Good Credit Saves Money

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Some of these guests include our very own Chris Brooks, Jen Wilkin, Nancy Guthrie, and many more. If you've ever wanted to read the Bible in a year, now's your chance! Listen to the trailer, follow, and subscribe on the Moody Radio app or anywhere you listen to podcasts.

Episode 1 drops on January 1st. One number can save you a lot of money, and it's not how much is in your paycheck or bank account. Hi, I'm Rob West. I'm talking about your credit score. A good one can be as good as money in the bank, but how do you get one or improve yours if, shall we say, it's a bit lacking? I'll tell you today, and 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. In Proverbs 22, Solomon writes, A good name is more desirable than great riches. To be esteemed is better than silver or gold.

So this is about more than money. As followers of Christ, we always want to act in a godly and righteous manner so that others will hold you in high regard. Your good name gives glory to God, whom you serve. Now that we've established that, in the financial world, a good credit score is a good name, and it literally can mean having more silver and gold in your pocket. It's how lenders judge you. The higher your credit score, the lower the interest rate you'll be offered when you apply for loans, credit cards, and mortgages.

That much you probably knew. What many people don't realize, however, is that these days, your credit score may also determine what you have to pay for home and auto insurance. The higher your score, the less you pay. And increasingly, employers are using candidates' credit scores in their hiring decisions. A candidate with a high credit score might be offered a job over someone else, all other qualifications being equal.

That also translates to more money in your pocket. To build or raise your credit score, the first thing you need to do is get a basic understanding of how the credit system works. And for our purposes, let's concentrate on your FICO credit score.

That's the one most lenders use. It's based on the information held in your credit reports at the three credit bureaus — Experian, TransUnion, and Equifax — and ranges from 300 to 850. Anything lower than 580 is considered poor. 580 to 670 is fair. 670 to 740 is good. 740 to 800 is very good.

And anything above 800 is exceptional. Your score indicates the likelihood that you'll repay the money that's loaned to you. That number is based on five factors — your payment history and whether you've made any late payments, the length of time you've had each account, your balances versus your available credit, the types of accounts you have, and the number of new accounts. But what if you don't have any of those items on your credit report?

It's a chicken and egg kind of thing. How do you get credit if you don't have any? You do that by opening a secured credit card. It has a credit limit equal to the amount of money you deposit in a designated savings account. And the bank uses that as collateral. It will then allow you to make charges on the card up to that limit.

But you don't want to do that. Instead, just make one routine, budgeted charge a month and then pay it off in full when the bill comes in. Now, you want to make sure the card is one where the bank reports your activity to the credit bureaus, but that's usually the case with secured cards.

But check. Once you start using the card the way I described, you begin to build a solid credit history. You can also get something called a credit builder loan if you go to the website self.inc.

That's inc. They'll help you set it up. By the way, you can also get this type of loan from some banks and credit unions. Here's how it works. You apply for and get the loan.

Usually the amount is from $300 to $1,000. When approved, you don't actually get the money. It's put into a CD and you make monthly payments that are reported to the credit bureaus as loan payments building your credit history in the process.

When the loan's paid off, you get the money you've paid into the CD plus a little interest minus a fee the bank charges. So it works like a secured credit card. But for an installment loan, having both would build a favorable credit history and score even faster. You can also become an authorized user of someone else's credit card to build a credit history.

Usually that's a parent or some other family member. Just make sure that person has a solid credit score and you don't actually have to use the card. As long as the primary owner uses it and makes regular on time payments, you'll get the benefit of good reporting on your credit. If you have a low credit score, the steps to increase it are simple.

Make all of your payments on time pay extra so you reduce the amount owed versus your available credit. It's going to take some time, so make sure you're patient. I hope that's helpful to you. Your calls are next, 800-525-7000. We'll be right back. Great to have you with us today on MoneyWise Live. I'm Rob West, your host. We're taking your calls and questions today on anything financial. The number to call is 800-525-7000.

Again, that's 800-525-7000. We'd love to hear from you today with whatever financial question is on your mind. Hey, before we head to the phones, today is Giving Tuesday, a special day set aside to recognize the joy and opportunity to support the nonprofit organizations that the Lord has allowed to cross our paths. Well, here at MoneyWise, we're grateful to you, our friends and donors to this ministry for your faithfulness and prayers. By the way, if you've never given to MoneyWise, let me encourage you to consider how we're working every day with the Lord's direction to help people break free from the worldly view of money and possessions and learn to live in the truth of God's Word. Our vision here is to see people living their lives fully surrendered to God, but we humbly recognize that's easier said than done.

Two areas that often stand in the way of full surrender are money and possessions. We tend to hold money too tightly. We depend on it too fully, and we may even be tempted to find our meaning in it. But the Bible has a different message for our lives. It's a message of freedom from the financial bondage and dependence we see around us to a life full of contentment, generosity and wise stewardship.

That's our heartbeat here. And if you've been blessed by this ministry and the encouragement we provide through God's Word, I would just invite you to prayerfully consider how you can partner with us so that together we can reach even more people in the coming year. To do that here on a Giving Tuesday, you would just head to MoneyWise.org and click the Give button to see all of the giving options available. And certainly here as we head toward year end, your gifts go a long way to helping us finish the year strong, but also to helping us to plan for next year's ministry activities. So again, your gifts are appreciated, big or small, whether it's one time or as a monthly patron, we would certainly appreciate your financial partnership.

You can do that quickly and easily at MoneyWise.org. Just click Give. All right, we'd love to hear from you today. Again, we have some lines open and perhaps one just for you with whatever is on your mind today.

800-525-7000. Let's begin today in Cleveland, Ohio. Fran, you'll be our first caller. Go right ahead.

Hi. Me and my husband are in the process of becoming members of a church, and we want to be responsible with the gifts that God has given us. So I've been blogging all of our income and things like that, and for the month of November, I've been following the 10-10-80 that you guys talk about. And I don't know, I guess my question is, with the 10% that I have put aside for November, now going into December, since we're not officially members of the church yet, do we still tithe the full 10% to the church? Can we tithe in multiple areas with different ministries that have blessed us? Like, what do we do?

Yeah. Well, first of all, Fran, let me just encourage you in your desire to be financially faithful with what God has entrusted to you. I love the idea of giving 10% right off the top systematically and then saving 10% for the future and then living on the rest. And perhaps even over time, you might want to think about systematically increasing that giving portion just as God blesses you and you experience the joy that comes from being connected to God's activity. You know, as we think about our giving, I mean, certainly I love the principle of the tithe that we see in the Old Testament as a part of the Mosaic law. There was actually three tithes that totaled 23 and a third percent.

One of them was every third year. And I like that proportionate, sacrificial, but also systematic giving of the first and the best right off the top. I think that's a great way to go. I will say that for those of us that have seen the cross, I think that should be a beginning point. My friend Randy Alcorn calls that the training wheels of giving. You know, Jesus raised the bar in every situation, and I believe that includes generosity. He said, to whom much is given, much is required.

And he celebrated the poor widow who gave out of her poverty. And so we recognize that it's an opportunity for us to show our dependence and trust in the Lord. And I think starting with a tithe, a tenth, to the local church is a great beginning point. You know, Fran, in terms of your situation being between churches and just now perhaps figuring out where the Lord is directing you to make your church home, I think it's certainly between you and your husband and the Lord.

Perhaps this is an opportunity here at year end to take those funds that you've already set aside and bless a ministry that's on your heart, that's meeting the needs of the body of Christ or reaching others in the name of Jesus, but also aligns with your passions as well, and bless them here at year end with that gift. But I think once you certainly decide where God is leading you and you find your next church home, then being a faithful supporter of that through a tithe, I think is absolutely the right way to go. If you decided to take the whole amount and just say, we're going to just tithe it to where God has led us and give that whole amount to the church, that would be fine, too. So I don't think there's a right or a wrong approach here. I think it's just whatever you guys would be most comfortable with. Okay, yeah, because I have so many ministries and, you know, especially you guys as well, like there's just so many ministries that have blessed us that are so important to me and have helped me in our journey and helped us in our journey that I'm like, you know, do I take this person and like, you know, spread it throughout everyone or does it have to go directly to the church or like what do I, you know, how do I do that?

Yeah. And I would typically say, you know, as you have a church home and God has planted you somewhere, then you need to start with your giving to the local church. So I would say let's prioritize the tithe as a systematic proportionate gift to God's provision to the local church where God has you today. That's my conviction and that's the way we approach it. But when you're still deciding kind of where that church home is and you've been in transition, I think if the Lord were to lead you to take whatever you previously set aside and bless a ministry that's on your heart, certainly that would be appropriate as well.

At the end of the day, it's more about your heart condition. God doesn't need our money, but he wants us to trust him fully with our giving. And I think doing that to your local church and to other ministries that he's placed in your path that have been an encouragement to you, I think is perfectly appropriate. So you guys pray that through, make a decision here at your end on how you want to proceed. And I'm confident the Lord will be pleased with whatever direction you go. And thanks for being a part of the program and for your encouragement today. We appreciate it.

Let's see, to Akron, Ohio. Is it Keziah? Am I saying that right?

Here is Keziah. Great. How can I help you? Well, I really want to know how that works. Okay. Yeah, very good. I think I caught, we had a little bit of disruption there on your line, but I think you said, what are I bonds and how do they work at treasurydirect.gov?

It's a great question. You know, I bonds are issued by the United States Treasury, which means they're ultra safe because they're backed fully by the US full faith and credit of the United States government. They're 20 year bonds with a 10 year extension and they're pegged to inflation.

So the composite rate is made up of a core rate plus a portion that's connected to the consumer price index, which just simply is a fancy way of saying when inflation's up, the yield goes up with it to offset the effects of inflation. I think they're a great investment for money where you don't need it for a year. So this is not your emergency fund, but it's also money that's not going to be invested for more than five years because with longer term money, I'd rather you put that in a stock and bond portfolio. But with money that has a one to five year time horizon, I think I bonds are a great investment right now. They're paying 6.8% and that'll be good for the next six months. And then it'll reset in May based on the consumer price index.

You can get them a treasury direct .gov, and I think it'd be a great opportunity for you. Kaziah, thank you for your call today. God bless you. We'll be right back with MoneyWise Live. Lines are open at 800-525-7000. Great to have you with us today on MoneyWise Live. We're taking your calls and questions today at 800-525-7000.

That's 800-525-7000. We've got some lines open and we'd love to hear from you on this Giving Tuesday. Let's head to Sioux City, Iowa. John, you're next on the program, sir. Go ahead.

Hey, hi. Thanks a lot for taking my call. My question is, I've got some 403b money and I want to convert it to a Roth IRA. And you need to do that by year end, I believe. And I was going to convert maybe 25k of that. But then I realized my state is going to get rid of the retirement tax on retirement money. And I'm thinking it probably makes more sense to wait until next year when that goes into effect instead of doing a conversion now.

What do you think? Well, what about just rolling that to a traditional IRA and then as you pull income out of that IRA, you would not be taxed at a state level there in the state of Iowa beginning next year. That would be another option versus converting that to the Roth. I'm not familiar enough with the changes in the law there in Iowa to know whether this exemption from state taxes only on retirement distributions from the IRA traditional or whether that also includes the conversion to the Roth. Are you aware of that? No, I'm not.

That's a really good question. Looks like I better check into that. Yeah, I would talk to your CPA or accountant just to do some planning here. Anytime the law is changing, it's a good idea, especially if you have flexibility in how you go about this to make sure you're taking full advantage of what's available to you. Obviously, you could make that Roth conversion next year as well. It's just a matter of whether you want to treat it as taxable income in 2022 or 2023, but the extent to which you may not have to pay state tax on either distributions coming out of that traditional or the Roth conversion would obviously be a factor in how you ultimately go about this.

I'd probably connect with your CPA, see if you can get some counsel here before you're in so you're ready to make whatever decisions you need to make. Does that make sense? Yeah, absolutely. All right. Appreciate your time. Thanks, and thank you. All right, John.

God bless you. Thanks for calling today. We've got a couple of lines open.

800-525-7000. Let's head to Chagrin Falls, Ohio. James, you're next up, sir. Go ahead. Hi, Rob. Thank you for taking my call, and I apologize.

I was in transition between this call and your last call. What is the difference between a traditional IRA and a Roth IRA, please? Yeah. So a traditional is just basically the differences in the tax treatment. One of them is tax-deferred growth. The other is tax-free growth. One offers a tax deduction on the contribution, and one is an after-tax contribution.

So let me break that down. With a traditional IRA, as you make the contribution, you're getting a deduction for that. So that contribution is excluded from your adjusted gross income for the year that you make the contribution. So this year, if you're under age 50, you could put $6,000 in a traditional or a Roth. Let's say you fully funded a traditional IRA. Well, you're now going to exclude that $6,000 that you contributed from your taxable income for this current year that you made the contribution.

That's then going to be invested, and it's going to grow for, let's say, 30 years because you're a young guy. And when you get to retirement after age 59 and a half, and you say, now I want to take all this money that I've contributed and the growth, the compounding that's occurred inside the account, I want to start pulling it out as income to myself because I'm no longer working. As you take the money out, it's then you're going to pay tax on it, federal and state income tax, as you distribute it. The Roth is the opposite. You make that same $6,000 contribution this year, you're going to go ahead and pay tax on that $6,000 and then put in after tax dollars. You don't get the deduction today, but it's going to grow tax free. So all the growth that happens, in my example, over 30 years, now you start taking it out in retirement. And as you pull the money out, both your contributions, but also the growth that you had, now you're pulling it out tax free. The other big difference between the two is the traditional IRA has, at least today, a required minimum distribution when you get to age 72 based on the balance and your life expectancy. The Roth does not. You could theoretically leave that money in there and just let it grow as long as you want and then ultimately pass it on to a charity or your heirs.

Does that make sense? Okay, it does. May I please, what's the difference between a Roth 401k and a traditional 401k? It's exactly the same in terms of the tax treatment. The difference between the 401k and the IRA is just that a 401k is set up by your employer and you'd fund it through salary deferral and the contribution limits are a lot higher. So for instance, the 2022 contribution limits I mentioned for an IRA are $6,000. The contribution limits for a 401k is $20,500. So you can put a lot more in and it happens through salary deferral, meaning it comes out from your HR department out of your paycheck and goes right into the 401k.

In terms of the tax treatment, both the deduction now versus after tax contributions and whether or not you're taxed on the distributions in retirement, it's exactly the same as an IRA with the traditional versus the Roth 401k. Okay, thank you. I appreciate the compliment.

I'm actually 62. I'm asking for a nephew of ours. Okay, very good.

Well, you can pass my example along to him. James, thanks for calling today. We appreciate it.

Muriel, Deborah, Pam, we're coming your way next. Hey, before we take this next break though, let me tackle one of these emails that has come in to us recently. By the way, if you have a question for us, you can send it in to questions at moneywise.org.

We try to get as many of those on the air as we can and so feel free to send your question along. This one says, I have a 17 year old daughter. What's the best way to help her establish credit? Should I co-sign a credit card? No. Should I get a charge card at a big retail store?

No. Here's what I would say, Elsie, either put her on as an authorized user and don't let her have access to the card as long as you're not going to have any late payments because your bad credit history would follow along with your good credit history or you could do a secured credit card and that's probably the most effective way. You or she would put, let's say, a couple of hundred dollars on deposit with a bank. They would issue a secured card against it. She could charge up to that amount.

I'd put a planned budgeted item on their small amount, pay it off every month and that'll help to build her credit history. We'll be right back. Stay with us. Hey, it's great to have you with us today on Money Wise Live as we apply the wisdom from God's word to your financial decisions and choices. Hey, if you'd like an advisor who understands what we talk about this program every day and really has met high standards and training and character and experience related to delivering biblically wise financial advice, well, that's a Certified Kingdom Advisor. It's the designation we trust for professional biblical financial advice and investments and if you'd like to find a Certified Kingdom Advisor in your area, you can do that at our website, MoneyWise.org. Just click Find a CKA. There's 1,300 of them around the country and I would interview two or three.

Find the one that's the best fit for you and again, MoneyWise.org, click Find a CKA. All right, back to the phones we go. Muriel from Spokane, thank you for calling. Go right ahead.

Yes. Our children are presently living in our basement. Our daughter is working from home with a mission that they served with overseas for eight years. When they came home, they came home intending to help me with my husband because he is disabled and we would like to build an annex to the house but it would cost about $225,000 to $250,000.

Our house is assessed at $389,000. We are both retired and so, you know, some family members will counsel saying you shouldn't go into debt or shouldn't refinance your house for your kids. Let them live in the basement and then I hear sermons about don't worry about tomorrow and, you know, don't be tight-fisted with your money and all that.

So, what is a good balance? Should we consider it? Should we just wait and let them continue living in the basement? Yeah.

Okay. It's a great question, Muriel and, you know, this is not your typical situation with adult kids who are living in the basement because they just don't want to go out and get a job and, you know, you're making it easy for them. It sounds like this is perhaps a little different where they've been serving overseas in a mission. They came back for a specific reason to help you care for your husband, their dad and, you know, that's why they're there. There is both though the financial and non-financial side of this equation that needs to be considered. Let's start with the non-financial.

I guess I'm just wondering kind of what is the path forward here? How long would you envision them being with you? And by the way, is it a child that's married or is it two children of yours? When you say they, who are you referring to?

Our daughter and son-in-law. Okay. So, it's your daughter and son-in-law and are they planning to be there indefinitely? Yes. Okay.

As long as necessary to help. Okay. Very good. And what is your husband's age? 76. Okay. And is he, you know, is he improving? Is he in, you know, pretty good condition other than he just can't work or what is his current medical? He has Parkinson's. Okay.

So, it won't improve. And eventually, you know, he's still ambulatory now. He cannot work. Okay.

He does get some disability from the VA. Okay. Very good.

And they're comfortable staying there as long as they need to even if that's a decade or more? Yes. Okay. Yeah. So, I think that's the first consideration is just to say, you know, does it make sense for us to go ahead and build a major addition which is going to be very costly given kind of how long you would expect them to be there both in terms of your husband's health and life expectancy as well as and none of us know our next breath.

So, we can't know that for sure. But also, just in terms of their own desire to have their own place and, you know, be out on their own and I so appreciate their willingness to come alongside the two of you to serve him in this way. The second piece of this in addition to the non-financial is of course your financial readiness and ability to do this in terms of, you know, both what would it cost you and can you support the debt service that would be incurred.

Let's talk about that for a second. So, it sounds like you have a mortgage on this home that's currently worth about $390? No, it's in the clear. We've paid for it before my husband retired but we would have to refinance in order to get a loan to build. Sure, yeah.

So, you wouldn't be refinancing an existing mortgage because you don't have one but you'd be adding a mortgage to a property that's currently free and clear, correct? Correct. Okay. And you think you'd need to borrow about $250,000 and how long ago did you get that estimate?

About three months. Okay. And you feel pretty confident that that would be, you know, an appropriate amount? Yes. Okay. Yeah, the costs have gone up although they've been as of late coming down a little bit.

Okay. So, let's say you were to borrow 250,000 against it and you've got the income to justify that. Rates, let's say 7.5% and you were to do that for 30 years, that'd be $1,800 a month. If you were to do it for 15 years, it'd be $2,200 a month probably.

And that's not including the taxes and insurance but you're already paying that anyway. So, do you have the ability to fund a mortgage of between $1,800 and $2,100 a month with your current income? Yes.

The kids would pay up to $1,700 a month. Okay. All right. So, you would cover the difference and do you have that available? Yes.

Okay. And what if something happened and their income changed and they were unable to do that? What would you do then? That is the question. We could use the disability pay but we don't know what we are going to need further down the road for the disability.

Yeah. I just think it sounds like the challenge here is that once you do it, you're stuck with it unless you sell it. And I think that's the challenge here is we can go into this with the best intentions and what if the unforeseen happens? We need to think about the worst case scenario in terms of they're laid off, their income stops, there's a disruption in their pay. How would you continue to service that mortgage because now all of a sudden if something happens with an interruption in income, your home is at the risk of foreclosure if for some reason that mortgage can't be paid.

And that's not an insignificant sum of money around $2,000 a month. And then there's the question of, okay, what if they decide the Lord calls them to something else? Now you're forced into a situation to sell this home in order to maintain your lifestyle and continue to pay your bills if you don't have the ability to service that mortgage. And then there's the question of whenever the Lord calls your husband home and that could be a long time from now or it could be tomorrow just like it could be for any of us and what happens at that point if they're then ready to move on and at that point you'd pretty much have to determine in advance that you got to sell the house. So I think you guys just need to talk and pray and think through all of this, put all of it in writing, document all the scenarios. You've got to think about the exit strategy. How did they get out from under this and is that realistic? There's got to be clear expectations because the last thing we'd want to do is take a situation where they're trying to honor their dad and be there as a support and create a family conflict relationally because things change and now you all are in a real financial bind.

So I would pray and think through that, think through all the scenarios, document it clearly, but at the end of the day taking on a mortgage sounds like the only way you can go about this if you decide to do it. Let's talk more off the air and we're going to take a quick break. We'll be right back. Stay with us.

Thanks for joining us today on MoneyWise Live. Just before the break we were talking to Muriel and we had a chance to visit a bit more off the air. As she was listening and thinking and I asked for her thoughts as we were talking, she said, you know what? I think you're confirming what I was suspecting and that is that perhaps it's not a good idea just given how things can change, especially with a young couple. Despite their desire to be there to serve their dad, encumbering this home, taking on a major mortgage, a major construction project, them having to come out of pocket $1700 a month for this new addition, given that this is going to now change the relationship and if the Lord were to redirect them, all of a sudden now there's this huge debt service that has to be paid. Now the home has to be controlled. So Muriel is going to continue to look at other options, perhaps renting an apartment down the street or maybe there's an annex at another home in the neighborhood that they could rent if they really want to continue to be available to her dad and her husband's father-in-law.

So I think that's the direction they're going to go. But if you don't mind, let me just pray for Muriel. Father, we just ask you to give Muriel just real wisdom here to navigate this situation. I pray for her husband's health that you would restore that. Lord, we trust you in that. But I just pray that you would give just great conversation and insight to Muriel and her conversation with her daughter and her son-in-law as they navigate this, that the daughter and son-in-law's desire to honor their dad would be evident and that you would just bring real clarity to how the housing situation should unfold in the days ahead. And we're going to trust you for that in Jesus' name.

Amen. Muriel, God bless you and thank you for calling today. Let's go to Canton, Ohio. Debra, you're next on the program. Go right ahead. Hi, Ron. Thanks very much for taking my call. I think this might be basic. I have some I-bonds and I was wondering there to try to figure out because I have two sons.

I'm like 70. Anything happened to me, I will want them to get it. I'm going to have it at will, but I know that you've got to put it or do you have to put a beneficiary on the I-bonds? I would, Debra, because then it will pass outside of your estate directly to your heirs in the way you would like that to happen. So you created a treasury direct account.

Is that right? Or did you buy them directly as paper bonds? Yeah, I created the treasury direct account. Okay, so you can attach a beneficiary to that account at treasurydirect.gov. That would be the way that I would go. So you'd log back in and you'll find the instructions there on how to do it.

And that will just ensure that those particular bonds pass directly to your beneficiaries in the percentage you would prefer and not happen through the probate process. Okay, I did try to log back in, but I couldn't find where it had the beneficiary at. Would you know by any chance? It is there. I don't know specifically right now where you would find that, but I know that it is there and there's some great help docs. They just recently updated their website as well. So just do a search on that site for beneficiary and you'll find the information that you need online. You're probably better off trying to search it out online just given how hard it is to get them on the phone these days. But it's there, Debra.

So you just take a look and see if you can find that. If you have to, you can always give them a call. Thanks for checking in with us today.

To Anderson, Indiana. Hey, Pam, you're next in the program. Go ahead. Hi.

I really appreciate you and your program, first of all. And I'm retired, 68. I've basically been living on my Social Security for the two years. And I bought a car.

So about a year ago. And which I regret buying a new car. So I've had $20,000 to put down on it and it's maybe $38,000. And so I'm paying payments on the rest of that. And I'm just wondering what to do at this point, whether just to continue paying it out or, you know, I know things have changed with the car market that used cars are they're charging more than, you know, in the past. And so I'm just I just don't know exactly what to do with that. And I thought I'd call and see if you had any what you have to say. Okay.

What is your ultimate objective here? Is it to get the monthly payment down because it doesn't really fit into your budget or something else? Yes. I would like to get rid of my payment. I wish I would have bought a car say for $20,000 when my lease went up. I leased cars previous. Okay.

Very good. Have you checked the value of your car recently? No, it's only like a year old, 15,000 miles. And what did you pay for it? I don't know.

Probably around $38,000 or so. What do you owe on it today? Do you think roughly? Well, I don't have that in front of me. So I know I've been. Yeah, I don't know. So I've been making payments for a year.

Okay. Well, it's possible that I mean, used car prices are up and you actually bought it prior to the significant jump that we've had. So what you may find is you could sell it for as much or maybe even a little bit more than you bought it for.

The key is what would you replace it with? And so I think that's your next step is to determine, okay, what is this car really worth that you have today? And I would look at kbb.com or edmunds.com or both to determine what a private sale value would bring and then subtract your loan from it and you'll determine how much equity you have to put toward your next car and then determine what you're willing to do. So you have a 15,000 mile car now.

Are you willing to go, you know, with a 2017 or 18 with 60,000 miles on it? And would the goal be instead of spending 38 to spend, you know, 30 or 27? You know, that could be an option and that would obviously bring your payment down. There is going to be some expense associated with it because you're going to have to pay the taxes and there's a few other fees that you'll have.

So you just need to make sure that it's going to result in the outcome you're looking for. So I think you've got some homework to do here, Pam, to determine again, what is my car worth today? And don't be surprised if maybe it's worth a little bit more than you paid for it. And what would I ultimately be going to buy? What make and model and year and mileage would I be comfortable with? And can I find what I'm looking for at a price point that after the taxes on the new purchase that I would still be able to reduce my monthly payment in a meaningful enough way that justifies all of this to truly get the savings that you're looking for every month, realizing that at the same time, you're going to have a car that's a little older, perhaps several years older with maybe 30 or 40 or 50,000 more miles that is going to be out of warranty. And now you're going to need to put something aside every month to make sure you've got some maintenance available. It doesn't have to be a crazy amount because a well-maintained car, even at 60,000 miles, should be able to run for another 100,000 or 150,000 if it's taken care of. So if you buy the right high quality car that is reliable, you shouldn't be in the shop every week. I don't mean that, but you are going to need to have something there to use if you have to do some repairs because you're out of warranty. Does all that make sense though?

Yes, it does. And I had an idea of what I would go to. I'd probably go just do it all through a dealership, which I know they have to take their cut and all that. Yeah. Well, here's the way I would go.

This is the way I just did this for my mom in the last two weeks. So when you decide on the make and model of car and you confirm that you can get in the price range you're looking for and you accept the mileage that you're going to have to be willing to accept to go along with that, then you just want to scour AutoTrader.com. You want to be on there every day. And if you can buy from a dealer, that's fine. And a lot of times you can get a certified through a dealer, which may even bring an extended warranty. But I wouldn't just go to one dealer. I would be looking perhaps over 30 days or more at all of the cars in the category make and model you're looking for until you find the one that's priced right that you can go buy. I wouldn't just go to one dealer because you may find that it's 100 miles away, the one that ultimately will save you a couple of thousand dollars versus one that's very similar to it at a dealership in your backyard.

So AutoTrader.com would be the place to go to find that next vehicle. Listen, all the best to you, Pam, in this search. And we appreciate your call today.

We'll finish in Cleveland, Ohio. John, thanks for calling, sir. How can I help is am I talking to you now? You are. Yes, sir.

Okay. Now I have I have $400,000 I wanted to. It's been laying in the bank drawing absolutely nothing for the past couple of years. Now the bank comes up with a 4% CD. Would it be wise to put it all into that CD? What is the time horizon on this money?

Is this money you're going to need anytime soon? No. Okay.

The time is 14 months. Okay. So it's a 14 month CD for 4%. Is that right? Yes. Yes.

Yeah. You can do better than that. So for instance, I know I'm just looking at Capital One right now they're offering 4% on a one year CD. So what I would do, John, is go to bankrate.com. That's bankrate.com and look for the CD rates that are going to fit what you're looking for. You know, given that you have this significant amount of money, as long as you're willing to put a minimum of $25,000 into any one CD, you're going to get some of the best terms around.

And what I'd probably do is stagger this over, you know, one year and two years, you know, maybe half in one and half in the half in the one year, half in the two years with a two year CD, you could probably get up around 4.6 right now. The thing about that though is that then every 12 months, you've got half of the money coming available. And if there's higher rates, you can take advantage of them at that point. So I would look to probably lock in something, not just at the bank you're at right now, but at the bank that is going to give you FDIC insurance, but also give you a much better rate than that even. You also want to make sure you don't have any more than $250,000 in any one institution with the same title to count.

Bankrate.com is your place to do that research, John. Thanks for calling today. That's going to do it for us.

MoneyWise Live is a partnership between Moody Radio and MoneyWise Media. Let me say thank you to my team today, Deb and Dan and Robert Sutherland. Thanks for being here with us as well. Come back and join us tomorrow. We'll see you then. Bye-bye.