Welcome to the Radical Personal Finance Podcast. I'm your host, Joshua Sheets, and today I'm very pleased to welcome Brandon, the mad scientist, to the show. Brandon, welcome. Brandon Sheets Thank you very much. I'm really excited to be here and I'm really happy to be on this side of the interview for once.

It's going to be nice and relaxing rather than trying to be the interviewer and worrying about asking questions. Joshua Sheets Exactly. It is definitely more nerve-wracking to be on the interviewer side because you're trying to produce a quality product instead of just simply going with the flow and sharing your story.

So hopefully it'll be fun for you. Brandon Sheets Absolutely. Joshua Sheets For those of you who don't know, Brandon does record a podcast, an occasional interview podcast mainly, at least those are the episodes that I've heard, and he writes a blog at madscientist.com. I highly encourage you to go and check out his writing and his show.

I've actually, Brandon, I just interviewed Paula from affordanything.com, and I first heard her off of your show and went and enjoyed her website because you had found her. So thanks for that connection there. Brandon Sheets Oh, that's cool. Yeah, Paula's great. I'm actually hopefully going to be meeting her in October and look forward to talking to her again, but I'll look forward to hearing that podcast because, yeah, I had a great time speaking with her.

Joshua Sheets Cool. So just a little intro for people. Today's show, I'm hoping, Brandon has a number of good articles, and I'm going to walk through some of his articles, and I'm hoping that today's show winds up being fairly meaty. So we'll get to know him a little bit and find out a little bit about his story, but then we're going to walk through some of the strategies that he's using to pursue his financial goals.

He's written some excellent articles. All those articles that we're going to reference will be in the show notes. I'd encourage you to go and look at some of the numbers and things in his writings, but it's very accessible. He's explaining some detailed concepts in a very accessible way, and so I just encourage people, go and read it, but don't expect today to be fluffy.

We're going to try to give you some useful strategies that you can implement immediately. So first off, though, Brandon, sorry for a generic question, but tell us a little bit about yourself and a little bit about your financial journey. Where'd you start from? How long have you been interested in financial independence?

Where are you at in your progress? Kind of just give us a little bit of background so we can understand who you are and where you're coming from. Sure, yeah. I'm 31 years old. I studied computer science in college, and I actually studied abroad in Glasgow, Scotland when I was a junior.

When I was over there, I met a Scottish girl and came back to the States for my senior year and graduated, and then I moved to Scotland. So we spent about four years living over there, and then I brought her over to the States, and then we just got married last year.

So after 10 years of being together, we just got married. Congratulations. Thank you. Yeah, married life's been good. We just had our one-year anniversary there just a little bit ago last month, so yeah, things are good with that. As far as when did I start my journey to financial independence, I've always been quite frugal, and I've always loved looking into money.

Even as a kid, I couldn't wait till I had a portfolio to manage and have money to do things with and watch it grow. So I've never been a big spender. But the actual journey itself to financial independence probably maybe three or four years ago. I came across Early Retirement Extreme, which is � I just listened to your episode on his book review, which was excellent.

I came across his blog, and it was only then that I really thought, "Whoa, that's actually possible." Up until that point, not spending a lot of money, I would take off six months at a time. In between jobs, I would quit. Obviously, moving between America and Scotland, that gave perfect opportunities just to go do fun things in between those times.

So I always used my money for freedom in that sense, but it was never a focused goal to, "Okay, I'm going to just work really hard for this time, and then I'll have freedom for the rest of my life." It was always like, "Work a bit, have a bit of freedom.

Work a bit, have a bit of freedom." >> Trevor: It's really interesting how a lot of times there has to be some kind of catalytic event like reading a story like Jacob's or reading something or hearing somebody or talking to somebody. This show is not designed to be the Early Retirement or Early Financial Independence show, but I'm enjoying some of these conversations because by realizing how quickly it is possible – Jacob's story is excellent.

He gives a very good, detailed kind of defense that it is possible and you don't have to be some investment wizard to accomplish that goal. But by realizing what's possible, I believe that all of us can look at our specific goals and understand what's important to us with a much bigger realization of the parameters that are possible.

Not all of us are going to pursue Jacob's lifestyle. I'm probably not going to pursue your approach, but I learn from everyone's approach. I think that's one of the goals I have for this podcast is to help people be exposed to stories and conversations with people who are doing it and seeing how they're doing it so that we can start with our own goals and say, "What do we want?" and really feel confident about setting those plans.

It's neat that that was a transformative event in your life as far as his writings. I'm sure that would make him feel good. Oh, absolutely. It completely changed everything. As you said, I definitely don't plan on living this style of life that Jacob does, but he's shown me what's possible as far as just making choices that make you happy rather than just doing what everybody else seems to be doing.

I'm sure I could have continued doing what I was doing so far as just working a few years and then going off and having a great time for a little while and then working a few more. But I definitely like the new plan of just working really hard and then having the rest of my life to do as I wish.

And the working in breaks thing I think is a very valid strategy. It's actually a strategy that I'm more interested in than some of the other strategies. It makes sense to me to spend a number of years working at a project and then to spend some time working on a different project.

Even with the more normal US-American career path, all of us – I guess the articles you read say that all of us are going to have multiple careers, multiple jobs in totally different fields. So that type of approach works well. But I'll give you a quick bit of insight.

I don't think I'm betraying anything personal, but I kind of chuckled. After I reviewed Jacob's book, I reached out to him via email. I shot him an email and asked him for an interview. He was very kind, but he made a comment in his note. He said, "I don't really think much about early retirement anymore." He declined the interview for right now.

I'm hoping in the future he'll do it. But he said, "At some point I may come back and start thinking about this stuff again, but I'm not really active in thinking about it or planning for it. So I don't think I'd be a good resource right now." I had to laugh because for many people, my belief is that by pursuing a strategy like his and a strategy like you're pursuing, it can set you free to kind of, instead of worrying about money and making all the decisions about money, then you can make decisions based upon what you're really interested in.

So Jacob, my understanding from his blog is he's currently working. He's doing some sort of trading up in Chicago, I think. But he's doing it because it's something that he's interested in, not because he has to. I thought it's so interesting that once he's achieved financial independence at a young age, he kind of just forgets about it.

Instead of it becoming this huge monumental thing of, "I've got a plan for this," it's just simply life. I thought what a cool testament to, I would love it if many young people would pursue a strategy like you're pursuing. I believe that free of some of the financial baggage and the concerns and the money troubles that a lot of people face, I think we would have a far more productive society of inventors and scientists and teachers and people sharing and helping society grow because they're in a position to pursue things that they're really interested in and passionate about instead of just pursuing things to earn the money that they need for this week.

Oh, absolutely. Yeah, the fact that Jacob's gone back to work is just, yeah, he's doing exactly what he wants to do. I know he really hates that he called his blog, Early Retirement Extreme because the retirement word has so much baggage associated with it, which is why I definitely try to save financial independence as much as possible because I have a whole list of jobs that I'm looking forward to pursuing after financial independence.

I'm sure I could do it now and I'd still be living a happy life, but I think there's something about getting a degree in something and then feeling that you need to maximize that investment of time and money. It's like, "All right, well, if I use my degree to then achieve financial independence, then I can go do all these other fun things that I'll get paid for, but really I'll be going there just to learn something new or meet new people or have new experiences." That, to me, is the best part of financial independence is the option to do that.

I have no desire to just sit and watch TV all day. I expect I'll probably be even busier after financial independence than I am now, but it'll just be on things that are very important to me and things that keep my brain occupied and happy. >> Trevor: Yeah, absolutely.

Walk us through, and this is going to be a little bit personal, but since you wrote it and published it in public, I don't feel bad about asking you through it. You sat down at some point over the last couple of years and really spent some time trying to envision and create your perfect life, as you put it.

Walk us through what that looks like for you, and I'm sure it'll change, so don't feel like you're lumped into a corner here, but walk us through the process of how you sat down first and started working on it and then what you think of, with you and your wife, what feels like and looks like the perfect life for you guys.

>> Tom: Sure. Yeah, no, this was a really, really good exercise, and I definitely encourage anyone to do it. It's actually a lot harder than it sounds. You think you know what you want, but when you really sit down and try to picture three months of something that's the same and doing the same thing, it's like the stuff you thought you wanted to be doing may not actually be the stuff you actually want to be doing.

It was definitely a really cool exercise, and yeah, it sort of came from ... It was just a natural progression, I think, once I knew that, okay, freedom's the number one thing. That's what I'm working towards, just saving up the money, and then I'll have the freedom to do whatever I want.

But then it's like, all right, well, what do I actually want to do? If work factors into that, then why not account for that and start my perfect life sooner? You know what I mean? So rather than think, all right, I just got to save up X amount of dollars so that I can spend Y amount every year, if I'm going to be working part-time doing something that I enjoy, I should probably try to factor that money in.

So yeah, for a good few months, we just kept talking, my wife and I, just talking about different sorts of plans and what's really important to us. So yeah, to sum up where we are right now, we realized that the things that make us happiest are being around people that we love and doing and trying new things that are challenging.

So since her family's in Scotland, my family's in America, we're never going to be able to live somewhere where both of us are completely happy as far as being able to see all the people that we want to see. So we thought, all right, well, let's think about this.

We can spend a few months here and there if we need to. We're going to have the flexibility to do that. So yeah, we came up with what we call the 363 plan, which means that we're going to spend three months in America just traveling around, seeing my friends and family and staying with them and spending some good quality time with them.

We're going to go spend six months in Scotland to see my wife's family and our friends over there. My wife will then work during that six months, which I'll come back to and talk about. And then we'll spend three months somewhere else in the world. We'll establish a base somewhere in a region that we want to explore.

And then we'll try to live like locals as much as we can and just do little side trips outside of there and maybe try to learn some languages and pick up new skills when we're abroad. So that's where we stand right now. And we're actually planning for that first year of the 363 plan.

I'll come back to my wife working. I write about this in a couple of posts actually, but the entire 10 plus years we've been together, we've had separate finances. I've obviously been pretty extreme in my savings rate ever since we met. My wife hadn't been that extreme. She was quite a normal person before all these ideas started rubbing off on her.

It always just worked best for us to have separate finances because then that way we're both contributing equal amounts to the bills, but then I can go off and save the rest of mine and she could spend it or save it or whatever she wanted to do with it.

So she's actually not going to be financially independent, which is why we are going to be living in Scotland for six months so she can work and see her family. And she enjoys her work a lot more than I think I do. So she's not too sad about it.

I'm not too sad about it because I love spending time in Scotland. What type of field of work is she in? She's an optometrist. So she'll be able to easily pick up, they're called locums in Scotland, which is I guess just like, you know, if a practice needs an extra optometrist for a week or a day or a weekend or something, they can just call these people that don't have permanent jobs somewhere and they can just come in and sub in for a week or whatever.

So that works out quite well. Yeah, that's really neat. And I want to riff off of that for a second because is she currently working a full-time practice where like it's her practice or she's currently doing some sort of occasional employment? She's working full-time. It's not her practice but she's working as an optometrist at someone else's practice.

But yeah, she's full-time and she will be until we make our move abroad at the end of next year. Okay. So you mentioned for both you and for her in your article you've mentioned that you are working towards being able to live off of your investment income but you're also interested in building up sources of income that allow you to not depend on your investment income so much.

And I think and also even just what you said about your wife's potential income in the future of doing a part-time. It's such a valuable strategy is that there are many ways, I think there are many ways to financial independence. One way which is maybe kind of the ultimate is to be in a position where the income off of your investments will flow in and support your living expenses.

That's awesome. For young people, it's perhaps a little bit daunting. You can also set up a lifestyle that's a part-time or seasonal employment. So if this is like you said of six months a year working at something like that, if you develop the skills, I've seen what comes to mind right now is accountants who work during tax season and arrange their living expenses that they don't need to work year round.

I think you're in software developers, people who can work anywhere, writers. There are so many careers that can be done on a seasonal basis if people seek that out. That's such an important strategy for people to understand what their skills are. And then it may be that the right move is to move into a corporate 50-week a year position or maybe the right move to take those skills and build something up that's able to be done part-time.

Part-time is actually something I'm going to be investigating. I think the more and more I think about it, the more and more it makes sense to maybe transition into financial independence that way. It's probably a big change, obviously, and there's probably a lot of weird emotions that go along with it.

It's mostly exciting, but I'm sure it's going to be a little scary as well. The idea of working part-time really appeals to me, one for tax purposes, just to maybe rather than just work a full year as your last year before financial independence, maybe just work two half years, save a bunch of money on taxes and then slowly work your way into a new lifestyle.

That's not a big change, a drastic change from what you're doing. I completely agree, and especially in the Internet age, there's so many more opportunities to do pick-up part-time work or even just work 20 hours a week doing something or whatever, take half the year off. There's many, many options, which is very nice in this day and age.

You see people doing this at every level of wealth scale. You see people doing this that are maybe just getting started, whether it's your stereotypical surf bum. I'll pick on surf bum because I think they're neat people. You spend six months waiting tables so you can spend six months surfing.

You see it if you read the literature and talk to people who are very wealthy, who have very high-profile corporate jobs, things like that. Most CEOs, if they retire from working a company, don't simply quit and stop working. Most CEOs have other projects that they do. I always enjoyed reading Jack Welch, who was the CEO of General Electric.

He writes columns for one of the Business Week magazines. He records a podcast. He's active in consulting projects. A lot of times you'll have a CEO who will retire from a leadership position in a company and that person will serve on boards. They'll serve on three or four boards where they're earning an income.

You find a lot of times that there's more to work than just money. The money is obviously really valuable, but there's also a certain fulfillment. There's also a certain activity, feeling like contributing to society. Those things are very valid, but many times people don't realize that it's available sooner than later.

It's not just something that you have to do from 65 to 75. It's something that you can do from 30 to 40 if you want to. That's up to each individual's goals. I think it's neat that you guys are factoring that into your planning. Mad Fientist Absolutely. What you said about work is definitely true.

It's actually amazing. It's something that I didn't expect out of pursuing financial independence. As I get closer and closer to that goal, I'm enjoying my job a lot more and more because I know I'm not going to be stuck in there doing the same thing for 30 years. As I get closer to the end, I actually really do enjoy what I'm doing.

Especially now that I'm to a point where it'd be fine if I just wanted to quit. I don't get angry as much as all the annoying office stuff that goes on. I just do my own thing. I still do good work, but I don't deal with all the bullshit that usually goes on just because I don't have to.

If they want to fire me, they can fire me. It's sort of like that office space. As that guy cared less and less, they liked him more and more. That's honestly what I'm finding. I'm not doing all the ass-kissing that everybody else is doing and all the normal stuff.

I'm just doing the work that I enjoy. My bosses are happier than they've ever been. It's a weird thing. It's a very cool perk of getting close to financial independence. Like I said, I'm enjoying my job more than I have in a decade. That's awesome. Now, you were talking about your wife.

You said that she's not a scientist, but you also said that maybe she's changing a little bit. What are you finding as you guys spend more time together? Are you finding that she's becoming attracted to your lifestyle more and more? Is she changing to that? What are you finding as the path there?

Absolutely. It's actually a very big surprise. I have a post on my site called an unexpected guest post. I was just up one night. I was writing an article. My wife said she was going to bed, so she just kissed me goodnight. She's like, "There's something on my computer that I want you to read." I was like, "Oh, okay.

What is it?" She's like, "Just read it." She went off to bed. I tried to finish the article that I was writing, but curiosity quickly got the better of me because I was like, "What could this possibly be?" So, I read. It was just this letter to me that was just talking about her feelings.

I think she said she got up in the middle of the night one night because she had so much on her mind, and she just started writing this. I was sleeping, so she just typed this out on her computer. It was like I got to watch the light bulb go off in her head as far as why I'm doing this.

Like I said, we've been together for 10 plus years. For that entire time, I've been the same, just watching my money very closely, not buying a lot of stuff, trying to save as much as possible. Like I said, she wasn't like that, so she didn't really understand it. We always had separate finances, so I never tried to force her to do anything that she didn't want to do.

We never really talked about it. Ever since I started writing on The Mad Scientist, she's my editor, so she gets to read all my articles before I post them just to try to snag any misspellings or anything like that. So yeah, I guess it started to sink in. Doing the podcast and interviewing other people that had pursued financial independence, she got to hear from other people besides me saying, "This is why I'm doing it as well." We also got to meet up with Jim Collins from JLCollinsNH.com.

I interviewed him for the podcast, and he actually lives quite close, so we met up with him and his wife and had some good dinner conversations about this stuff. I think it just started to gradually click. Like, "Oh, he's not just doing it because he's a cheapskate. He's doing it because he wants to let his money grow and then use the interest off the money to actually do what he wants without working." So yeah, it started to sink in, but it wasn't until we really started planning out our perfect life that she started realizing.

Because like I said before, she loves what she does. She loves working. So to her, it was like, "Well, why shouldn't I buy something that I want? Because I'll make more money, and I always like my job, so making more money is not a problem for me, so why not just spend it?" But when we started seeing that, "Look, this could actually give us six months for you of not working at all, spending more time with friends and family than we do now, seeing more places than we see now while still allowing you to be an optometrist," then it really sunk in.

And yeah, now she's just totally behind the idea. Her spending has completely changed. She wasn't going crazy before, but she's definitely more conscious of what she's spending her money on and when. So yeah, that's one of the biggest benefits of actually starting to write about this stuff, was that yeah, I think it really got her on board, and now we're in this together, which is great.

>> Trevor: Yeah, and it's neat that you can share that story, because a lot of times when people talk about financial planning, many people see frugality and saving and investing as a sacrifice, and they see it as a sacrifice of something that they want. I thought I enjoyed that.

Next, we're going to go to your triple value of income article, because I thought that was a good way to talk about it, but I'll set you up for it. I think the people who are, many people who are frugal, and many people who are pursuing strategies like you are, don't view it as sacrifice, but they view it more as a way for them to get what they really want.

My philosophy, personally, is I think, I just recorded a show on the ultimate smart person's guide to spending money. How I started that show is I said, "When is it okay for you to spend money?" My answer is, "Whenever you want." It's your money. You can do what you want with it.

I don't think there's anything necessarily better about saving it versus spending it, but the key is that are you saving it because you want to save it, or are you spending it because that's what's important to you? My favorite example that I've thought for years about was, and I've mentioned a few times on the show, was Chris Guillebeau's example of, "Would I rather travel to 100 countries, or would I rather drive an SUV?" Many people say, "I would love to travel.

I want to travel, but I can't afford to travel." Many people drive SUVs. I believe many times no one's ever asked them, "Have you considered that you actually want to drive the SUV? If you do, get the SUV. Do you want to visit 100 countries? If you do, here's a way that you could achieve it." Probably for you, I dare say that being frugal and saving and investing a large percentage of your income is not necessarily a sacrifice, but it's a way for you to achieve what's more important to you than the current gratification of spending money.

Absolutely. That's a perfect way to say it. Paula from Afford Anything, she has a really cool article on that. I forget the name of it, but I'll send you a link afterwards. It talks about how when she said she was going to go travel for two years, all of her friends were like, "How can you afford that?

What are you talking about? What are you doing?" Yet all of her friends were going out and buying a $30,000 SUV, and nobody was saying to them, "Whoa, how can you afford that? What are you doing? How do you do that?" There's all these things that society has just ingrained in our mind that are normal.

Most people probably, if they actually sat down and realized how much it was costing them and what they were giving up to do it, they might think differently. You're absolutely right. It's not a sacrifice. Actually, the more and more that I cut back – I started as frugal, but now with the goal so close in sight, I'm still dialing more and more back.

As I do, I'm getting happier and happier. I feel freer, less stressed, less worried. It's got to the point where I'm thinking, rather than keep whittling down to reach the sweet spot, at this point, I may be better just giving up everything and then only picking up the things that I really miss.

That may be more efficient to get to the sweet spot that way. It's not hard. With such an amazing goal in the finish line so close, it's so easy not to go out and spend a bunch of money on stuff that's not important to me. You mentioned the triple value of income article.

That's actually where it all started pretty much. My mom, I was speaking to her one day and something came up and I said I wasn't going to spend any money on it or something. She's like, "Why don't you just go out and buy something to make yourself happy?" I thought a lot about it and I'm like, "That would not make me happy." I wanted to figure out a way to explain it.

I started thinking and I'm like, "If I spend the dollar, then it's gone and I have this thing that I'm probably not going to be that into in a few weeks. Or, if I keep the dollar, that dollar is going to actually be worth X amount when I actually spend it, depending on if I put it into a retirement account or if I put it into a normal investment account." I wrote the triple value of income post to show that, if I forget the numbers I used, but say you make $100,000 a year, that $100,000 is actually only worth $80,000 to you because you have to pay $20,000 in tax.

But if you instead funnel a lot of that into tax advantage accounts, then you're getting the full value of your dollar plus all of the interest that you would accrue while it's in those accounts. It seemed like a really good way to explain why I don't feel like I need to spend money because I'm just delaying my gratification for more gratification later for the same dollars.

>> Trevor: It's interesting because I think if you find people who really enjoy saving and investing and building their money, a lot of times it's their hobby. It's something that they derive a lot of benefit out of. The benefit is either the fun of it or the benefit is what it can get them in the future.

I want to walk through, because I really enjoyed that post, some of the specifics of how you – and I'm not sure if you can pull it up on your screen. If not, I can read it to you. Walk through the numbers that you used regarding spending, investing, retirement contributions, employer match, and investment income and how that multiplied.

This is a really valuable concept for me. I think of it as stacking functions, which is a permaculture concept, stacking as many functions as possible and getting maximum use out of the dollar. Walk us through your actual numbers that you used in that post. >> Trevor: Sure. I got it up.

I have it in front of me. I obviously didn't take into the time value of money or anything like that. It was more just an exercise to show how much value you could extract from – I think it was $100,000 salary. As I mentioned before, if you spend all of that $100,000, you're going to at most probably get $80,000 of value out of it because of all the tax you're going to have to pay.

It's probably even more than that. That was just a – what am I trying to say? It was a rough estimate of the tax. >> Trevor: Yeah. >> Trevor: Yeah. Just assuming that, just assuming an effective tax rate of 20%, you're only going to be able to buy $80,000 worth of stuff.

Then I thought, "All right. Let's go another direction." If you instead invested one of those dollars that you earned, you'd still only be getting $0.80 of value out of it because you would pay tax on it. But then assuming you left it grow for 10 years earning the 7% average stock market rate of return, that dollar would actually be $1.57 when you came to spend it, which would provide – oh, yeah.

But you would then have to pay tax on that. Oh, no. The capital gains tax. Assuming capital gains tax. You'd roughly have like $1.45 of value out of it. If you invested for 10 years rather than just spending it as soon as you make it, you're actually going to get $1.45 instead of $0.80, which is quite a big difference, especially for only 10 years of waiting.

But you can actually do better than that. There are lots of tax advantage accounts that you can utilize, which is something I like to focus on because that's a very easy and surefire way of getting more bang for your buck. The next section I talked about are retirement contributions.

If I instead took one of those dollars and rather than spending it and getting $0.80 of value or investing it and getting $1.45 of value in 10 years, if I instead put it into my 401(k), then I'm initially still getting a dollar's worth of shares because I'm not paying tax on that dollar.

Then again, spending the same rate of return, after 30 years, I would end up getting $6.70 worth of value out of that dollar. $0.80 as opposed to $6.70 is a very big difference. I then talked about most people who work full-time have an employer match for their 401(k). The first 5% or whatever gets matched by the employer.

If I had that, that initial dollar, I wouldn't get taxed on it. My employer would match me, so that would turn into $2 right off the bat. Then if I invested it until standard retirement age in 30 years, it would be $13.39. That initial $0.80 that I could have just spent and then been bored with whatever I bought, I instead can put that in my 401(k) and then get $13.39 of value from that single dollar.

I'm not going to need $13.39 for that dollar probably by the time I'm 65 or 59.5 or whenever I decide to take it out. I could instead live off the interest from that dollar. I worked it out. Assuming a 3.5% yield, I could get $0.80 every two years. Every two years, I would be getting the same amount of value out of that dollar as I would have got if I would have just spent it and then lost it forever back when I earned it.

Adding all of this stuff up using all of the various contribution limits at the time, the contribution limits have actually increased. This was 2012, maybe I wrote this. Totaling all of that up, if you maxed out all of your 401(k)s, your IRAs, your HSAs, and then you only spent $25,000 a year and then invested the rest in taxable accounts, you'd end up getting over $249,000 of value as I've described it out of that $100,000 salary that had you spent it all, you would only get $80,000 of value.

You've given yourself three times as much salary without having any more work to do or working more hours or doing anything else differently just by intelligently making sure those dollars are actually going to work for you over the long run. >> Trevor: I'm going to add to this with a philosophy that I think is important because what I like about this is you said you're 31.

This is so important. I feel this is so important when we're 30 years old. It's a little different if you're later in life. The reason why this is so important is that money has a much greater utility at a younger age than at an older age. My favorite name for this, I'm going to borrow from Joshua Kinnon who calls it the red ring problem.

The red ring problem is getting rich too late in life. I'll link to an article that he wrote on this in the show notes so people can read his article. The red ring comes from a video game and the idea is that basically near the end of the video game, you can find this red ring that increases your ability hugely and makes the game extremely easy.

Life is kind of like that. The red ring problem is what's the point of saving money or investing money if I'm only going to get to enjoy it when I'm too old to care. This is so valuable at an early age to do these types of hacks or whatever you want to call them, optimization strategies at an older age is going to change.

The value of your dollar at 30 years old where you can turn the $100,000 into a value of $249,000 is crucial to building wealth in the early age. It's going to be different if you were 70 years old. The $100,000 at 70 is probably more useful for rational expenses rather than the $249,000 at the age of 110.

You can't ignore the concept at 30, otherwise you never get to enjoy those higher dollars. Absolutely. Very, very important. The earlier you start, the easier it is. That's definitely the case. There's no right or wrong here, but I like the fact. I have a good friend of mine who's a little bit older.

It's interesting with your $100,000 example. This good friend of mine, he's older, he's quite wealthy. Most people would consider him to be quite wealthy. He has a boating habit. I live down here in Florida. He lives in Florida as well. He really enjoys large expensive boats. He has a boating habit that costs him in excess of six figures a year.

It's a nice boat and he enjoys it. With this in excess of six figures a year, he actually continues to work part time so that he can support that boating habit. To me, the reason I'm bringing this up is because, just to hammer home for the 83rd time, either one of these is fine.

At this stage in your life, at 30 years old, the $100,000 for you is to get the triple value and to build it up in the future because that's more valuable. For my friend who's in his late 60s, for him the $100,000 is far more better served. He gets far more value out of it by allowing him to enjoy a luxurious lifestyle on the water.

You've got to do it in an intelligent way. At a younger age, I think most folks, it's so valuable to understand the math between what you've laid out and understand how by working that math at 30, it puts you in a position at 40, 50, 60, and 70 where you're able to enjoy the utility of that for a much enhanced lifestyle.

Mad Fientist Absolutely. I couldn't have said it better myself. Your friend with the boat, that's something I've been thinking about as well recently that I thought it would make an interesting article. I assume he owns his own boat and he still spends $100,000 a year? J. MoneyLine Correct. That's not the acquisition cost.

That's the running cost per year. Mad Fientist I don't know anything about renting boats, but I imagine you could probably rent a pretty amazing boat for $100,000 a year. Not obviously for the entire year, but whenever you wanted to use it and not have to deal with all the other garbage of keeping it and all of that stuff.

I imagine you could probably do it for less than $100,000, but maybe obviously you wouldn't be able to just think, "Oh, I'm going to go on my boat right now," and then go on it. There's obviously trade-offs. A lot of people's very expensive hobbies and things like time shares and things like that where you're only using it a bit or RVs and things like that.

I wonder if they've thought about renting before, just go ahead and buying and did the numbers as far as you could probably rent some pretty cool things and then not get sick of them. J. MoneyLine Yeah. You're going to love my Smart Persons Guide to Spending Money show because here would be a couple different ways that you could do it.

I'm not a boating person, so I'm with you as far as I would usually rather rent stuff like that because I would enjoy it. Now, it's challenging to hit the boat. Again, I'm down here in South Florida. We're talking about a 45-foot type of sport fishing boat. To charter one of those, you can charter it and you can go out and you can charter it for the weekend.

You can charter it and you can do it and you can have a lot of fun on that. But you can also flip it around and for the right situation, somebody with a boat like that, if somebody has a business, that boat can be an extension of their business, something that they use to entertain clients and something that they can use to entertain customers and clients.

It could also be something where it's a business in and of itself. So you can buy the boat if you have the cash to buy the boat and you can turn around and you can charter it out yourself. Well, because you're charting it out yourself, number one is you can turn it from an expense into potentially an income or you can use it as a – how do I put this appropriately?

You can use it as a business which is designed to be profitable but allows some of your expenses to be absorbed by the business side of the tax code. Absolutely. At some point in the future, I'm going to do a detailed show on tax planning but one of the most valuable things for people to do who are interested in luxuries is if you have a luxury that you enjoy and this is something that's important to you, whether it's big boats or racing cars or something like that, one of the most beneficial things you can do is you can say, "How can I take my luxury and how can I turn it into a business?" So if I enjoy operating a boat, it's very possible that I may enjoy operating the boat and being out on the water just as much if I have five paying clients on board with me versus me just simply being out there with just myself or with three or four of my buddies.

By taking something like that and turning it from an expense over into a business and by running it in a business-like manner, following the tax rules very carefully, keeping good records, you can take and you can legitimately turn the expense and move it over onto a business return where you have basically just like you would enjoy instead of spending your money in a taxable world, you can take that expenditure which would cost you $0.80, which would cost you $0.10 if you were doing it in a taxable world to turn that expenditure into an $0.80 expenditure in the business world.

There's a lot that you can do with it. If you keep good records, you can use your business assets and you can use them for both on the business side, but you can also get the personal enjoyment out of them as well. Mad Fientist That's great. I'm definitely excited to listen to your Smart Spending Money podcast because that's an excellent strategy and that's an awesome way to have an expensive hobby.

David Steinberg The key is knowing what the rules are and knowing what you want. I personally have zero interest in ever pursuing that course of action because I don't enjoy voting that much, but for somebody who that's important to them and they want to do it, look for a way to do it intelligently and look for a way to stack these functions on top where instead of having something be a large expense, can you make it into an income stream.

There are lots of ways that people can do that and do it very intelligently. Mad Fientist That's exactly what we plan to do. Travel is our biggest passion. Definitely we don't have many hobbies, but we love to go and see new places and experience new things. Travel was probably my biggest expense of my 20s.

We're flipping that around and we're going to use it to come out further ahead than if we didn't travel because like I said, we're going to go and spend three months plus at these different places that we've always wanted to go and see, but we're going to live like locals so we're going to be able to get apartments rather than hotels and the flight cost will be minimal not only because I'm quite good at travel hacking, but just because it's one flight over three to six months rather than most people take one flight over one or two weeks for their vacations and that obviously jacks up the price of the trip.

Plus there's just tons of cheap but very interesting places to live in the world that we're going to end up spending less money day to day living there than we would living in the States or in Scotland. So yeah, we're trying to turn our biggest passion not into a business but use it in a way that it will actually help us financially as well.

>> Trevor: Absolutely. So let me go to your article there on travel hacking because this was a great article. The trip that you recently did is you recently took a trip and you flew from Boston to Ireland and used some strategies and I think the strategies will be a little too detailed for the air, but in the article you flew from Boston to Dublin and then from Dublin to Glasgow and you stayed a couple nights in a five star London hotel and your total out of pocket cost was how much?

>> Chris: Less than 150 each for all of that. >> Trevor: And that would have been purchased at retail would have been about 2000 bucks each, something like that? >> Chris: Let's see, that would have been over a grand each definitely. A Boston to Dublin flight usually if you're lucky you can get it maybe for 7800.

At the time when I booked it, I record everything I do just to see how much money I'm actually saving. So at the time I think two of those tickets would have cost 1692.38. So we ended up saving 1450 by using miles. So yeah, that would have been over 1600 just for the flights from Boston to Dublin because it was summertime, it's America to Europe, that's not a cheap trip.

And then from Dublin we went to Glasgow because that's where my wife's family is, but my sister was studying abroad in London at the time so we wanted to stop in London. So yeah, a one-way ticket from Dublin to London and London to Glasgow, that would have been over 200 bucks each or close to 200 bucks each I think.

And then two nights in a five-star hotel right in Leicester Square, it was gorgeous, it was beautiful. The actual cost of the room was 974 for two nights, but we didn't pay anything. We used miles, I'm trying to see here. Oh yeah, I wrote on the post that we saved 240 because there's no way we would have spent 974 to stay in a five-star hotel had we been paying.

But yeah, the actual cost of that room for two nights on that weekend that we were there was 974. So yeah, the only thing we did pay was tax on the flights and absolutely nothing on the hotel. So yeah, it was less than 150 each and it was an amazing trip and it was cheap once we got there obviously because we were just staying with my wife's family.

Yeah, it was amazing. So yeah, travel hacking is one of those hobbies that you mentioned earlier that saves you money but it can be a hobby. It's actually a lot of fun and there's lots to it and could keep you occupied for a while and there's nothing better than waking up in a five-star hotel and seeing all the people around you and thinking that they spent a fortune and you didn't spend a penny.

This article, the travel hacking using the credit cards and the miles and the points is something that it's a topic that fascinates me. I am not actively doing it but it fascinates me. I'll give you a book that I just finished that you may, I don't know if you read or not, but the author of that book goes through some of his deals and how he did them.

The book is called Get More, Spend Less and the author, I think his name is Brad Wilson. He writes at bradsdeals.com. Have you heard of that book? No, I've not. It sounds interesting though. Check it out. I think you would enjoy it. I think you would enjoy it because he goes through some of his deals and his deals are like yours, incredible.

He goes through some of his, he's pretty hardcore about it, very extreme and you'll love his story and I'll do a review on that book at some point here. Also, the recommendation for anybody listening that wants to read a good book that on your site you give some good resources to the Flyer Talk forums and to some blogs that teach about this but it's definitely a good way to exploit the system a little bit right now.

It's great and it's going to be very important to us because like I said, once we get to these really cool places, it's going to be cheaper living there but getting there could be expensive but using these travel hacking techniques and currently I'm just building up my balances big time in preparation for all the travel that I plan to do in the next whatever decade or so.

Using those to make the travel between these interesting places very cheap is just going to make the benefit of travel even greater for us financially. There are lots of great resources out there and it is very addictive and it's very important to know how to use your miles just as much as it's important to know how to get the miles that you need.

I think using them is even more important because even though I flew from Boston to Dublin for such a little bit of money and not a lot of miles, the way I did it is very unknown, the way I used the miles and the way that I did. I spent less than half the amount of miles that normal people do when they try to book America to Europe flight and I paid probably a third or a fourth of the taxes that some people have to pay.

So yeah, just following some good blogs and checking out Flyertalk and reading about it and you can really just extract some incredible amounts of value out of these things. >> Trevor: I also want to point out how these functions stack, like how this is a part of the strategy.

Many people discount flying on points because of blackout dates, because of when they can fly. Many people discount travel but if one is financially independent and one has flexibility over their schedule, then number one, you can fly either at the cheapest time, so you can take those Wednesday flights or the Saturday afternoon flights that are just simply inexpensive.

You can fly at the seasons when a lot of people can't fly, so you can avoid the summer season when everyone's out of school but you can go on the shoulder season between the high season and the low season and you can get really, really great values or you can pursue some of the, you can take the award tickets on the dates that they're available.

So you can be flexible on that and you can afford to slow down. So like you said, one of the major expenses of traveling, when most people think about traveling they think about, "I've got this two week vacation that I have to take." You call it slow travel but if you have this two week vacation, let's say you're going to take a two week vacation to Europe, well let's say you pay retail and you got a thousand bucks each for a plane ticket and then because you're there for two weeks, you have to do this, you have to pack everything in every single day.

You've got to have rental cars while you're there. You've got to stay in hotels while you're there. You can't take a one month apartment rental instead of staying in a hotel. You can't slow down enough to use public transportation instead of having your own car. Because of the time pressure of being fixed on this work 50 weeks a year schedule, you wind up spending seven, eight thousand dollars on a two week vacation to Europe where if you are financially independent and you can slow down, you can take that exact same amount of money and stretch it out over a couple of months just because of your flexibility.

So the functions stack on top of each other. >> Trevor: Oh absolutely. You're not cooking for yourself. You're not doing anything. You're just spending money just as fast as you can pretty much just to have a good time and you will have a good time. But as you said, seven or eight grand, that could easily sustain somebody for an amazing year in Central America or Southeast Asia or South America.

That could be a whole year of learning Spanish and learning how to cook and going to the local markets and things that make travel really special that just don't cost a lot of money to do. I know I could live for a year on some of the budgets people have on their one week, two week vacations here in the States.

>> Jon: It's interesting. I think this is a US American concept that in our culture is not so well understood. When I was in college, I lived in Costa Rica and I did a research project with a business school that I was studying at. I did a research project for a Costa Rican eco-tourism company.

We prepared a report on American tourists, British tourists and German tourists. It's very clear when you look at it that as Americans, we would go to Costa Rica for a one week vacation and we would want everything carefully programmed in that one week. Every single day from morning to night, there are activities and we don't have a lot of time so we're willing to spend a significant amount of money on those trips.

We would want everything planned out in advance of the trip. When we go up, when we show up, we know what our itinerary is. Every moment of every day is scheduled and we've got it all planned out. The British tourists would come. They would want their itinerary planned out but they would usually come for about a month instead of a week.

They would stretch the time out longer and they wouldn't want everything planned out every day. They would want to make sure that they had some down time to figure it out. I'm using generalizations to make my point but these are pretty accurate. The German tourists would show up at the airport without a single plan, without a single booking but they would be there for two months.

They would get to the country. They would get to Costa Rica. Then once they were there, they would figure out what they wanted to do, when they wanted to do it. They would spend half the money that the Americans spend in a week over a two-month vacation while they're there.

It's crazy. It's a dramatic cultural difference between the cultures. It's the adventure and the not knowing and the uncertainty that makes travel so rewarding when you look back on it. My wife and I lived in China for three months and obviously didn't learn too much Mandarin in that time.

We would just hop on a local bus, try to find our way to some very remote, weird, small little village in China. We wouldn't know exactly when the bus was coming back, if it was coming back. It's just fun. It's the adventure. That's what makes it. If you want to have just normal life, eating the same things you eat and doing the same things you do at home, then save a lot of money and just go to the next town over.

Douglas Goldstein, CFP®, is the director of Profile Investment Services and the host of the Goldstein on Gelt radio show (Monday nights at 7:00 PM on www.israelnationalradio.com. He is a licensed financial professional both in the U.S. and Israel. Securities offered through Portfolio Resources Group, Inc., Member FINRA, SIPC, MSRB, NFA, SIFMA.

Accounts carried by National Financial Services LLC. Member NYSE/SIPC, a Fidelity Investments company. His book Building Wealth in Israel is available in bookstores, on the web, or can be ordered at: www.profile-financial.com (02) 624-2788 or (03) 524-0942. Disclaimer: This document is a transcription and/or an educational article. While it is believed to be current and accurate, divergence from the original is to be expected.

The original podcast can be heard at https://sites.google.com/site/goldsteinradioshows/. All information on this website is purely information and should not be used as the sole basis for making financial decisions. The opinions rendered herein are those of the guests, and not necessarily those of Douglas Goldstein, Profile Investment Services, Ltd., or Israel National News.

Readers should consult with a professional financial advisor before making any financial decisions. Please see the complete disclaimer at https://sites.google.com/site/goldsteinradioshows/. Also, check out our website at www.profile-financial.com (03) 624-2788 or (04) 524-0942. All information on this website is purely information and should not be used as the sole basis for making financial decisions.

The opinions rendered herein are those of Douglas Goldstein, Profile Investment Services, Ltd., or Israel National News. Readers should consult with a professional financial advisor before making any financial decisions. Please see the complete disclaimer at https://sites.google.com/site/goldsteinradioshows/. All information on this website is purely information and should not be used as the sole basis for making financial decisions.

The opinions rendered herein are those of Douglas Goldstein, Profile Investment Services, Ltd., or Israel National News. Readers should consult with a professional financial advisor before making any financial decisions. Please see the complete disclaimer at https://sites.google.com/site/goldsteinradioshows/. All information on this website is purely information and should not be used as the sole basis for making financial decisions.

The opinions rendered herein are those of Douglas Goldstein, Profile Investment Services, Ltd., or Israel National News. Readers should consult with a professional financial advisor before making any financial decisions. Please see the complete disclaimer at https://sites.google.com/site/goldsteinradioshows/. All information on this website is purely information and should not be used as the sole basis for making financial decisions.

Readers should consult with a professional financial advisor before making any financial decisions. the website. Please see the complete disclaimer at https://sites.google.com/site/goldsteinradioshows/. All information on this website is purely information and should not be used as the sole basis for making financial decisions. Readers should consult with a professional financial advisor before making any financial decisions.

Please see the complete disclaimer at https://sites.google.com/site/goldsteinradioshows/. All information on this website is purely information and should not be used as the sole basis for making financial decisions. Readers should consult with a professional financial advisor before making any financial decisions. Please see the complete disclaimer at https://sites.google.com/site/goldsteinradioshows/. All information on this website is purely information and should not be used as the sole basis for making financial decisions.

Readers should consult with a professional financial advisor before making any financial decisions. Please see the complete disclaimer at https://sites.google.com/site/goldsteinradioshows/. All information on this website is purely information and should not be used as the sole basis for making financial decisions. Readers should consult with a professional financial advisor before making any financial decisions.

Please see the complete disclaimer at https://sites.google.com/site/goldsteinradioshows/. All information on this website is purely information and should not be used as the sole basis for making financial decisions. Readers should consult with a professional financial advisor before making any financial decisions. Please see the complete disclaimer at https://sites.google.com/site/goldsteinradioshows/. All information on this website is purely information and should not be used as the sole basis for making financial decisions.

Readers should consult with a professional financial advisor before making any financial decisions. Please see the complete disclaimer at https://sites.google.com/site/goldsteinradioshows/. All information on this website is purely information and should not be used as the sole basis for making financial decisions. Readers should consult with a professional financial advisor before making any financial decisions.

Please see the complete disclaimer at https://sites.google.com/site/goldsteinradioshows/. All information on this website is purely information and should not be used as the sole basis for making financial decisions. Readers should consult with a professional financial advisor before making any financial decisions. Please see the complete disclaimer at https://sites.google.com/site/goldsteinradioshows/. All information on this website is purely information and should not be used as the sole basis for making financial decisions.

Readers should consult with a professional financial advisor before making any financial decisions. Please see the complete disclaimer at https://sites.google.com/site/goldsteinradioshows/. All information on this website is purely information and should not be used as the and I always wondered, I could see myself doing this for quite a while, but I was like, wonder if I'll get tired of it.

And they've just loved it. They always thought they'd settle down somewhere, but they just keep finding new places they want to go and traveling between them. And like I said, they had half a million for both of 'em, and I think they have more now than when they started.

So it's very, very inspiring. So yeah, I'll look forward to hearing them on your show as well. I gotta reach out to 'em first, but at some point I will. So, all right, three strategies that you write articles about. And I want to go over these strategies because I think they're valid things, but a lot of times people don't understand kind of how this can work.

Number one is you talk about traditional IRA versus Roth IRA. And at some point in the future, I'll do a show where I go through the details of the rules on each individual account as far as the traditional IRA and the Roth and all of the details of when you can take money out and the contributions and the advantages and disadvantages of most people.

I'm gonna summarize though, in a sense, most people are, if you read popular financial literature, you'll generally find that most people will say that one should always choose to participate in a Roth IRA before participating in a traditional IRA. And again, there are lots of reasons to this, but I want to talk about just the taxes.

So to explain for people, with a traditional IRA, you are able to make a contribution to that account prior to paying income taxes. The money grows with no taxes assessed on it year by year. And then upon distribution, the account is distributed without, excuse me, the account is distributed and that money is taxable income to you.

So you pay the tax on the backend. The advantages to a traditional IRA is purely focusing on the tax, not focusing on any of the other aspects of it, which I'll cover in a future show, is that when you earn a dollar, instead of investing 80 cents of that dollar, because you pay 20 cents of tax, the full dollar goes into the account.

And the idea is that potentially in the future, some people feel that if the tax rates hold constant and if you have a lower income in retirement, that you'll be paying taxes at a lower rate. The Roth IRA, if you earn a dollar, you go ahead and pay tax now, and then you invest the 80 cents, the money grows tax deferred, and when it comes out in retirement, the money comes out completely tax free.

Now there are other advantages and disadvantages between the two accounts. Many people feel that the Roth IRA is a better approach. And usually the reasons that they'll feel that way is either because of the flexibility, because of some of the distributions that you can take, the distributions that you can take now, or because of the, well, they run the numbers and say, well, I've got all this tax free money.

Most people don't realize that mathematically, if tax rates are constant, and if, so if income tax rates are constant, and if your income is constant, and if your investments return the same amount, if they're invested identically, you'll have the exact same amount of money from a traditional IRA versus a Roth IRA.

So if you invest 10,000, well, let's use $5,000 into the traditional IRA, and you do a pre-tax, it grows a certain rate of return, and then you spend the tax dollars in retirement, versus the Roth IRA, you'll have the identical amount of money, they're mathematically identical. So you're basically playing with two variables.

Number one, what income tax rates are, or number two, what your personal tax rate is. So you have a strategy, however, that is very unique, and will be appropriate for people to consider if you are looking forward to, if you're planning on lowering your income, your earned income at a very early age.

So walk us through your strategy, and why you say to start with a traditional IRA, and walk us through your strategy of how to do that, and how that works in an early retirement context. - Sure, sure. Yeah, this is one of the main reasons I started the blog.

I love the math behind all of this stuff, and I didn't see that there was, there's a lot of advice out there, but not a lot of it pertains to people that are pursuing early financial independence. Most advice is geared towards people that are working to 65, and doing the standard thing.

So yeah, this is a chance for me to dive into the math from a financial independence perspective. And yeah, before diving into it, I just wanna make the point that a lot of people focus on trying to eke out another 1% over the index, and they spend all their time picking stocks, and doing all this stuff that may help them, but in most cases it won't.

But then they ignore things like taxes, and fees, and transaction costs, and diversification, and things that are in their control they don't focus on, but then they try to make the money on things that they can't control. So taxes are a huge deal, and if you can minimize them then you're gonna be able to meet your goals much sooner.

So I just wanted to get that out there before I dive into this. So yeah, as you said, a lot of people do contribute to a Roth IRA. Some people I've heard, 'cause they wanna diversify the types of accounts that they're contributing to. So since a lot of people have a 401k, which is sort of like a traditional IRA, and all the same attributes that you mentioned, they figure, well, I'll put some money into the Roth IRA, and then that way I have some tax-free withdrawals, and I have some taxable withdrawals, and things like that.

But yeah, for someone who is pursuing financial independence, we're in a very unique situation where we're probably not gonna make as much as we make right now. I know for me, I will never make this much, because even if I get a job that pays this much, I'm not gonna work 100% of the year to get that wage, I'll maybe do 50%, or just work a quarter of the year, or whatever.

So I know that I'm not going to make as much as I do now. So that already is one benefit of going traditional over Roth, because the tax that I'm paying now on my last dollar of income is a lot greater than the tax that I would be paying when I'm withdrawing from that account.

So that is already a benefit. I personally like to take benefits that are available instantly. So I would much rather have the tax break now and have more of my money working for me than put it in a Roth and then get that nice tax-free withdrawal later on a lesser amount of total money.

Because every dollar that I put in into a traditional IRA, I'm getting 100 cents of value to buy the shares. So as I mentioned before, and as you just said, if it's a Roth, I'm actually only putting 80 cents worth of shares in the Roth, because I got taxed on the 20 cents before I could even buy the shares.

So that extra 20 cents worth of shares is just gonna compound and grow over the 30 plus years I have it in the account. And that is going to far exceed, I think, any downside to having to get taxed on that income later. But there are also very nice loopholes that not many people take advantage of, but only because they don't live the sort of lifestyle that I plan on living.

So there's a way to actually convert your traditional IRA and 401(k) into a Roth IRA. It's, you can, do you want me to go into that now, or do you want me to, are we gonna come back to that? Yeah, okay. - No, go ahead. - So yeah, so just to give you an idea of my strategy, I actually can't contribute to a traditional IRA because of my income limits, but my 401(k) acts in a similar way.

So say, so I currently max out my 401(k), so that's 17,500 bucks a year that goes into my 401(k). So that's pre-tax money, so that means that's not taxed, so that lowers my taxable income by 17,500. So already I'm saving thousands of dollars on tax that would have been taxed on that.

I then contribute that to my 401(k), and I will continue to max that out until I stop working. So at the point I stop working, I can roll that 401(k) directly into a traditional IRA, 'cause like I said, they're both similar types of accounts, and when you leave your job, you can roll that over into a traditional IRA.

So once it's there, I can gradually convert that to a Roth IRA, and the way that works is, since you weren't taxed on the 401(k) or traditional IRA, you then have to pay tax when you convert a traditional to a Roth. But if, as Joshua mentioned, my expenses are gonna be very low, my income's gonna be non-existent, so, well, besides the small amounts that I'm drawing down on getting some dividends and capital gains and things like that, but it's gonna be below the threshold that I'm even going to be taxed.

So it's possible to, I think I worked out my numbers, it's possible for me, once I reach financial independence, to transfer over $9,000 a year from my traditional IRA to my Roth IRA and not get taxed on a single penny of that transfer. So then, since I have 30 years to transfer everything, by the time I reach standard retirement age of 59 1/2, I should have hopefully been able to convert my entire 401(k), my entire traditional IRA that I funded back when my income was lower, I should be able to transfer all of that money into a Roth IRA and not pay a single tax on the conversion, which would then result in all of that money being completely tax-free, because it's tax-free going in, it's been growing tax-free, and then it'll be in a Roth IRA when I withdraw it, so then it will be completely tax-free at withdrawal.

So that is a great way to have completely tax-free retirement money legally and not go to jail. - Yeah, and this is a strategy, the only place that this strategy, like this strategy is an excellent strategy, the place that it works is if you're planning on, either if you're planning on having your income drop down to an extremely low level or if it happens for you by accident, maybe through a layoff, maybe through a medical condition, something like that.

So this could either happen by plan like you're doing or it could also happen for people who are, just it happens through circumstance. But this is really valuable because the strategy that you're using, by taking your upfront deduction, you can generally get, this is all income-dependent, so again, this is not tax advice, you've gotta consult your own tax advisor who can walk you through the actual, for your situation.

But conceptually, if you can cut your income down through 401(k) and IRA contributions, that'll help you to get into a lower bracket. It may help you to qualify for some more of the income-based either tax credits or deductions that are available to you. And by paying very, very low taxes now, and then like you said, dropping your income out, you can then do the conversion into a Roth and by picking it up little by little, you can do this at a very, very low cost or nothing.

And in addition to it, by being at a low income level in, I don't know whether to call it retirement or financial independence under your plan, if you can keep underneath the brackets, if you can keep underneath the 15% bracket, you can conceivably get to a point where you pay $0 of income tax because you have a low amount of earned income.

Any dividends and taxable accounts would be taxed and capital gains could be at a 0% level. And then also, with doing this strategy and by carefully regulating how much income you pick up, it can result in a very low tax bill. But this is not something that, generally a CPA is gonna point out to somebody.

It's generally something that you need to understand at first and then ask your CPA or yourself if you run them yourself, how much income you can pick up. I heard you say one thing. Let me give you one quick interesting workaround, Brandon. You may or may not know, and obviously, I doubt you wanna disclose your income, but do you currently, so you said you currently participate in a 401(k) but you're not able to participate in an IRA because of the income limits?

- I am able to participate in a Roth, not a traditional. - Okay, so generally, you might wanna consider doing what you're doing as far as going ahead and participating in a Roth now. But for people who are beyond the Roth contribution limits, one interesting thing that has existed for the last couple years is anybody at any level of income can contribute to an IRA, period.

It's just simply that you can't deduct those contributions on the front end if you're not, you can't deduct those contributions if you're not, if your income is underneath a certain amount. So anybody, even if your income is, we'll call it half a million a year, you can, this is relatively unimportant at half a million dollars a year, but you can do what's called a non-deductible IRA, and then you can do a conversion into a Roth.

So even though there are income limits for a Roth, if you're over those income limits, those income limits generally are, let me see, probably about, yeah, north of $180,000 basically, depending on what you're, whether you're married and all that stuff. But if your income is over that, you can still pursue some of the strategy and get into a Roth that way.

Other kind of things I wanna touch on, 'cause hopefully we're not making this too confusing, it's a little bit difficult to do in an audio format. Even if you are pursuing early financial independence, it still is valuable to consider using these types of retirement accounts. And by having the money in the Roth, there are too many people, the rules are generally with retirement accounts that you can't get the money out until you're at least 59 1/2 years old without paying penalties on it.

Well, there is a rule, once you have money in the Roth IRA, that after you've done the contribution and the money has been in there for at least five years, you can withdraw your basis in a Roth IRA, which is the amount of money that you've contributed and paid tax on, which under our example would be a low amount of money, but it's happening each year.

After five years, you can go ahead and withdraw those contributions and use them for current income, even if you're before the age of 59 1/2. - Exactly, and that's a huge point. And that's, 'cause I get a lot of questions, it's like, wow, you're putting so much money into your retirement accounts, but you can't get at it until you're 60, 59 1/2.

And it's like, how are you gonna fund the next 29 1/2 years of your life, 28 1/2 years of your life? And it's like, exactly that strategy is what I plan on using. And I've seen it referred to other places as a Roth IRA conversion ladder. And you're exactly right.

So currently all that money is growing. So those, say I only put in $5,000 into my 401(k) and I let it grow for 10 years and now it's $10,000 or something. When I do the conversion, the whole 10,000 acts as my contribution. So then I could potentially withdraw that entire amount after five years, which is a great, nice little side benefit of even taking your gains and accessing them beforehand.

So yeah, in my case, like I said, so assume that I am gonna, once as soon as I achieve financial independence, I'm gonna start converting $9,000, say, per year from my traditional IRA to my Roth IRA. So that means after five years of doing that, then every year from then on out, if I continue doing that, I'll be able to just withdraw $9,000 to live off of tax-free every single year from that account until I, well, until whenever, until my money runs out, really.

So yeah, so if you can come up with, as long as you have enough in your non-retirement accounts to fund five plus years of your lifestyle, then you can then sustain yourself potentially off the rest, paying little to no tax. So yeah, sure, if I needed to live off of 15,000 a year, then I could transfer that amount every year and create my $15,000 Roth IRA ladder and pay a little bit of tax on it, but I think I can, if I live on less of that, then it makes sense to convert less, and then that way I'm not paying any tax.

- Yeah, and there's some beautiful things to the Roth, is that because there's no, if you have a lot of money in a Roth IRA and you're past the ages where you can take it out, there's no, if you have a huge portfolio inside of a Roth, you can take out a huge amount of dividends per year and continue to have an effective tax rate of zero.

So if you have a lot of money in it, you can do that. There's one other one that I wanna point out in addition to what you said that a lot of people simply aren't familiar with. There's a rule called the 72T distribution. So the IRS allows you one way to get money out of retirement accounts before the age of 59 1/2 without paying penalties, and it's if you do it under what's called a series of substantially equal payments.

Now, this is extremely dangerous for most people because most people aren't in a situation where they are, most people aren't in a situation where they have so much money that they can start taking money out of retirement accounts before 59 1/2. But in the context of an early retirement strategy like you're pursuing, if you have the money in a Roth IRA and you've got that contribution done starting at really any age, if you take the money out under a table, an amortization table that is equal payments that are expected to last over your lifetime, then the money can come out before the 59 1/2 deadline without paying the penalty taxes, and in this case, without paying any taxes.

Now, the disadvantage, if you ever stop the money before 59 1/2, then you owe the penalty tax. And so this has to continue for your lifetime. But in the right situation for the right scenario for an early retiree looking to use these accounts for early tax savings and later tax savings, if the rules continue as they are now, there are some ways of using the money.

- Absolutely, that's a great point as well. And I'm not sure if I'm going to do that just because I'm hoping that maybe I won't even tap into that money and just let it grow tax-free, but yeah, that's an excellent way of knowing that you can get out that money without going through a Roth conversion ladder or anything like that, so that's an excellent point.

- Yeah, and you also want to choose carefully what assets you put into a Roth IRA. So generally, if you're gonna have both capital gains assets and income assets, so capital gains assets, usually stocks, and income assets, such as bonds, you would usually want to put your income assets inside of your retirement account.

So you could have a scenario, by using some of the things that you're pointing out, you could have a scenario where you have a taxable brokerage account that holds your stock portfolio if you're gonna have an asset allocation that's gonna include both stocks and bonds. You could use the brokerage account to hold your stock portfolio, which with your low income, if you can keep under that 15% income limit, which is kind of the numbers where you're at with your low income, you can effectively have a 0% capital gains rate and very favorable dividend rates.

And then with your income investments inside of the Roth IRA, that would allow you to use corporate bonds instead of municipal bonds, pick up a little bit of extra yield, and then you would be able to have that income coming out of your portfolio on a tax-free basis by using your Roth.

So there's a lot of little, not a little useful tools here, which maybe we'll cover in more detail in the future, but for the right scenario, your strategy to start with IRAs and 401ks, especially if they're deductible now, and then pursue the conversion strategy if your income is low in early retirement, then it's a powerful strategy.

- Yeah, and I just ran some numbers just to give people an idea, 'cause it's not, you're not eating ramen on this plan. Like I said, assume you convert 9,000 a year, you can still live off of 30 plus thousand of dividends and long-term capital gains and still not be taxed on any part of that convert, that $9,000 conversion.

So we're still talking big numbers here. Like you could have an amazing life living off of your 35, 30 grand worth of whatever your investments are returning and you're drawing down on them and dividends and things, and still do 9,000 every year, converting it into a Roth. So it's, yeah, the tax code does seem to favor early retirees, which is quite nice.

And the amount of money that you can actually save by implementing some of these strategies is so much more than you're gonna get if you try to beat the markets or try to find the star mutual fund manager and things like that. So your time is much better spent learning the tax code and learning some of these little tricks and loopholes and taking advantage of these types of accounts.

And you're gonna shed years and years off of your retirement and not get any more risk. Whereas if you're just trying to pick stocks and beat the market, yeah, you may knock a few years off, but you may add a couple decades and your risk is much higher. Yeah, we wanna use every one of these things.

So, and by the way, obviously, anytime you're talking about financial stuff, it probably doesn't need to be said, but I'll say it anything. This is all situation dependent. So hopefully people can just use these ideas and then look at your situation and consult somebody who's qualified and properly credentialed to give specific advice.

But maybe some of these ideas would help each person to figure out their specific situation, 'cause neither of us is probably qualified to give specific tax advice. - Absolutely, yeah, that's always worth mentioning. But yeah, at least you have something to go and talk about and ask about. - Now, the next strategy of the three is you have what you call the ultimate retirement account.

And this is a type of retirement account that most people don't have a clue about. So walk us through a summary of what you consider to be the ultimate retirement account and why. - Okay, yeah, so as I said, I love taking advantage of tax advantages up front. I know this is gonna be probably the most I'm ever earning, so I want to lower my tax burden now as much as I possibly can, 'cause then that means more of my money's working for me over a longer period of time.

So yeah, the ultimate retirement account in my mind is the HSA, which is the Health Savings Account. Now, this is an account that people can contribute to if they are currently enrolled in what's called a high deductible health plan. So if you aren't, then you won't be able to get the tax advantages of contributing to this type of account.

And the contribution limits are much lower than things like 401(k) and even IRAs. So you're not gonna get too much bang for your buck, but it is definitely a good way to lower your taxable income and getting lots of the benefits of both a traditional IRA and a Roth IRA.

So to explain how this works and why it is so beneficial to contribute to, so the idea is that you can contribute, I think it's 32.50 in 2013, I think the contribution limit is. So you can contribute up to 32.50 a year, and that is pre-tax, so you're not taxed on that income.

And you can then invest it, depending on the people that are holding your HSA, some have better investment options, others just have a savings account or equivalent. Mine, I can invest in broad-based, broad-index funds, stock market index funds, things like that, that have low expense ratios. So I treat it just as another investment account.

So the idea is you can put this money in and then use that money for medical expenses without paying any tax on it. So that means that if you spend 200 bucks at the doctor, that $200 is completely tax-free. So already you're better off, because no doubt you're gonna have something, some medical expense in your life that you're gonna have to pay for, and it's much better to just pay for it with tax-free money than it is to pay for after-tax money.

So that's the main idea behind the account, is to allow you to pay for healthcare expenses with your own money and not pay any tax on that money. So my idea is, though, there's a little, it's not a loophole, I guess, but it's just part of the rules. You don't have to take out that money as soon as you pay for the health expense.

So for instance, say, like I said, I had a $200 doctor bill. So yes, I could take that $200 out of my HSA, hand it to the doctor, and then that's it. I just used tax-free money to pay for it, which is great. Alternatively, I could pay for that with $200 out of my wallet that's, you know, I've already been taxed on, it's just my cash, and then I can leave that $200 sitting in my HSA for the next 40 years to grow tax-free, and then I could take out that $200 tax-free.

So this is another way that I'm saving for my early retirement. So it's sort of acting to me like a combination of a traditional IRA, a Roth IRA, and an early retirement IRA, because every time I spend money on a doctor, I'll keep track of it. That money will continue to grow tax-free, and then say when I'm 49, I'm like, oh man, I really need $200.

Then I can take that out tax-free and keep all of the investment earnings that have accumulated over those 19 years, and those will continue to grow. So it's like, so yeah, it's like I've been calling it the super IRA. And the best thing is, so you may be saying, oh, well, that's great, but what if I don't have $3,200 worth of medical expenses before I turn 60 or something?

The good news is that that account then just converts into a traditional IRA. So at that point, you could then do the conversion ladder that I already talked about, or you could just pay tax on the withdrawals just as you would a traditional IRA. And at that case, at that point in your life, you may not have to pay any tax just based on how much income you are, you actually need to survive.

So yeah, at the worst case, it's just a traditional IRA. At the best case, it's a super Roth where it's a traditional IRA 'cause you don't pay tax going in. It's like a Roth IRA 'cause you don't pay tax going out, and it grows tax-free, and you can withdraw some of the money prior to your standard retirement age, so you can use it in early retirement as well.

So that's, I hope that summarized it. My post on it's probably a lot more eloquent, but. - Yeah, this should give people just a teaser. 'Cause the HSA for early retirees is, and I've pointed people a couple times to your article 'cause it does do a good job of kind of explaining it.

Most people aren't so familiar with HSAs, and most people don't know about the fact that they can take the money out and spend it on any expense after the age of 65. So now you're gonna go ahead and pay income taxes, ordinary income tax rates after that time, but that's identical to a traditional IRA, but most people aren't familiar with that.

And people oftentimes get these confused with flexible spending accounts, FSAs, which have to be spent each year, and they don't realize that the money can accumulate inside of the HSA. My encouragement is this is a good way of stacking functions. For early retirees, you're likely going to, legally now with the changes in US American healthcare law, you're gonna need to maintain some health insurance.

And by the way, one caveat, it's a little unclear at the moment what with the implementation of the, what do you call it, Obamacare, Patient Protection Affordable Care Act, whatever it is, with changes in health insurance, the future of high-deductible health plans is a little bit uncertain, and then the future of health savings accounts is a little bit uncertain.

Doesn't seem like anything alarming, but keep it, if you're listening to this a year, two, three years from now, which is July of 2013, check the current rules, 'cause this may have changed since then. But the flexible spending accounts, people, you have to spend those each year, or you lose the money.

That doesn't occur with the health savings account. So the health savings account gives you an upfront deduction, and one way to add to your case for a super retirement account, unlike contributions to IRAs and Roth IRAs, my understanding is that health savings accounts are not subject to Medicare and Social Security taxes.

- Absolutely. - So in a traditional IRA, although you don't pay current income taxes, your money, you still have to pay Medicare and Social Security taxes on the income. With a health savings account, you don't. So that's an extra savings. The money can accumulate. Most people aren't familiar with how much, how liberal the definitions of what health expenses are.

So check the IRS website. There is a, I'll put a link to it, I think it's publication 502, where you can check the IRS lists of what qualifies as an expense. But even things like, the ones that always interest me is I wear contacts. Contacts and contact solution are qualified.

Some prescription drugs, it used to be that over-the-counter drugs were covered, that rule changed a few years ago. Even things that maybe traditional health insurance doesn't quite cover fully, things like chiropractic adjustments, other types of alternative medicine may be covered. Check the IRS rules. So there's a lot of flexibility to it.

Plus, the fact that people are paying with your own dollars allows you sometimes with your healthcare provider to negotiate a discount, a cash payment discount that doesn't necessarily go through the insurance claim. And sometimes you get better deals because of that. So when you start stacking current expenses, current things, on top of your ideas about delaying the distribution and also taking it as retirement, it definitely bears looking into.

And it's one of those valuable places that people can stack their benefits if they're able to arrange their financial affairs in such a way that they can make the contributions. - Yeah, and you made some great points about the FSA, because that, I actually just got an email from a reader recently, and he said, "I got this money, I'm about to dive into my health savings account, but I was reading the fine print, and it said that you need to use this before the end of the year, or else you'll lose it." And I hurried up and emailed him really quickly, and I was like, "No, no, that's an FSA, that's a flexible spending account, and you will lose it, so definitely do not put all your money in there if you don't think you're gonna spend it within a year." And then he wrote back, and he's like, "Yep, that was an FSA, and it looks like I don't have an HSA to contribute to, so that's very, very important, because yeah, you will lose the money out of a flexible spending account, so make sure you check that first." And your Medicare, that was also a great point, that'll save you another, what is it, 7.5% or 7.65% or something, that you would have had to pay on that money, so that's definitely another excellent benefit.

- Yeah, and to your reader there, this is a suggestion to listeners, an HSA is generally, the HSA account is something that generally, most places you'll wanna set up yourself. So your employer may offer you a high deductible health plan, which is HSA qualified. If that's the case, they may not, generally an employer doesn't say, "Here's who you have to use for your health savings account." You can go out and research and find a provider that will do it outside of that.

So if you have a health insurance plan that's a high deductible health plan, that's HSA qualified, you can still open the account. It generally won't be something that is deducted off of your pay stub. So speak with your human resources department and ask about that. Number two, for early retirees who don't have an employer, this is still possible with an individually owned high deductible health plan.

So as long as your plan is HSA qualified and your health insurance provider will let you know that, you can use an HSA bank or generally they're offered by banks or sometimes brokerage companies and you can research what would be the best provider. Then you can open this type of account on your own.

There are a lot of acronyms in health insurance, don't get them confused. There's HSAs, which is health savings account, FSAs, which is flexible spending accounts, HRAs, which are health reimbursement accounts. Each of them is unique and has their own advantages and disadvantages and their own implementation. But hopefully this will give people a little bit of information to talk to their HR people or research further on their own.

Anything else on the HSA, Brandon, before we go on to the last thing I wanna talk about? - No, no, I think that covers it. And then yeah, those are all really good points that you made. And yeah, as always, take a look and see if it'll work out for you.

But yeah, it could be very beneficial for people that are planning on early retirement and are just trying to minimize their taxes in the last few years that they're working. - Absolutely. Free Ivy League degree. - Right, yep. - Talk me through this, what are you doing? - Yeah, I'm currently one class and a thesis away from getting a master's degree.

This is something, you know, I-- - What's your degree? - I'm sorry? - What's your degree gonna be in? - Yeah, so it's a complete 180 from what my computer science bachelor's science degree was. So the, I have to say first, first I'm working full time, so there's only, at the institution that I work at, there's only a few programs that you can do part time, and this is one of them.

So I'm getting my master's of arts in liberal studies, but my thesis is actually gonna be on, I actually just was emailing my thesis advisor this morning about my proposal, but it should be something that would be interesting to both of our listeners. So hopefully it'll result in some pretty cool research, but yeah, no, it's a master's of arts.

I've always thought I would go back to school. I've always wanted to try grad school, but there's no way I would want to pay for it because I currently don't need any other qualifications to reach financial independence, so there's no way I was gonna set myself back 50K just to go back to school for a bit.

But yeah, no, my wife and I moved to an area where there's an excellent university close by, and I decided, at the time I was working remotely for a financial company, and so yeah, once we moved close to the Ivy League school, I was like, well, let me look into it, see if there's any programs that I could complete for free as an employee.

So there was, and it sounded interesting and something that I hadn't done before 'cause like I said, I was computer science, so I was just doing math and science and programming pretty much my entire undergraduate career, whereas this one's much different, lots of reading and paper writing and discussions and things like that.

So yeah, I thought it'd be worth it, so I decided I was gonna go for it, and so I just kept an eye on the job boards for the school, and then as soon as one popped up that was what I do, I applied, got it, and yeah, I'm less than a year from graduation, which feels great 'cause it's been, doing it part-time is quite difficult, working full-time and then trying to do papers and read tons of books and all this sort of stuff, and since I'm doing it part-time it took over, I think it'll be just under three years that I'll complete it in, and I have less than a year left, so I feel like I can see the light at the end of the tunnel, and yeah, it's been great, and I highly recommend it for anyone that wants to go back to school.

I think that people could even get undergrad degrees by going this route. I'm not sure on that, but I think that that's the case, but you could definitely get a graduate degree, and yeah, it's been very fulfilling. - Yeah, this can be, and the reason I wanted to talk about this is education is, many people's one of their major expenses, and people are very passionate about education.

Some people passionately believe that without formal education your future is doomed, and some people very passionately believe that if you go down the route of formal education your future is doomed, so there are a lot of strong feelings on it, but you and I don't know what's right for people, but if people are interested in formal education the approach that you're pursuing is one that can add a lot of benefits, and so I've thought a little bit about some different ways that you can leverage these, and again, this may just be a couple ideas in here for people to pursue on their own and see what's right for them.

Number one is that exactly like you said, many universities, if you're working for that university, will give you either discounted or completely free access to their classes. Usually it's a cap of a certain number of classes, and I think that can be done at undergraduate levels, graduate degrees, and even masters and PhD type of work, and so the other thing is that by working at a university a lot of times the university may be a very enjoyable work environment, so rather than somebody working at a job that they don't like, that's very stressful, and then going out and taking on student loans to pay for a degree, it may be worth looking into working at a university and then using the discounted courses as a way to do that, and by lowering your taxable income, it's possible that you may be able to simply have a lower tax bill if you're earning a higher income and you go to a lower income, rather than having to pay for your income with taxable dollars, you're getting a valuable fringe benefit.

A lot of times also universities offer generous benefit programs that go beyond their salaries, so universities sometimes offer very generous retirement programs with generous matches, generous health insurance, so if you look at the total value of a compensation package and include into it the dollars of your degree, that what you would be paying for the classes if you were paying for them out of pocket, it could be compelling.

- Those are all excellent, excellent points, and that was some of the things that I had to consider, 'cause like I said, I was working for a big city financial company, I was working remotely, so I had a lot of flexibility as far as that's concerned, and I was making good money, and it was a decrease to go and work for the university, but if you add up all the benefits, like the tons of paid time off, lots of holidays, great retirement benefits, and healthcare and things like that, and if you do add all those up, it is pretty similar to what I was actually earning as a pay-by-the-hour consultant, which is pretty impressive, and then when you factor in the educational benefits, then it totally blows it out of the water, 'cause right now I think it costs over six grand per course, and I'm taking four courses per year, so that's another 24 grand of value that I'm extracting from being employed by the university, and as you said, it's much lower stress, it's just a totally different environment from corporate America, like it's much more rewarding as well, and I'm helping some of the smartest kids in the country get a degree rather than helping the bottom line of some financial company, and I actually enjoy my work a lot more, and yeah, it's great getting a salary, and going to school, and most of my classmates are paying 50 grand a year, and not getting paid, so.

- Yeah, and in addition, for early retirees, I think there's some other benefits. I'm familiar with some friends of mine who worked at a university, but also by being students and working at the university, had access to some university housing, and that housing is provided, they needed to pay for it, but it's provided at a discounted rate, or they can negotiate that as part of their compensation package, and so if you have university housing, that can help when people are looking to decrease their expenses substantially, 'cause generally it would be less than maybe what you could find in the miles around the university.

In addition, again, stacking functions, if you are living and working on a university campus where you're getting your education, it's probable that you can lower some of your other expenses, such as transportation expenses. Many college students will ride a bike to class, and so now instead of having to ride a bike 10 miles across town for a commute, you can simply walk to your job, that lowers your expenses.

Also, things like entertainment. In the university system, college students generally aren't the most affluent. There's plenty of free and cheap entertainment that's really interesting that would allow people to live an extremely enjoyable but lower cost lifestyle, and people forget about this a lot of times, that it's not just something that you can only do at 20 years old.

Some friends of mine were doing it in their mid-30s with kids, and still able to live in, they weren't living in the dorms with the 18-year-old freshman students, but they were living in on-campus housing, working there, both spouses worked at the university, and it's a compelling situation financially if you can start to stack those functions.

There's a way to get a degree and get an expensive education without necessarily going the retail route. Just to go into details for a second, my friends who were, both spouses were working at the university, earning the income. When you take on the fact that you have a couple of kids, you're living and working on a university campus where you have entertainment, low transportation costs, low housing expenses.

When you take the kids, and you take relatively low income, but a lot of value for the income, and you start to run that through the tax code, you can qualify for the child deductions, you can qualify with a generous 401(k) or 403(b) as the case may be, retirement accounts, you can qualify for refundable earned income tax credits.

I mean, it's a substantial, substantial financial gain for the right person in the right circumstances. - Absolutely, and you forgot one of the best things is the university library. There's just, you could just keep yourself entertained for decades with the amount of stuff that's in there. They got DVDs, CDs, they got tons of books, and yeah, you're absolutely right.

There's a lot of fringe benefits of working for a university that could, yeah, make it very worthwhile for someone that's thinking about going back to school. And yeah, just in case anybody questions anything, I use 401(k) synonymously with 403(b), but I actually have a 403(b) since it's a non-profit entity that I work for, but yeah, same type of thing, same account pretty much, but yeah, just in case some of your more, your listeners that are listening very closely, then I don't want anybody to think that, hey, how's he have a 401(k) if he works at a university?

- That's true. And then two other things, just to add onto that, two other ideas that I've had, and if you have any others, the nice thing about universities is many times the universities have programs of, either whether it's study or employment, where they're working together with other schools that are in other places in the country or other places in the world.

And so if somebody has an interest in world travel, it may be that by pursuing their education at a foreign university, when I was younger, I considered studying at University of Hong Kong 'cause I was interested in living there. I didn't pursue it, but it could be that by being a student in an international context, you can take some of those things that you talked about earlier with travel, you can combine it with earning an income and combine it with educational value, and now you've stacked so many functions on top of each other that you've got a really powerful, really powerful scenario.

- Absolutely, yeah, studying abroad in Glasgow was one of the, yeah, the best years of my life. And I met my wife over there and completely changed my outlook on everything. So yeah, that could be a very fun and rewarding thing to do. - Yeah, and then the last one, and then we'll wrap up, is that just to remind people that a lot of times, this isn't necessarily just limited to university level.

Many times, if somebody's looking for a way, whether it's private school, many private schools for elementary and high school students offer similar programs, and it could be that if somebody, something that my parents were able to do, or that my parents did that allowed me and some of my siblings to attend a private school, it could be that instead of two parents working at higher income jobs, it could be that with one of the parents switching to working at either a university so that their children could go through college, or whether it's, 'cause this is also a strategy for kids, that if you have children that you need to put through university, the same type of program can apply to parents and their children's students.

Or at high schools, you can get a significant discount up to 100% on tuition, and if that lowers your, again, if that lowers your tax bill, because you have a lower earned income, if that allows for you to pursue some of these other strategies that we're talking about, consider it, and consider if some of these strategies might help you to achieve your financial goals sooner.

- Definitely, great advice. - Brandon, what did we miss? Anything else you wanna add? That's about it as far as what I had on my list of things to talk about. Anything that we missed, or any-- - No, that was great, I really, really enjoyed it. Yeah, that was, like I said, I was looking forward to being on the other side of it, and it was a lot easier, so you did a fantastic job, and I had a great time, so I appreciate you letting me come on and talk about some of this stuff.

- Yeah, well, keep it up, and I like to encourage people to sign up and read your blog and listen to your podcast. Things that's interesting that I like is that you're not there, you haven't achieved it, right? So you're not technically financially independent yet. - That's correct, yep.

- You're working down the path, and a lot of times, if people are interested in goals similar to yours, you're gonna develop a community around your site and around your blog and podcast of people that are pursuing similar goals, and that can be really encouraging, is for those who are interested in those types of goals, to talk with one another, to encourage one another, to brainstorm ideas, and it's also fun sometimes to see people working towards their goals and just simply follow them on the path.

I can guarantee, probably with a pretty, I feel pretty confident that your plans and your ideas are gonna change, and you're gonna find out that some of the stuff that you've probably even said in this podcast doesn't work for you three years from now, but you're gonna find some new stuff that does work for you, and that's okay.

You're probably more likely, you're more likely to achieve your goals 'cause you're working towards something rather than just simply floating on by. - Absolutely. - Keep up the good work on your blog and on your show, and I promise I'm not following you around interviewing all of your guests.

- Yeah, that's all right. Like I said, I picked them for a reason 'cause I really like reading their stuff and wanted to hear more from 'em, so even if you take 'em all, I'll still be listening 'cause like I said, I'll like to hear anything else that they have to say about it, and you'll probably ask different questions than I did, so yeah, feel free to go for it.

- Yeah, for sure. I'm trying to get, when it's available, I'm trying to get Jim Collins from GL Collins NH on here 'cause I want to talk about, I love some of his writings on real estate, and I think he has a good way of talking through that in some of his articles he's written, so I'm hoping to get him on here to talk about that.

- Oh yeah, yeah, I'm actually planning on just having a call with him right after this, not a podcast or anything, so I'll put in a good word, and I'm sure he'll be on your show in no time, but I know he's busy over the next few months traveling and Ecuador and stuff, but yeah, now I'm actually, I sometimes help him with some of the more technical stuff of his blog, the computer side of it, so I'm gonna call him right after I finish speaking to you, and no doubt look into something computer related, so I'll be sure to mention that I had a good time.

- Awesome. Well, that has been another episode of the Radical Personal Finance Podcast. Today talking with Brandon, the mad scientist. All the links to these articles that we've referenced will be in the show notes, and I'll put links to your podcast on iTunes and to your website. Encourage people to get over and enjoy some of your content.

If you have questions or anything that you'd like to talk with Brandon again in the future, put notes in the comments section, and who knows, maybe we'll have him back in a year or two and see how he's doing on his journey. So thanks again, Brandon. - Hey, my pleasure, Joshua, take care.