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 you know 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. The parable of the persistent widow is a lesson about the power of prayer. But does it also teach us how to deal with unrighteous judges in our lives?
I am Rob West. How often are you frustrated in your attempts to get satisfaction from some big corporation? Maybe you're overcharged on your cell phone bill or a product turns out to be shoddy. We'll apply a Bible lesson to the problem today. Then we have some great calls lined up.
But please don't call in today because we're pre recorded. This is MoneyWise Live biblical wisdom for your financial decisions. So I was reading an article recently by a guy who got fed up long ago dealing with the customer service departments at big companies. Whenever he had a problem with a product or service, he felt like he was just getting the run around. I'll tell you about his solution in a minute, but his story reminded me of the parable of the persistent widow in Luke 18. Jesus says, I will give her justice so that she will not beat me down by her continual coming.
Now, of course, the spiritual lesson is that we should pray consistently because our Heavenly Father hears our prayers. But notice that the widow doesn't deal with the courts customer service department. She goes straight to the top to get satisfaction. And that brings us back to the article by our fed up consumer and his decision to try the same thing. Tired of trying to reach a live human on the phone only to be told that company policy won't allow a refund exchange or whatever. He decided to go straight to the top. It happened one day when he couldn't get satisfaction for overcharges on his Verizon bill. He decided to do something that most of us would never think of email Verizon CEO.
Now, it wasn't easy. He had to hunt to find a working email, but eventually he did. He wrote the executive a lengthy but courteous email explaining his problem and was shocked soon after when he got a call from someone in Verizon's executive escalations department. Never heard of an executive escalations department?
I hadn't either, but apparently most major corporations have them. Think of it as an executive customer service department. They're staffed by people called executive response specialists. And it's their job to provide speedy resolution to customer complaints that have somehow escalated to the top of the top brass in the company. So our disgruntled consumer was surprised to get this call.
And as it turns out, the nice man fixed his problem and told him to hang on to his number in case he had any more problems in the future. He did have more problems, of course, and each time he contacted the executive response specialist, he received the same courteous assistance in solving his problem. In fact, the process worked so well that our then fearless consumer decided to try it every time he had a problem with any company, that is, email somebody right at the top. He reports that this tactic has worked with Home Depot, Spectrum, Honda, Bank of America, and Chase, along with the head of his local water utility and many other small companies.
Now, if you have a problem with Amazon, don't expect Jeff Bezos to give you a ring. He probably has a legion of executive response specialists, and it would be one of them who gets back to you. But before any of that happens, you've got to find a working email for someone at the top of the company, and the article's author says that's the hardest part.
He lists a few websites that might help, and we'll put those in today's show notes that you can find at MoneyWiseLive.org. If that doesn't work, he suggests trying to get anyone's email address at the company. It has to be a personal address, not customerservice at xyz.com. Once you have that, you have an idea how the company structures its emails. Is it john.doe at xyz.com or jdoe at xyz.com or some other structure?
But even if you can't determine the email structure, you can try all of the standard ones like I mentioned. A lot of those emails might bounce back, but who knows, one might go through and you get referred to the executive escalation department. And when this finally works for you and you have your contact, never lose it, because odds are very good you'll need it again one day.
The article's author reused a contact four years later, and though the original specialist had left, someone else promptly contacted him and satisfied his complaint. And by the way, it's always better to use email rather than the phone, because it leaves a paper trail, sort of. By the way, don't make this a one-way street.
When you get satisfaction from a company, when an unrighteous judge acts righteously, give them a good word on Yelp or another review platform. Hey, we're going to pause for a brief break. We'll be back with much more. Stay with us. Thank you for tuning in to MoneyWise Live, biblical wisdom for your financial journey. We're so thankful to be in partnership with you as you call in and share your stories and your questions, and we get to serve you with our MoneyWise coaches and certified kingdom advisors.
We see this as a big family, a community of people that want to know God's heart related to managing his money, and we can do it better together as we journey together. So thanks for being a part. Hey, our team is taking some time off today, so don't call in. But we had some folks that had some questions we were able to line up in advance, and so we'll take those now.
Let's head south to Hollywood, Florida. Joseph, thank you for your call, sir. How can I help you?
I have a question. I wanted to try to get rid of my PMI. I had gotten a mortgage through the FHA, and I refinanced once. I had an interest rate of like 4.75, now I have 3.5. So I didn't know if it was a good idea to refinance again to get rid of that PMI.
Yes. Well, yes, as you know, the only way you can get rid of the FHA equivalent of PMI is through a refinance. So we would be looking for you to get a one point reduction at a minimum in your interest rate, and then be able to plan to stay in that home for five years or more. And then I'd want to make sure also that the expenses associated with that were around 2%, not a whole lot more than that, the cost of the refi. So do you think you can do that? And if not, then unfortunately, you're going to have to look really hard at whether the cost of the refinance is going to be prohibitive for you, even though you're going to have to still continue to pay this PMI, which doesn't do anything for you, unfortunately. So give me a sense of whether you think you can meet those criteria.
I think I can. I was thinking, well, the last time I did it, I didn't have any money come out of my pocket because the property value had gone up. And because of that, I didn't have to have any money out of my pocket. I think it was maybe, it cost like maybe $800 or something like that, but then I got a credit. So I ended up refinancing and it didn't cost me pretty much anything that I could think of, that I had to bring money out of my pocket or anything.
Okay. But yeah, even though you're not bringing money out of your pocket, you may be doing a couple of things. You may be extending the term of the loan meaning. So if you had a 30-year mortgage, you've been paying on it three years, you start over at 30 years, which is in the earlier years is where the most is going to interest. The second thing that may have happened there is even though it wasn't coming out of pocket, you increase the balance of the mortgage. So even though your home is rising in value, you're adding more debt to the property as well. So just because you can do it and result in a similar payment and you're not spent coming out of pocket with a lot of money doesn't mean that it makes sense financially. Because what you need to look at is what is the total amount of interest you're going to pay over the life of the loan. And the only way to get that down is to decrease the interest rate and or decrease or at least match the term. So I don't want you to reset the term at a new 30 years and I'd like for you to get that interest rate down. Otherwise, you're just going to continue adding, creeping that balance higher and higher, that mortgage balance and it's just not going to be financially effective for you. So I'd take a hard look at that. Let's make sure you can save at least a point on the interest rate.
Let's make sure you're going to stay for five years and let's make sure the expenses are no more than 2% of the value of the mortgage. Otherwise, I'd probably leave it alone, Joseph. But we appreciate you checking in with us today. Let's head to Strongsville, Ohio. Joe, thank you for calling.
How can I help you? Well, in 1985, the property next door to me went up for a sheriff's auction and I purchased it. It was three city lots. One of the lots has a house on it. I sold the house and the lot with the house. Now I have two city lots.
I kept one for myself and now I'm selling the other one. How do I figure out capital gains? I wouldn't like to know how to figure out if I'm going to owe money on this or not.
Yes. Well, I would contact the CPA. There's a lot of moving pieces there, Joe. The bottom line is none of these are your domiciles, so they're all subject to capital gains. So you're going to have to establish your cost basis for all the property and then you're going to have to establish, as it's sold off, what portion of that is considered gain where it's appreciated beyond what you paid for it. And that profit there between your original cost basis plus any improvements that you made, minus the subtracted from the sale price of any pieces of this will help you determine exactly what's going to be subject to capital gains tax. So I would, if you don't have a CPA or accountant, this is the year to get one and have that person look at all of the parcels and help you to establish the cost basis so that as these are sold off or now that they are sold off, that you know exactly what is taxable and at what rate and you can plan for that so that it's not catching you by surprise.
In fact, some of that probably even needs to be prepaid. So that's going to be my best advice. If you don't have a CPA or accountant, you can connect with a Certified Kingdom Advisor in your area and ask for a referral.
Just head over to our website, MoneyWiseLive.org, and click Find a CPA. We appreciate your call today very much. Hey, before we head to the next break, let's take an email or two.
We haven't gotten to a few of these in a while. This is emails that come into questions at MoneyWise.org, questions at MoneyWise.org, and Patty is our next one up. Patty just says simply, how do I improve my credit score?
Well, Patty, there's a couple of ways to do that. But first of all, let me just say it's really critical that you understand that when it comes to improving your credit score, you don't need to pay anybody to do that because there's nothing they can do that you can't do yourself. So I think it's really important for you to understand that fundamentally. The biggest thing you can do, Patty, to improve your credit score over time is really in two areas. One would be just be an on-time payer. Your payment history is the largest percentage of what determines your credit score.
The second thing is keep those balances. I'd prefer them at zero because we're only using the debt for budgeted items, but I realize that's not always practical. So make sure from a credit scoring standpoint, not a financial management standpoint, but from a credit scoring standpoint, make sure those balances are under 30% of the limit. That's what's called your credit utilization, the amount you owe versus what is available. 30% and above is going to hurt you. 30% and below will help you.
Below 10% will be even better. And then the other things that you have less control over, the length of your credit history, how much new credit you have, are you out there seeking credit, and your credit mix, multiple types of credit accounts. All of that together is what makes up your credit score. But the very best thing you can do over time is only use credit for budgeted items, have active accounts where you're not carrying a balance, but where it's showing and being reported as on-time every month so that you're seen as an on-time payer.
And if you do that over time and follow biblical principles of managing money, you'll be rewarded in the form of a higher credit score. And Patty, we appreciate your call today, or excuse me, your email. Folks, if you'd like to send us an email and have it read on the air, send it to us at questions at moneywise.org.
That's questions at moneywise.org. We're going to pause for a break. We'll be back with much more. This is Money Wise, biblical wisdom for your financial journey. We'll be right back. So hello, Sue. How can I help you today?
Thanks, Rob. My thirty-second question is about money for my daughter starting grad school next month. We are a God-honoring family, which includes our finances, and my daughter will be starting grad school and receiving an un-subsidized loan for grad school, but she'll still be short in covering her expenses. So I don't want to cover or remove her financial responsibility, but I'm wondering if I should encourage her to borrow from me or just take out other loans like a grad plus at six percent. And that could really benefit her to borrow from me as she would for my help to the Lord.
But I'm just not sure what to do as a widow, a 61-year-old. I have no steady income, but I do have a house paid for and a cottage, and I do have quite a bit of money invested that could help her. Yes. Okay.
Would these be assets that you would not need if for some reason she was unable to pay this money back? That's true. That is correct? Yes.
Okay. Yeah, you know, I think as you go into this, you would just kind of need to make some key decisions in your mind and then talk it through with her. I generally discourage folks from lending to family members, and certainly that would include a child, unless you're ready, willing, and able to forgive the note at any point if it's required.
And here's why. You know, we see in the Bible that the relationship changes when you become a lender and a borrower. It says the borrower is servant to the lender, which means the borrower is the lender slave, in a sense. And so, you know, there's a relationship that changes there as you go from mother-daughter to lender-borrower. And it has the real potential to cause a strained relationship if even, you know, if everyone goes into it with the best of intentions and she's unable to get the job she wants, the Lord redirects her into something outside of the field she's been studying for that is not going to earn anywhere near the amount of money, and so therefore she's not able to pay it back. And, you know, so you get into those situations and collateral damage in a relationship is not worth any amount of money. And so that's why I would just err on the side of just, you know, passing, even if it's going to cost her more in the long run.
Now, if you were to say to me, Rob, I think this can be a blessing to her. I have the financial wherewithal to do it, even if I had to forgive the loan. And I'm ready, willing, and able to do so under the right terms and conditions or situations. And there's a real healthy communication and dialogue about that on the front end, so that there's not even, you know, guilt on her part if that were to have to happen because she knows it going into it. You know, these are the conditions under which I would only, you know, be at all comfortable with you doing this. Does that make sense though, Sue?
Yes. Does it help at all to say, okay, I'll charge you a minimal amount of interest so that we consider it a financial deal? Yeah, you certainly could, and you'd want to have all that in writing ahead of time so there's not any kind of, you know, misunderstanding as you go into it. But what I think is more important than her feeling like, well, I've taken advantage of Mom because I can see her just, you know, seeing you as wanting to help and being really grateful for that, we've got to think about the worst case scenario and deal with that first. And that worst case scenario is she's just unable to pay it back any time soon.
And, you know, we're ten years down the road and she's still working on the other debt that, you know, has real lenders that are not related to her and she hasn't been able to touch yours and she had told you she was going to plan to start to pay it back and she hasn't been able to and, you know, again, it could be for any number of reasons and then all of a sudden now we've got, you know, potential conflict between a relationship and it's just not worth it. So I think that's where you need to go into it saying, I have the ability and I'm willing to forgive this if it comes to that because I'm not willing to allow this to come between us. Do you follow? Okay. Yes. Thank you.
Yeah. So I think as long as you wrestle through that and then based on what you've decided, you all sit down and have an open and honest conversation about it and then whatever is decided is then reduced to writing that you both kind of agree to so there's no unmet expectations or potential conflict, then I think that's then the position that would allow you to move forward and do something that would be a real blessing to her but with proper understanding so that we elevate the relationship above the financial situation. And we appreciate your call today. Let us know how it turns out.
We'll certainly be praying that God will work in that situation. Robert's in Pennsylvania. Robert, we have just about a minute left.
How can I help you? Yeah. Just a real quick question.
How do you know when a vehicle is nickel diming you to death as far as the maintenance part of your budget is concerned? Yeah. That's a good question. You know, if you were to look at this vehicle, what would you say it's worth? Actually, it's not a specific question to me. I just know it's something I've dealt with in the past and just had to work through it but I just want to know if there's a rule of thumb to go by.
Yeah. I mean, you know, typically, I mean, if it's something you're paying for but you have a note on, I mean, anything that's more than 12 months' worth of payments, certainly if the costs get up to more than 50% of the value of the car, I think that's really the key. You know, but in most cases, you just want to evaluate what's the market value of this car, how much have I spent in the trailing 12 months and, you know, what percent of the value of the car is that. And when I begin to push over 25% heading toward 50%, clearly, it's time to make a change. And again, you've got to always be evaluating, you know, what is the underlying condition of this car and is it something that's just going to continue to have problems or did I just have one major event like a transmission, I've had an independent mechanic look over it, I've made the decision that, yeah, if I make this investment, I'm going to be able to get another 100,000 miles out of this car, then it might make some sense.
But I think those two rules of thumb certainly could be your guide apart from anything else. We appreciate you checking in with us, Robert. Thank you for your call, sir. We're going to pause for a brief break. This is MoneyWise Live, where God's word informs every financial decision. Stay with us.
More calls just around the corner. We'll be right back. Welcome back to MoneyWise Live.
So glad to have you along with us today. We've been taking your calls and questions covering a range of financial topics, applying God's truth and wisdom. We're going to do that with Elaine in Alliance, Ohio. Elaine, I understand you have a question about a health savings account. Is that right? Yes. Hi. Thanks for taking my call.
Sure. I have an HSA through Optum Bank. We own a farm, so we pay our own insurance. So it's a high-deductible account. And I now have just over $27,000 in our health savings account.
And Optum, on my online, when I look at it, they're encouraging me to invest quite a bit of it. Actually, they say I'm eligible to invest up to $25,000 of that money. I would love to look at it all as an investment, but it actually is money that we have set aside for our insurance, which has a family deductible of $12,000. We're very blessed that we have had good health so far and haven't had to use much of that. But we're getting older and not sure how much of that I really, truly ought to keep in there as just savings and what I could actually invest. They're telling me $25,000. I'm thinking more like to keep $24,000, like two years of my insurance worth.
What is your thoughts on that? Yeah. Elaine, is additional money being put in every month or over a fixed period of time? I put it in once a year. Okay. And how much are you adding to it? $7,000. Okay, great. And if you were to look back over the last couple of years, on average, how much are you taking out a year for medical expenses? Two to three at the most. Okay.
Yeah. So, I mean, generally, I would say, you know, at a minimum, you would want to make sure that you have what would be considered a reasonable amount for the year ahead, and then add some buffer to that, and then you could invest the rest. Because keep in mind, with you adding an additional $7,000 to it, and you're not even using anywhere close to that on average, and I realize that could change, you know, as long as you have a year or even two, as you said, in reserves for what could be expected based on, you know, just what you've been spending historically, then I would say beyond that, you absolutely could be free to invest it. And that's really the beauty of the HSA is get that money working for you. It's a very powerful tool for retirement, because past age 65, you can pull that money out, and it doesn't have to be for medically related expenses. And so, you know, I think that alongside your other retirement savings vehicles will be a phenomenal resource. But you also don't want to get in a position where you've invested money, money that's invested typically should be for the long term, meaning, you know, 10 years plus.
And if you're having to sell investments, especially if it's a down market, you know, that's not the ideal situation. So that's why we want this one to two year buffer, and I think you could go on the one year end just based on the additional money that's going in there every year being so much more than what you need. Does that make sense?
Yes, it does. Now, when I look and I push to invest, they suggest betterment and you just punch in your amount. Is that where you would go with that?
Yeah, I think that could work quite well for the amount of money you're talking about. You know, that's going to give you basically an index ETF approach. And basically what that means is they'll use exchange traded funds to build a portfolio that's very broadly diversified. It's going to have a mix of stocks and bonds. The allocation between stocks and bonds will be determined by your age and risk tolerance, which they'll put you through a questionnaire to determine that. And then among the stock portion, they're going to have a mix of international and domestic stocks, large cap, small cap, mid cap. So you'll have a good range of the indexes, which just means you're going to capture the broad moves of the market, not any one particular sector, but the market as a whole.
And that's probably a good thing. And the same will be true on the bond allocation. It'll be a mix of government and corporate, short term, long term durations.
And it's going to be very low cost. And again, you'll just get that long term growth as the market moves up. And obviously there's going to be some bumps along the way, especially given that we're 12 years into a bull market. But I think as long as you set aside what's appropriate for a year, two at the most, then you could feel free to invest the rest.
And I think that betterment approach with the amount of money you're talking would work just fine. So thank you for checking in with us. If you have other questions, don't hesitate to call back Elaine. Let's head to Illinois.
Victor, you're next on Money Wise Live. Go ahead. All right.
All right. How are you doing? It's wonderful to get through you all and listen to you every day. I've been trying to.
Yes, it's a blessing I give to Moody, one of my charities, and I'm just a blessing to hear you every day, especially when I get off work. Great. I'm trying to do investment like trading from home. I took a course, but I'm trying to see, OK, what type of computer to get and what who to get on to start doing that type of training at home, like a small training, starting off with a thousand dollars and work myself up. But learning how to do it first before I put in a whole lot of money. Sure. And Victor, are you thinking about short term trading where you're trying to pick winners and losers and move in and out to capture up trends in the market quickly, or are you thinking about just being systematic with a long term diversified investment strategy?
I'm trying to be systematic. I'm going to stay in for the long, learn it and then work it and not try to just get a little game and then you happy. I'm looking for a bigger picture than that. I'm glad to hear that because I wouldn't I would encourage you not to invest if you were going to take the first approach. You know, when we invest, it should be for the long haul, meaning 10 years plus. We should have money that's going into the market after we've set up our emergency fund, after we've been giving systematically, after we've taken care of any short term needs. This is money that really, truly is for the future and well into it. With that, we want to do it in a prudent way, meaning following Ecclesiastes, being properly diversified. We want to make sure that we're not too emotionally invested in it. It's such that if we were to see a downturn that lasted for even one to two years, you wouldn't automatically just pull the money out and try to time your reentry point. You'd really leave it there as long as you have the right strategy and allocation.
So I think that's a good thing. If you're just getting started, I like the robo-advisors. You know, Vanguard has a robo-advisor. Charles Schwab has one called their Intelligent Portfolios. You could use Betterment, which we just talked about with the previous caller. Any one of those three would take you through a question and answer process and then with an algorithm, they'd set up a very low cost, diversified indexed ETF portfolio. It would rebalance periodically and it would automatically reinvest every time you made a deposit, but there would be very little cost to it. So I'd go that route. Again, Betterment, Charles Schwab Intelligent Portfolios, or the Vanguard Advisor, which is their robo-advisor solution.
I think that'll give you what you're looking for. You can learn some things along the way. And by the way, if you want to do some more study on this topic, our friends at soundmindinvesting.org would be a wonderful resource for you to learn God's way of handling money and investments.
So check them out as well, soundmindinvesting.org. Thank you for listening, Victor, and for calling today. God bless you, sir. We're going to pause much more around the corner. Stay with us.
So please stay tuned. Let's go back to the phones. Cleveland, Ohio. Hello, Andrew. How can we help you, sir? Good evening. How are you guys doing today? Thank you for taking my call. I love you guys.
Thank you, sir. Yes, I'm about to be married for the second time. I'm a widow, and I'm going to be 65 when I get married in November, and a married young lady who's 54 now. I just want to know how to do the estate planning on how I see the house that I have right now with my late wife, and my kids grew up in that thing, and just trying to decipher how, as far as moving forward, we come together. Is it things like the house that was accumulated with the previous marriage and all of that, and I just kind of want to make sure that I do things right as far as my kids go, but also do right by her as well, because if something happened to me, if she's in the house that I've been in for the last 25 years, and just don't know how to set that all up as far as with the wheels and estate planning and all that.
Yes. Well, that's great, Andrew, and I really commend you for thinking through this, because we really need to think about, as we merge our lives and two become one, that includes your finances. But it's so much more than that, obviously, and so making sure you all have done a good bit of premarital counseling, I think, is critical from a pastor, a Bible-based church that can really help you all prepare for this really big decision, and make sure that it's God-honoring, and that together you all are going to pursue Christ as the head of the marriage, but then also to take stock and think about the finances. Do really understand where you're both at financially coming into this, how money was handled not only in the previous marriage, but even growing up, because that's so formative about how you all view money today.
What are your tendencies in these areas, and how can you all come together as husband and wife? I think updating clearly your wills and estate documents will be critical just because of all the changes involved, and this is in one situation where I would say that a prenuptial agreement could apply. And the only reason for that is because when you're bringing two families together that obviously have kids from previous marriages where there's wealth or debt from a previous marriage, it's not that we don't want to join husband and wife together, we absolutely do. But what we want to make sure of is that if there's assets that need to stay with one family for the benefit of certain children on that side, that that's talked about in advance, and that there's relational trust built, and that there's decision making that happens beforehand so that that can be then documented in a way that promotes unity, but also recognizes just the complexities of the financial lives that you're bringing to the table. If you're coming in with assets, you may want to pass along assets to your children, and she may want to pass them on to hers, and that would be a decision you all would need to make.
It doesn't mean in any way you're planning to get a divorce or you don't trust your spouse. It's communicating your concern for the future financial security of the other relatives and documenting that in either a prenuptial agreement. Or I love what our friend Ron Deal talks about when he talks about a togetherness agreement, which is essentially a different approach to the same idea where you really work through all these issues and then you could even have a togetherness agreement drafted by an attorney. So it's binding a legal contract, and I would recommend you pick up a copy of his book, Andrew. It's called The Smart Step Family Guide to Financial Planning from Ron Deal and Greg Pettis. And it's going to walk you through all of these issues and even get very specific about what that togetherness agreement can look like.
So pick up a copy of that book, The Smart Step Family Guide to Financial Planning, and then I would encourage you to connect with one of our certified Kingdom advisors in the estate planning area there in Cleveland so that person can walk you through the questions and answers you need to be responding to. And then for any legal documents that need to be updated or drafted, they can handle that as well. Does that all make sense to you? Oh, absolutely. I appreciate it. It's Ron Deal and one of the other gentlemen who will help me write the book, Ron Deal and someone else. Greg Pettis.
P-E-T-T-Y-S. Greg Pettis. Yep, you'll find it on Amazon or at Focus on the Family and The Smart Step Family Guide to Financial Planning. Listen, all the best to you. We appreciate you listening and calling. We'll certainly pray the Lord's blessing over you. On to Zealand, Michigan. Peter, how can we help you, sir? Hi, thank you for taking my call.
So I have a question. After selling some property, we have about 100K that's sitting in the bank right now in a savings account. And I'm trying to see what would be the best way to invest the money. I know that I can live in a savings account and just kind of give me a half a percent or something in a yearly basis. We basically don't have any debt except for what remains of the house is we actually own about 100K in the house. So the rate that I have in the house is pretty low.
It's about 2.5. So I really don't want to put the money and pay off the home because the rate is so low. So that being said, I'm just trying to find ways that I can put the 100K, set it aside as a savings besides the regular savings account.
Yes. And talk to me about how you think this money will ultimately be spent and in what timeframe? Right now, we have two little kids.
They're about 11 years old. So it will partly will be for college, but not all of it. And I always want to have the variable in case of an emergency, we need it. We can tap into the money and get some of it out.
Okay. We are putting enough in our 401K, so that shouldn't be a problem. So yeah, that's pretty much it in regards to the money. And what savings do you have apart from this 100K? I have another one which is basically just for regular expenses. So that one fluctuates between two to three grand.
That's the checking accounts that we use our expenses on a monthly basis. So this will be the one that pretty much is just sitting there right now, not making any money. Okay. Well, a couple of thoughts. Number one is I'd like for you to think about this in terms of three buckets. Bucket number one is your emergency savings. It's that money that you would if you had something unexpected, not planned replacement expenses like, you know, we know the washer and dryers on its last legs and, you know, tires on the car.
I mean, things that we should be planning for. That's not a part of our emergency expenses. We're talking about your unexpected loss of income.
We're talking about a transmission that just goes out unexpectedly or, you know, something comes out of left field medically. That's where our emergency fund kicks in. And I'd like for you to have three to six months expenses in that first bucket.
Total up what you're spending on a monthly basis and multiply it by three or as much as six based on your comfort level. And I'd put that in an online savings account at Marcus or Ally Bank. You're only going to earn a half a percent, but it's you're not going to have to pull money out of an investment that's down when you need it for emergencies.
It's supposed to be liquid and secure. So that would be bucket number one. And you could link that right up to your checking account if you ever need it.
It's just an ACH transfer away. Bucket number two is that portion of the hundred thousand that you genuinely want to go directly toward college. And I'd set up a 529 plan for that portion. I'd go to savingforcollege.com, run through their question and answer process to determine which is going to be the best 529 for you.
It may not be the one in Michigan based on the performance of the Michigan plan versus any tax benefits of you staying in Michigan with a 529. But that's going to get that money growing tax free as long as it's used for qualified educational expenses. Then, if there's any money left over and you genuinely believe you're not going to need that money for 10 years, then I'd say go ahead and put that to work. And I'd probably use, you know, with whatever's left, let's say that's 50K, you know, one of the robo-advisors would be a great option. So Vanguard Advisor, Schwab Intelligent Portfolios or Betterment. When you get up over a hundred thousand, I'd encourage you to contact the Certified Kingdom Advisor to invest it. But I think as you're just getting started, that would be a great solution just to get you going.
But does that all make sense to you? Yeah, the last portion that you talked about on the Vanguard per se investment, is that a 401K investment that you're talking about or is it a different type of investment? It would be a taxable account because you're already doing your retirement savings. I mean, if you don't have a Roth, you could open a Roth IRA and put it away. It wouldn't be a tax deduction, but you get tax-free growth. But then beyond what you can put into the Roth, which if you're married would be, you know, 12,000 for this year, unless you're over the age of 50, and then it'd be 14,000 between the two of you. That money's just going to, I'm assuming, going to be in a taxable account. So you'd pay capital gains as you have profits, but at least it would be growing for you for the long term. Does that make sense?
Yep, it does. I appreciate your time, and thank you for taking my call. All right, we appreciate it, Peter, and thank you for calling today. Well, I think that's going to do it for us today, but let me say thank you for being on the broadcast today, being a part of our MoneyWise family. I do want to remind you, MoneyWise Media is entirely listener-supported, and so if you count yourself among the MoneyWise family, we would encourage you to prayerfully consider supporting the ministry.
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Whisper: medium.en / 2023-09-03 01:16:09 / 2023-09-03 01:32:53 / 17