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The National Debt

MoneyWise / Rob West and Steve Moore
The Truth Network Radio
April 30, 2021 8:03 am

The National Debt

MoneyWise / Rob West and Steve Moore

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April 30, 2021 8:03 am

Many would argue that the pandemic and its economic effects have made the rise in our nation’s debt necessary. But our founding fathers never could have imagined the 28-trillion-dollar budget deficit that the federal government has now accumulated. On the next MoneyWise Live, host Rob West will talk with economist Jerry Bowyer about this critical topic and how it may affect your finances. Then Rob will take your questions on the financial topics you’d like to discuss. That’s MoneyWise Live, where biblical wisdom meets today’s finances, weekdays at 4pm Eastern/3pm Central on Moody Radio.

Rob West and Steve Moore
Planning Matters Radio
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Rob West and Steve Moore

This is Doug Hastings, VP of Moody radio and were thankful for support from our listeners, and businesses like United faith mortgage. My best friend is blessed with three kids in a big house all the kids have their own rooms, but recently life in a bagel house is been different. In an effort to solve kid boredom. My friend, but when 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 and set of rooms apart, it's Ryan from United faith mortgage and when I see a home. I can help with the 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 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 Millville Park Rd., Melville, NY. Licensed mortgage banker for licensing information, go to an MLS consumer corporate and MLS number 1330.

Equal housing lender not licensed in Alaska, Hawaii, Georgia, Massachusetts, North Dakota, South Dakota and Utah and to paraphrase Thomas Jefferson the principle of spending money under the name of funding to be paid back later is really swindling the future of the large-scale we must not let our leaders Lotos with actual death by Rob West.

The founders could've 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 will take your calls at 800-525-7000.

That's 800-525-7000. This is money wise live for God's truth guides your financial decision. Jerry Boyer is our guest today and well as the chief economist Biden financial also the editor of Townhall financial and occasionally rights for national review Jerry welcome back. Thank you, my friend, always great to be with you always delighted to have you serve Jerry at your recent article in National review that we want to talk about today. The CBO saying that our new debt projections are already obsolete. But what were those projections and why are they no longer valid.

Well, there no longer valid because between the time that they did their annual analysis for the long-term budget outlook and the time that they kinda got printed and scheduled the press conference in and release 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. They fear conflicting stories on this. There's one thing that's very important to understand is two ways to calculate the national debt and part of the national debt. We 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 were going to have to pay that but you know if you don't count, you can make the debt look a little smaller there point is hey we did this analysis, that's a problem, but we didn't take into account this huge spending bill that we just passed yeah and then Jerry you make the point that growth expectations are falling, mainly because of demographic trends and that's good to put pressure on this as well as an yeah really is. I mean, you need people right. God said fill the earth and subdue it.

Exercise dominion over the earth from 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 yet don't have the right ratio of people pulling the cart. The people in the cart and the Congressional Budget Office is acknowledging that there saying that dumb when I can.

I have the normal historic growth rates that we had seen since the 1950s or even before because were not dumb that you know were not replacing our population anymore. Now they did 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.

That's we we kinda sold the win without and were reaping the whirlwind in terms of low economic growth and if you don't have the economic growth then you have more debt problem because we 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 all the same time you got a lot of healthcare spending.

That's out of control.

So these things are driving us into your debt crisis territory, 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 can 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 means we were interest rates are 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 were were kind of in a situation where got a dilemma were both choices are bad. The enough to stop the spending that we could normalize interest rates and you know that might be a little difficult having it would hurt the housing market a little, but we can kinda get through that so were really arguing about which biblical principle. In a pilot program violate the principles about not getting an excess debt to violate principles about not debasing the currency. And that's a bad sign in and of itself that were not following the principles are trying to decide which one is lesson four.

That's not the situation. Jerry Boyer yesterday will be back with much more right after this welcome back to money wise live on Rob West, my guest today, Jerry Boyer Jerry as chief economist, Biden financial today were tackling the national debt. What are we going to do in this country with the debt that we have the just continues to grow and the jury 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 the 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 enough, Native Americans.

If the native population. People who live here now.

Don't reproduce ourselves then were either going to have population decline or going to make that up with immigration. The problem is that there's a lot of social tension around immigration and so were society that's very good that you have divided around high levels of immigration, the kind of levels it would take to keep the workforce growing which is kinda what you need in order to grow the economy enough in order to yet basically afford to fund our our retirement plans.

Now that goes to a deeper cultural issue because the concerns about whether immigrants are really kind of joining and assimilating into the American experiment or are they just sort of here to work then bring the old voting patterns behind. Again this is one of these downstream effects. It comes we violate biblical principles were supposed to fill the earth and subdue his first reproduce ourselves, were not supposed to abort away her future were not supposed to have access spending were not supposed to have excess debt were not supposed attempt to debase our currency.

But when we do when we violate principles face a nation that is violating principles will have tougher and tougher decisions to make and so you know a lot of Americans argued it would be very concerned about extremely high immigration levels, but then I 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 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 a population growth is driven entirely by immigration, assuming the CBO is right with the regard to the growth potential. Jerry, what did 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 you look in the details of the report I think are probably right about growth rates that were cut, you cut it 2% growth rates mean will be better this year because were bouncing back from the extremely low baseline of the pandemic shutdown, but I think our new normal is in fact going to be some normal type. I think if you look at their interest rate assumptions there. Assuming that we don't get normal interest rates until 2050. While I just hope think that's realistic.

I think eventually you know the markets are gonna say sorry, we don't believe you Federal Reserve. We don't believe you. Treasury we don't think you can 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 rate. In the early 80s the Fed tried to fight that.

But it couldn't because you know they only control part of it were part of a global economy, Robert Mundell, the Nobel prize-winning economist who just died recently for a few weeks ago told me once that the biggest economic mistake that people make is that the nation's 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 to dollars. I don't want your treasuries. They dump them on the market and interest rates spiked if we got anything like normal interest rates that will 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 amidst not doing its job right. Yeah me think of it as someone is living a very unhealthy lifestyle, and then you know they get they get drug dog was a say they take you know an opioid and they feel just fine it you know what they had had a back problem with it. Had another problem and now they feel find easy money is the fiscal equivalent of an opioid it hides it masks the pain that we should feel when when we are behaving badly and violating biblical principles of economics we feel just fine until we don't yes Jerry where we go as a nation you know historically what our back is against the wall. We have demonstrated that, at least in many cases that we can make the right decisions. Is this just about cutting spending is it about Guild taxes. So what is 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 progrowth policies right now were moving towards antigrowth 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 were heavily indebted, and were 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 about you being prudent with our debt and the other thing is okay, let's say the world doesn't listen.

Okay fine then at least were more prepared for a debt crisis if we're not leveraged to the hilt. So what I would what I would see the key CIC the 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 we had one of those that would be more painful than anything you kind of in our experience may be since the Great Depression.

So I think something I 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 how they bit the of the price of a loaf of bread that changes, but your paycheck is changing and you have to make tough choices and you 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 little older, who remember that that is not an unrealistic scenario. Not saying that's the base case in the next couple of years, but that is a that's a realistic scenario say several years out 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 10 years out, but 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 tended to well over the long run even when you buy just before crisis. So I think panicking is not the right way to go. I think it means have margin as opposed to leverage I dig 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 hedge, and so I think the main thing you can do is notice something like this can happen and is not the end of the world and your job is your job is to be a little island of serenity when your friends and neighbors.

Very good. Jerry Moyers, chief economist divided financial. You can read his article about the national debt at national review online.

Your calls next back to moneywise live on Broadway is today initiated Jerry Bowyer stopping my heart true.

No reason is he said for us as we recognize, yet we are taken a lot of that is a nation were going to have to deal with that in terms of her spending 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 her means are we avoiding the use of debtor and moving toward being debt-free over time we have some margin or some liquidity starting with an emergency fund. 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 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 began 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 take away for us. We're not gonna control of the US GDP or the interest rate through the economy. Apart from voting and using our voice there. We are to be found faithful with what God has entrusted to us from a stewardship standpoint. Well, we will 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 were to start in Puerto Rico with Maria. Welcome to the broadcast, what's on your mind today.

Now I know how to create a kind. I went driving me crazy.

I was able to get that money cleaner Dell, David hi, I have that missionary may be a candy rock radio. Tamika current internal accounting anything that glared at current savings that will help me back down. I'm coming contending my key 2005 me back in the land bad back in the car make big Kelly of the value my time, place and condition given me to 500 (like getting out but Mike Crane no I can't lock it exactly, though I do not know. I cry out to the beach we can fairly you last backed arm. I just wanted to let you know that yet PCs have really help me.

What I feel like I'm walking walking and walking so happy to hear that Maria your following biblical principles. That's what we teach and 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 and it just always works. And 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 and 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 cars or something. You're wrestling with you, trying to decide whether or not to sell it all.

I will get okay all right will 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 years worth of your payments. I think that's the time were 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 gonna be without a car. You mention walking to the grocery store determine how much not having a car will cost you if anything, or you get a need to avail yourself of taxis or goobers or ridesharing services to get around that can add up quickly, so just make sure that you can in fact get around to 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 appreciated onto Allentown PA Sean, thanks for being with us today. How can we help user a quick question about it or 18 that I have available at work. I have a matching 401(k) that they offer not-for-profit. My understanding is that they also can order update or I'll offer a 401(k) I would give you little bit of information about that of the 401(k) and how they might be. Be delighted to do that you have to do that just around the corner. Though Sean and I were to pause for a brief break we come back we'll talk about a 401(k) which is different than a 401(k) that means the movie onto your questions. We also have a typing question coming from Bill and Ohio will 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 God's word intersection moneywise live where faith and finance me 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 giving debt repayment. If you're thinking about. I was to save for the future.

What's the appropriate lifestyle for a Christian all that and more will tackle here on moneywise live today just before the break we were talking to Sean and Allentown PAN. He was asking about a 401(k), not a K it's a different variety. Sean Lamy explained just briefly but basically the 401(k) is equivalent to what would often be known as a 403B in the nonprofits either public school or your government agency type situation. It's going to be a retirement plan, just like the 401(k) or 403B, but they do all three of them offer major tax breaks, but their script are structured a bit differently with the 401(k) feel 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 the typically require everyone to participate as opposed to a 403 beer 401(k), 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 401 a variety so for 2020 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 find in a 401(k) or 43B, 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 withdrawal of 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 401(k) without penalty. When you reach 59 and have some very similar to a 401(k). So if this is an option being made available to you. This should be a good thing.

Again allow you to put much more away on an annual basis in terms of the investment options. Sean again that's gonna 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 the decision to make sure that your investing according to your age risk tolerance goals and objectives, but I would proceed and I think you'll find that this is good be a great savings tool for you moving forward. As you say, for the long term. We appreciate your call today onto Hiram Ohio. Bill your next on the program. What does your question about tithing protecting my call I are ministered at church. She was in financial trouble and he had a 25-year-old vehicle and then running more time on the car that considered tithing yet. It's a great question Bill so I love this that you wanted to make this gift you designated that gift for specific purpose. You know, here's the principle of the Titans 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 no for the most part we should give unrestricted gifts for her tied to 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 ill annual missions offering over and above are tied 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 in 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 ties again, it would be that proportionate systematic giving honor 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 tied the portion I set aside based on my increase and then with this specific gift that's for a very specific need in a designated way to try to do that out of my surplus as a sacrificial gift over and above the time. I think that would be great and see what the Lord does with that. He says this is the one area we can test them but at the end of the day. I would just go to your knees, asked 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. Thank you very much all right God bless you and 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 all the Lord let my that right now, but one at all. And, I think.

I better use white IQ mortgage very small now. At that point it "payment well and check and now I'm just wondering what approach that I like children line. I And it would, at 9000 a little bit more a year for 10 years and that the hundred thousand dollars. How to keep it with current and check it and after 10 years. It only pay and he said you know that at one know what you think.

Yeah. So are you wondering, then that's what to do with this money that sitting there earning 1%. Is that right how you think it should earn more than one person 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 you have is it is at 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 real okay so what's the total you have standing okay and then what's the balance on this, this, life insurance proceeds at 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 shop okay. All right.

And so how much would you say over the last year you pulled out of this account over the last year have okay and less question what are your total monthly expenses okay will I think this approach let's say it's 3005 make sure you have at least a year in emergency savings. Given your situation.

36,000 and 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 our website moneywise right back to moneywise live. So glad to have you along with this today. Let me fill you in on where we landed with the last caller during the break we were able to finish up 250,000 essentially sitting – she's old 9000 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 years worth of expenses that around 35,000 and she invested 215,000 on a very conservative income producing fashion. If that earn just 4% a year that would cover her $9000 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 other than 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 be with us today.

Let's go back to the phone's and will welcome Jordan from Ohio Jordan Hartley sisters are yeah thanks to glycol what situation I'm in. My wife and I that we bought a house back in 2009 we got it for a good price due to the housing market right now it's increased in value we done some improvements to it over the years and so we could make a profit off that positive pay down some of the principal throughout those years, but seeing the market the way it is. It seems like it's hyperinflated it you know we have to spend a lot more to get a bigger house now to have more children need more space. Do you think that it would be worth doing that currently versus taking some the money we've got about 60,000 in savings that we could take some of that and do. In addition to gain more space as opposed to trying to sell and then move but yet maybe I'm not sure would be losing that money right well yeah there's so is a lot of dynamics going on here and you're right were in a really interesting housing market right now. We got the program that we is coming up in the next couple weeks to redo a deeper dive into what's happening in the housing market. But, the short story is were not repeating 2008 2009 where we got a lot of speculative building in conjunction with a lot of foot loans being issue that shouldn't have been that was what was going on. Then with lax lending standards that created the housing bubble. There was some realistic 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 millennial's reaching age 30 either having kids and wanting to buy their first home. We got a shortage in the home supply nationally would probably about 2 million homes light for what was actually needed nationwide.

We also have the pandemic which is caused a lot of people to move to a work remote situation which means they can leave cramped apartments is apartments downtown and move out into the suburbs and bio home with a little more space for the kids can run around. You put all 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 spy national estimates, about 5 1/2% overvalued, which doesn't sound like much, and it's certainly not as high as it could be the with that said, I don't think were going to see any kind 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 can see much of a downturn in the tines anytime soon, so what you do with that.

Well, the other issue that's going on.

You mention you could add an addition to the home which I think you should look at is the old construction prices are through the roof largely again driven by the pandemic. A lot of people investing in their homes. They have been traveling.

The price of lumber is way up in your construction prices are high right now and good luck even getting a contractor 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 the you have your 20% down as you pull the equity out of this home make sure that the mortgage you're taking on for that next properties not more than 25% of your take-home pay and you don't 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 bit 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 got a little legwork here to do Jordan to figure this out but I suspect you might find that you might be simpler and you may still come out to just fine. If you would actually sell this place and go look for that next house that fits in your budget but also meet your needs. Does that make sense. It doesn't I appreciate that. Just looking for some you know something about it. The give meal push in the right direction are a very good day. Make it a matter of prayer.

You and your bride along the way and asked the Lord to give you some wisdom here as you make this decision will ask her moneywise live community to join you in that we appreciate your call today, but said to clear Lake, Minnesota, and I welcome Rachel to the broadcast. Either I wanted to check her information that I'm trying to remember back when I was all that I have not graduated last year earned it at me with her graduation money. What would be a light way to invest at an art. Thank you.

Remember back at and where we had learned that a Roth IRA is a compound interest account where you can take out the dollars every year starting in your 18 and if you contribute that thousand dollars a year until the age of approximately 2830 without making any withdrawal that compound interest level. Make your millionaire by the time you retire.

Think I remembered learning in class. I have my own investment but as a young person that is where I dear Karen I just wanted to make sure that you coming upon the kind that make her neck thousand dollars deposit. Good idea yeah does she have earned income.

Rachel got a very good deal. I like that a lot you know if we can teach your kids to do this really early deal that makes a lot of sense. In fact, there was an article that we put up recently about a 16-year-old who'd Artie started a Roth IRA spy Art Rayner, it's on our website moneywise, you'll find that 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 and a decent to 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 a thousand something higher than that you are this year the limit is 6000 and she could begin to increase that once she has a 401(k) or 43 be available at work where there's any kind of matching I would prioritize that first because that's immediate in a 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 go right back to that Roth IRA and if she kinda 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 the plan for the future and will 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 their RA, Rachel, God bless you. We appreciate your call today onto Miramar, Florida. Now this is the right near where I grew up just down the street actually enrolled. We appreciate your call today. How can helps her my call and my great job… Been going and you got public and and but in my pocket. I think you might grant my question is, you know I will put up a new what do $40,000 in my been some but I was told that I would move the money out the Bill Lupin penalized me so big that I can only put that money when it.gif nickel to the gold in it with you before you go and right now I'm about I'm about to be picked not get and I also have a 401(k) on April 1 30 my current job one voting. I lived that money would be 50 on all all turn out good. I would hold it imported some lightweight when Ethan walked and my money but it buddy, I reached the legal yes it incidences of pension that they say can't be that you can't turn it into an income stream or take a lump sum until 64 without significant penalties. Is that right Orrick yeah well that's probably the case may that's what they're telling me that would not be uncommon, so I would say rolled, I'd probably leave it right there not take that penalty. You don't and some like you need the money and then I would prioritize moving forward you continuing to fund that 401(k) which the benefit of the 401(k) is as soon as you separate from the company guilt at any point as long as you're over 59 1/2 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 401(k) with regard to that pension.

I leave it right where it is their role that we appreciate your call today from Miramar that's good to do it for us say we started today with Jerry Bowyer on the national debt you can find a replay of this pleasant article, Jerry wrote called CBO our new debt production projections are already obsolete, that's there for your enjoyment as light as a partnership between movie radio and moneywise we say thank you RT today Dan Jim and the rest were so glad to have you and God bless

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