Do not lay up for yourselves treasures on earth, where moth and rust destroy, but treasures in heaven. For where your treasure is, there your heart will be also.
Hi, I'm Rob West. Jesus makes it pretty clear in Matthew 6 that we can't serve both God and money. Today we'll talk about a way to make the decision easier, the treasure of giving. Then I'll take your calls at 800-525-7000.
That's 800-525-7000. Glad you're with us for another edition of Faith and Finance Live, biblical wisdom for your financial journey. So today we're unpacking the treasure principle.
Our friend Randy Alcorn wrote a whole book about it with that title. The idea is that where your treasure is, there your heart will follow. Now, why is it so important to understand this? Because giving generously breaks the power that money has over us and it allows us to experience kingdom life more fully. Jesus tells us our hearts become more rooted and attached where we've chosen to invest our material wealth.
The treasure principle is real and it's beautiful. It points the way to an amazing adventure with God. Holding money with an open hand and allowing God to use it is the only way to get free of the grip money has on us, especially in America where abundance causes us to tighten our grip on money. Jesus knew the correlation and told us how to break the connection. We see that in his encounter with the rich young ruler found in three of the four gospels. That man approached Jesus because he wanted to know how to inherit eternal life. From a place of love, Christ told the man to give his possessions to the poor and follow him so that he would have treasure in heaven. Jesus offered him the path to true freedom. The rich young man was unwilling and walked away sad because he had many possessions.
He just couldn't do it. Now, Jesus wasn't saying that money is bad and the rich won't go to heaven. And he wasn't saying we should give everything we have to the poor. He was only revealing what the man treasured in his heart and showing how money gets in the way of surrendering our hearts fully to God. This story offers the powerful hope that God can break the power of money in our lives through our generosity. That's because biblical generosity is also powerful and it allows you to discover the freedom it brings to your financial life and the blessing it offers to the world around you.
When we allow God's grace to loosen the grip we have on our stuff, we have the privilege of being an agent of grace in others' lives. In his book Never Enough, financial author Ron Blue tells how he once experienced this gift of grace through giving in a fast food restaurant. He was at a Chick-fil-A eating breakfast, as he often did. He came to know a woman named Rachel who regularly took his order. She was friendly, always welcoming Ron with a smile. That particular day he thought, I wonder if Rachel can take tips. Ron looked at the 20s in his wallet and thought, I'll give her a 20.
Just then Ron says, the Holy Spirit interrupted his thoughts, calling him a cheapskate. You have plenty of 20s, why not give her five of them? So instead of a single 20, he obediently folded over five of them so she couldn't see the amount. He handed them to her and walked out, feeling good about yielding to the Spirit's prompting.
But that's only half the story. You see, the next week Ron was back and Rachel pulled him aside. She said, thank you so much for the money.
I needed new tires and really thought I'd use your gift to buy them. But that day my daughter came home from school and told me about a classmate who had lost everything in an apartment fire the night before. I knew that her family needed the money worse than I did, so I gave them the $100 instead. Naturally, Ron was surprised as Rachel went on to share more of her story. You see, she was a mother of five who had moved to the US from Central America to give her children a chance for a better life. Although she certainly could have used that money, her heart was on the lookout for ways to bless others. Ron was humbly and profoundly reminded of the power of generosity. He says that he'd given out of his abundance, but Rachel turned around and gave out of her poverty. She had very little and really needed those tires, but took action to love her neighbor sacrificially.
Ron says he was stunned by the grace of the kingdom. Moving a little bit of treasure toward eternity had a huge impact on his heart. It reminded him again that giving breaks the power of money. You see, giving always breaks the power of money, transforming our hearts in the process.
That is the treasure principle. All right, your calls are next at 800-525-7000. That's 800-525-7000.
By the way, you can call that number 24-7. You're listening to Faith and Finance Live, biblical wisdom for your financial journey. Stay tuned. There's much more just around the corner, including your questions. Great to have you with us today on Faith and Finance Live. I'm Rob West, your host. All right, it's time to turn the corner and take your calls and questions on anything financial.
Tell us what you're thinking about. 800-525-7000 is the number to call. That's 800-525-7000. We've got some lines open at the moment, so we'd love to hear from you.
We're going to begin today in Grand Rapids, Michigan. Jacob, you'll be our first caller. Go ahead, sir. Hi, Ron. Thanks for taking my call.
Absolutely. Oh, Jacob, I think we lost you there for a moment. Let's see if we can get you back. Can you hear me? Yes, I can. Okay, great. Let's try that again.
Go ahead, sir. Okay. I just got married in July, and we're working through budget stuff. So my wife likes to do monthly budgets, and I am exploring weekly budgets.
So I was just curious if you have any tips or tricks on which one we should do that works the best. Yeah, I mean, my experience is that the monthly budget works a little better, but you can do a hybrid of sorts where you're doing a monthly budget. That is, you know what it takes to fund your household over a month's time. Usually, most bills are going to come in monthly, and then you can kind of figure out your discretionary spending for a typical 30-day period. And then you can take any annual expenses or semiannual expenses and divide them by 12 or by 6 to figure out how much you should be putting aside. If you're saving for home maintenance and you want to put away 1% of the home value a year, you can take 1 12th of that and put that aside.
And it just gives you kind of a rhythm to focus your spending around. But you can allocate your paycheck if you're using, let's say, the envelope system either in a physical form or a digital form like we offer in the Faithfi app. You can allocate to your envelopes based on every paycheck, which gives you the ability, depending on whether you get paid weekly or biweekly or monthly, to take those paychecks and say, okay, we want to know what we're going to spend over a typical 30-day period to make sure we've got everything captured. But as we get paid, we know kind of out of each check how we're going to fund each of our envelopes. Again, whether that's electronic on a spreadsheet or in an app like ours or physically where you're actually funding those envelopes, we know what's going in each envelope out of every pay period. And that way we can build that around when things come due. Does that make sense?
Yeah, that does. You mentioned pulling it out of every paycheck. Do I take a percentage of the paycheck or how does that work? Just so I don't take too much for one thing.
Sure. And that would be great if everything was due on the last day of the month. And if you can get a month ahead, that would be even better just because you don't have to worry about the timing. But until you get there, it may require you to actually look at when things come due throughout the month and then decide, okay, which things do I need to fund out of the first check and which things come out of the second check and actually fund it that way. And that's the way we built the Faithfi app. So essentially, if you were to jump into the app, you would connect it to your funding accounts, which would typically be your checking account, might be a checking and a savings account or a couple of savings accounts. You'd tell it that you want that to be a part of the balance that's available for funding. And then you'd go up and set up automatic transfers to happen that correspond with each pay period and funding from those accounts into each of the envelopes.
It's not actually moving money. It's just taking that balance and it's allocating to those digital envelopes. And then as the transactions come in, it would automatically apply the transactions to each envelope and reduce the amount that's available. If you do that in a more manual form, you would again look at all the things that you have to spend on a monthly basis and you'd look at the due dates and then you'd actually fund those envelopes physically or electronically based on making sure that the money is available in the envelope when it's needed. And so that might be early in the month for your food category because you got to go to the grocery store or keep gas in the car for a utility or a credit card payment. Hopefully you're paying that off every month and only using it for budgeted items.
You might sync the funding of that up with the timing of when it's actually due. So it does involve some kind of work on the front end just to figure out, okay, what's truly an accurate picture of what we're spending every month? What control system are we using once we have the budget in place to make sure we're controlling the flow of money and getting the dollars to the place we intended them to go?
And that's especially true with the discretionary categories. And then what method of control are we going to use? Do we want to use a smartphone app? Do we want to use an Excel spreadsheet or are we actually going to go more tactile, more manual and fund actual envelopes with cash? Which system do you think is going to work best for you guys?
I'm not entirely sure. I've tried to use the iPhone apps a little bit before and they work for a short time, but then I just, I guess I lose the traction on it. So I recently developed a spreadsheet type one and I'm kind of thinking that and maybe envelopes might work for us, but we'll see. Yeah, I think the key is to find something that works for you regardless of who you decide is going to be the bookkeeper, Jacob, between you and your wife, you know, whoever is probably more detail oriented, maybe enjoys finances a little more than the other.
You make decisions together, you set the budget together, you use it as an instrument of peace and unity in the marriage, but one person is the bookkeeper. And I think, you know, the system that you use is probably going to be what works best for both of you and the bookkeeper in particular. If you want to try another smartphone app just to see if this one might work for you, the Faithfi app that we spent a couple of years developing and have a team of developers constantly improving it is built on the digital, well, it's built on the envelope system in a modern, simple digital expression. And we have a team of people that would be delighted to kind of walk alongside you to help you get it set up and get it working well for you. We've got thousands and thousands of our listeners using it every day.
So if you want to give that a shot, I'd be happy to give you a six month pro subscription, but if you want to go more with the physical envelope, the key is what works best for you and to your point, what are you going to stick with? Because, you know, especially as you all are getting started, you're only a year into your marriage, you know, getting this area right where you guys have good open communication, you've got a good plan in terms of your goals and your priorities and your lifestyle that's based on your values as believers and getting a system that works for you to control the flow of money, not to restrict anybody, but, you know, allowing you each to have your own kind of piece of the budget for some spending money. But, you know, the bulk of it, you jointly decide together and it allows you to kind of move toward those God given goals that you have, whether that's saving for a home purchase or a car, putting aside for retirement, meeting your giving goals, you know, whatever that might be.
And I think, you know, probably looking at that on a monthly basis, but then finding a system to control that based on your pay periods, the due dates and just your money temperament, if you will, your wiring, I think is the key to making that sustainable. Does all that make sense? Definitely does. Thank you very much. I appreciate it.
You're welcome. Hey, as our gift to you, I'd like to do two things for you, Jacob. If you hold the line, we'll get your information. I want to send you a copy of Howard Dayton's book Money and Marriage God's Way. It's a great resource. Maybe you and your new bride can sit down and read through that a chapter at a time, you know, maybe a chapter a week and just use that as the basis for a discussion to talk about how you can really understand God's heart and design for money and marriage.
I'd also like to give you that six month pro subscription to the MoneyWise app and now called the FaithFi app and see if that might be a good resource for you. And again, our team at no cost would be happy to walk alongside you with some Zoom meetings to get all that set up. So stay on the line. We'll get your information and get all that right out to you. God bless you, my friend.
And congrats on your marriage. Hey, Jack, Alex, Susan coming your way next. Stay with us. We'll be right back. Great to have you with us today on Faith and Finance Live.
I'm Rob Last, your host. We're taking your calls and questions today. What are you thinking about financially speaking? We'd love to apply the wisdom from the scriptures to your financial decisions and choices. So give us a call.
Tell us what you're thinking about. We've got some lines open today, perhaps one just for you. Eight hundred five two five seven thousand is the number to call. And let's head right back to the phones. To Jackson, Mississippi, we go. Hey, Jack, thanks for calling, sir. Go ahead. Hey, I had a question for you about my 401k account.
I have about eight hundred thousand in it. And someone had told me I'd be better off to draw money out of my 401k to retire on until I was 70 to start taking my Social Security. So I just wonder what you thought on that. Yeah. Well, I'll be six probably when I retire. So I'd be four years.
I'd be out, you know. Yeah. Yeah. And how much would you need to pull out of that account each year? Probably about twenty, forty and fifty thousand.
OK. And what do you have built up in there? You said about eight hundred thousand. Yeah. OK. Yeah. And so, you know, you'd be pulling five percent. You know, that would be forty thousand a year. You think that would just about do it?
It'd be close. And that's something that came up. Yeah. OK. Very good.
Yeah. I mean, the reason they're telling you to do that is for every year you wait in between full retirement age and age 70 and taking your Social Security, your monthly check is going to increase by about eight percent a year. So the question is, are you going to do better than eight percent a year, assuming you live long enough to be repaid on what you gave up and then you've enjoyed that check that's eight percent or if you wait, you know, all the way between full retirement and age and age 70, you know, you probably have between twenty four and thirty percent that you'd be adding to your check that you get for the rest of your life. Typically, that works out to about eleven point seven years. And so if you don't take it at full retirement age, you take it at age 70, as long as you live, you know, at least eleven point seven years, then at that point you've been made whole for what you gave up during those years you didn't collect. And now, you know, from that point forward, you are enjoying a much higher check. So you've got to get from 70 to, let's say, you know, 81, 82 years old. And then for the rest of your life, you have that higher amount.
So if the Lord tarries and we don't know about that, if you're in good health and, you know, we don't know about that either, but we, you know, we certainly can look at family history and longevity and just kind of your overall health and say, you know, based on life expectancy, once you reach age 65 for a male, I think the last time I looked, once you get to 65, life expectancy is 83 years old. You know, if you're living to 81, 82, then, you know, you've got that higher check for the rest of your life and you've locked that in. So once you're made whole, the question is, would you have done better with your 401k, you know, invested?
Well, you're certainly not going to get a guaranteed 8% in the 401k, whereas you are with Social Security. You know, I think the other thing to consider is just, you know, how is that portfolio doing and has it recovered by the time you retire from what we've experienced last year and, you know, what we still have to experience if we're headed toward a recession this year. And I think that would be another consideration is, you know, are you comfortable locking in any of those losses and, you know, starting to take that out. But again, it's only 5% a year, maybe 6% a year.
So I think, you know, you probably should be in pretty good shape. The idea would be that you'd invest that in such a way that you could offset that, you know, that that, you know, typically we say try to take 4% a year, but even if you took 5% or 6%, the goal would be to replenish as much of that as you can. So you're not even really seeing that balance decline a whole lot through a small portion in stocks and a larger portion in fixed income. So I guess all that to say, I like this idea, Jack, for the reasons that I mentioned, especially if we keep this money invested and try to grow it with the money that's in it so we can offset as much of that 40 to 50,000 as possible. And, you know, if you're in good health and the Lord still has you here for a while, then, you know, you'll lock in those 8% increases on your Social Security. Does all that make sense? Yeah, it makes sense. But I rolled my 401k out of my company plan, like early part of this year. So I missed a lot of the downside.
And about 75% of it is still in cash. So I've got to put that back in, you know. Yeah. Do you have an advisor that's going to be making those decisions for you?
Or how do you plan to select the investments? Yes. They were the one telling me I needed to wait to save anything. And he said 401k would grow up to make up that difference.
Yeah. I mean, I would expect, you know, depending on how conservative you want to be, at least a good portion of it. If you're taking 6% a year, I wouldn't necessarily expect you to make that up, especially given what we think we're going to see with more of a sideways market these next couple of years. But yeah, I think over the long haul, you should be able to make up much of it.
And I like the fact that you're locking in that higher check. I think this is a good time, even though there's still some uncertainty ahead, before the market recovers for you to get that money working for you. And so perhaps it's a time to visit with your advisor and say, hey, what's our game plan? And maybe we ought a dollar cost average back into the market with the 75% that's still in cash. So we're buying at a discount and get that money growing for you between now and retirement.
And then, you know, start drawing out, obviously, whatever you need to fund your expenses at that point. So I think this is a good plan. And I concur with your advisor on it. All right. I appreciate it.
All right. Thanks for calling. We appreciate you checking in with us today. 800-525-7000 is the number to call.
Before we head to our next break and then back to the phones, a quick email. Harvey writes and asks, how can we contribute to ministries anonymously and still have a record of our giving for income tax purposes? Yeah, this can be challenging if you're giving direct to the ministry because they don't know who to issue the contribution statement to, and therefore you can't deduct it.
Here's a way around that. A giving fund at the National Christian Foundation is essentially a donor advised fund. You'd make a gift to your donor advised fund. You get the contribution receipt, which you can use for the IRS, and then you grant it out at whatever timeframe you want and to whatever ministry or charity you want. And you can do that anonymously.
So that's one way to do an anonymous gift and still be able to claim it on your taxes if you itemize. Hey, we'll be right back on faith and finance live. Stay with us.
Much more to come. Great to have you with us today on faith and finance live. I'm Rob West, your host. We're taking your calls and questions today on anything financial.
What are you thinking about? 800-525-7000 is the number to call. Give us a call right now. Our team is standing by 800-525-7000. Let's head to Miami, Florida.
Alex, you're next on the program, sir. Go ahead. Yes.
Good afternoon and thank you for taking my call. I'm interested in setting up a trust for my child. I'm looking at a company that would perform the trustee services, and so far I have one company that I'm supposed to be doing a Zoom meeting with later on this week, but I haven't really searched out too many companies.
I just needed to know how I could determine what companies would be like the four stars companies and what their fees would be for managing a fund of a million dollars. Yes. So are you trying to select the investment manager who would actually make the investment selections and also the trustee who would actually be your successor trustee in the event you're incapacitated? Is that right? Yes. The trust would be written up by my attorney and just to have someone execute the services of the trustees, a company that specializes.
Sure, sure. And yeah, so you're looking for a corporate trustee to be able to make this decision, and there's several factors you need to look at as you look at a trust option. Obviously the cost, and so individual trustees are cheaper than institutions, but in some cases that can make some sense depending on what you're looking to do there. Record keeping and reporting, the safeguarding of the assets, the service that you'll want from the trustee, who's somebody who's objective and can administer this according to the terms of the trust.
And then a corporate trustee can also maintain family unity by taking sole responsibility for all distributions if you're incapacitated or at your death, that type of thing. So do you have some options you're considering or kind of where are you in the selection process? I'm going to be having a meeting either this week or next week with one company, but I needed to have basically something to judge what this company is. So I needed to have, as far as the fees, what would the fees be and as far as their record if they're a four-star company.
Sure, sure. Well, what I would probably do, I mean, it varies so widely just in terms of the actual fees, and a lot of that's going to have to do with the amount of assets that are in the trust. I think given just the complexity of this and the considerations you need to make, I would probably connect with a certified kingdom advisor there in Miami, Alex, just to talk through your situation and have them help you determine what are the decision points you need to make at this point with regard to setting it up, funding it, but then also the selection of that trustee and what would be the appropriate amount to pay, and the investment management of the assets inside of it, if that's a part of this. So the best way to connect with a CKA there in Miami is just head to our website, faithfi.com, and just click Find a CKA. And I think talking it through with that person, looking at your whole financial situation right now and having them weigh in on what the considerations are would be really helpful to you at this point without knowing a lot more details.
I'd be hesitant to weigh in on exactly what you might expect to pay for this and what you might be looking for, just depending on what the needs are that you're going to have inside your particular trust. So again, to find a CKA in your area, even just for a consult to help you navigate all the issues you're thinking about, you'd head to our website again, faithfi.com, and just click Find a CKA. We appreciate you checking with us today, sir. God bless you. Let's see, to Indianapolis, Cheryl, you're next on the program.
How can we help you? All right, Susan in Tennessee. My apologies, Susan, go right ahead. Hi, thank you for taking my call. And I'm just really impressed with your expertise and your compassion and your respect for your audience. Well, thank you. I appreciate you saying that.
Thanks for calling in today. So I'm 63 years old. I'm going to start working part time. And I would like to know with regard to the cap of the income you can make prior to full retirement. I assume that they look at the net, not the AGI, not your growth. If I were to start collecting in March, would the January and February income be included? Are they looking at that 12-month fiscal year? Yes.
Yeah, it's a great question. So they are looking at the tax year. And in terms of the income, it is based on your gross pay. It only applies to income from work. So it doesn't count investments, pensions, annuities or capital gains.
And you would begin to receive a reduction. So for instance, if you're receiving benefits and working in 2023 but don't hit full retirement age yet, then the earnings limit would be $21,240. You'd lose a dollar in benefit for every $2 you earn above the cap. So if you have a part time job and it's paying you 30,000 a year, you're $8,700 over the limit, they deduct benefits on that basis.
And then ultimately the earnings limit is $56,520 where a dollar is withheld for every $3 you earn above that limit. And so what you'd have to consider is when you're retiring versus when you reach full retirement age and what the benefit that would be reduced based on how much you're planning to earn. Now keep in mind any reductions that you have would be repaid to you at full retirement age in the form of a higher check until that's fully restored to you. So it would be worth just kind of looking at this and determining when the best time to take it is based on the income you're planning to earn and then also factoring in, Susan, the reduction that you're going to be locking in. Because if you take Social Security at 62 versus full retirement age, you're going to be locking your benefit in about 30% lower than if you were to wait until full retirement age to take it. Now if you need the money, you may decide it's worth it to go ahead and do that. But if you can wait, you're going to see that check continue to rise. So what I would do is probably schedule a meeting with the Social Security Administration just so you can use your actual record as the basis for the conversation and they can tell you exactly how much you can earn, how much your benefit would be reduced.
And I would also take a look at whether it makes sense to go ahead and take it early at 62 or 63 or whether you could get by by continuing to work longer and continuing to delay because every year you get closer to full retirement age, you're going to see that benefit increase permanently by about 8%. Hope that helps you. Thanks for your call today. We'll be right back on Faith and Finance Live.
Stay with us. Welcome back to Faith and Finance Live. I'm Rob West, your host, taking your calls and questions today on anything financial. Back to the phones we go to. Indianapolis, Cheryl, how can I help you today? Hi, good afternoon and thank you so much for your wisdom, Mr. West.
Thank you. I currently have a Roth IRA, True Fidelity. It was like one of the 2025 funds, I will say. I was thinking about rolling it into their robo-advisor account, which requires selling everything that is currently invested in the mutual fund stocks, all of those, and then they would reinvest those monies. Would that be a wise decision in the current market?
Yeah, it's really going to depend, Cheryl. As long as you keep it invested, you're just going to have maybe a day or two while you're selling and liquidating the current investments and replacing it with, in your example, the robo-advisor investment. So I'm not as concerned about that as I am just what's the right investment mix for you. So you said you have a target date fund currently based on a retirement date of what year? It was 2025.
Okay, so that's pretty conservative because we're just a couple of years away from that. So you probably have, what, about 20 to 30 percent in stocks in that? Really it is showing, I think it was like 46 percent in stocks.
I was going to say when I went through their online tool, it was still showing like 42 percent in stock. So then if you replace it with the robo-advisor, then that's going to do something similar, but it's just going to be based on your answers to the questions and they'll build a similar mix of stocks and bonds based on your age and risk tolerance and goals and objectives. So you might end up with something very similar. It's just going to be using probably indexed ETFs, exchange-traded funds, instead of a mutual fund where a mutual fund manager is making those decisions on that allocation based on that target retirement date. As to which one might perform better or worse, there's really no way to know. It's ultimately going to come down to what is the ultimate mix of stocks versus bonds and what types of stocks and bonds are in each of those categories in the target date fund versus the robo-advisor selection of indexes. But those indexes are going to be comprised of stocks, large-cap, small-cap, mid-cap and bonds, probably some governments and corporate bonds. And that ultimate allocation is just going to be how the algorithm determines the portfolio based on the questions you provide. So I wouldn't be able to say whether it's right or wrong. Both would be prudent approaches in the sense that they're both going to take into account the fact that you're, I assume, just a few years away from retirement.
And so that's going to ensure that you aren't overly aggressive. But as to whether one would be better than the other, there's really no way to determine that at this point, unless we were to know where the economy and the market's headed and whether one's going to perform better than another. So the other option might be, as opposed to looking at just target date versus robo, might be target date versus actively managed, where you'd hire an investment advisor to actually make the buying and selling decisions for you, again, based on your goals and objectives.
But in a more actively managed approach as opposed to a passive indexing approach. Does that make sense? That does. And that sounds like great advice. I was just kind of that's what I was trying to determine if I should even go with the robo advisor or possibly find an actual advisor to manage those funds. Yeah.
Yeah. And, you know, I think you could certainly stay where you're at right now, assuming that target date lines up with your life stage. Perhaps you consider as an alternative a more actively managed solution. And for that, I'd probably head to our website, faithfi.com. Just click find a C.K.A. And there's some wonderful C.K.s there in Indy that you could interview two or three and find the one that's the best fit.
I'm not saying you automatically need to go with that, but as an alternative to a target date fund, that might be a better, you know, alternate consideration as opposed to moving to the robo, which would essentially give you another passive approach similar to what you already have. That makes perfect sense. I thank you very much. All right. Thanks for calling today. We appreciate it very much. To Tampa, Jessica, how can I help you?
Hi, Rob. Yeah, I'm wondering what's the best way to finance a major home repair is aside from cash. Yeah, so if you don't have cash and you've got a major home repair, I generally look at a home equity, not a line of credit, but a home equity loan.
The difference is the line of credit is going to carry a variable interest rate in just about every case, whereas the home equity loan is going to have a fixed interest rate. And you would know what that monthly payment is and the term is and the interest rate, and then you just pay it till it's done. You know, the downside right now is obviously rates have moved up considerably. And so the cost of those funds is going to be quite a bit higher than it would have been, let's say, a year ago. But that would be the typical alternative because we're making repairs or improvements to the house. And so we're collateralizing it to the house. You always want to make sure anytime you're taking a loan, especially when it's collateralized by something like your home, that you're not presuming on the future. You're not getting overextended in terms of what you're borrowing. But given that they have the home as collateral, it's going to make it fairly, you know, more cost effective than if you were going into your bank and trying to get a loan, you know, let's say just based on your signature where there's no collateral attached to it. Apart from that, it would be to say, well, depending upon whether these repairs are necessary because, you know, by delaying them, it's going to cause further damage to the home. If you have the option to wait, you know, kind of a third option in between, you know, having paying for it all right now and, you know, borrowing through a home equity loan might be to, you know, save and pay as you go. And so maybe there's some things you need to do more immediately, but others you can kind of kick the can down the road and you go back to your spending plan, look for ways to cut back. And then you guys are just really diligent about carving money aside and funding a savings account that once, you know, it builds up to what you need, then you can pay for it out of cash that way. But give me your thoughts.
What are you all thinking and what reaction do you have to what I shared? Yeah, that makes sense. I was hoping not to give up my three percent interest rate on my mortgage, but I may need to refinance and go that route.
Well, why is that, though? What do you owe still on the primary mortgage? Right around one hundred.
OK. And what do you need for these repairs? Probably for the absolutely necessary repairs, only about twenty thousand. OK. And what is the home worth, do you think? It's right around three hundred.
OK. Yeah. So I wouldn't touch that one hundred thousand dollar mortgage at three percent. I'd leave that alone. Not only you're going to give up that rate, that's phenomenal, but you're going to have all the cost of the new mortgage in terms of the origination and just the cost of refinancing, which could be three or four percent of the loan value. So I'd leave that mortgage alone and borrow the twenty thousand in a home equity loan, which is essentially a second mortgage that would go on top of the existing mortgage. And you'd focus on paying that one back just as quickly as you can and just keep making the regularly scheduled mortgage payments to your first mortgage. But it wouldn't make sense to try to refinance the whole thing just to get twenty thousand dollars cash out because of the cost of the refi and the fact that you'd be giving up that great interest rate.
You'd be doubling it and then some on that hundred thousand. OK. That makes sense. Thank you.
You're welcome. If you go to Bankrate.com or NerdWallet.com, you could begin to research who has the very best home equity loan options right now in terms of the best rates. Hopefully no closing costs, things like that. You've got quite a bit of equity.
So I don't think that should be an issue. Just make sure you've got enough cash flow to absorb that extra payment and try to get that paid off just as quick as you can. We appreciate you checking in with us today. Quickly to Cleveland. Lori, I have just a minute or so.
How can I help? I'm 69. I've been letting my Social Security grow till 70. My question is if I should work beyond 70, a couple of years more, will that change my Social Security amount that I would get or once I hit 70, it's locked in? Yeah. Well, it's yes and no.
Let me explain. Every year you wait to take Social Security beyond full retirement age, which is usually 66 or 67, you're going to get an 8% increase in your Social Security. That stops at age 70.
So that's probably what you're referring to. So how could you see increases beyond age 70? Well, if you continue to work and let's say any of the income, the amount of income you're receiving beyond age 70 is higher than any of your highest previous 35 years of earnings that is what's being used to determine your Social Security benefit. If you can replace any of those based on what you're earning beyond age 70, then you could get a higher check. But if you're saying, no, I'm working part time and I'm slowing down, I'm not going to earn any more than my highest 35 years of earnings over my entire life work record with the Social Security Administration, then no, the only increase you'd get would be the cost of living adjustment that everybody gets. You wouldn't get a guaranteed increase. But again, you could see an increase if you can replace any of what they call the high 35 that was used to determine your benefit. Does that make sense? Oh, yes. Actually, I had I look back and in those early years, I was only working where I was making $35,000 a year.
Okay. So the fact that I would be working if I was continuing to work like two more years at full time, it would not. How does that work? If I knock off that three or $5,000, I made that those years. And what I'm making today, does it? It would increase it. It's a pretty complicated formula in terms of what it would actually do. I'd check with the Social Security Administration.
They can tell you exactly how much your benefit would increase as you knock those earlier years off. Hey, thanks for calling today. God bless you.
Faith at Finance Live is a partnership between Moody Radio and FaithFi. Thank you to my team today, Ryan, Dan, Amy and Robert. Hope you have a great rest of your day and come back and join us tomorrow. We'll see you then. Bye bye.
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