Church Cash Reserves

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Today's version of MoneyWise Live is prerecorded, so our phone lines are not open. The emergency fund is a key part of WISE money management. Only God sees the future, but that doesn't mean we can't prepare for the unplanned by having a cash reserve. Now, that's also true for churches.

Like members of the flock, churches also need money in the bank for unforeseen expenses, but what rules govern the management of those funds? Post-Rob West tackles that topic today. Now, we are prerecorded, so please hold your calls, but we have some great questions already lined up. I'm Steve Moore, Church Cash Reserves. That's next, right here on MoneyWise Live. And Rob, we have to give a shout-out to our friends at ECFA, the Evangelical Council for Financial Accountability. They've spelled this out quite clearly in a great article, Church Cash Reserves, How Much Is Enough? And we'll have a link to it in our show notes today at MoneyWise.org, MoneyWiseLive.org, right? That's exactly right, Steve.

But we'll hit some of the high points today. I think I'd like to start with just why it's so important to have a church emergency fund or cash reserve. You know, just like with your personal finances, churches need a cushion to ensure that routine expenses are paid on time.

Without it, you run the risk of getting hit with late fees. If there's a mortgage on the church property, you need at least a few months' payments stored up to avoid foreclosure in the event of an interruption in revenue. It's a sad fact that churches split, and if half the members leave, well, a church could quickly be in dire financial straits, and no one wants to have to take a special offering to replace a worn-out heating or cooling unit or have to start at zero if the church decides to launch a new ministry. So there are plenty of reasons why a cash reserve is essential for a church as well as an individual. All right. And the same scriptures that apply to individuals also apply to churches?

Oh, absolutely. For example, Proverbs 6, you know it well. Go to the ant you sluggard, consider its ways, and be wise. It has no commander, no overseer or ruler, yet it stores its provisions in summer and gathers its food at the harvest. Of course, Proverbs 21 will echo this idea. The wise store up choice food and olive oil, but the fool gulps theirs down. All right. All right. So let's say my church has a healthy cash reserve.

They haven't done any gulping of late. I'll go out on a limb and say it's not all lollipops and rainbows now, though, right? No, it's not. Planning and wise management of that fund are necessary because there will always be pressures within the church about how it should be used. Should some of it go toward paying down debt early or to be more generous with the staff or to start new programs? You know, this leads us back to the original question. How much is enough for your church's cash reserve? And the folks at ECFA say it can vary greatly. Well, and that leads to the next question. How do you come up with that number?

Yeah. Well, consider the two extreme ends of the spectrum, Steve. One school of thought is that the church should have almost nothing in reserve, trusting God instead. On the other end, some say a church should have an entire year or more worth of operating expenses in the bank. I think the answer is probably somewhere in the middle, and each church with its leadership has to decide what's right for them.

Okay. What should guide that process? Well, first, members need to understand that having a cash reserve is simply the faithful administration of God's resources. This honors God, and the church has to make it a priority because it's key to giving the world the right impression of the Lord. Next, it's important to build up the reserve during the good times, especially when the church is growing. It can be a part of the budget process.

I know it was when I was chairman of the finance committee at a large church. We would build that in and fund our cash reserves each month up to a certain point that we had predetermined. You can do it in two ways. You can budget next year's revenue at, for example, 90% of this year's, or simply put a line in the budget for additions to cash reserves. All right. Well, let's say I've done that, and the church's reserve fund is growing.

So now what? Well, it's important to separate the reserve money from designated funds. In the event of a revenue shortfall, it would be a disaster to pay the mortgage with money specifically mandated for something else.

And speaking of the mortgage, it's wise to keep mortgage reserves above what the lender might require. Okay. Anything else?

Well, a couple of things. It's also important to be specific with your cash reserve goals, servicing debt, capital replacement, and ministry expansion. And finally, for any of this to work, leadership really needs to communicate the importance of having these cash reserves to the congregation. It doesn't show a lack of faith.

It's just simply good stewardship, but clearly communicating that with specific goals and the progress being made toward them is really a part of just faithful administration of the church's resources. Okay. Great information. We'll come back and put a bow on it right after this. If you thought you heard Steve Moore say goodbye last week, you did. But we're giving you one more week of Steve in the form of encore presentations of MoneyWise Live. Great to have you with us today on MoneyWise Live. We're discussing church reserves.

In fact, it's our Facebook question of the day. Why do you think it's important for a church to have cash reserves? Patrick says a church that maintains cash reserves is setting a good example in helping avoid the need to borrow if and when an emergency comes up. Bob said it's a model for our personal finances. Everyone should have three to six months reserve because unexpected expenses can pop up.

And Rob, I presume you'd agree with both of those comments, huh? Oh, absolutely, Steve. You know, this is really key for a church to really have a process by which they decide what is the right amount of reserves for us and then develop a plan to get there. Again, this is really critical just to faithful administration of the church, smoothing out the ebbs and the flows of the economy and the giving and all of the things that the church has to do. And it really reflects just prudent and wise stewardship for the church members, that the church lives by the same principles that we see in God's word and certainly would be taught from the pulpit. So I think this is really critical. And to the extent it's not being done, I think it's a time to go back and say, as the leadership and with the under shepherd, the pastor giving ultimate leadership alongside the leadership team, what is the right amount and how are we going to get there?

And I think that's just a carefully considered endeavor that we all need to take on. And if you'd like to do a little reading about this subject, you might want to consult the article that we've been quoting from today, produced by our friends at ECFA, the Evangelical Council for Financial Accountability. You'll find it in our show notes at MoneyWiseLive.org.

Up to Rochester, New York. Hello, Lynn. How may we help you? Hi. Thanks so much for talking to me. I really appreciate it.

Let's meet you guys all the time. So my issue is that I have a lot of debt, bad decisions that I've made in the past with money, student loans, auto loans, credit card debt, medical bills, just tons of things from a lot of different directions. And I'm just kind of lost as to where to begin and how to get that taken care of as quickly as possible. I know a lot of the debt that I have, you know, the interest rates are just unbelievable and it would be impossible to pay them off, you know, in a timely manner. So I'm just really looking to get myself out of debt and to start, you know, building my credit up. And I just don't know what would be the best way to do that. Yeah, yeah. Well, I think it's got to start, first of all, Lynn, and you may have already done this, but with just a careful accounting of what you owe.

So I would look at the assets that you have and then I would look at the liabilities and really have a detailed list of exactly what you owe, to whom, and what the interest rate and terms are, including the minimum payment. Do you have that right now? I don't have that right now, no. Okay. Well, have you gone through that exercise?

Have you gone through that exercise at some point? Yes. Okay.

All right. Well, that's key. And I think even if you don't have it in front of you right this moment, it's really important that you know exactly what you owe. The next, of course, is to go back to the budget and say, okay, I realize you have limited resources. And so what can you do to dial back expenses?

Are there areas you can cut back on? Are there discretionary spending items that need to be eliminated? You know, what can you do to free up margin on a monthly basis over and above your taxes, over and above your lifestyle, over and above the minimum payments to the creditors?

At that point, we've got to then make a determination as to how is the best way to proceed. You know, we take these different debts and look at them differently because they have different options. So for instance, you know, you mentioned bankruptcy.

That would only be considered as a last resort. You know, that's going to have just a huge negative impact on your credit history. And, you know, we don't view as believers bankruptcy as a means to get out of paying our debts, even though at some point you may be forced into it. And that just may be a reality. Now, with student loan debt, private or federal, it's very difficult to discharge in a bankruptcy unless you can really prove an undue hardship, like a mental or physical disability or something like that.

So that really wouldn't even temporarily solve the entire problem. So I think the key is to lean into this situation, be communicating well with your creditors, make sure that you even in some cases provide an example or an illustration of your budget so they can see exactly what you're dealing with and see if they'll work with you. With the credit card debt specifically, I would be looking toward a debt management program. Have you explored that option with credit counseling?

I have not. Okay, I'd start there. They can take a look at your overall debt picture. They'll also help you fine tune that budget just to determine what's possible. And I think if you were to get the credit cards and possibly the medical bill in a debt management program where you got the interest rates reduced and you have a payment every month that's not going to decline with the balances, but that fits well within the budget.

You'll feel better because you're going to actually make some progress. You'll pay these off 80% faster on average through credit counseling. So I'd start there. Visit with our friends at ChristianCreditCounselors.org as a starting place. And then if you have other questions, give us a call back.

I realize the weight of this is enormous, and I think if you can really get a plan where you can see that you're not just going to be going sideways and just paying the interest, but you're actually going to be making some meaningful progress, that's probably going to give you the incentive you need, Lynn, to really press on and perhaps even dial back some of your spending to make progress on other debts, like even the car loan. So let's start there, and then we'll look forward to hearing back from you if you have further questions. Lynn, God bless you.

Thank you so much. Fargo, North Dakota. Hello, Faye. How can we help you? Hi, Faye. We'll check back with Faye. Quad Cities, Illinois. Austin, what's your question today for Rob?

I know this doesn't pertain to what you guys have been talking about today, but I finally got through. I work five to six months out of the year, and I was just kind of wondering, how do you budget for a hit-and-miss working year where you only work about maybe five to six months out of the year? Yeah, yeah.

Well, Austin, I realize that can create a challenge. I think the starting place is to say, okay, with what I can count on, and the best way to determine what that is is probably looking at prior years as an estimate. Is to say, okay, what I can count on during those working months, I'm going to build a budget based on that. And so obviously you would take the total of those six months worth of work and then divide that by 12 and see if you can build a budget that allows you to put all of that into savings and then basically pay yourself a consistent monthly amount out of that that works with your budget. And dial your spending back accordingly so you're not running through it and then wondering how you're going to pay the bills, but you use those seasons of plenty to store up and then draw that consistent amount out, almost as if you are getting a regular monthly payment for 12 months. You're just accomplishing that through savings during those six months. Now, the next question would be, what can you do during the off months to increase your income? Because I'm sure you could probably use some additional funds if it's tight based on trying to allow the six months worth of pay to last 12. Have you explored other options in the off months to bring in some additional household income? Absolutely.

Now that's my next question. I was, well, you're saying base them six months off of, uh, you know, paying yourself for whatnot, but you know, the pay scale is significantly different. So like, you know, what I do is I travel on pipeline work. Well, then, uh, when I got off, I was doing concrete work, you know, and I mean, it's quite a big end of the spectrum there for pay scale wise.

Sure. You know, so like last year I only worked, uh, you know, three months doing pipeline work and then I only did two months of concrete. And so like last year, last year, but year before that I actually worked five months straight. Then the year before that, it wasn't even six months.

Yeah. Well, you know, hopefully you're getting rewarded well for the months you are working. It sounds like you do have some trade skills that would be marketable. And so I think the key is to really take inventory of the skills that you have and see where that might apply in other industries there, you know, locally where during those off months you could pick up some jobs. Perhaps you could check with your local church.

You certainly want to work through your local network, both online with things like LinkedIn as well as just friends and family to put the word out, let them know what skills you have and see if you can make some connections with others. I think the key is to really balance these two things, recognizing you do have a variable income, so you need to be particularly diligent with your budgeting to make sure you don't get ahead of yourself, spending money you don't have and presuming upon the future. But then in those off months, make it your full time job, Boston, to take inventory of what the Lord has given you in the way of skills and abilities and finding and praying, frankly, that he would provide some work that would allow you to bring in some additional income. We'll certainly pray to that end.

And we'd love for you to check back in with us along the way and let us know what you find. Even though it sounds a bit counterintuitive, Rob, having a budget when you have an income that isn't the same all the time is really vital for you. So all you can really do is go back the last year or so and if you see some sort of a pattern, if you don't plan or if you're not expecting any major changes, just budget on what's come in over the last couple of years and assume that, you know, at least that's a starting point. Yeah.

And then have your checks go right into savings so you can really create that monthly stream that's consistent and then just operate off of that. Yeah. You know, I love Proverbs 22 when we're talking about a person who's good at what they do or does something a little different outside the norm. Proverbs 22, 29. Do you see a man skilled in his work? He will stand before kings.

He will not stand before obscure men. And again, Austin, we're glad you called us today. Thanks. Faye and Fargo, we're going to try Faye one more time when we come back. 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. This is Money Wise Live. Your host is Rob West.

I'm Steve Moore. If you hear a phone number mentioned today, please ignore that phone number. Today's broadcast is a reprise edition of the program, but I think the upcoming information will help you and bless you and make you a wise steward of what God's given you.

Up to Fargo, North Dakota. Hi, Faye. You there in this time? I hope so. Thank you for taking my call. Thanks. Yes.

Go right ahead, Faye. When I retire at age 66, I was planning on taking my full Social Security, and that would be about $2,000. And I also would have a part-time job to supplement that. And then I would be leaving my 401k alone, which is around $500,000 interest rate of around 3.5%. However, now I am looking at my Social Security, and then at age 70, that amount would increase from $2,000 to $2,800. So they're saying that it's like an 8% increase.

That's right. Which one would I take? Would I take the Social Security or should I draw from the 401k?

Yeah. Well, if you can maintain a sufficient lifestyle on your retirement income, which clearly you have because you've been a diligent saver, you have assets to rely on, it really usually is best to wait until age 70 to receive Social Security benefits, assuming you're healthy. As you point out correctly, your benefit will increase, Faye, by 8% a year until age 70, at which point it will stop increasing. But based on what you're telling me about this $500,000 in the 401k, which is at a fixed 3.5%, obviously the math works in your favor on the 8%. Now, I realize you're giving it up for these roughly four years, and so there will be a period of time where you're trying to catch up through this additional $800 a month for all the money you've quote-unquote given up for these four years. However, assuming the Lord tarries, and again, your health is good, you will catch up, you'll recoup the money you gave up, and then you'll enjoy that higher amount for the remainder of your life, even though you will have dipped into the half a million dollars. What would you need to pull out of the 401k, Faye, in order to be able to cover your living expenses even while you're working part-time?

Probably $2,000 to $2,500 a month. Okay, so what I'm seeing is, typically when we look at a retirement income stream off of retirement assets, we use a 4% number, just to say if it's invested properly, and what I mean by that is you'd probably want an investment professional to help you, somebody who can make sure you've got some allocation to stocks, but the majority of it would be invested in fixed income, probably bonds and CDs and some cash portion, but that would all be put together with a goal of generating around 4% a year, which would mean that you could pull $20,000 a year before tax and not touch any of the principal. Obviously, if you go beyond that, depending upon how it's invested and what the market does and so forth, you may be beginning to dip into the principal, but again, you're still building this higher Social Security payment by 8% a year, and if at any point along the way you decide you want to just go ahead and start taking Social Security, you can do that, and you would still benefit from the higher amount each year that you wait, even if you don't wait the full four. So I would say, just from my perspective, I like the idea of you delaying the Social Security, continuing to work, and draw some supplemental income from your 401k.

I think you'll be glad you did, because you get that higher check for the rest of your life. And Faye, we're going to have to bid you adieu. We have to hit a break here, but I hope that information helps you.

It sounds like you're in a pretty good space right where you are. Thanks so much, 800-525-7000. And don't forget to check us out online, MoneyWiseLive.org.

Lots of great information. Free resources also available on our website, MoneyWiseLive.org. Steve Moore retired as co-host, and Rob West needed a vacation, so this week it's encore presentations of MoneyWise Live. Up to St. Louis, Mo and Gloria, what's your situation? Hi, I belong to a small church, and when I say small church, it's about six members. And our pastor, he's a 72-year-old, and he retired with disability. But anyway, I just joined the church like three years ago, and I am a faithful tither, but our church needs like $15,000 worth of repairs. So I was calling to ask, with a church that's small, and then most of the members that are there are retired members.

But I was calling to see if there's any idea that you can give me that we can do for repairs. We live in a historical area, but the buildings are beautiful. And you can tell the church at one time was beautiful, but now it's like an eyesore.

So, yeah. Yeah, Gloria, I certainly understand the question and the challenge, frankly. I mean, obviously that is a very small church, almost like a house church, and it sounds like that perhaps if you have a building for that number of people, you're always going to be at a disadvantage, because if God's people are the means by which we fund God's work through the local church, there's just not enough people there to be able to do that. How are you all paying the bills, let alone keeping the repairs done with that few church members? Tithing. The small members that we have, we tithe, and then like every extra that I get, of course, I tithe in that.

We just get together and we just take care of things among ourselves. Sure. And you said there's six church members, is that right? Yes.

Yeah. Well, I think the key here is just to really pray and ask the Lord for some direction. Obviously, it sounds like I would imagine just thinking about you all having a building and trying to do ministry, and you've got a pastor who has needs, and that's just one person, let alone any other church staff. I don't see how it's even possible to cover that, and so certainly it's not beyond what the Lord can do, but just given so few people, I think really the next opportunity is to say, Lord, what do you have for us? And really begin to think about attracting others, inviting them to join the congregation so that the body of Christ can expand for greater fellowship, greater study of God's Word, but also so there's more folks supporting the work of the church. So the church can do its ministry there locally and beyond, which would include keeping God's house provided for, and making sure that everything is functioning properly and the repairs are done.

So clearly I don't have an answer for exactly how that can be done, apart from just some real focused time of prayer, asking the Lord to give wisdom as to how you can proceed, and certainly I'd love to hear how this turns out. It's not beyond the Lord to provide for everything that's needed, even just with those folks that are right there, and yet perhaps there's some others that will come along that will join the congregation that could be a part of God's people funding the work of the Lord. I realize it's probably a challenge, and I'm really just fascinated to hear what the Lord's been doing, even to this point, with just those six church members. You know, Rob, I've been involved earlier in my life in churches that small, but as you mentioned, they were all house churches that ultimately moved to a larger facility of some sort.

Sometimes it's a commercial facility, sometimes it's national church buildings, sometimes it might be the public library or some sort of public building. But, Gloria, the one thing I'd urge you to be careful of, just in case it comes up, is don't go into debt. Don't use your credit cards to fund the ministry that's going on there. We don't see anything like that in Scripture, and you certainly don't want to run the risk of hurting one another's credit and relationships as well. But we'll pray with you about this, and please let us know how things work out. Thank you very much for calling. Now, we're going to go from a church of six members up to Chattanooga, where Mary, your church is considerably larger than that, huh?

Yes, it is growing quite a bit. And that is my question for you, is I'm having a hard time reconciling. I know that we need to grow and expand, and in general, even with the American churches overall, not just our particular church, but reconciling that growth where we're all so comfortable in our churches with heating and air and everything that we need with the needs of the world, the third world countries, with clean water and missions and structures and things like that.

I'm just really struggling. I know we've got to support our local churches and with our tithes and all that, but I'm having a hard time finding a balance between that and the needs of the world that are so much more greater than ours in this country. Well, Mary, I certainly resonate with what you're talking about. I think the key is to, first of all, wherever the Lord has you for that season, we're commanded, encouraged just to give and support God's work. The local church is God's plan A, and that's really where we should start with our giving, and I would encourage us to give on a systematic basis, and I think using the principle of the tithe is a great way to do that. As to how the church allocates those resources, ultimately we're under the leadership and the authority of the local church, but that doesn't mean that as a church member you can't ask some questions. So what may be the next appropriate thing, Mary, is for you to schedule a visit with somebody on the church leadership, just to get an understanding of the vision of the church and how do they plan to balance both the physical needs of the church both today and expanding to accommodate more people that the Lord may be bringing in conjunction with meeting the needs of those in the local community and, to your point, even beyond, because there's an unlimited number of needs out there, and clearly part of the role of the local church is to be about proclaiming the truth and sharing the gospel and even to the ends of the earth and even meeting some physical needs there in the local community. But ultimately we have to trust that the pastor and the leadership team that's been put in place is really spending focus and diligent time in prayer hearing from the Lord as to what that looks like for that local congregation. And to the extent it's not been made clear, I wouldn't hesitate to ask some questions. But I think at the end of the day, once you understand the philosophy and the decisions that are being made, perhaps even a bit more understanding of the vision of where the church is headed both with the local facilities and the ministries beyond the four walls, then at that point, the extent to which God has you there, I think we need to trust the leadership of the church and really support the work unless the Lord ever calls you away to somewhere else.

And even though that's perhaps difficult at times, especially if maybe a decision is made we don't agree with, I do think that's really the role of the body to come under the leadership of the local church, which is really God's plan. Okay, thank you very much. All right, we appreciate your call today. Thanks very much. Rob, we have a quick email here. I think it's quick anyway. It's from Morton, and he says, Dear Rob, can you tell me where to go, the best place to go to get a free credit report?

What do you think? Yeah, a couple of places with some funny names. One is called Credit Karma, creditkarma.com, and the other is called nerdwallet.com. Those will give you your credit score, which was not free until very recently.

If you're looking for just a credit report, go to annualcreditreport.com, and you can get that free of charge. Okay, and if you'd like to send Rob a brief email yourself, keep it brief. He addresses questions at moneywise.org. We'll be right back after this brief message. We hope you're enjoying this encore presentation of the program and that you'll join us next week for the all-new, updated version of MoneyWise Live with Rob West. Happy to have you along today on MoneyWise Live. I'm Steve Moore. Your host is Rob West. We're chatting with people all across the country. Let's continue to do that by going southwest Palm Beach. Alan, we appreciate your patience, my friend.

How can we help you? Well, my question was related to the first caller I heard, and it's basically how your Social Security benefits are calculated. I was under the impression that if I retired and my income fell off, I wouldn't be making contributions to Social Security so that my benefits would be reduced because they look at your contributions. Yes.

Well, that's right. So you have to work a minimum of 40 quarters or 10 years to be eligible, and then once you retire, Alan, whether it's at 62 or full retirement age or you wait until 70, then your benefits will not decrease at that point. They may increase with a cost of living adjustment, but they won't go down. Now, the method that Social Security Administration uses is a bit complicated in determining your benefit amount, but they basically take your earnings over 35 years of your working life, adjust them for inflation, divide them by 35 to work that long to get the annual average, and then divide that by 12 to get your monthly average earnings and then use that to determine your monthly benefit amount. One of the challenges in retiring early is that often you will drop some of those higher-earning years that we would typically see pre-retirement because you're in the kind of prime of your working life and you're adding some of those higher-earnings years to years that, you know, when you were first starting out perhaps that were lower. And so that's where you'd see a reduction is you're not going to get the benefit of those higher years that would then be factored into the average. You would still get benefits, but oftentimes you wouldn't get as much if you work for a full 35 years and, you know, the last 10 years or more, you know, you were earning peak income. Does that make sense?

Well, yes, in the government sort of way it does. But they don't stop averaging at age 62. They stop averaging, you know, based on when you stop contributing or when you like officially, you know, tell them that you're retired and not, you know, working anymore. How is that working back then?

I should know that I'm 63 years old, so. Yeah, well, my understanding is that you will actually, as you're continuing to pay in and earn, that's going to still be factored into your overall calculation. So, you know, there's not a cutoff at which point they're no longer factoring in that income. So if you continue to work, that's going to be factored into this formula that's going to determine your average over your working life, which would then affect your monthly average and then ultimately determine your benefit amount at the point at which you start taking Social Security. So the extent to which, again, you're dropping some of those earning years that were on the higher end that would have been factored in alongside some of the earlier years where maybe you weren't making as much, you know, that would potentially pull you down a bit.

So something to consider doesn't mean it's not the right thing, but it's just understanding that formula can really help as you're thinking and planning about your work life. We appreciate your call, Allen. Thank you so much. Yes, sir. Thanks, buddy. Appreciate that. Bye-bye.

Wheeling, Illinois, next. Elena, you're on with Rob West. Oh, hi, Rob. Hello. How are both of you? Thanks for taking my time. I appreciate it very much. You're doing well, Elena.

Absolutely. How can we help? Well, dear, what's happening is my husband is 60 years old, and I think he's planning to – I don't know if he's going to retire when he's 70. I think he's going to work three drafts.

I don't know. But he wants to switch jobs right now while he's 60. He works at a hotel, and he feels he's gone as far as he can because he doesn't have a college education.

They won't let him go any farther. And he wants to stay within the same hotel line, but he feels he has a better opportunity going to this hotel and learning more because he just wants to keep learning. Sure. Would that affect his Social Security by the time he's 70? Because it's a slight pay cut.

Yeah. Well, you know, it's not going to affect it in the sense that he'll continue to earn, and those earnings years will be factored into the formula. Any time you take a reduction in pay, that's going to be factored into the overall average. But, again, the average is going to come from 35 years of work, so whether a minor reduction in the twilight of his working life is going to make a dramatic impact on the ultimate benefit amount, probably not. I mean, certainly if he has five years that are factored in at a lower number than where he was previously, then, yes, it'll have some impact. The question is, is it enough for him not to switch jobs and follow what might be the leading of the Lord somewhere else, where he either feels like he'll be able to serve better or it's a better environment for him or his skills would be better suited for that particular job? I wouldn't allow potential Social Security benefits to derail that, but at the end of the day, the formula is driven by his earnings over his 35 years of working life, and any time a year is going to come in lower than a previous year, that's going to be a part of the calculation. Okay, he's beyond 35 years already, but still it won't affect him if he takes a slight pay cut. I mean, it might, you know, within ten years he'll probably go up again, but he loves where he's working, but he just feels he's at a wall, you know? Right, right. He feels like he wants to do more, but his hands are tied. I wouldn't let that hold me back if that was really where I felt like was the place I should be.

I'd move fully into that, knowing that the Lord will provide, and the impact is probably going to be somewhat minor. Okay, thank you. All right, Elena. God bless. Thanks so much.

Let's go down, yeah, a little further south than we normally go, down to Bermuda. And Jamil, we know you've been patient, and we appreciate that. What's your question for Rob? No problem. First off, I just want to say I listen to you all the time, and I really enjoy the show.

Thank you. Me and my wife, we're young, and we're just trying to get some advice. We're trying to figure out how to honor God with every penny that we have. But lately, it's been very difficult because we just had our second child, and we're trying to navigate to buying a house in Bermuda, but the cost is so expensive out here. And I also have $37,000 in student loans, so we want to aggressively pay off our debt. So I'm just trying to get some advice on that. And also, tax ties have been difficult too because I've been so overwhelmed with all the other things that's needed that sometimes I don't always give the full 10 percent. So what would you recommend to someone young like me just trying to figure out how to navigate and sort out these different costs?

Yeah. Well, Jamil, obviously you've got some challenges, and I realize that especially when you're starting out. We've all been there, and it can be very difficult with competing priorities and limited resources, especially when you're living someplace that has a higher standard of living, and things just cost more, as you point out.

You're in a beautiful part of the world, but you're paying a premium for that as well. So it's all got to come back to starting with, Lord, what would you have me to do? You've got to pray that prayer. You and your wife saying, what have you called us to? What are our values? What's important to us? We realize that this is your money, Lord. You've got us here right now, and as long as you have us here, we're going to live within our means and trust you for your provision. Now, how do we allocate those resources? Well, we've got to make sure that we're not living beyond God's provision.

We've got to be content with what we have, so that's going to dictate your lifestyle, everything from when you might be able to buy a house to how you go about putting food on the table and providing for your family, as well as how you over time get out of debt. So I would start with that spending plan or that budget to say, okay, what's coming in? What do we have to pay toward taxes? What are we giving? What are we paying toward minimum payments?

And then what do we have to live on? And the goal would be to free up margin beyond that to do three things right now in priority order. Number one would be to build up an emergency fund of at least one month's expenses on your way to three and ultimately six months. Number two, to be able to take that margin and really focus on trying to get that student loan payment paid down. I'd really make that my priority right now, even beyond and before buying a home, so you really can concentrate on eradicating that debt. And then ultimately, number three would be starting to save for that down payment, figuring out how much you can afford. I'd probably use 25 percent of your take-home pay for principal interest taxes and insurance as a guide, but remembering that you live in an expensive part of the country or the world, you may not be able to do that, and you may need to come up in terms of overall percentage, but then everything else has to come down with it.

So I think you've got to pray through it. Don't try to get ahead of yourself, though, in terms of buying something too soon, especially given where you live. I'd really focus on dialing into that budget, demonstrating you can live within your means, and trying to free up margin for both emergency savings, debt reduction. And then once you feel like you have a good handle on that debt, you're making some progress, you can see yourself being able to pay it off in five to ten years, then I think at that point we start working on saving for that down payment.

But I think the key is not to take on too much too soon, because you have so much on you right now. You all are young, you're just getting started, and so I'd really take those in priority order and really make it a matter of prayer as well. I'll be starting with tithes and everything will flow after that, like giving God first his debt there and then working my way to that. I think that's right, Jamil. I think, yeah, you've got to start with what is your gross income, we've got to make sure your taxes are paid, we want to give systematically to the Lord, we've got to make sure your debts are paid at a minimum, the minimum payment, and then we've got to live on the rest, but we want to live in such a way that we have some excess coming out, so we can fund savings, we can add additional money to debt, and then ultimately begin saving for the longer term. Jamil, we appreciate your phone call today, and we wish you guys the very best as you work through this.

The best you can do is one step at a time, be generous, and watch God work some miracles in your life. Again, we're glad you got through today, thanks very much. You've been listening to MoneyWise Live with your host, Rob West. MoneyWise Live is a partnership between Moody Radio and MoneyWise Media. Thanks for joining us, have a great day, and please join us again tomorrow.