A listener told me a funny story the other day. He had bought one of those fancy new exercise bikes and for him it was without a doubt a very special tool to help him get healthier. But the problem was three days went by and then four. And he'd yet to use the bike. And then on night five he's sitting at the kitchen table and he looks down at himself and he couldn't help but just laugh.
Because there he was wearing the exercise t-shirt that came with the bike and he was eating two corn dogs. Hi, it's Doug Hastings with Moody Radio and I think we'd all agree having a special tool only matters if we use it to our benefit. And I'd love for you guys to learn about my friends at United Faith Mortgage, a very unique faith-focused mortgage team with an advantageous tool just for you. You see, United Faith Mortgage is an arm of a bigger company who is a direct lender which means they get to use their own money and make their own decisions. There's no middleman and often this advantage allows them to get you a better rate on your refinance or your new home purchase which can save you monthly and lifelong money.
So I'd encourage you, check them out. United Faith Mortgage. United Faith Mortgage is a DBA of United Mortgage Corp. 25 Melville Park Road, Melville, New York. Licensed mortgage banker. For all licensing information, go to NMLSConsumerAccess.org. Corporate NMLS number 1330. Equal housing lender.
Not licensed in Alaska, Hawaii, Georgia, Massachusetts, North Dakota, South Dakota, and Utah. When you hear the word cryptocurrency, what image pops into your mind? For many people it might be a dollar sign, but maybe it should be a tulip. Hi, I'm Rob West. While it's true that some investors have made big money investing in cryptocurrencies, others have probably lost just as much or more. We'll talk about that first today, then it's on to your calls at 800-525-7000.
That's 800-525-7000. This is MoneyWise Live, where biblical wisdom meets today's financial decisions. Okay, I should probably explain the tulip reference. In the early 1600s, maybe you've heard the story, people went crazy investing in tulip bulbs in Holland. As a result, tulip prices skyrocketed and they became the hot commodity.
Well, you can imagine what happened. The tulip market eventually crashed and many investors lost everything. The so-called tulip mania of the 17th century was one of the history's first great investing bubbles. Well, the same thing is more than possible today with many of the hottest new cryptocurrencies, and that's why savvy investors might think of tulips when hearing the word cryptocurrency. You know, it seems like every week there's a new cryptocurrency mania. You hear names like Dogecoin, Litecoin, Ethereum, Binance, Tron, Chainlink.
Of course, Bitcoin is the granddaddy of them all, and by far the best known. Now, here's one of the big problems with cryptocurrencies. It seems like investors are willing to tolerate a great deal more volatility with them than they would for other investments.
Here's the bottom line. Cryptocurrencies are ultra high-risk investments with far too much volatility that exceeds any other investment class. Let's use Bitcoin's recent history as an example. In mid-April, Bitcoin was selling for around $63,000. Two weeks ago, on June 1st, it was $37,000.
That's more than a 40% drop. Personally, I believe the technology behind many of these cryptocurrencies is here to stay in our digital age. We simply demand instantaneous global transactions that are low-cost, accurate and verifiable, but for some of those very same reasons, terrorist groups are reportedly using Bitcoin and other cryptocurrencies because transactions are largely untraceable. Concerns that governments could step in and regulate or even outlaw cryptocurrencies has fueled some of the volatility for these investments, and since cryptocurrencies only exist in the digital realm, there's always the concern that they could be hacked. It's already happened to at least one cryptocurrency based in South Korea. Users of Bithumb lost $30 million worth of currency.
Another problem is the lack of so-called paper trail. Cryptocurrency transactions can't be undone in the sense that they can't be recalled, so a breach is a very real problem. Con artists have even set up entirely fake cryptocurrency exchanges that defrauded folks of their entirely real money. The crypto part of the cryptocurrency is a double-edged sword.
Investors want little or no regulation. They don't want to rely on governments or government manipulation of currencies, but the challenge is when things go wrong, like with a hack, it's difficult, if not impossible, for authorities to recover the funds. Cryptocurrency investing is also not what you'd call a user-friendly environment.
In many cases, you can't recover a lost or forgotten password, and there are some horror stories of people who have lost thousands, if not hundreds of thousands of dollars. Well, it's simply tied up in the cryptocurrencies with no way to access it. It's just like the Wild West of investing.
Not many rules and every man or woman for him or herself. So cryptocurrency investing is short-term. It's highly speculative trading and definitely not the type of investing encouraged by the Bible from my vantage point. The faithful steward invests for the long term with reasonable risk and a minimum amount of anxiety. Why would someone risk their money in something so risky? Well, it's just simply because of the chance to make a lot of money in a hurry. But the Bible has something to say about that.
Proverbs 21, 5 is clear. The plans of the diligent lead surely to abundance, but everyone who is hasty comes only to poverty. Another reason the get-rich-quick mentality is so dangerous for investors is that it often breaks one of the cardinal rules of investing, which is diversification. When you see something making huge returns, the knee-jerk reaction is to pull all of your money or put all of your money into it, which puts all of your eggs in one basket.
You know, bottom line and a good rule of thumb, if you don't understand something and can't explain it, you probably shouldn't be investing in it. So maybe we'll leave it there for today. Hey, your calls and questions are next.
800-525-7000. This is MoneyWise Live, where biblical wisdom meets today's financial decisions. We'll be right back. Thanks for joining us today on MoneyWise Live, where we recognize that God owns everything. Therefore, we're stewards, and money then is a tool to accomplish God's purposes. Hi, I'm Rob West. So glad you're along with us today as we mind the Scriptures and apply God's wisdom, the principles we find in the Bible related to financial management, to your financial life.
So here's the question. What's on your mind today? What do you want to talk about? Giving or saving?
Perhaps it's debt repayment or maybe long-term savings or lifestyle, whatever it might be. Give us a call. Here's the number.
We have some lines open. 800-525-7000. That's 800-525-7000. In just a moment, we're going to talk to Lorraine in Chicago, Felix is in Chicago as well, but we're going to begin today in Minneapolis. Mike, thank you for your call today.
How can I help you, sir? Hi, thank you for taking my call. Thanks for being a trusted source of biblical advice. Well, thank you, Mike.
You're welcome. I feel stuck in deciding how to, well, my question is, how do I learn about the companies behind the advisors, their fees and philosophies, and how they relate to the advisor? Because the advisor takes a percentage of finances that he's going to be taking care of, and then the company behind him also has fees, and whenever I read the fine print, I get stuck because I don't like the fine print. Yeah, yeah.
No, I completely understand. Well, Mike, first of all, let me just affirm the idea that you should seek some wise counsel when it comes to managing God's money. You know, as we move through our lives and our financial lives become more complex with everything else in our lives.
You know, I think about the days when Julie and I were in a one-bedroom condo just newly married in South Florida, and things were much simpler then than with four kids and more things to take care of, which is one of the paradoxes of prosperity. I think as we think about being a faithful steward of what God has entrusted to us, however little or much, clearly the Bible affirms this idea that we should seek wise counsel. And I think in that area of finance, that's certainly true. I think one of the first things you need to decide, Mike, as you process this is what type of financial professional do you need or professionals? Is it a financial planner who is not going to be looking to manage assets or sell you any products, but somebody who you just pay for their time to actually give you a comprehensive financial plan as outlined in the certified financial planning process, where they're looking at risk and retirement and college savings and cash flow and taxes, and really giving you a good understanding of what God is doing in your life, where he's taking you, and then aligning your planning with your values in the near term, but really more importantly in where you're headed in the long term. Or are you looking for somebody who's an asset manager, a wealth manager who can actually, beyond a financial plan, actually take responsibility where you delegate investment management?
And as you said, often those folks are paid based on a percentage of the assets under management. So tell me, I guess to begin with, are you looking for both of those or just one? Both of them, because I have, God's blessed, I'm turning 65 this year and I'm looking to have someone help or take over some of those responsibilities. Yeah, I like that. The wealth and the trust, I have a trust in just how to implement everything in it and just all of those things I haven't had to deal with before.
Yes. Well, obviously that's going to give you a peace of mind to know that somebody with a lot of expertise and time dedicated to this responsibility is going to be looking after what God has entrusted to you. So I think you need to ask some questions related to both pieces of that, and what's really clear, and you mentioned this as well, is in addition to somebody's expertise and how long they've been in the business, some of the things I would want to know, Mike, are how do they get paid? And they should be very transparent about that, both on the planning side, is that an additional charge and what would that look like each year? And then secondly, how do they get paid and all of the fees and expenses related to the investment management? Is there a percentage of the assets under management that's charged?
In addition to that, are there fees embedded in the investments they'll use or any transaction costs that go to the custodian? All of that should be able to be clearly articulated and made plain for you to see, and that would really be critical. I also think it's important, and by the way, Mike, don't hesitate to ask that question, and any advisor you would work with should be ready, willing, and able to furnish that information. I think it's also important that you understand that they share your values, and this is why we talk a lot about the Certified Kingdom Advisor designation, because God's Word has a lot to say about this topic, and it's often counter-cultural in terms of how we should approach finances, wealth, lifestyle, giving, investing, all of it. I think it's often counter to what the culture would say, and so having somebody that is aligned with your values, that understands the heart of God, and really can bring biblically wise financial advice to bear in the context of competent financial counsel, I think is critical. So what I would do is interview two or three folks.
It doesn't matter to me whether somebody's with what we would call a wire house, one of the big names on Wall Street, or they're independent. You perhaps could interview with one from each at a minimum, because as long as you align well with who they are, you feel good about their expertise and the rapport, you have a good understanding of how they're compensated, that's most important to me as opposed to whether they're with a particular firm or out kind of solo as what we would typically call a registered investment advisor. The last thing I would throw out that I think is also important is during that initial meeting, there should be a lot more question asking than selling, because I want to know that they want to know who you are and where God's taking you as they're doing their discovery. I'd also want to make sure there's good alignment with how they want to communicate with you. Hopefully they're willing to align that with your preferences, you know, how frequently are you going to meet, and is that over the phone or a video conference or in person, and you know, those types of things. I'd also want to understand where you fit in terms of their ideal client profile. Are you beneath their typical client profile and therefore they're going to hand you off to a junior advisor or planner? That's not necessarily bad, you just would want to know that going into it, or are you in their core client base and they're going to serve you directly, or is it a team approach? So I know I've thrown a lot at you, but I think it really is just, first of all, praying the Lord to give you some wisdom. Secondly, a series of interviews, a lot of question asking, and then ultimately landing on that advisor that feels like a good fit.
And yes, at that point, you should expect to pay for financial planning as a fee and then a percentage of the assets under management ongoing. Does that make sense though? Okay.
Well, it does. Thank you. Okay. Very good, Mike. We appreciate your call. And by the way, to find a CKA there in Minneapolis, just go to MoneyWiseLive.org, MoneyWiseLive.org and click find a CKA.
Put in your zip code and you'll get a list of CKAs there in Minneapolis that you can choose from. And we appreciate your call today. Well, we're already out of the gate and covered some great questions related to money. There's a lot more to come today. In fact, we're going to be talking with Felix just around the corner in Chicago about some money his daughter has that she received as a graduation gift, wants to know how to invest it.
What about Lorraine in Chicago? She has a lien on a property, wants to refinance the mortgage, and then Susan wants to talk about Social Security and the 2035 target where the trust fund is going to be depleted. All that and more just around the corner.
Stay with us. This is MoneyWise Live. Grateful that you've tuned in today to MoneyWise Live.
I'm Rob West. Phone lines are open for your calls and questions. 800-525-7000.
That's 800-525-7000. Hey, let me take the opportunity to remind you that MoneyWise Media is a listener supported ministry. It's your support that allows us to share God's financial wisdom every day. And as we're now into June, into what we affectionately refer to as the summer slump, we can always use your support and assistance. Your gifts allow us to bring you our financial coaches and our certified kingdom advisors and our radio broadcast every day, our web content at MoneyWiseLive.org and the MoneyWise app as well and all that's going on there. Plus the things we have to come, which by the way, are pretty exciting.
Hopefully in the next several weeks tell you about some of the new things we're working on. But all of that is made possible by your financial assistance. So would you consider a one-time gift or perhaps becoming a monthly patron, whatever the Lord may lead you to do? Let me just encourage you to go to MoneyWiseLive.org and click the donate button.
MoneyWiseLive.org and click the donate button and we'd be happy to send you Ron Blue's book Never Enough as our gift to you when you make a gift to the ministry and thank you in advance. Let's head back to the phones today. Chicago, Illinois. Felix, thank you for holding. Sir, how can I assist you? Yeah. Hi, Mr. West.
How are you? Thank you for taking my call. Absolutely. Thank you for coming.
Yeah, I had a quick question. My daughter, we had a great graduation. She graduated from high school and we had a little party and she got a blessing of more than maybe $600 to $700 and I was speaking to her about investing that. And she's looking to, she just got a part-time job as well and she's looking to maybe invest also $100 to $200 more every month. So I wanted to ask for your advice on which way she should go.
She's a beginning investor and I want to get her on the right track. Well, that's great, Felix, and delighted to hear that you and she are already having these conversations. You know, as it relates to helping our kids understand how to handle money as they move out of the home into college and beyond, you know, it's so critical that we have these conversations. Because Howard Dayton, my good friend and author, says we need to be MVP parents. We need to model good, godly financial management. We need to have verbal communication. We need to talk about it and ask questions and explain. And then we also need to have practical opportunities to work it out.
MVP. And that's what you're doing. You're modeling it in your financial life. You're talking about it and now you want to practically help her get started and that's really critical. I think, you know, when it comes to handling God's money, Felix, we always need to define what the purpose of the money is and we need to look at the priority order of the uses of the funds. I think one of the first things out of the gate you could do is help her to understand the idea of giving, being generous and, you know, taking a portion of her increase, perhaps a tenth to start with and giving that to her local church or getting her active in generosity. Secondly, I think you need to look at, you know, is there a short term need for any of this money? You know, as she moves beyond high school into college, you know, is this really the beginning of her savings that she needs to be able to use for some discretionary spending beyond, you know, what might be covered for her? Or is this money that could truly be set away, you know, for the longer term? And if we're going to invest it, I'd like for there to be at least a 10 year time horizon where, you know, we could begin to see this money grow for her future. Talk to me about that piece of it in terms of whether she needs this money in more of a short term savings account ready and available versus tying it up for the longer term. Yeah, we just barely started talking about that. So she's looking more for the long term. Okay. Yeah, I think the only thing I just want to make sure of is that as you process this with her, that this is not money that, you know, she says, Yeah, I really want to invest.
Let's do that. And then a year from now, she's going to want to say, Yeah, but I, you know, I'm kind of running dry and I need to access this money for various expenses that I don't have covered through another means. I would just discourage her from investing money that you think she would need in less than, you know, five to seven years at a minimum, preferably 10 or more.
And so that's where, you know, you've got to navigate that with her. But to the extent you want to lock it up or not lock it up, but put it away and and begin investing it. You've got two options here because she has earned income. She could actually start funding a Roth IRA with, you know, a portion of what she's bringing in every month, which would be great because, you know, starting at this age, you know, just a little bit every month, even 25 or $50 would go a long way towards helping her build something that's really meaningful, you know, way down the road.
And I understand it's hard for a teenager to think about, you know, 40 years or more, but it could be a great starting point. But funds that you obviously don't want to put away for retirement, but willing to invest for seven to 10 years or more, you'd probably want to do in a taxable account where she could get some growth, but have the opportunity to use it well before retirement. In either case, I'd probably get her to open an account at with one of the robo advisors. So Betterment, Charles Schwab, Intelligent Portfolios, you could use Wealthfront or even the Vanguard advisor.
They're all very similar. You would with her open the account. You'd answer a series of questions about her time horizon goals and objectives. She could make systematic contributions. It's very low cost. And as she makes those additional contributions, there's no transaction fees. So as she puts in $100 a month, it's automatically redeployed in the same strategy using index ETFs without any cost.
And typically you're going to pay maybe 0.25% a year, a quarter of a point. But the benefit is even with a very little amount of money, like we're talking about, she gets broad diversification by owning the big market indexes. So she's not going to get, you know, the high flyers like Tesla and some of the tech stocks that have been doing well, although not as well as of late. But she's going to capture the broad moves of the market over the long haul. And I think that's really the prudent approach to be properly diversified. So again, I would look at either splitting it between a Roth and a taxable investment account or go all into a taxable investment account if she doesn't want to put it away truly for retirement. And then look at one of the robo advisors, again, Betterment, Wealthfront, Schwab Intelligent Portfolios or the Vanguard advisor. It's going to give her a very low cost, very effective way to invest as she's just getting started. And then do some education along the way.
By the way, you stay on the line. I'm going to send her a gift. It's Ron Blue's book, Master Your Money, and she's got some time this summer.
Maybe she could read it. That would help her to understand really some of these key biblical principles that we talk about on MoneyWise Live that would really help her to get started in understanding God's way of handling money, which is so critical. And Felix, we appreciate your call today.
Thanks for being a great dad to walk alongside your daughter. Much more to come on MoneyWise Live. We have some lines open 800-525-7000.
Stay with us. Grateful that you've joined us today for MoneyWise Live, where God's word intersects with your financial life. I'm Rob West taking your calls and questions. We have some lines open 800-525-7000. Straight ahead, Alicia in Grand Rapids, Edlene in Fort Lauderdale, Susan in Clearwater.
But first, listening on WMBI in Chicago. Lorraine, how can I assist you? Hi, thank you for calling, taking my call. I have a lien on my property and I'm trying to refinance, but I'm having a problem with the refinance. They, you know, did all the paperwork, but when it comes to the process of the lien, they said they cannot do the lien with the refinance.
Yes. What type of lien is it, Lorraine? It is a United States government lien.
Yeah, yeah. For taxes? Well, not really for taxes. It's for something else. I see. Okay.
Yeah. Here's the bottom line. There is no strict rule that says you can't refinance if there's a lien on your home. But the problem is you'll have a difficult time, as you've already seen here, finding a lender willing to do it.
So that's going to be the challenge. You know, soft liens, you know, typically aren't a refinance, but a mechanics lien, a tax lien or a federal government lien like you have are going to be issues. You know, obviously you can't sell the property until you take care of the debt and the lien is removed either. And so I think the key right now is to focus on, you know, getting that paid off. After it's removed, it's still going to appear on your credit report, which could also cause you some problems, but give you a greater chance of doing the refi.
So I'm not surprised, unfortunately, and I'm sorry about this situation, I'm not surprised that they have turned you down. I think the other option you could look at, Lorraine, would be to find an independent mortgage broker who has a lot of experience, who could go out across the industry and see if there might be a lender that they're aware of who would do the refi. The challenge is, I suspect, because of the situation, you're probably, the refi is not going to make sense because the terms aren't going to be very good. So now you just have added cost for the refi itself and you may not be even any better off.
So I think the focus right now needs to be getting that paid off and moving beyond it as it gets further and further in the past, even if it's on your credit report, if it's paid in full and released, you know, that's obviously going to allow you to rebuild your credit over time. So sorry, I didn't have better news, but I think that needs to be the focus of your attention right now and we appreciate your call today. To Clearwater, Florida, Susan, thank you for your patience. How can I assist you? Oh, hi. It's so nice to talk with you. I listen to you every day and I just love your program.
I appreciate it. Yeah, I was listening yesterday and I am on Social Security right now. I'm in my 70s and I heard you say that in 2035, I think this is what I heard, in 2035 the trust fund would be completed for Social Security. So does that mean that I won't get any more Social Security? It does not. No, it doesn't mean that.
So let me just kind of reassure you of that first and foremost, Susan, and I do appreciate you listening every day. Basically, what's going to happen is the trust fund will be depleted based on the incoming taxes that we have and the number of people who are collecting, which continues to increase. So what would happen at that point is, it's estimated based on the most recent study that was done, without changes, Social Security would not be able to pay full benefits beyond that point. They would be until 2034, but once that trust fund is depleted, because there's just simply more going out than coming in between now and then, at that point benefits would have to be decreased by about 25%.
Now, will that actually happen? Well, I would tell you it's far more likely that Congress will overcome gridlock and implement steps to correct the problem, either by increasing payroll taxes or raising the full retirement age or both, you know, neither of which would affect you. But keep in mind, you know, Social Security was only designed to cover about 40% of retirement income, which is why it's so important that folks are saving beyond that. Obviously, it's a critical piece for your, you know, maintaining your expenses moving forward. So I suspect what is going to happen because this is such a political hot button, is that changes will be made so that they can shore up, you know, the the trust fund. But again, even if it no changes were made, and the trust fund was depleted, ongoing current tax revenues at that point would be able to cover about 75% of benefits.
So there would be a 25% reduction. I wouldn't count on that. I think we're going to see some changes. Does that make sense, though? Bless your heart.
Yeah. So I'm I will be 87 years old at 2035. Well, I think I'm gonna make it. I think you're gonna be just fine. We'll go to George Orwell and we can just put me down, right?
Because there's your checks not going away. And again, I think some changes are going to be made. But listen, all the best to you in this season of life. Excited about what God has in store for you in the days ahead, and we appreciate your kind remarks about the program. Thanks very much. Let's head to Fort Lauderdale, Florida.
Edline, how can I assist you? Yes, well, I don't want to say I we took out from our RIA for a $22,000 to purchase a car, a truck, and then to our surprise, due to the shortage, the car is so expensive, we cannot afford it. So now we put a hold on it. We would like to know what to do with the money now.
So you took, did you say 22,000 out of a retirement account, an IRA? Yes. Okay. How long ago did you do that? How many days has it been, roughly? Oh, it's been, next month will be three months. Three months. Okay.
Well, here's the thing. If you reinvest the funds, meaning redeposit what you took out within 60 days into the IRA, then there's no tax consequences, which if you're less than 59 and a half, you're going to pay a 10% penalty, plus that whole 22,000 is going to be added to your taxable income this year. So you're going to have to pay income tax on that. If you can get it back in within 60 days, it'll be as if you never took it out.
Unfortunately, if you're beyond 60 days, 61 or greater, it can't go back in. And the first thing we need to do is make sure you set aside at least enough to cover the taxes that will be due based on income taxes and the 10% penalty if you're less than 59 and a half. That's why I really encourage folks not to touch these IRAs or retirement accounts because this is very expensive money that we're tapping into, especially prior to 59 and a half. I mean, at a minimum, you're probably looking at 30% of that that you need to be setting aside to pay taxes on or about $6,600 that you'll owe to the government. So if you can get it back in, do that quickly.
I'd contact a tax professional to help you because you'll have to report the distribution and the refunding of the money on your tax return, but it would be a wash. Otherwise, you need to set that money aside. Then I think from here, we need to, you're right, used cars right now are very expensive. It's part of what we're seeing as the economy reopens and some of the spike in inflation. It's really hitting a few sectors hard, and one of those is used cars.
It's just a lack of inventory right now. So I'd be prayerful and really diligent about finding something that fits well within your budget. We appreciate your call today. God bless you.
And we'll pray that God gives you some wisdom. Folks, thanks for joining us. We're going to pause for a brief break, but still much more to come on MoneyWise Live.
Stay with us. Delighted you've joined us today for MoneyWise Live, where biblical wisdom meets today's financial decisions and choices. Hi, I'm Rob West.
In just a moment, we'll go back to the phones. But first, let's take an email question. This came in from John and Kate in Birmingham, Alabama. By the way, if you want to send us an email, we tried to read one a day on the air.
You can send it to questions at MoneyWise.org. John and Kate asked, how do we improve our credit score? And it's a great question, one a lot of folks think about because these days, credit scores are used for more than just determining whether to extend you credit. It's a part of determination on hiring, hireability, if you will, and you're looking for a job. It has to do with your insurance premiums and more. And so it is an important part of our financial life, not worth going into debt over by any means, but just something to keep in mind.
John and Kate, I think the first key understanding is really what makes up your score. We have some insight into that from FICO, Fair Isaac, which is probably the leading scoring company. They tell us 35% comes from your payment history, 30% from your amounts owed, 15% from the length of credit, 10% from new credit, and 10% from your credit mix.
Let me just mention each of these quickly. 35% payment history, the key there is to be an on-time payer. If you don't have active credit history because maybe you paid everything off or you're just getting started, a great option is a secured credit card. Look at the Capital One secured MasterCard. This is where you put a certain amount on deposit. They give you a credit limit up to that amount, so they have no risk because they can capture that money if you don't pay the bill. You would then set up probably a recurring charge for a budgeted item, could be very small, and then pay it off in full every month.
The idea is that's reported to your credit report every month, giving you some good payment history, showing yourself as an on-time payer. Amounts owed, that's 30%. The key there is you want to keep the total you owe in the aggregate across all of your limits less than 30%, but also each individual account you want to keep under 30% debt to limit, meaning the amount you owe outstanding versus the total limit available should be under 30%. Preferably it'd be at zero because I don't want you to be carrying any debt. Below 10% is even better.
That's going to help to really improve your score. The length of time, the length of your credit history, time is your friend, so the longer you show yourself as an on-time payer, that's going to help you. New credit is 10%. You're going to want to really limit your borrowing, and so don't be out there looking for new credit all the time.
That'll help. And then finally your credit mix. This is just the types of credit you have revolving, like a credit card installment, like a car loan or a mortgage. They want to see that you have a variety of credit, but again, not worth going into debt over. I would rather you be debt-free with a little bit lower score than I would you paying interest just to get that score up. But anyway, I hope that helps you as you understand what makes up your score and you can lean into trying to do everything you can to get that up over time. All right, back to the phones.
Alicia's in Grand Rapids. How can I assist you? Hi, thanks for taking my call.
Sure. Well, that has truly gifted me with the ability to not only write poems and stories, but most importantly, I've been writing songs for years. And I would love to pursue that career passion.
I'm actually, right now, I've sold some songs. This year, a lot of contacts have come in in regards to me working for other people as to writing music and, you know, even performances, things like that. So I'm trying to see if, because I have some money saved and I also have Roth and 401k and all that stuff through my work experience and everything. I'm in my 30s. I don't want to wait forever to pursue my career goals. So I'm trying to see if I should take some of that money saved to go ahead and pursue my career or to continue and work my daily 95. Until I, you know, I guess get a business and music, because I don't think I have time to do any of the music because of my job.
Yes. Well, you know, that's the key. And this is always the tension when we're trying to launch out into something else that requires us to generate income as a sole proprietor, especially when you're just kind of trying to break in and get started, although you've demonstrated that folks are willing to pay you for these God-given abilities you have in songwriting. But, you know, translating that from, you know, what has been a few here and there to something that can support you fully is obviously, you know, the challenge. And so ideally you would wait and, you know, do what you can part time or evenings or weekends for a while while you continue to build up some savings. And I would like for you to have that savings outside of retirement accounts just because of how expensive it is to access that money once it gets into a retirement account because of the penalties and the taxes that are due. So even if you froze your contributions moving forward and didn't contribute any more and you start really limiting your lifestyle to the best of your ability and saving so that you've got, you know, at least a runway of six months, because the key is you need to get a really good feel for and maybe you already have this, but how much income might you expect from this? You need to obviously have a really good understanding of what your expenses will be, you know, as you move into this.
Not just your personal expenses, but I'm talking about for this business that you'll be running so that you can work up a business plan and have a good sense of how much runway do you need so you're not putting your own financial life in jeopardy. And, you know, the music industry is well known for folks that are trying to break in, you know, doing everything they can, you know, working nights and weekends and, you know, just trying to make a career out of it. What we know is that God has gifted you with some incredible talents. And I think you need to make this a matter of prayer for him to give you wisdom to know when is the right time for you to move maybe more full time into this. I just don't want you to get in a situation where you start paying a lot of unnecessary taxes or worse, you start taking on a bunch of debt to fund your expenses because you're not quite ready to make this move. And I realize that can be frustrating because, you know, you're working the nine to five and you just feel like you don't have the time to put toward it.
So where is that balance, Alicia? And what could you do to build up some savings to give you that runway before you actually make the transition from quitting your job to doing this full time? Well, I've been saving, so I do have some money saved in that regard, you know. I think I have like maybe $10,000 saved right now, and that's been my goal in my mind to do this. And it seems like even I've been getting messages, it seems like when I go to church, it seems like those messages are present for me to move into this now. So I don't know, you know, if I should still wait and save more money or, you know, I just don't know, especially with all the opportunities that have come as a reason.
Yeah. Well, I think that the key is that God wouldn't lead you to violate, you know, biblical principles. So I would, you know, continue to pray, ask the Lord to give you wisdom and, you know, only you can really know what God is leading you to do. But at the same time, I'd take some real practical steps to say, okay, based on what has been coming my way and what I've generated, if you put full time toward it, what could you conservatively expect to come in over the next six months? And what expenses would you have against that business related expenses? And then, you know, really take an honest look at that, because once you leave that job, you're going to really have to rely on that 10,000 plus what you can bring in from this work to get you there. So I do the hard work of really analyzing what's been coming your way in terms of opportunities, translating that into, you know, the amount of time you'd be able to dedicate to that full time.
And then taking expenses out of that and then seeing how long you feel like you can maintain that. That really quantitative analysis plus what the Lord is leading you to do, I think will give you some peace of mind to know what is the right time, whether that's next month or next year. And we'll ask the Money Wise community to be praying for you as you make those decisions. We appreciate your call today.
Let's go to Florida, actually, with Victoria. How can I assist you? Yeah, so I have some properties and I have some money in like a small amount of money in IRAs. But I want to put together like a will or something for my three boys that and so I don't know, do I do just a regular will? Should I do something like a trust?
I have a 1619 and then the only one is 23. What's the best way to kind of secure and make sure that money is well dispersed to them? Well, if it's simply a case of bequeathing your assets to your sons after death, a will would be fine. That'll cost you somewhere between $500 and $900. If you have other considerations like not giving the funds to a child all at once or certain triggering events, you know, based on them reaching certain ages or, you know, a trustee that's making decisions based on, you know, decisions they're making, whatever that might be. That's where a trust whereby a trustee would manage those funds could make some sense. That's going to cost you probably $1500 or maybe a bit more. Another opportunity would be to put what's called a TOD, a transfer on death on an account at a brokerage firm or a bank, which would bypass the will and just make sure that certain assets are automatically passed outside the estate to your named beneficiaries.
But again, if it's just a matter of making sure that, you know, everything is going to pass as a part of your estate to the people that you've selected, namely your children, a simple will should cover that unless there's other considerations you want to factor in. Does that make sense, Victoria? Yeah, it does. I really appreciate it. Thank you so much.
Absolutely. I'd find a godly estate planning attorney in your area. You could contact the CKA on our website MoneyWiseLive.org to ask for a referral.
Maybe you check with your local church to find out who's an estate planning attorney in your local fellowship and they should be able to take care of this for you. And I know it'll give you a lot of peace of mind as you tackle this. Thanks for your call. Well, MoneyWise Live is a partnership between Moody Radio and MoneyWise Media, producing today Deb Solomon, engineering Dan Anderson on research today, Mr. Jim Henry, our call screener was Gabby T, and observing today was Eric Tidwell. Thank you for being here. We'll be back tomorrow with another edition of MoneyWise Live. Can't wait to see you then. Have a great evening. God bless you.
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