we have a horrible line, Keith. Can you just move one way or the other a couple of feet? Let's see if we can get a better connection. Okay, is that better? A little bit, it is.

Let's try it. Okay. I had a question about paying for a house out of IRA funds. Is there a special rate for that, or is it the regular income tax that you have to pay when you pull that out? Yes. There is with regard to the penalty. So what is your age, Keith?

Sixty-eight. So you wouldn't have a penalty anyway. What's permissible there is for a first-time home buyer, which is defined by you haven't owned a home that was your primary residence within two years, you can avoid the 10% penalty on up to $10,000 if you use that money to buy, build, or rebuild a home. But even then, you still owe the income tax on any amount you or your spouse withdraw. And by the way, that $10,000 is a lifetime limit for a first-time home purchase, so you can't use that more than once. But you would, even though you're putting that money into a home, and given that you're over 59 and a half, so you wouldn't have the early withdrawal penalty anyway, in all cases, you are going to have to pay tax on that if it's a traditional IRA. Of course, if it's a Roth IRA and that money's been in there for at least five years, you would not pay any tax because you already paid it on the contributions, and you would not pay it on any of the gains.

But it sounds like with a traditional IRA, you are going to have to set that money aside to cover the taxes on it if you choose to use those funds. Okay, thank you. All right, Keith, thanks for your call, sir. Thanks, Keith. Fort Lauderdale, Darlene, how can we help you today?

Yes, hi. Okay, my situation is I have been self-employed for a number of years, and I have a set, and I have a traditional IRA. And now I have to start taking the RMDs next year and in 2021. My question is, I haven't been able to contribute to them because the income is just not there versus expenses for a number of years. Would it behoove me to take that set and roll it over into the IRA and just have the one account? Or is there some advantage to just holding it and let it play out, I don't know, in years to come or something until I totally, totally stop working?

Yeah. Well, there's no benefit with regard to the RMD as to whether or not you have one or multiple accounts, because the required minimum distribution can be bundled. So that means basically after you calculate the required minimum distribution, which by the way, as you said, is for next year, not this year, because of the CARES Act, it's not required this year. But after you calculate the total RMD for each of your non-Roth IRAs, that means traditional IRAs, rollovers, SEPs, SIMPLs, then you can add up all of those RMDs and take that total from any combination of those accounts. So you don't have to have them combined for any reason, even if you want to pull from one. The question on combining them would really come down to, does it simplify things a bit for you?

You've got one account instead of two. Is there added benefit from the management standpoint, meaning there's one investment strategy and all the funds are in one place, so perhaps you have access to more investment options. Some mutual funds have a minimum investment, and so perhaps you get up above that minimum. You make sure you don't have unnecessary duplication of investments or the investments aren't managed properly because they're not seen as one and they're managed as two. So that would be the real benefit to you, but there's not any benefit as far as the RMD goes. Does that make sense or is there another part to your question that I'm missing? My other question is, with that RMD, I'm hoping, God willing, to be able to have a check issued directly to my church because then I understand I won't have to pay tax on it, correct?

That's right. Yeah, it's called a qualified charitable distribution, and basically what will happen is that amount would be sent directly from the account. The custodian would cut the check, send that to the charity or the ministry, your church, whoever that might be. They'll receive those funds, and yes, they'll get the full value of what was transferred. You'll satisfy your RMD for the year as long as you meet that minimum, and you won't pay any tax on it, which means everybody wins.

You satisfy your RMD and you get a larger deduction because the taxes haven't been taken out, and the ministry has more money to use for whatever purposes they have for the funds. So it's a great option, and basically you'd want to call the custodian and alert the charity, and ask about a qualified charitable distribution. Darlene, we wish you the best. Thank you very much.

Tammy in New Hampshire, just a little bit of time, can you give it to us quickly? I was thinking of rolling my IRA into a gold IRA. What do you think about that?

Yeah, I'm not a big fan of that. Gold obviously has done well lately. It's a store of value anytime there's uncertainty. We see the price, the underlying price of gold increasing. But historically speaking, Tammy, it has not performed as well as a stock and bond portfolio that's properly diversified, invested for the long haul in terms of both long-term reward, meaning the return on it, and volatility. Gold tends to be more volatile and hasn't performed as well over the long haul.

So even though there's a lot of buzz about it right now, a lot of talk about it just because of everything going on in the world, it's not my recommendation. In fact, I would limit your gold exposure in your portfolio to 5%. Would that go for anybody? I mean, is that recommendation what you would recommend to pretty much anybody regardless of where their money is deposited, their investment money? I would, Steve. Yeah, I think just on average, for the average investor, 5% is a good number, I think 10% max.

The only exception to that would be is if you have more than you need, you're willing to speculate a little bit more, or you're a professional trader, something like that, then you could go up to higher levels. But for most folks who are hearing my voice right now, I think 5% is all you need. All right. Here's our phone number. Give us a call.

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Money and Marriage God's Way is available when you click the store button at MoneyWiseLive.org. All right, here's our situation here. We have five lines blinking like little Christmas lights, but we have ten lines available, which means, if I'm not mistaken, we have five lines available for you right now. So if you have any sort of financial question, chondri or quandary or conundrum, this would be a good place to pose it as Rob West is here.

And as they say, it's a financial technical radio term, he's loaded for bear. 800-525-7000. He'd love to chat with you today.

Let's go south to Florida. Hello, Ian. Thanks for your patience. What's on your mind?

Hello, thank you. Yes, I have some money in a Capital One account that it's really all my money. I put in a Capital One because it was getting good interest at first, but now it's like $20 a month, and I wondered if I should try to somehow invest some of it, or also the other question I have is I'm thinking about making a move, and if I bought a house, do I put the 20% down, or do I put more down toward the house so I don't have to pay as much mortgage? I'm kind of at a loss here. Okay. Yeah, let's dig into some of these numbers, and just to give me a quick overview of what you've got. What do you have in the way of savings?

About $73,000. Okay. And so this would include your emergency savings. If something unexpected came out of left field, plus any money that you'd put down on this home purchase, is that right?

Yes. Okay. And how much are you looking to spend on this home purchase? Well, I'm just at the beginning of that, so I know it wouldn't be able to be very much. I'm thinking maybe 150 at the most. I don't think I can spend more than that. Okay.

All right. So obviously if we were to put down 20% on a $150,000 home, that would be $30,000 of the $73,000, which would leave you $43,000 left. That would be what I would shoot for as a target, but I'd want to make sure that the resulting mortgage payment on that roughly $120,000 mortgage was not more than 25% of your take-home pay, not only the payment, but including the taxes and the insurance, the escrows. So that 25% number will make sure that you have 75% of your take-home pay available for your other fixed and discretionary spending in your spending plan. So that would be a number I would be looking at as you're kind of massaging this budget for this home purchase.

You definitely want to keep that money safe and secure. Now, we'd want to make sure in addition to that that you have three to six months expenses. When you total up all your expenses, including rent now and maybe the mortgage payment that would be coming, what do you think roughly you're spending each month?

Well, right now without the mortgage, it's probably around $1,200 a month because I joined forces with my mom and my sister for now, and so we share, and it's a mortgage-free home. Okay. That's another question. It's in my name, but it's my mom's home. It's all her money, but it's in my name also. So I don't know if that would go against me in trying to get something else, but it has no mortgage. Right, yeah. No, the fact that there's no loan on it is not going to be an issue because it's an asset for you.

It's not really impacting you negatively whatsoever. Do you have a good credit score as far as you know? Yes, it's 784. Okay, great.

All right. Well, as long as you have good verifiable income, you should, with the interest rates right now, if you were to get, let's say, a 20-year mortgage, you'd be looking at $650 roughly at two and three quarters, and you'd add to that obviously the taxes and the insurance. That's on a $120,000 mortgage. So let's say we add all this together, and let's say at the end of the day it's $900. So that would put you at $2,100 for your monthly expenses. So three months of that would be $6,300. If you wanted six months, that'd be $12,600. So let's say we add $12,000 to the 30 that you're going to put into the home. That'd be $42,000.

Call it $43,000 of the 73. So you've got $30,000 left. And at that point, I'd be looking to say, are there any other kind of medium-term major expenses? Do you need to replace a car and you want to be able to do that with cash? Well, I'd add that amount.

Are there any other goals that you have that are shorter term? If not, then you absolutely could take that roughly $30,000 that's remaining over and above the down payment plus your six months emergency funds and invest that. And I would do that in a way that's diversified using probably mutual funds or exchange-traded funds. And you could use Betterment. You could use the Schwab Intelligent portfolios.

You could check with our friends at soundmineinvesting.org. But investing that would make a lot of sense. Beyond that, the only other question I would have is just are you saving systematically for retirement through a tax-deferred means like a company-sponsored retirement plan or an IRA? No.

I work for a Christian school and they don't offer that. So, no, I don't have any retirement. I'm not good at these financial things, so I haven't done much. And I'm getting close to retirement pay. Yeah.

All right. So, I think the good news here is that you've kept your life modest. Obviously, you're not spending a lot of money. So, Social Security perhaps is going to take a big chunk of that. But I think the key for you during the remaining working years that you have would be to sock as much money away as you can. And so, I'd at the very least fully fund a traditional IRA over age 50. You can put in $7,000 this year and you could open an IRA at one of those institutions. So, I'd probably take the full 2020 contribution out of the remaining $30,000 that you'll have and fund an IRA this year and next year beginning in January.

And then, see if you can systematically put in one-twelfth of the annual contribution amount each year so you can begin building that up over time. And we're glad that you got through today. And we wish you, your mom, and your sister the very best. Dacaba, Illinois, and Frank, you're retiring soon. So, how can we help you with that?

Yeah, I had a question. My wife's already retired. She's a retired teacher. And I'm retiring here in four years. And we owe seven years on the house. And we'll have enough income to pay the house off.

I mean, we could do it probably in a year and a half, no problem. But do I do that two years? Or do I keep putting money in and just make sure it's paid off before I retire? Yeah. What kind of return are you getting on the money that you've been investing recently?

Well, let's see. We got dividends are about $3,500 a month. And we got farm income because we have farms that we rent out. And we get a lump sum of that, which is $50,000 plus a year. Then I'm still working, and my wife's retirement, we're up to $100-something.

We're $140,000 a year. Okay. But basically, what I'm hearing is you have enough in the way of margin in your cash flow each month that you'd be able to pay this off as soon as two years, but certainly by retirement, just out of current cash flow, right? Yes. Yes. Okay. And if you didn't, where are you parking that money that's a surplus if you didn't direct that toward paying the home off more quickly?

We put that back in investments for retirement. Okay. All right.

Yeah. You know, I could go either way. If you had a real conviction, Frank, you and your wife, that you just want to be debt-free as soon as possible, I'd say go for it and don't look back. But if you're socking this money away, it's not going toward lifestyle and, you know, spending, but it's being socked away for retirement, which, you know, if the Lord tarries and you have good health could last decades, right, that you need this money. I like the idea of you sinking up, you're paying off your home with your retirement day because that's going to bring your monthly income needs down as low as possible in that season, which means you have less that you're pulling from investments or, you know, from any other retirement accounts that would be coming your way, including Social Security. So I think at the very least, sinking that up to retirement and continuing to invest makes a lot of sense to me, unless you said we just want to be out of debt as soon as possible and you've prayed through that, you have a conviction about it, then I'd say go for it. Frank, wish you guys the best.

Thank you very much. Great questions as you prepare for retirement. 800-525-7000, our number, Aurora, Illinois. Rhoda, what's your question for Rob West? Hi, my question is, I'm interested in investing in the stock market and I have between $100 and $1,000 to invest.

What would be your recommendations on what type of stock would I invest in? Sure, Rhoda. Is this a one-time amount that you have available or are you adding to this each month?

It will be one time. Okay. Well, let me ask you this first. Do you have an emergency fund? Do you have some savings beyond this that you can fall back on? Yes, we have an emergency fund.

Okay. So as long as you built that up to three to six months expenses and you're not pulling from that to do these investments, you know, I like the idea if you have a retirement account, then perhaps you just go ahead and put this into a broad mutual fund. I wouldn't buy an individual stock with this amount of money or a partial ownership of fractional shares because they're just too highly concentrated. I would put this probably in an S&P 500 index and just own the broad market, which you could do at Vanguard or you could do at Schwab or Fidelity or Betterment, one of those. Where basically you have, you know, lots of different companies through an exchange traded fund, very low cost and you would just capture the overall moves of the market over time as opposed to trying to pick a particular company that you think is going to do well. You're just too highly concentrated at that point and at the risk of one particular company.

Rhoda, thank you very much. You know, sometimes people with just a little bit of money, Rob, ask us about penny stocks. What are those and what's your brief recommendation? Well, I would stay away from penny stocks, Steve. They just don't have the liquidity that you would want in a company that is larger and has the volume needed for it to trade properly.

They tend to be a lot more volatile as well. Basically, it's talking about anything that trades for less than $5 a share and trades in the over-the-counter markets as opposed to the major market indexes. Okay, great. Rob, thanks very much. We'll come back and do it tomorrow, all right? All right, thanks, Steve. MoneyWise Live is a partnership between Moody Radio and MoneyWise Media and of course, you're involved in that to a great deal as well. Thanks so much for listening and supporting us. Please join us again tomorrow for another edition of MoneyWise Live.