Christian Financial Perspectives

Learn about the top 10 estate planning mistakes to avoid.

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This week, Bob and special guest Shawn McCammon discuss something that is both extremely important – but also can be heavily ignored – Inheritance and Estate Planning. Shawn is an estate planning attorney and CERTIFIED FINANCIAL PLANNERTM. Now, that’s a great combination!

He works with individuals and families to find effective solutions to meet their goals in the areas of estate planning, trust administration, business planning, and asset protection. Needless to say, he is full of great information when it comes to making a plan for your wishes after death.

In this episode, Shawn covers the “Top 10 Estate Planning Mistakes” that he commonly sees people make. This includes anything from not updating an estate plan to having former spouses still on a will. So, tune in to learn the details of an estate plan and to see if you might be making any of these top mistakes.

To learn more about Shawn and estate planning, visit texas-estateplanning.com or click on the button below!

GUESTS: Shawn McCammon, JD, CFP®, CKA®

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

[INTRODUCTION]

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.

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[CONCLUSION]

That’s all for now. 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 Play Music, Spotify, or Stitcher. To learn more about integrating your faith with your finances, visit ciswealth.com or call 830-609-6986.

[DISCLOSURES]

Comments from today’s show are 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. Bob does not provide tax advice and encourages you to seek guidance from a tax professional. Investment advisory services offered through Christian Investment Advisors Inc. DBA Christian Financial Advisors, a registered investment advisor.

Learn about biblical wisdom in regards to marital finances.

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Marriage is a game changer. You are becoming a team, a unit. It starts out full of promise for a hopeful future, but sometimes life gets in the way of happily ever after, and we soon run up against conflict. Since money is THE most common cause of friction in most marriages, Bob and Mary Jo have made an episode focusing specifically on finances in marriage.

One of the hardest things for most couples is managing money in a way that promotes harmony and unity in the household. Some of the topics covered in this episode include:

This is such an important topic that there are a number of books written on the subject, and God has a lot to say about money in the Bible. In fact, the Bible refers to money over 5000 times, sharing a tremendous amount of wisdom in regards to finances. With today’s secular worldview young marrieds can easily get caught up in the trap of consumerism if they don’t first start out with a Biblical worldview.

HOSTED BY: Bob Barber, CWS®, CKA® and Mary Jo Lyons, CFP®, CKA®

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

[INTRODUCTION]

Bob: Welcome to Christian Financial Perspectives, a podcast where we talk about ways to integrate your faith with your finances. This is Bob Barber.

Mary Jo: And I’m Mary Jo Lyons.

Bob: Are you ready to learn how to apply biblical wisdom to everyday financial decisions?

Mary Jo: Join us as we look at integrating your faith with your finances. If it’s your first time listening, welcome to our podcast, and if you’re a returning listener, welcome back.

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[CONCLUSION]

Mary Jo: You’ve been listening to Christian Financial Perspectives. Join us as we explore more about how to apply biblical wisdom to your financial situations.

Bob: To make sure you don’t miss any of our podcasts, you can subscribe to Christian Financial Perspectives on iTunes, Google Play, or Stitcher. To learn more about integrating your faith with your finances, visit out website at ciswealth.com or call 830-609-6986.

Mary Jo: That’s all for now.

[DISCLOSURES]

Comments from today’s show are 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 hosts, Bob Barber and Mary Jo Lyons. Bob and Mary Jo do not provide tax advice and encourage you to seek guidance from a tax professional. Investment advisory services offered through Christian Investment Advisors Inc. DBA Christian Financial Advisors, a registered investment advisor.

Learn about mid career risk and the impact that it can have on your retirement.

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What happens when you are looking at a possible job loss as you are nearing retirement? That’s the question we tackle on this episode about mid career risk and its impact on retirement planning. It may be happening to you, or someone you know, at this very moment. It’s yet another example of how we have to hope for the best and plan for the worst.

Bob and Mary Jo have friends and clients that this has already happened to, causing concern about their future and employment outlook. Age discrimination can be a real concern. The older you are when you get laid off, then the longer it takes for you to find a comparable position. The higher your salary, then the longer it takes to come anywhere near replacing your income.

Could you be next?

HOSTED BY: Bob Barber, CWS®, CKA® and Mary Jo Lyons, CFP®, CKA®

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

[INTRODUCTION]

Bob: Welcome to Christian Financial Perspectives, a podcast where we talk about ways to integrate your faith with your finances. This is Bob Barber.

Mary Jo: And I’m Mary Jo Lyons.

Bob: Are you ready to learn how to apply biblical wisdom to everyday financial decisions?

Mary Jo: Join us as we look at integrating your faith with your finances. If it’s your first time listening, welcome to our podcast, and if you’re a returning listener, welcome back.

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[CONCLUSION]

Mary Jo: You’ve been listening to Christian Financial Perspectives. Join us as we explore more about how to apply biblical wisdom to your financial situations.

Bob: To make sure you don’t miss any of our podcasts, you can subscribe to Christian Financial Perspectives on iTunes, Google Play, or Stitcher. To learn more about integrating your faith with your finances, visit out website at ciswealth.com or call 830-609-6986.

Mary Jo: That’s all for now.

[DISCLOSURES]

Comments from today’s show are 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 hosts, Bob Barber and Mary Jo Lyons. Bob and Mary Jo do not provide tax advice and encourage you to seek guidance from a tax professional. Investment advisory services offered through Christian Investment Advisors Inc. DBA Christian Financial Advisors, a registered investment advisor.

Finding C-L-A-R-I-T-Y in your financial future.

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One thing Bob and Mary Jo see on a daily basis is the lack of understanding and clarity when it comes to financial matters. Are you striving to have a solid financial future? It starts with clarity of your financial life. Clarity allows us to see the truth in past matters in order to make the best decisions for the future. It’s no different for finances.

They decided in this episode to break down the word C-L-A-R-I-T-Y into financial counterparts according to each letter.

C – Cash Flow

We have several past podcast episodes discussing tips, presenting resources, and sharing advice on how to find financial clarity in your life. If you are ready to gain C-L-A-R-I-T-Y and understanding surrounding your finances, give Christian Financial Advisors a call at 830-609-6986 or visit us on the web at christianfinancialadvisors.com.

Let’s make a plan together!

HOSTED BY: Bob Barber, CWS®, CKA® and Mary Jo Lyons, CFP®, CKA®

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

[INTRODUCTION]

Bob: Welcome to Christian Financial Perspectives, a podcast where we talk about ways to integrate your faith with your finances. This is Bob Barber.

Mary Jo: And I’m Mary Jo Lyons.

Bob: Are you ready to learn how to apply biblical wisdom to everyday financial decisions?

Mary Jo: Join us as we look at integrating your faith with your finances. If it’s your first time listening, welcome to our podcast, and if you’re a returning listener, welcome back.

[EPISODE]

Bob: Proverbs 2:2-6,, “My son, if you accept my words in store up my commands within you, turning your ear to wisdom and applying your heart to understanding. Indeed, if you call out for insight and cry aloud for understanding, and if you look for it as for silver and search for it as for hidden treasure, then you will understand the fear of the Lord and find the knowledge of God. For God gives wisdom. From his mouth comes knowledge and understanding.” You know, being a financial advisor for over 25 years, one thing I see on a daily basis is a lack of understanding, and this scripture talks about applying our heart to understanding and clarity, especially when it comes to financial matters.

Mary Jo: That’s so true, Bob. When I work with clients to explore their financial goals when we’re working on financial planning, they always seem to say something very similar. “I Want to achieve a solid financial future,” something along that line. So it may not be in those exact words, but their words always add up to something similar, almost the same thing. And I also subscribe to a newsletter from a group called Driven Professionals. They work with professionals by leveraging neuroscience to improve conversational intelligence and this combines science and intuition.

Bob: That sounds very interesting.

Mary Jo: It is. It is. I’m really drawn to the newsletter and there’s always some good tidbit in there.

Bob: So neuroscience, huh?

Mary Jo: Neuroscience, kind of how the brain thinks and how it works and you know the conversational intelligence, and that’s what we do all day long. Every conversation we have with our clients, we’re using these skills. So I thought there were a lot of parallels. So I often find good stuff in their content. This year, Driven’s word for the year 2020 is “clarity”, and that just spoke to me. Don’t we all want clarity, especially when it comes to our money. And you know how my mind goes from one thing to another?

Bob: Well yeah. Now wait a second. You say my mind’s all over the place too. So we’re both that way.

Mary Jo: I’m not too keen on Hollywood these days, but it is award season. So just kind of, you know, play along with this for a minute. We are the stars in our own movies. Our movies may still be in production, but it’s going to be an Oscar worthy performance, at least we hope it will be. And as the star of our show, we have blind spots and inherent biases. So think about the vision of your movie for a minute. What would that be like?

Bob: So you’re saying if I were in this blockbuster film, it’d be a celebration of me.

Mary Jo: Absolutely. The celebration of you, Bob.

Bob: Okay, so let me see. What would I want the script to say about me? What would I want the storyline to be about? That’s interesting. What would be my accomplishments? So gosh, I’m thinking about that to all of us. What would be our accomplishments? What would the movie say? What would somebody say about me? You know, the speech they would give about me. What would my career resume say? What would my life resume say? These are some of the things I start thinking about.

Mary Jo: I just thought you were thinking about how big that award would be for your Oscar.

Bob: Well, it’s going to be a real big one, isn’t it?

Mary Jo: Of course it is. I want to talk to our listeners. So, just think about that for a minute. Let that soak in. What would the movie about you be like? In today’s world, most of us, we’re carrying around a smartphone in our pocket. Basically, it’s a computer that literally puts the world at our fingertips, and it’s often a source of distraction for most of us. We have access to news headlines 24/7 to movies to everything that you want to look up.

Bob: Text messages, let’s see, email, social media.

Mary Jo: We’re bombarded.

Bob: Yeah, we are.

Mary Jo: In the headlines, they compete for our attention. The headlines are more sensational than ever to grab our attention. In fact, these headlines are even so sensational, they’re often far from the truth as a result. You know, they call it clickbait and I’ll click on something because I’m interested in what it has to say. And I’m like this has nothing to do with the headline that I clicked on. And so they’re really just trying to get you down these rabbit holes. And so what are the headlines going to say about your movie? I’m guessing the result will be much like today’s reality TV and won’t be very close to the truth, especially when it comes to our financial life. These headlines, they may reflect your perceived reality, but will they actually reflect your actual reality when it comes to your financial life?

Bob: This really has me thinking about what a movie would say about my life, Mary Jo, and if I get to write it then what I want to say about it.

Mary Jo: There you go. We’re in control of our future.

Bob: Yeah, exactly. So today’s topic, I guess we’re talking about financial. So what would it say about my financial life? What would that movie say?

Mary Jo: So let’s get some clarity on the truth about our financial life. What is your vision for your financial future? What do you want your life movie to be about? If you miss some of our earlier episodes, take a look at the podcast archives and review the previous episodes. We provided lots of great advice, tips, and resources to use to gain clarity on your financial future. Take advantage of them. Create a vision for your financial future. Don’t just let the script write itself because we all know how that will end.

Bob: Okay, so today’s podcast is really on clarity. So what we’re going to do is we’re going to take this word clarity, C, L, A, R, I, T, Y, and we’re going to break it down letter by letter and put a word or two behind each letter of clarity for financial reasons.

Mary Jo: So for the C in clarity, let’s look at cashflow. Proverbs 27: 23-24, “Be sure you know the condition of your flocks. Give careful attention to your herds, for riches do not endure forever and a crown is not secure for all generations.”

Bob: Can I say an updated version of that?

Mary Jo: Sure.

Bob: Be sure to know the condition of your cashflow.

Mary Jo: There you go.

Bob: Give special attention to your bank accounts, for riches do not endure forever.

Mary Jo: No, they don’t. Do you know where your cashflow is every day, every week, every month. Where’s it going? With the technology we have today, it’s easier than ever. Here at Christian Financial Advisors, our financial system downloads your debit and credit card expenditures daily and automatically puts them into different categories like shopping, food, home maintenance, entertainment, even pets, and lets you know at any time of the month what you spend in a category and how much you have left for the month for that category. It’s really an amazing system and completely automated. It may be just the tool you need to help get your monthly budget on track.

Bob: I know I’m clicking into mine sometimes two or three times a day. I like it, Mary Jo, not only for how it helps with seeing all the cashflow and where everything’s going, but I can see all my different bank accounts so I don’t have to go to each individual one to see what the balance is and to know if anybody has hacked into any of those accounts.

Mary Jo: Oh, and that’s a good reason. That’s for sure.

Bob: All right, so for clarity, we’ve gone over the C, so next and clarity is the L. So what we’re going to do for the L is we’re going to use the word longterm. A great scripture we take from this is Proverbs 13:11, “Dishonest money dwindles away. But whoever gathers money little by little makes it grow.” And that makes me think, from this scripture, of longterm. I mean this is a testimony that for most of us, lasting wealth is made slowly and methodically with discipline, hard work, and saving little by little like scripture says. You know, very few of us obtain wealth quickly, and I’ve noticed when we do, it usually goes away as quickly as it came. As I can remember so well from a few years ago with this huge amount of sudden wealth. And you know Mary Jo, you remember the podcast we did on “Sudden Wealth Syndrome”.

Mary Jo: Oh sure.

Bob: And from that oil boom in South Texas and you know, so many of those folks, they were worse off after than before because they didn’t know how to handle that sudden wealth. So think of wealth as longterm, not short term, and that it’s made over a 30 or 40 year period. I know that doesn’t set well with a lot of folks. It’s not, but it’s not made suddenly and it’s not just made over 5 years or 10 years. It’s really a longterm approach.

Mary Jo: Absolutely. For the next one, we’re going to look at A in clarity for advice. The Bible speaks many times about seeking the advice of others and godly counsel. So how we need one another and even pitying the man that has no one to watch his back and help him. But luckily you do have somebody to watch your back. We did a podcast earlier on seeking advice. It’s actually podcast number three very early on in Christian Financial Perspectives and it was “Virtues To Look For When Choosing A Financial Advisor”. So you may want to take a look at that one. As believers in Christ, we are called to a relationship and not to go it alone. We hear a lot about robo advisors these days, but you know, it’s kinda tough to have a conversation with a robot. They don’t know your history, they don’t know your family, they don’t know your values of your financial goals, and a robot can’t hold you accountable. You’re not going to have a relationship with a robot or a robo advisor. And that’s the difference maker.

Bob: Ecclesiastes 4:9-10, I was looking this up, I’ve heard this so much over my lifetime. “Two are better than one because they have a good return for their labor. If either one of them falls down, one can help the other up, but pity anyone who falls and no one’s there to help them up. “The secular worldview for financial matters, many times, tells us that we don’t need anyone to help us. That you can manage all your investments online just like the pros that have spent decades learning how to do it. I just don’t believe that’s true. It’d be like me trying to play on the basketball floor with the Spurs. I couldn’t compete. And I guess, you know, next they’ll be telling us we can even do surgery on ourselves without a doctor. I mean, it’s just amazing. We do need one another, and scripture plays into this.

Mary Jo: Absolutely, and that speaks from a secular worldview. From a biblical worldview, it says it’s okay to seek help, a trusted financial advisor that goes by a biblical worldview for finance using wisdom, experience, and knowledge can bring clarity to your financial goals and is not a weakness, but a strength.

Bob: So far in clarity, we’ve gone over the C, the L and the A. And again, the C was for cashflow. The L was for longterm, the A was for advice, and now the R is for rate of return. I’ve got another good scripture for you, and this might’ve been one many of you have heard. It’s from Matthew 25:14-21. It talks about the parable of the talents. Again, it will be like a man going on a journey who called his servants and entrusted his wealth to them. To one, he gave five bags of gold to another two bags and to another one bag, each according to his ability. Then he went on his journey. The man who had received five bags ago when it wants him put his money to work and gained five more bags. So also, the one with two bags of gold gained two more. But the man who’d receive the one went off, dug a hole in the ground and hid his master’s money. After a long time, the master of those servants returned and settled accounts with them. The man who had received the five bags of gold bought the other five and he said, Master, look, you gave me five bags of gold. I’ve gained five more. The master replied, well done, good and faithful servant. You’ve been faithful with a few things. I will put you in charge of more things. Come and share in your master’s happiness. When we talk about the R in clarity in rate of return, you need to understand the real rate of return on an investment before putting your money into it, especially after inflation, which often is 2% to 3% a year, and that reduces that value of money as time passes, as well as taxes. So what’s left after that is the real rate of return, which can often be unimpressive after considering for the adjustments of inflation and taxes. Accordingly, investors must consider what are the risks associated, though, with the investment is appropriate given the real rate of return.

Mary Jo: Taking this a little further. Another aspect of that, let’s look at your personal rate of return. Investors typically always perform worse than the overall market due to emotional reactions. They react negatively to market volatility. They panic and then sell out at the worst possible time. This happens mostly to those investors who are going it alone. When you’re working with a trusted advisor, they can walk with you through these periods of volatility and help you maintain a longterm perspective and then that will improve your own personal rate of return.

Bob: I remember we did a podcast called “The Emotional Investor”. You remember that one? I wish I knew exactly which one that was, but if you’ll go in our archives under the emotional investor, I think we did that sometime in the last quarter of last year. So now we come to the I in clarity, and for this one we’re going to use intelligence. Always think carefully and pray about the longterm financial impact of your financial decisions and avoid making them based on feelings and emotions. And this is what we mean by intelligence. James 1:5, “If you need wisdom, ask our generous God and he’ll give it to you. He will not rebuke you for asking.”

Mary Jo: Oh, that’s a powerful scripture there, Bob. I think it definitely speaks to that and we’ve got to seek wisdom when we fail short on our own.

Bob: Yes, we do,

Mary Jo: And for the next one, it’s for the T in clarity which is time. Understand that time is not limitless, so let’s value it. How you spend it shows what your real priorities are. When you say you don’t have the time to get your finances in order or anything else for that matter, you’re saying that it’s just not a priority for you, at least not right now. We want to encourage you to make your financial future a high priority. If you believe in family first, well getting your financial future in order is one sure way to show your family how much you value them. In Ecclesiastes 3:9-11, “What do people really get for all their hard work? I have seen the burden God has placed on us all. Yet God has made everything beautiful for its own time. He has planted eternity in the human heart, but even so, people cannot see the whole scope of God’s work from beginning to end.”

Bob: You know, Mary Jo, in that time, something that really hit me, and this was just a few months ago, was when I heard a guy say, “If you don’t have time for something, that’s not your priority.”

Mary Jo: That’s absolutely true.

Bob: That really hit me. He used this short story about how his little girl came up to him and she said, daddy, I want to go play right now. And he said, well, I don’t have time. Really what he was saying was, you’re not my priority right now. And that hit me hard. So, you know, all my kids are out of the nest now and I’m just thinking, Oh my goodness, I hope I never said that, but I have a feeling I probably did.

Mary Jo: There was a song it reminds me of it, back in the day, and it was by…Was it by Harry Chapin?

Bob: Cat’s In The Cradle?

Mary Jo: Yes. And yeah, that really spoke to that.

Bob: So here we are at the end of the word clarity. We’re at the Y. You know what the Y is gonna stand for. It stands for you because it’s up to you to make your financial future happen. It’s not your parents’ obligation to give you an inheritance or the government or a lottery ticket, but it’s up to you to be the best steward possible with God’s gifts. I’d like to go with this scripture for this one. It’s from Ecclesiastes 3:12-13, “So I concluded there is nothing better than to be happy and enjoy ourselves as long as we can, and people should eat and drink and enjoy the fruits of their labor for these are gifts from God.”

Mary Jo: After all, we’ve determined God owns it all. So, if you’re ready to gain clarity and understanding around your finances, give us a call at (830) 609-6986 or visit us on the web at ciswealth.com. We’re here to help. Let’s make a plan.

[CONCLUSION]

Mary Jo: You’ve been listening to Christian Financial Perspectives. Join us as we explore more about how to apply biblical wisdom to your financial situations.

Bob: To make sure you don’t miss any of our podcasts, you can subscribe to Christian Financial Perspectives on iTunes, Google Play, or Stitcher. To learn more about integrating your faith with your finances, visit out website at ciswealth.com or call 830-609-6986.

Mary Jo: That’s all for now.

[DISCLOSURES]

Comments from today’s show are 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 hosts, Bob Barber and Mary Jo Lyons. Bob and Mary Jo do not provide tax advice and encourage you to seek guidance from a tax professional. Investment advisory services offered through Christian Investment Advisors Inc. DBA Christian Financial Advisors, a registered investment advisor.

Join us as we interview Christian financial planning pioneer, Ron Blue.

More episodes >>

Bob and Mary Jo interview very special guest, Ron Blue. Ron is the president and founder of Kingdom Advisors, as well as the founder of The Ron Blue Institute which “delivers biblically-based financial wisdom to the body of Christ by providing thought leadership and content through church, professional, consumer, and academic channels.” Kingdom Advisors is a ministry that empowers Christian financial advisors who seek to integrate a biblical worldview into their advice and counsel. He has authored 18 books including:

Listen in as we dive into what motivated Ron to get into the Biblical financial planning movement, the amazing Christian leaders he met along the way, and his plans for Kingdom Advisors as this incredible organization continues to grow.

We also wanted to offer to our listeners a copy of Ron Blue’s “Simplifying The Money Conversation – Four H’s of Financial Wisdom”. Just give Christian Financial Advisors a call at (830) 609-6986 or email us at [email protected]

GUESTS: Ron Blue, Founder of Kingdom Advisors and The Ron Blue Institute

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

[INTRODUCTION]

Bob: Welcome to Christian Financial Perspectives, a weekly podcast where we talk about ways to integrate your faith with your finances. This is Bob Barber.

Mary Jo: And I’m Mary Jo Lyons.

Bob: Are you ready to learn how to apply biblical wisdom to everyday financial decisions?

Mary Jo: Join us as we look at integrating your faith with your finances. If it’s your first time listening, welcome to our podcast, and if you’re a returning listener, welcome back.

[EPISODE]

Mary Jo: In Colossians 3:23-24, “Work willingly at whatever you do as though you are working for the Lord rather than for people. Remember that the Lord will give you an inheritance as your reward and that the master you are serving is Christ.”

Bob: Oh, Mary Jo. We have such a special guest today on Christian Financial Perspectives – Mr Ron Blue. If anybody has spent his entire working years aligning with that scripture you just read as working for the Lord, it’s Ron. Ron is the founder of Kingdom Advisors, something that’s so close to our hearts, a ministry that empowers over 2,700 Christian financial advisors to integrate a biblical worldview into their advice and counsel and we’ve both been members of Kingdom Advisors for a while and we’re Certified Kingdom Advisors. We talk about that a lot on the podcast. In 1979, Ron founded Ronald Blue and Company. Now Ronald Blue Trust, which today is the largest Christian financial planning firm in the country with over $8 billion under management. That’s a B. That’s a billion. That’s quite a bit. He has authored 18 books including “Master Your Money”, “The Complete Guide to Faith Based Family Finances”, and “Surviving Financial Meltdown”. And I’ve read many of his books. A few years ago, he started the Ron Blue Institute for Financial Planning at Indiana Wesleyan University to help change the way Christians think, act, and communicate about financial stewardship, empowering the church, and changing the world. Ron holds a bachelor’s degree and a master’s from Indiana University and is married to Judy and they have five grown children and 13 – count that up – 13 grandchildren. That must be fun. Ron and Judy live in Atlanta, Georgia and many of you might remember hearing Ron many times, as I did, on the radio as a guest to Focus On The Family with Dr. James Dobson, FamilyLife Today with Dennis Rainey, and Money Matters with the late Larry Burkett that was such a mentor of mine. Oh Ron, welcome to Christian Financial Perspectives. We are so excited to have you.

Ron Blue: Well Bob, I appreciate, very much, that very kind introduction. I guess when you get as old as I do, you can put some things down. I appreciate you, Bob, and I remember when we met and I remember walking together, I think we were in Virginia or Norfolk, Virginia.

Bob: Yeah, that’s right.

Ron Blue: And talking about faith-based family finances, and now I’ve watched over, golly it’s been at least 20 years, you develop your practice and it’s such a joy to see how God has used you in a significant way in his kingdom. And I’m just delighted to be able to participate with you. So thank you for asking.

Bob: Thank you, Ron. We’re quite excited about it and honored to have you on as well.

Ron Blue: Well, I’m looking forward to it.

Mary Jo: Ron, when Bob and I first talked about inviting you on to be our guest on Christian Financial Perspectives. We were looking at doing a podcast focusing on “Simplifying The Money Conversation”. We thought it would fit well with the theme of integrating faith and finances. In fact, we liked it so much, we sent it out to all our clients this last year. But then we also realized that there was so much more in your body of work that we wanted to chat about. We want to start first with digging into “Simplifying The Money Conversation”, which is really just a conversation guide. And you start off in the guide by stating you how you want folks to handle their money from a competent place, empowered by biblical financial wisdom. And I think this is such a powerful statement. Can you tell us more about that and how you were inspired to start there?

Ron Blue: Well, the simplifying little booklet we developed, it actually began only four or five years ago when I was asked if I could develop some curriculum for Christian high school students. My daughter, Karen, had been a teacher and knew how to write curriculum. So she wrote six weeks of curriculum that we could put into a Bible program in one of the classes and choosing Bible was because there was so much Bible behind finances and it was a required course and we wanted everybody to have it.

Mary Jo: That would be great. It should be required across the country.

Ron Blue: Well, we’re trying. We’re in about a hundred high schools now.

Mary Jo: We need to get into the public schools, if possible. So that would be really good.

Ron Blue: Well, we could go down that track because it would be possible. Here’s what I found over my career. I’ve been in the financial services world for 52 years and I started on Wall Street and what I found is that everything that is good in the financial world will have its roots in the Bible, in biblical financial wisdom. And when we got done developing the curriculum, I looked at it and I said, that is the essence of everything I’ve been trying to teach over the last 4 years. And we called it simplifying because when you get right down to it, a biblical worldview approach to money is really, really simple. People don’t understand that and they don’t believe that. And one of the reasons they don’t believe that is that they don’t believe in the authority of scripture. But given the authority of scripture, developing a biblical worldview approach will work at any level of financial need. And I found that because it would work at any level, you know, all you had to do is to teach the principles. And I built the business that the Lord allowed me to start on the fact that God’s word speaks to finances and it speaks authoritatively and it works. And now that company, I was over there not long ago, they have actually over 10 billion in assets and 10,000 clients, and those clients are giving about $150 million a year to evangelical causes. And that was my original vision. Now, my vision is this isn’t so hard. It can be taught very, very easily. And that simplifying booklet is our attempt to teach the authority and the simplicity of God’s word when it comes to money and money management. So that’s a long answer, but that’s how it all got started. That’s how that book got started.

Mary Jo: Well, it may have simple in the title, but I don’t think there’s anything really that simple about it. And we all, even us older folks, need things simplified, not just the fifth graders.

Bob: That’s right. In this booklet, you’ve got the money conversation, it brings together the four H’s of financial confidence. And you list this as heart, health, habits, and hope. Can you talk about how you see these four principles as the foundation for every financial decision?

Ron Blue: Yeah, I can. And the four H’s is a framework, and it’s a framework for thinking. So the first thing that happens in behavioral change is you have to have some exposure, some knowledge, and then you begin to think about that, develop a conviction, and that conviction results in action. So, that’s kind of the fundamental learning model, teaching model, in it. But the four H’s is really a very simple, every behavior begins with the heart. So that’s one of the H’s. Money reveals a heart, and it’s an entry into the heart. There’s a lot said about money because it is the competitor to God for our heart. So, the heart is the beginning place and it drives your behavior, what you believe will drive your behavior. I was testifying before congressional subcommittee a number of years ago and the Senator asked me what I would tell the American family and I said, “Senator, I would tell them to spend less than they earn, avoid the use of debt, build some liquidity or merging into their finances and set some longterm goals so that they could prioritize their spending between the short term and the long term.” And he said to me, he said, “Well, that seems to me that would work at any income level.” And I said, “You’re right, Senator, including the United States government.”

Bob: [LAUGHS]

Ron Blue: Well if you look at that, those four, and if you add to that give generously. Those are the five money management principles that you use to manage your money. There really aren’t any other. I’ve got to live within my income. I’ve got to avoid debt. I’ve got to build some liquidity. I’ve got to save for the future. I’ve got to pay off my debt and pay off my taxes. And what I just recited was the five uses of money. So there’s heart, and then the habits are the habits of management, and the five uses of money is really a picture of your financial health and you can take your income. You know what your income is. You can look at your tax return, see what your charitable giving is. You can see what your taxes are. Most people know what they’re spending on consumer debt and what they’re saving. And so you have four out of the five uses of money, almost anybody can get that in just 30 minutes by looking at your tax return and doing a little bit of analysis of your finances. Well, when you put that into a pie chart and express it as percentages, it shows you your priorities. It’s a picture of your priorities. It’s a picture of your financial health. And that’s not very difficult. That’s why I say it’s simple. Heart determines behavior. Habits determines how you allocate your money according to your priorities and the pie chart pictures your priorities. And then when you manage your money with the habits to affect the priorities that you want, that gives you the hope factor. So that’s the four H’s – heart, health, habits, and hope. And that’s why I say it’s simple. It’s simple to see. Obviously, it’s difficult to work out and you work it out by faith. But that’s the four H’s, and you can use that as a guide and you can also use it as a communication tool. I’ve found this very effective to help people understand what their priorities are and then what they need to change in order to get to where they want to be.

Mary Jo: So simple in and of itself, but it all fits together. It’s definitely like a puzzle. Money, it’s such a tough topic to discuss in any relationship, certainly between spouses and even with our kids and especially even also with our parents because they’ve lived a long life and they have their same hopes and dreams and habits and all of that. But we have to understand what their wishes are. So a very important topic that can be hard to kind of break that ice sometimes. But the conversations, they’re so very important. Can you share some insight with our listeners that could help them navigate these challenging conversations?

Ron Blue: Yeah. Let’s just take the husband and wife conversation. I spoke at the American Association of Christian Counselors a number of weeks ago, and there were 7,000 counselors there. And when I asked the question, you know, how many of you deal with money in your counseling situations? Now, just about 100% of the hands go up, but money conversations and conflict with money are really symptomatic of something else, and that is symptomatic of the inability to communicate. Because if you take two people, put them in one checkbook, you’re bound to have some type of conflict. It can be constructive conflict or destructive conflict. This tool that we develop, you can take that simplifying booklet and look at just one page of the four H’s and now you can talk about that as a husband and wife and you can look at your priorities and agree on your priorities rather than argue about how you spend money or how you don’t spend money. So the conversation needs to be around priorities rather than the spending habits. You know, one of the funniest things that happened to me early in my career was I was counseling with an older couple and the man said, “Vida, the problem is you’re spending too much money.” And she didn’t even hesitate. She said, “Clarence, the problem is you’re under depositing.” That illustrates the kind of the conflict of two value systems. So a husband and wife’s conversations around priorities will help avoid some of the conflict that can come with money. Secondly, I was asked by a man not too long ago, he said, “How do you teach your children to manage money?” And the Lord gave me some wisdom and I said to him, without really thinking, I said, “Well, first of all, more is caught than taught.” So they’re going to do what you do. You’re teaching them just by the habits that you have. Secondly, you learn to manage money by managing money. The real issue today is children don’t manage money. They manage credit cards. And so somehow, parents have got to tie back to the spending that’s on those credit cards as a conversation. And the other thing is that parents have got to realize that mistakes and poor decisions and poor judgment is how you learn. So you can’t save them from the mistakes that you’re going to make. What you want to do is you want to teach them through the mistakes that they’re going to make. And mistakes are just a great opportunity to teach children. So those are just a couple of thoughts relative to husband and wife and parents and children.

Bob: Ron, you want to come over here and give me some counsel? I’m listening, you know, that the conversation should be around priorities, not the actual what you’re spending. I mean, and I wrote that quote down, “You learn to manage money by managing money, not credit cards.” I mean that’s good stuff there. You know, what else do we need? I mean, we got it right here, you know, more is caught than taught, you know? Okay. Parents.

Mary Jo: So as I sit here recording this and I’m looking around my office and my husband has only part of his baseball cap collection hanging on one of the walls in here and there’s probably 35 of them. So, that’s really more about priorities rather than spending.

Bob: By the way, Ron always pick on Mike. This is a big joke on our podcast. We pick on Mary Jo’s husband, Mike. We pick on him constantly. So, poor Mike. Now he’s the brunt of too many hats.

Ron Blue: Hey, you know what, though, there’s a point there and here’s the point. Well, you may not like the point, but the point I’m going to make is that when you take those four uses of money that I mentioned, you’re giving your taxes, your debt, and your savings. What’s left is what you’re spending on your lifestyle. Now, that’s not living expenses. Living expenses are only a part of the lifestyle expenses. So you’re really evidencing lifestyle with that particular piece of the pie. And that’s okay. God said he gives us richly all things to enjoy, including baseball caps. So.

Bob: You know, Ron, people will know that have been listening to our podcast for awhile, our loyal listeners, we mention this live, give, owe, grow. By the way, all of y’all that are listening, this comes from Ron, we got Ron on right now and he’s the one that that came up with this idea because it just simplifies everything and we’re always going to owe at least taxes. It just simplifies so much and something’s got to give. If you’re living on too much, your giving is going to be less or if you owe too much, you may not be able to grow. So, it’s just amazing how all four, you know, I break it down to four, I know owe has two of that. So, it’s basically five, but you came up with this live, give, owe, grow and it just really speaks to me and it speaks to people that sit across the desk from me every day when I mention this. We use that little chart that you have from Kingdom Advisors, and we give it to them. Live, give, owe, grow, and they go, “I’ve never thought about it that way.’

Ron Blue: Well. And that’s really true. And that’s why, again, I’m going to come back to the idea of simplifying because it’s not difficult. If we could convince people, especially pastors, that they know more about money than most wealth advisors because they know the scriptures, but they needed a framework to put those scriptures into. And that’s the reason that I developed that. And that’s been the biggest use of it has been to convince people that they already know more than what they think they know and what they don’t know is found in the Bible and what they do know is found in the Bible. So, that’s why it’s called simplifying. I’ve got to tell you, also, that when I first did the pie chart, I did it for Judy and I, and I just put it in front of her without explanation. It’s been probably five or six years ago now, and she looked at it and she said, “We’re doing okay, aren’t we?” And I said, “I’ve been telling you that for 35 years.” And she said, “Yeah, but it was all on a spreadsheet.” And she said, “I hate Excel.”

Bob: That’s me, Ron, everything’s on a spreadsheet. You know, I’ll show Rachael this spreadsheet and she’s like, man, I don’t relate to that. So this whole time we’ve been talking about this incredible workbook that, like you said, we sent that out to all of our clients at Christian Financial Advisors. And I want to just say, right in the middle of the podcast here, you’ve been hearing us talk about this. If you would like a copy of this workbook, we bought box loads of them when we bought them back when they first came out. We still have a lot of them. We give them out all the time. So if you’re listening to the podcast today and you want to get a copy of this workbook, give us a call at (830) 609-6986 or go to our website at ciswealth.com and send us an email through our website. Again, the phone number is (830) 609-6986 and we’ll get one of these out to you. So Ron, I want to change gears a little bit now. I’m holding in my hand “Master Your Money”, the book that you wrote and the updated version with your son that you did. “Master Your Money” is where it all started with me, with you Ron, because I taught the homebuilders Bible study through FamilyLife that was a version of this. This title has always been intriguing to me because it’s so straightforward. It says “Master Your Money”, and can you give our listeners a high level view of what this book is about and what it covers?

Ron Blue: Yeah. When I started in 1980, 1979 and 80, building a financial planning practice, I didn’t know what I didn’t know and there really wasn’t anything about financial planning at that point. And there certainly was nothing about biblical financial planning. And when I began to listen to Larry Burkett and read his material and know what I had discovered on both Wall Street and with my CPA firm, I began to put it all together. I had to put it together in such a way that it was a replicable. I began hiring people almost immediately when I started the business, and over the first five years, we developed together kind of the model of financial planning. And so the book, it was done at the suggestion of Chuck Swindoll. I was on his board and he wanted me to write. He said you need to write a book. And I said I don’t like to write. I had five unsolicited book contracts on my desk in 1985.

Bob: You say you don’t like to write, but now you have so many books. Wow.

Ron Blue: That’s right. I still don’t like to write. But “Master Your Money” was really a collection of what I was teaching my staff and my clients. And so it was an overview of biblical financial planning and it was intended that once it was released, nobody would ask me any questions anymore cause they were all in the book.

Bob: Didn’t happen.

Ron Blue: It didn’t happen, as you know. So, that was kind of the background of the book. I also followed the Campus Crusade model in that I considered it a work for hire. So, I never took any royalties off of that book. Probably over the first 15 books that I wrote I never took any royalties and they all went into the company. I didn’t even know how many books had been sold. But the book happened to hit at a time by God’s providence when nothing had been written on biblical finance for a number of years. So Focus On The Family featured it. Swindoll featured it. Billy Graham featured it in some of his work, and it got a tremendous amount of distribution. And I like to say what Henry Blackaby said, “I’ll write the book and God will distribute it.” And that’s what happened with “Master Your Money”.

Bob: Amen. And I remember hearing you talk about it so much on all those programs. You know, I was a big Focus On The Family fan. I listened to it every morning on the way to take my kids to school. And I heard so much about it.

Mary Jo: I’d like to talk a little bit about Kingdom Advisors. I know it has certainly changed the way I think about financial advice and planning as a Certified Financial Planner and how I handle money and advice conversations with my clients. I just wanted to ask you, what was your motivation behind starting Kingdom Advisors and where is it today and what’s your vision for it going in the next five to 10 years, Ron?

Ron Blue: The idea behind it, Larry Burkett had a small group of advisors that he would refer radio listeners to, and that group asked me if I would mentor them relative to how you integrated faith into your advice. And so I started doing that with a group of 16 and I found that what I had done was highly replicable. Tony Stinson and I started Kingdom Advisors in 2003. The idea was can we teach others to do what I had been doing for 25 years, and we found that yes, we could. The idea was that we would develop a lot more advisors than the, I don’t know how many I had at the time, maybe 30-40 advisors that worked for me, but we needed a lot more than that because there was a lot of Christians that needed biblical advice. So, God’s blessed us abundantly with 2,700 now. He gave us an opportunity to move our certification training into academia, which gave it academic rigor and credibility. And you ask, where do I see us going? Well, Tony and Rob around here, they say, our objective is 30,000 over the next several years. They don’t put a date on it. And I say, you know what? We need 100,000 right now.

Bob: This will be like a Promise Keepers event one of these days, Ron. You’re going to have to do it in a football stadium.

Ron Blue: Oh, wouldn’t that be a joyful thing?

Bob: Wouldn’t it be amazing? I will say, and Mary Jo, you know, I told you about it when you first came to that first Kingdom Advisors conference, you’re with financial advisors that are praising the Lord and raising their hands in worship and on fire for Jesus. It’s just mind blowing.

Ron Blue: I like that. A stadium event of Certified Kingdom Advisors. Wow.

Mary Jo: Wow. So there is a vision for you.

Ron Blue: There is a vision.

Mary Jo: So Ron, you also started the Ron Blue Institute in partnership with Indiana Wesleyan University a few years ago, and there is a lot of CFP type curriculums out there. I know that’s one of the things that’s talked a lot right now about trying to get the best program out there. How do you see that particular curriculum in relationship to what else is available? And if you would, please just tell our listeners why you did this and what the Institute’s vision and mission is all about.

Ron Blue: Well actually, this is another God thing. We just celebrated the 40 year anniversary of Ronald Blue Trust and I was able to say to those people, you know, none of this was my plan. I look back now and see God’s hand, but it was not my plan. I just kept moving forward and that’s the way it is with the Institute. I didn’t intend to start an Institute. I didn’t even know what an Institute was. In fact, I find out most people don’t. So the provost of Indiana Wesleyan heard me speak and invited me to campus and long story short, they offered to fund a $10 million endowment if I would license my intellectual property to them. And we had really three objectives. One was that we would teach every student in a Christian university a biblical worldview of money. 150,000 students a year graduate from Christian universities, and there’s no biblical finance curriculum in any of them. Well, I won’t say any, but hardly anything exists in that world and nothing that’s transferable. So, that was the number one objective. The second objective was that by moving the material into university, we gave biblical financial wisdom academic credibility. When you think about it, almost all credibility comes out of the universities and all of the professions come out of universities. So for God to open up that door to move biblical financial wisdom into the academic world was huge in terms of the credibility factor. The third thing was that I said I’ll do what you want me to do, but only if we make it available to all Christian universities. And so I’ve been spending my time, really the last five years, visiting with Christian universities and we’re working with about probably 30 universities now with those objectives. Teach every student and move it into your curriculum and then become a thought leader in that world. Now then, the other thing that has happened is when we move the certification into the academic world, we found out there’s almost nothing being taught by Christian universities as far as CFP curriculum.

Mary Jo: That is just awesome. We’re getting a lot of future leaders, but just getting that information out there to the young people, and they weren’t getting it anywhere else. So that’s hope for the future.

Bob: It is, Mary Jo. Yeah. As we grow, we know where we can hire. They’re coming from a biblical worldview versus a secular worldview of finance.

Ron Blue: I was in Houston a couple of months ago and I met with Dr. Sloan, the president of Houston Baptist University, and I had with me a friend and a fellow advisor, Randy Schrader from Houston. And we said to Dr. Sloan, we said, you know, you should be putting out dozens of Certified Financial Planners that also have the CKA designation into the Texas community. So that’s what we’re trying to do right now is to bill CFP/ CKA curriculum into the universities. Help them do that so that we can begin to put out students that have been trained in biblical finance.

Mary Jo: I was in the corporate world for a long time and boy, you did not have those kinds of conversations with clients. And I’m so thankful and blessed to be able to now integrate my faith with the advice that I’m so passionate about. So it’s been a game changer for me.

Bob: It’s really fun to watch, Mary Jo, too, because I know you were with the big firms, the real big firms, we’re not going to name names, but big ones, really big ones, including your husband. Mike was too, and it was fun to watch Mike last year when you came to the Kingdom Advisors event and to just see such a different perspective that so many financial planners for so many years have never seen. It’s fun to see. And Ron, thank you for that.

Ron Blue: It’s been my joy. I’ve had a very, very blessed life to be involved in kingdom work and now seeing the fruit of it and I’m 77 years old, so I’ve lived to see a lot of all of this come to fruition, but we’re just beginning – really just beginning.

Mary Jo: And you’re still a youngster.

Bob: Amen.

Ron Blue: Well, I can still walk.

Bob: We want to thank you for being on the podcast today. It has been a lot of fun having you on and hearing this wisdom from many years. You know, Ron, I listened to you so many times, like I said, on Focus On The Family and FamilyLife Today with Dennis Rainey. I was a big Larry Burkett fan. I got to admit, I’d be a little nervous if I had Dobson or Rainey call me today and one of them say hey, I want you to come be on my program. As a CPA that you are, before we end the program, I wanted to ask you this question. What was it like as a CPA, financial advisor being asked by Dobson, I mean, I know these are just men. I mean I understand that, but did you ever get nervous before you went on Focus On The Family?

Ron Blue: No, I really didn’t because this was never about me. It was always about what God had taught me. So my focus was always on, you know, let the words of my mouth and the meditation of my heart be acceptable. I did have an opportunity to know a lot of Christian leaders, and I learned a lot from them. You know, I learned vision from Bill Bright. I was on the Campus Crusade board for 25 years.

Bob: Oh wow. Bill was such an amazing, humble man.

Ron Blue: And visionary. It was not uncommon for me to get a telephone call from Bill and say, you know, we got this thing going someplace, and you know a lot of rich people. We need $1 million. Can you go find $1 million for us? He always said, you know, money follows ministry and we’ve been ministering for about 30 years, so where’s the money? He had such big vision, and it wasn’t the money. It was the consequences of spending the money. Chuck Colson, I got to know Chuck well, and Chuck said to me one time something that really changed the way I did a lot of things. He said do what only you can do. And when you think about building a business, there’s so much that you can do. But if you ask the question, is there somebody else that can do this, then you’ve got the opportunity to train somebody else. And Howie Hendricks was a mentor of mine and he said, God did not give you a spouse to frustrate you, but to complete you. I’ve never forgotten that.

Bob: All of these men you’ve mentioned, Ron, were such mentors to me, you know, Chuck Colson and Chuck Swindoll and Bill Bright and Dennis Rainey and Dr. Dobson, all those men. I would love to just hang out with them because I love how they’ve stood by biblical worldview all these years. And some of them have gone on to be with the Lord like Bill and Chuck, but man, I can’t wait to be in heaven with them.

Ron Blue: Well, we’ve seen some giants and there’s another set of giants that’s on the stage today.

Bob: That’s right.

Ron Blue: Dobson said to me one time, where are the future leaders? And I said, Jim, I don’t know, but I know that God knows.

Bob: That’s right.

Mary Jo: Thank you, Ron, again, for taking time out of your busy schedule to be the guest on Christian Financial Perspectives. I’d like to leave our listeners with a quote from our conversation guide that I just love – “Connecting your faith journey with your financial journey makes way for God to use your finances to mold your heart and life to treasure him more.” It’s so important to both Bob and I that our listeners know that we’re here for them to serve them with biblical financial advice week after week. And if you’d like a copy of the workbook Ron wrote and spoke of on today’s podcast called “Simplifying The Money Conversation”, please visit us on the web at ciswealth.com and we’ll get you a free copy.

Ron Blue: Well, thank you for what you’re doing. I sure appreciate both of you.

[CONCLUSION]

Mary Jo: You’ve been listening to Christian Financial Perspectives. Join us next week as we explore more about how to apply biblical wisdom to your financial situations.

Bob: To make sure you don’t miss any of our podcasts, you can subscribe to Christian Financial Perspectives on iTunes, Google Play, or Stitcher. To learn more about integrating your faith with your finances, visit out website at ciswealth.com or call 830-609-6986.

Mary Jo: That’s all for now until next week.

[DISCLOSURES]

Comments from today’s show are 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 hosts, Bob Barber and Mary Jo Lyons. Bob and Mary Jo do not provide tax advice and encourage you to seek guidance from a tax professional. Investment advisory services offered through Christian Investment Advisors Inc. DBA Christian Financial Advisors, a registered investment advisor.

Tune in to Part 2 of “20 Money Principles for 2020”.

More episodes >>

This episode ends our 2 part series on “20 Money Principles for 2020” to help you become more financially successful, with an emphasis on what the Bible says about financial issues. Many people don’t realize there are over 2200 scriptures about stewardship and how we handle money in the Bible. As Christians, we can rely on Biblical principles for guidelines to govern and manage our day to day lives.

Biblical guidelines not only help us to live a successful life, but they also illustrate many of the financial principles that are mentioned in this podcast episode (as well as previous episodes of Christian Financial Perspectives). So sit back and listen to numbers 11 through 20 of our money principles covered in part 2.

HOSTED BY: Bob Barber, CWS®, CKA® and Mary Jo Lyons, CFP®, CKA®

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

[INTRODUCTION]

Bob: Welcome to Christian Financial Perspectives, a podcast where we talk about ways to integrate your faith with your finances. This is Bob Barber.

Mary Jo: And I’m Mary Jo Lyons.

Bob: Are you ready to learn how to apply biblical wisdom to everyday financial decisions?

Mary Jo: Join us as we look at integrating your faith with your finances. If it’s your first time listening, welcome to our podcast, and if you’re a returning listener, welcome back.

[EPISODES]

Bob: Proverbs 8:32-35, “And so my children listen to me, for all who follow my ways or joyful. Listen to my instruction and be wise. Don’t ignore it. Joyful are those who listen to me, watching for me daily at my gates, waiting for me outside my home. For whoever finds me finds life and receives favor from the Lord.” What a beautiful scripture.

Mary Jo: It is. You know, who doesn’t want favor?

Bob: I do. I definitely do. Hey, especially when I go to the HEB parking lot where it’s so full.

Mary Jo: You need favor there.

Bob: You do here in New Braunfels cause it’s so busy, you know.

Mary Jo: You’d think here in Rockport that it’d be different, but it’s not. All the winter Texans are here, and oh, you need favor.

Bob: I was down there the other day and I was noticing that. I was like, where are all these people coming from? Like you said, they all come from up north to get away from that cold.

Mary Jo: Well we are happy to have them, but it changes the dynamic a little bit.

Bob: Yes.

Mary Jo: Well in our last episode of Christian Financial Perspectives, we began our two part series on “20 Money Principles For 2020”. Last time, we explored our top 10 money principles and today we’re going to be discussing part two where we explore money principles number 11 through 20. So, if your financial life is in chaos and you’re looking at how to get moving in a more positive direction, after all it is a new year, stay tuned and get ready to start the year off with a plan that includes some guiding principles on how to establish a more solid financial footing.

Bob: Now if you think 20 is a lot, you just wait until 2030. We’ll be having 30 principles for 2030,so we’re giving you a break right now. If you wait, if you procrastinate, it’s going to be more principles every year, right, Mary Jo?

Mary Jo: Well that’s true. No time like the present.

Bob: So, like we said, today we’re going to start off with number 11 in our list of 20, so if you didn’t get a chance to hear last week’s podcast where we shared the first 10 money principles for 2020, I invite you to go back and listen to that podcast, but after you listened to today’s podcast. So, here is number 11 in our list of the top “20 Money Principles For 2020”. Prioritize savings. Yes, this means to pay yourself first, not last. If you wait to do it and if you say, well, I want to save after I pay everybody else, there’s not gonna be anything left. I’ll tell you. I’ve seen it over and over, haven’t you, Mary Jo?

Mary Jo: Absolutely. That’s why those 401k contributions come out before you get your check.

Bob: And if you don’t have a 401k, then set up a systematic monthly contribution where it just automatically comes out of your account, and you know, if you’re not doing anything, start with something. Even if it’s just $25 a month, start there and then raise it to $50 and before you know it, you’ll be up to where you’re saving $300 or $400 or $500 a month, maybe even a thousand a month. You just never know. But I like what you’ve said, Mary Jo, over our many podcasts that we’ve done. You can’t invest your way to a solid retirement. You’ve got to save your way to it, and it takes money to make money. So you know, don’t think that you’re going to go invest in some pie in the sky. I mean, if it sounds too good to be true, it is too good to be true, but you know, it comes back to that scriptural principle. You’ve heard us say here on Christian Financial Perspectives many times is Proverbs 13:11, “He who gathers money little by little makes it grow.” And that really comes under that “prioritize savings” number 11.

Mary Jo: That takes us to number 12, learn the money game. You know, every game has rules and your money really, it’s no different. And wealthy people, they’re not necessarily any smarter. They’ve just simply learned how money works. As Bob and I were talking, and it’s kind of like a recipe. There are certain ingredients that go in and go in sometimes in a certain order, and they’re each necessary to make sure that the dish comes out like you want it to, that it’s edible and you’re going to enjoy it.

Bob: They’re not, like we were saying, it’s not that their intelligence level is any higher, they just know how to play this game.

Mary Jo: Well that’s true. So after a while, the steps to making that dish, they become muscle memory. You begin to know by instinct what’s going to work and what doesn’t. And the money game, it’s no different. So you’ve maybe heard that money plays by its own set of rules. And if you don’t know what the rules are, you’re going to lose at the money game. So educate yourself on some basic principles and how to take control of your financial life. And that’s what today’s podcast is all about. We’re going to try to help you do that.

Bob: Really we’re talking about the money game every week, aren’t we?

Mary Jo: Well, that’s true. And so you know, the money game, it’s greatly influenced by our mindsets, our behaviors, and most importantly, our emotional reactions. So if you’re playing to survive, you may just survive. But if you are playing to win, you’ll likely create a life where you control your money and it doesn’t control you. And I know, I’ve been on the other side. I like being in control. It’s like any other game or sport. The best players, they also work closely with the trusted coach. We’re in football season, you know, every team has a coach. It doesn’t matter what sport you’re playing, you’re typically working with the coach, even in golf. And so that’s where working with a trusted financial advisor comes in. We’re really nothing more than a coach, and we’re certainly here to help you learn the money game. Isn’t that right, Bob?

Bob: I would say that perfectly. And it is so important that those that have a coach do so much better than those that don’t. And as we’re looking for a financial advisor, you want to make sure that you look for one that’s a fiduciary based financial advisor as well. You know, we’ve said that a lot on the podcast. Be careful of a financial advisor that’s working on commissions. Look for one where you’re the one paying them, not a big insurance company or a large financial company to push a product.

Mary Jo: Because you are the one that’s still paying them, but it’s coming out of what you’re paying for that product. So good point, Bob. And so finally there is actually a principle and this is just one of the tools in the money game and it’s called the rule of 72. To determine how long it’s going to take for your money to double, you need to divide the interest rate into 72. So for example, if your account is earning 6% interest or 6% growth, it’ll double in 12 years. You take 72 divided by six, that equals 12. And if you’re earning a 10%, it’s going to take 7.2 years for your money to double. So that’s just one example. So learn the rules and play the game so that it’s to your advantage.

Bob: I’ve got to throw one in here. So if you’re making 1% is going to take 72 years for it to double.

Mary Jo: Well, it’s true. Let’s hope that’s not the case.

Bob: Well, you know what? If you look at what your money’s doing if it’s in the bank, all in the bank.

Mary Jo: That’s about 1%.

Bob: That’s about what you’re making. And we call that going broke safely because you’re not even keeping up with inflation. So number 13 of our 20 principles is explore your employer benefits. Really look at what’s available to you that your employer can give you or that they’re offering, but you need to investigate if those benefits, like if you have life insurance benefits that they’re giving you, is it really at a good price? Most of the time, that’s an annual renewable term, so it may not be the best option. Also, usually if it’s with your employer, that’s a policy that you can’t take with you. So, look at the entire market for those types of benefits, and buy something that you can take with you because people leave their employers many times today after four or five years for a better job with another employer. So you know, you may be able to get better coverage for less money by going outside of your employer versus taking the benefits they have inside of it. Am I making sense there, Mary Jo?

Mary Jo: Absolutely, Bob. And you know, another aspect of that to consider is, you know, when you’re in your 20s and 30s you’re generally in pretty good health and it’s easy to get caught up in just accepting that life insurance that the employer offers. But let’s just say you’re 45 and you get laid off and then all of a sudden you have to get your own insurance, but you’ve got a medical condition. So you want to go ahead and get permanent portable life insurance while you’re young and healthy that will last your lifetime.

Bob: Yeah, those life insurance companies are funny about that, aren’t they? If you have any health conditions, they don’t want to give you life insurance at that point. So know what you’re paying for, all the different benefits, look at your check stub, and look at every single deduction that’s coming out of it. You may be surprised. Take a detailed look at that and I think that’s something that’s a good, really a good option that one of the 2020s that we’re looking at right now, because I think many people forget to do this, Mary Jo.

Mary Jo: Well, I know that’s true Bob, because every financial plan that I do, I’m always having to kind of add that into the the monthly expenses. People don’t even think about that, but they are paying for those monthly expenses and it’s coming out of their check. So it is part of the detailed accounting of what you’re spending that we go through when completing a plan. So I know it’s definitely something people don’t think about. So the next one of our principles is having a family money huddle. And I think this one is so important. You want to hold a regular financial town hall with your household and this is a one off meeting that really is designed to focus on your family’s money and your goals and objectives for that money. So there’s this popular commercial and I’m sure most everybody has seen it about what’s in your wallet. And I’d like to kind of rephrase that and do a turn on words, I would say who’s in your wallet?

Bob: Yeah, lots of people. Interesting how you start adding Netflix and you start adding all those different subscriptions that we do today. There’s a lot of them.

Mary Jo: So that is what’s in your wallet. But I’m thinking who are those people? Your wife, your kids, your church, who are those people?

Bob: And those are good if your church, I mean we believe strongly in tithing.

Mary Jo: Absolutely. So who are you responsible for financially? So I mentioned your wife or your spouse and your kids, but you know what about your parents? You might also have a responsibility there. So these people should all be included in the family money huddles. And while you’re doing that, what’s important is you want to set goals together. You want to make a plan on how you’re going to get to those goals, and you want to establish checkpoints. How often are you going to revisit this? When are you going to see how you’re doing according to those goals and your plan to get there? And then if you need to redirect your efforts, you can do so at that time.

Bob: I’ve something else I’m going to say in here while I’m thinking about this, how often are you going to do this and have that regular town hall meeting, like you mentioned. You don’t want to bring up finances just out of the blue. You want to set a time for it.

Mary Jo: So everybody gets into that mindset.

Bob: Right. Exactly. So it’s like we’re going to be talking about this in five days, and everybody’s starting to gear up and realize we’re going to be talking about this in five days. Don’t just bring it up and say, we need to talk about this right now without any warning at all. I know in my household that doesn’t go too well.

Mary Jo: You’ve learned from experience. Yes, that is true. Those defenses and those walls go up faster than anything. As part of these huddles, you want to make sure that it’s safe and that people can express themselves and say what’s on their mind without interruption, without judgment, and without fear. Otherwise, your communication is really just going to break down. Also, agree on spending limits. Give everyone a chance to weigh in, share their opinions, their perspectives, and get buy in and come to an agreement. That is so important. There is no point in having a money huddle if you don’t come out of there with everybody agreeing that they’re going to work towards that goal. You want everyone on the same page so that everyone is sharing the goal, and they’re committed to being successful.

Bob: And you want to be careful of letting emotions get too high because emotions can definitely play into a family money huddle, when you put the money in there.

Mary Jo: If that happens, the best thing to do is pause, take a break, take 30 minutes, come back together and if still emotions are running high, then stop and come back another time, another day you have everybody time to kind of think and reflect on what’s been said and come back in a more constructive communication frame of mind.

Bob: I would say this too. Start off in prayer, ask the Holy Spirit to lead and guide you.

Mary Jo: Oh, that’s a great one, Bob,.

Bob: The enemy does not want families in harmony. So put the armor of God around that family meeting and invite him to be there with you in that all your words would be, you know, those that are uplifting, not tearing down. So, number 15 of our 20 is always be learning. Commit to learning. There’s a great scripture right at the beginning of Psalms in Psalms 1:1, “The joys of those who do not follow the advice of the wicked or stand around with sinners or join in with mockers, but they delight in the law of the Lord, meditating on it day and night.” You know, this is talking about learning and that we are constantly meditating on it and we’re in a constant point of learning in our lives. You know, we’ve got some great principles that come with this. Seek wise counsel. If you don’t understand some of these financial topics, seek wise counsel. Also, invest in yourself by learning the basics of financial literacy, which is defined as the ability to use knowledge and skills to manage financial resources effectively for a lifetime of financial wellbeing. I’m going to say that again because those are not my words. I actually found that on the internet last night. The ability to use knowledge and skills to manage financial resources effectively for a lifetime of financial wellbeing. That’s investing in yourself. You know, and if you don’t know the answers, ask them. Ask somebody. Look it up.

Mary Jo: There are no dumb questions.

Bob: There you go.

Mary Jo: And that is what we’re here for.

Bob: That’s exactly right. And research today, we’ve got the full library right in front of us. We have a computer at home or our iPhone or smartphone. It’s amazing today. We have all this information that we can go look up when we used to have to go to a library to do that. Speaking of that, there’s just so many books and blogs, podcasts like ours, to help you learn about creating a good, solid financial future. So take advantage of these resources, you know, subscribe to these podcasts. Like ours is free, and there’s so many others. I’ve become a huge podcast listener, and I listen to it while I’m in the car versus stuff that makes your mind go mushy.

Mary Jo: You started off with there are plenty of books, and you know you started this one off with a scripture about one particular book and about seeking wise counsel. So what’s the book that’s been around the longest that has the most wisdom when it comes to money?

Bob: As we know, that’s the Bible and I’ll tell you the book of Proverbs, you just follow the book of Proverbs for your financial life and you’ll be successful. Take advantage of coaching, mentorship programs that are out there, and continuing education. There’s a lot of it and also want to mention we have a couple podcasts that go with this particular one about learning. It’s our podcast episode number 22 that has to do with the top 15 questions that people ask, and our 53rd podcast is another one you can go to where we cover a lot of financial questions.

Mary Jo: All right. So moving on, we’re at number 16 in our list of “20 Money Principles For 2020”. You want to understand and manage risk. So work with your advisor to understand your risk tolerance and how much risk you are comfortable with and how much risk is prudent. So like most things in life, just because you can doesn’t mean you should. Understand how your investments line up with your risk tolerance, or maybe they don’t and you don’t know it. So we have a way of being able to put a microscope over your portfolio and assess the risk on it and assign it a number. And then we also will have you fill out a questionnaire and assign you a number and those ought to match or be close anyway. So if you’re a little concerned about that, give us a call and we can see what your situation is.

Bob: We do all this with technology. So as an example, an aggressive growth portfolio will have a number and think of it like a speed limit sign – a number like 75 or 80, but maybe if you take this risk assessment, this technology risk assessment, you come in at 45. Well, you’re way more conservative than that portfolio that’s an 85, so you may need a portfolio that fits more like a 45, which is more like a moderate portfolio. But then on the same side, Mary Jo, I’ve seen people where we have a moderate portfolio and that’s at a 45 or 50, and they’ll take the risk test and they’ll come in at a 75 or 80, so they can stand more risk.

Mary Jo: Well, and you kind of want to look at that and when the market’s rolling, like we’ve been seeing recently, and things are great and everything’s going up, you know, a rising tide lifts all boats, that feels great. But where this becomes so important is when that tide is going down and things are beginning to get rough and that’s when you want to make sure you’re appropriately invested according to your risk.

Bob: Yeah. And that program that we have, it tells you you’ve got this much money. This is how much you could be down in dollars. And I notice people’s eyes get bigger when they see it in dollars versus a percentage.

Mary Jo: That was our podcast episode number 42 and that was on riskalyze. So if you’re curious about that, when you have a moment after listening to today’s, you might want to go look at that one. Then you also want to avoid the typical stereotypes. If you’re young, you can afford to be more aggressive. You have time. Well, maybe that doesn’t fit with you. And men are more aggressive than women, they say. And sometimes that’s true, but not always. And a lot of times, people say you should have an age weighted portfolio. That’s the way to go. That the old rule of thumb used to be that you should subtract your age from a hundred and that’s the percentage of your portfolio that should be in stocks. So if you’re 70 and you subtract 30 you should have 30% in stocks. And you know, that may or may not be appropriate for you.

Bob: We’re all individuals.

Mary Jo: Absolutely.

Bob: It has to be for you, not for what somebody else says you should do.

Mary Jo: If you’re 70 and it’s saying you should have 30% of your portfolio in stocks, well what if you have more money than you’re ever gonna need, so you can afford to take more risk? You’re kind of shortchanging the next generation if you’re not investing as a fiduciary and doing right by what the resources are that you have. The more you grow that, the more you’ll have to give, and give to the church and give to kingdom purposes. And at the same time, you know, you just want to make sure that it’s just really appropriate for you.

Bob: So we’re really getting up on our list now. We’re all the way at number 17. Like we said at the beginning, there’s 20 principles for 2020. You realize next year there’s going to be 21 and then next year it’s going to be 22.

Mary Jo: We might come up with a new strategy by then, Bob.

Bob: So number 17 is embrace diversification. I’ve got a great scripture here. You’ve heard us say it many times on Christian Financial Perspectives. Ecclesiastes 11:2, “Invest in seven ventures, yes in eight, because you do not know what disaster may come upon the land.” Yes. This means everything should not be in real estate or all in your business or all in your company stock or all in the stock market at that or all in bonds or all in your bank. But think about seven or eight when this says invest in seven or eight. You know, this was Solomon that wrote this, one of the wealthiest men that ever lived in the world, if not the wealthiest, of all men, and he himself believed in diversification. I see this so often that this scripture is not obeyed when it comes to diversification, Mary Jo. Remember, we talked about my own dad, who had everything in real estate, and when that market fell. Right now, real estate has been so great in the Central Texas region. Everybody is just thinking, there’s no way it can go down. And I go, Well, I remember Phoenix. I remember Orlando. I remember Seattle.

Mary Jo: I remember Austin in the early 90’s, so it can go down. Bob, you mentioned those seven or eight types of investments. You know, one of the things that’s important to keep in mind when it comes to how many funds or how many investments you should have in a portfolio is the more money you have to work with, there’s more layers of diversification that you can add, but nobody needs to have an overly complex portfolio either. So you can get very adequately diversified with no more than seven or eight investment funds. It doesn’t need to be much more complex than that.

Bob: And while you’re talking, it reminds me too, that diversification doesn’t mean having five different advisors that are all putting you in large cap growth funds. That’s not diversification. But still there’s that belief, well I need to diversify by advisors because they’re putting me in different things. Not necessarily. They could all be having you in the same portfolio, so that’s not diversified. And we had such a great podcast. I remember doing one on that. That was our 28th podcast. So while you’re listing today, you know, after you’re done, if you want to go back and listen to podcast number 28, we did one completely on diversification.

Mary Jo: And our next one, this one is very timely. Play it safe. Identity theft is real. And before I get into my thoughts on that, something brand new just hit me. I was reading the news this morning and there was an article, a senior citizen that answered the phone and it was an unknown number and the person on the other end said that he was calling from customer service. Can you hear me? And the man before he responded, something clicked in his mind. And he remembered that, “Oh, I read something about this. I’m not supposed to say yes. They’re just trying to capture me to say yes on a recorded line.” And so he said, “I can hear you.” And the man said, “No, I just need a yes or no. Can you hear me?” And he goes, “I can hear you.” And he just kept saying, I can hear you. And he never gave him the yes or no. And then all of a sudden click, the guy on the other end hung up. So this is right now, today, a real phone threat. So if your phone rings and it’s somebody that’s unknown and they’re asking you a yes or no question, do not respond because they want you to say yes on a recorded line, then they can have proof that that you’ve said yes to whatever it is they want to sign you up for. And I’m guessing that’s not in your best interest.

Bob: Oh. The tricks they play.

Mary Jo: They do. And to the point where several states have now passed privacy legislation to hold violators accountable and help educate internet users on how to better protect their privacy. So a lot is going on around this right now, and it’s so important. You want to learn how to avoid these threats that exist regarding identity theft, data privacy, and cyber security.

Mary Jo: So, we had just a few best practices for you, but I know there is much more on this that you probably want to look into. These security breaches generally involve someone getting their hands on your personal data, especially your usernames and passwords. So make sure you’re using different passwords on all your different devices and programs that you log into and that you have those recorded somewhere very secure. You want to guard your data ,and don’t overshare on social media. People are looking at that. They’re tracking your comings and goings. So many teenagers put information on there. Well, I’m out with my family. I’m on vacation in Oklahoma. Hello, thief! No one’s at home right now. So go ahead and come rob us. So you just want to be really careful about what you’re saying.

Bob: And they’re tracking, also, we’re celebrating our birthday today or we’re celebrating our anniversary. They’re tracking that too because those are important dates that they can use for identity theft, so be careful of that.

Mary Jo: Absolutely. Especially weddings. They know that the entire family is off at the wedding reception or the wedding ceremony, but there’s all those wedding gifts at home. If you’re going to do that, have a family member or a neighbor come stay in the house while the family is all those events around a celebration like that. When it comes to electronics and internet communication, never click on a link or open an email from an unknown source. These are some of the latest scams, and you want to be aware of them. They are sending viruses through your email, and that’s how your computer can become infected very quickly. You also need to watch out for the data breaches and account hacks that are now known as credential stuffing in 2020. So, credential cracking happens when a hacker targets you and your company specifically. But credential stuffing happens when your username and password are stolen in an unrelated data breach, and then those credentials are cross matched to other accounts. So they get your information on one account, and then they go to all these other accounts and just try to use the same login and passwords thinking you’re using a common password everywhere. Then all of a sudden, they’ve got all access to everything that you have. If you’re using multiple accounts and the same password, you want to avoid doing it. The best offense is to keep your passwords unique for each one of your accounts.

Bob: And don’t keep them somewhere where somebody can hack into them and get them all at one place.

Mary Jo: Absolutely.

Bob: I mean, sometimes I think, okay, these hackers, they’re overseas or in some country. So, I have a tendency and I’ve had people say, well, don’t keep your passwords, don’t write down your passwords anywhere. Put them online. I’m like, well, wait a second. Is that guy from foreign country, are they going to come into my house where I have these passwords hidden and find it? Most likely not. So, I’m not such a disbeliever in having those written down in a very, very secure place, locked up in your home that are not online where you have those passwords. How do you feel about that?

Mary Jo: Well, you know, my memory recall isn’t what it was. I’ll admit it.

Bob: So, what you’re saying is you’ll put it somewhere, and forget where you put it.

Mary Jo: It’s not under my keyboard, but what I do when I’m recording the passwords is I don’t put the actual password. I just put a note to myself. It’s code, and it’s an abbreviation or it’s a hint or it’s, you know, something that only will be meaningful to me to remind me what that password was. So, if somebody were to get my list that I have hidden in a secure spot, they wouldn’t be able to figure out the password.

Bob: That’s a great idea. Great idea. I’m glad you shared that with us. All right, so we’re down to our last two. So we’re at number 19 – protect what you have. That means basically maintaining adequate insurance coverage on everything you can think of. You know, I just bought me a new tractor for my new place. You know how proud of that I was.

Mary Jo: Boys and their toys, and the older they get the bigger those toys

Bob: Yeah but I’ve had some fishing boats in the past. I’m thinking this tractor is going to be more efficient than the fishing boat. But you know the first thing I did was, right as they delivered it is, I went and called my insurance agent, took pictures, and sent them everything so that I would have coverage on it. So make sure you have got coverage on everything, especially your life and your income. Of course, good health insurance, all your autos and home, and make sure that coverage is great. We had a whole podcast on that. It was our 60th podcast, number 60 “Are You Protected?” Because so many people, they just buy insurance, like for their auto, based on price. And that’s not the way to buy it. You need to buy it based on what your coverage is.

Mary Jo: Absolutely. So our last one is to be content. This may be the most important one. In Hebrews 13:5, “Don’t love money. Be satisfied with what you have, for God has said, ‘I will never fail you. I will never abandon you.'” So, on that note of being satisfied with what you have, look at what you have. Use it up. Wear it out. Make do with it or do without. Not too long ago, my nephews were here and we spent a lot of time with some millennials. My sister was telling me that she had given my nephew a new shirt and he goes, “Mom, what do I need with this? I already have four shirts.” You know? So they had this mindset, less is more. And I think there’s something to that. Don’t be so quick to trade in that car until it’s used up. That way, we’re being much more financially responsible, but we’re not accumulating all this stuff and this baggage that we’re going to have to deal with later in life. So there you have it – our “20 Money Principles For 2020”.

Bob: And we’re here to help you with all these. So if you need any help, feel free to call either one of us at (830) 609-6986. Again, that’s (830) 609-6986 or visit us on the web at ciswealth.com.

[CONCLUSION]

Mary Jo: You’ve been listening to Christian Financial Perspectives. Join us as we explore more about how to apply biblical wisdom to your financial situations.

Bob: To make sure you don’t miss any of our podcasts, you can subscribe to Christian Financial Perspectives on iTunes, Google Play, or Stitcher. To learn more about integrating your faith with your finances, visit out website at ciswealth.com or call 830-609-6986.

Mary Jo: That’s all for now until next week.

[DISCLOSURES]

Comments from today’s show are 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 hosts, Bob Barber and Mary Jo Lyons. Bob and Mary Jo do not provide tax advice and encourage you to seek guidance from a tax professional. Investment advisory services offered through Christian Investment Advisors Inc. DBA Christian Financial Advisors, a registered investment advisor.

Part 1 of our 2 part series on “20 Money Principles for 2020”.

More episodes >>

This episode begins part 1 of our 2 part series on “20 Money Principles for 2020” to help you become more financially successful, with an emphasis on what the Bible says about financial issues. Many people don’t realize there are over 2200 scriptures about stewardship and how we handle money in the Bible. As Christians, we can rely on Biblical principles for guidelines to govern and manage our day to day lives.

Biblical guidelines not only help us to live a successful life, but they also illustrate many of the financial principles that are mentioned in this podcast episode (as well as previous episodes of Christian Financial Perspectives). So sit back and listen to the first 10 of our 20 money principles covered in part 1.

HOSTED BY: Bob Barber, CWS®, CKA® and Mary Jo Lyons, CFP®, CKA®

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

[INTRODUCTION]

Bob: Welcome to Christian Financial Perspectives, a weekly podcast where we talk about ways to integrate your faith with your finances. This is Bob Barber.

Mary Jo: And I’m Mary Jo Lyons.

Bob: Are you ready to learn how to apply biblical wisdom to everyday financial decisions?

Mary Jo: Join us as we look at integrating your faith with your finances. If it’s your first time listening, welcome to our podcast, and if you’re a returning listener, welcome back.

[EPISODE]

Bob: So today’s passage is from Proverbs 8:17-21, but before I read it, I want you to think of the I, me, and why in this passage when it refers to that, and put God and wisdom in its place of that. So as an example, Proverbs 8:17-21 says, “I love those who love me. Wisdom loves those who love wisdom, and those who seek me find me. And those who seek wisdom find wisdom.” So you see. So think about that as I’m going through the scripture. So we’ll start this over. Proverbs 8:17-21, “I love those who love me and those who seek me find me. With me are riches and honor, enduring wealth and prosperity. My fruit is better than fine gold. What I yield surpasses choice silver. I walk in the way of righteousness along the paths of justice, bestowing a rich inheritance on those who love me and making their treasures full.

Mary Jo: As Christians, we tend to rely on biblical principles for guidelines to govern and manage our day to day lives. And if relying on biblical principles for navigating our daily lives provides us comfort, doesn’t it make sense to use similar principles to help us manage our financial lives would also make us feel comfortable?

Bob: Yes, it does.

Mary Jo: Biblical guidelines helps us to live a successful life, and they also illustrate many of the financial principles we’re going to talk about in today’s podcast, as well as those we’ve talked about on previous episodes of Christian Financial Perspectives.

Bob: Yeah. You know when it comes to biblical guidelines, many people don’t realize that there’s over 2,200 scriptures about stewardship and how we handle money that’s written in the Bible. I love a quote from Ron Blue that we just recently had on our podcast who’s written over 17 books on money management. He says, “All good money management principles have their roots in biblical wisdom.” I want to say that one more time. “All Good money management principles have their roots in biblical wisdom.” And we like to say here on Christian Financial Perspectives that financially successful people use wise money principles that they follow consistently. And we’re going to define today and we’re going to go into these 20 money principles, but let’s look at what we consider financially successful. When we think about that on Christian Financial Perspectives, we’re not talking about just what your net worth is when it comes to being financially successful. But what we look at financial success is defined as being content with what you have, living within your means, having adequate reserves set aside to cover those unexpected things that happen in life, and understanding and applying the joy of giving. You know, you don’t have to be a billionaire or even a multimillionaire to be financially content. I love from the book of Philippians what Paul says, he said this in the fourth chapter of the 12th verse. It’s a very well known verse. “I Know what it is to be in need and I know what it is to have plenty.” So you think about Paul, he had both sides. He’s been poor and he’s been wealthy. And he goes on to say, “I’ve learned the secret of being content in any and every situation, whether well fed or hungry or living in plenty or in want.” So he knows that contentment is not going to be found in just a big, huge net worth, but it’s found in Christ.

Mary Jo: Absolutely, Bob. That’s well said and it is all about contentment. And you know, if you don’t govern and manage your money, it will soon govern and manage you. If you’ve been listening to our podcast for a while, you’ve heard me kind of talk about my financial past and I’ve been there. I’ve been where it manages you and it’s not fun. Being in control of your money is so much better. And so do you have a plan and a strategy for making financial decisions? If not, why not? We’re here to help you on today’s podcast to begin establishing those financial principles to live by. And by doing so, you’re taking control of your financial life. And when you do this, you can easily take more control of other areas of your life as well. So as we start the new year, we thought now would be a good time to review some basic financial principles that we think apply to everyone no matter how much you have in the way of financial resources.

Bob: This is part 1 of “20 Money Principles for 2020”, and we’re going to go over the first 10 today to help you become financially successful. And our second part, we’ll go into the last 10 financial principles. We just thought that sharing 20 and one day would be too much. So the first thing is to organize your finances. This means knowing what you have, where it is, and what it’s doing for you. Then, create a roadmap to the financial future that you desire. Because, you think about it, without a roadmap – and here is a financial roadmap – you’re probably going to veer off course and likely become lost and you know that can be very costly. Next, look at your paycheck and your gross pay is and your take home pay is after all the deductions that are taken from it, and get an understanding of that. I believe, Mary Jo, most people don’t really realize what they make.

Mary Jo: Oh, I don’t think they’ve seen a paycheck in a long time. I don’t think a lot of people understand who FICA is. I think I’ve said that before.

Bob: FICA’s there to take 15% of what you earn.

Mary Jo: Well, that’s today. FICA’s gonna want more soon.

Bob: Exactly. And that’s for social security and Medicare and Medicaid. But that’s what we refer to when we say FICA. After that, figure out which income tax bracket you’re in. You know, this is so important and where the next one starts, so you can see where your income is and what kind of wise decisions do you need to make to possibly keep you in that lower tax bracket by putting more into that retirement plan at work to help keep those taxes lower and save for the future. And last, organize those finances. Be a good steward by developing a good spending plan and keeping good records and knowing where all that money is going. So that’s the first thing of our 2020.

Mary Jo: The next principle is avoid the use of debt. In Proverbs 22:7 it says, “The rich rule over the poor and the borrower is the servant to the lender.” So spend less than you make, but know what you spend. When you spend less than you make, you actually can start saving. And what you save can become real wealth over time. This is actually how wealth is created. It’s created by saving and continuing to save and continuing to save. That wealth and that savings accumulates over time, and pretty soon you’ve got a nice nest egg.

Bob: I was thinking about that, Mary Jo. Proverbs 13:11, remember that? “Money gathers little by little, he who gathers little by little makes it grow.” So that’s right in there with that scriptural principle.

Mary Jo: That’s the number one key. So this is the foundation of a solid financial future. And you know, one of the things I hear so much about today is college debt. We’re hearing about student loan programs for paying those off. So, if you’re in high school or you’re a parent of a high schooler and you’re thinking about college, find a way to attend college without relying on student debt. We don’t want to see these kids crippled as soon as they get out in their professional life. Go slowly, take a few classes at a time so that you can pay it through cashflow. Consider a junior college. Hey, get a scholarship. Crack those books.

Bob: Work your way through college. You might appreciate it more.

Mary Jo: And work your way through college. Absolutely. I mean I know college costs have risen so high, and they’re much higher than they were in our day, but I worked two and three jobs my entire college career, and I’m still here to talk about it.

Bob: So the third thing of the 20 is establish and maintain an emergency fund. I love Proverbs 6:6-8. It says, “Go to the ant” and it says “you sluggard.” And I always thought that was just interesting how they put that in there. “Consider its ways and be wise, it has no commander, no overseer or ruler yet it stores his provisions in summer and gathers his food at harvest.” You know, when I was a kid, I loved to watch ants, Mary Jo, and you could put some cracker crumbs down and they’d take that from one area all the way to another area.

Mary Jo: You know, Bob, we have these cutter ants and they’re right here on the side of the house of our next door neighbor. And the other day, we were just standing out there and they’re slowly dismantling this plant and you’ve got millions of them and they’re carrying leaf by leaf over to their ant mound, which is in a neighbor’s yard clear across behind us. But there were millions of these ants, each carrying a leaf away to their mound. It was incredible.

Bob: They’re storing their provisions, aren’t they? I mean, we can learn something from those ants. And you know, a good rule to establish, at a minimum, is three months of living expenses, but as high as 1-2 years if you’re over 60 before investing anything in the stock market. So, this way you’re covered in case of a major illness or a loss of a job or whatever else may come along like a major natural disaster, which y’all definitely know about down there in Rockport when you had Hurricane Harvey.

Mary Jo: That’s the number one rule in my mind – establishing and maintaining an emergency fund. Key principle.

Bob: I’m thinking about how the condos that both you and I owned, and we were lucky to get out from under them, but some of those people are still having to make payments on those condos and they’re still not remodeled yet. So I’m just thinking, boy, if you didn’t have an emergency fund, you’d be in trouble.

Mary Jo: And if you were relying on that condo for the rental income, there are many, many of them that still haven’t been rebuilt two years later. Yeah. Having an emergency fund should be everyone’s first obligation there. Next on our list for money principles for 2020 is number 4, setting financial goals. Do you have a map of what you want your financial future to look like? If not, there’s no time like the present to create one. It doesn’t really matter how old you are. If you’re young and just starting out, think about what you want your financial future to look like. If you’re more mature and not quite where you want to be, take time to sit down and think about what you want to accomplish, what you want your future to look like, and what needs to change. Agree on what your financial goals are for the following year, the next 5 years, the next 10 years, and over the course of your lifetime. Once again, if you don’t master your financial future, it will master you. If you are a newlywed or considering marriage or if you are newly engaged, set time aside for a heart to heart conversation about what you want your financial future to look like and what steps you are willing to take to get there. A good resource was our previous podcast, episode 15, “Setting Financial Goals”. Be sure you take a look at that one.

Bob: It sure would. And I want to say something before I go to this next one, number five. It’s also about newlyweds or considering marriage. It’s best to talk about these things before you get married, then after. We’re just saying this from wisdom, so talk about those financial things like you just said. Number five is know the real cost of things. Okay, I’m going to say that again. Know the real cost of things. Understand how quickly a debt balance can grow when you’re only paying the minimum. If you finance purchases, you know, understand compounding. It can either work in your favor or it can work in the lender’s favor. Be cautious of anything that sounds too good to be true. The bottom line is to apply wisdom and math when hearing sales pitches that try to say there are no strings attached. I had to put the word math in there.

Mary Jo: And you know, Bob, there are always strings. Nothing is a free lunch.

Bob: Unfortunately, we find that out. Now, grace and a relationship with Christ is free, so that is the one thing that we know is free.

Mary Jo: All right, I’ll give you that. I’ll definitely give you that. So the next principle, minimize taxes. Keep more of what you make. And as we consistently do, we refer to scripture. There’s a good one that addresses this and it’s from Mark 12:14-17 Taxes for Caesar, “Teacher, they said. We know how honest you are. You are impartial and don’t play favorites. You teach the way of God truthfully. Now tell us, is it right to pay taxes to Caesar or not? Should we pay them or shouldn’t we? Jesus saw through their hypocrisy and said, why are you trying to trap me? Show me a Roman coin and I’ll tell you. When they handed it to him, he asked whose picture and title are stamped on it? Caesar’s, they replied. Well then, Jesus said, give to Caesar what belongs to Caesar and give to God what belongs to God.”

Bob: Amen, and this is saying we gotta pay our taxes and do it with integrity and do what’s legal.

Mary Jo: Absolutely. All of this within lawful means. So a couple of principles there. You want to plan throughout the year, not just at the end of December. Always be planning is my motto. And you want to take steps to avoid paying unnecessary taxes, which can diminish your assets and your income potential over time. Identify opportunities to manage your tax exposure through various lawful strategies that are available in any given tax year. Think strategically in order to minimize the amount of taxes paid over your lifetime.

Bob: You know, most people don’t think of that, do they?

Mary Jo: Well, it’s becoming more and more important.

Bob: I mean, how much taxes are you paying actually over your lifetime? So if you’re not integrating good, wise, financial principles for minimizing taxes, you could be paying hundreds of thousands dollars more in taxes than you need to.

Mary Jo: Well, and the way you pass money on to next generation when you want to think about how taxes are paid in your lifetime. If you’re fortunate to have more assets, then you’re going to need to support yourself. You want to be thinking about the tax implications of their lifetime and whoever’s going to inherit that money too. And you just got to think very strategically. We also want to recommend that you work closely with a qualified tax expert such as a CPA to help you plan. You know, it wouldn’t hurt to schedule a consultation to discuss your tax situation that could pay off for you and your family over time, and do this apart from your regular annual tax preparation meeting. Actually schedule time to talk to your CPA and say, what are we missing? What opportunities can we take advantage of? And make sure you’re looking and again, planning over the course of a lifetime.

Bob: I always do this. I always do that and I meet with my CPA and yeah, we’re not just talking about the taxes that are owed, but in the middle of the year.

Mary Jo: I just want to refer back to some of our previous episodes and we have done a few on taxes. And in fact, episode number 6 was “Income Tax Strategies in 2018”. Episode number 64 “Year End Tax Planning Tips” and episode 54 which was “Tax Efficient Tithing Strategies”. So some good ones in our archives on that one.

Bob: So here we are going to number seven. Remember we’re going to cover 10 of the 20 money management principles for 2020, and that is the know your credit score and work to maintain it and improve it. You think about this scripture from Proverbs 22:7, “Choose a good reputation over great riches. Being held in high esteem is better than silver or gold.” Well, a good credit score today indicates you’re trustworthy and that you have a good reputation for paying your obligations and your credit worthiness today is reviewed for so many other reasons other than just borrowing. And there is a difference between managing debt and managing credit. And again, we had an amazing episode that we did on this, “Mastering Your Credit Rating”. That was episode number 63 that you’ll find in our archives that I would invite you to go back and listen. Because I tell you, when it comes to employment, when it comes to insurance policies and many other things, whether you’re going to be renting, they’re going to be looking at that credit score and those ratings.

Mary Jo: Our next one, number eight in our top 10 money principles for 2020, is to start early. Prioritize savings from an early age. Teach your kids how to save. You know they have that three bucket strategy to save, give, grow. It’s never too early to teach them that.

Bob: And remember, more is caught than taught.

Mary Jo: That’s right. So develop a vision for what you want your financial future to look like. Make sure your spouse or your potential spouse shares this vision, preferably early on in the relationship, as Bob mentioned earlier. And here is a really important one that supports starting early. Understand the value of compounding. You invest a sum of money in the bank or the stock or bond market. You earn interest on your cash or participate in market growth with your invested assets. And yes, there have been periods of market decline, but over the long haul, the trend is always up and the market has always performed at a positive mode over long stretches of time. And then your balances grow in an ever increasing rate, because not only is your initial investment growing, but the growth or the interest it has earned is growing and generating additional growth. So, your balances grow even faster because you are earning interest on your interest and growth on your growth. And doing this in a tax deferred environment has an even bigger impact because you’re avoiding the impact taxes can have on your savings. Start saving with your first job. Make it a habit, pay yourself first. The longer you wait, the less you can earn through the power of compounding.

Bob: There was a famous man named Benjamin Franklin. He said compounding is one of the major wonders of the world. And we talked about that one time on one of our podcasts about how he put aside a sum of money and said it couldn’t be touched for like 50 years or 80 years. I don’t remember the exact story, but it was phenomenal how that money had compounded. So over time, that’s really important to understand that money is compounding, but you got to start early. All right, we’re getting close to the end. We’re at number nine already. Earn more, if possible, without sacrificing family time. So, if you’re fortunate enough to love what you do and do what you love, then you’re truly blessed, especially if you’re well paid for it. And we’ve noticed, also, that the earlier your salary increases, the greater chances of future raises, and they’re typically based on a percentage of your current salary. So you think about it, the higher your salary, the higher the raise, because 10% of 50,000 is 5,000 but 10% of 100,000 is 10,000 so that’s what we mean by the higher your salary, the higher the chance. But you know, Mary Jo, I think about this too, is the importance of sticking with a company and not hopping around a lot so that you can get those pay raises.

Mary Jo: We talked about the power of compounding, and it works the same way when it comes to your salary and sometimes it does take moving from firm to firm to get those big chunks. You can get sign on bonuses and that’s a good way to increase your salary if you’re stagnated at your current company. I know people don’t tend to stay. Back in my day, we stayed with one company for a very long time, but the trend is different now. But I still think that that is the best way to improve your financial future. I would agree with you, Bob.

Bob: You know many people, they need that extra income to have a brighter financial future.

Mary Jo: It’s so important to diversify your income and to create multiple income streams. So, this is a good one. And you know, Bob, we often refer to our ability to earn a living. And this is called human capital, and it’s the most valuable asset you’ll ever have.

Bob: So I did some research on the internet for ways to make some extra income, and I found many I’d never even thought of. And here’s some. I’m just going to give you some ideas, like becoming a virtual assistant to someone to answer the phone and helping a business owner from your home. This is pretty neat to do today, cause everything’s online through email, fax, zoom online. You know, it’s easier than ever before. So that’s an idea. Another one is, are you good at math or English or history or science or a foreign language or even technology. You could become a private tutor helping others with one of these skills. So get paid for that.

Mary Jo: When you mentioned that, this popped into my mind. There was a process where senior citizens did a lot of online tutoring for students in foreign countries where English was their second language. So it gave the seniors value that they could contribute and they were paid for it, but they were helping somebody learn English while they were tutoring them. And I thought, wow, what a win-win. So I just thought that was really interesting.

Bob: That is. You know, something else I’m finding today is, more than ever, people don’t know how to fix things and they don’t know how to build things or you know, they’re always hiring a specialist. So learn how to do some woodworking or plumbing or painting or any handy work. You’ll be surprised. There’ll be lining up and you know, needing some of that. You might end up going from part time to full time.

Mary Jo: Well and you can flip that around. So if you have those skills, higher them out, because there’s plenty of people that don’t have that skill.

Bob: Another idea is rent out a spare bedroom on AirBnB. You could do that, Mary Jo. But you notice, I put if it’s legal in your area, because a lot of HOA’s now, homeowner associations, are making it illegal to rent spare bedrooms. So make sure that that is legal to do in your area. But people have made some good income by renting out a spare bedroom, maybe not on Airbnb. I think if it’s longterm, most anywhere, you’ll be able to do that though. Spend a few hours a day driving for Uber or Lyft.

Mary Jo: Lots of people are doing that.

Bob: Yeah. Lots of people. I notice a lot of retirees. When I use Uber or Lyft, I’ve noticed that I’ve been getting picked up by a lot of retirees. Make deliveries for a local business or even, this is interesting, or even pet sitting. I saw that one when I did some research and I’m telling you, I saw hundreds. I mean, the list goes on and on. So if you’re wanting to make, you know, a little extra money to have a brighter financial future, it’s definitely out there. And you could just go on the internet and do some searches and find extra ways to make income.

Mary Jo: So,. our 10th money principle for 2020 is to give generously. In 2 Corinthians 9:7, “Each one must do just as he has proposed in his heart, not grudgingly or under compulsion, for God loves a cheerful giver.” Giving releases the bondage of materialism. And that is just so true. We are so tied to our stuff.

Bob: Well, it’s taking that fist and holding it so tight, you know, this is my stuff and realizing, hey, wait a second. This is God’s stuff. It’s hard to be materialistic when you’re giving it away.

Mary Jo: Absolutely. And we want to encourage our listeners to tithe regularly. In Malachi 3:10 it says, “Bring the whole tithe into the storehouse and there may be food in my house. Test me in this, says the Lord almighty, and see if I will not throw open the floodgates of heaven and pour out so much blessing that there will not be room enough to store it.” God knows our hearts. He wants our actions to reflect what’s in our hearts. So, create a giving plan. Even if you’re still in your accumulation phase or you’re young or you just don’t have a lot, there’s always still room to give. For more on generosity and generous giving, you want to take a look back at some of our previous podcasts – number 41 “From FOMO to JOMO”. That was from the fear of missing out to the joy of missing out. And then our episode number 65 on “Generous Giving”. So some great resources there for you.

Bob: So there you have it for today’s podcast for the first 10 of the 20 money principles for 2020. So in our next podcast, we’re going to share those next 10 money principles of the 20 principles for 2020 so make sure and tune in when it comes out in a few weeks. So in closing, we want to end today’s podcast with this final thought, “I will accept personal responsibility for my actions in 2020 to improve my financial future by making wise, knowledgeable, and biblically based financial choices.” Mary Jo, would you just repeat that one so they can hear that one again?

Mary Jo: “I will accept personal responsibility for my actions in 2020 to improve my financial future by making wise, knowledgeable, and biblical based financial choices.”

Bob: And then watch for those positive outcomes.

[CONCLUSION]

Mary Jo: You’ve been listening to Christian Financial Perspectives. Join us next week as we explore more about how to apply biblical wisdom to your financial situations.

Bob: To make sure you don’t miss any of our podcasts, you can subscribe to Christian Financial Perspectives on iTunes, Google Play, or Stitcher. To learn more about integrating your faith with your finances, visit out website at ciswealth.com or call 830-609-6986.

Mary Jo: That’s all for now until next week.

[DISCLOSURES]

Comments from today’s show are 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 hosts, Bob Barber and Mary Jo Lyons. Bob and Mary Jo do not provide tax advice and encourage you to seek guidance from a tax professional. Investment advisory services offered through Christian Investment Advisors Inc. DBA Christian Financial Advisors, a registered investment advisor.

Learn about different ways that you can be a generous giver.

More episodes >>

Do you have the desire and courage to be a generous giver? In this episode, we look at various ways to financially give to those causes closest to us. The Bible teaches us to pursue a life that imitates Jesus, and what better way than by being a generous giver?

As Christian financial advisors, sometimes we feel that we spend our days helping people accumulate more and more wealth. However, at times, it’s hard not to wonder what the ultimate purpose of that money is. Once we have answered the question “How much is enough” and have planned for future financial needs, then what?

HOSTED BY: Bob Barber, CWS®, CKA® and Mary Jo Lyons, CFP®, CKA®

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

[INTRODUCTION]

Bob: Welcome to Christian Financial Perspectives, a weekly podcast where we talk about ways to integrate your faith with your finances. This is Bob Barber.

Mary Jo: And I’m Mary Jo Lyons.

Bob: Are you ready to learn how to apply biblical wisdom to everyday financial decisions?

Mary Jo: Join us as we look at integrating your faith with your finances. If it’s your first time listening, welcome to our podcast, and if you’re a returning listener, welcome back.

[EPISODE]

Bob: For today’s podcast, our scripture comes from Deuteronomy 8:11-18, “But that is the time to be careful. Beware that in your plenty you do not forget the Lord your God and disobey his commands, regulations, and decrees that I’m giving you today. For when you become full and prosperous and have built fine homes to live in and when your flocks and herds have become very large and your silver and gold have multiplied along with everything else, be careful. Do not become proud at that time and forget the Lord your God who rescued you from slavery in the land of Egypt. Do not forget that he led you through the great and terrifying wilderness with this poisonous snakes and scorpions, where it was so hot and dry. He gave you water from the rock. He fed you with manna in the wilderness, a food unknown to your ancestors. He did this to humble you and test you for your own good. He did all this so you would never say to yourself, ‘I have achieved this wealth with my own strength and energy.’ Remember the Lord your God. He is the one that gives you the power to be successful in order to fulfill the covenant he confirmed to your ancestors with an oath.”

Mary Jo: Wow. Bob, that was a long one, but I know it really spoke to you since you just recently stepped on that scorpion.

Bob: Yeah. That was my first time and I hope that’s my last time cause that really hurt.

Mary Jo: I’m sure it did. When I saw that I had a little bit of a chuckle. And you know, as Christian financial advisors, sometimes we feel that we spend our days helping people accumulate more and more money. But at times, it’s hard not to wonder what the ultimate purpose of that money is. What do you think?

Bob: It seems that way, you know sometimes it’s like the goal is just to create more to buy newer cars and bigger houses and more stuff. And this can definitely be a dangerous perspective of money. And you’ve heard us say that many times here on Christian Financial Perspectives. The Bible has so much to say about money and our possessions and our attitude about how to handle it. So the point of today’s message is not for us to pursue riches in order to create this ultimate abundant lifestyle, but to take the Bible because the Bible teaches us to pursue a life that imitates Jesus’s ways and strengthens our relationship with God. This relationship with God, results in gratitude, contentment, trust, and hopefully, above all, generosity. I think that Jesus teaches more about our relationship with money and our character, and he fuels our spirit more than it teaches us about the attainment of it just for money’s sake, if that makes sense.

Mary Jo: It does, Bob. I just want to ask our listeners, do you have the desire and the courage to be a generous giver? Today, we are going to look at some ways to pursue significance in generosity for kingdom purposes. And you know, Bob, I was reading a book recently. The author explored the concept of how much is enough, and we’ve asked that same question many times on the podcast. Do you have a specific number that would make you content? Is there a point you could achieve that you would be happy? A house that would be big enough that you wouldn’t want an even bigger, more palatial estate? A car that you would be content to drive without wanting one that was even flashier or more impressive?

Bob: Okay, Mary Jo, as you say these questions, you talked about the estate. You know how I love land?

Mary Jo: I do, Bob. So that’s a question for you. How much is enough, Bob?

Bob: I’m on 17 acres, but I’d like to have about four or 500 more. You know, so that’s a whoo. You hit home here.

Mary Jo: Yes. And that native Texan and you coming out. Bigger is better.

Bob: So could our hearts be calling us to be more generous, but maybe we got our hands so tight that we’re not letting go of it. You know, we got that tight fist and we need to open that up. Most of us struggle greatly with that message of our time and consumerism. The American message is all about accumulating more and more and more stuff. We tend to want that stuff and covet it, but you know what? That stuff is all just going to rust. It’s going to rot. It’s going to decay. By the way, you notice I said we? Cause I’m right there with you and Mary Jo, you’re there too.

Mary Jo: Absolutely.

Bob: It’s a hard habit to break. It’s the American way. Let’s face it. We live in a society where coveting is encouraged. Contentment, though, that’s what we need and we can find contentment. We can find that peace where we are, regardless of what all it looks like around us. But in this culture of consumerism and me, me, me, is that possible? We believe it is. We certainly hope so. Contentment doesn’t have to mean poverty either and depriving ourselves of everything. We’re not saying that, but many Christians do choose to live more simply and I see it every day, which leaves more money available for giving, and that releases that bondage of selfishness.

Mary Jo: You know, Bob, as you are speaking, I kept having these thoughts over and over that consumerism, that “me, me, me,” that accumulating stuff mindset – I do think that some of that changes as we age and we move through our lifespan. You’re younger. Young adults starting to nest and build their first homes. They do tend to get caught up in – and I’m only speaking from experience, you know, that was my experience – we want to buy more stuff because our friends have more stuff. So we want to compete. We want to keep up with the Joneses, if you will. But then, as you get older, not that I’m old, but you start to downsize. We’ve downsized twice now, and you start getting rid of that stuff. So you’re like, why did you need this stuff in the first place? I think that we learn those lessons over time. Less is more.

Bob: That’s the truth. And it reminds me of that scripture where Solomon is talking in Ecclesiastics, and he gets to the end of his life and he finds out so much of this is just meaningless, meaningless, meaningless, trying to accumulate more and more and more.

Mary Jo: So none of us know what the future holds, what we will face in old age, and what the financial implications might be, but we can and should plan so we can prepare. As believers, we also have tremendous faith, but is our faith that God will take care of us enough to let go and open our hands for giving? This is an ultimate question we’re trying to solve, but it’s a hard one. We get it. How much is enough and we don’t know what the future’s going to hold. I was reading another book, “True Riches, What Jesus Really Said About Money and Your Heart” by John Cortines and Gregory Baumer. In the book, I read the following passage, “The most critical decision you will ever make is whether or not to recognize and respond to God’s love for you, joyfully surrendering your life to his leading rather than continually trying to make everything happen on your own. Surrender goes hand in hand with salvation. When you accept the gift of salvation, your whole life comes under the authority and guidance of God, including your money.” Now that gave me pause for thought. The first step is reaching that feeling of gratitude instead of pride for what we have and what we’ve accomplished and accumulated. After all, as followers of God, we’re called to remember who owns it all. He has provided everything for our use and enjoyment, but it’s not really ours. It’s his on loan to us.

Bob: And you know what, Mary Jo, that spits so much in the face of what society teaches us, though.

Mary Jo: That’s right. Once this is done and we realize we have more than enough, we can be at peace that our future is secure and now we can find joy and opening our hands and our hearts for kingdom causes to help those less fortunate. So, what’s next, Bob?

Bob: It’s giving season, isn’t it? We’ve gotten past Thanksgiving and we’re heading into Christmas. I always think of that is the giving season. Let’s assume that you’re ready to jump in now with that joyful heart. So once you’ve answered this question “how much is enough” – that’s a huge question – and have planned for your future financial needs and those of your family, then what? God knows our hearts and he wants to see our actions reflect what’s in it. But sometimes it’s hard to actually do what’s in our hearts and what is telling us. We have that tight fist again that we talked about, and we’re born with that sinful nature. We want it to be all ours and we as human beings, we’re just naturally selfish, but God wants us to adopt his selfless nature. Let me say that again. God wants us to adopt his self less nature. The good we have is God working through us and in us and when we allow God to change us and soften our hearts, there’s nothing we can do about that selfish nature on our own. But with God’s grace we can, and that saving relationship through his son Jesus Christ can help us.

Mary Jo: How can we give more? Giving has changed and so have the vehicle’s forgiving. So what do we do with those extra dollars? When you think about how your giving can be pooled with others, givers just think about how you can influence and support causes across the world, how you can bring others to Christ through your efforts and spread the word of God. So how can you give? One of the easiest and most current ways is to create a donor advised fund. A donor advised fund is a great tool that can help you pull charitable donations from year to year to give in many different ways. You can give smaller amounts as needs arise or causes that you care about come across your radar or you can hold it and accumulate more and give a larger amount down the road.

Bob: And I like it with a donor advised fund too, Mary Jo. You can get your family involved in that. We’ll emphasize to a lot of people when they open a donor advised fund to call it whatever the “[name of your family is] Family Giving Fund”. Donating appreciated assets is another great strategy for giving that we’ve done over the years. So think about do you have a stock that you’ve been holding onto for some time and has got a lot of capital gains in it and you don’t want to sell it, you know, because you’d have taxes. Maybe even inherited it from your grandma or grandpa and couldn’t part with it. So rather than sell it and realize some gains, why not? Think about donating it to your favorite charity or charities. If you have two different stocks, two different companies, you could donate to two different charities and establish that legacy of giving for your grandma on her behalf. You know, it’s a great way to remember them if she’s the one that gave it to you. So you and the charity, you’re going to both get the benefit of the current value of the stock. And since the charity’s a nonprofit, they’re not going to owe anything on the gains like you would. The charity can continue to hold it if they want to and sell at a later date and utilize the proceeds at that time. Do you have any other complex assets like this that you’d like to consider giving, cause there’s many creative strategies for donating assets where you can pay less in taxes while greatly impacting those charities you love and care so much about with the generosity that goes beyond the actual dollar amount of what a cash donation might do.

Mary Jo: Today’s podcast, it’s more about the giving mindset and not designed to address all the many charitable giving tools and resources that are available to you, and there are many. The world of giving is very complex and there’s lots of options. So, you can give directly a charity or to a giving fund. One of the important points to remember is to do your due diligence on your cause of choice. Learning more about the nonprofits you support will help you feel confident that you are choosing effective organizations and that your support, it’s really going to be making a difference. You want to make sure that you are helping the cause that tugs on your heart and not paying someone’s salary. There are many tools available to assist with this research, and you want to ensure your donations are actually making an impact where you intended.

Bob: So when it comes to giving, I’m going to go through five or six different questions that you need to think about. What’s the tax status of the organization you want to support? Is it a for profit organization, a not for profit, or a nonprofit? These all mean something different. What percent of the contributions go directly to the cause and what percent goes to salaries and administrative expenses? Most of them, if you’ll ask, they’ll tell you that. They’ll say, well, 90% actually goes to where it needs to, or 80% or even 95%.

Mary Jo: There’s all kinds of white papers and research articles that really dig into this, and it’s a huge issue. Not all those charitable organizations are on the up and up, and so you really need to be careful.

Bob: I like the ones in the Christian realm that belonged to the EFCA – Evangelical Council for Financial Accountability – and you can look for that. What other initiatives is the organization involved in that you want to give to? Do you fully support it, and are they biblical principles that they’re supporting? Do you want to give locally or do you want to have a global impact? So that’s something to think about in your giving. Are you considering just a one time donation? Where do you want to make own going gifts to the organization? Is It a current donation in this tax year or future donations being considered? Is the organization you have in mind a qualified charitable organization like a 501c3? Are you considering pretax or after tax types of assets to give to them? So all these are questions that you need to think about when it comes to giving.

Mary Jo: We mentioned the donor advised fund, but there are other vehicles to choose from that may be a better fit for your needs. And you’ve probably heard terms like a charitable remainder trust, maybe a family foundation, even an endowment to a university, just to name a few. There are even charitable giving tools on social media these days. You know, the GoFundMe accounts that you’ve heard about. So there’s all kinds of ways to structure those donations and all kinds of tools to use to do so. There are other questions to consider in regards to giving and what might be the best tool to use. Do you want to give now or at your death? Do you want to take advantage of the tax benefits of giving? Do you have an appreciated asset to donate, but maybe you’re afraid you may need income from it during your life. Do you want to make a private or a public gift? Would you like to involve your entire family in the giving process? Wow, that would be such a blessing. And can I increase my donation by taking advantage of managing funds? Maybe you or your spouse are still working and that your employer offers that. So that’s a huge bonus for your contribution. And are there other ways to give other than cash?

Bob: So I know we’ve touched on a lot of questions and a lot of ideas when it comes to generous giving. Great thing about all of this is Mary Jo and I, we can help you with all of these ideas and even more. I mean we’ve just touched on the surface of generous giving. There’s so much more to know and understand about this world of giving, and we’d love to help you with your giving goals. So if you have questions and you’d like the explore the right way to give, we’re here to help you. Are there causes that God is calling you to, causes that are tugging at your heart. And if you aren’t drawn to particular cause, just consider giving things because God cares about them. You know, giving often starts with the obedience before it turns in the joyfulness. So, there’s no time like the present to take action. If you’d like to learn more, give us a call to discuss how giving can be a part of your legacy. After all, we’ve heard it said many times here on Christian Financial Perspectives that God loves a cheerful giver.

Mary Jo: So once we have answered the how much is enough question and you are ready to open your heart and your hand to generosity, we ask you to prayerfully consider how you can give and give generously to the needs of others. Are you guilty of lifestyle creep? Join us in striving to stop listening to the voice of consumerism and coveting so that we can contently live more simply, and give more generously.

Bob: Can I repeat that?

Mary Jo: Yeah, go ahead.

Bob: Join us in striving to stop listening to the voice of consumerism and coveting so that we can contently live more simply and give more generously. That ought to be a quote.

Mary Jo: Well, it probably is somewhere. So on that note, I also want to thank the authors of “True Riches” for this great reminder. In closing, my prayer for all of us this holiday season is that we may learn to cast away our fears and anxiety about money and learn to trust in God the provider. In so doing, may we all experience the joy that God offers to those who live generously. And I want to end on Hebrews 13, “Keep your lives free from the love of money and be content with what you have because God has said, never will I leave you. Never will I forsake you. So we say with confidence, the Lord is my helper. I will not be afraid. What can mere mortals do to me.”

[CONCLUSION]

Mary Jo: You’ve been listening to Christian Financial Perspectives. Join us next week as we explore more about how to apply biblical wisdom to your financial situations.

Bob: To make sure you don’t miss any of our podcasts, you can subscribe to Christian Financial Perspectives on iTunes, Google Play, or Stitcher. To learn more about integrating your faith with your finances, visit out website at ciswealth.com or call 830-609-6986.

Mary Jo: That’s all for now until next week.

[DISCLOSURES]

Comments from today’s show are 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 hosts, Bob Barber and Mary Jo Lyons. Bob and Mary Jo do not provide tax advice and encourage you to seek guidance from a tax professional. Investment advisory services offered through Christian Investment Advisors Inc. DBA Christian Financial Advisors, a registered investment advisor.

Check out these 12 tax deduction tips.

More episodes >>

No time left to procrastinate! It’s that time of year again where we think about taxes and what deductions we can incorporate before the end of the year. They say there are only two certainties in life, death and taxes. With the changes to the tax code in 2018 due to The Tax Cuts and Jobs Act, it has become even more important to look closely at your tax situation each and every year and plan ahead. Year end tax planning is a must in order to minimize the amount of taxes we pay each year.

There are no guarantees in life but one thing we can all probably agree on is that taxes will only go up and deductions will only become fewer in the years to come. It’s also important to think strategically in order to minimize the amount of taxes paid over a lifetime. So, in today’s episode of Christian Financial Perspectives, Bob and Mary Jo look at some year end tax planning tips for this year that need to be incorporated as soon as possible, as well as some that might benefit you over the course of a lifetime.

HOSTED BY: Bob Barber, CWS®, CKA® and Mary Jo Lyons, CFP®, CKA®

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

[INTRODUCTION]

Bob: Welcome to Christian Financial Perspectives, a weekly podcast where we talk about ways to integrate your faith with your finances. This is Bob Barber.

Mary Jo: And I’m Mary Jo Lyons.

Bob: Are you ready to learn how to apply biblical wisdom to everyday financial decisions?

Mary Jo: Join us as we look at integrating your faith with your finances. If it’s your first time listening, welcome to our podcast, and if you’re a returning listener, welcome back.

[EPISODE]

Mary Jo: Luke 20: 20-25, “Watching for their opportunity, the leader sent spies pretending to be honest men. They tried to get Jesus to say something that could be reported to the Roman governor, so he would arrest Jesus. ‘Teacher,’ they said. ‘We know that you speak and teach what is right and are not influenced by what others think. You teach the way of God, truthfully. Now tell us, is it right for us to pay taxes to Caesar or not?’ He saw through their trickery and said, ‘Show me a Roman coin. Whose picture and the title are stamped on it?’ ‘Caesar’s,’ they replied. ‘Well then,’ he said, ‘Give to Caesar what belongs to Caesar and give to God what belongs to God.'”

Bob: Boy, Mary Jo, this scripture, I’ve heard it so many times and you know it’s really talking about paying taxes. It’s just a great scripture, and it’s pointing that we should be honest when we pay taxes.

Mary Jo: Well, we should be honest in everything.

Bob: Exactly. Exactly. We should be honest in everything, but you know it is interesting. You know, I’ve just got through building my new home. You know, some of these guys, they wanted to be paid in cash. And I was like, why do you want to be paid in cash? I mean like greenbacks. You know, not a check and well, so I wouldn’t have to report it, but that’s not right. So Jesus was really strong about this in this scripture and pointing out that pay to the government what we owe. You know, you look at that dollars, it’s the US Government’s, but of course we don’t have to pay more than we need to. God’s Word is about using wisdom, and it’s wise for us, as believers in Christ and we believe God’s word, to use all those tax deductions that the governing authorities allow us to use as long as it’s done with integrity.

Mary Jo: Integrity, I think, is the key word there. There’s certainly benefits for doing that as well. When you don’t declare all your income, you can’t show how much you earn and then that will hurt you down the road. So there’s good and bad with it, but you also take advantage of our roads. You take advantage of our schools, our city utilities, all of those things that taxes pay for. So, why shouldn’t you pay towards those expenses? Your fair share.

Bob: I got another one, too. Don’t mess with the IRS.

Mary Jo: Yeah, that’s a good one too.

Bob: I’ve heard people say, well I don’t need to pay taxes, you know, that’s not constitutional. And then you hear about them going to jail. So, I’m not going to mess with the IRS. I’m going to do what’s right. So if you guessed from today’s scripture what we’ve been talking about. If you think today’s podcast is about taxes, well you’re absolutely right and what a fun subject to talk about. Not. You know, but we need to talk about it.

Mary Jo: It’s a necessary evil if you want to look at it that way. But I think it makes sense and we should all pay our fair share. Fair being the keyword.

Bob: Yeah. Yes.

Mary Jo: So we do have some great reminders for you on today’s show, or podcast – some that could be worth several hundreds, if not several thousands, of dollars in savings. I don’t know about you, Bob, but I think it’s safe to say that taxes are only going to go up from here. What do you think?

Bob: I believe you’re right. I’ve never seen them going down much.

Mary Jo: And funny how that works.

Bob: Especially my property taxes with the way everything is increasing here in Central Texas.

Mary Jo: So we want you to keep in mind that none of these strategies should be used without first seeking the advice of your tax advisor and preferably a CPA, a Certified Public Accountant, as tax laws are constantly changing and vary depending on each individual situation. And we don’t know your situation, so this is very much overall educational and intended for very general purposes, but definitely seek the advice of your tax expert. They say there are two certainties in life, Bob, death and taxes.

Bob: I’ve heard that one many times.

Mary Jo: And with the changes to the tax code in 2018 due to the tax cuts and jobs act, and it’s become more important than ever to look closely at your situation each and every year and plan out accordingly. Plan longterm.

Bob: And that’s because these tax cuts and jobs act back in 2018, everything pretty much doubled for your exemption. So before we get started today, we’re going to go into 12 year end tax strategies. I want you to hear that word I just said again, year end. This is not the time to procrastinate. We’re bringing you this podcast a couple of weeks before the end of the year. But I want you to remember two extremely important numbers. So before we get started on our 12 year end tax strategies for this year, it’s important to remember these two numbers, $24,400 and $12,200. Now what I mean by this is $24,400 is the standard deduction rule for married couples filing jointly. And $12,200 is the standard deduction rule for singles filing individually. So, Mary Jo is going to share with you what we mean by the standard deduction.

Mary Jo: So here’s how the standard deduction actually works if you’re not quite familiar with it. And some of us think we know, but we’re not a 100% sure. So you can typically deduct items like property taxes, mortgage interest, and charitable giving, and all of these “items”. That’s what they mean by itemizing. I’m air quoting, but you can’t see that. And all of these items combined need to add up to at least the standard deduction. And if you’re married and file a joint tax return and all of your deductions do not total more than the $24,400 that Bob mentioned, or if you are single and they don’t add up to $12,200, you only get to offset your taxes owed by the standard deduction amount. Anything over this amount can be itemized and deducted from the total tax you owe.

Bob: That can be real confusing. Can you can see where that could be confusing, Mary Jo?

Mary Jo: Oh, absolutely.

Bob: So, basically, if you’re not going to have itemized deductions if you’re married and they’re not going to total over $24,400, you’re not going to have any deductions because that’s your standard deduction. So, you have to get above that number or if you’re single, $12,200.

Mary Jo: Sometimes if you’re struggling with visualizing how all this works, pull up the form 1040 and actually just look at the form and review it and if you haven’t been the one preparing your taxes for awhile, sometimes that will just kind of help you formulate how it all works in your mind and it’ll help you with planning purposes.

Bob: As we get into our 12 year end tax strategies. Mary Jo is going to talk to you in just a minute about the tax strategy number one and utilizing these numbers. Hopefully, we’re going to lower those income taxes for you if you use some of these. I don’t think all of us are going to be able to use all 12 of them, but if you use some of these by a few hundred dollars or even a few thousand dollars as long as you do it by the end of the year, that’s the important thing, to do this by the end of the year. I just want you to remember as we get into these twelve, these strategies. Remember you can call Mary Jo or I any time at (830) 609-6986. Again, it’s (830) 609-6986. If we’re available, we’ll get right on the phone with you. If we’re not, Kirsten or one of our people in the office can set up a time for you or you can email us from our website at ciswealth.com. All right, tax strategy number one. Go ahead, Mary Jo.

Mary Jo: So the first thing we want to look at is lumping as many qualified itemized deductions as you can into one year to get over that standard deduction threshold. That standard deduction threshold, now, it’s larger than it has been in the past. So we might struggle each year to make it, but we can plan and be very strategically on when we spend things that could be a deduction and maybe do all that in one year. Then, the next year you’re limited to the standard deduction, but then the next year you can bunch everything together. That may have to be an every year thing going forward, but otherwise you may never go over the standard deduction. So, by lumping them together, you’re more likely to get over the standard deduction amount. Examples again include property taxes, charitable contributions, and things of that nature. So if you don’t lump them in your itemized deductions, they’re meaningless for tax purposes.

Bob: I want to go in a little bit of detail on that. So what we mean by lumping them is like paying your property taxes. As an example, this is 2019. I could pay my 2020 taxes in January of 2020 then in December of 2020, pay 2021 taxes, right?

Mary Jo: Exactly, yes.

Bob: And it’s the same thing with your charitable contributions. You can either pay forward or look backward, but try to lump two years of charitable contributions into one year, just like you can lump a couple of years of property taxes into one year. That way, you’re going to get over that standard deduction and that is a very important strategy to do. Again, if you don’t understand what we’re talking about, give us a call, but this really means the difference between hundreds of dollars in tax savings and none.

Mary Jo: As we talk about the various strategies, this will become more clear because we’re going to illustrate how to do some of that going forward.

Bob: The second strategy that we have today is truly maxing out your contributions to your qualified plan at work. So as an example, if you’ve got a 401k, some of you don’t have that, but you’ve got a 403b or like if you work for a nonprofit or the government, you’ve got a 457 or a TSP plan, but before the end of the year, max out those contributions if possible. We’ve had folks, maybe they’ve put in $12,000, well they can go up to $19,000, and you can go talk to your payroll department about doing this. We’ve actually had clients do this in the past and that saved a few hundred, maybe even a few thousand, dollars. So remember this year, if you’ve not put this much in in your 401k, 403b, or federal thrift savings plan, you can go all the way up to $19,000, and if you’re over 50 you can add another six to that. So you can put up to $25,000 into your qualified retirement plans at work. But take a look at that right now, you know, in the next day or two and see how much you’ve put in and see maybe you can put a little bit more in, maybe even that last paycheck if you could afford not to take it, put it all into your qualified plan.

Mary Jo: And you know, Bob, you can be pretty strategic with how you do this if you have a flexible HR department, and this is probably really important for higher earners. The more you contribute early in the year, the longer that’s working in a tax deferred environment for you. You’re getting growth that’s growing and all of that is tax deferred. So, if you can tell your HR person, look, I want to max out my contributions for the year, so is there any way to do that, say, January through June? Then, you’re not taking the contributions out June through December. Sometimes that’ll work to your advantage and you’ll have more take home pay the rest of the year, but you’re getting that money in a tax deferred environment early on, if that makes sense.

Bob: I want to mention too, this is own your side of the equation, not own the match that you’re getting. I could see where some people will be confused on that. Mary Jo, like let’s say the 19,000 is the max. Maybe they’ve put in, you know, 9,500 and they’ve got a match of 9,500 and they’re thinking, well there’s a 19 but they don’t realize that’s on your side. You can put in the $19,000

Mary Jo: That’s right. So that brings us to tax strategy number three. So if you want to, you could give a big year end gift to your favorite charities before the end of the year or even fund a donor advised fund before the end of the year and give it out slowly over time to your favorite charities. When you fund a donor advised fund, it doesn’t all have to be given the next year. It can go over time.

Bob: That’s the beauty of the donor advised fund, isn’t it?

Mary Jo: Absolutely.

Bob: You can put $20,000 or $50,000 or a $100,000 into that donor advised fund. You get the tax deduction for it now, but you can give it out slowly over a long period of time.

Mary Jo: As needs arise that really pull at your heart. So if there’s nothing speaking to you this year, then just hold on to it.

Bob: Now here’s another tax strategy that I know your husband, Mike, would appreciate.

Mary Jo: It must be about a car.

Bob: Okay. Tax strategy number four. If you’re going to buy a car in the next few months, plus you get the year end deals, you might go ahead and do it now, because the sales tax could be deductible, assuming you get over that standard deduction. But if not, wait until next year and try to lump all your deductible items together into one. So I’m not pushing you to go out and buy a new car, but the sales tax and all sales taxes can be deductible. But you know the cars, it’s such a large amount, it’s easy to see that sales tax.

Mary Jo: Well, it’s probably the largest individual purchase any of us make at one time. And the rule works, the IRS permits you to ride off either your state and local income tax or sales tax when itemizing your deductions. And you can use either the actual sales taxes that you’ve paid or the IRS optional sales tax tables. That is something that’s allowable, and we should pay attention to that.

Bob: So here in Texas we’re fine, but if you have a state that has income tax, you can’t write off both. Is that what this is saying?

Mary Jo: Right.

Bob: Okay. So tax strategy number five, finish maxing out your health savings account for this year if you haven’t done so. That’s something I see all the time that people have not done. The maximum amount you can put into an HSA account is $3,500 per person, $7,000 for a family. But if you’re over 55, you can add another thousand to that per person.

Mary Jo: I always knew there were benefits to getting older.

Bob: Yeah, that’s probably because our health costs are higher and you know, I’m 57 now and knock on wood, everything’s been coming back good, but I’m sure getting a lot of physicals and hearing tests and all that to make sure everything’s working good. And I’m using what’s in my HSA account, so we’re maxing out what we put in those HSA accounts, which because I’m 57 I can put $4,500 in, plus Rachel can do the same thing.

Mary Jo: That’s all growing in a tax deferred environment yet again. So these balances, you don’t have to use them right away. They can be carried forward and used later on when you have less income and cashflow and use them for medical expenses in your later years. You can even cover things like premiums for longterm care insurance by using your HSA. So Mike and I were holding on to ours and we plan to use it much later. That takes us and brings us to tax strategy number six. Get those elective medical procedures done before the end of the year, if possible. For example, if you need eyeglasses or you’re considering eye surgery, which my husband is doing just now to take advantage of that. If you need to have some dental work done or maybe hearing AIDS upgraded, these are medical costs. They can be partially deductible depending on your income. So you want to look at how that all works.

Bob: And it may be too late right now because, you know, it’s hard to get into those doctors sometimes and get that done at the end of the year. But plan this ahead for next year and in the coming years when looking at grouping those deductions again to get over that standard deduction. Or next year, if that’s the year to group your deductible expenses, put that in one too. So as an example, you’ve got to meet your deductible and everything’s paid on top of that. It does make sense to lump all that into one year cause it all starts back over on January 1st. In 2019, the IRS allows all taxpayers to deduct the total qualified unreimbursed medical care expenses for the year, but it’s got to exceed 10% of your adjusted gross income.

Mary Jo: That’s the magic number. They have to exceed 10%.

Bob: Exactly. So if you make $100,000, unless you get over $10,000, that’s not going to count.

Mary Jo: Then there’s tax strategy number seven. If you own a business, buy any necessary business equipment before the end of the year. If you’re looking to upgrade your computers or your copiers or do you buy some additional office furnishings, even an automobile for the business, as well as paying possible year end bonuses to your employees. These are things you can, again, group together in the year where they’re going to benefit you.

Bob: I just bought a new computer yesterday on Cyber Monday.

Mary Jo: Oh good.

Bob: I know people will hear this next week, but Cyber Monday was yesterday. Like you said, I wanted to do that before the end of the year so we can take it off as a deduction. Strategy number eight is prepaying tuition. So if you’re a parent or grandparent of a college student, you may be able to lower your 2019 tax bill by simply prepaying the tuition right now versus waiting till next year.

Mary Jo: Then there’s tax strategy number nine. We call it tax loss harvesting. Sell your investments that’s fallen below your purchase price, and use the resulting loss to offset any capital gains in taxable accounts. And how that works, if you have longterm losses, they can offset realized longterm gains. In other words, if you have gains in something that you’ve sold, you don’t realize those gains until you actually sell the investments and you can do that up to $3,000. The same is true with short term investments. If you sold a short term investment and you have at least a $3,000 gain, you can offset $3,000 worth of losses on other investments that are also short term.

Bob: This normally works very well with individual stocks.

Mary Jo: Absolutely.

Bob: Say you have stock A and it’s gone up by $10,000 and you have stock B that’s gone down by $5,000. Well, if you sold both of them, there’d only be a $5,000 gain because you’re going to offset that $10,000 gain with the $5,000 loss. Now, some people though, they’re like, well, why would I do that? Well, maybe that stock is peaked out and maybe the other stock is just a loser and you just need to get rid of it. But there’s other things you can do, too, with tax loss harvesting. We’ll buy like kind stocks. So if it’s in a certain sector, we’ll buy that same type of stock. You do have to wait at least 31 days before you buy that same stock again if you wanted to.

Mary Jo: And you know the same thing does work with mutual funds in taxable accounts, too. So if you have big losses in a mutual fund and you have big gains in another, you could sell those, sell the gains, and then take the loss off of that. And then you can buy a similar investment now or wait 31 days and buy the funds back if they fit into your portfolio. But we can certainly help you walk through that in your taxable account if that’s something that would pertain to you.

Bob: And ETFs as well.

Mary Jo: Yes, absolutely.

Bob: Yeah. Okay. Tax strategy number 10 so remember we just have 12, so we’re nearly at the end here. Transfer IRA money to charity. This makes so much sense, especially for taxpayers. You know, you can only do this in the efficient way if you’re over 70 and a half, but if you’re not over 70 and a half and you have a parent that is, or a grandparent, you definitely want to tell them about the strategy, especially if they’re strong church goers and they give a lot to charities. Because for taxpayers over 70 and a half, up to $100,000 a year can be transferred from a traditional IRA, tax free, to a charity. But it’s got to go from the IRA directly to charity. And so as long as it’s done directly, there’s no tax due. I’m not saying, you know, $100,000 but if you could do $10,000.

Mary Jo: A lot of people are fortunate enough that they have to take those required minimum distributions from their IRA each year, but they don’t necessarily need it, the income to live on. So this applies to those people. You can meet your required minimum distribution requirement and you can donate all or part of it if it’s not all needed. And spouses are eligible for this as well. So for a couple, you can donate directly up to $200,000, up to $100,000 from each spouse’s IRA.

Bob: So let’s look at it this way. For a retiree that’s in a 24% tax bracket, an IRA charitable contribution of just $5,000, that could reduce your income tax bill by $1,200, even a thousand dollar donation could reduce your tax bill by $240. That’s why it’s worth listening to Christian Financial Perspectives. You’re making money today by listening to this program. The benefits of making the charitable contribution from your IRA are even bigger for those in the higher tax bracket. Remember, the charity has gotta be a 501c3 nonprofit organization.

Mary Jo: Which is what they refer to as a qualified charity. And you can’t also take the charitable deduction, so there’s no double dipping. So it’s kind of one or the other. This is also a great reason to consider a rollover to an IRA. So if you’re still sitting there, you’re retired, and you’ve left money in your 401k. You can’t do this from a 401k. It can only be done from an IRA.

Bob: I’m glad you pointed that out because that’s what some people were thinking. It’s got to be an IRA.

Mary Jo: That’s right. So another thing to think about in rolling over that money into an IRA if you haven’t done that.

Bob: I want to mention something here, too, because this can sound confusing. Remember. We’re here for you. You just give us a call at (830) 609-6986 during business hours, or you can email us from our website at ciswealth.com, and we’ll be glad to go over this strategy with you, especially for those of you that have that RMD. You haven’t taken it this year, but you know what, even if you have, look at that strategy for next year. It just makes so much sense. Instead of giving cash to your church as a tithe. Gift from your IRA as a tithe.

Mary Jo: And that brings us to another good one. All these land here if you will. That’s income timing. So you want to think strategically about income payouts if you have that option. So, consider delaying income until next year. Remember, this is a year end tax strategy only, and it’s only a good strategy if you think that your income will be lower next year. So if you’re thinking that your income is higher this year, maybe you’re going to retire halfway through the year, so you’re only going to have six months worth of earned income next year. Maybe you can time some things to go in next year instead of taking it this year. So a good example of how this would work if you plan on retiring during the year next year, are stock option grants that are considered income. So when you exercise those grants, when you do that, it becomes income. So instead of doing it now in December, you might want to wait until next year if you can choose when to take this. Be strategic.

Bob: And so this brings us to our last tax strategy today. Tax strategy number 12 which has to do with Roth conversions. The Roth conversion is a great strategy. It’s best for people, though, that believe their tax rates during retirement are going to be the same or higher than their current tax rates. Let me say that again. The Roth conversion strategy is a good strategy, but it’s only if you believe your tax rates during retirement are going to be the same or higher than your current tax rates. I haven’t seen tax rates going down lately though.

Mary Jo: Well, you know, we always think that when we retire, since we won’t have our earned income, that our income is going to be so much less. But once you get into the required minimum distribution age, that’s probably not the case anymore.

Bob: Being a high income earner, you may not have ever qualified for making a Roth contribution because of your income limitation. You may have just focused on traditional IRAs and 401k’s because of that immediate tax deduction, that you got a reduction. But if you look strategically to the future, a Roth conversion may make sense to do that now. So it’s very important to think strategically all about these tax strategies to minimize the amount of taxes that you’re going to pay over a lifetime, not just this year, but over a lifetime.

Mary Jo: I think that’s really important. So I’m going to repeat that, Bob, if that’s okay. It’s important to think strategically in order to minimize the amount of taxes you pay over a lifetime, not just this year. So a Roth IRA allows for tax free withdraws if the Roth IRA, either your contribution that you’ve put in earlier or your conversion amount, once you’ve had that open and in the Roth IRA for over five years.

Bob: I emphasize that – five years. Yes.

Mary Jo: And you’ve reached the magical age of 59 and a half or you become disabled or you’re dead. And if you no longer have earned income and have not started your required minimum distributions and you’re between the ages of 59 and a half and 70 and a half. It’s kind of that magic time period when this makes sense. If you believe your income tax bracket will be higher in later years due to large required minimum distribution requirements and if you have more funds in IRAs and 401k’s than you expect to need in your lifetime and you want a plan to pass these on. So if you have legacy goals, money in a Roth IRA is probably one of the best ways to leave money to the next generation.

Bob: And I am amazed at our retirees, Mary Jo, how many are not using their funds from their IRAs.

Mary Jo: Yes, they don’t need them necessarily. But you think about it. So the Roth, what happens if your son or daughter are a doctor, a lawyer, or somebody that is going to plan to have a high earning salary and then all of a sudden when they get their inheritance, it creates a tax liability for them. So passing those funds into a Roth for the next generation, there’s some real wisdom here. Things to know. Amount converted must become taxable income in the year it’s converted, and you need to have some cash on hand to pay the current taxes. So if you had to dip into an IRA to pay those taxes, it probably doesn’t make any sense. But if you have cash on hand, now might be a good time to think about this.

Bob: There seems to be some major confusion about that. I’m always seeing that when someone wants to convert from the IRA to a Roth IRA, they think they’re going to take the extra money out to pay the taxes from the IRA. And I say, No. You have to have on the sidelines, whatever tax bracket you’re in, to pay that amount of tax with that.

Mary Jo: Back in 2010 when there was a tax law that allowed for some great benefits to do Roth conversions, my husband and I did that that year and took advantage of it. When we got our tax liability, we were like we knew it, but it still hurt. So those years we had to have a pretty hefty tax bill, but it’s gonna make sense for us longterm. So if you find yourself in this situation, you may want to consider doing a Roth conversion for all, or even just part, of an IRA. So if you’re not sure how this works, let me give you an example. You want to calculate your current estimated income. So how much room do you have before you go up into the next bracket? For example, if you’re in the 22% tax bracket and your current joint income for this year, let’s just say is $96,000 the 22% bracket is any income that earns between $78,951 and $168,401. If you fall in that bracket between those two numbers, that puts you at the 22% bracket. If you take $168,401, which is the top of the bracket, minus $96,000 which is your salary, that’s a difference of $72,401. So, you could have additional earned income of $72,401 before it pushes you up into the next higher tax bracket. So if you’re wondering how much to convert, it would make sense to only convert $72,401 or somewhere less than that. And then that way you’re not going to be pushing you into a higher tax bracket this year. So again, we’re here to help. I know that’s a little bit confusing and some of those numbers are a little clunky, but I just kind of wanted to give a little brief explanation.

Bob: I think this is why you need a financial advisor.

Mary Jo: Absolutely. It’s an interesting strategy, but it will take planning and something you may want to consider going forward.

Bob: You need a pen and a pencil for that one. So there you have it. There’s our 12 year end tax strategies that could save you hundreds, if not thousands, of dollars, but you’ve got to integrate these before the end of the year. And there’s many other tax strategies to use throughout the year that we didn’t even go into today. There are a lot of unique ones for special situations like the sell of a large company, maybe a large ranch, highly appreciated company stock, or even how to best structure high oil and gas income to minimize income taxes, which I’ve done a lot and helped a lot of the folks down in the Eagle Ford Shell, a very big oil field that’s about an hour from me.

Mary Jo: And once again, Bob and I are not tax authorities. So, many of these strategies should not be used without first seeking the advice of your tax advisor or CPA. Tax laws are constantly changing and they vary depending on your individual situation, as well as what state you live in. So we want to make sure that you get that that we are not giving tax advice. If you’d like to take a complimentary 15 or 20 minute phone call to discuss how any of these strategies could apply to you. Call our office at (830) 609-6986 or visit us on the web at ciswealth.com, but don’t procrastinate as time is of the essence with just a few weeks to go before the end of the year.

Bob: I want to say that one more time. Don’t procrastinate.

[CONCLUSION]

Mary Jo: You’ve been listening to Christian Financial Perspectives. Join us next week as we explore more about how to apply biblical wisdom to your financial situations.

Bob: To make sure you don’t miss any of our podcasts, you can subscribe to Christian Financial Perspectives on iTunes, Google Play, or Stitcher. To learn more about integrating your faith with your finances, visit out website at ciswealth.com or call 830-609-6986.

Mary Jo: That’s all for now until next week.

[DISCLOSURES]

Comments from today’s show are 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 hosts, Bob Barber and Mary Jo Lyons. Bob and Mary Jo do not provide tax advice and encourage you to seek guidance from a tax professional. Investment advisory services offered through Christian Investment Advisors Inc. DBA Christian Financial Advisors, a registered investment advisor.

Learn how to master your credit rating score!

More episodes >>

In this episode, Bob and Mary Jo discuss the importance of having an excellent credit rating. A credit rating is not only used when buying a car, home, or applying for a credit card, but it is also used by insurance companies determining rates, employers determining whether to hire you, landlords determining rent, and even utility companies determining a deposit.

Your credit score can be seen as an indicator of your reputation and trustworthiness. Many people have questions and misunderstandings when it comes to their credit score. This podcast bring clarity to the topic.

HOSTED BY: Bob Barber, CWS®, CKA® and Mary Jo Lyons, CFP®, CKA®

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

[INTRODUCTION]

Bob: Welcome to Christian Financial Perspectives, a weekly podcast where we talk about ways to integrate your faith with your finances. This is Bob Barber.

Mary Jo: And I’m Mary Jo Lyons.

Bob: Are you ready to learn how to apply biblical wisdom to everyday financial decisions?

Mary Jo: Join us as we look at integrating your faith with your finances. If it’s your first time listening, welcome to our podcast, and if you’re a returning listener, welcome back.

[EPISODE]

Bob: Proverbs 22:7, “Choose a good reputation over great riches. Being held in high esteem is better than silver or gold,” and 2 Kings 12:15, “No accounting of this money was required for the construction supervisors because they were honest and trustworthy men.” These two scriptures apply to today’s podcast because we’re going to be talking about the importance of having a good credit score. Even though in today’s society we believe that debt should not be used to create an inflated lifestyle, which is what many people have gotten caught up in because it can be dangerous, this is still a great subject. With all this being said, a good credit score can indicate you’re trustworthy and have a good reputation for paying your obligations.

Mary Jo: Bob, that’s so true. We want to have a good credit score, but managing the use of credit, it’s so important to do it wisely and carefully and thoughtfully and keeping with the Christian mindset and Christian principle. It’s a double message that we’re covering here today, but it’s an important one.

Bob: Yeah. You knew how difficult this was for me.

Mary Jo: I did. Yeah.

Bob: I’m not totally against debt. It’s so hard to buy a home today with cash.

Mary Jo: Absolutely.

Bob: And cars have gotten so expensive, too. So I want to be understanding of this, but there’s so much, you know, in the Christian community that you got to be debt free. You gotta be debt free, but that’s not the world we live in. Yeah.

Mary Jo: Our audience is very broad and we have a lot of younger listeners and a lot of older listeners and being debt free when you’re just starting out and we don’t want to rely on credit, but having a mortgage, maybe financing a car when you haven’t had years to build up that savings, that’s probably pretty reasonable in today’s world.

Bob: You know, my dad used to have this really cute saying he’d say, cause he was in real estate, and he would always say, “Whether you rent or whether you buy, you pay for the place you occupy.” And you remember, you know, we’ve shared in our last programs, my dad did believe definitely in debt, especially when it came to real estate. But it is kind of an interesting saying and you’re paying that rent so it does make sense to buy. You get the tax advantages and the advantages of appreciation in real estate and you have something tangible for it.

Mary Jo: You have something tangible that you could always sell in case of an emergency, so that one is reasonable. We just kind of wanted to start with that disclosure if you will. We know this is an important topic, but we also know how important it is to manage it very carefully. It also reminded me of a couple of memories from my past. Do you remember a board game called Life?

Bob: Big time! I loved it.

Mary Jo: It was one of my favorites along with Monopoly.

Bob: That was my favorite was Monopoly.

Mary Jo: We spent many a summer playing both of those, and when I think about life as in our life that we are living today, sometimes it does seem like it’s a board game or so maybe we wish it was a board game. So when it comes to the game of life, there’s nothing like that feeling of knowing the ball is in your court. You are the one pulling the strings for a change. And when you have a perfect credit score, that’s a pretty good indication that you are winning at the game of life. As a consumer with a top tier credit score, you have lenders lining up to offer you financing.

Bob: That doesn’t mean you should go take it all.

Mary Jo: That’s right, but they’re going to be after you and you’ll get the best interest rates offered by lenders, the lowest possible longterm mortgage, and the lowest possible loan cost of any consumer. Your auto insurance rates may be less, too. So how cool is that?

Bob: Mary Jo, you’re right. A credit score, it could say a lot about you. It’s important to have a high one even if you’re not going to borrow money because it’s used for so many other things today. I think they ought to call it not just a credit score, but a reputation score.

Mary Jo: Oh, that’s good.

Bob: Cause we find that there’s so many questions when it comes to your credit score and misunderstandings about it. And that’s why we’re really exploring this topic in more detail today on Christian Financial Perspectives because, as we all know, knowledge is power because lenders, insurance companies, and even employers today, look at your credit score in making important decisions that pertain to you. A FICO score is probably the most popular credit score that we see out there. It’s a scoring system developed by the Fair Isaac Corporation, and it’s pretty much the industry standard when it comes to credit ratings. So here’s some things that you may not know. 10 billion FICO scores are purchased every year, and that’s not all through banks. That’s through employers. That’s through insurance companies. 27 million are purchased every day. FICO scores have been an industry standard for 25 years, and they had the evaluated the credit worthiness of more than 190 million Americans.

Mary Jo: I like the FICO score because it’s fair. A credit rating score, such as your FICO score, is an unbiased way for lenders to determine risk. It uses scoring algorithms that do not consider age, education, your zip code, your employment history, your gender, marital status, race, or income to determine your ranking. The founders of Fair Isaac saw the potential to use mathematics to reduce the role of human judgment in lending and potentially helping businesses give more people access to credit. And this all came about due to the need to provide fair housing and lending practices in the past.

Bob: I did not know that. I’m learning things myself today in this research that you’ve done.

Mary Jo: Just kind of where it all came from. There was a period of time where lenders were very biased and you could look at neighborhoods. They wanted to keep certain people ou,t and that’s how they did it.

Bob: Just like I was saying earlier, I think all of us would be surprised how many times our credit worthiness is reviewed for reasons other than borrowing, like your insurance company. I know that my auto insurance, my home insurance, and even employers now, they’re doing credit checks as a part of their decision making process. Most credit card companies are now providing your credit score on their website. This makes for an easy way to track your credit rating and ensure that nothing has changed, and monitoring that credit score is a really good practice in this day of cyber security and identity theft, because a sudden dip in your score is often the first indicated or something brewing out there,

Mary Jo: Something not so good, probably.

Bob: Probably not.

Mary Jo: Some financial thought leaders say that utilizing credit is worldly and goes against biblical principles and there is some truth in that. After all, the Bible cautions us to avoid the use of debt, and Bob and I definitely support that thought. However, your credit score indicates more about how you manage your debt. It also reflects on your character and your worthiness as a customer. There is a difference in managing debt and managing credit. In today’s world, there are many situations where your credit rating comes into play that you might not even be aware of.

Bob: So we’re going to go into five major reasons that a good credit score is important. Number one, it’s important to employers. 47% of employers today pull credit reports as part of their background checks on potential employees, largely to prevent theft and embezzlement and to reduce legal liability for negligent hiring.

Mary Jo: That was very true in the companies that I’ve worked for, very true in financial services for example.

Bob: Oh, and we do it when somebody wants us to consider them. That’s the one of the first things we do. We want to see their credit. Auto dealers, of course, they care when negotiating finance and they look for red flags and use it to help determine lending rates and loan terms and possibly even how much you’re going to pay for the car. If you don’t own a home and you need to, rent landlords are going to use credit reports to help them determine whether to rent to you and how large a security deposit they may require from you. Auto insurance rates as well as the payment terms, if you don’t have good credit, they’re probably going to require you to pay all up front. But if you have good credit, they’ll let you pay by the month. Or as I say, pay as you go as you’re using that insurance. And of course home purchases, mortgages, it gives a good indication of who you are as a human being. And should they lend that money to you. Realtors today, they want to know if you have good credit before they even many times go show you a home. So you know it’s a catch 22. We’re told to avoid debt, but then we’re told to maximize our credit rating, so what’s a person to do? Managing your debt and credit wisely is really part of being a good steward. And while your credit rating is just one component, your credit report is also important.

Mary Jo: Credit reports provide a detailed history of a person’s current and past credit accounts and debt, third party collections, certain public records, and requests by lenders and other companies. These reports include dates accounts were open, loan amounts, current balances, and payment history including late payments or defaults. So they just want to see what patterns that you have and that you’ve performed in the past. So just like having a poor credit history can cost you so can not having a credit history. In fact, everyone should occasionally assess both their credit report and their credit score. Even non-working spouses should look to establish a strong credit history. You never know what the future holds. So ladies, if you don’t have a strong credit record of your own, it could pay down the road to take steps to improve it. Just pull your credit, see what it says, look at your credit score, and give that some thought.

Bob: I’m a member, Mary Jo, of one of these credit monitoring programs and it gives me an update every month on my three different credit reports. As you probably know, there are three credit reporting agencies and each of these credit report agencies use a different version of the FICO score we were talking about earlier. In fact, there’s two major categories of scores within this. One’s called a base score and another is called a industry specific version. But there are different versions of these and each version looks at different credit components and uses different algorithms and tweaks to accommodate the type of credit the consumer is seeking. For example, auto lenders, credit card issuers, they use a FICO auto score or FICO bank card score, respectively, instead of base FICO scores. So insurance companies, employers, though, they look at it all.

Mary Jo: Different companies look at different components of credit or different categories to assess risk. Discover uses TransUnion, and Citibank uses Equifax. TransUnion considers the following five categories of information when calculating FICO scores and they are weighted more or less depending on the lender. So this was what was reported on my most recent credit card statement from Discover. And that’s one of those that I keep for business and I use and I pay it off regularly. But we also like to take advantage of the savings component in there. They pay one of the higher rates for cash savings. So we’re pretty loyal to Discover for that reason. But it has your payment history, which they weighed at 35% so that adds a lot to your credit rating; the amount you owe, this is weighted at 30%; the length of your credit history is at 15%; new credit that’s been opened 10%; and the types of credit you have is 10% weighted.

Bob: Wow. There’s a lot there to take in. If you have multiple cards and ever look at all these statements, you may have noticed some differences in these numbers reported and that’s because they’re using different versions of the FICO score. Each version weighs things differently. In fact, the length of credit history has a weighting of only 15% – less than some, but more than others. Payment history has the highest weighting of it all at 35%. So, make sure you’re making those payments on time. Good financial habits like consistently paying bills on time, keeping balances low, and only opening new credit cards when necessary can all have a positive effect on your financial health and, in turn, your FICO score. So review your credit scoreboard to see how you’re doing and keep in mind, poor financial habits like paying late can really harm your score.

Mary Jo: Something you’ve heard Bob and I say many times on this show, if it sounds too good to be true, it probably is too good to be true. So the next time you’re out at the department store and they say you can save an additional 15% if you open a credit card account today, don’t be fooled.

Bob: And they hate it when they asked me that because I tell them.

Mary Jo: I do, too. That poor girl in Target, you know, I haven’t been there in a long time.

Bob: She’s like, “All I was doing was asking you? I was like, “Do you know how much that could affect your credit and how bad that is?” And she said, “Oh no, I’m sorry I asked.”

Mary Jo: I know they don’t want to get me in their line, and those poor young clerks, they don’t have a clue what you’re talking about. This results in a change to your available credit of 15%. New credit opened is weighted at 10% and available credit if that is being tracked. So what seems like a good deal at the time can end up costing you a lot more in the long run. So just say, “No thank you.” Keep this in mind as we approach the holiday shopping season. Be sure you pass this wisdom onto the young adults in your world as well. Make sure that they know to say no and talk about this. We’re coming up on that time of year where everyone’s tempted and everybody spends black Friday and cyber Monday and all that time out there shopping. So just make sure you’re not tempted to succumb to any of those offers. Those younger people, they tend to be the ones that are swept into this the most. They’re tempted, they don’t understand the cost. Here’s what your score means to lenders. If you have an 800-900 score, that’s exceptional. Don’t we all want to be exceptional? I know I do.

Bob: Well, mine is.

Mary Jo: Mine is too, but it took me a long time to get there. And 740-799 that’s a very good score. 670-739, that’s a good score. 580-669, that is fair. 250-579, that’s risky.

Bob: So the goal is really to try to get that score over 800

Mary Jo: Absolutely.

Bob: So let’s look at several healthy credit behaviors. Number one, pay on time, get current and always stay current. If you’ve been paying on time for several months and then you find your risk of being late one month or this month, call and get forgiveness before that payment is due. That way you’re not likely to get that onto your credit report because you made arrangements in advance with the lender. Be proactive and take control of your payment history, light payments as well as collections. They stay on your report for seven years, a long time. Keep the balances low. Use your credit wisely. You know Mary Jo, we were just talking about this yesterday cause I’m building my home and I’m building that with cash. I used my credit cards and I had some high charges on Lowe’s and home Depot. The place that, I hope there’s some of those in heaven,

Mary Jo: that’s a band for you, but

Bob: It started to affect my credit even though I paid it completely off. So, you don’t want to get too high on that. So using a large portion of your available credit can have a negative impact on your score. Be careful about closing credit cards in an attempt to just raise your score. The longer your credit history, the better. So if you have a long relationship with the provider, don’t close that account, use it occasionally and pay it off immediately. If you’re worried about identity theft by keeping them open, just keep your unused cards in a safe or a locked drawer. Know where they are and keep them secure, just don’t close the account. Shop rates. If you’re rate shopping though, do so in a short period of time, because scores look at that and they can distinguish between shopping for car loans or mortgages based on how many recent inquiries you might have. So, dragging this out over time can definitely negatively impact your score.

Mary Jo: When you are shopping for a home with a new mortgage or car loan, that’s easily explainable, but it’s when this happens repeatedly that there’s a pattern. In our research, one of the techniques we discovered on how to build and repair your credit is to have a mixture of credit – credit cards, installment loans. Those are recurring level payments such as a mortgage or revolving credit like department store credit, there’s mortgage loans, auto loans, student loans, et cetera. However, here on Christian Financial Perspectives, we don’t encourage the use of installment loans or revolving credit. One of the biblical principles we support and we agree with is to avoid relying on debt. So here in the Christian community, we strive to live a credit free lifestyle and utilize cash whenever possible, and that’s what we really want to encourage.

Bob: Mary Jo, an interesting fact in all this is that the national average credit score has actually up in the last few years and is over 700 now. It’s at 706, and I think this is because that financial crisis we had back in ’08. It really got people aware of it, and consumer education on how important it is to monitor your score for potential errors and dispute those errors immediately if they occur has helped.

Mary Jo: How does pulling your credit score impact your credit rating? There is what is known as soft pulls and hard pulls. A so-called hard inquiry, when you apply for a new credit card, can knick your score for up to six months. A soft pull, also known as an involuntary inquiry, occurs when creditors want to send you pre-approved offers, and boy do I get those. That credit card solicitation you received in the mail was probably the result of a soft pull on your credit. Potential employers may check your credit, as do your existing credit card accounts. Both of those are soft pools, and if you check your own credit score, this is also considered a soft pool. The key is that a soft pull happens when you aren’t actively seeking out credit, so it has no effect on your credit score.

Bob: I have noticed, too, since I have put a freeze on all my credit, I have a permanent freeze on it, and if anybody wants to check on my credit, then I have to go in and I can open it up for a few days and then it will go back to that permanent freeze. I’ve noticed since I put my permanent freeze on my credit report, I’m not getting near as many solicitations for credit cards now.

Mary Jo: You know something? That is so true, Bob. We did the exact same thing. I hadn’t even thought about that. So you just mentioned it, but I never gave that a thought. But I guess that’s true. We’re not getting them either.

Bob: So remember that FICO scores are just one type of credit score. You can have multiple versions of a FICO score. FICO 8 introduced in 2009 is the most widely used, while FICO 9 is the newest. Maybe that’s more information than you wanted to know, but now you know it. Mortgage lenders typically use much older FICO score versions. So if you’re monitoring your score and comparing it month to month, be sure you’re comparing the same score type.

Mary Jo: That’s what we were talking about earlier. There’s two credit cards that I look at that put the score in there each month, and they use different systems so they’re both slightly different than each other. That’s why you’re seeing that and I didn’t know that. Staying on top of your credit score will not only help you avoid surprises, it’s also a great way to get your financial life back on track. Do you recall from our earlier podcast when we talked about our money history? This is one of the things that really helped motivate my husband and I when we’re working so hard to dig out of our debt load and improve our financial health. We watched our credit score double in a few short years, so just like it’s human nature to enjoy seeing your savings account balance grow, it’s also a great feeling to see your credit score improve.

Bob: Maybe that’s because it’s a good reputation, like we started off in the beginning.

Mary Jo: There you go.

Bob: So that’s going to do it today for Christian Financial Perspectives, and we hope you have learned how to master your credit score.

Mary Jo: You’ve been listening to Christian Financial Perspectives. Join us next week as we explore more about how to apply biblical wisdom to your financial situations.

Bob: To make sure you don’t miss any of our podcasts, you can subscribe to Christian Financial Perspectives on iTunes, Google Play, or Stitcher. To learn more about integrating your faith with your finances, visit out website at ciswealth.com or call 830-609-6986.

Mary Jo: That’s all for now until next week.

[DISCLOSURES]

Comments from today’s show are 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 hosts, Bob Barber and Mary Jo Lyons. Bob and Mary Jo do not provide tax advice and encourage you to seek guidance from a tax professional. Investment advisory services offered through Christian Investment Advisors Inc. DBA Christian Financial Advisors, a registered investment advisor.