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FI Weekly – September 5, 2023: Gift Tax, Time Savers, Credit as Debit, Food Stamps to FI

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. American Express is a ChooseFI advertiser. Disclosures.

2023 Gift Tax Exclusion

The 2023 gift tax exclusion is $17,000.

This means you can gift anyone $17,000 and:

  • You pay $0 in tax on the gift
  • This gift does not count against your lifetime gift/estate tax exemption (currently $12.92 million)
  • The recipient of the gift pays $0 in tax (gifts of this sort aren’t taxed by the recipient)

This $17k exclusion is per recipient and for each person gifting, so let’s say you’re married and you have two children.  You and your spouse each can give $17k to each of your children this year, so they each could get $34k in gifts ($68k total) without any tax consequences (or filing requirement) for anyone.

If you want to go deeper here’s an article from Smart Asset.  

Time Savers From The Community

Continuing our recap of time saving strategies from community members:

  • Chuck: “As a big reader, my time-saving advice is to use Feedly ( Feedly is an internet feed that collects the latest articles from all your favorite websites in one place. This aggregation of information allows me to go to a single place to read articles instead of hundreds of websites.”
  • Lindsey: “A timesaver that I appreciate is Walmart grocery delivery (or pickup). My credit card refunds the Walmart+ membership fee, so I get free deliveries and only have to tip. I add groceries from the “My Items” tab, making reordering staples fast and easy. It’s a huge time saver and allows my husband to help with grocery shopping since he doesn’t like to shop, but will gladly pick up groceries or carry them in from the front porch!”
  • Jeff: “I love our keypad deadbolt locks. We have one in the front door and one from the garage into the house. No more fumbling for keys, and I never have to worry about the kids potentially losing a key to the house. We just type in the code and it opens. Taking it a step further, I can give people their own individual code in case we need them to come by and tend to pets while traveling. All tied in to an app with remote access and history. Schlege Connect is the product I have if that’s of interest.”

Credit Card as a Debit Card Strategy

When I met Bob Sharpe, he told me about a YouTube video he published to show how he uses his credit card to earn rewards points, but tracks the spending in his digital bank register as if it were a debit card.

Every swipe of the credit card gets deducted from his bank account tracking as if it were a debit payment.  That way there is no chance he can overspend his account.

If you came from Dave Ramsey, or had issues with credit card debt in the past, I think this behavioral hack can make a big difference.

We are massive fans of travel rewards credit cards and think you can get 1-2 nearly free vacations per year by being smart with your credit cards, so this is valuable.  Here’s my September 2023 list of top 10 rewards cards.

From Food Stamps to FI

Episode 453 published yesterday and I thought Theresa’s story was a real inspiration.  Some highlights:

  • It truly “takes a village.” Theresa had multiple cousins play prominently in her financial life, she got a scholarship at her church to take Dave Ramsey’s Financial Peace course and was on food stamps as a single mom.  It wasn’t a handout but “a bridge to something better for me.”
  • Consistent action plus frugality were the keys.
  • “My family story changes here.” She opened a Roth IRA for each of her daughters and matched the amount they put in.
  • Debt snowball: Great mental benefits in paying off the lowest balance debt and then focusing on the next smallest balance.
  • “Those (Dave Ramsey) baby steps gave me a framework and something to build off of to establish some type of structure in my financial life.”
  • “I was looking for more” after Dave Ramsey’s step 6 and that’s when she found FI.  She went from a single mom in debt to reaching FI with her husband Paul.

ChooseFI Community Taking Action This Week

  • Nate said, “This week got a promotion at work and our son is back in school so decreased our daycare costs drastically equaling about an extra $700.00 per month. Going to literally add 1% to my 401k next month with the raise and increase my giving.
  • Katie said, “I had money in a 403b from when I was a teacher, and after listening to your podcast about 403bs (Episode 220), I started the process of moving my 403b over to a Traditional IRA. Let me tell you, it was a LONG process and my 403b provider made it VERY difficult. But I kept at it, jumped through all the hoops, and finally moved my money to my IRA where invested it how I wanted. This will help me earn a lot more towards retirement!
  • Andrew said, “My 1% better was scheduling next year’s board game nights now (along with the game/potluck theme) and drafting 11 emails that also included the information for the rest of the year (i.e. The first email will list the dates, game, and food for the next 10 game nights). The life hack? The emails are already scheduled to be sent a week before each meeting as a reminder (using Gmail’s native “schedule send” function)! I’m hoping this will make it easier for people to come and hang out!
  • Crismae said, “Our 1% better is actually going back to being on this journey to FIRE! To be honest, we enjoyed travelling so much, being flexible and free that somehow, we forgot that I need to be responsible for the future (lifestyle creep) We sat down last night and we discussed our current reality. TBH, I was very anxious about not saving much but talking with each other made us realize that this year we’ve been hit by all car expenses, AC repair and etc and we were able to power through w/o debt. I finished our August in/out report and we both felt good that we are being in charge again of our finances. Thankful to Choose FI community.
  • Michael said, “Speaking of decluttering, our 1% better has ironically been to stop buying toilet paper and tissue boxes in huge bulk at Costco. It was saving us a negligible amount of money each month, but taking up an entire shelf or two in our small home. If someone had offered us a couple bucks a month to rent storage space in our home, I’d say no way! We’ve been able to reclaim and reorganize our bathroom closet as a result and it is the tidiest and easiest to use it has ever been!
  • Callen said, “Something I did today that I am very proud of is help my parents save a bit of money. They are getting close to traditional retirement age, but haven’t really saved up enough to stop working.  I’ve been trying to talk to them about their finances for a long time and completely failed, but today I went about it a different way – I offered to log in to their internet provider’s account and their cellular account, to see if we can lower the price they’re paying – and they agreed! That small success got them to agree when I asked them to try a cheaper Netflix subscription than the one they have AND I got my dad to cancel his Apple Music subscription which apparently he doesn’t even use anymore. So even though it’s not a lot of money, I still managed to get them to save a bit. Hopefully this first step will open the door to more steps they’ll let me take with them to build some savings for their retirement.

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. American Express is a ChooseFI advertiser. Disclosures.
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