Using Home Equity to Save a Business

The following program was prerecorded, so our phone lines are not open. The Bible never calls borrowing a sin. On the other hand, God's Word doesn't have much good to say about debt.

Hi, I'm Rob West. Scripture repeatedly warns us about the dangers of borrowing. Proverbs 22, 7 gets right to the point, the borrower is slave to the lender. Today we'll look at a situation where you might be tempted to borrow, but shouldn't.

Then we have some great calls lined up, but we won't be taking your live calls today because we're prerecorded. This is Faith & Finance Live! Biblical wisdom for your financial decisions. Okay, so as the economy teeters on the edge of recession, small businesses are beginning to feel the pinch. A couple of years ago when the economy was booming, they may have sought to expand, plowing more revenue back into the business. But now money is getting tighter. Cash flow isn't what it used to be. Maybe it gets tougher every week to meet payroll.

Suppliers are having to wait longer for payment. So if you're a small business owner, what's the solution? Well, this is where temptation enters the picture, specifically the temptation to tap into your home's equity. You may even be seeing commercials saying something along the lines of, it's your money, use it however you want.

And while it might seem like the equity in your home would be a good source of quick cash to get you through a tough time, is it really? Today we're going to consider a question that's front and center for many families who own a business. Listen to Sheri's story. Sheri's husband is self-employed in the trucking industry. A few years ago they sold one of their trucks and used the profit to make a down payment on a home. Now they're facing serious cash flow problems because of fuel costs, lingering supply chain issues and the increasing time it takes clients to pay them. The business still owes money on much of the equipment and Sheri says even if they sold at all, they wouldn't break even. Sheri wants to know if now would be a good time to use the equity in their home to keep the business going.

Well, Sheri, the short answer to your question is absolutely not. Don't use your home as collateral to cover business debt. You'd put yourself at risk of losing your business and your home if you can't make the payments. Of course, dealing with a struggling business is never easy. If you're in that position, here are a few things to consider. Perhaps most important, there's a relational aspect to this issue. If you're married, are you and your spouse in agreement about how to proceed with your struggling business?

In any case, it's so important to pray together about this, asking God to reveal a path that you both can agree on. Then you can look at the economic conditions. Right now the economy is slowing, fuel prices remain high and you can reasonably expect that payments from your customers will only get slower. Consider the long-term future for your business.

What are your goals? Ask yourself, is it time to call it quits before you get yourself deeper into debt? It's always smart to seek wise advice from a financial planner, or you can talk to other business owners who've been there. One thing you'll likely hear from them is that it's not a good idea to mix personal and business finances, and that using your home equity to keep your business afloat only puts your family's future in jeopardy, so avoid that. Another thing to consider when discussing the future of your small business is your emotional attachment to it.

Business decisions should never be based on emotions. It's difficult for an entrepreneur to give up a business, but most successful ones will tell you that they failed at one before achieving success with another. So giving up on a failing business isn't the end of the world. Finally, ask yourself, what is God trying to tell you through this financial challenge? Whatever that is, you know you can trust God to lead you to a better place. And one final thought, we're called to practice absolute honesty and integrity at all times, especially in our finances. Business owners have a unique opportunity to witness for Christ in the marketplace. People are watching you, and how you act in troubled times can help point others to Christ.

Remember, money is a tool, it's a test, but it's also a testimony to the world, especially in challenging times. Proverbs 11, 1 tells us a false balance is an abomination to the Lord, but a just weight in His delight. And 2 Corinthians 8, 21 says, For we aim at what is honorable, not only in the Lord's sight, but also in the sight of man. So we want to thank Sheri for her really important question. And by the way, if you have an email you'd like to send along to us to be read on the air, you can send it to askrob at faithfi.com.

That's askrob at faithfi.com. This is Faith and Finance Live! Biblical wisdom for your financial decisions. We want to help you be a wise and faithful steward of God's money. It's a high calling, so let's do it together.

Stay tuned. We're just getting started. Grateful you've tuned in to Faith and Finance Live! I'm Rob West, your host. This is where we recognize that God owns it all.

You're a steward or a manager of God's resources and money is a tool to accomplish God's purposes. Hey, we're away from the studio today, so don't call in, but we lined up some great questions in advance that I know you will enjoy. In fact, let's begin today in Mississippi, and you'll be our first caller.

Go ahead. Yes, I don't really know how to word it except that my daughter sent me something off a Facebook. There was a clip of Glenn Beck speaking about how in the near future, he doesn't know when, but the dollar is going to fail, and we need to be prepared, or we'll end up like Venezuela. But he didn't tell how to prepare, and he's not the only one that's saying the dollar's going to crash or whatever. I mean, for lack of a better term, I don't really know how to say it, but hopefully you know what I mean. I do, and I appreciate the question. I mean, I don't know what it is the clip said. I will say, Glenn Beck has said a lot of things for a long time that haven't come true, but it doesn't mean that there's not some basis for what he's talking about here in terms of where we're headed as a country. Now, do I believe the US dollar or the US economy is eminently going to fail?

No. Clearly, the US is in first position by far. Economically, we're the biggest and strongest economy in the world. The US dollar is still the world's reserve currency. That's not going to change anytime soon. This would be troubling, perhaps, if there was another currency that could step into the role of the world's reserve currency.

The reality is that's just not the case. There is not another currency on the planet today that has any sense of being able to replace what we're able to do. Nearly 60% of the global currency reserves are in dollars. The euro is in second place with only 20%.

And consider that 90% of all foreign transactions involve the US dollar. So, you know, we're still in a position that no one else can rival. And yet, I think in many ways, we've mismanaged the responsibility that we have, and the opportunity that we have here in the United States with regard to our economy and our currency by overspending by running up massive debt now over $30 trillion.

The fact that we're not far away from our interest payments being our largest federal expense in this country, our monetary supply, we've had easy money which has led to high inflation, we've suppressed interest rates, I think the Federal Reserve has made some decisions that certainly are in question. So what does that mean for us? Well, I think first of all, what it means is, it doesn't change the fact that we're all responsible for our own economies first and foremost. So the big question is, what passes through our hands? And how do we faithfully manage that.

And so that's why we have this program to help you go back to God's Word, pull those principles out, that you can apply to your everyday financial decisions, because that's what you're tasked with, as a manager of God's resources to be found faithful, to spend less than you earn, to avoid debt, to set long term goals, to have some margin or liquidity in your financial life, and to give generously because that breaks the grip of money over your lives. Now, that doesn't mean we bury our head in the sands. But I think any potential major problem, which would probably most likely look like a debt default, which will end up pushing that up, the bigger issue that we have to solve for is just our incredible federal spending right now, the fact that our US national debt continues to climb, and it will be problematic for us, especially given the demographics in this country and the fact that we're not replacing the workers that are retiring. Now, again, we're still an incredibly strong economy. There's a lot going for the United States, we're innovating, and we have an opportunity to work our way out of it.

But our backs are going to be against the wall, we're going to have to make some hard decisions. And I think that's why we need to be voting for godly leaders that understand God's design for economics and wealth creation, and that people were created as a blessing, not a curse. And we were created to be workers. And there's a virtuous cycle of productivity and economic expansion and generosity, giving back to the God that created us, that ultimately is how God designed us to live and work and for economies to function. And when we violate that, there are consequences, but I think they're much further down the road. So what I would say to you, Ann, is manage your money according to the way God has instructed us that we find in his word. And let's continue to watch.

And you know, if there is going to be major problems, I think they're a good bit further down the road. But let's try to avoid that by praying for our leaders and voting for those that understand God's perspective of economics and wealth creation. Does that make sense?

So Yes, it does. And I've been taking notes. But what could you recommend as preparations? I know some people say about gold and silver, but what are you going to do? Take a bar of gold to the grocery store and pay for a loaf of bread?

Yeah, that's one of the challenges. And you know, gold does well in times of fear and economic uncertainty, which we are in right now and certainly headed for a recession, which is why gold is, you know, sky high right now in terms of price. So what I would say is what you should do is the range of precious metals that you and hopefully your advisor settled on for your portfolio, which for most people, I would say was between five and 10% of your investable assets. This is probably a time to be at the upper end of your range. But it's not a time to be highly concentrated in gold. It's not a time to pull everything out of the banking system. It's not a time in my view, even to get out of the market because stocks are on sale right now. And you know, this market will come back. Remember, it looks out six to 12 months, so the market will recover well ahead of the economy. We just got to get into this recession, figure out how deep it's going to be. We got to know that the Fed's done raising interest rates and that they're coming down and inflation is back under control. And I think this market will take off. So I would say stay the course.

Keep a long term perspective. Keep your money in the bank. Don't overweight in gold, but have a reasonable allocation to gold and silver as a part of a well diversified investment strategy. Would you recommend that for 70 euro to have five to 10%?

I would. Yes, ma'am. I think that is a prudent approach to a properly diversified stock and bond portfolio. Of course, it's all dependent upon your, you know, your goals and how much you have and how much income you need from those assets. So that's why I think it's never a bad idea to have a financial advisor that can counsel you and walk through this with you. But yes, I think short answer is, apart from knowing all the details in your situation as a rule of thumb, that does make sense for a 70 year old investor. And what was the website you gave about how you could find a financial advisor that will invest in biblical and not invest in non biblical things and at a good rate though, not charge exorbitant fees?

Yes, ma'am. We recommend the Certified Kingdom Advisor designation. These are men and women who've met high standards and character and competence. They've had a pastor reference and a client reference. They've signed a statement of faith. They've been trained to bring biblically wise financial advice and they have significant experience.

There's 1300 of them across the country. You can find one in your area and I would recommend you interview two or three before you settle on the one that's the best fit. A couple of questions you'd want to ask is one, can you help me align my values with my investments? Most of them do what we call faith based investing or what you might have heard of biblically responsible investing. And then secondly, you're going to want to know how they get compensated.

They're all different. They set their own fee schedule. So head to our website, faithfi.com. That's faithfi.com and just click the button that says Find a CKA. It stands for Certified Kingdom Advisor.

You could do a zip code search, interview two or three and find the one that's the best fit. And thanks for being on the program today. Hey, you're listening to Faith and Finance Live with Rob West.

Today's broadcast is prerecorded and that means we won't be taking any calls. But we do have some calls lined up and lots of great information coming your way that we think you'll find helpful. So stick around for more Faith and Finance Live after this brief break. Great to have you with us today on Faith and Finance Live. I'm Rob West. Our team is away from the studio today.

We're not here, so don't call in, but we lined up some great questions in advance and we'll get to those in just a moment. Just as I look at the Scriptures, one of the big ideas that literally jumps off the page when you look at this area of finance in light of a biblical worldview is the idea of contentment. We should foster an attitude of contentment. And I think that's the first understanding is that it is, in fact, an attitude.

Matthew 633 says, But seek first the kingdom of God and his righteousness, and all these things will be added to you. If our aim is the kingdom, then that changes our perspective. It makes it focused on the eternal, not the temporal.

And that's a game changer. Well, then from an attitude, we learn that contentment is, in fact, learned. The apostle Paul said it this way, not that I'm speaking of being in need for I have learned in whatever situation I am to be content. That's Philippians 4 11. So it's a learned behavior. It's also a choice. You know, I can choose to be content in every circumstance, rich or poor, happy or sad, easy or difficult, because as Christ followers, well, our position in Christ never changes. And I think that's an important reminder for us today.

And perhaps it could change your whole approach to your money. All right, back to the phones we go. Let's see, we're going to head to Shonda in Mississippi. Go ahead.

Yes, hi. Thank you for taking my call. So I think I've kind of messed up on getting some land deeded to me. My mother has about 52 acres. And we I was intending on building but plans have changed. She had to land in a trust. And then she and I've got two questions on that she she changed the the trust to me. But I never signed any paperwork. She said that there was no need to that.

But then also when she informed her financial advisor at Edwards Jones, he was he stated something to her to the fact that well, I would have to pay capital gains tax on the land, which if I ever sold it, which I understand that but the way he made it sound is that I would have to pay it twice. Yeah, I don't know. I'm not sure what he was referring to there. Is your mother still living? Yes.

Yes. Okay, living. All right.

And so have you already? Who's the property deeded to currently? Me.

Okay. And so how was it deeded to you? Did she do a quick claim deed?

Or how was it transferred to you? I wasn't with her, unfortunately, when she did it. Well, what he's probably referring to is, unfortunately, if you would have waited and received it as an inheritance, either through a will through the probate process, or through a transfer on death deed, where it passed to you following your mom's passing, which I realized she's still living. But if that was the way it was set up, or if it was in a trust, and you were the beneficiary of a trust, then you enjoy what's called a stepped up basis at that point where the cost basis would be stepped up to the market value as of the date of her death. The problem with the way it's currently unfolded is because it's been transferred to you prior to her death, you're going to keep her original cost basis. So what he may be talking about the fact that you will be paying more in the way of capital gains, because when you sell it, the capital gains will be calculated off her original purchase price, plus any improvements that have taken place, as opposed to a stepped up basis, which would come through an inheritance. Does that make sense?

It does. Now, second question is, can we go back and reverse that? Since the decision was made that I was I'm not going to build on the property?

Yeah, I don't believe so. That would be a good question, though, to ask an estate attorney. I think once that transfer has occurred, you can't unwind that. But I would check with an estate attorney. If you don't have one, you could reach out to a certified kingdom advisor in your area and ask for a referral to a godly estate attorney. And it would be a good time to update wills and make sure you have other documents in place like a living will or a health care surrogate, that type of stuff.

But unfortunately, I think it's too late at this point, but I would let an attorney tell you that. We appreciate you calling today. Shonda, if we can help you further, let us know.

Bruni is in Philadelphia. Go right ahead. Hi, guys. I'm so happy to talk to you.

You guys are awesome. I'm a single grandmother raising two grandchildren and living just by the grace of God. But up every month, I have $100 left after I pay all the bills and everything.

And I would like to know how can I invest that so we can get more money for the kids and me? I'll tell you what Bruni, you're doing the Lord's work there. A single grandmother raising two small children, getting by on a limited income, you know, trying to be a wise steward of God's resources. What an encouragement and a blessing you are to each of us as we just hear a small part of your story.

Have you looked into potentially any support that could be coming your way from, you know, the government or otherwise, just to help you make ends meet as you care for these children? No, I don't. I don't. Okay. You may be eligible for some government assistance programs.

And, you know, I would certainly look at that in terms of how to to use the $100. And kudos to you for being able to live on a modest income within your means and still have a margin. You know, that's great.

Do you have what I would call an emergency fund where you've put away some liquid savings for the unexpected? No. Okay. Okay. Yeah. So I wouldn't be thinking about investing. And I'm not saying you've done a bad job. I wouldn't have expected you to.

But this helps me answer your question. I wouldn't be thinking about investing that money. I would just be automatically transferring every month you've got that $100 left, automatically transferring that to a savings account. I'd open a high yield online savings account like at Marcus or Capital One 360. And then just automatically transfer electronically that money over.

You're going to get about four percent interest. But the key is you're going to protect the money. So it's there when you need it. And let's just try to build that up every month as you're able. Also, make your church available or aware of needs that you have so they can step in and be the hands and feet of Jesus. God bless you and all your work. And if we can help further, don't hesitate to give us a call.

Well, folks, we're going to head to a break. But let me remind you Faith Fi and Faith and Finance Live is listener supported. We could certainly use your assistance and support, especially as we head toward our fiscal year end at the end of June this month. If you'd like to consider a gift, we'd be grateful. Just head to our website, moneywise.org and click the donate button. You can give through the mail, online or over the phone. Again, moneywise.org.

Click donate. We'll be right back. Great to have you with us today on Faith and Finance Live. Hey, just a quick reminder, we're away from the studio today, so don't call in. We've got some great questions we'll get to in just a bit. But first, let's take an email. These come to us all the time at askrob.faithfi.com and we're delighted to read them on the air when we can.

This one comes from Barb. She writes, I'm 72, retired and single. I owe $93,000 on my home. The interest rate is three and a quarter percent. I have 23 years remaining. I have $430,000 in a traditional IRA. Would it be wise to take $93,000 from my investments to pay off my house? And what would the tax consequences be? Barb, the tax consequences would be significant if you took that $93,000 in one calendar year.

The entire amount would be added to your adjusted gross income for the year and likely push much of it into a higher tax bracket. So because you have a great interest rate, at least by today's standards, at three and a quarter percent, I would encourage you to not pay that house off right now unless you just have a real conviction from the Lord to do so immediately. I'd let your IRA recover with the market.

It's likely down like everyone else. And then at some point, I would look at perhaps doing that down the road once it's fully recovered. And when you do, I do it over a couple of tax years. If you spread it out, maybe a third in one tax year, a third in a second and a third in yet another tax year, you will probably lessen the tax liability and you can work with your CPA to determine exactly what that timing should look like.

So that would allow you to pay it off over the next few years, allow the IRA to fully recover, but also still do that in a way that is tax efficient. And I think that will ultimately help you accomplish all of your objectives. I hope that helps you, Barb. Thanks for writing to us again. If you have a question you'd like us to read on the air, send it along to us to askrob at faithfi.com.

That's askrob at faithfi.com. All right. Now back to the phones. Let's head to Ohio. Hi, Don.

Thanks for your patience. Go right ahead, sir. Hi. How are you doing today? I'm well, sir.

Thank you for calling. Well, actually, I am 65 years old and I had a retirement from a previous company that was bought out and I invested it into the bank. Anyway, I started a new job about 20 years ago and I'm into another 401 program. I was wondering, is it financially smart if I would take and combine the two accounts together? And also, I have a truck loan and I was wondering, I have five years left on the, you know, about $20,000. I was wondering, would it be smart if I would pay off that truck loan out of the 401 and just put the money back into the 401? Yeah.

A couple of thoughts there. So as to the first part of that in combining them, yeah, I like the idea of you moving that old 401k from your previous employer out of the current plan administrator that it's with. And you've got really two options there if you do that. One is combining it with your current 401k if your new employer's plan administrator allows that. In most cases, you would be able to do that, but you'd need to check on that. But I like that just for simplicity sake, now you've got one statement instead of two, you've got one account to pick the investments and stay on top of.

It just, you know, it helps to streamline things, which is always good in terms of our financial life when we can simplify. The other option will be to roll it to an IRA. You would still have two accounts. The benefit of the IRA over the your new 401k is you'd have an unlimited investment universe. So for instance, if you were, you know, frustrated at the limitations with the investment choices inside your 401k, maybe you wanted to begin to use some faith based investing options that align with your values and those aren't available in your 401k, you could get that in the IRA. But if you're happy with the investments that you have available, and it's been performing well, I think I'd probably just combine it with your new 401k. As to the truck loan, are you thinking about taking a loan against the 401k? Or were you going to take a withdrawal? I was thinking of taking a withdrawal. The company says, as long as I'm working, if I make a withdrawal from that account, I have got to put it back. They're going to take it out of my check whether I want to or not.

And I kind of thought that was kind of confusing to me. No, yeah, I think you are just slightly confused on that you can take a withdrawal from that a permanent withdrawal, they're going to withhold probably 20% to cover the tax portion, they'll send that to the IRS, and then you'll square up with the IRS at tax time. But you can absolutely take a withdrawal and you won't have a penalty because you are over 59 and a half, but it would be taxable. You can also if the 401k allows it, you could borrow against the 401k.

Here's the bottom line, though, I wouldn't recommend either of those Don, I'd probably just try to accelerate those payments to the car loan out of current cash flow, maybe you send an extra 50 or $100 a month if you can, and just try to pay it off primarily because I'd love for that money to continue to grow into the future. You know, even once you reach full retirement, let's say that's at age 70. You know, if the Lord tarries and you're in good health, you still need this money to last decades. And that could be a key piece, these two 401ks of you know, providing some supplemental income to you down the road.

Secondly, if soon as you pull it out, you're going to lock in any losses. And if you're like every other investor right now, that 401k if it's invested, it's down from where it was a year ago. And I'd rather you leave that money in there so that it can recover now. Could it lose more money before it goes higher?

Absolutely. We've never seen a bottom of a bear market like we're in now. Before a recession, it always happens in a recession, and we're not technically in a recession yet.

So I think we're going to retest those October lows from last year. So it could go down before it goes up, but it will recover ahead of the economy because the market looks out six to 12 months. So I'd rather you leave that money right there, let it rebound and grow. And then it's available down the road for you to draw an income from in retirement to supplement Social Security. And I just pay that truck loan out of current cash flow. That'd be my recommendation. Does that make sense?

Yes, that does. Hey, one more. Real quick, I'll be 66 and a half next year. And I was thinking I'm going to continue to work for another two, three years. Would it be financially viable if I go ahead and claim my Social Security and continue to work?

You certainly can. I mean, once you reach full retirement age, there's no limitation on the amount you can earn in terms of it reducing your Social Security benefits. And even if you did work above and you earned above that limit prior to full retirement age, that would only be a temporary reduction because you'd get that reduction back in the form of a higher check once you reach full retirement age. The biggest thing for me, though, Don, is that if you don't need the money because you're continuing to work and it sounds like you don't, I'd rather you leave it there because up to age 70, every month you wait beyond full retirement age to claim that Social Security, you're going to get one twelfth of eight percent. So you're going to grow that check by eight percent a year. And if you're in good health and live beyond, you know, if you were to wait until age 70, as long as you lived another 12 years, you'd make up for everything you didn't receive by waiting. And then you'd have a check that's probably about twenty five percent higher than you would have gotten for the rest of your life.

So I kind of like getting that guaranteed eight percent increase if you don't need the money. OK. Hey, thank you very much for being here and listening to me. I'm happy to do it, Don. God bless you, my friend. Thanks for being on the program.

Well, that music indicates that it's time to take a brief break. Please remember that today's program is prerecorded, so our phone lines aren't open. But we'll be back with more Faith and Finance Live in just a few moments. This is our final segment of a Faith and Finance Live program that we previously recorded.

Thanks so much for being with us today, and we hope you'll stick around and enjoy the rest of the program. You know, I think at the end of the day, the key idea is that as believers, we want to demonstrate that our trust is completely in the Lord. God is our provider. He will never abdicate that responsibility to the U.S. government, to our employer, to anyone.

It's him that gives us the power to even create wealth. Everything we have is a gracious gift from the Lord. So the question is, how can I be a faithful steward? And I think that starts on my knees, asking the Lord, what would you have me to do?

Listening clearly and intently, and then following his lead. And ultimately, we have to establish our own convictions as stewards of God's resources as to what he's leading our family to do. We know, looking at Scripture, that we're to live appropriately and give generously. And I think we have to have contentment, and we need to be willing to share with other people on our path. We need to be fixed on the eternal, not the temporal. But what that looks like for our investment portfolios, how we deploy our capital to be a part of human flourishing and to grow God's resources, at the same time recognizing the challenges around us, that's ultimately, I think, a conviction matter that we each need to establish before the Lord. I would never propose that I have all the answers, but I know that God's Word does, and I know that we don't know when Jesus is returning. And so we have to navigate that with wisdom and grace and try to be a blessing to people around us as we journey through this life and ultimately handle our money in such a way that God is our true treasure and that we are dependent on him alone.

Not the U.S. economy, not the stock and bond market. That can all be reduced to rubble, and it will be in a matter of time. And the question is, how can I be found faithful in my life, which the Bible calls a vapor? It's going to come and go in an instant, and yet I can be connected into God's grand story through my giving. I don't have enough time here to make a real impact apart from connecting my life into what God's doing from everlasting to everlasting. And so, for each of us, I think we need to make this a matter of prayer. We need to be an encouragement to one another. We need to be listening and watching, and yet being found faithful in whatever God has called us to.

And I hope that's an encouragement to you today. All right, now let's head back to the phones. Let's try to move through these questions as quick as we can between now and the end of the program to Mississippi. Glenn, thanks for your patience, sir. Go ahead.

Thank you for taking my call there. I was looking into revocable trust. And for the life of me, I really think that's the way to go versus a will, simply because it avoids probate and costs other things, although it does take a little money to set up a revocable trust.

I also read about an irrevocable trust, and that really is what caught my eye to begin with, is that, of course, once an asset is placed into that irrevocable trust, I myself, I can never grab hold of it and profit from it again. And that's fine with me, because I have a home that I would like to set up. You might say it's kind of like a safe haven for my kids if they go astray or something like that. And my grandmother did that for her 10 children, and two of them ended up living there their whole life. And one of the things about an irrevocable trust I found interesting, and I'd like to maybe have you comment on it, is that I can appoint, it seems like I can appoint a trustee. And even if I chose to move geographically in the country, which I don't, I mean, I plan to make this my last stop here. But it seems like I could appoint a trustee and have them sell my home here, and then buy me another home in another state if I wished.

Yeah, well, let me comment on that. You know, I agree with you, the trust does make some sense if you want to avoid probate, you want to be able to control that asset prior to death, if you're incapacitated beyond your life, if you want certain triggering events to cause the, you know, the passing of your assets, including this home at a date beyond your death. I mean, there are benefits and efficiencies you would gain through a trust, even though it's going to cost you probably a couple of thousand dollars to set it up. I think the question is, you know, is there a benefit of an irrevocable trust in your situation? The vast majority of people who use trusts as an estate planning tool use a revocable trust simply because you can't avoid the probate process, you can transfer the assets to your heirs, you can continue using and managing the assets without restriction, you can change it at any time, you know, and things do change. You can, you know, own real estate in multiple states and avoid ancillary probate in a state other than the one where you live. I mean, you get all of those benefits. The thing with an irrevocable trust is, you know, if you would typically only use that if your assets were higher than the federal estate tax exemption, and you will want to avoid estate taxes because you, you actually are losing control of that asset and removing it from your estate.

But that's a $12 million for an individual, $24 million for a couple. So most folks don't have to think about that. The other reason you do it is if you're comfortable giving up control after you establish the trust, and perhaps you want to protect it from future creditors, which a revocable trust would not necessarily be. So those would be the only reasons to do it.

But I think if you're just using it generally as an estate planning tool, I'd far prefer you have the ability to make changes through the revocable trust than I would you completely losing control through the irrevocable. Does that make sense? It does. I hope that helps. We appreciate your call.

David's been very patient in North Carolina. Go ahead, sir. So I have four grandchildren and is between a month and two weeks and 10 years of age. And I'm wanting to do something for them, put something back, trying to figure out if it's going to be best just to do a savings account, some type of IRA sort of thing through like a credit union. I do also have a Evers Jones account.

And then who do I put on that account for access to that? Yeah. Am I hearing that you don't want to specifically earmark this for college? You'd like it more widely available?

Yes, that actually messed up one of my kids who decided not to go to college. Yeah. Okay.

I don't account for that. So want to see what I can do? Yes. In case they didn't do that. Yeah.

Very good. What I'd probably do, David is just open a joint account with you and your wife on it. I wouldn't put it in a custodial account if it were me because that automatically becomes the kids money at 18 or whatever the age of majority is in your state.

And depending on what decisions or choices or financial or spiritual maturity they have going on, you may or may not want them to have that money whatever it is at that point. So you'd have more control over it, but you could have multiple accounts one earmarked for each child, even though it's titled in your name. And then I would just deploy that probably in a robo advisor solution. So I'd look at either Schwab Intelligent Portfolios or Betterment, two options for that. Essentially, you'd create four joint accounts, you'd set up a systematic contribution to that account every month, you'd answer a series of questions, it would build a low cost, meaning probably about a quarter of 1% a year, a low cost ETF portfolio. So these would be indexes that would capture the broad moves of the stock and bond market. And then it would automatically be rebalanced among those investments every time you made a deposit without any transaction costs.

So it's a it's a very efficient way to invest when you're starting with a small sum of money and trying to make regular systematic contributions. All right, thank you very much. I do appreciate that. Yeah, sure. So those would be the Schwab Intelligent Portfolios or Betterment.

Those would be the two that I would check out. Thanks for your call today. Let's see to Arkansas. Hey, Bob, go ahead, sir.

Hello, sir. My question is, I owe about 10,000 on my house. And I'm on a bank with a flexible interest rate.

Yes. And I owe, I was wondering, would it be feasible for me to refinance since the rate keeps going up and up, up, up on what do you want it on payments or 188 a month? Okay, yeah, I mean, it's certainly possible. The question is just whether it makes sense, given the cost of refinancing it, and you're going to have trouble finding somebody to refinance it with that balance, because typically they want at least 50,000 for a new mortgage. And if you had to go with a home equity line of credit or something like that, well, you're not solving anything because you would still have a variable rate. So you could look at maybe a home equity loan.

I mean, those come in with smaller amounts. But you're probably with the cost of the refinance itself, given the balance that you have, despite the fact that I don't like that variable rate and for the reasons you described. I'd probably just focus on getting it paid off as quickly as you can. And know that rates are probably, you know, they've reached their peak, and they're probably coming down from here, you know, and so this is going to be short lived. I mean, you're probably going to be back to a more reasonable interest rate sometime next year, even though it's it's a little bit painful to watch what you're paying right now. I think just given the size of this mortgage, you're probably going to be better off just sitting with it.

When I'm a retired pastor, and I just get social security, because I lost one of my lungs at 911. So that's the reason I was asking, because my, my finances, you know, I didn't want to get deeper debt than what I already am. Yes, sir. Yeah, I understand.

Are you able to cover the payment on it right now with your current income? Yes, sir. Yeah. Okay.

Yeah. I mean, you could certainly go to bankrate.com and look at some home equity loans and see, you know, what interest rate you could get. But I think you're going to end up about the same place. You are now with the refi, because you'd be even if you're refinanced to something fixed, you're going to be locking it in at today's interest rates. So you're probably going to be sitting right where you are, except now you don't have the option for it to come down, as it will with the variable rate.

So I think you're going to be in, you know, it's probably not even worth looking into, I'd probably just sit with what you have at this point. Okay. Yeah, I talked to you before on a question that I had, which was, I was on disability, and they automatically changed me to social security.

That was a couple of years back. But I do appreciate your help with your very knowledgeable God bless you. And I do pray for your service that you do. God bless you, Bob. Thanks for being on the program. And we absolutely appreciate your prayers, sir.

What a pleasure it was to talk to you today. Hey, before we wrap up today, let me remind you, you know, financial decision making can often seem overwhelming, seemingly endless decisions about money, but we can boil it down into something perhaps a bit more simple. All we can do with money is live, give, owe and grow. There's the money we spend on our lifestyle, the money we owe for debt and taxes, the money we grow for the future and the money we give to the Lord's work. And all of those are addressed in scripture. Every one of those have principles that we can pull out of God's word, our hope and prayers that we can help you do that on this program each day.

Faith and Finance Live is a partnership between Moody Radio and Faith File. Let me say thank you to my team today, Amy, Dan, Jim and Gabby T. Couldn't do it without them. Thank you for being along with us as well. So thankful for your calls and your questions. Have a great rest of your day and we'll see you next time on Faith and Finance Live. Bye-bye.