Stressing in the New Year

The latest COVID variant didn't stop folks from overspending this past Christmas shopping season. Now it's time to pay the piper.

I am Rob West. The credit card bills are starting to roll in, making many wish they'd been more frugal with their holiday purchases. I'll give you the numbers and talk about the stress they're causing. Then it's on to your calls at 800-525-7000.

Call it 24-7-800-525-7000. This is MoneyWise Live, biblical wisdom for your financial decisions. Okay, so the folks at LendingTree took a survey of 2000 adults and found that 36% of them went into debt during the Christmas shopping season. The average new debt taken on by those folks?

$1250. In addition, they found that a record 40% of holiday shoppers used buy-now-pay-later financing on some of their purchases. Many of them won't pay off that debt before the interest-free period expires, meaning they'll likely get hit with exorbitant interest charges. The credit bureau Experian has found that more folks are taking out personal loans these days, and about a quarter of them are doing it for debt consolidation. Now, we've talked about how dangerous that is, because it often just leads to more debt.

Another 10% said they took out personal loans to refinance an existing debt, probably to get a lower interest rate. Now, all of this is an indication that folks are living beyond their means. Instead of paying down debt or saving for purchases, they're going deeper into debt, and that will inevitably lead to more stress. And since stress has a way of sneaking up on you, here are some debt-related stressors to watch out for. First, you have nothing or very little in your savings account.

You can only afford minimum payments, you pay your bills late, or you've been denied credit. All of those things cause stress, which can result in depression, anxiety, irritability, and even memory and concentration problems. So, stressing over debt can have serious consequences. Now, how do you know when the stress of carrying too much debt is beginning to have an impact? Well, one of the signs you may not think about is lost productivity, either in your work or personal life.

It doesn't matter if you're a doctor or a dietitian, a stay-at-home mom or a steel worker. Worrying about debt keeps you from getting things done. Are you having trouble concentrating? Are your thoughts always drifting back to money so your work suffers?

Well, maybe you're not keeping up with household chores, dishes are piling up, or the leaves aren't getting raked. All of those are telltale signs of stress in your life. And stressing over debt can cause some very specific behavioral changes. One is that you start avoiding people. You screen calls because you're afraid of bill collectors. You cringe a bit every time the phone rings. Maybe you dread going to the mailbox because it'll probably have late notices in it. Or if you haven't ruined your credit yet, every day there is at least one offer in the mail from a lender offering to consolidate your debt. These are constant reminders that you have a problem, so the stress continues to build.

And like I said, it can be insidious, sneaking up on you and changing your daily habits before you even realize it. No wonder Proverbs 22.7 says the borrower is slave to the lender. Debt really does put you in chains because debt takes away your freedom and options, and that can manifest itself in any number of ways.

Have you turned down a great job that may be paid a little less for fear you wouldn't be able to make your payments? Maybe you'd like to move to a different city but can't because of debt. Finances have a huge impact on life's big decisions, and debt limits your options. Even though the Bible never calls debt a sin, it does warn us about it numerous times. And today we're really only talking about consumer debt that finances a lifestyle above your means.

That's not a part of God's plan for you. He wants you financially free so you can serve Him. We only want to borrow when there's the probability it will result in a gain, such as borrowing to start a business or perhaps buying a home that in most cases will appreciate. If you're experiencing debt-related stress, it's time to take action, and you have two great options. First, you can contact one of our volunteer MoneyWise coaches for help setting up a budget and finding ways to trim spending. You can also contact our friends at ChristianCreditCounselors.org. That's ChristianCreditCounselors.org. They can get your interest rates lowered so you can pay off your debt up to 80% faster with a debt management plan.

By the way, we'll put links to those in our show notes for today. Let's make 2022 a year when you end the stress of debt. All right, your calls are next.

800-525-7000. This is MoneyWise Live. We'll be right back. We're thrilled that you've chosen to tune in to MoneyWise Live this afternoon.

I'm Rob West, your host. This is biblical wisdom for your financial decisions. If you find yourself with a significant amount of credit card debt, really any debt that you're unable to pay off in full, we need to have a plan to get out from under it.

That high interest is going to cripple your ability to have margin, save for the future, give generously, and put money aside for retirement and short-term goals. It's really critical that you formulate a plan. That's going to start with a spending plan.

You've got to get to the place where you know what's coming in and going out. And then, once you have that spending plan established, you have a system to control that. Well, we'd love to help with the MoneyWise app. You can connect to your institutions, download your transactions, get them categorized by envelope, and in the palm of your hand know exactly where you stand at any point in the month.

And you and your spouse will both have access to that information. You can download the MoneyWise app wherever you download apps. Just search for MoneyWise biblical finance. And I'll again mention, if you find yourself under the burden of credit card debt, take advantage of a great resource. Our friends at ChristianCreditCounselors.org, these are believers. They want to walk alongside you, help you get those interest rates down, get that debt paid off 80% faster. Doesn't involve a new loan. It's going to work with your existing creditors, and again, with much less interest paid.

ChristianCreditCounselors.org is the place to go. All right, we've got some phone lines open ready to take your calls and questions today. The number is 800-525-7000. In just a moment, we'll be talking to Ruth and Jim. But first, Maria is in Margate, Florida, not too far from where I grew up. Maria, thank you for calling.

How can I help you? Hi, yes, I'm about to retire. And I have altogether maybe $140,000. That would be, you know, $100,000 that it is my, what do you call it? I have about $40,000 and I am so sorry, I'm so nervous. That's okay, no problem.

Okay, so 43B has 40 and then you've got 100 and another retirement account. All right. Yes, yes.

And also, I owe like $60,000 in my house, my mortgage, and I would like to pay that off. Did you say $60,000? Yeah. Okay. Go ahead. No, I don't have any other bills, but I would like to speak to someone that can guide me what to do with the rest of the money.

Yeah, very good. Well, let's talk about it briefly here, and then I'll give you a resource that you can take advantage of for some further planning. So you've got $140,000, then you've got $60,000 left on the mortgage. How long did you say, Maria, you plan to continue working? Oh, one more month. One more month? Okay. We're right on the cusp of your retirement.

How exciting. And have you put together a budget so you know exactly what it's going to take when you retire to fund your monthly expenses? Yes, I live with my husband also. So between both of us, I mean, we would be receiving maybe $3,000 a month. Okay.

Will that come exclusively from Social Security? Yes. Okay. And he's retired too or planning to in the near future?

Yes. Well, he isn't disabled. He's getting disability. Okay, very good. All right. Well, I'm sorry to hear that, but I'm glad you have that known income that you can count on. So I think the key is, Maria, you don't anticipate having to pull anything on a monthly basis from the $140,000.

Is that right? Not if I don't need it, no. Okay. But you believe that you can live off of the $3,000 a month you're getting from Social Security or at least unless something unexpected comes?

Yes. Okay. And do you have any savings, any liquid savings beyond the $140,000 retirement funds? Yes, about $10,000. About $10,000.

Okay. Well, here's the approach I would take. I love the fact that you've got $10,000. That tells me you have three months living expenses. That's the minimum I would want you to have, especially in retirement. I'd in fact love for you to get that up closer to six months expenses, which means I'd love for you to have about $20,000 in liquid savings. The $140,000 is money that you're going to want to keep invested. And I would probably connect with a certified kingdom advisor there in Margate to roll this money to an IRA and to manage it for you.

The good news is that you're shouldn't have to touch it. But if you did, it would be there to be able to help supplement your income from Social Security. If you just took 4% a year, that'd be about $5,600.

If you needed it for extra things, you needed to do a repair on the house or something came up that was unexpected that you weren't going to be able to cover from your $3,000 a month. And if it's managed with a small portion to stocks, maybe a larger portion to fixed income type investments, bonds and other fixed income securities, you should be able to make up that 4% still on a very conservative investment strategy, but where you can pull that roughly $5,600 or there about a year for these unexpected expenses that might come up. And that's going to give you a little cushion beyond the emergency fund that I talked about. The key will be to really try to control your spending along the way to try to live within the Social Security so that this $140,000 can keep growing. And I want it to be there so that if you all need it for long-term care, you need in-home care or you needed assisted living, something along the way, this would be the money you would probably want to look to in addition to the Social Security to be able to fund some of that.

So it sounds like you're in a pretty good spot. I think getting that counsel from a Certified Kingdom Advisor and having somebody take over management of this money, which it's a lot of money, so you want to manage it well, not too aggressive, but you still want it to have a return because if you don't and it just sits in money market or something like that, you're losing the money. You're losing the money like that. You're losing purchasing power, especially with inflation elevated like it is today.

Does that all make sense, Maria? Yes, one thing I need the $60,000 from that amount to pay off my mortgage. Okay, so you don't have the mortgage payment built into the $3,000 a month expenses?

Oh, no. No, that would be over and above that, is that right? Yeah, I would like to take the $60,000 from my retirement to pay and then the rest would go into whatever.

Yeah, very good. Well, the only thing I would consider on that, Maria, is you certainly could do that. One option would be to whether you'd want to spread it out over two tax years, which would mean you pay half of it off this year, half of it off next year. And you could even cover the payments out of the retirement account until you get to next year after you pay off half this year. That's going to spread that $60,000, which will become taxable to you when you take it out of the retirement account.

It's going to spread that over two years. So I would just talk to your CPA or accountant about that to see if it's better to spread it out over two years as opposed to taking it all out in one year. They can help guide you on that. If you just have a conviction though, Maria, that, listen, I just want to be debt-free ASAP, then you go for it.

But if you want to take a look at this to see if it might make sense for you to spread it over two tax years, it would at least be worth a look. Otherwise, I think you're right on track and we certainly appreciate your call today. May the Lord bless you in this exciting new season of life.

800-525-7000. We've got lines open. We'll be right back. This is MoneyWise Live! Biblical wisdom for your financial decisions. This is the program where each day we mind God's word and uncover principles that we can apply to the financial decisions and choices we're making each day. If you're a part of the MoneyWise community, we'd love for you to be active on our website and participating in our community forum. In fact, there's literally more than a thousand questions that have been posted in a short period of time with folks interacting with one another, asking questions, sharing ideas, and not only is the MoneyWise community responding to those, but our MoneyWise coaches are in there as well. If you'd like to participate in the MoneyWise community, just head to our website MoneyWise.org.

Create a free account and then you can post away. In fact, a great question just came in from Joshua and he says, what types of accounts should I use for savings specifically for a house or my next car? I'm only 22, but I want to start saving for these things. Should I use an investment account, a high yield savings, or something else?

And Joshua, this is a great question. I love that you're thinking about a systematically saving for those major purchases and it's really all about the time horizon. Given that I suspect you want to buy these, both the house and the car in the next couple of years, certainly less than five, I would say you really want to be thinking about just using a high yield savings account. You're going to get a little bit of interest as interest rates move up and even today the Fed is saying that they are moving rates higher. We'll see the first rate increase coming probably in March. As rates move up, the interest rates on these high yield savings will move from the place where they are now at about a half a percent up to something higher.

We'll probably pass one here percent before the end of the year. But here's the key, it's FDIC insured so it's protected. You're really not looking at the return on the money, you're looking at the return of the money because you want to make sure that it's there, not at the risk of any investments when you need it. So I would use a high yield savings account.

I like Marcus, Capital One 360, Ally Bank, any of those will give you free accounts with a high yield interest rate and they have great customer service. I would link that savings account to your checking and then you can set up an automatic transfer every month when you need it, you'll just transfer it back. But I think that's the place for those short-term savings and the great thing about these free accounts with the online banks is that you can have multiple savings accounts. So if you want to have one for each savings goal, you can certainly do that.

It keeps it nice and neat for you to keep track of. Joshua, we appreciate you posting in the MoneyWise community. If you'd like to join Joshua, just head over to our website.

Again, moneywise.org, create a free account and then we'll look for you in the community. All right, we've got some lines open today, taking your calls and questions. 800-525 is the number to call. Let's head to Chicago, Illinois. Hi, Ruth. How can I help you today?

Hi, thanks for taking my call. I, a condo with cash on my 401k in November and my credit, or my financial high of fidelity, but if I paid the full amount within 60 days, it would be as though I didn't borrow the money at all. I paid back everything but $13,000 knowing that a capital gains tax would be much, much smaller on that little amount. Well, I got an email from Fidelity the other day saying that the full amount is now taxable, the $260,000, not the amount that I paid back. So I'm concerned that now all of a sudden, because I bought in November and paid back in January, that the full amount is taxable now in November for 2021, even though I paid back 95% of it.

Is there some way of communicating with the IRS that in fact, I would be payable on the small amount, not the full amount? Yeah. So Ruth, did you say that you paid it back, you said it was within the 60-day window, but it was just this month, so this was pretty recent? Right. I bought in November and paid back in January, matter of fact, within the last 10 days.

Yeah. So what's probably going on is that Fidelity generated the 1099 based on that full withdrawal, and it's not capital gains that you'd pay on it, it would be taxable as income to you. And then when you paid it back, it just missed the window where that 1099 was generated prior to them either seeing or receiving those funds. So even though you were within the 60-day window, the document, the 1099 that was sent to you, and a copy was also sent to the IRS, was probably generated before they at least processed this amount that you put back in to the 401k, because your advisor is exactly right.

You have 60 days to return that money and it not be taxable to you. So the thing to do is just to contact Fidelity and ask for an amended 1099 showing that the 247,000 was paid back into the 401k inside the 60-day window. When they send that amended 1099 to you, one will also be transmitted to the IRS. And then when you file your tax return, you'll use that amended 1099 showing that much lower amount that will then justify why that's the portion you're paying taxes on. So this should be fairly easy to resolve, but it really needs to be done with Fidelity because they're the one that needs to issue the amended 1099. If you normally do your taxes, Ruth, this might be the year that you go ahead and get a pro CPA or accountant to do this for you, just to make sure that if there are any questions from the IRS and they challenge this, which they shouldn't because amended 1099s are issued all the time, that they can help you navigate that. But the bottom line is this should be fairly simple to resolve. I would just contact Fidelity if you haven't already, okay? And the fact that it was over the new year window doesn't make any difference.

It really doesn't. No, it's just that you caught that window where they're issuing the 1099s, but the bottom line is you return that money in the window of time that was allotted. So they're going to have to issue that amended return.

If it was done at a different point in the year and it was also in the 60-day window, by the time the 1099 is issued, it's all reconciled in their accounting system, in their computers. It just so happened you probably caught them midstream as we crossed over into the new year and then they were processing all these documents. So shouldn't be any problem whatsoever, but I would jump on that quickly, okay? Thank you. Thank you. Thank you. God bless. All right, Ruth.

God bless you. Thanks for calling today. 800-525-7000 is the number to call.

That's 800-525-7000. We've got several lines open. We'd love to hear from you with whatever's on your mind today. Do you want to deal with savings or giving? Perhaps it's your lifestyle or maybe it's that credit score. Maybe it's your generosity. How you give is so often determined by how you order your finances.

I'd love for you to be in a position where you're free to respond to the leading of the Lord. Well, that means we've got to get our financial houses in order. Well, we can help you do that here on MoneyWise Live.

The number to call is 800-525-7000. We're going to pause for a brief break when we come back much more just around the corner. Stay with us. We'll be right back. Thanks for tuning in to MoneyWise Live.

I'm Rob West, your host. So glad you're along with us today as we take your calls and questions on anything financial. As we apply God's word to our financial life, it can be quite simple. If we live within our means and avoid the use of debt and have some margin and set some long-term goals and give generously, we put ourselves in a position to experience God's best. It's not always easy to do that.

Don't get me wrong. It can be very difficult, and we can go through very challenging seasons, and that's often why we need to be in that position, because when we have more than we need, we can share with those in need. And that's just how the body of Christ works. That's God's plan and design.

But let's together try to apply these principles to our financial lives so we can experience what God intended for us and use His resources as a tool to accomplish His purposes. All the lines are full. We'll head right back to the phone. Sarah is in Tennessee. Sarah, how can I help you today? Hi there, Rob. I want to see if you have any advice for me.

The only thing that I can figure out is—not going to help me too much, but I'll just give you some general highlights of what's going on. To start with, I'm 72. To start with, I'm 72, and I've been retired for quite some time, since I was 55, because I have a disabled son that I'm taking care of full time.

And my husband died six years—seven years ago, excuse me. And right now, I've got some credit card debt that's $35,000 to pay it all off in full, but I also have an equity loan that I owe $75,000 on. I have an annuity that's $170,000, and it has been with this company long enough that I should not have much of a penalty if I surrendered it. It's $170,000, but what I've got in mind is just paying off the credit card debt, keeping the equity loan, and just to pay that payment and my utilities. It's getting real hard for me to try to take the payments on these credit cards and the equity, and I'm behind on my tithe already, about six months, and I've always prided myself through the years to do that first, but somehow got off track.

I don't know if there's any hope for me, but what do you suggest? Well, there absolutely is hope, Sarah, and I'm delighted you called today, and I understand you want to honor the Lord with what he's entrusted to you, and you've got more bills than you have money to cover everything, and so let's get you on a track where you can get this cleaned up and live within the provision that you have and get you back where you're giving regularly, and I think you'll feel a whole lot better when you do that. Talk to me for a second just about this credit card debt. Did it come over a long period of time?

Was it one event, and have you been adding to it? It has been over a period of time, and yes, I have been using the cards up until about a year ago, and you might want to know too that my Social Security is $1960 a month after they take the insurance out of it and to take care of my son, which is not a benefit to me, but he lives with me, and he gets a little bit more than that, two thousand and something, and I've been using both those checks to pay these credit cards and my utilities, and I have taken some money out of this annuity through the last seven years, but I just don't know what to do. I have no idea what to do, whether to try to pay the debt off in full, live on those Social Security checks, or whether to keep the equity. I'm thinking in my mind, keep the equity, but you may have something totally different to give me.

No, I think that's right. I think the key would be, I want to make sure that you really have demonstrated to yourself that you can live within that provision that's there. I realize even the minimums on that $35,000 is a lot, so if that comes off the table, that gives you a lot of breathing room, but I want to be sure that when that happens, if that's the direction you go, that you've got a plan so that that credit card debt doesn't come back into the picture slowly over time. You call me in a year from now and you say, well, I wiped out that $35,000, but now it's $10,000.

It's back and it's climbing. So I think we just need to make sure that you're disciplined, that you've got a plan to live within that provision, keep that home equity loan paid, and really budget the rest of the resources that you have for you and your son. Certainly wiping out that credit card debt is one approach. I probably would not wipe out the home equity loan. I'd try to build that into your plan because you'd be robbing your future earning potential by paying off the whole thing, and I'd love for you to do that out of current cash flow and just let this annuity product continue to work for you. So I would want to understand the tax implications of that. So you're going to want to check with a tax professional just to understand that if you pull that $35,000 out, what that means for you so you can plan for that and have that money set aside. But apart from that, if you have been for the last year living without adding to that credit card debt, that tells me that you're ready for this. We go ahead and wipe it out. You're certainly not making that much in the annuity with the high interest that you're likely paying on the credit card.

So I'd probably go ahead and do the plan you described, eliminate that credit card debt, and then move forward from here living within the Social Security you have and the disability and just paying the home equity loan as scheduled or a little bit more than is scheduled each month out of your current cash flow. Does that make sense? Certainly, yes. That's what I had in mind. I just wanted to make sure that you agreed with that.

I do. And I think you'll feel a whole lot better once you do it because you'll know that you've freed up that money. You're no longer throwing this money after this high interest credit card debt. And hopefully that'll give you the incentive to kind of move forward and pursue some of the things that are really important to you, like first you're giving and then even some rebuilding your emergency fund after that. So Sarah, all the best to you in the days ahead. Be encouraged.

I think you're on the right track and we appreciate your call. Cindy's in Florida. Hi, Cindy. How can I help you?

Hi, thank you. I would want to start by saying, first of all, that I do have financial stability and a spouse that basically manages our finances. We have an accountant, an attorney that sets up estate documents and a financial planner. So what I would like to know is what you would recommend for, what resources you might recommend for someone like myself who really needs to educate myself more on issues relating to financial management and assets investing, because I feel that I'm pretty much dependent on other people for sort of, you know, saying what's what. And I just would like to make myself more knowledgeable. It's kind of been a division of labor and marriage to have him handle that stuff and me do other stuff. And I just feel like I should know more than I do.

Yes. Yeah, I love that question, Cindy, and I would agree with you. I mean, as you manage God's money along with your husband and you all set joint goals based on your values and priorities, you need to be making decisions together. I think it does make sense for there to be one bookkeeper, the person who's more prone to the details, maybe has more of a familiarity and a comfort level with financial matters. But you both need to be on the same page in terms of where the accounts are, who these professionals are.

If something were to happen to him, you need to be able to step in and take over and not be wondering kind of where things are. From an investment standpoint, I want to send you a book called The Sound Mind Investing Handbook. It's based on biblical principles written in plain English, and it'll get you on the right track to understanding what investing is all about. Hang on the line, we'll get your information and we'll get it right out to you. We appreciate your call today. Much more to come on MoneyWise Live.

Stay with us. We're so glad to have you along with us today on MoneyWise Live, biblical wisdom for your financial decisions. Well, it was a wild day on the market again today. A lot of volatility. We had a 500-point gain going at one point in the day, only to give it all back and close down primarily because of the Fed chairman's comments. We expected a hike in interest rates. But in those press conferences following the Fed meetings, they hang on his every word.

So when he said, quote, there's quite a bit of room to raise interest rates without threatening the labor market, that signals, well, perhaps he's thinking several rate hikes and we'll probably see it sooner rather than later. That sent the market giving back all of the gains we had and losing some ground today. But the bottom line is, if we're invested with the right strategy, meaning we have a long time horizon, we're in the right investments appropriate for our age goals and objectives, we're not trying to pick the winners and losers, we're broadly diversified, then we really don't care what happens day to day or even quarter to quarter, because when we're looking long term and really steady plotters, as the Bible talks about, well, we put ourselves in a position to experience the growth that comes from being a prudent investor. And there's really been no better place to build wealth than a properly diversified stock and bond portfolio. So don't get caught up in the headlines. Just make sure that you have a good plan.

And if you need somebody to help you with that, well, perhaps a Certified Kingdom Advisor is an order you could find a CKA in your area when you visit MoneyWise.org. All right, let's head back to the phones today. Try to get through as many calls as we can between now and the end of the program. Lynn's in Auburn Dale, Florida. Lynn, how can I help you?

Hi, thanks for taking my call. I had a rental property in Connecticut that I just sold. And I never lived for the last 10 years, I haven't lived there, I just rented it. The money that I received from that house, I want to put down on a house in Florida that I'm in a contract with. Is there a certain amount of time that that money has to be used and put on the new house? Or does it have to go in an escrow?

What I hear different stories though, you got to use it in 35 days? No, because you got it from a rental property. There's a different way of handling it.

What's your advice? Yes. So this was a rental property and you're using the money for a similar property when you buy something in Florida, that's not going to become your primary residence, is that right? No, the Florida one will be my primary residence. Okay, so then you're not going to be able to avoid the capital gains, unfortunately. The way you avoid capital gains on a rental property or an investment property that's not your home is through a 1031 exchange.

A 1031 exchange is simply where you use the proceeds from the sale to buy another like kind property. In this case, it would be investment property to investment property. So you would then have to identify that new investment property in 45 days, and then you'd have to close within 180 days.

And that would essentially kick the can down the road on the capital gains because you wouldn't pay it. You just roll everything into the new investment property and then someday when you sell that investment property, you'd pay the capital gains at that point. But you're taking an investment property, you're taking the proceeds and you're going to buy a home for your own personal use, which is not a similar property. So you're going to pay the capital gains on that property sale probably at 15% depending on your income. And then when you put that into your new property, if you live there two out of the next five years, then if you were to sell that one, you would be able to take up to $250,000 in gains as a single person and have no capital gains. But that only applies when it's your primary residence, which was not the case for this property you're selling currently. Does that make sense to you? Yes, it does not.

One other question. I don't think it's going to make a hill of beans difference, but the house was left to me. It was our family home and when my parents passed, they left it to me.

So it's still the same scenario, correct? Yes, because when it was left to you, there's a stepped up basis, which means that when you inherited it, the new cost basis for that home is not when your parents bought it, but when you inherited it. And then from that point, it continues to appreciate until the point in which you sell it. And when you sell it, then you establish how much gain you have based on the selling price versus the cost basis at the date of death. That gain is what's going to be paid, which you'll owe capital gains on. And there's some other things that factor into that. So that will need to be paid.

And I think this is a great time, Lynn, if you aren't planning to already for you to employ a tax professional to handle your tax return to make sure that you calculate appropriately the capital gain that is due and not a dollar more than what's due. But you want to certainly get that right. And I think a professional can help you make sure you do that. Okay. Okay, perfect. Thank you. Be blessed. All right. You as well, Lynn. Take care.

Johnny is just south of Lynn in Fort Lauderdale, Florida. Johnny, how can I help you? Okay, I'm good. How are you doing today? Great. All right.

So my question is this. My job doesn't offer a 401k. Where should I be investing?

Yeah. So if you don't have a retirement plan at work, there's a couple of options. I mean, the simplest is to open an IRA. So I would probably say, you know, a Roth IRA would be my preferred approach, especially if you're younger, you've got time on your side, you would put in after tax contributions, you'd let that money grow, you'd want to do that systematically, as in every month. And if you're under age 50, you could do 6000 a year or $500 a month, I'd get that started. Now, the challenge with that is a lot of times you'll kind of bump into a ceiling where you say, Listen, if I'm going to put away 10 to 15% of my take home pay, I want to be able to put away more than 6000 a year. And that's where you'd say, Okay, what other options do I have?

At that point, you'd want to look at either an individual 401k, or a simple IRA, or if you're self employed, perhaps even a SEP IRA. Are you a w two employee, Johnny? Yes, I am. Okay. And how much do you think you'd have the ability to put away each month into retirement?

About 500. Okay, so then I'd start there. I mean, that'd be great. If you did nothing more than fully fund your Roth IRA, dollar cost averaging in every month, you'd be well on your way to, you know, having what you need down the road. And I suspect at some point, you will have access to a retirement plan at work. If you don't, and you find that you're ready to put in more, then that's where you can explore some of these other options. But I think the the Roth for now will do the trick.

I'd probably look at Betterment or Schwab Intelligent Portfolios, or the Vanguard advisor, any of those robo advisors would be a great solution, very low cost, and help you get started with index funds, you're going to capture the broad moves of the market, not try to pick the winners and losers. And I think that'd be a great track for you. We appreciate your call today. All the best to you, sir. Colleen is also in South Florida. Colleen, how can I help you? Hi, thanks for taking my call.

I just have a real quick question. I don't know if you can we have I have an accountant. We have we filed our taxes late for 2020, which is normal. And they received it in September, middle September because I did it certified mail. And it's been four months. And it's, we're waiting on this refund.

It's over $4,000. And we just it just keeps saying it's being processed. And my accountant says, Yeah, it's because they they're out of money. But don't worry, you'll get it with interest.

Okay, that's nice. But when? Yeah, it's not because they're out of money, but they are incredibly behind in processing 2020 tax returns. And now they're having to start to process 2021. You can blame it on the pandemic and the fact that so many tax filers didn't list stimulants payments correctly. So these returns are getting kicked out for hands on attention, not to mention that they're way down just in the number of workers that they have processing these returns, you put all that together. And, you know, given what we've been over through for the last couple of years, it's just really put a strain on the IRS.

So they are just really behind. So unfortunately, you're just going to have to wait this one out. There's not a quick fix to it. You're probably aware you can go to irs.gov slash refunds, but you probably have already been doing that. And it's going to say the same thing you said to me, which was, it's just still being processed.

And that's not for any other reason, other than it's just really going slow, given all the things I just mentioned, but you'll get it eventually. So you just hang on and and you'll see it before too long. We appreciate your call. Let's finish today in Cleveland. Kathy has a tax question as well. Kathy, just about a minute left.

How can I help you? Okay, so I work and I get a 1099 or I work and get a W-2 normal job. I'm going to get a 1099 for about twenty five hundred dollars.

And I cashed in my life insurance policy and I paid 10 percent. But I normally file online just myself. Do you think it's a good idea to do it just myself? Do you think they'll do a good enough job with these extra forms or should I use a professional? You know, you can do it online. I mean, they can account these online solutions or, you know, the tax web based tax software can account for the things you mentioned, an insurance policy withdrawal and a 1099 of twenty five hundred dollars. But given that it's not just a normal year for you, it's a little bit out of the ordinary. And given that there might be some expenses you can put against that 1099 income that perhaps you didn't know about, I think this is probably a good year to get somebody to prepare it for you. Doesn't have to be expensive, but having a human being that you can sit across the table from that knows the tax law, they can ask you some questions and make sure you're doing this properly. I think is going to be worth the cost of you hiring somebody to do that. So I would say this year, Kathy, if it were me, I'd probably get some professional help. But if you just really committed to doing it online, there's nothing you've described that couldn't be handled by an online solution.

So ultimately, you need to make that call. We appreciate you tuning in today and thanks for weighing in on the program. Well, that's going to do it for us.

MoneyWise Live is a partnership between Moody Radio and MoneyWise Media. Thank you to Hans, Deb, Amy and Jim. Thank you for being here as well. Hope you'll come back and join us tomorrow. We'll see you then. God bless you. Bye-bye.