How Your Spending May Save Your Retirement

Before I know the plans I have for you, declares the Lord. Plans for welfare, not for evil, to give you a future and a hope. Jeremiah 29, 11.

I am Rob West. Countless believers have gone to that verse for comfort over the centuries, and not a few probably about their finances. I'll talk with Mark Biller today about a more hopeful future for your retirement savings. Then it's on to your calls at 800-525-7000.

That's 800-525-7000. This is MoneyWise Live, biblical wisdom for your financial journey. Well, it's always a comfort to have Mark Biller with us. He's the executive editor at Sound Mind Investing, an underwriter of this program.

At SMI, they match and watch and read the financial forecasts, and they do that so you don't have to. Mark, great to have you back on the program. Thanks, Rob.

Good to be back with you. Mark, we always advise people to take what the so-called financial experts say with a huge grain of salt, and that's especially important with retirement savings, isn't it? Yeah, it really is, Rob. You know, if you read enough of these retirement headlines, you could get the impression that you'll never be able to retire. You know, we mentioned a couple recent studies that came across our newsfeed in this article that we're going to be discussing today. Both of these came from Fidelity Investments. The first one that jumped out to us said that a 40-year-old with household income of $100,000 should have three times that amount already saved for retirement at age 40. By age 60, they were saying that multiple should be eight times household income.

Then there was a second one that jumped out to us that said that a 65-year-old couple that's retiring today should expect to spend $315,000 for health care over the course of their retirement, and that doesn't include the potential need for nursing home or other long-term care. So, as you know, Rob, you know, at SMI, we're all about prudent planning and preparing. We think it's a biblical thing to do.

We think it's a wise thing to do. And I'm not even suggesting there's anything wrong with these studies that they're flawed or inaccurate in any way, but the problem that I have when I see these kind of numbers is they can look so unattainable to people that it causes them to just kind of throw in the towel and give up hope of even trying to save for retirement. Well, I certainly resonate with that, Mark. We hear it in the calls that we get on this program each day, and I'm encouraged to hear you say that you don't think those estimates tell the whole story.

So what's missing? Yeah, you know, what's missing from a lot of these studies is context, you know, what assumptions is Fidelity making and coming up with those numbers. There's also the way that the results get framed.

You know, a lot of times these studies and the headlines that accompany them, they're really intended to kind of deliver a jolt to the reader, you know, really grab their attention. So, for example, that $315,000 healthcare spending number I just mentioned, if you look at a normal retirement of 20 years or so and break that number into a monthly figure, it comes out to about $1,300 a month. Now that's a lot, but it's probably not totally dissimilar to what a typical worker is paying for healthcare right now between their health insurance premiums, maybe they're making contributions to a health savings account, they've got out-of-pocket costs and so on.

So the point is, it looks like an enormous number, but when you break that down, maybe the detail isn't quite as bad as it looks. But the biggest thing, Rob, that I think is missing from these retirement planning discussions is the fact that for most people, their expenses are likely to be less in retirement than they are when they're working. And even a step beyond that, their expenses are likely to decline over the course of their retirement. And that's a big deal if you're taking the default rule of thumb advice of taking your pre-retirement spending, cutting that by some multiple, 90% of your retirement budget, and then we're going to increase that by some inflation multiple every year through retirement. So that can be a really big adjustment as well.

Well, there's no doubt about that, and that's encouraging to hear. Well, we'll dig deeper into that. What expenses might we have? How much lower would you expect them to be?

And what are some of those expenses that will not only decrease or disappear after retirement, but which will actually increase? We're taking your calls and questions in these first few segments of the broadcast from Mark Biller today on retirement and investing. What's on your mind? We'd love to hear from you.

800-525-7000. We'll be back to discuss this topic and much more just around the corner. Stay with us. Thrilled to have you with us today on MoneyWise Live.

I'm Rob West, your host. Joining me today, Mark Biller, executive editor at Sound Mind Investing and underwriter here at MoneyWise. We're discussing a recent article on the SMI website and featured in the SMI newsletter. It's entitled, How Your Spending May Save Your Retirement.

You'll find it at soundmindinvesting.org. And just before the break, Mark was sharing that, you know, when folks hear that they need eight times their income in the bank by 60, age 60, in order to be ready for retirement or on track with your savings, that combined with a new study out saying you might expect for the average 65-year-old couple retiring today, might expect to have to spend as much as 300,000 or more for health care. While these may be good points of reference, they don't tell the whole story. And Mark, you said context is the key. Help us understand what you mean when you say our expenses may actually decrease when we retire.

Sure, Rob. So many expenses that people have during their working years and while they're raising a family, they don't continue either at all or at least to the same degree once they're retired. And that's really the reason why a lot of financial advisors will use as a first step, they'll take a person's current working budget and then they'll subtract some margin, 10%, 20%, something from that, as a first step of coming up with an appropriate retirement budget to reflect that some of these expenses either go away or diminish. The thing that we really want to dig into here and what this article is about is that while those rules of thumb are fine, the actual change in expense level can vary a lot from person to person. So it's really important to consider how your specific expenses are likely to change once you retire.

Yeah, that's a great point. By the way, before we dig further into this, let me mention we've got lines open today. We'll be taking your calls in the first portion of the broadcast on retirement. What are you experiencing? Do you have questions about how you can plan for and navigate this season of life or what about your investments as you head up to or in the season of retirement? We'd love to hear from you, 800-525-7000 with your questions for Mark Biller.

All right, Mark, let's dig a layer deeper. What are some of the most common expenses that tend to decrease or even disappear after retirement? Yeah, well, the most obvious group would be those that are directly associated with being employed. So once you retire, you're not going to have to pay payroll taxes anymore. You might also save on other directly work-related costs like commuting, work clothes, that kind of thing. Then if we go one layer beyond that, a lot of folks, as retirement is approaching, a lot of their budget is going to saving, saving for retirement.

Of course, after you retire, you don't need to do that anymore. You're now into spending that money you've already saved. So you can look at any money that you're putting into a 401k, another work retirement plan, or an IRA, and you can subtract that out of a retirement budget as well. Another big category are kid costs. So whether you've got kids at home now or maybe kids in college, you're saving for college, maybe you're paying off some college loans for your kids. All of those things, assuming that the kids are done with college and are out on their own by the time you retire, that's another big category that you can take out of that retirement budget.

Then the last big one is housing. One key pillar that we often refer to here at SMI is you really want to try to enter retirement with your mortgage paid off. If you are on track to have that done by the time you retire, that's another big payment that people can take out of their current budget when they're thinking about their retirement budget. Just one other note along those lines, you know, a lot of retirees downsize in retirement at some point and that can also reduce some costs like taxes, insurance, maintenance, utilities, those sorts of things.

Yeah, really helpful. In just a moment, we'll begin taking your calls from Mark Biller today on retirement and investing 800-525-7000. How much we spend on various things though, Mark, will actually change during the course of our retirement, right?

Yeah, it will and I thought it was really interesting. A piece that we put in this article is based on a book written by a financial advisor, Michael Stein, and he describes these three very distinct phases of retirement that he calls the go-go years, the slow-go years, and then a little more ominously the no-go years. And what he's talking about, Rob, is in that first phase, which is roughly ages 65 to 75, that's the real active phase of retirement.

When retirees are traveling, they're dining out, they're doing other activities, and then that kind of gives away typically age 75 to 85 as they move into those slow-go years. Those years are marked by a pretty marked decrease in spending to the point where really those expenses don't even keep up with inflation. And then of course the last phase, those no-go years, age 85 on up, typically very little travel, generally modest discretionary spending.

And recent government statistics really back this framework up. So if we compare the households in the pre-retirement category, that's age 55 to 64, with those new retirement retirees, the age 65 to 74 year olds, those new retirees on average spend about 19% less than the pre-retirees. Then as we go from the first initial phase of retirement into the later years, spending tends to decrease by another 20% or so. So again, just to be clear here, pre-retirement to early retirement, drop of about 20% in spending. Then early retirement to later retirement, another drop of about 20% in spending. So that's a really big deal, again, if you're looking at kind of a static increasing your budget by inflation throughout retirement kind of a model. Yeah. And so obviously that can make a huge difference just as you're thinking about it, and it really requires us then, Mark, to take a look at our actual budget prior to retirement. We need to try to anticipate what that budget's going to look like because at the end of the day, the only thing that matters is what is my spending going to be and do I have the income to match to it, right? Yeah, that's absolutely right.

And that can vary so much from person to person that it really is very important to dig into your own personal numbers and not just base it on kind of a rough rule of thumb. Yeah. And then obviously we want to have the investments that match that with whatever assets we've accumulated. All right, Mark Biller with us today from Sound Mind Investing. We're talking retirement today. Perhaps you don't need as much as you might have thought during this season of life, and there's actually some numbers that may increase.

We'll increase. We'll tackle those plus your questions just around the corner. By the way, if you're looking for more biblical resources related to retirement, one powerful tool is MoneyWise.org. You can do a simple search there for retirement. Believe it or not, we have more than 600 articles, videos, and podcasts that offer wisdom and practical help on the subject of retirement from the best content providers in Christian money management, including Sound Mind Investing, and it's available to you at any time.

Simply go to MoneyWise.org. The article we're talking about today from SMI is entitled How Your Spending May Save Your Retirement. If you'd like to get the full read, you can do that on their website at SoundMindInvesting.org. When we come back, we'll dive into your questions.

What do you want to know today from Mark Biller about investing or retirement? We'd love to hear from you. We have a few lines open. 800-525-7000.

That's 800-525-7000. Back with Mark Biller just around the corner. Stay with us. We'll be right back. Great to have you with us today on MoneyWise Live. I'm Rob West, your host. Joining me today, Mark Biller, executive editor at Sound Mind Investing and underwriter of this program. We're talking about retirement.

How much do you need to save and what will your expenses look like during that season of life? Let's head to the phones and take your questions today. A few lines open. 800-525-7000.

We'll begin today in Ohio. WCRF, Paul. Go ahead, sir. Hey, I'm wondering, you know, these figures are intimidating, but if people have a pension and their social security, how much in terms of cash is your pension worth? Yeah. Your thoughts, Mark?

I love that question. It's long been said that retirement is kind of like a three-legged stool and Paul nailed the first two legs, the social security leg, the traditional pension leg, and then the difference being made up by our investments. One of the the challenges of recent years is that fewer and fewer people have that traditional pension leg.

So for those who do, that's certainly a big help. For those that don't, their personal savings has to make up a little bit more of that shortfall. But really, the main thing we're driving at today is trying to get folks to understand that the more detail they can can bring to their own personal retirement budget, which things are likely to decrease, which categories are likely to increase, and really drill down on what their retirement cash flow needs are, then to Paul's point, you can take, what am I going to get in social security? What will my pension, if I have one, provide? And you're really a good portion of the way towards solving for that magic number, how much money do I need to have saved up before I can retire? Because that's going to be the piece that kind of fills in that difference. So you're exactly right, exactly on the right track of how we want to piece this puzzle together. Very helpful point there.

Appreciate that. Anything to add there, Rob? Well, you know, the only thing I would say is, and to your point, you know, most folks don't have a pension.

It used to be very common. You'd get to the end of a long working career of 30 plus years with a single company. They'd give you a gold watch and a check for life. And we exchange that defined benefits retirement plan with defined contribution with the advent of the 401k. So now it's up to each worker to do salary deferral. They may get some matching, but it's really on them to save for their retirement. And so I think to Mark's point, we've got to factor in what retirement assets we have plus social security, which was never intended to cover more than 40% of your pre-retirement income, and make sure that we are going to be able to solve for your lifestyle in retirement, which is likely going to start maybe 80% of your pre-retirement expenses. And perhaps to Mark's point today, go down slightly from there.

But Paul, it's a great point. Thanks for weighing in. To Buffalo, Danny, you're next on the program. Go ahead. Well, it looks like we lost Danny. Let's head to Chicago. Dave, you're next on the program, sir.

Yes, I have a question. I am currently 66. I'm old enough to start taking my social security, but I haven't.

I am working right now and I planned on taking it when I was 70. But I was wondering if I should start taking my social security now and maybe using that to invest more into the market, since the market is low now. Yeah, interesting question.

Mark, your thoughts? Yeah, it is. It's an intriguing idea there, Dave. You know, the nice thing about social security is the longer that you do wait to take it, the more your check will be, and not only just initially, but for the rest of your life. And the amount that that increases as you wait is really pretty generous in terms of the corresponding types of investment returns that you could get, at least safely. Now, I understand that the question is, to some degree here, does it make sense to take on a little more risk with the stock market? To take on a little more risk with the stock market seeming to be low right now. The only challenge with that is while it is lower, you know, we're down 20-ish percent. We saw a couple times in the 2000s where those declines extended quite a bit further.

So we're really talking about apples and oranges. The automatic increase that you're going to get by waiting to take social security is really more comparable to a really solid bond type rate of return, but it's risk free. You're not risking anything there. You know what your return is going to be, the increase in that social security. Whereas with taking it early and then, you know, of course you have to pay tax since you're still working, and then investing that, that's a much more variable route.

So, you know, the answer to that is going to depend a lot on each individual circumstance. Generally speaking though, especially for someone who's still working, I really like just deferring, taking that social security as long as you can, locking in that much higher payment for the rest of your life, potentially a spouse's life as well, and not trying to get too cute, trying to boost that return a little bit more with the stock market. And that's coming from a guy who loves to invest in the stock market. I just don't like the extra risk that that brings to the table.

What do you think about that, Rob? Yeah, I totally agree. Especially, you know, when we consider during that season of life, we would be getting more conservative in our investments. So even if we have a market that's moving up as opposed to sideways or down, we're still not going to participate in that full upside because we've likely gotten more conservative in that season nearing retirement.

So at 66, if you can just let this money continue to grow and guarantee or lock in that, you know, increased amount through social security at a much higher rate and then draw what you need that you would have been receiving from social security out of that 401k, that seems to make some sense to me, Dave. So listen, all the best to you. We appreciate your question.

It was a good one. Hey, we're going to take a quick break. One more segment with Mark Biller today when we come back.

What about the expenses that will actually rise during this season of life? We'll get Mark to weigh in on that. Plus a few more of your questions at 800-525-7000.

That's 800-525-7000. We're talking with Mark Biller today. If you'd like to check out this article we've been referring to, it's entitled How Your Spending May Save Your Retirement.

You'll find it when you visit soundmineinvesting.org. Much more to come just around the corner on MoneyWise. We'll be right back.

Stay with us. Great to have you with us today on MoneyWise Live. I'm Rob West, your host, taking your calls and questions today. In this final segment with Mark Biller, we're tackling your retirement-related questions and investing. We'll then turn the corner to any financial question that you might have in our final segment today on the broadcast. Mark and I have been talking about this idea of how much you need to save for retirement and whether your expenses will actually decrease during this season of life.

Let's head back to the phones to Buffalo we go. Danny, how can I help you, sir? Good afternoon.

I have a few questions but I'm going to make it short. I'm going to be 60 years old and I'm a late bloomer when it comes to saving money. So now with the 401k market being so unstable, what would you suggest now?

I got a lot of catching up to do. Where would you suggest I start putting some money to be able to potentially retire within the next, you know, maybe 10 years? Okay, 10 years away from retirement.

Mark, he's trying to play catch up here. What advice do you have? Yeah, so that's the type of question that we're dealing with all the time at SoundMind Investing and I'd encourage you, if you're interested, to maybe dig into some of the material there. As a general rule, I think you're definitely on the right track, Danny, that you want to, first of all, be trying to get as much money into that 401k as you can. Now, once you have kind of crossed that first threshold of getting the money into the plan, then we're talking about how is the best way to invest that and that time frame is critical. And you mentioned you've got about 10 years, so that's certainly long enough to be still investing some of that into stocks. You want to have a blend of stocks and bonds.

You know, the one thing that I would say as a silver lining, Danny, about being maybe a little late to the party, as you mentioned, is that with the correction that we've had this year, both stocks and bonds have become quite a bit more attractively priced as a result of coming down this year. So that's a nice side benefit there, but I would be targeting somewhere in the 50-50, maybe a little bit more to the stock side with a 10-year horizon. And, you know, you don't necessarily have to feel like you've got to put all that to work immediately, but I would focus on getting as much into the 401k as possible. And then, you know, as this bear market plays itself out, look to be aggressively putting that money to work as you have further drawdowns in the market. Or, if you don't want to play that way at all, you can just put that in regularly and not worry about the timing of that. So, a couple of pointers there.

Rob, what are you thinking? Yeah, I completely agree. I think the only thing I would add is, you know, often when we're trying to make up for lost time, we might do things we wouldn't otherwise do by being more highly speculative, taking more risk than we should, maybe highly concentrating in a few stocks we think that are going to outperform.

And that's just a losing game. So, I'd be more disciplined, diversified, and rules-based, if you will, Danny, in how you're systematically making these contributions. And it will pay off, especially given the opportunity you have, as Mark said, to invest while the market's down quite a bit. Thanks for your call today, sir.

South to Fort Lauderdale. James, you're next up. Go ahead, sir. Hi, I'm 69. I am on Social Security at $1,000 a month, have about $300,000 in cash, have a history of being too speculative on stock. I've done a lot of stock. But let's see, I'm just wondering where to go from here.

I'm in good health, too. Yeah. James, what are you living on right now?

I'm just living on what I just said. Okay, so you're pulling the money out of your savings every month? Yeah, unfortunately, it's been a lot out of my savings, too. Okay, so when you look at your monthly budget and you take out Social Security, what do you have left over that you need to pull from your investments to cover your monthly expenses? I'd say another $2,000 to $3,000 comfortably. I could probably do it with $2,000, but $1,000 over the Social Security, $1,000 to $2,000 over the Social Security. Okay, at $2,000, you know, $24,000 a year, that's 8% on a $300,000 portfolio.

That would be the extent of your retirement savings, is that right? Yeah. Okay.

Mark, what are your thoughts on his situation? Yeah. So, again, we want to have a blend because at $69,000, your typical retirement and time window from there is going to be over 10 years. So that's certainly long enough to continue to have some stock exposure. I love it that James is self-aware enough to recognize that his past pattern has been to maybe be a little bit too speculative on the stock side. That's good.

It's good to recognize your own biases like that. I think that, again, at SMI, we're constantly trying to give real specific guidance on which investment vehicles are right and the timing of those things. But for somebody who maybe doesn't want to put in quite that much effort to follow along with those specific recommendations, yeah, I think having a bunch of cash right now, I would be inclined to, as Rob mentioned a moment ago, to try to be as rules based as possible with that, maybe set up some predetermined guidelines for getting some of that cash reinvested.

And that can look like, you know, every other month for the next year, you're putting a portion of that in, which kind of removes that. Is this a good time? Is the market going higher?

Is it going lower? Those types of decisions. But you want to have a good blend, you know, probably in retirement there, maybe 50-50 stocks and bonds. And that would be my recommendation. Rob, your thoughts?

Yeah, I think that's spot on. So, James, I would take Mark's advice there. You know, be thoughtful about the investment strategy. Don't be afraid to deploy. It's a great time to do it as you maybe dollar cost average into this market. The key is you want to try to offset the effects of inflation and keep up with your withdrawal rate.

If you could keep that closer to $1,000 a month instead of $2,000, that will serve you well because that would get us closer to this target of about a 4% withdrawal rate, which should allow you, if you're invested properly with maybe a 30% allocation to stocks and the rest of fixed income, should allow you to cover that withdrawal rate and then preserve that principal balance. Thanks for your call today. Mark, just about 90 seconds left.

Tie a bow on this for us. What would you leave us with on this topic? Yeah, I think the big thing, Rob, is, again, to encourage people that you don't typically need to replace your entire current income to live comfortably in retirement.

There is a danger in relying too much on the rules of thumb. I'd really encourage people to dig into their own actual current spending and work from there into a retirement budget. And then the last thing, I would just leave on a hopeful note, Rob, and we have a note at the end of the article, a quote that is basically by a retirement expert that's just confirming what we've been talking about, that relying too much on these rules of thumb, especially that have an automatic increase in spending every year throughout retirement, tends to make people overestimate their retirement spending needs. And that's good news for most of us who are still trying to piece together that savings component.

Yeah, that's exactly right. And I would add, as I know Mark would, as we look at this through a biblical lens, let's recognize that the Lord has us here for a purpose and we need to take advantage of that. His calling doesn't expire on our lives. Mark, thanks for that hopeful encouragement today on retirement. My pleasure, Rob. All right. God bless you, my friend. That was Mark Bill, our executive editor at SoundMind Investing.

If you want to read this article, How Your Spending May Save Your Retirement, you can do that at soundmindinvesting.org. Back with more of your questions just after this. Stay with us. Great to have you with us today on MoneyWise Live. I'm Rob West, your host. This is where we apply the wisdom from God's word to your financial decisions and choices. Taking your calls here in our final segment of the broadcast as we turn the corner and address anything financial. The number to call, 800-525-7000. Let's head right back to the phones to Wayne, Illinois. John, you're next up.

Go ahead, sir. I'm drawing Social Security right now. My wife is more than 10 years younger than I. When I pass, my understanding is she has to eliminate it within 10 years.

Is there any way to extend it or go into a different program? You know, John, if she's inheriting the IRA as the sole beneficiary, she actually can just roll it over into her own IRA, and there is not a 10-year requirement to take that out. At the point she combines it with another IRA, she would not have to take a required minimum until she would have otherwise had to do that at age 72. All right, she's 74 right now, so she just rolls it into her own IRA.

And then she would just have her annual required minimums that she'd be subject to anyway. Okay, real good. That answers our question. Okay, John, thanks for calling, sir. God bless you. Let's see, to Alaska. Hey, Evelyn, thanks for calling.

Go ahead. Okay, my husband and I are self-employed, and we're late to the game. We heard about an IRA. I don't know much about it, but I was wondering how that works and everything. Yeah, you might be referring to a SEP IRA. So if you're self-employed, you can obviously contribute to either the traditional or the Roth IRA. You'd be able to put in 6,000 this year, but if you're over age 50, you can add another 1,000 to it. So you can put in 7,000 each into an IRA. And then if you have a non-working spouse, a spousal IRA. The key is you have to have earned income up to at least that amount. Beyond that, you could do as a self-employed person a SEP IRA, S-E-P, and that allows you to put away quite a bit more.

For a self-employed individual, Evelyn, contributions are limited to 25% of your net earnings from self-employment, not including contributions for yourself. So you can put in up to $61,000 for 2022. And so that's a great way to get a good bit more money going in to a tax-deferred retirement plan. You get the deduction now like you would with a traditional IRA. And then, you know, as you begin taking it out in retirement, you would just pay tax on it as it comes out as income.

Okay, so how would I, who, what organization would I go through to get that? Yeah, you could open that with any of the brokerage firms. I'd probably recommend you look at a Fidelity or a Charles Schwab would be two great options that would allow you to set those up.

Very low cost. If you didn't want to take responsibility for picking the investments, you could use one of their robo-advisor solutions, where essentially you answer some questions about your age and risk tolerance. And then, you know, if you don't want to ask questions about your age and risk tolerance, they use index ETFs. Think of these as just capturing the broad moves of the market, but in a way that is appropriate for your age with regard to the breakdown from stocks to fixed income or bond type investments.

And then it would just automatically rebalance the portfolio every time you make a contribution. So I'd look at the Schwab intelligent portfolios, or you could look at a brokerage firm like Fidelity and you'll want to ask them about opening a SEP, S-E-P-I-R-A. SEP. Okay. Okay. And also, and we were thinking about, is this a good move to make? We were going ahead, we came into a little bit of money. We was going to go ahead and just pay our credit card all. Oh yeah.

I like that a lot. I mean, the only exception to that would just be, I'd keep probably at least $1,500 back as an emergency fund if you don't already have one, because I want to break this cycle of using the credit cards. And when the unexpected comes, I don't want to have to default back to more credit card spending.

But as long as you do that and you've held back, I would say my target would be $1,500. Then I would say anything extra you have, let's absolutely get those credit cards paid off. As interest rates head up, we're expecting to get this week another three quarters of a point increase from the Federal Reserve on interest rates. Those variable credit card rates will go up with them. And so you're going to continue to pay more and more interest.

So getting those paid off is a huge opportunity to do right now. Thanks for your call, Evelyn. We appreciate you being a part of the program. Let's see. Let's head to Michigan. Tyrone, go right ahead, sir. Yeah, thanks for having me on my call. I got a quick question.

I don't know how quick it might be. I never knew anything about investing, saving, nothing like that, because I grew up in Texas. And back in the day, they didn't talk about stuff like that, saving, investing, and all that. Now I'm age 57 now. I have a 401k through my job.

They do 3% match to whatever I put in there and whatever. So what would you recommend a late bloomer, a guy like me, don't have a lot of money, but you know, trying to figure out something. I really didn't understand that until I started listening to this show. And I've been listening to it for a while. Let me jump in and see what I can do. Yeah, I'd be delighted to weigh in on that, Tyrone. You know, I think the key is to start where you can, right? So you recognize, listen, I perhaps haven't done as much as I would have liked to, but I'm going to start right now. It all begins with, first of all, recognizing that God owns it all. That changes your thinking about how you handle God's money, recognizing you're a steward of God's resources.

That's the beginning point. Commit everything you're doing to the Lord and invite Him into your finances. Secondly, you want to live within your means, which means you've got to have a budget, a spending plan. You've got to give every dollar a name, Tyrone, and that budget needs to reflect your values and priorities.

Where is God taking you? Does it have the giving in there that you want to do and having a little bit of savings? What about the expenses, your lifestyle?

Where do you need to cut back? Get that budget down and create a system to control the flow of money so that you don't allow that money to slip through your hands. The key to funding your long-term goals is to have margin, so you've got to live below your means, so you've got something left over to save. And once you have an emergency fund of three months expenses that's going to be what you fall back on when the unexpected comes, then absolutely, I'd love for you to get as much going into long-term savings as possible. Using your company-sponsored retirement plan is often the most effective way to do that. You'll get a tax deduction on what's going in. If it's a 401k or 403b, you can get it invested in a way that recognizes your time horizon until retirement, probably 10 years or so, and then allow that money to grow.

You contribute out of every paycheck and you'll be surprised how much you accumulate over the next decade that you can then use to supplement social security and any other retirement sources you might have to cover your expenses in that season of life. Does that all make sense? It makes perfect sense. I would think I'm going to live that anyway, but I'm like, okay, I got to start well, man, I got to, you know, let God do what he's going to do. Even though I didn't have no opportunity. Yeah, we're losing you a bit.

Hey, stay on the line, Tyrone. I'm going to send you a gift. I'll send you Ron Blue's book, Master Your Money, which will help really give you a picture of what this looks like to be a steward of God's resources. But it'll also walk you through all these practical considerations as well with regard to how you set up a spending plan, how you save for the future.

What about investing and insurance? It covers it all. We'll get that book right out to you as our gift. Let's see, John's in Chicago. John, how can I help you, sir?

Yeah, hi. I have an acquaintance that is renting me her vehicle, a Toyota Highlander with 210,000 miles on it. It needs already a new alternator and all five tires need to be replaced due to dry rot. And she said that she'll give it to me if I remodel her kitchen. But for me to, because I have a small RC general contractor is naming my company and I just need to, I don't know what to do because she wants 3,000 for the vehicle.

She says, I'll do it. But she says, she'll give me the vehicle and $2,000 if I remodel her kitchen. And we're talking about an estimate of close to 12,000. Yeah, that doesn't sound like a very good deal unless you're kind of doing it as a gift here. I mean, if this car is worth, well, my team looked it up 210,000 miles on a 2008 Toyota Highlander, even in very good condition. Trade-in value somewhere between 4,000 and 5,000.

Private party sale, you could make a case that it's worth between 6,000 and 8,000, but neither of those are anywhere near 12,000. So I think the key is, first of all, determine are you truly trying to barter these two? And if so, they need to be equitable. And I think you need to establish a basis for determining the value of the labor plus the materials you're putting into the kitchen and establishing the value on the car, which you can do through Kelly Blue Book or edmunds.com. And then come to an agreement, a meeting of the minds through negotiation on what that looks like. Now, she may not be willing to give you the car plus the additional amount that is really necessary to get it up to the true value of what you're providing. And then at that point, you'd have to decide, am I doing this as a gift or do I need to walk away?

And there's nothing wrong with that because if this is really meant to be a true barter situation, it needs to be equitable at the end of the day. Yeah, she's renting me the vehicle for 750, like I said, per month, and I've been using it to do work and to do lists. So it's helped me keep a roof over my head and food in my belly.

But I really don't know exactly what to do. I feel like I'm between a rock and a hard place because I need a vehicle. But yet I don't have income to purchase a vehicle. Yeah, you're paying good money for the use of that vehicle. Perhaps what you need to do next is take those skills you have in remodeling kitchens and do that job for somebody who will pay you for your time, what you're worth, and then use that to go buy your own used car instead of renting hers. Don't get into the binary trap where you just look at two alternatives and try to pick the best one.

Let's lift our sights a little bit and think at a higher level about how you can approach this in a way that puts you in a better long-term position and doing a $12,000 job for a $4,000 car doesn't seem like that's a good fit. We appreciate your call, John. God bless you.

Hey, MoneyWise Live is a partnership between Moody Radio and MoneyWise Media. That's going to do it for us today. Thank you to my team, Dan Anderson, Amy Rios, Gabby T, and Robert Sutherland. Hope you'll come back and join us tomorrow. We'll see you then. Bye-bye.