S1: The following program was prerecorded. So our phone lines are
S1: not open.
S2: Psychologist and educator Fitzhugh Dodson wrote, without goals and plans
S2: to reach them, you're like a ship that has set
S2: sail with no destination. Hi, I'm Rob West. Of course,
S2: goals don't amount to much unless you have a plan
S2: to reach them. That planning should involve more than building
S2: your net worth. Ron Anderson joins us today to discuss
S2: life planning, what it is, how to do it, and
S2: why you should. Then we have some great questions lined
S2: up for you. But don't call in today because we're prerecorded.
S2: This is faith and finance. Live biblical wisdom for your
S2: financial journey. Well, my friend Ron Anderson is a certified
S2: Kingdom advisor. He has 30 years experience helping folks across
S2: the country plan and set goals for financial affairs. He's
S2: the founder and president of plan A wealth management based
S2: in Lincoln, Nebraska. Ron, great to have you here.
S3: Hey. Thanks, Rob. It's great to be here.
S2: Ron, you've been a successful financial planner for a long time.
S2: You've helped a lot of folks, but it seems lately
S2: that the Lord has really burdened you with an additional
S2: passion that I'll call life planning. Now, that sounds self-explanatory,
S2: but I suspect there's more to it, isn't there?
S3: Yeah, I would say the more to. It is really
S3: thinking about what is your purpose? How are you going
S3: to make a contribution? You need to know what your
S3: financial goals are. But why do you want to be successful?
S3: What are you going to do with your time and
S3: your life? If you're on track financially to make that
S3: bigger contribution that God put you here for?
S2: Yeah, I love that it's this big why? Let's build
S2: on that. So then what is really the purpose of
S2: life planning?
S3: I think the purpose is to ask yourself some really
S3: tough questions. You know, why do you want to be successful?
S3: Why do you want to reach your goals? And if
S3: God allows you to do that, what are you going
S3: to do with your time? how are you going to
S3: fulfill that unique purpose and contribution that God put you
S3: here to make? How do you figure that out? What
S3: questions do you want to ask yourself to determine and
S3: narrow down what makes me special and unique, and how
S3: can I use that to further God's kingdom?
S2: Yeah, it makes me think about that iceberg illustration that
S2: our friend Ron Blue talks about. That 10% above the
S2: waterline is the financial decisions, but it's the 90% below
S2: the why and your values and your faith that really matter.
S2: So Ron, how then can a financial planner help with
S2: life planning?
S3: I think a financial planner can really help someone set
S3: a reasonable lifestyle so that they know how much they
S3: can spend, helping them save enough for their future, which
S3: really frees them up. If God nudges their heart to
S3: do something different with their time or with their energy
S3: or occupation, they have the margin in their lives to
S3: be able to say, yes, Lord, I will follow as
S3: opposed to I can't afford to do this. So it
S3: also gives you another person to think your confusion out
S3: loud with. As you're talking about your goals, you can
S3: also talk about, well, I feel like this is something
S3: I maybe am supposed to be a part of, and
S3: it gives you somebody to bounce those ideas off. I
S3: think you actually figure out a lot by talking to
S3: somebody about what you're thinking. You thinking it out loud
S3: helps clarify it in your mind.
S2: Oh, well. And perhaps even challenging you along the way.
S2: I love that you mentioned the reasonable lifestyle because I
S2: know one of the things you do is help your
S2: clients define enough so that they have the capacity to
S2: respond to the leading of the Lord, right?
S3: Absolutely. And be able to give generously along the journey.
S2: Ron, take us into Scripture. What does Scripture say about
S2: life planning?
S3: You know, one of the favorite scriptures I have related
S3: to life planning is Ephesians chapter five, and it basically says,
S3: be careful how you live. Don't live like a fool,
S3: But like someone who's wise. Make the most of every opportunity.
S3: Don't act thoughtlessly, but understand what God wants you to do.
S3: And how do you understand what God wants you to do?
S3: You spend time with God, you think. You ask questions
S3: and you try to listen to God's voice.
S2: Mhm. That's great. Ron, what have you seen play out
S2: in the lives of your clients as you've taken them
S2: through this process?
S3: Uh, one I can think of in particular, you know,
S3: they gave away a large gift and they actually went
S3: overseas and translated the Bible under cover in Eastern Europe,
S3: and they were able to do that and fund their
S3: own ministry doing it that way. Then they came back
S3: to the States after they were done, and they bought
S3: a place to give others rest in Colorado. So they
S3: used the money that God had blessed them with. And
S3: now they're using that as a blessing to people that
S3: are in ministry to give them rest because so many
S3: people are going so fast today.
S2: Wow. Well, that's far more than the typical financial planning engagement.
S2: Those are life changing, kingdom building outcomes, I love it. Ron,
S2: thanks for stopping by today, my friend.
S3: Hey, thanks, Rob. Great talking to you.
S2: If you want to learn more about Ron and plan A,
S2: you can head to plan a.com. Again, that website plan aww.com.
S2: Hey folks, we're going to pause now for a brief break,
S2: but we'll be back with much more on today's faith
S2: and finance live. Grateful you've tuned in to Faith and
S2: Finance live. I'm Rob West, your host. This is where
S2: we recognize that God owns it all. You're a steward
S2: or a manager of God's resources, and money is a
S2: tool to accomplish God's purposes. Hey, we're away from the
S2: studio today, so don't call in. But we lined up
S2: some great questions in advance that I know you will enjoy.
S2: In fact, let's go ahead and take one of those
S2: right now. Let's begin in Missouri today. Dennis, how can
S2: I help you, sir?
S4: Well, blessings to you all. I hope I can explain this.
S4: I'm 75 and I took out a loan a while
S4: back to help my daughter, and, uh, she's paying it off. And, uh,
S4: I recently bought her a car that I'm going to
S4: be paying off, and I have about 5000 available every month,
S4: so I'll be. I hope to have the car paid
S4: off like in seven months, approximately. My question is, once
S4: the car is paid off and I was just going
S4: to take the 5000 that I have available each month
S4: and just throw it into savings rather than go into
S4: investing and all that stuff. Because I'm not, I'm legally blind,
S4: so I'm not very good on seeing some of this stuff.
S2: Yes, yes. And you're wondering, Dennis, whether that's a good
S2: idea or is there some other question related to that?
S4: That's the main thing is, yeah, of course. I was
S4: just going to throw that $5,000 in savings and leave it.
S2: Yeah. Dennis, I love this. First of all, you sound
S2: like a really generous father. I love that. And do
S2: you have anything in savings currently, or would this be
S2: the beginning of your savings account?
S4: Well, I have 10,000 savings right now.
S2: Okay. And how much are you spending in a typical month?
S2: What are your expenses?
S4: Well, that's kind of hard to explain. I'm a disabled vet,
S4: so I get a VA pension. Okay. And the VA
S4: pension takes care of my of all my needs. I
S4: see from a financial standpoint. Yeah. So there's 5400 is free.
S4: There's nothing there's nothing really attached to it that I
S4: have to be concerned. It takes care of all my debt.
S2: Excellent. Well, here's what I would do. You know, I
S2: like this idea of you putting this into savings. I
S2: would say, you know, at least for the next 12 months, Dennis,
S2: I'd be just piling this into savings and just let
S2: it accumulate and put it in a high yield savings account.
S2: Whether you head to our local credit union or maybe
S2: you open an account or have your granddaughter help you
S2: open an account with Adelphi Christian Banking, they're a long
S2: time underwriter here of this program, the biggest Christian credit
S2: union in the nation. Uh, you can learn more at
S2: faith fi.com/banking. The reason I mention them is they're, they're Christians.
S2: So you know that you're working with a, a credit
S2: union that shares your values as a Christ follower and
S2: supports Christian ministries out of their profits, but also they
S2: have phenomenal rates. So they're offering right now for faith
S2: by listeners up to $100,000. 4% for the next 12 months. And,
S2: you know, they have a bonus of up to $400
S2: when you open an account by using the code faith Fi.
S2: But that would be an example of the kind of,
S2: of thing I would do. And let's just let that accumulate.
S2: I mean, you'd you'd have 60,000 at the end of
S2: the year. But that's great because here's the reality. Yes,
S2: your bills are covered by that VA pension. And thank
S2: you for your service. That's awesome. But if you had
S2: a major need or you needed long term care, you know,
S2: we need additional funds there for you to be able
S2: to cover whatever happens along the way. And so I
S2: think it's really key for you to be able to
S2: go ahead and sock that money away between now and then.
S2: So I'm going to suggest that that be your next step,
S2: that you go ahead and start putting that money away
S2: in a high yield savings. Again, if you wanted to
S2: learn more about Adelphi Christian Banking, you could go to
S2: faith fi.com/banking if you don't use the internet. And I
S2: know you said you're legally blind, perhaps, um, get your
S2: daughter to help you, uh, do that, or you can
S2: call them up. And, um, that phone number is And 2228. Um,
S2: and if you hold the line, our team can give
S2: you that number. Uh (800) 347-2228. And you can write that
S2: down and give them a call. But either way I
S2: think you're on the right track here. Dennis. Thanks for
S2: your call. God bless you. Uh, let's go to Oklahoma. Conroy,
S2: you're next on the program, sir. Go ahead.
S5: I am calling on behalf of my brother. He has
S5: credit card debt, about $40,000 in credit card debt with
S5: a 30% interest rate. All right. And, um, he makes
S5: about $900 a week. And his payments just minimum payments
S5: is about $1,350 a month. Do you have any suggestions
S5: on how he could, um, pay this down? He's looked at, uh,
S5: bankruptcy or national debt relief program, different things like that.
S2: Yeah. Is he able? And I realize this is a
S2: huge challenge just because given the high proportion, this payment
S2: is to his overall income, because, you know, even if
S2: he's taken that 900 a week. And, you know, in
S2: the months where he gets an extra payment, if he's
S2: saving that to try to normalize that, he's got about
S2: 4000 a month coming in. And as you said, he's
S2: spending about 1350 of that, uh, on his credit cards.
S2: Is he able to make that happen and live within
S2: his means just by eliminating every other unnecessary expense? Or
S2: is he going underwater every month?
S5: He has been going underwater. He has not been able
S5: to do it in the last 20 years. So.
S2: Okay. Do you think that it's possible? I mean, could
S2: he make a dramatic change? So let me ask a
S2: couple of questions. First is, is he married or single?
S5: He's married and he has four children.
S2: Okay. All right. And, um, yeah, I mean, so this
S2: is really challenging. I mean, the way I would typically
S2: recommend you handle this is you get into credit counseling
S2: program where the interest rates drop. And now all of
S2: a sudden through one level monthly payment without taking on
S2: new loans to replace the debt or consolidate it. We're
S2: actually making meaningful progress toward the debt reduction, but that's
S2: going to be a minimum of 3%. So, you know,
S2: you said it was I think you said was 40,000.
S2: So at 3%, I mean, possibly that payment comes down
S2: to 1200 a month. But, you know, that's obviously a
S2: real challenge. Now, if he can find a way to
S2: do that, if, you know, he and his wife are
S2: on board and they're literally saying, okay, for the next
S2: several years, we're just going to double down and, and
S2: make this happen either by eliminating every unnecessary expense, which
S2: is not going to be easy, but it can be done. Or,
S2: you know, maybe he's out getting a second job or
S2: she's working if she's not already or he's getting additional hours,
S2: you know, on his current job. I mean, getting really creative.
S2: That would be the best way to go to avoid
S2: bankruptcy because now he's actually making some meaningful progress. And
S2: so I, I would recommend he connect with our friends
S2: at Christian credit counselors.org. If he's unable or unwilling to
S2: do that, then I think, you know, at some point
S2: we're going to be in a bankruptcy situation because he
S2: may be forced into that just because of the the
S2: judgments that would likely be coming down the road against him,
S2: that could end up, you know, resulting in some garnishment
S2: and things like that when a court gets involved. Because eventually,
S2: if he's going underwater every month, the credit cards are
S2: he's going to reach the limits if he hasn't already,
S2: and he's going to be cut off and then things
S2: are going to go into arrears if they're not already,
S2: and then turned over to collection. And then kind of
S2: the process rolls from there. And there's not only the
S2: financial toll, but the emotional toll that comes from that
S2: as he begins to get hounded by those collection folks. And,
S2: you know, some of their tactics are less than scrupulous. So, uh,
S2: you know, I would recommend he, you know, really has
S2: a heart to heart, he and his wife and just say,
S2: you know, are we willing to double down and really
S2: attack this. And if they are either through cut cutting spending,
S2: getting more income coming in or both, you know, then
S2: I would head to Christian credit counselors.org.
S5: Okay. Can they handle this on their own? As far
S5: as being able to hold the creditors and cut interest
S5: rates just to make principal payments?
S2: No. They can't. I mean, in the sense that they
S2: would have to get behind and then try to go
S2: in and negotiate settlements. It's far easier to work through
S2: a credit counseling agency because these lower interest rates are
S2: already set. If you're willing to work through a nonprofit
S2: credit counseling agency like Christian Credit counselors, there's no negotiations
S2: involved and you don't have to get past due. Hey,
S2: thanks for your call, Conroy. We appreciate it. We'll be
S2: right back. So glad to have you with us today
S2: on Faith and Finance Live. Our team is away today,
S2: so don't call in. But we lined up some great
S2: questions in advance and we'll be going to those here
S2: in just a moment. Let me also remind you that
S2: the advice that I give each day on this program
S2: is general in nature. We offer principles and ideas that
S2: apply at a high level. They are not personalized. So
S2: that's why you should always seek professional financial advice. And
S2: if you'd like to find a professional who shares your values,
S2: we of course, here at Faith and Finance Live recommend
S2: the Certified Kingdom Advisor designation. These are men and women
S2: who've met high standards, and they've been trained to bring
S2: a biblical worldview of financial decision making. You can find 1@faith.com.
S2: Let's go to Georgia. Ed, how can I help you?
S6: Yes. Uh, what my question is, is I have been
S6: having a phone call from this collector. I, I, I'm assuming, uh,
S6: collecting agent for a bill that a medical bill back to, uh,
S6: 13 to 15 years ago, and I retired now in 2016,
S6: and I have not received or heard anything about that bill.
S6: And I asked them to send me a copy of
S6: the bill and where I see it, and they have
S6: not sent me no copy. And that was last year
S6: when I requested it. And this year I requested again,
S6: and they called me back.
S2: Mhm. Yeah. So are you wondering just whether they have
S2: the right to do that or whether this is a
S2: scam or what is your main question?
S6: Yeah. If I owe it, I pay it, you know.
S2: Yes. Yes, sir.
S6: But, uh. Well, there are two things, I guess. One,
S6: how far back can they go back on a medical
S6: thing to collect the money and then can they garnish
S6: Social Security check. Oh, that's all I'm making now is
S6: just Social Security since I'm being retired.
S2: Yes. Okay. Yeah. Great question here. So a couple of
S2: thoughts on this. Um, you know, I think a 13
S2: year old medical bill definitely deserves a healthy dose of skepticism.
S2: Doesn't necessarily mean it's a scam, but I would say
S2: don't send any money, you know, until they provide proof.
S2: So you've done the right thing by asking for written validation, uh,
S2: showing that who was the original medical provider, the amount
S2: owed an itemization of the debt and why they believe
S2: you still owe it. Uh, federal law requires debt collectors
S2: to provide valid information. And if they're refusing to provide documentation,
S2: that's a warning sign. Now, if they're just saying, yeah,
S2: we can do that, it's just going to take a
S2: little time. Well, that's not to be unexpected. Um, but
S2: they do need to demonstrate if they are not the
S2: original medical provider. And it sounds like they're a collection
S2: agency that they can document how they have, you know,
S2: purchased the debt or now, you know, they're the one
S2: that owned the debt and therefore you would pay them.
S2: A debt can exist for many years. Every state has
S2: a statute of limitations that limits how long a collector
S2: can sue you to collect. In many states, that's somewhere
S2: between 3 and 6 years. But it does vary by
S2: the type of debt. They can ask you to pay
S2: an old debt. And you know, to your point, you
S2: want to make good on the obligation. If it is
S2: in fact yours, that's great. I would agree with that.
S2: But I think the key is making sure you validate
S2: that it is, in fact, theirs and that this is
S2: a legitimate organization debt collector. Um, in terms of your
S2: Social Security, uh, you know, if this is simply an
S2: old medical debt collected by a private debt collector, your
S2: Social Security retirement benefits are generally protected from garnishment. The
S2: only exceptions to that would be federal tax debts. Federal
S2: student loans, child support and alimony or court ordered restitution. Um,
S2: so private creditors generally cannot garnish garnish your Social Security benefits. So, um,
S2: you know, there may be a caveat to that in,
S2: in the sense that, um, you know, if it's deposited
S2: to your bank account, uh, banks automatically protect two months
S2: worth of directly deposited benefits. Um, but if you've mixed
S2: those with other money or allowed them to accumulate beyond that,
S2: it can become more complicated. But I would just say,
S2: you know, if this is a 13 year old debt,
S2: I would wait for that validation and then proceed from there.
S6: Okay, I appreciate it. You know, I want to pay
S6: my bills and pay it. You know, I, I went
S6: to the hospital and checked with them, the financial department.
S6: And from 2000 up to now, I owe nothing to them.
S6: You know, there is no debt outstanding with them. So
S6: I'm assuming they had to sell the debt to somebody else.
S6: I don't know. There's so much scam out there. I
S6: just want to make sure.
S2: Absolutely. And you're doing the right thing here, Ed, because again,
S2: if the, uh, if the medical provider is saying that
S2: account was paid in full or there's a zero balance,
S2: I would proceed with a lot of caution before you
S2: do anything. Don't admit, you know, to owing it. And, uh,
S2: let's make sure they can provide some documentation that you
S2: could also verify with that, uh, original medical provider. And
S2: until that time, I just kind of sit on that. Hey,
S2: we appreciate your call today. God bless you. Uh, Lucille
S2: is in Illinois. Go right ahead.
S7: Thank you so much for taking my call. I have
S7: an opportunity to do a three year special catch up. Yes.
S7: So I'm going to be able to contribute, like double
S7: what you contribute. I'm 58, and I was wondering, what
S7: should I be considering? Should I just do it all
S7: as 457 or because within the 457 I have an
S7: opportunity to invest some of that as Roth. I don't
S7: have a lot of balance on my Roth account. What
S7: should I be considering to split it? Or am I
S7: better off doing all of it as deferred?
S2: Yeah. Yeah. You know, I've mentioned before there was a
S2: study done by some researchers that looked at thousands of
S2: actual retirees to determine what is the optimal mix between
S2: tax free and tax deferred retirement accounts. Once they got
S2: to retirement and started drawing it down. And what they
S2: found is and this was just based on the study
S2: they did, that the optimal scenario was if you take
S2: your age and you add 20 to it, so you're 58,
S2: add 20 to it, that's 78 that that would be
S2: the portion you should put in traditional. And then you
S2: put the rest in the Roth. And the idea was
S2: that you're probably at the peak of your earnings years,
S2: so you could really benefit from the deduction. But the
S2: fact that we don't know what tax rates are going
S2: to be in the future, you at least want something
S2: going into Roth. So whether you do 80 to traditional
S2: or 70, you know, I think somewhere between 70 and
S2: 80 to the traditional and 20 to 30 to the
S2: Roth is probably at least based on this study, an
S2: optimal scenario for you? I hope that helps. Lucille, thanks
S2: for your call back after this. Stay with us. I'm
S2: so thankful you're joining us today on Faith and Finance Live.
S2: I'm Rob West. Hey, just a quick reminder, our team
S2: is away from the studio today, so don't call in.
S2: But in just a few moments, we're going to get
S2: to some questions that we lined up in advance that
S2: I know you'll find very interesting. But let me take
S2: a moment just to invite you first to be a
S2: supporter of this ministry here at Faith VI. You know,
S2: we bring you this broadcast every day as a listener,
S2: supported ministry only because of your generous support. So maybe
S2: you listen regularly. Perhaps you count on this program. Maybe
S2: you've been able to apply some of the wisdom from
S2: God's Word that you've heard in your financial life, or
S2: it's just help you to be that wise and faithful steward,
S2: and you'd like to be a part of our team. Well,
S2: one way you can do that is by investing in
S2: this work through a one time gift, or even by
S2: becoming a faithful partner. I just invite you to join
S2: us on this journey. When you head to faithful.com and
S2: click give, a gift of any amount would be a
S2: big help. Again, that's faith v.com and just click give
S2: and let me say thank you in advance. Your gift
S2: will make a huge difference. Now let's head back to
S2: the phone calls we have lined up. Let's head to Mississippi. Roy,
S2: how can I help?
S8: Yes. Uh, I listen to you guys a lot. I
S8: have a goofy kind of question. My son has Um,
S8: started a plan through his own efforts, uh, with the, um,
S8: various securities out there, uh, that he's been involved with
S8: for several years. And he was giving me a list
S8: of some of the stocks, Amazon and, uh, oh, Cisco,
S8: all kinds of, uh, tech stuff. And he's garnered about
S8: $1 million doing this, but he's asking me if I'm
S8: interested in joining and throwing the money I have into
S8: his plan. And, uh, he jokingly, he says, I want
S8: people that like to not spend money. And, uh, I'm,
S8: I'm kind of throwing that around in my mind. The
S8: thing that concerns me or one thing anyway, is, uh,
S8: he's not a real strong Christian. And, uh, the other
S8: is what might be the plus and minuses of putting
S8: my money in a joint account with him and other
S8: friends of his, and like his son and his daughter
S8: and and that kind of thing. And he's curious if
S8: I want to throw my 401 in there, and I
S8: know there's going to be penalties if I do that.
S8: So what what might the penalties be?
S2: Yeah. Well, yeah, a lot there. Um, let's, let's kind
S2: of walk through this. There wouldn't be any early withdrawal penalties,
S2: but you could trigger a massive tax consequence by pulling
S2: that money out of the 401 K, because it would
S2: all be added to your taxable income in the year
S2: that you would draw it as ordinary income. And so,
S2: you know, that could certainly push you up into a
S2: higher tax bracket. It means a pretty big, you know,
S2: bill and you lose that tax deferred growth moving forward.
S2: So I wouldn't I wouldn't recommend that. I also want
S2: to just encourage you to be cautious here. You know,
S2: whenever family and investments intersect, I think at the very
S2: least it's it's wise just to proceed with caution and
S2: slow down because, you know, you certainly want to understand
S2: the risks, the liquidity, meaning if you change your mind,
S2: can you get out the fees, uh, you know, and
S2: whether this investment is appropriate for your stage of life.
S2: The last thing we would want is for this to,
S2: you know, go a direction other than what you expect
S2: or he expects. I'm not saying he's trying to do
S2: anything disingenuous here, but when it comes to investments, it's
S2: going to be beyond his control, the ultimate outcome. And
S2: I think, you know, the last thing we would want
S2: is some sort of relational collateral damage here. Um, or
S2: for you to be in a position where you have
S2: harmed yourself financially, you know, moving forward, given that this
S2: is your nest egg, I appreciate your desire to be
S2: supportive and, and, uh, you know, not turn him down.
S2: And yet at the same time, you know, this is
S2: a pretty significant decision with real tax implications and real,
S2: you know, sustainability, because your biggest risk in this season
S2: of life is what's called longevity risk that you could
S2: outlive your money, especially if you know, you take more
S2: risk than is appropriate and you lose some of it. Um,
S2: do you know what type of investment this is? It
S2: is a, is it a private investment or is it
S2: something that's publicly traded on the stock market?
S8: It's it's private. He doesn't trust anyone else out there.
S8: So it's all money. He's invested over the years. And
S8: we were with the S&P for a while. But he
S8: got out of that. And of course he's regretted doing
S8: that now. But um.
S2: Yeah.
S8: Yeah. It's it's mainly just a private, uh, individual kind
S8: of thing. He's created himself, you know.
S2: Yeah. And that just adds more risk. Not again, not
S2: that he's not skilled as a, as an investment selection,
S2: you know, person A as a stock picker, so to speak. Um,
S2: but whenever you go into a private investment, there is
S2: less regulation. Uh, often, you know, these private investments, uh,
S2: lack any liquidity. Um, and so, you know, your ability
S2: to get out of it is going to be significantly less. Um, so,
S2: you know, I would stay away from this. I mean,
S2: if you wanted to go into it again, um, I'd
S2: want to try to keep it inside the, uh, retirement structure,
S2: the pre-tax structure, which would mean that you could use a,
S2: what's called a self-directed IRA. You could do a search
S2: on that. You'd have to find a self-directed IRA custodian. Um, and,
S2: and they would often allow you to invest, but I
S2: would keep it probably no more than 5% of my investment. Um,
S2: just because again, this is not the season of life
S2: for you to both mix family and money and especially
S2: in a private investment, Um, you know, the ownership structure,
S2: the liquidity, the creditor risk, uh, you know, just all
S2: of these things, potential family conflict are a big downside, uh,
S2: in terms of a, you know, a joint tenancy situation. Um,
S2: you know, I would stay away from that as well.
S2: That's going to create gift tax considerations, estate planning issues. Um,
S2: it just adds a whole lot of complexity unnecessarily. Um,
S2: so I would just keep everything in your name alone.
S2: I would probably encourage you just to avoid this altogether.
S2: But if you did do it, I would do it only,
S2: you know, no more than 5%. And I would use
S2: a self-directed IRA to keep it in that tax deferred environment.
S8: Okay, fine. Thank you so much. I just wanted to
S8: get your your position on that kind of thing. I
S8: know the difficulties with family. Uh, you never think anything
S8: is going to crop up, and yet it always seems
S8: to rear its ugly head at some point. But thank
S8: you again.
S2: Unfortunately it does, but I appreciate you. Roy, thanks for
S2: calling today. Let us know if we can help further
S2: along the way. Let's go to let's see. We'll head
S2: down to Louisiana and how can I help?
S9: I, um, I have a problem that I've been trying
S9: to look into. Um, I needed some more social security
S9: quarters to start withdrawing my social security. I need 12
S9: more quarters. So I got a little job as a
S9: household manager. Now, my problem is I'm trying to figure out,
S9: should I be hired as an hourly employee, a household employee,
S9: or an independent contractor with hourly pay? Mhm. And I
S9: know there are such thing as nanny taxes. And how
S9: would the IRS look at this position and what should
S9: I do?
S2: Yeah. Great question. Uh, yeah. So as you look at this,
S2: you know, the key issue is that the job classification
S2: should reflect the actual working relationship. Not which choice produces
S2: more Social Security credits. So if your goal is to
S2: earn credits, you need to make sure your wages are
S2: properly reported and that Social Security and Medicare taxes are paid,
S2: whether you're an employee or an independent contractor. Really depends
S2: on the nature of the job, not necessarily which one
S2: you'd prefer, but in either case, you can achieve those
S2: credits as long as it's reported and taxes are paid properly.
S2: Hang on the line. We'll talk a bit more. Just
S2: a quick reminder, we're not here today, so don't call in.
S2: But we're going to head to a break and much
S2: more coming just after this. Stay with us. Thanks for
S2: joining us today on Faith and finance live here in
S2: our final segment of the broadcast today, let me remind you,
S2: our team is not here, so don't call in. But
S2: we lined up some great questions in advance. We'll get
S2: to those in just a moment. Before we do, let
S2: me remind you, if you haven't downloaded the Faith Fi app,
S2: we'd love for you to check it out. It's got
S2: three sections in it. The first is the money management
S2: system based on Larry Burkett's digital envelope system. It helps
S2: you manage God's money in a way where you know
S2: exactly what's left in each envelope at any point during
S2: the month. There's also our learn tab, where you can
S2: access the best content in biblical finance to grow in
S2: your understanding of God's way of handling money and our
S2: community where you can post questions, get comments and ideas
S2: from other stewards on the journey. So download it today
S2: on our website Faith fi.com. Just click app. Before the break,
S2: we were talking to Anne and Louisiana. She's looking to
S2: achieve the number of credits necessary to be entitled to
S2: a Social Security benefit. She's not quite there yet, and
S2: she has recently engaged as a household manager or is
S2: about to. Is wondering how should she structure that? To
S2: be sure that she earns Social Security credits. And I
S2: was saying, uh, before the break and that really, uh, the, the,
S2: the relationship between you and this person, uh, who's asking
S2: you to become a household manager is not as much about, uh,
S2: getting the credits and really more about what is the
S2: right job classification that reflects the actual working relationship. So, uh,
S2: you know, if you are, you know, just working for
S2: one employer and they're controlling what work is done and
S2: how it's done, then that's going to be a household employee.
S2: They would need to withhold and pay the Social Security
S2: and Medicare, and those wages would count. If you're truly
S2: operating independently and you set your own methods, you serve
S2: multiple clients, you're controlling how the work is performed. Well,
S2: then that would be in line with an independent contractor relationship,
S2: but you'd have to pay the self-employment tax. But that
S2: would then also earn Social Security credits. So, you know,
S2: the relationship you have and some of those key factors,
S2: you know, like one or multiple, you know, relationships and
S2: whether you control what you do and your hours and
S2: so forth or they do is ultimately what's going to
S2: determine the, the relationship that you have. But does that
S2: all make sense?
S9: Uh, yes. Um, the thing is, I will only have
S9: I want to work as an independent contractor, but I
S9: only have one client, but that's catapult me into the
S9: employee category.
S2: Yeah. So that's, that's going to be a challenge there
S2: because I, I certainly understand that you want to be
S2: independent because then you can take advantage of the deductions
S2: and so forth of being self-employed, although you would have
S2: both sides of Social security. Um, one client doesn't automatically
S2: disqualify you. I would just say, you know, you can
S2: have one client and still be an independent contractor, but
S2: the IRS is primarily going to look at who controls
S2: the work. So if you decide how the work is done,
S2: you provide your own tools, you set your own schedule,
S2: you operate independently. You may qualify as an independent contractor. If,
S2: on the other hand, the family directs your work and
S2: your hours and your methods, you're more likely a household employee.
S2: So I would, uh, you know, get with a CPA
S2: who can really just evaluate your situation here and advise
S2: you on how to set it up if you decide
S2: to go. Um, and the CPA believes you can be
S2: recognized as an independent contractor based on your working relationship,
S2: then you're going to want to make sure you keep
S2: separate books and that there's a clear line between your
S2: personal finances and your business. that's going to ensure that
S2: you are able to deduct business expenses without being challenged
S2: by the IRS. But you've got to be able to
S2: document things separately between your personal and your business activities.
S9: Okay. Well, that sounds good. Do you know any maybe
S9: off the air, you all can recommend us a certified
S9: Kingdom advisor here in the Louisiana area for me.
S2: Yeah. If you go to find acka.com, you could find
S2: a certified Kingdom advisor, and then you could ask for
S2: a referral to a small business accountant or CPA. They
S2: would all have one that they typically work with. So
S2: just go to find acka.com. You can do a zip
S2: code search. And thanks for your call today. Lord bless you. Uh,
S2: let's go to Philadelphia. Hi, John. How can I help?
S10: Yes, hello. Uh, this is an IRS question, and and
S10: IRA question. My wife has an IRA, and, uh, we
S10: take out required minimum distributions each year. Uh, last year.
S10: Among the 15 or 20 that we took out, one
S10: went to our church, and initially our church did not
S10: want a receipt for a required minimum distribution. We went
S10: back to the church and said, well, we would need
S10: a letter saying the church was a 501 C three.
S10: We got that and then we sent the check to
S10: them again, and the church came back a second time
S10: stating in all capital letters. They acknowledged receipt of the
S10: required minimum distribution, but they would not accept it as
S10: a tax deductible contribution. And it and it could not
S10: be reported on the tax form. And, you know, all
S10: of the other 501 C3S either either receded it or
S10: receded it as being received from a required minimum distribution.
S10: What's the tax law, actually?
S2: Mhm. Yeah. Interesting. Uh, I'm not sure why they're saying that.
S2: Because the with the. So was this a qualified charitable distribution?
S2: Is that what it is?
S10: Yes.
S2: Okay. Yeah. Here's what they might be referring to is
S2: see the the idea behind the qualified charitable distribution is
S2: you don't get to double dip. So the benefit here
S2: is that the amount coming out of the IRA and
S2: going to the charity is excluded from your taxable income,
S2: which every other distribution from an IRA is included in
S2: your taxable income for the year except a qualified charitable distribution.
S2: So the benefit to you is you get to exclude
S2: it and not add it to your taxable income from
S2: the year. You do not, though, get to also take
S2: it as a charitable deduction. And so that's probably what
S2: your church is referring to is they're just. And this
S2: is ultimately not between you and them. It's between you
S2: and the IRS. So they really don't have a say
S2: in this. But what they're probably trying to do is
S2: just make sure you're clear that as that money comes out,
S2: you already got the benefit by it not being added
S2: to your taxable income for the year, which hopefully allowed
S2: you to give more because you didn't have to worry
S2: about the tax liability, but you do not. Then to
S2: get get to add on top of that, a a
S2: charitable deduction against income, federal income tax. Does that make sense?
S10: Uh, yes it does. And I appreciate you taking your time.
S10: And I do appreciate your show and the Lord bless you.
S2: Okay. God bless you, John. Uh, I love the idea
S2: of the qualified charitable distribution. I think you were right
S2: on to do it. And again, it's the only way
S2: to get that money out of that IRA and not
S2: have any tax liability associated with it. But yeah, at
S2: that point, though, it is not it does not qualify
S2: as a charitable Contribution for a further tax deduction. We
S2: appreciate your call. Call any time. We'll go out to Texas. Virginia.
S2: How can I help?
S11: Hi. Thank you so much for taking my call. You're
S11: such a wonderful blessing. Thank you. Um, I have a
S11: student loan that I did not pay on for a while,
S11: so it has has some unpaid interest and, but I have, um,
S11: now been making payments and I've been putting squirreling money
S11: away and I'm able to pay off that interest, the
S11: outstanding interest so that because I need to do that
S11: right before I can, it'll even my payments will even
S11: touch the principal. Is that correct?
S2: Yeah. I mean, so, you know, if you have the
S2: opportunity to pay down accrued interest, that can definitely be
S2: a wise move because it reduces the amount of interest
S2: that may continue to accumulate. Um, I would say, you know,
S2: that's a generally a good idea. Are these federal or
S2: private student loans?
S11: Federal.
S2: Okay. All right. Um, yeah. And so is your plan
S2: to pay off the accumulated interest and then just keep
S2: paying on them, you know, monthly or what do you
S2: think in moving forward?
S11: Yes. Yes. So now that um the deferments have been
S11: been lifted, the I mean I was going to make
S11: payments anyway but definitely start making payments. Um continue to
S11: make payments monthly. But I noticed when I called them also,
S11: um they had said that, you know, if I just
S11: make say $200 a month, it's not really going to
S11: because I have so much interest accrued, it's not even
S11: going to bring down any of the principal. I'm really
S11: just paying off the interest because that's where when I
S11: send in a payment, they first send it to the interest.
S2: Yes, yes. And that's why you want, uh, that's why
S2: you want to do this. And so I think going
S2: ahead and paying off that accrued interest. Well done on
S2: putting that money aside and having the ability to do that.
S2: And now I think from here, you know, once you
S2: get that down, obviously if you can send a little
S2: extra every month, great. But at the very least, let's
S2: get that accrued interest from the deferment out of the
S2: way and then get you, you know, paying on a
S2: monthly basis. And again, if we can add something to it,
S2: that would be excellent.
S11: Okay. And then one other quick question. Someone had told
S11: me that they, what they did for with their child
S11: had a student loan is they refinanced it through a,
S11: through SoFi as a personal loan. Um, and they were
S11: telling me that I should do that, but I don't,
S11: I feel safer to have it as a federal, I
S11: don't know, just kind of feel like it's just to
S11: keep it as a federal loan there at six and 7%,
S11: because I have two different loans that have been federal
S11: loans that are consolidated. So one's at 6% and 6%
S11: wins at seven. And then when I went on to
S11: the sofa just to check it out, they don't even
S11: let you see any sort of percentages. You have to
S11: give them all your information, date of birth and all that.
S11: And I didn't want to do that.
S2: So yeah, well, here's the thing. I'd be very cautious
S2: about that because, you know, you're going to give up
S2: those valuable federal benefits if you need them down the road,
S2: like income driven repayment for deferment, forbearance. You've already taken
S2: advantage of it. If you needed it again in the future,
S2: you'd lose that. And you're likely not going to get
S2: a meaningfully lower interest rate on a personal loan without
S2: any kind of collateral that would justify it. So I
S2: would just stick tight with what you've got on the
S2: federal side.
S11: Thank you. Get the confirmation. God bless you, Rob.
S2: All right. Thank you, Virginia, I appreciate it. Hey, faith
S2: in Finance Live is a Ministry of Faith Fi and
S2: Moody Radio. Thanks to my team today. And we'll see
S2: you tomorrow. Come back and join us then. Bye bye.