More People Are Budgeting

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Not licensed in Alaska, Hawaii, Georgia, Massachusetts, North Dakota, South Dakota, and Utah. The COVID crisis and resulting shutdowns have at least one silver lining. More people are living on a budget these days. Hi, I'm Rob West.

It's true. As work hours shrank, folks found they needed a spending plan to stretch their precious dollars. I'll talk about that first today and why some people still aren't budgeting. Then it's on to your calls at 800-525-7000.

Call it 24 7 800-525-7000. This is MoneyWise Live, biblical wisdom for your financial decisions. Okay, so how do we know there's been a surge in budgeting? Well, we can thank the folks at debt.com for that information. They recently surveyed 1000 Americans and found that 80% of them were living on a budget. That's up from 68% found in the same survey conducted two years ago before the pandemic hit.

That's a pretty significant increase. What isn't so surprising is that nearly 90% of those in the latest survey who are using a budget said it helped them get or stay out of debt. Some other interesting findings, only about 10% use a budgeting app and 60% prefer paper and pencil. Obviously they haven't heard about the new MoneyWise app, which you can download for free wherever you get your apps.

Just search for MoneyWise biblical finance. But let's get back to that 80-20 statistic that showed one out of five people still aren't living on a budget, and you might be asking, why not? I think it's because they just don't understand the importance of budgeting, so they're not motivated to do it.

The solution there is simply more education. Some high schools have started teaching things like budgeting and balancing a checking account, but the vast majority of kids need to learn from their parents, which is always better. Parents can model budgeting and responsible spending for their children, otherwise they have to learn it on their own, the hard way. The second reason might be they're afraid a budget will be like wearing chains and will make them miserable.

They equate a spending plan with restriction. Now true, it does limit spending in non-essential areas, but instead of making their life miserable and confined, folks who stick it out and stay on a budget in one sense actually find it liberating. For example, they feel better about spending money for a vacation because they've planned and saved for it.

They don't worry or feel guilty about it, and they can really enjoy themselves. Another reason, and the easiest one to overcome, is that some people don't think they make enough to justify budgeting. The reality is the less you make, the more you need to budget, so you know where every dollar is going ahead of time.

That's just simple logic. Sometimes these folks will say, everything we make goes right back out the door to pay bills, so there's no point in budgeting, and that may be true for a minority of people living near the poverty level, but the vast majority of people have some margin, some amount of discretionary income. They just don't realize it because they're not watching how they're spending it.

A budget forces you to keep track. Consider this, you only have so much money to spend. Even if you're wealthy, your money is still finite.

There's always a limit. If you fail to grasp that, you'll eventually find yourself in debt. So with a budget, you still have the same amount of money to spend or save.

The difference is you're just deciding ahead of time how you'll spend or save it. Okay, so you're in the 20% not living on a budget, but now you're motivated to start. So what should you do first to put together a spending plan? Well, it's always a good idea to start by tracking your spending. Write down everything you spend for at least a month so you can see where your money's going. Then you need to make categories for your spending, things like groceries, gas, clothing, rent or mortgage, and utilities. You'll probably have a few more categories.

Write down how much you need to put in those categories. For example, your rent or mortgage is fixed. No guesswork there, but you'll have to decide what you'll spend in areas like food and entertainment. Then you also want to add up your total monthly income. You subtract your obligations, the total of all your categories from your income. Then you can see how much you have in discretionary funds. Once you know how much is left over, you can use that money to start paying down debt and saving. It's really just simple math. And once again, the MoneyWise app makes this whole process much easier than using a pencil and paper.

It uses the tried and true envelope system. You can easily link it to your checking and savings accounts. The app will track your spending and notify you if you go over in a particular category so you can make adjustments. In fact, you can connect it to all of your financial accounts.

Your transactions will come down automatically, and it'll even learn where certain transactions go in terms of the category that's appropriate. So more people are budgeting these days. Make sure you're one of them. All right, your calls are next at 800-525-7000. This is MoneyWise Live, biblical wisdom for your financial decisions. We'll be right back. Thanks for tuning into MoneyWise Live. I'm Rob West, your host. We'll be taking your calls and questions in just a moment. Here's the number, 800-525-7000.

We've got a few lines open, 800-525-7000. We began today by talking about the importance of budgeting, tracking your spending. You know, as managers of God's money, we realize how we allocate God's money says what's important to us. And we're never going to be as effective as we can possibly be in managing that money wisely unless we have a plan and a system to control the flow of money in and out.

Think about this. Most families will take in well over a million dollars in their lifetime. The question is, how are we allocating that?

And is some of it slipping through our fingers into areas perhaps we would otherwise control if we had that information at our fingertips? Well, that's what a budget can do for you. And we mentioned the MoneyWise app. This is why we created the MoneyWise app.

So God's people not only could have a community of people encouraging them where they can ask questions, that's in there. Not only could they learn the best way to handle God's money in areas like saving and investing and giving, that's all in there in our Learn tab. But at its core of the MoneyWise app is our money management system. We've got some exciting news we just released in the last couple of weeks, the brand new MoneyWise 3.0.

And if you haven't checked it out, I'd love for you to check it out today. In fact, today we just put up a blog with all of the new features found in the new MoneyWise app version three. You can find that at app.moneywise.org slash blog, app.moneywise.org slash blog. What you'll see there is the really the big new feature other than our new design is our three money management systems.

It's the first app to have three in one. You can use the tried and true envelope system. But if that's too advanced for you right now, then you can use our monthly spending plan tracking system. That's where you just establish your budget and track against it. Or if you want perhaps even a more simpler process, we've got just the pure tracking only option where you just track your expenses and categorize them so you have that information. Check it out today, app.moneywise.org slash blog so you can see all the new features in MoneyWise 3.0. It was just released. By the way, by the way, you can download the app in your app store.

Just search for MoneyWise biblical finance. All right, we're going to head to the phones. Eight hundred, five, two, five, seven thousand. Up first today is Valerie in Tennessee. Hi, Valerie. How can I help you? Hello. Thank you for taking my call.

I have a question. We both recently retired at sixty five. We are living on our pensions and pulling out so much from our retirement or 401K.

We need to replace our 15 year old vehicle with the newer one. And we've looked at possibly taking a lot of sums out, pulling more out a month from our 401Ks. Or what about the option of refinancing our home and getting a little extra cash and paying that down? Yeah, yeah.

OK, let's unpack each of these. First is you said you're living on your pension and 401K, so both of you are fully retired. Is that right? Yes. OK. And are you drawing Social Security?

No, we're holding off on that. OK, very good. And how much what would you say roughly is in your 401Ks altogether?

About one point four million. OK. And what are you pulling out of that to supplement the pension income? OK, we're pulling out four thousand a month. OK, very good. So, you know, you're right there in terms of, you know, just under the four percent number that I would be comfortable with where you can maintain the principal if it's invested conservatively with a focused on fixed income, but perhaps a portion in stocks that could be kind of a growth catalyst over the years.

And once you begin collecting Social Security, that'll make things even a bit easier because that would be supplemental income that you have coming in. Let's talk about the home for a second. Valerie, what is it worth and what do you owe on it? About five years ago, we were looking to refinance and it appraised for four fifty five. We owe one hundred and ten on it now.

OK, very good. And how many years are left on that mortgage? I think about eight. We've been trying to pay that down.

Yeah. And what is your interest rate? Our interest rate is four and a half.

Four and a half. OK, so there is an opportunity there. I mean, you're getting into the range where, you know, at the most, I wouldn't want you to go more than a new 10 year mortgage, which if you're accelerating that payoff, you could still, you know, have an eight year payback. But if you save, let's say, a point and a half on the interest rate and you make payments such that, you know, you match the current remaining term. So you could ask the mortgage company to amortize that for you in such a way that you don't increase the terminal with that savings of a point and a half on 10 years. You know, I want to make sure that there's enough interest savings over the 10 years to justify the cost, because, you know, you'll probably spend three grand in costs, closing costs and so forth related to the mortgage refinance itself. And we just want to make sure that there's going to be enough interest savings. There probably will, but you'll want to look at that. Now, should you roll the vehicle purchase into that?

You certainly could, but I think, you know, as you look at other options, you know, you could also just pull this out of the 401k, as you said. What are you looking to spend on the vehicle? We're looking at about $72,000. Okay. All right.

Very good. You know, I'd rather you not put all of that on the house. That would essentially, you know, put your mortgage back up at 200,000. It's going to be collateralized by the house.

I realize you got quite a bit of equity, but I'd rather you look at either just, you know, adding a bit more to what you're taking out, if you could get a good interest rate or just taking the distribution outright and buying the cars that way or car. You know, as you look at this, do you have some cash available that you could use as a down payment? Well, we have an emergency fund of 60,000 in it right now. All right.

And you're spending about 4,000. So if we were to, I mean, you've got well over a year's worth of expenses in there, correct? Yes. Yes. And we're not using that for anything else.

Yeah. So if you were to put down, let's say, you know, even on 72,000, if you were to put down 30%, that'd be, you know, 21,000. So let's say you put down 20 and you still have 40,000 left, which would give you, you know, a really healthy emergency fund. You know, that would bring the note down to 50. And then you could increase the amount that you're taking out as a distribution, or we just pull that 50 from your 1.4.

And, you know, I would imagine you're using an advisor, he or she could tell you which is the most effective investments to sell for you to raise that cash if there's not that amount of cash already in money market, which there likely is. Do you all have a preference as to whether you bump up the monthly distribution or you pull that out outright? Yes.

Okay. I just have taxes. Will we not incur?

You will. So, you know, one option would be you could spread it over two tax years. You know, to make sure that you don't bump any portion of it up into a higher bracket. So, you know, if you were going to do this right after the first of the year, you could take a, you know, a portion of it this year and a portion of it next year. You could do it right at the end of the year, which is when you're going to get the best deals on cars if you're buying new. And at that point, you could take a small note, but then pay it off right away as you take that second distribution in the new calendar year. And that would spread the tax bite, if you will, over two years. Does that make sense?

Yes, it does. Okay. So I think, you know, depending on how quickly you need this car, I think that would be my preferred option. I mean, you've got plenty of assets that you could structure this any number of ways. But I think what I would prefer to see you do is pull $20,000 from the emergency fund, take another, you know, if the balance on that is $50,000 that's remaining, take another $25,000 from your 401k this year, go ahead and buy the car with that, you know, $45,000, take a note for the rest, and then pull that final distribution in 2022 and just pay it off.

And at that point, you won't have to increase anything, you'll own the car outright, and you move forward from there. Right. That's that sounds great plan. Okay, okay. Thank you. Very good, Valerie. We appreciate your call today.

Absolutely. And thanks for listening. Let's head. You know what, let's take a quick break. And when we come back, we'll continue to unpack some great questions that are all lined up here.

Ed's in Indianapolis. He wants to know about some back taxes and student loans, how to tackle this. Glenda wants to know what PMI is, private mortgage insurance. We'll talk about that. Craig in Missouri, wanting to know about investing 50,000.

We'd love to hear from you. What's your question today? We'll run it through a biblical filter and apply biblical principles, help you move forward with confidence. This is Money Wise Live.

We'll be right back. Thanks for tuning in to Money Wise Live where we recognize that we're stewards of God's resources. This principle of ownership says that God created everything and therefore he owns everything.

We own nothing. But the next principle that follows is the one of responsibility. And that says that as stewards, we have no rights over what we temporarily possess by the Lord's provision. But we do have responsibility to use those resources wisely. And God will reward us for doing that. It may not be financial, but there is blessing that will come from that. And we can seek counsel from God's word so that we make sure that we're getting it right because his principles are always right.

They're always relevant and they will never change. I unpack these principles of stewardship in this week's Money Wise Weekly Wisdom. That email is going out today. In fact, it's sending as we speak along with our recommended reads for the week, our trending podcasts, and our verse of the week.

So if you'd like to receive the Money Wise Weekly Wisdom, just create a free account when you go to moneywiselive.org and we'll be sure to get it out to you. Let's head back to the phones today. 800-525-7000.

Bernie is in Chicago, Illinois. Hi, Bernie. How can I help you, sir? Hi. First of all, thanks for taking my call. You guys have got a great show. About two years ago, I called you guys for some advice and the advice was right on, and I'm glad I called you then.

And I just have another question. Well, I always like when it works out, Bernie, so I'm glad you said that. I'm going to be 62 this November. And I received this, I'm not sure, I forgot what it's called, but it comes in the mail and it kind of tells you what you're going to be receiving as far as your benefits. Yeah, from Social Security. Oh, yes.

I'm sorry. Yes. And it told me that at 62, I would get 1,000 and at 66 and a half, I would get 1,300. And I was just wondering, I mean, sure, I work for another, you know, three more years or whatever it is to get $300 more or should I retire now and just get a part-time job?

Yeah. Well, I can understand the dilemma because there's not only the financial side of this, Bernie, you know, what you're locking in here on Social Security, but there's the non-financial side, the quality of life issue. And I suspect you like the idea of saying, well, I can easily make up $3,600 a year with part-time work and slow down and not, you know, have this full-time job. And you would be able to do that because the threshold where you'd start to have your benefits reduced in terms of your earnings would be not until you reach about $19,000, which clearly you don't need that much to make up that $3,600 shortfall. Here's, though, the missing piece, and that is that that amount that you're going to be receiving as a benefit, the $1,000 a month, if you retire right now, you're locking that in for the rest of your life.

And so there will come a point, I would imagine, where you're not going to want to work at all or you're not going to be able to work, either because you just simply can't or God's redirecting you to something else in that season of life. And at that point, you're going to have to live on that $1,000 a month plus whatever other retirement income sources you have. So it's not just about making up the $3,600 a year for the next four years, because, you know, that amount is what you're going to be stuck with, if you will, as a benefit for the rest of your life. And so I think that's the consideration is to say, what is my monthly budget look like? How much do I need on a monthly basis? And is this $3,600 a year really going to make the difference in terms of me being able to meet those obligations?

And if it will, then I think it's pretty important that you continue working and get that check up as much as you can. Does that make sense to you? Oh, yeah, it does. Because I remember you guys were saying something before, but I didn't understand it. It was something about where some caller came in and asked you to like, she retired. She said she retired or something, but she makes up the benefits later somehow. And well, yeah, so what that's referring to is the reduction that takes place when you continue to work.

So if you earn more than $18,960 in the year 2021, and you're on Social Security, you've started to collect benefits, the Social Security Administration will deduct a dollar for every $2 you earn above that threshold. But that will be reimbursed to you later in increments once you reach full retirement age. So that's a temporary reduction. The problem is that is different than what you're talking about, which is claiming Social Security early, which is a permanent reduction of those benefits. So the amount that's reduced that will be restored to you is simply based on you earning beyond the threshold that's permitted. That is entirely different than you beginning to collect Social Security benefits at 62 and you locking in that thousand a month for the rest of your life. You will never earn that $300 back for any reason.

The only increases you will have in the future will be cost of living increases, which will be nominal. Does that make sense? Oh, yeah, it does. I'm glad I called you guys. Thank you so much. I appreciate it. You got a great show. All right, Bernie, we appreciate you, my friend.

Thank you for listening and for your kind words today. Folks, this is what it's all about. We want to look at what God's entrusted to us. That's what we're charged to be found faithful with, what passes through our hands. And then we want to apply biblical wisdom so we can manage God's money wisely, live with contentment, hold it loosely, give generously.

Yeah, we want to save for the future, but we also should be asking how much is enough, both with lifestyle and our balance sheet so that we can give generously. That's where true joy is found. And we're going to continue to take your questions. 800-525-7000. We'll be back right after this break, Snails. Thanks for tuning in to MoneyWise Live. I'm Rob West, your host, taking your calls and questions today. In just a moment, we'll be in Nashville, Tennessee.

We'll be in Missouri and Indianapolis, but next up is Cleveland, Ohio. Hi, Teresa. How can I assist you? Okay. I'm calling because, and I love the program. I'm trying to listen to it every day I can. So I love you guys.

You're so informative. Now, what my question is, is I'm trying to find out, okay, my job retired me early from my job, but I'm only going on next month, 55. So I feel like I have $144,000 in my IRA, and I'm trying to find out what's the widest way to best invest it, because I really can't take it out until I'm 59 and a half. So I'm just trying to get a heads up on should I roll it out of that IRA that's in and to maybe another IRA or a 401k or something. I just need some advice.

Can you help me? I'd be happy to, Teresa. Tell me what you're planning. So you're retiring at 54. Are you planning to kind of restart another career? Is God directing you to some other activity?

What are you planning to do? Well, I know he's directed me to something, because he's been in my life since I was a young kid. I'm a gospel singer. My mom, we come from the Brooks family. We're gospel family. We're singers.

If you need somebody to sing on your program, you can call me. I'm just trying to find what's the best maybe investment I can make to make a profit off of that, because I feel work because I'm still young enough to. But I was just trying to figure out it just sitting there and I don't want to waste it just sitting there. So I'm trying to figure out what do you think is wise for me to do?

Absolutely. Is it with your previous employer in a 401k, Teresa, or somewhere else? It's with my previous employer, OPRS, and I want to see if I should move it.

I don't know what to do. I would look at rolling it out to an IRA. And you're exactly right, Teresa, you're young, you've got time on your side. You know, if you were to let's say, you know, we typically think of retirement in terms of age, you know, 65, or somewhere between 65 and 70. But, you know, we don't follow the world's necessarily perspective on retirement, we realize God's call on our life happens throughout the entirety of our lives. And in that season, when we either stop working because we have to or because God redirects us, we should be asking, Lord, what's my next assignment? You know, when you have the greatest in terms of wisdom and experience to bring to God's service, it's an exciting season of life.

It's not a time just to live necessarily a life of leisure. But keep in mind, this money needs to last you if the Lord tarries and you're in good health for decades. And so you should be thinking about investing it. But it's also a good significant sum of money, I mean, $150,000. And what it could grow to is a lot of money. So what I would be thinking about Teresa is, in fact, rolling it to an IRA.

But first, before you do that, I'd leave it right there. And I would find an investment professional who can take over responsibility of this for you. It'd be somebody that you would interview, and I'd recommend you sit down with two or three certified Kingdom Advisors, find one that's a good fit for you in terms of the size of account, the opportunity for you to get to know one another, how you would be communicated with, their experience and expertise, all of these things. And once you decided on an advisor to manage this for you, then he or she would open an IRA at their custodian, could be Schwab or Fidelity, any number of institutions. And then you would just simply roll the money inside the 401k out to your new IRA. And based on the investment strategy that you discussed with the advisor, he or she would begin managing that for you on your behalf.

So you could then go and work and serve the Lord. And you'd certainly get the statements and oversee it and meet with the advisor a couple of times a year. But somebody would be waking up every day thinking about making sure that that money was invested wisely and where you're not taking unnecessary risk, given your age and objectives and risk tolerance. So the way you would proceed with that is you'd head to our website, MoneyWiseLive.org, just click Find a CKA.

And again, there's a number of them there in Cleveland. So I'd interview at least two or three, find the one that's the best fit. And then you'd roll the assets out and it would be invested at that point. Does that make sense to you? Everything you said makes sense to me.

So yes, it does. Good. I'm glad to hear it. Well, I think this is a great next step. I mean, you know, obviously, you can manage it yourself. And if you wanted to do that, I'd recommend you visit with our friends at SoundMindInvesting.org. And, you know, through the Sound Mind Investing newsletter, they could give you some great mutual funds. You'd roll it out to an IRA that you'd open, and then you could pick the mutual funds. But I think you have a meaningful sum of money.

And I think you'd probably have a lot of peace of mind knowing that there was a professional investment advisor making these decisions for you. So again, head to our website, MoneyWiseLive.org, click Find a CKA. Glenda is in Nashville, Tennessee.

Glenda, you're next on the program. How can I help you? Okay. I don't have a good understanding of can you hear me okay? Yes, ma'am. Anyway, what PMI means? I've been getting these letters from my mortgage company periodically. And from what I can get out of all the legalese, it sounds like I have an option of canceling the PMI if I want to.

I don't know. But I've never been really sure what PMI is and why it's necessary. And if it is that I should cancel it, what's good about that?

Yes. Well, it's a great question to ask, because it has no benefit to you whatsoever as the borrower. So the thing is, if you have a loan that's a conventional loan, and you borrowed more than 80% of the value of the property at the time you purchased it, then you were required to have private mortgage insurance, which is basically insurance for the lender, not for you. So in case you defaulted on the loan, it would make them whole has, again, nothing to do with you. So I think the key is, you would want to at this point, look at if you have now more than 20%, because you've either paid it down or the value of the home has risen, you'd want to look at getting that removed.

Once you get to 78%, typically, it's automatically removed. But at this point, as long as you can document that you've got at least 20% of equity in the home, and you might need to get an appraisal to do that, you can ask the mortgage company to have that removed. So you're no longer paying that because, you know, typically, this is anywhere between a half of 1% and 1% of the loan amount on an annual basis. So, you know, that could be on a $200,000 mortgage $166 a month or about $2,000 a year.

So if you can get rid of that, it's not doing anything for you, you absolutely want to. So I would call, don't respond to something that comes in the mail, I'd call your mortgage lender and tell them that you'd like to know what it would take for you to get rid of the private mortgage insurance and what steps you need to follow to see if you can do that. But a quick search on the value of your home versus your current mortgage balance will tell you whether or not you're in the neighborhood of that 80% loan to value, meaning you have at least 20% in equity. And that would be a good starting point to determine where you need to go next. And Glenda, we appreciate your call today. Thanks so much for checking in with us. A lot of folks are asking whether it's still time to refinance their mortgages. And I would just simply say we're in still an incredibly low interest rate environment.

So it may be. Most folks have already done it. But if you haven't, make sure you can save at least a point in interest. Make sure you don't increase the term, meaning if you have 20 years left, don't get a new 30-year mortgage. And make sure you're not spending any more than 2% to 3% of the mortgage value in closing costs.

Also, you need to stay put in that home for five to seven years as well. This is MoneyWise Live, biblical wisdom for your financial decisions. I'm Rob West. We'll be right back.

Stay with us. We're delighted to have you along with us today on MoneyWise Live. I'm Rob West, your host.

This is biblical wisdom for your financial decisions. We're taking your calls and questions today. And I've got a few lines open. In fact, I'm going to stay after for a few minutes today. I've got a bit of extra time, which gives me a chance to take a few more calls, even beyond the program. So if you'd like to be a part of the program, I'd love to hear from you.

Here's the number 800-525-7000. Craig is in Missouri. And Craig, I understand you have some money to invest.

How can I help you? Yes, sir. Just a quick snapshot of where we're at. Our home is paid off. We have about $100,000 in cash in the bank, and we have some 401, some Roth IRAs and things too. But we don't know what we can do with the money that's just sitting in our account.

We're fully funded on our Roth IRAs, and we do that every year. But I don't know. Any ideas? I thought I'd ask. Yeah. Well, I appreciate you asking. So let's figure out how much you need to keep in reserves. What are you all spending on a monthly basis, roughly all in? Oh, probably $3,500. Okay.

All right. So let's even bump it up to $4,000. If we were to do six months of that, it'd be $24,000. So you've got about $75,000 potentially. You said you're fully funding the Roth, but that's only $6,000 a year for you. And if you have a spousal Roth, another $6,000.

If you're over 50, at the most, $7,000 apiece. How much are you putting into your 401k? We don't really have a 401k. We're just fully funding our Roth IRAs right now. We do it individually, my wife and myself.

Very good. Are you self-employed? Yes, self-employed.

Okay. So I would look at the opportunity to open perhaps a SEP IRA, S-E-P, or an individual 401k. The third option would be what's called a simple IRA.

And depending upon your situation, you know, any one of them may be the best option. A SEP IRA would allow you to make an employee's contribution that's either 25% of your compensation or $58,000, depending on which one is less. And then you can put in an additional amount beyond that. So that would be one option where you could begin to put some serious money away. And that would allow you to not only get the tax benefit now, but get it growing on a tax-deferred basis. Because remember, the goal of what we want to be putting away, as long as we've got the emergency fund, we don't have any consumer debt, we're giving first, then the goal of what you'd want to be saving for the future would be somewhere between 10-15% of your income. And I would imagine that that's more than the $14,000 that you're potentially putting away each year. So depending on whether you have the ability to do more, it sounds like you do, then I think that SEP IRA could be a great way to go. Have you ever done any financial planning with a financial planner, Craig? No, we have a person we work with here locally, and we meet with him once a year, sometimes twice, and he's managing our loss and investments to the degree that we've invested.

And I've not gone back with him to deal with this excess money. I don't know, I almost feel like I want to look around a bit and find out if I can just be a little more creative. Well, I think the key is to do some planning first, just to determine what is your ultimate goal based on your lifestyle, and how many years you're planning to work, and what you anticipate the value of the business will be down the road once you sell it, or transition out of this work. What are you ultimately trying to save? Because we don't want to just save for saving's sake, we want to ultimately have a goal so you know how much you should be targeting to put in your business, how much you should be targeting to put away on an annual basis. And it could be that fully funding those Roths is enough, but if not, that's where the SEP or the simple or the individual K could be another great option to get some tax-advantaged money growing for you on a long-term basis. But having that plan so you set those financial finish lines and establish those goals I think comes first, and then we open the accounts and we fund them out of your excess cash profits from your small business to achieve those goals over time.

So if you're looking for an advisor to do that planning for you, I'd head to our website, MoneyWiseLive.org, click find a CKA, and you don't have to hire that individual to manage the money, you could just pay somebody for their time to do the planning, and then you could either use that person or someone else to actually manage any additional accounts you decide to open and fund out of this roughly 75,000 that we're saying is available for long-term investing because you don't need it for debt or emergency funds or anything like that. Does that make sense, Craig? Yes sir, great idea. Okay. Okay, very good.

MoneyWiseLive.org, just click find a CKA. We appreciate your call today. Beth is in Indiana. Hi Beth, how can I help you? Hi, how are you? Thank you for taking my call.

Yes ma'am. We owe about 4,000 left on our house, but the bank is telling us that we'd probably, you know, be a good time to refinance and possibly to fix things up, so we keep that homestead tax, is that what it's called? I just want to get it paid for so then we can use the money paying on our mortgage to pay off our son's student loans. What's the best thing to do? Well, keep in mind, the reason the bank is telling you that you need a new mortgage or they want you to refinance or they want you to get a home equity loan in place is because that's how they make money, and there's nothing wrong with that.

They're in business to make a profit, but that doesn't mean that's in your best interest. You know, there was never really a good argument to pay mortgage interest for the tax deduction, but now with the standard deduction raised so high, it makes even less sense because very few people even qualify to deduct the interest payments, but even if you can, it still doesn't make sense to be in debt for that reason. So I love the idea of you all wiping out that mortgage. You've only got 4,000 to go. You tear it up. You've got the peace of mind to know that you own your home free and clear, and you're unencumbered, and now you're no longer making that mortgage payment, which as you said, then frees up margin for you to apply to your next priority, which I love the idea of you paying off student loan debt because at some point you all are going to be completely debt-free. You're going to be able to increase your giving if you want to and be able to save for the future and know that you owe no one anything, which is a great place to be.

So there's no reason for you to go refinance or open a new line just because the bank is telling you to. In fact, I would encourage you not to do that, okay? Oh, yes. Thank you so much. All right, Beth. We appreciate you listening and calling today. Thanks very much.

St. Louis, Missouri. Hi, Sherilyn. How can I assist you? Thank you for taking my call.

I really love your show. My question to you is, I did a credit line increase on one of my credit cards, and so they said that it would be a hard impact on my credit if they do it, so I said that was fine. And they also let me know that it would affect my credit score, and I didn't know how much that would affect it, so I was wondering if you would know when they do a hard impact, what is the percentage that would affect your credit score? I think my credit score was at 600 or greater.

Okay, great. Yeah, you would want to know what that credit score is, and you can check it out at Credit Karma. That's creditkarma.com.

You can get it for free. You may also have a credit card. Many of the credit card companies now offer free credit scores. I would know what that is just as a good baseline, and I would be checking your credit report at least three to four times a year, and you can do that in annualcreditreport.com free of charge just to make sure there's not any inaccurate information or accounts that are not yours that are showing up that are there by error or fraudulently, so you can get that cleaned up. In terms of this hard inquiry, that's just essentially where you authorize a lender to pull your credit for the purpose of considering whether you're a good credit risk because they want to know whether or not to extend you credit, in this case increase your line. That hard inquiry does cause your score to go down, but typically it's not more than 20 or 30 points, and it will be temporary. You know, it'll come right back up, so unless you're out seeking a loan beyond this credit line increase, you know, you're shopping for a car, you're refinancing your mortgage, I wouldn't worry about it because any impact is going to be temporary, and if you're carrying balances on anything, which I'd love for you not to be, but if you are, you know, that credit line increase is going to make your credit utilization go down, which is a good thing. The credit utilization is just simply the percentage of your total balances that you're carrying versus the total available credit.

You want that below 30%, so increasing the available credit is going to cause your utilization to decline, which again is in your favor, but that hard inquiry is going to be a temporary minimal drop, and I wouldn't worry about it unless you're actively shopping for a new loan. Okay? Perfect. Thank you so much. That lets my heart down.

Okay, thank you very much for the questions. God bless you. You're very welcome, Cheryl Lynn. We appreciate your call today.

May the Lord bless you. Well, that's going to do it for us today. We've covered a lot of ground. We talked about investing and debt and credit scores and giving and social security and a whole host of issues.

Here's the good news. God's word speaks to all of it, you know, but if we want to simplify it, we recognize that ultimately it comes down to living within our means, avoiding the use of debt, having some margin or some savings in our lives. I would say setting long-term goals is number four and number five is giving generously. And if we do that consistently over a long period of time, then we've done our part to manage God's money wisely. And I think we should always be asking the Lord, how much is enough? You know, what should my lifestyle look like?

I don't need to take my cues from the word, from the world. I want to take my cues from the Lord. And so we've got to be on our knees saying, Lord, what would you have me to do? How much is enough for us? What should we be spending? And more importantly, what should we be giving?

Well, we want to help you figure out God's heart for your finances together each day here on MoneyWise Live. And I hope you enjoyed our time together. I want to say thank you to my team today. Gabby T was answering our phones. Deb Solomon was producing today.

Amy Rios Engineering and the amazing Jim Henry providing research today. Hey, thanks for being along with us. I hope you'll come back tomorrow and join us. I'll be here and we'll see you then. May the Lord bless you. Bye-bye.