Teaching from Christmas Past

Today's version moneywise live recordings. Our phone lines are not open and the angel said unto them, fear not for behold I bring you good times of great joy which shall be to all people.

Hi Rob West, wishing you and yours a blessed Christmas and as Christians living in a materialistic society. We must remember to celebrate for the right.

The birth of our Savior joins us to talk about that.

We have some great calls lined up but we will be taking your life calls today because where prerecorded messages moneywise live financial our good friend our Dayton is the former host of this probe and founder of compass, finances, God's way.

Cowards raised two incredible children who are now parents of their own and along the way, he learned some things about keeping Christ in Christmas Howard welcome back all great Rob on Christmas and do you as well Howard are opening verse is, in fact, from Luke two: it goes on to say. For unto you is born this day in the city of David a Savior, which is Christ the Lord.

And this shall be a sign unto you, you shall find the babe wrapped in swaddling cloths and lying in a manger and suddenly there was with the angel a multitude of the heavenly host praising God and saying, glory to God in the highest and on earth peace and goodwill toward men. Our little about you but there's nothing more beautiful than the Christmas story in the King James version is in their totally agreed Rob to grow up in a family that celebrated that passage of Scripture and it just the great memories of my childhood with my mom and dad and sisters and we wanted to pass on to our children as well. Speaking of Matthew and Danielle. Did you read that passage to them as they were growing up we did. We greeted the family on Christmas morning just before opening the present and we want the kids to realize that the real we were celebrating Christmas was a miracle in Jesus, the creator of the world coming to earth by God greeted person that would read when the kids got old enough they agreed and sometimes a little hard to keep them from being distracted with the present order of the tree but it was a tradition that that they loved.

I know it was ruled that giving and instilling generosity play at this time of year with your family to grab out the most memorable experience. I was in office development business and we hired a wonderful African-American man named Raymond that he'd been introduced to Christ while he was in prison where he became deeply committed to Jesus. He was the best employee I ever had was struggling financially – so we encouraged our daughter Danielle to give his daughter a particular doll that she had and Danielle didn't want but we took the doll witnessed and visited her home. It was a fixer-upper that our family had actually given Raymond practically no furniture. And when Danielle met his sweet daughter. She realized that she wouldn't have any presence. She probably changed her mind and Danielle is delighted to give her that doll and it was life-changing for Danielle and really encouraging to our whole family. Well, I know that was experiencing never forgot what advice Howard, would you give his parents today about teaching the real reason for the season. Rob I think it's more important today than anytime during my lifetime because so many in our culture plant rejected Christ so we need to be intentional in teaching our kids and grandkids.

The real reason that we celebrate Christmas that were honoring the Lord Jesus for leaving heaven coming down to earth to die for us so that we can have eternal life and spend all eternity with him. If we know the Lord. You're exactly right Howard, and we've got to do that with intentionality is not who gets swept up in the culture and focus on the wrong things right. Absolutely Rob it's really a righteous opportunity that we have as parents and grandparents. Yeah that's exactly right. And generosity is right at the center of all of it because we're experiencing God's ultimate generosity in the ultimate gift that he's given us Jesus Christ his son, our Savior born on Christmas day will Howard. Merry Christmas to you and yours.

Thank you for stopping by.

Loved it.

Rob Merry Christmas to you as well thank you card things better guest on this Christmas Eve. You can find more about him and his great ministry at compass 1.4. Today's program is prerecorded, so keep that in mind when you hear phone numbers going to pause for a brief break now.

Rob West will be back in a moment with more moneywise live along with us today. I moneywise I their team is taking some time off.

We're not in the studio. This is prerecorded, so don't: but we got some great questions lined up so it said right back to the phones in Merrillville, Indiana is Lola Lola. Thank you for your patience. I can my Catholic my call pickup program. Thank you Mike… If you can double-click I said jokingly to walking dependent on track to build on the don't have any clue as to what to put together back in the last night at the independent contractor that you don't have any. I would have to sit.

Thank you kind of give us some advice of what to do.

You know to it on that kind of you know I very good. Well, I'm delighted to hear that she's got this job. I'm sure she's grateful that she doesn't your right to ask how to approach this, because as an independent contractor Lola.

There are few things she needs to be aware of the most important thing is that she should probably be setting aside about 30% of her salary into a separate savings account for taxes specifically so as an independent contractor. Her employer.

Even though she's not an employee but the person who pays her bills or pays her won't withhold taxes for her so she'll need to file and pay what are called quarterly estimated taxes to the IRS on that which the form 1040 ES 1040 ES and it may behoove her to get a CPA or account if she is typically done her own taxes or she's not had to in the past, at least for this first year just to get everything set up and make sure she's filing appropriately, but she doesn't want to wait and just pay the taxes when she files or return the irises can expect an estimated tax payment every quarter and she automatically has that 30% just moved over every time she gets paid to the savings account money will be available when she makes her taxes and she may. That may be more than she needs to put aside, you'll learn that in the first year she may get a refund and perhaps you could back that down a little bit in your two just beyond. That means good, wise, money management would say she should save up an emergency fund of at least three months expenses once she's done that. I would encourage her at this young age to open a Roth or OTA to Roth IRA and start putting in the maximum annual contribution of 6000 a year since she doesn't have a retirement plan available to you her if she does that Roth every year fully funds it for you as young as she is. She's can have a whole bunch of money saved up.

That will be tax-free in retirement and she could open that with one of the Robo advisors betterment to the Schwab intelligent portfolio something like that. And then, of course, and this shouldn't be the last thing you should actually be the first thing even though I mentioned it last. I would encourage her to be generous to her church and start to learn what it means to give systematically to give. At a minimum the time I've 10th of what she earns or increase to the Lord as or better recognition, and a grateful heart for his provision and to recognize his authority and ultimately it's an act of worship. She can give cheerfully, but if she does those things that shall put herself in a position not only to honor the Lord and to have the money to pay her taxes but to really have a strong financial foundation under her for her future does only make sense yes 1040 EZ is an Edward S's and send me a 1040 yes okay that's right yet and that will be the estimated payments.

The estimated tax one fourth of what she expects to be able to need to pay annually toward her taxes and then when she files she'll just list the amount she's Artie pay then as the quarterly estimated payments and that'll go go against the total amount that she owes for the year.

If I walk I would just to make sure that everything's been being done properly and that you know her taxes are filed and you know as an independent contractor. She's can have a bit more ability to deduct certain expenses that may be related to her work and that no advice could come from the CPA to make sure that every available opportunity to deduct anything is fully maximized to the full extent of the law. So Lola you tell her work cited for her and thank you for calling into the program today. We appreciated but said from Maryville, Indiana to Georgia and welcome John, good afternoon.

I got five more years. I hear more years, five more years left on that house probably got short-term Roth IRA Roth IRA thousand dollars great. I got my grind all over it all. Over the last 25 years that but all of it just got wiped out stolen taken away.

I made it down. I doubt dollars that the last five years. So why in the world do you they say you can only put $6000 a year. I finally landed a really good, but it only got five more years.

So why did they say you can only put $6000 Roth IRA. Yeah, yeah, well, they gathered recognizing that you know for most folks they have access to another type of retirement accounts that allows them to put in more so for instance you know with the 401(k) and the contribution limit is up at note 19,500 for this year it's gonna bump up to 20,500 next year if you're self-employed, you could be in open a separate IRA which will also have in a higher contribution limits with the setup you can put in your 25% of your compensation or $58,000 for 2021, whichever is less. So you've got plenty of ability to contribute on a tax-deferred basis and then it with a traditional or Roth IRA.

Usually that's supplemental because it's in addition to, and can absolutely be invested. Additionally, so I think the question is, what's the best opportunity for you. I'm assuming you were considered self-employed as I write. John and okay and so that it may be a great opportunity for you to look at a sample IRA and you know which would allow you to put in quite a bit more than you have. You know, for this year and you could do a Roth on top of that, so I would go check with your tax preparer or connect with an investment professional. But this is going to give you the ability to socks the money away. I think the key for you is to maximize these five years. I'm delighted to hear that you will be completely debt-free. By the time you know you approach retirement. The trucks paid off. The house is paid off. That's can get your lifestyle expenses down as low as possible, then work out that retirement budget to see what income sources you have. Perhaps Social Security if you can work until full retirement age, and then figure out what your gap is which you because you paid off all your debt.

It's gonna be as low as it possibly can be. And then figure out how much you need to save in order to make up that gap and then let's really maximize these next five years with his good job assignment away as much as you The end of the day. Trust the Lord and be a good steward of his will be right back, grateful to have you along with us today and moneywise will I blessed to host their team is taking some time off today. We are not in the studio. This is pre-recorded, so don't call in, but we got some great questions lined up with that right back phones. Samuel is in Colorado Springs, Colorado. Samuel can help you call Joe, I will pull market with Vanguard Michael also will want to be contributing about 50%. Okay because 23rd because I'm always going to school, but don't look look at percent of all market bombs and 57 and you.BL 5/2 will talk on this point.

950 71 a.it's okay, you yeah a very good season. How much is in stocks is it that 70% of the portfolio having 57 and so you have a good rest. 43% in bonds six 6767 okay and so 33% in cash and bonds.

Yeah okay and tell me how how are you doing in terms of the portfolio do you feel like you're on track to have what you need to be able to supplement your retirement income when you retire. Are you ahead or do you think you're behind a little bit in your savings yeah because I hate you and Bill.

I met a valid. I don't know how much do you have in the portfolio roughly on three, 353,000's and do you think you're going to retire around 65 or what your plans probably won't retirement was all all 67 okay see you got another 10 years or so before you retire. Okay, very good.

Yeah, I'm comfortable with this allocation actually minimal unless your you know you have a particular concern about the market you're feeling like you need to be in a much more conservative. I think you being in a 2030 target portfolio with 67% in cash misusing 67% in stocks 10 years out from retirement is is about right because that's can give you a good growth engine.

You got time on your side and I think ill given that you're going to wait until full retirement age in a little unless again you felt like you just wanted to be extra conservative.

I think this portfolio is is just fine. So I would be comfortable with you proceeding unless you had a concern otherwise is an extent.

Okay, now and in this will automatically get a rebalance each year and get more conservative over time so you I would just let this money continue to grow and you know I think it sounds like you're in a good place that the only other thing I would do is you know as you get closer and closer to retirement. You want to start to think about what your budget looks like in retirement and what do you need each month to cover your expenses but hopefully if you're not already debt-free.

You will be by then and hopefully your expenses come down because you're no longer putting money into retirement savings and if you drop your life insurance you no longer need that. But once you settle into that retirement budget then we need to compare that to the Social Security income you have and then figure out how much you need to draw off of this account ill every year and let's say this grows to half $1 million, and I think if you could plan to not pull more than 20,000 a year out of this, then you should be in a good spot where you know you're not can impact the principal we could have somebody invested for you in such a way that it protects what you have but throws off, you know, a decent income and the need of a small growth component to it that would provide a little extra return over time, and if between that 20,000 roughly. And you know what you would bring in from other sources including Social Security. Hopefully that would cover your lifestyle, so I'd love for you to do some planning. As soon as you're ready to begin to look at that and that will let you know what your ultimate target for this account is, but I think this this target date fund, you're in the allocation you referenced some likes sounds like it's a good fit.

We appreciate your call today Samuel before we take our next break. God let me check in and take an email here, we do hear from a lot of you who send us emails and you want your question right on the air and you can do so at questions@moneywise.org why this exit comes from Larry and Larry says my aunt has run up a ton of credit card debt.

He wants to consolidated and or we want to consolidate it and get it paid off.

How can I help her without just giving her money to pay her bills and I think perhaps Larry that the best way to go would be credit counseling.

Essentially what would happen is if it's enrolled in a credit counseling program. The account would be closed. There would be in a single monthly payment that would be determined based on the amount of credit card debt that's owed. But, the kicker, as it would be in a much lower interest rate, which would get a larger portion of that payment every month. Going to principal reduction in the cool thing is that you could actually pay them directly for that amount. So you would ensure not only that is again to get paid, but you be doing doing it in such a way that you know that the money is going directly to so check in with our friends and Christian credit counselors.org Christian credit counselors.org they'll get it all set up for you. I think this is moneywise. I will be right back. Gratefully doing this today for moneywise like biblical wisdom for your financial decisions on Rob West to hosting our team is not here today taking some time off this is going to know: that's a great question lined up in advance like this one from.I understand you're in Texas and you actually have a testimony to shares that right. Thank you for guidance in how to make ends meet from paycheck to paycheck and I realized it had been trying to create healthy for me and this really helped to think in our heart delight see where I'm spending my money if I wasn't spending it on that parasympathetic, for saving my daughter this get made at college and find a way to help her with that. Very good. Slow down appreciate you saying that you know and this is a question we all should be asking ourselves in.

You willing to make changes as the Lord leads you know if we think about our money in terms of it being a reflection of what we value of what's most important to us the way we handle God's money says where our priorities are in the question we all have to ask is if this is telling a story about what's most important to me is it consistent with the story I want to tell and if not, what changes do I need to make and that doesn't mean we can't enjoy God's money, in fact, in first Timothy, a part of the reason that God entrusted to us is for our enjoyment. But we should do that in the context of a plan that allows us to live within our means. We should be content. We should be giving generously, and I think that we need to think about our values. What's most important to us to make sure that our money is really aligned well with that in inner your check register whether that's online or physical. It tells really what your priorities are and I think we always need to be evaluating whether or not we like the story it's telling and if not then we need to make some changes so you're in good company.

Donna and I appreciate you sharing your thoughts today and encouraging her other listeners and will certainly pray that the Lord will give you wisdom as you make decisions moving forward.

God bless you. Next up is Pepsi and Pepsi actually called didn't want to be on the air but had a great question. So let me ask Pepsi's question, which was simply she says I want to start small with my investments. Am looking for a place to invest $25-$30. The other are there any resources you can suggest and Pepsi. It's a great question because here's the thing when it comes to investing. Once we pay off her credit card debt and once we have that emergency fund of three months expenses. We should be looking to set something away for the future. Recognizing we should consume all that God entrusted to us today.

We should save portion of it.

In addition to paying her lifestyle expenses and giving we should be saving a portion for the future and what we think about retirement.

It's not just about the mindless accumulation of wealth, but it is a recognition that there will come a day where we perhaps can't work and we want to be able to support ourselves and espouse it in some cases and we do that by setting something aside on a systematic basis and we all have to start somewhere so if you have 20 or $35 that I would say let's get started. Here's what I would look at in the fin tech age that your stands for financial technology there some wonderful low cost investment solutions that allow you to start with no minimum and one of those is called betterment the ETT ERM ENT betterment you'll find it@betterment.com or you can download the smart phone app by the same name that would allow you to set up an investment account contributor $25. Perhaps you transfer right there from your checking account.

You can set that up on a systematic basis or just start with that amount, and by answering a series of questions they're going to build a portfolio for you. It's called an indexed portfolio which is just this fancy way of saying you're going to mirror the broad moves of the market using a very low cost investment strategy. So I would check that out betterment.com and I think that could be exactly what you're looking for and we appreciate your call today. Randy is in Palm Beach Gardens.

Randy how can help user think this to my home. I am not in since 1999 I don't have any debt. I don't have a lot of good target city things because they came staying out of debt.

I can pay off my mortgage rapidly in the next six years down the amortization now that I own 300 and I cannot do that and not put 15% of my income in an investment because I can't think of 15%, then I can't attack my mortgage. I will keep it on the regular mail you surely ask a couple questions and I can certainly shaped as somebody who sin is serving as a pastor you not earning a ton of money with the family trying to honor God's principles of managing your money staying out of debt. It's challenging to do everything but kudos to you for doing what you've done and I love the idea that you're weighing these two options of saving for retirement and paying off your mortgage. I heard you say you're 49 so would you expect that you'd be working for at least 15 years or more. Yes I would. I would expect probably at least okay sorry very good and on your current trajectory. When would you have the mortgage paid off if you didn't do anything different than what you doing right now each month, literally, and 60 but that's with adding this extra correct word and prioritize the retirement contributions. Then when would you have it paid off all that you, but I think about when she slightly.

I think one other option because I like the idea that you would you know if since you haven't saved a lot that you'd start to take full advantage of the tax-deferred retirement account get that money growing for you on a tax-deferred basis which it was a really powerful force in you even though your you consider yourself a little behind in your retirement savings you still got as you said couple of decades for this money to grow in so I wouldn't want you to miss these next six years.

Perhaps go back to your mortgage company or you can do this yourself online and get an amortization schedule that tells you how much you need to add every month so that you can sync up your payoff with your anticipated retirement date and then put the rest into retirement so that the idea would be you can save as much as you can for the next 20 years.

But when you hit that point, you know that the mortgage is paid off. So now your expenses are as low as possible, that might be a middle ground to consider that would allow you to do both things take advantage of the compounding and the tax-deferred growth and make sure you still don't have that mortgage payment when you get into retirement.

So that's at least my best advice I think you could go either way.

And certainly it would be a bad decision still alive will talk a bit more off the air and pay before we go to our break. Let me take an opportunity to invite you to be a financial supporter of money wise media. We are entirely listener supported in your gift would go a long way toward helping us finish the year strong and prepare for our ministry activities next year if you count yourself among our moneywise family we would invite you to give you can do that quickly and easily on our website just had to moneywise. The.org and click the donate button moneywise live.org and click donate. You can give their online securely and quickly. Or you can find our mailing address or phone number. Thanks in advance for your gift for December. Thanks for turning in the moneywise live in this segment is lined up in advance puts it right back to the phone, Chicago, Illinois hi Tom, how can help user thanks to my call appreciated your show.

Even though a lot of handling money here to be quite honest I haven't always been a good steward and I'm trying to do that. I have an old 401(k) through former employer or had that I recently converted to an Ira got a friend who is not a believer ultimately I would like to know an advisor wanted a certified kingdom advisors but just some advice he had given me start investing the Ira was to keep it right now in a Fidelity government money market fund and then funnel 30% of good into US treasury fund 10% into a municipal bond. He suggested a couple of and I was wondering what your thoughts on that was going based on the market. The current market to be very conservative click that and also I work for city College so I have a confession pension. My current employer and very good. Well, I think the starting point is to recognize your God's word is a lot to say about handling money and we can apply that to our lives very practically with the end of the day. We need to trust that he is our provider and just try to be found faithful as we manage what passes through our hands recognizing it's isn't, therefore, were tasked with being a steward. He certainly doesn't want us to live in fear and I think part of that we can overcome by making sure trust is in the right place, making sure we realize that money is not our goal. It's a tool to accomplish God's purposes and to educate ourselves in his way of handling money's principles and how we can apply those practically some thankful that you listen to the program and let's see if over time we can't move you from fear to ultimately having some confidence in managing money. God's way and I'm delighted to hear what you said about you've got some money that you built up. I am requesting a little bit just the strategy because if I understood correctly hundred percent of this would be an in income will 60% in government securities, 30 in US treasuries and 10 immunities which isn't to give you a whole lot in the way of return and tell me, where you're at in terms of how long you plan to work and how much you saved at this point, I'm actually part like I do not want to approach this from your standpoint, I'm 6059 about 60. I feel like I'm pretty healthy.

I have about 10 or more good years of work in the and your you know that's great and and you said how much of you saved up and that's in this IRA.

The IRA just has about 40,000.

My pensions got about 95 so some of my concern. I only want to use work anymore because I hear you, but you know is is that I haven't always been a great steward and you know I don't have shirts that you have control over the pensioners that just come turning in the background and eventually that'll be a monthly check to it.

It's actually a traditional fund, which is guaranteed for 1/2% okay suit. We don't have to worry about you know how that's allocated.

This is can happen automatically, so really what you're talking about.

Of this, is this IRA and are you adding to that each year were not. That was my part B of my question is, my understanding is, is it true that I cannot llama part of this pension I cannot contribute to that IRA II don't think that is going to be a problem but we can check on that for you.

You should be able to do that even though you're in the pension so that that shouldn't be an issue but I think the question then is, you know how to invest. This me you still got time on your side. Were talking 10 years and even then you know if you're in good health and the Lord terrorism and you're going to need that money the last couple of decades or more after retirement.

So I guess that would be my question is you know is this the portfolio he's recommended driven by your concerns over the market or his that because what I would say is that you know is a in a guy who's 60 planning to work.

10 more years. I probably have at least half of that portfolio in stocks just as you have the ability to have a grow a bit in a while you're continuing to work, especially because you try to make up some ground don't want to throw caution to the wind and be too aggressive. I would totally concur with that but that's what I'm saying you maybe half of it would be a more fixed income type investments and then the other half you where it has some growth component and the good news is that the let's say two years from now.

We had a recession in the last 18 months or two years. Well, you're only four years then you got another six years of what would likely be in a bull market in a recovering economy that would, you know, because nothing to bounce back and moved to higher ground in that stock portion of the portfolio would provide a bit of a growth engine for you along the way so you know that would be the approach that you know I would take in to your point.

Yes, you can contribute to a Roth IRA in a traditional even if you have a pension and I think you know that's probably your best interest to have all of these accounts working for you, you know, especially as you reduce any potential risk associated with the pension, you know, failing or something like that. I mean, that's very unlikely, but it could happen and so having multiple accounts of different types you know is just proper diversification. So what I would say is keep contributing to the IRA every year diligently limit your lifestyle and then I would choose an investment strategy for the IRA, probably using one of the Robo advisors with about a 50-50 blend between stocks and bonds.

You can also visit with our friends and sound mind investing.org and they would give you some great advice on which mutual funds to pick based on your age and what you're trying to accomplish. This only makes sense it does it does prior I had it in a Vanguard 2035 is pretty aggressive so the change to be so conservative. I think that is about right then and I would heal even a 2035 amine given no that's quite a bit further often even when you plan to retire. Given that it's only 20, 21, your plan retired 10 years.

That's probably about the right mix so I would say you know you could go back to the 2035 or if you want to take a more customized approach. You know, again, one of the Robo's could serve you well there but I think your head in the right direction. I would just continue to be diligent in your savings, you know, keep your lifestyle at a minimum, and I think you can make up a lot of ground over these next 10 years.

So all the best to you Tom. We appreciate your call. Let's head next to Sarasota Florida and welcome Kylie to the broadcast Heather question regarding wind and we want to start a retirement plan for ourselves on that question we often want to credit our year old that we we want to be well-prepared sure sure okay well with regard to your retirement options. Kylie, you will have either of you a retirement plan available work that works for me I don't I don't have the benefits he had a 401(k) okay great so you could put in quite a bit, you know, there are me 19,500 for this year and goes up by a thousand next year to 20,500. So that's been a quite a bit that I would need to happen on a salary deferral basis, which means if you haven't started yet. There's only so much you can do for this year because it's going to come out of his remaining paychecks. Beyond that I perhaps look at fully funding traditional oral Roth IRA.

If you guys are young. I would say let's go undo the Roth IRA for both of you a 6000 piece so be another 12,000 you could put away for retirement and you can do that anytime up to. When you file your 2021 tax return. So I think both of those options would be great for you to get started and you could choose from the investment options may be a target date fund or something like that in his 401(k) then diffuse like a Robo advisor for the Roth IRAs that would give you a broad index based ETF portfolio work else a lot of fancy terms of base of you just capturing the broad moves of the market over time in an index fund that mirrors some of the big market indexes so I think that would be a great approach.

You can look at Schwab intelligent portfolios are better meant for Vanguard advisor anyone of those three I be comfortable with for you to open the two Roth IRAs and then let's have him go ahead and start contributing to the 401(k), at least up to any matching, but beyond that, let's try to get a total of 10 to 15% of combined income going into retirement accounts with regard to your son, would you be comfortable making the decision that this money is used for college, or do you want it available broad want to general money on general biking want to drop it on okay.

The key is the do whatever he wants with it, so I just open a taxable account with you and your husband's name. You'll know it's earmarked for him. Didn't just go and start systematically investing in that every month and I would do that with the same company that you open the Roth IRAs with use the same Robo solution time and then when he's ready. You'll be able to say here is not until the line will talk about the mechanics of that that's good for us today.

Moneywise was a partnership between radio and moneywise media think you might thank you for being here as well will see you next