After reciprocating blog posts a little over a year ago (here and here), Mr Clipping Chains and I sat down for a podcast session a few weeks back. It went live today. If you want to take a listen, here it is: https://clippingchains.com/2022/04/11/ep-29-frugal-professor/.
Cliff notes version of the podcast:
- Brief recap of my money journey.
- Then we geek out about his post-FI tax bill (e.g. Roth conversions, tax-free cap gains, ACA subsidy implications, etc).
- Then we chat about life a bit.
Thanks to Mr Clipping Chains for the fun chat!
6 thoughts on “Podcast Interview with Mr Clipping Chains”
Hey Frugal Professor – I listened to the podcast with Clipping Chains – and I must say that was really well done. I am one of your 3 subscribers that you mentioned on the podcast – Thanks for the shout-out 🙂 About 5 years ago when I really started getting into the concept of FI and maximizing saving and tax concepts – I listened to all of the Mad Fientist podcasts. For me, the two that probably had the most tangible impacts for me were (a) the Millionaire Educator episode – which unlocked for me the concepts of being able to use both the 403b and the 457 (my wife is a teacher); and (b) the Go Curry Cracker episode- for the tax strategies. I definitely rank your Clipping Chains interview in that category. I think you really did a great job of methodically walking through (for post retirement funding strategies) the differences between the liquidity cash from a stock sale vs. what would be considered capital gains income for tax purposes. And then analyzing the impact of this for either capital gains harvesting/Roth conversion vs. ACA cliff. It was great to hear that, and you most definitely set things out quite clearly. I would recommend this podcast to anyone – and I hope to hear you on future podcasts!! Going in – I would have put the over/under for Costco mentions in a Frugal Professor podcast episode to be about 47 – and you were way under – which was really surprising! Anyway – great job.
Doug, thanks for the feedback on the episode. Glad that it was somewhat coherent. And my apologies for not mentioning Costco enough! Didn’t mean to ruin the over/under!
I had a fun time on the podcast. Maybe I’ll try it again some day.
Count me as one of your three subscribers as well. I enjoyed the podcast but I’m not sure I’m sold on it being much better than entertainment, mostly because it doesn’t end up being as information dense as I prefer. You know me and my preference for encyclopedias 😉
Thanks for the feedback. I agree that the information density of podcasts is necessarily lower than writing.
I hope all is well on the encyclopedia front!
Dr. FP – I listened to the podcast and thought it was good, but I had two observations that I thought I would share.
1. Mr. CC asked you about your plans since you are at the crest of FI (nearly 100% at 3.5% WR). Your response was was a total deferral and “ask me in 5 or 10 years.” But in 5-10 years you are going to be way over funded for retirement. That is clearly not a bad thing, but in 5 years you are probably going to be at a 2% WR, if not lower. I guess you were nervous with the question and wanted to pass, which is fine since I don’t know how I would answer, but if you keep working full time for 5 more years, you are going to way overshoot. (Again not a bad thing)
2. At one point in the interview, you and Mr. CC were trying to figure out if he should do Roth Conversions and at what tax rate it was good to do versus not do. This is a solvable problem with reasonable estimates. With the foundation of budgeting/tracking and tax analysis (both of which you have), you can mechanically forecast what the future will be like and what your tax rate will be in the future. Of course assuming no legislature changes, but no one knows those and I would argue they are likely to be small changes, not wholesale rewrites. I would be happy to share my approach, but I have found it really useful since effective tax planning is really a lifetime issue, not a year by year problem.
1. You’re right that if I keep working, I’ll likely overshoot. I’m still trying to figure things out. One solution is to spend (or give) more. Another is for my investments to plummet. Another is to more generously fund our kids’ future higher education. This month, I managed to have lost ~$130k and spent much more than normal, so I guess I’m doing my part to not overshoot.
2. With a bit more time, I would have been able to do a better analysis than on the fly. My live answer wasn’t great. I agree you can reasonably model and estimate tax liabilities into the future. The tradeoff with any decision (like an extra $1k of Roth conversions) is marginal-tax-rate now vs marginal-tax-rate later (https://frugalprofessor.com/trad-vs-roth-marginal-vs-marginal-vs-marginal-vs-average-wisdom-from-mdm/). The marginal tax rate now is always readily computed (as we did in the podcast). The marginal tax rate in the future depends on a whole host of parameters (future tax rates, investment returns, social security income, inheritances, lumpy and potentially unexpected expenditures, etc.). Despite the uncertainty of the future, I agree that we can guesstimate what the future might look like.