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January 30, 2023 141 – Should I Still Wait To Build Or Buy A Home
Click below to listen to Episode 141 – Should I Still Wait To Build Or Buy A Home
Should I Still Wait To Build Or Buy A Home

Is building or a buying a house something that you should consider right now?

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We’re back to the topic of “building or buying a house” that we covered last year around this time, but we are coming at it from today’s ever-changing housing market. Buying or building a home is something that probably 100% of those listening have done, thought of, or plan to do. However, in today’s economy and right at this moment, is this something that should even be considered?
Should you STILL wait to build or buy a home? Bob and Shawn delve into the math of this topic with statistics on financing percentages, past trends, and exceptions to the rule. So, if you were thinking about building or buying a house in the near future, this episode is definitely for you!

HOSTED BY: Bob Barber, CWS®, CKA®
CO-HOST: Shawn Peters
Podcast Charts

Case-Shiller Home Price Index Chart
(Click to view larger)

US Fed Funds Rate (Max)
(Click to view larger)

The Cycle Of Market Emotions
(Click to view larger)
Mentioned In This Episode

Christian Financial Advisors
Website

Bob Barber, CWS®, CKA®

Shawn Peters

Want to ask a question about your specific situation? Schedule a complimentary 15 minute phone call.
SCHEDULE AN APPOINTMENTDid you enjoy this episode? Sign up for email updates and never miss an episode.
EPISODE TRANSCRIPT

Intro:
Welcome to Christian Financial Perspectives, where you’re invited to gain insight, wisdom, and knowledge about how Christians integrate their faith, life, and finances with the biblical worldview. Here’s your Christian Financial Advisor’s host, Bob Barber and his co-host, Shawn Peters.
Shawn:
Welcome to another episode of Christian Financial Perspectives. We’re so glad you joined us. If you do like videos on all kinds of financial topics, but from a Christian perspective, we encourage you to smash that subscribe button and give this video a like. Today we’re going to be covering a topic that last January we did touch on. This is kind of a revisit or 2.0 part two on, “Should You Still Wait to Build or Buy a Home Today?” Now, I do want to give just a quick heads up. It is Cedar season and it’s hurting me a little bad right now. For those not in central Texas, it just means bunch of bad trees trying to hurt people. I will do my best to edit things out if I do cough or anything.
Bob:
Hey, I’m going to help you, Shawn. I’m going to be right there with you. Like I said, last year, it was this very week that we did a program on should you wait to buy or build a home today, and a year ago, we warned you not to do that. Today’s program is going to be called, “Should You Still Wait to Build or Buy a Home.” I think it’s good to go back and look at some of the things we covered last year, Shawn, and the many reasons that last year you should wait. Some of those reasons were, we were coming off of an eight to 10 trillion.. eight to 10 trillion. It’s hard for me to
Shawn:
Trillion, drillion, quadriIlion, I mean whatever. It’s all about the same. It’s a lot.
Bob:
Eight to $10 trillion of financial stimulus from the government that put the economy in hyper mode. That was in 20 and 21. To think about that in context, that was $24,000 on average for every man, woman, and child in the United States. That’s throwing a lot of money into the economy and it artificially stimulated the economy and real estate beyond anything that I’ve ever seen in my life. Then you add on top of that artificially low interest rates for mortgages, and that was coming to an end. It was for the first two or three months of last year, but now that’s ended completely. The Fed, also we warned last year, and they’ve done it now. They were tapering off the buying of $130 to $150 billion of mortgage bonds per month that they were buying, and that created massive liquidity in the mortgage markets. It really made the mortgage markets very loose. A lot of it was easy to find money.
Shawn:
They were pulling back on doing that.
Bob:
This massive stimulus again, created artificially high real estate prices, and not last but least, we talked about the emotions buying chart last year. It was showing across the board, “sell, sell, sell” not buy. It was not a time.
Shawn:
The indicator was sell, not a buy.
Bob:
We’ll take a look at that emotions chart. We can put that up on the screen for you and you can see that. We’re kind of getting at a point now to where, in the next six months to maybe a year. It maybe time to buy, but not yet. Not yet. You should still wait.
Shawn:
To answer the question of, “Should you still wait to buy a home in 2023?” Yes. In almost all cases, except a few. Obviously we keep that in mind even where we live here in New Braunfels. There are definitely some pockets. These areas where the home isn’t on the market for even 30 days. I mean, it’s gone quick.
Bob:
But that’s an anomaly.
Shawn:
That’s an anomaly. So keep that in mind. Just because you know of a small area or you know of a home that sell really quick. What we’re talking about here is the market as a whole.
Bob:
Not those unique situations. Shawn, the purchasing power that buyers had; here’s the reason number one. We’re going to go through four or five reasons. Number one why you should wait. The purchasing power that buyers had in 2020, 2021, and half of last year in 2022 is gone. I mean that purchasing power and the national. I say that because the National Association of Realtors estimates that 87% of all home buyers use a mortgage loan to buy a home. You’ve taken out 87% of the market. The purchasing power has been cut dramatically. Here’s an example of that. A year ago, someone that wanted to go buy a $750,000 house could buy that with a $3,000 a month mortgage payment. That’s pretty high, but still. If you wanted to buy that at today’s rates, now that $3,000, mortgage payment will only finance 450,000. That’s a
Shawn:
$300,000 drop.
Bob:
A $300,000 drop in purchasing power In just one year. Now, that’s kind of the higher end of the market, but let’s get to the area that most people were in. A year ago, a $2,000 mortgage payment could finance a $450,000 home. Today, that’s a $300,000 home. The purchasing power has gone down by $150,000 for the average person that’s a lot for that to drop.
Shawn:
Which makes sense. because most people, when they’re looking at buying a home, they’re looking at, how much can I afford per month? Well, for most people, how much they can afford per month didn’t really change. Which means the price that they can afford, the ultimate price, has to go down. That’s crazy to think that from 450 to 300,000.
Bob:
Prices of homes have to drop dramatically, Shawn, to compensate for the rise in interest rates over the last year. Remember what we said last year when we made this program.
Shawn:
It’s just math.
Bob:
It’s just math. I think it will happen. It’s happening a little slower now because so many people bought homes in the last couple years at low interest rates. The turnover rate’s going to be slower because they don’t, they realize if they sell their home, they can’t get that 3% interest rate anymore. We are going to see a major drop in that, especially for the home builders that just produce and produce and produce. If you’re thinking that rates are going lower or returning back to where they were, you really need to think again. Look at this chart that we’re putting up on the screen.
Shawn:
Now Bob, especially for those who are listening as well, what exactly is this chart showing us?
Bob:
This chart is showing us the Fed funds rate for the last 50 years. For the last 50 years you can see the “means”. The dotted line that you see in the middle there. That’s the “means”. That’s where the average is.
Shawn:
The average, right.
Bob:
You can see right now, all we’re doing is returning to the means. We make our program, just so you know, we usually make them about a week in advance. As this comes out, we’re right there at a quarter percent increase that the Feds about to do. That means they’ve returned to the “means”. You can see the rates were kind of artificially low since 2010, 2011. We’re going to point out a trend line here in just a minute that shows how we’ve come off both the trend line from 2010, 12, 13, right in there, and there’s the long term trend line. That’s the Case-Schiller Price Index. That goes way, way back. The second reason to wait is prices have got to get back to those trend lines. We’re going to look at that now, and I’m going to explain this to you. This is the Case-Schiller Price Index nationally of home prices. Going all the way back. You can see here to about 1985.
Shawn:
Yeah, 85.
Bob:
Right, during that time. You can see the black line on here, iff you look at this chart. Those of you that are listening to the podcast, I would encourage you to really go to YouTube and pull this video up. You need to see this chart and that other chart on the interest rate.
Shawn:
We can describe it though. The long term trend line, like Bob said, going back from about 1985. Right now, we should be at around, a 200% increase from from 1985. Whereas the more short term trend line, which this was starting, what would you say Bob, it’s about 2012 maybe?
Bob:
Yeah, about 2012, then you can see that cross right here on the line at about 2015.
Shawn:
From around 2012, so this was after the 2008 bubble and things had dropped quite a bit, and they were starting to recover. From there all the way until around 2020, we’d been on a pretty consistent, more short term trend line, and according to that one, we would be at about 275%. Again, compared with 1985.
Bob:
This is up 366%. It’s huge, and you’ll see I pointed out the 2008 bubble. How it got back down to the trend line. Then there’s a long term trend line. Then you see the stimulus line. That’s all the stimulus.
Shawn:
That’s where we are right now.
Bob:
You’ll see my little red, arrows I have in there with a circle. That’s where I feel that the prices are going to end up being right in between the short term and the long term trend line.
Shawn:
Kind of a best case, worst case scenario. Where best case scenario maybe we only really come back to around where we should be according to the short term trend line. Then your worst case scenario, if you’re looking at selling your home, I guess. Your worst case scenario would be coming all the way back to our long term trendline.
Bob:
That we’re way away from that. That would also be considered the “means”. Shawn, everything in my 38 years of experience always returns back to the “means”. The trend line. Like the interest rates are doing right now. This chart is a very compelling chart. So the third reason…
Shawn:
Home prices are unaffordable.
Bob:
They haven’t dropped yet and we’ve had a rise in interest rates, and quite frankly, the home prices are just now unaffordable to people.
Shawn:
Yeah.
Bob:
Even if interest rates would’ve stayed low, they were getting unaffordable.
Shawn:
They were getting out of hand, but when you’ve got a lot of these homes that the prices haven’t dropped yet, they haven’t come back to reality, and interest rates are so high. It’s like that person we were talking about the $2,000 a month mortgage payment. Well, who’s going to be able to buy a $450,000 home on a $2,000 a month mortgage payment? They can’t.
Bob:
Yeah, they can’t.
Shawn:
Most of the houses haven’t even come back close to the $300,000 in that kind of a scenario.
Bob:
Shawn, this is just mathematics again. If anybody says, “Y’all are crazy.” By the way, last year, there were the exceptions to the rule, but the rule was most of the realtors said, “This is not going to happen.” This is mathematics all right. You can deny mathematics only so long. One plus one equals two and two, and two is four, and so forth. You can’t deny it. You can say that one plus one doesn’t equal two, but it does.
Shawn:
What was the thing I think I’ve heard you say before? It’s liars figure, but figures don’t lie. I mean it’s math.
Bob:
The exception to the rule, though, there is an exception to the rule about possibly buying that house now. That would be if the home is in a unique situation, a unique property with limited availability. Some examples of that would be waterfront homes. Like here in New Braunfels, there’s not any left. When one comes on the market, that’s an anomaly. I mean, that doesn’t happen very often. When they do, it’s going to show up.
Shawn:
It doesn’t mean the prices won’t drop some because of interest rates. However, those kinds of places, if it’s a waterfront home on the river, lake, oceanfront where there aren’t any more spaces to build on that water. Well then those are going to hold their value better. Even those homes will see a decline because it’s just math.
Bob:
An an older home like we have where you live. You are in a area where they’re older homes, but they have the larger lots and those are very sought after.
Shawn:
They got the big trees. Plus we’re even more so now in the, in the middle of town.
Bob:
A home with some acreage. Homes directly on a golf course. I’ve been looking. We go to Rockport where we have a little condo on a golf course. We’ve been looking for a home on a golf course forever. When they come up, they just go fast. There are some that are way overpriced that are not going, but I know the price range down there. There’s a certain price range. Home with a unique view. We have some of those here in our own town.
Shawn:
I would think for a good example on that is a home where the area that they have a nice view of is maybe they’re overlooking some sort of park, or something where there’s not going to be someone building on it later. I know right over where we live down the hill a little further, there’s a nice area that for a long time has had a great view. Then all of a sudden new subdivisions going in, and now they have a view of other people’s homes.
Bob:
Oh no.
Shawn:
A really unique custom built home, or maybe a home that’s just in a really good location with limited building space. Maybe from zoning issues or things like that.
Bob:
Shawn, we just described in those five or six examples, that’s not the norm.
Shawn:
No, it’s not
Bob:
That’s not 80 to 85%. The old 80 20 rule; that’s not 80% of the homes. If you’re looking to buy or build a normal type track home where every sixth or seventh home on the block is the same. Except they do a reverse image, or they do the paint color a little bit different with a slight variation, or on a lot that can be easily reproduced a few blocks away. Then we’re saying to “wait, wait, wait, wait.” Those builders are starting to really drop the prices and they have a lot more to go.
Shawn:
Just to be clear too, we’re not saying there’s anything wrong with those homes.
Bob:
Not at All.
Shawn:
For most people, that’s what people buy.
Bob:
That’s what they can afford.
Shawn:
If those are the kinds of neighborhoods you’re looking at buying in, wait. Not only are those going to be the most affected, but part of the reason why they’re going to be the most affected is because, those are the types of builders that will get more desperate. They’ve got to move their product They’ve got to get that off their inventory.
Bob:
That brings us down to really, we’re getting to the conclusion of the program. We’ve given many good reasons, I believe, why you should wait. The timing is so important. You really want to be wise and cautious right now, and not get in a hurry. Unless it fits possibly that unique situation that is a far and few between. Those main points again; prices have to drop, it’s just math and 87% of home buyers borrow to buy, there’s no more Fed free candy, there’s no more stimulus checks coming to everyone, everything has to return back to the means, and interest rates, as we showed, are not returning to the long-term average historical levels.
Shawn:
No, they are. That’s really what what we’re seeing happening. Is that the Fed is, if anything, they’re kind of just getting to the average.
Bob:
Why did I say that? Yeah, I meant they’re not going back to the level that they were.
Shawn:
The point with that is, don’t expect anytime soon to all of a sudden get back to where the Fed fed rate is 0% to 1%. That’s not going to happen anytime soon.
Bob:
We hope we’ve given you a lot of good information today on, “Should you still wait to build or buy a home?” We’re recommending continue to wait. If you want to give us a call to talk about this, you can call us at (830) 609-6986, or even text us at that number. Or go to christianfinancialadvisors.com. Anything you want to share before we get off today?
Shawn:
No, I think we covered it. If you’re the one in five people watching or listening to this that’s buying some sort of unique home, then I guess this doesn’t apply as much. For the other four out of five people, wait to buy the home, or wait to build that home right now.
Bob:
Thank you.
Shawn:
Thanks for joining us and God bless.
Outro:
We invite you to listen to all of our past episodes, covering many financial topics from a Christian perspective. To make sure you don’t miss any of Bob’s upcoming episodes. You can subscribe to Christian Financial Perspectives on iTunes, Google Podcasts, Spotify, Stitcher, or Amazon Music to learn more about integrating your faith with your finances. Visit Christianfinancialadvisors.com or call (830) 609-6986.
Disclosure:
Investment advisory services offered through Christian Investment Advisors, Inc DBA Christian Financial Advisors also known as Christian Financial Advisors Management Group, a registered investment advisor. Comments from today’s show for informational purposes only, and not to be considered investment advice or recommendations to buy or sell any company that may have been mentioned or discussed. The opinions expressed are solely those of the host Bob Barber and his guests. Bob does not provide tax advice and encourages you to seek guidance from a tax professional. While Christian Investment Advisors believes the information to be accurate and reliable, we do not claim or have responsibility for its completeness, accuracy, or reliability.
19 min
January 25, 2023 140 – Diversification 101: Part 3 – Building Models
Click below to listen to Episode 140 – Diversification 101: Part 3 – Building Models
Diversification 101: Part 3 – Building Models

Listen to the last of our 3 part series on Diversification.

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You’ve made it to the end of our three part series on Diversification! We’ve already talked about charts and sectors, and in this episode Bob and Shawn discuss putting everything together to build a properly diversified investment model. There’s a lot that goes into being properly diversified, and it is not something that just happens over a day or two of learning. It takes time, education, and lots and LOTS of research.
If a properly diversified investment portfolio is truly something that you are wanting to achieve as a do-it-yourself investor, then these episodes are a great place to start. However, this is just the tip of the iceberg when it comes to everything that goes into diversification within investments. Are you ready to get started on your own or find a fiduciary based financial advisor to help you along the way? This episode may just help you come to a decision.

HOSTED BY: Bob Barber, CWS®, CKA®
CO-HOST: Shawn Peters
Mentioned In This Episode

Christian Financial Advisors
Website

Bob Barber, CWS®, CKA®

Shawn Peters

Tier Genesis
Website
Bible Verses In This Episode
ECCLESIASTES 11:2
Invest in seven ventures, yes, in eight; you do not know what disaster may come upon the land.

Want to ask a question about your specific situation? Schedule a complimentary 15 minute phone call.
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EPISODE TRANSCRIPT

Intro:
Welcome to Christian Financial Perspectives, where you’re invited to gain insight, wisdom, and knowledge about how Christians integrate their faith, life, and finances with a biblical worldview. Here’s your Christian Financial Advisors’ host, Bob Barber and his co-host, Shawn Peters.
Shawn:
Welcome to another episode of Christian Financial Perspectives. We’re so glad you joined us today. We’re gonna be covering part three of our diversification series, and if you like this video or in general, if you like videos on financial topics from a Christian worldview, then we would love it if you would hit that subscribe button. It costs a total of $0 to do that, so we’d really appreciate your support in that way. And of course, as always, you can like the video and share it with other people. So Bob, let’s get into part three today.
Bob:
Part three of diversification, Shawn. So we have really given a good education, today’s gonna be the last part of it. If you haven’t heard the first two parts, we’re gonna recap that a little bit and I would invite you…
Shawn:
Those will be linked on screen as well.
Bob:
Okay, good. Go back and watch them because what we’re really teaching you is how we diversify here. But if you are do-it-yourselfer or you wanna do it yourself and you wanna spend a couple years learning this, then you could do that.
Shawn:
Yeah, that’s right.
Bob:
And so the first part that we went over a couple weeks ago was the equity and fixed income style charts. And we’re putting that up for you to take a look at, and this describes when you’re going to diversify and build a portfolio that the equity style chart is all the different styles of stocks that have to do with large cap value, blend, growth. You can see mid-value blend growth, and small-value blend growth. And it has to do with the size of the companies. The large companies are your very well-known names like the Walmarts of the world, the Exxons, the big boys.
Shawn:
That’s right. The 10 billion plus.
Bob:
10 billion.
Shawn:
It’s crazy to think that now the large cap is 10 billion plus.
Bob:
When I started, like I said in the last two programs, it was about 2 to 3 billion. So, it’s really in increased a lot. And then we went into the fixed income style charts and how that all works. And it’s very, very important. This is the foundation for building a diversified portfolio is understanding where the stocks fit within all of these styles, along with international and emerging markets and domestic markets. So there’s a lot to learn here.
Shawn:
Exactly. This is just to indicate how picking the, a bunch of random different companies, for example, is not really diversification because you need to make sure you know where those different positions fall. So if you end up picking all value large cap, well, you’re not really diversified very much, even if you have a bunch of different holdings.
Bob:
The different styles will do well in different markets. Right now. the value style is working much better than the growth style as interest rates have gone up 450% in the last year. Cause they started at 0%. Now, they’re at 4.5%. not much more to go though. I will say that. It’s a good thing. They’re expecting only about another 1/2 to 3/4 of a point of interest rate rise. When you look at the percentages, that’s only a 15% more to go to get to that point. So that’s a good point.
Shawn:
It’ll be interesting to see how a lot of your very growth focused positions companies will handle the next few years with all these changes that we’ve had in interest rates and just the economy as a whole. We’ve seen tons of the larger tech companies laying off people, which is really sad. They brought on a lot of people, but now they’re laying off a bunch of people. And I just wonder if we’re gonna see more of that where the growth focused companies are gonna have to really scale back, and you’re gonna see more of the value focused going forward.
Bob:
Yeah. And the value focus normally has a lot less debt or no debt at all. So that was the first week, that was two weeks ago. And then last week we covered all the different sectors. And we went into the industries of each sector. So you have 12 different sectors. If you look on your screen, you’ll see that.
Shawn:
And I’ll go ahead and just read them off really quick.
Bob:
Yeah, go for it.
Shawn:
We’ve got healthcare, communication services, technology, consumer discretionary, consumer staples, energy, financial, industrials, materials, utility, real estate, and physical assets.
Bob:
And there’s all these industries within each sector. So you gotta understand how all these sectors work and the industries within each one, whether you’re going to overweight or underweight in those different sectors, and how that’s going to fit into that equity style chart.
Shawn:
Okay. And then of course, depending on your own investment policy or your own investment philosophy depends on are you typically going for something that’s hot or are you going for something like here at our firm, we always use what’s called a contrarian theory. So, if we see one of these sectors or one of the industries within a sector is just really beaten down, is down 50% for the year —
Bob:
Been way over sold.
Shawn:
Yeah. We’re looking at that as that’s probably a good buy. If something is up 20, 30, 40%, well, we’ll wait for that to go on sale.
Bob:
Even though so many will say, well that’s a trend and follow it.
Shawn:
But how much longer is that trend gonna go?
Bob:
So my style, if you were to think about my style, and we always say it it around here, I’m kind of old, but my style is a Warren Buffet style. I like to buy when everybody else is selling. And I like to sell when everybody else is buying. So that’s just the way I do things.
Shawn:
And it depends on how, for those of you watching, depends on your particular investment philosophy, but you should have that. You should know in addition to this, like, how are you going to manage this? How are you gonna invest in this? For example, you can always check out our website and we’ll put the length in description, but we have our own investment philosophy that we follow.
Bob:
We’ve talked about that right here on the podcast and YouTube channel the seven criteria that we use for investing. So today what we’re going to cover is building models. It’s taking all of this, these sectors and using the equity style chart, fix income style chart and building the models that go with that. And we’re gonna try to go through this very quickly, because it could take an hour, we could definitely spend an hour on this. We’re not; we’re gonna spend just minutes on each one. But we take the models, use these sectors and style charts, and we’re just gonna talk about five main models. There’s more models in this. But we’re gonna talk about the five main models and what we do here at Christian Financial Advisors. And we have these five main models. They start with ultra-conservative, then we have conservative, then moderate or balance, then growth, and aggressive growth. So Shawn go into how we build that first ultraconservative portfolio.
Shawn:
Yeah. So the first one, the ultra-conservative, is what would be considered a 100% fixed income model or portfolio, depending on your particular nomenclature you’d like to use. So for this one, it has the least amount of volatility, and we use the fixed income style chart plus some investments outside of the boxes, like maybe CDs, money markets, possibly some dividend paying stocks like the real estate sector, but just a very small percentage. Whatever it is, even if it’s not technically considered fixed income, it is something that would be very value focused and large cap, so it’s really no growth expected. It’s just paying dividends. So again, the focus on this is producing consistent income. This is not for growth.
Bob:
And it’s going to be your least volatile type of portfolio.
Shawn:
But there’s still volatility. Obviously, I mean, even in 2022, every market was down.
Bob:
Well, 2022 was so unique because we were taking interest rates from zero, like I said, up over 450%.
Shawn:
Exactly. But keep in mind, obviously fixed income was not hit nearly as hard as the overall equity market.
Bob:
Not, not near.
Shawn:
So this would still hold true that there is the least amount of volatility. But it doesn’t mean it’s immune to any kind of volatility.
Bob:
So, then you take one step up and what that means is you’re just having less fixed income. So this is typically going to hang out in the 80% fixed income arena.
Shawn:
Well we say 80/20.
Bob:
Yeah, the 80/20 and then the 20% equities. Now these equities that we’ve been doing in a conservative are going to be more of your conservative equities as well. So, they’re gonna be more of your large cap value, your dividend paying stocks. Where when we get up to the fifth portfolio we’re gonna speak of, aggressive growth, that’s not gonna have near as much large cap. It’s gonna have more mid-cap and small cap in it and emerging markets.
Shawn:
And conservative, you could have some large mid-cap blend, but you’re not gonna have a whole lot of mid-cap and definitely not small cap. At least that wouldn’t be recommended.
Bob:
So we call this our conservative portfolio. So we had ultra-conservative, then conservative, then we break right into the middle. This is actually our number one portfolio that we have here. I would say probably across America, it’s probably, that’s where most people have their money. And that would be in a moderate or a balanced portfolio. And it’s really focusing on a 50/50 mix.
Shawn:
Yeah. It could be a 50/50. I know for us here, a lot of times we will be at like a 60/40 on the, well, I guess just the whole truth, how we’ve doing this. So fixed income then equity, this would be a 40/60 usually, but it could be a 50/50 and obviously just kind of depends on your particular style of management that you’re following or if you are working with a larger company. But for us, it’s usually 40% fixed income, 60% equity. And because we are also a tactical management firm, sometimes we will adjust those numbers down if the market just seems overheated.
Bob:
Well, like last year, we felt like the market was way overheated. We’re talking in 2021. 2021. Because now this is 2023, so it wasn’t last year, it was the year before that. We went from a 60-65% exposure – it had gotten to 65 because our growth part of the portfolio got so hot. And everything was going up so much, we pulled that all the way down to 30-35, so we took it way, way down on the equities. That’s not normal, though. Normally, you’re gonna be 50-60% equities and 40-50% fixed income in a balanced, moderate portfolio. And you’ll see this across the board if you go start looking around at the different asset allocation in the different big firms.
Shawn:
We did that again, just a very, very short term like over a few months at most because then, as we started to see, some of the positions that we had either previously been in or were looking at moving more into, one of ’em was one of the funds that we used for healthcare. Healthcare was way down for the position that we would normally buy into, and so we moved more back into that position. And then kind of throughout the year, especially in the first six months of the year, we were deploying more and more of that cash that we had pulled back back into those equities, which just a form of dollar cost averaging. Again, using contrarian theory for us, we, here at the firm, we wanted to look for those opportunities of things that were on sale, if you will.
Bob:
And so it was a good move. It’s been a very, very good move.
Shawn:
And it doesn’t always show up as as a huge benefit. So, if you are using this tactic yourself at home or you’re interested in how we do it here, it won’t necessarily be a huge difference in that first 12 months, I would say. But it’s one of those where over the next two or three years, you start to kind of notice a difference between if you had just held onto everything versus if you did tactically kind of move in after the markets have gone up, move back in as it goes down, that’s when you start to notice that difference from that cost basis.
Bob:
So next, we get up to what we refer to as our growth portfolio and the growth portfolio still has some fixed income in it. But now instead of that being like it was in conservative where it was 80% fixed income, now it’s turned all the way down to 20% fixed income and maybe even a little less than that. And the equity portion can be up to 80% in the equity portion. And this is more going to be towards the growth side of the equation, too. You get back to the equity style chart and you take a look at that and that’s gonna be on the growth side, not on the value side. Now, you can still reach into value and we were doing that this last year, and we are still there right now in our growth,
Shawn:
But it is going to be more small and mid-cap as far as the valuation side. and then obviously depending on the need, it’s gonna be more growth could have some value or blended in.
Bob:
And if you remember back in October of 2021 in our growth where we were 80-85%, we pulled that back to 60%. So, we pulled back a lot on that. And now we’ve moved back into those, we’ll see the major benefit of that will be when the markets rebound. And history shows us, the markets have always rebounded. Will they always rebound? We can’t make the statement that they always will.
Shawn:
But history has shown that they, so far, have always rebounded.
Bob:
100% of the time.
Shawn:
I mean, in my opinion, Bob, if the markets don’t rebound, there’s probably much bigger concerns anyway that I don’t know who’s gonna really care about the markets anyway.
Bob:
Exactly. And there’s cycles and we’ve mentioned this many times in Ecclesiastes, there’s a time for everything. There’s not always gonna be good times, and there’s not always gonna be bad times. So when you’re in bad times, think about the good times because they’re gonna come around. When you’re in good times, you need to prepare for the bad times. And then this brings us to our last portfolio, which is…
Shawn:
Yeah. So the last one for our firm here, it’s usually around the 0% on the fixed income, but it could be up to 10% fixed income. And then the equity side of it is based on those numbers, you know anywhere from 90% to 100%. I would say the average is usually about 98%.
Bob:
That’s correct.
Shawn:
We do usually hold back just a little bit for cash. And this would be considered aggressive growth. So these are, again, this is almost 100% equity and it’s obviously gonna be a lot more small and mid-cap. It’s very growth focused. There may be some positions or sectors in there in the aggressive that we might not use in some of our other models just because, again, they are more aggressive.
Bob:
They’re a lot more volatile, and you gotta be able to handle extreme volatility when it comes to the aggressive growth style because you are, like you said, you’re nearly all equities and stocks. They fluctuate much more than a fixed income. So these are our five main models and we’re gonna talk about how we use them.
Shawn:
One thing I wanted to highlight, too, Bob, to keep in mind these five different models that we highlighted, they also all have a average expected investment time horizon associated with them. So for that volatility to make sense, there also needs to be an assumption that, like for aggressive, I’ll start there with aggressive, if you don’t have at least 10 years, maybe even 12, but at least 10 years that you’re gonna put the money in aggressive and not touch it at all and not panic and withdraw the money, then you have no business investing in that aggressive of a fund or model. And then it kind of goes down from there where, I mean, even ultraconservative is if you don’t have at least two to three years —
Bob:
That’s correct.
Shawn:
Then put in a CD. Put it in a high yield savings account. Like there’s no reason to even invest it in even something like ultra conservative.
Bob:
Which we do here. We do CDs. We have what we call our non-managed CD or we can buy treasuries with that. We don’t charge a management fee, it’s just a onetime fee to move into that.
Shawn:
Unless you’re doing it on your own.
Bob:
And it’s a very, very low fee. I will tell you right now, for $1000,000 CD it’s $300. For a $50,000 CD, it’s $150. So it’s basically 30 basis points one time once we buy that for you, and we can actually buy the same CD you can get at your local bank, we can get you a lot better rate. That’s kind of a weird deal.
Shawn:
That’s the main thing just to keep in mind is not just what those percentages are and the asset mix, but also keep in mind that the more aggressive you go, the longer in years, not months, but the longer in years you need to be willing to leave it invested. Otherwise that volatility, if you time it wrong, could really hurt you in the long run.
Bob:
It could. It could. And we have other models that are outside of this, like a real estate model or healthcare model or energy model. It’s all the different sectors. You could have models within there. So as you can see, this is very complex. It’s all about overweighting and underweighting between all the different parts, and we use all these same methodologies between fixed and equities. And the main thing, once you learn how to do all this is you gotta understand where do all these models fit for you and your long-term goals, your short-term goals. Some of our clients, they’ll use all five of these models. Some will use just two or three. It all depends on what your short-term and long-term goals are and how all that fits. This is the most important part, how it all fits within a comprehensive interactive financial plan.
Shawn:
That’s right. Because choosing which one of these models to go into when, like you said Bob, whether it’s 1, 2, 5 of them, really comes down to the question of are you nowhere near retirement? Are you getting close to retirement? Are you in retirement? If you’re in retirement, what are your actual income needs that you need to cover your expenses for retirement now that you’re not working anymore. And so, if you look at that and you figure out those numbers, then you get to the question of, okay, great, well if I need, let’s say I need $60,000 a year in today’s dollars. Okay, well if I need $60,000 a year and I have $800,000, okay, how much of that should I put into something that’s more conservative, like the ultra-conservative account,
Bob:
I’m gonna say about five years.
Shawn:
Yeah. About five years ago.
Bob:
So you need to have $300,000 in around ultra-conservative or conservative, and then beyond that, you can get over into that area.
Shawn:
Exactly. Exactly. And then the idea with that is of course we do this for our clients, but the idea being that you have your less volatile account with five years worth of capital for those income needs, so that way the rest of your portfolio can stay invested longer with a little more growth focused, because even if it just averaged 0% in your ultra-conservative, well in that case, you’ve still got five years before you might have to potentially touch the more growth focused account.
Bob:
And we call that…
Shawn:
And that’s a real simple example.
Bob:
I call that outlasting a bear market. That’s the bottom line is you can outlast a bear market when you have enough outside of the markets to take you through that bear market. Bear markets normally last 13 months. Which, by the way, it kind of says our bear market officially started in ’22 around June. A bear market is where it’s down 20% or more, correction is between 10-20%. So where it was down 20% or more, it started in June, average is about 13 months. If we do that average, we’re looking at June to July of this year that we would be coming out of that market. And the good thing is too, like I said, a lot of this has been cost from the fed lowering interest rates from 0% to 4.5%. They’re expected to go, in February 1st is the next time, they’re expected to announce another 0.25% and maybe another 0.25% or 0.5% on top of that. So the fed’s basically done, they only have 15% more to go, which is a good thing. So they’ve raised them 450%, it’s taken the market down 20%. So if you raise ’em another 15%, how much more down is that gonna take the market?
Shawn:
Right, exactly.
Bob:
Okay. With all this being said, in today’s part three, you’ve got part two and part one, you can definitely, you could do this yourself if you’re willing to devote years to it and learning how to do this and know how all this goes together with a comprehensive financial plan. Or, you can hire a fiduciary fee-based financial advisor like we are. Another thing that we didn’t even mention, I forgot, we want to make sure to do this, is we put all this, also, through our Biblically responsible, values, morally based screens before we put the holdings into the portfolios, and then we gotta put it through all the financial fundamentals, which is extremely important too. We got so cought up in all the different models, I forgot to mention that, which is the most important part.
Shawn:
Yeah. All of this and then great, here’s our top 30 picks for the 10 that we’re trying to isolate down to. And then we’ll screen through all of those and say, okay, which one of these actually pass our faith-based screens for Biblically responsible investing? And then we can finally narrow down our choices.
Bob:
Yeah. Financially, is it gonna make it? What are the PE ratios? How’s the company, how much debt is in the company? et cetera. What are the analysts saying about it? So, that concludes this three-part series. I hope this has been very helpful to you. It’s always good for me just to talk it out. I realize how much we do and how many years of experience has gone behind this. And Shawn, it really hit me as I was coming to the conclusion of this. You see these TV commercials that just show somebody doing this on their lunchtime with an app and these companies, these brokerage companies advertising online investing, and that is insanity to me when you look at what goes into this. You don’t just, you can’t just do this over lunchtime. If you have the time you wanna commit, you need to commit 20 or 30 hours a week to this, to learning this for many years, and then you could be ready to do it yourself.
Shawn:
Well, I’d almost argue, Bob, that if it really was that easy for people to be successful consistently over years, not just, oh, somebody’s been trading for a few months or something like that, but for a couple decades, how many hundreds of billions of dollars under management do you think we would have right now if we could just do it that easily?
Bob:
Yeah, that’s right. Most definitely.
Shawn:
So I think the idea there is that, yeah, sure, maybe it works for a little while, but it’s not gonna really work for a long term strategy. It actually, believe it or not, takes work and knowledge and diligence and a plan to be successful with this.
Bob:
Just like the mechanic now. I mean, I can’t work on my own car. It’s too complicated. So I’ll look at all that. So if you would like help from a fiduciary fee-based Christian advisor, we’d love to help you. You can contact us during business hours at (830) 609-6986. You can also text that number if you’d like to, or you can find us on the web www.christianfinancialadvisors.com.
Shawn:
Thank you so much for joining us on this episode. God bless and have a wonderful day.
Outro:
We invite you to listen to all of our past episodes, covering many financial topics from a Christian perspective. To make sure you don’t miss any of Bob’s upcoming episodes. You can subscribe to Christian Financial Perspectives on iTunes, Google Podcasts, Spotify, Stitcher, or Amazon Music to learn more about integrating your faith with your finances. Visit Christianfinancialadvisors.com or call (830) 609-6986.
Disclosures:
Investment advisory services offered through Christian Investment Advisors, Inc DBA Christian Financial Advisors also known as Christian Financial Advisors Management Group, a registered investment advisor. Comments from today’s show for informational purposes only, and not to be considered investment advice or recommendations to buy or sell any company that may have been mentioned or discussed. The opinions expressed are solely those of the host Bob Barber and his guests. Bob does not provide tax advice and encourages you to seek guidance from a tax professional. While Christian Investment Advisors believes the information to be accurate and reliable, we do not claim or have responsibility for its completeness, accuracy, or reliability.
26 min
January 16, 2023 139 – Diversification 101: Part 2 – Sectors
Click below to listen to Episode 139 – Diversification 101: Part 2 – Sectors
Diversification 101: Part 2 – Sectors

Delve into the world of financial and industry sectors in this latest podcast episode on investment diversification.

More episodes >>

In this second part of our three part series on diversification, Bob and Shawn discuss the different sectors and industries in which one can invest. Not only are there several areas of financial industries and sectors, but each of these are divided further, and those are divided smaller as well. A well diversified financial portfolio should include many of these sectors and their subsets.
However, how exactly is this accomplished when there are so many across so many different industries? Find out how and delve into the process of properly diversifying your investment portfolio across the different sectors in this episode on Diversification 101.

HOSTED BY: Bob Barber, CWS®, CKA®
CO-HOST: Shawn Peters
Mentioned In This Episode

Christian Financial Advisors
Website

Bob Barber, CWS®, CKA®

Shawn Peters

Tier Genesis
Website
Bible Verses In This Episode
ECCLESIASTES 11:2
Invest in seven ventures, yes, in eight; you do not know what disaster may come upon the land.

Want to ask a question about your specific situation? Schedule a complimentary 15 minute phone call.
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EPISODE TRANSCRIPT

Intro:
Welcome to Christian Financial Perspectives, where you’re invited to gain insight, wisdom, and knowledge about how Christians integrate their faith, life, and finances with a biblical worldview. Here’s your Christian Financial Advisors’ host, Bob Barber and his co-host, Shawn Peters.
Shawn:
Welcome to another episode of Christian Financial Perspectives. I’m so glad that you’ve joined us today, whether you’re watching this online, on YouTube, or you’re listening in on one of the podcast directories. If you are on YouTube and you like this kind of content where we cover financial advice and other topics but from a Christian and biblical perspective, we’d love it for you to like this video, share it with others, and especially hit that subscribe button, so you can know anytime we release a new video. And today, we’re gonna be covering part two of our three part series on diversification. Bob, you want to get us started?
Bob:
An exciting subject to me because we’re into this every single day. This program is a good program for DIY, the do it yourself worker, or somebody that just wants to know how we at Christian Financial Advisors, how we build our portfolios, which is pretty complex. And I thought in the beginning, Shawn, I was gonna be able to do this in one part, and then I realized as I got deeper in, it was gonna take three different parts to do this or else we’re talking an hour on this, and we don’t wanna lose anybody. Last week, I want to do a recap, so if you didn’t get to see it, I would invite you to go back and take a look at it. It had to do with the equity style and fixed income style charts. There’s nine blocks in each chart. I’m gonna have Garrett right now show you those charts that we went into detail what each one of those blocks meant. So today, what we’re gonna do is we’re going to talk about the 12 sectors that can fit within all 18 of those blocks, Shawn, being that there’s nine in the equities and there’s nine in the fixed income.
Shawn:
That’s right. And then we go into all the different sectors. And before we get that much further, let’s go ahead and read Ecclesiastes 11:2. This is from the NIV, “Invest in seven ventures. Yes, in eight, you do not know what disaster may come upon the land.” And I feel like that fits pretty well with diversification and coming from arguably the wealthiest, by a small margin, man that ever lived. What was it? I think Austin told us it was something like $6-7 trillion dollars, like adjusted for today’s.
Bob:
If Solomon would’ve been living today, and there’s nobody in the world now.
Shawn:
To my knowledge, we don’t have any trillionaires.
Bob:
Right. We just have a lot of billionaires.
Shawn:
We have billionaires, like multiple hundreds of billions. But I feel like anything with a trillion, if that’s your net worth like Solomon would’ve had, I feel like you’re probably first place.
Bob:
If Solomon, who knew how to build wealth, you realize he didn’t put it all in one thing, did he? He diversified it over seven or eight sectors. You hear me preaching a lot here about this, especially to those that love real estate. We live in a big real estate town. A lot of people have gotten wealthy on real estate, and they think that everything should be put in real estate. Well, that flies right in the face of a scriptural principle.
Shawn:
That’s right. And there’s also a scriptural principle about there’s a time for everything. So, yeah. You may have done well for quite some time with real estate, but just like any other market, they all go through cycles, which is why you would be prudent to diversify properly, which means not just real estate. And before we go further, Bob, I actually have something really exciting, especially if anyone is watching, listening that didn’t get our last episode. But we’re very excited to announce we have a new program that we’re calling “Tier Genesis”. And we’ve made this in mind with those who are a little more DIY, as well as those who are households that wouldn’t meet our normal $100,000 total assets minimum. And so, this is a program that is an all digital program, and you can go directly to the website and sign up and get started. You’ll have access to the same investment management that we do for all of our clients already, but by offering it through a little bit different of a program and service, we can help those who don’t meet our normal minimum, but are maybe young family or young professional people trying to get started, or those who just maybe haven’t built up as much, as well as if you are the type of DIY with your advisor where, “Don’t call me, I’ll call you.” So then this might be for you.
Bob:
Maybe you have $500,000 or even 2 million or 3 million.
Shawn:
And you just want what we do, but don’t call me all the time. I’ll call you when I need you. Well, this is for you. And so if you wanna learn more about that, or if you’re really excited, you’re like, Hey, I wanna get started, check out tiergenesis.com. That’s T-I-E-R genesis.com. We’ll have that in the description and on the screen as well.
Bob:
And now we’re gonna get into the sectors. And hopefully, we’re gonna try to do this very quickly. Garrett’s going to be putting up each sector, but then we’re gonna talk about within each sector the industries of those sectors. So you’ve got 12 different sectors. First one is healthcare. So Shawn, the four industries that we invest in when we look at healthcare are…
Shawn:
1) We have healthcare equipment and supplies. And then we have 2) Healthcare providers and services, 3) Biotechnology, and 4) Pharmaceuticals.
Bob:
You can see how those four break down. The providers could be hospitals. The biotechnology would be the inventing the arm or medicine. Pharmaceuticals would come under, like we had Eventide on one time and they talked about schizophrenia, but that kind of comes under biotechnology at the same. It can fall there.
Shawn:
The point is there’s a lot of variety.
Bob:
There’s a lot of variety in healthcare.
Shawn:
You have a sector as healthcare. And then you have those four industries and even to an extent, those four industries, you could kind of subdivide those into a bunch of different areas as well.
Bob:
You sure can. Right. So the second area is communication services, and this involves…
Shawn:
Three primary industries. We have 1) Telecommunications, we have 2) Media wireless,
Bob:
Like wireless phones.
Shawn:
And 3) We have entertainment and internet media.
Bob:
Netflix.
Shawn:
Yeah. I don’t know if anybody’s ever heard of that. It’s a streaming company.
Bob:
Watching Friday Night Lights right now on it from a long time ago. I never saw that, and I’m really enjoying it. Like I was telling you earlier, it’s making me, I’m like looking and watching this series. I’m going, that is too realistic, too much like my town I grew up in.
Shawn:
Which is not something you normally think of when you watch a show.
Bob:
No, it’s not.
Shawn:
Hey, this is realistic, but sometimes it happens.
Bob:
We’ve covered healthcare communication services. Next is…
Shawn:
Number 3 is technology divided into four primary industries. We have 1) Internet software and service companies, 2) We have IT consulting services, 3) We have semiconductor equipment, and 4) We have computers and peripherals.
Bob:
So far, we’ve gone through three. Sounds confusing, doesn’t it? I mean, if you wanna do it yourself, that’s fine, if you love this stuff like we do, but we’re showing you how we take all these different sectors and then the industries under each sector, and we put that into an investment portfolio. Next week in part three, we will be talking about how we apply this and use that equity style chart and fixed income style chart for each one, because every one of these has companies and they fit somewhere in that equity style chart.
Shawn:
That’s right.
Bob:
It could be a small cap, large cap, mid-cap. It could be a growth or value or somewhere in between company. So, they all fit within one of those nine.
Shawn:
And obviously, one of the reasons why we want to cover these sectors and the sub industries or industries is because even if you used those charts and you had large, small cap, mid cap you had these different areas and you were really diversified, if all of those different positions from the equity and the fixed income were all from one primary sector or from only a couple industries, then you’re not as diversified as you might think because you’re missing a piece of it. So that’s kind of why we thought this would be a good part 2 to go over these sectors and industries.
Bob:
And you can overweight these sectors or underweight the sectors depending on where the markets are. Like a few years ago, if you remember oil, was it under $20? $20? I mean, it went negative there for a while during COVID. and then it went up to $120 this last summer. And now as we are doing the program, as we’re making the program, it’s in the mid seventies per barrel. So you look at overweighting energy as an example, a couple years ago when nobody wanted to invest in it, that’s the time when you wanna invest in it. When everybody, and I’m telling you Shawn, cause I watched CNBC this last summer. Everybody’s saying, you gotta get into oil, gotta get into oil. And I’m going, no. It’s $120 a barrel.
Shawn:
It was interesting, because in late 2020 when we moved into energy when nobody really wanted to move into energy, and it was down quite a bit. And meanwhile everybody’s talking about technology stocks, which were skyrocketing, right? Like, well then when those flip around, like, well, now maybe if the technology stocks continue dropping like they have been, at least as the time of recording, maybe now’s the time to invest in technology and not invest in energy.
Bob:
So you gotta watch all these sectors. So the Ford sector is what we refer to as “consumer discretionary”. And that has to do with like retail. How much money do you have to go spend in retail, automobiles, consumer durables, apparels, hotels. You would think, well that’s travel, but that’s consumer discretionary. That’s discretionary spending. You don’t have to go to a hotel. That’s additional dollars that you have to spend in restaurants. Now, consumer discretionary, can you imagine would do better in a good economy, right?
Shawn:
Yeah. When people have more discretionary income to spend. It kinda almost seems like it goes together with the title there.
Bob:
Yes. Correct.
Shawn:
So there are those six, and then our fifth sector we have is consumer staples, and it’s divided into six primary industries. We have food and drug, we have beverages, we have food products. Oh, sorry, that was food and drug retailing. Then 2) Beverages, 3) Food products, 4) Tobacco.
Bob:
Which we would not invest in.
Shawn:
Right. No. Again, yeah. We’re not making any recommendations in general, like on this program that we’re just listing what they are.
Bob:
I just wanna make sure people know we will not invest in tobacco here.
Shawn:
5) Household products, 6) Personal products.
Bob:
And this did really well back in COVID there, your Walmarts and like your Krogers and your big grocery store chains did very well because these are consumer staples. These are things that people gotta have, and they need now.
Shawn:
In 2020, I think the toilet paper companies had probably record sales, right?
Bob:
You remember that.
Shawn:
People buying six years worth of toilet paper for some reason. Like, guys, come on. We’re gonna have more toilet paper.
Bob:
I’ll never forget that. I remember taking pictures of that. And it’s like, you can’t get paper towels. You can’t get toilet paper. And it’s like, it was insane. The run we had on that, and then people were trying to turn around and flip it, and sell it at high prices.
Shawn:
I never thought I’d see the day that people were scalping toilet paper online.
Bob:
So, we’re nearly halfway through, which the sixth one we were just talking about is energy. But energy breaks down. It’s not just gas in your car.
Shawn:
That’s right. It’s got five primary sub industries. We’ve got 1) Crude oil, 2) Natural gas, 3) Drilling, 4) Refining, and 5) Energy related services.
Bob:
And all these will drive energy prices. Like as an example, when energy was very, very low, those that were drilling were like, it’s not worth it. But prices went to $120 a barrel. Now, everybody’s drilling. And now what’s happening is you’ve got so many drilling that you have extra supply coming onto the market that will drive the price back down. It will get down to a certain point where they’ll stop drilling. They’ll say, this is not worth it again. It’s just a cycle. And like it goes with Ecclesiastes says there’s a time for everything. That’s why all these, you’ll have energy that will rotate, but then you’ll have the industries within energy will rotate back and forth as well.
Shawn:
Well, and when you get into energy, I think that’s an interesting example is that if the prices are really high, like for the oil, then obviously there’s gonna be more of a drive for drilling and it’s exploratory drilling. But when it comes to the refinery, what’s interesting is if the oil was already purchased, the energy companies, they don’t have to refine it. They can kind of turn the valve up or down a little bit, depending on like what the market demand is because they’re trying to make as much as they can per gallon of gas or diesel or per gallon for the oil. So why would they wanna sell more if they don’t make as much? If anything, just pull that supply back a little bit, don’t refine as fast. The people always wanna blame the government or whatever political party, but energy companies have a lot of different play in that, too.
Bob:
And as we think about one of these sectors. I was just thinking about something when my head was spinning as you were doing it about energy. There’s an old Texas company here called Southwest Airlines. And they are known that when energy goes way down, they go in and buy a lot of, I mean, when oil prices are way down, they’ll go in and hedge it and they’ll buy it for a couple years. You wonder if they went and did that during COVID when oil basically went to zero for.
Shawn:
I remember seeing that in the news. I don’t remember how many years ago it was, but I remember that coming out where a lot of the airlines were really struggling when prices had gone up quite a bit. And Southwest, of course, was in the news about like, oh, well they’re actually doing great cuz they bought a whole bunch previous, or they hedged it, you know? That’s interesting.
Bob:
Next, we have financials. So this is gonna break down into financial services firms like ours. Also, banks, insurance, this insurance industry. Then you have your overall capital markets, your consumer finance, like your credit cards and then thrift companies. So all these different sectors and you’ll notice again, a lot of rotation within the financial. I saw that over the last couple of years between which one of these one of these industries would be hot while another one wasn’t.
Shawn:
Okay. So our eighth sector is industrials, and we’ve got 10 industries.
Bob:
Oh, that’s a lot of there. Go ahead.
Shawn:
So number 1) Aerospace and defense, 2) Building products, 3) Construction and engineering, 4) Electrical equipment, 5) Machinery, 6) Commercial services and supplies, 7) Air freight and logistics, 8) Airlines, 9) Marine, and 10) Road and rail.
Bob:
I have a feeling when we’re listing all these now people are starting to go, okay, can I listen to this much longer? I’m starting to have brain overload and that’s what will happen. Now like I say, if you wanna build the portfolios yourself, you can. And you use this information to do that. And that’s very good for the DIY. If you’re finding yourself as you’re listening this going, this is so much, I’m becoming overwhelmed. Again, we just mentioned at the beginning of our program, Tier Genesis. We have our Tier Genesis program coming out for anyone that can go online, tiergenesis.com and you’ll get these sectors, and we’re putting these sectors depending on where the markets are – overweighting or underweighting – into our equity style boxes that we talked about in part one.
Shawn:
We’re basically, thing of it is this, if this seems like a lot of information, either that’s good if you’re trying to do more of this on your own, or maybe you need an advisor.
Bob:
Yes.
Shawn:
Maybe it’s us, maybe not. But we just figured it would be good to both help some DIY people and also allow you guys to kind of peek under the hood to an extent to see what’s going on, what goes on in our day-to-day life and how we do what we do.
Bob:
Just so you know, there’s only three more. I know we’ve gone through a lot of these and it’s a lot of information. The last three are materials, well actually four more. We’ve got materials, utilities…
Shawn:
Real estate.
Bob:
Real estate, and then physical assets. Boy, Shawn, I’ll tell you what we need to do. There’s so many different sectors in here. Let’s just try to hit on some of these because I think we’re getting so deep into this, I can see where this could… I think I’ve had people sit across the desk from me before and they’ve actually said, you’re gonna make my head explode if you keep bringing this on.
Shawn:
Well, let’s just hit a highlight a few industries here, each one. So for number nine materials, we’ve got things like chemicals, construction materials, metals and mining, those kinds of things, paper forests. Number 10 for the sector, we’ve got utility or utilities, really just kind of one industry, but you’ve got companies that produce, generate, transmit, or distribute electricity, or you have companies that produce, generate, and transmit natural gas.
Bob:
Exactly. Our last major sector is real estate. Now, people don’t realize that there are 14 different industries within real estate.
Shawn:
So, we’re not gonna hit all of those.
Bob:
No, we’re not, but you do have your big industrial buildings, you’ve got your retail buildings. You’ve got your lodging, you have your offices, and then you have your residential.
Shawn:
Yeah. Then you have residential.
Bob:
Which apartments come into that, too. All right.
Shawn:
And then just to name a couple more. You have things like healthcare is its own industry under real estate.
Bob:
Interesting. See, that came under real estate. So, you’ve got the hospital itself. It’s the building that it sits in.
Shawn:
Exactly. So, two separate things. You could be investing in the service of the hospitals. Or you could be investing in the real estate of the hospital. Things like that. A couple other ones I think is interesting – data centers and then timber land.
Bob:
I like the one of cell phone towers, because that is real estate and you see there’s cell phone towers everywhere. So, that’s just a few of them. And then we get to our last one, which is physical assets. That is gold and silver and actual equipment. All right. Things that you can touch now.
Shawn:
So what would be a good example of that, Bob, for equipment? And I mean, I’m sure everybody watching or listening knows probably what gold and silver are, but what would equipment be as a physical asset sector?
Bob:
Caterpillar. John Deere. So, those are examples right there of investing equipment.
Shawn:
Gotcha.
Bob:
All right. So there you go. That is the 12 sectors. On the last program, again, we discussed the equity style charts. And the next and last of our series on diversification, we’re gonna be discussing how you take these sectors and build actual portfolios, which we’re gonna be going over our ultra-conservative portfolio, conservative, moderate, growth, and aggressive growth. And we’ll be talking about how you overweight and underweight these different sectors and the style charts.
Shawn:
And if you’re watching this video on YouTube, we’d love to hear from you. You can comment maybe what sector do you think looks like might have a comeback in 2023, or what’s one maybe you’re interested in? I’m sure you’ve memorized all these by now.
Bob:
Oh, sure.
Shawn:
You’ve got it after hearing them. But we just love, or just in general, just leave us a comment and tell us maybe a topic you might like to see us cover.
Bob:
And we hope this has been very educational to you. By the way, if you need some financial advice and you would like to hire somebody to do all this for you, we are fee-based, fiduciary based advisor, and you can find us on the web at www.ChristianFA.com or www.christianfinancialadvisors.com and our phone number during business hours (830) 609-6986. You can text or call that number.
Shawn:
That’s right. Thanks again for joining us. God bless. And until next time,
Outro:
We invite you to listen to all of our past episodes, covering many financial topics from a Christian perspective. To make sure you don’t miss any of Bob’s upcoming episodes. You can subscribe to Christian Financial Perspectives on iTunes, Google Podcasts, Spotify, Stitcher, or Amazon Music to learn more about integrating your faith with your finances. Visit Christianfinancialadvisors.com or call (830) 609-6986.
Disclosures:
Investment advisory services offered through Christian Investment Advisors, Inc DBA Christian Financial Advisors also known as Christian Financial Advisors Management Group, a registered investment advisor. Comments from today’s show for informational purposes only, and not to be considered investment advice or recommendations to buy or sell any company that may have been mentioned or discussed. The opinions expressed are solely those of the host Bob Barber and his guests. Bob does not provide tax advice and encourages you to seek guidance from a tax professional. While Christian Investment Advisors believes the information to be accurate and reliable, we do not claim or have responsibility for its completeness, accuracy, or reliability.
22 min
January 11, 2023 138 – Diversification 101: Part 1 – Style Charts
Click below to listen to Episode 138 – Diversification 101: Part 1 – Style Charts
Diversification 101: Part 1 – Style Charts

Learn how to properly not put all of your financial eggs in one basket.

More episodes >>

This may be one of our most important podcast series to date. Diversification is a significant part of investing, and in this episode, Bob and Shawn discuss the different equity and fixed-income charts. This is a great episode series for learning the basic ins and outs of diversification within investing. Bob and Shawn also share what they go through daily to help make sure their clients’ portfolios are appropriately diversified.
On top of offering diversified investment portfolios, Christian Financial Advisors also adds both faith-based investing and biblically responsible investing aspects to our clients’ portfolios. Sit back and take a peek at how our firm works when creating a diversified investment portfolio within a Biblical worldview.

HOSTED BY: Bob Barber, CWS®, CKA®
CO-HOST: Shawn Peters
Mentioned In This Episode

Christian Financial Advisors
Website

Bob Barber, CWS®, CKA®

Shawn Peters

Tier Genesis
Bible Verses In This Episode
ECCLESIASTES 11:2
Invest in seven ventures, yes, in eight; you do not know what disaster may come upon the land.

Want to ask a question about your specific situation? Schedule a complimentary 15 minute phone call.
SCHEDULE AN APPOINTMENTDid you enjoy this episode? Sign up for email updates and never miss an episode.
EPISODE TRANSCRIPT

Intro:
Welcome to Christian Financial Perspectives, where you’re invited to gain insight, wisdom, and knowledge about how Christians integrate their faith, life, and finances with a biblical worldview. Here’s your Christian Financial Advisors’ host, Bob Barber and his co-host, Shawn Peters.
Shawn:
Welcome to another episode of Christian Financial Perspectives. We’re so glad you’re joining us today. We’re gonna be covering part one of a three part series on diversifying your investments. And if you like this kind of content on how to diversify your investments, how to invest from a Biblical perspective or just other topics on how Christians can integrate faith with their finance, then be sure to subscribe to our channel. Click that link below as well as if you’d like this particular video, be sure to give us a thumbs up and smash that like button. So, Bob, why don’t you get us started on part one today.
Bob:
So we’re gonna start on part one, like we said, of a three part series. It’s gonna be a lot. And it’s called Diversification 101. The three part series, today, we’re going to talk about understanding the different equity and fixed income style charts. Okay? And then next week we’re gonna be talking about understanding the 12 sectors and industries of diversification. Then the last part, part three, is going to be about setting up asset allocation models using all of this information. So, this is a good series for the DIY, the do-it-yourself investor, but at the same time, it also lets our audience know what we go through to build our portfolios that are biblically responsible. Because after you go through all of this, then you have to overlay the biblically responsible part on it, which looks for the positive and takes and takes away the negative.
Shawn:
That’s right. So effectively after going through all three parts of this series, if you’re investing on your own, this will be a really good introduction to everything that goes into the diversification. And if you’re a client of ours, or if you’re someone who after watching some of our videos, you like what we’re doing and you maybe wanna become a client. And either way, it just kind of gives you a little bit of, I guess, kind of peeking under the hood. What are some of the things that we have to go through? And then, like you said, and then on top of that, we also do the faith-based part of it, where as a biblical responsible investing firm, we have to look for those positive and negative screens after we’ve already done all this other stuff.
Bob:
And something exciting. We’re gonna be introducing something very exciting as we talk about this series and we’re calling that…
Shawn:
Well let me go over that. Before we get into part one, we are excited to offer a new service, and it’s gonna allow investors of any size to utilize our biblically responsible investing portfolios. And we’re gonna be calling it Tier Genesis. And this new service, it’s gonna allow our team to offer an all digital process for opening new accounts and intelligent portfolio rebalancing. All of the accounts will be actively managed throughout the year using Biblically responsible investing just as we’ve always done. But this allows us to waive our previous minimum of $100,000 per household, as well as to serve people who are more of a, “Don’t call me, I’ll call you”, the DIY investors of any size. I mean, you might be a larger client and just prefer a system that’s a little more digital. And look, if I need you, I’ll call you. So yeah, we’re very excited about that. If you’d like to learn more about it or you’re ready to get started, just visit tiergenesis.com. All right.
Bob:
I want to ask Garrett, if you’ll put that up on when we say that, put that Tier Genesis up there.
Shawn:
And we’ll have it in description, too. We’ll make sure it’s in the description.
Bob:
Okay. So today, in the first part, we’re gonna talk about the equity style chart and understanding that chart and how that’s used in diversification. And then the fixed income style chart. Now, Garrett’s gonna put it up here for us a diagram of what we use for the equity style chart. It looks like a tic-tac-toe.
Shawn:
Before you go a little further. Just in case. We may have a wide range of viewers and listeners, but…
Bob:
What is equity?
Shawn:
But first, for those of you who aren’t aware, equity would also be another name for, say, stocks and then for your fixed income, that’s typically referred to as bonds. So just kind of depending on where you’re coming from. just wanna make sure we cover that real quick.
Bob:
So as you’re looking at this equity style botch, which is what we’re gonna cover first, you notice that there’s nine different blocks. Like you said, it’s very much like a tic-tac-toe board.
Shawn:
Yeah. Kinda reminds me of that thing too, in school where you do the real basics of what eye color is someone gonna have and how you show the different genes with…
Bob:
I don’t remember that, Shawn
Shawn:
It’s the thing about the dominant versus recessive genes. So, it looks very much like that for anybody, any science nerds on here.
Bob:
So you notice across the top where it says a “value blend and growth”, and that has to do with the style of the stock you’re wanting to go in and a price to earning ratio. Is it trading at a great value or is it a growth stock? The PE ratio, priced to earn ratio, is gonna be higher. So it’s a higher risk, but also could be a lot more growth. So. we’re gonna get into that deeply, but right now we’re just talking about value blend and growth. And then you have, where there’s a large, small, or mid-size company, Shawn, when I first got into the business, the large was three billion and up.
Shawn:
Oh wow.
Bob:
Okay. Now, it’s 10 billion and up. A mid-size company is gonna be between 2 [billion] and 10 [billion], and the small is between 300 million and 2 billion. So, when you’re building a equity portfolio, a stock portfolio, you want to diversify in all of these different blocks.
Shawn:
So for an example, Bob, for the value versus growth, it’ll be a little harder to find one that’s right there in the middle for the blend, off the top of my head. But for a value, you might look at something like – and again, this is not an endorsement of anybody, it’s just big names people might recognize as they’re listening. But you might have a company like Exxon that might be considered more of a value, right?
Bob:
It’s definitely large cap, and it could be and but it depend on where it’s trading at.
Shawn:
It depends. Right, right. I just mean in general. It’s a large company.
Bob:
But it definitely was a value a year and a half ago.
Shawn:
That’s right.
Bob:
But today, the way it’s way up there, it could pop over into that growth, so it can go back and forth.
Shawn:
Well then, yeah, so again, I know it depends, I’m just trying to kind of paint a picture here. So you got the really large company that maybe there’s not a whole lot of growth, but they’re paying consistent dividends. That’s if they’re in that value space.
Bob:
That would be considered large cap value.
Shawn:
And then on the growth side for the most part, Tesla has been very much like a growth, because their PE is really high. And so just as an example, people might recognize the names.
Bob:
That’s good. And this is no endorsement to go buy a Tesla.
Shawn:
Yes. It’s not an endorsement, it’s just, I figured, hey, let’s throw some household names out there that people might recognize.
Bob:
Us, too. We have to deal with compliance, so we wanna make sure that we’re complying with everything.
Shawn:
Not a recommendation.
Bob:
So again, the large cap stocks are those with a $10 billion. That’s with a B. The mid-cap is 2 to 10 [billion]. And the small cap is 300 million. And growth stocks are categorized by their above average increase in revenue and earnings. So they’re growing; they’re in their growth stage.
Shawn:
A lot of your tech stocks would be considered growth.
Bob:
Yeah. That’s true.
Shawn:
Usually it’s stuff coming put of Silicon Valley. It is like, oh, it’s very much growth.
Bob:
Yeah. The PE ratio on these, or price to earning ratio, can be 50, 60, 70 and above. So, it’s a multiple. If you go to any of the financial websites, you can pull it up and you can look at the PE ratio, price to earning ratio. Where on the value side of it, you’re gonna get that PE ratio of like 20 and under, 15 and under. So, it’s trading at a value. It’d be like real estate’s gonna become a good value next year. Well, as we’re making it, this is gonna be coming out in 2023, and I think real estate is really gonna become a good buy if you’re patient.
Shawn:
That’s right. So to compare some of those numbers, your market average for the PE, the price to earnings ratio, typically around like 2025. So that’s why the value at say 15, 10 to 15, it’s gonna be below the market average, and your growth is well above that average.
Bob:
Now, just to get back to that equity style chart, I remember when the Timothy Plan started off as a Christian based mutual fund. All they had was a small cap value fund. That was it, and then they had a bond fund. Well, now they’ve got all these different sectors and actually their largest funds are their large cap value.
Shawn:
It’s actually, as kind of a side note on the Biblically responsible side of things, it’s really encouraging to see that there are more and more options to invest with your values as a Christian. As opposed to like when you first started, it was a lot harder.
Bob:
It was very limited. Very, very limited. Now the blend part, as you see that, that’s going to be something like, just think of the S&P 500, the S&P 500 index fund. That’s going to hang out right in the middle because it’s gonna have your growth. The Fortune 500, it’s gonna have your growth in there, and it’s going to have your value. So there’s your blends, and you can have a blended investment right down the middle of that chart. Then we get to the fixed income style chart. And you can see here how this is broken down is by short term bonds.
Shawn:
This is across the top.
Bob:
Yep. Short term bonds, one to five years, even some that can be three months. Intermediate term bonds and long-term bonds. Now the longer the term of the bond, the better or worse it can do, depending on what interest rates are doing.
Shawn:
That’s right. Depending on which way the interest rates are going.
Bob:
So, long-term bonds have gotten hit very hard this year. I mean, the year 2022 because interest rates have continued to go up.
Shawn:
Right. And if you’re not aware, for those watching and listening, is that when your interest rate goes up, the price of the bonds go down and vice versa, which is why those longer term bonds can be affected more. Because when you have an interest rate environment that’s increasing, which the Fed has definitely been doing a lot of. So it’s gonna obviously make the price, the average price of those longer term bonds, go down more.
Bob:
If you don’t hold them to maturity. So, that’s how the price fluctuates. So think about this, this last year in 2022, interest rates have gone up more than more than 2%. You have a 15 year bond, it’s called bond duration. So, you take 15, multiply that times two. That’s how much those bonds have gone down in value – 30%. Now, if you have a one year bond and interest rates go up by two, it only goes down 2%. Technically. I mean that’s what the math says.
Shawn:
Just a real simple mathematic formula. That’s right.
Bob:
So, you have your short, your intermediate, and your long term, and then you have your high quality, your low quality, we call that high yield, or we don’t call it junk bonds, but it kind of is. But we use the term high yield instead.
Shawn:
Well, high yield sounds better than junk bonds, right?
Bob:
Yeah, it does. It does. So your high quality, that’s gonna be your AAA rated, AA rated type bonds, your very well known companies that are issuing debt.
Shawn:
Or like US treasuries, things like that, right?
Bob:
Because there’s all kinds of different bonds. There’s corporate bonds. There’s municipal bonds. There’s government bonds. There’s school bonds. We’re in an area where it’s growing so fast that there’s been a lot of school bonds issued and it’s backed up by the strength of our county and our city and the taxing strength. So those could be very high rated, good quality, depending on where they are. So there’s bond funds and there’s individual bonds. And bond funds are gonna fluctuate. And you don’t have a lot, you can’t do a lot about it, but if you’re buying the individual bonds and it fluctuates, don’t worry about it.
Shawn:
Exactly. And that’s one thing to think about, especially if you’re listening to this to to do-it-yourself is that if you buy a bond fund, it’s a lot more susceptible to that price fluctuation.
Bob:
That’s correct.
Shawn:
Because there isn’t really a set maturity date because you’re buying a fund that buys bonds, whereas if you do purchase those fixed income positions, those bonds directly, that kind of gives you a little bit more of an advantage because the price will still fluctuate. But if it’s a five year bond, and you just make sure to hold it to maturity, it doesn’t really matter as much that the price fluctuated in between.
Bob:
Now, you’ll be rewarded or you get rewarded for going lower quality. They normally pay a higher interest rate, but there’s also a greater risk of default. Then your mids gonna fall right in there. And then your high quality bonds, they’re gonna have your lowest interest rates, but they’re also gonna have a very low risk default, because they’re, like you say, they’re highly, highly rated. So that gets us to, for today, on part one, as you’ve got your equity style chart, your fixed income style chart. Now, this is just the beginning of this, because then you’ve gotta look at your regions and your countries. You’ve gotta look at the developed countries versus the emerging countries. The developed countries are like Japan, United Kingdom, Canada, Switzerland, France, Australia, Germany, South Korea, Netherlands, and Sweden. We got it right here. And then the emerging markets, even though they’re big, like China’s huge, that’s considered an emerging market, because it’s still emerging – India, Taiwan, Brazil, South Africa, Thailand, Mexico, Indonesia, Malaysia, and Turkey. So you got all these both charts, and then you have all these…
Shawn:
And then on top of that, Bob, like you kind of alluded to earlier, like say on the fixed income side, you not only have the short, intermediate, and long term like for your duration, and then you have your high, medium, and low quality. But then you also have, well, is it government, like federal? Is it other countries, but do you have federal, is it considered municipal? Is it a corporate bond? Is it a school bond? Like, I mean, there’s all those other kind of subcategories to this. But this is just, I guess you’d say, more of a high level.
Bob:
We’re starting with basic, and we’re gonna go deeper. Because next week we’re gonna have part two of understanding the 12 sectors, and all of these sectors go within one of these categories.
Shawn:
That’s right.
Bob:
Yeah. And we’re gonna cover all the sectors like health. I’m not gonna list all 12, but here’s a few: healthcare, communications, technology, consumer staples, energy, real estate, plus many others. And we’re going to not only get into those sectors, but we’re gonna go under each sector or sub-sectors. Like healthcare, there’s gonna be the hospitals, but then there might be biotechnology where technology, there’s all the different types of technology that come into that real estate. It can be industrial real estate, it can be commercial, and it could be residential. So there’s all the different types of real estate.
Shawn:
And then once we’ve gone through all of that, then our part 3 will be covering the building asset allocation models.
Bob:
And you take all this information and put it together. So we’re gonna teach the DIY if they want to go this deep. And if you don’t want to, like we said at the beginning, we’re coming out with our Tier Genesis for the DIY investor that can just go online and open up an account, and all this research and active management is done for you, knowing we’re overweighting or underweighting constantly and looking at what the markets are going.
Shawn:
We trade throughout the year. We’re not day trading, but we trade many times throughout the year.
Bob:
We don’t just buy and holding= sales.
Shawn:
Exactly. Well, thank you so much for joining us. God bless and I hope to see you in part two.
Outro:
We invite you to listen to all of our past episodes, covering many financial topics from a Christian perspective. To make sure you don’t miss any of Bob’s upcoming episodes. You can subscribe to Christian Financial Perspectives on iTunes, Google Podcasts, Spotify, Stitcher, or Amazon Music to learn more about integrating your faith with your finances. Visit Christianfinancialadvisors.com or call (830) 609-6986.
Disclosure:
Investment advisory services offered through Christian Investment Advisors, Inc DBA Christian Financial Advisors also known as Christian Financial Advisors Management Group, a registered investment advisor. Comments from today’s show for informational purposes only, and not to be considered investment advice or recommendations to buy or sell any company that may have been mentioned or discussed. The opinions expressed are solely those of the host Bob Barber and his guests. Bob does not provide tax advice and encourages you to seek guidance from a tax professional. While Christian Investment Advisors believes the information to be accurate and reliable, we do not claim or have responsibility for its completeness, accuracy, or reliability.
18 min
January 03, 2023 137 – New Year’s Resolutions: How To Make Sure They Stick
Click below to listen to Episode 137 – New Year’s Resolutions: How To Make Sure They Stick
New Year’s Resolutions: How To Make Sure They Stick

Check out these techniques to better help your New Year’s Resolutions “stick”.

More episodes >>

Happy New Year! While new goals and resolutions can be set anytime, there’s just something about a new year and new beginnings that represent change. Bob and Shawn discuss different techniques to better help you achieve your goals throughout the year. These techniques not only apply to financial goals, but also to wellness goals within your own life, whether that be to start an exercise regimen or to spend more time with family.
No matter what your New Year’s resolutions might be – financial or no – it is important to take a step back and examine your life during this time of new beginnings. There are always opportunities for us to improve, but to also track our goals, progress, and resolutions in a healthy and consistent way.

HOSTED BY: Bob Barber, CWS®, CKA®
CO-HOST: Shawn Peters
Mentioned In This Episode

Christian Financial Advisors
Website

Bob Barber, CWS®, CKA®

Shawn Peters
Bible Verses In This Episode
PHILIPPIANS 4:13
I press on toward the goal to win the prize for which God has called me heavenward in Christ Jesus.

Want to ask a question about your specific situation? Schedule a complimentary 15 minute phone call.
SCHEDULE AN APPOINTMENTDid you enjoy this episode? Sign up for email updates and never miss an episode.
EPISODE TRANSCRIPT

Intro:
Welcome to Christian Financial Perspectives, where you’re invited to gain insight, wisdom, and knowledge about how Christians integrate their faith, life, and finances with a biblical worldview. Here’s your Christian Financial Advisors’ host, Bob Barber and his co-host, Shawn Peters.
Shawn:
Welcome to another episode of Christian Financial Perspectives and Happy New Year!
Bob:
2023.
Shawn:
I cannot believe it’s 2023. I I feel like we just recorded our New Year’s episode not that long ago for 2022.
Bob:
How do you think it feels for a guy like me who graduated from high school in 1980, he’s gonna be 43 years this year since I graduated from high school. Makes me feel kind of old, Shawn.
Shawn:
Think Bob’s old.
Bob:
But I’m still going and I’m gonna keep on going and I hope I can do this until I’m like Warren Buffet. I hope I can do it till I’m 90 or something.
Shawn:
At 60, you’re only like, it’s like your midlife, right? Cause you’re gonna live like 120.
Bob:
I hope so. No, I don’t. Really, I don’t wanna live that long. So today, as we always do at the beginning of the year, you know me, I’m really about setting goals.
Shawn:
Yes, I have come to expect that from you.
Bob:
I always have one on setting goals at the beginning of the year because I think it’s never too old to talk about. You need to talk about at least once a year, setting goals. We have the scripture from Philippians 3:14. Go ahead, Shawn.
Shawn:
Philippians 3:14, “I press on toward the goal to win the prize for which God has called me heaven word in Christ Jesus.”
Bob:
So one of the goals that’s very important is their spiritual goal this year. I hope that this year will be a year in which you grow closer to our Lord and Savior Jesus Christ. Maybe time to read that entire Bible again or just make sure you do that devotional every day. And so we are gonna talk about setting goals for this year.
Shawn:
And since this is Christian Financial Perspectives, this is gonna be focused a little more on setting financial goals for the year.
Bob:
That’s right. Well, the first one’s not really financial, but we’re gonna talk about the top 10 year resolutions that people set because at the beginning of the year, it’s always that time to renew, right? I’m in this new year. I’m gonna do it different this year. By the way, these are all my goals right here from last year. Okay. And I’m still working on this year. I’m getting close, but that first one didn’t work out too well for me. But I tried.
Shawn:
So this is a top 10 years resolution people set over and over in order… would you say in order of importance or is more of just an order of how many people typically have this listed?
Bob:
I think this is actually in order of importance, based on my research.
Shawn:
Importance and percentage. So the first one, eat healthier. 37% of people have that one.
Bob:
Got me.
Shawn:
It’s always a good one.
Bob:
Shawn, I’m so southern. I like my sweet tea and my chicken fried steak and my Mexican food. That’s what I’ve been raised on.
Shawn:
Well, Bob if I remember right, though, I think you might have hit the eat healthier, because I’m pretty sure you only put like six spoonfuls of sugar in your tea as opposed to eight.
Bob:
Actually I’ve gotten down to two.
Shawn:
Oh, even better. See, so that is even better. According to eat healthier, one could say that you technically accomplished that one.
Bob:
I’m trying. And then the next one is…
Shawn:
Get more exercise.
Bob:
All of y’all know that one. You know that if you go try to join the gym right now, it’s always packed. January, February, and March starts kind of tapering off. By the time summer gets around, you’re back to the same crew.
Shawn:
Your best time to join the gym is before you get to Christmas or towards the end of January when, unfortunately, a lot of people have already kind of given up on them getting more exercise, you know.
Bob:
We don’t want you to give up this year. We want you to do it every day because I do admit while I’m a little bit heavier here, especially after Christmas, I do exercise every day, but I have a little gym I have at my home, but that is the second one. Third one is save money or save more money. Now, we get to the Christian financial part of it. Okay. That’s 37%. That’s another very, very high one.
Shawn:
And then we’ve got focus on self-care. That’s 24%. It’s just kind of general, maybe it’s not necessarily healthy, getting healthier, getting more exercise, but just take care of yourself.
Bob:
This one’s maybe put the phone down and read more.
Shawn:
Read, like books?
Bob:
It’s a kind of an old-fashioned thing. You get the paper book out. It doesn’t require any batteries or anything.
Shawn:
Well, I’ll admit I usually use the electronic e-reader.
Bob:
We used to call that back in the old days, we called that a Kindle. But now I don’t know if they call it that anymore.
Shawn:
I don’t what they call it. I just didn’t wanna mention any your brand names.
Bob:
Number six.
Shawn:
Learn a new skill.
Bob:
Yeah. Learn something. Do something that that you don’t know how to do.
Shawn:
Maybe learn how to change the light bulb. This’ll be your year.
Bob:
The seventh one is making new friends. I’m too old for that, Shawn.
Shawn:
Oh, come on, Bob. You can still make new friends.
Bob:
It’s down there in the 15% category too, though. It’s not a real high one.
Shawn:
Just see, Bob, now would be a good time to make new friends. They’ll be your friends for the rest of your life, right?
Bob:
How about this one? Number eight, get a job.
Shawn:
Or get a new job.
Bob:
Get a new job. I think I’m gonna stick with what I do. I’ve been doing this so long.
Shawn:
Please don’t you get a new job. More for our listeners. Maybe you’ve been in that job and you realized I really shouldn’t be here anymore. Yeah, it’s okay. Go get a new job. And then the next one, take up a new hobby. That would be a good one. Maybe do something with the house.
Bob:
I probably need to do that. I’m so focused on this financial stuff. I need to do something different. I did play some golf. Okay. So I’m starting to take back up golf again.
Shawn:
I was gonna say you do need another hobby so we can talk about something other than finance.
Bob:
Financial, okay.
Shawn:
I mean, you’re good at that. Just maybe have something else to chat about.
Bob:
Okay. So we’ll talk about it. I grew up playing golf. Actually,, my parents were a member of a country club growing up, and I grew up playing a lot of golf up until I was 15, 16 years old. So when I go out and I start playing golf, the first couple of holes, it is terrible. But usually by about the third or fourth hole, I’m starting to par them. So that was always considered like riding a bike.
Shawn:
Old muscle memory, old muscle memorie’s back. “Oh, I remember this.”
Bob:
Yep. Exactly. It’s kind of like like you say, riding the bike. Once you learn it, you can get those skills back pretty quick. And the 10th one…
Shawn:
Is focus more on relationships.
Bob:
That’s a real important with me, and that’s relationships with your family, with friends, and others. So researchers say about 60% of us actually make our new year resolutions, but only 8% of them are very successful at them. Why is this so.
Shawn:
That’s a huge difference.
Bob:
It is, it is.
Shawn:
Bob, is that 8% of the 60% or is that just 8% of people in general.
Bob:
I don’t know. I think that’s 8% of people in general. I hope it’s not 8%. Cause 8%…
Shawn:
Of 60%, that’s a much smaller number.
Bob:
Eight times, that’d be 4.8. Something like that. No, that’d be 80% of 60%. So 8% would be like 0.04. Something like that. I think, I don’t think…
Shawn:
It’s low. Whatever. It’s low. 8%, 8% of people.
Bob:
So, we’re reminded, every year we talk about this, it’s always good to remind ourselves of it, of the famous Harvard Business School study about goals. And that 83 out of 100 people do not have clearly defined goals.
Shawn:
83 out of 100. And you know what, that kind of makes sense when we’re looking at those top 10 goals that people typically have – eat healthier or get more fit or work on your fitness. That’s a really vague goal too. So, that kind of makes sense. They’re like, well, if your goal is to eat healthier, what does that really even mean?
Bob:
So you need to write it down. Here’s my written down ones. And we’re, we’re gonna talk about how to write those down and we have a little form that we’re gonna give you, too. It’s a goal setting form.
Shawn:
Okay. And for this next one, of the 17 people that did have goals, only three of them actually wrote them down.
Bob:
So get this, 83 out of 100 people don’t have goals, but the 17 that did have them, only 3.
Shawn:
So 3out of 100. So 3 out of a 100 people had written goals.
Bob:
That’s a low, very low number, isn’t it? And when they concluded the study at Harvard, the 3 out of the 10 people that had written goals were earning 10 times the income of the 83 people that didn’t have any written goals. Plus, they tended to be in better health and have happier marriages.
Shawn:
Wow.
Bob:
Because again, one of those goals needs to be a relationship goal.
Shawn:
Yeah, it should.
Bob:
And a health goal. So what’s the first thing, Shawn, that if you want to hit a target, what’s the first thing you have to do? I’m gonna have that bow and arrow and I want to hit that target. Well, or shoot that target?
Shawn:
You need. I think you tricked me the last time we talked about this, but this one is, you need to have a target. Actually, that’s the first thing. So most people think, oh, I need to aim. No, you need to know what the target is. You need to have the target. Did I get it right this year?
Bob:
You got it. You got it perfect. You’re an old hat at this now, you’ve been doing this. So there’s a goal system that I’ve used for years, and it’s called the SMAC, S-M-A-C method.
Shawn:
Please don’t hit me on camera.
Bob:
Okay. So the S in SMAC means…
Shawn:
Specific. So, setting your goals and a target specifically for you personally. Not goals someone else has or wants, but something for you, specific for you.
Bob:
The M in SMAC means measurable. Set goals that you can measure along the way as you’re getting to that goal.
Shawn:
You know a good one for that one? The fitness one is maybe you say, Hey, I wanna lose 10 pounds or something. Well, that’s something that you can actually measure instead of just get fit. It’s like, well, I’m gonna lose 10 pounds, I’m gonna lose 20 pounds or I want to get to a certain body fat percentage. Those are all things that you can measure along the way. And they’re specific.
Bob:
The A in the SMAC is, is achievable. Achievable.
Shawn:
Set realistic goals you can achieve. Bob, you wanna give some examples?
Bob:
Well, I don’t think I should set a goal to run a marathon before the end of the year, but maybe I could set a goal to run a 5k.
Shawn:
Yeah, there you go.
Bob:
Okay. Because that would be unreasonable, especially with torn meniscus in both my knees, bad back, or even just walk five miles.
Shawn:
If you if you join a gym maybe a realistic goal would be like, I go to a CrossFit gym mainly because I used to work out on my own, but I kind of like going somewhere and just doing whatever the coach tells me to do that’s on the board. But wherever you go, if you join a gym, make your goal maybe to start with, I want to change my habits to where I go at least three times a week and just start with that. You can always build if you want to, but like, start with something weird. Like what, three times a week you can do that. That’s something achievable.
Bob:
You wanna curl 30, 40 pounds in each arm, you gotta start off with 5 or 10.
Shawn:
Yeah.
Bob:
And graduate from there. And as you get older, you’re not gonna be doing that heavy weight because your joints are gonna start hurting.
Shawn:
Okay. And so the last letter C, the C in SMAC means compatible. Set goals that are compatible with your values and beliefs.
Bob:
So, as we get into setting the specific goals. I always say that funny, too. My wife says, you sound like you say Pacific versus specific.
Shawn:
Just say it fast and they won’t know. No one will be able to tell, right?
Bob:
Right.
Shawn:
We’ll put specific in the subtitles.
Bob:
But I’ve been very specific over the years, and I set goals in practically every area of my life. This is gonna be on our goals chart that we’re going to give you. And Garrett, if you would put this up as we say these. So, one is a spiritual goal. And that’s, like you say, maybe the read the Bible this year or do devotionals every day to pray with your spouse. That could be a spiritual goal. Okay.
Shawn:
And if you’ve been having a hard time, this is a good example because I know this was one of my goals for 2022. But in 2022, my goal was that, for spiritual, is I wanted to be better and more consistent with my quiet time. There’s a lot of days where I felt like I was kind of giving my last 10% to God, like at the end of the day. And I realized, you know what, I’m gonna, I’m gonna start working out in the mornings, and why not? I can just get up 10-20 minutes earlier than I needed to, to get to the gym so I have some time just me and God, the kids aren’t up. Jenna’s not up. For those of you for spiritual goals, don’t think, oh, I wanna start spending two hours a day in my Bible. If you haven’t been doing that every day, maybe try 10 to 20 minutes a day, spending some time in the Bible. And then when you are consistently doing that every day, maybe you’re able to expand over time. But don’t, same thing, don’t jump into something huge on that spiritual goal.
Bob:
You don’t need to jump into the deep end. Jump into the shallow end, and then swim your way to the deep end. The physical one is the same thing, like you said. That’s a real big one with me, to keep working out. I’ll be 61 in June of this year. I hope to be going another 20, 25 years. Can you imagine how many podcasts we’ll have in 20 years?
Shawn:
Don’t do the math.
Bob:
I know it’d be a lot. I know. It would be, what’s? That’s like a thousand of them or something. But we’re up to 137. I think this is.
Shawn:
Then we have financial ones.
Bob:
And again, baby steps with that. If you’re not saving anything and you say, well, I wanna start saving a thousand dollars a month, that’s going from one extreme to the other. Remember, you need to make it SMAC specific, measurable, achievable, and compatible to you.
Shawn:
And then you have mental.
Bob:
Start off with $25. Okay.
Shawn:
That’s right. And then you start with mental, mental goals. Maybe that could be like from readin , because that is definitely one of the things…
Bob:
Maybe to go back to school.
Shawn:
Yeah. You can go back to school and finish that graduate degree or something or your undergrad if you didn’t finish your undergrad.
Bob:
The relational one. I think this is very important, especially for us guys. We have a tendency to get more focused on work. I am very, very guilty of this.
Shawn:
No, no. There’s no evidence of that, especially in the United States of guys focusing too much on their career and work. What?
Bob:
That relational one, like I’m looking at mine. Have a positive attitude towards Rachael, and travel more with her. By the way, this was 2022. I did that a lot last year. We went and we’re going to, again, this year. We’re going to finally, hopefully, do that Mediterranean cruise she wanted. We had to cancel a couple years ago cause of Covid. And hopefully it’s not gonna show it’s ugly head too bad again this year. Okay. But that’s a relational one that I’m gonna be doing with my wife. But that positive attitude toward her, I can be critical sometimes. And I had that, actually, on here – be less critical about things.
Shawn:
Yeah. That’s good. And you wrote it down.
Bob:
I wrote it down.
Shawn:
That’s helpful.
Bob:
Yep.
Shawn:
So professional. I don’t know, pin on your profession what you might do, maybe going for that professional designation in your career or maybe learning some new skills depending on where you’re working. Or maybe, hey, if you’re working somewhere, a lot of places, especially larger companies, will have like programs and stuff where you can say, all right I want to work my way up to being a shift manager or an assistant manager or something. A lot of times companies will have those paths if you say, Hey, I wanna go further with this. Well maybe talk to HR about it.
Bob:
Just remember to make it SMAC.
Shawn:
That’s right. Exactly. Don’t say I wanna be an owner of the property. You’re like, okay, maybe make baby steps there.
Bob:
So I was thinking about this for myself, Shawn, and it has to do with the program here. It was before the end of the year, be doing videos. That was not an easy task. This was not easy, putting tthese videos all together and the technology behind it and all that, but we did it.
Shawn:
We did. It took about six months longer, but we kept at it. And finally, and as you can tell, here we are.
Bob:
Are one of the things that kept me at it was seeing this every day. Because you know me, I put these around where I’m looking at them all the time. And then, there’s charitable goals. I think it’s very good to think of a charitable goal, what that may be. With me personally, it was supporting more children with Compassion. We’re very strong about Compassion International. But it may be with you, it may be Habitat for Humanity. Just start it. Maybe some of you’re not tithing or giving to your church. Maybe it just has to do with giving more to your church or volunteering at a charity.
Shawn:
It doesn’t have to be money, especially when it comes to charity. And I think that a lot of people kind of forget that. Like I know at our church, we really need more people to help with the youth, with the kids. And so maybe you can’t give money, but hey, maybe once a month you can help with something at your church. That’s great. That’s still helping.
Bob:
So another thing is, I had on my goals here that you can add something to your goals and it’s not gonna be on our little chart that we’re gonna give you, but I have traveled, again, because Rachael loves to travel. Me, I just like staying home on my 17 acres and playing out with my John Deere tractor. But Rachael loves to travel, so put that on my goals.
Shawn:
Put that on my specific family goal.
Bob:
Yeah. A special goal that you might want, like a skill you might wanna learn. I do have a travel goal in there. So, there is the spiritual form, I mean the goals form for you that we would love to share with you. And I just wanna emphasize again the scripture from Philippians, it talks about the goal to win the prize for which God has called you. So remember that behind all these, you need to be within the will of God, I feel within those goals.
Shawn:
And just to reiterate those again. So the goals form, we should have shown it on screen, but we’ll also have it in description.
Bob:
Yeah. We’ll make sure to have it on the screen.
Shawn:
But the ones that you usually recommend and the one that you follow, we have spiritual, physical, financial, relational, mental, professional, and charitable.
Bob:
And I take one and this little form, and you can see it’s real small. I just print this out on a piece of paper, and I laminate it. See how it’s laminated.
Shawn:
Or you can use clear tape.
Bob:
That’s what I do. Actually, that’s what I do.
Shawn:
If you don’t have your lamination machine.
Bob:
I used to have it laminated, but I use clear tape now and I put a copy of this – one in my shower, one on my vanity, one on your visor in your car. If you pull it down, you see it. I got one in my Bible. So I put these all around me where I see them. And as I look back at my 2022 goals, I’ve hit nearly every one of them except the weight.
Shawn:
I think that’s pretty good.
Bob:
Again, I’m gonna try that again this year.
Shawn:
So, so you got 6 outta 7.
Bob:
I think that’s pretty good. There you go. Well, that’s all for today. We hope we’ve helped you. Again, Aappy New Year, and it’s gonna be a great 2023. We look forward to bringing you many educational programs this year from a Christian perspective with Christian Financial Advisors.
Shawn:
And like we said earlier, if you do like this video, please like and subscribe, do all the fun YouTube things. It really does help us out. It also helps, I think, with the algorithm. If you like this, then other users similar to you who might also like Christian financial topics. So, that’s all. Happy New Year and God bless.
Outro:
We invite you to listen to all of our past episodes, covering many financial topics from a Christian perspective. To make sure you don’t miss any of Bob’s upcoming episodes. You can subscribe to Christian Financial Perspectives on iTunes, Google Podcasts, Spotify, Stitcher, or Amazon Music to learn more about integrating your faith with your finances. Visit Christianfinancialadvisors.com or call (830) 609-6986.
Disclosure:
Investment advisory services offered through Christian Investment Advisors, Inc DBA Christian Financial Advisors also known as Christian Financial Advisors Management Group, a registered investment advisor. Comments from today’s show for informational purposes only, and not to be considered investment advice or recommendations to buy or sell any company that may have been mentioned or discussed. The opinions expressed are solely those of the host Bob Barber and his guests. Bob does not provide tax advice and encourages you to seek guidance from a tax professional. While Christian Investment Advisors believes the information to be accurate and reliable, we do not claim or have responsibility for its completeness, accuracy, or reliability.
22 min
December 19, 2022 136 – What Is The True Meaning Of Christmas
Click below to listen to Episode 136 – What Is The True Meaning Of Christmas
What Is The True Meaning Of Christmas

We discuss the true meaning of Christmas outside of sales and presents.

More episodes >>

We’ve probably all found ourselves caught up in Christmas sales, the need to find perfect gifts, and all the stress that comes along with this holiday. What used to be a time of celebration, joy, and giving has slowly turned into a holiday of big businesses making sales quotas. No longer is Christmas the joyous occasion that it used to be.
We present statistics on just how money driven Christmas has become, and also present what Christmas time should truly be about. It’s jaw dropping the average amount an American household spends on Christmas! Instead of focusing on all of the gifts and decorations, sometimes it is good to take a step back and refocus on what Christmas is truly about.

HOSTED BY: Bob Barber, CWS®, CKA®
CO-HOST: Shawn Peters
Mentioned In This Episode

Christian Financial Advisors
Website

Bob Barber, CWS®, CKA®

Shawn Peters
Bible Verses In This Episode
PROVERBS 22:7
The rich rules over the poor, and the borrower is the slave of the lender.
MATTHEW 6:19-21
Do not lay up for yourselves treasures on earth, where moth and rust destroy and where thieves break in and steal, but lay up for yourselves treasures in heaven, where neither moth nor rust destroys and where thieves do not break in and steal. For where your treasure is, there your heart will be also.
LUKE 12:34
For where your treasure is, there will your heart be also.
MATTHEW 6:24
No one can serve two masters, for either he will hate the one and love the other, or he will be devoted to the one and despise the other. You cannot serve God and money.
ISAIH 7:14
Therefore the Lord Himself will give you a sign. Behold, the virgin shall conceive and bear a son, and shall call His name Immanuel.
JOHN 3:16
For God so loved the world, that He gave His only Son, that whoever believes in Him should not perish but have eternal life.
JOHN 14:6
Jesus said to him, “I am the way, and the truth, and the life. No one comes to the Father except through me.”

Want to ask a question about your specific situation? Schedule a complimentary 15 minute phone call.
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EPISODE TRANSCRIPT

Intro:
Welcome to Christian Financial Perspectives, where you’re invited to gain insight, wisdom, and knowledge about how Christians integrate their faith, life, and finances with a biblical worldview. Here’s your Christian Financial Advisors’ host, Bob Barber and his co-host, Shawn Peters.
Shawn:
Welcome to another episode of Christian Financial Perspectives. We’re so glad you joined us. if you’re watching us right now on YouTube, don’t forget to like and subscribe to the channel. And before we get started, Bob, you ready for Christmas?
Bob:
Well, you know the answer to that.
Shawn:
Oh, no. Wait, wait. We still got a few more days for Christmas.
Bob:
We got another three or four days.
Shawn:
Right. So you’re not gonna go to the local pharmacy corner store for at least, what, two or three more days?
Bob:
Yeah And I love to do it because all of us, I meet all my friends. It’s all of us guys and we’re usually walking around with our heads in the cloud like this. Like, what are you gonna get? I don’t know. And we just start grabbing stuff and the kids love it because they just…
Shawn:
It’s almost always some sort of, there’s chocolate and some sort of like salty snacks and…
Bob:
There’s a lot of gum in there, a lot of gum. Like little bitty toys like this big I’ll get, you know? Oh yeah. It’s funny.
Shawn:
Yeah. But you buy like the whole store and spend 20 bucks.
Bob:
You know what, I got this tradition from my dad, and my dad would do that. So, it’s kind of a tradition.
Shawn:
Well, I mean, between you and Rachael though, I mean, you’re always prepared, if you will.
Bob:
Oh, Rachael prepared 5 weeks ago.
Shawn:
Your stuff is more of it’s just fun to do it like last minute.
Bob:
So today we’re gonna talk about?
Shawn:
Well, we’re gonna be talking about the real meaning of Christmas. Now, before we get into that, though. All right. I just wanted to cover, so we’re gonna be going over the big business of Christmas and then the real meaning of Christmas.
Bob:
The big business of Christmas. You think Christmas is big business?
Shawn:
Well, we’re gonna cover that a little bit.
Bob:
I know you did a lot of studying on this, didn’t you?
Shawn:
I did. I did a little bit. Well, considering this is Christian Financial Perspectives, I figured we should probably have a little bit of financial in here.
Bob:
You’re gonna give us some financial stats that go with Christmas. It’s mind blowing. It really is.
Shawn:
So this is coming be more from the retail side. Which there’s a lot of statistics on it. So between Thanksgiving and Christmas, US, because this is just the US. I don’t know about the other countries. But for the US, retail sales reached $889 billion in 2021. That’s right. $889 billion, billion with a B. B as in Bravo, or as in a lot of money – in 2021 and are expected to reach $942 billion this year in 2022. We’re obviously through quite a bit of it already.
Bob:
I wonder how much of that – do you have stats on how much this is going on credit cards?
Shawn:
Well, we’re gonna gonna get a little bit into like how much people spend. But, but yeah. Just in the last couple months, Bob, we’ve been seeing some of the stats coming out about how much just normal life, like how much the average credit card debt, has been going up for per household.
Bob:
It’s gone way, way up because of way of inflation. People didn’t quit spending money. They just put it on the card and just kept going.
Shawn:
And then it adds up. I mean, like the Bible says, “Little by little,” right?
Bob:
Yep.
Shawn:
So, those are just some of those initial stats. The top end estimate though, Bob, for 2022 is $960 billion. Right. 960. Now, here’s what gets even crazier. Compare that with 2012 numbers.
Bob:
10 years ago.
Shawn:
10 years ago. $567 billion. We’re up over 66% in just 10 years. That is a lot of Christmas shopping, right?
Bob:
I would think the retail stores really push it and we see how they push it.
Shawn:
No, I’ve got some interesting data on here too of how much Christmas accounts for in retail. So, to break this down a little further, think about the following few stats we have, but I have a few stats.
Bob:
Wait a second. Before you go into this. I don’t want my wife hearing this because if she hears this top number, you’re gonna give, we don’t spend that much. She’ll say, well, that’s the average household.
Shawn:
Yeah. Well.
Bob:
Okay. Go ahead.
Shawn:
Take with that what you will. But Rachael, I hope you do watch this, because we put a lot of work into this. We’ve put a lot of work in these episodes. All right. Think about this from the 2022 holiday season, which is almost over. They call it the holiday season because it kind of starts a little bit before Thanksgiving, to an extent.
Bob:
Now it does.
Shawn:
Yeah. And for sure Black Friday and then it goes through Christmas and you’ve got your people shopping on the 24th. So anyway, US households will spend an average of 7250 – $7,250 during the holidays.
Bob:
I don’t think we’ve ever spent that much.
Shawn:
No, but that’s the average.
Bob:
That’s the average?
Shawn:
That’s the average.
Bob:
So a lot of people spend more than that?
Shawn:
Well, So, the way I came up with that number, because I couldn’t find specific stats on the actual average. Like I’d seen some averages from like a number of years ago. But I wanted something more current. So what we did is we just took, well if the estimate – the $942 billion, you divide that by the total number of households in the US, you get $7,250.
Bob:
You think they’re taking some of my neighbors I was telling you about that are spending $5000 to $25,000 just on lights?
Shawn:
Bob, they might be watching this. Don’t call them out on the lights.
Bob:
And having professionally installed lights. I wonder if that goes into that number. Yeah, that’s crazy. $7,250. Wow.
Shawn:
And see it’s funny though, too.
Bob:
That’s per household.
Shawn:
That’s what the…
Bob:
I know y’all don’t spend that much.
Shawn:
No, we don’t. But you take that $942 billion and if that’s the spending, you just divide that into the number of households.
Bob:
Well, that’s what’s interesting is how so many of these people are spending more than that. Of course, a lot of people are spending less, too. But still, that’s a lot.
Shawn:
So, another one, holiday shopping accounts for 30% of annual retail sales.
Bob:
Well, I don’t doubt that one.
Shawn:
30% of the annual sales are just like Christmas shopping, basically. Another one, from December 15th to the 24th accounts for 40% of all Christmas sales.
Bob:
I know that one. Cause I do that, on the 24th.
Shawn:
But think about that. So 30% of the annual sales occurs during this short window of time. And 40% of that is just from the 15th to the 24th.
Bob:
Hopefully, it helps some of y’all cuz we’re doing the program two or three days before. So maybe we’ll save you some of that.
Shawn:
So if you are, if you haven’t finished your shopping yet, you’re just helping to contribute to that 40%
Bob:
Now this is an interesting one, this next one. Go ahead. I’ve got to comment on this one.
Shawn:
56% of all shoppers buy gift cards.
Bob:
I wish you looked that up because I’ve heard some crazy percentage number of the gift cards that a lot of them never spend it.
Shawn:
That’s right.
Bob:
There’s unspent money on those gift cards.
Shawn:
And certain gift cards also have expiration. So what what will happen is, is you get a gift card and not only does it expire after a certain period of time if you didn’t use it, but some cards even have, I think this is like the more like the credit card debit card, like the Visa, MasterCard, stuff like that, where there’s a charge, basically like a finance charge per year. So even if it technically didn’t expire, depending on how much was added onto it, if you waited long enough, it’ll literally just go to zero from finance charges each year.
Bob:
I mean, it’s a profit making deal.
Shawn:
It’s a profit making deal. But the other thing too, just as an aside, it’s kind of sad to me that we’re at well over 50% of gifts are just a gift card. Because effectively, if you get the gift card, it’s like, well, I think maybe they might go eat or go to this restaurant or whatever. And you’re not even really, at that point, giving a gift. Like, isn’t the whole point, like at its core of when you’re giving a gift to someone, it’s like, Hey, I thought about this. Like, I wanted something that would be meaningful to you, and you buy a gift card. It kind of feels like just an easy way out of, “Oh, I checked the box to give a gift.”
Bob:
You can tell everyone because we don’t have this rehearsed in advance or anything. You know what my favorite gift is, because tell them. Go ahead.
Shawn:
It’s the stuff my wife always gets you, this basket with all your favorite snacks.
Bob:
Exactly. Which is coconut.
Shawn:
For anyone who wants to send us a gift.
Bob:
Coconut chips, coconut drinks. You name it. It’s got coconut in it. I love it.
Shawn:
So if you’re sending anything to Bob as a thank you for the show, make sure it’s got coconut in it.
Bob:
Hey, maybe we’ll get some coconut gifts now. All right.
Shawn:
So, and the last stat I wanted to share on just this retail side of it, the top five items people plan to buy for themselves as a Christmas gift for yourself, Alcoholic and non-alcoholic beverages. So drinks – 33%. Food, including like meal prep kits, 30%. Clothing, 30%. Shoes, 23% and books, 17%. I don’t know, just thought it was interesting.
Bob:
Shawn, I think about all this big business, and it’s gotta be stressfu.
Shawn:
A little bit. Yeah, yeah.
Bob:
Because all this debt that you’re accrue, a lot of this is debt, as you know, especially this year because credit cards are maxed out and you’re just putting more and more on them, and there is that stress.
Shawn:
Yeah. So the stress of the Christmas shopping. So, I wanted to share a little bit of information like from the American Psychological Association and some surveys that they’ve done, and just that information about the stress. Because you obviously have the money side, the retail side of it, but then there’s the actual mental stress of this. Almost three quarters of Americans report that money and work are significant sources of stress in their lives. And this according to the American Psychological Associations, a 2007 Stress In America survey. The holidays, anything between Thanksgiving and Christmas. Then compound the pressure as revealed in the APAs 2006 poll on holiday stress. Now, middle income Americans are particularly affected as the everyday financial pressures are amplified by demands to spend more. And now, inflation.
Bob:
It’s demand, you gotta spend more if you love me. Come on, spend more. That’s what America’s about. Right? Consumerism.
Shawn:
I know it’s sad. And then with inflation, this has just gotten even worse. Because now, just to do the same as last year, you’re not even outdoing last year, but just to do the same as last year and now you’re gonna spend even more. So, with the pressure to create the perfect holiday, so whether that’s a memorable meal, expensive gifts, elaborate decorations, and more like…
Bob:
Okay, let me expand on that. So you know us, we watch Hallmark every night. And I’m looking at all these decorations, I’m going, my house does not look like these houses. Wait a second. They’re professionally done. That’s a movie set. But all those decorations, again, I was telling you about…
Shawn:
Wait, Bob, are you, are you saying that sometimes Hollywood, even Hallmark Channel, doesn’t portray life as accurate as it typically is? Like, is there a little bit of Hollywood magic going on there?
Bob:
All perfect.
Shawn:
Oh, okay. All right. Well whether it’s those elaborate decorations or more, just not having enough money to do it all causes stress to more than 60% of those surveyed for holiday stress. So like, just everything about that feeling like I can’t do enough. Like, I’m not gonna be able to make the perfect holiday, just drastically increases the stress that people go through. And then, the worries continue even more when the credit card bills arrive a month later.
Bob:
Oh yeah.
Shawn:
Because you’re going through all this spending and it’s just really easy to, “Oh, buy this and buy this and oh, it’s on sale!” But remember, you’re still paying something, even if it’s on sale, you’re still spending money. So, make sure you’ve got a budget. Like that would be the one thing to help with the stress. Because like, you can’t avoid gifts at all.
Bob:
Yeah, that’s right.
Shawn:
But at least make sure like you stick to a budget that you can manage.
Bob:
Like what my old buddy Dave Ramsey always says you can get in debt in just a matter of days, but it can take you years to get out.
Shawn:
Oh, that’s right.
Bob:
And you think about, like, we go back to those stats that you were sharing earlier, that the majority of this shopping happens just a couple weeks before. So you’re pushing those credit cards way up just over two weeks and then it might be the next 12 months that it’s gonna take you to pay them off. How many, this is kind of a hard question I want to ask in all this, but I gotta admit even myself, Shawn, if I sat down and tried to list out 10 of the things I got last year, it’d be very hard. I don’t think most people could remember even 10 of them. Maybe two or three. And you always say, I always remember when Jenna, she knows what I love and gets me my food basket. That’s something I remember every single year. I start thinking, and I can’t really remember what else I got last Christmas. I think Rachael got me one of those little, what is it called, planes that go up in the air and take a picture.
Shawn:
A little drone.
Bob:
But I’ve not used it. See? I still gotta learn how to use it. I’m waiting for you to show me how to use that thing.
Shawn:
All right. Well, we’ll have to take a look at that later.
Bob:
I think that was a Christmas present, but I can’t remember. Can you? Could you list them? I gotta ask you, those listening to us, could you list 10 other things that you got last year right now? Could you sit down with a piece of notebook paper and write down 10. I bet you couldn’t.
Shawn:
I think the point here, though, is not to make someone feel bad about giving.
Bob:
Not at all.
Shawn:
But if anything, when you’re thinking about the stress of shopping for people for during Christmas, just remember that like Bob was saying, it’s not that important what you actually get. You’ve probably heard that before. It’s the thought that counts.
Bob:
Oh yeah. Right.
Shawn:
It’s not as much what you actually got. It’s the thought that went into it. You showed someone that you cared.
Bob:
Don’t hear that term very often anymore. It’s the thought that counts.
Shawn:
That’s right.
Bob:
Because it does. When there’s thought put into it, it’s more meaningful. There’s no doubt about that.
Shawn:
So now, I wanna share some scriptures with our viewers and listeners of what God’s word says about money and priorities, which I think is a good time to share this. So we’re gonna start with Proverbs 22:7, “The rich rules over the poor and the borrower is slaved to the lender.”
Bob:
Hmm.
Shawn:
That’s a good one to think about with trying not to get the credit card debt up too high.
Bob:
Yeah. Yeah, it is.
Shawn:
Bob, if you wanna get the next one.
Bob:
Matthew 6:19-21, “Do not lay up for yourselves treasures on earth where moth and rust destroy and where thieves break in and steal, but lay up yourselves treasures in heaven where neither moth nor rust destroys and where thieves do not break in and steal, for where your treasure is there, your heart will be also.”
Shawn:
Yeah. I feel like that’s a good one, too, with the where your treasure is, there your heart will be also. If you’re focused on what you’re getting people for the sake of like, it needs to be perfect, it needs to be great. Well, then you’re kind of missing the point of like, you’re wanting to show someone that you care. You’re wanting to show someone that you love them. And so, it should be more about like why you’re doing it, not what you actually spent.
Bob:
Yes, exactly.
Shawn:
So for the next one, Luke 12:34, “For where your treasure is, there will your heart be also.”
Bob:
Matthew 6:24, “No one can serve two masters, for either he will hate the one and love the other, or he’ll be devoted to one and despise the other. You cannot serve both God and money.”
Shawn:
That’s right.
Bob:
Okay. So, we’re gonna really get into now what we feel is the real meaning of Christmas.
Shawn:
That’s right. And whether you’re watching or listening to this episode, we want you to feel hope this Christmas season. We don’t want you to feel hopeless. Some of you may be stressed about Christmas coming up because maybe you feel like you didn’t get enough gifts. that whole thing about the perfect making the perfect Christmas. Maybe you feel like you didn’t get enough gifts for your family, or you didn’t get the right gifts. They weren’t the right ones. Maybe you’re stressed from spending too much money on the gifts, and you’re worried about the budget. You’re worried about that credit card bill coming due. Regardless of why you’re stressed, because it also might be just stressed about all the family coming into town.
Bob:
Could be.
Shawn:
But regardless of why you’re stressed, take comfort in knowing Christmas isn’t just about the gifts, it’s about celebrating the coming of Jesus to earth to save us.
Bob:
That’s correct.
Shawn:
So that takes us into the real meaning of Christmas.
Bob:
Isaiah 7:14 says, “Therefore the Lord himself gave you a sign. Behold the virgin shall conceive and bear a son, and they shall call his name Emmanuel.”
Shawn:
And just remember, as we’re going through these scriptures and you’re thinking about kind of how this Christmas has gone for you, since we’re not quite to Christmas yet, that you can still focus, like you still have time, you can still focus on what’s really important this Christmas with your family, even if you fell into the trap of the big business of Christmas. And to help you with this, we’re gonna highlight a few things to remember in addition to these scriptures. And hopefully this will help you not just for this Christmas, but for next year, too. So, our next scripture is John 3:16. Some of our Christian listeners might know this one, but John 3:16,”For God so loved the world that he gave his only son that whosoever believes in him should not perish, but have eternal life.”
Bob:
And John 14:6, you go ahead and read that one.
Shawn:
“Jesus said to him, ‘I am the way and the truth and the life. No one comes to the Father, father except through me.'”
Bob:
So I put together 10 meanings of the true meaning of Christmas, and this is what it means to me. I hope it means the same thing to you, Shawn, and to those that who are listening. The number one thing that I think is the true meaning of Christmas is this is about the immaculate conception and virgin birth of God’s one and only Son. I was just, this morning, as I was thinking about this, about the immaculate conception that this is the only person has ever been born on this earth that was not from the seat of man. But it was from God and and this was a virgin birth of purity.
Shawn:
Yeah. It’s just amazing thinking about like, there’s that part and just from that point forward, all of the promises and the prophecies that were made that God fulfilled and for, I mean, you think about, what was it? I think it was 400 years of silence from the time of the last prophet until Jesus, or the angel comes to Elizabeth right before Mary. So, until that angel showed up.
Bob:
Because John was coming.
Shawn:
Exactly. And before that angel, there was 400 years of silence. And you’ve gotta imagine, like if you’re one of the Jewish people thinking, well, God, you made all these promises, where are you? Where are you? Like, what’s going on? We haven’t heard anything from you. And God’s timing is not our own. But when he says, I will do something, he is faithful to do that. And that is what’s so amazing. Like when Jesus was born, it just started this whole cascade effect of remember all those promises I made to you? I’m fulfilling them. Now, here’s my son.
Bob:
That was the first miracle in immaculate conception.
Shawn:
The second one. It’s about unconditional love for all of us, no matter where we are in life.
Bob:
He came for every one of us. That’s right.
Shawn:
That’s right. Whether you’re a king or the blind beggar in the street.
Bob:
It’s about the worship of the King of Kings. The wise men came thousands of miles and could see the universe lining up to shoot that bright light in that star and shepherds on that glorious night.
Shawn:
Yeah.
Bob:
They came to worship the King of Kings in a barn amongst smelly animals because man, even from that point, was trying to reject.
Shawn:
That’s right.
Bob:
So God being born. We can still accept that today.
Shawn:
And it’s about the Holy Angels rejoicing, announcing the birth of Jesus to the shepherds.
Bob:
It’s about purity and holiness is truly what this day is about, the purity and holiness of God and of Jesus Christ.
Shawn:
It’s about Jesus being born humbly in a manger around a bunch of stinky animals so Jesus could relate to everyone no matter the social hierarchy.
Bob:
He didn’t come for the wealthy. He didn’t come just for the poor. He came for both the wealthy and the poor. He came for everyone. It’s about bringing forth the fruits of the Holy Spirit. It’s about love and joy, peace, patience, kindness and gentleness all in one, one person.
Shawn:
It’s about giving them meaning and purpose to this life.
Bob:
It is.Without Christ, I cannot imagine living life without Christ walking beside me. It’s about the Trinity. It’s the Father, it’s the Son, and the Holy Spirit, three in one.
Shawn:
That’s right. And finally, it’s about the free offer of a real and meaningful life here on earth with purpose, meaning, and eternal life with the maker of our universe simply by acknowledging and accepting His one and only son Jesus Christ as your personal Lord and Savior.
Bob:
Amen. That’s what we feel the meaning of Christmas is. And while the lights and the snow and the beautiful trees, the food and the cookies, definitely, the Christmas movies are all good. But the real meaning of Christmas is about God coming to live amongst us through his immaculate conception of a virgin birth conceived by the Holy Spirit. So, Merry Christmas from all of us at Christian Financial Advisors.
Shawn:
Merry Christmas and thank you for joining us.
Outro:
We invite you to listen to all of our past episodes, covering many financial topics from a Christian perspective. To make sure you don’t miss any of Bob’s upcoming episodes. You can subscribe to Christian Financial Perspectives on iTunes, Google Podcasts, Spotify, Stitcher, or Amazon Music to learn more about integrating your faith with your finances. Visit Christianfinancialadvisors.com or call (830) 609-6986.
Disclosure:
Investment advisory services offered through Christian Investment Advisors, Inc DBA Christian Financial Advisors also known as Christian Financial Advisors Management Group, a registered investment advisor. Comments from today’s show for informational purposes only, and not to be considered investment advice or recommendations to buy or sell any company that may have been mentioned or discussed. The opinions expressed are solely those of the host Bob Barber and his guests. Bob does not provide tax advice and encourages you to seek guidance from a tax professional. While Christian Investment Advisors believes the information to be accurate and reliable, we do not claim or have responsibility for its completeness, accuracy, or reliability.
24 min
December 12, 2022 135 – The #1 Reason Behind Financial Success
Click below to listen to Episode 135 – The #1 Reason Behind Financial Success
The #1 Reason Behind Financial Success

Financial success might just come down to these 2 words.

More episodes >>

Financial success is not just making a lot of money, but more importantly, it is WHAT you do with the money you make. Are you investing it correctly and diversely? Is your family prepared financially if something were to happen to you? Do you have money set aside for the future in case of a financial disaster like a loss of a job or disability? All of these and more are key to being financially successful and prepared.
So, what two words can easily sum up financial success? Bob and Shawn discuss what most financially successful individuals do in order to invest wisely, save consistently, NOT procrastinate, and have a financial plan in place. Listen in to discover the key reason behind financial success!

HOSTED BY: Bob Barber, CWS®, CKA®
CO-HOST: Shawn Peters
Mentioned In This Episode

Christian Financial Advisors
Website

Bob Barber, CWS®, CKA®

Shawn Peters
Bible Verses In This Episode
PROVERBS 1:1-7
The Proverbs of Solomon, son of David, King of Israel: for gaining wisdom and instruction; for understanding words of insight; for receiving instruction in prudent behavior, doing what is right and just and fair; for giving prudence to those who are simple, knowledge and discretion to the young – let the wise listen and add to their learning, and let the discerning get guidance – for understanding proverbs and parables, the sayings and riddles of the wise. The fear of the Lord is the beginning of knowledge, but fools despise wisdom and instruction.
PROVERBS 2:6
For the Lord gives wisdom; from his mouth come knowledge and understanding.

Want to ask a question about your specific situation? Schedule a complimentary 15 minute phone call.
SCHEDULE AN APPOINTMENTDid you enjoy this episode? Sign up for email updates and never miss an episode.
EPISODE TRANSCRIPT

Intro:
Welcome to Christian Financial Perspectives, where you’re invited to gain insight, wisdom, and knowledge about how Christians integrate their faith, life, and finances with a biblical worldview. Here’s your Christian Financial Advisors’ host, Bob Barber and his co-host, Shawn Peters.
Shawn:
Welcome to another episode of Christian Financial Perspectives. We’re so glad you joined us today, whether that’s on video or listening via audio. Bob, what do you got for us today?
Bob:
Well, I have a lot better subject today than I did last week. Last week was the number one reason for financial failure, and that’s not ever fun to talk about. I don’t like talking about that, but we needed to. But today we’re gonna talk about the number one reason for financial success.
Shawn:
I guess we could just say this is part two of the number one reason behind financial failure and success.
Bob:
Hey, that’s pretty good. I like that. Maybe we could have all done that at one time, except it would’ve been an hour.
Shawn:
It would’ve been a long program.
Bob:
Yeah. So last week we covered the number one reason for financial failure in detail, which is procrastination.
Shawn:
Oh, I forgot to look it up ahead of time. I thought I’d have time before this. Procrastination. I know it.
Bob:
You know, and the things that people will procrastinate on, we talked about that last week, and they’ll procrastinate. The first one’s a really big one. We’re not gonna go all over them again. We’re just gonna touch on them. It’s getting their estate plan done.
Shawn:
That’s right. This is just one thing after another. It’s just one thing after another.
Bob:
Can’t ever get around to that. You know, Christmas is coming and after Christmas I’ve got the next thing, then it’s taxes, then the kids on vacation. It’s always something.
Shawn:
And all of a sudden it’s Christmas again.
Bob:
Yeah. Exactly. Keeps going.
Shawn:
So the second one. Saving and investing early enough and consistently.
Bob:
The key is early.
Shawn:
Yeah. Exactly.
Bob:
And one I’ve seen unfortunately, with those that are left behind, it’s not having enough life insurance for the younger breadwinner when they have children.
Shawn:
That’s right.
Bob:
I want you to have lots of life insurance.
Shawn:
Jenna has enough. Jenna’s got enough to take care of her.
Bob:
Enough? I want you to have enough in case of something were to happen to you.
Shawn:
Yeah, no. That’s…
Bob:
Who do I make the program with?
Shawn:
I mean, I guess you’d find somebody, but see, the key is, Bob, that at least this is what I remember when I was going through the whole life insurance thing, is you want enough to make sure you take care of the family, but you don’t wanna be tempting.
Bob:
Exactly.
Shawn:
Don’t want Jenna to look at that going, “Well, he’ll be with the Lord.”
Bob:
Yep. Exactly. You don’t, you act up. You’re outta here. So if you’ve not seen last week’s program, we would definitely advise you, recommend you go back and see it. All right. So today, let’s cover the number one reason for financial…
Shawn:
Success.
Bob:
Success. But you know, first I think it’s important that we look at what financial success looks like.
Shawn:
That’s right. I’m sure everybody thinks of something different, but we’re gonna cover some areas that we feel are applicable to pretty much everybody.
Bob:
Yeah.
Shawn:
So number number one, a 65 to 70 year old can retire because they started saving and investing early in life and didn’t procrastinate. So, that’s one example.
Bob:
It’s that word again from last week.
Shawn:
So, don’t procrastinate. That helps.
Bob:
And I tell you, when I meet these 65 or 70 year olds, or even 60 year olds when they come in, and you’d be surprised, I mean, the majority of ’em have over a million dollars. You, but they started 30, 35 years ago. And they were just so consistent in how they did it. They weren’t trying to get rich quick.
Shawn:
It’s that consistency.
Bob:
It was that scriptural principle who saves little by little makes it grow.
Shawn:
That’s right.
Bob:
The second one I think of with financial success is when an unexpected expense comes along, like a major repair, your air conditioner breaks. You need a new car, or even you lose your job, or maybe a health emergency comes along and you have enough in…
Shawn:
Cash reserves.
Bob:
Cash reserves to cover it. That is so important. That’s something a lot of people fail to do, is to build their cash reserves. You know, Shawn, I even noticed that a lot of people, they’ll, build up their 401k, but then they forget to build the cash reserves.
Shawn:
That’s right.
Bob:
So I recommend doing both at the same time. Not one or the other.
Shawn:
That’s right. All right. And when it comes to like your individual IRA or things like that, maybe you do outside of your work plan. You know, it’s one of the things that when people come in and maybe they sold a home recently and they downsize. and they say, oh, I’ve got $200,000 left over that I can invest. And the first question I always ask is, great. Well, how much do you have in your cash reserves? It’s crazy, in my short time compared to yours, how many times it’s happened where they don’t have cash reserves or it’s very, very little. It’s like, okay, well then you don’t necessarily have 200k, maybe you’ve got 150k. Like, but you need to look at your expenses. That’s just one of those things, like we said, if you have everything in an IRA and everything in a 401k and you have that unexpected expense come along, you’re not gonna be in a good spot.
Bob:
Especially, it’s crazy to have cash reserves right now if you’re in this bear market. Investments are not considered cash reserves. It’s a complete separate thing. You know, this other one is kind of a ironic thing. It’s kind of a flip on what success is because it’s not success when somebody unexpectedly dies.
Shawn:
But it’s when someone unexpectedly dies and they have their estate plans in order.
Bob:
Yeah. That’s a nice thing. I see it more times than not that their estate plan is not in order, you know? So think of that as financial success to get your estate plan and don’t pro…
Shawn:
Procrastinate. Don’t procrastinate. So number four, a breadwinner unexpectedly dies and has enough life insurance to financially care for the family in their absence.
Bob:
Fortunately, we’ve had some of these too. I mean we just did a life insurance analysis yesterday. Austin and I were doing one and for a breadwinner 42 years old. Let me see. They make about $105,000 a year. And they had, I think, it was about $120,000 saved up in their 401ks and different savings. And when the life insurance analysis came out, we thought we were reading the numbers wrong. You know what it said that person needed if they were to die next year? 1.8 million in life insurance.
Shawn:
And how much did they have in life insurance?
Bob:
About $100,000.
Shawn:
So they’re a little low.
Bob:
They’re a little low. Yeah. But then again, I’ve seen where there had been unexpected deaths where the breadwinner did have a million and a half. And it really took the pressure off for the remaining spouse.
Shawn:
And one of the things, too, I think would be good for our viewers, listeners, when you talk about life insurance, it’s far more important earlier in your career, earlier in your life. Because typically, your 20 something and 30 something year old isn’t gonna have a whole lot of investment stake. It’s just not very common. I mean, and maybe if you went to law school or are a doctor and you graduated early and maybe you could build up really quick, but for most people, they don’t have a lot for investments. So, having that larger life insurance, even if it’s a 20, 30 year term, super cheap in your twenties and thirties. But that helps while you have time, cuz you’re, of course, diligently saving and investing during this time that you kind of help cover that difference. So then as you get older, you don’t need the life insurance as much because you’ve been able to build up your assets.
Bob:
I tell you what I’m gonna do, and Garrett, I want you to remind me of this. I’m going to put together a chart that we can put up when we’re showing this. Because really, your life insurance is up here when you first start, and then it goes down.
Shawn:
That’s exactly what I was thinking.
Bob:
And savings is going up and I’ll show a chart. That’s one of the reasons behind buying term and investing the rest, which was a really big deal about 30 years ago when that came out, because it used to just be whole life life insurance.
Shawn:
Which is incredibly expensive. But if you buy that longer term when you’re younger, and then like you said, you invest the rest, that makes a big difference. So as that life insurance is getting closer to expiring, you’re slowly building up your assets.
Bob:
Yeah. And that chart will really put this in perspective. And one of the last things I looked at, but there’s so many other ways of looking at these five.
Shawn:
These are really just five. We figured these were a good, broad overview.
Bob:
And I’ve seen this personally in our family when my wife got cancer and we had disability insurance coverage, and she could no longer work. And we had that disability coverage that covered her salary while she was getting her cancer treatment.
Shawn:
That’s right.
Bob:
Now, we’ll say, we’re heading towards five years of being cancer free now. So, we’re really excited about that. People ask all the time how Rachael’s doing and she’s doing really, really well. So, I’m glad that we’re fortunate and very happy to say that. Some of the things financially successful people do are they do not…
Shawn:
Procrastinate.
Bob:
I know we’ve said it a lot, and they save…
Shawn:
Consistently.
Bob:
Yeah. They invest wisely and diversify.
Shawn:
They know where their money is going and they track it.
Bob:
Yeah. Budgeting.
Shawn:
Okay. They can give and help others in need.
Bob:
I think that’s very important.
Shawn:
It is.
Bob:
They have a good financial plan in place that is so important. We’ll help put that together for you as a fiduciary based advisor.
Shawn:
They also try to educate themselves about how money works.
Bob:
And if you watch this program every week, you would definitely get educated. I think this, well, we say what, which podcast episode is this? 135?
Shawn:
135. Should be.
Bob:
Yeah. 135 episodes. So, if you haven’t listened to all 135, go do it.
Shawn:
Maybe just little by little.
Bob:
Yeah, yeah. There you go. Little by little. Don’t have this, you know, they do that with Netflix. Like you watch an entire…
Shawn:
You don’t need to binge watch our podcast episodes.
Bob:
Don’t binge watch. It will bring brain damage to you, too much overload.
Shawn:
Then the last one is seeks wise counsel and advice.
Bob:
So the number one reason for financial failure is…
Shawn:
Procrastination.
Bob:
The number one reason behind financial success is…
Shawn:
Wisdom and knowledge.
Bob:
Wisdom and knowledge. Shawn, if you’ll read that first chapter of Proverbs. It’s not really long, but I love that first chapter. It talks about that.
Shawn:
Will do. Proverbs 1:1.
Bob:
The whole chapter.
Shawn:
Exactly. “The Proverbs of Solomon, son of David, King of Israel: for gaining wisdom and instruction; for understanding words of insight; for receiving instruction in prudent behavior, doing what is right and just and fair; for giving prudence to those who are simple, knowledge and discretion to the young – let the wise listen and add to their learning, and let the discerning get guidance – for understanding proverbs and parables, the sayings and riddles of the wise. The fear of the Lord is the beginning of knowledge, but fools despise wisdom and instruction.”
Bob:
So smart people don’t despise it.
Shawn:
That’s right.
Bob:
They like that wisdom and instruction. Proverbs 2:6 says, “For the Lord gives wisdom and from his mouth comes knowledge and understanding.” You know, we want to help you be financially successful and we wanna come alongside you in this journey in life. Christian Financial Advisors, we are a fiduciary based advisor, which is so important because we work for you. We’re only paid by you. We’re never paid any commissions, so we have no conflict of interest. There’s not any trails paid to us. There’s no corporate giant pushing us to sell certain product or a certain stock or a certain mutual fund. Our interest is your interest, and this is to help you be financially successful. So you wanna talk about it, visit us on our website www.christianfinancialadvisors.com or text or call us during in business hours, Central Time, at (830) 609-6986.
Shawn:
Thank you for joining us and God bless.
Outro:
We invite you to listen to all of our past episodes, covering many financial topics from a Christian perspective. To make sure you don’t miss any of Bob’s upcoming episodes. You can subscribe to Christian Financial Perspectives on iTunes, Google Podcasts, Spotify, Stitcher, or Amazon Music to learn more about integrating your faith with your finances. Visit www.Christianfinancialadvisors.com or call (830) 609-6986.
Disclosure:
Investment advisory services offered through Christian Investment Advisors, Inc DBA Christian Financial Advisors also known as Christian Financial Advisors Management Group, a registered investment advisor. Comments from today’s show for informational purposes only, and not to be considered investment advice or recommendations to buy or sell any company that may have been mentioned or discussed. The opinions expressed are solely those of the host Bob Barber and his guests. Bob does not provide tax advice and encourages you to seek guidance from a tax professional. While Christian Investment Advisors believes the information to be accurate and reliable, we do not claim or have responsibility for its completeness, accuracy, or reliability.
14 min
December 07, 2022 134 – The #1 Reason For Financial Failure
Click below to listen to Episode 134 – The #1 Reason For Financial Failure
134 – The #1 Reason For Financial Failure

The #1 reason for financial failure probably isn’t what you think!

More episodes >>

There can be many reasons for financial failure, but one sticks out above all the rest. Bob and Shawn go into detail about the #1 reason for financial failure and the detrimental effect that it may have on your financial future. What exactly do we at Christian Financial Advisors consider financial failure? It can include a variety of items, but some financial failures that Shawn and Bob talk about are:
– Not having a will in place
– Not having life insurance (or enough life insurance)
– The inability to retire because of lack of savings
Listen in to see how you can help prevent financial failure in your life!

HOSTED BY: Bob Barber, CWS®, CKA®
CO-HOST: Shawn Peters
Mentioned In This Episode

Christian Financial Advisors
Website

Bob Barber, CWS®, CKA®

Shawn Peters
Bible Verses In This Episode
PROVERBS 13:11
Dishonest money dwindles away, but whoever gathers money little by little makes it grow.
2 PETER 3:8
But do not let this one fact escape your notice, beloved, that with the Lord one day is like a thousand years, and a thousand years like one day.

Want to ask a question about your specific situation? Schedule a complimentary 15 minute phone call.
SCHEDULE AN APPOINTMENTDid you enjoy this episode? Sign up for email updates and never miss an episode.
EPISODE TRANSCRIPT

Intro:
Welcome to Christian Financial Perspectives, where you’re invited to gain insight, wisdom, and knowledge about how Christians integrate their faith, life, and finances with a biblical worldview. Here’s your Christian Financial Advisors’ host, Bob Barber and his co-host, Shawn Peters.
Shawn:
Welcome to another episode of Christian Financial Perspectives, where we discuss how to use God’s word in finance. Bob, what do we got for today?
Bob:
Well, we have for today, Shawn, we’re gonna be talking about the number one reason for financial failure.
Shawn:
That’s gonna be a good one.
Bob:
I got a little tagline behind that, and it’s not what you think. Most people are gonna think very differently about financial failure after we cover today.
Shawn:
Then before we go any further, for those of you watching on YouTube, go ahead and put a comment down below on what you think the number one reason for financial failure is.
Bob:
Hey, that’s a great idea. Yeah, I like that.
Shawn:
And then we’ll see who got it, right? Yeah.
Bob:
Yeah. Do they get a prize?
Shawn:
yeah. You get to be the right comment.
Bob:
Okay. There you go. That’s right.
Shawn:
If you’re listening to us though, I guess you’ll have to go to YouTube for that. So let’s start with couple scriptures. Okay. How about Proverbs 13:11?
Bob:
I think that’s a good one.
Shawn:
“Dishonest money dwindles away, but whoever gathers money little by little makes it grow.”
Bob:
You know it’s the last part of that that’s so powerful here is that gathering money, little by little, that’s what makes it grow. It’s not all about getting rich quick. And we’ve talked a lot about that on Christian Financial Perspectives.
Shawn:
Yep. Well, let’s do one more then. 2 Peter 3:8, “But do not let this one fact escape your notice, beloved, that with the Lord one day is like a thousand years and a thousand years like one day.”
Bob:
I love that scripture. I’ve thought about it over the time cause sometimes people say, well, the Lord’s gonna be coming back tomorrow. I say, well it could be a thousand years because one day is like a thousand years with the Lord, because when we look at eternity and how long time is, but you’ll see how this goes, how these scriptures go with this later during the podcast. Alright. Or episode, because now we do video.
Shawn:
That’s right.
Bob:
And so we’re gonna be covering the number one reason for financial failure today. But next episode, we’re gonna be covering the number one reason behind financial success.
Shawn:
So make sure you tune into that one, too.
Bob:
There’s always two sides to it, and I want to give the reasons for signs of financial success as well. But I think it’s important that we look at these reasons. And a lot of people may relate to this because some of this has happened in their family, possibly.
Shawn:
And I think what we should do first is what is considered a financial failure? Because if you don’t know what we’re talking about here, you might be thinking something very different. And so, just to kind of get us all on the same page here, we’re gonna go over five examples that we’ve seen over and over, you more so than me.
Bob:
Oh yeah. In 30 years of doing this. I have seen these examples many, many times. And that first one…
Shawn:
That first one, A breadwinner dies without life insurance or enough to take care of the family in their absence.
Bob:
Seen this many times, unfortunately. And the breadwinner thinks that, oh, all I need is a hundred thousand dollars worth of coverage and they make a hundred thousand a year.
Shawn:
Right.
Bob:
And then they pass. So you got one year.
Shawn:
Exactly.
Bob:
Or you just haven’t gotten around to raising that coverage, or you don’t have any coverage at all. This is a very sad one, especially with a breadwinner that has a couple children at home like you do. You gotta make sure…
Shawn:
It changes over time. I know when Jenna and I first got married, the amount that I got was wasn’t millions of dollars. But the amount that I got at the time was enough that should something happen to me, it would give Jenna enough to completely pay off the house. That was the first thing. And also give her, I think it was like five years worth of supplemental income. You know, she wasn’t gonna be living like a queen, but it would be enough to cover all the necessities and everything. Give her time. Hopefully she’d grieve me for at least five years.
Bob:
Well life insurance today is just so cheap, Shawn, that there’s no reason for you to not get a 5 or 10 or 15 year term policy. It’s just pennies on the dollar.
Shawn:
But it changes over time. So that’s one of the things that like if you are the primary income earner make sure that hey, you got a new kiddo, well, you need to reevaluate your life insurance, as an example, especially if you’re still younger. You know, obviously if you’re talking about someone in their fifties and sixties, then by then you really should be focusing more on your own assets. Cause life insurance gets a little more expensive as you get older.
Bob:
I know.
Shawn:
So anyway, so that’s the first one.
Bob:
So here’s the second one I’ve seen. And this one just puts the family. I mean, you ever heard the old saying “rakes you over the coals”?
Shawn:
Yes.
Bob:
I mean, it just really rakes the family over the coals, and it is very sad. And I’ve seen this maybe 5 to 10 times in my career. Go ahead.
Shawn:
It’s when you have a family member that dies without a will and everything is locked up in probate for months or longer. Which also then costs the family thousands of dollars in attorney fees and all those accounts are locked up. So whether it’s spouse, parent, grandparent, aunt, or uncle, when someone dies without that will in place, there’s so much of that that could be preventable. Both the frustration – like you’ve already lost a loved one, but then they have to go through all the probate and the costs associated with it and not even having access to much of the funds anyway that could have helped with all kinds of things.
Bob:
Let’s get into the third financial failure that I see a lot of. And this one is a sad one as well. These are sad. All these are are tough to say. But there’s a reason, there’s a number one reason, this happens to every one of these failures that comes behind it.
Shawn:
So this next one is someone 65 to 70 years old. They can’t retire because they lack enough savings and investments to provide enough income for necessities. You know, again, it doesn’t mean necessarily having enough to retire like a king or queen.
Bob:
No, we’re not talking about 10 million dollars.
Shawn:
But not even being able to retire just for basic living expenses, and it’s sad.
Bob:
The fourth one is there’s no cash reserves when an emergency situation arise or loss of income.
Shawn:
Or sickness.
Bob:
Or sickness or just how about this one? Just your air conditioning breaks. Nowadays, that can cost $20,000 to fix. That causes failure because now what do you do? You either have to go in debt or you have to go in, say your 401k and borrow money out. And I consider that financial failure. And I’ve seen this not five times like we did on the probate. I’ve seen this hundreds of times.
Shawn:
Yeah. And a good a good rule of thumb that we always talk to people about is they have money that they want to invest, and one of the first things we ask is, well, what’s in your emergency fund right now? And many times people don’t have an emergency fund or they ask, well, what do you mean how much should be in there? So you always wanna make sure you’ve got about six months of your expenses, at least, for an emergency fund. And you might wanna have a little something else, too. Like you said, what if something goes out that’s expensive?
Bob:
So let’s get to the fifth one and we’re gonna just keep going and we gotta get to five of these, and there’s more. But I’m only using five today. And that fifth one I see is a financial decision that cannot be made on behalf of someone when they’ve been in a major accident or maybe they’ve had a heart attack and they go into a coma for a while, and they don’t have the right documentation in place to make financial decisions. I’ve seen this not a lot, but it has happened. And it can be scary because now the person that makes the financial decisions is no longer competent to do so.
Shawn:
So making sure you and your spouse are both on accounts and have signing authorization or maybe other part might be is having some sort of limited power of attorney or medical power of attorney or things like that.
Bob:
Yeah. So I want to ask you, you have any guesses yet? It’s really one word that leads to all this, these reasons for financial failure. Any guesses?
Shawn:
And if you’re watching, last chance to put it in the comments.
Bob:
Put in your comment. Okay. All right. Now, I’m going to go over the next part. We’re gonna give you some hints as to what this word might be because it’s a major word. And I’m telling you, I’ve seen this over and over, the number one reason. But we’re gonna quickly go through these. Shawn, you’re gonna read one and then I’m gonna read one.
Shawn:
All right. So to give you a hint, “It’s nearly Christmas. I’ll get around to getting that will done after the new year.”
Bob:
“It’s a new year, and we’re so busy. Let’s wait a few months until it slows down and then we can get on it.”
Shawn:
“Oh, no. Gotta get those tax returns done first, then we can talk about getting that will done. Saving and investing, getting an adequate life insurance policy. Let’s just wait until after April 15th.”
Bob:
“Oh no, it’s April 15th. After then, school is about out for the summer. We’re so busy now with all the kids and activities. Let’s wait until after school is out to get all this done.”
Shawn:
“The kids are only young once. We really need to plan our summer vacation for the family now, and we are all just so busy with the kids outta school. So let’s do all of this when we get back from summer vacation and get the kids back in school, kinda get back on a normal schedule.”
Bob:
“Yeah. Well we got ’em back in school now. But now we’re so busy with the kids and school and football and soccer and band and dance practices. Let’s wait until things slow down a little and then we’ll get some of these things done like getting that life insurance policy or starting that savings plan.”
Shawn:
Exactly. And the cycle continues. Now we’re back to Thanksgiving and Christmas and what do you know, New Year’s.
Bob:
Shawn, there’s never a convenient time. Okay. There’s never a convenient time to do these things to keep you from having financial failure. Shawn, you have an example when I was talking to you about this – I think it’s interesting that we have a client that for six years has been, what is this example?
Shawn:
So, unfortunately, we have a client that for the last six years, going back and looking at the previous meetings that we’d had and seen basically what looks like the same meeting, which is, okay, here’s where you’re at. Here’s what you might be able to retire on. Okay. Here’s what’s going on. And kind of, here’s the shortfall and here’s the solution. So maximize your IRA contributions and you know, a couple other little things. And so we get together the paperwork to get that move money authorization in place and get everything ready to go. And then, the same thing happens every year where we have a couple months where we’re contacting the client and trying to get things signed and move forward. It’s one of the things that, “Later we’ll get this done.” And now six years have gone by, six years that could have involved consistent investing and actually getting more prepared for retirement. And now, if they wanted to retire in another three or four years, they’re not gonna be able to because of that thing we talked about before. They’re not gonna be able to meet minimum necessities.
Bob:
So here’s that thing already. All right? It’s one word, it’s called procrastination. Procrastination.
Shawn:
End the video. Just kidding.
Bob:
Procrastination is the number one reason for financial failure. Every one of these that we named was because of procrastination. It was procrastination to get the will done. It was procrastination to get the life insurance policy or to get more coverage. It was procrastination to start saving. It’s procrastination.
Shawn:
There’s another one where that could go right along with that, Bob. All of these resulted from procrastination, but they were all preventable.
Bob:
Every one of ’em, every one of ’em was preventable. So Shawn, I went and I did some research on procrastination, like, why is this happening? I thought, well, this person just won’t get around to it or they’re just lazy or whatever. I was wrong. So, there’s a difference.
Shawn:
Not only that, Bob, but I thought it was really cool how God kind of orchestrated this script together because you tell me what this is about. That is, and I go, well, that’s weird because it was like two days before that maybe that I had just had a Ted Ed video that I saw pop up in my feed and it was on procrastination and like the science and the psychology of it. And it was just kinda cool. You know, we kind of both came to the same conclusion separately.
Bob:
So, I found two different definitions of procrastination. One is, and Garrett, I want you to put this up while I’m reading this so everybody can see this. Procrastination is the habit of avoiding an urgent task despite negative consequences. When people procrastinate, they often delay priorities and instead focus on less important, more enjoyable, simpler tasks instead. Okay. Shawn, will you read that next one? And put this definition up for this one also.
Shawn:
Sure. Procrastinators tend to prefer pleasure over progress. They are task adverse, putting off important tasks by doing something else that feels more productive or easier and enjoyable. They don’t seek rewards that seem far into the future.
Bob:
So we are gonna go over it, there was a lot of words and some common reasons about what causes procrastination, and we’re just gonna list these. But I’m telling you as I went over this, I never thought of it that way. Especially this first one, which is…
Shawn:
Perfectionism.
Bob:
Perfectionism. So they’re waiting for the perfect time. So a lot of people that procrastinate are actually perfectionists. Which they wanna do it the right way, right?
Shawn:
Yeah. And I used to think that, too, that procrastination was typically more associated with people are just lazy, you know? Or like, they just don’t feel like doing any work.
Bob:
It’s not the case.
Shawn:
And yet the vast majority of it is, I mean, we’re gonna go through ’em, but you’ve got perfectionism, you have fear of failure.
Bob:
I can see that.
Shawn:
Fear of criticism.
Bob:
Yeah. That I’ve made the wrong choice, so I’m just going to procrastinate and I’m not gonna move forward.
Shawn:
And I felt that when we were going through these and making this list, like, oh, I feel guilty that so many times, too, where I realize I’ve been putting this task off not because I don’t know how to do it or not because I don’t realize it’s important, but because to an extent, in the back of my mind, I’m thinking, “Well, I don’t want to fail at it.” You know? So for those of you watching and listening, I feel you. This is not just something we’re throwing at you, and we’re not guilty of it.
Bob:
I think we all feel this. Okay. All of us have done this. As an example to avoidance, I’m just gonna avoid this. It’s not gonna happen.
Shawn:
Maybe it’ll go away.
Bob:
I’m never gonna die. I’m never gonna get sick. I’m never going to retire. I’m never gonna have a cash reserve need. I’m like, wait a second. But you can avoid it for only so long because it’s gonna come along. Cause there’s a time for every season under the sun. And it says that Ecclesiastes that there’s a time for everything.
Shawn:
You know, Bob, my pastor in the last message he said, I don’t remember in the context of what he was talking about, but he did say that, “Right now, last I checked, the death rate’s still hovering at about a hundred percent.” Yeah. So that avoidance, it’s not gonna work because eventually we’re gonna go be at home with the Lord.
Bob:
There could also be some self-esteem issues, a tendency to self defeat. Depression can cause procrastination, trouble focusing, this is kind of one that maybe you and I, Shawn with our high energy.
Shawn:
What? No. ADD?
Bob:
Not at all.
Shawn:
Neither one of us. I’m not on medication for that either.
Bob:
Task aversion, resisting challenges. You don’t like that challenge. You just don’t want it because it doesn’t feel good. It’s hard to go into that.
Shawn:
Number 12, decision fatigue.
Bob:
Oh yeah. I think a lot of people do that.
Shawn:
Yeah. Especially, I mean, you’re at work and you know, you have all these different things you have to do and you’re trying to make decisions between all of them and you literally just get fatigued from all the decisions you make, and so you avoid some of them. You procrastinate. And it doesn’t go away.
Bob:
So we only have three more. Difficulty defining goals, a disconnect with the future self, and really just a lack of energy. I got a lot of these from a website that we could put up there. I thought was really good. What causes procrastination?
Shawn:
And there’s also really great Ted Ed video that we can maybe throw in there as well.
Bob:
Yeah. If you could do that for us, Garrett, and get that in there. Okay. So, one of the things I thought was, let’s give some solutions. And one is I think start very small. Okay. Don’t try to eat the whole elephant at one time. Just take small bites.
Shawn:
If you’re a vegetarian, don’t eat the entire gourd at one time.
Bob:
Yeah. So when we look at these five things, like if you’re the breadwinner, if you think that you need more life insurance, go online today and just get a quote. Or, just call your life insurance agent. Maybe that’s the one thing you’re gonna do. Not all five of these, but just that one that we mentioned, or if you don’t have a will, make that call to an attorney. So you don’t have to do number one right now, but maybe you just need to do number two right now. Or, you haven’t started saving. Well, you look at that and you’re going, man, I just don’t have the funds. Don’t go to Starbucks. Quit buying the expensive coffees. Don’t go out to eat as much. Just start with $20 a month or $50 a month $50 per pay period.
Shawn:
Just get it. Just do something where you get in the habit of adding something to your investments. It doesn’t have to be that you’re completely maxing it out, but like you said, maybe it’s – for that little step, Bob – find one thing that you know you keep spending money on that’s very discretionary and you don’t really need, and cut that budget in half and invest the other half.
Bob:
It’s like we were gonna say at the very end, I just gotta say it right now, it’s all about baby steps.
Shawn:
That’s right.
Bob:
Now, you knew when I said that what I was talking about. There’s a funny movie from years ago called “What About Bob?” And you know, I’m Bob. So it’s called “What About Bob?” and it is so funny, but it talks about baby steps and he can’t get anything done because he’s scared to go to the next one. You gotta see that movie. It is hilarious, and he starts doing baby steps and eventually gets where he can do anything.
Shawn:
That’s right.
Bob:
He actually becomes a psychologist in the very end. It is a funny movie, but I’m just telling you, don’t try for the all or nothing approach.
Shawn:
That’s right.
Bob:
Okay. Just little parts at a time. I think we can help you get over that procrastination.
Shawn:
And that’s just like the scripture that we read, it’s little by little. It’s not all at once. It’s little by little. Just start knocking out those individual steps.
Bob:
Make it this week I’m just gonna call the attorney and make an appointment for the will. Make it next week. I’ll just make one call, one call. I mean, I’m talking 40 or 50 hours in the week. Just make five minutes. Five minutes to make the phone call to the insurance agent or to go online for that quote. Your family will appreciate it. You will appreciate it. You will be glad that you started. Go to your human resources at your work and start that retirement plan. Say I’m gonna put $25 a week outta my paycheck. And then it’s gonna be $50 and then it eventually you’ll be surprised. I’ve got clients that are putting $1000 a month or 2000 a month into their plans
Shawn:
Your goal would be to just slowly try to increase that stuff at your work for your retirement and at least get to where you’re putting away the maximum your company will match, because otherwise you’re leaving free money on the table.
Bob:
Well, that’s gonna do it for today. I tell you, if you need help, we want to help guide you to get you in the right direction for this. And you can give us a call at (830) 609-6986 during business hours, or you can text that number or you can go visit our website www.christianfinancialadvisors.com. Now, I want you to join us on our next episode, because we’re gonna be going over the number one reason behind long-term financial success. And that’s gonna just be two words. This week was one word, procrastination. The next one will be two words. You can be thinking about what those words are that link up to long-term financial success. Until then…
Shawn:
Thank you for joining us and God bless.
Outro:
We invite you to listen to all of our past episodes, covering many financial topics from a Christian perspective. To make sure you don’t miss any of Bob’s upcoming episodes. You can subscribe to Christian Financial Perspectives on iTunes, Google Podcasts, Spotify, Stitcher, or Amazon Music to learn more about integrating your faith with your finances. Visit Christianfinancialadvisors.com or call (830) 609-6986.
Disclosures:
Investment advisory services offered through Christian Investment Advisors, Inc DBA Christian Financial Advisors also known as Christian Financial Advisors Management Group, a registered investment advisor. Comments from today’s show for informational purposes only, and not to be considered investment advice or recommendations to buy or sell any company that may have been mentioned or discussed. The opinions expressed are solely those of the host Bob Barber and his guests. Bob does not provide tax advice and encourages you to seek guidance from a tax professional. While Christian Investment Advisors believes the information to be accurate and reliable, we do not claim or have responsibility for its completeness, accuracy, or reliability.
22 min
November 28, 2022 133 – Creative Giving Strategies
Click below to listen to Episode 133 – Creative Giving Strategies
Creative Giving Strategies

Learn about unique ways that you can pay-it-forward through creative giving techniques.

More episodes >>

Is creative giving something that has crossed your mind when it comes to your investments and legacy? If giving back is part of how you want to be remembered, then this episode is for you! Christian Financial Advisors is here to help you find unique ways to give back and help create a positive impact in our world.
This is such a great episode that coincides with the giving season we are in right now at the end of the year! Bob and Shawn discuss unique and creative ways that you can give using devices like donor-advised funds or even creating your own family-giving fund. Really, no matter which way you decide to give back with all that God has blessed you with, paying it forward is a way to love your neighbor as yourself.

HOSTED BY: Bob Barber, CWS®, CKA®
CO-HOST: Shawn Peters
Mentioned In This Episode

Christian Financial Advisors
Website

Bob Barber, CWS®, CKA®

Shawn Peters

National Christian Foundation
WebsiteInstagram
Bible Verses In This Episode
PSALM 24:1
The earth is the Lord’s, and everything in it, the world, and all who live in it.

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EPISODE TRANSCRIPT

Intro:
Welcome to Christian Financial Perspectives, where you’re invited to gain insight, wisdom, and knowledge about how Christians integrate their faith life and finances with a biblical worldview. Here’s your host, Christian investment advisor, financial planner, and coach, Bob Barber.
Shawn:
Welcome to another episode of Christian Financial Perspectives. When this episode airs, it should be run around Christmas time. So we thought it would be a good time to share some giving strategies. Now, these are not necessarily giving strategies that have to be used at the end of the year, but that’s a usually a good time. So, Bob, why don’t you introduce our topic.
Bob:
So what I’m going to be doing today, Shawn, is I’m gonna be giving a workshop that I have given many times in a lot of churches, so I know this material very well. I developed this program and we call it the 10-4-4 giving strategies, and it’s all about planned giving. So we’re gonna, today, we’re gonna share 10 planned giving strategies, 4 planned giving time periods, and 4 planned giving tools. That’s why I call it 10-4-4. I just thought right around Christmas time, it’s always good to talk about giving because that’s what Christmas is.
Shawn:
Yeah. Amen.
Bob:
All right. So we’re gonna get right into this. This is a long presentation, but I’m gonna try to do all this in 20-25 minutes max, and this is something that you might wanna tell your church about. If you’d like us to come present this in your church, then we certainly can, and we get a lot more in detail when we do a live presentation. But we’re gonna do a PowerPoint today. So you can see this as we go through it, this is the actual PowerPoint presentation that we give. So the first planned giving strategy is your estate plan. Such a simple thing. This is where you take your estate plan and you include your church, your favorite charities, a family giving fund, we’ll explain that in a little bit, in your will or trust as one of the heirs and beneficiaries.
Shawn:
Pretty straightforward.
Bob:
It is. Very much so. The second one is, go ahead, Shawn. I’m gonna let you there.
Shawn:
Number two is based on retirement plan assets, so including your favorite charity or charities or family giving fund as one of your primary or contingent beneficiaries. So some examples of this would include any IRAs, 401Ks, 403Bs, TRP – thrift savings plan, or annuities.
Bob:
And Shawn, I see this, this is one of the most efficient ways to give to a ministry or a church because you’re taking money that would normally be taxed that would go to your children and now have to pay tax on on it, and you’re giving it to a ministry that’s a 501c3, so they won’t have to pay tax.
Shawn:
So, Bob, what’s this chart that we have shown on screen? What are these numbers actually giving us an indication of?
Bob:
This gives us an an indication of how much is in the different plans and the billions and billions of dollars. All right. The third giving strategy is highly appreciated stocks, might be a little low this year, but the bull markets will come back, and last year would’ve been a great time. So that’s where you take the stocks and instead of giving cash from your bank account to a charity, you donate appreciated stock, and then you don’t have to pay the capital gain tax on that.
Shawn:
Yeah. Makes a lot of sense. So instead of selling it and then giving them the cash, you just donate the stocks directly?
Bob:
That’s correct. We can help you do that. That’s one of the services that we do for free of charge here at Christian Financial Advisors.
Shawn:
All right. Number four involves real estate. So whether that’s land such as residential, commercial, farm and ranch, maybe a house or houses, condo, condos, apartments, office buildings, but no timeshares,
Bob:
Timeshares are way, way too complicated. We’ve had actually, people say, well, can I dump my timeshare over on in it? No, you can’t. It’s too complicated. But we have run across people over the years, we had a client about six years ago, and she had nearly an acre in the middle of San Antonio that had been in her family for years. She sold that in the millions and gave that away. But I mean, she didn’t celebrate. She actually gave it away and turned it into a charitable gift annuity with a major Christian university. So that’s a great example of using real estate. So planned giving number five, strategy number five is just looking at your business interest. You know, we’ve got here in the picture, I mean, this is an example of a major business, Caterpillar, and they could donate some of their stock to the business. Or, I could even just, you take a business and the National Christian Foundation works with this where they become a part owner in your business. Okay. Maybe like a 2% share or a 3% share.
Shawn:
But you can set that up as a non-voting interest.
Bob:
That’s right.
Shawn:
So yes, they do have a partial ownership, but that doesn’t mean that all of a sudden the charity’s gonna tell you how to run the business.
Bob:
No.
Shawn:
I guess that’s kind of an important thing.
Bob:
This comes up to the part of Psalms 24:1 with, “The earth is the Lords and everything in it,” and where you believe your business belongs to the Lord, you can take a percent of your business and actually give it to charity. So what it earns, and you know, I need to look at doing this myself because I just think about this, this would be pretty, pretty powerful.
Shawn:
Well, planned giving strategy number six is oil and gas interest. So this could be related to mineral rights, oil, natural gas, water rights, a lot of different options there.
Bob:
And you can give a percentage. You don’t have to give it all. So you can give a percentage in that case. Then just think about that old vehicle you might have and your car, or maybe it’s some artwork that you have. Maybe it’s a boat, and you’ll hear their advertisements, Cars 4 Kids. So that’s an example of where you donate an old car, you donate an old boat that you have, or doesn’t have to be old, it could be new as well. That can be turned, actually, into a gift to charity.
Shawn:
So planned giving strategy number eight. We have precious metals and stones. So gold, silver, diamonds, emeralds, really just any kind of valuable jewelry.
Bob:
Remember that gold and silver do not carry near the tax advantages that other investments do. So this is a very viable, great thing to do by giving that to a charity. You’ll get the tax deduction, though, for the value that the gold is. And all these, you get the tax deduction for the that it is. All right. Then again, we just mentioned this earlier, like your IRAs, your 401ks, not only that, but any life insurance policies you have, there’s always a part that’s the main primary beneficiary, and there’s contingent, and you have a percentage, and you could make a life insurance policy a percentage beneficiary of your life insurance policy. Then the 10th giving strategy that we believe in is if you’re selling a major asset, like a piece of property, it’s actually give before selling. I have an example here of a $300,000 asset that’s been fully depreciated. In the first example, we have where you sell the property. Then, you take $30,000 and you give that as a cash gift. The net after tax capital gain is gonna be $195,000 in this case, okay, after you pay all the capital gains that are due on the $300,000.
Shawn:
And you gave the gift.
Bob:
That’s correct. But if you took that piece of property and you gave a portion of that asset before it was sold, now you can increase that gift to $40,000. So you’ve gone from a 10% giving to, what is that? Near 14, about 14, 13.5-14% of the gift. So you’ve increased the gift size and you haven’t hurt yourself at all.
Shawn:
You still get the same net after the capital gains tax and giving the gift. But the benefit in this case is the receiving charity ended up getting a larger amount.
Bob:
And we also use vehicles like a charitable gift annuity and charitable remainder trust. I’m going to explain how that works later.
Shawn:
So now we’re gonna get into the 4 planned giving time periods. Remember, this is the 10-4-4. We just went over the 10 types of strategies. Now, we’re gonna cover the planned giving time periods, and those are 1. Give now, 2. Give later 3. Give asset now, but keep the income, and 4. Keep the asset, but give the income.
Bob:
Okay. So these are things that you can give now. We mentioned some of these earlier, things like stocks, real estate, collectibles, business interests, precious metals, miscellaneous valuable goods, and oil and gas interests. Or you could give later. You could do the same thing. Like your estate plan is where you’re giving later, your beneficiary of your IRAs, annuities, beneficiary of life insurance policies, or even a donor advised giving fund.
Shawn:
And number three, the give now, but keep the income for your lifetime. So the two very popular ones, options for those, charitable gift annuity as well as charitable remainder trust.
Bob:
And we’re gonna get into how that works here in just a second.
Shawn:
We will. Yes. Stay tuned.
Bob:
The fourth one is to keep the asset, but give the income. This is where you can create a passive income for yourself, rental income, dividends, oil and gas revenues, and business income. So, the tools that we use for this are the donor advised giving fund, the charitable gift annuity, the charitable remainder trust, and the charitable lead trust. So let’s get into how these work.
Shawn:
The giving tool number one, this is the donor advised fund as well as the family giving fund.
Bob:
Yeah, it’s the same thing. It’s just what a lot of people call it.
Shawn:
So the first thing similar to a family foundation, but without the headaches you receive an immediate tax deduction of up to 50% of your adjusted gross income. Recommend grants to your church and favorite ministries at any time in the future. In any amount.
Bob:
That’s right.
Shawn:
And they’re advantageous in a year of high income for tax purposes.
Bob:
So we’ve used this in cases where somebody maybe gets a big bonus, and their income’s way up this year, but it’s not gonna be next year. So they could use the donor advised fund and actually do pre giving. This is where you can take stocks and give it to the donor advised fund. All these things that we’ve mentioned, you can give it to the donor advised fund, get the tax deduction for it. They sell the asset, it becomes cash, and now you can invest it, and then that’s like a family foundation. We call it a family giving fund because you can actually name it. I have one, it’s called the Barber Family Giving Fund. Our Barber family giving fund is set up to where 20% of our estate goes to that fund, and then we name the charities that we love.
Shawn:
And then obviously would support the charities of your choice.
Bob:
Exactly. So you got it. So then there’s the charitable gift annuity. This is very favorable for someone that says, I have the asset, but I need that asset for income.
Shawn:
Right.
Bob:
So they can give the asset, and that gift now is gonna give back a guaranteed income for life, but it’s considered a gift, and then it turns into a lifetime annuity. So actually, cause it’s a gift, you get a tax deduction. It’s tax advantaged income. So here’s an example. We got Betty Smith or John Doe, age 75. They donate $100,000 to a charitable gift annuity. In return, they’re gonna receive 5.8% for their life.
Shawn:
Or in this case, $5,800 tax advantaged annual payout for life.
Bob:
And when we say tax advantaged, for the first few years, they won’t have to pay any tax on that. So you think about this, are you getting that at your bank? Are you getting nearly 6% today? The answer of course is no, not right now. Not yet.
Shawn:
If you got a mortgage recently, you’re probably paying at least that much or more.
Bob:
Yep. So here, in this case, you’re getting a $44,000 charitable tax deduction.
Shawn:
Okay. But that also generates a $24,270 immediate gift for, in this case, Betty Smith’s church or her favorite ministry.
Bob:
So isn’t that neat. You can take that tax deduction. So you got the $5,800 coming at you, I mean if Betty’s 75, if she lives to 95, she’s gonna live 20 years.
Shawn:
And Bob, question? Why is it the $5,800 in the first number of years you don’t pay anything? Is that because of the fact the $24,270 was generated as immediate gift? So basically that $5,800 goes kind of towards that?
Bob:
Well, exactly. You can use up the $44,000 charitable tax induction towards that.
Shawn:
Gotcha.
Bob:
Then we have example number two where we have a couple, so the payout’s gonna be less, Shawn, because it’s based on two lives. But this is a $100,000 gift that they give. They get a 4.6% payout, a $29,000 charitable tax deduction, and an immediate gift to their church of $16,000. Now, these are examples, and we use the National Christian Foundation to help. They’re the ones that underwrite these charitable gift annuities, which is one of the largest Christian foundations in the entire world.
Shawn:
So for our viewers, listeners, would that be considered kind of like the administrator, almost?
Bob:
It is. It is.
Shawn:
In the setup?
Bob:
They could go to ncfgiving.com and they’ll see the National Christian Foundation. These are the sample payouts. Now you’ll see the older you are, the higher the payout, the younger you are, the less payout.
Shawn:
I mean, makes sense.
Bob:
Does it? Yeah, because you live longer.
Shawn:
The older you get, the less likely you’re to live much longer.
Bob:
Exactly. That’s true. And you’ll see for a married couple, the rates are a little bit lower, but not bad payout rates. Now, I do wanna mention that these payout rates are subject to change. They change with the interest rate environments.
Shawn:
This is just kind of an average example.
Bob:
Right. And so if someone actually wanted to do this, we’ll get the actual rates of what they would be at the time. All right.
Shawn:
All right. So let’s do giving tool number three, which is a charitable remainder trust. Just some of the different aspects of that. This one is used for giving an asset now, but keeping the income for life, offers major tax advantages when selling a highly appreciated asset, creates an immediate income tax deduction when the asset is donated, when asset is sold, no capital gain taxes due.
Bob:
You hear that?
Shawn:
Which is nice. Offers a higher income base for life due to elimination of capital gain tax on the sell of the asset, and reduces or eliminates estate taxes.
Bob:
That’s because it’s not part of your estate. So, you’ve got this asset. Remember, I mentioned that we had a client and she had a property in San Antonio that sold for in the million. So, let’s take a $2 million example. Your basis in that property is basically zero. You’ve depreciated it out, you sell it for $2 million, you’re gonna owe a good $400,000-$500,000 in tax. If you put your property in the charitable remainder trust before you sell it, you will owe zero tax. You won’t owe any tax. You’ll receive a tax deduction. Now remember, you’ve given your property to the charitable remainder trust, but you’ll receive income. So now all that $2 million, instead of income being on 1.5 million or 1.4 million after tax, you’re actually gonna have a higher income, because now you’ve got what would’ve gone to tax is now gonna go towards income.
And that income could not only be on, just take myself as an example, not only my life, it could be on my children’s lives as well. So they can receive income from that. But see what it said, “charitable remainder”? By the second generation, the remainder will go into a charity. Here you use your giving fund. So now you’ve created an endowment in your family name.
Shawn:
That’s cool.
Bob:
Pretty neat. Pretty amazing giving tool. The giving tool number four is what we refer to as a charitable lead trust. I’m gonna let you read that off and then I’ll explain what this means.
Shawn:
Sounds good. So, charitable lead trust – for keeping an asset, but giving the income for a set number of years. So instead of for life. Donor receives a charitable income tax deduction in the year the trust is created and good for donors who desire to make a multi-year charitable pledge and accelerate the charitable deduction.
Bob:
So what you’re doing here is let’s take like I own a hous , and it’s completely owned and I’m getting rent from it. Well, what I can do is I can give that asset to a charitable lead trust and keep that income for a set number of years, and then it can revert to the trust, and I can receive it back. I can actually give the asset and bring get the asset back. So, as the example, I’m giving the house, the income from it’s gonna go to the charity, and then I take it back after 10 years, but it gives me the tax deduction up front for doing that to a certain percentage. These are very complicated types of giving tools, but they’re in a high tax bracket.
Shawn:
There’s a price sometimes. Yep.
Bob:
Really, really great. Really great one to use. So now we did it, we got through this very quickly. And like I say, in a live setting, I’ll go into detail a lot more in all of these, but for times sake, here we are.
Shawn:
No one has to sit here and either watch or listen to a 45 plus minute presentation.
Bob:
That’s right.
Shawn:
Okay. So we’re gonna go over the summary of benefits of planned giving. So number one, income tax advantages.
Bob:
Number two, capital gain tax advantages.
Shawn:
Number three, helps charities further their mission.
Bob:
Number four, giving is thought out and intentional.
Shawn:
Number five teaches your family the importance of giving. That’s s good one.
Bob:
Number six, it is releases the stronghold of materialism.
Shawn:
Amen. Number seven, it’s scriptural that it is more blessed to give than receive.
Bob:
It’s an excellent estate planning strategy.
Shawn:
And number nine, helps fulfill the great commission.
Bob:
And it creates positive change in the lives of others and society. So we can help you give in many ways here at Christian Financial Advisors using many gift instruments to accomplish your giving goals. Here’s basically what we are trying to accomplish here, is we’re taking those taxes that would normally go to the government and instead turning those into giving dollars. You’re still living on the same amount. You’re still growing the same amount, but we’re basically turning that into a gift because you’re gonna have to pay those taxes anyway.
Shawn:
I don’t know about you, Bob, but I’m pretty sure our listeners and and viewers would agree, would you rather the money go to the government or would you rather go to a charity or your church that you wanna support? I mean, that’s kind of a no brainer, right.
Bob:
And you know, also, Shawn, it’s known most of your Christian charities, especially the ones that are members of the EFCA, Evangelical Financial Accountability Organization, every dollar you give to that, about 90% to 85%, 85% to 90% goes to where it’s supposed to go.
Shawn:
Wow. And the government is about the opposite.
Bob:
It’s the opposite.
Shawn:
About 10-15 cents of every dollar actually does the thing it’s supposed to.
Bob:
Does the good.
Shawn:
Rest is all the administration.
Bob:
Yeah. So it’s very, very wasteful when we give to the government. It just doesn’t get to where it needs to. So think of it like this, God gives to us and we receive, and then we give and others receive. Then when they give, what happens here is just kinda like dropping a rock in a small pond.
Shawn:
Dropping in the water.
Bob:
Yeah. You increase the ripple of influence, and with planned giving strategies, you can do that. We wanna bring a biblical worldview to all of wealth and to all of financial planning because we believe wealth comes from God. It belongs to him and it should honor him. Wealth is for…
Shawn:
Yeah. We believe wealth is for providing for the family, supporting the church and ministries that spread the gospel, and helping those in need.
Bob:
We also wanna make sure before we do planned giving that everything else is taken care of, all your financial planning, investment management, retirement planning, tax planning. So don’t think because you’re doing planned giving that you’re not gonna be taken care of. We make sure that happens first and then we do the planned gift later.
Shawn:
Well, and as you can kind of see from our graphic with the puzzle pieces, the planned giving is just part of the puzzle. I would argue that you don’t want to just immediately go into the planned giving because what about your own financial planning, your existing tax planning, your investment management, the income you need. I mean, there’s so many other pieces, and so you don’t wanna look at it in isolation because how do you really know how much you can even afford to give until you know the other pieces?
Bob:
Until you’ve done all your planning. That’s right. Well, I hope today has really opened your eyes to the different types of giving strategies there is during this time that we think about giving and Christmas coming right up.
Shawn:
Yep. I mean, we won’t be able to outgive God after He gave us His son, but we can do the best we can with what we’ve been given.
Bob:
Well, it’s more blessed to give than receive. If you’d like help with some planned giving, give us a call at (830) 609-6986 or text us during business hours or go to www.christianfinancialadvisors.com.
Shawn:
Thank you for joining us and God bless. Bye-bye.
Outro:
We invite you to listen to all of our past episodes, covering many financial topics from a Christian perspective. To make sure you don’t miss any of Bob’s upcoming episodes. You can subscribe to Christian Financial Perspectives on iTunes, Google Podcasts, Spotify, Stitcher, or Amazon Music to learn more about integrating your faith with your finances. Visit Christianfinancialadvisors.com or call (830) 609-6986.
Disclosures:
Investment advisory services offered through Christian Investment Advisors, Inc DBA Christian Financial Advisors also known as Christian Financial Advisors Management Group, a registered investment advisor. Comments from today’s show for informational purposes only, and not to be considered investment advice or recommendations to buy or sell any company that may have been mentioned or discussed. The opinions expressed are solely those of the host Bob Barber and his guests. Bob does not provide tax advice and encourages you to seek guidance from a tax professional. While Christian Investment Advisors believes the information to be accurate and reliable, we do not claim or have responsibility for its completeness, accuracy, or reliability.
24 min
November 22, 2022 132 – 2022 Year End Tax Strategies
Click below to listen to Episode 132 – 2022 Year End Tax Strategies
2022 Year End Tax Strategies

Check out these strategies for potentially saving on your taxes for 2022.

More episodes >>

It’s that time of year again! The time where we all start looking at our finances to try and figure out what types of tax savings we can procure through various strategies before December 31st hits. Christian Financial Perspectives is here to help you out with that! Of course, we always recommend running these strategies by your CPA or tax professional first.
Bob and Shawn mention multiple tax saving strategies and deductions with data included for married couples, single filers, head of households, and those over a certain age. There’s a lot of information in this episode, so we recommend grabbing a pen and paper to take notes.

HOSTED BY: Bob Barber, CWS®, CKA®
CO-HOST: Shawn Peters
Mentioned In This Episode

Christian Financial Advisors
Website

Bob Barber, CWS®, CKA®

Shawn Peters
Bible Verses In This Episode
MARK 12:17
Then Jesus said to them, “Give back to Caesar what is Caesar’s and to God what is God’s.”

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EPISODE TRANSCRIPT

Intro:
Welcome to Christian Financial Perspectives, where you’re invited to gain insight, wisdom, and knowledge about how Christians integrate their faith life and finances with a biblical worldview. Here’s your host, Christian investment advisor, financial planner, and coach, Bob Barber.
Shawn:
Welcome to another episode of Christian Financial Perspectives. I wanna give you a quick warning for those of you who may wanna turn away, because today’s program could save you several to many thousands of dollars in taxes. So, you don’t wanna listen if you like paying more in taxes than you need to. So we’ll give you guys just a couple seconds to turn away or turn off the episode. All right, If you’re still, here we go, Bob.
Bob:
I guess they wanna save money on taxes.
Shawn:
I guess they wanna save money on taxes.
Bob:
All right. And before we get started, it’s important to know that these tax strategies that we’re gonna give you today, I would run ’em through a CPA, a qualified tax expert or an accountant before you do them for you personally. So every one of these, some will apply, some won’t, but I have a feeling out of the 10 that we’re gonna share today that you are going to find one or two of them that actually will save you a thousand or two in taxes. So this next 30 minutes that we’re gonna go through this, I don’t know if it’s gonna take that long, but it is gonna take a while, is worth about a thousand an hour. So I would definitely stay tuned cuz you will see some ideas that we’re gonna give you that are good ones.
Shawn:
And for those watching online, you should be able to jump to the chapters. So if you wanna just quickly see which of these looks like they apply, just jump down into that.
Bob:
That’s a new thing I didn’t know you could do. Oh, okay. All right.
Shawn:
It’s fancy.
Bob:
So one of the things that is important, before we get to the strategies is to understand the standard deduction that all of us receive, whether we’re married, single, or a head of a household. And let me define the head of a household. Somebody that would not be married but maybe has a child. So they have a dependent, All right, so for 2022, the standard deduction for a single filer not married is $12,950. That means that you get that deduction right off the bat. I guess I’m trying to, if that’s the right term to say. The next for a married couple, that standard deduction is $25,900 for this year. So, that’s much higher. And of course it’s gonna be double, basically what a single filer. And then the head of a household is $19,400,
Shawn:
Like you said. So say single mom or dad with a dependent.
Bob:
Right. Correct. And taxpayers who are at least 65 years old or blind, it was interesting in looking that up, will be able to claim an additional $1,400 in the standard deduction on top of these numbers that I just gave you. If you’re single or head of a household, it’s $1,750. Plus, even more, you can also declare even more if you happen to live in a disaster area. Florida had the hurricane hit this year. So if you had a qualifying disaster in your area, like a hurricane or a wildfire, like we always see happening in California or the west, you can add more to that standard deduction. Now this is important to know what this standard deduction is because as we get into tax strategy number one, less itemized deductions total more than the standard deductions, you don’t even need to itemize.
Shawn:
Right. It’s just a waste of time.
Bob:
Yes it is. So we’re gonna go over these itemized deductions and how important it is that you understand what you can itemize and will it total more than these initial numbers that I gave you. Garrett, If you would put those initial numbers right up one more time so people can see that before we get into this. So if you see those numbers there, the first tax strategy, number one for 2022, and this is a year end strategy, you gotta do these strategies before the year end. So we’re coming to you and giving this to you in November, cuz you still got some time left to do these strategies. So go with that first one, Shawn.
Shawn:
So the first one is lumping together itemized deductions that you can. So you wanna lump as many of the qualified itemized deductions as you can into one year to get over that standard deduction threshold. And I mean, obviously try to do this I guess every other year at least.
Bob:
Well, it depends, and I was thinking about this for myself, cause that first one we’ve got is property taxes. So the max that you can use towards the itemized deduction is $10,000 in property tax. Okay. Well, property taxes on my home are that much already. So if I wanted…
Shawn:
Welcome to Texas.
Bob:
Where taxes are very high. Californians, they’re moving here by the thousands. They get here and they go, Oh my goodness, I never knew property taxes were that high, but they’re very high in Texas. So it wouldn’t make sense for me to lump my two together. Right?
Shawn:
Now Bob, that’s $10,000 for the property filing jointly. So if you’re single, it’s $5,000 or you did married filing separately, it’s $5,000.
Bob:
But Shawn, I don’t know what your property taxes are, but I don’t think they’re $10,000.
Shawn:
No, they’re $5,500.
Bob:
So for you, it would make sense to pay your property tax twice in one year. Because that’d be $11,000. You’d get to claim 10 of that 11.
Shawn:
Right.
Bob:
I hope this makes sense to listening to audience.
Shawn:
So what you’re saying on trying to lump them together every other year, depending on the situation. So in my case, since I’m barely over that $10,000 that I’m allowed for the property tax, it doesn’t really help much to go with the itemized deductions versus the standard deductions because it’s just not enough, right?
Bob:
Correct. Correct. But there’s other things that you can add on top of that. Gotcha.
Shawn:
Okay.
Bob:
So you’ll wanna pay your property taxes on January 1st and December 31st, . And what I mean by that is for you, Shawn, is take 2022. You pay your property taxes on January 1st, 2022 and you pay your 23 property taxes on December 31st, 2022.
Shawn:
Okay.
Bob:
So that’s gonna give you, now you’ve gotta add on top of that to get above your standard deduction. And the things that you can add on top of that would be mortgage interest.
Shawn:
Right.
Bob:
Now you can’t lump some of your mortgage interest two years into one, but the mortgage…
Shawn:
Because it’s only once paid.
Bob:
That’s correct. Right. So let’s say your mortgage interest was another $10,000, now you’re up to $20,000. That’s getting close to that standard deduction.
Shawn:
Right?
Bob:
On top of that, if you’re a tither and you know have a hundred thousand dollars income and you’re giving $10,000 to the church, now you’re at 30 thousand, that’s 10,000. Right?
Shawn:
So now, just from really, I guess you’d say those three things.
Bob:
Those three things.
Shawn:
Mortgage interest, the paying both years of property tax in the same year, and the charitable giving, you’re already over the standard deduction.
Bob:
So now it makes sense. But next year, if you did that for 2023, you wouldn’t get to that, above that, because you paid your taxes for 2023 on December 31st.
Shawn:
I could pay 2024 maybe early. But yeah, it doesn’t really matter at that point.
Bob:
So it’s real important how you look at your itemized deductions. And that’s why I’m spending, I knew this would take some time, and you have other deductions on top of this. I know y’all had a baby this last year, and you can take 7.5% of your income, depending on what you spent on the health cost and 7.5% of that against your adjusted gross income. And we’re gonna get into that here in a minute. But that can go towards your itemized deduction.
Shawn:
That would be another one to keep in mind then of the standard deduction versus the itemized is did you have a new addition to the family?
Bob:
Yeah. So we’re gonna go to the second year end tax strategy for 2022.
Shawn:
Which is maxing out your qualified plans. So this, for example, maxing out your contributions to your qualified retirement plan at work. So maybe your employer has a 401k, 403b, 457, TSP plan. There’s a bunch of different ones. So you wanna make sure you max out your contributions to those before the end of the year.
Bob:
And they all have the same rules. Basically the 401k, 403b, 457, TSP, they all have the exact same rules of the amount that you can put into them. Now, this is the number one strategy I see that people don’t do. We’ve got your typical earner making 70 to 100k a year, your 40 year old making this much, and they’re putting 3% of their salary into their 401k. And that’s it. So they’re putting 3000 in.
Shawn:
And it’s also common because depending on the employer, it’s on average anywhere from 3% to 6% for a match match. So that’s why for a lot of people, they just do whatever the match is, but you can do more.
Bob:
Yeah, A lot more.
Shawn:
A lot more. And like you said, this is something that we have clients save thousands of dollars on their taxes by doing this because number one, most of us need to be saving more towards our retirement anyway. And for 2022, you can contribute up to $20,500 towards a 401k, 403b, the federal thrift savings plan. Plus if you’re 50 or older, you can do another $6,500 on top of that. Now, for a lot of people, $20,500, and especially if you have the $6,500 on top of that, a lot of people, that’s not 3%. That’s more than 3%.
Bob:
Oh, a whole lot more. But you could get that full amount.
Shawn:
That still reduces your taxable income.
Bob:
That’s right. You can put that full amount. So I’m not saying, some people might say, I put $3000 and I don’t have any more money to put in, but if you do, maybe if you had $10,000 more, that $10,000 if you’re in a 20% effective tax bracket, okay, you’ve just saved $2,000 in taxes. We’ve just made this program worth it to you.
Shawn:
You got all your money back on the investment, which was free to watch this.
Bob:
That’s an example. And I meet a lot of individuals that are 55 to 60 or 65 that do need to max out their plans and they’re just nowhere near that $27,000 that they can put in. That’s on their side. That’s not saying the employers are gonna match that much. But they’re just only a percentage.
Shawn:
One, not catch, if you will, one thing just to keep in mind is for a lot of people they may be contributing to – are you listening, watching – maybe contributing to your 401K as a Roth contribution, not as a tax…
Bob:
Tax deduction.
Shawn:
Thank you. Traditional, more traditional type contribution. So obviously if you did this full $27,000, but you were contributing as a Roth, that’s not gonna save taxes now. So just kind of throw that out there. Make sure you know how you’re contributing.
Bob:
And I have my opinion opinion on Roths and I’m not gonna share that right now.
Shawn:
Okay. And we’ll save that for another time.
Bob:
It can be a favorable and a negative opinion on both. Year end tax strategy number three for 2022.
Shawn:
Large year end gifts to charities.
Bob:
Give a large yearend gift to your charity before the end of the year or you can fund a donor advised fund if you don’t want to give that all to the charity right now. And that’s a tax deduction. Also, lump your charitable giving into one year if you can.
Shawn:
A lot of these are if you can.
Bob:
So because that’s gonna add on top of your itemized deductions.
Shawn:
So for example, similar to the property tax scenario, that if you want, if you can afford it within your cash flow, whatever you would normally give to the charity or the church in the current year, do that plus what you would give the next year. That way you can get those deductions a little higher.
Bob:
Before the end of the year. And if you say, Well, I don’t want to give that all to the church right now, like I say, you could use a donor advised fund and then a donor advised fund could give it month by month.
Shawn:
So a little slower overtime.
Bob:
Yep. Which it’s the same thing, but you’re saving a lot on taxes. That could be worth for a $100,000 income earner or $200,000, again, this is another $2,000 or $3,000 in tax savings. I mean so far, some of the things I’ve mentioned we’re up to $7,000 or $8,000 in tax savings already. And we’re at tax strategy number three.
Shawn:
When you’re talking about the gifts to charities and churches. I mean, it’s money that you were planning on giving anyway. So why not do it now, whether it’s a lump sum or the charitable get annuity, because either way you still get to deduct a full amount.
Bob:
Now I’m scared about this next tax strategy, Shawn, because I know y’all are looking at a car now.
Shawn:
So number four is sales tax. Buy that new car if you need one. Now, we’ve been looking at buying a car for a while, it still hadn’t worked out yet, but we are doing our very best to remain diligent and not get emotional and fall into the, “I just want it now.”
Bob:
Yeah. Exactly. So I know y’all have been looking a very, very long time, and I’m proud of you that you’ve really taken your time and not let your emotions get involved in it, because that can get so involved in it.
Shawn:
And we’re definitely looking at the new car, not just for this strategy before.
Bob:
And this just applies.
Shawn:
Also, used car prices have been crazy for a while.
Bob:
So this applies towards a new car. So the sales tax that you pay on that car, and cars are so expensive today. $40,000 or $50,000. That sales tax is deductible. But in a state like California where you have income tax, if you have an income tax, the income tax can be deductible towards your federal tax, but you can’t take sales tax and income tax, in my research.
Shawn:
Gotcha. All right. So for those of us in a state like Texas or other states that don’t have a state income tax, well yeah, use the sales tax and deduct that.
Bob:
All right. So we’re nearly halfway through our 10 tax strategies. The year end tax strategy number five for 2022 is maxing out your HSA or your Health Savings Account, if you haven’t done that. That’s a pure deduction on the very front of your tax return. The amount that you can put into a Health Savings Account this year for an individual is $3,650. Or if you’re a family, you can put $7,300 into an HSA plan and if you’re above 55, add…
Shawn:
There’s another thousand dollars.
Bob:
Add another thousand on that. So that’s good. And the good news is these numbers are going up again next year.
Shawn:
Well, and also what’s great is the money you’re putting into that, unlike man, you feel sometimes the insurance premiums you pay every month just feels like a waste. Well, at least with the Health Savings Account, the money that you’re putting into that, you then get to use for medical expenses towards your deductibles. So whatever it is, at least this is money that you’re not just kind of throwing at the insurance company, but you actually get to use it. It’s a deduction and you get to use it.
Bob:
Correct. And you can use that for things, even a chiropractor or going to your dentist. All right. So that’s the first five. So now let’s get to your tax strategy number six.
Shawn:
Six. Medical procedures. So go ahead and get those elective or mandatory medical procedures done before the end of the year if possible. So for example, eyes, maybe just getting new glasses or corrective surgery, maybe something for your teeth, for dental. Maybe you’ve been putting off getting those hearing aids. I said maybe you’ve been putting off those hearing aids, things like that.
Bob:
Got mine right here.
Shawn:
Making sure Bob’s are working. But you may only deduct the amount of your total medical expenses that exceed 7.5% of your adjusted gross income. Can you maybe re-say that again, but in a way our listeners can understand?
Bob:
Well, I’ll say it slowly. You can only deduct the total medical expenses that exceeds 7.5% of your gross income. Right. Gross income’s a hundred thousand. I always use that. It’s a nice, easy number.
Shawn:
It’s a nice easy number.
Bob:
Yeah. So $7,500, your medical expenses are not gonna be deductible for that first $7,500.
Shawn:
It’s basically a standard medical deduction. Almost.
Bob:
Correct. Right.
Shawn:
So unless it’s more than that, there’s anything to deduct.
Bob:
I’m gonna ask Garrett, if you’ll put what we have in our notes here. There’s a website on the IRS.gov/taxtopics/TC502. He’ll put that up here, up there, so you can see that. And you can go to that. And that tells you about the medical procedures because it really is very, very detailed. And I thought that would be good. All right, we’re getting to…
Shawn:
Number seven. All right. Business equipment. So if you own a business, buy any necessary business equipment you’re going to need or were thinking about upgrading to in the near future, before the end of the year. So by December 31st. So for example, for us in a regular office building – computers new copier, copiers, office furniture, furnishings, even business automobiles. All of those types of things are deductible then for 2022.
Bob:
And I’m a big believer in this one, a big believer.
Shawn:
I remember growing up, my dad who was in mining and excavation, went into site prep and now he’s still doing farming. But I remember every year he would talk about how many tires he bought cuz they knew they were gonna use them. But when you’re using big equipment like that, those tires can head up real quick.
Bob:
So while this doesn’t apply to the majority of listeners, those that are business owners, it does apply and definitely use this tax strategy. It’s a great tax strategy, and I’ve been using it for years.
Shawn:
And that applies Bob, even you don’t have to have a whole bunch of employees. I mean, if you’re self-employed, and you mostly work as an independent contractor for companies, there’s still stuff if you wanted to get that new computer working at home I mean, there’s a lot of things you can sell.
Bob:
Right here. We’re going over this, my Dell computer right here. I’m not trying to advertise for them, but this is about a four or five year old computer and it’s gonna be time for an upgrade soon. And so, I’m not going to, but you could consider upgrading to your new laptop that you carry with you.
Shawn:
Let’s get into number eight. Tax loss harvesting. Especially this year so far in 2022, we have been in a bear market. You’ve been in a bear market. So now’s the time to do that.
Bob:
That involves looking at your holdings and selling them off. So you have a paper loss. Now if you do that, as markets moved so fast. Again, as we’re sitting here, in the last two days, the market’s gone up 5%, three yesterday and it’s gone up two right now. Who knows what it’s gonna close at today. That’s an example. So if you do exit the market, get back in immediately to something else.
Shawn:
In this case, we’re not saying to sell your investments to take those to realize those losses so you have ’em on paper and just sit in cash, because then you’re running the risk of the markets moving up.
Bob:
And losing your rebound.
Shawn:
And missed out on that opportunity. So you’re selling it, but you need to move into something different for at least that 30, Or is it, It’s 31.
Bob:
Well, make it 31.
Shawn:
You make it 31 to be safe.
Bob:
You wanna make it safe. Make it 32 days. If you have a holding you really like, and you’re looking at a paper loss right now, sell it. Go into a like kind of holding, not exactly the same. You gotta be careful. Cause there’s some IRS rules here. And I would, again, talk to your qualified tax account, tax professional about this. But you can go out of that security for at least 32 days and then come back in. But I would go into a security that responds the same to the markets so that you don’t miss out on the upswing.
Shawn:
So for example, if you’re mostly equities, you’re an aggressive or aggressive growth type of a fund and you’re in 98% stocks, don’t sell all of your stock positions for a loss and move into a bunch of fixed income.
Bob:
Cause they’re not gonna rebound the same.
Shawn:
Because that’s not gonna function the same. So that’s the main thing is don’t buy the same thing, but you want to buy something at least a similar asset class.
Bob:
And now you have that paper loss that you can use towards future gains for when you’re rebalancing. And those are carry over too. So now you could take up to $3,000 in one year if you don’t have anything to go against it, but if you have a paper loss on paper, say $30,000 and you had gains of $30,000, they go against one another. There’s no tax due on that gain because you had the loss that went against it. So they’re really good to put that in your bank right now, especially during a bear market. So that was tax strategy number eight. Just a couple more to go.
Shawn:
To go that 31 days. Well technically wait 32 to be safe.
Bob:
Yeah. I like the 32.
Shawn:
The reason for that, too, which is very important for everyone tuning in, is that if you don’t hold something else for at least that minimum time, then it becomes a wash sale and whatever the tax losses that you incurred, they get washed out. You don’t get to use them.
Bob:
You don’t get to use them. The IRS won’t let you use them. Yep, that’s right.
Shawn:
So number nine.
Bob:
Number nine.
Shawn:
RMDs directly to charity. Now this is an interesting one because we do have a lot of clients that do this. For IRAs that you get to age 72 and you gotta start doing your required minimum distributions, because ole Uncle Sam wants his tax money. So when you get to that point, if you don’t actually need that money for income, you have different options. You could take the money and you could put it back in a different investment account or a different account. You don’t have to technically spend it,
Bob:
But you have to pay tax on it.
Shawn:
But you’ll pay tax on it. So the other option, if you really don’t need it, but you have to take it, you can take it as a qualified charitable distribution or QCD . Now the benefit to that is you don’t pay tax on it. You still meet that require required minimum distribution and it goes to a charity of your choice. So, it’s nice.
Bob:
I actually tell our age 72 year and older that don’t need theRMD to live on to use their RMD for their tithe towards their church.
Shawn:
Yeah.
Bob:
Yeah. Because if you take it as cash and then tithe, it may not be deductible.
Shawn:
Right.
Bob:
Because it’s gotta get above, again, the standard deduction. So it’s a great thing to do and you can really give a lot. It doesn’t just have to be your RMD, you can go up to a hundred thousand dollars per person if you wanted to, if you’re that charitable.
Shawn:
Yeah, there’s a couple clarifications on that. So obviously the charity has to be a qualified 501c3 organization.
Bob:
That’s correct. That’s right.
Shawn:
So you can’t just say it’s charity. The other thing is you can’t also take the charitable deduction. So no double dipping.
Bob:
Yeah. Cause it’s gone through the charity. You can’t take that as a deduction.
Shawn:
Right, exactly. So that’s what you mean by the double dipping,
Bob:
Right. That’s correct. That’s right. All right, we’re down to our last one and this is a real big one with me.
Shawn:
Number 10, income timing. So think strategically about income payouts if possible. Consider delaying income until next year if it’s really high this year and you don’t think it will be next year. So remember, this is a year end tax strategy and it’s really only a good idea if you think your income will be lower next year. So Bob, maybe you give us an example.
Bob:
Well, I’m gonna give you an example. Me personally. I could have delayed my income last year, but I kind of knew a bear market was coming because we’d been in a bull market for so long. So there’s an example of timing income, because in a bear market, my income’s gonna be lower. In a bear market, it’s gonna be, I mean in a bull market, it’s gonna be higher. And another example with this would be a retiree. So a retiree has a big bonus coming at the end of this year and he’s gonna retire in April of next year and his income’s gonna be much lower, right? He needs to ask his company, can I delay this bonus until 2023 instead of right now? Because then it’s gonna even your income out. Because remember, the one thing you’re trying to do is to keep yourself from going into higher tax brackets. Remember the more you make, the more the government wants, contrary to popular belief that the wealthy don’t pay their fair share. That is a pure lie. All right? All you gotta do is look at any tax table and the more you make, the higher percentage you pay. As an example. You’ll take somebody that makes $100,000, their tax burden may be $10,000 or $15,000. Okay? You take somebody that makes $400,000, their tax burden’s not four times that amount, it’s like eight times that amount. Eight or nine times that amount.
Shawn:
And I say that because I handle bookkeeping, everything for the business here. And so part of that kind of falls into helping you with your taxes. And I don’t really want to even mention the taxable amount, but I can tell you the people that make more money pay not just percentage wise, but just across the board, they pay more taxes. So don’t listen when you hear media and politicians talk about, “Oh, the wealthy don’t pay their fair share.” No, no. They pay their fair share, your fair share, my fair share, plus everybody else’s. So that income timing is really, it’s a really great tip. And that’s something, again, especially if you have someone who’s looking at retiring next year or just based on what’s going on with the business, maybe they’re in more of a sales position and they just don’t see that it’s gonna be as good the next year, and you got that bonus coming. Ask your employer, Hey, can you pay me in January?
Bob:
Except the employer might want the deduction.
Shawn:
They might. So that’s a discussion to have with the employer.
Bob:
And so we’ve gone over these 10 strategies and all these need a lot of advice to go with them. Don’t just take what we said today at face value, get with a Certified Financial Planner or your accountant or tax professional, and look at each one of these for your individual situation. We are here to help you with this. We do have a CPA on board now, but I’m not going to recommend any of these strategies for you unless they were to talk to you personally and know your financial situation.
Shawn:
Yeah. Because again, as we’ve said for all of these, these are options. They may not all apply, but we have a feeling that if you’re watching or listening to this, that probably a couple of them will apply. But you still need to look at your individual situation.
Bob:
And we’re here to help. During business hours, you can give us a call at (830) 609-6986. You can also text that number or you can go on our website to www.christianfinancialadvisors.com.
Shawn:
Yep. Thanks again for joining us and God bless.
Outro:
We invite you to listen to all of our past episodes, covering many financial topics from a Christian perspective. To make sure you don’t miss any of Bob’s upcoming episodes. You can subscribe to Christian Financial Perspectives on iTunes, Google Podcasts, Spotify, Stitcher, or Amazon Music to learn more about integrating your faith with your finances. Visit Christianfinancialadvisors.com or call (830) 609-6986.
Disclosures:
Investment advisory services offered through Christian Investment Advisors, Inc DBA Christian Financial Advisors also known as Christian Financial Advisors Management Group, a registered investment advisor. Comments from today’s show for informational purposes only, and not to be considered investment advice or recommendations to buy or sell any company that may have been mentioned or discussed. The opinions expressed are solely those of the host Bob Barber and his guests. Bob does not provide tax advice and encourages you to seek guidance from a tax professional. While Christian Investment Advisors believes the information to be accurate and reliable, we do not claim or have responsibility for its completeness, accuracy, or reliability.
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