The National Debt

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Not licensed in Alaska, Hawaii, Georgia, Massachusetts, North Dakota, South Dakota, and Utah. To paraphrase Thomas Jefferson, the principle of spending money under the name of funding to be paid back later is really swindling the future on a large scale. We must not let our leaders load us with perpetual debt. Hi, I'm Rob West.

The founders could have never envisioned today's $28 trillion national debt. Today I'll discuss this critical topic with economist Jerry Boyer and how it affects your finances. Then I'll take your calls at 800-525-7000.

That's 800-525-7000. This is MoneyWise Live, where God's truth guides your financial decisions. Well, Jerry Boyer is our guest today. You know him well as the chief economist at Vidant Financial.

He's also the editor of Town Hall Financial and occasionally writes for National Review. Jerry, welcome back. Thank you, my friend. Always great to be with you.

Always delighted to have you, sir. Jerry, it's your recent article in National Review that we want to talk about today. The CBO saying that our new debt projections are already obsolete. What were those projections and why are they no longer valid? Well, they're no longer valid because between the time that they did their annual analysis for the long-term budget outlook and the time that they kind of got it printed and scheduled the press conference and released the results, we passed the American Rescue Plan Act, and that added another almost $2 trillion to the debt. So the debt levels were already considerably above 100% debt-to-GDP ratio.

And if you hear conflicting stories on this, there's one thing that's very important to understand. There's two ways to calculate the national debt. And part of the national debt, one part of the government borrows from another part of the government. Social security borrows, you know, from the Treasury Department. So when you hear conflicting results, it's whether you count that or not. I would count it because I think it's politically impossible to cut social security, so I think we're going to have to pay that. But, you know, if you don't count it, you can make the debt look a little smaller. Their point is, hey, we did this analysis, debt's a problem, but we didn't take into account this huge spending bill that we just passed. Yeah, and Jerry, you make the point that growth expectations are falling mainly because of demographic trends, and that's going to put pressure on this as well, isn't it?

Yeah, it really is. I mean, you need people, right? God said, fill the earth and subdue it.

Exercise dominion over the earth, I'm summarizing. And if you don't have people, it's hard to have economic growth. Or if you have people, and most of them are retired, then again, it's hard to have economic growth.

You don't have the right ratio of people pulling the cart to people in the cart. And the Congressional Budget Office is acknowledging that. They're saying that we're not going to have the normal historic growth rates that we've had, say, since the 1950s or even before, because we're not, you know, we're not replacing our population anymore. Now, they didn't mention abortion, but we know that abortion is a major suppressor of population. And so, you know, that's going to really hold us back economically. We kind of sowed the wind with that, and we're reaping the whirlwind in terms of low economic growth. And if you don't have the economic growth, then you have more economic growth. You have more debt problem, because if you don't have the economic growth, you don't have the tax revenues. And if you have a whole lot of people retiring and getting old at the same time, you've got a lot of health care spending that's out of control. So these things are driving us into, you know, debt crisis territory. Yeah, no question about it. Jerry, low interest rates are helpful when it comes to the amount of debt we have, but obviously the longer-term trend is up on interest rates. Is that going to be problematic?

Yeah, it is. And it will also be problematic if the longer-term trend is down on interest rates if it's artificial. So if we let interest rates return to the market level, then that immediately creates a debt crisis. I mean, if we were... interest rates ought to be roughly, historically, 10-year treasuries are about 5%. If our treasuries went to 5% now, we would essentially already be in crisis. And the Federal Reserve knows that, which is why it buys those bonds driving down the interest rate. But it does that at the expense of debasing our currency.

It does that by creating money. So because we won't control our spending, we're kind of in a situation where we've got a dilemma where both choices are bad. Now, if we stop the spending, then we could normalize interest rates.

And, you know, that might be a little difficult, you know, what hurt the housing market a little, but we could kind of get through that. So we're really arguing about which biblical principle we're going to violate. Are we going to violate biblical principles about not getting in excess debt? Or are we going to violate principles about not debasing our currency? And that's a bad sign in and of itself that we're not... we're not talking about following biblical principles. We're trying to decide which one is less important.

That's not a good situation. Jerry Boyer, our guest today. We'll be back with much more right after this. Welcome back to MoneyWise Live. I'm Rob West. My guest today, Jerry Boyer. Jerry is chief economist at Vidant Financial. Today, we're tackling the national debt. What are we going to do in this country with the debt that we have that just continues to grow? And, Jerry, just before the break, you were making the point that, at least historically, we've always thought about being able to grow our way out of debt problems, effectively lowering the percentage of debt compared to the gross domestic product. But you made the point that because of smaller labor force with demographic trends and other factors, so with GDP growth being suppressed, that's going to create challenges. Interest rates can be problematic. Now, sometimes we hear analysts say that immigration is the key to growing our way out of this mess.

What about that? Well, again, that's one of those situations where we have a dilemma. If the native population, meaning current native, I'm not talking about Native Americans, if the native population, people who live here now, don't reproduce ourselves, then we're either going to have population decline or we're going to make that up with immigration. The problem is that there's a lot of social tension around immigration. And so we're a society that's very divided around high levels of immigration, the kind of levels it would take to keep the workforce growing, which is kind of what you need in order to grow the economy enough, in order to basically afford to fund our retirement plans.

Now, that goes to a deeper cultural issue because they're concerned about whether immigrants are really kind of joining and assimilating into the American experiment, or are they just sort of here to work and bring the old voting patterns behind. Again, this is one of these downstream effects that comes when we violate biblical principles. We're supposed to fill the earth and subdue, we're supposed to reproduce ourselves.

We're not supposed to abort away our future. We're not supposed to have excess spending. We're not supposed to have excess debt. We're not supposed to, you know, debase our currency. But when we violate principles, a nation that is violating principles will have tougher and tougher decisions to make. And so, you know, a lot of Americans would be very concerned about extremely high immigration levels. But then, you know, how else do we have enough workers of the proper age in order to pay into a system to pay for retirement? It's a real dilemma.

Yes. Well, as you point out in the CBO's projections, deaths exceed births by 2044, indicating that without immigration, the population would decline. And thereafter, population growth is driven entirely by immigration. Assuming the CBO is right with regard to the growth potential, Jerry, what then in your view does our fiscal future look like? I think that the CBO is wrong in that it's overly optimistic. And the reason I think that is, if you look in the details of the report, I think they're probably right about growth rates that were, you know, kind of 2% growth rates.

I mean, we'll be better this year because we're bouncing back from the extremely low baseline of the pandemic shutdown. But I think our new normal is, in fact, going to be subnormal. I think if you look at their interest rate assumptions, they're assuming that we don't get normal interest rates until 2050. Well, I just don't think that's realistic. I think eventually, you know, the markets are going to say, sorry, we don't believe you, Federal Reserve. We don't believe you, Treasury.

We don't think you're going to pay back this debt. And then at that point, it becomes impossible for the central bank to control the interest rates. You know, in the 1970s, we had extremely high interest rates in the early 80s. The Fed tried to fight that, but it couldn't because, you know, they only control part of it. We're part of a global economy.

Robert Mundell, the Nobel Prize-winning economist, who just died recently, a few weeks ago, told me once that the biggest economic mistake that people make is that nations think they're in control of their own economic situation when they're not. When we debase our currency, eventually the world says, I don't want your dollars. I don't want your Treasuries. They dump them on the market and interest rates sink. And so, you know, interest rates spike.

If we got anything like normal interest rates, I don't see how we can safely assume we won't for 30 years, then that makes our debt crisis come that much earlier. Jerry, the interest rates are supposed to be an appropriate reflection of the risk that's in the system. But when we manipulate them, it's not doing its job, right?

Yeah. I mean, think of it as someone who's living a very unhealthy lifestyle and then, you know, they get drugged or let's say they take, you know, an opioid and they feel just fine, right? You know, they had a back problem or they had another problem and now they feel fine. Easy money is the fiscal equivalent of an opioid. It hides, it masks the pain that we should feel when we're behaving badly and violating biblical principles of economics.

We feel just fine until we don't. Yes. Jerry, where do we go as a nation? You know, historically, when our back is against the wall, we have demonstrated, at least in many cases, that we can make the right decisions. Is this just about cutting spending? Is it about, you know, taxes? What does the future look like with regard to how we solve this?

Yeah, that's a good question. I think that we would have to have a shift towards very pro-growth policies. Right now, we're moving towards anti-growth policies, which would make all this happen a lot more quickly and a lot worse.

So that's a political shift. I also think there needs to be a culture shift and what I would hope and pray for is that the church leads that. That, you know, it's hard for us if we're heavily indebted and we're spending heavily and unwilling to make tough choices. It's hard for us then to lecture the nation about how the nation ought to live. So I think that Christians need to be an example to the world about saving versus spending and about, you know, being prudent with our debt. And the other thing is, okay, let's say the world doesn't listen.

Okay, fine. Then at least we're more prepared for a debt crisis if we're not leveraged to the hilt. So what I would see the key, see, I see that in every historical epoch, I see the key always being the church. If it's absent, that's the key problem in the world.

And if it's present, preaching the whole counsel of God and living it, then that's the solution to the problem. Jerry, if we were to have a debt crisis at some point in the future, what would that look like for the average American? I think for those average Americans who can remember the 70s, it would probably look something like that. Now, there's also much worse debt crises like the European debt crisis, if we had one of those, then that would be more painful than anything, you know, kind of in our experience, maybe since the Great Depression. So I think something, a realistic debt crisis, something that we actually could see that would be in memory would be the stagflation of the 1970s. High unemployment, nobody's getting raises, but every time you go to the store, the number on the ground beef changes.

You know, the price of a loaf of bread, that changes, but your paycheck isn't changing, and you have to make tough choices, and you're having trouble affording gasoline and all the rest of it. I was a kid during that, and I remember that pain. There's a lot of people who are a little older who remember that. That is not an unrealistic scenario. I'm not saying that's the base case in the next couple of years, but that's a realistic scenario, say, several years out.

Yeah. Jerry, in light of that, what is your counsel to our listeners? I imagine there's some people listening saying, well, if that's possible, whether that's five or ten years out, maybe I should exit the stock market, maybe I should pull my money out of the bank. There could be some folks that have real concern.

What would you say to them? I would say don't panic. First of all, we don't know that's the case, so financial markets tend to do well over the long run, even when you buy just before a crisis, so I think panicking is not the right way to go. I think it means have margin as opposed to leverage. I think it also means be diversified. This is probably something you should talk to, say, a certified kingdom advisor about. Talk to your advisor and say, hey, how can I be diversified?

You know, what's a good inflation edge? So I think the main thing you can do is know that something like this can happen, and it's not the end of the world, and your job isn't to panic. Your job is to be a little island of serenity when your friends and neighbors are panicking. Very good. Jerry Boyer is chief economist at Vidant Financial.

You can read his article about the national debt at National Review online. Your call is next. We'll be right back. Welcome back to MoneyWise Live.

I'm Rob West. So glad to have you along with us today. I appreciate Jerry Boyer stopping by today with some hard truth, and yet no reason, as he said, to panic. I think the key for us is we recognize, yeah, we're taking on a lot of debt as a nation. We're going to have to deal with that in terms of our spending and just how we adhere to biblical principles that apply to nations as well as individuals in the days ahead.

The key for us is what are we doing with what's passing through our hands, with what God has entrusted to us? Are we living within our means? Are we avoiding the use of debt or moving toward being debt-free over time? Do we have some margin or some liquidity, starting with an emergency fund?

Do we have surplus on a monthly basis? And then are we saving for the longer term? Are we giving generously, and have we set long-term goals because we can make a better decision today with a longer perspective? When we put those five things in place, then that means we've positioned ourselves with what God has entrusted to us in a place where we have followed biblical principles, we align ourselves with what is God's best for us, and it puts us in a position to share, to be the light, to be that beacon on a hill that can proclaim truth and meet the needs of others around us and, yes, reflect Christ in what we do, including the way we manage our finances. I think that's the takeaway for us.

We're not going to control the U.S. GDP or the interest rates or the economy. Apart from voting and using our voice there, we're to be found faithful with what God has entrusted to us from a stewardship standpoint. Well, we want to apply those principles to what's going on in your life today as we turn the corner and begin to take some questions. We do have lines open. Here's the number, 800-525-7000.

That's 800-525-7000. We'd love to hear from you. We're going to start in Puerto Rico with Maria. Welcome to the broadcast. What's on your mind today? Good afternoon.

Hello. I have been blessed with your program. I had two personal loans, two credit cards that were driving me crazy. I was able to get some money.

The first thing I did, I cleared those away, the paid off. I was able to tithe. I have missionaries that I help and the radio station, the rock radio here in Puerto Rico and my tithing.

All that is squared out. I don't really have a savings that will help me much, but that's why I'm calling concerning my car. I have a Gran Vitara Suzuki 2005. The engine, the transmission, rack and pinion went bad, so I'm investing 2,500 in the car.

The Kelly Blue Book value on my car is placed as a fair condition. It's giving me 2,500 to 4,500. I figured I'm going to stick with it. I was calling to see if it was good enough, but by praying God has showed me I need no more because I can walk to the grocery store, to the drugstore.

I live close to the beach, which I fairly use. I don't go much, but I just wanted to let you know that your teachings have really helped me get out of the deep water. I feel like I'm walking on water right now. Well, I'm so happy to hear that, Maria. You're following biblical principles. That's what we teach.

That's the benefit of following God's truth. It's timeless. It's transcended. It works in every situation. It transcends tax codes and economies.

It just always works. When we do it, again, we put ourselves in a position to experience God's best. That's the ability to be generous, which brings great joy. The ability to live with contentment and to experience freedom and peace of mind.

I think that's what we're all looking for, including, as I said, the ability to share with others in need. Maria, I appreciate your testimony today and your encouragement. You've made some hard decisions, but you have done the right things that I think are moving you toward a more solid financial footing, and that's always exciting to hear. Specifically about the car, is there something you're wrestling with? Are you trying to decide whether or not to sell it? Well, I was wondering if I should have, but the truth is I don't want to get into a car loan, so my little faithful one will have to stick with me until God tells me.

Okay, all right. Well, you know, just a general rule of thumb there is if the repairs get to the place where they exceed half of the vehicle's value or more than a year's worth of your payments, I think that's the time where you say, you know what, it's probably less expensive for me just to get rid of this and move on, and certainly that would be something for you to prayerfully consider. But you want to make sure you have a plan for where you go from there, and if you're going to be without a car, you mentioned walking to the grocery store, determine how much not having a car will cost you, if anything. Are you going to need to avail yourself of taxis or Ubers or ride-sharing services to get around?

That can add up quickly, so just make sure that you can, in fact, get around without a car and do that less expensively. But may the Lord bless you. Thank you for giving testimony to His faithfulness today and for your kind words about the program. We appreciate it. On to Allentown, PA. Sean, thanks for being with us today. How can we help you, sir?

Hi, thank you for taking my call. I just have a quick question about a 401A that I have available at work. I have a matching 401k that they offer, but since it's a not-for-profit, my understanding is that they also can offer us a 401k.

I was wondering if you could give me a little bit of information about that or the rules, the same as a 401k, and how they might be different. I'd be delighted to do that. We're going to have to do that just around the corner, though, Sean.

We're going to pause for a brief break when we come back. We'll talk about a 401A, which is different than a 401k, and what that means. Then we'll be on to your questions. We also have a tithing question coming from Bill in Ohio, so we'll deal with that as well, plus whatever's on your mind. Here's the number.

Phone lines open 800-525-7000. This is MoneyWise Live, where God's Word intersects with your finances. Welcome back to MoneyWise Live, where faith and finance meet each day as we apply God's truth to your financial situation. Lots of questions ahead as we tackle what you're dealing with today, be it giving or debt repayment. Maybe you're thinking about how much to save for the future or what's the appropriate lifestyle for a Christian. All that and more we'll tackle here on MoneyWise Live today.

Just before the break, we were talking to Sean in Allentown, PA. He was asking about a 401A, not a K. It's a different variety. Sean, let me explain just briefly, but basically the 401A is equivalent to what would often be known as a 403B in the nonprofit, either public school or government agency type situation. It's going to be a retirement plan, just like the 401K or 403B, but all three of them offer major tax breaks, but they're structured a bit differently. With the 401A, this is usually custom designed and can be offered to key employees as an added incentive to stay with the organization.

That's typically why it's done. They typically require everyone to participate as opposed to a 403B or 401K, which is entirely voluntary. The employee contribution is set by the employer, but the employer is required to contribute as well. Now, you can generally get a lot more money into the 401A variety. So for 2020, it was $57,000, $58,000 this year in 2021, and that's the limit between you and your employer, which is obviously higher than what you'd find in a 401K or 403B. And so there are real benefits to them and some distinguishing characteristics, certainly.

Now, if the employee leaves, they can usually, if the employer allows, withdraw the vested money by rolling it to another qualified retirement plan or by purchasing an annuity, and then you can withdraw the money from your 401A without penalty when you reach 59 and a half. So very similar to a 401K. So if this is an option being made available to you, this should be a good thing. And again, allow you to put much more away on an annual basis. In terms of the investment options, Sean, again, that's going to be up to each employer's plan and ultimately the custodian in terms of what investment options are in there. So if you feel good about making that selection yourself, that's great. Otherwise, I'd seek out the counsel of a professional to help you make that decision to make sure that you're investing according to your age, risk tolerance, goals, and objectives.

But I would proceed, and I think you'll find that this is going to be a great savings tool for you moving forward, as you say, for the long term. We appreciate your call today. On to Hiram, Ohio. Bill, you're next on the program. What is your question about tithing?

Hey, thanks for taking my call. Our minister at our church, he was having some financial trouble, and he had a 25-year-old vehicle and just didn't run anymore, so I bought him a car. Is that considered tithing?

Yeah, it's a great question, Bill. So I love this, that you wanted to make this gift. You designated that gift for a specific purpose. You know, here's the principle of the tithe, is that we give off of our increase proportionately, and I would say that we should start with God's plan A, which is the local church. Now, the question is, you know, does that include designating a gift as opposed to, you know, just giving it to the church generally? And I would say, you know, for the most part, we should give unrestricted gift to the church, unrestricted gifts for our tithe. I think we would give beyond that, sacrificially, to give designated gifts for certain specific needs, or, you know, a good example would be, we give to the, you know, annual missions offering over and above our tithe for the general operations of the church.

I would put this in that category. At the same time, I would say, God doesn't need our money, he wants our hearts, right? And your desire here is to be found faithful in your giving. And so I think God sees that and honors that. You know, if we want to apply the principle of the tithe, again, it would be that proportionate systematic giving on our increase. So I think this is ultimately between you and the Lord. If I just look at it face value, I would see, and perhaps this is an area where you would say, Lord, I'm going to try to go above and beyond what I was planning to do and continue to give to the general operations of the church out of my tithe, that portion I set aside based on my increase, and then with this specific gift that's for a very specific need and a designated way, I'm going to try to do that out of my surplus as a sacrificial gift over and above the tithe. I think that would be great. And, you know, see what the Lord does with that. He says this is the one area we can test him.

But at the end of the day, I would just go to your knees, ask the Lord to give you wisdom as to how he wants you to handle this. And I'm confident the two of you can figure that out together. Does that sound good, Bill? Well, yes, sir. Thank you very much. All right. God bless you. And I appreciate your generosity. Thank you for sharing that story with us today. Let's head to Munster, Indiana. Beth, you're next on MoneyWise Live. Go ahead.

Hi, and thank you for taking my call. I'm calling because I recently, my husband went to be with the Lord and he left me some insurance money, life insurance money. But right now it's in an account at like 1% only.

And I think there's probably better uses for it. I do still have a mortgage, but it's a very small amount. At this point, it's a good low payment because it's low interest.

And I'm just wondering, you know, someone approached me about buying some life insurance for myself, for my children when I passed on. And it was almost about 9,000 or a little bit more a year for 10 years. And it was $100,000 policy, but it was going to earn interest at 6%.

And after 10 years, it's fully paid. And he said, you know, that's better than the 1% on the money that I have. So what do you think about that? Yeah. So are you wondering then, Beth, what to do with this money that's sitting there earning 1%?

Is that right? Well, I mean, it has helped me with things that I need to do, but I do think that it should earn more than 1%. Yeah, I would agree with that, depending upon how this relates to other savings and other assets that you have.

So give me a quick breakdown of that. As you look at your emergency savings, what do you have? Is it this amount that was the proceeds from this life insurance money, or do you have other savings that you would consider your short-term emergency savings?

Not really. Okay. So what's the total you have in savings right now? Um, probably about a thousand dollars. Okay. And then what's the balance on this life insurance proceeds?

Oh, that's 250,000 dollars. Okay. And are you taking an income off of that? Are you drawing anything out of that to pay your monthly expenses, or do you have that covered from social security or other sources?

Normally I don't have to draw, but occasionally I do. Okay. All right. And so how much would you say over the last year you pulled out of this account? Um, over the last year, maybe $9,000. Okay. And last question, what are your total monthly expenses? Oh my goodness.

I wish I knew that. Okay. Well, I take this approach. Let's say it's 3000. I'd make sure you have at least a year in emergency savings, given your situation. So that'd be 36,000 and you could multiply that out. The balance I think you could put to work on a very conservative basis. So I connect with a certified kingdom advisor there in Indiana, who can help you build a portfolio.

You can find someone at our website, moneywiselive.org. We'll be right back. Stay with us. Welcome back to Money Wise Live.

So glad to have you along with us today. Let me fill you in on where we landed with the last caller during the break, we were able to finish up and she had 250,000 essentially sitting in cash. She's pulled 9,000 of it over the last year just to supplement her expenses. And she's wondering if she should leave it there earning 1%. And what we decided was if she pulled out a year's worth of expenses at around 35,000 and she invested 215,000 on a very conservative income producing fashion, if that earned just 4% a year, that would cover her $9,000 a year that she needs and ideally never touched the principal.

So she's going to seek out a certified kingdom advisor and see about investing that money, 215,000 of it in such a way that she can produce an income, but be very, very conservative. And we had a good chat, wanted to fill you in on that. Thanks for being with us today. Let's go back to the phones and we'll welcome Jordan from Ohio. Jordan, how can we assist you, sir?

Yeah, thanks for taking my call. What situation I'm in, my wife and I, are that we bought a house back in 2009. We got it for decent a good price. Due to the housing market right now, it's increased in value.

We've done some improvements to it over the years. And so we could make a profit off that plus we've paid down some of the principal throughout those years. But seeing the market the way it is, it seems like it's hyper inflated. It you know, we'd have to spend a lot more to get a bigger house now that we have more children need more space. Do you think that it would be worth doing that currently versus taking some of the money we've got about 60,000 in savings that we could take some of that and do an addition to gain more space as opposed to trying to sell and then move. But yet maybe I'm not sure if we'd be losing that money.

Right. Well, you know, there's, you know, there's a lot of dynamics going on here. And you're right, we're in a really interesting housing market right now. We've got a program that we are coming up in the next couple of weeks where we do a deeper dive into what's happening in the housing market. But kind of the short story is we're not repeating 2008-2009 where we've got a lot of speculative building in conjunction with, you know, a lot of loans being issued that shouldn't have been. That was what was going on then with lax lending standards that created a housing bubble. There was some real systemic issues in our financial system that needed to be addressed. And that led to the Great Recession.

This is different. This is driven by real demand. The millennials are reaching age 30. They're having kids and wanting to buy their first home. We've got a shortage in the home supply nationally. We've probably about two million homes light for what is actually needed nationwide. We also have the pandemic, which has caused a lot of people to move to a work remote situation, which means they can leave cramped apartments, apartments downtown and move out into the suburbs and buy a home with a little more space where the kids can run around.

You know, you put you know, you put all of that together with low, low interest rates and it's created some real demand. Nevertheless, the housing market is a bit over run right now. It's about, by national estimates, about five and a half percent overvalued, which doesn't sound like much.

And it's certainly not as high as it could be. But with that said, I don't think we're going to see any kind of housing crash or collapse. I think what we'll see is a cooling of the growth rates because they're just not sustainable. And so I think you'll see a flattening of the growth. But unless we were to get into a real recession, I don't think you're going to see much of a downturn any time, anytime soon.

So what do you do with that? Well, the other issue that's going on, you mentioned you could add an addition to the home, which I think you should look at is, you know, construction prices are through the roof, largely, again, driven by the pandemic. A lot of people investing in their homes.

They haven't been traveling. The price of lumber is way up and, you know, construction prices are high right now. And good luck even getting a contractor that can start anytime soon. So I think you should look at both options. The benefit, though, of you selling in a market like this is you're going to get top dollar, even though you're going to spend top dollar when you buy that next place.

So that should be somewhat of a wash. I think you need to legitimately go out and look for that next home that you believe would meet your needs and make sure it's going to fit into your budget. See what it would take for you to buy it. Make sure that you have, you know, 20% down as you pull the equity out of this home. Make sure that the mortgage you're taking on for that next property is not more than 25% of your take-home pay. And, you know, really crunch those numbers. Then realistically look at what you can get out of your house to help you make all of that work. Then I think you could take the step of actually getting a contractor or two into your current home to give you a real bid on what it would actually take to do that addition.

And I think the numbers will speak for themselves. You probably will find that that major construction project is a bit more expensive than you think. So I think you've got a little legwork here to do, Jordan, to figure this out. But I suspect you might find that, you know, it might be simpler and you may still come out just fine if you were to actually sell this place and go look for that next house that fits into your budget but also meet your needs. Does that make sense? It does. And, you know, I appreciate that.

Just looking for somebody who knows something about it to give me a push in the right direction. All right. Very good.

Hey, make it a matter of prayer, you and your bride along the way, and ask the Lord to give you some wisdom here as you make this decision. We'll ask our MoneyWise Live community to join you in that. We appreciate your call today. Let's head to Clear Lake, Minnesota, and welcome Rachel to the broadcast. Hi there.

Hi, thanks for taking my call. I just wanted to check some information that I'm trying to remember back to when I was in high school. But I have a daughter that graduated high school last year. She had asked me, with some of her graduation money, what would be the wisest way to invest that. And I was trying to remember back to the class that I had taken where we had learned that a Roth IRA is a compound interest account, so to speak, where you can take $1,000 every year starting when you're 18.

And if you contribute that $1,000 per year until the age of approximately 28 to 30, without making any withdrawals, the compound interest will make you a millionaire by the time you retire is what I think I remembered learning in that class. So I have my own investments, but as a young person, that is where I steered her. And I just wanted to make sure now that she's coming upon the time that she's going to make her next $1,000 deposit if that's still a good idea. Yeah. Does she have earned income, Rachel?

She does. Yeah, very good. I like that a lot. If we can teach our kids to do this really early, that makes a lot of sense. In fact, there was an article that we put up recently about a 16-year-old who had already started a Roth IRA. It's by Art Rayner. It's on our website, moneywiselive.org.

You'll find a very similar idea there. But the power of compounding is incredibly powerful, Rachel, when you start early and you do it over a long period of time. And as you said, it doesn't take much money, especially when it's growing that long at a decent long-term annualized growth rate, but without the drag of the taxes, which I think is the key here. And if she could just get in the habit of doing that, perhaps it bumps up from $1,000 to something higher than that. This year, the limit is $6,000 and she could begin to increase that. Once she has a 401k or a 403b available at work where there's any kind of matching, I would prioritize that first because that's immediate, you know, return on your money. If you get a dollar for dollar match up to 3%, that's 100% return on your money for that first 3%.

But then I'd go right back to that Roth IRA. And if she kind of builds the giving and the saving component systematically into the way she handles God's money at an early age, she will reap huge dividends down the road to be able to give more generously and to be well planned for the future. And we'll really call you blessed for helping her understand these powerful forces. So I affirm everything you're saying here, and I think you should just encourage her to press on. All right. Thanks so much. It's so good to hear. All right, Rachel, God bless you. We appreciate your call today.

On to Miramar, Florida. Now this is right near where I grew up, just down the street, actually enrolled. We appreciate your call today. How can I help, sir? Thank you. Thank you for taking my call. And I appreciated the great job that you guys have been doing. And you guys have an impact positive in my family life.

Thank you. My question is, you know, I have worked for a place for 17 years where I have a $40,000 in my pension. But I was told that if I remove the money at the early age, they will penalize me. And it's not going to be the money that's going to be so big. So they said, I can only touch that money when if God blessed me to see the golden age, which is 64 years old. And right now, I'm about I'm about to be 50.

Not yet. And I also have a 401k on a 401k in my current job. I'm wondering, should I leave that money with the city until I reach 64? Or can I can I remove it and put it somewhere where it can work and generate more money by the by the time I reach 64 years old? Yes.

And so this is a pension that they say can't be, you can't turn it into an income stream or take a lump sum until 64 without significant penalties. Is that right? Correct. Yeah. Well, that's probably the case. I mean, that's what they're telling you.

I mean, that would not be uncommon. So I would say rolled, I'd probably leave it right there. Not take that penalty. You don't didn't sound like you need the money. And then I would prioritize moving forward, you continuing to fund that 401k, which the benefit of the 401k is, as soon as you separate from the company, you know, at any point, as long as you're over 59 and a half, you could begin to take it out much sooner than 64.

And as soon as you separate no matter what age you are, you can absolutely roll it out to an IRA or put it into another 401k. But with regard to that pension, I'd leave it right where it is there rolled and we appreciate your call today from Miramar. Well, that's going to do it for us. Hey, we started today with Jerry Boyer on the national debt at MoneyWise.org. You can find a replay of this plus an article that Jerry wrote called CBO our new debt projections are already obsolete. That's there for your enjoyment.

MoneyWise Live is a partnership between Moody Radio and MoneyWise Media. Let me say thank you to our team today, Dan, Amy, Jim, and the rest. We're so glad to have you with us. May God bless you. Bye-bye.