No Credit Score? No problem!

This is Jamin Baxter and I serve as Business Development Director for Moody Radio. The only reason we're able to spread the gospel of Jesus Christ on the radio is because of financial support from listeners like you. We also have businesses support us too, like United Faith Mortgage.

Faith and family is at their core. It's why they choose to be such a close partner with our station. It's why they specifically advertise on Christian radio stations across the country.

It's why father and son John and Ryan still lead the company to this day. Check out United Faith Mortgage and their direct lender advantage at UnitedFaithMortgage.com. Thanks to you and to United Faith Mortgage for supporting Moody Radio. United Faith Mortgage is a DBA of United Mortgage Corp. 25 Melville Park Road, Melville, New York. Licensed 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. This is Jamin Baxter and I serve as Business Development Director for Moody Radio. The only reason we're able to spread the gospel of Jesus Christ on the radio is because of financial support from listeners like you. We also have businesses support us too, like United Faith Mortgage.

Faith and family is at their core. It's why they choose to be such a close partner with our station. It's why they specifically advertise on Christian radio stations across the country.

It's why father and son John and Ryan still lead the company to this day. Check out United Faith Mortgage and their direct lender advantage at UnitedFaithMortgage.com. Thanks to you and to United Faith Mortgage for supporting Moody Radio. United Faith Mortgage is a DBA of United Mortgage Corp. 25 Melville Park Road, Melville, New York. Licensed 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 BunnyWise Live is prerecorded, so our phone lines are not open. For more than 25 years, having a good credit score was the only way to get a credit card. Now there's a movement to put credit cards in the hands of folks who have no credit score at all.

I am Rob West. It's all a part of the federal government initiative to make credit available to folks whom banks didn't consider trustworthy before. I'll talk about that first today.

Then we have some great calls lined up, but please don't call in today because we're prerecorded. This is MoneyWise Live, where biblical truth meets your financial decisions. So as I said, a FICO credit score or one from several other scoring agencies has been the major tool that banks use to decide whether they will lend you money or issue someone a credit card. That credit score, of course, is based on how individuals handled credit in the past.

But if they've never been extended credit, they won't have a credit score at all, a condition that affects millions of Americans today. Banks, however, are now viewing this group as a vast untapped market for credit cards and other loan products. The plan is banks will start to share their data on customers' deposit accounts with other banks. The government is pushing this as a way to extend credit to people who've been denied opportunities to borrow. So 10 of the nation's biggest banks, including JPMorgan Chase, Wells Fargo, and US Bancorp, will now consider credit card applications based on a person's checking or savings account history, and not just for their customers, but also for folks banking with their competitors. To be fair, this isn't a move intended to give credit cards to folks who have bad credit. Rather, it's for folks who don't have credit scores, but, and here's the key, who are financially responsible. Banks will look at an applicant's account balance over time, along with their overdraft history. This is a huge departure from the time-honored tactic of banks looking only at credit scores and credit reports to determine who they'll loan money to.

The credit score, of course, is a single number that reflects a person's borrowing history and whether they make their payments on time. So it leaves out people who use only cash or debit cards. And that's an awful lot of people. Fair Isaac, the company that puts out FICO scores, says 53 million adults in the US fall into that category. And to a great extent, these are folks who resort to dreaded payday loans and other high-interest forms of credit.

The Consumer Financial Protection Bureau says that blacks and Hispanics are more likely to fall into that group than white or Asian Americans. The idea of extending credit to people with limited or no credit history actually isn't new. Banks have wanted to find a safe way to do it for years, and several have attempted small pilot programs to do it. And about three years ago, FICO rolled out a scoring system that relied on how faithfully consumers manage their bank accounts, but no banks have signed up for it. That shows just how big an attitude change has come over banks as 10 of them have now agreed to exchange data to get the latest initiative off the ground. The main government agency behind the push is the Office of the Comptroller of the Currency. Its mission is to remove barriers for minorities and underserved people to fully and fairly participate in the nation's economy. Now, that sounds like a good thing, or is it?

At best, it's probably a mixed bag. No doubt it will help responsible people who've made a decision to go cash only. By doing so, they've been locked out of various forms of credit. But it will no doubt also be a huge temptation for many others to run up debt. Just because someone has avoided checking account overdrafts doesn't mean they won't be tempted to run up a credit card balance if given the opportunity.

Maybe that's the idea. Why are banks suddenly willing to extend credit where they haven't before? Well, aside from government pressure, the COVID pandemic may have produced an incentive for banks to loosen their requirements for credit cards. Possibly as a response to their income being threatened by COVID shutdowns, Americans in 2020 made significant cuts in their credit card debt. A new study by WalletHub shows that Americans lowered their credit card balances by a record $83 billion last year. That means they also paid a lot less interest to issuers who might now be looking to make back those losses by extending credit cards to folks who've never had them before. There's no question that credit cards are a double-edged sword. They can be a huge convenience and most pay rewards, but they can be a pathway to debt and huge payments.

The only safe way to handle a credit card is by paying off that balance in full every month. Hey, this is a reminder that we're not live today, but we do have lots of great information coming up in the rest of the program. This is MoneyWise Live, where biblical truth meets your financial decisions. Stay with us. We'll be right back. It's great to have you with us on MoneyWise Live today, but unfortunately, today we're not live. We're prerecorded and therefore won't be taking your calls. However, we've lined up some calls in advance that we think you'll find helpful, so stay tuned and enjoy the rest of the program. So glad to have you with us on MoneyWise Live today.

I'm Rob West. We'll tackle your financial issues, but do it from a biblical viewpoint, because here's the thing, folks. The Lord has a lot to say about how we manage money, and I believe it's because money is often the chief competitor to lordship. If something's going to dethrone God from first position in our lives, it's most often going to be money or the things that money can buy. What I've come to know over the years and counseling literally thousands of folks and so many thousands of hours on the radio is that your financial journey is one of the key ways God shapes your spiritual journey. When you hold everything that God has entrusted to you loosely and you understand that it can be used as a tool for God's purposes, not just to build bigger barns but to share with those in need and to provide for your family and to make memories with those you love and really understanding God's heart related to your money, it has a profound impact, because when you get this area of your life under the lordship of Christ, my experience is it will lead to a more intimate relationship with Him. But it does require that we start on our knees and say, Lord, what would you have for me?

What lifestyle have you called me to? How much should I keep? How much should I give away? It's not that 90% is ours and 10% is His.

It's all His. The question is what portion should we keep and then how should we share with others in need? And after we get to our knees, we need to go to God's word, because there's 2300 verses that deal with money and possessions. You know, we started today by talking about credit scores and there's a lot in there in God's word about debt.

Proverbs 22 seven, the rich rules over the poor. The borrower is the slave of the lender. You see, debt changes the relationship. And so we want to move toward a place of being debt free. Does that mean borrowing is a sin?

No, I wouldn't say that. But I do think we ought to position our lives so that over time we are unencumbered as we are able then to respond to the leading of the Lord. Well, that's the perspective we want to bring to all of the financial questions we tackle on this program. So we're going to begin today in Chicago, Illinois, WMBI. David, thank you for calling.

How can I help you, sir? Hi, I just recently got married last week and I want to start our financial future off as best I can. I've got some savings and so does she. We're going to start our own bank account together. How much would you tell us that we should save after bills and everything? Yeah, well, just backing up a bit, you know, I think it's so great that as a recently married couple, you're really thinking about your financial future because as two become one flesh, I think that absolutely includes this area of finance.

It doesn't come naturally. You need to recognize you both bring to the marriage relationship different money personalities. Money may have been handled differently in each of your homes growing up.

Maybe somebody had more than another and that all of that really informs how we view money, how we spend it, how tightly we hold on to it. But the key now is to bring those two perspectives and personalities to the table in a way that you can craft a vision for your future together as a family, as a new married couple and say, Lord, this is now money you've entrusted to us as one flesh. How can we use it as a tool to accomplish what's most important to you?

What's on your heart related to where we're headed? And as you begin to talk about that, perhaps have a at least a monthly money date to look at your spending plan and to talk about your values and what's most important to you and how you spend money can reflect that. I think that really is the key foundation there. Then we want to move to a place where you're setting up a spending plan that reflects that because the day to day controlling of the flow of money and even the sacrifices you'll make in the short term to achieve that longer term vision I think is really key. And staying on the same page about that as husband and wife is going to be really critical. In terms of the priority order, David, of that to me clearly I would say give first.

And so one of those conversations you all need to have if you haven't already is just kind of what your starting place is on giving, systematic and even sacrificial. And then beyond that obviously you're going to want to meet the needs of the family, both the discretionary and the fixed spending. You're going to want to make sure all of that balances and the idea would be to live well within your means so that you have margin. Now as to the priority use of that margin, really the only thing we can do with that margin is to save it or we can give it away after we've dealt with our lifestyle and we've paid our debt and our taxes.

So the question then is the priority use of that. I would say you'd want to start with an emergency fund of three to six months expenses. That's really going to be there as liquid safe money that you can access when the unexpected comes and it will. Beyond that I would be looking toward reducing or eliminating consumer debt if you have it. And then beyond that start looking to fund longer term savings. So starting with any matching portion you have on retirement plans, moving to a goal of 10 to 15 percent going toward retirement. Then we can start looking at things like perhaps medium term goals.

At some point saving for college if you all decide and the Lord blesses you with children. Looking beyond that to a home purchase and saving for a down payment. Things like that but reflect on what I've shared.

I've thrown a lot at you and tell me what additional questions or thoughts you have. Yeah I have a pretty good amount for emergency fund and savings and what was that last one you asked me? Well yeah I just want to understand kind of specifically what it is now that you've got that emergency fund in place are you looking for what is the right retirement savings target or something else? Yeah because we just purchased a home too and I almost have it paid off. Wow okay so you have a good bit of margin over and above the monthly expenses.

So I love the fact that you're quickly moving toward becoming completely debt-free including your home that's phenomenal. Are you funding long-term retirement savings in a tax-deferred environment? Yes I have an IRA. Okay so the goal there would be to get to 10 to 15 percent of your take-home pay. An IRA is going to cap out probably before you get that even with a spousal IRA. So are you self-employed or do you have a retirement plan at work? I have a retirement plan.

Okay great yeah so you just want to make sure that you know you're funding enough there so you take full benefit of the compounding over time and like I say that 10 to 15 percent goal is going to get you on the right track there. The nice thing is you know there's only five things you can do with money. We can spend it on our lifestyle, we can save it, we can use it to pay down debt, we can give it away or we can pay our taxes. And you know once you get to a place where you've eliminated debt, you've capped your lifestyle and said we don't need to we don't need any more lifestyle spending. You know ultimately it comes down to you know once you've paid all the tax you're going to pay do we want to give more? Do we want to save more? And you're just going to constantly be striking the balance between the two because we don't want to just mindlessly accumulate more and more. We want to have a plan and we're saving for retirement at a certain level that's well determined in advance. We want to look at other medium-term goals.

You already have prioritized paying off the house, that's great. At some point you're going to get to a place where you can just begin to really dial up your giving and that's going to be a really fun experience for you. So boy it sounds like you guys are on a great track. Let's do this.

You hang on the line. I want to send you a copy of the book Money and Marriage God's Way by Howard Dayton. I'd love for you and your new bride to sit down perhaps weekly.

Each of you commit to reading a chapter and then just talk about it and let's see where God is taking you guys and we appreciate your call very very much today. You know folks as we think about marriage and putting the marriage relationship and the money together. You know money could be a real source of conflict but here's the thing it doesn't have to be. I believe the budget, the spending plan can actually be an instrument of peace bringing you closer together but it's all about a shared vision for where God is taking you and how the money is then a tool to accomplish that. Make a priority to sit down and talk to your spouse about that tonight.

Stay with us. More to come on MoneyWise Live. You're listening to an encore presentation of MoneyWise Live. You can find out more information about the topics we're talking about when you visit our website moneywiselive.org. Today's program is pre-recorded so keep that in mind. We're glad you're with us today for MoneyWise Live.

I'm Rob West. This is the program where we run today's financial decisions through a biblical lens and try to apply biblical truth and principles to what's going on in your financial life. Hey have you downloaded the MoneyWise app? It's available and it's a free download in your app store. It has our digital envelope system where you can download your transactions automatically and apply them to your envelopes.

You and your spouse can stay on the same page with your budget in your hand vis-a-vis your smartphone. It also has our MoneyWise community where you can post questions and get answers. You can also access our discover tab with the best content podcasts videos and articles in Christian finance. It's all there in the MoneyWise app. You can download it today.

Just search for MoneyWise biblical finance. All right back to the phones. Taking your calls 800-525-7000 to Charleston Tennessee. Robert thank you for your patience sir.

How can I help you? Well we're considering doing an addition onto our home that is paid for and I'm trying to decide about waiting six months to a year to see if the building costs will go down. It's probably around $80,000 the addition and just kind of wanting to kind of get your thoughts there. Yeah well there's no question Robert that construction costs are elevated right now. Lumber in particular is very expensive. Concrete is up and then there's just a lot of disposable money running through the system right now both in the form of stimulus as well as home equity that a lot of folks are tapping into. So contractors are just very very busy and that supply demand dynamic that they taught us in economics is at work here which is pushing prices higher. A lot of folks believe that we'll work some of these supply constraints through the system as the economy fully reopens and we should see a cooling off of some of these prices. Is that a guarantee?

Does that mean necessarily that a year or two from now we're going to see lower prices? Certainly we don't know for sure but I think that would certainly be reasonable. So I would you know consider waiting perhaps you could get with a contractor and you know do a bit of more of a detailed bid than what you have now just to see what their professional opinion is. I think the the bigger question Robert is is this the right time for you all to do it financially?

Number one do you plan to stay in the home for a while and if so that's great you if you have the resources to do it and enjoy it I think that's a great idea. But then secondly how are you going to pay for it? Is it going to require debt? Are you going to pull from existing assets? Have you been saving for it?

Give me a sense of that side of it. Well we would have to borrow 90 percent, 80 or 90 percent probably of the money. We have a an IRA of course that would cost us to get into that but otherwise we would be borrowing the money and right but right now we're debt-free.

Okay yeah and that's great. You know I don't love pulling it from an IRA. Are you over 59 and a half?

Yes 66. Okay so you wouldn't have any penalty but obviously anything you pull is going to add to your taxable income. I think the key is if you're you know just pulling an amount that's modest and not going to make a you know a big dent in the sense that it's going to push that portion up into a higher tax bracket or something and you've got the ability to do it meaning it's not going to you know hamper long term your ability to supplement your social security and just the fact that you've got to add obviously this debt service to your budget. But if you've worked all that through the system I think that's a good thing so then it's just a matter of timing and I would say that a year or two from now I would expect that you could do it a bit less but I probably get a couple of opinions on that and like I say sit down with a contractor to think it through. If you've got the money available or you've got the ability to pay for it and you all want to enjoy it now I think there's no reason that you wouldn't want to proceed but the idea that you could save you know 10 or 15 percent perhaps a year or two from now is real and if that made a big difference in you and your wife deciding to proceed or not you may want to wait.

So I would make it a matter of prayer but I think it sounds like a good plan as long as you've worked it through the budget and it looks like everything will work out. We appreciate your call today. To South Florida, Erica, thank you for your patience. How can we help you? Hi, how are you guys doing today? Great, very good. Good, I just want to tell you that first of all I really appreciate the show. I listen to it almost every day that you're on on my drive home and I just appreciate how intuitive you are. You're patient and listening. You're so good at your response and I just want to tell you as a listener I really appreciate the show. Well that's very kind of you, Erica. Thanks for saying that. It means a lot.

Yeah, thank you. So I have like a, it's not many questions but it's kind of a holistic question. So I'm 45. I have an IRA, well I'm sorry, it's a 401k with $125,000 in it. I put about 12% of my income between my part and the match by my employer which equals about $600 a month and I also have a variable annuity that has about, I think the last time I checked it was 55 or 56,000. So I have I'm sure 20 years of working less and my house is at 67. I owe 67 so I'm sure I'll have it paid off in I don't know maybe say 10 or 15 years. In January my car will be paid off. I'm going to put some extra money toward my home so paying down my debts. My question is how much money do you need for retirement and does it seem, I'm a single person, I'm a single mom, does it seem like I am projected to have enough money in my retirement? Yeah it's a great question Erica that so many people are thinking about and there's rules of thumb and benchmarks that we can use that in some respects are a little scary because they tend to be a lot more than we think we might need but it really comes down to what is it actually going to take to fund your lifestyle and I love the fact that you're on a path to be debt-free because that's going to keep that as low as possible.

So keep that as low as possible. So let's do this. We're going to pause for a quick break. I'm going to ask you to hold and when we come back I'll weigh in specifically on your situation. Stay with us.

More to come just after this. Welcome back to MoneyWise Live. I'm Rob West.

This is where God's word intersects with your financial life. So glad to have you along with us today. Hey our team is taking some time off today. This program is pre-recorded so don't call in today. Wait till we're live in the studio but we do have some great calls all lined up ready for you today.

I'm sure you'll enjoy them. With us now is Erica in South Florida. Erica is a single parent. She has about 125,000 saved up in a 401k plus an annuity that has about 55 to 56,000 in cash value and she's wondering is she on track for her long-term savings for her retirement at age 45. And you know as I said Erica there are some savings benchmarks that you can find. I mean what you'll see typically out there is that you know at 45 you should have somewhere between two and a half and four times your salary saved as kind of a barometer as to whether you're on track or not.

So you you may be in that you know area you may not be. The key though is to allow the compounding to work for you to keep your lifestyle at a minimum to save consistently over time so that you can build up assets to be able to fund your lifestyle when you get to that season where you can no longer work or God redirects you. The good news is as you said you're on track to pay off your home in a reasonable out of amount of time probably well before you reach retirement you're on track to pay off your car and I'd love for you to continue to save that payment so you can buy the next one with cash or close to it. But I think because you've limited your lifestyle you've purposed yourself to be debt free as best you can and as quickly as you can when you get to that season it's going to mean that you don't require perhaps quite as much as even you do right now. Perhaps you could live on you know 70 certainly less than 80 percent of what you are living on today. The good news is you know if you take 125,000 and you grow that at eight percent over the next 20 years and by the way the S&P 500 has done more than that over the last you know number of decades probably if you go back 50 to 100 years it's it's done quite a bit more than that. But let's just say it grows at eight percent for the next 20 years and you continue putting in that 600 a month you'd have nearly a million dollars. Now obviously inflation is going to erode some of that purchasing power but you should be able to convert that you know let's say it's 950,000 to about 40,000 a year in income that you could use to supplement your social security. If it grew at seven percent it'd be you know about eight eight hundred thousand which you could convert easily to a thirty two thousand dollar income. So I think the key is because you're limiting your lifestyle you've purposed yourself to be a saver and you have time on your side you're going to have plenty of resources and I think the key is just to kind of run that through your budget over time maybe look at that each year just to say what do I expect my retirement budget to look like and how much income would I need. At some point you'll get you know an idea of what social security is going to pay you and obviously we could see some changes and even some reductions between now and then because we've got some challenges with that system that I believe we'll fix. But I think the key is you've saved up a good bit of money and you're on a good trajectory I would stay on that and then perhaps if you can bump that up a bit over time as you know the kids come off the payroll and you have a bit more discretionary income that would always be a good thing as well.

Does that help though? Yeah that's really fantastic thank you so much. Okay well hey I appreciate you calling and I think at some point along the way it would probably do you some good to sit down with a financial planner just to do a bit more of a deeper dive into this so you have a an appreciation of kind of what your current trajectory is because keep in mind I didn't even factor in that annuity and obviously that's going to continue to grow and you could convert that into an income stream as well. So I appreciate your call today. Lord bless you and we'll hope to talk to you again real soon.

Let's head to Minnesota. Gordon's been holding and Gordon how can I help you today? Oh yeah I'm trying to figure out my finances after being married for 27 years. I'm all of a sudden going to be single and I'm just trying to figure out finances, assets and trying to figure out how I can stay in my home. Yeah well Gordon first of all I'm sorry to hear that about what's going on in your life and we'll ask the Lord to just really give you a vision about what the future will look like and clearly the finances are a part of that. Do you have an understanding of what that will look like in terms of the assets that will be yours and the income that you'll have moving forward?

Well it's a bit confusing for me right now. Okay all right well I think that's obviously going to be a big piece of this because as you get a bit more clarity Gordon about what decisions are made on the part of the court that tells you which assets are going to remain with you and what's going to happen with the home and what your income looks like moving forward. I think the key is really just to get everything in order so that you have a real appreciation of what you have in terms of assets and what income you have so that you can build your spending plan around that and perhaps getting some objective council to walk with you in that process would be good. I'd recommend you connect with one of our MoneyWise coaches when you're going through a major transition and obviously just a difficult season like you are right now given what's happening here with the divorce. I think having somebody who can make a difference and somebody who can not only pray with you and encourage you spiritually but also just bring an objective fresh viewpoint to the table to help you get things in order both your assets as well as developing a new spending plan that balances that prioritizes you know what's most important to you would be really key. So let me encourage you to head over to our website moneywiselive.org click connect with a coach. These are wonderful men and women that are trained to walk alongside people to help them in this area of finance and I know they'd be delighted to do that. So listen we're going to ask the MoneyWise Live community to be praying for you right now and check back in with us along the way and let us know how it's going especially if you have questions as you get a bit more clarity and we appreciate your call today.

To Florida, Cecilia or excuse me, Cecilia how can I help? Yeah I have a situation here where I have a mortgage of $161,000 and $101,000 is I'm paying on that it's five percent for 40 years and the the financial company put aside $50,000 that after the 40 years of paying I would start paying on that. Yes.

Now I have a friend who had the same type of mortgage and all of a sudden the loan company is calling that money they put aside immediately and they wanted to roll into their payment but then their their its payment went sky high. Yes. I am wondering should I the combined amount I hold is $161,000 I have a company who would refinance it for me and my total out it would be total $167,000 they're putting a cost in it.

Yes. At 3.375 percent interest my payments would be $910. Okay you know I like the idea with this modification they put a balloon on the end you'd have to look at the terms as to whether or not that is callable but in either case if you plan to stay in the home and you don't lengthen the term getting that interest rate down is key and making sure that new payment fits well within the budget I think would be a great thing. So I'm in favor of the direction you're headed. Stay on the line we'll talk a bit more off the air and we'll be back with more MoneyWise Live after this. This is our final segment of a broadcast we previously recorded. Thanks so much for being with us today and we hope you'll stick around and enjoy the rest of today's program. We're grateful you've decided to tune in to MoneyWise Live today where God's word intersects with your financial life. Back to the phones in Ohio. Debbie has been waiting patiently. How can I help you Debbie?

Good afternoon. I'm calling because I have some money set aside in a retirement account but I'm not I'm under the age of 59 and a half and I have some money set aside and a and a just a regular emergency fund but a friend is recommending that I apply for a HELOC in case an emergency comes up and that way I won't have to touch my emergency fund or my retirement money and I'm wanting to get your thoughts on that. Yeah I'm not a big fan of that especially if there's a cost to even opening the HELOC whether or not you draw from it just because that's money that you're spending perhaps unnecessarily. You know one of the downsides to the HELOC is you've got a variable rate and rates are heading higher so that's going to be money that's expensive to access and you know if it's just for emergencies I'd rather you have that in a liquid savings account as opposed to you know funding that with debt. So you have twenty thousand I think the goal is you know should be three to six months expenses you're probably already in that range so that's a good thing and if you needed to tap your home equity down the road for some reason I'd rather you do that with a home equity loan where you can get a fixed rate. So paying to have that line open for some purpose that is unknown at this point I think is unnecessary. I'd rather you just keep that savings account there liquid, safe, secure and available if you need it and then you know once it's established which it sounds like it already is just focus on you know continuing to save for the longer term or if you have you know other medium term savings goals you can prioritize those as well.

Does that make sense though? Yes absolutely thank you so much I appreciate your insight. Absolutely Debbie thank you for your call today. To Orland Park, Illinois Roger how are you today? Hi I'm doing well thank you. Great how can I help you? Well generally speaking my wife and I are doing okay with finances we just paid our got our mortgage paid off after 30 years.

Wow great. We have investments going with an advisor. I keep asking my advisor because I hear so much about Roth IRAs and I don't have one and I've asked him about it and he his response is generally you're too old it's not going to benefit you that much and kind of kindly shrugs it off with me but I keep hearing about it.

Let's just wonder if your thoughts I'm 57 years old. What are your thoughts on starting a Roth IRAs? Sure well I think the first question Roger is always you know what is your savings goal so if we're talking specifically about retirement savings have you done some planning to determine you know what you'd like to have available when you reach that time where perhaps either you can't work anymore or the Lord redirects you to some something else let's say that's somewhere between 65 and 70. Have you determined what you're ultimately trying to have saved up by that point?

No we have not at that point we're just going along with the program kind of you know. Okay yeah I think that's key because you know so often we think well we just need to save as much as we can and if we got a late start or we haven't been putting enough aside that may be true but it's not true for everyone and we don't want to just save for saving sake so I think we really need to define what is our finish line and you know perhaps doing some retirement planning with the advisor that you already have doesn't have to be elaborate or expensive but just to look at what do we project our expenses are going to be in retirement once we're no longer saving for retirement and perhaps if we're debt-free and maybe the kids are off the payroll but with inflation factored in you know what are we going to need to have and then what might we expect based on our current understanding of social security and then what gap are we trying to solve for that we're trying to build up assets to you know turn into income and then with your current trajectory where will you be and do you need additional retirement savings going in and if you do what type of account is the best one to do that in did you say you're currently saving in a 401k at work and this Roth that you're considering would be in addition to that yes okay and so I think the first question would be would you benefit by just increasing your 401k contributions there is something to be said Roger about the Roth IRA losing a bit of its benefit as you get closer to retirement because it's going in on a tax you know after-tax basis so you're not enjoying that deduction today but you're getting the tax-free growth but arguably you know as you start to get closer and closer to retirement age getting more conservative you're losing a bit of the benefit of that because you're not gonna you know get as much in the way of tax-free growth through the compounding if you know as you would have if you would have started that you know Roth IRA 20 years ago so I think that's perhaps what your financial advisor is getting at and I think the key there is you know should you just increase your 401k contributions the only thing I would say about having that Roth is I kind of like the idea of you having both the tax-free and the tax deferred buckets so you can determine which is the best to pull from when you get to that season because you know we may be in a very high tax bracket you know we may see increases in in tax rates between now and then I mean certainly you know the Biden administration is proposing that whether or not they're successful it remains to be seen and you know which segments of the income earners that applies to is unknown as well but you know let's say 10 years from now tax rates are significantly higher than they are today then you would want to have some money in a Roth that you could pull from tax-free before you pull from the IRA because all of that would be taxable income as it comes out so I think that's one of the benefits that might you know argue in favor of well even though we're saving in the 401k assuming we're not quite on pace with where we want to be and we want to put more away let's start this second bucket that we're going to contribute to in the form of a Roth IRA and then we'll have both options available in that season based on tax code and other situations going on around us does that make sense? Absolutely, you sound just like my advisor.

He's talked fast. Do I have to open a Roth through him or is that something I can do on my own? Oh no you can absolutely do that on your own I think especially if you're just getting started let's say you're going to put in 500 a month or you know which would get you to the 6,000 a year limit although you're over 50 years old so you can add another thousand to it but yeah you could open that anywhere you could open that with Fidelity and you know or Schwab and use their intelligent portfolios you could use Betterment or the Vanguard Robo advisor any of those would be great they're low cost you'd get ETFs that are indexes they'd be broadly diversified and then you could just set up an automatic contribution directly into that account every month or you could make a one-time contribution before you file your taxes however you wanted to do it. Yeah okay all right oh wow thank you very much. Well you're welcome Roger we appreciate you listening and thanks for calling today may the Lord bless you.

We're going to head for our final call today to Union Grove Wisconsin Matthew thank you for holding how can I help you? I had a question regarding making a contribution from my corporation to myself in terms of some sort of a investment retirement 401k or Roth IRA and I'm just going to tell you right now that I am completely illiterate when it comes to these I don't have I'm 49 I've got six kids my wife stays at home we've invested in land and mostly out the country and the company has done very well and I want to diversify a little bit and I know that I can take money put it into some sort of an investment portfolio from my S corporation but I'm not sure how much I can put in and you know you know what my limits are with that. Yeah so you don't have a retirement account set up currently is that right? Yeah great well there's some real simple ways to do it as a self-employed individual Matthew one of the simplest is called a SEP IRA which stands for a simplified employee pension IRA and the benefit of that is you know unlike a 401k there's not a lot of administration or fees to manage that on an annual basis in terms of filing fees and you can contribute up to 25% of your compensation or a max this year of I believe $58,000 whichever is less and you know if you're self-employed your contributions are generally limited to 20% of your net income so that would be probably a great starting point you know another option is what's called a solo or a solo 401k or an individual 401k which would be another great option to look into but I think either of those the SEP or the individual K I think would get you started and allow you to set up systematic contributions into that account so you've got something that you're saving in addition to your real estate that you could grow over time especially now that you've got some you know good revenue coming in and perhaps some money that you could direct into these accounts on a tax deferred basis which will really help so I would look into both of those perhaps check with your tax preparer or you could even set them up yourself you could use Schwab or Fidelity or Vanguard one of the discount brokers that would let you set that up with very little cost and then you could go ahead and start making some systematic contributions I'd probably start with index ETFs or mutual funds just to get a broad diversification into the account and just make sure you put as much as you can in and 20 years from now or down the road when you're ready to start pulling it out you'll be glad you did we appreciate your call today all the best to you and those six kids congratulations you're a blessed man well that's going to do it for us today so glad you've been along with us today as we've tackled your questions we've covered the gamut talked a good bit about retirement and credit scores we've talked about giving and even marriage how do you handle finances as a married couple looking all at it from a biblical perspective MoneyWise Live is a partnership between Moody Radio and MoneyWise Media let me say thank you to my amazing team today Amy Rios, Deb Solomon, Gabby T, Jim Henry and sitting in with us today is Samuel Bowen thank you for being here we'll look for you tomorrow we'll do it all over again come back and join us