The Dangers of Budgeting

The philosopher of baseball Yogi Berra once said, if you don't know where you're going, you'll end up someplace else. Hi, I'm Rob West. So it's important to plan where you're going and financially that plan is called a budget, planning where your dollars will go.

But there may be some dangers associated with budgeting. And Chad Clark joins us to talk about it today. 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 journey. Well, it's always fun to have Chad Clark on the program. He's executive director here at FaithFi. And Chad, great to have you in the studio today.

Thanks for having me. Chad, as you know, there are some dangers when it comes to having a budget. And by the way, folks might be surprised to hear us say that.

So why don't you explain? Yeah, you don't typically hear us talking about the dangers of budgeting. And let me just start by saying that this is not an excuse not to have a budget.

So let's just clear the air here. Okay, what we're talking about is that there are some warning signs, some warning labels that we need to be aware of. So if we purchase a tool, it usually comes with some warning signs, some warning labels. My wife and I were originally from New Mexico, not a lot of trees out there.

We moved here to Atlanta and lots of trees. And one of the tools that we use a lot out here is a chainsaw. Chainsaw comes with a lot of dangers and some major warning labels on it.

And those are just to help keep you safe and keep other people safe. And so that's what we're talking about here is we're not saying that a budget is a bad thing by any means, just like a chainsaw is not a bad thing by any means. But we have to make sure that we're aware of some of the dangers if we don't use it properly.

That's exactly right. If you want to cut down a tree, you're very glad to have a chainsaw. So let's slap some warning labels on our budget. What do we need to be aware of? Yeah, we're going to talk just about three dangers that we need to be aware of when it comes to using a budget. Again, these are not excuses not to have a budget, just things to be aware of so that we can overcome them and we can use the tool properly. The first one we're going to look at is a budget can lead us to idolizing money. So we encourage people when they use a budget that it becomes a part of their daily rhythm. But by doing that, you can really start to idolize money as you watch every dollar and where it's going. And it can actually cultivate this love of money if we're not careful, but we can overcome that idolization of money by renewing our mind and God's word and reminding ourselves that God is our ultimate treasure, that our hope is not found in money and possessions. The second danger that we want to look at is pride. When we have a budget, we can start to see success in reaching our financial goals and milestones. Pride can start to well up within us.

But ultimately, we are not to boast in any of our own abilities. It is God who gives us the power to create wealth to achieve these goals. And so we should always be overcoming that temptation to pride and boast in self and just turn back to the Lord and give thanks to Him for all things. And then the final danger is relying on the budget more than God. When we have a budget, we start to make decisions off that budget.

And that's great. And we encourage people to do that. But when we feel the prompting and the leading the Holy Spirit to do something beyond our budget, there's a temptation to use the budget to override what God is calling us to do. So for instance, if you're called to give and you go back to the budget and you go, well, God, I can't give that much. You should discern, well, am I going to listen to the budget or am I going to listen to God or if he's calling you to take a new job or to take a step of faith, let's make sure that the budget does not restrict our trust in God. But we maybe take the budget to him and say, God, I don't see how this is going to work out. But just like in Malachi 3, he says, test me, bring the whole tithe to the storehouse. And he's going to show you just how powerful he is.

I love that. So we have to be on our guard against idolizing money against pride and relying on our budget more than God. But if we do that, a budget, as we said at the top, is still a very valuable tool. And I can't help but think that the FaithFi app would help us to budget in a way that honors the Lord because of all the other resources that are there. So for someone in our audience, Chad, who's not familiar with the FaithFi app, quickly explain what it is. Chad Jordan Yeah, we built the FaithFi app really, again, just as a tool.

We want to help you on your stewardship journey. But like we just talked about today, we want you to be aware of some of the dangers that come with using any tool, but specifically a budget to make sure that you're not idolizing money, but that you're putting your hope in your future and your ultimate treasure is only found in the Lord. And that money is just a tool for his kingdom and his purposes. That's what we designed the FaithFi app to help you steward his resources well, for his glory.

John Green All right, we're still close to the beginning of the year. This is a great time for you to start budgeting in a God honoring way the FaithFi app can help you do it. Download it today at faithfi.com.

Just click app or search for FaithFi in your app store. Chad, thanks for stopping by. Chad Jordan Thank you.

John Green All right. Back with your calls just around the corner, 800-525-7000. I'm Rob West, and we'll be right back. Stick around. Announcer The opinions offered during this program represent the personal or professional opinions of the participants given for informational purposes only.

Any information provided is not intended to replace advice from a financial, medical, legal, or other professional who understands your specific situation. Rob West Great to have you with us today on Faith and Finance Live. I'm Rob West, coming to you live from the National Religious Broadcasters Convention here in the Moody Suite at the beautiful Opryland Hotel in Nashville, Tennessee, gathering together with media executives and broadcasters, all coming together for the purpose of enhancing their work to take the gospel to the ends of the earth using the powerful medium of podcasting and radio and TV and film. And it's an exciting environment with lots of energy, but we're grateful to be able to come to you from here all week. We're, of course, still taking your questions on this program as we apply God's wisdom to your financial decisions and choices. So we've got lines open today. They will fill quickly. So you have a question, give us a call, 800-525-7000.

Again, the number to call is 800-525-7000. We'll look forward to speaking to you soon. Let's dive in.

We're going to begin in Clearwater, Florida today. Kathy, go right ahead. Kathy Hi, Rob. Thanks for taking my call. I'm calling about long-term care insurance, the annuities that they have set up. I'm 65 years old, and I'm single, and I don't have any children, and I don't have any debt, and I'm worried about if I need long-term care, you know, in the future, if these long-term care annuity policies are a good idea or not.

Rob Yeah. You know, I think they are, Kathy, so long as you can afford not only the premium today, but increases down the road. So what I wouldn't want you to do is secure a policy that's going to kind of push you right up to the edge in terms of your budget, because we're seeing these policies increase along with life expectancy increasing and the fact that we have a rising cost of medical care in this country, and that's causing these premiums to increase. Now, they don't underwrite the premium in terms of the increases on an individual basis. It has to happen at the state insurance commission level for all policyholders in a particular state.

However, it does happen, and it has been happening. In fact, some companies, in particular, some companies that didn't price these products appropriately have seen increases over the last several years of as much as 50 percent, and so we have to be able to absorb that. Now, why would we take a long-term care insurance policy on in this season of life? Well, if there's one thing, Kathy, that has the likelihood to erode your assets in this season, it's most often going to be the need for long-term care.

We know that the cost is significant. I mean, it can run $9,000 a month for nursing care, and it kind of goes down from there, and of course, it's increasing at an increasing rate, and so this would, of course, offset that as you have the opportunity to have a daily benefit. There's usually an elimination period that you have to get beyond, and then there's a max payout that you would secure as a part of the policy, and often you'll have an inflation rider to increase it over time, but the idea would be that if you needed some sort of care because you're not able to do certain activities of daily living, then it would kick in and provide the financial assistance for you to be able to either bring in in-home care or day care or full nursing care or assisted living. The stats say that about 70 percent of us will need some type of long-term care beyond the age of 65.

It usually lasts between 18 months to three years. It can go on even longer than that, and that's due to the advances in medicine that are keeping us here longer, but it's costing more, and so I think for that reason, it's probably important for you to connect with a long-term care insurance agent, somebody who specializes in this type of policy, who can really look at your medical underwriting, what conditions do you have, if any, that might make the cost increase, look at the various insurers to see which one might be the best fit for you, and then quote the policy, but again, making sure that you can afford it not only today, but in the future. The alternative, if you don't take something like an LTC policy, would be to self-insure, and so then you would have to use your own assets to cover the cost of care in this season of life, and if you spent them down, when you get below a certain level, like $2,000 worth of assets, then you'd rely on Medicaid assistance in a Medicaid-approved facility, but this can give you some peace of mind, but it's not cheap, and I think at 65, we're kind of on the back end of the range of ages that I encourage people to look at this, because it's going to get more cost prohibitive the older you get, certainly beyond the age of 65.

Does that make sense? It does, and I do go to a planner, and I've got a policy, the one I kind of looked at is, you know, it's $100,000, you put in $10,000 a year for 10 years, and it has surrender values and all that, and it's effective the day I sign it. I just don't know if, and I can do that, I've got plenty of assets that I could put in 10,000 a year for 10 years, that's not a problem for me. I just don't know if that's a wise use of money, I mean, if it's something I should do it.

I thought it, I think it is, just because I don't have any children or anyone to rely on or anything, so that's why I was looking at them. Yeah, yeah. I like that a lot, so that's a long-term care annuity that can provide you a regular stream of income, and I think especially because you don't have somebody that could step in and provide that care when you need it, having this to offset other assets that would need to be used, especially since you have the ability, you know, to pay for it, I think it can be a great choice, and I like the 10-Pay option where you're paid up over a period of time, you have the assets to do it, and even if this doesn't shoulder 100% of the cost of long-term care, it could take a significant portion of it, which would be a real blessing to you in that season of life, and the Lord has given you the assets to be able to pay for it, and so, you know, it's like any other insurance, we're just trying to offset a potential risk that we have. Okay, oh, thank you so much, Rob. That helps me so much. Well, I'm so glad, Kathy, and I'm delighted that you called today. I call back any time, but it sounds like you're on the right track.

I'm thrilled to hear that you've done your homework here, and you have an advisor who's walking alongside you, and I think you're making a great choice. Okay, thank you so much. I appreciate it. God bless. All right. May the Lord bless you as well.

800-525-7000 is the number to call. We're taking your calls and questions today on anything financial, as we tackle what you're considering in your financial life, running it through the lens of biblical wisdom. We'll head back to the phones here in just a few moments.

It looks like all the lines are full, but let me go back to where we started today just for a moment as we head into this next break. Chad Clark stopped by today, and it's always fun to have Chad in the studio, but we were talking about the importance of a spending plan and budgeting. Often we will, with the best intentions, put a plan together and just not follow through on it. It becomes difficult, or we get off plan, or something comes out of left field, and you know what?

It doesn't work out the way we expect, and so we just kind of cast it aside and say, you know what? It's just too much work. Let me challenge you to perhaps revisit the spending plan conversation. Take the time to actually put that plan in place, but here's the key. Pick a plan and a system to manage the flow of money that fits your personality. Maybe you're more hands-off and directional. Well, there's one approach to that.

Maybe you're more hands-on, and you like to be detailed, and you'd like to know exactly what's in every one of your spending categories at any point in the month. Well, there's a solution for that. They're both found in the FaithFi app, and you'll find that on our website at faithfi.com. That's faithfi.com.

Just click app at the top of the page. All right, back with more of your questions just around the corner. Great to have you with us today on Faith and Finance Live, live from the National Religious Broadcasters Convention. I'm Rob West, and we're delighted to be here in Nashville, Tennessee, but we're also delighted to be broadcasting, so we can bring you this program each day live from Nashville, but also taking your calls and questions on anything financial. We've got the lines stacked up, lots of great questions coming up, so let's dive back in.

To Bolingbrook, Illinois, WMBI. Hi, Bernice. Go right ahead.

Yeah. Hi, Rob. Hi. Can you hear me okay?

I sure can. Yes, ma'am. Yeah, okay.

All right. So I'm looking at CD's versus money market, and what is better, I know there is some differences between them. I'm more familiar with CD's than money markets, but if I had an opportunity for a money market at 5.07, which is a really good rate, I'm not used to seeing money markets at that rate, and it's through thriving, so I didn't understand how it's so high and what would be better right now, because I know you can get some CD's at 5% as well. Yes. The thing is, like, thriving versus a credit union versus a bank, you know, the security, I know the bank is FDIC, the credit union mentioned yesterday is the NCUA, but I didn't know about thriving.

Okay, yeah, very good. You know, they're basically the same in the sense that you're looking at the yield and then you're looking at the safety. So with the CD, as you said, you either have FDIC or NCUA insurance, that's what I would suggest depending upon whether or not you're looking at a bank or a credit union. CD's tend to have higher rates than money market accounts, although that's not necessarily the case, especially if you're with an institution that, you know, is in a position to just offer a more attractive rate of return to attract new customers. Of course, the CD gives you no access to your money without penalties until the term ends, whereas the money market offers access to the funds with rates typically more comparable to a savings account.

Now, in terms of the safety, you would want to just understand what kind of backing there is. Oftentimes a money market will, you know, offer the same FDIC insurance, whereas a money market mutual fund will not. And so I think you just need to understand the potential risk you're taking, although it's very low.

We have seen, you know, a situation where a money market fund, quote, broke the buck, where, you know, they're always supposed to be priced at a level one dollar, and depending upon what assets are backing it that they're invested in, during 2008, 2009, we actually saw a money market that broke the buck. And so the question is, is there backing there where the government will step in, and so I think that's where you just need to understand, do you have that FDIC insurance or not. With regard to the institution of Thrivent, I wouldn't have any problem with you going with a money market with Thrivent, I would just want you to understand what kind of safety and protection is there. But with that said, I think, you know, if you're looking at the yield, I would compare that to a CD, and if you're getting a comparable rate, I like the money market option just because it gives you the liquidity, meaning the ability to pull money in and out as needed.

Okay. Now, like, if you looked at, like, Thrivent versus Ron Blue, are they, like, similar type establishments, like that was one better than the other, or? Yeah, you know, there's not necessarily one better than the other. So you mentioned Ron Blue, which is Ronald Blue Trust, now Blue Trust. They would not take custody of the fund, so they would be the advisor or the trust company, and then they would house your money at, like, a Fidelity or a Schwab or one of those types of firms, whereas Thrivent actually is your broker-dealer, so they would take custody of the funds. You know, both would offer you a great option in terms of, you know, a money market fund, and so I wouldn't have any issue if Thrivent had a particular money market fund that was appealing to you. I wouldn't have any issue with you putting that money there versus another brokerage firm like Schwab or Fidelity, something like that. Right. So are they any more safer, like Fidelity and Schwab, or similar to Thrivent then with the banking?

In terms of Thrivent versus what? Yeah, like, if you said through Ron Blue, they're just, they're not really holding it. They're putting it through Fidelity or Schwab or some other one, right?

That's right. Is that more safe? Is that safer, then, than to go with Fidelity?

Well, it's going to come, in terms of safety, it's going to come down to the backing. So if the particular institution failed, is there a government backstop? And you know, with a Thrivent money market, you'd want to ask that question. I don't believe the Thrivent money market is insured by the FDIC or any other government agency, but you would want to ask that question. With the case of a Fidelity money market or something else, oftentimes they will be.

So you would just want to check and see, you know, whether that's available. Now, they may offer what's called the National Credit Union Share Insurance Fund, which is the NCUA, and if that's the case, then that, in the same way that FDIC provides the backing of the full faith and credit of the U.S. government, that's what provides backing, the backing to the credit unions. I think the question is just whether you're working through the Thrivent credit union or not, and whether or not this particular money market fund has that backing, and you'd need to ask that question. Okay, so I just asked that financial analyst, or I guess that's right.

Yeah, I think whoever you're working with at Thrivent should be able to tell you with the particular money market that you're looking at, whether there's any U.S. government agency backing. Okay, all right. Okay.

And then I had one other question. I didn't know if you had time. Sure. Go ahead.

Okay. So they also have a product. It's called Drive and Fix Deferred Annuity, and it is like a multi-year, and like I was looking more like at a three-year or a five-year. I didn't want to go more than that, but, you know, if you put, you know, let's say $100,000 or more, they're at $4.65, $4.8. So it seemed pretty good, although you could lock in and rates could go up. I don't know what the chances of that, but I don't know if that's a safe product to go into, and no matter, it's the same situation again with Thrivent making sure what kind of backing. Yeah.

Yeah. I mean, I think that product could work for you. If you're looking for something that's guaranteed, you don't want to take market risk. I think deferred fixed annuity could be a great option, especially with the attractive rates we have right now. They're not all created equal, so I would shop around, but I don't have any problem if you're looking for an annuity product with you using Thrivent specifically.

I think I would just compare it to maybe one or two other options to check the rates. Thanks for your call today. We'll be right back. Great to have you with us today on Faith and Finance Live. I'm Rob West, live from the National Religious Broadcasters Convention here in Nashville, Tennessee. We're broadcasting all week, taking your calls and questions today on anything financial. Coming up in the next segment, we'll dive into the mailbag. Amy, my producer, has a list of some questions that have come in recently.

If you've sent one in at moodyradio.org slash finance, we'll look forward to tackling a few of those just a few minutes from now in our next segment. But first, let's head back to the phones to Cleveland, Ohio. Hi, Harvey. Go ahead. Yeah.

How are you doing, Mr. West? I'm good. Good.

Good. I was wondering about this mortgage, open-end mortgage, I was looking through my mom's papers and my father's document, and she's been paying on this thing for over 20 years. And I don't know what it is, I never heard of it before, maybe you can enlighten me.

Yeah. So an open-ended mortgage basically provides financing to help you buy a home, and then typically they're used for renovations. So let's say you were going to buy a home and then renovate it in the future, the open-ended mortgage works similar to a home equity line of credit, but you can use only the drawn funds for upgrades to your property. We don't see these very often, they're very uncommon, and the benefit is that they allow you to kind of wrap the expenses into one product. And so you're avoiding paying closing costs for two loans, and then you only repay the mortgage and any extra that you use, and you have one loan and one monthly payment. Now the downside is that, again, it's difficult to find a lender that can do it. You can't draw more than the maximum, so you're limited, but there's also this risk of borrowing more money than what you can reasonably repay, which is why I typically say, let's just get the loan we need for as little as possible and not borrow any more than that.

But in certain situations, specifically when you're buying and renovating, it can save you some money because it allows you to kind of continue to pull money out as needed and not have to pay for the financing costs associated with securing a second loan. Does that make sense? It does.

It does. But I'm confused because I do not see where she has gotten a disbursement from the company or her major disbursement over the course of the loan. Yeah. Do you know if she ever took more than the original loan amount? I don't see where she's taken none. Oh, okay. So what does she currently have?

What liens are on the property today? None. Okay.

No. That's the only thing she's paying on. Okay. So what is it she's paying on? She does have a first mortgage? No, she doesn't.

Oh, she doesn't. Okay. Okay. When you say just this mortgage, what is this mortgage?

The open-ended mortgage? Correct. Okay. And so she's paying on it, which means she has a balance.

What do you think that balance is? Do you know? I don't know.

Okay. Yeah, I think that's your next step here. So basically an open-ended mortgage, as I described, is one that allows you to continue to pull money. Perhaps she never did.

Again, these are fairly rare, but it's nothing to be concerned about. I think the key is just find out exactly what is the status of this mortgage. What is the amortization schedule, meaning based on the payment that she's sending, how much or how long will it take her to pay it off in full? And she can continue to pay on it. She's only going to pay back what she borrowed. So even if it's open-ended still and there's an amount that's remaining that she's able to pull, it doesn't mean she has to.

So she can just treat this like a normal conventional mortgage at this point and just continue to pay on it until it's paid in full. Yeah. I'll do some more investigation and see where it fires me. I think that's a good idea, Harvey. Hey, I'm delighted you're walking alongside your mom in this. I know it's a blessing to her and call back any time. We appreciate you being on the program.

Let's go to Ohio. Hi, Amber. Thanks for your patience. Go ahead. Hi, Rob. Thank you for taking my call. I listen to you every day on the radio and I absolutely, it's a blessing. Oh, thank you.

That's very kind. Yes. My question is about Social Security. So my husband isn't looking to retire for 10 years, but he has heard from several people that your Social Security benefits are based on your three highest performance years, whether it be when you were 21 or 50.

And I didn't know if that was true or not. No, one of the numbers that you said is right, but there's a very important missing number. And so it's not your highest three years at your highest 35 years. So they call it your high 35.

So in order to get Social Security benefits, you have to have 40 quarters of paying in to Social Security through your FICA taxes or 10 years. But your benefit is based on the calculation is based on your highest 35 years of earnings. And so they look at those high 35 and that's what's going to drive how much benefit you get. And what that also means is that as you continue to work, even beyond Social Security age of taking benefits, if at any point your total years compensation and the taxes that you're paying are greater than any of your existing high 35, then it will replace one of those.

But it is those highest 35 years of earnings, which is why the longer you work and the more you make, the better off you're going to be in terms of that Social Security calculation. Does that make sense? Okay. Yes, it does.

Yes, it does. Thank you so much. All right. You're welcome. Hey, thanks for being on the program today. We appreciate your call. We've got a few lines open today, 800-525-7000 is the number to call. If you have a financial question, we can probably sneak a few more in before we round out the program here in just a little bit.

Back to the phones to St. Petersburg, Florida. Hi, Greg. Hey, how are you doing, Ralph?

I'm doing great. Good. Hey, my question is, my siblings and I inherited due to the passing of a parent, we inherit some property and that property was sold and the money, the funds from that property has been divided already between the three of us. My question is, is on the taxes, any taxes that may or may not need to be paid and also the realtor that we were dealing with mentioned the step up, something like step up. So could you explain that to me and also the taxes in it that need to be paid?

Yeah, very good. So there's not an inheritance tax, so any taxes that would have to be paid on the estate would have happened prior to the distribution of the estate, so you wouldn't be concerned about that. The step up in basis occurs when you inherit real property or an asset. The cost basis is stepped up to the market value as of the date of death. So let's say somebody bought a house for 100,000, it appreciates to 300,000. Normally when they sell it, in my example, they'd have 200,000 worth of capital gains, they'd pay capital gains tax on.

But let's go back to that example. They buy it for 100,000, it grows to 300,000, they pass away and hand it off to an heir. The step up in basis steps up that $100,000 cost basis to the market value as of the date of death, which is the 300,000, which means if they turn around and sell it right away, there is no capital gains tax because the step up in basis is to the current market value and then it's sold.

The only time you and your heirs would have capital gains in this example is if you inherited it, got the step up in basis and then you held onto it, let's say for another year and it continued to appreciate you'd be responsible for the capital gains on the growth during that year where you owned it beyond the death. Let's talk a little bit more off the air. We'll be right back on Faith and Finance Live.

Stick around. Great to have you with us today on Faith and Finance Live, live from the National Religious Broadcasters Convention here in Nashville, Tennessee. This is the place to be if you're involved in Christian media, films, broadcasting, podcasting, whatever it might be. Everyone comes together once a year to be encouraged, to form some deepened relationships, to learn through all the great sessions and teaching and lots of meetings that happen here. But we're grateful to be able to bring you the broadcast of Faith and Finance Live from Nashville alongside this event here in the Moody Suite today.

We're taking your calls and questions as well, but here in our final segment, we like to do on Wednesdays, we dive into our money mail bag and we look at the questions that have come in over the previous week at moodyradio.org slash finance and see if we can tackle a few of those. Amy, I understand we have a few, right? We do and I have to say it was 68 degrees here in Chicago, so that makes me a little less jealous that you're in Nashville and I've been joking with my girls because you know, my Julie, my wife and my girls came on this trip and we're here at the Opryland.

Now, if you've ever been in the Gaylord Opryland, you know that it's like a city inside, right? And it's always 72. It doesn't matter whether it's freezing outside, doesn't matter if it's raining, it's sunny and it's green and it's 72 degrees in the Opryland. So we have no idea what the temperature is outside.

Well, we enjoyed a nice day here in Chicago, so like I said, hadn't been too jealous thinking about where you are. Okay, so let's get started with these. First off, Ingrid writes, I am supplementing my retirement earnings by dog sitting as well as cleaning a few houses.

Am I allowed to make a certain amount of money without paying tax on it or must I claim everything I make? I truly want to do the right thing. Yeah, I appreciate that Ingrid. Let me ask you though, Amy, first, I don't know if I've ever asked you, do you have a dog? I don't because Marty is pretty allergic, so yeah, we've never ventured there.

That wouldn't be a good thing. All right. Well, I like Ingrid that you're looking for creative ways to supplement your income in retirement. So here's the bottom line on this typically, and there's always a caveat to everything. If your total gross income is below the standard deduction threshold and let's use 2023 last year because that's probably when you were doing this work. If it's below that threshold, which for 23 was 13,850 for a single filer, 27,700 for those married filing jointly, then in most cases you're not filing a tax return. Now, but generally that only works for a W-2 employee. If your earnings are from self-employment and that's what this would be considered and they were $400 or more, then you do have to file an income tax return. You may not owe taxes, but you still have to file and report it.

So I would say, Ingrid, bottom line is based on the type of work you're talking about, dog sitting, you're a self-employed person, you probably made over 400, you're probably filing that return. Okay. That's really good for all of us to know. Okay. Next up, Michelle says, I started taking my social security benefits at my full retirement age. I'm currently also getting half of my ex-husband's benefits. If I remarry, will I lose that? Yes. If you remarry, Michelle, you would no longer be eligible for spousal benefits from your ex-husband.

You would though be eligible for benefits associated with your new husband. Okay. Very good. Also, and finally, Rich, I am trying to intervene for my cousin. He has maxed out two credit cards.

The total amount is 10,000. He can't afford to pay the 200 a month minimum. What can I do to help him?

Yeah. Well, I think a great option, first of all, Rich, would be to connect him with our friends at Christian Credit Counselors. You'll find them on the web at christiancreditcounselors.org. Here's what they're going to do. They're going to help him set up a budget, which is step one, to try to curb spending to free up margin to start paying these back. Now, the benefit is that once you do that, or once he does that, and I realize that may be some hard work, but this is important, then they have arrangements with the credit card issuers to lower the interest rates, typically significantly lower, and so then if he were to get on a debt management program, he'd pay one level monthly payment. On average, he's going to pay that back 80% faster.

Now, if you want to intervene here, I would only do it in a way that reinforces the right behavior, so here's an example. Rather than just giving him cash and leaving it up to him as to how to use it, because of the situation he's in, perhaps you agree to match a portion of these payments to Christian Credit Counselors every month, so you're helping him to move toward becoming completely debt-free, but doing it in a way that's wise, because you're paying much less interest due to the fact that he's in a debt management program. Again, if you want to check with Christian Credit Counselors, they're on the web, christiancreditcounselors.org. I think that's great advice, and I just so appreciate Rich's heart here in trying to help his cousin get out of debt, and so just keep these emails coming. We love to hear your questions, and get these in front of Rob.

Just go to moodyradio.org forward slash finance, and you'll see a form there you can fill out. Amy, thank you very much. So grateful for my team, Amy Rios there, Dan Anderson today, our engineer, Chris Seagard our engineer on this end at the Opryland, and Jim Henry, I mentioned Chris's name, and he just shot a glance over to me, and wait a minute, what's wrong? No, everything's good, but when we're doing remotes, things are always a little precarious, so anyway. Well, we're grateful for you too, Rob.

Thank you so much. All righty. Hey, let's go back to the phones. We've got a few minutes left. We'll try to sneak a few more in before we round out the broadcast here, to Missouri we'll go. Go ahead.

Hey Rob, good afternoon. Hey, I've got some rental properties, I'm buying some more, my wife's seen the self-directed IRA online, she wants me to put them in there. I'm cautious, my questions are, is the deed still in my name?

That's one. Two, if I want to refinance it a couple years down the road, will that be an issue? And three, let's say I want to sell it several years down the road, is that an issue?

Yeah, yeah. So as a general rule, Greg, on this might be everything that happens in the self-directed IRA stays in the self-directed IRA. Because the property is an IRA investment, the purchase contract is made in the name of the IRA, the income from the investment then goes back to the IRA and the expenses for the property are paid by it. So as long as it's in your self-directed IRA, you generally don't have to pay taxes on the income from the rental. So for example, the rental income that goes directly into your IRA is either tax-free for Roth or tax-deferred. So I don't think that would be an issue if you're trying to take distributions out of it, that would obviously create a taxable event. But I think at the end of the day, this can be a really great option, even though there's a little more headache to getting a self-directed IRA set up.

If you're skilled in real estate investing, it can be a great way for you to grow this asset and earn income on a tax-deferred or tax-free growth basis. Okay. So sounds pretty good, but now if I want to sell it like 10 years down the road, that'll create a taxable event is what you're saying? Absolutely. Unless you leave the proceeds inside the IRA. Okay.

And then I could sell it or cash out refinance and buy more property, keep that down. That's exactly right. All right. Yep. Well, that sounds great. All right.

Yeah. And you would also be able to, let me just also mention, you'd be able to refinance that inside the self-directed IRA as well. So if you needed to, for some reason, restructure the loan, that's not a problem inside that self-directed IRA.

So it can be a really effective tool. I think the key is to do some homework on who is that best self-directed IRA custodian. Not all IRA custodians handle self-directed.

So you'd want to be with somebody who's really skilled and has an expertise in self-directed IRAs. Okay. Great. Well, thank you, Rob. I appreciate it. You're welcome, Gregory. Thanks for your call, sir.

Quickly to Kasemi. Robert, go ahead. Hi, Rob. How are you?

First time caller. Long time. Awesome. Okay. Well, great.

I appreciate it. Hey. Yeah.

Listen, I got questions. What do you feel about promissory notes? I have an opportunity to get into a promissory note that's going to pay a good return. Okay.

But, you know, I don't know about how insured it is, you know what I mean, as far as FDIC or anything like that. Yeah. So are you the one lending the money?

No, no. I would be giving the money to the promissory note and getting it. Now, my understanding, it's backed by certain insurance companies, like the bigger insurance companies also, this promissory note. Yeah. Yeah. I would just be real careful there because, you know, typically, you know, these promissory notes are often unsecured, meaning that, you know, like a secured loan comes with collateral, often a promissory note is unsecured. So if the, you know, issuer defaults, you have a hard time recovering your money and you would have to pursue legal action and that's expensive and time consuming.

So I'd want to know a lot more about this in terms of an investment because although the rate of return might be pretty attractive, the risk level is probably pretty high and commensurate with the return. I see. Okay. You got time for one more question?

Quickly. Yes, sir. I'm 60. I'm going to be looking at wanting to retire at 65.

My retirement age is so low. Unfortunately, I'm losing you here, Gregor. Let's do this.

I'm sorry, Robert. Let's see if we can get you scheduled for tomorrow for the second half of that question because I'm out of time and I think your sell signal is fading in and out. But we appreciate you being on the program today, sir. May the Lord bless you.

Well, folks, we covered a lot of ground today. I'll tell you, it's always great to be along with you on this broadcast each day and especially this week as we've had the privilege of coming to you from NRB, the National Religious Broadcasters Conference with a lot of great conversations being had here in the room in the Moody Suite and some great conversations with you on the other end of the radio. You know, the big idea here at Faith and Finance Live is that we would see God as our ultimate treasure and money a tool to accomplish God's purposes, helping you look through a biblical worldview and be that wise and faithful steward. We know you want to be as you manage God's money every day. We want to help you do that and it's our privilege to do so. Hey, on behalf of my team today, Chris Segar, Dan Anderson, Amy Rios, and Jim Henry, I'm Rob West.

Faith and Finance Live is a partnership between Moody Radio and FaithFi. I hope you'll come back and join us tomorrow. We'll do it all over again. Until then, we'll see you then. Bye-bye.