Living for Less
Jiab Wasserman | Jun 12, 2019
JIM AND I GOT married 16 years ago in our modest home. We spent just $500 and only invited immediate family members. Back then, we didn’t have any clue where life would take us. Neither of us planned to retire early, let alone retire abroad. Still, how we got married was a sign of how we wanted to live—in a financially prudent manner. We set out to keep our living costs under control, and that set us on a path to financial independence, culminating with our retirement last year. In particular, we focused on four key expenses: 1. Debt. I’ve always disliked being in debt. When we merged our finances, Jim came with credit card debt, while I had an auto loan. We realized it would take many years to pay off the mortgage on the home we just bought together. We could, however, reduce our other debts. Since credit cards were the most expensive debt, we aggressively tackled those first. We both had excellent credit scores, so we opened credit card accounts that offered an introductory 0% promo rate, using either my name or Jim’s. We’d transfer old, interest-accruing balances to the new cards and then—before the 0% promo rate ended—transfer the balances again to new cards that offered 0% promo rates. During this time, we lived frugally and managed to pay off the credit cards within a few years. We were also able to pay off my auto loan in two years. After that, our only debt was the mortgage. We sent in at least one extra payment per year. Based on my calculation, we were on track to pay off the mortgage in 22 years. 2. Transportation. For most people, their biggest expense—after housing—is their car or cars. Living in Dallas, a city with poor public transportation, we both needed good,…
Read more » Cutting Corners
Jiab Wasserman | Jul 5, 2019
THE EARLY RETIREMENT movement has many naysayers and outright haters. My husband Jim and I can sympathize: We sometimes get strong pushback when we share our strategies for living frugally. “That seems like a lot of work,” some people respond. “It sounds like you don’t have much fun,” others say. Some even accuse us of lying. I readily admit it takes effort to be frugal. But then again, it takes work and sacrifice to exercise regularly, stick to a diet and get an education. Ditto for anything else worth achieving. What about the “no fun” comments? I’d say that’s a misconception. We choose to live frugally, but that hasn’t meant depriving ourselves. Rather, we choose to spend on the things that matter most to us. Here are five ways we cut corners: 1. Entertainment. Early on, we subscribed to Netflix and satellite TV. For satellite, we switched between DirecTV and Dish, depending on the promotion. But over the years, it became more and more expensive after the promo period ended, and we could no longer justify paying $80 to $100 a month to watch a few channels. We definitely didn’t need 200-plus channels, so we cancelled the satellite TV but kept Netflix. We also used alternatives to the movie theater, like Blockbuster and Redbox, so we could rent newly released DVDs. In addition, we’d stream movies at home, sometimes with vigorous debates and multiple votes over what to watch. 2. Recreation. Many people forget that our tax dollars already pay for entertainment—in the form of public parks and libraries. We always played tennis at the public courts. Not only was it free, but also we got the sense of community that comes with seeing the neighbors walk their dog, youth teams practicing soccer, or families holding a birthday party or a cookout.…
Read more » Show Me the Cash
Jiab Wasserman | Jun 4, 2021
THERE ARE A GREAT many terrible problems. Having too much cash typically isn’t seen as one of them. Yet that’s where we are. Following our move back to the U.S. from Spain, we found ourselves with an abundance of cash sitting in our brokerage account. And these days, with interest rates the way they are, that cash doesn’t do much more than sit. The upshot: We decided to purchase some rental properties. We have one rental unit already—our former home—but we plan to make it our home once again. With the help of our property manager, Jeannette, who is also a realtor, we searched for and found one property we liked, and with a price that was already reasonable but which we hoped to negotiate lower. We thought we could jump to the front of the buyer’s queue by offering cash. Jeannette said we would need to show the seller proof of sufficient cash on hand. That’s when the problems arose. We didn’t want to just show our Vanguard Group brokerage statement, because that would tip the seller as to how much cash we had available, likely making her hold firm on the price and reject our request to pay for improvements in the heating and air conditioning system. Jiab called Vanguard to inquire if the folks there would issue a “line of credit” letter for the amount we wished to offer. We had more than enough cash to buy the property three times over and we could have borrowed the necessary sum using a margin loan—and yet they declined. They didn’t want to take the risk of backing us, despite the cash they were so graciously holding for us. Not to be thwarted, Jiab called around to see if we could quickly qualify for an investment loan for the…
Read more » Less Is More
Jiab Wasserman | Aug 20, 2021
I RECENTLY INJURED my lower back playing tennis. I rested for a day and then decided I was well enough to resume my usual activities. But my haste worsened the pain, extending my recuperation to more than a week. Every move—even sneezing—hurt. Putting on my pants was a major struggle. I was forced to do nothing except rest. Doing nothing was the one of the hardest things I’ve ever done. Ironically, at the time of my injury, I was working with Jim on writing a book on Daoism, and I happened to be focusing on the idea of wu wei or “nonaction.” The notion: We shouldn’t act unnecessarily and instead do so only when we absolutely have to. In the Dao De Ching, Lao Tzu cautions against interfering with the state of things. He sees the world as one of precious balance, where an action that isn’t carefully considered might easily lead to an avalanche of unwanted effects before balance is eventually restored. This got me thinking about the financial world—and about how much better off we’d be if we adopted this kind of cautionary thinking by investing in index funds, keeping costs low and interfering with our portfolio's natural growth as little as possible. History has shown it’s extremely difficult to beat the market averages year in and year out. Sometimes, a rush to action hurts us. As Warren Buffett once observed, "The stock market is a device to transfer money from the impatient to the patient."
Read more » Buen Camino
Jiab Wasserman | Apr 30, 2019
ON APRIL 3, MY HUSBAND Jim and I were among 262 pilgrims who made our way into Santiago de Compostela to receive an official pilgrim’s certificate for completing the required distance along one of the famous El Camino’s several routes—the most popular of which is some 500 miles. We were now certified peregrinos, or pilgrims. Because it was early in the season, ours was one of the slow days for Camino completion. Last August, 2,000 certificates per day were issued. Walking El Camino is gaining in popularity not just with Spaniards, but also with folks from around the world. In 2018, there were 327,328 certificates issued, compared to just 2,491 in 1986. This begs the question: Why do people commit themselves to such an arduous walk, which can take weeks to complete? In an age that provides convenience, comfort, speed and efficiency, thousands from around the globe walk hundreds of miles, enduring considerable physical demands, long periods of solitude, and deprivation from most modern comforts and conveniences. I can’t answer that question for all pilgrims. But I can honestly say that it was one of the most memorable experiences of my life. The certificate at the end was, of course, nice to receive, but that was the least of it. In The Pilgrimage, Paulo Coelho wrote, “It is the road that teaches us the best way to get there, and the road enriches us as we walk its length.” El Camino enriched me in three ways: I had the feeling of being fully present. I recently retired after working more than 25 years in the business world, where I had to be simultaneously mindful of the past, the current situation and the future. The simple act of walking, putting one foot in front of the other for mile after mile, hour after hour, brought…
Read more » Grab the Wheel
Jiab Wasserman | Mar 13, 2020
WHILE JIM AND I cooked dinner the other night, we talked about the old cars we drove when we were younger—and how they tended to pull to one side if we took our hands off the steering wheel. We humans have a similar tendency: We head in one direction unless we make a conscious effort to be more rational. That brings me to the coronavirus and accompanying stock market plunge. We all have gut reactions to news like this. Many of us drift toward fear and even panic. If you find that happening, try these three steps: 1. Have a roadmap. Instead of reacting to the news, each of us needs a plan that’ll keep us on course. As we go from childhood to adult life to retirement, we all have financial goals along the way, things like funding college, building an emergency fund, paying off debt, amassing wealth, starting a business and more. Once we’ve developed a financial plan to take us from here to where we want to be, we need to stick with it, no matter how great the temptation to stray. For instance, three of my top priorities were saving for my children’s college, paying off the mortgage and retirement. The 2008-09 Great Recession was perhaps the scariest financial time since the Second World War. But at that juncture, my goals were still many years away, so I stuck with my plan. I continued to fund college and retirement accounts, while also sending in extra mortgage payments as often as I could. I had to cut back on luxuries, including vacations, but I kept my priorities dead center. 2. Know your risk tolerance. We need to be aware of how we react during times of stress and then plan for it. For example, when stressed, do…
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Mark Crothers is a retired small business owner from the UK with a keen interest in personal finance and simple living. Married to his high school sweetheart, with daughters and grandchildren, he knows the importance of building a secure financial future. With an aversion to social media, he prefers to spend his time on his main passions: reading, scratch cooking, racket sports, and hiking.
Saving for Grandchildren
ArticleJohn Yeigh | May 2, 2026
- Tax-free growth when used for qualified education expenses
- High gift-tax contribution limits: $19K per contributor per year (indexed)
- New ability to convert up to $35K into a Roth IRA for the beneficiary
Cons- Relatively complex with penalties and taxes on non-qualified withdrawals
- Limited, state-approved investment options
- Risk of underutilization if the child does not pursue qualifying education
Caveats- Technology and AI could significantly reduce education’s cost structure in the future
- Roth conversions are capped at $35K lifetime
- The 529 must be open 15 years, and contributions must age 5 years before conversion
- Conversions require the beneficiary to have earned income (i.e. they could Roth anyway)
- Annual Roth contribution limits still apply (e.g., $7.5K in 2026), so completing the full $35K conversion would take five years
UGM Custodial Accounts Pros- Brokerage account where up to $2.7K of unearned income can be tax-free each year
- High gift-tax contribution limits: $19K per contributor per year (indexed)
- Broad investment flexibility — stocks, bonds, funds, etc.
- Few restrictions on how funds may be used for the child’s benefit
- Potential for low taxes on capital gains, but subject to marginal “kiddie tax” at parent’s rates until tax-independency or age 24
Cons- Higher income or capital gains could trigger the kiddie tax at the parents’ marginal rate
- Assets count as the child’s for financial-aid purposes
Caveats- Custodians have some ability to spend down the account for legitimate child expenses if the child is a wild-child in the later teen years
Coverdell Accounts Pros- Tax-free growth for qualified education expenses
- More flexible investment choices than most 529 plans
Cons- Low contribution limit: $2K per year plus income limits restrict who can contribute
- Essentially irrelevant today given the expanded options within 529 plans
Trump Accounts Pros- $1K government seed deposit for children born 2025–2028
- Contribution limit of $5K per year in 2026, indexed to inflation
- Parent employers may contribute up to $2.5K per year (also indexed)
- Tax-deferred growth with Roth-conversion opportunities beginning at age 18
- No earned-income requirement for Roth conversions
- Roth conversions are ideal in low-income years starting after age 18 once the child has transitioned to tax-independency of parents or at age 24 when “kiddie taxation” ends. Early tax independence could even be a combined Roth plus student financial-aid strategy
- Potential to convert large account values over several years at relatively low tax rates (potentially marginal 10-12% tax-rates, but averaging less due to the standard deduction).
Cons- Investment options limited to low-cost indexed stock funds (not necessarily a drawback)
- Penalty-free withdrawals must wait until age 59½, but the accounts could be advantageous even including penalties
- Limited custodian control and intervention possibilities if the teen is a wild-child
Caveats- If Roth conversions are not undertaken during the child’s low-income years, a UGMA invested to capture long-term capital gains tax-rates may outperform a Trump Account taxed at ordinary income tax-rates
- Watch this space as future adjustments or eligibility changes are possible
In effect, the 529 is a two-decade college savings program having some complexity and withdrawal limitations; the UGM is a reasonably flexible, 18-30-year college or house downpayment savings program; and the Trump account is a somewhat inflexible, sixty-year retirement accelerator. Resulting Playbook Here is our family’s intended playbook for tax-advantaged accounts in the grandchild's name:- Parents’ retirement account fundings remain their top priority - 401K’s at a minimum up to the match, HSAs with their triple tax advantages, and Roths as long as eligible within income limits.
- A Trump account has already been initiated to secure the free $1K government seed contribution – grows to potentially $2.6K at age 18 after penalties and taxes.
- Limited 529 funding has also been initiated to start the 15-year clock for potential later Roth conversions.
- The family’s next priority is to fund the Trump account which starts at $5K later this year. Maximizing the Roth conversion opportunity will require ~$116K of contributions (at 3% inflation) over 18 years which we grandparents intend to help fund. I estimate the Roth converted Trump account could grow to ~$2 million of tax-free money at age 60 (6% growth) assuming early-age Roth conversions, and the Wall Street Journal projects as much as $3 million (link likely paywalled).
- The subsequent priorities are to start UGM taxable account and 529 account contributions in parallel to perhaps initial levels of about $35K each. This may take our family some years depending upon available resources for contributions.
For the UGM account, a balance of $35K should capture a sizeable chunk of the annual $2.7K tax-free income limit by investing in high-yield income alternatives. For the 529 account, $35K aligns with the Roth conversion limit. On a personal note, we had extremely positive UGM outcomes with our children. We saved taxes for two decades, and each child used the ~$60K balance as down payments on their first house shortly after college. Due to the 529’s withdrawal rigidities and potential technology impacts, we are unlikely to fund the 529 to the max.- We will skip Coverdells as the alternatives offer ample savings opportunity in the child’s name ($200K+).
- Depending upon spare resources available for gifting, we can always reassess future contributions.
That’s our plan, and we’re sticking to it…. until something changes.Shopping around – you versus the grocery store
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