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FI Weekly – May 16, 2023: Student Loan Forgiveness, Lower Insurance Premiums, Roth IRA Timing

Choose FI has partnered with CardRatings for our coverage of credit card products. Choose FI and CardRatings may receive a commission from card issuers. Opinions, reviews, analyses & recommendations are the author’s alone, and have not been reviewed, endorsed or approved by any of these entities. Disclosures.

Student Loan Forgiveness Update

When we had Travis Hornsby from The Student Loan Planner on the podcast in August 2022, literally hundreds of members of the ChooseFI community took action to have their student loans forgiven.

Travis was back on the show yesterday in Episode 437 of the ChooseFI podcast and the update is there is a new path to student loan forgiveness that is time sensitive (end of 2023) and now it’s much more broadly applicable.

It seems like 25%-50% all student loan borrowers can benefit from this, so please, if you have student loans or know anyone who does, drop everything and listen to Episode 437.  It’s that critical.

Travis was also kind enough to give members of the ChooseFI community a discount on their consultation and ‘custom student loan plan’ if you use this link.

Take Action to Lower Your Insurance Premiums

Mike wrote in with an email that serves as a challenge for all of us to take action:

“Good news! My 1% better this week involves huge savings on insurance premiums for my two vehicles, renters insurance and the policy for my vacation home. By shopping for new policies, I was able to save over $3,100 in the coming year on all three policies combined. In fact, I didn’t change any of the coverages on the policies. Everything on the new ones is identical to the old coverages and I still managed to save all that money.

Quite frankly, I was shocked by the sharp increases in premiums over the last few years despite having all three policies with the same carrier. So much for multi-policy discounts!”

How much will you save by shopping for new insurance policies?

Roth IRA Timing

Cody Garrett from Measure Twice Money, posted something important in the Facebook group that I wanted to paste here verbatim:

“There is so much confusion about the two “5-year clocks” for Roth conversions and Roth earnings.

Here’s a cheat sheet:

Roth IRA CONTRIBUTIONS can be withdrawn tax- and penalty-free at any age for any reason. These come out first.

Each taxable Roth CONVERSION has its own 5-year clock before being distributed from the Roth IRA penalty-free. This clock goes away at age 59 1/2. This is how Roth conversion ladders are built in early retirement.

If over age 59 1/2 with over 5 years since the first Roth IRA was funded, EARNINGS can also be distributed tax- and penalty-free. Otherwise, another qualified distribution exception would need to apply.”

For additional nuance, check out the comment section of the post or ask Cody a question directly.

ChooseFI Community Taking Action This Week

  • Katie said, “I’ve been saving your emails regarding PMI removal as I was going through a big home renovation. Well, the renovation is complete! I contacted the mortgage company, paid for the assessor, and two weeks later was notified that they’re deleting my PMI requirement. Thank you for all the great information!”
  • Jade said, “My 1% better this week is that I figured out how much I’d need to invest each paycheck in my 401k to max it out this year, for the first time ever, and I set up my account to hit that target. I’m a little nervous about the amount left in my paycheck, especially since I’m doing this mid-way through the year so it’s not an even distribution. But the idea that everything is an experiment has been super helpful to ease my nerves! I have readily accessible savings to cover things if needed, and if I need to scale back and not quite max out this year, that’s OK too. But I think I can do it.”
  • Sage said, “This is a 1% better in the greater context of roughly 60% better. A few years ago, a dear friend introduced me to FI and ChooseFI, his simple suggestion to get a better understanding of personal finance has been life changing for me. I’m a 29 year old firefighter with a small family in Colorado. My introduction to FIRE and frugality has completely changed my relationship to money, to my partner, to my health, hobbies and passions. Now, my partner and I are designing the life that we want and living it, dreaming about the future like never before! Recently, I was fortunate enough to see my salary increase by nearly $20,000 after learning the power of advocating for myself and my peers. Without seeing other’s “1% changes” on this newsletter I wouldn’t have felt as empowered or courageous enough to fight for more money through union negotiations and “stir the pot”. Part of the big raise was just looking into my paychecks with scrutiny to find an error that would have gone unnoticed for who knows how long…the little things matter! Thanks everyone for living inspirational lives and sharing it in this space.”
  • Casey said, “I accepted a new job offer with 20% better pay and the opportunity to make even more. I also have the option to work from home, so I will get to see my wife and 1 year old daughter more. The improved health insurance benefits will allow us to save $780 each month. Finally, we just finished the process of downgrading our car to cut our transportation budget by $500 each month.”
  • Avi said, “My 1% better has been ‘negotiating’ my upcoming home rental lease renewal – it was literally just a kind email with the question. I got it dropped literally 1%, which is not much, but it does add up and it was free and simple.”
  • Annie said, “My 1% better came after buying a new kitchen table. I had been searching for a new one for a while and was thrilled when I found the one I wanted. I paid for it and was out the door. The next day I found a 10% off coupon for any 1 furniture item at this store in my local discount magazine. I called the store and asked if I could apply it and get a 10% refund. They said sure and refunded my card!”

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Choose FI has partnered with CardRatings for our coverage of credit card products. Choose FI and CardRatings may receive a commission from card issuers. Opinions, reviews, analyses & recommendations are the author’s alone, and have not been reviewed, endorsed or approved by any of these entities. Disclosures.
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