What's in Your 401k?

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Not licensed in Alaska, Hawaii, Georgia, Massachusetts, North Dakota, South Dakota, and Utah. The numbers continue to roll in about the impact COVID had on the economy last year. And one thing is clear, it changed the way some of us are handling our 401ks.

Saving for retirement is always important and the need for it doesn't change, even when there's a crisis. So today, Kingdom Advisors President Rob West talks about how the pandemic may have affected your retirement savings. And we'll take your calls at 800-525-7000. Your calls on anything financial.

800-525-7000. I'm Steve Moore. What's in your 401k?

That's next on MoneyWise Live. Well, Rob, folks just starting out in life often seem to think that retirement investing is something they can pretty much deal with later. But we want to dispel that notion kind of quickly today, right? That's certainly true, Steve.

Think about this. Sometimes retirement is referred to as the golden years, but it's certainly not because you're not likely to have more gold than because your income is usually less. In fact, your younger years when you're just starting out in the workforce should actually be called your golden years, even if you only invest a small amount then. That's because of the huge impact that starting early will have on your retirement assets decades down the road.

There's something like an inverse ratio at work. Investing even small amounts in your early career years will have a bigger impact than investing a lot later because of the time required for earnings to compound and grow. Yeah, well, that's exactly right. Lots of truth in that. 100% truth in that. But again, as a younger person in your 20s, you don't really make a lot of money.

Typically, it's just hard to convince someone that age that they really need to pay attention to this. But okay, there are other benefits as well, right? That's exactly right. Your 401k contributions are deducted from your taxable income so you won't pay taxes on them or your earnings until you make withdrawals in retirement. Plus, if your company offers matching contributions, as we like to say, that's free money.

So you want to take advantage of that for sure. Yeah, so that's what we want to be doing with our 401k. But I guess what actually happened last year in 2020. Well, no doubt the pandemic hurt a lot of people financially. Millions lost jobs or at least partial income. But under the CARES Act, Steve, folks affected by the COVID shutdowns were allowed to withdraw up to $100,000 without incurring the usual early 10% withdrawal penalty and a lot of them did. Between March of 2020 and January of 2021, listen to this, roughly 1.6 million people took money out of their 401ks. But according to the brokerage Fidelity, there was some good news on the 401k front as well. Nearly one third of 401k investors actually increased their savings rate in 2020.

And the average balance was almost $122,000 by the end of the year. Okay. All right. Now, one of the other questions we get all the time is how much do I actually need for retirement? That's kind of a broad based broad brushed question. Care to tackle it?

Sure. It's always a tough one because so much depends on lifestyle and the needs of each individual. Here's what Fidelity offers as a rule of thumb, though, your goal should be to have 10 times your annual salary in your portfolio by the time you retire. To get there, you're going to need to save if you can, at least over time, up to 15% of your take home pay. And that doesn't mean starting when you're 35 or 40. By then you'll probably have to put a lot more than 15% in retirement if you retire.

In retirement, if you wanted to reach that goal, as we said at the top, Steve, the earlier you start, let's say by age 25, the easier it will be to reach your retirement goal. And even if you can't put in 15% right away, start with something don't just delay it, work your way up to that 15% number as quickly as you can. Yeah, yeah. And of course, hope that we don't have another Coronavirus pandemic or something similar, huh?

Well, that's right. Now, we should take a minute to let listeners know about an important change for you, Steve. So perhaps we turn the corner. And I would just say, you know, as we talk about heading in to tomorrow, tomorrow is going to be an exciting day. We have something to celebrate, don't we Steve Moore? I have no idea what you're talking about.

Are you putting a million dollars in my 401k for me? No, no, no, you know, tomorrow is the day we get to celebrate a big transition that you have coming up as you head into a new season and a new chapter of life, but a lot more on that tomorrow. Okay. Thank you. You really caught me off guard there and I'm seldom caught off guard. I can't spell guard.

It's always A and the G and the U kind of confuse me. It's probably a good time to retire. He's Rob West. He's not retiring. I'm Steve Moore kind of semi-retiring. We'll tell you more about that. Here's our phone number, 800-525-7000. We'd love to chat today. 800-525-7000.

We have open lines. Welcome back to MoneyWise Live, finding God's plan for your financial life. If we can help you, if you have a question or you're in the midst of a quandary or you just want to comment in some way, something financially related, give us a call right now. Let's chat.

800-525-7000. Rob, with your permission, we'll jump into our calls, okay? All right. Sounds good.

All right. Let's go to Bear, Delaware. Hi, Dee. How are you today? Hi. How are you? We're doing great. Thanks. How can we help you?

Good. I just wanted to give a praise. I wanted to thank the Lord for helping me.

Back in 2005, I believe it was, or 2004, Larry Brickett. I was $60,000 in debt, and he sent me some information and told me, after I told him how much money that I made, he said I should be able to pay that off within three to four years, and I did. I would just explain to them I've just been so busy because I was still working in a school and I'm a caregiver, but I haven't been able to call in to give the praise, but I wanted to make sure I did that while it was on my mind. I'm so glad you did, Dee. That's exciting. Now, how did you do it? Did you cut back on something? Did you make a change in your budget?

What did that look like? Well, I cut back on a lot of things, and I even gave up my lattes and my services and stuff like that, which I missed very much, but also he was telling me how to, when you have bills, he says, try to pay as much as you can on one bill, and once you get that paid off, put more on the next bill, and that's how I did it. That's how I was paying my bills off, so he sent me the information in a box, and everything just went to plan with God's help and with you guys, and I appreciate it. I did it, and I'm just so excited.

Well, I bet you should be. You did the hard work, and what you described, Dee, is what we call the snowball method, where you essentially pay all your minimums, you take all your surplus, and you attack the smallest balance, and when you get that paid off, then you go right down the line, and every time you pay one off in full, you get kind of that emotional, psychological win, if you will, and that has proven to be enough of an incentive to keep going that most folks just keep going like you did until they've paid it all off. Now, what have you done with that money that you're no longer sending to debt payments? Are you saving that? Did you increase your giving?

What are you doing? I'm increasing and giving, and I'm saving some, and I've been putting my grandchildren to a Christian school. Okay, I love that.

That's incredible. Yes, these are very important. My children went to a Christian school, and they all graduated, so I went the same thing for my grandchildren.

I want them grounded in God's Word at a young age as they grow up. Yes. Well, God's Word is very clear that we should celebrate, and we should remember, and God is faithful, and you're acknowledging that today publicly, and by doing so, Dee, I'm confident that it's a real encouragement to somebody out there listening who is where you were four years ago, and perhaps this is the incentive they needed to dial back the spending and cut out the lattes, if that's what you need to do, and apply all of that extra money.

And it does work, because it does work. Dee, did you say, Dee, that this was back in like 2005? Do I remember that correctly? I guess it was before Larry Burkett died. Is that how you say his name? Burkett? Yes, Larry Burkett.

That's right. Yes, he was coaching me through all this, and I'm telling you, if you just listen, and if you trust God, which I wasn't doing that, it does work, and I give him all the praise for it. And I can't wait to meet Larry in heaven. I can't wait to meet him in heaven sometime. Well, I understand that you're going to love him, Dee, because we loved him, those of us who worked with him. And you know, Rob, what a legacy Larry left behind.

That was before the internet. Dee writes a letter, sends it to Larry, who got hundreds of letters, to be honest with you, and he responds, and he provides her with not only information, but a box full of stuff. I mean, that's the kind of legacy of love and grace that Larry left behind, and it means that as this ministry continues, until Jesus comes, that we need to be the same kind of people. Generous and willing to share God's word and God's principles and the gospel of Jesus Christ all at the same time. Well, we walk in some big shoes, as you know, Steve, following in Larry's footsteps, and try to carry on exactly the way he would and did, which was in a way that was hope-filled and encouraging and kind, and yet very practical and helpful, but always centered on God's word. And so, great to hear that testimony today. Mark in Milwaukee, what's on your mind?

How can we help? Hi, Mark. I was on mute. Okay, no problem. Okay, Mark, take yourself off mute.

That's something we've all become accustomed to in this Zoom age, where we have to take ourselves off mute. Hey, Mark, how can we help you today, sir? Hey, gentlemen. First, thank you for your ministry. I appreciate it. It's helped me pay down over $50,000 in debt over three years. And I'm almost debt-free, so we're doing pretty good. But my question is, I have $20,000 remaining on my last student loan, and right now there's no interest on that loan.

It's current. And I have $20,000, besides my emergency funds, left by the end of the year. And I was wondering, should I pay off, or should I keep it in a high interest account? And what's your opinion on that? Yeah, yeah. Well, you know, I like the idea. Well, let me just confirm one thing before I give you my thought. Did you say you had $20,000, which is equal to the balance in addition to your emergency savings? Correct, in addition. Okay.

Yeah, okay. And do you have any other upcoming, you know, short-term needs that are just going to require some additional funds, you know, in the next couple of years? I have a mortgage that is accruing interest, so there's that.

But other than that, nothing that I can predict. Our vehicles are all paid off. Great. We have our emergency fund, and we have our three months' worth of funding for our bills.

It could be six months, but, you know, we're working on it. Sure. And you're contributing to a retirement account of some sort? Yes, sir, at 15%. Okay, very good. Yeah, you know, I like the idea of you accelerating this and paying it off.

You know, I think you could go a couple of directions. One would be to say, you know what, we want to have a little bit more than three months, so we're going to hold a little bit of this money back just to make sure we don't get ourselves in a predicament where, you know, we need more than three months to weather some unexpected financial storm. And because we paid this off, we don't have anywhere to go, especially while it's at 0% interest. I wouldn't do it just purely because, you know, of that half a point return you're going to get in that high-yield savings. I'd do it because you really feel like you need a little bit more in the way of reserves to fall back on. And if you don't have any other source of funds, you know, once you pay this debt off, then, you know, you don't have that money. But if you're comfortable with the three months, especially if you're living well within your means and you have a surplus, which is allowing you to add to that three months and you have a plan to get to the six months fully funded, then I would say just go ahead and wipe it out. I mean, I think that's very biblical.

If we have the power to do it, we should. And you're looking at it in light of your other God-given goals and priorities. And as you evaluate it, certainly being debt-free, regardless of whether or not there's 0% for the time being or part of that's going to be forgiven or anything like that, I just like the idea of you saying, you know what? I borrowed this money. I'm going to pay it back. I have the ability to do it. And it makes sense in light of my other priorities, which you're already taken care of.

So for that reason, I'd say either A, go ahead and just wipe it out and let's move on, or B, at least pay down a significant portion of it so that you're on track to pay it off in the next couple of years at the very latest. Mark, we're glad you called today. Hope that helps you.

Thank you very, very much. You're listening to MoneyWise Live with Rob West. If you have a question or a comment regarding what the Bible's direction is when it comes to establishing priorities, paying off debt, generosity, teaching your kids about managing money, living a balanced financial lifestyle, or anything along those lines, our lines are open at 800-525-7000. Welcome back to Money Matters, where we do our very best around here to understand God's principles of money and finance and share those with you and one of those principles, Rob. It's a big one, and that is living a balanced lifestyle, making sure your budget does balance, your checkbook balances. And speaking of all that, even we live with a balanced portfolio, if you will, and we live on a budget only because of our listeners, right?

Well, that's exactly right. Here on Money Matters, you realize all that talk of Larry Burkett, and you welcomed people back to Money Matters. Did I say Money Matters?

Which is the old program, yes. Did I really? You did. Well, that's why, well, I'll leave it at that.

It's probably time. We do. Oh, no. We do live started way, way back, 1988, it was called Money Wise, and then there was Money Matters. No, no, it was Money Watch. Well, we're Money Wise. Money Watch.

There you go. Money Matters, Money Wise, and now it's Count Your Money, or something like that. No, no, it's Money Wise, and to your original point, we do live on a balanced budget, and guess what? It's the end of March, which means we want to finish the month strong, and we depend on your financial support to produce this radio broadcast each day in partnership with Moody Radio to bring you all of the web resources and tools and the Money Wise coaches and the Money Wise app. We do all of that because of your generous support. So would you consider a gift, perhaps partnering with us monthly or one time? This would be a great time to do it.

It's quick and easy. You can head over to MoneyWiseLive.org. That's MoneyWiseLive.org. Just click the donate button at the top of the page, and we would certainly be grateful. That's right.

Money Wise, remember that, Money Wise, Money Wise Live. He's Tom West. I'm Steve Moore. Oh, no, Rob West. Rob West. Let's move along.

It's his brother. Okay, I'll do that. 800-525-7000. Orlando, Jacinta, how can we help you today? Hi. Good afternoon. I'm a first-time listener and caller.

Thank you. My concern is that I heard in the beginning of the hour that you were talking about how much to set aside. Well, I definitely started late regarding my financial plan for retirement. I am a government employee, so I know I have a pension, so a partial of my retirement is paid, but I'm not sure where to begin at this time. I don't have a 401k, so I'm just wanting some assistance based on starting late. Where do I begin?

I don't owe any debt other than my home, and I do have savings, but not any investment. Yeah, it makes sense. Well, I appreciate that, Jacinta. Let me just encourage you.

There are so many people listening that are in the same spot. We can pick up right where we're at and say, how do I move forward from here, recognizing that rules of thumb are just that. They're rules of thumb, and we do the best we can, and we need to be keeping our lifestyle in check and saving for the future. We also need to be well planned, but at the end of the day, we trust the Lord. He is our provider, and we just want to be found faithful, all of us, myself included, in managing God's money wisely, according to the principles we find in His Word.

And here on MoneyWiseLive each day, we unpack those 2350 verses in God's Word as it relates to money and possessions and saving and giving and all of it. And certainly we should be setting something aside for the future, but we're all at different places in that journey. And so we say, what do I need to do moving forward?

And that's really the key. How many more working years do you have, Jacinta? Well, when do I plan to retire?

Yes, ma'am. When I hope to retire. When do you plan to retire at this point? Well, I mean, I think, I guess I hopefully retire initially at 60, but then I don't, I can go further on based on my situation and go to, I guess, a second retirement to like 70. So where it's not as stressful. Sure. I'll have 30 years by 60, but then I can go forward on another job before I can start pulling out, I think.

And how far away is that? How old are you today? I'm 40.

Okay, great. So you've got 20 years and potentially 30 years still to go in terms of the working life that you have. And obviously, as believers, we realize that we're called to be workers even before the fall of man, right? We're to be productive and take what the Lord has created and improve it. And we all have a calling on our life and we are in service to the Lord throughout our lives until he calls us home.

And we always need to be evaluating what that is for each of us. And there will likely be a season where you'd stop paid work because either you have to or the Lord redirects you to something else. And that's why we want to save for the future, not just to sit back and live necessarily just a life of leisure. But you have time on your side even though you are starting late. So I think the next step for you, Jacinta, is a plan.

Because when you have a plan, it's always more encouraging to at least know where you stand and what you're trying to reach. And part of that plan is going to include determining what your lifestyle will look like in retirement in that season. I love the fact that you are debt-free except for your mortgage. We're going to want to make sure we prioritize paying that off at the very latest by the time you enter that non-paid season of your life, so that your lifestyle is as low as possible. But as a part of a planning process, you would estimate what your lifestyle expenses will look like in that season, probably somewhere around 70 to 80 percent of your current expenses just because the mortgage will be paid off, you're not saving for the future, those kinds of things. You might drop some insurance that you no longer need, things like that. And then you at least have a target that says, okay, in addition to the guaranteed income source I can count on, my government pension, I'm going to be short X, whatever that number is on a monthly basis to fund my lifestyle based on my best guess on what that's going to cost me every month. And then you can kind of back into, okay, in order to generate that kind of supplemental income, I need a certain amount in the bank to be able to fund that.

And then you at least have a target that you can save toward by keeping your lifestyle at a minimum and perhaps funding a Roth IRA or a traditional IRA in addition to what you're putting away at work. So I would encourage you to connect there in Orlando with a certified Kingdom advisor to do some of that planning. And you can find two or three of those to interview and then select the best one at MoneyWiseLive.org. Just click Find a CKA. And we appreciate your phone call today.

Thanks very much. When we return, it's Stephanie in Austin and Patricia in Cleveland. You can find out who we are, what we do and how to support us easily, quickly and safely when you visit MoneyWiseLive.org, MoneyWiseLive.org.

Okay, let's go to Austin, Texas. And Stephanie, thanks for your patience. What's your question today? Hi. Hi. I just want to say thank you, you two guys, for the blessings.

Y'all bless the – y'all generate – y'all journey through the Money App. Oh, good. Thank you very much. Appreciate that. Thank you. Okay. I just have a question about my risk savings plan for my job. I work for the federal government.

Okay. And we're under a three-tier system. And I'll put in 10 percent, but I know I'm entitled to the – I want to get the retirement and I'm going to get the Social Security. But also, we also have a three-saver plan.

Excuse me. And I've been on my job at – I work for the Internal Revenue Service, and I've been there since I was 36. But I didn't start right away with the savings plan until I was about 38, two years later. But what I did was I made a big mistake, and when I signed up with the savings plan, I put down – I thought I was putting in five percent, and I put down 50 percent of my income. Did you say 50 percent?

Yes. It was going – I thought when I signed up on the website, I put down 50 percent. And I was wondering why my paycheck was growing, like, small, and I just didn't go like that until almost two years later.

Oh, no. And my savings plan grew to almost $25,000, which was crazy. And I said – they told me that I put in 50 percent. Well, I wasn't paying attention at the time because I was working another part-time job. I see. And I said, well, I'll just have to deal with this.

I don't know why they're taking so much out. And I just realized – and I just realized it, and I said, well, at least I have a nice little savings. But that was like – and then now I'm 52.

So it grew since then. But I'm still just putting in 10 percent since I started. After the 50 percent, I dropped it to 10 percent. So can I – you think it's a good idea that I stay at the 10 percent? Because I keep hearing you saying 15 percent. You should put in about 15 percent.

Yeah. I mean, 15 percent would be a great target. And the idea here, Stephanie, is that Social Security was never intended to cover 100 percent of your expenses in retirement. At best, it's probably going to cover 40 to 45 percent. So we need to be saving through other means to have other assets that we can convert into income streams to supplement Social Security and cover your lifestyle in that season.

And so with the TSP, which is for government employees, the Thrift Savings Plan, you have essentially the ability to contribute to what is the equivalent of a 401K through salary deferral, which you're doing. And one way to build that up quickly is to set it at 50 percent. But that's challenging. And so I realized that was a mistake. So 10 percent certainly is a great number.

I think, you know, 15 percent is probably a better target. So, you know, it always requires that you go back and do a couple of things. Number one is I'd like for you to have a plan. So I think at this point in your life, I think you said your age was 52. This would be a great time for you to get with a financial planner, do a financial, comprehensive financial plan that includes the retirement portion of your financial planning just to determine, OK, what do you expect your expenses to be in that season? What might you have from Social Security based on the latest estimates and what you've been paying in?

And then what would your gap be? And therefore, what do you need to have in your TSP when you reach retirement to generate the kind of income that you need and not pull out too much every month so that account will sustain you throughout the rest of your life? Because keep in mind, when you retire, let's say you retired, you know, 65, you could still need that money potentially for three decades or more. So we need that money to last. So I think doing a financial plan with a financial planner would be real benefit to you. And then, you know, it's not just 15 percent for the sake of 15 percent.

You're saving toward a target based on somebody who's actually run the math and, you know, you've worked together to come up with that number through a planning process. So I'd encourage you to go to our website, MoneyWiseLive.org, connect with the Certified Kingdom Advisor there in Austin and go ahead and do some of that planning. And if you have questions when you're done with that, give us a call back. Stephanie, thanks very much. We appreciate that. And we're glad that you caught those numbers early on, even after two years.

Cleveland, Ohio. Patricia, you want to help your daughter, huh, with her student loans? Yes, sir. And blessed holy week to both of you. Yes, ma'am. Thank you.

Thank you. She just started her job last week. It's with a nonprofit, but, you know, she's starting to get all these offers in the mail about consolidation. And we're just not sure how to advise her other than making a spreadsheet and trying to compare, but if there's safety things to watch out for.

And then also if we are unable to help her, we have a question, are you able to make payments on the principal like you can with a mortgage, extra payments on a principal to get the, you know, amount of the loan down more quickly? Sure. Thank you.

Yeah, you certainly are. Let me ask you about two things that my producer put in the notes here when you called in a moment ago. One is that you were considering using retirement savings. And the second is that your daughter's employer potentially is going to help her pay these down.

Tell me about those two items. Okay, we're going to use our retirement time and my husband and I both have part-time jobs, so we want to target some of the funds, not our retirement savings, but our retirement income for part-time jobs to maybe help her. And it does not look like her employer will be able to help her. I see.

Okay, very good. Well, the only thing I would just caution you on is just keep in mind when it comes to paying for college or paying back college loans, you know, when we talk about using retirement savings and I realize you're saying you have a part-time income in your retirement season that you perhaps is extra money and you're going to use that to pay this down just as a gift to her and that's great. Just be sure that you're not taking away from important savings that you're putting away that you're going to need because she's got a lot more time on her side to repay these than you have to pay back retirement savings. But if it's surplus, kind of over and above what you all need to maintain your lifestyle in this season because you've decided to keep some part-time jobs, that's great.

And you want to bless your daughter, I think that's tremendous. Yes, you can pay directly toward the principal and pay these down beyond the monthly payment. You'll just want to make sure that you indicate that they do that. As to the consolidation, if these are federal loans, doing a federal loan consolidation is fine. It's not going to improve the interest rate. You're going to have an aggregate of the current rates. It's just going to simplify things because rather than having multiple loans, you'll have one and the nice thing about the loan consolidation is that it preserves all of the federal options both in terms of loan forgiveness if she were to happen to qualify for any of that and income-based repayment options if she ever needed those. So I like the simplification that comes through the consolidation but don't refinance them with a private lender because you're going to be giving up all of that when you do that. So I think you guys are doing a wonderful thing and you absolutely can help her pay these down.

Just make sure you have the funds to do it. Patricia, thank you very much for giving us a call today and for reminding us that it is indeed Holy Week. It's Holy Tuesday today and tomorrow Holy Wednesday, then Maundy Thursday, Good Friday, and of course then Easter Sunday. We'll be right back after this. Wonderful to have you with us today. He's Rob West.

I'm Steve Moore. Linda is on the line now from Coeur d'Alene. And Linda, if you don't mind, what does Coeur d'Alene mean? Is that maybe an Indian name or something like that? It is, and it means heart of the all, A-W-L. Oh.

Because the French traded with the Indians and the Indians were shrewd traders, so they said they had a heart of the all. Wow. You know, the little all that you poke holes in leather with.

Yes, leather, exactly. You're an English teacher, aren't you? You're an English teacher, aren't you?

I am. How do you know that? Wait a minute. I just felt it. It was just a vibe.

How does he do it? It was just a vibe. All right. Wait a minute.

What color car does she drive? No, I'm not going there. Yeah. Linda, God bless you. Thanks very much.

What's your question? Thank you. Well, I have to say, first of all, I've listened to Moody Radio out of Spokane for over 20 years, and this is the first time I've ever phoned in a red-letter day. That's great. Amen.

We're glad to have you. Thank you. I'm refinancing my house from a 4.3 mortgage down to 2.8, and I paid 200 for my house six years ago. It's assessed at 4.85.

That's what's happening in lovely Coeur d'Alene. So I really was thinking I'd like to take out 15,000 and replace some laminate flooring. Okay. That means that I would increase my mortgage by 15,000, but just calling to see what the wisdom of doing that would be.

Yeah. So if I understood correct, your current mortgage is 200. You'd be adding 15 to it, so it'd go up to 215. Are you also going to roll the financing costs? No, I paid 200 for the house.

I owe about 155 on the house. Oh, okay, great. And you said it's worth 4.85? That's what it appraised at. Incredible, yeah. Incredible. And so you'd add 15 to it, and are you also going to roll in the cost of the refinance, or are you going to pay that out of cash?

No, I'm rolling that into it. Okay. And how much are you planning? What do they cost roughly?

Do you know yet? Roughly 5,000. Roughly 5,000. 4 to 5,000.

Okay. Yeah, I mean, that's a little high. I'd love to see that 3 to 4,000. You know, 2% of the mortgage balance would be typically what I'm shooting for, which would be around $3,100. So you might want to get a couple of other options to consider if you haven't already. I'd encourage you to get at least three.

You can always check with your bank, but then I'd look online at bankrate.com to see who has the best programs and rates currently because it's changing all the time. In terms of you rolling that 15 in, yeah, I mean, it makes some sense in that that's a fantastic interest rate. You've got a ton of equity. You know, the only downside is how long is the term going to be on that, Linda? Oh, it's starting over at 30 years. Okay. And how long have you had that mortgage? Six years.

Okay. See, I'd love for you to do this at 25 or 20 just because, you know, by you going back to a new 30 years, re-amortizing it, even though you've got a phenomenal interest rate and you're saving, you know, 1.2%. By adding those years back on it, you're not actually saving as much. So I would consider going with a 25-year mortgage. The only other option would be if you knew that you could pay this 15 off relatively quickly, you know, because you have some surplus every month or you've got some, you know, partial, you know, amount that you've built up in savings that you could use for it.

Tell me about that. Do you have much surplus every month or are you pretty tight and therefore you don't think you'd be able to pay it off quickly? No.

No, I do. And my payment would be $860 a month. So I had thought that I could make a couple extra payments throughout the year.

Yeah. And that would be good. So you'd have a couple of options. One is you go ahead and refinance it, but again, I'd look at 25 years and you just do the 155 plus the expenses. And then you get a second home equity loan for the 15,000 and then just really focus on paying that off quickly so you don't amortize that interest on that 15,000 over the next 25 years. Or if you pay an extra payment or two a year, let's say the next 18 to 20 years, because you'd pay it off sooner. You might be able to pay that portion of the loan off, that home equity loan off in two or three years, if you could, or four or five. So that would be the only thing to consider.

But if you feel like, no, I just don't have the ability to add enough money to pay that 15,000 off in the next three to five years, then I'd say, okay, let's go ahead and roll it in. But let's not increase the term to 30 years. Do you follow that?

I do. A 25-year term. A 25-year term. And if you think you could pay that 15 back in three to five years, then I'd do it as a home equity loan separate.

If you can't, you say, no, there's just no way I can put that kind of money toward it to pay it off in three to five years, then go ahead and roll it in. But let's make sure we don't extend the term out. Okay. Makes perfect sense. Okay.

Just some things to discuss with them. All right. Very good. Thank you. And the English teacher, thank you for listening and for calling your first time today. We're delighted. Linda, God bless you. Thanks so much.

Valparaiso, Indiana. Just a little bit of time, Beatrice. How can we help you? Yes. I'm wondering if I should dip into my annuity. I have an annuity of 85,000, and I have a daughter that's living with me. She's been with me since my husband passed away. And I had took out a mortgage on my home, and we were doing some home repairs.

But we still have quite a bit to go. And she's coming into some money because of the virus, the COVID virus. So she's saying that I should leave and let her finish fixing the house. And I'm saying, no, maybe I'll stay and you leave and I'll fix the house. But she's saying it will probably be too much for me.

So that's my question. Should I stay and fix the house with my annuity, or should I let her stay here and I move on for a couple of years? She's dead.

And she'll fix the house. Yeah. Boy, there's a lot of moving pieces here, Beatrice. Let's try to quickly tackle this.

And it may be that we just need to reconnect at another time or get you with a coach. But this is your home and your name. Is that right? Yes. Okay.

And what's the value of it? It's 200,000. Okay. And how much do you need to put in it to bring it up to working order, the repairs and renovations you're talking about? This may be about 7,000.

Okay. And are these cosmetic repairs and renovations, or is this like a leaky roof that you just have to address? Yeah, it's a leaky roof and a little bit of cosmetics. Also, I wanted a privacy backyard fence and a kitchen redone remodel and bathroom. I got a bathroom and a half to remodel. And basically, that's it. It's really electricity to bring it up to date.

Okay. But keep in mind, the types of things you're talking about, bathroom remodels and kitchens, get very expensive. You remodel a kitchen, that could easily be $20,000 to $50,000.

But that's cosmetic. So what I'm hearing is there's some things you have to do immediately. Now, let's set your daughter's wishes aside for a second. This is your home. Is this a home you want to stay in? Yes, for the time being, I do. But it's kind of like a big house, a big house for me.

It's got four bedrooms. Okay. So it's more convenient for her because she's got three children.

Okay. So I can see her as far as her living here and taking care of the house and me moving on. So she wants to buy it from you? Does she want to buy it from you? No, it's going to be hers. She's going to inherit it when I leave because I've already told her that the house would be hers. Yes. But in the meantime, where would you go live if you left?

Probably in a small bedroom apartment, one bedroom apartment. And then that way I can keep an eye on things going on here. Sure. And do you have the money to be able to do that? Could you afford to go get an apartment? Yes.

Yes, for about a year or so. I mean, she's saying to give her two years at the most. You know, she said she would help me financially too with the apartment. Okay. But, you know, I'm just still thinking about her moving on. Yeah.

See, I'm not a big fan of this. I think there needs to be a lot more consideration, planning, prayer that needs to go into this. You know, it's wonderful that you want to leave this home to your daughter, but you're still here and you're still the steward of these resources.

The Lord hasn't called you home yet. And so we need to look at your financial situation and you want to be able to be a blessing to your daughter, but you've got to think about what God has given to you right now because you're the steward. You're the manager of those resources. And so you need to have a plan that's sustainable, that's not dependent upon her. If you were to give her this home now, and then you have to go out and pay for a rent, which is very expensive right now.

Rental prices are very high. We'd want to look at that in your budget and make sure that's something you could do because it could be that now is the time for you to sell that home and take that money and get something smaller that you can pay cash for. And then maybe out of the proceeds, you help your daughter with a little bit, get her on her feet.

But I think right now we're not necessarily approaching it that way. And you may find yourself in a position where you're financially overextended. She's in your home.

She's not able to help you despite her best efforts. And you have a real predicament on your hands. So I think we need to back up and get somebody else to kind of look at the whole situation and give you some counsel. So let's do this.

I want to have my producer get your information. And I'm going to personally have one of our coaches connect with you to help you go through all the numbers, look at your budget, look at the assets you have, look at your home, and then help you think objectively about what's the best plan for you moving forward while at the same time recognizing you want to be helpful to your daughter and her kids, which is not a bad thing. We just need to make sure it all works because the Lord wouldn't lead us to do something that's not sustainable. And so, you know, the plan needs to make some sense before we proceed with it. So you hang on the line, we'll get your information, and then we'll connect you with a coach. Beatrice, you sound like a very generous person. You hang on the line. I agree with Rob. Let's think this through just a little bit more if we have the time, and I think we do. Thank you very much.

Speaking of time, we are pretty much out of it. I want to thank our production staff today, Amy, Eric, Dan, and, of course, Jim Henry. For Rob West, I'm Steve Moore. MoneyWise Live is a partnership between Moody Radio and MoneyWise Media. Thank you for your prayers and your generosity. I hope you'll come back and join us again tomorrow.