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December 2, 2020 7:03 am
Raising children and managing money are challenging in the best of times, those villages may seem like insurmountable obstacles. If you suddenly find yourself a single parent with an unfortunate condition that plagues the United States far more than most other countries. Single-parent household financial planner teacher Rob West has financial advice for parents were on the wrong answer calls on anything and 805 five 7800 525-7000 times more single-parent finances next moneywise line Rob in many cases people do good parents through no fault of their own and we want to be clear that were not advocating divorce in any way, but sometimes it is thrust upon folks and then often they need some special help. 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 parents, 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 your unpaid bills and pay 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. Right now you need to make up a chart or calendar for all of your bills in 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 our 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 encourage you to get the new moneywise after 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 sort won't work. I will give you a percentage for every category but just know that you will have problems of 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.
I believe if your budget reveals that you're already in the red, with not enough to cover your expenses. Yet 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 not. Look for ways to bring in extra money, or both. Let's start with cutting your expenses go over each category in your budget. One of the time and think of ways you can cut spending of the grocery budget is often a place where you can trim without sacrificing nutrition.
Avoid processed, packaged foods and prepare your own meals that make a list before you go to the store based on the menu plan and stick to it. Always avoid eating out. That's gonna be more expensive that 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 give them 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 in a while you may be able to save some there as well.
But once you've trimmed all of your categories. You may find that your budget is balanced.
Now, let's hope so, but what if not not yeah then you have to look at that 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 are 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 or more companies are doing this time will come back and chat some more. With some final thoughts on this discussing finances with a single parent. I will be back with more in your post to 800-5257 the financial wealth you leave behind could be the best thing that ever happened to your loved ones or the worst, and it splitting hairs, giving your money and things to your children without ruining their lives. Ron blue explains why it's important to make these decisions now, instead of forcing your heirs to do it later. Splitting hairs will foster a real appreciation for the precious resources that God has entrusted to you, and it's available. Click the start button moneywise live.org for 30 years and sound mind investing has been helping Christians reach their financial goals. Step-by-step guidance for investors at every stage from those just getting started, those getting ready for retirement through scriptural principles and practical suggestions. SMI offers financial wisdom for living well. More information short via webinar on profit and peace of mind, no matter what's happening in the market is available at sound mind investing.some say the world is spinning out of control.
Maybe you feel like your own little world is doing the same that no one cares about what happens when you read the Bible, God knows exactly was going on globally and in your life.
In Matthew 10 2830 not be afraid of those rather, be afraid of the one who can destroy both soul and body in hell are not two sparrows sold for one of fall to the ground outside your father's care and even the very hairs of your head are all number so don't be afraid. More than any sparrows. To me that sounds like God knows exactly was going on and my life. My concern about what's happening in the world's worry.
I'm learning my trust.
Do you feel like your hands are tied with dad preventing you from serving God. If you have credit card debt. Christian credit counselors can help through our debt management program we can get out of credit card debt. About 80% faster while doing your debt info. For more information on how Christian credit counselors can help visit Christian credit counselors.org Christian credit counselors.org or call 800-557-1985, 800-557-1985, lies live your hostess round less times more just a couple minutes were taking a look at the challenges of being a single parent when it comes to your money in your finances in any final thoughts force from well I think you know if you suddenly become a single parent that 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 talked about in more detail. Make sure you understand exactly what you have, what it's doing what you should expect from it, to covering everything from insurance to you what your investments look like making sure that you are properly protected, but also that you understand the plan and if there's things you are uncertain about what 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 are moneywise coaches are available to you at no cost.
You can connect with wanted moneywise live.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 a two or three responses are we sure have Alexandria said having childcare available at church services and small group activities is always helpful. Lori said my children are now enough adults, but when I was raising them alone. I needed help with food close and shoes field trip because the list goes on. So just make sure you're looking for opportunities to be of help.
And then I want from Scott as well as the other 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.
Don't offer unsolicited advice so that something worth considering worth considering and thinking about then make all of this bathed in your prayers as well, especially at this time of your fish. A single parent, mom or dad a listening right now as we move in on the Christmas holiday.
This is gotta be tough and are 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 less today about anything financial I give us a call right now because we have about eight open lines of finding by Pat pass math so maybe it's like three, but nonetheless there is some open lines 800-525-7000 800-525-7000 call right now is begin Rob, Phoenix, Arizona hello Marie how you doing today I'm doing well thank you I appreciate your your show, thinking how can we help a two-part question or if parent have to file for bankruptcy. How are the findings in a 529 plan impacted.
Yes Maria 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, but generally speaking, there is 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 total $6425. Unfortunately, funds deposited less than a year from filing have no protection. So the idea here is that they want to make sure you're not going to court."
Sheltering money in a very short period of time to avoid it being taken by the creditors, and so that 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 in 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. And then at regarding 2529 plan, restart it available that daddy educate the person about 529 plan. Yeah, my favorite website for 529 plans and I love this tool for college savings is saving for college.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 are trying to determine what I be best to go with the 529 in my state, especially if their state.
529 offers and the 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 saving for college.com I think will give you the information you're looking for Marie thank you very much were glad that you got through today. In fact, you are first call and let's go to Birmingham, Alabama Jimmy what your situation with your trucks or I currently go around 23, 24,000 on that truck and all my credit card project about paid off.
I had one with $1800 ballot. I well that's what good it think Brett and I were at work at all the time. Everybody here get frightened about you more Data we can walk you out so I'm debating on starting my own company and by paying for the LLC in the insurance and everything and I do have a little bit little bit put back in savings but would be a better idea to go ahead and pay off the credit card utilize money I have in savings to start my own company. Yeah, tell me a little about what you have here Jimmy in terms of the actual amount you owe and the credit cards and the total of your savings right around 3504 and what I got walkway with basically and my credit card balance is capital one and it $1800 and then the only other debt that you have is a truck note is that right yet think about the end of the year going ahead and refinancing the truck so I can have a lower payment because it right around 575 month and what is the interest rate that you have 7% in my credit score is right around 9626 90 and 700 okay. You may or may not be able to improve that with that credit score mean, obviously, there are more attractive rates out there but you got in many cases be over 700 qualify for the you know I like the idea, Jimmy, have you thinking about having something or 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 major company moving trailer from one point to another. Okay so you do the same kind of thing you just do it on your own and gotten get your own jobs.
I had an overbearing wife not tempted to do because her clean out property preservation and may make and $2500 a week doing that. She said it wasn't stable enough so she could lift me to quit and going 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 cleanout I was taking and donating to needy families and to charity.
Yeah well it sounds like obviously something you've done in the past you had some success with. So I like that.
The other 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 than 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 $3800 with an $1800 credit card debt as you're going out and starting a business. Now that 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 you can cover your health insurance you 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 you know I am happy to hear that you got some experience in that you been down this road before, but at the same time it is not a real solid financial foundation under you so you 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 you that's great, but often times it takes longer than we expected. 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 of marketing and can figure out to all the things you need to do that would be my best advice for you in terms of the credit card anytime you're looking at making a change want to preserve cash. And so this would not be the time to pray off the credit card and be the 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 $1500. Make sure you preserve that and then try to pay off as much as you can. Other credit cards and then by living well within your means, try to take care of the rest of it in the months following that seek and 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 not you probably have a strategy for your finance your career even your retirement strategy for your getting to know Christian foundation and your family maximize your resources to learn how to moneywise not work to which the team because he gives me.
Upon my current events in case I don't get a chance to read it later this morning. He read article called New York things blues out of her back.rates in their sleep that night crawlers are discriminating between Swank low income tenants daily news found everything you can get that bad because bad bad are equal opportunity. Thanks. We went $0.45 online experience money and life run on the same track. Unfortunately, sometimes it seems like your money is heading in a different direction from your goal, and never enough three keys to financial contentment.
Author Ron blue helps you to break down all your financial options to a basic floor and then shows you how to keep it all chugging along in the right direction on the same track never enough three keys to financial contentment available when you click the store button at moneywise live out of work that you have what you have here to discuss it and help with Steve Moore, the guy answering all those hard questions. That's Rob Weston.
I mean, here's a question we never tackled rabbit. I think you're the man to probably handle this one. You probably carry a money clip don't I say use the kind of guy who carries like a solid gold money clip with the silver dollar on the outside. I know it now and not me any clips yet never have.
Money clip actually will have my permission should you do, they being a Christmas gift for me. Steve may be such a stocky camp in Tampa, Florida hello doing what's on your mind today said God will be so real quick. 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 starting over the existing one or like to do that or would it be on my next lease to do it on the company on really not sure how to do that. Sure, it's well doing this would be something I would talk to your account about the bottom line is you could approach the lender that you're getting released from asking Phil 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, but 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. That's why want you to talk to your account because I 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 got the test on that in terms of it being used exclusively for business purposes and that may be the simplest solution. I assume the doubt.
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 police 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 going. Thank you very much. We hope that you work through that and that it works out well for you. We appreciate your call 800-525-7000 Melanie in Tampa Florida. What you question for Rob West. I hired my retired currently where trying a medically income from one of our investment is better to draw monthly. Better to drive for the entire year during January.
Yeah, it's a great question Melanie, tell me about the income that you're taking out and in the investments that are in it is a stock and bond portfolio are what you have stocks and bonds and in what is the total of the portfolio roughly well. There are thereabouts for so I get together 800 900 okay and how much you pulling out each month. 1500 okay alright so yeah 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 high yield on them you to continue to earn money while that money is working for you as opposed to pulling that out and just parking that in the savings account. That's not going to do a whole lot for you so that typically are better off converting that to an income stream and taking that throughout the month as opposed to Nonie.
Thank you very much Keith and Viola Illinois were heading in your direction so don't hang up. Investing is more than just return it's an expression of who you are and what you value is the way you invest your money reflect your identity as a Christian at eventide. We design investments for performance and a better world. You can invest with the confidence to reach your financial goals while remaining true to your Christian values and commitments. We call this investing makes the world rejoice more is available. Best eventide.com invest eventide.com Christian healthcare ministries enables believers to show love for one another by sharing each other's health costs through CHN's voluntary health cost-sharing programs members uplift each other spiritually and financially. CHN was an eligible option under the affordable care act and a Better Business Bureau accredited charity interested. Learn more by calling 800-791-6225 or online at CH ministries.more. My name is Ryan and I've a communications major at the movie five on the radio this week is found in Micah 5. Though you are small among the kinds of Judah, out of you will come for me, one of Israel's origins from old ancient time. That's Micah 523 the Moody radio rest of the week during a pandemic spiritual or midlife crisis. You may be asking what now under deck hosting Moody publishers reading for change podcast's new book, what now, Moody Bible Institute Pres. Mark Joe will help your next season. Learn how to break free of sting nation. We envision your life story.
Don't let fear get your copy of what publishers.com that's Moody publishers.com how did you feel the last time you made a not so good decision as pastor Andy Stanley points out our decisions, like the steering wheel of our life and so you get decision-making right you get life right in his new book, better decisions and 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 gifts of money wise of $25 or more money wise lot from John Scott was hospital slammed with culpability and abrasions are trying to lure nurses and doctors out of retirement, recruiting students and new graduates with yet for their licenses, offering eye-popping salaries in a desperate effort to ease staffing shortages number of US patients in the hospital with a 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, US 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 19 testing before and after trips is an option. Many Americans do not follow the CDC guidance over traveling over the Thanksgiving holiday on Wall Street stocks finishing next the down game 59 points. The NASDAQ down five. The S&P picked up six this is a summary news with us today moneywise live from last times more with taking your calls and 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 to just circling the parking lot looking for a space. Nonetheless, before you entered 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 money I question Steve you're talking about shopping and parking 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. Are you like. Now forget never find what I'm going all the way to the back. I'm the guy who was 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 provides an increase to my heart.
I send walking the 6 to 7 miles into the stone from the parking space now my wife, my first wife Marge, my only wife. My only why should I should make that joke.
My only wife Marsha doesn't like that she does not want to walk 6 miles and 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 arose in constant will apparently have touched a nerve here so you know, maybe we had a move on. I told you before, I don't want to talk about personal things on their right.
Got it right by oath Viola Illinois hello Keith how you doing my friend Keith conference. There is FireWire Keith we have a terrible, horrible Keith, can you just move one way or the other. A couple of feet let's see if we get a better connection better than a little bit. It is a let's try not paying per house on IRA funds that are of special rate for that or is it the regular income tax that you have to pay all that out yes there is.
With regard to the penalties.
So what is your age. Keith, 68 okay so you wouldn't have a penalty. Anyway, what's not permissible. There is for a first-time homebuyer, 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 use that money to buy builder rebuild a home but even then you still of the income tax on any amount you or your spouse withdrawal. By the way that $10,000 is a lifetime limit for first-time home purchaser. 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 1/2 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 monies been in there for at least five years you would not pay any tax because Yorty painted on the contributions and you would not pay it on any of the games but 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 calls. Thanks Keith Fort Lauderdale Darlene the how can we help you today. I like I got in the RMD lack 20, 21 and number mall over into the all are just holding it, letting out, something like totally totally parking 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's and 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 saps symbols then you can add up all of those RMD's 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 other 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. Or 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 are managed properly because they're not seen as one in their managed as to so that would be the real benefit to you, but there's not any benefit for his focus far as the RMD goes it does that make sense or or is there another part your question, I'm missing. I have a check in my chair and I will pay tax on it, that's right yes 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 you ever that might be Bill receive those funds and yes I do get the full value of what was transferred you'll satisfy your RMD for the years. Always 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 have been taken out and the ministry has more money to use for whatever purposes they have for the funds.
So I think it's a great option and basically did want to call the custodian and alert the charity and do 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 rolling my IRA into gold IRA when you think about that. I'm not a big fan of that you know 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 to me and is not performed as well, as a stock and bond portfolios properly diversified invested for the long haul. In terms of both long term reward meeting.
The return on it and volatility goal 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 would that goes for anybody I meet is that recommendation what you would recommend to pretty much anybody, regardless of where their money is deposited their investment. I would Steve yeah I think just on average share for the average investor 5% is the is a good number. I think 10% max. The only exception that would be as if you have more than you need. You're willing to speculate a little bit more for your professional trader or something like that then you can go up to higher levels. But for most folks, you hear my voice right now the 5% is right is a phone number give us a call open lines 800-525-7000.
Many people are experiencing financial challenges such as credit card debt downsizing that in jobs 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 shows that the Bible is a veritable managing your finances will discover the profound if it has a relationship with God, your money counts is available when you click the start button moneywise live here to help me understand God's purpose for your life to the eyes of a layman, to whom much is given much is required. Thanksgiving is a time for all of us to stop and say thank you God for all that you've given us those of us who receive more than her share required by God to give more than her share back to those in need is called selling season reaping the harvest know you can't help give God. It begins with you, but a couple cold waters only a couple cold water is not given in Jesus name will countless opportunities to feed and clothe the forward target your heart this Christmas season boring them like the plague. Unless you can trust to distribute whatever you give them. In Jesus name is how you exercise good stewardship of all that God has placed in your hand. There is nothing more exciting than knowing God is using you to move people closer to join is not America Jesus Christ man. The Bible teaches in Matthew 26 was the Christ, the son of man doesn't fit Jesus. He was one of the prophets and forgot.
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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 and strengthening your relationship with your mate and cultivating godly joy, money, and marriage God's way is available and moneywise live.org is our situation.
We have five things like little Christmas lights, but we have 10 lines available which means I'm not mistaken we have five lines available for you right now. So if you have any sort of financial question country 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 Leanne, thanks for your patience. What's on your mind, money, capital one account that all my money Y now $20 a month and I wondered if I could somehow invent and audit all know that making a move and what I bought how you like 20 pounds or more accounts like the house so I don't much like that a lot here. Okay, still it still, let's dig into some of these numbers and just to give me a quick overview of what you got what you have in the way of saving 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 put down on this home purchase.
Is that right okay and how much you looking to spend on this home purchase. Well I may be 100. I don't okay alright so obviously if we were to put down 20% on hundred $50,000.
Will that be 300 that this gives me 30,000 of the 73 which would leave you 43 left. That would be what I would shoot for as a target. But I want to make sure that the resulting mortgage payment on that roughly hundred and $20,000 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 affixed and discretionary spending in your spending plan so that would be a number I would be looking at as you're gonna massaging this budget for this home purchase.
You definitely want to keep that money safe and secure. Now we want to make sure. In addition to that, that you have 3 to 6 months expenses when you total up all your expenses, including rent now and maybe the mortgage payment that would be coming what you think roughly your spending each month.
I probably around 1200.
My mom and now that we share a market-rate home in my name.
My mom found Dr. money in my name all fell out against me and trying to get out right. You know the fact that there is no loan on it is not going to be an issue because it's an asset for you it's it's not really impacting you negatively whatsoever. You have a good credit score.
As far as you know, okay great sorry was always have good verifiable income. You should, with the interest rates right now if you were to get to. Let's say a 20 year mortgage you be looking at $650 roughly at 2 3/4 menu to add to that. Obviously the taxes and the insurance that's on $120,000 mortgage. So let's say we had all this together and let's say at the end of the day it's it's $900. Yes, that would put you at your $2100 for your monthly expenses so three months of that would be 6300 if you wanted six months that be 12,600. So let's say we had 12,002 the 30 that you're going to put into the home that be 42,000:43,000 of the 73 Steve got 30,000 left and 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 you want Bill to do that with cash wide 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 your diversified using a probably mutual funds or exchange traded funds and you could use betterment you could sure use the Schwab intelligent portfolios you could check with our friends, of sound mind investing.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 now offering that now I don't have any payment.
I think I haven't done much yeah right so I think the good news here is that you know you've kept your life modest. Obviously you're not spending a lot of money is 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 suck as much money away as you can inside at the very least fully fund a traditional IRA over age 50 can put in 7000 this year and you can open an IRA at one of those institutions.
So I probably take the full 2020 contribution out of the remaining 30,000 that you have and fund an IRA this year and next year beginning in January and then see if you can systematically put in 112 of the annual contribution amount each year, so you can begin building that up over time and were glad that you got through today and we wish you and your mom and your sister the very best, to Cabell, Illinois, and Frank your retiring soon, so how can we help you with that? What is already retired retired teacher and I'm retiring here for your and we old seven years on the house and will have enough income to pay the house off you do a probably an year and 1/2. No problem, but do I do that two years or do I keep putting money and and just make sure it paid off before I retire I will can return to you getting on the money that you've been investing recently.
We got well we got dividends are about $3500 a month and we got farm income because we have farms that we ran out we get a lump sum of that which is $50,000 plus a year, then I'm still working on my wife's retirement were up 200 something lower hundred $40,000 a year okay but basically what I'm hearing is you have enough in the way of margin in your cash flow each month you'd be able to pay this off is soon as two years but certainly by retirement just out of current cash flow right yet okay and if you didn't wear your parking that money that's a surplus.
If you didn't directed toward paying the home off more quickly. We put that back on investment for retirement okay yeah you know I could go either way if you had a real conviction. Frank, you and your wife. You just want to be debt free as soon as possible I'd say go for it.
Don't look back but if you're socking this money away.
It's not going toward lifestyle and 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 paying off your home with your retirement date because that's gonna 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 of other retirement accounts. It 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 prayed through that you have a conviction about it, then I'd say go for Frank. Wish you guys the best.
Thank you very much. Great questions as you prepare for retirement. 800-525-7000 R number Aurora Illinois Rhoda what silly question for Rob West. I investing in the market and I have between $100,000 what would be your recommendation on what type of back when I investing sure Rhoda is this a one time amount that you have available. Are you adding to this each month. It will be one time okay you know if if you let me ask you this.
First, do you have an emergency fund, you have some savings beyond this that you can fall back on. Okay so as long as you build that up to 3 to 6 months expenses and you're not pulling from that to do these investments it. 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 you just to highly concentrated. I would put this probably an S&P 500 index and just on the broad market which you could do it to Vanguard or you could do it Schwab or fidelity or betterment. One of those were basically you have 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 do you think is going to do well you just too highly concentrated at that point, at the risk of of one particular company.
Rhoda, thank you very much you know sometimes people will just a little bit of money. Rob asked us about any stocks. What are those and what your brief recommendation. Well, I would stay away from penny stock Steve they just I 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 the trades for less than five dollars a share and trades in the over-the-counter markets as opposed to that. The major indexes. Okay Rob, thanks very much welcome back and do it tomorrow. All right, I think sleep moneywise. Live is a partnership between Moody radio and moneywise media and of course you are 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 moneywise. Not