Boomers Hanging on to Houses

Millennials and Gen Z'ers looking to buy houses are having a rough time of it, and analysts say baby boomers are the reason.

Hi, I'm Rob West. Boomers aren't the only reason younger folks are finding it difficult to buy the size home they'd like. Other factors are working against them, too. I'll tell you all about it today with some advice on how to deal with it, and that 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. OK, so the real estate site Redfin says that empty nest baby boomers own almost a third of the nation's large homes. These are folks aged 58-76. Meanwhile, Millennials with kids own just 14%.

Millennials are defined as ages 26-41. As you might expect, Gen Z'ers, ages 19-25, own just.3% of large homes. And in case you're wondering, a large home is described as having three bedrooms or more.

Now, why is any of this important? Well, because younger folks tend to upsize buying larger houses as their families grow. And so right now, there's a huge demand for those homes, but not a lot of inventory.

Redfin says this situation is caused by two factors. First, when today's boomers were younger, houses in general were a lot more affordable, so they tended to buy bigger houses. Second, boomers now have little financial incentive to sell. Most of them, 54%, have no mortgage. They own their houses outright. Their median monthly cost of ownership for things like insurance and taxes comes to just over $600. For boomers still holding a mortgage, the vast majority have a much lower interest rate than they'd have if they sold now and bought a different home.

They might downsize and have about the same monthly payment, so they're staying put and keeping inventory low. Of course, for millennials and Gen Z'ers, all this is making their dream house seem like a dream that will never come true. Supply chain interruptions during the COVID pandemic dramatically reduced building starts for a couple of years, while demand for new houses only grew. The increase in building costs raised home values higher and higher, and then came inflation and soaring interest rates. Not surprisingly, all this made 2023 the least affordable home buying year on record.

Folks with equity in their current home can generally sell and buy another house, but first-time home buyers without that leverage are finding themselves priced out of the market. 2024 is projected to be a better year for them, but conditions are a long way from what their parents experienced. Many boomers took advantage of an abundance of newly built homes and favorable economic conditions during their biggest earning years, 30 or more years ago. They built wealth and bought big homes. Those homes proved to be solid investments. Their value has grown several times faster than incomes over the last several decades. Boomers now hold half of the nation's wealth, and a lot of it is in real estate. Also, when they bought homes, they didn't have to spend as high a percentage of monthly income on housing, so they were free to invest more.

Today's younger families aren't being handed those same opportunities, but analysts say they need to be patient. More boomers will decide to sell and downsize in the years ahead. More houses will be built. Inventory will increase and prices will go down. Mortgage rates will also go down, maybe not to 2% or even 3%, but they will go down, making homes more affordable. It's just a matter of time. In the meantime, you can get ready.

I recently gave you some steps for this, and they're worth repeating. First, accelerate your payments to get rid of credit card debt and any car loans you have. That improves your debt-to-income ratio and will help you get a better mortgage rate. Be sure to make every payment on time.

Check your credit reports for errors and dispute any you find. Bring your credit score up as much as possible. That will also help you get a lower interest rate, which will lower your monthly payment when you do buy. Save as much as you can in liquid savings for your down payment.

20% is best. That way, you won't get stuck with private mortgage insurance, which increases your monthly payment from $30 to $70 for every $100,000 you borrow. And finally, when you are ready to buy, don't take the first mortgage offer that comes your way. Most buyers do, if you can believe it. Get pre-approved and then shop around for a mortgage with the lowest rate and best terms you can find. It could save you tens of thousands of dollars over time. Okay, that's what's going on in the housing market.

I hope you found that to be helpful as you're on your quest to buy a home. Your calls are next. The number 800-525-7000.

That's 800-525-7000. I'm Rob West and we'll be right back. 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. Well, thanks for joining us today on Faith and Finance Live. I'm Rob West. We're going to take your phone calls in just a moment on anything financial, which just means that you have a question today. You'd like for us to tackle that question. We'd love to hear from you at 800-525-7000.

Again, that number is 800-525-7000. For the moment at least, we've got several lines open and we'd love for you to get in the queue. We're going to dive in. Let's begin in Indiana. Hi, Joseph.

Go ahead, sir. This is Joseph Keefer calling. I got into a debt management plan from Stonebrook Bank. They hooked me up with an outfit called Global Holdings LLC in Tulsa, Oklahoma. He said, I'll call you periodically.

I heard nothing from him. I've been paying the minimum on the credit card bills they took. Now, after these 11 months, he says, well, you don't have to pay those. Send them to me.

I'm awful leery of doing that. I am as well, Joseph. Let's dig into this just a bit further. So you have some credit card debt? Is that what we have here? Yes.

Okay. How much do you owe? It was, I think, five credit cards they took and a notary pulled in. It was a contract and everything, but I've always heard you say, don't, you know, not pay the debts on debt. It's a debt management plan, but all of a sudden after 11 months, he says, don't make them, send them to me. And I'm afraid if it don't work out, I'll owe the late fee and everything on them. And I just don't know what to do. And you're the only person I really trust. Well, I appreciate that.

I'm glad you called. So what it sounds like they're probably doing is something called debt settlement, where in a sense, they're going to take over negotiations, which is what you authorize them to do between you and the creditor. And so normally you would work directly with the creditor paying the monthly payment as scheduled. And what they're doing is dropping in the middle of that arrangement and trying to negotiate a lower payoff on your behalf. I'm not a fan of this approach because what it typically involves, and this is what it sounds like they're doing with you is they're going to ask you to stop making the payments, get you behind and use that, you know, past due status to try to negotiate a better situation for you. The problem is that's going to trash your credit and result in you being contacted potentially by these creditors because now you're past due.

You're not keeping up with your obligation. And they may or may not be successful at coming in and negotiating a lower payoff. And even if they do, there's going to be a lot of carnage along the way with regard to your credit. So I say to avoid debt settlement at all costs. I also say avoid debt consolidation where you take out a new loan. What I would encourage you to do is either snowball it yourself or if you want to involve a third party, which can be very effective, I would use debt management where you leave the credit, the debt right where it is. You go into a pre-negotiated lower interest rate, which is available through credit counseling or debt management. So you don't have to get in arrears. You can stay current, never get behind, but still enjoy a lower interest rate, which allows you to get the debt paid off a lot quicker.

In fact, on average, 80% faster. So the challenge here is obviously you've been in this program for a while. You've given them permission to act as your agent. And so you would have to rescind that permission. And then you would have to reestablish contact with the creditor, let them know that you want to resume payments and then potentially slide it into a debt management program. I just don't know what commitments you've made to this outfit, number one, and then number two, what it would look like for you to get it back from global holdings and try to get yourself back current. Do you know what that process looks like if you wanted to kind of take an off ramp from this? Well, they said I could pull out any time, but I've been in 11 months and now he says they think we don't want you to want you to use us.

And this has been 11 months. Say that last part again. Who says they don't want you to use them? Tony from Stonework Bank in Texas. Okay, so that's the creditor that you have a credit card with or that's global? No, that's the people that sold me that got me on the debt management plan with this global holdings.

Okay, so there's yet another intermediary here. This is pretty convoluted and I just don't like the sound of it as to kind of why he's acting as an agent for global. At the end of the day, you need to do what's best for you, try to keep your obligations and commitments. And so what I would be doing is asking what it looks like for you to unwind this and reestablish contact directly with your bank because again, I just don't like the whole approach of debt settlement and how they go about it personally. Yeah, well it's a debt management plan, but you know, I'm not going to I'm not going to send him the card.

I just want to be he's going to call me on the first and I'm going to say I don't want to do it. I'll keep making the minimum payments and paying the global outfit. I mean, I don't want to get jammed up with my creditors. Yeah, the problem is debt settlement is not debt management. And the only reason I'm pointing out that distinction is with debt management. You're able to slide into through the nonprofit credit counseling agency of which global is not you're able to slide into those pre-negotiated lower interest rates. And so I would if I were you I would contact my friends at Christian Credit Counselors. They are a debt management company not debt settlement. They're a 501c3 not-for-profit.

They're all believers and I would say listen. I've got this arrangement with global a debt settlement company. I'd like to wind that down and I'd like to move over into a debt management program. Can you all help me pull it away from them establish connections with each of my banks get me into those pre-negotiated lower interest rates. And then from that point forward you could make one on-time monthly payment and you won't get into arrears. Nobody's going to stop paying anybody and you know, you'll pay this off a lot quicker with less interest. Well, Rob, I call the Christian Credit Counselors. They wanted to take a lot more by credit cataract surgery payment and everything, but they wanted $450 a month.

Well, remember that's not going to them. So what they're taking is I mean is a very small fee there, but they're taking just the scheduled monthly payment, which is typically about 3% of the balance, which is what you would normally pay as a minimum payment to a credit card anyway. So how much debt do you have in total Joseph?

Roughly about 18. Okay, so 18,000 and you know at 3% yeah, that's $540 a month. So they're not even taking that much. It sounds like they're taking two and a half percent which is pretty typical, you know, if you were paying a minimum payment see with global. It sounds like they're not collecting the full minimum payment because they're just trying to build up a war chest potentially. This is the way a lot of them work. Again, I don't know the details here, but they're building up a war chest to try to go in and negotiate a lower payoff after this gets several months behind and your credits ruined. But if you're going direct or through credit counseling, you're going to have to pay a typical minimum payment, which on 18 grand is about $450 to $500 a month.

The difference is through Christian credit counselors, you can get a much lower interest rate. So I far prefer that option. Now it's got to fit into your budget. And if it doesn't, then we're gonna have to look at other options. But you know, this whole idea of debt settlement, especially where there's a third, a fourth party involved.

This other outfit, I'm not a big fan of. Stay on the line, Joseph. We'll talk a bit more. We'll be right back. Thanks for joining us today on faith and finance live. I'm Rob West. Hey, before we head back to the phones, let me remind you, we're just a couple of days away from the end of the month, which is an important time for us to hear from you with your financial support.

That's right. As a listener supported ministry here at faith and finance live, we can only bring you this broadcast every day as a result of your generous support. And we're about $7,000 shy from our month in goal here for February. And if you could make a gift, we'd certainly be grateful. A gift of any amount one time or as a monthly financial partner would go a long way to helping us continue to do this work and equip you as a faithful steward of God's money. Just head to our website today or tomorrow if you'd be so inclined at faithfi.com.

That's faithfi.com and click give at the top of the page and we'll say thanks in advance. All right, let's head back to the phones. West Palm Beach, Florida. Hi, Maria. Go right ahead.

Hi. My question is, I live in an environment that it's becoming very unlivable because I have a neighbor that left music from 4 a.m. and I've decided I need to move. I've, you know, she doesn't listen to the police or the HOA. And so I'm thinking I'm in a condo situation. I'm thinking of buying a home and I've never lived in a home. And I just want to make sure I have enough money.

You know, how much should I spend on a home versus my total my total assets? And I am I'm on disability. So I get it. That's how I get my income.

But I do have inheritance money from family. Okay. So. Yeah. Yeah. I know.

I'd be happy to. Oh, go ahead. Yeah.

No, no, no. You know, I'm a single woman. So like, you know, I know a home is I'm 56. A home is, you know, more work and stuff. But friends are helping me and I'm going to be looking this weekend and my condo is on the market.

So just praying that the cash buyer comes my way. Yeah. And I can move forward, you know. Sure.

No, I could certainly appreciate that, Maria. And I know how expensive real estate is there in South Florida. So I know that's not insignificant. Well, let's walk through this and talk about both the monthly expenses with regard to if you're going to have a mortgage, what you should be thinking about in terms of a percent of your income. And then we can also talk about kind of your assets and what you might want to think about allocating toward that home purchase.

What do you have in the way of assets currently? Can you hear me? Yes.

Okay. First, it's central Florida. It's three hours away from here and it would be cash. It wouldn't be a mortgage.

So I could buy the house in cash, but I want to know how much I should spend. And what was the third question you had? Well, let's start there. So how much do you have in assets right now? Okay. Cash I have right now, $734,000. Okay.

Go ahead. The condo I currently live in, it's on the market for 220. So, you know, if I, you know, and then I bought it for 185. I put $8,000 into it.

So that's 193. So whatever I could sell it for, you know, minus closing fees and because it's before two years, I will have to pay capital gains on the profit. But I'd rather do that than live another five months of this.

I finally slept last night, but this has been a very abusive situation on my health. Well, I'm so sorry to hear that. Do you have other assets, Maria, any retirement accounts or anything like that? No, I just have my money. All my money is in CDs. Well, I have the one is it's all combined.

I made a list of everything like the online banks with CDs and then my Roth IRA. Okay, it's like 40. Yeah. How much is in the Roth? 47,400.

Okay, 47,000. And is that a part of the 734? That's in addition to? Yes. Yes.

That's a part of it. Okay. And so you'll have roughly 950,000, let's say, I mean, you know, you'll have some closing costs, obviously, of maybe 12,000, maybe a little bit more. So let's say you clear 210 and we're at, you know, basically close to 950,000 that you'd have in the way of assets. Now, what are your monthly living expenses today? It's probably like, you know, I'm very stingy at probably about 2000 a month.

Okay. And do you have enough coming in from your disability to cover that? I get like 717 37. So I'm probably, you know, living, I probably, you know, it's, it's probably like 1800 my expenses, but it's not like very organized. Like I pay my age, I pay all my bills, and I buy food, and I don't buy extras, you know, if I have to go to the vet, we go to the vet, but he's holding, you know, I take good care of him, I make my own dog food, you know, I, I save money in many ways. So are you able to live off of that every month without pulling out of the 734? Are you drawing basically an income from your savings? No, I'm not drawing an income. See, that's the thing, I probably should start a little bit.

Okay, so you're able to live on that with in your current environment, and that includes an HOA, which you may or may not have with your new home. All right. Do you have any other expenses you have, you know, you think you might have coming up in the near future? You looking to replace a car or anything like that?

No, my car is two years, two and a half years old. Okay, great. Excellent. Yeah.

And then obviously, your disability will turn to Social Security at some point, correct? Right, right. Okay. And they said it would be the same amount. Yeah, should be.

Okay, great. So then I think the only question is just what portion would you be comfortable moving from cash into real estate? I mean, still an investment still has the ability to, to appreciate you could liquidate that down the road and get the cash back. You could turn it into a stream of income with a reverse mortgage if you ever wanted to would be another option if you wanted to stay in this home that you bought.

Nevertheless, it becomes illiquid. So as you've been thinking about this, what amount have you been considering spending just as you look at kind of the location and the size of the home that you need? Well, my range was like up to $3.50.

Okay. Yeah, I mean, I don't see any reason why you wouldn't be able to spend $350,000. That would obviously still give you a $600,000 in the bank that you could continue to invest.

You're not drawing any income from it. So that's a sizable amount of money that you would be able to fall back on. The key is I would just go into it knowing what are my expenses going to be.

Look at the utilities, the taxes and the insurance on it, which insurance is really challenging right now in Florida. And so I, you know, I think, you know, you putting $350,000 toward this is a perfectly fine idea. Just count the cost ahead. Let's talk a bit more off the air. We'll be right back. Great to have you with us today on Faith and Finance Live.

I'm Rob West. We're taking your calls and questions today on anything financial. We'd love to hear from you at 800-525-7000. That's 800-525-7000. Call right now. Let's head right back to the phones and talk to Eileen. Go right ahead.

Hey, Rob. My husband and I are 60, both of us. We have four IRAs, two Roth, two traditional. Would there be an advantage to changing the two traditionals to Roths? Yeah, it's a great question. You know, what do you think in terms of the reason why you would do that? Well, I'll be honest. I was listening to Suze Orman the other day and she was talking about she likes Roths better than traditionals. And I thought, you know what, I'm going to ask Rob West that question. That's great.

I'm glad you did. You know, here's the thing. I mean, I like the Roth as well, but I like it when you're you've got a lot of years to let it grow.

So the question ultimately comes down to does it make sense to pay the tax now or later? So let me ask this. Are you all retired, did you say, or are you still working?

No, no. My husband is full-time professional and intends to work for 11 more years, 71, maybe longer. I dabble in consulting. So, you know, my income may be four to five thousand a year. Yeah.

Okay. So, you know, you've got to look at kind of your current tax bracket with you being, you know, still working and, you know, recognizing that taxes right now, they're fairly low. The Trump Tax Cuts and Jobs Act is going to expire in 2025 unless extended. So that's something to consider as you think about ultimately, you know, what tax bracket you'll be paying. So the idea typically is, you know, during your working years, if you can put something toward Roth, that's great. You've got a lot of years of compounding that tax-free growth really is a powerful force.

And then over time, you have the ability to pull that out. Now, in terms of your situation, you guys are still working and you're probably, you know, earning more today than you will ultimately, you know, be earning when you're fully retired. And so the question is, does it make sense to pay today's tax rates at your income versus waiting and taking this money out in retirement from the traditional, which is when, you know, you would, you know, be in a lower, potentially lower tax bracket? You know, in terms of the rule of thumb, there was a significant research done on this by some researchers at the University of Arizona, and they suggested adding the number 20 to your age. And what they found is that when you add 20 to your age, that's the ideal percentage to have in traditional and the rest in Roth. You know, so if you all what did you say your age was 60? OK, so in your case, if we applied this formula based on the thousands of retirees, they looked at that the ideal scenario is to have, you know, 80 percent or excuse for you, 80 percent of traditional 20 percent in Roth.

So if you wanted to convert something, that would at least give you a target. But again, I think it's going to come down to, you know, are we going to pay more taxes today versus in the future? The unknown is what's going to happen with tax rates? Are they going higher?

They certainly if they're going anywhere, they're probably going up. But we've got to balance that against the fact that today you have earned income and in the future you may not once you all are fully retired. And so, you know, I'd probably talk to your CPA about that just to get a professional to weigh in on this. Excuse me, using your specific situation. OK, very good. Thank you. OK, you're very welcome. Thanks for calling.

Let's go to Grand Rapids. Hi, Alan. Hi, Rob. Thanks so much for taking my call today and thanks, too, for your program. I appreciate so much your biblical wisdom, your financial wisdom that you share with us in the calls that you take. And, too, I appreciate the gentle and kind way that you always interact with your call ends. And so just thanks again.

Well, thanks for saying that, Alan. That's very kind. The reason for my call today is I've been retired for about nine years. I'm seventy nine years old and I've left my 401k intact at the previous employer and I'm friends with them.

And they've been kind of nudging me and wanting me to get it out of there. And so I'm in the process of not in the process, but thinking of moving it to an IRA. I have about five hundred and thirty thousand dollars in the 401k. My wife and I are debt free.

We own our own home. We have one hundred plus thousand in CDs and we have another fifty thousand in savings and checking account. And so my question is, in moving that from that 401k, I want to reinvested in an IRA.

What would be your suggestions for me to do that? Yeah. In terms of the investment mix, Alan, is that the main question? Yeah. Just how to do it.

I've been talking to one adviser, financial adviser, and he had me at 70 percent in equities and 30 percent in cash and bonds. And I just thought, my goodness, at my age, I just didn't feel comfortable with that. But I wanted to get your take on it. Yeah.

Yeah. I would probably flip that at nearly 80. You know, the typical rule of thumb had been one hundred minus your age.

Now that people are living longer. A lot of times you'll see one hundred and ten minus your age, maybe as much as 120 on the high side. And the resulting answer is the portion that should be in stocks with the balance in bonds. So we did 110 minus your age of nearly 80.

That would be a 30, 70 portfolio with 30 percent in stocks, 70 percent in bonds. And some people might say, well, why would I still have 30 percent in stocks at the age of 80? And the reason is, you know, we don't know how long the Lord has for you, but we know people are living longer now. So you could live well into your 90s.

You could live beyond and be well beyond 100. And so I think for that reason, especially with inflation, the idea is that we we take a half million dollar portfolio. We have a good 30 percent that has the ability to grow. You could go as high as 40 percent. And, you know, that's going to give you some growth engine to offset the fixed income portion, which, by the way, in the next several years should do well. But, you know, in any given market, you know, may or may not do terribly well. But the idea would be even if we got into a major recession or a stock market correction or even a crash, you know, you wouldn't touch the stock portion, which is only 30 percent. But you'd have the ability to do that because, you know, you're sitting here with one hundred and fifty thousand essentially near liquid, if not totally liquid. And, you know, you'd still have another, you know, if we if we took 30 percent of a half a million, you'd still have another, you know, three hundred fifty thousand plus in fixed income type investment. So that would be at least the starting point for me, either 30, 70 stocks to bonds or 40, 60, you know, as a starting point. What do you think of annuities as part of them, part of the mix?

I'm certainly OK with that. I mean, you know, it's a you know, a lot of people will say don't ever use an annuity. They're too expensive. They're too complicated.

And they are both of those things. But they also provide some real value in the sense that, you know, if you don't want to take the risk of the market, you know, that's where an annuity can be great. You're transferring that risk to the insurance company and assuming you can get a guaranteed rate of something that's pretty attractive or you can take away the downside. Just recognize you're giving up access to the money if you need it without penalties or surrender charges. And you're you know, you're not going to get the full upside in exchange for that downside protection.

But as long as you know that going into it, I think they can be a great part of the overall investment strategy. I've got to take a break, Alan. Stay right there. We'll be right back. Hey, great to have you with us today on Faith and Finance Live.

I'm Rob West. Hey, our new study is out. It's the Faith by Study Rich Toward God. If you have a small group and you're looking for a great, powerful study that is practical and relevant to your life, but confront some of the money issues that I think are so central to our lives.

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Again, it's called Rich Toward God and you'll find it at faith.com. All right. We're going to head before we go to the phones into the mailbag. Every Wednesday, we take an opportunity to tackle some of those questions that have come into us electronically.

And Amy, it seems like that mailbag has been busy. It has been. We've got four for you today. You ready? Yeah, let's do it.

Okay. So first off, Myra writes, I have a real estate license in Florida. I want to buy investment properties. If I start my own company, which would be more beneficial, forming an LLC or a professional association?

Yeah, it's a great question, Myra. And by professional association, I assume you're meaning a corporation. I'll kind of answer this in light of that. So the LLC basically is stands for limited liability company, as the name implies. This is a business structure that protects you from personal liability for the company's debts or liabilities.

And so it's going to limit liability. Now, it's flow through for tax purposes, which is what a lot of people don't like because, you know, you're going to pay tax on all of the income that is coming to your portion of that LLC just based on your personal tax rate. So the alternative is what you'll hear a lot of people refer to, which is an S Corp. A little more complicated and more expensive because you do have to set up a corporation. You're still going to get the liability protection, but the benefit of the S Corp is that you will be taxed in a way that allows you to distinguish between your salary and dividends. So on your salary portion, you'll pay, you know, the self-employment or FICA taxes. But on that portion that's a dividend, you won't. And so there are some tax advantages on that.

So I would get with your CPA to determine what the best is for you. Okay. So before we move on, I wanted to mention that tomorrow's opening topic for the program coming up is titled LLC versus C Corp versus S Corp for your business. Well, what do you know? I know.

That's kind of coincidental. So hopefully if Myra is listening, she could tune in tomorrow and get some more specific details about that that you'll be sharing. That's great. Okay. So next Ward is asking, is debt consolidation a good start to handle a $35,000 in credit card debt?

Yeah, it's a great question, Ward. And no, I'm not a fan of debt consolidation. Here's why. I mean, just in my experience, and Amy, you'll recognize this because we get a lot of calls, is that folks who have debt that they take out new debt, even at a lower interest rate, it takes the pressure off. They're like, okay, now that credit card debt's gone.

They don't make the changes in their financial life to rein in spending. And so then they call Amy and I back six months later, and now they've got the debt consolidation loan and then the credit card debt's back. So instead, I would do the hard work, dial back your spending, get on a budget, and then use debt management where the debt stays right where it is. But we get those interest rates down and that level monthly payment, those lower interest rates, you combine that. And on average, you'll pay that up 80 percent faster. So just go to christiancreditcounselors.org. Perfect. Okay, so next, Rocky is asking, are there safe money market accounts out there that align with biblical principles? Yeah, I love this question, Amy. And you know, we're getting more and more people that want to know that they're doing business and working with institutions that align with their values. You're seeing that as well.

Definitely, for sure. And that's, I think, to the heart of Rocky's question here. So with a money market account, they're usually either FDIC for a bank or NCUA for a credit union insured, which just means it's backed by the U.S. government, occasionally by a private insurance company. So when you talk about alignment with biblical principles, Rocky, my mind goes to Christian Community Credit Union. They do have money markets.

They're insured by America Share Insurance, no depositor has ever lost a dime there, and they're dedicated to following biblical principles and supporting Christian ministries. So that could be a great option for you to look at. Hey, did I happen to mention to you?

I don't know if I did. I actually opened a small savings account out there recently. And so I'm just trying, I'm navigating that and just kind of getting started with it. But it was a great experience so far. Excellent. Okay.

Glad you mentioned that. Abby writes, I am a single 48-year-old woman with $120,000 mortgage at 4%. Would I be better off putting all my extra earnings into my retirement, or should I split it up and put some of my money into extra mortgage payments and then some of it into retirement, accepting the fact that there's going to be slower progress on both of those financial goals?

Yeah, that's a great question. You know, I like you prioritizing the retirement savings. Let's maximize these, you know, earnings years that you have. You still have a relatively low interest rate on that mortgage. Let's set a goal for you to pay off that mortgage by the time you reach retirement. You know, so let's say you're using 65. Again, we don't want to follow the cultural approach to retirement that we transition at 65 because we don't longer offer any value to anyone to a kind of permanent vacation. That's not God's model.

He created us to be workers and to be in service to him throughout the whole of our lives. But we also do want to plan for that time where maybe you pivot away from paid work because you have to. But let's say we use 65, so that's 17 years. What if you were to call your mortgage company and say, how much extra would I need to send every year to be able to pay this off in 17 years?

They might say nothing or they might say, yeah, send us an extra $1,000 a year and then do that and then put everything else into retirement. Oh, great. That's great advice. And as always, Rob, we just thank you for all your wisdom, sharing it with us on a daily basis. And we just love hearing from you guys. So keep the emails coming.

Just go to moodyradio.org forward slash finance and you'll find the form there where you can submit a question for Rob. That's great. And Amy, thankful for you and the team that lead us so well every day here on the air and appreciate you digging into the mailbag. We'll do it again next week. All right. Let's head back to the phones. Listen, we've got hopefully time for well, certainly one, but hopefully two more questions quickly to Chicago earnest. Go ahead, sir.

Hi, I'm calling regards. I'm trying to find out a better way to kind of get off this mortgage because I once upon a time was debt free for about 12 to 15 years. Plus, I'm up in age and my wife, we kind of hate to have debts like this, even though this I'm a first time home buyer. Took me 60 years, 61 years to decide to buy a home because at one point I was comfortable living in an apartment and I just retired a year ago.

And so I decided to buy a home, come someplace and live quietly. But I wanted to know what's the best strategy for paying this off. I have over 130,000 in the IRA and have about 60, a little bit over 60,000 in a money market in a bank. That's really my savings. But is it is in a money market where it earns money once a month, like $140 a month. So I just kind of wanted to know, will it be I was thinking about taking out of the rough 25,000 and putting towards the principal.

I'm kind of trying to strategize how to get this down. And my interest rate is 5.6. All right. Home debt. Yeah, very good earnest. I'll get you 100.

OK, excellent. Well, listen, I appreciate that question that makes a lot of sense and I could totally understand why you would want to get this paid off as quick as you can, especially with that rate. Although historically speaking, that's not a bad interest rate.

It's certainly more than we'd like it to be and and more than we saw, you know, prevailing rates a couple of years ago in the twos and threes. So you said you had 60,000 in money market and then you said you had 130,000. Is that the Roth IRA? Yes, 30,000 is off. OK. And what is your income? I don't have any credit card debt.

No payment debt. Good. Yeah. Well, you're doing great. It's just my mortgage and I have HOH, which is 270 a month. All right. What is your income source, Ernest? My pension, I have a pension, I have two pensions.

I'm a brick mason. OK, great. And so you're able to live on the pension without drawing anything out of the Roth or the money market every month? Yes, sir.

OK, great. And then how is the 130,000 invested? As far as the Roth, I'm not familiar with what terms that Roth is, but I just... Is it in mutual funds or stocks or is it just sitting in cash?

I'm not sure. I think it's sitting in cash. I think the mutual fund. All right. Is somebody looking after this for you or are you making those decisions?

Oh, yeah. Fidelity. I have fidelity. I moved the money out of, once upon a time was in 401 with my job. And after I retired, I moved it out of there and moved it over to Fidelity to kind of manage. OK, got it.

Yeah. You know, I think the key here is, I mean, I don't want you to deplete all of your assets trying to pay this off. I mean, your pension covers the mortgage payment and the rest of your expenses doesn't sound like you're going under every month. And although I don't love the five and point six percent, at least for now, that money market's probably at least offsetting that. And you still have the liquidity. And then the 130,000, if it's invested, should be doing about that as well. So I just don't want you to drain your assets in case you need that money down the road for long term care or something like that. I think what we might want to do is in a couple of years, if you could refinance that at, let's say, four percent and maybe you do it for 20 years instead of 30 and get that interest rate down, that might be a great option.

But in the meantime, I wouldn't be looking to put a lot of money on that house right now just because it's not going to change your monthly payment. And, you know, we're probably doing well on the money market and the Roth, and I want you to hang on to that money. So that's my best advice for you, my friend. We appreciate your call. God bless you. Ashley, let's see if we can get you on tomorrow. Faith in Finance Live is a partnership between Moody Radio and FaithFi, and we'll see you tomorrow. Bye bye.