Are Online Banks Safe?

Today's Faith in Finance Live is actually prerecorded, so our phone lines are not open. It's understandable that when you hand over your money to someone for safekeeping, you'd like to get it back.

Hi, I'm Rob West. That's the relationship you have with your bank. You put your money in with the expectation of it being there for you, plus interest. Is that a sure thing with online banks?

I'll talk about that first today, and then we have some great calls lined up, but please don't call in today because this program is prerecorded. This is Faith in Finance Live, biblical wisdom for your financial decisions. So a few years ago, when online banks were first coming, well, online, we got a lot of calls from folks wondering if they were safe. Now, it seems we're getting that call volume again with folks wondering if putting their money in an online bank is a prudent thing to do, possibly as a result of a few bank failures this past spring. Banking is perhaps the most heavily regulated industry in the US, but it isn't foolproof.

Managers are human, and humans make mistakes. There will always be bank failures, but the system we have in place makes bank closures rare and isolated. Now, if you're concerned about putting money in a bank that has no branches, no actual buildings that you can physically walk into, you should know that there's actually very little difference between a so-called brick and mortar bank with branches and an online bank that exists only in cyberspace. In fact, to most customers of brick and mortar banks, there's no difference at all because they never go into a bank branch these days. That was a trend already well underway when COVID hit, forcing many banks to close branches to walk in traffic.

Since you can deposit a check with a smartphone now, many people have little need to actually go to a bank. Banks of course have noticed this, and they've been closing branches right and left the past few years. In 2020, there were about 90,000 brick and mortar bank branches in the US.

By 2022, that number had fallen to just over 70,000. Banks need fewer branches these days because they're now offering all or most of their services online as well. Now, there's no doubt that some people want in-person banking, the ability to sit down with a loan officer face to face, for example. But it seems a lot more people are content to do their banking completely online, often with just a smartphone. But if folks can have that same cyber experience with a brick and mortar bank, why are so many people flocking to online banks and leaving brick and mortar behind?

Well, it's simply a matter of interest. Online banks have significantly higher yielding rates and lower fees than traditional banks. That's because they don't have the overhead costs of maintaining dozens or even hundreds of brick and mortar branches. Still, to some people, the idea of not being able to physically go to a bank branch and take their money out is worrisome. Just how safe are online banks? Well, the answer is every bit as safe as brick and mortar banks and credit unions, as long as they're federally insured. That means they're backed by the full faith and credit of the US government, just in case a bank or credit union fails. The Federal Deposit Insurance Corporation, or FDIC, ensures deposits at federally insured banks. The National Credit Union Administration ensures deposits at federally insured credit unions.

In both cases, that coverage is a maximum of $250,000 per person per institution. So an online bank has the same insurance coverage as a brick and mortar bank, as long as it's FDIC insured. And you can check on that.

Go to FDIC.gov and use their bank find feature or visit NCUA.gov and use their research a credit union tool to verify if an institution is federally insured. But you'll probably have a difficult time finding one that isn't. Now, what about cybersecurity, you ask? Well, if everything is done online, doesn't that make your account more vulnerable to hackers and thieves? Well, all banks as well as online vendors have a vested interest in preventing that. They use data encryption technologies such as two factor or biometric authentication, electronic signature verification and continuous account monitoring. But customers have to do their part to maintain cybersecurity too. And that's whether they use an online or a brick and mortar bank. That starts with having a secure internet connection and a strong password. Never use public Wi Fi to access any of your accounts either financing or shopping. That person sitting next to you in the coffee shop could be waiting for a chance to hack into your account and clean you out. So to recap the question, are online banks safe?

The answer as long as they're federally insured, they're every bit as safe as brick and mortar. I hope that's an encouragement to you. Hey, folks, we're going to pause now for a brief break, but we'll be back with much more on today's faith and finance live. Grateful to have you with us today on faith and finance live. Hey, just a quick reminder, we're not here today. Our team is away from the studio, so don't call in.

But we've got some great questions coming up in just a moment. First, let's tackle a couple of emails. These come into us at Ask Rob at faithfi.com. By the way, if you have a question you'd like to send along, send it to that email address. Ask Rob at faithfi.com.

This comes from Peter. He says, I heard on a recent show to make sure the big three that is housing, car and food are 65% or less of your take home pay. I have three questions. First, would housing include my cable, internet and landline phone? Peter, yes to internet, but no to cable and phone. Secondly, Peter says, should I include household supplies? I would say no. Don't include the household supplies.

I would put that in groceries. And then finally, he says, my net paycheck includes deductions after health insurance. Should I back that out before calculating the 65%? And I would say what we're looking for is net pay after tax.

So add back your retirement and health insurance for this calculation. I hope that helps you. By the way, again, if you'd like to send an email along, just send it to us at Ask Rob at faithfi.com. We try to get as many of these on the air as we can each week. Also, if you'd like to post a question in our Faithfi community, just head to our website, faithfi.com.

You can post it there and get responses from other stewards. All right, let's head to sunny Florida. We're going to go to Orlando. Hi, Dee. Thanks for the call. Go right ahead. Hi, thank you so much for having me.

Yes, ma'am. My question is, I'm considering whether I should file for bankruptcy. And the reason is, we bought a car, my husband and I, and five months later we found out that it was a lemon. So now I owe $25,000. In good shape, the car is worth $17,000. And they want $20,000 to fix the vehicle. So I had to turn around and buy another car so I could get to work. And then my other bills are in total, now that I've added all these expenses, $29,000 in credit card bill. So in total, $54,000. And I don't know if it makes sense to try to pay this $25,000 loan that I don't have an actual car.

It's basically junk. So what do I do? And what happens if I do file for bankruptcy?

Yeah. Well, Dee, I'm sorry you're in this difficult spot. I know how much this weighs on you, not only financially, but just emotionally and spiritually as well.

And this is a really challenging situation. I would say, just in terms of bankruptcy in and of itself, we won't find that in Scripture. What we see is the wicked borrows and does not repay, so we need to make an absolute commitment to repayment. However, if you're forced into bankruptcy for legal protection, I would say that's not the primary concern. I think the key is, how can you move forward as a faithful steward of what God has entrusted to you and try to repay what you owe as you're able, whether or not you end up filing for bankruptcy for protection.

So that's kind of a secondary concern for me. Obviously, moving forward, it would be much better if we could avoid bankruptcy and allow you to avoid the cost associated with bankruptcy as well as getting on a track to perhaps get these debts paid back in such a way that you could get on a stronger financial footing, both with the credit cards and these auto loans. One option with the car itself would be just to turn it in. Essentially, it's a repossession, but you would voluntarily turn it in to the lender. And at that point, there would be a deficiency balance that you would be responsible for, and that would sit out there as an unsecured debt. And you could try to pay that off as you're able.

Obviously, you're going to have a hard time selling it, and you really couldn't do that in good faith, just kind of knowing what you know about what it needs in terms of repairs, and nobody's going to buy the car given what you're saying needs to be done to it. So that voluntary repossession would obviously be simpler than filing for bankruptcy. It would be a big hit on your credit score, but not as much as bankruptcy, perhaps 100 points off versus 200.

Not that the credit score is the driving factor, but it is one consideration. Let me ask you though, just in terms of the income that you have, let's say you were to voluntarily allow that car to be repossessed, and you were to have that deficiency balance out there. Are you able to keep your working car payment plus the minimum payments on the credit cards in your current income if you didn't have the second automobile? Probably, yes, if I didn't have the lemon to deal with, because that payment is with insurance about $850.

Yeah, okay. So I think that might be worth exploring before you go down the route of bankruptcy, and talk to the lender about that. Let them know the situation, let them know that you're sitting on a limit, it has massive needs, you're considering a voluntary repossession. You understand there would be a balance between what it's worth today and what is owed, but that's about the best you can do apart from filing bankruptcy, and at that point they wouldn't collect anything anyway, at least now they could perhaps sell it all for parts, that kind of thing. I would get some legal counsel on this as well, perhaps consult with a bankruptcy attorney on this matter, and just make sure that you have looked at all aspects of this from a legal standpoint so you understand what you're getting into before you make the final decision. If that were to work out, and then you were to perhaps get on a much smaller repayment plan for the difference between what they can recoup with the asset itself, and then you move forward from there, I would look at putting these credit cards in a debt management program at that point, essentially where you'd use credit counseling to get these interest rates down, get on one level monthly payment that fits into your budget, and then the idea would be that you would have this one monthly payment that's going, a much larger portion of it going to principal reduction every month because the interest rates have been dropped on the credit cards. We're not replacing them with new debt, we're leaving them right where they are, but the interest rates are coming down. And then you'd obviously keep your existing car current and cover all of your other bills, and then you could just work with the lender on this amount that's owed once you turn in the car.

That would probably be worth exploring, in my opinion, prior to bankruptcy, just to see if there's a way you can work with your existing creditors to make a plan moving forward that actually makes some sense and allows you to make some progress month to month instead of just treading water. Does that make sense, though? Okay, yes, yes it does. Thank you very much. All right.

You're very welcome. I would probably see if you can find a godliest bankruptcy attorney in the area. Maybe your church could make a referral to you. You could certainly reach out to a certified Kingdom advisor on our website and ask for a referral. But somebody who could just consult with you and talk through these scenarios that I mentioned and give you some legal advice so that you know what the implications of all this would be before you do it.

But if at all possible, let's try to avoid that bankruptcy. And listen, we'll be praying for you, Dee. We'll ask our faith and finance community to do that for you as well. I know there's a lot to this, but you've got this and I'd love for you to call us back at some point along the way and let us know how it all turned out. God bless you. Thanks for being on the program today. We appreciate it.

A quick email before we go to our first break. John writes, if I have a large inheritance and tithe on it and the tithe is close to or larger than my income, will I be audited? The inheritance tax has already been paid. Well, there's not an inheritance tax.

If you give on it. And I love that idea, John. Yeah, it could make an audit more likely.

Here's the key, though. Just make sure you have all the documentation to show that this was received as a windfall, as a part of an inheritance. And you should sail right through.

Also, a good idea to use a CPA this year. Thanks for your email. We'll be right back. Stay with us. This is Faith and Finance Live with Rob West. Hey, if you hear a phone number mentioned today, please ignore that number and don't call us, because today's broadcast was previously recorded. But we think the upcoming information will help you and make you a wise steward of what God's given you.

So please stay tuned. Hey, as we think about applying God's wisdom to our financial decisions, you know, one of the key issues that we have to consider is that season of life in retirement. You know, the world would offer a definition, an idea of retirement that I believe really is not in line with the scriptural perspective on retirement. You know, this idea of retiring at 65 and getting a check and retiring to a life of leisure is a fairly modern concept.

You know, we really don't see that modeled in Scripture, except in a very narrow instance around the Levitical priests. God's Word really does not support the idea of retirement that we would see today. So as we think about it, here's a few perhaps retirement myths that I think you need to be aware of as you consider how you approach this season of life, recognizing that, well, we all need to be honoring God's call on our life throughout the whole of our life. It doesn't have an expiration, which would mean that we would retire to something and not from something. First of all, it's this idea in terms of a retirement myth that we should never stop being a part of God's workforce.

We just change assignments as we age and our circumstances change. However, we have to still plan carefully for that time when our income may be reduced or fixed because we can no longer work. Another myth is that retirement is all about us.

As believers, it's never all about us. Life, including how we live after we retire, is all about Christ and our service to Him. A third misunderstanding about retirement is that you have to accumulate as big a nest egg as possible. In fact, what's more important is to decide how much is enough and save for that and no more. Another retirement myth is that retirement planning is only for rich people. In fact, everyone should plan for the future.

Psalm 90 verse 12 says, Teach us to number our days, that we may gain a heart of wisdom. Well, wisdom includes prudent planning and saving so that we're out of debt and free to serve the Lord as He calls us in our later years. Another myth is that you'll necessarily be in a lower tax bracket once you retire. While that may be true for some as work income decreases, your retirement investment earnings could keep you in a higher bracket. Plus, the Tax Cuts and Jobs Act expires in 2025, and experts say that will likely mean tax hikes for everyone in 2026. And then a final retirement myth before we head back to the phones is that you can determine your future.

Yes, you can make plans, but be careful not to presume, which means you say, I'll retire at such and such a date with this amount of money. My spouse and I will move here and do this or that. Well, James 4 warns against this. It says you don't even know what will happen tomorrow. Instead, we ought to say if it's the Lord's will, we will live and do this or that. You know, retirement may not be a big topic in the Bible, but we can still plan wisely for our later years. So whether you're getting ready to retire or still working and raising a family, make your plans. Be on your knees before the Lord asking Him for wisdom as we submit everything that we have for His use and for His glory as well.

Hopefully that's an encouragement to you today. All right, let's head back to the phones. The Tennessee Hi Annette, thanks for calling.

Go ahead. Hi, I have a 2019 Honda CRV that I owe $18,000 on and it's financed by Capital One. My monthly payment is $529 at 11% APR. There are several companies offering for me to refinance through them. Now I'm trying to find out which one is the reputable company because I will be turned in October.

There is Autopay, Tressie, Ray Genius, Upgrade, Caribou, Lending Club and Upstart. I see. All right. How long ago did you purchase this car, Annette? In 2021.

All right. Yeah, so a good bit of time has passed. The challenge right now is I realize you're getting all these offers and they may offer some pretty attractive interest rates in the literature, the marketing material that may or may not be what you actually will get approved for and so you've got to be careful there. We're obviously in a very challenging interest rate environment right now as well where interest rates are considerably higher than they've been in the last couple of years, certainly for a long time, even decades. Up to this point, we've had very, very low interest rates and that's, of course, not the case as the Fed fights inflation by attempting to slow our economy through, among other tools, raising interest rates dramatically. So this is not going to be the ideal time.

If you can wait it out, you may be better off waiting until next year, but it doesn't ever hurt to look into it. What is your credit score? Do you know? It's right at 700. Okay. All right. Very good.

Yeah. So as long as your debt to income ratios are in line with that credit score of 700, you should be able to get it down. You're just not going to get it down where you might want it to be because typically you're going to want to save at least a couple of points. I would say you need to get it below nine in order to make this worthwhile because there are some costs involved in it.

If you can't get it below nine, I would probably wait until next year and then try this again. What you probably want to do, Annette, is look at bankrate.com just to see who has the very best loan programs right now. That's one of the websites that will allow you to search for not only bank products, but also for auto loans. So that would be one. You could also look at Lending Tree. I believe that you mentioned that one as well. Lending Tree would be a great one to find who has the best auto loan rates.

And then I'll give you one more. It's kind of a silly name, but it's a great website. It's called NerdWallet.

If you check those three, Bankrate, NerdWallet, and Lending Tree, I think that would allow you to search for the specific loan you're looking for, the age of the car, your credit score, and find the programs that would offer the best rates and terms. Again, if you can save at least two points, I would say it's probably worth moving ahead with it. Annette, thanks for your call. Back with much more on faith and finance. Stay with us. Delighted to have you with us today on Faith and Finance Live. We're not here today. Our team is away from the studio. This is prerecorded, so don't call in. But we've got some great questions we lined up in advance. Before we go to the phones, let me remind you, Faith Fi and Faith and Finance Live is listener supported.

If you'd like to be a financial partner, you can do that at faithfi.com. Just click Give. Thanks in advance. All right, let's head to the phones. To text as we go.

Hi, Maggie. Thanks for calling. Go ahead. Yes, I am wondering about the legitimacy that this is not a scam that I saw on my smartphone that I actually started signing up for, but then I don't think it was completed.

It wouldn't finish all I have is the smartphone right now. But it was in. I'm not sure who it was sponsored by, but it said life hacks you should know, especially as a senior. And it says, quote, born before 1985. Yes, quite a bit. Quite a bit before. I'm a senior for about 10 years now.

I've been retired, but dealing with severe health problems, you know. Then it says get up to $185,000 to use however you would like. Thanks to the Government Insured FACOP initiative. And then in the second frame that I saved on my phone here, it says FHA cash out guide.

And I'm wondering, is this just a refi thing? I live in a very old house. I want to get it repaired.

I don't want to make improvements to where I would no longer have my property taxes frozen. And besides, I'm not going to live here that much longer unless God does a miracle. I would welcome a miracle. I really would.

Because it came on suddenly, it was unexpected, just severe back deterioration. And I have an upstairs I have to climb upstairs to use the bathroom. It's difficult. And I've lived here 34 years and I don't have a loan on my car is old. There's no reason for me to buy a new car. I'm just going to get the old one fixed up and make it last as long as I can. Because I figure my next step is going to have to be not a nice little town home, like some people have suggested, but it's going to be long term care is what it's going to be. And I don't want to lose my independence.

So I'm staying here as long as I can. And I've saved some money up probably probably about $75,000 to make the repairs, but I'm not even sure if that will do it. So what am I looking at with this thing? Is this legitimate? Well essentially, it sounds like it is just an FHA refi cash out, which basically involves just if you have an existing mortgage. And let me ask, do you have a current mortgage on the property? No, you own a free car.

No, no, no. It's been paid off for years. Okay.

Yeah. So this would just be taking a new first mortgage on the property, which you could get typically up to 80%. You wouldn't want to, but it's just a mortgage on the property that would allow you to do a cash out where you're not paying off another loan. You're essentially taking the cash to use for improvements or whatever else you might want to do. So you know, I think the key is determining what are the right improvements to make just given what you're expecting in terms of potentially selling this down the road. Because the last thing we'd want to do is to put a lot of money into the house for things that you may not be able to recoup in a relatively short period of time. And I would perhaps talk to a realtor about those things that make the most sense to do and those things to avoid so that you can maximize the value of the home upon its sale and not sink a bunch of money in that you're not going to get out. And then at that point, we would determine based on the amount you're looking to spend, whether or not it makes sense to take a loan or in your case, because you've been such a diligent saver, whether it makes more sense just to use cash, you know, for these projects. Just based on what you know today, Maggie, and I understand you'd like to keep your independence and stay in this home as long as you can. What would you guess is the timeline on when you might need to sell and move into something that provides a little more care?

I don't know. They've told me different things. It's severe and progressive, basically osteoporosis, just degeneration of the spine.

So my mobility is greatly, greatly reduced, and there's a lot of pain. And I can't take care of this property properly. And yet, I've worked for long term care as a social worker in my life, and I know what it's like. And I know that I will not be able to do the city approved cat rescue program that I've been doing for so long that I am dedicated to do that I'm sure the Lord said, stay in it, you're gonna learn things from this that you're not, wouldn't know any other way. What it does is it gives me a platform at night when it begins to get cool and the cats come out. I run into people that I have a message from the Lord about Jesus is coming soon. I've told hundreds of people, but I'd have an 8pm curfew if I'd moved into your average, you know, long term care thing.

Yes. Well, let me ask you this, what would you be able to do? Do you have any idea how much your house is worth today?

I think I was guessing about 175,000. And it wanted to know I filled it out, it wanted to know about my credit report. Well, I don't want to sign a one year contract to hook my computer back up. And so I don't have anything but I can't check my credit report. But I don't owe anything.

I have no debt. But these are my two things I want to tell you real quick. The add on room, it's probably gonna be quite expensive. I have no idea how much yet because I can't find decent people. And some of the things like somebody just cut the trees down.

I keep running into people that aren't, they aren't competent, and they aren't what they claim to be. So I don't know yet. But re re firing an add on room, that's got to be several thousand dollars, but I think my savings would cover it. And the second thing is a lot of plumbing issues. I'm just saving them up. For one thing, I don't want to ease up a lot of time and I don't want to be negative. Well, here's unfortunately, I'm gonna have to hit a break here.

But let me just give you my thoughts on this. You know, I think given your health status, I would encourage you to really think long and hard about whether or not you'd want to do that kind of major addition to the home again, that's just going to be very costly. I mean, you're going to be very surprised at and how much that cost just given where construction prices are right now. That's a major add on that's going to run, you know, a lot of money I could use every bit of what you've saved and more. And so what I would probably do as a next step Maggie is start thinking in terms of how do I position this house to maximize the value upon its sale so that you have as much as possible to buy into one of these facilities that perhaps where you could get a townhome and still have your independence but where they allow you to step up into more skilled care along the way. Now I realize some of them can be very costly. You might need two or three hundred thousand dollars to buy in and then it's three or four thousand dollars a month just you know for ongoing maintenance and that may not be possible and so you need to find one that fits what you have available but maximizing the equity from that house upon its sale is going to be really critical so you have as much as possible to buy in again potentially keeping your independence but where you've got a path so that you know unless the Lord heals you, you can get the care you need moving forward. So I would go slow. I would consider not doing those renovations.

I'd find a realtor in the area who could come in and help you make a plan on what to repair and what not to in order to get the most out of the house that you can and then pay cash for it. God bless you Maggie. We'll be praying for you and thanks for calling. Hey folks we're going to pause now for a brief break but we'll be back with much more on today's Faith and Finance Live. 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. Why faith and finance? Well as we accept our role as stewards of God's resources, that's right it all belongs to him, well we want our faith to inform the financial decisions we're making. You see we start with our values and priorities as believers and then we look to the Council of Scripture and we say what are those principles, the big ideas and themes we can pull out of God's Word around how we manage his money and then we make decisions in the here and now with confidence. But we want our faith to be right there in the mix because we want to invite God into our financial lives. You see my experience is that our financial journey is one of the key ways God shapes our spiritual journey as we hold what he's entrusted to us loosely. So often what can be a chief competitor to lordship is the financial resources that we have, that which God has entrusted to us because as we make money and end as opposed to a means to an end, a tool, well it can compete with God for first position in our lives, we see that clearly in scripture.

Remember the parable of the sower? What choked out the word from bearing a 30, 60, 100 fold return was the desires for other things, the deceitfulness of wealth. If we pursue money as an end in and of itself, well it can absolutely compete with our hearts for our devotion to the Lord. So let's not do that, let's seek the counsel of scripture, let's live with contentment and joy, let's hold God's resources loosely, apply his wisdom, look to give generously because that breaks the grip of money over our lives and when we do we will experience God's best as we apply his wisdom. Hey before we head back to the phones, some common sense spending strategies for you.

You know managing your money wisely doesn't have to be complicated. A simple spending plan can help you track what comes in and goes out and if you feel like your spending gets out of control, perhaps you need a new approach. So with that in mind, here's a few common sense strategies for spending in two categories. The first is clothing and the second is utilities. We're tackling some of our discretionary spending items today in clothing but then also our utilities where those costs can run out of control. Alright let's tackle clothing first. You know the temptation is to buy whenever there's a sale or to chase after the latest styles or both.

You know with kids we have the added problem of sizes changing all the time. Well here's a couple of penny pinching ideas that will keep your family's wardrobe looking sharp for less hopefully. First you don't have to buy new, instead visit local thrift stores where you'll find deals on current styles as well as wardrobe basics if you have kids this is where you'll save big time. Now teenagers may push back on this but give them a budget and challenge them to find something they like.

They'll enjoy seeing how far their money can go. If you do shop retail, use coupons and loyalty programs to get big discounts. Consider consignment stores. My kids have really become quite skilled at this. You find stylish clothing there and when you're done with your gently used items you can trade them for cash or a discount.

I know these are popping up all over. We've got some great ones in our area here in North Atlanta and our kids love to go in there and find the name brand items they're looking for but where maybe 30 or 40% of the premium has been knocked off through consignment. Now I also want to encourage you to rethink your closet. Instead of filling it with clothes and shoes that you'll wear only once or twice, think multi-purpose. A good pair of slacks can take you to work or church.

A neutral skirt perhaps can work for an interview or an evening out. So focus on your core wardrobe with a few high quality basics and then let your accessories and thrift store add-ons provide maybe some color or variety. Here are a few ways to save in the utility category. First, buy energy efficient appliances. I'm not saying you should replace all your existing appliances at once but when it's time to put in that new washing machine, choose one that costs less to run. Sometimes you can get a deal on scratch and dent appliances at the big box stores. Also around major holidays that's a great time to buy appliances. Consider using LED lighting. This is when you need to replace a bulb.

It's generally worth the extra cost up front to buy the LEDs because you'll see them pay for themselves over time with much longer life and more energy efficiency. Take advantage of rebates. Often we kind of discard these pretty quickly but they can add up especially when you install energy efficient systems in your home. Check with your utility company for rebates there. Reduce your energy bill by unplugging, turning off electronics and adjusting your thermostat especially when you're not at home. We can often have those utilities churning in the background unnecessarily. Stay up to date on maintenance.

I'm talking to myself on this one as well. You know those dirty filters they can make your HVAC system work much harder which costs more and makes it wear out sooner. Make sure windows and doors are properly sealed. Make sure you're changing out those filters for your HVAC system for plumbing.

Check for pipe leaks and have your septic tank pumped out on schedule. If you have one you get the idea. Here's the bottom line. Making a few smart changes to your spending mindset and your maintenance routine can really save money in the clothing and the utilities category of your budget. So just take some time to think through those. For more information about wise ways to spend and save in all categories head to our website at faithfi.com.

That's faithfi.com and learn how to develop a personalized spending plan with the FaithFi app. Alright back to the phones as we round out the broadcast today. Let's head to Arkansas. Ken thanks for calling sir. Go right ahead. Appreciate all you do and your common sense and sharing great ideas with us.

Well thanks. I'm a real estate appraiser by profession and it is unbelievable how many people want to retire and still owe a large amount on their homes. And I'm thinking boy you're going to be tied to that forever and I did a refinance yesterday with a gentleman and he just laughed about it. He said I'm going to leave the debt to my kids.

Well I don't know that that's wise or whatever. I think it's a great thought Ken. You know my objective for folks is to be completely debt free including their home by the time they retire. We don't need to get caught up in this trap of just believing that we ought to just let this debt ride throughout the whole of our lives and we'll just get used to the fact that we'll always have a payment. Well we want to work in a way that's smart so that as we're entering retirement this largest expense that's in our budget our housing payment is gone.

And it's going to require some intentionality but there's some ways to do it. You know just one extra payment a year will knock often five years plus off your mortgage. Now you can use a bi-weekly payment plan to do that which is where you send a half a payment every two weeks.

Well there's 26 two-week periods that means 13 full payments so if you get into the habit of sending which you can do yourself you don't need to pay somebody to do this. You get in the habit of sending that half a payment every two weeks that in and of itself will you know knock years off that mortgage and help you get to that place where you are you know entering retirement with that gone. But you know I think you make a great point Ken and if we're going to balance the budget in retirement especially as we're living on less and perhaps we haven't saved as much as we thought we could or wanted to you know making sure we don't have any debt payments in this season of life is really critical. Yes sir I agree with you 100%. Appreciate again all that you do and your wife's counsel. Well thank you Ken.

Yes sir I appreciate you weighing in on the program today. You know as we think about this season of life what we're seeing is that most retirees are living on around 75% of their pre-retirement income. Now why is that?

Why only 75%? Well if we do what Ken was talking about and we really prioritize paying off our debt that major expense hopefully for not only the house but the cars any other consumer debt is gone that's a big help. Secondly well we're not saving for retirement so if you were putting 10 to 15% toward retirement obviously that's gone because now we're in retirement we're no longer saving for it. Hopefully the kids are off the payroll that's becoming less and less frequent but it's still something we need to prioritize they should be fully functioning adults by that season of life get them off the payroll obviously unless there's an extenuating circumstance where they're a lifelong dependent.

Often we're spending less on clothing and eating out because we're no longer working we're not out during the day and we can make sure to cut some expenses there so a lot of opportunities including life insurance if we've saved properly we don't need life insurance in that season of life. So I think the key for most of us is first of all let's take the right approach to retirement again seeing the calling that God has placed on our lives as something that lasts throughout our entire lives we don't have an expiration date until the Lord calls us home so we should be in service to him with whatever that is so we're retiring to something not from something but then let's be well planned what does that budget look like in retirement including the giving that we want to do and our lifestyle expenses and then how are we going to meet that and then all along the way we need to be asking the question how much is enough both for our lifestyle our monthly spending and our accumulation what we're ultimately saving let's not just save mindlessly let's be intentional and make it a matter of prayer. Before we close out the program today Nancy writes to us at askrob at faithfi.com I'm wondering what the best and most secure way is to save education money for my three-year-old grandchild. Well Nancy since you have 15 years for this money to grow you don't have to be too concerned about preservation I'd be focused on growing this money in a tax advantaged way that's certainly more than enough time to overcome any market fluctuations so I would say let's use a 529 savings plan that's my preferred approach for saving for college plus you can also use it up to ten thousand dollars for k-12 education as well for private education and you would want to look at savingforcollege.com to see which state's plan is going to be best for you but you can put in basically as much as you want you'll be able to get this growing on a tax free basis so long as it's used for qualified educational expenses you can get it back based on grants and scholarships or transfer to another child or even now coming in a few years put it into a Roth IRA if it's unused. Thanks for writing to us. Hey I hope today's broadcast has been an encouragement to you thanks to my amazing team today Amy Dan Clara and Jim thank you for being here as well Faith and Finance Live is a partnership between Moody Radio and FaithFi I hope you have a great rest of your day and come back and join us next time we'll see you then.