Your Top 10 Financial Moves for 2022

Today's version of MoneyWise Live is prerecorded so our phone lines are not open. If you're still working on your financial New Year's resolutions for 2022, wouldn't a long list of options be helpful? Hi, I'm Rob West and you've come to the right place to get your list of top 10 financial moves for 2022.

We'll chat about many of them just ahead. Then we'll have some great calls lined up. But since we're not live today, please hold your calls until next time. This is MoneyWise Live, biblical wisdom for your financial journey.

Your 10 most important financial moves for 2022 is the title of the cover article in the current issue of Sound Mind Investing. Today, our guest is the author of that article, Joseph Slife. Joseph, welcome back to the program.

Well, Rob, it has been a while. Merry Christmas to you. And to you as well. Joseph, this article, which is available at soundmindinvesting.org, offers a list of about 75 possibilities. I know you urge folks to pick a personal top 10 for the year ahead, so I'd say you've definitely covered the bases.

Well, we certainly hope so. What we've done is to survey all of our SMI articles from over the past year, and we've categorized them by subject of things that relate to spiritual matters or getting financially stable, building an investment portfolio, things related to preparing for retirement and so on. And then in the online version of the article, Rob, we have linked, hyperlinked to each information about each of those things to an additional article that gives people more details. Now, obviously, all 75 ideas are not going to apply to each person.

It depends on one season of life and family situation and so on. But our annual top 10 approach is designed to help someone look at all the possibilities that fit who they are and where they are in their finances and say, you know what, I really need to do that particular thing and that one and that one. And ultimately, to pick 10, that can be their action items for 2022, sort of a to-do list, a list of resolutions, as you say, that'll help folks make financial progress in the year ahead. Well, I love this approach because a lot of folks just need help getting started. You've done that hard work for them, and picking their top 10 will be a great exercise.

So let's dive in and get to as many as we can. Joseph, what's first? Well, we always start our annual list, Rob, with a section titled something like First Things First or What's Most Important. And this is where we recommend the things that are spiritually foundation.

You know, at SMI, just like you do at MoneyWise, Rob, we look at financial matters from a stewardship perspective. God owns everything. You and I are stewards, managers, of what he entrusts to us. So one of our suggestions this year in this area is to practice living in conscious dependence on God. You know, the Lord is not just out there somewhere, and he's not to be acknowledged only on Sunday. So we're urging people to take time each day to recognize their literal dependence on the Lord for life and for breath and for everything, to quote the Apostle Paul from Acts 17. And we think it's a good idea for people to develop a habit, a daily habit, an hourly or even more often habit, saying short prayers throughout the day to acknowledge their powerlessness and God's power. And what this does is reinforce the idea, the truth, that God is our source and supply, and we serve him as stewards.

Another one in this section is to build your financial house on the bedrock of biblical principles. You know, Rob, we can never tell ahead of time what financial storms may come our way or when they'll come. No one could have predicted the things that have happened over the past year and a half or so. And we could have more stuff, more storms, in 2022.

We're not predicting that, but it could happen. And we believe if people will base their financial decisions and their actions on the protective principles, the stewardship principles that are taught in Scripture, they'll be able to weather those storms. Another one in this sort of spiritual section, Rob, is that if you have the spiritual gift of giving, then cultivate it. Every follower of Jesus is called to be generous. We all know that. But from the New Testament, we also know that God has given some people this special gift of giving, just as he's given some people gifts of administration or teaching or whatever.

So if you have that gift of giving or think you might, study what the Scriptures say about it and please make the most of that gift. Joseph Slive from soundmindinvesting.org. Today we're talking about your 10 most important financial moves for 2022. I'm Rob West. This is MoneyWise Live. Much more to come just around the corner.

Stay with us. Welcome back to MoneyWise Live. I'm Rob West, your host. Joining me today, Joseph Slive with Soundmind Investing. Joseph has recently written the cover article for the current issue of Soundmind Investing's newsletter. It's entitled Your 10 Most Important Financial Moves for 2022.

And perhaps you're still working on your financial resolutions. Well, the great news is this article offers a list of 75 potential resolutions for you to create a personal top 10. And Joseph, we started today with some ideas that we put in the category of spiritually foundational, which is a great place to begin. Now we move on to strengthening your financial foundation.

So tell us what you suggest here. Yeah, Rob, one of the best things that anybody can do in this area of strengthening financial foundation is to cultivate good habits. We all know how easy it is to pick up bad habits, but good habits have to be cultivated.

They have to be worked on. And that means taking specific actions that reinforce good habits. For example, making a spending plan that puts you in a position to pay down your debt steadily. So you're paying off your credit cards and car loans and those sorts of things, a priority.

And here's one in this category that I know you'll like, Rob. We encourage people to start using a money management app to track their finances. And there is one I happen to know of. It's the MoneyWise app. Perhaps you've heard of it. We think that's a great tool for making financial progress. And it'd be a great thing for somebody to start with in 2022. And here's an idea on the spending side of things that can really help. And it's one that many people never think of.

And it's simply this. Speak up to save money. We have a guy in our office, Matt Bell. He's been on your program before.

And Matt does this frequently. He just asks very politely, is there any better deal you can offer me? And he's found that when he asked just forthrightly and politely, he's been able to get fees waived. He's been able to get subscription prices lowered just by making a polite request to somebody and smiling and being firm. And I actually tried this at Matt's suggestion one year with my Internet company. I called and they lowered my bill by $20 a month.

So you just never know unless you ask. And here's a very timely one for this month. Don't go into debt with Christmas spending.

Yes. You know, if you turn on the TV this time of year, Rob, or the radio or your browse online, marketing hype and financing deals are all over the place. And we just encourage people don't be swayed by any of that. Instead, develop a plan for your Christmas spending and buy only what you can afford. You will not regret it. That is great advice. These are great ideas. And that last one in particular is something you can do right now. Resolve not to go into debt this Christmas. Don't get swept up in the hype.

And then after the new year, and this is key, begin saving for the next year so you're ready next Christmas. All right, Joseph, these are really helpful. Let's move into another category. And this one is developing your investing plan.

What do you have for us? Yeah. You know, Rob, in this area, it's kind of a balancing act. Scripture encourages us, on the one hand, to prepare for the needs of tomorrow. That's very important. But it also warns us very forthrightly about becoming hoarders.

That's something we are definitely not to do. You know, people are just amassing stuff to be amassing it for ourselves and building bigger and better barns. So as you invest, it's always good to keep in mind that this isn't just about building as big a nest egg as you can. It's about saving wisely and proportionately for future needs without being too self-focused and building too much stuff. And saving for the future like this, investing, really starts with looking realistically at where you are and then developing a prudent plan that moves you toward your long-term goals. And we, of course, urge people to make this a spiritual matter, not just a financial one. We think people are well-served to pray over these sorts of things and to seek out wise and godly counsel. That said, we also want people to recognize that wise investing choices often reflect common sense.

You know, sometimes people have this idea that you've got to be a Wall Street wizard to be an investor, and that is simply not so. In fact, many basic investing lessons are closely connected with what people already know and do. For example, a few weeks ago, my wife and I took a trip to see some relatives for Thanksgiving. We went down to Florida. We mapped out a travel plan, and we stuck to our plan. We knew where we were going to be and when we were going to be there, traffic permitting.

And the same holds true for investing. Plan your way. Don't just head off in any direction. You have a destination that you're going to. Now, Rob, here's a suggestion in this area of investing that won't apply to everyone, but it does apply to many people.

And it's this. Don't be overly rigid in your investment plan. Now, that may sound like I'm contradicting what I just said a moment ago about planning your way.

But the idea here is that, you know, life happens. You have to have some flexibility. And if your plan is too strict, you can miss out on some very important things in life. For example, you might be thinking, you know, oh, wow, taking a family vacation costs too much. That's going to mess up my investing plan.

And I can almost guarantee you, Rob, that on your deathbed, you'll regret that decision of giving up the family vacation, because that's where you build bonds of relationship and memories with your family. So, you know, being too strict also, in some cases, could cause you to turn a deaf ear to God. You might be thinking, well, you know, maybe I should give generously to this thing or that thing, but that's going to interfere with my investing plan, and so you don't do it. So we want people to plan, but not allow their plans to become like a financial straitjacket that keeps them from doing really important things. Great advice.

All right, Joseph, time for just one more category. Let's finish with some ideas related to college in particular. Yeah, Rob, that's very important for parents who have children of a certain age. You really need to learn how to navigate the college admissions process. There are ways to make that system work to your advantage. If you and your child have selective colleges in mind, such as having your child take advanced placement classes in high school and get involved in extracurricular activities, especially in leadership roles. But there are also some things you can do if you have less selective colleges in mind, and we talk about that in our article. Also, one of our top ten options in the area of college is to study very carefully the various kinds of student loans and what they entail regarding interest and payment options. Unfortunately, many people take out college loans without really understanding what they're getting into, and they regret it later. And that includes parents, Rob, who borrow to put their kids through school. It's a shocking fact that people older than age 60 make up the fastest-growing segment of college student loan debtors.

That really is staggering and something we need to heed a warning related to so we don't inadvertently allow our kids to graduate with a lot of debt. Well, Joseph, we're just about out of time today. Any last words of advice for our listeners?

Yeah, Rob, I'll end the way I ended the article in the SMI newsletter for this month. And that is, as we start a new year, you know, we all have this tendency to think, oh, if only I knew what lies ahead. And, of course, we can never know that. And probably if we did know it, it would be rather disconcerting. But there is something we can know, and it is something of immeasurable value. The apostle Paul talks about this in Philippians chapter 3. He says he wants to know him, that is, Jesus Christ.

Paul says that everything else is worthless when compared with the infinite value of knowing Christ Jesus, my Lord. And, you know, Rob, that really should be our true number one goal for 2022 and for all the years to come. That's great advice and a great place to finish. Joseph, thank you for joining us today. Well, thank you, Rob, and again, from all of us at the SMI, happy Advent to you and Merry Christmas. Thank you, sir, and you as well. Joseph's Life has been our guest today.

You can get the entire list of 75 important financial moves for 2022 on their website at soundmindinvesting.org. We'll be right back. We're so grateful you've joined us today on MoneyWise Live.

This is biblical wisdom for your financial decisions. I'm Rob West, your host. Hey, our team is enjoying some time off today, so don't call in. No one's here to answer that call, but we lined up some great questions in advance. We'll take those right now.

We'll head next to Cleveland, Ohio. Charlena, thank you for calling. How can I help you? Hi, thank you for taking my call.

My question hopefully is not too complex. My husband and I made a probably not so smart decision to cosign for a car for our son probably about two or three years ago. The car is not paid off, and the car is now inoperable, and we're trying to decide is it better to let the car go, take the hit on their credit, pay the difference from whatever they charge us, and just begin to rebuild, or do we keep trying to throw money into a car that's not even being used?

The caveat to it is that we are planning on seeking a new mortgage probably within the next six months or so. Oh, wow, yeah. All right, let's talk about your son's role in this. What is he paying on this right now? I'm hesitating to even ask, but tell me.

I know. Well, he got married, moved to another state, and so he was paying half of the car payment, and we were paying, continuing the note and paying the insurance. The insurance has been put on hold because the car doesn't go anywhere, and they're trying to build their family or whatever, so he has not been paying anything on the car for, I don't know, it's been a while. How much do you owe on it?

Honestly, I think it's like close to $8,000 right now. It was a very bad car loan. Okay, and do you have any idea what it would take to get it in working order enough to sell it?

Oh, that's the fun part. There's a wire issue with the car, like a dealer manufacturer issue. We had a mechanic go over this car with a fine tooth comb, and he cannot fix it. So we're kind of hesitant to have it towed from one place to another to try to have the dealer look at it, because then we're looking at putting more money in just to even attempt to get it fixed, because that was our original plan. Yeah, but the key is to get this thing sold, and I realize you may be upside down, you probably are, but that's going to be better than you just letting this kind of sit forever and having to satisfy this loan, because that's going to be my recommendation. I think our obligation as believers is to pay.

Psalm 37 is clear, the wicked borrows and does not repay. So I think we need to have an absolute commitment to repayment, in my view, and the very best way to steward this asset, even though it's problematic, is to ask the Lord to give you some wisdom, lead you to the right mechanic who can get it in working order, who can allow you to sell it to, at the very least, offset some of the $8,000 you owe. I think this is also a learning opportunity for your son to step in and do what he's promised to do and not skirt that responsibility as he's starting out his family, which I realize is tough, but so is making good on your commitments, which he made to his mom and dad. And this is why the Bible is pretty clear about not co-signing, and you're learning this lesson, so I don't mean to throw this back at you, but the reason that Proverbs says be not one of those who gives pledges is because the FTC, the Federal Trade Commission, says 50% of the time when you do this, the person you're co-signing for will not pay, and this situation is bearing that out. So I think from my vantage point, Sherlina, and I know this is tough and it's perhaps not what you want to hear, I would say we're going to make a commitment to make good on this loan. We're going to approach our son and say, listen, even if it takes you the next 15 years, I need you to put something in your budget every month to make good on whatever commitment he has made from the very beginning so he can feel good at the end of the day that he's taken care of his obligation.

And thirdly, I'd check around at your church or with friends, see if you can find another mechanic who would be willing to take this on and at least give you a second opinion on what could be done to remedy the situation so that you could in good faith sell a working vehicle that at least in part could take care of some of the $8,000. And those would be the steps that I would take, but give me your thoughts. I realize that's easier said than done.

No, I mean, those are exactly those. Actually, those are exactly our thoughts for the reason of knowing as a Christian that we're supposed to pay our debt. And so at one point, someone had advised us to let the car go.

And I just thought that was so off putting, but then it's like, okay, well, maybe we should. So, I mean, honestly, if I could find and honestly feel like it's a dealer issue, it has to go to a dealer at this point that if we can find it and get the car. I don't even know that we would sell it more so as pass it along to someone else who in the family who needs a car if they can afford to maintain the payment or sell it to that person in the family.

Yeah, yeah. Well, that's going to come down to whether or not it's upside down and you actually owe more than it's worth. But I would take that approach. You may want to go ahead and join AAA and, you know, wait the seven days and then you could, you know, tow it as a part of that plan that will be fairly reasonable. And, you know, find the place you want to take it, whether that's a dealer or a reputable mechanic who can get to the bottom of this.

But I think that's the way to go. And I think beyond that, you know, you need to look at, you know, how you can do this in such a way that you can actually sell it and get out of it. What kind of car is it, might I ask? And how old is it? It is a Chrysler 200.

I think it's a 2012 and it has some type of grounding wire issue that the car doesn't start. Well, listen, you do this. You stay on the line.

Robert Sutherland, who's helping us with research today, is a car guy. So I'd love for him to weigh in on this, but we don't have time to do that on the air. So stay on the line and we'll talk to you off the air in just a moment. Hey, before we go to our break, let me remind you of the importance of your financial support right here at year end. Money Wise Media is entirely listener supported, which means our broadcast daily, our Money Wise app, our Money Wise coaches, our website, all the things that we do to encourage you with biblical financial wisdom is a direct result of your financial support.

So if you would prayerfully consider a gift here before December the 31st, we'd certainly be grateful. You can head to our website MoneyWiseLive.org and click the donate button. That's MoneyWiseLive.org and click donate to give online safely and securely.

Or you can find our mailing address or our phone number. Again, MoneyWiseLive.org and click donate before December 31st and thanks in advance. Hey, we're going to pause for a brief break. We'll be back with much more.

Stay with us. Yeah, Rob, I'm 66 and my wife and I both have an IRL and I also have a TSP account and I'm wondering when is the latest I can start taking money out of that and how much is the minimum so I can just keep it building or whatever? Yeah, well the SECURE Act made a change to the required minimum distribution rules. If you reach age 70 and a half in 2022 or later, which if you're 66, that's you, your first RMD will need to be taken by April 1st of the year after you reach age 72.

So it used to be 70 and a half, now it is 72. So at that point, you would then be required to start taking your required minimum distribution. And your required minimum is just a table that is produced by the IRS and there's a calculator on their website that would allow you to determine approximately what that amount is. But basically, it's a function of your life expectancy based on your age and the balance of the account. And that's across all of the accounts that you have that are in tax deferred investment accounts that would need to be taken with an RMD.

You can find the RMD tables in IRS Publication 590-B. And by the way, I didn't know that off the top of my head. Jim Henry is here today and just told me that. I can give that to you. But bottom line is that's how it works.

Does that make sense? Yeah, so after April of the year I turned 72, I have to start drawing some funds off and it's a percentage, is that right? Yeah, it's basically a percentage based on the balance and your life expectancy and it will tell you how much you need to take. Okay, and do they dole it out in monthly increments or I just take a lump sum once a year?

You can take it how you want. So the key is you just have to take out the amount that you are supposed to take out by the date you take it. Now, if you want to back that up and start drawing it out monthly and use that to supplement your budget or something like that, that's fine. The key is just that you get it all out by the date that it's required, whether that comes out a little bit at a time or in one lump sum. Right, and I understood earlier that you're not a real big fan of annuities so I mean just drawing them out from the IRAs and from the TSP account is suitable, is that correct? Yeah, so as you look at your budget, Earl, you're still working now, is that right?

Yes. Okay, have you started to think about what your retirement budget will look like, you know, if there's any changes, perhaps, you know, any debt you have including your mortgage maybe is paid off or close to it by the time you retire and you're not saving for retirement any longer, maybe you drop an insurance policy, a life insurance policy you no longer need. I mean the key would be to kind of settle into what does our retirement budget look like, in some cases it's 70 or 80% of your pre-retirement budget and then look at your income sources. Okay, we have our social security, great, we've got this RMD that we're going to have to take every year, we've got, you know, a pension or whatever it might be, kind of total all that up and figure out, you know, what you need. Hopefully, the amount you'd have to withdraw off the TSP and the 401k or IRA would not be more than let's say 3 or 4%, we typically say 4%.

I saw an article yesterday from Morningstar just saying that given the fact that people are living longer and the modest returns we're expecting in the market in the next decade, you know, the new numbers, they're in their world 3.3%, so less than 4%. But the idea would be we take some number out percentage wise each year that allows that portfolio to at least maintain its value for the rest of your life, if not grow a little bit. And the key would be, you know, would that, you know, cover your needs on a monthly basis?

Have you done some of those exercises? Well, not really, but I really don't need that because the money I'm making right now where I'm working is just going into my savings because I'm living off pension. Oh, great. Okay.

Yeah, so you'll be all set. So I think the opportunity for you then, because you really don't need to take anything out other than what's required, is to see what are the other creative ways to satisfy that RMD without incurring any more tax. And one of those is what's called a qualified charitable distribution. Are you aware of that? Yeah, I've heard of that. Yep. Yep.

Okay. So that would be a great opportunity for you, Earl, because if you're already doing some giving out of cash, you could perhaps stop that giving, do it out of the IRA through a QCD. It reduces your adjusted gross income for that year and gives the full amount to the ministry or your church or charity through the qualified charitable distribution. So that could be another great way to go about this and reduce your tax liability at the same time. But bottom line is, I think if it's money you don't need, then unless it's going to be given away through a QCD, you could just sock it away in savings and it's an opportunity to increase your giving or save for some other purpose. I like that tax credit thing. Yeah, for sure.

It's a great tool. Well, listen, all the best to you in this next season of life. We appreciate you listening and calling today. God bless you. To Ohio. Hi, Charlotte. Thanks for your patience.

How can I help you? Well, I was just wondering, we do not have a lot of money put away for retirement, which I work part time and my husband went back to work part time. And we have a couple small IRAs and I have my emergency fund was wondering, he had just went to work part time for a company and is making pretty decent money and was wondering, they have a matching 401k. And if they would, since he hasn't been there very long, if we were able to sign up for something like that, would it be worth my while or not? Because we'll probably work another couple of years. Yeah, I think it would, especially if there's matching Charlotte, because that's free money. So if he's going to make a contribution and they're going to match it, you know, 50 cents on the dollar or a dollar on the dollar, you're not going to get a 50 or 100 percent return on your money anywhere else guaranteed like that.

So take full advantage of that. Also, some companies offer the choice between what's called a traditional 401k and a Roth 401k. I'd probably opt for the Roth if it's offered because taxes are likely going to go up in the next few years. That's at least what's been talked about. I don't think there's anybody talking about them going any lower. And there's certainly plenty of talk about them going higher. And so if you could go ahead and pay today's tax rates and let that money grow and then come out tax free down the road, that would be a good thing. But at the very least, given that you still have some ground to make up on your savings, if there's a match, take full advantage of it.

And even if there's not, it's a great opportunity while he's still working to go ahead and sock some additional money away. All right. Okay.

That's what I needed to know. Thank you, sir. Very good. We appreciate your call today.

Thanks very much. Hey, Money Wise Live is listener supported. If you're a part of the Money Wise community, we would ask that you would prayerfully consider supporting this ministry.

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Just click donate. Much more to come on Money Wise Live. Stay with us. We're going to pause for a brief break, and then we'll be right back.

We're so glad you've joined us today for Money Wise Live, biblical wisdom for your financial decisions. Hey, our team is taking some time off today. We're not in the studio, so don't call in, but we've lined up some great questions in advance that I know you'll enjoy. In just a moment, we'll be talking to Judy in Indianapolis.

Daniel's waiting patiently in Chicago. But next up, Eileen in Bradenton, Florida. Hi, Eileen. What's on your mind today? Hi.

Thank you for taking my call. I have an 11-year-old daughter, and I'm trying to figure out, as a mom, the best way to create or show her how to be smart with money. I know that there's different personalities when it comes to money. I'm not sure I've figured hers out. She doesn't seem to care. That's one, right? Yeah, that's one, right? And she's not a kid that seems to, you know, is always asking me to buy things for her. So that's, I guess, another clue. So I just want to do my job as a mom and, you know, ensure that she's more of a saver than a spender and makes good choices with God's money.

Yeah. Well, the first thing, Eileen, is to do exactly what you're doing, and that is to recognize that you need to be imparting this along the way because you're raising a future adult. And we know that money is the chief competitor to lordship, or at least that's the way I read scripture.

It's, at the very minimum, a primary competitor. Not to mention the fact that we want her to be financially literate, and God's word has so much to say on this topic. So first thing I want to do is send you a copy of Howard Dayton's resource called the ABCs of Handling Money God's Way, which I think will be a great tool that you guys can work your way through.

And speaking of my friend Howard Dayton, you know, he talks about being an MVP parent, and his MVP stands for Model Verbally Communicate and Practical Application. And so if you go back and you look at that, the first question is, you know, are you modeling how to handle money God's way? Are you all talking about regularly the fact that resources are limited, and God owns it all, and you're a steward or a manager of his resources, and therefore you need to live within God's provision and be content with what God has provided, which means you need to have a spending plan.

And so money can't be allocated to everything, and so that plan is God's picture of how he wants you to use his tool that he's provided according to your values and priorities. And so for things like, you know, eating out or entertainment or miscellaneous expenses or clothing, there's only so much to go around, and it's a part of a plan. And when the money's gone, it's gone, and we wait till the next month.

And I think we can get creative with that, and that even goes to the practical application. You know, Julie and I one month turned our eating out envelope over to our kids. And we said, listen, this is what you all have.

This is what goes into this envelope every month. And so you guys this afternoon, it was a Sunday, are going to sit around the table and figure out how we're going to allocate this money over the next 30 days. And so it was hilarious to see them kind of deciding, debating, if you will, on how they were going to spend the money and whether we were going to go out after church, and they wanted to do something on Friday night.

And, you know, at the end of that process, they had figured out that we couldn't do it all, and so they had to really decide what the plan was. Well, they began to see that resources are limited, and therefore we've got to work together to figure out how to allocate God's money. And so I think as long as you're modeling that, which means regularly talking about it, that's that verbal communication. And then you're finding ways to provide practically, you know, examples of what this looks like.

That's going to go so far because when we talk to adults, you know, I was an advisor for over a decade, answered thousands of questions on the radio. What we find, Eileen, is that, you know, some of your earliest memories around money are key drivers to the way you handle money today. And so that environment you're creating, whether there's an abundance or whether money's tight, regardless, it's about how you approach that and create teaching opportunities to provide those practical examples and the conversations around what it means to be a steward of God's money. So I think as you think about modeling and verbally communicating and practically applying that with her, you probably know more than you think you do in terms of what you might be able to do to instill some of these principles. And this resource I mentioned, the ABCs of Handling Money God's Way, will give you a framework for that.

Okay? Well, thank you so much for that. I really appreciate the help.

And I do try to lead by example in many ways, not just money. But thank you very much for that. You're welcome. We appreciate your call today. God bless you.

On to Chicago, Illinois. Hi, Daniel. What can I do for you, sir? Hi, how are you, sir?

Thank you so much for taking my call. So I was telling Amy about my situation. I started my 401k about six years ago. But right now, I feel like I still have a lot of debt, and I don't know if it's the wisest thing to just stop my contribution and get rid of my debt. Yeah, so tell me about that. What debts do you have?

So we have a credit card with $8,000, and we owe a family member $4,000. Okay. All right. And are you living on a spending plan?

Yes. So we started putting the envelope away. But right now, we feel like there's a lot of money that's still loose. Like, okay, what happened to this $10?

What happened to this $8? And we're like, okay, you know what I'm saying? I know totally what you're saying. And that really is starting with an accurate reflection of what you're actually spending, which means you may need to track for 30 or 60 days just to see where your money's going.

That may even be a surprising exercise. The MoneyWise app can help with that. If you download the app from your app store, just search for MoneyWise Biblical Finance.

When we're done here, we'll get your information. I'll make sure you get a six-month subscription so you can connect it to your bank accounts and automatically download your transactions. There's three systems in the app for managing money. You're probably going to want to choose the tracking system for the first 60 days just to get a proper accounting of where that money is going.

And then you can create a plan and then ultimately use the digital envelope system. That's going to be key because your margin, Daniel, that is the money you have left over after the bills are paid is going to be essential to you getting this debt paid off. What percent of your income are you putting in your 401k right now?

Okay, so I started with five, then I increased it to 10, and I ended up with 15. All right. And does your company match?

No, we have a pension plan. Okay. All right. Do you know roughly what amount the dollars that are going into that 401k every month, that 15% that you're putting away? Right. So right now it was about 246 every week. Okay.

All right. So you're putting about, let's say, on average about $1,000 a month away. I would probably back that down to about 5% until those credit card debts are paid off.

In fact, if there's no matching, you could eliminate it altogether. Talk to me about the family debt that you have. Is that accruing interest, and are you living up to your commitment on that?

Yes, sir. So pretty much no interest whatsoever, but just the fact that in our heart we know that we owe this person. It's actually my father-in-law who let us borrow this money when we were in need. And we've been putting an envelope to pay him, and then something comes up and we grab the envelope to use it for something else. And I'm like, okay, I think I'm doing the wrong thing because I'm putting money into a 401k for retirement. But I feel owe this person, which I see on a daily basis.

Well, I agree. And I hear in your heart that you really would feel a lot better if you paid that off. So regardless of the interest rate, I'd probably, if it were me, prioritize that. And I think as long as you do the hard work on the spending plan and you're living within it, and you're really trying to control your expenses and free up as much margin as possible, then I'd be comfortable with you eliminating the 401k. But if the money is going to continue to leak out and you're not going to save for the future and really focus on this debt reduction, I'd be a little concerned. But if you're willing to do the hard work, then I'd say eliminate those 401k contributions.

You're not getting any matching. I don't see the market doing anything significant in the near term, certainly not equal to the interest you're paying on the credit cards. So I'd take 100 percent of that and anything else you can free up by being more diligent in controlling your expenses, put it toward your family payback first and then the credit cards.

Once that's gone, let's get at least one month's expenses in savings and then restart the 401k, okay? Okay, perfect. All right. God bless you, buddy. Thank you for calling today. We're going to finish today with Judy in Indianapolis. Hi, Judy.

How can I help you? Yeah, I am 52 years old and I had just gotten a life insurance just to make sure that I only have a 13-year-old child. And I do not know if it is practical that I'm paying that much money so that to make sure that my husband and my child will have something just in case something happens to me, would you rather advise me to put the money into a form of my Roth RIA or... Yeah, well, the key for this insurance, and by the way, is that term insurance, Judy? It's life insurance. Yeah, but do you know if it's term or whole life? Is there a savings component to it or is it just pure insurance?

Whole life. I know that a certain time it will go down when I turn 70. Sure.

Let me ask you this. If something were to happen to you, would that place a hardship on your husband continuing to provide? Okay, so they're counting on your income to be able to maintain their lifestyle.

Yes. Okay, so I think you need life insurance, absolutely. So this is a worthwhile expense but you don't need to do it in a way that combines a savings vehicle with it because you're not going to get enough insurance. It's going to be too costly and there's better ways to save. So I wouldn't cancel anything but I'd go look for a term policy that's 10 times your income on a 12-month basis. If you're making $50,000, I'd look for $500,000 in life insurance. But if on a term policy, it's probably going to be an eighth of what you're paying for whole life insurance. Once you get that policy in place and you've got the right coverage, then you can cancel this other whole life policy. We appreciate your call.

MoneyWise Live is a partnership between Moody Radio and MoneyWise Media. That's going to do it for us today. Thanks for being with us. Thank you to my team, Amy, Dan, Eric and Jim. Come back and join us next time, will you?