Kill that Unused Account

Americans have an average of four credit cards. Do you really need that many?

And how many is enough? Hi, I'm Rob West. Too often we hang on to credit cards we no longer use, providing an unnecessary invitation to identity thieves to run up charges in your name. Canceling them is a good idea if done properly. I'll talk about that today and then it's on to your calls at 800-525-7000.

That number is 800-525-7000. This is Faith and Finance Live, biblical wisdom for your financial decisions. Well, Christians should always take Proverbs 10-4 seriously. It reads, We certainly don't want to have a slack hand when managing credit cards. I know you agree because we get a lot of questions about credit cards and two of them go something like this. If I close a credit card account, will it affect my score? And why does it affect my score? Your credit score will drop a little after closing an account.

Most people are surprised by that because it seems like you're being punished for doing the right thing. But it really comes down to mathematics and complicated computer algorithms. To find out why your score drops, we'll have to simplify things. So first, a definition.

An algorithm is just a set of rules that solve a problem in a limited number of steps. Algorithms live in computer models that give you more credit score points for having three things. Long-standing accounts, more available credit, and more kinds of accounts, like a credit card, auto loan, and mortgage. If closing an account falls under one or more of those factors, your score goes down. So just remember, the longer you have an account open, the more credit you don't use, and the more types of accounts you have, the higher your score. In fact, those three factors make up 55% of your FICO score.

Now why is that? Well it's simply because having old accounts, unused credit, and more kinds of accounts tells lenders that you're more likely to pay them back. But is this really something to worry about when you close an account? A slight drop in your credit score?

Usually not, but there's one occasion when it could be important. If you're shopping for a mortgage or some other kind of loan, you want the highest score possible. Lowering your score by even a few points could put you in a lower range of scores, and that could affect the interest rate you get on the loan. A higher interest rate means money out of your pocket every month. But in most cases, when you're not seeking a loan, a slight drop in your credit score means very little. You'll quickly make that up if you keep the outstanding balances below 30% on remaining accounts and you make your payments on time. So you may be asking, why bother closing an account after you've paid it off, especially if it's going to cost you points on your credit score? Well, there are at least two good reasons. First, it eliminates the temptation to use it if you run into an unexpected financial problem.

That's what your emergency fund is for, and you should use that money if the car breaks down or the water heater starts giving you cold showers. I've already mentioned the second reason to close an unused account. It's the constant threat of identity theft. If your account is hacked, it'll cause you a lot of headaches, especially if it's unused and you're not paying any attention to it. Now, even though I said go ahead and close an unused account and don't worry about your credit score, you don't want to close several of them at once, even though that would feel really good. Closing a bunch of accounts at once will multiply the negative effect on your score. The best way to close unused accounts is gradually.

No more than one or two every six months. That way you spread out the negative impact while at the same time minimizing it by keeping low balances and making on-time payments with your other accounts. Now, here are the steps to closing an account and making sure it's closed. First, pay off any remaining balance. Then check any recurring charges on the account and cancel or transfer them. After that, call your card issuer and tell them to cancel the account. You may want to follow up by writing an email or letter to your credit card issuer to confirm your card's been canceled. Finally, double check your credit reports at all three credit bureaus, Experian, TransUnion, and Equifax to make sure the account's been closed. You can get them for free at annualcreditreport.com. Okay, so that's why you should close an unused account and how you should do it. And again, don't worry about how it affects your score. Hey, have you checked out our new Faithfi app?

You can use it to manage your money and get a clear picture into your spending and perhaps make sure it's going where you want it to. You can learn more at faithfi.com. Just click app. All right, your calls are next, 800-525-7000. I'm Rob West and we'll be right back.

Stay with us. Welcome back to Faith and Finance Live. I'm Rob West, your host. We're so glad you're along with us today as we apply God's wisdom to your financial decisions and choices. Hey, we have some lines open today.

We'd love to hear from you. The number to call is 800-525-7000. That's 800-525-7000. Give us a call.

All right, let's start today in Chicago. Jared, thank you for your call. Go right ahead. Hello, you mean Sharad? Oh, Sharad, my apologies, sir. Yes, sir. You're next. Go right ahead. That's okay.

Real quick question, sir. I'm in the process of doing my taxes and I was wondering if my Social Security tax withheld and Medicare tax withheld is deductible. No, sir, it's not. Unfortunately, I wish I had different information for you, but it is not a deductible expense. So you pay a combination of Social Security and Medicare taxes.

You as an employee, W-2 income, are responsible for half of that, 7.65% of your income, but that is not a deductible expense. Well, thank you very much, sir. Have a great day. God bless you.

You're welcome, Sharad. Thank you for calling, sir. 800-525-7000. We've got a few lines open today. We'd love to hear from you with whatever your financial question is.

South to West Palm Beach. Hi, Marie. Go right ahead. Hi, thanks for taking my call today.

My in-laws in their 90s, a few years ago. Okay, my in-laws. You need us to put you on hold and we'll get back to you, Marie.

Well, I'm hearing myself already turned out. Yeah, turn down your radio. That'll take care of that. If you don't mind, just take a second.

Turn that down to zero. The delay is getting in and then you can go right ahead. Okay, hopefully we're good now. Yeah. My in-laws who are in their 90s, several years ago, put their longtime home in their children's names, which they had seven children. And then in December of 2022, the house was sold. So because the house was in the children's names, they divided the money up to all the children equally. But all the children wrote checks back to the parents because it's their house, their income.

But now we're doing taxes and it's like, oh, do we have to declare that as income, like personal income on our income tax? No, unfortunately, though, that was not a good way to handle it. Why did they do that? Why did they place it in the children's names if it wasn't intended to be an asset of the children and there was a payback? Well, one of the siblings, we're in Florida, but they're in Pennsylvania. One of the siblings sought some advice and was told that's what they should do.

All right. Well, the challenge with that is it may have been for Medicaid purposes or something like that, although there's a five year look back. The challenge is the way this is handled is that that was considered a gift to each of the siblings when that deed was change was made, probably through a quitclaim deed where they surrendered a portion of the the ownership of that property and divided it among the children. So you all were now co-owners of that property. Then it was sold and that's going to trigger a capital gain. So that's not an income, but your portion of the proceeds of the sale is the the gain on that is going to be taxable to you as a capital gain.

So essentially, let's keep it even here. Let's say it's $100,000 property and it was divided equally 25% to four individuals. When it was sold, each person gets $25,000 and then we'd establish the cost basis for the property.

What was it originally purchased at? Well, let's say in my example, it was originally purchased at $50,000. Well, that $50,000 then divided four ways would then be $12,500 that each one would have as a cost basis. So they'd have the difference $12,500 in profit and then that would be subject to capital gains. And then when you gave the money back to them, essentially you're making a gift back to them, which you don't get any credit for that. There's no deduction for a gift back to any individual. So unfortunately, you are going to have to pay capital gains on that and it's probably going to be 15%.

Now again, it's just on the gain. So you'd have to establish the original cost basis and then take your share of that and determine out of the money that you receive from the sale of the property, how much of that is a return of the original investment and how much of that is profit. And then you'll pay capital gains on the profit. And then that gift back to them doesn't really have any tax consequence unless it goes over $17,000 and then you just have to let the IRS know about it. So unfortunately, it wasn't a great way to handle it originally when it was set up. And so you're going to need to, if you don't use a CPI, I would recommend you do that this year and let that individual know that you have a sale of a property that you were a partial owner of so they can determine what the capital gain was.

Okay, let me ask you this. That house was probably purchased in like 1962 and probably might have paid $25,000 for it. And when it was sold, I think they sold it for $200,000. But between 1962 and 2022 December, so many things like improvements have happened that don't you deduct that from whatever your profit is.

You do. So not wear and tear and maintenance, but anything that improves the value of the property. So you put an addition on it, you put a new roof on it, you know, things like that, but not just wear and tear on the property. So, yeah, the CPA would have to help you establish, first of all, what was that original purchase price that shouldn't be that difficult to find. But then you're going to have to establish a rationale for how you add the improvements, not the maintenance and wear and tear, but the improvements to the property that occurred over that period of time. How you come up with a value of that, that would increase the cost basis, but you'd have to be able to defend it before the IRS if you were questioned on it.

But, yeah, at the end of the day, you're going to come up with a true profit, which is reflective of the sale price minus the original purchase price minus any improvements. And then that profit would be divided equally among on a pro rata basis among the folks that were the owners. And then that would be taxed as a capital gain. And then it's taxed at 15 percent? Yeah, for most folks, you know, if you have income between $440,000 and $500,000 roughly.

OK, but let me ask you this. Like, say it has central air conditioning and they replaced it three times. So can you deduct that dollar amount each of those times? Yeah, you're going to need to check with the CPA on that just in terms of what would be allowable and what wouldn't. I wouldn't be able to get into that kind of detail here as to, you know, what you might consider or not.

It does get pretty technical. And so I'd get some some really competent counsel on that. So and everybody will benefit, obviously, from it. So maybe you all share the cost of that CPA to help you establish that true cost basis, because everybody's going to need to know that as they file their taxes for their portion. So I'm sorry to be the bearer of bad news, Marie, but it is not income.

So that's a good thing. Hey, we appreciate you checking with us today. All the best to you in the days ahead.

Eight hundred five, two, five, seven thousand is the number to call. We've got some lines open today. Maybe you have a question you've been thinking about. We'll help you apply the principles we find in God's word to those decisions and choices or testimony. We'd love to hear that as well. Hey, if you haven't checked out our website recently, you can do that at faithfi.com. While you're there, we'd love for you to consider a tax deductible gift to the ministry. We are listener supported.

Just click the Give button. Hey, we'll be right back after this short break. Much more to come just around the corner on Faith and Finance Live.

Eight hundred five, two, five, seven thousand. We'll be right back. Great to have you with us today on Faith and Finance Live. I'm Rob West. We've got just three lines open, perhaps one just for you. Eight hundred five, two, five, seven thousand is the number to call. Let's head to Chattanooga, Tennessee. Corey, you're next on the program.

Go ahead. I was just wondering, I have a house that I had for actually what happens, I got married. We moved into a house that we bought from her dad and we still had that primary home of hers.

We didn't rent it or anything. It needed work. So we fixed it up over the last six years.

You know, new roof, new heating and air unit. And we finally got it done this past year when the market was so high. Thank the Lord because it went up really high. We made a lot of money, more than what we could think we could make on it. But so, you know, we cleared around one hundred thirty thousand dollars. And I'm wanting to know how to go about this. How, what's the tax laws as far as, is that a straight up capital gains that I'm going to have to pay on this? Or can I write off my fifty eight thousand that we put into it?

All those type of things. Yeah, very good. So the first question is, did you live in the house two out of the last five years as your primary residence? Well, my kids did, but I can't say I did.

OK. All right. If you if you could say that, and I understand you can't, that would allow you to have up to half a million dollars as a married couple in gains without paying any capital gains tax. But since you did not live there, you as a as your primary residence two out of the last five years, then it would be considered an investment property. And then the as long as you held it more than a year, it would be a long term capital gain, which, you know, for most folks, that's going to be 15 percent. If you have if you're married filing jointly and you have income between eighty nine thousand and five hundred and fifty thousand, you'll pay 15 percent capital gain.

If you have less than eighty nine thousand, you would pay nothing in terms of capital gains. Now, in terms of establishing the gain, you would take the selling price minus that original purchase price, your cost basis, and then you could also further reduce it by certain improvements. And as we said with the last call, you'd probably want to check with a tax preparer just to determine exactly what could be considered an improvement that would reduce that cost basis versus what would be just general wear and tear. But generally speaking, if it's something that stays with the property, not maintenance, and you've got wood that rotted around a window and you replaced it, not that kind of thing. But if you did something to improve the value of the property, then that would be able to be reducing the cost basis. OK. All right.

Yes, the best thing to do is find a CPA really quick this week and see what they can do for us. I'm sure I think that's right. Just to make sure you get that right. And if you ever question that, you've got a good rationale for what how you establish that cost basis. OK. All right. So, yeah, as far as writing it off, it's not necessarily going to mean I can wrap the whole fifty seven thousand off just because of certain things. You know, even the heating and air unit may not be that situation because it was an improvement from the old unit.

You know, that was really inefficient. But yeah, that's a good question. And that I would rely on your CPA's counsel to determine whether or not you could add something like that.

So I wouldn't want to weigh in on that specifically. But I think this is the year for you to get some some wise counsel as you establish that. Good news is, like I say, is for most folks, it's either zero or 15 percent capital gains unless you're making over five hundred fifty three thousand dollars if you're married filing jointly. So it's pretty reasonable, I guess I would say. I think capital gains rates, unfortunately, are headed higher in the days ahead.

So you at least can enjoy that for the time being. Hey, Corey, thanks for calling today. We appreciate it.

To Covington, Indiana. Hi, Greg. Go right ahead. Hi.

Thank you. I got a question. You're talking about getting scammed on credit cards, too many credit cards, too much information out there. Do I need something like lifelock on my accounts? Would that be the wise thing to do? Would you have an opinion on that?

You know, I do. And I'm not a big fan of it. I mean, if somebody if one of your financial institutions gets hacked and they are going to pay for some sort of monitoring service for you, which often they will for a period of time, you know, I would take full advantage of it. If it's something you're coming out of pocket from, it could be anywhere from, you know, twelve to thirty five dollars a month.

I mean, it's it's fairly expensive and it goes up after the first year and there's lower tier plans, but they're generally not comprehensive and no family coverage. You know, I think, you know, for the most part, it's not going to prevent you from identity theft. It's essentially going to monitor threats to your identity, alert you when threats are detected, which a lot of your credit card companies in particular and your bank will do that anyway. And then they'll help you recover from identity theft. But all the steps are out there at FTC dot gov and other places where you can get a lot of helpful free information about if you do find out that your identity has been compromised in some way.

And what are the steps you take everything from reporting it, you know, getting a police report, letting the FTC know, you know, changing passwords, closing, you know, changing account numbers on financial accounts. I mean, all of those steps are pretty clearly outlined. So from my standpoint, although it may give you some added peace of mind, and if you got some extra margin in your budget and that would give you that peace of mind, then I'd say go for it. Apart from that, I would say it's an unnecessary expense. I appreciate that. And thinking along that line, would you have any say ABC suggestions one, two, three months to prevent identity theft? Say some common causes of identity theft that we could as public be on guard for me some things that we aren't doing that we should be doing or keeping an eye on things better. I'd appreciate your comment on that.

Yeah, I'd be happy to. So a couple of just general ideas. One would be freeze your credit. That's a pretty simple process.

It's free. You'd have to do it with each of the three bureaus, Experian, TransUnion or Credit. Experian, TransUnion and Equifax is the third one that essentially involves you putting a PIN number on your credit file so nobody can access that to open an account in your name without the PIN number to thaw it out. Well, if somebody is trying to fraudulently open an account in your name, they won't be able to provide the PIN number and now the account doesn't get opened. I would never respond to any inquiries by phone or by email that are asking you to click a link or give out information over the phone.

That's a phishing scam and they're very good at impersonating reputable financial institutions. So just don't do it. Don't click links and emails. Don't give information over the phone no matter who they say they're with.

Use strong passwords, change them often and don't ever use public Wi-Fi for your transacting business. Well, that helps you, Greg. Thanks for calling today. We'll be right back. Stay with us.

All right. Let's head back to the phones to the Pacific Northwest. Hi, Rachel. Go right ahead. Hey, Rob.

Thanks for taking my call. So we can just put this in a small area here. We are considering changing our traditional IRA in a managed account, a traditional managed account, which we've had for a long time, to precious metals, a self-managed precious metals account. And so a few questions about that.

A, is this wise or overreactive? And the other thing is that it would be all from the traditional managed account going into the precious metals account where the precious metals are stored somewhere else, not in hand. And there would be a custodian responsible for transactions. So that's a main question. Yeah.

What does this IRA represent as a part of your total investable assets? What percentage? A lot. Like more than 50 percent? Probably right at that. Yeah, it would be at least 50 percent. Okay.

Yeah. So that would be my concern. I mean, do I have a problem with the precious metals? No, I think that can be a great investment. And I think this is the time to be at the upper end of your range.

But we typically say that range is five to 10 percent of your investable assets, not 20 or 30 or 40 or 50 or more, just because it doesn't produce any income. It doesn't historically perform as well as a stock and bond portfolio and has more volatility. And I realize that in times of uncertainty, we see a lot more people buying it.

And I understand why. It's a store of value. It's a hedge against that uncertainty and fear that can exist in times like we have going on right now. Just given what we've come through and the inflation we're dealing with, the prospect of a recession, some of the decisions we see happening around us with with the Federal Reserve and the U.S. government and just the debt levels in this country.

I mean, I get it. But I think any potential major problem here in this country, economically speaking, is pretty far down the road. I think in the near term, like in the next several decades, we'll be able to weather these storms. I think, in fact, the market will recover quickly once we see the Fed is done raising interest rates and once we know we're through that recession. I don't think we've seen the bottom on this market. We talked to Bob Doll yesterday, chief investment officer at Crossmark Global.

He joins us each Monday with his market analysis. And he reminded us that in every time we have a recession, we hit our we make a new bear market low from the previous cycle. So that would say that given that we whether or not we've been in a recession, we are technically not in one right now. We expect to be in one later this year. That means if history holds true, we will go below those October 2022 lows before we go higher.

But I think we will. So I think a better strategy is to say, yeah, I want some exposure to gold, but I'm not going to get overweighted there and highly concentrated because the compounding effect of me having my investable assets working for me in a stock and bond portfolio, despite the fact that the next year might be a little challenging. We're looking over decades and we're saying even once we get to retirement, we still have, if the Lord tarries and we're in good health, 20, 30 years for that money to grow and you're going to do better in a properly diversified stock and bond portfolio, just at least historically speaking. Now, let's talk about the self-directed IRA specifically.

You know, I don't have any problem with that either. There are higher fees associated with these self-directed IRAs. They have to, as you said, be the gold has to be stored in an IRS approved depository. And, you know, you have still the usual RMD requirements, although those are getting, you know, older. So it's going to be up to 75 years old soon.

So it sounds like you guys have quite a bit of time there. But it's just a lot of expense and trouble. You know, you need to make sure that you really believe it's worth it.

Another approach would be to own a gold tracking stock like an ETF that tracks the price of gold, not a mining company where they have their own sales and earnings and potential problems, but a tracking ETF that literally mirrors the price of gold. You know, that would be another way to do it. And then you don't have to take any possession.

You can hold it in your traditional IRA. So those are just some thoughts. Again, you're the steward.

You need to make this call. But I guess my questions would be, is it worth the cost and complexity of the self-directed IRA to own the gold physically? And then secondly, it sounds like you're pretty highly concentrated. And I think that violates the diversification rules I would encourage you to consider for your overall investment strategy. Yeah, I felt like that kind of went against that whole don't put all your eggs in one basket thing. A little bit, yeah.

They're really all in one basket there. But, you know, we were considering it more for the fact of safety or preserving what we already have, as like everyone else seen. It just nosedives.

And then, you know, we are at that age where we are definitely soon to retire and, you know, we'll have retirement fund, but also, you know, all that we've been saving for so long. But as much to protect it, like that, well, if you are invested in that, then, you know, it's there. It's at least worth what it's worth. And you know, it doesn't make any more money. Well, hopefully it is making some money because it's hopefully increasing in value. But it doesn't generate an income and it's hard to, you know, what do you do if you want? I mean, if everything does really go south, what do you do with it? You know, I mean, do you try to get it back and take possession of it and, you know, chip away a piece to barter with? I mean, you know, so it does become problematic from that standpoint if we're playing out these kind of worst case scenarios. Yes, yes. And, you know, and it wouldn't be stored at, you know, that amount stored, you know, it'd be in a vault somewhere, I guess, you know, managed by whoever, wherever that is.

The custodian, sure. So just to get through, just to get us through the unknown time, which we don't know really how long that time is going to be. Yeah. And I guess that's the problem. And unfortunately, we have to take a break here in just a second.

But that's the challenge here. Rachel is when we look at the performance of the stock and bond portfolio going back to the 1920s, we see how well the market has done despite the ups and downs. But we can't if as soon as we try to time the market and pick our entry and exit points. So we quote unquote miss the turbulence with this idea that we're going to get back in at some point that missing that recovery, which is invariably what happens, just completely skews the results because you could sit on the sideline and gold feeling very good about it.

And then when the market recovers and the economy's back up and running again, inflation's back down and we're through the recession and the job market's strong again, all of a sudden the market has recovered and gone to a new high. And now you're thinking about buying back in. So I guess that's from my standpoint, I'd rather take a diversified approach, have 10 percent in gold, but the rest in stocks and bonds and just stay the course and really see this as a long term play with the Bible called steady plotting.

That's just my perspective. At the end of the day, you guys need to pray about it and make that decision. And we'll just trust the Lord, give you some wisdom on that. Rachel, thanks for being on the program today. God bless you. Hey, we're going to take a quick break and back with much more. Stay with us. We'll be right back. Delighted to have you with us today on Faith and Finance Live. All right, let's move through these final questions here in our last segment today, starting in Indianapolis. Angie, how can I help you?

Hey there. My husband and I are selling our house and our goal is to downsize. We've got enough equity in the house that we can pay off what we owe in the current house and then really what our goal is to pay cash for the next house. And then also out of that, we'd like to take what's left over, which is we're estimating to be about fifty thousand dollars and we're we're either going to pay off. Well, my husband wants to pay off our external debt. So the challenge with this is I'm a business owner. I have a commercial mortgage.

I'm about four and a half years in. It is it's an SBA loan held by a bank and it's at prime. So it's at 10 percent right now interest. And they my home is currently collateral for that. So my choice here is to the SBA, the mortgage company has said that they will take the the first position or take the lien off or the collateral off for us to do what we need to do. They want to take that equity and put it towards my commercial mortgage instead of letting us have it to pay off external debt. So my other option here is to refinance. And I've talked with the bank. They're willing to do like a 40 60 split of 40 percent of a 501 SBA loan and they handle 60 percent.

And it's they're saying that right now the average of that would be combining the two. It's going to be about seven and a half to eight percent. And then in two years we can rework the the loan for the percentages. And I'm just trying to figure out what's really going to be the best route to go here, because with my current loan. I've I've got I currently owe like six for six hundred forty five thousand dollars when we went to the other bank for the refinance there. They're wanting to refinance, you know, about seven hundred and sixty thousand. So more than that is what they're saying. And, you know, I'm so I'm really just trying to see what what is going to cost me less as a business owner, if that makes sense.

Yeah, it does. And I think you have to determine how high a priority is releasing that personal residence. You know, what a lot of folks don't realize is that they can negotiate when it comes to these loans and try to negotiate out their personal residence from the bank's collateral at the time of the loan.

Once you do it, they're not going to allow that to happen, but they're going to take every piece of collateral they can get, starting with your primary residence. And so, you know, I would say, you know, we want to try to negotiate out of that if at all possible. And I think you've got to decide how important that is to you as a part of the equation, in addition just to the overall expense of the loan itself. Does that make sense?

Yeah. And I'm actually not opposed to, you know, to working in that way because it takes it takes a big chunk out of the current mortgage that I have. I mean, even though the interest rate is at 10 percent and I've been paying I've been paying the principal just to try to get it down. But I think the challenge is, you know, my husband, he's really determined to pay off that external debt. And, you know, it's credit card debt that he's accumulated. He wants to get that.

He wants us to be completely debt free and understand that. And it would be nice to be free, you know, to have the business finally separated from the personal. I think that's I mean, it is important because we may want to do other things. But, yeah, I just don't want it to cost me a ton of money to refinance, you know, all for the sake of just getting our house off of the loan. Yeah. So I think that's really the issue at the core of this.

I mean, I agree. I don't want you to pay a fortune either. At the same time, we've got to determine, you know, at what point are we unwilling to allow the business to be mixed with your personal finances, which it is now. If something were to happen to the business, you could be putting your home or you are putting your home at risk. One other option to consider, Angie, is a credit union. A lot of times a credit union will make a business loan and they'll offer a more suitable solution than a bank because they're member owned.

They're much more likely to exclude a personal residence from their collateral requirements because they just often feel like it's unreasonable to ask for a personal residence as collateral. So that would be one option you could look at. But I think at the end of the day, you're just going to have to decide, yes, there's an added cost to do this.

We've got the refinance itself, plus this new interest rate, especially for an uncollateralized loan, or at least one that doesn't include your personal residence. If you had a rental property or raw land or a vacation home, you know, that could be another option. If you had other, you know, assets that you could use from the business itself, that would be ideal. But I would agree, I'd like to get to you out of that collateralizing your personal residence as quickly as you can, even if there's a bit more expense. But if it creates a hardship for you as a small business owner, you are your business and your business is you. And so your ability to continue to operate is critical. So I think, you know, you and your husband just have to balance that.

Look, count the cost, explore every option, including the credit unions. At the end of the day, you're going to put these two options side by side and determine what impact it's going to have on the business. And that's going to quickly tell you how important it is for you to release the home, which I would put in a decision making matrix at a pretty high priority. But it's not everything. And obviously, if it hinders your ability to operate and creates a strain on the business, then that's not good either. Well, it's not going to put us under by any means, but it's definitely going to hurt. Sure.

Yeah, I get it. Well, we'll ask the Lord to give you some wisdom on that. I think you and your husband get all the facts, get all the numbers, explore your options. I would definitely look at the credit union and then you all put those side by side. Ask the Lord to give you guys unity in that decision. And I would say don't make any borrowing decisions unless you guys are on the same page.

But once you are, then I would go for it and don't look back. So I appreciate you being on the program today, Angie. All the best to you. I know this is a tough one. Quickly to Miami. Hi, Bob.

How can I help you? Yes, Rob. I have about three hundred thirty thousand in an IRA. And what I'm 72 and with required minimum distribution, it's only about thirteen thousand a year. And to raise that my income, I was considering an immediate annuity for like one hundred thousand. That would nine nine percent instead of about four percent.

I'm doing now. Yeah. Yeah. I mean, I think if you're solving for an income gap on your monthly income, that would give you peace of mind to know that I've guaranteed and kind of shored up my budget by now having this guaranteed amount. I don't have to think about the market, especially if you've got a couple hundred thousand in addition to that. That's certainly an option if you get a really attractive, you know, fixed annuity rate on that.

You know, I can't argue with that. I would just look at the potential that you can have by keeping full access to your capital, not tying it up in an annuity and investing it, you know, with the goal of being able to maintain maybe a withdrawal rate of around four percent, which, you know, at three hundred and thirty thousand is, you know, thirteen thousand a year, somewhere around a thousand dollars a month, a little bit more than that. And, you know, then you still have access to your capital. But if you want to take a third of it and kind of lock it in and you get a really good rate and that gives you some peace of mind, I'd say go for it. That can be a great option.

And it's one of the only cases where I would say an annuity may make sense, even though they're certainly not my first choice because of the loss of capital, the complexity and the cost. It's a good question, though, Bob. We appreciate your call today.

To Illinois. Hi, Sarah. Go ahead. Oh, hi.

Hi, Rob. I currently have no debt besides my home and I'm military disabled and only receive unearned income. I received money from a personal injury lawsuit and after putting aside three months of emergency funds, should I put the remaining ten thousand of the lawsuit money in an I-bond or put it towards my two point eight percent, two point eight percent, sixty seven thousand remaining mortgage?

Yeah, that's a good question. I mean, you're not going to be able to pay off the mortgage, but I'd like for you to do that at some point. Kind of give me the so your emergency fund will be shored up.

Do you have any consumer debt besides your mortgage? No, nothing. OK. All right.

Very good. And how far are you from retirement? Oh, I just I guess military disability, so I'm currently not receiving any earned income.

OK, so you're living on the military disability? Right. I mean, I have twenty thousand and like a 401K, but I think you can only put earned income in there. That's right. And so much a year as far as I know.

Yeah, you have to have earned income and you can only go up to that amount or the maximum, which this year is sixty five hundred. So that the military disability is enough to cover your bills, Sarah? Yes. OK. Yeah.

So I like the I bond. It can be a great way to offset the effects of inflation right now, paying six point eight percent. You'll get that for the next six months. I do it pretty soon before the rate changes because it's probably going down in May. But you'll get a full six months if you do it before the end of April. So I would get that done. And then, yeah, I like the fact that you're shoring up your emergency fund and you don't have any debt and you've got your bills paid with your retirement.

I think you'd be in good shape. Oh, great. I guess that's it. All right. Well, Sarah, thank you for your service. We're incredibly grateful.

You're welcome. Where where did you where was your last tour? I was eight years. I got out ninety eight. I just missed my whole unit went overseas during the Gulf War.

I was going basic training. I just missed it. OK. All right. Very good. Well, we're grateful and we appreciate you being on the program today. God bless you.

Well, folks, that's going to do it for us today. So thankful to have you along with us on faith and finance live. Hey, I couldn't do this without my team, Amy Rios, Dan Anderson, Robert Sutherland and Gabby T on the phones today. So thankful for that team and all they do to make this possible. Thank you for being here as well. Faith and Finance Live is a partnership between Moody Radio and Faith. I hope you have a great rest of your day and come back and join us tomorrow. In the meantime, check out our Web site, faith five dot com, and we'll see you then. Bye bye.