Faith Finance is a daily radio ministry hosted by Rob West. The program offers a practical, biblical and good-natured approach to managing your time, talents and resources.
Concrete Steps Toward Getting Out of Debt
As a new year gets underway, many people feel motivated to do things like lose weight, cut back on social media, and, yes, get out of debt. Unfortunately, New Year’s motivation often wanes quickly. So today, we want to give you practical ideas for turning a new year’s resolution into genuine progress at least in the getting out of debt area.
Well, as you may know, every so often on our Monday program, we like to revisit the five basic things you can do with money. Here they are: You can earn it, live on it, give it away, owe it to someone or the government, or you can grow it for the future by saving and investing. Earn, live, give, owe, and grow.
Today, we’ll focus on the fourth of those: owe.
Again, many people, at the first of the year, resolve to get out of debt, or at least make progress on reducing their debt. But motivation often wanes quickly.
To stay motivated, you need to have a plan. You may remember that a few days ago we mentioned the idea of making your resolutions SMART. S-M-A-R-T. That stands for Specific Measurable Attainable Realistic and Timely.
So let’s start with this specific thing related to debt
1. FIND OUT WHERE YOU ARE. By that we mean you need to have a concrete understanding of how much you, to whom, and what the terms are, including interest rates. You need to know that because, for example, it’ll make much more sense financially to attack a credit card debt that’s at 18 percent than a car loan that’s at 3 percent.
As you catalog your debts, we suggest you list them in order from the lowest balance to the highest.
2. STOP ADDING TO YOUR DEBT. As the old saying goes, it’s hard to get out of a hole if you keep digging deeper. You may want to stop using credit cards and instead move to a debit card or cash for your spending. That’ll help you avoid further debt.
3. TELL SOMEONE WHAT YOU’RE DOING. (Credit to financial writer Matt Bell for this one). In other words, ask someone to hold you accountable to your plan to get out of debt. It’s remarkable how much it helps to have an accountability partner when it comes to following through on what you’ve committed to doing.
4. CREATE A SPECIFIC PLAN FOR PAYING DOWN YOUR DEBT. Now, there are different ways to approach this. Perhaps the easiest method is to commit a specific amount to debt reduction each month. Let’s say it’s $500, and you have five credit cards. Pay at least the minimum balance due on four of your cards, but pay as much as possible on the card with the lowest balance.
To continue the example, let’s say your minimum payments total $300. So you pay that, but then pay the remaining $200 toward the lowest-balance card. When you focus your payments this way, you’ll be able to pay off that lowest-balance card soon.
Then, when it’s paid off, you’ll keep paying $500 a month on your debt, but now focus your attention on the new lowest-balance card. After a while, when that one is paid off, you keep paying $500 a month and put most of the money toward the new low-balance card.
This approach of fixing your overall payment at the same amount each month and attacking the lowest-balance card will create a steady sense of progress that you’ll find encouraging.
And note how this approach is S-M-A-R-T. It’s Specific Measurable Attainable--Realistic and Timely. It’s not vague at all. It is clear and purposeful.
THE NEXT STEP
After you get all your credit cards paid for, you can then start attacking other debts that may be at much lower interest rates, such as car loans and school loans. If you were paying $500 a month against your credit cards, that $500 is now freed up to accelerate payments on your other debts.
This process of creating a systematic plan for paying down debt has worked for many, many people. Again, first, you need to get a clear picture of where you are, then commit to not taking on more debt, and finally, create a clear, easy-to-implement plan that you stick with not just in the early weeks of J
Have you memorized Proverbs 21:5? It states, Steady plodding brings prosperity; hasty speculation brings poverty. You may know it by heart, but taking it to heart is a different thing altogether. It’s a double-edged verse and you must follow both parts to be financially successful. We’ll talk about that today on Faith and Finance.
As we said, there are two sides to Proverbs 21:5, and they’re really about not giving up and not giving in. Steady plodding means not giving up, and hasty speculation means giving in to greed.
THE PERILS OF HASTY SPECULATION
Consider the real-life story of an executive at a major western bank, and to protect his anonymity, we’ll just call him Brian.
Starting his career in finance back in the 1990s, Brian probably thought he was pretty good at managing money, although he admits he was living beyond his means and accumulating debt.
That left him vulnerable to the promise of great riches at the peak of the dot.com craze in early 2000. Like so many others at the time, Brian hadn’t grasped the biblical truth that hasty speculation brings poverty.
When a coworker offered to bring him in on the ground floor of a can’t lose tech startup, Brian was all in. He invested $10,000 he managed to scrape together and as he describes it, got ready to pop champagne corks.
But the only popping Brian heard was the dot.com bubble bursting. He lost everything by investing in a company he knew nothing about. He had given in to hasty speculation and paid the price. As Proverbs 28:20 warns, A faithful man will abound with blessings, but whoever hastens to be rich will not go unpunished.
Of course, God doesn’t sit around and wait for you to make foolish mistakes with money so He can punish you. He doesn’t have to, because the consequences of poor money management happen all on their own, and those consequences can be severe. Hasty speculation borne of greed is just one example.
1 Timothy 6:9 and 10 warns, Those who want to get rich fall into temptation and a trap and into many foolish and harmful desires that plunge people into ruin and destruction.
For the love of money is the root of all kinds of evil. Some people, eager for money, have wandered from the faith and pierced themselves with many griefs.
Okay, so much for not giving in, now for not giving up. That’s a short definition of steady plodding a longer one would be living within your means, avoiding debt, saving for short term needs and investing consistently for long term needs and to do those things for a very long time. That’s steady plodding.
And you might think it doesn’t sound very exciting, but don’t be fooled. There’s plenty of drama in staying the course and following God’s financial principles. When you do, you’ll experience highs and lows, great peace and contentment and probably some discouraging setbacks along the way.
God’s Word addresses this, too. In James 1:2-4 we find, Count it all joy, my brothers, when you meet trials of various kinds, for you know that the testing of your faith produces steadfastness. And let steadfastness have its full effect, that you may be perfect and complete, lacking in nothing.
So God’s Word encourages us to not give up, and this is where we get back our story of Brian the banker. Fortunately, he didn’t give up, even after losing all his money. Instead, he took a course on biblical money management through his church, and that’s when things started to turn around for him.
Brian says God’s Word taught him to be more frugal and disciplined with money. He saved and eventually began investing in real estate something he knew more about. He started small and went slowly, with no get-rich-quick scheme, just steady plodding.
And over the years, it paid off. Because he wasn’t over-leveraged, Brian’s real estate venture survived the housing crash and Great Recession. Eventually, he was able to start a fitness-related business with his sona dream he’d
529 Rollover To Roth
For more than 20 years, 529 education savings plans have helped families pay for qualified school expenses while enjoying a tax benefit in the process. But there was also a major drawback. We’ll talk about that today.
If you’ve ever wondered how 529 plans got their name, it goes back to 1996 when Congress enacted Section 529 of the Internal Revenue Code, allowing states to establish and administer the plans.
Each state has its own plan, and they have different benefits and requirements, but the common ingredient is that money put into a 529 savings plan grows tax-free and withdrawals for qualified education expenses are also tax-free. The money can be used for grades K through 12 as well as college.
So it’s similar to a ROTH IRA, in that contributions are not deductible on your federal tax return. However, more than 30 states offer some kind of tax break, so depending on where you live, you could be eligible for state tax deductions or credits if you invest in a 529.
These plans also offer you some flexibility in case things change. If one child doesn’t use all of the money in the account, the beneficiary can usually be changed later to a different direct relative. In theory, a single account could survive for generations.
Another nice feature anyone can contribute but it’s usually better to have the account in a parent’s name.
There’s also a potential financial-aid advantage to a 529 plan. The FAFSA form Free Application for Federal Student Aid counts money held in 529 plans at a lower rate than money in other accounts. That means money in a 529 plan won’t count against you as much as other assets when applying for aid.
You can invest in any state’s 529 plan and use the money to pay for an eligible college in any state. So 529 plans are flexible in many ways, but they come with one major restriction: Once you open a 529 account and put money into it, you’ve committed the money for education.
If you don't use it for eligible expenses, those withdrawals will incur a 10% penalty and will also be subject to federal income taxes on the investment gains. And that’s why more families haven’t taken advantage of 529 savings plans. But all that is about to change as 529 account holders get a new way to rescue unused funds.
As part of the $1.7 trillion spending package passed last month, money leftover in a 529 savings plan can be rolled over into a Roth IRA without incurring taxes or penalties starting in 2024. That’s a potentially huge development, as it removes a major drawback to 529 plans and will likely encourage more families to open the accounts.
It’s unclear how much unused money might be transferred from 529 plans to Roths, but in 2021, there were nearly 15 million 529 accounts holding almost $500 billion in assets. That’s about $30,000 per account.
Critics of the new provision say it’s a handout to the rich because wealthier families are more likely to have 529 plans than lower-income families and because the provision doesn't carry income limits.
It does, however, have a number of other restrictions. For one, there’s a lifetime limit of $35,000 on transfers, and rollovers are still subject to annual Roth contribution limits. In 2023 that limit is $6,500, or $7,500 if you’re over age 50.
Also, like any custodial account, once the funds go in, they become the property of the beneficiary. That means a 529 rollover can only be made to the beneficiary’s Roth account, even though a parent or grandparent may be the owner.
Most graduates with leftover 529 money won’t be able to immediately roll it over to a Roth. To be eligible, the 529 account must have been open for at least 15 years, and contributions and earnings must be in the account a minimum of 5 years before they can be transferred.
You want to save as much as possible for education so you can avoid borrowing remember Proverbs 22:7, the borrower is slave to the lender. And one of the best ways to av
Answers To Tough Financial Questions With Howard Dayton
Hi, I’m Rob West. The Bible teaches that we should seek out wise counsel for answers to questions. Today we’ll be asking some tough financial questions and Howard Dayton will give us his answers.
For by wise guidance you can wage your war, and in abundance of counselors there is victory. Proverbs 24:6.
Howard Dayton is the author of Your Money Counts and the former host of this program.
Today we’ll go through a list of questions Howard has been asked over the years.
1. What’s God's perspective on paying taxes?
That's the same question the pharisee’s spies asked Jesus in Luke 22: "Is it lawful for us to pay taxes to Caesar, or not? Jesus answered, Show Me a denarius (which was a Roman coin). Whose head and inscription does it have?' And they said, 'Caesar's.' And He said to them, 'Then render to Caesar the things that are Caesar's"'
A lot of folks rationalize not paying taxes because the government squanders much of the money it receives. Now, I’m not condoning government waste. In fact, I believe a citizen should try to influence the government to be more efficient and responsive. However, the Bible clearly tells us of an additional responsibility: pay the taxes you legally owe.
How does the Bible define financial success?
Scripture tells us that financial success is simply being a faithful steward. That’s different from the world, where success is measured by how much wealth one acquires.
But as Christians, we should assume someone is successful just by outward appearances. If we had seen Joseph or Paul in prison, Daniel in the lions' den, or Job in his affliction, how many of us would have considered them successful?
According to Scripture the desired end for us is to become faithful stewards. After we have fulfilled that responsibility, it’s up to God to decide whether or not to entrust us with wealth, or not, according to His purposes.
Is it permissible for a Christian to be ambitious?
Scripture certainly doesn’t condemn ambition. Paul was ambitious. In Corinthians 5 he says, "We have as our ambition ... to be pleasing to Him. For we must all appear before the judgment seat of Christ, that each one may be recompensed for his deeds"
But the Bible does strongly condemn selfish ambition. Paul also says in Romans 2 that the Lord, "will render to every man according to his deeds ... to those who are selfishly ambitious . wrath and indignation."
So our ambition shouldn’t be motivated by egotistical desire. It should be to please Christ. We should have a burning desire to become increasingly faithful stewards in using the possessions and skills entrusted to us.
Should wives work in a job outside the home?
There’s some interesting data on that. The number of women with children working outside the home peaked at 29 million in 2000 and remained there for nearly two decades. But since COVID, that number has dropped by 2 million. A lot of moms who left the workforce to care for kids because schools were closed. But the experts tell us they’re not returning to the workforce.
In my opinion, during children's early formative years it is preferable for a mother to be home whenever the children are home. Titus 2:4-5 reads, "Encourage the young women to love their husbands, to love their children, to be sensible, pure, workers at home."
I think it’s ideal for a mother of young children to limit working outside the home to those times when the children are not at home unless family finances depend upon her income. As children mature, the wife will have increased freedom to pursue work outside the home.
Why do the wicked prosper?
God’s people have asked that for centuries. Even the prophet Jeremiah asked it in Jeremiah 12, Why does the way of the wicked prosper? Why do all the faithless live at ease?"
The Bible tells us that some of the wicked will prosper, but it does say not to worry about it. In Psalm 37 we find, Do not fret because of evil men or be envio
Factors for Successful Investing With Mark Biller
There are also no secrets to successful investing. In the long run, several key factors will determine your results. Mark Biller lays those out for us today on Faith and Finance.
Mark Biller is the executive editor at Sound Mind Investing.
(RW) Mark, today we want to look at an article you have up at SoundMindInvesting.org titled, Eight Key Factors That Determine Your Long-Term Investing Results. We’ll dive into those in a moment.
But first, let’s talk about the big-picture message we hope you’ll take away today.
In a nutshell, it’s to focus on what you can control rather than worry about what you can’t. That’s good advice for all aspects of life, including money management.
For investors, it’s a timely reminder as well, given the ever-present uncertainty about the stock market’s future direction. But regardless of which way the market moves this year, there are still several factors you have direct control over. So those are the things to focus our attention on.
1. The rate of return you earn: This is what investors focus most of their attention on, which causes them to spend their time trying to pick winning stocks, the best funds, or the most astute market guru to follow.
And it’s not that your rate of return doesn’t matter. It obviously does. It’s just that, unfortunately, this is the one factor we’ll discuss today that’s largely out of your control, unless you’re willing to settle for guaranteed CD-like returns. No matter how hard you study or how much you know, you can’t predetermine exactly what your rate of return will be. So instead, it makes sense to turn your attention to the factors where you do have a lot of control.
2. Building on a strong foundation: This is the first factor that you DO have control over. You don’t have as much to fear from economic storms and bear markets if you’re debt-free, have an emergency reserve, and use a cash flow plan that produces a monthly surplus.
Your ability to put such a foundation in place is affected by how big a house you buy, how new a car you drive, how responsibly you handle credit, and a host of other decisionsmost of which are under your direct control.
3. How much you save and invest: Invest $200 a month for 20 years at 10.0% and it will grow to $152,000. You could improve that to $198,000 by either (1) increasing your annual rate of return from 10% to 12%, or (2) by increasing your deposit by $60 per month.
A lot of investors will try to move heaven and earth to boost that return, while boosting the monthly deposit is much more certain and under their direct control.
3. How much you lose to taxes: The example I just gave assumes you’re investing in a tax-deferred retirement account. If you made your $200 monthly investments into a regular taxable account, you’d need to earn 12.6% per year rather than 10%, just to reach even the lower $152,000 target. (That’s assuming a 29% combined federal/state rate.)
So you want to make full use of tax-advantaged accounts like IRAs and 401(k)s.
4. How long you save: Examples of compound interest and investment growth show us that amazing things happen when you leave money invested for long periods of time. That means you should start contributing to your investment accounts as early as possible and plan to leave the money working tax-deferred for as long as possible.
5. Whether you’re playing the short game or the long game: With the long-term investing game, you win by plotting your strategy very carefully at the outset, and then letting that strategy play out over time. Short-term news, current market fads, and so-called expert opinions are largely irrelevant to long-term investors.
So turn off the financial shows on TV and stop looking at your daily returns.
6. Whose advice you listen to: Is your strategy in sync with biblically based financial principles, or more reflective of the conventional thinking offered by the secular investing
Preparing for Your Financial Future
We’d all like to have more money, and there’s nothing wrong with that if we have the right motivation. We’ll talk about that today on Faith and Finance.
Every few weeks on our Monday program, we revisit the five things you can do with money. Here they are: You can earn it, live on it, give it away, owe it to someone, or save/invest it.
Earn, live, give, owe, and grow.
Today, our focus is on the last of those: growing your money for the future by investing
Let’s talk first about motivation. If your reason for investing is to get rich quick, we have a warning for you. Actually, Jesus has a warning for you. He said in Luke 12:15 to be on guard against every form of greed.
Greed takes our eyes off God and puts them on ourselves, which is spiritually dangerous. And it’s a recipe for unhappiness.
Ecclesiastes 5:10 says, Anyone who loves money never has enough. Anyone who loves wealth is never satisfied with what he gets.
That said, investing for the future if you have the right motivation is commended in Scripture.
Proverbs 21:20 says, There is precious treasure and oil in the home of the wise, but a foolish person swallows it up or as The Living Bible puts it: The wise man saves for the future, but the foolish man spends whatever he gets.
So this is the right motivation the desire to be a good steward, preparing today as best you can for the needs of days and years to come.
So, how do you prepare? Well, you could stash money in a savings account and you should, for shorter-term needs and for an emergency fund. But savings accounts, even the highest-paying ones, will not keep up with inflation. Money put in a savings account will lose value over time.
To keep pace with inflation, or to outdistance it, requires putting your money in things that tend to grow as the economy grows. For most of us, that means investing in the stock market, and you can do that in a way that is balanced, not reckless.
That brings us to learning
WHAT YOU NEED TO KNOW ABOUT INVESTING
We have guests on this program regularly who talk about wise approaches to investing, so we won’t go into detail about that now, except to say that it’s essential that you have a long-term plan and a set of guidelines that inform your decision-making. In other words, think long-term, not get-rich-quick, and don’t make decisions based on hot tips or financial talk shows.
Now, to be a good steward, you also need to understand the various investment vehicles that may be available to you, such as a tax-advantaged 401(k) or 403(b) at your workplace. You also should learn about Individual Retirement Accounts and how those can help you save for the future in a tax-smart way.
A great resource that explains such accounts and many other things about being a good steward as an investor is The Sound Mind Investing Handbook by Austin Pryor.
One more thing: Making your money grow for the future will involve some risk that is the nature of investing. So the actual investments you choose should be appropriate for someone of your age and overall financial situation.
Younger people can afford to take higher levels of risk than older people because younger folks have a lot of time to recover from market downturns.
So to sum it up: invest with the motivation of being a good steward and take the time to learn what you need to know to invest wisely for the years to come.
On today’s program, Rob also answers listener questions:
● How do minimum required distributions work?
● When does it make sense to adjust payroll withholdings to cover expenses?
● How do you determine if you need life insurance?
● How much can you contribute to a 401k account and a Roth IRA without tax penalties?
● When is a Medicare Advantage plan a wise purchase?
● How are assets distributed upon the death of a parent without a will?
Remember, you can call in to ask your questions most da
All relevant & God-centered! Has helped me tremendously!
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