0:00

Hey this is Daniel thanks for listening to

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DIY money if you haven't already be sure

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to give us a five-star review on iTunes

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so your friends know that they can learn

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from the show. Now enjoy the

0:11

show. What's

0:16

up everybody? Welcome back to DIY money. I think

0:19

I'm supposed to say that and you're supposed to

0:21

say... DIY money. There

0:23

it is. Do I need more coffee

0:25

today? Probably. The coffee pot is

0:27

empty. I actually had a pretty heavy hand

0:29

this morning when I poured mine. Clearly because

0:32

I went down to get a second cup and it was like

0:34

a third of a cup worth. Okay.

0:36

Do you usually have two at the

0:38

office? No. But it was cold today.

0:41

Yeah. And I don't know

0:43

it was just cold today. I don't want to talk about the

0:45

cold. I'm kind of bitter. I had

0:47

a well I still have I think a

0:49

camping trip planned for this weekend but

0:51

the low is supposed to be like 40 which

0:54

is where you're like... Perfect camping water. No

0:56

your toes get cold. Oh that sounds

0:58

great. I don't want to talk about the cold.

1:01

What I want to talk about is coffee because

1:03

this is coffee talk. Coffee talk. Do

1:05

you do I think we've talked about this

1:07

before briefly but I don't remember what

1:09

you said because it hasn't been warm since for

1:12

a long time now. Are

1:14

you a cold brew guy at all or are you

1:16

just strictly hot coffee? I don't seek

1:19

out cold brew. Okay. But

1:21

it's like if

1:23

it's summer and I

1:26

come across it and I want a

1:28

coffee and all of the conditions all

1:30

add up then I mean I will enjoy it. Okay but

1:32

if you let's say you go to a coffee shop

1:35

in the summer are you getting cold iced

1:37

coffee? No. Cold brew or are you still getting

1:39

hot coffee? No. When I lived in Las

1:41

Vegas for a while it'd be like 105 out

1:43

I would just drink a hot coffee. I

1:45

hate that for you. So

1:48

which in 105 it almost tastes like cold

1:50

brew. When you say if I stumble across cold

1:53

brew is it just on the

1:55

side of the road? I don't

1:57

Wake up in the morning and go. You know what? sounds awesome. Like

2:00

colder here. But. I

2:03

guess if I'm just hanging out at

2:05

if like all the conditions and stars

2:07

line up and recycle. It could be

2:09

a meteorologist or you might see. What?

2:21

Is stars that need to align. Canal

2:23

checklist and I'll be like hanging

2:25

out mid morning. On. A

2:27

patio. And

2:30

person I'm with orders cold brew and

2:32

like I guess I'll try that too

2:34

and might as well. I don't know.

2:37

that socially i or is the first check

2:39

box looks like a helpless and are now.

2:42

Early crave colder. Very opposite has be a

2:44

good good colder to. My thing

2:46

is I like will be better than

2:48

ice coffee but most places make terrible

2:50

cold brew as if I also sell

2:53

iced coffee. Ah yes or no.

2:55

I went through fantasies. T

2:58

You're talking about not just ice

3:00

coffee, but legit. Like twenty for

3:02

our culture. Yes, but not

3:04

like. All. The way to like night

3:06

show called are like Starbucks. You sorry about

3:08

the cold? Read the stuff that they put grinds and input in the

3:10

fridge. With are honest with you. I don't know

3:12

what nighter a colder actually means beyond. I think

3:15

they use. Nitrogen in the i'm

3:17

going to make something up and I

3:19

hope it's referencing. Process. Yes that's

3:21

was gonna say. is that right? I

3:23

have no clue what I think. it's gimmicky. I

3:26

think it is too. I think it's made up. Know.

3:29

I mean, there's obvious dismiss it as a number of

3:31

lives. I think they make it out, but I don't

3:33

think it's essential. they. Pour a little bit a lacroix

3:35

in it before they handed to you. Know that

3:37

different bubbles liquid levels I would know

3:40

the the former his oh we're not

3:42

the bubbly bubbles probably of the worse

3:44

mobile in another state. In our

3:46

office the last week between the and

3:49

unite on his bubbly is crappy look

3:51

really or better than. The crew it

3:53

yeah and I'm on team better because probably

3:55

Waters now and it's a. Very

3:58

contentious. Not. Like but. Bramble.

4:00

like. There's a lot of. What? Are they

4:02

called flavored salty waters? I

4:05

think there's a difference between. A

4:07

seltzer water in a sparkling water and that's

4:09

fun. for highway so were drifting off coffee talk

4:11

which probably get to the question is. Ah,

4:13

Ok, well on that note, then Daniel,

4:16

Those abrupt ending to. What? Be part of

4:18

people into our social and let us know what their

4:20

favorite. Seltzer. Soda: sparkling.

4:23

They're gonna say bubbly. I

4:26

hope not. Just saying And

4:28

libraries. Look. Korea's the

4:30

on. I can't even

4:32

think of a fancy Brandon is moving. It's.

4:35

Like it's not that much better. It's

4:37

just a fancy breeds. It has a fancy

4:39

name. He feel cool when

4:41

you drink and I sell so cool moments

4:43

in your lesson. Feel cool? How cool is

4:46

that? Most but the flavor itself. We're going.

4:48

Out only wish we had a was working over

4:50

this were doing. A blind taste test. I.

4:52

Think we should do that. will get the same.

4:55

Alibi has has ones for this podcast. Of

4:58

what coffees with. it's like a writer for coffee.

5:00

The Cia I'm other. remember that and you actually

5:02

have? Well right? Yeah, pretty well. Yeah, it's not

5:04

okay. My own horn was it like. Line.

5:07

Is every. Single One Would you have to get

5:09

to the question? That. We're. Going to retire? Okay,

5:11

yeah, I hear it. Okay, well this

5:13

podcast all podcast brought to you by

5:16

Jewel Financial. Check us out on the

5:18

web: J O U L Eve financial.com

5:20

Keep your questions coming to Park as

5:22

A D I Y money.org and we

5:25

do need junior questions. I think they

5:27

mentioned that last episode, but keep those

5:29

juniors coming, we've got one coming up

5:32

on the next episode. But.

5:34

Looking a little dry in that area.

5:36

arm send i'm over was and twenty

5:38

five dollar Amazon gift card and today

5:40

we got a question from Johnson Johnson.

5:42

where you got. The. Idea

5:46

of on his Mrs. Johnson from

5:48

Virginia. Ah I hope this question

5:50

isn't too technical are confusing. However,

5:52

I have an H S A

5:55

Accounts that I'm using as an

5:57

investment vehicle Arms I have an

5:59

upcoming. Medical procedure

6:01

that I expect to exceed my

6:03

Hs a balance. Fortunately, I have

6:06

enough cash on hand to cover

6:08

it. However,

6:10

my question is assuming I'm

6:12

keeping diligent records of the

6:15

procedures, would I be able

6:17

to to withdraw that amount

6:19

once my balance gross pass,

6:21

the cost of the procedures

6:23

are proceeding medical expenses or

6:25

does my to say balance

6:27

needs you exceed the accumulation

6:29

of all my. Health is. He

6:33

trying to say he's. Taking

6:36

a city is t h

6:38

a say so The reason.

6:40

Why I like this question? Lot one

6:43

inhales like a technicality that we can

6:45

certainly get teeny tiny. Taking a step

6:47

back, let's talk about the benefits of

6:49

a Say. It's been awhile since we've

6:52

jumped into those a little bit and

6:54

then talk about some some good strategies

6:56

that we see and talk to people

6:58

about frequently about using these. well so

7:01

Hs Say is a health Savings Accounts.

7:03

In order to have a health savings

7:05

account, you have to be enrolled in

7:08

a high deductible health plan. That

7:10

qualifies you to be able to open this

7:13

accounts and make contributions. Now once you

7:15

fund it, it stays with you for life.

7:17

So this isn't a situation where. Is.

7:19

A lot of times you open it

7:21

through your employer because that's easier you

7:24

don't necessarily have to on once you

7:26

leave that company your Hs they will

7:28

follow you wherever you go what we

7:30

typically like to do because when you

7:32

put the contributions in you get a

7:34

tax deduction for that whether that's on

7:36

the front end and they just don't

7:39

report the income because three employer or

7:41

you actually get like a line item

7:43

on your referred to take those out

7:45

either way to get in ducks and

7:47

then it's gonna grow tax free in

7:49

that account. And that third benefit

7:51

of this triple tax benefit is when

7:54

you take those funds out as long

7:56

as they are used for. Qualified.

7:59

medical Expenses or

8:01

medical reimbursements There

8:06

is no tax on

8:09

the funds as they come out either. So

8:11

it's the only vehicle with that triple tax

8:13

benefit. It's deductible going

8:15

in, grows tax free, distributes tax

8:17

free. The benefit

8:19

of these and the best way you can

8:22

use them in the long term is you

8:24

can actually invest the funds in your HSA.

8:27

And what you'll do is save medical receipts.

8:29

You can pay for those out of pocket

8:31

as they're occurring. And then

8:34

when you get into a place where you need

8:36

the funds, then they've grown tax free. It

8:39

doesn't matter what year that expense incurred. As

8:41

long as you haven't reimbursed it yet, you

8:43

can reimburse it. So 20 years

8:45

down the road, if I go to the doctor today, I

8:47

can take out the funds after

8:50

they've grown a bunch too and reimburse.

8:52

So the question here is the technicality

8:54

on if I go to

8:56

the doctor today and it costs $250 but the balance

8:58

in my HSA is only $200, can I then later

9:00

reimburse? Which

9:06

you can as far as I can

9:08

find. Now the IRS, I

9:10

couldn't find in their publication a

9:12

direct answer on

9:14

this because Daniel and I were talking a little

9:17

bit right before this. I think

9:19

the intention in the IRS code was

9:21

more about monitoring the long

9:24

term contributions and distributions and not

9:26

necessarily banking on people investing them

9:28

and doing kind of this strategy

9:30

that we talk about with

9:33

our clients a lot. Totally. Yeah, but if

9:35

you even think about it on a micro

9:37

level intra-year, if you

9:39

had an expense in January

9:41

and you were making monthly contributions to your

9:43

HSA, you can pull that out in December

9:46

after the balance grew. So what we're

9:48

really just talking about is a more macro view

9:50

of that or a larger picture view of that

9:52

where you contribute for multiple years, have some investment

9:54

gains, all that, and then take some out in

9:56

the later years. I think what

9:58

trips people up mostly is the idea that you... you can

10:00

save receipts for multiple years and

10:02

reimburse yourself in the future. So this is a strategy

10:04

that our family does. We contribute

10:07

to our HSA. We

10:10

put pretty much all of that into

10:12

investments with the goal of having

10:15

a medical account for our future retirement, medical

10:17

expenses. So we're just really trying to save

10:19

up as much, not as much as possible,

10:22

we're trying to save up to where we would fully

10:24

fund kind of our anticipated medical expenses for retirement. And

10:26

then along the way, we're scanning

10:29

and retaining copies of all of our medical receipts.

10:31

So if we really did need that money along

10:33

the way, we have the proof

10:35

and we could withdraw

10:37

that and reimburse ourselves at

10:40

any time for that. So in the

10:43

future. So that's fairly

10:45

helpful, I think, at least

10:47

that's a strategy that we've gone about doing.

10:50

So along the way, we're getting the tax

10:52

deduction in each year that

10:54

we contribute to the HSA. We're

10:56

not paying taxes on the growth and

10:58

then when we take it out, that's as long as we have all those receipts,

11:00

it's fine. Right now, kind of my

11:03

intention is to think about it as sort of like

11:05

our Medicare premium and

11:07

out of pockets in retirement. But

11:09

we don't know what's gonna happen between now

11:11

and retirements. And so it's nice to know

11:13

if like we really needed some

11:15

extra funds that we have those receipts there up to

11:18

what we spent before. I

11:20

like doing it that way. I mean, it just provides

11:22

an additional sort of retirement savings

11:25

vehicle. And I will

11:27

also say another question we get

11:29

frequently about the HSA or I think there's

11:31

some confusion or gray area

11:33

about is what qualifies as a medical

11:36

expense? Because when I hear medical expense,

11:38

I'm like, okay, well, if I'm not going to the

11:40

doctor, then I can't

11:43

reimburse it. But they've

11:45

expanded that pretty broadly, especially

11:47

like in 2019, I know

11:49

they started counting like out

11:51

of pocket. If you

11:54

go and get like over the counter

11:56

medications, that now qualifies. Yeah, definitely look

11:58

at the list of. things

12:00

that it qualifies and doesn't qualify for.

12:02

Because there's some things you would not think that

12:05

they do qualify, some things you think that they

12:07

would qualify, they don't qualify. It could

12:09

be beyond just your general doctor bills. It

12:11

could be a little confusing. So definitely do look at the

12:13

official list. And

12:15

that's the way the cooking comes.

12:18

Right. Right. And I'm sure that will probably

12:20

change as well over time. Yes. By the time you look at it. You

12:22

can eye on it. Yeah, no, probably. Awesome.

12:24

Anything else to add? No,

12:29

not necessarily. I would think, you know, in Johnson's

12:31

case, think about if you already have

12:33

the cash to pay the medical expense, you

12:36

know, why not let this keep growing in the future?

12:39

You'll retain those receipts in case you ever really did

12:41

need it. But you can't get money back

12:43

into nature. It's like a retirement account, right? Like you can't

12:45

– if you take

12:47

money out of it, you're never going to

12:50

get that maximum contribution back for a year

12:52

that's passed. And so one of

12:54

the powerful things about retirement and HSAs and things

12:56

like that is if you're able

12:58

to max those out in a given year or put in

13:00

as much as you can, then

13:02

each year you kind of have a new limit that you're able to

13:04

do. But anytime you make a distribution,

13:07

you don't get a higher than the limit that year or

13:10

in the future year. So it's really hard to put –

13:13

impossible to put money back in if you will. So

13:16

think about if you

13:18

can leave those funds in there longer, all the better

13:20

in most

13:23

cases and for most people's plans. It can be a really

13:25

good savings for the long term. Go get it, son. Go

13:27

get it. Yep. Awesome. Okay.

13:30

Well, all Johnson did was send us

13:32

a question and he's going to receive

13:34

a $25 Amazon gift card. But we'll

13:36

wrap it up there today. The

13:39

secret to wealth is very simple. It's to

13:41

live on less than you make, invest the

13:43

rest and to continue to do so for

13:45

a very long time. Make it a great one. This

14:00

means this episode of the show, if you want your

14:02

questions aired on the show, be sure to send that

14:04

to us and you'll get a $25 Amazon gift card.