1 00:00:08,800 --> 00:00:12,240 S1: Martin Luther once said, there is no more lovely, friendly 2 00:00:12,240 --> 00:00:16,400 S1: and charming relationship, communion or company that a good marriage. 3 00:00:16,760 --> 00:00:19,840 S1: I am Rob West. A strong marriage is a blessing, 4 00:00:19,840 --> 00:00:24,319 S1: but it also takes intentional effort, especially in a blended family. Today, 5 00:00:24,320 --> 00:00:26,880 S1: I'll be joined by Ron Deal and Greg Pettis to 6 00:00:26,920 --> 00:00:30,720 S1: discuss a valuable resource for second marriages. And then I'll 7 00:00:30,720 --> 00:00:37,440 S1: take your calls at 800 525 7000. That's 800 525 7000. 8 00:00:37,680 --> 00:00:41,160 S1: This is faith and finance. Live biblical wisdom for your 9 00:00:41,159 --> 00:00:49,120 S1: financial journey. Well, our guests are Ron Deal and Greg Pettis, 10 00:00:49,120 --> 00:00:54,040 S1: authors of the Smart Step Family Guide to Financial Planning. Ron, Greg, 11 00:00:54,080 --> 00:00:55,680 S1: great to have you back with us today. 12 00:00:56,120 --> 00:00:58,200 S2: Oh, man, it's so exciting to be here. Thanks for 13 00:00:58,200 --> 00:00:58,800 S2: having us. 14 00:00:59,380 --> 00:01:00,300 S3: Good to be on. 15 00:01:01,020 --> 00:01:04,740 S1: Well, guys, your book, The Smart Stepfamily, is loaded with 16 00:01:04,740 --> 00:01:09,140 S1: practical financial advice for blended families. I reference it on 17 00:01:09,140 --> 00:01:12,820 S1: this podcast often, but in particular, I want to focus 18 00:01:12,819 --> 00:01:15,539 S1: on one area where you've come up with a way 19 00:01:15,540 --> 00:01:19,340 S1: for couples in that situation as a blended family to 20 00:01:19,380 --> 00:01:23,180 S1: promote peace and unity in their marriage. It's called the 21 00:01:23,180 --> 00:01:27,100 S1: togetherness agreement, and I'd love for you to start there. 22 00:01:27,140 --> 00:01:29,660 S1: What is it and why is it so important? 23 00:01:30,060 --> 00:01:33,980 S2: Well, let's just start with the context for what we're 24 00:01:33,980 --> 00:01:38,380 S2: talking about. Couples who form a relationship when they've had 25 00:01:38,380 --> 00:01:40,540 S2: a previous life, if you will. Maybe one of them 26 00:01:40,540 --> 00:01:44,060 S2: has brought children to the relationship. They are often in 27 00:01:44,100 --> 00:01:47,340 S2: middle age or later in life. They have a history 28 00:01:47,340 --> 00:01:49,940 S2: of financial history. They have debt. They have expense. They 29 00:01:49,940 --> 00:01:53,700 S2: have all kinds of investments that perhaps they've been working 30 00:01:53,700 --> 00:01:57,700 S2: on for years. And now we're merging. But we're not 31 00:01:57,700 --> 00:02:02,559 S2: just merging money. We're merging relationship. We're merging children, we're 32 00:02:02,560 --> 00:02:06,720 S2: merging parenting styles. We're merging some sort of lost death 33 00:02:06,720 --> 00:02:10,880 S2: or divorce has preceded this new marriage relationship. All of 34 00:02:10,919 --> 00:02:15,679 S2: that rolls into any conversation about money. I just don't 35 00:02:15,680 --> 00:02:20,160 S2: think people realize how complicated that is. It's one thing 36 00:02:20,200 --> 00:02:22,280 S2: to say, oh, you know, so you've got, what, three 37 00:02:22,280 --> 00:02:25,040 S2: bank accounts and I've got two bank accounts. We've got 38 00:02:25,040 --> 00:02:27,120 S2: all these investments. Let's just put all the money together. 39 00:02:27,160 --> 00:02:29,560 S2: Well no no no no. Immediately it starts to be 40 00:02:29,560 --> 00:02:33,240 S2: about oh, trust. And it's about well I couldn't trust 41 00:02:33,240 --> 00:02:35,440 S2: the former spouse because they took me for every dime 42 00:02:35,440 --> 00:02:37,600 S2: I had. So how am I going to make sure 43 00:02:37,600 --> 00:02:41,240 S2: that doesn't happen again? It's about provision for me and 44 00:02:41,240 --> 00:02:43,880 S2: for my children. I've got an aging parent. How do 45 00:02:43,880 --> 00:02:46,600 S2: I care for them? It is about all of those 46 00:02:46,600 --> 00:02:50,119 S2: dynamics rolled up into a conversation about how many bank 47 00:02:50,160 --> 00:02:53,280 S2: accounts you have. And so when we sat down, Greg 48 00:02:53,280 --> 00:02:56,079 S2: and I and our other co-author, David, sat down and said, 49 00:02:56,080 --> 00:03:00,419 S2: we want to write a book about financial planning in 50 00:03:00,419 --> 00:03:04,580 S2: blended family situations. We have to take into consideration all 51 00:03:04,620 --> 00:03:07,740 S2: of these dynamics. So we haven't just created something in 52 00:03:07,740 --> 00:03:09,740 S2: the togetherness agreement. Greg will tell you a little about that. 53 00:03:09,780 --> 00:03:12,700 S2: It's just a second. It's not just about money. It 54 00:03:12,700 --> 00:03:16,859 S2: is about providing and loving well and caring and creating 55 00:03:16,900 --> 00:03:19,940 S2: trust in your relationship that goes the distance. 56 00:03:20,340 --> 00:03:20,660 S1: Mhm. 57 00:03:20,860 --> 00:03:25,139 S3: Exactly. It's about clarity on so many of these, like 58 00:03:25,139 --> 00:03:28,899 S3: you said, emotionally charged issues. When we said, I do 59 00:03:28,940 --> 00:03:32,139 S3: his kids, her kids, their kids, what did we mean? 60 00:03:32,540 --> 00:03:35,980 S3: What were the details around our vision for an optimistic 61 00:03:35,980 --> 00:03:39,380 S3: future together? And so we find that the togetherness agreement 62 00:03:39,380 --> 00:03:43,500 S3: provides clarity to these emotionally charged issues. And in essence, 63 00:03:43,500 --> 00:03:46,860 S3: as one couple said, we're writing the rules for our 64 00:03:46,860 --> 00:03:49,700 S3: marriage with love and respect for both parties. 65 00:03:50,340 --> 00:03:50,980 S2: Mhm. 66 00:03:51,900 --> 00:03:54,660 S1: And that's what's so key here, is that we want 67 00:03:54,660 --> 00:03:57,640 S1: to let love and respect lead. And yet there are 68 00:03:57,640 --> 00:04:02,200 S1: very real practical issues that we have to navigate. And Ron, 69 00:04:02,200 --> 00:04:05,320 S1: to your point, money issues are hard issues, right? So 70 00:04:05,360 --> 00:04:11,120 S1: money is symptomatic of a deeper underlying spiritual values based 71 00:04:11,120 --> 00:04:17,440 S1: conversation that does surface some really tough and yet exciting 72 00:04:17,440 --> 00:04:21,400 S1: conversations if we'll lean into them. The question is we 73 00:04:21,400 --> 00:04:23,880 S1: need a roadmap or how do we get a roadmap 74 00:04:23,880 --> 00:04:25,080 S1: to navigate that? 75 00:04:25,120 --> 00:04:27,440 S2: You know, a lot of things about blended families, including 76 00:04:27,440 --> 00:04:30,200 S2: marriage and navigating money, have to do with the pain 77 00:04:30,240 --> 00:04:34,480 S2: of the past. And pain creates fear, right? My last 78 00:04:34,480 --> 00:04:36,320 S2: spouse really hurt me. I don't want to have that 79 00:04:36,320 --> 00:04:39,680 S2: happen again. So I'm going to be guarded with you. Well, 80 00:04:39,720 --> 00:04:41,360 S2: you know, fear is not a good way to make 81 00:04:41,360 --> 00:04:44,839 S2: decisions about anything. Uh, spiritually that doesn't work. You know, 82 00:04:44,839 --> 00:04:46,400 S2: we don't want to approach God that way. We don't 83 00:04:46,400 --> 00:04:49,560 S2: approach our, the people we love that way. Uh, and 84 00:04:49,560 --> 00:04:52,160 S2: so we try to help people create this together as 85 00:04:52,160 --> 00:04:55,460 S2: an agreement. So it eliminates fear so that it is 86 00:04:55,460 --> 00:04:58,140 S2: no longer a barrier to our oneness. 87 00:04:58,420 --> 00:05:02,020 S1: Mhm. Well, I'm looking forward to continuing to unpack this. 88 00:05:02,020 --> 00:05:04,380 S1: What does it actually look like? Is it a binding 89 00:05:04,380 --> 00:05:07,859 S1: legal agreement? What goes into it? What about some of 90 00:05:07,860 --> 00:05:11,180 S1: those touchy situations that will come up? What about a business? 91 00:05:11,180 --> 00:05:13,820 S1: We'll deal with this and much more. Ron Deal and 92 00:05:13,820 --> 00:05:16,980 S1: Greg Pettis with us today, authors of the Smart Stepfamily 93 00:05:16,980 --> 00:05:22,060 S1: Guide to Financial Planning. Just around the corner, 800 525 7000. 94 00:05:22,100 --> 00:05:35,659 S1: We'll be right back. Thanks for joining us today on 95 00:05:35,660 --> 00:05:38,659 S1: Faith and Finance Live. This is where we apply God's 96 00:05:38,660 --> 00:05:42,500 S1: wisdom to your financial decisions and choices. Joining me today 97 00:05:42,500 --> 00:05:45,580 S1: are good friends Ron Deal and Greg Pettis, authors of 98 00:05:45,580 --> 00:05:50,060 S1: the Smart Stepfamily Guide to Financial Planning. How do you 99 00:05:50,100 --> 00:05:54,390 S1: navigate financial decisions with a blended family. And how do 100 00:05:54,390 --> 00:05:59,150 S1: you even memorialize those decisions once you have those conversations? 101 00:05:59,150 --> 00:06:00,830 S1: And how do you do it in a way that's 102 00:06:00,830 --> 00:06:04,070 S1: respectful and loving? Well, today we're talking about a great 103 00:06:04,070 --> 00:06:07,950 S1: tool that Ron and Greg refer to in their book 104 00:06:07,950 --> 00:06:12,470 S1: called A Togetherness Agreement, where it provides a roadmap for 105 00:06:12,470 --> 00:06:17,310 S1: having these conversations and then memorializing them. And Greg, you 106 00:06:17,310 --> 00:06:21,750 S1: actually advise folks to make this agreement, the togetherness agreement, 107 00:06:21,790 --> 00:06:26,349 S1: a binding legal contract. How will that help? And, well, 108 00:06:26,350 --> 00:06:29,070 S1: the marriage itself is a binding legal contract. 109 00:06:30,029 --> 00:06:32,750 S3: Yes, it's a great question and we get it a lot. 110 00:06:33,350 --> 00:06:37,390 S3: First of all, it provides specifics that are not clearly 111 00:06:37,390 --> 00:06:42,150 S3: outlined in that general marriage binding contract. For example, I mean, 112 00:06:42,190 --> 00:06:45,310 S3: as simple as how many accounts should we have? Should 113 00:06:45,310 --> 00:06:47,880 S3: we combine everything together all at once or have 2 114 00:06:47,880 --> 00:06:52,930 S3: or 3 accounts? Who gets the business? What does fair 115 00:06:52,970 --> 00:06:57,250 S3: mean is fair. Always equal. What are we going to 116 00:06:57,250 --> 00:07:01,210 S3: do for our special needs child? What about the rights 117 00:07:01,210 --> 00:07:07,849 S3: and roles of, well, grandchildren, step grandchildren, grandparents, step grandparents? 118 00:07:07,850 --> 00:07:12,970 S3: Any party who has a loving interest in our future 119 00:07:12,970 --> 00:07:17,250 S3: can be a part of the togetherness agreement. It'll also 120 00:07:17,250 --> 00:07:20,890 S3: help the team, your whole financial team, the financial advisor, 121 00:07:20,890 --> 00:07:24,410 S3: the attorney, the CPA, all your agents. They need to 122 00:07:24,410 --> 00:07:29,210 S3: have an overarching document that explains why did we decide 123 00:07:29,210 --> 00:07:32,490 S3: to do this? Why? What were we thinking when we 124 00:07:32,490 --> 00:07:33,850 S3: did that and so forth? 125 00:07:34,410 --> 00:07:37,290 S2: You know, as Greg was talking, I was thinking, um, yes, 126 00:07:37,290 --> 00:07:41,850 S2: marriage is a legal binding relationship. And yet do you 127 00:07:41,850 --> 00:07:45,890 S2: want to leave the future to the legal system of 128 00:07:45,930 --> 00:07:48,490 S2: your assets and your money? You know, we've talked before 129 00:07:48,490 --> 00:07:52,710 S2: about if you are married to somebody and you spend 130 00:07:52,710 --> 00:07:56,470 S2: 25 years together and your spouse dies and leave you 131 00:07:56,470 --> 00:08:00,150 S2: all the assets, and then you marry again in mid-life, 132 00:08:00,470 --> 00:08:05,910 S2: but don't make specific, um, documents dictating where you want 133 00:08:05,910 --> 00:08:08,630 S2: your money to go after you pass away. If you 134 00:08:08,630 --> 00:08:13,390 S2: pass away. Yes. And your second spouse marries somebody else 135 00:08:14,150 --> 00:08:16,350 S2: and then they die, all of a sudden, all your 136 00:08:16,350 --> 00:08:19,550 S2: money goes to that person's kids, somebody you've never met 137 00:08:19,830 --> 00:08:24,230 S2: them and their children instead of your children. Unless. That's right, 138 00:08:24,430 --> 00:08:27,310 S2: you know. That's called inheritance drift, right? It just sort 139 00:08:27,350 --> 00:08:30,430 S2: of moves away from you. And nobody intended that. It 140 00:08:30,430 --> 00:08:34,830 S2: just sort of happened. Unless you've made provision for where 141 00:08:34,830 --> 00:08:37,270 S2: you want your money to go after your death. And 142 00:08:37,270 --> 00:08:39,550 S2: in this case, and in that case, I should say 143 00:08:39,550 --> 00:08:42,310 S2: your children are provided for. You're provided for your aging 144 00:08:42,309 --> 00:08:45,990 S2: brother or sister, parent, whatever. Whatever you're invested in goes 145 00:08:45,990 --> 00:08:48,610 S2: where you want it to go. You don't want to 146 00:08:48,610 --> 00:08:50,570 S2: just leave it to the legal system. You want to 147 00:08:50,570 --> 00:08:52,929 S2: tell that system what to do with the things that 148 00:08:52,929 --> 00:08:53,689 S2: you cherish. 149 00:08:53,970 --> 00:08:57,490 S1: Mhm. That's so important and probably something that most folks 150 00:08:57,490 --> 00:09:01,330 S1: haven't considered. Well, perhaps guys, a story, an example would 151 00:09:01,330 --> 00:09:05,450 S1: help to illustrate the power of this tool. The togetherness agreement. 152 00:09:05,450 --> 00:09:07,610 S1: In the book, you include a story about a couple, 153 00:09:07,850 --> 00:09:11,010 S1: Anthony and Jenny. What was their situation and how did 154 00:09:11,010 --> 00:09:12,130 S1: this tool help them? 155 00:09:12,530 --> 00:09:14,250 S2: Greg's going to tell you in a minute, a little 156 00:09:14,290 --> 00:09:16,050 S2: bit about some of the specifics of what they came 157 00:09:16,050 --> 00:09:17,850 S2: up with, but let me just set the stage. This 158 00:09:17,850 --> 00:09:20,730 S2: goes back to how we started our conversation. The complexity 159 00:09:20,730 --> 00:09:24,170 S2: that blended families often face. So Anthony has children. He 160 00:09:24,170 --> 00:09:27,410 S2: also owns a company that he's been invested in most 161 00:09:27,410 --> 00:09:30,090 S2: of his life that he's been building. And he meets 162 00:09:30,130 --> 00:09:35,010 S2: Jenny and she's a CPA. She's pretty successful. She's 36 163 00:09:35,010 --> 00:09:37,730 S2: years of age. She has children of her own and 164 00:09:37,730 --> 00:09:40,810 S2: she has an aging mother. Okay. So on the surface, 165 00:09:40,850 --> 00:09:43,890 S2: when couples say things like, you know, I love you, 166 00:09:43,890 --> 00:09:46,770 S2: you love me, we're going to be a happy family. And, 167 00:09:47,030 --> 00:09:49,630 S2: and I assume that means you'll just care for my 168 00:09:49,630 --> 00:09:51,829 S2: kids if something terrible happens to me. And I'll take 169 00:09:51,830 --> 00:09:53,790 S2: care of your mother if something terrible happens to you. 170 00:09:54,110 --> 00:09:58,470 S2: And the best of intentions don't necessarily work out that way. Um, 171 00:09:58,830 --> 00:10:01,350 S2: just because you love one another, you really need to 172 00:10:01,390 --> 00:10:03,030 S2: put it in writing. You really need to think it through. 173 00:10:03,070 --> 00:10:04,870 S2: You really need to talk it through. Because it could 174 00:10:04,870 --> 00:10:08,990 S2: be that in the course of doing their togetherness agreement, Anthony, 175 00:10:09,309 --> 00:10:13,270 S2: he's got an assumption that his oldest son gets his company. 176 00:10:13,510 --> 00:10:15,750 S2: He's shown an interest in it. He's been invested in it. 177 00:10:15,790 --> 00:10:19,109 S2: He's interned there. He went to college with the intent 178 00:10:19,110 --> 00:10:20,990 S2: of learning how to run a business. And he's going 179 00:10:21,030 --> 00:10:22,990 S2: to come back and work with dad. And then if 180 00:10:22,990 --> 00:10:25,950 S2: dad ever retires, that's been in the works for years 181 00:10:25,950 --> 00:10:29,469 S2: before Jenny ever showed up. Yes, but if he doesn't 182 00:10:29,470 --> 00:10:33,310 S2: express that clearly and openly, Jenny may have some assumptions 183 00:10:33,309 --> 00:10:37,070 S2: of her own about what happens if he were to 184 00:10:37,150 --> 00:10:39,590 S2: pass away, what happens to the company. Maybe she's got 185 00:10:39,590 --> 00:10:43,390 S2: kids that are interested in that business. Okay, so who's 186 00:10:43,390 --> 00:10:46,650 S2: going to be in charge with that next generation of leadership. See, 187 00:10:46,650 --> 00:10:49,410 S2: that's the kind of that's the sticky business getting down 188 00:10:49,410 --> 00:10:53,569 S2: into the weeds. Togetherness agreement helps you get proactive so 189 00:10:53,570 --> 00:10:58,010 S2: that you have a dialogue and make those decisions before 190 00:10:58,010 --> 00:11:00,850 S2: you ever have to deal with it. Greg, remind us 191 00:11:00,850 --> 00:11:02,730 S2: what Anthony and Jenny, some of the things that they 192 00:11:02,730 --> 00:11:03,290 S2: worked out. 193 00:11:04,010 --> 00:11:08,410 S3: Yeah. So Anthony was 44 year old, very successful construction 194 00:11:08,410 --> 00:11:10,850 S3: company owner. And as you said, Ron, he had two 195 00:11:10,890 --> 00:11:13,090 S3: boys that he had promised were going to get the 196 00:11:13,090 --> 00:11:17,810 S3: company one day. Uh, unbeknownst to Jenny, however, during their 197 00:11:17,809 --> 00:11:20,650 S3: courtship and dating, he didn't disclose he had a gambling 198 00:11:20,770 --> 00:11:24,210 S3: problem with some debt. Uh, had a low credit score, 199 00:11:24,770 --> 00:11:29,890 S3: had a very controlling ex-wife, etcetera. Now, on the other side, 200 00:11:30,170 --> 00:11:34,930 S3: Anthony didn't know that Jenny had really spent a lot 201 00:11:34,929 --> 00:11:39,210 S3: of her hard earned money taking care of her mother, 202 00:11:39,210 --> 00:11:41,370 S3: who was aging, as you mentioned. And she had promised 203 00:11:41,370 --> 00:11:43,450 S3: her that. Hey, mom, one day you can come live 204 00:11:43,450 --> 00:11:46,750 S3: with me. You know, I'll do whatever I can do 205 00:11:46,950 --> 00:11:51,429 S3: to help you get through this. And so, you know, 206 00:11:51,470 --> 00:11:54,750 S3: during the courtship, these things just don't come out so 207 00:11:54,750 --> 00:11:57,630 S3: often is the case. And so the first thing that 208 00:11:57,630 --> 00:12:02,670 S3: the togetherness agreement did is it created an arena for disclosure, 209 00:12:03,190 --> 00:12:11,630 S3: an atmosphere for full transparency, which then created a mutual respect. MM. Uh, 210 00:12:11,710 --> 00:12:17,030 S3: Jenny found out about, you know, Anthony's gambling problem, felt compassion, 211 00:12:17,030 --> 00:12:21,510 S3: and they were entering him into a counseling session to 212 00:12:21,550 --> 00:12:24,030 S3: get his credit score up. Meanwhile, they were going to 213 00:12:24,110 --> 00:12:27,870 S3: they agreed to have one joint budget account, but to 214 00:12:27,910 --> 00:12:31,270 S3: keep two individual accounts until Anthony could raise his scores 215 00:12:31,309 --> 00:12:35,510 S3: and get over this gambling problem. They also agreed that 216 00:12:35,550 --> 00:12:40,910 S3: though Jenny and her daughter would not receive the company. Yeah, 217 00:12:40,950 --> 00:12:44,929 S3: working with an attorney, they would create a trust and 218 00:12:44,929 --> 00:12:47,689 S3: place some life insurance in the trust for Jenny and 219 00:12:47,690 --> 00:12:51,410 S3: her daughter. They also worked with their agent to create 220 00:12:51,410 --> 00:12:55,970 S3: long term care solutions for the mother and to provide 221 00:12:55,970 --> 00:12:59,050 S3: clarity about their future, which really relieved both of them 222 00:12:59,050 --> 00:13:02,250 S3: of a lot of stress and reaffirmed their commitments to 223 00:13:02,290 --> 00:13:06,130 S3: each other in a way that they really couldn't go 224 00:13:06,170 --> 00:13:09,730 S3: that deep without a togetherness agreement. Now, theirs was a 225 00:13:09,730 --> 00:13:12,330 S3: legal document drafted by their attorney, but I wanted to 226 00:13:12,330 --> 00:13:16,890 S3: make this point clear. Just having the discussion, just sitting 227 00:13:16,890 --> 00:13:19,209 S3: down and even just jotting some things on a legal 228 00:13:19,210 --> 00:13:22,890 S3: pad or the back of a napkin will create that 229 00:13:22,890 --> 00:13:28,730 S3: first step of transparency in disclosure that will then help 230 00:13:28,970 --> 00:13:31,410 S3: navigate these these emotional issues. 231 00:13:31,850 --> 00:13:35,850 S1: Mhm. That's so helpful. Boy, we are about out of time. Guys. 232 00:13:35,850 --> 00:13:37,410 S1: We're going to have to have you back because there 233 00:13:37,450 --> 00:13:40,610 S1: is so much more I want to talk about here. Ron, quickly. 234 00:13:40,610 --> 00:13:41,950 S1: When should this be done? 235 00:13:42,429 --> 00:13:46,670 S2: You know, ideally today. So if you're dating somebody, now's 236 00:13:46,670 --> 00:13:49,590 S2: the time to start having that conversation. And if you're 237 00:13:49,590 --> 00:13:52,030 S2: already married and you go, man, we've never really talked 238 00:13:52,030 --> 00:13:53,950 S2: about this. I have a lot of assumptions. We've never 239 00:13:53,950 --> 00:13:58,189 S2: checked in with one another. Okay, then start today. And 240 00:13:58,190 --> 00:14:00,829 S2: the books designed to help you get a plan and 241 00:14:00,830 --> 00:14:02,189 S2: start moving that direction. 242 00:14:02,470 --> 00:14:05,310 S1: I love it. It's an absolutely essential tool for a 243 00:14:05,309 --> 00:14:07,430 S1: blended family. Gentlemen, thanks for stopping by. 244 00:14:07,670 --> 00:14:08,270 S2: Thanks for having. 245 00:14:08,270 --> 00:14:09,030 S4: Us. Thank you. 246 00:14:09,309 --> 00:14:11,790 S1: Pick up a copy of the Smart Stepfamily Guide to 247 00:14:11,830 --> 00:14:15,670 S1: Financial Planning wherever you buy books. All right. Your calls 248 00:14:15,670 --> 00:14:20,510 S1: are next. The number 800 525 7000. I'm Rob West, 249 00:14:20,510 --> 00:14:23,350 S1: and this is Faith and Finance Live. We'll be right back. 250 00:14:35,070 --> 00:14:36,270 S1: The opinions offered during. 251 00:14:36,270 --> 00:14:39,890 S5: This program represent the personal or professional opinions of the 252 00:14:39,890 --> 00:14:44,650 S5: participants given for informational purposes only. Any information provided is 253 00:14:44,650 --> 00:14:48,370 S5: not intended to replace advice from a financial, medical, legal 254 00:14:48,370 --> 00:14:52,250 S5: or other professional who understands your specific situation. 255 00:14:59,530 --> 00:15:01,250 S1: Great to have you with us today on Faith and 256 00:15:01,250 --> 00:15:04,090 S1: Finance Live. Well, we're going to begin taking your calls 257 00:15:04,090 --> 00:15:06,610 S1: and questions here in just a moment. So if you've 258 00:15:06,610 --> 00:15:08,570 S1: got something on your mind today, you want to chat 259 00:15:08,570 --> 00:15:13,130 S1: about it, we'd love to hear from you. 800 525 7000. Again, 260 00:15:13,130 --> 00:15:19,010 S1: that number 800 525 7000. Any financial questions in play today? 261 00:15:19,050 --> 00:15:21,610 S1: Perhaps you're looking to get that credit score up or 262 00:15:21,730 --> 00:15:25,330 S1: pay off some debt. Maybe you're wondering about investing, especially 263 00:15:25,330 --> 00:15:29,450 S1: given the volatility in the markets. Or maybe for you 264 00:15:29,450 --> 00:15:32,370 S1: it's staying on budget or you're just finding yourself in 265 00:15:32,370 --> 00:15:36,690 S1: a really desperate situation. Maybe you're struggling today, financially speaking, 266 00:15:36,690 --> 00:15:39,270 S1: any of those topics and more. Again, we have some 267 00:15:39,270 --> 00:15:44,110 S1: lines open so you can call 800 525 7000. Speaking 268 00:15:44,110 --> 00:15:49,310 S1: of market volatility, uh, the stock market, uh, tumbling again 269 00:15:49,310 --> 00:15:53,550 S1: today as losses mount. Uh, the impact of the Iran 270 00:15:53,590 --> 00:15:57,310 S1: war is showing up among other places in the markets. 271 00:15:57,350 --> 00:16:00,109 S1: The Dow Jones off, uh, a little less than 500 272 00:16:00,110 --> 00:16:05,550 S1: points today, about 1%. The S&P 500 down 1.5%. The 273 00:16:05,550 --> 00:16:09,830 S1: Nasdaq off a full two percentage points today. That says 274 00:16:09,830 --> 00:16:15,950 S1: oil remains elevated. And, uh, the president saying today, although 275 00:16:15,950 --> 00:16:22,590 S1: the US could end Iran military operations now it will continue. Uh, 276 00:16:22,590 --> 00:16:27,190 S1: and that means, uh, perhaps a more prolonged conflict that 277 00:16:27,190 --> 00:16:30,670 S1: of course, weighing on the markets. Could this, uh, tip 278 00:16:30,670 --> 00:16:35,630 S1: the global economies of the world into recession? It's certainly possible, 279 00:16:35,630 --> 00:16:39,920 S1: especially as oil remains elevated. We'll watch that closely. Jerry 280 00:16:39,920 --> 00:16:42,360 S1: Boyer will be by in the final segment. We'll get 281 00:16:42,400 --> 00:16:45,160 S1: Jerry's take on all of that. All right. Let's head 282 00:16:45,160 --> 00:16:47,520 S1: to the phones. We're ready for your calls. We've got 283 00:16:47,520 --> 00:16:49,360 S1: lines filling up, but we do have room for you 284 00:16:49,360 --> 00:16:53,200 S1: at the moment. 805. Two five, 7000. We'll begin in 285 00:16:53,200 --> 00:16:55,000 S1: Saint Louis today. Richard. Go ahead, sir. 286 00:16:56,320 --> 00:17:01,640 S6: Uh, good afternoon, sir, and thank you for your ministry. Um, 287 00:17:02,200 --> 00:17:07,320 S6: a question, uh, I've seen ads on television, uh, up front. 288 00:17:07,320 --> 00:17:11,760 S6: First question, as on television about why refi. I think 289 00:17:11,800 --> 00:17:14,760 S6: it has something to do with, uh, some kind of 290 00:17:14,800 --> 00:17:19,479 S6: refinancing that they pay like over 10% over five years. 291 00:17:19,520 --> 00:17:21,480 S6: Do you do you know anything about that or can 292 00:17:21,520 --> 00:17:22,200 S6: you comment? 293 00:17:22,960 --> 00:17:25,639 S1: Give me a little more context. Where did you hear 294 00:17:25,640 --> 00:17:28,280 S1: or see this? And what was the specifics? 295 00:17:28,400 --> 00:17:35,660 S6: Uh, uh, I, I saw it on television. It's Larry Elder. Uh, 296 00:17:35,780 --> 00:17:39,740 S6: does the commercial. It's why refi. But if you don't know, 297 00:17:39,740 --> 00:17:41,220 S6: we can go on to something else. 298 00:17:41,940 --> 00:17:46,100 S1: Yeah. I'm not, uh, you know, totally familiar with it. Uh, 299 00:17:46,100 --> 00:17:49,540 S1: Larry Elder does ring a bell. I think that's perhaps 300 00:17:49,540 --> 00:17:54,700 S1: reverse mortgages, uh, that he is talking about there, which is, 301 00:17:54,740 --> 00:17:58,060 S1: of course, for somebody 62 and older. So instead of 302 00:17:58,060 --> 00:18:01,580 S1: making payments to the bank like a normal mortgage, the, 303 00:18:01,619 --> 00:18:04,460 S1: you know, those payments are optional on a reverse mortgage. 304 00:18:04,460 --> 00:18:07,820 S1: So I think what, what they're getting at with that advertisement, 305 00:18:07,820 --> 00:18:09,859 S1: and I'm not familiar with the company behind it, so 306 00:18:09,859 --> 00:18:11,700 S1: I wouldn't want to say whether it's a a good 307 00:18:11,700 --> 00:18:14,500 S1: thing or not. But in terms of the reverse mortgage 308 00:18:14,500 --> 00:18:17,700 S1: itself for those. And we talked with Harlan Akil about 309 00:18:17,700 --> 00:18:20,780 S1: this recently, for those in the fourth quarter of life, 310 00:18:20,780 --> 00:18:23,740 S1: perhaps in a home that was not built for an 311 00:18:23,740 --> 00:18:27,899 S1: aging adult, maybe it's multi-level or, you know, just other 312 00:18:28,060 --> 00:18:31,419 S1: features that are needed. Um, you know, a lot of 313 00:18:31,420 --> 00:18:35,320 S1: folks are quote unquote, stuck in those homes because either 314 00:18:35,440 --> 00:18:37,680 S1: a they've got a very low interest rate mortgage and 315 00:18:37,680 --> 00:18:40,840 S1: couldn't afford the higher interest rate, or B the home 316 00:18:40,840 --> 00:18:44,320 S1: they need in a more desirable location, maybe near family, 317 00:18:44,320 --> 00:18:47,080 S1: maybe newer with some of the other features or more 318 00:18:47,119 --> 00:18:49,159 S1: is more expensive and they just wouldn't be able to 319 00:18:49,160 --> 00:18:52,919 S1: afford that monthly payment. A reverse mortgage would allow you 320 00:18:52,920 --> 00:18:55,320 S1: to be able to buy a home like that and 321 00:18:55,320 --> 00:18:58,280 S1: not have a mortgage payment, so it can be a 322 00:18:58,280 --> 00:19:01,800 S1: very effective financial planning tool. You know, in that season 323 00:19:01,840 --> 00:19:02,400 S1: of life. 324 00:19:03,440 --> 00:19:07,760 S6: Yeah, I was more interested in the investment portion. Okay, 325 00:19:07,800 --> 00:19:09,960 S6: let's see if we can move on real quick. I'm 326 00:19:09,960 --> 00:19:14,760 S6: 78 years old. I'm trying my very best to avoid 327 00:19:14,800 --> 00:19:19,720 S6: nursing facilities or long term care. I can invest about 328 00:19:19,720 --> 00:19:24,639 S6: $3,000 a month. Uh, how could, uh, what would you 329 00:19:24,640 --> 00:19:27,520 S6: recommend as a safe? You know. 330 00:19:28,200 --> 00:19:31,640 S1: Yes. Well, the first thing I would do is, you know, 331 00:19:31,680 --> 00:19:37,980 S1: really it's about stability, accessibility, access to the funds, and 332 00:19:37,980 --> 00:19:40,859 S1: then peace of mind, of course. First is I think 333 00:19:40,859 --> 00:19:45,020 S1: I would prioritize safety and liquidity. So you want money 334 00:19:45,020 --> 00:19:49,100 S1: available if your health or housing needs change, that means 335 00:19:49,180 --> 00:19:53,420 S1: 6 to 12 months worth of expenses in cash or 336 00:19:53,420 --> 00:19:56,220 S1: high yield savings. Certainly high yield savings. If you can 337 00:19:56,220 --> 00:20:00,380 S1: get some interest, you should. You could also use some 338 00:20:00,380 --> 00:20:04,379 S1: short term bonds or CDs for additional stability, but I 339 00:20:04,380 --> 00:20:08,179 S1: would have that full six months worth of expenses safe, 340 00:20:08,180 --> 00:20:11,260 S1: liquid and earning interest. That's going to mean high yield 341 00:20:11,260 --> 00:20:14,940 S1: savings or money market. I'd avoid anything, you know, volatile 342 00:20:14,940 --> 00:20:19,580 S1: or complex. Beyond that, you want to create reliable income streams. 343 00:20:19,580 --> 00:20:21,740 S1: So since your goal is to stay in your home, 344 00:20:21,900 --> 00:20:25,500 S1: predictable income matters more than growth. So you may want 345 00:20:25,500 --> 00:20:28,100 S1: to look at what's called a bond ladder or a 346 00:20:28,140 --> 00:20:31,880 S1: CD ladder for steady income where you, you know, you 347 00:20:31,880 --> 00:20:34,000 S1: take this money and as you build it up in, 348 00:20:34,000 --> 00:20:37,359 S1: in savings, then when you get to 25 or 50,000, 349 00:20:37,600 --> 00:20:40,480 S1: maybe you buy a CD at that point and you 350 00:20:40,480 --> 00:20:43,040 S1: stack them on top of each other. Or you could 351 00:20:43,040 --> 00:20:49,800 S1: use a conservative income focused portfolio, you know, where maybe, um, 352 00:20:50,080 --> 00:20:53,040 S1: you know, at, at approaching age 80, we'd probably not 353 00:20:53,040 --> 00:20:57,840 S1: want more than 30% in stocks, 70% in fixed income 354 00:20:57,840 --> 00:21:01,000 S1: type investments, which could be done through mutual funds, where 355 00:21:01,000 --> 00:21:06,679 S1: you'd have a maybe a conservative stock mutual fund for 30% 356 00:21:06,680 --> 00:21:09,720 S1: and then 70%, you'd buy maybe a short term or 357 00:21:09,720 --> 00:21:14,160 S1: medium term bond fund. Um, that would have a, you know, 358 00:21:14,200 --> 00:21:16,720 S1: a yield on it and would move with interest rates. 359 00:21:16,720 --> 00:21:19,199 S1: And as rates come down over the next few years, 360 00:21:19,560 --> 00:21:22,960 S1: it would do well. I think either of those solutions 361 00:21:22,960 --> 00:21:26,480 S1: could work well. The CD ladders or the stock and 362 00:21:26,480 --> 00:21:29,980 S1: bond portfolio using mutual funds if you wanted to go 363 00:21:30,020 --> 00:21:34,020 S1: that direction with the mutual funds. Our friends at Sound 364 00:21:34,060 --> 00:21:39,139 S1: Mind Investing.com um could give you the the mutual funds 365 00:21:39,140 --> 00:21:42,740 S1: to buy and allow you to do it yourself, but 366 00:21:42,740 --> 00:21:46,139 S1: they'd make it really simple. So hopefully that helps you. 367 00:21:46,180 --> 00:21:48,660 S1: Richard gives you some thoughts around how to think about 368 00:21:48,660 --> 00:21:51,980 S1: your emergency fund and then what to do with the rest. 369 00:21:52,020 --> 00:21:54,340 S1: We appreciate your call, sir. Lord bless you. We'll be 370 00:21:54,340 --> 00:22:08,820 S1: right back. Thanks for joining us today on Faith and 371 00:22:08,820 --> 00:22:12,180 S1: Finance Live. Hey, if you love the program, you listen regularly. 372 00:22:12,180 --> 00:22:14,860 S1: Maybe you found something that's been helpful or we've been 373 00:22:14,859 --> 00:22:17,100 S1: able to encourage you to see God as your ultimate 374 00:22:17,100 --> 00:22:20,620 S1: treasure and to think about how your money management really 375 00:22:20,619 --> 00:22:25,020 S1: intersects with your spiritual formation, with your faith journey. And 376 00:22:25,020 --> 00:22:28,440 S1: you'd like to support the ministry. We are listener supported. 377 00:22:28,440 --> 00:22:30,720 S1: So your gifts to the ministry allow us to reach 378 00:22:30,720 --> 00:22:33,240 S1: more people on a daily basis and bring you not 379 00:22:33,240 --> 00:22:36,600 S1: only this broadcast, but all the tools and resources, our studies, 380 00:22:36,600 --> 00:22:41,000 S1: our devotionals, our app, and our new field guides. A 381 00:22:41,000 --> 00:22:44,639 S1: new product category we're launching this summer. Each field guide 382 00:22:44,640 --> 00:22:49,840 S1: focused on a specific question with a biblical approach, actionable worksheets, 383 00:22:49,880 --> 00:22:52,360 S1: case studies for you to hear from others that have 384 00:22:52,359 --> 00:22:55,200 S1: gone before you on questions like how much money is 385 00:22:55,200 --> 00:22:58,040 S1: enough and how do I give intentionally and how do 386 00:22:58,040 --> 00:23:01,080 S1: I prepare the next steward? 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Just head to faith.com/give. 396 00:23:31,859 --> 00:23:33,820 S1: You'll be able to read about our new field guides 397 00:23:33,820 --> 00:23:39,179 S1: when you get there. Faith fi.com/and we'll thank you in 398 00:23:39,180 --> 00:23:42,060 S1: advance for that. Uh, let's take some more phone calls here. 399 00:23:42,060 --> 00:23:43,820 S1: We do have a few lines open. If you've got 400 00:23:43,820 --> 00:23:48,020 S1: a question, you can call right now 800 525 7000. 401 00:23:48,060 --> 00:23:50,460 S1: Let's go to Chicago. Linda. Go ahead. 402 00:23:51,300 --> 00:23:54,380 S7: Hi there Rob. I am deep in the weeds of 403 00:23:54,380 --> 00:24:01,300 S7: figuring IRS right now and I have done our family IRS, um, uh, 404 00:24:01,300 --> 00:24:04,619 S7: taxes for years. So it might be partly just a 405 00:24:04,619 --> 00:24:07,860 S7: control freak issue too. But what has got me scratching 406 00:24:07,859 --> 00:24:11,980 S7: my head is annuities. And I know you're not partial 407 00:24:11,980 --> 00:24:14,219 S7: to starting them, but we've had one now for a 408 00:24:14,220 --> 00:24:19,420 S7: number of years. We took our first disbursement in last December, 409 00:24:19,820 --> 00:24:24,419 S7: and as I'm working through either the 1040 forms or 410 00:24:24,420 --> 00:24:28,440 S7: the various publications that seem to have information about it. 411 00:24:28,600 --> 00:24:32,560 S7: I am very confused. I think I figured out the 412 00:24:32,560 --> 00:24:35,720 S7: start date, which would be the first distribution, which as 413 00:24:35,720 --> 00:24:39,240 S7: I said, was in November. Excuse me, December, but I 414 00:24:39,280 --> 00:24:44,640 S7: am very confused. Your cost is generally your net investment 415 00:24:44,640 --> 00:24:49,199 S7: in the plan of the annuity starting date. So if 416 00:24:49,200 --> 00:24:55,080 S7: we started this in 2011 for roughly 6000 something from 417 00:24:55,080 --> 00:25:00,399 S7: what the website says, and every quarter thereof, I've been 418 00:25:00,400 --> 00:25:03,400 S7: seeing fees going out, which I assume has gone to 419 00:25:03,400 --> 00:25:06,520 S7: our financial guy whom I dearly love and trust. He 420 00:25:06,520 --> 00:25:10,080 S7: is a brother in the Lord, but that actually all 421 00:25:10,080 --> 00:25:16,520 S7: those fees come up to more than our financial starting amount. 422 00:25:17,040 --> 00:25:20,480 S7: So either one are the online resources that you can 423 00:25:20,480 --> 00:25:25,700 S7: point me to or some other insights How to handle this. 424 00:25:25,940 --> 00:25:29,220 S1: Yeah. Well, it's a great question. And there's a lot 425 00:25:29,220 --> 00:25:32,340 S1: of pieces to this. And it gets into how the 426 00:25:32,340 --> 00:25:37,580 S1: IRS taxes annuities and the terms can be confusing for sure. 427 00:25:37,780 --> 00:25:40,460 S1: So the annuity starting date you're correct is the date 428 00:25:40,460 --> 00:25:43,780 S1: you begin receiving payments from the annuity. That's when you 429 00:25:44,020 --> 00:25:47,619 S1: switch from what's called the accumulation phase where it's growing 430 00:25:47,780 --> 00:25:51,220 S1: to the payout phase when you're receiving income. It's also 431 00:25:51,220 --> 00:25:55,020 S1: when the IRS begins applying the tax rules on the distributions. 432 00:25:55,220 --> 00:25:58,700 S1: Your cost or your net investment in the contract. Those 433 00:25:58,700 --> 00:26:02,300 S1: are the same idea. That's the total amount of after 434 00:26:02,300 --> 00:26:05,260 S1: tax money you paid into the annuity. And so if 435 00:26:05,300 --> 00:26:08,979 S1: you funded it with after tax dollars, that entire amount 436 00:26:08,980 --> 00:26:12,540 S1: is your cost basis. If it was inside a tax 437 00:26:12,540 --> 00:26:15,740 S1: deferred account, well then your cost basis is zero because 438 00:26:15,740 --> 00:26:19,219 S1: it's not been taxed yet. And so once the payments start, 439 00:26:19,220 --> 00:26:23,200 S1: the IRS uses something called the exclusion ratio. So they 440 00:26:23,200 --> 00:26:26,120 S1: look at what portion of each payment is tax free 441 00:26:26,440 --> 00:26:31,200 S1: as a return of your principal and what portion is taxable. Now, 442 00:26:31,200 --> 00:26:35,360 S1: if you started years ago, you would check your original contract, 443 00:26:35,359 --> 00:26:38,840 S1: or you could call the insurance company or review the 444 00:26:38,880 --> 00:26:43,160 S1: IRS form 1099 R. Once the payments have started, that 445 00:26:43,160 --> 00:26:48,960 S1: usually shows the taxable versus the non-taxable portion. Um, and 446 00:26:48,960 --> 00:26:51,480 S1: as long as, you know, kind of what your cost 447 00:26:51,480 --> 00:26:55,760 S1: basis is, um, you know, then, uh, you would be 448 00:26:55,760 --> 00:26:58,760 S1: able to determine, uh, you know, how much of your 449 00:26:58,760 --> 00:27:03,360 S1: payment is taxable, uh, with each payout. Does that make sense? 450 00:27:05,320 --> 00:27:10,240 S7: Uh, yes and no. So, so the cost basis in 2011, 451 00:27:10,480 --> 00:27:15,520 S7: let's just for round numbers, say was $6,000. Now the 452 00:27:15,520 --> 00:27:22,370 S7: annuity supposedly has a worth of $205,000, But somewhere I 453 00:27:22,410 --> 00:27:26,010 S7: read that that cost basis is also affected by the 454 00:27:26,010 --> 00:27:30,850 S7: fees through the years that have been taken from the annuity. 455 00:27:31,970 --> 00:27:34,530 S1: Yeah. So where are you getting that cost basis from? 456 00:27:36,730 --> 00:27:42,010 S7: Um, well, I went online for the particular company and 457 00:27:42,010 --> 00:27:46,130 S7: I tiptoed through nine pages of, oh, I forgot what 458 00:27:46,130 --> 00:27:49,609 S7: the column, but I could see when our guy had 459 00:27:49,650 --> 00:27:54,650 S7: had changed, um um, had bought or sold for us 460 00:27:54,650 --> 00:27:58,850 S7: within the annuity. But then every quarter there was a 461 00:27:58,850 --> 00:28:03,010 S7: fee amount taken out, which I assume is his part 462 00:28:03,010 --> 00:28:04,649 S7: of doing business for us. 463 00:28:05,970 --> 00:28:10,690 S1: Yeah, yeah. Um, and you're saying, what's the value of 464 00:28:10,690 --> 00:28:11,369 S1: it today? 465 00:28:12,450 --> 00:28:15,890 S7: Well, I, I know what the company says the value 466 00:28:15,890 --> 00:28:19,170 S7: of it is today, but for, for IRS purposes at 467 00:28:19,170 --> 00:28:22,629 S7: the form when it says the cost basis. Do I 468 00:28:22,630 --> 00:28:27,109 S7: go back to that six grand back from 2011? 469 00:28:28,750 --> 00:28:31,310 S1: Yeah. I mean, you would go back to so the 470 00:28:31,430 --> 00:28:35,230 S1: the cost basis would be the the total amount you 471 00:28:35,230 --> 00:28:38,190 S1: put into the annuity, the sum of all of those 472 00:28:38,190 --> 00:28:41,990 S1: payments going in. Do you know how much your, your 473 00:28:42,030 --> 00:28:44,709 S1: net investment is, the amount you put in? 474 00:28:45,590 --> 00:28:49,190 S7: Well, that $6,000 according to the website. 475 00:28:49,430 --> 00:28:52,190 S1: But is that right though? Because I mean, did you 476 00:28:52,190 --> 00:28:54,430 S1: pay into this over many years? 477 00:28:55,030 --> 00:28:57,790 S7: Oh, Rob, it's been so long. And I admit my 478 00:28:57,790 --> 00:29:01,790 S7: financial records are just for this kind of stuff. Just 479 00:29:01,790 --> 00:29:03,270 S7: not in good shape at all. 480 00:29:03,750 --> 00:29:07,190 S1: Yeah, yeah. Okay. Well, is do you know if this 481 00:29:07,190 --> 00:29:15,550 S1: is a non-qualified annuity or a qualified annuity inside? Okay. Yeah. Yeah. Well, 482 00:29:15,550 --> 00:29:18,530 S1: so I'd recommend I mean, you can ask the money 483 00:29:18,530 --> 00:29:22,730 S1: for the investment in the contract and that's your cost basis. 484 00:29:23,090 --> 00:29:25,650 S1: And then you can also ask them whether it's qualified 485 00:29:25,650 --> 00:29:29,970 S1: or non-qualified. Or you could review a 1099, but I'd 486 00:29:29,970 --> 00:29:34,290 S1: recommend you get with a CPA to avoid surprises here 487 00:29:34,290 --> 00:29:38,210 S1: and just have this person look at it, you know, 488 00:29:38,250 --> 00:29:40,489 S1: and see what it is in fact, you originally put in. 489 00:29:40,530 --> 00:29:43,650 S1: If it's the 6000 and and if the 100 plus 490 00:29:43,690 --> 00:29:48,530 S1: thousand today represents years of growth. The key question would 491 00:29:48,530 --> 00:29:51,930 S1: be was it funded with after tax dollars or pre-tax 492 00:29:51,930 --> 00:29:54,810 S1: retirement money? Because that determines how it's taxed when you 493 00:29:54,810 --> 00:29:58,890 S1: pay it out. But that's also going to affect, uh, 494 00:29:58,930 --> 00:30:02,370 S1: you know, this ratio that speaks to how much of 495 00:30:02,370 --> 00:30:05,890 S1: each withdrawal, um, you know, is going to be taxable 496 00:30:05,890 --> 00:30:07,970 S1: and how much is just a return of your premium. 497 00:30:08,370 --> 00:30:10,770 S1: So I think at this point, I would probably get 498 00:30:10,770 --> 00:30:13,530 S1: a CPA involved. And as much as I know you 499 00:30:13,530 --> 00:30:16,090 S1: have been doing it yourself and you probably like to, 500 00:30:16,370 --> 00:30:18,310 S1: you certainly don't want to get this one wrong. 501 00:30:18,830 --> 00:30:21,190 S7: Trust is the rest of the issue. 502 00:30:22,990 --> 00:30:25,310 S1: Say that again. Oh, can you trust somebody? 503 00:30:25,550 --> 00:30:26,790 S7: A good one that you trust? 504 00:30:27,110 --> 00:30:30,870 S1: Yeah. Well, I head to a certified Kingdom advisor there 505 00:30:30,870 --> 00:30:34,229 S1: in Chicago and asked for a referral. Uh, so, you know, 506 00:30:34,270 --> 00:30:36,870 S1: I would have high trust just because of the high 507 00:30:36,870 --> 00:30:39,750 S1: standards that the case go through, and they'd all have 508 00:30:39,750 --> 00:30:42,790 S1: a godly CPA that they work with. So head to 509 00:30:42,830 --> 00:30:47,750 S1: find a.com. And if you can't find a c k 510 00:30:47,790 --> 00:30:50,830 S1: in the tax area, any c k could give you 511 00:30:50,830 --> 00:30:54,990 S1: a referral. Find a c k.com. Linda, thanks for your call. 512 00:30:54,990 --> 00:31:06,550 S1: You'll get there. We'll be right back. Thanks for joining 513 00:31:06,550 --> 00:31:08,950 S1: us today on Faith and Finance Live. I'm Rob West 514 00:31:08,950 --> 00:31:12,470 S1: with me today and this segment, Jerry Boyer, our resident economist. 515 00:31:12,510 --> 00:31:16,290 S1: He joins us each Friday with his market analysis and 516 00:31:16,330 --> 00:31:19,930 S1: Jerry market continuing to sell off. I think this is 517 00:31:19,930 --> 00:31:23,410 S1: the the fourth losing week in a row. I mean, 518 00:31:23,450 --> 00:31:26,570 S1: I guess despite what's going on here with where oil's 519 00:31:26,610 --> 00:31:29,130 S1: at and the fact that it doesn't seem like this 520 00:31:29,170 --> 00:31:32,690 S1: war is going to end anytime soon, especially given President 521 00:31:32,730 --> 00:31:36,610 S1: Trump's comments today. Maybe we're not doing that bad. Down 522 00:31:36,610 --> 00:31:39,490 S1: nearly 10%, but what is your take on all this? 523 00:31:39,850 --> 00:31:42,010 S8: Yeah, I agree. I mean, a war can do a 524 00:31:42,010 --> 00:31:47,170 S8: lot more economic damage than 10% destruction in value in 525 00:31:47,170 --> 00:31:50,209 S8: the stock market. So I think the stock market is 526 00:31:50,210 --> 00:31:54,490 S8: doing about as well as you could expect given the situation. Um, 527 00:31:54,610 --> 00:31:56,970 S8: so this isn't this does not seem to be a 528 00:31:56,970 --> 00:31:59,930 S8: major risk event for the United States of America or 529 00:31:59,970 --> 00:32:02,930 S8: a fundamental threat to our economy in the long term. 530 00:32:02,970 --> 00:32:06,130 S8: Otherwise markets would be down a great deal more. Um, 531 00:32:06,130 --> 00:32:09,290 S8: I do think, however, that, you know, the markets are 532 00:32:09,290 --> 00:32:12,209 S8: reflecting something, you know, a genuine problem. So what's the 533 00:32:12,210 --> 00:32:15,350 S8: genuine problem? A couple of things. One, inflation has not 534 00:32:15,350 --> 00:32:18,469 S8: gone away yet. Um, now I understand that under the 535 00:32:18,470 --> 00:32:23,350 S8: previous administration inflation was a lot higher. But it's not beaten. Right. 536 00:32:23,390 --> 00:32:26,750 S8: It's just it just looks, it looks good compared to 10%, 537 00:32:26,750 --> 00:32:29,950 S8: but it doesn't look good compared to long term history. Um, 538 00:32:29,950 --> 00:32:31,830 S8: so what does that mean? Well, a couple of things. 539 00:32:31,830 --> 00:32:35,190 S8: It means that the central bank, the fed, is not 540 00:32:35,190 --> 00:32:38,990 S8: likely to try to stimulate economic growth by printing more money, 541 00:32:38,990 --> 00:32:41,950 S8: because the fed does not think we've beaten inflation. And 542 00:32:41,950 --> 00:32:44,710 S8: I think they're right about that. Uh well what does 543 00:32:44,710 --> 00:32:48,270 S8: that mean for markets. Well, because the fed creates money 544 00:32:48,270 --> 00:32:50,630 S8: out of thin air and pumps it into markets. That 545 00:32:50,630 --> 00:32:53,310 S8: drives the price up. Well, if markets don't think that's 546 00:32:53,310 --> 00:32:56,510 S8: going to happen, uh, then you don't get that price increase. 547 00:32:56,510 --> 00:32:58,190 S8: In fact, it looks like we're not going to get 548 00:32:58,190 --> 00:33:01,190 S8: the expected fed cuts. So markets go down in response 549 00:33:01,190 --> 00:33:02,950 S8: to that. Or another way to put it is the 550 00:33:02,950 --> 00:33:06,870 S8: largest investor in the world, uh, is our own central bank. 551 00:33:07,030 --> 00:33:09,110 S8: And if we don't think that our central bank is 552 00:33:09,110 --> 00:33:13,050 S8: going to be buying more, uh, then markets go down 553 00:33:13,050 --> 00:33:15,370 S8: in response to that. And we don't think they are 554 00:33:15,450 --> 00:33:18,930 S8: because inflation hasn't gone away. Part of that is oil 555 00:33:18,930 --> 00:33:22,050 S8: prices are up a lot. And when oil prices go up, 556 00:33:22,050 --> 00:33:23,450 S8: the Fed's going to look at that and say well 557 00:33:23,450 --> 00:33:26,250 S8: that's probably going to cause inflation. And whether they're right 558 00:33:26,250 --> 00:33:29,810 S8: or not they see a danger of inflation. By the way, 559 00:33:29,810 --> 00:33:31,730 S8: when oil prices you and I have talked about this 560 00:33:31,730 --> 00:33:34,050 S8: for the past couple of months, what I said is 561 00:33:34,050 --> 00:33:37,130 S8: there really is an inflection point at about $100 a barrel, 562 00:33:37,610 --> 00:33:40,010 S8: where before that markets can kind of shrug it off 563 00:33:40,010 --> 00:33:41,970 S8: and the economy can, but you get much more above 564 00:33:42,010 --> 00:33:45,730 S8: 100 and it might slow the economy down. Well, we 565 00:33:45,730 --> 00:33:50,130 S8: are considerably above $100 a barrel. So I think we're 566 00:33:50,130 --> 00:33:53,890 S8: likely to get an economic slowdown, might even be a recession. Now, 567 00:33:53,890 --> 00:33:57,370 S8: if you want me to guess now people say, well, 568 00:33:57,370 --> 00:34:02,490 S8: you're an economist. Don't guess. Know all economists. Guess I'm 569 00:34:02,490 --> 00:34:05,130 S8: one of the few who admits it's a guess. That's 570 00:34:05,290 --> 00:34:06,330 S8: that's what I can offer you. 571 00:34:06,490 --> 00:34:06,930 S1: That's fair. 572 00:34:06,970 --> 00:34:08,930 S8: I'm going to I'm going to offer you more honesty 573 00:34:08,969 --> 00:34:12,670 S8: than any other economist, I'm guessing. Um. But by the 574 00:34:12,670 --> 00:34:15,509 S8: grace of God, somehow my guesses have largely been correct. 575 00:34:15,510 --> 00:34:17,710 S8: I think we probably get a half a recession out 576 00:34:17,710 --> 00:34:20,630 S8: of it. In other words, one quarter of negative negative 577 00:34:20,630 --> 00:34:24,590 S8: economic growth, not two quarters. Um, and I think markets 578 00:34:24,590 --> 00:34:28,189 S8: are reflecting that as well. So oil being up as 579 00:34:28,190 --> 00:34:32,350 S8: much as it is, the markets being down, um, and 580 00:34:32,350 --> 00:34:35,430 S8: it's not and the markets are people are selling stocks 581 00:34:35,430 --> 00:34:38,109 S8: and they're kind of buying some bonds too. So the 582 00:34:38,110 --> 00:34:40,950 S8: market I think is indicating that we've got a slowdown. 583 00:34:40,950 --> 00:34:42,870 S8: I don't think we have a collapse. I don't think 584 00:34:42,870 --> 00:34:45,149 S8: we have a depression. I don't even think we're going 585 00:34:45,150 --> 00:34:49,270 S8: to have an official recession. Although given the media's orientation, 586 00:34:49,310 --> 00:34:51,670 S8: the media seems to be more willing to call something 587 00:34:51,710 --> 00:34:54,230 S8: a recession depending on who the president is. So I, 588 00:34:54,550 --> 00:34:56,350 S8: I think if we got two bad weeks in a row, 589 00:34:56,390 --> 00:34:58,670 S8: the media is going to call it a recession. Uh, 590 00:34:58,670 --> 00:35:01,350 S8: but I think that we have a slowdown. I don't 591 00:35:01,350 --> 00:35:03,950 S8: think it's disastrous. I think you have a good economic 592 00:35:03,950 --> 00:35:06,310 S8: policy mix that we can come out of it strong. 593 00:35:06,630 --> 00:35:09,670 S8: But couple things need to happen. One, the war needs 594 00:35:09,670 --> 00:35:12,850 S8: to end. I know that some people think wars are 595 00:35:12,850 --> 00:35:16,450 S8: good for the economy. That's a lie. Wars are bad 596 00:35:16,450 --> 00:35:19,370 S8: for the economy. That's. I would say that's a lie 597 00:35:19,370 --> 00:35:21,850 S8: from the pit that wars are good for the economy. 598 00:35:21,850 --> 00:35:25,370 S8: They're not. They're destructive. They might be necessary evils, but 599 00:35:25,370 --> 00:35:28,330 S8: they're they're they're bad for the economy. So the war 600 00:35:28,330 --> 00:35:30,489 S8: is bad for the economy. By the way, that's not 601 00:35:30,489 --> 00:35:32,770 S8: the most reason to be against a war. I mean, 602 00:35:32,810 --> 00:35:35,250 S8: war is also bad for human life. But I'm an economist, 603 00:35:35,250 --> 00:35:36,890 S8: so I'm just going to look at the economic element 604 00:35:36,890 --> 00:35:40,049 S8: of it. Um, and also I think trade wars are 605 00:35:40,050 --> 00:35:43,049 S8: bad for the economy, frankly. Uh, and the president has 606 00:35:43,050 --> 00:35:45,410 S8: had a lot of on again, off again, on again 607 00:35:45,570 --> 00:35:47,529 S8: this week. I think it's a trade war with Canada. 608 00:35:47,570 --> 00:35:50,490 S8: You have to look check every week. We need steadier 609 00:35:50,530 --> 00:35:54,009 S8: leadership on this, especially if we're at war. This is 610 00:35:54,010 --> 00:35:55,930 S8: not a time we need to be poking other people, 611 00:35:55,969 --> 00:35:59,290 S8: other countries, in the eye to make some political point. 612 00:35:59,489 --> 00:36:02,770 S8: So I think if we end the war and we 613 00:36:02,770 --> 00:36:06,330 S8: end the trade war, we can get a boom, not 614 00:36:06,330 --> 00:36:09,589 S8: just a recovery, a boom, because we have the right 615 00:36:09,630 --> 00:36:13,510 S8: tax policy. We have tremendous breakthroughs going on in technology. 616 00:36:13,550 --> 00:36:15,550 S8: We're the energy leader of the world. We have a 617 00:36:15,550 --> 00:36:18,989 S8: lot of deregulation in the energy sector. But we have 618 00:36:18,989 --> 00:36:20,430 S8: to get past these two wars. 619 00:36:20,870 --> 00:36:24,230 S1: Yeah, Jerry, one thing that I think people are struggling 620 00:36:24,270 --> 00:36:27,550 S1: to understand is, you know, we've we had drill, baby drill, 621 00:36:27,550 --> 00:36:31,110 S1: and we're now a net exporter, I believe, of petroleum. 622 00:36:31,469 --> 00:36:35,230 S1: Why does the Strait of Hormuz push our gas prices 623 00:36:35,230 --> 00:36:37,150 S1: up if we have everything we need right here. 624 00:36:37,870 --> 00:36:40,390 S8: Because we don't just consume it right here because it's 625 00:36:40,390 --> 00:36:44,070 S8: a global market. So the price of of oil anywhere 626 00:36:44,110 --> 00:36:46,469 S8: affects the price of oil everywhere. I mean, there are 627 00:36:46,469 --> 00:36:49,310 S8: some variations in the price depending on whether it's Brent crude. 628 00:36:49,310 --> 00:36:52,629 S8: Some of it's coming through different avenues. So there is 629 00:36:52,630 --> 00:36:56,190 S8: a little bit of a split. But the fact is that, 630 00:36:56,230 --> 00:36:59,270 S8: you know, I mean, if there is a shortage of oil, 631 00:36:59,670 --> 00:37:02,509 S8: then there's a shortage of oil, right? So if there's 632 00:37:02,550 --> 00:37:05,150 S8: if there's if there's a shortage at one part of town, 633 00:37:05,469 --> 00:37:07,690 S8: the price goes up all over the place because people 634 00:37:07,690 --> 00:37:10,609 S8: drive someplace else to buy the stuff. So, I mean, 635 00:37:10,650 --> 00:37:12,250 S8: if they can't get it through the Strait of Hormuz, 636 00:37:12,250 --> 00:37:14,730 S8: then they're buying it from us. And so we're exporting 637 00:37:14,730 --> 00:37:16,609 S8: even more of it, which means we have less of 638 00:37:16,610 --> 00:37:19,570 S8: it here. So that's the thing about in a global market, 639 00:37:19,570 --> 00:37:22,129 S8: the price of something, one place affects the price of 640 00:37:22,130 --> 00:37:25,890 S8: it everywhere. So if you're in North Korea, doesn't matter 641 00:37:25,930 --> 00:37:28,890 S8: what happens elsewhere. Completely closed off society. But for the 642 00:37:28,890 --> 00:37:31,850 S8: rest of us, we're all kind of in it together. Um, 643 00:37:32,090 --> 00:37:35,370 S8: and so, I mean, we have certain advantages. I think 644 00:37:35,370 --> 00:37:38,089 S8: being a net exporter of oil and natural gas, what 645 00:37:38,090 --> 00:37:39,810 S8: that really means is not that we're going to have 646 00:37:39,810 --> 00:37:42,650 S8: a lower price. What it means is if there really 647 00:37:42,650 --> 00:37:45,049 S8: is like a world war and we're cut off from 648 00:37:45,050 --> 00:37:47,850 S8: the rest of the world, we'll have oil and they won't. 649 00:37:48,170 --> 00:37:50,850 S8: But when unless we have something like that, like an 650 00:37:50,850 --> 00:37:54,450 S8: embargo or a war, we have a global oil market. 651 00:37:54,450 --> 00:37:57,690 S8: And when there's a restriction in the supply, then the 652 00:37:57,690 --> 00:37:59,089 S8: price goes up for everybody. 653 00:37:59,450 --> 00:38:02,529 S1: Yeah. Interesting. All right, Jerry, well, we'll certainly keep an 654 00:38:02,530 --> 00:38:05,049 S1: eye on it. We appreciate your comments as always. Thanks 655 00:38:05,050 --> 00:38:05,820 S1: for your time. 656 00:38:05,980 --> 00:38:07,100 S8: Always a pleasure. God bless. 657 00:38:07,100 --> 00:38:09,900 S1: You. All right. That's Jerry Bowyer. He's our resident economist, 658 00:38:09,900 --> 00:38:12,339 S1: joins us each Friday. Quickly to the phones. We'll try 659 00:38:12,340 --> 00:38:14,940 S1: to sneak in one maybe two more questions. Denise is 660 00:38:14,940 --> 00:38:15,980 S1: in Illinois. Go ahead. 661 00:38:17,219 --> 00:38:20,860 S9: Hi, Rob. Thanks for taking the call. Um, I have questions. 662 00:38:20,860 --> 00:38:24,180 S9: With regard to T-bills, we have about $20,000 that we'd 663 00:38:24,180 --> 00:38:27,020 S9: like to invest. Um, I was looking at, you know, 664 00:38:27,060 --> 00:38:32,180 S9: a CD, high rate CD, but they're usually about four, 4%. Um, 665 00:38:32,219 --> 00:38:34,740 S9: but I'm really wanting to get some T-bills. I know 666 00:38:34,980 --> 00:38:38,700 S9: right now they're about for one month. It's about 3.73%, 667 00:38:38,700 --> 00:38:40,420 S9: but I don't know anything about them. So that's why 668 00:38:40,420 --> 00:38:42,940 S9: I was calling. I kind of needed a little direction, 669 00:38:42,980 --> 00:38:45,460 S9: like what's a good investment with this money. 670 00:38:45,580 --> 00:38:48,220 S1: So you can buy them directly from the US government 671 00:38:48,219 --> 00:38:51,540 S1: without any fees. And that's really best for beginners. I 672 00:38:51,540 --> 00:38:56,060 S1: think you just go to treasurydirect.gov. So that's the Treasury's 673 00:38:56,100 --> 00:39:01,660 S1: website specifically for Treasury bills bonds and notes. Um and 674 00:39:01,660 --> 00:39:04,640 S1: you can buy them there and it's very easy to do. 675 00:39:04,680 --> 00:39:06,799 S1: You'd set up an account, you can purchase them, hold 676 00:39:06,800 --> 00:39:11,040 S1: to maturity. And you know, it's it's pretty self-explanatory. The 677 00:39:11,040 --> 00:39:15,120 S1: other approach would be through a brokerage account, which if 678 00:39:15,120 --> 00:39:17,880 S1: you have other investments, it's easier to manage through a 679 00:39:17,880 --> 00:39:21,000 S1: brokerage account alongside the other investments. So you could go 680 00:39:21,000 --> 00:39:24,960 S1: to Fidelity or Schwab and you could buy the T-bills there. 681 00:39:25,120 --> 00:39:28,600 S1: The other option is banks or exchange traded funds, but 682 00:39:28,600 --> 00:39:31,239 S1: those are indirect. You're not buying the actual bonds. You're 683 00:39:31,239 --> 00:39:34,640 S1: buying an investment that holds them. T-bills can be purchased 684 00:39:34,640 --> 00:39:39,360 S1: in increments as little as $100. And, you know, it's 685 00:39:39,360 --> 00:39:42,239 S1: fairly straightforward to do and they're a pretty good investment. 686 00:39:42,280 --> 00:39:46,120 S1: I mean, to your point, short term T-bills are yielding 687 00:39:46,120 --> 00:39:49,640 S1: around 4% backed by the US government. They're short term, 688 00:39:49,640 --> 00:39:53,040 S1: which means they're flexible. It's a great place to park cash, 689 00:39:53,440 --> 00:39:56,760 S1: a lower return than stocks or other long term investments. 690 00:39:57,400 --> 00:40:01,319 S1: And the reinvestment risk is there. Meaning as you go 691 00:40:01,320 --> 00:40:04,060 S1: to roll it over, You know, the rates can be 692 00:40:04,060 --> 00:40:07,620 S1: lower if rates start coming down. But for a conservative 693 00:40:07,620 --> 00:40:10,259 S1: investor with a short term goal and wanting safety and 694 00:40:10,260 --> 00:40:14,380 S1: liquidity for $20,000, I think that could be great. 695 00:40:15,860 --> 00:40:19,300 S9: Okay. Do you have any other suggestions for that? The 20,000. 696 00:40:20,500 --> 00:40:22,819 S1: What is the purpose of it and the time horizon? 697 00:40:24,300 --> 00:40:27,299 S9: Uh, it's just to actually gain some interest. Um, we 698 00:40:27,300 --> 00:40:28,580 S9: want to keep it liquid. 699 00:40:29,219 --> 00:40:31,780 S1: Okay. So yeah, I mean, you could look at just 700 00:40:31,780 --> 00:40:34,540 S1: a straight money market. Um, you know, for instance, our 701 00:40:34,540 --> 00:40:37,620 S1: friends at Christian Community Credit Union, which would be a, 702 00:40:37,940 --> 00:40:42,379 S1: the largest Christian banking institution in the country, uh, they're 703 00:40:42,380 --> 00:40:46,779 S1: doing 4% right now on money market and, um, up 704 00:40:46,780 --> 00:40:50,180 S1: to $100,000. And for faith by listeners, there's even $100 705 00:40:50,180 --> 00:40:52,980 S1: bonus up to as you open a new account. So 706 00:40:53,020 --> 00:40:56,100 S1: that could be an option, something like that. That's insured, 707 00:40:56,300 --> 00:41:00,860 S1: that's paying a great yield, uh, but also has total liquidity, 708 00:41:00,860 --> 00:41:03,279 S1: I think could be, you know, something to look at 709 00:41:03,280 --> 00:41:06,359 S1: alongside this and maybe a little simpler as well. If 710 00:41:06,360 --> 00:41:10,000 S1: you wanted to explore that, you go to faith.com/banking. But 711 00:41:10,000 --> 00:41:14,040 S1: really anything in that money market, high yield savings CD 712 00:41:14,040 --> 00:41:18,360 S1: or t-bill category is going to either be privately insured 713 00:41:18,360 --> 00:41:19,920 S1: or backed by the full faith and credit of the 714 00:41:19,920 --> 00:41:24,680 S1: United States government with still reasonable, either immediate liquidity or 715 00:41:24,680 --> 00:41:28,400 S1: short term liquidity safety and a decent yield. I think, 716 00:41:28,719 --> 00:41:30,280 S1: you know, any of those could work for you. 717 00:41:31,120 --> 00:41:34,680 S9: Okay. So if I do go to the US Treasury 718 00:41:34,960 --> 00:41:38,359 S9: website that you told me, treasurydirect.gov and I open up 719 00:41:38,360 --> 00:41:40,959 S9: an account, I do this myself so I can just 720 00:41:40,960 --> 00:41:42,960 S9: roll those over if I wanted to. Or I could 721 00:41:42,960 --> 00:41:45,279 S9: just cash them in and then take the money. You know, 722 00:41:45,280 --> 00:41:47,120 S9: I could do I just take care of it. But 723 00:41:47,120 --> 00:41:49,120 S9: if I use a brokerage, then I'll have to pay 724 00:41:49,120 --> 00:41:50,640 S9: for them to do it. Correct? 725 00:41:51,160 --> 00:41:53,879 S1: Yeah, yeah, there's a very small amount there, but you 726 00:41:53,880 --> 00:41:56,200 S1: can still do it yourself if you're on the retail 727 00:41:56,200 --> 00:41:58,760 S1: side of Fidelity or Schwab. You know, you could place 728 00:41:58,760 --> 00:42:01,660 S1: that order. But yes, there are there are zero fees. 729 00:42:01,660 --> 00:42:05,219 S1: If you do it directly through treasurydirect. Gov. There would 730 00:42:05,219 --> 00:42:08,300 S1: be a small fee if you did it through Fidelity 731 00:42:08,300 --> 00:42:08,940 S1: or Schwab. 732 00:42:09,780 --> 00:42:11,779 S9: And what exactly would you do if it was you 733 00:42:11,780 --> 00:42:14,899 S9: had $20,000 in this situation? Would you do. 734 00:42:15,540 --> 00:42:17,860 S10: If it was a. Yeah, if it was a fairly 735 00:42:17,860 --> 00:42:18,460 S10: short term. 736 00:42:18,500 --> 00:42:21,180 S1: Thing, like a year or less, I would probably not 737 00:42:21,180 --> 00:42:23,379 S1: fool with the T-bills. I'd probably just do a high 738 00:42:23,380 --> 00:42:27,500 S1: yield savings or money market like I described, because then 739 00:42:27,540 --> 00:42:29,739 S1: you can add more money to it. You could pull 740 00:42:29,739 --> 00:42:32,779 S1: it out, you know, you could electronically transfer it. You 741 00:42:32,780 --> 00:42:35,260 S1: don't have to wait for it to come due. Um, 742 00:42:35,460 --> 00:42:38,020 S1: you know, I think that's a better, longer term solution. 743 00:42:38,020 --> 00:42:40,859 S1: That's just a little simpler. But, you know, I don't 744 00:42:40,860 --> 00:42:42,939 S1: think there's anything wrong with T-bills. And to your point, 745 00:42:42,940 --> 00:42:45,620 S1: there's pretty attractive yields right now. But that would be 746 00:42:45,620 --> 00:42:48,580 S1: my preference. Denise, I hope that helps. Thanks for your call. 747 00:42:48,580 --> 00:42:50,980 S1: We appreciate it. Faith and Finance Live is a partnership 748 00:42:50,980 --> 00:42:54,460 S1: between Moody Radio and Faith fi. Thanks to Tyra Taylor, 749 00:42:54,460 --> 00:42:56,620 S1: Josh and Dan. Have a great weekend. We'll see you 750 00:42:56,620 --> 00:42:57,220 S1: next week.