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Big Goal Savings Formula

MoneyWise / Rob West and Steve Moore
The Truth Network Radio
July 5, 2021 8:03 am

Big Goal Savings Formula

MoneyWise / Rob West and Steve Moore

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July 5, 2021 8:03 am

If you have really big financial goals in mind, do you know if you’re saving enough to reach them? On the next MoneyWise Live, host Rob West will explain whether you’re saving for a house, your child’s education, or your own retirement, there’s a simple formula that can help you determine if you’re on track. Then he’ll take your calls and questions on various financial topics. That’s MoneyWise Live—where biblical wisdom meets today’s finances, weekdays at 4pm Eastern/3pm Central on Moody Radio.

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If you're like me watching little kids doing Easter egg hunt is a pretty beautiful thing, but I always feel bad for the littlest of the pack. It always seemed so traumatizing to see that little one run for an egg. She has her eye on only to have a bigger cadence sweep in and steal it at the last second Heights, Doug Hastings, with Moody radio and unfortunately the same kind of situation has become a traumatizing reality for families all across the country. Families are out searching and finding their dream home only to have it pulled away by another hunter at the last second, which is why I'd really like you to meet my friends at United faith mortgage. Unfortunately, this faith focused mortgage team can't scare off the other hunters but they can very quickly get you preapproved and make it look as good as possible to sellers.

They specifically made a commitment to this podcast in our listeners to do all they can to help you. You can find the entire United faith mortgage story of especially reading how their direct lender advantage can often save your family monthly and lifelong money@unitedfaithmortgage.com United faith is a DBA of United mortgage Corp. 25 Millville Park Rd., Millville, NY license mortgage banker for licensing information, go to an MLS consumer access.org corporate MLS number 1330. Equal housing lender not licensed in Alaska, Hawaii, Georgia, Massachusetts, North Dakota, South Dakota and Utah. Today's version moneywise line is sure phone lines are not of 21 five tells us steady plodding brings prosperity. Hasty speculation brings poverty.

But if you have a really big financial goal in mind how do you know if you're plotting enough by Rob West. Whether you're saving to buy a house for your child's education or for the day you retire.

A simple formula can help you determine if you're on track and we have some great calls lined up but we will be taking your live calls today because we're prerecorded.

This is moneywise live for the Bible is our best financial advisor. Sometimes you hear that is half the fun of arriving at your destination.

But that's not the case when we set financial goals. Is it we want to get there as quickly as we can.

If you think you're on a five year savings plan say to buy a home. When you find that it will actually take you seven or eight years. You'd probably step up your efforts. Knowing how much you're actually saving and how much your spending could help you funnel more money into your savings plan and speed up the process and you can find that out by figuring out your savings rate.

That is the percentage of your income that you're hanging onto each month versus how much is slipping through your fingers, perhaps keeping you from reaching your goal. The exercise will reveal how much of your income is left after meeting all of your expenses. It's the money that could be going into your savings plan and getting you closer to achieving your goal. So to figure out your savings rating you have to first determine your total monthly take-home pay from all sources that include your full-time job in any part-time or side work that you do. If taxes are automatically withheld. Multiply that income by .8 to get a rough after-tax figure at it all up to get your average monthly take-home pay. Now you have to figure the other side of the ledger, how much you are spending each month. For now, don't count things that are automatically taken out of your paycheck by looking at your checking account statements for the last few months you get a pretty good idea of where your money's going first add up all your nondiscretionary monthly expenses. This would be things like your rent or mortgage, utilities, car insurance, and any loan or credit card payments that basically anything that you have to pay every month.

Add all that up and hang on to the total will get back to that in a moment.

Now add up everything else all of your discretionary spending. This includes things like groceries and eating out, and maybe even gasoline because you can spend far more than necessary in those categories and of course include entertainment like your cable bill or streaming services.

Total it all up and now you have your monthly discretionary spending. Add that to your nondiscretionary spending and now you have your total monthly expenses. As an aside, if you want some help in doing all of this the moneywise app in your app store would be a great resource. Right now it's time for the formula but don't worry, you've already done the hard part first subtract your expenses from the income figure you came up with earlier.

Next, divide that number by your income. I know that seems like a weird thing to do, but it actually works.

You should get a very small number less than one don't worry about the decimal boy. Now you want to take that number and multiply it by hundred, so let me use an example to illustrate this, let's say your total monthly take-home pay is $4500 and let's say your monthly expenses are 4000. That's the discretionary plus the nondiscretionary expenses. Subtract 4000 from 4500 and you get 500. When you divide 500 by 4500 you get .11, you multiply that by 100 and you get 11.1. Let's just round that down to 11. For simplicity that your savings rate, 11% of your income is what you're saving each month.

Of course, this formula doesn't take into account contributions to a qualified retirement plan or any employer matching funds you would add those numbers back into your monthly income to get a more accurate retirement savings rate without knowing your current savings rate will help you determine if you're on track to meet your goal. In the time you have remaining.

You can estimate how much you'll have tucked away based on your savings rate if that's not enough to meet your goal. You'll have a pretty good idea of how much you have to increase your savings rate to get there and how you do that well. This is why we separated discretionary and nondiscretionary spending to increase your savings rate will have to go back to your discretionary spending to see where you can make cuts if you're saving 11% knowing you actually need 15%. For example will help you decide you could live without. All you have to do is make cuts and keep redoing the formula until you reach that 15% savings rate all right out. This lesson is been helpful to you. Make sure use that to reach your savings goal.

Rob West so glad you're along with us today. Today's program is pretty recorded but I will tell you we have some wonderful calls lined up in advance much more to come. Just go back to moneywise live for God's word intersects with your natural life. Appreciate you being alone with us today. Our team is not here today were enjoying a day off so don't call Linda answer the call, but we got some great questions lined up in advance. One of those comes from Suwanee Tennessee and it's from list one. We appreciate your call today.

How can we help you mom, not even with $4500 and I keep packing away a little bit that well and I'm not in your own thing and it will be needing vehicle and I wanted to be able to help me plant you know that and wondering why there for me and like what you have been saying, the better they fitting no I don't think so just based on what I'm hearing them and how how far off is this that you would want to be able to tap this money right in your car lighter is that correct yeah I mean that's not hard and fast mean you know anything over five years and you arguably could invest in. I I'm just thinking that, given where we are in the investment cycle. You know the economy is raging back now that the pandemic you know is beginning to wane, and the economies reopening the word and have the strongest GDP we've had in 20 years, but we got a lot of headwinds inflation the debt we have in this country and the fact that the market is a bit ahead of itself. Even though corporate earnings have been strong.

So what I would not want for you list. One is for you to head start plowing this money into the market, even broadly diversified through index funds, and you know year from now the market begins to take a downturn in let's say where to get into a recession lasted a couple years and all of a sudden this 4500 that you've really worked hard to save you know is worth 3000, and that you know you'd be really discouraged, especially if that was happening right about the time that they needed the money so I probably just going to keep this you know in a savings account. I know it's frustrating to see that it's not earning anything, but at least you're protecting what you have and it's going to be there when you need to use it and you know where most of the economists I talked to think that just based on how far this market has come even if we don't see a downturn anytime soon were just knocking to see the kind of growth rates we've seen, you know, in the last decade anytime soon, so I'd probably just put it in a high-yield savings that Ally Bank or Marcus and just earn that half a point. And as the interest rates had higher and they will over time, then you know you'll you'll get higher rates not getting anything significant, but at least you be protecting what you have. Does that make sense to you yet that then and I are well, absolutely. Let me just encourage you list Wanda you know year stay home. Did you see your single-parent no no okay okay so you and your husband obviously are your prioritizing your taking care of these kids providing for them. I'm sure you know would limited resources like we all have.

It's about priorities and you've said you know what, despite everything else, we want to suck some money away for the kids, and that's not always easy to do, especially on one income with all the competing priorities so way to go for putting that money away and I know you guys will be glad to be able to help them with that car purchase. When that time comes up hey thanks for listening for your encouragement today and we appreciate your call.

God bless you.

Let's move on to central Maine and welcome Ross to the broadcast Ross year on moneywise live. I appreciate no God bless all everything that you guys do.

Definitely a blessing for you to call his mom a little confused. The Lord blessed me with their finances to purchase a house outright hearing central Maine, transplant from Long Island to expense about so my wife and I have been looking at houses is coming up to retirement soon on a number 57 but planning ahead looking to get a house down in Florida but I don't know if I should know I should get a mortgage down in Florida and make payments on that once we get established and sell the house but I don't want to upset God's blessing. So if you're a direction.

It know I appreciate that Ross and first of all congratulations for having your primary residence paid off. Did you say you're anticipating relocating there eventually and making that your primary residence or do you land. For this to continue to be a second home indefinitely second home. We will plan on coming up for some time and I go back down and what time like snowbirds okay very good. Well here's my thoughts. I like the idea that even though this is an investment property necessarily. This is really just a second home. I like the idea of you getting the mortgage on that second property not on your primary residence. Now keep in mind that if it's not your primary residence, you gonna pay a slightly higher interest rate should be less than 1/2 a point higher if it was a true investment property, it would typically be somewhere between 1/2 a point and three quarters of a point higher, but because it's just a second home probably less than 1/2 a point, but why would you do that and not just put it on your primary residence. Well, primarily because I would like to keep your primary home just that and not put it at risk in the event something unforeseen happened, you are unable to make that payment. I wouldn't want your primary residence to be at risk, and rather it be only related to the second property for some reason in a desperate and dire situation.

You had to let it go.

So for me keeping those two things separate. Keeping your primary residence, free and clear is worth paying just a little bit more in the way of interest. Some may disagree and say no it's not worth paying that extra money I just like to keep things separate that I think the only other option would be as if you were looking to downsize with your home there in Maine and you could then take part of the money that you would pull out of that property prior to buying something new and use that to either buy the home in Florida outright, or at least further reduce the mortgage that you would be assuming or taking on to make that purchase. That would be you know, the only other consideration. But if you worked it into the budget.

You feel like you've got a plan to build a cover that mortgage and stay in your current residence. I may think that's the key that it's not disrupting any other plans that you have and have been working toward. Does that make sense actually like what I was very keep it like sick up but something happens.

Don't down to Florida wiped out by a hurricane is like that. We stopped to look yet that's exactly right. And you worked long and hard to make sure you're in that position. I would want to disrupt that for any reason. Hey, thanks for listening for calling today. We appreciate it very very much. And before we take our break. Let me remind you we have a brand-new app out that we'd love for you to take advantage of you can find it in your app store when you visit and search for moneywise biblical finance. It's a digital envelope system, the community, and even the best content and biblical finance all in one place. Check it out today again Saturday or app store Google player Apple and search for moneywise biblical finance in order to pause for a brief break will be back with much more stable back to moneywise live fully apply God's truth to your financial life as remind the Scriptures we understand that God is the owner where the managers and money is a tool to accomplish God's purposes, and the good news is 2300 verses in the Bible that tell us how we should manage money. The principles that the Lord lays out for us that we can apply to every financial situation and you know what their simple note we live within our means. If we avoid the use of debt. If we give generously have some margin or some savings in her financial life. And then we set long-term goals will be well on our way to experiencing God's best in this area doesn't mean we won't still struggle from time to time, or we may find ourselves where we have an abundance at some points. Regardless, it's about being found faithful.

As a manager of what God has entrusted to us today. That's what we want to do here on this program is celebrate God's provision in our life and then talk together about how we can be found faithful and that before we take some more calls today, but let me remind you the moneywise app is available in your app store is a free download. It's available when you search for moneywise biblical financial find or discover tab with the best podcasts, articles and videos in Christian finance. You'll find our community where you can post a question, get feedback from others on the journey as well as her moneywise coaches you also find her digital envelope system where you can organize your spending. Download your transactions from your institutions automatically have been categorized and then know in every envelope where you stand throughout the month that's going to be key to living within your means ago downloaded today, you'll find it in your app store. Just search for moneywise biblical finance that's moneywise biblical finance scurry back to our phones.

Let's go to Michigan Denise year on moneywise live go ahead, join want to share something that I learned financial seminar that I wanted to share it. We were so deep in debt. It was just crazy. The gentleman that went leading the seminar said the reason for getting out of debt if and could have more money to the heart of my money to get just changed our perspective so much so many years later and I know when I am 92, down, and what is my question is things that come in the mail for getting charities there so many of them and they many good reasons to have. I don't know should I pick out a few and get a little bit of money to each of our should I just pick out 100 and continued to just get it. We do have things that been supporting for years different than that. Something that I want to give extra well it makes sense to me. Just first comment on what you are sharing just a moment ago and that is I couldn't agree more. You know, part of the reason that God blesses us is so we can be a blessing to others. Meeting the needs of those around us, both locally and even to the ends of the earth, though we realize that we should be a conduit of God's activity not the bucket where God's provision stops with us but a pipeline directing a flow of God's activity into where he is at work so I couldn't agree more.

And I love that you have a passion to give. I think the key as it relates to the where of giving really begins with your plan. So there's the financial side in terms of what you're going to pre-commit in the way of giving dollars, perhaps at the beginning of the year were a couple of times during the year.

Now that doesn't mean we don't leave room for the Holy Spirit to move in you to give beyond that, as the Lord leads, but there should be up a predetermined amount that I would look at at least annually to say this is what I want to give and I would look both out of income that which is coming into you from whatever sources as well as assets your balance sheet are there appreciated stocks that I could give in a way that's tax efficient to bless the ministry do I have a piece of real estate that I no longer need and I want to put it to work in God's economy and give it away so looking at that annually is going to give you a dollar amount and then again leave room for the Holy Spirit to move it for some reason you want to change that. Throughout the year, but once that's been determined that I think it's a matter of deciding where you want to get not clearly you've already got things on your heart. There's things that really are important to you. I would look at the things that break your heart you know the things that really feel pain you in the name of Christ things that are going on around the world.

Whether it's injustice or people who need to give physical needs met. Of course, spiritual needs to be met. I'd like to grill inventory of the things that God has really placed on your heart. Uniquely, those could be things here in your local community here domestically or even abroad and really think about the giving that you're doing and aligning that with God's heart from Scripture and your passions and where those two things, meet with the resources you've decided to allocate to giving. I think that really should be the primary focus. Now does that mean that you don't give two other things along the way as the need is made known through the mail, or any number of other ways know you certainly could do that, but I wouldn't feel bad about passing on some of those. Just because somebody asked doesn't mean it's the right thing for you. You may be deciding to allocate your resources to something else that's on your heart and that's okay.

I don't think you need to feel guilty about that. I think it's all about.

Again, deciding prayerfully how much and then where and then allowing the Lord to let those plans change over time. Dissent all make sense to you Denise okay I getting to God's chosen people are so many organizations out there that are that are doing ministry for their physical and their spiritual help button and I get all of these things and I wonder okay now. Which one should I get to yeah that's a good point and that's where I would be looking at where do they have a good track record of the work that they're doing are they accountable you could even use a website like ministry watch.org or the National Christian foundation, and in CF giving.org to look at and evaluate these ministries because not only do we want to give to what's on our heart, we want to give to the places where God is working and where they had demonstrated excellence in the work that they're doing in Jesus name. So take advantage of those resources and appreciate your call today. Much more to come on moneywise live just around the corner will be right back.

It's great to have you with us on moneywise live today but unfortunately they were not life were pretty recorded and therefore won't be taking your calls.

However, we've lined up some calls in advance that we think you'll find helpful. So stay tuned and enjoy the rest of the program back to moneywise live or biblical wisdom meets today's financial decisions scurry back to our phones we go to Minnesota next mark.

Welcome to the broadcast redhead question on a previous employer and I left it there when I left about three years ago and now and roll it over actually roll it over into annuity and wondering if that was a good move. It's it's an annuity with the guaranteed money plus the death benefit and 5% interest of 1 July start growing out of it. However, that cost 2.6% to get all of that sure what I'm trying to do is get a steady income retirement I'm 61 okay very good.

Yeah, you know, I mean first of all, in terms of rolling a 401(k) into an annuity, you know, you don't get the tax advantage that often people are looking for with an annuity because 401(k)s of course are already tax-deferred.

It could have remained tax-deferred into an IRA so there's not any tax advantage to be gained by rolling the funds over into an annuity but clearly the reason you did it. Mark is because you want the fixed income option you like the guarantees and you're looking to convert that to an income stream that's going to supplement your retirement income in that season of life. Have you looked at you said there's a 5% guaranteed.

I guess while it's still growing and then when you annuitize of you arty determine what that monthly income stream will be right around okay annually are not. I'm sorry that annually not probably be more like you know, probably after taxes 1100 bucks and does that sync up with what your need is when you add that to other income sources including Social Security yeah will be in a pretty good range.

I think it's not comfortable. My wife and Roth IRA as well and she can start drawing her Social Security this fall and will put that right into her rock won't need it until I retire. Yeah okay well you is not a bad thing. I mean it. Annuities are typically not my first choice. Just because as you mention, they come with a host of fees and charges that may reduce what you have available to you. It does limit your options because as you said, you know you can convert it to an income stream. And that's great but you no longer have access to the principal. If you were to me that to you for a major expense like long-term care or something like that that might come up along the way.

Also, just from an inheritance standpoint, they can be challenging. Also now what is the upside, it's not all negative. The upside is you were looking for peace of mind and so if there is a gap between the income you expect in the budget that you created for that retirement season and you can solve that gap with the income stream from the annuity you know what it is and that gives you peace of mind to know that you have to worry about the ebbs and flows of the stock market of the bond market or anything else you've transferred that risk from yourself to the insurance company and there's a lot of folks that like to be in that position and know that they got something guaranteed every month they can count on and they can order their lifestyle accordingly and you know that will last for the rest of their lives. So I think you know that's the key so I wouldn't feel bad about doing that and I think again if it's going to put you in a position where you have what you need for that season in terms of covering your expenses.

That's a good thing and so out from that standpoint, I don't know that there's any changes that are necessary other than just making sure exactly what the provisions are making sure you understand what happens beyond your life. With regard to your wife's ability to continue to collect that payout and then the tax implications as well so hopefully that's helpful to you, Mark.

We appreciate your call very much today, let's go down south to Alabama and welcome Tom to the broadcast redhead, thank you very much.

This concerns the question about our bio 30-year-old daughter.

All are beginning a new retirement program going to latch at .3% up to 6% of my question, I guess for someone her situation. The recommend raw additional yeah so she has both good the Roth 401(k) as well as the traditional 401(k) available work yes okay yeah you know I like the Roth option for somebody who's young. And certainly she is. She's got time on her side. She's probably in the early part of her earning potential, which means she's not in the highest tax brackets by any means. So although she's giving up a deduction in the current year, it's probably less than it will be down the road when she's earning more money and she's going to enjoy that tax-free growth between now and retirement which you were talking 3+ decades down the road so I I think you know all things being equal, I would probably choose in her situation the Roth 401(k).

The only thing to consider might be either now or in the future, splitting it between the traditional and the Roth. There is something to be said in that retirement season, depending upon what the tax code looks like and you what her needs are in terms of income and so forth.

Having her choice as to pick from the tax-deferred or the tax-free environment given so many of those variables that we just don't know what to look like 35 years from now. So that would be the only other option, but if she's going to choose one.

I'd probably go with the Roth. Does that make sense.

Thank you very much all right yes, we appreciate your call today very much.

Let's go quickly to Canton, Ohio Renée, we got just a couple minutes before next break I can we help my little about how I will wait and I'm hoping that I don't have that here how you planning and planning, and Randall and I went to make Bankhead and planning to give them back even well Renée, let me just say first of all were to join you in praying that the Lord would intervene here you know nothing is out of his control. He is so your creator. He knows every cell in your body and so were going to just ask that he would bring his healing touch to your body regardless of what the diagnosis is.

Secondly, we should all well plan because we don't know if we have one more breath or 30 more years and so in terms of making that last stewardship decision.

We will all do mean everyone listening that we need to have a will in place to govern who will be the next steward of our assets and resources and in your case. You also may want to look at a living will to specify how you want to be treated in certain medical situations. I would give somebody a power of attorney. I have one for me. I would also say the Alzheimer's Association is a great publication with more information as well listen you stand will talk a bit more often.

This is money wise live right back. This is our final segment of the broadcast. We previously recorded. Thank so much for being with us today and hope you'll stick around and enjoy the rest of today's program but collectively wise, live on Rob West. So glad you decided to join us. You have a question. You haven't been able to get through on the program. You can always email it and we love to hear from you. Let's take an emailed question.

Now this what actually came in last night to end. It comes from Heather.

Here's what Heather writes my husband and I are expecting an extra cash payment of 19,000 after taxes and tied we expect to have about 10,000 we have a car loan of 21,003 to 4 months of emergency funds.

The question is, would you recommend that we put the full 10,000 toward the car loan, or only a portion toward the car loan and keep the rest as a cash reserve and whether we appreciate your emailed questions so much your my approach would be this and by the way, let me just say I don't think there's a right or wrong answer here but I would probably build that emergency fund up to six months expenses with the money received that there's anything left put that against the car note, then I'd focus sending any margin each month to the extra principal reductions on the car and when that balance on the car gets low enough that you can pay it off completely out of emergency savings and still be left with say 1 to 2 months expenses and savings and do it, pay it off.

Here's the thing. At that point, you're no longer going to have a car payment, which would allow you to take 100% of that car payment plus any margin you were putting toward principal and re-build that emergency fund so preserve your cash. Let's focus on getting the car down, but we can pay it off, pay it off and then use the excess to build the emergency fund backup. If you have a question you can reach us at questions@moneywise.org let's go back to the phones and welcome Joe to the broadcast calling from Spokane, Washington Joe, you're on money wise live. My call this or question here real quick.

My wife is getting ready to retire after about 3738 years with the company and that given her early retirement were both be eight years old and little early for her but we we plan for retirement very well.

Most my life since working in our 20s and so the question is that I left the company back and I found a very good investor that we took my money rolled into and I got a lot normal.

I threw them in them. The question I hear people say it's not always wise to invest in the same company. My wife investing for a long time with that company as it is it wise to think that we take that money and invested in the one company that we trusted or should we find somebody else that is capable of doing that.

Just to say have multiple baskets in case something did go down this Joe when you talk about investing in one company are you talking about one brokerage firm or actually investing all of your dollars in a single investment which is one publicly traded company. Now I'm talking about wanting because we had that conversation with the company I'm with you know the way to explain it as we invest in many different market stocks directly not in one, but I don't care. You know people that have done very well say yeah we we cannot legally grab bars in different places investment from we want to be safe with a very good I've done some tracking with you. Just wanted to be sure your talk about a single investment is clearly I wouldn't advocate for that we want to be properly diversified know when it comes to an investment firm owned investment single investment professional you know I have no problem with you having everything in one place.

In fact, there's a good case for doing just that. Number one deal, the more you have in investable assets, the more attractive pricing you're typically going to get in terms of the fees that are charged with the management of those assets typically reach certain breakpoints as the total assets under management.

Even across multiple accounts.

Gross.

That's number one number two you avoid un-necessary and even unhealthy duplication of investments because often times accurate multiple investment advisors they probably are not coordinating the investments among themselves and so it may cause you not to be as strategically invested from the diversification or even a tax efficiency standpoint as opposed to having everything at one place and think the third thing is just the simplicity in terms of what you have to keep up with you. You only have one meeting every quarter or semiannually as opposed to yell that's the one conversation that you're having each time you have a question or you make need to make a change. You cut the number of statements you're receiving in half so you know from my standpoint as long as this is somebody that has good track record. You built a good relationship with your happy with the communication. Obviously, the track record in terms of the performance on the investments that you had to this point, and preferably somebody who aligns with your values as a believer and understands biblical principles of managing money can help you lean into God's best for you. If all those things are in place that I would say having everything with one firm I don't have a problem with.

In fact, I'd encourage awesome appreciate that the second portion of that is retirement coming up very quickly for her. I'm capable of, you know, she's worked her entire life. And so I asked her to relax and take it out. Take the time to retire and enjoy the work work just fine. The other parking.

That is, the ERA the early retirement portion of that is open above what we have.

She has saved through the long term of that career. I think I know what you say here, but you know if we go below from Anna on a house that's worth quite a bit with property and we thought that ERA portion of that would be enough to pay the home off so I thought was I wanted to ask week we will pick the normal 401(k) rollover to that investment that we have picked the other portion of that money. There's an opportunity that we can leave it where it is in the company and because she's take early retirement companies offering that 59 1/2 she could start pulling from that money and all you would have to pay tax on that money, no penalties at all.

Is that a good idea or should we just take that money and also invest that and and work towards.

Obviously, that money can earn a lot more if the market continues to do well but you know what with the COBIT 19 pandemic going on different market jobs are doing so well right now mine is been shaken up. I have a very good job but at the end of the day in the next year there's really no guarantees of things don't pick up so should we pay the house off or should we just leave it in and continue working guilt so I'm 65 to retire.

Yeah, yeah, well, you know, I think, again, there's probably not right or wrong answer here. I like the idea of you becoming completely debt-free and if you can sink that Joe up with the time that you're moving into retirement, it's gonna pull the monthly expenses down. Obviously as low as possible because you're out of debt and you know right now you should be in a fairly conservative posture.

Anyway, given your age and where you are in terms of proximity to retirement.

So as long as you do that in a way that makes sense from a tax standpoint not pulling it all out in a single year, but you do it.

Over time, and preferably sink it up with the payoff of the house as you're moving into full retirement for both of you.

I think that makes a lot essential a lot of peace of mind and flexibility. Hey, Joe. Hopefully that's that's helpful to you. We appreciate your call very much today, let's go quickly to Joliet, Illinois, and welcome Linda to the broadcast hi Linda, this might like a rental daughter and her children and our current mortgage. When we originally bought the house. I thought my daughter was going to fill it but it's working out better for me to keep owning it. While we fix it up because I can take advantage of the yeah the right from fixing up the property. I current mortgage is 3.99 and I would like everything and sit at the bank where my daughter works but there are only giving us like a 3.375 because of the rental property of the different yeah 3.375 is a little higher than I would've expected them in a rental property can be as much is three quarters of a point higher, but your rates right now should be only around 2.62.75 percent depending on how long you're looking at suit tell me you're looking to refinance your primary residence as a part of this appreciate it a lot.

Couple years now and 30 year fixed and I would like to hear okay yeah and so you plan on staying in the while I assume is a right to rent it for me and picked up my plan is to put the title in her name. Okay yeah that's just not enough of the savings Linda to justify this, so I'd probably just call them and ask them to give you an amortization schedule based on paying it off in 15 years so you know what you need to send in order to accomplish that. But I think the cost that you're going to pay to refinance it for that nominal savings on interest is just not going to make any sense unless you can get more attractive rates of perhaps the other option is to go to bank rate.com. Let's look at some online lenders get two or three more good faith estimates and see if you can get that rate down. I want you to save at least three quarters of a point here before, it would probably make sense for you to spend know anywhere from up to 2% of the value of the mortgage. In closing costs. Otherwise, again just get them to run the amortization schedule based on a 15 year of payoff and that you can accomplish the same thing with your current mortgage. Hopefully that's helpful to you and we appreciate your call very much. Well folks that's going to do it for us today. Thank you for joining us were so grateful when you stop by and participate in the program were all a big community here just sharing our ideas and thoughts, asking questions and journeying together as stewards of God's resources. We do that together. It's such an encouragement. Hey moneywise live is a partnership between Moody radio and moneywise media let me say thank you my team today.

Amy Rich and Gabby tea and we appreciate you being here will be back again next time with another edition of moneywise live where God's word intersects with your financial life come back and join us –


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