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FI Weekly – January 5, 2021

2021 is Here: Start Contributing

Happy New Year! 

Now’s the time to take action on filling up your 2021 contributions to your accounts including HSA, IRA, 401k, 403b, 457, etc. 

Thanks to my trusty ToDoIst reminder to max out my HSA, we already contributed the family maximum of $7,200 for 2021. 

(as an aside, I was recently asked for HSA company recommendations and the two we see recommended most frequently are Fidelity and Lively for low or no-fee options.) 

Here’s an article from The Motley Fool discussing the 2021 limits, but in general terms, for workers under 50, they are as follows: 

  • 401k: $19,500 employee contribution 
  • IRA (traditional and Roth): $6,000 
  • HSA: $7,200 family ($3,600 individual) 

Back to Basics: JL Collins Returns

The ChooseFI podcast continues our ‘back to basics’ theme into 2021 with some exciting news: JL Collins returned as a guest in Episode 284! Check it out and be comforted by Jim’s incredible message of low-cost index funds being your highest likelihood of long-term wealth building success. 

And a sneak peek for readers of the FI Weekly: Brandon, The Mad Fientist, will appear on the podcast in the next few weeks, so stay tuned! He’s been working on a passion project that I know he’s excited to tell the world about, and it particularly highlights the power of FI and interest-led learning. 

What Was the Best Book You Read in 2020?

I’m trying to fill out my essential reading list for 2021 and need your help: What was the best book you read in the past year or so? 

Like we always talk about, this is a community where a rising tide lifts all of us, so you sending me your top picks will help me turn around and highlight them for the whole community. 

Hit reply and let me know the title and why you enjoyed it so much, and thanks in advance for your help! 

ChooseFI Community Taking Action This Week

  • Bradley said, “I called around and switched my home insurance and ended up saving $700 per year with higher coverages and lower deductibles (it doesn’t make sense to me either). My wife and I plan to use this extra ~$60 per month to pay down our student loans a little faster during this forbearance period!” 
  • Julia said, “My brother turned thirty in December. For his present, I opened a Roth IRA (contributed $100 to get it going), and set up recurring deposits from his checking account for him. Bonus is we also set one up for his fiancée!” 
  • Gavin said, “I have been reading more (read about 10 books in the past 3 months!) and I just finished ‘Deep Work’ by Cal Newport. It was really good and it inspired me to delete just about all apps that make money from me using them (the only ones I kept are Overcast, since I’m addicted to podcasts, and Calm since I’ve paid for a lifetime membership already). In addition, I have benefitted so much from reading so much more since I feel more relaxed and I’ve been learning a lot too. I hope to start a Master’s Program in Psychology in 2021 (I feel this will be a great opportunity to improve personally and professionally) and am going to polish up my scholarship essays to hopefully get it paid for free!” 
  • Chelsea said, “Recently, I did some geoarbitrage to reduce our vet bill. My dog desperately needed her teeth cleaned; she’s 11 years old. I knew she needed one tooth extraction because it was about to fall out, but the rest of her teeth looked fine to me for what I could see. We live in Denver, Colorado and the vet estimated $1200 – $1500 depending on how many extractions they would have to do. My husband and I are from the St. Louis area and our families still live there. We knew we were going to be in Missouri so I called the small-town vet my dog used to visit when I lived there and they quoted me $300-$500 for the procedure. The day-of I opted to pay extra for the antibiotics ($15), the IV ($30) and additional lab work ($45). I ended up paying a total of $264 for the entire teeth cleaning. The poor lady working the desk thought I was mad when I asked her to repeat it. I told her how much I was quoted in Denver and we both shared a laugh together! I saved at least $1,000 simply by shopping around outside of a high cost of living area.” 
  • Eric said, “I discovered FI a couple of years ago as a 1st year Physical Therapy Student. Since discovering the ChooseFI podcast, I’ve been hooked and spreading the word to anyone who seems remotely interested in personal finance. Over the past couple of years, I digested all the content possible. I graduated in 2020 during the pandemic and was blessed enough to have my job still waiting for me. Finally, I had an income and began my path towards FI. I’m proud to say that from June to December – I paid off $21,536 worth of credit card debt incurred while being a student over the past 7 years to end 2020! Additionally, my fiancé paid her car off 8 months early. We are so happy to start the new year being debt free besides federal student loans (on to the next goal!).” 
  • Rahul said, “I transferred my entire 401k balance which was in a single Target Date Retirement fund to similar individual funds that represent the same overall composition with 20x lower expense-ratio. I’ll happily manage re-balancing these in exchange to save 10’s of thousands of dollars over the next few decades!” 

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What Are You Optimizing For? | Chris Hutchins | Ep 423

Sometimes on the journey to FI, we ask ourselves the following; do I really need to spend money on this? Do I really have the time and resources for that? These questions may be easy to dismiss by saying no in order to stay on track with your financial goals, but by dismissing them, you could be missing out on something that is beneficial to your personal journey! This week we are joined by friend of the podcast, Chris Hutchins, to talk about the hacks for optimizing your life, the differences between cheapness and frugality, and the importance of valuing your time and what it can lead to. Saving money is an important part of achieving FI, but you should never feel so restricted that you miss out on investing your time and money in things that bring joy and value into your life. While saving is important, it’s okay to spend money. Whether it’s on a trip or investing in something new, there are ways to make it work without feeling guilt or shame. Prioritizing and valuing your time can introduce new experiences and provide happiness as well as perspective while on this journey! 

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