S1: Puritan poet Anne Bradstreet once said, wisdom without an inheritance
S1: is better than an inheritance without wisdom. Hi, I'm Rob West.
S1: Every parent hopes to leave an inheritance for their children,
S1: but doing so wisely takes careful thought and prayer. Today,
S1: Ron Blue joins us to discuss the uniqueness principle and
S1: how it can guide parents in passing down wealth effectively.
S1: And then it's on to your calls at 805, two
S1: five 7000. That's 800 525 7000. This is faith and finance. Live.
S1: Biblical wisdom for your financial decisions. Well, we always look
S1: forward to having Ron Blue on the program. He's co-founder
S1: of Kingdom Advisors, the author of many books on personal finance.
S1: And a dear friend of mine, Ron, great to have
S1: you back.
S2: Good to be a part of it, Rob. Thank you.
S1: Ron. Studies show that around two thirds of parents divide
S1: their estates equally among their children. And while this certainly
S1: isn't a bad thing, can you share with us how
S1: this can be problematic in some cases?
S2: Yes. I think, uh, Rob, if we, uh, think about
S2: it the way God treats us, he loves us all equally.
S2: But he treats us uniquely. Yeah. Um, he doesn't just
S2: divide up everything equally. Some have some things and others
S2: have others. But. So when it comes to leaving an
S2: inheritance to our children, we have five children. And I
S2: can tell you this. They all sat at the same
S2: dinner table, but they sure didn't all turn out the
S2: same way.
S1: Amen.
S2: I mean, they've done fine. I don't mean to imply
S2: something negative there, but. Yeah, but they married differently. Uh,
S2: they parent differently. They're in different economic situations due to
S2: jobs lost, jobs taken. So what I have found over
S2: time is that when Judy and I started, our kids
S2: were none of them were married. Well, I'm sorry, there
S2: were two of them that were married and we asked
S2: three questions. Rob. We said if we left X amount
S2: of money to X child, what's the worst thing that
S2: could happen? And it took us about two years to
S2: really think that one through. Um, the second question then
S2: was well how serious is it? In some cases it
S2: wasn't serious at all. Like we had one child, we said, well,
S2: if we left them whatever, they'd give it all away. Hmm.
S2: So that's not real serious? No. Uh, we had different
S2: situations with another child where it would have really harmed
S2: their marriage. Uh, because if the husband really had a
S2: passion to provide for his family. So we asked ask
S2: those questions? Uh, what's the worst thing that can happen?
S2: How serious is it? And then what's the likelihood of
S2: it occurring? And that's the process that we follow. It
S2: doesn't say how we'll end up. And I can tell
S2: you this now, at my age, um, 83, with a
S2: daughter that will soon be 59 as the oldest and
S2: the youngest being 47. Circumstances changed over time. So how
S2: we would answer the question today that we asked for
S2: the first time 25 years ago is totally different, but
S2: it's the process. That's the thing to think about. And
S2: in America, the default is equal. Yeah. And it's not
S2: necessarily wrong to be equal, but it is, I think, uh,
S2: unwise to not think through the consequences of, of leaving
S2: this wealth. Mhm. To a particular child.
S1: Well I so appreciate that about your teaching, Ron, because here,
S1: once again, you're not saying that it's better or worse
S1: to leave the same amount to each child. What you're
S1: saying is what's important is to follow a decision making process, right?
S2: Absolutely. Because what you don't want to do is, you know,
S2: and you've heard me say this too, don't pass wealth
S2: unless you pass wisdom. Yeah. Because wealth never creates wisdom.
S2: But wisdom can create wealth. So what I want to
S2: do as a parent is the best thing for my children.
S2: And I need to think that one through very, very
S2: thoughtfully and very, very prayerfully. It may end up. I
S2: treat them equally, but it may not either. The most
S2: important thing is the process that I follow. And I
S2: you know, if you don't ask the right question, you
S2: don't ever get the right answer. And the right question is,
S2: what's the worst thing that could happen? Because I don't
S2: want that to happen. Okay.
S1: Yeah, that's right on. Ron, I know you've said wealth
S1: transfer at the end of the day should reflect God's wisdom,
S1: not human emotions, because ultimately we're accountable to him. This
S1: has once again been so valuable. Ron, thanks for stopping by.
S2: Always a delight, Rob. Thanks for having me.
S1: That's teacher and author Ron Blue talking about the uniqueness principle.
S1: Your calls are next 800 525 7000. That's 800 525 7000.
S1: I'm Rob West, and this is Faith in finance live.
S1: We'll be right back after this break.
S3: The opinions offered during this program represent the personal or
S3: professional opinions of the participants, given for informational purposes only.
S3: Any information provided is not intended to replace advice from
S3: a financial, medical, legal or other professional who understands your
S3: specific situation. And.
S1: Great to have you with us today on Faith and
S1: finance live here on Moody Radio. I'm Rob West, looking
S1: forward to taking your calls and questions today. The number
S1: with lines open is 800 525 7000. That's 800 525 7000.
S1: Great to have Ron Blue here today. He is a
S1: mentor to me and somebody who's really shaped probably more
S1: than anyone else. My thinking about biblical financial decision making,
S1: I love that he teaches out of principles, because it's
S1: not a matter of just giving you an answer. It's
S1: a matter of helping you think biblically along the lines
S1: of principles pulled from God's Word as it relates to
S1: financial decisions, not financial answers, but financial decision making. And
S1: certainly that shows up in this area of wealth transfer
S1: that he was discussing today, where we think along the
S1: lines of principles, he shared the uniqueness principle if you
S1: love your children equally, you will treat them uniquely. Doesn't automatically,
S1: as he said, mean you can't. Uh, you know, you
S1: have to give different amounts. You may decide to absolutely
S1: give the same amount. Um, but you may choose to
S1: leave differing amounts as you think through these questions that
S1: he shared. What's the worst thing that can happen? How
S1: likely is that to occur? And, you know, as you
S1: consider that wealth is the fuel in the engine that
S1: propels somebody in the direction they're already going? Well, more
S1: wealth thrown into the wrong trajectory could lead to disaster.
S1: And so thinking and praying through that and being able
S1: to change at different seasons of your life is really key.
S1: And then this big idea that overrides everything, which is
S1: we want to transfer wisdom before wealth. You remember what
S1: the book of Ecclesiastes says, that wisdom and wealth are
S1: both good, but only one preserves, and that's wisdom. And
S1: so we want to transfer wisdom before wealth. And actually
S1: we want the growth in wisdom to outpace the growth
S1: in wealth. Otherwise, we get into a danger zone. We
S1: unpack this at length in our brand new study that's
S1: due out in the month of May. It's 12 lessons
S1: on money from the Book of Ecclesiastes, written by one
S1: of our faculty members. Here at Faith by John Cortinez.
S1: John took a deep dive in to the book of
S1: Ecclesiastes and has written this incredibly thoughtful, beautifully designed, 150
S1: page study on the book of Ecclesiastes called Wisdom Over Wealth.
S1: And we think you're going to love it. We're going
S1: to send it as soon as it's available. The first
S1: folks that will receive it are our Faith V partners.
S1: And so if you'd like to become a partner today
S1: and ensure that you receive each of our studies or
S1: devotionals as they roll out, along with four issues of
S1: Faithful Steward, our magazine, you can check us out at
S1: Faith Philly.com. Just click give at the top of the page.
S1: We'd love to hear from you. All right. We're going
S1: to dive into your questions today. The number to call
S1: 800 525 7000 with lines open again. That number you
S1: can call right now with any financial question. 800 525 7000.
S1: Let's go to Jamestown, North Dakota. Carol. Go ahead.
S4: Hi. Thank you. Um, I have, uh, called a couple times,
S4: and I think you've got the information on me. I
S4: have a a term life policy, and I'm paying $400
S4: a month for it. And my son said, that's outrageous,
S4: because I'll probably I may even outlive it. Um, and
S4: then I have the question about the reverse mortgage, because
S4: you had had that expert on last week or before,
S4: and I'd like to know about that. But since I'm 81,
S4: using the equity now for my family's sake rather than,
S4: you know, trying to pass it on. Yeah, I got it.
S1: Yeah. Very good. So let's talk about these separately because
S1: they really are two different issues. Both can be, you know,
S1: very effective tools. I like you having insurance term insurance
S1: so long as there's somebody depending upon your income. Because
S1: the idea behind life insurance is we want to offset
S1: the risk that exists, that in your passing, a hardship
S1: would be created by a loved one or a dependent
S1: due to the loss of your income. And so if
S1: there's no one counting on your income because either you
S1: don't have any dependents or anyone that's, you know, relying
S1: on your income or you're no longer working or you've
S1: saved enough because you're, let's say, in the retirement season,
S1: you know, where you you don't have income currently. Or
S1: if it went away, you know, nobody would would be
S1: in a hardship, then you really don't need term life insurance.
S1: You don't need any life insurance for that matter. So
S1: that's an unnecessary expense that perhaps served its purpose, but
S1: is no longer necessary and therefore could be recaptured into
S1: the family budget. Um, so talk to me about that
S1: piece first. Is there anyone that would have a hardship
S1: created if you were to pass away by way of
S1: a loss of income?
S4: No, the children are all adult children there, and two
S4: of them have said no, they don't need it. And
S4: I know the third one doesn't, and probably the fourth not. Also,
S4: I mean, I mean, I might ask them all, but, um,
S4: certainly I will ask them all, but they're not dependent
S4: on it. Yeah. And I'm on totally on Social Security.
S4: I have no other income right now, so.
S1: Okay. Yeah. Um, and, and I really don't even like
S1: insurance for the purpose of generating an inheritance, uh, because,
S1: as you said, you know, you're not supplementing their income
S1: monthly right now. So if something were to happen to you,
S1: it's purely from an income standpoint. It would change nothing
S1: for them. And then they would, you know, be blessed
S1: by whatever you leave to them out of whatever assets
S1: you've accumulated and your personal things and so forth. But
S1: I wouldn't try to fund a life insurance policy that's
S1: going to get more and more expensive as you age,
S1: solely for the purpose of having something extra to give
S1: to them. They would probably tell you. I would guess
S1: they'd rather you have that extra $5,000 a year, you know,
S1: at the very least, to stick into savings in case
S1: you need it down the road. If not to enjoy
S1: part of it right now, rather than you funding a
S1: life insurance policy for a death benefit that they really
S1: don't need and aren't counting on. Does that make sense?
S4: Yeah, it makes absolute sense. The only reason I was
S4: keeping it was so that they could maybe use that money,
S4: splitting it up to pay off the farm mortgage, you know? Um, yeah,
S4: but I since have talked, heard you talk about, um,
S4: reverse mortgages. But I like what you're saying about the
S4: life insurance policy, and I probably will just stop it. So.
S1: Okay. Yeah. I mean, so that's another piece. If for
S1: some reason there's a family farm that has a policy
S1: on it that they want to be able to keep,
S1: one way they could fund that would be perhaps they
S1: get a life insurance policy that they pay on your
S1: life that would then pay off that loan for the
S1: purpose of them being able to keep it in the family.
S1: The other option would be if they decide they want
S1: it and oftentimes heirs don't. They could then go out
S1: and get their own mortgage to keep it. Maybe they
S1: divide it between the siblings and, you know, continue to
S1: keep the farm. But I would let them sort that out.
S1: It sounds like you could probably use that. You know,
S1: money recaptured 400 a month into your budget. Let's talk
S1: about the reverse mortgage. So you have two properties, one
S1: that you live on and one that's purely for investment
S1: or farming. Is that right?
S4: We lived on a farm until my husband started teaching
S4: in town, where I am now in Jamestown. Um, and
S4: then we got this little studio house, and that's where
S4: I am now, because I had told him I can't.
S4: Live on the farm by myself. It's just too emotionally hard.
S1: Okay, so the the reverse mortgage would only be available
S1: for your primary residence, so that would be the place
S1: that you're living right now. Um, what? How much is
S1: that worth? That property.
S4: That, uh, it's worth about 120,000.
S1: Okay. Worth about 120,000. And what do you owe on
S1: it today?
S4: And the mortgage is 62,000.
S1: Okay. 62,000. All right, let's do this. I've got to
S1: take a quick break. When we come back, we'll pick
S1: that up and talk about whether or not you should
S1: consider a reverse mortgage. You're right there on the line.
S1: You need to have about 50% equity. Uh, and you
S1: are pretty close. We'll be right back. Thanks for joining
S1: us today on Faith and Finance Live. I'm Rob West
S1: here on Moody Radio. We've got some lines open today
S1: taking your calls and questions you can call right now
S1: with anything financial 800 525 7000. Again that's 800 525 7000.
S1: We're our team is standing by. Let's go back to Jamestown.
S1: We were talking with Carol before the break about term
S1: life insurance. She asked a follow up question with respect
S1: to a reverse mortgage. She and her husband live on
S1: a piece of property worth about 120,000. They owe about
S1: 62,000 on the property. She's 81 years old, and she
S1: was asking about a reverse mortgage. And for your primary residence, Carol,
S1: that would likely be an option. You would need to
S1: go through the process to know for sure, but it
S1: would likely be an option you typically want. And this
S1: isn't a hard and fast rule, but you generally need
S1: about 50% equity in the property in order for this
S1: to to be an option. Sounds like you have that. Um,
S1: and so what would typically happen is that the mortgage
S1: would be paid off with the reverse mortgage. Um, except
S1: that now you would no longer have a payment. And
S1: so that would be the first thing is that even
S1: if you didn't get a monthly income stream, you know,
S1: for folks in this season of life that, you know,
S1: just are short on income because they haven't saved enough
S1: or whatever it might be. Um, you know, still carrying
S1: a mortgage can be and is often your largest expense
S1: in retirement. So even if you didn't get any income
S1: or have a line of credit, just paying off that
S1: forward mortgage that carries a payment every month with a
S1: reverse mortgage that doesn't require a payment any longer, you
S1: can pay it, but that's not required. Um, would often
S1: alleviate that largest expense and perhaps be a game changer
S1: in your budget. Uh, that would give you more freedom
S1: and flexibility to cover your lifestyle, spending and whatever the
S1: Lord has called you to. Uh, what's the downside? Well,
S1: the downside would be there are fees. So right up front,
S1: you'd have a 2% fee to the FHA. That's key,
S1: because that ensures that you could never owe more than
S1: the home is worth. So you're you're not essentially guaranteeing
S1: it personally. It's, you know, the type of loan that
S1: doesn't require a personal guarantee. So the home is the
S1: only collateral versus any other kind of conventional mortgage where
S1: you are guaranteeing it personally in any shortfall you'd have
S1: to come up with. Secondly, though, the other downside would
S1: be if you have a low interest rate mortgage, the
S1: amount that's refinanced would go up consistent to the prevailing rates,
S1: and it would remain variable. So with rates around 7%
S1: right now, that rate would jump up from whatever you
S1: have now to the 7%. And because the payment is
S1: no longer required, that existing mortgage balance would just grow
S1: over time with the interest and fees, again, you'd never
S1: owe more than the house is worth. But if you
S1: sold it, or when you and your husband pass away
S1: the proceeds of the home sale would go to pay
S1: off whatever that reverse mortgage balance is, and then the
S1: remaining remaining amount would then be paid out to your heirs.
S1: You still own the home, but the loan would have
S1: to be satisfied by your estate before you know the
S1: proceeds are then paid out. Um, does that make sense though?
S4: It makes a lot of sense. Um, the interest on
S4: my husband is no longer living, by the way.
S1: Oh. My apologies. Okay.
S4: No, that's all right. I, uh, but the interest on
S4: the present mortgage is two, uh, 2.5%.
S1: Yeah. Yeah.
S4: So that's really good, right?
S1: It's phenomenal. Yeah. So. So you would be giving that
S1: up and the the rate would adjust up to something
S1: close to what they are now. So that's a negative
S1: in the sense that, you know, that's going to cause that, uh,
S1: that balance to grow faster over time. But again, if,
S1: if no one's counting on, you know, you leaving a
S1: significant inheritance there, not necessarily looking to hang on to
S1: that house that you're passing. Um, you know, it could
S1: be the difference between you living out the rest of
S1: your life in that home and having a little bit
S1: more cushion, because now you no longer have a mortgage
S1: payment such that you're willing to pay a little bit
S1: higher interest, even though you're not paying it. It just
S1: reduces the amount that would be available in your estate
S1: at your death. And that's where a lot of people
S1: who choose a reverse mortgage end up, because they say, well,
S1: if I could just get to where I'd pay it
S1: off completely and own the home outright, that'd be great.
S1: But if this is my largest asset and I don't have,
S1: you know, I've got enough to live on, but I
S1: don't have any wiggle room. And if I could get
S1: rid of this mortgage payment by paying it off through
S1: reverse and no longer having it, you know, I'm okay
S1: with that because, again, my kids aren't counting on this
S1: money from me.
S4: Mhm. Very good. A lot to consider there. Yeah. Yeah.
S4: It's going to mature in July 1st. So do I
S4: just go to the bank now and say, put the
S4: situation out there? You know, because that interest is so good.
S4: I'm afraid that it's going to go up when they,
S4: you know, if I have to refinance in in July
S4: or renew it or whatever you call that.
S1: Okay. So is this like A51 arm or something where
S1: it was fixed for 5 or 7 years and then
S1: it starts to adjust?
S4: Right. My husband did it in 2020 and I see
S4: okay with that. Yeah I.
S1: See. Yeah. So that's one of the reasons you have
S1: such a low rate. But that's going to go away.
S1: So again another reason because when you refinance this, which
S1: is what you're going to need to do, you're probably
S1: going to be jumping up to this higher rate anyway.
S1: And if you go with the reverse now the payment
S1: is optional. If you want to pay it you can
S1: and reduce the balance, but you don't have to. And
S1: that could be a game changer. So perhaps, you know,
S1: take some time and think and pray through that. I'm
S1: not saying this is, you know, it's right for everyone
S1: or it's a one size fits all, but it is
S1: an option that is often not considered and with this
S1: being nonrecourse debt, meaning they can never come after you,
S1: you can live in the home for the rest of
S1: your life, and any equity that remains after the the
S1: mortgage is paid off by by way of the sale
S1: of your home after your death or when you move,
S1: you know it can be a great option for some folks. Uh,
S1: our friends at Movement Mortgage could run an illustration for
S1: you and just help you understand exactly what that would
S1: look like for you. Just go to movement.com.
S4: I did do that and I couldn't find any information,
S4: so I'll have to try it again. I guess.
S1: Movement.com um, put in your information and they'll reach out
S1: to you. But, Carol, thanks for your call today. May
S1: the Lord bless you. And if if I can assist
S1: you in any way along the way, uh, don't hesitate
S1: to reach out. We appreciate you being on the program. Well, folks, uh,
S1: we're up against our next break, but, uh, Amy has
S1: been waiting patiently there in Missouri and Yvette in South Carolina,
S1: so we'll come back and tackle those questions next. We
S1: do have room for you. We've still got half the
S1: program remaining. So if you have a financial question today,
S1: we'd love to have you on the broadcast. The number 800, 525, 7000,
S1: helping you see God as your ultimate treasure and integrating
S1: faith and finance for the glory of God. I'm Rob West.
S1: This is faith and finance. Live and we'll be right back.
S1: Stick around. Thanks for joining us today on Faith and
S1: Finance Live, helping you see God as your ultimate treasure
S1: and manage money for God's glory. We've got lines open
S1: today 800 525 7000. Let's go right back to the phones.
S1: Amy has been waiting patiently in Missouri. Amy, how can
S1: I help?
S5: Hi. Um, I just had kind of a challenging situation
S5: I wanted to talk to you about. So my husband
S5: and I got married in our 40s. I had raised
S5: my children and they were out of the house and
S5: on their own by that point. He had never been married,
S5: never had children, and he and his father have a
S5: business together. And then he also has a normal, regular
S5: full time job. I have a full time job. And
S5: after we married, he moved into my home, which I
S5: had owned for close to a decade. And in seven
S5: years there has been no joining of the finances. He
S5: will not discuss it with me, period. I know nothing
S5: about his finances, and I still pay all of the
S5: bills that I did before we were married. It's been,
S5: you know, definitely all over the map emotionally. But I keep,
S5: you know, clinging to the fact that I want to
S5: honor God and I want to honor the marriage covenant. Yeah.
S5: And I don't understand. I don't know what to do
S5: with it. I don't know how else to approach it.
S5: He is just simply shut me out and is not
S5: willing to build a life together at all in that area.
S1: Yeah, yeah. Well, I'm so sorry. This is very difficult
S1: and I appreciate your transparency on that. I know this
S1: is painful. Um, so when you've engaged him in conversation
S1: around this in the past, what what does he say
S1: about his unwillingness to go there?
S5: The first time I, I told him to sit down,
S5: we had to talk. We'd been married about 6 or
S5: 7 months and finances had never been discussed. And, um,
S5: the reaction I got was we we weren't kids when
S5: we got married. I had my own, you know, bills
S5: and you had your bills, and that's pretty much it.
S1: Yeah.
S5: The remainder of the conversation, he, you know, just would
S5: kind of look off into space as I was talking and,
S5: you know, but not even willing to do something as
S5: simple as join our cell phone bills when it was
S5: going to save us both money every month.
S6: Yeah, yeah.
S1: Yeah. And obviously, if you've brought it up again, you're
S1: met with a similar type response.
S5: Yes. And in the beginning I understand that. But seven
S5: plus years in. Yeah there's zero effort to build anything together. Yeah.
S5: And it's just I, it just leaves me beside myself.
S1: Yeah, I certainly understand that. Well, when we go back
S1: to Scripture, I mean, we understand there's not a specific
S1: passage that speaks directly to modern banking, but we can
S1: look to God's wisdom around his design for marriage, which
S1: is all about unity and oneness. And we can extend
S1: that into stewardship. I mean, I would start at Mark ten. Therefore,
S1: a man shall leave his father and mother and hold
S1: fast to his wife, and the two shall become one flesh.
S1: And I think that oneness extends to all facets of
S1: our lives, and that includes our bank accounts. And therefore
S1: I think it's wise for couples to combine finances rather
S1: than keep them separate, because when we we keep them separate,
S1: it it fosters mistrust and it doesn't strive toward unity.
S1: And it's it's often difficult to then have, uh, you know,
S1: shared goals where we understand, you know, when we join
S1: our finances and we say everything that God has entrusted
S1: to us as one flesh, regardless of who earns what
S1: money it all belongs to, the Lord doesn't belong to
S1: you or him. It belongs to God. And he's now stewarded.
S1: He's asked you to steward these resources. And that was individually.
S1: But once you joined together in marriage, he's asked you
S1: to steward his resources as one flesh. And so I think,
S1: clearly according to God's Word, that's the approach we should take. Now,
S1: does it get slightly more complicated when we're marrying later
S1: in life, especially when you've had kids prior to the marriage?
S1: Absolutely it can. But I think that at that point,
S1: with clear and honest and open communication and a lot
S1: of trust at the core, you might say, well, because
S1: I had a child prior to marriage, you know, whatever
S1: assets got entrusted to me prior to that point, you know,
S1: we're going to go ahead and carve out and deal
S1: with it separately. And again, that would be done, you know,
S1: with a very place, a very open and honest communication
S1: with trust at the core. But at the very least,
S1: from that point forward, I would say whatever got entrusts
S1: to you, you all need to have jointly shared goals
S1: and you need to approach it together. And the extent
S1: to which one of you is unwilling, I just feel
S1: like is is outside of the the biblical model and
S1: understanding of marriage and how it should be approached. So
S1: what do you do with that if he's unwilling to
S1: go there? And I think it just becomes problematic. Number one,
S1: I think number two, we have to understand money issues
S1: are hard issues, so the money and how it's handled
S1: is really symptomatic of of deeper issues that need to
S1: be addressed regarding trust and other issues. The money is
S1: really just symptomatic. And so at the end of the day,
S1: you may need to, you know, approach him about saying, hey,
S1: I really think we need to bring somebody else into
S1: this conversation. If we can't move forward together and find
S1: a place to work together on it. But prior to that,
S1: where would you go with it? I mean, I think
S1: we could look to some principles and also some passages
S1: in Scripture about this. I think number one is to
S1: model wisdom and respect. So first Peter three one likewise, wives,
S1: be subject to your own husbands, so that even if
S1: some do not obey the word, they may be won
S1: without a word by the conduct of their wives. That's
S1: not about silence or passivity. I think that's about letting
S1: your character and your consistent faith be a light and
S1: your respectful Full persistence in Christ like love. The idea
S1: would be that it might influence his heart over time
S1: more than pressure could. I think second would be to
S1: seek peace without compromising stewardship. So Romans 12, if possible,
S1: so far as it depends on you, live peaceably with all.
S1: So you're not responsible for changing your husband's heart. That's
S1: the Holy Spirit's work. But I think you are responsible
S1: for doing what you can, modeling peace and inviting him
S1: in and not provoking him, and faithfully managing what you
S1: can control. Uh, you know, like your portion of of
S1: God's resources. And then I think, thirdly, ask for wisdom
S1: and wait on God. You know, James one five is
S1: very clear. If we lack wisdom, we need to ask
S1: God and it will be given him. And so I
S1: would say, pray for your husband to open up to you,
S1: but also for wisdom on how and when to talk
S1: to him. The timing and the tone I think matter.
S1: And sometimes I think the most powerful move is prayer
S1: followed by patient action. So I would really make this
S1: a matter of prayer. Try a non-confrontational approach. You know,
S1: instead of, hey, we need to talk about money. It's
S1: can I share something that I've been working on financially,
S1: or can I share something with you that really is
S1: important to me, that I'd like to try to make,
S1: you know, progress on. Celebrate small wins. You know, if
S1: he responds to something, anything, acknowledge it and show appreciation.
S1: I think that builds trust. And then I think perhaps,
S1: you know, inviting a to the extent he's willing, a
S1: neutral third party, a pastor or a Christian counselor or
S1: a financial coach into the equation. Uh, and then at
S1: the end of the day, I think you can still
S1: be faithful in, in being a wise steward of what
S1: God has entrusted to you, because, again, you can only
S1: do what you can do. But I don't think you
S1: should just say, this is important to me, but I'm
S1: just going to let it go. I think you need
S1: to lean into it and let's trust God that that
S1: he's going to intervene. Does that make sense, though? I
S1: know that's a lot.
S5: Yes, it absolutely makes sense. And I feel as though
S5: that's been the path of the past, you know? Well,
S5: basically over seven years. Um, at this point, I just
S5: feel abandoned. Yeah. I just feel as though the conversation
S5: has been had enough times and there's been zero change.
S1: Yeah.
S5: That, um, you know, it's not abandoned when someone never
S5: shows up initially.
S1: Yeah, I think that's right. And I think, again, this
S1: goes back to money issues or hard issues. And this
S1: is just symptomatic. Let's finish up off the air. I'd
S1: like to talk just a bit more. We'll be right back.
S1: Thanks for joining us today on Faith and Finance Live.
S1: I'm Rob West. I had a chance to visit with
S1: Amy a bit more off the air, and we're going
S1: to send her a copy of Howard Dayton's book, Money
S1: and Marriage God's Way. We've also offered to cover the
S1: cost of a Christian financial counselor to walk alongside she
S1: and her husband. We realize that we don't know whether
S1: he'd be willing to to take advantage of either of those,
S1: you know, walk with her through that book, uh, to
S1: explore God's heart around money and marriage, uh, or to
S1: allow a counselor to come in as a third party
S1: into the equation. But I would just ask you, as
S1: the faith and finance family, to be praying that God
S1: would soften his heart and hear her out and be
S1: willing to engage, perhaps in a way he never has before,
S1: and that perhaps either through the book that Howard Dayton
S1: wrote years ago, that's just a classic, or through one
S1: of our certified Christian financial counselors that really are trained
S1: and their heart, their ministry, is just to serve God's
S1: people in this area that through one of those, he'd
S1: be willing to invite that in, and perhaps that the
S1: Holy Spirit would do a work in his life. So
S1: let's pray for Amy in that regard. All right. We're
S1: going to head to Georgia next. Uh, Susan, go right ahead.
S7: Hi, Rob. Thank you for taking my call.
S1: Yes, sure.
S7: Um, so I have several questions pertaining to withdrawal of.
S7: I'm thinking about leaving a job, and I want to
S7: take probably half of my 401 K and all of
S7: my stock money that's in this company, and use it
S7: to pay off my mortgage. Um, my questions are so
S7: I know that I'm paying right off the top 10%
S7: penalty because I am not 59.5. Um, and then after
S7: that 10% do I pay the tax? They were telling
S7: me 20% tax comes off. The top of that also,
S7: is that 20% taken after the 10% is removed or
S7: off of the whole entire amount? That's my first question.
S1: Okay. Yeah. So it's the whole amount of the withdrawal
S1: would be subject to a 10% penalty unless what is
S1: your age 56. Okay. So and you're separating from your employer.
S1: Is that right?
S7: Thinking about it, if I can financially afford to do it. Away.
S1: Okay, so there is the rule of 55 that would
S1: come into play here, which is an IRS provision that
S1: allows you to withdraw from your employer sponsored retirement plan
S1: without the usual 10% early withdrawal penalty. As long as
S1: you're at least 55 in the year, you you leave
S1: your job and it only applies to the employer's plan
S1: you leave. So if this is the 401 K or
S1: the 403 B from the employer that you're leaving, then
S1: you would should be able to avoid that 10% penalty,
S1: but 100% of the withdrawal would be taxable. So it
S1: would be added to your taxable income for that year.
S7: Okay. And so that being said, um, my husband's only
S7: income is Social Security. And thus far it has not
S7: been taxed because of our tax bracket. Um, my wages
S7: are not really high. And so we have not had
S7: to pay taxes on that Social Security. So considering we
S7: file jointly, including his Social Security money, this withdrawal from
S7: my employer and my wages, would they then tax his
S7: Social Security?
S1: They could. Yeah. Because the 401 K withdrawal would increase
S1: your income for the purposes of determining taxes on Social Security,
S1: so that the IRS uses a formula called combined income,
S1: or sometimes it's called provisional income. And basically it's your
S1: adjusted gross income, which includes and it's plus a few
S1: other things. But your AGI, even without those other things,
S1: includes withdrawals from a pre-tax retirement account. So that would
S1: be added in where it hadn't been before, on top
S1: of any other income, on top of Nontaxable interest and
S1: on top of half of your husband's Social Security benefits.
S1: And then if the combination of all of that, as
S1: a married filing jointly exceeds $32,000, then half is going
S1: to be taxable. If it exceeds 44,000, up to 85%
S1: would be taxable. So yes, it would affect it would
S1: affect whether or not that Social Security income, which previously
S1: have not been taxed because it sounds like you're under
S1: the threshold, would now possibly be taxed up to 85%
S1: of it. But the other issue that we haven't talked
S1: about yet, maybe you're getting to this, is just whether
S1: this makes sense. And I think, you know, I'm never
S1: a fan of well, I shouldn't say never. Often I
S1: will say I'd rather, if you can afford it, just
S1: to continue to pay out the mortgage by keeping your
S1: lifestyle low and, you know, just focus on any extra
S1: income you have or opportunities to pay down the mortgage.
S1: Do it that way. Rather than taking this big chunk
S1: out of your 401 K for for three reasons. One is, um,
S1: you know, that money's no longer there, growing on a
S1: tax deferred basis for you to use to supplement income
S1: later such that even if you don't need it now,
S1: you might later for long term care or something like that.
S1: Number two, it adds this kind of big taxable event,
S1: because even if you spread it over two tax years,
S1: you still have this big jump in income. And to
S1: your point, it may require you're now paying Social Security
S1: tax on Social Security, which you haven't previously. And then
S1: third is just, you know, given what's going on right
S1: now in the markets, I mean, we've had this major
S1: kind of I'll call it a collapse of the stock market, just,
S1: you know, and it could be short lived. And I,
S1: I'm not saying I think we're entering a depression and
S1: the market's never going to recover. But I'd be, you know,
S1: not very excited about you, you know, liquidating your 401
S1: K with the market down 20%.
S7: Okay. So um, also then with the tax thing, um,
S7: we're going to combine his Social security, my wages, and
S7: what I actually receive after paying the if I pay
S7: the penalty and the tax that comes out automatically, or
S7: am I including the whole entire amount before tax plus
S7: wages plus Social security at tax?
S1: Yeah, it would be the total amount of the withdrawal
S1: would be added to your taxable income. And then and
S1: then your they would calculate the federal and state income
S1: tax that would be due on that amount. And in
S1: addition to that, that number would go toward your combined
S1: income that determines what portion of your husband's Social Security
S1: is now taxable, if any.
S7: Okay. So then the thing I've been told about the 20%
S7: coming right off the top of that. Does that happen
S7: at tax time or does it happen when they pay
S7: out the.
S1: Well, it's up to your plan administrator because that's not
S1: a requirement. I mean that that would be up to
S1: each plan. If they withheld it, they would do it
S1: at the time of the distribution. And then they just
S1: send it into the IRS. Ultimately, it's not that you
S1: owe 20%, it's that they're going to withhold an estimate
S1: of 20%. And then you may owe more, or you
S1: may get some of that back, depending on, you know,
S1: your actual return.
S7: Okay. Okay.
S1: Yeah. Is that helpful?
S7: If that is helpful. Thank you Rob I appreciate it.
S1: Okay. Absolutely. Thanks for your call. Susan to Virginia. Hi, Debbie.
S1: Go ahead.
S8: Hi, Rob. I'm so excited for the opportunity to talk
S8: to you. Great. My my husband and I have recently retired,
S8: and we're trying to make some informed financial decisions on
S8: little pockets of saving money here and there. And as
S8: I pay bills, I've been noticing that many companies now
S8: give you discounts if you set up auto payment for
S8: your bill. Yeah. And they usually offer you the opportunity
S8: to either use your bank account or credit card. Right.
S8: So I'm trying to figure out which is the best
S8: option with with using a bank account I'm a little
S8: concerned with all these different companies having, you know, your
S8: bank routing number and your checking account number. Yeah. Um,
S8: and if I consider using a credit card, I'm wondering, um,
S8: is it best to have a credit card, like, use
S8: the credit card you already have, which if you do that,
S8: you're increasing. You know, the the percentage of your usage
S8: on your credit card. And and what kind of hit
S8: that would have, um, versus getting a whole nother like
S8: a rewards type of credit card where you're getting cash
S8: back rewards for paying. Do you have any thoughts on this?
S1: I do, yeah. You won't be surprised I have thoughts. Uh, okay.
S1: So a couple of things going on here. Number one is. Yeah,
S1: I like the idea of you setting up the auto
S1: payment and getting a discount. I like that you're thinking through,
S1: do I use bank account or credit card? Because that's
S1: a that's a good consideration. I actually, so long as
S1: you take the debt risk off the table that you're
S1: going to spend money on non-budgeted expenses that you can't afford,
S1: and now you're paying interest on it. I mean, if
S1: that was a possibility, I'd say forget it. But assuming
S1: you're just. No, no, Rob, this is budgeted items. We're
S1: going to pay it in full every month and that's
S1: off the table. Then, you know, it is nice to
S1: be able to pay this with a credit card, because
S1: if you have a credit card that has rewards with
S1: cash back. So, you know, like a for instance, the
S1: Wells Fargo card is paying 2% on everything across the
S1: board right now, and there may be others that are
S1: even better. Um, to be able to get that 2% back,
S1: no fees. Um, it gives you some extra fraud protection
S1: because credit cards offer stronger protections against fraudulent charges than
S1: debit cards tied to checking accounts, or even checking accounts
S1: with your ACH routing number. Because, you know, remember what
S1: happens if somebody compromises your debit card or your checking
S1: account is it can take longer to resolve and the
S1: funds are already gone, leaving you temporarily without the money.
S1: Whereas with the credit card, so long as you identify
S1: it and on a timely basis dispute it, you don't
S1: have any any risk there. You have no liability. I mean,
S1: by law, it's no more than $50. And most cards
S1: it's $0 as long as you report it. So for
S1: that reason, assuming you're going to pay it, only budget
S1: items pay it off in full. There's no monthly or
S1: annual fee and you're going to get some rewards. Then
S1: I would say with the added protections, I actually prefer
S1: the credit card for that purpose.
S8: Okay. Now, if we do already have a credit card
S8: that has cash back rewards and we have a high
S8: limit on that, but if we use that same credit card,
S8: then we're using a higher percent. I can't think of
S8: what that term is.
S1: Yeah, it's the credit utilization. So number one, unless you're
S1: going to be out looking for a loan anytime soon,
S1: it doesn't really matter in your season of life. But
S1: but even if you are concerned about that, I would
S1: just say as long as you're not going above 30%
S1: of that limit, then it's really a non-issue. So if
S1: it's a $10,000 limit, as long as you're under, you know,
S1: $3,000 on a monthly basis, then it's a it's a non-issue.
S1: And then I think, secondly, would just be the idea
S1: that if you wanted to, as long as you paid
S1: it off. Because remember, we're using it for budget items.
S1: So you got the money in checking as long as
S1: you paid it off, not by the due date, but
S1: by the day before the closing date of the cycle.
S1: Then they're going to report a zero balance to the
S1: credit bureau. Um, because they're going to look at the
S1: balance as of the date of the end of the cycle.
S1: And if you paid it off the day before, it's zero.
S1: And so you don't even have to worry. Does that
S1: make sense?
S8: Wonderful. Yes it does. Thank you so much.
S1: All right. I appreciate your call. Lord bless you. Thanks
S1: for being on the program today. Hey, big thanks to
S1: my team today. Boy, I couldn't do this without them. Tara, Taylor, Dan, Gabby,
S1: T and Devin. We'll see you next time. Bye bye.