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4 Ways to Lose Money

MoneyWise / Rob West and Steve Moore
The Truth Network Radio
September 14, 2021 7:10 pm

4 Ways to Lose Money

MoneyWise / Rob West and Steve Moore

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September 14, 2021 7:10 pm

Money has its limitations, but it really is handy to have around most, if not all of the time. So, you don’t want to let opportunities to make or save money slip through your fingers. On today's MoneyWise Live, Rob West will share 4 ways you may be missing out that could be causing you to lose money. Then he’ll take your calls and answer your financial questions from a biblical perspective. 

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Rob West and Steve Moore
Rob West and Steve Moore
Rob West and Steve Moore
Rob West and Steve Moore
Rob West and Steve Moore
Rob West and Steve Moore

One listener that stands out, that I work with recently was his older couple that was interested in refinancing eight reached out to a few different lenders and the other credit wasn't the best. I know some of these other bigger banks. You just won't hear back from that 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 236 months from now back that older couple. We work 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 might heads a movie it's a wonderful life Clarence.

The angel tells George Bailey they don't use money in heaven really replies comes in handy down here about money has its limitations can't buy you love, but it really does come in handy so you don't want to let opportunities to make or save money slip through your fingers thought about that first year goals of 800-525-7000 800-525-7000.

This is money was canceled, lacks wisdom, let him ask God, who gives generously to all without reproach, and it will be given him. God wants to be a part of your life.

And that certainly includes how you handle money to be a good steward you need to be on the lookout for ways to save money and for areas where you might be missing out on the chance to hang onto more of it not for the love of money, but to be able to use more of it, for God's purposes and for his glory will today have got four ways you may be missing out. The first is not contributing enough to your 401(k) to get the maximum matching contribution. If your employer offers one but even if you're already getting the maximum that you may not realize there's a way to get an even greater return on your 401(k) contributions. In addition to your regular payroll contributions. The more you frontload contributions at the beginning of the year, the more opportunity you have for compound earnings granted that takes planning and diligence. But if you have the cash on hand to contribute a lump sum early you'll be money ahead. Just keep in mind that the total annual contribution limit is 19,500. The only hitch is if you contribute a lump sum early in the year, you still have to contribute enough each pay period to get the maximum match. That's because most employers put in those matching contributions on a pay period basis so you don't want to frontload all of your annual contributions just enough to get the best of both worlds. But what if your employer doesn't offer a 401(k) at all. You can't just say oh well, I'll save for retirement.

In my next job again because of compound earnings time really is money every year you don't set up a Roth IRA money is slipping through your fingers. A Roth gives you five key benefits. The first is tax-free retirement income. That's not the case with a traditional IRA where contributions are pretax, you deduct them from adjusted gross income on your tax return, but you have to pay income tax on your withdrawals when you retire a Roth doesn't work that way. Your contributions are with after-tax dollars.

Truth you don't get the tax benefit now, but it's worth it because your withdrawals during retirement are 100% tax-free. The IRS figures it already got what's coming to it. A Roth is especially good if you project your tax rate will be higher in retirement than it is now generally that means the longer time until you retire the better. A Roth works for you. Also, we don't advise this, but if you had to get your hands on raw funds and only as a last resort. The rules make early Roth withdrawals easier and nontaxable as long as they come from your contributions and not your earnings. Also, unlike a traditional IRA or 401(k). You won't have required minimum distributions. When you reach age 72, and two more quick benefits. Almost anyone can contribute to a Roth and if you bequeath one to your errors.

They won't have to pay taxes on withdrawals either. The next opportunity to lose money is by not taking full advantage of a flexible spending account. If your employer offers one a lot of folks shy away from them because they know that contributions not spent during the year are lost, but with a little planning and calculation you can set your contributions pretty close to what you can expect to spend on qualified items during the year.

Now there are actually two versions of the FSA. The first is for medical expenses in the list of what's covered is too long to give. Here, the second is a dependent care flexible spending account which covers childcare care for an elderly adult in-home dependent care for an afterschool care and nursery school either one must be offered by your employer.

You can set up on your own.

You also have to sign up for and contribute to each separately your HR department can talk you through the process. Bottom line, then FSA let you pay for qualified expenses with pretax dollars saving you a lot of cash okay our last opportunity to lose money is by lending it to Uncle Sam tax-free. Instead of putting it where it can earn money for you. I'm talking about having too much withheld from your paycheck for taxes. By the way, the average tax refund is around $3000 and that's money you could be using right now.

Pay down debt creature savings.

So there you have it for ways to avoid losing money and I hope you take advantage of your cause index data 525-7000 on Rob West and this is money wise joining us today and moneywise live in just a moment movie taking calls and questions on anything financial, here's the number 800-525-7000 guidelines open would love to hear from you tell us what's on your mind. Invite us into your story and let's see if we can apply God's word to your financial decisions and choices and help you move forward with confidence. We started out today by talking about money mistakes.

Four ways you can lose money in what we've all been there, haven't week that we asked a question like that on Facebook today what you learned from your money mistakes and we got a poster responses and learned it takes a long time to recover and is in the true we can get into a money mess quickly, but getting out is hard work and it can take a long time. Sandy said I learned that I didn't need it anyway.

So often buyers remorse sets in. After purchase, especially when the new one. The shinier one is just around the corner.

In fact, being that today was an Apple launch event day.

If you're a techie person. You know what I'm talking about what was in your hand instantly became outdated and you probably felt like you needed to huff Cricket try to fight that urge. Jeannie said learned financial literacy at a young age and that's really important. Jennifer was sharing some of her woes from being a landlord she's decided that's not for her and I can certainly understand if you had some bad experiences. Here's the good news. As believers we can put all of that right at the foot of the cross, God will redeem our mistakes if we turn it over to him. The good news is he's given us his word which has all the principles and practical ideas. We need about managing God's money faithfully and effectively.

That's working to try to do today's help you do just that. Here's the wind skews me the number to call. Lines are open 800-525-7000. That's 800-525-7000 were going to begin today in Richmond, Virginia Della, thank you for calling.

How can I help, and they like it is almost up on it so I have days of people caught in the charge on the car exceeded 48 lunch I ate a 60 mind and a match is $3685 if you pay cash. I ate at $179 and I sent my question is is that good or should I put this money outside hand is my available plan ever something happened stated, well it's a great question, one that a lot of people ponder and here's what I would tell you when you look at Consumer Reports and their data, it would suggest that it is not in your best interest on the average to buy an extended car warranty.

They asked again. Consumer Reports 8000 of their readers if in their experience extended auto warranties were worth the money and they found that two thirds of them spent a lot more on the warrantee. Then they got back in repair savings.

Now of course this is just on the average two thirds of this group, there would be plenty. In our listening audience that would say it was well worth it. I had a major expense and it kicked in. As long as you read the fine print and have the coverage you think you're getting and usually it's best to get it from the manufacturer itself. You may find that you're an exception but on the average Della lease Consumer Reports found it doesn't make sense.

Here's out when they went on to talk about it. What they found only about 18% of the money warranty companies take in goes back out for repairs. The rest goes to overhead marketing and profit, which means the vast majority of cars under extended warranty don't break down often enough to make buying a plan like this anywhere near cost-effective again for the average consumer. So if you were to take the money you'd used to buy that warranty and instead put it in your emergency fund on the average, you'd probably be way ahead and if you find that your emergency fund can't keep up with your car repairs well at that point it's probably time to consider getting another car, so that's at least the Council I would offer to you today. Does that make sense okay very good. We appreciate you listening Dell and calling in today.

May the Lord bless you 800-525-7000 is the number to call. We got some lines open onto Chicago, Illinois. W MBI hi Lincoln I can help you up. Have a fiscal United States Navy and I just wanted to know whether or not they pay interest after 30 years and how to catch demand without creating a real big tax consequence. Yes, well it's a great question and interest on the debt doubly bonds if that's what you have, that is paid monthly and paid when you were in accumulates monthly and paid when you cash in the bond. So, you would probably want to look at how it was issued. Is this paper bond or electronic about paper bond.

Okay, so you could go into your local bank and inquire as to your ability to relinquish those. Or you can convert it to an electronic bond.

The best resource Lincoln for all of this information, including the value of those bonds is treasury that's treasury direct.GLD and you can type in the. The bond certificate number get all the details and information as to the tax consequences of that of probably nothing you know you're gonna pay tax on whatever the interest is depending upon the type of bond when you redeem that you want to check with your tax preparer as to what you should factor in on that. So I would check out treasury for more information. We appreciate your call today very much.

Thanks for listening 800-525-7000. Let's send an email real quick.

This one comes in from John and John is in Birmingham, Alabama.

He says how do I strike the right balance between giving and providing for my family and John this is her crate question you want. As believers, that I think we should be thinking about you often when we think about money as it relates to God's word. One of the verses we quickly come to is from first Timothy word says you're worse than an unbeliever. If you don't provide for your family and we might think that the starting point is, in fact, provision, and I would perhaps push back on that. Just a little bit.

Certainly we are to provide for our families.

There's no doubt about that. But if we start there and Paul David Tripp makes this point really clearly in his new book, redeeming money, which by the way, were making available between now and the end of the year when you give to moneywise. He makes the point that provision can be an un-ending list of needs and wants that never allows us to move on to other things, namely generosity, Paul makes the case that the gospel message the gospel story is a generosity story. And so we should start there. So I would encourage you to flip the equation and say that perhaps start as husband and wife by praying and asking the Lord what would you have us to keep and therefore how much should we be giving away and then order your finances and the provision for your family in terms of the lifestyle you're going to live on what's left after you answer the given question, of course, so you'll need to build into that some margin or savings for the future, but I would challenge you to perhaps take a week or two and just you and your wife separately pray and asked the Lord, Lord, what would you have us to do what lifestyle have you called us to, and then come together and talk about that and see if you can't get to a place where as one heart and one the flesh you move forward in confidence towards God's vision for your family that's I think as believers, how we need to approach it and it always begins on our knees. Well we got a lot more ahead on moneywise live phone calls are coming in will get to more of those. Just after the break, but I got a few lines open. Here's the number 800-525-7000 will continue to dive into your questions better at saving giving her lifestyle. Perhaps at some retirement questions are how you handle college expenses. Whatever it might be in 100 525-7000. This is moneywise live with Mrs. thanks for joining us on moneywise live on the West Coast website moneywise if not check it out on your mobile device or your desktop and one of the things you see right at the top is the donate button. Let me remind you moneywise live is we can only do what we do through your generous support.

If you consider yourself a part of the moneywise community may be a benefit from this program are consume some articles or videos or podcasts on your website maybe you use the moneywise after you posted as to the question in the moneywise community and gotten a response from one of our coaches.

If you would prayerfully consider a gift beyond the giving to your local church would certainly be grateful we could use your support were just a bit behind this month of September and if you would head over there at your convenience and consider a gift would be grateful again moneywise just click the donate button where it had back to the phones all the lines are full so you sit back and enjoy some great questions and just a moment.

We'll talk about tax refunds that are running behind will talk about how you pay that on student loans. But first, Chicago, Illinois Janet, I understand you have a question about our 401(k) and IRA. How can I help my company match is 6% of the 401(k) contributions and I have up until this this whole up until September and contributing it out to the traditional 401(k). I recently switched it to the Roth 401(k) and I heard something about having to print a certain amount in the traditional in order to get the match from the company is not aware of that. Typically, you'd want to check with your plan administrator just to find out the details on that. Typically, if they're offering a match in their offering both the traditional version of the 401(k) and the Roth they're going to match your contributions to either one. But if in fact they were only matching to the traditional 401(k) I would fully maximize that match before I contributed anything anywhere else. Now if you were already contributing the full 6% and you had more to put in which that would be a good think is the goal over time would be to get up to 10 to 15% of your pay going into retirement, then obviously you could contribute to both and still take full advantage of the match, but I asked that question just to clarify, and if in fact that's the case, let's get every penny of that free money that you're not going to get on a guaranteed basis anywhere else. Now some listeners might be wondering why would I contribute why would I split that contribution in just keep in mind having both buckets to pull from in retirement can be very very advantageous. Here's why we don't know where tax rates are going to be down the road you know for talking a couple of decades down the road. Who knows whether, would make more sense to pull from the tax-free bucket and let the tax-deferred bucket, grow, or vice versa.

What is your income to be are you working part time are you going to need the money or do you want to let it grow and if so, the, the Roth bucket would work to your advantage because at least at this point there's no required minimum distribution so you wouldn't have to pull it out creating a taxable event and you could then gifted to errors, so having the flexibility of both getting the tax deduction now as well as the after-tax contributions and then being able to choose which bucket you pull from either the tax-free or the tax-deferred can make a lot of sense, but we certainly want to maximize that match before we do anything you Janet.

We appreciate your call today to Grand Rapids, Minnesota.

I understand. I didn't know there was a Grand Rapids, Minnesota hi Tammy, how can I help you and I are working on cannot fire down there long and saved, then making the minimum payment on interest on nothing not going to like principal to be able to double up on that payment every month but that is not feasible for us to file let Albert a suggestion of an amount above the interest payments that you can get let me help. Well I think you're hitting on the key here, which is you want as quickly as possible to make extra payments above and beyond that monthly interest only payments so you can in fact begin to impact principal. Obviously, anything above that payment you're describing goes directly to the amount you borrowed and resulting in you paying off your student loans sooner than if you only make the minimum interest-only payment which means you're just kind of treading water, so to speak. So to me. I think the best option for you right now is to first of all start with your spending plan to go back to the budget and just look hard at what can we cut back on what unnecessary expenses do we have do we need to sell an asset. We need to make a major decision like downsizing ill out of a home that's preventing us from achieving our goals.

If you are spending too much on housing and you need to look at all options and try to realign your budget so that you have margin that is money over and above your fixed and discretionary expenses that can be applied first to an emergency fund.

If you don't have one of three months expenses and then to principal reduction on those student loans is this if these federal loans Tammy Dino yeah okay right so your noggin want to disrupt that even if you had the credit score and the ability to get the interest rate down by refinancing these on a private loan basis. You're gonna give up a lot of income-based repayment options and other flexibilities that come with the federal student loan so I think at this point is just a matter of reworking that budget to try to at least get something every month going to principal reduction. Does that make sense. Very good. Let's do this.

If you hold on the line. I want to get you access to a Pro subscription of our moneywise app at no cost to you for six months. This will help you connect your institution download your transactions.

You can set up your budget. Track your spending every month you and your husband so you guys can use the digital envelope system and to make sure you don't go over in any categories, which will once you have that information. Hopefully help you get more going to those student loan so stimuli will get your information get them right out to you folks a lot more to come on moneywise lives we apply God's word to your financial decisions to lines open 800-525-7000 just after the break will be in West Palm Beach in Chicago and Chattanooga Grand Rapids. Perhaps your city as well to hear from you. 525-7000.

This is moneywise lives in this thinking about thanks for joining us on moneywise live biblical wisdom for your financial journey just before the break, I was talking about the moneywise app.

If you have a down for you to download it today.

Got a major update coming out next week working to introduce three styles of managing money for the very first time I've never seen that Internet we've had our tried and true digital envelope system which is most I think advanced way to handle your money because you're always in sync with your checking and savings balances knowing exactly what's in each envelope so you can stay on top of your spending plan, but for some folks that's more than they're looking for sword and introduced to other money management styles in the app upland in traffic where you create a monthly plan and track against it and it resets every month or just a track only option for some folks were just getting started and saying you know what I just want to see where my monies going out want to put it in the envelopes and keep everything in sync. I just want to see where my money is going by category. Will you be able to toggle through the three different options and change at any time were really excited about it. Trying to put the most innovative tools for you to manage God's money effectively. So if you download the app today. You'll be ready to go when the new update comes out next week. Just had to your app store wherever you download apps and search for moneywise biblical finance are, let's go back to the phones. Grand Rapids, Michigan. This time I am a how can I help all of my taxes next year and not because I have not received accurate and and anything that I read had said that they were going to take a lot longer because the closet by then. Like so well. I don't really know exactly what I should do about that.

I think it out. Well, it's likely that it's just delay them in a couple of the reasons and into the income tax refund might be delayed would be if your return has errors or it's incomplete, but what's likely going on is your just caught up in the backlog that the IRS is experiencing at the start of September, the IRS denounced it still had 8 1/2 million unprocessed individual returns and normally refunds take about 21 days to process but they say the delays now could be about 120 days so a couple of extra months once they get to it. You know they been busy not only with the backlog due to limited staffing because of Cove had been on top of that they've had to process stimulus checks and then the time a child tax credit payments and then refunds for tax overpayment on unemployment benefits mean all of that has created just a significant backlog.

So I think what's gonna be in order here M is just probably a little more patience. Recognizing this is an unusual year that you want to get more information.

There is where's my refund tool that will give you the status of your refund. You can go to if you tried that I bring back what it told me that it was everything else okay. All right. Very good.

Well, I would. I would just continue to be patient, at least for the time being. Go there is the refund Make sure you get into the one reaction you put in your social your filing status in your refund amount and that it should give you exactly the information that you need. Don't just read an article there's actually a tool there now.

If you use that and it just still came in incomplete than there's not a whole lot you can do at this point, but you could also call now the way. Times have been extremely long lately but the number is 800-829-1040. That's 800-829-1040. I hope you see that scooter rather than later, Emma, and I'm sorry to hear that it's taking so long will it sit next to Chattanooga, Tennessee hi Tom, how can I help I have about $100,000 in checking Nutrition and usually fortunate bank and that I am wondering what would be based best place to invest NiCad actually that will go into the 88 years so so it will go into some kind of a high and too much grain to churches and schools and so forth and involved with wondering if there some way.

A good way may give an update program that I could that yes well and I love the way you think and hear Tom because he honestly don't need this money God's bluster. Whether you want to be a good steward other than you want to be able to get it into the hands of errors and ministries down the road couple of thoughts number one would be at want to make sure.

In addition to this, you have an emergency fund of at least six months expenses that you can fall back on if you don't let's carve out that portion and keep it in a high-yield, the FDIC insured savings account with whatever's left over. I would really ask a couple of questions. Number one is Do you want to take any risk with it, given that you don't need it you wanted to grow and you want to pass it on. I think you could look at this is money that you don't want to be unnecessarily risky with but if you want to have the ability for to grow beyond a very small guaranteed rate like on a CD or a savings account you're gonna have to have some risk, but you could still temper that to your own risk tolerance goals and objectives. I would secondly look at what giving might you want to do now you know if this is money that is beyond what you believe you'll need or at least some portion of it because you've established kind of a financial finish line. But what about getting some of this into God's economy. Now, as opposed to waiting and giving it down the road that's only a question you can answer and I would pray through that as to how you go about investing these funds for whatever portion remains.

That's not going to be in your emergency fund or be used for immediate giving.

I would look at to using an advisor and you mention faith-based investing, which I'm really excited about exciting and growing segment of the investing landscape where you can align your investments with companies that are having kingdom impact or at the very least, making a positive difference in the world and screening out companies that are misaligned with your Christian values.

A certified kingdom advisor could help you with that you would just add to our website moneywise click find ACK a.

These are competent and experienced professionals who met high standards and biblically wise professional financial advice I'd interviewed two or three Tom find the one that's a good fit. And when you're there to talk about your desire to have your values aligned with your investments and they can explain to you some of the investment choices that would be faith-based but before we had to break your tell me your thoughts.

Do you have any questions or follow-up thoughts. I think that pretty well that you get might and look French a.k.a. yellow league I correct you just one bit. It's moneywise moneywise and then you will sound very clearly in a couple different places find ACK a and there some wonderful certified kingdom advisors there in the Chattanooga area okay thank yes men.

Lord bless you. We appreciate your call today. You know times asking about faith-based investing in the as you think about being an owner of a company and that's what you're doing when you're investing your owning companies that may be a very small percentage, but you're still an owner.

Here's the question. If you have the opportunity to make sure those companies you're owning are aligned with your values that you want to take advantage of that and if so, perhaps you should check out companies like Eventide funds invest or praxis funds or inspire some wonderful options out there for you align your values with your investment choices using exchange traded mutual funds or better yet connect with a certified kingdom advisors times going to just had to moneywise click find this a much more to come still and moneywise I don't know back to moneywise live biblical wisdom for your financial decisions. As you know, in the new moneywise we are aggregating what we believe is the very best content in Christian fighting. That's right, you can go there to get videos, articles and podcasts from folks like Christian credit counselors. The Christian stewardship network, compass, finances, God's way.

Sound mind investing generous giving Christian healthcare ministries. It's all there, coming in in one place and you can search by topic, by by content type. It's all there and we'd love for you to check it out just had to moneywise and you can growing your understanding of how God want you to manage money based on biblical wisdom, but said back to the phones, West Palm Beach, Florida hi Marie, how can I help them three years old and okay. But don't really want to quit thinking about getting online about three and half hours away from here and when I retired a year to six months. Get a new and then laying everything in a brand-new location, lower cost-of-living and wondering what you think about that. Yeah, I don't have any problem with that. Would you plan to stay in this home, which I understand you own free and clear and then get a construction loan and build why you're living in your current property yet okay yeah so you'd probably want to look at a construction to permanent loan which is a loan that allows you to fund the construction that you're doing and then convert that to a permanent loan when the home is completed you can want to make sure you understand the cost of that since you don't have a mortgage payment now. Just make sure that fits into your budget and then you'd obviously be able to sell your current property and use that to pay it off. The other option would be you go ahead and sell your place you rent while you're building your property and that way you don't have to take out that large mortgage. Hopefully you have all the money you need for the construction.

Second thing is just make sure you get a guaranteed bid, not to exceed a certain amount as you work with and find your general contractor and especially these days, although it's been improving. There's just some real inflation going on in homebuilding right now just because of some of the raw materials than the cost of been very high although you're talking about perhaps a year or two down the road and things should done normalizes the supply chains open back up. Thirdly, I think just going with your eyes wide open. The other be a lot of folks that would say building a home is great there be more that would say I may not ever do that again if it's just because you know you end up spending more in many cases than you planned.

Just a lot more work that goes into it. Some people enjoy that others, so perhaps they're not cut out for it, so just make sure you understand what you're getting yourself into.

As you think about building a home on a piece of raw land as opposed to going out and finding something that just really fits what you're looking for in terms of location and style and actually buying something that's already completed where you don't have the hassle of actually building but in terms of just the way you're describing the order of these things going down with the Celt first and then build out of the proceeds or you borrow to build and then pay it off making sure you have the staying power to to cover the monthly payment while you're waiting for that home to be built and then ultimately for your current property to sell. I think that's the key. Finally, before you make any improvements or renovations to your existing home or even repairs. I talked to a real estate professional just to find out what things you should do and what things you shouldn't do because you won't get the money out of it before you sell. Given that were so close to that point something Marie all the best to you. Sounds like a fun project that you have coming down the road. I'm sure that will be enjoyable for you.

We appreciate your call today to Chicago, Illinois hi Leanna, how can I help. I think that we bought a home now for the clothing that they gave that to me after I have because somehow borrow that from now, drop me because I was told that I can get that a free attack like wanted that I keep my Roth IRA for how the house fell with the current situation going on.

I get playing fair religion exemption, and will not share Larry King and on Dell And get trying to figure out if I can put that back into my Roth IRA or hold onto it are a couple more money anywhere. Things kind of go yes. Well, this couple of things going on here and encourage you to check with the tax preparer on your specific situation, you can use up to $10,000 from a Roth earnings free of both taxes and penalties for a home purchase. If you meet certain requirements and you need to make sure that you do in fact meet those you can always pull out your direct contributions at any time.

That's the money you put in, not the gains but up to the amount you put in because you've Artie paid tax on that money and now the government doesn't have to give you your tax-free increases as its invested in terms of your ability to put it back in with the sum of the co-visited your cares act provisions. It extended the amount of time you had to put money back in if you didn't need it but it had to be taken out as a result of the coated financial hardship. Typically, you've got to put that money back in your IRA within 60 days and if you don't put it back within 60 days, you're not able to do so because there's so many things going on here. First-time home purchase, and that the coded carriers act and your money that came out of a Roth that may or may not be a part of your original contribution. It would be very difficult for me to tell you precisely what your options are. At this point. So I think in light of the situation, I would connect with a professional accountant or CPA go over your details and they can advise you the best way to proceed. If you have the ability to put that money back and I do that because that's money for your retirement. It's already been taxed and it will grow tax-free. From here on out, and you don't want to miss out on that compounding.

I really love Roth IRAs, but they don't do you do any good if you take the money out of them so I would check to see if you can get it back in Atlanta. We appreciate your call today were to stay in Chicago.

Anna is there and has a question about some credit cards.

How can I help you all that one will be the best strategy for me to ensure that my credit score. In order for me to paint the low amount of arrangement, while well with what I most concerned about is you just getting out of debt and there's two styles of paying credit cards down, there's the snowball method that we talk about often where you pay all the minimum mandatory payments and then you take any margin or surplus you have. Beyond that, and you apply it to the lowest balance card and put everything extra you have toward the lowest balance. The reason is, although it's not us or the way you save the most interest.

It's going to give you the quickest win which psychologically will help you keep going in the best strategy for you is the one that you can finish, meaning you ultimately get completely out of debt. So that's the snowball method. The other method is called the avalanche method the same idea pay all the mandatory minimums except with your surplus you go after the card with the highest interest rate that will probably not be necessarily the one with the lowest balance.

So even though you might save a few dollars in interest over the long haul. You may not stick with it because studies say that if you can't see yourself making progress quickly.

You may abandon the strategy altogether. So I go with the snowball method if it were me in terms of your credit score. Again, I'm not terribly concerned about that if you really wanted to try to focus on getting your score up. In the meantime you'd want to make sure that any accounts where the balance was beyond 30% of the limit of the limit is 10,000 you owe 4000 year at 40% of the limit that's gonna pull your score down. If you can get that down to 30%, and better yet 10%. That's gonna raise your score. So if you wanted to focus on your credit score you look at it through that light. Try to get those balances below 30%, but limit your lifestyle cutback your spending.

Let's attack these credit card debt, credit cards and try to get them paid off and I go with that snowball method.

We appreciate your call today. Sebring, Ohio. Need I have just about a minute left. How can I help you know why I take money from an IRA in the stock market and pay off in home equity line. I know I'm not a big fan of that strategy number one. If you are is this a traditional IRA, IRA, I have another minute Roth IRA rod guaranteed 4% interest every year.

The other one will IRA it in the stock market and I'm about what is your age. Anita I'm 6868 OKC when any penalties but would all be taxable so I know I'm not a big fan of this just in terms of pulling money out of retirement account. You are going to create a taxable event and I just make sure you realign your investments. If you're uncomfortable to make sure that you've got the right mix of investments for your risk tolerance goals and objectives and let's try to pay off the equity loan out of free cash flow. What you have in that simple IRA about 71,000 and 70,000 any other right okay are you pulling anything out of those to cover your lifestyle, your living expenses now now okay since he just asked me. Amber okay so if you can do it by just paying audit out of free cash flow. I do that if you want. You absolutely want to.

Then I do it over to tax years to spread out the tax liability and then as you free up that monthly payment for the home equity loan, then I would leave best that time so you can build that.

We appreciate your call today. Middle English as a partnership between the radio and moneywise medium as a thank you, Dan, Amy, Eric and Robin, I can do without them. Thank you for being here as well.

Look forward to having you back tomorrow. Lord will only get


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