In my last post , we talked about how long-term capital gains stack on top of ordinary income when calculating your federal taxes. We also looked at the magical unicorn of tax brackets: the 0% long-term capital gains bracket. This “stacking” concept doesn’t just help reduce your taxes today—it can also shrink your tax bill years from now by intentionally using the 0% tax bracket. And that’s where capital gains harvesting comes in. Yes, “harvesting,” as if we’re out in a fiel

When I first heard about the zero percent tax bracket for long-term capital gains, I didn’t believe it. Mind you, I’m not talking about Roth IRA withdrawals, which are always tax-free. I’m talking about capital gains from stocks held in a taxable brokerage account . The IRS not taxing this money sounded too good to be true. But it is true—the IRS really does let some of your investment gains be taxed at zero percent. Long-term capital gains actually have their own set of tax

(and why getting bumped into a higher tax bracket isn’t the disaster people think it is) In my previous post , I mentioned that capital gains and dividends can fall within a zero percent tax bracket if you hold your investments long enough. Imagine: legally not having to pay taxes on thousands of dollars of income. Cha-ching! But before we get that fun part—we need to clear up one thing: how our progressive income tax system works. Many people misunderstand how ordinary incom

In my previous post , we talked about capital gains—the money you make when you sell stocks for more than you paid. But that’s only one way stocks can make you money. In this post, we’ll take a look at the second way of making money with stocks: dividends . We’ll break down key dates to know about dividends and how to minimize tax liability. And we’ll also answer the big question every dividend investor wants to know—Is it possible to live off of dividends only? WHAT ARE DIVI

When I first started buying and selling stocks, I never held any shares for longer than a few months. Then tax season rolled around, and I found myself staring blankly at a Schedule D tax form, thinking, “What the heck are capital gains , and why did my tax liability jump?” If you’re new to investing, there are two ways to make money through stocks: capital gains and dividends. In this post, we’ll break down what capital gains are, how they’re taxed, and why your holding per

So you have health insurance. But do you know what you’re actually paying for? If the words premium, deductible, coinsurance, and co-pay sound like gibberish, keep scrolling. I’ll break down the most common health insurance terminology you’ll come across—without the jargon. Trying to understand your health plan can be as painful as hemorrhoids UNDERSTANDING THE COSTS BEHIND YOUR HEALTH PLAN Before diving into the alphabet soup of plan types, it helps to understand the basic

Health insurance is one of the biggest puzzles of early retirement—right up there with "what day is it again?" Six months into early retirement, I wish I could say health insurance isn't on my mind. But it is—a lot. It’s hard not to with health care costs being so high in the U.S. compared to other countries. It is a lot easier when you receive health insurance through your employer. They do all the legwork—they find the best plan and negotiate the best rates. All you have to

As the six-month mark of my early retirement approaches, I’ve started looking back at how it’s gone so far. Before I retired, I pictured waking up late, spontaneous adventures, and maybe a new hobby or two. And while some of that has happened, the reality has been a little less “vacation mode” and a little more “figure out how to make retirement enjoyable” mode. Many people assume retirement is like flipping a switch—you leave your job on Friday and wake up Monday in permanen

Your 401(k) is one of your most powerful tools to escape the rat race and reach financial independence. But like any tool, using it correctly makes a big difference. Even smart savers sometimes miss out on thousands of dollars (and years of growth) because of a few small mistakes. Here are 10 common 401(k) mistakes — and how to make sure you’re getting the most out of your plan. NOT UNDERSTANDING YOUR 401(k) TYPE When 401(k)s were first introduced, there was only one type. Y

Today, I thought I’d share my tips for landing your dream job. These tips are based on my experience in human resources and as a hiring manager. I'll even teach you a game-changing interview question that has helped many friends land their dream jobs. Even if you’re currently employed, knowing what I’m about to share will be helpful if you want to reach financial freedom faster. Increasing your income should always be part of your plan, and finding ways to boost your salary i

Even if you hated math as a student, you’ll love learning the Rule of 72; it takes less than a minute to learn. The Rule of 72 explained simply is an easy, yet powerful mental shortcut to quickly estimate how long it takes for money (or debt) to double. For example, if someone asked you how long it would take for their mutual fund to double in value if it's compounding at 10%, you'll be able to tell them within seconds without the use of a calculator. The Rule of 72 is my fav

Getting furloughed during the 2020 pandemic turned out to be a blessing in disguise because it helped me realize my wife and I needed to...

“Compound interest is the eighth wonder of the world. He who understands it, earns it…he who doesn’t…pays it.” —Albert Einstein Perhaps...

You know your current net worth and your average annual expenses. You also have your target number . So, now it’s time to start putting your financial independence plan together. And I’ll share my tips on creating a plan that will work, including my best tip that I learned watching basketball. You might be wondering if it’s even necessary to create a plan. Why not just wing it? Yes, I know making a plan isn’t always fun. I like to wing it on most things myself, but I don’t

In your quest for financial independence, you can picture your personal finances as a bucket being filled with water . We're all trying to fill that bucket to the top, but the flow rate of money (income) and the leaks (expenses/inflation) determine how fast we get there. If you've been wondering where to put your money to make that bucket fill faster, you're in the right place. In this post, we'll cover the best financial accounts for beginners —the essential tools you need

If you followed along in my last post, you would have calculated your net worth , which tells you where you currently are in the rat race. The next logical question is: How much to save for retirement? To escape the rat race, you must figure out your ultimate goal: What net worth do you need to achieve your Financial Independence Number? Why is it important to figure out this target number? Well, imagine if you were in an actual physical race, except that there’s no clear fin

It’s been roughly four months since I retired and almost six months since my wife did. We often talk about how this was a great choice, but early retirement wasn’t always the plan. As mentioned in my first post , I had doubts we’d be able to retire at all, let alone early. Back in 2006, we weren’t thinking of retirement. We were thinking of starting a family. One day, I was killing time at a Borders Bookstore—remember those?—when I came across a book about how to make money

If someone asked you what your current net worth is, would you know the answer? Knowing your net worth is the single most important step in creating your plan to escape the rat race. It’s the same as planning a hike or any other trip; before planning how to reach your goal, you first need to know where you’re starting from. Net worth isn’t a term exclusive to wealthy celebrities. Everyone has a net worth. It’s simply a way to measure your financial health at any given time. M

Before I officially retired, I told friends that I was going to start a blog titled “FIRE before 50.” The number one response I got was people asking if I got fired. They questioned if I was hinting that I got ( wink wink) laid off. It made me chuckle and also realize that not everyone is familiar with FIRE (spelled in all caps). So, I thought I’d share the different types of FIRE retirement today because it is, at the very least, interesting. It’s also somewhat cool to lear

A close friend recently asked if I used CDs (Certificates of Deposit) and would recommend them. So I thought I'd share my thoughts on CDs and tips on how to build a CD ladder. Let me start by saying that CDs are not great investments if you want to grow your wealth. Because they have such low risk, their rates of return are also very low. The annual percentage yield (APY) of CDs usually falls somewhere between 1%-5%. Not great at all. Sometimes, the APY can even fall well bel