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It's more than just a ticket. Welcome to Radical Personal Finance. The show dedicated to providing you with the knowledge, skills, insight, and encouragement you need to live a rich and meaningful life now while building a plan for financial freedom in 10 years or less. My name is Joshua, and I am your host, your guide, and your fellow traveler on this journey towards financial independence.

Today we do live Q&A. I've got a conference line opened up, a couple of callers sitting on the line. We'll go and have some questions and have some chats about financial independence. I enjoy doing these shows because it gives me a chance to talk to you and allows it to be very practical.

One of the challenges of being a podcast host is it's easy for me to sit in my office and come up with things that seem relevant to me. But sometimes without that live interaction with you, it's often hard for me to be sure that the comments are very – that what I have to share with you is going to be really, really relevant.

So we've got a few callers on the line, and we'll have to deal with some real-life situations. So let's start with Matt in Tampa. Welcome to Radical Personal Finance. How can I serve you today, please? All right. Thanks, Joshua. Thanks for taking my call. So my wife and I, in about two years, plan on me going to seminary and we'll be moving.

And my hope is that I've accumulated enough cash as well as some assets and different retirement accounts that when I'm at seminary, I'll be able to primarily focus on my studies and my family and perhaps only work part-time if necessary. So I guess my main question was to get some of your thoughts about how I can hack efficiently, get distributions out of these retirement accounts, and specifically how to utilize a backdoor Roth/Roth conversion.

And also to talk about, I guess, the five-year rule as it pertains to taking out qualified distributions, if I understand it right. But that's pretty much the main two questions. Okay. Well, let's start with – I want to make sure we do a good job. So let's start not with jumping right into that, but give me just a quick overview of your financial situation.

How much money do you have in IRA or 401(k) accounts presently? Presently in my IRA and Roth IRA – Separate the Roth – hold on. Just the IRA or traditional 401(k)? Okay. In the traditional 401(k), my wife and I have a combination of about 7,000 as of today, and the traditional IRA is about 4,000.

So about a total of 12-ish. And now how much in Roth IRAs between the two of you? About 4,500. 4,500. And of that 4,500, do you have any guesses on how much of that is your contribution to the account? I haven't looked for a while, but I would say about probably 3,500 or so.

Okay. And do you have other money outside of retirement accounts, other savings or investments that aren't in these 401(k) accounts? Sure. As of today, we should have somewhere around $25,000 in cash, just in bank and physical cash. Okay. Great. And do you have any debt? No. No debt. Okay.

So basically the question is you've got $25,000 in cash, you've got $4,500 in the Roth IRA, and then in traditional IRAs and 401(k)s, you have about $11,000. And your goal is to go to seminary and graduate with no debt or as little debt as possible and to do this in the most efficient way.

Is that accurate? Yes, that's accurate. I also, I should have said this, I do have about $2,300 in a 457B deferred compensation, and I also have about 5,000 in a health savings account, which I try to forget about and just keep it for health emergencies. Okay. When do you plan to start seminary?

How many years from now? Approximately two years, fall of 2019. And have you already chosen where you'd like to go to seminary? Yes, I believe so. It hasn't been finalized, but I think we've narrowed it down. How much is it going to cost you per year? Per year, the tuition is about $6,000.

Okay. And how many years will you be going? It should be a four-year program. Okay. So your total cost here for your program is $24,000. Do you have any idea about financial aid, scholarships, other grants and things like that at this point in time? No, not really. Okay. And what's your plan as far as living expenses?

How much do you think you're going to need for living expenses during that $4,000 time, sorry, during that four-year time? As of right now, it looks like somewhere around $2,200 a month, although the rental situation is a little iffy. And then of course with healthcare, that's kind of been a difficult one for me to assess just with some of the political changes or potential changes or lack thereof.

What's your current plan for household income? Household income at that time in seminary? Yes. How are you going to earn your money? Is your wife going to bring income to the family? What's your plan? Predominantly it should only be me. My wife and I hope that she can be a homemaker, although she is a registered nurse, so she might be able to do a little bit here and there.

Predominantly it would be me bringing in somewhere between maybe $5,000 to $10,000, either working at the seminary or potentially I should have my MBA by then, so I might be able to work something in accounting or business or taxes. And is your question on the backdoor Roth, the five-year plan and all of that, is your question basically around the idea of converting the traditional IRA and traditional 401(k) to a Roth with the goal of minimizing your 10% penalty tax?

Is that what you're hoping for? Yes. Yeah, my hope was that I could begin those conversions in those years that I'm not really earning any or very much earned income and then pay the "tax" at that time at a zero rate or close to that and then take the qualified distributions for higher education expense from the Roth.

I think that's what I'm trying to do. Interesting. Okay, yeah, and the question I had about the distribution is from what I had read from the IRS and other articles, I wasn't sure if I needed one particular Roth IRA to have existed for up to five years and then the monies I convert into that could be taken out as qualified distributions or if each instance of monies being converted to that Roth had to have a five-year waiting period in order to avoid that 10% penalty.

That's where I'm a little lost. It's a good question. I don't know the answer for certain off the top of my head. My guess would be, based upon the intent, kind of the spirit of the intent of the rules, my guess would be that the focus that they want is they want to have the money itself seasoned for five years.

So not just that an account has existed. Otherwise, I think that would be an abusive situation. Let's say that I had – I'm 40 years old. I've had a Roth account since I was 20 years old. But then I'd want to do a conversion into the Roth account this year and because of the fact that the Roth has existed for 20 years, then I can just take it out right away.

I don't think that is – although I can't cite it for sure and say, "Hey, here's the code or the tax court ruling," or anything like that that would say that. That doesn't match the spirit of the law as I understand it to be. In general, with tax planning, you're pretty safe to go with the spirit of the law.

There are a few exceptions but in general, if you're looking at it, just think, "OK, how would a thoughtful, rational person apply this?" The five-year rule is – for distributions from a Roth IRA, the five-year rule is intended to mean that the money needs to actually be there for five years.

So I think it would actually be the actual dollars that have been converted that need to sit there for five years. But I don't think that – I mean in general in your situation, I don't think this is going to be a big thing either way. You have a lot of money outside of the cash.

We're only – in terms of your asset structure, you're really – these 401(k)s and IRAs are a very small component of your overall plan. So yes, if your income drops during the time that you're in school, then look carefully and see, "Can I go ahead and make a conversion to this?" But if your income drops substantially, then that is the time to go ahead and make any conversions that you can.

Do you think you'll be able to save more money in the next couple of years? Yes. By the time I go to seminary, my expectation is we should have about $85,000 or so in the different assets. And I think the overall cost should be $120,000 to $140,000. So there's still a gap, but I think most of that could be filled with part-time work or maybe some other advantageous situations.

And do you and your wife presently have children? I'm sorry, can you say that again? Do you guys presently have children? No, but we are expecting this coming year. Awesome. Congratulations. Well, I guess my thoughts for you, just to kind of wrap up, hopefully I've answered the question sufficiently.

My thought for you would be do everything you can to earn now. And then probably the biggest cost is not necessarily the cost of seminary but the cost of housing and living expenses. And I think that while you're in seminary it's an appropriate time for you to look for a unique living situation that can cut your expenses significantly.

I hate much of the modern seminary system that spits out newly minted and certified and ordained preachers with debt, with college debt, just like the secular world spits out newly minted students with college debt. I hate it. I think it's a terrible plan. And the biggest cost, there's two ways to attack it.

There is, number one, the discussion of the actual cost of the seminary program, and number two, there is the cost of living expenses. And if nothing else, I think that one of the most important places, ways for churches to be involved with supporting students who have decided to go to seminary is at the very least to provide housing and to provide opportunities.

So whether that's maybe somebody can put a fifth wheel camper on their, you know, behind the barn, or if there's somebody who has a big enough house where they've got an extra wing where you and your wife can live. If you only have small children, that's a lot easier than if you have larger children.

But I think that you should look to take advantage of support within the church for your living expenses. And if you can cut that rent to down significantly, it dramatically changes the whole scenario. For those who are interested in seminary, one of the most inspiring articles, I will make a note here and write about it, but one of the most inspiring articles I've ever read on the subject of seminary was by Joel McDermott on the American Vision website.

He wrote an article titled "Bachelor's Degree, BA to PhD for Under $15,000 Total – How I Did It." And he explains his path to, through his bachelor's degree, master's degree, and PhD, wherein he was able to go to school, get his doctorate in theology with, in total, his cost was less than $15,000.

That doesn't cover some of the challenges of living expenses, but it does at least cover and talk about some of the challenges and expenses relating to classes. I found it a really inspirational article. I will link it on today's, in today's show. Curtis in Spokane, welcome to Radical Personal Finance.

How can I serve you today, sir? Thank you, Josh, for taking my call, a long-time listener. So my wife and I, we've been married for just about two years now. We're pretty much settled on making a move to Hawaii within the next two or three years. The thing that I wanted to ask you about is, A, how viable is it to be financially independent in paradise?

Obviously, the cost of living is substantially higher there. Rent, housing, food costs, you name it. I can give you a little bit of background as to why we want to make this move. Yeah, please do. If that helps. Yeah, so we got married a couple years ago. There's a lot of things that are currently going on in our lives.

Her mother had colorectal cancer. She passed away about a year ago. And then my mother right now currently has pancreatic cancer. So we've been doing a lot of caregiving and we absolutely love doing it. It's just, I don't know if you've had to care for a loved one with cancer before, but it's very, it's a challenging process with all the, just the ups and downs that you would expect from taking care of a parent in those type of situations.

Although our marriage is wonderful. It's fantastic. We've just had a lot of bumps in the road just from that perspective. And my wife, she's from, actually she's from Thailand and she, our climate here in Spokane is not conducive to our lifestyle. There's just not a lot of things for us that we enjoy currently in the city and we want to move somewhere that's more reflective of what we want to do on a daily basis.

Hence why we want to move to Hawaii, just because of the environment, the lifestyle, the culture. We visited Maui a couple of times in the last two years and absolutely loved it. So I guess to me, I would answer the question in this way. The scenario you're describing is a matter of prioritization.

If you need to get to Hawaii for a break, for an opportunity to rejuvenate after this difficult time of your life, and it's compatible with your and your wife's lifestyle goals and for her own health and happiness, she needs a change. So to me, those things are all way more compelling and way more important than financial independence.

If you think about it, if – let's just focus in on the fact that your wife doesn't like Spokane, is miserable there. If you spend the next 10 years and your wife is miserable living in Spokane, but you get rich, just so that finally you can go and be happy.

So speaking broadly with these terms, of course, I think that's a dumb plan. If a simple move can help significantly to bring more happiness and peace to your marriage, in my mind that's absolutely the way to go. So I wouldn't look at it in terms of yes or no, should I go or shouldn't I go?

I would look at it and say these things are more important. You need to – your goal is to be in Hawaii. One component of financial freedom that is very valuable is to focus in on lifestyle first. I think one of the key things to do is to purchase some of those basic lifestyle components as early as you can.

The biggest ones is location. If you know where you want to be and you're not there, get to where you want to be as quickly as you can. Then once you're there, start to make a new plan toward financial independence. Start to make a new plan toward figuring out how can I live inexpensively, increase my income substantially and save the difference until I can live on the cash flow from my investments.

I think it's possible to pursue financial independence in just about any context, living just about anywhere. But your plan will change depending on the context that you choose. If you choose to live in an expensive place to live, then you will have to look at it and say, "Well, how can I accommodate this plan?" Here will be a couple of comments.

Number one, expense is relative. Many times you will find that a place that costs more will also have higher incomes because costs are going to be related to income. So you may have more economic opportunities when living in a place that's expensive than you do in a place that's cheap.

I love the country. I like to live out in the country and Mississippi is a beautiful state. But there aren't as many opportunities, financial opportunities to earn a lot of money in a physical job living in Mississippi as there are in New York City. So there's a reason for the difference in cost.

This balance can be changed and kind of brought a little bit out of whack when you live in a place where a lot of people are retirees or when you live in a place where people earn their income from abroad. That does change things. But still, there's got to be some connection between wages and cost of living.

The next thing is every place that you choose to live will have some offsetting features that you can look at. So Hawaii might have expensive rent, but you might have a climate that doesn't require as much energy use. Energy is expensive in Hawaii, so I got to be careful there.

But maybe you don't need air conditioning quite so much. Or maybe there's a way that you can figure out how to get your food less expensively. And so how I would approach it is I would start by saying we've gone through the process of saying this is important to us.

We want to make this lifestyle change. Let's figure out how to make the transition. And then once we're there, how can we intelligently handle all of the details that are there? There may be some sacrifice involved. Maybe you say we were living in the city, but we found an opportunity to live on a farm where they'll give us – we're going to live on an organic food farm in the mountains and they'll give us discounted rent in exchange for labor.

That would be a really great thing for us to go and do for a year while we get our feet under us, give us a time to spend out, spend time outside working on a farm while we figure out what our next step is. Or maybe you share a house with other people so that you can cut your expenses, et cetera.

You can figure out a way once you're clear on what you want to do. And then my other encouragement would be remember, incomes are not fixed. There are lots of ways to make money. And if you have a goal that's important to you, you can probably find a way to increase your income substantially towards that goal.

Okay, that's great advice. Yeah, we've – I've done a lot of research on the economics of Hawaii and it seems like for the last at least five to ten years that wages have remained relatively flat while the housing market has escalated quite substantially. So jobs, at least in terms of income, have been difficult even for the locals to afford even their mortgages.

But yes, to give you some background, our current household income right now is about $115,000 a year, about $40,000 in cash, with about $60,000 in Roth, IRA, and traditional 401(k)s. Our current value of our house currently is about $280,000 and we owe about $185,000. I guess one thing we did consider is if we did move, we could sell the house, but we could potentially rent that out as well at about $2,300, with our current mortgage payment at $1,350 per month.

So – and we also run a local business in the city and just based on a rough number we could potentially sell that for $100,000. So I guess with all that information at hand, would it be wise to purchase a home and be house poor in Hawaii or would you still suggest trying to rent for the first year or so and then figure out what we want to do?

Paul Shufflett: If you don't know Hawaii, I would be slow to buy quickly. If you know Hawaii, then certainly you can consider it. But everything you're describing to me, basically what you described is the fact that you and your family could move with no debt and $300,000 in the bank.

You can set up a new life anywhere and figure out your next steps. You can – that – you have a level of financial independence that makes almost any lifestyle choice accessible to you because of your careful planning and work over the years. So you have the ability to do that.

Now the specific details, should you open a business there? Should you get a job? Should you buy a house? Should you not? I don't know. In general, I think it's probably a bad idea to buy a house with – it's a bad idea to buy a house quickly and here would be a couple of reasons why.

Number one, you're not sure the neighborhoods. You probably may not even be sure which island you want to be on and all real estate is local. It takes a little time to be in a place to understand the culture of a specific neighborhood to see is this the type of neighborhood that we want to be in.

That's just standard. So in general, if you can find a rental, in general, it's always a good idea to rent for a little bit until you decide where you actually want to be. Number two, you're just describing coming off of a season of life of great pain and great work and you've described that your wife probably needs some time to rest and to heal.

I wouldn't want to be making long-term decisions with regard to housing in that context. I don't want to give her some time to heal and to rest and then to make sure that we're making clear-headed decisions. Number three, you're moving, making a huge move and you don't know if the lifestyle is actually suitable to you.

Maybe island living is all you've dreamed of and maybe island living is not for you. So it's best to make small commitments until you're really confident and sure. I've known lots of people who have moved someplace and, "Hey, this is going to be great," and then all of a sudden a few months in, they start to realize, "No, this is not so great." And if you can minimize the cost of those decisions to extricate yourself, I think it's wise.

And then number four, take a look at the trend of housing in a particular area. If what you're describing to me about Hawaii real estate is true, you want to be very careful about buying in. Who knows if it will continue to go up or who knows if it will continue to go down, but I do think you should be careful about buying in.

So for those reasons, I would move pretty slowly. Any final follow-up questions, Curtis, before I go on to my next caller? No, that's great. Thank you, Joshua. Great. Well, thank you to listen to the show and I appreciate the question. It's an awesome position that you're in. And I would just emphasize to other listeners, notice how independent Curtis and his wife already are.

In the financial situation they described, no, they can't – they don't have three million bucks in the bank to spit out money that they can just sit back and live on, but there's no life decision that is – that's out of their reach. There's nothing that they can't change lifestyle-wise.

And those lifestyle changes are the first most valuable aspects of financial independence. The process of being able to live on the income from investments will come later. Nathan in Pennsylvania, you're up next. Welcome to Radical Personal Finance. How can I serve you today, please? Hey, Josh. Thanks for taking my call.

Had a couple of life changes recently. Wanted to get your opinion on it. So changing jobs, moving a couple of states away. And I have – so we had two houses. I had a house that we owned and we rented just south in another state about an hour south of us.

Long-term renters in that house, they told us recently that they would be moving. We basically – sorry. So we sold our house that we're in now and we'll get probably about $60,000 cash back to us on this. The house that we own about an hour south of us is paid off.

It was our first house that we moved into. And it was – we moved north when the market was bad. So we decided to keep it and rent it. Had really good renters. Good experience renting. So really what we're looking at is in a few years possibly coming back to that area.

And we don't know whether to sell the house to keep it. We're not sure of the tax implications. And if we did sell it, not sure what we would do with that money, whether to invest it. I know the market's really high. So it makes me a little nervous putting all that in the market high.

Not sure exactly what to do with that. How much is the house worth? Probably about $185,000. And do you remember how much? Maybe $190,000. And you paid for it? Yes. $115,000. If you moved back to that area, would you want to live in that house again? It's not a bad house.

It was more of a starter home. We would be okay living in it for a couple of years to not pay the capital gains. There's no guarantee of getting back in that area, but it sounds pretty promising that a position would open up with the company that I started working at.

If not, I could always find another job in that area. And I can give you background information on our situation too. Yeah, that's probably enough. So the two decision factors that jump out at me in this decision is one, the rental and the challenge of managing a rental from abroad or from another state, from farther away.

And number two is the capital gains. So that's the tax question. Is it worth going around? So number one, the rental. If you didn't own the house today, would you buy a rental house two states away and in the neighborhood and the type of house that this house is?

Probably not, unless it was a really good deal I couldn't walk away from. But I probably wouldn't seek it out, yes. At $185,000, would you buy a house like this one? Would that be a really good deal? No. Okay. So just kind of a simple way of trying to get to the heart of the matter of zero-based thinking.

If you wouldn't do it again today, then you probably should be careful about continuing to do it. Now, that question ignores the embedded tax liability, because the only reason that you don't want to put it on the market right now and sell it for $185,000 is that you're saying, "Well, I've been out of it, so now it's not my primary residence.

Now I'm going to have to pay the tax on the gain of the property." So what you need to do is you need to calculate the embedded tax liability in the property. If you did sell it today at $185,000, calculate the sales costs, how much are you going to lose in realtor fees, et cetera.

Probably get a market analysis done by a local real estate agent so you have an accurate idea of what you think it would sell for. And then calculate how much tax you'll owe on the sale. You have to figure out and calculate what is your modified adjusted basis in the property, how much you paid for it, how much your actual basis is today based on the fact that you've rented it out, and then calculate what the tax that you would owe would be on the sale and then ask yourself that question again.

Let me just use some simple numbers. Let's say that on the sale of it, you can sell it for $185,000. Let's say that your sales costs are eight grand. So let's use 10 grand for round numbers, $10,000 of sales costs and $15,000 of tax, capital gains tax on your gain when you figure out what you've actually benefited from it.

So now let's say instead of clearing $185,000, you're going to clear $150,000. So calculate that math and then ask yourself the question again. Would I buy this house for $150,000? If so, is that a great deal? Well, if it's not, then you should consider going ahead and just taking the profit.

Because as you said, the reason you didn't want to sell it when you moved was because the market was down, but the market has been up. So we've got to do a little guessing. Do you think the market has more room to run locally? Are the trends strong or do you feel like we're at a strong point where it might be good to go ahead and sell it?

I think the market's going to be strong. There's a lot of major companies coming in there. And in the last three months, it's went up considerable, probably 15% jump. So that's significant. That's really important for you to pay attention to. But you've got to consider it and do the analysis and run the numbers and then ask yourself that question.

Do I think this house is going to be worth more in the future? Now number two, if you move back, I think your biggest risk here is lifestyle. It would be unusual for many families who purchased a starter home and then moved out of the starter home into what I presume is probably a nicer home to want to move back to the starter home and to be content with that from a lifestyle perspective.

That would be unusual. Now I like unusual, but you've got to ask the question, ask your wife, would we really be willing to move into this starter home again? Would we really be excited about it? And then what you can do is calculate the tax savings because in my understanding of the ownership and use rule that would help you to avoid the tax on the sale of a house, if you move back into the house, the two rules are that you have to own and occupy a house as your principal residence for at least two years before you sell it and you have to have it for at least two years out of the previous five.

So you've got to have both of those things as your – you must have used the home as your principal residence for at least two out of the five years before the sale. So I think you could run this scenario where you could move back there. It's your principal residence, declare it as such, and then you go ahead and sell it and then you have the tax-free gain.

But that's going to come with a lifestyle cost. So it might be worth it. But – and the question is, ask your wife, how much do you value this tax-free money that we can get? Is it worth it? Are we actually going to do that? Michael Munger Right. So we have talked about that and we are pretty weird.

The last five years, we've changed our lifestyle considerably, kind of got onto different people's forums. Mr. Money Mustache and JL Collins found you not too long ago. So all of the – well, actually, it all started with Dave Ramsey, I think, similar to your story a little bit, I think, if I remember it.

But I guess maybe graduated up from that, but give him a lot of credit. He got it started. So my wife is pretty excited at least the potential of what it's done so far and where it's going. It wouldn't be an endgame, but we see the potential with the growth.

But we're not – I would say we're not emotionally attached to it or anything like that. But I guess if we did decide to sell it, because it's kind of on the fence with it, I really am struggling where to put it. Because if we sell our current house and where we're going, we're going to rent for – we're probably going to rent the few years we expect to be there because we don't think financially it would be worth buying.

And we don't want to put roots down there and make it more difficult to leave. So if we sell that and we have this, we'll probably have about $120,000 in cash. And if we sell the other one, let's say we clear, I would say conservatively, $150,000, that's a lot of cash.

And I'm just not sure what to do with it, which sounds crazy, I guess. But I'm nervous about putting it all in the market all at once at record highs. Yeah, we'll just put it in a bank and wait until you find a good opportunity. That's my plan if I don't think of anything else to do.

This is a big pet peeve of mine and not picking on you but you're expressing the thing. People have a fear of having just money sitting in the bank and I don't get it. When we're talking a short-term perspective, having money sitting in the bank is not a problem.

And by short-term, I mean a few years. There's no reason to worry about what to do with money on the short term. The best thing to do if you don't know what to do with it is just keep it safe, put it in the bank and leave it alone and wait until you have an opportunity where something will come along.

If you imagine just about any scenario, you think back in two, three, four-year chunks of your life, it's very common in most people's lives that in two, three or four-year chunks, you'll find a good use of money. That may be that there's a correction in the stock market and you say, "You know what?

I'm going to buy in." That may be that there's a change in the housing market and you say, "This is a time for us to go ahead and pull the trigger and buy this particular type of house." That may be you have an idea for a business or you have a friend of yours that you want to engage in some kind of private investment, but there's no reason for you not to just put the money in the bank and that shouldn't be a reason for you to keep the money in real estate.

If you want the money in real estate, you can always just – if it's a good time to sell this house and take your profits and you want this particular part of your portfolio to be invested in real estate, you can always find another house to put it into.

But there's no – you shouldn't be scared of putting $300,000 in the bank, letting it sit there for two, three, four years until you find something good to do with it. Michael: Perfect. Tavis: Yeah. It's a big psychological thing that I think people face, but when you have money I think you'll find that there are plenty of people that want to help you invest it as time goes on.

All right. Last caller for today, Josh in Illinois. Welcome to the show. How can I serve you today? Josh: Yeah. Hey, I was hoping I could ask two questions. I think one's going to be really easy for you. Tavis: Go for it. I like easy. Josh: All right. Great.

So I've just been listening for a few weeks and I started with the most recent shows and I jumped back with some of the older ones and I came across a couple of shows about the cash flow statement and the financial condition, statement of financial condition. I kind of wanted to do that, but I was hoping I could take a look at your template, but it's not there anymore and I wasn't sure if there's a way to get access to it.

It expired in the show notes or something, that document. Tavis: Yeah. That was an old link and I do need to replace the document. It's on my list of things that I need to do. But to make it just very simple, in the audio of that show, I described how to do it.

Again, I should go ahead and re-upload those templates and fix some of those old shows with those minor details. But don't let seeing something else intimidate you. For your statement of financial condition, you just simply write down a list of all your assets and group them according to kind.

Group your real estate assets together, group your investment assets together, group your cash assets together, group your tangible assets together and then list your liabilities and just write it out. You can do it on a legal pad, et cetera. With your statement of cash flows, top of the page, just write out or top of the spreadsheet, write out your total gross income and then systematically pull out each of the categories and calculate how much you pay in categories.

Put your employment taxes, put your federal income taxes, put any other deductions that you have from your paycheck. So figure out how to get from your gross income to your net income and then start listing your household expenses. So if you understood just the basic outline of it, you can do it.

But yes, it is on my list that I do need to fix that document for the old file. Preston Pysh (00:36:40): Right. Yeah. No, and I've created both of my own versions in Excel. I just kind of wanted to take a look at yours. Trey Lockerbie (00:36:46): You're a spreadsheet nerd.

You want to see my spreadsheets. Preston Pysh (00:36:49): Oh, I love them. I love them. I got spreadsheets for everything. Hey, my other question was, I guess the short version of the question is do you have any exposure to or any thoughts on these sort of medical bill sharing organizations as a substitute for health insurance?

The one that I'm familiar with is called Samaritan Ministries. It's sort of a Christian base. You pay a certain amount every month, but you, instead of sending it to a health insurance company or something like that, you send checks to people that have bills. And I don't know if you know anything about that, but the reason I'm asking is because I'm trying to transition my wife out of her job by some other side of the family business and stuff that I'm doing.

And so she can be home, but her health care is great and we're going to lose it obviously if she quits. So I'm just looking at other alternatives and that's one of them, but I've never really heard anybody from outside of the organization be able to critique them. I don't know if you had any knowledge on that or thoughts on that.

Trey Lockerbie (00:37:22): Back in December of 2016, I did a series on health insurance. Episode 393 was part one and then it continued on through that series. In episode 403, I talked about, it was called the health insurance series part four, how to avoid and evade the Obamacare tax penalty.

I introduced in that show, episode 403, I introduced the concept of health care sharing ministries. And then episode 404 of the show is called the health insurance series part five, health care sharing ministries. This is how we pay for our health care costs in the Sheetz family. And then episode 405 was the health care sharing ministries wrap up with a few additional comments.

I'll give you the short version of those shows in answer to your question. Trey Lockerbie (00:38:02): I love the health care sharing ministry model. There are a number of good ones. Samaritan Ministries is the one that my family and I use, but there are other good ones as well.

There's Liberty Health Share. There are four big ones. Can I do this off the top of my head? I don't have it off the top of my head. I would need to go and find my notes, but an episode of, oh, here we go. In the notes for episode 404 of my show, there's Christian Healthcare Ministries.

Then there's MediShare, also Liberty Health Share and Altrua Health Share. So the biggest ones, or the Liberty Health Share is more well-known now because they've been advertising aggressively in some of the right-wing conservative political space. Christian Healthcare Ministries is very large, and so is MediShare and then Samaritan Ministries as well.

I like Samaritan. I have nothing but good things to say about health care sharing ministries. I love the model. I love the concept, and I have been thoroughly pleased with our participation in the Samaritan Ministries model of health care sharing ministries. I don't think they're for everyone. The couple things that you need to look out for is, number one, there is an ideological and religious statement of – basically a statement of faith that you have to affirm to be able to participate.

That statement of faith ranges from very liberal and inclusive to very conservative and exclusive across those companies. So for example, Liberty Health Share requires you to affirm a statement of faith that is very inclusive, almost kind of the American civil religion. You affirm that there is a god of some kind, but you don't necessarily have to make too many specifications about what that god is or means, and it's much more kind of the American civil religion, god, freedom, etc.

That ranges. Samaritan Ministries on the other hand, their statement of faith is very exclusive. It's very tight. It's a Trinitarian confession of faith, and it's very, very careful in its approach. So not everybody can endorse such a statement of faith, and so that's why they're excluded. So for a listener who can't endorse one of those statements of faith as required for membership, they would have to find another option for them.

But I love it. We've loved Samaritan Ministries. I love with Samaritan Ministries that the checks don't come from the centralized organization. We had – this last year, my wife and I had a child, and every dollar of the cost of childbirth was paid for out from the healthcare sharing ministry organization, and it all came in with very nice checks from our fellow participants in the plan, accompanied with beautiful notes and congratulations and notes of encouragement and scripture verses, etc.

It was a very refreshing experience after years of dealing with a cold insurance company at the other end of the line. But it's not without risk. So that's my answer. I love it. We have – I heartily endorse these organizations. We've found it to be very inexpensive and to – well, to be very reasonable in terms of the cost.

For our family of five, our monthly share cost is $495 a month, and so that's very, very reasonable considering the benefits that we get. Michael Myre: Great. So I should have just done a search on your website basically. Ted Whitten: I try to keep the website useful to work with search, but sometimes it's a little overwhelming and I don't do as good of a job as possible.

But yes, go and listen to those episodes of the show, and I think especially episode 404, and it'll give you the comprehensive treatment. Any specific questions on Samaritan Ministries or the concept in general? Ted Whitten: I mean, not really. I think almost about half the people I know here in Peoria area work for the company, so I'm not really lacking information about Samaritan Ministries.

It's just kind of wanted to get an outsider's viewpoint. So that kind of confirms some of my thoughts. So the only – I guess the final kind of light that I could add would be in terms of deciding and thinking through which option to go with, which company to go with, I find them all to be competitive with one another in terms of premiums, et cetera.

I think the biggest difference would be a couple of things. Number one, that confession of faith that you would have to affirm upon membership. That will be a big thing. Number two, there may be some specific coverage for a specific thing that would guide you from one to another.

For example, the thing that put me over the top for Samaritan Ministries was twofold. One, I liked the fact that the money doesn't go through the central disbursement account, but it comes directly from fellow participants. I like that because it feels very much like the community sharing approach. But another one was for me, Samaritan Ministries had a specific option in their plan and in their guidelines where they said that with regard to tobacco use, that an occasional celebratory cigar was expressly permitted.

All of the rest of them have – when I was doing the research, all the rest of them had a complete blanket prohibition against any tobacco use and they didn't discriminate between cigarettes and cigars, pipes, etc. There's a huge difference in terms of the health risk from a daily pack of cigarettes versus an occasional pipe or an occasional cigar and I enjoy an occasional celebratory cigar.

So I found – would have found it frustrating to have that choice excluded from me by joining one of the others. But in the Samaritan Ministries guidelines, they had a specific exception for – with regard to tobacco use, an occasional celebratory cigar was permitted. So that was just a minor thing that when I was reading through all the guidelines was valuable and important for me.

So if you listen to that show and if you read the various guidelines to the different companies, I think you'll find them. The final thing would be each company has a different maximum cap on their coverage. So not all medical – unlike traditional health insurance under today's Affordable Care Act compliant plans which has no maximum out of pocket – sorry, no maximum limit to the plan.

The plan if you have a $20 million medical expense, the plan will pay for. Christian Healthcare Sharing Ministries do indeed have a max, have a maximum cap. Now it can range as high as I believe the highest is a million bucks but you would need to read among them and decide what's the appropriate setup for me.

But we've loved it. And if you do join Samaritan Ministries, mention to them please that Joshua Sheets sent you. Joshua Sheets is spelled S-H-E-A-T-S. Tell them Joshua Sheets sent you and then I will get on my next statement, I'll get a reduction in my bill. So that's nice. And that's not something that's exclusive for me.

I need to start advertising that more on Radical Personal Finance because it would be very helpful to have dozens and dozens of you signing up with Samaritan Ministries every month and telling them that Joshua Sheets sent you because that would help me with my monthly share amount. But anytime you're a member of, well these were Samaritan Ministries and the others I think have equivalent programs as well, you can just simply share it with your friends and if you share it with your friends you'll find that they will give you a discount on your next bill as a referral fee.

I think that's really nice and it's very, very helpful. So those of us who have a platform should share it. So if you're interested in Christian Healthcare Sharing Ministries, go to episode 404 of the show, listen to it. I can heartily endorse the approach. In that show I talk about who it may not be right for, just as I've just done, but in general if you can affirm the statement of faith and if you're looking for a consistent, reliable way to pay for your healthcare costs, that may work for you.

If you choose Samaritan Ministries, tell them Joshua Sheets sent you and I would greatly appreciate that. Thank you to all of you who called in for today's Q&A show. I have enjoyed the interaction. One more of these scheduled for tomorrow, Wednesday, October 4th. So if you'd like to do that, go by my Twitter page, just click the link in today's show notes.

The call in number is there, you can call up and you can ask me any question that you like. These particular Q&A shows are not exclusive to patrons of the show. You can have access if you're just interested in calling in. Finally, if you would like to support the show that I do and support me financially, I would be greatly appreciative of that.

Go to radicalpersonalfinance.com/patron and you can set that up. Radicalpersonalfinance.com/patron. Be back with you soon. This show is part of the Radical Life Media network of podcasts and resources. Find out more at radicallifemedia.com.