054 - Fully Funded Lifestyle Change

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1 - 35 Jonathan Mendonsa Hey guys welcome to the choose FI radio podcast today we have a very different type of episode. It's one of those episodes where we have an announcement to make and I'm super excited about it as it affects me in a very personal level. But the title of this episode is called the fully funded lifestyle change. And as you may remember that title is co opted from Slowly sipping coffee. Who writes over at Slowly sipping coffee dot com so that title is little bit of an homage to what they've they've written about over there. But we're going to co-opt it and adapt it to a very personal story that we want to tell here. at Choose FI and without any further ado. Welcome to the Choose F.I. radio podcast.
35 - 82 Speaker You're listening to ChooseFI Radio. The blueprint for financial independence lives here. If you're looking to unlock the secrets to financial independence and early retirement you're in the right place. Stay tuned and join a community of like minded people who are Getting off the hamster wheel. And taking control of their lives in the pursuit of financial independence Choose FI your home for financial independence online.
82 - 130 Jonathan Mendonsa OK so a little bit of a teaser there Cliffinger. Yeah I have an announcement and the announcement is that I have made the decision with some guidance from Brad and from my family to go ahead and pursue choose F.I. full time which means I'll be stepping out of my role as a pharmacy manager and potentially looking for part time work to supplement but giving choose F.I. 100 percent of my attention. And this is a really big deal and so in today's episode we're going to one just kind of walk you through that decision tree and to maybe share some of the things that you should be considering as maybe you start thinking about how to transition out of a 9 to 5 or W-2 income job and into your side hustle passion project or entrepreneurial venture. Very excited to do this and to help me with this I have my co-host Brad here today. All right Brad what about this announcement.
130 - 196 Brad Barrett All right Jonathan Well this is obviously huge news congratulations to you and your family. I mean I think in speaking with you I mean a I was shocked when you did this frankly and I'm sure I'm sure the audience is as well. But upon speaking with you about it you know it begins to make a lot more sense and it begins to make a whole lot more sense in the world of FI and basically what we've been talking about for the last seven or eight months here on this podcast. And while at first I was very very scared for you. I now really understand the move and I certainly applaud it and you know the reason why I was a little worried at first, because frankly choose FI is not making boatloads of money of course. So I mean like my first thought was Oh my goodness what is he doing. You know? I got to be honest. But I think in speaking with you I understand your thought process. A.) you've cut your expenses to the bone and we're certainly going to talk about that on this podcast. B.) you have an opportunity here. You feel that this has become your life's project. ChooseFI and truly it's become mine as well.
196 - 289 Brad Barrett You and I are both spending probably 40 hours plus a week on the podcast and the community and we want to do everything we possibly can to nurture this community and grow it because it feels like this inflection point for financial independence and if we can help in our way become this kind of central community point for fi then I mean like I said is literally my life's project and I know you feel that this is an opportunity that not not to enrich ourselves. That has nothing to do with it. It has to do with taking what we're so passionate about what we've called a life superpower over and over and over and really help bring this to a wider audience and to connect the audience and to connect the community that already exists. I mean we have we have huge plans for this entire project and entire community and frankly it's it's difficult to do with just the limitations of time. And I know your job as a pharmacist is is difficult. You work 40 plus hours a week. You have a significant commute and then you're working 40 hours a week on choose FI. plus you have a new son. I mean like it's something had to give. And the beauty of this fully funded lifestyle change is that because you've been so diligent about cutting your expenses and being smart and saving money you have the opportunity to make that choice from a position of strength. And that is the key and that's what I really want to explore with you today.
Brad_Catchphrases, savings
289 - 493 Jonathan Mendonsa That's the perfect summary. I mean I really could I could stop with that. What's so amazing to me about about this choice is that it goes back to what we've been saying. The power is continually shifting to your side of the court. And so you know I get that you understand my decision tree but I think it's important. And it will be beneficial for our audience to also just to see the practical implementation of this so you take people that are at these different places on the FI path. People like Brad are either right at FI fully passed FI Joel from FI 180 who is that lean fi or flex fi slowly sipping coffee, Who's right at this point of considering the fully funded lifestyle change as well. Noah who's maybe approaching half FI and is doing this gap year right now. You can see that there are so many benefits to pursuing this path long before you hit twenty five times your annual expenses. And I am on this journey as well and I'm not as far along down the road as they are and everybody's journey is going to look a bit different. But I have a entry level 6 figure net worth in my pre-tax buckets. I have one to two years of expenses totally saved up right now and because of both of those two things and the decisions I've made to this point I have slashed all my extra expenses. I have paid off my car. I have paid off my student loans. My life cost about thirty thousand dollars a year because I have done all of those different things. I have all this flexibility now built into this situation where if I even work one or two days a week I can continue to fund our life as it is right now for the next one to two years and I came to this decision realizing that with my current workload I can't keep both up. Choose F.I. grows more and more. I think we're going to finish the year with just under 2 million downloads. And there is a lot of organizational content preparation time responding to e-mails just the day to day activities of having this platform that we're grateful that it is blowing up but there are some very real time costs that come along with this. And at the same time my job as a pharmacist it's very important that I give that 110 percent and that my attention not be split. That is a job where you're keeping people safe. There's no room for error in that role. And I was putting 40 hours a week in at the pharmacy plus on top of that all the management stuff that comes with pharmacy and I was also now more and more putting 40 hours a week into choose F.I. and I have a newborn son and a wife that obviously they're are the most important thing in my life. Both of these responsibilities were eating away at their time. And so I had to choose and because I applied the principles that we've been talking about on this show over the last eight or nine months I was able to make this choice and I'm ecstatic. You know I'm not I'm not scared. I'm not frightened. I'm ecstatic that I have this window of time that I can just apply to choose F.I. which is my passion and I can just see where this goes and we can continue to provide this service to you guys and help provide you information that helps you reach your goal. Decades ahead of your peers. So this just feels like it's going to be a win win. It's going to be a win for my wife for my son. It's going to be a win for our community, choose F.I.. It's going to be a win more likely for my pharmacy and my pharmacy team because all of these people deserve, all of these different areas deserve somebody that's able to give it their full attention not somebody that's half in one place half on another. And so I am aligning my time with things that bring value to my life. And this is the culmination of that decision tree.
college-loans, networth
493 - 526 Brad Barrett All right Jonathan so obviously this is a complete life change for you. I mean what what's going on in your life. What is what has changed. What questions did you have. What conversations did you have with your wife. I mean like there's a million things I don't know like where to dial into it so I'll just throw it over to you. Give me like the background on I guess start with you know you and Danny and how you guys discussed this and got up the courage to do it when frankly like I told you I wouldn't have had the courage to do it. So you know I love to hear more about that.
526 - 753 Jonathan Mendonsa Yeah. Danny Danny was nervous but she could see that like I was starting to crack trying to juggle all of these different responsibilities. And I was just starting to slip with the little things like I would be constantly having to prioritize my day thinking about the next three or four things and everything was urgent. No there wasn't this queue of things, rather it was everything had to happen right now because I was struggling to keep up with maybe self enforced deadlines. But there were implications if I couldn't make things land when they were supposed to land. And to that end I was just doing dumb stuff like I would go fill up the car with gas and then I would leave the I guess the seal on the gas tank off because I was already had, I had already moved onto the next mental object in my mind and that's just a dangerous and stressful place to find yourself. So she knew that like I couldn't keep both these ships going full speed ahead for much longer. Just little things like that showed that I was starting to slip. But on top of that I had also been modeling this for a while now. I had reeled in my expenses I just wasn't purchasing stuff left and right. We had showed real traction we'd gotten the student loans paid off which is something that I don't think even though she knew I was going all in on the hand. She didn't really believe those student loans that were in the six figures we're ever going to disappear and then one day they were just gone. And then getting the car completely paid off, all of our debts were suddenly just gone. and then you looked at our finances and we realized that our life doesn't cost anything. Once you get rid of all that consumer debt. I got rid of all the expensive Verizon cell phones and we're using Google Project Fi for our cell phone service and our cell phones only cost 30 bucks a month. I mean basically when you go through the pillars of fi and you go through our episode looking at the entry level middle class lifestyle I was firing on all cylinders and as a result of that we were able to get our lifestyle down to around 30 thousand dollars a year and I was able to show that because we tracked it on mint month after month after month that those were consistently the numbers that we were hitting we were crushing our food budget and we weren't we didn't feel like we're depriving ourselves. And I was able to just show her this consistency. So I think her confidence I me where I was leading us you know grew right along with that. And then as I was doing that I was also able to show our savings and we were able to relatively quickly after we got rid of our student loans and after we got rid of all of our consumer debt and we were still maintaining that extraordinarily high savings rate we were able to rack up a pretty significant buffer zone. You know what we like to call f-you money which is that one to two years of expenses. And so I could just I was just able to show her both of those side by side and then the time came that I actually and this is really what it came down to. I went to my boss and I told them that there were some pretty significant events coming up. I mean you guys remember so we had the we had Fin Con coming up at the end of October we had that documentary film crew that came to Richmond for a week and there's a few other events right around that timeline that were going to require that I take some pretty significant time off. And then the following month we were actually going to go visit her family, which they live, they're in Cape Town South Africa. And we were gonna need to get some additional time off for that as well. We haven't seen her family in a couple of years. And I went to my boss and I said Would it be possible for me to just take a leave of absence during this window. And he just said No no it would not. I think you would need to step down if you wanted to do that. And my wife got that righteous anger for me, because of all the time and hard work that I've been putting in that there was no bend there. And she just said I think you should do it. I think you should just go and pull the trigger and get out. And so I did it and I did it and I wasn't scared about it. I said you know what I understand that's completely fine. Maybe it really is for the best and I'm going to put in my two weeks and I think my boss was shocked. I don't think that was the answer that he was expecting. I don't think you see that very often. But that is what happens when you get to a place in life where you're not just one to two months out from total financial disaster. You can make decisions that are in your best interest. So that's where we found ourself.
college-loans, debt, families, fincon, playingwithfire, savings
753 - 774 Brad Barrett All right so I really want to drill down on this. You went to I guess your boss or the district manager or whomever it was and said like I want to take an unpaid leave of absence. Right. Like you were not asking for to be paid or anything like that you just wanted to take a couple of weeks off. I assume you would have gotten all your ducks in a row before you left.
774 - 784 Jonathan Mendonsa Yes yes it would have been unpaid leave of absence and I would have had very clear instructions for whoever was filling in and I would have been gone for about three weeks and then come back.
784 - 797 Brad Barrett OK. And his response was an absolute no. And when you said he wanted you to step down. Does that mean he wanted you to like he wanted you to quit. Or is it something else. I have a feeling it's something else in this regard.
797 - 816 Jonathan Mendonsa Yeah no actually it would have been stepping down. So it have been moving from a permanent pharmacy manager position down to a floater pharmacist where you'd be filling in shifts and usually those are somewhat erratic and it's normally nights and weekends. From what I've seen but there was still a place for me within the organization but I would lose my my position as a pharmacy manager.
816 - 943 Brad Barrett OK. Wow. So right. So the power dynamic shifts to you then right. which is so cool. That's what's great about fi. And just about even though you're not at FI right. Like you have that f-you money. You have cut your expenses to the bone and your life just doesn't cost that much. So the power dynamic shifts to you. Right. I can't imagine that this district manager has basically ever come across one of his pharmacy managers who has this kind of power. Right. That's really unusual because generally in corporate America what the boss says goes, right. That's just the way it is. So even if it's a reasonable request it's basically up to the bosses whim. And frankly that's not good enough, and that's part of why we pursue FI, to not be beholden to someone else's whim, to not be beholden to that job. And whether you're going to lose it the next day and your entire life comes crashing down. Right. Because most people don't save money but you Jonathan. You paid off your student loans you paid off your car. You have a significant amount of money saved in an emergency fund plus your 401Ks and the power shifts to you. Right. Sure you're not at half FI you're not at lean FI you're not at full FI but you still have power. And that's really crucial for the audience to understand here is that this is a continuum. And every bit closer you get to fi that's more power that accrues to you. And Jonathan is a perfect example of this. He went in with a fairly reasonable request and it was just said absolutely no. And I love that Danny had that righteous indignation and basically said F you. Right. That's what she said. And that is just that's really really cool. And yeah I mean listen I applaud you. I know it's a scary step. I know it's a big step but it sounds like you've thought it through and you know this it's almost a can't lose situation like pharmacy jobs are plentiful. You could pick up. I mean with the way that your expenses are so low you could probably pick up one eight hour shift a week and it would more than cover your life expenses. Right.
401k, Jonathan_Catchphrases, college-loans, emergencyfunds
943 - 988 Jonathan Mendonsa Yeah and it strikes me that I have been hearing since I first got into pharmacy school. All the different opportunities that are available to pharmacists. But then somewhat towards graduation. you Kind of limit yourself. And I think part of that as well you don't necessarily have time to go all in on a hand that might not pan out. But now that's exactly what I have. I have all the time in the world to find the exact perfect setup for what I'm looking for which would bet to keep my foot in the ring in a opportunity or position that really interests me and gets me excited. So I think that's just a remarkable situation to find myself. And it's also going to allow me to really explore this journey both with you on choose FI and our audience and get a chance to just dabble with all these unique levers that we get a chance to pull along the way.
988 - 1025 Brad Barrett All right Jonathan so obviously Danny's on board you're on board. You know this is a go right. Like you decided to not only not just step down and take this roving position but to basically to put in your two weeks so you're out of that job. It just was an untenable situation. And yeah I mean I guess if you're not going to have the support of your boss it doesn't make sense to stay. So you know I completely understand that. And then you talk us through like what does the transition look like. What did you have to do as far as leaving a job you've been out for a while and and transitioning into basically not having full time employment.
1025 - 1123 Jonathan Mendonsa Yeah and I think that's a very interesting point Brad because at least in the setting that I found myself you talk about having a brand with regards to the business. But as an employee you also have a brand there is how are you perceived by your upper management. And things are rarely stagnant your personal brand as an employee is either growing getting better, or it's getting worse. And I truly felt that if I took that step down and that role my personal brand, you know my value to the company, was going to go down in the tank right along with it. how I was perceived by upper management. My brand was going to be in their control. And so by by stepping out, by not playing by those rules and saying you know what I'm going to hit the reset button here. I was totally able to reclaim all that power and get to define the terms on how I want to be perceived. And then when I go back in because of the way I did it I was able to leave on great terms. And if I were to ever re-enter the workforce with this particular company they would welcome me back. As opposed to someone whose brain was maybe being slowly marginalized or dismissed over time as someone that just maybe the perception was they really didn't care know anything like that. In contrast I would get to choose the environment in which I found myself. And it's this concept of hitting the reset button that I wanted to touch on because it's a concept that we talked about a couple of months ago back with Noah and Becky from money Meta game dot com talking about the possibility of trying something like a gap year and then in the Friday roundup I know we talk specifically about the power of the reset button where Becky found herself very burnt out after a few years and she thought to herself that if she didn't step away for a period of time she would never be able to enjoy her career again. This was my reset button. Does that make sense Brad.
1123 - 1172 Brad Barrett Yeah. No it doesn't make sense. So just based on conversations that you and I have had I think your boss, the one who you actually put in your two weeks to, was kind of taken aback certainly that you decided to quit. Like he thought you were going to take that roving position. And I suspect a.) he was impressed. Just on a human level. Because who does that right. Like who has the power to do that. And humans feed off of power dynamics and when that shifts like I think he went probably from if I can put myself in his shoes like from oh I'm just the boss. To Oh wow. Jonathan has some power in his life and that's pretty impressive. And I think he actually mentioned to you right there that you would be welcomed with open arms. It's not just you kind of pontificating. I suspect that would be.
1172 - 1177 Jonathan Mendonsa Yeah he said that I was an asset to the company and whenever I wanted to come back there will be a place for me.
1177 - 1187 Brad Barrett Nice So that's talk about a position of power. And that's that's wonderful. So I definitely wanted to clarify that because I think some people in the audience would have questions about it.
1187 - 1237 Jonathan Mendonsa I'm glad you did. And I think that is an important aspect to mention about the concept of F-you money that it does not mean literally giving the finger to somebody. It is not necessarily you going out in this blaze of apocalyptic fury where you're burning it all down around you and you're taking a baseball bat to the fax machine. I highly recommend to most people that you don't burn unnecessary bridges but realize that you having the power on your side of the court that you get to make decisions and just be honest and upfront with what is in your best interest may be the best path and that's what I've found. operate from a place of power. Tell them what your expectations are and what you are going to be doing. And then let them respond to that as they will. Yeah there's no reason to burn unnecessary bridges or relationships. I think that that is an added benefit that if at some point I wanted to or needed to go back to this particular employer I would be able to.
Jonathan_Catchphrases, relationships
1237 - 1355 Brad Barrett Yeah and I think that's a great point all around. I think Jonathan you and I have talked about relationships and the power of your network. And now again not networking in that scammy glad handing type away. But like actual genuine human connection I have credited those type of relationships with a lot of my success in life. And really the people who we spend the most time with and who are the most important in our lives we get a ton of value out of and you need to nurture those relationships so by no means Jonathan said something essential there. That by no means has F-you money mean you go out with all guns blazing and just be this horrible human being like that gets you nowhere right like part of the way that I look at life is trying to take the best strategy. It's almost like a poker or a mathematical type of analogy that I like you just do what you can to increase your odds of success almost in every way. And that doesn't mean you're sitting there calculating all the time and trying to get the most out of every situation and every relationship. But if you do the right things in situations more often than not over years and decades good things are going to happen to you. Right. And clearly for Jonathan there's no benefit to going out in a blaze of glory and just saying well screw you I have this power. I have money saved up. You would look like an absolute fool and frankly you know there are many thousands of pharmacies by this one company and you would be blacklisted right. Jonathan that would get you nowhere. But by going out in a classy way and frankly in a way that this district manager has never seen before. Right. In all likelihood he's never seen someone with that power go out like that. That gives you credibility for the future and just the sheer fact that he said you could come back to his very store means a whole heck of a lot. So yeah I mean well done on that. And just a smart strategy really.
Jonathan_Catchphrases, relationships
1355 - 1420 Jonathan Mendonsa Thank you. Thank you very much. So with this transition I had to clean up my financial house. There are some things that you have to think about which I think it will be valuable for our audience to consider these as well when they make these transitions. And so while I don't necessarily have all these answers for you today because I am in the process of doing this I kind of wanted to roll through some of the things that I have already done and then some of the things that my wife is making sure that I will do and this will be a way for me to hold myself accountable. The first and most obvious one is the separation of service from your employer. You then opens you up to be able to do a rollover so all of your funds that were captive to your employer's 401K or 403B or whatever whatever vehicle those were in you can now roll them over into an IRA. Brad and I and many people in the FI community are big fans of Vanguard although Fildelity and Schwab are also very popular right now. And I was able to roll my 401k into a new fund at Vanguard and obviously based on past conversations you know that I do the VTSAX for that so I am now 100 percent stocks. VTSAX in my IRA.
401k, 403b, indexfunds, ira, stocks
1420 - 1466 Brad Barrett And that's interesting because when I left my full time job I certainly had the option to roll my 401K out to an IRA. But I actually left my 401k with my old employer which was slightly unusual just because in theory I'd rather have the control and shift it to Vanguard and be able to direct the funds as I want. But what was interesting was this particular employers 401K had the Vanguard Total Stock Market Index Fund but they actually had like the institutional shares. So it was ever so slightly smaller expense ratio. And since I have all of my funds in there anyway there was no real incentive for me to move it out. So yeah my 401K even two and a half years later is still with my old employer actually.
401k, ira, stocks
1466 - 1484 Jonathan Mendonsa But I would imagine that irrespective of whether or not you have that with Vanguard or whether you have it with your old employer you are still able to track that in your. I guess the software I know I use personal capital is track of my investments. Are you able to track your investments with your employer with personal capital.
1484 - 1526 Brad Barrett Oh yeah you bet. And I can log in anytime and connect it. So yeah that's not not a big deal. I can track it. I can move investments. I still have full access over it as if I were an employee. But it just doesn't give me the full access to every mutual fund and stock in the world that you would have if you were with Vanguard or Schwab or Fidelity. So so yeah basically I chose to leave it there just because like I said the fund that I was going to put it into VTSAX I actually have a slightly better version of it in this employers 401K so yeah there was no real incentive to move. But that is certainly when you talk about cleaning house. That's definitely one of the first things to think about.
401k, indexfunds, stocks
1526 - 1550 Jonathan Mendonsa All right so right behind that was life insurance. Many people have life insurance and they have some form of a plan through their employer. In my case I had a 200 thousand dollar policy through my employer and since I am no longer employed by the company that policy is no longer valid or active. So my wife has it all my to do list to go get a term policy this week. And that is on my To Doist. Brad.
1550 - 1555 Brad Barrett Nice very cool. Has that been one of your cleaning house putting everything into todoist as well.
1555 - 1609 Jonathan Mendonsa Yes yes I'm actively doing. I'm actively using to do. And so right now I just use it for my weekly task like my wife has me go through this list of things that I need to do and every Sunday I have to go through this very organized five step process to get the baby in the car and ready for church. But if I mess up anywhere in the order of any one of those things she calls me to task. But aside from that I'm trying to be more creative and I know one of the things that you said is that you put a massive amount of time into getting every single recurring thing that you do for an entire year put in there and then once you've done that once it's just setup for life. And that's the next step I don't quite do that yet. And also the push notifications on my phone are competing with my headspace notifications so I'm getting a little push notification fatigue. I may delete the headspace and do that on an as needed because to doist is definitely winning on the app of the year award in my opinion.
1609 - 1666 Brad Barrett Nice. That's very cool. And yeah I shut off all notifications I pretty much shut off notifications my phone. Anyway I just find that it drives me insane. But yeah as far as putting everything to doist I think that is that really is when you can trust it and it even just random things like actually sonwoo. One of our moderators on the Facebook group mentioned he's like I think I've got one for you that you probably don't have. And it's when do your passports expire. Because I mean that could be years and years and years in advance so I went to my fireproof safe that we have in one of the closets in the house here pulled out the passports found out their expiration date and then put into to doist to renew them let's say six to nine months beforehand. So or whatever you know whatever the day was so I mean just something like that. Like I mean I'm trying to get every single thing in my life into to doist so I can just trust it completely and it really does make a huge difference.
1666 - 1670 Jonathan Mendonsa One day it will fail you.
1670 - 1772 Brad Barrett Hey hey But let's hope not. But I wanted to talk about the term life insurance real quick having life insurance with your employer. Like I never fully understood that I haven't run the numbers as perfectly as I want to. But like especially if you're starting young and you're contemplating getting life insurance like you can get a term life insurance especially if you're in like your 20s or early 30s and you're healthy you can get a term life insurance policy for really just a couple of hundred dollars a year especially if you're only talking I think he said two hundred thousand dollars. Like I think we have six hundred and 700000 dollar policy somewhere in that vicinity and it's only a couple hundred dollars per year for each Laura and myself. So I mean and that locks you into it. And I've always I try to mitigate risk where I can. And for me it was always do I really want my insurance policy through my employer when I could leave if I could get fired. And when the rates weren't that much better. And also when. Every year I'm getting older and I'm potentially getting into worse and worse categories for you know the actuarial tables and how much my term life insurance is going to cost so I would argue for people out there that if you were especially healthy and slightly younger maybe search around on the internet and find the term life insurance policy there as opposed to just being stuck to your employer especially if you're pursuing fi anyway and you might leave your job at 35 40 45 something like that. At that point if you do still need term life insurance you're going to be in a much less advantageous position. So yeah just a little point for the audience out there.
health, lifeinsurance
1772 - 1858 Jonathan Mendonsa Yeah I agree. Don't take my advice on that. You know it was a free benefit that I had to work so I knew it was like a placeholder. I knew I had something in there and I was just taking the path of least resistance which was just not setting it up. But now that illusion of security is gone. And so I am now actually going to have to do this which is good. I mean it's a general advice to people I'd recommend that you not rely on your employer for your insurance and that you take Brad's advice and I know that for just price shopping insurance I believe Zander is a price shopping service that will allow you to get quotes from multiple companies. I'm sure that there are other providers out there that will do something similar but I believe Zander dot com offer Zander dot com does offer price shopping for term life insurance policies so you can cross state lines and get the best deal for your family. So this is a huge one health insurance. And someone pointed out to us recently that we had done 60 some odd episodes and we have not done health insurance and I'm going to say this is the episode where I tell you that you're going to have to keep waiting. We don't have the perfect answer for that yet. We are researching it. I mean I'm making this change right now and I don't have the perfect answer for you. That's that's how frustrating it is how bad it is I guess you'd say there are less bad of bad options and I can walk you through my personal decision tree but I can't by any sleight of hand convince you that there is a perfect answer to this right now.
healthinsurance, insurance
1858 - 1930 Brad Barrett Yeah I mean that's the unfortunate truth. And yeah I mean we get e-mails about this all the time and guys please know we understand what a big deal this is. We really do and we're not just like purposefully ignoring it by any means. It's just there's no good answer. I mean frankly we live in America we have this mess of a health care system and that's what it is right. We don't want to come on the podcast and talk about all these options when frankly there's not really an especially good one and it's very frustrating for us. Believe me we would love nothing more than to have an episode or multiple episodes about how to hack healthcare and and all these great options but we just frankly haven't found them. So please know in the background that we're doing our best and we're always looking for new information. So if you have something send it to us right feedback at choose FI.com. If you have something that can help the FI community please let us know. But yeah until that happens you know where we're doing our best to try to find or try to find an answer. And of course we can give you our own recommendations and what we've done which as Jonathan said which is the less bad of bad options and that's probably a pretty good way to put it.
1930 - 2092 Jonathan Mendonsa But at least I will say that I do understand the problem. So I understand the challenges that after researching I don't have the answer but I can at least tell you the obstacles that you're facing so in the United States you basically have coverage to your parents until I believe you're at age 25 or 26 and then you fall off that cliff and then you don't really have any great options until you're 65 and then you become eligible for Medicare and so we're looking for how to plug that gap. And there's just a couple things that are out there. There's a few state exchanges. depending on the state you live in that you may be eligible for that leave Colorado and a few others have kids. Kaiser Permanente there's a few other states that have a state run insurance like Washington State. I know noah mentioned that and then Obamacare is in place and most of the country at least at the present time end of 2017 and those the price tag that come with those are the full price tag that come with those are very expensive. Although there are income based subsidies that will alleviate much of that. The implication there being if you can get your income low enough you can qualify for some of those subsidies and there may be a play there. We're going to have an expert come on and try and walk us through some of this because this is outside of my scope of expertise but this is just kind of showing you how I walk through my general decision tree. If you fall down around the poverty line you actually then become eligible for some Medicaid programs and those have their own pros and cons but that is there as well as a catchall that doesn't help high income earners that are looking for a reasonable and affordable approach to health insurance. The other option that is outside of all those are the Health Share Ministries which are not health insurance they are traditionally considered more of just sharing each other's medical cost. They come with very in my opinion reasonable prices. Price tags it does seem like a viable option but they're not necessarily as accepted across the country as traditional insurance. You may have to jump through some additional hoops. There are some limitations of those as well. And we can point you to a few articles that we have found that help explain those. ESI from ESI money.com did a great walkthrough of how he picked out one. This is actually the approach that I have landed on as a stopgap in the short term. I signed up for a health share through liberty health share got this advice from Brad and from Ryan in our Facebook group and it seemed like a very reasonable option for a generally healthy family with lower medical costs in general people that don't use the healthcare system very often and it was going to be essentially for my family of three as 500 dollars a month with a 1500 dollar deductible and Brad maybe you can weigh in on that and give me a little bit more input on your experience with Liberty healthshare.
health, healthcare, healthinsurance, insurance
2092 - 2228 Brad Barrett Yeah I've used liberty for going on three years now and I have been absolutely thrilled with Liberty healthcare in general. They are wonderful. They have paid every single claim that's come through. And you know frankly compared to traditional insurance it's significantly less expensive as Jonathan said. It winds up being about 450 dollars a month for the premium for a family. And then like you said it's a 1500 dollar deductible and then above that it's paid 100 percent actually by Liberty. The issue comes in that like Jonathan mentioned it is not insurance and they are very explicit about this so any issues that I have or that I've run across are not liberty healthcare related. Like I said they're fantastic great customer service. It's just that since they are not truly insurance and they don't have these contracts with hospitals and doctors there are instances where you can get what's known as balance billed. So the hospital can charge you some absurd fee. Liberty pays what's customary and reasonable and then the doc the hospital or doctor checks come after you for the remaining amount. So that's you know potentially a nightmare scenario obviously. Luckily I haven't had too many major issues health wise over the last couple of years but we have had an instance of balance billing. And it's you know it's pretty frustrating and frightening that hospitals or doctors can accept except accept until they don't. And you know that bit of uncertainty is is a little bit much for me so frankly like we're actually considering getting a traditional insurance plan even though it's significantly more expensive but albeit it is deductible actually. So you could deduct that on your tax return. So that kind of mitigates some of the additional expense. So just rest assured for the audience and Jonathan for you like I am exploring this and you and I while we're both on liberty healthcare. Now that might be something that you know I do some research you do some research and we decide to change it. It's a really wonderful program for what it is and they do a great job. But but again just because of that uncertainty it is a little bit frightening for me personally. So that's why I am contemplating changing.
families, health, healthcare, tax
2228 - 2339 Jonathan Mendonsa And you need to understand like just to our audience and that we should do a episode on that. But many times when you get a bill from the hospital it's like MSRP on a car. So it's not actually what people pay. It's a starting place. It's a negotiation. And so for organizations that have enough buying power they get to dictate what they actually want to pay. It's like when you go on Craigslist and you see a sticker price for something you know you're not going to pay that price. You may lowball them and maybe you'll land somewhere in the middle. But it's a starting place. It dictates the tone unfortunately with like a health share. They come in and they try to get these reasonable rates at these larger insurance companies are able to negotiate with hospitals which to you and I seems like that would be that would be reasonable doubt would be obvious. But the companies basically try to stick us with the cash price instead of using the same rates that they would give to an insurance company and there's just that's just the nature of this game that unfortunately all of us are stuck playing next is just cleaning up shop. So my wife knows that we've gone through a lot of financial overturn there's a lot of accounts that have changed and she wants to know right along with a life insurance policy like what would happen if we're one of us were to pass. Is there some sort of assurance box or file box that will dictate instructions on exactly what actions that our surviving spouse should take. Now this wouldn't be as big of a deal for if I were the surviving spouse because I set everything up. But frankly if it were to go the other way she would have no idea where to start. No idea what accounts to look into. No idea what how to take action and so actually creating a plan for how to go about organizing our finances in case of one of us passing away is a big deal it's not enough just to have life insurance. Your surviving partner needs to be aware of how to implement and take care of the family if that were to happen and so that sort of directive box is something that is on my To Doist as well.
families, health, insurance
2339 - 2380 Brad Barrett I think I need to add that to my to doist. I know Laura's going to hear this and ask where our list is. so yeah I think that's that's a really good thing for people out there that I think most of us don't want to think about that unfortunately. But part of this FI journey is really thinking about different eventualities and planning. So it's kind of irresponsible of me that I that I don't have that. Not to mention when I have websites and everything is online. Could Laura even find how to log into any of my sites or any of my information. I mean that's that's ridiculous frankly that I've never even put that down on paper. So yeah. Jonathan thank you. That's that's a huge one.
2380 - 2384 Jonathan Mendonsa You're welcome. And Laura you're welcome as well. And Danny will now feel validated. So Danny you're welcome as well.
2384 - 2387 Brad Barrett Yeah she should be and. That's great.
2387 - 2493 Jonathan Mendonsa All right. So now as a budding entrepreneur crafting this show and seeing where this goes. There are some questions that you need to come up with how you're going to approach saving for retirement because obviously savings doesn't stop once you become an entrepreneur or once you pursue this path it's still important to have a high savings rate and it's very important to understand how tax optimization changes once you move out of W-2 income and to self employment income. That entire structure changes. And so this is a conversation that in large part we're going to defer until we're actually doing this story with Alan Donnegan and Talis talking about building a side hustle and at some point in that journey we'll use that storyline or our storyline here choose FI to bring on different accounts to share their perspective on how they would go about optimizing this particular path. Do you do a SEP IRA. Do you do a solo 401k. How do you plan for your tax bill. You know a very interesting statistic came across my desk recently as I was reading a book which we'll talk about in a future episode called freelance to freedom and the number one reason that small businesses fail is because the owners fail to plan for tax time or underestimate the tax burden. And that was incredible to me and shocking. So it's twofold one how to plan for tax season if you're a small business owner and to how to save for your own retirement and some of the unique advantages that small business ownership actually gives you over being an employee. So all of that is a fascinating conversation and it's why it's so much fun that you don't have to rely on my experience as a pharmacist. But we have Brad who has background as an accountant and we can actually bring accountants on the show to share their particular your life hacks and tips that they've implemented into their own business practices and advice they've given to their clients so that will definitely add to the picture.
accountant, hustle, savings, sepira, smallbusiness, solo401k, tax
2493 - 2557 Brad Barrett Yeah I agree we definitely will defer that conversation but I know with my other two websites side travel miles 101 and richmond saver's dot com. I do have a 401k with travel miles 101 and I have a SEP IRA with Richmond savers so essentially this is very rough back of the envelope. Essentially you're allowed to defer about 20 percent after after the calculation comes and I think you'll see that it's 25 percent when you read the literature. But but it effectively works out to be about 20 percent. So you can defer 20 percent of your net income from your businesses into a 401K. And of course that's up to the the regular limitations which I believe is up to fifty four thousand dollars in 2017. I know it was 53000 in 2016 but you're not precluded from putting money into a 401K just because you're not at a traditional 9 to 5 job. So there definitely are options and we're going to explore that in great detail with Alan and Keith.
401k, sepira, travelrewards
2557 - 2667 Jonathan Mendonsa So to kind of wrap this episode up. There are a series of questions and I'm sure that this is not all of them that this is what's on my mind immediately that we are going to need to come up with some answers for. And fortunately this is tied so closely to the purpose of our show which is making these decisions and lowering the barrier of entry for you to make similar decisions if it fits the path that you want to follow. And I think it's cool that I'm being forced to do this now and that so perfectly ties in with what we're trying to accomplish on the show. I'm excited that the information that we find the solutions that we come up with will provide content for future episodes and that that will then spur you on to take action in your own life. And then the action that you take when you provide that back to us as feedback will allow us to then produce future shows. So it's very much a virtuous circle and work cited that you joined us as we just kind of dialogued about it for a little bit. So thanks so much for taking the time to listen to this episode today. If you want to support us and what we're doing here at choose F.I. here four easy ways 1 leave us and itunes review you want to do that just go to choose FI dot com slash iTunes two use our page to sign up for travel credit cards. If you want to travel the world with miles and points instead of your hard earned dollars then just go to choose F.I. dot com slash cards and get started today. 3 If you're working on the milestones of FI set up a personal capital account to track your progress and use our affiliate link. It's completely free and just go to choose F.I. dot com slash PC P as in Paul C as in Cat and four and most importantly find your friends co-workers and family members who might be open to this message and tell them about the podcast. Have them start with episode 38 the Why of Fi and right behind them have them go listen to Episode 21 the pillars of FI. It is a fantastic starting place. Alright my friends the fire is spreading. We'll see you next time as we continue to go down the road less traveled.
2667 - 2675 Speaker You've been listening to choose FI radio podcast where we help middle class America build wealth. One life hack at a Time.

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