Vacation Tips for 2021

This is Doug Hastings, Vice President of Moody Radio, and we're thankful for support from our listeners and businesses like United Faith Mortgage. My best friend is blessed with three kids and a big house. All the kids have their own rooms, but recently life in that big old house has been different. In an effort to solve kid boredom, my friend bought one of those massive blue tarps and created a full room tent in the spare bedroom.

They put each of the kids' mattresses under the tent in the shape of a T. And every night, for now five weeks, the kids have slept with their heads feet apart instead of rooms apart. It's Ryan from United Faith Mortgage, and when I see a home, I can't help but see interest rates, escrows, and trying to help listeners pay the least amount possible. But for me, that story was a needed reminder that it doesn't matter whether our homes are big or small.

It only matters whether we're willing to enjoy the little things that God gave us today, like a tarp tent. If you happen to be looking for a new place to put up a tarp of your own, we are United Faith Mortgage. United Faith Mortgage is a DBA of United Mortgage Corp. 25 Melville Park Road, Melville, New York. Licensed mortgage banker. For all licensing information, go to NMLSConsumerAccess.org.

Corporate NMLS number 1330. Equal housing lender. Not licensed in Alaska, Hawaii, Georgia, Massachusetts, North Dakota, South Dakota, and Utah. Summer's just around the corner, and that means folks are starting to plan for summer vacations. After a year cooped up with COVID restrictions, 2021 could see a surge in people hitting the road. Hi, I'm Rob West. You know, some areas remain in shutdown mode, but others are opening up, hoping for a better season than last year. So first, some tips for planning your warm weather getaway. Then we take your calls at 800-525-7000. That's 800-525-7000.

This is MoneyWise Live, where God's financial principles intersect with your money. So no question that the availability of vaccines is increasing confidence in getting out of the house, but that doesn't mean that masks are a thing of the past. They're still required on planes, buses, trains, taxis, and ride sharing services at a minimum.

Many states and establishments are expected to maintain mask requirements through the summer as well, and some even into next year. If you're traveling by car this summer, you can't assume that everything will be open along the way to your destination, so it's highly advisable to plan your hotel, restaurant, and service station stop so you know where you can stay overnight, grab a meal, and gas up when you need to. Also, if you're renting a car, ask what steps the rental company takes to clean the vehicle. Ideally, the company only offers cars that have been thoroughly wiped down with a disinfectant and sanitation procedure.

That includes door handles, steering wheel, shift lever, and control panel. You should also bring your own disinfectant wipes and keep them handy. Now, a little more about hotels. Of course, call ahead to make sure your preferred hotel is open, but also ask what steps they're taking for COVID. Things like reducing capacity, social distancing, and requiring staff and guests to wear masks. And if the hotel has a restaurant that you might want to use, is it open?

If not, ask about other restaurants within a convenient distance. Now, air travel is still highly affected by COVID with many restrictions. You'll want to ask your airline about in-flight amenities like food and beverage services, which could be limited or not available at all. Also, many airlines still limit flight capacities and maintain social distancing by not filling middle seats. Meanwhile, the Transportation Security Administration is making an exception to its 3.4 ounce liquid container rule. TSA will allow you to have one oversized liquid hand sanitizer container up to 12 ounces per passenger, which you can keep in your carry-on bag.

So that's a change. And of course, masks are still required in airports and on planes. Now, a note about international air travel. In case you have family or friends flying in from overseas, all passengers coming to the US, even US citizens, must have a negative COVID-19 test result before boarding a flight to the US. Travelers who don't provide this to their airline will be denied boarding, but maybe your vacation plans include a cruise, an industry that's been just devastated by COVID. The Centers for Disease Control has lifted its ban on cruises, but many cruise lines are voluntarily continuing their suspension of sailing operations in the months ahead. So if you're considering a cruise this summer, check with the cruise line or a travel agent about availability and restrictions.

There's no question that taking a vacation this summer will require a lot more planning than you're probably used to. Also, you should know that the CDC is still urging us to delay traveling and warning that it will increase your chances of contracting and spreading COVID-19. Many state and local governments still have travel restrictions. These may include testing and quarantine requirements. Maine, for example, requires you to show a negative COVID-19 test result or self-quarantine for 10 days. So check with the appropriate health departments along your way. You have to be flexible and prepared for changes before and during your trip. And for COVID vaccines, if you're eligible, consider being vaccinated before your trip and waiting two weeks after your second dose before hitting the road.

That allows your body to build protection from the virus. And even after being vaccinated, understand that you'll still have to follow all travel requirements. A word about testing. The CDC recommends taking a COVID-19 test no more than three days before your trip. Take a copy of your negative test results with you during your trip. It could be very handy. And cancel all plans, of course, if you test positive.

So a lot of requirements, a lot of restrictions still in place for your vacation this summer. All right, I'll be taking your calls on any financial topic next. The number, 800-525-7000. This is MoneyWise Live. Stay with us. We'll be right back. Welcome back to MoneyWise Live.

I'm Rob West, your host. Thanks for being along with us today as we unpack God's truths and apply them to your finances. All the decisions you're making on a daily basis, we want to honor God as a steward of his resources and make the very best decision we can, recognizing that God owns it all, money is a tool, and we're charged with the management of the Creator's resources.

So we want to be found faithful in that. Hey, do you need some help from a professional advisor, whether that's for financial planning, investments, estate planning, tax and accounting, whatever it might be? If you'd like to know that that professional can offer advice that aligns with your values and priorities for a Christian, we'd encourage you to look for someone that holds the Certified Kingdom Advisor designation, and you can find a CKA in your area by heading over to MoneyWiseLive.org and just click Find a CKA. All right, it's time to take your calls today. We do have a few lines open. Here's the number, 800-525-7000. 800-525-7000.

We begin today in Miami, Florida. Isaac, you're on the program. Go ahead. Rob? Yes, sir? Is it true that Steve retired? It is true, yes. As sad as that is, I miss my compadre, who's normally by my side each day, but excited for this new season of his life as he pursues what God has for him next.

But yes, that is true. Oh, it wasn't because he told them a bad dad joke, right? No, no dad jokes involved. It was the fact that he had spent more than 30 years behind a microphone, and he was ready to pursue some other interests. But we're grateful for him, and he'll be back periodically offering some of his analysis and humor along the way, so he's not going anywhere entirely.

He just won't be here as co-host every day. But Isaac, what's your question today? How can I help you, sir? Yes, so I have, this is like a part two, because I had asked the question before, and so my question today would be like, what is the difference in risk like between a reckless risk and like a risk that is risky but can actually have some benefits?

Yeah, yeah. Well, it's a great question because, you know, there's something called risk-reward. There's a risk-reward ratio, and there's a concept of risk and reward that really goes hand in hand with investing. You know, we've got to understand what it means to assume a certain level of risk in exchange for a commensurate return, and, you know, that's one of the ideas when we invest is that as we expect more in the way of potential profit, the potential risk of that investment goes up with it, and so we're constantly balancing risk and reward as we think about investing God's money, and we need to make sure that the risk-reward ratio is appropriate for our age and stage of life and expectations because we certainly wouldn't want to take on an unnecessary level of risk to achieve a return beyond potentially even what we need, and so we need to start with what is God entrusted to us, what lifestyle has he called us to, what are our goals and objectives that are God-ordained, and then as we seek to invest God's money, what is that appropriate amount of risk that we should take, and what expectation might we have for the return that would follow? When it comes to a healthy amount of risk, I think, you know, we talk often about long-term investments being those investments that would be 10 years or greater, and I will often say that the very best place or the starting place for your long-term investments should be in a properly diversified stock and bond portfolio, and as you build that portfolio or as a financial professional builds that portfolio, they look at a various classes of possible investments, and as they look at those investment options, they would move up and down in the risk-return spectrum, so the progression is typically short-term debt to long-term debt, bonds, property, high-yield debt, and then equities or stocks, and as you look at that progression, you want to build a portfolio that has varying levels of risk associated with it and recognize that there'll be different levels of return that come with that, but that would be an appropriate or a healthy amount of risk as long as the portfolio is built with your goals and objectives in mind and it's properly diversified. I would say a reckless amount of risk is where you begin to get into speculation, Isaac, where you're no longer taking a long-term perspective with a properly built portfolio with a healthy amount of risk. You're moving beyond that, trying to speculate as to the moves on a short-term basis of an underlying asset class, so that could be a high-flying stock that you're trying to buy and quickly see a gain on so you can jump out. It might be something in the precious metals. It might be commodities. It could be any number of asset classes, and I think when you begin to get into that speculation where you're violating the biblical principles we see about what appropriate investing looks like with a long time horizon and all the other things that I've mentioned, that's where I think it begins to become unhealthy unless you're a professional trader doing that full-time and you have the proper training and expertise. So hopefully that's helpful to you.

I think the key is to make sure that as you begin investing that you're knowledgeable, that you do some reading on the topic, you certainly explore the scriptures, and I think it's always good to consider having a professional walking alongside with you. We appreciate your call today. Next up is Nick in West Lafayette, Indiana.

Nick, go right ahead. Yeah, my question is about long-term care insurance. I have my in-laws, they're in their basic 60s, and so they're wondering if they should sign up for a long-term care insurance. All the information that I have is that for each one they will pay about a thousand dollars a month in premium, and that would cover three full years of care, whether it's a nursing home or a physical situation, and I don't know if that is something that is worth pursuing or if it's better to put that money into a mutual fund or some sort of investment like that, and it's just curious what your thought is.

Yeah, you know, I'm a fan of this product. If it's something that you buy with a great deal of, you know, research to make sure you get the policy that's right for you, and it has to fit into your budget, because if you can't keep up the premiums long-term and you've got to drop it, it's going to be of no value to you, and, you know, the data says that this is going to be, for most folks, the very most expensive thing they'll deal with in this season of life. You know, according to the Alzheimer's Association, the estimated cost for end-of-life care in 2019 was between around $230,000 and $367,000, and, you know, most health and disability insurances don't cover long-term care, but that's where long-term care insurance does, and so I think when you can get an agent who's independent, who knows the various players that are committed to this space, who can help you price out and find the policy that's right for you, it can really offset this major potential burden that, you know, the majority of Americans will need for somewhere between 18 months and three years, and it's going to cover things like nursing home care, assisted living facilities, adult day care, even in-home care or home modification, so that's why, you know, they're not all created equal, but it can be a tremendous benefit to having something like that in place. I think you're talking about the right age.

I would say between 55 and 65 is the time to begin to shop it, and, you know, I think as you find that right agent who can go out and price it for you, getting multiple bids from various carriers, that is the right approach, so, you know, if you've checked all those boxes, then I think this is a good thing to have, and again, it's just going to alleviate that risk that comes in this season of life that can be really burdensome and erode your assets in a hurry. Does that help, Nick? Yes, thank you, Rob. Okay, appreciate your call, sir, and we look forward to talking to you again real soon. Well, we're going to continue to take your calls on the program today, and we've got a lot more to cover.

We've already covered some ground, but we'll certainly get to many more of your questions, whether it's debt, giving, investments, retirement, how to save, anything is fair game today. 800-525-7000 is the number to call. We do have several lines open.

800-525-7000. Thanks for being along with us today. We're going to take a brief break and back with much more. Welcome back to MoneyWise Live, where God's word intersects with your financial decisions. Thanks for being along with us today. Right back to the phones we go, Central PA. Lee, thanks for calling today. Go right ahead.

Hi, thank you. So I guess my question is kind of two parts. So first, my husband is considering moving towards either a partnership or self-employment. He's currently employed by a small employer and has been with this employer for 6 years as an electrician and a plumber, and he is looking at either entering a partnership or being self-employed to do some handyman work, which there is definitely a market for that in our area. I guess my first question is in regards to partnership. Of course, we hear a ton of negative things about partnership, and so we're leaning towards self-employment with just subcontracting with this individual that he's considering partnership. Do you have any thoughts on that?

Yeah, I do. You know, a business partnership obviously is a shared business venture between two parties. It can be something as informal as just an agreement, which you would always want to have a written contract, or it can be certainly more formal than that. The benefits are, you know, financing, expertise between the two individuals, division of labor, but there clearly are some disadvantages. And I think, you know, as a believer, you want to make sure you're going into it with somebody who's like-minded. You know, we always want to have a couple of things in place whenever we're considering a partnership. Number one is you've got to have the exit plan defined on the front end, because, you know, two become one in marriage, but that doesn't apply to a business partnership. And so I think to protect the relationship and to even protect yourself financially, you need to go into it saying, okay, on the front end, we're going to create an off-ramp. So if this doesn't work, we know what that looks like, including how are we going to value the business when that time comes, if it does.

So there's not any question at that moment as to, you know, how do we unwind this? How does one person exit if they decide to pursue other endeavors? They just want to, you know, go into business for themselves. You know, having that valuation, at least the process for valuation determined in advance and defining the off-ramps, I think, is critical. I think the second piece that is just essential is when it comes to a business partnership, being like-minded in terms of values and really having somebody that, you know, for a believer, I would say, you know, I wouldn't personally go into a partnership with somebody who doesn't know Christ.

And, you know, having that values match is really key, because you're going to have differences of opinion, you know, work ethic, treatment of vendors and customers, but really the underlying values have to be right there. And of course, you know, each party needs to go into that with their eyes wide open. But if you feel like those two pieces are in place or could be in place prior to it, I wouldn't say it's, you know, an automatic disqualifier. I think, you know, for the two of you to pray and think through it, and if you just can't get a piece about it, then I think he goes it alone and perhaps they look for ways to, you know, share business back and forth.

And, you know, if they're both, you know, in the same field, there could be some synergies and maybe over time it will become obvious that they need to join forces. But if you have some reservations on that, perhaps you don't start that way. Does that make sense, though? Okay. Yeah, that does. That does. Absolutely.

Thank you. And I don't know if you have time to take my second question, but it's just in regards to, so, you know, this is totally new for us as far as considering starting our own business. And so what we are not sure about is in terms of, like, trying to figure out how much does he need to chart or to make similar to what he makes now. Do you know what I mean? We're just not sure, like, tax-wise how much to consider for, how much to expect, you know.

Right now he makes, last year he grossed around $51,000, and that was with his overtime. So we're, you know, we're looking to stay in that same area, ballpark at least, but we're just not sure what all to take into consideration whenever we're figuring that, if that makes sense. It does, absolutely. So do you all have a written budget that you use on a monthly basis?

We have a general one, yes. Okay. And do you find that you're able to live within your means pretty consistently, or have you been, you know, accruing any debt? No, we are able to live within our means, yes.

Okay, all right. Well, I think the key for you all is, you know, as you begin to look at this, you know, you want to make sure that you understand, you know, to your point, exactly what it's going to take to fund your family on a monthly basis. As you look at, you know, your gross income, you know, then you would subtract your giving plus your taxes plus your debt. And, you know, that's going to be the maximum available to spend on living expenses, you know, and so often people will, you know, get that out of line.

There's actually a formula that I call the minimum income needed formula that I can share with you that I think will really help you back into this number, and perhaps that would give you a starting point. So once you do this, stay on the line. We're going to take a quick break.

When we come back, I'll walk you through it, and I think that'll give you the number that you're looking for so that you can make sure you feel like you guys can achieve that and not put yourself in a position where you're going to be underwater every month. So hang on the line. We'll tackle that just around the corner. This is MoneyWise Live. I'm Rob West. We're going to pause for a brief break. We'll be back with more of your calls right after this. Stay with us. Welcome back to MoneyWise Live. I'm Rob West, your host.

Thanks for being along with us today. Just before the break, we were talking to Lee in central Pennsylvania. Lee and her husband are considering a move into a new small business. Her husband is an electrician and a plumber working for a small employer and thinking about starting his own business, doing remodeling, perhaps on his own, or going into partnership with a friend. Just before the break, we said before you would even consider a partnership, at the very least, you need to have a values and a faith match.

And secondly, you always want to have an off-ramp defined in advance. This is not a marriage. It's a business partnership. So how does one person exit the business? And really what's critical to that is how are you going to value the business when that time comes?

You need to decide that on the front end. Lee's second question was, how much do we really need to make so that we know that we have enough to pay our bills? Because the gross amount you're taking in is not going to be enough to cover everything. So how do you actually back into that? And there's a formula that actually tells you the minimum income needed to cover everything that you have, recognizing there's really only five things you can do with money. There's money you give, there's the money you pay your taxes with, money for living expenses, money for debt, and then the rest is flowing through to savings. Lee, do you have a pen and paper handy?

I do, yes. Okay, so here's what you want to do. This is the formula. So you want to write living expenses plus debt, and I'm going to explain these in a minute, and then put a line under that because you're going to divide that by one minus, and now make a parentheses, and you're going to do your giving percentage plus your effective tax rate, and then you're going to close the parentheses. So on the top, living expenses plus debt, on the bottom, one minus, open parentheses, giving percentage plus effective tax rate, close percentage.

So let me walk you through this. So what did you say your living expenses are when you look at what it takes to fund your family every month? Yeah, so I would say we're right around, I would say like $2,500 a month.

Well, no, take that. That's not with debt. Okay, you said just living expenses, so that would be I'd say around $1,500. Okay, all right, but you were saying you all are making about $53,000 a year right now, is that right? $51,000, that was like with bonuses and things, so that wasn't like... And you're able to put some money away every month?

I feel like we haven't been very consistent in that, but if we pay more attention to it, we probably could, yeah. Okay, well let's say it's $2,000 a month just for round numbers, and we're going to multiply that by 12. So that's $24,000 in living expenses, and then you would take the total of your debt. So do you know what your debt payments are roughly each month? Each month, yeah.

All we have is a mortgage, and I think it's right around $750 a month. Okay. That's with our escrow.

Okay, yeah. And I would put that actually in with your living expenses. I would be looking for additional credit card payments, things like that. So if you had some debt, you would add that to it. So let's say you were spending $300 a month, you'd add $3,600 to that.

So that'd be $27,600. Then you're going to divide it by one minus your giving percentage and your effective tax rate. So let's say you're giving 10%, and your effective tax rate is essentially the total tax burden divided by your income. So let's say your effective tax rate, what you actually paid last year, let's say it's 22%. So one minus 32% would give you essentially what you need, which would be 0.68. And when you divide that out, you would take your $27,600, which is what you need each year, and then you divide that by one minus your effective tax rate and your giving percentage or 0.68. That would say, okay, I need $40,588 in order to get the $27,600 that I need to fund my lifestyle. And so it's really just a matter of you guys plugging in those numbers and figuring out, okay, we need this gross amount because that's going to result in us being able to fund our living expenses, take care of our debt, continue to do our giving and cover our effective tax rate. Does that make sense?

That does make sense. Yeah, yeah, definitely. So you can just kind of work with that and plug in all those numbers, the two of you and kind of see how that shakes out.

But make this a matter of prayer, Lee, as you guys think about this. And, you know, don't go too quickly. Make sure you have the right reserves before you step out into your own business.

If you were to delay it because you feel like you don't have enough in the way of emergency reserves, I don't think that's a bad thing, because it can often take longer than you expect to get a new business up and running. But keep us posted along the way. We appreciate your call today very, very much. Let's head now to Stewart, Florida.

Craig's up next. Go right ahead. Rob, thank you for taking my call.

When I turned on the program, I didn't know it centered around finances, but I could kind of tie my question into that. Right now, I'm in a season of grief. I just lost my younger brother unexpectedly.

He was 41, and I just feel like God is very distant right now. Rewind roughly 18 years, and I nearly lost my life in a violent crime. When I woke up in ICU, I basically had, I think it was an angel of the Lord at the foot of my bed, or it was Jesus himself. I wasn't expected to live, so I know that I'm here for some sort of reason.

I haven't figured out what that is. I'm a visual artist, and I made a move out to Hawaii shortly after 9-11, and did okay, and then when I came back to Florida, the violent crime occurred, and I nearly lost my life. So my hope and prayer has always been that I could somehow use my gift that God's given me to somehow share it with the world and make the world a better place, but I really feel like the past 18 years of my life, I've just been almost in a holding pattern. I haven't really gotten any clear direction on what it is that God wants me to do, and with losing my brother recently, it's just been even more difficult to move forward, but I know just because you don't see God working in your life doesn't mean he's not working. So my question to you is, what do you do when you feel like God is far away, and how do you press on when you feel like nothing is taking place?

Yeah. Well, Craig, I appreciate your call today, and one thing we know is true is God is near to the brokenhearted, and clearly you're in a difficult season right now. So the first thing I want to do is ask our MoneyWise Live community to be praying for you.

I'll certainly do that before we conclude here today. You know, in a season like this, we want to run to the Father and learn what it means to abide. I think we've got to start by going back to his word, assuming you have already given your life to Christ, and if you haven't, that's the beginning point, surrendering your life to the Lord, asking him to come in and be preeminent, to be your Savior, to redeem you from your sins, to send the Holy Spirit to indwell you, and to accept his free gift of eternal life, not based on your merits, but based on the shed blood of Jesus on the cross.

That's the beginning point. We give our lives to Christ, and then from that point forward, it doesn't mean that our life, everything is going to work out perfectly. We know that we're in a fallen world, and until Jesus returns to bring us home, there's going to be a difficulty here. And so what we need to do is abide with the Father. We need to stay in the scriptures.

We need to be in a Bible-believing church around community that can encourage us and walk alongside us, and leave the rest to him and know that his promises are true and real, and he will never leave you or forsake you. You stay on the line. We're going to pray together during this break, and folks, we're going to pause for a moment. We'll be right back. Stay with us. Welcome back to MoneyWise Live.

So glad you're along with us today. Would you like to connect with one of our MoneyWise coaches? We've got trained volunteer coaches that are ready to serve you. They'll walk alongside you over a number of weeks to teach you biblical principles of managing money, help you set up a debt repayment plan, a giving plan, and a spending plan. Also help you get acquainted with the MoneyWise app, which is available as a free download in your app store. Just search for MoneyWise Biblical Finance. To connect with a coach, head over to our website, MoneyWiseLive.org. Click the button that says, in fact, connect with a coach, and we'll get you connected where you can begin to engage virtually with somebody who can really be an encouragement, but also practical help to you along your financial journey.

Again, MoneyWiseLive.org. Let's go back to the phones. William, you're next on the program. Go right ahead, sir.

Hello. So I had a question about capital gains. I'm selling my house, and I will be making a profit on it. And I was told that there's an exemption to get out of capital gains if you're getting married.

Is that true? And then the issue with that is I'm not getting married in the same fiscal year that I'll be selling the house. Okay, so this was your primary residence, is that right?

Yeah. Okay, so as your primary residence, you know, there's a basically a home sale exclusion from capital gains. As long as you live in the home for two out of the last five years, then you would be excluded from capital gains on that sale of the home as a single taxpayer for $250,000 worth of gain, and for a married taxpayer, $500,000. So are you gonna have more than $250,000 in gain? I will not gain more than $250,000, but I haven't lived there for over a year.

Oh, you haven't? Okay, so yeah, you had to be a two out of the last five years. I'll ask my team to look at that. I'm not aware of any other exclusion that would allow you to miss that gain if you've only been there a year and you're planning to move, but certainly we can take a look at that and see if there's something else there. I would always encourage you when you have a change in your financial life and getting married is certainly one of those major changes for you to seek out a tax professional who can walk alongside you as you all begin to now file jointly and put your financial lives together, just making sure everything is being done properly. You're taking every deduction available to you, but you're also filing on a timely basis. So if you need a certified kingdom advisor in the tax and accounting area there in Ohio, William, just head over to our website MoneyWiseLive.org to connect with a CKA and I think that would be a great next step for you. We appreciate your call.

WGNB is next up calling from Michigan. Ed, go right ahead. Yeah, my question is when people pay online, like using PayPal, I've heard of a thing called Stripe. I'm not sure if that's the right word for it. Yes. Have you heard of that? I have, absolutely. Okay, is that any good?

What do you have to say on that? Can you use your debit credit cards using Stripe? Yes. Yeah, it's just a processor of payments. So both PayPal, which is a very well-known name and very easy to use, and Stripe are very, very popular. You know, both of them charge a percentage plus a certain fixed amount for an online transaction. And, you know, Stripe has become massive.

I mean, they power some of the biggest brands out there in the marketplace, like Lyft and Under Armour and Pinterest. And so it's becoming very, very popular. You know, you don't need a Stripe account, only a debit or credit card.

And it's a really simple really simple process. So, you know, you would find that they have all of the latest security features. And they are certified by the payment card industry as a PCI service provider level one, which is the highest level of security in the payments industry. PCI has become kind of the gold standard as of late, and is the requirement for those that accept online payments related to security in there at the highest level. So I wouldn't have any issue with you using Stripe to conduct business online.

And again, it's one of the biggest players out there. So hopefully that's helpful to you, Ed. We appreciate your call today. Let's go to Isa in Indiana.

You're next on MoneyWise Live. Go ahead. Hi. Thank you, Rob, for accepting my phone call.

Yes, ma'am. Um, Michael, my question is, is, well, I guess I had a situation. I've been working really hard on my credit, gotten it almost up to 700. And then one of the creditors, I paid it off, which I thought was the right thing to do. And one of my creditors closed my account due to inactivity. And then my credit score plummeted 109 points.

And I'm so bummed. And I was wondering if there's anything that I could do about that? Yeah. Well, are you carrying a balance, Isa, on the other accounts that are still active? Yes.

Okay. Now, so what happened there likely was that when that account was closed based on inactivity, and they would have, you know, that would have been in the fine print when you opened it that, you know, says basically, with a certain number of months of inactivity, the account can be closed because they want to go ahead and extend that credit to somebody who's going to use it. Because that's how they make money doesn't mean you should have been using it.

It's just that's how the industry works. As soon as that account was closed, then that credit limit was removed from the total credit that's available to you, which meant that the balances you were carrying were a higher percentage of your overall limit. And as that percentage moved up, what's called your credit utilization ratio, your credit utilization went probably above the 30% threshold, which causes your score to come down. So the only, you know, way to reverse this would be number one over time, number two would be to get that credit utilization down. And I would encourage you rather than opening up new accounts, I would encourage you to just really focus on, you know, paying down your debt and getting on a plan that's going to allow you to pay that off as quickly as you can, whether that's through a credit counseling program or just limiting your lifestyle and trying to pay as much as you can toward the balance each month.

But that's what's going on here. You know, the key here, though, Isa, is I'm much more interested in your financial health and you being on a solid financial footing than I am your credit score. You know, that's only going to come into play when you're out there seeking new credit because you want to be able to qualify for the best rates and terms. But if you're not out there looking for credit and, you know, I hope you're not out there seeking a lot of new credit, then it really doesn't matter that you saw that decline. And you can reverse that by continuing to be an on-time payer and continuing to focus on paying those balances down over time. If you want to connect with our friends at Christian Credit Counselors for a credit counseling program, that could be a great way to accelerate your debt reduction. You'll find them at christiancreditcounselors.org. We appreciate your call today. Let's head to Florida next. Paul, you're on MoneyWise Live. Go ahead. Yes, I've been listening to Moody's since 1986, and it's been a big part of my life.

Glad to hear that. My question is in regard to I'm 70 years old. I have about $50,000 a year income between Social Security and a pension, and I have no debt. And I have about $200,000 invested in mutual funds. I think it's five different mutual funds earning between five and seven percent over the last 10 years. And I'm content there, but I'm just wondering if half of them are at the higher level of risk and half are at a lower level of risk. Do you see any reason why I should be have all on a lower level or just say where I'm at? Sure.

It's a great question, Paul. Let's run back through those numbers again quickly. What did you say the total of the investment portfolio is today? About $250,000.

$250,000. All right. And you said you've been earning between five and seven percent annualized? Yeah.

That's the average over the last 10 years. Sure. And what's the breakdown between stocks and bonds in that portfolio? I have no bonds.

I had some in the beginning. So it's 100 percent in stocks. And are you pulling an income off of that? No, I'm just being reinvested.

Okay. And so you're covering your expenses right now with Social Security and other sources? Yeah, I only spend half, well, about 40 percent of my income is what it takes for me to live.

The other 60 percent, I give it to my church and, you know. Great. Yeah. So you're obviously living well within your means, living modestly. I love that.

I love that. And this money is able just to continue to grow. It could be there down the road if you needed assisted living or some sort of long term care, which could get quite expensive. So I like the idea that you would have this money growing. Having, though, 100 percent of your investable assets in this season of life at the risk of the stock market does seem too aggressive to me. I would tend to ask you to have something more like 30 percent in stocks and maybe 70 percent in bonds.

You've probably done quite well over the last decade or so. But as we head into the prospect of a market that could hit a bump in the road with a recession, you know, a year or two down the road once we work through all this stimulus and fiscal policy and the economy reopens fully, you know, this this economy has been on quite a tear on the upside. So I could see us having a downturn here in the next couple of years. And I wouldn't want 100 percent of your assets, at least in your investable portion, at the risk of the stock market. So I encourage you to seek out an investment professional, Paul, that can help you build a portfolio that takes the risk level way down so that it's there if you need to begin to draw on it.

But if you saw a decline in the market of, let's say, 35 percent, you wouldn't see your portfolio go with it. You can find a C.K. at our website MoneyWiseLive.org. Folks, thanks for being along with us today. That's going to do it for us. I want to say thank you to my amazing team, Deb Solomon, Amy Rios, Jim Henry and the rest.

MoneyWiseLive is a partnership between Moody Radio and MoneyWise Media. We'll be back tomorrow to do it all over again. Hope you can join us. We'll see you then.