Year-End Tax Tips

Do you know the difference between death and taxes?

Death doesn't get worse every time Congress meets. Hi, I'm Rob West. It's fun to joke about paying taxes but it's even better to minimize what we legally have to pay. I have some great year-end tips to help you do that. Then it's on to your calls at 800-525-7000. Call that number 24-7-800-525-7000.

This is MoneyWise Live. Biblical wisdom for your financial goals. Don't have a Roth IRA? Well, this may be the time to make a Roth conversion. You'll be converting pre-tax dollars into post-tax money so you'll owe taxes on it.

But there's a method to the madness. When you withdraw those funds later in retirement, you can do it tax-free. This is an especially good strategy if your income was low in 2021.

COVID's done that to a lot of people. But if you expect your income to increase next year, it's better to pay the taxes now when you're possibly in a lower bracket. You can also deduct contributions of up to $3600 into a health savings account if you have access to one. Also, while there's no federal deduction for contributions to a 529 education savings plan, many states do offer them. So consider opening a 529 plan. Alright, here's our next tip.

Give to charity. It's more difficult to get a deduction that way since the standard deduction for an individual was raised to $12,550 or $25,100 for married couples filing jointly. But there's a temporary provision still in place that allows you to take a $300 deduction for making an eligible gift to charity like your church. It's a $600 deduction for joint filers. Make sure you take it on your 1040.

Just keep in mind that it has to be a cash contribution. Alright, next, don't forget to take your required minimum distributions. The IRS requires you to take a certain amount of money out of your pre-tax retirement accounts each year once you're 72 or older.

Failure to do so is costly. You'll pay 50% in taxes on every dollar you fall short of your RMD. And if you have to take an RMD, consider making a qualified charitable distribution or QCD with some or all of that money. That way your favorite ministry is blessed and your RMD is satisfied without owing anything in taxes.

Check with your retirement plan manager for specific details on how to make a QCD. Okay, here's an important one that won't actually lower your taxes, but it will make sure you take full advantage of a deduction you've already taken. And that's making sure you use all of the money in your flexible spending account at work if you have one. Contributions to your FSA were made with pre-tax dollars, so they've already lowered your adjusted gross income. But in most cases, the money in your FSA is use it or lose it. So spend it on qualified items before the expiration date.

Check with your HR department for more details. Now, if you haven't gotten gifts for everyone on your Christmas list, consider giving money to family and friends. The rules say you can give up to $15,000 per year per individual without having to file an IRS gift tax form. It's $30,000 for couples filing jointly. You can go over that amount without paying taxes, but any gift money above the limit is counted against your lifetime exclusion, which right now is $11.7 million.

So that's not likely to be a problem, but you will have to file the gift tax form, however. 2021 has been a great year for the markets, but if you happen to own stocks that didn't do well, maybe even lost value, now's the time to consider what's called tax loss harvesting. With this strategy, you sell stocks that have declined in price to realize a loss. You can then use that loss to offset capital gains made on other investments this year. If you were extremely unfortunate with your portfolio this year and actually sustained more losses than gains, you can take an additional deduction of up to $3,000 against your taxable income in 2021. And if you lost more than that, you can roll these losses into future years up to $3,000 annual limit. We hope you can take advantage of some of these tax tips.

We have to pay under Caesar, but only what the law requires. Your calls are next. 800-525-7000. I'm Rob West and this is MoneyWise Live. We'll be right back. Thanks for joining us on MoneyWise Live. I'm Rob West, your host.

Delighted to have you along with us today. We've got some phone lines open. We'll be taking your calls and questions in just a moment. Here's the number, 800-525-7000. Call with anything financial. We'll apply biblical principles and see if we can give you some advice that will help you make the next step.

Again, 800-525-7000. Hey, we would love to invite you to be a supporter of this ministry. MoneyWise Media is listener supported. We also are a not-for-profit ministry, which means your contributions are tax deductible. We rely on your support to do everything we do, especially here at the end of the year.

We would invite you to consider prayerfully supporting this ministry. If you count yourself among our MoneyWise community, perhaps you listen to this program with some regularity and you've benefited from some of our advice or resources. We'd love to have you help us plan for next year through your contributions before December 31st. You can give quickly and easily online at MoneyWiseLive.org. You can just click the donate button. You'll also find a physical mailing address or a phone number if you'd rather give that way. Again, MoneyWiseLive.org. Just click the donate button and thanks in advance. Again, a few lines open today.

800-525-7000. In just a moment, we'll be in Kingsland, Texas. But first, Amelia is up today in Naperville, Illinois. Hi, Amelia.

How can I help? Hello. Well, my question was about a deduction when you're filing your taxes. Is there a limit of a $300 deduction regardless of how much you give during the year?

Yes. Well, it just really depends upon whether or not you're taking the standard deductions. So, the $300 deduction that you're referencing is for qualifying charities in 2021 or $600 for a married couple.

That would be kind of right off the top. And so, that allows you to get that deduction whether you take the standard deduction or not. But beyond that, if you take the standard deduction, then you wouldn't be able to claim any other deductions.

If you itemize, however, that would be your opportunity to claim additional deductions against your charitable contributions. Do you follow that, Amelia? I do. And thank you very much. You are very welcome. We appreciate you listening and calling, and thanks for your generous heart.

800-525-7000, two lines remaining open. Ray is in Kingsland, Texas. How can I help you, Ray? Thank you, Rob. Thanks for taking my call.

We watch you, listen to you faithfully. Thank you. That's emergency funds. I know you've talked about it multiple times and usually suggest three to six months holding there. So, my wife and I delayed our Social Security, and so we're living off of that plus a supplement of $500 out of other sources. So, is that emergency fund the total, the Social Security plus the $500 or just the $500? And then the follow-up question, how liquid do these emergency funds need to be? Should it be sitting at a bank somewhere or if it's an account where I can reach it and say in less than a week, you get it to me if I needed it? How does that work?

That's it. Yeah, it's a great question, Ray. And what we're looking to do with emergency funds is be able to not only offset unexpected expenses, things that come out of left field, but also replace lost income if you were to lose a job. Now, when you're on Social Security, that risk is lower because you're not relying on an employer that could terminate your employment, therefore you lose your income. So, to your point, your Social Security is fixed and you can count on that. But that number is also used in terms of total monthly expenses to get to a rule of thumb that's going to give you an amount that's adequate for the other unexpected expenses that can come and most certainly could come and will come in that retirement season of life.

Although the risk of a loss of income is low, you still have the risk of major unexpected home repair or something that just comes out of left field that costs several thousand dollars that you don't have to sell or liquidate some investments or you're certainly not relying on a credit card, that kind of thing. So, I think for that reason, I'd love for you to take your total expenses for the month regardless of the fact that you've got Social Security coming in to offset part of those and multiply that by three to six months depending on your comfort level. And that would give you really an amount that's set aside that is adequate to cover most unexpected expenses that might come out of left field. In terms of where to keep those funds, I really like keeping them in a separate savings account, Ray.

I like taking advantage of a higher level of interest even though that's relative. Today, that means about 0.55% interest but that's better than 0.001. And in order to do that, you're going to need to put that in an online savings account. That will also allow you to open an account that doesn't charge any fees and I would have that linked to my checking account which may be at another institution entirely and through the ACH system, you should be able to have those funds within one to two days with the click of a button.

I like that because you can still get to it fairly quickly but it's not sitting there commingled with your other funds that you're using for everyday expenses which just makes it one step removed and perhaps a little more likely that it won't be used for unintended purposes. But tell me what questions you have on all that. Those answer them very well. That's what I was looking for and I really appreciate it. Thank you, sir. Excellent, Ray. Well, thank you for your listening, sir, and Merry Christmas to you. God bless. Let's head to Wichita, Kansas where Antonio is today. Antonio, how can I help? Hey, how you doing today, sir? Doing great.

Thank you for calling. Oh, well, you know, I didn't think I'd get in but my question is, as I spoke to a young lady earlier, I have a home rental that I rent and someone mentioned to me that I should turn it into an LLC for tax purposes. What do you say about that? You know, that generally is going to give you some tax flexibility and I would talk to your tax preparer about that to determine whether it makes sense. A lot of times folks will use an LLC for personal liability protection. They do involve less compliance paperwork.

They're fairly easy to start. It can give you some other flexibilities around management and distribution of the assets if you need to, even privacy. So I think there are some advantages, certainly, Antonio, for you to conduct your real estate activities within an LLC. But from a tax standpoint, I would consult a professional tax preparer just to understand exactly what the difference would be based on your current structure versus the LLC. You know, the disadvantage really is just that they cost a bit more to form and maintain than a sole proprietor or a general partnership and the transferable ownership. And ownership in an LLC is often harder to transfer than with a corporation. So you just want to make sure there's enough benefit there for you.

So I'd start with the tax side and then the rest of it's going to be mainly on the legal side. Thank you for your call, sir, and we'll be right back. We're grateful to have you tuning in to MoneyWise Live today, biblical wisdom for your financial decisions.

I'm Rob West, your host. We've got a number of questions lined up here in advance, but we've actually got two lines open. Perhaps one of those two remaining lines is for you, 800-525-7000. Before we head back to the phone calls today, let me just remind you, I'd love for you to create a free MoneyWise account at MoneyWiseLive.org. That will allow you to post to our MoneyWise community where our coaches are answering your questions. It will automatically sign you up to receive our MoneyWise weekly wisdom email. And then if you become a pro user, which right now at MoneyWise.org slash pro is available at a discounted price for a limited time. You'll also be able to take full advantage of the MoneyWise app and schedule a time to meet with one of our coaches whenever you need it. They'll be there to encourage you, answer your questions and help you get pointed in the right direction.

Check all of that out when you visit our website MoneyWiseLive.org. We're going to head to Arkansas next where Linda is. And Linda, how can I assist you today? Yes, sir. Thank you for taking my call. I listen to your program nearly every day. And at one point you were talking about bitcoins.

I'm on Social Security disability and I'm able to pay my tithes and still have between 150 to 200 dollars, generally 200 left over. And I was wondering, and I'm nothing about bitcoin, but I think you said that or someone said that when Europe recovers, our dollar won't be worth anything. And so I thought, well, maybe that's something I should look at.

Yeah, I can assure you that wasn't me. I appreciate you listening regularly. So here's what I would say about the U.S. dollar. I mean, we have our challenges here in this country in terms of the amount of debt we've taken on in the last several years and then the decades before that. And through our monetary policy and just a whole host of issues, inflation has obviously picked up as of late. But we also have a very strong economy as well.

We have a very strong consumer. We have, for all intents and purposes, the strongest economy in the world. And I think that applies to the U.S. dollar as well, which is why even in 2008 and 2009, when we had a real financial crisis with systemic problems in the system, the dollar rallied.

Because there really is no alternative when you look across the rest of the world. And so I still have a lot of faith in the U.S. economy, which is why if, you know, with my money and what I would encourage you to do is to be a diversified investor following biblical principles, but with long term money as an owner of stocks and bonds with a risk level that's commensurate to your age and objectives. And I would not put Bitcoin in any category for investments. It's just too speculative, Linda. I think the technology behind Bitcoin is here to stay.

And, you know, there's still a lot of unanswered questions. The regulators are trying to figure out how to handle it. Just even this week, Congress was talking about some new rules on digital assets, and, you know, that has kind of spooked the market a bit. Visa's made some major moves into the crypto space.

And so I think we're seeing it become more and more mainstream. But that doesn't change the fact that it's very speculative and highly volatile. And for that reason, I would stay away with my investment dollars. I mean, if you just take what happened last weekend as an example, you know, between Friday night and early Saturday morning, Bitcoin's price fell more than 20 percent.

And that was just in a series of hours. Now, it had recovered a lot of that by Tuesday afternoon. But that kind of volatility, I think, just puts it out of bounds for prudent investors trying to be steady plotters, applying biblical wisdom to their investments. So if it were me, I would set that aside as an investment. And for that reason, I would be looking to invest on more of a sure and steady approach.

It's not going to give you the kind of the wild swings. And, you know, I don't think at the end of the day that's what you're looking for, though. Does that make sense? Well, all that did. But I'm still back to what you said, stocks.

I know nothing about stocks. Sure. Well, let's do this. And I heard you talk about Kingdom Advisor. Yeah.

Yeah. Well, let me help you with that. You said you have $200 a month to invest. So the first question I would ask is, do you have an emergency fund? Do you have funds set aside totaling, I would say, at least three months worth of your expenses? What it takes for you to fund your lifestyle for a 30 day period? Do you have three months worth of expenses in a liquid emergency fund?

No. That having been said, though, I own my car, I own my truck, I own an acre of land, I own my house. And I have about a year and a half worth of food. Okay.

Well, I like all of those things. So I think the next order of business is to build what I call an emergency fund. And I'd love for you to have three to six months expenses.

So if it costs you $1,500 a month to cover all your bills or let's say $2,000, I'd love for you to have between $3,000 and $6,000 in retirement. Some people want to have as much as a year's worth of expenses in a liquid savings account. Not invested at the risk of the market but available if you need it because the unexpected does come.

So I would take that $200 a month and for the next good many months, I'd use that to fund that emergency fund in a liquid savings account that's linked to your checking. Once that's in place, if you truly have a margin of $200 a month, then you could be an investor. And basically by systematically putting that into the market, you would be what's called dollar cost averaging, where you're buying whether the market's up or the market's down. When the market's down, you buy more shares of the investments you're buying for the same price.

And when the market's up, you're buying less shares. But over time, you're taking a concerted position in the market and you'll capture the broad moves of the market. Now, how would I go about investing $200 a month? Well, again, I'd make sure you have the right time horizon, which is at least five, preferably ten years on this money. And secondly, I'd probably use, in your case, if you're just getting started and you're trying to drop $200 a month in, I'd use what I call a robo-advisor, which is essentially where you'd own ETF, exchange-traded funds, so you'd capture the broad moves of the market through indexes.

Now, that may all be foreign terminology and if it is, I understand that. So, I would do a couple of things. Number one, when we're done here, I'd like for you to hold the line and I'm going to send you a copy of the Sound Mind Investing handbook, so you can read up and be an educated investor according to biblical principles. But then secondly, I'd check out a few of the robo-advisors just to see what I'm describing. I'd look at Betterment or the Schwab Intelligent Portfolios or the Vanguard Advisor. Any one of those three would give you a very low cost, very well-diversified investment solution that you could set up an automatic transfer into every month so that every month you're taking a position.

When those dollars are invested, you wouldn't incur any cost and then over time, you could build up quite a nest egg there. So, I think the first order of business is to get that emergency fund funded. Start reading this book I'm going to send you and then if you have other questions, don't hesitate to give us a call along the way. You hold the line, Linda, and thank you for checking in with us today. We're going to pause for a brief break. A couple of lines open on MoneyWise Live.

Here's the number 800-525-7000. We'll be right back. Stay with us. Thanks for tuning in to MoneyWise Live. I'm Rob West, your host.

Glad to have you along with us today. Taking your calls and questions on anything financial, let's head right back to the phones. Esther is in Chicago.

And Esther, how can I help you? Hi, thank you for taking my call. Yes, my question is we're wanting to buy a house and the reason we want to do it now is because we're concerned about inflation. Is it a good time to buy now? I know the prices are high, but won't they go higher with inflation?

Well, let's talk about this for a second. So, is this going to be a primary residence or an investment property? It would be a primary residence. Okay, and have you been renting up to this point or would you be selling a home? We're selling a home, but we can buy the home that we're planning to buy now for cash.

So, it would be a cash deal. I see. And that's even prior to selling the home you're in today?

Yes. And besides that, we have a place to live right now. We're living, I'm caring for my mother, so we're basically living at her place. Okay, very good. So, it's not like we need a house.

Yeah. Well, you know, if you have time and you could wait, I mean, there's an argument to be made that the housing market is a little overpriced right now. Nationally, the latest estimates are about five to six percent overvalued, but we're not in a bubble situation by any means. We have seen an incredible rise in the housing market in the last several years in particular, but it's due to real demand.

You know, there is just a lack of inventory out there. That was certainly the case this past summer. It's gotten a little better, but we're still short on the number of homes that are needed. You've got a number of factors, including the pandemic, which has caused a lot of folks who were living downtown in apartments to move out to the suburbs because they're working remotely and more and more companies are offering that option. You've got a lot of folks relocating because of high tax states. You've got millennials that are now coming of age where they're having kids and wanting a little more space. And so all of that put together has resulted in somewhat of a housing shortage, and it's just economics 101. When you have more demand than supply, prices are going up. And for that reason, you know, I don't think we're going to see housing prices come down dramatically by any means.

We may see a cooling of the rise in housing prices, but that's probably about it for the next couple of years. So for that reason, I think if you know where you want to go and you know the location, you know, you've done your research. You obviously, you know, you're paying cash, which is a good sign that you've got the financial wherewithal to do it.

I'd say you go ahead and proceed. Now, if you're not going to occupy that home because you're living with family and taking care of your mom, then, you know, you could certainly wait and look over the next year or two to see if we were to hit a recession or something like that. But apart from that, I would say, you know, as you sell your current home, you're going to benefit from the fact that it's a seller's market. You're going to get top dollar on it. And therefore, you know, even though you're paying, you know, top dollar for this next home, you know, it's being offset by what you're making on the home that you're selling.

So I think for those reasons, I don't see any real compelling argument for, you know, waiting on the sideline unless you're just not ready to occupy it and you'd like to see what happens economically in the next year or two. Does that all make sense? Yes. What I'm struggling with, if you have time, is that we sold a house that's a brick house with a brick garage and it's a whole house. It has everything except the basement. That's what we sold. But there's cost to selling. And so now the money that we have practically all is going into a frame house that actually it's not even a full house. It's half a house.

And it doesn't even serve our purposes. We would have to build a garage and there's a second floor. So that's a downside. But I'm just thinking, you know, is that a wise decision? I'm struggling with not, you know, giving up more than what I'm going to be getting. And maybe that's just the way it is.

I don't know. Well, this comes down to what is the right home for you, in my opinion. It has nothing really to do with where the market's at because if you look for a home that perhaps has all the features you're describing on the home you're selling and it's going to cost you a little bit more, well, again, you're making up for that in a sense by the home that you've sold because you're getting all the appreciation that you experienced in that home. So I think the key for you right now is less about timing and more about what is going to meet your needs in terms of the location, the type of home you want, the size home you want. Do you want multi-floor? Do you want ranch? What kind of construction materials?

How new or old? You know, whether it requires renovations, you want to go in and put your kind of fingerprints on it or you want to buy something that you can just move into and enjoy, you know, those are the decisions I think you need to make first and then you've got to determine your budget. What are we willing to spend and can we find the home that meets our needs within that budget? Not where we're going to get into a situation and stretch and buy too much house but, you know, based on your budget, buying the very best home you can that kind of solves for as many of these criteria that are important to you as possible. So I think that's perhaps the next step for you all is irrespective of the economy and the housing market, what is the right home for you? What are the non-negotiables?

What are the things you'd like to have? And then, you know, get a realtor that can help you really chase that down in the area that you're looking for to see how many of those things you can find, you know, within your price range. And if you can find it, I'd say proceed. But what you're describing about the home you're looking at in terms of what you're giving up doesn't sound like the ideal solution for you. So I'd give that some more thought and prayer.

Make sure you're using a professional to help you make those decisions and keep us posted. I'd love to know how it turns out. Thank you for your call today.

To Houston, Texas. Hi, Petra. How can I help you?

Hello. Yes, thank you. I was saying that I have some money saved, and I really don't know what to do to make it grow and just not have it sitting there. I mean, I'm new at all this.

I'm barely trying to figure this out. Yeah. When you say you have some money saved, would this be in addition to what I call an emergency fund of three to six months expenses?

No. I mean, I have an income of – I have an additional income that's just money saved. No, I don't have an emergency fund. Okay. How much do you spend roughly total on a monthly basis? With all my bills, about $2,000. Okay.

So I'd love for you to have at least $6,000 in a savings account, preferably $12,000. Do you have any credit card debt? No. All right. Any other consumer debt like car loans or anything like that?

Yes, I do. I'm paying on a car. Okay.

All right. How much do you owe on the car? About $20,000.

Okay. And what do you have total that you've got saved that you're looking to invest? $100,000.

$100,000. Okay. Tell me about your income. Are you on Social Security? Are you working? What are your income sources? Yeah, I'm retired.

I have an income of about almost $5,000 a month. Okay. Very good. Let's do this.

I'm going to ask you to hold the line. We're going to take a quick break. When we come back, I'll give you my thoughts on how you should approach this $100,000 that's surplus. This is MoneyWise Live. Stay with us. We'll be right back. Thanks for tuning into MoneyWise Live. I'm Rob West, your host. This is biblical wisdom for your financial decisions.

Just before the break, we were talking with Petra in Houston. Petra, I understand you have $5,000 a month coming in in retirement income. You've got a $20,000 car note. Your expenses are about $2,000 a month, and you've saved up about $100,000 that you're wondering what you should do with. I'm curious, at the end of the month, after all your bills are paid, what do you usually have left over out of the $5,000?

Well, I pretty much have most of my husband's retirement money. Which is about how much? About, I'd say, at least $2,000 or more. $2,000 a month. Okay.

Very good. So, you know, I think what you could do right now, last question, do you have a mortgage or are you renting? Or do you own your own? No, I own. You own the home. Great.

Okay. So, I think with the $2,000 a month, what I would do is start going after the car note. Let's try to get that paid off as quickly as you can. If you just added that $2,000 a month, plus the monthly payment you're currently paying. Let's say you pay that off in eight months, and that's going to increase what you have extra on a monthly basis. So, that'll take care of the car. And then I would set aside at least six months expenses, which would be $12,000 in a savings account that's linked to your checking account. And because you've got so much margin, I don't think you need any more than that.

Then the balance of what's left, which would essentially be about $75,000, maybe $80,000, you could invest. The only other thing, though, is you mentioned some renovations of $25,000. How quickly do you think you need to do those? Well, I'm really wanting to take care of this soon.

Like, you know, the beginning of next year. Okay. All right. Then I'd go ahead and set that aside as well. So, if we take the $25,000 for the renovations, plus the $12,000 for the emergency fund, that's $37,000. Let's call that $40,000 that you need to set aside in savings. That gives you $60,000 to begin investing.

At that point, I would probably connect with a certified kingdom advisor there in Houston who could help you get set up with an investing program that makes sense for you. Fairly conservative, but where you're going to get a little more return than you would get, you know, just by sticking this in a savings account. It is going to add a little bit of risk to it because any time we're investing any money, we have the risk of principal loss. But the idea is with the emergency fund that you have and with that surplus of at least a couple of thousand a month, and that's going to be even higher once the car is paid off, you know, you shouldn't have to touch that money. And the goal would be that you'd probably average, you know, 5% a year or so, which would allow that money to grow. And you'll be adding to it once the car is paid off.

So that would be my next steps for you. Let's set aside $40,000 for the renovations and the emergency fund. Let's add all your surplus to get the car paid off. And then let's look at investing the $60,000 and what you'll add to it once the car is paid off down the road. Does that make sense to you?

Yes, it does. But how do I go about finding the right, you know, where to invest it? Yes, advisor?

Sure. So a couple of options for you. One would be go to our website, MoneyWiseLive.org. MoneyWiseLive.org and click Find a CKA.

That stands for Certified Kingdom Advisor. I'd put in your zip code, find somebody, probably two or three in your area and contact them and tell them you're looking to invest about $60,000 and that you'll be adding, you know, a couple of thousand to it over time. The other option is you could connect with our friends at SoundMindInvesting.org.

SoundMindInvesting.org. They could assist you as well. And I think between those two options, you'll get some good godly counsel that can guide you in these decisions but you're in really great shape in the sense that you'll have a fully funded emergency fund. You'll be completely debt-free including the car.

You'll have the renovations covered and you'll still be adding to your investment accounts every month once all of this is done. So I hope that's helpful to you, Petra. Thank you for listening and calling. We appreciate it very much.

To Wheeling, Illinois. Hi, Caleb. How can I help you? Hi. Thank you so much for taking my call.

I really appreciate it. I'm 18 years old. I have had my first part-time job for about eight or nine months. And right now, all the money I get is going into a savings account. Ten percent goes to tithing and then a little bit of it helps to pay for my car insurance. And I know this is really general but I'm wondering is there anything else I should be doing with my money? Should I be investing it? I'm really just looking for a little bit of guidance advice, I guess, with what I should do with it. No, that's great.

I'm glad you're thinking about this now and you're obviously establishing some rhythms and disciplines, Caleb, that will serve you really well into the future. So you said you're bringing in about how much a month? Approximately $800 a month, I would say, probably.

Okay. And tell me how that's currently being allocated. What are you doing with the $800 a month? Out of every paycheck I get, it's just ten percent goes straight to tithing since every paycheck is about $400.

I get $75 and that goes to car insurance and the rest goes straight to savings or like $20 if I need to get gas or something. Perfect. Yeah, I love it. Are you living at home? I am, yes. Okay, so yeah, your expenses are very, very low. What have you saved up so far, Caleb? So far in my bank account I've got about $6,000 in savings approximately, so definitely in the lowest tax bracket.

Yeah, absolutely. And as you think about kind of the next couple of years, at what point do you feel like you want to be ready to move out of mom and dad's place and get your own apartment and are you thinking about buying a car? I mean, what are those major expenses you're looking at in the next couple of years? Yeah, so right now a lot of it is just saving up for college. I'm in my last year of high school right now, so a lot of it is just saving up for that. I haven't quite looked at getting a car yet.

A lot of it I just know is going to come with whatever. If I'm able to get any scholarships, any college loans, I'm going to have to take out over the next four years. So I'm not even at an apartment yet. It is basically all about college for me right now.

Got it, okay. And college is not paid for. I mean, you're going to need to cover that yourself either through what you save or through student loans or scholarships, right? More than it's probably going to be a good chunk of it, yes sir.

Yeah, okay, very good. So I think at this point I wouldn't be looking to invest. I mean, I think when you've got a surplus and you're in college and college is paid for and you've got a good saving set aside, I'd be looking at starting a Roth IRA just as soon as you can. But not right now because that's money that we need to have a 10-year time horizon on and right now you need to save as much as you can to cover the cost of college and when you need to buy a car and other expenses that will come, you need as much saved up as possible. So I would just say let's keep that money going into a high-yield savings account. I know it's not terribly exciting, the return that you're going to get on it, but that's not what's important right now because that money doesn't need to be at the risk of any kind of markets whatsoever. Where you could lose money because you need to be able to access it to pay for things in the next 6, 12, 18, 24 months.

So for that reason, I just stay on this current track. Work as much as you can, your expenses are low. Make sure you give first, which you have been and that's tremendous and everything else, you just sock it away in a savings account so you're ready to cover those expenses as they come. And then down the road, we can look at getting you started with a systematic investment of even $25 or $50 a month going into a Roth IRA, which will serve you really well, but we're a little premature for that. You stay on the line. I'm going to send you a copy of Howard Dayton's book, Master Your Money is Ron Blue's book, and that would be a great one for you.

And I think that will begin to teach you some of these biblical principles, but through all of the areas of financial planning. So stay on the line, we'll send you Master Your Money. It's our gift to you and I appreciate your call today. Don't hesitate to check back with us in the future.

Quickly to Topeka, Kansas. Hey, AJ, you're going to be our last caller today. Go right ahead. What's up, OG Rob? Hey, thank you.

You bless us more way than you know. Hey, my point is that, man, I just retired. I got like a good lump sum, probably about $80,000 or more going into a checking account. And I just don't know what to do with it. I mean, I'm going to pay some bills off. You know, I got like, I owe like $6,000 on a vehicle. I got a part-time job at Brandy's about $1,100 every two weeks. And then I got about $25,000 to do on my home. You know, but I just don't, I normally pay off some bills, but I don't know what to do with the money other than that. Yeah. Where is this money coming from, AJ?

Huh? Where is this money coming from? Retirement papers.

State of Kansas Retirement System. Okay. And how much are you going to receive? Did you say $80,000? Yes, sir.

Okay. And I heard you rattle off bills. And did I hear renovations as well on the house? No, I owe about $25,000 left on the mortgage. You know, $25,000 in our car, about $6,000. And I got a part-time job, I bring home like $500 every two weeks. Okay. And do you have any other expenses other than the $25,000 and the $6,000 that you need some money for? I ain't with my wife, but no, sir. I mean, I don't have any credit cards, but you know, we do have other credit card expenses. That's what I was wondering. Do I pay off the high credit cards or the low credit cards?

Yeah. Well, there's a lot of moving pieces here, AJ, that I think you would benefit from some help looking at all of it. I mean, my priority order would be, number one, what is your budget going to look like moving forward, if there's any changes coming as a result of your job situation, and really dialing into that spending plan. What does it take to fund your household on a monthly basis? And then match that with the income sources you have.

If you have a change in income, you're moving from full-time to part-time work, that's fine. But what are those income sources, and do you have enough? And then what is your system to control the flow of money in and out? Apart from that, I'd be looking to pay off the high-interest credit cards. I wouldn't do that with retirement accounts. I'd do that with surplus, and I'd use a debt management program. ChristianCreditCounselors.org is the way to go.

I'd make sure you have your emergency fund funded as well, but apart from that, I'd really be looking for you to get a full-blown financial plan. So you stay on the line, and I'll get you connected with one of our MoneyWise coaches. We appreciate your call today. That's going to do it for us, folks.

MoneyWise is a partnership between Moody Radio and MoneyWise Media. I want to say thank you to my team today, Jim, Amy, Dan, and Hunt. Thank you for being here as well. Come back and join us tomorrow. We'll see you then. Bye-bye.