Making the Right Investing Decisions

Trust in the Lord with politics, include God in their decisions. And that's why it's always a blessing to get his wise financial counsel. Mark, great to have you back with us on the program.

Thanks guys, pleasure to be here. Mark, there's no question we've survived one of the strangest years in market history and everyone wants to know what to expect in 2021, record highs or perhaps steep declines, but you're not here to make predictions today, are you? No, I'm firmly in the Yogi Berra camp when it comes to predictions. Of course, he said famously, it's tough to make predictions, especially about the future. You know, in all seriousness, at the beginning of every new year, it seems like every financial pundit feels like they need to weigh in with their predictions, trying to tell us what the right moves to make for the year ahead are. You know, regardless of what's being predicted, whether it's the direction of the stock market, whether interest rates will rise or fall, basically any measurable financial metric, there have been studies done that have shown time after time that these predictions are unhelpful at best and harmful at worst, really. You know, the uncomfortable reality is that predictions are just a flimsy way to build an investment portfolio. One phrase that I use a lot with our SoundMind investing members is that investing is about probabilities, not certainties. And we're trying to stack these probabilities in ways that give us the best overall chance of success, while always keeping in mind that some things are gonna play out differently than we expect. That's really the only thing that we can predict with any certainty is the uncertainty that we're going to face. So, you know, if we're willing to admit that making accurate predictions is really tough, very unlikely, and that the whole prediction exercise is probably unhelpful, then we start to see that making these quote-unquote right investment moves isn't necessarily something we should be trying to measure simply by which investments end up making the greatest gains. You know, really, the right choices, again, we're using that term kind of tongue-in-cheek, these right choices, the ones that are right for you are gonna be the ones that realistically assess your current financial situation, then look years ahead to where you wanna go and provide you with a high probability of getting there. Yeah, while knowing and accepting that there will, of course, be bumps along the way.

Okay, we've got about a minute before our first break, so get us started here. How do we make purposeful movement down that road? Yeah, so first of all, the right investing decision is always one that's consistent with a specific biblically sound long-term strategy that you've adopted. You know, many investors kinda collect random ideas, and that's their portfolio, things that seemed like good ideas at the time but weren't chosen with any thought of how each piece fits into the whole.

And that tends to happen by default because most individual investors are responders, meaning that they're reacting to outside information as it comes across their path. If you're making decisions on a case-by-case basis like that without much thought to the big picture, that's usually not the best approach. So we can talk about what is the best approach here in a minute.

Yeah, we certainly can. This is really helpful, and I love the idea of being thoughtful and purposeful about how we approach investing in a new year. Helping us make the right investing choices and decisions in 2021. Mark Biller with us today from Soundmind Investing. Check them out, soundmindinvesting.org.

We'll be right back. 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.

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You'll find it all in Master Your Money by Ron Blue, available when you click the store button at moneywiselive.org. Great to have you with us today. Our guest is Mark Biller from Soundmind Investing.

We're quoting the Bible and also Yogi Berra, more of the Bible than Yogi, and I'll turn it back to you, Ron. How do you move forward with your investments in 2021 in a way that's purposeful and especially after that setup? That's what we're talking about today. And Mark, just before the break, you said that often investors tend to be responders, meaning they react to outside information as it comes across their path and make investment decisions on a case-by-case basis without much thought to the big picture, which is, of course, what we wanna be focused on. So what then is the opposite of that? Yeah, so the contrast to being a responder is what we're always trying to focus on at SMI, and that's to help our members be initiators instead of responders. And an initiator is someone who develops an individual investing strategy that's specifically tailored to their personal temperament and goals. Now, for a person like that, the right move that we're talking again about these right moves for 2021, well, for that type of person, the right move is owning investments that they've purposefully sought out, knowing how each piece fits into the overall scheme of their big picture plan. Yeah, that's excellent. So what do you suggest for a person who wants to follow this initiator path that you described but doesn't feel like they know what they're doing?

Yeah, that's a great question. First, I guess I'd say here are three suggestions that are kind of big picture suggestions for anybody who's trying to figure this out. First of all, you should always pray over your investing decisions. Secondly, seek out and listen to good counsel.

And third, and I think this one's really easy to overlook, give yourself time to reflect. Don't be in a hurry to decide. And as you're kind of going through those three broad steps, examine your motives. That can really help steer you around some dangerous pitfalls.

Why am I attracted to a particular investment or idea or strategy? If you're married, certainly pray with your spouse and talk this out until you reach agreement. That's really important because you need to both own your investment decisions since you're in this together. Now, that's kind of general advice. As we drill down into the investing specifics, again, I would say seek experienced Christian counsel, whether that means working with a Christian advisor or using a do-it-yourself-with-help type service like what SMI provides. You wanna be getting some good input into your decisions. If you feel like you don't really know what you're doing, you need that kind of good input and you wanna get it from a source that has similar values to you. And then as you evaluate your options, take your time to figure out what kind of approach is gonna serve you well over the next many years and then settle into a plan and a process that you can stick with for the long haul. Yeah, I couldn't agree more and obviously getting wise counsel is critical.

The Bible certainly underscores that idea. But what would you say, Mark, to a listener who feels like investing is just a complicated subject? They just don't understand it.

Where should they turn? Yeah, it can definitely feel that way, especially when you're just starting out. And I would just encourage someone who might feel that way by saying that a good plan doesn't have to be complicated to be effective. We've got one simple strategy in our SMI handbook that uses just four index funds and a person only has to touch it once a year.

Now, that's an example of a really simple strategy that has been pretty effective over time. So, bigger picture as we're talking about these right investing decisions, well, the right investing decision is always one that you understand. Most people really don't need a particularly complicated approach. So, give yourself a break, skip the complicated stuff, educate yourself on the basics. The right investment step is one where you know what you're doing, why you're doing it, and how you expect it to improve your situation over time. And again, if you're not really sure what these basics are that you should be focusing on, we've got lots of free material available at soundmineinvesting.org for you to kind of start your educational journey. Yeah, you know, that's really helpful. I think one of the areas that trips folks up is that they tend to base their investment decisions on getting the highest possible returns and that can lead someone to trouble, can it?

Yeah, absolutely can. You know, the right investing decision is one that's prudent under the circumstances and those circumstances are gonna be different for each individual. So, what people often forget is that the investments that offer the highest potential returns usually come along with the greatest risk of loss as well. And so, each person needs to answer the question of how much of their capital can they afford to lose and still have a realistic chance of meeting their goals. You know, one great example of this, Rob, we talk about it from time to time, is the idea of owning the stock of your employer. Now, you may work for an amazing company whose stock is a great investment, but for you, as an employee of that company, you already have so much tied to the success of that one company, your income, your health benefits, maybe part of your retirement income, that even if that might be a great stock investment for me as a non-employee, for you as an employee of that company, you probably shouldn't own very much of that stock. You know, it'd be better for you to diversify and not have all your eggs in one basket, you know, even if it would otherwise be a great stock. So, that's just a good example of if you're just looking through the lens of where the highest possible returns, you can actually get yourself in trouble.

Yeah. Mark, as we begin to wrap up today, and this has been so helpful, it's often said that fear and greed are the two emotions that tend to drive investing decisions. But why don't you finish today?

We've got about a minute left. How do we avoid letting those emotions drive our investing decisions in 2021? Yeah, it's so hard. Those are the twin pitfalls, the ditches on either side of the road that we wanna be on. You know, I would just say if you do the things that we've been talking about, praying over your decisions, seeking wise counsel, having a long range plan and diversifying your investments, you know, those are things that are gonna help you move forward with confidence and consistently applied, they're also going to help temper these fear and greed influences. We always need to be aware of them because they never really go away no matter how good we get at this. But you know, the big picture point we're trying to make today is by understanding a few of these core concepts, you can be equipped to make basic investing decisions that are right for you. And hopefully that'll be true in 2021 and for many years ahead. Absolutely. And one thing we know is that uncertainty is certain.

So we need to trust a plan that's rooted in truth and that comes right out of God's word. Mark, thanks for stopping by today, my friend. Always my pleasure, Rob. And you can read more about today's topic, what we've been discussing in their excellent article, making the right investing decisions in 2021 and beyond when you visit soundmindinvesting.org. This is Money Wise Live, I'm Steve Moore.

We'll be right back. If the heavy burden of debt is robbing you of freedom and peace of mind, Christian Credit Counselors can help. We're a nationwide nonprofit credit counseling organization that has helped over 300,000 individuals in the last 27 years get out of credit card debt 80% faster while honoring that debt in full. To learn how Christian Credit Counselors can help you, visit christiancreditcounselors.org.

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To learn how, visit moneywise.org slash ncf. 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 wonder what's going on in your life. I wonder how you would characterize this particular season.

And isn't it interesting how we can be having one season and in a day, wham, everything can turn. and suddenly we're in a new season and our God is good and our God is faithful and he's got a work to do and we trust him but suddenly we find ourselves in a new season. As we look at that and we think about that, what does it mean to you that he has set you apart for himself? When you see that God says in Christ, I want you to know before the very foundation of the world, I set you apart for me.

Let that sink in for a moment as we see what he would tell us through the name Jehovah Meccadishken. That particular name conveys a couple of things under distinctiveness I don't want you to miss. The name conveys the God who, first of all, first bullet point separates me and I'm gonna ask you to write it down just like that because I want you to think in first person today. I'm not sure we have a name of God we're ever gonna study that's more personal than this one because what he's saying is this, you are mine, you are mine. I set you apart for myself and you belong to me. So there's a distinctiveness in this that separates me and makes me different.

Separates me, the second bullet point is makes me different. That's the essence of the word sanctification where the Hebrew is concerned. You've been listening to a quick word with Beth Moore. Now that faith has come, a study of Galatians is now available in a printed workbook edition. Grab your copy today and join Beth for Bible study at BethMoore.org. This is MoneyWise Live, your host is Rob West.

I'm Steve Moore. If you hear a phone number mentioned today, please ignore that phone number. Today's broadcast is a reprise edition of the program but I think the upcoming information will help you and bless you and make you a wise steward of what God's given you.

Rob, let's begin by going to Lancaster, Pennsylvania. Hey Lee, what's on your mind today, sir? Good afternoon, thank you for taking my call.

Two questions. Well, first of all, I've been blessed with two grandchildren and I have been thinking about a 529 plan. First of all, the first question is the advantage and disadvantages of a 529 plan and I did, for my kids, I have secured a financial counselor to talk to each of them and get them on the right track and one piece of advice that they received is have the grandparent initiate the 529 plan for the grandchildren.

I'm not sure what the advantage or disadvantage of that is as well, so that's my question. Okay, well, specifically related to the benefits of the 529 plan, you know, it's one of my favorite plans simply because you're able to save money on a tax-advantaged basis. You have tax-deferred growth and then tax-free withdrawals when you use the savings for qualified educational expenses. These plans are more generous in terms of allowing the annual contributions for savers.

You can put in up to 15,000, which is where beyond that you'd trigger a gift tax unless it's applied to the lifetime exemption, but you have the opportunity inside the plan to take advantage of the investment option. Some states are better than others and you can go outside of your state. You may not want to because of in-state tax benefits in some cases, but that's where just comparing the various 529s around the country will work well for you.

You also want to find one with low fees, but it really can be a great way to save for the expenses related to college and get some of that compounding to work for you without any taxes pulling down the gains. You also have the ability to get the funds out on a pro-rata basis for scholarship awards and grants, and you can use the funds up to a certain amount for a K to 12 private school, so it really is a great tool. Now, in terms of having the grandparents open it versus the parents, generally it's more favorable from a tax standpoint to have a parent own 529 when you are considering the eligibility of FAFSA and receiving financial aid. Do you have reason to believe, Lee, you would qualify for some need-based aid?

I don't think so. I'm just not sure why they were advised and they didn't understand that either, and I don't mind helping out in any way, but I just want to make sure that it's the best way to go about providing the means for my grandchildren. Yeah, well, you could still contribute to a parent-owned 529. The benefit there, if you do have the ability to qualify for financial aid, is that a parent-owned 529 plan is considered an asset to the parent, but a distribution made from a grandparent-owned 529 is considered student income, and it's substantial. Assets held by parents can reduce the need-based aid by only around 5% of the asset's value, whereas student income can reduce aid by as much as 50% of the amount distributed, so almost 10 times as much. There are some exceptions to that, so you're gonna want to take a look at that, but I think, generally speaking, it'd be great for their parents to open it, you to then contribute to it as you see fit, and you can obviously do a great deal to help them save the proper amount that's needed to be used down the road, specifically for educational expenses. You can read up on this, Lee, if you want to do some homework online.

My favorite website for this, both in terms of comparing the various plans, even going through a question and answer tutorial that'll recommend the best plan for you, as well as just additional information on uses of 529s, is simply savingforcollege.com, and I'd encourage you to check it out. Lee, we appreciate your phone call today, sir. Thank you very much.

Enjoy those grandbabies. Mine visiting at home today, Rob. Oh, yeah? Yeah, Olivia's visiting, and when I left, they were making cookies. Does that mean you took her to Chick-fil-A today?

Not Chick-fil-A today. We may do pizza tonight. Okay. Whatever she asks.

Well, I'm sure she did. I, of course, am the taskmaster. I'm the one who says no. Oh, sure.

In my mind, I say no. It doesn't come out that way, but no, I'm wrapped around her little finger, both little fingers. Las Cruces, New Mexico. Hi, Mary, how can we help you? Hi, thank you so much for taking my call. Happy to.

I have a question. My husband and I are both now retired, and we're starting to take Social Security. We have a house balance of 180,000. We have about eight years to pay, and our house payment is about $3,000 a month. Our interest rate is low at 3% because we refinanced it, and that's why we have these years to pay. We have 3% interest. So my question is, would it be better with our Social Security to pay off this 180,000 or invest it, savings, investment, something, for our later years, or maybe do a split?

Yeah, yeah. So talk to me about the assets that you have, Mary, that you would be pulling from to pay off the mortgage if you decided to do that. Well, I wouldn't use any of the assets.

What I would do is use my Social Security that we're just starting to get, and so we've not gotten comfortable with it spending, and since it's gonna be very new to our pocket, we just thought instead of spending it, apply it to the house. Oh, I see. Yeah, so you wouldn't be talking about paying it off in a lump sum. You would just be accelerating the payoff by adding an amount equivalent to your Social Security payment each month, is that right? Yes. Very good. You know, I love that idea because you can always stop that at any point if you needed the money, but the idea that you could get out of debt completely sooner rather than later is just gonna get you not only some savings and interest, but ultimately to a place where your monthly expenses are significantly lower, which gives you more flexibility, and as you said, you haven't even factored this into your plan.

So yeah, I would just redirect all of this to your mortgage payoff, assuming you have the proper reserves, and I'd love for you to have at least six months. Mary, thank you very much for calling today. Hope that helps. We're going to pause briefly, and then we'll be back. This is MoneyWise Live. We'll be right back. We'll be right back. We'll be right back. And trust God to write your story by Robert and Nancy Walgamut.

Order your copy today at moodypublishers.com. Do you feel stuck? Are you tired of going through the motions of faith? Do you wanna make real progress in your life but not know where to start? How to Grow is a book to help you grow spiritually and help others grow as well.

We often see the gospel as a starting point of the Christian life rather than the main point of all life. How to Grow, a new book by Daryl Dash, available at moodypublishers.org. That's moodypublishers.org. 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. With SRN News, I'm John Scott. He was recovering from nerve agent poisoning he blames on the Kremlin. The ruling concluded a court hearing set up by a police precinct where Navalny was being held since his arrest in Moscow on Sunday.

Swiss authorities say they placed two hotels under quarantine and ordered all guests and employees be tested for the new variant of the coronavirus that happened at the upscale skiing resort in St. Moritz. This is SRN News. It's a real pleasure to have you with us today as we share God's principles of financial stewardship, managing your money, whether it's giving, saving, preparing your children for college, buying a house, whatever, more than likely God's word has something to say about it or certainly some principles that apply. And we're glad you're there today. Now, please keep in mind that today's program is prerecorded. We won't be taking any new calls this afternoon but we hope you'll stay with us because Lisa is on the line.

She's calling from Youngstown, Ohio, right? Well, Lisa, we're so glad to have you with us today. How can we help? Hi, thank you.

I always enjoy this show and all your wisdom. Thank you. So my mother is in assisted living and fortunately we've been kind of good stewards and she's taken care of, has long-term care and pension and social security to cover her expenses there. And we sold her house. And between that and her previous bank accounts we have like $150,000, which she most likely won't need. She's 85, some dementia, but otherwise well. And so we wanna know what might be the best place to put this money because banks or checking accounts don't do much and CDs I know aren't doing much.

Yes, very good, Lisa. So with these proceeds from the sale of the property are you looking for this money just to grow or is she going to be drawing an income off of this? She will not need it.

Okay, all right. So this is really just money that's there for the future. If she were to need it down the road, obviously we want it stable, but we also want this money earning a bit if we can. I think the best thing for you to look at right now is to begin interviewing financial professionals that could take over the management of these funds. There will be some investment professionals that have minimums that are higher than 150,000, but plenty that could work with this amount of money.

And what you would be looking for here is somebody who really is a competent professional. The reason we recommend the Certified Kingdom Advisor designation is this would also be somebody who's a godly person who understands the Council of Scripture as it relates to money, and really is going to want to be invested in knowing your mom's situation, who is she, and what's the purpose of this money now and in the future. And given that we're not in a capital appreciation phase, we're in a capital preservation phase of her life, which means protecting it as paramount and then growing it as secondary, that's going to result in an entirely different type of portfolio that this investment professional would build for you. Probably a highly concentrated toward fixed income type assets. So we're talking about government and corporate bonds, perhaps a smaller allocation to stocks that are high quality dividend paying or preferred stocks, where during a period of a bear market, even for a couple of years, the money would not be accessed, even if she needed a portion of it, it would be taken out of the more stable investments while the stock portion that would probably be no more than 30% could recover. But the overall portfolio with the combination of the stocks and the bonds would net probably a goal of around 4% a year. So if she has 150,000 that's working for her, we'd be looking at adding 6,000 a year, and then that would continue to compound into the future.

And then obviously if at some point she needed it for additional expenses, medical or otherwise, that money would be there. So I think given this is a significant amount of money, and given that I think some professional expertise would give you the peace of mind to know that the portfolio is invested appropriately for what its intended purpose is, I think that's really gonna be your best opportunity. So I would reach out to probably two, maybe even three certified kingdom advisors there in the Youngstown area.

You can find those men and women at moneywiselive.org. Just click Find a CKA. And after you have those meetings, if that's the direction you go and you have questions, don't hesitate to give us a call. Lisa, thank you very much.

Time for one more, I think before the next break, Spokane, Washington. Hello, Phil, what's your situation regarding life insurance? Hi, thanks for taking my call. Yeah, my question is, so currently my wife and I, we got life insurance. So for us and for our two kids, so me and my wife, we currently have term life insurance, and we got whole life for both of our kids. And my question is, is it better for me to, so take them out that I'm putting towards that and just get a retirement account, but it wouldn't be much.

We are only paying about 130 to 150, I don't know the exact amount, towards our four accounts. Yeah, yeah. Phil, let me ask you, you are still working and your wife is as well, is that right? I am the only one working. Okay, and what is your age? I am 28. Okay, got it, all right. And what is the amount of death benefit you have on that term policy? For me, 1 million, and for my wife, half a million.

Okay, all right. And if you don't mind me asking, roughly, what are you earning per year, generally speaking? It's kind of hard to say, I'm in construction, so every year it kind of fluctuates. And I'm self-employed, so I would say probably around 60,000.

Okay, all right. So we would typically say that you would want to have 10 to 12 times your income as a starting point, and then you can add to that if you had any major expenses coming up, like if you had kids and you wanted to cover the cost of college, you had a mortgage, you wanted to be able to pay off the mortgage. So at 12 times 60,000, that's around 720,000. If that's a net number and you're really bringing home 80 and keeping 60, obviously, that would be a higher number at that point, we'd be talking about 960,000. So at a million dollars, you're probably at about the right amount of coverage.

And at your age, it's very inexpensive. So think about it this way, if something were to happen to you and your wife needs to replace your income so she can maintain her lifestyle, keep the bills paid and the house paid and so forth, that's what that insurance is for. So it's a very small amount of money to provide some confidence and peace of mind to your wife to know that you can still provide for her beyond your life. And she could take that million dollars and convert that into an income stream that would really help to shoulder a lot of these expenses on a monthly basis. So as much as I hear you that that's money that's probably you're not gonna ever see any return on because you're, Lord willing, you're not gonna ever collect on that, it's there to really offset that significant risk that exists if something were to happen to you and the Lord called you home prior to when you're down the road when you're a much older man.

So I would hang on to that. I think the question is, what do you all need to do in terms of reordering your financial life to be able to create some margin so you can be putting money as a self-employed guy into a SEP IRA? You know, a very simple retirement account that you could put in up to $55,000 a year. You wouldn't obviously put that much but it'd give you plenty of ability to put money away. You're still young, you've got time on your side, we're talking 30 years probably that you're gonna be working. But you being able to start now and just being able to sock some money away over time I think is the key. So I'd go back to that budget.

Look where you can cut back expenses, not canceling life insurance but other areas to create margin to fund at a minimum a Roth IRA for you and your wife and if not just those, a SEP IRA. Phil, God bless, we're glad you called today. Thank you very much and we'll be back with more after this.

We'll see you next time. Sounds great, Siri, download the MoneyWise app. Okay, searching for MoneyWise on the app store.

Learn more at app.moneywise.org. 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.

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The problem comes when you push in on someone's face without their permission. So run as far away from that as possible and just love on people. Jesus said they'll know that you're his disciple by your love and to love him as much as you love yourself. This is your purpose and they are your mission. Your job is to ignite revival outside the walls of your church by moving everyone every day closer to Jesus.

For help doing that, go to rotw.com. Three ways that you can pray for Moody Radio. Pray that we would be faithful to the word. Pray that we would present the simple gospel simply. Pray that listeners would be drawn to Christ. Three important prayer requests. We're serious about them and serious about asking you to join us in our mission of making Christ known.

Thanks for your commitment to Moody Radio and for being a part of our prayer team. How do you reach people who call themselves Christian but don't know Jesus? Find out by reading The Unsaved Christian. Dean Ansera was a cultural Christian. Today, he pastors a thriving church and he wrote this book to offer starting points that lead to deeper conversations. You'll be equipped to confront cultural Christianity and lovingly share the gospel to the cultural Christians in your life. Cultural Christianity is a huge mission field in desperate need of missionaries.

Get your copy of The Unsaved Christian at moodypublishers.com. Hey, thanks for sticking around today. We do appreciate that. Rob West, your host. I'm Steve Moore. Let's go back to our phone lines.

Orlando, Florida. And Corrine, what's your question today? Hi, thanks for taking my call. You bet. Yeah, two questions.

The first one is, is it worth it to refinance now? I mean, three friends was like, yeah, yeah, yeah, do it. And one friend said, just double up. And it's the same thing, double up on your 30-year. So what do you think?

Yeah, well, there's, I think, truth to both equations. The question is, why are you refinancing and what loan are you going to get to replace what you have now? So the idea that, yes, you can double up your payment is a good one. That's always going to help you accelerate your payoff, because when you double up, anything you send beyond that monthly payment, Corrine, is going to go straight to principle.

So you know, if you just send, well, we talked to a caller the other day, he sent an extra $100 a month, and he paid off his 30-year mortgage in 23 years. So that extra $100 a month cut off seven years. Now, why would you refinance? Well, the reason you would refinance is because you could, in most cases, because you're lowering the interest rate. And you're lowering it by at least 1%, preferably 1.5%. So you have a 4% rate, or 375, and you're going to refinance at 2.765, or something like that. That extra point or more in interest rate reduction is going to result in a meaningful decrease in the amount of overall interest you're paying. Now, where you can get caught, though, is you can end up lowering the rate, but extending the term.

And we don't want to do that. So for instance, if you had a 30-year mortgage, you've been paying on it five years, you don't want to start over with a new 30-year mortgage, because that reduction in interest rate is going to be offset by lengthening the term. So you'd want to do a 25-year mortgage, or a 20. And then, of course, you've got to make sure that fits into the budget. The last consideration is, what are the closing costs?

And are they normal and customary? Or are you paying an inordinate amount? Because all of those closing cost dollars are also going to take away from the overall savings in the reduction in interest. So the last point is, you want to make sure you're going to stay in that home for at least five to seven years, at least, so you can pay back the cost of the refinance, and then enjoy that lower interest rate for the life of the loan.

So given all that, tell me what you're trying to do. How long was your term on your mortgage originally? How long have you had it? And what is your interest rate? OK, so it's a 30-year mortgage. The interest rate is 4.8. And I've had it for 10 years. OK. And what is your credit score?

Do you know? My credit score is pretty good, because I like to pay everything off on time. I believe it's like around 750, maybe almost 8.

I don't go up to 750. Yeah, so you're in a prime situation here, Karine, where you could do a new 20-year mortgage, not a 30-year, but a 20-year mortgage. You could probably get that right now at about 2.5%, because interest rates are very low right now, 2.5.

You could even do a little bit less than that. And so you'd be paying on it for 20 years, but you'd be taking off over two points on the interest rate. And then you may even have the same monthly payment, because even though it's 20 years, that drastic reduction in interest rate is going to bring that payment down quite a bit. And then if you wanted to double up on it, you could do that, but you'd be doing it while paying a much lower interest rate. So I think the key for you now is to go out and get probably at least three different lenders to take a look at this so you can compare the closing costs. And as long as you're planning to stay in this home a while, you could be a prime candidate for a refi. Does that help?

Well, yes. I talked to my mortgage clerk on the phone. I think I can do a 15, and it'll be like 19 years left to pay it.

And he can do 2.5. And so it's a 15-year OK-to, then a 20? Yeah, that's fine. I wouldn't just automatically go with your mortgage company, though. I'd get a couple of additional quotes from some other lenders. I'd probably go to bankrate.com, look at even some of the online banks or mortgage lenders, which tend to have a little bit more competitive rates or lower closing costs. And yeah, 15 or 20, the key is make sure the payment fits into the budget, and make sure you're getting that low interest rate, 2.5 or less.

And you're going to want to look at the closing costs to make sure they're not more than 1% to 2% of the overall loan amount. Thanks so much, Corrine. Holland, Michigan. Hey, Steve, what's your question for Rob today? Hey, Shalom Aleichem, brothers. My question is on, that was peace beyond you, by the way. A little Hebrew lesson for you. Yeah, the answer back, though, should have been just reversing it, since we are supposed to turn it around and give it back to me.

Anyway, so much for lesson. Hey, come on now. Want some peace?

Give me peace back. OK, so get to the question. The question is, on debts that are incurred and go into the credit bureau, is it seven years or 10 years where they drop off? Technically, I'm given to understand, and usually that's wrong anyway, that the debt is no longer incurred, basically.

That it is somewhat, in a sense, forgiven. However, I've also been told that if you so much as during, after that seven years or during that seven years, if you pay as much as $1 on that debt, you actually end up starting the clock all over again. And then a second question, if you gentlemen don't mind, is I don't think there's a lot of people that understand that the stimulus check is nothing more than a loan from the government. Because I got a bill for the stimulus check that my wife and I got and told that they were going to take it out of the income tax refunds over the next few years.

However many years, I have no idea. But I find that really ironic that a lot of people think, this is great. We got money to help out, but the government didn't give it to you for free.

They want it back. Yeah, well, a couple of things. Number one is, on the debts, unpaid debts are dropped from your credit report after seven years. But as you said, there are some exceptions. So if you set up a payment plan for an old debt with a collection agency, the delinquent debt could be, quote unquote, re-reported to the credit bureau, extending the time it's on your report. Obviously, that's not a reason to pay it back.

The wicked borrows and does not repay, we read in Proverbs. So clearly, we should have an absolute commitment to repayment. But typically, that negative information is going to fall off after seven years. But how you go about paying it back, and whether it's with the original creditor or with a collection agency, a third party, could affect that timeline just depending on how that's treated. In terms of the stimulus check, I'm not aware of any legislation that's going to require paying that back.

I think you may have misunderstood what was being communicated. The only thing that will be paid back is there was somewhat of a tax deferral on FICA taxes that are going to be, unless Congress acts, we're going to have to pay that back. And that's going to come out in your 2021 taxes. But not the stimulus payments. Those were sent without, at least at this point, based on the way the bill was passed, not any expectation of reimbursement.

So hopefully, that's helpful. Take another look at that communication. Perhaps talk to a tax preparer to decipher it for you. Because it's not always plain English when it comes from the IRS.

But I think you are mistaken there on what you understood. God bless you, Steve. Thank you very much for that.

Bowling Brook, Illinois. Robert, we have a couple of minutes left here. How can we help you the quickest and the best? OK, so I am approaching my seventh year. And I'm going to be thinking about getting Social Security. And my question is, do I have to wait until my birthday? Or is it the year of my birthday that I can file for? How does it work? And also then, when does the payoff start?

Yeah, it's a great question. So you can go online and sign up for Social Security benefits now. You do that at SSA.gov, SSA.gov, to set up an account. While you're doing that, just request a start date for the benefits that's a day or so beyond your 70th birthday. That way, there's no question that you'll get the final 8% increase for delaying benefits. There's no point in not filing for benefits then, because your amount won't increase.

So you want to go ahead and start collecting. And Social Security benefits are paid a month in arrears, like a mortgage. So your first payment would come 30 days later. But you just want to set that start date just beyond your 70th birthday.

Does that make sense? So it starts at 70 and a half. It's actually the 70th, right? That is correct, yes.

OK. So you're saying I can apply for it right now and tell them to start it literally a day after my birthday? That's correct. Yeah, what you're thinking of with the 70 and a half was a required minimum distribution age, which has now been pushed actually to 72. But 70 and a half was where you had to start taking a required minimum distribution every year out of an IRA. But in terms of your start date for your benefits, delaying every year you delay up to age 70 puts an 8% increase on that check for the rest of your life.

And so that's why you want to push that beyond your 70th birthday to make sure you lock in that final 8% increase for delay. Robert, we're glad you called. And we hope that clears things up for you. We wish you the best. Thank you very much. And Rob, just a little bit of time left here, but we haven't mentioned in a while the new MoneyWise app. Fill us in on how it's obtained, where you can go to get it, what's there.

Yeah, absolutely. We'd love for you to download it. There's no cost to download it. It's the MoneyWise app in your App Store. What is my App Store? Well, if you're an Apple person like I am, you'd go to the App Store, whether that's on your tablet or your smartphone, and just search for MoneyWise Biblical Finance. If you're an Android user, you're in the Google universe, then you go to the Google Play Store. And it's there as well, MoneyWise Biblical Finance.

What will you find? Well, the core component is our digital envelope system where you can set up your spending plan using the tried and true envelope system. You can download your transactions after you connect to your institutions. Also, there's a community there where you can ask questions and share ideas with one another. I even stop by there from time to time to answer questions. And our Discover tab, which has all of our MoneyWise broadcasts. You can listen to this live program, or you can listen to any of our archives as well. Thanks, Rob. MoneyWise Live, this program is a partnership between Moody Radio and MoneyWise Media. Thanks for your support. Join us again next time.