The Personal Finance Geek

An HSA, or Health Savings Account, is a tax-advantaged account that can be used to save for qualified medical expenses. HSAs are available to anyone with a high-deductible health plan (HDHP). The main benefit of an HSA is that contributions are tax-deductible, meaning you can deduct them from your taxable income. This can lower your tax bill and give you more money to save for upcoming medical expenses. Another benefit of an HSA is that earnings grow tax-free . This means that the money you contribute to your HSA will continue to grow, tax-free until you withdraw it. Finally, withdrawals from an HSA are tax-free as long as they are used for qualified medical expenses . This means that you can use your HSA to pay for things like doctor's visits, prescription drugs, and hospital stays, and you won't have to pay taxes on the money you withdraw. If you have a high-deductible health insurance plan, an HSA is a great way to save for medical expenses. The tax advantages can mak...

Retirement planning can be a daunting task, especially if you're not sure where to start. There are a lot of different retirement plans out there, and it can be hard to know which one is right for you. In this blog post, we'll explain the difference between four of the most common retirement plans: 401(k), Roth IRA, traditional IRA, and pension plans. A 401(k) is a retirement savings plan offered by many employers. With a 401(k), you can contribute a portion of your salary before taxes are taken out. This means that your money grows tax-deferred, which can save you a lot of money on taxes in the long run. There are also often employer matching contributions, which means that your employer will contribute money to your 401(k) account, too. The current limit for the amount that an employee can contribute to their 401(k), in 2023, is $22500, which works out to a maximum of $1,875 a month. Contributing to one of these lowers your taxable income when you make the contribution...

  John and Jane are a married couple in their late 30s who graduated at the top of their classes, John from med school, and Jane from law school. They now earn a combined total of $1,400,000 working as a neurosurgeon and corporate counsel. They have a $2,500,000 mortgage; $300,000 left to pay from law school, and $250,000 to pay off from med school. They can allocate up to $23,333.33 every month to pay off their debts, and they want to make some progress on all their debts each month, to avoid a situation where they owe much more than anticipated and are trapped in debt much longer because interest piled up.                There are three commonly suggested methods for attacking debts like this. First, paying off exactly what the amortization schedule would require of them. These are the terms of  their 3 outstanding debts:   Amount borrowed Minimum payment ...

Suppose Tom has the following (post-tax, not including contributions to retirement) expenses: $1500 in rent, $400 in groceries, $200 in utilities, $300 in transportation, $400 in healthcare costs, $385 in student loans, and $100 in miscellaneous household expenses, plus some extra expenses: investing in his retirement, going out with his friends and his girlfriend, saving for a house, giving to charity, and some subscriptions.  The things Tom needs each month are the things I’ve attached prices to: rent, food, his car, gas, light, heat, A/C, the internet, his health insurance premiums, doctor visits and any associated care, household expenses, and paying back his student loans from his bachelor’s degree. The other things are things Tom certainly likes to have in his life but doesn’t need, and their prices are much more flexible month to month: his wants. In case Tom loses his job or gets in a car accident and needs to buy a new car right away, or has some other catastrophes happe...

At a typical bank, you can open 2 different kinds of accounts that have different purposes: savings and checking. Savings accounts are for precisely that: saving money. Checking accounts, on the other hand, are for income and expenses. You’ll get a card, called a debit card, which, when you use it at a store, will take money directly from your checking account to make the purchase, so you won’t have to pay for it later like you would with a credit card. It is expected that there will be lots of transactions through an account like this: Ed’s paycheck came in, then he paid his rent, bought groceries every week, filled up his car every 5 days, went to the doctor, took his girlfriend on a date to a restaurant and then to see a movie, and so on. But savings accounts are to build a cushion: in case Ed’s car breaks down and he needs to buy a new one, if Ed wants to have enough for a down payment so he can buy rather than have to rent, and so on. So, banks want to disincentivize transferring ...