A Great Way to Pay for Healthcare

This is Doug Hastings, Vice President of Moody Radio, and we're thankful for support from our listeners and businesses like United Faith Mortgage. Heading into spring, I've been spending a lot of time pondering, analyzing, and debating something extremely important to men, and even many women. And that's whether a new driver would improve my golf game.

I would say I'm somewhere between embarrassing and appalling at golf. But man, do I love it. And all my buddies show up with these epic flash, big maverick birther drivers, and I can't help but feel like they've got this massive advantage on me and my persimmons. It's Ryan, and our faith and family mortgage team, we're proud to have a pretty special advantage ourselves, and one that can be a big deal for you. Our team is an arm of a bigger company who is a direct lender, which means our company uses its own money and makes its own decisions within its own walls. There's no middleman, and this advantage often allows us to get you a better rate, saving monthly and lifelong money on a refinance or new home purchase. We're much better at mortgages than I am at golf.

We are United Faith Mortgage. COVID has changed our world dramatically in the last year and a half, how we work, educate our children, and even visit the doctor. So it's good to know that some things haven't changed.

Hi, I'm Rob West. The pandemic also strained our healthcare system, but a unique way of paying for healthcare hasn't changed. I'll talk about that with Lauren Gydeck of Christian Healthcare Ministries. Then it's on to your calls at 800-525-7000. That's 800-525-7000.

This is MoneyWise Live at the crossroads of biblical wisdom and your finances. Our guest today is Lauren Gydeck, Vice President of Communications and Media at Christian Healthcare Ministries, and she's here today to reassure us that the amazing service her group provides has gone off without a hitch during the pandemic. Lauren, great to have you back with us.

Oh, thank you so much. Thanks for having me back on your show. Absolutely. So how are things going at CHM? Bring us up to date. Sure. Things are going very well.

You know, the pandemic has not really affected us very much. And we are, you know, we continue to share medical bills, 100 percent of eligible medical bills for our members, and we keep our sharing time down. So that's a consistent experience for everybody who joins the program. And also we reached a milestone recently where we have shared a sum total of over six billion dollars in medical bills since the time we started. Incredible. Six billion dollars in shared medical bills. God's people coming together, sharing each other's medical costs.

And Lauren, that's incredible. It's a huge milestone and really speaks to the longevity and the success of this ministry, doesn't it? Absolutely. This is our 40th year and we're so proud to be able to, you know, God has given us the ability to continue to serve our members over this long period of time. And we're just thrilled to be able to do that.

Yeah, no question. You mentioned the term share time, keeping the share time down. I assume that means how quickly those shares are going out to your members. Is that right? Yes, that's correct.

So explain that a bit. Just what does that typically look like? Well, our target date to share is between 75 and 90 days. And a lot of times, though, we over deliver on that. You know, we work with the health care providers and sometimes special arrangements need to be made.

But by and large, you know, members are seeing those bills shared under that three month timeframe. Yeah, that makes sense. All right. Well, since it's been a while since you've been with us, how about a quick refresher on how Christian Health Care Ministries works?

It's definitely not health insurance, but give us an overview. Right. It's a different model than perhaps what some of your listeners are used to. We are biblically based. So, you know, our foundation is Galatians 6, 2, which says carry each other's burdens and so fulfill the law of Christ. And then we also take an example from the early church in the Book of Acts, so chapters two and four. It said the believers pooled their possessions and shared with each one as he had the need. And then there was no one in need because they were all supporting one another. And that's what we do in the area of health care costs. Yeah, no question about it.

Just about a minute before our first break. How is it different than insurance? Well, I would say, you know, the main thing is the patient is in charge. So, you know, you as the patient, you can shop around for your health care and save a lot of money for yourself and for your fellow members. And also, you know, you always see the pricing. So there's transparency. And that's something where you would get the bills and you would send the bills to us. And then we would work with your health care providers as needed and we would turn those bills around and we would what we call share those bills, meaning that we would send a check to you, the patient.

Yes. And some programs actually require testing or application fees. What's required to become a member of CHM? Well, we're a ministry and so we don't exclude anybody based on height or weight or where they live. You know, our only qualifications are that you are a Christian living by biblical principles and you agree to our statement of beliefs, which is on our website. And then you attend worship, group worship regularly as your health permit. Well, and what's really special is that you describe your relationship with your members as a covenant relationship based on a biblical model. We're going to continue to unpack this just around the corner talking with Lauren Gydeck of Christian Health Care Ministries, a health care cost solution that's budget friendly, faithful and biblical. Then your questions, 800-525-7000, 800-525-7000. This is MoneyWise Live, where God's word guides our financial decisions.

Welcome back to MoneyWise Live. We're so thankful for the underwriters we have here on our program that allow us in part to bring you this show every day. One of those is the Ministry of Christian Health Care Ministries.

We're joined today by Lauren Gydeck, vice president of communications and media at CHM, a health care cost solution that's budget friendly, faithful and biblical. And Lauren, just before the break, we were talking about the biblical basis for this ministry. And then you described really how it works. So let's walk through a scenario. Perhaps some of our members are still a little fuzzy about how this actually plays out in their lives. Let's say the kids are playing soccer in the backyard. Little Johnny, unfortunately, breaks his ankle as an emergency room visit.

I've been there, done that as an X-ray and a cast. It comes to twenty five hundred dollars. How would you pay for that using CHM?

Yeah, that's a great question that we get all the time. So I'm going to use the example of our gold program. We do have three different programs, but I'll just describe gold for the sake of time. And the threshold that we'd be looking for with the gold program is five hundred dollars. So, you know, anything that would exceed five hundred dollars and that could be multiple medical bills, but together they exceed more than five hundred dollars. Then CHM would go ahead and assist with those costs. So in this case, because it's, you know, it's about twenty five hundred dollars is what we're talking about.

CHM would actually share, go back and share one hundred percent of those costs as long as they're eligible, according to our guidelines, which in this case, everything should be eligible. Interesting. Yeah. And the really exciting thing about this is, in fact, a community. It's the body of Christ coming together. Talk about that side of it, because often these events where you all are stepping in and sharing are surrounding health crisis. And that means this is a difficult time. There's actually a prayer element here, too, isn't there?

Absolutely. Yeah, we have some more formalized type of programs where members can write to each other, send notes to each other. And then we have more informal types of things where, you know, folks call in, they're dealing with a really tough situation or maybe they just got news that they're expecting, you know, so they're really happy, but they're nervous. And our staff is very compassionate and eager to walk alongside them, whatever they're dealing with. And we hear that a lot from our members how they felt so supported by our staff and they pray for them over the phone and sometimes by way of email. So there's lots of ways that the body of Christ can lift each other up spiritually during the time.

No question. And you mentioned the team you have in-house that is dealing with each of your members and addressing their customer service needs. You mentioned they often pray with them. We have visions when we think about paying for medical bills that we're going to have to haggle with our provider. And in this case, yes, it's not insurance, but we're wanting to make sure that these events are covered. Talk about that piece of it and how willing CHM is to step in no matter what's going on.

Right. Yeah, I think I mentioned briefly before, we have a team of experts who interact with health care providers all the time. So, you know, sometimes there are unique situations where a member needs to have a surgery quickly or things need to be set into motion fast. And our team is so good at, you know, interacting with the providers on the member's behalf. So if this is something that is intimidating to you as far as asking for a discount on your medical bills, which we encourage, then we do have staff here who can assist with that as well.

Yeah. And typically when you're a cash payer, which is how the medical provider will see you if you're a part of CHM, they're very willing to lower their fees, aren't they? Yeah, we do find that in a lot of cases, some of the bigger hospital systems, they're a little more challenging and we do work with them as well.

Hence the team I mentioned a couple of minutes ago. But by and large, the health care providers are pretty friendly toward the model once they understand what it is we're trying to accomplish. And they understand that, you know, CHM has been around a long time. You know, we share each other's bills and we're faithful to do it. So generally speaking, you know, we do have members who get, you know, 40, 50, 60 percent off and I'm talking about big bills, you know, in some cases $100,000 or more.

Yeah, very good. I mentioned a moment ago that Christian Healthcare Ministries is not only faithful and biblical, but it's budget friendly. Let's talk about that for a moment. What is the actual cost of membership? Can you walk us through it?

Yeah, absolutely. Well, I'll start with the gold program again, which is $172 per person per month. But there is a cap. So no family would ever pay for more than three what we call units. So it's really $172 a unit. But all dependent children together are considered just one unit.

So if you have five kids, you know, it doesn't matter. You never pay more than 172 times three, which is $516 a month. Well, and for a lot of folks as they think about having a legitimate healthcare cost solution, especially one that's biblically based, they're probably surprised to hear how in fact, budget friendly it is. That's incredible. Lauren, I love your stories, because I know you get to know your members and your team shares these internally as you see God at work and see the body of Christ coming together. Is there a story that comes to mind of a CHM member who's recently had an event? Yes, the person I'm thinking of actually was a young lady about 30 years old in living in Maine, you know, recently married, no children. And she went to the eye doctor for a checkup. They said, you know, we think there's something wrong.

We want you to have an MRI. And before she left the appointment, she passed out, come to find out that she had a brain tumor. Now, thankfully, it was operable. But of course, you know, she had to go through all the stress of having that major surgery. And they thought that there was a really good chance that she would lose her hearing in one ear, but God was so faithful and she came out of it. She could hear immediately after the surgery and, you know, the doctors were just astounded. And CHM was able to help. As you can imagine, brain surgery is quite expensive. So we were able to help and satisfy all those medical bills she had.

Wow, incredible. Well, I know you all are really personally invested in your members' lives. And I so appreciate that aspect of the ministry. As we've mentioned before, we actually have team members here at MoneyWise Media that have been with CHM for a long, long time. And they share that sentiment about just how they feel they're a part of a community. And they're so grateful to have the support of CHM through their health care and every facet of it. I noticed many conventional health plans right now, Lauren, are in an extended open enrollment period through August 15th. That's not an issue with CHM.

There's no such thing, is there? Right. We don't have an open enrollment period, so you can join CHM at any time. You know, we kind of joke around and say we're always open. Or if you need to make changes, if you're already a member and you need to make changes, that's pretty easy to do. We just need a 30-day notice for that.

But it's very flexible. It's very easy to join. And we're always eager to welcome new believers into our family. That's great. Well, this has been so informative and helpful, Lauren.

As I said, we're so thankful for your partnership. We're about out of time today. How can folks get more information? It's real easy. They can just go to our website, which is chministries.org, or they can call us at 800-791-6225. Great. Thanks for being with us today, Lauren. Thank you so much. I appreciate it. Lauren Gajdek of Christian Healthcare Ministries has been our guest today.

Learn more at chministries.org. Your calls are next, 800-525-7000. Stay with us. Thanks for joining us today on MoneyWise Live.

I'm Rob West. Phone lines are open 800-525-7000. We're grateful for Lauren Gajdek and the team at CHM and their partnership and underwriting of MoneyWise Radio. You know, this is a really phenomenal alternative that's budget-friendly to traditional healthcare. And our Facebook question today was, why do you think medical cost sharing is a great way to cover healthcare expenses? And Charlotte said, well, we use CHM, which is great because you pay the same amount monthly, whether you have one child or more, which is way cheaper than any traditional option, she says.

Lisa says you don't have to participate in plans that pay for things you don't believe in. So, you know, there's another aspect to this, which is aligning your dollars with an organization that aligns with your values. So really exciting.

CHM, of course, you know, been doing this for a long time, goes back all the way to 1981. And again, thankful for Lauren stopping by today. All right, we're going to turn the corner and take your financial calls and questions today. We want to apply the truth of God's word to your financial life. We've got some lines open. Here's the number 800-525-7000.

That's 800-525-7000. Before we take our first call today, let me just mention that we do have coaches available for you. We'd love for you to both submit your questions if you don't have a chance to get on the air, but you have a question and one of our trained volunteer coaches can assist you. We'd love for you to submit that question one of two ways. Either email that to us at questions at moneywise.org, questions at moneywise.org.

And we use those questions, many of them on the air, and I try to answer at least one a day. And then beyond that, you can post your question to our MoneyWise community. You'll find it in the MoneyWise app when you download it in your app store. And you can post a question here from other MoneyWise listeners, but you'll also hear from our coaches as well. And so be sure to stop by, download the app, connect to the web app at app.moneywise.org and post your questions. We'd love to hear from you and provide some biblical counsel to whatever you're facing today. All right, let's dive into your questions today. 800-525-7000. We're going to start in Iowa with Diane. Welcome to the program. How can we assist you? Hi, thanks for taking my call. My question is between a revocable trust and an irrevocable trust, and which one would you recommend would be the best way to go if we have investments in a home and vehicles and things that we'd like to ensure that gets transferred to our kids appropriately?

Yes. Well, a revocable trust, Diane, and a living trust are separate terms that describe the same thing, basically a trust in which the terms can be changed at any time. Whereas an irrevocable trust is just as it says, it describes a trust that can't be modified after it's created without the consent of the beneficiaries. But irrevocable trusts offer tax shelter benefits that revocable trust do not because you simply can't take it back. It removes the assets from the benefactor's taxable estate, meaning they're not subject to estate tax upon death. They also receive the benefit of a tax responsibility for any income generated by the assets as you move assets into the trust. But for most folks, estate taxes are not an issue just because there is not going to be any kind of inheritance tax or gift tax of any kind up until $11.5 million right now.

And so most folks are not looking for that kind of assistance. So instead, they're looking at a trust for the purposes of estate planning to be able to pass their assets to their beneficiaries at the time of their choosing, whether that's prior to death, if they were incapacitated, and then they would have a trustee that would take over and make those decisions on their behalf. Or after death, if they want to have certain conditions upon, you know, the timing of when assets are released based on, you know, minor children, things like that. A trust is also a great way to just improve the efficiency of the estate transfer process, wealth transfer, because it's out of the probate court. It's not subject to, you know, the public record. And so it stays, again, outside of the probate court, which would normally be accessible by the public. So there are some benefits to it. I think, you know, it's not for everyone in terms of there is some added cost over and above a simple will. So I think it's really incumbent upon you to sit with a godly estate planning attorney just to talk through your situation. Do you have any lifelong dependence because of an ongoing medical issue? Are there unique circumstances?

You know, how do you want to use the trust and is that the right tool for you to accomplish what God would have you to do in your last stewardship decision, which is how you orderedly, in an orderly way, distribute your assets to the next steward. So does that answer your question, though? Yes, it does. That's good. That's exactly what I wanted to know. So just needed a little clarification. I'd already done some investigation, but I needed it in a more concrete terms that I could understand.

Very good. Well, I'm glad that was helpful to you. If you want to sit with somebody and one of the real benefits, Diane, to sitting with an estate planning attorney is not only their competency and ability to draw up these documents, but just the questions that they can ask you to uncover perhaps things you haven't even thought of in terms of how you're conducting your wealth transfer, how you're communicating with the next generation. And to the extent it's a godly estate planner, not just looking at the financial capital, but the spiritual and social capital as well and helping you navigate the transfer of values and wisdom even before the wealth.

So if you don't have someone that you can connect with, I'd encourage you to connect with a certified kingdom advisor in your area and then ask for a referral to a godly estate planning attorney. Just go to our website, MoneyWiseLive.org and click Find a CKA. We appreciate your call today very, very much. Well, folks, thanks for being along with us today. A lot more to come on MoneyWise Live, many more of your questions as well. We'd love to hear from you.

Phone lines are open at 800-525-7000. Let me also mention that MoneyWise Live is listener supported. So if you'd prayerfully consider a gift as we head toward the end of the month of May, we'd be grateful. We depend on you to do everything we do on the air, in the app, on the web, our coaches, our CKAs, all of it. It comes from your generous support. Just head over to MoneyWiseLive.org, click the donate button as you prayerfully consider what God would have you to do and we say thank you in advance.

Hey, more to come just around the corner. Here's the number, 800-525-7000. This is MoneyWise. We'll be right back. Thanks for joining us on MoneyWise Live.

I'm Rob West. You know, we all want our faith to be reflected in every facet of our lives and we want our lives to be centered on God's word. And we want that to include our finances, don't we?

That's what this program is all about. How we take the counsel of Scripture, pull out the principles and apply them to our financial lives. What's on your mind today financially? If you want to be found faithful in navigating what the Lord has entrusted to you and managing his resources wisely, we'd love to talk to you. Do you have a question about debt or giving? Perhaps it's refinancing your home, you have some student loans or credit cards you're trying to pay off, or maybe you're just trying to navigate handling money as husband and wife.

How do you do that together? Well, whatever's on your mind today, we'd love to hear from you. We've got some lines open.

Here's the number, 800-525-7000. In just a moment, we're going to be talking about how to pay off a car loan, we'll be talking about capital gains on rental properties. But up next is Doug in Akron, and I understand you use Christian Healthcare Ministries, the biblical solution to healthcare costs that we talked about in the opening segment. Tell us about your experience, Doug. Well, hey, I'm a longtime listener and first-time caller. I just want to tell you I really appreciate your program. A lot of excellent, excellent biblical advice. I would encourage a lot of people to take it.

I'm one of those that basically, you know, I'm a Christian, I've been around a long time, I'll try to make it quick because I know you probably have a lot of people that you can talk to. But I had an opportunity to sign up for their program, and I ran it about, I'm a business owner, I ran it by my account and some other people there in my business to get the idea. And it was very odd to them about how this whole thing worked. So they weren't really jumping up and down about it, but I thought, you know what, this is biblically based.

You know, it's got to be real. And I took a trip because where I live, I could walk into one of their offices and I had to sit down with some of the people and they were like really very helpful. And so I signed up and I went with the goal plan. And about a year after that, I developed a health issue. I had a lump underneath my arm that was something that shouldn't have been there. And my doctor basically said, Doug, we've got to get you in.

We're not even going to do a biopsy, we're going to just take it. So that's how serious it was. And I thought, wow, how is this going to work?

Well, I got to tell all you people out there, this is reality. This really works. These people were awesome. My surgery was going to cost somewhere around $20,000 to $30,000. And just like the one gal said, you know, I paid the first $500. And they walked me through the process with the bills. It was a little unusual because it really sounded too good to be true.

The only thing I had trouble with is the fact that you have to basically tell them that you're a self-pay, which a lot of the hospitals would scratch their head. But I would encourage everybody, this is a real thing. It is a bunch of Christians that actually are, you know, where the rubber meets the road, they're doing what they say they do.

And I would recommend them 100%. Oh, that's great. Well, I appreciate your testimony, Doug. And, you know, it's one thing just to hear about the nuts and bolts and the heart behind it from somebody inside the organization. It's an entirely different thing to hear from somebody who's been where you were, facing large medical bills and thinking, all right, how is this going to work? And then to see it unfold in the way it was described, God's people coming together, your bills paid, and somebody to walk you through the entire process, that's really encouraging. How are you doing health-wise?

I'm awesome. I mean, I'm a 66 year old guy, but I mean, I have a construction company and I'm like, I can still do the stuff I almost always could do. And I, you know, I credit that to the Lord giving me good health, but that's a scary thing.

You know, a lot of people when it's a health issue and a serious thing, they get confused to hear, you know, a lot of advice from a lot of different people. This was like dealing with family. I'll just put it that way. That's great. Well, thank you for your encouragement today and for listening to the program and for taking the time to share your story as well. We appreciate it, Doug. May the Lord bless you. To Coeur d'Alene, Idaho. Michael, you're next on the program.

How can we help you, sir? Yeah. Rob, the question I have is that we have a couple pieces of property that we divided. One piece we inherited from my dad when he passed away and the other piece then we bought, divided both of those into smaller parcels.

And we'd like to sell a couple of those. We have some friends that are interested and our thought was, I'm retiring, so we could use it to help supplement retirement. And then also looking at maybe doing an addition on our home and that possibility, but wasn't sure about how capital gains, if this would factor in and what we might be looking at concerning that.

Yes. Were all of these properties bought as rental properties or was one of them or a piece of one of them your primary residence? No, neither one is our primary residence. They weren't rental properties. They were both bare land properties.

Okay. But investment properties and not where you're living. So you wouldn't get obviously the exclusion based on that being your primary residence for the last two out of the last five, two out of five years. So yeah, there would be capital gains on any gains that you have. You know, the capital gains tax rate right now, if you're married filing jointly with taxable income between 80,000 and just shy of half a million is at 15%. And there's various methods of reducing that capital gains tax tax loss harvesting using a 1031 exchange to kind of roll it into a similar property that you identify within 45 days of the closing and then, you know, purchase within 180 days of the closing, you know, those types of things. But for the most part, you're going to establish a basis and for that property that you inherited, you'll enjoy a stepped up basis based on the date of death. And then upon the sale, you'll determine what was in fact the gain. And that would be what you'd be looking for in terms of, you know, where the capital gains would apply. So I would, you know, anytime you have something going on in your financial life that's different, especially when there's significant transactions involved, like the ones you're mentioning here, I would encourage you to seek out professional assistance from a tax preparer, a CPA or accountant who can just help you navigate all of this, make sure that the capital gains is calculated properly, that you don't pay any more than you have to because you may be able to add, you know, something to the cost basis. If you made any improvements for that raw land, put in kind of any of the infrastructure prior to the sale, things like that. So I'd connect with the CPA or accountant.

But yeah, you'll have some capital gains here based on the profit over and above the cost basis, which was either when you purchased it, you know, minus some of the transaction costs and improvements or that stepped up basis on that inherited property. But I think you'll that'll be money well spent when you seek out that professional advice. So we appreciate your call today.

Sounds like a blast to have a small community there with a lot of friends buying properties right next to each other. I think that's a great idea. We appreciate your call today. Phone lines are open 800-525-7000. That's 800-525-7000. Just ahead, we're going to talk about the best way to pay off a car loan, whether or not you should double up your payments to reduce principal on your mortgage, and whether you can achieve the perfect credit score.

That and your questions. Here's the number again, 800-525-7000. This is Money Wise Live, where we apply God's truth to your financial life, mining the scriptures, understanding how those 2300 verses apply to what's going on in our lives as we accept our role as steward of God's resources so we can be found faithful and live generously. More to come just ahead. Stay with us. Thanks for joining us. This is Money Wise Live. I'm Rob West. Back to the phones today. We're going to go to Boca Raton, Florida, just north of where I was born and raised. Diana, thanks for being on the program today. How can I help you?

Thanks for taking my call. We own two properties. One is our primary residence. The other is a rental property. We are soon to pay off the mortgage on the rental property and followed within a year. So, primary residence. How can I either insulate myself from a credit score dip from a nearly stellar perfect credit score or either insulated from that hit or perhaps I should continue to keep a small mortgage on one or the other property.

Yeah. Well, I love the fact that you have a great credit score, but for me, Diana, there's no reason to pay a dime of interest that you don't have to just so you can keep an extra mortgage on the books. First of all, are you going to see a dip when you pay that off?

You may. It wouldn't be much because when we look at the formula for how, let's say, the FICO score, and that's not the only one, but that's one of the most common, 10% of that score is your credit mix, the various types of credit that you have. You know, a good mix of revolving accounts, installment accounts, a mortgage, you know, that type of thing. And so by taking a mortgage out of that equation, that's going to alter that mix.

But again, that's only 10% of your score. And it's not that that's necessarily going to be a long term pull you down. It may just be as those changes occur, you may see a slight dip.

I would ask, is that even going to make a difference? You know, if you have a stellar credit score, let's say it's over 820. And all of a sudden, you know, a few weeks later, it's temporarily down to 780. And then it works its way back up to 820.

Does that really matter? You know, I mean, if anything over probably 740, you're going to qualify for the very best rates and terms whenever you borrow any money, and that's assuming you're going to be in the market to borrow some more money. And that's probably not even a given. So I would, you know, as much as you'd like to just feel like, well, I've got a great score, and I don't ever have to think about it. I wouldn't use that as a reason to pay any interest unnecessarily, especially given the fact that you may not see very much in the way of a change at all. And whatever you see, as long as you're an on-time payer, and your credit utilization, you know, is good, meaning the overall credit you have extended to you, that the current balances are, you know, 30% or less of that credit utilization for the revolving accounts.

And, you know, unless those things are out of whack, which clearly they're not, if you have a stellar credit score, then I just wouldn't worry about it. Does that make sense, though? That makes perfect sense. Thank you so much. I appreciate that wisdom. Okay, we appreciate your call today.

God bless you. And hey, congrats on that credit score. By the way, what is it?

I'm just curious. 843. 843. Congratulations, Diana. That's a great credit score. I'll give that one to you for sure. Hey, God bless you. Thanks for your call today.

To Wheaton, Illinois. Tyler, you're on MoneyWise Live. Go ahead. Hi, so I was asking a question. It's kind of twofold. It's kind of one is, how did we get into this situation?

And the second thing is, what do you think is best for me? So the situation is I got married recently, and my wife is paying a, she's paying a car loan, but it's, she's paying the amount of two cars. So at one point she had a car that she returned, and I'm curious how she's now still paying for that car, but also paying for the car that she currently has. Like, why would, why would she be paying for both but not driving both? But she's assuring me that, that there's nothing she could have done that she signed, that she's going to pay off both. And therefore, when she returned the other one, now she has to pay off both. And then yeah, the interest rate is kind of high, and it's kind of a high payment because of that. So I'm thinking about, is it wise to take out a, like, find a buyer for it, take out a loan, pay it off, and then use the money the buyer pays us to pay off the loan to kind of get out of it?

Or is it wise even just to kind of stay in that position? Yeah, Tyler, is the two loans or is it, was it all rolled into one new loan? Rolled into one.

Rolled into one. Is that right? Yeah.

Okay. Yeah, well, clearly what happened was, you know, based on, you know, maybe she borrowed 100% of the value of the car, and you know, she drove it off the lot and immediately lost, you know, 20% or more of its value. And by the time she sold it, she had not gotten back into a positive equity situation.

She was upside down. So when she went to, you know, turn that car in, presumably, and get the next car, they said, well, that's fine, even though, you know, the value of this car is not enough to pay off the note, we'll just roll that new amount into this new car purchase. So, you know, now essentially, you're paying what was left over on that old car plus you're financing this new car and, you know, you're driving one car and you know, still paying for that one, but also still paying for the other. Do you know if you have any positive equity now in this current car?

I suspect you don't. But do you know what it's worth? Have you looked at the private sale value on, let's say Kelly Blue Book and compared that to the current balance on the note? Yeah, the Kelly Blue Book is about 13,000 for it. And then, like the what would be left on the note is about 13,500.

Okay, all right. And does the payment fit into your budget? You know, I know you are recently married, and you're probably, you know, you're young, you're still building your income.

Tell me about your budget and kind of how this fits in. Yeah, we could really squeeze it and make it work. But we both are in agreement that it'd be convenient to find a way to get it off our hands if it's possible. Well, yeah, I mean, I think the key is that you've got to get it sold and you know what the minimum you can accept is to make sure that you get out enough to pay off and satisfy that note in full.

And then you've got to solve for transportation at that point. So let's say and by the way, you're in a good market for this because used car sales, used car values are up right now at pretty high levels. And so, you know, there's an argument to be made that depending on what part of the country you're in, and you know, the condition of the car, the make and the model and how desirable that is, you know, you could in fact, get if Kelly Blue Book says you should be able to get 13, you can probably find somebody who'd be willing to pay 13 five, just because you know, prices are a bit higher right now than what you'll even see online. So let's say you were to get out from under that you got enough, you could write the check based on the sale, pay off the note.

Now that comes out of your budget. What would you do then for her transportation? Well, we would get a, we would just find a way less expensive car that would be more budget efficient with the payments. And the one thing is they're saying that we can't transfer the note to someone else. Like, I was curious, like, will we have someone else pay us a check like before we give them the car, to pay off the car?

Oh, yeah, absolutely. Yeah, so that that's the way a private sale works. So you would, you know, list this car, you could do that on auto trader, you could do it any number of ways, you're going to do better if you do it as a private sale, you know, even Craigslist or eBay Motors, versus taking it to a dealer.

And you'll do a private sale. And yeah, there's a process for that you could, you know, do a couple of Google searches and kind of see how you want to go about that in terms of, you know, how you facilitate the payment of that in exchange for signing over the title. But yeah, they'd essentially write you a check, you would turn over the title of the car to them, they become the new owner. And, you know, you then turn around and write that check to the, the company that has given you the loan, and pay it off, and you'd get a payoff balance, you know, ahead of time, and know exactly what that is. And you just want to make sure you negotiate in such a way that ideally, you get at least that out of it. But that's how it would go down. And then at that point, you guys could take it and, you know, go find a new car that's, as you said, less expensive, perhaps a bit more budget friendly.

So you've got a little more margin to do other things, build up your emergency fund, you know, give more, perhaps even contribute to that retirement plan. Does that make sense? Yeah, thanks so much. Okay, Tyler, God bless you. And congratulations on that new marriage as well. To Chicago, Illinois, Tammy, thanks for your patience today.

How can I help you? Hi, thank you for taking my call. I have always heard that it's better to add an extra payment when you're trying to pay off a mortgage to the principal. And I was wondering if you do like double the payment, will they make that process go faster? Like if you double the payment that you're going to make to the principal? Oh, absolutely.

It sure will. Because the way a mortgage is calculated, the interest is calculated based on the principal balance every period. So the amortization schedule, which is the schedule you get when you get the mortgage based on the full term of the mortgage, let's say it was 30 years, takes that balance and says, okay, based on this fixed monthly payment that you're going to make to the mortgage company every month. Here's the interest that was charged on the balance at the end of month one. And that's why the majority of that payment is going to go to interest because it's a high balance. Therefore, there's a lot more interest and it's a fixed payment. So that smaller portion gets applied to the principal, then the next month, the principal balance is the portion of the interest is calculated based on the interest rate on that slightly smaller balance. And so again, the majority is going to go to interest but a little bit less.

And then over time that flips. Well, if you make a double payment, that first payment is going to go based on the mortgage, the amortization schedule, but that second payment, let's say you double it, is going to go 100% to principal, because the interest for that period has already been paid. And so now when we get to the next month, they're calculating the remaining interest on a balance that, you know, is one month's payment lower than what it was the prior month. And so if you do just one extra payment a year, not 12, but one, you'll take a 30 year mortgage and depending on the interest rate, it'll probably become 25 or 26 years. In terms of a payoff, you can cut off four to five years, just one extra payment a year. So you can imagine the power of doubling it every month.

Do you follow all of that, though, Tammy? Yes, thank you so much. Okay, we appreciate it. Hey, there's a lot of great mortgage calculators out there on the internet.

I just searched for mortgage calculator, and you can play around with it and actually put in your specific terms, how much you want to send extra every month. And it'll tell you exactly how quickly you'll get that paid off. I think you'll be encouraged when you see the results. Thanks for your call today. Well, that's going to do it for us today, folks. MoneyWise Live is a partnership between Moody Radio and MoneyWise Media. Let me say thank you to my engineer, Amy Rios today, producing as Deb Solomon, Jim Henry providing research, the amazing Gabby T answering phones today. Thank you for being here. We appreciate all of your calls. We appreciate you inviting us into your stories, and we'll look forward to having you back next time. We'll be here tomorrow on MoneyWise Live. God bless you.