November 26, 2025 • 43 mins
Raising kids to handle money wisely is about more than teaching them dollars and cents—it’s about shaping their hearts to see their true identity in Christ. As parents, we all want to help our kids and teens understand their true value and develop a biblical foundation for both money and identity. On the next Faith & Finance Live, Rob West and Brian Holtz share how we can do just that—right from the start. Then, it’s on to your calls. That’s Faith & Finance Live—biblical wisdom for your financial journey, weekdays at 4pm Eastern/3pm Central on Moody Radio.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
S1 (00:04):
The following program was pre-recorded so our phone lines are
not open.
S2 (00:08):
Raising kids to handle money wisely is about more than
teaching them dollars and cents. It's about shaping their hearts
to see their true identity in Christ. Hi, I'm Rob West.
As parents, we all want to help our kids and
teens understand their true value and develop a biblical foundation
for both money and identity. Brian Holtz joins us today
to share how we can do just that right from
(00:30):
the start. And we're prerecorded. So please hold your calls
until we're back in the studio. This is faith and
finance live. Biblical wisdom for your financial journey. Well, it's
always a pleasure to have Brian Holtz, CEO of Compass
Financial Ministry, join us to share what God is doing
through their work, and today is certainly no exception. Brian,
(00:51):
great to have you back.
S3 (00:52):
Thanks, Rob. It's always fun to be with you.
S2 (00:55):
So, Brian, we're really excited about this new resource right
from the start. I know it was created for kids
ages 11 to 15. So just talk about the genesis
of this project.
S3 (01:05):
Yeah. You know, we saw a real gap in discipleship
for this age range. In particular. We have lots of
things out there for little kids and for high schoolers.
But middle schoolers are forming their worldview, including what they
believe about money and identity. Now, this study helps them
see that their worth comes from being made in the
image of God, not in what they own or what
others think of them. It takes Scripture and helps them
(01:27):
learn and apply it in fun, interactive lessons.
S2 (01:30):
Oh man, we're going to give a lot of these
away on this program. I'm so excited about this. You know,
it's a timely message, Brian, especially during this holiday season
when there's so much pressure to spend more and have
more and do more. So what are the key themes
you explore? And right from the start?
S3 (01:46):
Yeah, there are six chapters identity, giving, saving, spending, building
on your foundation, and finishing well. Each one takes a
biblical perspective and turns it into a hands on experience.
There are short daily lessons, memory verses and something we
call life hacks simple, practical challenges that help students apply
(02:07):
what they're actually learning. The goal, of course, is to
make faith and finances personal, relevant, and fun.
S2 (02:13):
I love that. Clearly, this goes beyond just teaching them
financial literacy how to handle money. It really is about
shaping their hearts and even their character. So Brian, how
does it help them understand who they are in Christ?
S3 (02:26):
The very first chapter is all about identity. Students read
passages like Genesis one and Psalm 139 to learn that
they were made in God's image, and that they are
loved by the creator of everything. They learn that their
value doesn't change with their possessions, their popularity, or their performance,
and once they grasp that, then they're able to view
(02:47):
their giving, saving, and spending as acts of worship.
S2 (02:50):
Oh, and obviously that is a solid foundation that we
all need. Uh, could you share an example of one
of those life hacks. I love this idea, these practical
ideas that parents or youth leaders might find helpful.
S3 (03:03):
Yeah, one of our favorites is the good old trustworthy
one that we're all familiar with. The three jars exercise
where they, the kids, will divide their money into a giving,
a saving, and a spending jar each time they earn
or receive it. It simply turns an abstract idea into
a habit that they can see and touch. And of course,
parents love it because it opens up that conversation about
(03:24):
generosity and wisdom with money.
S2 (03:26):
Mm. Yeah. That is so good. Uh, it's such a
great way to encourage gratitude during this season as well. Yeah.
How can families or churches put this resource into practice, Brian?
S3 (03:37):
Yeah, we've designed it to be used at home in
youth groups and in Christian schools. There's a student book
and a leader's guide that has all the discussion prompts
and activities. It fits naturally around these holidays, especially Thanksgiving,
but really works any time of the year. Our hope
is that it helps parents disciple their kids in a
practical and joyful way.
S2 (03:57):
I know Howard Dayton, the founder of compass, always talks
about being MVP parents that we need to model this.
We need to have some verbal conversations. We need to
get practical. Sounds like this is woven all through it,
but this idea that more is caught than taught is
a big one, isn't it?
S3 (04:13):
It absolutely is. We just can't get enough of showing
it to our children, explaining it when they ask questions,
and then helping them do the same.
S2 (04:21):
Yeah. Brian, let's finish with any ideas or anything you
used with your own kids that you've found especially helpful
as you try to get really practical about teaching them
biblical financial principles?
S3 (04:34):
Yeah, we love making our kids make real choices about
where money is spent. So it's not just, hey, do
I buy a piece of candy or not? But there
is an actual cost that if I choose to buy
a piece of candy today, tomorrow, I might not get
to do something that I want to do. And that
exposure to real consequences, both good and bad, is just
invaluable in the development of their character and financial habits.
S2 (04:57):
There is no doubt about that, folks. Helping your kids
understand who they are in Christ may be one of
the most valuable financial lessons you teach them over time. Brian,
great to have you here, my friend.
S3 (05:09):
Thank you so much, Rob. It's always a pleasure.
S2 (05:11):
That's Brian Holt, CEO of Compass Financial Ministry. To learn
more about their new resource right from the start, visit
Compass Financial Ministry. Org. Much more to come just around
the corner. Stick around.
S4 (05:38):
This is Faith and finance live with Rob West. Hey,
if you hear a phone number mentioned today, please ignore
that number and don't call us because today's broadcast was
previously recorded. But we think the upcoming information will help
you and make you a wise steward of what God's
given you. So please stay tuned.
S2 (05:58):
Well, today we're going to be taking your calls and questions.
So there's something going on in your financial life that
you'd like to talk about. We'd love to chat about
it with you, help you think about it in light
of biblical wisdom, making God your ultimate treasure, but recognizing
there are very practical insights in God's Word that relate
to how we manage money. Yeah, we need to see
(06:19):
God as owner of everything and accept our role as stewards. Yes,
we need to understand that our spending reflects our values,
and that we can see as a result of how
we spend money what's important to us. It tells a story.
You know, it's not just that our heart follows our money.
If that were true, the Pharisees would have been the
most devout. No, it's that our heart is revealed by
(06:44):
our money. You know how we handle money, how we
hold it, whether it's loosely or tightly, how we give it,
how we invest. It is a revealer of the heart,
the late Larry Burkett used to say. Money management is
the clearest indicator into what's going on on our lives spiritually. Wow.
Stop and think about that for a moment. And perhaps
(07:04):
that should be a challenge to us to take a
step back and say, wait a minute. Maybe the way
I'm handling money doesn't reflect what I want to be
important to me. And so maybe some changes in order.
And we need to ask ourselves that periodically. But the
other thing we find in God's Word is these practical
principles that we can apply to modern financial decision making,
(07:27):
the fact that we shouldn't cosign, that we need to
be careful about how we use debt, that we should
seek wise counsel, that we need to pass wisdom before wealth,
because wisdom is the only thing that is preserved, uh,
in terms of wealth is fleeting, wisdom is not. And
so we need to make sure that we're preparing the
next generation, that we need to count the cost and
(07:47):
look at the ant and see how she gathers in
the harvest for the for the winter that's coming. Looking
at the the model that Joseph presents as he saved
in a time of plenty for a time of famine.
You know, all of these principles can apply to how
we manage money today. And if we boil it all down,
once we recognize that God owns it all, we spend
(08:09):
less than we earn. We avoid the use of debt.
We have some long term goals because the longer term
our perspective, the better the decision we're going to make.
Today we have some liquidity or some margin. We have
something left over at the end of the month. That's
the only way we're going to fund our longer term
goals beyond the here and now. And then finally, we
give generously. And if we do those five things, that's
(08:31):
not a get rich quick philosophy. It doesn't mean you'll
be free from any financial calamity, but it does mean
that you're heeding the counsel of Scripture. You're understanding God
is your provider, and then you're putting yourself in a
position to experience God's best. Where money is a tool.
It's not the end. It's a means to an end.
It should be something that brings enjoyment, not frustration. All right,
(08:52):
let's dive in. We're going to begin today in Fort Wayne, Indiana.
Anthony go ahead sir.
S5 (08:58):
Hey Rob, how you doing?
S2 (09:00):
Doing great. Thanks for your call.
S5 (09:01):
I was calling, um, I have about, uh, 135,000 in
my phone, and my home is about 100,000. Um, and
some change. But, uh, I was thinking, you know, would
it be a good idea to cash out my phone
to pay off my house? Yeah. What do you think
about that?
S2 (09:21):
Yeah. Good question. Uh, you know, in most cases, Anthony,
I would say cashing out a 401 K at, uh,
you know, age 56 or really, you know, any age
during your working years to pay off a mortgage is
generally not advisable, mainly because of the taxes and the
penalties and then the lost, what we call opportunity cost.
(09:42):
So let me unpack those first taxes and penalties. Since
you're under 59.5. The IRS would charge a 10% early
withdrawal penalty, uh, on the 130,000, unless you separated from
your employer. And you could use what's called the rule
of 55. Uh, you would have that 10% early withdrawal penalty,
and then the full amount withdrawn would also be added
(10:05):
to your taxable income, your ordinary income likely pushing you
into a higher tax bracket. So let me give you
an example. If you're at the 22% marginal tax rate,
that's 28,600 in federal tax plus a $13,000 penalty. So
that could be, you know, $41,000 in taxes and penalties.
(10:28):
So you'd only net, uh, about 100, about 88,000, um,
you know, not enough to pay off the $100,000 loan.
Then we've got the opportunity cost. So the 130,000 could
remain in a tax deferred environment and growing. And if
the investments earn more than 5%, what you're paying on
the mortgage, which is historically very plausible. In fact, I
(10:52):
would say, you know, it's very conservative. If you look
over the last let's pick any time period 100 years. Um,
you know, when you factor in dividends and appreciation, uh,
you know, the S&P 500 has done north of 9%
a year. And so, you know, that would really warrant
you keeping both the 401 K and the mortgage and
(11:13):
then just really trying to accelerate payments on the mortgage
using after tax cash flow. If you want to be
out of debt sooner. And that could mean, you know,
at a minimum, trying to make one extra payment a year.
If you could do more than that, that's great. Um, now,
if rates drop, you could look at refinancing the 5% loan.
But I don't expect you to. You know, I'd want
(11:34):
you to save a point and a half, which means
rates would have to get down to three and a half.
You know, worst case, 4% before it would make sense
for you to refinance. And I don't see that anytime soon.
So if it were me, I would just. Unless the
Lord just really giving you a conviction to be debt
free as soon as possible. And then I would say
follow the leading of the Lord. But apart from that,
(11:55):
I'd probably prioritize trying to pay it off as you
can with extra principal payments, and then keep that 401
K invested so that you have that nest egg, you know, ten,
20 years from now when you need to convert that
to an income stream. Does that make sense?
S5 (12:10):
Yes. It makes, uh, yes, very good sense. Um, I
was also thinking that, you know, if I had pulled
it out, you know, yes, it would take about the, uh, 30.
It would still be some money in there. That's what
I'm saying. It's like 135. I'm taking the whole thing out,
but try to pull 100,000. I know they would pull, like,
$30,000 off of that and.
S2 (12:30):
Yeah.
S5 (12:31):
Go that route.
S2 (12:32):
Yeah. And the challenge is that if you did that, um,
you wouldn't have a full 100,000. So even then, if
you don't pay it off in full, you don't reclaim
that mortgage payment, which you know could be key to
you accelerating, you know, savings to try to make up
for what you've taken out. So I just think that
tax bite is too high, not to mention the opportunity
(12:55):
cost of having that money in a tax deferred environment,
which you could not easily replicate because there's contribution limits
moving forward. Um, and so keeping that in that tax
deferred environment for that to grow over the next, let's
say 15 years, uh, you know, that's going to be
a meaningful part potentially of your retirement plan. And so,
(13:15):
you know, I would probably if anything, I would probably say, okay,
when do I expect to retire? And let's just pick
a number. Let's say it's ten years from now. What
you might do is, is run an amortization schedule, and
you can find an amortization calculator online for free. That
would tell you, okay, if I want to be debt free,
including my home, by the time I retire ten years
(13:36):
from now, how much would I need to spend extra
Beyond my scheduled monthly payment so that when I retire
in ten years, you know, at the same time I'm retiring,
I'm making that last mortgage payment. That would be an
interesting exercise for you. And then let's see if you
can orient your budget such that you could do whatever
(13:58):
that is so that you know, okay, by the time
I enter retirement, my biggest expense, my mortgage payment is
going to be gone. And I'm going to have my
401 K and everything that that grows to over the
next decade. I feel like that's kind of the best
of both worlds, and that will help you solve for
your lifestyle spending when that mortgage goes away. Thanks for
your call, Anthony. Just a quick reminder. We're not here today,
(14:20):
so don't call in. But we're going to head to
a break and much more coming just after this. Stay
with us. So glad to have you with us today
on Faith and Finance Live. Our team is away today,
so don't call in. But we lined up some great
(14:42):
questions in advance and we'll be going to those here
in just a moment. Let me also remind you that
the advice that I give each day on this program
is general in nature. We offer principles and ideas that
apply at a high level. They are not personalized. So
that's why you should always seek professional financial advice. And
if you'd like to find a professional who shares your values,
(15:05):
we of course, here at Faith and Finance Live recommend
the Certified Kingdom Advisor designation. These are men and women
who've met high standards, and they've been trained to bring
a biblical worldview of financial decision making. You can find
one at Faith comm. All right, let's head back to
the phones. We're going to go to Virginia. David. Go ahead.
S6 (15:23):
I've been listening to your show for a while now, and, um,
the Lord has shown me that, uh, my wife and
I need help. As of right now, we're in pretty
bad shape. If, um, we're so far behind the eight ball,
if it rolled backwards, it would crush us. We're both
in our late 50s. We both have just acquired good jobs.
(15:46):
We have great health care. Um, but we don't know
all the ins and outs about it. Um, we need
help with everything. Like from the from the get go.
We have not been good stewards at all. And, um,
we need somebody to dust us off, straighten us out,
put us on a path and say, okay, your money
(16:06):
needs to go. Here, you have this with this company.
You can do this. You can. Don't do this, do this.
I mean, we literally need from the very get go.
S2 (16:16):
Yeah, that makes sense, David. Well, first of all, I
appreciate your transparency there. And I think, you know, we've
got to define reality and get clarity about where we're at.
Sounds like you've got that and then purpose ourselves to say, listen,
I want to live despite, you know, the mistakes I've
made and the choices I've made that I wish I
could go back and change. We can't. We've all got those.
(16:38):
The key is that you and your wife, you know,
come together in unity and pursue God's best for you.
Recognize your role as stewards or managers of God's resources
and then say, what is it? What does faithfulness look
like from this point forward? Uh, to really, uh, dial
in our lifestyle spending and live well within our means
so we can free up margin that allows us to
(17:00):
to do some systematic, regular giving, but also to really
prioritize saving and putting that financial foundation under us. And
it starts with really some of those key pieces, you know,
as simple as we got to dial in that budget
and look at every, you know, dime that's going out
and make sure that it aligns with what's truly important
to you. And you may need to make some decisions
(17:21):
to cut back, building up that emergency fund of 3
to 6 months expenses, uh, you know, making sure you
have your debt under control. And if there's any consumer debt,
what do we need to do to get it paid off?
And then, you know, how do we leverage the assets
we've got. So I know you've got some, you know,
perhaps an old 401 K or IRA. Is that position
(17:42):
properly in terms of the investments that are in there,
are they appropriate for your age and risk tolerance. You know,
for for somebody who's, you know, in their upper 50s, um,
you know, we'd probably want a 5050 portfolio where 50%
of that's in stocks, 50% in short and medium term bonds. And,
you know, just let that grow over the next, you know,
(18:03):
ten years plus, uh, as the Lord allows you to
continue to work. And then what do you need to
do to accelerate your savings goals? Um, and make sure
that you've, you know, you're putting as much away in
a tax deferred environment as you can. So you've got
that nest egg to supplement Social Security. And then there's
the other elements as well that an advisor could look at.
(18:24):
What about insurance. You know, what insurance options do you
have through your employers, uh, looking at, you know, your
estate plan, just making sure you have a valid will
in place, uh, you know, talking about, you know, tax, uh,
your tax strategy. And are there ways to reduce taxes
with both of you working? And one of the primary
ways is going to be through your, uh, not only
(18:44):
your charitable contributions, but through your retirement savings on a
tax deferred basis. So, you know, all of that can
be looked at through a comprehensive financial plan. And so
what I would do as a next step is just
reach out to a certified Kingdom advisor there in Virginia.
The website is find a. Com. And these are men
and women who have met high standards and experience and
(19:07):
competence and passed a reference and client reference. And, you know,
they've had a regulatory review and they've been trained to
bring a biblical perspective of money management. Um, and I
would look at first and foremost a comprehensive financial plan,
somebody just to evaluate everything you're doing and, and make
some recommendations and put a plan together that says, okay,
(19:28):
in order for us to maintain this lifestyle in retirement,
Here's how long you need to work. Here's how much
we need to save. Here's what you need to do
on your lifestyle spending. You know, here's where's the gaps
in the risk assessment with regard to insurance. And, you know,
here's what we need to do to to, you know,
minimize the taxes that you're paying. All of those things
could be handled by that. And then you could move
(19:52):
to the asset management side for those assets you've already accumulated,
having somebody that could give oversight to those and make
sure that they're invested properly, does that all make sense though?
S6 (20:04):
Amen. And yes, I mean, yes it does. Okay. But
I don't I don't know all the ins and outs.
But no, I get what you're saying. And thank you
very much.
S2 (20:13):
Well, and you don't need to. That's the good news.
That's exactly right. Find a com and K stands for
Certified Kingdom Advisor. There's about 1800 of them in the
US and Canada. And I know there's a good many
of them in Virginia. And, uh, you know, I interviewed
2 or 3. Find the one that's the best fit. But,
you know, Bible is very clear about seeking wise counsel. And,
(20:35):
you know, I think that's that's where you need to
go next, is to have somebody who can come alongside you,
who can help you gain clarity about where you're at.
Where are we going? What's the plan that will get
us there? And how do we reflect our values as
Christ followers in the heart of God in Scripture, in
all of it. That's what you need next, and that'll
bring you and your wife even closer together, I think,
(20:57):
as well. Thanks for your call, David. Lord bless you
in Arkansas, Charlie. Go ahead.
S7 (21:02):
Rob. I'd like to know, since I am going to
be drawing my full benefit of Social Security in December,
I was wondering, how much can I make without being taxed?
S2 (21:15):
Yeah. Um, so you are at full retirement age, and
so that means that you no longer have an earnings limit.
That limit in terms of what you can earn only
applies to people before full retirement age. But once you
reach full retirement age, which is, you know, no later
(21:36):
than 67, uh, then you can earn any amount and
still receive your full Social Security benefit with no reduction.
I think we lost him. Hopefully that helps you, Charlie,
but it sounds like you're in good shape there. You
can work away, earn as much as you want. You're
going to continue receiving that benefit. Hey, thanks for your
call today. Much more to come. Just around the corner.
(21:58):
Stick around. Thanks for joining us today on Faith and
Finance Live. Again, we're not here today. Our team is
away from the studio so don't call in. But we've
got some great questions coming up. In just a moment.
(22:18):
We'll head to Louisiana to talk to Rochelle. But first
Mississippi Paula. Go ahead.
S8 (22:24):
Hi, Mr. Rob, thank you so much for allowing me
to speak with you today.
S2 (22:29):
Of course. Thanks for calling.
S8 (22:30):
And let you know I. We appreciate your you, your gift,
your gift to the body of Christ. And we appreciate you.
Thank you.
S2 (22:37):
Well thank you.
S8 (22:38):
So, Mister Rob, I have worked very hard, with God's help,
to get my credit report in a good, you know,
in a good way. Like I had a credit report
of 730, almost 740. And, um, recently I had a
miscommunication with my student loan student loan account, and they
(22:59):
dinged me and sent in a negative report. And it
took my my credit report down to 548. So I'm
calling you to ask you, would you happen to know
how long now we've resolved that? And then they have
since sent in a current, you know, report saying that
(23:19):
it's current but it's still low. And I'm wondering, would
you happen to know how long does it take to
get that credit report back up. You know, I'm still
doing the same thing. Paying on time, you know, doing
all the things to keep my credit report good. But
how long does it take to get it back up
now that they've sent in that current report?
S2 (23:40):
Yeah, it's a great question. And let me just make
sure I'm clear. So it was an error that's been corrected.
It was a mistake and it's been deleted or corrected.
Is that right?
S8 (23:51):
It's been corrected. They said they were not able to, uh,
reverse the delinquent report. Uh, but they did report it current.
They can't take it off. The credit report is what
they're saying.
S2 (24:05):
Okay, so it was a legitimate late payment that was accurate.
Is that right?
S8 (24:11):
Well, it was, and it wasn't. It was. I had
my student loan was with Navient for a long, long time.
And I think somehow they switched it over to another
agency or whatever. And I didn't know that. And I
was thinking I was still with Navient and they were
trying to get in contact with me. Well, I thought
(24:33):
this new people, I thought they were a scam. I
didn't know them. They didn't let me know that they
were my new student loan people. So when Navient finally
sent me a letter saying, we have now switched your
account to Mohela, and I said, oh, that's who's been
calling me. And I responded to them. But by then
they had already reported, um, my student loan as late.
S2 (24:59):
I see.
S8 (24:59):
And so I called them and we, you know, we
resolved it. They reported me current because of the, you know,
situation and but my my credit report is low now so.
S2 (25:13):
Yes.
S8 (25:13):
Yeah. I don't know how long it's going to take.
S2 (25:15):
Got it. Okay. Yeah, I mean that that's a common
situation with student loan transfers. Um, and because the payment
was truly late, even though you didn't know the loan
was transferred. The credit bureaus consider it accurate. So generally
it can't be removed just because of confusion. You thought
(25:36):
it was a scam or even lack of notice. The
lender is required to report the factual payment history. Now, uh,
you can write the loan servicer, the new one, or
the one that reported the late payment and request a
goodwill deletion or adjustment. And maybe you've already done this,
but explain you've never either never received the notice, or
(25:58):
if you did, you thought it was, you know, errant
or fraudulent. Um, you have a strong prior payment history.
You resolve the issue immediately, and sometimes they'll agree to
to remove or update it as a one time courtesy,
but it's not guaranteed. Um, and again, if the credit
report is accurate, uh, then it will, you know, Remain
(26:23):
on that record as a 30 day late payment for
up to seven years. But the impact fades over time,
so the score drop is sharp. In the few months
you've experienced that you just described that. But the recovery
begins after about 6 to 12 months of on time payments,
and then after a couple of years, the effect is
(26:44):
usually pretty minor. So, you know, generally speaking, if it
was just because of confusion, but technically it's accurate that
there was a late payment regardless of the circumstances that
led to it, it is not going to be deleted
or updated as an error. It will remain and then
it will just become less and less of a factor
(27:06):
over time. Does that make sense?
S8 (27:09):
It makes sense. So you're saying, did you say it's
going to take 6 to 12 months for my credit
score to go back up as long as I continue to,
you know, maintain the, uh, on time payments.
S2 (27:21):
Yes. Because the the most current information, the most recent
information impacts you the most. And a late payment, you know,
in the very recent past is a pretty significant, uh,
issue and is what's causing that score to drop. But
as that becomes further and further in the past and
typically that's, you know, between 6 and 12 months of
(27:43):
online of on time payments, that's when you're going to
start to see it come up. And again, after two years,
it'll be pretty minor. Um, but here's the reality. If
you're not out looking to get a new credit card
or get a, you know, a mortgage or refinance or
buy a car with a car loan, it doesn't really matter.
I mean, that's that's kind of a moving target. And yeah,
(28:04):
you want your hard work reflected in your credit score,
but if you don't need it because you're not out
borrowing anything, it doesn't really matter if it takes, you know,
another year or two before it's back up to where
it was.
S8 (28:17):
But that's the whole thing I was.
S2 (28:20):
No, I get it.
S8 (28:21):
And hard to get it.
S2 (28:22):
I totally understand.
S8 (28:24):
We were looking for a new house.
S2 (28:26):
Okay, so you are looking for a mortgage?
S8 (28:29):
Yeah, that's what I say. That was the whole thing.
We had our credit report in a good place, and
we're ready to go and start. You know, we had
actually started looking at getting a pre-approval for, you know,
home and so forth, and now this. So, yeah, I
guess I have to wait.
S2 (28:48):
Yeah. I think that's going to be the key. And,
you know, I wouldn't I would reach out to the
loan servicer and just see if they can and just say,
I'm looking for a goodwill deletion just given the situation. Um,
they don't have to do it because technically it's accurate,
but it's it's not. Uh, I mean, it's certainly worth asking.
S8 (29:09):
Do you believe in those people that help you with
credit reports?
S2 (29:13):
No, I don't, because the bottom line is, um, you know,
credit repair is, you know, fraught with, uh, bad actors.
I'm not saying anything about this particular company, but the
bottom line is, you know, anything that can be done
for your credit report, you can do on your own.
And if the information is accurate, regardless of whether or
(29:36):
not there was extenuating circumstances that led to it, there's
really nothing you can do, uh, to, you know, get
it off. Because really, the only thing you can do
is dispute it. But it's accurate. And they can verify
that with the, the, uh, the loan servicer. So I
just don't think, you know, you spend a lot of
money and they can't remove legitimate negatives. And a lot
(30:00):
of these companies have faced legal scrutiny. Um, and they
can't do anything you can't do for yourself. So I'm
just not a fan of credit repair.
S8 (30:09):
I understand I really appreciate your help today, and I'm
going to move forward and pray and ask God to
give me a favor.
S2 (30:18):
Awesome. Well, I agree with you and I'll join you
in praying for that, Paula. And listen, this thing will
get recovered and perhaps about the time you're back up
to where you were, the mortgage rates will be down
where it's a little more affordable. And, um, that might
be the best of both worlds. Hey, God bless you.
And thanks for your kind remarks about the program, I
appreciate it. Rochelle, you've been very patient. I'm coming to
(30:39):
you right after the break, and then we'll, uh, we'll
get to Annie in Alabama as well.
S4 (30:44):
You're listening to Faith and finance live. Today's broadcast is prerecorded,
so please keep that in mind. We're going to pause
now for a brief break. Then we'll be back after
that with more on Faith and Finance live.
S2 (31:04):
Thanks for joining us today on Faith and Finance Live
here in our final segment of the broadcast today, let
me remind you, our team is not here, so don't
call in. But we lined up some great questions in advance.
We'll get to those in just a moment. Before we do,
let me remind you, if you haven't downloaded the Faith
fi app, we'd love for you to check it out.
It's got three sections in it. The first is the
(31:26):
money management system based on Larry Burkett's digital envelope system.
It helps you manage God's money in a way where
you know exactly what's left in each envelope at any
point during the month. There's also our learn tab, where
you can access the best content in biblical finance to
grow in your understanding of God's way of handling money
and our community, where you can post questions, get comments
(31:49):
and ideas from other stewards on the journey. So download
it today on our website. faith.com. Just click app. All right.
Let's head back to the phones. Let's, uh, head to Alabama. Annie,
go right ahead.
S9 (32:03):
Uh, you know, I have a will and, uh, already
made up. And so this company that came to our
church and was telling us about we needed a truss
trust also. So and they were going to charge me
$3,000 to, you know, do all my insurance, my, my everything,
(32:23):
you know, capital that I had finance that I had.
And so I thought that it was a little bit steep. Yeah.
But the question for you is, uh, do I need
to trust.
S2 (32:36):
You do not need a trust. So a simple will
is enough if your estate is is fairly simple, if
all of your major assets have named beneficiaries. So if
you have investment accounts or an IRA or life insurance policy,
you want a named beneficiary. And then on your home,
if your state allows, I'd have to look it up.
But you could have a Todd deed transfer on death. Um,
(33:00):
and if you don't mind going through probate for everything left,
meaning the will would name an executor, the executor would
work through the probate court. There would be some time
and expense to get everything settled. But as long as
you're willing to work through the probate court or your
executor is, then a will will be just fine. The
(33:21):
reason a trust is sometimes added and you're right, it
is more expensive by by uh, by a good bit
from a basic will is people want to avoid probate. So,
you know, with a revocable living trust, uh, your anything
inside the trust will not go through probate. So therefore,
(33:42):
the court is not involved. There's not the time and
the expense. It's not a part of the public record. Um,
so you have a little bit more control over how
and when heirs receive assets. It creates a bit more
of an efficient transfer. Um, and it can go into
effect prior to your death if you became incapacitated. So
(34:03):
it would allow someone, the trustee to easily manage your
finances if you become incapacitated. That is not the case
with a will. It doesn't go into effect until you die.
So you would need other mechanisms like a durable power
of attorney or something like that. Um, so is a
will or excuse me, is a trust necessary? No. Uh,
(34:25):
does it have some added benefits? Yes. And then it's
just a function of, you know, are those things things
I'm looking for? And if not, then you're fine with
your will?
S9 (34:34):
Yeah. And so they were saying that I would be
in my children and whoever else maybe would be in
probate court for, for, for years or months fighting over
everything because my will would just not be enough. And
that kind of it made me a little skittish. And
so I thought I said, maybe I do need to
(34:55):
get a trust then.
S2 (34:56):
Yeah. I mean, I don't love the sound of what
you're describing here. It sounds like they're trying to create,
you know, a sale, um, in what they're describing. Because
with a simple will that's valid and uncontested with one
home and a few bank accounts, and all the beneficiaries
agree and cooperate. You know, probate can wrap up in
(35:17):
4 to 6 months from the initial filing to the
final distribution. So, you know, unless there's something that's really complicated, uh,
or there's a disagreement, um, you know, slow asset transfers
or court backlogs or, you know, you've got a dispute
between beneficiaries. That's where it can drag on. But if
it's fairly simple and uncontested, 3 to 6 months, I
(35:41):
would say is probably realistic.
S9 (35:43):
Ah, okay. So I will have to go into probate
court anyway. Huh? With the will they will have to.
S2 (35:49):
They will with the will. The trust would avoid probate.
S9 (35:53):
Yes. Okay, okay.
S2 (35:55):
Yeah. Got it. All right. Thank you for your call.
Lord bless you. Rochelle, you've been very patient today there
in Louisiana. How can I help you?
S10 (36:03):
So I've heard you talk about capital gain a lot
with the fact that you purchased a home for a
particular price. But how does the capital gain work? When
you build your own home and you have a small
HELOC loan?
S2 (36:22):
Yeah, it's a great question. Uh, the HELOC itself doesn't
create capital gains because borrowing money is not a taxable event.
So when someone takes out a home equity line of credit,
they're borrowing against the equity in their home. The funds
they receive are not income and not subject to capital gains.
The capital gains occur when you sell the property. So
(36:45):
capital gains taxes only come into play when the property
is sold for more than the cost basis, which in
your case would be what you paid for the land
plus the improvements. And so the amount you owe on
the HELOC doesn't affect whether or not you owe capital gains.
It only affects how much cash you walk away with
(37:07):
after the sale, the capital gains only come into play
upon the sale of the property, and that would be
based on is the selling price of the property greater
than the cost basis, which again, would be, you know,
the the purchase of the land and then the improvements
and construction and all of the, the things that make
(37:28):
up what the original value was. Does that make sense?
S10 (37:32):
It does. But so if my house is worth around
400,000 and if that's what I sold it for.
S2 (37:40):
Well, that's what it's worth today. The question is what
is your cost basis? So, uh, you know, cost basis
on a home that you, uh, built, uh, you know,
you bought the land at some point, right?
S10 (37:55):
Um, no, I did not have to buy the land
to put it on there.
S2 (37:59):
All right. How did you receive it?
S10 (38:01):
Through a divorce.
S2 (38:02):
Okay. Uh, so you received it? The land only, and
then you built on top of it, or the home
was already built when you received it.
S10 (38:11):
I built the home after Hurricane Laura.
S2 (38:13):
Okay. So you would have to determine, um, you know,
what your true cost basis is, and a CPA could
help you do that. Uh, so when you receive the
land through the divorce, it was land only. There was
no improvements.
S10 (38:29):
No improvements. No.
S2 (38:30):
Okay. Yeah. So it was just raw land. Yeah. So, uh,
you know, you would have to basically go back and
reconstruct your original cost basis based on the cost of,
of construction. Um, and, and then that would determine, okay,
what do I have in this property? The total amount
invested in this property. That's my cost basis. And then, uh,
(38:51):
you know, you'll take the selling price when you actually
sell it someday, subtract that cost basis, and then that's
the amount that would be subject to capital gains. But
keep in mind, if this is your primary residence, you
can set aside if you're single filing, uh, you know,
a single status. You can set aside up to 250,000
(39:11):
in capital gains, um, you know, without paying any tax
on it if it's your primary residence.
S10 (39:17):
Okay. All right. I forgot about that part.
S2 (39:20):
Yeah. So as long as you haven't taken advantage of
that in the last two years, and you've lived in
this home as your primary residence for two out of
the last five years prior to the sale. Then the
first 250,000 in gain is gone. Uh, there is no
capital gains tax whatsoever.
S10 (39:37):
All right. Thank you very much, sir.
S2 (39:39):
Okay. Thanks for your call today. Let's finish up, uh,
we'll head to Washington and talk to Craig. Go ahead.
S11 (39:45):
Thanks for taking our call here. So I have a friend.
He's 19. He's listening also. But I just wanted to
know if you could just give him a simple, uh,
strategy to get, uh, saving for this future and ultimately, retirement.
S2 (40:00):
Great. Does he have earned income? Is he working?
S11 (40:03):
He is working? Yes.
S2 (40:05):
Okay. Yeah. So, you know, I think the Roth IRA
is the best option for that. Uh, he's going to
put in after tax dollars, which he's, you know, at 19,
he's probably not paying a whole lot in taxes, if anything.
And he could put in up to $7,000. So, you know,
I think that would be the best place to start
for retirement. But let me back up for a second.
(40:26):
You know, I think the key is to understand, first
of all, that God owns everything and you and I,
and he is a steward of God's resources. And so
I would begin to to really digest God's heart as
it relates to managing money. And I'm going to send
you a book for you to pass along to him.
It's a classic in this space. It's called Master Your Money.
(40:48):
I read it about the age of 19, and it
was a game changer for me. It's by Ron Blue
and it will walk him through, really, the counsel of
Scripture as it relates to everything from God's ownership to
spending and lifestyle to saving, also investing. You know, the
dangers of debt, you know, really just kind of covering
(41:08):
the waterfront. A primer, if you will, on biblical money management.
And what he will find in there is things like
God owns it all and we're stewards, so we don't
own anything, uh, that, you know, our spending reflects what
we value. Money can compete for our devotion to God
if we're not careful, and that there are wise principles
in God's Word around managing money, like spend less than
(41:31):
you earn, avoid the use of debt and set long
term goals and give generously and and have some margin
or liquidity. And as long as he's doing those foundational
things and he's got his emergency fund in place of
a couple of months worth of expenses, then absolutely starting
to save for retirement right now is a great option
(41:51):
because he's going to have, let's say, 50 years of
compounding where the gains are going to gain on top
of the gains on top of the gains. And and
that's just the way compounding works. It's why Einstein called it,
you know, the eighth wonder of the world, because it's
such a powerful force when it's working for you, and
especially in a Roth IRA where there's tax free growth,
(42:14):
the government gives you the ability to to never pay
any taxes on the gains. It's incredible. And I would
look at the Schwab Intelligent Portfolios or Betterment as a
great kind of turnkey solution to get that Roth open
and just have him put a systematic contribution in it
every month. So hang on the line. I'm going to
get your information and send you Master Your Money, the
(42:36):
book by Ron Blue, and then direct him to Schwab
Intelligent Portfolios or Betterment. Hey, thanks for your call, Craig.
Lord bless you, my friend. Well, that's going to do
it for us today. Faith and Finance Live is a
partnership between Moody Radio and Faith VI. Thank you to
my amazing broadcast team. I couldn't do this without them.
I hope you have a great rest of your day
and we'll see you next time on Faith and Finance live.
The following program was pre-recorded so our phone lines are
not open.
S2 (00:08):
Raising kids to handle money wisely is about more than
teaching them dollars and cents. It's about shaping their hearts
to see their true identity in Christ. Hi, I'm Rob West.
As parents, we all want to help our kids and
teens understand their true value and develop a biblical foundation
for both money and identity. Brian Holtz joins us today
to share how we can do just that right from
(00:30):
the start. And we're prerecorded. So please hold your calls
until we're back in the studio. This is faith and
finance live. Biblical wisdom for your financial journey. Well, it's
always a pleasure to have Brian Holtz, CEO of Compass
Financial Ministry, join us to share what God is doing
through their work, and today is certainly no exception. Brian,
(00:51):
great to have you back.
S3 (00:52):
Thanks, Rob. It's always fun to be with you.
S2 (00:55):
So, Brian, we're really excited about this new resource right
from the start. I know it was created for kids
ages 11 to 15. So just talk about the genesis
of this project.
S3 (01:05):
Yeah. You know, we saw a real gap in discipleship
for this age range. In particular. We have lots of
things out there for little kids and for high schoolers.
But middle schoolers are forming their worldview, including what they
believe about money and identity. Now, this study helps them
see that their worth comes from being made in the
image of God, not in what they own or what
others think of them. It takes Scripture and helps them
(01:27):
learn and apply it in fun, interactive lessons.
S2 (01:30):
Oh man, we're going to give a lot of these
away on this program. I'm so excited about this. You know,
it's a timely message, Brian, especially during this holiday season
when there's so much pressure to spend more and have
more and do more. So what are the key themes
you explore? And right from the start?
S3 (01:46):
Yeah, there are six chapters identity, giving, saving, spending, building
on your foundation, and finishing well. Each one takes a
biblical perspective and turns it into a hands on experience.
There are short daily lessons, memory verses and something we
call life hacks simple, practical challenges that help students apply
(02:07):
what they're actually learning. The goal, of course, is to
make faith and finances personal, relevant, and fun.
S2 (02:13):
I love that. Clearly, this goes beyond just teaching them
financial literacy how to handle money. It really is about
shaping their hearts and even their character. So Brian, how
does it help them understand who they are in Christ?
S3 (02:26):
The very first chapter is all about identity. Students read
passages like Genesis one and Psalm 139 to learn that
they were made in God's image, and that they are
loved by the creator of everything. They learn that their
value doesn't change with their possessions, their popularity, or their performance,
and once they grasp that, then they're able to view
(02:47):
their giving, saving, and spending as acts of worship.
S2 (02:50):
Oh, and obviously that is a solid foundation that we
all need. Uh, could you share an example of one
of those life hacks. I love this idea, these practical
ideas that parents or youth leaders might find helpful.
S3 (03:03):
Yeah, one of our favorites is the good old trustworthy
one that we're all familiar with. The three jars exercise
where they, the kids, will divide their money into a giving,
a saving, and a spending jar each time they earn
or receive it. It simply turns an abstract idea into
a habit that they can see and touch. And of course,
parents love it because it opens up that conversation about
(03:24):
generosity and wisdom with money.
S2 (03:26):
Mm. Yeah. That is so good. Uh, it's such a
great way to encourage gratitude during this season as well. Yeah.
How can families or churches put this resource into practice, Brian?
S3 (03:37):
Yeah, we've designed it to be used at home in
youth groups and in Christian schools. There's a student book
and a leader's guide that has all the discussion prompts
and activities. It fits naturally around these holidays, especially Thanksgiving,
but really works any time of the year. Our hope
is that it helps parents disciple their kids in a
practical and joyful way.
S2 (03:57):
I know Howard Dayton, the founder of compass, always talks
about being MVP parents that we need to model this.
We need to have some verbal conversations. We need to
get practical. Sounds like this is woven all through it,
but this idea that more is caught than taught is
a big one, isn't it?
S3 (04:13):
It absolutely is. We just can't get enough of showing
it to our children, explaining it when they ask questions,
and then helping them do the same.
S2 (04:21):
Yeah. Brian, let's finish with any ideas or anything you
used with your own kids that you've found especially helpful
as you try to get really practical about teaching them
biblical financial principles?
S3 (04:34):
Yeah, we love making our kids make real choices about
where money is spent. So it's not just, hey, do
I buy a piece of candy or not? But there
is an actual cost that if I choose to buy
a piece of candy today, tomorrow, I might not get
to do something that I want to do. And that
exposure to real consequences, both good and bad, is just
invaluable in the development of their character and financial habits.
S2 (04:57):
There is no doubt about that, folks. Helping your kids
understand who they are in Christ may be one of
the most valuable financial lessons you teach them over time. Brian,
great to have you here, my friend.
S3 (05:09):
Thank you so much, Rob. It's always a pleasure.
S2 (05:11):
That's Brian Holt, CEO of Compass Financial Ministry. To learn
more about their new resource right from the start, visit
Compass Financial Ministry. Org. Much more to come just around
the corner. Stick around.
S4 (05:38):
This is Faith and finance live with Rob West. Hey,
if you hear a phone number mentioned today, please ignore
that number and don't call us because today's broadcast was
previously recorded. But we think the upcoming information will help
you and make you a wise steward of what God's
given you. So please stay tuned.
S2 (05:58):
Well, today we're going to be taking your calls and questions.
So there's something going on in your financial life that
you'd like to talk about. We'd love to chat about
it with you, help you think about it in light
of biblical wisdom, making God your ultimate treasure, but recognizing
there are very practical insights in God's Word that relate
to how we manage money. Yeah, we need to see
(06:19):
God as owner of everything and accept our role as stewards. Yes,
we need to understand that our spending reflects our values,
and that we can see as a result of how
we spend money what's important to us. It tells a story.
You know, it's not just that our heart follows our money.
If that were true, the Pharisees would have been the
most devout. No, it's that our heart is revealed by
(06:44):
our money. You know how we handle money, how we
hold it, whether it's loosely or tightly, how we give it,
how we invest. It is a revealer of the heart,
the late Larry Burkett used to say. Money management is
the clearest indicator into what's going on on our lives spiritually. Wow.
Stop and think about that for a moment. And perhaps
(07:04):
that should be a challenge to us to take a
step back and say, wait a minute. Maybe the way
I'm handling money doesn't reflect what I want to be
important to me. And so maybe some changes in order.
And we need to ask ourselves that periodically. But the
other thing we find in God's Word is these practical
principles that we can apply to modern financial decision making,
(07:27):
the fact that we shouldn't cosign, that we need to
be careful about how we use debt, that we should
seek wise counsel, that we need to pass wisdom before wealth,
because wisdom is the only thing that is preserved, uh,
in terms of wealth is fleeting, wisdom is not. And
so we need to make sure that we're preparing the
next generation, that we need to count the cost and
(07:47):
look at the ant and see how she gathers in
the harvest for the for the winter that's coming. Looking
at the the model that Joseph presents as he saved
in a time of plenty for a time of famine.
You know, all of these principles can apply to how
we manage money today. And if we boil it all down,
once we recognize that God owns it all, we spend
(08:09):
less than we earn. We avoid the use of debt.
We have some long term goals because the longer term
our perspective, the better the decision we're going to make.
Today we have some liquidity or some margin. We have
something left over at the end of the month. That's
the only way we're going to fund our longer term
goals beyond the here and now. And then finally, we
give generously. And if we do those five things, that's
(08:31):
not a get rich quick philosophy. It doesn't mean you'll
be free from any financial calamity, but it does mean
that you're heeding the counsel of Scripture. You're understanding God
is your provider, and then you're putting yourself in a
position to experience God's best. Where money is a tool.
It's not the end. It's a means to an end.
It should be something that brings enjoyment, not frustration. All right,
(08:52):
let's dive in. We're going to begin today in Fort Wayne, Indiana.
Anthony go ahead sir.
S5 (08:58):
Hey Rob, how you doing?
S2 (09:00):
Doing great. Thanks for your call.
S5 (09:01):
I was calling, um, I have about, uh, 135,000 in
my phone, and my home is about 100,000. Um, and
some change. But, uh, I was thinking, you know, would
it be a good idea to cash out my phone
to pay off my house? Yeah. What do you think
about that?
S2 (09:21):
Yeah. Good question. Uh, you know, in most cases, Anthony,
I would say cashing out a 401 K at, uh,
you know, age 56 or really, you know, any age
during your working years to pay off a mortgage is
generally not advisable, mainly because of the taxes and the
penalties and then the lost, what we call opportunity cost.
(09:42):
So let me unpack those first taxes and penalties. Since
you're under 59.5. The IRS would charge a 10% early
withdrawal penalty, uh, on the 130,000, unless you separated from
your employer. And you could use what's called the rule
of 55. Uh, you would have that 10% early withdrawal penalty,
and then the full amount withdrawn would also be added
(10:05):
to your taxable income, your ordinary income likely pushing you
into a higher tax bracket. So let me give you
an example. If you're at the 22% marginal tax rate,
that's 28,600 in federal tax plus a $13,000 penalty. So
that could be, you know, $41,000 in taxes and penalties.
(10:28):
So you'd only net, uh, about 100, about 88,000, um,
you know, not enough to pay off the $100,000 loan.
Then we've got the opportunity cost. So the 130,000 could
remain in a tax deferred environment and growing. And if
the investments earn more than 5%, what you're paying on
the mortgage, which is historically very plausible. In fact, I
(10:52):
would say, you know, it's very conservative. If you look
over the last let's pick any time period 100 years. Um,
you know, when you factor in dividends and appreciation, uh,
you know, the S&P 500 has done north of 9%
a year. And so, you know, that would really warrant
you keeping both the 401 K and the mortgage and
(11:13):
then just really trying to accelerate payments on the mortgage
using after tax cash flow. If you want to be
out of debt sooner. And that could mean, you know,
at a minimum, trying to make one extra payment a year.
If you could do more than that, that's great. Um, now,
if rates drop, you could look at refinancing the 5% loan.
But I don't expect you to. You know, I'd want
(11:34):
you to save a point and a half, which means
rates would have to get down to three and a half.
You know, worst case, 4% before it would make sense
for you to refinance. And I don't see that anytime soon.
So if it were me, I would just. Unless the
Lord just really giving you a conviction to be debt
free as soon as possible. And then I would say
follow the leading of the Lord. But apart from that,
(11:55):
I'd probably prioritize trying to pay it off as you
can with extra principal payments, and then keep that 401
K invested so that you have that nest egg, you know, ten,
20 years from now when you need to convert that
to an income stream. Does that make sense?
S5 (12:10):
Yes. It makes, uh, yes, very good sense. Um, I
was also thinking that, you know, if I had pulled
it out, you know, yes, it would take about the, uh, 30.
It would still be some money in there. That's what
I'm saying. It's like 135. I'm taking the whole thing out,
but try to pull 100,000. I know they would pull, like,
$30,000 off of that and.
S2 (12:30):
Yeah.
S5 (12:31):
Go that route.
S2 (12:32):
Yeah. And the challenge is that if you did that, um,
you wouldn't have a full 100,000. So even then, if
you don't pay it off in full, you don't reclaim
that mortgage payment, which you know could be key to
you accelerating, you know, savings to try to make up
for what you've taken out. So I just think that
tax bite is too high, not to mention the opportunity
(12:55):
cost of having that money in a tax deferred environment,
which you could not easily replicate because there's contribution limits
moving forward. Um, and so keeping that in that tax
deferred environment for that to grow over the next, let's
say 15 years, uh, you know, that's going to be
a meaningful part potentially of your retirement plan. And so,
(13:15):
you know, I would probably if anything, I would probably say, okay,
when do I expect to retire? And let's just pick
a number. Let's say it's ten years from now. What
you might do is, is run an amortization schedule, and
you can find an amortization calculator online for free. That
would tell you, okay, if I want to be debt free,
including my home, by the time I retire ten years
(13:36):
from now, how much would I need to spend extra
Beyond my scheduled monthly payment so that when I retire
in ten years, you know, at the same time I'm retiring,
I'm making that last mortgage payment. That would be an
interesting exercise for you. And then let's see if you
can orient your budget such that you could do whatever
(13:58):
that is so that you know, okay, by the time
I enter retirement, my biggest expense, my mortgage payment is
going to be gone. And I'm going to have my
401 K and everything that that grows to over the
next decade. I feel like that's kind of the best
of both worlds, and that will help you solve for
your lifestyle spending when that mortgage goes away. Thanks for
your call, Anthony. Just a quick reminder. We're not here today,
(14:20):
so don't call in. But we're going to head to
a break and much more coming just after this. Stay
with us. So glad to have you with us today
on Faith and Finance Live. Our team is away today,
so don't call in. But we lined up some great
(14:42):
questions in advance and we'll be going to those here
in just a moment. Let me also remind you that
the advice that I give each day on this program
is general in nature. We offer principles and ideas that
apply at a high level. They are not personalized. So
that's why you should always seek professional financial advice. And
if you'd like to find a professional who shares your values,
(15:05):
we of course, here at Faith and Finance Live recommend
the Certified Kingdom Advisor designation. These are men and women
who've met high standards, and they've been trained to bring
a biblical worldview of financial decision making. You can find
one at Faith comm. All right, let's head back to
the phones. We're going to go to Virginia. David. Go ahead.
S6 (15:23):
I've been listening to your show for a while now, and, um,
the Lord has shown me that, uh, my wife and
I need help. As of right now, we're in pretty
bad shape. If, um, we're so far behind the eight ball,
if it rolled backwards, it would crush us. We're both
in our late 50s. We both have just acquired good jobs.
(15:46):
We have great health care. Um, but we don't know
all the ins and outs about it. Um, we need
help with everything. Like from the from the get go.
We have not been good stewards at all. And, um,
we need somebody to dust us off, straighten us out,
put us on a path and say, okay, your money
(16:06):
needs to go. Here, you have this with this company.
You can do this. You can. Don't do this, do this.
I mean, we literally need from the very get go.
S2 (16:16):
Yeah, that makes sense, David. Well, first of all, I
appreciate your transparency there. And I think, you know, we've
got to define reality and get clarity about where we're at.
Sounds like you've got that and then purpose ourselves to say, listen,
I want to live despite, you know, the mistakes I've
made and the choices I've made that I wish I
could go back and change. We can't. We've all got those.
(16:38):
The key is that you and your wife, you know,
come together in unity and pursue God's best for you.
Recognize your role as stewards or managers of God's resources
and then say, what is it? What does faithfulness look
like from this point forward? Uh, to really, uh, dial
in our lifestyle spending and live well within our means
so we can free up margin that allows us to
(17:00):
to do some systematic, regular giving, but also to really
prioritize saving and putting that financial foundation under us. And
it starts with really some of those key pieces, you know,
as simple as we got to dial in that budget
and look at every, you know, dime that's going out
and make sure that it aligns with what's truly important
to you. And you may need to make some decisions
(17:21):
to cut back, building up that emergency fund of 3
to 6 months expenses, uh, you know, making sure you
have your debt under control. And if there's any consumer debt,
what do we need to do to get it paid off?
And then, you know, how do we leverage the assets
we've got. So I know you've got some, you know,
perhaps an old 401 K or IRA. Is that position
(17:42):
properly in terms of the investments that are in there,
are they appropriate for your age and risk tolerance. You know,
for for somebody who's, you know, in their upper 50s, um,
you know, we'd probably want a 5050 portfolio where 50%
of that's in stocks, 50% in short and medium term bonds. And,
you know, just let that grow over the next, you know,
(18:03):
ten years plus, uh, as the Lord allows you to
continue to work. And then what do you need to
do to accelerate your savings goals? Um, and make sure
that you've, you know, you're putting as much away in
a tax deferred environment as you can. So you've got
that nest egg to supplement Social Security. And then there's
the other elements as well that an advisor could look at.
(18:24):
What about insurance. You know, what insurance options do you
have through your employers, uh, looking at, you know, your
estate plan, just making sure you have a valid will
in place, uh, you know, talking about, you know, tax, uh,
your tax strategy. And are there ways to reduce taxes
with both of you working? And one of the primary
ways is going to be through your, uh, not only
(18:44):
your charitable contributions, but through your retirement savings on a
tax deferred basis. So, you know, all of that can
be looked at through a comprehensive financial plan. And so
what I would do as a next step is just
reach out to a certified Kingdom advisor there in Virginia.
The website is find a. Com. And these are men
and women who have met high standards and experience and
(19:07):
competence and passed a reference and client reference. And, you know,
they've had a regulatory review and they've been trained to
bring a biblical perspective of money management. Um, and I
would look at first and foremost a comprehensive financial plan,
somebody just to evaluate everything you're doing and, and make
some recommendations and put a plan together that says, okay,
(19:28):
in order for us to maintain this lifestyle in retirement,
Here's how long you need to work. Here's how much
we need to save. Here's what you need to do
on your lifestyle spending. You know, here's where's the gaps
in the risk assessment with regard to insurance. And, you know,
here's what we need to do to to, you know,
minimize the taxes that you're paying. All of those things
could be handled by that. And then you could move
(19:52):
to the asset management side for those assets you've already accumulated,
having somebody that could give oversight to those and make
sure that they're invested properly, does that all make sense though?
S6 (20:04):
Amen. And yes, I mean, yes it does. Okay. But
I don't I don't know all the ins and outs.
But no, I get what you're saying. And thank you
very much.
S2 (20:13):
Well, and you don't need to. That's the good news.
That's exactly right. Find a com and K stands for
Certified Kingdom Advisor. There's about 1800 of them in the
US and Canada. And I know there's a good many
of them in Virginia. And, uh, you know, I interviewed
2 or 3. Find the one that's the best fit. But,
you know, Bible is very clear about seeking wise counsel. And,
(20:35):
you know, I think that's that's where you need to
go next, is to have somebody who can come alongside you,
who can help you gain clarity about where you're at.
Where are we going? What's the plan that will get
us there? And how do we reflect our values as
Christ followers in the heart of God in Scripture, in
all of it. That's what you need next, and that'll
bring you and your wife even closer together, I think,
(20:57):
as well. Thanks for your call, David. Lord bless you
in Arkansas, Charlie. Go ahead.
S7 (21:02):
Rob. I'd like to know, since I am going to
be drawing my full benefit of Social Security in December,
I was wondering, how much can I make without being taxed?
S2 (21:15):
Yeah. Um, so you are at full retirement age, and
so that means that you no longer have an earnings limit.
That limit in terms of what you can earn only
applies to people before full retirement age. But once you
reach full retirement age, which is, you know, no later
(21:36):
than 67, uh, then you can earn any amount and
still receive your full Social Security benefit with no reduction.
I think we lost him. Hopefully that helps you, Charlie,
but it sounds like you're in good shape there. You
can work away, earn as much as you want. You're
going to continue receiving that benefit. Hey, thanks for your
call today. Much more to come. Just around the corner.
(21:58):
Stick around. Thanks for joining us today on Faith and
Finance Live. Again, we're not here today. Our team is
away from the studio so don't call in. But we've
got some great questions coming up. In just a moment.
(22:18):
We'll head to Louisiana to talk to Rochelle. But first
Mississippi Paula. Go ahead.
S8 (22:24):
Hi, Mr. Rob, thank you so much for allowing me
to speak with you today.
S2 (22:29):
Of course. Thanks for calling.
S8 (22:30):
And let you know I. We appreciate your you, your gift,
your gift to the body of Christ. And we appreciate you.
Thank you.
S2 (22:37):
Well thank you.
S8 (22:38):
So, Mister Rob, I have worked very hard, with God's help,
to get my credit report in a good, you know,
in a good way. Like I had a credit report
of 730, almost 740. And, um, recently I had a
miscommunication with my student loan student loan account, and they
(22:59):
dinged me and sent in a negative report. And it
took my my credit report down to 548. So I'm
calling you to ask you, would you happen to know
how long now we've resolved that? And then they have
since sent in a current, you know, report saying that
(23:19):
it's current but it's still low. And I'm wondering, would
you happen to know how long does it take to
get that credit report back up. You know, I'm still
doing the same thing. Paying on time, you know, doing
all the things to keep my credit report good. But
how long does it take to get it back up
now that they've sent in that current report?
S2 (23:40):
Yeah, it's a great question. And let me just make
sure I'm clear. So it was an error that's been corrected.
It was a mistake and it's been deleted or corrected.
Is that right?
S8 (23:51):
It's been corrected. They said they were not able to, uh,
reverse the delinquent report. Uh, but they did report it current.
They can't take it off. The credit report is what
they're saying.
S2 (24:05):
Okay, so it was a legitimate late payment that was accurate.
Is that right?
S8 (24:11):
Well, it was, and it wasn't. It was. I had
my student loan was with Navient for a long, long time.
And I think somehow they switched it over to another
agency or whatever. And I didn't know that. And I
was thinking I was still with Navient and they were
trying to get in contact with me. Well, I thought
(24:33):
this new people, I thought they were a scam. I
didn't know them. They didn't let me know that they
were my new student loan people. So when Navient finally
sent me a letter saying, we have now switched your
account to Mohela, and I said, oh, that's who's been
calling me. And I responded to them. But by then
they had already reported, um, my student loan as late.
S2 (24:59):
I see.
S8 (24:59):
And so I called them and we, you know, we
resolved it. They reported me current because of the, you know,
situation and but my my credit report is low now so.
S2 (25:13):
Yes.
S8 (25:13):
Yeah. I don't know how long it's going to take.
S2 (25:15):
Got it. Okay. Yeah, I mean that that's a common
situation with student loan transfers. Um, and because the payment
was truly late, even though you didn't know the loan
was transferred. The credit bureaus consider it accurate. So generally
it can't be removed just because of confusion. You thought
(25:36):
it was a scam or even lack of notice. The
lender is required to report the factual payment history. Now, uh,
you can write the loan servicer, the new one, or
the one that reported the late payment and request a
goodwill deletion or adjustment. And maybe you've already done this,
but explain you've never either never received the notice, or
(25:58):
if you did, you thought it was, you know, errant
or fraudulent. Um, you have a strong prior payment history.
You resolve the issue immediately, and sometimes they'll agree to
to remove or update it as a one time courtesy,
but it's not guaranteed. Um, and again, if the credit
report is accurate, uh, then it will, you know, Remain
(26:23):
on that record as a 30 day late payment for
up to seven years. But the impact fades over time,
so the score drop is sharp. In the few months
you've experienced that you just described that. But the recovery
begins after about 6 to 12 months of on time payments,
and then after a couple of years, the effect is
(26:44):
usually pretty minor. So, you know, generally speaking, if it
was just because of confusion, but technically it's accurate that
there was a late payment regardless of the circumstances that
led to it, it is not going to be deleted
or updated as an error. It will remain and then
it will just become less and less of a factor
(27:06):
over time. Does that make sense?
S8 (27:09):
It makes sense. So you're saying, did you say it's
going to take 6 to 12 months for my credit
score to go back up as long as I continue to,
you know, maintain the, uh, on time payments.
S2 (27:21):
Yes. Because the the most current information, the most recent
information impacts you the most. And a late payment, you know,
in the very recent past is a pretty significant, uh,
issue and is what's causing that score to drop. But
as that becomes further and further in the past and
typically that's, you know, between 6 and 12 months of
(27:43):
online of on time payments, that's when you're going to
start to see it come up. And again, after two years,
it'll be pretty minor. Um, but here's the reality. If
you're not out looking to get a new credit card
or get a, you know, a mortgage or refinance or
buy a car with a car loan, it doesn't really matter.
I mean, that's that's kind of a moving target. And yeah,
(28:04):
you want your hard work reflected in your credit score,
but if you don't need it because you're not out
borrowing anything, it doesn't really matter if it takes, you know,
another year or two before it's back up to where
it was.
S8 (28:17):
But that's the whole thing I was.
S2 (28:20):
No, I get it.
S8 (28:21):
And hard to get it.
S2 (28:22):
I totally understand.
S8 (28:24):
We were looking for a new house.
S2 (28:26):
Okay, so you are looking for a mortgage?
S8 (28:29):
Yeah, that's what I say. That was the whole thing.
We had our credit report in a good place, and
we're ready to go and start. You know, we had
actually started looking at getting a pre-approval for, you know,
home and so forth, and now this. So, yeah, I
guess I have to wait.
S2 (28:48):
Yeah. I think that's going to be the key. And,
you know, I wouldn't I would reach out to the
loan servicer and just see if they can and just say,
I'm looking for a goodwill deletion just given the situation. Um,
they don't have to do it because technically it's accurate,
but it's it's not. Uh, I mean, it's certainly worth asking.
S8 (29:09):
Do you believe in those people that help you with
credit reports?
S2 (29:13):
No, I don't, because the bottom line is, um, you know,
credit repair is, you know, fraught with, uh, bad actors.
I'm not saying anything about this particular company, but the
bottom line is, you know, anything that can be done
for your credit report, you can do on your own.
And if the information is accurate, regardless of whether or
(29:36):
not there was extenuating circumstances that led to it, there's
really nothing you can do, uh, to, you know, get
it off. Because really, the only thing you can do
is dispute it. But it's accurate. And they can verify
that with the, the, uh, the loan servicer. So I
just don't think, you know, you spend a lot of
money and they can't remove legitimate negatives. And a lot
(30:00):
of these companies have faced legal scrutiny. Um, and they
can't do anything you can't do for yourself. So I'm
just not a fan of credit repair.
S8 (30:09):
I understand I really appreciate your help today, and I'm
going to move forward and pray and ask God to
give me a favor.
S2 (30:18):
Awesome. Well, I agree with you and I'll join you
in praying for that, Paula. And listen, this thing will
get recovered and perhaps about the time you're back up
to where you were, the mortgage rates will be down
where it's a little more affordable. And, um, that might
be the best of both worlds. Hey, God bless you.
And thanks for your kind remarks about the program, I
appreciate it. Rochelle, you've been very patient. I'm coming to
(30:39):
you right after the break, and then we'll, uh, we'll
get to Annie in Alabama as well.
S4 (30:44):
You're listening to Faith and finance live. Today's broadcast is prerecorded,
so please keep that in mind. We're going to pause
now for a brief break. Then we'll be back after
that with more on Faith and Finance live.
S2 (31:04):
Thanks for joining us today on Faith and Finance Live
here in our final segment of the broadcast today, let
me remind you, our team is not here, so don't
call in. But we lined up some great questions in advance.
We'll get to those in just a moment. Before we do,
let me remind you, if you haven't downloaded the Faith
fi app, we'd love for you to check it out.
It's got three sections in it. The first is the
(31:26):
money management system based on Larry Burkett's digital envelope system.
It helps you manage God's money in a way where
you know exactly what's left in each envelope at any
point during the month. There's also our learn tab, where
you can access the best content in biblical finance to
grow in your understanding of God's way of handling money
and our community, where you can post questions, get comments
(31:49):
and ideas from other stewards on the journey. So download
it today on our website. faith.com. Just click app. All right.
Let's head back to the phones. Let's, uh, head to Alabama. Annie,
go right ahead.
S9 (32:03):
Uh, you know, I have a will and, uh, already
made up. And so this company that came to our
church and was telling us about we needed a truss
trust also. So and they were going to charge me
$3,000 to, you know, do all my insurance, my, my everything,
(32:23):
you know, capital that I had finance that I had.
And so I thought that it was a little bit steep. Yeah.
But the question for you is, uh, do I need
to trust.
S2 (32:36):
You do not need a trust. So a simple will
is enough if your estate is is fairly simple, if
all of your major assets have named beneficiaries. So if
you have investment accounts or an IRA or life insurance policy,
you want a named beneficiary. And then on your home,
if your state allows, I'd have to look it up.
But you could have a Todd deed transfer on death. Um,
(33:00):
and if you don't mind going through probate for everything left,
meaning the will would name an executor, the executor would
work through the probate court. There would be some time
and expense to get everything settled. But as long as
you're willing to work through the probate court or your
executor is, then a will will be just fine. The
(33:21):
reason a trust is sometimes added and you're right, it
is more expensive by by uh, by a good bit
from a basic will is people want to avoid probate. So,
you know, with a revocable living trust, uh, your anything
inside the trust will not go through probate. So therefore,
(33:42):
the court is not involved. There's not the time and
the expense. It's not a part of the public record. Um,
so you have a little bit more control over how
and when heirs receive assets. It creates a bit more
of an efficient transfer. Um, and it can go into
effect prior to your death if you became incapacitated. So
(34:03):
it would allow someone, the trustee to easily manage your
finances if you become incapacitated. That is not the case
with a will. It doesn't go into effect until you die.
So you would need other mechanisms like a durable power
of attorney or something like that. Um, so is a
will or excuse me, is a trust necessary? No. Uh,
(34:25):
does it have some added benefits? Yes. And then it's
just a function of, you know, are those things things
I'm looking for? And if not, then you're fine with
your will?
S9 (34:34):
Yeah. And so they were saying that I would be
in my children and whoever else maybe would be in
probate court for, for, for years or months fighting over
everything because my will would just not be enough. And
that kind of it made me a little skittish. And
so I thought I said, maybe I do need to
(34:55):
get a trust then.
S2 (34:56):
Yeah. I mean, I don't love the sound of what
you're describing here. It sounds like they're trying to create,
you know, a sale, um, in what they're describing. Because
with a simple will that's valid and uncontested with one
home and a few bank accounts, and all the beneficiaries
agree and cooperate. You know, probate can wrap up in
(35:17):
4 to 6 months from the initial filing to the
final distribution. So, you know, unless there's something that's really complicated, uh,
or there's a disagreement, um, you know, slow asset transfers
or court backlogs or, you know, you've got a dispute
between beneficiaries. That's where it can drag on. But if
it's fairly simple and uncontested, 3 to 6 months, I
(35:41):
would say is probably realistic.
S9 (35:43):
Ah, okay. So I will have to go into probate
court anyway. Huh? With the will they will have to.
S2 (35:49):
They will with the will. The trust would avoid probate.
S9 (35:53):
Yes. Okay, okay.
S2 (35:55):
Yeah. Got it. All right. Thank you for your call.
Lord bless you. Rochelle, you've been very patient today there
in Louisiana. How can I help you?
S10 (36:03):
So I've heard you talk about capital gain a lot
with the fact that you purchased a home for a
particular price. But how does the capital gain work? When
you build your own home and you have a small
HELOC loan?
S2 (36:22):
Yeah, it's a great question. Uh, the HELOC itself doesn't
create capital gains because borrowing money is not a taxable event.
So when someone takes out a home equity line of credit,
they're borrowing against the equity in their home. The funds
they receive are not income and not subject to capital gains.
The capital gains occur when you sell the property. So
(36:45):
capital gains taxes only come into play when the property
is sold for more than the cost basis, which in
your case would be what you paid for the land
plus the improvements. And so the amount you owe on
the HELOC doesn't affect whether or not you owe capital gains.
It only affects how much cash you walk away with
(37:07):
after the sale, the capital gains only come into play
upon the sale of the property, and that would be
based on is the selling price of the property greater
than the cost basis, which again, would be, you know,
the the purchase of the land and then the improvements
and construction and all of the, the things that make
(37:28):
up what the original value was. Does that make sense?
S10 (37:32):
It does. But so if my house is worth around
400,000 and if that's what I sold it for.
S2 (37:40):
Well, that's what it's worth today. The question is what
is your cost basis? So, uh, you know, cost basis
on a home that you, uh, built, uh, you know,
you bought the land at some point, right?
S10 (37:55):
Um, no, I did not have to buy the land
to put it on there.
S2 (37:59):
All right. How did you receive it?
S10 (38:01):
Through a divorce.
S2 (38:02):
Okay. Uh, so you received it? The land only, and
then you built on top of it, or the home
was already built when you received it.
S10 (38:11):
I built the home after Hurricane Laura.
S2 (38:13):
Okay. So you would have to determine, um, you know,
what your true cost basis is, and a CPA could
help you do that. Uh, so when you receive the
land through the divorce, it was land only. There was
no improvements.
S10 (38:29):
No improvements. No.
S2 (38:30):
Okay. Yeah. So it was just raw land. Yeah. So, uh,
you know, you would have to basically go back and
reconstruct your original cost basis based on the cost of,
of construction. Um, and, and then that would determine, okay,
what do I have in this property? The total amount
invested in this property. That's my cost basis. And then, uh,
(38:51):
you know, you'll take the selling price when you actually
sell it someday, subtract that cost basis, and then that's
the amount that would be subject to capital gains. But
keep in mind, if this is your primary residence, you
can set aside if you're single filing, uh, you know,
a single status. You can set aside up to 250,000
(39:11):
in capital gains, um, you know, without paying any tax
on it if it's your primary residence.
S10 (39:17):
Okay. All right. I forgot about that part.
S2 (39:20):
Yeah. So as long as you haven't taken advantage of
that in the last two years, and you've lived in
this home as your primary residence for two out of
the last five years prior to the sale. Then the
first 250,000 in gain is gone. Uh, there is no
capital gains tax whatsoever.
S10 (39:37):
All right. Thank you very much, sir.
S2 (39:39):
Okay. Thanks for your call today. Let's finish up, uh,
we'll head to Washington and talk to Craig. Go ahead.
S11 (39:45):
Thanks for taking our call here. So I have a friend.
He's 19. He's listening also. But I just wanted to
know if you could just give him a simple, uh,
strategy to get, uh, saving for this future and ultimately, retirement.
S2 (40:00):
Great. Does he have earned income? Is he working?
S11 (40:03):
He is working? Yes.
S2 (40:05):
Okay. Yeah. So, you know, I think the Roth IRA
is the best option for that. Uh, he's going to
put in after tax dollars, which he's, you know, at 19,
he's probably not paying a whole lot in taxes, if anything.
And he could put in up to $7,000. So, you know,
I think that would be the best place to start
for retirement. But let me back up for a second.
(40:26):
You know, I think the key is to understand, first
of all, that God owns everything and you and I,
and he is a steward of God's resources. And so
I would begin to to really digest God's heart as
it relates to managing money. And I'm going to send
you a book for you to pass along to him.
It's a classic in this space. It's called Master Your Money.
(40:48):
I read it about the age of 19, and it
was a game changer for me. It's by Ron Blue
and it will walk him through, really, the counsel of
Scripture as it relates to everything from God's ownership to
spending and lifestyle to saving, also investing. You know, the
dangers of debt, you know, really just kind of covering
(41:08):
the waterfront. A primer, if you will, on biblical money management.
And what he will find in there is things like
God owns it all and we're stewards, so we don't
own anything, uh, that, you know, our spending reflects what
we value. Money can compete for our devotion to God
if we're not careful, and that there are wise principles
in God's Word around managing money, like spend less than
(41:31):
you earn, avoid the use of debt and set long
term goals and give generously and and have some margin
or liquidity. And as long as he's doing those foundational
things and he's got his emergency fund in place of
a couple of months worth of expenses, then absolutely starting
to save for retirement right now is a great option
(41:51):
because he's going to have, let's say, 50 years of
compounding where the gains are going to gain on top
of the gains on top of the gains. And and
that's just the way compounding works. It's why Einstein called it,
you know, the eighth wonder of the world, because it's
such a powerful force when it's working for you, and
especially in a Roth IRA where there's tax free growth,
(42:14):
the government gives you the ability to to never pay
any taxes on the gains. It's incredible. And I would
look at the Schwab Intelligent Portfolios or Betterment as a
great kind of turnkey solution to get that Roth open
and just have him put a systematic contribution in it
every month. So hang on the line. I'm going to
get your information and send you Master Your Money, the
(42:36):
book by Ron Blue, and then direct him to Schwab
Intelligent Portfolios or Betterment. Hey, thanks for your call, Craig.
Lord bless you, my friend. Well, that's going to do
it for us today. Faith and Finance Live is a
partnership between Moody Radio and Faith VI. Thank you to
my amazing broadcast team. I couldn't do this without them.
I hope you have a great rest of your day
and we'll see you next time on Faith and Finance live.
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