The Contractor’s Budget

Moonie Radio's Spring Share event has officially ended, but we could still use your help. Will you partner with us in our mission to be bold for the Gospel in 2023? To see our impact or partner with us, visit springshare.org. So how do you budget?

Hi, I'm Rob West. Developing a budget isn't difficult, if you know how much money you have to spend. But what if your income keeps changing? Then what do you do? Well, I'll share a few tricks today to help, 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. Well, new data shows that employers are using about 25% more contract workers now than a year ago, largely due to fears of recession. That means a lot more people are struggling to budget with income that varies from week to week. But the need to budget doesn't change just because your paycheck does. Spending less than you earn is the key to every financial success.

It's the foundation that everything else is built upon. It's nearly impossible to stay out of debt and save without a spending plan. This is a plan for your money. It gives every dollar a job and directs the flow of money in and out of your accounts. You'll never be able to maximize your giving and saving without a spending plan. And this applies to everyone, whether you're an employee or a contract worker. It's imperative as a Christian that you wisely manage the resources God's given you.

Proverbs 27-23 reads, Know well the condition of your flocks, and give attention to your herds. Having a spending plan means you know, either specifically or on average, how much you have coming in and going out and where those monies are directed. You'll have to give an account someday for how you manage money, so you need to have a plan. Now, the format you choose for your spending plan is up to you. You can use pencil and paper, or you can take a digital approach, and for that we recommend highly the FaithFi app.

You'll find it in your app store. Just search for FaithFi, Faith and Finance. It will help you set up your budget using the tried and true envelope system, and it has the best financial content from a host of Christian authors like Shanti Feldhahn, Art Rayner, and Randy Alcorn. So get the Faith and Finance app if you haven't already, or you can learn more at faithfi.com.

Just click on the app tab. No matter which approach you choose, begin by tracking your expenses for 30 days. Capture every expense, no matter how small. Then, think about the non-recurring expenses and add them in with a monthly amount needed to have what's necessary when that expense rolls around.

This would be quarterly insurance payments, an annual homeowners association fee, vacation expenses, or your Christmas fund. Then, take that 30 days of actual spending, plus the non-recurring expenses I just mentioned, and build a budget by category. Once you take a first pass, you'll need to do the hard work of bringing the budget in line with your income and making sure that your spending reflects your goals and priorities.

If it doesn't, that's where you need to start cutting back and making changes. By the way, if you use the FaithFi app, you'll find its envelope system particularly helpful for controlling the flow of money in your discretionary categories, which are the typical budget busters because they vary from month to month. These are things like eating out, shopping for clothes, gifts, and entertainment. You'll also have to decide who manages the budget going forward, husband or wife.

We all have different gifts and talents. Sometimes the more detailed, organized person is the wife. Sometimes it's the husband.

You've got to figure out what's the best approach for you. You can have one person being the bookkeeper, and I recommend that you do, but both spouses need to be in on the plan and the commitment to sticking with it. This is why we recommend, and Howard Dayton, the former host of this program, has recommended for many years that you have a weekly money date. That's when you come together each week to review the spending for the last seven days, make course corrections, no finger pointing, and address the unexpected.

And of course, the unexpected is always going to happen. So we've covered the variable expenses, now here's what to do about the variable income, which is key for most contractors. Start with what you do know. What was your average monthly income for the last six months? Can you reasonably expect to earn the same amount in the next six months? The goal is to arrive at a budget that can be covered by the average or slightly below average amount you expect to earn each month. In the months you earn more, keep the excess in savings to fund the lean months. You may also want to consider depositing all of your income into savings and then transferring only a set amount each month for living expenses.

And that's how contractors or anyone can budget successfully on a variable income. All right, your calls are next, 800-525-7000. This is Faith and Finance Live, biblical wisdom for your financial decisions.

We'll be right back. Great to have you with us today on Faith and Finance Live. Are you looking for a modern, simple way to manage your budget, control your spending, and also have a view into your finances as husband and wife so you can make changes throughout the month? Well, the FaithFi app can help you manage your spending plan well, and it's easy to access on our website. You can download it in your app store or head to faithfi.com.

That's faithfi.com and just click on app. You can learn more about it. All right, it's time to turn to your calls and questions today. Whatever you're thinking about financially, we'd love to hear from you. We've got some lines open. Our team standing by, 800-525-7000.

Perhaps you have a story or a testimony you'd like to share of God's faithfulness in your financial life. We'd love to hear that as well. Again, the number, 800-525-7000. Give us a call. Let's start today in Pennsylvania. Hi, Natalie.

Go right ahead. Hi. I just heard your promo about contractors and saving money and all that, and that's kind of where my question is leading.

Okay. So that's kind of cool. First, my husband just started a business, a contracting business. He has been in the industry for 19 years and now is an LLC sole proprietor. And basically for me, I don't have a part in the business as of yet since he just started, but he said one day I will. But I just wanted to know how to keep personal and business separate because I know him as a sole proprietor, he'll be taxed either way on everything. But I just I have a hard time understanding like personal tax and business tax and then also leading into saving money and tithing to the Lord as well.

The personal money and then the profits from the business. But technically, you don't know all that till the end of the year. But I hate to just fork out all this money for taxes and all this money at the end of the year for tithing. If there's a way to do it kind of in between, you know, every three or four times a year. Absolutely.

So that's a great question. And I think you're exactly right to think about this now on the front end. I mean, if you don't keep your personal and business finances separate, it can really lead to an accounting nightmare for either you or a bookkeeper. So you really need to separate your business expenses, accounts and finances from you personally having separate checking account, having a separate business credit card if that's something you need just to buy materials before you get paid from your customers.

You potentially forfeit not only legal protections, but also tax deductions by not having those separated because you want to clearly be able to define what is a business expense, which will reduce the profit that you have. And you'll want to make sure that you keep track of any shared expenses or when you use personal items for business purposes, that type of thing. So it's important, I think, to get set up with an accountant or a CPA. Somebody can help you set up the books, if you will, on that the chart of accounts. So how you're going to track expenses for the business. Again, making sure you're not only you're registered as a legal corporation. And it sounds like you've already got the LLC in place, but also just the accounts and then the book, the books or the records to document everything, because you want to be able to show to the IRS exactly what was a business expense and what was personal, even though it's a flow through or a pass through entity. You're not going to be able to make certain deductions on the business side unless you can document and justify those expenses. So do you all have a CPA or an accountant that you work with? Yes, we do have an accountant and we also have a lawyer for any legal things that may come up.

OK. All right. Well, so I would talk to your accountant just about getting everything set up. So making sure you have a small business bank account, you know, you want that done in Bradstreet number.

You want utility accounts if there are any in the company's name, but you want to apply for credit in the company's name, the business credit card. And then just make sure you understand how to keep the books on a monthly basis as well. And that way you'll be able to run reports on truly how the business is performing so that you can see when, you know, it's starting to do better or when you see some red flags and you need to make some changes. But again, when it gets all intertwined with your personal finances, that can be a real problem. So I would ask that question and have perhaps the two of you, certainly the one who's going to be the bookkeeper, sit down with that accountant and have them walk you through what that needs to look like moving forward. I think it's also important to understand just with regard to tithing, you know, a lot of times businesses right out of the gate don't make any money. And so we just want to tithe on the increase specifically as it relates to your business.

So if you get to the point either sooner or later that you're paying yourself a salary, obviously, as that comes in as in the form of income, clearly, if you want to apply the principle of the tithe, you would tithe right on that amount. The question would be any earnings in the business that stay with the business. And you could take that on a, you know, an annual basis if you wanted to and just look at, you know, at tax time, what is the true profit after all the bills are paid, all the salaries are paid out. If you know, if any, and I realize you may not have one initially, but then you'll identify what is truly the increase for this year that's staying in the business as profit. And then if you wanted to tithe on that, given that this business is essentially you and your husband, you know, you could absolutely do that and then take that a year at a time. There could be a year where there's a loss and you wouldn't have any tithe.

But, you know, I think that's the right approach to take because clearly, if you were to try, let's say every month, you don't know if you truly have an increase until you get to the end of a period of time, like a quarter or a year. Does that make sense? Yeah. Yeah.

And then I just had one other quick thing. Because we don't have any retirement because the company that he worked for didn't do that. So how would you recommend our investing? Should we wait the first year or should we start right away in investing? Yeah, you know, I think you're just going to have to balance cash flow on this because, you know, so often businesses, when you're getting started, you need more cash. It takes more time than you think to kind of get it ramped up.

I agree. We don't want to, you know, forsake the opportunity for compounding any longer than we have to. The earlier you can start, the better. I also don't want to put the business and really you guys because you are the business in a cash crunch where you're putting money into retirement accounts that you really don't have because you're still getting things up and running. You have new expenses. You're trying to figure out how much profit you're going to have.

And you're trying to pay yourself a consistent salary so you can actually budget like we talked about at the beginning of the program. So I'd probably say, you know, unless this thing is just given his experience in this space and, you know, if he has some jobs already lined up, unless this is going to come out of the gate really strong, I'd probably wait a year before you contribute or get to the end of the year. And before you file your return, that would be the time to contribute, especially if you find you're going to have a big tax bill and, you know, you want to take and save some taxes by making a contribution to a retirement plan. That would be a good time, you know, at the end of a year, getting ready to file that year's return in the first quarter of the next year to decide where do we stand?

How did we do? And, you know, is this a good time to go and make a contribution? A good option for that, Natalie, would be what's called a SEP IRA. That's a simplified employee pension. Basically, it provides business owners like you all with a simplified method to contribute to retirement, and you can put away up to $66,000 a year or 25% of compensation, whatever's less. So you're going to be able to put a lot of money away, and then once it gets in there, you can invest it in whatever you want, probably some high-quality mutual funds, and you could use a brokerage firm like Fidelity to open that.

But I'd probably wait a full year, and then as you're getting ready to file that year's return, decide whether you have the money to make the contribution. Does that make sense? Yes, and is that in the personal side or the business side? It'd be a personal account.

So it's a simplified employee pension, which is for small business owners, so it's for an individual, but it's specifically the purpose of putting retirement funds away, you know, in a larger amount because you're self-employed. Stay on the line. We'll talk more off the air.

We'll be right back. and sustainer of everything, not in the things of this world. You're holding God's money loosely and living generously, and when we do that, I think we're not going to be without in this world trials and difficult seasons.

The Bible's clear we're going to have that. Just look at the apostle Paul's life, but we can know that we've at least put ourselves in a position to do and be obedient toward God's plan and purposes in our lives, in concert with him through prayer and study of his word, We hope this is an encouragement to you, this program every day as we unpack those principles and apply them to what you're dealing with in your financial life. Hey, give us a call with your financial question today. 800-525-7000 is the number to call. Let's head to Mississippi. Hey, Don. Thanks for calling. Go ahead, sir. Hey, Rod. Thanks for taking my call. Enjoy your program.

Listen to it every day. If I could, I'd like to give a quick testimony of God's goodness, his grace. In 2017, I was on the verge of bankruptcy, about to lose everything I had. I worked in the pipeline industry for several years, and that was kind of up and down, kind of what you were talking about earlier today with your pay and everything.

We'd work a while and be off the wallet anyway. I just got really tired of being in debt, and I just prayed about it. And I said, OK, Lord, if you open the door, we'll do it, you know. And I've been working ever since, straight.

I started out in 2017 with $220,000 in debt, and today I'm down to about $47,000. Wow, Don, that's incredible. God has been faithful, man.

He's been faithful. I have a question about retirement. I started really late.

I started in probably 2020, I believe it was, so only four or five years. My company has a 401k. They match 6%. I have about $43,000 in that. In the last year or so, I bought a Roth IL-8 annuity. I put $14,000 in that.

That's about 3.75%. And just recently, I got a money market account, opened a money market account of about $35,000. That includes my emergency funds and savings slash retirement savings. So my question is, what do I need to do with this money that I have? I'm just trying to make sure I'm doing everything I can since I got started so late.

Yeah. Well, first of all, Don, let me just say thank you for sharing that testimony. What an encouragement I know that was today to somebody who's in that position. Maybe you were years ago with $220,000 in debt saying, Lord, enough is enough. I want to invite you into my financial life. I want to do this your way. And you are making some incredible progress toward being debt-free.

You're absolutely going to be debt-free well before retirement, which is going to allow you to be flexible and free to follow the Lord in whatever way he leads and allow you to keep your lifestyle as modest as possible in that season. So thank you for giving that testimony today, sir. You're right.

You're a little behind. But at the same time, we just need to take from where we are today and move forward and make the best decisions we can. And I think you're doing the right things. Having that debt paid off is going to be key.

Beyond that, what's most important is just to keep your lifestyle at a minimum. Living within your means is really the key to every financial success once we know that God owns it all, because that's going to give you a margin or surplus to fund your goals and objectives that are aligned with your values. And at this point in this season of your life, it's putting money away so that when God redirects you away from paid work to whatever your next assignment is, you've got the ability to support yourself. You'll have some Social Security. You'll have this 401K and these IRAs. Beyond that, Don, is there any other retirement accounts that you'll have coming in?

No. Like I said, that's what I'm trying to figure is where I need to put some of this money. I'll be 59 this year, so I'm probably going to look to work at least to at least full retirement age, 67, or maybe even 70, according to how my health is. And I think that'll be key because if you can let that money grow, your Social Security, it'll grow by 8% a year until age 70, which will allow you to have potentially three years or another 24% on that check for life, which will really help to close that gap. This year, you could put in 27,000 in that 401K for 2023 if you're over the age of 50. So I'd be looking just to maximize my contributions into that 401K.

It's going to give you the ability to deduct that from your taxes, which will save you a little bit on taxes. And I think the key is just to get as much as you can going into that account for the next decade so that you have a nice nest egg built up through all the markets ups and downs. It should over the next decade be higher. That's going to be at least the very best way, I think, historically speaking, to overcome inflation and build some wealth that will allow you to supplement Social Security. Do you have the ability to put somewhere close to 27,000 in this year?

Well, I'd probably get fairly close to it. But I had talked with a friend of mine who kind of does financial advisory, and we had talked about putting more in, but he says that if I do that, then I don't have control of the money. That's why we went with the raw file rate with the annuity part of it.

I'm just lost on that stuff. Well, I appreciate that if you would have called me and when you were considering the annuity, I would have said let's not do that because you can do better than three and a half percent over the next decade in just based on history going all the way back to 1926. So I don't really like annuities. Even though you're right, you are limited in your investment options inside the 401k. You're going to have plenty of investment options for you to choose, you know, whatever investment strategy you want. And that's going to be the very best way to grow it not inside an insurance product. So you've already got that.

Let's just leave that right where it is and let it do its thing. You're probably going to have some penalties if you try to pull it out, but I wouldn't put any more in annuities or insurance products. I just sock it into the 401k and then pick the very best investments you can. If you need some help with those investment selections, you can reach out to one of our Certified Kingdom Advisors in Mississippi. Just go to faithfi.com and click find a CKA.

But if it were me, I'd do it through the 401k and just try to max that out. Thanks for your call, Don. God bless you, my friend. We'll be right back.

Stay with us. I'm so thankful you've joined us today on Faith and Finance Live. My name is Rob West, and we're here to serve you and your financial questions.

We're trying to bring you a biblical perspective of money, relying on the Council of Scripture, the wisdom, the principles to apply to your financial decisions today. And we know you all have them. I certainly do. And we want to do that together. So we've got some lines open with whatever you're thinking about today at 800-525-7000. Feel free to give us a call. Let's head to Miami, Florida, south to Joyce. Hi, Joyce. Go right ahead.

Hi. What an asset you have to the body of Christ and to all who are listening. Well, thank you. That's very kind. Thanks for taking my call. I want to put about two thousand in high bonds.

I wanted to know what are the downfalls and how long you think I should keep it in for a year or two. Yeah, it's a good question, Joyce. Tell me about this two thousand dollars. How does this fit into your overall financial picture? And more specifically, do you have separate from this an emergency savings account? Yes.

Yes. I'm 74 years old. But instead of purchasing life, more life insurance, I want to get that money to be like a subsidized for my daughter. You know, I want to put in a financial bondage. So I was thinking that would have been a good thing to do. I don't know.

Yeah. You know, the thing with I bonds is they're very attractive right now. They were incredibly attractive late last year when they were paying nine point six two percent.

They're still attractive right now at six point eight percent. And the nice thing is that you'll know that this money will always offset the inflation. But that rate is not going to be as attractive down the road.

So if this is money that you'd like to grow, you know, over the next 10 years for your daughter, because the Lord's not finished with you yet and he's going to Terry and you're in good health and you still have some work to do here on this side of heaven. Then, you know, we might be able to grow this money a little faster or at least, you know, see more growth over time if you were to invest it. Now, with that, you're taking more risk. So with a greater return, we have a greater amount of risk. And so if you said to me, Rob, I just want to maximize the return I can get on this, but I want to be very safe.

I really don't want to take any risk with it. Well, I bonds would be one way to go because, you know, the rate is very good right now at six point eight. You'd get that. Let's say you put it in tomorrow and it'd take a little longer than that to get it all set up and funded. But let's say tomorrow you put it in for the next six months, you'd get six months worth of two of six point eight percent.

You know, that's an annualized return and you get six months of that. And then at the end of the six months, you'll get the new rate and we won't know what that is until May. But I can tell you it's going to be lower than six point eight. It'll still be fairly attractive. And it will probably keep coming down because the Federal Reserve has indicated they're laser focused on getting inflation back down as close to their two percent target as possible. So as inflation falls, the rate on these bonds will fall. So I think it could be attractive for the next year, maybe two years. But after that, it's probably not going to be something terribly exciting. And so the question is, should you go ahead and just take the two years worth of the I bonds rates? And you could.

And it'll be very safe because it's backed by the full faith and credit of the United States government. Or would it be better to take that two thousand and drop it into a high quality mutual fund while the stock market is down and let that grow over the next 10 years? And then maybe have something a little bit more, you know, in the way of return, even though you're taking more risk, which sounds like it's more of what you're looking for.

I think I will go with the I bond for the two years. I'm 74, you know, you know, I just want to do a little safety. Yeah, that's fine. So are you comfortable using the Internet, Joyce? No, but my daughter is going to help me.

OK, very good. So you'll want to sit with her and go to TreasuryDirect.gov. That's the only Web site you can buy them.

The only way you can buy them is electronically unless you're doing it through a tax refund. So you'll set up an account or she can for you at TreasuryDirect.gov. You will connect another account electronically, like a savings or a checking account, wherever this two thousand is coming from. You can name her as the beneficiary. So if God were to call you home before her, she'd automatically get the money outside of probate. And then you'd transfer the money in that would purchase the electronic bonds and then you could pull it out any time after a year. Now, if you pull it out in less than five years, you're going to pay a small penalty of just three months worth of interest.

But any any time after a year, you can get the money back. OK. OK. All right. That's all. Thank you. OK. God bless you, Joyce. Well, thank you. And thank you for your kind remarks at the beginning of the segment here. We appreciate what you said. All right.

Let's stay in Florida. Hi, Dawn. How can I help you? Hi. Thank you for taking my call.

I enjoy your radio station so much. Well, thank you. Well, my question is, I will be 62 this year. My husband is 63. So there's a year apart in regards to Social Security. I know that my F.R.A. is 67 as well as my husband. And he definitely is the higher income earner. My question is, I did some research and I found the answer on AARP.

And I just wanted to ask the question to you. It's basically can I file for my Social Security at 62 and switch to spousal benefits later? Yes, absolutely. So your spousal benefit could continue to grow. And once your husband starts to claim benefits, then you'd be able to switch to spousal benefits and you'd be able to take the higher of the two. You know, you certainly couldn't earn both. But, yeah, you could start taking yours and then switch to his down the road.

Okay. And that's what I thought, Bob. But I called Social Security because, like I said, this is all new to me and I just wanted to see what would be the best solution. Now, they said, no, I don't know how accurate that is when you call Social Security because they said you used to be able to do that, but you can't. She quoted 2016 was the year when they changed it. And she said you can't start yours and then change over to spousal. You can't go from one to the next. Well, I certainly don't like the idea of contradicting the Social Security system.

So I would call back and talk to somebody else. My understanding is that based on the latest rules and regs is that as long as your spouse is not receiving retirement benefits, you can claim yours at 62 and then make the switch. Once your husband begins to file, you know, you will get the higher of the two.

If your spouse is already getting Social Security benefits, then you know, under that rule, you don't have a choice whether to wait and switch. But he's not claiming his. So according to my understanding, you should be able to down the road. Yes. And like I said, I did do my research and that's what I found out. And then I thought, OK, just to make sure I'll call Social Security.

So, yeah, Bob, I thought what you're thinking. Yeah, I could. But so, yeah, so I guess what I would what I would do is call back and just see if you can clarify that because there are exceptions and so forth. And I certainly wouldn't want you to make a decision based on faulty information. So I'd probably maybe set up an in-person or a virtual meeting or at least get somebody on the phone and just say, here's my understanding. You know, based on the fact that my husband is not taking benefits, I have the ability to take mine now and then switch to his later and take the higher of the two.

Can you explain to me why that's not the case? And what they may say is, no, you misunderstood or somebody misspoke and you're covered there. But I'd follow up and see if you could clarify that, because what you're describing is not does not align with what my understanding is. Thanks very much for calling today, Don.

We appreciate you being a part of the program. Let us know how it turns out. I'd be interested in knowing kind of where you land on this. We've got a few lines open today. Perhaps you have a question for us here on Faith and Finance Live.

If you do, the number to call, 800-525-7000. Tahirah would love to take your call. So call right now and we'll be right back.

Thanks for joining us today on Faith and Finance Live. Let's head right back to the phones. We'll see if we can get to as many questions as we can here between now and the end of the program.

To Michigan. Hi, Kim. How can I help you, sir? Hi, Rob. Enjoy your show.

Got one kind of major question. My wife and I have been in church ministry for several years and really haven't established a retirement because we couldn't manage that. She's an incredibly good budgeter.

So she's got it down to where we do pretty well. When I started Social Security, we started because of the extra income, saving the money for an emergency fund and for retirement. But now our question is, we owe about $47,000 just over on our house and we're trying to decide should we just pay that off. We've got about 13 years to go on the mortgage. That will put us at $83,000 because we're $70,000 right now.

What's your advice? Yeah. So are you still working now?

I am still currently in ministry and have a part time job. Get out at four o'clock so I get to listen to your program. Cool. That's great. Great.

And how long? I mean, obviously only the Lord knows how long you'll continue to do this, but you can plan to continue this for the foreseeable future. Yes, because I'm in pretty good health and I enjoy both the ministry and then work in a funeral home, which is, you know, just like an extension of my ministry. Yeah.

Yeah, I love it. Well, I mean, God, as you know, God created us to be workers. So, you know, we want to continue to throughout the whole of our life be in service to him, whether that's paid or not.

Just the assignment changes along the way. If you were to pay off the house, where would the money come from? It would come out of that savings that we've been saving for retirement, our Social Security savings that we've been doing. So how much have you built up?

About 80,000 at this point. And that's just in a taxable account? No, that's actually in our local bank. OK, but it's not inside a retirement account of any kind? No, it is not.

No, I got a few little things, but they don't amount to anything to talk about. Yeah, got it. And so as you look at this, I mean, if you were to stop working for pay, I know you're really only working part time right now. And let's say the house is payments gone. Are you all able to live on Social Security or are you really needing to build something up that you could draw an income from to supplement? Yeah, I don't think we could really make it on Social Security because, you know, our monthly budget right now is about 4000.

And Social Security will only get us to about half that. Just a little over. Yeah. OK. All right. So if you're going to need you think maybe a fifteen hundred a month, you think is that probably about right? Yeah.

OK. Yeah. So, you know, if you were to build up something, you know, to let's say two hundred and fifty thousand, you know, at four percent, that'd be ten thousand a year. I mean, that still wouldn't get you there. But, you know, that at least give you eight hundred dollars a month.

You may need to take a little bit more than that. But I think the goal is how do we, you know, over this next, you know, let's say decade, if that's how long you're continuing to work for pay. How do you build up something, you know, maybe a quarter of a million dollars? I think the key is to get that money into a tax deferred environment and get it invested. So what I'd probably do is, you know, let's pull out six months worth of emergency reserves. So if you're living on 4000 a month, you know, that's twenty five thousand. You'd probably want to put in a leave in that savings account.

May want to consider moving that to an online savings where you can at least get a little bit of interest on it, you know, maybe three and a half percent right now with FDIC insurance. And then, you know, that would leave you fifty five thousand to do something with. And I'd probably start funding, you know, Roth IRA for you and your wife. You could each put in seventy five hundred dollars over the age of 50 per year and you wouldn't have any required minimums as long as you have earned income. And then, you know, that could be invested with the idea that, you know, we want to try to grow that over the next decade. You'd still want to be fairly conservative, but, you know, I might have 50 percent bonds, 50 percent stocks and just try to grow it. And, you know, you guys could put in fifteen thousand for 2022 if you haven't filed your return.

Well, fourteen thousand last year was seven thousand apiece over age 50. And then you could put in another fifteen thousand for this year if you wanted to do that. But tell me how you feel about that. Are you are you wanting to take a little bit of risk and try to grow this? Or are you really wanting to stay more in bank type products that are guaranteed? Well, we don't necessarily want to stay with the bank thing, but we don't want to be, you know, too invested in that right now because the banks are a little bit challenging or questionable, I guess is what I mean.

Yeah, I wouldn't be concerned about that. I mean, if unless you're in one of them, I mean, this was really isolated to some we could see more of it for sure. But it was isolated to some very specific regional banks that had mismanaged their their portfolios because when they take in deposits, they lend it out. And, you know, then they buy U.S. government treasuries. They had a lot of long term treasuries. They had particular in the case of Silicon Valley depositors that were needing their cash because they're in a high growth industry. And in this environment, they were draining their deposits and that required them to sell these assets at a loss, which resulted in a run on the banks on those banks. I think it's limited and the government has taken extraordinary measures to backstop it.

And even as of late, Secretary Yellen plus Fed Secretary also is out, you know, Chairman Powell and saying that we may go even beyond 250. So if you're up to 250,000 or less, I don't think you have to be concerned. I think the question is, what's the best place to balance getting out of debt so you reduce your lifestyle as much as possible? I think the key there is to do that by the time you stop working, because that's going to get your biggest expense off the table. And if you had a conviction to do that right away, you certainly could go in and wipe it out and you'd still have, you know, probably 12 months worth of expenses in the bank. The question beyond that is, if Social Security is not enough, what can we do to grow some wealth over the next decade? I'm just using that as a ballpark for how long you're going to continue to work for pay.

You could go beyond that. But what can we do to grow some wealth so you have an asset there that you can convert to an income stream, you know, to use for the rest of your life? And I think that's really the key. And so if it were me, I'd probably, you know, just continue paying on this mortgage and, you know, try to sock some money away in an IRA and then invest it in a fairly conservative way.

But where you have a mix of stocks and bonds and give you the potential to grow it over the next eight to 10 years. Does that make sense? Yeah, it kind of does. We're both listening to my wife. Yeah, but give me your thoughts, you and your wife, delighted she's listening as well, just on, you know, if that doesn't line up, because at the end of the day, you all are the stewards and, you know, we want to align this with your values and priorities and, you know, what God's doing in your life as a couple and in your family. And I think, you know, if you're saying, listen, Rob, we just feel like the Lord's giving us a conviction to get out of debt, then I would say you do that and don't look back.

But if not, and you want to just continue paying on this mortgage, and I assume it's at a low interest rate, and you want to take this 80 and set aside the six to 12 months worth of emergency funds and keep that in savings and then take the rest and start socking it away over the next decade into an IRA and get it invested where it can grow, then that would make some sense to me unless that's misaligned with where you all feel like God is leading you. And if that's the case, then I fully support that. So give me your thoughts on that. Yeah, and we're certainly praying about it. Yeah. And I understand we need to invest to try to build that up.

I just thought, you know, the interest, our mortgage is five and a quarter percent. Oh, okay, so it's a little higher. Yeah, well, that that was good back in 2006. Yeah, that's true.

That's true. Yeah, we've never refinanced and so on like that. So, okay, think about that may change things just slightly for me because, you know, I was thinking you had a one of these two and three quarter 3% rates, you know, with, with over five. Yeah, I might, I might like this idea of you all just wiping that out and then shoring up that savings of six months in.

And so that would be 47. And then if you put another 25 into emergency savings, that's 72. And then you could take the remaining eight and maybe that's what you use to start the IRA. And then you guys have some peace of mind to know, hey, we're completely debt free.

We don't owe anybody anything. And now we're going to focus on taking 100% of our surplus every month. Now that this mortgage is paid off and put it away toward long term savings, you know, I think you could absolutely make a case for that at age 70. I think that sounds really good. That gives me a little more sense of relief because we were just heard your money minute this morning. You just said save the interest and that would save us quite a bit interest, you know? Yeah, I like that.

Okay. Well, I think given that interest rate, I can get on board with that once you guys take another week or so and just pray about it separately and together and see where the Lord leads you. But we appreciate you being on the program today. Thanks for calling today, Kim, you and your wife. God bless you guys. Thanks for your service to the Lord over a long, long time. If we can help further, let us know quickly to Chicago. Joe, you'll be our last caller. Unfortunately, I was long winded there. How can I help you?

Thank you for taking the call. My wife and I were both 57 years old, recently financed. We have 28 years left on our mortgage. It's on a three flat building. We occupy one of the units and the rents that come in on the on the building covers the mortgage with escrow and actually gives us about 150 bucks a surplus.

The rents are about 15 to 20 percent under market value. We have wonderful neighbors and we want to keep them comfortable as well with the interest rate, with the rate of inflation being what it is today. And I'm needing that three percent locked in for the next 20 years. So I just let the rents ride and pay the house off by itself or should I make attempts to pay off the building earlier?

Yeah. And what would you use to pay it down quicker? Our incomes. I'm 57 years old. I'm a first responder. I'll be retiring this year, but my wife will continue to work and I'll be drawing about 5000 on a monthly pension.

OK, I got it. And what do you do with that surplus now if you're not paying toward the mortgage? Are you putting it away in investments? We just finished putting our last daughter into graduate school.

So, you know, she just wrapped up right graduate school. So now we have this extra 150 and the rents pay off the mortgage completely. And we're kind of wondering, do we pay the building off sooner or do we let it ride?

Yeah, I think I'd let it ride, especially since you're 15 to 20 percent under market. I don't think those renters are going anywhere. And now you're going to have some surplus.

Now that your daughter's through grad school, I just sock that money away and let the buildings pay for themselves. We appreciate your call. Sorry, I didn't have much time, Joe. Faith and Finance Live is a partnership between Moody Radio and Faith Fi. Thanks for being along with us.

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