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Answers to Tough Financial Questions

MoneyWise / Rob West and Steve Moore
The Truth Network Radio
January 25, 2023 5:00 pm

Answers to Tough Financial Questions

MoneyWise / Rob West and Steve Moore

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January 25, 2023 5:00 pm

The Bible teaches that we should seek out wise counsel for answers to life’s questions. And that’s especially true when we’re dealing with tough financial questions.  On today's Faith & Finance Live, host Rob West will welcome Howard Dayton to review some of the tough financial questions he’s answered over the years with the help of scripture. Then Rob will answer your calls on various financial topics. 

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For by wise guidance, you can wage your war. And in abundance of counselors, there is victory.

Proverbs 24, 6. Hi, I'm Rob West. The Bible teaches that we should seek out wise counsel for answers to questions. Today I'll be asking some tough financial questions, and Howard Dayton will give us his answers, all based on God's Word. Then it's on to your calls at 800-525-7000.

That's 800-525-7000. This is Faith and Finance Live, biblical wisdom for your financial decisions. Well, our friend Howard Dayton joins us again today. He's the author of Your Money Counts and the brand new book, Charting Your Legacy. He's also the former host of this program and one of the wisest men I know, and I mean that. Howard, welcome back.

Well, that's very kind of you, brother, and great to be with you, Rob. Always delighted to have you, Howard. Okay, we've got a list of questions that I know you've been asked over the years, Howard, so let's dive right in. We're going to start with taxes. What is God's perspective, according to his Word, Howard, on paying taxes? Well, just think of the question that the Pharisees asked Jesus, you know, is it lawful for us to pay taxes to Caesar or not? And Jesus said, show me a Roman coin whose head and inscription does it have? They responded, Caesars.

And he said to them, then give to Caesar the things that are Caesars. And a lot of folks rationalize not paying taxes because the government squanders so much money. Now, I'm not condoning government waste.

In fact, I believe a citizen should try to influence the government to be more efficient. However, the Bible tells us to pay the taxes we legally owe. I have a close friend who likes to say, I pay my taxes with integrity and joy.

What a great combination. Well, that's exactly right, because taxes are symptomatic of God's provision. All right, how about this one, Howard? How does the Bible define financial success? You know, Scripture tells us financial success is simply being a faithful steward. Most people measure success by how much wealth somebody piles up. Yeah, but Christians should not assume that somebody is successful just by outward appearances.

If we had seen Joseph or Paul in prison or Daniel in the lion's den or Job in his affliction, how many of us would have considered them successful? According to the Scripture, our responsibility is to become faithful stewards. After we have fulfilled that responsibility, it's up to God to decide whether or not to entrust us with a lot or a little. I love that, faithful, being obedient over a long period of time.

All right, let's follow up on that then, Howard. Is it permissible for a Christian to be ambitious? Yes, Scripture doesn't condemn ambition.

Paul was ambitious. In 2 Corinthians 5, he says, We have as our ambition to be pleasing to him, for we must all appear before the judgment seat of Christ, that each one may be rewarded for his deeds. But the Bible strongly condemns selfish ambition. Romans 2 says that the Lord will render to each man according to his deeds, to those who are selfishly ambitious, wrath and indignation. So our ambition shouldn't be motivated by ego. It should be to please Christ. We should have a burning desire to become increasingly faithful stewards in using the possessions and skills that he's entrusted to us, Rob. Oh, that's so good, Howard.

All right, time for one quick one. And this is something a lot of people wonder about. Why do the wicked prosper, Howard, in your view? God's people have asked that question for centuries, Rob. The prophet Jeremiah in Jeremiah 12 said, Why does the way of the wicked prosper? Why do all the faithless live at ease? You know, the Bible tells us that some of the wicked will prosper, but it says not to worry about it. In Psalm 37, we find, Do not fret because of evil men or the envious of those who do wrong, for like grass, they will soon wither.

Howard, just about 30 seconds left. Let's go back to what you said a moment ago. You talked about the importance of being faithful. What's the fruit of that in your view as someone lives as a faithful steward? Well, if a person who lives as a faithful steward is Christ-centered, and they're handling their money in a way that pleases the Lord, they're handling their life in a way that pleases the Lord, Rob. And the byproduct of that is that they do draw closer to the Lord himself.

And that's what we all are looking for. Howard, grateful for you, my friend. Thanks for stopping by. My pleasure, Rob.

Loved it. Tough questions today answered by Howard Dayton, drawing from the Council of Scripture. Howard is the author of the book Your Money Counts and the new Charting Your Legacy, picking up where you buy books. Your calls are next, 800-525-7000. This is Faith and Finance Live biblical wisdom for your financial decisions. Stay with us. We'll be right back. Thankful to have you along with us today on Faith and Finance Live. I'm Rob West, your host. Hey, the phone lines are building up.

That's right. We've only got a few left. So if you have a financial question today, we'd love for you to get in the queue. 800-525-7000. We'll take as many questions as we can. Let's jump right in.

Hartford, Connecticut. Hi, Beverly. Thanks for calling.

Go ahead. Hi, Rob. How are you? I'm well, thank you.

Oh, and hi to the little one in the back. That's great. Okay. We at least, it was a couple of, three of us, we had went on a vacation in Orlando, and they ended up that we bought a time share and was told that we could sell it or cancel it, not really cancel any time because they give you a certain amount of time to cancel, but you can sell it if you want it too. But now that we want to give it up, and they're telling us that we cannot give it up, and we can't sell it until we finish paying off for it, which we had bought it in August of last year. So can you give me advice on that? Sure.

Let me ask you, Beverly, was there anything in the contract or the agreement that you signed that spoke to this issue of how you were to go about selling it if you wanted to? No, they, no. Okay.

Yeah. So the challenge here is, I really don't ever get called. I'm sure there's people out there who bought time shares and love them. I just don't hear from them. So we hear from people all the time that really want to get out of these, which should serve as a warning to those who are considering it, just to make sure that you are going to use it and that you have a way to get out of it. Because obviously those that are selling these time shares want to look for new sales. They are not as interested in making a market for people who already have time shares to sell them to others, because there's not any commissions built into that process.

So often they are very difficult to unload. And most of the time the company that sold it to you has no incentive to buy it back or to try to help you get it sold. So I would always start with the documents that you signed just to see what rights you have and what commitments they made to be a party to allowing you to sell it and how you might go about that, or if there's a prohibition against selling it prior to getting it paid off in full. Ideally what you would do would be somebody, find somebody who'd be willing to take on the payments so that they could use it and enjoy it, but basically pick up from where you left off. Worst case scenario, you'd continue paying it until it's paid and then you'd find somebody to either buy it or just take it away from you and they would agree at that point to take on the maintenance expense. But you'd have to ensure that in doing so, you are transferring that responsibility.

Because if you retain that contractual responsibility to keep the maintenance fees paid and they fail to do so, it may actually be you that's still on the hook for that. So you'd need to look into that. A couple of thoughts is I would always start with an attorney looking at the sales contract. Beyond that, I would perhaps talk to the management company that sold it to you, see if they have a way for you to sell it. You can check out a website on the internet.

It's at tug2.com. That stands for Timeshare Users Group. It's a community of timeshare owners who offer advice and share their experience. One of the first things they'll tell you is never pay any upfront fees when you're trying to sell your timeshare. Some companies want you to pay before they take you on as a client. Don't do it. You can also try to see if you can find somebody in that marketplace that would be willing to take it on or buy it.

Sometimes there are folks looking to buy them in there. And then as I mentioned, you can look at giving it back to the company. It's called a deed back. But again, for that to work, it has to be paid off to your point and you can't owe any back fees or taxes.

If you did it that way with the deed back, then you would be getting out of any further responsibility for it, which is obviously key. So I think those are your next steps. Unfortunately, there's not going to be a simple way to go about this, but I do think you need to explore those to see if you can find a way forward. Does that make sense?

Yes, it does. Okay, very good. So I think your next steps are review the contract, perhaps with an attorney. Check out tug2.com. See if you can do a deed back. But again, that's going to mean that you got to pay it off in full.

So that might take some time and then find out if you could give it away and transfer that responsibility to someone else. Thanks for your call, Beverly. Keep us posted on how this goes. Let's see. Let's head to Tennessee. Tammy, you're up next.

Go ahead. I am 64 years old, and I have some debt. It's basically credit cards and then some loans. It's pay, buy now, pay later loans. I'm wanting to find out what my best recourse is to get these paid off. Should I take out a loan or just what I had thought is just get a hold of them and say I'm paying off these bills at one at a time. Once I get one paid, you know, that's I don't want to get further in debt. So this is what I'd like to do.

Yeah, yeah, very good. I certainly understand that. And you're living on a fixed income, which makes it challenging. Tammy, do you have anything set aside in what I would call an emergency fund? So we can break the cycle of charging when the unexpected comes even 500 or $1,000?

No. Okay. I think you've got to start there at when all your bills are paid. And again, I realize it's tight. But when all your bills are paid, including the minimum payments on all these cards, what do you have left over at the end of the month?

About 100, if even that. Okay. All right. So I would probably, you know, take a couple of months and try to build up a little bit of a cushion, maybe a couple of hundred dollars, just so if something comes out of left field that you weren't planning, we're not going back to the credit cards, because we've got to break that cycle. And I realize this is challenging.

I'm not saying it's easy. But I want to get out of using these cards once and for all. How much do you owe on the credit cards? All together, my bills are no more than $7,000, maybe not even $5,000. And that's the debt that you have? Yeah, these are credit cards. They'll give you 300. I have very bad credit. So it sees whether trying to build your credit again, you will give me $300. And then it just doesn't work.

I end up getting myself in trouble. Yeah, yeah, we don't need to do that anymore. So somewhere between $5,000 and $7,000, does that include the buy now pay later? Yes. Okay. All right. What I would do from here, Tammy, is I would contact my friends at Christian Credit Counselors.

Here's the thing. The best approach for this is not to try to take out a new loan, because that's going to take the pressure off. And if we haven't solved the underlying issue, the credit card debt is going to come back. What we need to do is get the interest rates down, so that more of what you're sending every month is going toward principal. And we need to find one fixed monthly payment, a level payment, so that as the balance comes down, we're still sending the same amount that fits in your budget. But that snowball effect of sending a larger percentage of the balance every month is going to let you pay that off 80% faster. I'd like to start there. These are godly people who work with folks who are in credit card debt every day.

And the combination, again, of getting that interest rate down plus one fixed monthly payment that fits in your budget is going to allow you to actually make some progress as opposed to right now, where you're probably just treading water. So if you're comfortable going on the internet, go to christiancreditcounselors.org. If you're not, stay on the line, and my team will give you the phone number. Thanks for calling today.

All the best to you, Tammy. This is Faith and Finance Live, 800-525-7000. We've got some lines open. I'm Rob West, and we'll be right back.

Stay with us. 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.

Got a couple of lines open, 800-525-7000. Before we head back to the phones, let me talk to those of you who are financial or stewardship coaches or counselors. Maybe you find yourself as a financial coach in your local church. You're working in your stewardship ministry and providing coaching to the congregation, or maybe you're more formal in that and you have a business where you do coaching, financial coaching. So you're not risen to the level of a certified kingdom advisor in the sense that you're not an investment advisor or financial planner, but you're doing financial coaching, maybe on focused on spending plans or marital harmony related to money. This is a really growing space, and we're going to be expanding the work that we do in the days ahead related to connecting you with financial coaches and counselors that can really help you in your specific area of need.

We're really excited about it. We're partnering with the Institute for Christian Financial Health to do that. Well, the director of the Institute, Art Raynor, is going to be conducting for you coaches and counselors next week a free 20-minute webinar on crafting a great discovery session. So this is the first intake session when you're working with a council lead on stewardship matters on discovery, really the intake process, the questions you would ask. He's going to share his discovery session that he does with all of his council leads, and it's free to you. You can also learn at the same time about the CCFC, that is the Certified Christian Financial Counselor certification. If you'd like to learn more, you're a stewardship coach and you want some additional training, head to faithfi.com.

That's faithfi.com. And you can sign up today. All right, let's head back to the phones, all the lines full.

So we're going to dive in to Shreveport, Louisiana. Nancy, how can I help you? Hi, thank you for taking my call. My question is whether it would hurt my credit rating to close a MasterCard that was taken out in November last year when I was trying to get out of a timeshare. And this was part of the deal. I ended up getting out of that contract, but the MasterCard still came and I have not even activated it, but just didn't know whether that would hurt to just go ahead and close it.

It wouldn't, Nancy. But one thing you may want to do is just pull a copy of your credit reports, which will be no cost to you at annualcreditreport.com. That's the government's website where you can access your credit reports from the three bureaus, Experian, TransUnion, and Equifax, and just see if that's showing as an open account. It's probably not, given the fact that you never activated it, it probably is not even showing as an open account. But in the event that it is, or you would just feel better calling them and saying, listen, you know, regardless, I want you to consider this closed. I don't plan to activate it.

You could certainly do that. That's not going to negatively impact you. Anything that would have temporarily reduced your score would have already happened. So for instance, the inquiry that would have been done into your credit to see whether you could qualify for that new loan, that would have reduced your score slightly. That's in the past now. And the fact that this was never opened, it means that that was never added to your total available credit, which is now being removed.

So there's really not going to be any effect on you on this. So you can either just call them and talk to the company about it or pull your credit reports to see if in fact it's even listed and you may find that it isn't. Okay? Okay. Well, the thing that I get from the bank that is supposedly something like from TransUnion, it is showing up on that. Okay.

And is it showing as an open account? Yeah. Okay.

Yeah. So then I would call them and just let them know that you don't have any use for it. You'd like to go ahead and close it. That's not going to impact you negatively.

It's not like it's an older account that has a long history that's being taken away or anything like that. Are you carrying a balance on any other cards? No, I pay them off each month. So I've got three other cards, well, actually two other credit cards, and I pay them off each month. Yeah.

So the only factor would just be if this is showing as an open account, then that available credit is a part of your credit utilization, which what you're charging every month, even though you're paying it off, if you pay it off after the end of the cycle date, the total charges for the month are showing up on your credit report and the percentage of those charges to all of the credit you have available to you, if that rises over 30%, that will reduce your score. And so if by taking this one out of the mix, that causes those monthly charges to trip up over that 30% threshold, that's the only way this can impact you negatively. Beyond that, there really isn't another way. Okay. Okay. All right. Okay. Well, thank you very much. I appreciate it. You're welcome, Nancy. Absolutely. Thanks for calling.

To Plainfield, Illinois. Hi, Addie. Go right ahead. How can I help you? Hi. Thank you for taking my call and all your advice. Sure.

Thank you. So my question is, I'm 60 years old and through work the financial people that help us through work, they advise me to open, I believe it was like a Roth IRA or something because it has to be open for five years prior to me moving anything into it. But I didn't understand what they meant. So I have opened an IRA with Schwab, but there's nothing in it yet. I haven't funded it yet, but I don't know the purpose of it, like why I did that. Yeah. I'm a little confused on that too.

The five-year rule on Roth says that you have to wait five years before withdrawing any converted balances or withdrawing any contributions in order to be able to get the tax-free withdrawal after 59 and a half. It shouldn't have anything to do with you contributing to that Roth. Do you have a company-sponsored plan at work? Yes. So I guess what happened was... Oh, I guess he told me that I guess that once I retire, I guess to be able to move my money into something, I guess that that plan had been open for five years. I see. Okay. Yeah. So if you're going to roll a Roth 401k in or convert it, then you would have it open. So that's fine. Yeah. You can just let it sit there and wait until your retirement. That's going to start that clock running.

So that's probably what he was getting after and that makes sense to me. So I appreciate you calling today. You hang on the line. We'll talk a little bit more off the air and make sure you're clear on that.

But that sounds like a good plan. This is Faith and Finance Live. Much more just around the corner. Stick around. Great to have you with us today on Faith and Finance Live. I'm Rob West, your host, taking your calls and questions.

The number to call today 800-525-7000. We'd love to hear from you. All right. Let's head back to the phones. Durant, Iowa. Hi, Grace.

Go right ahead. Hi. So I'm selling a farm privately and the contract was drawn up by our lawyer, but I need to know how about reporting this on my income and there's being interest paid each month by the buyer. And do they need a 1099 interest form? And if so, how do we get that? Yes. Okay.

So they've been go ahead. Yeah. I just didn't know for sure how I was supposed to go about this. Yes. Well, first of all, so they have been renting it from you or have you been holding a mortgage on it?

How are you getting the interest prior to the sale? I would say we're just renting. I see. Okay.

Yeah. So that would be reported on your taxes. Ultimately, when you sell it, you're going to pay capital gains on it. And that's reported on Schedule D of your 1040.

And as long as you have income as a single filer in 2023 over $44,625 and less than $459,000, you'll pay a 15% long term capital gain rate if you held that property more than a year. Are you selling it to them this year? Yes. Okay. Yeah.

They've been paying the whole year. Okay. All right. Very good.

But the sale to them, you're actually selling them the property. Is that right? Yes. Okay.

Yeah. So then the difference between the selling price and the cost basis would be your gain. And as long as you held that for more than a year, that would be reported on Schedule D as capital gains. And then you would report the interest that you took in as well. And you'd not be able to offset that with any expenses, but you'd report that as well on your taxes. So I think this is the year if you don't normally use a tax preparer to do that just to make sure that you take full advantage of any deductions, especially as you're calculating that cost basis to determine what your true cost basis is versus your selling price.

I would work with your CPA or accountant, or if you don't have one, I'd connect with one this year just to make sure that all of that is filed appropriately. All the best to you, Grace. Congrats on this upcoming sale. I'm sure that is exciting for you. Thanks for calling today.

To Miami, Florida. Hi, Spencer. How can I help you? Mr. West, thank you so very much for taking my call. Your program has been a blessing to me financially speaking for the past few years. Yes, thank you very much. I appreciate that. Yes, sir. Okay. I have a 403b with Valek.

The company changes the name to another name now. My last statement, I had a balance of $39,000. But prior to my last statement, which was in September last year, the balance was $52,000. 52 or 62? It was 52.

52,000. Okay. Correct.

So when I received my last statement in December, the balance went down to $39,000. Yes. So I'm going to have a meeting with my financial advisor. So I'm wondering, do I still make my systematic contribution towards that or do I remove it?

If so, what would be your suggestions on that? Yes. So you got a statement in September, the statement showing $39,000, that was a 1231 statement. Is that right? The statement I have in September was $52,000. Right.

But what's the date on the statement showing $39,000? That was the beginning of January, this month. Okay. All right. Yeah. So you've got a 25% decline in a quarter's time.

I mean, the end of the year was tough. Market has recovered. I suspect it's up somewhat from that low point that you saw there in early January.

But that's a lot. So I would be asking the question kind of, what am I invested in? How did it perform against the market indexes that are equivalent to my investment allocation?

And have them talk you through that and then just decide based on your age and risk tolerance, what you're trying to accomplish, whether or not you're in the right investments. You're still with the company that offers the Valik plan. Is that right? Yes, I'm still with the company. Okay.

Yeah. So the only thing you could do would be to change the investments inside the plan. Depending upon what they are and what the investment strategy is, I'd be inclined for you to wait for this to recover and keep contributing to it. Because keep in mind, as you dollar cost average into this portfolio, you're buying stocks at a discount. I mean, everybody's portfolios are down, although the start to the year has been positive.

Everybody's down, which means with the same salary deferral amount, you're buying more shares with the same amount because these stocks and bonds are cheaper right now. That's a good thing because as the market recovers, whether that's next quarter or next year, you'll benefit from that. And I think the key is to play the long game. And then at some point, as this account recovers, it would be important to look at, was I too aggressively positioned for my age and objectives and should I make some changes to perhaps get a bit more conservative or no, I was invested right. I've got time on my side. I'm willing to take the volatility because I'm looking at the long-term gain potential of being invested with this money. How far are you away from retirement, Spencer? I'm 54 now and I'm looking forward to God's will to be in the market for the next 10 years. Yeah.

Okay. So I mean, that's the good thing is that you've got a long runway here. And so I think the key for you as your most powerful wealth building tool is your income. Because if you can limit your lifestyle and just systematically fund this account over time, you will build wealth and the market will help for you to overcome the effects of inflation. I just would want you to kind of look into and have that open and honest dialogue with your advisor as to what happened, why, how am I invested? Should we be looking at making changes down the road? But apart from that, I think I would keep systematically contributing and look at this as a long-term investment. Okay. Before you go, I've heard you talk about the government saving like you can invest $1,000 per year. I mean, even though I don't have an answer with you now, but can you touch base on that whenever you have a chance on the program once again, if it's possible?

Just describe that just a bit more to me. I didn't follow that with the $1,000 a year. This was like a government type of investment with the government fund, something like that. Maybe the I bonds? The I bonds, correct. Yes. Okay.

Yeah, I can certainly do that. And we have a couple of programs on that if you want to go to our website, faithfi.com and search for I bonds. Essentially, these are inflation bonds issued by the US government. You can put in up to 10,000 a year. I would look at perhaps an I bond investment. You can't use retirement money and I would only look in money that has a one to five year time horizon because you can't touch it for a year. But if you're investing for more than five years, this is not a good place to be because I think this high inflation is temporary. The I bonds are pegged to inflation right now paying 6.8%. That will reset in May and it's going to be based on the consumer price index. So if you have money between one and five years, you might consider putting in 10,000.

You can do it at treasurydirect.gov. And for more information, check out our website. We'll be right back. Hey, great to have you with us today on Faith and Finance Live.

I'm Rob West. You know, folks, as we think about our money, here's the big idea. We want to slay the money God, if you will. We want to recognize that our money is a tool given to us by God because it belongs to him and we can't have it become an idol in our lives. If ultimately it becomes the end and not a means to an end, then we've not put it in its proper place. You see, we've allowed it to occupy a place that only rightfully belongs to God himself.

But when it's put in its place as a tool to accomplish God's purposes, wow, it's a powerful tool because we can help others on our path and we can use it to build relationships and to provide for our families. But do it in a way that allows us to work out our faith through our spending decisions so we're drawn into a more intimate relationship with the Lord. That's the big idea on this program each day is we want to encourage and equip you with godly wisdom and principles, not for me, but from God's Word to apply to your financial advice.

If you'd like to learn more, download our app or check out all the content on our website. You can do it at faithfi.com. By the way, while you're there, if you'd like to support the ministry, we'd be grateful. FaithFi and Faith and Finance Live are listener-supported. You can give right there on the homepage faithfi.com.

Thanks in advance. All right, back to the phones. Let's try to get to as many questions as we can. All the line's full. We'll head to Coconut Creek, Florida. Michael, thanks for calling. Go ahead, sir. Yes, hi, Rob.

This is Michael. I had a question about we have money in the traditional brick and mortar bank savings and checking accounts, and we feel like, you know, here's a lot of high interest. Other banks, we can keep money that we need liquid, you know, for, you know, emergency funds and things like that between $15,000 to $30,000.

And we're just wondering, you know, what banks you might recommend that allow liquidity and the highest interest in both checking and savings. Yeah. Are you comfortable using an online bank, Michael? Yeah, we haven't used an online bank before, but we would be open to that.

Yeah. Well, that's one way you can go. You know, the way I structure things is to have my local bank where I could walk in or drive through if I wanted to for my checking account, but then with a savings account, I use an online bank that's linked electronically. So with the ACH transfer system, you know, within a couple of days at no cost, you can transfer money back and forth. The great thing about the online banks is, you know, they have very high interest rates and no fees. So you could even set up multiple savings accounts for savings targets or goals.

You could do that in the FaithFi app or you can do it with actual physical accounts. But in either case, you know, you'd be getting rates right now on FDIC insured savings, fully liquid, you know, at 3.6% or higher, whereas, you know, with a typical brick and mortar bank, you might be getting 0.1%. So I would look at bankrate.com to determine who has the best rates right now. I'll give you three that I like just because they have great customer service and they're known for their very high interest rates.

Ally Bank, A-L-L-Y, Marcus, Marcus.com, that's the retail operation of Goldman Sachs, and then Capital One 360. Any of those would provide you really high rates. You can use them for checking too.

You just may find that you'd rather use, you know, brick and mortar checking just to be able to walk in and see somebody face to face if that's important to you. So that would be the direction I'd go. And again, if you want to do research on other options, you could go to bankrate.com. I would also mention that, you know, more and more of our listeners are looking for a Christian solution, a faith-aligned solution for their banking needs, both savings and CDs, as well as loans. And our friends at Christian Community Credit Union would be delighted to help you. And part of what you're investing in is they're taking a portion of what they receive and giving it away to further the gospel in a variety of areas. You can learn more at joinchristiancommunity.com. But Michael, is that helpful to you?

Michael McPhee It is, thank you. And also, just a question, I saw another one that you didn't mention was SoFi. That one says they have checking and savings. It looked like they had a high. Would you recommend that one as well?

Michael McPhee Yeah, I would. I mean, it'll be FDIC insured. They've been around for a while now. They're a fairly large institution, and they are pretty aggressive when it comes to the rates. So they would be right up there, typically in terms of both savings and checking with the ones that I mentioned.

Yeah, so I would certainly be fine with that. Michael, thanks for checking in with us, sir. Francis in Pompano Beach, just down the street from Coconut Creek. How can we help you? Francis Yeah, hi. Thank you so much for taking my call.

I love your show. My question is this. So my husband passed away, and he had a 401k. I transferred it over to an inherited 401k, and they told me that I could not take anything out from it until 67 years old.

Just wanted to make sure that was right. Michael McPhee Yeah, so there are very specific rules for inherited IRAs in terms of how you go about taking that money out. And so I think the key there is to work with your CPA. Who was the one that you were talking to about this? Francis This, it's at Fidelity is the company that runs, I guess, the 401k. It's for CBS or whatever.

Michael McPhee Okay, yeah, very good. Yeah, so they should be able to give you the best information on what that looks like in terms of, you know, how you go about taking that money out. The rules did change fairly recently with regard to the distribution on that. There, you know, is no rule necessarily that you have to wait until 67 to withdraw the funds from a spousal inherited IRA in particular. So I think it would be worth talking to your CPA and just saying, based on the date of death, and the situation here, when, you know, do I need to take this out, if at all? Or could I just let it continue to grow and take it out just based on my own, you know, age and the rules there for when I would need to start taking required minimums. That's probably what you'll find is that you would just need to begin taking required minimum distributions on this.

But there are, there's been a number of changes as of late. And so that's why I think Francis, you'd be well served to talk to a CPA about this. Do you have a tax preparer that you work with?

Francis Collins I do. So they would know about it because there's another 401k that he had that I was the beneficiary on and it, you know, I was automatically put on there. And I, I think I thought they told me that as a widow, I could take it out at 59. But I'm not sure.

Dr. Ken Jones Yeah, yeah. Yeah. So I think your CPA is going to be able to look exactly at the situation. And again, a lot of this has been changing as of late. So it's going to come back to the date of death. And they can tell you as a spouse, you would have certain exclusions on some of these rules exactly when you need to take it out.

What is your hope? Are you hoping to leave it in there and just take it out through the required minimums? Or are you wanting to take a more significant distribution right now? Francis Collins You know, I was going to leave one of them in there until, you know, 65. But if I have to leave it till 67, then you know, yeah, I don't want to pay taxes. I was going to take the other one out a little earlier. But I don't, if I have to leave it in there, then I would. I was going to give it to the kids.

If I could take one out earlier, I would just give it to the kids. That was my plan. But they're telling me, you know, you pay taxes if you take it out, and it's pretty high. So Dr. Ken Jones Yeah, you certainly will pay taxes as the money comes out. So that's really going to be the key is looking into, you know, what is the required withdrawal rate that you'll have to follow. And they can tell you that. So I would connect with your CPA and he or she can really outline all this for you and make sure that you're doing this right. Because you obviously want to follow the IRS's rules and regulations on this. And it has been changing as of late, specifically with the SECURE Act.

It changed these required minimums for inherited IRAs a pretty good bit. So take a look at that. If we can help you further along the way, Francis, let us know. God bless you.

To Orlando, Florida. Hey, Matt, how can I help you? Matt Lira Hi, thanks for taking my call. I am calling because I'm fixing to get rid of a car loan. And the only debt that I have left at that point would be my house. So a home loan. And I was wondering if you had, you know, a good strategy to get to me to for, you know, to get debt free, pretty much.

Yeah, very good. So tell me the debt that you have today. Well, in two months, I'll get rid of this $800 payment that I do on my truck every month. Okay. And so that's $2,000 or a little less than about $1,600 left on that. And I have $125 on the house. Okay. So after two months, you'll be debt free except for your home, correct? Yes, sir.

Okay. And what will you have extra per month once the truck is paid off? $800. $800 a month?

$850, actually. Okay, great. And do you have an emergency fund, Matt, of three to six months expenses?

Yes, yeah, definitely. Okay. And are you contributing to a retirement plan at work?

No, sir. Okay. Do you have one available to you or are you self-employed? I'm not self-employed, but they're not providing that where I'm working at. And yeah, I change job a lot. So yeah, I'm a tradesman, so I can be working with one company six months and someone else for the rest of the year. Gotcha. But you typically are W-2 employed when you are working? Yeah, I do 1099 once in a while, but typically W-2. Okay.

Yeah. So I would get started on that before I'd focus on getting the house paid off and open a Roth IRA for you and if you're married, you and your wife. If you're under age 50, you could put in 6,500 each, so that's 13,000 this year.

And I do that at Fidelity or Schwab and use their intelligent portfolios. Beyond that, once you have the emergency fund and you're contributing to retirement, then I think absolutely starting to accelerate that mortgage payoff, just send that extra amount that you have with your check that covers your scheduled payment and then you'd send an amount over and above that. That's going to help you get that paid off much quicker. Thanks, Matt. God bless you, my friend. Thanks for calling today.

Faith and Finance Live is a partnership between Moody Radio and Faith Fi. Grateful for Tahira, Charles, Amy, and Jim. Hope you have a great rest of your day. Come back and join us tomorrow. We'll see you then. Bye-bye.
Whisper: medium.en / 2023-01-25 18:36:36 / 2023-01-25 18:53:13 / 17

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