5 Roadblocks to Retirement

Today's version of MoneyWise Live is prerecorded, so our phone lines are not open. Proverbs 21, 5 reads, The plans of the diligent lead surely to abundance, but everyone who is hasty comes only to poverty.

Hi, I'm Rob West. Applying that verse to retirement, it means having a long-range plan that accounts for possible setbacks along the way. Today I have five roadblocks to retirement that could delay the day you quit working.

Then we have some great calls lined up, but please don't call in today because we're prerecorded. This is MoneyWise Live, biblical wisdom for your financial decisions. Now I know some of you younger listeners hear the word retirement and you think, that's too far off to worry about now. But the truth is, you should be thinking about retirement from the day you start your first job. That's how you can plan for and overcome the obstacles I'm going to lay out for you now. The first is no doubt the most obvious, not saving and investing enough.

I said and because you want to do both. Saving refers to your emergency fund. If you don't have one, start building it today. You want to have three to six months living expenses in your emergency fund.

This needs to be kept liquid and accessible, but not too accessible. Set up a savings account at an online bank like Ally, Marcus or Capital One 360. Then set up an automatic transfer from your checking account into that online account.

Most banks will let you do that. Use that money for only true emergencies like a job loss or unexpected medical bills. Whatever you take out, put back in as soon as you can. What does an emergency fund have to do with retirement? Well, it protects you from having to interrupt or worse, tap into your long-term investments. Now about investing, your goal should be to put away 10 to 15% of your income toward retirement. It's critical to do this early in your working career to take advantage of compound earnings and long-term gains in the stock market. If your employer offers a 401k plan with matching contributions, take full advantage of it. Those matching contributions are essentially free money, so contribute enough to max them out. Your contributions are tax deferred until you begin taking distributions in retirement. If your employer doesn't offer a 401k, you can still open a tax advantaged IRA, either a traditional or a Roth. Generally, the younger you are, the more you'll benefit from a Roth over the traditional. Either way, your contributions are limited to $6,000 a year in 2021, $7,000 if you're 50 or older. That's the what and where for investing.

Now for the how. Inside your 401k or IRA, you'll have options for how you want to invest those assets. And to keep things simple for now, just consider low risk and higher risk. Subtract your age from 110.

So if you're 30, that number would be 80. Since you have a long time before retirement, you can comfortably put 80% of your assets into mutual funds and stocks, the higher risk category. You would then put the other 20% in low risk, fixed income securities like bonds. Now as an alternative, you can put your contributions in what's called a target date fund.

You choose one that's pegged to your anticipated retirement date and the fund manager rebalances your assets between low and higher risk securities for you. Now we've spent a lot of time on saving and investing, but not having enough in those accounts is the biggest obstacle to retiring one day. So the second obstacle to retirement is job loss. Too often, you don't even see it coming.

Who could have predicted the COVID pandemic and the loss of 30 million jobs practically overnight? Well, this is where having an emergency fund is critical. The third obstacle is the loss of your ability to work such as an illness or injury. The Social Security Administration says that 25% of 20 year olds will become disabled before they retire.

Usually the work interruption is temporary and you can overcome it by having disability insurance, another must. The fourth obstacle is avoidable for most people, but far too many fall victim to it, debt. It's a major reason many people have to delay their retirement plans.

The only solution is to learn to live below your means so that you not only avoid debt, but have leftover or discretionary income for saving and investing. The interest you pay on credit card debt will far exceed any earnings in your retirement account, so you're actually losing ground. Now the fifth and final obstacle to retirement is the premature death of a spouse. It's financially devastating even in dual income households. It will delay your retirement plans and derail them. The solution is adequate life insurance with a death benefit of 12 to 15 times the salary that is lost. I recommend term insurance.

So there you have it, five obstacles to retirement. All right, we're going to pause for a short break. This is MoneyWise Live. We'll be right back.

Welcome back to MoneyWise Live. I'm Rob West, your host. Thankful that you're along with us today. Hey, our team is taking a bit of time off, so we're not in the studio, so don't call in, but we've got some great questions lined up in advance. I know you'll benefit from what we're able to share today. We're going to begin in Knoxville, Tennessee for this segment, and Tanya, thank you for calling.

How can I help? Hi, thank you for taking my call. I have some properties that I'm about to sell, and with that money, I've got two options. What I'm thinking that I would be better to do with it, and I'd love your advice on what would be the better choice. So as you know, I'm from Knoxville, Tennessee, so I'm at the foothills of the Smoky Mountains where there are a ton of rental cabins.

So one option I could do with my profits from the sale of my property is I could buy a rental cabin and have that as a long-term investment, or I could take that money and pay, I could completely pay off my house, and I would be completely debt-free. So I'd love to know what your thoughts are. Well, tell me how you're processing this. You know, as you think about it, which one gives you greater peace of mind? Which one are you leaning toward, and are you married, and if so, what is your spouse think?

Yes, I'm married, and we have prayed, and we talk, and we don't know, because you know, biblically, you can think about that the Lord tells you to invest your money and to use it, but then you're also not supposed to be in bed either. So in the grand scheme of things, I'm 46 years old. In the grand scheme of things, I'd like to be able to set myself up to where, you know, in a few years, I've got some profits coming in through the rental cabin. So to me, that makes more sense in the long run, but we're also, you know, in the world of COVID, and I don't know what that's going to do for vacation rentals, and you know, if I pay off my house, if I lose my job, or anything like that happens, then it's paid for, and I'm completely debt-free.

So yes, I don't know. Yeah, well, I'm glad you all talked through it. I mean, you're right, you know, borrowing is permissible, and I would say, even according to Scripture, and I would say there are certain rules I'd love for you to use when you're borrowing, or when you're continuing to carry debt as opposed to paying it off, which you would have the ability to do with the sale of this property, and that is that the economic cost is less than the economic gain, meaning this is an appreciating asset. So, you know, it should appreciate more perhaps than the debt service.

Number two, that husband and wife are in complete agreement, and that, you know, you've calculated the debt service into your budget, which obviously you've been paying on it for some time, and you've been able to make that work. So, I think you making this decision, if you and your husband felt comfortable taking this money and deploying it into an investment property, there's nothing kind of out of bounds on that as we weigh it against Scripture. I will also say, though, that paying off your home is never a bad idea. You know, the peace of mind that comes with that, I think clearly in Scripture we see the change in the relationship from master to slave is one that we want to get ourselves out of as quickly as we can.

And, you know, if you all were to decide to do that, I don't think you'd ever look back and say that was a bad decision. It would also give you the ability with the savings of the mortgage payment each month to, you know, accelerate perhaps your savings that could ultimately result in you, you know, buying another piece of property down the road. The only caution I would have with regard to doing what you're describing with the vacation property, and I understand you're in an desirable location, it's beautiful there, is, you know, are you going to be paying a premium for this property over even one to two years ago, just given what's happened in the housing market? You know, each locale is different and this being a vacation area, it may or may not have been affected in the same way. But I would want to understand, you know, what are you paying today and where were prices 12 and 24 months ago and are you paying even or going to be asked to pay beyond what truly is, you know, market value based on comparables because of where we find ourselves in the housing market?

And if so, is that going to put you at a disadvantage right now versus let's say one to two years down the road where you're paying top dollar and that's going to eat into some of your profits, whereas, you know, you might have the ability to buy something a little lower later. I would also want to understand just kind of what has been the resiliency of this market that you're talking about over the last year. Have they continued, you know, apart from the shutdowns where everybody was, you know, had to stay home?

Have they been really affected? And so I'd want to, you know, have you get in there and understand kind of what's been happening in the market with somebody who's really knowledgeable and has firsthand experience. Have you already been a landlord, Tanya, with this property you're selling? No, the property I'm selling is land, so there's nothing on it.

But I have owned a vacation rental somewhere else on the coast before, so we have done that before. And I can tell you from the cabin now, they are premium from what they were a year ago. They've gone up like everything else has gone up, so they definitely are higher than they would have been a year ago or a year and a half ago for sure. Yeah, and that doesn't automatically mean we're going to see a softening, although I think, you know, as inventories increase, we already have seen a bit of a softening in the housing market.

Although I don't think we're in a bubble situation, I wouldn't, it wouldn't be hard to convince me that we're going to see prices decline slightly before they go higher, you know, over the next 12 to 24 months. But I think the biggest question is just, you know, do you and your husband have a real conviction about being debt free, being out of debt? And if so, I wouldn't hesitate to do that. And I don't think you'll look back with any regret. And then secondly, if you're comfortable carrying this debt and you really want to have this asset for your future, there's nothing wrong with it. But just go in with your eyes wide open in terms of what are you going to be spending? How much above market value?

What's happening in this market? And are you prepared to be a vacation, you know, rental landlord? And all the things that come with that, I'm glad to hear you have some experience and it will certainly help being local to this property. But, you know, you're taking on basically a part time job. And so you just need to go in with your eyes wide open on that as well. So I think you're free to pursue whichever path you want. I would just pray that the Lord would give you all unity and one heart in this decision. And if one of you, if only one of you even has a real conviction just to go and eradicate that debt, then I would just take that as the Lord's leading to do that. But if you're both in agreement about moving toward an investment property, then I think you just need to go in with your eyes wide open, get some real competent advice from a real estate professional who knows the areas and including these rental properties you're talking about to make sure that this is the opportune time.

Because the other option is you sell, you put the property, the proceeds in cash and you wait and you can never go wrong with that as well. So I'm not going to give you a definitive answer, but it sounds like you're on the right track and hopefully some of that will help. All right. Let's head next to, well, it looks like we're going to stay in Knoxville, Tennessee. Hi, Elaine.

How can I help? Yes, I sold a rental property just recently and so I am about 68. So I'm and I am not interested in being a landlord any longer. I am a widow and I have no debt.

I had actually, until you had your, your speaker on today, I had assumed that our next step in the economic cycle was going to be inflation, but that seems to have kind of been shot down. But so anyway, I mean, I'm in a pretty good situation, obviously, where and I shouldn't have to touch this money. I mean, I want it long term to service, you know, anything that comes up.

I already have long term health care. I've got anyway, I have. So anyhow, I just have this money and I was, I want to keep it safe. So the only thing I can, I just, I just don't know what to do.

Yeah, very good. Well, I think the first question, Elaine, is are you wanting, when you say you want to keep it safe, do you want to guarantee meaning are you willing to take any risk with it in order to get, you know, not an eight or 10% annualized return, but, but a bit more than you would get in CDs and savings accounts or through an insurance contract of some kind? I'm really, I'm not at this point, I don't really want to have much risk involved with this money at all.

So what, what were you thinking? Well, the only reason I say that is it just gives, it really limits our options. I'm not saying it's the, it's a wrong decision to say, I don't want to take any risk, but that's really the first question you have to ask. Because if you say, I want to eliminate all risk, you're really left with either CDs, certificates of deposit, which right now are paying very little or high yield savings accounts with FDIC insurance. Apart from that, you know, if you move out to anything else, apart from a guaranteed insurance contract, like an annuity, then you have the, you know, you're going to be assuming some level of risk. And so, you know, for now, that means getting about a half a percentage point to maybe 0.7, almost maybe to three quarters of a percentage point in terms of an interest rate. Now that'll move up over time. But as you know, that's not a whole lot.

I mean, you're not even keeping up with inflation at that point. I think if you wanted to move into some risk categories, then what I would recommend is you get an investment advisor that could build a very conservative and what would be called a stable portfolio where there might be a exposure to stocks of maybe 20% to 30%. You'd have to work through that. And that would over time provide the growth engine to the portfolio. But keep in mind at any given time that may be down, but you would go into it knowing I'm not going to touch that. If it goes down, I'm going to let that recover, you know, over the next five or 10 years and let that move to higher ground. And then with the rest of the portfolio would be a mix of cash and CDs and maybe some bonds which also have the ability to lose value but should be more stable. And the goal for a portfolio like that with maybe 70% fixed income and 20 to 30% in stocks would be maybe instead of a half a point to 1% a year would be maybe 4% as a goal. So I think that's really the decision point here. If you said, no, I just want to protect it, then I'd put it in a high yield savings account with FDIC Insurance at Marcus or Capital One 360 or Ally Bank and let's just wait for interest rates to come up.

And in the meantime, it would be backed by the full faith and credit of the United States government and you wouldn't have to worry about losing a penny because the government would protect it. So hopefully that's helpful to you. We've got to hit a break, but you stay on the line. We'll talk just a bit more off the air. This is MoneyWise Live!

Biblical wisdom for your financial decisions. We're taking some time off today, so don't call in. But back with more questions right after this. Stay with us.

Thanks for joining us on MoneyWise Live. I'm Rob West, your host. Our team is off today. We're enjoying some time away from the studio, but that didn't stop us from scheduling some great calls in advance. We're going to go back to the phones in just a second. But because of that, don't call in. There's nobody here to take your call. We'll be back quickly though. So when you do have that question, it's only a matter of time before we'll be here ready to receive it.

Just not today. OK, let's head to the phones. Fort Myers, Florida. Hi, Annette. How can I help you?

Hi, thank you so much for taking my call. I am in the process of getting ready to refinance my mortgage, but I'm beginning to think that maybe I should pay it off. But if I do pay it off, it's only going to leave me a little bit, you know, very little cash, liquid cash. But of course, I could build that back up again because I'd be putting my mortgage payment right back into savings. So just wanted to get your thoughts on that because that's really what I have in the bank right now. That's all the cash that I have. Yeah, I'd be really nervous about you depleting all of your cash. I love the fact that you'd be debt free and I want you to take that seriously. But I don't want you to be completely dry of emergency reserves.

I'd really love for you, Annette, to have three to six months. Now, I realize you could build it back up because you wouldn't have a mortgage payment. But that interim period, you know, I'd rather you not have, you know, depleted your funds that you would otherwise have available. So perhaps, you know, what we could do is kind of a hybrid here where, you know, maybe you start to accelerate the payoff a little bit beyond the monthly payment and or, you know, try to take any surplus you have to continue to build your savings so that you could get to a place where you'd at least have a couple of months worth of, you know, expenses in emergency reserves, then pay it off and then take that mortgage payment and not find anywhere else to spend that. But just use that to replenish your savings until you get back up to three months expenses. But I don't think now's the time to do it just because it would bring you down so low. Does that make sense?

It does make sense. I do have some money invested that I could always pull from if I was desperate. I also I pay off my credit cards every month, so I'm not in debt anywhere else. And I really don't foresee any other expenses coming up. You know, my car, I'm good for three to five years.

My AC is okay. But one of my goals is to be, you know, to get my mortgage paid off. Okay. How much would you have left if you paid it off in full? Probably about $2,000. Okay. What are your monthly expenses total? monthly expenses or maybe, let's see, what am I here?

I would say probably about $1,000, maybe $1,200. Really? Wow. Okay. Well, I mean, if it's that lean, then obviously, and that would be without a mortgage payment or including your mortgage payment?

That would be including the mortgage payment. Yeah. Wow. Okay. Well, I mean, if you'd still had a couple of months worth of expenses, and now all of a sudden, your monthly need is going down, because you don't have a mortgage payment, then, you know, you could plow that right back into savings and bring that back up to six months expenses, you know, in just a few months, and now you're completely debt free, you've got a fully funded emergency fund, and then you can redirect all of that money into longer term savings. So I think given your conviction here and that to be debt free, and given that you have such a lean monthly need, because you're living so modestly, and because you know, you'd be able to take the margin and replenish that, and you've demonstrated you can do that just by way of what you're telling me about how little you're spending every month, then I could get on board with this plan. And I think you'd be delighted that you did it.

So I'm going to give it a thumbs up. Okay. Oh, I think we lost you. I'm glad you called today, Annette.

I hope that helps you. But we appreciate your call very, very much. You know, folks, there's nothing like being completely out of debt.

We should all make that a goal at the very least by the time we reach that retirement season, if not before. And I'll tell you, I know from talking to so many people who've done it, you will never look back. We're going to pause for a brief break, but much more to come just around the corner. Stay with us on MoneyWise Live.

Thanks for tuning in to MoneyWise Live. I'm Rob West, your host. Hey, our team is taking some time off today, so we're not here. We're not in the studio. Therefore, don't call in. However, we've got some great questions that we lined up in advance. So let's head right back to our phones.

Richmond Hill, Georgia. Hello, Mike. How can I help you, sir? Hi, how are you doing? Very well.

I have a question for you. I own a house in Texas that is fully paid for. I'm renting it out. I make $1,300 a month on the rent. I pay $5,000 a year out on property tax. I have a house in Georgia that I live in. I've got a balance of about $212,000 on that house. And my question is, would I be smart to sell the house in Texas and use the profits to pay off the one I currently live in?

I'm just afraid of tax issues and those kinds of things going forward. Yeah. Yeah.

It's a great question. So obviously, the money that you have, you're in addition to, well, you don't have a mortgage on it, but other than the $5,000 in property tax and putting some aside for maintenance, you're cash flowing $1,300 a month on that. So obviously, that would go away, but it would be offset by, I assume, your ability to pay off in full your primary residence. Is that right? Correct. Correct. Okay. All right. And would that give you some more peace of mind to know that you were completely debt-free?

I think it would. In some sense, like I said, my biggest fear is how this is going to impact me in the area of taxes, both on the sale of the house and then also filing my personal taxes every year. I don't have mortgage situation going on any longer. And I just wonder if it's going to be a tax nightmare for me if I do that, even though my house here would be paid off. Yeah.

Yeah. Well, I mean, you're going to pay some capital gains on the gain in this property. For most folks, that's going to be 15% based on the income that you have.

And so, you know, you could go ahead and think that through. Basically, it's the final selling price minus the cost of the purchase plus any house improvement costs and transfer costs. And so that would help you with, you know, what your capital gains would be and the amount and then, you know, it would probably be 15%.

You'd have to check with the CPA to confirm that. So it's not a significant amount of money. And, you know, right now, I suspect, depending on where you're at in Texas, you know, just given where housing prices are, you could probably really maximize this asset. So it perhaps is a good time to sell. I think the key is, you know, what would you do then with the money, you know, you're recouping out of this in terms of if you were already funding your mortgage payment, that means you have enough to cover it. Are you really just kind of offsetting the 1300 that's coming in versus getting rid of that mortgage payment?

And if so, then, you know, that's a great move there because you've lowered your lifestyle. And then with any excess, you could begin to build that back up and perhaps get another, you know, investment property down the road or redirect that into a more passive investment that doesn't require your time and attention, especially as an absentee landlord in another state for you to maintain that property. But I wouldn't be terribly concerned about the tax effect. I'd really be looking at this more about what is the most appropriate asset for you?

Is it stocks and bonds or is it real estate? And you know, do you want the upkeep and oversight of being a landlord versus, you know, you being completely debt free and, and then being able to save for the future in another asset class? So give me your thoughts on that. Yeah, I have a property manager out there who, you know, does a pretty good job of taking care of the tenants and upkeep and so on and so forth like that. So it's not been a real hassle.

I've had it up for rent since 2010, I believe, and it's real good tenants. So it's just something to think about. I was really more afraid of the taxes, what kind of predicament those might put me in.

Yeah, yeah. Well, I wouldn't be terribly concerned about that. I mean, you obviously want to understand what the taxes will be and know what that's going to pull out of your profits. So I'd probably consult with your CPA just to get a good handle on what is your gain and what is the capital gains tax rate that will be applied and then what you'd be left with in terms of the proceeds. And once you know that number, I think at the end of the day, it's a decision that comes down to one, do you have a conviction around being debt free?

And number two, where is the best place for those funds moving forward? And, you know, I think, you know, that'll make the decision pretty clear at that point. So we appreciate your call today. Thanks for checking in with us and feel free to check back and we can help along the way.

Let's head to Ohio. Hi, Martha. How can I help you? Hi, Rob. I just want to say first off, I really appreciate you're in your team's ministry.

I do listen frequently. But my situation is I have learned from your broadcast that you can use your RMD and have that go directly to a nonprofit organization or to my church. And I'm not old enough yet for my own personal IRA to do an RMD, but I have an inherited IRA. And it's been my understanding, this is traditional IRA, that I cannot convert that to myself. It has to remain in the inherited status. But can you gift directly your RMD out of an inherited IRA?

I can't really get a direct answer on that. Yes, you can. So for an inherited IRA, the QCD is reported as an after death distribution for required minimum distribution purposes. So you would just want to keep an acknowledgment of the donation from the charity for your tax records.

But I would consult with your tax preparer. Do you have somebody prepare your return for you, Martha? I do. And I did reach out with this question, but I don't know.

She's just been extremely busy, but it's been over a month and I still I'm still not getting a response. So I don't know if maybe I'm getting to the point I might need to go through your organization to find a tax preparer that is in your organization. What would you recommend? Sure. Well, yeah, I mean, you could certainly connect with a certified kingdom advisor there in Ohio. If we don't have someone in the tax and accounting area, you can ask for a referral. But I think the key is you want somebody who's really going to be a good fit for you, who is able to communicate with you. I realized during the height of tax season that may take a little bit longer, but just generally speaking, you know, it should be somebody that gets back to you with your questions and answers that you need.

But at the end of the day, yes, generally speaking, you should be able to do a qualified charitable distribution even with an inherited IRA, which would be great for your tax purposes and for the benefit of the ministry. But I would always run this by your tax preparer just to make sure that it's been reviewed based on your specific situation so they can weigh in and let you know exactly what needs to be done. And if you need to connect with a CKA, you could do that on our website MoneyWiseLive.org. Just click Find a CKA. Martha, we appreciate you listening and calling today. May the Lord bless you. Folks, we're going to pause for a break, but we'll be back with much more after this.

Stay with us. Thanks for joining us today on MoneyWise Live. I'm Rob West, your host. Our team is taking some time off today, so we're not actually in the studio. This is prerecorded, so don't call in. There's no one here to answer your call today, but we lined up some questions in advance that I know you'll enjoy.

And so let's head right back to our phones. Ed is in Indianapolis, Indiana. Hi, Ed. How can I assist you, sir? Hi. Thanks for taking my call. I'm in a really, really bad situation.

It's just so big. I don't know how to deal with it, so I haven't done anything with it over the years. And finally decided to call you guys for some advice. Wife and I have small business for a few years, ended up the first time trying to be responsible for our own taxes, and $200,000 I guess over the years built up in back taxes. Have since shut down the business. I'm working now for another company, so I'm back on the deductions and on that tax deductions, that kind of thing. But $200,000-ish in back taxes, $200,000, $150,000 in student loans. We had $50,000 with a collection agency right now from a debt consolidation loan that we weren't able to keep up with. And about $10,000 in credit card debt.

And I mentioned my mortgage and the two cars that we don't own, so. Yeah. Okay.

Well, Ed, I know this must be a huge weight on you. And I think the first step is just what you're doing right now is to say, I'm not going to ignore it any longer. I actually want to do what I can, realizing that I can only do what I can do. You know, the decisions that have been made in the past are those decisions. We can leave those at the foot of the cross and ask the Lord to redeem this situation.

We can learn from it, grow from it, and then try to be found faithful moving forward to do everything you can. And in God's power over time, let's see if we can get all of this paid back, or at least paid back to the extent folks would be willing to work with us to compromise and, you know, take settlements of certain amounts against all that you owe. What about from a legal standpoint? Is there federal tax liens and judgments against you at this point? Well, I've had the taxes prepared.

We haven't filed them yet. So and I haven't heard from the government yet. I don't want to leave it that way. And that's not the right way to do it. But I know that, you know, eventually they will come knock on the door. So that hasn't no, that officially hasn't happened yet. All right. But you have a tax professional who has some experience and offers and compromises to the IRS and negotiations, that type of thing?

Not really. I mean, you know, I have an acquaintance or a friend who is an accountant, and she's given me some advice a little bit, but I haven't officially. So back when I had this business, I did some trade with a CPA.

He's the one prepared my taxes for me. At that time, they were current. So I mean, this year now, at this point, you know, we're talking a period of eight years. I'm sure of all the interest and penalties. It's, you know, going up.

But yeah, there's no question about it. Well, you have to file your taxes to be eligible. But I would encourage you to have somebody who's really a specialist in this type of negotiation with the IRS.

There are no guarantees, of course, but it's quite possible that you could have that 200,000 in back taxes reduced significantly, because they know that they can't get blood from a stone. So, you know, they often lower the amount owed to something the taxpayer can handle and, you know, can work with you on payment plans. The key is to get that started and, you know, begin moving towards something that at least at least keeps you in good standing based on an agreement that you come to if you can get to that place.

So if you stay on the line after we're done here, I'll connect you with somebody that really is a specialist in this area and perhaps could be of assistance to you. Beyond that, you know, I think that's the first priority. The second would be the credit cards and, you know, Christiancreditcounselors.org could be a great resource to you at some point to actually help you once you're ready to get these interest rates reduced and, you know, perhaps get you on a payment plan to get these paid off.

Of course, with student loans, you're going to want to talk to your loan servicer and see if you can change your repayment plan, you know, look at deferment or forbearance, which is temporary, but, you know, if you qualify for it, that could be a great start. Obviously, at the end of the day, you only have so much that you have available to begin to move in the direction of these. So I'd probably start with the tax situation first, see if you can make some headway and then move from there. Just asking the Lord to give you wisdom. I know this is going to be, you know, really difficult just emotionally and it's a heavy burden that you're carrying. And so we just need to, you know, you need to stay close to the Lord. Ask him to walk with you every step of the way.

You and your wife focus on what you have and, you know, continue to be grateful for that so that you don't get discouraged. But I believe the Lord will honor your desire to be found faithful here, even if it's going to take a long time and it's going to be painful in the process. So what I'd like to do is I'm going to pray for you, but then I want you to hold the line, Ed, and I'm going to get your information and get you connected with somebody who I think perhaps could help you on these taxes. Okay? Thank you.

All right. Father, we just lift that up to you and we know, Lord, we're all sinners. We all need the blood of Jesus to cover our sins. And Lord, you've said that we can lay them at the foot of the cross and you are a God of restoration. And I just pray that you would honor Ed's desire to be found faithful, to no longer ignore these mistakes that he's made in the past and to be found faithful moving forward, that you would give him wisdom. You would give him favor with each of these organizations, the government, the lending institutions, and that there would be a path forward that would allow him to begin to make progress toward honoring these obligations, which we know we should do and his desire is to do so. So we commit this entire situation to you, tell you we trust you, we love you. We ask you to be close to Ed and his wife during this season and that they learn from it and emerge with a more intimate, close walk with you, which we know is most important. So we commit this to you in Jesus name.

Amen. Ed, we appreciate your call today, sir. And all the best in the days ahead. Keep us posted and you stay on the line.

We're going to head to South Carolina. Hi, Renata. How can I assist you?

Hi, thank you for taking my call. My question, I have two short questions. The first one is I have two little kids less than two years old and I'm wondering how we could start saving up money for them, what programs are available to help them out to save money for the future for college or whatever they can use it for. And the second is there any financial advices in South Carolina you could connect us to?

Yeah, I'd be happy to. Well, thanks for those questions. I'm glad you're thinking about saving for the future for those two precious little ones. I do want to make sure even though I love the idea of you all saving for them for college, I want to make sure that you've addressed other priorities first. And what I would say those other priorities are would be one that you're giving proportionately to your income so giving systematically. Number two that you've got an emergency fund and that's your emergency savings reserve. I'd have if you if you can at least three months expenses in that liquid savings. And then I would want you to be saving for the future for your future first, making sure you're putting something in a company sponsored retirement plan if you have it, at least up to a matching portion but a goal of 10% of your income going into that retirement plan. And then finally that you don't have any consumer debt meaning high interest credit card debt.

So tell me about those four. Are you on track with those giving and emergency fund and retirement savings and no credit card debt? Okay, yeah, we're given we do that at 10% as well as we support not some nonprofits as we are led to do so. Emergency fund we do have at least for three months, me and my husband as well.

We both have for one case through our jobs. In terms of debt, we do have about $7,000 in credit card debt, which we are planning to get rid of it by January 2022. The other thing we do all is car payment for one car, which is about 33,000. And the major big debt for the two or five success to then loan debt to us combined, it's going to be about 380,000.

Wow. And are you paying on that now? Or is that deferred? We are paying on that the student loans. Okay, do you know how many years it's going to take you to pay it off based on your current plan? Currently, we enrolled in as an income driven repayment. And with that, after you pay all 12 up to 20 years, the rest is forgiven. And so far, we've paid up to six years of that. The other thing is we both work in the federal facility. And I know there's a loan forgiveness program, which I'm trying to look more into that if you pay consistently for 120 months without missing, you can qualify for your loans to be forgiven.

Yeah, I would look at the fine print on that. It's the public service loan forgiveness program PSLF. And the problem is very few people actually get their loans forgiven. Now, the good news is the Department of Education just recently said they're going to relax the rules because they realize it's a problem.

And they want to make it more available to a lot more folks. So it's a great time for you to go ahead and take a look at that. And you may be able to count a lot of the payments you've already made, these six years of payments, I believe you said, toward that 10 years or 120 qualifying monthly payments.

So I would check that out. Just go to studentaid.gov and look for public service loan forgiveness. You could also read about some of the pending changes coming down from the US Department of Education around that loan forgiveness. But keep in mind, you've got to really understand the fine print because what I don't want, Renata, is you all to believe you're headed toward forgiveness, only to find out that you don't qualify because of some caveat that you didn't understand going into it.

So you want to really research that well and make sure that you talk to the US Department of Education about that. You know, that's going to be my biggest priority for you guys. I mean, that's a massive debt. I realize you know that.

Obviously, if you're going to get it forgiven, that's great. In terms of where to go for saving for college for the kids, a 529 college savings is going to be your best option. Go to savingforcollege.com and you can find out which state's 529 plan is the best for you.

You can set up one for each child and then set up an automatic deduction as you make contributions to those accounts. We appreciate your call today. Folks, that's going to do it for us.

MoneyWise Live is a partnership between Moody Radio and MoneyWise Media. I want to say thank you to my team today, Gabby, Jim, Deb, and Amy. I hope you'll come back and join us next time. I'll be here and look for you then. May God bless you. Bye-bye.