This is Doug Hastings, Vice President of Moody Radio, and we're thankful for support from our listeners and businesses like United Faith Mortgage. If you go to our mortgage team's website, you'll find hundreds of testimonials of real Christian radio listeners we've helped. Laura here is a recent friend who is kind enough to share a few words with her local station.
I was actually referred to United Faith Mortgage through my mother-in-law. We decided it was time for us to start looking for a house, and I reached out to Kelly, and we found several houses we liked, but you know, with the seller's market, things kept falling through. But any time we needed her, she was there for us. She got everything we needed as soon as we asked for it, and she made it work. She made sure that if that was the house that our family wanted, we were going to get that house. They're a wonderful company, and we're just really blessed that we found them in the process, that they helped us get through it, and we are in the home of our dreams, and our family is so happy. We are United Faith Mortgage. A lot of folks will tell you that they can't receive Social Security benefits unless you've worked and paid payroll taxes for at least 40 quarters or 10 years. Now, the trouble with that is a lot of folks are wrong. Hey, we were talking about spousal and survivor benefits today.
You may be eligible for them even if you've never received a paycheck. Our host, Rob West, fills us in on that first today. Now, we are pre-recorded, so please hold your calls until next time, but we have some great questions already lined up. I'm Steve Moore. For a few minutes today, important retirement information next on MoneyWise Live. All right, Rob, Social Security is important, maybe even too important, certainly occasionally a bit confusing, but people do make this a big part of their retirement plan by not having enough in savings, which is not the way it was set up to work, but that's all the more reason to know more about what you have and how much you have and all the rest, isn't it?
Absolutely, Steve. It's especially important to do your research if you haven't worked the required 10 years because the Social Security Administration usually won't inform you that you may be eligible for benefits. Well, that's good to know right off the top.
So let's give folks a jumpstart on that research. First of all, how does a regular working person qualify for Social Security benefits if you don't have the necessary work record? Well, like you mentioned at the top, the first way is through what's called spousal benefits. You may not be eligible to receive benefits based on your work record, but you may still be able to receive them based on your spouse's record or even your former spouse's record in the case of a divorce. Okay, well that's good to know. But what would those benefits look like if you're getting spousal benefits?
Well, it works like this. You may be eligible for up to 50% of your spouse's benefit if he or she claims at their full retirement age. So for example, if your spouse is eligible to receive $1500 a month at their full retirement age, your benefit amount could be as much as $750 a month. Okay.
And when does that happen? Well, you'd have to be at least 62 years old and your spouse would have to be receiving benefits already. Now, you can claim your spousal benefits that early at age 62, but if you do, there's a cost. If you claim them before your full retirement age, which is now 66 or 67, well then your benefits will be permanently reduced by up to 30% unless you're caring for an eligible child under the age of 16.
So, bottom line is, Steve, unless you absolutely can't live without the money, it's better to wait for your full retirement age to collect spousal benefits in addition to regular benefits. Okay. You mentioned something about divorce.
How would that work? Well, it's interesting. You could almost say divorce has no impact at all.
And here's what I mean by that. If you're divorced, you may still be able to claim benefits based on your ex-spouse's work record. The marriage must have lasted at least 10 years and you can't currently be married. And even if your ex has remarried, you're still eligible based on his or her record. As would be the case with a current spouse, you have to be at least 62 years old to file for divorce benefits and your maximum benefit would again be 50% of your ex-spouse's full benefit amount if he or she files at full retirement age. But unlike a current spouse, your ex-spouse does not need to have already applied for Social Security benefits for you to receive them based on their record.
Finally, Steve, your claiming benefits has no effect on your former spouse's or their current spouse's benefits whatsoever. Okay. My head is spinning a bit here. I understood everything you said.
I just hope I can remember it for more than a few minutes. But I guess the upshot is you're not left out in the cold if you've been divorced. What if you're a widow or a widower?
Well, now we're getting into what's called survivor's benefits. Your eligibility for those depends on the age of your spouse when they passed away. So if your spouse worked for at least 10 years, then they would have qualified for benefits and as a result, you may be entitled to survivor's benefits. But even if your spouse didn't work that long, there's still a chance you could qualify and you really need to check with your local Social Security office for more information on that. And personally, I've found those folks to be quite helpful because this can be confusing. Yeah, no question about it. For example, as a widow or a widower, you have to be at least 60, not 62, to file for benefits.
But you also may qualify if you're age 50 or older and have a disability. So as you can see, it gets a bit technical. When we come back after the break, we'll finish up this segment and hopefully give a few more details.
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.
Yes, it's true. Steve Moore has retired as co-host and Rob West is spending a little time with his family. So enjoy some encore presentations of MoneyWise Live this week.
Then join us on April 12th for the newly revamped MoneyWise Live 2.0. So to put a bow on this, Rob, what about a non-spouse receiving survivor benefits? Yeah, so this would be children, ex-spouses, parents, sometimes even other relatives.
They may qualify, Steve. In all of those cases, the amount of the benefit depends greatly on how much the worker was eligible to receive and how many people file for benefits. There's a maximum amount a family can receive, and that's based on the deceased's work record as well.
So that's, again, an area where you want to get a bit more information. This may be new information for a lot of folks. I know there are a lot of folks that don't even realize that a spousal benefit exists, let alone survivor's benefits. So this is something you certainly want to get more information on, SSA.gov or your local Social Security office. And I happened to be on SSA.gov just a few days ago. And I have to say, you know, there are websites and then there are websites. But I found this one well done, easy to understand. And, you know, sometimes when people hear they have to go to a government website, they almost give up before they begin to try because it sounds like something, you know, complicated that they'll have to wade through lots of fine print.
But I found SSA.gov to be very understandable and easy to use, so don't be afraid to check that out. Okay, Rob, let's take some calls. Let's see. Let's go back to Columbus, Ohio. Candice, thanks so much for holding on.
What's your question for Rob West? I was supposed to get my stimulus check for 1400 and I haven't received it yet. And I don't know when they was mailed out or I don't know any information about it. Yeah, you know, they are going out actively, Candice. And so, you know, many folks have already received them, but many haven't. So that's not a complete surprise.
Doesn't mean necessarily there's anything wrong. Let me encourage you to go to the IRS's website, IRS.gov. They've recently revamped this section. You'll want to look for the Get My Payment portal. It'll just say Get My Payment. And if you click on that, follow the instructions, you can put in the information and get some insight as to what's going on. But I suspect it's going to be there any time.
But I think this Get My Payment portal at IRS.gov will be exactly what you need. Hopefully get you the information you're looking for and that check will be there before you know it. So even though your neighbors may have received theirs, Candice, they're still printing those.
They are still mailing those. So nothing to be too alarmed about. OK? OK. Yes, ma'am. Alrighty. Thank you.
Thanks, Candice. Let's go to Chicago. Tony, how can we help you? Hi, Tony. You with us? Oh, Tony, are you there? OK. I don't hear Tony.
Maybe we can try to get her back. Rob, I have an email. This is from Tom. He says, Can I borrow money from my credit card to replace my roof?
The cost would be around $12,000. We could pay it back, we think, within 30 to 45 days. What do you think about that?
No, I don't like that at all. Even though you can take a loan against your credit card, you know, there's usually a fee for that and you're going to have a sky high interest. The challenge is, imagine if you think you can pay it back, but then you can't. You know, your best laid plans go awry and now you've got a really high interest debt that you've got to take care of and service every month. That's going to make that roof very costly over time. So I would delay that as long as you can and try to cut back expenses, lifestyle the best you can so you can start saving for that and see if you can build that up. Maybe do some minor repairs just to keep it in working order so you don't create any more damage.
But then, you know, go ahead and save until you can do the full repair. All right, Tom, we appreciate that question. Thanks.
Let's try Chicago one more time. Tony, are you there? Yes, I am. Super.
How can we help? I'm a small business person and we have set up a simple IRA for employees. No one took advantage of it.
So it's like two years old now or a little bit more than two years old. I have heard a 401k is better, but I already had a little bit more expensive to implement and manage or whatever. And I have my daughter also working with us, so I'm wondering, do I incur the expense to switch it over to a 401k or just still offer it to employees as a simple plan? Yeah, I like the simple IRA or the simple plan for small businesses, Tony, for the reasons you mentioned. The simple is easy to set up, very inexpensive. It doesn't have the expensive filing requirements each year, just very easy to maintain. You can offer matching. You have to do it consistent across the board for everybody, but you can offer a matching portion. Why is it do you think they're not taking advantage of it? That is a great question. My daughter is like, Mom, let's get this going.
I want to do this. And the other employees, I don't really understand why no one has taken advantage of it for two years. It's free money, right? Yeah, absolutely.
And are you offering to match? Yes, 3%. This is an education thing, I believe, Tony, not anything else. You need to get somebody in there that can explain to them, you know, what this is and the benefit that you're offering. You know, I could see you going through the whole process of setting up a 401k all the time and expense, not to mention the setup cost, but the annual expense of maintaining it. And then nobody does that either.
And so you haven't improved the situation. So I think perhaps maybe find a financial advisor in your church, somebody who's a friend, maybe call a certified kingdom advisor there in Chicago. See if somebody would be willing to come in and just give an hour of their time to explain, you know, to your employees, including your daughter, what they have to take advantage of here. Or maybe you just educate yourself and, you know, do a little lunch and learn. Say, listen, I'm going to buy everybody lunch. Maybe it's over Zoom because of COVID, but you send them, you know, a gift card for lunch. And then you ask them to come on the Zoom and you take 30 minutes to explain the benefit that you've given them. And, you know, the free money that they're passing up and how simple and easy it is to take advantage of. So I think that's your first step before I'd ever consider putting a 401k in place for a small business is just too costly.
And I don't think it's actually going to help. Rob, that's great advice. Tony, we wish you and your employees the very best. You sound like a generous employee here. We're going to pause for a brief break, then we'll be back with more. You're listening to MoneyWise Live with Rob West. I'm Steve Moore. More coming up after this.
First Corinthians 13, three says, And if I give all my possessions to feed the poor, and if I deliver my body to be burned, but do not have love, it profits me nothing. 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 prerecorded. We won't be taking your calls, but we've lined up some calls in advance. So stick around. This is MoneyWise Live. Let's go directly to our phones.
Chicago, Anna, thanks for your patience. And what's your question? So I recently retired, and I have like about $300,000 in a photo to do, but I want to move to an IRA. And I was wondering if you'll be wise to just put all that money in like something like those computer investment programs.
Like, for instance, I checked that Schwab has one that's called Intelligent Portfolio. Would you be wise to do that, or wise to have somebody manage it? Yeah, that's a great question. Anna, how much did you say you have in that 403b that you'd be rolling over?
About $300,000. Okay. Yeah, you know, I'm a fan of the robo-advisors for someone who's just starting out. It's a great option if you're just getting going.
The minimums are often very small. They're very low cost. You get great diversification using an index strategy. They're great with rebalancing as you're contributing. So as you're building wealth in the market, I think the robo-advisors are a phenomenal tool.
A lot of the millennials are using them, and that's a great thing. When you have the substantial assets like you have after you've been working for a long time, you've built that up, I think you can do better to have an investment professional working with you just to make sure that your unique needs are addressed. It's not that the robo-advisors can't accomplish that, but I think somebody in your situation would really benefit by having somebody you could sit down with face-to-face, ask questions, really gets to know you and kind of what God has for you in this new season of life, can really help to tailor the investments to your needs as well as the tax considerations, the income that you'll need to draw off this at some point. That would probably be more suited for this stage of life that you're in. So if you don't have someone, there's some wonderful Certified Kingdom Advisors there in Chicago, Anna. If you just go to MoneyWiseLive.org, click on Find a CKA, and I'd interview two or three, find the one that's the best fit for you, and that'd probably be the way to go. They can answer all your questions.
There generally would not be any kind of consultation fee, and you'd really want to just find somebody that's a good match for you. But that would be my preference for you at this stage of life. Does that work for you, Anna? I listen to your programs every day, and I have learned so much, but then I had this question in mind. I said, I don't know that $300,000 is a lot compared to other people.
So I was wondering, would it be better that one of them go forward? Yeah, that's a lot of money, Anna. There's no question about it. You've obviously been a diligent saver. You've worked a long time. You've saved a long time. Clearly, you've limited your lifestyle. I'm excited for you as you enter this really fun season of life where you can ask God, what's next?
What's my next assignment? And it sounds like you'll have the resources you need to be able to maintain your lifestyle. The key is just to be a wise steward, and the Bible is very clear that we should seek wise counsel. So I think that's why you would be headed in this direction. But we appreciate you taking the time not only to listen to the program, but to call in today with your question. Yeah, we appreciate your loyal listenership, Anna. God bless.
Nashville, Tennessee. Hi, Alex. What's going on in your life, sir? Thank you for taking my call, wise guys. I called you last week, if you remember, to buy a car. You suggested me to buy one car. So my next question is, if I buy a rebuilt title, is this going to affect the insurance company?
So what is your suggestion? I see. So the question is, if you buy a used car, and did you say with a rebuilt engine?
Did I hear you correctly? Yeah, rebuilt title. Rebuilt title. Okay.
All right. And how would that affect the insurance? To my knowledge, I mean, they're going to want to know that there's a clean title, and is there not on this car you're looking at?
Yes, I'm looking for a clean title, but some of the regular titles, the price is very fair price, but what is your advice for me? Okay, well, yeah, just for the benefit of our listeners, the clear title just simply means it's never been deemed a total loss. Otherwise, it would be known as a salvage car. And so that'd be obviously what you'd want to be looking for. And if you didn't have a clean title, I would think that the insurance would take issue with that.
Steve, what are your thoughts? Well, sometimes it's known as a salvage title. Sometimes it's just known as a rebuild title or a rebuilt title, but it does mean that at one point the car was actually totaled by the insurance company, and then the car has been rebuilt so that it then meets state qualifications. Typically, the state will send out an inspector to approve the work that's been done on the car so that even though the car was totaled at one time, the state now deems that it's usable and safe. However, once it has a salvage title, most insurance companies will provide liability insurance for it, but they won't offer you anything else, not comprehensive, not collision because they don't really know what else may have happened to the car that wasn't seen or addressed. So typically, you'll lose about 50% of the value of a car with a rebuilt title. I have purchased a couple of cars that way.
In fact, it was a wonderful Christian guy, and that's what he specialized in, was rebuilt title cars. And typically, it was about 50% less than the market value for what a non-salvage title would have been, and it was a good deal. So you just have to know what you're looking at and take your chances and ask an independent mechanic perhaps to even review it, but not a bad option if money is tight. What if I buy a rebuilt title and if I get accident, that means I'm going to lose a car? Well, I mean, if it has a rebuilt title already and you get in an accident, yeah, because you don't have collision insurance more than likely, you just have to bear the entire value of repairing the car yet again. So you just have to have open eyes going in and be prepared to deal with that if it happens, but if your money is tight and that's all you can afford, then it's not a bad option as long as you're dealing with honest people. Yeah, I think the big idea here is that very few insurance companies will in fact give comprehensive coverage on these salvaged or rebuilt titles. And so just be aware of that and know that in addition to getting the savings on the purchase, there are some risks there and you need to be able to cover those in the event you had a collision that was not covered.
You'd be out that money and out the car for a period of time. So hey, Alex, thanks for checking back in with us. We wish you the best as you pursue this.
Appreciate that, Alex. And speaking of auto insurance, I just received something in the mail the other day reminding me it was time for me to renew my auto insurance. This is my third year with this company and typically this is the time when I reshop my insurance. Lots of insurance companies will give you a great rate going in, but by the third year they want to recover that inexpensive or cheap rate that they offered you initially. So if that's your situation, be careful about that.
Go out and shop every third or fourth year and save yourself some money in the process. Hey, you're listening to Money Wise 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 Money Wise Live.
I'm Steve Moore. We'll be right back. Hey, we'd love to have you visit our website. If you haven't been there in a while, or perhaps you've never been there, you'll find us at MoneyWiseLive.org. And there you'll find lots of information about who we are, what we do, access to free resources like budget templates, ways to find a certified kingdom advisor in your area, how to connect with a budget coach at no charge, and much, much more. You can also make a donation to our ministry if you'd be so inclined.
We'd ask that you pray about that if you enjoy the program, and then click the donate button at the top of the page, MoneyWiseLive.org. Let's go to Chicago. Hi, Becky.
Nice to have you there. And what's on your mind? Hi, I just received a bonus for my husband, and we have a plan to pay some of our credit cards down, and that would allow us to take a big chunk off of it, but we would still probably still have some remaining credit to still have. I'm just wondering, do we do something like that, or do we just stash it back in savings? Yeah, Becky, tell me a little bit about the status of your savings. Do you have any savings currently? We do have a little bit in savings, not substantially. Okay, how much?
So that's kind of what, you know, why we're thinking. Probably about $10,000. Okay, and what would be the total, roughly, of your expenses each month? $3,000, $4,000, more, less? More, because we have a mortgage, we have four kids, we're paying for private school, we're paying for special needs, therapy, we have two special needs kids. So we've been just literally just trying every time, because after the credit cards are done, then we have medical bills that we have to pay off because of surgeries and stuff like that.
So just trying to figure out how do we, go ahead. Yeah, I was just going to say, do you all have a budget? Have you taken the time to really track your spending for a period of time and get it all written down and categorized just to see exactly what you need on a monthly basis? Yep, I just, I don't have that right in front of me. Yeah, no, that's fine.
I just want to make sure that you've done that. And are you living by that? I mean, have you found a system that works for you, Becky, where you're controlling the flow of money in and out? You know how much is left each month during the month and the discretionary categories, you're curbing your spending as you're getting down, you know, toward the end of the month in certain areas, so that you stay on budget? Do you have that kind of process in place?
Did we lose you, Becky? All right, I'm not here yet. Let me give you some thoughts. I think that's really the first step is I'm glad to hear that you've done the budget.
That's great. Now we need to make sure that you guys really have a process to control it. And that's where the MoneyWise app comes in. It's a digital envelope system. The old tried and true envelope system is the best way to control your money.
And with our new MoneyWise app that you'll find in your app store, you can connect it to your institutions, download your transactions, they get automatically categorized into your envelopes. And here's the key at any point in the month, you can open it up and see what's left in an envelope so that you can make mid month corrections along the way and begin to dial your spending back as needed to stay on budget. That's key. Also, using that process to look for any available areas to cut back, you clearly have a ton on your plate that you just talked about. So I realize it's very difficult and things are changing all the time, especially medically.
I get that. But what we want to do is try to reduce spending wherever possible so that we can free up margin on a monthly basis. After the minimum debt payments are made, and after the expenses are covered, we want to try to build that savings up to three months expenses, especially with as many variables as you have going. So I think the better option with this bonus that you got, Becky, is for you to build up that emergency savings to three months expenses.
So you've got that to fall back on because I want you to break this cycle of having to go to the credit cards anytime something comes out of left field, and I realize that probably happens more often than not. Instead of really piling on the credit cards right now, and by the way, if you have anything more than what would get you to three months expenses, let's go right to the credit cards and try to pay those down. But in the meantime, let's visit with christiancreditcounselors.org and let's see if we can use a debt management program to get the interest rates down. By the way, you'll pay the debts off 80% faster, and that's going to help you start making some progress toward getting those paid off. As you pay them off and you'll have a consistent monthly payment that fits into your budget, that's going to free up money when you're done to put back toward paying down the medical bills and getting savings even higher toward six months expenses, then we can start looking longer term. So I realize you have the weight of the world on you right now.
We'll certainly ask our MoneyWise Live community to be praying for you, but I'd encourage you to start with the budget, the tracking system, and christiancreditcounselors.org, and if you have any other questions, give us a call back. Yeah, Deb, thanks very much for calling. I'm sorry we lost you in the middle of that, but I hope that you were able to hear the rest of Rob's answer. Thanks very much, and if you need to, call us back again on another day and we'll give it another try.
Grand Rapids, Michigan. Hi, Dee, what's your question today? Hi, actually, well, thank you for taking my call, and I have a couple of quick ones. The first one is when that Equifax breach happened a couple years ago. I was like the second tier, it wasn't as major, but just, and they sent me a letter letting me know, and then just recently my daughter saw online where there's like a settlement, and she plugged in her social security number and nothing came up and she never got a letter. She plugged in mine and it did come up, and she said if she filled out this stuff for me, I'd get $150 back, and I said, well, let me find out if it's legitimate first.
So I just wanted to see if you know anything about that. Yeah, I do, Dee, and it is legitimate. I think the key is you don't want to respond to something you get by email. You want to go to the site that really is dedicated to this, and the website is equifaxbreachsettlement.com. And if you put in your information there and you find that you are eligible and you did have the losses or the time spent during the period of time where it's relevant to this particular settlement, and you qualify based on having paid for monitoring services or the other kind of necessary pieces, then absolutely I would proceed.
But you'll just want to check that website and make sure you're at the right place, and again, it's equifaxbreachsettlement.com for you to get more information about your specific eligibility. Thank you, Dee. We're going to try to squeeze in Patrick here calling from McHenry, Illinois, and what's your investment question, Pat?
Hi, good to talk to you guys. I just recently invested into a stock, and I know you guys at MoneyWiseLive would not think it was a very wise decision because it was a penny stock. And this shot up 150%. I invested when it was 30 cents, and I pulled it out when it was 75 cents. And I have a lot to learn.
I was planning on doing my own research. So I invested $1,000 in, and I now have $2,500. And I was just wondering about taxes. I wish I would have learned about taxes in school.
That's not something school really teaches you. But I was wondering about what's the easiest way about going about paying the taxes on that, because I don't know everything about stocks. I don't know everything about investing. But if you hold a stock for so long, then you don't have to pay the taxes on it. But this was basically a day trade.
Pat, let us jump in here before we run out of time, okay, buddy? Well, I think the key here is, you're right, we're not crazy about penny stocks because they're often highly concentrated. You don't have proper diversification. And by the way, the average penny stock last year lost 27%. So I'd rather you be properly diversified investing for the long haul.
In terms of a short-term gain, that's just going to be at your normal tax rate, and that's the way it'll be taxed. Hey, we'll be right back with more MoneyWise Live. Steve Moore is riding off into the retirement sunset, leaving Rob to clean up after the party. So you're hearing an encore presentation of MoneyWise Live. This is MoneyWise Live, where we come to you each day remembering that God owns it all, and then we take what He's given us to manage and do our best to manage it according to His principles, as we find them in His Word, the Bible. Let's continue on.
Quitman, Mississippi. Hello, Paula. And what's on your mind? Hi. Hi. Go right ahead. Hello. Yes, go right ahead, Paula.
We hear you. Yes. I was calling because I have a business LLC, and I was saving money, and I have a regular chicken account about $40,000, and I was trying to see what would be a good place to set it or put it in order to get the most financial benefit from the money. Yeah. I would be looking for an online bank that offers a business savings account.
You will not find the same options as you do with a personal account, but there are still some great options out there for you to get more of a higher-yield business savings account. That's what you're looking, just to improve the yield that you're receiving? Is that right? That's right. Yeah.
Okay. I would check out bankrate.com, and what you'll be looking for would be high-yield business savings accounts. Again, you'll find them anywhere from, right now, 0.8 percent up to 0.5 percent, some with no fee. Depending on how much you're carrying in the way of a balance, you may or may not see a whole lot of money out of that, but every little bit helps, right? As long as it works for you in terms of the practicality of the day-to-day management of the business, it may be a good option for you to consider an alternate account that gives you a little bit of yield there.
Again, bankrate.com is a great website for you to explore that, and I think you'll find what you're looking for, Paula. And, Rob, the difference between a business savings account and a regular personal savings account would be what? Yeah. One starts with business and one starts with personal.
No. With personal accounts, there's more options. When you get into business banking and business savings, just not all banks will offer the same terms, the same rates on the business side as they do the personal side. There tends to be more transactions, more in and out in a business environment than in a personal, and so you will just find a difference there.
And so that's why when you're looking for a business savings, you specifically need to go out and look for a business savings account as opposed to just looking for the highest yield savings account. Most of those that you'll come across will be personal, and some of them may be only personal. Okay. Understood. Thanks. Mark is in Aurora, Illinois. And, Mark, what's your question today for Rob? Hi. Thanks for taking my call. I hear you guys talking about refinancing mortgages, and one of the things I don't hear frequently is modifying a mortgage or taking the amount of difference in principal that you would pay going from a 30-year fixed to a 15-year fixed and just applying it to the main part of the principal reduction. What are your thoughts? Well, I love that, Mark. I'm in favor of both of them.
Let me talk about each one. Loan modification obviously is something that's a bit different than a refinance in that you're just asking the lender to change the terms of the existing mortgage. You're not actually replacing the mortgage. The challenge with a loan modification is that most people don't qualify because you're going to have to provide the documentation to show a hardship or some basis for why they would modify this loan on your behalf. And most people just simply aren't in a position to qualify. If they will, and you might as well ask if you think you could qualify for a modification, but in many cases, they'll just refuse that request.
And so it's fairly uncommon unless, again, you're in a hardship situation. In terms of just taking your existing mortgage and paying against the principal, absolutely. That's the way to go. For most people that just default to the 30-year mortgage because they want to keep the payment well within their means, the ability to get that paid off much quicker is to prepay the principal. And what I like is either going taking one-twelfth of the mortgage payment and sending that extra every month or you could try to focus on sending one extra payment a year or do what's called a bi-weekly mortgage where you pay a half a payment every two weeks. Well, there's 26 two-week periods, which means you'll send 13 full payments, which happens to be one extra. That's going to take a 30-year mortgage and depending on the rate, probably get that down to 25 or 26 years just with sending one extra payment a year. So I think that's a phenomenal idea.
We only talk about refinancing for those where if you're going to be in the house five to seven years, you can save a point, preferably a point and a half on the interest rate that can really go a long way to helping you save in total interest dollars spent, assuming you're going to stay in the home, which gives you enough time to pay back the costs of the refinance. But all three of those should be evaluated depending upon your situation. Gotcha. Appreciate it. Thanks. Okay. Thanks for raising that point. It's a good thought. Yeah. Thank you very much, Mark.
Appreciate that. Let's see. How about out to St. Louis? Have you ever been to the Arch, Rob?
I've never been to St. Louis. No. Well, what do you say? You and I take a little vacation. Yeah.
Field trip, huh? Yeah. Okay. All right. MoneyWise Live from St. Louis. I'll buy the bagels.
You pay for the airfare. Wait a minute. Shairani, thank you very much for calling us today. And what's your question?
Thank you very much for taking my call. Yeah, me too. I have folks who have got like a couple hundred dollars each from aunts and uncles over Christmas.
And they're asking me if there's any way that they can invest it, if there's any advice I can give them to learn how to invest and manage their money. Yeah. Well, there's a couple of options out there. One that's kind of fun. It's got a smartphone app that's very visual. And it's really designed for people to start investing with just as little as $5. It's called Stockpile, just like it sounds. Stockpile.com. No monthly fees or minimums.
You're going to pay 99 cents a trade. But again, it's very intuitive. And it's something that for kids, I think with your help, of course, because it would be a joint account, it could be or a custodial account, it could be a very effective tool. In fact, I've done it with my kids where they've wanted to invest in specific companies. And I've actually used it as a learning experience for them to go out, research the companies that they're interested in investing in, come back to me and tell me why. They then put some money in and then it gives them some incentive to track the progress of those particular companies. Because remember, where your treasure is there, your heart will be also God's word says. So it's funny how when you invest in a company, you become really interested in how that company is going to do on a quarterly basis.
And so that's a great way to get started. The only downside to buying individual stocks, which you can do through Stockpile because you can buy something called a fractional share. So even though the company like Apple or Alphabet, Google or Amazon or any of those might be trading at hundreds of dollars per share, you can buy what's called a fractional share. So you can still invest in those companies, even though you couldn't afford to buy a single share.
And that's one of the benefits of Stockpile. But the downside is you can't trade too much because with a very small account, even 99 cents a trade will add up. And secondly, we want to teach this principle that you find in Ecclesiastes of a diversification. And so when you're investing in just one or two companies, you can use it as a learning experience, but it's not the right strategy. If you're going to start to put meaningful money in, you'd want to use probably indexes and ETFs so you can get broad exposure into the market and begin to teach the idea of diversification. So let's do this. I want to send you a copy of Howard Dayton's book, Your Money Counts.
If you'll stay on the line, we'll send that to you. You can go through that with them and begin to talk about some of these principles of handling money God's way. And then to get started in investing, you can check out Stockpile for fractional shares.
Or if you want to put money in for more of a long-term strategy, I'd look at either Betterment or Wealthfront. And I think that'll give you what you're looking for. You know, Rob, we've had a couple of people mention young people today, teaching young people, working with young people. We had a young man, Carlos, who was 19, who's trying to work on some things. In fact, he said, I wish they taught this in high school. Boy, this is a critical, crucial area. Don't you think teaching young people how to handle finances, everything from how the system works in the United States to how to apply for a savings account or a checking account, how to balance your checkbook, and then right on down, practical stuff that young people need to know before they head off to college? Well, that's exactly right, Steven. Unfortunately, too often, they're not leaving the house with this kind of education.
There's the financial literacy side, but then there's the biblical side as well, which is so critical to understand God's way of handling money. And our friend Ron Blue is doing a lot of work to that end. If you want to learn more about what they're doing in high schools and universities across the country, including home schools, visit their website, RonBlueInstitute.com. Really exciting things happening, and we'll maybe talk more about that in a future broadcast.
We will indeed. Rob, thanks very much. Hey, and thank you for tuning in and for listening today. If you're wondering about maybe refinancing your current home or maybe buying a home or a rental property, if you're somewhere in the middle of the mortgage maze, let's put it that way, I'd like to suggest a copy of Dale Vermillion's book, Navigating the Mortgage Maze. There's all kinds of great information there, biblical, practical, how to apply for a mortgage, various types of mortgage financing.
What about some tax concerns, best payment options, top 10 mortgage traps to avoid, and what to do if you just don't qualify for a mortgage. That and more when you pick up a copy of Navigating the Mortgage Maze by our good friend Dale Vermillion. In fact, Dale will be joining us soon on an upcoming program. But in the meantime, you might want to purchase a copy of his book and you'll find it and others available to purchase when you visit our website, which is MoneyWiseLive.org, MoneyWiseLive.org. MoneyWiseLive is a partnership between Moody Radio and MoneyWise Media. Do us a favor, tell a friend about the program so they can tune in and enjoy it as well. If you have an email question you'd like to send to Rob West, that addresses a short one, questions at MoneyWise.org. Please keep your questions short as well, questions at MoneyWise.org. My thanks to our technical crew, Amy, Judy, Jim, and Gabby T. Thanks so much for being there. Join us again next time.
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