Overcoming the COVID Credit Crisis

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Not licensed in Alaska, Hawaii, Georgia, Massachusetts, North Dakota, South Dakota, and Utah. As vaccines roll out, we may soon see light at the end of the COVID crisis tunnel, but it may take years to overcome the credit crisis in its wake. The loss of income during the pandemic forced many Americans, maybe you, to rely on credit and rema balances. So today, host Rob West talks with Neely Simon of Christian Credit Counselors about a way to speed up your financial recovery process, and it's your calls at 800-525-7000. I'm Steve Moore, overcoming the COVID credit crisis, next, right here on MoneyWise Live. Well, Rob, Neely Simon is the director of strategic partnerships at Christian Credit Counselors, where they've no doubt logged some overtime recently, helping folks deal with the credit crisis brought on by COVID, and we're taking your calls today. On this particular subject, if you're dealing or struggling a bit with some credit issues, credit crisis issues, now's the time to call 800-525-7000 while we have open lines.

Rob? Yeah, and there's no doubt, Steve, that folks are really struggling because of COVID in many cases, and that has resulted in debt. Neely, great to have you back on the program.

Thank you so much for having me on the show. Sure. You know, you've come across some information here that reveals the extent of the credit problems many folks are facing today due to COVID. I'd love for you to begin by just bringing us up to speed.

Sure. So I think all of us are pretty well aware that there's been a huge impact in terms of job loss and income reduction in this 2020. CNN actually stated that 27 million Americans are out of work due to COVID. Those numbers mirror something like what we are dealing with in the Great Depression. So I think for many people, they're still struggling and have fallen behind on their bills and are running up credit card balances or taking out 401K loans or have even fallen behind on the taxes.

So it's really difficult for people to keep their heads above water if they have been impacted. So I think it's really important that we're here today to share trusted resources, providing people exposure so that they can have more choices in terms of what to do next. Yeah, absolutely.

Go ahead. Yeah, something I came across. So Finicity is a company that collects financial data. They did conduct a survey of over 2000 U.S. consumers to learn the extent of the impact on people's finances during COVID. And what they found is that over half of the people surveyed experienced temporary or permanent job loss or loss of income due to the pandemic. And the majority of those affected say they're still having difficulty staying current. One of the saddest statistics, though, that I read is that there's about 15 percent of those impacted by the crisis have experienced permanent job loss or income reduction.

So there's no question that there's going to be definitely a ripple effect for years to come based on this COVID pandemic. Yeah. Well, Nealey, I got to look at some of the data and I know that we've heard reports about assistance being provided, whether that's payment holidays or putting interest on the back end.

But I know many that responded to this particular survey said they haven't been offered a way to ease the loan terms during the pandemic. Isn't that right? Yes. A lot of people have been given temporary relief. Right. So whether it's, you know, forbearance on credit cards or mortgages or student loans. But the reality is eventually they're going to need to pay that. And a lot of times, too, they have to pay the catch up amount. Right.

So it's really I think a lot of things that have happened are a Band-Aid fix and we're really going to see a lot of the ripple effect come 2021 and what's going to happen for people. I know personally what we're experienced when people call us up, businesses have, you know, just completely depleted their savings trying to stay afloat. They've maxed out their credit cards on out-of-pocket expenses and now their businesses are having a close.

Right. So it's a tough time for a lot of people. Then we have the kids are at home doing the home school. So sometimes parents have to stay at home. They've experienced a loss of hours at their work.

Bills are higher, food bill, utilities. So there's there's a lot going on that really is making people uncomfortable or maybe even fearful because there's so much that's uncertain in the future right now based on COVID. No doubt. Well, there's a lot more to talk about on this and your questions. If you have a question related to this issue, credit issues, debt, credit cards. Nealey's here to help.

That's right. Eight hundred, five, two, five, seven thousand. Nealey Simon, a good friend from Christian Credit Counselors with us today. Call right now if we can help.

Eight hundred, five, two, five, seven thousand. Great to have you with us today. It's MoneyWise Live with Rob West. I'm Steve Moore. We're talking about debt and credit. And if you're struggling a little bit with some issues in those particular areas, maybe we can help. Christian Credit Counselors, a tremendous ministry nationwide, helping folks who are, well, dealing with these kinds of issues and who may need some outside help. And Nealey Simon is all of that. Rob?

Yes, she sure is. You may be dealing with some of the fallout from the COVID crisis, higher utility bills, credit card bills, an uncertain future. I know unemployment programs that were over and above the typical unemployment have ended and so have so many of the relief programs.

So it can put you in a really precarious spot. And Nealey's here to help, along with her team at Christian Credit Counselors. And Nealey, back to the survey from Finicity. Was there any particular demographic that was hardest hit by job loss and income reduction?

Sure. So the survey revealed that people making an annual income below fifty thousand have suffered the greatest impact. So when you think about it, that industry includes restaurant, hotel, airline workers, most of which have lost their jobs or income in the last year. So they're typically the most vulnerable and are having the greatest difficulty staying current and keeping up on their payments.

Yeah, I can certainly imagine. Before we take some calls on these topics, and by the way, Nealey's here to help, 800-525-7000. Nealey, how do you help folks facing these really difficult and challenging times find peace in the midst of these storms? I think the most important thing is to reach out and at least explore what your options are. I know at Christian Credit Counselors, we're getting calls. People are a little uncomfortable.

They've never had to do this before. Explore their finances, asking for help. But I say the first step is to step out and ask for help. At our company, we're there to listen to people, to provide solutions, walk them through a budget and a plan. If they have credit card debt, that'll really provide them with a long term solution in terms of getting out of debt and creating some more disposable income. If the need goes outside of what we do, we also have a lot of resources and partners that we work with, such as MoneyWise budget coaches. So we'll do a budget with someone. But if someone wants ongoing budget coaching, they can utilize your coaches.

We also encourage them to stay connected with friends and families and small groups. But most importantly, confront the issues at hand. I know a lot of times things can become scary, especially if you don't know or have the resources to solve the problem, but they're not going to go away.

So the best thing you can do is to confront them, work with people that love and care for you and use trusted resources so that you can get out from underneath the struggle. Nealey, with your permission, we'll start taking a couple of calls here. OK, they're coming in now. So let's see, 800-525-7000, Akron, Ohio, WCRF and Joshua. How can we help you, sir?

Hey, Josh. Yes. Go right ahead. I was listening and like she said, this is my first time reaching out, asking for help like this, especially on the live radio.

Sounds kind of crazy. I have a lot of a lot of personal issues, you know, going on. But I do I do tend to give it back to God. You know, I do feel like the situation is still there. But I can't I'm not I'm not wrapped up in it, but listening to the radio station today and you guys are encouraging people to call in and ask for help.

So I said I might as well. My situation is very personal, but I don't know if you guys should be saying it on the radio. You know, well, we're happy to help here.

And certainly you don't have to reveal anything. You're not comfortable, but we'd love to try to provide some practical assistance in addition to praying for you today. Joshua, anything you might share about your situation that would specifically related to a question you have on where you go from here? What's going on?

Well, I mean, I don't mind. I'll tell you guys, you know, just soon as soon as this Corona thing hit, I lost my job. I was a social worker and I lost my job.

And you can imagine the money I was making there. I'm clearly not making now. So the bills are falling very far behind on and I'm trying to get caught up on just rent. Rent, electricity, you know, also have a I had a young lady tell me that she's pregnant with my child. However, she's kind of not giving me a blood test. But I'm kind of really anxious about figuring out how I should be going about that also, because I've never been in this situation.

I've never seen anything like that this before. Joshua, it sounds like you are certainly going through it. Do you have any credit card debt to speak of in addition to the bills that are behind? Yeah, I realized that I realized that my credit mark, my car payment since I was paying it late, it's affected my credit very badly. So now credit cards, loans, I couldn't even go back to school. You know, I didn't realize things had gotten that bad.

I just looked up and it was bad. So, yeah, well, I appreciate you being transparent and describing some of what's going on. Nealey, Joshua's situation is one that a lot of listeners are probably in. They've lost a job and things have been spiraling.

Bills got behind, which is impacting their credit. We've got credit card debt. Where do you encourage somebody to go first as they try to get on the right track? Sure.

So, Joshua, I'm so glad that you called in. I just want to share with you that the first step would really be to sit down and do a budget with you. Certainly the most important things are a roof over your head, electricity and a car so that you can get to and from work. I'd say the credit card would come later. You know, I'm not telling you not to pay your bills, but I think the best thing to do is to kind of get your arms around what's most important. We could certainly walk you through a comparison estimate in terms of what we could do with the credit card. But keep in mind on our program, if you have fallen behind, you know, and you do choose to start the program, all the credit card late fees and all the creditor calls will stop. But I think at this point in time, you need to take care of the basics, have an idea and a plan on what we can do to help you, and then kind of navigate that plan once you have more income, then start taking care of the credit card debt. What do you think?

I totally agree. And if you want to go to our website, MoneyWiseLive.org, Joshua, and do a search for the May Day budget, it's a program we did for somebody in your specific situation where we've got to deal with the big four, right? We've got to keep food on the table. As Neely said, we've got to keep the mortgage or the rent paid. We've got to keep the utilities on.

We've got to keep the transportation so that you can either look for work or keep your current job. Apart from that, everything else is kind of on the table, if you will, as you manage this crisis. I think the other key thing, Joshua, is that you are in a Bible-believing church. You are around other believers who can encourage you, walk with you. Most importantly, above all of this is your own personal salvation. If you've not ever placed your trust in Jesus Christ, that's the beginning point today above everything.

And if you want to know more about that, go to NeedHim.org. Let me pray for you, if you don't mind. Father, we just lift Joshua up to you. He's got a lot on his plate, but nothing's caught you by surprise, Lord. You are his provider and sustainer, his Savior, Lord. And so we just trust him again to you, tell you today we trust you with his life. And we just ask you to give him wisdom to know how to navigate the days ahead, that you'd be near to him, encourage him, and provide for him. And we want to thank you in advance for what you're going to do in Christ's name.

Amen. Joshua, again, to reach out to Neely's organization, Christian Credit Counselors. The easiest way to do that is 800-557-1985.

800-557-1985. And God bless you, Joshua. We appreciate your call today. Thanks. Quickly to the state of Maryland in Charmaine. What's your situation?

How can we help? Hi. Good afternoon. My situation is my credit's really bad. I went through a divorce.

Actually, the actual divorce was 2015, but he left way before then, 2008. And I was left with some debt, just carrying the bag. And trying to get out of that, I did a modification on my primary mortgage. And we had a home equity mortgage that I got in a charge-off state because it wasn't being paid. But then that got transferred to another loan company, like a collection agency, I guess. And they wanted payment. But my credit, I had debt from my mom passing and using the credit card for that, and getting through her funeral and all that, and taking a loan to just keep the house, because I had children in the home and I didn't want to lose their stable point while everything else was going on. So I fought through that.

My church family has been awesome. They're like, I don't know how you do it, but you're doing it. But at this point now, and I managed to pay pretty much all the credit card bill, but when I got ready to do a refinance, my score was still like 522. And they're like, we can't refinance you. So I held off until now, paid some more, paid some more. And now I got it up to 660, I think, was the last time. But my challenge is the credit score is now good, but I still can't get to refinance the house because the charge-off account, the home equity line, they have it on record that I'm delinquent, I'm late.

So Fannie Mae and Freddie Mac, they won't do anything with payments that are late. Sure. And let me jump in.

Unfortunately, we're going to have to hit a break here in just a second. You know, my heart goes out to you. I realize you've been through it. And yet I'm delighted to hear your church families walked alongside you.

And they've even acknowledged your diligence, your faithfulness in the Lord's provision during this. I think you need to keep paying on time and look for a nonconventional loan option for a refi potentially that will fit into your budget. So I would begin checking with some of the online banks to see if you can find a program outside Fannie Mae and Freddie Mac that would do a refi. But keep being an on-time payer. That score will keep coming up.

And we'll be back with more after this. Nealy Simon is our guest today from ChristianCreditCounselors.org. If you have some challenges when it comes to your credit and your debt, these are wonderful folks to contact. Again, ChristianCreditCounselors.org or 800-557-1985. Nealy, just before the break we were talking about the real challenges that folks are having, many of them across the country, related to finances as a result of COVID that has resulted in debt for many folks. And you were talking about finding peace in that by connecting with somebody at Christian Credit Counselors to begin to make a plan, starting with a budget, income and expenses, and trying to get the numbers to work.

But then, beyond that, looking at how credit counseling can be an effective tool. And I was going to ask you to explain that, but it sounds like, Steve, our next caller wants to know just that. So maybe we ought to head there. Let's do that. Okay.

Let's see. Willard, Missouri. Rebecca, nice to have you there. Thanks for holding. And what's on your mind? I wonder if a reverse mortgage is the right thing to do if you're trying to save and keep a home.

I don't know if that's possible with a reverse mortgage at all and get out of your debt. Sure. Tell us a little bit about your situation, Rebecca.

What are you dealing with here? Well, I am a guardian of my dad, and I am doing all his financial business, and plus I have a home of my own. It's paid off. And I also care for my mother's home and paying that mortgage. Plus, I have a couple credit cards I need to get out of debt. Yeah.

And what income sources do you have for all of this? Well, I work as a – I'm a driver for the Postal Service, and I pay my own way there, but he also as well has his income I have to manage, and should I do a reverse mortgage with him. I see. Okay.

So let's try to keep these separate for a moment. As guardian for your father, you have to make sure his bills stay paid. Is there a shortfall in what he's receiving his income and what it's going to take to continue to fund his expenses on a monthly basis? I think he's all right. It's just that the mortgage is needing to be put down, and he has credit cards that he had previously before I ever had him, of carrying of him. And they just need to be – the debt needs to be taken care of and fully make payments on it, but if you have more than one credit card and you want to put it in one payment and reverse his mortgage, is that okay?

Would that be a good idea? Yeah. And how much equity does he have in that home? I'd say about $5,000.

What does that mean? Tell me what you think you could sell the home for, and what does he owe on the mortgage? Well, he owes on the mortgage about $180,000, and it's about $200,000. Yeah.

Okay. So I'm not a big fan of reverse mortgages to start with. They're expensive, and I'd rather not fund lifestyle with debt.

But you really, as a general rule of thumb, have to have 50% equity or more to even be considered for a reverse mortgage. So that's really not going to be an option here. Nealey, though, specifically with the credit cards, would you explain just how credit counseling works? Because that may be a great option.

Sure. Rebecca, so credit counseling offers what's called a debt management program, and the way that it could potentially benefit your father is that we have pre-negotiated interest rates, terms, and conditions with the creditors, which enable us to lower the payments and the interest rates. And then we consolidate all of the debt into one monthly payment, and we snowball the debt. So he would be continuing to make monthly payments each month to all the creditors. Those payments would just be made through us with the accounts that are on the plan.

And then once an account gets paid off, that payment then gets applied towards another account to expedite the payoff. That's very good. That's Nealey Simon from Christian Credit Counselors. Sorry to interrupt there, Nealey. We'll be right back.

Stick around. Well, when we look at the aftereffects of the COVID crisis, we see that debt and credit are two of the big ones. And so with us today, Nealey Simon from Christian Credit Counselors. Well, Nealey, just before the break, you were sharing how credit counseling can work, and really this could be a solution for so many of our listeners that find themselves in credit card debt as a result of this pandemic. You know, it involves pre-negotiated interest rates that lower the payment and the interest rate, and then consolidating the debt into one monthly payment. But when we say consolidation, often there's some confusion about that. So tell us the rest of what we need to know about credit counseling.

Sure. So I think it's really important to understand that we're not a settlement company and we're not providing a consolidation loan. The benefits are through lowering the payments and interest rates and then snowballing the debt. Through that process, we can get people out of debt about 80% faster while honoring their debt in full. Our interest rates with the creditors are going to range in between 2% to 12.5% APR, and they're going to vary per creditor. So I just want to share to all the listeners out there, if you are struggling with credit card debt, or maybe you're making payments but no progress, or need to create some more disposable income, I recommend giving Christian Credit Counselors a call, allowing us to work you up a free consultation, which will consist of a comparison estimate, which will outline the new APRs, cost savings, interest savings, estimated time to repay, and what our payment is. Also allow us to walk you through a budget. Then we send you all that information along with the next steps so you can think about it, pray about it, share it with a spouse, and make a decision whether it's a good fit for your family.

Yeah. Well, this is a wonderful team of people, folks, and these are godly men and women who really see this just as much as their ministry as it is their work. And they want to serve you, they want to be here to help, and they will walk alongside you every step of the way. So, Nealey, so thankful for your time today. Thanks for the research you've done and for your partnership in serving our listeners. We're grateful.

Great. Thanks so much. Take care and God bless. Thanks, Nealey.

You too. And again, if you have a pencil in hand or a pen or an iPad, whatever, here's some contact information. We'll also put it in today's show notes. You'll find that, the show notes, when you visit MoneyWiseLive.org. You'll find Nealey Simon's organization, Christian Credit Counselors, at ChristianCreditCounselors.org, and their toll-free number, 800-557-1985. Thanks for tuning in today.

It's MoneyWise Live with Rob West. I'm Steve Moore. Our phone number, 800-525-7000, Boynton Beach, Florida. Carol, how can we help you?

Yes, hi. My daughter has been doing my taxes the last three years, but she said as long as my only income is Social Security income, that I don't need to file taxes. But I don't want to get in trouble with the tax company, so I've been having her file them anyway. And then also for this year, 2020, we got the $1200 stimulus check. So I don't know if that's maybe another reason why I would have to file taxes.

Yeah. Well, you can never go wrong, Carol, filing. At least that way you've complied with the law, and if you don't know anything, that will be made clear. If you're under age 65, you don't have to file a federal tax return if your income is less than $12,200. If you're over 65, that increases to $13,850. Again, if your income is under that, you would not have to file a federal tax return. If it is over that, then you would, and you may owe some tax. Specifically related to the stimulus checks, they are not taxable. That is not taxable income. The IRS has made that very, very clear. So take a look at that. Again, you can't go wrong filing that return. It's probably simple. There's even some free online solutions for how you can do that. And if you don't owe anything, at the very least, you may get a refund, or if not, you haven't paid anything in, you may be in a situation where you don't owe.

But if you do, you want to know that clearly because the penalties and interest will add up quickly, and we appreciate your call today. God bless. Thanks, Carol.

Ingleside, Illinois. Cheryl, how can we help you? Well, I had an accident about a year and a half ago, and now they're supposed to be giving me a settlement. I'm just trying to be wise on what to do and how to tithe on it. I know it's income, so I believe I need to tithe, and do I just do it to my church, or can I spread it out to different organizations, Christian organizations? I'm just lost.

Sure, sure, Cheryl. I appreciate that call. You know, we love giving here on MoneyWiseLive and love to talk about what God's Word says about giving, because clearly giving is on God's heart. I believe it calibrates our hearts to His.

He's the ultimate giver, and remember, we were created in His image. This idea of the tithe is a great one. I think for many folks, it should be the beginning point for their giving.

Now, we're no longer under the Mosaic law. We're under the law of Christ, and we see in the New Testament that we should be systematic in our giving. We should give proportionately, but it's about the heart, right?

And we should be being a conduit with God's provision into God's activity. And I think doing that off of the increase is a great way to do that, beginning with your local church. Now, let's talk specifically about, because you mentioned a tithe, and you mentioned an insurance settlement.

I really don't see that as income. Remember, an insurance settlement is a compensation to offset a loss that you had, either expenses because you have medical bills, or you had damage to real property that this is compensating for, so it's really not an increase. At the end of the day, though, you can't out-give God. So if you said, Lord, regardless of how I got this and that it's a settlement from an insurance payout, I still want to honor you with the first fruits of this. That's great! That's never a bad thing, and I'm confident the Lord will be delighted that that's your heart's desire.

But in terms of a tithe applied to an increase, which is income, I really don't see an insurance settlement fitting into that category. I think you should make this a matter of prayer, though. Get on your knees and say, Lord, what would you have me to do?

And then just follow his leading as to how much and where you want to give it. And Cheryl, we appreciate your heart of generosity in that regard. Thank you for calling us today. Indianapolis. Hi, Kathy. Just a couple of minutes.

How can we help? Hi. I just recently graduated, so I'm looking at my students' loans, although they're all on hold because of the coronavirus stuff. So I have a salary, but I haven't paid anything towards them because they're on hold right now. But I have additional extra money coming in on one time check, and so I'm trying to decide which one to put it towards. One is a 5%, one is a 4%, and a 3% when they actually kick in. So I'm wondering, should I start with the 5% or just take the 3% one and get rid of that? It's the lowest amount.

Yeah. You know, Kathy, I appreciate this question very much, and I like the idea of you paying this as soon as you can. I realize that nothing's due at this point because of the situation we're in with the coronavirus and forbearance. But we want to get those paid off just as quick as you can, and the interest rate is at zero right now for federal student loans, which is a great thing. It means every dollar you send is going to go right to principal. If obviously you don't have the means to pay it, then this is a great opportunity not to do so. But if you do, I'd go ahead and start paying these down as quick as you can. As to which one, I really like the snowball method, which basically ignores the interest rate.

And they're fairly similar, even though I realize there's a difference. But the snowball approach is going to start with the smallest balance, meaning you pay the minimums on all of them once they kick in. And then you apply any extra to that smallest balance. Or if there's nothing due, then you're going to send some money, send it all to the smallest balance. That's going to get that paid off really quickly, which is going to give you the emotional win and perhaps the encouragement to just continue right on down the line.

When you pay off that one, move to the next one, and so on. Thank you very much, Kathy. Five open lines right now, 800-525-7000.

A pleasure and an honor to have you with us today. Thank you so much for calling, 800-525-7000. Again, that phone number, 800-525-7000. Before we go back to the phones, however, Rob, let's do an email.

It's been a little while since we received Rachel's email. She says, dear Rob and Steve, do you have any advice for wise stewardship of the stimulus check from the government? Normally we tithe and save any extra money we receive, but the point of this check is to help stimulate the economy, right? After tithing, should we support small businesses in our neighborhood rather than save it?

So a couple of different things going on in that question. Yeah, you know, I appreciate that question, but at the end of the day, the stimulus check is really to provide much needed income and assistance to Americans who have been affected by the coronavirus. So what you need to do is take this money that has been entrusted to you, which now makes you the steward of this portion of God's resources, and really ask him, Lord, what would you have me to do? The good news is he's given us all kinds of direction in the form of principles in his word as to what should be the priority uses of this money, including giving. I would see this as a part of God's provision, so give proportionately, including setting some aside for the future.

There's precious oil in the house of the wise. The foolish man swallows it up, so let's fund that emergency fund if it's not fully funded. The wicked borrows and does not repay, so let's get out of debt, right? If your emergency fund is funded, what about paying off some credit cards?

And then we could kind of move right on down the line. So I wouldn't do anything based on what you think an expectation of the government is. I would see it as needed assistance and support to Americans, see it as now money that you've been entrusted as to being a faithful steward of, and then look to God's word for direction on where you go from here. Rachel, great question. Thank you very much for that, and if you have a question for Rob and you can keep it brief, just a couple of lines, and you'd like to e-mail it, here's the address, questions at moneywise.org, questions at moneywise.org. Let's go south a bit, Miami, Florida.

Mary Lou, what's on your mind today? Yes, I'm calling because about 12 years ago I had gone to a financial advisor, and I wanted to start preparing for retirement. I was 40, I'm turning 50 now, and I had $20,000 sitting in the bank, and the person advised me to buy an annuity, $20,000 annuity that was going to give me more than what the bank was giving me. So now I think there's about like $22,000 after 10 years, and on April it shows that it's maturing. What should I do with it? Just let it sit there, or is there something better to invest in preparing for retirement?

Yeah, yeah. Well, this is a tax deferred, meaning this was money that is in a tax deferred environment inside that annuity. I would roll that out to an IRA and invest it. The fact that it's been in there as long as it has and it's only gone from $20,000 to $22,000 is one of the reasons why I'm not a big fan of annuities. I'd rather see that invested in a properly diversified investment portfolio of stocks and bonds consistent, Mary Lou, with your age and objectives and risk tolerance so that it's growing over time with the market.

Now, you've got to have the right time horizon for that, meaning, you know, really 10 years plus. But keep in mind, even once you hit retirement, you know, those who reach age 65, life expectancy is going to be somewhere around 83 or 84. So if you're in good health, even when you hit retirement age, not that you all of a sudden have to stop working.

I don't think your calling from the Lord ever expires. But if you redirect your time and energy or find yourself in a place where you just can't work for pay any longer, even when you reach that point, you likely have a decades long need for this money. And so we would still want it invested probably with some portion of it in a stock allocation that's going to give it some growth, which is going to allow it to perform better, a lot better than what I'm hearing that annuity did. So I would look to roll it out to an IRA.

Where do you go for that? Well, I'd open an IRA probably at Charles Schwab or TD Ameritrade. Our friends at soundmindinvesting.org could be a great resource to help you get in the right direction, even find some good high quality mutual funds to put that into once you roll it over. So head over there soundmindinvesting.org and begin to peruse that godly advice there on investing. And I think that'll be a real help to you. Mary Lou, God bless you. Thanks so much. Chicago, Nikki, welcome to MoneyWise Live.

How can we help? Hi, my question was my job was offering a pension and they're no longer offering it was been a long offer. And at that time, probably about 2 years ago, we either had we were able to take it out with Timothy or to move it over to a higher rate or something like that. So at that time, I just put it in a traditional IRA. And I wanted to know, like, is it possible that I can transfer it over to a Roth IRA?

Is there a penalty? How does that work? It's about 23,000. I see. And what is your age, Nikki? I'm 45. Well, I'll be 45.

Okay, great. Well, yes, I mean, oftentimes when traditional pension plans are closed by the company, they encourage workers to roll those pensions into individual retirement accounts IRAs, which you did and that was a great decision. Whether or not you want to move that to a Roth is something you could certainly consider.

I like the Roth IRA a lot. It would involve you doing what's called a Roth IRA conversion where this traditional IRA is converted to a Roth. When that happens, Nikki, all of that money is going to be taxable to you, so it will be added to your taxable income in the year of the conversion. So you'll have to have the money to pay that tax bill.

Why would you do that? Well, the benefit is once you pay the tax, then the money from that point forward, let's say this money grows for the next 20 years between now and retirement, that's going to grow tax free, meaning all the gains that you have over the next 20 years of investment results are not going to be taxable to you when you take it out. You would have already paid the tax on the starting balance, but not on all of the gains. The other thing you've got working for you there is there's no required minimum distribution on a Roth IRA. So at some point down the road, if this is money you don't need because your income is covered in retirement, you can just leave it there, let it grow. So I like the idea of the Roth. I'd probably check with your tax preparer just to make sure that it makes sense and also make sure that you're ready for that tax bill and you've got the money to pay it.

But again, if you do, I think that could be a great tool in your tool belt as you look at your retirement assets growing in the future. Nikki, God bless you. Thanks so much for that.

And Vinny in Utica, New York, I think you're our final caller for the day. How can we help as we squeeze it in here? So I think you answered my question. Nikki's question was the same as mine about converting my traditional to a Roth.

But I would like to pose another question. I'm thinking about two years out of retirement, I own my home. What's the disadvantage of using a reverse mortgage as living income after I retire?

Yeah, well, a couple of things on that Vinny. First of all, you're a little bit in a different situation with regard to considering the Roth because she was 20 years from retirement, you're two years from retirement. So I would just consider the growth prospects of that and whether or not now is the time to go ahead and pay that tax bill or it would be better just to let it go. And perhaps even though tax rates could be higher down the road, your income will likely be less than it is now two years from retirement.

You're probably earning some of your peak earning dollars. And this may not be a good time to convert, not to mention the fact you don't have time on your side in terms of it continuing to grow. So I would just consider that as you think about it. Does that make sense to you? No, absolutely. Absolutely. Yeah. Like I said, I have to listen to what you said to her. Yeah, I figured that out. You're absolutely right.

Okay, very good. As to the reverse mortgage, you know, they're not my favorite because there obviously are costs associated with them, lenders fees, FHA insurance fees, closing costs. Then you've got the interest rate.

So they're structured that both the adjustable and the fixed rate financing is available, but oftentimes they're higher than the prevailing rates. You know, you've got to, you know, your home can be foreclosed if you don't, you know, keep everything paid. Then you've got to think about, you know, passing it on in terms of errors if they wanted to keep the property in the family. But as long as you do your due diligence, you understand the costs going into it. You know, if you plan to stay in your home kind of for the rest of your life, so to speak, and you've got all this equity there and you're short in terms of your living expenses from other sources and you'd like to convert this to an income stream for life. You've counted the cost and you understand the implications from an inheritance standpoint, then certainly it's not something I would say there's never a reason to do it. I would just look for other ways to accomplish it. Notably, perhaps selling the property, downsizing and not, you know, funding your lifestyle with debt.

But again, if you plan to keep it and you're short and this can provide a needed, you know, coverage, if you will, of that gap on a monthly basis by converting it to an income stream for life, you certainly could do it. I would just go in knowing exactly what you're getting into. Vinnie, glad you called today. Glad you got through. God bless you, brother. We appreciate that.

Thank you very, very much. Almost out of time. But Rob, tomorrow's guest is going to be our good friend Bob Dahl. Bob is an economist. He manages over $4 billion worth of assets, which is almost as much as we have together. And he's going to give us some thoughts and projections for 2021. We're looking forward to that, aren't we?

Well, we sure are. Bob is a good friend. He's a Wall Street executive. He's worked on Wall Street for a couple of decades now or more. Very well respected. You've probably seen him on CNBC or Fox Business.

He's a frequent contributor, but he loves the Lord. And he's just a phenomenal market commentary that he provides every week. And annually, he does his 10 predictions, which are often sought after in the industry. So he's going to share those predictions.

What is he looking for in the market this year, 2021? That's all coming up tomorrow. Will he have a prediction for the Super Bowl, Rob? Well, we can ask. I think we should ask, actually.

I will definitely ask. Thanks for tuning in and for listening today. My thanks to our tech team, Aaron, Amy, Danny and Jimmy for Rob West. I'm Steve Moore. MoneyWise Live is a partnership between Moody Radio and MoneyWise Media. God bless. Drive safely. Join us again tomorrow.