November 14, 2025 • 42 mins
Time: it’s one of the most valuable things we have—and one of the easiest to waste. You’ve often heard that “time is money.” The truth is, time is worth far more than dollars and cents—it’s the most limited resource God has given us. On the next Faith & Finance Live, Rob West explores how to use it wisely and invest it for eternity. Then, it’s on to your calls. That’s Faith and Finance Live—biblical wisdom for your financial journey. That’s weekdays at 4pm Eastern/3pm Central on Moody Radio.
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Episode Transcript
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S1 (00:08):
It's one of the most valuable things we have and
one of the easiest to waste. Hi, I'm Rob West.
You've heard it a thousand times. Time is money. But
if that's true, why do we spend it so carelessly?
The truth is, time is worth far more than dollars
and cents. It's the most limited resource God's given us.
Today we'll explore how to use it wisely and invest
(00:30):
it for eternity. And then we'll take your phone calls
at 800 525 7000. This is faith and finance. Live.
Biblical wisdom for your financial journey. If you've ever said,
I just need a little more time, you're not alone.
Many people feel the pressure of time slipping through their fingers. Yet, ironically,
(00:52):
we often spend our days chasing money, status, or productivity
only to run out of the very thing we were
trying to buy back. We treat time like a renewable resource,
when in reality it's more like a savings account being
slowly drawn down. Every hour you live is one you'll
never get back. Yet our culture tells us to equate
(01:13):
our worth with how much we earn. But Scripture invites
us to see time differently. Psalm 90 verse 12 says,
teach us to number our days, that we may gain
a heart of wisdom. Moses isn't talking about counting hours
on a clock. He's talking about recognizing that our time
on Earth is limited and therefore immensely valuable. From a
(01:34):
biblical perspective, time isn't ours to manage as we wish.
It's God's gift to be stewarded wisely. Just as money, talents,
and resources belong to him, so does time. In Ephesians
515 and 16, Paul writes, look carefully, then, how you
walk not as unwise but as wise, making the best
use of the time, because the days are evil. In
(01:57):
the original Greek, that phrase, making the best use of
the time literally means redeeming the time to buy it
back and use it for God's purposes. Some translations use
the word redeem here, and that's no accident. It's the
same Greek word Paul uses elsewhere to describe what Jesus
did for us. Christ redeemed us from sin and emptiness,
(02:19):
giving us life with eternal purpose. In the same way,
we're called to buy back our time, to invest every moment,
every conversation, and every decision in what will last forever.
But here's the catch if we don't decide what our
time is worth, someone else will. Your employer, your phone,
your to do list, even social media all have plans
(02:41):
for your time. If you don't set boundaries, your schedule
will fill up with things that seem urgent but aren't
truly important. Jesus, however, modeled a completely different rhythm. Even
with the most important mission in history, he frequently withdrew
to pray. He took time to rest, to eat with friends,
and to be fully present with people. Jesus lived in
(03:04):
such a way that he had the margin to be interrupted,
to stop and heal the sick, to listen to those
in pain, or to teach when someone had questions. He
never rushed, yet always accomplished exactly what the father intended.
So how do we live as if our time actually
belongs to God? First, reevaluate your priorities. Every decision is
(03:27):
a trade. When you say yes to one thing, you
say no to something else. Ask what matters most in
God's eyes. And am I giving that my best time?
Second measure time by meaning, not money. Our culture calculates
value in dollars per hour, but God's economy works differently.
A quiet afternoon encouraging a struggling friend might not pay
(03:48):
in dollars, but it honors God and advances his kingdom
in ways money never could. Jesus said, seek first the
kingdom of God and his righteousness, and all these things
will be added to you. Third, build margin into your life,
just as financial margin creates space to respond to needs.
Time margin allows you to live generously. When you're not overscheduled,
(04:10):
you can pause to listen, serve, or rest. Sabbath isn't
wasted time. It's holy time that reminds us God is
in control, not us. And finally, steward small moments. The
worth of your time isn't only found in the big events,
it's also in the five minutes you spend praying for someone,
or the ten minutes you use to read scripture before
(04:32):
your day begins. Colossians 317 reminds us, whatever you do
in word or deed, do everything in the name of
the Lord Jesus. When you begin to see your time
through that eternal lens, even the smallest moments take on
lasting significance. You stop chasing the clock and start cherishing
(04:52):
what truly matters. As missionary C.T. Studd put it, only
one life will soon be past. Only what's done for
Christ will last. So what's your time really worth? It's
worth exactly what you do with it for eternity. Don't
just count your hours. Make your hours count. Live intentionally.
Rest purposefully, serve generously, and let every day remind you
(05:15):
of the one who holds all time in his hands.
All right. Your calls are next. Stick around. We'll be
right back.
S2 (05:34):
The opinions offered during this program represent the personal or
professional opinions of the participants, given for informational purposes only.
Any information provided is not intended to replace advice from
a financial, medical, legal, or other professional who understands your
specific situation.
S1 (05:58):
Well, I'm thankful to have you with us today on
Faith and Finance Live. We started by talking about time.
Now let's talk about how we can help you manage
God's money. That number to call is 800 525 7800
525 7000. Well, guess what? It's, uh, it's that time
of year. No, I'm. I'm not talking about peppermint mochas.
(06:19):
I'm talking about Operation Christmas Child. That's right. Uh, through
the 17th. So just a few more days. It's your
chance to share the love and hope of Jesus with
a child around the world. You can pack a shoebox
like my family does each year, put school supplies in it,
a toy, and most importantly, your prayers. Head to Moody Radio.com.
(06:40):
Click on Operation Christmas Child. There's a banner there. It
has all the instructions and details. And, uh, what a
practical way to live out generosity and point to children
around the world to the gospel of Jesus. I know
they're planning on reaching well over a million children this year,
but they can't do it without you. So if you
(07:01):
would head to Moody Radio org click Operation Christmas Child,
the banner right there on Moody radio.org. Get the details
and then don't miss this window. We've got to get
the boxes packed and dropped off at a, uh, a
drop off location near you so they have time to
get them to a child somewhere around the world, uh,
(07:21):
before Christmas. You can help. And you can be confident
that the love of Jesus, the gospel, is going to
go out as a part of that shoebox. What a
great opportunity, especially for the whole family. Moody radio. All right.
We're going to dive into your questions here in just
a second. So if you've got a question we do
have lines open that probably won't last long. So go
(07:42):
ahead and call right now. Our team is ready for
you 800 525 7000. That's 800 525 25 7000. Let's
go to Wisconsin. Jane, you'll be our first caller. Go ahead.
S3 (07:54):
My son recently graduated from college, and he's now paying
high interest in a large amount of student loans. So
I'd like to know if you have any options or
strategies for him to reduce his long term repayment burden.
S1 (08:10):
Hmm. Yeah, I certainly appreciate that question. Are these federal
student loans?
S3 (08:16):
Some of them are, but that's not the majority of them.
S1 (08:19):
Okay. The majority of them are private.
S3 (08:22):
Yes.
S1 (08:23):
Okay. Yeah. Well, uh, you know, I mean, the first
option is to look for, you know, better repayment plans.
He can log into Studentaid.gov and just look at his options. Uh,
I mean, obviously, even though there's income driven repayment available
where he could lower that monthly payment, um, based on
(08:43):
his income, which is a nice feature in the federal
loan program. He's going to want to pay as much
as he can to try to get it paid back
as quickly as possible. Um, I would say consider refinancing
only if it's wise. So, you know, if if some
of the loans are private and they are, uh, you know,
he can look at refinancing at a lower rate with
(09:05):
a reputable lender. That's probably not going to happen right now. Um,
but at some point in the future, that will likely
be an option for him. And he's going to want
to look at that. Now, I wouldn't, uh, refinance the
federal loans into private loans because he might need some
of those federal protections, like the income driven repayment or
the deferment or future forgiveness down the road. Um, but
(09:29):
certainly private loans that are already private can be refinanced. Uh,
you know, if he can get a better interest rate and,
and perhaps over time, as interest rates come down, plus
his income, I suspect, you know, will go up. And
as he can demonstrate that along with good credit, he's
going to have some more attractive rates available, but that's
down the road in terms of just thinking about how to,
(09:51):
you know, make the payments as and pay them down
as quickly as possible. Uh, you know, once payments are manageable, then,
you know, he's going to want to attack the highest
interest loan first with extra payments. So this is what
we call debt snowball, where basically you line them up
from smallest to largest balance, pay the minimums on all loans,
(10:12):
and then attack the smallest balance first to build momentum. Uh,
the other approach is to use what's called the avalanche method,
where you, you go from highest to lowest interest rate.
But a lot of times, that momentum you can build
by knocking out one in full and really focusing all
of your energy on on that smallest balance and seeing
(10:32):
that progress is what can keep you going. Um, I
would say, you know, two other things just to throw out.
One would be look for employer help. Uh, you know,
you're going to want to look for employers that offer
student loan repayment assistance. Many of them do. And so
that would be a nice feature if that happens to fit.
(10:54):
You know, while he's out looking for a job, um,
you know, some allow pre-tax contributions toward loans through benefit programs,
which would be great. So just make sure he asks
HR if he's out looking for a job, if they
have any student loan repayment benefits, even a small amount,
you know, could help him. And then finally, I would say,
you know, Jane, he just really needs to guard his lifestyle.
(11:16):
You know, the biggest danger after college is lifestyle creep,
a new car and maybe a, you know, a nicer
apartment or, you know, subscription, everything. I mean, he's, you know,
you can if you're not careful, you can have subscriptions for,
you know, 15 different streaming services and apps and so forth. Well,
those add up. And so if he can live like
a student for a few more years, keep expenses low
(11:39):
and throw the margin at those loans, he might be
able to get them paid off in 5 to 7
years instead of dragging it out for decades, which a
lot of people do. So is that helpful, though?
S3 (11:50):
Yes it is. Thank you.
S1 (11:52):
Okay. You're well. You're very welcome. Thanks for being on
the program today. We appreciate you. 800 525 7000. Let's
go to Fox Lake, Illinois. Anna. Go ahead.
S4 (12:01):
Okay. Thank you. Um, I would like to know which
and how to invest, um, 50 k equity from my
home sale and how to avoid long term capital gains tax.
S1 (12:11):
Okay. Yeah, let's deal with that second part first. So
you had a home sale. Was it your primary residence?
S4 (12:19):
Yes.
S1 (12:20):
Okay. Yeah. So if it was your primary residence for
two of the last five years prior to the sale,
then you can exclude up to $250,000 in gains, not
the selling price, but the gains. If you're married, filing jointly,
you could go all the way up to a half
$1 million in gains. Um, but, you know, if you
(12:41):
have 50,000 essentially that we're talking about here, as long
as that was your primary residence for two out of
the last five years, there is no capital gains on
on $50,000 because that would be under the 250,000 threshold.
S4 (12:55):
Got it.
S1 (12:56):
Okay. Now in terms of what to do with it, um,
you know, I think the best possible option is to
get it into a retirement account. So if you have
access to a 401 K or a 403 B, or,
you know, a tsp, you could contribute, uh, pre-tax dollars
if 401 K and 403 b and TSP has to
(13:18):
come out of salary deferral. Otherwise you could drop it
into an IRA. Um, so that would be, you know,
where I would love to see you get that money because,
you know, that's going to allow it to grow without
the drag of the the taxes on the investment gains. Um,
and I'm assuming, you know, you you don't need this
(13:38):
money anytime soon. Is that right?
S4 (13:41):
Correct.
S1 (13:42):
Okay. Yeah. And you do have an emergency fund separate
from this money?
S4 (13:46):
Yes.
S1 (13:47):
Okay. So I would say that's your your best option.
Let's see what we can do to get that in
a in a tax deferred environment, either by increasing your
contributions or maxing out your contributions to your retirement plan
at work if you have it, even if that means
you have to pull out of savings and, you know,
to cover your bills, you're kind of swapping one account
(14:10):
for the other. Or you could fund an IRA. Those
would be the two best options. Let me do this though.
I've got to hit a break here, but I want
to make sure you don't have any follow up questions,
so we'll tackle that off the air. So stay right there.
This is faith and finance live. We'll be right back. Hey,
(14:34):
thanks for joining us today on Faith and Finance Live.
We do have some lines open today. If you have
a question, call right now. 800 525 7000. Let's go
to Ohio. John, how can I help?
S5 (14:47):
Yes, I have a question. Um, the other day I
was told about a fixed rate, fixed rate annuity that's offering,
as a bonus, 22% on top of your investment right
off the bat. Does that sound like a good thing,
(15:10):
or is it crazy?
S1 (15:13):
Uh, yeah, I mean, it it sounds like a pretty
big red flag. Uh, you know, a 22% bonus, I
think should immediately raise some caution. Um, and in almost
every case, that bonus is not what people think it is. Um,
you know, they don't give you that for free. So, um,
(15:34):
you know, the bonus could be applied to what's called
an income benefit value. It's it's basically used in a formula.
If you later take lifetime income from the annuity, it's
not actual money in your pocket and you pay for
that bonus. Typically annuities with big bonuses usually come with
(15:56):
either long surrender periods or high fees for the income
riders or strict withdrawal limits, or maybe reduced returns. And
usually the bigger the bonus, the more strings attached. So
if anybody's telling you you get 22% right away, or
it's a guaranteed return or you can't lose, I would
(16:17):
say that's misleading at best. And, you know, deceptive at worst. Um, so,
you know, in your situation, I mean, I think what
matters most at age 79 is, you know, liquidity, meaning
you can get to the money if you need it. Simplicity.
We don't want something overly complex. And that's certainly what this,
this bonus annuity would be. And then lastly you'd want
(16:40):
protection of principle, something that's going to protect your money
and give you a reasonable rate of return. So um,
I would say just generally speaking a fixed rate annuity
with a 22% bonus if you understood them correctly is
almost certainly not a good idea for a 79 year
old investor.
S5 (17:00):
Okay. Well, thank you very much.
S1 (17:02):
All right, John.
S5 (17:03):
Kind of taking a load off.
S1 (17:05):
Okay, good. Well, thanks for your call today, sir. God
bless you. Uh, Indiana is where Kelly's located. Go ahead.
S6 (17:11):
Hi. My mother in law, who's still living, deeded my
husband five and a half acres, um, out of a
tract of 13 acres, I think total. So he is
thinking about selling his to his sister. And we were
just wondering what kind of a tax rate would that
be on the selling price? Is there an inheritance tax?
(17:32):
How does that work?
S1 (17:34):
Okay? Yeah. So, uh, when did he receive this and
how did he receive it? So she's living, and then
she just gave it to him as a gift.
S6 (17:44):
Yeah. He's here. I'll let him talk. Yeah.
S1 (17:46):
Okay.
S7 (17:47):
We went through a lawyer as a deed of gift.
S1 (17:50):
Okay, yeah. So it was a gift that she gave
to you. And how long ago was that?
S7 (17:56):
Uh, it was earlier this year.
S1 (17:58):
Okay. Yeah. And then, uh, have you. So your your
sister is looking at buying it at a, at a
market rate that, you know, whatever the, the market rate is.
Or are you looking to give her a discount?
S7 (18:11):
Uh, I was hoping for a market rate, but she
she has a realtor friend who said that what she's
asking is reasonable.
S1 (18:20):
Okay. Yeah. So essentially what happens here is if she
gave you the land while she's living, that's considered a gift.
And her basis, uh, is your basis meaning for capital
gains purposes? Whatever she originally paid for it, her cost
basis passes to you as opposed to, you know, if
(18:44):
you receive it as an inheritance, you get a step
up in basis to the market value as of the
date of death, in this case, with a gift, you
just essentially, you know, you bring her her cost basis
is now your cost basis. Um, and so then, uh,
you know, when you go to sell it, uh, to
your sister, the sale is taxable. Uh, so selling to
(19:06):
a family member doesn't avoid taxes. So you'd then report
the selling price to your sister, your cost basis, which
is your mom's cost basis. And then the difference between
those is a capital gain. Um, and if you sell
it below market value, to be generous, the IRS would
treat the rest. You know the difference as a gift.
(19:27):
And then the capital gain is going to be dependent upon,
you know how long, uh, you owned it? Um, and
your income level and how big the gain is. Um,
so that basically, that's what we're talking about here is
a capital gain.
S8 (19:45):
Yes. Okay. Um, but his mom didn't.
S6 (19:48):
Buy the land it.
S8 (19:49):
Came from.
S6 (19:50):
His great grandfather gave it to his grandfather. His grandfather
gave it to his dad, his dad passed away, and
the mom deeded it to the kids.
S1 (19:59):
Okay. Yeah. Um, so was she an owner on it
with her husband prior to him passing away?
S7 (20:06):
No, it was it was my father's land.
S1 (20:09):
Okay. So she inherited it from her husband.
S7 (20:16):
Uh, yes. I guess you could say that he passed away.
And so everything went to her.
S1 (20:20):
Okay. Um, yeah. You're going to need to, uh, talk
to a CPA, uh, on that one, because the thing
you're going to need to understand is, um, you know,
what is that actual cost basis for your mom? And
because it was marital property, you know, that's where they're
going to have to determine, and there's probably going to
(20:42):
have to be an attorney involved. I wouldn't want to
to weigh in on this specifically around, you know, did
she actually receive it as an inheritance, essentially, and therefore
she enjoyed that step up in cost basis or because
they were married? Is it really marital property? And therefore
because it was it's just been gifted through these generations.
(21:04):
Does she somehow have a cost basis that goes back,
you know, several owners, which could mean that it's very
low and, you know, so you have her cost basis,
whatever that is. We've got to have somebody determine what
that is. That's going to be ultimately what determines, you know,
how much capital gain here. The benefit is not only
(21:26):
do you inherit her cost basis, but you also inherit
her holding period, which means it's most certainly going to
be a long term capital gain, which is favorable. You know,
it's probably going to be there 15 or 20%, but
you're going to have to figure out her cost basis
to determine how much tax is owed on a capital
(21:46):
gains basis. So I'd get with, uh, the attorney that
helped to handle the estate and your CPA. I hope
that helps, Kelly. Thanks you all for your call. Bye bye.
Great to have you with us today on Faith and
finance live. I'm Rob West. Hey, if you love the program,
(22:08):
we'd love for you to consider being a supporter of
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Not only you're going to help us reach more people
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(22:29):
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(22:50):
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(23:10):
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Let's head back to the phones. Brian is in Ohio.
(23:33):
Go ahead. Brian.
S9 (23:34):
Hey. Yeah, thanks for taking my call. Rob.
S1 (23:37):
Of course.
S9 (23:38):
I was just wondering, uh, what's the best way to
calculate how much life insurance do you need?
S1 (23:45):
Yeah. You know, there's a kind of a simple way
to do it. And then there's, uh, you know, a
way that, um, you know, is another way to do
it that, uh, some people use. Let me let me
cover both. Kind of the simplest rule of thumb is,
you know, typically you you need 10 to 12 times
your annual income, and that can get you in the
(24:06):
ballpark pretty quickly. And the idea is you want to
be able to replace that income during your working years. Now, obviously,
as you get closer to retirement and you've already built
some assets, you know, you could see that number decline.
But the idea would be that we have the life
insurance in place during our working years and then we
(24:27):
drop it. It's an unnecessary expense in retirement because we've
already accumulated the assets. There's nobody counting on us for income.
If something were to happen to you and you're married,
you know, by the time you reach retirement, you've got,
you know, survivor's benefits on Social Security, you've got your
retirement accounts you've been building during your working years. Uh,
(24:48):
there's no risk there in terms of you passing away.
And there's really not any loss of income. Now, you
might say, well, wait a minute. I'd never used it.
Wouldn't that money thrown away? No. It's kind of like
your car insurance, you know, you get it to protect
yourself and offset the risk, but you hope you don't
ever have to use it. And the same is true
with term life insurance. You know, you would just get
(25:09):
that during your working years, and that 10 to 12
times your income isn't going to carry you through, you know,
to age 90. But what it's going to do is
allow your dependent, your, in most cases your spouse to
continue to maintain their lifestyle and continue to save for
retirement such that you know it would replicate the the
(25:31):
glide path for wealth creation that you would have had
if you were still living now. The more complex way
is something called dime D. I'm E and it's an acronym.
D stands for debt. So you'd add up your mortgage,
your car loans, your personal loans, credit cards, everything you'd
want paid off if you passed away. I as income replacement,
(25:54):
it's that same 10 to 12 years of income. Um,
m is mortgage. If that's not already counted under debt,
go ahead and pay off the mortgage. And then E
is education. Estimate the cost of college for each child.
You roll all that together, and then you go out
and buy a term life insurance policy that covers it.
Now you might say, well, that's a pretty big number
(26:14):
and it probably is. And again, that's why we like
term insurance because you're just paying for the cost of
the mortality expense. You're not also trying to, you know,
create a savings vehicle at the same time. And if
you're healthy and you're young and you get a good
20 year policy, and then you replace it once or
twice along the way, you know, you'll spend as little
(26:35):
as possible on insurance, but you'll make sure that your
loved ones have everything they need. If God were to
call you home to maintain their lifestyle and continue to
save for the future, does that make sense?
S10 (26:46):
Yeah.
S9 (26:47):
Yeah. Would you recommend. Uh, so I'm 39. Would you
recommend getting a 20 year and then after that, a
ten year to cover?
S1 (26:58):
You certainly could. Yeah. I mean, that's one way to go.
The other is you just go ahead and get while
you're healthy and young a 30 year term, which is
pretty typical. Um, and they, you know, they've got those
that's going to be the cheapest, the cleanest. And that
helps to protect. I mean, you could still replace it
down the road if you wanted to, but if something
changed and you were no longer Medically able to qualify
(27:21):
or it was going to be very expensive. At least
you'd have it there that would carry you all the
way through age 69.
S5 (27:27):
Gotcha.
S10 (27:28):
Yeah.
S1 (27:30):
Okay. And in terms of where to go, I just
use probably one of the I mean, unless you have
a local life insurance agent, uh, you know, there's so
many great tools online now, like policy genius and select quote, um,
you know, and there's one called Quotacy. Um, and they're
going to go out and, you know, directly to the
top rated insurers like Banner Life and Protective and Lincoln
(27:54):
and Mutual of Omaha. And they're going to take your
medical situation and your age, and they're going to compare
it against all those top rated companies and find out
who has the best price.
S9 (28:06):
Okay.
S1 (28:09):
All right.
S9 (28:10):
All right. Thank you very much.
S1 (28:12):
Absolutely, sir. Thanks for your call. Let's go to Florida. Hi, Dolores.
How can I help?
S11 (28:17):
Good afternoon. Thank you so much. I love your ministry. Um,
so I, I have a friend. She's 65 years old.
She opened a policy, I believe she said 2014 for
about $10,000, and she pays about 21, $22 a month. And, um,
the insurance wants to give her $2,000 back. Now, that's
up for renewal. They want to give her $2,000 back
(28:39):
and start a new policy that's almost like double that $42.
And we didn't understand why. So I figured I'd call
you all to see if you all can explain it
to us.
S12 (28:48):
Yeah, I'd be happy to. Uh, so.
S1 (28:51):
Why are they offering her two grand and trying to
raise the premium? Well, they want her to get rid
of her old policy and move her into a more expensive,
less favorable one. Uh, why does this happen? Well, the
old policy is probably unprofitable for the insurer. Or they
want to reset the terms and increase her premium and
(29:12):
reduce their long term risk. So they've run an analysis
and they've determined that, you know, $2,000 as a sales incentive. Uh,
you know, is worth it. Um, what she probably has
now is what's called a whole life burial policy. So
for the $10,000 worth of coverage at 22 a month,
she had a fixed premium, a fixed death benefit. And then,
(29:35):
you know, the certainty that if she keeps paying, her
beneficiary gets ten grand when she passes away. And, you know,
policies like this become more valuable to her as she ages,
which is why the company wants to change it. And
the new policy is almost guaranteed to be worse because,
you know, it's essentially doubling her premium. She gets the
(29:56):
2000 as a return, but it resets the conditions so
the insurer reduces their payout risk. And, you know, it
could involve a new medical review or some sort of
graded death benefit. Um, so I would say at the
end of the day, I would encourage her not to switch.
Tell her to keep the $10,000 policy at 22 a month.
(30:18):
That's likely the best coverage she'll ever get at her
age and price.
S11 (30:23):
Thank you so much. You all have a blessed day.
You're a wonderful.
S1 (30:27):
Thank you. Dolores. God bless you. You sound like a
great friend. We appreciate your call. Well, we're going to
take a break. When we come back, we'll have, uh,
another segment where we'll be able to answer your questions.
We've got some great ones coming up. We may have
room for one more. That number 800 525 7000. Again,
that's 800 525 7000. This is Faith and finance. Live.
(30:49):
I'm Rob West. Stay with us. We'll be right back. Well,
here in our final segment today, we're going to try
to get through as many calls as we can. Try
to talk to a lot of folks here. Some great
questions coming up. Let's head to Georgia. Carly how can
(31:11):
I help.
S13 (31:12):
Hi. I think I have no children and no other family.
I've heard you talk about.
S1 (31:21):
Hey, let's do this. Carly, I want to hear your question,
but we're losing you a little bit, so I'm going
to have you go on hold. My team is going
to work with you, see if we can get that
line cleared up, and then I'll come right back to you.
So stay right there. Let's go to North Carolina. Alofa.
Thank you for calling. Go ahead.
S14 (31:37):
Thank you for this opportunity and the knowledge you're providing
on your platform. Um, my question was, due to my furlough,
I wanted to see if. Would it be your advice
on borrowing from 2025, um, tax purposes on my 401
K and then doing the other half in 2020 6th January?
(32:03):
Would it make a difference? Um, the total amount was 50,000.
So I wanted to ask the question, would it be
smarter to do it half in 2025. 25,000. And do
the other half in 2026. Just based on the unforeseen circumstances.
S1 (32:23):
And yes.
S14 (32:24):
To offer information for others.
S1 (32:27):
Yes. Thank you very much. And I'm so sorry that
you went through that. I'm delighted that's been rectified. And
I realise you're still having to kind of deal with
the fallout of it. Let me make sure I'm understanding
clearly here. Alofa. Um, you already took 50,000 out or
you're going to.
S14 (32:42):
No, my my goal is to, um, remove those funds
from my 401 K to help, because we still don't
know the process of when the funds will be released
to us.
S1 (32:55):
Got it. And did I hear you say you're going
to borrow it from your 401 K, or are you
going to take a withdrawal?
S14 (33:01):
Um borrow it.
S1 (33:03):
Okay. Got it. Uh, so with regard to you borrowing,
if it's a 401 K loan, that's not a taxable withdrawal. You're, uh,
you know, so therefore you wouldn't, uh, splitting it over.
You wouldn't split it over two years like you would
if you were taking a withdrawal, and you didn't want
to push it up into a higher bracket. That's typically
(33:23):
a strategy where when you're taking a withdrawal from a
401 K, and that amount of withdrawal is going to
be added to your taxable income from the year. It's
better to push it out so that, you know, half
half happens in one year, half happens in another. And then,
you know, we don't inadvertently push a portion of it
up into a higher tax bracket. But a 401 K
loan is not taxable income. As long as you stay employed,
(33:47):
you repay the loan on time and you follow the
plan's rules. Um, but is that an option just given
what you've got with the furlough?
S14 (33:57):
Yes. Yes.
S1 (33:58):
Okay. Yeah. So that is not a taxable event. You
just need to know if for some reason you leave
the job or, you know, end up getting laid off,
then that's going to become taxable to you all at once. Uh,
in the the year, uh, that you are no longer,
you know, employed, uh, whatever that outstanding loan balance is,
is going to be immediately considered a withdrawal at that point.
S14 (34:22):
Okay. Thank you so much and much gratitude for the
wisdom you shared daily on our journey in this life.
S15 (34:30):
Well thank you.
S14 (34:31):
Thank you for.
S15 (34:32):
Your. Oh, that's very sweet of you. Well.
S1 (34:35):
I have an amazing team. You're right to call them out.
And thank you very much. Have a wonderful weekend. Let's
go back to Georgia. Carley, I think we've got you.
Go ahead.
S13 (34:43):
Hi. Thank you. Um, I'm a widow. I have no
children and no other family. And I've heard you talk
about revocable trusts and how they can monitor assets and
take care of things if I become incapacitated. Yeah. I
wanted to know what the difference would be if I
(35:06):
had a power of attorney and someone designated to do
that versus a revocable trust.
S1 (35:13):
Yeah, it's a great question. And let me just try
to draw a distinction here, because a revocable trust and
a power of attorney that's not an either or. They
do completely different jobs. So most people need both. But
let me explain. So here's what a power of attorney does.
A power of attorney lets someone you trust manage your finances.
(35:34):
If you become sick, injured, unable to act for yourself incapacitated,
it's for while you're alive. And there are two main types.
There's a durable financial power of attorney so someone can
pay your bills and manage your accounts. And then there's
a health care power of attorney. Someone can make medical decisions.
Now let's talk about what a revocable trust does. A
(35:57):
revocable living trust holds your assets while you're alive, lets
you stay in complete control. Name someone to manage the trust.
If you become incapacitated and it transfers your assets to
your heirs without probate when you die, um, but both
(36:17):
of them would be necessary if. Especially if you want
to avoid probate. The power of attorney is absolutely essential,
you know, because it's going to give the legal authority
for somebody to act on your behalf, and that's no
matter what situation arises, whereas the revocable trust is only
for those assets inside the trust. And it has more
(36:39):
to do with the efficient transfer of the trust's assets
to your heirs outside of probate than it does giving
the legal authority to someone to act on your behalf.
If you're unable to do so while you're living, which
is really what the power of attorney is. Does that
make sense?
S13 (36:56):
Yeah. So basically then I need a power of attorney
with someone designated in case I would like to have
a car accident and become unconscious and they needed to
take care of my bills and my health care.
S1 (37:09):
Well, yes, but there's two different types of power of
attorney in that situation that would come into play. There's
the the durable power of attorney, which is the bill
paying and the managing of your financial affairs. And then
there's separately a health care power of attorney. And it's
not typically it's not the same person. Um, and that
person can then make medical decisions but not, you know,
(37:31):
get into your financial accounts and other things.
S13 (37:35):
Okay. So I should have separate people on both of
those documents.
S15 (37:38):
I would.
S1 (37:38):
Yeah. I mean, typically what you're looking for with somebody
who's making the medical decisions is really that person that,
you know, would understand your wishes, have the kind of
empathy and and be someone that you would trust with
the medical side of it, which often is different from
somebody who's not only trusted but has the financial acumen
and the details that can handle, you know, more financial
(38:02):
and accounting type, you know, functions, if that makes sense.
S13 (38:06):
That makes perfect sense. Thank you.
S15 (38:08):
Okay.
S1 (38:08):
So you need it at a very minimum. You need
a will. You need a durable financial power of attorney.
You need a healthcare power of attorney. And then typically
folks want an advanced directive, which is where you'd make
end of life decisions. So nobody has to make that
for you. And then if you want to simplify things
for your heirs, that's where the revocable trust would come
(38:29):
in to avoid probate.
S13 (38:31):
Great. Thank you so much. That really helps.
S1 (38:34):
Okay, Carly, God bless you. Thanks for calling today to Colorado. Uh, Candy,
how can I help?
S16 (38:39):
Hi. Yes, uh, we've been blessed to have two homes
in different states. And within the next, like, 3 to
4 years, we're thinking about selling one of them. Not
sure which one, but you had mentioned the capital gain exemption.
When you sell a house or you don't have to
pay taxes on the capital gains. And I was wondering.
(39:02):
You said two of the last five years. Do they
have to be consecutive?
S1 (39:07):
They do not know. And this is a common area
of confusion. It does not have to be consecutive. So
it's a total of 24 months within the last 60
prior to the sale. Uh, so you have to have
owned the home for at least two years, lived in
it for your as your primary residence for at least
two years. But those two years can be any 24
(39:29):
months in the five year window before the sale. They
don't have to be back to back, but you can
only do this every two years. So if you do
it once and you meet the requirement of two out
of the last five, not consecutive, then you wouldn't be
able to do it again for another two years.
S16 (39:48):
Okay. Sounds great. So we could flip flop states where
we reside in then, correct?
S1 (39:54):
You could. Yes. As long as you establish. Yeah. You're
living there as your primary residence, and it has to
be for 24 months out of five years.
S16 (40:05):
Wonderful. Thank you so much for clarifying that and for
your program.
S1 (40:09):
Well, thank you very much, I appreciate it. Let's go
to canton, Ohio. We'll finish up with Nancy. Go ahead.
S16 (40:15):
Hi. Um, my husband and I, um, have five rental properties,
and I'm 70, and he's 72, and, um, eventually, probably
when he's about 78, we wanted to dispose of our properties. Um,
we do have three children. Um, I don't know if
it's best to do it in one year or, um,
(40:35):
what you would suggest, um, financially, um, so that we
don't have to.
S1 (40:41):
Yeah. Timing matters a lot here, Nancy. Not just for taxes,
but for Medicare. Because if you sold all, let's say extreme,
you sold all five rentals in one year, that would
massively increase your income and drive up your Medicare premiums
two years later. If you spread it out, which is
typically the way you'd want to do it. You know,
that's going to help to to not have that big
(41:02):
income spike. Because when you sell properties, they you'd recognize
the capital gains any depreciation, recapture any net rental income.
And if you were to do that in a single year,
your income could jump six figures even if the properties
aren't big. And then that's reported to Medicare. And the
Medicare premiums are based on income from two years earlier.
(41:24):
That's what's called Irma. Um, and so that would trigger
higher Medicare Part B and part D for one full year,
possibly thousands of dollars in extra costs. So spreading it
out over several years would help to keep your income lower,
hopefully stay below the Irma thresholds, reduce your capital gains,
and then spread out any depreciation recapture as well. Um,
(41:47):
so what could you do? Well, you could stagger the sales.
You could do 1031 exchanges if you're going to reinvest
in other properties. The other thing to consider is if
you want to do any giving out of any of
these properties. You could give all or a portion of
any of these properties to a donor advised fund before
you sell, and then you don't have any capital gains
on that portion because it's sold inside the donor advised fund.
(42:11):
Eliminating the capital gains. And then it just funds your
account that you can then direct to your favorite ministries
or your church. Does that make sense?
S16 (42:19):
Yes it does. Thank you very much.
S1 (42:21):
You're welcome. By the way, folks, if you want to
open a donor advised fund. A lot of people are
doing it. I love it, I call it a charitable
checking account. Uh, do that at the National Christian Foundation,
which will ensure you'll never be prevented from giving it
to Christian ministries. Just go to faith. And open your
giving fund in about three minutes. Faith and finance is
(42:42):
a partnership between Moody Radio and Faith by. Big thanks
to Taylor, Lisa, Josh and Dan and everybody here at
Faith by go to Faith, we give every gift doubled
until the end of the year. Here to Faith vine.
We'll see you next week. Bye bye.
It's one of the most valuable things we have and
one of the easiest to waste. Hi, I'm Rob West.
You've heard it a thousand times. Time is money. But
if that's true, why do we spend it so carelessly?
The truth is, time is worth far more than dollars
and cents. It's the most limited resource God's given us.
Today we'll explore how to use it wisely and invest
(00:30):
it for eternity. And then we'll take your phone calls
at 800 525 7000. This is faith and finance. Live.
Biblical wisdom for your financial journey. If you've ever said,
I just need a little more time, you're not alone.
Many people feel the pressure of time slipping through their fingers. Yet, ironically,
(00:52):
we often spend our days chasing money, status, or productivity
only to run out of the very thing we were
trying to buy back. We treat time like a renewable resource,
when in reality it's more like a savings account being
slowly drawn down. Every hour you live is one you'll
never get back. Yet our culture tells us to equate
(01:13):
our worth with how much we earn. But Scripture invites
us to see time differently. Psalm 90 verse 12 says,
teach us to number our days, that we may gain
a heart of wisdom. Moses isn't talking about counting hours
on a clock. He's talking about recognizing that our time
on Earth is limited and therefore immensely valuable. From a
(01:34):
biblical perspective, time isn't ours to manage as we wish.
It's God's gift to be stewarded wisely. Just as money, talents,
and resources belong to him, so does time. In Ephesians
515 and 16, Paul writes, look carefully, then, how you
walk not as unwise but as wise, making the best
use of the time, because the days are evil. In
(01:57):
the original Greek, that phrase, making the best use of
the time literally means redeeming the time to buy it
back and use it for God's purposes. Some translations use
the word redeem here, and that's no accident. It's the
same Greek word Paul uses elsewhere to describe what Jesus
did for us. Christ redeemed us from sin and emptiness,
(02:19):
giving us life with eternal purpose. In the same way,
we're called to buy back our time, to invest every moment,
every conversation, and every decision in what will last forever.
But here's the catch if we don't decide what our
time is worth, someone else will. Your employer, your phone,
your to do list, even social media all have plans
(02:41):
for your time. If you don't set boundaries, your schedule
will fill up with things that seem urgent but aren't
truly important. Jesus, however, modeled a completely different rhythm. Even
with the most important mission in history, he frequently withdrew
to pray. He took time to rest, to eat with friends,
and to be fully present with people. Jesus lived in
(03:04):
such a way that he had the margin to be interrupted,
to stop and heal the sick, to listen to those
in pain, or to teach when someone had questions. He
never rushed, yet always accomplished exactly what the father intended.
So how do we live as if our time actually
belongs to God? First, reevaluate your priorities. Every decision is
(03:27):
a trade. When you say yes to one thing, you
say no to something else. Ask what matters most in
God's eyes. And am I giving that my best time?
Second measure time by meaning, not money. Our culture calculates
value in dollars per hour, but God's economy works differently.
A quiet afternoon encouraging a struggling friend might not pay
(03:48):
in dollars, but it honors God and advances his kingdom
in ways money never could. Jesus said, seek first the
kingdom of God and his righteousness, and all these things
will be added to you. Third, build margin into your life,
just as financial margin creates space to respond to needs.
Time margin allows you to live generously. When you're not overscheduled,
(04:10):
you can pause to listen, serve, or rest. Sabbath isn't
wasted time. It's holy time that reminds us God is
in control, not us. And finally, steward small moments. The
worth of your time isn't only found in the big events,
it's also in the five minutes you spend praying for someone,
or the ten minutes you use to read scripture before
(04:32):
your day begins. Colossians 317 reminds us, whatever you do
in word or deed, do everything in the name of
the Lord Jesus. When you begin to see your time
through that eternal lens, even the smallest moments take on
lasting significance. You stop chasing the clock and start cherishing
(04:52):
what truly matters. As missionary C.T. Studd put it, only
one life will soon be past. Only what's done for
Christ will last. So what's your time really worth? It's
worth exactly what you do with it for eternity. Don't
just count your hours. Make your hours count. Live intentionally.
Rest purposefully, serve generously, and let every day remind you
(05:15):
of the one who holds all time in his hands.
All right. Your calls are next. Stick around. We'll be
right back.
S2 (05:34):
The opinions offered during this program represent the personal or
professional opinions of the participants, given for informational purposes only.
Any information provided is not intended to replace advice from
a financial, medical, legal, or other professional who understands your
specific situation.
S1 (05:58):
Well, I'm thankful to have you with us today on
Faith and Finance Live. We started by talking about time.
Now let's talk about how we can help you manage
God's money. That number to call is 800 525 7800
525 7000. Well, guess what? It's, uh, it's that time
of year. No, I'm. I'm not talking about peppermint mochas.
(06:19):
I'm talking about Operation Christmas Child. That's right. Uh, through
the 17th. So just a few more days. It's your
chance to share the love and hope of Jesus with
a child around the world. You can pack a shoebox
like my family does each year, put school supplies in it,
a toy, and most importantly, your prayers. Head to Moody Radio.com.
(06:40):
Click on Operation Christmas Child. There's a banner there. It
has all the instructions and details. And, uh, what a
practical way to live out generosity and point to children
around the world to the gospel of Jesus. I know
they're planning on reaching well over a million children this year,
but they can't do it without you. So if you
(07:01):
would head to Moody Radio org click Operation Christmas Child,
the banner right there on Moody radio.org. Get the details
and then don't miss this window. We've got to get
the boxes packed and dropped off at a, uh, a
drop off location near you so they have time to
get them to a child somewhere around the world, uh,
(07:21):
before Christmas. You can help. And you can be confident
that the love of Jesus, the gospel, is going to
go out as a part of that shoebox. What a
great opportunity, especially for the whole family. Moody radio. All right.
We're going to dive into your questions here in just
a second. So if you've got a question we do
have lines open that probably won't last long. So go
(07:42):
ahead and call right now. Our team is ready for
you 800 525 7000. That's 800 525 25 7000. Let's
go to Wisconsin. Jane, you'll be our first caller. Go ahead.
S3 (07:54):
My son recently graduated from college, and he's now paying
high interest in a large amount of student loans. So
I'd like to know if you have any options or
strategies for him to reduce his long term repayment burden.
S1 (08:10):
Hmm. Yeah, I certainly appreciate that question. Are these federal
student loans?
S3 (08:16):
Some of them are, but that's not the majority of them.
S1 (08:19):
Okay. The majority of them are private.
S3 (08:22):
Yes.
S1 (08:23):
Okay. Yeah. Well, uh, you know, I mean, the first
option is to look for, you know, better repayment plans.
He can log into Studentaid.gov and just look at his options. Uh,
I mean, obviously, even though there's income driven repayment available
where he could lower that monthly payment, um, based on
(08:43):
his income, which is a nice feature in the federal
loan program. He's going to want to pay as much
as he can to try to get it paid back
as quickly as possible. Um, I would say consider refinancing
only if it's wise. So, you know, if if some
of the loans are private and they are, uh, you know,
he can look at refinancing at a lower rate with
(09:05):
a reputable lender. That's probably not going to happen right now. Um,
but at some point in the future, that will likely
be an option for him. And he's going to want
to look at that. Now, I wouldn't, uh, refinance the
federal loans into private loans because he might need some
of those federal protections, like the income driven repayment or
the deferment or future forgiveness down the road. Um, but
(09:29):
certainly private loans that are already private can be refinanced. Uh,
you know, if he can get a better interest rate and,
and perhaps over time, as interest rates come down, plus
his income, I suspect, you know, will go up. And
as he can demonstrate that along with good credit, he's
going to have some more attractive rates available, but that's
down the road in terms of just thinking about how to,
(09:51):
you know, make the payments as and pay them down
as quickly as possible. Uh, you know, once payments are manageable, then,
you know, he's going to want to attack the highest
interest loan first with extra payments. So this is what
we call debt snowball, where basically you line them up
from smallest to largest balance, pay the minimums on all loans,
(10:12):
and then attack the smallest balance first to build momentum. Uh,
the other approach is to use what's called the avalanche method,
where you, you go from highest to lowest interest rate.
But a lot of times, that momentum you can build
by knocking out one in full and really focusing all
of your energy on on that smallest balance and seeing
(10:32):
that progress is what can keep you going. Um, I
would say, you know, two other things just to throw out.
One would be look for employer help. Uh, you know,
you're going to want to look for employers that offer
student loan repayment assistance. Many of them do. And so
that would be a nice feature if that happens to fit.
(10:54):
You know, while he's out looking for a job, um,
you know, some allow pre-tax contributions toward loans through benefit programs,
which would be great. So just make sure he asks
HR if he's out looking for a job, if they
have any student loan repayment benefits, even a small amount,
you know, could help him. And then finally, I would say,
you know, Jane, he just really needs to guard his lifestyle.
(11:16):
You know, the biggest danger after college is lifestyle creep,
a new car and maybe a, you know, a nicer
apartment or, you know, subscription, everything. I mean, he's, you know,
you can if you're not careful, you can have subscriptions for,
you know, 15 different streaming services and apps and so forth. Well,
those add up. And so if he can live like
a student for a few more years, keep expenses low
(11:39):
and throw the margin at those loans, he might be
able to get them paid off in 5 to 7
years instead of dragging it out for decades, which a
lot of people do. So is that helpful, though?
S3 (11:50):
Yes it is. Thank you.
S1 (11:52):
Okay. You're well. You're very welcome. Thanks for being on
the program today. We appreciate you. 800 525 7000. Let's
go to Fox Lake, Illinois. Anna. Go ahead.
S4 (12:01):
Okay. Thank you. Um, I would like to know which
and how to invest, um, 50 k equity from my
home sale and how to avoid long term capital gains tax.
S1 (12:11):
Okay. Yeah, let's deal with that second part first. So
you had a home sale. Was it your primary residence?
S4 (12:19):
Yes.
S1 (12:20):
Okay. Yeah. So if it was your primary residence for
two of the last five years prior to the sale,
then you can exclude up to $250,000 in gains, not
the selling price, but the gains. If you're married, filing jointly,
you could go all the way up to a half
$1 million in gains. Um, but, you know, if you
(12:41):
have 50,000 essentially that we're talking about here, as long
as that was your primary residence for two out of
the last five years, there is no capital gains on
on $50,000 because that would be under the 250,000 threshold.
S4 (12:55):
Got it.
S1 (12:56):
Okay. Now in terms of what to do with it, um,
you know, I think the best possible option is to
get it into a retirement account. So if you have
access to a 401 K or a 403 B, or,
you know, a tsp, you could contribute, uh, pre-tax dollars
if 401 K and 403 b and TSP has to
(13:18):
come out of salary deferral. Otherwise you could drop it
into an IRA. Um, so that would be, you know,
where I would love to see you get that money because,
you know, that's going to allow it to grow without
the drag of the the taxes on the investment gains. Um,
and I'm assuming, you know, you you don't need this
(13:38):
money anytime soon. Is that right?
S4 (13:41):
Correct.
S1 (13:42):
Okay. Yeah. And you do have an emergency fund separate
from this money?
S4 (13:46):
Yes.
S1 (13:47):
Okay. So I would say that's your your best option.
Let's see what we can do to get that in
a in a tax deferred environment, either by increasing your
contributions or maxing out your contributions to your retirement plan
at work if you have it, even if that means
you have to pull out of savings and, you know,
to cover your bills, you're kind of swapping one account
(14:10):
for the other. Or you could fund an IRA. Those
would be the two best options. Let me do this though.
I've got to hit a break here, but I want
to make sure you don't have any follow up questions,
so we'll tackle that off the air. So stay right there.
This is faith and finance live. We'll be right back. Hey,
(14:34):
thanks for joining us today on Faith and Finance Live.
We do have some lines open today. If you have
a question, call right now. 800 525 7000. Let's go
to Ohio. John, how can I help?
S5 (14:47):
Yes, I have a question. Um, the other day I
was told about a fixed rate, fixed rate annuity that's offering,
as a bonus, 22% on top of your investment right
off the bat. Does that sound like a good thing,
(15:10):
or is it crazy?
S1 (15:13):
Uh, yeah, I mean, it it sounds like a pretty
big red flag. Uh, you know, a 22% bonus, I
think should immediately raise some caution. Um, and in almost
every case, that bonus is not what people think it is. Um,
you know, they don't give you that for free. So, um,
(15:34):
you know, the bonus could be applied to what's called
an income benefit value. It's it's basically used in a formula.
If you later take lifetime income from the annuity, it's
not actual money in your pocket and you pay for
that bonus. Typically annuities with big bonuses usually come with
(15:56):
either long surrender periods or high fees for the income
riders or strict withdrawal limits, or maybe reduced returns. And
usually the bigger the bonus, the more strings attached. So
if anybody's telling you you get 22% right away, or
it's a guaranteed return or you can't lose, I would
(16:17):
say that's misleading at best. And, you know, deceptive at worst. Um, so,
you know, in your situation, I mean, I think what
matters most at age 79 is, you know, liquidity, meaning
you can get to the money if you need it. Simplicity.
We don't want something overly complex. And that's certainly what this,
this bonus annuity would be. And then lastly you'd want
(16:40):
protection of principle, something that's going to protect your money
and give you a reasonable rate of return. So um,
I would say just generally speaking a fixed rate annuity
with a 22% bonus if you understood them correctly is
almost certainly not a good idea for a 79 year
old investor.
S5 (17:00):
Okay. Well, thank you very much.
S1 (17:02):
All right, John.
S5 (17:03):
Kind of taking a load off.
S1 (17:05):
Okay, good. Well, thanks for your call today, sir. God
bless you. Uh, Indiana is where Kelly's located. Go ahead.
S6 (17:11):
Hi. My mother in law, who's still living, deeded my
husband five and a half acres, um, out of a
tract of 13 acres, I think total. So he is
thinking about selling his to his sister. And we were
just wondering what kind of a tax rate would that
be on the selling price? Is there an inheritance tax?
(17:32):
How does that work?
S1 (17:34):
Okay? Yeah. So, uh, when did he receive this and
how did he receive it? So she's living, and then
she just gave it to him as a gift.
S6 (17:44):
Yeah. He's here. I'll let him talk. Yeah.
S1 (17:46):
Okay.
S7 (17:47):
We went through a lawyer as a deed of gift.
S1 (17:50):
Okay, yeah. So it was a gift that she gave
to you. And how long ago was that?
S7 (17:56):
Uh, it was earlier this year.
S1 (17:58):
Okay. Yeah. And then, uh, have you. So your your
sister is looking at buying it at a, at a
market rate that, you know, whatever the, the market rate is.
Or are you looking to give her a discount?
S7 (18:11):
Uh, I was hoping for a market rate, but she
she has a realtor friend who said that what she's
asking is reasonable.
S1 (18:20):
Okay. Yeah. So essentially what happens here is if she
gave you the land while she's living, that's considered a gift.
And her basis, uh, is your basis meaning for capital
gains purposes? Whatever she originally paid for it, her cost
basis passes to you as opposed to, you know, if
(18:44):
you receive it as an inheritance, you get a step
up in basis to the market value as of the
date of death, in this case, with a gift, you
just essentially, you know, you bring her her cost basis
is now your cost basis. Um, and so then, uh,
you know, when you go to sell it, uh, to
your sister, the sale is taxable. Uh, so selling to
(19:06):
a family member doesn't avoid taxes. So you'd then report
the selling price to your sister, your cost basis, which
is your mom's cost basis. And then the difference between
those is a capital gain. Um, and if you sell
it below market value, to be generous, the IRS would
treat the rest. You know the difference as a gift.
(19:27):
And then the capital gain is going to be dependent upon,
you know how long, uh, you owned it? Um, and
your income level and how big the gain is. Um,
so that basically, that's what we're talking about here is
a capital gain.
S8 (19:45):
Yes. Okay. Um, but his mom didn't.
S6 (19:48):
Buy the land it.
S8 (19:49):
Came from.
S6 (19:50):
His great grandfather gave it to his grandfather. His grandfather
gave it to his dad, his dad passed away, and
the mom deeded it to the kids.
S1 (19:59):
Okay. Yeah. Um, so was she an owner on it
with her husband prior to him passing away?
S7 (20:06):
No, it was it was my father's land.
S1 (20:09):
Okay. So she inherited it from her husband.
S7 (20:16):
Uh, yes. I guess you could say that he passed away.
And so everything went to her.
S1 (20:20):
Okay. Um, yeah. You're going to need to, uh, talk
to a CPA, uh, on that one, because the thing
you're going to need to understand is, um, you know,
what is that actual cost basis for your mom? And
because it was marital property, you know, that's where they're
going to have to determine, and there's probably going to
(20:42):
have to be an attorney involved. I wouldn't want to
to weigh in on this specifically around, you know, did
she actually receive it as an inheritance, essentially, and therefore
she enjoyed that step up in cost basis or because
they were married? Is it really marital property? And therefore
because it was it's just been gifted through these generations.
(21:04):
Does she somehow have a cost basis that goes back,
you know, several owners, which could mean that it's very
low and, you know, so you have her cost basis,
whatever that is. We've got to have somebody determine what
that is. That's going to be ultimately what determines, you know,
how much capital gain here. The benefit is not only
(21:26):
do you inherit her cost basis, but you also inherit
her holding period, which means it's most certainly going to
be a long term capital gain, which is favorable. You know,
it's probably going to be there 15 or 20%, but
you're going to have to figure out her cost basis
to determine how much tax is owed on a capital
(21:46):
gains basis. So I'd get with, uh, the attorney that
helped to handle the estate and your CPA. I hope
that helps, Kelly. Thanks you all for your call. Bye bye.
Great to have you with us today on Faith and
finance live. I'm Rob West. Hey, if you love the program,
(22:08):
we'd love for you to consider being a supporter of
the ministry here at Faith fi. We rely on your
support as a listener supported ministry. And here at the
end of the year, this is a really important time
for us to hear from you, and I've got a
good reason for you to think about supporting the ministry.
Not only you're going to help us reach more people
with this message of God's wisdom around financial stewardship. But
(22:29):
also we've got a match in place, some wonderful friends,
very generous folks that stepped up and said, we're going
to match every gift to Faith five between now and
December 31st, up to $175,000. And we're not there yet. Uh,
we've still got a ways to go, which means every
gift you make will in fact be doubled. We're still
(22:50):
about 130,000 away, and we've got about a month and
a half to get there. Uh, also, every gift of
any amount will ensure that, uh, my new devotional, Our
Ultimate Treasure, which literally goes to the printer today, the
team has been in the back, uh, room in the
conference room all day, with pages spread out everywhere, doing
(23:10):
the last final checks. Uh, it's literally going off today.
You're going to love it. I'm so thrilled with how
it came out, but we're going to be able to
send you a copy in January for every gift that
comes in between now and December 31st. So just head
to our website faithfully. That's faithful. Give and thanks in advance.
Let's head back to the phones. Brian is in Ohio.
(23:33):
Go ahead. Brian.
S9 (23:34):
Hey. Yeah, thanks for taking my call. Rob.
S1 (23:37):
Of course.
S9 (23:38):
I was just wondering, uh, what's the best way to
calculate how much life insurance do you need?
S1 (23:45):
Yeah. You know, there's a kind of a simple way
to do it. And then there's, uh, you know, a
way that, um, you know, is another way to do
it that, uh, some people use. Let me let me
cover both. Kind of the simplest rule of thumb is,
you know, typically you you need 10 to 12 times
your annual income, and that can get you in the
(24:06):
ballpark pretty quickly. And the idea is you want to
be able to replace that income during your working years. Now, obviously,
as you get closer to retirement and you've already built
some assets, you know, you could see that number decline.
But the idea would be that we have the life
insurance in place during our working years and then we
(24:27):
drop it. It's an unnecessary expense in retirement because we've
already accumulated the assets. There's nobody counting on us for income.
If something were to happen to you and you're married,
you know, by the time you reach retirement, you've got,
you know, survivor's benefits on Social Security, you've got your
retirement accounts you've been building during your working years. Uh,
(24:48):
there's no risk there in terms of you passing away.
And there's really not any loss of income. Now, you
might say, well, wait a minute. I'd never used it.
Wouldn't that money thrown away? No. It's kind of like
your car insurance, you know, you get it to protect
yourself and offset the risk, but you hope you don't
ever have to use it. And the same is true
with term life insurance. You know, you would just get
(25:09):
that during your working years, and that 10 to 12
times your income isn't going to carry you through, you know,
to age 90. But what it's going to do is
allow your dependent, your, in most cases your spouse to
continue to maintain their lifestyle and continue to save for
retirement such that you know it would replicate the the
(25:31):
glide path for wealth creation that you would have had
if you were still living now. The more complex way
is something called dime D. I'm E and it's an acronym.
D stands for debt. So you'd add up your mortgage,
your car loans, your personal loans, credit cards, everything you'd
want paid off if you passed away. I as income replacement,
(25:54):
it's that same 10 to 12 years of income. Um,
m is mortgage. If that's not already counted under debt,
go ahead and pay off the mortgage. And then E
is education. Estimate the cost of college for each child.
You roll all that together, and then you go out
and buy a term life insurance policy that covers it.
Now you might say, well, that's a pretty big number
(26:14):
and it probably is. And again, that's why we like
term insurance because you're just paying for the cost of
the mortality expense. You're not also trying to, you know,
create a savings vehicle at the same time. And if
you're healthy and you're young and you get a good
20 year policy, and then you replace it once or
twice along the way, you know, you'll spend as little
(26:35):
as possible on insurance, but you'll make sure that your
loved ones have everything they need. If God were to
call you home to maintain their lifestyle and continue to
save for the future, does that make sense?
S10 (26:46):
Yeah.
S9 (26:47):
Yeah. Would you recommend. Uh, so I'm 39. Would you
recommend getting a 20 year and then after that, a
ten year to cover?
S1 (26:58):
You certainly could. Yeah. I mean, that's one way to go.
The other is you just go ahead and get while
you're healthy and young a 30 year term, which is
pretty typical. Um, and they, you know, they've got those
that's going to be the cheapest, the cleanest. And that
helps to protect. I mean, you could still replace it
down the road if you wanted to, but if something
changed and you were no longer Medically able to qualify
(27:21):
or it was going to be very expensive. At least
you'd have it there that would carry you all the
way through age 69.
S5 (27:27):
Gotcha.
S10 (27:28):
Yeah.
S1 (27:30):
Okay. And in terms of where to go, I just
use probably one of the I mean, unless you have
a local life insurance agent, uh, you know, there's so
many great tools online now, like policy genius and select quote, um,
you know, and there's one called Quotacy. Um, and they're
going to go out and, you know, directly to the
top rated insurers like Banner Life and Protective and Lincoln
(27:54):
and Mutual of Omaha. And they're going to take your
medical situation and your age, and they're going to compare
it against all those top rated companies and find out
who has the best price.
S9 (28:06):
Okay.
S1 (28:09):
All right.
S9 (28:10):
All right. Thank you very much.
S1 (28:12):
Absolutely, sir. Thanks for your call. Let's go to Florida. Hi, Dolores.
How can I help?
S11 (28:17):
Good afternoon. Thank you so much. I love your ministry. Um,
so I, I have a friend. She's 65 years old.
She opened a policy, I believe she said 2014 for
about $10,000, and she pays about 21, $22 a month. And, um,
the insurance wants to give her $2,000 back. Now, that's
up for renewal. They want to give her $2,000 back
(28:39):
and start a new policy that's almost like double that $42.
And we didn't understand why. So I figured I'd call
you all to see if you all can explain it
to us.
S12 (28:48):
Yeah, I'd be happy to. Uh, so.
S1 (28:51):
Why are they offering her two grand and trying to
raise the premium? Well, they want her to get rid
of her old policy and move her into a more expensive,
less favorable one. Uh, why does this happen? Well, the
old policy is probably unprofitable for the insurer. Or they
want to reset the terms and increase her premium and
(29:12):
reduce their long term risk. So they've run an analysis
and they've determined that, you know, $2,000 as a sales incentive. Uh,
you know, is worth it. Um, what she probably has
now is what's called a whole life burial policy. So
for the $10,000 worth of coverage at 22 a month,
she had a fixed premium, a fixed death benefit. And then,
(29:35):
you know, the certainty that if she keeps paying, her
beneficiary gets ten grand when she passes away. And, you know,
policies like this become more valuable to her as she ages,
which is why the company wants to change it. And
the new policy is almost guaranteed to be worse because,
you know, it's essentially doubling her premium. She gets the
(29:56):
2000 as a return, but it resets the conditions so
the insurer reduces their payout risk. And, you know, it
could involve a new medical review or some sort of
graded death benefit. Um, so I would say at the
end of the day, I would encourage her not to switch.
Tell her to keep the $10,000 policy at 22 a month.
(30:18):
That's likely the best coverage she'll ever get at her
age and price.
S11 (30:23):
Thank you so much. You all have a blessed day.
You're a wonderful.
S1 (30:27):
Thank you. Dolores. God bless you. You sound like a
great friend. We appreciate your call. Well, we're going to
take a break. When we come back, we'll have, uh,
another segment where we'll be able to answer your questions.
We've got some great ones coming up. We may have
room for one more. That number 800 525 7000. Again,
that's 800 525 7000. This is Faith and finance. Live.
(30:49):
I'm Rob West. Stay with us. We'll be right back. Well,
here in our final segment today, we're going to try
to get through as many calls as we can. Try
to talk to a lot of folks here. Some great
questions coming up. Let's head to Georgia. Carly how can
(31:11):
I help.
S13 (31:12):
Hi. I think I have no children and no other family.
I've heard you talk about.
S1 (31:21):
Hey, let's do this. Carly, I want to hear your question,
but we're losing you a little bit, so I'm going
to have you go on hold. My team is going
to work with you, see if we can get that
line cleared up, and then I'll come right back to you.
So stay right there. Let's go to North Carolina. Alofa.
Thank you for calling. Go ahead.
S14 (31:37):
Thank you for this opportunity and the knowledge you're providing
on your platform. Um, my question was, due to my furlough,
I wanted to see if. Would it be your advice
on borrowing from 2025, um, tax purposes on my 401
K and then doing the other half in 2020 6th January?
(32:03):
Would it make a difference? Um, the total amount was 50,000.
So I wanted to ask the question, would it be
smarter to do it half in 2025. 25,000. And do
the other half in 2026. Just based on the unforeseen circumstances.
S1 (32:23):
And yes.
S14 (32:24):
To offer information for others.
S1 (32:27):
Yes. Thank you very much. And I'm so sorry that
you went through that. I'm delighted that's been rectified. And
I realise you're still having to kind of deal with
the fallout of it. Let me make sure I'm understanding
clearly here. Alofa. Um, you already took 50,000 out or
you're going to.
S14 (32:42):
No, my my goal is to, um, remove those funds
from my 401 K to help, because we still don't
know the process of when the funds will be released
to us.
S1 (32:55):
Got it. And did I hear you say you're going
to borrow it from your 401 K, or are you
going to take a withdrawal?
S14 (33:01):
Um borrow it.
S1 (33:03):
Okay. Got it. Uh, so with regard to you borrowing,
if it's a 401 K loan, that's not a taxable withdrawal. You're, uh,
you know, so therefore you wouldn't, uh, splitting it over.
You wouldn't split it over two years like you would
if you were taking a withdrawal, and you didn't want
to push it up into a higher bracket. That's typically
(33:23):
a strategy where when you're taking a withdrawal from a
401 K, and that amount of withdrawal is going to
be added to your taxable income from the year. It's
better to push it out so that, you know, half
half happens in one year, half happens in another. And then,
you know, we don't inadvertently push a portion of it
up into a higher tax bracket. But a 401 K
loan is not taxable income. As long as you stay employed,
(33:47):
you repay the loan on time and you follow the
plan's rules. Um, but is that an option just given
what you've got with the furlough?
S14 (33:57):
Yes. Yes.
S1 (33:58):
Okay. Yeah. So that is not a taxable event. You
just need to know if for some reason you leave
the job or, you know, end up getting laid off,
then that's going to become taxable to you all at once. Uh,
in the the year, uh, that you are no longer,
you know, employed, uh, whatever that outstanding loan balance is,
is going to be immediately considered a withdrawal at that point.
S14 (34:22):
Okay. Thank you so much and much gratitude for the
wisdom you shared daily on our journey in this life.
S15 (34:30):
Well thank you.
S14 (34:31):
Thank you for.
S15 (34:32):
Your. Oh, that's very sweet of you. Well.
S1 (34:35):
I have an amazing team. You're right to call them out.
And thank you very much. Have a wonderful weekend. Let's
go back to Georgia. Carley, I think we've got you.
Go ahead.
S13 (34:43):
Hi. Thank you. Um, I'm a widow. I have no
children and no other family. And I've heard you talk
about revocable trusts and how they can monitor assets and
take care of things if I become incapacitated. Yeah. I
wanted to know what the difference would be if I
(35:06):
had a power of attorney and someone designated to do
that versus a revocable trust.
S1 (35:13):
Yeah, it's a great question. And let me just try
to draw a distinction here, because a revocable trust and
a power of attorney that's not an either or. They
do completely different jobs. So most people need both. But
let me explain. So here's what a power of attorney does.
A power of attorney lets someone you trust manage your finances.
(35:34):
If you become sick, injured, unable to act for yourself incapacitated,
it's for while you're alive. And there are two main types.
There's a durable financial power of attorney so someone can
pay your bills and manage your accounts. And then there's
a health care power of attorney. Someone can make medical decisions.
Now let's talk about what a revocable trust does. A
(35:57):
revocable living trust holds your assets while you're alive, lets
you stay in complete control. Name someone to manage the trust.
If you become incapacitated and it transfers your assets to
your heirs without probate when you die, um, but both
(36:17):
of them would be necessary if. Especially if you want
to avoid probate. The power of attorney is absolutely essential,
you know, because it's going to give the legal authority
for somebody to act on your behalf, and that's no
matter what situation arises, whereas the revocable trust is only
for those assets inside the trust. And it has more
(36:39):
to do with the efficient transfer of the trust's assets
to your heirs outside of probate than it does giving
the legal authority to someone to act on your behalf.
If you're unable to do so while you're living, which
is really what the power of attorney is. Does that
make sense?
S13 (36:56):
Yeah. So basically then I need a power of attorney
with someone designated in case I would like to have
a car accident and become unconscious and they needed to
take care of my bills and my health care.
S1 (37:09):
Well, yes, but there's two different types of power of
attorney in that situation that would come into play. There's
the the durable power of attorney, which is the bill
paying and the managing of your financial affairs. And then
there's separately a health care power of attorney. And it's
not typically it's not the same person. Um, and that
person can then make medical decisions but not, you know,
(37:31):
get into your financial accounts and other things.
S13 (37:35):
Okay. So I should have separate people on both of
those documents.
S15 (37:38):
I would.
S1 (37:38):
Yeah. I mean, typically what you're looking for with somebody
who's making the medical decisions is really that person that,
you know, would understand your wishes, have the kind of
empathy and and be someone that you would trust with
the medical side of it, which often is different from
somebody who's not only trusted but has the financial acumen
and the details that can handle, you know, more financial
(38:02):
and accounting type, you know, functions, if that makes sense.
S13 (38:06):
That makes perfect sense. Thank you.
S15 (38:08):
Okay.
S1 (38:08):
So you need it at a very minimum. You need
a will. You need a durable financial power of attorney.
You need a healthcare power of attorney. And then typically
folks want an advanced directive, which is where you'd make
end of life decisions. So nobody has to make that
for you. And then if you want to simplify things
for your heirs, that's where the revocable trust would come
(38:29):
in to avoid probate.
S13 (38:31):
Great. Thank you so much. That really helps.
S1 (38:34):
Okay, Carly, God bless you. Thanks for calling today to Colorado. Uh, Candy,
how can I help?
S16 (38:39):
Hi. Yes, uh, we've been blessed to have two homes
in different states. And within the next, like, 3 to
4 years, we're thinking about selling one of them. Not
sure which one, but you had mentioned the capital gain exemption.
When you sell a house or you don't have to
pay taxes on the capital gains. And I was wondering.
(39:02):
You said two of the last five years. Do they
have to be consecutive?
S1 (39:07):
They do not know. And this is a common area
of confusion. It does not have to be consecutive. So
it's a total of 24 months within the last 60
prior to the sale. Uh, so you have to have
owned the home for at least two years, lived in
it for your as your primary residence for at least
two years. But those two years can be any 24
(39:29):
months in the five year window before the sale. They
don't have to be back to back, but you can
only do this every two years. So if you do
it once and you meet the requirement of two out
of the last five, not consecutive, then you wouldn't be
able to do it again for another two years.
S16 (39:48):
Okay. Sounds great. So we could flip flop states where
we reside in then, correct?
S1 (39:54):
You could. Yes. As long as you establish. Yeah. You're
living there as your primary residence, and it has to
be for 24 months out of five years.
S16 (40:05):
Wonderful. Thank you so much for clarifying that and for
your program.
S1 (40:09):
Well, thank you very much, I appreciate it. Let's go
to canton, Ohio. We'll finish up with Nancy. Go ahead.
S16 (40:15):
Hi. Um, my husband and I, um, have five rental properties,
and I'm 70, and he's 72, and, um, eventually, probably
when he's about 78, we wanted to dispose of our properties. Um,
we do have three children. Um, I don't know if
it's best to do it in one year or, um,
(40:35):
what you would suggest, um, financially, um, so that we
don't have to.
S1 (40:41):
Yeah. Timing matters a lot here, Nancy. Not just for taxes,
but for Medicare. Because if you sold all, let's say extreme,
you sold all five rentals in one year, that would
massively increase your income and drive up your Medicare premiums
two years later. If you spread it out, which is
typically the way you'd want to do it. You know,
that's going to help to to not have that big
(41:02):
income spike. Because when you sell properties, they you'd recognize
the capital gains any depreciation, recapture any net rental income.
And if you were to do that in a single year,
your income could jump six figures even if the properties
aren't big. And then that's reported to Medicare. And the
Medicare premiums are based on income from two years earlier.
(41:24):
That's what's called Irma. Um, and so that would trigger
higher Medicare Part B and part D for one full year,
possibly thousands of dollars in extra costs. So spreading it
out over several years would help to keep your income lower,
hopefully stay below the Irma thresholds, reduce your capital gains,
and then spread out any depreciation recapture as well. Um,
(41:47):
so what could you do? Well, you could stagger the sales.
You could do 1031 exchanges if you're going to reinvest
in other properties. The other thing to consider is if
you want to do any giving out of any of
these properties. You could give all or a portion of
any of these properties to a donor advised fund before
you sell, and then you don't have any capital gains
on that portion because it's sold inside the donor advised fund.
(42:11):
Eliminating the capital gains. And then it just funds your
account that you can then direct to your favorite ministries
or your church. Does that make sense?
S16 (42:19):
Yes it does. Thank you very much.
S1 (42:21):
You're welcome. By the way, folks, if you want to
open a donor advised fund. A lot of people are
doing it. I love it, I call it a charitable
checking account. Uh, do that at the National Christian Foundation,
which will ensure you'll never be prevented from giving it
to Christian ministries. Just go to faith. And open your
giving fund in about three minutes. Faith and finance is
(42:42):
a partnership between Moody Radio and Faith by. Big thanks
to Taylor, Lisa, Josh and Dan and everybody here at
Faith by go to Faith, we give every gift doubled
until the end of the year. Here to Faith vine.
We'll see you next week. Bye bye.
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