I often preach about the importance of financial health, but one should not neglect physical health either!
Lately we have been doing family runs in the morning before our days begin. We use the Nike + app on our phones to record each run. “Gamification”, the use of game mechanics to incentivize an activity, is a core part of the Nike + app. It rewards you with little digital pats on the back for a job well done, and mildly scolds you for being neglectful.
The last five years has seen an explosion of these types of fitness gadgets and programs, from simple pedometers that come in cereal boxes to the Apple Watch that reminds you to stand up and move around periodically throughout the day. You don’t need a gadget, but they can be helpful motivators.
Of course we are trying to instill a good work ethic in Frugal Boy. The best workout he can get right now is being set loose outside. A playground is a plus, but he’ll happily amble around our yard until he gets worn out.
So grab a friend, spouse, the kids, or a pet and get out and exercise! Your pee doesn’t have to be the only thing golden about your Golden Years.
Today was the first day of Memorial Day weekend, a three day weekend for many Americans. Part of frugal living is finding the joy in simpler activities. For us, that includes reconnecting with nature by hiking through the wilderness and enjoying the sights and sounds that cannot be found in a sterile office environment.
Someone asked Shae what our plans for the weekend were, and when she replied that we would probably be hiking 3-6 miles they could not understand why we would want to do that. Well, keep reading to get a glimpse of what adventures and fun can be had in your own backyard.
We drove a short distance to Detweiller Park in Peoria, Il.
Detweiller Park is special because it is the southern most trailhead for the Illinois River Bluff Trail (see a trail map here). The 6.9 mile trail features terrain that you would not expect to find in Central Illinois. Namely, rolling hills, and deep ravines.
There was an nice playground by the trailhead that we took advantage of to set Frugal Boy free while we ate some lunch. After fueling up it was time to hit the trail.
It didn’t take long to have an up close encounter with this fine specimen.
Whenever I post these types of photos to Facebook, I always get a rash of comments along the lines of “kill it” or “run away”. Our goal is to impart a “Live and let live” philosophy to Frugal Boy. The snake, like most animals and insects, poses no real danger to us. It is far better to admire it with respect and then move along and let it go about its day.
Perhaps the greatest thrill that I get out of hiking is not knowing what’s behind the next bend in the trail.
What’s Around the Bend-itis
Aren’t you just the least bit curious as to what’s up ahead on the trail. Just take a few more steps to find out. You never know what you’ll come across, and we came across something that totally blew us away!
Well, are you curious yet? Are you thinking, maybe I should get outside and enjoy the freedom of nature?
What if you found a ghost camp?
The ole swimming pool.
The trail had switched from a dirt path to a two rut gravel road. The first thing we came upon was this old swimming pool and bath house.
Next door was a canteen/cafeteria area?
Canteen, cafeteria, or trading post?
An overgrown cross gave a hint as to the camp’s original occupants.
overgrown cross and message board
Our road reached a junction, but trail signs pointed the way to a place further back in the ghost camp.
Here we found intact restrooms and an accessible caboose.
If you looked at the trail map at the beginning of the post, you’d see that this was Green Valley Camp, our turnaround point for the day. GVC was run by the Salvation Army before being turned over to the Peoria parks district.
We switched off carrying duties and Frugal Boy was hosed down because it was hot out.
On the way back we spotted some more of nature’s wonders.
Do you know what plant has mitten shaped leaves?
If you said, Poison Ivy, congratulations! Leaves of three, leave it be.
Nearing the end of the hike, we crossed over another rambling brook. I had made a mental note of it on the way in, and we stopped to let Frugal Boy play in it.
He was happy as could be and got nice and dirty. A fellow hiker walked by and just grinned when she saw a mostly naked toddler playing in the stream.
Overall, it was a splendid hike.
Discovered a Ghost Camp ✓
Played in a stream ✓
Saw animals in their natural habitat ✓
Avoided poison ivy ✓
So that’s why we go out hiking on our three day weekends.
He didn’t have a very good time and demanded to be held for the duration. I think he may have enough memory to associate it as an ouchy place. In three months he will finish up the last major round of baby vaccinations and then I think he gets a bit of a reprieve.
His measurements looked good at: 25 lbs 14 oz (88%), 19.25″ head circumference (94%), and a lanky 33″ (97%). I think the length was a bit off as we measured him at home closer to 32″.
School is almost out for the summer, but you should always be learning new things in life. Today we’ll cover an advanced personal finance topic. It may sound like goobly gook, but the payoff is worth it! So break out the notebook and pay attention.
Roth Conversion Ladders
What if I told you that you could retire earlier or with substantially more money and you didn’t need to earn more or spend less. Does that sound too good to be true? Well, it is true thanks to a little strategy called roth conversion ladder.
What is it?
During your working years that you are saving up for retirement you have three options as to how you can save your money.
The first option is to use a traditional 401k or IRA (individual retirement account). With this type of savings account, your contribution gets to grow tax free. Then when you reach retirement age (59.5) any withdrawals that you make are taxed.
The second option is to use a Roth 401k or IRA. Your contributions are taxed going in and then at retirement age you can withdrawal the principle and interest tax free.
The third option is to invest in a taxable account. Generally the contributions to a taxable account are post tax and any gains (withdrawals) are also taxed. It is kind of the worst of both worlds. The one bonus is that you do not have to wait until retirement age to access the funds.
To sumit up, you can either pay the tax man when you retire, when you earn, or both.
A Roth conversion ladder is a strategy where you use a traditional IRA as your primary savings vehicle and then over time you convert the balance over to a Roth IRA. In doing so, you get the best of both worlds. Your initial contribution is tax free and can grow for many years and your eventual withdrawal is also tax free. The tax man can be removed from the equation and thebest part is that it is perfectly legal!
How does it work?
To start the process, upon retiring any traditional 401k funds will need to be rolled over to an IRA. This is pretty straightforward and according to Vanguard, it involves 3 simple steps that should take you less than 30 minutes.
Now the real fun begins. The IRS allows you to transfer IRA funds to a Roth IRA as long as the transferred money is considered income and taxed as such. Also transferred money is not accessible for a period of five years. Uncle Sam gets his cut during the transfer and is happy. You are also happy because you realize that being a newly retired individual your taxable income is basically whatever you transfer between accounts. You also know that income tax doesn’t kick in until you cross a certain threshold (exemptions + standard or itemized deduction). For example, since we are married and have one dependent we could convert up to $24,600 a year without paying a single penny in taxes.
$12,600 (standard deduction) + $12,000 (three times personal exemption of 4,000)
Obviously when Frugal Boy strikes out on his own, we will lose a dependent, but we would still be able to convert $20,600 a year tax free.
Roth Conversion Ladders are awesome because you get to grow money relatively tax free.
Perhaps the easiest way to understand the strategy is to see an example. Thankfully, Root of Good, has already packaged together some easy to read tables that show how it works.
Root of Good also explains some intricacies nicely, such as how to handle inflation during the five year waiting period, how to best cover the five year gap, and their own personal conversion plan.
If this sounds like a lot of work or is overly confusing you may be asking yourself why should I bother. JL Collins, an early retirement advocate, crunched the numbers and determined that by using this strategy to minimize taxes, the test case individual could retire two years earlier than just sticking to the conventional script. You don’t have to earn more or spend less, just plan ahead and you can retire sooner!
When should I consider it?
Roth conversion ladders are best suited to those planning on an early retirement. The conversion takes time (the more time you have, the less taxes you’ll have to pay).
If you are just starting out and the prospect of early retirement is appealing to you then you should utilize a traditional 401k and/or IRA. Having some money in a taxable account will help you cover the first five years of converting, but your primary goal should be to stuff as much money as possible into the tax advantaged retirement account. Later on in life, you can figure out the specifics of how you are going to access that money in a tax minimal way.