Teaching Kids That God Owns It All

Today's version of MoneyWise Live is prerecorded so our phone lines are not open. Do you know why ducks can't keep a secret?

It's because they always quack under pressure. Hi, I'm Rob West. Okay, sorry about that one. But since there aren't many ducks in the audience, it's safe to let you in on a few secrets for financial security, ways to finally get control of your money. Then we have some great calls lined up, but please don't call in today because we're prerecorded. This is MoneyWise Live, biblical wisdom for your financial journey. All right, full disclosure now, these aren't really secrets, but they might as well be since so many people don't do them.

If you know one of those people, maybe you can pass these along. So the first one is live on less than you earn. If you don't, there's no way to save and you'll almost always run up debt. But if you can get on a budget that allows you to live even a little below your means, you'll stay out of debt and have something to put in the bank for emergencies. Fail to do this and you're looking at a long, hard road full of financial potholes. The MoneyWise app makes setting up a budget a breeze.

At your app store, just search for MoneyWise biblical finance. Here's the next one, and it's especially important with what's been happening on Wall Street. Ignore investing so-called experts on TV, especially if they tell you to buy everything in sight when the market's up, or that the sky is falling and you need to sell now. The real secret to successful investing is to own quality index and mutual funds along with some bonds, and to hold them for a very long time, regardless of what the market's doing. Unless you're a very savvy investor or have money you can afford to lose, shy away from individual stocks.

Forecasting the profitability of single companies is too complicated for the average investor. Okay, here's our next secret for financial security. Buy term life insurance to protect your loved ones, should something happen to you. Avoid whole life and permanent policies that mix insurance with investments.

Anything but term insurance is too expensive and won't give you the returns you can get by investing separately. The next not-so-secret move is also extremely important in times of high inflation. Get rid of credit card debt. Use the snowball method to pay down the smallest balance first, and then move on to the next.

But you can only do this if you're following the first secret. Live on less than you earn. That way you'll have extra each month to retire your credit card debt. Paying interest on consumer debt is like burning money. Can you really afford to do that? Now the next item is also critical, and that is buy cars for the right reason.

Cars are expensive, and having sky-high monthly payments on a car loan is a sure way to bust your budget. Buy cars for reliability and fuel efficiency, not to show off to the neighbors. Speaking of neighbors, this brings us to the next item, and it may actually be a secret for a lot of people. There's more to relationships with those living around you than just being social. For example, a neighbor can be a source of tools you won't need to buy, as long as it's a two-way street, and you always return anything you borrow in good condition.

Neighbors can also be a wealth of information about your area, like the best places to shop and what deals are out there. Just be sure to give as much as you receive. Okay, the next one is don't touch your retirement savings.

Throughout your working years, there will be many times when it seems like a good idea to tap into your 401K or IRA. But it's a quick, short-term solution that will cause long-term pain. Instead, work diligently to build an emergency fund of three to six months living expenses. Here's another way to ensure financial security, and maybe it's a secret, too. Turn off the TV.

How will that help? Well, you won't be bombarded by advertising. Financial teacher Ron Blue likes to say that advertising convinces you to buy things you don't need and can't afford to impress people you don't even like.

The less advertising you see, the less likely you'll be to buy something on impulse that will almost certainly end up in a closet or out in the garage when the novelty wears off. As an extension of that, have you ever invested in a hobby that you later realized wasn't all that fun or interesting, like taking up golf or scuba diving? These can cost hundreds or even thousands of dollars just to get started. Instead, look for hobbies that have little or no ongoing costs.

An example might be teaching yourself how to play an instrument or taking a class on building a website or cooking. You can do many of these things online now at a relatively low cost. Okay, our last item probably won't be a secret either, but it's definitely a no-brainer. Don't gamble. That includes not playing the lottery. You have better odds of being hit by lightning twice than winning what is really just a state-sponsored numbers racket.

It's also bad stewardship. Gambling doesn't glorify God and how we use His money. All right, I hope those things are helpful to you today. We have much more on MoneyWise Live just around the corner. Stick around. Thanks for joining us today on MoneyWise Live, biblical wisdom for your financial decisions.

I'm Rob West, your host. Hey, if you checked out the MoneyWise app, we'd love for you to do that, just to go to wherever you download apps and search for MoneyWise Biblical Finance. It has broadcast archives, our MoneyWise community where you can ask questions, get answers from our coaches, all of our content there in our Learn tab with the best voices, podcasts and article from Christian Finance, and our MoneyWise money management system. We have three systems in one so you can find the way to control spending and set up your budget in a way that fits your personality. Pick the one you want, download transactions automatically, and you can even use our digital envelope system. It's all there in the MoneyWise app.

You can download it today. Again, search for MoneyWise Biblical Finance. Coming up on the remainder of the broadcast today, we'll tackle a couple of emails that have come in, particularly in the area of debt repayment and credit scores.

We received emails from Marlene and Cindy. We'll tackle those today. I'll also share a bit about auto leases. With the rising cost of cars these days, used cars up 16% year-over-year, new cars up 12% in light of some of the supply chain constraints and the challenges with the chip shortage, we're seeing sky-high car prices.

An average car payment now at $712 a month with new cars averaging over $40,000. In light of that, we're seeing a bit of a rise in the number of folks considering an auto lease. I'll weigh in today on whether or not you should consider a lease. Is that good stewardship or not?

What are the pros and cons? I'll tackle that today. Let's start with an email today.

This comes from Cindy. She says, Between my husband and I, we have close to $40,000 in credit card debt and about $40,000 in car loans. We've slowed down our spending considerably and are trying to make larger monthly payments, but I was wondering if there's a better way. We talked about consolidation, but my husband is opposed to the concept of closing the credit cards until they are paid down. Another option we can think of is getting a home equity loan. We have no mortgage or just applying for a flat-out loan from the bank. I'd love to hear your advice.

Well, Cindy, a couple of thoughts. It's generally not a good idea to pay down debt with other debt, in my view, and that's why we advise against loan consolidations, essentially where you're taking the debt and replacing it with, in this case, new debt. But often, even though the interest rate may be lower, you're extending the repayment term, which means you have the potential for this money to be paid back with even greater interest because you're bringing the payment down, you're extending it out.

It also generally does not address the underlying issue. If the debt is a result of primarily lifestyle spending, that is, living beyond your means, often using the Band-Aid, taking the pressure off, lowering that repayment amount each month is going to not require you to fix the issue that got you in the debt in the first place. Oftentimes, that pattern will continue, and I'll get a call six months later from someone that says, yeah, I've got now that loan consolidation, and guess what? The credit cards are back, and we don't want that to happen. So I would prefer you do the hard work of really first tackling that budget and really looking at what do we need to do to right-size our spending. Let's go back to our values and our priorities, then let's evaluate our spending plan in light of that and make the hard decisions, cut back, reduce living within your means and creating margin, and then demonstrating that you can do that for perhaps three to six months so you really have solved the problem it's going to require that you live on a spending plan. As to how to tackle that credit card debt, and by the way, definitely don't securitize that unsecured debt to your home through a home equity loan.

That's a big no-no. But the way to tackle it, in my view, is through a better approach called debt management. Our friends at Christian Credit Counselors can help you. Essentially, they have agreements in place with the major credit card issuers to give you a much lower rate so you can pay them off 80% faster. You'll make one monthly payment to Christian Credit Counselors. They take care of the rest. The accounts are closed, so if you want to keep one account open, you could keep that out of the program and you'd find out more at christiancreditcounselors.org.

I think the key for your husband to understand is that although those accounts will be closed, you'd still have access to one if you needed it, but the key is let's try to get you out of debt as quickly as possible, but do it in a way that's actually going to be sustainable and allow you to continue to move forward and never again be in credit card debt. So, Cindy, we hope that helps you today. Thanks so much for checking in with us, and God bless you. If you'd like to send a question to our team, you can do that at questions at moneywise.org.

You'll get a personal response from one of our MoneyWise coaches, and many of them will find their way on the air. So, we'll look forward to hearing from you. All right, we're going to head to the phones. By the way, our team is away from the studio today, so don't call in, but we've got some questions that we lined up in advance.

We're going to begin today in Texas. Cindy, you're our first caller. Go right ahead. Yes, sir. How are you doing? I'm well, thank you.

Thank you for taking my call. My situation is that my husband has always taken care of our investments, our finances, everything like that. And, well, unfortunately, he has filed for a divorce, and so we were trying to mediate everything without going through an attorney. And the bottom line is he's going to keep all of the investments because he's used to doing stock market and everything. And he's given me all of the real estate, which is five houses, and they're all together in one community on a lake. And I'm feeling very overwhelmed, and I don't know what to do with all of them. I don't know when to sell or should I not sell.

They're all paid for. So should I just pick one? I mean, I just don't know what to do. I'm really overwhelmed.

Yeah. Well, I could certainly understand, Cindy, and our heart breaks for this situation. We know that God is in the midst of it. He has not abandoned you and will not. And so that's your starting place is to turn to him. Put your trust squarely in the Lord. Ask him to give you wisdom and guide your steps. Cindy, you're going to get through this, but you need some godly counsel to do that. I appreciate you calling in here today. I'll get you pointed in the right direction.

But we also need somebody who can walk alongside you. Let's deal with the most immediate issue first, and that is your own cash flow and ability to keep your bills paid. You know, assuming this was divided equitably and, you know, only you would know that and whether or not this was the right decision to do this outside of the courts. These are illiquid assets.

Now, they can be converted to liquid assets by selling these homes, but they're not going to generate necessarily unless they're rented out any cash flow in the meantime. So are your bills covered and what are your income sources? Well, my income for I'm 64 years old, and so he was saying I can either, you know, start drawing Social Security now or I can wait till whenever I need to. But my sources of income are he's going to pay me $1,500 a month temporary spousal support. And then I believe my Social Security would also be around $1,500 a month. Where I do live, many people do the Airbnb thing, so that is one option if I decide, you know, that would also generate some income. So that's pretty much all my income.

Yeah. But obviously you're not claiming Social Security now. So the first question would be, is that $1,500 a month going to be enough to cover your expenses right now? Let's do this. I'm going to take a quick break when we come back on the other side of this. We'll talk about where you go from here in terms of looking at your income and expenses, but then also how to think about these homes that you now own as well. This is Money Wise Live biblical wisdom for your financial decisions. Cindy, you stay there and we'll be right back with much more. Stick around. It's great to have you with us on Money Wise Live today, but unfortunately today we're not live. We're prerecorded and therefore won't be taking your calls. However, we've lined up some calls in advance that we think you'll find helpful.

So stay tuned and enjoy the rest of the program. Cindy called from Texas. She's holding the line.

We spoke just before the break. She's unfortunately going through a divorce at 64. She's really never been responsible for handling the finances. Her husband was really the one who did that, and so now she's got a lot of questions about how to move forward.

It sounds like, Cindy, you all were on the track, if you haven't already, to settling for how the assets of the marriage would be divided and then what the financial, the monthly marital support would be from your husband. But you've done that outside of the court process. You've just come to that conclusion between the two of you. Is that right? Yes, we did.

Yeah. So I guess that would be my first thing is just I think it would be in your interest, and this is just my counsel. You obviously need to make the decision. It'd be in your interest to at least consult with an attorney about the settlement that you are talking about. It doesn't mean you have to challenge it. It doesn't mean it's not equitable, but I would want to make sure that it is. Is that an appropriate amount of monthly marital support given the income that he has, and is the division of assets, you taking the real estate, him taking the investment portfolios, is that appropriate? Especially given your lack of awareness of the finances just because he's been the one handling it. And I'm not saying he's doing anything that's not appropriate, but it would be at least worth I think having somebody who's representing your interests take a look at that before you make this final decision. But what are your thoughts on that? I do agree with you, and I did give a significant amount of consideration in doing that, and I did meet with a couple of attorneys. But, you know, they're very expensive.

I mean, they were like, OK, for $7,000 you can retain me. And I was just I just kind of got to the point that maybe instead of giving the lawyers all this money, if we go slow at it and and level headed, maybe we could get there on our own. Yeah, well, I don't think it has to be terribly costly because you aren't necessarily going to go through the process of, you know, going through court proceedings. I think you just need somebody who's going to look this over and understand exactly what assets are there and what is equitable, both for the support as well as the division of assets. So I would strongly encourage you to do that, perhaps find somebody who would do that, you know, on an hourly basis just to consult with you. And I think the other thing you need is a certified kingdom adviser, a financial adviser who could really help you on that side of the equation.

Because here's the next step is you've got to determine how's the best way to proceed forward. For instance, there's a couple of options on Social Security. One would be, depending upon his age, you might be able to take your, you know, up to half of his Social Security and let yours, if you have your own work record, continue to grow. I'd love for you to delay that as long as you can because every year you wait on taking your portion, you increase that by 8% a year and that's for the rest of your life.

So it'd be great if you could delay that. Obviously, you'll have that monthly marital support, whatever that's going to be. And then beyond that, I think the question is, do you want to become a landlord? Do you want to get in the business of essentially taking on a full-time job of managing these five properties and renting them out? Now, you could have a management company, but there's still a lot of oversight and involvement that you would need to, you know, have. And you'd really need to decide, is that something you want to do? These could likely cash flow very well, especially since you own them free and clear. But you're going to want to make sure since they're all in one area that, you know, the rental options are good there. You mentioned a lot of Airbnbs. What kind of competition do you have?

What kind of monthly income could you generate? And that could be a solution for allowing you to delay taking Social Security as long as you can. But that evaluation needs to be done. And you need to understand what you're getting yourself into in terms of ongoing involvement versus liquidating these properties, which now is a great time to do it. The housing market is sky high, even though it's been cooling as of late. And perhaps converting these to liquid assets that could then be invested for what we call a more passive income stream.

So investments that generate dividends and interest and appreciation that could be taken out as a monthly income stream, where the idea would be just to protect and preserve the principal balance, but get you a monthly check, what we call mailbox money. And you wouldn't have to be involved in the oversight and the ongoing involvement of being a landlord. So I think those are the decisions you need to consider.

There's no need to be anxious. It sounds like you have plenty of assets and a good plan, but you just need wise counsel to walk alongside you. So as a next step, I'd think about what I've shared and then I would seek some legal counsel as well as a financial advisor. As to the financial advisor, we recommend the Certified Kingdom Advisor designation. So you can head to our website at moneywise.org, click find a CKA, do a zip code search and interview two or three.

The first thing they're going to do is help you get a good understanding of what are your monthly expenses, what income sources do you have, and then what are all of the assets that you have available, and then help you decide how to proceed moving forward in light of what you have. Does all that make sense? It does make sense.

And I was just wondering, the thing that makes me wonder the most is the precarious times in which we live. Because, you know, how do you find an administration, they keep, I forget what you call it, but they, if people get behind on their rent, just let it go on and on and on and on. Do you know about that? Well, you have the ability to initiate an eviction process. So there's, you know, you have legal grounds to, you know, be a landlord, rent these properties out, and if somebody doesn't pay to file eviction proceedings, you know, some of the things that were put in place during COVID have expired.

And so, you know, you're in control there. So I wouldn't have concern with you being a landlord. What's most important to me is, does that make sense in terms of your overall financial situation? And do you have the time and the expertise to actually, you know, do that on a day to day basis?

Or would you rather a more passive approach? So I think that's where some wise counsel would really help. I'm going to ask our MoneyWise community to be praying for you. I certainly will.

I know this is a challenging time, but the Lord is going to walk with you, Cindy. If we can help further along the way, let us know. We'll be right back. Sharon, coming your way next on MoneyWise. Stay with us.

Today's program is prerecorded, so keep that in mind when you hear phone numbers. We're going to pause for a brief break now, but Rob West will be back in a moment with more MoneyWise Live. How should we as Christians think about investing? What if we could invest our money in a way that aligns with what we believe? At Eventide, we believe it is possible to love God and love our neighbor in the very practice of investing. We design investments for performance and a better world so you can invest for the future with a sense of wholeness and purpose. We call this investing that makes the world rejoice. More information is available at investeventide.com. For 30 years, Soundmind Investing has been helping Christians reach their financial goals with step-by-step guidance for investors at every stage, from those just getting started to those getting ready for retirement. Through scriptural principles and practical suggestions, SMI offers financial wisdom for living well.

More information, including a short video webinar on profit and peace of mind, no matter what's happening in the market, is available at soundmindinvesting.org. Ugh! I can't do it!

I missed again! I'll never get it right! Children need to believe that their future is bright. Learning to overcome, defeat, and negative encounters is essential. Help your children and grandchildren by reading Kathy Cook's book Resilient Kids, Raising Them to Embrace Life with Confidence, practical advice and biblical strategies to help raise thriving children who will recover from disappointment. Pick up your copy of Resilient Kids at moodybooks.org. So you're a college grad, but the enthusiasm of college life has faded, and the workaday world, it's kind of boring.

What now? Find answers in 101 Questions You Need to Ask in Your 20s, valuable advice and great humor. This book will help you feel better about your 20-something life and help you score a few more wins.

101 Questions You Need to Ask in Your 20s. Learn more at moodypublishers.com. How much do your kids or grandkids know about God's way of handling money? It's one of the most important things they can learn about in life, and there's a fun way to do it with the Secret Slide Money Club book series. In this three-book series, agents race to save their friend from the agents of albatross while learning to give, save, and live God's way. You can request your copy of this book series with your gift of $25 or more to Money Wise.

Just visit moneywise.org. I'm Miriam Neff, and I'm Valerie Neff-Hogan with Wise Women Managing Money. Fraudsters target isolated people. I'm contacted regularly by widows who are targeted in their grief. I say, do not respond, answer the phone, or agree to meet.

Period. Make sure you have a trusted person with common sense who has your back for feedback. Let them know this, quote, offer and its details. Also, make sure you have a financial planner that you vetted, is recommended by people you know and trust, and who listens to you. Your needs, questions, and concerns.

Invite a trusted friend to go with you for meetings with lawyers, financial planners, and any other meeting. An old TV show, American Greed, captured the problem. Greedy fraudster.

Vulnerable target. Usually, their too-good-to-be-true offer is fraudulent. This feature and more at wisewomenmanagingmoney.com. We're so thankful you've chosen to join us today on Money Wise Live, biblical wisdom for your financial decisions. This is the program where we recognize that our financial journey is in many ways tied to our spiritual journey. Often money and the things that money can buy is a competitor to lordship. So we want to hold what we have loosely, recognizing God's authority and ownership.

Our role as steward to be found faithful, applying his principles that we find in his word to the decisions and choices we make every day. Let's do that together. By the way, we're away from the studio today, so don't call in, but we've got some great questions that we lined up in advance. Back to the phones we go to. Missouri, Sharon, thank you for calling. Go right ahead. Yes, sir.

Thank you for taking my call. I have a question about I-bonds. When my grandson was born 19 years ago, I started buying those I-bonds for him.

I haven't really accumulated a whole bunch, but I had heard at that time that those would be good. But I would like to just go ahead and cash them in now. I think I've had enough time to cash them in.

And I don't know how to go about it. I don't know. Do I just go to the internet and put in I-bonds or something?

Yeah, it's a great question. Now, on the I-bonds, the interest will be paid at redemption. So it's been accruing essentially in the background, so you wouldn't have realized that along the way. And they weren't paying a whole lot until recently, but right now they're actually paying a tremendous rate. So unless he just really needs the money, you may want to think about hanging on to them a bit longer before you redeem them, just because you've been holding them all this time, and now we're finally in this period where you're getting a phenomenal rate of return. These are paying 9.62% right now, and that's going to adjust again in November. But you're not going to find a return anywhere near that with the level of safety that these have. So that might be the only reason to consider. I think these will begin to tick back down.

I think they'll still pay better rates than you've seen over the last several years in the future, but we're not going to see the 9.6% sustainable because inflation has peaked based on everything we can see today, and it's beginning to come down. So I guess that would be the first question, and then we'll talk about how to redeem them. Would you consider holding on to them just while this great rate is being paid? Well, I don't really have that many, and I guess they're in his name there. I'm not sure they're in my safe deposit box at the bank.

I guess I just didn't know if he wouldn't know how to go about taking care of them if something were to happen to me. Yeah, so a couple of thoughts on that. So you have the paper bonds, is that right? Yes, sir.

Okay. Yeah, so what you can do is actually you can get them redeemed or you can convert them to the electronic bonds, and then you can add him as a beneficiary to the account. Essentially, if you want to redeem them, you could go to treasurydirect.gov. That's the government's website that would allow you to look up each of these individual bonds, and you could see about converting them to the electronic bonds and then adding him as the beneficiary. That would then ensure that at your death it goes to him, and you can hang on to them. If you wanted to just redeem them, you could do that as well through the treasurydirect.gov website, and that would be the place to go.

I may not. If they're in his name, I probably can't redeem them, can I? Well, they're probably not in his name. They would have had to have been in a custodial account as a minor. So they're likely in your name. You'll find out when you go to the website and put in the CUSIP numbers.

So at that point, you could either keep them in your name, add him as the beneficiary and hang on to them, or go ahead and initiate the process to redeem them. But all that information will be available at treasurydirect.gov. Okay. Well, that's where I wasn't for sure where to go, and I knew our bank.

I worked at the bank, retired from there, and we only did the Series E bonds, cash flows in. Right. And they're moving it all online now. Right.

Everything's that way. I guess I'm just a negative person the way I think, because I don't think anything's going to last, and I would like to just let him have them. He could use a new vehicle, but I don't know if he had enough of that, but to help with it.

Sure. Well, you certainly could do that, and you can make a gift to an individual of up to $16,000 a year as the annual gift exemption. If you give more than that, then it just goes against your lifetime gift exemption of up to $12 million. So you're never going to come close to that. So if you get over $16,000, you're going to have to file something with the IRS just to let them know that you gifted more than that in a single year.

But you certainly could do that, get those redeemed, make that gift to him, and then he'll be able to decide how he wants to proceed at that point. All right? All right.

I thank you for your help. Yes, ma'am. Happy to do it. Thank you for your call today. To Texas, Dan, thanks for calling. Go right ahead. Well, good morning. I've been looking for about a year now. It's my first time calling in.

Great. My mom recently passed away, and she left a trust of my stepfather. My mom will be married, and it's for about $100,000. But I'm 67 years old and retired, and I guess it's been in a trust for like 10 years, and I was just wondering, how do you get out of the trust?

He talked about 10 percent you can get up front the first time, and I just don't know where to do or where to go from there. Yeah. Are you the successor trustee on this, Dan? I'm just a beneficiary. My sister is handling the account.

Okay. And what does the trust say in terms of how the assets are distributed, because really the trust documents would guide that as to what triggering events. But your sister would be the one who handles the dispersion of these assets based on the information in the trust that indicates how the assets are to be distributed beyond the death of the grand tour. Really? So he could be stuck in the trust for the rest of my life, and there's nothing I can do about it?

No, no. Typically, a trust is used to hold assets while somebody's alive, and then in the event they're incapacitated, a successor trustee would take over. But oftentimes, the trust will indicate how it's to be distributed upon the death of the grand tour. That living trust becomes irrevocable at that point, and then typically based on triggering events, people reaching a certain age or something like that, they would then receive their portion of the trust as the beneficiary. So you just need to find out what that trust indicates as to how those assets will be distributed and when. You need to get a copy of that trust document to see what's supposed to happen. Have you seen that? I have not. My sister is pretty close-lipped on this. Okay.

Well, I think it would be very appropriate, Dan, for you to say, in light of your mom's passing as one of the beneficiaries of this trust, that you'd like to just see a copy of the trust just to review it so you can understand what the next steps are, and it'll all be laid out in the trust documents. Okay. Hey, thank you so much for your help. I do appreciate that. All right, Dan. God bless you, my friend. Thanks for calling today.

We're going to take another break here in just a moment. You know, folks, as we think about our wealth transfer, it's really critical that this last stewardship decision we make is well thought out. We want to give careful attention to stewarding God's resources not only in life, but in death, and that's a big one. And starting with having a valid will in place. You know, so often folks will not have that. They just think, well, I don't need that. I'll deal with that down the road. I'm not going anywhere anytime soon.

Well, that's not the right approach. We need to have a will. If you need a trust, there are places for that. But usually a simple will is what most people need. And then thinking about, is the next steward chosen and prepared? Am I going to give my resources to the work of ministry, to God's work, or to heirs? And what will that do to those heirs?

Are they ready to handle them? The book Splitting Heirs is the best resource if you're thinking through those issues. Pick up a copy today, and we'll be right back on MoneyWise. Stay with us. Thanks for joining us today on MoneyWise Live, biblical wisdom for your financial decisions. You know, when we recognize God owns it all, and then we live within our means, and avoid debt, and set long-term goals, have some margin, and give generously, at that point we've put ourselves in a position to experience God's best as stewards of His resources. Well, here on this program each afternoon we explore the Scriptures and try to help you apply His principles to your financial decisions and choices. Now, don't call in today, because we're away from the studio, but we've got some wonderful folks that we lined up in advance.

So let's get right back to the phones. Lupe in Arkansas, how can I help you? Yes, my daughter has an account for my granddaughter since she was a baby, and my granddaughter is now six years old. My daughter started this fund for her when she was, this savings account when she was born, to try to get ahead, like for college, later down the road. Does she need to put that in something different to make her money grow faster?

Yeah, I would. A savings account has paid next to nothing for a long time, even with interest rates up. It's a little better now at one and a half percent with an online savings account, but that's still not going to allow this money to grow like it needs to for a six-year-old if you're eyeing college, which is 12 years away. Let me ask you though first, Lupe, does she want to earmark this specifically for college-related expenses? Because if so, there's a very specific type of account I'd like to recommend, but it will limit the money to be used for qualified educational expenses.

So that is not only tuition, but room, board, fees, those types of things. Do you believe she wants to earmark it specifically for college? She asked about maybe, because she said one day she can use maybe this for college or later on down the road when she gets to be 16 or something, maybe get her a car. Yeah, yeah.

Okay, well that's the next decision to be made. If she wants to earmark it for college, a portion of it or all of it, and that doesn't mean she has to continue to add to it, maybe then she starts saving separate from this with future money that could be more generally available. But if she wants to use it for college, I'd use a 529 college savings plan. This is essentially a plan, Lupe, again it's called a 529 college savings that comes from the tax code in section 529. But basically it allows her to put the money in. It would be named for her daughter to be used for qualified educational expenses.

And it acts like a Roth IRA where essentially the money goes in after tax, it gets invested, there would be mutual funds inside that 529, stocks and stock mutual funds that the money would be invested in. And then it would grow over the next 12 years. It could automatically get more conservative as her daughter gets closer to college so that it's not, you know, there's not a large downward, you know, trend potentially the year before she goes to college. And therefore, she's lost a bunch of money right as she's pulling it out. But all of that growth happens tax-free as long as she uses it for qualified educational expenses. And one of the other benefits is there's actually, if she has the ability to seek financial aid, it's handled in a way that's helpful for financial aid because it's considered an asset of the parent, not the child, which the parents' assets are much lower than the child's assets in terms of calculating the expected family contribution. The other benefit of the 529 Lupe is that if she got scholarships and grants, she can pull the money out penalty-free based on, you know, equal to the amount of scholarships and grants she receives so that money is not locked up there for college if she doesn't need a portion of it. So that would be what I would recommend and I would use the website savingforcollege.com to determine the best 529 for her. Depending upon the tax treatment and the performance, every state has a 529 and the Arkansas 529 may not be the best one for you all.

It may be better to go into another state's 529. But once you complete the information at savingforcollege.com, it will recommend the top 529 plans for her. If she wants to keep it more generally available for any purpose, like to be able to give it to her to buy a car or an apartment after college or something like that, then I'd recommend she move it to probably a robo-advisor. So this is essentially where it would stay in her name, your daughter's name, earmarked for her daughter, but it would not go into her daughter's name. It would stay in your daughter's name and then she could move it into stock investments that would allow it to grow over time and she would just know that this money is earmarked for her daughter. But getting this money working for her over the next 12 years is going to make a lot more sense and give you the potential to see this grow at a much faster rate than just leaving it in the savings account.

Yeah. Okay, thank you so much for all that info. You're welcome. Happy to do it. If you're savingforcollege.com to evaluate the 529 and if she wants to keep it out of the college account, then I would use either the Schwab Intelligent Portfolios or Betterment. Either of those would be great options to get this invested at a very low cost in some very broad indexed investments that would just capture the broad moves of the market. So I would give her that information.

If we can help her further, let us know. Thanks for your call today. Before we go back to the phones, I mentioned we've got a really interesting dynamic going on in the car market right now. Used cars up 16% year over year. New cars up 12%. The average monthly car payment now $712 a month. That's because of the supply constraints. Most dealerships having trouble getting new car inventory and largely that's due to chip shortages. As a result of that, more people are looking at auto leases. How should you think about a lease?

Well, let me give you some thoughts. According to Kelly Blue Book, the average price paid for a new vehicle in the US hit a record $48,000 in July. So I would wait before buying a car if at all possible. In terms of leasing, back in 2017, 37% of new cars on the road were leased.

Following the pandemic, that dropped to $25, but it's certainly becoming more attractive with the cost of cars these days. So if you're in the market for a new car now and you can't wait until prices come down and you're considering a lease, well, the benefits that people usually look to for these are number one, the down payment and the monthly payment on a lease are usually lower than what you'd pay on a car loan. So from a cash flow perspective, this makes the lease look good. And with a lease, you get to drive a new car every few years with most regular maintenance and repairs being covered under the contract. The lower monthly cost on the lease means you can choose a better car than you could otherwise afford with updated safety features and higher end options.

And you don't have to worry about the trade in value or selling your vehicle. Now, those benefits are what you'll hear about in the lease ads, but don't be fooled. There are some serious drawbacks to leasing. The money you pay for a car lease is like paying rent on an apartment.

In the end, you don't know anything. And over time, a lease will cost more than a loan would. Leasing can become a never-ending treadmill of monthly payments with high fees for breaking the contract or buying out. And it usually limits the number of miles you can drive per year and there are fees for excess wear and tear. Often the maintenance coverage does not include tires, so you're on the hook if those need replacing. And you may even have to pay a fee at the end of the lease.

So I think you can see where I'm going with this. From a stewardship standpoint, leasing a new car is typically not the wise move for you. Plus, with a lease, there's a temptation to choose a better car than you can really afford. This can be a matter of self-indulgence or even pride. Let me take you to Proverbs 21 17. He who loves pleasure will become a poor man.

And then Proverbs 16, pride goes before destruction and a haughty spirit before stumbling. So when it comes right down to it, folks, the most economical way to drive is not to lease a new vehicle and not even to borrow if you can, but save up your money to buy a used car for cash and keep it for a long, long time, as Howard Dayton likes to say, until the wheels fall off. Buying a new car can make sense, too, if you're able to pay cash or at least put a significant down payment down and then drive it for many years. By the way, if nobody bought new cars, well, soon we wouldn't have enough used cars to go around.

So we still do need to have a place for buying new cars. All right, I hope that helps. Let's get back to the phones and wrap up for the day. South Carolina Carol, thank you for calling.

Go right ahead. I was wondering, me and my husband, I have retired and he has not. He's still working. And I have about $50,000 in the retirement at the United Methodist Church. And I'm wondering if I should use that to pay off our house or should I keep that because I do not have life insurance.

And I was just wondering what was the best way to handle that. We do not have any other debt. OK, very good. So you said you're already retired. Your husband is still working. So you've referenced the life insurance, but then also the retirement assets and the idea of paying off the house. Let's start with the house. On the current trajectory you're on, when would the house be paid off if you just continue doing what you're already doing? Well, it would probably be about four or five years. OK, four to five years.

All right. And if something were to happen to your husband, what would you live on? Have you all accumulated enough in the way of assets other than this $50,000 for you to live on or would you just be living on Social Security? No, I would have his retirement. He works for the state, so I would have that. OK, and that would cover your bills? Yes, sir, it would.

OK, very good. So I think the key here is, you know, does it make sense to hang on to the $50,000 or pay off the house? I love being debt-free, but if you guys are on track to have this paid off in four to five years without taking the $50,000 out of the retirement, I would probably do that because this account is probably down with the market. That would give it time to recover. Plus, as you take it out, it will all be taxable.

So unless you just have a real conviction from the Lord to be debt-free as soon as possible, I'd stay on your track to pay off the house in the next four to five years, which is going to take your biggest expense out of the equation, and let's just let this $50,000 continue to grow. I hope that helps you, Carol. We appreciate your call today.

We're out of time. Well, folks, that's going to do it for us today. Thanks for listening. MoneyWise Live is a partnership between Moody Radio and MoneyWise Media. This is where God's word intersects with your financial life. I want to say thank you to Jim, Amy, Dan, and Gabby, and thank you for being here as well. Hope you'll come back and join us next time for another edition of MoneyWise Live. We'll see you then.