Living in the Future

Living within your means not only involves taking care of the expenses you incur today, but also preparing for expenses you are likely to incur down the road. I am Rob West. Ahead today, we'll be living in the future.

Well, sort of. Plus, we'll take your calls on any financial topic. So here's our number, 800-525-7000. We'd love to hear from you.

Again, 800-525-7000. This is Money Lives Live, biblical wisdom for your financial journey. Well, as you've probably heard me say before, when you get right down to it, there are five basic things you can do with money.

You can earn it, you can use it to live on, you can give some away, you can pay it to people you owe, such as debt payment or taxes, or you can invest it so that it will grow for the future. Those five things are easy to remember. Earn, live, give, owe, and grow.

On our Monday programs, as we start a new week, we often focus on one of those foundational five things. Today, it's the live category, using money to live on. Now, when I say money to live on, you probably think of gas, groceries, your electric bill, those regular expenses that occur day to day or month to month, but I want to focus on another aspect of money to live on, paying for things that are not regular expenditures. And this is where many people get tripped up in their finances. They fail to set aside enough money for future expenses. Sometimes we don't know about those things in advance, at least not specifically. For example, I don't know if my car will develop transmission trouble six months from now.

I hope not, but I do know my car is likely to need some kind of repair or at least some kind of maintenance in the months ahead. So it's wise for me to set aside a certain amount of money each month in an auto repair fund so that when that expense occurs, well, I'll have money to pay for it. The late Larry Burkett used to call this planning for unplanned expenses.

You may not know what's going to happen or when it's going to happen, but you can be pretty sure that at some point something will go wrong with your car or a furnace or a lawnmower or something. And if you don't have money set aside, those unplanned expenses can create a bit of a financial crisis. This is why it's so important that when you set up your budget, your spending plan, you build in savings for emergencies. An even better approach is to get more precise about it with separate savings accounts for different things, such as one for general emergencies and one for home repair and auto repair. That may sound complicated, but it's not.

Several online banks, including Capital One and Discover Bank, allow you to easily set up multiple savings accounts with no minimums or fees so you can segregate your savings for different types of unplanned expenses and keep it all straight. Well, let's move from unplanned expenses to expenses we know about in advance and often don't prepare for. This is September, and I have news for you. Christmas is just a little more than three months away. Now, from when you and I were little kids, we've always known when Christmas is, and yet every year it seems to take people by surprise, at least in a financial sense. Christmas comes, but they're not ready for Christmas-related spending. Extra expenses at Christmas are common, not only for gifts, but for things like a Christmas tree, replacement lights, maybe seasonal entertainment, or a trip to visit relatives.

It adds up. Are you preparing for those expenses? People who are really good at managing money often start setting funds aside in January for Christmas-related expenses, and that's not a bad idea.

But even if you didn't start back then, you can start now. By setting aside money in September, October, November, and early December, you'll have a pool of money for Christmas-related things. So, where do you get the money to set aside for Christmas?

Well, there's only one way. Adjust your spending. You have to not spend money on other discretionary expenses between now and Christmas. This involves making a commitment. I am not going to spend on this or that now because I'm saving it for Christmas spending later. Or we're not going to go out to eat this week. Instead, we're going to save that money for Christmas.

I understand. Restraining your spending can be challenging, so it helps to have a clear goal in mind, such as being able to buy gifts and do other things you want to do at Christmas time without going into debt. So, here is what I want you to remember today. When you think about money to live on, think beyond your regular expenses to those that occur only every so often, whether it's fixing your furnace or buying gifts at Christmas. Being able to live in the future, so to speak, is crucial to achieving long-term financial health and stability. I'm Rob West, and your calls are just ahead. The number, 800-525-7000. This is MoneyWise Live, biblical wisdom for your financial decisions. Delighted to have you with us today on MoneyWise Live.

I'm Rob West, your host. We're taking your calls and questions today on anything financial. The number to call is 800-525-7000.

That's 800-525-7000. Already half the lines full, but we have several more. We'd love to hear from you today. All right, let's begin in Nebraska today. Lynn, thank you for calling.

How can I help? Hi. I'm glad to be on your program, and thank you. I enjoy listening to your advice.

Thank you. I'm calling. I'm almost 67 years old, and I'm trying to decide whether I would be advantageous to go ahead and take my Social Security now, or whether I need to go ahead and try to wait. I do work. I plan on working, and I do have like insurance through that, but there is a lot of medical debt and other debt that we owe that is past debt that needs to be paid off, and so I'm debating if I would be ahead to take my Social Security and use that money and just try applying it to the past debt that we have to try to get out of debt, even though later I would not get quite as much Social Security. Yeah. Or if I would be better to go ahead and just struggle with the debt and wait till the Social Security is full at 70 or whatever.

Sure, yeah. Now that makes sense, and what you're referring to there is that 8% increase that you'll get in that Social Security check, actually one-twelfth of 8% every month that you wait up to age 70 beyond full retirement age, and that normally, apart from this debt decision, we'll get to that in a moment, that normally comes down to am I in good health, and can I get by without having that income? And if the answer is yes to both of those, it sounds like you're continuing to work, so apart from being able to pay off this debt, you can cover your expenses, and therefore you have the ability to let this money grow, assuming you're in good health.

Nobody knows how long we have, except the Lord, but if he tarries and he's got plans for you for quite a while, you can make up for that if you were to wait to age 70 in probably around 11 years or so, and then you'd enjoy that higher check for the rest of your life. Now, as to this debt, you said it's medical debt, it's exclusively medical debt, is that right? It's medical, and there's also income tax debt, which is quite a bit, which actually part of that's already being taken out of my husband's Social Security that he gets. Okay, how much do you owe on each of these? I would say medical, there's at least around $30,000.

Okay. And the IRS, I'm not sure exactly where it's at, but I would say there's, oh boy, I don't know, there's over $10,000, $15,000, I'm not sure. Yeah, no, that's okay. And with the medical debt, is it currently just in the default status and kind of sitting, or are you on a payment schedule that you've worked out with these providers? Actually, it's going to point trying to pay, but there's garnishments coming out of paycheck.

Yeah, okay. You know, I think here in this situation, Lynn, as much as I'd love for you to let this check continue to grow, I think if you have the ability to start bringing in additional income by going ahead and claiming your Social Security, that's not a bad idea. I mean, it's not like you're 62 and you're going to take a 30% reduction.

You've reached full retirement age. I think we certainly, as believers, want to honor our debts if we have the ability to do so. And I think not only can it help you just get on a proper trajectory without wage garnishments, but where you've gone in and negotiated an offer and compromised with the IRS and gotten on a payment plan, and hopefully the same with the medical providers, and they'll likely be very willing to work with you. If you could match those to this new income source that you have coming in and start making progress towards something that will ultimately pay these off, I just think not only will that help you clean things up financially, but it'll just give you a lot of peace of mind to know that you're actually moving toward a goal and that you're doing it not out of wage garnishments, which, by the way, would get that money coming back into your household so you could have margin and save and all the things you probably want to do. But just knowing when you go to sleep at night that, you know what, we're dealing with this. I think that will go a long way.

But give me your thoughts. Well, one of my thoughts, too, is the fact that like with the IRS and all the fees that you are charged for what you owe are so tremendous that you're paying so much more money. And anything that goes to court, anything that goes to garnishments, you're paying all your fees, you're paying all that extra cash out. And you're paying a lot.

This is a no-brainer for me here, Lynn. I think you're eating up all that eight percent and then some. I mean, just take the interest on that IRS debt, which is probably at five percent, not to mention the fees and penalties on top of the same for the medical debt and, as you said, the garnishment and the fees that come with that. I think this is a blessing. You go ahead and take it from my perspective.

You all are the stewards. You need to pray through it and make a decision. But from my perspective, I'd go ahead and take it. And then I'd really lean into this. I'd find a CPA or an enrolled agent who has an expertise in representing taxpayers before the IRS specifically for offers and compromises to work out a payment plan, you know, possibly even get a reduction in what's owed. The same with the medical providers. If you could knock out some of the smaller debts, you know, it'll lump some payment and then get on payment plans with the others.

If you're paying out of cash, often they will, you know, reduce the amount that's owed, especially if they didn't think they were going to get anything, stop these garnishments. I just think that makes a lot of sense. Okay.

Well, that's where my thoughts have kind of been, but I was wanting to check and make sure. Yeah. Yeah. Just I'm tired of the debt. The debt hanging overhead really just really does bite me. Yeah, I can certainly imagine. And just feeling like, you know, when is this ever going to get resolved?

And, you know, are we ever going to make any progress? I mean, I think getting all of that underway, engaging each of these, you know, providers and the IRS in a process that's going to get you on a current payment plan. So you're actually an on time payer based on these new payment plans. You work out with both. I think it's just going to give you a lot of peace of mind. So you I think you should go in that direction. You talk to your husband. You guys pray about it. We'll ask the Lord to give you some wisdom.

But from my perspective, you know, that's going to make a lot of sense. We appreciate you listening and for your kind remarks today. Thanks very much.

Quickly to Nashville, Tennessee. Tim, you're next on the program. Go ahead. Hey, Rob, thanks for your ministry and thanks for taking my call today.

Yes, sir. I've recently gotten into a little inheritance. It looks like there's going to be about 60K that'll come my way after the settle of the estate. And I've got also an investment account that has a 51K in it. We're both my wife and I are approaching retirement. Where we work, though, we have good pension plans and both of us have 401Ks there, although there's not a whole lot in the 401Ks. The one has like 35K and the other one has 70. But it looks like those are going to be able to at least sustain our current income if not exceed them.

Okay. I've got debt in relation to the house. We have about a $400,000 house and 115K on it. My question is in relation to the money that is in currently in an investment account. Do I leave it in that account or do I put it in?

I'm also thinking about the other money from inheritance towards the debt on the house. Yeah, very good. All right, let's do this, Tim. I've got to hit a quick break, but that was great background information. I'm going to ask you to stay right there. And just on the other side of this, I'll give you my thoughts. You're listening to Money Wise Live, biblical wisdom for your financial decisions. We'll be right back.

Stick around. Thrilled to have you with us today on Money Wise Live, where we apply God's wisdom from the Bible to your financial decisions. We've got some lines open today, 800-525-7000 for whatever is on your mind financially speaking. I'm Rob West.

Just before the break, we were talking to Tim and beautiful Nashville, Tennessee. He's about to receive an inheritance of $60,000. He's got an investment portfolio with about $51,000. Those two amounts are in addition to the pensions that he and his wife have and some small 401Ks. They owe about $115,000 on a home that's worth about $400,000.

And he's wondering as he thinks about retirement, is it best to use the investment portfolio plus this inheritance and pay off the house or do something else with it? Let me ask you, Tim, the $51,000 in investments, is that down with the market quite a bit? Yeah, it actually, it had been part of my dad's overall investment. And I think this last quarter they dropped nearly $50,000. It was about a $400,000 investment. But your portion of that is only $51,000?

Yeah, my portion, I've got a lot of siblings. Okay, yeah. My portion of it ended up being $50,000. I think it got down to $50,000 and she recently said it was up to $51,000 now.

Okay, yeah. But I do kind of, I'm a little jittery between the other 401Ks and that one. There was a total loss of about $20,000 this last quarter. Yeah, did you say you lost about $100,000 on the $400,000? I think on the $400,000 they lost about $50,000. Oh, about $50,000.

Okay, so that's actually not too bad. I mean, if it was $100,000, that'd be 25%. If it's, you know, only $50,000, that'd only be about 13%, which is not bad given the market. But what I would say is, I love the idea of you, you know, paying off that house, especially as you near retirement. How far out from retirement are you? Probably a year and a half, two years. I've already turned 65.

The house is at a 299 and I owe five years on it still. Yeah. Okay, very good. And do you believe through the planning you've done that the Social Security plus the two pensions plus the 401Ks will be enough to sustain you all? Yeah, it should provide more than enough income on our regular standard at this point. In fact, we'll probably end up getting a little more.

Yeah, okay, very good. And you said you'll have that house paid off in five years on your current path. What about an emergency fund? Do you all have liquid savings apart from all this that we've been talking about? What we currently have is around 10. And I was thinking out of the inheritance, maybe to hold 10 of it back to go towards that. And I thought at that point, we could still have the house paid off by the minimum next year. Yeah, very good.

And when that require using the 51,000 in stocks? That would be right. Yeah. Okay.

So here's my thoughts. I would definitely shore up your emergency fund. I'd love for you all to go into retirement with at least six months worth of living expenses in a liquid savings account. I love the idea of you sinking the payoff to the house with retirement or shortly after because that's going to take your biggest expense off the table even though you've got a low interest rate.

I love the idea of you just being unencumbered and keeping your lifestyle as lean as possible. I'd use the remainder of what's left over from the 60K after you shore up the emergency fund to start paying down that house quickly. You're obviously continuing to pay the monthly payments every month.

For the 51,000, if you just had a real conviction, you or your wife or both of you together to be out of debt as soon as possible, I'd say just go ahead and pay it off. Otherwise, I'd probably keep that money invested, let it come back over the next year or so. And then once the market recovers, then I'd look at selling it. Then I'd look at selling it and paying off the house as an inheritance. Obviously, your cost basis was reset to the date of death on that inheritance for those equities and whatever other investments you have. So you shouldn't have a whole lot of capital gains there apart from the recovery. And then that puts you in a position where you've not locked in those unrealized losses. You're waiting for that to recover. You've shored up your emergency fund, but you're still on track to get that house paid off pretty quickly. And now you guys are entering retirement with as low monthly expenses as possible, which sounds like you have ample resources to cover all of that and then some, which is a great place to be. Okay.

Well, that sounds good. One more quick question in reference to the investment money within the inheritance. If, for instance, when it went into my account, there was $50,000 and now there would be like $51,000 or whatever it would grow to, if I took out just the $50,000, the initial, would there be any kind of a tax on that versus the whole amount that it would have gained over the last month or two? Yeah. So it'll be taxed on a pro rata basis. So basically, you'll establish the cost basis for all of those, whatever holdings were in the portfolio on the date of death. That's the new cost basis.

And then as you liquidate each of those positions, that cost basis would be applied and you'd either have a gain or a loss from that point. I gotcha. Okay, great.

Does that make sense? Sure. Appreciate your, yes, it sure does. And you both most helpful.

I appreciate your input there. Happy to do it. God bless you, my friend. And thanks for calling today.

Folks, just around the corner, we're going to take another quick break and we come back. Some great questions lined up here today. By the way, let me mention an underwriter for this program is the National Christian Foundation. When you're thinking about the future and how to prepare for the generosity component of your stewardship plan, this is a great partner of ours that helps God's people create what's called a giving strategy based on biblical principles so they can be wise stewards of all they have and experience the joy of greater generosity. Boy, that's your near and dear to our hearts here at MoneyWise. It's such a great way to be intentional about your giving and get trusted counsel from their wealth of experience. So if you don't have a giving strategy, perhaps you want to reach out ncfgiving.com.

That's ncfgiving.com. We'll be right back here on MoneyWise and we'll be taking your calls and questions. The number to call, 800-525-7000.

That's 800-525-7000. We'll be going to Royal Palm Beach, Florida, Chattanooga, Tennessee, Central Florida, and perhaps your question as well. I'm Rob West and this is MoneyWise Live where we apply God's wisdom to your financial decisions. We'll be right back. Great to have you with us today on MoneyWise Live. Biblical wisdom for your financial decisions.

800-525-7000 is the number to call. Checking the markets today, it's all green across the board. The fourth day in a row as we snap that three-week slide we experienced a few, well for the last several weeks. Today, why are the markets up? Well, investors are somewhat optimistic about the inflation number that's going to be out tomorrow morning. They're at least thinking that it's going to show that inflation did in fact peak in June and have been falling ever since. We'll see what tomorrow's reading holds.

Also some military success in Ukraine. A piece appears to be boosting investor sentiment. Also a weakening US dollar. This is all leading up to the next Fed meeting which is expected to produce another three-quarters of a point of an increase in rates.

All of that together, well the market's more optimistic and that's why the market has been rising. A lot more to come on that and in fact, we'll hear from our good friend Bob Doll a little later in the program and he can give us more details. All right, back to the phones. We go 800-525-7000 to Central Florida. Leo, you've been very patient sir. How can I help you?

Hi, thank you for taking my call by the way. I'm a school teacher and I've been teaching for 23 years. My very first three years of teaching I did in New Hampshire and then I returned back to Florida where I'm originally from. And this is going to be my 20th year teaching in Florida and I was thinking about early retirement because I'm a little bit burnt out and the Florida retirement system when I signed up says that I can't retire early but if I retire after 20 years I will be getting $850 a month and pensions for life. I have saved about $30,000 in a liquid seventh account and I was thinking about the possibility of buying three extra years of retirement. You know, the three years that I worked in New Hampshire I can buy them in Florida and end up getting instead of 850 about 1,300. However, I was also thinking about putting that money into my mortgage and I don't know what's better for me.

Yeah, well a couple of thoughts here. I mean the Florida retirement system I'm told requires 20 years of service but then your benefits are reduced by 5% for each year you retire before the normal retirement age of 65. But if in fact, Leo, you are correct that with a $30,000 worth of purchases toward, you know, creditable service will give you an extra $500 a month for life, that's a no-brainer because you essentially will be able to pay yourself back in the extra $500 a month in five years. I mean that's a 20% return on that $30,000 a year for you to get, you know, $500 a month and you'll enjoy that for the rest of your life. So if I could pay myself back in five years and then from that point forward have that extra $500 a month, that just makes all the sense in the world to me. But do I have that correct that that's what they're saying that that $30,000 as a lump sum toward creditable service will result in an additional $500 for life? Yeah, I did call the school board and the financial guy that does retirement. He told me that if I bought those extra three years, it will be about $30,000 and it will get me up to $1,300 a month and, you know, pensions are for life.

So I was thinking, what would be better? So yeah, I mean I think, you know, that just makes a lot of sense to me given how significant that is. I mean that's $6,000 a year on a $30,000 investment. You're not going to find that anywhere and, you know, once you've essentially paid yourself back then you just continue enjoying that higher check.

So as much as I'd love for you to be debt-free and if you had a conviction around that, I'd say go for it. But apart from that, just from a math standpoint, that just makes a lot of sense for you to be able to have that, you know, from here on out. Awesome. Thank you very much. All right, Leo, we appreciate your call today. God bless you, my friend. To Chattanooga, Karen WMBW. Go right ahead.

Yes, hello. Thank you so much for your ministry. I've listened to you since Larry Burkett and even though I've gone through several crises, the Lord has shown me how I can save and by the age of 65 I was totally debt-free, my house paid for. And I'm at the next timeline now. I have waited to retire, as you suggest, until 70. I turned 70 in January. So you mentioned last week, I believe, the RMD required minimum distribution was 70 and a half. I thought it had gone up to 72 and a half. Yeah, it actually went up to 72. So it was 70 and a half.

It's gone up to 72. It was changed in 2020. So you have to begin taking your required minimum by April 1st in the year after you turn 72. And then you have to withdraw the RMD amount each subsequent year based on the current RMD calculation.

Perhaps you heard me talking about a qualified charitable distribution and that still can be done at age 70 and a half, but your RMD is not going to kick in until 72. How is that figured? It's based on the IRS's table. It's going to have to do with your age and the balance of your portfolio or your retirement accounts and your life expectancy, which they will provide. And so that IRS table will tell you how to determine the appropriate amount based on the amount you have in the retirement account, your age and the resulting life expectancy for a female your age.

And is that the IRA that it's taken from? Yeah, well, you can pull it from, you know, if you have a 401k and an IRA and maybe another IRA. Any accounts you have, it would be the total of those retirement accounts.

And then you could pull it from one account or the other. It doesn't really matter as long as you get the minimum amount out by the deadline. Is the Roth included in that?

It is not, no ma'am. So with a Roth IRA, you actually don't have a required minimum. That amount can stay in there and just continue to grow as long as you'd like.

I have moved from the traditional into the Roth continuously for the last four or five years since I've been working. But this year I'm retired. Will they send me a notice on this? You will not get a notice, no.

So you just need to make sure that you get that out. And if you don't use a CPA, this might be the year to do it. Once you turn 72, just to make sure you calculate that properly, you certainly can do it yourself, but it's not a bad idea to make sure you get out the appropriate amount.

Okay, we'll do that the first year. I know my mother missed it and she had to pay, I believe it was a 50% penalty. That's right.

Yeah, it is steep. Now don't miss, Karen, the opportunity to use a qualified charitable distribution. So any giving that you're doing, let's say you are doing giving a tithe to the church or other giving and you're doing that right now out of your current cash flow or out of savings, perhaps you do that from your IRA instead and satisfy that required minimum and then it doesn't get added to your taxable income for that year.

Does that make sense? Oh, that's wonderful, yes. Yeah, so it's called a qualified charitable distribution and it does count toward the required minimum. The receiving ministry or charity doesn't pay any tax on it, so they get the full amount and it's excluded from your adjusted gross income.

So you don't add anything to your taxable income, but you're satisfying the RMD and you could use it as a replacement for giving you what have otherwise done out of current cash flow. So ask your custodian about a qualified charitable distribution. Thanks for your call. We'll be right back on MoneyWise Live. Stay with us. Great to have you with us today on MoneyWise Live.

Biblical wisdom for your financial decisions. Hey, before we go back to the phones, it's Monday. Our good friend Bob Doll joins us on Mondays.

Bob is chief investment officer at Crossmark Global Investments where investments and values intersect. Bob, good afternoon, sir. Happy Monday, Rob. Hey, four days in a row, we'll take it, huh?

Yes, it beats a stick in the eye, as they say. Yeah, the mood is improved and consistent with our view that we're going to be in a choppy, sideways pattern. You know, we get four down days and then we get four up days and I think that's going to continue. I don't think we're going to break out either direction until we get some more certainty around all the uncertainties that are out there, Rob. Yeah, obviously we'll get more data here. A big one tomorrow with CPI.

What are you expecting? So the headline number could actually be negative because so many parts like oil have moved down a bunch in the month and that could have enough to take the average down. Now the core inflation, remind listeners, that's inflation X food and energy because remember we don't use food and energy. Neither of them, right?

Neither of them, right. That number is still going to be, it may be down a little bit, but it'll still be unacceptable. So we're not out of the inflation woods, but people could look at the number in a positive way and that's part of the anticipation of the rally we've been witnessing.

Yeah. Bob, also what's helping the markets is the fact that the U.S. dollar is weakening. Why is that so? Why is that encouraging to the two investors? So the weakening in the dollar means that foreign profits coming back to the U.S. for all the U.S. multinationals begins to have a tailwind rather than a headwind. The dollar's been up 15% year to date prior to this mini decline we've witnessed and that starts to weigh on the earnings of those companies.

Okay. And then what about just general investor sentiment? I know in your comments this week you were talking about the bull bear ratio.

Tell us about that. Yeah, the bull bear ratio is obviously the number of bulls relative to the number of bears and that number got way under one. It was the lowest 0.6 at the trough a bunch of weeks ago. So six weeks ago was 0.76 and then it moved up to 1.64 as everybody got optimistic and then we have the sell-off and it went back to one. What does that tell us? Investor mood is fickle. It's all over the place. Swings like this are unusual, Rob, and the way you use this ratio is when it's under one historically it's usually a pretty good buying opportunity and then the market gets overbought and then we sell off consistent one more time with that sideways choppy trading pattern that I suspect we'll continue to see that we've witnessed really since that June low. More than ever we need to stay focused on the long term.

Bob, one final question. What about the rest of the world? I mean it seems like as tough as things are right now and could be for the U.S., it's worse for China and Europe.

Give us an update there. Yeah, so all three major economies are slowing. The U.S. largely because of the monetary tightening we've talked about. Europe because the energy crisis and the absence of sufficient energy supplies which could which could create havoc and shortages in the winter and that's doing a number on the European economy and China, it's the self-imposed zero COVID policy that has slowed down that economy.

So all three of the major blocks are weakening. Interesting. All right, well we'll certainly keep an eye on it beginning with the CPI data tomorrow, Bob. Always appreciate your time, my friend. Thanks for stopping by. Talk to you next week. All right, if you'd like to learn more you can visit crossmarkglobal.com. While you're there, sign up for the dolls deliberations to get Bob's weekly commentary. I know I rely on it. You'll come to do that as well.

Bob Doll with Crossmark Global Investments. All right, here in our final segment of the broadcast, back to the phones we go to Royal Palm Beach, Florida. Ada, thank you for your patience.

Go right ahead. Hi, thank you for taking my call, sir. I have a quick question and I'm sorry I don't have the full details but I just received a notice from a pension benefit that I had. I left the company about 20 years ago and now they're asking me if I would like to receive one lump sum which of course is subject to you know the taxes of course that I would have to pay or number two would be I could receive monthly annuity payments of their plan starting in December.

The third choice would be for me to do nothing. I am 64. I don't know if that's retirement age because I don't even know when I can retire because I just I own a home but I would begin getting monthly annuity payments starting in December and I don't know what to do and all this was just sent to me and I have to make a choice before this coming Monday the 19th.

So you can help me. I know a lot of times you mentioned about the annuities real quickly and I know you're not too fond of them which I understand and I'm probably not either but I've heard you mainly talk a lot about is it a B plan, annuity B plan that if you put a certain amount you have to keep the money in there for a year. I'm not sure if that's I hear you on my way from work. Sure, you're probably talking about the I bonds but that's different than this. Do you know the lump sum amount they would offer you and then secondly do you know how much the monthly annuity would be? No, see that's what I'm saying. I just received this and called the desktop that they're asking me.

I don't know. Yeah, so that's what it's going to come down to Ada is you're going to have to look at what they're offering you as a lump sum versus what you would be getting as a monthly check for the rest of your life. The primary difference is that with the lump sum you have access to the full amount that's great as you said there are tax implications to that but the benefit is you get the full amount that you could tap into at any point. If you needed to go beyond just a monthly income stream because you needed long-term care assistance and you know assisted living or in-home care down the road or nursing home care that's probably the major expense you would face in this season of life. Beyond that you know if you have the monthly payout if it's a decent amount equivalent to perhaps more than you would expect to get with a reasonable withdrawal rate from the lump sum which I would use about four percent for that then you may feel better and have more peace of mind knowing I don't have to take any risk in the stock market I can just collect that monthly check for life and if that amount that they would provide you is a meaningful amount in the sense that it might make up once you retire a gap that you would have between social security and what your expenses would be you may be just thrilled to know that all you have to do is walk out to the mailbox every month and you get your check but it really is going to come down to what is the amount they're willing to give you as a lump sum and what is the amount they'll give you as a check for the rest of your life and if you're married does that go beyond you to your spouse because the other factor here is if you can take the lump sum invest it and then when you're ready to retire down the road start drawing an income from it you know and if you could keep that to let's say four percent a year the idea would be you'd never touch the principal so you could earn that income for the rest of your life and then still have the principal amount that you could give away to a ministry that's on your heart or as an inheritance so i generally like the lump sum option but i would need to know the numbers so here's what i'm going to recommend i'd encourage you to reach out to a certified kingdom advisor there in south florida you can do that on our website at moneywise.org just click find a cka you can pay them just for their time and just tell them you need some planning you need to bring the documents in have them review it then do a calculation to determine based on your situation is it better to take the lump sum or the monthly payout but without knowing those numbers i wouldn't be able to weigh in on that again ada that's moneywise.org just click find a cka and i think you'll really value having some professional advice as you make this really important decision and just let them know you have to be able to do that within a week's time we appreciate your call today god bless you to east chicago indiana linda go right ahead um yes thanks for taking my call i know it's almost at the end of the program but thank you yes i um just want to briefly um tell you my situation okay i'm in a lease and um my lease is up and and my daughter suggested that mom since you owe your house right you know the only thing on your house your credit gets good excellent credit and um all that good stuff she said so why don't you just take out a loan um on the house refi the house or whatever you call it i guess it's refi but anyway take out equity rather equity equity loan yeah equity loan and then pay the car off and then you still have money left over to fix up do the repairs in the house yeah yeah you know i'm not a big fan of that because essentially we would be taking this money against the house and at some point you had a car loan that you couldn't pay the car is repossessed if you can't make your mortgage or home equity loan payment your house is repossessed it's called foreclosed so buying the car is probably a good idea you've been the one driving it you know how well you've taken care of it i'd do some hard bargaining with them uh they'd prefer you to buy it i'd look for the value of the car at kbb.com that stands for kelly blue book kbb.com or edmunds.com and then tell them you want a better price than what they can sell it for off the lot because you're already there and see if you can negotiate a really good purchase but when you do that i would love for you not to pull that equity out of your house i'd leave that right there the fact that you owe your home free and clear is phenomenal i'd look to just get a car loan for that so that it's only secured by the car and not your house i realize you may be in good shape and feel like there's never going to be a problem with that but we don't know what the future holds and so i think you being able to buy this which can make a lot of sense if you can get the right price especially given what's going on in the car market these days is a good thing but again i'd use a car loan go to our our favorite website there is bankrate.com to find who has the best loan terms and rates for car loans right now and we appreciate your call hey let me say thank you to my team today ryan hanson managing our phones our engineer today was dan anderson our producer amy rios and providing great research to me today mr jim henry thank you for being here with us as well money wise live is a partnership between moody radio and money wise media hope you have a great afternoon come back and join us tomorrow we'll see you then bye-bye