Taking Interest in I Bonds

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.

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Not licensed in Alaska, Hawaii, Georgia, Massachusetts, North Dakota, South Dakota, and Utah. Watch cable TV for a while and you're bound to see a program about buried treasure in the Sierra mountains or off some Caribbean island. But do you ever wonder why the searchers hardly ever find anything?

Well, an even better question might be what on earth does buried treasure have to do with government bonds and your savings account? Today, Kingdom Advisors President Rob West answers those questions and more. Now we are prerecorded, so please hold your calls until next time. But we have some great questions already lined up. I'm Steve Moore, taking an interest in iBonds. That's next on MoneyWise Live.

Okay, Rob, I can't wait to see you tie these loose threads together. Bonds, savings accounts, buried treasure. They're all about money, I guess. Well, they are, but there's more to it than that. First, let's go back to your original idea that treasure hunters on TV never actually find any treasure. Yeah, yeah, right.

Well, just like they never find Bigfoot either. Right, same idea. But there's a different principle at work with buried treasure. It's something called the efficient markets theory.

In the stock market, it means that the value of a stock always reaches its perfect selling price, barring any outside factors. Now, applying it to buried treasure, it works like this. The bigger the treasure, the more likely someone else has already found it. Okay, well that makes total sense, I guess.

Probably explains why they never find it on TV on those shows, however. But what does it have to do really with government bonds and my savings account? Right, well that might be a case where the efficient markets theory isn't working. A lot of folks are passing up some buried treasure in the form of government I bonds. Right now, about the best you'll get with your savings or emergency fund in an online bank is around 0.5%, one half of 1%. Brick and mortar banks are paying far less. But get this, right now, series I savings bonds are currently offering 1.68%. That's more than three times the online bank rate and it would pay you $118 a year for a $10,000 emergency fund.

Well, not lots of buried treasure there, but why turn down almost $120 a year if you don't have to? Exactly, and now changing channels from treasure hunting to financial programs, you might see experts debating which ETF or exchange traded fund is best based on a single basis point that's 0.01%. You'd have to have a million dollars invested in that fund to earn the extra $118 you get with a $10,000 I bond. Okay, so what exactly are I bonds and how do they work? Yeah, well an I bond is just another type of U.S. savings bond and it's guaranteed to keep up with inflation. As with other bonds, you get a fixed rate set for the life of the bond and right now it's around zero.

Zero? Wow, well that didn't sound like much buried treasure really. Well, here's the buried treasure part. If you own an I bond, you'll get semi-annual rate adjustments, in other words two per year and right now that rate change is 0.84%. Double that because you get two of them and your annual interest rate is just under 1.7%. There's your buried treasure. And of course, I bonds are backed by the full faith and credit of the U.S. government.

Also, interest on I bonds is free from state taxes and possibly federal taxes if you cash in the bond in the same year you pay for college expenses depending upon your income. Okay, but why do I think there must be a catch somewhere? Well, because of course you're smarter than the average bear, Steve Moore. That's the nicest thing you've ever said to me, right? Okay, all right, great.

We've gone from buried treasure to yogi bear. So, what are the downsides to owning I bonds? Well, they do come with a few restrictions. You have to hang on to them for at least 12 months before you can cash them in. That means you shouldn't put all of your emergency savings into I bonds in a single year. Also, you're only allowed to purchase 10,000 worth of I bonds in a single year.

Of course, that'd be 20,000 for a married couple, but you can add 5,000 to that by designating that it be taken from your federal tax refund. By the way, that'd be about the only reason I'd want you to get a refund that large. Otherwise, it's an interest-free loan to the government. One other limitation, you can only buy them online at treasurydirect.gov. No brokers or banks.

And I would make sure you only put a portion of your emergency fund in I bonds, given that you can't touch it for at least 12 months. Great information, Rob. Thanks very much. Hey, you're listening to MoneyWise Live with Rob West. Today's broadcast is prerecorded, 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. This is MoneyWise Live.

I'm Steve Moore. We'll be right back. 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.

Hebrews 11, verse 6 reminds us, And without faith it is impossible to please him, for he who comes to God must believe that he is, and that he is a rewarder of those who seek him. Nice to have you with us today on MoneyWise Live. Maria is in Ocala, Florida. And Maria, we know you've been on hold for a while, so we appreciate your patience. And what's your question?

Yes, thank you for taking my call. I'm currently 61 years of age, and I'll be 62 in March. My husband passed away in November of last year, and he had a traditional IRA with approximately $45,000 left in it. He had been using it over the years, and now I don't know what to do. I was told to see about converting it to a Roth or just taking the money out and doing something differently, but I know it's going to be a serious tax consequence for me.

I'm not currently employed, but I do get a very minuscule pension from the state of Florida, and I inherited my husband's Social Security survivor's benefit. Okay, yeah. Well, Maria, first of all, I'm so sorry to hear about your husband's passing. Am I understanding correctly that you have not touched this IRA since his passing? It's just been sitting there? It's sitting there.

I haven't even said anything to the bank because I don't know what to say. Okay, all right. So what you're living on right now is the spousal Social Security benefits plus the retirement pension, is that right? That is correct. And is that enough to cover your expenses, Maria, each month?

Yeah, pretty much. I mean, I live very frugally, so yes, but I was concerned about just letting it sit there until it causes me a worse tax problem. I was told that for the next year or two, I have my husband's as a widow, I get an extra exemption on the IRA. I mean, the IRS taxes.

Yeah, okay. Well, with traditional IRA that's inherited from a spouse, you generally have three choices. And I would check with your CPA to make sure you're doing this properly. But you can typically treat it as your own IRA by designating yourself as the account owner, you would just need to provide the necessary paperwork and death certificate and so forth.

You can roll it over to another traditional IRA if you have one, doesn't sound like you do, or another qualified plan. Or you can treat yourself as the beneficiary rather than treating it as your own. But the bottom line is, if you don't need this money, I mean, I realize it's nice to have and you may need it at some point down the road, maybe there's a major medical expense or some unforeseen event.

But the good news is you're living modestly, the Lord's provided income to meet your bills, you haven't touched this. So I just let it continue to grow. But I would transfer it over into your name as the account owner and go through the process of that. And then you're going to have to decide, how do I want to invest it, assuming you're not going to withdraw it. And I don't see any reason to withdraw it, especially in a in full, because all of that money would be added to your taxable income, and you'd pay a lot of tax on that. So I would, I would really just keep it invested there. And if possible, and if necessary, think about changing the way it's invested and, and who's managing that for you. Do you have somebody that's a trusted investment advisor or somebody that you know, who's helped you with financial planning and other matters in that area? No, I don't, because I've never been in this position or even thought about it. Okay.

I don't have anyone. And the thing is, I was concerned, can it become a Roth IRA? So it will be a better tax situation?

Or is it too late? It's not, you could convert it to a Roth, the problem is, you'd have to pay all the tax on it. And I just wouldn't want you to have to do that. You'd have a huge tax bill if you converted, you basically you'd add 45,000 to your taxable income for the year. And here's the thing, uh, you'd be paying the taxes right now in your current tax bracket, which perhaps is as low as they'll ever be. If we think taxes or rates are going up down the road, you're not working.

So obviously it's not like you're going to lose, uh, uh, you're going to be in a lower bracket down the road because of that. But, uh, you really get the most benefit from a Roth, uh, Maria, when you have a long time for the money to compound and grow. Whereas in this case, I don't see enough benefit for you paying this large tax bill just to get it into the Roth. I'd rather you transfer it to your name and then make sure it's being invested properly. And to do that, I'd contact a certified kingdom advisor there in Ocala, just go to money wise live.org and click on, find a CKA. And I think that'll at least get you going in the right direction.

Uh, they can help you navigate getting the bank to change the owner to your name, and then perhaps take a look at the investments. Uh, if you want to do some reading on this from somewhere that provides a godly perspective, visit with our friends at sound mind investing.org. And again, I hope that's helpful and so sorry to hear about your husband's passing.

Mario, God bless you. Thank you so very much. And if you're looking for some other places to find out more about God's word, when it, when it, when it pertains to your money, your investments, your retirement, you'll find lots of things to read, lots of free resources and our store as well. If you'd like to purchase some of the books you hear us give away to many of our listeners, you'll find all of that and more when you visit money wise live.org. It's also where you can make a donation. If you'd be so inclined just to click the donate tab at the top of the page, money wise live.org. And thanks in advance for your generosity.

Uh, we'll remain in Ocala, Florida. Hi Sue. How can we help you today? Yes, I would like to know how can you invest money? It's in the bank.

I don't get almost nothing. Where can you invest because I see advertising on the paper 8% and now don't throw it out. Yeah.

Okay. So, well, I think the first question is just to make sure this is money that should be invested. And the main thing related to that is, uh, how long do you anticipate before you need this money either to begin drawing an income from it or where you might need to take some out for a specific reason? Uh, what do you think about that?

Yeah, I might take some if I need. But would you anticipate that the majority of this money you would not need for, let's say 10 years? No.

You don't think you'd need it within 10 years. Is that correct? Yeah. Okay.

Okay, very good. And is this money in a retirement account or is it in what's called a taxable account, which is just like a checking or savings account, something like that? I don't know.

I get the thanks from the taxes, but it's not much and then it's maybe $40 or $50. Okay. But this isn't in an IRA or some other type of retirement account, is it? Oh, I don't know anything about those things. Okay. Yeah, it's okay.

Yeah, very good. Well, what I know is that this is a large sum of money. $70,000 is a significant amount of money.

So here's what I would do. I would hire somebody to help you invest this. I would find somebody who shares your values, somebody who understands that you come from a biblical worldview, somebody who understands and has great competency in managing money like this, and it's not going to be managed according to what they think should happen. It's going to be managed according to how they might look at an investment strategy that fits with what you need to happen, meaning what is your age, what is the likelihood you'll need some of this money, how long before you would need to draw some out, how much risk do you want to take, and really ask you a lot of questions, get to know you and what God's called you to, and then help you build an investment strategy that is going to be reflective of all of the things you've been talking about, and then walk with you along the way as you have questions and to help you understand what's being done. That would be an investment professional, and I'd recommend a certified kingdom advisor. That just means that they've gone through great training to apply God's Word to their professional advice.

It means that they have great competency and character and integrity, as well as a lot of years in serving in this area. You can find that person, Sue, if you use a computer. Just go to MoneyWiseLive.org and just scroll down a little bit, and you'll see something that says, Find a CKA.

That stands for Certified Kingdom Advisor. Look for one there in Ocala that you can visit with. In fact, I'd look for a couple of them.

Find the one that's the best fit for you, make an appointment, and I think that will get you going in the right direction. Sue, thank you very much, and God bless. Down in Miami, Tanya, we know you've been holding, but unfortunately we're running out of time, but you have a good word for us about our friend Larry Burkett, huh?

I do. I've been doing his budget since my early 20s, over 30 years now, and thanks to that advice, my husband and I are totally debt-free, including college. My daughter recently graduated with her PhD. Wow, Tanya, that's incredible. So God has really honored your faithfulness to follow His principles of managing His money, and you're now reaping the benefit and seeing the fruit of that.

So excited. What a powerful testimony. And you know what, Tanya? You've been an encouragement, I know, to many others who are listening today who say, I want to be able to tell that same story years down the road. And so thank you for being obedient to share that with our listeners today. We appreciate it.

Wow, a PhD with no college debt. Absolutely incredible. We appreciate that, Tanya, and we appreciate the memory of our good friend Larry Burkett. I had the honor of working with him for over 20 years, just a wonderful, great guy.

And of course, if Larry were here, he would tell you that he just tried to plagiarize God's Word as much and as often as possible. That's our focus, God's Word, when it comes to your money and finances. We have to pause for a break. More MoneyWise Live after this. Good to have you with us today. This is MoneyWise Live, where we do our best to help you understand and establish God's plan for your life and your money. Please remember that today's program is pre-recorded, so don't call in.

Next, Seward, Alaska. Hey, Mark, what's going on in your life, sir? Hey, fellas. Big fan of the show.

Listen whenever I can up here in Alaska. Thanks. I have a question. Yeah, I have a question for you today regarding my father's will. My father is retired and 70 years old, and my mother has passed away several years ago. Up until this point, he has the will written that my brother and I will split 50 percent of everything he has after he passes. He has about $180,000 in cash. He owns a $300,000 home and has a few other assets, both and so forth. On a recent vacation, he broke the news to me that he's thinking about changing his will to going to 20 percent for myself, my brother, and then my brother has a daughter who's 28 years old who has two small children, and each of those mentioned would all get 20 percent. I have the power of attorney on his will because out of the group of us, he trusts me to follow through with his wishes.

I'm a believer in a Christ follower as well as him. My brother is not, and neither is my niece, but for purposes of this, he asked me what I thought, what my reaction was, and if I had any input with that, and I really didn't know what to tell him other than I said, Dad, ultimately it's yours to do as you choose, and what you ask of me, I will do follow through to the best of my abilities. So my question for you today is, from a biblical perspective, how can we find some enlightenment on this scenario, and is there an answer that I could give my father from a biblical perspective? Yeah, well, I certainly appreciate that, and we do see the inheritance in the Bible. It's pretty clear Proverbs 13 22 comes to mind, a good man leaves an inheritance to his children's children, and so that model is certainly there. I think each of us as stewards have to decide how does God want us to manage his money, and that's not something somebody else can tell us, a child or a parent or anybody else. I think each of us, once we're an adult, we need to be able to stand before the Lord and really, through prayer, decide how the Lord wants us to handle his money. And when it comes to that final decision of wealth transfer, which you remember is the last stewardship decision we'll make, we need to be asking it about that as well. And that not only includes inheritance, but there's only two other places you can leave money. The government, we don't want to do that if we don't have to in the form of taxes, and then charity or ministry, how we want to put the money into circulation in God's economy. And we've got to decide how we want to balance those, and then what is the plan that allows us to live that out, and that can change over time.

We should be revisiting that periodically. So I think the best thing you can do, Mark, is first of all encourage your dad, assuming he's a believer, to really be thoughtful and pray through that decision. And just give him the ability to know, this is your decision, you're the steward of these funds, whatever is ultimately passed on to someone else, they will become the steward, but not until then. And so ask the Lord to give you wisdom here. I think secondly, what you could do would be to give him a book.

The very best book on this topic is a book by my good friend Ron Blue, who's a mentor of mine, and it's called Splitting Airs, H-E-I-R-S, Splitting Airs, you can get it on Amazon. And it really talks about not the technical side of wealth transfer, but the principles, and always looking at each of the principles from a biblical perspective. And I think that might be an encouragement to him as he thinks about how he wants to pass on this money to whomever he wants to pass it on to. At the end of the day, it's his decision, and I would just affirm that in him and tell him you'll be praying for him as he makes that as well. And then you've done the last thing, which is to say, ultimately, I'm going to do what I need to do to honor your wishes, and that's exactly what you should be saying.

So I think that's the direction I would go, encourage him to pray, affirm his decision-making process, and then perhaps give him a gift of this book, Splitting Airs. In fact, if you hold the line, Mark, we'll get your information. I'll send you a free copy as our gift to you.

Mark, you sound like a godly guy, and it sounds like your father made a wise choice in making you power, or giving you power of attorney. We wish you the best with this. Thank you very, very much. With that, we're going to have to pause. We'll be right back with more. This is MoneyWise Live. Hey, thanks so much for tuning in, listening in today, and telling others about our existence. We certainly do appreciate that. Let's go to our phones now.

Madison, Wisconsin. Alan, thank you very much for contacting us. Sir, what's on your mind? Hi, yeah, I was listening last week and heard a woman call in with a question about how to help her teenage kids with questions on how to handle their finances, and she seemed a little concerned that maybe it was too late, and there was already some bad habits that have set in. And I'm the father of several small children from the oldest is eight down to newborn, and I was wondering what sort of things I can start thinking about in teaching and any practical tips or things I can start doing now so that we get ahead of the curve and don't get into bad habits from the beginning.

Well, I can tell you're a good dad, Alan, because you're thinking about the right things and you want to honor the Lord as you raise these children and do it in a way that honors Him, and clearly you're doing that. And I think starting early is the right idea as we begin to make money fun, make it visual, visual and make it in a way that's relatable and age appropriate. So for very, very young children, I would just start with the simple bank or jars that allows them to see money separated for saving, giving and spending. And it's fun if they can even have a clear jar of some kind where they can see the money grow. And, you know, what you're trying to teach there is that there's uses of money and that with everything that comes in from whatever purpose that is, and we can talk about allowances in a second, but let's say it's birthday money or Christmas or however little ones earn money that they immediately begin to allocate it among save, give and spend.

And with saving, I would even encourage them to print out a picture. Maybe you help them do this of what they're saving for. So it's right there at the top of the jar and they know what they're working toward and they can begin to learn the idea of delayed gratification and putting money away. We also want to get them involved in giving early. So that just becomes a part of their habit as they grow older. And then, of course, with the spending, that would be on things that you would deem for them to spend their money on at their discretion, but it would be more in the short term. I think as they get older, we can also teach them the value of work and working with excellence and doing a good job. So there would probably be, I know there is in my house, chores that everybody has to do. That's just part of being in our family and you're expected to do them and you don't get paid for it.

But perhaps there are other jobs that you determine in advance where they do get a quarter or an age appropriate amount of money and they are paid based on how they did with that job. And some of those things could allow them to earn some extra money. And again, then allocate that among the give, save, spend. So I think that's really important. It's also important just to model this. You know, as we talk to people, adults, about managing God's money, I will just tell you that probably the most powerful force in how you handle money as an adult is really how your parents modeled handling money as kids.

And that shouldn't be any surprise. That's probably that way with most things, but it's certainly that way with money. What money was like growing up has a profound impact on how you handle it in your later years. And a lot of that has to do with, was a spending plan modeled? You know, did you talk to the kids about the fact that there are limited resources and as they get older, actually involve them in some of the decisions in an appropriate way?

Saying things like, hey, there's limited resources. We have certain amounts set aside for eating out so we can give and so we can save and all those things. So let's decide this together. Do we want to eat out twice and get something less expensive this week? Or do we want to eat out just once?

Maybe we take tonight and stay in because we want to be able to do something after church. You know, those kinds of things. Well, those conversations will begin to reinforce this idea that money is limited and needs to have a plan. And then finally, God owning it all is critical and they need to understand that. And that's by way of you talking about it. So tell me what your thoughts are on that. Is that helpful?

Yeah. I've been taking notes as you were talking. Well, I'll tell you what we're going to do, Alan, so you don't have to take any more notes.

Howard Dayton has written a wonderful book for children ages five to seven called the ABCs of managing money or of handling money. And if you'll stay on the line, we'll get your contact info and we will see to it that Howard sends you a complimentary copy. All right, buddy. We appreciate that.

Thanks very much. Rob, I think it's also important. I don't have to tell you teaching children about money is like teaching them anything else. It's a process just because you say something once or twice or 20 or 30 times. It's a process. It takes a while to get it.

And children are different. One may get it, one may not get it so well. It's a process. Well, it is a process.

And I can't underscore again, this idea of modeling enough. You know, if we are living without a budget, living frivolously, it's causing all kinds of strain and stress in our lives because we're not heating the Council of Scripture. Our children are taking note of that.

And I don't say that so you feel bad about yourself. But I think as you purpose yourself moving forward to do this God's way, understand the benefits of that are not just for you, but for your kids as well. Alrighty, let's continue on.

Let's see West Memphis, Arkansas. Hayden, you have a Bible question for us, huh? Yes, sir. Before I get to my question, I just want to say that I'm a huge fan of the show. I'm 19 now.

I've been listening since I was 16. And with other questions, they have definitely been answered in, you know, completely and fully. But with this, what is the best way to provide for your family from a biblical standpoint?

Yeah, yeah. Well, Hayden, I'm delighted to hear that you're 19 years old, you're thinking about God's Word, and you're thinking about how it applies to your life. And that is the right that is the right way to go. Because this is really the textbook that should guide every facet of our lives. But what a lot of people fail to realize, Hayden, that you're picking up on is that God's Word speaks authoritatively to this area of money, like it does every other area of our lives. And so we need to understand these principles, we need to dig deeply into them.

And then we need to think about how to apply them. As it relates to provision. The author Ron Blue said this, he said, as I look in Scripture, in particular, 1 Timothy, as it relates to my lifestyle, I see three things that we're charged with doing. Number one is that we're to provide, and that's to your question, we're to live with contentment, and we're to enjoy what we have. Well, the provision comes from 1 Timothy 5-8, where it says anyone who does not provide for their relatives, and especially their old, their own household, has denied the faith, and is worse than an unbeliever.

And certainly, none of us would want to be called that. So what does that mean? How do we provide? Well, the good news is God doesn't just leave us to our own devices to figure that out. He gives us principles in His Word that help us to understand what that looks like, starting with God owns it all, recognizing the importance of giving, because that's going to cause us to hold money loosely and to break the power of money over our lives. We should have a spending plan. The Bible talks about that the ant stores up during one season, so he has food in another season, and that's the idea of saving, that we should count the cost, and so we should have a spending plan that governs how much is coming in and going out.

We should be thinking about putting money aside for the longer term. All of these things are how we provide, because we follow God's principles. Here's what I want you to do. Hang on the line, Hayden. We're going to get your name and number. We're going to send you Howard Dayton's book, Your Money Counts, and that's going to unpack every one of these principles I just described.

Great question, Hayden. Thanks very much for calling 800-525-7000. We'll be right back. This is a reminder that today's program is a broadcast we previously recorded, so even if you hear the number, please don't call. But you can send us an email at questions at moneywise.org. And we're back with you on MoneyWise Live. Here's just one of the 2300 plus verses in the Bible that deal with money and possessions.

You ask and do not receive because you ask with wrong motives, so that you may spend it on your pleasures. James 4-3. Let's go from James to Jack.

Sherriville, Indiana. Hi, Jack. What's on your mind today for Rob West? Well, I've got some money that I need to set aside for my grandkid. I just got a new grandson right before Christmas, and I'm wondering if it's best to go with like a 429 or some other investment that he can tap into, whether he goes to school or not. Yeah, yeah.

It's a good question, Jack. Did you say you are thinking in terms of college, or how important is it for you to have this money available for other non-college related expenses? Well, I'm thinking for college, but who knows what's going to happen 18 years down the road with him or everything else.

Yeah. Well, I think that's, you know, really the first decision. I really like the 529 for saving for college, specifically because it's going to grow like a Roth IRA, and you've got a lot of time on your side because he was just recently born. So if you do this, if you're a systematic investor over a long period of time, and this money grows in the investments inside the 529, and then it's used for qualified educational expenses, including up to a certain limit, K to 12 private school, but also college related expenses, room and board and books and fees and other things at college, not to mention tuition, then you get all that growth tax free. And depending on your state, you'd have to check there in Indiana, you may end up getting a state tax deduction for the contributions.

So that's what I like about it. Now, what that doesn't allow it to be used for is other things that may come or, you know, if he doesn't need the funds for college, keep in mind, it could always be transferred to another 529 account for the benefit of another person, including yourself, if you ever decided you wanted to further your education, or another grandchild that might come and have need for it, or in the event he gets a college scholarship or grant award, you can take the money out on a pro rata basis equivalent to the scholarship. So that would give you the ability to get some of those funds back to be redirected.

So I think you've got a couple of options. One is you could say, you know what, I'm just going to go all in on college and just expect that at some point, he's going to want to go to school and need some help. And this is going to be the best tax advantaged environment for me to grow these funds. So I'm going to do that or I'd like to split it in two, I'm going to take half of what I want to contribute each month or each year, put it in the 529 half somewhere else. Now, for that somewhere else, I wouldn't put it in a custodial account, like a UTMA or a UGMA, just because that becomes his money at the age of majority in your state, you can use it for whatever he wants.

And you may want to have a little bit more control depending on where he's at and how God has wired him and the decisions he's making and all of that at the time. And so that would give you reason, I think, to keep it in an account in your name separate, earmarked for him, but invested nevertheless, and then you could give it to him at your discretion and time of your choosing. So that would be the probably the two directions I would go. If you want to entertain the 529 I'd look at savingforcollege.com.

You can run a little calculator there to determine the best 529 for you based on your state and the performance of both 529s in your state and outside. All right, thanks, sir. Okay, Jack, thanks for calling, sir. Thanks for thanks very much.

All right, Chicago, Illinois. Michelle, I know you've been holding patiently for a while. Thank you for that. And what's your student loan question?

Thank you for taking my call. I have a massive student loan. And just contemplating or wondering what your thoughts are regarding refinancing with a private lender versus staying with the government loan because they offer so many options like income driven and deferment and something and but the interest rate I haven't tested it out yet, but I want to look into how much the interest rate is. But I feel like it might save me money if I transferred to if I refinance and just wondering your thoughts on that.

Yeah, Michelle, I mean, you've identified the main issues here. The first issue is if you move out of the federal program, and that's what you would be doing by refinancing with a private loan. And there are many of them and some of them very competitive in terms of fees and interest rates. But as soon as you move out of that environment, you are giving up the flexibility that comes with the federal loan program, the protections for not only loan forgiveness, if you're a student happens to qualify for that, but also the flexible repayment options, the income based repayment options deferment, forbearance, other options that you have in the federal loan program.

Now, why would you give that up? Well, the only reason you would is because you feel like it's, there's enough reason to move out of that, because you're going to save some money on the interest rate. And that's obviously where you need to start to say, can I in fact save money because you'd need to save a good bet in order for you to justify walking away from some of those flexible options. You know, I think it's a it's a risk that you would have to go into knowing the the risk that you're assuming by giving those up and just decide how, you know, certain Do I feel like the future is for your student or if you're the one repaying it, your financial well being, and whether or not you know, you want to just preserve those options. But you may find Michelle when you go out and look for those private refinancing options, there's just not a lot of savings there, you may find that the federal rates are such that, you know, there's not going to be much that you'll realize on a monthly basis. So I'd probably start there just so you know what you're comparing and visit with SoFi and a number of the others that are the most competitive, you can go to bankrate.com to compare them.

And once you have an idea of what the interest rate would be, I think you'll know pretty quick whether or not it makes sense. Okay, perfect. That's what I do. Thank you so much. Okay, Michelle. Thanks for calling. God bless you. Thanks, Michelle. We appreciate that already. Well, Rob, it's been a while since we've done an email. So let's take one of those.

This is from well, he doesn't say who he is. Says Dear Rob, I was divorced before I married a wonderful Christian lady. After our wedding, I learned that her credit was ruined by helping her adult kids who then defaulted on the loans she co signed. My credit is excellent. Would we be better off if we kept separate accounts?

Yeah. Well, I think the big idea here is that whenever we're married to become one that includes our finances. And so, especially when we've been we're marrying later in life, or perhaps in like, in this case, a second marriage, we need to have full disclosure, we need to talk about perhaps what's happened in the past good, bad or indifferent. But then we need to move forward together. Now, what would be the practical impact of you all having joint accounts, really nothing, your credit history is yours, hers is hers, hers will not spill over to yours apart from you having accounts that you share together and those not being paid on a timely basis. So and I am assuming this wouldn't happen. But the only potential risk is you have a joint credit card, she allows a child to use it. And you don't have the money to pay the bill. That would be about, you know, the only problem I could foresee, and there would be obviously much deeper issues there that you all would have to tackle.

But, you know, just the fact that she has some poor credit, and you all have some shared accounts, there is no ramification of that it's not going to in any way spill over to yours, apart from the genuine and real credit history that you have together for those particular accounts only not any accounts that happened previously. Okay. And if you have a question for Rob, you'd like to ask by email rather than actually appearing on the program. The address is questions at MoneyWise.org. Keep it just to a couple of lines questions at MoneyWise.org. Indianapolis.

Hi, Connie, how can we help you with your RMD? Well, I don't really even want to take it out. And and but I guess I have no choice.

And because of the taxes, you know? Yeah, yes. And so I was wondering where to put that money that I'm required to take out? Yeah. Well, you know, one option we talk about Connie, quite a bit here on the program, just because so many of our listeners are looking for ways to be generous is something called a qualified charitable distribution of you. Are you familiar with that term? Yeah.

Okay. Essentially, what happens is the IRS will allow you to make a what's called a qualified charitable distribution, which is a gift directly from your IRA to a Christian or to a ministry or not for profit charity that will also satisfy your RMD. So imagine this, imagine you're already doing some giving to your local church, and you replace that giving that you're currently doing out of cash with money you've already paid tax on you, you'd no longer make that and you make the gift directly from your IRA in the same amount.

Why would you do that? Well, a it's going to satisfy the RMD to the extent you make a qualified charitable distribution at least to the amount that you need to take out for that year. And second, there's no tax that's realized. So instead of you selling some money or selling some stocks, taking the cash out, then adding it to your taxable income for the year, there is no tax when you do the qualified charitable distribution. It's a non taxable event. And the the ministry or charity receives the full value of the distribution.

And nobody pays the any tax you don't and they don't. Does that sound like something that might be of interest? It sounds great. Because that benefits our charities and it makes the gift bigger to them. Exactly. You've got it.

You've got it. That's great. And then you could keep giving what you're giving out of cash or you could replace it.

It's up to you. But yeah, I think that would be a great option. So here's what you do. Call your IRA custodian, tell them you're interested in doing a qualified charitable distribution. They'll give you the paperwork. Let your church or charity know that this is coming.

Work with your CPA to figure out how much you need to take out for any given year. And then when you fill out the paperwork, the money will be sent over and you'll satisfy your RMD and make a wonderful gift to charity that you love. Rob, do you get frequent flyer miles with that? No, but I've heard toaster maybe. A toaster. Good.

Because earlier you were talking about online banks. That's exactly what I was thinking. But when do I get my toaster?

How will that work? We're out of time, thankfully. He's Rob West. I'm Steve Moore. You're you. And we're glad you're tuned in today. MoneyWise Live is a partnership between Moody Radio and MoneyWise Media. Thanks so much for listening. We appreciate your prayers. Join us again next time.