July 30, 2025 • 42 mins
How do you truly thrive in life—not just financially, but in every area? On the next Faith & Finance Live, Ron Blue and Rob West talk about how to live with purpose, peace, and wisdom by following God’s design for life. They unpack biblical principles that lead to flourishing, not through formulas, but through faithfulness. Then, Rob addresses your financial questions. That’s Faith & Finance Live, where biblical wisdom meets today’s finances—weekdays at 4pm Eastern/3pm Central on Moody Radio.
Faith & Finance Live is a listener supported program on Moody Radio. To join our team of supporters, click here.
To support the ministry of FaithFi, click here.
To learn more about Rob West, click here.
To learn more about Faith & Finance Live, click here.
See omnystudio.com/listener for privacy information.
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
S1 (00:09):
How do you live a life that truly flourishes not
just financially, but in every area God cares about? Hi,
I'm Rob West. Today we're talking about how to live
with purpose, peace, and wisdom by following God's design for life.
Ron Blue joins us to unpack biblical principles that lead
to flourishing, not through formulas, but through faithfulness. And then
(00:31):
it's on to your calls at 805, two, five 7000.
That's 805, two five 7000. This is faith and finance.
Live biblical wisdom for your financial journey. Well, what a
pleasure it is to welcome teacher and author and my
good friend and mentor, Ron Blue. Back to the program. Ron.
(00:53):
Great to see you.
S2 (00:54):
Oh thank you Rob. It's always good to talk to
you and be with you.
S1 (00:57):
Thank you Ron, when we talk about flourishing as believers,
what do we really mean? What does a life shaped
by God's design actually look like?
S2 (01:06):
You know, as I was thinking about it, knowing what
the topic was, I used to tell my staff that,
you know, the Christian life is not better. It's different.
So it doesn't look like the world would envision the
life because it's totally different. And the other thing is,
(01:27):
is that it is always unique to an individual. So, um,
my life to flourish has got to follow biblical wisdom
in all of my thinking and actions. And I'll leave it.
I lead a life that flourishes because I'm leading a
life that was created for me by our creator.
S1 (01:47):
Mm.
S2 (01:47):
So it will be different. Um. And as a matter
of fact, there's some good things about that, though, too,
because it will be a life of contentment.
S1 (01:56):
Yes.
S2 (01:57):
Um, now, I don't have to have money to be content.
I don't have to have approval to be content because
I'm loved by an almighty God. And he says, I'll
never leave you nor forsake you. So it's a different life.
S1 (02:11):
Yes, it sure is. And you talked about contentment. That's
one of those cornerstones. What are a few others, as
you look at God's Word that you think should be
a hallmark of a faithful, flourishing life?
S2 (02:22):
Well, I think a really good beginning point is stewardship
in its broader meaning. And if God owns it all,
and if God gives me everything I have comes from God,
then I am a steward and not a not an owner.
I'm a manager. So I'll reflect God's ownership and I'll
(02:44):
use his resources, be they time, talent, treasure, relationships and money,
whatever it may be, for his glory. Because I'm stewarding
everything that's been given to me. And I think another Characteristic.
And I've thought a lot about this one is a believer,
and a follower of Jesus will always be generous and
(03:08):
be generous with their money. They'll be generous with all
of those things with and that is really countercultural generosity.
And so to become generous, we need to be transformed
by God's Word. Yes, we've talked about contentment, but there's
some other characteristics. And, you know, the word deceit is
(03:29):
used in the Bible a lot. And the word greed
is used in the Bible a lot. And I think
that you'll see a believer living with integrity and honesty
and all of their dealings. You know, Proverbs is a
great book, uh, which gives guidance, uh, about honesty and
integrity and deceit and all of those things that make
(03:49):
a life meaningful life. And I think additionally, it's going
to be a life that's lived with purpose. Yes. Um,
I'm here for a reason, for a purpose. And it's temporary.
Because my home is eternity. Yes. And so what I'm
doing here is living my life with the objective of
(04:13):
realizing that I get to spend eternity with our Lord
Jesus and our creator God. And that's a big deal, too,
because so many people, the purpose in life is to
be is entertainment or many other things that compete with God.
But God's purpose for me is to live a life
(04:36):
of that has meaning, uh, because of what he puts
into it. So yes, those are some of the thoughts
that come to my mind.
S1 (04:44):
I love that, and as you said, we live with
an eternal perspective because we know we are sojourners on
this earth and our true citizenship is in heaven. Well, Rhonda,
what would you leave our listeners with? Just about 15
seconds left.
S2 (04:58):
Well, just remember that God owns it all. And I'm
the steward, and I get to use the resources entrusted
to me for his glory.
S1 (05:06):
And what a privilege that is. Ron, thank you for
that reminder today. We appreciate you being with us.
S2 (05:11):
Thank you for having me.
S1 (05:13):
That's Ron Blue, author and teacher, and we'll be right
back with your questions after this. Stick around.
S3 (05:34):
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 (05:58):
You know, as we think about our role in managing
God's money, there's some big ideas that jump out at us.
You know, when we look at the counsel of Scripture,
we recognize that, well, first of all, God owns everything.
That's the the preeminent starting point of everything. And it's
the understanding that everything we have our money, our possessions,
our opportunities belong to God and are entrusted to us
(06:20):
for his purposes. We're stewards, not owners. Second, money reveals
we do with it shows what we love. You see,
how we handle money reflects what we value most. Our
financial decisions expose our true priorities and whether we trust
in God or in our wealth. And then thirdly, faithful
stewardship leads to flourishing. You know, when we manage money
(06:42):
God's way through diligent work and generous giving and strategic
investing and wise planning, we experience spiritual fruitfulness and participate
in his Kingdom purposes. So those three big ideas. God
owns everything. Money reveals our heart. Faithful stewardship leads to flourishing.
Those are kind of central to everything we do here.
So each day on the program, we want to help
(07:04):
shepherd you towards ideas. It's on the heart and work
it out so that you can live out that biblical
worldview and your money journey. But we also recognize you
have very specific questions as well. And so part of
what we dedicate this program to is answering those questions
as you think about spending it wisely and getting out
of debt and saving for the future, and helping your
(07:26):
kids understand these ideas and principles. All of that we
know results in questions that you have. So this is
your program. The rest of it is yours for your
questions today. So go ahead and call right now we
have some lines open. Any financial question today. We'd love
to take that for you or from you and process
your questions 800 525 7000 is the number to call again.
(07:49):
That's 800 525 7000. Those lines will fill up. But
at the moment at least, they're open and ready for you.
You'll get right through again. 800 525 7000. Let's begin
today in New York State. Sue, you'll be our first caller.
Go ahead.
S4 (08:05):
Good afternoon, and thank you so much for taking my call. Um,
I'm calling because my 89 year old mother has an IRA,
and she's wondering about the financial implications if she has
to cash that in.
S5 (08:18):
Yeah, and that's a good question.
S4 (08:20):
IRAs.
S5 (08:20):
Sure. What is.
S1 (08:21):
Her income? What does her income consist of right now?
S4 (08:25):
Um, social Security and a small pension.
S5 (08:29):
Okay.
S1 (08:29):
Got it. Yeah. So essentially what happens is a traditional
IRA withdrawals are taxed as ordinary income in the year that, uh,
that they're taken out. So that means there's no capital
gains treatment. So withdrawals are simply going to be taxed
at your mom's marginal tax rate, just like wages. So
(08:53):
the entire amount withdrawn is taxable. You know, if all
contributions were pre-tax, which is what happens with a traditional IRA.
So the larger the distribution could push some of it
up into a higher tax bracket, which not only would
require her to pay tax on the amount taken out
(09:14):
and maybe even a higher bracket that she's currently in,
but it also could affect the taxation of Social Security,
because remember, the more combined income we have, the larger
the percentage of our Social Security that's taxable. Up to 85%
of your Social Security is taxable. But it all depends
(09:35):
on how much income you have. And it affects your
Medicare premiums, which are which is called Erma, which means
that more the more income you have, the more you
pay for Medicare premiums. So there are some significant implications
to her taking IRA withdrawals, especially if their larger withdrawals,
(09:57):
for the reasons that I mentioned. Now, I know there's
a lot there. So give me your thoughts on all that.
S4 (10:02):
Well, that really answers a lot of questions for me.
And the fact that she's struggling right now financially due
to would be better if we helped her with those prescriptions,
rather than her cashing that in.
S5 (10:14):
Yeah.
S1 (10:15):
Okay. And what would she use that money for? For these, uh,
medical expenses?
S4 (10:21):
Yes.
S5 (10:22):
Okay. Yeah.
S1 (10:23):
I mean, so.
S5 (10:24):
That's.
S1 (10:24):
You know, there's not a whole lot there in the
sense that this is probably not going to push her
significantly up into a higher tax bracket. Um, because she's not,
you know, pulling a ton out. I mean, she would
probably want to think about setting aside, you know, 20%
of what she takes out just to be ready for
any kind of impact where that 10,000 is now taxable
(10:47):
as income. And there's a possibility it could slightly increase,
you know, the amount of her Social Security that she's
paying tax on. But clearly, you know, it would be
better if she could keep that in place, especially if
that's really the only thing she has to fall back on.
And if if you all are in a position to
come in and help her out, well, that would be wonderful. But, um,
you know, I think if we were talking pulling 50
(11:10):
or 75,000 out in a year, clearly that's going to
make a pretty major impact that we need to plan for.
But 10,000 is going to be fairly minor. Um, but
there will be tax implications to that, both in the
form of taxes on this as income, which is how
it'll be treated. And then again, you know, it could
cause some of her Social Security that perhaps is not being, uh,
(11:32):
you know, is not currently taxable to become taxable, uh,
for the current year.
S4 (11:38):
Okay. Thank you so much for your help. And we
appreciate it.
S5 (11:42):
Oh, absolutely.
S1 (11:43):
And you as well. Thank you for your call, Sue.
800 525 7000 is the number to call. We're taking
your calls and questions today. We'd love to help you
out with whatever is on your mind. Let's go to
mentor Ohio. Jennifer. Go ahead.
S6 (11:57):
Hi. Thank you so much for your ministry. I listen
to you every day.
S1 (12:01):
Awesome. Thank you.
S6 (12:03):
Sure. My question is, what is the difference between a
traditional Roth IRA versus a Roth 401 K through my employer?
S1 (12:17):
Yeah. Uh, really? No difference from a tax standpoint. Uh,
they all or they both. Both the Roth IRA and
the Roth 401 K offer you the opportunity to make
after tax contributions. So you get the income, you pay
the tax on it, then you put it in the
(12:38):
Roth or the traditional, uh, or excuse me, you put
it in the Roth IRA or Roth 401 K, and
then it grows tax free. So you get tax free
withdrawals in retirement. So the the only difference would be
largely around the contribution limits. Roth 401 K. You can
put in up to 23,000 for the year. And you
(12:59):
can add an additional 7500 to that if you're over 50, uh,
with a Roth IRA, you can only put in up
to 7000 or 8000 if you're 50 or older. Um,
the the other difference is around the, um, income limits.
So with a Roth IRA, you can't contribute. If your
income is too high, it starts to phase out at
(13:22):
146,000 a year. With a Roth 401 K, there is
no income limit. So those are the main differences. But
from a tax standpoint, they're exactly the same. Does that make.
S6 (13:34):
It does. I was just wondering because I have that
opportunity through my work. But my husband is self-employed and
he always has the limit he can put in because he,
Because it's a traditional Roth IRA.
S1 (13:50):
Okay. All right. Let's let's unpack that a bit more,
because I want to make sure we're, uh, we're right there. Jennifer.
We'll talk a little bit more off the air and and, uh,
get that cleared up. Thanks for your call today. Much
more right around the corner. Stay with us. Thanks for
(14:14):
joining us today on Faith and Finance Live. I'm Rob West.
I was able to, uh, get back together on the
phone with our previous caller during the break, and we
were able to clarify a couple of things. And namely,
you know, the question that she and her husband were
wrestling with is, hey, why are you bumping up against
an $8,000 limit with your Roth IRA? And I'm able
(14:37):
to put in a lot more than that in my
Roth 401 K. And so we're able to clarify the
fact that, yeah, it's the types of accounts. So with the, um,
the 401 K, whether it's traditional or Roth, you've got
that ability to put in 23,000 under the age of 50.
30,550 or older. Uh, but with the IRA, no matter
(14:59):
whether it's Roth or traditional, you're still going to have
that limit of only 7000 or 8000 if you're 50
or older. So, uh, love the, the, uh, the Roth
variety of both. But, uh, the 401 K version is
going to have a much higher limit, that's for sure.
All right, let's, uh, take some more phone calls. Let's
go out to Chicago. Hi, Betty. How can I help?
S4 (15:20):
Oh.
S7 (15:21):
Um, I'm 62 years old. Um, still working and planning
on working for, um, at least till 67. My husband
is retired. We have a home with one rental apartment,
and we owe over $300,000. Um, we want to take
a loan out for from 20 to Thousand dollars to
(15:45):
fix it so that we can sell it and get
into a single family home that doesn't have that much debt.
And we both have really good credit. Um, so I
want to know, uh, what advice you have as far
as I didn't want to refinance the house because it's, uh,
you know, rates aren't great and there's a lot of fees.
(16:07):
So do you have any advice for us?
S1 (16:09):
Yeah, but let me just make sure I have a
good understanding of what you have here. So you have
two properties. You have your primary residence plus a rental.
Is that right?
S7 (16:17):
No, I have one house. Okay. With a rental apartment
in it. We rent to. We have a renter, so. Okay.
It helps us pay our mortgage.
S1 (16:29):
I see. And what is that? The value of that home.
S7 (16:32):
Um, it's like, uh, 600, and, uh, I forgot, like, 645,000.
S1 (16:40):
Okay. And what do you owe on that one?
S7 (16:42):
300,000. Okay, something like that. Yeah.
S1 (16:45):
Yeah. All right. So you've got a little, uh, more
than 50% equity in that property. And what is the
interest rate on that mortgage? Roughly?
S7 (16:54):
Uh, I forgot it's like three and a half, I think.
S1 (16:58):
Okay. Yeah. So you don't want to touch that. That's
a that's a great rate. And we're probably not going
to see three, uh, anything, uh, you know, anytime soon.
So that that's excellent. And you all plan to stay
in this home for the foreseeable future?
S7 (17:13):
Well, no, we that's why we want to, uh, to get, uh,
we want to borrow 20 to $30,000 so that we
can do repairs. When we bought the house, the inspector
that we hired, um, and the realtor, both did not
disclose a lot of things, so we had to do
a lot of work on it. But we need 20
to $30,000 so that we can fix it up and
(17:34):
then sell it. Um, because it's a two flat and
we want to buy a single family home to retire
and not have so much debt. Depth.
S1 (17:42):
Got it. Okay, great. Yeah. I think your best option
is going to be what's called a home equity line
of credit. Uh, basically, this is a line of credit
that would be open to you up to a certain amount.
They may, you know, you could get a line up
to 50 or 100,000, but you don't have to take
that much. In fact, you know, you don't have to
(18:02):
borrow anything until you're ready for that money to be used.
So you might get the line in place at closing.
You might not take anything out, but you can borrow
up to however you know, much is available through the line,
and then you get the work done. And as you
have to pay the contractors for the work, you know,
you would take some money against that line of credit.
(18:23):
The nice thing is there are fee free home equity
lines of credit. Uh, many banks right now, even some
of the biggest, like Bank of America and Truist and
some others are offering no application, no closing costs, no
annual fees. Um, and so, you know, there's some great
options there. Now you're probably going to, you know, have maybe,
(18:46):
you know, prime plus one, uh, you know, in prime
rate right now I believe is sitting at, uh, you know,
let's see, current Prime I think is seven and a half,
if I'm not mistaken. Um, and so it may be
lower than that. So you may, you know, be up eight,
(19:07):
eight and a half. I mean, hopefully you can get
it a little lower. But the good news is you're
typically with a line of credit, although some, um, you know,
are going to be, uh, fixed. Most of them are variable. Um,
so that would allow you to see that interest rate
come down as rates come down. Now the Fed met
today didn't move interest rates. And if you're planning on
(19:28):
making these, uh, repairs soon and getting that sold, you know,
you may not see a whole lot of reduction, but
the idea is you're borrowing a small amount to get
this work done. And then as soon as you sell
the property, you come in and pay it off. So
I would go out. If you have good credit and
look for, I'd get at least three, maybe even up
to five different lenders, you know, to tell you what
(19:51):
they're offering in terms of their rate. Is it prime
plus zero? Is it prime plus one. And I would
look for some that might be willing to do it
fee free where you wouldn't have a lot of expenses,
and then that would give you the money you need
to tap into for the renovations. And then as soon
as you sell the property, you'd pay off the first
mortgage and the home equity line of credit.
S7 (20:11):
Do they add the line of credit amount balance to
the mortgage amount?
S1 (20:17):
Well, both of them are mortgages. So you've got a
one in a first position, which would be your primary
mortgage that you owe. You know, that 300,000 on. And
then you'd have a second mortgage which is in second position. Uh, which,
which is the holder of this line of credit. So
both of them are leans on the property. It's just
that your primary mortgage would be in first position and
(20:40):
your home equity line of credit would be in second position.
And that's in part why they charge you a little
bit more, because the first lender gets paid first. If
for some reason you don't perform and make the payment,
they have to foreclose and then they get paid second
out of the proceeds of the property.
S7 (20:56):
Wow. Okay. Well thank you. Thank you so much and
bless you. And and the show you do. We really
appreciate you.
S1 (21:04):
Well appreciate you. Thanks for saying that. It's a blessing.
I love what I do every day, and I get
to come alongside and encourage and help, uh, find folks
like you. So thanks for your call. Betty. Call anytime. Well, folks, uh,
we're going to take a quick break. Here. We come back.
We've got lots of great questions coming up. We'll talk
about long term care insurance with Margaret. And, uh, Constantino
(21:25):
wants to talk about, uh, retiring. And plenty more questions.
Perhaps yours. 800 525 7000. You can call right now.
We'll be right back. So glad to have you with
us today on Faith and finance live here on Moody Radio.
I'm Rob West. We've got some lines open. Only three
(21:47):
of them, though. We've got a lot of great calls
coming up. If you have a financial question, call right now.
800 525 7000. Hey, by the way, we just got
back in stock. They were out of stock as you
all been buying them up. Our study rich toward God.
It's a study on the parable of the rich fool.
You know, when we started producing here at Faith by
Studies and Devotionals, this was the very first one that
(22:08):
we did. It was one that was really on my heart,
because I've loved this parable of that, that we hear
about this rich fool who builds bigger barns and he,
you know, just talks about how he's had all this
success and he takes all the credit for it, and,
you know, he's going to eat and drink and be
merry and enjoy life. And Jesus comes in and says,
this very night, your life will be demanded of you.
(22:31):
And who will get all this stuff? And then at
the end, he talks about this really fascinating idea of
Jesus says you need to live rich toward God. Life
does not consist in the abundance of possessions. And this
short story that Jesus tells kind of on his, uh,
in his final, uh, you know, days of his ministry, uh,
(22:54):
as he's on his way into Jerusalem is just fascinating. Uh,
because there's so much we can pull away from this,
and it's it's surrounding somebody who actually steps out of
the crowd and asks Jesus to settle an inheritance dispute.
And there is just so much that I think we
can apply to our financial journey. Well, if you want
to go on this journey with us in this four
(23:14):
week study, uh, on the parable of the Rich fool, uh,
pick up Rich toward God, you'll find it on our website.
Com just click on the store and again you'll see
our study rich toward God. It's back in stock. We'd
love to put it in your hands. All right, let's
head to the phones here. West Palm Beach, Florida. Margaret,
go right ahead.
S8 (23:31):
Hi, Rob. Thanks for taking my call. And I appreciate
everything that you do. You're really an inspiration to me. Well.
Thank you. I'm 62 years old, and, um, I'm thinking
about long term care. And I was wondering what your
thoughts were.
S1 (23:51):
Hmm. Yes. It's a great question. And, you know, 70%
of Americans 65 and older will need long term care.
And usually for a couple of years. Um, so it's
something that is very real. And we ought to consider,
you know, whether it applies in our situation. I will
also say, uh, you know, it's it's fairly expensive. Um,
(24:13):
and for good reason, because, you know, long term care, um,
you know, can be costly. I mean, if you need
full nursing care, that could run 9000 a month, 100,000
plus a year. And so if anything in this season
of life, this fourth quarter of life, if anything is
going to derail us financially. It's most often going to
be expensive, long term care. So the whole idea behind
(24:37):
this type of insurance is that it's a wise planning
tool because it can step in and provide, you know,
that that coverage. So assets are not spent down on
nursing home or in. So it really is asset protection.
It also gives you more choice and flexibility in where
and how you receive care. Because often what can deter
(25:00):
you or derail you from getting the kind of care
or is you just can't afford it. And it also
eases the burden on family members who might otherwise provide
or have to coordinate care. Now, what is the downside? Well,
it's expensive, um, especially if it's if it's purchased later
in life beyond age 65. Also, the rates can increase
(25:21):
over time, even on existing policies. Um, if you never
need care, you know, you could see that as money wasted. And, uh,
you know, the the policies can be complex. Uh, they
can have caps and waiting periods and exclusions. But again,
I would say bottom line is it's a good fit
for people in their 50s and 60s. If you have
(25:43):
assets to protect, usually if you have more than a
quarter of $1 million in, you know, in assets, and
especially if you have a family history of needing care.
But I would want to make sure that, you know,
you have the ability to not only cover the premium
now and into the future, but that you could also
absorb increases on that premium such that, you know, you
(26:06):
wouldn't have to drop this at some point down the
road because you can't afford it any longer. And then
at that point, it did you no good. So let
me stop there and just kind of get your thoughts
on on what I've shared and any follow up questions.
S8 (26:20):
Um, it sounds good. I was just thinking about it because, um,
you know, you never know where life is going to
end you up. And, um, I don't want to be
a burden to my daughter or my son, you know? And, um, uh,
I don't, you know, I was would like to live
(26:42):
in my home for as long as possible and not
go into a nursing home, you know? Um, but you
never know what where God is going to lead you.
I know that for sure. Um, I read an article
about a lady who's 107, and she lives with her granddaughter,
(27:06):
and she still tends her garden and goes to church
every Sunday. I would like to be like that. God
has truly blessed her. You know, uh, I would like
to be like that, but you never know. You you
just never know.
S1 (27:23):
Yes, that's exactly right. Well, I couldn't agree more, Margaret.
And we know for as long as the Lord has
you here, he has a plan and a purpose for
your life, and I appreciate that you don't want to
be a burden on family. And so why we save
and you know, by God's grace, we're able to pay
for the care that we need throughout our life. I mean,
there are some safety nets there. So, you know, if
(27:45):
you spend down your assets. Um, you know, you could
rely on Medicaid and go into a medicaid approved facility
where that would, would come in. If you have personal
savings or investment assets to pay for care, you could
certainly take that approach. There are some other types of, uh,
insurance products. You can use an annuity with a long
(28:06):
term care insurance rider. There's also hybrid policies that offer
both life insurance and long term care. I think the
factors to consider when deciding whether to to do this,
and it's complex and it's a it's a challenging decision.
Number one is family health history. Have you had relatives
that needed care and for how long? That doesn't tell
(28:28):
us everything that you need to know because ultimately it's
in the Lord's hands, but it's it's one factor. Second
is your assets. Do you have enough to self-insure without
burdening family? Third would be your desire for independence. Do
you want to be able to, you know, have the
care you need without involving, let's say, children? Um, you know,
(28:48):
your marital status and then also inflation protection. I would
say the typical, um, you know, uh, premium is, is
usually somewhere between around $3,000 a year for solid coverage.
You know, for a 60 year old. But these premiums
can go up in the future. And you need to
(29:09):
be able to continue to absorb that. Um, so, you know,
hopefully that gives you a few things to think about.
Is that helpful?
S8 (29:17):
That's been very helpful. Thank you so much. All right.
God bless you for whatever you do. You have a
plan and a purpose and God is using you. And
I thank him for that.
S1 (29:30):
Well, Margaret, I thank you for those kind words. You
have the gift of encouragement, there's no doubt about that.
And I'm so thankful that I had the chance to
talk to you today. We appreciate your kind remarks. Call
any time. Well, folks, uh, we're up against another break, though.
We come back, um, in our final segment, we are
going to tackle a few more questions today. Uh, we'll
talk to, uh, Constantino Constantino's wondering, you know, when does
(29:53):
it make sense to delay Social Security? What's the best
option there? You know, that's a common question for retirees. Uh,
Ruby has a fascinating question about something called velocity banking.
Have you heard of it? It's a strategy using a
home equity line of credit to pay down debt quicker.
It's complex. It can be expensive. It's not for everybody.
(30:13):
It's not my favorite option. We'll talk about it straight ahead.
That and perhaps your question as well. This is faith
in finance. Live where God is our ultimate treasure. Money
is a tool to accomplish God's purposes. I'm Rob West.
We'll be right back. Stay with us. Great to have
(30:38):
you with us today on Faith and finance live. I'm
Rob West here in our final segment today we're going
to try to get to as many calls as we can.
Let's head right back to those phones. Constantino calling from
Boca Raton, Florida. All four of my kids born in
Boca Raton. Beautiful part of the country. Constantino, how can
I help you?
S9 (30:56):
Yeah. Hi, Rob. How are you?
S1 (30:58):
I'm doing.
S9 (30:58):
Great. Long time listener. First time caller.
S1 (31:01):
Hey, great. Constantino. What what what took you so long, man?
S9 (31:06):
Oh, my God. Every day I listen to you. And
I'm a road ranger and I'm on the road. It's hard.
S1 (31:13):
Do you. Do you drive for a living or just
commuting or. What are you doing?
S9 (31:17):
Yeah, like road ranger, those guys. I mean, those guys
on the.
S10 (31:21):
Side of the road. Yeah.
S9 (31:22):
You guys, when you break down.
S10 (31:24):
Hey, I love it.
S1 (31:25):
Thanks for your service, my friend.
S9 (31:27):
Thank you. Thank you. I work with the Florida Highway Patrol.
S1 (31:31):
Okay. Excellent. Well, you, uh, you are a big help. Uh, when?
In a time of crisis. So thanks for what you do. Hey,
how can I serve you today?
S9 (31:39):
Thank you. Uh, yeah, I'm 66. We'll be 67in September,
so I wanted to collect, start collecting my Social security.
Then I hear so many things and people saying, if
you wait three more years, you will earn 24% more
on top of that check.
S1 (32:00):
That's right.
S9 (32:00):
But I. I don't feel like waiting. And I also
heard that I can't retire now and get my Social
Security check. But if I work, I want to continue
working and paying taxes every year until I'm 70. And
I heard that if I do that and then I'll
(32:22):
be earning 8% every year, they would add to that. Correct?
S1 (32:27):
Well, you're mixing up two different things, so let me
try to clarify that. So first of all, you get
a full retirement age benefit that you can figure out
exactly what that is based on your work history. You
could go to my ssa.gov and find out what your
full retirement age benefit is. Do you know that number?
S9 (32:48):
Uh, no.
S1 (32:50):
Okay, so you could go check that out again. The
website ssa.gov login. It'll pull your work history and tell you, okay,
at your full retirement age, which is probably some somewhere
between 66 and 67, you start taking Social Security, you'll
get your full benefit. And and you can do that
no problem. And at that point, you can continue to
(33:11):
work and earn as much as you want. And it'll
have no impact on your Social Security in terms of,
you know, it won't reduce your Social Security if you
take your Social Security early. There's a limit to how
much you can earn, and then they start reducing your
Social Security. That no longer applies once you reach full
retirement age. Now. There's two other things you mentioned. One
is this 8% a year that you get by waiting.
(33:35):
And the other is the impact positively of you continuing
to work? Assuming you're earning higher wages than perhaps some
of your previous high 35, your highest 35 years of wages.
So let me talk about both of those. Regardless of
whether or not you continue to work, if you delay
Social Security past full retirement age, you're going to get 8%
(34:00):
credited in delayed retirement credits per year. It's simple interest,
not compounding. So that means at 68, you're going to
get 108% of your benefit if you wait. If you
wait until age 69, you'll get 116%. If you wait
till age 70, you'll get 124% of your full retirement
(34:20):
age benefit. That has nothing to do with whether you
continue to work or not. It has everything to do
with whether or not you delay your Social Security by one,
2 or 3 years. You wouldn't want to delay it
past three years because they don't. It doesn't continue to
grow after age 70, so you might as well take
it now. Why would you do that? Well, it's kind
(34:41):
of nice to lock in a check 124% of what
you would have gotten at 67 for the rest of
your life. Now you're going to have to live about
12 years past age 70, for you to be paid
back for what you gave up between 67 and 70.
But if you do, and the Lord, you know, has
a plan for your life beyond that, he doesn't call
(35:02):
you home. Well, now, for the rest of your life,
you're going to have that that higher benefit check by
about 24%. Now, you also mentioned whether it helps you
to continue working. It does, but it has nothing to
do with delaying your benefits. Whether you take your benefits
at full retirement age or you wait until age 70.
Regardless if you keep working and your wages in any
(35:26):
year for the rest of your life. If any of
your wages were you paid. FICA taxes are higher than
any of the high 35 that determined what your Social
Security was going to be at full retirement age. Those
higher wages will replace the lower year, and they will
automatically recalculate your benefit and you'll get a higher amount.
(35:49):
But that's true whether you take it at 67 or 70.
So those are two different things. One is do you
take it at full retirement age or wait and let
it build by 8% per year? And then separately, if
you continue to work and replace one of the previous
high 35 years of earnings, that's ought to recalculate your
benefit and cause it to go. Now, I've thrown a
(36:11):
lot at you. Does that all make sense?
S9 (36:14):
Yep. Yep. So that means if I, uh, if I
decided to just, uh. So who who's going to decide
Decided my full retirement age. I got to get into
the website and check retirement age.
S10 (36:29):
Yes. What is your.
S1 (36:31):
Birthday?
S9 (36:32):
16th September.
S1 (36:35):
September. What year?
S9 (36:38):
Right now, 2025 will be 67.
S10 (36:41):
Now what?
S1 (36:41):
What year were you born?
S9 (36:43):
1958.
S1 (36:45):
Okay. 1968. Your full retirement age?
S9 (36:49):
Oh 58.
S1 (36:51):
Okay. 1958 so let me look at that. Uh, let
me just. I can pull this up real quick. Uh,
let me just see here, 1958. Okay. Um, your full
retirement age is 66 years and eight months.
S9 (37:05):
Okay.
S1 (37:07):
Yeah. So at that point, you can receive 100% of
your Social Security benefit with no reduction. Now, if you
delay past 66 and eight months, then for every year
you wait up to age 70, they're going to credit 8%
per year to the amount you full retirement age, regardless
of whether you keep working or not.
S9 (37:27):
So. But I won't get it if I don't.
S1 (37:30):
Well, you'll just if you start taking it, you're just
going to get your full retirement age benefit, whatever that
was supposed to be.
S9 (37:38):
Okay. Gotcha.
S1 (37:39):
Now, separate from that, let's say you decide to take
it at 66 and eight months and you get your
full benefit. You're not going to get the 8% a year.
But if you keep working and any of the go
forward years, you earn more than any of your previous
high 35 that they use to calculate your benefit, then
that is going to result in an increase, but that
(38:01):
happens automatically.
S9 (38:04):
In my on my, uh, on my Social Security check. Correct.
S1 (38:08):
Yeah. At the end of every year, they're going to
look at your wages for the year and they're going
to say, okay, we were using his high highest 35
years of earnings to determine his benefit. But this year
he replaced one of those. Maybe early in his career
he earned X amount and this year he earned more
than that. So we're going to drop that one off.
We're going to add this one in. Then we're going
(38:29):
to recalculate his benefit. It's not going to be 8%
but it'll be something. It will go up right right.
S11 (38:37):
Got it.
S1 (38:38):
Hey Constantino. Thank you for keeping us safe out there
on the Florida highways, my friend. God bless you. And
call anytime. Let's go. Well, we'll stay in Florida. Hi, Ruby.
Go ahead.
S12 (38:48):
Hi, Rob. Thank you for taking my call. I listen
to your show often and really enjoy it.
S13 (38:53):
Well, I'm so glad. Thank you.
S12 (38:55):
Yeah. So I a couple Sundays ago, I was having
a meal with some friends, and we were talking about
our mortgages and, you know, um, accelerating the payoff. Right.
So one of the things I do now is I
pay extra, and I think I've already knocked off one
year in this mortgage I obtained in 2020. So basically
five years I knocked off one. Well, this concept came
(39:18):
up about velocity banking and the way it was explained.
And then I went on YouTube and look into some
research that if you take off a HELOC, like for 10,000,
put the 10,000 on your mortgage and then take your
income and put use it to pay off the helocs
(39:39):
and you just do this repeatedly, you know, every six months,
eight months, however long it takes you to pay off
that 10,000. Ultimately, you'll end up paying off your mortgage sooner.
And looking at the math, it looks like it worked.
But I know there was a lot of that they
left out, you know, just watching a YouTube video. So
I wanted to get your feedback and your opinion on
(40:03):
using that, that method and concept for increasing or paying
off your mortgage quicker.
S1 (40:10):
Yeah. What is your current interest rate?
S12 (40:13):
3.5.
S1 (40:14):
Yeah, yeah. This isn't going to work for you. I mean,
I'm not a big fan of Velocity Banking anyway, you
have to have a lot of cash flow. Uh, it's
just a lot of juggling, essentially. What happens. I mean,
you know, a lot of people are not familiar with
this term. So basic one here is you use a
home equity line of credit, uh, like a checking account
(40:35):
to pay off your mortgage faster. And so you open
a line of credit, you take a chunk of the HELOC,
you make a large payment toward your mortgage, and then
you deposit your income into the HELOC to quickly pay
it down. And then you repeat the process to pay
off the mortgage in larger chunks. And the key is that,
(40:55):
you know, there's simple interest on the HELOC and there's
amortized interest on the mortgage, and you can accelerate the
principal reduction. The problem is number one, it's complicated. Number two,
you know, it can it can kind of go awry
if you don't keep up with it. Number three, a
lot of the companies that do it for you, you know,
require you to pay a lot of money to get their,
(41:16):
their fancy software and so forth. But but then the
other issue is 3.5% is a great rate. And so
to use a HELOC at 8% plus, because you're probably
playing paying prime plus some sort of margin to pay
off a low mortgage rate, even if it's simple versus
amortized interest. You know, I just think at the end
(41:37):
of the day, there's really not a scenario I can
think of where Velocity banking makes sense with a 3.5%
mortgage and the current HELOC rates. So I'd rather you
just keep it simple, keep in making extra principal payments
directly on your mortgage, and don't get caught up in
this fancy strategy. Okay.
S12 (41:58):
Yeah. Thank you for that. That was my thought.
S14 (42:00):
I said, alright, keep.
S12 (42:01):
The path I'm on.
S14 (42:02):
And excellent. Thanks, Ruby.
S1 (42:04):
Appreciate your kind remarks about the program. Lord bless you.
Hey faith and Finance lives a partnership between Moody Radio
and Faith five. My amazing team Tara, Omar, Lisa and
Jim today doing all the pushing the buttons and the
hard work. See you tomorrow.
How do you live a life that truly flourishes not
just financially, but in every area God cares about? Hi,
I'm Rob West. Today we're talking about how to live
with purpose, peace, and wisdom by following God's design for life.
Ron Blue joins us to unpack biblical principles that lead
to flourishing, not through formulas, but through faithfulness. And then
(00:31):
it's on to your calls at 805, two, five 7000.
That's 805, two five 7000. This is faith and finance.
Live biblical wisdom for your financial journey. Well, what a
pleasure it is to welcome teacher and author and my
good friend and mentor, Ron Blue. Back to the program. Ron.
(00:53):
Great to see you.
S2 (00:54):
Oh thank you Rob. It's always good to talk to
you and be with you.
S1 (00:57):
Thank you Ron, when we talk about flourishing as believers,
what do we really mean? What does a life shaped
by God's design actually look like?
S2 (01:06):
You know, as I was thinking about it, knowing what
the topic was, I used to tell my staff that,
you know, the Christian life is not better. It's different.
So it doesn't look like the world would envision the
life because it's totally different. And the other thing is,
(01:27):
is that it is always unique to an individual. So, um,
my life to flourish has got to follow biblical wisdom
in all of my thinking and actions. And I'll leave it.
I lead a life that flourishes because I'm leading a
life that was created for me by our creator.
S1 (01:47):
Mm.
S2 (01:47):
So it will be different. Um. And as a matter
of fact, there's some good things about that, though, too,
because it will be a life of contentment.
S1 (01:56):
Yes.
S2 (01:57):
Um, now, I don't have to have money to be content.
I don't have to have approval to be content because
I'm loved by an almighty God. And he says, I'll
never leave you nor forsake you. So it's a different life.
S1 (02:11):
Yes, it sure is. And you talked about contentment. That's
one of those cornerstones. What are a few others, as
you look at God's Word that you think should be
a hallmark of a faithful, flourishing life?
S2 (02:22):
Well, I think a really good beginning point is stewardship
in its broader meaning. And if God owns it all,
and if God gives me everything I have comes from God,
then I am a steward and not a not an owner.
I'm a manager. So I'll reflect God's ownership and I'll
(02:44):
use his resources, be they time, talent, treasure, relationships and money,
whatever it may be, for his glory. Because I'm stewarding
everything that's been given to me. And I think another Characteristic.
And I've thought a lot about this one is a believer,
and a follower of Jesus will always be generous and
(03:08):
be generous with their money. They'll be generous with all
of those things with and that is really countercultural generosity.
And so to become generous, we need to be transformed
by God's Word. Yes, we've talked about contentment, but there's
some other characteristics. And, you know, the word deceit is
(03:29):
used in the Bible a lot. And the word greed
is used in the Bible a lot. And I think
that you'll see a believer living with integrity and honesty
and all of their dealings. You know, Proverbs is a
great book, uh, which gives guidance, uh, about honesty and
integrity and deceit and all of those things that make
(03:49):
a life meaningful life. And I think additionally, it's going
to be a life that's lived with purpose. Yes. Um,
I'm here for a reason, for a purpose. And it's temporary.
Because my home is eternity. Yes. And so what I'm
doing here is living my life with the objective of
(04:13):
realizing that I get to spend eternity with our Lord
Jesus and our creator God. And that's a big deal, too,
because so many people, the purpose in life is to
be is entertainment or many other things that compete with God.
But God's purpose for me is to live a life
(04:36):
of that has meaning, uh, because of what he puts
into it. So yes, those are some of the thoughts
that come to my mind.
S1 (04:44):
I love that, and as you said, we live with
an eternal perspective because we know we are sojourners on
this earth and our true citizenship is in heaven. Well, Rhonda,
what would you leave our listeners with? Just about 15
seconds left.
S2 (04:58):
Well, just remember that God owns it all. And I'm
the steward, and I get to use the resources entrusted
to me for his glory.
S1 (05:06):
And what a privilege that is. Ron, thank you for
that reminder today. We appreciate you being with us.
S2 (05:11):
Thank you for having me.
S1 (05:13):
That's Ron Blue, author and teacher, and we'll be right
back with your questions after this. Stick around.
S3 (05:34):
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 (05:58):
You know, as we think about our role in managing
God's money, there's some big ideas that jump out at us.
You know, when we look at the counsel of Scripture,
we recognize that, well, first of all, God owns everything.
That's the the preeminent starting point of everything. And it's
the understanding that everything we have our money, our possessions,
our opportunities belong to God and are entrusted to us
(06:20):
for his purposes. We're stewards, not owners. Second, money reveals
we do with it shows what we love. You see,
how we handle money reflects what we value most. Our
financial decisions expose our true priorities and whether we trust
in God or in our wealth. And then thirdly, faithful
stewardship leads to flourishing. You know, when we manage money
(06:42):
God's way through diligent work and generous giving and strategic
investing and wise planning, we experience spiritual fruitfulness and participate
in his Kingdom purposes. So those three big ideas. God
owns everything. Money reveals our heart. Faithful stewardship leads to flourishing.
Those are kind of central to everything we do here.
So each day on the program, we want to help
(07:04):
shepherd you towards ideas. It's on the heart and work
it out so that you can live out that biblical
worldview and your money journey. But we also recognize you
have very specific questions as well. And so part of
what we dedicate this program to is answering those questions
as you think about spending it wisely and getting out
of debt and saving for the future, and helping your
(07:26):
kids understand these ideas and principles. All of that we
know results in questions that you have. So this is
your program. The rest of it is yours for your
questions today. So go ahead and call right now we
have some lines open. Any financial question today. We'd love
to take that for you or from you and process
your questions 800 525 7000 is the number to call again.
(07:49):
That's 800 525 7000. Those lines will fill up. But
at the moment at least, they're open and ready for you.
You'll get right through again. 800 525 7000. Let's begin
today in New York State. Sue, you'll be our first caller.
Go ahead.
S4 (08:05):
Good afternoon, and thank you so much for taking my call. Um,
I'm calling because my 89 year old mother has an IRA,
and she's wondering about the financial implications if she has
to cash that in.
S5 (08:18):
Yeah, and that's a good question.
S4 (08:20):
IRAs.
S5 (08:20):
Sure. What is.
S1 (08:21):
Her income? What does her income consist of right now?
S4 (08:25):
Um, social Security and a small pension.
S5 (08:29):
Okay.
S1 (08:29):
Got it. Yeah. So essentially what happens is a traditional
IRA withdrawals are taxed as ordinary income in the year that, uh,
that they're taken out. So that means there's no capital
gains treatment. So withdrawals are simply going to be taxed
at your mom's marginal tax rate, just like wages. So
(08:53):
the entire amount withdrawn is taxable. You know, if all
contributions were pre-tax, which is what happens with a traditional IRA.
So the larger the distribution could push some of it
up into a higher tax bracket, which not only would
require her to pay tax on the amount taken out
(09:14):
and maybe even a higher bracket that she's currently in,
but it also could affect the taxation of Social Security,
because remember, the more combined income we have, the larger
the percentage of our Social Security that's taxable. Up to 85%
of your Social Security is taxable. But it all depends
(09:35):
on how much income you have. And it affects your
Medicare premiums, which are which is called Erma, which means
that more the more income you have, the more you
pay for Medicare premiums. So there are some significant implications
to her taking IRA withdrawals, especially if their larger withdrawals,
(09:57):
for the reasons that I mentioned. Now, I know there's
a lot there. So give me your thoughts on all that.
S4 (10:02):
Well, that really answers a lot of questions for me.
And the fact that she's struggling right now financially due
to would be better if we helped her with those prescriptions,
rather than her cashing that in.
S5 (10:14):
Yeah.
S1 (10:15):
Okay. And what would she use that money for? For these, uh,
medical expenses?
S4 (10:21):
Yes.
S5 (10:22):
Okay. Yeah.
S1 (10:23):
I mean, so.
S5 (10:24):
That's.
S1 (10:24):
You know, there's not a whole lot there in the
sense that this is probably not going to push her
significantly up into a higher tax bracket. Um, because she's not,
you know, pulling a ton out. I mean, she would
probably want to think about setting aside, you know, 20%
of what she takes out just to be ready for
any kind of impact where that 10,000 is now taxable
(10:47):
as income. And there's a possibility it could slightly increase,
you know, the amount of her Social Security that she's
paying tax on. But clearly, you know, it would be
better if she could keep that in place, especially if
that's really the only thing she has to fall back on.
And if if you all are in a position to
come in and help her out, well, that would be wonderful. But, um,
you know, I think if we were talking pulling 50
(11:10):
or 75,000 out in a year, clearly that's going to
make a pretty major impact that we need to plan for.
But 10,000 is going to be fairly minor. Um, but
there will be tax implications to that, both in the
form of taxes on this as income, which is how
it'll be treated. And then again, you know, it could
cause some of her Social Security that perhaps is not being, uh,
(11:32):
you know, is not currently taxable to become taxable, uh,
for the current year.
S4 (11:38):
Okay. Thank you so much for your help. And we
appreciate it.
S5 (11:42):
Oh, absolutely.
S1 (11:43):
And you as well. Thank you for your call, Sue.
800 525 7000 is the number to call. We're taking
your calls and questions today. We'd love to help you
out with whatever is on your mind. Let's go to
mentor Ohio. Jennifer. Go ahead.
S6 (11:57):
Hi. Thank you so much for your ministry. I listen
to you every day.
S1 (12:01):
Awesome. Thank you.
S6 (12:03):
Sure. My question is, what is the difference between a
traditional Roth IRA versus a Roth 401 K through my employer?
S1 (12:17):
Yeah. Uh, really? No difference from a tax standpoint. Uh,
they all or they both. Both the Roth IRA and
the Roth 401 K offer you the opportunity to make
after tax contributions. So you get the income, you pay
the tax on it, then you put it in the
(12:38):
Roth or the traditional, uh, or excuse me, you put
it in the Roth IRA or Roth 401 K, and
then it grows tax free. So you get tax free
withdrawals in retirement. So the the only difference would be
largely around the contribution limits. Roth 401 K. You can
put in up to 23,000 for the year. And you
(12:59):
can add an additional 7500 to that if you're over 50, uh,
with a Roth IRA, you can only put in up
to 7000 or 8000 if you're 50 or older. Um,
the the other difference is around the, um, income limits.
So with a Roth IRA, you can't contribute. If your
income is too high, it starts to phase out at
(13:22):
146,000 a year. With a Roth 401 K, there is
no income limit. So those are the main differences. But
from a tax standpoint, they're exactly the same. Does that make.
S6 (13:34):
It does. I was just wondering because I have that
opportunity through my work. But my husband is self-employed and
he always has the limit he can put in because he,
Because it's a traditional Roth IRA.
S1 (13:50):
Okay. All right. Let's let's unpack that a bit more,
because I want to make sure we're, uh, we're right there. Jennifer.
We'll talk a little bit more off the air and and, uh,
get that cleared up. Thanks for your call today. Much
more right around the corner. Stay with us. Thanks for
(14:14):
joining us today on Faith and Finance Live. I'm Rob West.
I was able to, uh, get back together on the
phone with our previous caller during the break, and we
were able to clarify a couple of things. And namely,
you know, the question that she and her husband were
wrestling with is, hey, why are you bumping up against
an $8,000 limit with your Roth IRA? And I'm able
(14:37):
to put in a lot more than that in my
Roth 401 K. And so we're able to clarify the
fact that, yeah, it's the types of accounts. So with the, um,
the 401 K, whether it's traditional or Roth, you've got
that ability to put in 23,000 under the age of 50.
30,550 or older. Uh, but with the IRA, no matter
(14:59):
whether it's Roth or traditional, you're still going to have
that limit of only 7000 or 8000 if you're 50
or older. So, uh, love the, the, uh, the Roth
variety of both. But, uh, the 401 K version is
going to have a much higher limit, that's for sure.
All right, let's, uh, take some more phone calls. Let's
go out to Chicago. Hi, Betty. How can I help?
S4 (15:20):
Oh.
S7 (15:21):
Um, I'm 62 years old. Um, still working and planning
on working for, um, at least till 67. My husband
is retired. We have a home with one rental apartment,
and we owe over $300,000. Um, we want to take
a loan out for from 20 to Thousand dollars to
(15:45):
fix it so that we can sell it and get
into a single family home that doesn't have that much debt.
And we both have really good credit. Um, so I
want to know, uh, what advice you have as far
as I didn't want to refinance the house because it's, uh,
you know, rates aren't great and there's a lot of fees.
(16:07):
So do you have any advice for us?
S1 (16:09):
Yeah, but let me just make sure I have a
good understanding of what you have here. So you have
two properties. You have your primary residence plus a rental.
Is that right?
S7 (16:17):
No, I have one house. Okay. With a rental apartment
in it. We rent to. We have a renter, so. Okay.
It helps us pay our mortgage.
S1 (16:29):
I see. And what is that? The value of that home.
S7 (16:32):
Um, it's like, uh, 600, and, uh, I forgot, like, 645,000.
S1 (16:40):
Okay. And what do you owe on that one?
S7 (16:42):
300,000. Okay, something like that. Yeah.
S1 (16:45):
Yeah. All right. So you've got a little, uh, more
than 50% equity in that property. And what is the
interest rate on that mortgage? Roughly?
S7 (16:54):
Uh, I forgot it's like three and a half, I think.
S1 (16:58):
Okay. Yeah. So you don't want to touch that. That's
a that's a great rate. And we're probably not going
to see three, uh, anything, uh, you know, anytime soon.
So that that's excellent. And you all plan to stay
in this home for the foreseeable future?
S7 (17:13):
Well, no, we that's why we want to, uh, to get, uh,
we want to borrow 20 to $30,000 so that we
can do repairs. When we bought the house, the inspector
that we hired, um, and the realtor, both did not
disclose a lot of things, so we had to do
a lot of work on it. But we need 20
to $30,000 so that we can fix it up and
(17:34):
then sell it. Um, because it's a two flat and
we want to buy a single family home to retire
and not have so much debt. Depth.
S1 (17:42):
Got it. Okay, great. Yeah. I think your best option
is going to be what's called a home equity line
of credit. Uh, basically, this is a line of credit
that would be open to you up to a certain amount.
They may, you know, you could get a line up
to 50 or 100,000, but you don't have to take
that much. In fact, you know, you don't have to
(18:02):
borrow anything until you're ready for that money to be used.
So you might get the line in place at closing.
You might not take anything out, but you can borrow
up to however you know, much is available through the line,
and then you get the work done. And as you
have to pay the contractors for the work, you know,
you would take some money against that line of credit.
(18:23):
The nice thing is there are fee free home equity
lines of credit. Uh, many banks right now, even some
of the biggest, like Bank of America and Truist and
some others are offering no application, no closing costs, no
annual fees. Um, and so, you know, there's some great
options there. Now you're probably going to, you know, have maybe,
(18:46):
you know, prime plus one, uh, you know, in prime
rate right now I believe is sitting at, uh, you know,
let's see, current Prime I think is seven and a half,
if I'm not mistaken. Um, and so it may be
lower than that. So you may, you know, be up eight,
(19:07):
eight and a half. I mean, hopefully you can get
it a little lower. But the good news is you're
typically with a line of credit, although some, um, you know,
are going to be, uh, fixed. Most of them are variable. Um,
so that would allow you to see that interest rate
come down as rates come down. Now the Fed met
today didn't move interest rates. And if you're planning on
(19:28):
making these, uh, repairs soon and getting that sold, you know,
you may not see a whole lot of reduction, but
the idea is you're borrowing a small amount to get
this work done. And then as soon as you sell
the property, you come in and pay it off. So
I would go out. If you have good credit and
look for, I'd get at least three, maybe even up
to five different lenders, you know, to tell you what
(19:51):
they're offering in terms of their rate. Is it prime
plus zero? Is it prime plus one. And I would
look for some that might be willing to do it
fee free where you wouldn't have a lot of expenses,
and then that would give you the money you need
to tap into for the renovations. And then as soon
as you sell the property, you'd pay off the first
mortgage and the home equity line of credit.
S7 (20:11):
Do they add the line of credit amount balance to
the mortgage amount?
S1 (20:17):
Well, both of them are mortgages. So you've got a
one in a first position, which would be your primary
mortgage that you owe. You know, that 300,000 on. And
then you'd have a second mortgage which is in second position. Uh, which,
which is the holder of this line of credit. So
both of them are leans on the property. It's just
that your primary mortgage would be in first position and
(20:40):
your home equity line of credit would be in second position.
And that's in part why they charge you a little
bit more, because the first lender gets paid first. If
for some reason you don't perform and make the payment,
they have to foreclose and then they get paid second
out of the proceeds of the property.
S7 (20:56):
Wow. Okay. Well thank you. Thank you so much and
bless you. And and the show you do. We really
appreciate you.
S1 (21:04):
Well appreciate you. Thanks for saying that. It's a blessing.
I love what I do every day, and I get
to come alongside and encourage and help, uh, find folks
like you. So thanks for your call. Betty. Call anytime. Well, folks, uh,
we're going to take a quick break. Here. We come back.
We've got lots of great questions coming up. We'll talk
about long term care insurance with Margaret. And, uh, Constantino
(21:25):
wants to talk about, uh, retiring. And plenty more questions.
Perhaps yours. 800 525 7000. You can call right now.
We'll be right back. So glad to have you with
us today on Faith and finance live here on Moody Radio.
I'm Rob West. We've got some lines open. Only three
(21:47):
of them, though. We've got a lot of great calls
coming up. If you have a financial question, call right now.
800 525 7000. Hey, by the way, we just got
back in stock. They were out of stock as you
all been buying them up. Our study rich toward God.
It's a study on the parable of the rich fool.
You know, when we started producing here at Faith by
Studies and Devotionals, this was the very first one that
(22:08):
we did. It was one that was really on my heart,
because I've loved this parable of that, that we hear
about this rich fool who builds bigger barns and he,
you know, just talks about how he's had all this
success and he takes all the credit for it, and,
you know, he's going to eat and drink and be
merry and enjoy life. And Jesus comes in and says,
this very night, your life will be demanded of you.
(22:31):
And who will get all this stuff? And then at
the end, he talks about this really fascinating idea of
Jesus says you need to live rich toward God. Life
does not consist in the abundance of possessions. And this
short story that Jesus tells kind of on his, uh,
in his final, uh, you know, days of his ministry, uh,
(22:54):
as he's on his way into Jerusalem is just fascinating. Uh,
because there's so much we can pull away from this,
and it's it's surrounding somebody who actually steps out of
the crowd and asks Jesus to settle an inheritance dispute.
And there is just so much that I think we
can apply to our financial journey. Well, if you want
to go on this journey with us in this four
(23:14):
week study, uh, on the parable of the Rich fool, uh,
pick up Rich toward God, you'll find it on our website.
Com just click on the store and again you'll see
our study rich toward God. It's back in stock. We'd
love to put it in your hands. All right, let's
head to the phones here. West Palm Beach, Florida. Margaret,
go right ahead.
S8 (23:31):
Hi, Rob. Thanks for taking my call. And I appreciate
everything that you do. You're really an inspiration to me. Well.
Thank you. I'm 62 years old, and, um, I'm thinking
about long term care. And I was wondering what your
thoughts were.
S1 (23:51):
Hmm. Yes. It's a great question. And, you know, 70%
of Americans 65 and older will need long term care.
And usually for a couple of years. Um, so it's
something that is very real. And we ought to consider,
you know, whether it applies in our situation. I will
also say, uh, you know, it's it's fairly expensive. Um,
(24:13):
and for good reason, because, you know, long term care, um,
you know, can be costly. I mean, if you need
full nursing care, that could run 9000 a month, 100,000
plus a year. And so if anything in this season
of life, this fourth quarter of life, if anything is
going to derail us financially. It's most often going to
be expensive, long term care. So the whole idea behind
(24:37):
this type of insurance is that it's a wise planning
tool because it can step in and provide, you know,
that that coverage. So assets are not spent down on
nursing home or in. So it really is asset protection.
It also gives you more choice and flexibility in where
and how you receive care. Because often what can deter
(25:00):
you or derail you from getting the kind of care
or is you just can't afford it. And it also
eases the burden on family members who might otherwise provide
or have to coordinate care. Now, what is the downside? Well,
it's expensive, um, especially if it's if it's purchased later
in life beyond age 65. Also, the rates can increase
(25:21):
over time, even on existing policies. Um, if you never
need care, you know, you could see that as money wasted. And, uh,
you know, the the policies can be complex. Uh, they
can have caps and waiting periods and exclusions. But again,
I would say bottom line is it's a good fit
for people in their 50s and 60s. If you have
(25:43):
assets to protect, usually if you have more than a
quarter of $1 million in, you know, in assets, and
especially if you have a family history of needing care.
But I would want to make sure that, you know,
you have the ability to not only cover the premium
now and into the future, but that you could also
absorb increases on that premium such that, you know, you
(26:06):
wouldn't have to drop this at some point down the
road because you can't afford it any longer. And then
at that point, it did you no good. So let
me stop there and just kind of get your thoughts
on on what I've shared and any follow up questions.
S8 (26:20):
Um, it sounds good. I was just thinking about it because, um,
you know, you never know where life is going to
end you up. And, um, I don't want to be
a burden to my daughter or my son, you know? And, um, uh,
I don't, you know, I was would like to live
(26:42):
in my home for as long as possible and not
go into a nursing home, you know? Um, but you
never know what where God is going to lead you.
I know that for sure. Um, I read an article
about a lady who's 107, and she lives with her granddaughter,
(27:06):
and she still tends her garden and goes to church
every Sunday. I would like to be like that. God
has truly blessed her. You know, uh, I would like
to be like that, but you never know. You you
just never know.
S1 (27:23):
Yes, that's exactly right. Well, I couldn't agree more, Margaret.
And we know for as long as the Lord has
you here, he has a plan and a purpose for
your life, and I appreciate that you don't want to
be a burden on family. And so why we save
and you know, by God's grace, we're able to pay
for the care that we need throughout our life. I mean,
there are some safety nets there. So, you know, if
(27:45):
you spend down your assets. Um, you know, you could
rely on Medicaid and go into a medicaid approved facility
where that would, would come in. If you have personal
savings or investment assets to pay for care, you could
certainly take that approach. There are some other types of, uh,
insurance products. You can use an annuity with a long
(28:06):
term care insurance rider. There's also hybrid policies that offer
both life insurance and long term care. I think the
factors to consider when deciding whether to to do this,
and it's complex and it's a it's a challenging decision.
Number one is family health history. Have you had relatives
that needed care and for how long? That doesn't tell
(28:28):
us everything that you need to know because ultimately it's
in the Lord's hands, but it's it's one factor. Second
is your assets. Do you have enough to self-insure without
burdening family? Third would be your desire for independence. Do
you want to be able to, you know, have the
care you need without involving, let's say, children? Um, you know,
(28:48):
your marital status and then also inflation protection. I would
say the typical, um, you know, uh, premium is, is
usually somewhere between around $3,000 a year for solid coverage.
You know, for a 60 year old. But these premiums
can go up in the future. And you need to
(29:09):
be able to continue to absorb that. Um, so, you know,
hopefully that gives you a few things to think about.
Is that helpful?
S8 (29:17):
That's been very helpful. Thank you so much. All right.
God bless you for whatever you do. You have a
plan and a purpose and God is using you. And
I thank him for that.
S1 (29:30):
Well, Margaret, I thank you for those kind words. You
have the gift of encouragement, there's no doubt about that.
And I'm so thankful that I had the chance to
talk to you today. We appreciate your kind remarks. Call
any time. Well, folks, uh, we're up against another break, though.
We come back, um, in our final segment, we are
going to tackle a few more questions today. Uh, we'll
talk to, uh, Constantino Constantino's wondering, you know, when does
(29:53):
it make sense to delay Social Security? What's the best
option there? You know, that's a common question for retirees. Uh,
Ruby has a fascinating question about something called velocity banking.
Have you heard of it? It's a strategy using a
home equity line of credit to pay down debt quicker.
It's complex. It can be expensive. It's not for everybody.
(30:13):
It's not my favorite option. We'll talk about it straight ahead.
That and perhaps your question as well. This is faith
in finance. Live where God is our ultimate treasure. Money
is a tool to accomplish God's purposes. I'm Rob West.
We'll be right back. Stay with us. Great to have
(30:38):
you with us today on Faith and finance live. I'm
Rob West here in our final segment today we're going
to try to get to as many calls as we can.
Let's head right back to those phones. Constantino calling from
Boca Raton, Florida. All four of my kids born in
Boca Raton. Beautiful part of the country. Constantino, how can
I help you?
S9 (30:56):
Yeah. Hi, Rob. How are you?
S1 (30:58):
I'm doing.
S9 (30:58):
Great. Long time listener. First time caller.
S1 (31:01):
Hey, great. Constantino. What what what took you so long, man?
S9 (31:06):
Oh, my God. Every day I listen to you. And
I'm a road ranger and I'm on the road. It's hard.
S1 (31:13):
Do you. Do you drive for a living or just
commuting or. What are you doing?
S9 (31:17):
Yeah, like road ranger, those guys. I mean, those guys
on the.
S10 (31:21):
Side of the road. Yeah.
S9 (31:22):
You guys, when you break down.
S10 (31:24):
Hey, I love it.
S1 (31:25):
Thanks for your service, my friend.
S9 (31:27):
Thank you. Thank you. I work with the Florida Highway Patrol.
S1 (31:31):
Okay. Excellent. Well, you, uh, you are a big help. Uh, when?
In a time of crisis. So thanks for what you do. Hey,
how can I serve you today?
S9 (31:39):
Thank you. Uh, yeah, I'm 66. We'll be 67in September,
so I wanted to collect, start collecting my Social security.
Then I hear so many things and people saying, if
you wait three more years, you will earn 24% more
on top of that check.
S1 (32:00):
That's right.
S9 (32:00):
But I. I don't feel like waiting. And I also
heard that I can't retire now and get my Social
Security check. But if I work, I want to continue
working and paying taxes every year until I'm 70. And
I heard that if I do that and then I'll
(32:22):
be earning 8% every year, they would add to that. Correct?
S1 (32:27):
Well, you're mixing up two different things, so let me
try to clarify that. So first of all, you get
a full retirement age benefit that you can figure out
exactly what that is based on your work history. You
could go to my ssa.gov and find out what your
full retirement age benefit is. Do you know that number?
S9 (32:48):
Uh, no.
S1 (32:50):
Okay, so you could go check that out again. The
website ssa.gov login. It'll pull your work history and tell you, okay,
at your full retirement age, which is probably some somewhere
between 66 and 67, you start taking Social Security, you'll
get your full benefit. And and you can do that
no problem. And at that point, you can continue to
(33:11):
work and earn as much as you want. And it'll
have no impact on your Social Security in terms of,
you know, it won't reduce your Social Security if you
take your Social Security early. There's a limit to how
much you can earn, and then they start reducing your
Social Security. That no longer applies once you reach full
retirement age. Now. There's two other things you mentioned. One
is this 8% a year that you get by waiting.
(33:35):
And the other is the impact positively of you continuing
to work? Assuming you're earning higher wages than perhaps some
of your previous high 35, your highest 35 years of wages.
So let me talk about both of those. Regardless of
whether or not you continue to work, if you delay
Social Security past full retirement age, you're going to get 8%
(34:00):
credited in delayed retirement credits per year. It's simple interest,
not compounding. So that means at 68, you're going to
get 108% of your benefit if you wait. If you
wait until age 69, you'll get 116%. If you wait
till age 70, you'll get 124% of your full retirement
(34:20):
age benefit. That has nothing to do with whether you
continue to work or not. It has everything to do
with whether or not you delay your Social Security by one,
2 or 3 years. You wouldn't want to delay it
past three years because they don't. It doesn't continue to
grow after age 70, so you might as well take
it now. Why would you do that? Well, it's kind
(34:41):
of nice to lock in a check 124% of what
you would have gotten at 67 for the rest of
your life. Now you're going to have to live about
12 years past age 70, for you to be paid
back for what you gave up between 67 and 70.
But if you do, and the Lord, you know, has
a plan for your life beyond that, he doesn't call
(35:02):
you home. Well, now, for the rest of your life,
you're going to have that that higher benefit check by
about 24%. Now, you also mentioned whether it helps you
to continue working. It does, but it has nothing to
do with delaying your benefits. Whether you take your benefits
at full retirement age or you wait until age 70.
Regardless if you keep working and your wages in any
(35:26):
year for the rest of your life. If any of
your wages were you paid. FICA taxes are higher than
any of the high 35 that determined what your Social
Security was going to be at full retirement age. Those
higher wages will replace the lower year, and they will
automatically recalculate your benefit and you'll get a higher amount.
(35:49):
But that's true whether you take it at 67 or 70.
So those are two different things. One is do you
take it at full retirement age or wait and let
it build by 8% per year? And then separately, if
you continue to work and replace one of the previous
high 35 years of earnings, that's ought to recalculate your
benefit and cause it to go. Now, I've thrown a
(36:11):
lot at you. Does that all make sense?
S9 (36:14):
Yep. Yep. So that means if I, uh, if I
decided to just, uh. So who who's going to decide
Decided my full retirement age. I got to get into
the website and check retirement age.
S10 (36:29):
Yes. What is your.
S1 (36:31):
Birthday?
S9 (36:32):
16th September.
S1 (36:35):
September. What year?
S9 (36:38):
Right now, 2025 will be 67.
S10 (36:41):
Now what?
S1 (36:41):
What year were you born?
S9 (36:43):
1958.
S1 (36:45):
Okay. 1968. Your full retirement age?
S9 (36:49):
Oh 58.
S1 (36:51):
Okay. 1958 so let me look at that. Uh, let
me just. I can pull this up real quick. Uh,
let me just see here, 1958. Okay. Um, your full
retirement age is 66 years and eight months.
S9 (37:05):
Okay.
S1 (37:07):
Yeah. So at that point, you can receive 100% of
your Social Security benefit with no reduction. Now, if you
delay past 66 and eight months, then for every year
you wait up to age 70, they're going to credit 8%
per year to the amount you full retirement age, regardless
of whether you keep working or not.
S9 (37:27):
So. But I won't get it if I don't.
S1 (37:30):
Well, you'll just if you start taking it, you're just
going to get your full retirement age benefit, whatever that
was supposed to be.
S9 (37:38):
Okay. Gotcha.
S1 (37:39):
Now, separate from that, let's say you decide to take
it at 66 and eight months and you get your
full benefit. You're not going to get the 8% a year.
But if you keep working and any of the go
forward years, you earn more than any of your previous
high 35 that they use to calculate your benefit, then
that is going to result in an increase, but that
(38:01):
happens automatically.
S9 (38:04):
In my on my, uh, on my Social Security check. Correct.
S1 (38:08):
Yeah. At the end of every year, they're going to
look at your wages for the year and they're going
to say, okay, we were using his high highest 35
years of earnings to determine his benefit. But this year
he replaced one of those. Maybe early in his career
he earned X amount and this year he earned more
than that. So we're going to drop that one off.
We're going to add this one in. Then we're going
(38:29):
to recalculate his benefit. It's not going to be 8%
but it'll be something. It will go up right right.
S11 (38:37):
Got it.
S1 (38:38):
Hey Constantino. Thank you for keeping us safe out there
on the Florida highways, my friend. God bless you. And
call anytime. Let's go. Well, we'll stay in Florida. Hi, Ruby.
Go ahead.
S12 (38:48):
Hi, Rob. Thank you for taking my call. I listen
to your show often and really enjoy it.
S13 (38:53):
Well, I'm so glad. Thank you.
S12 (38:55):
Yeah. So I a couple Sundays ago, I was having
a meal with some friends, and we were talking about
our mortgages and, you know, um, accelerating the payoff. Right.
So one of the things I do now is I
pay extra, and I think I've already knocked off one
year in this mortgage I obtained in 2020. So basically
five years I knocked off one. Well, this concept came
(39:18):
up about velocity banking and the way it was explained.
And then I went on YouTube and look into some
research that if you take off a HELOC, like for 10,000,
put the 10,000 on your mortgage and then take your
income and put use it to pay off the helocs
(39:39):
and you just do this repeatedly, you know, every six months,
eight months, however long it takes you to pay off
that 10,000. Ultimately, you'll end up paying off your mortgage sooner.
And looking at the math, it looks like it worked.
But I know there was a lot of that they
left out, you know, just watching a YouTube video. So
I wanted to get your feedback and your opinion on
(40:03):
using that, that method and concept for increasing or paying
off your mortgage quicker.
S1 (40:10):
Yeah. What is your current interest rate?
S12 (40:13):
3.5.
S1 (40:14):
Yeah, yeah. This isn't going to work for you. I mean,
I'm not a big fan of Velocity Banking anyway, you
have to have a lot of cash flow. Uh, it's
just a lot of juggling, essentially. What happens. I mean,
you know, a lot of people are not familiar with
this term. So basic one here is you use a
home equity line of credit, uh, like a checking account
(40:35):
to pay off your mortgage faster. And so you open
a line of credit, you take a chunk of the HELOC,
you make a large payment toward your mortgage, and then
you deposit your income into the HELOC to quickly pay
it down. And then you repeat the process to pay
off the mortgage in larger chunks. And the key is that,
(40:55):
you know, there's simple interest on the HELOC and there's
amortized interest on the mortgage, and you can accelerate the
principal reduction. The problem is number one, it's complicated. Number two,
you know, it can it can kind of go awry
if you don't keep up with it. Number three, a
lot of the companies that do it for you, you know,
require you to pay a lot of money to get their,
(41:16):
their fancy software and so forth. But but then the
other issue is 3.5% is a great rate. And so
to use a HELOC at 8% plus, because you're probably
playing paying prime plus some sort of margin to pay
off a low mortgage rate, even if it's simple versus
amortized interest. You know, I just think at the end
(41:37):
of the day, there's really not a scenario I can
think of where Velocity banking makes sense with a 3.5%
mortgage and the current HELOC rates. So I'd rather you
just keep it simple, keep in making extra principal payments
directly on your mortgage, and don't get caught up in
this fancy strategy. Okay.
S12 (41:58):
Yeah. Thank you for that. That was my thought.
S14 (42:00):
I said, alright, keep.
S12 (42:01):
The path I'm on.
S14 (42:02):
And excellent. Thanks, Ruby.
S1 (42:04):
Appreciate your kind remarks about the program. Lord bless you.
Hey faith and Finance lives a partnership between Moody Radio
and Faith five. My amazing team Tara, Omar, Lisa and
Jim today doing all the pushing the buttons and the
hard work. See you tomorrow.
Popular Podcasts
Fudd Around And Find Out
UConn basketball star Azzi Fudd brings her championship swag to iHeart Women’s Sports with Fudd Around and Find Out, a weekly podcast that takes fans along for the ride as Azzi spends her final year of college trying to reclaim the National Championship and prepare to be a first round WNBA draft pick. Ever wonder what it’s like to be a world-class athlete in the public spotlight while still managing schoolwork, friendships and family time? It’s time to Fudd Around and Find Out!
Crime Junkie
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.
The Breakfast Club
The World's Most Dangerous Morning Show, The Breakfast Club, With DJ Envy, Jess Hilarious, And Charlamagne Tha God!