Seniors in Debt

Being in debt isn't good at any age, but it's especially difficult for folks in or nearing retirement. Hi, I'm Rob West. It's a disturbing trend, growing indebtedness among our nation's senior citizens.

So what are the causes and is there a solution? I'll talk about that with Brandon Sieben today, and then it's on to your calls at 800-525-7000. That's 800-525-7000. This is Faith and Finance Live, biblical wisdom for your financial journey. Well, it's great to have my friend Brandon Sieben with us again today. Brandon is President and CEO of Compass.

Finance is God's way. And Brandon, great to have you back. Thanks for having me, Rob. So encouraged to be here.

Well, we always look forward to our time together. And I know, Brandon, you've been keeping an eye on this disturbing trend that's growing debt for folks even beyond retirement age. Give us a snapshot. How bad is it? Well, it's bad, Rob. According to the Federal Reserve Bank, over the past 20 years, debt levels for those in their 60s has risen by over 400%. And for those in their 70s, that grew by over 500%. It's a big problem. And when we talk to folks nearing or in retirement, of all the issues they're dealing with relative to finances, that's the biggest.

Yeah. What kind of debt are we talking about here? It's a bit all over the board, but the top three we see are credit card debt and oftentimes multiple credit cards, car loans and home equity loans. Brandon, what do you see as the cause for this increasing debt for these folks?

Well, I'd say there's not one thing, but really a combination of factors. First, many times there's a spending problem, meaning retirees are spending like they were before retirement, but now without the income to cover the spend so they borrow the difference. Second, a lot of folks just aren't aware of the cost of debt and how the math works. For example, you know, these days a credit card could be charging 20% interest or home equity loan could be as high as 10 to 12. And people just really aren't aware of the cost there. A third, you know, a lot of people are conditioned to think that's OK, you know, no big deal. I mean, for example, I bet if you talk to nine or 10 retirees, 10 retirees, nine would tell you, I've always had a car payment. That's just kind of what we're always conditioned to do, have been.

And fourth, maybe life happened. You know, maybe there's a medical emergency or they need help to get kids out of trouble. And the next thing you know, they're on the ropes. They were already living on the edge, no emergency fund, and now they have to borrow to get out of the jam they're on.

Yeah, I certainly understand that. So how do you counsel folks nearing retirement age or even beyond who have debt? Where do they need to go from here? Well, first, we tell them there are no shortcuts.

You know, it's going to be hard, like going on a diet, going to be some pain before the game. Then we point them to God's word first for encouragement. You know, God's pretty clear we should avoid debt. You can see that in Romans 13, eight or Proverbs 22, seven. Even Jesus tells us in Matthew six, we can't serve God money.

Got to choose. And so when we're in a mountain of debt, the best first steps to get on our knees and ask God for help. And it's good when you get debt-free, it glorifies God. Practically speaking, we find there's usually 500 to 700 a month of retiree spend that can be cut pretty quickly.

It's hard, but some areas include cutting back on travel, going out to eat less or not at all, canceling some or all of the home tech like cable, or even cutting out some of those day-to-day creature comforts like getting manicures, pedicures, or the trips to Starbucks. And then lastly, and financially speaking, we encourage people to understand the math and make the best financial decision. For example, you know, if I have investments and they were 100% in the S&P from 2000 to 2022, they would have grown six and a half percent per year, right? And if I carry a $10,000 balance on a credit card, I might be paying 18% interest on that balance. 18% is nearly three times the cost of what I could have gained on the six and a half percent.

So in this case, the best financial decision, as well as spiritual decision, is to liquidate the investment and pay off the debt. Yeah, that's so good. And obviously one of the big downsides here, Brandon, is that in this season of life when you have the most wisdom and experience to bring in the Lord's service, often debt holds you back from following the leading of the Lord, doesn't it? It sure does. No doubt about it. Well, Brandon, that was great information. We really appreciate you stopping by today. I know this has been an encouragement to our listeners. Thanks so much. Have a great week.

All right. That's Brandon Sieben, President and CEO of Compass Finances God's Way. If you want to learn more about financial discipleship, how you can grow personally, or learn to teach others, check out their website at compassone.org.

That's compass, the number one, dot o-r-g. We've got to take a quick break, but much more just around the corner. If you have a question today, call right now, 800-525-7000. Stick around. Great to have you with us today on Faith and Finance Live. I'm Rob West. It's time to take your calls and questions. We'd love to hear from you at 800-525-7000. We've got some lines open today and we'll be taking your calls throughout this hour and look forward to hearing from you again, 800-525-7000.

Let's begin today in Tennessee. Hi, Kathy. Thanks so much for calling.

How can we help? Hello. Hello, and thank you so much for your program. It has carried me for many, many years. Well, thank you. And now that I'm in my senior years, I am having senior questions. Okay. I'm happy to help.

Okay. I recently had an attorney look at estate planning, and of course we are very limited in what I would call an estate. The only money we really have is what is in our home. So I went to her to ask questions, and she recommended that I also look into a Medicaid program of some kind, and it's because she said with your limited income you may need that in your latter years. But she also was telling me that it would be around $3,000, and I don't have $3,000 at this point.

I'm wondering if there's another way to go about looking into that without spending a whole lot of money. Yeah. So what was it she was going to do for $3,000? Well, she was going to do the Medicaid paperwork, and then she was going to do – I honestly can't remember. Maybe it had to do with powers of attorney, and I really can't remember the third one. But there were three different items, and so all put together, she even said $3,500 with those additional things.

Okay. Yeah, I might get a second opinion on that. I mean, at first I thought maybe she was talking about the Medicaid asset limit. So right now there are limits on how much you can have in terms of assets to qualify for Medicaid. But it sounds like what you're saying here is that the total cost of putting all these documents together was $3,500, and without her putting a trust in the mix, for those other documents, that seems a little high. I mean, I always hesitate to question fees just because I think professionals are very – they're worth paying for, and you want to have somebody who has skills and can make sure that you're not only putting the right documents in place, but also that they're in line with the laws of your state and somebody who can ask you the right questions to make sure that all of your wishes are being taken care of, and certainly you want to be able to pay somebody what they're worth for their time. At the same time, there are some kind of industry standards, and I would think you getting a will plus a durable power of attorney, maybe a health care surrogate and a living will, I wouldn't expect that to be up in the $33,000-plus range unless there was a trust involved. So what you may want to do, Kathy, is just get a second or third opinion.

If you don't have somebody else to check with, you could contact a certified Kingdom advisor in your area and ask for a referral to a godly estate planning attorney who could just weigh in on the situation. You can tell them basically what you're looking for, and they could quote you a fee for that. Okay.

Thank you so much. I appreciate the fact that I didn't have to have the answer of, oh, that's ridiculous, you need to go away and do something else. But I do trust this person, and I wanted to make sure I was in the right pathway. Yeah, and I think that's a big part of this. You want to make sure you have somebody you have a good rapport with and high trust.

And again, I wouldn't be the first to say that this is out of line. So what I would just say is whenever you're looking to have something done that involves fees like this one, it's never a bad idea to get a couple of offers or bids for somebody. But at the end of the day, you may find that this is perfectly customary and appropriate given what you're looking to have done.

So I would just probably get another opinion or two, and if they're somewhat in line with one another, then obviously if this person is somebody that you know and trust, I would say, I would probably lean in the direction of this individual that you've already spoken to. So I hope that helps you, Kathy. Thanks for your kind remarks about the program. I'm glad to hear you're getting your estate in order. And if we can help with anything else along the way, don't hesitate to reach out. May the Lord bless you.

Eight hundred, five, two, five, seven thousand is the number to call. Let's head to Miami. Hi, John. Go ahead. Hi. I was wanting to talk to you. I love your program.

Listen to it every day. I've been a faithful saver for a long time. I have a rollover IRA that has all about four hundred and eighty thousand in it. I currently I'm still currently working. I'm 62 years old, planning on working till at least 65 in my 401K.

I have one point three. So I'm thinking about where I want to live the rest of my life. My wife and I bought a piece of property up in Tennessee and we'd like to build a house there.

Right now, it's kind of difficult with the way things are with inflation. So I'm thinking about taking the money out of my rollover IRA, building the house. And then when I sell the current house, I have maybe putting it back. The current house I have is paid for. I really don't have a lot of debt, but it's kind of hard for me to let go of all the savings I've had over these years.

And I'm just kind of insecure about if I'm going to have enough when it's time to retire. Yeah. Yeah. Very good.

Well, there's a couple of issues we've got going on here. I mean, if you're going to pull the money out of the IRA and not have it be counted as a distribution, it would have to get back in there within 60 days in order to not have that treated as a taxable distribution. So that would be a little risky there if you're pulling it out with the hopes that you're going to sell and close on a property and have that funded in such a time that would allow you to put that money back in. So I wouldn't pull it out of the IRA unless you planned on pulling it out. And I'd absolutely work with your CPA to determine the right sequencing of those withdrawals to make sure that you don't pay any unnecessary tax. So, for instance, you may want to spread it over two tax years. You could pull half at the end of this year, half next year.

But I wouldn't pull it out with the intention to put it back if there's not certainty that you can do that within the 60-day window. With regard to your uneasiness just about spending this money, I certainly understand that. I don't think there's anything wrong with building as long as you understand that often it can take more time and even more cost than you anticipate. There's a good number of unknowns there, even if you get a bid that's not to be exceeded.

You just need to make sure you're working with a reputable contractor, that you've addressed any cost increases that may happen with some of the building materials and whether that's planned for or the contractor is going to absorb that. And then I think the bigger issue, Jon, is around just your needs in retirement in terms of the assets you've built. Obviously, you've prioritized saving. You've put away quite a bit of money.

That's great. I think the key is how much do you need in retirement? What is that budget going to look like? And then let's back into what asset level are you going to need to support that? If you've got a portion coming from Social Security, great. But what is that gap between your guaranteed income sources and what you need to draw from your retirement assets? And is that realistic just based on the assets you'll have remaining after you deploy any of it into real estate or anything else?

And we would typically use as a starting point a 4% withdrawal rate to make sure you're not taking out too much so that you can maintain the principal balance and that money lasts the rest of your life. So let's do this. I want to give you a chance to respond. So if you'll hold the line, I've got to take a quick break. I want to get your thoughts on the other side of this break and then we'll wrap up. So Jon, you stay right there and we'll be right back on Faith and Finance Live. Great to have you with us today on Faith and Finance Live. I'm Rob West. We're taking your calls and questions.

Three lines open, 800-525-7000. Just before the break, we were talking to Jon in Miami. Jon's built up a retirement nest egg. He's looking to build a home that they will ultimately move into for retirement. And he's wondering about pulling money out of the IRA for construction. He's also talking about just some uneasiness about how much he really needs in retirement. And Jon, what I was saying was just be careful on planning to put that money back in unless you know you absolutely can within 60 days or it's all going to become taxable. If you are planning to pull it out and make it a withdrawal, let's look at the tax implications of that, work with the CPA to see what the timing of that needs to be. And then ultimately, toward your uneasiness about retirement assets, we really need to start with what are your income needs going to be in retirement.

Let's compare that to known guaranteed income sources like Social Security and anything else. And then let's look at the other assets that will be remaining. And let's just make sure that the withdrawal rate is realistic such that we won't deplete that money too quickly.

But give me your thoughts on all that. It makes sense. I'm also continuing to think, well, with the market the way it is and getting the house, but I think the best way to go and I know it's not normally a good thing to do, but I think that the sense I'm pretty much debt free is to get a construction to a permanent loan, use the bank's money. And then once this is done, the market should have settled down.

The stock market should have recovered somewhat. And then I should be able to take after that loan closes and it converts into a permanent loan. So I can start making payments on that loan, sell the current house I'm in, and then perhaps refinance and put that money directly into the new loan. That way, thereby not touching the money I have invested on either side, either in the IRA or the 401k.

I like that a lot. Will you not have enough coming out of your existing home to pay off, though, the new loan? Will it be more expensive, the one you're building? The construction costs, I was lucky enough to purchase this home 23 years ago, and I paid it off relatively early with the intention of saving as much as I could for retirement. So I bought it at about $125,000 in South Florida.

It's worth probably almost $400,000, but to build a new house with construction costs, it's going to be at least $500,000. Got it. Yep. So you still have a relatively small mortgage that hopefully will fit nicely into your budget. What's the gap between Social Security and what you're going to need on a monthly basis in retirement?

Have you figured that out yet? Well, I've never been comfortable with relying on Social Security, because I've been of the opinion that there's a chance that it may not be there. So I've always saved with the intention of relying on Social Security. But if I can reach within just the 401k I have at work at 1.3 right now, I'm going to continue to work from the next two to three years, if I can end up at 1.5 around there.

Without Social Security, I'm looking at a 4% rate, probably about 55 to 60,000. Yeah. And then if Social Security is there, that would put me well towards $75,000, and I feel comfortable there. Okay, great. Yeah, it sounds like a great plan. I love what you're thinking about the construction to permanent and then paying it down and possibly even refinancing a couple of years down the road once rates are back, hopefully close to where they were previously. So that's great.

And then it gives you some time to get that house built. It doesn't take any taxable withdrawals from your retirement accounts. I think you're right on giving yourself time for those accounts to recover and then planning on that 4% withdrawal rate.

That makes sense. The only thing I would say about Social Security is I can understand why you're leaving that out of the equation. That's never a bad idea to be conservative. I will say that once the trust fund runs out in there, I think the latest estimates are 2035. Even with it at zero, the trust fund, they're still able to pay 75% of benefits, even with the trust fund completely depleted, and it's too much of a political football, they're not going to allow that to happen. So what will happen is, I suspect, is that we'll see full retirement age be pushed out from 66 or 67 to something probably closer to 70 and or they will increase the FICA taxes and maybe a combination of the two, but they're not going to allow that to, you know, get into a position where the benefits are unable to be paid. And again, they can still pay 75% of today's benefits with that trust fund at zero. So there's going to be something there, if not the entire thing, just given how close you are to retirement.

So I hope that's an encouragement to you. Yes, thank you. I'm also thinking, you know, minimally, I'm going to continue to save enough for one tape, but I'm thinking maybe I should cut back on what I'm saving to only the amount that's going to be matched by by by employer being my age is, you know, 62 and I'm planning on probably only working about three to four more years.

Okay, yeah, that sounds great. What would you do with the balance then? The remaining amount that you're not the remaining amount you're not putting into retirement any longer. I have another investment account that I that I leave for my emergency fund, I really only have about two months worth of emergency funds, I would stick that bonuses I get in that money that I usually stick in there. It's an investment fund through fidelity.

And I usually just let it sit there. I have a very good appetite for for risk. I'm not, I'm not a risk averse.

So I'm not, I'm not afraid of sticking it in that account. Yeah, the only thing I would say to that is I like it in the tax deferred environment. And if you have a brokerage window available in your 401k, it would give you the option to invest in anything you want. You may not but if you did, that might be worth looking into because then you could invest in some of those higher risk, more speculative investments through the brokerage window, but still get the benefit of the tax deferral. So you don't have to pay capital gains.

So that would be a reason to keep pumping that into the 401k while you're still working. So something just to consider there, john, hey, appreciate you being on the program, my friend, it sounds like you're making some great decisions here. All the best to you all as you think about transitioning into this next season of life.

May the Lord bless you today. We're going to take a quick break when we come back. We're going to stay in Miami and talk to Joyce.

We'll head to beautiful Alaska and talk to Eric and then perhaps your question two lines open 805257 thousands the number to call. We're going to take a quick break and back with much more on faith and finance live. I'm Rob West, your host always appreciate you being along with us. By the way, check out our website when you have a chance faithfi.com. We'll be right back.

Thanks for joining us today on faith and finance live. I'm Rob West, taking your calls and questions today. Let's head right back to the phones.

We're going to stay in South Florida, Joyce. Thanks for calling. Go ahead. Thanks for receiving my call.

I have two questions for you if you're able to answer. Why am 74 years old? I have a whole life insurance. Am I able to change it to term life? Probably not, but you would have the option to get a new term policy and cash this one out. You typically wouldn't want to do that in retirement, though.

At age 74, a term life policy is going to be very expensive. What's the purpose of the insurance, Joyce? Do you still need it? Or is it really just to provide an inheritance of some sort? No, it's just that I'm no longer here. My daughter could use that to bury me.

Sure. Are there other assets that would be available for that? The reason I ask is the mortality expense associated with this policy as you age continues to grow. And so this is probably a fairly expensive policy right now.

You may have some cash value that has built up in this that you could pull out an earmark for burial expenses and then drop the policy. So you just want to make sure that this makes sense for you to continue to pay for this. Yeah, it's like $25,000 and I pay like $179 every month. Yeah, that's a lot of money. I mean, you're spending $179 a month.

That's over $2,100 a year for a $35,000 death benefit, which is not a whole lot of death benefit, especially when you spend $2,000 a year. Is there cash value in it? Would you be able to pull cash out if you collapse the policy? There's cash value, yes. Yeah.

Do you know how much? No, not right off hand. I think I should have kept what I've had, but my friend told me to change it and I could have made a bad decision. Have you already done something with this?

No, it's this day. I just let me talk to you a man of experience. Sure. Well, I would consider probably dropping the policy. Again, if you could take that $2,000 and redirect that to a savings account, it wouldn't take too many years before you'd have everything you need. You may have some cash value in this that could really be earmarked for burial expenses and you could add $2,100 a year back to your budget to do some more giving. You could save that and build up your emergency fund. I think continuing to pay for this very expensive policy that you don't really need because nobody's counting on it, especially with a very minimal death benefit of $35,000 with you spending $2,100 a year.

I would rather see you check into pulling the cash out, collapsing the policy, letting it go, and then just regaining that $179 a month. Yes. One more question about the bonds. Is it a good time to buy bonds? I know it used to be 6.8%. You're talking about inflation bonds?

No, they're really not as attractive. They were at 9.6 a little over a year ago, then they were down to 6.4. Now they're at 4.3 and they're going to continue to fall. If you're looking for a higher yield with safety, I'd rather you go into a one-year CD at maybe 5.5%. It's going to be better than the I bonds. With the I bonds, if you pull the money out in less than five years, you're going to have a three-month penalty worth three months of interest.

Although the I bonds were attractive previously, I don't think they are as much any longer, so I would probably pass and look at high-yield savings or certificates of deposit. Thanks very much for your call, Joyce. We appreciate it.

To Alaska. Hi, Eric. Thanks for calling. Go ahead.

How you doing, sir? My question is, I'm 33, my wife is 35, so we're both starting a new job. She's going to the hospital and we're getting ready to start with our, trying to make, start a retirement for us. So my job is doing a simple, and I hear you say a lot of times, like IRA Roth, I'm not understanding too much what they are.

Sure. My job is giving me a simple IRA or whatever I put in there, they'll match it. Her job, she already has a Roth from her old state job, but the one she's going through says they don't have the same thing.

So she's wondering if we are, if sticking with the IRA or is it best for her to go out of her Roth and just, she wants to put it, I believe the company is called Maryland, M-E-R-I-L-Y-N, invest like the investors, rather than where she's at. And we're just kind of not sure. And we're just wondering, and we hear you guys every day all the time out here.

And so we didn't know. Yeah. Well, here's the goal I think is if you start with saying, okay, how much do we want to put away toward retirement? What is your age, you and your wife roughly? I'm 33, she's 35. I'm going to be 34 this year.

Great, great. So you've got, let's say 30 years between now and retirement. So you're still young and the goal would be for you all to put 10 to 15% of your pay into a retirement account. Why a retirement account? Well, whether it's a SEP or an IRA or a 401k, all of all of those are basically the same unless you have the Roth version where you get a tax deduction when the money goes in and then you invest it. And then it grows tax deferred, meaning think of the IRA or the 401k as an umbrella over the account.

The taxes are the rain and they fall off the side. So as your investments are growing, there's no drag by the taxes that are being paid. You get the full amount of the investment return and then that continues to happen until retirement. And then as you pull it out, then you pay tax on it as income.

But during that season of life, ideally you wouldn't have other income or maybe you do, but this is a supplement. So it's okay to pay tax on it then. So if your goal is 10 to 15%, then you say, okay, which is the best retirement vehicle for me to take advantage of? Well, with a SEP IRA, you can put in 15,500 this year. With a Roth, you can only put in up to 6,500. With a 401k, you can put in 22,500. So a lot of times I say, let's start with any accounts that offer matching.

In your case, that's the simple. If she has a 401k that offers matching, I'd start there. And then once you get up to where you have fully taken advantage of the match, then let's switch over to the Roth IRA because I actually like that one a little better. You put in after tax money, but it grows tax free and you never pay tax on all the gains when you pull out down the road. But a lot of times you might get to the maximum on that at 6,500 and still want to put a little bit more away. And that's where you'd go to either the simple or the 401k. So I think the starting point is to say, okay, if we want to put 10 to 15% away every paycheck, can we do that?

And you may not be able to right now. You may not be able to make your budget balance. And if that's the case, then start wherever you can. But that'll give you a goal for an amount that you want to be able to put away. And then my priority in terms of the type of accounts would be first matching, second Roth.

And then third, whatever allows you to get up to the full amount that you want to be able to put away based on those contribution maximums, if that makes sense. Is that helpful? Yes, sir. Yes, sir. So I tell her, does she keep the Roth that she already has going?

Like, that's a good thing. Well, tell me again about her retirement options at work. Does she have a 401k available? Yes.

So she has a 401k that she's already doing through her job through the state, but she's switching to the hospital. And so they're saying they don't have that. They have like a 458 or 457 or something like that.

457. Yeah. Yeah.

That's the same thing as a 401k. Okay. Okay. So that's what they told us. So if she'll put in 8%, they'll do 7. So it'll be 15%. Great. So about like what you're saying.

Yeah. So I would just let that Roth go, let it keep growing and take full advantage of that 457 and that 7% match. And then if she has, if you all have more money to put away beyond that, then go back to the Roth.

But I would prioritize the 457 first. Thanks for your call, Eric. God bless you guys. We'll be right back on Faith and Finance Live. Great to have you with us today on Faith and Finance Live. I'm Rob West.

We've got tons of questions and we'll get to as many as we can here on the broadcast today in our final segment to Nebraska. Hi, Chris. Go right ahead. Hi. You had me about a year ago.

I was low income, wanted to know if I could retire at 50 and you gave me great advice. I wanted to thank you for that. Now I'm thinking on my eight.

Oh, no, thank you. And I'm thinking of my eight year old nephew. I don't want him to struggle like I did through life.

And is there something I can get started for him that his parents couldn't dip into where it give him a little at 20, a little more at 30 and a big chunk at 40 and the rest at 50. And then a second part of the question. Do you have a website or anything that has books that helps kids with learning about finances? And I just wanted to thank you again in advance. Oh, that's very kind, Chris. Thank you for that.

When we're done here today on this question, you stay on the line. I'm going to ask Amy to get your information and we're going to send you a book called The ABCs of Managing Money God's Way from Howard Dayton. That'll be our gift to you and you can pass it along. What is the child's age, Chris?

Eight. OK, yeah, so that'll be a good fit. It's called The ABCs of Handling Money God's Way. Beyond that, you know, really what you're describing is a trust. And essentially you would have to create a trust, which an estate planning attorney would do for you. You are the grantor.

You establish the trust. It's a revocable trust, so it can be changed at any time. And then you would name a trustee, which can be an individual or a corporate, a corporate trustee.

But typically it would be an individual, somebody who's trustworthy and attentive to details and that could be named as this the person that handles the trust upon your death or incapacitation. And then whatever gets goes into the trust, you would fund the trust over time with either cash or other assets. You could spell out in the trust documents how the money is to be distributed to the trustee.

Excuse me, to the beneficiary in this case would be the child. But you could play certain restrictions on that in that a certain percentage would happen at, you know, at X age and then Y age and then and so forth. And then all of that could be handled.

You wouldn't be able to do that with just a typical account outside of a trust that would give you the ability to allow the money to be dispersed over time. And it would name the individual who would have to make that happen. Is that what you're looking for?

Yes, I wrote down everything you said. Thank you so much. You're welcome.

So what I would do is contact an estate planning attorney in your area. If you don't know one, you could reach out to one of our certified kingdom advisors at faithfi.com. That's faithfi.com. Just click find a CCA. They could make a referral to you.

And and then I would go visit with that person, let them know what you're looking to do, and then they could set it up for you. Was there a second part to the question? No, but I just wanted to say thank you for helping us out here in our world. Well, you're so kind and I appreciate your generous heart and for your kind remarks today. Thanks for calling and we'll look forward to having you back sometime in the future. God bless you. To Indiana.

Hey, Charles, go ahead, sir. Yes, I got a letter from my mortgage company and they're saying that my mortgage is over to an extra account. And they're going to I either had to pay around thirteen hundred or my mortgage to go up to two hundred dollars more a month. And I just wonder what would be the best to let it go up or to pay the thirteen hundred.

Well, it's really going to accomplish the same thing. If you have the thirteen hundred dollars and you want to try to keep your mortgage payment where it is because you've got a certain budgeted amount that you'd like to stick within, then, you know, I would just go and send the thirteen hundred dollars unless that's going to deplete your emergency savings. And if that's the case, then I might just go with the two hundred dollar option. Essentially, what's happened here is either your property taxes or your homeowners insurance or both have increased and they're just trying to account for that because they probably have forecasted that you're going to be at a deficit. You're not going to have enough in the escrow account to pay one or both.

And so they need you to make that up. They're willing to let you do it over time or they'll let you do it as one a one time payment. This is all your money anyway. And so, you know, if you were to sell the house, you'd get it back. So I wouldn't worry about whether or not one is a better deal than the other. It's really just a matter of do you want to try to keep your mortgage payment where it is because, you know, it just works in your spending plan. And if you have the cash, then I'd go and just write the check. Otherwise, you can do it out of your mortgage payment. But this is not a cost to you.

Essentially, they're just trying to make sure the escrow is fully funded so these these bills can be paid when they come due. OK, it'll still go up to around 80 dollars. What I do, I paid at thirteen hundred. And the other part is my spouse was saying that maybe we should sell the house and move where we can get a lower tax rate. OK, say that say that part again.

You broke up just a little bit. OK. My spouse was saying that maybe we should move and get a where they will have a lower tax rate. Yeah. You know, you certainly could look at that, although I would count the cost on that, because remember, buying and selling real estate is very expensive. You know, so you've got probably six percent to a realtor on the way out. And then when you buy the property, now you've got, you know, the additional cost to purchase the real estate taxes.

And, you know, you've got the not only the fees, but also you've got the mortgage insurance. I mean, there are expenses associated with buying and selling a property. So you'd have to be able to realize a pretty substantial reduction in property taxes for you to make that worthwhile.

Now, for instance, some counties where I live, if you're over a certain age like over 65, you don't have to pay the school taxes any longer. And so moving to that county could save you a lot of money. That kind of move may make some sense because that's a lot of money that you would save over, let's say, a 10 or 20 year period.

But apart from something like that, you know, I would just make sure you know what you're actually going to save and compare that to the transaction cost before you were to go ahead with something like that. Okay, thank you for your help. All right, Charles, God bless you, my friend. We appreciate it. To Illinois. Hi, Marge. Go ahead.

Hi. Yeah, my question is in regards to allowable deductions when we do our taxes. In years past, I know I was able to claim 100% of my charitable contributions and medical. And this past year, we were only allowed to claim $12,500.

Do you know why that is and is that going to be going up that amount? Well, the standard deduction for 2023, for instance, Marge, for a married couple is $27,300. So you would need to have itemized deductions that exceeded $27,300 for you to be able to itemize on your taxes. Do you think you might have charitable donations and other deductions exceeding $27,000? I'm single, so what is that amount?

So I apologize, $14,700. For next year or this year? For this year, 2023 tax year. Okay, so 2023 tax year we pay in 2024, right?

That's correct. Okay, so next year when I pay my taxes, I'll be able to claim $14,500. Well, that's the standard deduction, so you'd have to get up above that before you would itemize.

For 2022, which is the taxes you paid this year, it was $12,950 for single filers. And that's all you can claim? That's correct. If you exceed that?

That's right. Well, so that you either take the standard deduction if your deductions are below that, or you'd itemize if you'll get above that by itemizing. But if you can't get above that with your itemized deductions, you're better off taking the standard deduction, which is what more than 80% of taxpayers do. Yes, mine exceeded it by almost twice as much, but I was told that I could only claim the $12,500.

No, I would go back. Did you use a CPA? Yes.

Okay. Yeah, I'm a little confused by that, so I'd ask for a little bit more explanation. I mean, it may have come down to your adjusted gross income, so there is a maximum on the amount of deductions you can claim based on your AGI. And so that may have been the issue just with regard to your contributions. So I would double check with your CPA on that just to have them, he or she, explain in a little more detail why you were limited to that amount, because it's not about the standard deduction.

It probably has more to do with how much income you had versus how much you were trying to deduct. And so it would be worth going back and asking for further explanation. Thanks for your call today. We appreciate you being on the program. Quickly to Yolande in Indiana.

How can I help? Hi, Rob. I just had a question. So we just sold our house, and we are going to buy my mom's house under contract.

I was just wondering, will it affect our taxes for next year if we get a check for the equity we have had in our old house and then give that to my mom? No. So if I understand correctly, you lived in this house two out of the last five years, correct, as your primary residence? Yes. Okay. And how much profit did you receive from this? $112,000. Okay. Yeah. So there's no taxes on that because it was your primary residence.

You lived there two out of the last five years. You could actually have up to half a million in gains and profits before you would pay capital gains tax. So there's no tax on the money coming out.

You deposit it in your checking account. Now you're going to make a gift to your mom of that amount? Yeah. Or we will kind of have a loan through her instead of the bank in a way. Okay. So you're going to buy another property, and she's going to finance it, and you're going to pay her? Yes.

Okay. Which you can do, you're just going to want to have a real estate attorney draw that up and put everything in writing. And then when you give that portion to your mom as the down payment, essentially she's just financing the property.

So I would just make sure you involve a real estate attorney so everything's documented properly with the deed and the note that she's holding on this next property that you're buying. You can find one in your area who can help navigate that through you. Thanks so much for your call today. God bless you. Faith and Finance Live is a partnership between Moody Radio and FaithFi. Thanks to my team today, and we'll see you tomorrow.