Click below to listen to Episode 10 – Thanksgiving and Timely Reminders

Episode 10 – Thanksgiving and Timely Reminders

Wishing you a Happy Thanksgiving from Christian Financial Perspectives!

As we approach the upcoming holidays and the end of the year, Bob and Mary Jo thought it would be good to share some timely reminders regarding your personal financial wellness. Thanksgiving is one of our favorite holidays. It is a wonderful time to reflect on the past year with family and friends over Thanksgiving dinner, and remind one another of everything that we are thankful for.

With Black Friday and Cyber Monday looming around the corner, Bob and Mary Jo share tips for sticking to a budget when it comes to gift giving and money spending. They also touch on other year end topics including charitable gift giving, reviewing your tax situations, and maximizing your retirement plan contributions.

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®
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Mary Jo Lyons, CFP®, CKA®

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EPISODE TRANSCRIPT

[INTRODUCTION]

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

Mary Jo: And I’m Mary Jo Lyons.

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

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

[EPISODE]

Bob:
Hello, Mary Jo. Can you believe that Thanksgiving’s just a few days away?

Mary Jo:
The time has flown by this year, but I guess they say that every year.

Bob:
It’s one of my favorite holidays of the year. Time to get together with friends and family and do a lot of eating. I get pecan pie on the brain.

Mary Jo:
You’ve already been talking about it.

Bob:
Yes. I love being able to bond over a great meal. I always say for Christians, food and fellowship go very well together, and we even have this old recipe that I always start thinking about it right about this time that my mom’s been making for years. It’s a pecan pie recipe that has been in the family, as far as we know, since 1830 when our family entered the state of Texas. And it’s where you take the pecans and instead of just layering them on top of the pie, you crush them all up and put them all throughout the pie so you really get that pecan flavor. And then you’ve got to make the crust from homemade and then you just drench it in whipped cream. I’m getting hungry. My mouth is watering thinking about it. Yeah.

Mary Jo:
So not vanilla ice cream, but whipped cream?

Bob:
Whipped cream, lots of whipped cream. My mom always laughs, she goes, so are you going to have a little bit of pie with whipped cream or whipped cream with pie? What’s your favorite dish?

Mary Jo:
God, that is so hard. I’m torn. I love me some cornbread stuffing if it’s made real savory. I also like cranberry chutney, and I like making it. It’s one of my husband’s favorite, so it’s a recipe that I experiment with all the time and I’ve shared it a time or two. But you can use it on the leftovers, because speaking of ice cream, they go great on vanilla ice cream, but you can also use it in appetizers, and it’s certainly so much better making homemade cranberry sauce than it is that jelly stuff out of the can. I think that’s probably my favorite.

Bob:
I’ve heard you say this, it’s called cranberry. What do you call this again? Chutney. Now I’m sure I’ve had that, but I’m not sure. I’ve never heard it called that.

Mary Jo:
It’s more like a spread. So it’s chunky. It’s got fruit in it. So I put an Apple, I put pears, I put raisins, and even some chopped nuts. So it’s got the juice and pulp of an orange. Well, it’s kind of thick and it’s got all kinds of goodness in there.

Bob:
Okay, well I think my mom makes that, but I just never knew it was called that. So, it just goes to show what I know.

Mary Jo:
You just want to eat it all. So before we get into this week’s topic of timely reminders, we’d like to start each episode with a scripture as you’ve heard us do in the past. Since it’s nearing Thanksgiving, we thought this one would be a good one to start off. I chose Psalm 100 and it’s actually called A Prayer of Thanksgiving. “Shout for joy to the Lord all the earth. Worship the Lord with gladness. Come before him with joyful songs. Know the Lord is God. It is he who made us and we are his. We are his people, the sheep of his pasture. Enter his gates with Thanksgiving and his courts with praise. Give thanks to him and praise his name for the Lord is good and his love endures forever. His faithfulness continues through all generations.” How was that for timeliness at Thanksgiving? I love the ending “through all generations”.

Bob:
I love as you were reading that give thanks to him and praise his name. Enter his gates with Thanksgiving. Being thankful is mentioned a lot of times in that scripture. Hopefully, some of our listeners can choose that one too. That is a very good scripture to read. Psalms 100 is what you reading that out of. As we get towards the end of the year and here it is Thanksgiving. And like I said, I just cannot believe, I don’t know how this thing happens. It comes on faster and faster every year and I know everybody says that. I don’t know if that’s a sign that I’m getting older.

Mary Jo:
I think it is.

Bob:
But I think we’re all aging, but what we’ll talk about some timely reminders for the end of the year concerning personal financial wellness during this Thanksgiving week. One of the things that we want to be careful of, being that it is Thanksgiving week and there’s the black Friday coming up, is being careful of spending money on things that are just going to rust, rot, and decay and not even remember the next year that you got the gifts. I really emphasize that here around this Thanksgiving time, Christmas time, that you create a list and spending budget for each person you want to give something to and really stick to it. Possibly even open a separate checking or debit account just for Christmas. Later, you could just use that same account for gifts during the year for birthday gifts, et cetera.

Mary Jo:
Bob, another thing you could do is the envelope system. Put what you’re going to spend for each person in an envelope. It’s just another way and makes it simple. I love that concept. Definitely want to stress to our listeners about watching out for Black Friday. Be so careful about buying things just because they’re on sale and you get caught up in the excitement and the enthusiasm of shopping, and everything looks like a deal. Well it’s not a deal if you don’t need it. And then Cyber Monday, it’s kinda the same thing all over again. If you don’t have a chance on Friday cause you’re busy cleaning up after Thanksgiving, you might get caught up in that Monday sale. Just only buy what’s on your list and try to ignore some of the noise. I always want to share a little something personal. We’re to looking to downsize now and I’m looking around my house, and all I see is all this stuff. When you’re in your twenties, thirties, forties, it’s all about accumulating stuff, and then as you get in your 50’s and and older, it’s all about getting rid of that stuff.

Bob:
Yeah, you’re right. I got to admit, you’re right

Mary Jo:
When it comes to stuff, you have to store it, you have to transport it, you have to insure it. All of those things cost money. I just think that life is about experiences and that’s something that you kind of learn as you move through life and with more experiences, and that’s where the good stuff is. It’s not in the stuff. Give some real thought before you buy things. Is it something you need? Is it something that’s really going to add value or is it just more stuff?

Bob:
Another thing as we’re coming into the end of the year and thinking about Thanksgiving and buying all that stuff, I’m sure today or the next day you’re getting all these flyers in the mail and in the newspaper, but think about giving because that’s really what it’s all about. What really brings significance is giving to others, giving to worthy causes. So, as we’re getting here at the end of the year, look at forming a year end giving plan and maxing out your charitable giving. Just remember the things that you may be giving to like Goodwill. You want to get a receipt for that and itemize all that. Now this year, your giving is going to have to total quite a bit to get over the threshold with the new tax laws, which for a couple was $24,000. So, if your itemized deductions are not going to total over $24,000. Itemized deductions are things like mortgage interest, property taxes, sales taxes, et cetera, if that’s not going to total over that amount, you really don’t necessarily need a receipt cause you’re not going to take a deduction for it. In the past for a couple, it was $12,000 that was your automatic deduction for each other. But now it’s $24,000. Does that make sense, Mary Jo?

Mary Jo:
Yes, and I think you’re so right. If you are able to maximize that and accumulate more than $24,000, it will be imperative to have a receipt. Before, you could go donate up to, I think it was $250 or $500 to Goodwill, for example, and you didn’t have to claim a receipt, but now you do and the IRS is going to be looking for that. If you’re going to itemize those deductions, definitely have receipts to back it up. As a small business owner, it’s also a great time to think about the small business retirement plans. What should our listeners be thinking about for that?

Bob:
Well, if they haven’t contributed all year long, it depends on are they working for a corporation or are they an individual business owner? As an individual business owner, you still have time to set up a SEP IRA plan or even a solo 401k, but most people don’t fall in that category. Most of our listeners fall into the category of probably working for a company that has a 401k or 403b or a thrift savings plan. It’s here at the end of the year where you can maximize those contributions to those plans. I’ve even had some clients in the past here at Christian Financial Advisors. We’ve talked about it, we’ve looked at it, and they still could put another $10,000 into their 401k, but that would mean forgoing their last paycheck if they did that. So, we look and see if they have enough savings to forego that last paycheck and put the entire last paycheck into the 401k to get that deduction. Those are some things that you can do that can save on taxes here at the end of the year.

Mary Jo:
Oh, that’s a great idea. Speaking of taxes, that’s a topic that we all love hearing about, isn’t it/

Bob:
Oh yeah, absolutely.

Mary Jo:
Oh, but we shouldn’t begrudge paying taxes. It’s just a sign of God’s provision, but as frustrating as it can be, it’s also important to be thinking about those taxes. We talk about year end tax planning, but you want to be thinking about your tax situation throughout the year, not just at the end of the year. You don’t want to be panicking at the very last minute. So, there are some strategic things you can do to plan ahead to help minimize the taxes. I think that’s something that we all probably want to do. Bob, we’ve already touched on some of the changes on the new tax laws. What else do our listeners need to be aware of?

Bob:
Well, let me re-emphasize those changes. The most important one is the itemized deductions must be over $12,000 for a single person or $24,000 for a couple for it to count. But medical expenses are another new thing this year. It used to be 10% of your medical expenses could count towards your deductions, but this year it’s 7.5% of adjusted gross income. And there’s those itemized deductions like home mortgage interests, charitable contributions, student loan interest, educator expenses, casualty, and theft losses. And Mary Jo, I know you have some more tax ideas.

Mary Jo:
Well, I think one of the things that is helpful to consider is since we have such a higher limit for those deductions, you want to give some thought to when you can strategically group those deductions. If it’s one year, if you can prepay expenses that you have for the following that you would normally pay in January such as property taxes. Maybe pay that in December and then that will help to get you to a higher level of deduction so you can deduct it this year. But then next year it’s probably going to be a lean year, so you’re going to have some fat years and some lean years. So be thinking about that if your state taxes are due January 15, maybe pay those in December. Also, you some of the itemized bills that you can think about from a healthcare perspective. Let’s be thinking ahead of it so you can plan out those bills if it’s going to be a year when you can deduct your expenses. And now with the cost of getting any kind of medical treatment or any kind of tests, you might be able to accumulate a large enough expense that’s going to total more than the 7.5% of your adjusted gross income. If you had a hospital stay, this might be the year to do that or emergency room care. Also, if you’ve had elective surgery. Last year, I had multifocal lens implants and that was a very large out-of-pocket expense. So if that’s the year that I’ve had that large expense, maybe I want to do some dental work that I was holding off on. Or, you might have other medical tests that are quite expensive. Try to pull those all together in one year and then avoid them the next year when you can’t deduct. Does that make sense, Bob?

Bob:
It does. And you know what else I was thinking of while you were saying that is not only for the tax purposes of medical expenses. I was also thinking of your deductible for your health insurance. So, by lumping your medical bills in one year, if you’re able to do that, you’re only going to have to pay that deductible one time. An example of this would be, let’s say your deductible is $4,000 and you just had $2,000 of medical expenses, then you’re not going to get to use your health insurance. But let’s say you have medical bills that are going to total over $10,000 both years in two different years. If you could put that all into one year, you won’t have to pay that deductible but one time.

Mary Jo:
That’s right.

Bob:
Does that make sense?

Mary Jo:
Yes, absolutely.

Bob:
And then also tax ideas are for the self employed like myself. If you can, you might want to think about delaying income, if this is a real high income year, until next year. Also, when you’re self employed, because of your expenses, you can sometimes pull those expenses this year or put them to next year. You’ve just gotta be careful about this, and I’ve noticed this in the past myself. If you’re going to be more profitable next year, then delay your expenses. But if you’re going to be about the same, go ahead and put those expenses towards this year.

Mary Jo:
That also applies to those fat and those lean years. If you have bundled your deductions for this year and you’re trying to get above that 7.5% of your adjusted gross income, you want to have less income this year and then next year if you’re not going to itemize those deductions, it’s okay to have a higher income next year. I think it all plays together.

Bob:
And then one last thing that I want to mention, tax loss harvesting is a big thing right now at this time of the year. It’s been a good year in some stocks. So, you might own some stocks that have a high gain to them and have been sold. You might have some other stocks that have a loss to them. You want to keep those stocks, but you could sell those stocks and then buy them back 31 days later and take a loss against your gains. We call that tax loss harvesting.

Mary Jo:
Yes. And you can carry those losses forward. And then $3,000 that you can gain that you can offset with losses from previous years. Did I say that right?

Bob:
Well, yeah, but I thought if you had gains of $15,000 and you have losses of $10,000, you could take the $10,000 of losses against the $15,000 of gains if you do it in the same year.

Mary Jo:
Yes, that’s true, but you have carry forward losses of $3,000.

Bob:
That’s right. Yes, you do.

Mary Jo:
Also, for our listeners that are approaching 70.5, If you are in the period when you are required to take a minimum distribution out of your retirement plans, don’t forget to do that because after the age of 70.5, There is a penalty if you forget to take out your required minimum distribution. That penalty can be up to about 50% or what the distribution should have been, so it’s quite costly if you miss that. Also, if you are one of those that has a flexible spending account with your employer benefit plan, make sure that you spend any leftover balances if your employer doesn’t offer a grace period. You don’t want to leave that money on the table. Think of things that you still need to buy that you can use your flexible spending account to do, like you can do it for your copays at the doctor. You can use it for prescriptions, over the counter medicines, and things along that line. In closing, we’d like to offer up another prayer for our listeners. I think that this is something special about this time of Thanksgiving. It’s a time to be with family and give thanks for our many blessings, but it also can be a difficult time for some people. I know Bob and I are extremely thankful for our listeners out there. We appreciate the fact that you’re spending your time with us, and we don’t forget that. We take that very seriously and we hope that you are finding value in our show and that it’s been a blessing to you. If it has been a blessing, we also would ask that you share it with those that you care about.

Bob:
Our Heavenly Father, creator of everything, all that is, and all that is to come. We thank you for the many blessings you’ve given us over this past year. Food to eat, clothes to wear, shelter from the storms, friends and family that love us. That is a reflection of your love. We acknowledge there are times in our lives that we ourselves feel unloved and unlovable. Give us the grace to love others, even when they are difficult. Almighty God, we trust in your faithfulness to carry us over the roughest times of life. We trust in your love to walk with us to the most difficult of days. We trust in your promise of eternal life and put all our hope and trust in you. Thank you Jesus for dying on the cross for our sins and given us eternal life through your atoning sacrifice.

Mary Jo:
Forgive us for our sins, the things you asked us to do and we fail to do, as well as the things you told us not to do but we did anyway. We are sorry and we ask that you will strengthen us so that we will always follow you. We pray that your Holy Spirit will be felt by people who are in pain in mind, body, or spirit. Help them to know that you are with them, and you are able to carry them through their trials. Bless our church family, bless our community, bless our nation, bless our world, and especially bless our listeners. Enable us to live so that your will might be made manifest in the world around us. We ask all these things in the name of Jesus, our Lord and Savior.

Bob:
We wish you a blessed Thanksgiving. Enjoy this time with family and friends. Take care and be safe.

[CONCLUSION]

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

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

Mary Jo: That’s all for now.

[DISCLOSURES]

Comments from today’s show are for informational purposes only and not to be considered investment advice or recommendations to buy or sell any company that may have been mentioned or discussed. The opinions expressed are solely those of the hosts, Bob Barber and Mary Jo Lyons. Bob and Mary Jo do not provide tax advice and encourage you to seek guidance from a tax professional. Investment advisory services offered through Christian Investment Advisors Inc. DBA Christian Financial Advisors, a registered investment advisor.