017 | Mad Fientist an Origin Story

Introducing the Roth Conversion Ladder

In Today’s Podcast we cover:

  • Today’s guest: Brandon from MadFientist.com and the origin story of the Mad Fientist
  • How did the Mad Fientist website come about? He first stumbled on the Early Retirement Extreme website
  • He thought there’d be investing strategies to get him to financial independence more quickly, but he realized index funds were the best way to go about it
  • Then he stumbled upon tax optimization and tax avoidance strategies
  • Finding Get Rich Slowly and other personal finance blogs got him interested, but he looked at it through the eyes of an early retiree and realized the standard advice didn’t necessarily apply
  • “Early retirees are such a different breed” and optimizations can be had when looking at the problems differently for FIRE
  • He took a core tax strategy and pivoted it to the best way to optimize for early retirees
  • He uses his audience feedback to help come up with ideas for new posts or as ways to update and augment posts
  • The Roth IRA conversion ladder changed the entire game for him and made him max out as many pre-tax accounts as possible
  • How to get retirement money out earlier than the traditional 59.5 age without a penalty?
  • Building a 5-year conversion ladder with traditional savings to cut your effective tax rate down to almost 0% on your traditional IRA and 401k
  • Brandon’s college choice and how it impacted his financial life with minimal student loan debt
  • Brandon took a software developer’s position at an Ivy League University and worked towards a free Ivy League master’s degree
  • Did Brandon max out his 401k his very first year?
  • What’s the most expensive car Brandon every bought? He leased a Toyota RAV4 but other than that every car he has ever owned is at least 10 years old
  • What financial mistakes has Brandon made or where does he not follow his own advice? Timing the market and sitting with too much cash
  • Take your brain out of your investing decisions once your plan is set
  • What type of investing does Brandon do? All index funds from Vanguard and cash
  • How has Brandon evolved psychologically as he has approached Financial Independence?
  • Reaching your FI number doesn’t by definition make you happier. You have to find your passion in life
  • They actually loosened up their spending for a year to enjoy life as much as possible. Total tally: $35,000 of yearly spending. As compared to their normal $30,000 – $33,000 spending.  An insignificant increase in money spent for such a large increase in satisfaction
  • What is the most surprisingly positive aspect of post-FI life?
  • What does his life look like 5 years from now/what does he want to do with his life?
  • Hot Seat Questions
  • Favorite life hack: Find out what makes you happy
  • Advice to your younger self: Just get started today

Links from the show:

Books Mentioned in the Show:

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3 thoughts on “017 | Mad Fientist an Origin Story”

  1. Love this episode! During the discussion of using the Roth Conversion ladder, it was discussed primarily as a tax exempt conversion by keeping the conversion amount below the deductions available. (Ie. $32,000 available tax deductions, $32,000 conversion with no other reportable income). All funds take out of the Traditional account must all be converted to a Roth to avoid that early withdrawal fee as stated on the podcast. It is important to note that taxes will be due on any funds above the $32,000 or tax delectable amount. The money due in taxes will have to come from somewhere other than the Traditional account or the Roth in the first 5 years of the Roth Conversion Ladder method. At year 5 and on, the money due in taxes could be taken from the Roth account.

    Great episode, just wanted to share this little bit as it is significant for my early retirement plan and possibly to others. I ended up planing to have 5 years of savings plus the additional amount needed to pay the tax due on the conversion dollars above the deductible amount.

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