The New FICO Score

Me to a single number between 308 50 is largely determined Worthing to get a loan picture Bible school were, of course, but that's changed a bit. There are two fight that's right here. Isaac and company or FIFO as a new system to measure your credit worthiness financial planner and teacher Rob West has the details and explains how it works to your advantage or not. Now today's program is recorded were not live in the studio but we hope you stick around. I'm Steve Moore, the new FICA score.

That's next right here on moneywise live get a ton of calls about the FICA score. Usually people want to know why there is went down points. Now I suppose will be getting even more calls about the credit scores well there's nothing wrong with that. We love explaining these things and helping people understand their credit scores, and while FICA is now offering two different scoring methods the lenders let me just say at the outset that if you follow the basic rules about credit scores. You have nothing to worry about.

And those rules are well pay your bills on time and never have a balance that's more than 30% of your available credit. Keep the number of credit accounts to a minimum and don't apply for several loans or credit cards at once. Okay so explain this new FICA score for well first let's go over the basics of the old score because that will help to explain things the traditional FICA scores based on five factors, each making up a percentage of your score payment history is the big one. Whether you've made at least your minimum payments on time. That makes up a full 35% of your score.

That's followed by the total amount you owe in relation to your income comprising 30% of your score. Then the length of your payment history accounts for 15%, followed by the types of accounts you have 10% in the last new credit another 10% would FICA crutches those numbers they come up with a score between the 308 50 does your cholesterol make any difference there not yet know you will see how is this new number different. Well it's really interesting.

Steve, the new score which is called the fight go resilience index or F are essentially tosses out your payment history. Historically, the single most important factor in determining your credit worthiness. You'd think that would be the last thing they want to do away with.

You would think but do you remember the disclaimer that brokers always use about stocks past history is no guarantee of future performance. Hello, that's the idea that FICA was basing their new AFR I score on its designed to predict which consumers are more likely to default on payments during a time of economic stress will that explains the word resilience in the name the new score is measured on a scale of 1 to 99 and just to make it more interesting. Unlike the old FICA with the new one.

The lower your score the better. So what does this new score replace the old FICA says no it doesn't replace the old score but instead gives lenders just one more tool to use when deciding whether to give you alone.

FICA actually says that if lenders had use the new score during the great recession, when lenders had tightened credit on the backend of the financial crisis will more than half a million consumers that were denied mortgages would have actually gotten them. Interestingly, they don't say how many who received mortgages wouldn't have gotten them that make sense. So what's the new fMRI FICA score based on. If not, payment history pretty much the four remaining factors of the old score.

Your credit mix meeting the types of account you have more, installment credit like a car loan is better revolving accounts like credit cards will actually hurt your effort.

I score then there's the total of your revolving balances. Obviously, the lower the number the better. Next is the number of active accounts you have.

FICA says resilient consumers have only about three active accounts, while less resilient, consumers have more like 10 and finally the number of inquiries lenders have made concerning your credit of the more resilient people have one or less in the past year. Less resilient folks have between one and three and you still don't think folks have anything to worry about with yet another FICA score. I really don't as long as you play by those rules keep your credit accounts to a minimum, especially revolving accounts like credit cards. Your balance is low and the number of credit inquiries that one or less per year. Of course, always pay your bills on time. Do that and you have nothing to be concerned about with any credit score. Thanks, Rob hey, you're listening to moneywise live with Rob West. Today's broadcast is recorded so we won't be taking any calls but we have some calls lined up integrative patient coming your way, but I think you will find usable at the very end.

This is moneywise live on Steve Moore. Do you know if you have enough enough money of house. Do you know how much is enough. If not, one blue can help with this book.

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You can see a short video webinar on sound mind investing.org since 1990 sound mind investing in stocks offer financial wisdom for living well sound mind investing thought Archie debt has a stranglehold on many American households in our country is piling up debt amounts that threatens future generations. We've seen periods of lower saving and borrowing and increased foreclosures. These economic times certainly have led to a lot of pain and problems despite how serious this is it is nothing compared to sin. Sin do not commit is kind of like a debt and each of us has rung up an incredible to have so much debt that we can never were all in Jesus son of God died on the cross to pay the penalty of sin in the book of Colossians.

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For more information on how Christian credit counselors can help visit Christian credit counselors.org Christian credit counselors.org or call 800-557-1985, 800-557-1985 pleasure to have you joining us today on moneywise live will find us on Facebook under moneywise media for you to visit our website which is moneywise live.ORG school North a bit to St. Paul, Minnesota and Jenny. How can we help out right now and I unexpectedly got mild about my car. I do like about 12,000 funeral expenses a little bit of painting my early 70s that I should continue to work on working full time. Right now I am pretty healthy about worried about the small amount of painting by habit.

If I can get through it. Now, well, sure. So let's talk about the income that you would have if you were to stop working your collecting Social Security at this point I assume is a rent okay and what you have in your 401(k) about 20 okay and you have any other income sources that if you were to stop working beyond Social Security and the 401(k) plan.

I do have a little bit but not a lot. All right. And do you have any other debt other than what you cumulated with with the funeral expenses plus the car, while Delta my dog operation tell about 2000 left on that I would like to at least small bills under $100 okay and have you run a budget. Jenny to look at what you would need on a monthly basis to cover your lifestyle and all of the spending that you do in retirement so you could determine whether Social Security alone would cover it now so yeah I think there's a couple of things your number one is obviously the longer you can work the better and a minimum, we want to continue to work such that you can eradicate all of your debt. The roughly 2000 for the pet situation. The 3000 for the car and then that roughly 12,000 you still owe. You can get your expenses as low as possible because you're no longer servicing that debt I think. Secondly, whatever you can do to continue to add to the 401(k) would help.

At the current level of 48,000 were talking about, you know, you could probably pull a couple thousand a year off of that account without impacting the principal if it's invested properly that you can add to your Social Security but you know that's only going to give you an extra hundred and 60 or $70 a month so I think the first question is your what is it going to take for you to find your lifestyle. So I go ahead and do that quote and quote retirement budget so you know what it would look like. Assuming all the debts paid and could you cover all of your expenses on Social Security plus another hundred and 50 or so a month from the 401(k) that would be ideal. And then you continue to work until the debts are paid and at that point then you decide. Do I want to just keep working and build the 48,000 or do I want to go ahead and retire because I know that you know that I've got what I need.

Beyond that, I'd love for you to also have when you stop working in emergency fund and in preference would be that you have at least six months and without a lot to fall back on. Beyond this, this 401(k), I'd love for that evening to go out for eight or nine months worth of expenses in the liquid savings account. You have access to in the event of an unexpected major expense or major medical event. So I think let's be grateful towards giving you good health. He's given you a good job. I would say the key right now is keep your lifestyle those possible work as long as you can to eradicate the debt and try to save up that emergency fund of 6 to 9 months and then just continue on your current trajectory with funding your 401(k). The good news is you have the Social Security to fall back on and up at some point you need to stop working, assuming the budget balances it sounds like you can do that. Jenny my car. The dog operation have in savings right now. Jenny okay very good so that I'm imagining your expenses on a monthly basis are not more than two or 3000 is at right right okay so six months.

You're basically at six-month right now, that's great. So if you were to pay off 5000 that would drop that to 13,000 but then you could take what you were sending to the car and go ahead and and replenish that so I like that option because that means you still got, you know, four months, roughly 3 worth of expenses in the bank as savings and now you've eliminated the debt. So now you can just focus on building that backup paying off the funeral expenses and then just maximizing what's going to do your 401(k). Glad you called today thank you very much hope that helps you really quickly moved to Lakeland Florida and Leslie. How can we help you today wondering what I find I need to get there market will I will have to back out for $4500 back my mortgage payment and then I clean what I have. I lick thinking right, I should lean back in 90 secondary to crack or should I take the time to plan Iran type direction will actually do well. I don't like about the article.

The my daughter and I felt but I don't think I would like something okay well this is a lot of moving parts and I'm sorry to hear about your recent divorce and I hope you're leaning into your church family and you have some people around you that can be an encouragement and a prayer support for you. I love the fact Leslie that you got this duplex in your essentially funding your half of it through the tenant that you have on the other side.

That's great because they're paying your mortgage payment and building equity for you. I think the key is just make sure you have the proper reserves so that if you need to do any maintenance you can do that if you without a tenant for a period of time.

That's not to put a real damper on your situation and so that's why I try to keep some liquidity here.

I would absolutely go ahead and pay off that consumer data 4500. So you're completely debt-free. Apart from the mortgage that the tenant is paying for on your side of the duplex that leaves you with let's say 35,000. Would that be the extent of your savings or do you have a liquid savings.

Beyond that, okay, do you have access to a retirement fund work okay but you just never contributed to it.

I know sure that's great. Tell me about your budget. So, assuming the tenants in place in the mortgage is paid which is the way it is today. Do you have anything left over at the end of the month based on your current income and expenses on my own like it a lot.

$1500 that I can either cut back on like okay well here's what I would do. I would go ahead and work on that budget quickly and that's what I do this weekend. If you don't have time before then. I realize you probably have a lot on your plate, but I would really take some time to begin tracking and quantifying what it is you're spending on a monthly basis both recurring and nonrecurring expenses. I get that down do the hard work of figuring out where you can trim make sure you pull in those things that don't happen every month or that you don't get a bill for, but are still reality gifts and entertainment, and oh what about the trip were to take the summer and what about quarterly insurance payment. You gotta capture it all you got a plan for it on an annual basis, but look at it monthly and be saving for those things that come only periodically, then figure out where you can cut because if you could get 1500 a month that I want you to go ahead and start that 401(k). There's probably some matching there. I'd set a goal of putting in 10% of your income. If you can't get quite there.

That's okay, but at least you have something going toward long-term savings.

Then I go and pay off the consumer debt. I keep six months of reserves of your expenses in liquid savings and an online savings account just so you got that to fall back on and I also think about any repairs or things you need to do for the duplex, especially on the tenant side and I put that in a separate account as well so I wouldn't be investing this 35,000 until you have a little bit more history and you've demonstrated you can live on this budget and I go ahead and start the 401(k) right now.

I think you feel a lot better. Your debts are paid off your contributing to long-term you got a good healthy reserve account, you can always put that money to work down the road if it still Leslie, let me suggest that you visit our website moneywise live.org scroll to the bottom of the page and you'll see some resources there. Many of them are free.

That will help you with your personal finances, and I do hope that that helps you going with thanks so much.

This is moneywise live and we be right. Do you know if you have enough money of house. Do you know how much is enough. If not, one blue can help with this book. Master your money a step-by-step plan for experiencing financial contentment. Learn how to save and invest and give wisely to create a long-term financial plan and how to get out of debt. Find it all in master your money by Ron blue available when you click the start button moneywise live.org, click insert everything here is a click away question in this portion of Scripture will not do the right question that we in Romans chapter 9 settled by the common sense when we go….The world's only begotten son would not all come together question from our time here is the rhetorical God and listening to each Tuesday night Bible study 9:30 PM central Tuesday no problem toddling.org the financial wealth you leave behind could be the best thing that ever happened to your loved ones or the worst in splitting hairs, giving your money and things to your children without ruining their lives. Ron blue explains why it's important to make these decisions now, instead of forcing your heirs to do it later. Splitting hairs will foster a real appreciation for the precious resources that God has entrusted to you, and it's available. Click the start button moneywise live.org to moneywise live with less times more, and our next call Jeannie calling Florida Jeannie thanks for your patience and how can we help you part-time… I.

30 liquid now what we ask hello my wondering what yeah well Jeannie you know I think a couple thoughts here. Number one is a question first. Other than the 30,000 you have in the CDD you have any other liquid reserves that you can access if you had some sort of emergency or unplanned expense.

What was that something shall happen.

Okay, what we think the value of that is around okay and in the do you have any other retirement assets to speak of. Now, well money money very good and tell me about your budget with that's 5000 a month. Are you able to live well within that meeting most months where you have a little bit of margin left over that you can put into savings.

At the end of the month.

Are you regularly going underwater on okay well you know what this 30,000 challenges. It's it's all about risk and reward rights are typically when we get to this stage of life and were no longer trying to necessarily grow the assets entirely because we don't want to take the risk associated with 100% stock portfolio.

We would dial that back and try to be more conservative with what's called a balanced approach see you have a mix of some percentage in stocks and a general rule of thumb on that as you take hundreds. Subtract your age that would be the person you want in stocks or because people are living longer. Some people say no hundred 10 minus your age you put that percent in stocks and in the rest you put into bonds, high quality, either corporate or government bonds you might make some CDs in there, albeit as you said rates are very low right now and so that's not adding a whole lot you could even use some other types of investments like preferred stocks, which pay you a bit of a higher yield and so that when you put all that together you would try to achieve on a conservative basis a portfolio that would throw up about 4% a year, were you not taking the risk.

If the market goes down, you knock me down as much as the market and you've got to know you wouldn't pull out the stock portion in the bear market you let that come back and that generally will take 18 months to three years of its or if there's a real problem. Not like we're in now or it's event driven and we recovered very quickly but something little more systemic that might take a bit more time and yet when you look at that the 4% year on 30,000 would throw off $1200 a year so the idea would be if if your money was invested that when a balanced strategy, a mix of stocks and bonds and other fixed income type investments you could pull out 1200 a year or an extra hundred a month and never touch the principal so that would be one option. The other option is to be a little bit more aggressive saying that you know we don't plan to touch this. We got this 55,000 we can access with an emergency and were living well within our 5000 a month put in a little bit in savings every months were to take a little more risk and try to grow this and maybe achieve a six or 8% return on average for the next five or 10 years so that this money and I wasn't 30,000. But maybe it's 50,000 and serve one of you needed assisted living or you needed some for a short period of time.

Some in-home care or something like that that money could be chewed up in a hurry just because of the cost of that type of care, but at least you'd have more than the 30,000 you have now so it just really comes down to how much risk are you willing to take for how much return of the challenges that amount of money it would be difficult of hired investment professional to take that on for you. Other times, the minimums would be no more than that. So you would have to really look at other options and I would say perhaps visit with our friends, of sound mind investing.org, or you could use one of the Robo advisors like Schwab intelligent portfolios that are meant and I think you could build a low-cost portfolio accomplish your objectives. Jeannie thanks so much for calling us today would hope that helps you. We have to pause for another break. Just as quick reminder, we are pre-recorded today.

Don't call but don't leave in some interesting calls and questions coming up right after this. How should we as Christians think about investing. What if we could invest our money in a way that aligns with what we believe that Eventide we believe it is supposed to love God and love our neighbor in the very practice of investing we design investments for performance and better world so you can invest for the future with a sense of wholeness and purpose.

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Subscribe today. My movie radios.my movie radio money and life run on the same track. Unfortunately, sometimes it seems like your money is heading in a different direction from your goal, and never enough three keys to financial contentment. Author Ron blue helps you to break down all your financial options to a basic floor and then shows you how to keep it all chugging along in the right direction on the same track never enough three keys to financial contentment available when you click the store button moneywise live outdoor from John Scott Sally's order and I will rake the Gold Coast for hours before the center finally made Lambeau, delivering publishing, rain and wind from Pensacola Beach, Florida westward to Dauphin Island, Alabama National Hurricane Center says Sally will cause dangerous flooding from the Florida Panhandle to Mississippi and well in London in the days ahead. Sally is now in tropical storm resident Rob issuing an emergency declaration for Oregon Jude of the deadly wildfires that burned across that state and federal officials have also declared a public health emergency is dangerous. Smoky conditions continue socks ending mixed. After getting a brief boost from the Federal Reserve's decision to leave interest rates unchanged at nearly 0 but I'll gain 36 points.

The NASDAQ off 139 and the S&P drop 15 this is SRN news moneywise live with Rob West, Steve Moore go back to our phone lines. Let's see, Indianapolis, Indiana hello Mary, thanks for your patience. How can we help cost-sharing counsel like me to put money to collect on something that could go to if you put money in kind like they go to the market might get and I would have died that money come out. Tax-free money can do online content and felt like this one, but I heard somebody say that you don't want to think about and you not not that good way to do it because it's not much to get it not like to do what yeah yeah Mary will I appreciate the question what you're referencing is the fact that the gains inside a life insurance policy can be.

They are tax-deferred, and so they are treated similarly to retirement accounts. Depending upon their health, how to set up and have them how it's funded so that is correct, but I don't like it for an investment strategy, at least for the for most people in terms of being your first option that you have the fees associated with whole life insurance are high compared to other investment options you have little control over your investment results and so I think the net result is for the average person. It's not the best investment strategy. What I would do is separate your need for life insurance as a death benefit to protect the needs of her dependents and loved ones. In the event that you were taken home or or your spouse was and by the proper amount of insurance that you need for your family on you and your husband in this case through term insurance and then save through other conventional methods which would allow you greater control over the fees and expenses and give you more flexibility with regard to the investment options so this would not be my default them and are there some exceptions sure in they would be for those folks who really have maxed out all of their other long-term tax-deferred saving option so if you'd maxed out your 401(k), IRA and Roth options, then a whole life insurance saving strategy can make some sense. But at that point, I would be asking, you know, should you be thinking about the question how much is enough and perhaps you know you're over accumulating and you could be looking at greater giving opportunities or something like that. As opposed to just continuing to accumulate. But for those individuals in this would be a very select group of people I'm talking about in terms of the maxed out every other option but for most people they haven't and so I think using those more conventional options again with less cost and greater repertoire of investment options would be the better choice you follow that the all option out yeah yeah so I like that option better.

There are policies out there as you're referencing that kin can also be used for long-term care and so that is one option to consider. But again, you are paying for that death benefit and so if the death benefit is not needed. Again, I'd rather you save in other more conventional methods and then by a straight long-term care insurance policy specifically for that purpose.

Now if you need a death benefit, and you want to try to combine these two that is something to consider. But I don't like you paying for the death benefit if you don't need it. I'd rather you just pay for the pure cost of the long-term care insurance and then save outside of that in a way that's fit your goals and objectives. Mary if you'd like to go deeper into the subject and is certainly nothing wrong with that. I'd recommend our friends@soundmindinvesting.org you can go there. They have lots of good Cherry Hill that you can read on this. Also they have a wonderful book called the sound mind and handbook that will cover to cover all the pros and cons of what we've been chatting about here today. Again, sound mind, and.org and we wish you well.

Thank you Naples Florida rain old what you question for Rob West thinking Michael, I have I this is my first time granddaughter and and I'm so happy to have it.

She is 2008. Now and then I would like to open an account for, I don't know if it's 529 all and investment could be left 15 grand I would like to know when the best way I can do that for yeah well the only problem that I'm hearing in this equation Reynold is that you're in Florida and she's in California that's way too far away going to give it till be in charge of it. Just I'm going to give it like it well you most certainly can open a 529 account is a grandparent that you generally can name anyone as the beneficiary and Reynold. I think the key here is if you've already decided in advance that you'd like to bless her with this specifically for the use of qualified education expenses as opposed to having it available for other purposes, then I think that's a great option because as long as you decided that I wanted to be specifically for college than five 529 plan is my favorite option for that.

It's going allow again you to name hers beneficiary you'd be able to contribute up to 15,000 for 2020 if you're married between you and your wife you could put in as much is 30,000 against the exemption that's available for federal gift taxes and then it could be invested. It's can be treated favorably if she has the option to qualify for financial aid. Down the road because it will be an asset of the parents or grandparents which are treated much lower than if it was an asset of the child. So I think the next step for you is to go to saving for college.com saving for college.com and find out given where she lives and where you are.

What is the best 529 plan. Given that you don't have state income tax in Florida, you're probably going to want to choose a plan in another state. Here's the good news. Most states allow you to use their plan. Even if you're not a resident and so would you be able to do is look for the highest quality plan that set has the best results from an investment standpoint and you'd be able to fill out a the questions there as their presented saving for college.com and you would be recommended which plan would be best given your situation, so I love this idea. I think it will be a great blessing for her down the road thank you very much we appreciate your call today. And with that I will have to put a bow on it for this segment you're listening to moneywise live he's Rob West. He has no grandchildren. I'm Steve Moore. I have two grandchildren. But if I went into that topic. Well Rob would fire me and we just have enough time to do that but granddaughters will change your life and I'll just leave it at that, all except for the money wisely magazine we have a new E Magazine. It's a quarterly publication.

It contains special podcasts and articles and inspiring stories and you should check it out today your free subscription, you sign up for that. When you visit our website moneywise.org moneywise.O are you listening to moneywise live with Rob West. Today's broadcast is recorded so we won't be taking any calls but have some calls lined up. Here's a great deal more about our money than most of us imagine Jesus is more about our use of money and possessions and about anything else, including both heaven and hell in managing God's money.

Author Randy L breaks it all down in a simple, easy to follow format that makes it the perfect reference to look you're interested in gaining a solid biblical understanding of money, possessions and eternity managing God's money is available in the store moneywise live.org hi, I'm here to help you understand how urgent it is a sugar for every opportunity to the eyes of a layman, always watch your people got you to contact babies repeatedly brought their name to your minor several people mentioned her name to you or place or experience remind you about the is how God talks to you always fall and that you never be sorry more often you be surprised over the perfection of God's timing when your call came exactly when they needed your call. Most had the exact word of the information of the Scripture. They knew that very moment. There's nothing that rivals what that does to your faith and their in Isaiah 4310.

God says he pointers his witness so that we will believe that we when we have these kinds of experience and nothing can shatter no matter what we face, and that's a great word. There is nothing more exciting than knowing God is using you to move people closer to him. Join is not America.

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If you take away all the witnesses and the murder weapon with my client's fingerprints.

There really is no evidence is that not true.

Well, there's a written confession. Okay other than that, to I guess without all that evidence, there is no case by case that's in it, are you sure you don't need to defend me a little O. Trust me, this case is in the bag. If there are no closing arguments will excuse the jury for the liberation, Your Honor, I speak for the rest of the jury very well. This court finds Mr. Whitmire guilty and sentenced to life in prison that is so not well for you. My bill in the morning.

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The guy with the answers he's Rob West and work happy to have you with us on the program. Today, however, we are pre-recorded. Taking your calls lined up some calls in the past that I think you'll find interesting, helpful, and the very very trite way but I think the upcoming information will help bless you and why. If you're on Facebook.

Check us out. You'll find this at moneywise media on Facebook moneywise media lots of interesting information there that you might want to avail yourselves of. Let's go back to where phones Cleveland, Ohio and Gail what you question today for Rob, though I am going to transfer 8000 out of my and someone had mentioned that it would be why you transported transfer earlier into a risk investment. Until that happens I guess the galas this is a result of the divorce decree yet okay and that this is the portion that's going to be going to your ex-husband is a right crack okay and so you're wondering right now while you're waiting for this period of time for that transfer to occur, whether or not you should move to a more conservative posture with the investments. Have you had a conversation with him about that now.

Okay. All right. Well, if this you know what I would typically say is you know it's inside an IRA.

I would just leave it as is and then you know when the time comes, he's entitled to whatever portion it is based on the divorce decree and at that point he can then take in the form of an IRA having been transferred out and either leave the investments intact or make a change at that point, unless there's some requirement as a part of the divorce decree for you to to make a change to the investment mix if you wanted to have that conversation with him about the portion that will be going to him and how you'd want to do that. You certainly could but my typical default on that would just be leave it as is were you know however you would normally have it invested and that the point at which it becomes his asset by virtue of this decree, then he would then take over responsibility for the investment management at that point to some extent, it was implied when it in an IRA and you are at risk with the money market going up and down transferring it to a lower risk so that there is not that dollar amount I see okay yeah and so because the overall value can fluctuate and he's getting a set amount. It could be a higher percentage of what you have today based on the investments declining in value. Is that right crack yeah but here's the way I would look at it is that this is a long-term investment and so really you want to take the long view with the entire portfolio even though he's entitled to a set amount I getting more conservative is going to penalize you because you don't have the potential to have the growth that you would have, as long as this investment mix is set in an appropriate way according to your long-term goals and objectives.

The market could fluctuate along the way and I realize those investments wouldn't be able to rebound because that cash would be taken out, but ultimately I think as long as you're properly invested. You know you should be okay now. If you wanted to take a portion of it, perhaps maybe even equal to the portion that's going to be exiting the portfolio and get more conservative with that. Maybe that is is a wise posture at that point, but I certainly wouldn't do it with the entire portfolio.

Given that you're taking the long view on this perfect right to call the day you're very welcome. Thanks for listening and I hope that helps, thank you very much Gail. Let's continue on South a bit, Miami, Florida and my route.

We appreciate you holding Mammon. What's on your mind share guiding I hear about my daughter got the boy and little girl he liked living in my second home so I do have my home all living and not really financially helping her and with the hurricane that we had all my longer how I'm selling my now in what now I want you to get all my question what that line a capital gain all if I open an IRA for many more were my home that help lower the mortgage and might compete with the money to do with the money. After I got my route. What is this home. This rental property okay great and what you expect the game to be on the property after you deduct to the original purchase price, the improvements, the costs would you anticipate paying capital gains tax on okay alright so you have a significant amount and you're not planning on replacing this property with anything else correct.

I allow okay yeah and then how much you plan to give to your daughter, probably about 20 okay alright well that is a couple of options here in terms of mitigating the capital gains tax is not a lot you can do mean you can offset gains with losses which is called tax lost tax loss harvesting where you pair the game from a cell with a loss in another area of your investments but if you don't have any other games that you can losses that you can offset the gain with then that's not can be helpful. There's something known as a 1031 exchange, which is where you exchange it for a like kind. In this case property new real estate were you in a sense, defer of the capital gain.

That's not applicable here and then the only other thing other than charitable giving would be turning your rental property in your primary residence and you stay there long enough to meet the requirements from the IRS which is two out of the last five years has to be lived down as your primary residence, I assume you don't want to do that if you did you could you have exclusion up to 1/4 million dollars of capital gains, but apart from that, I think what you're trying to do is a good thing and that you're taking this asset you liquidating it to pay likely 15% in the form of capital gains and you could not offset, that was some charitable giving, which would of course be deductible to the extent you get up above the charitable or skews me the standard deduction and then you could make a gift to your daughter of 15,000, which would be part of the annual gift exclusion you could do that you know of 15,000 per year.

Anything over that would go against your lifetime gift exclusion. But that's not going to diminish in any way the capital gains tax.

That's just to be a straight out gift.

So I think based on what I'm hearing, you're likely just going to need to pay that apart from any charitable contributions you want to make with this and I would talk to our friends at the National Christian foundation about that in CF giving.com but I love the idea of you taking this asset, freeing up these resources and then shoring up your financial life, especially alongside the gift to your daughter.

I know I'm sure she'll be grateful Myra were glad you called. Holding information helps you.

Thanks so much Rob to see if we can ski us squeezing Randy he's calling from Butler Alabama Greg Randy were so glad you called. How can we help like yeah I have a right in our software… Right when you're in college we bought about several thousand dollars bonds when he was three and four years old used for college and I was don't think they maturing to the near even their fight you right now 15 years later checking on you know how to make those with mature yes I think bonds and also I am no longer employed on contract work which I don't have access to 401(k) contribution and not always done that 30 steady over the years just some advice on what to do now okay very good you couple of things you just move through them quickly number one savings bonds are paying a whole lot these days, but I would start by finding out exactly what the value of the bond is today and in the future with the coupon rate is and that which is essentially the interest rate and you can get that information by keying in your specific bonds and the cusipnumbers@treasurydirect.gov treasury direct.gov. I'd start there and then once you have that information. I think you can make a good decision.

Moving forward with regard to the 401(k).

Once you separated from that company I'd roll that out to an IRA either invest that yourself and high-quality mutual funds in reference of sound mind.org can help there, or if it's an amount that would be sufficient for you to hire an investment professional that would be another option for you as an independent contractor. I would be looking at probably either a setup IRA or solo 401(k) and individual 401(k) is the place where you're going to get the ability to put away enough money for you to be able to have something on an annual basis that's meaningful being contributed toward retirement. So I checked those out and probably talk to your CPA or accountant about that for a recommendation based on your specific tuition and Randy were glad you called. Hope that helps you and your son. Thank you very very much and thank you again for turning in this thing being a part of the program moneywise live as a partnership between Moody radio and moneywise media and you are listed as the Rob West, I'm Steve Moore hoping you and yours have a wonderful remainder of the day, then join us again next