6 Principles for a Solid Investing Plan

How do you forgive a dead man?

Particularly when he's your grandfather? My name is Brian Dolan, host of a brand new podcast called The Grandfather Effect. This podcast is five years in the making. It contains interviews, ponderings, and wrestlings with my family, my faith, and what forgiveness really looks like in the face of generational sin. If you listen carefully, you'll hear more than a story about my family. You'll hear a story about yours.

Streaming now on the Moody Radio app and anywhere you listen to podcasts. Proverbs 21 five tells us steady plotting brings prosperity, hasty speculation brings poverty. I am Rob West. That's one of the most quoted verses about investing and with good reason. It lays the foundation for a successful investing plan. Today I'll talk with Mark Biller about six principles to help you get there. Then it's on to your calls at 800-525-7000.

That's 800-525-7000. This is MoneyWise Live, biblical wisdom for your financial decisions. Well, Mark Biller is executive editor at Sound Mind Investing, where they've had their noses to the grindstone trying to keep track of today's highly volatile market today. Well, another one of those days. Mark, welcome back to the program. Thanks, Rob.

Good to be back with you. So, Mark, to say that folks are a bit antsy about stocks and bonds these days is an understatement. But the SMI newsletter has an article with six principles to help us keep a level head in turbulent times. We certainly need that right about now. And you start out with a great analogy about investing. So would you share that with us to begin?

Oh, absolutely. So this article begins with the idea that investing is like writing. A roller coaster while wearing a blindfold. So you can't really tell when a steady incline is about to give way to a big decline. And while my kids seem to actually enjoy riding real roller coasters, there are very few investors who have enjoyed the type of volatility and ups and downs that the market's thrown at us so far this year. Now, unfortunately, there really is no way to make volatility completely disappear.

It's just an unavoidable part of investing for most people. But you can stay steady through those ups and downs by using a well-defined and disciplined investing strategy. Now, there's not going to be one magic bullet, no silver bullet here, a single strategy that's going to be right for absolutely everybody. But every good long-term strategy incorporates six core principles. And that's what we're covering in this article.

Well, I'm looking forward to that because we always need to be grounded. I love the idea of a well-defined and disciplined investing strategy. And six principles are something we can all grab hold of.

So where do you want to start? Yeah, well, the first principle, Rob, is that success doesn't come from hoping for the best, but rather knowing how you're going to handle the worst. And what we mean by that is that since these market downturns are an inevitable part of investing, your plan needs to account for that. And the best way to do that is through diversification. That simply means that we're purposely selecting a range of investments that march to the beat of different drummers. When we do that, when we hold these different types of investments that tend to respond differently to economic events, it helps smooth out the overall volatility of the portfolio. So the hope is that while some of your investments are zigging, others are going to be zagging. And a lot of the modern investment business is built on research that shows that there actually are ways that you can combine these various types of assets in ways that reduce risk without sacrificing a lot in the way of returns.

Yeah, and that's certainly encouraging. Why take greater risk than you have to to accomplish your goals and objectives? All right, what's principle number two? Yeah, it's that our investing plans need to have clear-cut, easy-to-understand rules. And the more specific and actionable those rules are, the better. Because what happens is if your rules are not very well defined, it's hard to make decisions quickly and with a lot of confidence. So for example, if your plan calls for, say, significant investments in small company stocks, well, we would say it might be better to define that a little more clearly. Maybe it should say 30% of my portfolio will be invested in small company stocks. That's really straightforward.

It's very measurable. The others kind of wishy-washy and open to interpretation. So that's the next principle there, Rob. Yeah, that's really helpful. And we need to have a plan that brings some definition to what we're trying to accomplish. And when things get turbulent like they are right now, well, that allows us to go back to the plan and say, okay, we're doing this because it's well thought out, it's in line with our goals and objectives, and we can ride this out. Keep in mind, you don't have a loss until you sell something.

Otherwise, it's just a paper loss. Well, we'll continue to unpack these principles just around the corner with executive editor at Soundmind Investing, our good friend Mark Biller. Hope you'll stick around and then later your phone calls on investing in the markets at 800-525-7000. We're grateful to have you with us today on MoneyWise Live, where we apply God's wisdom to your financial decisions. Joining us today, our good friend Mark Biller, executive editor at Soundmind Investing and looking at a recent SMI newsletter article around six principles to keep us level-headed in turbulent times. Another rollercoaster on the stock market today, the Dow Jones ending positive around 50 points, a big sell-off again in the NASDAQ, though down over 2% on the day, led by a lot of the social media stocks selling off in the wake of a warning about earnings related to Snapchat.

Well, it's just another day in the markets, right? Mark Biller taking us back to God's word to sound biblical thinking so we can weather these storms with a well-thought-out strategy that's intentional and disciplined. Mark, just before the break, you shared that first principle, which says that success doesn't come from hoping for the best, necessarily, but also knowing how to handle the worst, and that's really key as you build your portfolio. You also took us into principle number two is that we need to have clear-cut, easy-to-understand rules, and if we have those rules in place, like how much we're going to invest in small company stocks versus large company, well, it helps us to stay the course in the midst of the turbulence.

Tell us what the third principle is. Yeah, well, principle number three is that your investing plan needs to reflect your financial limitations. It's really important to never ignore the words higher risk because those mean something very important, that there's a greater likelihood that you could lose money.

And every day, people who think it'll never happen to me find out that it can indeed happen to you. You know, big picture, Rob, investing isn't some kind of a game where the gains and the losses are just a way that we keep score. You know, money isn't an abstract thing for most people. For most of us, it represents years of working hard and saving our hopes and our dreams, and having unexpected financial losses can be devastating. So a good investing plan is going to help ground us and discourage us from taking risks that we can't afford. So getting really practical here, because I know it's something that both SMI and MoneyWise focus on, your top financial priorities need to be getting debt-free and building an emergency savings reserve because those steps are going to build the appropriate foundation that make you financially strong enough to be able to bear the risk of loss that's always present when you're investing. Now, of course, there are some exceptions to that, possibly contributing to a workplace retirement account, especially if your employer is matching your contributions.

And of course, most people are going to be working on paying off their mortgage while they're starting their investment journey, but it's really important to get these steps in the right order and reflect those financial limitations. Yeah, that's such great advice. And clearly, you mentioned that employer match. You don't want to turn away what is essentially free money. You want to take full advantage of that if you can. Before we get to principle number four, let me just remind you, we've got some phone lines open today. Mark Biller here and can take your calls and questions on your investing. What are you thinking about related to your portfolio?

Are you concerned about the declines, considering repositioning your assets? Do you want to talk about the economy? We'll take questions on those topics here in the next segment. We'd love to hear from you. 800-525-7000 is the number to call.

That's 800-525-7000 with questions from Mark Biller. All right, Mark, principle number four. Yes, number four is that your investing plan needs to keep you within your emotional comfort zone. So you don't want to take on a strategy that's going to rob you of your peace or take you past that good night's sleep level because if you do, you're likely going to bail out on that strategy eventually and likely at the worst possible time. So the amount of risk you take needs to be consistent with what we call your investing temperament, your season of life, and that's really why some sort of risk assessment process is usually part of the startup or onboarding process when you're working with an advisor or with a service like what SMI provides.

Yeah, that's really helpful. Losing sleep over your investment account leads to bad decisions. All right, principle number five. Yes, number five is that a solid investment plan needs to be realistic regarding the level of returns that you can reasonably expect. Over the years, we've occasionally had people ask us to recommend safe investments that will give them annual returns of 10% or 12% or more than that sometimes. And if by safe, they mean that there's little chance of losing money in those investments, there just really aren't many, if any, investments like that. Investments that are safe in that sense typically pay a lot less than 10% to 12%.

Now, you and I, Rob, have talked recently about how the recent spike in inflation has actually created a rare exception, and that's I bonds, which are currently yielding close to 10%. But that is a rare exception indeed because return and risk are usually very closely linked. You know, investments that offer higher rates of return typically do so because they have to. They have to offer these higher rates of return to entice investors to take on higher levels of risk.

So the principle here is you want to incur the least amount of risk that's going to get you to your financial destination safely. Yeah, obviously, we see when you talk about high-risk investments, that brings up the topic of these really speculative investments, the most recent flavor of which is cryptocurrencies. I recently read, Mark, the majority, over 50% of people who currently hold them are holding them at a loss because so many have rushed in in the last two years. And obviously, we've seen a recent sell-off, but that would fit into this category, wouldn't it?

Oh, absolutely. Yeah, that really is the tip of the spear when you're talking about risky investments right now. But like you mentioned just a moment ago, Rob, you know, you can go a little bit down the risk ladder and hit these tech stocks, and a lot of these tech stocks are down 40%, 50%, even some 70% and 80%. So it's not just the, you know, the super risky crypto stuff. We're actually seeing that with some of the more speculative stocks as well.

Yeah. Mark, when we think about kind of bear market testing your portfolio, finding a percentage at which you would be able to weather it without losing sleep or making a dramatic change, for the typical 70% stock, 30% bond portfolio, what level of downside do you need to be willing to weather? Is it 25%, 30% more?

What is it? Yeah, you know, if you've got an investment time horizon that's going to have you invested for a decade or longer, then history tells us that you're pretty likely to run into one of these bear markets that's going to take you down at least 30%. In the last, you know, 22 years, we've had two bear markets that went down 50%. And yet, if you look at the long term chart, you know, it's up up to the from the lower left to the upper right of the chart. So in spite of these big periodic declines, stocks have come back, but you need to be present to win.

You got to stay in to get those gains. Very, very good. Well, we'll come back and continue to unpack these principles. Principle number six just around the corner. And your questions for Mark Biller.

What's on your mind related to your portfolio, your investments, your future when it comes to growing your assets? We'd like to talk to you today. We've got some lines open at 800-525-7000. We're going to pause but we'll be right back with much more with Mark Biller just around the corner. Stick around. Thanks for joining us today on MoneyWise Live, biblical wisdom for your financial decisions. I'm Rob West. Joining me today, Mark Biller, executive editor at Sound Mind Investing. We're talking about biblical principles of investing and how we can stay focused on our long term plans and strategy in the midst of turbulent markets, drawing from biblical and sound financial principles. Lots of calls coming in for Mark Biller related to investing. So before we unpack principle number six, let's head to the phones.

We'll begin today in Pompano Beach, Florida. Roseanne, thank you for calling. Go right ahead.

Yes. Hi. Good afternoon.

Thanks for taking my calling. I am 62 years old and I'm going to be 62 in October. And I have sold one of my apartments in Pompano and I have to invest about $250,000, which I saw another day. I received an email for an annuity for a lie annuity for 8.5. I'm not sure about the details yet.

I just want to know because I thought it was too good to be honest. So I don't know if it's going to be a good investment or not. Mark, an eight and a half percent annuity. What are your thoughts?

Yeah, it does sound pretty, pretty good there, Roseanne. I'd be a little bit skeptical as well. The thing that you really need to watch out with with annuities typically is that they tend to charge high fees. And so that's usually the first thing that I caution folks about.

It's not that they're inherently bad by any means, it's just that they tend to be very expensive ways to accomplish whatever it is that you're trying to accomplish. So you want to look at that very carefully. Eight and a half would certainly be higher than I would expect in the current environment. So I would definitely proceed with caution.

I don't know if you've got some sort of a CPA or financial advisor that might be able to look over that with you to help you make sure that everything is as it appears there. But I would be a little bit cautious. Rob, what's your take on that? Yeah, I would totally agree. I think what you're looking at there is a variable annuity.

Perhaps they're quoting maybe historical averages. The challenge is, although there may be a downside floor to it with some protection, you're going to give up on the upside a portion of this if it's variable annuity. And that's why, to Mark's point, I'd rather see you keep access to your funds, put a well-diversified, properly allocated portfolio together for your age and risk tolerance, and invest that way with wise counsel and investment advisor.

But if you want to transfer the risk to an insurance company for either a guaranteed return or at least a return where you have a guaranteed limit on the downside, just understand what you're getting into, understand what it would take to get access to your money if you need it through the surrender charges and penalties, and read the fine print, which is why, to Mark's point, you need a competent financial advisor looking that over with you and perhaps providing some other alternatives. So I'd go slowly and get somebody to help you analyze that and make sure that it's the best solution for you, Roseanne. Thank you for your call today. To Kansas City, Kansas, Brian. Go right ahead with Mark Biller. Hi.

Hey, this is Brian. So thanks for the call. I am 57 and I'm trying to put away some money for my wife who's a little younger than me. So we've been saving away and paying off the house. It's paid for.

Then my family died and I had some inheritance, so it jumped us ahead by quite a bit. So we're ready to invest approximately $150,000 more or less. And I was just wondering, should I wait a little while, let the market drop more, or should I go ahead and just jump in? Yeah, Mark, this is a great question, because when you're sitting on a lump sum as significant as the amount Brian's talking about that's essentially all in cash, how's the best way to approach deploying that in good markets or bad?

Yeah, that is a great question, Brian. There are a few different approaches you can take. There's no single best way to do this. One would be, of course, an investment service like SMI has. We're going to have very specific ideas of when is a good time to invest, when we are shifting from one asset class to another, from cash to stocks, back and forth.

So we're going to be offering very detailed, specific advice on that sort of thing. But that type of service isn't for everybody, and so for somebody who is just trying to handle this on their own, and maybe they're trying to make decisions in their 401K or a situation like you've got, I would just encourage them that it doesn't have to be all or nothing. You don't have to decide to put all that money to work all at once, and one way to kind of spread that risk a little bit is to potentially split that amount into smaller pieces and deploy that gradually. That can certainly be a lot easier emotionally. Now financially, typically the market tends to go up over time, so the odds say that sooner is better to deploy the money, but I have always found that for most real people, the emotional side of that is much easier at splitting that up into a few different pieces. So one idea, Brian, might be to take that and divide that into, say, three to five chunks and maybe put in a fifth of that every other month or something like that. That way if the market does keep falling, you feel like you're taking advantage of those better prices, and you haven't put it all in right before something bad happens to the market.

So that would be my suggestion there just from an emotional comfort standpoint to actually take action, because that's really the most important thing, that you're not sitting here a year from now with the same decision not having done anything. Mark, just 30 seconds before the next break, I think the big idea of what you just said, and I totally agree, is you have kind of a rules-based approach to how you're going to deploy it, as opposed to trying to pick the entry points based on when the market's going to hit its low point, right? Yeah, absolutely.

Trying to pick the low is really tough. That's exactly right. By the way, if you want to learn more about SMI, go to soundmindinvesting.org, and you can read about all that Mark just talked about. We're going to ask him to stick around for one more segment. We've got some lines open, 800-525-7000. This is MoneyWise Live. We'll be right back. Delighted to have you along with us today on MoneyWise Live. We're talking with Mark Biller about six principles of successful investing, plus your questions. In fact, let's head right back to the phones.

Lewiston, Idaho. Shirley, thank you for your patience. You're on with Mark Biller.

Go ahead. Yes, I'm interested in learning more about corporate bonds and if you think they would be a good investment. Yeah, Mark, your thought on corporate bonds. Yeah, so corporate bonds are definitely one of the asset classes that we are invested in really all of the time as part of our portfolios. It's hard to say that a particular investment is good or bad because they all tend to go through cycles, right?

So particular investments at particular points in time, some are going to be better than others. What we've had so far this year, Shirley, is we've had interest rates really spiking higher in a rapid fashion as investors have finally started to believe the Federal Reserve when the Federal Reserve has been saying we are going to raise interest rates to fight this inflation problem. So the first rule of bond investing, Shirley, is that when interest rates rise, bond prices fall. So what we've had so far this year is rising interest rates, which has led to falling bond prices. And as a result, all types of bonds, including corporate bonds, have had a miserable first half of this year, one of the worst in several decades, actually. Now, the question is, of course, from here, what is likely to be the path for corporate bonds? And that, you know, nobody knows the future, so you can't give a firm answer to that. But I would say that in the paradoxical way that risk works in the markets, with all of the bad news that has been priced into bonds so far this year, that actually some of the risk in bonds has actually now decreased relative to where they were at the beginning of the year.

And that's natural. They've fallen in price, and as a result, they are less risky now than they were at the beginning of the year. Now, does that mean that they can't fall further?

Absolutely not. They certainly can. But I am personally feeling better about bonds today than I was, say, a few months ago, and that is largely because they've already corrected now quite a bit. So within corporate bonds, surely you'll find that there's another big distinction, and that is the length of the bonds. So long-term bonds are going to be quite a bit more risky than shorter-term bonds. And typically, the way that we handle all of this risk and these various risks is that we diversify through bond mutual funds.

So there are any number of those. We like Vanguard's bond funds simply because they're well-diversified. They're low-cost, so the expenses are very low on those. And so we will typically mix short-term bonds with intermediate-term bonds as part of our bond allocation, and then we add to that through some of our actively managed rules-based strategies. So I would say, surely, that corporate bonds overall, great choice, typically going to be fairly safe. Now, of course, there are riskier ones and safer ones, so you want to pay attention to the credit quality there as well. But if you're looking at a mainstream bond fund like Vanguard's intermediate-term bond fund, those are usually going to be pretty good options, pretty safe options. Rob, what would you add to that? No, I think you're exactly right.

Question for you, Mark. You mentioned bond funds. Obviously, with a bond fund, you can't hold the maturity like you can if you own an individual bond. If you can hold the maturity, it takes the really falling bond price out of the equation because if you're willing to hold it to the end, you're guaranteed the coupon. How should folks think about that piece of it?

Yeah, you're exactly right. And for somebody who feels comfortable selecting individual bonds, that is a great option. A lot of folks are nervous about doing that because, of course, it's hard to get good diversification. A lot of folks are stuck holding just a handful of corporate bonds in that situation, and then if something happens to one of those companies, they've got a problem on their hands. But that is a good option if you feel comfortable selecting those bonds yourself.

Yeah, and of course, making sure you're not too highly concentrated in any one particular bond. Very good, counsel. Shirley, thank you for your call.

To Nashville, Tennessee. Bruce, you're next on the program. Go ahead, sir. Yes, sir. Thank you, gentlemen. Good afternoon.

Can you hear me? Yes, sir. Yes.

Okay. I've been investing in the Roth IRA for pretty much since its inception, and I have a lot of cash in there, and I'm planning to invest that in different instruments. I'm over 59 and a half, and it's been in the Roth cash for over five years. So my question is, as I invest and get dividends and interest in capital gains, is there any tax liability? Do I have to pay taxes on that, or is that free and clear since it's in the Roth? Yeah, once you make the contribution to the Roth, Bruce, you can immediately begin investing. That five-year rule only pertains to your ability to take out the earnings without any gains on it. But as you can put it in, immediately turn around and invest it, all that money is going to grow tax-free, both the dividends as well as the capital gains. And as long as you wait at least five years to begin pulling that out and over 59 and a half, you can do so without any tax on any of the gains or the income. So you're in good shape.

I'd begin to put that money to work, especially as this market comes down, you could begin to systematically move it into the market. Final question for Mark Biller today, but if you're holding lines, stick around. We'll still have another segment where I'll take your questions in just a moment. But to Woodridge, Illinois, Betty, go right ahead for Mark Biller.

Hi. My question was, I transferred my 401K to a regular IRA. I rolled it over and had it actively managed. And what I noticed was that there was a great drop in the amount after everything was invested into different funds.

And I'm wondering, is that normal? I mean, I was just totally surprised that it dropped significantly when I rolled it over to a managed account. And this was in December and January, from December 21 to January 22. So the market wasn't that bad. Sure.

Mark, your thoughts? Yeah, I think the thing to look at there, Betty, is the decline in the market during January. Because you're right, there shouldn't be any decline simply moving it from the 401K to the IRA.

That should not cost you anything to do that. But with the market, and especially certain parts of the market, peaking last November and falling fairly sharply into January, some of those January losses were fairly steep. So I would look at exactly what you were invested in and try to line it up that way. Yeah, exactly right. Betty, I'd do a little bit more investigation as to whether that came over in cash, and then it was deployed and that's what led to the decline, or whether the investments came over intact. And then you can probably trace the declines back to those actual investments following the transfer.

And it's probably just market-related. I'd check it out a little bit further. Mark, thanks for being with us, my friend. Thank you, Rob. All right, soundmindinvesting.org is where you can learn more. We're grateful you've tuned in to MoneyWise Live, biblical wisdom for your financial decisions. Hey, before we head back to the phones, let me remind you, MoneyWise Live and MoneyWise Media is listener-supported. We rely on your financial support to do what we do every day. We serve you and the MoneyWise community with principles and content and this radio program, our app.

Everything we do is made possible by your generous support. MoneyWise is a not-for-profit ministry, and if you'd consider a gift to the ministry, we'd certainly be grateful. You can do that on our website quickly and easily at moneywise.org. Just click the donate button. You'll find a way to give through the mail, online, and over the phone. Again, moneywise.org and then donate. And we would certainly appreciate your gifts between now and June 31st when we finish out our fiscal year and plan for our next year of ministry. Thanks in advance. All right, back to the phones we go.

Tampa, Florida. Lisa, you've been incredibly patient. Thank you for waiting. Go right ahead.

Thank you, sir, for taking my call. Long story short, I'm just looking to see if renting versus renting to own. I just got approved for HomePartners. It is a lease-to-own organization, and I'm waiting on Divvy. And I just wanted your insight as to what do you think that's a good idea to do in this market or at all? Yeah. Would you be renting to own with an option to actually buy it, or would you actually have a lease purchase agreement where you are required to buy it at the end of the agreement? These programs are an option to buy. Okay.

All right. Yeah, you know, this can be a good thing in the sense that if you don't have the down payment, you can essentially have a portion of the rent going toward that down payment, so it's kind of a forced savings. You'd want to understand the terms. Is there any kind of upfront cost for this option to be able to rent to buy? You'd want to understand how maintenance works. Are you going to split those costs, or is the landlord solely responsible?

You need to know that going in. You need to also recognize that if you decide not to proceed, you're probably going to lose all that you accumulated toward that down payment. And you need to understand, are you paying above fair market value for this because of this option to rent to buy?

So it's not my first choice, but if it allows you to get into a property you really think will meet your needs, one that you'd like to ultimately have, and have a portion of that rent going toward your down payment, it's something to consider. I would just make sure you count the cost. Again, are you overpaying?

What if you don't proceed and you lose that money? And is this really the place that's going to serve your needs when you're ready to buy it? You'll also want to know how they're going to determine the fair market value when that time comes.

Is that something that's determined in advance or based on some other criteria for determining the value? So as long as you do your homework on this and it fits where you're at, I would say it's something worth considering if you read the fine print. Okay, sir. Thank you very much for your time. I appreciate it. Absolutely, Lisa. Thank you for calling today. God bless you.

To St. Paul, Minnesota, Pat, thanks for your call. Go right ahead. Yeah, I'd like to start out. I just love your show, but I can't always listen because of my work schedule. And I know you've covered this topic before, but could you do just a quick overrun of the high bonds and how much I can put in there and how long I have to keep it in there, please?

Yeah, I'd be happy to. And by the way, Pat, you should check out the MoneyWise app in your app store. Just search for MoneyWise Biblical Finance because you can take the program with you on the go and even listen live when you have the time.

But if you miss it, then you can catch it whenever it makes sense for you. I bonds are a great option, especially right now. You know, I stands for inflation. So these are inflation bonds issued by the U.S. government, backed by the full faith and credit of the United States government. So incredibly safe and paying right now a phenomenal interest rate of nine point six percent because of what we're seeing with inflation. It's pegged to CPI, the consumer price index. It's reset every six months. So this rate that they're paying right now is good.

It'll adjust again in November, probably coming down, but I think still going to be elevated for some time. You can put in up to ten thousand dollars in electronic I bonds at Treasury direct dot gov. That's the Treasury's Web site and then another 5000 in paper bonds using your federal income tax refund. So 10000 for sure. And if you use a refund, an additional 5000, meaning that you can put in up to 15000 in a calendar year per person.

You've got to keep them in place. You can't take any money out for at least a year. So you're gonna have to make a 12 month commitment. If you cash it in before five years, you'll just give up the previous three months worth of interest when you take it out. But apart from that, it's a great option for money you have that's able to be locked up for a year because of that tremendous interest rate of nine point six percent.

And over the next 12 months, even if it adjusts down in November, the aggregate rate that you'll realize over a year with basically no risk is still tremendous. OK. Awesome. Thank you very much. All right, Pat.

Treasury direct dot gov's the Web site you're looking for. And thanks for your call. Tampa, Florida. Beverly, thank you for calling. Go right ahead. Yes.

Can you hear me? Yes, ma'am. Yes. OK.

I am looking to do a lot. Right. But I got this offer from this company.

Right. What is happening is I'm going to get it for 15 years. I pay no interest. I don't pay it back until I'm selling the house.

You get 30 percent or whatever the house value is at that time. OK, I'm not sure I'm looking for me. Yeah, I'm not sure if I'm following you. So it's a heloc. Right. A home equity line of credit. Is that what you're looking at?

Yes, sir. OK. And what are you looking to do with with the money? OK, I'm in the middle of a divorce and I'm in my retirement home, but my husband want me to sell it and give him the money and I won't have anywhere to go or stay. So I was trying to buy his interest in the in the house. It was a retirement that I had bought for myself.

But because I'm married to him, they said he's entitled to 50 percent of it because of the state I am in. Sure. Sure. What's the value of the home, Beverly? It's about $370,000.

All right. So if you were to get a mortgage for half and I wouldn't get a home equity line of credit, I'd just get a conventional mortgage. That'd be a mortgage of one hundred and eighty five thousand. Are you able to absorb a mortgage of one hundred eighty five thousand into your budget? No, that's the problem. I wouldn't be able to pay it.

It would be too much for me. OK. Yeah. Eighty five thousand. And he's going to leave me in debt, you know, with all the previous debt that I'm carrying for him already. And he's going to leave me in debt with this hundred and eighty thousand. I'm never able to survive that because I'm on Social Security.

Yeah. I mean, that would run you about fourteen hundred dollars a month with taxes and insurance added in just probably on average. So you'd need to be able to absorb that fourteen hundred dollars a month.

And it doesn't sound like you can on your fixed income. So I think the option here, Beverly, is to sell this home as much as you'd like to hang on to it and take the proceeds. You take your half.

He takes his half. And then you could turn around and rent something or perhaps buy something a little smaller that fits the money that you'll get out of it. The equity that you'll pull out, perhaps adding to that a small mortgage, something that fits into your budget. But you've got to start with that spending plan to realize, you know, how much can you add to your budget, if anything, in the form of, you know, a small mortgage. And if you really don't have any room for it, then you need to be taking that cash out the roughly one half that you're entitled to and buying something, perhaps a townhome or something that fits so you don't get in over your head. Does that make sense?

Yes. Well, what I realize, you know, I cannot afford anything out there. You know, my interest rate is 2%, where I am right now. And based on what's out there, even if I rent a one, say I go into a one bedroom, I'm looking at two thousand dollars a month. And that doesn't include my utilities. And where I am, I'm cheaper staying in my home than even trying to rent. So I don't know what to do.

Yeah, I totally understand, Beverly. The challenge is, with the court saying that he's entitled to half of it, you're going to have to figure out how to buy him out. And if you don't have the ability to do that, taking on a mortgage is not the answer, certainly not a home equity line of credit. So I think the only option you have at this point is really to sell it so that you can, you know, satisfy that obligation of giving him at least 50%. And then at that point, we're going to have to just pray and ask the Lord to provide something. Perhaps let your church family know what you're looking for.

Maybe somebody has something, you know, for you. Perhaps renting for a period of time while home prices stabilize. Maybe looking at a different part of town or moving to a different area. None of these are easy, and I realize this is a difficult environment to be in. But taking on a mortgage that you can't afford, you know, with a home equity line of credit is just going to lead to bigger problems down the road. So perhaps connecting with one of our MoneyWise coaches would be a great option for you, somebody to help you think through the different scenarios.

If you head to our website, moneywise.org, and click our Community tab, you can connect with one of our coaches free of cost, and they can help you navigate this. I realize it's not easy, and I'd love for them to journey with you. So we'll ask our MoneyWise Live community to be praying for you, Beverly, and keep us posted on how this turns out.

God bless you. Dawn is in Moline. Dawn, you'll be our final caller. We have just a minute left. Go right ahead.

Okay. I have an MRD that I have to take out every year, and I'm wanting to give it directly to my church. And I did that last year, and I realized that I was taxed on that amount. I thought we could just give it directly to our church and not be taxed on it.

And so that's my question. I just don't understand why I was taxed on it. Dawn, did you take that money out and deposit it in your checking account and then write a check to your church? No, I sent it directly. I had them, my investment company, send it directly to the church. All right.

And was it through what's called a qualified charitable distribution? Well, I'm not sure about that. Okay.

All right. So that's what you need to do is get the documentation from your investment company and give that to your tax preparer. Tell him or her what you did and have them look at it.

It could be that you paid tax on it inadvertently, and they can get that back for you. But you're going to need them to check it out. Thanks for your call today. Well, that's going to do it for us.

MoneyWise Live is a partnership between Moody Radio and MoneyWise Media. Thank you to Robert, Gabby T. Thank you to Dan and Amy as well. And thank you for being here. Come back and join us tomorrow. We'll see you then. God bless you.