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Ally Bank Ditches Overdraft Fees

MoneyWise / Rob West and Steve Moore
The Truth Network Radio
July 21, 2021 8:03 am

Ally Bank Ditches Overdraft Fees

MoneyWise / Rob West and Steve Moore

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July 21, 2021 8:03 am

What costs your bank only one dollar, but sets you back thirty-five? If you guessed an overdraft, then you’re correct.  But it doesn’t have to be that way any longer. On the next MoneyWise Live, host Rob West will talk about how the practice of banks gouging their customers with overdraft fees could be coming to an end. Then he’ll address the financial questions you’d like to discuss. That’s on the next MoneyWise Live, where biblical wisdom meets today’s finances—weekdays at 4pm Eastern/3pm Central on Moody Radio.

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Hey there I'm Jim and Baxter and I certainly radio is the director of business development. Our team's job is to find businesses that love Moody radio and Jesus Christ and want to support the work we do financially just like you today. I like to introduce you to United States mortgage.

Simply put, they are afraid focus mortgage team serving clients across the United States.

They put together a team with Christian values with faith and family at the core. They know that this is arguably the most important purchase of your life. Check out the top five things you should know about United States thanks to you and United for supporting the radio United for mortgages, a DBA of United mortgage Corp. 25 Millville Park Rd., Millville, NY license mortgage banker for licensing information, go to an MLS consumer corporate MLS number 1330. Equal housing lender not licensed in Alaska, Hawaii, Georgia, Massachusetts, North Dakota, South Dakota and Utah. Question for you what cost your bank only one dollar.

What sets you back 35 if you guessed an overdraft. You are correct, but it doesn't have to be that way any longer. Rob West it's no secret that banks have been gouging customers with overdraft charges for decades, coming to a dead will talk about that first today that will take your calls on any topic at 800-525-7000 24 seven. 800-525-7000. This is moneywise live biblical wisdom for your financial journey. Okay, so obviously you never want to have an your checking account. But anyone can make a mistake. For example, maybe a deposit, you expect it didn't come through. You forgot to check on it some auto payments go out and there you are overdrawn that's irritating enough, but then you're hit with an overdraft fee which these days averages around $35. This is a huge moneymaker for banks because it only cost the bank about a dollar to process an overdraft but one bank has broken ranks. Now why one of the largest online banks, has announced it will no longer charge overdraft fees to any of its customers. How I had waived those fees temporarily last year due to COBIT, but now they've made the change permanent. In a press release ally CEO Jeffrey Brown said, quoting now 80% of overdraft fees are paid by consumers living paycheck to paycheck or with consistently low balances precisely the people who need help stabilizing their finances."

Brown went on to say that eliminating those fees will help keep people from falling further behind in feeling penalized. A recent survey showed that 95% of the bank customers who paid an estimated 12.4 billion in overdraft fees last year were financially vulnerable and disproportionately black and Latino.

Theoretically, banks charge fees to cover their expenses. When you have an overdraft there covering the amount that your short but overdraft fees are wildly out of proportion to the true cost of covering overdrafts. Banks are actually making about a 3500% profit on them. Other banks have claimed they stopped charging overdraft fees.

But in reality they only stopped allowing overdrafts. So now I announcing it will no longer charge customers for overdrafts is significant for the banking industry and its leading to speculation that the rest of the industry may have to follow suit. As I mentioned how I is one of the bigger online banks with 2.3 million customers and hundred and 24 billion in deposits in this latest move is sure to draw in more customers. As for other banks waving their overdraft fees.

Some analysts are pointing to a similar situation in the brokerage industry a few years ago but Robin Hood started to trend by offering commission free stock trades. This was eventually followed by huge companies including Fidelity Schwab and TD Ameritrade now commission free trades are the norm of banking and stock trading are largely computer-driven. These days, with very little hands-on processing required. In other words, they are cheap to operate, but banks still have these dinosaur fees in place to cover costs. They no longer have online banks with lower overhead like Ally Marcus and capital one 360 have been leading the way in scrapping minimum balance requirements and fees for maintenance electronic transfers and ATM withdrawals.

But you know that's not the only reason to switch to an online bank. Folks call us all the time wanting to find a better savings rate for their money. The easiest way to do that is to switch to an online bank where you will almost always find better savings rates than that a brick-and-mortar bank but maybe you're thinking switchbacks. Sounds like a hassle. Well, it really isn't. Let me talk you through it first, but choose an online bank with no minimum balance required no annual fees look for the highest savings rate you can find.

Make sure there are no fees for checking but once you've decided on the bank open a checking and savings account there. Now you want to go over your current checking and savings account. Look for direct deposits, auto payments, and any other accounts linked years take that list and begin contacting each of those entities. Creditors and depositors and give them your new banking information. You'll have to monitor your old and new accounts for a couple of months to make sure that all of your transactions have switched over but when there is no longer any activity in your old account, go ahead and close well. They have possibly some changes coming to the banking industry and how you can take advantage of the stewards of God's money, so we want to make sure were scratching every dollar of the Lord's money right here because her next.

800-525-7000. This is moneywise live biblical wisdom for your joint is moneywise live on Rob West sticking your calls and questions today. Got some phone lines open. Looking forward to hearing from you.

Here's the number 800-525-7000.

That's 800-525-7000. Perhaps you got some bills you been trying to get on top but maybe that spending plan just isn't working for you and your spouse or you got some debt you're wondering the best way to pay it off should you get a consolidation loan. What about credit counseling or you've heard something about the debt snowball. What is that while we'd love to help you sort it out and get on God's plan using biblical principles to apply to today's financial decisions.

That's what we do here at moneywise.

Live it. We'd love to hear from you again the number 800-525-7000 were to begin today in Harrisburg PA Brock, thank you for calling I can help user my phone call Rob so last year I was looking to invest some money I came upon and I was told open a Roth IRA so I put thousand dollars into that and it's been almost a year and I've made 48% interest on is there a way that I can close that and not take a penalty and invested somewhere else or should I just leave it there. You made $0.48 Brock next time in Harrisburg. It sounds like you're buying coffee. Sorry to hear that you know with the Roth IRA. By the way, that was a good move. I'm a big fan of the Roth IRA to start putting away money for retirement, especially if you have time on your side.

That money is not going to be any tax advantage on the deposit but that money will grow tax-free between now and retirement.

So if you could continue to fund that Roth IRA. That's actually a great idea. Now there's a difference between the type of account and then the investments inside it.

Once you make that contribution to the Roth. You then have to choose the investments that will be deployed with whatever deposits are made and it can be anything could sit in money market and basically be like a cash account.

It could be in a CD or it could be in stocks and bonds and mutual funds and exchange traded fund.

So after you made that contribution.

Do you think that the money just set in cash or was it actually deployed in the investment of some kind, but he did tell me that he was going to put it in a diverse portfolio, but I guess it never happened. I see so you have an advisor that you're working with. I do okay and so where is that account to use the custodian and Raymond James okay and have you talk to that advisor periodically appoint anyone to see me and Mike for Mont and or Mike came in out the year night talk to that though okay no I have not okay alright well obviously it's a small account and I suspect it got lost in the shuffle. The ideal situation would have been the decision is that money when then it was deployed because of the amount I wouldn't have expected it to be in individual stocks, but probably a basket of stocks like a good high-quality growth mutual fund or even a low-cost exchange traded fund attractive market index, like the S&P 500 or something like that. Unfortunately, it sounds like it wasn't ever invested in. I would at the very least, just make the advisor aware of the fact that here's what was communicated to me. I'm disappointed to learn that it's just been sitting dormant. If for some reason I'm mistaken. Let me know but it seems like it was never invested in. At that point you have to make a decision as to where you want to move the money now with the Roth IRA, you can always take your original contributions back out without any penalty because keep in mind you didn't get any tax benefit when the money went in and from the government standpoint, the fact that you're taking it out means it can't grow tax free in the future, and so to let you collect that money at any time without any tax consequences unless there was any game, but in your case that would only be the $0.48, so you do have the ability to pull it out.

Not I'm not encouraging you to do that just because that's money that you put away for the long haul. I'd rather you get that repositioned and invested properly before we talk about perhaps were to move it and how to invest it though.

Tell me about the rest of your retirement plans. Are you contributing to another account at work or were you planning to add money to this over time yet. I was $6000 in the next month or so, but I'm not thinking again. I'm really not really sure what to do. Yeah, yeah.

Very good.

What is your age 27, okay, very good. Well, do you have a retirement plan at work that's available to. I do not okay alright so the Roth is a great option for you, and you can continue to put in 6000 a year at least, that's again the maximum contribution for this year. If you're under age 50. So at the very least because you're young guy you don't have a planet work. I like the idea of you continuing to put 6000 years so you have something working for retirement, but it's key that we get that invested properly.

So I think you have two choices.

Number one is try to get this account back on track by calling the advisor saying it.

I'd like to get this invested disappointed it didn't happen last year but let's move forward, talk to me about how you'd invested this year and then make sure you follow up and that it gets done. If you would rather move it out of there. I would certainly understand why you would want to do that and I think at that point you got one of two options number one is to use one of the Robo advisors where you would answer a series of questions based on your age and your goals, risk tolerance, objectives, and then a portfolio would be built. That's automated and every time you deposit additional money, whether that's an annual contribution or monthly. That money would be reinvested for you in what's called an indexed portfolio, so they would use exchange traded funds to buy stock market indexes that mirror the broad market largely concentrated toward stocks because you're so young. You don't need really any allocation toward bonds, probably very little, if any, and at that point, the money would automatically be invested in. You'd basically just capture the broad moves of the market. Over time, but one of the real benefits is its very low cost. You might pay 20 basis points a year, or 1/5 of 1%. So I think that's a great approach and you could use better mentor Schwab intelligent portfolios or Vanguard advisor. Any of those three. Offer this type of service. If, however, Brock. You'd rather do the investing yourself and learn some things along the way. Then you could use mutual funds and I'd probably recommend you connect with our the soundbite investing newsletter would give you plenty of mutual fund suggestions that you could pick from, and you could even monitor them and upgrade them over time as the market changed, which sounds like could be the best fit for you. I mean, I just go ahead and do it for me. But what kind what kind of again.

Should I be paying $1000 investment like yet from the last look at again.

Should I pain yeah me and if if you are invested in a growth stock mutual fund, you should have. You should see between 20 and 30% probably in terms of returns which leads me to believe that probably just was never invested was probably sitting in the cash account okay so I basically need to call him and tell him to go ahead and invest it and not let that there's a cash account that's correct.

I would just want to understand exactly how is going to do that and what is going to charge you to do it because keep in mind most investment professionals. Their business models are not set up to work with portfolios at $6000. Typically, in order to have an advisor managing an account for you.

You would need to have your 75 or hundred thousand dollars.

Now he may be equipped to handle smaller accounts and have a process for doing that. I would just want to know exactly how is gonna get paid. What is the cost to be as a percentage of the portfolio and what types of investments. Is he going to use individual stocks or mutual funds or ETF, so perhaps he ought to start there and see if you can get some comfort with what that is. I wouldn't want you to pay more than 1 1/2% a year if is going to charge you a fee and I want to make sure that it was invested consistent with your age, which means you should have largely a stock-based portfolio even though I would recommend mutual funds or ETF's.

If that's not gonna happen that I think one of these Robo advisors might be a great fit for you.

So hopefully that gives you some information if you are confused about what you're hearing what you give him a call there at Edward Jones.

Don't hesitate to give us a call back and love to chat with you some more.

We appreciate your call today. By the way proud of you for getting started early is a 27-year-old guy getting money into a Roth IRA doing that consistent suit that consistently will serve you well over the long haul.

The best alright lots of calls waiting and I'm ready to take him. Here's the number for the two lines that remain open 800-525-7000 so delighted to moneywise live today on Rob West taking your calls and questions if you getting a busy signal. It's because all lines are full but sit back and enjoy. We have some great calls coming up Marcy and Rachel, Eric and Maggie were coming your way. But first, Fox Lake, Illinois John, good afternoon.

A user your call. My 401, two months ago I change company and my new one will be starting in about September 1. My question is should I leave the money where 401, currently at very happy with the return or should I call that over my new company for one or should I put it into an IRA.

Yeah, well, you identified the three options that you have. John and I don't think you can make a mistake. I generally advise moving out of an old 401(k) specifically because usually the fees will go up slightly when you're no longer employed there and for simplicity sake, you know, we can end up with multiple accounts all over the investing universe, if you will, and it just leads to more upkeep and oversight because that's one more set of statements you're going to get one more set of tax documents, you're going to get.

So anytime we can consolidate. I think that's better now. The only thing that's causing me any hesitation is that you're so pleased with the investment results. Although it's been a great market so I would suspect you're going to be happy if it's invested properly with just about anywhere that should be. I would recommend either rolling it into the new 401(k) because that's just again going to keep it very simple can have everything together so that as it's managed. It can be managed as one amount and you won't have duplication of investments unnecessarily as you select your new investment strategy.

Again, it's also going to give you one must account to keep up with or roll that out to an IRA, but I would want to make sure that you had a plan for how you were going to invested because the benefit of that rollover IRA is that you basically have now unlimited investment options, whereas with the 401(k) you're limited to the investment universe inside the plan.

The IRA takes those blinders often gives you really full access to any stock, bond, mutual fund or if you want to get complicated through self-directed IRA. You can even invest in other assets like real estate. So you know I would want to make sure you had an advisor because that's his significant sum of money you've accumulated over hundred thousand dollars somebody who's going to deploy that money were invested for you unless you feel like you have the time and the expertise to do that so that would then probably bring me back to if you don't have that in place putting it into the new 401(k) doing your research, perhaps getting some assistance from the plan administrator to actually select your new investments have everything under one roof and then move forward from there react to that idea though and give me your thoughts on what sounds best to you optional drawing overworked IRA. I guess I can sure. I've been managing might find myself over the last five years, about 20% rate which demanded I stay picking stocks my prickly look at my funds every six months to see if I should. I don't do it more more frequent or should I let them think they are professional would give me a better return. Obviously, there's no guarantee sure well it sounds like something you enjoy doing and you been able to put in the time tax to make the selections. Is that right yes okay and you're not using individual stocks right.

These are mutual funds, they are yes okay and how are you picking them. I have a couple international loss and aggressive. I'm doing my research free of funds. I meant Vanguard always been a big fan of Vanguard. There looking at that. I just try to do my research waiting on looking at the where the market that is very good. Well, I don't have any problem with it. Sounds like something you've done well. I like the fact that you're in mutual funds, meaning you have good diversification. I think the one thing you might want to consider is as your assets continue to grow because you're putting more and more away. Perhaps you take a portion that you say you're going to manage yourself and then take another portion and turn it over to an advisor so it could be that this is the time for you to consider building a relationship with an investment advisor for that hundred and 15,000 you've already built up and then you take over the new 401(k) that you're just starting out, and perhaps start that process over.

By selecting the mutual funds inside the new 401(k) but if you send me Rob no I really would like to continue to do this is something I've enjoyed. I've obviously done well in putting in the time and I do like the fact that you're only looking at it a couple times a year. I wouldn't have a problem with that. I just would throw out is another idea. Perhaps think about as it grows, splitting it between a portion that you're doing in the portion it's being handled for you. Does that make sense and I really like what part of our Natalie would like very good if you want a suggestion for an advisor to in your area discover website moneywise click find the CK and I'd interview two or three. Find the one that's the best fit and maturity have somebody in mind John all the best to you.

We appreciate your call today. Celica great guy who's the do a lot of things right, following God's principles in managing money much more to cover moneywise live just around the corner talking to Maggie in Michigan and Eric in Muncie and Rachel's in Venice that thank you for joining us on moneywise live today am Rob West. Take your calls and questions got three lines open 800-525-7000. That's 800-525-7000. Hey have you join the moneywise live family yet is a contributor but we rely on your financial support to put this program on the air each day bring you the moneywise and have poor website. All of our content are moneywise coaches we couldn't do it without you.

You consider a gift would certainly be grateful any getting beyond the giving you due to your local church is all we would ask you to prayerfully consider just said to our website moneywise, click the donate button you can get quickly and securely puts it back to the funds today.

Maggie is waiting patiently in Michigan. Maggie, how can I assist you for having me out am a little nervous, but thank you for having me, and it is about my credit card I want to be able to help other people get out of debt. But I also need your expertise. Okay, I have a credit card and like $2800 and I want to know the vast land and the passive way to pay.

That's all I can pay it off and fall. But I really don't want to because I want to learn how to do this install I know the minimum payment. It really doesn't really help a lot because I pay $70 and $36 with an interest management rate if I 14.90 what is your advise on paying off the credit card slip. Maggie was in what you just described, and that is you have the ability to pay it off and we certainly want to do that, but you want to do it the right way so you don't have this come back again in the future and you know that's really smart because the one thing we've got to do when were dealing with. That is, solve the underlying issue.

What led to the data in the first place, and for most of us it's overspending without a plan or overspending with a plan that were not following. And so we've got a start there because the last thing I want you to do would be to pull money out of savings pay off that credit card and then you call me back three months from now you say Rob, guess what the credit card debts back and I need to get out from under it again. So we've got to live within her means and that really is the starting point now of course there can be un-expected medical bills or things that result in credit card debt, and that's why we need that emergency fund.

So let's talk about those two things. First, have you taken the time Maggie to Journal all of your expenses over a given month's time to come up with an accurate accurate spending plan, well located, and I agree with what you said you know we have to watch our spending.

But when I talked to one of the ladies I would not count. She wanted to know if I made a start. So I get basically close the card out and it looked like somebody else could have been made part of it on if I called out, but now I just wanted all I see. Okay, so that card is an even activity longer know it's not active any longer at all and I want you might okay very good.

Are you sure that those charges are yours.

Go back and look at him and I requested copy going back. Maybe not couple years at that date with and I didn't look at him, Saul and I don't think some of them were mine. I was a little careless at the time, but back in the dig and all the bad I.K would cut it.

You know well it is it was that long ago you would have trouble getting that reversed anyway. Alright well I think you're right in that we need to get this paid off, but it is important that you dial into that spending plan. If you want some help with that are moneywise coaches would be happy to walk alongside you to get a plan to actually control the flow of money in and out every month. Now what is the balance on the credit card right now the balance on the credit 28 by okay very good and what you have in savings that you could use to pay this off.

I mean I would have you know, get out of my time I Retirement 7070 and I can take it out of my IRA but I didn't want to do that. Yeah, I would prefer you not do that. Do you have any liquid savings I it would like to have small account and probably at the old okay well I'd like to start there because here's the thing you know we gotta get to a place where you got some liquid savings that is specifically for emergencies because the unexpected will come.

I recommend you have 3 to 6 months expenses. But while were waiting to get this credit card debt paid off.

I'd like for you to try to accumulate $1500 in emergency savings. Let's get that in the liquid savings account then I would say any additional money you have, over and above your expenses. Let's add that to the minimum payment and start trying to get that balance coming down every month.

If you have multiple savings accounts or places where you've accumulated some money I'd like to try to consolidate all of that into one place, because ultimately we'd like to get to the $1500 in emergency savings. Then apply every bit of excess every month toward the credit cards once it's paid in full and you verify the accounts been zeroed out then will contribute to any of that margin to your emergency savings to get up to 3 to 6 months expenses. That's gonna be really the reserve account that you'll want to have to fall back on when the unexpected comes and it will so you're not having to pull money out of the IRA.

Whenever you need it.

I think that's really the plan for you moving forward. Obviously, if you want to get paid it off sooner, you could pull some money out of the IRA would be taxable so you need to set that portion aside, but I'd rather you do it out of excess cash flow on a monthly basis. Do the hard work of limiting your expending getting that balance coming down. The good news is it's not a tremendously high ballot so I think you should have that paid off in just a matter of time. Does that sound like a good plan.

Looking at me. What about doubling up on payment like if I pay over the minimum when it do and then maybe the middle of the month and not a payment yeah and you don't need to separate it out.

I think if you have the ability to send to payments… Go and do that you're really anything you have, over and above that minimum payment you're going to satisfy the interest for that. And then every bit you send over that is good to go right. The principal, so that's the key is much as you can get going to that balance every month is going to get that balance declining will have that paid off in no time and then you guys can focus on building up that emergency savings. Maggie, you and your husband sound like wonderful people. All the best to you. If you have any other questions along the way. Give us a call. We appreciate you checking in with us today about folks that we do have some lines open today and looking forward to taking more of your calls between now and the end of the program. Here's the number 800-525-7000.

That's 800-525-7000. By the way, I mentioned are moneywise coaches. Let me just I quickly mentioned if you'd like to take advantage of one we'd love to hear from you and we can certainly get you connected. I just sent over to our website moneywise and click connect with the coach but said to Minnesota. Rachel's been holding patiently, Rachel. How can I help you rank. I appreciate that my how I encourage others to an option. I just tried to explore how I had a 30 year mortgage. I paid it down about seven years and in the meantime, I've acquired quite a bit of equity in my home repairs and things so now I'm looking at refinancing and a cheaper interest-rate marital interest rate was 4.25% and depending if I go with a 30 year loan that are not interested then 15 year loan we lose Rachel. Okay, no problem. Let's do this would have to hit a quick break but I want to hear the rest your story and be able to encourage folks are listening today so you hold the line to pause in them will come right back in here the rest of your story. This is moneywise live on Rob West.

Stay with us very please join us for moneywise live today applying God's wisdom to your financial decisions. Just before the break Rachel in Minnesota was telling us about her home loaded Rachel up. Appreciate your patience as we had had a quick break. There I'd love for you to start over. Tell us exactly what's going on in your life and I'll see how we can help.

I write my original mortgage started about seven years ago, seven years and that kind interest-rate for printer and in the meantime about credit and equity in my home and can I have a couple of options that I loan officer have informed me that the interest rate could be much lower that you option that I had our refinancing for 15 years at two point think and make payment would pretty much a close to the MET sheet at $100 more a month so I would pay my loan off quite a lot more quickly that she did give me a second option and that that anything like uncle that had never done it before, but she loves asking if I needed any cash for anything and the only thing that came to my mind was a question add more equity to my home.

Maybe like construction project, so she said if I had done a cash out option I could still get a loan at 15 years rate would be similar to .752 point thank little bit higher but and then my payment would only be about $200 hundred and $50-$200 more a month but I could take about $40,000 in cash and was wondering if this is why think if you essentially I'm spending a little bit more per month that I can immediately do some projects on the home just fine and very good. So it was a 30 year mortgage. To begin with.

So you got 23 years remaining as a right okay and what you believe the value of the home is today.

Rachel comparatively actually did have a market analysis done.

Thinking of selling and that about 375,000. Okay, what is the principal balance on the first mortgage. Today, roughly hundred and 30,030 okay you got some good equity as to whether or not it makes sense to cash out. I would always ask for what purpose, and I'd rather you not use it to pay down credit card debt everything like that but you are talking specifically for home improvement projects. Is that right okay so you know obviously the goal is to get the home paid off in full. So you would like to be out of debt completely. As soon as you can without a meal interfering with other goals that I think from a priority standpoint come first.

Ideally when you get the very least, when you reach retirement you want to be completely debt-free, which is good to keep your lifestyle and a minimum. So, do we want to add to the balance well, that's not the ideal situation, but yelp if you have the ability to do some things that you can enjoy because you to stay in this home for a while.

Recognizing that you may not get the full amount back out of them. When you sell, but depending on what you do and how thoughtful you are about the projects that you take on. You should get at least a portion depending on what kind of project were talking about whether it's a and the dishes under new flooring, or improving a bathroom or kitchen you all of those you'll get different percentages back of what you actually put into it, but if you plan to be in this home for quite some time. Obviously, the enjoyment factor has to be considered as well. I think secondly recognize this is an opportunity for you to take advantage of a very low interest rate environment. I think you are in fact ripe for a refi because it sounds to me like you can lower the term, which is always the objective. In fact, you'll be lowering it significantly from 23 to 15 years and with that significant reduction in interest rate you're not really adding much to the payment so I think the question ultimately is, can you afford to do these renovation projects ores that can hinder you from accomplishing other purposes. Would you rather take that other $200 a month and put it toward a fund. It's good to be used to replace your car do you have any other debt you're trying to pay off.

Are you saving for any other medium-term purchases and if really you don't have anything that you're really trying to focus on right now and you feel like you have the money to do it and you could get some enjoyment out of it and ultimately improve the value of your home and there's nothing wrong with doing it this way.

In fact, it's probably good to be the least expensive money that you can access given the environment that were in from a rate standpoint so I think the only remaining question then would be.

I like the terms I like the interest rates. I think the only question would be what are they going to charge you for this refinance and I would use 2 to 3% of the loan value as your guide. So on the hundred and 30,000 would be looking to spend no more than 2600 to 3000 obvious.

If you have 40,000 to it. You be talking no hundred and $70,000 loan, so we be talking 30 504,000 but you just want to make sure that even though they're given you a good rate and terms that you like that you're not spending too much that's going to eat away at some of that interest savings because you're spending a lot for the cost of the refi is all that make sense Rachel click on any negotiable it's really just to be shopping around so I would go to bank and get at least three lenders two of which I would want to be online banks that are competing for your business and just compare them against each other.

Let them know that you are shopping it around and make sure that you get the very best rates, terms and fees and you can compare those truth in lending statements to understand exactly what's going on.

If you're buying down the rate you're paying origination costs. Those kinds of things there plenty of great programs out there right now so just make sure you get enough bids to make sure you are in fact getting the very best one. Okay, I think that the content current very good rates alert middle Lord bless you and all the best in the and how you perceive moving forward to Cadillac, Michigan Jim, thank you for your patience. Your answer. How can I help you Rob, thank you for taking my call. First off, I tell you yours and I believe in what you're doing on the sound advice you give everybody it makes me warm inside with a good feeling because of fight that somebody talking the truth out there whether about God and money are just what's happening and I am excited about that for the first will think you generally just say I much appreciate you saying that so that means a lot.

You're welcome sir, right.

So here's the scenario I've got money and a an IRA or traditional way in a Roth IRA also started I am to the point where I'm almost retired one more year to go and I like to start moving some money from my traditional IRA into my rock.

The best way to do that and not pay as much taxes and if I'm going to pay taxes. Where should that money come to work. Yeah Jim why is it that you're wanting to get that money into the Roth are you just wanting to avoid the required minimum down the road or what is the real driver behind it. I like to reduce my minimum down the road because I believe in paying the government but I don't believe that much okay yeah I I think the only question I would have is whether that's gonna make sense for you. I mean, obviously were in the low tax environment and in all likelihood based on what we're hearing coming out of Washington. It remains to be seen what will happen. Tax rates are headed higher so I would expect that down the road we could have tax rates higher than we have today. At least that's probably the general direction I wouldn't see them going any lower than they are now and I could see them being considerably higher at some point, but apart from that, you know there's not a real compelling reason in this stage of life to go ahead and pay the tax and get the money into the Roth.

The real benefit of the Roth is when you have time on your side for that tax free growth to really compound and do it's it's magic. Over time, but you'd you're not going to be invested in such a way during retirement that you can really maximize that and pending on how much money were talking about converting you're going to be adding some significant tax burden to yourself in the near term. As you try to convert all this money over.

So with the RMD not hitting until 72 now I'm just not sure there's a compelling enough reason for you to go ahead and convert all of that money into the Roth IRA, but tell me your thoughts on that. Well I would agree with that for the most part, but here's my thought okay so I saved well through my years and I've always managed her money. Given the advice of the individuals that are: and I'm like yup aren't you without arcuate that were doing well. So when I look at my retirement and I have my personal IRA and I know the government can affect tax that might have my Roth IRA. I'm thinking I'd like to move it into my rock because it's not going to be taxed and I don't believe them. But I need my rock and my retirement okay but you understand all the money you convert to the Roth is going to be added to your taxable income in the year that you make the conversion so you will pay the tax.

You just gonna do it now as opposed to doing it later when you have to take it out right. Okay, more like you shut the long-term being in the market long term for the Roth is what I was concerned about getting a monetary gift to my kids. I understand that I put it in the wrong I'm not going to use it.

It's probably more for them and I like to see it because they know it can happen if you got come after the others. I cease and let them what you have in the traditional IRA that you would be looking to convert all over. I'm very tired object you want to mentally target going trying convert money on my planet converted through the next 10 years after okay and how much do you have in that account about conservatively. Right now I've got. I'm doing well convert at least $200 okay very good. Yeah, I think the key will be to spread it out. I would connect with your CPA to develop a plan so that you don't pay any more tax than is absolutely necessary. You stand. The lie will talk a little bit more off the unfortunately were at a time that's good to do it for us today.

I'm Rob West on behalf of my team. Thanks for listening moneywise lives, a partnership between Moody radio and moneywise media come back and join us tomorrow.

I'll be here will do it all over again. God bless you

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