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February 12, 201921 – Understanding Qualified Retirement Plans Part 2
Click below to listen to Episode 21 – Understanding Qualified Retirement Plans Part 2
Episode 21 – Understanding Qualified Retirement Plans Part 2

Check out Part II of our Understanding Qualified Retirement Plans series.

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In Part II of our series, Understanding Qualified Retirement Plans like IRA’s, Roth IRAs, 401k’s, 403b’s, SEP IRAs, SIMPLE IRAs and Required Minimum Distributions (RMDs). Bob & Mary Jo discuss the specifics and the rules associated with each type of plan including:
Required Minimum Distributions
Distribution Rules
Qualified Charitable Distributions
And more

Individual Retirement Plans (contributory plans) are discussed before getting into Employer Sponsored Contributory Plans for 401k’s, 403b’s 457 and Thrift savings plans. Lastly, small business owner plans are discussed, including SEP and SIMPLE IRA plans.

HOSTED BY: Bob Barber, CWS® and Mary Jo Lyons, CFP®
Mentioned In This Episode

Christian Financial Advisors
Website

Bob Barber, CWS®, CKA®
Mary Jo Lyons, CFP®, CKA®

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EPISODE TRANSCRIPT

[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:
We’re going to talk more about understanding retirement plans, including IRAs, Roth IRAs, 401ks, 403bs, SEP IRAs, simple IRAs, and even get into required minimum distributions and what those mean and require.
Bob:
Do you think that went over anybody’s head what they just heard there, Mary Jo?
Mary Jo:
It’s a lot of acronyms.
Bob:
It is a lot of acronyms. In a recent episode, we talked about procrastination. When it comes to retirement savings, many of us are guilty of doing that. So, this is another “priority in retirement” podcast today because sometimes retirement seems so far away for some but so close for others. And in our last episode, we looked at the history of retirement plans and how social security got its start. So in today’s episode, we’re going to be looking at all the specifics regarding the most popular types of retirement plans that Mary Jo just mentioned, how they work, how much you can contribute, and what the rules are. I love the scripture, as we are Christian Financial Perspectives, That 2 Corinthians 6:1 says. It’s actually from the New Life Version of the Bible, “We are working together with God and we ask you from our hearts not to receive God’s loving favor and then waste it.” I just love that scripture because it talks about how God has given us favor by having the ability to make an income. And when we take that income and waste it, I think we’re not doing ourselves justice. That’s not a godly thing to do. So we want to be careful when God blesses us that we don’t waste it and save for our future retirement,
Mary Jo:
There’s another great scripture that I think also speaks to retirement readiness in a way. It speaks about self control, which is a hard when we’re faced with our savings goals versus spending on earthly stuff in the secular world and all the demands we see today and the pressures to buy, buy, buy. But we really want to stress that individuals can’t invest their way to retirement readiness. They have to save their way to retirement readiness. And you might hear me say that again, but it’s just kind of my biggest passion. So it is talking about our savings goal and there’s no time like the present. The other scripture that I like around this is from 2 Peter chapter 2:3-5, “By his divine power, God has given us everything we need for living a godly life. We have received all of this by coming to know him, the one who called us to himself by means of his marvelous glory and excellence, and because of his glory and excellence, he has given us great and precious promises. These are the promises that enable you to share his divine nature and escape the world’s corruption caused by human desires. In view of all this, make every effort to respond to God’s promises, supplement your faith with a generous provision of moral excellence and moral excellence with knowledge.” So that’s our goal for today is to impart knowledge to our listeners.
Bob:
Are you ready to go with it, Mary Jo, cause there’s a lot to go through, isn’t there?
Mary Jo:
Let’s do it. Get your listening hats on.
Bob:
All right. So let’s start with the easiest retirement plans first, which most of us know about. And that’s the traditional IRA. For 2019, the maximum contribution that you can put in a traditional IRA is $6,000 per person or actually, if you’re over 50, you can put $7,000 per person. Now, I want you to understand that putting money in an IRA may not be tax deductible because it depends on what your income is and other plans that you may be putting money into.
Mary Jo:
Bob, we want our listeners to remember that in our first episode, part one on retirement plans, we shared that qualified plans are those that the “contributions” qualify as a reduction or deduction from taxable income. This is true for the individual, as well as the employer. The deduction is restricted if individuals making the contribution participate in an employer sponsored plan.
Bob:
So again, to emphasize that deduction. It may be restricted due to the individual’s level of income, and that depends on the modified, adjusted gross income. You’ll hear that referred to as MAGI, and a deduction may be allow for all non or a portion of your IRA contribution. So, a lot of people that max out their 401k or their 403bs and thrift savings plans that we’re going to be talking about here later in the program, they may not be able to put anything into an IRA as a deduction. Many I know of, Mary Jo, they actually don’t put money into an IRA if they have those other plans.
Mary Jo:
That’s typical, but they can if they have enough and they want to continue to save for retirement in a tax deferred way. So, you can contribute, you may not be able to deduct it.
Bob:
So in 2019 deductions are phased out at these numbers. If you’re single and you’re earning between $64,000 and $74,000 – so it starts phasing out at $64,000. So, if you go above that $74,000, you won’t get to deduct what you’re putting in an IRA if you’re single. And if you’re married filing jointly, those phase outs start at $103,000 on up to $123,000. So again, if you go above $123,000, there’s not going to be anything that you can deduct for that. And then there’s married filing separately, which the phase out range is actually $0 to $10,000.
Mary Jo:
One of the things I want to stress is a working spouse can fund an IRA for a non-working spouse. The deductability of that contribution is subject to the same phase out rules that you were just sharing with us, Bob. But I think this is really important for our listeners, especially all the stay at home moms that are out there or if you know a stay at home mom or one of your daughters is a stay at home mom. I would really encourage you to recommend that the family fund the IRA. The stay at home mom is working. She’s working really hard, and from a psychological benefit, everybody should have retirement savings in their own name. So she’s working for the family and the family should be funding her IRA. So even if her spouse is contributing to the 401k, I think it’s just a great thing that they also set up an IRA for the spouse that staying at home, and they begin to make contributions so that she or he are making retirement contributions in their own name. I think it’s just a psychological thing that nobody can take away from you, and it’s a huge benefit. I really encourage it.
Bob:
I do too. I think that is a wonderful thing to do. I encourage that always with everyone that are clients here at Christian Financial Advisors.
Mary Jo:
And Bob, we’ve talked about the traditional IRA. And if you are thinking about funding an IRA, but it’s not deductible, that makes a Roth IRA a possibility for you. And so these are also an individual contributory plan. Contributions are not tax deductible, but it’s a good solution for anyone who doesn’t qualify for a deductible IRA, but you do have to meet some income limitations. So why don’t you share those income limitations with our listeners.
Bob:
Yeah. So those income limitations, I do have people call me all the time, Mary Jo, and they’re making over $200,000 a year and they’re wanting to put money in a Roth IRA. So, they can’t do that, bottom line. So, let’s get to these actual numbers for single and head of households. It starts at $122,000, and then it peaks out at $137,000. So what I’m referring to is if you’re single and your income is over $137,000, you’re not going to be able to put money in a Roth IRA. For married couples, that range phases out from $193,000 to $203,000. So really the bottom line is if you’re making over $200,000 a year, you’re not going to get to put money in a Roth IRA either if you’re married, filing jointly. This phase out range for a married individual filing a separate return that makes a contribution to a Roth IRA is not subject to an annual cost of living adjustment. And that remains 0 to $10,000. So really if you’re married, filing separate returns, I guess, forget the Roth IRA, wouldn’t you say, Mary Jo?
Mary Jo:
Sounds that way. The other thing we want to touch on is that Roth IRAs are not subject to required minimum distributions. Therefore, they’re really one of the best ways to leave money to the next generation, wouldn’t you say, Bob?
Bob:
I would. And don’t forget that we work with a lot of people that like to do IRA conversions to a Roth, but there’s a lot of complex rules there. I’m not even going to get into those on today’s podcast. But if you would like to talk about converting a traditional to a Roth, just remember this. Anytime you convert, whatever you convert is going to be considered income for that year. And if you’re in a high tax bracket, it may not make sense to do it because we see a lot of that. I have a lot of folks, they’re making that high income, over a couple hundred thousand dollars a year. They can still do some conversion, but they’re in such a high tax bracket. It’s just going to add insult to injury already on top of their income by converting. And you want to convert the whole thing. You don’t want to take money out, if that makes sense. Like in other words, if you’re converting from the traditional to the Roth and you’re converting $30,000, you want to convert all 30. Now you just have to pay tax on an extra 30
Mary Jo:
That’s exactly right, Bob. But one of the things that we want to think about is maybe the years to do that are the years right after you quit working when your earned income is less and before you turn 70.5 and have to start taking required minimum distributions out. For most people, those are their lowest tax bracket years. And so they might want to take a look at, and this is where working with a good CPA comes in handy, is if they have room to convert a portion of their IRA to a Roth, you just want to make sure you don’t convert so much that it bumps you up into a higher tax bracket. Look at how much extra room you have on your bracket, and maybe you convert small portions of it each year. Anything you convert now is less you have to take out in the way of required minimum distributions later on.
Bob:
You saw me raising my hand. That’s exactly what I was going to tell you. That’s the big thing is that you don’t have to take required minimum distributions out of a Roth IRA. And I tell you, a lot of our podcast listeners are not above 70, but we do have a few of those that are, and that seems to always be a concern of their’s. They’re so concerned. Am I taking my RMD? Am I taking my RMD? And with the Roth, you wouldn’t have to worry about that.
Mary Jo:
And I think it’s important to, what I call, diversify across the tax code. And it’s great when every individual not only do they have a traditional IRA, but they have some monies in a Roth, but they also have sufficient after tax savings. That gives you a lot of flexibility down the road. If you’re subject to those income limitations and it keeps you from qualifying for a Roth now, and you’re still working, check to see if your employer offers a Roth 401k, cause that might be your best option for participating in a Roth.
Bob:
All right. So we’ve said a lot about those IRAs, traditional and Roth. Now, we’re going to get into the employer sponsored contributory plans, which so many of you are familiar with that are listening to our podcast today. The 401k or the 403b or the thrift savings plan if you’re working with the military. We’re going to get into these contribution levels first, and the 401k, 403b, 457 plan is another one, thrift savings plan. These all have pretty much the same contribution limits. And for 2019, those contribution limits are $19,000. So you can put up to $19,000 into one of these plans. If you’re over 50 and you’ve got a catch up provision, you can put another $6,000. That’s going to knock that up to where you could put up to $25,000 of your income. That’s not even including the match that your employer is going to make, which the employer, depending on how nice they are, can put an additional $37,000 into a 401k, 403b, thrift savings plan, which is $56,000 altogether if you’re below 50 or $62,000 above 50. Those are some serious dollars. I just want you to think about this. Say, you’re making up to $100,000 income. Your effective tax bracket is about 20%, 25%. Whatever you put into these plans, you’re lowering your tax bracket by that amount. So, let’s say you put $10,000 in a plan and your effective tax bracket is 20%, you’re saving $2,000 on taxes. So, it makes a lot of sense to put money into these plans.
Mary Jo:
For those higher income earners, that’s a lot of tax savings. So if you can avoid that and really think about what that does to your overall tax liability each year, it’s a huge benefit.
Bob:
Oh yeah. You think about folks in the higher tax brackets. We’re talking $12,000 – $15,000 in tax savings. Now we’re just going to go into the different plans. I’m going to go into one plan and Mary Jo’s going to go into another. We’re going to tell you the different rules behind one. The first one that so many are familiar with is the 401k. The 401k is considered a qualified retirement plan that allows eligible employees – they gotta be eligible – of a company to save and invest for their own retirement on a tax deferred basis. Only an employer is allowed to sponsor a 401k. So, your employer has to be sponsoring one for you to participate in it. And it can be funded with pretax or after tax dollars. So, we were talking about the tax savings. If you do put some after tax dollars in, cause there’s a Roth 401k. Some plans offer that. Some others don’t, but that would be your after tax dollars.
Bob:
The contributions are usually automatically withheld from your paycheck. So, you start off at $50 a month and then you go to $75 and before you know it, you’re at $300 or $500 or even $1,000 a month. And that’s the way I like to start people, Mary Jo, is in a lower amount. Get used to that and then just incrementally add $25 more every couple of months, and you don’t miss it. And then eventually, you’re way up there to where you’re putting large dollars into this 401k plan for your retirement.
Mary Jo:
Bob you’ve said, pay yourself first. So the way I like to encourage that is to increase that contribution every year on January 1st or every year when you get your annual raise. So a lot of firms, they can pretty much bank on a cost of living raise each year. So that’s a great time to up your contribution amount.
Bob:
I agree with you there.
Mary Jo:
I know we’re throwing around a lot of numbers and a lot of acronyms, so just bear with us, but we get lots of questions on these plans. We felt this would be a really helpful episode. So the next one is the 403b plan. This is designed for public school employees and certain tax exempt organizations such as hospitals, nonprofits, and museums. This is where I’ve had a lot of experience in my former life in dealing with a lot of these plans. They are also known as a tax sheltered annuity. So typically what that means is that can be turned into a stream of lifetime income if you desire. So a 403b plan is set up as an annuity, which you can either take distributions out or you can convert it to a stream of income. These are funded through elective employee salary deferrals, and some optional employer contributions. So after tax contributions may also be allowed. And we talked about that with both the 401k and 403b plan. What’s really important is that those stay segregated. Maybe you want to roll that over. You need to know which contributions were before tax and which ones were after tax and your plan administrator or your employer is responsible for auditing that and keeping great records on those contributions.
Bob:
So we’ve touched on the 401k. We’ve touched on the 403b. A lot of you might not be in either one of those, but maybe you have a 457 plan because this is designed for state and local government employees, including police officers, firefighters, and other civil servants, and some high paid executives at certain nonprofits like hospitals, charities, and unions also get access to a 457 plan on top of a 403b plan.
Mary Jo:
That’s a lot of our listeners. Think about how many police officers and firefighters that are out there and people that work for hospitals. It certainly is a way to contribute more.
Bob:
There is similar funding, just like the 403b and the 401k. Contributions are pretax. You don’t pay taxes until you take the distributions. If you take the money out prior to 59.5, though, the distribution is not subject to the typical 10% penalty in a 457 plan
Mary Jo:
The next one that we’re going to talk about is the thrift savings plans. These are referred to as TSPs, and they’re designed for federal employees or members of the uniformed services. They also have automatic payroll deductions. There’s a choice of tax treatments, again, pretax and after tax. Sometimes, there’s a raw provision aloud. And the one thing that’s interesting about these plans is they often allow for in service withdrawals. I’m going to back up a little bit. So for a lot of employer plans, such as a lot of 401ks, maybe your employer doesn’t have the best investment solutions available. So if they allow in service withdrawals, this may or may not be something that you want to look into. It just typically means that you can pull money out of your current employer plan and roll it into an IRA that becomes self directed. And for us at Christian Financial Advisors, we specialize in biblically responsible investing, and you probably don’t have access to that with your employer plan. So if that’s important to you and you have access to an inservice withdraw, it may be something to look at and we can certainly help you with that.
Bob:
As you can guess, we see a lot of the thrift savings plans. We’re in New Braunfels in between San Antonio and Austin. San Antonio is a big military city. So we see that the thrift savings plans probably more than any other plan, just because of where we’re located, so close to all the military bases. There’s other plans that we’re going to get into, but it kind of falls into different categories now. We’ve talked about the 401k, the 403b, the thrift savings plan, the 457, a few of you may have what’s called an employee stock ownership plan. And that’s referred to as an ESOP. And we’re not going into a lot of detail on that because not a lot of you have that option, but I just wanted to let you know that we understand ESOPs. And if you need some help with your Aesop plan, definitely give us a call and we’ll be able to go over that with you.
Mary Jo:
You’re absolutely right, Bob. Those can get pretty darn complicated, but it’s a great benefit.
Bob:
Well, then we have what’s called the profit sharing plans. It is a type of defined contribution plan, and it’s discretionary employer contributions only. And that vesting schedule may apply. So it looks something like this. Maybe that profit sharing plan, the company is going to distribute out 5% across the board and that’s how they could do that through your defined contribution plan, because you put that inside of a 401k type of plan. Does that make sense?
Mary Jo:
Yes. Next we’re going to talk about retirement plans designed for small business owners.
Bob:
There’s basically two plans that we’re going to talk about here. Well, actually three. We’re going to talk about the simple plan, the SEP plan, and a solo 401k. But the simple plan is a plan that I work with a lot, because we are a Christian company, and we’ve worked with a lot of Chick-fil-A owners over the years. For some reason, the simple just fits them perfectly. And the simple is less expensive and much easier to set up than a 401k. It’s for your smaller employees, for those with fewer than 100 employees, which is the majority of our land. We’ve done a lot of simple IRAs over the years. It works really good for anyone, say, less than 20 employees, and here’s the way the simple works. So, it’s not the same contribution amounts that you can put into the 401k that we mentioned earlier. The employee can put up to $13,000 if they’re below 50, and they can put in an additional $3,000 if they’re above 50. So it’s a total of $16,000. And this is what’s interesting about this plan, Mary Jo, is that you could make, let’s say you have a part time mom that’s working over at Chick-fil-A and she makes $13,000 in a year and they didn’t need the income for the family. She could take all $13,000, put it in that simple plan, 100% of it. We see a lot of this with people that are working in a part time capacity outside the home that’s not the breadwinner, and they just want to save that towards their retirement. And again, if they’re above 50, they can go up to $16,000 and then the company can match whatever they make up to a 3% match.
Mary Jo:
Bob, I want to encourage our listeners if you are a small business owner out there and you have been thinking about offering a retirement plan, we really encourage you to kind of give that some serious thought because it’s a great way to increase loyalty, but also make them sticky and to really compensate them in a way. I think, as an employer, it’s also partly your responsibility to help employees begin to save and prepare for their financial futures. So regarding the simple IRA, there’s actually two different types. There’s one where all of the employees have to stay at the same financial service firm that the plan is at, that’s called a 5305, but then there’s also what’s known as a 5304, and the employees can go open their own simple account wherever they want to, and the employer will then direct their contribution to that provider. There’s some flexibility in there for employees as well.
Bob:
Mary Jo, when we first started doing the simples, we did most of them were 5305, but now we do the 5304. The reason we do that is because, let’s say, the owner of the Chick-fil-A has a larger account that would require a managed account. Maybe they have $50,000 or $100,000 in the account, so they can have that account in our managed program. And then their employees can pick a totally different plan wherever they want to go with that. It enables us to really separate these accounts, and it makes a lot of sense to do the type where you can go with two different vendors.
Mary Jo:
They typically have smaller balances, so they may be best served going to a do-it-yourself financial services firm that has low fees, and they’re not paying for active management when they have relatively low balances. So that’s a great point, Bob.
Bob:
That’s exactly right.
Mary Jo:
So the next one we’re going to talk about is a SEP IRA, which is called a simplified employee pension plan. These are designed for business owners with 0 to 5 employees. It lets employers and self-employed contribute significantly more than they would be able to to a traditional IRA. And the contribution limits are up to $56,000 or 25% of taxable income. This is the kicker, however, and I know, Bob, you’ve got some thoughts around this. The employers must make proportional contributions to all full time employees after three years of employment and over the age of 21.
Bob:
Yeah. So if you do the SEP and we’ve done quite a few of these over the years, but as a company grows, I’m not really in favor of the SEP because there’s no vested interest on the employee side. The employer is putting all the money in, and if the employee decides to leave the company after six months, the employee gets to take that money with them. So if you don’t have any vested interest in something, what would keep you from taking the money?
Mary Jo:
That’s exactly right, Bob. And finally, we’re going to talk about a solo 401k, and this is a way for an independent business owner who wants a 401k option, but they’re just one employer and one person firms. So, I know you’ve got some experience there as well, Bob.
Bob:
We’ve done quite a few solo 401ks over the years, but we’ll look at it and we’ll say, well, is it better to do a SEP or the solo? So, it really depends on where your income is. This is something that we need to get with a CPA and figure out what’s the best route to go.
Mary Jo:
So we covered a lot of the most popular types of retirement plans and there’s others out there, but they’re not nearly as common. We’re not going to spend time on those for the sake of today’s discussions. We really wanted to just hit on the most popular that would apply to most of our listeners. And Bob, I think there’s also some defined benefit plans out there. So something else that we haven’t really talked a lot about. If you have a defined benefit plan, certainly give us a call and we’d be happy to talk to you about it.
Bob:
And I want to mention in there, the defined benefit plan is on top of the defined contribution plan. So you can have a 401k and a defined benefit plan because the 401k is a contribution plan. Mary Jo, we’ve done a lot of these defined benefit plans with folks that are in our Eagle Ford Shale that have a very, very high income and they need all the tax deduction they can get because they may have a windfall where they have $500,000 or a million dollars comes in. We set them up where their oil and gas, mineral rights are running like a business. And then we can contribute to a defined benefit plan up to like $200,000 or more. On top of that, they can do a defined contribution plan. We’re talking some very, very serious tax savings, like tax savings in the $50,000 range because they’re in that high, high tax bracket. But again, it’s very complex and this is something that we’d have to discuss with you off the podcast.
Mary Jo:
And that’s a good segue, Bob. If you are listening to us today, keep in mind that this is part two of understanding retirement plans. If you missed our previous episode, look for part one of understanding retirement plans where we talk more about the differences between defined benefit plans and defined contribution plans. One key thing to keep in mind, there are different rules for key employees and highly compensated individuals that may apply to the defined benefit plan. So we’ll touch on that. If you have questions, give us a call directly.
Bob:
So as we get close to the end here of today’s podcast, let’s go over some distribution rules. First, withdrawals before 59.5 are subject to a 10% penalty in most of these plans. Distributions are required, also, after you turn 70.5. This is called the RMD, required minimum distribution. There’s a calculation that is done and that amount must be withdrawn on an annual basis. Mary Jo, are you going to go into some of these other rules?
Mary Jo:
So RMDs are calculated based on a formula – that the IRS of course provides for us – that basically calculates what it will take for the account to be depleted at the end of the owner’s life expectancy. After all, the IRS wants their money. So they’ve got it planned so that when you die, they’ve gotten what’s theirs.
Bob:
Yes, they do. That’s right.
Mary Jo:
But the one key thing here is if you fail to take your required minimum distribution on time, there’s a penalty and it’s a steep penalty, 50% of what the required amount was. So ,don’t let that be you. If you’re working with an advisor, make sure that they help you calculate that each year and help you plan for how you want to take that out. This additional taxable income also could push you into a higher tax bracket. It may also reduce your eligibility for certain tax credits and deductions. You want to be really thoughtful about your options there, which brings us to the qualified charitable distribution. So Bob, why don’t you talk a little bit about that?
Bob:
Well, to eliminate or reduce the impact of the RMDs that we see and paying tax on that, charitably inclined investors may want to consider making a qualified charitable distribution. So they take that RMD and they give that directly to a charity, and you can distribute up to a $100,000 depending on how high that RMD would be. And you can go beyond the RMD, by the way, if you’re above 70.5, to a qualified charity, and you can exclude that completely from your taxable income. But remember, it has got to be made payable to the charity. You don’t take it yourself and then give it to the charity. You go directly from your qualified IRA plan to the charity.
Mary Jo:
This is a huge benefit. And one we’re certainly willing to help you with. God does love a cheerful giver. So as we wrap up today’s episode on understanding retirement plans, we’d like to leave you with this thought. It’s time to press on. In Philippians 3:12-16, Pressing Toward the Goal: “I don’t mean to say that I have already achieved these things or that I have already reached perfection, but I press on to possess that perfection for which Christ Jesus first possessed me. No, dear brothers and sisters, I have not achieved it, but I focus on this one thing, forgetting the past and looking forward to what lies ahead. I press on to reach the end of the race and receive the heavenly prize for which God, through Christ Jesus, is calling us. Let all who are spiritually mature agree on these things. If you disagree on some point, I believe God will make it plain to you, but we must hold on to the progress that we’ve already made.”
Bob:
So as we end today’s podcast, if we’ve created retirement confusion, feel free to give us a call anytime at 877-71-TRUTH, and we’ll be glad to go over all of these types of retirement plans and which might be the right one for you and all these rules. We don’t expect you to take all this in and write all this down. There’s a lot of confusion out there, but Mary Jo and I are here to help guide you through that confusion. Give us a call.
[DISCLOSURES]
This broadcast is designed to provide accurate and authoritative information on the subjects covered. It is not however intended to provide specific legal tax or other professional advice for specific professional assistance. The services of an appropriate professional should be sought. 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.
35 min
February 05, 2019 Episode 20 – Understanding Qualified Retirement Plans Part 1
Bob & Mary Jo discuss the history of retirement planning from social security to company pension plans as well as complete breakdowns of various retirement plans.
25 min
February 05, 201920 – Understanding Qualified Retirement Plans Part 1
Click below to listen to Episode 20 – Understanding Qualified Retirement Plans Part 1
Episode 20 – Understanding Qualified Retirement Plans Part 1

Check out Part I of our Understanding Qualified Retirement Plans series.

More episodes >>

Bob & Mary Jo discuss the history of retirement planning from social security to company pension plans as well as complete breakdowns of various retirement plans including:
Individual vs Employee sponsored
Defined Contribution Plans vs Defined Benefit Plans
Qualified Plans
For much of the 18th and 19th centuries, most poverty relief was provided in the almshouses and poorhouses. Eventually, the Industrial Revolution transformed the majority of working people from self-employed agricultural workers into wage earners working for large industrial concerns. By the 1960s, 70s, & 80s most larger employers provided workers a pension plan to live on in retirement.
Now, employees are typically responsible for funding their own retirement years. Ideally they should be putting aside funds to help supplement social security in retirement. Today, Retirement Plans can be categorized in a number of different ways.

HOSTED BY: Bob Barber, CWS® and Mary Jo Lyons, CFP®
Mentioned In This Episode

Christian Financial Advisors
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Bob Barber, CWS®, CKA®
Mary Jo Lyons, CFP®, CKA®

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EPISODE TRANSCRIPT

[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:
In Hosea 4:6, it talks about how my people are destroyed for lack of knowledge, because they reject knowledge. In today’s podcast, we’re going to talk about understanding retirement plans, including required minimum distributions, and we’re going to have a two part series. The first part is going to be a lot on the history of retirement plans. Then, the second part’s going to be more on just the actual retirement plans that are available to us today.
Mary Jo:
Bob, as we were getting ready for today’s podcast, I was thinking about how we have moved from a pension plan where employers and the government provided income in retirement to a contributory system where we’re now responsible for our own retirement funding, a lot has changed. I realized that so many of our listeners are younger and they may not have this perspective on how we got from where we were to where we are today. I also read a report that I found some alarming statistics that I thought I would share with our listeners. The federal reserve in May of 2018, so just this year, they created a report, and the name of the report is “A Report on the Economic Wellbeing of US Households in 2017”. So in 2017, two fifths of non retired adults think that their retirement savings are on track. Yet one fourth have no retirement savings or pensions whatsoever.
Bob:
So you’re saying, Mary Jo, that a fourth of our population right now that they don’t have any retirement savings plan?
Mary Jo:
Nope.
Bob:
Wow. That’s scary. Like you say, in the whole enchilada, there’s nothing.
Mary Jo:
Nothing on their taco plate. They don’t have anything.
Bob:
Wow. Wow. That’s amazing to me. That’s just a huge number,
Mary Jo:
As we were talking about, they’re thinking that social security is going to provide for them, but social security really barely gives you income to live at the poverty level. So, we’ve got to do better. Three fifths of non retirees with retirement accounts have little or no comfort in managing what investments they do have. And regarding financial literacy, they asked the respondents in the survey five basic questions about their finances, and one fifth got them all wrong. The average number of correct answers was only 2.8. So that tells us that normal Americans, they really just don’t understand their finances. They don’t understand the responsibility of saving for their own futures, and so Christian Financial Perspectives to the rescue. We hope to do a little educating on this podcast, as well as our next episode where we’re going to get into the specifics on retirement accounts. We have some work to do, wouldn’t you say?
Bob:
I would say we have a lot of work to do, and with people retiring left and right today, wasn’t it in 2017, half of retirees retire before the age of 62 and a quarter between the ages of 62 and 64. So you know what Mary Jo, when I think about that, if they don’t understand it, how many are retiring today that may outlive their income?
Mary Jo:
One of the top questions we get all the time, and they’re not even really focusing in on it until they get to be about 60, and that’s just not soon enough. We hope to educate a little bit more around that.
Bob:
I think we’ve really seen what we call this golden era of retirement, Mary Jo, especially with our parents and those that are 75 to say 95, because they came from this era of you work for a large company, like a large chemical company or a large technology telephone company or a large oil company, and you work for them for 25, 35 years, and you get a pension plan. On top of the pension plan, you get some social security, and then there’s some savings on top of that. I don’t know about you, Mary Jo, but I’ve kind of, in the last 15 years, it just seems like you go up and down the highways, and you see these retirees that are 70, 75 years old. They’re in nice RVs, and they’re going to Colorado in the summertime to escape the heat. They’re coming down to Texas, your favorite place, Rockport or Port Aransas, down in that area during the winter to escape the cold up North. It just seems like this golden, I call it my la-ti-da era. I think our age group is thinking we’re going to have it like our parents did, but how are we going to have it like our parents did? We don’t have that.
Mary Jo:
Some things are going to need to change. I also wanted to share a little perspective. You referred to it as the golden era and how that got its name was back in the day, companies would provide retirees with a gold watch, and that was their reward for having worked for that company for 40 plus years. In our parents’ generation, that was their goal is to retire with that golden watch. That doesn’t happen anymore. We’ve gone from a system of employer and government provided pension system to an employee contributory system, but we haven’t done a great job in getting Americans to recognize that they are the ones that have to contribute to that system.
Bob:
Now, I hope somebody heard that, say that again. It’s gone from an employee…
Mary Jo:
Employer and government provided pension system to an employee contributory system.
Bob:
Now that’s where we’re going to share in part two is that contributory system. We’re talking about the 401ks, the 403B’s, the 457 plans, where they have to contribute towards their retirement because the company’s not going to do it.
Mary Jo:
And we do want to encourage our listeners to stay tuned and listen to part two because that’s where we’re going to get into the specifics of each of the various retirement plans and how they work, what the rules are, how you put money in, and most importantly, how you get money out without getting in trouble.
Bob:
So I guess we’re going to get into a little bit of a history lesson now, right?
Mary Jo:
We are. As we were thinking about those plans, I thought it would be kind of interesting to look at how they originated. How did we get from that pension plan mindset to where we are today? A lot of our listeners are younger and they don’t have that perspective. I thought a bit of a history lesson might be interesting.
Bob:
Well, so it kind of starts way back. Like you go back in the 18th and 19th centuries. Most poverty relief was provided in the alms houses and poor houses. And really, the relief was made as unpleasant as possible in order to discourage any dependency.
Mary Jo:
Bob, I remember in my history books and I know there’s a lot of revisionist history going on now, but I remember reading about how they would put a P on the sweatshirts of these people because they really wanted to let them know that living in a poor house was not a good thing. We didn’t encourage that. We wanted people to provide for themselves. It was really looked down upon back in the day.
Bob:
So as we got into the 20th century, it seemed like what was happening here is we were going through demographic changes in America. Beginning in the mid 1800’s and then into the 1900’s, we really looked at the traditional systems of economic security differently. And here’s what happened. So Mary Jo go through those things of what happened.
Mary Jo:
Well, first we had the industrial revolution and then the urbanization of America. We then had the disappearance of the extended family, and all along there became an increase in life expectancy. People began to live longer.
Bob:
So the industrial revolution, what it did is it transformed the majority of working people that were self employed, agricultural workers into wage earners for large, industrial companies. And you had Americans moving from their farms and small rural communities to large cities, thus the breakdown of family too. I mean, I gotta tell you, that’s where the breakdown of the family started happening.
Mary Jo:
That’s exactly right, but I think that’s another podcast, Bob.
Bob:
It most definitely is because that’s where the industrial jobs were. They were in the bigger cities. Listen to this stat. This is really interesting. In 1890…
Mary Jo:
Bob, okay, let’s think about that. 1890. So that was 128 years ago.
Bob:
It was, yeah.
Mary Jo:
It’s not that long ago if you think about it.
Bob:
Not when you look at the thousands of years of history. So in 1890, 28% of the population lived in cities. You get that? Only 28% of the population lived in cities. By just 1930, 40 years later, now we think about this over the thousands of years, over this 40 year period, it went from 28% of the population and doubled to 56% of the population. I don’t know what the percent is today. It’s much higher than that.
Mary Jo:
Much higher, and I think they all live in Houston.
Bob:
I think they all live in the in the San Antonio, Austin area now too, because we’re becoming one big gigantic city here in Central Texas. They’re saying in the next 15 to 20 years could be as large as the Los Angeles area. So boy it sure has changed here. Yeah.
Mary Jo:
It’s just amazing the growth, and so we want to look at the industrial revolution, the migration of the American population, and then let’s fast forward from 1890 to the great depression of 1929. In the 1930s, they found America facing the worst economic crisis in modern history, poverty among the elderly grew dramatically. And by 1932, 17 States had old age pension laws, but none of those were in the South. Well, that’s kind of interesting in and of itself. Social insurance was conceived by President Roosevelt and it was designed so that it would address the permanent problem of economic security for the elderly. It created a work-related, contributory system in which workers would provide for their own future economic security through taxes that they paid while they worked.
Bob:
So this is social security. Okay. Because when you hear the word social insurance, most people don’t think of social security.
Mary Jo:
Well, but that’s how it started.
Bob:
Okay. Gotcha.
Mary Jo:
It was actually started and was passed into law on January 17th, 1935. So, the benefits were to be based on payroll tax contributions, which is what they’re based on now, that the worker made during his or her working life. It was intended to provide unemployment insurance, old age assistance, aid to dependent children, and grants to states to provide various forms of medical care.
Bob:
But it kind of changed over the years because originally social security was designed to be a temporary relief program that would eventually disappear as more people were able to obtain retirement income through the contributory system, like the IRAs, the 401ks.
Mary Jo:
That’s right.
Bob:
But then you had your amendments that in 1939, it made a really big change in the social security program. And it added some new categories of benefits, like payments to the spouse. This is example. I’m married. If I were to pass away, those payments would go to my wife, Rachael, and minor children of a retired worker, what we call so-called dependent benefits and survivor benefits paid to the family in the event of a premature death of a covered worker. This is a good thing. If there’s nothing saved up at all, that takes care of those children. But this change really transformed social security from a retirement program into more of a family based, economic security program. I like the way that said that – into a family based, economic security program.
Mary Jo:
But what we have found is it’s just not sustainable. We’re already hearing a lot of talk about is social security going to become bankrupt in our time. I think that, lucky me, I don’t think that I’m going to see that, but certainly I think maybe Bob, your children are going to see that. So we need to kind of pay attention to that. It’s a wake up call. We had a system where funding and pension plans were provided by the employer, and then when combined with social security, it provided a reasonable lifestyle. Social security was designed, again, to be a contributory system and a temporary fix.
Bob:
Yeah. We’re not supposed to sit here and live strictly on social security.
Mary Jo:
No, it was never intended for that.
Bob:
It was not intended for that, and we get back to the beginning of our podcast today where we’re talking about 25% – 30% of the population has no retirement plan at all in their 50’s. And they’re thinking that social security is going to provide for them. Well, it’s going to provide some, but it’s going to provide it at about a poverty level. It’s not enough to provide that lifestyle that our age group has become accustomed to here in America. And this is where we’re showing you the history today, and the wake up call. In the 1960s, 70’s, and 80’s is when those large employer pension plans came along and they worked well, but also they become very, what we call, top-heavy. And the companies saw this. You remember the major automobile company? We can’t say the name of the company because then we might be saying go buy that stock or something. But it was a major automobile company that their pension plan went broke.
Mary Jo:
Well, you hear that now, Bob, all the time, unfunded liabilities and pension liabilities. It’s true in cities and states around the country. Just look at Detroit. So, there’s a lot of places where the fireman’s pension and the police officer’s pensions are at great risk.
Bob:
So, these pension plans were designed to take care of longterm employees over the course of their retirement years. But you know what’s happening? Everybody’s living a lot longer. And like you said, they’ve become top heavy and cost prohibitive. Today, those that are 10 years younger than I am, like I’ve said, I’m about 56, 57. Go 10 years younger, they’re not getting the pension plans. You have to rely upon a contributory plan like that 401k or 403b or IRAs. Most state, city, and federal workers also grew to depend on these pension plans, Mary Jo. And it’s just interesting to see what is happening now. And we’ve seen, also, the fall of some of these major companies over the years, and they completely go bankrupt.
Mary Jo:
People depended on them, but the companies, they just haven’t been able to keep up with the promises that they made, and it has created a real financial impact. And so we have gone from this pension plan mindset to the contributory system. Now, employees are typically responsible funding for funding their own retirement. And ideally, they should be putting aside funds to help supplement social security as well, but they need to start early in order to get this done. So to get started, it’s helpful to know a little bit more about retirement plans, how they’re categorized, and maybe some of the labeling that you hear. I think a lot of our listeners may not understand that. We wanted to give a little tutorial overall. There are individual retirement plans and there’s employer sponsored plans. These are tied to either you as the individual, an individual plan. That’s what a traditional IRA or a Roth IRA is. IRA stands for individual retirement account. So, it’s tied to you as the individual, or those plans are tied to you as an employee. These are commonly referred to as employer based plans or qualified plans. These include 401k’s, 403b’s, 457’s, and thrift savings plans.
Bob:
Next week, we’re going to go over all what you could put in these plans and how they work. We’re going to get into those technical details. So again, as we get towards the end of today’s podcast, we’ve talked about the contribution plans and we’ve talked about the defined benefit plans. I’m going to define this for you. Defined contribution plans are funded by contributions from either the employer, the employee, and many times both. The employee manages the investments in the plan. So, how you manage it is totally up to you. Whether you go growth or conservative, it’s going to be how much you have during retirement. The totals, many times, are dependent upon contribution amounts, frequency, and investment performance. And there’s no guarantee as to what these plans will do. Then we have what’s called a defined benefit plan. That’s what we’ve been talking about for much of this program, about the company pension plan, in which an employee’s pension payments are defined or calculated according to how long they’ve been with the company and their salary. These are the plans that are very much disappearing.
Mary Jo:
In those plans, did they have a guarantee Bob?
Bob:
In the defined benefit plans? They had a guarantee, but it was only based on the strength of the company.
Mary Jo:
And as we talked about, there have been many instances where these employers have underfunded their pension plans and they can’t meet their obligation. So, it’s very common today in most states and in a lot of big cities. And then Bob, we’ll go into qualified plans. A lot of what we’ve been talking about are qualified plans, but what exactly does that mean? A qualified plan is simply one that is described in section 401A of the tax code. How many people have actually sat down and read the tax code?
Bob:
I definitely expect everybody to remember that one.
Mary Jo:
But that’s where the 401k, the 401A, those came from. And it’s the most common type of qualified plans or profit sharing plans, which is what your 401k plan is and the defined benefit plans. In general, your contributions are not taxed until you withdraw money from the plan. I like to think of it as this way, do your contributions qualify you for a reduction or deduction from your taxable income? So, that’s kind of how I know that that’s a qualified plan, and this is true for individuals as well as employers. So, if when you contribute money to the plan and you get a tax deduction from it, that’s what’s known as a qualified plan.
Bob:
So there is your history lesson from today’s podcast about retirement and how it has changed over the years. Mary Jo and I are here to help you. Christian Financial Advisors is here to help you go through the mine field, because it is so confusing today. And it’s scary, Mary Jo. I mean, quite frankly, it’s a little frightening.
Mary Jo:
Well, and that’s why people need to be working with a trusted financial advisor to help guide them and to help do some calculations and determine how much am I going to need to live on? That’s where we come in at Christian Financial Advisors. We’re here to help educate and guide you and help answer these questions. So that’s why we thought that providing this little bit of history was beneficial. I get these kind of questions all the time. I’m just finding that our listeners, they’re not really prepared for the future that they need to have, and so we want to help.
Bob:
And I think it’s important, too, that we always emphasize that you look for a fiduciary, not a commission based advisor, but one that’s going to work as a fee based advisor, in which you, the listener – those that are listening to our podcast – you pay the advisor. The advisor is not paid by some big, corporate company or some annuity company that’s forcing a sale on you so that you both are tied to the same side of the table, the same goals. So that the advisor benefits when you benefit, but when you don’t benefit, the advisor doesn’t benefit either. It can’t be a one way street. It has got to be both benefit or both lose at the same time. Does that make sense?
Mary Jo:
And recommendations are made in your best interest.
Bob:
That’s right. You got it. Yeah. So in our next episode, we’re going to look at all the specific plans and the rules associated with all the different IRAs, the 403b’s, how much you can put in them. Mary Jo, we’re going to go over the RMDs, also. We’ll go over that required minimum distribution.
Mary Jo:
Absolutely. And we want to make sure that everybody understands the rules. Bob, I know that this history lesson that we’ve gone over today, I found it interesting. I know that we’ve kind of lost sight of what happened to get us here, but the important message that we want to deliver to our listeners today is that you’ve got to plan for your own financial future. And we’re here to help you. We want to be alongside you. We want to help pray for you. We want to help you do it in a biblical way that honors God and gives all the glory to the kingdom.
Bob:
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. The information cited in today’s podcast can be found on the social security website at ssa.gov under social security history.
25 min
January 29, 2019 Episode 19 – The Timothy Plan with Guest Art Ally
This week, Bob and Mary Jo interview a special guest and long time friend and Christian brother, Art Ally. Art is The Founder, President & CEO of The Timothy Plan Mutual Funds, a fund family categorized as a Biblically Responsible Investment (BRI).
32 min
January 29, 2019 19 – The Timothy Plan with Guest Art Ally
Click below to listen to Episode 19 – The Timothy Plan with Guest Art Ally
Episode 19 – The Timothy Plan with Guest Art Ally

Learn more about The Timothy Plan mutual fund company with founder Art Ally.

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This week, Bob and Mary Jo interview a special guest and long time friend and Christian brother, Art Ally. Art is The Founder, President & CEO of The Timothy Plan Mutual Funds, a fund family categorized as a Biblically Responsible Investment (BRI).
The Timothy Plan is the first mutual fund company that established and utilizes Biblically based screens as the first criteria in the selection of its investment portfolios of companies. The fund family avoids companies that support abortion, pornography, non-scriptural lifestyles, anti-family entertainment, alcohol producers, tobacco product manufacturers, gambling, violations of child labor laws, and supporting terrorist nations as defined by the US Government.
Its ultimate goal is to provide an alternative investment that allows Christian and conservative investors to align their investment portfolio with their beliefs.

GUESTS: Art Ally
HOSTED BY: Bob Barber, CWS® and Mary Jo Lyons, CFP®
Mentioned In This Episode

Christian Financial Advisors
Website

Bob Barber, CWS®, CKA®
Mary Jo Lyons, CFP®, CKA®
Art Ally
Linkedin

The Timothy Plan
WebsiteFacebookXLinkedinInstagramYouTube

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

[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:
Each week. We like to start with talking about investing from a biblical perspective, as well as what the Bible has to say about how we handle all of God’s money on a daily basis. This week I’m really excited to welcome a special guest and longtime friend and Christian brother for over 20 years to our podcast, Art Ally. Art is the founder, president, and CEO of The Timothy Plan Mutual Funds. But before we started this morning and when I was getting ready for the podcast, I went to see what does Wikipedia say about The Timothy Plan? I hope they say the right thing, but there you go, Art. Now, I know your on, Art, and welcome to the program. So Art, I’m going to read this off of Wikipedia and you can tell me if this sounds like The Timothy Plan, but I thought they did a good job, whoever put this together: “The Timothy Plan is the first mutual fund company that established and utilizes biblically based screens as the first criteria in the selection of its investment portfolios of companies. The fund family avoids companies that support abortion, pornography, non scriptural lifestyles, anti-family entertainment, alcohol producers, tobacco product manufacturers, gambling, violators of child labor laws, and supporting terrorist nations as defined by the US Government. The fund family is categorized as biblically responsible or what we refer to as BRI. Its ultimate goal is to provide an alternative investment that allows Christians and conservative investors to align their investment portfolio with their beliefs. The Timothy Plan constantly monitors the holdings in its investment portfolios to determine if any of the companies have changed their policies and procedures, subsequent to being placed into the portfolio.” I think that’s a really nice definition of The Timothy Plan, Art. What do you think about that?
Mary Jo:
Bob, I think anywhere we go from here might be downhill. That was excellent.
Bob:
I know. Mary Jo, I’m wondering who wrote that on Wikipedia because you know, somebody is writing that, but they did a good job. Maybe it’s somebody on your staff and you don’t know it, Art.
Mary Jo:
Hmm. That’s true. I think it definitely summarized everything. We couldn’t have said it better. We do like to start each episode with a scripture or a couple of scriptures. Sometimes, we might get a little carried away. Today’s topic made me think about Matthew 12:26, “For what will it profit a man if he gains the whole world but forfeits his soul.” Bob, I think you had another one you also wanted to share.
Bob:
I did. Yeah. I came up with 1 Timothy 3. How about that one? Timothy Plan?
Mary Jo:
That’s very timely.
Bob:
2 Timothy 3:14-17, “But you must remain faithful to those things that you have been taught. You know that they are true, for you know you can trust those who taught you. You’ve been taught the holy scriptures from childhood, and they have given you the wisdom to receive the salvation that comes by trusting in Christ Jesus. All scripture is inspired by God and is useful to teach us what is true and to make us realize what is wrong in our lives. It corrects us when we are wrong and teaches us to do what is right. God teaches us to prepare and equip his people to do every good word.”
Mary Jo:
So Art, how do you like that welcome to Christian Financial Perspectives podcast? We wanted to thank you for joining us today.
Art:
Well, thank you. Can I throw a scripture in?
Mary Jo:
Absolutely. The more the merrier.
Art:
Well, Bob kind of hit it, but he was a couple of chapters off on the genesis of our name. It comes from 1 Timothy 5:8 which says, “If you don’t provide for your family, those of your own household, you have denied the faith and are worse than an unbeliever.” But verse 22 in that same chapter says avoid evil. That’s how we came up with the name of the fund family.
Mary Jo:
Oh, now that’s an interesting perspective.
Art:
And then my favorite scripture, 2 Corinthians 6:17 that says, “Come out from among them and be separate, says, the Lord do not touch what is unclean and I will receive you.” So, we’re doing good on scripture today.
Mary Jo:
We are, and we do have quite a number of questions lined up for you, Art. But I wanted to start with your perspective on the Values Voter Summit held this past September in Washington DC. I know Bob was fortunate enough to go in person, and I was able to listen live to some of the online speeches. I listened to your interview with Dan Celia where you talked about getting started with BRI. I found it interesting that you shared investors weren’t thinking about using their investment portfolios to celebrate and support companies that mirrored their Christian values when you got started some 20 plus years ago. It just didn’t occur to them. I loved what Dan said that we cannot compartmentalize our money from those values that we hold close to our hearts. As we all know where our heart goes, so goes our money. I like to say we vote with our values. So if I want to avoid a retail store chain that doesn’t support my values or a bank that celebrates causes that I don’t believe in, then why would I want to invest in those companies? It’s because we don’t think about it. We don’t realize that there is an alternative, but there is an alternative and it’s called biblically responsible investing. It’s what The Timothy Plan is all about. I wanted you and Bob to share a little bit of your perspectives for our listeners on the Voter Summit and your experience there.
Art:
Family Research Council is one of the top ministries in America, and the Values Voter Summit, if it’s not the event of the year nationally, it’s darn close. I mean, it is just first class. I hope Bob drank some of the coffee cause we were sponsoring the hospitality area right across from the auditorium.
Bob:
Art, I drank a lot of it, so.
Art:
All right, well I just got the bill for Bob. So I want to thank you for it. They are very proud of their coffee at that hotel, but you know, we love FRC and the values voters is one of the top events nationally, and I would recommend any listener who can possibly go next year, think about it, then check it out on the web and get there. I mean, they have the top conservative leaders in America, one after another, after another, as you’ve seen just outstanding
Bob:
For me, it really opened my eyes, Mary Jo and Art, to the fact that when we choose to be biblically responsible with the investments that God has entrusted to us, it’s not only in obedience to God and following scriptural guidelines, which is true to making a political stance for conservative values as well, but the values voter summit forced me to ask myself, as well as others, a deep question beyond biblically responsible. And Art, I think you’ll find this interesting is how can you call yourself a conservative if you’re knowingly and intentionally supporting liberal agendas in your investment portfolio. So, it just doesn’t make sense for me or those that subscribe to biblically responsible investing, to vote one way while completely supporting another way. So in your Timothy plan brochure, you state, “The way we invest not only affects our financial goals, but it also affects the broader culture and when we choose to invest in any security, we become owners in that company and help support or financially support the mission and vision of that company.” So, it’s really about stewardship and how we’re voting when we choose to be BRI, is that correct, Art?
Art:
Well, it’s even more than that, Bob. I mean, you’re absolutely right, but the majority of investors really don’t understand how investments work. But you look at where your money is invested, especially if it’s in a mutual fund, they show you what companies are owned in that fund. But most investors really don’t understand what they’re investing in. That’s why they need people like you to help open their eyes. In fact, as you well know, we have tools now that if they want to use them, and you have it available for your clients, called the eVALUEator that will tell you how much money that you may have invested in any mutual fund or any individual company, but any mutual fund, how much that fund has invested in companies that are involved in all these unbiblical activities, which have nothing to do, in too many cases, with the business they’re in. It’s just that they’re following an unholy agenda. People would be shocked if they understood how much. And these funds, in fairness to them, are not doing it on purpose. But if they’re not carefully screening, they are going to end up owning companies that anybody with real Christian convictions and values does not want to be an owner of.
Bob:
I want to mention, too, that we just did a podcast with Dave Hart from eVALUEator services. So, if anyone does want to know what is in their mutual funds and what stocks they’re investing in, or if those companies possibly embalmed and immoral agendas aside from what they should be doing. Like I remember Dave said, if it’s a company that makes desk, that’s what they need to be doing is making desks. We can do that. We have that eVALUEator program, and we’ve subscribed to it for many years. Going forward, Art, we have you on our program today because you’re the founder of The Timothy Plan, and I’ve known you for many years, Art. There’s probably somebody listening that might’ve never heard of The Timothy Plan. So, I want you to tell them who is The Timothy Plan and what made you start something like The Timothy Plan so many years ago?
Art:
Hmm. Well, you want the truth?
Bob:
Of course I want the truth.
Art:
Of course you do. Of course you want the truth. Well, the Lord has this 2×4, and it’s got my name on it because I came into this kicking and screaming. I’ve been in the business probably 18 years helping Christian clients, just like you do Bob, invest and all of that. I was oblivious to the fact that, you know, I’m helping them invest in these various funds, but these funds, I began to learn, are operating totally contrary to biblical principles. They were funding stuff that was just unbelievable. So, I searched. I searched the entire industry to see if anybody was doing any kind of biblical or moral screening. And the fact is there was a whole bunch of what’s called SRI – socially responsible funds – out there, but they were screening for very liberal issues. Nobody was willing to step up and screen for principles that are in alignment with God’s word. And so it was either forget about it or start the fund family. I learned, as you have Bob over the years, you’d go home and talk to mama about it because God has given women a sense that us thick headed men just don’t have.
Bob:
That’s the truth.
Art:
All right there we go. I opened that door, didn’t I? Bonnie supported it fully, but we launched The Timothy Plan in 1994. It was, as you said in the beginning, a real struggle because people were just not thinking in those terms, you know, it’s like churches, church and businesses, and what do the two have to do each other? Well, we all know on this call, they have everything to do with each other, but it took eight years for people really to start tracking on this, and the Lord and I had a lot of conversations during those years, and finally it hit me that they don’t know. They just don’t know this stuff. They know the business they’re in, they know what they do and their frame of reference, but in investing, it’s a mystery to them. So that prompted me to hibernate for three months, search God’s word, take a lot of material I had from other accomplished authors, and put together a biblical stewardship study guide that was 9 hours in length that actually exposed everything from soup to nuts, from cradle to grave, of what God’s word says about handling money. We’re dealing with a narrow aspect of money. Well, a pretty wide one, actually, investing. But when you step back and think about it, money is central to everybody’s life. You’re either working to earn it, trying to get out of debt, budget it, spend it, save it, put kids through college with it, or get ready for retirement. Money is central. Give it, which is an afterthought in too many cases, and all of our training, as a general rule on handling money, comes from the world, not the church. And so I really wanted a complete, thorough work, and we did it. We trained over 1000 financial advisors and you went through it yourself, Bob.
Bob:
I did. I remember going through that.
Art:
Well, what we’re doing now, for the general public, because it sat around for a few years, by the end of this week or early next week, we will have this course fully up on the internet at no cost where people can go through it at their own leisure. It’s going to have a link on our website, on Timothyplan.com website, where you can go through this incredible work. Not because I wrote it because I didn’t. The Holy spirit did. I do not have the ability to do what finally came out, but it is so comprehensive on every aspect of handling money biblically that when you go through it, you’re going to find out you’ve been handling it exactly the opposite of what God’s word commands us to do. So, that was one of the thrills of my life to get that out there because if we start handling it God’s way, it’s going to remove so much pressure from people, so much anguish for people, and probably cut the divorce rate down because money is at the center of all of it. Maybe cut the crime rate down because the real motive in most crimes is money and start doing it God’s way. Investing is certainly a critical part, but only a piece of it.
Bob:
I can tell and, Mary Jo, you can too, that The Timothy Plan is so much more, just a mutual fund family. There’s a DNA to it that’s all about bringing God’s word to God’s people and educating them. Because we’ve got the founder here, Mary Jo, and you can tell.
Mary Jo:
I hear that passion. I think Art has a stone tablet in front of him.
Art:
I’m not that old. Come on.
Mary Jo:
But Art, I wanted to ask you, you shared so much there about the history of The Timothy Plan and your thoughts originally, but what was the original vision and mission of The Timmy Plan so many years ago when you started?
Art:
Well, I’ve been very active in Central Florida, which is where we’re headquartered, in battling abortion and pornography. In fact, I was chairman of our first three life chains, and here I am in the investment business. When it started dawning on me that I’m helping my clients invest in companies that we’re battling in the streets to try to stop, it was a wake up call. The other wake up call was nobody was doing this, and it’s either start it or move on and try to minimize it like most people tend to do, but I could not leave it. I had to really put together something. From the beginning, we were running red ink, far above what most people would even have nightmares about, every month because based on assets is where our revenue helps pay expenses from. We weren’t growing, but people came alongside at just the right time. This has been God’s fund from day one. It’s not mine. He did use me because of the 2×4, but Christ is a chairman of our board. We made the determination from day one that we are going to honor him in everything we do. That covers from the back office administration to the marketing material. From day one when we were losing $60,000 – $70,000 a month, our marketing material rivaled that of some of the big brokerage firms. What irritates me is when people wear a fish on their shirt sleeve or when they do something for Jesus, but they do it in such a shoddy or amateurish way. We were convicted not to do that. He is our chairman. We’re going to honor him. Everything we’re going to do is first class. We’ve got the top money management firms in the country managing our various funds, and we have 13 funds now. We’ve grown from just a single fund to 13 because you have to do, as I know you preach about Bob, asset allocation. So, we needed screened funds in all the asset classes. But as people started waking up, we finally got out of the red ink and we are now a very solid, profitable mutual fund family, but our profits don’t go into our pockets. We support a lot of ministries. I think we majorly support. I say that with fear and trepidation, because I don’t want to get a bunch more phone calls because we can’t stretch too far, but this is God’s money, and it’s meant to fund his kingdom. We’re committed to do that. We understand the value of money. It’s a tool, and it’s a tool to accomplish his work. It’s all His, we try to be very faithful to doing that here at Timothy.
Bob:
And I must say now, Art, The Timothy Plan is over a billion dollar fund family now. I want to make sure I’m correct in that assumption.
Art:
Yes, you are.
Bob:
Yeah. I remember when that happened, and it’s not all about how much money it is, but the more people we get involved in this biblically responsible investing movement, the more wall street pays attention, and these companies pay attention. Am I right when I make that statement, Art?
Art:
Well, you’re right. The industry is so humongous. We’re still a very small player. But as my friend, Kevin Freeman, and I think you’ve met Kevin, said to our board of trustees, he says, “You know what?” When we hit the billion, he says, “You have taken $1 billion out of the hands of the world.” And as you grow from here, that’s only going to increase, but why in the world would anybody, if there is an alternative. And the thing that I dealt with from day one was my friends on Wall Street said, “You can’t do this.” I said, “What do you mean I can’t do this?” They said, “You cannot get good performance if you screen out some of the companies that are doing very well.” And my comment to them then is the same as it is today. Oh, obedience trumps performance every single time, but that doesn’t mean we’re going to get substandard performance. We’ve got the top money managers in the country managing our various funds. And at times, we may trail some of the others in the industry in performance, but we’re never going to hurt anybody. We’re very conservative. And the only reason we would ever trail anybody, whether it’s the indexes or other funds, is because something people really don’t realize is there’s about five humongous companies that dominate most indexes. And what those five do, let’s say the S&P 500. 5 of the 500 determine the performance of that index. All five of them, we will not own because of their vile activity. So when they are doing well, we will trail them some, but all the other funds will be investing in them and so they’ll look like they’re doing great, but sooner or later, everything comes back down to earth again. And so over time, we will perform as good as anybody, but we’re going to do it in a way where people will be honoring God in their investments, and it’ll be a less volatile way to invest. We understand today that the investor’s main objective today, unlike it was when I started in this business 45 years ago when it was performance, performance, performance, today, it’s don’t lose my money. We take that seriously, but we also want to get a good return. We’ve been doing that over the last 24 years for our shareholders.
Mary Jo:
There’s so much there that we want to explore a little further, but first I want to step back into something that you said. I love that The Timothy Plan lifts up and celebrates companies that promote Christian values, but I also love that the company does so much good with their profits. So can you tell us about some of the projects and charities that you support and the kinds of positive impact that The Timothy Plan has had over the years?
Art:
Well, one of the big problems with nonprofits is all of them are competing for what seems like a shrinking pool of capital. It takes money for them to be effective. And because we’ve been blessed, we are able to share it with them, whether it’s House of Hope here locally, if you wanted some names, I mean, they take in troubled children and imbue them with scriptural principles, and those kids turn around. We support organizations like Family Research Council that puts on the Values Voter Summit. Liberty Counsel. I mean, it goes on and on. Florida family policy council. We try to prudently share with ministries that have the most impact on our culture.
Mary Jo:
Are there any global missions that are a focus for you?
Art:
Well, we are a big supporter of Israel. We support “Hope for Israel”, a ministry over there that services their nation. We have funded church planting ministries, but the majority of them are local in the US, I mean domestic industries, but it stretches far beyond Orlando. But as long as God provides, we will be sharing.
Mary Jo:
Well, you mentioned Israel, and we know that is one of your newer funds, the Israel Fund. How did that come to be?
Art:
Aww, now thank you. Folks, that was not a setup question, but it’s my favorite one. We launched that thing probably six years ago, and it came out of a conviction that Israel was not getting a lot of love from America, whether it’s politically or the church itself. We wanted to show support for Israel, and we launched this fund strictly to show support for Israel. What I learned after we launched it is Israel is one of the most powerful economic powerhouses in the world. I mean, they are leading edge in medical research and technology, very creative. For a little country, they are unbelievable in the economic power that they wield. So, it has been a very good fund for us, but that’s not why we launched it, but we’re pleased to say, we’re glad we have it. People are starting to wake up a little bit, and God’s word is very clear. He will bless those that bless his people and curse those that don’t. We’re not doing it for the blessings. We’re doing it to be faithful, but it has turned out to be a really good investment program for our shareholders. We actually go over there twice a year with our investors and tour the Holy Land. It has been incredible.
Bob:
I will tell you, Art, that we have a lot of clients here that have have invested in that Israel Fund. And like you said, it wasn’t for the reason of the returns as much as it was they wanted to be supporting Israel.
Art:
Right.
Bob:
They are really convicted of that and will stand through thick and thin in support of Israel, which I think is a wonderful thing. I was looking at this and thinking, do you have a scripture that goes with just that particular fund?
Art:
Well, Bob it’s called the Bible. I couldn’t pick out one, but throughout the Bible, it is very clear. The only reason we have any hope is we’re grafted into Israel as Christian believers. There is a cancer among Christian churches today in this replacement theology nonsense, which is so unbiblical. It’s like the Christian church has now replaced Israel as God’s people because Israel rejected Christ. God doesn’t work like that. In fact, I teach a Torah class that is so deep in that that I could go on and on for 2-3 hours for the parts of scripture that fit that. But we are commanded, or cautioned, that he will bless those that bless Israel, and he will curse those that curse Israel, and God doesn’t change his mind.
Mary Jo:
I like what your brochure says. “Every dollar is a vote.” Can you talk more about this?
Art:
Well, it really is. The reason so many companies, and we screen out about 800 of the 8,000 domestic publicly traded companies, the main reason they hit our prohibited list is their behavior. A lot of that is due to pressure they receive from the other side. So for Christians to end up owning shares of that company, there is no reason for that company to change our bad behavior. What if every Christian would come out from among them and be separate, just like it says in 2 Corinthians. 60% of all the money in mutual funds is owned by investors who claim to be Bible believing Christians. What if they would do it God’s way? America would change overnight. These corporations would reform overnight, but they don’t get any penalty or pressure from our side. And whether we do or not is beside the point, the point is, are you going to be obedient? Are you going to follow what God’s word says? All we do here is give an opportunity, no requirement. We don’t judge anybody. We don’t even judge these corporations, but I’ll guarantee you we won’t own them if they’re pursuing an unholy agenda. But that’s what, I guess, we mean by the “every dollar is a vote” because you can absolutely vote by filling that company’s shares with your vacancy.
Bob:
I think that that’s going to nearly sum it up for us, Mary Jo, because as I think about this, that’s the true question. What are you going to do now that you know?
Art:
Right.
Bob:
And that’s the question I asked. And it’s interesting to me, Art, as you know, I’ve been doing this a long time and you and I have been working with each other over 20 years, we will have Christian brothers and sisters that will know about being BRI. Some of them will come here. Many of them will come here, and we will form a biblically responsible portfolio for them. And occasionally, we’ll have one leave to go back, and I’ve never understood that one.
Art:
For sure.
Bob:
But the question to anyone that’s listening is are you prepared to be biblically responsible and honor God with your investments? We would love to help you with that and give you a report from our eVALUEator that will show you exactly what is in your portfolio. And if you can do something about this, then we’d like to help you. I know sometimes you have a 401k, and there’s no choices there. We just need to talk about that and have a discussion. What do you do in that case?
Mary Jo:
Art, we wanted to take a moment and thank you for your time today. We know that this has been a very difficult time for you and your family. Bob and I want you to know that we are continuing to pray for you. Your son, Steven, who’s very involved in The Timothy Plan, is facing some serious health issues. God’s got this, and we are going to continue to pray for healing for him, but our thoughts and prayers are with you and your family as you fight this battle. I wanted to leave you with a scripture and hope that you can find peace in this. “The Rewards of Wisdom” from Proverbs 3:8, “It will be healing to your body and refreshment to your bones, my son. Do not forget my teaching, but let your heart keep my commandments.”
Art:
Excellent. And Rachael has been in our prayers ever since.
Bob:
Thank you.
Art:
We’ve got a lot in common, my friend.
Bob:
Yeah, we do. We do. Well, we love your brother, and we really appreciate you being on the podcast with us. We will pray that this will be heard by many ears, and that the Holy Spirit will speak to them to move in a way that can make a difference.
Art:
Amen. God bless. Thank you for the good work you guys are doing.
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. There is no assurance or certainty that any investment strategy will be successful in meeting its objectives. Investors should consider the investment objectives, risks, charges, and expenses of the funds carefully before investing. The prospectus contains this and other information about the funds. Contact Bob Barber at 672 Ridge Hill Drive, New Braunfels, Texas, 78130 or at (830) 609-6986 to obtain a prospectus, which should be read carefully before investing or sending money.
32 min
January 22, 2019 Episode 18 – eVALUEator With Guest Dave Hart
This week, Bob and Mary Jo interview David Hart, the president of sales and marketing for eVALUEator services. eVALUEator is a tool for screening investments according to morally and biblically-responsible values. It is a tool for giving investors knowledge and the ability to be a good steward and stay away from various activities.
22 min
January 22, 201918 – eVALUEator With Guest Dave Hart
Click below to listen to Episode 18 – eVALUEator Tool With Guest Dave Hart
Episode 18 – eVALUEator Tool With Guest Dave Hart

Learn more about the eVALUEator® investment screening tool.

More episodes >>

This week, Bob and Mary Jo interview David Hart, the president of sales and marketing for eVALUEator®. eVALUEator® is a tool for screening investments according to morally and biblically-responsible values. It is a tool for giving investors knowledge and the ability to be a good steward and stay away from various activities.
The eVALUEator® tool screens around 30,000 companies for corporate activities supporting areas like:
Abortion
Pornography
Nontraditional marriage
Entertainment
Christian rights
Alcohol
Tobacco
Gambling

Christian Financial Perspectives goes in depth with Dave Hart explaining the history behind eVALUEator®, those who typically use the tool, and how they find various activities that different corporations are supporting.
Learn more about eVALUEator® by visiting www.evalueator.com or www.moralscreening.com

GUESTS: Dave Hart of eVALUEator®
HOSTED BY: Bob Barber, CWS® and Mary Jo Lyons, CFP®
Mentioned In This Episode

Christian Financial Advisors
Website

Bob Barber, CWS®, CKA®
Mary Jo Lyons, CFP®, CKA®
David Hart
Linkedin

eVALUEator®
WebsiteFacebookXLinkedin

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

[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:
This week, we would like to welcome a special guest to our podcast, David Hart with eVALUEator. It’s a tool for screening investments according to morally and biblically responsible values. Before we bring David on, let’s start off with God’s word. So, Bob, what do you have for our listeners this week?
Bob:
Well, Mary Jo, I was looking at some scriptures and I came up with Matthew 16:26, it says, “What will you gain if you win the whole world, but destroy yourself. What would you give back to your soul?” Another scripture was from Psalms 119:14, “Obeying your instruction brings as much happiness as being rich or wealthy.” So I think these scriptures speak to the fact that when it comes to investing, and what we’re going to be speaking about this morning, if we really believe that God owns it all, which is another scripture from Psalms 24:1 is, “The earth is the Lord’s and everything in it.” If we truly, truly believe that, then even our investments belong to God. And we’re going to speak this morning about how your investments can bring glory to God by the way that you invest. A good friend of mine, Dave Hart, who I’ve known for about 20 plus years. Is that about right, Dave? Have I known you that long?
Dave:
That’s about right.
Bob:
Well, we’ve had a lot of good times together, haven’t we Dave?
Dave:
Yes, we have. We have, certainly.
Bob:
Dave, welcome to the podcast today. We are really looking forward to you educating our podcast listening audience about the eVALUEator. This is truly an issue that is dear to my heart. We’re glad to have you as one of our first guests on Christian Financial Perspectives. Dave is the president of sales and marketing for a eVALUEator services. So Dave, welcome to the program. As always, I like to start with a little background perspective. So, why don’t you tell us a little bit about yourself and how the eVALUEator came about?
Dave:
First of all, thank you for having me. I hope that we are able to help you and help your listeners. I’ve been working in this market now for over 27 years teaching financial advisors how to present moral investing to clients and how to show clients how to be good stewards of their money. I’ve been in sales most of my life, I’m kind of getting long in the teeth. But I’ve been in sales my whole life. And this has absolutely been a joy in my life to be able to serve the Lord in this way.
Bob:
So, we have this eVALUEator program that we’re going to be educating our listeners about this morning. What does the eVALUEator do?
Dave:
We look at what company activities are and what they actually support.
Bob:
Tell us about some of those screens that you use.
Dave:
We screen companies that support abortion, pornography, or are involved in it in some way; non-married lifestyles and non traditional marriage; Christian rights; alcohol; tobacco; and gambling.
Bob:
How many companies are you able to screen?
Dave:
We can look at over 30,000 companies, and that includes some private companies as well.
Mary Jo:
Wow, that’s a lot. So what percentage of those companies actually fail these screens?
Dave:
This is probably a shock to most people. Less than 7% of those companies fail our screen list, and out of the exchanges that are offered, probably about 1400 companies.
Bob:
One of the questions I have is so you screen for companies that are supporting abortion, pornography, non traditional marriage, entertainment, Christian rights, alcohol, tobacco, and gambling? I just wanted to emphasize all that, that you’re screening for again. But like for pornography, I know that none of us as Christians would ever want to invest in a company that is producing pornography, but you go a little bit deeper than that, don’t you?
Dave:
We do. And what we do is we dig down into the company activities. We look at their 1099’s. We look at and we partner with several different watchdog groups. One of those is “Life Decision International”. Planned Parenthood has watchdog websites, and there’s many others that we’re able to see what these activities are. A lot of these activities they’re very proud of and they post them. Those are the things that we’re looking at that are showing what these companies are supporting.
Bob:
So in other words, let’s say you’re screening for abortion. It’s not actually a company that’s producing abortion, but it could be one that is supporting abortion or one that is supporting pornographic material. Is that a good way to say it?
Dave:
Yeah, they’re supporting it by financial dollars. Maybe they’re making a board efficient that they’re providing to the hospitals and so forth.
Bob:
Dave, I had a client of mine I was doing an account review with about six months ago. We have two major distribution systems up and down Interstate 35 here, one towards Austin and one towards San Antonio. And I’m not gonna mention the name of the company, but I’ll say this, that a lot of folks are buying from this company on a daily basis. They can get a package to you within hours. So that’s enough said about who that company may be. You can just go determine that yourself. But I found out their daughter has a friend that’s a strong, strong Christian. She went to work for this company. And she said that she was putting massive amounts of pornography in boxes that were going out and being delivered to people’s homes. She was amazed that this company had so much pornography that they were delivering. Even though the company was not producing pornography, they were selling it.
Dave:
Happening in a lot of cases. But the part about it is, is most of these companies, for example, a company that makes the desk you’re sitting at, that’s what they do. They make a desk. They’re trying to make money for their shareholders, trying to make money for their company, and they’re trying to make a competitive product. They’re not out here trying to change anything or affect the culture. They’re making a desk. So we’re really looking for companies that are minding their own business.
Bob:
Oh, okay. That they’re doing what they’re supposed to be doing and not involved in, I guess, could we say those are political agendas that they could be involved in too? Maybe supporting like non traditional marriage lifestyles?
Dave:
That’ll work. That’s right.
Bob:
So there’s about 30,000 companies that you screen. You said the percentage of those companies is only 7%, which that’s a good thing. But I’ve noticed that when we look at large cap companies, like in the S&P 500 index, that we see about 50-60% of the S&P 500 index, though, are involved in some of those agendas that we named. Am I correct in saying that?
Dave:
That is correct. And the reason a lot of these mutual funds and these other companies violate these screens is because those are the companies they’re choosing. Instead of going out and doing a little bit of homework and finding companies that are in those industries that they could invest in, they’re copying what everybody else is doing. And they’re putting them in the small cap and they’re putting them in the large and mid cap. They’re putting in the aggressive. They’re putting the exact same companies in all these things. They’re not really diversifying clients at all.
Mary Jo:
Clients think they’re diversified because they have different funds, but those funds are replicating the exact same portfolios. You have a lot of overlap without realizing it.
Dave:
Absolutely.
Mary Jo:
Now, we’ve talked about some of these other issues. Do you screen for gun rights? That’s another polarizing area.
Dave:
We really don’t screen for gun rights. We haven’t found anything in scripture that says anything about guns and war and so forth. I mean, God sent his people to war many times, so they’ve had to have weapons and so forth. We don’t consider that a biblical screen. Therefore, we don’t have those in there.
Mary Jo:
Oh, interesting. Okay. Now, you’ve talked about some of these political agendas. Do you really think you’re going to change anything? Do you have any success stories you can share with us?
Dave:
We have had some success stories. We’ve had some success stories back here a short time ago when we had some companies that were challenged, and they’ve quit. So, we have had some success in that. We had one company, they were surprised and did not even know that they were doing that. They said that they would discontinue that and not be involved in that. So yes, we have had some companies that have done that.
Bob:
We can have a positive effect when we find out that companies are involved in agendas that violate biblical principles. We need to let them know, and many times more than not, they’ll stop supporting that agenda.
Dave:
In eVALUEator, we have a letter. We have a good letter and a bad letter. Simply click on that, pull up that letter. It has a corporate address on it, and you could download it into a word document and send it to the company. Tell them whether you like or dislike what they’re doing. You could do it as a financial advisor. You could also share that letter with a client, and they actually would have two letters coming to them. We’ve had some results from them. We’ve had a couple of fund managers that have called us and said, “We didn’t know we were doing that and we don’t need to do that.” And they’ve discontinued owning that company in that portfolio.
Mary Jo:
Dave, that was one of the questions I had. I would imagine that a lot of times the CEO and the board of directors are so far removed from the day to day business that they could not be aware of some of the things that the company is supporting. What’s on the website, for example. So do you find that that can be true?
Dave:
Absolutely, and some of these people in the HR for these companies are very liberal, and they make those choices. The company doesn’t even know what’s happening.
Mary Jo:
I can see how that would happen. You look at different initiatives for the company donations. A lot of times you get forced to contribute to these, or they have these funding campaigns in a major corporation. What if you personally don’t support that? I think that the human resources department is making a lot of these decisions, and the leaders of the company may be the last to know.
Dave:
Absolutely. You are correct.
Bob:
We’re talking about the eVALUEator. One of the things I want to point out with the eVALUEator, it is a computer program that we use. You can let us know what mutual funds that you own, what stocks you own. And we’ll put those ticker symbols in our eVALUEator program that we subscribe to here at Christian Financial Advisors. And we can let you know what involvement you might have in abortion or pornography or non traditional marriage lifestyles, or entertainment, alcohol, tobacco, and gambling. I will tell you, Dave, over the years, and Mary Jo, as I’ve done these eVALUEator reports, it’s like putting the light on the table, like it says in scripture, and really shining your light on what that’s involved in. And then, we can make good, Christian choices about finding companies that are not involved in those agendas and mutual funds that are not involved in those agendas. And one thing that I’ve noticed over the years, Dave, is some of the companies that fail the screens, many times, it’s that same company that is six months or even a year or two later, that is in the news that has done something else that would cause their stock to drop dramatically because of other agendas they might be in. It’s kind of interesting that once they get involved in that slippery slope, it kind of takes you down that path.
Dave:
How right you are. I can remember back when all those companies went down. All of those companies had been on our screen list from the beginning. We weren’t surprised that they were having trouble with dishonesty in their group if that’s the kind of people they were.
Mary Jo:
So Dave, another question is who uses your services? Who can have access to the eVALUEator tool?
Dave:
Financial advisors use us. We have some third party investment corporations that are using us. We have a free website that’s called moralscreening.com that an individual can go on and look. They get a limited look of companies. We will guide them to a financial advisor such as Bob and Mary Jo, and they can help them. Not only can they show them what they’re invested in, but we show the alternatives that they could use to not do those things.
Bob:
Well, exactly. We don’t want to say that you cannot invest in a Christian way cause you can. There’s more choices today than there’s ever been pretty much in the history of the markets. I remember when the first biblically responsible mutual fund came out many years ago, and now there’s many other choices to choose from. I remember Dave, when the Timothy Plan started and there was one fund that was available. This is not a solicitation to buy or sell the Timothy Plan, but I remember it was just one or two funds. It was like a small cap value fund and a bond fund. And now, they’ve got every kind of fund you can imagine to pick from. And there’s been other families that have started out of the movement that the Timothy Plan started many years ago in the biblically responsible choices.
Dave:
20 years ago when I started, there was $23 million invested in this way. Today, with all of these other companies and things, there are billions of dollars, but you know what? We’re not going to make an impact on the companies until we’re in the trillions. So, we’re still working toward our first trillion.
Mary Jo:
And why do you say that? Why is a trillion dollars the magic number?
Dave:
It’s not really a magic number, but people follow the money. It’s always about the money. Not sometimes. Not once in a while. Not occasionally. It’s always about the money, and if they see the money going away because of the way that they’re handling their funds, they’ll stop.
Mary Jo:
I think in so many areas of life, if we celebrate the good and we really shine that light on those companies that are doing good, that are following family based values, and we lift them up and we vote with our dollars for those good companies, the others will soon wake up. They’ll either choose to stop what they’re doing to be part of that, or they won’t. That’ll be our sign for who we want to invest in. So, I think that celebrating the positive is such a great approach rather than dwelling on the negative and those that aren’t. Let’s really celebrate and lift up the companies that we want to do business with.
Bob:
I agree with you, Mary Jo. And Dave, I know you’d like to comment on that as well.
Dave:
I love to tell a story that people who stand in good, we don’t understand people who stand in evil. We don’t understand why people want to kill policemen and why people want to cut off somebody’s head to prove a point. We don’t understand it, but you know what? They don’t understand people who are standing good. They don’t understand what our problem is if somebody says a four letter word in front of our children. They hear it on TV. We’ve heard that before. What is our big problem? Well, our problem is, simply, we pursue good. We watch what we say. We watch how we say what we say. We watch where we go. We watch who we do business with and certainly who we should invest with the money that God’s entrusted us with. We should be watching that as well.
Bob:
So Dave, as we come to the end of the program, I would just like you to emphasize that a little bit more. For somebody that’s been listening to us, maybe this is the first time they’ve heard about biblically responsible investing. We’ve had entire programs on values based, biblically responsible investing in the past. If you’re hearing this podcast for the first time today, you can go look in our archives and see where Mary Jo and I have had a complete program on that. But today, we’re just talking about the computer program that we use to help us be biblically responsible. Dave, speak from your heart to someone that they’ve heard about this the first time and what they should do. I just want to hear it directly from you because you’re my brother in the Lord. I’ve known you for years.
Dave:
What I’d like to say is a real mission that I have in my heart is to be able to change what people are doing and be able to show them how to be good stewards and how to be obedient to God and how to speak the love language to God. I believe that where people’s hearts are, there also should be their treasures. And that’s what we’re about. Showing how to put your treasures where your heart is.
Mary Jo:
And God does own it all after all.
Dave:
He owns it all.
Mary Jo:
Oh, I love that. I think that’s just a great thought as we wrap up today’s show.
Bob:
I want to thank you for joining us today on Christian Financial Perspectives. I know that this is a podcast that probably no one has ever heard anything like this. I know it’s created some curiosity, and we want to help you. Go to our website, CISwealth.com, scroll down, and you’ll see about halfway down the page where you can click on and get a free evaluation of your portfolio. We would like to give you a free evaluation. There’s no obligation to do business with our company. We just want to shed God’s light on that. We want you to be pure in how you’re investing, and I believe that God’s going to honor that. If he doesn’t honor it here on earth, he’s definitely going to honor it in heaven, but I believe he’s going to do both.
Mary Jo:
There are a few additional thoughts we want to leave you with. Money decisions are really spiritual decisions. As you said, money is one way we work out our belief system, our values, our goals, and priorities. There is a current ad campaign running that always makes me kind of reflect on this when I hear it. So what is in your wallet, or rather, what is in your investment portfolio? As a conservative Christian, do you talk the talk, and more importantly, do you walk the walk? Do your investment choices reflect your values?
Bob:
At Christian Financial Advisors, we work with clients just like you who want to integrate their faith with their finances. If you’d like to learn how you can implement BRI in your investment portfolio, give us a call.
[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.
22 min
January 15, 2019 Episode 17 – The Need for Financial Planning
Would you take a road trip without a map or GPS? In this episode, Bob and Mary Jo cover the many reasons for needing financial planning. Financial planning is the process of wisely managing your finances so that you can achieve your dreams and goals – quite simply, a map to get you to the financial future you desire.
23 min
January 15, 2019 17 – The Need for Financial Planning
Click below to listen to Episode 17 – The Need for Financial Planning
Episode 17 – The Need for Financial Planning

Learn about the many reasons why financial planning is a necessity.

More episodes >>

Would you take a road trip without a map or GPS? In this episode, Bob and Mary Jo cover the many reasons for needing financial planning. Financial planning is the process of wisely managing your finances so that you can achieve your dreams and goals – quite simply, a map to help get you to the financial future you desire.
A realistic, comprehensive plan can help you meet your goals by addressing your financial weaknesses and building on your financial strengths. Without a plan and a strategy, there can be a lot of unnecessary risk in achieving these goals; risk that can cause emotional stress and financial distress if not managed properly.
You don’t have to do it alone. A qualified financial planner, such as Certified Financial Planner (CFP®) professional, can help you make decisions that make the most of your financial resources.

HOSTED BY: Bob Barber, CWS® and Mary Jo Lyons, CFP®
Mentioned In This Episode

Christian Financial Advisors
Website

Bob Barber, CWS®, CKA®
Mary Jo Lyons, CFP®, CKA®

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

[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 21:5, “Good planning and hard work lead to prosperity, but hasty shortcuts lead to poverty.” Does it seem like your financial life is spinning out of control at times? Well, you’re not alone. Financial planning to the rescue. In today’s episode, we’re going to discuss financial planning, what it is, how it helps, and why you need it.
Mary Jo:
Bob, I gotta ask you a question. Would you ever take a road trip without a map or a GPS?
Bob:
Well, you know, my wife says I would, but no. I wouldn’t.
Mary Jo:
You are a guy. You probably won’t stop and ask for directions, but that’s a whole different podcast. I say that because financial planning is a process of wisely managing your finances so that you can achieve your dreams and goals. Simply put, a map to get you to the financial future you desire. So, that’s what the financial planning process is. It’s basically just a map.
Bob:
I guess we’d say financial planning is really about bringing all the pieces of your financial life together, Mary Jo?
Mary Jo:
That’s true.
Bob:
It’s like a process to help you identify all your financial goals and develop a plan to achieve them in, what I say is, a systematic way. It’s a realistic, comprehensive plan that helps you meet your goals by addressing your financial weaknesses and building on those strengths.
Mary Jo:
Many advisors, in the scope of working with their clients, do elements of financial planning. However, most are not skilled or trained in looking at the entire picture all at once. They may provide guidance on individual topics as they arise, but much like a pharmacist may recommend a particular over-the-counter medicine to treat a symptom, they are not looking at the entire picture to figure out the cause of the symptom. They’re not doing a complete physical or a battery of tests to properly diagnose what is going on that could be contributing to the symptoms. As a result, many people make a financial decision in one area that could have a negative consequence in other areas of their financial lives. Does that make sense?
Bob:
It does, and that’s very well said. Christian Financial Advisors, our approach to financial planning is a little different. We help our clients to use their God given resources to accomplish their God given dreams and goals. We have these, what we call, financial modules and what you can do is you can pick and choose what’s most appropriate to you now and in the future. We’ll customize each module to your personal situation. So, you can take individually or you can add it and put it all together as a full plan. Our financial advice here is always based on biblical principles so that you can confidently navigate through all those financial decisions as a faithful steward of what God’s given you for your family’s financial future. And I like the fact, Mary Jo, that you’re our CERTIFIED FINANCIAL PLANNER®. Most people think of all financial planners as certified, but that’s not true. Just about anyone can use a title “financial planner”, and I’ve seen this over the years, but only those that have fulfilled the CFP CERTIFIED FINANCIAL PLANNER® Board’s rigorous requirements can call themselves a CFP professional.
Mary Jo:
That’s true, Bob. As a CFP professional, we are held to a strict, ethical standard to ensure financial planning recommendations are always in the best interest of the client. What’s more, CFP professionals require several years of experience related to delivering financial planning services to clients, and pass the comprehensive CFP certification exam before we can even call ourself a CFP professional. So, not only do we have to have the academic rigor behind it, but we also have to have the years of experience before we can hold ourselves out as a CERTIFIED FINANCIAL PLANNER®.
Bob:
Would you not say financial planning is really a dynamic process, isn’t it?
Mary Jo:
It is. It’s an ongoing iterative, evolving process. I hate to think of it as just a book on a shelf.
Bob:
Those goals, they seem to evolve over the years. You’ll have different goals within your 20’s and your 30’s and then the children come along, and then the children go to college and the children leave. Then, you retire. So, over the years, it shifts depending upon your lifestyle, your circumstances, and your age. There’s a lot of things you look at with financial planning over the years, like career changes, marriage, maybe a loss of a spouse, an inheritance that you may receive, which a good supporting scripture I always like when it comes to inheritance is Proverbs 20:21, “An inheritance gained hurriedly at the beginning will not be blessed in the end,” which is really talking about being careful when we receive an inheritance or give an inheritance. How are we going to give it away or receive it, and just be careful that we’re not going to spend it all. Even things like a home purchase goes into financial planning or even a home sale, a growing family. A great scripture that I like to use with that one is from 1 Timothy 5:8 that we’ve used many times here on Christian Financial Perspectives, “If anyone does not provide for his relatives and especially for his immediate family, he has denied the faith and is even worse than an unbeliever.” Pretty tough scripture there, but it’s showing how important it is that we provide for our family and do it in a wise way.
Mary Jo:
That’s right, Bob, and I love the scripture.` Not only do we need to think about a growing family, but something that’s hitting us now, more than ever, is providing for our elderly parents and making sure that they have a plan and are covered. Sometimes, that falls to us. I wanted to be sure that we think about that as part of the financial planning process. Like most people, you have hopes and dreams and life goals for yourself and your family. Without a plan and a strategy, there can be a lot of unnecessary risks in achieving these goals, risk that can cause emotional stress and financial distress if not managed properly. And, Bob, marital unity is so important when talking about our finances. Financial distress is probably one of the biggest things that is a stumbling block in most marriages. So making sure that you have shared financial goals, that you’re on the same page, and that you agree on your process to get there, that is so helpful in making sure to maintain harmony within a marriage, wouldn’t you say?
Bob:
I would say that, and it’s so important that you have someone come alongside you, possibly, and help you with that, which is what we’re emphasizing today. Because like in Proverbs 15:22, you always hear me quoting that one, “Plans fell from lack of counsel, but with many advisors they succeed.” As you begin to consider how to manage your financial future, you should feel confident knowing you’re working with someone committed to providing you with the highest standard of financial planning. This truly begins with a process. We’re going to walk you through what the financial planning process looks like. First, let’s talk about when you might need financial planning.
Mary Jo:
You might want to take control of your financial future, but you don’t know where to start. You have retirement plans from previous employers and don’t know what your options are. You don’t have time to do it yourself. A great supporting scripture is from Ecclesiastes 4:9-10, “Two are better than one because they have a good return for their labor. If either of them falls down, one can help the other up, but pity anyone who falls and has no one to help them up.” Maybe you don’t have the expertise in all the areas such as investments, insurance, taxes, or retirement income strategies. In Proverbs chapter 15:22, another great scripture, “Plans fail for lack of counsel, but with many advisors they succeed.”
Bob:
Maybe you’ve done some initial planning, but want to work with a professional and get a second opinion. You want to develop a strategy for giving, but you don’t want to put your own financial needs at risk. You have an unexpected life event or immediate need, like a layoff, illness, or disaster. I like to look at Proverbs six through eight. This is one of my favorite scriptures. It talks about go to the ant, “Consider his ways and be wise. It has no commander, no overseer, or ruler, yet it stores its provision in summer and gathers his food at harvest.” I think it’s a really great scripture to go with that unexpected life event that you plan in advance. And next, as you are approaching retirement and need to generate replacement income, but you just aren’t sure about things like tax implications.
Mary Jo:
Without prior planning, funding these events can result in additional debt, creating financial hardship. Anticipating the events in advance, developing and implementing a saving strategy, can help reduce the risk and make financial burdens more manageable. Having a solid financial plan in place can help you weather these storms without putting your financial future at risk. We talked about the financial planning process awhile ago, and there’s actually six steps. So Bob, what is the first step in the process?
Bob:
Well, how about this one? Agree on how to work together first.
Mary Jo:
That’s a good one.
Bob:
You want to identify what the scope of the relationship is gonna look like. Like at Christian Financial Advisors, we have a financial planning agreement. Then, you want to talk about the fees involved and how much time is going to be involved in putting that plan together. How well are you going to work together?
Mary Jo:
Then the next step is what I call the discovery process. It’s where you gather the information about your finances and set your financial goals. We’ll have you initially complete a confidential client profile where you share with us all the moving pieces and parts of your money life, – all of your income sources, all your liabilities, all your debts. We’ll establish some goals. It’s a very complex form, not complex, but it’s a very comprehensive form that we have you complete. And then, we schedule a series of meetings to go over that. Typically, there’s one where we meet to kind of go over that and get the big nuggets, but then there’s going to usually be another followup meeting so that I can clarify any of those unanswered questions that come up as I begin the analysis process. But again, this could be a series of meetings and here we define your personal financial goals. We determine your risk tolerance and what your timeframes are for those goals. And then we can appropriately begin to identify solutions.
Bob:
Mary Jo, I have got to say that when you were talking about the confidential profile, one of the things I’ve noticed is it’s pretty difficult and it’s taken years and years of research to put together our confidential client profile. But if you’ll fill that out, I’ve noticed that it helps our clients as much as it helps us because they identify needs and things that they had never thought about while they’re filling out the confidential profile. Have you noticed that too?
Mary Jo:
Well, yes. There are so many elements of that that maybe they haven’t given thought to. And if they sit down, if it’s a married couple ,and they do it together, then they’re both kind of seeing the whole picture. I have this little saying that I use in this part of the process, and it’s open the kimono. You have got to expose it all. And so in order to really have a good quality outcome, we need good quality information coming in at the front of the plan. And that’s what this helps with.
Bob:
Okay. So this is going to take us to our third step of the financial planning process. Again, the first one’s agreeing to work together. The second one’s gathering information, and this third one is analyzing all that information that you’ve given us and then coming up with a strategy. So, we call it an analyze and strategize. This is where we consider all the options, the pros and the cons and the risk and the outcomes of all that information that we’ve gathered. We work with you to analyze your assets, liabilities, expenses, cashflow, current insurance coverage, investments, and tax strategies. We identify potential gaps and the appropriate solutions, and then we go into the fourth area of financial planning. We develop those recommendations, and this is where we actually present our findings, and we review the recommendations and the rationale behind them.
Mary Jo:
And Bob, one of the things that as we go through this step in the process, we have wonderful software that we use and it allows us to do “what if” scenarios and that’s part of what the beauty of this planning process is. If you tell me that your plan is to live in the current house throughout retirement, but we find out that you’re very well funded and you go, “Well, Mary Jo, what happens if we buy a vacation home?” Well, we can model that in. Or you say, “Well, Mary Jo, well, what happens if we spend more or we spend less?” And so we’re constantly tweaking those levers, and you can see what options you have, but then you say, “Well, okay, if I spend a little bit more in a month, do I still have enough to do the giving that’s on my heart?” I just love to see all the different scenarios that we can come up with and model for clients, and we’ll do that as part of a comprehensive plan. And then, we want to put the plan into motion. We will agree on next steps. How will the recommendations be carried out? As the planner, what am I responsible for? But then as the client, you’ll have certain responsibilities to help carry out and implement your goals. And as the planner, what do you want my role to be? Do you want me to serve as a coach or help you coordinate the process with other key players in your financial life? A lot of times, we’ll meet with an attorney and a CPA and help put those pieces in place and make sure that all the players are on the same page. And then, we can tweak and adjust as these experts give us guidance, additional guidance. So, we agree on action items from both the planner and the client.
Bob:
Then we get to this last part of the financial process, which is extremely important, just as important as these first five. And that is that we monitor the progress and stay on track because things are going to change in life. Kids are going to be born. Grandkids are going to be born. Sometimes, a disease comes along. So, there’s all kinds of things that are constantly changing. You’ve gotta look at financial planning and approach it as a living, breathing, evolving process. Make shifts and updates as necessary, and monitor that progress to ensure you’re staying on track because it’s like a vehicle you can’t just change the oil one time in the entire lifespan of it. You’ve got to change the oil. You’ve got to get new tires every once in a while. I mean, things change. So, life’s constantly changing, and that is such an important part of the financial planning process. You don’t just do it one time and forget about it.
Mary Jo:
I think that’s exactly right, Bob. In this day and age, we start our planning typically in our forties. And then, you still have your fifties to work through. We used to stay with one employer for the majority of our career, but that doesn’t happen anymore. They say now that most people stay with one employer, on average, about seven years. So that means that you’re going to have retirement plans to roll over or to move into a current employer’s plan. So, there’s going to be changes and there may be periods of unemployment. You’ll have to adjust all those levers as you move through your years in your life. That’s why we don’t look at it as just a book that we’re going to create one time and put on a shelf. That’s old school financial planning.
Bob:
Now, Mary Jo, I see here at the very end, you’ve got some really good tips for success. So, I’m going to let you start off on this because you put this together and I’ll chime right along.
Mary Jo:
Okay. First, you want to set measurable, financial goals. If you’ll recall, that was one of our recent podcasts that we had, setting measurable financial goals, and putting those in writing and how important that is. So, you want to create specific targets that you want to achieve and when you want to see those results.
Bob:
Oh, I like this second one. Understand the effects of each and every financial decision you make. Financial life is much like a puzzle, Mary Jo, did you ever see the little puzzle pieces that we had here from a long time ago?
Mary Jo:
I did, and it works beautifully. I think it’s the perfect image. Another image that I have, and I always like to talk in visuals, it’s like a crazy quilt. You have all these different pieces of fabric that don’t go together, but when you put them all together, it makes a beautiful piece that will keep you warm when these cold, chilly days.
Bob:
You’ll have competing financial goals all along the way, too. The investment decisions you make along the way, what are the tax consequences that might be of those college funding decisions for your children or grandchildren? So, there’s all different decisions that have to be made along the way that you’ve got to put into your financial plan.
Mary Jo:
You want to periodically reevaluate. We mentioned it being a dynamic process. Goals may change, and certainly unforeseen issues may arise. Aging parents. That’s a big realism in today’s world, so they may need help. It could be, for example, if the spouse has to be in the caregiver’s role, maybe he or she has to step out of the workforce for awhile to make that happen. So, that could be a real hiccup in your financial plan.
Bob:
And Mary Jo, this last tip for success that I see you’ve got in here, which goes along with the program that we did about procrastination, is start planning now. The number one reason for failure is procrastination. You never know what tomorrow may bring, and by developing good habits now, good saving habits, budgeting and investing habits, you’ll be better prepared to handle those emergencies in life’s challenges when they come along. As Christians, most of us strive to give generously, but you may be afraid that you may not have enough. If you aren’t sure how much is enough, the financial planning process can help you decide. We want to help you decide that prayerfully, taking in God’s word in consideration of that, that all your spiritual goals align with your financial goals and vice versa. We want to help you to discover the joy of generosity and create a plan to live a more generous life. That is so fun because it’s more blessed to give than receive, and expand God’s kingdom while achieving the dreams and goals of your family. To end up today’s program on financial planning, we’ve shared a lot with you. Mary Jo has a great scripture to share with you here at the end of the today’s podcast.
Mary Jo:
This is from Romans 12 – A Living Sacrifice to God. “Don’t copy the behavior and customs of this world, but let God transform you into a new person by changing the way you think, then you will learn to know God’s will for you, which is good and pleasing and perfect. Because of the privilege and authority God has given me, I give each of you this warning. Don’t think you are better than you really are. Be honest in your evaluation of yourselves, measuring yourselves by the faith God has given us. In his grace, God has given us different gifts for doing certain things well. So if God has given you the ability to prophesy, speak out with as much faith as God has given you. If your gift is serving others, serve them well. If you are a teacher, teach well. If your gift is to encourage others, be encouraging. If it is giving, give generously. If God has given you leadership ability, take the responsibility seriously. And if you have a gift for showing kindness to others, do it gladly.” We all have a gift. For some of you, it’s knowing what you don’t know. So, plan today for a financially fit future. Let’s make a plan together. 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.
23 min
January 08, 2019 16 – Procrastination
Click below to listen to Episode 16 – Procrastination
Episode 16 – Procrastination

Bob and Mary Jo talk about one of the main reasons for financial failure in almost every area of your finances – procrastination.

More episodes >>

Many find themselves in a revolving cycle of putting off financial matters that need to be done. Could you be in this cycle? Bob and Mary Jo talk about one of the main reasons for financial failure in almost every area of your finances – procrastination.
Procrastination is the #1 reason for financial failure. Typically, it’s only when a crisis hits that people get spurred into taking action. Unfortunately, by not being proactive and planning ahead, your choices can become very limited.
This episode focuses on 5 important financial areas that should never fall victim to procrastination. With a new year comes the opportunity to start it off right and begin accomplishing all those things you’ve been needing to do but haven’t because you been procrastinating.

HOSTED BY: Bob Barber, CWS® and Mary Jo Lyons, CFP®
Mentioned In This Episode

Christian Financial Advisors
Website

Bob Barber, CWS®, CKA®
Mary Jo Lyons, CFP®, CKA®

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

[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:
The definition of procrastination – to be slow or late about doing something that should be done; to delay doing something until a later time because you don’t want to do it. Now, James 4:13-14, “Come now you who say today or tomorrow, we will go to such and such a city and spend a year there and engage in business and make a profit. Yet you do not know what your life will be like tomorrow. You’re just a vapor that appears for a little while and then vanishes away.” Hi, Mary Jo.
Mary Jo:
Hey Bob. I want to take a minute and wish all our listeners a Happy New Year. I just can’t believe we are on the cusp of 2019. Gosh, where does time go?
Bob:
I don’t know. Me either.
Mary Jo:
Oh man. Well, in today’s podcast, we’re going to talk about one of the main reasons for financial failure in almost every area of your finances, whether it’s retirement planning, tax planning, education planning, risk planning, like liability, life insurance, disability, or even thinking about longterm care insurance and estate planning, especially, and setting up for that will for your family. Procrastination is one of the biggest and most dangerous reasons for financial failure. We always think we’re going to get to it tomorrow. Tomorrow never comes.
Bob:
Exactly right. And with the new year comes the opportunity to start it off right and begin accomplishing all those things you’ve been needing to do, but you’ve been procrastinating about, but we don’t want you to feel alone, as we all are prone to procrastinate. It’s very easy to put off those things we all need to do, especially financial matters. Today, we’re going to focus on five important financial areas that one should never fall victim to procrastination, as it’s very costly to do this for yourself, as well as for those you love.
Mary Jo:
Procrastination is definitely the number one reason for financial failure. Typically it’s only when a crisis hits that people get spurred into taking action, and usually that can be a little too late. And when that happens by not being proactive, sometimes you’re not planning ahead. Sometimes, your choices become limited. That’s one of the very reasons to get it done and get your wishes in place while you still have control over those wishes. Many find themselves in a revolving cycle of putting off financial matters that need to be done. Could that be you? Could you be in this cycle? When it comes to financial matters, that cycle can look something like this.
Bob:
Okay, Mary Jo. So, here we go. We’ve really gotten to the definition of procrastination. Let’s share some good scripture. It’s January, but we’re just now getting over December. Could this be done in March? What do I need to do?
Mary Jo:
Well, it’s March, but with taxes coming up in April, I’ll plan to take care of this in May.
Bob:
Oh, okay. Well it’s May, but the kids or grandkids are graduating. Why don’t we tackle this in July?
Mary Jo:
Summer. It’s always easy to get to it in summer. It’s July, but with summer vacation, how about we just wait until August?
Bob:
Well, oh no. It’s August. The kids and the grandkids are just starting school. Could we wait at least until September or October to get this done?
Mary Jo:
Now it’s October, but we’re just so busy with the kids and the grandkids and all their school activities and all the fall festivals. I don’t think I’ll have time to do this until next month.
Bob:
Now, it’s November. It’s Thanksgiving coming up. Can we wait to get this done until December after Thanksgiving and holidays are over?
Mary Jo:
Sure, Bob. December’s always a good time. Ah, but now I’ve got Christmas parties and getting ready for the family to come in, all our visitors. I think we should probably just wait until next year. Maybe it’s time to just step off that spinning wheel. Is there ever really a convenient time? No, not really. Make this the year you prioritize and make that appointment to get all your financial house in order.
Bob:
Well, I tell you, Mary Jo, what we just went through is a scenario that I have been hearing for over 25 years that I’ve been in financial advice and planning. It is amazing. Hopefully, somebody could relate to this little scenario because it’s really never a convenient time. So now, let’s get into what we see. I see. I’m sure you see this too, Mary Jo. One of the main things people procrastinate about and one of the reasons that the first question we always ask when someone comes in for a review is estate planning. How long has it been since you’ve updated your estate planning documents or your will? And Mary Jo, I’m finding that many people, you ask them, how long has it been since you updated it? They look at you like, wait a second. I’ve never even done a will. It doesn’t matter where you are in the spectrum. I have a person we’re working with right now that has $6 million, and they haven’t done their estate planning ever, and they’re a business owner. I’m just amazed.
Mary Jo:
Oh goodness.
Bob:
Then you’ve got the other end of the spectrum with someone with $10,000 is just starting off and they haven’t done their so it’s everywhere in between. There’s a good scripture that will motivate all of us, I believe. And that’s Proverbs 20:21, “An inheritance gained hurriedly at the beginning will not be blessed in the end.” It’s so important when we think about estate planning that we hand those assets off wisely to those that we love and care about. And I know, Mary Jo, you and I have done a podcast on estate planning that somebody could go back and listen to this called “Estate Planning: The Wrong Way, The Right Way.”
Mary Jo:
I think probably estate planning is one of the most critical issues that we’re going to talk about today. I always like to be very positive on our podcast, but I always think it’s also important for us to share stories and to talk about some examples. I have one that’s very personal to me and very timely. We’re coming up on October and it’s actually almost the one year anniversary of a very tragic event that happened to my next door neighbor. She was a young mom with two kids and walking her little boys to school one day last year, and a lady ran a stop sign and hit them both. She was killed. The mom was killed. Luckily, she and her husband had talked about their wishes. So he kind of knew what she wanted, but that kind of thing, it’s tragic, but it could happen so easily. Just this morning, I went to a meeting and I saw the kids outside, waiting for the school bus. I don’t wish anybody harm, but you just never know what can happen. So, don’t put that off. It’s so important to have all those documents in place, especially a healthcare directive and a healthcare power of attorney. You might be incapacitated, and you can’t predict those things.
Bob:
You know, Mary Jo, I think this goes right with the scripture that we started off with in James 4:13-14. And that 14the verse said, “Yet you do not know what your life will be like tomorrow. You’re just a vapor that appears for a little while and then vanishes away,” which is another reason we need Jesus so much. Our life here on earth is just a blip compared to eternity. That’s the importance of estate planning because you just don’t know if you’re going to be here tomorrow.
Mary Jo:
That’s right. Another key area that we want to look at is risk management. A lot of people don’t understand necessarily what we mean by risk management, but it is transferring the risk, typically, to an insurance company. So, this is really all about insurance and making sure you’ve got all those T’s crossed and the I’s dotted. In Ecclesiastes 11:2, “Invest in seven ventures. Yes. In eight. You do not know what disaster may come upon the land.” In risk management, then insurance policy. So, how long has it been since you’ve gone over your insurance policies? Have you done an insurance review? I always recommend talking with an independent insurance advisor to just assure that you’ve got the right coverage, that it’s cost effective, that it’s still relevant, and you still have the need for that insurance or do you need more? You may think you’re well covered in the event of an accident or some sort of disaster, but that’s not always the case. I noticed after Hurricane Harvey, this became a real issue and a lot of people didn’t have the coverages in place that they thought they had. Here’s another personal story. I was talking to a friend of ours who was also a condo owner down in Rockport in the same complex that we were. We just happened to be having dinner, and this was really about a month before the storm hit and somehow got talking about insurance coverage. I said, “Yeah, we need to probably up our personal coverage on our condo policy.” He looks at me and he goes, “Condo policy, what do you mean?” And I go, “Well, you have to have your own personal condo.” He goes, “Doesn’t the complex have that?” And I go, “Well, the association has a policy, but it only covers the exterior that is out in all of the common elements and the roof and the siding, but it doesn’t cover the sheet rock in or your personal contents. That’s what you have to have.” He said, “Oh, I didn’t know I needed that.” And I go, “Yes, you do.” Well, he called his agent the next morning and got it in place. Harvey hit less than three weeks later.
Bob:
Wow. I’ll tell you what Ron up here with Christian Insurance Services is always telling me stories. Mary Jo, about people that bought insurance strictly on price through one of these advertisements they saw on TV that nearly played insurance. As a joke, you should never buy insurance by stone price. You should buy insurance based on coverage. That’s right. That’s what people do. They buy based on price. And it’s always, you know, call this amount and you’re going to save 15 or 20 or 30% more on your insurance. Be careful that Ron has told me some really sad stories about people that have done that. And then they got in a car accident, very, very little was covered. And maybe even some lawsuits have come out of that. There’s one particular one I know of that lawsuit came out of it. Insurance didn’t cover them because they bought one of those insurance companies that are always advertising on TV. And it was just all about price.
Mary Jo:
Well, you want to make sure you’re looking at what is covered and what is not covered. The things that are itemized that are not covered, that’s just as important as what is covered. Just making sure that you’ve got your depreciation and the increased cost of construction is covered. Also, that you have the property liability limits. So, we can certainly talk about that more and if you have questions, we’d be happy to guide you through that.
Bob:
We’re going to have a whole show on just insurance coverage one of these days. Again, if you procrastinate on that one, that can hurt. We’ve covered the first two so far, estate planning and risk management. The third one is saving and investing for the future. We’ve used this one quite a few times as scripture. It’s always kind of funny in a way. I mean, just the way it starts off in the beginning is from Proverbs 6:6-8, “Go to the ant, you sluggard. Consider its ways and be wise. It has no commander, no overseer or ruler, yet it stores his in summer and gathers is food at harvest.” This really talks about speaking to savings and investing for the future. When that time comes that you’re going to need that savings, or you’re going to need that retirement plan and you’ve procrastinated for too long, it can become too late. Every once in a while, Mary Jo, I will meet people that they’re 60 years old and they’re saying, well, I need to start saving for my retirement now. I hate to tell them, I mean, it’s never too late, but that’s pretty late in the game.
Mary Jo:
So many wait until after the kids are gone and out of the house or out of school, and you should be saving simultaneously for those things.
Bob:
It’s a question that you need to think about right now. Like, how long has it been since you’ve had an annual review to make sure you’re on the right path for your specific situation? Are you well positioned for a major, potential downturn in the markets, as well as a major rally to take advantage of them in your portfolios? Are you aware of exactly how all your investments are positioned in your old 401K’s, if you’ve left a job for another job, or 403B’s, IRAs, or old brokerage accounts. Should you reposition your CDs or savings to another financial institution for a better rate of return? Procrastination for very long on this one could mean, again, thousands of dollars.
Mary Jo:
People think that they are diversified because they have all these various accounts, but what I find is there’s so much overlap because they’re all invested in the same thing. Have you looked at the entire picture and made sure that everything is utilizing the best in class choices in each of the various retirement accounts? It’s very, very important. Next, we come to tax planning in Romans 13:5-7, “Therefore, it is necessary to submit to the authorities, not only because of possible punishment, but also as a matter of conscience. This is also why you pay taxes, for the authorities are God’s servants who give their full time to governing. Give to everyone what you owe them. If you owe taxes, pay taxes. If revenue, then revenue. If respect, then respect. If honor, then honor.” So, I think taxes are, I’ve said this before, a sign of God’s provision that we’ve been fortunate to earn money and make money. We do owe our fair share. We want to pay that, and not begrudgingly, but we also don’t want to pay more than we need to. Doing everything we can to plan for taxes, to make sure that we are spending in a tax efficient manner, that we’re investing in taxable accounts. Are those invested in a tax efficient manner? So, we want to make sure we’re looking at all those things, planning throughout the year, and not procrastinating around this because of that word taxes. It always makes us, “Oh, I don’t want to have to deal with that,” but you could be costing yourself significantly, and you could use money for better causes.
Bob:
So far, we’ve covered estate planning, risk management, savings, and investing for the future, and tax planning. The last thing we’re going to cover for today’s podcast is budgeting. This is definitely one you don’t want to procrastinate on either. Mary Jo, I know you have a great scripture that you found.
Mary Jo:
In Proverbs chapter 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.” Making sure you know where everything is and what you’re spending – are you tracking your expenses? I don’t think you necessarily have to track them daily, but it’s important to monitor those and keep up with them. One of the things in today’s times, probably 90% of us pay our expenses – like groceries, eating out, or gas – all on credit cards or using a debit card. But you’re constantly hearing about cards being compromised or retailers being compromised, and you never know whether you’ve been impacted by that or not. Those can be pretty widespread. If you don’t sit down and take an approach in a discipline to actually look at those accounts and see where those spendings go, you may not even realize you’ve been impacted and you’ve been hacked. It is important to check that every once in a while. Certainly, all financial institutions allow you to track and categorize your spending and your investments and account balances any time. With some of these new online tools, it can be very easy to do this. You just want to make sure that you’re staying on track. The other thing I encourage you to do is to check in on your account, and most of them now offer your credit rating. It’s so important to keep up with your credit rating, and know whether it’s increasing or if some reason it’s gone down. If it has gone down, you want to find out why. That could also be another red flag that something’s amiss in your account
Bob:
With today’s technology, we here at Christian Financial Advisors have a system where you can monitor multiple bank and debit accounts with different banks and credit unions, multiple credit card accounts, and even multiple investment accounts, even your 401K, all at the same time on a daily basis. You can see them all on your computer or smartphone any time of the day. I do this personally and I love it because our system has an app on the phone and you can just click on that app, put in 4 or 5 numerical numbers that you’ve come up with. You can see that. The system doesn’t allow any money to be moved or transferred. It’s strictly a monitoring system. But that’s what I like, too, because that gives it a lot of safety. It’s going to keep track of all your expenses and consolidates them daily. So, you know at any time what you’ve spent on any category for the month, and it even lets you know if you’ve gone over budget. Let’s say you have $500 for the month for entertainment and eating out, and you’re already at $550 by day 21. Well, no more eating out or entertainment for the next nine days or you’re going to have to sacrifice for the next month. I think this is very important that we monitor this all at once. It helps so that you don’t have to go to each individual account if you have multiple bank accounts and multiple credit cards, especially like if you’re a business owner, because those that do know where they are financially do better than most of those that don’t.
Mary Jo:
You have to pay attention. Once you start focusing on it and I don’t mean a daily focus, but once you start visualizing those numbers, your account balances, your savings, you’re more intentional. I think that’s an absolutely right, Bob. I think that was a great statement that you just made. One of the things over the years as a financial planner, and I’ve done so many plans for so many people, I think the hardest part is just getting started. It’s never as onerous as you think it’s going to be. Once you start down the process, you get on a roll. You find it feels really good to make progress and get your financial life in order. It’s very freeing, if you will. Once you start to see your balances grow, your savings goals materialize, it brings a certain amount of peace to know that you’re getting your life in order. It’s just kind of like cleaning out the closet. You hate to think of the task and you don’t want to get started, but once you’re done, you just love it. There’s a certain quote out there. I almost hate to use it giving some of the things in the media, but “just do it”.
Bob:
So as we come to the end, I want to say what that definition of procrastination is – “to be slow or late about doing something that should be done; to delay doing something until a later time just because you don’t want to do it.” Don’t procrastinate on these five areas we talked about today – Estate planning, risk management, saving and investing for your future, tax planning, or budgeting. As always, Mary Jo and I are here to help you get started with that first step that we know can be, many times, the hardest one. 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.
22 min

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Biblical wisdom for financial decisions and goals. Conversations about managing money according to Christian principles, featuring expert insights on budgeting, investing, giving, and building wealth…