June 9, 2025 • 42 mins
God demonstrated the most generous act the world has ever known when He gave His only Son to redeem us all. So then, what should we learn about being generous from the example of the Gospel? On today's Faith & Finance Live, Rob West will welcome Nathan Harris to talk about how we can practice Gospel generosity. Then, Rob will answer your calls and financial questions.
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
S1 (00:08):
You know the grace of our Lord Jesus Christ, that
though he was rich, yet for your sake he became poor,
so that you by his poverty might become rich. Second
Corinthians eight nine. Hi, I'm Rob West. This powerful verse
is often quoted when we talk about generosity, and rightly so.
It shows us that generosity isn't just a financial principle,
(00:31):
it's rooted in the very heart of the gospel. Today,
Doctor Nathan Harris joins us to explore that connection more deeply.
And then it's on to your calls at 800, 500,
25 7000. This is faith and finance. Live biblical wisdom
for your financial journey. Our guest is Doctor Nathan W Harris.
(00:52):
He is vice president for strategic initiatives at the University
of Mobile and author of the new book, A Short
Guide to Gospel Generosity. Giving as an act of Grace.
Doctor Harris, welcome to the program.
S2 (01:05):
Yeah. Thank you so much for having me on today, Rob.
I'm grateful to be here.
S1 (01:09):
The term gospel generosity may be new to some people.
So would you take a moment here right at the
start to define it for us?
S2 (01:16):
Yeah, absolutely. I mean, I can give you a simple definition,
and it's this gospel. Generosity is generosity that's rooted in
the gospel. I can tease that out a little bit more,
and I'm happy to do so. But I often say
that that generosity is not merely a virtue for the
Christian life, but really is a cheerful disposition that springs
forth from the good news of salvation in Jesus Christ.
(01:37):
Generosity is a fruit of the gospel that arises from
new life in Christ. It's something that's empowered by the
Holy Spirit and that we've seen modeled by the father
throughout all of creation. Gospel generosity is that sign of
a radical reforming of a believer's head and heart to
joyfully serve the Lord through their stewardship of their resources.
So the long story short, generosity for Christians is not
(01:59):
just about giving, but it's about proclaiming and portraying the
saving work of Christ in their life.
S1 (02:04):
Oh that's powerful. I love the picture that that gives
of our generosity as an overflow of gratitude for what
Christ has done on our behalf. Now, Doctor Harris, as
we talk about giving, people naturally gravitate toward questions about
the tithe. So let's go. There are Christians called to
tithe or are we called to something greater?
S2 (02:24):
Yeah, really asking some tough questions to.
S1 (02:26):
Start this off.
S2 (02:27):
There's really no, uh, you know, there are few questions
that can provoke a healthy debate like this one. But,
you know, Christians throughout all the age have have asked
this question. And I recognize that they've come up with
different answers. But for me, uh, as as I read
both the Old Testament and the New Testament in my Bible,
I can't help but conclude that that tithing, specifically the
(02:47):
requirement of 10%, is not a calling for Christians. And
I know, you know that that some listeners are going
to be thinking, whew, I'm finally off the hook. I
don't have to give. No, that's not the response that
we want to have either. We aren't obligated to give
Christians see giving as an incredible gospel opportunity. So in
a sense, we're called to something much greater than tithing.
(03:09):
We're called to live our lives generously, humbly, selflessly, and
with an eye and mind on the kingdom of God.
S1 (03:14):
Yeah. That's helpful. So how then, should the gospel transform
our hearts, our minds, and even our approach to managing money?
S2 (03:23):
I love that question. You know, there's an old phrase
that's often attributed to Martin Luther. You know, the great reformer,
whether he said it or not doesn't matter as much
as the content is just so true. And the quote
says that there are three conversions in one's life the
conversion of the heart, the conversion of the mind, and
the conversion of their pocketbook. And I think it was
Spurgeon who later added that it was often the pocketbook
(03:44):
that was the most difficult for conversion. And while I
laugh at that, and we may be laughing when we
hear those quotes, they should still cause us to pause
and think when we encounter Christ and put our faith
in him, we experience a conversion of our heart. Our
hearts are filled with the affections for Jesus. We desire
to serve him. A heart of stone is replaced with
a heart of flesh. We experience a conversion of mind,
(04:05):
one that no longer thinks of the things of this world,
but is thinking heavenward, as we read in Colossians. And
if those things are true. Spoiler alert they are true.
Then all aspects of our lives experience conversion. And yet,
in my experience, I've seen how people submit their lives
to Christ while keeping their finances to themselves. So in
one hand they hold out Christ, and in the other
hand they hold their finances out as far as they
(04:26):
can away from it. And I think it was Spurgeon again,
to quote him, he said something along the lines of
that you can't hold on to Christ while also holding
on to your money. So if the gospel transforms your mind,
then you're thinking isn't just on your wealth, it's on Christ.
If the gospel transforms your heart, then your affections aren't
for wealth, they're for Christ. So that gospel transformation that
(04:47):
we experience when we come to Christ informs the way
that we view money, steward it, save it, spend it.
And yes, it informs even the way that we give it.
S1 (04:56):
Oh that's powerful. What a picture of what our life
should look like as a steward. A money manager of
the King of Kings. Well, we've just scratched the surface,
so we're going to have to have you back. But,
Doctor Harris, thanks for stopping by today.
S2 (05:08):
Yeah. Thanks so much.
S1 (05:09):
That's Doctor Nathan Harris, author of A Short Guide to
Gospel Generosity. Giving as an act of Grace. Pick it
up wherever you buy books. Your calls are next. 800
525 7000. We'll be right back.
S3 (05:32):
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 (05:55):
Great to have you with us today on Faith and
finance live here on Moody Radio. I'm Rob West. Boy,
I'm really looking forward to taking your calls and questions today.
I've been off for about ten days traveling overseas on
a mission trip. We took a group of about 200
high school students over to Poland with a choir, high
school choir, and a couple of sports teams and went
(06:16):
into the high schools to share the love of Jesus.
It was incredible. And, um, I saw a lot of, uh,
just the Lord really moving in people's lives. But so
thrilled to be back with you here today. I miss
my time engaging with, uh, our amazing listeners and callers
here on Moody Radio. I'm delighted to be able to
help you steward God's money today. And by the way,
(06:38):
that's what we do during this broadcast. Each day, we
recognize God has given you a good gift as he's
entrusted money, his resources that all belong to him, to
you as the manager, and we're each then charged with
being found faithful in that. Remember, money is a good gift,
so long as it's a tool to accomplish God's purposes,
(06:59):
to deepen relationships, and perhaps to use to celebrate and
just enjoy a great meal together. And I think that
makes God smile, but also to share with others people
in need, and even to invest in a way that
promotes human flourishing. All of that is God honoring. So
long as money is not our end, God is our
ultimate treasure. Money is a tool to accomplish God's purposes. Now,
(07:23):
as we journey along with money, we realize that it's
one of the primary ways God shapes our spiritual journey,
because it's such a tangible expression of what we value
and what we trust. But it also has very practical implications.
And you're trying to manage debt and think about giving
and investing for the future, and then you've got to
(07:44):
transfer it down the road. And how do you do that? Well,
all of these bring very real questions. And so we
invite you to call the program and ask those questions.
And we'll do our best to guide you back to
biblical principles, but to give you really practical advice around
how you can move forward in seeking to be found
faithful as a wise steward. So if you have a
(08:04):
question today, we've got lines open. Looking forward to hearing
from you on the broadcast. The number 800 525 7000. Again,
that's 800 525 7000 you can call right now. Uh,
before we dive in today in the news, we want
to see what is being talked about today. Run that
through a biblical lens. And it happens to relate to
(08:25):
first time homebuyers, especially Gen Zers in their 20s. And
it relates to student loans and credit card debt, which
is making it more difficult to get into a home. Uh,
a new study from a collection agency, the Kaplan Group,
backs up some of these findings with hard numbers. Here's
the first one. And that is since 2007, the average
(08:46):
student loan balance has more than doubled, now sitting at
nearly $38,000. Over the same period, the national homeownership rate
has dropped almost 5%. And for every 1000 in student
loan debt, your odds of owning a home drop by about, well,
close to 2%. But there is some encouraging development from
(09:07):
first time homebuyers, and that is that new rules from
FHA and Freddie Mac have eased the way, counting just
a half a percent of your student loan balance toward
your monthly debt load. Some buyers, especially medical professionals, can
even have their student loans excluded entirely. However, credit card
(09:27):
debt is still a major limiting factor for first time
home buyers. Bottom line pay off or pay down your
credit card balance as quickly as possible to improve your
chances of being approved for a mortgage. Also, keep in
mind just because the mortgage company says you're approved doesn't
mean it's the right loan for you. A couple of
rules of thumb there. Number one, always have a 20%
(09:47):
down payment. That's going to help you avoid private mortgage insurance,
which is about 1% of the mortgage balance. It does
nothing for you. It's just an unnecessary expense. Secondly, make
sure that that principal interest taxes and insurance payment the
mortgage payment 25% or less of your take home pay,
no more than 30%. That's going to ensure that you
have enough left over for everything else. So just some
(10:11):
thoughts there as you navigate what is a challenging home
buying environment just because of the affordability of homes, homes
being at their peak. Not to mention these high interest
rates that have persisted longer than we anticipated. All right.
We're ready to dive into your questions today. Our team
is standing by so you can call right now 800
525 7000. Let's begin in Lebanon, PA hi, Jack. Go ahead.
S4 (10:36):
Hi, Rob. How are you doing? I'm doing great. I
had a question about a irrevocable trust. Uh, my wife
and I are concerned we have a lot of equity
in our home, and we'd like to leave some of
that to our children. Um, and we visited with a
attorney in the area whose primary business is setting up, uh,
asset protection plans, and he has a very good reputation. Uh, but, uh,
(11:00):
they recommend putting your home into the irrevocable portion trust. Um, and, uh,
one of the things they said in the course of
this and they put this in writing, is that if
you need to get money out of that irrevocable trust, uh,
you can pay that out to your children a certain
amount per year. And then you can ask your children
(11:22):
to write a check back to you. So, um, I'm
just just asking your opinion about the ethics of irrevocable
trusts in general, but specifically, um, that question, uh, of
getting funds out of the irrevocable trust.
S1 (11:40):
Yeah. Yeah, that raises some some red flags to me. Um,
I'd perhaps get a second opinion on that. Uh, you know,
irrevocable trusts means giving up control. Um, and so you
can't easily change your mind later. Um, and so you
just have to understand what you're getting into, uh, when
(12:00):
you set these up. Secondly, I think it's important to
understand that if somebody suggests you could pay kids and
have them, quote, pay you back, it really could be
seen as trying to bypass Medicaid or tax rules, which
certainly I think I would put in the unethical category. Um,
and so you just need to be really careful about that. Uh,
(12:20):
there could be legitimate reasons to put a home in
a revocable, irrevocable trust, especially for estate planning purposes. But
it comes with trade offs in that you lose control.
And it's it's hard to reverse. Um, so I think
you just want to be careful that, um, any kind
of Arrangement. You understand the legal and financial consequences on that.
(12:43):
And then, you know, I think it rises even to
a higher standard as a Christ follower as to what
are we trying to do here? What is the ultimate objective?
Are we trying to kind of get around the rules
and regulations in some way, and if so, why? What's
at the heart of that? And I think to the
extent you have a check on that, I think that's
that's certainly something you ought to lean into. Um, has
(13:04):
there been an explanation as to why the irrevocable trust
is needed at this point?
S4 (13:10):
Well, it's to prevent losing your funds if one or
both would go into a nursing home. Yeah, yeah. So yeah,
that was my second part of the question. Is that
in your opinion is that ethical.
S1 (13:26):
Yeah, yeah. You know, I think the the challenge there
is again, you lose control over that. And there's going
to be a look back period on that. Um, you know,
from Medicare and Medicaid to determine whether or not, you know,
that was the intention. Um, and so I think there
can be appropriate ways to do that. Let's do this.
I've got to hit a break. And so perhaps when
(13:47):
we come back, we could talk for a second just about,
you know, when you would use an irrevocable trust, uh,
specifically around, uh, elder care planning, uh, what the trade
offs are, what's ethical and what's not. So, uh, do
me a favor. Um, Jack, just hold the line and
we'll unpack this a bit more just around the corner
after this break. When we come back, we'll be taking
(14:09):
the rest of your calls as well. The lines are
filling up. We've got some great questions coming up, so
don't go anywhere. This is faith in finance live on
Moody Radio. I'm Rob West. Much more to come. Just
around the corner. Stay with us. Great to have you
(14:32):
with us today on Faith and finance live here on
Moody Radio. I'm Rob West. We're taking your calls and
questions today. Before the break, we were talking to Jack
from Lebanon, PA. He's wondering about setting up an irrevocable
trust for his kids, and he just wants to make
sure that the concept of an irrevocable trust, how it's
structured and the fact that it's protecting assets, even to
(14:53):
the extent that it taps into government assistance and preserves
assets for heirs, whether or not that's ethical and something
that is appropriate. You know, Jack, the reason people would
do it is obviously to preserve Medicaid eligibility first and foremost.
So those irrevocable trust assets are typically not counted as
(15:15):
a part of your personal estate. Because remember, they've been
given away and you can't reverse that. And it has
to be set up correctly a medicaid or Medicare trust
or revocable trust. So it meets the look back period,
so that Medicaid can be tapped for nursing home costs
without depleting your savings. Also, the assets are shielded from
(15:38):
creditors lawsuits or personal financial mismanagement, again ensuring that they're
preserved for heirs. You can specify how and when they're distributed. Um,
you know, even while removing those assets from your taxable estate,
which you have done, and you may have estate taxes,
but this would, depending on the structure, reduce those, although
(16:00):
it's less of a consideration now, at least with the
current laws that don't allow the estate taxes to kick
in until you get into estate above $13 million. Um,
the downside is the loss of control because again, you
can't access them or control them directly. You're relying on
the trustee to do that. And so you really can't
change the terms, at least not easily or dissolve the trust. Um,
(16:23):
Medicaid will review any asset transfers within five years. And
so you could face penalties or delayed eligibility. There are
high costs as well. So the legal fees as well
as the ongoing administrative costs are a bit higher. And
then there are some complexities, which is why you really
need an elder care attorney, you know, to do this.
(16:44):
Somebody who specializes in this. I think to your point, though,
you know, thinking through, I mean, some would say that really,
you know, by doing this, you're ultimately just transferring this
responsibility to your neighbors, essentially to others that are going
to pick up the bill, other taxpayers that you know.
So you can give your kids an inheritance. Others would say, no,
(17:07):
this is an entirely legal action, and it would not
be good stewardship to take advantage of it. So I
think this is really a conviction matter. Um, you know,
where you need to kind of check your motives and
your heart on it. And, uh, are you, you know,
trying to preserve wealth for God honoring purposes or really just,
you know, trying to avoid costs at others expense? And
(17:30):
I think that's where if you have a check about
it or a concern as to, you know, ultimately what
you're trying to accomplish and how it's going to play out.
You know, that's something I would really pray through and
seek some godly counsel on before you make that final decision.
Does that make sense, though?
S4 (17:47):
It does. Yeah. It makes makes perfect sense. Yeah. All right. Well,
thank you very much, Rob.
S1 (17:52):
Absolutely. God bless you, Jack. We appreciate your call today.
Let's go to Brownsburg, Indiana. Hi, Greg. Go ahead.
S4 (17:59):
Yeah. Rob.
S5 (18:00):
Question a couple questions on Social Security. I'm at 68,
and at age 68 years ago, I had to take
disability and not work. Since I had sold a home
recently and made a capital gain. Does that is that
would that be taxable to where I have to record
that to Social Security?
S1 (18:23):
Uh, well, in terms of the, um, the taxes on that,
a home sale would be a capital gain or loss. Uh,
so is this your primary residence?
S5 (18:34):
Uh, it was my primary residence. Sold. It did make
the the capital gain after I paid the mortgage. Satisfied
all that? Um, and didn't make a profit. Um, but
it's not like I work. Say, I started working a
job and making hourly wages. I've never done that. But
I didn't know if this capital gain profit would, would
(18:56):
or would not be affected.
S1 (19:00):
Yeah. Uh, so it's going to come down to if
this was your primary residence, meaning it was where you
lived most of the time, uh, as your domicile. And
you did that for two out of the last five
years prior to the sale. Um, depending on whether you're
filing single or married, if you're filing single, you'd have
up to 250,000 in profit. Not the selling price, but
(19:22):
the amount of gain that you had that would be
excluded from capital gains tax if you're filing married, filing jointly,
you could have up to a half a million in
profit that would be set aside with no capital gains tax.
So did you have more than either 250 or 500,000
in profit?
S5 (19:41):
No, no I didn't.
S1 (19:43):
Okay. Then you would be able to take that, uh,
you know, if you, uh, only sold one home in a,
you know, for in the last two years, and you
lived there two out of the last five, then you
would have no capital gain whatsoever on that primary residence.
S5 (20:00):
Okay. Um, another question quickly is, uh, when I started
the disability, uh, eight years ago, it was considered Social
Security disability. It might still be considered on the Social
Security disability. Or once I hit 66.5, which I already
have my full retirement age. Does it just drop down
(20:22):
to the term Social Security?
S1 (20:25):
Yes, exactly. Um, so that, uh, Social security, Social security, disability, um,
does become Social Security once you've reached full retirement age. Um,
and so you would just automatically convert to Social Security
retirement benefits at your full retirement age.
S5 (20:46):
Is that something I do, or was that automatically done
through the Social Security office?
S1 (20:53):
Yeah. No, that would that would happen automatically. I mean,
you could certainly call into the office, uh, just to
check your status. You can call the toll free number
to understand your benefit transition, and they can confirm if
you're already on retirement benefits. But normally that would happen
automatically once you reach full retirement age. It would just convert.
S5 (21:16):
Okay. Thank you. Rob.
S1 (21:18):
Okay. God bless you Greg. Thanks for being on the
program today. Well, folks, uh, we're up against our next break.
We'll take that now. When we come back, we'll continue
to work our way through these questions. We'll head to
Florida and talk to Manny and then Shaina in Illinois.
Bob Dole coming up in our final segment as well. Today,
we'll get Bob's check on the markets, find out what's
moving the markets today. As we closed about flat, uh,
(21:43):
Dow Jones only down one point, S&P up just modestly
and the Nasdaq up just a bit more than that.
Bob Dole in our final segment today. Stay with us.
We'll be right back. Great to have you with us
today on Faith and finance live here on Moody Radio.
(22:04):
I'm Rob West. We're taking your calls and questions. The
line's nearly full, so let's head right back to the
phones to Florida. We go. Hi, Manny. How can I help?
S6 (22:13):
Yes. Thank you for taking my call. I enjoy your
program so very much. Thank you. My question concerns is
in regards to the, um, converting, a traditional IRA into
a Roth IRA. Um, I'm. I have over 500,000 in, uh, traditional. Um,
(22:33):
I'd like to convert it over into a Roth, uh,
before I hit that, uh, uh, required minimum deduction, uh,
age of 73. And because of, of course, you know,
I have to pay taxes on that, uh, that money
that I have to withdraw and it'll put me into
(22:54):
another tax bracket, and it will also affect my Social Security.
So I thought that, uh, maybe, uh, he might be
able to give me some advice on, uh, um, whether
or not to do it now and pay the taxes
up front now and not have to worry about it
at the back end, and then just be able to
(23:15):
withdraw my, uh, from my Roth IRA with not having
to pay any taxes on that money.
S1 (23:22):
Yeah. Very good. Well, a couple of thoughts on that
with regard to, uh, you know, pulling that money out. Um,
what did you say your age was today?
S6 (23:32):
Uh, 67.
S1 (23:34):
Okay. Yeah. So you've still got some time because you're
not going to have to take that money out. The
current RMD requirement based on your age will not kick
in until you reach age 73. And so you got
quite a bit of time before that would, uh, be necessary. Uh,
keep in mind that, you know, the other approach to
this without having to pay any tax on it, which
(23:57):
obviously any portion that you convert to a Roth IRA
would be taxable to you now in the year that
you convert it. And that could push, depending on how
much you convert in any given year, it could it
could push that up into a higher tax bracket just
because it increases the the total taxable income for the year. Um,
(24:18):
you know, when you reach full, well when you reach
age 73. Um, you know, it's it's going to be
based on the IRS table, but it's probably going to
be somewhere around, uh, you know, in high 3%, maybe
as close to 4% of the balance, um, that you
would have to take out at that age. Somewhere around,
(24:41):
I think it's around 3.8% of the balance, um, at
age 73. And you do have the ability, at least
based on the current rules and regs, to do what's
called a qualified charitable distribution. So any money that you
are currently giving or at that time when you reach
that age are currently giving, let's say, to your local
(25:01):
church or other ministries, and perhaps you're doing that out
of after tax dollars from checking or savings. If you
just replace that existing giving you were doing, assuming you
were doing more than, you know, 3 to 4%, uh,
a year in giving. If you replace that after tax
giving with money coming out of that traditional IRA through
(25:24):
a qualified charitable distribution, you could satisfy your required minimum
and get that money out without adding it to your
taxable income whatsoever. So you'd never pay tax on it
because remember you didn't pay it tax on it going in.
And now when you pull it out through the qualified
charitable distribution you don't pay tax on it now. So
(25:44):
it essentially is tax free through this tool. And that
would avoid you having to, uh, you know, pay the
tax on it. Now by way of that Roth conversion.
Does that make sense though?
S6 (25:56):
I'm not quite sure I understand that. Uh, um, uh,
I'm I'm still a little fuzzy on the, uh, um,
if I am contributing to, uh, or donating the money, um,
how is it that I can use the money for, uh,
(26:16):
you You know, so for daily, uh, spending that I
need to do, if the money is allocated, uh, for
a charity.
S1 (26:27):
You would not be able to. I guess I was
assuming that you didn't need the money in the IRA,
and you're just looking to let it continue to grow.
And the only reason you were taking it out is
because the IRS, at that point, at age 73, was
telling you that you had to, um, you know, if
you need the money for living purposes, well, then what
I would do is just take it out as you
(26:47):
need it. And yes, you're going to have to recognize
it at income at that point. But I don't know
why you would convert it to the Roth at this
point and pay tax on perhaps more than you actually
need to live on. All I was saying was that
if you have money in a traditional IRA and you're
not needing to pull it out, you're just letting it
grow because you're going to give it away at death,
(27:09):
or you're going to leave it as an inheritance. And
the only reason you're pulling it out is because of
the their required minimum will, then perhaps the opportunity you
have is to replace any giving you're doing with other
after tax funds, with money coming from the traditional IRA,
and that would allow you to satisfy your required minimum
(27:30):
and do the same giving without paying tax on that
money as it comes out. But if you need the
money to live on, well, you're going to have to
pay tax on it as you take it out. And again,
at that point, I don't know why you would do
the Roth conversion. I'm just not seeing that would help
you in any way if you follow.
S6 (27:49):
Okay. Because I was just talking to an advisor, financial advisor,
he would say that we would stretch this out within
a five year span and do a conversion, um, every
year of the funds until they're all converted over to
(28:10):
the Roth.
S1 (28:11):
Yeah, but what is it that you're ultimately trying to
accomplish by doing that?
S6 (28:17):
Not paying taxes on on the funds when I, uh,
take them out, um, from my, uh, at, uh, whatever age. Um, well,
I guess the, uh, the age for, uh, withdrawing from the, uh,
Roth would also be 73, is that correct?
S1 (28:41):
Well, there's no there's no required minimum for the Roth.
So once you convert it to the Roth, you could
leave it in there forever and never pull it out.
I guess, though, the the thing that I'm not following
on is you would have a massive tax bill for
the next five years. I mean, you'd have an additional
$100,000 in taxable income that would be reported, uh, you know,
(29:01):
on your return that you'd be paying tax on. And
I just don't know why you'd want to pay that
massive tax bill every year for the next five years,
just so you could then turn around at 73 and
pull it out tax free. I just don't think that
offers you any benefit. I think I'd rather leave it
in the tax deferred environment and then only recognize it
as you need it, because you need some money to
(29:24):
live on. And as you pull it out, yes, you'd
pay tax on it coming out of the traditional IRA,
but you're going to pay tax on it when you
convert to the Roth, but you're going to probably push
it up into a higher bracket because you're pulling out
much larger sums.
S6 (29:39):
Okay, okay.
S1 (29:41):
Yeah. So I think my best option would be let's
leave it there if you need it to live on
at any point, go ahead and pull out what you need.
That's why you have it. Yes. You're going to have
to pay some some taxes on it. And that may
affect how much you pay in terms of taxes on
your Social Security. But better to do that than try
to kind of jam all of this taxable income of
(30:03):
a half $1 million into the next five tax years.
I'd rather you just take it out as you need it.
And again, once you get to age 70.5, you can
start pulling some out as a qualified charitable distribution. Uh,
certainly at age 73, when you have that required minimum,
that would be a tool that I would take full
advantage of. So hopefully that gives you some additional thoughts. Manny,
(30:24):
we appreciate your call today, sir. May the Lord bless you.
Thanks for being on the program. Uh, quick break. When
we come back, uh, Shaina has a question about, uh, insurance, uh,
on credit union. She's understanding that, uh, Christian Community Credit
Union does not have FDIC or NCUA insurance. In fact,
they use something called American Share insurance. And, uh, we'll
(30:47):
talk about, uh, the confidence you can have in that backing.
We'll be right back.
S7 (30:58):
Great to have you with us today on Faith in.
S1 (31:00):
Finance live here on Moody Radio. I'm Rob West.
S7 (31:02):
Coming up in just a moment. Bob Dole.
S1 (31:04):
Stops by. We'll get Bob's take on the markets and, uh,
everything going on with the economy as we begin a
new trading week. But first, Shane is waiting patiently in Illinois. Shaina,
how can I help?
S8 (31:15):
Hi. I was listening to your program and I appreciate
all your help and advice. Um, I was looking for
a good place to put my daughter's, um, money. Um,
I know you talked about Christian Community Credit Union in
the past, and when I looked on their website, I
noticed that they're not FDIC insured. And I just wanted
your take on that.
S1 (31:35):
Yeah. It's a it's a great question. And, uh, they have, uh,
something called American Share Insurance. It's a private insurer. So
you're right, it is not backed by the federal government
like FDIC or the NCUA, which would be the typical, uh,
equivalent for credit unions. I will say they've they've been
around a long time, since 1974. Um, they are considered
(31:59):
very safe. Nobody's ever lost a dime with regard to, um,
any kind of default, uh, of any kind whatsoever. And
so I've got a lot of confidence in that backing.
I think, you know, the reserve requirements that they have, um,
you know, put them at the highest safety level, uh, again, to,
(32:21):
to um, you know, just in looking at it, no
members ever lost any money in an AC insured account.
They've got over 1.5 million members and about 100 credit unions.
I think there's 20 billion in insured shares. So it's
significant scale and stability. So I would I would say
just based on the reserve requirements, the high equity ratio
(32:45):
and then just the the protections that they have, plus
the track record, I would be very confident in that
backing okay.
S8 (32:54):
All right. Well then thank you very much for the explanation.
S1 (32:56):
All right. You're welcome. You know, and I think you're
tapping into Shayna. And this is for the benefit of
everybody listening. You know, more and more believers are wanting
to do business with institutions that align with their values.
And I think that includes a banking partner. And that's
why we like so much the relationship we've had with
Christian Community Credit Union. You can learn more at Join
Christian community.com. We're also finding that more and more of
(33:19):
our listeners want to align their values with their investments.
And that's why I'm delighted Bob Dole is with us.
He joins us each Monday in this segment. Bob leads
Crossmark Global, which is a leader in faith based investing.
And you know, Bob, as we talk about these markets today, um,
obviously still a lot going on with regard to earnings. Uh,
you know, we've got some employment data last week. We're
(33:42):
waiting for inflation data this week. Just kind of summarize
where we find ourselves.
S9 (33:47):
Yeah, we find ourselves obviously at uh, a high level
relative to the lows of, uh, a bunch of weeks
ago and back to where we were before all this
noise started. Rob. So we're flirting with all time highs
and equity, um, equity markets. And, uh, what's changed since
we were there last time? Well, earnings estimates are a
(34:08):
little lower. Tariffs, to the extent they stick are going
to be higher than they were. And so valuations are
a little on the higher side. So um investors want
to look at the glass half full these days.
S1 (34:22):
Yeah that's exactly right. Um what are you expecting from
the inflation data this week? I know there's a consensus
out there. And how important is that reading?
S9 (34:31):
Um, yeah, it's it's it's important as inflation numbers always are.
The consensus for the consumer price index this week is 0.3%.
That's an increase of course. And that would take the
year over year number up to 2.75 or 2.75%. Well
that's better than nine where we were a few years ago,
(34:54):
as you'll remember, Rob. But it's not the two that
the fed really targets. So our view has been all along.
Inflation is going to stay closer to three than it
is to not the three is a disaster. But at
these valuation levels you almost need two to justify the
p e ratio in the stock market.
S1 (35:11):
Yeah. And obviously the fed is paying close attention to
those inflation numbers. Is that the primary driver of when
they'll finally resume lowering interest rates.
S9 (35:21):
It is certainly the inflation number but also the employment numbers.
They're seeing inflation sticky to the upside. And they're seeing
the labor market getting marginally weaker. And that puts them
between a rock and a hard place because the they'd
like to see lower inflation so they could turn around
(35:42):
and lower rates. But if the employment situation is going
to be more problematic, well then what do they do?
And that's why you see there they're sitting on their
hands for now.
S1 (35:51):
Yeah. No question about it. Bob, you've talked and you
mentioned it again in this week's deliberations about these trade
Frameworks that are coming out that are different than the
trade deals, which kind of have everything all buttoned up,
at least to this point. It seems like investors are
patient or have been, but I don't know how long
that will last. What are your thoughts?
S9 (36:13):
It's a great question. Obviously, the president has moved to
delay some of the the concerning issues, and that's what's
enabled investors to rest a little bit. But I like
your distinguishing between those two words. That is we've got
a few frameworks out there with the UK for example.
(36:34):
That was the first one. There were a few others,
but we have no deals. A deal is we've dotted
the I's and crossed the T's and we know how
we're going to operate and they take a long time
because they're complicated, so many moving parts. So I suspect
we'll get a few more frameworks before too long. Rob.
But deals, that's going to take some time.
S1 (36:54):
Yeah. All right. We'll keep a close eye on it. Bob,
as we wrap up here today. You know, we talked
about just this opportunity to align your values with everything
from your banking to your investments. I'd love for you
to share just briefly how you and the team bring
that values or faith filter into your selection process as
you build portfolios.
S9 (37:14):
Yeah. To reiterate what you said, we we want to
be as believers and as faithful stewards of what God's
given us to line up all of our life, including
our investments with our faith. For us across Mark, um,
there are at least two sides of this coin. One
is what are we going to exclude? We will not
(37:36):
own companies that make products that harm, maim, or kill people. Uh,
and that's that's a strict rule because that's not in
what God created us all to be. Yeah. Conversely, or
in addition, uh, the the inclusionary side, who's doing good
out there? Who are the companies that are doing exemplary
(37:59):
work in terms of promoting things that God would smile upon?
How they treat people, their customers, their suppliers, their employees,
those companies get extra points and I call it an
extra kiss when thinking about putting in the portfolio. So there,
the two sides that keep us busy with our clients money,
trying to win, beat the benchmarks, get good performance, but
(38:22):
also be faith aligned.
S1 (38:23):
Well, what's pretty exciting, Bob, is I know there's a
growing amount of empirical research and data that says this
idea of companies that are blessing and loving their neighbors
and their stakeholders and their employees and their customers, well,
actually lead to an additional source of alpha. That is outperformance, right?
S9 (38:44):
Absolutely. In fact, we've just here at Crossmark reviewed the
scoring system whereby we look at the values, not what
we're excluding, but among the companies that we're thinking about
investing in, who gets positive scores. And we have found
that that process, that methodology creates some alpha as well.
(39:05):
And that's comforting. On top of trying to buy good
company with smart management's reasonable valuations, etc., it's a it's
a great combination. We're thrilled to do this.
S1 (39:15):
It's really encouraging. Well Bob, keep up the good work.
Thanks for your time today, sir.
S9 (39:18):
God bless you.
S1 (39:19):
All right. That's Bob Dole. He's CEO and chief investment
officer at Crossmark Global, a leader in faith based investing.
You can sign up for his weekly investment commentary. Dolls deliberations.
Crossmark global.com. All right, back to the phones. We'll round
out the broadcast here today. Saint Louis. Hi. Nay. How
can I help?
S10 (39:38):
Hello? Okay. I have been approved for a home loan,
and my credit score was, like, six, 26, 22. Okay.
I had little problems with the house. Uh, right at
the mark. Some problems came. Okay. And well, anyways, that
Linda was saying, well, you know, you can get your
credit score up to like 640, you ain't got to
(40:00):
put no money down because FHA requires 3%. Well, once
he told me they got my head wheels thinking, so
I'm like, should I use this 3% money now? Since
we was at a pause, we about to start back up. He,
you know, went back on my credit report again and
I did pay off some of my stuff, but I'm like,
I can pay off more, you know. Yeah. Get, you know,
(40:23):
see if they would work with me the settlement and
pay off the two that were getting my credit score
up to that 640. And now I'm thinking, is it
a wise decision to use that money for that?
S1 (40:34):
Yeah. You know, I would prefer you don't. In fact,
you know, I would love for you to have 20% down. Now,
you may it may take you longer than you're willing
to wait to get there. Um, because you're talking about
did I hear you saying about only putting 3% down?
Is that right?
S10 (40:50):
Yes, sir. Yes.
S1 (40:51):
Yeah. Yeah. So ideally I'd love for you to have 20%.
But again, I realize that's a lot. I mean, that
would mean that you'd have about 56,000. That's quite a
bit more than you've got now. I'd also love for
you to be out from under that credit card debt
once and for all. And so I would probably if
it were me, I would say, let's delay the home
(41:12):
purchase for right now. Let's focus on getting that credit
card debt paid off. How much do you have in
credit card debt?
S10 (41:20):
Oh, about well, they work with me. If I pay
it off 6000 and I have the 3% money, I
have like 9000. And I figured, oh, I can just
pay that off. And that would get my credit boosted up.
S1 (41:33):
Yeah. The challenge is you're going to go into this
without any equity whatsoever, which means if we had a
downturn in the housing market, you could be upside down
on the house. Number one, you're also going to have
a private payment every month for private mortgage insurance, which
is going to run you about 1% of the balance
per year. And so if you oh, you know, let's
say 280,000, that's $2,800 that you're paying toward PMI, private
(41:58):
mortgage insurance per year. That doesn't do anything for you.
That's an additional $230 a month on that mortgage. So
if it were me and again, you're going to have
to make this call. You're the steward I would wait.
Let's keep that 9000 in savings as your emergency fund.
Let's get that 10,000in credit card debt and a debt
(42:19):
management program with our friends at Christian Credit Counselors. They'll
get the interest rates lowered, which means you'll pay it
back much faster. Then once you're out of credit card debt,
let's take all that money and start sending it to
your savings to build that up with a goal of 20%.
That's also going to improve your credit score along the way.
(42:39):
Hope that helps. Nay, thanks for your call. Big thanks
to my team Amy, Omar, Tara, Lisa and Rihanna. Faith
in finance lives a partnership between Moody Radio and Faith five.
We'll see you tomorrow.
You know the grace of our Lord Jesus Christ, that
though he was rich, yet for your sake he became poor,
so that you by his poverty might become rich. Second
Corinthians eight nine. Hi, I'm Rob West. This powerful verse
is often quoted when we talk about generosity, and rightly so.
It shows us that generosity isn't just a financial principle,
(00:31):
it's rooted in the very heart of the gospel. Today,
Doctor Nathan Harris joins us to explore that connection more deeply.
And then it's on to your calls at 800, 500,
25 7000. This is faith and finance. Live biblical wisdom
for your financial journey. Our guest is Doctor Nathan W Harris.
(00:52):
He is vice president for strategic initiatives at the University
of Mobile and author of the new book, A Short
Guide to Gospel Generosity. Giving as an act of Grace.
Doctor Harris, welcome to the program.
S2 (01:05):
Yeah. Thank you so much for having me on today, Rob.
I'm grateful to be here.
S1 (01:09):
The term gospel generosity may be new to some people.
So would you take a moment here right at the
start to define it for us?
S2 (01:16):
Yeah, absolutely. I mean, I can give you a simple definition,
and it's this gospel. Generosity is generosity that's rooted in
the gospel. I can tease that out a little bit more,
and I'm happy to do so. But I often say
that that generosity is not merely a virtue for the
Christian life, but really is a cheerful disposition that springs
forth from the good news of salvation in Jesus Christ.
(01:37):
Generosity is a fruit of the gospel that arises from
new life in Christ. It's something that's empowered by the
Holy Spirit and that we've seen modeled by the father
throughout all of creation. Gospel generosity is that sign of
a radical reforming of a believer's head and heart to
joyfully serve the Lord through their stewardship of their resources.
So the long story short, generosity for Christians is not
(01:59):
just about giving, but it's about proclaiming and portraying the
saving work of Christ in their life.
S1 (02:04):
Oh that's powerful. I love the picture that that gives
of our generosity as an overflow of gratitude for what
Christ has done on our behalf. Now, Doctor Harris, as
we talk about giving, people naturally gravitate toward questions about
the tithe. So let's go. There are Christians called to
tithe or are we called to something greater?
S2 (02:24):
Yeah, really asking some tough questions to.
S1 (02:26):
Start this off.
S2 (02:27):
There's really no, uh, you know, there are few questions
that can provoke a healthy debate like this one. But,
you know, Christians throughout all the age have have asked
this question. And I recognize that they've come up with
different answers. But for me, uh, as as I read
both the Old Testament and the New Testament in my Bible,
I can't help but conclude that that tithing, specifically the
(02:47):
requirement of 10%, is not a calling for Christians. And
I know, you know that that some listeners are going
to be thinking, whew, I'm finally off the hook. I
don't have to give. No, that's not the response that
we want to have either. We aren't obligated to give
Christians see giving as an incredible gospel opportunity. So in
a sense, we're called to something much greater than tithing.
(03:09):
We're called to live our lives generously, humbly, selflessly, and
with an eye and mind on the kingdom of God.
S1 (03:14):
Yeah. That's helpful. So how then, should the gospel transform
our hearts, our minds, and even our approach to managing money?
S2 (03:23):
I love that question. You know, there's an old phrase
that's often attributed to Martin Luther. You know, the great reformer,
whether he said it or not doesn't matter as much
as the content is just so true. And the quote
says that there are three conversions in one's life the
conversion of the heart, the conversion of the mind, and
the conversion of their pocketbook. And I think it was
Spurgeon who later added that it was often the pocketbook
(03:44):
that was the most difficult for conversion. And while I
laugh at that, and we may be laughing when we
hear those quotes, they should still cause us to pause
and think when we encounter Christ and put our faith
in him, we experience a conversion of our heart. Our
hearts are filled with the affections for Jesus. We desire
to serve him. A heart of stone is replaced with
a heart of flesh. We experience a conversion of mind,
(04:05):
one that no longer thinks of the things of this world,
but is thinking heavenward, as we read in Colossians. And
if those things are true. Spoiler alert they are true.
Then all aspects of our lives experience conversion. And yet,
in my experience, I've seen how people submit their lives
to Christ while keeping their finances to themselves. So in
one hand they hold out Christ, and in the other
hand they hold their finances out as far as they
(04:26):
can away from it. And I think it was Spurgeon again,
to quote him, he said something along the lines of
that you can't hold on to Christ while also holding
on to your money. So if the gospel transforms your mind,
then you're thinking isn't just on your wealth, it's on Christ.
If the gospel transforms your heart, then your affections aren't
for wealth, they're for Christ. So that gospel transformation that
(04:47):
we experience when we come to Christ informs the way
that we view money, steward it, save it, spend it.
And yes, it informs even the way that we give it.
S1 (04:56):
Oh that's powerful. What a picture of what our life
should look like as a steward. A money manager of
the King of Kings. Well, we've just scratched the surface,
so we're going to have to have you back. But,
Doctor Harris, thanks for stopping by today.
S2 (05:08):
Yeah. Thanks so much.
S1 (05:09):
That's Doctor Nathan Harris, author of A Short Guide to
Gospel Generosity. Giving as an act of Grace. Pick it
up wherever you buy books. Your calls are next. 800
525 7000. We'll be right back.
S3 (05:32):
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 (05:55):
Great to have you with us today on Faith and
finance live here on Moody Radio. I'm Rob West. Boy,
I'm really looking forward to taking your calls and questions today.
I've been off for about ten days traveling overseas on
a mission trip. We took a group of about 200
high school students over to Poland with a choir, high
school choir, and a couple of sports teams and went
(06:16):
into the high schools to share the love of Jesus.
It was incredible. And, um, I saw a lot of, uh,
just the Lord really moving in people's lives. But so
thrilled to be back with you here today. I miss
my time engaging with, uh, our amazing listeners and callers
here on Moody Radio. I'm delighted to be able to
help you steward God's money today. And by the way,
(06:38):
that's what we do during this broadcast. Each day, we
recognize God has given you a good gift as he's
entrusted money, his resources that all belong to him, to
you as the manager, and we're each then charged with
being found faithful in that. Remember, money is a good gift,
so long as it's a tool to accomplish God's purposes,
(06:59):
to deepen relationships, and perhaps to use to celebrate and
just enjoy a great meal together. And I think that
makes God smile, but also to share with others people
in need, and even to invest in a way that
promotes human flourishing. All of that is God honoring. So
long as money is not our end, God is our
ultimate treasure. Money is a tool to accomplish God's purposes. Now,
(07:23):
as we journey along with money, we realize that it's
one of the primary ways God shapes our spiritual journey,
because it's such a tangible expression of what we value
and what we trust. But it also has very practical implications.
And you're trying to manage debt and think about giving
and investing for the future, and then you've got to
(07:44):
transfer it down the road. And how do you do that? Well,
all of these bring very real questions. And so we
invite you to call the program and ask those questions.
And we'll do our best to guide you back to
biblical principles, but to give you really practical advice around
how you can move forward in seeking to be found
faithful as a wise steward. So if you have a
(08:04):
question today, we've got lines open. Looking forward to hearing
from you on the broadcast. The number 800 525 7000. Again,
that's 800 525 7000 you can call right now. Uh,
before we dive in today in the news, we want
to see what is being talked about today. Run that
through a biblical lens. And it happens to relate to
(08:25):
first time homebuyers, especially Gen Zers in their 20s. And
it relates to student loans and credit card debt, which
is making it more difficult to get into a home. Uh,
a new study from a collection agency, the Kaplan Group,
backs up some of these findings with hard numbers. Here's
the first one. And that is since 2007, the average
(08:46):
student loan balance has more than doubled, now sitting at
nearly $38,000. Over the same period, the national homeownership rate
has dropped almost 5%. And for every 1000 in student
loan debt, your odds of owning a home drop by about, well,
close to 2%. But there is some encouraging development from
(09:07):
first time homebuyers, and that is that new rules from
FHA and Freddie Mac have eased the way, counting just
a half a percent of your student loan balance toward
your monthly debt load. Some buyers, especially medical professionals, can
even have their student loans excluded entirely. However, credit card
(09:27):
debt is still a major limiting factor for first time
home buyers. Bottom line pay off or pay down your
credit card balance as quickly as possible to improve your
chances of being approved for a mortgage. Also, keep in
mind just because the mortgage company says you're approved doesn't
mean it's the right loan for you. A couple of
rules of thumb there. Number one, always have a 20%
(09:47):
down payment. That's going to help you avoid private mortgage insurance,
which is about 1% of the mortgage balance. It does
nothing for you. It's just an unnecessary expense. Secondly, make
sure that that principal interest taxes and insurance payment the
mortgage payment 25% or less of your take home pay,
no more than 30%. That's going to ensure that you
have enough left over for everything else. So just some
(10:11):
thoughts there as you navigate what is a challenging home
buying environment just because of the affordability of homes, homes
being at their peak. Not to mention these high interest
rates that have persisted longer than we anticipated. All right.
We're ready to dive into your questions today. Our team
is standing by so you can call right now 800
525 7000. Let's begin in Lebanon, PA hi, Jack. Go ahead.
S4 (10:36):
Hi, Rob. How are you doing? I'm doing great. I
had a question about a irrevocable trust. Uh, my wife
and I are concerned we have a lot of equity
in our home, and we'd like to leave some of
that to our children. Um, and we visited with a
attorney in the area whose primary business is setting up, uh,
asset protection plans, and he has a very good reputation. Uh, but, uh,
(11:00):
they recommend putting your home into the irrevocable portion trust. Um, and, uh,
one of the things they said in the course of
this and they put this in writing, is that if
you need to get money out of that irrevocable trust, uh,
you can pay that out to your children a certain
amount per year. And then you can ask your children
(11:22):
to write a check back to you. So, um, I'm
just just asking your opinion about the ethics of irrevocable
trusts in general, but specifically, um, that question, uh, of
getting funds out of the irrevocable trust.
S1 (11:40):
Yeah. Yeah, that raises some some red flags to me. Um,
I'd perhaps get a second opinion on that. Uh, you know,
irrevocable trusts means giving up control. Um, and so you
can't easily change your mind later. Um, and so you
just have to understand what you're getting into, uh, when
(12:00):
you set these up. Secondly, I think it's important to
understand that if somebody suggests you could pay kids and
have them, quote, pay you back, it really could be
seen as trying to bypass Medicaid or tax rules, which
certainly I think I would put in the unethical category. Um,
and so you just need to be really careful about that. Uh,
(12:20):
there could be legitimate reasons to put a home in
a revocable, irrevocable trust, especially for estate planning purposes. But
it comes with trade offs in that you lose control.
And it's it's hard to reverse. Um, so I think
you just want to be careful that, um, any kind
of Arrangement. You understand the legal and financial consequences on that.
(12:43):
And then, you know, I think it rises even to
a higher standard as a Christ follower as to what
are we trying to do here? What is the ultimate objective?
Are we trying to kind of get around the rules
and regulations in some way, and if so, why? What's
at the heart of that? And I think to the
extent you have a check on that, I think that's
that's certainly something you ought to lean into. Um, has
(13:04):
there been an explanation as to why the irrevocable trust
is needed at this point?
S4 (13:10):
Well, it's to prevent losing your funds if one or
both would go into a nursing home. Yeah, yeah. So yeah,
that was my second part of the question. Is that
in your opinion is that ethical.
S1 (13:26):
Yeah, yeah. You know, I think the the challenge there
is again, you lose control over that. And there's going
to be a look back period on that. Um, you know,
from Medicare and Medicaid to determine whether or not, you know,
that was the intention. Um, and so I think there
can be appropriate ways to do that. Let's do this.
I've got to hit a break. And so perhaps when
(13:47):
we come back, we could talk for a second just about,
you know, when you would use an irrevocable trust, uh,
specifically around, uh, elder care planning, uh, what the trade
offs are, what's ethical and what's not. So, uh, do
me a favor. Um, Jack, just hold the line and
we'll unpack this a bit more just around the corner
after this break. When we come back, we'll be taking
(14:09):
the rest of your calls as well. The lines are
filling up. We've got some great questions coming up, so
don't go anywhere. This is faith in finance live on
Moody Radio. I'm Rob West. Much more to come. Just
around the corner. Stay with us. Great to have you
(14:32):
with us today on Faith and finance live here on
Moody Radio. I'm Rob West. We're taking your calls and
questions today. Before the break, we were talking to Jack
from Lebanon, PA. He's wondering about setting up an irrevocable
trust for his kids, and he just wants to make
sure that the concept of an irrevocable trust, how it's
structured and the fact that it's protecting assets, even to
(14:53):
the extent that it taps into government assistance and preserves
assets for heirs, whether or not that's ethical and something
that is appropriate. You know, Jack, the reason people would
do it is obviously to preserve Medicaid eligibility first and foremost.
So those irrevocable trust assets are typically not counted as
(15:15):
a part of your personal estate. Because remember, they've been
given away and you can't reverse that. And it has
to be set up correctly a medicaid or Medicare trust
or revocable trust. So it meets the look back period,
so that Medicaid can be tapped for nursing home costs
without depleting your savings. Also, the assets are shielded from
(15:38):
creditors lawsuits or personal financial mismanagement, again ensuring that they're
preserved for heirs. You can specify how and when they're distributed. Um,
you know, even while removing those assets from your taxable estate,
which you have done, and you may have estate taxes,
but this would, depending on the structure, reduce those, although
(16:00):
it's less of a consideration now, at least with the
current laws that don't allow the estate taxes to kick
in until you get into estate above $13 million. Um,
the downside is the loss of control because again, you
can't access them or control them directly. You're relying on
the trustee to do that. And so you really can't
change the terms, at least not easily or dissolve the trust. Um,
(16:23):
Medicaid will review any asset transfers within five years. And
so you could face penalties or delayed eligibility. There are
high costs as well. So the legal fees as well
as the ongoing administrative costs are a bit higher. And
then there are some complexities, which is why you really
need an elder care attorney, you know, to do this.
(16:44):
Somebody who specializes in this. I think to your point, though,
you know, thinking through, I mean, some would say that really,
you know, by doing this, you're ultimately just transferring this
responsibility to your neighbors, essentially to others that are going
to pick up the bill, other taxpayers that you know.
So you can give your kids an inheritance. Others would say, no,
(17:07):
this is an entirely legal action, and it would not
be good stewardship to take advantage of it. So I
think this is really a conviction matter. Um, you know,
where you need to kind of check your motives and
your heart on it. And, uh, are you, you know,
trying to preserve wealth for God honoring purposes or really just,
you know, trying to avoid costs at others expense? And
(17:30):
I think that's where if you have a check about
it or a concern as to, you know, ultimately what
you're trying to accomplish and how it's going to play out.
You know, that's something I would really pray through and
seek some godly counsel on before you make that final decision.
Does that make sense, though?
S4 (17:47):
It does. Yeah. It makes makes perfect sense. Yeah. All right. Well,
thank you very much, Rob.
S1 (17:52):
Absolutely. God bless you, Jack. We appreciate your call today.
Let's go to Brownsburg, Indiana. Hi, Greg. Go ahead.
S4 (17:59):
Yeah. Rob.
S5 (18:00):
Question a couple questions on Social Security. I'm at 68,
and at age 68 years ago, I had to take
disability and not work. Since I had sold a home
recently and made a capital gain. Does that is that
would that be taxable to where I have to record
that to Social Security?
S1 (18:23):
Uh, well, in terms of the, um, the taxes on that,
a home sale would be a capital gain or loss. Uh,
so is this your primary residence?
S5 (18:34):
Uh, it was my primary residence. Sold. It did make
the the capital gain after I paid the mortgage. Satisfied
all that? Um, and didn't make a profit. Um, but
it's not like I work. Say, I started working a
job and making hourly wages. I've never done that. But
I didn't know if this capital gain profit would, would
(18:56):
or would not be affected.
S1 (19:00):
Yeah. Uh, so it's going to come down to if
this was your primary residence, meaning it was where you
lived most of the time, uh, as your domicile. And
you did that for two out of the last five
years prior to the sale. Um, depending on whether you're
filing single or married, if you're filing single, you'd have
up to 250,000 in profit. Not the selling price, but
(19:22):
the amount of gain that you had that would be
excluded from capital gains tax if you're filing married, filing jointly,
you could have up to a half a million in
profit that would be set aside with no capital gains tax.
So did you have more than either 250 or 500,000
in profit?
S5 (19:41):
No, no I didn't.
S1 (19:43):
Okay. Then you would be able to take that, uh,
you know, if you, uh, only sold one home in a,
you know, for in the last two years, and you
lived there two out of the last five, then you
would have no capital gain whatsoever on that primary residence.
S5 (20:00):
Okay. Um, another question quickly is, uh, when I started
the disability, uh, eight years ago, it was considered Social
Security disability. It might still be considered on the Social
Security disability. Or once I hit 66.5, which I already
have my full retirement age. Does it just drop down
(20:22):
to the term Social Security?
S1 (20:25):
Yes, exactly. Um, so that, uh, Social security, Social security, disability, um,
does become Social Security once you've reached full retirement age. Um,
and so you would just automatically convert to Social Security
retirement benefits at your full retirement age.
S5 (20:46):
Is that something I do, or was that automatically done
through the Social Security office?
S1 (20:53):
Yeah. No, that would that would happen automatically. I mean,
you could certainly call into the office, uh, just to
check your status. You can call the toll free number
to understand your benefit transition, and they can confirm if
you're already on retirement benefits. But normally that would happen
automatically once you reach full retirement age. It would just convert.
S5 (21:16):
Okay. Thank you. Rob.
S1 (21:18):
Okay. God bless you Greg. Thanks for being on the
program today. Well, folks, uh, we're up against our next break.
We'll take that now. When we come back, we'll continue
to work our way through these questions. We'll head to
Florida and talk to Manny and then Shaina in Illinois.
Bob Dole coming up in our final segment as well. Today,
we'll get Bob's check on the markets, find out what's
moving the markets today. As we closed about flat, uh,
(21:43):
Dow Jones only down one point, S&P up just modestly
and the Nasdaq up just a bit more than that.
Bob Dole in our final segment today. Stay with us.
We'll be right back. Great to have you with us
today on Faith and finance live here on Moody Radio.
(22:04):
I'm Rob West. We're taking your calls and questions. The
line's nearly full, so let's head right back to the
phones to Florida. We go. Hi, Manny. How can I help?
S6 (22:13):
Yes. Thank you for taking my call. I enjoy your
program so very much. Thank you. My question concerns is
in regards to the, um, converting, a traditional IRA into
a Roth IRA. Um, I'm. I have over 500,000 in, uh, traditional. Um,
(22:33):
I'd like to convert it over into a Roth, uh,
before I hit that, uh, uh, required minimum deduction, uh,
age of 73. And because of, of course, you know,
I have to pay taxes on that, uh, that money
that I have to withdraw and it'll put me into
(22:54):
another tax bracket, and it will also affect my Social Security.
So I thought that, uh, maybe, uh, he might be
able to give me some advice on, uh, um, whether
or not to do it now and pay the taxes
up front now and not have to worry about it
at the back end, and then just be able to
(23:15):
withdraw my, uh, from my Roth IRA with not having
to pay any taxes on that money.
S1 (23:22):
Yeah. Very good. Well, a couple of thoughts on that
with regard to, uh, you know, pulling that money out. Um,
what did you say your age was today?
S6 (23:32):
Uh, 67.
S1 (23:34):
Okay. Yeah. So you've still got some time because you're
not going to have to take that money out. The
current RMD requirement based on your age will not kick
in until you reach age 73. And so you got
quite a bit of time before that would, uh, be necessary. Uh,
keep in mind that, you know, the other approach to
this without having to pay any tax on it, which
(23:57):
obviously any portion that you convert to a Roth IRA
would be taxable to you now in the year that
you convert it. And that could push, depending on how
much you convert in any given year, it could it
could push that up into a higher tax bracket just
because it increases the the total taxable income for the year. Um,
(24:18):
you know, when you reach full, well when you reach
age 73. Um, you know, it's it's going to be
based on the IRS table, but it's probably going to
be somewhere around, uh, you know, in high 3%, maybe
as close to 4% of the balance, um, that you
would have to take out at that age. Somewhere around,
(24:41):
I think it's around 3.8% of the balance, um, at
age 73. And you do have the ability, at least
based on the current rules and regs, to do what's
called a qualified charitable distribution. So any money that you
are currently giving or at that time when you reach
that age are currently giving, let's say, to your local
(25:01):
church or other ministries, and perhaps you're doing that out
of after tax dollars from checking or savings. If you
just replace that existing giving you were doing, assuming you
were doing more than, you know, 3 to 4%, uh,
a year in giving. If you replace that after tax
giving with money coming out of that traditional IRA through
(25:24):
a qualified charitable distribution, you could satisfy your required minimum
and get that money out without adding it to your
taxable income whatsoever. So you'd never pay tax on it
because remember you didn't pay it tax on it going in.
And now when you pull it out through the qualified
charitable distribution you don't pay tax on it now. So
(25:44):
it essentially is tax free through this tool. And that
would avoid you having to, uh, you know, pay the
tax on it. Now by way of that Roth conversion.
Does that make sense though?
S6 (25:56):
I'm not quite sure I understand that. Uh, um, uh,
I'm I'm still a little fuzzy on the, uh, um,
if I am contributing to, uh, or donating the money, um,
how is it that I can use the money for, uh,
(26:16):
you You know, so for daily, uh, spending that I
need to do, if the money is allocated, uh, for
a charity.
S1 (26:27):
You would not be able to. I guess I was
assuming that you didn't need the money in the IRA,
and you're just looking to let it continue to grow.
And the only reason you were taking it out is
because the IRS, at that point, at age 73, was
telling you that you had to, um, you know, if
you need the money for living purposes, well, then what
I would do is just take it out as you
(26:47):
need it. And yes, you're going to have to recognize
it at income at that point. But I don't know
why you would convert it to the Roth at this
point and pay tax on perhaps more than you actually
need to live on. All I was saying was that
if you have money in a traditional IRA and you're
not needing to pull it out, you're just letting it
grow because you're going to give it away at death,
(27:09):
or you're going to leave it as an inheritance. And
the only reason you're pulling it out is because of
the their required minimum will, then perhaps the opportunity you
have is to replace any giving you're doing with other
after tax funds, with money coming from the traditional IRA,
and that would allow you to satisfy your required minimum
(27:30):
and do the same giving without paying tax on that
money as it comes out. But if you need the
money to live on, well, you're going to have to
pay tax on it as you take it out. And again,
at that point, I don't know why you would do
the Roth conversion. I'm just not seeing that would help
you in any way if you follow.
S6 (27:49):
Okay. Because I was just talking to an advisor, financial advisor,
he would say that we would stretch this out within
a five year span and do a conversion, um, every
year of the funds until they're all converted over to
(28:10):
the Roth.
S1 (28:11):
Yeah, but what is it that you're ultimately trying to
accomplish by doing that?
S6 (28:17):
Not paying taxes on on the funds when I, uh,
take them out, um, from my, uh, at, uh, whatever age. Um, well,
I guess the, uh, the age for, uh, withdrawing from the, uh,
Roth would also be 73, is that correct?
S1 (28:41):
Well, there's no there's no required minimum for the Roth.
So once you convert it to the Roth, you could
leave it in there forever and never pull it out.
I guess, though, the the thing that I'm not following
on is you would have a massive tax bill for
the next five years. I mean, you'd have an additional
$100,000 in taxable income that would be reported, uh, you know,
(29:01):
on your return that you'd be paying tax on. And
I just don't know why you'd want to pay that
massive tax bill every year for the next five years,
just so you could then turn around at 73 and
pull it out tax free. I just don't think that
offers you any benefit. I think I'd rather leave it
in the tax deferred environment and then only recognize it
as you need it, because you need some money to
(29:24):
live on. And as you pull it out, yes, you'd
pay tax on it coming out of the traditional IRA,
but you're going to pay tax on it when you
convert to the Roth, but you're going to probably push
it up into a higher bracket because you're pulling out
much larger sums.
S6 (29:39):
Okay, okay.
S1 (29:41):
Yeah. So I think my best option would be let's
leave it there if you need it to live on
at any point, go ahead and pull out what you need.
That's why you have it. Yes. You're going to have
to pay some some taxes on it. And that may
affect how much you pay in terms of taxes on
your Social Security. But better to do that than try
to kind of jam all of this taxable income of
(30:03):
a half $1 million into the next five tax years.
I'd rather you just take it out as you need it.
And again, once you get to age 70.5, you can
start pulling some out as a qualified charitable distribution. Uh,
certainly at age 73, when you have that required minimum,
that would be a tool that I would take full
advantage of. So hopefully that gives you some additional thoughts. Manny,
(30:24):
we appreciate your call today, sir. May the Lord bless you.
Thanks for being on the program. Uh, quick break. When
we come back, uh, Shaina has a question about, uh, insurance, uh,
on credit union. She's understanding that, uh, Christian Community Credit
Union does not have FDIC or NCUA insurance. In fact,
they use something called American Share insurance. And, uh, we'll
(30:47):
talk about, uh, the confidence you can have in that backing.
We'll be right back.
S7 (30:58):
Great to have you with us today on Faith in.
S1 (31:00):
Finance live here on Moody Radio. I'm Rob West.
S7 (31:02):
Coming up in just a moment. Bob Dole.
S1 (31:04):
Stops by. We'll get Bob's take on the markets and, uh,
everything going on with the economy as we begin a
new trading week. But first, Shane is waiting patiently in Illinois. Shaina,
how can I help?
S8 (31:15):
Hi. I was listening to your program and I appreciate
all your help and advice. Um, I was looking for
a good place to put my daughter's, um, money. Um,
I know you talked about Christian Community Credit Union in
the past, and when I looked on their website, I
noticed that they're not FDIC insured. And I just wanted
your take on that.
S1 (31:35):
Yeah. It's a it's a great question. And, uh, they have, uh,
something called American Share Insurance. It's a private insurer. So
you're right, it is not backed by the federal government
like FDIC or the NCUA, which would be the typical, uh,
equivalent for credit unions. I will say they've they've been
around a long time, since 1974. Um, they are considered
(31:59):
very safe. Nobody's ever lost a dime with regard to, um,
any kind of default, uh, of any kind whatsoever. And
so I've got a lot of confidence in that backing.
I think, you know, the reserve requirements that they have, um,
you know, put them at the highest safety level, uh, again, to,
(32:21):
to um, you know, just in looking at it, no
members ever lost any money in an AC insured account.
They've got over 1.5 million members and about 100 credit unions.
I think there's 20 billion in insured shares. So it's
significant scale and stability. So I would I would say
just based on the reserve requirements, the high equity ratio
(32:45):
and then just the the protections that they have, plus
the track record, I would be very confident in that
backing okay.
S8 (32:54):
All right. Well then thank you very much for the explanation.
S1 (32:56):
All right. You're welcome. You know, and I think you're
tapping into Shayna. And this is for the benefit of
everybody listening. You know, more and more believers are wanting
to do business with institutions that align with their values.
And I think that includes a banking partner. And that's
why we like so much the relationship we've had with
Christian Community Credit Union. You can learn more at Join
Christian community.com. We're also finding that more and more of
(33:19):
our listeners want to align their values with their investments.
And that's why I'm delighted Bob Dole is with us.
He joins us each Monday in this segment. Bob leads
Crossmark Global, which is a leader in faith based investing.
And you know, Bob, as we talk about these markets today, um,
obviously still a lot going on with regard to earnings. Uh,
you know, we've got some employment data last week. We're
(33:42):
waiting for inflation data this week. Just kind of summarize
where we find ourselves.
S9 (33:47):
Yeah, we find ourselves obviously at uh, a high level
relative to the lows of, uh, a bunch of weeks
ago and back to where we were before all this
noise started. Rob. So we're flirting with all time highs
and equity, um, equity markets. And, uh, what's changed since
we were there last time? Well, earnings estimates are a
(34:08):
little lower. Tariffs, to the extent they stick are going
to be higher than they were. And so valuations are
a little on the higher side. So um investors want
to look at the glass half full these days.
S1 (34:22):
Yeah that's exactly right. Um what are you expecting from
the inflation data this week? I know there's a consensus
out there. And how important is that reading?
S9 (34:31):
Um, yeah, it's it's it's important as inflation numbers always are.
The consensus for the consumer price index this week is 0.3%.
That's an increase of course. And that would take the
year over year number up to 2.75 or 2.75%. Well
that's better than nine where we were a few years ago,
(34:54):
as you'll remember, Rob. But it's not the two that
the fed really targets. So our view has been all along.
Inflation is going to stay closer to three than it
is to not the three is a disaster. But at
these valuation levels you almost need two to justify the
p e ratio in the stock market.
S1 (35:11):
Yeah. And obviously the fed is paying close attention to
those inflation numbers. Is that the primary driver of when
they'll finally resume lowering interest rates.
S9 (35:21):
It is certainly the inflation number but also the employment numbers.
They're seeing inflation sticky to the upside. And they're seeing
the labor market getting marginally weaker. And that puts them
between a rock and a hard place because the they'd
like to see lower inflation so they could turn around
(35:42):
and lower rates. But if the employment situation is going
to be more problematic, well then what do they do?
And that's why you see there they're sitting on their
hands for now.
S1 (35:51):
Yeah. No question about it. Bob, you've talked and you
mentioned it again in this week's deliberations about these trade
Frameworks that are coming out that are different than the
trade deals, which kind of have everything all buttoned up,
at least to this point. It seems like investors are
patient or have been, but I don't know how long
that will last. What are your thoughts?
S9 (36:13):
It's a great question. Obviously, the president has moved to
delay some of the the concerning issues, and that's what's
enabled investors to rest a little bit. But I like
your distinguishing between those two words. That is we've got
a few frameworks out there with the UK for example.
(36:34):
That was the first one. There were a few others,
but we have no deals. A deal is we've dotted
the I's and crossed the T's and we know how
we're going to operate and they take a long time
because they're complicated, so many moving parts. So I suspect
we'll get a few more frameworks before too long. Rob.
But deals, that's going to take some time.
S1 (36:54):
Yeah. All right. We'll keep a close eye on it. Bob,
as we wrap up here today. You know, we talked
about just this opportunity to align your values with everything
from your banking to your investments. I'd love for you
to share just briefly how you and the team bring
that values or faith filter into your selection process as
you build portfolios.
S9 (37:14):
Yeah. To reiterate what you said, we we want to
be as believers and as faithful stewards of what God's
given us to line up all of our life, including
our investments with our faith. For us across Mark, um,
there are at least two sides of this coin. One
is what are we going to exclude? We will not
(37:36):
own companies that make products that harm, maim, or kill people. Uh,
and that's that's a strict rule because that's not in
what God created us all to be. Yeah. Conversely, or
in addition, uh, the the inclusionary side, who's doing good
out there? Who are the companies that are doing exemplary
(37:59):
work in terms of promoting things that God would smile upon?
How they treat people, their customers, their suppliers, their employees,
those companies get extra points and I call it an
extra kiss when thinking about putting in the portfolio. So there,
the two sides that keep us busy with our clients money,
trying to win, beat the benchmarks, get good performance, but
(38:22):
also be faith aligned.
S1 (38:23):
Well, what's pretty exciting, Bob, is I know there's a
growing amount of empirical research and data that says this
idea of companies that are blessing and loving their neighbors
and their stakeholders and their employees and their customers, well,
actually lead to an additional source of alpha. That is outperformance, right?
S9 (38:44):
Absolutely. In fact, we've just here at Crossmark reviewed the
scoring system whereby we look at the values, not what
we're excluding, but among the companies that we're thinking about
investing in, who gets positive scores. And we have found
that that process, that methodology creates some alpha as well.
(39:05):
And that's comforting. On top of trying to buy good
company with smart management's reasonable valuations, etc., it's a it's
a great combination. We're thrilled to do this.
S1 (39:15):
It's really encouraging. Well Bob, keep up the good work.
Thanks for your time today, sir.
S9 (39:18):
God bless you.
S1 (39:19):
All right. That's Bob Dole. He's CEO and chief investment
officer at Crossmark Global, a leader in faith based investing.
You can sign up for his weekly investment commentary. Dolls deliberations.
Crossmark global.com. All right, back to the phones. We'll round
out the broadcast here today. Saint Louis. Hi. Nay. How
can I help?
S10 (39:38):
Hello? Okay. I have been approved for a home loan,
and my credit score was, like, six, 26, 22. Okay.
I had little problems with the house. Uh, right at
the mark. Some problems came. Okay. And well, anyways, that
Linda was saying, well, you know, you can get your
credit score up to like 640, you ain't got to
(40:00):
put no money down because FHA requires 3%. Well, once
he told me they got my head wheels thinking, so
I'm like, should I use this 3% money now? Since
we was at a pause, we about to start back up. He,
you know, went back on my credit report again and
I did pay off some of my stuff, but I'm like,
I can pay off more, you know. Yeah. Get, you know,
(40:23):
see if they would work with me the settlement and
pay off the two that were getting my credit score
up to that 640. And now I'm thinking, is it
a wise decision to use that money for that?
S1 (40:34):
Yeah. You know, I would prefer you don't. In fact,
you know, I would love for you to have 20% down. Now,
you may it may take you longer than you're willing
to wait to get there. Um, because you're talking about
did I hear you saying about only putting 3% down?
Is that right?
S10 (40:50):
Yes, sir. Yes.
S1 (40:51):
Yeah. Yeah. So ideally I'd love for you to have 20%.
But again, I realize that's a lot. I mean, that
would mean that you'd have about 56,000. That's quite a
bit more than you've got now. I'd also love for
you to be out from under that credit card debt
once and for all. And so I would probably if
it were me, I would say, let's delay the home
(41:12):
purchase for right now. Let's focus on getting that credit
card debt paid off. How much do you have in
credit card debt?
S10 (41:20):
Oh, about well, they work with me. If I pay
it off 6000 and I have the 3% money, I
have like 9000. And I figured, oh, I can just
pay that off. And that would get my credit boosted up.
S1 (41:33):
Yeah. The challenge is you're going to go into this
without any equity whatsoever, which means if we had a
downturn in the housing market, you could be upside down
on the house. Number one, you're also going to have
a private payment every month for private mortgage insurance, which
is going to run you about 1% of the balance
per year. And so if you oh, you know, let's
say 280,000, that's $2,800 that you're paying toward PMI, private
(41:58):
mortgage insurance per year. That doesn't do anything for you.
That's an additional $230 a month on that mortgage. So
if it were me and again, you're going to have
to make this call. You're the steward I would wait.
Let's keep that 9000 in savings as your emergency fund.
Let's get that 10,000in credit card debt and a debt
(42:19):
management program with our friends at Christian Credit Counselors. They'll
get the interest rates lowered, which means you'll pay it
back much faster. Then once you're out of credit card debt,
let's take all that money and start sending it to
your savings to build that up with a goal of 20%.
That's also going to improve your credit score along the way.
(42:39):
Hope that helps. Nay, thanks for your call. Big thanks
to my team Amy, Omar, Tara, Lisa and Rihanna. Faith
in finance lives a partnership between Moody Radio and Faith five.
We'll see you tomorrow.
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Does hearing about a true crime case always leave you scouring the internet for the truth behind the story? Dive into your next mystery with Crime Junkie. Every Monday, join your host Ashley Flowers as she unravels all the details of infamous and underreported true crime cases with her best friend Brit Prawat. From cold cases to missing persons and heroes in our community who seek justice, Crime Junkie is your destination for theories and stories you won’t hear anywhere else. Whether you're a seasoned true crime enthusiast or new to the genre, you'll find yourself on the edge of your seat awaiting a new episode every Monday. If you can never get enough true crime... Congratulations, you’ve found your people. Follow to join a community of Crime Junkies! Crime Junkie is presented by audiochuck Media Company.