Money and Marriage F.A.Q., Part 2

One listener that stands out that I worked with recently was this older couple that was interested in refinancing. They reached out to a few different lenders and their credit wasn't the best. I know some of these other bigger banks, you just won't hear back from them, which I cannot stand. Not everybody has the 780 credit scores and never had any hardships in their life.

I'll walk you through what you have to do. How can you end up being able to do this refinance, whether it's two, three, six months from now? Back to that older couple, we worked with them for months and months to improve their credit and we were able to get the loan done. We were saving them hundreds each month, thousands of dollars a year, finally got themselves into a situation financially that they can handle and they could start saving money each month, saving for retirement.

At the end of the day, they just could not be happier, which just put a huge smile on my face. We are United Faith Mortgage. One listener that stands out that I've worked with recently was this older couple that was interested in refinancing. Their credit wasn't the best. Not everybody has the 780 credit scores and never had any hardships in their life.

I'll walk you through what you have to do. How can you end up being able to do this refinance, whether it's two, three, six months from now? We worked with them for months and months to improve their credit and we were able to get the loan done.

We were saving them hundreds each month, thousands of dollars a year, and they could start saving money each month, saving for retirement, which just put a huge smile on my face. We are United Faith Mortgage. United Faith Mortgage is a DBA of United Mortgage Corp. 25 Melville Park Road, Melville, New York. License 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. Today's version of MoneyWise Live is prerecorded, so our phone lines are not open. A word to the wise from Proverbs 1522. Without counsel, plans fail, but with many advisors, they succeed. Hi, I'm Rob West, and we're seeking wise counsel for couples today. We've got more frequently asked questions for Howard Dayton, author of Money and Marriage, God's Way.

Then we have some great calls lined up, but we won't be taking your live calls today because we're prerecorded. This is MoneyWise Live, biblical wisdom for your financial journey. Well, our guest is Howard Dayton, former host of this radio program, founder of Compass Finances, God's Way, and great personal friend of mine. Howard, delighted to have you back on the program. Great to be with you again, Rob.

Last time you were here, Howard, we had you answer some tough questions, frankly, from your book, Money and Marriage, God's Way. And it was so helpful that we thought we needed to do round two. So if you're ready, we're going to just dive right in. Yeah, I'm ready. I've finally recovered from all those tough questions.

Oh, you can do this stuff in your sleep. I know it. And we'll get right into the first one. And we do have a tough one, though, for you right off the bat. So I'll give you a fair warning.

And here it is. I have $5,000 in credit card debt that my husband doesn't know about. I'm reluctant to tell him because I'm afraid he'll never trust me again.

What should I do? That is a tough one. But I really appreciate her desire to be honest with her husband. I mean, disclosing this credit card debt is a key for them to experience the authentic closeness, Rob, that the Lord intends for couples. So the first thing I do is pray. Pray that the Lord would prepare him to receive this news well. The second thing is to develop a plan to pay off the debt. And third, meet with him personally. Tell him of your desire to be completely honest.

Disclose the debt and the plan to pay it off. Seek forgiveness and ask him if he would meet with you every week for a money date to review the finances together so that this will never happen again. And Rob, anytime a couple is faced with a difficult situation, such as this one, the one that is receiving the bad news really has a priceless opportunity. How they react can either significantly strengthen the marriage or it can damage the marriage. To respond with grace, kindness, encouragement can radically improve a marriage. And when you think about it, the guilty party already knows they're guilty.

So responding with kindness communicates, you know, I love you like crazy. I want us to work through this problem and continue to strengthen our marriage and don't get historical by constantly bringing the guilt before the party. And when you think about it, that's really how the Lord deals with us. 1 John 1 says, if we confess our sins, he's faithful to forgive us our sins and cleanse us from all unrighteousness. And he puts those sins behind his back. If we are genuine in our repentance, he doesn't bring him up again. I mean, the Lord really wants the best for us. And he's set the model on how we should interface with the husband and wife. Well, I know financial infidelity happens more often than we realize. And as you said, it's about prayer. It's about coming to it with an open heart and a true desire to seek reconciliation, to be truthful and honest and work together, perhaps even creating a vision with oneness toward what God has for you in your finances. Great counsel, Howard.

Just about a minute left before our first break. Here's another toughie. My wife wants her elderly parents to come live with us, but I think they should go to an assisted living facility. How can we resolve this issue? Yeah, the key is to pray together daily, asking the Lord to show you both what he wants you to do. And I think a lot of your wife, frankly, for wanting to care for her mom and dad.

Now, if you're reluctant to have him in your home because you can't afford it, or maybe you're overwhelmed by the prospect of caring for him, seek other solutions. For example, if your wife has siblings, ask if they can help in caring for mom and dad. The Bible is very clear. We should honor our parents. And that includes in this season of life when they're elderly and need our care.

This is something that I think greatly pleases the Lord. Well, Howard, we still have a lot more ground to cover, a lot more questions. These are FAQs on Money and Marriage God's Way, straight out of the book by the same title, Money and Marriage God's Way by Howard Dayton. We'll continue to unpack these questions just around the corner. Stay with us. More to come on MoneyWise Live.

We'll be right back. Welcome back to MoneyWise Live. I'm Rob West, your host. Along with us today, Howard Dayton, former host of this program, founder of Compass Finances God's Way and author of Money and Marriage God's Way. He is joining us today to answer some, frankly, tough questions about money and marriage.

You know, God's design is oneness in every area of our lives with our spouse. And that certainly includes money, but that's easier said than done sometimes. Howard, we come to the marriage relationship with different money backgrounds, money personalities.

Money was undoubtedly handled differently by our parents. And then we're supposed to find one plan that works for the two of us. And it doesn't always play out that way, does it?

No, it doesn't. But thank the Lord that we've got his word, which gives us really, Rob, as you know, the game plan, the foundation for how we should handle our money. So in the area of giving, in the area of debt, I mean, all these different areas, God really gives us clear direction.

And a big part of becoming one financially is learning what God's word says about money. And Rob, you do just such a superb job of communicating that. I'm really grateful for you. Well, grateful for you as well. And we're going to dive into a few more of these questions today, specific questions that really relate to money and marriage God's way.

And next up, Howard, is this one. My husband and I both have been divorced and in previous marriages where there was constant fighting about money. What can we do to avoid this in our marriage? Yeah, Rob, as you well know, previously married couples often bring the emotional baggage of the problems they experienced during their earlier marriage. So I think that the couples need to address this issue head on, discuss the issue of frequent arguments, focus like crazy on encouraging each other and creating a culture of celebration rather than conflict in the marriage.

For example, you as a couple may have a half dozen maxed out credit cards. Well, every time you pay one of those turkeys off, celebrate, because what we celebrate, we tend to repeat. And one of the keys to celebrating is to pick something you really like to do together as a couple. Make it a memory, you know, enjoy yourself. And fortunately, what we discovered as a couple, celebration doesn't have to cost a lot of money.

You know, a quiet evening alone with your spouse can result in a lifetime of wonderful memories. Just celebrate whenever you can, even the small victories. That's a part of what it really takes to make a marriage sweet. And I'm all for sweet marriages.

Well, I love the idea of celebrating. I also appreciate what you've taught us for so long, Howard, and that is the idea of communication. We know that's key in every aspect of marriage, but certainly in the area of money. And your idea of a money date opens up those lines of communication. And that is a key piece of handling money God's way. All right.

Our next question reads like this. My husband wants to buy a new car every three years, even though we have to use lots of debt to do it. How can I show him in black and white that we should be buying used cars for cash? Yeah, Rob, as you well know, unfortunately, many people have car debt their entire lives. And according to Lending Tree, the average monthly new car payment's now over 550 bucks a month. And just think about it. What if you took that $550 a month, invest that from age 21 to 65, earning 10%?

And it would grow to more than, are you ready for this? $5 million. So I'd go online to Bankrate or, you know, any number of websites out there that have calculators, find the calculator that computes the compounding growth of savings and review it with your husband. So he can really catch the vision of the financial impact for them as a couple by regularly saving instead of staying in this mode of paying $550 every single month for a new car every three years. And I'd really encourage folks to develop a strategy to be able to pay cash for their new car. Very practical way is to drive your existing car until it's paid for. After you pay the car off, keep putting that monthly amount of your car payment in your bank account.

So when it's time to buy the next one, it can be done with cash and you can get off that the wheel of having to make monthly payments for the rest of your lives. Yeah, that's great advice, Howard. I know you've lived that out personally for a long, long time. All right, on to the next question. This one might sound extreme.

Unfortunately, it's more common than you might think. It reads, my wife is a compulsive spender. She wastes money on clothes and on her gambling addiction.

What should I do? Yeah, well, as you know, well, Rob, gambling can destroy a couple's finances. You've got to do three things.

And I'll give them in order of importance. First, lover. And that includes praying earnestly for her freedom from gambling. Then second, many people need professional help to get free of this gambling problem, preferably from a Christian counselor who can apply biblical wisdom and biblical principles to the healing process. And finally, you need to take control of the family finances for her protection as well as your family's protection. The amount of money available for her should be limited. She'd certainly provide a reasonable budget for clothing and her personal needs, but you really need to take control of the rest of the finances. And by the way, if it's the husband who has the gambling problem, his wife should control the family finances, providing him with a modest monthly budget for his personal needs. But it's so important to get good spiritual counsel to help somebody get out of the web of gambling.

Yeah, this is really key. All right, Howard, just a couple of minutes left before we're going to have to wrap up for today. You know, I hear from so many couples where, and it could go either way, but in many cases, the husband is not a believer. The wife is. She wants to be found faithful in giving. He doesn't support her desire to give. And she's just feeling like she's not doing what the Lord has asked her to do. How do you help her navigate that? Yeah, that is not easy.

And as you know, and as you've said, Rob, it's very prevalent in many marriages. And I would take a slow-go approach if she is in a position to earn some money, even if it's part-time babysitting, if she's a stay-at-home mom, where she can earn some money and get his permission to be able to give based on the money that she provides or based on the money that she earns as a first step. Obviously, the best thing over the long term is to have the husband join her in giving generously to the Lord. And certainly by prayer, that's key. And by exposing the husband to biblical truth, you know, if he's not a believer, a book or a tape or listening to this program might have a huge impact on the spouse.

Yeah, I know it will. Well, Howard, unfortunately, that's all we have time for today, but such wisdom and great godly counsel. I appreciate you stopping by to help folks tackle these tough questions. Loved it, Rob. Thank you so much.

Absolutely. We'll do it again real soon. Howard Dayton's been our guest today. You can find his book, Money and Marriage God's Way, wherever you buy your books. This is MoneyWise Live, where God's Word guides our financial decisions. We'll be back with much more. Stay with us. Thanks for joining us on MoneyWise Live, where God's Word intersects with your financial questions. And we're so glad you're along with us today.

Our team is actually taking some time off today. So don't call in. But I will tell you, we have some great questions lined up in advance. And we're looking forward to hearing from those folks. I know you'll hear something that will be of value to you. And perhaps in just a moment, we'll take a few of your emails as well.

Let's head to Holland, Michigan. Steve, you've been incredibly patient. How can we help you, sir?

Hi, thanks for taking my call. My wife and I are frequent listeners. Always appreciate your sound advice. My mom passed away last year, and we have received or will receive an inheritance of about $100,000. Along with some investing and saving and tithing on that, we also want to share that with our three kids. We have three sons.

They're all married, have children, and in pretty stable situations. But we'd like to give them roughly $10,000, $12,000 apiece. Our discussion has been, do we just kind of write them a check and say, here you go? Or do we kind of just let them know, hey, we have something here for you in case of an emergency. We're just kind of wrestling with how to present this to them. In a sense, I think we'd like to be able to just hand the money over to them, trusting that they will be wise stewards with it or not.

So I just don't know. We've been in the receiving end of situations like that before. And frankly, the funds came out of the blue. We were very surprised and grateful for the blessing that happened, so we're not sure which direction to go with this.

Yeah. Well, it's obviously going to be a blessing to them no matter how you do it. I would make it a matter of prayer, Steve, just to ask the Lord to give you some wisdom.

There's obviously any number of directions you can go. There's going to be not any tax consequences to this, because it was an inheritance to you, so there's no taxes. And the annual gift exclusion is $15,000 per donor, per recipient, so you could actually give $30,000 between you and your wife, so you're fine there. So I think the question is now or later, and are there any stipulations as to the gift?

So let's talk about now or later. I think the key is, do you want them to be able to use the funds right now? And a good bit of that has to do with just your own observations as to their financial and spiritual maturity. Clearly, if there was anything going on in any of their lives where they were living a lifestyle that was problematic, and you could actually end up funding sinful behavior that would lead to something other than a desired outcome, and so if there's any hint of that, you obviously want to withhold that as to not put money into a problematic situation.

So I think that would be the first issue. Obviously you didn't mention that, so I'm going to assume that that's not the case, but if there was something there that Mike saying that prompted in your thinking, you know, let me know. But then secondly, financial maturity as to the decisions they're making, and just your observations as to their ability to handle that. Give me your thoughts. Well, I believe each of, as sons, they're all three boys, each of them are intelligent, smart, and living, we feel, a good life. I know that two of them are definitely believers. The third, I don't think so, but he is a stable, a good father, and we feel leading a good life. But obviously there's that other aspect to his life as well. But I think they're each in different stages as far as their needs might be. None of them are destitute by any means, they all are in stable situations income-wise, so it would be really something we would like to see them do something with, maybe long-term or something like that. But then are we dictating what they should do with this?

And that's, I guess, where we're kind of wrestling. Yeah, and I think, I mean, clearly you're the one making the gift, so you can do it however you want, but there is that element to it where, you know, I think you'd need to ask yourself, are you okay with whatever decision they would make? And you need to be able to answer yes to that before you make that gift. If they were to decide to use it on a really nice vacation, or an improvement on the house in the short term versus investing it for the future, would you be okay with that decision?

I think you and your wife need to talk through that before you would be in a position to make that gift. If you are okay with whatever they choose, and you just cited their maturity and stability and just kind of where they're at in their lives, then I think there's something to be said about you all just making that kind of, you know, lavish gift perhaps with it. You'd say, you know, our desire is that this would be something that you'd have into the future. I think, you know, it would be good for them to hear that from you, to know that that's, you know, going into it, that's your desire. Now, they become the steward and have to decide what they do with that information, but I think making that known to them that that would be your hope, but that at the end of the day, you're going to leave it up to them as to how they use it. No questions asked, you know, I think that would be certainly one approach. There would be nothing wrong with that.

I think the second option is just, you know, is there something creative you want to do with this, you know, i.e. promoting generosity. So, you know, if it's 10 or $12,000, maybe it's $10,000 as a gift and $2,000 in a donor-advised fund where it's already been given and needs to just be given away. So you can set up a donor-advised fund where they would then be charged with, you know, distributing that $2,000 to non-profit ministries and charities that would be near and dear to your heart. That would be a way to kind of foster, you know, some really exciting and fun giving that's on the heart of God, clearly, when we look at Scripture. So I would probably go one of those two approaches, but I do think you and your wife need to kind of wrestle through this and just say, are we going to be okay no matter what they do with it? And if the answer is yes, then I like the idea of just making the gift, making your desires known on the front end so they have that and then can weigh that as they make decisions.

But at that point, you need to be willing to let it go and trust that they're going to make the right decision. And then if you decide you want to add a giving component to it, talk to our friends at the National Christian Foundation about a donor-advised fund, ncfgiving.com. Steve, hang on the line. We'll talk a bit more off the air.

This is MoneyWise Live. So glad you've joined us today. Again, we're taking some time off, so don't call in, but we'll be back with much more just after this. Stay with us.

Thanks for joining us on MoneyWise Live, where we apply God's wisdom to your financial life. Hey, we're taking some time off today. Our team is not here, so don't call in, but we have some wonderful calls that we've lined up in advance that I know you'll enjoy. We're going to begin today in Florida in this segment. Pam, welcome to the broadcast.

How can we help you? Hi, thank you for taking my call. I've been listening to some of your podcasts. I've been listening to some of your podcasts. I've been listening to some of your podcasts. Hi, thank you for taking my call. I've been listening to you for a while.

I miss your side, buddy. I do as well. I just saw him the other day, and he gives his best to all of the MoneyWise listeners, but I appreciate your kind remarks. Well, I was listening the other day, and there was a young lady that called in about having a credit card that she wanted to out. I've had a couple of credit cards that I've just had hidden. I basically use two credit cards, maybe just one.

So the particular stores that have their own, I'm not using them. So how do you get rid of them, and how often do you delete one, or how do you do this whole thing? Yeah, well, you know, I think the key is whether or not you're concerned about a temporary drop in your credit score. I mean, that's what most folks are asking about when they ask about closing a credit card, because at face value, the idea that you would have these cards sitting around that you have no intention of using is not a good idea, because you've got to keep up with the accounts. You've got to monitor them to make sure that nobody's compromised the account and is charging them for unauthorized and fraudulent purchases, because if you don't report that on a timely basis, you may end up being liable for it.

So you've got to keep up with them. And I think just for simplicity's sake, we all have enough on our plates, let alone tracking accounts we're not using, that we probably want to get those closed. Now, the reason we may want to spread that out over time or start with the accounts that have been open most recently is just as a result of, you know, where is your credit score? Do you already have a high score? And, you know, therefore, if it dropped 30 or 50 points temporarily, and then it came back up, you know, a few months later, that's not a big deal, especially if you're not out seeking credit, then I would say just go ahead and close them. And let's be done with it. But if you're kind of right on the borderline, you know, you need a 640 and above to qualify for a loan that you're looking to get and you're at 655, you know, it's probably not the time to go closing a bunch of accounts because you could see a drop and then, you know, that could hurt your ability to qualify for the best credit when you're out there looking for a loan.

So, I think that's the driving factor here. How many cards are you looking to close, Pam? I'm looking to close at least four.

Okay. Everything I have is paid for. I have rental property that I'm getting rent in that they're all paid for, my house is paid for, everything is paid for. So, there's no loans that I'm out looking to get and I'm just trying to delete and get rid of things.

Okay, then I just go ahead and close them all down right now. And, you know, again, if you monitor your credit score or you have a, you know, free service from a credit card that does that for you, you may get alert that your score has dropped 30 or 40 or even 50 points. That's not a big deal.

It'll come back. The key is that you're an on-time payer every month and that you have just, you know, a good financial foundation under you. So, I wouldn't be too concerned about it and I think it'll give you a little bit more peace of mind to know those are out of the equation, they're done and you can forget about them and cut up those cards. So, hopefully that helps you. We appreciate your call today and we'll look forward to hearing from you again real soon. Connie's in Fort Myers.

Connie, how can I help you? Hi, thank you for taking my call. Yes, I am weighing two home mortgage refinance options and I'm just trying to see which one would benefit me more. So, the first one is at 2.625% with a finance fee of $1,300 plus closing costs. And then the other one is 2.25% with a financing fee because you're buying down a few points, $2,805 plus closing costs.

Can you give me some or recommend which one might be the better deal? Yeah, well, I mean, you could run the numbers just to see whether or not, you know, how long it would take for you to be, quote, in the money for you to buy down that rate. I mean, I typically would say let's just find the lowest rate possible, you know, that you can with the lowest closing costs, you know, without a lot of upfront fees. I mean, right now, you're going to be looking at something, you know, just under 3%, you know, without a lot of cost and where you're not buying down the rate but, you know, you're only spending 1% to 2% in terms of the overall loan value toward closing expenses.

So, on a $300,000 loan, we're talking about, you know, $3,000 to $6,000. And as long as you're going to stay in that home for at least, you know, five to eight years and you don't extend the term and you're saving at least a point to a point and a half on the interest rate, then that makes a lot of sense because you'll end up paying back those costs, you know, over five or six or seven years. And, you know, then from that point forward, you enjoy the savings on the interest, you know, until the end of the loan and you'll save thousands and thousands of dollars in interest if you stay in the home until it's paid off. The reason, you know, that I don't love the idea of buying it down is, you know, life calls, right? And so you may plan to be in this home a long time but if you end up moving, you know, and you've bought the interest rate down, that's just more upfront expense that we have to wait until you recoup, until you start realizing some benefits of that refinance. Now, if you plan to stay there for 30 years or let's say you're doing a new 20 year mortgage and you actually stay for 20 years and you run the amortization schedule based on you buying down the rate on the front end and you do in fact take it all the way to the end, you may find or you probably will find that you're actually going to save some money in interest and you can have them give you that comparison to show you.

It's just that, you know, for most folks they're spending a lot of money upfront and we just don't stay in homes these days, you know, for that long. Does that all make sense to you? I think we lost you, Connie, but I appreciate you calling today. Hopefully that's helpful as you think about this. I might encourage you to get a third bid just because I like the idea of getting three. Let's get one from your current provider, your current lender. I'd get at least two from online banks.

Go to bankrate.com to get the very best loan programs that are out there with the very best rates and I think if you do that and then compare the three again with the idea being you want to understand are you getting today's best rate based on a credit score of 740 or above, which is going to be just under three percent with no more than one to two percent in closing costs, that's a good mortgage and I would certainly consider that. So we appreciate your call very, very much. Well folks, we've got just a moment before our next break. Let's take an email.

We haven't done that for a bit. If you have an emailed question, you can always send it to us questions at moneywise.org and we'll try to get it on the air. This question comes from Michael and Jan and Michael just asked simply, should I pay off my student loans before I begin long-term savings? And here's what I would say to that. I would be well on your way to paying down your student loans before you start contributing to your retirement account.

What do I mean by that? Well, if you're in a position where you've got the monthly payment fit into your budget and you can have a target to pay those student loans off within 10 years, then I would say yes. Go ahead and start by putting at least the matching portion in your retirement account to take full advantage of that dollar for dollar match. If you have that, that's free money.

You don't want to pass that up. And then I think you have a choice at that point. Do you want to add more to the retirement account or do you want to accelerate that payoff? I think you could go either way.

It's really just something you need to pray about and develop a conviction about. There would be nothing wrong with saying we want to get out from under that debt as soon as possible or no, we're okay with a 10-year payback and we want to increase our retirement. Ultimately, your target for retirement is 10 to 15 percent of your take-home pay. Jan and Michael, thanks for sending your email to questions at moneywise.org. We're going to pause back with more of your calls and questions just after this. Stay with us. Welcome back to MoneyWise Live.

I'm Rob West. So glad to have you along with us today. Hey, our team is taking some time off today, so don't call in, but we have some great questions all lined up for you. You're going to get a lot out of this. We're going to talk about whether universal life makes sense for kids.

We're going to talk about how you use a health savings account to supplement retirement, but first down to Chattanooga, Tennessee. Tim, what's on your mind today? How can we help you, sir? Yes, thank you, first of all, for taking my call.

Sure. And I'm 67, I'm retired, and I'm taking four percent, as they say. Well, my question is, if I got stocks, I get bonds and whatever, what yield do I want to get per year on the whole thing in order to make sure that everything floats right? Yeah, well, that's a great question because obviously you're going to have some taxes that you need to pay on that money, and so you want to make sure that that is covered as you pull that out so you can net the amount that you need. So typically, we'd be looking to make about five percent annualized on that portfolio so that you can, you know, easily take out that four percent and cover any, you know, fees or expenses.

Keep in mind, you know, if you have an investment advisor in there, there's going to be a cost related to that, and then you have any taxes that are due as well. So if you target, you know, a five percent return, if in some years, you know, it's six or seven and other years it's down, I mean, the idea is that over time that that's going to balance out to a four percent rate of return typically would like a 70-30 portfolio where 30 is in stocks and about 70 of that is in fixed income or bonds. And the idea would be, you know, if you were 100 percent invested in stocks, you know, we would say that you would want to be thinking about, you know, being able to weather a 30 percent downturn in the market and, you know, or 35 percent. You know, so when you look at getting that exposure down to only 30 percent in stocks, you know, at that point, we're talking about much less that you would be weathering on the downside, you know, probably about 10 percent. So even if your portfolio during a period of time where the market was declining, if that portion was down about 10 percent, you know, for the overall portfolio, that's OK, because you would wait that out and let that money come back without selling anything or doing anything to cover that. And then you'd live on the fixed income portion. Obviously, during periods where it's doing quite well, you know, then we're looking at realizing some of those gains and using that to supplement the portfolio.

So those ups and downs over time should even out to where you can cover that four percent in income that you're taking out and make sure that, you know, all the expenses and taxes are paid. Does that make sense? Well, it's exactly the question or answer the question I was trying to ask. Yeah, thank you very much. Very good, Tim. Thanks for your call today, sir. We appreciate it. Let's head to Cleveland, Ohio. April, how can we help you with HSAs today? Hi, thanks for taking my call.

Sure. I am interested in finding out. I don't understand how to use an HSA account to maximize retirement savings. The reason I'm asking is because I'm in my early 50s. I haven't saved a dime and I need a way to turbocharge this. Also, to give you a good idea of where I am, even though I'm in my early 50s, I feel like the Lord is leading me to attend medical school. So I'm in the middle of massive flux and I want to make sure I do this right.

Yeah, very good. Well, I think the key right now, April, if you feel like you're a bit behind on long-term savings, is just to keep your lifestyle at a minimum, the best you can, so you have as much surplus as possible. And make sure you keep giving. Don't take on any debt to the best of your ability and take that margin and save, save, save. Now, you want to get that in tax advantaged vehicles, which is going to be either a 401k at work or at least an IRA, a traditional or a Roth.

If you're self-employed, you could use a SEP IRA, but an HSA is in fact another way to do it. The key is you really need to be fairly healthy because you don't want to be using that money a lot and you want to be able to max out your contributions. But if you can do that, then the amount that's left over at the end of the year, when even before that, if you've built up a surplus, can be invested in mutual funds and other vehicles.

So that money is growing. Now, you want to make sure you keep enough money liquid in the account for your annual healthcare expenses. And you can liquidate positions as you need to, but you generally want about as much as you think you'd need in a 12 month period. The rest you invest.

Now, here's the key. Once you reach age 65, the HSA behaves similarly to a traditional IRA. You take withdrawals out of the HSA for non-medical expenses, penalty free. Now, taxes may still be applicable to your withdrawal amounts similar to traditional IRA withdrawals, but you avoid that 20% penalty from the IRS. Now, the withdrawals for qualified medical expenses, which arguably in that season of life may be your biggest expense, will still be eligible for tax-free withdrawals as you look to pull that money out.

Now, with contribution limits, you've got to have a high deductible health plan in place in order to qualify for the HSA. But as long as you do, you can put in 3600 in 2021 for an individual, 7200 max for a family. So, you know, that's the idea behind it where it's this additional savings vehicle that can be invested with tax advantages, assuming you're not using up what you put into it each year, you know, for your medical needs in a given year. Does that make sense to you?

Why? Yes, but I also wonder how do I access it at the end of the year to be able to invest it? Because from what I understand, you can only access the funds for medical purposes.

So I'm a little bit lost. Can you help me with that? Well, you can.

Yeah, sure. You can only withdraw them for medical purposes, but that doesn't mean that you can't invest it. So when you make contributions into the HSA, generally through salary deferral, either an employer portion or an employee portion that you elect, that goes into the HSA. And then you would just typically log into your account online with whoever your plan administrator is, the custodian of that, of those funds. And you're not taking any money out like you would if you needed to pay a medical bill. You're just taking the balance and that portion that you don't think you need in a given year that you want to invest, you would just direct it right into those investments inside the HSA. So the money is never leaving the account. It's just that you're redeploying it in investments inside the plan, similar to what you would do in a 401k or an IRA. You're not taking the money out.

You're just investing the money that goes in. Does that make sense? I, yes, it does. Thank you. You're welcome. We appreciate you checking with us. And we'll look forward to talking to you again real soon. Thanks, April. Let's head to Green Acres, Florida. Jennifer's up next.

Jennifer, how can we assist you? Yes. Thanks for taking my call. I wanted to know the difference.

My baby was like six years old. I had opened, I wanted to open an account and I opened it and the lady said it was life insurance. But then when I called back a couple of years later, they said, oh, it's a universal insurance. So what does universal insurance means? Yeah, well, universal life insurance is also called adjustable life insurance because it offers some flexibility. You have the ability to reduce or increase your death benefit and pay your premiums at any time in any amount with some limitations. But the idea is it's a combination of a life insurance policy with a savings vehicle. The question I guess I would have is, you know, why do you need insurance on a child? You know, you can usually get as a rider to another policy, a small burial policy if you wanted protection, you know, for that, you know, that type of event that could occur. But other than that, you know, typically, I don't recommend it. I'd rather you get a very inexpensive burial policy and then take the difference and invest it not through an insurance product, but through another type of account.

If you want to save for your daughter's future, you know, I'd look at a 529 plan for college or another type of investment account where you can see that money grow. But again, not inside an insurance product where there's a lot of fees and commissions. But with the insurance portion itself, I guess I would just ask, you know, why do you feel like you need that?

Right. I didn't know at the time, but then I opened with Prime America a 529 for her. And when I wanted one for myself, well, bankers life turned me down because I'm diabetic and they didn't want to give me an insurance.

So I turned it on her. But then I opened Prime America and they said they would put up a savings for me. So I have a 529 for her and a savings for me with Prime America. And then with this now, I wanted to know, I don't know how much I have in there to pull it out.

Yeah. So you would want to just call and ask if there's any cash value that's accumulated. And when you cancel the policy, if that's what you decide to do, you would get that back.

And then that policy would lapse. And then moving forward, I think the question is just where's the very best place for you to invest for yourself? It's probably going to be starting with an emergency fund and a high yield savings account up to three to six months expenses.

And then beyond that, for the longer term for you, I'd look at a retirement account like an IRA or a 401k or 403b. And then for your daughter, it's probably going to be a 529 specifically for college. There are probably better plans out there better 529 plans than the one that you're in. And the way to evaluate that is just to go to savingforcollege.com. You can look at the current plan you're in and compare it to other plans in other states to see if you can do better, and I suspect you can.

In many cases, you'd be able to roll that over to the new 529. So I hope that helps. I appreciate your desire to save for the future and be thoughtful about how you manage God's money. We appreciate your call today. Well, that's going to do it for us, folks. MoneyWise Live is a partnership between Moody Radio and MoneyWise Media. Let me say thank you to my amazing team, Deb Solomon, Dan Anderson, Jim Henry, Amy Rios, and we're so thankful for what they do each day to make this program happen. This is where God's word intersects with your financial life. Come back and join us next time, will you? God bless you.