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A Hybrid Envelope System

MoneyWise / Rob West and Steve Moore
The Truth Network Radio
February 8, 2021 7:03 am

A Hybrid Envelope System

MoneyWise / Rob West and Steve Moore

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February 8, 2021 7:03 am

The old “tried and true” cash envelope budgeting system will help you spend less.  But many folks prefer to use credit and debit cards instead. So, is there a way to successfully stick to your budget while using both methods of payment?  On the next MoneyWise Live, hosts Rob West and Steve Moore have a way for you to get the best of both worlds. Then it’s your calls and questions on the financial matters you’d like to discuss. A hybrid envelope system on the next MoneyWise Live at 4pm Eastern/3pm Central on Moody Radio.

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Hi this is Doug Hastings, VP here at Moody radio and we have a unique sponsor for this podcast.

It united Faith mortgage the faith focused mortgage team with a very specific advantage that can save families money. Here are two things you need to know number one united Faith mortgage was started by a dad and his son and his wife and they've grown into a team helping families all across the US and number two, they have unique advantage. Their company is an arm of a bigger company, which is a direct lender meaning there's no middleman.

Their company uses its own money and makes its own lending decisions within its own walls. Again, no middleman, and often this allows them to get you a better rate on a new home purchase, refinance, or cash out refinance which could save you money over a lifetime. Check out the faith and family mortgage team@unitedfaithmortgage.com united. Faith is a DBA of United mortgage Corp. 25 Millville Park Rd., Melville, NY license mortgage banker for all licensing information, go to an MLS consumer access.org corporate MLS number 1330. Equal housing lender not licensed in Alaska, Hawaii, Georgia, Massachusetts, North Dakota, South Dakota and Utah and you can buy a box of envelopes online delivered to your door for just a few dollars but using the budget can save you a fortune through the old tried and true budget will help you spend less, many folks to use CAD credit today is president West has a way to get past your calls at 800 557 805 five 7000 times more hybrid… Anyone rubs or how exactly does the envelope budgeting system help you cut back on spending. Well Steve I guess the easiest way to describe it. It makes spending real UC studies consistently show that when you have to take actual dollars out of an envelope and check out.

Well, you naturally want to spend less, usually 10 to 30% less than you would if you use a credit or debit card yeah but as we said many folks we know. Still prefer to use plastic these days. Yeah, that's right, probably because it's far more convenient than getting cash out of the bank and filling up those physical envelopes for each of your budget categories.

So how do we get the best of both worlds.

It will as you indicated with a hybrid system that incorporates both you can continue to pay some of your bills online using a credit or debit card like your mortgage, utilities and insurance things that tend to be the same from month to month, but for truly discretionary categories. I'm talking about food, clothing, shopping and entertainment you would use the envelope system and pay with cash that allows you to still save money in a significant part of your overall spending plan and I like that to because there are times when I go into buyer and a cup of coffee or a bagel or something.

Hate to use my credit card for a dollar and $0.10 or something like that so hard.

So how do we get started. Well, as you would wind setting up any budget system with research that you need to track your spending for a couple of months to see where your money's going now very easy way to do that is by downloading the absolutely free money why zapping your app store which is actually based on the tried-and-true envelope system.

It enables you to track every penny you spend an assignment to the appropriate category okay and then what well once you have a good idea of where you're spending your money, you can decide which categories you will commit cash to.

We mentioned that food is a good cash category because you're usually in the checkout line when you buy it, whether at the grocery store or even eating out utilities on the other hand wouldn't be a good cash category because you have to drive to an office somewhere use cash so it's easier to pay utilities online to try to come up with 3 to 5 budget categories where you can conveniently use cash.

Okay I said no, no, I have my cash categories then where would the next yeah then you stop using credit cards for them. Instead, you'll load cash into the appropriate envelope for each category.

You can do this every week or perhaps every payday. Whichever you like that when the money runs out and envelope. Well, you have to stop spending or pull dollars from another envelope and just knowing that helps you spend less and hopefully stay on budget and that's that's fine. But folks are buying more more things online these days even food so in that case I guess you can't use your cash envelopes well. Au contraire, my good man.

Consumer expert Clark Howard Stevens come up with a handy work around that lets you use the envelope system. Even when shopping online. Listen to this, you simply set up one more envelope marked course online but you don't load any money into it. Here's an example so you were a $15 case of beans online with a debit card but since food is a cash category. You have to take 15 out of your food envelope and put it in the online envelope that then hold you accountable to the caste system okay but what happens to that money in the online envelope. Yeah, one of two things you can either deposit the cash back into your checking or savings account or just use it to reload your envelopes for the next go around, meaning you'll withdraw that much less to refill your envelopes.

Either way you stayed on budget.

Okay, that's a pretty handy trick and the other tips for the hybrid cash envelope budgeting system yeah keep a little money on you at all times. I'd say $20-$50 that that's your I forgot my envelope money keep you from using my plastic over the whole idea here is you want to get the benefit of spending less with cash in. You don't want to give up the rewards of using plastic think about giving up 2% in rewards to gain at least 10% boost Cashman and there you have the hybrid envelope budgeting system West 805 five to have you out there today it's moneywise live with your post from last time Steve Moore this is a place where we meet each day to encourage each other to manage your money biblically and effectively.

Practically, if you have any thoughts or suggestions of things that work for you when it comes to manager money – I'd like to camp out for a minute on something you said I just a moment or so earlier you mentioned. See if I can. I wrote it down here yeah you said, if you order a $15 case of beans online with a debit card and how often do you actually do that $15 case of beans. Could you well well you could probably save on the price for being if you got a $15 case of you know, it's a good deal not be asked with the Martian. I've been married for quite a while. I don't know where we get our beans and but when this program is over here.

I'm going to check it out and report tomorrow to get mounting for that is definitely do that okay 800 525 claimant where week 800-525-7000.

Let's begin by going out to Donahue, Iowa Quinn nice to have you there my friend.

How can we help you call a money. My wife and I have some money crying on two different retirement funds into different mutual funds we discern about two months ago so we have a limited credit card debt $5000.

There is a medical bill to the hospital about $4000 and we have a vehicle loan for about $13,000 and we did right refinance your mortgage to a 15 year fixed. I guess my question is like my dad is always been very strong about leaving money on using a lot of it out of the market will remain compound interest or missing church, but then I've also been told in and rent a lot of us of the lot that you can't really even began to regret it.

Mutual funds because I'm not beyond that to do that so would you advise or again withdrawing money paying the capital gains stuck down or deleted. Yeah, yeah. It's a great question and by the way here that cute little guy in the background. Congratulations. I'm so glad I did know we always need a few baby sounds in the background.

That's great. You notice a great question and you as you think through it when it really all comes down to just the prior use of God's money because everybody has limited resources right and we got an unlimited number of alternatives. So we lean into this recognizing first, God owns it all. Therefore, were his manager would want to be faithful stewards and we want to know the principles of God's word that really help us to navigate, ensuring that are spending our allocation of God's money does in fact only line up with his principles and his word, but also with our values with what's most important to us and you know, we recognize that the longer-term the perspective the better the decision were to be able to make today in financial maturity is giving up today's desires for future benefits and so you know it all comes down to lifestyle. How we rein in our spending and make sacrifices in the short run, so we can realize those things that are really important to us in the long run like no saving for the future and being able to give generously and you know at some point being able to fund a college education for that little guy that we hear in the background and all those other things that are just really important you all and by the way, enjoying God's money is well taken a vacation every now and then to build some memories that you know as you're able and as God provide so how do you kinda navigate all of that and I think you've got a come back to just that day to day month-to-month spending plan and say okay, how do we take the resources we have and live with contentment within God's provision and begin to allocate what we have.

According to what's most important to us and what we want to accomplish in the future so that you've got 100% coming in. Obviously some of that to come right off the top of your W-2 employee for taxes and you probably can have a few other things deducted out of there and then you've obviously got your net spendable income at that point.

So I would give first right out of that off on the gross and then I would next look if you don't have an emergency fund, I'd look to fund that with any surplus and by the way, you gotta have something left over after the bills are paid, both discretionary and fixed expenses. If you're ever going to pursue any of these goals and the extent to which your living right up to the edge or beyond it every month you is really going to limit your ability to pursue any of this, but assuming you dial the spending back such and you track it that you can actually you have some margin left over them, then here's the prior use of that emergency fund first if you got credit card debt which you do, you said you got about $5000 I'd That emergency fund of $1500. What you really go after that emergency fund skews me yeah go after the credit card debt with every bit of margin that you have once you get the credit card debts paid off that I get that emergency fund up to three months after that I would be looking at systematically starting to contribute to a retirement plan up to the matching portion of your guilt company-sponsored plan. If you have it with the goal of trying to get up to 10%. Even with regard to the mortgage and the medical debts in a car.

You obviously want to continue to pay on those systematically at the very minimum, making your minimum monthly payment but I would go after the medical debts next before even I would push my retirement plan up beyond the matching portion. Once the medical debts are gone and we just got the car in the mortgage.

I think it's then time to start focusing more on adding more to the investments should you pull out anything to go and pay me these debts off. I'm not a big fan of that unless you absolutely have to. And here's why.

For two reasons. Number one is ask. It's expensive money in the sense that not only do you have the lost opportunity cost where that money is no longer compounding for the next 10 or 20 or 30 years, but you also have to pay the taxes as you mentioned, capital gains, and if it's in a retirement plan early withdrawal penalties are added to your taxable income for the year. Those types of things. The other downside is it takes away this need to really fix. Perhaps what is at the root of the problem which is overspending not living on a budget not raining in your expenses. I'd rather you do the hard work to do that and get it right for your future then I would go and pull it out of the investments continue to live right up to the edge and then you call me back six months or year you say Rob the credit card debt is back and we have no 10,000 less in our investments after a lot at you there. Quinn tell me your thoughts. Yeah, I mean there is a problem spending and start taking steps to look at that nerd wallet if you wanted things. And yeah, it is currently the quick fix to draw money out. I guess I'm just torn as to whether I should try and clean the slate and change my habits, knowing I don't want to be in the same place a few months or like you said carry the day at work.

All and then while changing my habits as a real or not.

Well, I think there is just because a human nature and just you know the thousands of calls we taken over the years and adjusting tell you, you may be the exception, but typically you're going to be the rule, which is you take the pressure off with the quick fix. We don't solve the underlying issue.

It's coming back and so is much as I hate credit card debt.

My love for you not to be paying that high interest rate.

I'd rather you go back trim the budget and start attacking the debt using the snowball method, which is sending as much free income is you can add it beyond the minimum payment. The other option you can look at would be a credit counseling program which would basically it sounds perhaps worse than it is essentially the account be closed to get the interest rate down. You could paid off 80% faster and our friends@christiancreditcounselors.org can help you with that if you want to do it yourself.

I would just go that approach. I would encourage you not to pull it out of the investments the right way to do the hard work. It'll pay for itself in the next 20 and 30 years as you make some of this a really when were glad to get through today. God bless you, and that cute little boy there and back with more it's moneywise live 5257. This is moneywise live that guy over there. The good-looking one that's Rob West and he's taking your calls, questions, comments today on anything financial at 805 five 7000 talking about anything today.

That's of interest or concern to you.

But for a few minutes here also talking about budgeting which is really mean other than Christ himself. It's kind of the cornerstone on which we build everything else when it comes to personal finance. Rob sometimes that word budget is just kind of offensive, almost unto itself and I want to get to the app you're in the second week we call we got budgeting anything else that makes it more palatable work for now.

I get a lot of people don't like that word budget denser, yet we do refer to it as the spending plan. I'm not sure how much more exciting that is. But perhaps it's a little better. I write well. It's okay. Let's make it better by talking about the app because that's a little more contemporary and well you said make your budgeting cool again and that's exactly what the app does. Perhaps, maybe that should be our slogan moving forward. But yeah if you haven't downloaded the new moneywise app. What are you waiting for, it's there for the taking. Just that I had over your app store in the Apple App Store the Google play store. Here's what you want to search for moneywise biblical finance free to download. Here's what you can find three things number one the very best digital envelope system on the planet. My word for it.

Second is our moneywise community where you can ask questions, have thought comments and responses from our certified kingdom advisors I'm in there periodically, or moneywise coaches stop by regularly. We'd love to have you engage with us there and then thirdly coming next week. Steve, yes I said coming next week. Our brand-new Discover tab where all of the premier content providers in biblical finance.

All of them are going to be there with all of their content, stories, videos, articles, podcasts, leaning in to our app so you can find everything you need to find on any topic. Again, all related to biblical finance and one space it's gonna be in the app and on a brand-new website were launching next week. So going downloaded now, so your writing when comes out you'll have it in your pocket or it and that's cool that were going to get all these people together with all of their information and I mean talk about ultimate flexibility when it comes to budgeting, but you did say a few moments ago that the phrase making budgeting cool again is something that that emanated from me right I could.

I did yeah I could put this on my resume. I think I think you're good. Yeah, I originator of makes budgeting cool and trademark that dollar. 15 every time it's mentioned on the okay got it right 800-525-7000. Let's get well okay let's go North to Alaska Sebastian what you have for us or I yes Erie groups of… Budgeting stuff and one thing that my family figured out that work should reconcile thing is, instead of entering. If you have a digital envelope system at entering each purchase. When you make for an online large real retailer that starts with AMO. The taking some of those purchases every month. We make a lot of my peer last act of entering each one into each individual category.

Every every time, and in doing that. Instead, we buy gift card for the certain amount every month to $300. Whatever it is and then that never want to Limit Spending on That Online Retailer and Then Number Two It Makes It so Much Easier to Reconcile. At the End of Each Month.

You Don't Have To. You Have Entered Each Time Either.

But at the End of the Month. Sometimes the Old Way.

I Think They Would Charge Your Card and It Would Come off and and Would Charge Charge Again or Not a Target for the Final Time in Post Once It's Been Received so Month Is All the Gaps in Their and Was Hard to Reconcile Your Budget When You're Yelling, Envelopes, and so by Just Buying a Gift Card Each Month. Problem Solved, and Also The Limit That We Could We Could Spend on That Site Yeah I like Dancing Tonight. I Do Encourage You to Check out the Moneywise App Specifically Because I Think We've Sold for This. You Know, When You Buy You and You Mentioned Amazon. You the Challenge with Amazon Is You Can Buy That so Many Different Types of Things That Go in Any Number of Categories.

The Great Thing Is about the Moneywise App You Can Say Which Vendors You Want to Automatically Categorize in Which You Don't. So in My App on My Digital Envelope System in the Moneywise App. I Don't Automatically Categorize Amazon and Then I Attributed to the Envelopes Manually.

The Great Thing Is Though You Can Even Split the Transaction. Among Multiple Envelopes Just to Stay on Budget Know Exactly Where You Stand It Any Given Time, so We Do This. I Look for You to Try It out and Then Call Us Back and Let Us Know If It Solves the Challenges You've Had in the past with These Types of Transaction. So You Stand the Weinberg and Give You a Six Month Pro Subscription to the Moneywise App for Calling in That Great Idea, and Then They'll Let Us Know What Works for You, Sebastian, before You Hang up up There in Alaska. You Mentioned That One Company, I Think You Referred to Them As Aim Is AMO Z Do You Get Your Shipments As Quickly up There Is We Get Here in the Atlanta Area Due To the Fact You're a Bit Distant, Absolutely Not. Okay, Very Interesting. Okay Play Sebastian, Stay Warm. Glad You Called Today. God Bless Your Brother We Appreciate It and That God Bless You for Listening and for Calling in Today If That's What You're Planning to Do Right Now Because We Have Open Lines so That I Was up 800-525-7000 Talking about Anything Money Related That 800-525-7000. This Is Moneywise the Things of the Topics of Budgeting Today for Giving Generously to Save to Help Your Kids Go to College Any of Those Things and Much Much 525-7000. Let's Go up to Cleveland Hey Dave, Thanks for Holding Sure of What He Have for Us Today. How Can We Help Talk about Budgeting, but Back in the Day When I Started My Own.

I Did What I Just Wrote down My Bill on Envelopes That I Wrote down How Much the Bill Was a Smart, Each Check and Sponsors Are Doing B System like All I Do Know That but That What Happened Was like in an Elementary School You Teach a Child the Way It Should Go. I'm Today Not on about It in the Back My Head on Budget Minded Just Makes Sense and Is Legally Week Coming up This Little Postman Jesus. I Saved Two Paychecks a Month Melrose Ice Put in My Savings When I Make Okay and I Got Caught. I Make Okay Money You Not Working the Trades Right but yet the Same Time I Don't I Don't I Handwrite My Close No Cable. I've Never Had Cable My Life. The Step by Coffee to Go. I Always Make It Here at Home to Service These People Trickle down Economics to Ourselves and This Way Just in the Top Okay One Question You Guys Can. I'm about to Start Cutting a Check for Overseas Her Brothers and Sisters Need That I Was Either on Martyrs Voice or Open-Door Coming.

Are These Good Reputable Places to Be Supporting Our Brothers and Sisters Overseas Yeah Yeah Well First of All Day.

Let Me Just Affirm Everything You're Saying about How You Have Been a Faithful and Tither, but Also Someone Is Just Handling God's Money Frugally and You Obviously You've Developed Those Disciplines and Habits over the Years and That's Paid the Significant Rewards to You, to the Point Where Now You're Living Modestly and Saving a Bundle Which Means You Have the Opportunity to Do More Giving As the Lord Put Your Heart and There's Something That You're Really Passionate about like the Organizations You Just Mention You Can Lean into That and I Love That Opportunity. You Know, Our Friends at the National Christian Foundation Would Love Love to Weigh in on Whatever Your Passions Are and Then Perhaps Give You Some Suggestions on Ministries Doing the Name Doing That Work in the Name of Jesus with Excellence around the Globe and It Could Be a Two of the Ones You Just Mentioned Could Be Some Others. So I Check That out Just to Head over to MCF Giving.com That You Have a Local Office There in Cleveland As Well and Just Ask Them to Perhaps Weigh in on Some Ideas Related to the Particular Area of Ministry or Need You're Interested in around the World and They Be Delighted to Help You, but I Appreciate Your Encouragement Today. I Know Some Folks Listening or Sandman If Dave Can Do It I Can to. That's What This Is All about, That's for Sure. Dave God Bless. We Appreciate That Call. We Appreciate That Testimony Going All the Way Back to Larry Burket but You Know to Be Honest, Somewhere, Someplace, Some Time Someone Started an Envelope System before Even Larry and God Blessed Them, but Whatever Works for You.

I'm Looking at Your List Thinking of Me and My Lifestyle and My Wife No Cable Check Open-Door Martyrs Voice Check. We've Given the past of These Organizations Drying Your Own Close on the Run That past Marsha Tonight.

I Don't Know If I'm Going to Get Buy-In, At Least Right Away but If I Do I Do If I Don't, Well I Might Blame Dave but When Nadja Called Today, but Anybody I Know. So You Skip the Making Your Own Coffee at Home on That List All Yeah I Do. You Just to Get Them. Sorry I Did These Days with Cold It.

I Make My Own Coffee at Home, Will They Go That's for Sure. So Sorry to Go. Bless You, Dave Appreciate about It.

Miami, Florida Demetrius, Thanks for Holding Sure What's on Your Mind, and Good Afternoon, One of Those out Because Been Actively Working on My Credit and I Mom Made Some Great Improvement.

However, What Had a and the Judgment As a Relates to the Repossession, and More Recently They Actually Started to Garnish My Wages so My Question Is There Any Way to Prevent Them from Garnish My Wages. Well, It Ends up Becoming a Legal Question Here Demetrius and I'm Sorry to Hear about the Challenges You Had, but I'm Encouraged by the Fact You Want to Get This Cleared up, Take Proactive Steps Moving Forward to Get a Solid Financial Foundation under You and Manage God's Money Wisely.

We've All Made Plenty of Mistakes and so the Key Is How Do We Move Forward from That and Be Found Faithful with What Passes through Our Hands.

From This Day Forward. With Regard to the Garnishment and the First Thing You Can Do Is Ask the Court to Stop the Garnishment and Allow You to Set up an Installment Plan. You Probably Have To Show Some Extenuating Circumstances This Would Be a Financial Hardship or Something That Resulted in the Repossession and That You're Now Capable of Resuming Regular Payments. The Other Way Is Obviously to Pay off the Loan in Full. It's Theoretically Possible to Get a Personal Loan That You Will Then Used To Pay the Car Note off with, but That Will Likely Be Difficult with a Recent Repossession That Is in the Last Year You with Regard to Your Credit Report. I Know I Have a Note Here My Screen.

The Ask Our Producer about Getting That Removed Your Credit Report. There's Really No Way to Have a Repossession Removed from Your Credit If It's Accurate in This Case, It Clearly Is. It Will Typically Stay There for Seven Years Anybody Who Will Tell You If You Pay Them a Little Bit of Money They'll Get That Quote and Quote Cleaned off Your Credit Report. I Wouldn't Trust Because It's Just Not Possible. Legally, so You the Key Is, I Think Moving Forward Is As This Becomes Further and Further in the past You Have the New Information Is Long As You're an On-Time Pair with Whatever Active Accounts You Have. That's Good. You Know, Just Slowly Run Rebuild Your Credit over Time and Minimize the Impact and Then after Seven Years It'll Fall off Entirely. I Think the Key Is, Can You Get to the Place Where It's Either Paid in Full, Settled in Full, Which Means They Take an Amount Less Than What You Actually Owe or Get on in a Payment Plan Where Your Back. Current Every Month Based on the Plan.

They Agree to, and Those Would Be the Best Case Scenario for You Both with Your Credit and with the Garnishment May Try so You Have That Makes Sense to You Does Add to Make Some Good. It Makes 100% Object Be All the Report Was about Four Years Ago. I'm Currently Making Payment.

So Even What Type Paid Often Get the Court Would Have Removed. At That Point.

Now You Have about a Year Okay What Would Happen Then at That Point Demetrius Is That It Would Be Noted on There That Was Paid in Full. It Would Show the Repossession the of the Are Nine Which Is the Category on Your Credit Report Because That Is in Fact What Happened and Remember Your Credit Risk Report Is Supposed to Be an Accurate Record of Your Repayment History and This Is a Part of That History, At Least for Seven Years, so It Would Still Be on There but It Would Help the Fact That It Shows That It's It Has a Zero Balance, Which Means That You Took Care Of It and That You're Now Improving Your Situation by Being On-Time Pair Moving Forward. That in and of Itself Is Going to Cause Your Credit Report to Repair Itself over Time, but Getting It Deleted or Removed, Unless It's Inaccurate, Which in This Case It's Not in Fact Happened. You're Not Going to Have It Removed until That Seven Years… It Demetrius We Wish You the Best with That. Thank You Very Much Were Going to Pause Here and Then Will Come Back and Take Some Calls and Anything That's of Concern to You. Let's See Who's up.

Roseann Is Coming up Next. She Wants to Know How to Pay off Her Credit Card without Making Her Credit Scoring without Going down. Daniels Interested in Opening a Roth IRA, and More. When Money Wise Live Comes to Total and Complete Honesty in the Marketplace. Proverbs 2023 Reminds Us Unequal Weights Are an Abomination to the Lord and Are Not Back to Our Phone Lines Orlando Florida Roseann. We Appreciate Your Patience and What You Question for Rob. Thank You. I Am Not Working and I Have Not Left on the Credit Card That I Had Very, Very Often, but I Want to Pay $90 Out Of It to Keep the Card Argue That That Didn't Go That What You Get That I Do I Do I Do Have To Other Book That I Don't You Yeah Well I Couple of Things Which Are You Trying to Avoid Your Credit Score Going down What Your Main Concern around Rosen That Would Be My Main Point I'm Trying to Fight If I Write up a Credit Card. Looking Back at That about a Fixed Dollar on Yeah Yeah Well I like Having a Zero Balance and Typing It off in Full Every Month Would Be the Ideal Because and You Make Sure You Not Paying Any Interest in It so There's the Paying It off for Paying It down and Then Ultimately Paying It off and Then There's Closing the Accounts, so Start about Paying Them off Each Month.

The Great Part about That Is What's Reported to the Bureau Is the Balance When the Statement Is Generated Prior to the Payment Coming in, so It'll Show You Having an Active Account with a Balance It's Moving up and down Based on What You Add to That Card Each Month. But Then the Fact That You Pay It off in Full. Make Sure That You Don't Have Any Interest Charges Because You Would Be in That Grace.

Until the Full Payment Is Received.

Think the Other Thing to Consider. There Is That As Long As You Have a Recurring Charge. That's a Budgeted Item Even If It's a Small Dollar Item Every Month. The Key There Is. This Can Be Reported As an On-Time Pair and That's What's Most Important, Because That's Gonna Be the Largest Portion of Your Credit Score 35% Is Allocated to Payment History and so You Want to Make Sure That You Are an On-Time Pair Every Month. So Paying It off in Full Wasn't Really Not Going to Affect Anything but the Reason Why You May See a Temporary Reduction in Your Credit Score When You Exit Close an Account Is That Your Three of the Five Categories of Your Credit Score Are Affected When You Close an Account. The More Kinds of Accounts You Have That Raises Your Score, the Longer You Have Those Accounts. The Higher Your Score, and the More Credit You Have and the Less You Use It. That Raises Your Score.

So by Closing an Account It Could Bring down the Overall Credit Limit.

Although If You Don't Have Any Balances That Should Be an Issue. It Will Reduce Potential of the Different Types of Accounts You Have It.

For Instance, You Didn't Have Another Credit Card Open. Sounds like You Do and Then the Third Issue Would Be If in Fact It's No Longer Reported As a Partier History. Once You Close It and It Happens to Be One You've Had for a Long Time. It's Gonna Reduce the Overall History Represented on the Credit Report Which You Know That Length of Credit History Is 15% Your Score. Bottom Line Though Is If You're an On-Time Pair in Your Managing Your Money Wisely. You Don't Have Balances in Excess of 30% of the Limits That Are Available to You. I Wouldn't Worry about It Too Much. Roseann, Any Decline Is Going to Be Short-Lived. It's Also Good to Be Modest.

I Think the Benefit in Closing These Accounts, Including These Old Store Accounts Is These Are Just Three Last or Two Less Accounts You Have To Keep up with Because These Days When Accounts Get Compromised and People Use Them Fraudulently and If You Missed It, You May End up Paying for Something You Didn't by You May Pay Interest Charges or They May Charge It. You Don't Know about It Because You Don't Actively Use It. Then It Gets Delinquent and Now You've Got a Message You Got Clean up on Your Credit Report Because There Was a Balance That You Didn't Pay As You Did Know That You Didn't Actually Charge It, so Getting the Number of Active Accounts Pared Back over Time, and I Would Say over Six or 12 Months. By Systematically Closing Them Is Going to Work to Your Advantage by Just Simplifying Your Financial Life so It Bottom Line Is I like the Idea of You Keeping This Balance Is Paid in Full. I like the Idea of You Pairing the Number of Accounts You Have Active over Time, and Any Fallout from That on Your Credit Score. I Wouldn't Be Too Worried about Roseann. Thanks Very Much. Chicago Daniel, Thanks for Holding and Your Question for Rob Is What You Might Call an Irate Five Years Ago and It Was a Traditional IRA. Now I'm in a Different Bracket, and I Don't like Pressure Rolling over to a Raw, Open Another Account. I See What Tax Bracket Are You Ending 35%. Well Okay so Your High Income Earner, You Know the the Opportunity Here with the Traditional IRA Makes A Lot Of Sense to Me Because You Get That 35% Savings If in Fact That Your Tax Rate around the Front End and Then You Get That Benefit That Money Continues to Grow and Then the Idea Is That When You Pull It out in Retirement.

You Are in a Much Lower Bracket Because Perhaps You're Earning Last Because Your Needs Are Less Than You're No Longer Saving Paid off All Your Dad, and of Those Kinds of Things Are Taken Care Of so Your What You're Beginning to Pull out and Which Should Be Counted As Income. As You Withdraw. It Is Good to Be at a Lower Rate. Now Obviously We Don't Know What the Tax Rates Are to Look like down the Road It Could Be That You're Making Less Money, or Lower Bracket, but the Overall Tax Rate Brackets Are Higher across the Board. We Just Don't Know. So We Have To Base This on What We Know Today Which Is Your in a Pretty High Tax Bracket so You're Going to Benefit from the Traditional IRA Deduction That You're Going to Get Both on the Roth Excuse Me Traditional IRA or a Traditional 401(k), so I Probably Stick with What You Have Just Given What You're Describing to Me about Your Taxes Rather Than Opening the Roth at This Point. Can You Ignore That When I Opened It Irate. I Was in a Different Bracket so Help Me Time Now Help Me at All. Even If I Contribute to the Maximum. I'm Only 37 Years. Also on My Not Only Try to Open a Raw and Start Pay Taxes Now.

Why Is It That the Traditional Is Not Helping You. Now You're Getting That Deduction All the Deduction. Even If I Contribute 6000 This Year.

It Will Help You Interesting, Well I Mean It to Be Excluded from Your Taxes As Income. So That's You Know That Portion You're Not Can Be Paying, You Know, at That Highest Tax Bracket.

If That's in Fact the Bracket That You Rent so I Probably Circle Back with Your Tax Preparer. Daniel Just to See What He or She Recommends. This Can Be Most Effective for You. Obviously They'll Have All the Information That I Don't but I Suspect You Are Getting Quite a Bit of Benefit If That's the Tax Bracket Herein, but Glenn Run That by Euro Tax Preparer and See What They Say. Let's Go to Cleveland Ohio and Lorraine, Your Question Today for Rob West. How Can We Help You to Credit Cards Having to Care for His Mother.

His Debts Are His Own and That of His Mother and Both of Which Together Exceed His Income. We Are in Place.

My Mother and Husband in Iran a Place to Eradicate His Debt. Whatever It Is, but I Don't Want to Enable Him, How Would You Suggest We Do This. Tell Me Lorraine, What It Is That's Going on in His Situation. What Is It That's Causing the Debt. Some Poor Decisions on His Part Buying a New Car and Set up an Old One and Having Debts in the past That before He Had to Start Taking Care Of His Mom but with Mom. Her Income, Her Pension Does Not Equal the Nursing Home Costs Associate Had to Pay for That and Insurance and Madison and Those Things Okay Very Good.

First of All I Love What You Trying to Do Here You Trying to Be of Help with the Real Practical Help, Which Is Helping Financially but You Wanted to Do It in the Right Way, Which Is Always That the Right Approach and I Think the Key Here Lorraine Is to Do It in Such a Way That Rewards or and since the Right Behaviors and Disciplines so You Have One Opportunity Would Be to Say Listen, Whatever You Put toward Your Credit Cards Will Match It You.

The Other Thing You Could Do Is to Say, Listen, You Really Need to Get on a Spending Plan Because You Got a Rain in Your Spending. Given the Situation That You're in and to the Extent to Which You Are Willing to Connect with a Moneywise Coach, Which Won't Cost Them Anything and Meet Every Other Week for the Next Three Months. Our Assistance Is Predicated on That. You Could Say Listen Were Going to Start Saving in a Savings Account and As You Do Certain Things Reach Certain Milestones Then Were Going to Come in with the Assistance I Think You're Communicating down and Love That Listener Desires to Help You to Set You up for the Future and to Encourage You to Make the Right Decisions Because, Listen, If We Come in and Just Take Care Of This and We've Treated the Symptom and Not the Problem We're Setting You up for Failure down the Road Because You Haven't Learned the Hard Lessons We All Have To Learn and That Is That There Is Limited Resources and We Got to Have a Plan to Live within God's Provision. So I Think the Key Right Now Is to Really Try to and Send Those Right Behaviors. Get Some Good Dialogue Going.

Transparency, His Willingness to Either Show You What's Going on or Be Accountable to 1/3 Party like a Moneywise Coach Last Thing Is Hold the Line, I Might Get Your Information and Send You a Copy of Howard Dean's Book Your Money Counts and Perhaps You Encourage Him Again Predicated on This Assistance to Read through This Material.

One Chapter a Week and Talk about It with You, and I Think All These Things Are Going to Help Set Him up to Really Move in the Right Direction and Handle God's Money Wisely Ring Great Question Here. Part and Will Pray That God Blesses Your Activities and Your Responsibility to Help out Here.

Thank You Very Very Much. This Program Moneywise Live As a Partnership between Moody Radio and Moneywise Mediate My Thanks to Our Technical Crew Today. Amy and Aaron and Jim. Jim Also Preparing to Spread the Tarp for Another Football Season Will Be Here Tomorrow.

Hope You Join Us for Another Edition


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