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Loving Parents and Debt

MoneyWise / Rob West and Steve Moore
The Truth Network Radio
May 11, 2023 5:50 pm

Loving Parents and Debt

MoneyWise / Rob West and Steve Moore

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May 11, 2023 5:50 pm

How often have you heard someone say they want their kids to have things they didn’t have? That parental wish is part of the American Dream, right? On today's Faith & Finance Live, host Rob West will talk with Art Rainer about how loving parents can easily fall into debt while trying to provide the “best” things for the kids. Then Rob will answer your calls on various financial topics. 

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We always want what's best for our children, and we'll be right back. A lot of folks, as you know, struggle with wanting to give their kids the best chance in life, and yet not break the bank while doing it. You have an article on faithfi.com titled Six Things That Can Lead Loving Parents Into Debt, and I want to get right into them. So what's the first one?

Sounds good. The first is keeping up with the Joneses, trying to maintain the lifestyle of those around you. Your neighbor or coworker dresses their children in high-end clothing, and so you want to do the same. Or your neighbor sends their children to a private school, so you decide to follow suit even though you can't really afford the cost. The Joneses are a frustrating crew to chase because they're always shifting the standard, right? As soon as you feel that you have arrived, they move it slightly out of reach again, so we need to be careful here. There will always be other parents who spend more on their children, but they may be using debt to finance it. You could be chasing a facade.

Alright, so don't get trapped into debt by keeping up with the Joneses. I love it. Number two. It's one you might not think of. Spending time on social media. The images that you see on Facebook, Instagram, Twitter, TikTok, whatever, are simply the filtered versions of those that you follow. The constant barrage of great vacations, child accolades, and perfect family moments can make you feel like you're a bad parent at times. You can easily create unrealistic expectations and try to buy your way to feeling better about yourself. Yeah, the best version of someone's life on social media has certainly added to the comparison trap. Alright, that's two.

What's number three? Yeah, so this one is easy to fall into. Thinking your kids won't succeed in life if they don't have it all. You know, extracurricular activities have entered a whole new realm. Travel leagues, academic and athletic camps, and private tutoring have become just a commonplace now. Unfortunately, there's a cost to all of these activities and experiences, eating up time and money. Now, are extracurricular activities good? Yeah, absolutely. But are they worth going into debt? Absolutely not. Oh boy, I know this one all too well.

A dancer, a soccer player, two basketball players. We've certainly been down that road. You have to be careful. Alright, what's number four, Art? And that is caring more about your child's future career than their future character. Often, the focus of our parenting is centered on getting our child into a good school or setting them up to have a good career. Those are important, but they're not the most important. The most important part of parenting, shepherding our child's heart, is difficult and time consuming, but it's also less costly. Yeah, and the one can never make up for the other, that's for sure. Alright, what's number five?

It's the one that you mentioned in the beginning. Wanting to give your kids what you didn't have growing up. You probably remember a time when, as a child, you didn't get something you wanted. Maybe it was a new bike, maybe as a teenager, it was a certain car, you or your parents, they just couldn't afford it. And you remember how you felt. Now, as a parent, you don't want your child to experience those exact same feelings you had. So, when they ask, they get.

Even if the purchase requires a credit card. Oh boy, and that's a tough one. And it leads right into the last one.

We've got just 30 seconds. Yeah, that's right. Not considering how lacking something actually helped you as a kid. You remember lacking something as a kid, but do you also remember what resulted from not being able to get that item?

You may have resorted to more creative play. If you were a teenager, you may have gotten a job. Those moments in your childhood helped you in your growth as an individual.

Now, don't you want your children to have the same opportunity? Absolutely. Boy, those are really good, and I really appreciate you stopping by, Art. Really good stuff. Thanks for having me. That was Art Rayner, faith and finance contributor. You can learn more about Art Rayner and Christian Money Solutions at christianmoneysolutions.com. All right, folks, your calls are next. 800-525-7000.

That's 800-525-7000. We'll be right back. Great to have you with us today on Faith and Finance Live.

I'm Rob West. All right, it's time to take your calls and questions today on anything financial. The number to call is 800-525-7000. Calls are coming in, but we've got some lines open, so we'd love to hear from you.

Again, 800-525-7000. Before we start into the phone calls today, let me just mention that as we head toward our fiscal year end here at Faith and Finance, our year ends on June the 30th, which means now is a critical time for us to see those who support this ministry give generously so we can stay on track and finish the year strong and prepare for another year of ministry. As a listener supported ministry, we require on you your financial support for all that we do. So if you'd consider a gift of any amount and we mean that, if you could do $50, that's great. If you can do $500, that's great. We'll take those gifts of $5,000 as well.

All of them together help make this possible. It's quick and easy to give online at faithfi.com. That's faithfi.com. Just click the give button between now and June 31st, or excuse me, June 30th, and thanks in advance. All right, let's dive into some phone calls today. 800-525-7000 to Kathy to begin with. Go right ahead.

How can we help you? Good afternoon. Thanks for taking my call. I recently retired from the federal government and I haven't moved my 401k because I'm really not sure whether I should roll it over or not. I do want to have access to my money, but I'm not savvy enough to figure out whether I want someone else to manage it or I want to choose how it's managed. Yes.

That makes sense, Kathy. My thought would be you've worked your whole life to build up this nest egg, it's probably best to have somebody manage it for you. Just like any other area of your life, having that godly wisdom from an advisor who understands your worldview and what God has for you in this next season of life, but also who has significant experience in managing portfolios like this to minimize risk and help you accomplish your goals, preserve what you have, but also grow it appropriately in this season of life, I think makes a lot of sense.

Now, certainly you can do it yourself if you have the time and the know how to do that. In either case, I would probably look at rolling it out of what it's in now, probably a 457 plan if you worked for the government, rolling that over to an IRA, that would not be a taxable event. And the primary benefit is you'd have far more control over it than you do now, whether you choose to manage it yourself or hire somebody to do so, because you're not going to be limited to those investment options inside the retirement plan. You'll be able to choose from really any investment option whatsoever. How much have you accumulated roughly? Right now with the downturn, it's $300,000.

Okay. Yeah, so it's a significant sum of money. And that would be a perfectly appropriate amount to hire an advisor again, if you chose to do so. Talk to me about just your considerations there. And if you were to manage it yourself, how would you go about that? That's the part I'm not sure about.

I would like to have access to it, you know, in case I have some dire emergency. But if I rolled it back into, or rolled it into the 401, I'm not sure how I go about getting the, picking the stocks and all of that. I'm kind of leery about that. Yeah. And I think for good reason.

I mean, you know, it's, that's why it makes sense when you get to this season of life. Inside the 401k, there's some limited options there. And for most folks, they can, you know, choose the right mix of investments inside the 401k.

But when you get to this season of life, and you're trying to protect what you have, capital preservation, but also to grow it modestly, so you could generate an income from it, and hopefully allow this to last the rest of your life. I think that's where the skills and expertise of an advisor could really make a huge difference. At the very least, Kathy, I would probably interview two or three advisors just to see if there's one that you feel like is a really good fit. We've even provided some questions for you that you can use in that interview process. So what I would do as a next step, without even rolling it out, because if you're, if you're possibly going to engage an advisor, you would want to wait and roll it out after you hired that person, because they would tell you what custodians they work with. Is it Fidelity? Or do they work with Schwab?

Or do they work with one of the others? They'd let you know that. And then you'd open the IRA with them, and then they would help you roll it out and then begin to deploy the investment strategy. So as a next step, I would encourage you to head to our website, faithfi.com, and click on the button that says FIND A CKA. That stands for Certified Kingdom Advisor.

You could do a zip code search in your area at interview two or three. And these are men and women who've met high standards and character and competence. They've been especially trained to bring biblically wise professional financial advice. They've had a pastor reference and a client reference and a statement of faith and code of ethics and a regulatory review.

I mean, they've met really high standards, and it's the designation we trust for biblically wise professional advice. So again, that's faithfi.com and just click FIND A CKA. Okay?

I will do that. Thank you very much. All right, Kathy. Hey, God bless you in this next season of life. How exciting as you transition to what God has next for you. Let's head to Pennsylvania.

Diane, go right ahead. Hi, I recently had to leave my husband because of abuse toward myself and my teen son. We had nowhere to go, but my mom lives in a facility and we have not sold her house yet.

My son and I moved in there just to have an immediate safe place. And I'm not sure the ramifications of living there. I have some physical disabilities and work part time. I make about $18,000 a year. So obviously I can't pay a lot of rent. I know that she would be happy to let us live there, but because she has dementia, she can't give that consent.

I'm being told that this could be a really bad thing because of, I guess, some ramifications with Medicare. Yeah. Do you have other siblings, Diane?

I do. Okay. Have you talked through this with them?

They are actually unfortunately estranged from the family and only one is part of my mom's will. And yeah, I can talk to her about it. Okay.

Well, first of all, I'm so sorry to hear about the situation that you've been in and I'm glad to hear you're in a safe place. That's what's most important. But I think moving forward, you ought to be thoughtful about this. Obviously your desire is to honor your mom's wishes. You've got to think about other heirs and siblings, at least those who you are in communication with because they may have strong feelings one way or the other given that this is your mom's home and she can't give this consent for you all to live there, just given her mental capacity.

There are certain rules here. Medicaid won't take your mom's house while she's in a facility. However, all of her other assets are subject to recovery by the state after she passes. In most cases, the home can't be transferred to an adult child without violating the look back period on Medicaid, although there is an exception known as a caregiver child exemption or a caretaker child exemption, which allows the transfer of the home to an adult child without violating it.

But in this case, again, she doesn't have the ability to even do that. So I would consult with an estate attorney just to find out exactly how you need to proceed here because obviously you don't want to jeopardize in any way your mom's standing. I don't think you will, but I would get that legal opinion. And then obviously once you know kind of legally how you can and can't proceed, then you obviously want to talk to your family members and just kind of work through this together, having a conversation about where things stand and the fact that you all want to hang onto this home anyway for your mom. You're not ready to sell it and nobody else wants access to it.

Somebody living there and maintaining it's actually a good thing, but I'd have that conversation with them. I appreciate your call today. We'll certainly be praying for you. We'll be right back. We're grateful to have you with us today on Faith and Finance live here on Moody Radio. We've got some phone lines open.

We'll head back to the phones here in just a moment. The number to call is 800-525-7000. You know, as we head into home buying season, spring is really the time that most folks look to make a change if they're looking to buy a new home. And we're hearing a lot of folks wanting to know, where do I turn for a trusted mortgage partner? Well, our underwriter movement mortgage is someone you ought to take a look at. We certainly are grateful for our partnership, their focus on serving borrowers and really simplifying the mortgage process, but also just the incredible kingdom work they're doing through the movement foundation and the giving that they're doing literally worldwide. If you'd like to learn more, you're in the market for a mortgage, you can certainly explore movement at movement.com forward slash faith.

That's movement.com forward slash faith. All right, let's head back to the phones again. 800-525-7000 is the number to call.

We have a few lines open today. Gabby T standing by to take your call. Let's head to Cleveland. Hi, Jeff. Thanks for being on the program, sir. Go ahead.

Hi, thanks, Rob. 60 plus years old, recently single. I need to purchase a home. I'll have about 100k to put down on it. I also own a rental property, which probably brings in after it's all said and done, 10 to 12,000 per year. So I'm not sure if I could sell that and put that to the purchase of that house. I could probably afford about a $200,000 to $225,000. Not sure if I should hang on to that rental property and collect the rent or sell it and use it for the proceeds of the house. Yeah, okay.

Yeah, let me just ask a few questions and I'm happy to weigh in. What are you looking to spend just as you are looking for the size home you need in the neighborhood and so forth? What do you think that purchase price is going to come out around?

$225,000. Okay, so $225,000 and you said you have $100,000 to put down, correct? Correct.

All right, and where is that? That's just liquid and cash? Yes. Okay, and so that would leave you a mortgage of somewhere around $125,000 and you say, do you think that will work in your budget at current rates? Yeah, I guess the big question is, do I ditch the rental property? I could probably get about $120,000-ish for it or do I keep it? It's free and clear at this point, obviously.

Right. Well, it sounds like if it's a wash and you're getting $10,000 to $12,000 a year out of that house and you could basically take that income and cover your mortgage, now all of a sudden you've got two pieces of property that are appreciating and I love the idea that you're diversified in asset classes. Do you have some retirement assets in the stock market?

I do. I got a pension coming at $65,000 so it's about another year and a month. Okay, so I love the fact that you'd be heading into retirement. You'd have a relatively small mortgage at $125,000. I realize rates aren't great right now but given the cash flow you've got on this other property, I think keeping both of these properties, one you're living in, one that's a rental, especially if the rental is covering the mortgage, the debt service on your new primary residence, that just feels really good to me, especially given the guaranteed income you'll have when you hit retirement. Yeah, I mean the income from the rental will not quite cover a mortgage because I've looked into it.

I'm probably still up $1,300 a month so it'll come close but it won't cover it. But if it's not too much work on you, it's not been a real big hassle to keep it rented, it's in a desirable area and you've got some good renters that have been coming through there, I mean I like the idea of hanging on to it. It feels like you're still living fairly modestly and the fact that you've got $100,000 to put down on this next house tells me you're doing some things right. So unless you just have a real conviction to be debt-free, and if you did I'd just sell this property and buy it with cash, but if you're comfortable hanging on to that mortgage, I think having both of these properties heading into retirement would be a good thing. Yeah, I do kind of like the debt-free thing. Okay, well I mean pay attention to that because if that's the case and you're really feeling the sense that, hey, I just want to know that I own everything and I own no one anything and that's okay, then I would say this is a ripe opportunity prior, especially right now in the spring, we're pre-recession, this is the home buying season, I think this would be an opportunity for you to go ahead and liquidate that for top dollar and then just buy that new property with cash and you've got your income lined up for retirement, you're debt-free at that point. If that feels good to you, then I certainly wouldn't argue with that.

Yeah, that sounds like a prettier picture, but I'm not sure if it's theological. So okay, thanks so much. Appreciate it.

And I will heed your advice, my friend. Absolutely. Sorry, I'm a little wishy-washy on this one. I mean, I think you could make a case either way, but the part that I heard right there at the end, Jeff, that you would really feel better being debt-free, that tells me everything I need to know.

I would say don't look back, sell that property, buy it with cash, and honor that desire that you have to be debt-free. So I'm on board with that here at the end of our conversation. Thanks for being on the program today. 800-525-7000.

Quickly to Plantation, Florida. I know it well. Hi, Aiden. Go ahead. Hi. Yes, I'm Aiden. Thanks for taking my call.

I was just calling. It's kind of a quick question. I've been married for about, we're going on three years now, newlyweds. We're in our late 20s. My husband has gone into his fourth year of medical school, so we're accruing a lot of debt, but really just trying to get smart with our money. My husband comes from a home where his dad's a financial advisor. He's been 20-plus years.

He's a Christian. My father-in-law is very, very wise about everything he handles, you know, our retirement, our life insurance, all those type of things. But my question is now, I come from a background where I don't have a lot of money background.

I don't know a lot about money. I just like, okay, take it, do with what you need. But I kind of am starting to try to get a hold of things and learn about it and be on the same page as my husband. And the thing that we're kind of coming to a crossroads to, and my question for you is, do you think it's wise to go to our father-in-law with all of our stuff and say, here, this is what we want to do with our future. We want, you know, home, kids, all these things. This is where we're trying to go with our money and our life.

Or should we go to a non-biased, maybe more neutral finance or financial planner? Wow, that's a great question, Aiden. I love that you're really being thoughtful about this. I'd love to unpack this a bit more with you. Unfortunately, I'm up against a break. So if you don't mind and you've got a moment, I'm going to ask you to hold the line. We're going to take a quick break. When we come back, we'll talk about whether or not to engage your father-in-law as your financial planner, or is it wise to get a neutral third party?

Stay on the line. We'll be right back on Faith and Finance. Thankful to have you with us today on Faith and Finance Live, where we apply the wisdom from God's Word to your financial decisions and choices. The question on the table, to have your father-in-law as your advisor or not? That's Aiden's question. She and her husband have been married for three years. They're just starting out in their financial life and they have some investments and some insurance and they're wanting to continue to be well planned and have somebody, a financial professional who's working with them.

It just so happens that Aiden's father-in-law has been in financial planning for over 20 years. And so her question is, would that be a good idea or not? Aiden, I definitely have some thoughts on this, but I have a few questions first.

First of all, what is your husband's take on this? I think his first take is just, like, he would not trust anybody more than his father just because, you know, his father comes from a Christian perspective, so he's already trying to do right by people, by God's Word, but even so, more so would he set his children up for financial success. Yes, and I totally get that. So he's 100% on board for it.

Yeah. Has he left the door open, though, that, you know, Aiden, I realize this, it may be better for somebody else to be holding us accountable for our financial decisions. I mean, has he acknowledged that that may be not the best thing, even though you both have great respect for his dad? I think that's harder for him because, like I said, he trusts nobody else more than his father because he has seen how successful he's been with helping people. But I think I'm more so the one that's more fearful on this because it's just, like, you know, I guess the boundaries of marriage and dreams and all those types of things. So we're kind of at a, you know, trying to pray about it and figure out, okay, Lord, like, can we lay down and work with my father-in-law or should we go to a more neutral position?

Yeah, no, it makes total sense. And then last question, has your father-in-law weighed in on this? I mean, for instance, if you all use somebody else, do you think that would create a strain? Has he been pushing for you all to work with him or do you feel like he would be fine no matter where you land?

No, I think he would be 100% fine. I respect that. Okay, very good.

Well, so my take is this. I think I would rather see you not work with your father-in-law. You know, there's the financial mechanics that come in with working with an advisor, the person who's helping you pick out the insurance policy and managing your investments and, you know, running calculations to determine, you know, what your projections will be and how much you need to save for retirement. But then there's all the other stuff, which is really the real value of where advisors serve their clients, and that is asking the right questions and really helping them navigate, you know, where God is taking them and holding them accountable to the decisions. Hey, you all said you wanted to accomplish these things.

Now let's look at your spending and how is that lining up and do you need to cut back and maybe even asking some hard questions and somebody for you, you know, to turn to, you know, in this equation as you and your husband are working together, you know, to bring into the conversation and I just feel like with that being your father-in-law as much as you respect him and as skilled as he is, it's probably just not the best fit for you guys just because you want to be completely transparent and open and, you know, if his one of his key jobs is to hold you all accountable to the goals that you've set up, is that the best role for your father-in-law or is he somebody that really should just be on the outside praying for you, encouraging you, you know, giving you some wisdom along the way when you ask for it, but not the one necessarily every quarter asking the hard questions and hey, you said you were going to do this and why did you spend that kind of thing. I just don't know that sets everybody up for success in terms of relational harmony and, you know, pursuing God's best. Does that mean it's wrong if you don't, if you decide? No, absolutely not. I don't think there's a right or wrong decision here.

I just think my preference would be that you all go to a neutral third party. Thank you. That's very beneficial.

Okay. Hey, let us know how it turns out if you'd like and we appreciate your calling today. I realize this is challenging so I don't minimize it in any way and I'm delighted to hear Aiden that you said you and your husband were praying about it. So I think if you conclude that, you know what, that is how I feel, I would in love go to your husband and just say, listen, I've been thinking about it. I've been praying about it. Here's my position, but I want us to make this decision together and so if we're not aligned on it, let's take a couple of weeks before we land on it and let's just pray about it separately and let's come together until such time as we have unity here before we make this decision. So keep that door open for you guys to work through this together. I know you're still young in your marriage, but I'm confident the Lord can allow you all to get unified on this one.

It's an important decision, so take your time in making it. Thanks for calling today. We appreciate it. To Sarasota, Florida. Hey, Phillip, go ahead.

Hey, Rob. Thanks for taking my call. Just a couple of quick questions. One is about the penalty for taking Social Security before your full retirement age. I have a situation where I have passive income and I reach full retirement age in December of this year. I'm operating a little bit of a deficit every month and so I was trying to hold off. I can handle that, but my understanding is is that for every dollar I earn above a certain amount for every $3 I earn above a certain amount, they will take away a dollar of my Social Security. If I take it before full retirement age and one of your understanding of that and what that limit is and everything else I have, like I said, I have significant passive income and I fault taking Social Security is because I would lose every dime of it because of the penalty. But what is that?

What is that gap there? What is the amount you can earn? Give me your thoughts on that. And if I have a second after, I got one more quick question for you.

OK, yeah, happy to do that. Essentially, you know, when you go beyond that earnings limit, you will lose a dollar for every $2 you go over the limit. But here's the thing, though, that will eventually come back to you. So if if you take it early, you're going to lock in a reduction on the benefit amount equal to about 8 percent per year or one twelfth of 8 percent every month. So you take it a year early. You're going to lock in the fact that now you're only going to get 92 percent of what you would have gotten if you reach full retirement age. On top of that, there is going to be an earnings limit.

It's twenty one thousand two hundred and forty dollars in twenty twenty three. If you go above that twenty one thousand, they're going to reduce it by a dollar for every two dollars you go over it. But that will actually come back to you in the form of a higher check once you reach full retirement age. So that's only a temporary reduction. You'll eventually be made whole. The piece that doesn't ever get restored is the fact that for every month you take it prior to full retirement age, you're going to lock in a lower benefit equal to about one twelfth of 8 percent for every month you take it early. Does that all make sense? It does.

Just a little little add on to that. I reach for retirement age in December. I could easily wait till January, but I reach for retirement age in December. Does that account for everything that I made prior to taking it? Or is it what you what you make after you take it as far as the the one for two dollars? Yeah, it would be on a pro rata basis from the time you take it forward. So they will give you a pro rata calculation for from the time you start to take it until full retirement age.

Now, the earnings limit does change in that last year prior to taking it. So let me get that number. And just on the other side of the break, I'll give you that number. Plus, also, I know you had a part two to this question, so I'm going to ask you to stay on the line and we'll deal with part two. And I also want to give you that that limit that does change in the months leading up to full retirement age so we can talk about that as well. You're listening to Faith and Finance Live.

I'm Rob West. We've got more to come here in our final segment today, plus a lot of questions still on hold. So we'll get to as many of those as we can today. Have you checked out our website? Do so at faithfi.com. You can jump into our community and even download the FaithFi app. Hey, much more to come just around the corner.

Stick around. Great to have you with us today on Faith and Finance Live. Just before the break, we were talking to Philip in Sarasota. He's wondering about taking Social Security before full retirement age and specifically the income limits. So here's that number I was looking for. It was fifty six thousand five twenty.

So let me let me explain this to you, Philip. So if you're taking benefits under less than full retirement age, as long as you're under full retirement age for the entire calendar year, so at no point during the calendar year do you reach full retirement age, then they deduct a dollar for every two dollars you earn above the limit. And this year's limit is twenty one to forty in the year in which you turn full retirement age. They're going to deduct a dollar for every three dollars above fifty six thousand two fifty. But they'll only count the earnings prior to the month you reach your full retirement age. So let's say you reach full retirement age in August. They're going to count your earnings for January through July. And the limit is fifty six to fifty.

You go above that, they'll reduce a dollar for every three in either of those cases, whether it's a year where you don't reach full retirement age for the entire year or it's the year where you do reach it. That reduction will eventually be returned to you. Does that all make sense? Absolutely. And that is really helpful. I appreciate that.

You're welcome. Sure. What was that part two question? Part two question was my dad passed away in 2005 and he had collected coins for virtually his entire life. And so I ended up with all those coins and a couple of safety deposit boxes. And recently I saw an app that you can take and you can point at one of the coins and tell you the value of the coin and some of those things like that.

I guess somewhere in Proverbs, it talks about wisdom and prudence and witty inventions and always concerned about those things. But is there is there a place that, you know, if someone wanted to sell those coins, how do you go about finding someone that would value them and not not walk off with one that they found that might have some value to it? Do you know anything about that? Can any referrals on that?

Yeah, I mean, let me give you a few places you could check out. One would be the numismatic guarantee corporation. So a numist is somebody who specializes in coins.

And the new numismatic society would be the kind of the society in this space. And the website is if you've got a pen handy in GC coin dot com again in GC coin dot com. You could also look at the professional coin grading service, that would be PCGS dot com. And then there's the American numismatic Association, which is just simply money.org.

Any of those three might be a good starting place. There's also something that's pretty widely known as the red book. It's the guidebook of United States coins. It's considered kind of a standard reference for US coins. And you can pick up the 2024 edition for like 16 bucks. And you could just kind of Google it guidebook of United States coins.

I think between those three websites and the red book that might give you at least pointed in the right direction. You are a good human being. Thank you so much. Thank you, Philip. I haven't been called that yet today, but I appreciate it.

God bless you. Hey, let's head to Chicago. Hi, Caroline.

Go right ahead. Really quick question regarding a 1099 S form that I received for my mom's estate. And I'm not sure how to go about that. Okay. Well, so the proceeds from a real estate transaction are generally taxable.

So you received the form 1099 S that reports the proceeds from the sale of the real estate. Now, this was your mom's house, not your own primary residence, correct? Correct.

Okay. And so is your mom still living? No, she passed away in 2021. And I received the documentation. So my attorney is asking, Hey, did you did you file that and I was unaware that I needed to file it. So it does have an EIN number for the estate. Yeah. Okay. But you inherited the property solely at her death? Yes. And you just sold it this year? Yes, we sold it last year. Okay.

Yeah. So you're just going to want to give that 1099 S to your tax preparer because what happened is when you received the property, there was a stepped up basis that occurred as of the date of your mom's death. So the cost basis on that property was as of the market value as the date of death. And then whatever gains occurred between the date of her death and your sale, that is going to be taxable as taxable income. And so our capital gains.

So you're going to want to give that 1099 S to your tax preparer so they can acknowledge that in the tax return if it was last year, last year's return and you've already filed then you need to do an amended return. Okay. Okay.

That's what I needed. Yes. And another question. So do you and those cases do you typically does the estate typically owe money? No, no, there's no, the state there's no estate tax. And if it was under $12 million, you received it, you didn't pay any tax on it when you got it.

And they they stepped up the cost basis. So now it's your asset, not hers. And from this point forward, from the date of death forward, you're responsible to pay capital gains on any gains that exist in the property as your asset.

But that would not be something that would be paid by the estate. Okay. That's what I needed to know. Thank you so much. You're welcome. We appreciate you calling today to Kresha in Miami. Go right ahead. You're on the program. Thanks for taking my call. Sure.

Thank you. My question is I need to purchase a new vehicle. But I'm debating if I should purchase a 2019 which is within my budget, or wait a couple of months and get a 2020 and hope that that vehicle would drop down and now be in my budget.

Because the 2020 will have like less usage on it. Yeah. So I guess I'm a little confused, though, in terms of have you already identified the cards or you're just talking kind of generally here?

No, I've identified the cards. Okay. But you're buying so you're buying a used car. And you've got two cars you're looking at ones of 2019 and ones of 2020.

They're the same model but a different year is correct. Okay. All right. And you believe you're hoping that if you wait a little bit longer, the 2020 model, the person who's selling it as a used vehicle that they're going to lower the price because the new model years are out? Correct.

Okay. Yeah, I probably wouldn't take that approach because if it's priced right, it's going to be sold out from under you while you're waiting. So I would probably prefer that you just determine how much you can afford in your budget and then just buy the best car you can based on the reliability, the safety ratings, but also, of course, the price point and then you're going to want to get it checked out by a third party. I would also once you kind of narrow it down to what you want to spend and what make and model you're looking for, just really scour the country. I mean, the last car I bought, I bought it three states away and I saved thousands of dollars by buying a plane ticket, flying in, spending the night, picking up the car the next morning and driving it home.

So just be willing to travel. But I wouldn't necessarily just kind of sit on the sideline waiting for the new model years to come out because, again, if this car is priced appropriately, it's going to get sold. And if it's not, I wouldn't count on necessarily this used car owner to drop the price just because the new model years are out.

So I would go ahead and proceed with your purchase. I would just look for, you know, as new a car with as low a mileage as you can get that fits your budget once you've decided on the make and model. I guess because when I went on the website is the pre-owned certified, they had a lot of choices, a lot of cars. So it wasn't like it was just one car by one person that's being sold. Yeah, yeah.

Now, that makes sense. I guess the way I would approach it, though, is, I mean, do you feel like you've you've narrowed it down to the make and model you truly want? Yes.

Okay. And if that's the case, I would just scour the Internet. I mean, if you only want to work with dealerships, I would understand that. But if you could include, you know, private party sales, you'll have a lot more. But even if you just look at dealerships, I would just look at the year, the make, the model, the price range you're looking for, set up an alert on autotrader.com and cars.com and a few others. And just, you know, every day you're scouring the Internet for the new cars that have come online, you know, in that make, model and year with as low a mileage as possible. You know exactly what they're going for.

So you can immediately spot one that's really priced well and you're ready to jump on it. But if you feel like this one is not priced right, you know, I would pass on it and I would just keep looking until you find one that fits your budget. Perfect. Okay. Thank you. Okay. All right. You're welcome. We appreciate it.

Let's just quickly go to Adam in Indianapolis. How can I help you? Yeah. So I went through the Dave Ramsey Financial Peace University and I set up the envelope system.

My sister kind of talked me into it and let me do it virtually. So I set up multiple savings accounts and I have a credit card linked to each one and I don't let the credit card balance get above the balance of the envelope, but my sister says this is still a terrible thing to do, that I shouldn't be using credit cards under any circumstance, but I don't know how to set it up virtually to the point where I don't have to use cash if I'm not using these credit cards. Yeah. With all due respect to my friend Dave Ramsey, I don't have any problem with you using a credit card as long as you're living within your means. You're only using it for budgeted items and you're paying it off in full.

I mean, it's actually very convenient. Can credit cards be a problem? Well, they're not the problem. It's the way we use them, but absolutely they can get you into danger if you use them to spend beyond your means. But the way you're describing it, Adam, if you're using them for budgeted items and paying them off, I'd say more power to you and you can get some benefits along the way in terms of cash rewards.

So I don't have any problem with it personally. We appreciate you calling today. That's going to do it for us.

Faith and Finance Live is a partnership between Moody Radio and Faith. Thank you to Amy, Jim, Tahira and Gabby T. Couldn't do it without them. Have a great rest of your day and come back and join us tomorrow. We'll see you then. Bye bye.
Whisper: medium.en / 2023-05-11 18:55:28 / 2023-05-11 19:12:29 / 17

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