100R | Know the Rules

100R Know the Rules

Brad and Jonathan explain how simply knowing the rules can save you thousands on taxes and college financing, Brad talks through the IRA Conversion Ladder and Capital Gains Harvesting, and a few updates from the community.

  • The financial independence movement is growing, and seeing a lot more press coverage.
  • Messaging matters: The Wall Street Journal published one article with two different headlines.
  • Pursuing financial independence isn’t about buying brown bananas, despite what some media would suggest.
  • Brad reached financial independence with intentionality about his priorities in his life.
  • Brad and Jonathan don’t aim to tell people what decisions to make in their life, just give options and information.
  • What did Brad’s family do to reach financial independence?
    • Housing: chose to move to a less-expensive cost of living area
    • Cars: Brad & his wife drive 15-year-old cars
    • Food: don’t go to restaurants often
  • Set up a life that doesn’t cost that much.
  • Pursuing financial independence actually allows people to pursue jobs that they love.
  • If life costs a lot and someone is in debt, it’s very hard to walk away without taking major risks.
  • Knowing tax rules is a huge component of pursuing financial independence.
  • Knowing the rules in regards to paying for college makes a huge difference in how much financial aid your student might be eligible to receive.
  • A message from Matt about researching the actual requirements necessary for a job in nursing – the cost of nursing school can range from a few thousand dollars to more than $100k.
    • http://www.thernmentor.com/nursing-shortage-fast-pass-middle-class/
  • Studying nursing in a less expensive area still gives you qualifications to practice anywhere in the U.S., with a potentially huge payoff.
  • Roth Conversion Ladder & Capital Gains Harvesting – the goal is to pay little or no tax.
  • Roth IRA Conversion Ladder:
    • Starts with traditional IRA/401k.
    • If you want to retire before 59.5, taking money out is taxable income.
    • If you’re not collecting significant income, taking money from an IRA is unlikely to push you into a high tax bracket.
  • Capital Gains Harvesting
    • If you’re income is low, your tax bracket can be incredibly low.
  • Email from Dan explaining how he and his wife paid off many of their debts, found a way for his wife to be a stay-at-home mom, and started a small side hustle.
  • Brad shares a frugal win of the week at the optometrist.


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5 thoughts on “100R | Know the Rules”

  1. Agree about the messaging. I wonder if this spate of focus on the FI community will flare up and fade like the publicity about the simple living community in the 1990s/early 2000s.

    The whole “working for the weekend” discussion is so true. Alot of the debt I accumulated was buying stuff for the life I wanted but couldn’t have because I was in debt and needed a job to pay the debt. Just putting some space between me and the edge feels really good.

    I would love a whole episode where all the tax avoidance ideas are pulled together. It sounds like one should try to stay in 15% or lower from this podcast.

  2. Guys,
    I am worried that the news industry is getting under your skin. Remember, many in this industry are hooked on expensive caffeinated drinks, work themselves ragged, and believe that having a 1% saving rates is normal. I would love them to state their savings rates at the beginning of each article they post on the Fi movement as you do when talking about your finances. They are good people and typically come around to facts, but are just not use to a message like yours. The Fi movement is built on finding authentic information, retesting proven theories, and a commitment to helping others. What has amazed me about being savvy to money over the years is just how many people are scared to act on their ignorance about money. Ironically, it is the lack of time spent wisely that sets up most for failure. Keep up the great work!

  3. Keep the FIre burning! I left work at 53 before hearing much about FI/RE. Lived life frugally, never felt deprived, love the freedom now like a kid who just heard the last school bell for summer recess. No regrets. Good job on assembling so much information on one site and helping others.

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