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Hazardous to Your Wealth

MoneyWise / Rob West and Steve Moore
The Truth Network Radio
December 6, 2021 5:07 pm

Hazardous to Your Wealth

MoneyWise / Rob West and Steve Moore

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December 6, 2021 5:07 pm

Sometimes we make conscious mistakes with our money. Sometimes they’re the result of just not paying attention. Either way, those mistakes can be hazardous to your wealth. On today's MoneyWise Live, Rob West will talk about some of those harmful missteps. Then he’ll answer your calls and questions on various financial topics. 

See omnystudio.com/listener for privacy information.

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So so so smart. Because as diligent makes rich is sometimes we just not paying attention. Either way, they can be hazardous.

Well talk about those missteps first.

Today it's all your calls at 800-525-7000 800-525-7000.

This is moneywise live let that opening verse discourage you but take this opportunity to learn from your mistakes and here's a verse to encourage you. Proverbs 90 team 20 reads listen to advice and accept instruction that you may gain wisdom in the future who can use more wisdom.

Right. So here are some common money mistakes.

You can correct or better yet avoid them in the first place. The whole idea is to hang onto the money. You've worked hard to earn and to get that money working for you.

So the first mistake. That's hazardous to your wealth is living paycheck to paycheck or put another way, spending all or most of what you are. If you do this, you're guaranteed to have nothing left at the end of the month. Sometimes this is called paying yourself first, no matter what put a little something aside each month where you don't see it and don't spend it.

Set up an automatic transfer of some amount of money from your checking account into savings. Then adjust your spending so that you meet all of your monthly obligations. You'll probably have to cut out some things that you've grown accustomed to now. Sometimes people say they just don't make enough to save what that's true for some but it's a small minority. Almost everyone can cut something from their spending a worthy goal is to save 10% of your income if you can do that you will very soon start to see your savings grow.

Once that happens, all you have to do is leave it alone which leads to our next money mistake.

Not having an emergency fund, but if you begun to set something aside and savings that becomes your emergency fund. Keep going until you have at least three months living expenses, but six months worth is definitely better which leads us to the next thing that's hazardous to your wealth and that is paying interest on consumer debt, like credit cards and you get there by not having an emergency fund. So when an unplanned expense pops up. You have to go into debt you eliminate that mistake by not making mistakes one and two, but if you already have debt.

The mistake is paying only the minimum monthly requirement. If you look closely at your monthly statement. You'll probably see a box that tells you how many years it will take to pay off your balance. If you pay only the minimum. Don't be surprised if it's 15 years or longer.

This is a good opportunity to rethink how much things really cost. Let's say you go out to dinner by yourself and you end up putting $30 on your credit card. If you were to pay that off. According to the minimum monthly payment. It would end up costing you 50 or $60. The next decision that's hazardous to your wealth is buying a new car. Now we have nothing against buying a new car.

It's the fact that some people have to buy new cars or at some point there wouldn't be any cars left on the road, but you should only buy a new car if you saved up enough to pay cash for. In fact, the goal should be to always pay cash for a car, whether it's new or used. You can only do that if after you've paid off a car loan you keep driving that car but continue to make payments to yourself into a savings account.

You then use that money to buy your next car when you need it eventually by continuing to make payments to yourself after a loan is repaid, you'll have enough to buy the car outright.

It may take a few cars to get there, but eventually you'll make it so by dependable late-model used cars until you can pay cash for a new one. Won't that be a glorious day. The next money mistake. That's hazardous to your wealth, especially if you're young is not setting up a Roth IRA. Once you have your emergency fund in place to start putting money into a Roth and you can do this even if you're contributing to a 401(k) at work. You can contribute $6000 a year into a Roth with after-tax money 7000 if you're 50 or older, when you retire you can withdraw that Roth money tax-free from our last thing that's hazardous to your wealth is buying too much house. Too often we think of a house as an investment that always pays off, even though the housing collapse of 2008 proved differently and that's especially true these days with home values rising, so keep your mortgage payment to 25% of your take-home pay and make sure you have at least 20% for a down payment so that's her list of things that are hazardous to your wealth can take steps to avoid or limit your calls or next. 800-525-7000 on Rob Weston.

This is moneywise live biblical wisdom for your financial decision to have you along with us today.

I moneywise live as opposed to just motor will begin taking your calls and questions on anything financially love to hear from you guidelines open at 800-525-7000 whatever is on your mind today financially speaking, would love to get you into the mix.

800-525-7000 were going to begin today in Wisconsin. Amanda, thank you for calling.

How can we help to question is actually about how much you need to earn to qualify for Social Security for an extended amount of time the situation is.

My husband and I are dairy farmers.

About 20 years ago, our tax advisor told him to start paying me as an employee.

So proprietor and outstanding at that time we could take our health insurance as a deduction.

After we couldn't do that anymore.

He still continued to pay me but I had heard the other day that you need to earn a minimum of it was like 5000 some dollars a year.

I don't know it. They said they raise that amount so I was this kind of wondering how much do I need to earn a year and how many years do I have to earn that qualify. I'm 56 years old until you know I'm looking at retirement down the road. Very good. Yeah, I can certainly understand that is so your income is obviously reported to the IRS to earn credits toward Social Security. The number of credits you need to qualify for benefits is 40 and you earn those credits when you work and pay Social Security taxes. Now the number of credits only determines if you're eligible or not.

You don't get any extra benefits for earning more than 40 I here's the key, though, you can only earn four credits per year and there based on your total wages and self-employment income for the year so that means you might work all year to earn four credits. Or you could earn enough for all four in less time. The number you mention what is correct it's $5880 this year to get the maximum four credits so you get one credit for every 1470, or a total of 5882 get all four in that amount of earnings that it takes Amanda each year to earn a credit may change, but that's this year's number so you earn 5880 you get your max of four credits you've got have a total of 40 before you're eligible so if you do the math of four into 40 it's can it take you 10 years of earning that amount.

If you get the max. Four credits every year to get to a place where you qualify now the amount that's paid to you is based on your 35 years of highest wages so when you start collecting at a minimum of age 62 upwards of 70. That would be the Output in terms of when your benefits stop increasing but once you get to at least 62.

You can start receiving benefits in the amount that your paid is based on your age because if you start taking it before full retirement age, you're can have your benefits reduced. It's a function of your age and your 35 years of earnings and every year you have earnings higher than one of your 35 previous you'll replace one of those and for any years were you don't have wages over 35 years there any use zero for that year so there's two numbers that you're focused on one is the minimum number of credits to get the to get benefits. And that's the magic number 40 and then the amount is a function of your highest 35 years of earnings and the age that you start receiving benefits realize there's a lot to that. Does that make sense to you. I was wondering did that amount change over the years. There always been that $1470 know that number does change I don't have the historical number in front of me but it did has changed over time and increase so it has been lower than that in prior years, and then like I want to talk to somebody you know about the specifics of what I have the best person to talk with. Well I would go straight to the Social Security Administration. You can schedule an in-person visit or a virtual visit and what they will do. Amanda is pull up your particular record based on your Social Security number and give you actual numbers based on projections that they can see one great check-in during the year is the report that you should get each year around your birthday.

That gives you an analysis of what's been paid in what you press the projected benefits are based on your work history, but it any time you can schedule that appointment to get more detailed information and ask questions. So go to SSA.gov. That's Social Security's website and I set up a visit and I think that I give you the information you need. Okay thank you very much all right, thank you for calling and listening. We appreciate it very much. 800-525-7000 is a member call to Naperville, Illinois hi Susan, how can I help you. Medicare has been. He was born in Canada. His parents emigrated from Ireland born in Canada.

They were planning on living in the United States right now. Of time and when he was 13, I brought him here and my children and so they became fitted in 1962 and he always thought he would then and so he voted hard just a security card where you know we've been out married 40 years and this January campsite security and and yeah but then you need to show proof of chapter and he had passed Ireland. He and he had like statement security saying you know you pain and carry and tell since January. We haven't been able to get social security for him I was going to retire last year and being a teacher and I couldn't because he wouldn't qualify for Medicare. And if I quit working. He would not cover any major no physical issues, and I mean after working so hard on my life and neither one of now. He got a job and because to cover him, but I'm afraid to retire because he loses his job then Miami for Medicare so very frustrating. We've contacted Congressman and lawyers and we piled something much immigration servant, but we haven't heard back there so slow and behind his because of the pandemic.

Sure, I sell it's very frustrating because he always saying you're not like you have a green card and and apply when he was 18, but nobody ever said that he thought when it became. He now Mac. I think that's what parents thought it well there. Dad now know we can't know what they were thinking. Yes, it sounds like you're doing all the right things.

I'm sorry to hear what you're going through. I know it's frustrating and you're right.

All of these departments, the IRS US citizenship and immigration services. They're all behind. As a result of books being displaced. Not able to be in the office, processing the information as they normally would have due to the pandemic and so unfortunately it's a waiting game. I suspect you did the form from the US citizenship and immigration services of 565 which is the replacement for citizenship document and this was basically a form to basically provide proof of a US citizen and ill. If you discover that he is in fact not then than that would be the question as to what steps need to be taken to do that. Hopefully there was an oversight.

He is in fact does have citizen status and you can have that verified. But I would if you haven't already, go to the website it US CIS.gov.

That's the US citizenship and immigration services you're able to file that in 565 online which is the application for replacement of the citizenship document that would be obviously the proof that you need. Clearly if if you discover that he is in fact not a US citizen and that's a whole another process that you will need to go through but I would do everything you can, just to see if in fact he is and get that to that certificate of citizenship that you need to be able to prove that it will certainly pray that the Lord give you some wisdom and hopefully that will come through sooner rather than later. I realize it is a difficult spot that you rented so will ask the Lord to intervene there. Thank you for calling.

Keep us updated. Would love to hear how this turns out well, more of your phone calls just around the corner after this brief break will be talking to Anthony in Chicago next up is looking to refinance his home and got room for you as well. Here's another 800-525-7000.

This is moneywise live joining us today on moneywise is most delighted with this you looking for a financial professional that is a planner investment advisor tax and accounting specialist who shares your values well certified kingdom advisor might be exactly what you're looking for these men and women have met high standards and training integrity and also from a regulatory standpoint and they been especially trained to bring a biblical perspective of money you can find a certified kingdom advisor in your area you visit our website moneywise live.org just click find the CK back to the phone today with a few lines open 800-525-7000 in just a moment Thomas in Cleveland wants to know with the potential settlement.

What he should do with that money Robin in Fort Myers is wondering about when she can begin collecting Social Security, but next up Anthony in Chicago.

Anthony, how can I help you very good thinkers are. God bless you folks for years.

My late. My late. She got me she had been addicted to YouTube channel movie good place to listen to for sure yes or situation I get a bottle home back in 2002 and I ran into some financial trouble.

After about an went all the way Bankruptcy Court and wound up got led us to accompany that was able to do loan modification and right now we have been for probably about three years now. Michael Troy all payments on time and God open door financially and we also have a 2021 vehicle that we own time with.

We will have any trouble cannot build right now but just thinking that as I'm getting older, my age of the prospect try to find out this logical strata refinance strata dishware or possibly sale. It out from under the house on, you do have some rear off okay very good so is the if you were to continue paying on the mortgage.

I assume you have a balloon that would come due on the backend. Is that right yes sir okay and it this point. Do you have the credit score and the income to be able to refinance his home, assuming it's the right home for you and fits your budget. Could you refinance to a new mortgage that would allow you just to pay it out and fit it into your budget know what I have to get my wife score pool and also I would be this time I will be adding my wife walked to the loan because we first get it on my wanted her added on at the husband-wife some reason they screwed it up and find out later that really put me on a long what they got work together for good, because Our credit school part sure that she wasn't on very good. Let me ask you what you believe the home is worth what right now probably be 70,000 but that's just pulling out number out of their you believe if you were to sell it today, you would only get 70,000 what you owe on my last statement that 70 grand on but you also know that balloon okay well here's the key. I mean, I think the first question is, is this the right home for you. Can you afford this home if by adding your wife and with your credit school where it is. You can refinance it in the principal, interest, taxes and insurance payment would be no more than 25% take-home pay for your budget. I think that's the best way to go. So I'd start there by just exploring that option. Check with your local bank or bank rate.com. If you find you can't qualify for mortgage will then move forward from there. Keep us posted moneywise thanks for joining us today on moneywise live talk to me and to having a mortgage and fits in here to make sure that you go into it with down to equity in one of the challenges as we run right up the mortgage right up to the value of the home. We don't have any equity we put ourselves in a spot where we could potentially be upside down unable to sell the home. So we want to help margin. We also want to make sure that payment fits well within our plan and usually that's ketamine keeping that under 25% of your take-home pay. But when you factor at all in the key is not buying too much house such that it really cramps your ability to do other things to give first Avenue margin. Save for the future, and so getting that right is key in this low interest rate environment. We have the opportunity with a decent scratch credit score to keep those expenses down, but we certainly want to be careful at the home we purchase and not trying to push and stretch to buy too much else is going to limit flexibility in other places.

But Anthony. We appreciate your call today very very much but said back to the funds we got a few lines open 800-525-7000 two Fort Myers, Florida hi Robin, thank you for your patience. How can I thank you so much for taking my car got perfect. Perfect timing because I just got one that you talk about a little mailbox and I looking me to Google a question is, can I still keep working and collect at 62 met one question answered and come yes so you can start collecting Social Security at age 62, your benefits, the will likely be reduced by about 1/3 of what they would have been if you continued working until age 66 or 67, so you'll take up about a 30% reduction in that's locked in, doesn't mean it won't increase the way you would increase it from that point would be to continue working and replacing any of your 35 years of highest wages. If you are more than any of those, 35, you can replace some of those that will bring your benefits up and you have cost-of-living adjustments but that reduced base amount that you begin collecting will be locked in early start at about 30% below what you would receive if you'd wait to full retirement age now in terms of you working you can absolutely continue to earn money. Once you start benefits you will have a reduction though of a dollar for every two dollars you are over 18,960.

So let's call that 19,000.

Any amount you earn over 19,000 you going to see a dollar drop off for every two dollars you earn over that amount. Now that's not a permanent reduction, though, that money that's withheld will be a reimburse to you later in increments.

Once you reach full retirement age until it's all been fully restored so that doesn't concern me as much as the fact that with you start taking it 62 you're really going to, lop off this roughly 30% that you would have received and every check if you'd waited till full retirement age did you follow all that Robin Hill and every penny of that desk as to how MS certainly yeah that's certainly one option that means if you think about it in terms of getting about an 8% guaranteed return. You know with the IRS in terms of letting that continue to accrue versus what you might be able to get otherwise. You know you can run the scenarios and you may come out ahead. Or maybe not.

You just have to see. But yet that is certainly one option if you go and take it now starts sucking it away, get it invested. You may do better. I think that the question is just whether you want to assume that risk or you'd rather have the guaranteed increases that would come by delaying those taking those benefits. Given that you really don't need the money right exactly about yeah something to think about and you can begin playing with the numbers and running some scenarios and see which one you're most comfortable with.

But I think the key is starting with the, the facts and figures, which, hopefully, now you're better equipped to make that decision. We appreciate you listening and calling and hope to talk to you in the near future Cleveland, Ohio hi Thomas, how can help user on my where I have a lot my garlic to call me back love of all my wallet. I want to know if I will not all go back and that that might expand my money, Lanny and I can move on the local coffee near okay. I'm trying to understand exactly what your question is.

I understand you return terminated from your employer.

You're now in the middle of a lawsuit with that former employer that may result in a settlement. Is that right okay and you're trying to determine if an often allowed Larry, my time and I'll be have to take it down right now. Let's go. That's right yet the question is whether you want to leave it where it is a role it out. How much do you have in the retirement account, like almost 200,000 okay yeah I would look at rolling that out. I think the question is whether you want to move into an IRA or to an employer retirement plan edit that your new employer.

Wherever you land if they have a 401(k) you could roll it in their. What are your plans at this point for work now and I 401(k) but now I hear okay very good now so you got a couple of options you can leave it there and roll it into this new 401(k) at any point in you'd want to contact your HR department to find that out.

They may allow you to roll that in prior to when you're eligible to begin contributing out of salary deferral so that would be one question. If not and you want to go and get it out of their current employer. Although there's no urgency there. You could roll into an IRA and what I would do Thomases find an investment advisor that could manage that for you. Make the buying and selling decisions on your behalf as to which investments to choose you could find a certified kingdom advisor there in Cleveland that you would interview and select on our website. Just go to moneywise live.org click find a CK and I'd interviewed two or three Thomas find the one that's the best fit for you and then that person could open the IRA for you, you'd move the funds into that IRA. That's not a taxable event and then based on your goals and objectives. The investments would then be selected and managed for you moving forward. So you know that that's growing on an appropriately diversified basis and then as soon as you're able, you can begin contributing at your new job. To some extent you as to an advisor know I'd I'd interviewed two or three certified kingdom advisors there in Cleveland so moneywise live.org and click find a CK and I would start with that option first.

This is a significant sum of money. So I think finding an advisor can manage this for you would be your best option. So I would do that right away and then find something they can. Thomas, thank you for your goals will be right back in moneywise live things are turning into my driveway because this is biblical wisdom for your financial decisions.

Just a moment, will head back to the phones we got some great questions from Rochester in Florida and Spokane at Fort Myers. But first, it's Monday. Bob Dall joins us each Monday for our mark market commentary Bob is cheese chief investment officer across mark global investments where investments and values intersect. You can learn more, cross more global.com and Bob, I hope you fed your seatbelt on, since I talked to you last and that we've been talking with SPECT and volatility to move up in both directions. We talked a week ago was exactly what we got most of it was to limit the downside. Today we have a big update back where he started exactly right.

What is the headlines you're looking at what you see me open it to have this volatility with, unchanged. Yes, some big positive is a big negative. The positives remain good economy, very strong earnings and the absence alternatives Tina there is no alternative. On the negative side of the ledger. We've got the Fed slowly taking the punch bowl way because they are finally like the rest of us worried about inflation and despite the good things I said about the economy and earnings. There were good, but they're slowing in markets much prefer acceleration to the upside, not to slow down and I can give you 10 more on each side, but the primary one drop suspects notes that the Federal Reserve, it seems like there's been a lot more talk as of late that they may accelerate some of this monetary policy that were talking about in terms of contracting what they have been doing previously what are you seeing there for sure a minute conversation shifted from the downside risks to employment to the upside risks of inflation and so they had a slow process in mind when they put the beginning of the tapering of bond purposes per purchases in place a few weeks ago and now with the inflation, rearing its ugly head a little further think we better accelerate that they're not saying it this way, but basically sand then we have the opportunity to raise rates sooner than we originally thought. If we want to and need to know question about that's about as we head into next year. I know you're preparing to prepare your 10 annual predictions do not can ask you for a preview but you have said you expect Stockstill to outperform bonds. It's the place to be with a balanced portfolio right yes is exactly where we are but don't expect stocks to be up. You know, 10, 15, 20% like they offer lots of investors this year it's going to get tougher from here.

It's going to be bumpy and will be a lot of stocks to go down the wall go up, which is why this is a great time to begin thinking about hiring a professional to manage your investments where you have previously you've not had once bought a lot of our listeners are calling asking about crypto's obviously this is been in the news in the last week in particular just because of the downside volatility which I think underscores the reason why we don't want to be speculating with God's money on the high flyers for you to weigh in on that conversation coming at it from a fairly ignorant standpoint, what, when, I don't understand something well enough bypass and leave it to somebody else and that's where crypto falls and I know enough to say crypto technology is for real and it will have some staying power. But who the winners and losers are what the regulatory environments going to be over this stuff. We just don't know Rob, so you get big moves and in both directions, I say to people. If you've done well. God bless you. Take a little profit speaking is doing well this year and perhaps will finish here. There's a real opportunity Bob to be generous with some of those investment returns that it would otherwise generate capital gains rate well said if you had thousand dollars in the stock market 18 months ago today that's worth about 100,000 stocks of doubled since the pandemic low and so I say to people you expect out of $100,000 necessary 50 before take some of it and and give give it away give it to so many worthwhile causes to build the kingdom.

Very good.

Bob always appreciate your comments you enjoy your week my friend will talk to you next Monday. Talk next Monday but by Rice Bob Dole, chief investment officer across mark global investments. You can learn more about Bob's funds and the firm across mark global.com but it back to the phones. Claudette is in Fort Myers: how can I help we doing hello my eye children I my really I am one great grandma. I have new fill the younger one between 1/2 between the age of 3 to 29 so bad thinking because this doing well. We should not include them in know where we should focus on young guard grandchildren and great-grandchildren talking with that because we can look at the combine KK and grandchildren that just one day, like effect that have like a dystopic sure Claudette Junior has been talk prior to marriage or have you talk since then to decide whether or not you want to keep assets there were accumulated prior to your marriage separate for your respective children or whether you wanted to combine everything and then distributed to the on that basis.

Combine everything right now at eight where we Had passed. I bet that [it, but now we are going to do it over and about 20 years old okay very good and I think it's probably will certainly time to update before you do that, Claudette.

I would really consider how you want to approach this in terms of the amounts that you want to go to each person and in one of the principles that Ron blue talks about in his book splitting errors is that if you love your children equally. You will treat them uniquely. What he means by that is no there's this idea that we don't necessarily have to distribute that which were going to distribute to errors in the other place to distribute it would be ministry give it away but that which is going to go to errors we don't automatically have to give the same amount to everyone based on their need and what resources they have been whether others have a greater need than perhaps one of the other children or grandchildren. So once you talk and pray through that how you want that distributed you come up with the rationale you can change it. Over time, but you go ahead and make some decisions and then you would have the will updated to reflect those decisions and if you needed a trust to be able to distribute it beyond your life to minor children over time based on certain criteria that could be put in place all of that would be done in the context of the conversation in the documents that will be drafted by an estate planning attorney and I recommend somebody who shares your values, somebody who's a believer, but I think the starting point is to figure out exactly how you want to distribute those assets and on what basis because the documents in the legal instruments just reflect that and carry out your wishes in order to help you make those decisions. I want to send you a copy of this book that I just referenced this cold splitting errors e.g. IRS splitting errors.

It's by Ron blue and I think it's the best book on this topic, not in the howl of of estate planning and wealth transfer but in the why the decision-making process from a biblical perspective. So I would start there, make those decisions that have the documents drafted and then I think the next step is to communicate to your heirs why you've done what you've done and how that's going to happen so that all of that is clear and not being discovered after the fact.

After both of you pass away, so listen Claudette used down the line will get your information will get this book right out to you. I think it'll be a real blessing to you, but let's take one more call today before we wrap up John's in the Spokane Washington the right answer.

I want taking my call real quick. I retired from the military about 28 years ago and my income took a major reduction.

You said earlier in the show but Social Security benefits are based on your part. Five. How your earning that they have to be 35 consecutive year. Although I lose my higher earning military pay but no they do not have to be consecutive. So it's just straight up your highest 35 years of earnings are averaged to determine your Social Security benefit, along with your age based on you when you start claiming Social Security benefits so it's not consecutive. It's just the highest 35 of all the years you've been paying in to the Social Security system and any years that to you earn a higher amounts.

Moving forward, can replace any of those 35 that were lower than that of moving forward even after you begin claiming your benefits is that makes it started cleaning out months ago and not concerned about losing my military wages. Gotcha yet know that will be the case as long as you paid Social Security taxes that's can account and you'll you have the average of those highs 35 and we appreciate you checking in with us. John hopefully that's the good news you are looking for. Sir God bless you. Well folks that's good about do it for us today. We covered a lot of ground. There is a lot to talk about when it comes to managing God's money wisely. But when we think about it all boils down to these simple principles like give generously going to live within our means. We want to avoid that have some margin in our financial lives, we can accomplish our goals and then lastly we want to set long-term goals so we know where were headed. We do that will put us in a position to experience God's best. Recognizing his ownership in our role as stewards of his resources want to live with contentment and live well. Thanks to my team today Melody, Dan and Jim, thank you for being here moneywise.

Not as a partnership relies media come back and join us tomorrow


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