Our Switch to an HSA: The Good, the Bad, and the Ugly

Last October, I was excited to learn that Mr. ThreeYear’s employer was offering, for the first time ever, a high deductible health care plan, coupled with a Health Savings Account (HSA).

In the past, we’d only had the option of a Flexible Savings Account (FSA). Flexible Savings Accounts offer some tax advantages, such as allowing you to deduct up to $2700 of your paycheck, tax free, to use with qualified medical expenses. But you only have one calendar year to use the funds or you lose them. $500 of the funds carry over to the next calendar year, which you have to use by March 31st.

With an HSA, however, you can deduct up to $7000 of your paycheck, tax-free, and there’s no deadline for using the funds. You can invest the money in your HSA, and take it with you if you leave your employer. Your money will grow, tax free, for as long as it’s kept in your account, and you can access the money whenever you like to pay for qualified medical expenses. If you haven’t read the MadFientist’s excellent primer on HSAs, you should. It’s one of the reasons I was so excited to get an HSA option this year.

Last Year

Last year, we opted for the company’s normal health care insurance option. Each paycheck, $280.99 was taken out of Mr. ThreeYear’s paycheck for his cost of the health insurance, and $57.75 was taken out of each paycheck to fund the FSA.

When we went to the doctor, we paid a normal copay of $20-$40 and medications cost us $10 each.

Continue reading “Our Switch to an HSA: The Good, the Bad, and the Ugly”

Your Three Year Experiment: Jennifer & Lewis

Happy Wednesday, readers! So glad to be back with another installment of the “Your Three Year Experiment” series, where we feature stories of people pursuing their unique dreams and goals over the next few years.

Today I’m delighted to introduce Jennifer, a new reader whose story is very similar to my own, except she’s a lot younger, doesn’t have kids, and has way more energy than I do, based on this interview! 🙂

You’re going to love her story! In it, you’ll learn:

  • the daily habit Jennifer and Lewis, her boyfriend, use to stay on track with their goals
  • their multi-national geoarbitrage plan
  • why paying attention to your tax rate is so important

Take it away, Jennifer!

Tell us a little bit about yourself.

Hi! My name is Jennifer and my boyfriend’s name is Lewis. We are in our mid-30’s and live in Cincinnati, OH. We’ve followed very different paths up to this point in our lives but one thing we have in common is our dissatisfaction with following the standard societal norms and the idea of working for the next 30-40 years. We have decided to chart our own path that is a unique mix of a “fully-funded lifestyle change” and eventual financial independence, with a big dash of geoarbitrage mixed in!

Our plan is to spend the next 3 years in Cincinnati saving up/investing as much money as possible so that we can then move abroad for the following decade or so. We would both continue working on-and-off in some capacity- I plan to apply for teaching positions in international universities, while Lewis completes his degree online and then launches his own translation company. Our goal is to move every 2-3 years. So far we are planning: Bogotá (Colombia), then somewhere in the Middle East (likely Dubai or Abu Dhabi) [Laurie’s note: then definitely check out my friend Andrew’s story], then either Paris or Granada (Spain) for Lewis to do his masters. From there, who knows?!?

What’s your background? Early years, education, married, kids, jobs?

I’ve spent most of my life living in Cincinnati minus a few years in Dallas. I grew up in a solidly middle-class family and was the first to attend/graduate college. My parents have always tried to instill the standard American ‘dream’ in me of getting a good job, staying there forever, and living my whole life here in Cincinnati. Sorry to disappoint them, but I’ve never fit into that mold!

Even my career path has been interesting in that I keep jumping back and forth between two fields. I went to a top design school for architecture/interior design but quickly realized that I didn’t enjoy working in the field, so I took extra classes each quarter (the maximum the university allowed!) in order to get a minor in Spanish. Good thing too, because I graduated in 2009 and couldn’t even find a design firm to VOLUNTEER at!

Continue reading “Your Three Year Experiment: Jennifer & Lewis”

The Six Streams of Income We’ll Rely on in Early Retirement

Now that our family has moved to North Carolina, our next big financial goal, ten years’ hence, is retirement. We’ve decided to wait until Little ThreeYear graduates before we retire (although we could always change our minds).  Since we’ll be retiring somewhat early, before the “official” age of 65, we’ll need to structure our retirement so that we have access to different pools of money, or streams of income, to tap into.

Though Mr. ThreeYear and I primarily invest in index funds (we have a “slow and simple-don’t get greedy” philosophy), we currently plan to have several streams of income available to us when we retire. Some will be passive, and others active. While this wasn’t necessarily a conscious plan on our part, life has worked out this way and we’ll take these streams of income we’ve developed along the way. Continue reading “The Six Streams of Income We’ll Rely on in Early Retirement”

March Net Worth Update

As we enter the fourth month of the year here in North Carolina, I’ve been thinking about the differences between our old Spring in New Hampshire and the Spring we’re experiencing now.

While it did snow yesterday (very strange for North Carolina in April), in general we’ve enjoyed warmer temperatures and sunshine. New Hampshire still has snow on the ground, so the flowers and Spring weather are a welcome change.

Spring has always been my favorite time of year here, and this year is no different. The new blooms and warmth make me smile. And things are in full bloom right now. Our cherry trees have exploded in tiny white blossoms that look like snow as they fall off the trees. We’re sneezing like crazy with all the pollen in the air, and everywhere you turn, creeping phlox, tulips, daffodils, and other early Spring emergents are bursting out of the ground in an explosion of color.

Our Progress

March was a pretty boring month, net worth wise. Nothing much changed and we saved a normal amount towards retirement, our HSA, home equity, and the like. Our total net worth increased just over 1%.

Continue reading “March Net Worth Update”

The Golden Rule of Building Wealth

Everyone wants the magic formula, the hat trick, the secret, to becoming wealthy. And no, it’s not “you attract to you what you think about.”

The golden rule of building wealth is simple. It’s so simple, it’s been repeated ad infinitum by the personal finance community, financial planners, and people who actually have wealth.

It’s been systematically attacked, hacked, subjugated, by practically every other entity in our society.

Ready? Here it is: spend less than you earn.

Oh, and we can’t forget the corollary: invest the difference.

Boom. We’re done.

Oh, if only, dear reader. If only it were that simple. If only I hadn’t felt dread course up and down my body yesterday as I calculated how much we’ve gone over budget in March. If only Payday Loan Centers didn’t sprout like fire ants across the small rural communities of this country.

If only we didn’t have the hear the siren call of advertisements fill our every waking moment, to peruse the endless streams of social media promising you’ll be better, faster, and stronger, if you click here and buy it now.

Spending less than you earn, as simple as it sounds, is one of the hardest things to do as a human being living in our modern (especially first world) society. It involves saying “no” one hundred, one thousand, ten thousand times per day to what can feel like everyone and everything around you. It involves staying true to a distant goal for a distant self, living like you’re in a different economic class, developing copious amounts of will power over time, and not letting it all fall apart if your life becomes unglued, through death, divorce, or some other tragedy.

It sometimes feels like an impossible task. And yet, people accumulate wealth every day. People save; people retire; they pay off their mortgages.

In my experience, as a reformed spend-a-holic, we’ve been able to slowly accumulate wealth in the face of all these temptations because of a couple of behaviors that have allowed us to practice “The Golden Rule of Building Wealth” while still existing in a consumerist society.

Continue reading “The Golden Rule of Building Wealth”

How We Paid Off Our Debt, Twice: Guest Post on Financial Pilgrimage

When I saw a note on a forum about a new series featuring young families getting out of debt, I smiled. Our family has definitely achieved the former, but I don’t think we qualify for the latter at this point. After all, I’m almost 40, Mr. ThreeYear is a ripe old 45, and our kids are no longer so young. At 11 and 8, they definitely qualify for the middle-elementary category.

However, I think our story has a lot to teach young families with debt to pay off. After all, we started our debt payoff in a typical fashion, by following Dave Ramsey’s baby steps. But we took more debt on, after we’d paid off our original debt, learned how to pay off debt twice, and have somehow still managed to save a large net worth and reach our goals of location independence.

Financial Pilgrimage is a blog about a young family who is also in the process of paying off their debt, including their mortgage. They focus on advice for young families, those who are just getting started, have young kids, or both.

Here’s our Debt Payoff Story (times two):

1) Start by telling us about yourself. Please include any details you feel comfortable sharing about your family, job situation, income level, and amount of debt paid.

I’m Laurie and I’ll start by saying that my family is probably a few years past the “young” stage. I’m 39, my husband is 45, and our boys are now 11 and 8. When we started our debt repayment journey, though, we only had one son who was about 18 months old.

Don’t worry, it didn’t take us ten years to pay off all our debt! But we had to learn some lessons twice, so I thought our story would be a great case study for young families.

When we started our debt repayment journey, my husband worked for a Fortune 50 company in marketing, I had just become a stay-at-home mom, and we were adjusting to life as new parents.

It was July 4th, 2008, and my husband had been laid off six months before. It was the middle of the housing crisis, and his company had been hit hard. They laid off thousands of employees.

At first, we were frantic—he’d received a 3-month severance, but what would we do after that? After all, I was no longer working, we had a mortgage, and we now had a young son to support.

Continue reading “How We Paid Off Our Debt, Twice: Guest Post on Financial Pilgrimage”

Hate Your Job? Don’t Worry; You’re Not Wasting Your Time

Yesterday Paula Pant posted a quote on Instagram:

Okay, let’s analyze this one for a minute.

I know that this could have easily been a throwaway quote designed to inspire people to find their dream jobs.

But this quote bothered me in a real and visceral way.

Here’s why.

Let’s say you’re currently in a job you hate. According to this little pearl of wisdom, your life right now has no value. You are doing absolutely nothing of worth. There is nothing that you can glean from this job to help you with the rest of your life.

I call bull on that.

Continue reading “Hate Your Job? Don’t Worry; You’re Not Wasting Your Time”

Curbside Composting: Guest Post on Tread Lightly, Retire Early

I don’t talk a lot about environmental matters on this blog, but getting better with money has definitely made me think more about making waste, and my family’s impact on the earth over the years.

Angela from Tread Lightly, Retire Early offered to share our story about bringing curbside compost to our town in New Hampshire and I thought other people would want to hear how we got it set up.

Curbside compost is a service that picks up your leftover food scraps and composts them for you in an industrial facility, then brings compost back to you. It was great for my family because we could compost all of our food scraps, even meat, without worrying about bears, or composting during the winter.

Angela’s blog focuses on ways you can lessen your impact on the planet and create financial independence. Check out her personal finance roundups on Wednesdays and her Frugal Five features on Fridays, in addition to posts about the intersection of the environment and finances.

Continue reading “Curbside Composting: Guest Post on Tread Lightly, Retire Early”

Are You the 1%?

I’ve been thinking a lot about the dumb luck of being born in one of the world’s wealthiest countries. It reminded me of this post, which is one of my favorites. Every once in a while, I find it really helpful to go drone-like and fly up above my privileged circumstances to reflect on how fortunate I and my family really are. Videos like the one below help me to take a few minutes to put things in perspective. 

Last night, my son asked me to replay a video I’d shown him last year.  It’s called If the World Were 100 People. Maybe you’ve seen it. One of my professors in my Master’s course introduced me to the video last Spring.

If you’ve got two and a half minutes, it’s a great watch.

The company that developed the video, GOOD Magazine, used research from the Central Intelligence Agency’s World Factbook to give us an idea of what our world would look like if its almost 7.5 billion inhabitants were reduced to a mere 100 people. 100 is a number we can wrap our brains around fairly easily. We all know 100 people. We’re probably friends with 100 people. Continue reading “Are You the 1%?”

How We Stacked Financial Wins to Grow Our Net Worth

Ten years ago, in 2009, we had just started getting paying off our $38,000 in debt and had very little savings to speak of. We had a 30-year home mortgage on our house in Atlanta, and because we’d only put 5% down and the market tanked so bad, we had negative equity in it.

I thought we’d never get our debt paid off, but we finally did, in December of 2009. For awhile, we were only focused on building up an emergency fund, and didn’t think about our net worth at all.

But once we found the FIRE community and began to learn more about personal finance, we wanted to grow our net worth and become financially free.

Here’s what we did to stack our financial wins and grow our net worth to the level it is now.

Continue reading “How We Stacked Financial Wins to Grow Our Net Worth”