Okay, with a title like that you might have surmised this is a heavy post and you are exactly correct. This is not a post I planned or even want to write. It’s probably the hardest post I’ve written yet. However, I’ve been convicted of something and the only way for me to lie my head on my pillow night and sleep is to come clean. I’ve come clean to Mr. Ramsey and now I must with Y’all.
Archives for December 2018
Hey there! Welcome back to part four of my series on brain health. When I got sober, I really spent time studying the effects of drugs on the brain. There were selfish motives involved as I was depressed, confused, and frankly concerned that I damaged my brain beyond repair. In my studies, I found that the brain has a remarkable ability to heal itself (thank God!). Additionally, I learned that there were some things I could do to aid in the healing process:
- Minimize the stress
Well, Merry Christmas! Haha, with a title like that you may not be feeling the holiday cheer exuding from this post. However, I challenge you to stay with me on this one and I think you’ll find that I’m full of cheer, just not consumerism.
I wrote an article about enjoying Christmas a minimal consumer. In it, I share some tips on minimizing the consumption and embracing the family time. Maybe questing conventional things is not your shtick but if you’re reading my blog, I suspect it might be. So let’s talk about starting a Christmas revolution…
What do I mean by Christmas revolution? First, let’s define revolution:
- a forcible overthrow of a government or social order in favor of a new system.
Christmas is certainly a social order and/or custom for many of us. I realize that not all people celebrate Christmas but there certainly are a lot of us who do and the marketers sure play it up! I’m putting out the call to those in the financial independence community and, of course, to anyone else reading this who agrees with me.
Let’s overthrow the customs of shopping, spending, excessive decorating, and whatever else you find exhausting about the holiday and get back to the basics.
The Marketing of Christmas
I’m pretty sure most people know that the holiday of Christmas was created to celebrate the birth of Jesus. As the bible goes, three wise men brought gifts to baby Jesus when he was born. Somehow this gift giving has hijacked the entire holiday season. Additionally, there are all kinds of modern-day customs to go along with it:
- Christmas lights
- Christmas trees
- Peppermint lattes
- Candy canes
- Christmas cookies
- Santa Claus
- Nut roll
I’m fine with many of these traditions, especially the nut roll. 😉 However, I’m not fine with people exhausting themselves to prepare for the holiday. Read this post by the Fioneers for some alarming statistics on holiday stress.
Do you know how many people have said to me in the last month that they are stressed out because of the holidays? Or they don’t have enough time to get it all done? Or they hate shopping?
Well, I didn’t count (I probably should have) but it was a lot of people! I’ve had so many conversations with people who say they prefer Thanksgiving. Why? Because Thanksgiving comes with no obligation to buy gifts. It’s just a holiday where the family gets together to enjoy one another and eat. It’s lovely!
So back to the marketing…we are bombarded this time of year with commercials and advertisements enticing us to spend way more than we should on gifts for our loved ones. I don’t really watch TV but I’m fairly certain there are a plethora of commercials of spouse’s buying each other cars. Whaaat?? I’m not married but I’m pretty sure I’d be pissed if my spouse made such huge financial decision without my consent. Nonsense!
I’ve seen so many billboards advertising jewelry. They seem to be designed to guilt men into feeling like the best way to show their wife and/or girlfriend they love them is with an expensive piece of jewelry. More nonsense!
The Revolution Starts with You
Yes, you! How does anyone make a change in this world? In the words of Mahatma Gandhi, “be the change that you wish to see in the world.”
If more of us do our own little overthrow of these customs, maybe it’ll catch on. Perhaps we’ll start a movement. Maybe, just maybe someday people will say I love Christmas because there is no gift giving obligation and we simply enjoy family and food. A girl can dream, right?
It all starts with us and our families. I’ve found that nothing can really be forced on anyone but if we find something we believe in, we get to be an example to those around us. I’m not really stressed about this holiday but I’m surrounded by people who are. I don’t go around telling everyone how little I’m doing to celebrate Christmas, but if others complain it certainly opens the door for me to share this alternate path.
Here are the action steps that I believe we can all take in an effort to create a Christmas Revolution:
- Cut down on the decorating. A simple Christmas tree and lights can be nice but who needs a full house of decorations that only stay up for one month? I mean if you like lugging out boxes from your attic and decking the halls only to pull the same box back out of the attic a month later and take it all down, go for it. Not me! Here is my minimal Christmas tree this year. Simple. Charming. Easy.
- Don’t shop. This may sound sacrilege when it comes to Christmas but I’m serious. If you must…how about doing it a little more creatively? Like budgeting and shopping in the offseason. Hmm, novel idea to avoid the craziness of holiday shopping. Or how about gifting experiences rather than stuff? I imagine my family’s tradition of Christmas gift giving will not cease upon my request. However, I can control what I give. I like to consider myself a generous person so it’s not that I don’t want to give. It’s rather that I don’t want to stand in stores wondering what I should buy my loved ones. So I don’t. I find creative ways to gift experiences to my family.
- Say no to parties. While I’m sober, I’m not a party pooper. I’m all for having a good time with family and friends; however, it seems there are so many parties & gatherings this time of year that people drain themselves running from one to the next. Why should something fun be an obligation? If you get invited to more than you can or want to attend, say no. People will get over it. In the book Essentialism, Greg McKeown talks about the answer of “no” being an opportunity to trade popularity for respect. Be the type of person whose yes means yes and no means no! Respect is the new black.
- Donate your time & money rather than gifts. There are a lot of people in unfortunate situations in this world. Being that Christmas is associated with giving, how about donating money and/or time to people in need? I actually see this one taking off more than the others. If we go to our families and say next Christmas rather than getting me gifts, please donate to this cause, they might be inspired. Or better yet, perhaps we go to our families and say how about we all donate our time & money to people in need instead of getting each other sweaters and trinkets. Some examples to give to are:
- Local homeless shelter
- Halfway house
- Recovery center
- Students in the inner city
- A people group in a third world country
- Make Christmas day simple. Get together with your families to cook, eat, play board games, talk, laugh, love and be thankful. It doesn’t have to be about opening a flurry of presents under the tree or making everything perfect. Just hang. And if you have little ones who’ve already become accustomed to the gift-giving tradition, how about doing what I do for my niece & nephews? I put them on a scavenger hunt where they are taken all over the house to unwrap clues until they get to the final gift. This year their final gift is a wallet with money and a promise for an adventure day with Auntie Dee. The catch is they have to save that $ until we have our adventure day. I’m teaching them delayed gratification this year. 🙂
Okay, so am I crazy to want a Christmas revolution? I think not. I suspect that many people, either secretly and/or openly, wish the stress and obligations could be skipped. Well, I’m here to say they can be!!
Like any other time we question conventional thought, we need to think creatively and outside of the Christmas box on this one. So who’s with me?
I never liked to be proven wrong in my past. In fact, it still stings when it happens today but the difference is I welcome a challenge! I want to get better at life and that means allowing for corrections. My choice to max out a Roth IRA was under a false assumption on my part. I’ve been challenged and am switching to traditional IRA!
Why I chose a Roth IRA
As I’ve revealed in multiple places on my blog and most recently in my article on 2019 contribution limits, I’m maxing out three tax-advantaged accounts:
- Employer-Sponsored Simple IRA ($12,500 for 2018 ; $13,000 for 2019)
- HSA ($3,450 for 2018; $3,500 for 2019)
- Roth IRA ($5,500 for 2018; $6,000 for 2019)
I made the false assumption that I could not max both a simple IRA and a traditional IRA and deduct the contributions both. Why? Because I failed to verify.
Why I’m switching to a Traditional IRA
“Trust, but verify” – Russian proverb also made popular by President Ronald Reagan
Under that false assumption, I thought I might as well still get some tax benefit by contributing to a Roth IRA.
Then I received the following comment on my article:
It was a great question and so I spent some time researching and reading. The following two articles are amongst the best I’ve found on the topic:
- The Only Reason to Ever Contribute to a Roth IRA by Financial Samurai
- Traditional IRA vs. Roth IRA – The Best Choice for Early Retirement by Mad Fientist
Furthermore, I went to the IRS website and confirmed that I can contribute to an employer-sponsored IRA and a traditional IRA. If you are covered by a retirement plan at work, Traditional IRA contributions deductions do have limits:
In my case, I’m single and my modified adjusted gross income is below the $63k threshold for 2018 and $64k threshold for 2019 so I can take the full deduction on my traditional IRA contributions in addition to my Simple IRA.
Lastly, I conferred with a tax accountant and he confirmed that I’m indeed in the sweet spot. He then said something that really resonated with me. We never know what is going to change in the future so why not enjoy the tax benefit which is certain today. One in the hand…
I would say that is some serious verifying. I’m convinced and am switching to a traditional IRA. That being said I will be able to reduce my taxable income in 2019 by $22,500:
- $13,000 (Simple IRA)
- $6,000 (Traditional IRA)
- $3,500 (HSA)
Another change I’m making for 2019
So I’ve written on the magic of HSAs and was able to convince my boss to offer an HSA qualified plan to our company. Initially, when I opened my HSA account I invested 75% and kept 25% in a debit account for health expenses. I think I was scared to invest it all.
I’d read the Mad Fientist’s article on HSAs and understood that it would be more optimal to invest it all, pay out of pocket for health expenses, and save my receipts. After all, there is no expiration on reimbursing ourselves from our HSA accounts for qualified medical, dental, and vision expenses.
Well now that I’m comfortable with maxing out my retirement accounts and cash flowing my expenses, I’ve changed my account so that 100% of my HSA contributions will be invested for 2019.
Okay, so 2019 is looking a bit more optimal!
You know what they say about assumptions…
So let’s talk a little bit about being wrong. I made some decisions off of some assumptions. I felt confident about what I thought I knew.
“It ain’t what you don’t know that gets you into trouble. It’s what you know for sure that just ain’t so.” – Mark Twain
Gosh, I love Mark Twain quotes! My lesson in this is to be careful about what I think I know for sure.
Don’t get me wrong I didn’t make a terrible mistake. Heck, we are talking about which investment account is going to help me maximize on taxes. This is a good problem to have, right?
Being wrong with grace
I’ve felt my pride rise up when I realize I’m wrong and someone points it out to me. Pride prevents us from getting better in life. Pride says, “I don’t need help; I can do it myself.” Additionally, pride says, “I’m going to keep doing things my way.”
Pride is ugly.
I simply don’t want it in my life. Sure it rears its ugly head from time to time, but when it does, I do my best to repent, turn away, and instead embrace a growth mindset. When we look at things in the world as a problem waiting to be solved or a puzzle ready to be put together, we are not intimidated by being wrong.
“I have not failed. I’ve just found 10,000 ways that won’t work.” Thomas Edison
Thomas Edison certainly rocked a growth mindset!
Babe Ruth struck out more times than any other player in Major League Baseball (MLB) and look how that turned out for him? I’d say he achieved rockstar status.
So my point is to embrace being wrong. I say take a chance on something you’ve been wanting to do but have held off out of fear or concern about getting it “right”. Look at me, I started a personal finance blog and have been challenged on some things. I’m the better for it.
I knew I wanted to get better at investing so by starting this blog I knew I’d be forced to learn stuff. What better way to be held accountable, eh?
Now that I’m out of debt, I like being optimal with my finances but I’m certainly not perfect. This journey is about getting a little bit better all the time. 🙂
I’ve got a new strategy for the new year which will allow me to optimize on my taxes, invest for my retirement, and cruise on autopilot. Choosing the traditional IRA over the Roth IRA is the optimal choice for me while I’m in this sweet spot. I plan on growing my income so this sweet spot may only be around for a short while.
How about you? What are your strategies for 2019?