July 21, 2025 • 40 mins
College students may be pros at pulling off last-minute study sessions, but when it comes to finances, cramming just doesn’t cut it. We often say that everyone needs a budget, and for college students, that might be even more crucial. On the next Faith & Finance Live, Dr. Kelly Rush joins Rob West with practical budgeting advice every college student should hear. Then, Rob tackles your financial questions. Listen for Faith & Finance Live, where biblical wisdom meets today’s finances, weekdays at 4pm Eastern/3pm Central on Moody Radio.
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Episode Transcript
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S1 (00:08):
College students may be pros at pulling off last minute
study sessions, but when it comes to finances, cramming just
doesn't cut it. Hi, I'm Rob West. We often say
that everyone needs a budget, and for college students, that
might be even more crucial. Today, Doctor Kelly Rush joins
us with practical budgeting advice every college student should hear.
(00:30):
And then it's on to your calls and questions at
800 525 7000. That's 800 525 7000. This is faith
in finance. Live. Biblical wisdom for your financial journey. Well,
our guest today is my friend, Doctor Kelly Rush, a
finance professor, division chair and financial planning program coordinator at
(00:53):
Mount Vernon Nazarene University in Ohio. She's also on the
board of directors at Kingdom Advisors. Advisers. She's well versed
in the intersection of faith and finances, and today she's
here to help us tackle an important topic for students
and their families. That is, how to build a solid
college budget. Kelly, great to have you back with us.
S2 (01:13):
I really like this topic. Rob. Thanks for having me.
S1 (01:16):
Kelly. You work with students every day. So let's start
with the big picture. Why is it so important for
college students to learn how to manage their money? At
this stage?
S2 (01:25):
I'm reminded of Proverbs 22 train up a child in
the way he should go, and when he's old, he
will not depart from it. We apply that verse to
a lot of areas in parenting, but it holds true
in this area of finances and wanting our children to
develop those good habits, especially during the college years, so
that they'll continue those down the road. And so whatever
those habits are that they're developing during those critical college
(01:49):
years is either going to start them on a path
of financial success or cause later regrets down the road
that they'll then have to overcome.
S1 (01:59):
Yeah. That's right. The financial foundation is important now. You
interact with a lot of college students. Kelly. So what
do you experience? I mean, do they tend to have
budgets or is that more of an exception if they do.
S2 (02:11):
Well, yes and no. A lot of college students have
a mental budget. Sometimes we call that mental accounting, but
very few have an actual written budget. And they might
have a general sense of what they should be spending.
But even if they have that general sense, they still
don't track their spending. And so they don't have a
clear picture of where the finances are going, and they
(02:33):
don't have a written budget to compare anything to. And
so over time, what they find is that they're actually
spending more than they realize. They're watching those bank accounts
dwindle more quickly than they than they anticipate, and they
genuinely don't have a sense of where the money is going.
So it's easy for a college student to think, well,
I don't expenses my I have a lot of variability.
(02:53):
And so I'll just have a budget later on. But
we want to develop those habits early on so that
they'll stay with the student and they'll continue those budgeting
practices on into the future.
S1 (03:04):
Yeah, that's well said. Now, there's some lessons or ideas
that they need to learn at this stage. One of
those I know is the time value of money. Why
is that such a key foundational concept for college students
in particular.
S2 (03:18):
Time value of money really is critical because the relationship
between time and money is not random. There's a system
to it. It's logical. It's reasonable. It really reminds me
of the orderly God that we serve. There's an order
to this time and money relationship. And so when college
students learn how the time value of money variables work together,
(03:39):
they realize that the most powerful variable in every time
value of money calculation is always time. When the financial
destination boils down to time and that need to use
time wisely.
S1 (03:53):
Yeah. Now let's apply that then. Kelly. The time value
of money to budgeting.
S2 (03:57):
Well, often budgeting the question comes up. Well, how much
do I save? When I save, how much am I
going to earn on that, on that investment and even
the industry? A lot of attention is given to a
savings rate return on investments. Those are definitely important variables.
But because time is the most powerful variable, college students
need to use the budgeting process to have the best
(04:19):
impact down the road. You know, Scripture speaks of time often.
The psalmist asked the Lord to teach us to number
our days, that we may apply our hearts to wisdom.
And Paul told the church in Ephesus to walk carefully,
not as fools, but as wise, because we're supposed to
redeem the time. So, without exception, the most important thing
(04:40):
college students need to understand is that they have time
on their side. And if they start early, saving early,
giving early, stewarding wisely from the very start, all of
those practices go into building of all of them have
a positive impact with time.
S1 (04:57):
That is so good. When we come back from this break,
we'll talk about credit, when is the right time to
open a bank account, and much more. Kelly Ross here
today we're talking college students. Following this interview, your questions
today at 800 525 7000. Stay with us. We'll be
right back. Thanks for joining us today on Faith and
(05:30):
Finance Live. We're talking budgets 101 for college students. Perhaps
you're a college student or you have one in your life. Well,
we've got a great guest today. My friend rush is
finance professor, division chair and financial planning program coordinator at
Mount Vernon Nazarene University in Ohio. And she's been sharing
with us some of these key foundational concepts and ideas
(05:53):
that are so important for college students. And Kelly, before
the break, you were talking about the importance of time,
value of money, and you made this really important distinction
that really time is on your side when you're a
college student, and that's important. But when you say that.
Is that always true in terms of money?
S2 (06:12):
Well, this is a great clarification to make, Rob. So
thank you. Time is always on a saver side. It's
always on an investor's side because the longer runway for
those good practices leads to a positive impact down the road.
But time has the opposite impact for debtors. Long runways
for someone who's trying to pay off debt means that
(06:33):
more interest is under consumer debt. If they can steward
well early, they will always have a compounded blessing over time.
S1 (06:44):
Yeah, let's shift to budgeting. Kelly, I know another concept
you've talked about is this idea of momentum. You say
that money has momentum in college. Unpack that for us.
S2 (06:55):
Oh, absolutely. I tell students that money moves and money
has momentum. I mean, I think about my kids when
they were little, they saved for a few big purchases.
They saved for are they saved for their portion of
the college tuition? But they didn't understand the small purchases
that mom and dad were making all of the time.
And so when you get to college, and those small
(07:16):
purchases tend to fall on the shoulders of the college student,
they just don't realize how many transactions happen in the
course of normal day to day life, whether that's ordering
pizza or coffee run or streaming services or whatever those
things are. The frequency of small purchases tends to gain
momentum throughout college. The sheer number of expenses that results
(07:39):
in the momentum of how money moves over time.
S1 (07:44):
Yeah, that's really helpful and a powerful idea. Let's turn
to practical tools. Kelly, do you have any favorite go
to resources for people who are just getting started with budgeting,
or are facing the momentum of money moving that you
just described?
S2 (07:59):
For sure. So for young children, a lot of parents
will use the envelope system. They'll have a few budgeting categories.
And that's a really great way to tangibly teach young
kids about money. But that's probably not going to be
the plan for a college student. I don't know if
you've heard this, but they're out there that cash doesn't count.
And they'll they'll say that real flippantly. Oh, cash doesn't count.
(08:20):
As in when money is moving. They think of the
cash as already being spent because it never shows up
in an online transaction. So because Gen Z operates in
the world of apps and easy online access, we want
to meet them where they are. And so we want
to use those finance apps. I really like the Faith
VI app. It's a great place to begin with budgeting.
(08:40):
It's customizable to meet the student's needs. Money management options.
It's a great place to be a very practical resource
for college students.
S1 (08:47):
Well, I couldn't agree more. You can go to faith.com
to check it out. Let's stay in the practical category. Kelly.
At what point do you think students should open their
own bank accounts and start managing money independently, rather than
relying on mom and dad?
S2 (09:02):
Oh, that's a great question, Rob. And so something that
we say at our house all the time is that
we're on the same team, right? Parents and students are
on the same team. And so in order to have
be on the same team, we want to have a
game plan. And to their students, the game plan of
turning over the expenses to the college student. When will
they pay for their own gas? When do they pay
for their own clothes, their own cell phone, and so on.
(09:24):
And so we need to communicate not just these are
going to move to the college students, but when do
they move? And so having a plan for that really
puts people on the same team on the same page.
And then they can map out how much to budget for,
when to budget for, and when those expenses move to
the student's responsibility. That was probably the time when they're
(09:46):
going to want to open up their own bank account,
have their own responsibility for those specific expenses that mom
and dad said, okay, now these are yours.
S1 (09:55):
Yeah. And I think one of the keys there and
you said this is clear communication, Kelly. Naturally, one of
the other conversations that needs to be had is around credit.
Should college students start building credit now or do they
wait until after graduation?
S2 (10:12):
You know, I think either is going to be fine
in the long run, but there really is some value
in starting the process of building credit during college. That
longer runway of building credit can have a benefit down
the road for that first apartment, or when they're shopping
for insurance and things like that. So what I suggest
is starting with a secured credit card where a one
time refundable deposit is put down and the axe is
(10:35):
collateral to the credit card issuer. And so once they
open that secured credit card, then they have to think about, okay,
well which expenses am I going to move to that
credit card. And I always suggest start with gas. Right.
Nobody spends more for gas than they have to. And
so that's a very easy budget item to begin putting
on a secured credit card. And then very critical they
(10:56):
have to pay that credit card off every month. And
that secured credit card will help them to build credit
over time. Because again time is on their side.
S1 (11:05):
Yeah. No doubt about that. Now of course, sticking to
a budget Kelly is not just about controlling expenses. These
students also have to think about their income when it
comes to building a budget. So what should students be
thinking about beyond just the paycheck when it comes to
working during the school year?
S2 (11:23):
Well, I really like to see students working a consistent
part time job during the college years. Um, you know,
it shows that they can juggle responsibilities of schoolwork and employment,
builds that discipline of being a faithful steward over time.
And my favorite part time jobs are the ones that
have high impact with reasonable flexibility, it's Flexibility. It's pretty
hard to find a position where they can come to,
(11:45):
but with some reasonable flexibility for them. I think of
things like go get a referee certification or learn to
cut hair on campus. Those are really great ways to
have high ROI on some really easy investments of their
own time. And then just keep in mind what what
they're moving towards. Maybe if they're a nursing major, they're
(12:06):
going to be working at a local hospital, but trying
to find those positions that are in their field of
study are going to be a blessing for them over
the long run.
S1 (12:14):
Yeah, that's really helpful. Kelly, we've got just about a
minute left. So before we wrap up, let's finish with
a few common pitfalls. What are some of the issues
college students need to be cautious of as they begin
to build their budget?
S2 (12:28):
Well, one of the pitfalls that I'm seeing right now
is just a desire for a shortcut. Students are tempted
to be drawn to that biggest financial return and the
shortest amount of time with the least amount of sacrifice.
That's just human nature. And so that shortcut is showing
up on college campuses, especially right now in terms of
this growing popularity of sports betting. And I liken the
(12:50):
rise of sports betting on college campuses to a modern
day gateway drug. It's addictive. It leads to escalating financial snares,
and it can be really dangerous for college students. You know,
Paul told Timothy that those who would be rich fall
into temptation and a trap and many foolish, harmful desires.
(13:10):
It's not that they may fall into a trap. They
do fall into a trap. Then many foolish and harmful
desires escalate into financial destruction. And that just brings us
back to the time value of money. Why? Stewards don't
try to circumvent time. They use the time that's on
their side to follow biblical wisdom. They gather little by little.
(13:31):
Over time. They watch those financial resources grow. They see
the blessing of time that the Lord gave them.
S1 (13:37):
Wow, this has been so good, Kelly. We have given
students and their parents a lot to think about. We
really appreciate you being here today.
S2 (13:45):
Well, thanks for having me, Rob.
S1 (13:47):
Absolutely. That's Kelly Rush, professor of finance at Mount Vernon
Nazarene University. And if you want to check out the
Faith five app that Kelly mentioned, just go to Faith.
Com and click app. Back with your questions after this
800 525 7000. Stick around.
S3 (14:15):
The opinions offered during this program represent the personal or
professional opinions of the participants, given for informational purposes only.
Any information provided is not intended to replace advice from
a financial, medical, legal, or other professional who understands your
specific situation.
S1 (14:39):
Thanks for joining us today on Faith and Finance Live.
I'm Rob West. Looking forward to taking your calls and
questions today on anything financial. The lines are open. The
number to call 800 525 7000. No matter what you're
thinking about in your financial life, here's what we recognize.
We start with the idea that money is a good
gift from God. That's right. It's for our delight. Who
(15:00):
created joy? He created money. And so we use it
to deepen relationships. We use it for a joyful celebration.
As we enjoy a great meal with family, we give
it away to love people and support the work of
the Lord and our communities and around the world. We
invest it. Hopefully that's supplying capital to business that are
creating goods that are good and services that serve people.
(15:24):
And that's just a part of God's design. Now we
live in a fallen world. And so that's where the
creation well, when we worship the creation over the creator,
it becomes really problematic. And there's a seductive nature of wealth,
especially living where we live in the most prosperous nation
in the history of the world. Money can rival our
(15:44):
hearts for devotion to God. We can't let that happen.
So each day we try to recenter you, and we're
talking to ourselves at the same time around a biblical
worldview of money taking you into the heart of God
in Scripture. But also we know that you have very
practical decisions that you're making every day around your spending
plan and around your investments and providing for your future
(16:06):
and getting out of debt and managing that credit score
and all with money management. Well, that's what this program
is for, to bring encouragement, to bring hope, to take
you back to God's Word, but also to address your
specific questions. So if you have a question today, something
in your financial life, go ahead and call right now.
The rest of the show is yours. 800 525 7000
(16:26):
is the number to call again. That's 800 525 7000.
We will look forward to hearing from you. This is
a great time to get in the queue because we
still have some lines open again. 805 257. In the
news today before we head to the phones reserve federal.
Excuse me, federal Reserve Governor Christopher Waller is again cutting
(16:47):
or calling for rate cuts, but this time he's urging
the fed to act as soon as its July meeting.
That's coming up, by the way, July 30th and 31st. Now,
Waller has supported the idea of easing before, but this
is his strongest case yet. And he's pointing to signs
of a softening labor market and warning that waiting too
long could tilt the risks too far toward weaker economic activity,
(17:12):
namely a recession. While the headline inflation rate rose to 2.7%,
core inflation, which strips out food and energy, sits at
just 2.1%. That's better. A better reflection of long term
trends and interestingly, much closer to the Fed's 2% target. Now,
Waller's comments set him apart from other fed officials who
(17:34):
are urging more patience, they prefer to see inflation stay
low for longer before making a move. Interestingly, many had
been saying that President Trump's tariffs would lead to higher inflation.
That's probably the prime reason the fed has held off. Interestingly,
we've not seen that the tariffs are in place, although
they've moved around quite a bit. Um, you know we've
(17:57):
really not seen that stoking of inflation that I think
many were expecting. That's very interesting. We'll of course keep
an eye on that. But uh, big question is when
will the fed move. Will it be in July, uh,
this month or will they wait until their next meeting?
We'll certainly keep an eye on it. All right. The
lines are filling up. So it's time to dive into
your questions today again. That number is 800 525 7000.
(18:20):
Let's go to Ohio. Seth, how can I help you, sir?
S4 (18:24):
Hey, Rob. Uh, really appreciate you taking my question. I
have a question regarding life insurance. I'm in my and
have a history of cancer, which has made it difficult
to qualify for traditional life insurance. I have some life
insurance provided through an employer policy, but not enough. Um,
that makes us comfortable and to be true income replacement
(18:45):
for me. Um, and with my wife who does not work. Um,
and we have four young kids. So I was wondering
if there is any tips or, um, direction you could
give for somebody in my situation. Of companies that may
be more open to covering, uh, cancer survivors and just
things I could do to help improve my chance of
gaining coverage.
S1 (19:06):
Yeah. Well, um, are you on the other side, or
are you cancer free at this point, Seth?
S4 (19:11):
I am cancer free and have been more than ten years,
so I was surprised to see, um, that some of
the denials that I got, I thought, for being that
far out, it wouldn't be as big of an issue. But, uh,
it's been a few times now that I've been denied coverage.
S1 (19:25):
Yeah, yeah. No, certainly I understand. Well, I'm delighted to hear, uh, that, uh,
that you are in in a in a good spot
right now with regard to being free. Um, you know,
certain companies, uh, are more lenient than others when it
comes to a history of cancer. Now, it is going
to depend on the type of cancer, the stage and grade,
the time since your last treatment, and then any ongoing
(19:47):
health and and follow ups. But I think that's where
using an independent insurance broker is going to be really helpful.
Number one, they may, you know, often know of those
companies that are probably they can shop dozens of companies
because they're not captive with one particular company. So they can,
you know, really look across a wise and, you know,
(20:07):
some of those that, uh, would be, uh, you know,
I know, um, Mutual of Omaha would be known for
their considering applicants, you know, somewhere as soon as 1
to 5 years post-treatment, uh, would be another one, uh,
banner life, Pacific life. So, you know, there are companies that, again,
(20:28):
with good follow up care and long term remission are
going to treat this more favorably than others, and you
need to kind of be able to zero in on
those particular life insurance companies that are going to give
you the most favorable ratings. So I would say work
with an independent broker. They know which companies are more
likely to say yes. Have all your medical records and
(20:49):
treatment summaries ready, expect a medical exam and full underwriting. Uh,
and then the time since remission is critical, most companies
are going to want to see 3 to 10 years
cancer free, depending on the type. But I think, uh,
you know, that's your your next step. You could also
look at some online, um, services like Policy Genius. Uh,
(21:09):
or Quotacy would be another one that you could look at.
Hope that helps, Seth. All the best to you, my friend.
We appreciate you calling today. God bless you. This is
faith in finance. Live. I'm Rob West. A quick break
and back with much more after this. Stay with us. Hey,
(21:35):
thanks for joining us today on Faith in Finance Live.
I'm Rob West. We're taking your calls and questions today
at 800 525 7000. Back to the phones. We go
to Tampa, Florida. Louise, how can I help you?
S5 (21:47):
Oh good afternoon Rob. Thanks for taking my call. I
love your show. Thank you. I wanted to know. So
we own a condo and we're we're moving out because
we want to rent for different reasons for a while,
and I didn't know. I mean, we will probably buy
the sale, make like $100,000 profit. I didn't know if
(22:11):
it would be better to to sell and invest, or
if we should hang on to this property and rent it.
S1 (22:19):
Yeah, it's a great question. It comes up often, and
I'm glad you asked because you do need to think
through this. Um, you know, the reasons to rent it
out would be an on stream potential for the property
to appreciate. You know, it's a way to diversify outside
the stock market because we want to diversify among stock types,
(22:40):
but we also want to diversify among asset classes. So,
you know, you have a little bit in stocks. You
have a little bit in real estate. It keeps you
more diversified like the book of Ecclesiastes talks about. But
you have to deal with sins and vacancies. And local
rents may not always cover the mortgage and taxes and
insurance and HOA. And you'll have to depreciate, uh, you know,
(23:03):
the taxes later if you sell. So, you know, I
think the, the question to ask yourself is, first of all,
the rent cover, all of your expenses, the mortgage, the HOA,
the insurance, the taxes, the repairs. That's the first question.
Second is, is the, uh, in an area with a
(23:24):
strong rental demand. The third question is, am I willing
to man or hire a property manager? Like, do I
want to continue to have to do that? And, you know,
that's kind of a part time job and you just
need to be able to take all the things that
go along with that. I think the fourth question is,
do I have a reserve fund for repairs and tenant turnover?
(23:45):
Meaning if I have a gap in a renter from
one to the next, or if they damage the property?
And then finally, long term value, do I believe the
property will appreciate over the next 5 to 10 years?
If the answer to all of those is yes, well
then clearly it's a great idea because, you know you
can cover your expenses. There's strong demand. You've got a reserve,
(24:07):
you think it's going to appreciate and you're willing to
be a landlord. So, you know, those would typically be
the things I would be looking at. But what are
your thoughts.
S6 (24:18):
No, that that's good because.
S5 (24:20):
There were certain things I considered, like the taxes increase
and certain things, but, uh. Right. I didn't really consider like,
will it appreciate because condos don't appreciate as much as
houses and their hoa's keep on going up. So that's
something really to think about. And, uh, and also, you know,
(24:41):
I mean, to also have that reserve as the turnover
of the rentals and, you know, the renters and the
reserve fund and all that. So. No, those that's perfect.
It gives me a few more things to think about
before we make the decision, because I thought, I know
we could sell it, make some money and invest though. Um.
S1 (25:05):
But. Well, I think the other thing is, you know,
if you live there as your primary residence for two
out of the last five years, you could sell it
without any capital gains. Um, you know, if this is
a seller's market because there's high demand and the housing
market is still fairly strong right now, This could be
a great time for you. You know, just to go
ahead and lock in your profit. Um, you know, if
(25:27):
you move it to a stock market type investment, maybe
with a certified Kingdom advisor, now all of a sudden
it's a much more passive investment. You're getting the growth
and the, the compounding, uh, of the investment growth, but
you're not having to deal with the call in the
middle of the night or, you know, a toilet that
won't flush those kinds of things. And then that's the
other big one, which is, you know, do I just
(25:49):
want to reduce complexity and stress because selling it would
be a much simpler option. And then finally, a lot
of people say, the reason that I don't want to
continue is I would rather be debt free. And, you know,
maybe I've set a goal to pay off debt completely
and that, you know, is driving my decision to go
ahead and sell. So, you know, there's there's two sides
(26:10):
to it. And part of that is a financial equation
is this makes sense financially on paper lifestyle goals, your values. Um,
you know what you're looking for in this season of life,
whether or not you want to try to reduce the
overall complexity or whether you're you're comfortable continuing to be
a landlord. So I think as you think and pray
through all that, Louise, you'll come to the right decision.
S5 (26:32):
Right. Well, thank you so much. This has been very helpful.
S1 (26:37):
Good. I'm so glad. Listen, thanks for your call today. Uh,
we appreciate it. And call any time. Uh, let's go
to Lakeland, Florida. Hi, Douglas. Go ahead.
S7 (26:47):
Uh, thank you for taking my call. I'm a first
time listener, and I just coincidentally turned on my radio.
And your, uh, naming program, uh, came up and phone number. Uh,
I am I am 75, and my wife is 74.
We have a house that's paid off, and we want
(27:08):
to know how to go about adding my three daughters,
our three daughters, uh, 42, 46 and 48 years old
to the to the deed of our house. Do I
go through a title company? Do I need to go
through a. An elder attorney? Do I need a revocable trust?
I just need some direction in this. Um, in this area?
S1 (27:31):
Yeah. I'd be delighted to weigh in on that. And
I'm so glad you found the program today, Douglas. That's great. Uh,
you know, the first question is, uh, is that the
best move for you? What is it you're trying to
accomplish by adding, uh, the the girls to the, uh,
the deed?
S7 (27:47):
Well, if we should, um, pass away in a car accident,
for example, and the deed is in our name, um,
then I believe that if we didn't have, uh, we
have a will, and we we, um, wanted to add
we have our daughters added equal stirpes, uh, on our
house and property, but I didn't want to go through, um, uh,
(28:12):
probate court and and bog down my daughters with, uh, Well,
a lot of money and a lot of wait time
to get this settled. So that's that's the reason for
the call.
S1 (28:23):
Yeah. So it really is just for the efficient transfer
of the asset at death. And there are better ways
to do that because if you go ahead and put
them on the deed, number one, you lose control, which
may not be a big issue, but they legally own
a share now. But the bigger issue is it creates
potentially capital gains issues later. Because if you add them
(28:43):
to the deed through a quitclaim deed and an attorney
could do it, a title, you know, a company could
do it, a real estate attorney. But the challenge with
that is they keep your original cost basis. So, you know,
let's say you paid 100,000 for it, and at your
death it's worth 300,000. You've got a $200,000 capital gain
(29:07):
if you add them to the deed now while you're
living and just relinquish a portion of the ownership to them,
then they're going to keep that $100,000 cost basis. So
whatever they sell it for, they're going to pay capital
gains on all that gain. If they inherit it by
way of a trust or another tool. In the state
of Florida, that's called a lady bird deed. Um, essentially,
(29:30):
they're going to get a step up in basis so that, um,
that cost basis steps up to the property or the
market value as of the date of death. So now
if they turn around and sell it, they don't have
any capital gains. So that's why it'd be better than
adding somebody to the deed to use a lady bird deed,
(29:51):
which basically allows you to stay in control, avoids probate,
and only transfer these transfers. The ownership with you when
you pass. The other option would be a revocable trust. Um,
so all when you pass away, the home passes to
your daughters outside of probate. Uh, the revocable trust and
the trustee would handle that. I've got to take a break. Douglas,
(30:13):
I want to get your thoughts on all that. So
stay right there. We'll pick it up on the other side.
We'll be right back. Thanks for joining us today on
Faith and Finance Live. Helping you see God is your
ultimate treasure and money, a tool to accomplish God's purposes.
Before the break, we were talking to Douglas in Lakeland.
(30:34):
He's looking to add his three daughters to the deed
of his house to avoid probate and create the efficient
transfer of the asset I was sharing with him. I
might reconsider that and either go with a lady bird deed,
which essentially accomplishes the same thing. It would allow him
to stay fully in control of the property during his life,
avoid probate, and then transfer ownership outside of the court
(30:58):
probate process only after he passes. But they would enjoy
that step up in basis so that they would not
have to pay capital gains. The same would be true
with a revocable trust. The reason you'd use a revocable
trust and not a an irrevocable trust is. The revocable
trust allows for you to make changes at any point.
(31:18):
The irrevocable trust does not, but it would allow you
to place the home in the revocable trust. You'd have
to retitle it. Then when you pass away, the home
would pass to your daughters. If that's the way the
trust read outside of probate, they'd get that step up
in basis and again, you'd retain full control while you're alive.
(31:38):
That's going to be a more costly option, though, than
the Lady Bird deed, although the Lady Bird deed only,
whereas the trust other assets in it as well. But
give me your thoughts on all that, Douglas.
S7 (31:50):
Okay. I understand the advantage now of the lady bird deed.
There's no capital gains tax for my daughters to have
to assume. Um, is the bird deed going to be sufficient?
I don't have a lot of assets outside of my home. Uh,
so as the lady bird deed going to be all
that I need and and how How do I go
(32:12):
getting the lady bird deed? Is that something a title
company can do, or do I still need a real
estate attorney? Yeah. Give me some guidance.
S1 (32:22):
Sure. Yeah. I mean, the thing with the lady Bird
deed is it only applies to the home. So everything
else would be subject to your will and the executor.
It does involve the court. Although if it's fairly simple,
it may be able to happen outside of really the
court getting involved and you having much in the way of, uh,
of any expense. Um, so I wouldn't be too concerned
(32:44):
about that if we're just talking about furniture and so forth.
But you do need a will that's up to date
and valid. So there's no confusion about who gets what,
but it should be fairly minimal and cost and and
length of time. If the, if the major asset the
home was covered by the lady bird deed. It is
highly recommended that you use an attorney to create a
lady bird deed. So I would, uh, get an attorney.
(33:07):
You know, if you do it yourself, You just need
to make sure it complies with Florida specific law. There
could be mistakes in the deed or the recording process
that can nullify the transfer, and that then defeats your goals.
So I think the bottom line is I'd use a
a Florida estate planning attorney. It'd be fairly simple. Shouldn't
be very costly, but you want to get it done
(33:29):
right to protect your rights, avoid probate, and prevent any mistakes.
S7 (33:35):
I appreciate your information. You've been a great help and
look forward to listening to you again on the radio.
S1 (33:42):
Well, great. Thank you Douglas. Lord bless you. Listen, I
want to send you a gift for being a first
time caller. We have a a magazine that we produce
here quarterly called Faithful Steward. It's full of just rich,
really helpful articles that are theologically sound, and I think
you'll enjoy it. If you're somebody who thinks a good
bit about being a faithful steward of what God has
entrusted to you. So stay on the line. We'll get
(34:03):
your information, and we'll put a copy of of our
latest edition of mail to you, sir. God bless you. Uh.
To Naples. Hi, Becky. Go ahead.
S8 (34:11):
Hi, Rob. Glad to be able to get through for
this question, because I have someone coming out tomorrow to
talk to me about an annuity. And I've also spoken
to someone earlier in the week. Um.
S1 (34:21):
Any reason they're not my first choice? Is there one
working for? The investment? There are one. The early charges.
(34:42):
I think generally they have lower returns because either it's
a fixed rate of return that would be below, you know,
what you might get annualized in the market or even
with the indexed annuities where it's tied to a market index,
you only get a what's called the participation rate. So
you get a portion of the upside of the market.
(35:03):
And this is perhaps for me the biggest risk or
down or or downside because, you know, here's what you
have to recognize is that market returns are let's call
them lumpy. And here's what I mean by that. You know,
usually it's a it's a big up year followed by a,
you know, sideways year, followed by another big up year,
(35:24):
and then maybe a little bit of a down year.
But you know, with the annuities you max out on
what you're getting. And so the way over a, you know,
50 or 75 year time horizon, we get, you know, 9%
annualized returns is largely driven by those big up years.
And if you don't get that because you cap out
(35:47):
at a certain amount, the insurance company keeps the rest
in exchange for the downside protection. When you kind of
average that out over a longer period of time, you
just don't get the annualized returns that you would get
in the market, even though you have to take the
downside risk with it. And so I think for that reason,
you know, I don't love them. So anyway, hopefully that
(36:09):
gives you a little bit of insight into why, uh,
you know, they're not my favorite, but feel free to
fire away with any questions that you have.
S8 (36:17):
I do have a couple of questions. The earlier this
week had said that they do not do fixed, that
they do variable and they attach it to the S&P.
And so that if and it looks at your anniversary
date is when you accrue it and it looks at
the whole year how the S&P did. And he said
and if they do bust you still get a guaranteed rate.
(36:38):
But if it does better then you get a percentage
as far as the fees. Because I know you've always
said that these people make money off of the fees.
He said there's no fee that he makes his money
from the insurance company. Now, he did say he said,
you're allowed to take up to 10% per year at
no penalty. But he said, if you take more than that,
then you will be penalized. And it's the longer you've
(36:58):
held it, the less penalty you get. So the reason
I'm looking at this is for diversification and to have
some stability in our investment portfolio.
S1 (37:08):
Yeah. Okay. Yeah. I mean, so a couple of thoughts
on that. Number one. How are agents paid on annuities? Yeah.
The insurance company pays the agent a commission when you
buy the annuity. But the commission is built into the
product's pricing and fees. So while you don't write an
your agent a check, the cost is ultimately passed on
to you. Um, you know, you likely pay a fee
(37:32):
each year that they call the fee and expense. And
then there's fund management fees, and then there's optional rider fees.
And so all that together, you know, reduces your returns
even though the agent's commission isn't directly visible to you. Um,
in terms of, you know, what he's saying about the
(37:52):
S&P 500? Yeah, that's absolutely true. You do get the
downside protection where you can't lose money. The insurance company
is going to guarantee it. But again, I would go
back to this idea that you're only getting a portion
of the upside, and often where those better annualized returns
come from. When you invest stock market, even though you're
taking the downside risk, it comes from those dramatic up
(38:16):
years like take last year where we were up more
than 20%. If you capped out at eight, you could say,
well that 8%. Great. I'll take it. Yeah. But you know,
it's the 20% last year on top of the 20%
the year before. You know, when you put all that,
you do well in the market. And I think, you know,
you're giving up a lot for that downside protection with
(38:38):
the annuities. Now how do you manage the risk. Well
you do that through diversification. You might add some bonds
to it and some gold and. And then yes, you'd
have some stock portion. But rather than putting it in
a complicated insurance product, you manage it by diversifying the
investments and having an investment advisor. But my experience is
you just do better over time when you invest directly
(39:00):
in the investments. You manage the risk through diversification and
asset allocation. And the other benefit is you get, you know,
full access to your money if you need it. Now,
the 10% a year without penalties is nice, but what
if you need more than that? Um, you know, I
think that that is a downside for me, if all
that makes sense.
S8 (39:21):
It does. I'm just thinking, at my age, at 70,
I want to I'm not out there to play the
market anymore, and I'm tired of it. And I've got
about 5% in silver and some money in the, the
actual in the market itself and some bonds and stuff
like that. So I was looking at it as diversification
with stability, that I know that I've got a guaranteed
income coming in every month.
S1 (39:41):
Yeah. And I think that's where it can really shine
if you want to, you know, you've got bonds, you've
got some precious metals. I mean, what I typically, you know,
at 70 I would say you'd want probably only 40% in,
you know, a stock portfolio and probably 60% In bonds and,
you know, plus some precious metals. And that's how you
(40:03):
reduce risk. And you keep that 30 to 40% in
stocks because we still need, you know, Lord willing, into
your 90s or beyond. And so, you know, we know
that's the growth component. Yes. At any given, you know,
month or quarter or year, it could be down. All
it's going to do. Well, I mean, if I were
to tell you at the beginning of this year, we're
(40:24):
going to bomb, you know, Iran's nuclear facilities, and we
were going to have, you know, tariffs and a potential
trade war with China. And yet in July, we'd be
sitting here at an all time high. You'd have said,
I don't know about that. And yet that's the reality.
So listen, I think what you're talking about with the
annuity could be a great piece of the overall plan.
(40:45):
I don't have a problem with it. I would just
make sure you get a second opinion. Thanks for your call.
Faith and finance lives a partnership between Moody Radio and
Faith to Hear and Rihanna serving us today. Have a
great weekend. We'll see you on Monday.
College students may be pros at pulling off last minute
study sessions, but when it comes to finances, cramming just
doesn't cut it. Hi, I'm Rob West. We often say
that everyone needs a budget, and for college students, that
might be even more crucial. Today, Doctor Kelly Rush joins
us with practical budgeting advice every college student should hear.
(00:30):
And then it's on to your calls and questions at
800 525 7000. That's 800 525 7000. This is faith
in finance. Live. Biblical wisdom for your financial journey. Well,
our guest today is my friend, Doctor Kelly Rush, a
finance professor, division chair and financial planning program coordinator at
(00:53):
Mount Vernon Nazarene University in Ohio. She's also on the
board of directors at Kingdom Advisors. Advisers. She's well versed
in the intersection of faith and finances, and today she's
here to help us tackle an important topic for students
and their families. That is, how to build a solid
college budget. Kelly, great to have you back with us.
S2 (01:13):
I really like this topic. Rob. Thanks for having me.
S1 (01:16):
Kelly. You work with students every day. So let's start
with the big picture. Why is it so important for
college students to learn how to manage their money? At
this stage?
S2 (01:25):
I'm reminded of Proverbs 22 train up a child in
the way he should go, and when he's old, he
will not depart from it. We apply that verse to
a lot of areas in parenting, but it holds true
in this area of finances and wanting our children to
develop those good habits, especially during the college years, so
that they'll continue those down the road. And so whatever
those habits are that they're developing during those critical college
(01:49):
years is either going to start them on a path
of financial success or cause later regrets down the road
that they'll then have to overcome.
S1 (01:59):
Yeah. That's right. The financial foundation is important now. You
interact with a lot of college students. Kelly. So what
do you experience? I mean, do they tend to have
budgets or is that more of an exception if they do.
S2 (02:11):
Well, yes and no. A lot of college students have
a mental budget. Sometimes we call that mental accounting, but
very few have an actual written budget. And they might
have a general sense of what they should be spending.
But even if they have that general sense, they still
don't track their spending. And so they don't have a
clear picture of where the finances are going, and they
(02:33):
don't have a written budget to compare anything to. And
so over time, what they find is that they're actually
spending more than they realize. They're watching those bank accounts
dwindle more quickly than they than they anticipate, and they
genuinely don't have a sense of where the money is going.
So it's easy for a college student to think, well,
I don't expenses my I have a lot of variability.
(02:53):
And so I'll just have a budget later on. But
we want to develop those habits early on so that
they'll stay with the student and they'll continue those budgeting
practices on into the future.
S1 (03:04):
Yeah, that's well said. Now, there's some lessons or ideas
that they need to learn at this stage. One of
those I know is the time value of money. Why
is that such a key foundational concept for college students
in particular.
S2 (03:18):
Time value of money really is critical because the relationship
between time and money is not random. There's a system
to it. It's logical. It's reasonable. It really reminds me
of the orderly God that we serve. There's an order
to this time and money relationship. And so when college
students learn how the time value of money variables work together,
(03:39):
they realize that the most powerful variable in every time
value of money calculation is always time. When the financial
destination boils down to time and that need to use
time wisely.
S1 (03:53):
Yeah. Now let's apply that then. Kelly. The time value
of money to budgeting.
S2 (03:57):
Well, often budgeting the question comes up. Well, how much
do I save? When I save, how much am I
going to earn on that, on that investment and even
the industry? A lot of attention is given to a
savings rate return on investments. Those are definitely important variables.
But because time is the most powerful variable, college students
need to use the budgeting process to have the best
(04:19):
impact down the road. You know, Scripture speaks of time often.
The psalmist asked the Lord to teach us to number
our days, that we may apply our hearts to wisdom.
And Paul told the church in Ephesus to walk carefully,
not as fools, but as wise, because we're supposed to
redeem the time. So, without exception, the most important thing
(04:40):
college students need to understand is that they have time
on their side. And if they start early, saving early,
giving early, stewarding wisely from the very start, all of
those practices go into building of all of them have
a positive impact with time.
S1 (04:57):
That is so good. When we come back from this break,
we'll talk about credit, when is the right time to
open a bank account, and much more. Kelly Ross here
today we're talking college students. Following this interview, your questions
today at 800 525 7000. Stay with us. We'll be
right back. Thanks for joining us today on Faith and
(05:30):
Finance Live. We're talking budgets 101 for college students. Perhaps
you're a college student or you have one in your life. Well,
we've got a great guest today. My friend rush is
finance professor, division chair and financial planning program coordinator at
Mount Vernon Nazarene University in Ohio. And she's been sharing
with us some of these key foundational concepts and ideas
(05:53):
that are so important for college students. And Kelly, before
the break, you were talking about the importance of time,
value of money, and you made this really important distinction
that really time is on your side when you're a
college student, and that's important. But when you say that.
Is that always true in terms of money?
S2 (06:12):
Well, this is a great clarification to make, Rob. So
thank you. Time is always on a saver side. It's
always on an investor's side because the longer runway for
those good practices leads to a positive impact down the road.
But time has the opposite impact for debtors. Long runways
for someone who's trying to pay off debt means that
(06:33):
more interest is under consumer debt. If they can steward
well early, they will always have a compounded blessing over time.
S1 (06:44):
Yeah, let's shift to budgeting. Kelly, I know another concept
you've talked about is this idea of momentum. You say
that money has momentum in college. Unpack that for us.
S2 (06:55):
Oh, absolutely. I tell students that money moves and money
has momentum. I mean, I think about my kids when
they were little, they saved for a few big purchases.
They saved for are they saved for their portion of
the college tuition? But they didn't understand the small purchases
that mom and dad were making all of the time.
And so when you get to college, and those small
(07:16):
purchases tend to fall on the shoulders of the college student,
they just don't realize how many transactions happen in the
course of normal day to day life, whether that's ordering
pizza or coffee run or streaming services or whatever those
things are. The frequency of small purchases tends to gain
momentum throughout college. The sheer number of expenses that results
(07:39):
in the momentum of how money moves over time.
S1 (07:44):
Yeah, that's really helpful and a powerful idea. Let's turn
to practical tools. Kelly, do you have any favorite go
to resources for people who are just getting started with budgeting,
or are facing the momentum of money moving that you
just described?
S2 (07:59):
For sure. So for young children, a lot of parents
will use the envelope system. They'll have a few budgeting categories.
And that's a really great way to tangibly teach young
kids about money. But that's probably not going to be
the plan for a college student. I don't know if
you've heard this, but they're out there that cash doesn't count.
And they'll they'll say that real flippantly. Oh, cash doesn't count.
(08:20):
As in when money is moving. They think of the
cash as already being spent because it never shows up
in an online transaction. So because Gen Z operates in
the world of apps and easy online access, we want
to meet them where they are. And so we want
to use those finance apps. I really like the Faith
VI app. It's a great place to begin with budgeting.
(08:40):
It's customizable to meet the student's needs. Money management options.
It's a great place to be a very practical resource
for college students.
S1 (08:47):
Well, I couldn't agree more. You can go to faith.com
to check it out. Let's stay in the practical category. Kelly.
At what point do you think students should open their
own bank accounts and start managing money independently, rather than
relying on mom and dad?
S2 (09:02):
Oh, that's a great question, Rob. And so something that
we say at our house all the time is that
we're on the same team, right? Parents and students are
on the same team. And so in order to have
be on the same team, we want to have a
game plan. And to their students, the game plan of
turning over the expenses to the college student. When will
they pay for their own gas? When do they pay
for their own clothes, their own cell phone, and so on.
(09:24):
And so we need to communicate not just these are
going to move to the college students, but when do
they move? And so having a plan for that really
puts people on the same team on the same page.
And then they can map out how much to budget for,
when to budget for, and when those expenses move to
the student's responsibility. That was probably the time when they're
(09:46):
going to want to open up their own bank account,
have their own responsibility for those specific expenses that mom
and dad said, okay, now these are yours.
S1 (09:55):
Yeah. And I think one of the keys there and
you said this is clear communication, Kelly. Naturally, one of
the other conversations that needs to be had is around credit.
Should college students start building credit now or do they
wait until after graduation?
S2 (10:12):
You know, I think either is going to be fine
in the long run, but there really is some value
in starting the process of building credit during college. That
longer runway of building credit can have a benefit down
the road for that first apartment, or when they're shopping
for insurance and things like that. So what I suggest
is starting with a secured credit card where a one
time refundable deposit is put down and the axe is
(10:35):
collateral to the credit card issuer. And so once they
open that secured credit card, then they have to think about, okay,
well which expenses am I going to move to that
credit card. And I always suggest start with gas. Right.
Nobody spends more for gas than they have to. And
so that's a very easy budget item to begin putting
on a secured credit card. And then very critical they
(10:56):
have to pay that credit card off every month. And
that secured credit card will help them to build credit
over time. Because again time is on their side.
S1 (11:05):
Yeah. No doubt about that. Now of course, sticking to
a budget Kelly is not just about controlling expenses. These
students also have to think about their income when it
comes to building a budget. So what should students be
thinking about beyond just the paycheck when it comes to
working during the school year?
S2 (11:23):
Well, I really like to see students working a consistent
part time job during the college years. Um, you know,
it shows that they can juggle responsibilities of schoolwork and employment,
builds that discipline of being a faithful steward over time.
And my favorite part time jobs are the ones that
have high impact with reasonable flexibility, it's Flexibility. It's pretty
hard to find a position where they can come to,
(11:45):
but with some reasonable flexibility for them. I think of
things like go get a referee certification or learn to
cut hair on campus. Those are really great ways to
have high ROI on some really easy investments of their
own time. And then just keep in mind what what
they're moving towards. Maybe if they're a nursing major, they're
(12:06):
going to be working at a local hospital, but trying
to find those positions that are in their field of
study are going to be a blessing for them over
the long run.
S1 (12:14):
Yeah, that's really helpful. Kelly, we've got just about a
minute left. So before we wrap up, let's finish with
a few common pitfalls. What are some of the issues
college students need to be cautious of as they begin
to build their budget?
S2 (12:28):
Well, one of the pitfalls that I'm seeing right now
is just a desire for a shortcut. Students are tempted
to be drawn to that biggest financial return and the
shortest amount of time with the least amount of sacrifice.
That's just human nature. And so that shortcut is showing
up on college campuses, especially right now in terms of
this growing popularity of sports betting. And I liken the
(12:50):
rise of sports betting on college campuses to a modern
day gateway drug. It's addictive. It leads to escalating financial snares,
and it can be really dangerous for college students. You know,
Paul told Timothy that those who would be rich fall
into temptation and a trap and many foolish, harmful desires.
(13:10):
It's not that they may fall into a trap. They
do fall into a trap. Then many foolish and harmful
desires escalate into financial destruction. And that just brings us
back to the time value of money. Why? Stewards don't
try to circumvent time. They use the time that's on
their side to follow biblical wisdom. They gather little by little.
(13:31):
Over time. They watch those financial resources grow. They see
the blessing of time that the Lord gave them.
S1 (13:37):
Wow, this has been so good, Kelly. We have given
students and their parents a lot to think about. We
really appreciate you being here today.
S2 (13:45):
Well, thanks for having me, Rob.
S1 (13:47):
Absolutely. That's Kelly Rush, professor of finance at Mount Vernon
Nazarene University. And if you want to check out the
Faith five app that Kelly mentioned, just go to Faith.
Com and click app. Back with your questions after this
800 525 7000. Stick around.
S3 (14:15):
The opinions offered during this program represent the personal or
professional opinions of the participants, given for informational purposes only.
Any information provided is not intended to replace advice from
a financial, medical, legal, or other professional who understands your
specific situation.
S1 (14:39):
Thanks for joining us today on Faith and Finance Live.
I'm Rob West. Looking forward to taking your calls and
questions today on anything financial. The lines are open. The
number to call 800 525 7000. No matter what you're
thinking about in your financial life, here's what we recognize.
We start with the idea that money is a good
gift from God. That's right. It's for our delight. Who
(15:00):
created joy? He created money. And so we use it
to deepen relationships. We use it for a joyful celebration.
As we enjoy a great meal with family, we give
it away to love people and support the work of
the Lord and our communities and around the world. We
invest it. Hopefully that's supplying capital to business that are
creating goods that are good and services that serve people.
(15:24):
And that's just a part of God's design. Now we
live in a fallen world. And so that's where the
creation well, when we worship the creation over the creator,
it becomes really problematic. And there's a seductive nature of wealth,
especially living where we live in the most prosperous nation
in the history of the world. Money can rival our
(15:44):
hearts for devotion to God. We can't let that happen.
So each day we try to recenter you, and we're
talking to ourselves at the same time around a biblical
worldview of money taking you into the heart of God
in Scripture. But also we know that you have very
practical decisions that you're making every day around your spending
plan and around your investments and providing for your future
(16:06):
and getting out of debt and managing that credit score
and all with money management. Well, that's what this program
is for, to bring encouragement, to bring hope, to take
you back to God's Word, but also to address your
specific questions. So if you have a question today, something
in your financial life, go ahead and call right now.
The rest of the show is yours. 800 525 7000
(16:26):
is the number to call again. That's 800 525 7000.
We will look forward to hearing from you. This is
a great time to get in the queue because we
still have some lines open again. 805 257. In the
news today before we head to the phones reserve federal.
Excuse me, federal Reserve Governor Christopher Waller is again cutting
(16:47):
or calling for rate cuts, but this time he's urging
the fed to act as soon as its July meeting.
That's coming up, by the way, July 30th and 31st. Now,
Waller has supported the idea of easing before, but this
is his strongest case yet. And he's pointing to signs
of a softening labor market and warning that waiting too
long could tilt the risks too far toward weaker economic activity,
(17:12):
namely a recession. While the headline inflation rate rose to 2.7%,
core inflation, which strips out food and energy, sits at
just 2.1%. That's better. A better reflection of long term
trends and interestingly, much closer to the Fed's 2% target. Now,
Waller's comments set him apart from other fed officials who
(17:34):
are urging more patience, they prefer to see inflation stay
low for longer before making a move. Interestingly, many had
been saying that President Trump's tariffs would lead to higher inflation.
That's probably the prime reason the fed has held off. Interestingly,
we've not seen that the tariffs are in place, although
they've moved around quite a bit. Um, you know we've
(17:57):
really not seen that stoking of inflation that I think
many were expecting. That's very interesting. We'll of course keep
an eye on that. But uh, big question is when
will the fed move. Will it be in July, uh,
this month or will they wait until their next meeting?
We'll certainly keep an eye on it. All right. The
lines are filling up. So it's time to dive into
your questions today again. That number is 800 525 7000.
(18:20):
Let's go to Ohio. Seth, how can I help you, sir?
S4 (18:24):
Hey, Rob. Uh, really appreciate you taking my question. I
have a question regarding life insurance. I'm in my and
have a history of cancer, which has made it difficult
to qualify for traditional life insurance. I have some life
insurance provided through an employer policy, but not enough. Um,
that makes us comfortable and to be true income replacement
(18:45):
for me. Um, and with my wife who does not work. Um,
and we have four young kids. So I was wondering
if there is any tips or, um, direction you could
give for somebody in my situation. Of companies that may
be more open to covering, uh, cancer survivors and just
things I could do to help improve my chance of
gaining coverage.
S1 (19:06):
Yeah. Well, um, are you on the other side, or
are you cancer free at this point, Seth?
S4 (19:11):
I am cancer free and have been more than ten years,
so I was surprised to see, um, that some of
the denials that I got, I thought, for being that
far out, it wouldn't be as big of an issue. But, uh,
it's been a few times now that I've been denied coverage.
S1 (19:25):
Yeah, yeah. No, certainly I understand. Well, I'm delighted to hear, uh, that, uh,
that you are in in a in a good spot
right now with regard to being free. Um, you know,
certain companies, uh, are more lenient than others when it
comes to a history of cancer. Now, it is going
to depend on the type of cancer, the stage and grade,
the time since your last treatment, and then any ongoing
(19:47):
health and and follow ups. But I think that's where
using an independent insurance broker is going to be really helpful.
Number one, they may, you know, often know of those
companies that are probably they can shop dozens of companies
because they're not captive with one particular company. So they can,
you know, really look across a wise and, you know,
(20:07):
some of those that, uh, would be, uh, you know,
I know, um, Mutual of Omaha would be known for
their considering applicants, you know, somewhere as soon as 1
to 5 years post-treatment, uh, would be another one, uh,
banner life, Pacific life. So, you know, there are companies that, again,
(20:28):
with good follow up care and long term remission are
going to treat this more favorably than others, and you
need to kind of be able to zero in on
those particular life insurance companies that are going to give
you the most favorable ratings. So I would say work
with an independent broker. They know which companies are more
likely to say yes. Have all your medical records and
(20:49):
treatment summaries ready, expect a medical exam and full underwriting. Uh,
and then the time since remission is critical, most companies
are going to want to see 3 to 10 years
cancer free, depending on the type. But I think, uh,
you know, that's your your next step. You could also
look at some online, um, services like Policy Genius. Uh,
(21:09):
or Quotacy would be another one that you could look at.
Hope that helps, Seth. All the best to you, my friend.
We appreciate you calling today. God bless you. This is
faith in finance. Live. I'm Rob West. A quick break
and back with much more after this. Stay with us. Hey,
(21:35):
thanks for joining us today on Faith in Finance Live.
I'm Rob West. We're taking your calls and questions today
at 800 525 7000. Back to the phones. We go
to Tampa, Florida. Louise, how can I help you?
S5 (21:47):
Oh good afternoon Rob. Thanks for taking my call. I
love your show. Thank you. I wanted to know. So
we own a condo and we're we're moving out because
we want to rent for different reasons for a while,
and I didn't know. I mean, we will probably buy
the sale, make like $100,000 profit. I didn't know if
(22:11):
it would be better to to sell and invest, or
if we should hang on to this property and rent it.
S1 (22:19):
Yeah, it's a great question. It comes up often, and
I'm glad you asked because you do need to think
through this. Um, you know, the reasons to rent it
out would be an on stream potential for the property
to appreciate. You know, it's a way to diversify outside
the stock market because we want to diversify among stock types,
(22:40):
but we also want to diversify among asset classes. So,
you know, you have a little bit in stocks. You
have a little bit in real estate. It keeps you
more diversified like the book of Ecclesiastes talks about. But
you have to deal with sins and vacancies. And local
rents may not always cover the mortgage and taxes and
insurance and HOA. And you'll have to depreciate, uh, you know,
(23:03):
the taxes later if you sell. So, you know, I
think the, the question to ask yourself is, first of all,
the rent cover, all of your expenses, the mortgage, the HOA,
the insurance, the taxes, the repairs. That's the first question.
Second is, is the, uh, in an area with a
(23:24):
strong rental demand. The third question is, am I willing
to man or hire a property manager? Like, do I
want to continue to have to do that? And, you know,
that's kind of a part time job and you just
need to be able to take all the things that
go along with that. I think the fourth question is,
do I have a reserve fund for repairs and tenant turnover?
(23:45):
Meaning if I have a gap in a renter from
one to the next, or if they damage the property?
And then finally, long term value, do I believe the
property will appreciate over the next 5 to 10 years?
If the answer to all of those is yes, well
then clearly it's a great idea because, you know you
can cover your expenses. There's strong demand. You've got a reserve,
(24:07):
you think it's going to appreciate and you're willing to
be a landlord. So, you know, those would typically be
the things I would be looking at. But what are
your thoughts.
S6 (24:18):
No, that that's good because.
S5 (24:20):
There were certain things I considered, like the taxes increase
and certain things, but, uh. Right. I didn't really consider like,
will it appreciate because condos don't appreciate as much as
houses and their hoa's keep on going up. So that's
something really to think about. And, uh, and also, you know,
(24:41):
I mean, to also have that reserve as the turnover
of the rentals and, you know, the renters and the
reserve fund and all that. So. No, those that's perfect.
It gives me a few more things to think about
before we make the decision, because I thought, I know
we could sell it, make some money and invest though. Um.
S1 (25:05):
But. Well, I think the other thing is, you know,
if you live there as your primary residence for two
out of the last five years, you could sell it
without any capital gains. Um, you know, if this is
a seller's market because there's high demand and the housing
market is still fairly strong right now, This could be
a great time for you. You know, just to go
ahead and lock in your profit. Um, you know, if
(25:27):
you move it to a stock market type investment, maybe
with a certified Kingdom advisor, now all of a sudden
it's a much more passive investment. You're getting the growth
and the, the compounding, uh, of the investment growth, but
you're not having to deal with the call in the
middle of the night or, you know, a toilet that
won't flush those kinds of things. And then that's the
other big one, which is, you know, do I just
(25:49):
want to reduce complexity and stress because selling it would
be a much simpler option. And then finally, a lot
of people say, the reason that I don't want to
continue is I would rather be debt free. And, you know,
maybe I've set a goal to pay off debt completely
and that, you know, is driving my decision to go
ahead and sell. So, you know, there's there's two sides
(26:10):
to it. And part of that is a financial equation
is this makes sense financially on paper lifestyle goals, your values. Um,
you know what you're looking for in this season of life,
whether or not you want to try to reduce the
overall complexity or whether you're you're comfortable continuing to be
a landlord. So I think as you think and pray
through all that, Louise, you'll come to the right decision.
S5 (26:32):
Right. Well, thank you so much. This has been very helpful.
S1 (26:37):
Good. I'm so glad. Listen, thanks for your call today. Uh,
we appreciate it. And call any time. Uh, let's go
to Lakeland, Florida. Hi, Douglas. Go ahead.
S7 (26:47):
Uh, thank you for taking my call. I'm a first
time listener, and I just coincidentally turned on my radio.
And your, uh, naming program, uh, came up and phone number. Uh,
I am I am 75, and my wife is 74.
We have a house that's paid off, and we want
(27:08):
to know how to go about adding my three daughters,
our three daughters, uh, 42, 46 and 48 years old
to the to the deed of our house. Do I
go through a title company? Do I need to go
through a. An elder attorney? Do I need a revocable trust?
I just need some direction in this. Um, in this area?
S1 (27:31):
Yeah. I'd be delighted to weigh in on that. And
I'm so glad you found the program today, Douglas. That's great. Uh,
you know, the first question is, uh, is that the
best move for you? What is it you're trying to
accomplish by adding, uh, the the girls to the, uh,
the deed?
S7 (27:47):
Well, if we should, um, pass away in a car accident,
for example, and the deed is in our name, um,
then I believe that if we didn't have, uh, we
have a will, and we we, um, wanted to add
we have our daughters added equal stirpes, uh, on our
house and property, but I didn't want to go through, um, uh,
(28:12):
probate court and and bog down my daughters with, uh, Well,
a lot of money and a lot of wait time
to get this settled. So that's that's the reason for
the call.
S1 (28:23):
Yeah. So it really is just for the efficient transfer
of the asset at death. And there are better ways
to do that because if you go ahead and put
them on the deed, number one, you lose control, which
may not be a big issue, but they legally own
a share now. But the bigger issue is it creates
potentially capital gains issues later. Because if you add them
(28:43):
to the deed through a quitclaim deed and an attorney
could do it, a title, you know, a company could
do it, a real estate attorney. But the challenge with
that is they keep your original cost basis. So, you know,
let's say you paid 100,000 for it, and at your
death it's worth 300,000. You've got a $200,000 capital gain
(29:07):
if you add them to the deed now while you're
living and just relinquish a portion of the ownership to them,
then they're going to keep that $100,000 cost basis. So
whatever they sell it for, they're going to pay capital
gains on all that gain. If they inherit it by
way of a trust or another tool. In the state
of Florida, that's called a lady bird deed. Um, essentially,
(29:30):
they're going to get a step up in basis so that, um,
that cost basis steps up to the property or the
market value as of the date of death. So now
if they turn around and sell it, they don't have
any capital gains. So that's why it'd be better than
adding somebody to the deed to use a lady bird deed,
(29:51):
which basically allows you to stay in control, avoids probate,
and only transfer these transfers. The ownership with you when
you pass. The other option would be a revocable trust. Um,
so all when you pass away, the home passes to
your daughters outside of probate. Uh, the revocable trust and
the trustee would handle that. I've got to take a break. Douglas,
(30:13):
I want to get your thoughts on all that. So
stay right there. We'll pick it up on the other side.
We'll be right back. Thanks for joining us today on
Faith and Finance Live. Helping you see God is your
ultimate treasure and money, a tool to accomplish God's purposes.
Before the break, we were talking to Douglas in Lakeland.
(30:34):
He's looking to add his three daughters to the deed
of his house to avoid probate and create the efficient
transfer of the asset I was sharing with him. I
might reconsider that and either go with a lady bird deed,
which essentially accomplishes the same thing. It would allow him
to stay fully in control of the property during his life,
avoid probate, and then transfer ownership outside of the court
(30:58):
probate process only after he passes. But they would enjoy
that step up in basis so that they would not
have to pay capital gains. The same would be true
with a revocable trust. The reason you'd use a revocable
trust and not a an irrevocable trust is. The revocable
trust allows for you to make changes at any point.
(31:18):
The irrevocable trust does not, but it would allow you
to place the home in the revocable trust. You'd have
to retitle it. Then when you pass away, the home
would pass to your daughters. If that's the way the
trust read outside of probate, they'd get that step up
in basis and again, you'd retain full control while you're alive.
(31:38):
That's going to be a more costly option, though, than
the Lady Bird deed, although the Lady Bird deed only,
whereas the trust other assets in it as well. But
give me your thoughts on all that, Douglas.
S7 (31:50):
Okay. I understand the advantage now of the lady bird deed.
There's no capital gains tax for my daughters to have
to assume. Um, is the bird deed going to be sufficient?
I don't have a lot of assets outside of my home. Uh,
so as the lady bird deed going to be all
that I need and and how How do I go
(32:12):
getting the lady bird deed? Is that something a title
company can do, or do I still need a real
estate attorney? Yeah. Give me some guidance.
S1 (32:22):
Sure. Yeah. I mean, the thing with the lady Bird
deed is it only applies to the home. So everything
else would be subject to your will and the executor.
It does involve the court. Although if it's fairly simple,
it may be able to happen outside of really the
court getting involved and you having much in the way of, uh,
of any expense. Um, so I wouldn't be too concerned
(32:44):
about that if we're just talking about furniture and so forth.
But you do need a will that's up to date
and valid. So there's no confusion about who gets what,
but it should be fairly minimal and cost and and
length of time. If the, if the major asset the
home was covered by the lady bird deed. It is
highly recommended that you use an attorney to create a
lady bird deed. So I would, uh, get an attorney.
(33:07):
You know, if you do it yourself, You just need
to make sure it complies with Florida specific law. There
could be mistakes in the deed or the recording process
that can nullify the transfer, and that then defeats your goals.
So I think the bottom line is I'd use a
a Florida estate planning attorney. It'd be fairly simple. Shouldn't
be very costly, but you want to get it done
(33:29):
right to protect your rights, avoid probate, and prevent any mistakes.
S7 (33:35):
I appreciate your information. You've been a great help and
look forward to listening to you again on the radio.
S1 (33:42):
Well, great. Thank you Douglas. Lord bless you. Listen, I
want to send you a gift for being a first
time caller. We have a a magazine that we produce
here quarterly called Faithful Steward. It's full of just rich,
really helpful articles that are theologically sound, and I think
you'll enjoy it. If you're somebody who thinks a good
bit about being a faithful steward of what God has
entrusted to you. So stay on the line. We'll get
(34:03):
your information, and we'll put a copy of of our
latest edition of mail to you, sir. God bless you. Uh.
To Naples. Hi, Becky. Go ahead.
S8 (34:11):
Hi, Rob. Glad to be able to get through for
this question, because I have someone coming out tomorrow to
talk to me about an annuity. And I've also spoken
to someone earlier in the week. Um.
S1 (34:21):
Any reason they're not my first choice? Is there one
working for? The investment? There are one. The early charges.
(34:42):
I think generally they have lower returns because either it's
a fixed rate of return that would be below, you know,
what you might get annualized in the market or even
with the indexed annuities where it's tied to a market index,
you only get a what's called the participation rate. So
you get a portion of the upside of the market.
(35:03):
And this is perhaps for me the biggest risk or
down or or downside because, you know, here's what you
have to recognize is that market returns are let's call
them lumpy. And here's what I mean by that. You know,
usually it's a it's a big up year followed by a,
you know, sideways year, followed by another big up year,
(35:24):
and then maybe a little bit of a down year.
But you know, with the annuities you max out on
what you're getting. And so the way over a, you know,
50 or 75 year time horizon, we get, you know, 9%
annualized returns is largely driven by those big up years.
And if you don't get that because you cap out
(35:47):
at a certain amount, the insurance company keeps the rest
in exchange for the downside protection. When you kind of
average that out over a longer period of time, you
just don't get the annualized returns that you would get
in the market, even though you have to take the
downside risk with it. And so I think for that reason,
you know, I don't love them. So anyway, hopefully that
(36:09):
gives you a little bit of insight into why, uh,
you know, they're not my favorite, but feel free to
fire away with any questions that you have.
S8 (36:17):
I do have a couple of questions. The earlier this
week had said that they do not do fixed, that
they do variable and they attach it to the S&P.
And so that if and it looks at your anniversary
date is when you accrue it and it looks at
the whole year how the S&P did. And he said
and if they do bust you still get a guaranteed rate.
(36:38):
But if it does better then you get a percentage
as far as the fees. Because I know you've always
said that these people make money off of the fees.
He said there's no fee that he makes his money
from the insurance company. Now, he did say he said,
you're allowed to take up to 10% per year at
no penalty. But he said, if you take more than that,
then you will be penalized. And it's the longer you've
(36:58):
held it, the less penalty you get. So the reason
I'm looking at this is for diversification and to have
some stability in our investment portfolio.
S1 (37:08):
Yeah. Okay. Yeah. I mean, so a couple of thoughts
on that. Number one. How are agents paid on annuities? Yeah.
The insurance company pays the agent a commission when you
buy the annuity. But the commission is built into the
product's pricing and fees. So while you don't write an
your agent a check, the cost is ultimately passed on
to you. Um, you know, you likely pay a fee
(37:32):
each year that they call the fee and expense. And
then there's fund management fees, and then there's optional rider fees.
And so all that together, you know, reduces your returns
even though the agent's commission isn't directly visible to you. Um,
in terms of, you know, what he's saying about the
(37:52):
S&P 500? Yeah, that's absolutely true. You do get the
downside protection where you can't lose money. The insurance company
is going to guarantee it. But again, I would go
back to this idea that you're only getting a portion
of the upside, and often where those better annualized returns
come from. When you invest stock market, even though you're
taking the downside risk, it comes from those dramatic up
(38:16):
years like take last year where we were up more
than 20%. If you capped out at eight, you could say,
well that 8%. Great. I'll take it. Yeah. But you know,
it's the 20% last year on top of the 20%
the year before. You know, when you put all that,
you do well in the market. And I think, you know,
you're giving up a lot for that downside protection with
(38:38):
the annuities. Now how do you manage the risk. Well
you do that through diversification. You might add some bonds
to it and some gold and. And then yes, you'd
have some stock portion. But rather than putting it in
a complicated insurance product, you manage it by diversifying the
investments and having an investment advisor. But my experience is
you just do better over time when you invest directly
(39:00):
in the investments. You manage the risk through diversification and
asset allocation. And the other benefit is you get, you know,
full access to your money if you need it. Now,
the 10% a year without penalties is nice, but what
if you need more than that? Um, you know, I
think that that is a downside for me, if all
that makes sense.
S8 (39:21):
It does. I'm just thinking, at my age, at 70,
I want to I'm not out there to play the
market anymore, and I'm tired of it. And I've got
about 5% in silver and some money in the, the
actual in the market itself and some bonds and stuff
like that. So I was looking at it as diversification
with stability, that I know that I've got a guaranteed
income coming in every month.
S1 (39:41):
Yeah. And I think that's where it can really shine
if you want to, you know, you've got bonds, you've
got some precious metals. I mean, what I typically, you know,
at 70 I would say you'd want probably only 40% in,
you know, a stock portfolio and probably 60% In bonds and,
you know, plus some precious metals. And that's how you
(40:03):
reduce risk. And you keep that 30 to 40% in
stocks because we still need, you know, Lord willing, into
your 90s or beyond. And so, you know, we know
that's the growth component. Yes. At any given, you know,
month or quarter or year, it could be down. All
it's going to do. Well, I mean, if I were
to tell you at the beginning of this year, we're
(40:24):
going to bomb, you know, Iran's nuclear facilities, and we
were going to have, you know, tariffs and a potential
trade war with China. And yet in July, we'd be
sitting here at an all time high. You'd have said,
I don't know about that. And yet that's the reality.
So listen, I think what you're talking about with the
annuity could be a great piece of the overall plan.
(40:45):
I don't have a problem with it. I would just
make sure you get a second opinion. Thanks for your call.
Faith and finance lives a partnership between Moody Radio and
Faith to Hear and Rihanna serving us today. Have a
great weekend. We'll see you on Monday.
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