Mindy Jensen: Today we have a couple who are very close to financial independence based on their net worth, but they’re facing a cash flow problem. Andrea is currently on sabbatical and would love to stay there while Tracy continues working in real estate, but they’ve had about $120,000 in unexpected medical expenses this year, and there may be more. They’ve been relying on a HELOC to cover some of their expenses in the interim. So will they both be able to be work optional within the next five years? And to make that happen, will Andrea need to return to work? Hello, hello, hello, and welcome to the BiggerPockets Money Podcast. My name is Mindy Jensen, and with me as always is my loves-to-give-people-options co-host, Scott Trench.
Scott Trench: Thanks, Mindy. I exercised my option to talk continuously in loud rooms for an entire weekend at BPCon, so if you notice my voice is not quite the same today, that is why. But the brain is working just fine here. We are so excited to be joined by Tracy and Andrea, and excited to see what options they have on this episode. So without further ado, welcome to the BiggerPockets Money Podcast.
Andrea: We’re super happy to be here. Thank you for having us. We feel like we’ve learned so much from you guys and the community over the years.
Scott Trench: Well, thank you for joining us. Go Birds, and absolutely fantastic financial position you’ve built here. I’m super excited to get into it. It’s really impressive.
Mindy Jensen: Scott, it’s Go Bears. That’s how you say that.
Andrea: Go Birds.
Mindy Jensen: All right, so Tracy and Andrea, you have built a rather impressive portfolio. I’m going to run through your numbers super quick. We have on the asset side about $3.8 million. Yay, that’s a lot of assets. However, that is split between a liquid financial portfolio of about $2.3 million — traditional accounts, Roth accounts, a little bit in an HSA, a small amount in cash — and about $1.5 million in real estate with about $840,000 in equity there. So a good position to be in. Let’s look at your expenses. We have income and expenses. Income, about $151,000. That’s your take-home after your credits, your taxable income, your tax liability, etc. And spending is $166,000 against $151,000. So there’s a negative of about $15,000 for this year. And clearly this is not how it’s always been because you’ve amassed such a large portfolio, but that is this year. And this year that $166,000 doesn’t seem to take in the $120,000 in medical expenses. So it’s actually more like $286,000.
Tracy: Correct.
Mindy Jensen: But I’ve got some good news for that.
Scott Trench: So we have a net worth of $3.8 million, a financial portfolio alone of $2.3 million, and we have an annual burn rate of $15,000 in terms of more spending than income coming in. How does that feel for you guys?
Tracy: I was comfortable with it until we hit this large speed bump in the road this past summer.
Andrea: We understood that we would have a little bit of a burn rate and we were expecting that, which didn’t make us feel great. But when we had the additional expenses hit this year, it definitely turned it to not feel so great, right? We spent a long time accumulating with surplus and that’s not the case anymore. So that’s really odd for us.
Tracy: And typically we’ve always had really big cash reserves of six months to a year. So this was definitely a different mindset for us.
Scott Trench: One observation I have here as well is you have $6,300 in cash right now. We’re not listing a credit card balance, but many people carry a small credit card balance they pay off in full. So it may be even less than that in terms of net cash. Is that right?
Andrea: It probably is today.
Tracy: It fluctuates.
Scott Trench: And then we have, of your liquid portfolio, the $2.3 million in 401(k), Roth, and other retirement accounts. It looks like almost all of that is in your 401(k) with $227,000 in your Roth and another $51,000 in the HSA. Is that right?
Tracy: Yes.
Andrea: That’s correct. I mean, I think we’re an example of — I know you don’t like the term anymore — that middle-class trap, because we’ve spent so much of our time in corporate life putting into our 401(k)s and looked up and went, we can’t get to this money. Or we know now we can, but it’s challenging. It’s not as easy as we want it to be.
Scott Trench: So there is a real liquidity puzzle to put together. The answer must be there, right? Because that wealth is clearly here. But then in order to access the money in the 401(k), for example, that will stack on top of what is not a zero income right now in some capacity, whether it’s a Roth conversion, whether it’s a 72(t), whether there’s a penalty paid in there. So that probably feels totally inaccessible to you. Is that right?
Tracy: Yes. And we worked really hard because I think we realized about eight years ago everything was in our 401(k). So that’s why we started building a small real estate portfolio — one, to get the cash flow, and two, to just diversify outside of the traditional 401(k).
Scott Trench: Now the real estate portfolio also, like, I think the no-longer-middle-class trap, the deferral dilemma here, also hits the real estate schedule too, because the real estate is now tied up with relatively low interest rate debt. And five, six, seven, eight years ago, it seemed like you could refinance it or whatever, but now you don’t want to refinance that and change out low interest rate debt. Property values are declining in some cases, or it’s a little bit less liquid in some cases. And then there’s a gain to be realized on the sale. There’s depreciation recapture and those points. So it also seems like that doesn’t feel as liquid right now either, right? So that leaves your home equity, and you’ve already used that as a source of liquidity to this point with a $273,000 HELOC that we see in the position, on a $600,000 property. Is that summing up the reason why this position feels so probably bad even though it should feel great? Is that summing up the core issue here?
Tracy: Yes.
Andrea: We feel like it should be much better feeling than it is right now.
Mindy Jensen: How old are you?
Andrea: You’re not allowed to ask. No, we’re in our early 50s.
Tracy: We’re in our early 50s and we live right outside of Philadelphia, in the South Jersey suburbs.
Mindy Jensen: Okay, so you’ve got a nice chunk of change going to taxes every year.
Andrea: This year, not so much because I stopped working.
Mindy Jensen: Oh, I mean property taxes.
Andrea: Oh, property taxes.
Tracy: Property taxes still.
Andrea: Yes, you know it.
Mindy Jensen: So what if I told you there might be a way to access some of that 401(k) money and pay little to no tax on your income?
Andrea: We’d love to hear that.
Mindy Jensen: Okay. I was reading an article on Medium from Dad Is Fire, and if anybody knows Dad Is Fire, I’m trying to get in touch with him. He said these are the tax breaks you get after 50, and one of them is the medical expense deduction. Have you heard of this?
Tracy: No.
Mindy Jensen: I had never heard of this either. Healthcare costs tend to rise with age, and the IRS allows you to deduct unreimbursed medical expenses that exceed 7.5% of your adjusted gross income. This deduction applies to all taxpayers, not just those over 50, though it often becomes more useful as medical expenses increase, whatever. So I went down a little rabbit hole. I’m like, what is this? And I am not a CPA. Absolutely, it is worth talking to a CPA, especially this year and maybe next year if you continue to have these high medical bills. But if you have the $100,000 in income and the $120,000 in medical expenses this year, you could potentially pay no taxes on the $112,000 difference. And you could also Roth convert up to $11,600-something and pay no tax on that too. That’s how much deficit you have with these high medical expenses this year. I am, like I said, not an expert, but I did go down a rabbit hole. A very down-and-dirty Google search shows your $100,000 income and $120,000 in medical bills gives you $112,000 in potential itemized medical expense deductions. And the Roth conversion of $11,600 is also at the 0% tax bracket. You could Roth convert more, and then you would just pay nominal tax on that. The problem with a Roth conversion is that that is money for down the road. You’re not 59 and a half yet, so you can’t actually access that money, but you can start pulling some of it out of your 401(k). You could also start a 72(t), and that will give you cash flow now. That gives you some money. You’re not paying penalties on it, but you are paying income tax on it. Again, because you’ve got this $112,000 in potential itemized medical expense deductions, you have much more room to work with. So this year, it could be very beneficial to talk to a tax professional about this specific event. It’s already October. You don’t want to wait until the end of December, and then you either can’t get at it or you’re scrambling, trying to do all of this financial stuff. I would recommend the first thing you do is talk to a tax professional who understands this specific thing, and also somebody who understands what a 72(t) is, because finding somebody who can help you with that is kind of hard. That was quite eye-opening to me, and I thankfully do not have these $120,000 in medical bills. But if you can get by with not paying taxes on that or paying a much lower tax rate, that’s just better.
Andrea: Is it that the $120,000 would directly offset the income, or is it—
Mindy Jensen: The IRS allows anyone of any age to deduct unreimbursed medical expenses that exceed 7.5% of your adjusted gross income. So it’s not the entire $120,000. You would have to take the 7.5% first and then the rest. And again, I don’t know what I’m talking about. Anybody who’s an expert on this and mad at me for not saying it all right, email idontcare@tellsomebodyelse.com. This is an idea, and I want you guys to go and run with this. Talk to a CPA and see what you can do.
Scott Trench: icare@tellme.com, because I would like to learn more about this. So if anybody is an expert on this particular — this is a very specific area of tax law here — we would love someone to chime in on the YouTube comments or email scott@biggerpocketsmoney.com, or mindy@biggerpocketsmoney.com, because we are not experts on this, but this was something that Mindy did really great research to uncover in preparation for this episode, because it directly applied here. It’s one of those niche things that could actually specifically and tactically help you guys with the liquidity problem in the near term.
Andrea: Great.
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Mindy Jensen: So one of the most important words in all of this is “unreimbursed.” I don’t know if that means coming from an HSA or coming from — there is a potential that there might be a second party that would be responsible for some of these medical bills. So it may not be the amazing find that I discovered, but it might be. Like, if some of these are your specific responsibility, you could potentially reduce your income. So that is the first place I would start — finding somebody who knows more about this and diving deep into that.
Andrea: Yeah, that’s great. We’ll definitely take a look at that.
Scott Trench: The next question I have here is, you are a real estate professional, is that right, Tracy?
Tracy: Yep. And that has come in handy over the years, as Andrea was a W-2 employee and I had real estate professional status. So we were able to do various cost segregations on some of our properties.
Scott Trench: Okay. Have you largely fired those? Is the chamber empty in terms of cost segregations on the rental portfolio?
Andrea: I think we have one property that remains, but it’s the lowest-valued property.
Tracy: Correct. Right.
Andrea: So there is some flexibility. We could probably get a portion of that this year.
Scott Trench: Okay, got it. And then that kind of segues into — of this $1.5 million portfolio, you have one property that is worth $450,000, $455,000, with a $220,000 mortgage balance remaining, and I believe you’re under contract to, or are about to, sell that property. Is that correct?
Tracy: That is correct. Proceeds about $210,000. And our concern with that is we’re on the ACA right now. So if our income goes over a certain amount, and those proceeds would — we would hit the cliff.
Scott Trench: Interesting. This is one where I’m not aware of a way to, in this case, avoid that cliff in this particular year. But I will say, if you plan to be on the ACA next year, that could be even worse because the premiums are set to rise 17%. So if there’s no reason to expect some sort of offset for that next year, there could be a bias to just taking that hit now before it gets higher next year on that front. That’s an interesting component here. Do you have any access to accounts like an HSA or a flexible spending account, or those types of things, that could somehow reduce your tax burden?
Andrea: Yes, we definitely have access to the HSA. We have about $50,000 in that that we could use this year or next to offset some of the expenses. I think we’ve always just been hesitant to do that because, you know, the triple threat and the really valuable type of account, but we could definitely pull the trigger on pulling some of that out.
Scott Trench: I was actually wondering if you can contribute to—
Tracy: Yeah, we’re on the bronze ACA plan, so I think we can contribute up to a certain amount. I don’t know what the number is offhand.
Scott Trench: I’m not sure exactly how the pieces will come together, but I’m just trying to look at these options here. And one thing is, even if it goes right in and right out, that’s still better, because some of these expenses that you’re incurring on a medical basis are qualified, surely, for the HSA distributions. So even if it just goes in and then comes right back out, that’s a tax benefit — that’s at least one, two thousand dollars that could make the time spent coming on the BiggerPockets Money Podcast helpful. I’m trying to find all the little levers here. Same thing with a dependent — like some sort of healthcare FSA, if you were on a plan that was not HSA-compatible, would have been where I was going with that. So that’s one. How much of your Roth balance is basis?
Andrea: Last time I checked, it was at least $80,000. So there is some flexibility, I think, to take that out, right? It’s the basis we can take out, not the earnings—
Tracy: Not the gains. Yeah, not the gains without getting penalized.
Scott Trench: Okay, because there could be something here as well. Again, just thinking through where things might go — where there’s a Roth conversion that takes place from the 401(k) to the Roth, and at the same time, there’s a distribution of some of the basis as part of that. That could be one way to think about the liquidity. It’s always hard mentally to take the Roth out, but that’s one of the pieces that I’m trying to think through as we’re going through all this. Okay, and then on the real estate sale, I know you guys are wondering, basically, should I 1031 exchange that? Should we just take the liquidity and put it towards the next item here? There’s now a circular element — that puts us over the MAGI cliff. Although, let me ask you this: how are you not already going to be over the cliff for ACA with $148,000 in taxable income and a household of 3?
Tracy: Household of 4. We have a household of 4, and it’s $124,000.
Andrea: $128,000, I think it is.
Tracy: Something — $124,000.
Mindy Jensen: $128,600 for 2026.
Andrea: So we’re flirting right up against it.
Tracy: And we thought if we needed to, that we could use that HSA contribution.
Scott Trench: That’s going to make it really tricky, right? That’s where you really want to get precise, and you don’t want to miss, like, that interest on your savings account or whatever as part of that. When you’re in that danger zone, that’s like right on the bubble, because if you go over, then go over, right? Maybe there’s a case for recognizing that gain this year, but it would be a shame if you could have put it into next year and gone over then, but gotten the full premium this year. Man, it’s like a great puzzle. You have a lot of good things going on here, and the actual hard tax planning challenges make this game very complicated and very advanced here.
Tracy: I was also thinking, if we do buy a new property with the proceeds of the one, then we could potentially do a cost segregation, and that would bring down our MAGI. But again, we’re kind of — we’re developing the problem that we’ve already put ourselves into.
Scott Trench: Walk me through this 1031 exchange component. What do you envision doing there?
Tracy: Well, the vision is we’ll have a little bit over $200,000 in proceeds going into a 1031. So I was thinking getting something like a two-unit for around $450,000, $400,000. That way we keep the same amount of debt level for the 1031 requirement.
Scott Trench: What’s the interest rate on the current property, and what would it go to?
Tracy: The current property was actually going to adjust, so it was going to be around 7% because it was a five-year balloon. So it was going to adjust to around 7%. And then probably if we did like a DSCR loan, it’ll probably be around 7%, 7.5%.
Scott Trench: So there’ll be no net change to liquidity and no real cash flow benefit of this move. Why are you making the move?
Andrea: Because I don’t want to pay taxes.
Scott Trench: But why are you making the— why are you selling in the first place? Sorry. Yeah.
Andrea: So the property is part of a partnership and it made sense for both sides of the partnership to do this as well as the 5-year reset. And so there was really no cash flow coming from that property and there was just so much money tied up in the equity.
Scott Trench: Yeah. So this is why this situation is so fascinating here. And again, I’m going to rack my brain here, but that’s another one that’s like, man, if we, if we pay the taxes, that’s a real net worth hit right now. We need to buy time for about what, 6, 7 years, 8 years. Is that right?
Andrea: Sounds about right.
Scott Trench: We can access the retirement account funds penalty-free. That’s the challenge.
Andrea: Yeah. It’s 4 and a half years.
Mindy Jensen: Well, they can access the retirement funds now penalty-free, Scott. They’re going to pay taxes on it when they pull it out at 59 and a half. They’re going to pay taxes on it when they do it now. Now they just have to set up a 72 to do this. And you have to take the 72 money for 5 years or until you hit age 59 and a half, whichever is longer. So if you’re in, you know, 52, 53, 54, that’s kind of the really sweet spot to do a 72. You won’t have this extended 72 that you’ll have to take.
Scott Trench: That’s a great point here. I think we should model out— I’m going to do this while you’re making the next point, Mindy, but I’m going to model out what happens to this $2 million account balance if you don’t touch it for the next 7, like the next 7, 14. I’m gonna do that rule of doubling while you’re doing this because it may be that you have, you should start taking, I don’t know, maybe you should, assuming today’s tax law continues, begin aggressively converting or taking this money out via 72 immediately because you are a real candidate for RMD bombs, um, at this point.
Tracy: Right.
Scott Trench: I need to take a look at that.
Mindy Jensen: And the 72 solves this liquidity problem that you’re having. You would be paying taxes on it, but again, you’ve got this potential big tax break because of these unreimbursed medical expenses. You can convert to the top of the 12% tax bracket is $105,000. To the top of the 22% tax bracket is $208,000 that you can convert. And that’s the Roth conversion. If you’re already going to lose your ACA, you’re going to fall off the cliff. The problem that we’re having is a cash flow problem. Do you want another rental property, or do you want $161,000 to help with this cash flow crunch? Because at $15,000 a year that you are not quite making with your expenses versus your income, $160,000 is going to buy you a lot of years.
Andrea: It does. I think my concern Overall is, will we have enough money when we are fully retired?
Scott Trench: I’m not concerned about that problem.
Andrea: You don’t think that’s an issue? I get paranoid about getting rid of some of the assets.
Scott Trench: I think the game is won for you guys.
Mindy Jensen: See, now I disagree with Scott.
Scott Trench: They have $3.2 million financial portfolio right now. It seems to me almost, almost impossible to conceive that this would not be enough at traditional retirement by an enormous amount. Plus that those rental properties are going to amortize across that time period, right? Right.
Mindy Jensen: Right, but they’re spending $166,000 a year. So you multiply that by 25 for the 4% rule, and that’s $4.15 million in liquidity.
Scott Trench: Yeah, we’re not FIRE right now at that level of spend, but if the question is, will we have enough at retirement, I have a really hard time believing that this situation is not going to result in enough.
Mindy Jensen: Yes, you have enough at traditional retirement age. You’re Coast FI! Yay! You’re more than Coast FI. Congratulations! But yeah, let’s look at these expenses because I didn’t see any real outsized expenses.
Andrea: Don’t look too closely, Mindy. They’re too high right now.
Mindy Jensen: Well, so housing expense of $2,400, that’s not ridiculous,
Tracy: right? But we don’t actually have a mortgage right now.
Andrea: That’s the age luck.
Tracy: Yes, but we do have a home equity. So we actually did a flip to ourselves in the same neighborhood. We did it 2 years ago. So So we bought a house that needed a lot of work in the same neighborhood, sold our house, and went into the new house. So we were able to do that and not have a mortgage, which was great. But we did take a HELOC out because we ran a little bit over on the renovations. And then we’ve been using that HELOC to cover our small gap. But also we’ve had some unexpected expenses of $120,000 over the summer. So now we’re burning through that HELOC. Right. So that you’ll also see that HELOC we’re paying about 7% on.
Andrea: And I will say that the, the expenses that you’re seeing are over the last year. I feel like we’ve gotten a lot tighter, more focused and controlled in the last couple of months. So it’s not quite—
Tracy: Well, we average, I would say, around $12,000 to $13,000 a month in expenses.
Mindy Jensen: Okay. I mean, could you tighten your belts? Sure you could. But if you’ve got these medical expenses, that I’m assuming takes up a lot of that. up quite a bit of headspace, and it can be maybe a little stressful. So I don’t see a lot of like outsized expenses. Food and dining is $2,000 a month. That’s a lot, but it’s not a lot when you’re also dealing with all these other things. You’re like, I just can’t focus on making dinner tonight, we’re gonna go out. And you’re not destitute. I don’t look at these expenses and think, wow, we have some work to do. And like you said, you’re starting to rein those a little bit. I don’t think that there’s a financial problem, but I don’t think that you can both be work optional at this time. I’m a little concerned about these— basically the sole source of income is real estate commissions. I don’t know if you know this, but the market’s kind of tanking right now. How is it by where you are?
Tracy: Well, since Andrea took sabbatical, I was really able to focus on my client base. So I’m having a fairly good year. And in the Northeast, real estate’s pretty steady Eddie, which is nice. But I agree with you, it is always a concern because it is variable.
Scott Trench: I built this specifically for this use case. Whenever this came up, it was like, is my spending reasonable, right? So for a couple with kids, you know, in the top 20% income earner in the Philadelphia, Camden, Wilmington area, what do other households of your size spend. And so I use the top 20% here because you’re clearly very wealthy. Even if the income today, it may be borderline with this cutoff, I don’t know, for the household. I pegged your housing spend at $2,400 a month because you’re spending less than the average because of the no mortgage payment here. And I moved your transportation costs down because you’re not spending this. This is, this is where the FIRE community or BiggerPockets Money community overwhelmingly just crushes the American average American in terms of their spending almost across every income quintile is because they don’t buy these crazy cars and finance them. So that payment is usually easy to beat. And this is where we often see people struggle, is food, which often you look at your food budget. And I’m also not as confident in my data on the food budget quite here, but it does suggest that you are spending even more than wealthy people in your local area for food. I find it very hard to stay reasonable in this category as well. Then there’s healthcare, entertainment, apparel and services, and the other category. And you can see that you are, with these adjustments, spending just a hair under what a typical household of your, of your type in the Philadelphia area is spending. And so that can give you some perspective on if you want to shave areas or whatever, maybe there’s room to run in some of these. It’s a personal choice, but I like to compare it to other similar households to see what’s reasonable and what’s not as like a starting point. So that could be useful to you.
Andrea: That’s fascinating because I’m always asking my friends, what do you spend on groceries? What are you doing? And so that’s good, good to know. And I think we could tighten up. Mindy was spot on that, you know, sometimes the food is the last that you just— or a pizza when chaos is happening. So yeah, but the last couple of months we’ve gotten much tighter, and it’s just we’ve recognized that a lot of the audience is FIRE, and so they might see that number and be like, oh my God, they’re spending how much on food?
Scott Trench: Here’s the thing, this is very common because the people without kids— it’s— everybody’s different, but, but I think a lot of people without kids, you know, go through life, you know, or go through a big chunk of their life, and they’re very happy with the spending at the lower brackets here. And I think it’s just a different perspective when you have kids. Like, are you going to really spend in the bottom quintile in your local area if you’re a multimillionaire FIRE household? And I think that many people have that question answered no, some answer yes. That’s a harder decision for many families than they think it will be before they have kids and go down the path. The more important point here, though, that I think from a planning consideration is this will not last forever. How old are your kids?
Andrea: 14 and 10.
Scott Trench: 14 and 10. So in a few years, you’re going to be a household of 2 people, And that spending profile is going to be very different at that point, right? That’s a $6,000 drop from the market average right after the kids leave the household in the same area. So there’s a planning element here as well. And like, the 4% rule assumes static inflation-adjusted spending. Cody Garrett said, uh, basically it’s an academic answer to an academic problem, not a real-world application. And that’s another reason why I’ve been fascinated with these datasets. So something to consider there is, again, it’s— I think there’s a bridge component here, and that’s what you to think about here is how do I bridge my liquidity? That’s a very tough question that we’ve now exhausted several answers here. One is you can bridge liquidity problem by slightly narrowing your spending. So that’s a component of this. Another is, do we access some of the Roth account to some degree and begin a Roth conversion ladder? That’s a very reasonable answer as part of that, right? And those 2 together begin to nudge you towards solving this problem to some degree. Access to liquidity in the meantime is going to be important. So you might consider And I just came back from BPCon. I’ve been looking for this for years. It didn’t exist 2 or 3 years ago in a way I was familiar with, but an investment property HELOC, even if you never use it, could be something to think about as part of your portfolio, just so that it’s there. Access to liquidity is great. Firing it and using it is a riskier decision because now you’re taking a variable interest rate that creates risk in that bridge process. But having that option is likely better than not having the option if it is free to have the option, which I believe it is. And you begin paying once you actually take out that loan. So that’s something to consider as part of this. And then any tax break you can get, the HSA into and back out, if you’re going to use a bronze plan or a dependent, you know, not a— I keep using dependent care FSA because that’s my big expense with childcare right now, but like a health savings account or a flexible spending account will be helpful there. Those are like the beginnings of the pieces here that I’m putting together that I think will help the situation. And I think between them, you might be able to get pretty close. I don’t know. Is that sort of sounding— directionally correct?
Tracy: Yes,
Andrea: it is.
Tracy: Yeah. I think also it’s the— we expect to have the biggest expense coming up of over $200,000 till next year, till next June or July. And where does that $200,000 come from? Should we, for example, take a mortgage on our house?
Andrea: Should we take the Roth? Those are the questions,
Tracy: right?
Andrea: Do we just sell that property and take the
Mindy Jensen: hit I mean, we’ve got $166,000 potentially, probably, because it’s, it’s under contract and it will close very soon. $160,000 of $200,000 is sitting right there.
Tracy: Right.
Andrea: She’s
Scott Trench: right. And so what, what, what is this expense related to?
Andrea: It’s more, um, medical educational expenses for our son.
Scott Trench: And these are non-insurable?
Andrea: These are— have been denied by insurance.
Tracy: Um, I mean, it is possible some of it will get paid for. We don’t know I don’t know if 100%, but
Andrea: I do expect some of it to be refunded at some point in time.
Scott Trench: The question there is, do we access some of the retirement after-tax or do we borrow and repay? Let me think through this here. So you have a HELOC of $273,000 currently. And
Tracy: when, how much is left on that about?
Andrea: Uh, it caps out at $350,000. So when I did some calculations, I believe that if we continue to leverage that this year, 2026 will be covered, but it’s what do we do about 2027 then?
Tracy: Right.
Scott Trench: Okay. So HELOC interest is tax deductible if you use the funds to buy, build, or substantially improve the home securing the loan. So in your case, it may not be tax deductible. So this makes it a very expensive borrowing source relative to, for example, your investment property portfolio. where the interest is tax deductible. So I don’t know if there’s a large spread between your investment property portfolio borrowing versus your borrowing on your home, then this could be a good option to continue to tap that. But you may save a few points on the borrowing side if the rates are very close and you’re able to deduct that through your rental property portfolio. So that’s one consideration here. And again, I, I don’t think I’m gonna have a magical answer to like, here’s the way to do this, because I mean, it’s there in the sense that there’s money in the 401 to liquidate. If push comes to shove, right? But, but I don’t have a magical answer to getting all of this pre-tax wealth that’s locked up in the rental properties or in the retirement accounts into liquidity. But I think that there’s enough smaller levers to pull to begin to ease the problem and buy you time to some degree. One other obvious answer to this is making more money from the agent business. What’s the opportunity like in the commissions front?
Andrea: Yeah, I think that’s going to be the case. I think that I’m going to be looking for work very shortly. I think that depending on what we do with the investment property and the cliff, I would either start working now or I could try to find something in January. I’m pretty comfortable that I’ll be able to find something.
Scott Trench: What about on the real estate commission side? Is there opportunity to drive the— is that business?
Tracy: There’s always that. Reach out to Casey. Anyone that wants to buy, sell, or invest in real estate, Please contact me.
Scott Trench: Make a lot more money from your existing business is, is, you know, very sage wisdom here. Again, that’s like another, another one of the, one of these levers here. The problem with that, of course, is that because it’s going to be hard to go through the retirement stack in this situation, you’re going to be adding more income that’s taxable and fighting a, uh, it’s like this, like the hill will get steeper and steeper against you with each additional dollar of income in there. I still think that that could be part of the solution here to some degree for, for some interim period. I want to call it a risk here that I You have a— in your expense line item, you have $1,250 for your HELOC as part of your household spending, which I think is great. But how did you come up with this $1,250 number? Where did that come from?
Andrea: That was what was due this month. And so it increases when we spend, so it, it will continue to go up.
Scott Trench: Okay, I don’t like that answer. I don’t like that answer. Is that, is that your interest only on the HELOC?
Andrea: Yes.
Mindy Jensen: And then what about the housing expense of $2,400? Because you said you didn’t have a mortgage.
Andrea: No, that’s— isn’t that baked in together?
Tracy: No, that’s taxes.
Andrea: Oh, they’re separated? Yeah.
Tracy: Yeah, taxes, insurance, and household expenses, you know. Um,
Andrea: taxes and insurance are expensive.
Scott Trench: Do you think of the HELOC as a short-term or medium-term or long-term debt for yourself, for your house?
Tracy: It was supposed to be short-term.
Andrea: Yes.
Tracy: Yes, we want to take that away as quick as possible. It definitely makes me uncomfortable.
Scott Trench: What does short-term mean to you? How long is that?
Andrea: Our original plan was to have it maybe for a couple of years and then sell a property.
Tracy: But we didn’t expect it to balloon up this high.
Andrea: Right.
Scott Trench: How about 5 years? Is 5 years a reasonable benchmark for the longest short-term can mean?
Andrea: I think so. Yeah, I think my thought was to not have it when we truly retire.
Tracy: Yeah, I mean, I— at this level though, I’d rather get rid of it faster.
Scott Trench: The current outstanding balance is $273,000. Is that number still accurate?
Andrea: That is correct. Correct.
Scott Trench: So $273,000, I’m going to divide that by 60 months. Okay. I think you should be much more concerned about this number than what is showing up in your spreadsheet as a sobering take here, because I don’t think that $1,250 is a good expense number for this. I think you should say, this is a 5-year loan product that I’ve taken out. And to repay it, I need to pay my $1,250 in interest. And I need to be paying back in monthly installments, in such a way to pay it off. And that would be $4,550 per month to pay that off. So that’s a drain on the liquidity situation that I would— that’s a sobering thing here. I think we’ve given some constructive ways to begin accessing liquidity. And that one should be, okay, I think I’m maybe understating my household expenses to some degree, at least with the way I’ve capitalized the balance sheet right now. And you can adjust that with a new loan product, a straight-up refinance. There’s lots of ways to do it so that the payment is not actually $5,800 per month. That’s not a real reflection of it, but I think that it would be helpful to begin framing it somewhere along those lines. You can choose a different, you know, amortization period on that loan if you don’t like my 60 months.
Andrea: That number, Scott, is really what’s probably going to drive me back to work more than anything else.
Scott Trench: There’s lots of ways to access liquidity in here, but the balance sheet is causing there to be an issue here that you have accurately flagged, you know, is real, real in here. And again, I’m just like, how do we resolve that situation? The next piece I do want to come back to though is whatever your income is today, and if you go over that MAGI cliff, I think that we’re going to have an RMD problem as well, and that will offset some of these things here. So that would be a great one to talk to with the financial planner as well to get around. But I think that if you assume today’s tax code is static, $2 million, and you said you were late 40s, early 50s?
Tracy: Early 50s, but thank you, Scott.
Scott Trench: So if we assume that that balance doubles twice before you start withdrawing it in your late 60s there, and that would be a generous assumption, but that would be $8 million in your 401(k). So you want to know somebody else who is going to have that problem of that magnitude? Talk to the lady sitting next to me right here. And Mindy, Mindy, you got this problem?
Mindy Jensen: I have this problem, and I am trying to get money out of my 401(k). We also have a bit of a cash flow issue, and we are doing the 72(t). We did one 72(t) this year. We will start another one because you can have multiple. It’ll either be this year or next year. I am 53. I’ll be 54 at the end of this month. So I am also in that sweet spot of I really will only have to take it for 5 or 6 years. And it can still be a great tool for somebody who’s 40, but they’re taking it for 19 years. They have to realize that they’re taking it for 19 years. So yeah, I think as much money as I can get out of my traditional 401(k) in these current known tax brackets is what I am striving for.
Andrea: Got it.
Scott Trench: So this is a truly complex situation. Let me see if I can recap and summarize where we’re at now, because I know we’ve probably lost and confused many people. And I know you guys are going around with a lot of these things, but the problem is liquidity, not net worth. We’ve got a great situation, relatively speaking, overall. We zoom back out. The $2 million in the 401(k) is both a huge opportunity and a potential tax bomb for you specifically. This is not a common problem in America, where you’re going to have an RMD tax bomb. But for a $2 million total balance in your early 50s, that becomes a real potential RMD challenge. And I think the answer partly lies there. I am less and less with each part of this conversation concerned about the MAGI cliff. I’ll actually run through that. What are your total premiums this year for ACA? Do you know, just the insurance premiums?
Andrea: I think we’re getting almost $2,000.
Tracy: So if we go over the cliff, we’ll end up paying about $20,000.
Scott Trench: Okay. And you said you have $14,000 and $10,000 for your kids?
Andrea: Yeah.
Tracy: Yes.
Scott Trench: This is not going to be the major blocker. This is my another fun little tool here for healthcare costs. So I’ve got Philadelphia here, Philadelphia area. You’re in — let’s put you in New Jersey actually. So I’m gonna put you — what’s the name of the town in New Jersey or nearby town?
Andrea: Cherry Hill.
Scott Trench: Cherry Hill, New Jersey. Okay. Do you have another larger area that’s nearby?
Andrea: Princeton.
Tracy: Princeton, Trenton.
Scott Trench: Perfect. Okay. Okay. So here, for a household of 2 51-year-olds, non-smoking, with 2 children on an ACA Bronze plan, I’ve got you somewhere in this ballpark for premiums, $19,650 in annual premiums. Does that sound about right, or am I low or high?
Andrea: I think that’s about right.
Scott Trench: Okay. So if you— your cliff is $128,600. Okay, so if you stay just under that cliff, you’re going to get a credit of $14,000. Man, that is a real number. That’s a real number here. So if you go over that cliff, it goes to zero, and that’s straight cash in the next 12 months that will impact your position. My bias to be less concerned about the cliff was wrong here.
Mindy Jensen: Scott, when I was on the ACA, I would apply every year as though I was not going to go over the cliff, and I would get the max subsidies that I could, which kept my annual expenses low. And then when I did go over the cliff, if I did go over the cliff, I would just owe that money at tax time. So that just got added on to— but that’s next year’s problem.
Tracy: And that’s where we are now.
Mindy Jensen: And that’s every year. So even though you might go over the cliff this year, especially if you decide to take the cash from the property instead of doing a 1031 exchange, next year, you could still have the subsidies for the year. And then, I mean, if you make enough money next year, then you pay them back in 2028. So it isn’t like you have to start paying them back right now. And cash flow is an issue right now. And one thing— oh, I wanted to say, I keep forgetting to say this about the 1031 exchange. Have you done one before? You can’t take control of the money. You can’t take possession of the money. If you do, the 1031’s out the window.
Tracy: Yep, we have the 1031 intermediary all set up.
Mindy Jensen: Okay, you’ve got all that. So you really don’t have to make any decision until like the day of closing, right?
Tracy: We have to start identifying properties and all that good stuff.
Mindy Jensen: Are there properties? Like, have you looked around to see if there’s anything?
Tracy: We are. We’re looking for something maybe that’s not in bad shape so that we don’t have to pour a lot of extra money into it. So something that’s a little bit turnkey.
Mindy Jensen: Okay.
Scott Trench: Guys, we might need a little bit more time here today. This is— it’s like, you can tell we’re enjoying the puzzle and we really want to help.
Andrea: I feel like maybe we gave you too tricky of a one.
Scott Trench: Again, I don’t want to lose sight of the fact that you’ve won here. There’s a really good—
Tracy: That’s why I come back to, do we just get, in January, what have you, just get a mortgage on our primary? Because then that would pay off the HELOC. And move out the mortgage to 30 years. Although we took a lot of pride that we were living without a mortgage,
Andrea: but when you have a HELOC of $300,000, it doesn’t really feel— it’s pretty much a mortgage.
Scott Trench: Think about how much worse off you would be if you had not pursued financial independence and built this situation right now. You have like a challenge in tax-efficiently accessing your wealth at a very difficult time. This would cripple many other Americans.
Tracy: Yeah, but yeah, we feel very—
Andrea: We’re so fortunate.
Tracy: We feel very fortunate, and we’re grateful. You know, we have a math problem, not a survival problem.
Scott Trench: So here’s what I’m going to do next. As you’re close enough, I actually got to use the tax projection tool here. This is— this is not planning grade. This is like an estimate only here, but I had a lot of fun vibe coding this tax projection tool. So I put you in Pennsylvania here. You’ve got 2 children for your tax credit. You got $100,000 from earner 1 in self-employment or 1099. You got $48,400 in taxable rental income. Is that accurate? Is that your cash flow, or is that your taxable rental income?
Tracy: That would be the taxable amount, but yes.
Scott Trench: Okay, so you think you’re gonna have $48,000. This is before we have our capital gain here. And then you said you had $31,500 in 72(t) is how you phrased it. Is that a given, or is that an option you may take?
Andrea: No, that’s a— that’s what we took out last year to try to cobble together this year.
Scott Trench: And that’s all going to hit here. So that’s $142,000 in take-home pay. I’m getting more precise than my spreadsheet here.
Andrea: Yeah, I think the rental income will not be rental— like, I think once you deduct all the expenses, it won’t be that high.
Scott Trench: Let’s call it $30,000 in taxable rental income.
Tracy: And with my business expenses, yeah, it’ll probably be less than that.
Scott Trench: Can I call it $80,000 in self-employment net?
Tracy: Right.
Scott Trench: So that puts us at $141,500, very close to the number you had earlier in pre-tax. I’m also, by the way, assuming that you will go and max out on HSA, because even if you just reimburse yourselves, like, why wouldn’t you do that? So I have that for your deferral here. That gets me a little bit more precisely to about $113,000 in take-home pay after federal income tax, self-employment, including what you’re going to set aside for FICA, right? Like Social Security, Medicare, and all that kind of stuff, employer and self-employed tax there. And then your state tax of about $3,400. Let’s see what your MAGI is going to be here. I’m with the setup. I got you over the cliff. Oh no, I got you just under the cliff. Man, this is too close for my tools. The tools I’ve built are helpful directionals, and they tell you if you’re close. This is where you really need like that next level of paid professional tools. I think it’s just so— like, there’s so many variables that interlock here that this is the case for a financial planner, especially in this year and moving through the next 2 or 3 years on it, because we have 6 or 7 different interdependent situations that conditionally determine the direction we’re going to take here, right? Like if this was over the cliff, then I would probably be biasing towards just selling that property, taking the— paying your tax bill. You know, if let’s say we had a $200,000 capital gain here, I’m going to call it a long-term capital gain, it’d be like $150,000 probably is more ballpark of what the gain would actually be on this property. Is that right?
Andrea: Sounds right.
Scott Trench: I don’t even think you’re going to get to the net investment income tax threshold. There’s these cliff breakpoints I look for when thinking about realizing income, and those include federal ordinary tax brackets. Right now, you’d be in the middle of the 12% ordinary income tax bracket. Then the capital gains tax bracket stacks on top of that. So you’d actually have a little bit of capital gains at the 0% bracket here, and then you’d have a big chunk in the 15% bracket. Then there’s the net investment income tax threshold, which I believe comes in around $250,000. It’s not like you all of a sudden pay it. It begins to go into effect after that threshold. So those are the thresholds I look for. I’d be relatively comfortable biasing towards, if you’re going over the MAGI cliff, just, you know, MAGI— just, just begin to stack up some of these brackets. And it’s not that big of a tax deal. It’s some taxes, but it solves such a huge chunk of your liquidity challenge here. Do you think next year, if you get a job, Andrea, do you think that would include health insurance?
Andrea: Yeah, I would bias towards a W-2 that had health insurance.
Scott Trench: That might be an option for next year, because then you’d be over the cliff, and then you wouldn’t have this $14,000 either-it’s-there-or-it’s-not credit decision coming into your tax position, because you’d be getting your healthcare through your insurance. So you’d be making a much more like a sliding scale decision about what taxes to realize with the realization of income. And that would maybe make it a little easier to declare that income next year. This is so close that you must get precise, in my opinion, about forecasting your income, because the stakes are actually quite high for missing here. And it’s kind of a weird and perverse incentive to not sell that one extra property between now and the end of the year and get that commission into next year if you can.
Andrea: I know, I’m usually so excited when the commissions come in. Yeah, right. Oh, I don’t know if we want that one to close.
Scott Trench: If you could get 3, it would be obviously great, you know. But I don’t know how much the average commission is, but if you get like $30,000 or $40,000, then great, that overwhelms this like tax offset here. But, guys, I wish I could give you an easy answer here, but I think I’ve only got a collection of pieces. I think it’s really: project your income. I think if you’re under the income, you need to buy time until next year, if you’re under the MAGI cliff, is my bias here. I think that for this rental property, if you know you’re going to go over the cliff and you can sell it this year, taking the cash and using it to solve your liquidity problem makes sense to me, because the order of operations goes emergency fund first, then bad debt, then investing. That makes that fairly— like an easy bias to have. Although again, there’s just biases, and there’s so many things that can change it here. I think that pruning back the expenses a little bit in some areas where you think are reasonable is a good tactical item. Maybe there’s $1,000 or 2 a month left in there that can still give you a reasonable situation. I think that the 72(t)— it’s great that you fired that already. I think there’s a Roth conversion element here, and I think that there’s basis in the Roth that you can take out as part of that if you need liquidity in the near term as part of that structure. And I think that the pieces are interconnected enough that a really good financial planner will agree partially with some of the things I’m saying and then expose additional places where that breaks, because there’s enough complexity and liquidity options here that there’s going to be all these different caveats, as we’ve discussed. So is that a helpful starting point? At least— is this any of this new or useful? Oh, and then Mindy’s got the home run item there with the tax.
Mindy Jensen: Yes, definitely go look into that. I agree with Scott, you should connect with a financial planner as well as a CPA or a tax professional. We’ve got a list of fee-only financial planners on our website at biggerpocketsmoney.com/fipro. That’s F-I-P-R-O. I hope that this unreimbursed medical expense thing works out for you, because that just seems like such a gift from the IRS, and they’re not known for giving delightful gifts. And it’s not just every dollar that you convert is just tax-free, because once every dollar you convert then changes your income as well. So you’ve got this like sliding scale of almost like spinning plates. You gotta— okay, let’s start with this one, and then let’s spin this one and spin this one. You gotta go back over here and massage this one too. But I think that if this works out for you, that could be a really big win in a space where it’s not really a win. But, and then if you’re already going to go over the cliff, look at how big you can go over the cliff and figure out your nominal tax obligation, or Scott, what’s it called? Your cumulative tax obligation.
Scott Trench: What do you mean, total tax liability?
Mindy Jensen: Yes, because it’s not— you’re not being taxed at 24%. This part’s at 10%, this part’s at 12%. So yeah, you figure out what your tax obligation would be, but you have a good opportunity if this unreimbursed medical expense thing works out. You have a good opportunity to get a good chunk out of your 401(k) and into a Roth, or just get it out of the 401(k) and do a 72(t) so you can start having more liquidity. As somebody who also is having a bit of a cash flow issue, once we did that 72(t), it’s not stressful, because I have money to get at. I just don’t wanna pay taxes on it. Well, I just decided I’m gonna pay the taxes on it, and that kind of lifted a lot of burdens.
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Andrea: I think there are so many variables right now that maybe talking to yet another person and getting another perspective is a great idea. And, you know, if we had known about FIRE earlier, we would have done things differently, right? We wouldn’t have maxed out the 401(k)s. We would probably have been more intentional about after-tax. So maybe it is a lesson for other folks too.
Scott Trench: I also think another big takeaway here is, you know, the variables now, right? The ACA premiums, you know, your tax brackets and the cliffs that you’re going to go through in there and how that’s going to play out. You know where your sources of potential liquidity are—an incremental HELOC and investment HELOCs on your portfolio, or the sale of rental properties, or the Roth basis. So you know that those are all the variables here. I will also say this: it’s not going to break your position if you’re suboptimal on this. You are multimillionaires. We want to be optimal. That’s what we’re trying to do here at BiggerPockets Money with all this. I’m not sure it is possible here. And I think that a lot of “optimal” is actually going to then cascade through the next decade or two and could get blown up by future tax code changes or whatever. So I think that once you make a decision about how you’re going to access your liquidity in this situation, live with it. You’ll never know, and never be capable of knowing, whether there’s a truly perfect way to go about this particular situation. You have good relative options. And it’s just unfortunate that we can’t totally—we can’t just like find a correct—I am unable, on this particular one, to find the correct answer to your situation here, other than some levers to pull.
Tracy: Yeah, we appreciate it. And we appreciate your perspective.
Mindy Jensen: Yeah, Scott, I don’t think I have anything to add. In the words of Charlie Munger, I have nothing to add. Did you ever go to his meetup?
Scott Trench: No.
Mindy Jensen: In Omaha, Warren Buffett would wax poetic for hours, and then Charlie Munger would say, “I have nothing—”
Tracy: to add.
Mindy Jensen: But no, I don’t. I think you covered it pretty well. You know what, I do have something to add. Tracy and Andrea, if you do get this unreimbursed medical expense deduction, please just let me know. I learned about this on the plane out to BPCon this past weekend. So I was like, oh my goodness, this is perfect for this scenario. We should talk about this on the show.
Tracy: Yeah. And we’d love to report back and tell you what we see and hear.
Mindy Jensen: Yeah, I would love that. Okay. Well, I really appreciate your time and sharing your situation. I think there are a lot more people in situations like this than you would necessarily think.
Scott Trench: I think that this is a definite case for some kind of hourly—and I would get on that immediately—hourly financial planner. I would get on that immediately, because the decisions will be based on a very tight estimate of your—at least one decision is very, you know, dependent on your actual income. And it’s so close that this is very much within a margin of error. You do not want to be under or over unintentionally and miss a serious opportunity to solve this problem. Like, it’d kind of be a relief if you’re just over. Now you can just begin making these other decisions to begin accessing your liquidity. Maybe that’s what they tell you to do—forget about all the tax credit stuff and just go get your liquidity. I don’t know. I think when you model out the RMD, there’s a good chance that that’s possible. But again, we’ll see. That’s why you need a real professional modeling software, I think, in your situation. Well, cool, guys. Thank you so much for coming on, for listening, for sharing this very personal and very—I think it’s a really—this, like, we were talking about this earlier before we recorded. This is the boogeyman for FIRE, right? These medical expenses here that come after you have hit it. And it’s not like this has derailed the entire plan here, but it is a major wrench in the plan. And it’s very complicated—and I think it illustrates the incredible complexity of decumulation in a tax-efficient way and all the interlocking parts. So really appreciate you coming on and sharing this challenging but also strong financial position that you’ve built.
Andrea: Thank you.
Tracy: Yeah, thank you.
Mindy Jensen: Thank you, Tracy and Andrea, and we will talk to you soon.
Tracy: All right, thank you.
Mindy Jensen: All right, Scott, that was quite the interesting conversation with Tracy and Andrea. I agree with you that they are in a good position. They just are having a cash flow problem right now. I think that they’re going to fall over the ACA cliff, and they should just embrace this: taking the money from the rental property, making as much money as she can as a real estate agent, Andrea finding another job to start generating more income, and just understanding that this year they’re just not going to get those ACA subsidies—but they’re in a great position. They are just having this “which bucket do I pull from” problem, which honestly can be a bit of a dilemma. Like, oh, I don’t want to, you know, ruin my traditional retirement. I don’t want to ruin my early retirement. How do I figure this out? Yeah. So I think you gave them a lot of really great things to think about. What did you think of the show?
Scott Trench: I think you gave them fantastic advice with the healthcare costs tax nugget there. That’s something that I think very few people are familiar with. And I think that’s one of the—maybe the lesson there is, you have these unexpected expenses in these different categories. Go Google things, ask the AI, think about how you surface this unique situation and whether there’s some sort of benefit, or some sort of program, or some sort of cheat code of some kind that you can use to at least soften the blow of these kinds of unusual circumstances there. It was really good work for you to uncover that, Mindy.
Mindy Jensen: Yeah, well, shout out to Dad Is FIRE for writing on Medium. And again, if anybody knows him, send him my way. I’d love to talk to him. But this is the unreimbursed medical expense deduction. If you are an expert in unreimbursed medical expense deductions, or you know something about it, email mindy@biggerpocketsmoney.com or scott@biggerpocketsmoney.com, BiggerPocketsMoney.com, because this is something that is probably going to affect several people in our audience, and I want to learn more about it too.
Scott Trench: One last thing I’ll call out, just one parting thought here, is their net worth—total assets minus total debts—is $3.75 million. $3.75 million times 4% is going to be $150,000 per year in spending. And their current expenses, again with that paid-off house, are about $166,000. So they’re not quite FI. They’re pretty close. You know how all that goes. I think that there’s something there that’s worth kind of reflecting on or thinking about for a little bit, in the sense that there’s a difference between that number, $3.75 million, and then the feeling of freedom. That’s a Chubby FI number, right? That’s solidly in the Chubby FI. We’re not quite at Fat FI, but we’ll probably be at Fat FI by the time we hit retirement, if we don’t liquidate everything in the meantime, we allow things to compound, and markets cooperate. But there’s a difference between that number pre-tax, which is where all of it is today, right? Effectively every single dollar in this position is pre-tax, or, you know, greater than 90%—80 to 90% is pre-tax. And there’s a difference between that number being post-tax in a paid-off house or paid-off rentals or those types of things. And that’s something that, at this level and in this situation, mattered and matters to a lot of people. And I’m not sure exactly how to think it through, but I think it’s important, and I want to explore it more as time goes on, because I would love to develop better frameworks for accessing it in situations like these and solving these problems. So if this is something that you are an expert on or know how to deal with, or you were listening to the show and thinking, “Scott, Mindy, come on, the answer is right here,” we’d love to have you email us at scott@biggerpocketsmoney.com or mindy@biggerpocketsmoney.com. This is the type of problem that we’re interested in solving. And we think a lot of BiggerPockets Money listeners have versions of this. This is perhaps more extreme than most, though.
Mindy Jensen: I agree with you. I think there are a lot of people out there who have these “where do I pull from and how do I do it in the most advantageous way” issues. So yeah, if that’s you, reach out to us. We’d love to talk to you too. All right, Scott, should we get out of here?
Scott Trench: Let’s do it.
Mindy Jensen: That wraps up this episode of the BiggerPockets Money Podcast. He is Scott Trench. I am Mindy Jensen saying chop chop woodshop. Scott, where can someone find that awesome budget calculator?
Scott Trench: You can find all the tools at biggerpocketsmoney.com. Mindy, it’s sometimes difficult for me—maybe this is a benefit, maybe it’s a curse, I don’t know, blessing or curse on this—but I really enjoy the process of thinking through these incredibly complex personal finance puzzles. I totally get that this is a challenging situation, a challenging time, but I enjoyed the actual challenge of dissecting their financial puzzle. And I feel like I’ve spent the last year building the tools for this particular challenge, like the cliff and what to do when you’re close, and all those types of things, and the tax projection tool, and the budget—you know, is it reasonable—and all that. So I was grateful to have an opportunity to do that, and grateful that they may actually have an opportunity to help them. But yeah, if you want to check them out, they’re at biggerpocketsmoney.com. And then the healthcare one is at biggerpocketsmoney.com/healthcarecosts, one word. The tax projection tool is at biggerpocketsmoney.com/tax. And the budget tool is at biggerpocketsmoney.com/budget. So hopefully that’s relatively easy to follow. But you can just type in biggerpocketsmoney.com and you’ll find all of these. I also want to throw out one more resource while I’m at it, a fourth biggerpocketsmoney.com URL, which is biggerpocketsmoney.com/fipro. And that’s where we’re trying to find financial planners and tax preparers and those types of things that could help a fairly advanced situation like this. It’s not yet complete. It’s a work in progress. We’d love referrals. If you or somebody you know is a professional that wants to work with complex situations like this, and actually knows what you’re talking about and can do this stuff, we’d love to have a chat with you. We want to have a chat with people before we add them there. But biggerpocketsmoney.com/fipro, FI Pro, to see what we have currently here.
Mindy Jensen: I agree with Scott, you should connect with a financial planner and a tax planner, and we’ve got a list of fee-only financial planners and tax planners at biggerpocketsmoney.com/fipro. That’s F-I-P-R-O.
Scott Trench: If you’ve been putting off life insurance, I get it. The old process was miserable—phone calls with an agent, a nurse coming to your house for a blood draw, then waiting weeks to find out what you’d pay. That friction is exactly why so many people who should have coverage don’t. Here’s what I believe: most BP Money listeners need term life, and the right move is to build a ladder—a few term policies of different lengths stacked together so your coverage steps down as your mortgage shrinks and your kids get closer to being financially independent, or you get closer to hitting your financial independence number. The thing that makes that practical now is Ethos, a platform that helps you find life insurance 100% online. Same-day coverage, no medical exam. You just answer a few health questions online. Up to $3 million in coverage, some policies as low as $30 a month. So building a two- or three-layer ladder that used to take a month of appointments is something you can knock out before your coffee gets cold. Get your free quote at ethos.com/bpmoney. That is ethos.com/bpmoney. Application times may vary and rates may vary.
