A few years back I created a post titled “Choosing Your Health Insurance Plan – With Math!”. Back then we were deciding between a high deductible and a standard plan at Mrs. EYFI’s employer (back when she was still full time).
This year we faced another tough health insurance decision: picking an Obamacare plan. Otherwise known as Affordable Care Act (ACA) Health Insurance. I’ll mostly use “ACA” below because it’s shorter/easier.
Last week at FinCon (review post coming soon!) I had the privilege to meet Emily Roberts, who hosts the Personal Finance for PhDs podcast and has helped many PhD students with personal finance since she graduated with her PhD in biomedical engineering in 2014.
As far as I know, she is the first fellow PhD in engineering I’ve ever met at FinCon, which was really nice – there aren’t too many of us interested enough in personal finance to go to a conference about it!
One question we discussed was whether grad students should invest any savings they can scrape together in a Traditional IRA (which is fully deductible, equivalent to 401(k) “pre-tax” dollars) or a Roth IRA (which you contribute to after paying taxes, but grows tax-free after that).
This week I spent my time working on building some illustrative diagrams for a couple of my previous posts: Part-Time Work After Financial Independence and Computing Social Security Income.
Sooo…. I’ve gone back to the land of the employed this week.
I know, I know… the math says I don’t need to. But there are still some very compelling reasons for me to do this. And of course some very compelling reasons for me to NOT do this.
This week I’ve been very focused on writing a new eBook titled “Ten Steps to Become and Stay Financially Independent”.
In the previous post, I discussed how to compute the taxable amount of your social security income (SSI). Which is unfortunately a bit complicated, but we got it done.
The next step is to figure out how to pay no (or minimal) taxes on that taxable amount of your social security, which is vital for the Tax and Penalty Minimization (TPM) method described in the Withdrawing Money After FIRE post.
You’re probably thinking “uh… doesn’t the definition of taxable mean you’ll pay taxes on it?”
50%. Or higher. 70% to 80% is even better.
Am I serious? I can’t possibly be serious. Right?
Actually, yep, I am totally serious. And yes, I know that’s a crazy simple answer and probably seems totally impractical for most readers. But hear (read?) me out.
A couple years ago my wife and I were procrastinating yet again on selecting a health care plan option. Specifically, which of two plans to select for her and our son that were offered by her company. My health insurance is super simple: I’m fully covered, no premiums (ignoring dental and vision). But hers was hard! There’s a huge amount of information to consider, from premiums to deductibles to co-pays to co-insurance rates to tax-savings to traditional vs high-deductible plans to how much to put in your FSA or HSA…. Insane.
I got fed up with trying to eyeball this decision. So, I broke out Python! I managed to script up and plot a wide variety of scenarios, and as a result the decision finally became clear. I love Python and plots – I’m definitely an engineer to the core.
For years I put off thinking about refinancing our house. I just didn’t want to deal with all the factors I would have to consider, even though our 30 year mortgage rate wasn’t that great (4.75%).
Then I started seeing some news articles about mortgage rates hitting all time lows. Gritting my teeth, I finally forced myself to buckle down and take a careful look.
So if wife and I are FI, why are we still working?
Well, as I wrote in “FI Explained”, Financial Independence does not equal Early Retirement. When we started seriously pursuing FI after I obtained my PhD in 2016, we never set a goal to retire in our 30’s, even though theoretically we could retire if we wanted to.
