Don’t Pay These New Car Fees

This is Doug Hastings, Vice President of Moody Radio, and we're thankful for support from our listeners and businesses like United Faith Mortgage. Mortgage commercials are rarely exciting, so to make it slightly more interesting, here are my nieces to do it for me. So interest rates continue to drop like my sister's baby teeth.

Come on, Uncle Ryan had to say the same thing last year. That's true. Last year, it was rates are boring talk historically low, and now this year, there's somehow even more boring talk historically lower than the previous boring talk historically low.

Sounds boring. But for so many listeners who just haven't wanted to deal with it, refinancing right now could save you massive amounts of Lego sets. Rates have gotten that low. Some borrowers could potentially save hundreds monthly and tens and tens of thousands over the life of a loan. And if you didn't put 20% down before, some could even stop having to pay PMI.

Give Uncle Ryan a shot. We are United Faith Mortgage. United Faith Mortgage is a DBA of United Mortgage Corp. 25 Melville Park Road, Melville, New York. Licensed mortgage banker. For all licensing information, go to nmlsconsumeraccess.org. Corporate NMLS number 1330.

Equal housing lender. Not licensed in Alaska, Hawaii, Georgia, Massachusetts, North Dakota, South Dakota, and Utah. Don't you just love that new car smell? Some people say they'd use it as cologne if they could buy it in a bottle. But with the average new car price at $37,000, well, that's some mighty expensive perfume.

New cars really do have a wonderful aroma, but there may be some add-ons in the sales contract that don't quite smell right. Our host, Rob West, tells you what to look out for. Then we take some calls from all across the country. However, today's edition of the program is not live. We are pre-recorded.

I'm Steve Moore. Fees you should never pay when buying a new car. Next, right here on MoneyWise Live. Well, Rob, we often tell people to buy late model used cars because they might be able to get a lot of trouble-free miles at a pretty good value, but that doesn't mean that we're against buying new cars, does it?

No, not at all. As we often say, if no one bought new cars, we'd soon run out of used ones. Buying a new car makes the most sense when you can pay cash for it and you plan on keeping it for at least five years. That way, you overcome the huge depreciation that results when you drive it off the lot. Following those rules, Steve, you can get a great value when buying even a new car. Now, when you buy a new car, it seems like you're bombarded with all kinds of fees or add-ons.

Some are unavoidable, but how can you tell, really? Well, let's start with the fees that you really can't avoid paying. First is the destination charge. This is what the automaker charges the dealer for getting the car from the factory to the lot. Dealers will almost never budge on passing that along to you. The destination charge should be listed on the window sticker. Then there's the dock fee which covers all the paperwork the dealer must do to complete the transaction.

This can run anywhere from a hundred to five hundred dollars. If it's more than that, I would challenge it for sure. Let's see, the next would be state sales tax. You really can't get out of that one either unless you're fortunate enough to live in Alaska, Delaware, Montana, New Hampshire, or Oregon, where there is no state sales tax, interestingly.

Also, you probably won't avoid the tax if you go to one of those states to buy a car because it will likely be added on when you register it in your state. And one more unavoidable cost, the title and registration fee. This one you shouldn't mind paying though because the dealer can probably file that paperwork faster and cheaper than you could do it on your own. We might add, however, that some dealers do try to inflate some of those costs as a way of telling you that, hey, we're going to do it for you so you don't have to worry about it. You don't have to forget it.

We'll take care of it. And certainly that's worth something, but you probably need to give that some thought at least. All right, so these are all the fees you'll have to pay when buying a new car?

There's actually one more, but let's put it in the maybe column. It's an advertising fee. The dealer may insist on charging you for it, but it should be listed on the vehicle in plain view. If they spring it on you when you're signing papers, do your best to have it taken out. Okay, now we're at the fees you should never pay.

So what's first on this list? Yeah, something called a dealer prep charge or dealer preparation charge. Theoretically, it would cover prepping the vehicle for display on the lot, finalizing the sale, but this cost shouldn't be included in the retail price of the car, or it should be, not as an added fee. Next, you might see a fabric protection fee.

This one you can really skip. If you're worried about staining the upholstery, just buy a few cans of Scotchgard and do it yourself. It'll be a whole lot cheaper. Another fee you shouldn't pay when buying a new car is paint protection. This is a urethane film that they put on the car, but you shouldn't need it. Any rust that appears would be covered by warranty. Instead of this protection, just ask for wax when you go through the car wash, at least in my view.

Okay, I guess I haven't purchased new in a while. Fabric, paint protection, those are kind of new to me. I guess this new one though, Steve, won't be new to you, and it's a fee for rust proofing and undercoating, which can run you from $200 to $1200 depending on the car. Most cars manufactured after 2006 are made with galvanized metal underneath. That greatly reduces the likelihood of rust.

And you can move to Florida where you don't use all that much salt on the roads, but it does come in in the air, if you will, if you live near the beach, right? Yeah, I'm well aware of that, absolutely. All right, anything else? Well, one more fee you shouldn't pay when buying a new car, Steve, vehicle identification number etching.

Yes, it's a thing. While it's true that this would make it more difficult for thieves to resell your car if it's stolen, you can do it for yourself or take it to an auto repair shop and have it done typically much cheaper than the dealer would charge. Okay, dealer prep, fabric and paint protection, undercoating, and then etching all fees you probably shouldn't pay when buying that new set of wheels. Thanks, Rob. You're listening to MoneyWise Live, but today we're not live, so if you hear that phone number, please don't call, but do stick around.

Lots of good information ahead. We're MoneyWise Live, and we talk about our telephone number often, usually, because we're live, but today we're pre-recorded, so if you hear a mention of the phone number, please don't call us, but you can find us online at MoneyWiseLive.org. Are we selling any new or used cars here today, Rob? Anything you want to move quickly? No, no. The old Pontiac in the backyard? No, no, no, not selling any cars today, Steve.

It is, however, our Facebook question of the day. What was your experience buying a new car? And Daisy says, I loved it.

My bank offers something called AutoAdvisor. They helped me get a better deal by negotiating for me. Okay, Rob, you want to read the next one? Well, Kate said, sticker shock. She said, don't forget about the new license, registration and insurance fees going up. Now, one benefit to a new car, though, is you don't have to get the emissions checked, Steve, so you get out of that. Yeah, yeah, and don't forget to ask for free floor mats, even when they tell you they've given you the best price you can.

Typically, you can get them to throw in a set of floor mats. Mary Lynn says, I first leased my car and then was able to buy the car. However, I won't be leasing again, so that's probably good wisdom. If you think you're going to buy ultimately, just go ahead and get the best deal you can.

Don't lease it first. You'll end up paying more money in the long run. And then finally, Rob, what do you have here? Well, Bob said you'd need to do your homework, and that's just great advice for anything.

We're managers of God's resources, so let's be wise stewards. The good news, Steve, is there are more online resources than ever. The buyer is equipped with more data than ever before when he or she walks into the dealer in terms of what the actual price was, what it should be, and the ability to compare online across all kinds of dealerships. So, great opportunity for the buyer to be well informed.

And let me throw out one little commercial here, though it's not really a commercial. We have no business relationship with Costco. However, they do offer a buying club, and most people who've done their homework, checked on them, and actually used Costco to buy a car have found that Costco, again they have a buying service, generally can come up with some very, very good prices for you. So if you're thinking of buying new and you're already a Costco member, give that some consideration. Okay, Kansas City, Missouri.

Hello, Ricky, what's on your mind today? Yeah, I'm 55 and I don't have a 401. I don't have stocks or bonds. All I have is about $50,000 of equity in my house, and I was wondering if I should take $25,000 out and invest it into a real estate firm or some stocks or bonds or something to build some kind of a future maybe?

You know, I hear what you're saying, Ricky, and I can understand why you'd want to move in that direction, and yet I don't think it's a good move for you, and here's why. You know, the goal is for you ultimately to be debt-free as you're entering retirement, number one. The way you're going to do that is by paying off all of your debt, including your home mortgage, getting your lifestyle and monthly expenses down as low as possible, so the need for income in that season of life as you're thinking about what God has for you after you're ready to redirect away from your current work or perhaps when you can't work any longer by keeping your lifestyle down and debt completely eliminated, that's just going to mean that you need less.

So that's the first reason. The second is don't like borrowing to invest. Essentially, we'd be taking the equity from your home, paying interest on it, which would mean that we'd have to earn at least that much just to stay or keep our heads above water, and then, you know, anything beyond that would still be taxable, not to mention the risk associated with it.

So it's just not a good plan. What I'd rather see you do is really start with that monthly budget, and if you haven't taken time to track your expenses over preferably 60 or even 90 days, Ricky, just to see exactly what it takes for you to fund your lifestyle, what are those recurring and non-recurring expenses, those things that you get a bill for, those things that you don't get a bill for but are a reality in terms of your monthly spending, and those things that don't come around every month, like a quarterly insurance payment or an HOA fee or, you know, birthdays that you have for friends and family throughout the year. If you want to take a vacation periodically, you've got to get all that into the budget, then you've got to begin to do the hard work of saying, how can I pair this back to free up margin beyond my monthly expenses so that after I give and pay my taxes and cover my lifestyle, I've still got something left over. And then with that, I would prioritize first building up an emergency fund of at least three months expenses, assuming your debt is paid off in terms of consumer debt, not including your mortgage. Then once the emergency fund is in place, now I would start thinking about not dropping a large sum of money in the stock market but begin to invest systematically.

And I would do that either through a company-sponsored plan where you're having a payroll deduction going right into a 401k, or if you don't have access to something like that, either a Roth IRA or if you're self-employed like a SEP IRA. But that's going to allow you to fund the retirement or the long-term investments out of your current cash flow, doing it on a systematic basis so you're not trying to time the market, but you're just investing over time on a regular basis and trying to just build up and accumulate as much as you can using the overall long-term performance of the stock market, not over six months or 12 months, but over years and decades, using that amount of time to ultimately be the tool to build wealth. But again, we're not doing it with borrowed funds that we're paying interest on. I realize that's more of a kind of a steady plotting approach. It's certainly not a get-rich-quick strategy.

And if you're trying to play catch-up, I think the key is keeping the lifestyle as trim as you can so you can free up as much as possible to be contributing toward long-term savings. But give me your thoughts on that. Did you follow what I'm saying there?

Yeah, that made perfect sense. Yeah, because when I was talking to the bank and they said that the interest on my equity would be cheap cheap, and then I got to looking at the market and they were saying like I'd earn like 11.25 percent or something, so I was thinking maybe I'd make enough to cover the interest off the equity and maybe come away with maybe five or six percent off the investment itself. Yeah, so what they're doing is they're pulling, I mean there's not anything necessarily incorrect about what they're saying, meaning is this money cheap? Sure, relatively speaking, interest rates are very low right now. And the long-term performance of the stock market, if you look over the last 100 years, has certainly been better than 9 percent. But remember, there's wild fluctuations in there, you need to have time on your side, and they're not factoring in the consideration that you'd be paying taxes on the gain along the way because it wouldn't be in a retirement plan. Again, I just don't think this is the wise approach to take borrowed funds and go into the market.

I'd rather you focus on paying that house off and then just be systematic in your investments as a steady plotter month after month. Ricky, we're glad you called today. Thank you very much. We appreciate that. Rob, just before we hit the break here, here's a quick email.

It comes to us from Charlie. He says we're in our 70s and selling our house. After we sell and before we buy another house, is it safe to keep all that money in our checking account for a few months?

It is. Just make sure you're not tempted to use that money because you want it to be there when you need it for that next home. There's something called FDIC insurance. This is the Federal Deposit Insurance Corporation essentially giving the full faith and credit of the United States government backing to this money and backing to the bank if for some reason they were to fail, which is very, very unlikely. How does that work? Well, you get $250,000 per depositor for each account ownership category.

That gets complicated. But let's say you're married, you get 250,000 for an individual account. And then if you have a joint account, you'd get another 250,000 there, and your spouse could do the same thing.

So there'd be plenty of capacity there for you to have money that's safe with FDIC insurance backing it and ready and liquid so that when you're ready to buy that next house, you can grab it and go. Okay, and if you have a question you'd like to email, Rob, here's the address. Questions at MoneyWise.org, questions at MoneyWise.org.

Chad Nuga, Tennessee. Hi, Danny, what's your question today? I have a question about using pension to pay off some credit card debt. One of my pensions has about $50,000 in it. I have about $55,000 in credit card debt. I've already paid off about $20,000 in the past two years. I know what you want to say, but a little wrench in the cogs is that we have one of our parents living with us, and they're declining quickly, and my wife would like to go part-time to help take care of her better, and this would enable us to be able for her to go part-time if we did that. Yeah, so obviously you've paid off a lot of debt in a very short period of time, Danny.

How did you do that? Were you taking basically the lion's share of her income and directing that straight to debt reduction? That's correct, and we've been snowballing like you always suggest. Yeah, good, and so at this point she would like to be able to move to part-time as soon as possible, meaning in the next couple of months, or are we talking in the next six to twelve months? Well, if we could use that pension to pay that down, then she could do it almost immediately.

Okay, and so they're giving the option to either take a lump sum in addition to annuitizing the pension, is that right? Yeah, I think we lost you, so let's do this. We'll take a break, come back, and finish this one up.

We will indeed. You're listening to MoneyWise Live. Your host is Rob West.

I'm Steve Moore. Today's broadcast is pre-recorded, so we won't be taking any calls, but we have some calls lined up and some great information coming your way that I think you'll find usable at the very, very least. We're going to break for just a moment. Don't go anywhere.

Stick around. This is MoneyWise Live. Hey, a real pleasure to have you with us today. This is MoneyWise Live. I'm Steve Moore, that other guy over there, the guy with the answers.

He's Rob West, and we're happy to have you with us on the program today. However, we are pre-recorded. We won't be taking your calls, but we've lined up some calls in advance that I think you'll find interesting, helpful, and very, very practical.

At least we've tried to make them that way, so stick around. This is MoneyWise Live. Let's go directly to our phones. Okay, we were talking with Danny.

Unfortunately, he drove into a bad cell or something, Rob, and I think we lost him, but any final thoughts if Danny is listening? Well, I would just say, yeah, so Danny essentially has $55,000 in credit card debt. They paid off a considerable amount that they owed beyond that $55,000 over the last couple of years, and they did it by taking his wife's income and directing almost all of it to credit card debt reduction. However, she would like to go part-time because they need to care for some parents, so he's wondering, should we pull from our pension? And essentially, you could, if your pension administrator allows it, take a lump sum from the pension, and it basically equals the amount of the credit card debt.

I would just be hesitant to do that all at once. That is going to be taxable if you take that lump sum, so you're essentially, Danny, going to add $50,000, the balance of the pension, or at least what you were planning to take, to your taxable income for the year. So just recognize that, you know, in terms of you've got to factor that in, in terms of what's actually available to reduce the debt by. My question would just be, is there a way to delay it or pay off a portion of it, maybe half of it that way, and then the other half by delaying going part-time, let's say, for six months?

I realize that may not be ideal, depending on the timing and the situation with regard to caring for aging parents, but I would just try to look for a way to fund a portion of this out of current cash flow by keeping the budget lean and mean, rather than taking all of it from the pension because of the tax implications. But at the end of the day, I certainly understand where you're headed, and we certainly concur with the idea that you need to be there for aging parents and would fully support you in that effort. All right, Danny, we hope you caught the tail end of that. Thank you very much. Harry is in Lighthouse Point, Florida, and Harry, is there actually a lighthouse? Rob, maybe you'd know.

Oh yeah, there is. I grew up right down the street, Harry. Excellent. Great to have you on the program. I'm doing great, sir. How are you? I'm doing great. Appreciate you guys and the job you do on this show.

Love to listen to it every day. Thank you, sir. My question is about leasing. My question is about leasing. So I lease three or four cars for, you know, $25,000 sedan for $300 a month. Every two or three years they call me, take the car back, give me a new car. So I finally bought the car, the residual value, bought the car. Now I'm saving every month for my next car, and it just seems like I have to save more to buy a new car in five years than the amount I was paying to lease a car. And when I'm leasing the car, I always have a new car. I'm never putting, you know, money into tires, brakes, or repairs. So it almost, I know what the Bible says about debt, but it almost doesn't make sense. Yeah, Harry, I think we're losing you there, but I got the gist of your question.

I could certainly appreciate what you're saying. I'm not a fan of leasing a new car. I think the key is we want to be able to buy a car that's affordable, that fits into our budget, whether that's used or new. And for many people, because of the price of cars these days, and because of where they're at in terms of competing priorities with the resources they have, they're better off buying a two or three year old car, missing some of the depreciation, and buying it, as Howard Dayton says, till the wheels fall off.

And, you know, that's the way we drove our cars. Our last minivan that we had for a long time had 250,000 miles on it. So I don't like the lease because the embedded fees, buying it out after, is going to cost you more than if you had even financed it. If you drive a lot, you're going to have all the wear and tear, plus you'll often have to pay additional if you go over the allotted miles. At the end of the day, I'd rather you buy and hold on to it for a long period of time. And I can promise you the numbers will work in your favor if you do that. But just to take care of your side for a moment, he does get that new car smell.

Yes, he does. But they sell that in a bottle now. This is MoneyWise Live. Don't go away.

Please, you're with us today. It's MoneyWise Live with Rob West. And Rob, how about an email?

This one is from Abby. She says, Dear Rob and Steve, my husband and I are debt-free. We're now able to invest, and my husband was able to take a lower-paying job in order to do something he truly loves.

The financial freedom has been wonderful and such a gift to us. We have three children. After paying our debt, we were able to become foster parents, and we're on our journey to adopt our daughter.

To celebrate the adoption, we're hoping to take a big family vacation. We don't have a credit card to spend the money we've saved. Without credit, our applications are being denied. Is a secured credit card our only option? Yeah, Abby, let me just celebrate with you for a moment.

How incredible. You're debt-free. You're now investing. Your husband's doing something he loves, even though it's a lower-paying job. But you wouldn't have had the freedom to even do that if you hadn't gotten yourself in a position to be debt-free.

And then you've taken it a step further. You're choosing to become foster parents. You're on a journey to adopt, and you want to celebrate that with a family vacation.

That is super cool. All right, so what do we do about getting a credit card to be able to have available during this trip that you're going to take? Yeah, unfortunately, one of the byproducts of living debt-free is a lack of credit, which can be challenging. Now, if you've had credit in the past, which it sounds like you did because you were able to become debt-free, you probably have some history. So I would get on NerdWallet and look around for some credit card options that are willing to extend to you with a lack of credit. But a secured credit card would be a great choice in terms of establishing a monthly repayment history. And that may be all you need to get back into this game and get somebody to approve you. So just head down to your bank, put a couple of hundred dollars on deposit, put a recurring charge on there that's a budgeted item, pay it off every month. That will get you some positive history being reported. And a couple of months from now, you may be all set. That's great information.

That's NerdWallet.com. All right, let's go back to our phones. Let's go to Florida and say hi to Ardley. Ardley, thank you for calling.

How can we help you? Good evening. First time calling on your program. Oh, very good. Thank you for calling. Yes, sir.

I listen to your program every day and I found it, you know, interesting. So I'm about to buy a used car. In fact, it's a used truck. So I was wondering, I have a car, I bought a brand new car, 2015. And I got six years to pay it off. So my goal was to pay it off in five years and I'm about to reach my goal. So my previous car that I have, it was written off.

So I got $3,800. So I have that saved towards a done payment for the next car. So my question is, my question is, I have $3,000, maybe $500 on this previous car that I'm paying for. So I'm asking what I should do if I should pay off for that car and just go with no done payment and the next truck that I'm going for.

Okay, I'm trying to follow you. So you said you have $3,800 that you've saved up in cash, is that right, toward the next car? No, that's what I got for the car that was written off. They pay me, the insurance pay me for that money for that car.

So I have it saved. So now that I reached to where, you know, $3,500 leave to pay for this car. So I'm wondering if I should pay off for that car that I am paying for now. And then just go in without no done payment on the next car.

I see. So you owe $3,500 on a car that was that you no longer have? Was it in an accident?

Or am I missing something? No, I got that for the car that was in an accident. The insurance pay me that money for that car. Okay, so you no longer have the car, but you owe the $3,500 and the insurance company gave you $3,800. Am I following you correctly? Yes, sir.

Okay, great. And so yeah, we absolutely have to pay that off because you owe that debt and that was what that insurance payment was for. Glad you have it or and glad that they came through with at least what you still owed and you're still going to have $300 over and above that. The question then you're asking is, where do I go from here?

And that's the right question to ask. What I would love for you to have is, if you're buying a new car, which you're probably not, but if you were to buy a new car, I like 20%, if not more, but at least 20% as a down payment just to make sure you have some equity, you're not ever going to be upside down with a used car, you could go as low as 10%. Again, I'd love for you to buy it for cash if you could save it up.

But I realize in many cases, that's not a possibility. And so a 10% down payment at a minimum would be my goal. So what are you looking to spend on this next car? I'm looking for maybe 2017 Toyota Tacoma truck. Okay, what do you think that'll run you from?

Yeah, those are running like maybe 20, 25,000. Okay. And you don't have anything saved toward do you have any kind of emergency fund? Yes, that's what I was trying to let you know that the 3800 that I have is from the car that was total by from the insurance. So I have that money, but I have 3000 to pay 3500 to pay on the the car that I'm paying off now tried to pay off.

Right. So when you pay off the wrecked car, you're going to have $300. Is that all you have in savings at that point?

Or do you have anything else saved? It's not the right car, the car that was wrecked, I get paid for it. Insurance paid me for that car. Yeah. So the car that I'm talking about now I bought a brand new car 2015. So I have $3,500 to pay off that car. Okay.

All right. And then why do you need another car? Yes. So you're gonna buy a second truck? Yes, I need a truck.

You need a truck. Okay. Okay.

All right. We shouldn't purchase it without any down payment at all. I mean, right, Rob? I mean, we want to put some money down.

We don't want to finance the whole thing. Well, that's exactly right. Yeah. And the challenge there hardly is you're going to get into it and you could potentially be upside down very soon. So here's what I'm saying.

I think you just don't have enough in the way of liquid reserves. And so if I were you, I would be looking at buying something a lot less expensive. And I tried to wait as long as you could to buy it. So you could save that's going to come back to your spending plan, and really going to require that you do some hard work to try to pair your lifestyle. So you can free up some margin and continue to put money away. So you're ready to buy that car. And when you do, I'd be looking for something less than $25,000. You know, you know, Rob, other than your house, an automobile purchase is probably the largest purchase most people will make.

And when you add them all up over a lifetime, it's really, really substantial. So yes, you know, we kid a little bit about the new car smell and driving a Mercedes Benz or a Ferrari or something like that. But obviously, we all need something to drive to work in and do errands and things like that. Most of us will buy a car at some point, but you don't want to let the the newness of a car, the flash of a car get the better of your budget. You want to be something, buy something that's a good value. You want to be thoughtful when you do this, and obviously something that you and your spouse agree on. Any other thoughts, recommendations in that regard, Rob?

No, I think you're right on, Steve. You've got to start with the spending plan and make sure you're not buying something to compete with somebody else or because you liked what you saw on Facebook or Twitter. It's got to fit within your budget and with what you have available. All right. We'll come back and chat some more. This is Money Wise Live. Happy to have you with us today. I love Proverbs 22 29. It says, Do you see a man skilled in his work? He will stand before kings. He will not stand before obscure men.

So whether you're a doctor, a plumber, an astronaut, a mechanic, a transmission, I need a transmission guy, Rob. But think of what it would be like if every Christian was known for the quality of work that he or she did. Sometimes you may be the the only testimony for Christ that the person you're standing in front of receives. So take what you do seriously.

Use your spiritual gifts and any other talents that God gives you to be a witness for him and to always do a good job. All right. Let's try Kurt again. He's in St.

Cloud, Minnesota. What's what's the situation there, Kurt? Hello. Good afternoon.

Thanks for taking my call. Sure. I am just wondering if it is a good time to invest in gold, not necessarily the time, but to just invest in precious metals of gold. Currently, I do have like a 401 and an IRA. I just wondering if that's the best way to go now to to add a little something else to what we've got already. Yeah.

Well, I would just say this, Kurt. I like gold as a part of a well diversified portfolio, but I'm talking about investing in gold as a long term play. And I only like it at probably 5 percent of the portfolio. Max 10 percent.

My preference would be it not be more than 5 percent of your portfolio. Why do we hear so much about gold right now? Well, it's a store of value. And so when we get into periods like this where there's all kinds of negative news and there's uncertainty about the economic condition globally just because of what's going on with coronavirus and now the oil markets, people flee to, quote unquote, safety and they go into things that have real value that are physical.

And that would be gold. And so it does tend to be one of those places people run to in a period like this where we have a lot of volatility. But again, if we go back to God's word, we shouldn't try to get rich quick. And I'm not hearing you say that, but I'm just saying generally we don't want to try to time the market. There's been a big run up in gold recently, so we'd be getting in at levels that are much higher anyway. And again, I would usually only own gold as a long term play. And what it does there in the portfolio is try to smooth out some of the fluctuations that we would see in a period like this. It does tend to be more volatile even though the performance is there.

It doesn't over the long haul perform as well as the broad stock market and it performs with more volatility, meaning up and down movements. So that's why we would often just recommend holding a small percentage. How do you invest in gold? Well, people automatically think about taking physical possession like gold coins or bullion or jewelry. The challenge there is you're often going through a dealer, so there's a markup, then you have to store it securely.

And that is costly, not to mention for some people, they have concern about keeping it in their physical possession. You can buy gold futures. That's for, I would say, only professional traders. For most people, the best way to own an allocation to precious metals like gold or silver would be through exchange traded funds. So this is basically a tracking fund that mirrors the movement of the movement of the price of gold, the underlying precious metal. So an example would be the ETF GLD, which just tracks the price of gold. That would be my preference and I would prefer that over investing in gold mining companies because then the price is moving not just with the price of the underlying precious metal, but in relation to how that particular company is performing, their balance sheet and their performance and the supply and demand and all those other issues.

So long answer to a short question, yes, it's advisable, but not on a short-term play where you're trying to just capture a short-term move in the price of the precious metal, but as a long-term allocation of not more than 5%. Kurt, we hope that helps you. Great question, especially in this day and time. Thank you very much. Franklin, Tennessee. Leanne, what's on your heart?

Hey, yeah, thank you. I'm just at the beginning of really trying to be intentional about my finances. I've got out of debt. I've got a little bit of savings. I'm applying for a secured card just so that I can buy a home and, you know, just think about good blankets of security for my family. Now, I had a 24-hour scare where I thought my identity was stolen and it just threw me for a loop because it just would have messed up everything.

I've been working so hard. How important is it to invest in identity security? Sure, yeah, it's a great question. Let me ask you, you said you had a 24-hour scare. I'm assuming what that means is that the end result was that your identity has not been compromised.

Is that true? Yes, yeah. Well, okay, my information has been compromised and then an old medical place did not report for five years. Well, they just reported I had gone through divorce, never knew about the bill, was never notified. You know, I was probably bouncing around homes at the time and so now it's come through. So all I saw was my score which I had been working on but this, you know, dug up from five years ago just all hit right now. But yeah, it did make me think should I have that security? Yeah, yeah.

Well, there's no question that identity theft is real and in our global digital age it is on the rise although there's just as much activity to combat it and use technology for good to overcome some of the things that the crooks are doing as much as there is people trying to assume you're right and steal your identity. But it's something you want to be a vigilant about. I love the fact that you're working hardly in to be a faithful steward of God's resources. You've said I've gotten out of debt. That's awesome. You've got a secured credit card. That's going to prevent you from going back into debt but still keep your credit, you know, positive in the sense that you're as long as you're charging things that are being paid off every month. Now you've got positive credit history being reported to your report every month.

That's all really good. In terms of the need for paying for credit monitoring, unless your identity has been assumed or compromised, I think going with the free options is enough. You know, you could get the added peace of mind through credit monitoring. It would run anywhere from $10 to $30 a month. But I would probably start with the free things.

What are those? Well, you can do a credit freeze, which is basically going to mean that nobody can open an account in your name without the PIN number. So that would prevent, you know, go a long way toward preventing anyone from opening an account fraudulently. You can get your credit reports. I would get one from each of the three bureaus every quarter. And you can do that from annualcreditreport.com. And then you can obviously monitor your credit score through NerdWallet or Credit Karma and stay on top of any changes in your credit score, which would alert you to some activity you need to be aware of.

I like that for most people simply because it's free. But if your information has been compromised, your identity has been stolen, or you just are concerned about it, and you're, you know, it's really weighing on you, then that's where I think credit monitoring as a next step is something you could consider. Leanne, we hope that helps you. Thank you very much. And we're happy to hear that you're starting to take your personal finances seriously. Thanks. Indianapolis, Howard, we have just a little bit of time. Let us have a quickly Okay. All right.

My question is concerning. We have a commercial property. So $130,000. And we have another home that we have $40,000. I'm wondering if we should take some of that money and pay that $40,000 to eliminate the capital gain. Yeah, you're breaking up there a bit, Howard, I think it has to do with the sale of an investment property and how to miss out on the capital gains. And if I heard you correctly, the best way to avoid the capital gains or at least defer the capital gains on the sale of a commercial property is through what you may be aware of as a 1031 exchange, where basically, as long as you get the money into another investment property of like kind or equal or greater value, then you can push the capital gains out. In a typical 1031 exchange, you have 45 days from the date of sale. That's known as the identification period to find it, but then you have to complete the sale within 180 days. I would look for a qualified intermediary who specializes in this to get all the details, make sure what you're looking at qualifies.

But it certainly can be an effective way to avoid the capital gains now and roll the full amount into a similar property that could continue to work for you. So I know we had a little trouble hearing you there. And hopefully I captured the question correctly.

And if so, that would be my starting point place as you begin to explore that further. Howard, thank you very much. We appreciate your patience and hope that we answered your question properly. Thanks again for calling in today. Rob, you know, we've been talking a bit while for the last several days about investing.

But if I may, I think one of the best investments you can make is in people or an organization that is blessing you helping you making a difference in your life. That would be your local church. It might be a broadcast ministry, right?

It sure could be. I would just simply say, first of all, thank you for being a part of the Money Wise community. If you listen or you call or you send us emails, we're grateful. We want to serve you. We love doing this program every day. We're so grateful for our partnership with Moody Radio.

But we are listener supported. And so that simply means that we can't exist without your partnership financially with us. There's three quick ways to partner with us financially. And I would just encourage you to pray first, give to your church first.

But then however the Lord may lead, we would certainly be grateful, whether it's $100, $10, or $1,000. You can call 888-6634211. That's 888-6634211 and someone will help you. You can click donate when you go to moneywiselive.org, or you can text the word GIVEWISE, that's one word, GIVEWISE, to 28950.

GIVEWISE to 28950. Thank you, Rob. You've been listening to Money Wise Live. This is a partnership between Moody Radio and Money Wise Media, and you are listeners. For Rob West, I'm Steve Moore, hoping you and yours have a wonderful remainder of the day. Then join us again next time.