July 2, 2025 • 43 mins
As Christians, we’re called to be generous, but what does that look like when someone asks for money on the street? Should we give? Is there a better way to help? On the next Faith & Finance Live, Rob West and Dr. David W. Jones explore the ethics of giving to homeless people. They also share ways to show compassion without causing harm. Then it’s on to your calls about various financial topics.
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
S1 (00:03):
Today's version of faith and finance live is actually not live,
so don't call in.
S2 (00:08):
Whoever is generous to the poor lends to the Lord,
and he will repay him for his deed. Proverbs 1917. Hi,
I'm Rob West. As Christians, we're called to be generous.
But what does that look like when someone asks for
money on the street? Should we give? Is there a
better way to help? Today, Doctor David W Jones joins
us to explore the ethics of giving to homeless people
(00:32):
and how to show compassion without causing harm. Then we
have some great calls lined up. But please don't call
in today because we're pre-recorded. This is faith and finance live.
Biblical wisdom for your financial decisions. Well, we're honored to
have Doctor David W Jones with us today. He's a
(00:53):
senior professor of Christian ethics at Southeastern Baptist Theological Seminary
and completed his PhD on Christian financial ethics. He is
also the author of several books and articles on moral
and theological issues. David, great to have you on the
program today.
S3 (01:09):
Thanks, Robert. It's good to be here.
S2 (01:10):
David, we're looking forward to diving into a series of
financial ethics topics with you throughout this month, covering everything
from the lottery and sports betting to gambling and the
prosperity gospel. But today, as you know, we're starting with
something many of us encounter. Often the decision to give
money to someone who's homeless and asking for help. So
(01:31):
to begin, would you lay a biblical foundation? What does
God's Word teach about us? Caring for the poor?
S3 (01:37):
Hey, Rob, I think it's, uh, it's important. And I
think all Christians would probably agree with this, that as believers,
we certainly want to have a concern for the poor.
We certainly want to have a heart that desires to help. Uh,
and that simply comes from, uh, from Scripture. I think
of Matthew 542, uh, which Christ says, give to the
(01:58):
one who begs from you, and do not refuse the
one who would borrow from you. Or first John 317
where John writes and says, but whoever has this world's goods,
and sees his brother in need, and shuts up his
heart from him, how does the love of God abide
in him? So I think Scripture is clear that we
need to have a concern for the poor. We we
(02:20):
should want to help the poor. Really, the the devil
in the details is. But how do we do that?
And that's maybe the harder question.
S2 (02:28):
Yeah. That's right. And especially when we get into a
situation like we're describing today, specifically being asked for help
from someone on the street, we see perhaps they're homeless
or appear to be, you know, that may involve a
sinful lifestyle. And that brings up a whole host of questions.
So perhaps there are some questions we should ask ourselves
(02:49):
when someone approaches us for money, what might those be?
S3 (02:53):
Well, I think, you know, first off, when you see
somebody on the side of the street, and perhaps you're
at a red light and there's someone there with a
sign that's asking for for help, asking for money. Um,
I think the the first thing that I, I like
to do personally, uh, is sort of check what is
my assumption in my heart about that person. And honestly, Rob,
(03:14):
oftentimes where my heart goes is I think, well, you know,
the reason why that person is in need. It's because
they're lazy. It's because they have a drug habit. It's
because they're unwilling to work. Uh, and I find myself
sort of silently condemning, uh, the homeless person and the
person who's in need. Uh, and what I, what I
call that, that sort of that heart position. Really? It's, um,
(03:38):
the phrase I've used in the past is it's being
middle class in spirit, where what I'm doing is I'm saying, hey,
I have a car. I have a job because I
work hard, and I have what I have because I've
been willing to to labor for it. Uh, but of course,
we know that Christ called us not to be middle
class in spirit, but to be poor in spirit. And
(03:58):
as a matter of fact, that guy on the side
of the street, he may be a drug addict, he
may be lazy, he may be unwilling to work. He
may be, in a sense, unworthy of our help. But
that's the very reason why we should desire to help him.
Because if we think bigger picture just I mean, maybe
a different question is this what if God waited until
(04:19):
we deserved his love and help in order to help us? Well,
while we were yet sinners, Christ died for us. Yes.
So actually, it's because that homeless person actually doesn't actually
deserve our help. That's the very reason why we should
desire to help them. And so getting that that heart
in a right position, I find, really is the the
(04:40):
first step and in some senses almost the hardest thing
to do because usually our interaction in those settings, you know,
we're not necessarily on the top of our game spiritually.
And oftentimes we start out in the wrong place.
S2 (04:53):
Boy, that is so well said and I think a
great foundation for our discussion today. The next question then
is how do I help? And we'll get into that
just around the corner. Also, what about just this overwhelming
feeling that you want to be able to help everyone
and you know you can't? That and much more. We're
talking today with David W Jones. He's senior professor of
Christian ethics at Southeastern Baptist Theological Seminary. Much more on
(05:18):
helping the homeless just around the corner. Stay with us.
Thanks for joining us today on Faith in Finance live.
(05:39):
We're in the midst of a series on financial ethics.
Joining us today, Doctor David W Jones. He's senior professor
of Christian ethics at Southeastern Baptist Theological Seminary. His PhD
work was actually on Christian financial ethics. So he is
someone that we are really excited about weighing in on
these topics today. Specifically, we're talking about this question we
(06:02):
all wrestle with, and that is should I give money
to homeless people? And there are a host of issues there.
And David, before the break, you were talking about really
how we should posture ourselves, how we look at this
through the lens of Scripture, some of the perspective that
we bring into this. And you said, undoubtedly we are
to give to help those in need. The question is,
(06:23):
how so? Is it ever wrong to give money directly
to someone who's homeless, like when we're being asked for
money on the street? Or is the bigger issue how
we give unpack that for us?
S3 (06:36):
Yeah. You know, um, getting the heart right, you know,
that we talked about is maybe the first step, you know,
but this the second important step. Uh, how do I
do this? And certainly, um, we don't want to act
in such a way where we end up enabling sin
LinkedIn or empowering sin or not even, you know, acting
in a way that would insulate somebody from the natural
(06:58):
consequences of their sin. Because oftentimes that's something that's built
in that God uses to promote repentance. And so we
want to act in a way that shows love for
our neighbor. And so oftentimes, you know, giving money directly
to someone on the street corner is is not going
to be the best course of action. Um, while it
might not be inherently wrong, um, they could take that
(07:22):
money and they could use that, you know, to finance
a drug or alcohol habit or use it in other
sinful ways. And so I've always encouraged people to make
some type of a non-cash gift. Uh, and that could be,
if you have time, you know, offering to buy them
a meal at a local restaurant or even I know, folks,
(07:44):
it's even been my practice, you know, to carry some
non-perishable food in my car, like a box of granola bars.
And if someone asks for help, you know, rather than
offering them a $10 bill, you know, offering them a
granola bar. And so trying to help in a way that,
as best as it's possible with my own actions, our
own actions that we're trying to show love of neighbor,
(08:08):
that we're not purposely putting someone in harm's way by
enabling them to perhaps continue in a sin.
S2 (08:15):
Mhm. Yeah. David, how do we process that from an
ethics standpoint. You know we want to help. Perhaps we
feel the leading of the Lord to help. Maybe there's
a small child standing next to them. We'd love to
be able to give them some cash that they could
use to put gas in the car, or maybe get a,
you know, a roof over their head, make the rent payment.
How do we think about the responsibility we have to
(08:38):
protect them, which we can't control? And do we leave
that to the Lord? And is that okay? Or should
we bear some of that responsibility Ability that perhaps because
of the situation we're in, we should naturally conclude that
it would likely be used for things that would be sinful.
And therefore we have some responsibility before the Lord. How
(09:00):
do we process that?
S3 (09:02):
Yeah, I think it's all about about being a good
steward and acting wisely. Now, of course, you know, in
a in a brief encounter on a street corner as
we're walking to the office, or again, maybe you're at
a stoplight and there's someone there on the side of
the road and, you know, before the light turns green
or before you, you know, you get to the next block,
(09:22):
you're probably not going to be able to, you know,
to learn a lot about what's actually the cause of
this person's poverty and why are they here. And we're
not going to be able to get enough information in
order to discern what might they do with a gift
that I give them. And so I think that the
important part is having that desire to help, you know,
(09:43):
even preparing in advance to help when we have these encounters? Yeah.
And then helping in the best way possible in that
given context that we find ourselves in. And I think
that's really what the Lord is going to hold us
responsible for. And that really ought to be the goal
that we're we're aiming for.
S2 (10:01):
Yeah. What about engaging in a deeper way? My sister,
for example, um, you know, repeatedly saw an elderly woman
that obviously appeared homeless and very poor at a grocery
store over a long period of time. She ended up
befriending her. They became very close and journeyed together over years. Uh,
(10:22):
often meeting she, you know, met her at her small apartment.
They helped financially. I mean, they she my sister and
her husband invested in this woman's life. And I think
that's a picture, a beautiful picture of how we can
help those in need. It does bring up, you know,
questions of safety and is that, you know, appropriate and
(10:43):
those types of things. But how do you think about
engaging beyond that handout of a granola bar or deeper
in someone's life?
S3 (10:50):
Oh, that's a great question. And what a great example
by your sister there, Rob. The, um, you know, essentially
there's there's three broad causes of poverty, and I wouldn't
have time to dive into all the depths of this,
but the the three causes of poverty are personal sin, uh,
natural evil, like, think maybe like a hurricane or tornado, uh, or, um,
(11:10):
oppression by others or essentially other people's sin. Uh, and
based upon the cause of poverty, um, that really shapes
and really directs us in how we might seek to
address poverty. And there's two broad ways that poverty can
be addressed. There is a an aid based model, which is,
you know, kind of giving out aid indiscriminately. Uh, and
for example, if you know, if someone is homeless because
(11:33):
of a natural disaster, well, then we want to give aid,
you know, pretty much without question and as soon as possible. Yes,
but a second model is a developmental based model. And
that's more, I think, of what you described there with
your sister, where somebody who perhaps is is in poverty
because of oppression by someone else, or perhaps even by
their own poor choices. Well, that's going to involve long
(11:56):
term personal involvement in order to address the poverty. And
should that become possible, you know, by encountering somebody or
perhaps getting involved in a group or organization that has
a long term model that's set up that can be
an incredibly effective and as well as incredibly rewarding way
to address poverty. So it's those those two approaches, you know,
(12:20):
whenever we see poverty, we kind of have to process
is is immediate, sort of indiscriminate aid appropriate in this
context or is a developmental kind of long term thing
more appropriate? And so it takes some thought in order
to kind of work through various instances that we find
ourselves in.
S2 (12:37):
Yeah. We've only got about 90s left. We're going to
have to have you back, clearly. But what about someone?
And we get this question often. Who's in our listening
audience today? David saying, I'm just overwhelmed by the needs
around me and I want to help everyone. I just
don't know where to start.
S3 (12:52):
Yeah. What a what a common reaction among so many believers.
You know, there's a principle that I've written about and
talked about elsewhere. It's called the principle of moral proximity.
And what this principle teaches is that we are most
morally responsible for those who are closest to us. And
this has been helpful to me because it can be
(13:13):
easy to be overwhelmed, say, by world hunger. But in fact,
of the matter is, I probably can't solve world hunger
for my living room. But there may be people in
my immediate circles, maybe my neighborhood, my church, my town
who I'm going to come across on a weekly basis,
who I can actually make a meaningful difference in their lives.
(13:33):
And if all Christians who are out there addressed first
the poverty that was closest to them, Well, then obviously
there's going to be a large kind of scale effect
of that. And really the fact of the matter is,
we're most equipped to actually deal with those who are
closest to us. And so indeed, big problems require big solutions.
(13:56):
But God's called us to take care of what's in
front of us first.
S2 (13:58):
There's no doubt about that, folks. Pick up a copy
of David's book, Every Good Thing An Introduction to the
Material World and the Common Good for Christians, where he
addresses this topic and much more. David, thanks for being
with us today.
S3 (14:11):
Thanks, Rob.
S2 (14:11):
That's David W Jones, senior professor of Christian ethics at
Southeastern Baptist Theological Seminary. Hey, folks, we're going to pause
now for a brief break, but we'll be back with
much more on today's Faith and finance live. So thankful
(14:34):
to have you with us today on Faith and Finance live.
I'm Rob West, by the way. Our team is not
here today. We're away from the studio, so don't call in.
But we've got some great questions that we lined up
in advance. We'll get to those in just a bit.
You know, I'm reminded as we think about the role
of money in our lives that we need to counteract
the messages of this world. We need to operate from
(14:55):
a biblical worldview. And when we look to Scripture, I
think we really see three big ideas around the role
of money. The first is money is a tool. Yeah,
we use it to buy things for ourselves and others,
and we use it to accomplish God's purposes. But it's
also a tool in the sense that God uses money
in my life to teach me to rely on him.
(15:16):
It's a daily demonstration of my faith. It reveals where
I've placed my trust and what I value. So it's
a tool. It's also a test. You know, having too
much or not enough can be a test. Are we
going to live with contentment? Will we choose contentment? Are
we going to rely on money in place of God?
It's a test in our lives, but it's also a testimony,
(15:38):
especially our willingness to trust God when we have little.
Or perhaps to share generously when we have much that
provides witness to an unbelieving world, even our faith to
handle money God's way in the midst of uncertain times,
that itself can be a great testimony to the world.
So money is a tool. It's also a test, and
(16:00):
it's a testimony that God uses to both provide for
my needs, as well as to grow me up in
my faith and rely more heavily on him. I hope
that's an encouragement to you today. All right, let's get
to our calls today that we've lined up for you.
Let's head to Maine to begin today. Lee, you'll be
our first caller, sir. Go ahead.
S4 (16:18):
I'm almost 44 years old. Um, I started my 401
K in Roth IRAs in my work, maybe a little
over a month ago. And, um, I can only afford
to put in probably around 10% of my earnings. So
I put 5% in my Roth IRA, and I put
five in my 401 K, but I was wondering, uh,
(16:39):
in the long run, which one should I invest more
into to have a better outcome at retirement?
S2 (16:44):
Yeah, it's a great question, Lee, and I'm delighted to
hear that. Uh, you're prioritizing, you know, keeping your lifestyle
in check and being systematic in your retirement contributions, even
if you feel like you're a little behind. The key
is let's take advantage of these next, you know, 20
or 30 years when you're going to be working and,
you know, you can sock away as much as possible. Remember,
(17:07):
you're very, uh, your most powerful tool for wealth building
is your income. So long as you live beneath it
and you can sock that money away. So I think
that's great. You're at 10%. Let's try to push that
up as you're able, maybe over time, to 15% or
even a bit more. This is also a great question
as to do we go with the pre-tax traditional 401
(17:29):
K where you get the current tax deduction versus the
after tax Roth. Obviously the pre-tax. You will pay tax
on it when it comes out in retirement with the
Roth the after tax contribution, the gains come out tax
free in retirement. Two different approaches. Both can be very effective.
Let me just clarify though. You do not have a
(17:50):
Roth 401 option. You only have the traditional. Correct.
S4 (17:54):
Yep.
S2 (17:55):
All right. Very good. Um, I certainly want you to
take advantage of the matching portion in your 401 K.
I'll share kind of a rule of thumb with you
that came from some research that was done a number
of years ago. Uh, some researchers came together to look
at this very question on, you know, how do we
think about contributing to a pre-tax versus an after tax
(18:15):
environment as we age and throughout our working life get
closer to retirement? And they studied thousands of retirement plans,
real retirees, just to see what was the optimal mix
between the pre-tax and the after tax. And what they
came up with was a rule of thumb. And thumb,
and that's all it is, doesn't mean it's right for everyone,
(18:36):
but they just factored in the uncertainties that exist, which
is we know you're probably going to be making less
in retirement, but we don't know what the tax structure
is going to be, you know, 20 years down the road. Um,
our tax is going to be a lot higher. Are
they going to be the same? Are they even going
to be lower than they are today? We just don't know.
And so their rule of thumb was you take your age,
(18:58):
you add the number 20. And then that's what you
put in the pre-tax contribution and then the balance you
put in Roth. So if we applied that to your
situation you know you're 43. We had 22 it so
that's 63. Call it 65%. You know, you would put
around 65% of your total contributions into the pre-tax. And
(19:19):
then you'd put the balance in Roth. I mean, I
think that might give you a good rule of thumb,
maybe a bit more than half into the 401 K,
certainly at least to take advantage of the matching and
then maybe the balance in Roth. And that way you
have both of these buckets growing in the future. And
then when you get to retirement and we understand what
the tax structure looks like and some of the other factors,
(19:42):
you would then have both the pre-tax and the after
tax buckets to pull from. And you could optimize your
withdrawals accordingly. Does that make sense?
S4 (19:51):
That's my sense yes. Thank you.
S2 (19:53):
Excellent. So I think that's at least get you pointed
in the right direction here, Lee. And hopefully it gives
you some things to think about. We appreciate you being
on the program, sir. God bless you. Uh, let's see
South Carolina. Susie, go right ahead.
S5 (20:05):
Hi. I'm calling. I wanted to get some information regarding
whether to who? My account over from Vanguard. Okay. Edward Jones,
my husband and I have an account with IRA. Account
with Edward Jones. It was just some money we had. And,
you know, we decided to go ahead and set up
(20:27):
another account. But I also have a 401 with Vanguard,
and that's been there ever since I've been working with
that company. And when I left that company, um, I
didn't put anything else in it, but it is growing.
The the thing I'm kind of skeptical of is both accounts,
they seem to go up and down at the same rate.
(20:50):
There's no difference. So one is managed, one with, um,
Edward Jones is being managed by a financial advisor. The
one with Vanguard is not. But whatever happens in the Vanguard,
it's the same thing that happens in the one with
Edward Jones. Yeah, we were thinking about moving that over
(21:11):
and just not sure if we should or not.
S2 (21:15):
Yeah, it's a great question. Here's my thoughts. Um, I
like you having an advisor that's kind of leading the
way here and making the decisions. It's not really a
matter of me. Edward Jones versus Vanguard. Both are solid
financial organizations. I think the fact that one is passive
at Vanguard versus active, I'd skew toward the active, I
think largely because the market has just done so well,
(21:37):
and I think we're entering into a period with these
rich company valuations where an actively managed account is going
to do better than a passive, just for a variety
of reasons related to the economy. So if it were me,
I would go ahead and roll that over to that
advisor at Edward Jones. We'll be right back. So thankful
(22:04):
to have you with us today on Faith in finance live.
I'm Rob West, your host. Now. Our team is away
from the studio today, so don't call in. But we
lined up some questions in advance that I know will
be helpful to you. Uh, back to the phones to Indiana.
And thanks for waiting. Go ahead.
S6 (22:19):
Um, I have an HSA that I've had. I established
it in 2006, and then I put into it for
like ten years, and then I got on Medicare. Had
to go on Medicare. Um, and I have, um, around
seven and a half years of Medicare Part B premiums
that were taken out of my Social Security payments each
(22:40):
month for the last seven and a half years. And
it's my understanding I can take those premiums out of
my HSA. But I read online if I and I
haven't done that, and I read online that you can
go retroactive, I could take all those seven and a
half years like this year if I want to. Is
that is that true?
S2 (23:01):
You know, I would look into that. My understanding is
that is not the case. Now, clearly, once you're 65,
you can use HSA funds to pay for Medicare Part
B and C and D. Um, but you can't use
it for any kind of Medigap or Medicare supplement, and
you can't contribute to an HSA beyond age 65, but
(23:25):
you can use it for the premiums. Now, where I
think you need to get some information is I do
not think you can use it to pay back premiums.
You've paid in the past specifically for Medicare. That's what
I would. I want you to get to a little
bit more information on, because that's not my understanding, although
I'm not certain on that. And that's why I want
you to check it out.
S6 (23:46):
Okay. Well, it publication, you know, the pub 959 is
not clear on it either. But online, like Kiplinger, you know,
Schwab and all those are adamant that you can go
back on it. And I can't find it anywhere, you know,
in publication.
S2 (24:02):
969 so yeah, yeah. Uh, do you normally file your
own taxes or do you have a CPA you could
run this by?
S6 (24:09):
I usually do my own. Yeah, I do my own.
S2 (24:11):
Okay. Yeah. So this might be the time where you
just this is important enough that reaching out to somebody
who could give you, you know, definitive answer on this,
who's a tax professional, I think would be a good
idea because obviously that'd be real helpful if you could
go retroactive and now you'd get all that money out
tax free, and you could use that to shore up
your emergency fund or whatever else. But, uh, I'm not
(24:34):
I'm not certain that's possible. I know moving forward, you
could pick up those premiums with tax free distributions along
the way, and hopefully that'll help you moving forward for sure.
S6 (24:45):
Okay. All right. Well, I'll try to find out up
as an accountant or something.
S2 (24:49):
All right. Very good. Anne, thanks for calling today. I
wish I could have given you more definitive advice on that,
but we appreciate you being a part of the program. Uh,
let's go to, uh, Georgia. Hi, Mark. How can I help?
S7 (24:59):
Yeah, thanks for taking my call. Um, I am 57.
My wife is 62, and we were wondering if she
should go ahead and start drawing Social Security. We do
not need the money for income. We would take 100%
of that and invest it, uh, and just didn't know
(25:21):
what the the drawbacks were of going ahead and doing that.
S2 (25:25):
Yeah. So she's qualified under her own work record, is
that right?
S7 (25:29):
That's correct.
S2 (25:30):
Okay. And, uh, she would take that. At what age?
S7 (25:34):
Uh, well, we were wondering about taking starting that now.
She's 62. Will be 63 this year.
S2 (25:40):
Okay. Got it. Yeah. So she's going to, you know,
take obviously a pretty big, uh, you know, cut on that, uh,
by taking it early so it could be, you know,
as much as 25 to 30%. Um, and and I'd
love to see that grow. I mean, the difference is. Yes.
Could you invest it and do better? Possibly. Um, you know,
(26:03):
I think one of the questions would be just because
you all are still working, more of it might be taxable, uh,
versus later when you have maybe your fully retired and
you don't have as much income. And so perhaps you know,
much less of it if any would be taxable. Uh,
I think the second thing is you're going to get
a guaranteed return by waiting, as long as you live
(26:25):
long enough to reclaim it through the higher check. Um,
but you know, you're going to get a guaranteed increase of,
you know, nearly 8% a year, um, by waiting until
full retirement age, which there's no guarantee in the market.
So I think that's why, I mean, you know, we
don't know which is going to come out better. So
we just have to make an educated decision. Um, but
(26:48):
if you, uh, you know, expect to live, you're in
good health. Um, you know, and you expect just to
have the longevity based on family history and your own
current health status to live, you know, into your 80s
and beyond. Delaying those benefits increases that total lifetime payout.
And that tends to be, you know, the better option.
S7 (27:07):
Okay. Well, thank you very much I appreciate it.
S2 (27:10):
Yeah. You're welcome. We appreciate you calling today Mark God
bless you, sir. Hey, before we take one more call,
interestingly in the news and this probably won't come as
a shock to you, uh, the paper check is all
but dead. In the U.S. for more than a century,
checks were the preferred way, of course, to pay for
most things. Now here's a study and just came across
(27:30):
this today. Fascinating by the personal finance site gobankingrates. They
found that nearly half, 46% of Americans hadn't written a
paper check in the preceding year. Now, as I think
about my own life, I hardly ever write checks. I mean,
maybe when, you know, a service worker comes to the
house to repair something and, you know, they they don't
(27:53):
take a credit card, although most do now. Um, and
so you write them a check. Really? The only time
I can think of that I've written a check in
the past year. There's one time a year where I
write a check, and it's because, uh, our garbage people,
when they come to pick up the Christmas tree every year,
which we can put at the curb, I've got to
write a $15 check, put it in a Ziploc bag,
(28:15):
and literally attach it to the tree. And they come by,
they grab the grabbed the check and they take the
tree away. That's the only time I write a check
each year. Interestingly, now, obviously debit cards and smartphone apps
have made it much easier to pay at the register,
and online purchases, of course, have always been digital. Many
major retailers, such as target, have even stopped accepting paper checks,
(28:37):
interestingly for payment. Covid, of course, accelerated this trend with
a huge increase in online purchasing, but it was well
under way even before the pandemic hit. In 2015, Americans
wrote 18.1 billion checks. By 2021, that number had dropped
from 18 to 11 billion, almost a 40% drop. Now,
(29:00):
in addition to debit cards, consumers are increasingly turning to
digital payment methods. So this would be things like PayPal
and Venmo and and Zelle. So imagine soon nobody will
be able to say the checks in the mail. Although
with online banking there is still even though you're just
making a few clicks, the bank typically is still sending
(29:21):
that paper cheque. But I think that's probably going to
be replaced with a true digital solution end to end.
It already is, but it will increase in the days ahead.
What does all this mean? Not much other than, you know,
there's clearly convenience, expediency, even I think security that goes
without these paper cheques flying through the mail where somebody
(29:42):
can grab them and and get your account number. But
there are trade offs. And that means we need to
use digital best practices when we're doing more and more
business online, including, you know, making sure that you're not
on public Wi-Fi when you're logging into these accounts. You
keep your operating system on your computer or your smartphone
(30:04):
up to date with all those security patches. Use long
string passwords. I'd use a password manager. I use one
called one the number one password. One password. But there's
a lot of them. Uh, LastPass would be another, but
they'll actually generate, you know, a 15 or 18 or
20 character, uh, you know, password for you and save it,
(30:25):
encrypt it. And, you know, you can have a different
password for every account, which is really the best practice there. Uh,
don't ever click on a link in an email or,
you know, for a phishing scam or even, you know,
give out your information if somebody calls you, even if
the caller ID says they're from a company you recognize,
they can spoof that. So we've got to be on
our guard. But I think there are plenty of benefits
(30:47):
we derive from moving more digital. Even though I know
a lot of you listening out there today are saying, nope,
I'm standing my ground. I still like to go to
the bank, I still like to write checks. And I
hear you on that. Stay with us. Great to have
you with us today on Faith and Finance live. I'm
Rob West. Our team is away from the studio today.
(31:10):
We're not here, so don't call in. But we lined
up some great questions in advance and we'll get to
those in just a moment. First, you know, as I
look at the scriptures, one of the big ideas that
literally jumps off the page when you look at this
area of finance in light of a biblical worldview, is
the idea of contentment. We should foster an attitude of contentment.
(31:31):
And I think that's the first understanding is that it is,
in fact, an attitude. Matthew 633 says, but seek first
the kingdom of God and His righteousness, and all these
things will be added to you. If our aim is
the kingdom, then that changes our perspective. It makes it
focused on the eternal, not the temporal. And that's a
(31:51):
game changer. Well then, from an attitude, we learn that
contentment is in fact learned by the apostle. Paul said
it this way, not that I'm speaking of being in need,
for I have learned in whatever situation I am to
be content. That's Philippians 411. So it's a learned behavior.
It's also a choice. You know, I can choose to
(32:12):
be content in every circumstance. Rich or poor, happy or sad,
easy or difficult. Because as Christ followers, well, our position
in Christ never changes. And I think that's an important
reminder for us today. And perhaps it could change your
whole approach to your money. All right, let's go back
to the phones here. We're going to round out the
(32:32):
broadcast today with your questions. Let's go to Ohio. Hi, Christine.
How can I help?
S8 (32:37):
Hi, Rob. Thanks for taking my call. Sure. Um, I
am actually calling on behalf of a good friend of
mine who is a young man in his late 20s,
and he is incarcerated in the state of Louisiana. And
he he has about five years left in his sentence. And, um,
he's an avid listener of your program. And so he
asked me to call him for you.
S2 (32:58):
Oh, awesome. That's great.
S8 (32:59):
And, um. Yeah. And I recently opened, um, just a
small index fund on his behalf. Um, it's in my name,
but I'm going to be giving him the funds when
he gets out. But he just had some questions. Um, like,
what would be the best way for him to invest
in the stock market, for the best possible gain and
profit for his future and his family, given the volatility
(33:20):
of the stock market? What kinds of funds would you recommend?
Mutual index, etc.. Um, do you recommend a traditional or
Roth IRA? And then also, what would be the best
way for him to invest in buying shares of a company?
So I hope that all makes sense.
S2 (33:38):
It sure does. Yeah. And Christine, when we're done here today,
I'd like for you to hold the line because I'd
like to put a book in the mail to you
if you have the ability to get it to him.
That would be great. Could be something he could be
reading through. It's called the Sound Mind Investing Handbook, which
really just unpacks kind of a lot of these principles
around how do you invest practically, but also through the
(33:59):
lens of biblical wisdom. So we'll we'll get that out
to you as our gift to him. Um, you know,
I think in terms of just generally investing, um, you know,
we always have to define, first of all, you know
what is the time horizon and purpose for the money?
And so if this money is intended to be really
for the future, meaning retirement. So in that fourth quarter
(34:22):
of life where, you know, we, you know, perhaps move
away from paid work or we're unable to work and
we're trying to supplement Social Security. If he has enough
credits to to get Social Security, then, you know, we
do want to try to put it in a tax
advantaged account. So I think using a Roth IRA, um,
once he's out and has earned income, because that would
(34:43):
be required. And if he's married, he could have a
spousal IRA, uh, for his wife, whether she works or not.
And so that would allow them, you know, let's say,
you know, if it was 20, 25, they could put
in 7000 apiece or 8000 if they're 50 or older. Um,
and so, you know, that'd be a great place to begin. Um,
if he ends, you know, depending on what he does
(35:05):
for work, when he gets out, if he has a
401 K available, especially if there's matching, I'd use that
as another tool. And then in terms of the the
where of the investing. Um, I would say, uh, you know,
I love the faith based investing mutual funds. If he's
really concerned about his values being reflected, uh, you could
download a list of those faith based investing funds that
(35:28):
he could consider. Or you could, uh, on his behalf.
And I'll give you if you've got a pen handy.
It's just faith and investing. Faith and investing. Fi. And
that'll give you a PDF with all of the faith
based investing mutual fund families. Uh, those would be great.
(35:49):
If he just wants something that's more passive, like an
indexed approach, you could also open an account for him
at something like the Schwab Intelligent Portfolios, which is very
low cost. And then based on kind of his age
and risk tolerance and goals, it would just automatically build
a very passive portfolio using the major market indexes, both
(36:11):
bond and stocks. Um, but it would be widely diversified
over domestic and international small cap, mid cap, large cap.
So you get a really nice diversified portfolio. Again, very
low cost. Uh, and the nice thing about that is
there's no transaction cost. So if you were to be
putting in a little bit every month, for instance, it'll
just automatically be reinvested without any transaction expenses into all
(36:35):
of the different investments based on what the algorithm says
is the right mix for him. So that's the Schwab
Intelligent portfolio. So I think either of those could work
the faith based investing list or the Schwab Intelligent Portfolios.
That's the where and then the what type of account
is going to have to do with as long as
this is earmarked for retirement? I think the Roth and
(36:56):
then perhaps plus a 401 K when he gets out
could be a great option in terms of just how
to think about investing. I mean, I think the key
is it's just all about being systematic and whether the
market's up or down. You just want to keep investing.
And even if it's down, that's actually not a bad
thing because now all of a sudden, with the same contribution,
you're buying more shares of the same investments because they're
(37:19):
less expensive. And it always comes back, at least historically speaking,
and moves to new highs over time. And so that's
why we take a long term view. And we're systematic
in our investments and we're properly diversified which is why
we use either ETFs or mutual funds. Does that helpful
though it is.
S8 (37:37):
Thank you so much Rob.
S2 (37:39):
Awesome. Happy to do it Christine I'm going to send
you that book. So you stay on the line. Our
team will get your information. We'll get the Sound Mind
Investing Handbook out to you. It's our gift to you.
You pass it on to him. And if we can
help him with anything along the way, tell him to
reach out and tell him. Thanks for listening to the program.
God bless you. Let's go to Illinois. Hi, Alex. How
can I help?
S9 (38:00):
Hey, Rob. How are you doing?
S2 (38:01):
Doing great. Bud.
S9 (38:02):
Accepting my call? Sure. Hey, I want this question I
just trying to grasp something? Been trying for a little longer.
What's the use of IRA or Roth when I have
to pay someone to, you know, look after my money
and I gain nothing. They give me nothing for me,
letting them hold my money. What's the difference between that?
(38:23):
And just a regular bank savings account?
S2 (38:26):
Well, first of all, the Roth is just the type
of account. And what it is, is the, you know,
it comes from Senator Roth, which is what it's named after,
and it's a retirement vehicle that allows you to put
in after tax money so you don't get a deduction
and it grows once you invest it tax free. Um,
meaning all the gains and the dividends and any interest
(38:49):
you're earning inside that Roth during your working years. When
you start pulling that out in your fourth quarter of life,
as long as you're 59.5 or older. But for most folks,
you know, in their 60s and 70s, you pay no
tax on all that gain. So there's a tax advantage there,
especially if you can be systematic in your investments over
a long time. Now, in terms of how you go
(39:11):
about investing that and what fees you're paying, you really
have complete discretion over that. I mean, you could be
with one of the very low cost providers like Schwab
or Fidelity. And although you may have a, you know,
an annual fee, just an account maintenance fee of 25
or 50 bucks, I'm making that up, but it's not
(39:31):
going to be much. You know, you don't have to
pay anybody to manage that for you. You could do
that yourself. The reason people pay advisors to manage Roth IRAs,
in many cases, although it's not required, is because they
don't know what investments to pick. And so they say,
you know what? I realize I'm going to have to
pay something to this person. But my objective is by
(39:53):
paying a professional, I'm going to see better performance. And
so the investments that are selected on my behalf are
going to result in better risk adjusted returns, and therefore
it's worth it. Just like when you sell your house,
you can sell it on your own and not pay
a realtor, but you're going to have to market it,
and you're going to have to do the staging, and
you're going to have to invite the strangers into your
house when they, you know, have an open house and
(40:14):
you're going to have to negotiate the contract, and you're
going to have to show up at the closing, you know,
and so a lot of people say, for my biggest
transaction in life, buying and selling a home, I'm going
to pay a professional. And I think the same is
true here for investments. But is that required? Absolutely not.
You could go to Robinhood, for instance, and pay next
to nothing for a Roth IRA, but you're going to
(40:35):
be on your own in terms of the investments, the
stocks or the ETFs or the mutual funds that you buy.
Does that make sense? Alex, are you there? All right.
Looks like we lost Alex. Hopefully that was helpful. We
appreciate your call, sir. Uh, call back any time if
we can assist you further. Real quick to Georgia. David,
I've just got about a minute left. How can I help?
S9 (40:57):
Uh, appreciate your show. Rob had a commentary on Roth
IRA versus the traditional to kind of go along with
some stuff today.
S2 (41:05):
Okay.
S9 (41:06):
I'm recently retired, 62 years old, federal worker income sources,
three different places, including Social Security. One of the observations
I'm going to need to move to a different part
of Georgia, where my fully paid for home. Now, if
I move, I'm going to have to invest like another $150,000.
(41:29):
I pull that from a Roth, then I don't increase
my taxable amount.
S2 (41:35):
Yeah.
S9 (41:36):
For the year.
S2 (41:37):
Yeah.
S9 (41:37):
If I did pull that from a traditional oh my
goodness my taxable amount would like double huge.
S2 (41:44):
Yep.
S9 (41:44):
So I was wanting to just point out and let
and then let you finish up here. Uh that sometimes
uh by having Roth funds to pull from you can
decrease your tax bracket or at least prevent it from
going up.
S2 (41:59):
Yes, sir. Excellent, David, that is well said. You are
exactly right. And and boy, that's, uh, you're right on
the money there. And so the idea is by having
both at your discretion, the pre-tax, which when you withdraw,
adds to your taxable income in the Roth, which does
not gives you ultimate flexibility in your case, having access
to that Roth is huge. Thanks for weighing in on that. Well, folks,
(42:22):
it's been a joy to be along with you today.
Thanks for inviting us into your story. What a joy
it is to encourage you with God's Word as you
seek to be that wise and faithful steward. Our goal
that you'd see God as your ultimate treasure. Let me
say thanks to my team today. I couldn't do it
without him. Amy, Dan, Gabby, T, and Jim Faith in
(42:42):
finance lives a partnership between Moody Radio and Faith fi.
Have a wonderful day and come back and join us
next time for another edition of Faith and Finance live.
Today's version of faith and finance live is actually not live,
so don't call in.
S2 (00:08):
Whoever is generous to the poor lends to the Lord,
and he will repay him for his deed. Proverbs 1917. Hi,
I'm Rob West. As Christians, we're called to be generous.
But what does that look like when someone asks for
money on the street? Should we give? Is there a
better way to help? Today, Doctor David W Jones joins
us to explore the ethics of giving to homeless people
(00:32):
and how to show compassion without causing harm. Then we
have some great calls lined up. But please don't call
in today because we're pre-recorded. This is faith and finance live.
Biblical wisdom for your financial decisions. Well, we're honored to
have Doctor David W Jones with us today. He's a
(00:53):
senior professor of Christian ethics at Southeastern Baptist Theological Seminary
and completed his PhD on Christian financial ethics. He is
also the author of several books and articles on moral
and theological issues. David, great to have you on the
program today.
S3 (01:09):
Thanks, Robert. It's good to be here.
S2 (01:10):
David, we're looking forward to diving into a series of
financial ethics topics with you throughout this month, covering everything
from the lottery and sports betting to gambling and the
prosperity gospel. But today, as you know, we're starting with
something many of us encounter. Often the decision to give
money to someone who's homeless and asking for help. So
(01:31):
to begin, would you lay a biblical foundation? What does
God's Word teach about us? Caring for the poor?
S3 (01:37):
Hey, Rob, I think it's, uh, it's important. And I
think all Christians would probably agree with this, that as believers,
we certainly want to have a concern for the poor.
We certainly want to have a heart that desires to help. Uh,
and that simply comes from, uh, from Scripture. I think
of Matthew 542, uh, which Christ says, give to the
(01:58):
one who begs from you, and do not refuse the
one who would borrow from you. Or first John 317
where John writes and says, but whoever has this world's goods,
and sees his brother in need, and shuts up his
heart from him, how does the love of God abide
in him? So I think Scripture is clear that we
need to have a concern for the poor. We we
(02:20):
should want to help the poor. Really, the the devil
in the details is. But how do we do that?
And that's maybe the harder question.
S2 (02:28):
Yeah. That's right. And especially when we get into a
situation like we're describing today, specifically being asked for help
from someone on the street, we see perhaps they're homeless
or appear to be, you know, that may involve a
sinful lifestyle. And that brings up a whole host of questions.
So perhaps there are some questions we should ask ourselves
(02:49):
when someone approaches us for money, what might those be?
S3 (02:53):
Well, I think, you know, first off, when you see
somebody on the side of the street, and perhaps you're
at a red light and there's someone there with a
sign that's asking for for help, asking for money. Um,
I think the the first thing that I, I like
to do personally, uh, is sort of check what is
my assumption in my heart about that person. And honestly, Rob,
(03:14):
oftentimes where my heart goes is I think, well, you know,
the reason why that person is in need. It's because
they're lazy. It's because they have a drug habit. It's
because they're unwilling to work. Uh, and I find myself
sort of silently condemning, uh, the homeless person and the
person who's in need. Uh, and what I, what I
call that, that sort of that heart position. Really? It's, um,
(03:38):
the phrase I've used in the past is it's being
middle class in spirit, where what I'm doing is I'm saying, hey,
I have a car. I have a job because I
work hard, and I have what I have because I've
been willing to to labor for it. Uh, but of course,
we know that Christ called us not to be middle
class in spirit, but to be poor in spirit. And
(03:58):
as a matter of fact, that guy on the side
of the street, he may be a drug addict, he
may be lazy, he may be unwilling to work. He
may be, in a sense, unworthy of our help. But
that's the very reason why we should desire to help him.
Because if we think bigger picture just I mean, maybe
a different question is this what if God waited until
(04:19):
we deserved his love and help in order to help us? Well,
while we were yet sinners, Christ died for us. Yes.
So actually, it's because that homeless person actually doesn't actually
deserve our help. That's the very reason why we should
desire to help them. And so getting that that heart
in a right position, I find, really is the the
(04:40):
first step and in some senses almost the hardest thing
to do because usually our interaction in those settings, you know,
we're not necessarily on the top of our game spiritually.
And oftentimes we start out in the wrong place.
S2 (04:53):
Boy, that is so well said and I think a
great foundation for our discussion today. The next question then
is how do I help? And we'll get into that
just around the corner. Also, what about just this overwhelming
feeling that you want to be able to help everyone
and you know you can't? That and much more. We're
talking today with David W Jones. He's senior professor of
Christian ethics at Southeastern Baptist Theological Seminary. Much more on
(05:18):
helping the homeless just around the corner. Stay with us.
Thanks for joining us today on Faith in Finance live.
(05:39):
We're in the midst of a series on financial ethics.
Joining us today, Doctor David W Jones. He's senior professor
of Christian ethics at Southeastern Baptist Theological Seminary. His PhD
work was actually on Christian financial ethics. So he is
someone that we are really excited about weighing in on
these topics today. Specifically, we're talking about this question we
(06:02):
all wrestle with, and that is should I give money
to homeless people? And there are a host of issues there.
And David, before the break, you were talking about really
how we should posture ourselves, how we look at this
through the lens of Scripture, some of the perspective that
we bring into this. And you said, undoubtedly we are
to give to help those in need. The question is,
(06:23):
how so? Is it ever wrong to give money directly
to someone who's homeless, like when we're being asked for
money on the street? Or is the bigger issue how
we give unpack that for us?
S3 (06:36):
Yeah. You know, um, getting the heart right, you know,
that we talked about is maybe the first step, you know,
but this the second important step. Uh, how do I
do this? And certainly, um, we don't want to act
in such a way where we end up enabling sin
LinkedIn or empowering sin or not even, you know, acting
in a way that would insulate somebody from the natural
(06:58):
consequences of their sin. Because oftentimes that's something that's built
in that God uses to promote repentance. And so we
want to act in a way that shows love for
our neighbor. And so oftentimes, you know, giving money directly
to someone on the street corner is is not going
to be the best course of action. Um, while it
might not be inherently wrong, um, they could take that
(07:22):
money and they could use that, you know, to finance
a drug or alcohol habit or use it in other
sinful ways. And so I've always encouraged people to make
some type of a non-cash gift. Uh, and that could be,
if you have time, you know, offering to buy them
a meal at a local restaurant or even I know, folks,
(07:44):
it's even been my practice, you know, to carry some
non-perishable food in my car, like a box of granola bars.
And if someone asks for help, you know, rather than
offering them a $10 bill, you know, offering them a
granola bar. And so trying to help in a way that,
as best as it's possible with my own actions, our
own actions that we're trying to show love of neighbor,
(08:08):
that we're not purposely putting someone in harm's way by
enabling them to perhaps continue in a sin.
S2 (08:15):
Mhm. Yeah. David, how do we process that from an
ethics standpoint. You know we want to help. Perhaps we
feel the leading of the Lord to help. Maybe there's
a small child standing next to them. We'd love to
be able to give them some cash that they could
use to put gas in the car, or maybe get a,
you know, a roof over their head, make the rent payment.
How do we think about the responsibility we have to
(08:38):
protect them, which we can't control? And do we leave
that to the Lord? And is that okay? Or should
we bear some of that responsibility Ability that perhaps because
of the situation we're in, we should naturally conclude that
it would likely be used for things that would be sinful.
And therefore we have some responsibility before the Lord. How
(09:00):
do we process that?
S3 (09:02):
Yeah, I think it's all about about being a good
steward and acting wisely. Now, of course, you know, in
a in a brief encounter on a street corner as
we're walking to the office, or again, maybe you're at
a stoplight and there's someone there on the side of
the road and, you know, before the light turns green
or before you, you know, you get to the next block,
(09:22):
you're probably not going to be able to, you know,
to learn a lot about what's actually the cause of
this person's poverty and why are they here. And we're
not going to be able to get enough information in
order to discern what might they do with a gift
that I give them. And so I think that the
important part is having that desire to help, you know,
(09:43):
even preparing in advance to help when we have these encounters? Yeah.
And then helping in the best way possible in that
given context that we find ourselves in. And I think
that's really what the Lord is going to hold us
responsible for. And that really ought to be the goal
that we're we're aiming for.
S2 (10:01):
Yeah. What about engaging in a deeper way? My sister,
for example, um, you know, repeatedly saw an elderly woman
that obviously appeared homeless and very poor at a grocery
store over a long period of time. She ended up
befriending her. They became very close and journeyed together over years. Uh,
(10:22):
often meeting she, you know, met her at her small apartment.
They helped financially. I mean, they she my sister and
her husband invested in this woman's life. And I think
that's a picture, a beautiful picture of how we can
help those in need. It does bring up, you know,
questions of safety and is that, you know, appropriate and
(10:43):
those types of things. But how do you think about
engaging beyond that handout of a granola bar or deeper
in someone's life?
S3 (10:50):
Oh, that's a great question. And what a great example
by your sister there, Rob. The, um, you know, essentially
there's there's three broad causes of poverty, and I wouldn't
have time to dive into all the depths of this,
but the the three causes of poverty are personal sin, uh,
natural evil, like, think maybe like a hurricane or tornado, uh, or, um,
(11:10):
oppression by others or essentially other people's sin. Uh, and
based upon the cause of poverty, um, that really shapes
and really directs us in how we might seek to
address poverty. And there's two broad ways that poverty can
be addressed. There is a an aid based model, which is,
you know, kind of giving out aid indiscriminately. Uh, and
for example, if you know, if someone is homeless because
(11:33):
of a natural disaster, well, then we want to give aid,
you know, pretty much without question and as soon as possible. Yes,
but a second model is a developmental based model. And
that's more, I think, of what you described there with
your sister, where somebody who perhaps is is in poverty
because of oppression by someone else, or perhaps even by
their own poor choices. Well, that's going to involve long
(11:56):
term personal involvement in order to address the poverty. And
should that become possible, you know, by encountering somebody or
perhaps getting involved in a group or organization that has
a long term model that's set up that can be
an incredibly effective and as well as incredibly rewarding way
to address poverty. So it's those those two approaches, you know,
(12:20):
whenever we see poverty, we kind of have to process
is is immediate, sort of indiscriminate aid appropriate in this
context or is a developmental kind of long term thing
more appropriate? And so it takes some thought in order
to kind of work through various instances that we find
ourselves in.
S2 (12:37):
Yeah. We've only got about 90s left. We're going to
have to have you back, clearly. But what about someone?
And we get this question often. Who's in our listening
audience today? David saying, I'm just overwhelmed by the needs
around me and I want to help everyone. I just
don't know where to start.
S3 (12:52):
Yeah. What a what a common reaction among so many believers.
You know, there's a principle that I've written about and
talked about elsewhere. It's called the principle of moral proximity.
And what this principle teaches is that we are most
morally responsible for those who are closest to us. And
this has been helpful to me because it can be
(13:13):
easy to be overwhelmed, say, by world hunger. But in fact,
of the matter is, I probably can't solve world hunger
for my living room. But there may be people in
my immediate circles, maybe my neighborhood, my church, my town
who I'm going to come across on a weekly basis,
who I can actually make a meaningful difference in their lives.
(13:33):
And if all Christians who are out there addressed first
the poverty that was closest to them, Well, then obviously
there's going to be a large kind of scale effect
of that. And really the fact of the matter is,
we're most equipped to actually deal with those who are
closest to us. And so indeed, big problems require big solutions.
(13:56):
But God's called us to take care of what's in
front of us first.
S2 (13:58):
There's no doubt about that, folks. Pick up a copy
of David's book, Every Good Thing An Introduction to the
Material World and the Common Good for Christians, where he
addresses this topic and much more. David, thanks for being
with us today.
S3 (14:11):
Thanks, Rob.
S2 (14:11):
That's David W Jones, senior professor of Christian ethics at
Southeastern Baptist Theological Seminary. Hey, folks, we're going to pause
now for a brief break, but we'll be back with
much more on today's Faith and finance live. So thankful
(14:34):
to have you with us today on Faith and Finance live.
I'm Rob West, by the way. Our team is not
here today. We're away from the studio, so don't call in.
But we've got some great questions that we lined up
in advance. We'll get to those in just a bit.
You know, I'm reminded as we think about the role
of money in our lives that we need to counteract
the messages of this world. We need to operate from
(14:55):
a biblical worldview. And when we look to Scripture, I
think we really see three big ideas around the role
of money. The first is money is a tool. Yeah,
we use it to buy things for ourselves and others,
and we use it to accomplish God's purposes. But it's
also a tool in the sense that God uses money
in my life to teach me to rely on him.
(15:16):
It's a daily demonstration of my faith. It reveals where
I've placed my trust and what I value. So it's
a tool. It's also a test. You know, having too
much or not enough can be a test. Are we
going to live with contentment? Will we choose contentment? Are
we going to rely on money in place of God?
It's a test in our lives, but it's also a testimony,
(15:38):
especially our willingness to trust God when we have little.
Or perhaps to share generously when we have much that
provides witness to an unbelieving world, even our faith to
handle money God's way in the midst of uncertain times,
that itself can be a great testimony to the world.
So money is a tool. It's also a test, and
(16:00):
it's a testimony that God uses to both provide for
my needs, as well as to grow me up in
my faith and rely more heavily on him. I hope
that's an encouragement to you today. All right, let's get
to our calls today that we've lined up for you.
Let's head to Maine to begin today. Lee, you'll be
our first caller, sir. Go ahead.
S4 (16:18):
I'm almost 44 years old. Um, I started my 401
K in Roth IRAs in my work, maybe a little
over a month ago. And, um, I can only afford
to put in probably around 10% of my earnings. So
I put 5% in my Roth IRA, and I put
five in my 401 K, but I was wondering, uh,
(16:39):
in the long run, which one should I invest more
into to have a better outcome at retirement?
S2 (16:44):
Yeah, it's a great question, Lee, and I'm delighted to
hear that. Uh, you're prioritizing, you know, keeping your lifestyle
in check and being systematic in your retirement contributions, even
if you feel like you're a little behind. The key
is let's take advantage of these next, you know, 20
or 30 years when you're going to be working and,
you know, you can sock away as much as possible. Remember,
(17:07):
you're very, uh, your most powerful tool for wealth building
is your income. So long as you live beneath it
and you can sock that money away. So I think
that's great. You're at 10%. Let's try to push that
up as you're able, maybe over time, to 15% or
even a bit more. This is also a great question
as to do we go with the pre-tax traditional 401
(17:29):
K where you get the current tax deduction versus the
after tax Roth. Obviously the pre-tax. You will pay tax
on it when it comes out in retirement with the
Roth the after tax contribution, the gains come out tax
free in retirement. Two different approaches. Both can be very effective.
Let me just clarify though. You do not have a
(17:50):
Roth 401 option. You only have the traditional. Correct.
S4 (17:54):
Yep.
S2 (17:55):
All right. Very good. Um, I certainly want you to
take advantage of the matching portion in your 401 K.
I'll share kind of a rule of thumb with you
that came from some research that was done a number
of years ago. Uh, some researchers came together to look
at this very question on, you know, how do we
think about contributing to a pre-tax versus an after tax
(18:15):
environment as we age and throughout our working life get
closer to retirement? And they studied thousands of retirement plans,
real retirees, just to see what was the optimal mix
between the pre-tax and the after tax. And what they
came up with was a rule of thumb. And thumb,
and that's all it is, doesn't mean it's right for everyone,
(18:36):
but they just factored in the uncertainties that exist, which
is we know you're probably going to be making less
in retirement, but we don't know what the tax structure
is going to be, you know, 20 years down the road. Um,
our tax is going to be a lot higher. Are
they going to be the same? Are they even going
to be lower than they are today? We just don't know.
And so their rule of thumb was you take your age,
(18:58):
you add the number 20. And then that's what you
put in the pre-tax contribution and then the balance you
put in Roth. So if we applied that to your
situation you know you're 43. We had 22 it so
that's 63. Call it 65%. You know, you would put
around 65% of your total contributions into the pre-tax. And
(19:19):
then you'd put the balance in Roth. I mean, I
think that might give you a good rule of thumb,
maybe a bit more than half into the 401 K,
certainly at least to take advantage of the matching and
then maybe the balance in Roth. And that way you
have both of these buckets growing in the future. And
then when you get to retirement and we understand what
the tax structure looks like and some of the other factors,
(19:42):
you would then have both the pre-tax and the after
tax buckets to pull from. And you could optimize your
withdrawals accordingly. Does that make sense?
S4 (19:51):
That's my sense yes. Thank you.
S2 (19:53):
Excellent. So I think that's at least get you pointed
in the right direction here, Lee. And hopefully it gives
you some things to think about. We appreciate you being
on the program, sir. God bless you. Uh, let's see
South Carolina. Susie, go right ahead.
S5 (20:05):
Hi. I'm calling. I wanted to get some information regarding
whether to who? My account over from Vanguard. Okay. Edward Jones,
my husband and I have an account with IRA. Account
with Edward Jones. It was just some money we had. And,
you know, we decided to go ahead and set up
(20:27):
another account. But I also have a 401 with Vanguard,
and that's been there ever since I've been working with
that company. And when I left that company, um, I
didn't put anything else in it, but it is growing.
The the thing I'm kind of skeptical of is both accounts,
they seem to go up and down at the same rate.
(20:50):
There's no difference. So one is managed, one with, um,
Edward Jones is being managed by a financial advisor. The
one with Vanguard is not. But whatever happens in the Vanguard,
it's the same thing that happens in the one with
Edward Jones. Yeah, we were thinking about moving that over
(21:11):
and just not sure if we should or not.
S2 (21:15):
Yeah, it's a great question. Here's my thoughts. Um, I
like you having an advisor that's kind of leading the
way here and making the decisions. It's not really a
matter of me. Edward Jones versus Vanguard. Both are solid
financial organizations. I think the fact that one is passive
at Vanguard versus active, I'd skew toward the active, I
think largely because the market has just done so well,
(21:37):
and I think we're entering into a period with these
rich company valuations where an actively managed account is going
to do better than a passive, just for a variety
of reasons related to the economy. So if it were me,
I would go ahead and roll that over to that
advisor at Edward Jones. We'll be right back. So thankful
(22:04):
to have you with us today on Faith in finance live.
I'm Rob West, your host. Now. Our team is away
from the studio today, so don't call in. But we
lined up some questions in advance that I know will
be helpful to you. Uh, back to the phones to Indiana.
And thanks for waiting. Go ahead.
S6 (22:19):
Um, I have an HSA that I've had. I established
it in 2006, and then I put into it for
like ten years, and then I got on Medicare. Had
to go on Medicare. Um, and I have, um, around
seven and a half years of Medicare Part B premiums
that were taken out of my Social Security payments each
(22:40):
month for the last seven and a half years. And
it's my understanding I can take those premiums out of
my HSA. But I read online if I and I
haven't done that, and I read online that you can
go retroactive, I could take all those seven and a
half years like this year if I want to. Is
that is that true?
S2 (23:01):
You know, I would look into that. My understanding is
that is not the case. Now, clearly, once you're 65,
you can use HSA funds to pay for Medicare Part
B and C and D. Um, but you can't use
it for any kind of Medigap or Medicare supplement, and
you can't contribute to an HSA beyond age 65, but
(23:25):
you can use it for the premiums. Now, where I
think you need to get some information is I do
not think you can use it to pay back premiums.
You've paid in the past specifically for Medicare. That's what
I would. I want you to get to a little
bit more information on, because that's not my understanding, although
I'm not certain on that. And that's why I want
you to check it out.
S6 (23:46):
Okay. Well, it publication, you know, the pub 959 is
not clear on it either. But online, like Kiplinger, you know,
Schwab and all those are adamant that you can go
back on it. And I can't find it anywhere, you know,
in publication.
S2 (24:02):
969 so yeah, yeah. Uh, do you normally file your
own taxes or do you have a CPA you could
run this by?
S6 (24:09):
I usually do my own. Yeah, I do my own.
S2 (24:11):
Okay. Yeah. So this might be the time where you
just this is important enough that reaching out to somebody
who could give you, you know, definitive answer on this,
who's a tax professional, I think would be a good
idea because obviously that'd be real helpful if you could
go retroactive and now you'd get all that money out
tax free, and you could use that to shore up
your emergency fund or whatever else. But, uh, I'm not
(24:34):
I'm not certain that's possible. I know moving forward, you
could pick up those premiums with tax free distributions along
the way, and hopefully that'll help you moving forward for sure.
S6 (24:45):
Okay. All right. Well, I'll try to find out up
as an accountant or something.
S2 (24:49):
All right. Very good. Anne, thanks for calling today. I
wish I could have given you more definitive advice on that,
but we appreciate you being a part of the program. Uh,
let's go to, uh, Georgia. Hi, Mark. How can I help?
S7 (24:59):
Yeah, thanks for taking my call. Um, I am 57.
My wife is 62, and we were wondering if she
should go ahead and start drawing Social Security. We do
not need the money for income. We would take 100%
of that and invest it, uh, and just didn't know
(25:21):
what the the drawbacks were of going ahead and doing that.
S2 (25:25):
Yeah. So she's qualified under her own work record, is
that right?
S7 (25:29):
That's correct.
S2 (25:30):
Okay. And, uh, she would take that. At what age?
S7 (25:34):
Uh, well, we were wondering about taking starting that now.
She's 62. Will be 63 this year.
S2 (25:40):
Okay. Got it. Yeah. So she's going to, you know,
take obviously a pretty big, uh, you know, cut on that, uh,
by taking it early so it could be, you know,
as much as 25 to 30%. Um, and and I'd
love to see that grow. I mean, the difference is. Yes.
Could you invest it and do better? Possibly. Um, you know,
(26:03):
I think one of the questions would be just because
you all are still working, more of it might be taxable, uh,
versus later when you have maybe your fully retired and
you don't have as much income. And so perhaps you know,
much less of it if any would be taxable. Uh,
I think the second thing is you're going to get
a guaranteed return by waiting, as long as you live
(26:25):
long enough to reclaim it through the higher check. Um,
but you know, you're going to get a guaranteed increase of,
you know, nearly 8% a year, um, by waiting until
full retirement age, which there's no guarantee in the market.
So I think that's why, I mean, you know, we
don't know which is going to come out better. So
we just have to make an educated decision. Um, but
(26:48):
if you, uh, you know, expect to live, you're in
good health. Um, you know, and you expect just to
have the longevity based on family history and your own
current health status to live, you know, into your 80s
and beyond. Delaying those benefits increases that total lifetime payout.
And that tends to be, you know, the better option.
S7 (27:07):
Okay. Well, thank you very much I appreciate it.
S2 (27:10):
Yeah. You're welcome. We appreciate you calling today Mark God
bless you, sir. Hey, before we take one more call,
interestingly in the news and this probably won't come as
a shock to you, uh, the paper check is all
but dead. In the U.S. for more than a century,
checks were the preferred way, of course, to pay for
most things. Now here's a study and just came across
(27:30):
this today. Fascinating by the personal finance site gobankingrates. They
found that nearly half, 46% of Americans hadn't written a
paper check in the preceding year. Now, as I think
about my own life, I hardly ever write checks. I mean,
maybe when, you know, a service worker comes to the
house to repair something and, you know, they they don't
(27:53):
take a credit card, although most do now. Um, and
so you write them a check. Really? The only time
I can think of that I've written a check in
the past year. There's one time a year where I
write a check, and it's because, uh, our garbage people,
when they come to pick up the Christmas tree every year,
which we can put at the curb, I've got to
write a $15 check, put it in a Ziploc bag,
(28:15):
and literally attach it to the tree. And they come by,
they grab the grabbed the check and they take the
tree away. That's the only time I write a check
each year. Interestingly, now, obviously debit cards and smartphone apps
have made it much easier to pay at the register,
and online purchases, of course, have always been digital. Many
major retailers, such as target, have even stopped accepting paper checks,
(28:37):
interestingly for payment. Covid, of course, accelerated this trend with
a huge increase in online purchasing, but it was well
under way even before the pandemic hit. In 2015, Americans
wrote 18.1 billion checks. By 2021, that number had dropped
from 18 to 11 billion, almost a 40% drop. Now,
(29:00):
in addition to debit cards, consumers are increasingly turning to
digital payment methods. So this would be things like PayPal
and Venmo and and Zelle. So imagine soon nobody will
be able to say the checks in the mail. Although
with online banking there is still even though you're just
making a few clicks, the bank typically is still sending
(29:21):
that paper cheque. But I think that's probably going to
be replaced with a true digital solution end to end.
It already is, but it will increase in the days ahead.
What does all this mean? Not much other than, you know,
there's clearly convenience, expediency, even I think security that goes
without these paper cheques flying through the mail where somebody
(29:42):
can grab them and and get your account number. But
there are trade offs. And that means we need to
use digital best practices when we're doing more and more
business online, including, you know, making sure that you're not
on public Wi-Fi when you're logging into these accounts. You
keep your operating system on your computer or your smartphone
(30:04):
up to date with all those security patches. Use long
string passwords. I'd use a password manager. I use one
called one the number one password. One password. But there's
a lot of them. Uh, LastPass would be another, but
they'll actually generate, you know, a 15 or 18 or
20 character, uh, you know, password for you and save it,
(30:25):
encrypt it. And, you know, you can have a different
password for every account, which is really the best practice there. Uh,
don't ever click on a link in an email or,
you know, for a phishing scam or even, you know,
give out your information if somebody calls you, even if
the caller ID says they're from a company you recognize,
they can spoof that. So we've got to be on
our guard. But I think there are plenty of benefits
(30:47):
we derive from moving more digital. Even though I know
a lot of you listening out there today are saying, nope,
I'm standing my ground. I still like to go to
the bank, I still like to write checks. And I
hear you on that. Stay with us. Great to have
you with us today on Faith and Finance live. I'm
Rob West. Our team is away from the studio today.
(31:10):
We're not here, so don't call in. But we lined
up some great questions in advance and we'll get to
those in just a moment. First, you know, as I
look at the scriptures, one of the big ideas that
literally jumps off the page when you look at this
area of finance in light of a biblical worldview, is
the idea of contentment. We should foster an attitude of contentment.
(31:31):
And I think that's the first understanding is that it is,
in fact, an attitude. Matthew 633 says, but seek first
the kingdom of God and His righteousness, and all these
things will be added to you. If our aim is
the kingdom, then that changes our perspective. It makes it
focused on the eternal, not the temporal. And that's a
(31:51):
game changer. Well then, from an attitude, we learn that
contentment is in fact learned by the apostle. Paul said
it this way, not that I'm speaking of being in need,
for I have learned in whatever situation I am to
be content. That's Philippians 411. So it's a learned behavior.
It's also a choice. You know, I can choose to
(32:12):
be content in every circumstance. Rich or poor, happy or sad,
easy or difficult. Because as Christ followers, well, our position
in Christ never changes. And I think that's an important
reminder for us today. And perhaps it could change your
whole approach to your money. All right, let's go back
to the phones here. We're going to round out the
(32:32):
broadcast today with your questions. Let's go to Ohio. Hi, Christine.
How can I help?
S8 (32:37):
Hi, Rob. Thanks for taking my call. Sure. Um, I
am actually calling on behalf of a good friend of
mine who is a young man in his late 20s,
and he is incarcerated in the state of Louisiana. And
he he has about five years left in his sentence. And, um,
he's an avid listener of your program. And so he
asked me to call him for you.
S2 (32:58):
Oh, awesome. That's great.
S8 (32:59):
And, um. Yeah. And I recently opened, um, just a
small index fund on his behalf. Um, it's in my name,
but I'm going to be giving him the funds when
he gets out. But he just had some questions. Um, like,
what would be the best way for him to invest
in the stock market, for the best possible gain and
profit for his future and his family, given the volatility
(33:20):
of the stock market? What kinds of funds would you recommend?
Mutual index, etc.. Um, do you recommend a traditional or
Roth IRA? And then also, what would be the best
way for him to invest in buying shares of a company?
So I hope that all makes sense.
S2 (33:38):
It sure does. Yeah. And Christine, when we're done here today,
I'd like for you to hold the line because I'd
like to put a book in the mail to you
if you have the ability to get it to him.
That would be great. Could be something he could be
reading through. It's called the Sound Mind Investing Handbook, which
really just unpacks kind of a lot of these principles
around how do you invest practically, but also through the
(33:59):
lens of biblical wisdom. So we'll we'll get that out
to you as our gift to him. Um, you know,
I think in terms of just generally investing, um, you know,
we always have to define, first of all, you know
what is the time horizon and purpose for the money?
And so if this money is intended to be really
for the future, meaning retirement. So in that fourth quarter
(34:22):
of life where, you know, we, you know, perhaps move
away from paid work or we're unable to work and
we're trying to supplement Social Security. If he has enough
credits to to get Social Security, then, you know, we
do want to try to put it in a tax
advantaged account. So I think using a Roth IRA, um,
once he's out and has earned income, because that would
(34:43):
be required. And if he's married, he could have a
spousal IRA, uh, for his wife, whether she works or not.
And so that would allow them, you know, let's say,
you know, if it was 20, 25, they could put
in 7000 apiece or 8000 if they're 50 or older. Um,
and so, you know, that'd be a great place to begin. Um,
if he ends, you know, depending on what he does
(35:05):
for work, when he gets out, if he has a
401 K available, especially if there's matching, I'd use that
as another tool. And then in terms of the the
where of the investing. Um, I would say, uh, you know,
I love the faith based investing mutual funds. If he's
really concerned about his values being reflected, uh, you could
download a list of those faith based investing funds that
(35:28):
he could consider. Or you could, uh, on his behalf.
And I'll give you if you've got a pen handy.
It's just faith and investing. Faith and investing. Fi. And
that'll give you a PDF with all of the faith
based investing mutual fund families. Uh, those would be great.
(35:49):
If he just wants something that's more passive, like an
indexed approach, you could also open an account for him
at something like the Schwab Intelligent Portfolios, which is very
low cost. And then based on kind of his age
and risk tolerance and goals, it would just automatically build
a very passive portfolio using the major market indexes, both
(36:11):
bond and stocks. Um, but it would be widely diversified
over domestic and international small cap, mid cap, large cap.
So you get a really nice diversified portfolio. Again, very
low cost. Uh, and the nice thing about that is
there's no transaction cost. So if you were to be
putting in a little bit every month, for instance, it'll
just automatically be reinvested without any transaction expenses into all
(36:35):
of the different investments based on what the algorithm says
is the right mix for him. So that's the Schwab
Intelligent portfolio. So I think either of those could work
the faith based investing list or the Schwab Intelligent Portfolios.
That's the where and then the what type of account
is going to have to do with as long as
this is earmarked for retirement? I think the Roth and
(36:56):
then perhaps plus a 401 K when he gets out
could be a great option in terms of just how
to think about investing. I mean, I think the key
is it's just all about being systematic and whether the
market's up or down. You just want to keep investing.
And even if it's down, that's actually not a bad
thing because now all of a sudden, with the same contribution,
you're buying more shares of the same investments because they're
(37:19):
less expensive. And it always comes back, at least historically speaking,
and moves to new highs over time. And so that's
why we take a long term view. And we're systematic
in our investments and we're properly diversified which is why
we use either ETFs or mutual funds. Does that helpful
though it is.
S8 (37:37):
Thank you so much Rob.
S2 (37:39):
Awesome. Happy to do it Christine I'm going to send
you that book. So you stay on the line. Our
team will get your information. We'll get the Sound Mind
Investing Handbook out to you. It's our gift to you.
You pass it on to him. And if we can
help him with anything along the way, tell him to
reach out and tell him. Thanks for listening to the program.
God bless you. Let's go to Illinois. Hi, Alex. How
can I help?
S9 (38:00):
Hey, Rob. How are you doing?
S2 (38:01):
Doing great. Bud.
S9 (38:02):
Accepting my call? Sure. Hey, I want this question I
just trying to grasp something? Been trying for a little longer.
What's the use of IRA or Roth when I have
to pay someone to, you know, look after my money
and I gain nothing. They give me nothing for me,
letting them hold my money. What's the difference between that?
(38:23):
And just a regular bank savings account?
S2 (38:26):
Well, first of all, the Roth is just the type
of account. And what it is, is the, you know,
it comes from Senator Roth, which is what it's named after,
and it's a retirement vehicle that allows you to put
in after tax money so you don't get a deduction
and it grows once you invest it tax free. Um,
meaning all the gains and the dividends and any interest
(38:49):
you're earning inside that Roth during your working years. When
you start pulling that out in your fourth quarter of life,
as long as you're 59.5 or older. But for most folks,
you know, in their 60s and 70s, you pay no
tax on all that gain. So there's a tax advantage there,
especially if you can be systematic in your investments over
a long time. Now, in terms of how you go
(39:11):
about investing that and what fees you're paying, you really
have complete discretion over that. I mean, you could be
with one of the very low cost providers like Schwab
or Fidelity. And although you may have a, you know,
an annual fee, just an account maintenance fee of 25
or 50 bucks, I'm making that up, but it's not
(39:31):
going to be much. You know, you don't have to
pay anybody to manage that for you. You could do
that yourself. The reason people pay advisors to manage Roth IRAs,
in many cases, although it's not required, is because they
don't know what investments to pick. And so they say,
you know what? I realize I'm going to have to
pay something to this person. But my objective is by
(39:53):
paying a professional, I'm going to see better performance. And
so the investments that are selected on my behalf are
going to result in better risk adjusted returns, and therefore
it's worth it. Just like when you sell your house,
you can sell it on your own and not pay
a realtor, but you're going to have to market it,
and you're going to have to do the staging, and
you're going to have to invite the strangers into your
house when they, you know, have an open house and
(40:14):
you're going to have to negotiate the contract, and you're
going to have to show up at the closing, you know,
and so a lot of people say, for my biggest
transaction in life, buying and selling a home, I'm going
to pay a professional. And I think the same is
true here for investments. But is that required? Absolutely not.
You could go to Robinhood, for instance, and pay next
to nothing for a Roth IRA, but you're going to
(40:35):
be on your own in terms of the investments, the
stocks or the ETFs or the mutual funds that you buy.
Does that make sense? Alex, are you there? All right.
Looks like we lost Alex. Hopefully that was helpful. We
appreciate your call, sir. Uh, call back any time if
we can assist you further. Real quick to Georgia. David,
I've just got about a minute left. How can I help?
S9 (40:57):
Uh, appreciate your show. Rob had a commentary on Roth
IRA versus the traditional to kind of go along with
some stuff today.
S2 (41:05):
Okay.
S9 (41:06):
I'm recently retired, 62 years old, federal worker income sources,
three different places, including Social Security. One of the observations
I'm going to need to move to a different part
of Georgia, where my fully paid for home. Now, if
I move, I'm going to have to invest like another $150,000.
(41:29):
I pull that from a Roth, then I don't increase
my taxable amount.
S2 (41:35):
Yeah.
S9 (41:36):
For the year.
S2 (41:37):
Yeah.
S9 (41:37):
If I did pull that from a traditional oh my
goodness my taxable amount would like double huge.
S2 (41:44):
Yep.
S9 (41:44):
So I was wanting to just point out and let
and then let you finish up here. Uh that sometimes
uh by having Roth funds to pull from you can
decrease your tax bracket or at least prevent it from
going up.
S2 (41:59):
Yes, sir. Excellent, David, that is well said. You are
exactly right. And and boy, that's, uh, you're right on
the money there. And so the idea is by having
both at your discretion, the pre-tax, which when you withdraw,
adds to your taxable income in the Roth, which does
not gives you ultimate flexibility in your case, having access
to that Roth is huge. Thanks for weighing in on that. Well, folks,
(42:22):
it's been a joy to be along with you today.
Thanks for inviting us into your story. What a joy
it is to encourage you with God's Word as you
seek to be that wise and faithful steward. Our goal
that you'd see God as your ultimate treasure. Let me
say thanks to my team today. I couldn't do it
without him. Amy, Dan, Gabby, T, and Jim Faith in
(42:42):
finance lives a partnership between Moody Radio and Faith fi.
Have a wonderful day and come back and join us
next time for another edition of Faith and Finance live.
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