Perfect Storm for Debt

A joke going around the internet actually isn't that funny. It goes like this, if anyone is Christmas shopping for me, I take a size large in student loans. Hi, I'm Rob West.

A perfect storm may be coming that could make this Christmas shopping season not funny at all for folks with student loan debt. Neely Simon joins us today with the details. 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, our guest Neely Simon is a certified credit counselor with Christian Credit Counselors, an underwriter of this program. Neely has been following events that affect consumer debt. And she's here today with another report. Neely, great to have you back.

Thanks for having me on the show, Rob. Now, we set this up by saying there's a perfect storm brewing for debt, Neely. So why is that the case?

So there's a few reasons that I'd like to touch base on. One is that student loan payments resumed in October after being on forbearance for three years. The federal student loan debt is estimated to be $1.7 trillion, which affects 40 million Americans. So as a result, a monthly $7 to $8 billion will have to go towards student loan debt. And then the average monthly payment now is about $503 due to inflation. As we all know, inflation is not going away. Although it is slowing from last year's 8.5%, the Consumer Index states that it is still running at a 3.4% annually, where food inflation is at 3.7, and gas prices are up over 3% annually, but spiked over 10% in August alone. Despite all these reasons, consumer spending remains high at 4.9% above last year.

Well, if that's the case, Neely, how is it that spending actually increased in the last year? The hard reality is that people are still living outside their means, spending more than they make and relying on credit cards to make ends meet or to keep up with their lifestyle. Bank rate stats show that 46% of credit card holders are carrying a balance, which is up 39% from last year. The average credit card interest rate is now 20.24. And for people seeking credit counseling, we see the interest rates to be closer to 22, up to 26%. And then lastly, the average balance per account is around 5,500 and climbing.

Wow. Well, then the last part of the perfect storm is that we're coming into the Christmas shopping season when folks really feel pressure to spend money that perhaps they don't have. So what advice do you have for them, Neely? I would say don't fall victim to retailers offering you a discount or promotional rate by opening up a new account. And then prepare your Christmas budget. Know how much you can afford and don't go over it. One way to do this is the good old envelope system where you use all cash. This will ensure you don't go over. Then you can make a list of all your presents with spending limits. Another option is you can give cards or make inexpensive gifts and then allow for some budget in regards to decorating, food, holiday baking and other things. But don't be excessive. Remember, he is the reason for the season, not all the stuff. That's exactly right.

Now, sometimes things just get away from people, though, Neely. So if someone is struggling with credit card debt, how can Christian credit counselors help? So we offer a debt management program which lowers your payments and interest rates, getting you out of debt about 80% faster. Our program helps you do it the right way by paying off your debt in full with interest ranging between one and 12% APR. We also offer a free consultation that provides you with a comparison estimate which will outline all the benefits and the fees. Keep in mind there's no commitment. We really just want to educate you on your options.

Proverbs 3 27 states, Do not withhold good from those to whom it is due, when it is in your power to do it. Christian credit counselors is here to help you get on the road to financial freedom, and we look forward to speaking with you. Absolutely, and you've been great partners for a long, long time, Neely. We're so thankful that you stopped by today with some great information. Thanks for being here. Thanks so much.

All right. Folks, if you have credit card debt, my preferred way for you to get out of debt is debt management, and that means Christian credit counselors. So check it out today, christiancreditcounselors.org.

Get those interest rates down and pay that debt off up to 80% faster. That was Neely Simon with Christian Credit Counselors. Your calls are next on Anything Financial, 800-525-7000. This is Faith and Finance Live.

Stick around. Well, I'm grateful you've joined us today on Faith and Finance Live. I'm Rob West. It's time to take your calls and questions today on Anything Financial. We've got a few lines open. The number to call today, 800-525-7000. Let's dive in. We're going to begin today in Montana. Hi, Jane. Thanks for calling. Go ahead.

Hello. I would love to hear your thoughts on funding short-term mission trips, and by that I mean anywhere from two to four months. I've gone on a number of trips over the years, and so far I have been blessed to fund about 100% of that myself. The Lord blessed me while I was working full-time, and I could set aside money. However, about a year and a half ago, I retired from my nursing position so I could focus more on participating in this mission work more frequently. So my ability to set aside funds has pretty much disappeared, and my, quote, mission pot has run dry.

I'm currently planning to go back to the field in early 24 for a couple more months. Asking for assistance monetarily has been pretty hard for me. I've been told that I shouldn't feel that way. That folks who can't go might appreciate being able to. So therein lies my question. Is there really a, quote, need if you have not exhausted all the funds in your own account, or is it better to, I'm going to say rob Peter to pay Paul, if you set aside maybe for major home maintenance or replacing a car, should you go into those funds, and use that before you reach out to others, and then just trust the Lord to fill in the gap for the next trip, or the next need?

Yeah. Well, it makes a lot of sense, Jane. I appreciate that question, and you know what, I don't think there's a right or wrong answer there. I think I would start by just asking the Lord for some direction there.

In my view, I think the way you've approached it is right. If you have the ability to fund it out of current cash flow without going into debt or anything like that, then that's great. You're doing incredible work, and during your working years you had the ability to fund that. I think now, given that you are in a different season of life in terms of the resources you have available, I don't think you asking for the opportunity for somebody to invest in your work to take the gospel to the ends of the earth is out of school at all prior to you exhausting, in your words, all of your funds. I mean, this idea that just because you've got some reserve set aside in an appropriate fashion for upkeep of the car and the house, your emergency fund, that type of thing, and that you're still inviting others to participate in sending you on the field to take the gospel, I think is perfectly appropriate. They have the opportunity to either participate or not, and it's not like you're asking them to help to fund your lavish lifestyle or anything like that.

So again, I think it's a matter of conviction. It's ultimately between you and the Lord as to how much you should participate versus inviting others to participate with you. But I think the extent to which you've already done that out of your own resources and now in this season of life, God's continuing to give you that burden to go and perhaps even accelerate the amount of work that you're doing, but you don't have the resources to cover that fully without spinning down everything you have to zero. I think inviting others to join you in that journey is perfectly appropriate. And I think you're right in the counsel you received around this idea that there's some that want to be able to take the gospel and either they haven't been called to do so, well, we've all been called, but in the sense that actually going and being sent, perhaps this isn't a time where they can go.

Maybe they're beyond even physically the ability to do the kind of trip that you're doing, and yet they have the resources to be able to partner with somebody like you. You're giving them the opportunity by inviting them to participate. So I would be on board with that idea.

Okay. Well, I appreciate that. I've been wrestling with it and I thought, well, you know, I could come up with an amount that looks like I might need. I could toss it out there and then just trust the Lord. He, you know, he can prompt people, like you said, to give or to not. And I can take that. If it comes up short, then I go back to my own funds and make up the difference. And that way I've given the opportunity.

But yeah. I think that's exactly right. It just kind of let the Lord lead in that direction and see where it goes as you cast the vision and find others who might be willing to come alongside you. Where are you headed, Jane, if all of this works out?

Going back to Africa. This will be the one to third time to work on a surgery ship. So awesome. Put in a plug for mercyship.org. Excellent.

I know Mercy Chips does incredible work all over the globe. And so I'm delighted to hear that you're taking the gifts and talents God's given you and using them to meet physical needs and spiritual at the same time. So that's great, Jane. I'm delighted to hear it. Well, thanks for being on the program today. May the Lord bless you as you go. And hopefully a lot of others will be on board and sending you. God bless you.

To Chattanooga. Hi, Karen. Go ahead. Hello.

So happy to talk to you. So can you hear me? Yes, ma'am. Can you hear me okay? I sure can.

Go right ahead. Yes. The question is about RMDs. Specifically, my mother, in years back, 10 years, did not fulfill her RMD and was charged 50%. And so my birthday, I'm going to be specific, is that right? And I would like to know when I need to donate my RMD and where is it going to come from? How am I going to find out how much that I owe to, I guess, each organization?

Yes, very good. Well, the date is December 31st of every year when you're required to take a required minimum, it has to be withdrawn by December 31st. And currently, and it depends on your age, but if it starts in the first year following the year, you reach age 72. And so from that year moving forward, you would take it each year by December 31st.

In most cases, your custodian would notify you they're required by law to notify you by January 31st each year of the amount and the deadline for taking it. But it's basically a number that's calculated by the Internal Revenue Service. So you take the balance of the account from the prior end of year, December 31st, and then that's divided by the life expectancy factor that the IRS publishes each year.

So they basically have a number that factors in your life expectancy. And when you divide the account by that number, it tells you how much you have to take out by the end of the current year. So generally what happens is it would be just come out of the cash portion of the account.

And if you have stocks in there, for instance, you would have to sell the amount of stocks equal to the amount you're taking out so that you'd have that money available. Does that make sense? Well, it makes some sense. Yeah. Where is your account located, Karen?

In Chattanooga, Tennessee. Right. But who's, no, what's the name on the statement you get every month or every quarter?

Two statements from Benjamin Edwards and Primerica. Okay. Yeah. So you would contact each of those firms and they would let you know what that required minimum distribution is. And then they'll take that out and essentially send you a check at that point and you can do whatever you want with it.

The key is just that you take out the appropriate amount by the end of the year. I've got to take a break. Stay on the line. We'll talk a bit more off the air. We'll be right back. Thanks for joining us today on Faith in Finance Live. I'm Rob West. All the lines are full, so let's go right back to the phones. Rockford, Illinois. Hi, Sue.

How can I help? Okay. I'm scheduled to receive an inheritance and it will be the second distribution this year from the total estate and the first distribution we gave to our children. And the second distribution we're wondering about giving to the grandkids, of which there's six grandkids ages 20 to 12, would that make any sense?

And if so, what kind of an investment or savings account or whatever could we... Each of the six grandkids could receive $7,600. Okay. Very good. Yeah.

A couple of questions, Sue. Do you want this specifically to be earmarked for college or would you like for them at some point in the future to be able to use it for whatever they want? I think use it for whatever they want, yeah. Okay.

Very good. And then the second question is, do you want to be able to control the time, basically the age and the conditions under which they receive the money or would you be comfortable with them automatically receiving it at the age of majority, typically 18 in most states? Probably the age of majority, yeah.

Okay. Because in that case, you could open what's called a custodial account where essentially it's being held for the benefit of the child. They're going to get it at the age of majority and you would help to direct it and in a sense invest it until that time. But when they reach the age of majority, they'd automatically receive it. So, you know, the only downside to that approach that you just have to think through is, you know, the odds are that one of them will probably, you might feel, not be ready either financially or spiritually to receive those funds. And yet you wouldn't really have a choice. And if they wanted to go use it to buy a sports car, they could.

So that's the only consideration. But if you were comfortable with them automatically getting it at the age of majority, then it would create some benefits because it's not going to be taxable in the same way and there's some benefits to it being in a custodial account. So at that point, you would open a custodial account for each of the six. You would then make the initial deposit and then you just have to decide at that point how you want to invest it. And you could choose either to put it in stocks and bonds. You could put it in, you know, guaranteed type investments like maybe a CD. But if you've got a time horizon of at least five years, preferably 10 years, I would say, you know, allowing this to be put in, you know, to some high quality mutual funds so it has the ability to grow over the next, let's say, decade makes a lot of sense. But you are taking risk and therefore it does have the potential to lose value.

So give me a sense of, you know, what your thoughts are on the investments. Well, considering two of the grandkids, one is 20 and one is 18 already and then the other one is 16. So there wouldn't be five years or anything. And this, you know, the age of majority doesn't fit to six anyway. So yeah, that makes sense. So are you looking just to give them the gift right away or are you wanting to give it to them down the road? Well, I don't know.

I didn't know. Okay. What would you advise?

Well, it really just comes down to, as you and your husband really think through this, what are you trying to accomplish? And so if it's really just to bless the grandkids as soon as they're ready to receive it, then as soon as you get your distribution from the estate, you could turn around and write them a check. And it's not a taxable event. You can, you know, give all of that money. You said you're looking to give how much? Around $7,500? Yeah, $7,600 basically. Yeah. Okay.

Yeah. Well, for 2023, you can give up to $17,000 per person without even letting the IRS know. So you could just turn around as soon as you receive that distribution and write that check to each of the grandkids. If there are a few of them that are too young to receive that now, then that's where you'd open the custodial account. But if you're just looking to essentially pass it right on to the grandkids and bless them with this gift, then there's no need to invest it. You'd let them use it for whatever purpose they want and you could go ahead and give it to them right away. Right. But then we wouldn't have any idea whether the parents were going to just take over and use that money themselves or whether they would open up an account either, right? Would we?

Well, yeah. So I think, you know, with the ones that are adults, you would just write the check directly to them and then it's their money to do what they want with. When you open the custodial account and you'd make the deposit for the minors, nobody can touch that money unless it's used for the benefit of the children. So nobody would have access to it. Now, I would advise you to bring the parents into the conversation just so everybody's on the same page. But if you drop it into a custodial account for the ones that are not yet 18, then it could either sit there in cash or it could go into a CD or it could go into stocks and bonds. And then at some point when they turn 18, then they would be able to take over the account and manage it themselves.

But nobody would be able to pull the money out and use it for a purpose other than to benefit the child. Right. Okay. All right. Okay. Yeah.

We better get the parents involved. Okay. Thank you. I do appreciate that. You're welcome, Sue.

You sound like a very generous grandmother. Thanks for calling and being on the program today. We appreciate it.

800-525-7000 is the number to call. We're going to take a break in a moment when we come back. A lot more of your questions also coming up a little later in the broadcast today.

Bob Doll stops by. Bob will weigh in on the markets and the economy. A lot going on as of late. Most folks really surprised at how well our U.S. economy is holding up despite these high interest rates. It is proving to be far more resilient than most expected. Let me also mention here at the end of the year.

That's right. Only about a month and a half remaining in 2023. This is an important time of year for us to hear from you with your financial support as a listener supported Ministry of Faith and Finance Live relies on listener support to bring you this broadcast each day. If you'd like to be a part of the group of stewards around the country that are funding our work, we'd invite you to visit faithfi.com. That's faithfi.com.

Just click give between now and December 31st. We'll be right back. Great to have you with us today on Faith and Finance Live. Let's head right back to the phones. By the way, we have a couple of lines open. 800-525-7000. You can call right now.

Let's go to Ohio. Hi, Arthur. Go ahead, sir.

Yes. I was calling because around February of this year, I decided I wanted to try to work really hard to get debt-free by September of this year. I do have an investment.

I'm 68 years old, and I do have an investment with Charles Schwab. I had about $60,000 worth of debt. What I did was I had about $35,000 or $40,000 in the bank. It wasn't making any kind of money, so I decided to start using that, paying off cars that had interest on it. It was like six credit cards. Then I had like three of them that had 0% finance that had to be paid off by a certain time. Around July, I decided to call Charles Schwab and get an advancement of $20,000. Long story short, I was able to pay everything off.

I had to pay the $20,000 back within 60 days, which I did. Then what happened was I ended up paying everything off by September 3rd. So now I got these credit cards that are 0-0 balance.

Do I cut them up or get rid of them? Would that affect my credit? The only thing I owe now is my house and maybe about $8,000 on my vehicle. All right. Yeah, very good. Do you use the credit cards for budgeted items? I try not to.

I got one that I use for, because I have a company, I have my own company. By the way, would you do me a favor and just turn your radio down there in the background? Okay, there we go. Yeah. All right, great.

Yeah, say that again. Yeah, so I only use one credit card, maybe two. What I use them for is like groceries, gasoline, and a little basic stuff. Then I pay it off at the end of every month.

Sure. Yeah, that's great. Yeah, that's going to keep the information being reported to the Bureau with you as an on-time payer, which is a good thing just to keep a healthy credit score. We don't want to ever go into debt in order to build up our credit score, but if you're using it properly for budgeted items, paying it off at the end of the month, not paying any interest, and especially if there's not any annual fees on these cards, then I think that's a good thing because it's going to ensure that you have some ongoing positive credit history. But with any of those cards that are not being used actively, I think there's no reason not to close them. I mean, yes, your score will temporarily dip, but it'll come back within a few months. The only thing you may want to consider is if you were about to go out and try to qualify for a mortgage, or you needed to buy a new car, and you were getting a loan for that, and all of a sudden your credit score was going to be a factor, then you may want to wait until after you get beyond that to close them. But if there's nothing on the kind of near-term horizon that you're planning to do that requires that you would qualify for a loan, then I would say for any of those cards you don't plan to use, they're not going to be a part of just kind of your normal course of spending and paying it off as a part of your budget, then I would say absolutely close those, because then that's just one less card that could be compromised. You know, even if the account is not being used, you still need to check it each month just to make sure that there's not any transactions on there that you haven't authorized, and by closing it you get out of that.

Does that make sense? Yes, that makes a lot of sense, because my score right now is 845. So you really don't need to worry, because anything that would happen is probably only going to require, I mean you may see a 20 or 30 point drop if that, and you know, even if you were to go out and try to get a loan tomorrow, anything over a 720 is going to qualify you for the very best rates and terms.

You're way higher than that. So I would say any of those kind of cards that you're not planning to use, I'd definitely go ahead and close them out. Alrighty, thank you so much. I appreciate that. Alright, Arthur, thanks for your call today. 800-525-7000 is the number to call. We've got some lines open. You can call right now. Let's go to Florida. Hi, Debbie, go ahead. Hi, Rob, thank you so very much for taking my call.

Sure. So I retired in September. I'm 70 years old. I did start taking my Social Security at 65 and changed from working full-time to part-time in order to start making the transition of less income. We have no debt. Our home is paid for, cars are paid for. I got that taken care of in September, the last payment on the car.

We do have some credit cards that I do use, but for about a year and a half now, they're paid off every due date. So I don't carry a balance. My question is regarding in 2019, I transferred the majority of my retirement funding from my 401k at my job through a CKA to a company called Thrivent. Through them, I have a deferred annuity. Let's see, it says a flexible premium deferred variable annuity and a second that's a Security 1 deferred annuity. I also have a traditional IRA and a Roth IRA.

My question is regarding the 401k that is still with my employer. We have some, a couple of major expenses coming up, a roof that's got to be put on that is severely damaged on a building on our property and estimates are, I haven't gotten, there's somebody coming out tomorrow to give me an estimate on that, but when I talk to the clearing house that manages the hospital's 401k, it's an all or none. I thought I could take part of it out this year and then part of it out next year to kind of balance the tax impact.

But they said it's all or none. I mean, I can roll it into the Roth IRA that I have. But my concern is, as I said, we have someone coming out in the morning for one of the estimates on this roof that needs repair. And I don't know if I'm going to need the money before the first of the year or not.

And I am concerned about the tax impact. Yeah. So is the 401k a Roth 401k? There's a traditional IRA and a Roth IRA within the retirement. Now the one at work, as far as I know, is just a straight 401k.

Okay. But you're still employed there, right? You haven't separated from employees?

I retired in September. Oh, okay. So you could roll that out to an IRA and not leave it there.

Yeah. And then what do you have in the Roth and the traditional IRAs? How much? The one that I have to thrive in it, the traditional has, as of the end of September, just under 112,000.

The Roth has just under 67,000. Okay. What I would do, I mean, I think now, yeah, go ahead. Go ahead.

The deferred annuities have a gradually decreasing penalty. Sure. It is down to 3%. If I were to draw anything out of it this year, it was established in September of 2019. Okay.

Yeah. I would check with your CPA here, Debbie. I mean, you can definitely get those funds. You're just going to want your CPA to look at kind of what your tax bracket is based on the income that you have and determine whether it makes sense for you to pull it over two tax years or not. You could, he or she may just have you pull it from the IRA or they may have you pull it from the Roth.

As long as you're not going to get a penalty in doing so. So it really just is a tax consideration. And I wouldn't be able to tell you that without looking at your whole situation.

So if you normally prepare your taxes, I'd get a CPA to do it this year. If you already have one, I'd ask that person to weigh in on this. We appreciate your call.

Stay on the line. We'll talk a bit more. Great to have you with us today on Faith and Finance Live here in our final segment today on a Monday before we head back to the phones. Bob Dolls here. Bob is chief investment officer at Crossmark Global Investments, where investments and values intersect. Bob, here we go again another week, starting off, well, kind of flat ish. What do you make of this market? Where are we going from here?

Yeah, kind of mixed. As you said today, after a big run last week, especially on Friday, a lot of averages moved above their moving averages, which technically is a good sign. So the world is looking as the glass is half full rather than the opposite. And I think that's a function of people not so worried about inflation. We get an important CPI monthly number tomorrow, Rob, as you know, and people be analyzing that where the commas are and every nook and cranny in that number. But I think at the moment, people are feeling like earnings are OK. Interest rates have backed off.

Maybe we're OK. Well, right. And, you know, the more we analyze all this data, it just continues to point to the resiliency of the U.S. economy, more so than any economy around the globe. Right.

Exactly. With a focus on the U.S. consumer. The debate is, will they run out of excess savings so that their spending, which has been robust, peters out some. And of course, that's related to the job market. And we've seen those numbers get a little weaker, Rob. We'll be watching those numbers carefully, the weekly unemployment claims, the monthly employment numbers. If they slow, that will put a dent in the consumer and will have more caution and a slow down. Almost inevitably, the economy is going to slow from the very strong pace of growth we saw in the third quarter. Yeah.

All right. What about sectors of this market, Bob? Are you surprised to see the big tech companies continuing to outperform? They've done so well. I think it's a function of people saying, well, look, they may not be the cheapest stocks in the marketplace, but they have strong balance sheets, good cash flow, a lot of cash on the balance sheet in an uncertain world.

There are the kind of stats you want. And so people drift toward those well-known names. Yeah.

No question about that. You mentioned the job market, Bob. I know we're continuing to get data there. What is the latest on the U.S. employment market? So we've seen unemployment move up. We just had early this month the monthly employment numbers, and we had 150,000 new jobs. That's the slowest we've seen in quite some time, as you know. And the unemployment rate ticked up. The lowest last April, 3.4%. Now it's 3.9%.

Historically, when the unemployment rate moves up by half a percent, which it has done, that's often a recession signal. So yet another mixed piece of information for all those data-hungry investors. Yeah. No question about that. Just making it really a challenge to determine where we go from here.

All right. Finally, Bob, what's the latest on oil, just as we watch very closely the Middle East? Well, oil has behaved incredibly well, given the uncertainty of the Middle East. You point out, in fact, oil is now lower than it was the day before October 7 was when the invasion took place. I don't think we should get lackadaisical about that.

We should be prepared for some oil price volatility and the possibility. So far, so good. But keep vigilant on that one. Yeah, very good, Bob. All right. We always appreciate it, Bob. Have a great week, and we'll talk to you next Monday. Thank you, Rob. All right. God bless you. That's Bob Dahl. He's Chief Investment Officer at Crossmark Global Investments.

You can sign up for his weekly investment commentary at crossmarkglobal.com. All right. We're going to round out the program today with your questions.

We'll get to as many as we can. Let's go to Columbia, Missouri. Hi, Sarah. Go right ahead. Hi. Thank you so much for taking my call.

I've got a fun one today. I am recently married, and it's time to join finances with my husband. So I'm looking for a little advice about how to combine assets. Ah, yes. Okay. So have you all talked through this and kind of where do you feel in terms of, you know, are you both on the same page? It's like, yeah, we're definitely doing this, but what does that look like? Or is one of you sensing we'd rather...

Yes, that's where we would be. Okay. Yeah. Very good. And you said how long have you been married?

Two months. Okay. Great. Well, congratulations. That's awesome.

Thank you. You know, I think the next step is really just to start merging everything. I mean, operating out of one checking and savings account, developing that spending plan together, you know, taking a step back and saying, first of all, you know, let's talk about how each of us grew up around money and how that informs how we handle money today, how tightly we grip it, how loosely we hold it. Did one of you grow up where money was really, you know, tight and another had a surplus and how does that inform how you think about money? What do you all want to do about lifestyle? What's the appropriate lifestyle?

How much do you want to spend? What are your values? You know, how did you want to use money as a tool? Is it really important for you all to give generously?

And if so, what does that look like? And maybe one of you wants to give a little more than the other. We got to talk about that. How important is it to, you know, limit the use of debt? I mean, just really beginning to unpack a lot of these things as a married couple because then your plan is what allows that to come to fruition, both on the day-to-day spending around your budget that says, here's how we're going to take what God has entrusted to us as one flesh and use that on a daily basis. But then the margin that you have, your ability to live within that and have some cushion or some surplus is what's going to allow you ultimately to fund your longer-term goals, which should also align with your values and priorities as a godly couple and being able to put money away for the long term and be able to accelerate your giving or respond to, you know, the prompting of the Holy Spirit if you're led to give to something beyond just your regular systematic giving or your ability to pay off, you know, debt and accelerate that.

So I think there's just a lot of conversation that has to go on and then we've got to develop the budget and then the mechanics are, you know, we just operate out of one account so we both have full visibility. It's not my money and your money. It's our money. It's really God's money that we've been entrusted to manage. So, you know, direct deposits all go into one account and we have, you know, one savings account. Everything's held jointly. Maybe there's one person that's more administratively inclined that's actually clicking the buttons and, you know, making the payments and on occasion writing the checks but, you know, you guys are having a monthly money date or, you know, at some point coming together making course corrections, looking at how it's going and, you know, I think from that point, you know, you're set. Does that make sense though and is there any gaps in what I said in terms of kind of what you're trying to figure out at this point? That's awesome advice.

Thank you so much. Can you speak to what we should do with our retirement accounts, our investment accounts and whether we need to merge those and get one advisor or if we can keep them sort of separate and put each other's names on them? Yeah, it's a great question. So with retirement accounts, they can't be held jointly. You know, so an IRA has to be in only one person's name, individual.

That's what I is. Individual retirement accounts, one person. A 401k, only one person. Now where you all will come onto each other's accounts is as the beneficiary and that's what you'll do as a part of your estate planning. So you all need to go in and now that you're married you need to, you know, if you haven't already, you need to update your will. You need to probably have, you know, think about, you know, healthcare surrogates so you all could make decisions for each other if you're incapacitated.

Usually that's not an issue with a marriage married couple, but you still want to make sure it's all in order. And as a part of that, you'll actually update your beneficiaries on each of your retirement accounts so that you're his beneficiaries and you know, he's yours. And that way, you know, those accounts would automatically pass to the other, you know, upon the other person's death outside of probate. So you wouldn't jointly title those. In fact, you're not able to, but you would update those beneficiary designations. In terms of the advisors, I would settle on, you know, one advisor, I don't think there's a need to have two advisors, both in terms of who's doing the financial planning for you, as well as who's doing any asset management, actually making the buy and sell decisions on any investment accounts that you have.

I'd probably settle on one person meet with that person as a couple, you know, on some regular basis. But you don't need to retitle any of those accounts. Okay, that's helpful. And what about debt that's in his name? Is that something that I should just like help him pay off?

And then that's that? Or is that something I should put in my name? Yeah, no, you wouldn't put it in your name, but I would, you know, treat it as my assets, you know, and your assets are now our assets. And that includes your debt and my debt is now our debt, not in the legal sense, where you're going to go retitle it, or you're going to kind of sign to take responsibility for it.

But in the sense that it becomes a part of the plan. So as we're saying, what is our lifestyle going to be? How much do we want to spend? We're also looking at assets and liabilities, you know, your debt is your liabilities. And as a part of your plan, you're looking at how quickly can we pay off this debt, and not, you know, deplete all of our reserves. And you would do that considering both of your incomes because again, now it's our income together, regardless of who's the one that generates it, that comes into your, you know, checking account every month, and then you create a plan. And part of that plan includes paying down debt. Now, it may happen to be debt he brought into the marriage. But you're absorbing that into your financial plan as a couple now, in terms of how you prioritize paying it off, regardless of where it originated. Awesome. Okay. What about credit cards?

Yeah, this is so helpful. And so do you have credit card debt that was existing prior to the marriage or you just mean moving forward? Moving forward, both of us use credit cards for like basic spending, but neither one of us have substantial credit card debt. Do we need to combine our cards together and just have one?

Yeah, it's a good question. I mean, you could get a joint credit card. If not, I would each have one with the other person as the authorized user because in the event something happened to one of you, if you're just an authorized user on his, let's say, and he were to pass away, you would no longer have access to that.

So you either want to join account or you each want one with the other person as the authorized user. That would be my best advice. Hey Sarah, stay on the line. I want to send you a copy of the book, Money and Marriage God's Way, as our gift to you. I think it'll be a real blessing to you. Thanks for calling today.

Faith and Finance Lab is a partnership between Moody Radio and FaithFi. Thanks to Anthony, Dan, Tahira, and Jim. We'll see you tomorrow. Bye-bye.