Helping the Kids Buy a House

Today's Faith in Finance Live is actually not live, so our phone lines are not open. Home values and interest rates remain high, and that's leading some parents to consider becoming a bank for their kids.

Hi, I'm Rob West. On paper, it makes sense. If you have the resources to give your adult child a loan to buy a house, it seems like a great idea. But is it? Are there pitfalls? We'll explore that idea today, and then we'll have some great calls that we've lined up.

But since this program is not live today, please hold your calls until we're back in the studio. This is Faith in Finance Live, biblical wisdom for your financial decisions. Of course, there are two reasons a parent might want to lend money to a child to buy a house. The first, obviously, is to reduce the amount of interest the child must pay. The parent might be able to make the loan at a below market rate.

More on that a bit later. Second, the child may not qualify for a loan from a mortgage lender. He or she might have an unfavorable debt-to-income ratio, meaning too much of their gross monthly income is going to pay the debt they already have.

Or they simply might not have enough credit history or a high enough credit score. This is where some parents may decide to help by becoming their kid's mortgage lender. It's natural to want to help family members, and God's Word tells us we should. First Timothy 5-8 reads, If anyone does not provide for his relatives, and especially for members of his household, he is denied the faith and is worse than an unbeliever.

But does the providing called for in that verse include lending money? It's one thing to help someone with a financial gift, quite another to lend money. Both must be carefully considered to determine whether they'll actually help the recipient or harm them by discouraging their own efforts to earn needed money. It's important for adult children to achieve financial independence. You want to make sure you're not encouraging them to remain dependent.

A financial gift or even a loan could possibly do that. Lending can also lead to additional problems. What if they don't pay it back? What if you need the money you loaned, but now you can't get it back because the kids can't or won't make their payments? How will that affect the relationship?

Badly, no doubt. That's why it's often better to simply make the money a gift rather than a loan. That way you're not expecting it to be paid back and there's no risk to the relationship. Of course, most parents aren't in a position to buy their kids a house. There's another potential downside to lending kids mortgage money, whether you're charging them interest or not.

It's the opportunity cost. How much more could that money earn over time if it were put into a properly diversified portfolio? Probably a lot more than the interest you'd be willing to charge your kids. And that could mean the interest you charge them, if any, will be below the current market rate. That means the difference between what you're charging and the market rate will be considered a gift by the IRS. If that amount exceeds $18,000 a year, you'll have to file IRS gift form 709 with your tax return, but it won't result in more tax.

The amount will just count against your lifetime gift tax exclusion of $13.61 million. And finally, there's one more downside to lending to kids for a home purchase. Since it's a private loan, their payments won't be reported to the credit bureaus and won't do anything to lengthen their credit history or increase their credit score. That means if they have to borrow for anything else, such as a car purchase, they'll end up with a higher interest rate or not qualify at all. But if they're saving thousands and thousands in mortgage interest, that trade off is probably worth it. Now, after all this, you probably think we're dead set against loaning money to kids for a home purchase.

That's not the case. We just want you to have the facts and be prepared for whatever might happen as a result. So let's say you decide to make the loan. Now what is it with a handshake or verbal agreement like mom and dad, you buy us a house and we'll pay you X number of dollars a month.

No, you need to make this official and legal. For one thing, the IRS requires it. So you may want to have an attorney draw up a legally binding contract, just like a commercial lender would have to do. That contract will specify the amount of money borrowed, the interest rate to be charged, the term of the loan, and what the monthly payment will be. Also, what penalty will result from late payments of a specified time, usually 30 days. Now that's important, but the agreement will also specify that the home is collateral for the loan and that you, the lender, have the legal right to foreclose on the property if the borrower fails to make the payments.

To sum up, personal loans to family members can be extremely beneficial, especially to young folks, but they're not without certain risks and it's important to understand those before going in. 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'll be back with much more on today's Faith and Finance Live. So glad to have you with us today on Faith and Finance Live.

I'm Rob West. Hey, let me mention our team is away from the studio today, so don't call in, but coming up in just a few moments, we'll have some questions that we lined up in advance. I know you'll find them a great encouragement. Let me also mention while we're together, the advice that I give is general in nature. We're looking at principles, so always seek advice that's unique to your situation.

This is not intended to replace the advice you'd get from a professional that can approach your specifics. So just want to, of course, remind you of that periodically. Let me take a couple of emails. You know, we get emails all the time here at the broadcast and by the way, if you have an email, feel free to send it along to moodyradio.org slash finance.

You'll find the form there to send it to us, moodyradio.org slash finance. This comes from Michael. He says, my wife and I are retired and have limited income. She'll be inheriting enough money to pay off our mortgage.

We're looking for a bank where we can open an account and deposit those funds probably for about a year. Thank you for your faithful advice and biblical wisdom. And Michael, we appreciate you writing to us. Here's the key.

I think. Why do you want to wait to pay off that mortgage? You could go ahead and put that against the mortgage now. Now, if there's some reason you need to hang onto that money, I would say just put it in a high yield savings account. The key is FDIC insurance and a competitive rate, especially now while we have these attractive interest rates. This is a great time for you to take full advantage of those. And you can do that when you go to bankrate.com. Just find who has the very best rates and terms right now. And I think that'll be a great option for you.

Let's take one more. Jonathan writes to us. In addition to my 401k at work, they're now offering a Roth IRA. Is it wise to invest in a Roth with my employer or should I open one elsewhere?

It's a great question, Jonathan. You know, if you still have the ability to put more into your 401k, I'd probably balance it between the two if you have that option. Often a good rule of thumb is for the pre-tax 401k, let's use your age plus the number 20. So if you're 40, that would be a total of 60% into the pre-tax. And then let's put the balance in my example, 40% into your Roth 401k. If you max out the 401k, that's the time then to switch to the Roth IRA.

But the Roth is a great option. I love it and I take full advantage of it. Now let's head back to the phone calls we have lined up. Let's go to Mississippi to begin today. Greg, thanks for calling, sir.

How can I help? Thank you for ministry. I really value biblical wisdom in regards to finance. We are beginning stages of where our kids are starting their families.

And one of them right now is looking to purchase their first home. We would like to be able to help with that. We have in some ways already through gifts, but there's potentially the desire for them to have a loan from us as well.

I would like to understand better biblically how that would look. We don't want to do anything that would not honor God with what he's entrusted with us, but at the same time, we know the struggles and things that they potentially could be facing. So really looking at how that would be structured, but we also don't want to rob them of the potential of working through those struggles as we did growing up and the value of that.

Yes. Well, I appreciate that, Greg, and that would be the first place that I would go. Listen, I totally understand the desire to help your kids and wanting to help them get started. Well, especially in light of this challenging environment where the average home in this country now has surpassed four hundred thousand dollars and then we've got higher interest rates right now, at least higher than we've become accustomed to in the last couple of decades. So all of that just creates real challenges.

And yet, as you said, you don't want to kind of thwart the growth process that can come by working hard and starting with meager means and kind of working your way up and not having the opportunity to learn some of those lessons. I think, no, biblically, I mean, it's clear the Bible says don't cosign. I mean, that's just really plain in God's Word. Now, this is a little different. You know, obviously, if you're making a gift, there's nothing wrong with that. You just need to think through, you know, am I putting them in a situation where I'm allowing them to buy something or enabling them to buy something that's really beyond their means? So, you know, all the other things that come with it, the maintenance and the utilities and the upkeep is beyond where they should be at, just kind of in their stage in life and their income. And so in my desire to help, I actually may be setting them up for some challenges down the road.

So that's just kind of on the giving side. But as long as you're not robbing either of them from their ability to provide for their families, which obviously is innate in us, God hardwired that in us, or pushing them into maybe a higher lifestyle than they're ready for. You know, on the lending side, the issue there is just what God's Word said in Proverbs pretty clearly, is that the borrower is servant to the lender. And so you have to realize, or, you know, in other translations that the borrower is slave to the lender.

Well, that just simply means that the lender-borrower relationship changes the relationship. And so now, if even out of their, you know, sincere desire to, you know, make all of the payments on time based on the scheduled agreement, they're unable to because of the loss of a job, because of something, it has the potential to damage the relationship. Now, you might say, listen, I'm going into this knowing full well that if something happened that was unexpected and they were unable to pay, I'm just going to forgive, you know, those payments or, you know, give them the ability to resume down the road. I mean, but apart from that, you know, you would be potentially putting yourself in a situation where the financial desire to help could result in a damaged relationship.

And of course, that's never going to be worth the financial benefit here. So I think you just have to go into it, you know, addressing those issues. How are we going to deal with the fact that my child or, you know, my child and his or her spouse is now a borrower of mine and what is that going to do to our relationship?

And then secondly, you know, am I setting them up for, you know, a lifestyle that they're not ready for? Beyond that, there are some mechanics you would want to make sure to be in place if you decided to go forward. You'd have to make sure that this is in writing. So there's clear expectations that you define in advance, you know, what is the interest rate? What's the expected repayment? What if they can't pay?

What are the repercussions of that? And the IRS is going to want you to have that in place anyway. And if you charge them below, you know, kind of market rates, a portion of that might be considered a gift. And if you go over the annual limit on that, you may have to let the IRS know.

So obviously I've thrown a lot at you there, Greg, give me your thoughts on all that. Um, yeah, I think, uh, you know, that's along the lines what, um, I mean, we, we've had some counsel from Larry Burkett and I've listened to Dave Ramsey and things like that. And then when we started out, we received, um, you know, some funds from, uh, from our parents, uh, and they asked us to read a book, um, the wealthy barber. Um, and I thought that was a great, you know, resource and things like that. And I'd like to be able to do those kinds of things for, for our kids. Just, um, there's just a lot of value in being able to do those kinds of things and understand it financially and plot out slowly. Yeah.

I think you're exactly right. I think, you know, giving them a gift of a book like that, like master your money or, you know, a number of resources come to mind, money, possessions, and eternity. I think the other thing is look for ways to reinforce the right behavior.

So if you want to make the gift, maybe you make the gift, but you said, listen, we'll match every dollar you put down toward this house up to a certain amount, those kinds of things. Hey, I've got to take my first break. Stay on the line. We'll talk a bit more. We'll be right back. Thanks so much for joining us today on Faith and Finance Live. I'm Rob West, your host. Hey, our team is away from the studio today. We're not here, but we've got some great questions that we lined up in advance.

I know you'll enjoy those a little later in our broadcast. Folks, have you checked out recently our website at faithfi.com? If not, I'd encourage you to do that. You'll find our community there where you can post questions and comments, hear from others that are on the stewardship journey as well. You can also access our content and check out the FaithFi app.

It's at faithfi.com. Hey, before we head back to the phones, you know, we were talking just before the break to Greg and, you know, I just want to underscore this idea that we've just got to heed God's Word here when it comes to co-signing. Number one, don't do it even with your kids. Secondly, when you're lending money, it's changing the relationship.

Proverbs says it really clear, the borrower is slave of the lender. And so just recognize that the result of that could be a damaged relationship. That's never worth saving a few bucks.

So just be very careful. I'd say just kind of my default answer is don't do it. If you do go ahead with it, just understand number one, as I said to Greg, you don't want to inadvertently by extending money to somebody that couldn't get it, you know, from a conventional lender, go into something where you're setting them up for failure. I mean, there's reasons they have these ratios and if those ratios don't work out, you know, you're kind of circumventing that process that would otherwise require them to wait and save and be patient and build up their credit score and all of the things that come with delayed gratification. Now, if it's just to help them get in a lower interest rate, well, again, understand the implications of the potential damage relationship. Secondly, there are real tax implications to this if you're giving them a below market rate.

Thirdly, there are some mechanics to this. You need to take out a lien on the property. You would need to draw up the paperwork just as a commercial lender would do, showing the amount, the interest rate, the term, the monthly payments, what would happen if the borrower fails to make the payments.

I mean, all of those things will lead to clear expectations. And then finally, I would just come back to why is it that they, you know, aren't going conventional and if there's a reason, maybe we ought to look at that and, you know, recognize that that's a warning sign before we proceed. Final thing, and this is minor, but just something to remember is that when you give a personal loan like this, it's not going to help them build their credit.

Whereas, you know, if there's a conventional lender involved, it'll be reported to the Bureau. So anyway, just some things to think about as you consider this. In fact, let's continue on this. Donna has a thought on loaning money to family out of Texas. Hi, Donna. What did you have to share with us today? Well, hello.

I agree 100% with how you just wrapped that up with Greg. Teaching your family members how to save, sharing building tools to get where they want to go. I've seen this in my own family and they lend money and it severed the relationship forever. I mean, we're talking about as small as $400.

So I've been around a little while and I believe that God will provide and he has, and I've seen it in our own lives, my husband and I. So if you're being honest, don't lend money because it's just going to mess everything up. Just don't do it. It's just not worth it. Teach them to know how to save and do it for themselves and teach them that God will provide and show them, give them examples then. Yeah, yeah.

It's a good word, Donna. I've certainly seen it play out that way many, many times in the past and I think, you know, one of the challenges is God uses these difficult seasons in our lives where we have to learn hard lessons. We have to exercise delayed gratification. We have to cut back to deal with mistakes that we've made in the past. And I'm not saying that's the case here with Greg's kids. He just genuinely may want to bless them and do it in a way that's God-honoring and I get that and there are ways to do that. But in other cases, we're stepping in, kind of rescuing our adult children from poor decision-making.

They don't learn the lesson and then they're bound to repeat those same behaviors in the future, which is never going to pull them out of the situation they're in currently. So it's a great reminder, Donna. I appreciate you weighing in on the program today. Thanks for your call.

Let's stay in Texas. Hi, Nancy. Go ahead.

Hi, Rob. Thank you for taking my call. I really appreciate it. Yes, ma'am. I am so appreciative of your program. I can't tell you how comforting it is to be able to have someone to talk to about little things that, you know, they seem stupid to other people, but really they're part of the big picture and it really helps to have you there. So thank you. Well, thank you, Nancy.

I appreciate you saying that. I have just received, I have, what is it, an annuity? Yes, ma'am. And I just received an email from it and it's $2,800. And so what I was thinking is what would be the best thing to do with that? Now, I'm 73 years old, so I was thinking of putting it in a Roth IRA, opening up a Roth IRA and stuff. Yeah.

Yeah, you certainly could do that. So is this a tax deferred annuity and therefore this would be taxable, this payment that you just received? You know what? I don't know that.

I'll have to find out. Yeah, you will, because whenever you have money coming out, either you withdraw money or you begin receiving payments from an annuity. If the annuity was growing tax deferred upon withdrawal, that money will be taxed as income. Again, assuming you purchase the annuity with pre-tax funds. If it was purchased with post-tax dollars, then you would only owe taxes on the annuities gains, not just, you know, the withdrawal or the payment. So that would be something for you to understand because I don't want you to get caught by surprise with that.

Now, once this is after tax money, which, you know, it would be in this case, then absolutely you could put that into a Roth IRA. Do you have earned income this year or do you plan to? You mean am I working? I'm working. You are. Okay, got it.

Yeah. So you can only, you know, put in up to your earned income or the limit, which, you know, happens to be now $7,000 this year for those under 50, $7,000 for those 50 and older. I like the Roth IRA a lot because this is money that would grow tax-free. So you put in the after tax dollars, you then invest it and then, you know, it grows. And then, you know, anytime after you're 59 and a half, you could pull, you know, a portion of it out or you could just let it continue to grow. The other benefit beyond the tax-free growth is there's no required minimum distribution like you'd have with a traditional IRA. And so you can let this grow.

If you don't need it, you want to give it away at your death, you want to leave it as an inheritance, there's not going to be that requirement to pull it out. So the only other question to decide is where to invest it. And so I would look at either one of the robo-advisors or maybe one of the faith-based investing mutual funds on our website at faithfi.com. But bottom line, I like that approach, Nancy.

I think a Roth would be great for you. Thanks for your call. We'll be right back. Great to have you with us today on Faith and Finance Live.

I'm Rob West. Hey, let me just remind you quickly that we're not here today. Our team is off, so don't call in. But we lined up some great questions in advance, and we'll be getting back to those in just a moment.

First, let's tackle another email. This one came to us from Lynn. Here's what Lynn writes. I was just wondering about title lock for my home. I see ads for this all the time on television. Do I need title lock to keep someone from stealing my home?

This is a great question, Lynn, and you're right. We see these all the time being advertised. Bottom line, I'm not a fan of this type of insurance because it really doesn't lock your title as the name suggests.

Nothing can really do that. Instead, they promise to notify you if someone attempts to file a fraudulent deed. Now, almost all counties now allow you to check the status of your deed online, and many will allow you to sign up for alerts if anyone attempts to file a new deed. If someone were to fraudulently transfer title and take out a loan on your property and the lender tried to foreclose on the property for nonpayment, well, it wouldn't stand up in court. The transfer would be fraudulent, and the lender would be on the hook for the money, not you. So my recommendation is to save the money, and if you're really concerned about it, you can keep an eye on the deed yourself. You also may want to check with the county just to see if they offer any kind of automatic alerts, if there's a change to the deed status. Some will offer that, and that would in a sense be providing the same service that the quote lock insurance or lock title would be providing, but without you having to pay anything. So I would pass on that.

Now, keep in mind, this is different from title insurance, which you would typically take out when you purchase a home, which ensures that you have legal title to the property. But this is something entirely different, and as I said, it really is unnecessary. If you have a question for us, send it along, moodyradio.org slash finance. All right, back to the phones. Let's go to Mississippi. Hi, Gary. How can we help? Hey, Rob. Thanks for taking the call. Yes, my wife and I are thinking about giving my daughter and son-in-law less than $10,000 to purchase land around their existing home, and I was just wondering the best way to do that with the IRS.

Yeah. You know, in either case, whether you give them the money and they buy it or you buy it and then give them the property, it really is the same net result. You and your wife between the two of you can make a gift of up to $36,000 in this calendar year 2024, and you don't even have to let the IRS know. If you were to happen to go above 18,000 per person, you and your wife, each 18 or a total of 36, then you'd have to fill out IRS gift form 709. That wouldn't result in taxes. That would just then chip away at your lifetime exemption, which is now over $13 million before you'd have any estate taxes. So either way, you're going to make the gift to them. It's going to be under the 36,000 in cash. They turn around and buy the property or you buy it and then make the gift.

It would still be applied toward, even if you're gifting property, it would still be applied to that annual gift exclusion of 36,000 between you and your wife. So really, whatever's more simple, if you want to just give it to them and let them go through the process of buying it just so they have that experience, that might be worthwhile. But at the end of the day, there are no differences from a tax standpoint.

Okay. So we can just give them the cash without the IRS involved. That's exactly right. Because of the amount we're talking here under 10,000, you absolutely can.

That's what I need to know. Thanks, Rob. Appreciate your program. Yes, sir. Gary, thank you for your call today.

We appreciate you very much. Let me take just a moment and talk to you about solving financial problems. We've referenced this several times today.

We've been talking about it today related to adult children. But in the midst of economic bad news, you may be facing your own financial problems. If that's the case, do you have a plan to solve those problems? Too often, we let our anxiety and fear determine how we respond to personal hardship. But anxiety and fear are tools of the enemy to distract us from following God. Here's what 1 Peter 5, 8 says. This says, for your enemy, the devil prowls around like a roaring lion looking for someone to devour. So if you feel your financial problems are eating you up, take heart, because God is aware of what's going on with you, and He can bring you through those struggles. The fact is, as believers, we are much-loved children of the Lord God Almighty. So we can handle financial problems in a different way following biblical principles. And in the next segment, I will tackle those and share with you what I see in Scripture on some of the steps, some of the keys, to solving financial problems according to biblical wisdom. We'll get to that in just a bit. In the meantime, let's head back to the phones. We're going to go, let's see, to Texas.

Hi, Gloria, how can I help you? You've said something about contribution limits. I didn't know there was such a thing. And if you give more than the limit, are you penalized? Yeah, it's a great question. What is the limit?

Sure. Yeah, so there are a couple of different kinds of contribution limits we'll talk about most often. One would be contribution limits to a retirement account, like an IRA or a 401k. What you may be referring to is the limits on the amount you can make as a gift to an individual.

What are you describing? The gift or the retirement contributions? Well, I thought when you said contributions, I came to mind what I give to other ministries, charities, things of that nature. I wasn't talking about personal contributions. I was just, is there a limit on what I can give? Like if I make a contribution to your ministry and other ministries, my churches and whatever.

Yeah, no ma'am. You can do as much as you want. There could be a limit for the amount that you can deduct based on your adjusted gross income. You may not be able to deduct it against your taxes if you give over a certain amount of your income, but you can give as much as you want.

There are no contribution limits to ministries or charities whatsoever. So you can give away as the Lord leads, and there's no stopping on that. Okay, okay.

Well that helps me a whole lot. Now, a minute ago you told this man that he could give so much to his family without getting the IRS involved. I wrote down that you said $18,000, but then when you ended the conversation you said something about $10,000, so what is the limit? Good question, I appreciate you clarifying that. He was saying he's giving his kids just under $10,000, and so I was saying because you're only giving them less than $10,000, you're well under the limit of $18,000 per person.

So you're right. So disregard the $10,000 number. The limit you can give without involving the IRS to any individual is $18,000 per person, which also means that if you're married, you and your spouse could give a total of $36,000 to any one individual, $18,000 apiece. And you can do that to as many people and as many times as you want, and you don't have to tell the IRS a bit.

But if you get over that $18,000 per person, or $36,000 for a couple, that's when you have to let the IRS know by just filling out the gift form. Okay. All right? Well, thank you so much for your time. You're welcome, Gloria. Thanks for your call today.

May the Lord bless you. We appreciate you. Folks, we're going to take our final break of the hour here, and then we'll come back with our final segment. But let me remind you, we're out of the studio today. Our team is not here, so don't call in, but much more to come just around the corner on Faith and Finance Live.

Stick around. Great to have you with us today on Faith and Finance Live. By the way, we're not live today.

We're away from the studio, so don't call in, but we have some great questions that we lined up in advance. By the way, this ministry is entirely listener supported. That means we rely on your financial gifts and support to do what we do on the air every day. If you consider a gift, we'd certainly be grateful. Just head to our website, faithfi.com, that's faithfi.com, and click the Give button.

Thanks in advance. Hey, let's get back just for a moment to solving financial problems. You know, in the midst of the challenging economic situation we find ourselves in, you may be facing some financial challenges of your own, and we want to encourage you to look to God's way to handle that following biblical principles.

And here's how. First, I would say run to God. You know, Proverbs 18, 10 tells us why this is an effective strategy. It says, The name of the Lord is a strong tower. The righteous run to it and are safe. You know, if you put your faith in Jesus as your Lord and Savior, you're counted among the righteous. And running to the Lord's safe tower is your privilege.

You see, when you're facing financial problems, you can put them before the Lord in prayer, trusting Him to sustain you and provide for you through these hard times. I realize it's difficult, but you have to admit you can't fix things on your own. So first, run to God. Second, do what's right.

God expects His people to, and I'm quoting from His word here, do justice, love mercy, and walk humbly with Him. So the second step is carefully examining what you're doing. Now, if there's any partiality or greed or dishonesty in your dealings, well, take care of those heart issues first through repentance. Next, make things right with anyone you might have injured going forward.

Commit to righteous attitudes and actions, and find a godly friend who can provide accountability for you as you begin to solve your financial problems. So first, we're going to run to God. Second, we're going to do what's right.

Third is, we're going to make a plan. Let me go back to God's word. These are the words of the Apostle Paul.

He said, For God is not a God of disorder, but a God of peace. Paul wrote that to the Corinthians, and it can apply to both relationships and actions. So whether your plan is a systematic plan for paying off debt or a simple budget or a step-by-step correction of a financial mistake, doing things in good order is key. There is an order of operation that we need to follow in all kinds of things, and that certainly applies here in our finances. And the final step in dealing with financial problems is to seek godly advice.

Proverbs 11 14 says, For lack of guidance a nation fails, but victory is won through many advisors. So whether you get help from a certified kingdom advisor at faithfi.com, or you talk to a godly financial counselor. By the way, we have certified Christian financial counselors that are a part of Faithfi here. You can find those at faithfi.com slash CERT CFC. That stands for Certified Christian Financial Counselors. So that's CERT, C-E-R-T C-F-C. You'll see the list of the initial group of certified counselors we are making available to you. They can help you with things like setting up your spending plan, getting a debt repayment plan, perhaps helping you with relational money issues.

They're godly counselors, and they're ready to help you financially, so you can check that out at our website. But, you know, that help is so key because it really gives you somebody to provide accountability, wise counsel, somebody to pray with you. And I think that's really key, especially when we're dealing with financial problems and struggles. You know, it can be so easy to just avoid it, kind of forget about it, maybe not even open the envelopes when they come in and kind of just hope it goes away.

Now, we know it won't, but it's just easier than dealing with it. But having somebody who can help you get on a plan and establish kind of step one, step two, so you can begin making progress is so key. And before you know it, you'll be well into that plan, you'll have the motivation to continue, and you will find yourself actually making progress toward solving your financial challenges. You know, solving your financial problems isn't a one size fits all proposition. Each person's situation is unique, but God never changes.

And His Word and the principles in it are trustworthy and useful. You can be sure that you're on the right track for solving your financial problems when you follow these steps. Run to God first.

Do what's right. Make a plan and seek Godly advice. By the way, if we can help you in your financial journey, we'd love for you to visit our website at faithfi.com. And if you have a financial question in your life related to any of these financial topics we've been talking about, we'd love to tackle it with you. Now, let me also mention one of the things you can do while you're at faithfi.com is you can jump into our Faithfi community. Now, you may not have seen it. It's in the Faithfi app.

It's also on our website at faithfi.com. Here's what's happening though. Every day, stewards like you are posting questions and comments. They're tackling things together. They're sharing ideas.

They're responding to one another. And it's a great free way for you to be connected to a community literally around the globe of stewards that want to be faithful in managing God's money. And by setting up a free Faithfi account, you can jump into the community and post a question and respond to others.

So check that out today when you visit faithfi.com. Hey, by the way, we mentioned the IRA contribution limits for 2024. I do want to make sure you know that your Roth and traditional IRA contribution limits have increased to $7,000.

For 23 and 24, you can deduct charitable contributions if you itemize your tax deductions. But don't forget that for 2023, last year, you can still contribute to an IRA until you file your 2023 tax return. So that might be an opportunity if you want to get some extra money into your IRA. You didn't make contributions last year, but you have the ability to do so. Maybe you got a bonus right here at the beginning of the year for last year. It would be a great opportunity prior to you filing for 2023 for you to go ahead and fund 23 and then you can turn around and fund 2024 as well. Let me also mention just a few of these kind of basic ideas I think you need to know as you're managing God's money.

Because you know, here at the start of the year, we don't have to make things overly complex. The key is to follow God's principles when it comes to managing his money. And one of the ways we do that is by just following some basic steps. First of all, live within your means. That's why you got to have a spending plan. Second is to avoid the use of debt. So let's try to limit the use of debt and get out of debt over time.

Third is to set some long term goals because we're always going to make a better decision today when our perspective is long term. Fourth, we want to have some margin or some liquidity. So we don't want to spend right up to the edge. We want to spend less than we earn. That's going to give us margin and that margin or surplus is key to funding our God-given financial goals. And then finally give generously because giving breaks the grip of money over our lives. And when we do those five simple things, well, it doesn't mean everything will always be perfect.

It just means that you're putting yourself in a position to experience God's best. Alright, before we round out the program today, let me tackle a couple of your emails because we receive these every day and I often don't get to enough of them. So this comes from Angelica. She writes, we're thinking of purchasing a home at the end of 2024. Do you think rates will be lower and do you think home prices will stay high?

Well, it's a great question, Angelica. You know, the Federal Reserve is expected to lower interest rates six times this year in small increments. Now it could be less than that.

I would probably say it's four to six times. In fact, some of the data out today, even just on wage increases, is not going to be welcome news for the Federal Reserve. You know, the strength of this economy is going to prove that inflation will be stubborn and so we may see the Fed holding off on lowering rates even a bit longer than we expect. But the bottom line is we do expect rate declines this year. So mortgage rates should go down. I think my best guess, and no one really knows, but my best guess is that we would see interest rates in the fives by the end of 2024, which obviously that's not ideal, especially when we got used to those two and three quarter and three percent rates.

But it's still better than where we are today. So I would say, you know, if you are looking to buy at the end of the year, just make sure that, you know, you've counted the cost. And my recommendation is that you have no more than 25 percent of your take home pay going to principal interest taxes and insurance on your mortgage. So run those scenarios with the down payment that you have that's hopefully at least 20 percent. And let's make sure that that payment, including taxes and insurance, is no more than 25 percent of your take home pay. By the way, this week, 30 year mortgage rates are just under seven percent.

So obviously we have a long way to go to get into the fives, but we're hopeful of that by the end of the year. Let me just also say I'm not looking for home prices to decline. The demand for housing is still outpacing supply. So although we're seeing a slowing of the the home price increases, we're not expecting any kind of decline. So, again, that's where even if you have to delay the purchase to save, I really don't want you to stretch too far and pay more than you can actually afford.

So really crunch those numbers. Be honest with yourself about what you can actually afford based on your budget and in some of those rules of thumb that I mentioned and only go into that home purchase when you're ready. If you need to push it beyond 2024, I might do that just so you don't put yourself in a financial hardship. Angelica, thank you for writing to us. I hope that's helpful to you. By the way, if you have a question you'd like to send it along, send it to AskRobAtFaithFi.com.

That's AskRobAtFaithFi.com. Well, that's going to do it for us today, folks. So thankful to have each of you along with us on the broadcast today as we tackled your financial questions.

We covered a lot of ground. Let me say thanks to my team today, Amy, Dan, Clara, and Jim. Thank you for being here as well.

Faith in Finance Live is a partnership between Moody Radio and FaithFi. I hope you have a great rest of your day and come back and join us next time. We'll see you then. Bye-bye.