4 Comments

  1. Geoff

    I love the point on paying debt with after-tax dollars. Many people, including myself, are either ignorant or forget the tax implications on earned money. I coincidentally read your post just after completing the chapter in JL Collins’ book on Roth vs. Traditional IRAs. Before the new year, I switched from a Roth to a Traditional IRA when I realized the extra money I was giving Uncle Sam to fund my Roth could be moved to a taxable account for growth potential. I think this move freed up $900 to $1000 for additional investing. I also realized that my retirement income will probably be significantly less than what I make now with the goal of my family being in the 15% bracket with possibly only 3k to 5k being exposed to the 25% bracket. I’m sure there are other tax strategies I’ll learn along the way that will leverage that even further, but it’s amazing what a little tax knowledge can do. The FIRE community has definitely opened my eyes. Thanks for everything you guys do!

    • Geoff, I have slowly begun converting some of my traditional IRA money to a Roth IRA. I’m hoping to build a Roth Conversion Ladder like these guys: #1, #2, and #3. That way we’ll eventually have a pot of tax-free money to better optimize our taxes. When it comes to retirement accounts, I always tax the tax deduction first and convert to a Roth account later if possible and tax-efficient (Gotta stay in that 10% bracket…maybe a little in the 15%, but 25%, no way!). Thanks for visiting and frugal on, Ed

  2. ElleX

    I agree with Geoff…it never ever occurred to me about paying back debt with after tax dollars…

    So I paid off my mortgage in November…so no more debt payments!

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