taxes Archives - Page 2 of 2

Alrighty, folks. This week I’m pleased to bring you a low-down-and-dirty financial deep dive with climber, writer, father of five, and lover of personal finance: The Frugal Professor. In this interview, we hold our breath and plunge into complex issues surrounding actually spending all this money we save for periods of no traditional income, meanwhile navigating the treacherous, shark-infested waters of the US healthcare system.

I’ve always said that saving and generating wealth is shockingly simple once some key concepts are understood, implemented, and doggedly followed, through thick and thin. And I’m sticking to my story.

What is not so straight-forward, however, is threading a very fine needle on living off the money we’ve saved. In a period of no traditional income⏤call it “retirement” if you want⏤we shouldn’t be just selling shares and calling it a day. We have to optimize healthcare spending, minimize taxes, and avoid early withdrawal fees and penalties meant for a much more traditional retirement.

But with a little planning, it ain’t no thang.

Let’s roll up our sleeves with the Frugal Professor and get a little dirty, shall we?

Hey guys. I know that 2020 was a hard year. And 2021 only seems like a continuation of that trend. It’s easy to throw up our hands or hunker in a ball, suck our filthy, calloused thumbs, and wait. But that’s not the solution.

Despite everything that happened in 2020, the S&P 500 returned over 18%. For those of you with money in the market back in the late February and March, I hope you held your breath and squeezed your butt cheeks while the sky was falling. During that time the S&P 500 fell over 30% from its recent highs, with several pucker-inducing drops of 10%+ per day! For those who stuck to the plan and avoided market timing, you did just fine.

For instance, someone with $1 million dollars invested on January 1, 2020 ended the year with approximately $180,000 in gains for doing nothing other than owning an index fund. That’s real, folks. Of course, we have to pay tribute to the inevitable years this will not be the case (where we could lose just as much as we made), but over time, history shows us that the market returns approximately 7-10% per year, on average.

These are the simple little things that we did every year. The result? We were able to walk away from paid work in our 30s.

Does financial freedom appeal to you?

Here’s how we can set the ball rolling in 2021.

Tag: taxes

The Frugal Professor: Let’s Get Deep in the Weeds

Your 2021 Guide To Actually Saving Real Money