3 Biblical Principles for Debt

They say that money is a good servant, but a terrible master, and that's especially true when it comes to debt.

Hi, I'm Rob West. Surveys show that taking on debt ranks near the top of the list of financial regrets. Debt can make profound changes in your life and have spiritual consequences. Sharon Epps joins us today to talk about that. Then it's on to your calls at 800-525-7000.

That's 800-525-7000. This is Faith and Finance Live, biblical wisdom for your financial decisions. Well, just in case you didn't know, Sharon Epps is president of Kingdom Advisors, the organization dedicated to training your financial advisors on the biblical principles of managing money. Sharon, always a delight to have you on the program.

Thank you, Rob. Well, we like to keep things simple whenever possible, as you know, Sharon, and you have a great way of doing that when it comes to using money. In fact, it comes down to just four things, right?

Well, I hope we can remember this. It's live, give, owe, and grow. And as you know, I like to talk about live, give, owe, and grow as a pie. And the reason for that is a pie is a limited amount.

And when you make one slice bigger, the other slice has to get smaller. And that's what happens with our money. And so today we'll be talking about owe. And of course, that means debt. Yeah, and there's often some confusion about biblical principles when it comes to debt. So let's start with what the Bible tells us, or maybe we should say doesn't tell us. Well, I think we need to think about this in high-level principles and ask this question, does the Bible say it's wrong to borrow money? And the Bible does not say that borrowing is wrong. Debt isn't sinful or evil, but it is enslaving. It redefines a relationship between two people.

One is indebted to the other, and it can be cumbersome, and it even begins to dictate decisions of the one that's enslaved. Well, Sharon, as you well know, principles can help us make wise decisions. So what biblical principles guide us on debt?

Well, I'd like to focus on three today. The first one is that we are clearly called to repay what we borrow. Psalm 37 21 teaches the wicked borrow and do not repay, but the righteous give generously. Second one is we want to free ourselves from debt as quickly as possible. In fact, Proverbs 22 7 carries this warning, the rich will over the poor and the borrower is the slave to the lender. And so we don't want to be enslaved. And then finally, the third one we'll look at today is that we're to serve God and not money. Matthew 6 24 says, no one can serve two masters, either you will hate the one and love the other, or you will be devoted to the one and despise the other. You cannot serve both God and money. Yeah, that's really helpful. And those are, of course, great reasons to get or stay out of debt.

But Sharon, is there a better one? You know, my favorite one is we want to be free to serve God. And if I'm enslaved to debt, then I don't have the freedom to make decisions like that.

And just a real quick story. My friends Matt and Lisa, they got married and there was a ton of college debt involved when they first got married. They were actually so dedicated to serving the Lord that they took second and third jobs to get out of debt. And now they are free to serve in their gifted.

I love that. Well, what would we tell someone then who's struggling with debt to do first? Well, first of all, we want them to pray. We know that when we tell God our heart's desire, and it's in line with his will, he helps us to do that. And so we want to commit to do what he asked us to do and ask him to provide. The second thing is we want to save money.

Now, wait a minute. Aren't we talking about debt today? We are, but we call the emergency fund debt insurance. If nothing else, save $1,000. The biggest mistake I've seen is people decide to get out of debt, pay aggressively down and then have to borrow again because they don't have that savings. And then third thing, we want to pay off all of our credit card and consumer debt first.

Wow, that's exactly right. And I'm really excited to announce a brand new tool from our team here at Faithfi. It's our new debt assessment that will actually give you a clear picture of where you are with your debt and the best way to pay it off. You'll find it at faithfi.com forward slash debt.

That's faithfi.com forward slash debt. Now, Sharon, I know you're going to stick around and answer some questions with me, aren't you? Let's do that.

All right. I'm looking forward to it. Folks, the lines are open. We're ready for you. Give us a call at 800-525-7000.

That's 800-525-7000. Rob West and Sharon Epps with you today on Faith and Finance Live. Stay with us.

Much more to come just around the corner. Well, delighted to have you with us today on Faith and Finance Live. Rob West and Sharon Epps in the studio today taking your calls and questions on anything financial. The number 800-525-7000. We've got some lines open. You can call right now, 800-525-7000. Although we'll talk about any financial topic, if you want to continue on our opening topic of debt, we'd love to tackle that.

And Sharon, as we shared a moment ago, we're really excited about this brand new tool we're rolling out. Well, the assessment that's located at faithfi.com actually helps you have an individualized plan to pay off your debt. I can't imagine a better tool if you're trying to get out of debt. That's exactly right. Faithfi.com forward slash debt.

It's free. It will help you input your debts of any kind, whether it's credit card, mortgage, both. You'll be able to set your minimum payments and then look at the impact of extra payments using either the snowball method, smallest to largest balance, or the avalanche method where you go smallest to largest interest rate. Now, the studies will say that the snowball method is the most effective, right?

Well, it really depends on your personality. What's most effective is what will help you actually get out of debt. That's right.

So economists say the avalanche because of the highest interest rate, but we think snowball is very great if you need a quick win and to be able to say, I've made a milestone by paying off my first one that's the smallest, now I'm ready to move to the next. Anything that involves a little celebration along the way is a good thing. Absolutely. All right. Hey, let's dive into some phone calls today. We've got two lines open. So if you have a question, I'd encourage you to get in on the conversation.

800-525-7000. Let's begin in Illinois. Hi, Kay. Go right ahead.

Hello. My question is I have a son who is a pastor in a small church and has a family. They don't have a very large income and I would like to gift them some money. My question is whether or not there is a tax deductible way to do that. Absolutely. You are able to give money away every year to family members or friends without incurring taxes on that money up to, and Rob, that amount is blanking out real quick.

No, you're fine. It's $17,000 now. That's not going to give you a deduction though. So are you looking to make a tax deductible contribution? Is that what you were hoping for? Yes. That was one thing I was thinking about, yes. Yeah.

Yeah. So the exclusion that Sharon's talking about, which she's right on, you can actually give away up to $17,000 a year per person. So you and a spouse could make a gift up to $34,000 and you wouldn't have to tell the IRS about that. If you go beyond $17,000 per person, you'd actually have to report it. But at that point, it comes off of your lifetime exclusion of more than $12 million. So still not any tax due. Now, if you're looking to make a tax deductible contribution, you can't make that to an individual.

So unfortunately, that would not be possible. But of course, as you look at your stewardship opportunities with God's money and you see a need there and you want to be a blessing to your son who's a pastor, I think, you know, making that gift would be great and obviously a huge help. There's just not going to be a tax deduction associated with it. Well, and you know, I think it's important to remember, we do want to save taxes when we can. But ultimately, what's our goal in our generosity? And God provides the money to us. And it may be that we don't need a tax deduction.

We just need to help take care of our family. Yeah, I think that's right. Is that helpful? Okay. That's very helpful. Thank you. All right. Thanks for calling today. And we appreciate your generous heart towards your son who's serving as a pastor.

That's great. Let's head to Fenton, Illinois. Hi, Joe, go ahead. Hi, thanks for taking my call.

I, my husband and I are both retired. And we were looking at he wants to get into gold. And I had no idea how to where to begin.

Yeah, it's a great question. Go ahead. Were you going to add something to that?

No, that's fine. Well, we certainly, you know, hear a lot more about gold as an investment in times of uncertainty. And given what we've got going on with inflation, and gold being a store of value, somewhat of a hedge against inflation, and just the uncertainty around rising debt levels in this country and some of the other challenges geopolitically, we can understand why there's a lot more folks talking about you need to invest in gold, I think, though, we need to use moderation there. You know, our recommendation is to not have more than 10% allocated in a typical investment allocation toward the precious metals simply because there is more volatility historically.

And there's just not the performance. I mean, for instance, you would have thought gold would have been doing very well in this environment. And although it's it's up recently, it's actually still cheaper today than it was in the summer of 2020.

Despite all that's happened in our country and, and economically. So I think as a result of that, we see that we just need to not go overboard when it comes to gold. So how should I think about investing in gold, we like to divide that 10%. And again, that would typically be a max up between perhaps a 5% allocation that you might call your forever allocation. And that's where you might want to consider buying physical gold, maybe gold coins would be a great option, a little more divisible than maybe a gold bar.

You still have the storage. But the great thing is, if you're just buying the pure gold, and not like rare coins, then you have the ability to say, Okay, what is the spot price today, and then you can understand quickly and easily how much you're being asked to pay above that as kind of a dealer markup. And with the physical gold because you've got the security and there's some cost to buying and selling, you probably don't want to be selling that and buying it very often, I would say you buy it and you just kind of hold it forever and maybe even plan on passing it down.

And then if you want to go beyond that 5% up to a maybe a full 10% allocation. One way to consider doing that is through one of the gold tracking stock. So there are exchange traded funds out there.

And I realize I'm throwing some terms out here. And so you could seek some additional help on this. But there are tracking investments that basically track the price of gold. And they're actually backed by real physical gold, but you trade them like a stock. And so if you wanted to be able to benefit from the rise in gold, because you think it's going to do well in the future. And again, it's an uncorrelated asset, meaning it should give you some protection. And in the case of, you know, a really difficult time economically, then you could buy that gold ETF and have that other 5% be something that's a little bit more liquid. Let me encourage you to head to our friends at soundmindinvesting.org, their website soundmindinvesting.org.

And just search for the word gold and you'll find a number of articles on this topic, Joe, that I think will be a great resource for you to think about how to invest in gold, what's the appropriate allocation, and how it might fit into the rest of your investment portfolio. Does that make sense? Yeah, so that was soundvesting. Wait, soundmindinvesting.

Let me try it again. You're close. Soundmindinvesting.org.

Soundmindinvesting.org. Yes, ma'am. Okay. Do you think I'm going to do an IRA, gold IRA? Is that a good route to go?

You certainly could. Again, that's where we're seeing a lot of marketing around that right now. And again, I think the key is- Oh, is that what you were talking about, the tracking? Well, I think the key is the total percent of your investable asset. So if you might say, okay, between my IRA and my 401k and some other investments I have, I'm going to pick a number, $100,000. The key is what percent of that total amount of investable assets is in gold. And I'm saying you don't want to go above 10% typically. So you might say, well, maybe I'll own up to $10,000 in gold between the physical gold and the tracking stock.

So I wouldn't put your whole IRA in it unless it's a very small part of your overall investment strategy. I hope that helps you. Again, soundmindinvesting.org can be a great resource. We're going to take a quick break. Sharon Epps here today and back with your questions right after this. Well, good afternoon.

Welcome back to Faith and Finance Live. I'm Sharon Epps. I'm in the studio today with Rob West. We're having a great time talking with you on your calls. We'd love to talk to each one of you. If you have a question today, feel free to call us at 1-800-525-7000. That's 1-800-525-7000. Debbie from Idaho, how can we help you today?

Hi. Well, this is probably pretty short and simple. And it's really not to do with borrowing, although I should have brought that in too. But I was asking about title insurance. I've heard Rob talk a lot about we don't need title fraud insurance. But I wondered, it's an older home. It's 1957. And yeah, is it a good idea to buy title insurance?

And it does. We do have a lender. Yes, absolutely. I would recommend that you buy title insurance. That title insurance basically protects you if your ownership is ever challenged on the home. And it's a low cost relative to the potential reward if there's ever a problem.

So yes, title insurance, basically saying that if your ownership is challenged, this insurance will come in and help you is a great idea. Great. Okay. And can I ask just one more quick one that's really specifically to you to do with this home purchase? Absolutely. Okay, thank you. So I am already retired.

Well, semi-retired. And I'm buying this home with my kids because I have the down payment. And my daughter and her husband are going to be paying, you know, like, toward the mortgage. I'll be paying less toward that than they will. And I'm a little nervous about getting into a mortgage again, my home that I'm still retaining and renting out to help me with this.

It's been paid off for years. So I'm going into a mortgage situation again. And it's kind of a little bit too late to back out. But does that sound like a stupid thing to do? Well, first of all, let me say if you haven't closed on the deal, it's not too late to back out, you might lose a little bit of money.

But let's make sure it's a good decision for you. I think the question would be, are you able to qualify for that mortgage if you're taking it out in your name? And are you comfortable with making those payments? One of the things that's really important about debt, especially when you have family members involved, is to be very sure that you're able to take care of whatever obligation you've taken on in your name, and that you're not relying on somebody else to repay it, no matter how much you love them. So you're saying that if I can't pay the whole mortgage myself, that I shouldn't do it?

Is that kind of what you're saying? Well, I think it's something to seriously think and pray about, because whatever you're relying on your children to pay, becomes basically an obligation between the two of you and it can really impact your relationship. Any other thoughts on that, Rob?

Yeah, no, I think you're exactly right. I mean, relationally, when you get money involved, especially when there's debt, it changes the relationship. Debbie, are they going to be on the mortgage as well? Or are you the only one qualifying for and taking out the mortgage? No, we're doing it in all three of our names. And they're going to be on the title too. We're just going to have internal written record of because they're buying it in the long run, all their mortgage payments are going to go toward the purchase cost. So it will be theirs eventually.

And how will that happen? Will you gift your interest to them at some point? Well, they're going to pay up to up to, you know, two thirds of it, say, because I'm living in it too. I'll be in the basement and they'll be living upstairs. So it'll be a shared thing. And then probably, I mean, I'll have to change my will and I will give them my portion of it. Does that make sense?

It does. Yeah, that makes sense. And then what about kind of an off ramp here? I think, you know, anytime you're going into a situation like this, you need to define the exit plan because your life situation may change, their life situation may change, which may involve one of you wanting to move out. Have you all talked about what happens then? Yes, we have. And even more of an off ramp, I still have my home here in Idaho that I'm I'm actually going to be living in the basement.

I'm living in the basement half a year in Idaho and I'll be living in the basement of the new home or new old home in their state half of the year because I have grandkids in both places. So, yeah, yeah, very good. Yeah. So I think the key is my home here. I could I could sell if I really needed to. I'd rather not. But yeah, you know, I could sell them.

Yeah. Well, I think to Sharon's point, I think the key is just to define, you know, for instance, asking the question, what's the worst thing that can happen? Well, the worst thing that can happen is, perhaps despite everybody's best intentions, they could run into a financial difficulty. That means they're no longer able to pay, which also affects you because it could damage your credit or it could force the house to be sold and that's going to take some time as long as you're willing to live with that.

And the same is true for them. If something happened in your financial life that made gave you the inability to repay it, that has a corresponding impact on them, their credit and their home that you all are joining owning jointly. So I think you just need to consider all of these factors. As Sharon said, it's a lot of open communication, a lot of, you know, making sure it's clear in terms of the ownership structure and in writing what's expected of everybody and then defining both the worst thing that can happen and the off ramps. And as long as we can get comfortable with that, well, then essentially you all are kind of going into business together, buying a home that you're going to enjoy and live in. But you realize you have two different lives and God could direct one of you in one direction or the other. And either of you could have financial difficulties along the way. So we just want to make sure all of that's been considered because what's paramount is that we wouldn't do anything that could ever result in a damaged relationship. Does that make sense?

It surely does. And I'm glad you guys both brought that up about the off ramps because that was not something I had considered putting in writing. So we will need to add that to our our internal document. Thank you. You're welcome. Very good. Well, listen, you sound like a great mom and we're delighted that you have this opportunity to perhaps have a really exciting season of life with your kids. And I'm sure you guys will all enjoy that. Thanks for being on the program today, Debbie. We appreciate it. Well, folks, we're going to take a quick break. We come back.

We've got questions stacked up, so we'll be tackling those right around the corner. Let me also mention Faith and Finance Live is listener supported, which simply means we rely on your generous gifts to fund this ministry. All that we do on the air, our broadcast team, our app, our website, it's all because of your generous support. And we could use your support here at the end of September. You can make a gift at FaithFi.com.

Just click Give. We'll be right back. We're talking about debt and all other things, financial and faith and finance live today. Rob West is in the studio. I'm Sharon Epps, and we're enjoying taking your calls and exploring this new debt assessment. We're so excited to announce that FaithFi.com forward slash debt.

You can go and take a quick inventory of your debt and get a customized repayment plan. Rob, what are you excited about with this? Yeah, I think that it's just a really simple tool. So our team here, led by Chad Clark, is always thinking about practical tools, but they like simplicity.

And I know that speaks our language, Sharon, where you can get in there and just have a really simple way. If you're a non-financial person to kind of step through the questions that it asks you about the various types of debt you have, you'll need your balances and your interest rate and your minimum payment. But other than that, you'll have everything you need to figure out exactly which method of payment, either the debt snowball or the debt avalanche works best for you.

You can apply with an easy slider the additional amount you'll add above the minimum payment to see how much savings you can have in interest and your payback period. So we think it'll be a really helpful tool. It will also connect you directly to Christian Credit Counselors dot org if you could use their services as well.

So check it out today. FaithFi.com slash debt. Well, Rob, do you know the most difficult part of repaying debt? What's that?

Getting started. Yes, exactly. It really is. That's right.

I mean, in Germany, how much debt you really have and the steps to get out of debt. That's the most fearsome part. And it seems like if you will just sit down, get that information together and see that there's a plan and there's hope. That's the most important thing. Yeah, that's exactly right. Well, let's go to our callers.

Jeremy in Illinois. How can we help you today? Yes.

I have a question. My wife and I have a small savings account. And let me see, it's in the bank and it doesn't grow a lot of returns. So I wanted to know what the best way for us to do with that money.

All right. Are you relying on this for your emergency savings? Do you need access to it pretty quickly if something came up?

Yes. I mean, this is our it's our only savings account that we have. So, you know, we try to deposit as much as we can into it.

But if we need it for something emergency, we would have to take it out right away. OK, well, let me refer you to Bankrate.com. That's Bankrate.com. That's the best place to go and see the best savings rates that are being paid.

I'll also tell you that many of the online banks that are offering the higher savings rates, you can easily link to your current checking account so money can be moved back and forth pretty regularly between the accounts. So congratulations for savings and for trying to maximize your return. Thanks so much for calling, Jeremy. Now let's go to, is it Estelle in Illinois? Yes.

Yes. Thank you. Hi Estelle.

Hi. I'm calling because since we're talking about debt of owing and paying, a person owes a Christian owes me a thousand dollars and they are not paying me. It's a security deposit that I had up and they kept the larger part of the deposit and they lied, deception on why they kept the money. And I sent them a demand letter and they have not responded to the demand letter. So what do you do when debt is owed to you? Yes, that's a great question. You know, I think that it's important to look at this from a financial perspective, but also from a spiritual perspective.

And so the Lord calls for us to, as much as possible, to live at peace with other believers. It sounds like you've taken the first step to assert the fact that they haven't paid what you believe is owed to you. I would really recommend that you get a spiritual leader involved that might be able to help the two of you have a conversation. I think sometimes it's easy to jump to legal types of solutions when relationally there may be an opportunity to have better communication and really work out the wrong.

It may be that that person is considering something you're not aware of. And those are the types of things that an individual third party that's a spiritual leader could help you walk through. So I would encourage you if there's another strong Christian or a pastor that might be willing to sit down with the two of you and see if you can come to a conclusion that way. I think that's great advice. Estelle will certainly ask her faith and finance live community to be praying for you.

We know this can be difficult to navigate relationally and yet Sharon has laid out the biblical model. And so let's trust the Lord that he'll open that door, perhaps give you an opportunity to see something you haven't, and the same for the other party, and pray for an amicable resolution here that's God-honoring. Thanks for being a part of the program today. May the Lord bless you. Let's head to, well, we're going to be, well, we do have time.

My apologies. Tennessee, Brian, go ahead. Hey, thanks for having me on. I have two questions.

Let me start with the first one. So in the event when my mother passes her house, I do not anticipate myself keeping the house, renting it or doing anything with it, but go ahead and liquidate it. So let's assume we liquidate it. What's the best option to avoid tax implications at that point? Now, I'm not trying to pass her off yet at all, but when that happens, what's the best way for us to divert that money to? Yeah, so is this home in your mom's name solely at this point?

It is because there is an incremental amount still owed, just a very, very small amount. When that's accomplished, then she will switch it, then she's going to switch the estate to ours. Okay, now talk to me about that.

What do you mean there? So prior to her death, she's planning on gifting this property to you? Well, I'm assuming that's the plan, right? Well, I think the estate, what she was planning on doing, when she passes, then it would be transferred to us. And that's what you want.

Now, let me just talk to you generally. It's always good to get specific financial advice and tax advice based on your actual circumstances, but generally speaking, the way it works is you absolutely want to inherit that property as a part of the estate, not prior to her death. No, if through either a TOD, a transfer on death deed or a trust or even just a simple will, that property is then left as a part of the estate to you and your sister, you'll enjoy what's called a stepped up cost basis, which just simply means doesn't any longer matter what she paid for it to determine whether there's capital gains, the new cost basis is the property value as of the date of death, which means that if you then turn around and sell it, there are no taxes because it would step up to the new market value and then you'd turn around and sell it at that market value.

If you all held on to it and it continued to appreciate, well, then you'd have capital gains, anything beyond the market value as of the date of death. Does that make sense? Yeah, absolutely. So yeah, I appreciate that.

Obviously, I want to, I do not plan on keeping it at all so that we would liquidate it very shortly after her death and then take those funds, separate apart them in two ways and then, um, you know, uh, determine what, what I want to do with the funds from that point. Yeah, exactly. Good. Great. Now the second question, if you got just a second, if I had, let's say I had a couple of gold, I do have a couple of gold coins, uh, would like to liquidate them.

I understand the value on a quick Google search is about $2,200 each. I have two grandsons, three and four. If you were to take that money. Looks like we lost you there, Brian. Can you hear us? No, I'm sorry. I can still hear them.

I thought I was, I thought I'd been bumped down. Yeah, no, that means we're coming up on a break. So let's do this. You stay right there. We'll take this break and we'll come back and talk about these gold coins and your sons and where you go from here.

Hang on the line. This is Faith at Finance Live. I'm Rob West.

She's Sharon Epps. We're taking your calls and questions today on anything financial and we'll be back with much more right after this stick around. So you want to be a wise and faithful steward of God's money. We want to help. This is Faith at Finance Live.

Rob West and Sharon Epps with you today. Hey, by the way, we rolled out a brand new tool. We think you may find helpful. It's our new debt assessment tool. You'll find it at faithfi.com slash debt. It'll help you get a plan.

And as Sharon said a moment ago, that's really the key. A plan is the key to getting started. So you can actually finish paying it off. It'll help you get a plan and get started in paying off your debt once and for all.

Faithfi.com slash debt. Just before the break, we were talking to Brian in Tennessee and we were talking about his mom's estate. But Brian, you had a second question related to some grandsons and gold coins. This will be interesting.

Go ahead. Correct. So today's value is somewhere around $2,200. Each one of them has one.

They're three and four. If you were to take that money, take those coins and sell them, obviously, and take that money and invest it for them, how could you do that where the compound effect would be more beneficial than just retaining two gold coins? Yeah, I like the way you're thinking because I think you could do better, perhaps. I mean, we don't know where gold's going. We don't know where the stock market's going. But just based on history, you would do better in a properly diversified stock portfolio. You wouldn't have everything in one asset class, first of all. And you could be, you know, among various types of companies and sectors. The other benefit you have in stocks versus gold is you have the ability to earn an income in addition to the capital appreciation.

It's also a lot more liquid. So what would I do? Well, after you liquidated it, I would open perhaps two accounts in your name or in the name of you and your wife, one earmarked for each child. And then if, you know, you want to pick those investments, just find a good high quality mutual fund. Perhaps if you want to align this with your convictions and you want to make sure you're investing in a way that aligns with your values, you could use some of the faith based investing funds. But the idea would be to kind of put the money into a mutual fund where you have good diversification and then just let it grow. And the benefit of keeping that in your name is that you would choose the time and the place where you'd pass this money off to them. And you could ensure at that time that they were financially and spiritually mature enough to receive the gift as opposed to you putting it in a custodial account where it automatically becomes their asset at, let's say, 18. Does that make sense?

It does. Let me just for purposes, let's say we allocated a 30 year age. Right. And a 10 percent compound interest over the next 26 years.

Right. Is that how I should look at it? Maybe to consider its worth in 20 by the time they're 30 years old. That kind of how you would look at it? Yeah, I probably wouldn't use 10 percent. I'd probably use something like eight percent.

But yes, you could use any kind of compound investment calculator on the Web and type in your starting value and the rate of return and determine what you'd have 20 years down the road or whatever that might be. Perfect. OK, very good. Right. All right, Brian.

Absolutely. Thanks for your call. Let's go to Holland, Michigan. Hi, Cindy. Go right ahead. Hi, how are you? Great.

Yeah, I got a question. I'm retired now and I'm debt free and I have about fifty six K in the company I used to work for for thirty five years. And I'm wondering what to do with the money. Do I leave it in the 401k and let them invest it? Because I got it kind of safe. But one of them is a little bit worse from investing in some money or what do I do about that? You know, I just want to figure out what to do with it.

All right, Cindy. Well, we want to help you figure that out. I think one of the general principles that we encourage with 401ks is that when you leave the company, it's often helpful to go ahead and roll that money out into a brokerage account where you have complete control and access over it. So in the company funds, you may be limited in what you can invest in.

You also sometimes can have changes, corporate takeovers, those kinds of things which make it more difficult to navigate. So if you get it out of the company, you're able to manage it on your own. Now, we want to be sure that you roll over that money. So you're not taking a distribution, but you're actually asking them to transfer from the company 401k to your new 401k directly.

You've never touched the money directly. And that maintains the tax status that you currently have. Oh, okay. Okay. Is that is that helpful?

Yeah, but it does that. Do I have to go to a financial advisor and have them look at that? Or is that something that I can, I mean, because I'm going to be paying somebody to do something with it, correct?

Yes, but we can you can do it yourself if you're up to that. But I think it might be helpful to check with a certified kingdom advisor and get some directions so that you're sure that you're handling it correctly. If you go to faithful.com and search for a certified kingdom advisor in your area, they may be able to give you a better direction there on what you need to do. Thank you, Cindy. We appreciate your call.

And God bless you as you make these changes. Let's go to john john's calling from Florida today. How can we help you? Hey, john, are you with us? All right, john, it looks like we're having a little trouble with your line. We'll try one more time. Can you hear us? All right, we're gonna have to hear a check that out. We'll see if we can get you on here in a moment.

Let's go to Chicago, Katrina, go right ahead. Thank you for taking my call. I have a question in regards to an annuity. I have money invested with a financial advisor now in a Roth account.

And in order I'm 59 and a half. So in order to try to get income where I would have a generated or guaranteed income per month, when I retire, he's advising me about putting it into an annuity, which this would be it has a rider on it where I have a guaranteed income with a minimum of 6% return, it could go up, of course, but it would never go down. And I just had questions about what do you feel about this type of annuity? It's not an index annuity.

But I know other people are telling me to steer clear of a new Yes. And in general, I think there's just several things to consider with the annuities that might outweigh some of the benefits are definitely are some of those benefits. But fees on annuities tend to be higher. There's a lack of liquidity if you needed to get to that quickly, it's more difficult to do that. And inflation can also erode your buying power. Whereas if you're not locked into that, you have an opportunity to take advantage of it.

So generally, we wouldn't recommend an annuity for this particular situation. Okay. All right. Thank you very much. All right, Katrina, thanks for calling today. We appreciate it very much. Looks like john is ready and Pembroke pines. Go ahead. Sir, thank you for taking my call.

And yeah, and ma'am had a quick question. So my my my hospital that I work for just recently, is offering us a Roth 403 B, along with a regular 403 B and the regular one has a match. And I don't think the new one's gonna have a match at least on the first year.

So it starts on the second of the next year of next year 2024. So I wanted to know how you would split up contributing, if you would. And then also, if I should stop doing my outside rock, everything listen, so I can max it out. Yeah, very good. So how much what percent of your income are you putting into retirement plans right now?

Do you know? 15 to 20%? Okay, yeah, that's great. And so you have the option to go with one or the other the traditional or the Roth, or to split it between the two? I think the option is split between the two. All right.

And do do they both offer the matching depending on no matter what you choose? No. So from what I understand, the Roth does not have a match as of now. Okay.

But given that you're putting in 15 to 20%, you could fully max out the match, and then still contribute to the Roth, right? Correct. Yeah. So it's interesting. I was actually just talking talking with Mark Biller about this this week about some new data that's out. You know, the challenge is, if we knew what the tax code was going to do in the future, and we knew exactly what your income was going to be in retirement, we could say, well, of course, you'd want to do, you know, the current deduction in the traditional or no, you'd want to pay the tax and get the tax free growth, you know, in the Roth, but we don't, I mean, those are unknowns. And so a study was done recently that came up with a rule of thumb.

And that's all it is, it's, it's not going to be a one size fits all. But it just based on the data said that if you add 20 to your age, that that was the ideal percentage to put in a traditional and then you put the rest in a Roth. So you know, if you're 40, you'd put 60% in the traditional, you'd have 40% in the Roth. And then you'd have these kind of two buckets, kind of growing simultaneously. And then in retirement, you would actually choose based on the tax code and where you're at and whether or not you have to take a required minimum, you could pull from some from the Roth, you could pull some from the traditional, if you wanted to do your giving out of the traditional through a qualified charitable distribution, you could do that. So it just gives you maximum flexibility to kind of have both the tax deferred and the tax free buckets growing simultaneously. So whether you split it 50-50, or you apply this rule of thumb that I mentioned, from this University of Arizona research, I think the big idea there is to have both of them working for you makes a lot of sense. Do you follow that?

Oh, totally. So you said the one that plus 20 for the traditional? Yes, correct. Your age plus 20 is into the traditional and the rest into the Roth.

That was at least as they analyze just hundreds and hundreds of situations. That was the the optimal balance, if you will, between the two. Awesome. And then the Roth that I have outside of my company, would you still I max that out as well? So would I continue to do that? I think so.

I mean, that gives you plenty of opportunity there. I think the key is, given that you're putting so much in you got 20% out of your employer, sponsor plan plus fully maxing out your Roth, I just want to make sure you're well planned, and that you know what your finish line is, so that you can maximize your giving along the way. Now you may be behind and trying to catch up and that's great. But I wouldn't miss out on the opportunity to do some planning with a certified kingdom advisor around how much you actually need for retirement.

You can find a CKA on our website, faithfi.com. Thanks for your call, John. We appreciate it. Sharon, we're out of time, unfortunately, but it's been a lot of fun. It has been.

Folks, Faith and Finance Live is a partnership between Moody Radio and Faith Fi. On behalf of Tahira, Dan and Jim, we thank you for being here today. We'll see you next time. Bye-bye.