Life Events Requiring Financial Advice And Planning Part 2

Intro: Welcome to Christian Financial Perspectives, where you’re invited to gain insight, wisdom, and knowledge about how Christians integrate their faith, life, and finances with a Biblical worldview. Here’s your Christian Financial advisors host, Bob Barber, and his co-host, Shawn Peters. Shawn: Welcome to another episode of Christian Financial Perspectives. We’re so glad that you joined us. If you like financial topics from a Christian perspective, we’d love you to smash that subscribe button and maybe like this video and share it with others. It helps the channel and helps other people find content like this. So today, we are going to be covering part two on 12 life events that require financial advice and planning. We’re going to do, just for those of you who maybe miss the other episode, you can either click that link in the description. or you can go ahead and we’ll give you a quick little recap. So last week we covered the first 6 of the 12. And the verse we wanted to give you guys is, again, Proverbs 21:5, which is, “The plans of the diligent lead surely to advantage. But everyone who is hasty comes surely to poverty.” So Bob, do you want to recap the six from part one last week? Bob: I sure do, and this would be just to recap, I really emphasize you go back and that you watch part one, watch part one or listen to it through the podcast, because we get into detail what the reasons are behind each one of these. But this really has to do with life events. And life events require financial advice and financial planning, and they require it before these events occur. Sometimes though, you can’t help it for it to be after. Okay? Like, one of the events we talked about last week was death in the family. That’s an event that that must require financial advice and planning. Another one last week was retirement. Then we talked about divorce. Hopefully, you’ll do that before divorce. You need to look at that. Then another life event is a new marriage. That could be the first marriage, or it could be the death of a spouse and you’re remarrying somebody new. Disability or major illness. And the sixth one was a big one in my book is before any large purchases are done, Shawn, like an RV or a boat or an airplane or that second vacation home. Shawn: Or some sort of property. Bob: Exactly. So today we’re going to get into detail in part two. Again, we went into a lot of detail in part one, so I’ll invite you to go back and listen or watch that. So another life event that we see, so we’re going to go 7 through 12, is you need to do some financial advice, look for some good financial advice and planning. I always emphasize an experienced advisor. If you’re not going to use us, I’ve got so much experience, it’s crazy. It’s like 30 plus years. is Shawn: Is that all? Bob: Yeah, that’s all. But I’ve seen so many of these, I’ve seen all of these life events being a financial advisor during my years, but that’s before the sale of any sizable asset, Shawn. Shawn: So number one for today, or number seven in our full list. You want to get good financial advice and planning before you sell any sizeable asset. Bob: Not after, please don’t. You can come to us afterwards… Shawn: It’s too late. Bob: We’ll try to help you best we can. But for tax consequences, you gotta do this before, and you gotta do this even before if you’re planning on selling a large piece of real estate, you need to do this before you even enter into a contract for that real estate. Because we may advise doing a charitable remainder trust, as an example, putting that real estate in that and then selling it, especially if it’s a couple million dollar piece of property. But anything that’s up $100,000 plus, you need to get with a financial advisor or planner. And that’s like land. A large stock position is another thing, an investment property, a business. If I sold my business, my basis in this business is zero. It’s going to be all capital gain, Shawn. Shawn: So how do you handle that? Bob: How do I handle that and what can be done in advance to lower taxes? And so many things can be done, but so many times they call me and they say, “Hey, we’ve got $3 million. We’ve just sold the property. What can we do to lower the taxes?” Well, there’s not a lot. Shawn: Not much now. Bob: There’s not a lot. Shawn: Once the sale’s occurred. So again, that is before the sale of any sizable asset. And we would just say as a general rule, anything about a hundred thousand dollars or more. Make sure you get some advice and planning BEFORE you enter the contractor sale. Bob: That’s right. Shawn: That’s right. So the next one, a job change. Bob: Yeah, exactly. Shawn: This is one that I think occurs somewhat frequently on the job. Bob: Nowadays. It does. Shawn: So how will you manage your old retirement plan? Or do you have, if you have the experience to manage it yourself and a written investment strategy for managing it, maybe you can manage it yourself? Bob: Never met one yet…. Shawn: No. Bob: That had an investment strategy. Shawn: Unless it’s a financial advisor. Bob: Yeah, exactly. Exactly. But yeah, what are you going to do with that old 401k? And you know, that job change could also mean a higher income. What’s that going to look like? Which takes us to our ninth one, which is another major life event. Shawn: You get advancement in a job, and so now you’re going to have higher income, which means you want to do a little bit of tax planning. So, and again, similar to when you’re selling that asset, this one is, I guess technically after the job advancement or job change has occurred, but before you’ve already finished the year and you’re about to file your taxes in a couple weeks. Bob: That’s not the time to do it. Shawn: If you make that change, talk to somebody about the financial planning and the advice and plan for, okay, well what is my estimated annual income going to be compared to last year? How’s that going to affect my situation and what can I do to reduce the overall tax burden? Bob: I think also what’s so important about an advancement in a job, where maybe your income goes from $70,000 to a $100,000, you’ve had a huge raise, you’ve gone up $30,000. Does that mean you should go out and spend all that money now? Shawn: No. Bob: Exactly. Shawn: First of all, congrats. But yeah. But second of all, no, don’t spend all of that. Bob: We’re not going to say not to raise your standard of living in a little bit with that. I mean, maybe out of a $30,000 raise $10,000 for that, but taxes are going to take another 5k or 6k of that. And then, let’s look at saving the rest, and as you said, because of that advancement, you may be able to completely max out your 401k. Well, you’re not doing that now. Shawn: I’m going to give my brother a little bit of praise here first, for an example. He’s a doctor. He’s a primary care physician. And I know when he and his wife, when he was going through med school, they were very frugal, because med school is expensive, for one thing. He was even working at Best Buy for a little while because just for some extra income. And what they did is as soon as he graduated, he was actually starting to get doctor money. They stayed on almost exactly the same budget for an a quite a few years because they were able to accelerate paying off his student loan debt. And so that was one of those things where yeah, his income went up significantly, but instead of all of that just going to a higher standard of living, they said, you know what, let’s save some of this money and let’s use some of this money to pay off our debts. Bob: I’m really smiling, Shawn, because I don’t… Shawn: He’s a doctor, I’m so proud of him. Bob: You need to be proud of him because I don’t hear this very much. I hear, okay, our income went up, especially doctors, I want to congratulate myself now because I’ve been in med school for 10 or 12 years. And now we’re used to living on $50,000 a year. Now, all of a sudden I’m making $250,000 and they just go right up there and spend all of it. Shawn: Expenses go all the way up to the top. Bob: So, I’m not saying to not congratulate yourself, but if it goes from 50k to 250k, and you are one of these doctors, maybe… Shawn: Go to a 100k. That’s still celebrating. Bob: Exactly. Or 150k, and save the rest. And like you say… Shawn: Or pay off some debt. Do a combination. Bob: Get rid of that debt. Shawn: As an example. Bob: Alright, so number 10 is a major life event that again, you need to get within a financial advisor and do some planning. There’s a new child or grandchild in the family. You gotta look at things like insurance and estate planning. What;s this child going to cost? Maybe a college plan that wants to be set up. I meet with so many of our younger, around your age. They’re getting the new children, the family and the grandparents would like to maybe set aside, start a college fund and you can contact the grandparents. Shawn: And if they do say thank you, and then make sure you get on that. Bob: There’s a 529 plan you can look at or you could just set up a different account and label that account for it. Shawn: Yep. Kind of earmark that. It doesn’t have to be a 529 plan. One of the benefits of of not doing the 529 plan, if you open an account and you earmark it for one of your kids or for the grandkid, but if you earmark it for that, and let’s say when that kid gets a little bit older, they decide to go kind of a non-standard path. Like maybe they’re not going to go to a four year school, but maybe they’re going to study abroad. Maybe they’re going to go into something more vocational… Bob: Maybe they’re going to go in the ministry. Shawn: Yeah. Maybe they’re going to go into the ministry. And so by not having that 529 plan, you then have the flexibility to help them with whatever that other path is that, like you said, the ministry, if they’re calling them into the ministry, well great, well maybe you can help them with that church plant or whatever it is that they’re wanting to do. So, there’s some option there. But, it’s funny though, as of recording today, my daughter is turning one. And so, my wife and I… Bob: And that’s, by the way, y’all, that’s my granddaughter. Shawn: That’s my granddaughter. It’s his favorite granddaughter, right? Bob: Exactly right. Shawn: It’s the only one. But yeah, we’ve been looking at the insurance and the estate planning, just realizing, all right, well, with her being one and my son is four, and like we’re updating our estate planning and making sure that the insurance is enough and making sure that should something happen to us, like how are we going to take care of the kids and who’s first in line. Bob: That’s a life event. See? Shawn: Well, those are all those things. Bob: All right. Now this, these next two are major life events as well, but this next one is a big life event. And we see a lot, we see all these lot. I keep saying a lot, but we do. But this next one is a large inheritance or sudden wealth. I called it, you gotta be careful of that sudden wealth syndrome. And this occurred a lot with where we’re located because we’re just an hour away from what’s called the Eagle Ford Shell, which is oil, big oil. The largest in the world, and I saw this in a big, big way about 10 years ago, that all of a sudden we talk about sudden wealth, it’s this farmer out here has nothing and they’re getting a $2 million check. They need to immediately… Shawn: Bob, how many times did you tell me that you would see farmers and ranchers that are making $30,000 to $50,000 a year and all of a sudden they’re making a $100,000 to $200,000 a month? Bob: Oh, many times. Many times. Shawn: It’s like that. But it doesn’t last either. That oil is real strong at first, and then it starts to slow down. Bob: They end up going and buying second homes on the coast. They all want to buy the big boat, the big Ford F-350 King Ranch Edition that cost about $80,000 for the truck. And they’re not thinking about the future. They’re just thinking, okay, I’ve not had this, I want this right now. And it’s amazing how many of – we went through and looked at and they went through that wealth very quickly, and now they have nothing to show for it. They bought depreciating assets. But then we have some that – the old 80/20 rule, 20% said, well, I’m going to be wise with this. I’m not going to get crazy. And now, they’ve got huge amounts of sums, 5-6 million sitting in their accounts, in their retirement accounts. And we did a lot of tax planning there, too, and a large inheritance. Be careful about passing too much wealth down to your children, too, where they can just spend it all right then. Maybe look at some trust planning. So, all this requires good financial advice and planning. And then this takes us down to our last one of the day, which is not very often, I don’t see this much at all. Shawn: Yeah. A little less common. Bob: But is before you’re thinking about starting or buying a new business. I do see this every once in a while and where are the funds going to come from. Do you have the ability to lose all those funds? Shawn: Which is important. Bob: We know business in the first couple years, about 85% to 90% of businesses fail. So what type of businesses it is, and we need to plug all that into your financial plan. Again, like we were saying last week, the one that we made about five or six weeks ago that was called integrated financial planning. We can put all that information into our integrative financial planning and it needs to be looked at. So there you go. There there is 12 major life events that require financial planning. And Shawn, I can virtually guarantee you, but a lot of people have never thought about that. Shawn: You know what I can guarantee you, Bob? Bob: Okay. What can you? Shawn: Is that people watching or listening have probably experienced at least one of these in their lifetime. And the longer you live the more likely… Bob: You’re going to experience, or I probably experienced three or four of them over my lifetime that definitely was in need of good financial advice and planning. We are here, Shawn and I are here, and our staff. We’ve got a wonderful staff here to serve you. Great advisors. I’m still advising myself. I love doing this. And if you have any of these life events that we’ve talked about over this week and last week, give us a call and/or text us. You can text us and say, I’d like to speak with Bob or Shawn, or you can make an appointment right from our website. So our phone number is (830) 609-6986 and you can text or call that, you can text that 24 7 and we’ll get back to you the next day. Shawn: We’ll get back to you during business hours. Bob: Or go to our website, check us out at www.christianfinancialadvisors.com. Any last thoughts you want to share, Shawn? Shawn: No, I think we kind of covered everything. Like you said, we’ve got a team here. Bob and I aren’t just pretty faces. Bob: There’s others behind us, right? Shawn: We’ve got other people here, too. We’ve got lots of advisors and we’re here to serve. So, contact us and we’d be happy to help you if you happen to be going through or are about to go through one of these life events. Bob: That’s all for today. Shawn: God bless and thanks again for joining us. We invite you to listen to all of our past episodes covering many financial topics from a Christian Perspective. To make sure you don’t miss any of Bob’s upcoming episodes you can subscribe to Christian Financial Perspectives on iTunes, Google Play Music, Spotify, or Stitcher. To learn more about integrating your faith with your finances, visit ciswealth.com or call 830-609-6986. [DISCLOSURES] Investment advisory services offered through Christian Investment Advisors Inc dba Christian Financial Advisors®, a registered investment advisor registered with the SEC. Registration as an investment advisor does not imply a certain level of skill or training. 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 Shawn Peters, and their guests. Bob and Shawn do not provide tax advice and encourage you to seek guidance from a tax professional. While Christian Financial Advisors® believes the information to be accurate and reliable, we do not claim or have responsibility for its completeness, accuracy, or reliability.