April 8, 2025 • 42 mins
Every parent hopes to leave an inheritance for their children, but doing so wisely takes careful thought and prayer. On the next Faith & Finance Live, Rob West will welcome Ron Blue to discuss the Uniqueness Principle and how it can guide parents in passing down wealth effectively. Then Rob will answer your questions on different financial topics.
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Episode Transcript
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S1 (00:08):
Puritan poet Anne Bradstreet once said, wisdom without an inheritance
is better than an inheritance without wisdom. Hi, I'm Rob West.
Every parent hopes to leave an inheritance for their children,
but doing so wisely takes careful thought and prayer. Today,
Ron Blue joins us to discuss the uniqueness principle and
(00:28):
how it can guide parents in passing down wealth effectively.
And then it's on to your calls at 805, two
five 7000. That's 800 525 7000. This is faith and finance. Live.
Biblical wisdom for your financial decisions. Well, we always look
forward to having Ron Blue on the program. He's co-founder
(00:51):
of Kingdom Advisors, the author of many books on personal finance.
And a dear friend of mine, Ron, great to have
you back.
S2 (00:57):
Good to be a part of it, Rob. Thank you.
S1 (01:00):
Ron. Studies show that around two thirds of parents divide
their estates equally among their children. And while this certainly
isn't a bad thing, can you share with us how
this can be problematic in some cases?
S2 (01:15):
Yes. I think, uh, Rob, if we, uh, think about
it the way God treats us, he loves us all equally.
But he treats us uniquely. Yeah. Um, he doesn't just
divide up everything equally. Some have some things and others
have others. But. So when it comes to leaving an
inheritance to our children, we have five children. And I
(01:39):
can tell you this. They all sat at the same
dinner table, but they sure didn't all turn out the
same way.
S1 (01:44):
Amen.
S2 (01:46):
I mean, they've done fine. I don't mean to imply
something negative there, but. Yeah, but they married differently. Uh,
they parent differently. They're in different economic situations due to
jobs lost, jobs taken. So what I have found over
time is that when Judy and I started, our kids
(02:07):
were none of them were married. Well, I'm sorry, there
were two of them that were married and we asked
three questions. Rob. We said if we left X amount
of money to X child, what's the worst thing that
could happen? And it took us about two years to
really think that one through. Um, the second question then
(02:29):
was well how serious is it? In some cases it
wasn't serious at all. Like we had one child, we said, well,
if we left them whatever, they'd give it all away. Hmm.
So that's not real serious? No. Uh, we had different
situations with another child where it would have really harmed
their marriage. Uh, because if the husband really had a
(02:50):
passion to provide for his family. So we asked ask
those questions? Uh, what's the worst thing that can happen?
How serious is it? And then what's the likelihood of
it occurring? And that's the process that we follow. It
doesn't say how we'll end up. And I can tell
you this now, at my age, um, 83, with a
(03:13):
daughter that will soon be 59 as the oldest and
the youngest being 47. Circumstances changed over time. So how
we would answer the question today that we asked for
the first time 25 years ago is totally different, but
it's the process. That's the thing to think about. And
(03:35):
in America, the default is equal. Yeah. And it's not
necessarily wrong to be equal, but it is, I think, uh,
unwise to not think through the consequences of, of leaving
this wealth. Mhm. To a particular child.
S1 (03:53):
Well I so appreciate that about your teaching, Ron, because here,
once again, you're not saying that it's better or worse
to leave the same amount to each child. What you're
saying is what's important is to follow a decision making process, right?
S2 (04:09):
Absolutely. Because what you don't want to do is, you know,
and you've heard me say this too, don't pass wealth
unless you pass wisdom. Yeah. Because wealth never creates wisdom.
But wisdom can create wealth. So what I want to
do as a parent is the best thing for my children.
And I need to think that one through very, very
(04:30):
thoughtfully and very, very prayerfully. It may end up. I
treat them equally, but it may not either. The most
important thing is the process that I follow. And I
you know, if you don't ask the right question, you
don't ever get the right answer. And the right question is,
what's the worst thing that could happen? Because I don't
want that to happen. Okay.
S1 (04:47):
Yeah, that's right on. Ron, I know you've said wealth
transfer at the end of the day should reflect God's wisdom,
not human emotions, because ultimately we're accountable to him. This
has once again been so valuable. Ron, thanks for stopping by.
S2 (05:02):
Always a delight, Rob. Thanks for having me.
S1 (05:04):
That's teacher and author Ron Blue talking about the uniqueness principle.
Your calls are next 800 525 7000. That's 800 525 7000.
I'm Rob West, and this is Faith in finance live.
We'll be right back after this break.
S3 (05:33):
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. And.
S1 (05:56):
Great to have you with us today on Faith and
finance live here on Moody Radio. I'm Rob West, looking
forward to taking your calls and questions today. The number
with lines open is 800 525 7000. That's 800 525 7000.
Great to have Ron Blue here today. He is a
mentor to me and somebody who's really shaped probably more
(06:17):
than anyone else. My thinking about biblical financial decision making,
I love that he teaches out of principles, because it's
not a matter of just giving you an answer. It's
a matter of helping you think biblically along the lines
of principles pulled from God's Word as it relates to
financial decisions, not financial answers, but financial decision making. And
(06:40):
certainly that shows up in this area of wealth transfer
that he was discussing today, where we think along the
lines of principles, he shared the uniqueness principle if you
love your children equally, you will treat them uniquely. Doesn't automatically,
as he said, mean you can't. Uh, you know, you
have to give different amounts. You may decide to absolutely
(07:01):
give the same amount. Um, but you may choose to
leave differing amounts as you think through these questions that
he shared. What's the worst thing that can happen? How
likely is that to occur? And, you know, as you
consider that wealth is the fuel in the engine that
propels somebody in the direction they're already going? Well, more
(07:21):
wealth thrown into the wrong trajectory could lead to disaster.
And so thinking and praying through that and being able
to change at different seasons of your life is really key.
And then this big idea that overrides everything, which is
we want to transfer wisdom before wealth. You remember what
the book of Ecclesiastes says, that wisdom and wealth are
(07:41):
both good, but only one preserves, and that's wisdom. And
so we want to transfer wisdom before wealth. And actually
we want the growth in wisdom to outpace the growth
in wealth. Otherwise, we get into a danger zone. We
unpack this at length in our brand new study that's
due out in the month of May. It's 12 lessons
(08:01):
on money from the Book of Ecclesiastes, written by one
of our faculty members. Here at Faith by John Cortinez.
John took a deep dive in to the book of
Ecclesiastes and has written this incredibly thoughtful, beautifully designed, 150
page study on the book of Ecclesiastes called Wisdom Over Wealth.
And we think you're going to love it. We're going
(08:23):
to send it as soon as it's available. The first
folks that will receive it are our Faith V partners.
And so if you'd like to become a partner today
and ensure that you receive each of our studies or
devotionals as they roll out, along with four issues of
Faithful Steward, our magazine, you can check us out at
Faith Philly.com. Just click give at the top of the page.
(08:44):
We'd love to hear from you. All right. We're going
to dive into your questions today. The number to call
800 525 7000 with lines open again. That number you
can call right now with any financial question. 800 525 7000.
Let's go to Jamestown, North Dakota. Carol. Go ahead.
S4 (09:03):
Hi. Thank you. Um, I have, uh, called a couple times,
and I think you've got the information on me. I
have a a term life policy, and I'm paying $400
a month for it. And my son said, that's outrageous,
because I'll probably I may even outlive it. Um, and
(09:23):
then I have the question about the reverse mortgage, because
you had had that expert on last week or before,
and I'd like to know about that. But since I'm 81,
using the equity now for my family's sake rather than,
you know, trying to pass it on. Yeah, I got it.
S1 (09:42):
Yeah. Very good. So let's talk about these separately because
they really are two different issues. Both can be, you know,
very effective tools. I like you having insurance term insurance
so long as there's somebody depending upon your income. Because
the idea behind life insurance is we want to offset
(10:03):
the risk that exists, that in your passing, a hardship
would be created by a loved one or a dependent
due to the loss of your income. And so if
there's no one counting on your income because either you
don't have any dependents or anyone that's, you know, relying
(10:24):
on your income or you're no longer working or you've
saved enough because you're, let's say, in the retirement season,
you know, where you you don't have income currently. Or
if it went away, you know, nobody would would be
in a hardship, then you really don't need term life insurance.
You don't need any life insurance for that matter. So
that's an unnecessary expense that perhaps served its purpose, but
(10:47):
is no longer necessary and therefore could be recaptured into
the family budget. Um, so talk to me about that
piece first. Is there anyone that would have a hardship
created if you were to pass away by way of
a loss of income?
S4 (11:02):
No, the children are all adult children there, and two
of them have said no, they don't need it. And
I know the third one doesn't, and probably the fourth not. Also,
I mean, I mean, I might ask them all, but, um,
certainly I will ask them all, but they're not dependent
on it. Yeah. And I'm on totally on Social Security.
I have no other income right now, so.
S1 (11:22):
Okay. Yeah. Um, and, and I really don't even like
insurance for the purpose of generating an inheritance, uh, because,
as you said, you know, you're not supplementing their income
monthly right now. So if something were to happen to you,
it's purely from an income standpoint. It would change nothing
for them. And then they would, you know, be blessed
by whatever you leave to them out of whatever assets
(11:45):
you've accumulated and your personal things and so forth. But
I wouldn't try to fund a life insurance policy that's
going to get more and more expensive as you age,
solely for the purpose of having something extra to give
to them. They would probably tell you. I would guess
they'd rather you have that extra $5,000 a year, you know,
(12:05):
at the very least, to stick into savings in case
you need it down the road. If not to enjoy
part of it right now, rather than you funding a
life insurance policy for a death benefit that they really
don't need and aren't counting on. Does that make sense?
S4 (12:19):
Yeah, it makes absolute sense. The only reason I was
keeping it was so that they could maybe use that money,
splitting it up to pay off the farm mortgage, you know? Um, yeah,
but I since have talked, heard you talk about, um,
reverse mortgages. But I like what you're saying about the
life insurance policy, and I probably will just stop it. So.
S1 (12:40):
Okay. Yeah. I mean, so that's another piece. If for
some reason there's a family farm that has a policy
on it that they want to be able to keep,
one way they could fund that would be perhaps they
get a life insurance policy that they pay on your
life that would then pay off that loan for the
purpose of them being able to keep it in the family.
The other option would be if they decide they want
(13:02):
it and oftentimes heirs don't. They could then go out
and get their own mortgage to keep it. Maybe they
divide it between the siblings and, you know, continue to
keep the farm. But I would let them sort that out.
It sounds like you could probably use that. You know,
money recaptured 400 a month into your budget. Let's talk
about the reverse mortgage. So you have two properties, one
(13:24):
that you live on and one that's purely for investment
or farming. Is that right?
S4 (13:29):
We lived on a farm until my husband started teaching
in town, where I am now in Jamestown. Um, and
then we got this little studio house, and that's where
I am now, because I had told him I can't.
Live on the farm by myself. It's just too emotionally hard.
S1 (13:43):
Okay, so the the reverse mortgage would only be available
for your primary residence, so that would be the place
that you're living right now. Um, what? How much is
that worth? That property.
S4 (13:55):
That, uh, it's worth about 120,000.
S1 (14:01):
Okay. Worth about 120,000. And what do you owe on
it today?
S4 (14:05):
And the mortgage is 62,000.
S1 (14:07):
Okay. 62,000. All right, let's do this. I've got to
take a quick break. When we come back, we'll pick
that up and talk about whether or not you should
consider a reverse mortgage. You're right there on the line.
You need to have about 50% equity. Uh, and you
are pretty close. We'll be right back. Thanks for joining
(14:31):
us today on Faith and Finance Live. I'm Rob West
here on Moody Radio. We've got some lines open today
taking your calls and questions you can call right now
with anything financial 800 525 7000. Again that's 800 525 7000.
We're our team is standing by. Let's go back to Jamestown.
We were talking with Carol before the break about term
(14:52):
life insurance. She asked a follow up question with respect
to a reverse mortgage. She and her husband live on
a piece of property worth about 120,000. They owe about
62,000 on the property. She's 81 years old, and she
was asking about a reverse mortgage. And for your primary residence, Carol,
that would likely be an option. You would need to
(15:15):
go through the process to know for sure, but it
would likely be an option you typically want. And this
isn't a hard and fast rule, but you generally need
about 50% equity in the property in order for this
to to be an option. Sounds like you have that. Um,
and so what would typically happen is that the mortgage
would be paid off with the reverse mortgage. Um, except
(15:37):
that now you would no longer have a payment. And
so that would be the first thing is that even
if you didn't get a monthly income stream, you know,
for folks in this season of life that, you know,
just are short on income because they haven't saved enough
or whatever it might be. Um, you know, still carrying
a mortgage can be and is often your largest expense
(15:58):
in retirement. So even if you didn't get any income
or have a line of credit, just paying off that
forward mortgage that carries a payment every month with a
reverse mortgage that doesn't require a payment any longer, you
can pay it, but that's not required. Um, would often
alleviate that largest expense and perhaps be a game changer
(16:18):
in your budget. Uh, that would give you more freedom
and flexibility to cover your lifestyle, spending and whatever the
Lord has called you to. Uh, what's the downside? Well,
the downside would be there are fees. So right up front,
you'd have a 2% fee to the FHA. That's key,
because that ensures that you could never owe more than
the home is worth. So you're you're not essentially guaranteeing
(16:42):
it personally. It's, you know, the type of loan that
doesn't require a personal guarantee. So the home is the
only collateral versus any other kind of conventional mortgage where
you are guaranteeing it personally in any shortfall you'd have
to come up with. Secondly, though, the other downside would
be if you have a low interest rate mortgage, the
(17:03):
amount that's refinanced would go up consistent to the prevailing rates,
and it would remain variable. So with rates around 7%
right now, that rate would jump up from whatever you
have now to the 7%. And because the payment is
no longer required, that existing mortgage balance would just grow
over time with the interest and fees, again, you'd never
(17:25):
owe more than the house is worth. But if you
sold it, or when you and your husband pass away
the proceeds of the home sale would go to pay
off whatever that reverse mortgage balance is, and then the
remaining remaining amount would then be paid out to your heirs.
You still own the home, but the loan would have
to be satisfied by your estate before you know the
(17:46):
proceeds are then paid out. Um, does that make sense though?
S4 (17:50):
It makes a lot of sense. Um, the interest on
my husband is no longer living, by the way.
S1 (17:55):
Oh. My apologies. Okay.
S4 (17:56):
No, that's all right. I, uh, but the interest on
the present mortgage is two, uh, 2.5%.
S1 (18:06):
Yeah. Yeah.
S4 (18:07):
So that's really good, right?
S1 (18:09):
It's phenomenal. Yeah. So. So you would be giving that
up and the the rate would adjust up to something
close to what they are now. So that's a negative
in the sense that, you know, that's going to cause that, uh,
that balance to grow faster over time. But again, if,
if no one's counting on, you know, you leaving a
(18:29):
significant inheritance there, not necessarily looking to hang on to
that house that you're passing. Um, you know, it could
be the difference between you living out the rest of
your life in that home and having a little bit
more cushion, because now you no longer have a mortgage
payment such that you're willing to pay a little bit
higher interest, even though you're not paying it. It just
(18:50):
reduces the amount that would be available in your estate
at your death. And that's where a lot of people
who choose a reverse mortgage end up, because they say, well,
if I could just get to where I'd pay it
off completely and own the home outright, that'd be great.
But if this is my largest asset and I don't have,
you know, I've got enough to live on, but I
don't have any wiggle room. And if I could get
(19:12):
rid of this mortgage payment by paying it off through
reverse and no longer having it, you know, I'm okay
with that because, again, my kids aren't counting on this
money from me.
S4 (19:23):
Mhm. Very good. A lot to consider there. Yeah. Yeah.
It's going to mature in July 1st. So do I
just go to the bank now and say, put the
situation out there? You know, because that interest is so good.
I'm afraid that it's going to go up when they,
you know, if I have to refinance in in July
or renew it or whatever you call that.
S1 (19:41):
Okay. So is this like A51 arm or something where
it was fixed for 5 or 7 years and then
it starts to adjust?
S4 (19:48):
Right. My husband did it in 2020 and I see
okay with that. Yeah I.
S1 (19:53):
See. Yeah. So that's one of the reasons you have
such a low rate. But that's going to go away.
So again another reason because when you refinance this, which
is what you're going to need to do, you're probably
going to be jumping up to this higher rate anyway.
And if you go with the reverse now the payment
is optional. If you want to pay it you can
and reduce the balance, but you don't have to. And
(20:14):
that could be a game changer. So perhaps, you know,
take some time and think and pray through that. I'm
not saying this is, you know, it's right for everyone
or it's a one size fits all, but it is
an option that is often not considered and with this
being nonrecourse debt, meaning they can never come after you,
you can live in the home for the rest of
your life, and any equity that remains after the the
(20:36):
mortgage is paid off by by way of the sale
of your home after your death or when you move,
you know it can be a great option for some folks. Uh,
our friends at Movement Mortgage could run an illustration for
you and just help you understand exactly what that would
look like for you. Just go to movement.com.
S4 (20:53):
I did do that and I couldn't find any information,
so I'll have to try it again. I guess.
S1 (20:59):
Movement.com um, put in your information and they'll reach out
to you. But, Carol, thanks for your call today. May
the Lord bless you. And if if I can assist
you in any way along the way, uh, don't hesitate
to reach out. We appreciate you being on the program. Well, folks, uh,
we're up against our next break, but, uh, Amy has
been waiting patiently there in Missouri and Yvette in South Carolina,
(21:19):
so we'll come back and tackle those questions next. We
do have room for you. We've still got half the
program remaining. So if you have a financial question today,
we'd love to have you on the broadcast. The number 800, 525, 7000,
helping you see God as your ultimate treasure and integrating
faith and finance for the glory of God. I'm Rob West.
This is faith and finance. Live and we'll be right back.
(21:41):
Stick around. Thanks for joining us today on Faith and
Finance Live, helping you see God as your ultimate treasure
(22:03):
and manage money for God's glory. We've got lines open
today 800 525 7000. Let's go right back to the phones.
Amy has been waiting patiently in Missouri. Amy, how can
I help?
S5 (22:14):
Hi. Um, I just had kind of a challenging situation
I wanted to talk to you about. So my husband
and I got married in our 40s. I had raised
my children and they were out of the house and
on their own by that point. He had never been married,
never had children, and he and his father have a
(22:35):
business together. And then he also has a normal, regular
full time job. I have a full time job. And
after we married, he moved into my home, which I
had owned for close to a decade. And in seven
years there has been no joining of the finances. He
will not discuss it with me, period. I know nothing
(22:58):
about his finances, and I still pay all of the
bills that I did before we were married. It's been,
you know, definitely all over the map emotionally. But I keep,
you know, clinging to the fact that I want to
honor God and I want to honor the marriage covenant. Yeah.
(23:19):
And I don't understand. I don't know what to do
with it. I don't know how else to approach it.
He is just simply shut me out and is not
willing to build a life together at all in that area.
S1 (23:31):
Yeah, yeah. Well, I'm so sorry. This is very difficult
and I appreciate your transparency on that. I know this
is painful. Um, so when you've engaged him in conversation
around this in the past, what what does he say
about his unwillingness to go there?
S5 (23:50):
The first time I, I told him to sit down,
we had to talk. We'd been married about 6 or
7 months and finances had never been discussed. And, um,
the reaction I got was we we weren't kids when
we got married. I had my own, you know, bills
and you had your bills, and that's pretty much it.
S1 (24:13):
Yeah.
S5 (24:13):
The remainder of the conversation, he, you know, just would
kind of look off into space as I was talking and,
you know, but not even willing to do something as
simple as join our cell phone bills when it was
going to save us both money every month.
S6 (24:27):
Yeah, yeah.
S1 (24:29):
Yeah. And obviously, if you've brought it up again, you're
met with a similar type response.
S5 (24:36):
Yes. And in the beginning I understand that. But seven
plus years in. Yeah there's zero effort to build anything together. Yeah.
And it's just I, it just leaves me beside myself.
S1 (24:51):
Yeah, I certainly understand that. Well, when we go back
to Scripture, I mean, we understand there's not a specific
passage that speaks directly to modern banking, but we can
look to God's wisdom around his design for marriage, which
is all about unity and oneness. And we can extend
that into stewardship. I mean, I would start at Mark ten. Therefore,
(25:13):
a man shall leave his father and mother and hold
fast to his wife, and the two shall become one flesh.
And I think that oneness extends to all facets of
our lives, and that includes our bank accounts. And therefore
I think it's wise for couples to combine finances rather
than keep them separate, because when we we keep them separate,
it it fosters mistrust and it doesn't strive toward unity.
(25:36):
And it's it's often difficult to then have, uh, you know,
shared goals where we understand, you know, when we join
our finances and we say everything that God has entrusted
to us as one flesh, regardless of who earns what
money it all belongs to, the Lord doesn't belong to
you or him. It belongs to God. And he's now stewarded.
(25:57):
He's asked you to steward these resources. And that was individually.
But once you joined together in marriage, he's asked you
to steward his resources as one flesh. And so I think,
clearly according to God's Word, that's the approach we should take. Now,
does it get slightly more complicated when we're marrying later
in life, especially when you've had kids prior to the marriage?
(26:17):
Absolutely it can. But I think that at that point,
with clear and honest and open communication and a lot
of trust at the core, you might say, well, because
I had a child prior to marriage, you know, whatever
assets got entrusted to me prior to that point, you know,
we're going to go ahead and carve out and deal
with it separately. And again, that would be done, you know,
(26:40):
with a very place, a very open and honest communication
with trust at the core. But at the very least,
from that point forward, I would say whatever got entrusts
to you, you all need to have jointly shared goals
and you need to approach it together. And the extent
to which one of you is unwilling, I just feel
like is is outside of the the biblical model and
(27:02):
understanding of marriage and how it should be approached. So
what do you do with that if he's unwilling to
go there? And I think it just becomes problematic. Number one,
I think number two, we have to understand money issues
are hard issues, so the money and how it's handled
is really symptomatic of of deeper issues that need to
(27:22):
be addressed regarding trust and other issues. The money is
really just symptomatic. And so at the end of the day,
you may need to, you know, approach him about saying, hey,
I really think we need to bring somebody else into
this conversation. If we can't move forward together and find
a place to work together on it. But prior to that,
(27:43):
where would you go with it? I mean, I think
we could look to some principles and also some passages
in Scripture about this. I think number one is to
model wisdom and respect. So first Peter three one likewise, wives,
be subject to your own husbands, so that even if
some do not obey the word, they may be won
without a word by the conduct of their wives. That's
not about silence or passivity. I think that's about letting
(28:06):
your character and your consistent faith be a light and
your respectful Full persistence in Christ like love. The idea
would be that it might influence his heart over time
more than pressure could. I think second would be to
seek peace without compromising stewardship. So Romans 12, if possible,
so far as it depends on you, live peaceably with all.
(28:27):
So you're not responsible for changing your husband's heart. That's
the Holy Spirit's work. But I think you are responsible
for doing what you can, modeling peace and inviting him
in and not provoking him, and faithfully managing what you
can control. Uh, you know, like your portion of of
God's resources. And then I think, thirdly, ask for wisdom
and wait on God. You know, James one five is
(28:50):
very clear. If we lack wisdom, we need to ask
God and it will be given him. And so I
would say, pray for your husband to open up to you,
but also for wisdom on how and when to talk
to him. The timing and the tone I think matter.
And sometimes I think the most powerful move is prayer
followed by patient action. So I would really make this
a matter of prayer. Try a non-confrontational approach. You know,
(29:14):
instead of, hey, we need to talk about money. It's
can I share something that I've been working on financially,
or can I share something with you that really is
important to me, that I'd like to try to make,
you know, progress on. Celebrate small wins. You know, if
he responds to something, anything, acknowledge it and show appreciation.
I think that builds trust. And then I think perhaps,
(29:37):
you know, inviting a to the extent he's willing, a
neutral third party, a pastor or a Christian counselor or
a financial coach into the equation. Uh, and then at
the end of the day, I think you can still
be faithful in, in being a wise steward of what
God has entrusted to you, because, again, you can only
do what you can do. But I don't think you
should just say, this is important to me, but I'm
(29:59):
just going to let it go. I think you need
to lean into it and let's trust God that that
he's going to intervene. Does that make sense, though? I
know that's a lot.
S5 (30:08):
Yes, it absolutely makes sense. And I feel as though
that's been the path of the past, you know? Well,
basically over seven years. Um, at this point, I just
feel abandoned. Yeah. I just feel as though the conversation
has been had enough times and there's been zero change.
S1 (30:29):
Yeah.
S5 (30:29):
That, um, you know, it's not abandoned when someone never
shows up initially.
S1 (30:36):
Yeah, I think that's right. And I think, again, this
goes back to money issues or hard issues. And this
is just symptomatic. Let's finish up off the air. I'd
like to talk just a bit more. We'll be right back.
Thanks for joining us today on Faith and Finance Live.
I'm Rob West. I had a chance to visit with
(30:57):
Amy a bit more off the air, and we're going
to send her a copy of Howard Dayton's book, Money
and Marriage God's Way. We've also offered to cover the
cost of a Christian financial counselor to walk alongside she
and her husband. We realize that we don't know whether
he'd be willing to to take advantage of either of those,
you know, walk with her through that book, uh, to
explore God's heart around money and marriage, uh, or to
(31:20):
allow a counselor to come in as a third party
into the equation. But I would just ask you, as
the faith and finance family, to be praying that God
would soften his heart and hear her out and be
willing to engage, perhaps in a way he never has before,
and that perhaps either through the book that Howard Dayton
wrote years ago, that's just a classic, or through one
of our certified Christian financial counselors that really are trained
(31:43):
and their heart, their ministry, is just to serve God's
people in this area that through one of those, he'd
be willing to invite that in, and perhaps that the
Holy Spirit would do a work in his life. So
let's pray for Amy in that regard. All right. We're
going to head to Georgia next. Uh, Susan, go right ahead.
S7 (31:59):
Hi, Rob. Thank you for taking my call.
S1 (32:01):
Yes, sure.
S7 (32:03):
Um, so I have several questions pertaining to withdrawal of.
I'm thinking about leaving a job, and I want to
take probably half of my 401 K and all of
my stock money that's in this company, and use it
to pay off my mortgage. Um, my questions are so
I know that I'm paying right off the top 10%
penalty because I am not 59.5. Um, and then after
(32:28):
that 10% do I pay the tax? They were telling
me 20% tax comes off. The top of that also,
is that 20% taken after the 10% is removed or
off of the whole entire amount? That's my first question.
S1 (32:44):
Okay. Yeah. So it's the whole amount of the withdrawal
would be subject to a 10% penalty unless what is
your age 56. Okay. So and you're separating from your employer.
Is that right?
S7 (32:59):
Thinking about it, if I can financially afford to do it. Away.
S1 (33:02):
Okay, so there is the rule of 55 that would
come into play here, which is an IRS provision that
allows you to withdraw from your employer sponsored retirement plan
without the usual 10% early withdrawal penalty. As long as
you're at least 55 in the year, you you leave
your job and it only applies to the employer's plan
(33:27):
you leave. So if this is the 401 K or
the 403 B from the employer that you're leaving, then
you would should be able to avoid that 10% penalty,
but 100% of the withdrawal would be taxable. So it
would be added to your taxable income for that year.
S7 (33:46):
Okay. And so that being said, um, my husband's only
income is Social Security. And thus far it has not
been taxed because of our tax bracket. Um, my wages
are not really high. And so we have not had
to pay taxes on that Social Security. So considering we
file jointly, including his Social Security money, this withdrawal from
(34:10):
my employer and my wages, would they then tax his
Social Security?
S1 (34:15):
They could. Yeah. Because the 401 K withdrawal would increase
your income for the purposes of determining taxes on Social Security,
so that the IRS uses a formula called combined income,
or sometimes it's called provisional income. And basically it's your
adjusted gross income, which includes and it's plus a few
(34:37):
other things. But your AGI, even without those other things,
includes withdrawals from a pre-tax retirement account. So that would
be added in where it hadn't been before, on top
of any other income, on top of Nontaxable interest and
on top of half of your husband's Social Security benefits.
And then if the combination of all of that, as
(35:01):
a married filing jointly exceeds $32,000, then half is going
to be taxable. If it exceeds 44,000, up to 85%
would be taxable. So yes, it would affect it would
affect whether or not that Social Security income, which previously
have not been taxed because it sounds like you're under
the threshold, would now possibly be taxed up to 85%
(35:26):
of it. But the other issue that we haven't talked
about yet, maybe you're getting to this, is just whether
this makes sense. And I think, you know, I'm never
a fan of well, I shouldn't say never. Often I
will say I'd rather, if you can afford it, just
to continue to pay out the mortgage by keeping your
lifestyle low and, you know, just focus on any extra
(35:48):
income you have or opportunities to pay down the mortgage.
Do it that way. Rather than taking this big chunk
out of your 401 K for for three reasons. One is, um,
you know, that money's no longer there, growing on a
tax deferred basis for you to use to supplement income
later such that even if you don't need it now,
you might later for long term care or something like that.
(36:09):
Number two, it adds this kind of big taxable event,
because even if you spread it over two tax years,
you still have this big jump in income. And to
your point, it may require you're now paying Social Security
tax on Social Security, which you haven't previously. And then
third is just, you know, given what's going on right
now in the markets, I mean, we've had this major
(36:31):
kind of I'll call it a collapse of the stock market, just,
you know, and it could be short lived. And I,
I'm not saying I think we're entering a depression and
the market's never going to recover. But I'd be, you know,
not very excited about you, you know, liquidating your 401
K with the market down 20%.
S7 (36:49):
Okay. So um, also then with the tax thing, um,
we're going to combine his Social security, my wages, and
what I actually receive after paying the if I pay
the penalty and the tax that comes out automatically, or
am I including the whole entire amount before tax plus
(37:10):
wages plus Social security at tax?
S1 (37:12):
Yeah, it would be the total amount of the withdrawal
would be added to your taxable income. And then and
then your they would calculate the federal and state income
tax that would be due on that amount. And in
addition to that, that number would go toward your combined
income that determines what portion of your husband's Social Security
is now taxable, if any.
S7 (37:34):
Okay. So then the thing I've been told about the 20%
coming right off the top of that. Does that happen
at tax time or does it happen when they pay
out the.
S1 (37:44):
Well, it's up to your plan administrator because that's not
a requirement. I mean that that would be up to
each plan. If they withheld it, they would do it
at the time of the distribution. And then they just
send it into the IRS. Ultimately, it's not that you
owe 20%, it's that they're going to withhold an estimate
of 20%. And then you may owe more, or you
(38:04):
may get some of that back, depending on, you know,
your actual return.
S7 (38:09):
Okay. Okay.
S1 (38:10):
Yeah. Is that helpful?
S7 (38:12):
If that is helpful. Thank you Rob I appreciate it.
S1 (38:14):
Okay. Absolutely. Thanks for your call. Susan to Virginia. Hi, Debbie.
Go ahead.
S8 (38:19):
Hi, Rob. I'm so excited for the opportunity to talk
to you. Great. My my husband and I have recently retired,
and we're trying to make some informed financial decisions on
little pockets of saving money here and there. And as
I pay bills, I've been noticing that many companies now
give you discounts if you set up auto payment for
(38:40):
your bill. Yeah. And they usually offer you the opportunity
to either use your bank account or credit card. Right.
So I'm trying to figure out which is the best
option with with using a bank account I'm a little
concerned with all these different companies having, you know, your
bank routing number and your checking account number. Yeah. Um,
(39:00):
and if I consider using a credit card, I'm wondering, um,
is it best to have a credit card, like, use
the credit card you already have, which if you do that,
you're increasing. You know, the the percentage of your usage
on your credit card. And and what kind of hit
that would have, um, versus getting a whole nother like
(39:22):
a rewards type of credit card where you're getting cash
back rewards for paying. Do you have any thoughts on this?
S1 (39:27):
I do, yeah. You won't be surprised I have thoughts. Uh, okay.
So a couple of things going on here. Number one is. Yeah,
I like the idea of you setting up the auto
payment and getting a discount. I like that you're thinking through,
do I use bank account or credit card? Because that's
a that's a good consideration. I actually, so long as
you take the debt risk off the table that you're
(39:48):
going to spend money on non-budgeted expenses that you can't afford,
and now you're paying interest on it. I mean, if
that was a possibility, I'd say forget it. But assuming
you're just. No, no, Rob, this is budgeted items. We're
going to pay it in full every month and that's
off the table. Then, you know, it is nice to
be able to pay this with a credit card, because
if you have a credit card that has rewards with
(40:10):
cash back. So, you know, like a for instance, the
Wells Fargo card is paying 2% on everything across the
board right now, and there may be others that are
even better. Um, to be able to get that 2% back,
no fees. Um, it gives you some extra fraud protection
because credit cards offer stronger protections against fraudulent charges than
(40:31):
debit cards tied to checking accounts, or even checking accounts
with your ACH routing number. Because, you know, remember what
happens if somebody compromises your debit card or your checking
account is it can take longer to resolve and the
funds are already gone, leaving you temporarily without the money.
Whereas with the credit card, so long as you identify
(40:52):
it and on a timely basis dispute it, you don't
have any any risk there. You have no liability. I mean,
by law, it's no more than $50. And most cards
it's $0 as long as you report it. So for
that reason, assuming you're going to pay it, only budget
items pay it off in full. There's no monthly or
annual fee and you're going to get some rewards. Then
(41:12):
I would say with the added protections, I actually prefer
the credit card for that purpose.
S8 (41:18):
Okay. Now, if we do already have a credit card
that has cash back rewards and we have a high
limit on that, but if we use that same credit card,
then we're using a higher percent. I can't think of
what that term is.
S1 (41:32):
Yeah, it's the credit utilization. So number one, unless you're
going to be out looking for a loan anytime soon,
it doesn't really matter in your season of life. But
but even if you are concerned about that, I would
just say as long as you're not going above 30%
of that limit, then it's really a non-issue. So if
it's a $10,000 limit, as long as you're under, you know,
$3,000 on a monthly basis, then it's a it's a non-issue.
(41:55):
And then I think, secondly, would just be the idea
that if you wanted to, as long as you paid
it off. Because remember, we're using it for budget items.
So you got the money in checking as long as
you paid it off, not by the due date, but
by the day before the closing date of the cycle.
Then they're going to report a zero balance to the
(42:17):
credit bureau. Um, because they're going to look at the
balance as of the date of the end of the cycle.
And if you paid it off the day before, it's zero.
And so you don't even have to worry. Does that
make sense?
S8 (42:27):
Wonderful. Yes it does. Thank you so much.
S1 (42:30):
All right. I appreciate your call. Lord bless you. Thanks
for being on the program today. Hey, big thanks to
my team today. Boy, I couldn't do this without them. Tara, Taylor, Dan, Gabby,
T and Devin. We'll see you next time. Bye bye.
Puritan poet Anne Bradstreet once said, wisdom without an inheritance
is better than an inheritance without wisdom. Hi, I'm Rob West.
Every parent hopes to leave an inheritance for their children,
but doing so wisely takes careful thought and prayer. Today,
Ron Blue joins us to discuss the uniqueness principle and
(00:28):
how it can guide parents in passing down wealth effectively.
And then it's on to your calls at 805, two
five 7000. That's 800 525 7000. This is faith and finance. Live.
Biblical wisdom for your financial decisions. Well, we always look
forward to having Ron Blue on the program. He's co-founder
(00:51):
of Kingdom Advisors, the author of many books on personal finance.
And a dear friend of mine, Ron, great to have
you back.
S2 (00:57):
Good to be a part of it, Rob. Thank you.
S1 (01:00):
Ron. Studies show that around two thirds of parents divide
their estates equally among their children. And while this certainly
isn't a bad thing, can you share with us how
this can be problematic in some cases?
S2 (01:15):
Yes. I think, uh, Rob, if we, uh, think about
it the way God treats us, he loves us all equally.
But he treats us uniquely. Yeah. Um, he doesn't just
divide up everything equally. Some have some things and others
have others. But. So when it comes to leaving an
inheritance to our children, we have five children. And I
(01:39):
can tell you this. They all sat at the same
dinner table, but they sure didn't all turn out the
same way.
S1 (01:44):
Amen.
S2 (01:46):
I mean, they've done fine. I don't mean to imply
something negative there, but. Yeah, but they married differently. Uh,
they parent differently. They're in different economic situations due to
jobs lost, jobs taken. So what I have found over
time is that when Judy and I started, our kids
(02:07):
were none of them were married. Well, I'm sorry, there
were two of them that were married and we asked
three questions. Rob. We said if we left X amount
of money to X child, what's the worst thing that
could happen? And it took us about two years to
really think that one through. Um, the second question then
(02:29):
was well how serious is it? In some cases it
wasn't serious at all. Like we had one child, we said, well,
if we left them whatever, they'd give it all away. Hmm.
So that's not real serious? No. Uh, we had different
situations with another child where it would have really harmed
their marriage. Uh, because if the husband really had a
(02:50):
passion to provide for his family. So we asked ask
those questions? Uh, what's the worst thing that can happen?
How serious is it? And then what's the likelihood of
it occurring? And that's the process that we follow. It
doesn't say how we'll end up. And I can tell
you this now, at my age, um, 83, with a
(03:13):
daughter that will soon be 59 as the oldest and
the youngest being 47. Circumstances changed over time. So how
we would answer the question today that we asked for
the first time 25 years ago is totally different, but
it's the process. That's the thing to think about. And
(03:35):
in America, the default is equal. Yeah. And it's not
necessarily wrong to be equal, but it is, I think, uh,
unwise to not think through the consequences of, of leaving
this wealth. Mhm. To a particular child.
S1 (03:53):
Well I so appreciate that about your teaching, Ron, because here,
once again, you're not saying that it's better or worse
to leave the same amount to each child. What you're
saying is what's important is to follow a decision making process, right?
S2 (04:09):
Absolutely. Because what you don't want to do is, you know,
and you've heard me say this too, don't pass wealth
unless you pass wisdom. Yeah. Because wealth never creates wisdom.
But wisdom can create wealth. So what I want to
do as a parent is the best thing for my children.
And I need to think that one through very, very
(04:30):
thoughtfully and very, very prayerfully. It may end up. I
treat them equally, but it may not either. The most
important thing is the process that I follow. And I
you know, if you don't ask the right question, you
don't ever get the right answer. And the right question is,
what's the worst thing that could happen? Because I don't
want that to happen. Okay.
S1 (04:47):
Yeah, that's right on. Ron, I know you've said wealth
transfer at the end of the day should reflect God's wisdom,
not human emotions, because ultimately we're accountable to him. This
has once again been so valuable. Ron, thanks for stopping by.
S2 (05:02):
Always a delight, Rob. Thanks for having me.
S1 (05:04):
That's teacher and author Ron Blue talking about the uniqueness principle.
Your calls are next 800 525 7000. That's 800 525 7000.
I'm Rob West, and this is Faith in finance live.
We'll be right back after this break.
S3 (05:33):
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. And.
S1 (05:56):
Great to have you with us today on Faith and
finance live here on Moody Radio. I'm Rob West, looking
forward to taking your calls and questions today. The number
with lines open is 800 525 7000. That's 800 525 7000.
Great to have Ron Blue here today. He is a
mentor to me and somebody who's really shaped probably more
(06:17):
than anyone else. My thinking about biblical financial decision making,
I love that he teaches out of principles, because it's
not a matter of just giving you an answer. It's
a matter of helping you think biblically along the lines
of principles pulled from God's Word as it relates to
financial decisions, not financial answers, but financial decision making. And
(06:40):
certainly that shows up in this area of wealth transfer
that he was discussing today, where we think along the
lines of principles, he shared the uniqueness principle if you
love your children equally, you will treat them uniquely. Doesn't automatically,
as he said, mean you can't. Uh, you know, you
have to give different amounts. You may decide to absolutely
(07:01):
give the same amount. Um, but you may choose to
leave differing amounts as you think through these questions that
he shared. What's the worst thing that can happen? How
likely is that to occur? And, you know, as you
consider that wealth is the fuel in the engine that
propels somebody in the direction they're already going? Well, more
(07:21):
wealth thrown into the wrong trajectory could lead to disaster.
And so thinking and praying through that and being able
to change at different seasons of your life is really key.
And then this big idea that overrides everything, which is
we want to transfer wisdom before wealth. You remember what
the book of Ecclesiastes says, that wisdom and wealth are
(07:41):
both good, but only one preserves, and that's wisdom. And
so we want to transfer wisdom before wealth. And actually
we want the growth in wisdom to outpace the growth
in wealth. Otherwise, we get into a danger zone. We
unpack this at length in our brand new study that's
due out in the month of May. It's 12 lessons
(08:01):
on money from the Book of Ecclesiastes, written by one
of our faculty members. Here at Faith by John Cortinez.
John took a deep dive in to the book of
Ecclesiastes and has written this incredibly thoughtful, beautifully designed, 150
page study on the book of Ecclesiastes called Wisdom Over Wealth.
And we think you're going to love it. We're going
(08:23):
to send it as soon as it's available. The first
folks that will receive it are our Faith V partners.
And so if you'd like to become a partner today
and ensure that you receive each of our studies or
devotionals as they roll out, along with four issues of
Faithful Steward, our magazine, you can check us out at
Faith Philly.com. Just click give at the top of the page.
(08:44):
We'd love to hear from you. All right. We're going
to dive into your questions today. The number to call
800 525 7000 with lines open again. That number you
can call right now with any financial question. 800 525 7000.
Let's go to Jamestown, North Dakota. Carol. Go ahead.
S4 (09:03):
Hi. Thank you. Um, I have, uh, called a couple times,
and I think you've got the information on me. I
have a a term life policy, and I'm paying $400
a month for it. And my son said, that's outrageous,
because I'll probably I may even outlive it. Um, and
(09:23):
then I have the question about the reverse mortgage, because
you had had that expert on last week or before,
and I'd like to know about that. But since I'm 81,
using the equity now for my family's sake rather than,
you know, trying to pass it on. Yeah, I got it.
S1 (09:42):
Yeah. Very good. So let's talk about these separately because
they really are two different issues. Both can be, you know,
very effective tools. I like you having insurance term insurance
so long as there's somebody depending upon your income. Because
the idea behind life insurance is we want to offset
(10:03):
the risk that exists, that in your passing, a hardship
would be created by a loved one or a dependent
due to the loss of your income. And so if
there's no one counting on your income because either you
don't have any dependents or anyone that's, you know, relying
(10:24):
on your income or you're no longer working or you've
saved enough because you're, let's say, in the retirement season,
you know, where you you don't have income currently. Or
if it went away, you know, nobody would would be
in a hardship, then you really don't need term life insurance.
You don't need any life insurance for that matter. So
that's an unnecessary expense that perhaps served its purpose, but
(10:47):
is no longer necessary and therefore could be recaptured into
the family budget. Um, so talk to me about that
piece first. Is there anyone that would have a hardship
created if you were to pass away by way of
a loss of income?
S4 (11:02):
No, the children are all adult children there, and two
of them have said no, they don't need it. And
I know the third one doesn't, and probably the fourth not. Also,
I mean, I mean, I might ask them all, but, um,
certainly I will ask them all, but they're not dependent
on it. Yeah. And I'm on totally on Social Security.
I have no other income right now, so.
S1 (11:22):
Okay. Yeah. Um, and, and I really don't even like
insurance for the purpose of generating an inheritance, uh, because,
as you said, you know, you're not supplementing their income
monthly right now. So if something were to happen to you,
it's purely from an income standpoint. It would change nothing
for them. And then they would, you know, be blessed
by whatever you leave to them out of whatever assets
(11:45):
you've accumulated and your personal things and so forth. But
I wouldn't try to fund a life insurance policy that's
going to get more and more expensive as you age,
solely for the purpose of having something extra to give
to them. They would probably tell you. I would guess
they'd rather you have that extra $5,000 a year, you know,
(12:05):
at the very least, to stick into savings in case
you need it down the road. If not to enjoy
part of it right now, rather than you funding a
life insurance policy for a death benefit that they really
don't need and aren't counting on. Does that make sense?
S4 (12:19):
Yeah, it makes absolute sense. The only reason I was
keeping it was so that they could maybe use that money,
splitting it up to pay off the farm mortgage, you know? Um, yeah,
but I since have talked, heard you talk about, um,
reverse mortgages. But I like what you're saying about the
life insurance policy, and I probably will just stop it. So.
S1 (12:40):
Okay. Yeah. I mean, so that's another piece. If for
some reason there's a family farm that has a policy
on it that they want to be able to keep,
one way they could fund that would be perhaps they
get a life insurance policy that they pay on your
life that would then pay off that loan for the
purpose of them being able to keep it in the family.
The other option would be if they decide they want
(13:02):
it and oftentimes heirs don't. They could then go out
and get their own mortgage to keep it. Maybe they
divide it between the siblings and, you know, continue to
keep the farm. But I would let them sort that out.
It sounds like you could probably use that. You know,
money recaptured 400 a month into your budget. Let's talk
about the reverse mortgage. So you have two properties, one
(13:24):
that you live on and one that's purely for investment
or farming. Is that right?
S4 (13:29):
We lived on a farm until my husband started teaching
in town, where I am now in Jamestown. Um, and
then we got this little studio house, and that's where
I am now, because I had told him I can't.
Live on the farm by myself. It's just too emotionally hard.
S1 (13:43):
Okay, so the the reverse mortgage would only be available
for your primary residence, so that would be the place
that you're living right now. Um, what? How much is
that worth? That property.
S4 (13:55):
That, uh, it's worth about 120,000.
S1 (14:01):
Okay. Worth about 120,000. And what do you owe on
it today?
S4 (14:05):
And the mortgage is 62,000.
S1 (14:07):
Okay. 62,000. All right, let's do this. I've got to
take a quick break. When we come back, we'll pick
that up and talk about whether or not you should
consider a reverse mortgage. You're right there on the line.
You need to have about 50% equity. Uh, and you
are pretty close. We'll be right back. Thanks for joining
(14:31):
us today on Faith and Finance Live. I'm Rob West
here on Moody Radio. We've got some lines open today
taking your calls and questions you can call right now
with anything financial 800 525 7000. Again that's 800 525 7000.
We're our team is standing by. Let's go back to Jamestown.
We were talking with Carol before the break about term
(14:52):
life insurance. She asked a follow up question with respect
to a reverse mortgage. She and her husband live on
a piece of property worth about 120,000. They owe about
62,000 on the property. She's 81 years old, and she
was asking about a reverse mortgage. And for your primary residence, Carol,
that would likely be an option. You would need to
(15:15):
go through the process to know for sure, but it
would likely be an option you typically want. And this
isn't a hard and fast rule, but you generally need
about 50% equity in the property in order for this
to to be an option. Sounds like you have that. Um,
and so what would typically happen is that the mortgage
would be paid off with the reverse mortgage. Um, except
(15:37):
that now you would no longer have a payment. And
so that would be the first thing is that even
if you didn't get a monthly income stream, you know,
for folks in this season of life that, you know,
just are short on income because they haven't saved enough
or whatever it might be. Um, you know, still carrying
a mortgage can be and is often your largest expense
(15:58):
in retirement. So even if you didn't get any income
or have a line of credit, just paying off that
forward mortgage that carries a payment every month with a
reverse mortgage that doesn't require a payment any longer, you
can pay it, but that's not required. Um, would often
alleviate that largest expense and perhaps be a game changer
(16:18):
in your budget. Uh, that would give you more freedom
and flexibility to cover your lifestyle, spending and whatever the
Lord has called you to. Uh, what's the downside? Well,
the downside would be there are fees. So right up front,
you'd have a 2% fee to the FHA. That's key,
because that ensures that you could never owe more than
the home is worth. So you're you're not essentially guaranteeing
(16:42):
it personally. It's, you know, the type of loan that
doesn't require a personal guarantee. So the home is the
only collateral versus any other kind of conventional mortgage where
you are guaranteeing it personally in any shortfall you'd have
to come up with. Secondly, though, the other downside would
be if you have a low interest rate mortgage, the
(17:03):
amount that's refinanced would go up consistent to the prevailing rates,
and it would remain variable. So with rates around 7%
right now, that rate would jump up from whatever you
have now to the 7%. And because the payment is
no longer required, that existing mortgage balance would just grow
over time with the interest and fees, again, you'd never
(17:25):
owe more than the house is worth. But if you
sold it, or when you and your husband pass away
the proceeds of the home sale would go to pay
off whatever that reverse mortgage balance is, and then the
remaining remaining amount would then be paid out to your heirs.
You still own the home, but the loan would have
to be satisfied by your estate before you know the
(17:46):
proceeds are then paid out. Um, does that make sense though?
S4 (17:50):
It makes a lot of sense. Um, the interest on
my husband is no longer living, by the way.
S1 (17:55):
Oh. My apologies. Okay.
S4 (17:56):
No, that's all right. I, uh, but the interest on
the present mortgage is two, uh, 2.5%.
S1 (18:06):
Yeah. Yeah.
S4 (18:07):
So that's really good, right?
S1 (18:09):
It's phenomenal. Yeah. So. So you would be giving that
up and the the rate would adjust up to something
close to what they are now. So that's a negative
in the sense that, you know, that's going to cause that, uh,
that balance to grow faster over time. But again, if,
if no one's counting on, you know, you leaving a
(18:29):
significant inheritance there, not necessarily looking to hang on to
that house that you're passing. Um, you know, it could
be the difference between you living out the rest of
your life in that home and having a little bit
more cushion, because now you no longer have a mortgage
payment such that you're willing to pay a little bit
higher interest, even though you're not paying it. It just
(18:50):
reduces the amount that would be available in your estate
at your death. And that's where a lot of people
who choose a reverse mortgage end up, because they say, well,
if I could just get to where I'd pay it
off completely and own the home outright, that'd be great.
But if this is my largest asset and I don't have,
you know, I've got enough to live on, but I
don't have any wiggle room. And if I could get
(19:12):
rid of this mortgage payment by paying it off through
reverse and no longer having it, you know, I'm okay
with that because, again, my kids aren't counting on this
money from me.
S4 (19:23):
Mhm. Very good. A lot to consider there. Yeah. Yeah.
It's going to mature in July 1st. So do I
just go to the bank now and say, put the
situation out there? You know, because that interest is so good.
I'm afraid that it's going to go up when they,
you know, if I have to refinance in in July
or renew it or whatever you call that.
S1 (19:41):
Okay. So is this like A51 arm or something where
it was fixed for 5 or 7 years and then
it starts to adjust?
S4 (19:48):
Right. My husband did it in 2020 and I see
okay with that. Yeah I.
S1 (19:53):
See. Yeah. So that's one of the reasons you have
such a low rate. But that's going to go away.
So again another reason because when you refinance this, which
is what you're going to need to do, you're probably
going to be jumping up to this higher rate anyway.
And if you go with the reverse now the payment
is optional. If you want to pay it you can
and reduce the balance, but you don't have to. And
(20:14):
that could be a game changer. So perhaps, you know,
take some time and think and pray through that. I'm
not saying this is, you know, it's right for everyone
or it's a one size fits all, but it is
an option that is often not considered and with this
being nonrecourse debt, meaning they can never come after you,
you can live in the home for the rest of
your life, and any equity that remains after the the
(20:36):
mortgage is paid off by by way of the sale
of your home after your death or when you move,
you know it can be a great option for some folks. Uh,
our friends at Movement Mortgage could run an illustration for
you and just help you understand exactly what that would
look like for you. Just go to movement.com.
S4 (20:53):
I did do that and I couldn't find any information,
so I'll have to try it again. I guess.
S1 (20:59):
Movement.com um, put in your information and they'll reach out
to you. But, Carol, thanks for your call today. May
the Lord bless you. And if if I can assist
you in any way along the way, uh, don't hesitate
to reach out. We appreciate you being on the program. Well, folks, uh,
we're up against our next break, but, uh, Amy has
been waiting patiently there in Missouri and Yvette in South Carolina,
(21:19):
so we'll come back and tackle those questions next. We
do have room for you. We've still got half the
program remaining. So if you have a financial question today,
we'd love to have you on the broadcast. The number 800, 525, 7000,
helping you see God as your ultimate treasure and integrating
faith and finance for the glory of God. I'm Rob West.
This is faith and finance. Live and we'll be right back.
(21:41):
Stick around. Thanks for joining us today on Faith and
Finance Live, helping you see God as your ultimate treasure
(22:03):
and manage money for God's glory. We've got lines open
today 800 525 7000. Let's go right back to the phones.
Amy has been waiting patiently in Missouri. Amy, how can
I help?
S5 (22:14):
Hi. Um, I just had kind of a challenging situation
I wanted to talk to you about. So my husband
and I got married in our 40s. I had raised
my children and they were out of the house and
on their own by that point. He had never been married,
never had children, and he and his father have a
(22:35):
business together. And then he also has a normal, regular
full time job. I have a full time job. And
after we married, he moved into my home, which I
had owned for close to a decade. And in seven
years there has been no joining of the finances. He
will not discuss it with me, period. I know nothing
(22:58):
about his finances, and I still pay all of the
bills that I did before we were married. It's been,
you know, definitely all over the map emotionally. But I keep,
you know, clinging to the fact that I want to
honor God and I want to honor the marriage covenant. Yeah.
(23:19):
And I don't understand. I don't know what to do
with it. I don't know how else to approach it.
He is just simply shut me out and is not
willing to build a life together at all in that area.
S1 (23:31):
Yeah, yeah. Well, I'm so sorry. This is very difficult
and I appreciate your transparency on that. I know this
is painful. Um, so when you've engaged him in conversation
around this in the past, what what does he say
about his unwillingness to go there?
S5 (23:50):
The first time I, I told him to sit down,
we had to talk. We'd been married about 6 or
7 months and finances had never been discussed. And, um,
the reaction I got was we we weren't kids when
we got married. I had my own, you know, bills
and you had your bills, and that's pretty much it.
S1 (24:13):
Yeah.
S5 (24:13):
The remainder of the conversation, he, you know, just would
kind of look off into space as I was talking and,
you know, but not even willing to do something as
simple as join our cell phone bills when it was
going to save us both money every month.
S6 (24:27):
Yeah, yeah.
S1 (24:29):
Yeah. And obviously, if you've brought it up again, you're
met with a similar type response.
S5 (24:36):
Yes. And in the beginning I understand that. But seven
plus years in. Yeah there's zero effort to build anything together. Yeah.
And it's just I, it just leaves me beside myself.
S1 (24:51):
Yeah, I certainly understand that. Well, when we go back
to Scripture, I mean, we understand there's not a specific
passage that speaks directly to modern banking, but we can
look to God's wisdom around his design for marriage, which
is all about unity and oneness. And we can extend
that into stewardship. I mean, I would start at Mark ten. Therefore,
(25:13):
a man shall leave his father and mother and hold
fast to his wife, and the two shall become one flesh.
And I think that oneness extends to all facets of
our lives, and that includes our bank accounts. And therefore
I think it's wise for couples to combine finances rather
than keep them separate, because when we we keep them separate,
it it fosters mistrust and it doesn't strive toward unity.
(25:36):
And it's it's often difficult to then have, uh, you know,
shared goals where we understand, you know, when we join
our finances and we say everything that God has entrusted
to us as one flesh, regardless of who earns what
money it all belongs to, the Lord doesn't belong to
you or him. It belongs to God. And he's now stewarded.
(25:57):
He's asked you to steward these resources. And that was individually.
But once you joined together in marriage, he's asked you
to steward his resources as one flesh. And so I think,
clearly according to God's Word, that's the approach we should take. Now,
does it get slightly more complicated when we're marrying later
in life, especially when you've had kids prior to the marriage?
(26:17):
Absolutely it can. But I think that at that point,
with clear and honest and open communication and a lot
of trust at the core, you might say, well, because
I had a child prior to marriage, you know, whatever
assets got entrusted to me prior to that point, you know,
we're going to go ahead and carve out and deal
with it separately. And again, that would be done, you know,
(26:40):
with a very place, a very open and honest communication
with trust at the core. But at the very least,
from that point forward, I would say whatever got entrusts
to you, you all need to have jointly shared goals
and you need to approach it together. And the extent
to which one of you is unwilling, I just feel
like is is outside of the the biblical model and
(27:02):
understanding of marriage and how it should be approached. So
what do you do with that if he's unwilling to
go there? And I think it just becomes problematic. Number one,
I think number two, we have to understand money issues
are hard issues, so the money and how it's handled
is really symptomatic of of deeper issues that need to
(27:22):
be addressed regarding trust and other issues. The money is
really just symptomatic. And so at the end of the day,
you may need to, you know, approach him about saying, hey,
I really think we need to bring somebody else into
this conversation. If we can't move forward together and find
a place to work together on it. But prior to that,
(27:43):
where would you go with it? I mean, I think
we could look to some principles and also some passages
in Scripture about this. I think number one is to
model wisdom and respect. So first Peter three one likewise, wives,
be subject to your own husbands, so that even if
some do not obey the word, they may be won
without a word by the conduct of their wives. That's
not about silence or passivity. I think that's about letting
(28:06):
your character and your consistent faith be a light and
your respectful Full persistence in Christ like love. The idea
would be that it might influence his heart over time
more than pressure could. I think second would be to
seek peace without compromising stewardship. So Romans 12, if possible,
so far as it depends on you, live peaceably with all.
(28:27):
So you're not responsible for changing your husband's heart. That's
the Holy Spirit's work. But I think you are responsible
for doing what you can, modeling peace and inviting him
in and not provoking him, and faithfully managing what you
can control. Uh, you know, like your portion of of
God's resources. And then I think, thirdly, ask for wisdom
and wait on God. You know, James one five is
(28:50):
very clear. If we lack wisdom, we need to ask
God and it will be given him. And so I
would say, pray for your husband to open up to you,
but also for wisdom on how and when to talk
to him. The timing and the tone I think matter.
And sometimes I think the most powerful move is prayer
followed by patient action. So I would really make this
a matter of prayer. Try a non-confrontational approach. You know,
(29:14):
instead of, hey, we need to talk about money. It's
can I share something that I've been working on financially,
or can I share something with you that really is
important to me, that I'd like to try to make,
you know, progress on. Celebrate small wins. You know, if
he responds to something, anything, acknowledge it and show appreciation.
I think that builds trust. And then I think perhaps,
(29:37):
you know, inviting a to the extent he's willing, a
neutral third party, a pastor or a Christian counselor or
a financial coach into the equation. Uh, and then at
the end of the day, I think you can still
be faithful in, in being a wise steward of what
God has entrusted to you, because, again, you can only
do what you can do. But I don't think you
should just say, this is important to me, but I'm
(29:59):
just going to let it go. I think you need
to lean into it and let's trust God that that
he's going to intervene. Does that make sense, though? I
know that's a lot.
S5 (30:08):
Yes, it absolutely makes sense. And I feel as though
that's been the path of the past, you know? Well,
basically over seven years. Um, at this point, I just
feel abandoned. Yeah. I just feel as though the conversation
has been had enough times and there's been zero change.
S1 (30:29):
Yeah.
S5 (30:29):
That, um, you know, it's not abandoned when someone never
shows up initially.
S1 (30:36):
Yeah, I think that's right. And I think, again, this
goes back to money issues or hard issues. And this
is just symptomatic. Let's finish up off the air. I'd
like to talk just a bit more. We'll be right back.
Thanks for joining us today on Faith and Finance Live.
I'm Rob West. I had a chance to visit with
(30:57):
Amy a bit more off the air, and we're going
to send her a copy of Howard Dayton's book, Money
and Marriage God's Way. We've also offered to cover the
cost of a Christian financial counselor to walk alongside she
and her husband. We realize that we don't know whether
he'd be willing to to take advantage of either of those,
you know, walk with her through that book, uh, to
explore God's heart around money and marriage, uh, or to
(31:20):
allow a counselor to come in as a third party
into the equation. But I would just ask you, as
the faith and finance family, to be praying that God
would soften his heart and hear her out and be
willing to engage, perhaps in a way he never has before,
and that perhaps either through the book that Howard Dayton
wrote years ago, that's just a classic, or through one
of our certified Christian financial counselors that really are trained
(31:43):
and their heart, their ministry, is just to serve God's
people in this area that through one of those, he'd
be willing to invite that in, and perhaps that the
Holy Spirit would do a work in his life. So
let's pray for Amy in that regard. All right. We're
going to head to Georgia next. Uh, Susan, go right ahead.
S7 (31:59):
Hi, Rob. Thank you for taking my call.
S1 (32:01):
Yes, sure.
S7 (32:03):
Um, so I have several questions pertaining to withdrawal of.
I'm thinking about leaving a job, and I want to
take probably half of my 401 K and all of
my stock money that's in this company, and use it
to pay off my mortgage. Um, my questions are so
I know that I'm paying right off the top 10%
penalty because I am not 59.5. Um, and then after
(32:28):
that 10% do I pay the tax? They were telling
me 20% tax comes off. The top of that also,
is that 20% taken after the 10% is removed or
off of the whole entire amount? That's my first question.
S1 (32:44):
Okay. Yeah. So it's the whole amount of the withdrawal
would be subject to a 10% penalty unless what is
your age 56. Okay. So and you're separating from your employer.
Is that right?
S7 (32:59):
Thinking about it, if I can financially afford to do it. Away.
S1 (33:02):
Okay, so there is the rule of 55 that would
come into play here, which is an IRS provision that
allows you to withdraw from your employer sponsored retirement plan
without the usual 10% early withdrawal penalty. As long as
you're at least 55 in the year, you you leave
your job and it only applies to the employer's plan
(33:27):
you leave. So if this is the 401 K or
the 403 B from the employer that you're leaving, then
you would should be able to avoid that 10% penalty,
but 100% of the withdrawal would be taxable. So it
would be added to your taxable income for that year.
S7 (33:46):
Okay. And so that being said, um, my husband's only
income is Social Security. And thus far it has not
been taxed because of our tax bracket. Um, my wages
are not really high. And so we have not had
to pay taxes on that Social Security. So considering we
file jointly, including his Social Security money, this withdrawal from
(34:10):
my employer and my wages, would they then tax his
Social Security?
S1 (34:15):
They could. Yeah. Because the 401 K withdrawal would increase
your income for the purposes of determining taxes on Social Security,
so that the IRS uses a formula called combined income,
or sometimes it's called provisional income. And basically it's your
adjusted gross income, which includes and it's plus a few
(34:37):
other things. But your AGI, even without those other things,
includes withdrawals from a pre-tax retirement account. So that would
be added in where it hadn't been before, on top
of any other income, on top of Nontaxable interest and
on top of half of your husband's Social Security benefits.
And then if the combination of all of that, as
(35:01):
a married filing jointly exceeds $32,000, then half is going
to be taxable. If it exceeds 44,000, up to 85%
would be taxable. So yes, it would affect it would
affect whether or not that Social Security income, which previously
have not been taxed because it sounds like you're under
the threshold, would now possibly be taxed up to 85%
(35:26):
of it. But the other issue that we haven't talked
about yet, maybe you're getting to this, is just whether
this makes sense. And I think, you know, I'm never
a fan of well, I shouldn't say never. Often I
will say I'd rather, if you can afford it, just
to continue to pay out the mortgage by keeping your
lifestyle low and, you know, just focus on any extra
(35:48):
income you have or opportunities to pay down the mortgage.
Do it that way. Rather than taking this big chunk
out of your 401 K for for three reasons. One is, um,
you know, that money's no longer there, growing on a
tax deferred basis for you to use to supplement income
later such that even if you don't need it now,
you might later for long term care or something like that.
(36:09):
Number two, it adds this kind of big taxable event,
because even if you spread it over two tax years,
you still have this big jump in income. And to
your point, it may require you're now paying Social Security
tax on Social Security, which you haven't previously. And then
third is just, you know, given what's going on right
now in the markets, I mean, we've had this major
(36:31):
kind of I'll call it a collapse of the stock market, just,
you know, and it could be short lived. And I,
I'm not saying I think we're entering a depression and
the market's never going to recover. But I'd be, you know,
not very excited about you, you know, liquidating your 401
K with the market down 20%.
S7 (36:49):
Okay. So um, also then with the tax thing, um,
we're going to combine his Social security, my wages, and
what I actually receive after paying the if I pay
the penalty and the tax that comes out automatically, or
am I including the whole entire amount before tax plus
(37:10):
wages plus Social security at tax?
S1 (37:12):
Yeah, it would be the total amount of the withdrawal
would be added to your taxable income. And then and
then your they would calculate the federal and state income
tax that would be due on that amount. And in
addition to that, that number would go toward your combined
income that determines what portion of your husband's Social Security
is now taxable, if any.
S7 (37:34):
Okay. So then the thing I've been told about the 20%
coming right off the top of that. Does that happen
at tax time or does it happen when they pay
out the.
S1 (37:44):
Well, it's up to your plan administrator because that's not
a requirement. I mean that that would be up to
each plan. If they withheld it, they would do it
at the time of the distribution. And then they just
send it into the IRS. Ultimately, it's not that you
owe 20%, it's that they're going to withhold an estimate
of 20%. And then you may owe more, or you
(38:04):
may get some of that back, depending on, you know,
your actual return.
S7 (38:09):
Okay. Okay.
S1 (38:10):
Yeah. Is that helpful?
S7 (38:12):
If that is helpful. Thank you Rob I appreciate it.
S1 (38:14):
Okay. Absolutely. Thanks for your call. Susan to Virginia. Hi, Debbie.
Go ahead.
S8 (38:19):
Hi, Rob. I'm so excited for the opportunity to talk
to you. Great. My my husband and I have recently retired,
and we're trying to make some informed financial decisions on
little pockets of saving money here and there. And as
I pay bills, I've been noticing that many companies now
give you discounts if you set up auto payment for
(38:40):
your bill. Yeah. And they usually offer you the opportunity
to either use your bank account or credit card. Right.
So I'm trying to figure out which is the best
option with with using a bank account I'm a little
concerned with all these different companies having, you know, your
bank routing number and your checking account number. Yeah. Um,
(39:00):
and if I consider using a credit card, I'm wondering, um,
is it best to have a credit card, like, use
the credit card you already have, which if you do that,
you're increasing. You know, the the percentage of your usage
on your credit card. And and what kind of hit
that would have, um, versus getting a whole nother like
(39:22):
a rewards type of credit card where you're getting cash
back rewards for paying. Do you have any thoughts on this?
S1 (39:27):
I do, yeah. You won't be surprised I have thoughts. Uh, okay.
So a couple of things going on here. Number one is. Yeah,
I like the idea of you setting up the auto
payment and getting a discount. I like that you're thinking through,
do I use bank account or credit card? Because that's
a that's a good consideration. I actually, so long as
you take the debt risk off the table that you're
(39:48):
going to spend money on non-budgeted expenses that you can't afford,
and now you're paying interest on it. I mean, if
that was a possibility, I'd say forget it. But assuming
you're just. No, no, Rob, this is budgeted items. We're
going to pay it in full every month and that's
off the table. Then, you know, it is nice to
be able to pay this with a credit card, because
if you have a credit card that has rewards with
(40:10):
cash back. So, you know, like a for instance, the
Wells Fargo card is paying 2% on everything across the
board right now, and there may be others that are
even better. Um, to be able to get that 2% back,
no fees. Um, it gives you some extra fraud protection
because credit cards offer stronger protections against fraudulent charges than
(40:31):
debit cards tied to checking accounts, or even checking accounts
with your ACH routing number. Because, you know, remember what
happens if somebody compromises your debit card or your checking
account is it can take longer to resolve and the
funds are already gone, leaving you temporarily without the money.
Whereas with the credit card, so long as you identify
(40:52):
it and on a timely basis dispute it, you don't
have any any risk there. You have no liability. I mean,
by law, it's no more than $50. And most cards
it's $0 as long as you report it. So for
that reason, assuming you're going to pay it, only budget
items pay it off in full. There's no monthly or
annual fee and you're going to get some rewards. Then
(41:12):
I would say with the added protections, I actually prefer
the credit card for that purpose.
S8 (41:18):
Okay. Now, if we do already have a credit card
that has cash back rewards and we have a high
limit on that, but if we use that same credit card,
then we're using a higher percent. I can't think of
what that term is.
S1 (41:32):
Yeah, it's the credit utilization. So number one, unless you're
going to be out looking for a loan anytime soon,
it doesn't really matter in your season of life. But
but even if you are concerned about that, I would
just say as long as you're not going above 30%
of that limit, then it's really a non-issue. So if
it's a $10,000 limit, as long as you're under, you know,
$3,000 on a monthly basis, then it's a it's a non-issue.
(41:55):
And then I think, secondly, would just be the idea
that if you wanted to, as long as you paid
it off. Because remember, we're using it for budget items.
So you got the money in checking as long as
you paid it off, not by the due date, but
by the day before the closing date of the cycle.
Then they're going to report a zero balance to the
(42:17):
credit bureau. Um, because they're going to look at the
balance as of the date of the end of the cycle.
And if you paid it off the day before, it's zero.
And so you don't even have to worry. Does that
make sense?
S8 (42:27):
Wonderful. Yes it does. Thank you so much.
S1 (42:30):
All right. I appreciate your call. Lord bless you. Thanks
for being on the program today. Hey, big thanks to
my team today. Boy, I couldn't do this without them. Tara, Taylor, Dan, Gabby,
T and Devin. We'll see you next time. Bye bye.
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