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When Term Life Insurance Ends

MoneyWise / Rob West and Steve Moore
The Truth Network Radio
February 27, 2023 6:06 pm

When Term Life Insurance Ends

MoneyWise / Rob West and Steve Moore

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February 27, 2023 6:06 pm

Life insurance is the only way most people can provide for their families if they should die unexpectedly. But what happens when you come to the end of the term insurance you signed up for? On today's Faith & Finance Live, Rob West will explain what happens when your term life insurance ends. Then he’ll answer your questions on various financial topics. 

See omnystudio.com/listener for privacy information.

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They say life insurance is like a parachute. If you don't have it the first time, odds are you won't need it again. Hi, I'm Rob West. A funny line, but all kidding aside, life insurance is the only way most people can provide for their families if they should die. But what happens when it ends? I'll talk about that first today, and 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. Of course, we're talking about term life insurance here, which we almost always recommend. It's far cheaper than whole life and doesn't mix investing with a death benefit. You're much better off investing separately from an insurance policy. Now, term insurance, by definition, ends when the term expires. And we often get this question from listeners.

What then? Well, generally, you have four options. The first is to simply let the policy lapse. If you had a 20-year policy that's ending at this stage of your life, it's quite possible that you no longer need life insurance. If the kids are grown and out of the house supporting themselves and your spouse's income, plus Social Security survivor benefits is sufficient, then life insurance is a needless expense that you can put to better use in your retirement account. But if you still have dependents who rely on your income or a spouse whose income can't meet expenses, then you still need to have some type of term policy.

And that leaves you with three more options. The next is to get a completely new term policy when the current one expires. We normally recommend one with a death benefit of 10 to 12 times your salary. Don't be surprised by how much more a new policy at this later stage in life will cost. A 50-year-old healthy male can expect to pay around $80 a month for a 20-year, $500,000 policy, or around four times the cost for a 30-year-old. That's simply based on actuarial tables.

It's nothing personal. Of course, if the policy is only to provide for your spouse and not dependent children, you may be able to get by with less. For example, a policy that would pay off just the remaining principal on your mortgage, if any. And while the cost of a new policy might have given you sticker shock, it's usually less than you'll have to pay to simply extend your existing policy, which is another option.

Why is that, you may be asking? Well, if you decide to get a new policy, you'll have to go through all of the underwriting procedures you did at age 30, a medical exam giving an extensive medical history, blood test, and so on. When all of that is complete, the insurance company has a pretty good idea of the risk it's taking on. Okay, so let's say you go through all of that and you're approved for a new term policy, but the monthly premiums are too high.

Well, you have a few ways to bring them down. You can lower the death benefit. Instead of $500,000, maybe you can get by with just $250,000. The company may encourage you to buy more insurance than is necessary, so you have to keep your own needs in mind.

You can also lower the term. Instead of getting a new 20-year policy, maybe you can get by with a 10-year term. Again, just long enough to get the mortgage paid off, for example. And you can save up and opt to pay your premiums annually instead of monthly. Some companies will give you up to a 5% discount for making a yearly lump sum payment. Your next option for when your term insurance policy expires is you can simply extend it. If you decide to go that route, there's usually no medical workup required. But since the insurer is going into this blind with no idea of any medical conditions that may have arisen in the past 20 years, the premiums will be higher than you'd have with a new policy, sometimes a lot higher. But keep in mind, if you have developed a serious medical condition, you may not be able to get a new policy at all. In that case, extending your current policy is definitely the way to go if you can afford it. If you can't, it leaves you with your last option, getting what's called a simplified term or instant issue policy. As you might guess, an instant issue policy requires no medical checkup. You apply, you're approved, and you start paying premiums. And usually you can do all of that online. Now, if you're thinking that sounds too good to be true, there must be a catch.

Actually, there are three. First, the death benefit with this type of term policy tends to be smaller. Second, the term is likely to be shorter. And three, it probably will cost a lot more than a regular term policy that includes a medical exam.

But for some folks, an instant issue policy could be a real blessing when their current term policy expires. All right, I hope that was helpful. Your calls are next, 800-525-7000.

That's 800-525-7000. I'm Rob West, and this is Faith and Finance Live. We'll be right back.

God owns it all, therefore we're stewards, so money's a tool to accomplish God's purposes. That's what we talk about on this program each day as we allow the wisdom from God's Word, the timeless, transcendent wisdom and principles to apply to your financial decisions and choices, the things you're thinking about right now related to God's money. We'd love to hear from you today with whatever is on your mind. We've got some lines open and I'm ready to go. 800-525-7000 is the number to call. That's 800-525-7000.

Our team is standing by. Let's begin today in Wisconsin. Todd, you'll be our first caller, sir. Go right ahead.

Hi, thanks for taking my call. I was looking into refinancing my home and I kind of went on Credit Karma and they recommended a few financial companies, but I was just wondering if it's safe to do online and how do you know that these companies are legitimate? Yeah, it's a good question. You know, what I would do, Credit Karma is certainly one option. Lending Tree is another. You will find that these online banks and lenders tend to have better rates and terms and so it's worth shopping around. Because this is the largest transaction most of us will ever have, it's important for us to have multiple offers. What we find is that on average the typical person will only get one lender to weigh in and I think that's a mistake.

A couple of thoughts. Number one is, you know, you can look to see first of all what the rating is of the particular institution and keep in mind it's probably going to be sold anyway to another servicer. So it's really, you know, the lenders not of a primary concern. As long as they're, you know, willing to do the deal and they give you good customer service along the way, you understand, you know, the truth in lending disclosure and exactly what it's going to cost you and they'll work with you on a timely basis and, you know, internet reviews can be a great resource there just to determine that they are going to do what they say they're going to do on a timely basis.

But once you get to closing from that point forward, your servicer can change. And so it's really not a main concern who the actual lender is that's going to get you to the closing table because that's probably not who you're going to be working with moving forward. So I think for that reason, certainly if you have an existing banking relationship, you certainly could check with those folks just to see what they're offering. But I would absolutely compare it to at least two other lenders that you would look for online at either a Credit Karma or you could use Lending Tree.

And I think, you know, as you shop around, you'll find some great options. Let me also encourage you to visit with our friends at Movement Mortgage. This is a faith-based company that is nationwide and you should at least check them out as well. They're really trying to redefine the mortgage process and it's all built on biblical principles. If you go to movement.com forward slash faith, you can learn more about Movement Mortgage and I would certainly put them in the mix as well. Is that helpful? Yes it is.

Okay. Movement.com you said? Forward slash faith for faith and finance. Yeah, movement.com forward slash faith. But you shop around, Todd, see what you can find and we can help you further along the way, sir, let us know. God bless you and thanks for checking with us today. 800-525-7000 with a few lines open to Fort Lauderdale. Hi Albert, go right ahead, sir.

Yes, good evening, Brother Rob West. Myself and my wife is retired and our distribution from our IRA was 5,000 in 2022. Interest from our savings was 4,000.

That's a total of 9,000. Social Security, we received between both of us a total of 35,000. Now, what is income and what is not?

What is taxable and what is not? Sure, so Social Security is taxable and a lot of that is going to be determined by your total income. So, you know, what you will find is that typically when you get above the $32,000 threshold for a married couple, that's where you're going to be taxed on up to 85% of your Social Security benefits. So it is ultimately going to come down to what is your total combined income as to the percentage of your Social Security that will be taxed. Well, the only income, as I said, that we have is interest from the savings in the bank and distribution that we have to take out each year for IRA and that adds up to $9,000. Okay, and then you'd have your Social Security benefit on top of that. What is the amount you're receiving there? Total is $43,982. Okay, yeah, so that is going to, you know, cause those benefits to be taxable.

So what I would do is check with your CPA or tax preparer just to determine exactly what percentage of your benefits will be taxable based on your combined income, the various sources that you described, plus Social Security on top of that and they can give you a good idea of exactly what that's going to be based on the current marginal rates. Do you normally prepare your own return or do you have somebody do that for you? I normally have, you know, one of the tax, you know, company does it.

But, you know, I haven't really filed tax in the last probably let's say five years because the last time I did it there, they said that my income was not enough so I shouldn't, you know, be filing tax anymore. Okay, yeah. And so conflicting information so I just want to make sure I'm on the right track.

Sure, sure. Yeah, so between $25,000 and $34,000 you may have to pay income tax on up to 50% of your benefits. More than $35,000, that's when it goes up to 85%. So it sounds like it could be that you're in fact below that and that's what they're describing there because you're staying essentially under the standard deduction with all the income that you have. But always a good idea to check in with your tax preparer just to look at your total situation and determine exactly what you need to be planning for so it doesn't catch you by surprise. Albert, thanks for checking in with us today, sir.

800-525-7000 is the number to call quickly to Lakeland. Hi Katie, go right ahead. Hi there, Rob, how you doing? Doing great, thanks.

Good, I've got a question. I bought a Harley last year and my interest rate that I'm paying is about $11.14 interest rate. My credit score is excellent. I have an $823 on Experian, on TransUnion at $8.18 and I'm going through the dealership for financing. My question to you is should I refinance this? Credit Karma says I can get a loan cheaper and it's going to be almost the same entirety to pay off that loan. So I'm trying to make the payments but I'm trying to make them in a shorter amount of time. I can't double up payments because I can't afford it but I want to at least make the payments I'm making right now so that way I can continue to decide and do my due diligence to continue to stay up with my budget.

Yeah, I would definitely shop around. If you have a high credit score, that's a pretty high rate. You should be able to get down below $10 for sure on a street bike today, probably 9.5% with excellent credit. So the key is going to be the total cost of the interest on your current loan versus the reduced interest plus the cost to refinance.

You're just going to have to compare those two. So I'd get two to three lenders involved in competing bids for what you might be able to refinance too. Look at the total cost of the interest on the new loan at the lower rate.

Add two at the cost of the refinance itself and compare that to your current loan to see if it makes sense. Thanks for calling, Katie. God bless you. We'll be right back. Stay with us. Taking your questions, applying God's wisdom from the Bible to your financial decisions and choices. That's what we do here on this program.

This is Faith and Finance Live. I'm Rob West. The number to call today is 800-525-7000. We've got some lines open. We'd love to hear from you. Let's head to Cleveland, Ohio. Teresa, thank you for calling today.

Go right ahead. Hi, my question is, do I have a question where I have to figure out, I'm trying to get a debt consolidation or refinance on my home. I owe $68,000 and I'm trying to figure out, do I go with the $68,000 or is it better for me to refinance and get a lower interest rate on all my debts and I'm trying to consolidate. Okay.

Let's talk about that, Teresa. So you mentioned a $68,000 debt. Is that combined debt from various places or is that one debt that you owe?

It's one that is on my house, but I just picked up a car loan and I'm trying to get a refinance through a credit union right now, my credit union, but they're running the credit now to see if they could do it. But if not, this person held me at 21,000. He lied to me and told me it would be only 10% and it's not.

I found it's 21%. For the car loan? He just wanted a car sale. Yes. Wow. Wow. And what is your credit score, Teresa? Do you know? It was 645, now it's 618. Okay.

All right. What other debt do you have besides the $68,000 on your house and the car loan of 21,000? Nothing much, just a little bit. I had a Home Depot card of 1,000.

At rest I'm tiny. It's nothing more. I got one $5,000 loan. That's it after that.

It's nothing else. And what is the interest rate on your house? 5%. Okay.

All right. And how many years do you have left on that mortgage? It's supposed to be when I turned. I supposed to be retired when I turned actually 58.

It should have been two years, but I got into a bad situation. Listen to somebody and it's at 68, but the house was 90,000 when I purchased it. So it's down to 68. So I'm trying to figure out how to get it down further. Or should I just wait till I'm dead and they pay it off?

I'm trying to figure out what the way to go. Well, can you afford the monthly payment for the mortgage, principal interest, taxes and insurance in your current budget? Yes, I pay for every month. Yes. Okay, great.

So here's the thing. I don't want you to refinance, Teresa. Number one, it's going to reset that term. Now you could shorten the term and that would be what I would do if I refinance. But there's really not any benefit of you refinancing. I don't want you to increase the balance that you owe on the house. And if you roll the car loan in, you'd be taking a loan that's secured only by a car and now you're putting your home at risk.

So if something were to come out of left field unforeseen and you're not able to make the payment, now you've just put your primary residence in jeopardy. And so I'd rather you stay with that current mortgage, which is at a good rate, it would probably go higher if you were to refinance given your credit score and where rates are at right now. Not to mention, you know, you'd probably pay around 4% just in the cost of the refinance. So that's $2,700 just in fees and expenses to do the refinance. So I'd stay right where you're at, make sure you keep that payment paid every month. And let's focus on refinancing that car loan. And I think where you need to go from here is to probably, you know, shop around, I'd go to bankrate.com and find other lenders that would be willing to compete for your business to refinance that car loan, which is at a ridiculous interest rate right now.

And I'm so sorry to hear that you were taken advantage of, but we've got to get that down. And the good news is there's there are lower rates. Now, if you had a high credit score, you could get that down to around 9%.

You're still going to be up in the teens, but certainly much better than 21. So we need to try to get that refinance. And then the key from that point forward will be to limit your lifestyle, spending your monthly expenses as much as possible so that you can free up as much margin as possible. And I want you to attack that car loan with every available dollar, assuming you have an emergency fund of at least one month's expenses. And if you do, then I'd focus every available dollar on getting that car loan paid off at this point, but I wouldn't refinance the mortgage and roll it in. I just refinance the car loan as a new car loan. Does that make sense?

Yes, it does. Thank you. I was nervous.

I didn't know I'd want to be true. I know you get good. I love you every day. I'm glad to hear it.

You are. You're our number one fan today, Teresa. So listen, let's do this.

You hang on the line. We'll send you a gift just for being so sweet and for calling today. I want to send you a copy of Ron Blue's book, Master Your Money.

It was a blessing in my life when I was getting started in this whole intersection of faith and finance. And I know it will be to you as well. So you stay on the line. We'll get your information and get that right out to you. Thanks for calling today. Quickly to St. Louis. Hi, Charlotte. How can I help you?

Oh, hi. Yes, I am 75 years old and I'm thinking about I want to get my home put into my kid's name, out of my name and into their name. And what is the best way to do that without them having to pay a bunch of taxes on it?

There wouldn't be any taxes, but you might miss what we call the stepped up basis, which has to do with the capital gains that are paid when it's sold. What are you trying to accomplish, Charlotte? Is it just the efficient transfer of the asset at your death?

Yes, or maybe now before I even die. But what is the benefit of putting it in their name now? What is it you're trying to accomplish by doing this? Well, I thought maybe it would be simpler is all.

That's the only thing. Is it better to go? It really is better to wait until the Lord calls you home, because here's the reality is right now, if you were to transfer it in their name, it would be considered a gift that would not be taxable unless the house is more than $12 million.

But it's not going to allow the basis to be stepped up. So if they inherited at your death, the cost basis, which determines whether there's a profit when it's sold, is going to be stepped up to the market value as of the date of your death. If you gift it to them by just doing a quit claim deed, they're going to retain your cost basis, which means when they sell it, they've got to subtract the original purchase price from the selling price and then they'll have to pay capital gains tax.

So for that reason, I'd rather just you have an updated will or perhaps look at a trust to transfer this asset and you could check with a godly estate planning attorney about it, but I wouldn't transfer it to them now. We'll be right back. Stay with us. I know that how this works all weekend, you had a financial question kind of rolling around in your mind. You've been contemplating it, maybe praying over it and you just need the sounding board to run it by.

Well, we'd love to be that today. If you have a question, you'd like to join us on the broadcast today. The number to call is 800-525-7000. We've got some lines open. That's 800-525-7000. We'll be taking those calls over the remainder of the broadcast. Plus, coming up in the next segment, Bob Dahl will check in with his weekly market commentary, tell us what he's looking at and thinking about this week as it relates to the markets and the economy.

That's coming up in just a bit. Again, 800-525-7000. Before we head back to the phones, here we are nearly at the end of the month and as a listener supported ministry, staying on budget every month is key for us to continue to do the work that the Lord has called us to. If you'd like to become a financial supporter of this ministry with your tax-deductible gift, we'd certainly appreciate that whether you become a monthly supporter or with a one-time gift. It would go a long way toward helping us meet our monthly goals here in the month of February and continuing to do the ministry that we have here at Faith & Finance. If you'd just head to our website, faithfi.com, that's faithfi.com and click Give. If you've found some benefit in the work that we do here on this radio broadcast and the other ministry resources we make available, we'd certainly appreciate it. Again, faithfi.com, just click Give and thanks in advance. All right, back to the phones we go.

Chattanooga, Tennessee. Tracy, thank you for calling. Go right ahead. Hey, how you doing today? I'm well, thank you. I'm glad you took my call.

Listen, I'm going to try to make it as brief as I possibly can. I believe in paying tithes, but I had in the past a really bad experience. So I listened to you guys and I listened to a couple of faith-based channels, but I don't trust people anymore. And my God has been telling me, you know, you need to pay your tithes, but I don't have a church.

I've been in Chattanooga now for a minute, but I have not found a church home. So I decided today to just call you and to see, you know, what your opinion would be, you know, about somebody like me. I know I should be tangentized, but I just don't trust anybody. And I don't think that they're going to do what they're supposed to do with the money that God has blessed me to govern. So I don't know what to do.

Yeah. Well, let me just first encourage you. God doesn't need our money. He wants our hearts.

He's always been about our hearts. And giving is one of the ways that we calibrate our hearts to the Father out of an overflow of gratitude for what God has done for us by, first of all, sending his Son Jesus to pay the penalty for our sin through the substitutionary atonement on the cross and his resurrection that we might be adopted into his family. Out of gratitude for that, we say, God, I want to be a part of what you're doing. And one of the ways I can do that is taking a portion of what you've entrusted to me, because it all belongs to you, and redirecting it back as an act of worship, as a demonstration of my trust, as really an understanding that God's provision is complete and sufficient, and the joy that comes from being a part of God's activity connected into his work, whether that's through the local church or around the globe. Now, how do we go about that? Well, I think it starts with giving systematically and proportionately, using the principle of the tithe as a great starting point to the local church.

That was God's plan A. It doesn't mean that the local church is perfect, but it does mean it was ordained by God as a part of how we as a community of believers come together, not a physical building, but the joining together of God's people in service to him to edify and build one another up, but also to take the gospel to our communities and to the ends of the earth. And we should support the work of the local church. We see that clearly in the Old Testament law, but we also see that modeled in Acts in the New Testament, and various places that we should be supporting God's work. Now, I think it's really important, Tracy, that you find a local fellowship, and it sounds like you're certainly looking in that way.

Hebrews 3 tells us specifically to guard our hearts lest they become hardened and exhort one another to remain faithful. Well, I think that's difficult to do if you're not a part of the body of Christ in a local church fellowship. And when you find that church home, you can absolutely begin to give systematically and proportionately a tithe, which means a tenth, to that local church.

In the meantime, where do you give? Well, I would just ask the Lord to lead you. Could be that you give a weekly tithe as you visit a church, because I would make it a priority to be visiting churches there in Chattanooga, and I happen to know there's some wonderful churches there in Chattanooga. And as you visit, perhaps you give a tithe. Maybe you take and direct that as the Lord leads to another ministry that, while you're looking for a new church home, God is using to build you up in your faith. Maybe that's one of the teaching ministries here on Moody Radio.

But I think the key is for you to look in earnest for that place that God would plant you so you can get involved and invested, be a part of the body of Christ in a local fellowship, and be a faithful giver in whatever the way the Lord leads while you're looking, and ultimately when you find that new church home as a faithful and active giver. Does that all make sense, though? Yeah, what you just said made plenty—I listen to you guys all the time, like I said, you make plenty of sense, but can you tell me how to get me out of the way so I can actually do what I'm supposed to do because I'm scared? To be honest with you, I'm just scared, you know.

And I'm sure that you've had many people to call and say, well, you know, I've dealt with this, I've dealt with that. And I know that the money belongs to God, but I'm just, I'm like, well, God, it belongs to you. Why am I governing over it? Because you know I'm not worthy of governing over it, and I don't make the best decisions.

Yeah. Well, I think the key is to renew your mind here, Tracy, and to be in God's Word, to remind yourself of His promises, to not buy into the cultural worldview of money, which would tell you, well, it's built on materialism, encouraging you to spend all that you have, to be discontent with what you have, to measure your self-worth according to your net worth. None of that follows a biblical worldview. It also can lead to fear, the whole what-if game. And fear is ultimately a demonstration of a lack of trust in God and His provision. Often fear comes from the what-if. You know, I play that what-if game that makes me think about what can go wrong in the future. The problem is we can't see the future, and we would worry about it even if we could. And so that worry then leads to fear, and that's ultimately a spiritual trap.

It's the opposite of trust. Well, the antidote to that is God's Word, because we remind ourselves that Jesus has overcome the world, God is in control of the details, the enemy wants us to worry about what we might lose, but in Christ, Tracy, you and I know that we gain so much more. So I think we can be confident that we can trust God with our future and claim 2 Timothy 1.7, for God gave us a spirit not of fear, but of power and of love and of self-control. And so what I'd like to do is send you—it's a Bible, actually, a complete Old and New Testament.

It's called the Stewardship Bible, and our friends at the American Bible Society, along with Compass Finances God's Way, actually publish this Bible, and every passage related to money is highlighted in green. And what I'd love to challenge you to do in the coming days and months, Tracy, is just begin to meditate on God's Word and read those passages in green in particular, and see if God doesn't give you perhaps a new vision for what it looks like to trust Him completely, to get to replace fear with faith, and ultimately to be able to be a generous giver wherever God plants you in the days ahead. How does that sound? Did we lose you? Nope, I said that's fine.

Okay, great. Well, listen, God bless you, Tracy. We'll be praying for you.

You stay on the line. We'll get your information and get that Bible right out to you. We're going to take a quick break when we come back much more on Faith and Finance Live just around the corner.

Stay with us. We're so thankful you tuned in to Faith and Finance Live here on Moody Radio. I'm Rob West. We're taking your calls and questions today, but it's a Monday, which means we have the distinct privilege of talking to our good friend, Bob Doll. Bob is Chief Investment Officer at Crossmark Global Investments. And well, if you're ever wondering what the market's doing or the economy, I'm often wondering that myself, which is why I rely on the Doll's Deliberations, his weekly investment commentary each week.

And you can sign up for your own copy delivered to your inbox at CrossmarkGlobal.com. Bob, good afternoon, sir. Happy Monday. Happy Monday.

Bob, so much in your Doll's Deliberations this week. We'll just touch on a few of the big themes. One of them is this idea of the Fed pivot that a lot of folks have been talking about. Now, you believe we may see a pivot this year, but the pivot you're talking about perhaps is a little different than what most people are. Explain that.

Sure. The common wisdom about a pivot is the Fed stops raising rates and we put our eyes on when they go lower rates later in the year. Our suggestion is maybe the pivot is instead of insisting on two percent inflation, which they have done ad nauseum, maybe they compromise and say maybe three is good enough. The world's changed for a lot of reasons and three might be acceptable. That would be a big pivot.

Yeah, it sure would. Bob, give us some perspective on that. I mean, obviously, we know inflation when you're growing, you have an economy that's growing, you're going to have some inflation.

That's just a part of it. But is there some significance to that two percent number? And as things continue to settle in at a higher number, let's say three, what are the longer term implications for that? So Rob, the decade prior to the recent rise inflation starting roughly a year ago, inflation was almost nonstop below two, primarily between one and two, occasionally even below one.

So that's where the two came from. Long term in the U.S., inflation is closer to three, meaning over many decades. And because some things have changed demographics, the end, at least temporarily, of globalization, which is a big dampener on inflation. These are some of the reasons why the Fed might say, you know, three may be more realistic for the environment in which we find ourselves.

That's a big difference from two. The implications are, obviously, interest rates are a little higher if inflation is three rather than two. And the price earnings ratio valuation on stocks is a little lower at three percent inflation rather than two.

They'd be big adjustments. Is that problematic given some of the headwinds we have, including our demographics and the aging of our workforce and the fact that we're having less kids on average per family? I mean, you put all of that together. Does that idea of a higher average inflation concern you?

Not particularly. I mean, if we started arguing that it's going to be four or five, yeah, that would have deep negative ramifications. But three is not the end of the world. And frankly, while I like low inflation, don't get me wrong, three may be, quote, healthier for the environment and for Fed policy than insisting on two. You've heard me say it before. If they really insist on two, we may need a bad recession to get inflation down to two.

And that might not be worth it. Yeah, interesting. All right, Bob, you also had a brief comment on the budget deficit and the federal debt. Obviously, we've talked about this before. And you've said to this point that we can sustain as a nation our debt, although the trajectory is concerning. What do you think is right around the corner? But also, what are the longer term trends that we need to be aware of? So the reason we've said it's been tolerable till recently is that interest rates were low and falling.

The reason it's not tolerable is we've had a free lunch, if you will, for years. And with interest rates going up, now we have a problem in interest expense as a percentage of the federal budget or spent as a percentage of GDP. That's a big change. And therefore, along with the debt ceiling crisis of the middle of this year, this issue, the federal debt and deficits is going to be front and center, unlike it's been in quite a long time. Yeah, interesting, Bob. Well, certainly something to keep an eye on. And I know it's going to be a hot topic politically as we move forward.

All right. Despite all of this that we've talked about, Bob, you make the case that really, January, February, first two months of the year, the economy has remained fairly resilient to this point, huh? It has both real growth economy and inflation have been higher than expected for the first couple of months of this year. We'll see if that's sustainable or not. But that's caused a lot of us who said recession before too long and inflation's coming down. Not so fast on either of those economic growth and inflation.

But therefore, if you will, nominal growth to some of the two has kept corporate revenues reasonably strong. Interesting. All right, Bob. Well, I appreciate you weighing in, my friend, as always, and hope you have a great week. We'll talk to you in a week's time. Talk to you next Monday. All right. Bob Doll, chief investment officer at Crossmark Global Investments.

You can learn more or sign up for his dolls deliberations at Crossmark Global dot com. All right. Let's head back to the phones. Arlene is in Fort Lauderdale, my hometown.

Arlene, how can I help you? Yes. Hello. Yes, ma'am.

Go right ahead. Yes, I was calling because I have a couple of properties, but one in particular. I owe 57,000 on it, and I rented. But my tenants moved out July 31st, and I've been trying to upgrade it on the inside because the house was built in the 50s. And I've been okay so far, but I'm running out of cash because I've been using the residual income to actually upgrade.

But now it's getting very tight. I'm not sure what to do. Should I take out a loan? Should I go ahead and rent it for next month and not worry about it?

I have a couple of prospects that are interested in getting the place. Yeah, I don't know what to do. I've been tithing. I asked God to give me a certain amount. I wanted a certain amount to give, and I've been successful in doing that. And I'm just so happy about how things are going, but I'm not fearful. But I'm like, I got to be more mindful that I could end up in debt to my ears.

Yeah, that's right. Well, you know, the thing that strikes me, Arlene, is that you had it rented. Renters move out.

That's not to be, you know, that's not unexpected. And you have, you said, a couple of prospects in the wings. So that tells me perhaps, you know, taking a more slow and steady approach to repairing, renovating, updating over time as you have the cash to do it is a better approach than you, you know, taking on some debt at this point, especially if you have folks that are willing to rent and rental prices are still very high right now.

If we get into a recession, I could see them coming down. So I think this is an opportunity for you just to move another tenant right in, especially if you don't have the cash on hand to do these renovations. Do you believe that the current state of the property is holding you back? Or do you think you should be able to put somebody back in there at fairly competitive rates? I've asked for $2,600. And I've gotten two prospects. One's ready to go in right now.

In fact, I've shown it to her. The floors are wooden, so I had to have a company to do that. I changed all the windows to Hurricane Impact. Both doors were changed to Hurricane Impact.

I bought, put in two new washers, a new washer and dryer, new bathrooms, and a new kitchen. Wow. So and now I'm like, yeah, yeah.

I think this is an opportunity for you Arlene to hit the pause button. Let's get somebody back into that property after all this great work that you've done. That sounds like a really healthy rental rate, although I'm not surprised given where rental rates are and the fact that we're talking about South Florida.

There's not making any more property there in South Florida. And so I think you need to take advantage of all the work that you've done and let's get some cash flow going. And perhaps down the road as you have additional resources, you could do some additional renovations, but I don't see any reason given what you just described to me the work that you've done, the fact that you have somebody ready to go. You should borrow any kind of money to do further renovations.

You've done some major work there and it's time for you just to enjoy the benefit of that by getting this property rented again. Okay. That's, that's what I was thinking. But then, you know, I just need to paint it, press your key and paint it. So they're willing to come in and I'll do that next month or the next month. Do you have the cash to do that?

Not on hand. Okay. Well, I might, I might even say, listen, I should buy in two months.

Yeah. I might, you know, tell them in advance, listen, I'm, you know, I'm gonna, I plan to paint it, but it's going to happen over the next year. And you know, you take your time and get the cash for it before you obligate yourself to do it. I wouldn't borrow. I just don't think you need to. And this is a great asset that you have.

And I just continue to move forward and on that cash basis without any borrowing, make a commitment to yourself that you're not going to borrow, you're only going to do further improvements and renovations as the funds are available. Thanks for your call today. Arlene quickly to to Montana.

Hi, Annie. I have just about 30 seconds left. Go ahead. Oh, goodness.

Sorry, I have a cold. So I have a about a $25,000 loan that I signed on for my daughter's school. It is a private loan, so we cannot. Whatever, but anyway, I'm nearing retirement and I need to get rid of it. And she cannot afford to refinance or credit is not well. I just need to get rid of it.

Yeah. Unfortunately, you know, unless she has the documented income and the credit worthiness to qualify on her own, a lender is not going to let you out of it without her refinancing and doing that without you. And it doesn't sound like that's going to be easy to do. So I think the key is you stay on it. Let's hope she can continue to pay on it.

And as she establishes credit moving forward and gets a job and builds up her credit score, hopefully a year or two down the road, you'd be able to refinance. Stay on the line. We'll talk a little bit more off the air. Folks, thanks for being with us today.

Faith and Finance Live is a partnership between Moody Radio and Faith. So thankful for my team today. Couldn't do it without them. You have a great rest of your day and we'll see you tomorrow. Bye bye.
Whisper: medium.en / 2023-02-27 21:10:25 / 2023-02-27 21:27:09 / 17

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