Josh Bruce
Welcome to the rabbit-hole.

March 15th, 2021 paycheck

Created on:

Cash reserve is slowly going down as I'm using it for shelter and food while not continuing to save for future months; getting down to current and next month cash flowed.

All the other major shifts I'm wanting to do are happening while the cash reserve is dwindling.

Let's talk about those major shifts; seems relevant.

Financial institutions

I have primary, secondary, and tertiary institutions identified. These are "traditional" institutions — mostly credit unions; I really like cooperative and member-owned business models. I've had two of the institutions for over 20 years now.

Primary

Their standard savings account is paying around 6 percent on the first 500 USD as long as you have an "active checking account". An active checking account means either a direct deposit coming in or a checking account with 4 or more transactions per month. I qualify under both.

(Side note: Some payroll departments will let you split your direct deposits between multiple institutions; so, I could have an active checking account even if this wasn't my primary institution.)

They also offer these sub-accounts that have nice features I haven't found at other institutions.

  1. I can make deposits to them regularly.
  2. I can't withdraw the money without a penalty.
  3. They pay dividends; albeit small, but still.
  4. I choose when the funds will be rolled into my checking account.
  5. As long as there's a positive balance in the sub-account within 30 days, I don't need to create another account (like I would with a traditional certificate situation).

I have 12 of these and one rolls over at the beginning of each month. This affords me the ability to perform the envelope method while a) not using physical envelopes and cash, b) earn dividends for saving up for known future expenses, and c) not have to manually perform the transfer.

This institution has my second longest running, lowest rate credit card, which has helped me establish an exceptionally long credit history (more on that later).

I also have a line of credit for overdraft protection on the checking; using credit cards can get a bit sketchy when used for overdraft protection.

Secondary

This institution was a pleasant surprise as I was planning on having them as the tertiary institution for business accounts. Their customer service and products had me shifting that mindset within the first week.

This institution will be replacing a local credit union currently housing my business accounts.

Tertiary

This institution I mainly use for my auto and property insurance but they do offer other products.

My mother's annuity I set up for her was through them and didn't come with the pitfalls I've heard mentioned by others.

Credit cards

My life used to be easy when it came to credit cards. The shifts I'm going to be making has caused this to change.

I have one card with my primary institution. I've had it for almost 20 years. No changes planned here. It's a low rate card at about 6 percent and is used if I think I'll carry a balance.

I have another card with my new secondary institution I opened recently. It's a rewards card giving 3 cents for groceries, transit (anything but an airplane), and restaurants; with 1 cent on everything else regardless of category. I put together a spreadsheet based on my credit card purchases in 2020 and found that those three categories are the bulk of my purchases; would have earned about 400 USD. I'm hoping to make this my new primary card. If I don't it will be used with those categories at minimum.

My third card used to be my primary card. It's a rewards card and earned me about half what the previously mentioned card would have. I've had it for 20 years. The plan here is to hold onto this card while the previous and next card age. Then I'll close it down and the history should remain on my credit report for 10 years according to Experian.

My fourth card will replace the previous card from the same institution. It's a straight cash rewards card and earns 1.5 cents on the dollar regardless of category. I'll use it for subscriptions and instances where AMEX isn't accepted.

My fifth and sixth cards are both business cards; one for each business. If the accounts at the secondary institution get opened, I'll try to get cards through the secondary institution and close these two out, which consolidates my institutions back to the three mentioned.

Retirement accounts

I have a 401(k) with my employer. It's 100 percent vested. It doesn't offer my desired index funds but I'm faking it by having a small-, mid-, and S&P 500 index fund. The changes I made was going from the target date fund into the S&P 500. Then, during open enrollment, I opened the other two and have my contributions going to them on a 50-50 split and nothing more going to the S&P 500 to get the equities asset allocation described by the Investment Policy. I increased the contributions by 2 percent, going from 5 to 7 percent; employer match is on the first 5. (I got a raise and am hoping to reduce my tax liability without blocking myself from a sizable amount in my non-retirement accounts.)

I decided to go Health Savings instead of the HSA provided by my employer; I've been burned in the past with an HSA being tied to my employer and don't want to deal with that again. I decided to use them because they partnered with Vanguard and have the funds I'm interested in. They're customer service doesn't suck. I'm not going to max it out at the beginning of the year as my health insurance situation can change and it's my understanding the contribution limit is tied to a monthly construct...yeah, not sure how to word that better, that's where it lives now.

Decided to shift to maxing out the Roth IRA at the beginning of each year; leaving room to deal with the income caps and whatnot...I feel weird having to say this is a concern in my life.

If there comes a point where I can't max out the contributions to the Roth IRA, I'm hoping to open a traditional IRA at that time or have opened one by rolling over my 401(k). I'm hoping that by keeping my contributions increasing along with any salary increases that I will always be able to max out the Roth though.

Taxable accounts

I have the Vanguard index funds doing their things. I have an M1 Finance pie doing its thing (made 20 cents in dividends already).

The funds in the taxable accounts, including those at the traditional institutions, is what I'm planning to carry me from 50 to 60 when the IRAs become available. Of course, this presumes I don't maintain active employment during that time. I do enjoy what I do for a living.

Medical expenses

When it comes to financial independence (for the short period I've known about its existence) in the United States, medical expenses before qualifying for Medicare seems to be the question.

Near as I can tell, the situation depends on your current medical condition, perceived future medical needs, and your needs for the past 12 months or so.

Let's start there.

I don't go to the doctor outside regular checks. I've never broken a bone, I've had one cavity so far, and had to get stitches when I was 10. With that said, when I go to the hospital, I go to the hospital.

I've been to the hospital 5 times in my 41 years on this planet. Each time it was roughly 7 days. All those were in the last 15 years.

Here's a story indicative of me going to the doctor.

I used to live in Washington DC. I was riding a bike to work. I hit a curb next to the Jefferson Memorial and flew Superman-style over the handlebars.

All that went through my head was, "Protect the brains."

Yes, plural. The meat-brain in my skull and the messenger bag I affectionately refer to as my brain.

I must have looked like I was parachuting from a plane because I bent my body back as much as I could, landing on my chest then sliding about three feet on my side. (Did I mention I wasn't wearing a helmet?)

Now, the concrete outside the memorial is probably not what you think of when you think concrete sidewalk. It's basically cement mixed with jagged pebbles about the size of an adult thumb.

I was tore up.

It looked like I lost a fight with a cheese grater.

The palms of my hands were scraped to hell. The left side of my torso caught the next worst of it. And, then there was my left elbow, which was draining blood all over the place.

A bunch of runners came to my aid. One of them tied my elbow off with a clean, black sock he had to change into when he got to his office (at least that's what he told me). We called the woman I was dating at the time. She came and picked me up to take me to the hospital.

They looked me over. Said they couldn't do anything for me and told me to put bandages on my side and palms. When I asked about the elbow, the doctor looked at it and said, "Well, I can't even stitch that, there's just nothing there to stitch."

A piece of the jagged rocks embedded in the cement had carved out a chunk of my skin, which I apparently left at the memorial. So, it's not a cut or a gash. The skin was gone and they couldn't pull the sides together and stitch them.

We went to the pharmacy and picked up creams and ointments to treat cuts along with a mess-ton of bandages.

I called my manager who insisted I come in the next day. I did.

I showed everyone the pictures. And my palms (I was doing software development at the time and leaked blood on my desk a couple of times). I was there a few hours before being sent home.

A couple weeks later I was doing pretty well. The hole in my elbow had formed what I heard referred to as a blood plug, which is what it sounds like, a plug made of coagulated blood. It was stopping the hole from healing (closing) quickly. So, I pulled the one inch, solidified blood from my elbow and bandaged the hole. In a week, it was healed, now there's barely a noticeable scar.

A day or two later, the woman I was dating came over with a bicycle helmet.

That's my normal hospital visit.

"Please, help."

"There's nothing we can do for you."

I lost a toenail once and had concerns about how it was growing back; nothing. I jumped a bench and caught my foot and went to a podiatrist who took X-rays and MRI scans; nothing. Chest pain once; nothing. Was deaf in my right ear because of a buildup of earwax, they did try I will grant them, then gave up and sent me home; I went to the pharmacy and bought a syringe and read all about removing wax buildup in ears before making that part of my monthly routine (and stopped using cotton swabs to clean my ears).

So, this isn't some macho masculinity trip, I go to the doctor if something seems off. They just usually send me home saying there's nothing they can do for me. When they don't send me home, I stay in the hospital for a week while they figure out how to help me.

All right.

All that to say, that's my baseline.

My projection is that I'm 41 now and hoping to be financially independent enough to retire at 50 if I want to. Which means I need a medical solution that'll carry me from 50 to 65, if nothing changes in the United States regarding health care.

I want to have the benefits of an HSA; so, no matter what, I'll be carrying some type of high deductible health plan until I'm 50 or stabilized it enough that it's not losing money from fees (again, that's why I went with Health Savings as the provider, very reasonable on the fees and not tied to my employer, which loses some tax benefits; worth it, I think). The health plan provided by my employer is about 200 USD per month. I could've signed up for one through the ACA marketplace, which would have further decoupled me from my employer and cost around 350 USD per month.

I reached out to an ACA advisor provided by my now tertiary institution. They explained how the plans were pretty much locked to the state or even county I lived in. So, if I traveled a lot or for work and something happened, the hospital I went to would stabilize me and then send me back to the location my ACA plan was tied to.

Put another way, and after asking the question straight up, I was told that: My health plan would either be nationwide coverage tied to my employer or limited coverage tied to my state of domicile.

I asked how nomads (RVers) did it. The advisor didn't know. I got off the phone and started searching. I found a company that specializes in providing medical insurance plans to full-time nomads.

In short it's multiple insurances. The keystone insurance is an indemnity plan; depending on the procedure, I get a check for a certain amount of money and pay the rest. At which point it's not the same as a health share, because there are no deductible-like expenses, just the premium; however, it is like a health share in that I pay in and can use them to help with medical expenses. I also get to say "I'm self-insured and would like your best cash rate, please."

It's around 300 USD per month.

I qualified mainly because I am not currently being treated for something and I haven't been treated for anything in the last 12 months; 2020 was good for something, I guess.

Now that I'm qualified as long as I continue paying the premium, they can't deny me for medical procedures covered. It's also a nationwide Preferred Provider Organization.

Not anchored to my employer. Not anchored to my domicile location.

While the HSA is stabilizing I'll have both coverages at roughly 500 USD per month and, once stabilized, that'll drop to roughly 300 USD per month regardless.

I can't double dip though. Therefore, this will give me a chance to see what happens.

My understanding is that I can go to the doctor. Do the self-insured thing. Once I get all the bills, I can submit them to the indemnity insurance company I'm using. They could deny it for some reason. At which point I can pass it to my employer's health insurance provider (the devil I know, so to speak). If I have to submit it to my employer's health insurance, then I'll likely cancel the auxiliary coverage and keep the employer-provided or grab an ACA plan.

If it works, and the HSA is stable, I'll cancel the employer-provided or ACA plan. At a 3600 USD maximum contribution per year to the HSA, we have some time (thinking two or three years at the most).