How to Tithe in Retirement

This is an encore presentation of If you make those decisions, then we have some great questions lined up for you. If you make those decisions, then we have some great questions lined up for you.

If you make those decisions, then we have some great questions lined up for you. So, tithing literally means a tenth, and so it's often simple to calculate from our working income. If I earn $10,000, a tenth is $1,000. The math's pretty simple there. So, some people do question, well, should I tithe from gross, before tax, or net, after tax income?

And that's a personal decision that you'll need to make. I think that the first fruits principle would seem to apply to tithing prior to paying the government. But in either case, it's an easy calculation by applying that 10% to an income amount. So, many retirees choose to tithe similarly to how they do in their working years. They simply tithe on whatever income they do receive.

But we started getting the question from some of our retired clients, well, how do I tithe in retirement just because my income sources vary in timing and composition, and feature really some form of a return of principle? And that really led to many meaningful conversations. Oh, I can imagine it did.

And these are good-hearted people who just want to honor the Lord appropriately in this season of life. And it can get complicated. I mean, there's multiple sources of income that each include a return of principle in this season, right?

That's right. And so, that's why in the guide, we really highlighted five common income sources. Social Security, pensions, retirement accounts, brokerage investment accounts, and rental property income, just to name a few. So, as you imagine, it can get confusing. The guide's really not to try and tell people what to do, but really to provide a context so that they can apply it to their individual situation.

Hopefully, you can prayerfully apply a plan that's best and that you can have confidence in that. So, one of the income sources, Social Security, let's just kind of go through those quickly. Social Security, you're paying in through your payroll taxes, right? And if you get a benefit statement from the Social Security website, you can actually see how much you've paid into that. A pension can be similar in the sense that you may be paying into that pension. Maybe your employer is paying in as well. It can be unique in each situation. A retirement account, such as an IRA, is generally made up of contributions plus some earnings or growth. And similarly, a brokerage account can be just like that. The main difference there is that you're paying taxes as you go and as you're earning that.

So, then you have to decide if you want to tithe on earnings not yet distributed and possibly even tax-free income that doesn't show up on your tax return. Well, how do you handle all of this? Well, we're going to take a quick break. When we come back, Anthony Saffer will help us think through how you approach tithing in retirement. Much more to come just around the corner.

Stick around. Great to have you with us today on Faith and Finance Live. We're talking today with Anthony Saffer. He's a certified financial planner with One Degree Advisors, and we're talking about tithing in retirement. It's simple during your working years, and you simply give a tenth on your increase. But what about in your working years where you have different kinds of income? And many of those income sources represent money you've already paid in and therefore tithed on, but also earnings and other forms of income coming back your way. It gets a bit more complicated. And, Anthony, when we're transitioning into this season of life, it can be complicated, including the financial piece, right?

That's right. I mean, income sources are changing. You know, somebody's retiring.

They're figuring out how to live with their time, and then their money aspects are changing. And so when it comes to tithing, that question of, well, how do I tithe in retirement? There really are two options, at least as we see it. So one is pretty simple.

The other is a tad bit more complicated. But before personally deciding how to tithe in retirement, it can really be helpful to note your priorities. Are you aiming to keep things simple?

Are you willing to apply a little bit more detailed calculation to it? And perhaps you need to minimize tithing just to help make ends meet. In the case for more simple, you're really just tithing off what's deposited into your bank account, plus adding any other money that's withheld perhaps for taxes.

So let me give you a quick example. Let's say our friend Mary, she's retired. She wants to continue tithing to her local church. So every month she receives Social Security and then a distribution from her IRA. She simply adds up that income that comes into her bank account, adds back in any money that was withheld for taxes and applies that 10%, and there she has her tithe.

It's simple and it's impactful. Yeah. Well, what about some other examples, Anthony, like a pension?

That's right. So with a pension, it would be really the same thing in terms of what may hit a bank account. A lot of times if someone receives, let's just say $3,000 as their pension payment, they're just going to simply apply that $300 pension. If someone wanted to apply perhaps a more detailed calculation that said, hey, I paid in this much as principal and I've already tithed on that money, then they can break it down to say, well, how much have I contributed versus how much is actually growth or earnings that I'm now applying the tithe to? And we created a free resource that helps people basically sit down with each income source and really just apply a plan that's unique and personal to them.

Yeah, very good. So would you recommend then a percentage if somebody wanted to recognize the portion that's being returned to them and then just apply that percentage, whether that's from the Social Security statement or from the total contributions into your retirement plan, to every check coming out? Yeah, absolutely. So let's just take an example and let's use an IRA account because this is common to a lot of people. So we'll go back to our hypothetical friend, Mary. She has a million dollars in her IRA account. She's done a good job of savings and because she's done it over many years, let's just say her principal is $250,000.

Those are her contributions. And then $750,000 is growth over the long term. So of that 75% that's growth, if you apply that to the principal, let's say she has a $4,500 IRA distribution.

You apply 75% to that $4,500, which comes out to $3,375. That's the earnings that she's actually getting from that. And then you can just apply your tithe to that. Same thing with something like Social Security or a pension.

Yeah. Is that where most of your clients come down or are most of them just taking the simple approach to say, everything I get is a gracious gift from the Lord, whether or not a portion of it is a return of capital, and therefore I'm just going to tithe on everything coming in. I'd say more people take the simple approach, and they really want to create that impact. Sometimes it's harder for certain people that are trying to make ends meet. In either case, we need to be trusting the Lord through that. But I will say that it's never going to be exact. And you don't want to fall into that trap of feeling guilty over this. Prayerfully go through it.

Talk with your spouse about it. And that's why having just a plan where you can have confidence, apply those calculations, and then feel good about it. And if it's something where you are applying a percentage to it, often people will run with that percentage for quite a while or for their lifetime, and they're confident in that. And then they can really just spend their time serving the Lord with not only their finances, but with their time and their heart.

Yeah, that's really helpful. Let's take one other example. What about an income property, like a rental property? How would you help folks think about their tithing on that?

Yeah, good question. And a lot of times people will have rental properties when they are working, and then that carries into retirement. So often they'll keep the same method that they have into retirement. But a lot of times if you're getting a gross income, let's just call it $2,000 a month in rental income, but you're putting in $500 of expenses, you treat it like a business. And so the $1,500 is really the income that's coming to you, and then people will often apply that percentage to the net income. Now, that can be changing on a year-by-year basis, so we do have a lot of clients that just simply say, hey, let's just apply the tithe to the gross income and let's make it simple.

Yeah, very good. I know you help folks with tax-efficient ways to do their giving in retirement. What would be some of the most effective that you've seen? A lot's changed with tax reform. It seems like there's a new tax law every year, and especially in 2018 through the major tax reform, what we noticed was that obviously a lot fewer people were itemizing their deductions because the standard deduction had gotten so much higher. And in talking with people, they didn't realize that they were not getting the tax benefit that they once were from their charitable giving. So we talk to people often about stacking your tithe, which basically just means supersizing it essentially in one year, and then the other year taking a standard deduction. And one way to help facilitate this is using appreciated stock to tithe in retirement. Even a donor-advised fund such as with our friends with National Christian Foundation can be a great strategy. And then the third thing I would add, Rob, is qualified charitable distributions from IRAs. These can help fulfill those required minimum distributions. But honestly, it's just a really tax-efficient way to give directly from your IRA.

Yeah, that's helpful. Now, you mentioned a donor-advised fund. We talk about them often. I refer to them often as a charitable checking account.

Will you give just a quick thumbnail sketch for somebody who's not familiar with that term? Yeah, it's a giving fund, and so essentially you can set that up with a community foundation. They act as the intermediary for that. And when we give over to a community foundation, it's essentially a completed gift at that point in time. And so it goes to the community foundation, which is a charity, and that's really what determines the tax break. So I can supersize my giving in one particular year from a tax standpoint, but then I can further distribute that money later on. Even though the money's with the foundation, as it says in the name, it's a donor-advised fund. And so the community foundation basically takes your recommendations to give to the final charity, whether it be a church or another ministry.

Yeah, that's helpful. We've got about just 30 seconds left, Anthony. So tie a bow on the tithing for us. This is really about a conversation between you and the Lord, not trying to check a box and making this legalistic, right?

Absolutely. And that transition into retirement can be a big step for people. And so having a plan can help give you that confidence, not only with tithing, but with those different retirement income sources, your time.

You want to be able to go in there and have that financial freedom, as Ron Blue often talks about, so that you can serve the Lord faithfully. Wow, that's really helpful. Anthony, so appreciate your time today. Thanks for stopping by, my friend. Thanks, Rob.

All right. Folks, you can get access to this free tool in our show notes today. You can also learn more at OneDegreeAdvisors.com. That's OneDegreeAdvisors.com. Our guest has been Anthony Safer with One Degree Advisors. What a great discussion.

I know it's been helpful to you. You're listening to a best of broadcast of Faith and Finance live with Rob West. This program is prerecorded, so we're not available to take your calls today, but you can email us at AskRobAtFaithFi.com. You're listening to a best of broadcast of Faith and Finance live with Rob West. Hey, if you hear a phone number mentioned today, please ignore that number and don't call us, because today's broadcast was previously recorded. But we think the upcoming information will help you and make you a wise steward of what God's given you, so please stay tuned. Let's head to Chicago. Hi, June, you'll be our first caller. Go ahead.

Hi, thanks for taking my call. I listen to your program every day at my lunch hour, and a lot of what you say I can't really apply because I don't have any kind of retirement fund or extra cash to invest, but my biggest investment is my daughter, and she's nine. She just turned nine, and she wanted to find out how she can invest her first $100. I know it's not a lot of money, but you've got to start them young, right?

Yeah. So, yeah, I just want to instill some good financial habits so when she's my age, she has more to work with. She wants to be a financial advisor when things up, so, yeah.

I love that. Well, I think you're great to start early. I'm going to send you a book called The ABCs of Handling Money God's Way. It'll be our gift to you just as a way for you to begin to instill these financial principles that we talk about on this program because it's more than just financial literacy. Yeah, you need to teach her how to invest. I love that you're starting there. You need to teach her about the dangers of debt, and at some point, what does it mean to have compound interest working for you and against you, and how to build a budget and get on a spending plan.

That'll come later. Right now, you can probably focus on give, save, spend, but you also need to focus on those biblical principles that you can model, starting with this idea that God owns it all and we're his money managers and that the Bible has a lot to say about the role of money in our lives. When it comes to investing, though, June, I think this is a great idea.

You know, one of the things that you may want to do, normally we would apply the principle from the Bible that we see in Ecclesiastes around diversification to our investing and say we want to be invested in a wide range of investments so that we don't put all of our eggs in one basket. The challenge is it's not going to teach her as well as perhaps investing in one or two companies that she knows and is excited about. So what we may do to start with is for you to say to her, listen, stock ownership is company ownership. You can actually take this $100 and be a very small owner of an actual company, perhaps even a company that you know and see and enjoy and challenge her to think about what that company is. What's a company that's traded, that's publicly traded, so be a large national company that she does business with or she enjoys, maybe it's, you know, it could be any number of industries and have her and you help her begin to select those two or three companies. And the really neat thing is that now through what's called fractional ownership where she might even be, you know, own less than one share, maybe a small percentage of even one share of a company, she can actually go and buy those two or three companies.

Maybe she puts $33 in one, $33 in another, and $33 in the last one. And then through like Robinhood or any number of discount brokers that offer fractional shares, she could actually purchase those shares. And then what would be fun is she could actually watch those companies and keep up with them. They're obviously companies she's going to be not only invested in with her finances but personally because she, you know, likes to frequent them with you. And, you know, that might be a way for her to begin to learn about them and then when she's ready she could, you know, you could even take it a step further and have her look at, you know, all the news coming out on the company or maybe read a quarterly report or something like that. That might be a fun way for you all to get started. Now, you need to start talking about this idea of diversification because as she gets older and has more money, she's certainly not going to want to have, you know, a third of her money in one particular company. That's just too much risk. But when we're talking about just getting started, it would be a fun way for her to start investing and maybe have a little bit more interest in it because she actually knows the company that she's buying and she would probably be excited about that.

Does that make sense? Yeah, you know, I thought you were going to say CDs, so I think this is a way better way to get her involved in the whole thing. Yeah, I like this idea. Good. All right, so let's do this. We're going to do two things. One is I'm going to send you the ABCs of handling money God's way, so you stay on the line. We'll get that out to you. That's from Howard Dayton, our good friend, and you can perhaps work through that book with her and I think that will be fun and interesting for you to begin to teach some of these principles, but then you guys take that money and you challenge her to think about what three companies she'd like to buy, and then you could open an account at Robinhood or one of the others that offers fractional shares and begin to make that purchase.

Another one you might want to look at is called Stockpile. Both of them have web apps, so if she has a smartphone, she could actually have access to it. You would, of course, too. You'd make the deposit in the account and then you'd buy those fractional shares equal to the amount you want to invest in each company, and then you guys have some fun with it. Now, the only other thing I would say is let's just make sure that you want to put a hundred dollars, the whole hundred, toward the investments, because the other idea we want to begin to instill is this idea of give, save, spend, and so maybe she takes $10 and you help her give that away, and then she takes however much you want, maybe half of what's left, and she spends that for something she's wanting or saving for in the near future, and then that third bucket, maybe that's what you invest.

But if she's already got some other money set aside for giving and saving and you want to invest this, or spending, and you want to invest this whole hundred dollars, then you certainly could do that. I just wanted to at least throw that out for you to consider as you might want to divide it up into these three buckets. Does that make sense? Yeah, it makes perfect sense. Thank you. Good. You're welcome.

You stay on the line. June, we'll get that information out to you, and we appreciate you listening to the program. God bless you.

Well, folks, we're just getting started here today. So appreciate Anthony Safer stopping by. By the way, if you'd like to learn more about what Anthony was talking about, how to tithe in retirement, this is a question that comes up very often on this program by good-hearted stewards that just want to be faithful in retirement.

Maybe they've tithed their whole lives, and now they're wondering, should I tithe on the whole amount if a part of what's coming back to me is a return of capital? And Anthony, I thought, had a real thoughtful approach to that. If you'd like to explore this further, check out our website at faithfi.com. We have an article there with the complete workup that Anthony and his team did. It's called simply How to Tithe in Retirement. You'll find it at faithfi.com.

Just click content. Hey, folks, we're going to pause now for a brief break, but we'll be back with much more on today's Faith and Finance Live. You're listening to a best of broadcast of Faith and Finance Live with Rob West, and it's one of our most popular broadcasts that aired in 2023. Hey, if you hear the phone number mentioned today, please ignore that number and don't call us because today's broadcast was previously recorded.

But we think the upcoming information will help you and make you a wise steward of what God has given you, so please stay tuned. Back to the phones we go to Rockville Center, Long Island. Jeanette, thank you for calling. Go right ahead.

Yes, good afternoon. I paid my rent in March, and the rental agency never got the payment, so I went to the post office and they said it was stolen. So I paid them $14 to investigate. Now, I'm thinking about it, and I paid double in April to make up for the March rent, and the rental agency gave me the grace to not evict me, which I thank God for.

He had mercy on me. So I just want to drop this whole thing and have mercy on the post office. I'm not good with legal matters, so I don't know what I'm faced with here, so I just want to drop the whole thing.

Is that a good idea? Well, let me ask you, Jeanette, I mean, certainly you can do whichever you'd like in terms of where you go from here, but did you end up having to pay twice, or did they credit you back for the cashier's check that wasn't deposited? No, I didn't get that money back. I paid double in April because the check was stolen in March.

Okay. Yeah, well, I mean, I don't know why you wouldn't have them at least look into it. It's not like you're going to pursue a legal remedy of any kind, but to say to the bank, listen, I got the cashier's check, I mailed it, you put it in the mail, right, and sent it to your landlord, is that right, through the postal service? Through the postal service, a money order, yes. And they say they never received it, correct? Yeah, and the agency, yeah, they never received it. Okay, so you asking the bank to, and that's who you asked to investigate it? Is that right? No, I asked the post office to investigate it, but they already told me that it was stolen.

Well, how did they know it was stolen? Well, I don't know. That's what he said, so. Yeah, okay.

All right. Have you talked to your bank about it? Yes, I did go to the bank, but it was not a check. It was a money order, so they can't do anything for me.

Well, they can. A refund can be processed if your money order has not been cashed. So they have a way to cancel the payment and issue a replacement or a refund for an uncashed money order. So that would be where I would go, not the post office. I mean, unfortunately, this happens with the post office, probably more frequently than it should, where things get misplaced or never arrive. Could it have been stolen? Sure. Could it just be lost?

Absolutely. But really, what I would do is go back to the bank that you got the money order from and ask them to investigate whether it was ever deposited, because if it was, it was deposited fraudulently, and they made an error because it would have been made out to, I assume, the landlord, correct? Yeah, well, yes, but I got the money order from the post office, not the bank. Oh, I see. My apologies.

Okay, so they were, did the post office offer to investigate for the purpose of seeing whether or not it was ever cashed? Yes, I had to pay $14 for that. Okay, and you've already done that, correct? I've already done that, but I'd like to even go back tonight and tell them to forget about it. Okay. If it were me, I mean, again, this is up to you, Jeanette, if it were me, I would let that process play out.

I mean, this happens all the time. You got the money order. It's likely lost. It probably has not been cashed.

They will verify that based on this $14 investigation that has been done here, and as a result of that, you'll probably be able to get that money back if it has been cashed fraudulently, then you probably won't, and you could drop it at that point, but I would let them do this research and see if it hasn't been cashed, then it can be canceled, and then you're going to get your money back, your $267. So if it were me, I would just let that process play out and let them determine what the outcome was, okay? Okay, okay, wonderful. That's what I'm going to do. Very good, Jeanette.

I'd like to play out. Very good. Well, listen, all the best to you. Thanks for checking with us today, and let's pray that there's a resolution here, and you can get that money back that is rightfully yours, and then you can move on from this. Hey, let us know how it turns out.

To Grand Rapids, we go, Hey, Dave, go right ahead, sir. Hey, Rob, I had a question concerning my HSA account that I have at work. I'm still working full-time. I got a call last week during open enrollment from our HR advisor at work stating that because I turned 65 this year and I had to get into the Medicare Plan A that the IRS says that I am no longer able to contribute to my HSA account. Do you know anything about that? Because that was news to him.

Yeah, unfortunately, Dave, you were given the right information. Once you sign up for Medicare, you can no longer make contributions to an HSA, even if you still have coverage with a high-deductible health plan, which is required for an HSA. That actually extends six months retroactively to enrolling in Medicare, so any contributions you make during that time, you should try to reverse that to avoid a tax penalty.

The reason for that look-back period is because once you enroll in Medicare, you're retroactively covered for the prior six months, and they started backdating Medicare coverage a long time ago to assure that people retiring and coming off an employer plan wouldn't have a coverage gap, and as a result of that, that eliminates your ability to contribute. So that is, in fact, true. So is that like a mandatory thing, then, once you turn 65? You have to... Because I understood that once I turned 65, I had to join the plan A, not the plan B, but the plan A.

Is that true, then? Yes. So it begins at, you know, 65, and you want to go ahead and sign up because you'll have a late enrollment penalty if you don't. So it behooves you to go ahead and sign up for it at that time. Okay. And I did do that.

So now I had another question that was posed to me. My wife is 62. Could we go ahead, like, through our credit union and set up an HSA in her account and then fund that? And if so, is there any way of getting the tax benefit for that or not? Yeah, so as long as you have that high-deductible health plan that goes along with it, you certainly could do that, and that would be worth looking at, and then you could continue to fund that into the future. The other thing is these can be a great tool for retirement, you know, because you can use them for a variety of things in that season of life, and you can invest it.

So that would certainly be something to take a look at for your wife, for sure. We appreciate you calling, Dave. God bless you, my friend. Thanks for being on the program today. All right, we're going to head to a break, so don't go anywhere.

Still a lot more to come, even though we're away from the studio today and you shouldn't call in. We have some great questions that you're really going to enjoy as we continue to apply God's wisdom to your financial decisions. We'll be right back. This is an encore presentation of Faith & Finance Live. This was one of our most popular episodes in 2023, and as this year comes to an end, we would be grateful if you'd help us meet our year-end financial goal by December 31st.

To do so, visit faithfi.com and click Give. Great to have you with us today on Faith & Finance Live. I'm Rob West. We're glad you're here today.

Let's head right back to the phones to Illinois. Hi, Rose. Thanks for calling. Go right ahead. Yes, this is Rose. Thank you so much, Rob, for taking my call. I had a question about IUL, Indexed Universal Life Insurance, as a way of investing and then also at the same time life insurance.

What's your opinion about this? Yeah, you know, I mean, it's another form of whole life insurance where some of your cash value is placed in what are called sub-accounts that mirror a stock index. So you might think of the S&P 500.

That would be one of these indexes, the 500 largest companies in the U.S. It's mixing insurance with investments, which is not our first choice. Whole life insurance tends to be expensive. You know, with this index universal life, you get a portion of the upside on the investments in exchange for, you know, having oftentimes a floor on the downside, which is why they're often sold to people, especially in times like this where the market is more volatile, they're saying, listen, I'm tired of seeing my account move up and down.

I want to know that I have a floor. And what they may or may not realize, I'm sure it's told to them, but they may not fully appreciate the implications. They're giving up some of that upside potential. If the market's up, you know, 12%, you may only get nine, you know, in exchange for having that downside. So what I would prefer to see someone do is buy term insurance to cover their life insurance needs and get enough coverage to make sure they're truly offsetting that risk. So at a minimum, 10 to 12 times the income they're trying to offset. You know, so if someone were to pass away and other family members are depending on that income that's now gone, we need enough to basically, you know, fill the gap for that income that's gone away. And then on top of that, some folks will add paying off the mortgage, covering college education, things like that. And the best way to buy that full coverage that you need on someone that, you know, has others depending upon their income is to get term life insurance. It's the most cost effective. And then you take your investment dollars and you invest straight into the stock and bond market or whatever you're investing in.

It might be real estate or precious metals or a combination of the four, but not try to mix insurance and investments into a complicated product that, again, doesn't give you the full upside, causes you to lose access to your money without surrender charges, has fees and expenses, those types of things. So, you know, that's my general perspective on it. Is there never a place for it?

No, I wouldn't say that. For some folks who are looking for guarantees and want to transfer the risk to the insurance company or they're looking for an income stream where they don't have to worry about the market, things like that, sure, it can be an option. Or if you exhaust all of your other tax-deferred retirement options like IRAs and 401Ks and you're behind and you've maxed all those out and you're trying to put away even more on a tax-deferred basis, an insurance product like this could be helpful.

But for the vast majority of people, I'd rather you invest in an IRA or a 401K or both and get your life insurance taken care of with a term policy. Does that make sense? That makes sense. Thank you so much, Rob. All right, you're welcome. Thanks for calling.

To Murfreesboro, Tennessee. Hi, Michelle. Go ahead. Thank you for taking my call. I'm just, I am trying to figure out some things with my mother. She's 69 years old, so it wasn't something that I was expecting to go through now. She had a wreck in February, and she can no longer walk.

So she is looking at long-term care because that's just where she's at, and we're looking to get her into the long-term care, which means she's going to have to go on to Medicaid. And as we start looking at her finances, she doesn't own any property. The only property she owned was the car that she wrecked, and now she does have a whole life policy that has about $3,500 in it. So the question is, can I go ahead and take that money out? Because it's more than she's allowed to have on Tennessee's TennCare Medicaid. Can I take that money out and prepay, you know, funeral services with that?

Or what does that look like? And then what are the tax implications for her? Now, it's only $3,500, but what does that do? Yeah, so whole life policies are exempt, not counted for Medicaid's asset limit. However, I believe the cash value is considered an asset because you can access it. So that may be, is that what you're referring to, the cash value portion?

It is. Yeah, okay. Well, with that, just like any asset, Medicaid is going to have a five-year look-back period, so they're going to scrutinize every transaction from your mother's accounts for the last 60 months. And if they find transactions that would reduce her assets to make her eligible for Medicaid, then they'll penalize her.

So, you know, I think there's not really a way around that, not that we should be looking for one. You know, just in terms of prepaying funeral arrangements, you know, obviously, I can understand why you would want to do that. And you certainly could check with an elder care attorney or an estate planning attorney just on what your options are here, given that she is going to be relying on Medicaid and you want to make sure that, you know, there is the resources to have a proper burial, and given that the cash value goes above that, that could put you in a difficult spot.

But just bottom line is that five-year look-back, I think, is going to, you know, cause you some problems with what you're describing. There's really no assets. The only thing that she has owned in the last five years is the car that she totaled, and it was a 97 Buick, so not much value in that. And she doesn't own a home, so there's no assets to that, so... Sure, sure.

Okay. But obviously that threshold is pretty low, given that it's, you know, $2,000 for an individual in terms of that Medicaid asset limit. So, as you said, this does go beyond that. So I'd probably talk to an elder care attorney just to see if you can, you know, there's any other ideas that they may have for how you navigate this.

But bottom line is I think you're going to be in a position where you do go above the limit, and any spend-down of that is going to be looked at retroactively for 60 months. So, listen, all the best to you. I know these are difficult situations to navigate. I'm grateful that you're walking alongside your mom in this.

I hope she's doing better from that car accident, and I'm sure that's challenging. God bless you, Michelle. Thanks for being on the program.

To Naples. Hi, John. How can I help you? Yes, I'm still waiting here. Yeah, you're on the program.

Go ahead, sir. All right, thank you, Rob. I appreciate your program. I'm listening every single day. Actually, we are Canadians, you know, family of four, from my wife and two boys.

But actually we are because of work and actually committing back and forth. So I would like to establish a credit history here in order to buy probably a house in the near future. And I would like to know if you can, what would be the best way? What do you think would be the best steps in order to create credit? I don't have any social security right now yet for the United States. I'm still Canadian. I got all my stuff in Canada. But the other day I went to ask about buying a house. You know, you don't have the social security. So I would like to, you know, just I got a couple of accounts, Bank of America, you know, a couple of accounts of savings. But in order to establish a credit as a Canadian, what do you think?

What could be, you know, a good advice if I would like to create something around here in Florida? Yeah. And you have a residence here, a U.S. mailing address? Yes, yes, yes. Yes, of course.

And are you applying for a social security number? Yeah, that's in progress, but still could take longer. So yes, we are renting a place. Yeah. Okay, very good.

Well, a couple of thoughts. You know, the easiest way to get started is to open a secured credit card. So you go to your bank or you could go to, you know, even an online bank.

Bankrate.com could tell you which banks have the best programs for secured credit cards. But essentially you'd put a certain amount on deposit, let's say three or four or five hundred dollars. And then they issue a credit card against that with a limit of that amount that's on deposit. And then you'd put a recurring charge on that every month.

It could be a very small monthly transaction. And then you'd pay it off on a timely basis. And as you make those on-time payments, you're going to slowly start to build credit. You could do that with a bank-issued credit card. You could also, you know, look at a department store credit card if you, you know, could get one.

But the secured card will be easier to open with a lack of credit. And then you could also look at what's called a credit builder loan, where you essentially pay off the loan and you pay interest to yourself. But the whole purpose of it, you know, is that, you know, you would be building credit with it. So you could, you know, get online and just do a search for credit builder loan. And the combination of that credit builder loan plus that secured credit card, two different types of credit, which are both, you know, factored in. The type of credit is factored into that score. And then that online, excuse me, that on-time payment history that you're establishing as you make a charge against the secured credit card and as you pay yourself back with that credit builder loan every month, then the combination of those two should help you to begin to establish credit. And then at some point down the road, you know, you're maybe adding to that when you buy a house or a car or something like that. Does that make sense? Yeah, pretty much.

Thank you so much. Credit builder loan, right? Credit builder loan. Yeah, credit builder loan and then secured credit card.

Do a search for credit builder loan to read about it and then you can find the best place to get a secured credit card when you head to bankrate.com. We appreciate you being on the program, John. All the best to you and thank you for your kind remarks about the program. Well, folks, that's going to do it for us today. Faith and Finance Live is a partnership between Moody Radio and Faith Fi. Thank you to my amazing broadcast team. I couldn't do this without them. I hope you have a great rest of your day and we'll see you next time on Faith and Finance Live.