What You Need to Know About Open Enrollment

Summary

Money Guy Show: What You Need to Know About Open Enrollment
Release Date: November 25, 2024
Hosts: Brian Preston and Bo Hanson

The Money Guy Show, hosted by Brian Preston and Bo Hanson, delves into essential financial strategies to empower listeners in their wealth-building journey. In the episode titled "What You Need to Know About Open Enrollment," the hosts address a series of listener questions, providing in-depth analysis and actionable advice on topics ranging from early retirement strategies to optimizing health insurance plans during open enrollment.

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1. Navigating Early Retirement and Living Off Stocks

Listener Question:
Joshin inquires about the "rules for living off of stocks before retirement," detailing a scenario where he’s considering how to manage a $350,000 brokerage account while taking a few years of no income due to grad school. He seeks advice on whether to sell his stocks gradually or all at once.

Discussion Highlights:

Bo Hanson emphasizes the importance of distinguishing between retirement accounts and brokerage accounts. He notes that while retirement accounts like 401(k)s and Roth IRAs have restrictions until the age of 59½, brokerage accounts offer more flexibility for creating an income stream [00:26].

Bo introduces strategies for those pursuing early retirement or following the FIRE (Financial Independence, Retire Early) movement. He suggests that "if you're able to manipulate your income to the extent that you can keep it super low, you might qualify for 0% capital gains," allowing for tax-efficient liquidation of assets [01:50].

Brian Preston adds that for younger individuals like Joshin, who may have an equity-heavy asset allocation, maintaining a robust emergency fund is crucial. He warns against the pitfalls of selling stocks during market downturns, which can lead to suboptimal financial decisions [03:10].

Notable Quote:
Brian Preston states, “Begin with the end in mind... you probably need to go heavily more on the cash side of the thing... this isn't money you want to have at risk” [03:10].

Conclusion:
For those considering living off stocks before traditional retirement age, it’s essential to balance income needs with maintaining liquidity and minimizing tax liabilities. Gradual liquidation aligned with income strategies is generally advisable over abrupt selling, especially to avoid capital gains taxes and preserve long-term wealth.

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2. Establishing Emergency Funds in Dual Income Households with Rental Properties

Listener Question:
Carlos asks, “How big should my emergency fund be? If we are dual income and plan to rent out our house, should we have separate emergency funds for each?”

Discussion Highlights:

Bo Hanson outlines that in a dual-income household where both partners earn similar incomes, an emergency fund of three months of living expenses may suffice. However, if there's a significant income disparity, he recommends increasing the emergency fund to four, five, or even six months to mitigate inherent risks [10:47].

Brian Preston concurs, emphasizing the complexities introduced by rental properties and additional obligations. He advises that entering ventures like real estate or new jobs requires thorough preparation and a solid emergency fund to handle various scenarios [11:48].

Bo further explores whether emergency funds should be combined or kept separate, suggesting that while they can be treated as separate entities, effective communication within the household is paramount to manage financial dynamics and prevent power imbalances [14:05].

Notable Quote:
Bo Hanson advises, “What you don’t want to do is live high on the hog, get to the end of the sabbatical, get to 33, 34 years old... and say, holy cow, I burnt through all the stuff I saved in my twenties.” [05:36].

Conclusion:
An adequately sized emergency fund is critical, especially in households with dual incomes and additional financial commitments like rental properties. The fund should reflect the household’s income stability, risk exposure, and financial obligations, ensuring resilience against unexpected financial setbacks.

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3. Evaluating Employer-Provided Ownership and Shareholder Bonuses

Listener Question:
Eric poses a question regarding his company's offer to “buy into ownership,” mentioning shareholder bonuses typically ranging from 10 to 20% of the initial investment and anticipating an increase in share value over time.

Discussion Highlights:

Bo Hanson interprets Eric's query as a "making partner opportunity" and distinguishes it from employee stock purchase plans. He categorizes this as a step 7 or step 8 in the financial order of operations, emphasizing that such investments should only be considered after establishing a solid financial foundation [15:55].

Brian Preston underscores the illiquid nature of such investments, likening it to starting a new business. He warns against over-concentration of financial capital in a single entity, advising diversification to mitigate risks [17:26].

Notable Quote:
Brian Preston emphasizes, “Be careful having both your human capital and your financial capital all loaded up in only one entity.” [17:26].

Conclusion:
Investing in employer-provided ownership opportunities can be lucrative but should be approached with caution. It’s essential to ensure that foundational financial needs are met before committing significant resources to such investments to avoid undue risk and maintain financial stability.

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4. Optimizing Health Insurance Plans During Open Enrollment

Listener Question:
Amber seeks guidance on open enrollment, specifically asking, “When might an HSA or a high deductible plan not be a good idea? I currently have a low deductible plan but pay a higher monthly premium. How should I think about this as a financial mutant with HSA access?”

Discussion Highlights:

Bo Hanson advocates for Health Savings Accounts (HSAs) due to their triple tax advantages but acknowledges that high deductible health plans (HDHPs) aren’t suitable for everyone. He provides a scenario where opting for a low deductible plan might be more beneficial, especially if the current low deductible plan offers comprehensive coverage with affordable premiums and minimal out-of-pocket costs [20:08].

Brian Preston echoes the importance of “doing the homework” during open enrollment, advising listeners to assess their anticipated healthcare needs for the upcoming year. He advises comparing premiums, deductibles, employer incentives, and tax savings to make an informed decision [20:08].

Bo further breaks down the decision-making process into evaluating premiums, healthcare usage, employer incentives, and tax benefits, recommending a systematic comparison of these factors to determine the most cost-effective and suitable plan [24:13].

Notable Quote:
Bo Hanson advises, “Stack up those four columns or those four rows for all of your health plans... and make sure you're always optimizing.” [24:13].

Conclusion:
Choosing the right health insurance plan during open enrollment requires a thorough evaluation of personal healthcare needs, financial implications, and available incentives. While HSAs offer significant tax benefits, they may not be the optimal choice for everyone, particularly those with low healthcare utilization or who benefit more from comprehensive, lower-deductible plans.

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Final Insights and Takeaways

Throughout the episode, Brian Preston and Bo Hanson emphasize the importance of strategic planning, diversification, and informed decision-making in personal finance. They advocate for:

• Maintaining Adequate Liquidity: Ensuring sufficient emergency funds to navigate financial uncertainties without jeopardizing long-term investments.

• Diversifying Investments: Avoiding over-concentration in single entities or investment types to mitigate risks.

• Proactive Financial Management: Regularly reviewing and adjusting financial strategies to align with changing personal circumstances and market conditions.

• Effective Communication in Households: Discussing financial goals and strategies openly within households to ensure cohesive and resilient financial planning.

Notable Closing Quote:
Brian Preston concludes, “Money's only a tool. It's not really a goal. Take an active role in your financial life... those small little decisions... can lead to your great big beautiful tomorrow.” [25:26].

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This episode serves as a comprehensive guide for listeners seeking to make informed decisions during open enrollment, manage early retirement finances, evaluate employer investment opportunities, and establish robust emergency funds. By addressing real-world questions with practical advice and expert insights, Brian and Bo provide valuable resources for anyone looking to enhance their financial well-being.

Transcript

[Joshin]

Joshin wrote in and asked, what are the rules for living off of stocks before retirement? I'll have a few years of no income because of grad school, but I have about 350k in brokerage. In a brokerage account, do I sell slowly or all at once? And what do you think about this idea?

[Bo Hanson]

What are the rules about living off of stocks before retirement? A few years of no income because of grad school, but after infinity brokerage account, do I sell slowly or all at once? Well, what are the rules about it? Well, we know this. If we've been saving into retirement accounts, if we've been saving into 401ks or Roth IRAs or accounts like that, we can't use them until a certain time. We can't actually get to those assets until 59 and a half. Or if it's a 401k, if we're. We retire in the year we turn 55, we can do that. But these are like retirement assets. And so I think the question Joshin's asking is, okay, before I get there, before I get to 59 and a half, how should I think about creating an income stream? And if I have a portfolio, he said, right Now I've got $350,000. How do I think about that? And we have a lot of folks who do enter into early retirement and they're part of the fire movement or fine movement. And there are some things that you can think about when it comes to early retirement. Like one of the ones I think about, that I know we do for a lot of clients, is if you're able to manipulate your income to the extent that you can keep it super low, you might qualify for 0% capital gains. So even as you have these stocks and you begin to liquidate them as needed, you can pay 0% capital gains if you stay below certain income thresholds. What I think is interesting, though, for Joshin is if. Did he say his age?

[Brian Preston]

No, but he said brokerage accounts. I'm assuming these are not retirement. These are after tax assets.

[Bo Hanson]

One of the things that I would think through is if you're entering into retirement or if you're entering into pseudo retirement, what I would argue is that before you even think about, okay, well, how am I selling my stocks and how am I selling my brokerage assets is my level of liquidity at the place that it ought to be at. Because we say that when you're accumulating and you're in step four of the financial order of operations, you want to have three to Six months of living expenses in liquid cash. However, when you get to retirement, when you get to financial independence, you start living off of these assets. We want to see your cash levels increase. We want you to have somewhere between 12 to 18 months of distributable living expenses available for you. Well, if you do that, what you're not going to do is get in a situation where you have to start immediately selling stocks or selling stocks at the worst possible time. So my immediate question for Josh would be like, okay, what's the strategy? Or what are the rules for pulling out in early retirement? My question would be, what's the rest of your financial situation look like? Because that's going to dictate what the rebalancing strategy inside of the portfolio looks like.

[Brian Preston]

Well, I think it's interesting because I'm going to take the stance that he's younger and he's on a sabbatical. He just said, I'm 28, so younger on a sabbatical.

[Bo Hanson]

This isn't retirement.

[Brian Preston]

Well, but this is what makes it weird is like if you were a retiree, it's not hard for us to say, let's make sure you have 12 to 18 months of cash in your account and we'll replenish this every 12 to 18 months so that we can go to market and take advantage of are we in a good time or a bad time? And take advantage of what's been performing the best and look at the tax rates and all the other things and it's a nice clean system. I worry about for somebody who's in their 20s is because if I had to guess, your asset allocation is going to be probably equity and then cash. That's it. Whereas your retiree is going to have equities, they're going to have bonds. So even if I liquidate, if we're done with cash for retirees, if the market's getting its teeth kicked in and I still need to get access to assets, I have a whole huge basket of fixed income and other very conservative assets. I can still go replenish the cash flow in retirement. Whereas you in your 20s, if you don't think about this sabbatical or period of time, well, you might if you only did if you were pulling a just in time accounting system on your cash flow and selling every month. What do you do in those months or those intra year volatility periods where the market's down 15% in a month? You're going to be like, holy cow, where am I going? How am I going to pay the bills on this and you're going to get caught making a desperate decision. Fast forward. Maybe you even said, I'll just go ahead and I'll liquidate for the next 12 months or even 18 months. Because I heard the guys talk about 12 to 18 months. That's what they do with retirees. And then what happens? You get into 24 months and the market is down 30%, 40% because your asset allocation is all equity, it's not going to be as well. So grad school, here's the thing. Begin with the end in mind. You know the time period, you know the goal, which is grad school. Make sure that you, I don't mind if you want to have a multiple tiered system here with it, but you probably need to go heavily more on the cash side of the thing of what the total value of the goal is because you don't have a backup plan. And you're definitely within that three to five year of what I consider short term. This isn't money you want to have at risk. So don't just assume you're the same as a retiree because your asset allocation and all the other things don't align the same way.

[Bo Hanson]

Yeah, I think I probably misunderstood the question. I was thinking pre retirement, but this is how to fund something like an intermediate term goal. So that if that's the question, Justin, here's a rule I think that I would think through. I want you to go to moneyguy.com resources and I want you to check out our wealth multiplier because here's what I really want you to understand. If you're going to take a sabbatical or if this is going to cover your grad school, you really need to understand the cost of every dollar that you take off the table. Right? So if you have $350,000 in an after tax brokerage account, that's wonderful. At 28 years old, you are well on your way for that money to turn into millions of dollars by the time that you get to retirement. But if you live off of that 350 and you pull it all out over the next four or five years, you need to recognize that what you did in that season was you pulled millions of dollars out of your future financial self. So you have to figure out, does that make the most sense? This is where I think, especially for people who are going to cashflow grad school or going to try to live off of their resources while they're still in the accumulation phase, being as lean as possible and having as small of a footprint as possible is probably the best solution. What you don't want to do is live high on the hog, get to the end of the sabbatical, get to 33, 34 years old, about to restart in your career, and say, holy cow, I burnt through all the stuff I saved in my twenties.

[Brian Preston]

Now I'm behind.

[Bo Hanson]

Now I'm behind. Right now you are in the ahead position. I would try to do everything in my power to see how do I stay in the head position, by the.

[Brian Preston]

Way, in case this becomes a highlight. What was great about doing a live show is that we were getting additional details fed to us. So if that came off as, like, why is this segmented? It's because I give the content team y'all were giving us. I guess information is coming through the chat y'all are putting on the teleprompter. It's not even a teleprompter, but it's in front of the monitor. The comfort monitor.

[Bo Hanson]

The comfort monitor. That's what we call it.

[Brian Preston]

That's a teleprompter, too?

[Bo Hanson]

No, it's just a screen.

[Brian Preston]

So we see slides.

[Joshin]

Yeah, that is a thing. Like, if you're, like, live speaking. Comfort monitor, by the way.

[Bo Hanson]

Yeah.

[Brian Preston]

When I was doing the book tour, I was like, can we just have a comfort monitor so I can see the slides and notes? And we didn't. So it was raw.

[Bo Hanson]

Remember the location?

[Joshin]

He was like, we didn't.

[Bo Hanson]

Was it the Texas location?

[Brian Preston]

Yeah, it was in the movie theater.

[Bo Hanson]

Could you imagine adding a comfort monitor in there? No way. It wouldn't have worked, by the way.

[Brian Preston]

I can tell you, if you ask me, my favorite venue. It's been far enough along that I can say this now. It was at Dallas show, which was in a movie theater, I kid you not. They basically just go into a movie theater and flip on the lights and then just bring two nerds to stand in front of everybody. And I loved it because there were so many unique things that happened. Like we had a cockroach go across the floor. Floor that Carter kicked out of the way. We had one of you lovely people who was in the audience. You decided with the full lights on. Decided crocheting right in the second row. Just going to town while I was talking, which was just kind of a unique thing to look up and see somebody just crocheting all the way through.

[Joshin]

It was the only place where you could see the money. You could see people and make eye contact with them. And I think it made for a funnier show, but I think you are.

[Brian Preston]

Oh, and how about the fact that every second room, there was no green room or place for. So Beau and I were just hanging out in the entrance of another movie theater that we thought, like, there was no movie in there. There was no show going on. And then all of a sudden, this older woman, I guess she was gonna be the only person that watched this movie I'd never heard of. And she's like, what are y'all doing here?

[Bo Hanson]

Cause we were both dressed up. She's like, I think we're going to the wrong movie.

[Brian Preston]

Funny things.

[Joshin]

Honestly, that was a really fun show.

[Bo Hanson]

Good energy.

[Brian Preston]

It was a blast. I mean, we pretty much sold. We sold out this thing and then had everybody and you guys, Dallas. I left that not only thinking the barbecue was really good, but I was like, maybe I could live in Dallas because, I mean, you guys made us feel so welcome there. It was awesome.

[Joshin]

They like us in Dallas.

[Bo Hanson]

We gotta figure out another reason to take this show on the road. That was fun.

[Brian Preston]

And we got to meet Jake there too, you know, so it's fun.

[Bo Hanson]

Meeting Jake said Dallas was the best because I was there. He literally said that in the chat right now.

[Joshin]

It's kind of true.

[Brian Preston]

Maybe it was because Jake's wife was there.

[Joshin]

Yeah, we got to meet her.

[Brian Preston]

She was. She gave all the beans, by the way. She just spilled it all.

[Joshin]

All right, good sidebar there. But all that to say joshin. Thank you for that question. If you would like a money guy tumblr, just email winneroneyguy.com and we would love to send you one since we answered your question on the show today. All right, speaking of people we met on the tour, Carlos has a question. Hey, Carlos, I just wanted to know how big should my emergency fund be? If we are dual income and plan to rent out our house, should we have separate emergency funds for each? And I like this question because he's respecting your real estate and cash rules, Brian and Bo. So maybe you can speak to it and give him a little bit of guidance.

[Bo Hanson]

Yeah. So let's talk about what should your baseline emergency fund be? If you're a dual income household, and let's say that you have about the same income, There's a lot of folks who say, hey, we want to be a little bit more aggressive. We feel comfortable with three months of living expenses for our emergency fund, and that's appropriate because we're both income earners and we're both at about the same spot. That would be permissible and allowable. But say you're dual income earners, but one of you has a much higher income than the other. Well, I would argue that there's more risk inherent in your situation. So your emergency fund should likely be greater than three months. It should probably be somewhere closer to four, five, maybe even six months of living expenses. Well, that's just in the normal circumstance. That's just in the normal environment. Whenever you start introducing real estate and you start thinking about having a rental property or having other assets and obligations, I think that also affects the emergency funding, the appropriate emergency fund levels.

[Brian Preston]

Agreed. Yes. And that's why I think when you get into this level of complexity, it's not. Look, the input of what you're trying to create is only going to be as good as all the scenarios you plan for. And that's why I know we throw them out there all the time. But it really is. When you get into doing rental property and renting out a house that you used to live in, you kind of starting a new business. I mean, and there's a lot of things, even when you're thinking about taking on a brand new job, that's a new endeavor and it's going to change your cash flow, it's going to change your house dynamics. Don't sleep on doing the 3D glasses plan. I mean, there's a reason we talk about this is that I want you to do some preparation and do some homework and figure out, hey, what's going to happen if this goes really well? That's the dream plan. If it goes how I think it will, that's the down to earth plan. And then what happens when literally this thing goes belly up and it's the doo doo plan? Don't sleep on that. And that's why you might come to the. Because it'll let you do a gut check on your personality and how you handle the emotional stuff as well. Because if you, if you are two separate people from an emotional way, you look at money and you, you see the doo doo plan and you like full on panic. We can't, we got to make sure that we boost up our cash to get us through this point here. But then you're married to a cowboy that's like. Or, you know, you're in this relationship with somebody who's like, oh, it'll be all right. You know, y'all are in completely different places. Different places. You've got to go ahead and have that communication plan. And what if you're in two different places and yalls income? Exactly what bo was talking about are in two different places on who can provide what. You've got to reconcile those things. And why not do it now before things go south, either with the property or with the dynamics of if you are having a tough time in the relationship, it's better to go ahead and plan this stuff now, now, while things are good, versus letting this be the thing that creates a lot of stress and strife in your relationship.

[Bo Hanson]

I do think. Let me ask this. What are your thoughts on keeping those funds separate? Like, can you have all one emergency fund? Or if you have a rental property, should you think of that as a separate bucket of emergency funds?

[Brian Preston]

Well, you have to be careful. Look, I don't want to because there's a state, you know, there's. There's who owns what. Relationships are tough. And I didn't hear Carlos talk about marriage or whatever. So that's its own other dynamic in there as well. But I'm trying to be respectful of the fact that if this is a couple living together but not married, is that these things are strange dynamics.

[Bo Hanson]

No, I'm talking about the household emergency fund versus if you have a rental property, should that all be combined into one emergency fund or should you have a separate emergency fund?

[Brian Preston]

No, I think you could treat it as a separate because you essentially have an entity together. But I do think what I thought you were alluding to, and I've had this conversation with somebody else recently, when you have two people making completely different incomes and they're living together and sharing a house, is that money can become a power dynamic. And I always think that that's a weird thing because relationships are already hard. So you just want to make sure that you all have really good communication about the dynamics of money and emergency reserves and access and all the other stuff, because that's the hard parts that make a relationship where it can get difficult. And if your communication is not good, it can fall apart. I don't know if that was clear, but that's what I would say.

[Joshin]

Lots of angles, but they were all good things to think about. Carlos, thank you for the question. If you don't already have one and want a money guy tumblr, just email winneroneyguy.com all right, Eric has a question. Up next, it says, my company offers you to buy into ownership. Shareholder bonuses usually are about 10 to 20% of the initial investment and the value of the shares increase over time. What step of the foo is this?

[Bo Hanson]

Okay, so the company offers you to buy into ownership shareholder bonuses usually about 10, 20% of the initial investment, the value. Yeah. So this is just. I'm going to call this making partner. I have the making partner opportunity at my employer. Because here's what you didn't say. You did not say this was some sort of like employee stock purchase plan where you're getting a discount on the shares. If you're getting a discount on the shares, I'd argue that's like free money. That would be more of a step two thing. If this is something where you're just able to buy into the entity for whom you work and you're able to do it at a reasonable market valuation, in my opinion, this is going to be a step 7 hyper accumulation, step 8 type goal. Because you want to make sure you've done all the other things. Brian, can you hold up the thing real quick? You want to make sure that you've got the emergency fund in place and that you're building your financial foundation. You've maxed your Roth ira, you've done your hsa, you're funding your retirement accounts. And this is no different than, quote unquote, starting a business. Right. Like, you would put this in the same place as starting a business. Because basically what you're doing is you are, in fact investing in a business. It just happens to be a business that you also work for. So not only are you saying, hey, my human capital is tied up in this thing and this is where my paycheck comes from, but now I also want to tie some of my financial capital to it. And while that could be a wonderful thing and could have an amazing roi, you want to make sure you're doing it at the right stage of your financial journey or not too early or you become way over concentrated.

[Brian Preston]

I've got a word for Eric, Illiquid. You think about this. BO laid out all the details, but even when we get to steps five and six of the financial order of operations, I mean, I don't want you. It would make me cry. I mean, physical wet tears coming down my cheek if you actually tried to get to your Roth IRA for an emergency. But you could do it. I mean, you really could do it. You could get. Even your 401k would probably allow you to either take a loan or hardship. You could get it. I would not advise it. It's not a good idea. But if you get in a pickle of a situation and you call your owner of the company and say, hey, you know that stock purchase plan I'm in, I've got a little hardship going on right now, I'D like to get some of that money back. They'll be like, no, it doesn't work like that. This is an illiquid investment. You have a period certain, or there's windows where you can take action, but only in those windows. That's why BO is spot on. Since this has limited access, it is illiquid. This is a step eight of the financial warranty order of operations. This is something after you've built the financial foundation underneath you and you want to maximize the opportunities of what this could create for you, both from cash flow as well as from an investment in your employer. But I also, I think BO said something that I think is very valuable and should be emphasized. Be careful having both your human capital and your financial capital all loaded up in only one entity. Look, some of you can't help avoid it. Like, look, I've started several small businesses and it's just the nature that sometimes that becomes one of your biggest financial assets. But I've tried in the background to be building up as much liquidity and access to assets elsewhere outside of my small businesses as fast as possible. Don't just assume just because things have been good this year and for the last five years, 10 years, that trees don't grow to heaven.

[Joshin]

Great. Well, Eric, I know I was reading all the names that I had already done, but Eric, if you would like a tumblr, just email winneroneyguy.com, we would love to send you one. Thank you for submitting your question. All right, Amber's question is up next for you. It's an open enrollment question. She says, yeah, when might I know? It's that time of year. When might an HSA or a high deductible plan not be a good idea? What should I consider? I currently have a low deductible plan, but pay a higher monthly premium. So how do you think about this as we go into this open enrollment season, especially as a financial mutant with that HSA access? Potentially.

[Brian Preston]

Yeah.

[Bo Hanson]

So, you know, we love HSAs. We love what they can do for you. They're triple tax advantage. You can put money in on the front end, get a tax deduction. You can invest the dollars, they can grow tax deferred and then you can use them tax free for qualified medical expenses. They are wonderful, but they're not the end all be all. There are a lot of circumstances in which. And by the way, in order to be able to contribute to a hsa, you have to be covered under a high deductible plan. Well, the high Deductible plan is not always the best decision. I'll speak to one scenario where it's not and I'll leave some more for you. One scenario where it doesn't make sense is let's say you work for an employer that has highly subsidized Cadillac insurance. You could go get the high deductible plan and maybe it's going to be a lower premium or maybe your employer covers 100% of the cost if they have another type of insurance that is fully subsidized or highly subsidized and it's just co pays and it's not going to cost you a lot either for the premium or for the services that you might receive throughout the year. And you're a healthcare user that goes to the doctor and needs those services. You may be much better off taking the very, very affordable, really, really good Cadillac health insurance instead of opting for the high deductible plan just because you want to be able to contribute to nhsa. There's one example.

[Brian Preston]

Yeah, look, you gotta do the homework. Don't skip leg day. Meaning that open enrollment should not just be. Do what you did last year. It needs to be. You need to think ahead, begin with the end in mind and say, hey, in the coming year, what am I going to be using healthcare for? Is it just catastrophic protection like a high deductible health plan will be providing? Because I feel healthy, things are good, no big life changes are coming my way. That's one option. But I always, you know, I'm the one like a knucklehead that still does a lot of the HR and payroll stuff around here. And I love. One of my favorite things because it's kind of like a gossip thing. This is what it feels like to work at tmz, I think, is that when we do open enrollment, I get to see what people are choosing on their health insurance. I'm like, oh, oh, somebody's doing some family planning because they went to, because they went to that high prime, they went to that Cadillac plan. I'm like, I wonder why they're doing the Cadillac plan this year. And I know because we have a bunch of financial mutants that work here. They're doing it because they're growing the family. More than likely in the next 12 months, I'm going to have them come to my office and, and say, guess what, you know, we're growing the family. And I'm like, yeah, I kind of knew it, you know, because I saw your, I saw your health insurance election so there's nothing wrong. And look, that's the fun part of it. I'll tell you. I turned a certain age and so did other people in my household that I knew that there was, like, some testing that was required at these ages. It's expensive, it's pretty invasive, and they put you to sleep and, you know, we go to the facility to do all this stuff.

[Bo Hanson]

Tell us more.

[Brian Preston]

Well, I'm just telling you, you know, that this ain't cheap. You know, all these. And they even got this racket set up to where you have to go talk to the doctor first. You're like, hey, you guys have told me we have to do this. Why do we have to have a consult beforehand to do this? Everything is to extract as much out of this process as possible. You might want the Cadillac insurance. You have a lot of procedures or surgeries or things coming up. There's nothing wrong with you being a proactive participant, doing the homework, thinking about how you're actually going to use this plan in the coming year and do it. And then by the same token, though, if you did grow your family last year and now you got open enrollment coming your way, and you know, hey, everybody's healthy. It looks like this is good. Don't just stay on the Cadillac, because that's what you did last year. Go to that high deductible plan, get back on the HSA savings, and don't skip out on just doing the homework. Bo, you always share. I'm going to screw this up. So that's all right because I got you to protect me.

[Bo Hanson]

Yep, I'm here.

[Brian Preston]

You're supposed to look at what the premiums are on the high deductible versus the Cadillac, and then go look at how you're using the money because you got the savings. You got to go. Then compare where your deductible is on the two different plans, see where the difference is, figure out where the break even, and then make your decision.

[Bo Hanson]

Yep, that's the two of them. Then the next two are any employer incentives. If your employer puts money in your HSA or if they offer any sort of health reimbursement account or something like that. And then fourth is tax savings. So you have premium costs, you have actual healthcare costs, employer incentives, then you have tax savings. You stack up those four columns or those four rows for all of your health plans. And every year in open enrollment, you make your decision which one makes the most sense for next year. And then next year, you rinse, repeat, rinse, repeat, rinse, repeat, and you make sure you're always optimizing. Hey, well done.

[Brian Preston]

Well, I got a good tag team.

[Bo Hanson]

You know, hey, 500 will get you in the hall of Fame.

[Joshin]

Amber, great question. Thanks for being here. And we would love to send you a Money Guy Tumblr just as a thank you. So, since we answered your question on the show, email winneroneyguy.com to cash in on that. Remember, just because the live stream ends doesn't mean that the personal finance conversation ends. Go to moneyguy.com where we have our entire archive of episodes on all kinds of topics, along with moneyguy.com resources where you can get all of our free stuff. We've got some calculators, some free downloads that go even more in depth on some of the topics that we talked about today and more. So be sure to check that out because we made it for you.

[Brian Preston]

Ruby, what I loved is that last question let me highlight, that really did highlight the fact that money's only a tool. It's not really a goal. So, you know, that's what I think we try to put out there to our Money Guy family is take an active role in your financial life. You know, actually realize those small little decisions you're making really can lead to your great big beautiful tomorrow. I'm your host, Brian Preston. Mr. Bo Hanson. Money Guy Team out.

[Narrator]

The Money Guy show is hosted by Brian Preston. Abound Wealth Management is a registered investment advisory firm regulated by the securities and Exchange Commission. In accordance and compliance with the securities laws and regulations, Abound Wealth Management does not render or offer to render personalized investment or tax advice through the Money Guy Show. The information provided is for informational purposes only and does not constitute financial tax, investment or legal advice.