Afford Anything - Q&A: How Do You Maximize a Mini-Retirement?

Episode Date: September 30, 2025

#647: What if you and your partner want to take a few months – or even a year – off work?  How do you handle health insurance once you leave your jobs?  And how do you make sure the time off isn’t wasted, but becomes a launchpad for what’s next? In this week’s Q&A, we dive into those questions.  We also cover three more listener questions: what to do with a leftover $125,000 in a 529 account, how one listener landed a fully remote job with a 30 percent raise, and whether you can amend your taxes after a FEMA-declared disaster. Listener Questions: Danielle (04:35): “We want a mini-retirement. What should we do about health insurance – and how can we make the most of the time off?” Danielle and her husband want a break, but don’t want to go uninsured, and they also don't want to squander their mini-retirement. We look at what happens when you leave a job, where to find coverage, and how to design a mini-retirement that sparks discovery instead of regret. Lee (32:17): “We have $125,000 left in a 529 account. No one needs it for school. What should we do?”A six-figure leftover balance sounds great, but it comes with tricky rules. Can you roll it into a Roth IRA? Use it for other programs? Withdraw without a tax hit? We explore the surprising flexibility inside a 529. Pedro (44:06): “I followed your job search advice – and just landed a new role!”Pedro once struggled with dead-end applications. Now he’s celebrating a fully remote job, a big raise, and better alignment. How did he do it? By targeting the intersection of his skills and industry, instead of casting a wide net. Melanie (53:35): “I spent $45,000 after a FEMA-declared disaster. Later, Congress passed retroactive tax relief. Can I benefit?”Disaster tax relief is confusing, especially when laws apply after the fact. Melanie asks if she can amend her return to capture new benefits. We talk timelines, amended return rules, and why professional help matters. Timestamps: Note: Timestamps will vary on individual listening devices based on dynamic advertising segments. The provided timestamps are approximate and may be several minutes off due to changing ad lengths. Key Highlights How to get health insurance during a mini-retirement. Why treating time off as a “science experiment” can reshape your career. Smart options for a leftover 529 account (including new Roth IRA rollovers). A real listener’s success story: from stalled applications to a remote job with a 30% raise. What to know about amended returns for FEMA-declared disasters. Resources Pedro's original question on Episode 605 Healthcare.gov — ACA marketplace for insurance enrollment The Power of Fun by Catherine Price Digital Minimalism by Cal Newport Freedom app — tool for blocking distractions Share this episode with a friend, colleagues, your cousin who is obsessed with latest meme stocks: https://affordanything.com/episode647 Learn more about your ad choices. Visit podcastchoices.com/adchoices

Joe, when you were 40, you sold your financial planning practice. Did you think about taking a mini retirement after that? No, not really. I thought about, I was so excited about going into teaching at the time that I did not at all. I was fired up and ready to move on. How old were you the first time that you took a mini retirement? Oh, wow. I felt like the whole time that I was in school, I truly was kind of on a mini retirement

because I wasn't working. I was just taking classes and picking up my kids. Slacker student. That's a slacker student. I felt like school was retirement. Wait, you, you are balancing a full-time academic course load with raising twins. Yeah, yeah, but it wasn't hard. It just did not seem difficult. Sorry, students. Man, I want your professors. I know. They were actually really good professors, but it just did not seem, school did not seem difficult when I went back. But they say that anyway, right? That when you go back. People that take gap years and come back to school later and they know why they're there.

They know what the professors focused on. I would bet when you were just recently in school, it felt like you had a clear understanding of what the objective was. Yeah, you know, it was very time consuming. Like I certainly had an extremely busy schedule. But what was nice about it was that I wasn't in charge of designing the syllabus. You know, like, I didn't have to worry about any of it. I could just show up. I could just passively show up and be like, I'm here.

Teach me. Yeah, exactly. And that's something that I think you appreciate after you have been out in the real world, particularly in a managerial or leadership position for a while. And then you go back to school and you're like, ah, I am not responsible for putting the syllabus together. This is great. Hurrah. Yes.

At any rate, where all of that is going, it's a long walk. But we're going to address a question from a listener who is in her mid-30s. She and her husband want to take a mini-retirement, but they have some concerns. They're nervous about certain things. We're also going to hear from a listener who has a young family. They want one parent to be able to stay at home. In order to do that, they would feel much better if they had their mortgage paid off. We're also going to hear from someone who spent nearly $45,000 trying to recover from a FEMA declared disaster.

And after spending that money, Congress passed a retroactive tax relief bill. So what should she do? We're going to tackle that. And we're going to also hear from a listener who took our advice and it worked. Hey, oh. Welcome to the Afford Anything Podcast, the show that knows you can afford anything, not everything. This show covers five pillars. Financial Psychology, increasing your income, investing, real estate and entrepreneurship.

It's double-eye fire. I'm your host, Paula Pan, to every other episode-ish. I answer questions that come from you, and I do so with my buddy, the former financial planner, Joe Sal C-high. What's up, Joe? I am so excited to be here today because, well, my house is a wreck, as I showed you earlier. Yes. It's way more fun than trying to navigate around a construction zone. Yes, you are currently, and this speaks to social capital.

You are staying with a buddy of yours who lives down the block. It is. I put out my thumb and... You hitchhiked there? I hitchhiked. I have been to both your house and this buddy's house, and I can state with firsthand knowledge that you live walking distance apart. I do, yes. Hitch hiking not required.

When you think about the wealth that's in your life, think about your financial wealth, but also think about your social capital, the friendships that you've made. You know, who are the people who would take you in when your roof gave way and your home flooded and all of the flooring needs to be pulled up? And that is literally, Joe, the situation that you find yourself in right now. Not even figuratively. It is literally where we are right now. All the flooring in my house is pulled up because it all got wrecked. So good times. Yeah. And that's the beauty of good neighbors. And good homeowners insurance.

If only we could transition to an ad break, but we won't. Instead, we'll transition to our very first question, which comes from Danielle. Hey, Paul, and Joe. My name's Danielle, and a while back, I listened to your mini-retirement episode. It's really great, really inspired me. But one thing I can't really wrap my head around is health insurance. I have a situation where my husband will be between jobs for, six months to a year. We have plenty of money to kind of hold us over for quite a bit of time.

And I'm kind of just wondering, I'm ready to pull the trigger, maybe visit all the national parks, go live in Hawaii for a little bit, go do things that like really bring me joy because work is not one of those things anymore. And I just don't know how we would do the health insurance part. Where do we go? Where do we book? What of our best options we are in our early? early 30s. I'm trying to do this before we have kids, trying to have some fun. Just really scared to leave this job. But this job doesn't bring me joy anymore. So I got to do something that will. I think I'm a little afraid that even after this many retirement, I won't know what brings me joy or where I should try and find work afterwards. But maybe that means I need this retirement.

I would appreciate your input. And I need the push. I need the push that. maybe a mini-retirement could be better than retiring of 10 years early. Thanks, guys. Danielle, thank you for the question. If I may, your direct question was about health insurance. I don't think that you actually asked a question about health insurance, though. I think your true question behind the question is, how do I find the confidence to take this mini-retirement? Because it's clear to me from your question that you're not happy with that. You're not happy with the work that you're currently doing. You know that you have decades of work ahead, and you know that the status quo is untenable. You don't want to spend the next three decades doing work that doesn't

bring you joy, doing work that doesn't serve a greater purpose, doing work that isn't your calling. A mini-retirement is a great break from that, but what I'm hearing in your question is that you don't simply want to hit pause, have an escape for six months, and then come back to a life that's same old, same old. A mini retirement is best when it's not just like watching a movie and then you go back to the same life that you've always done, but instead it is a transition that you experience before you embark on something even bigger and better and more of a fit. And the reason I'm reading that much into your question, Danielle, is because the direct question that you ask, the health insurance piece, easy, easy, easy, health care.gov, done, problem solved. There's

an open enrollment season that is at the end of the year, but if somebody has a major life transition, which leaving a job qualifies as a major life transition, whether you are laid off or fired or quit or whatever, if you separate from employment, that qualifies as a major life transition, which means you are qualified to enroll in healthcare.gov when that happens. And so when you lose your employer-sponsored health insurance, you will be qualified to enroll through health care.gov. And then you just go on there and you shop for plans and you buy one. It's no different than buying groceries or theater tickets. Yeah, making a car payment every month. I mean, it's expensive. Yes, the cost is going to vary depending on your state and your age.

But fundamentally, what do you do when you need something? You buy it. Now, if you want, we could talk through the definition of co-insurance versus co-pay versus deductible versus annual out-of-pocket maximum. We could walk through that glossary so that you understand the options. I'm happy to do that. I don't think that's your question, though. No, I think the bigger question is around the push.

As I thought through this, and I thought through my life and my career and some of these big potentially life-changing decisions I've made, Paula, I don't look back at any of the decisions that I made and think to myself, man, I wish I'd waited longer to make that move. In fact, usually it's the opposite. Why didn't I do that sooner? And I think there's a lot to fear. I feel fear very, very strongly. If I were in this situation right now, I've been in this situation before, sold my house and all my property and decided to become a digital nomad. That was a little scary and to embark on a whole different adventure. But I should have done that sooner. When I look at statistics around vacations and many retirements,

it takes people a full two weeks to just get their head on straight. Here's a scary fact. do you know how much paid time off Americans waste every year and never take? Oh, I know it's a big number. According to Forbes, it's 765 million vacation days every year that we don't take. We're tired, Paula. We're tired. We're burning the candle at both ends. And so to get two weeks is great.

To do what Danielle's talking about and taking a mini retirement, even so much better. to not even go back into that environment. And I do believe that there are a bunch of people in the fire community who think that they want to drop out because they're so tired and they're so sick of their job when truly, I believe this mini-retirement is a way better idea. The right work feels so fulfilling. And I think we'll hear this later on today from another afforder about how fulfilling getting into the right climate can be.

The right work is energetic. It is so interesting. You just want to go. You want to do it more. You want to be there every day. And I've been in both climates. So I get how in some climates you're like, get me the hell out of here. I never want to work again. And then when you do take on another role and it's super fun, you're like, why wasn't I doing this forever? This is amazing. But it can change very quickly, Paul, as you know, just a boss change. And one of my jobs that I loved, my boss changed and our entire department, Morales, Al went through the floor because the new boss just was a whole different topic. But it can change very quickly. So I love the idea of mini retirement, A, to recharge, B, to get out of what could be either a toxic or exhausting situation. But third, just because your life is an adventure. The research shows that the three qualities that most highly correlate with your job satisfaction are mastery, autonomy, and purpose. Danielle, I am guessing that one of two things is going on. Either you have a direct supervisor or direct

manager, that relationship is not going well because there is research that shows that your feelings about the person to whom you directly report is a huge factor in your level of job satisfaction. Either that's happening or the other possibility is that you do not feel massive. mastery, autonomy, or purpose within the work that you're doing, that at least one of those three qualities is lacking, maybe two out of three, maybe all three. I'm guessing some combination of those factors, relationship with direct supervisor, lack of mastery, lack of autonomy, lack of purpose. When those elements are missing from the work that you're doing, that greatly increases your likelihood of not enjoying that work.

It's interesting, Paula. When I was in a leadership role, when people came into my office and asked for more money, I had to slow down and assess that situation because sometimes it was, they just needed more money or the company hadn't given races in a while and they were wondering, you know, if it was at time and I deserve more. But often, Paula, while I was always open to talking about more money and advocating on their behalf, a lot of the time, Paul, it was exactly what you are talking about, that people felt disengaged from the work. And instead of taking a second and going, what is it about this work that just isn't making me enthusiastic anymore? We think that the magic bullet is, if I make more money, well, then somehow I'll re-engage. And in those cases early in my career, when I didn't engage, I just found a way to either get them more money or figure out a pathway to more money. And we didn't solve those other issues that were really the root of the problem. They were gone anyway within the next 18 months. Right.

It turned out it wasn't even about the money. It was about those other factors that you mentioned. And it's so important, I think, when you think, you know, I just need a raise. Well, a raise is good. and showing up to your problems in a really nice limo is awesome. But the problems are still going to be there even when you make more money. Limousine problems. Yeah.

Champagne problems. So then the question is, Danielle, how do you undertake this mini retirement in a constructive way, in a way that helps you uncover what you might want to do next? So here are a few suggestions. First, block social media from your phone. There is an app called Freedom, which I use. It is an app that blocks social media from you. You can set time limits or parameters around it. So I normally have a blocker on my phone such that I can only open Instagram and Twitter on my phone between the hours of 8 p.m. to 9 p.m. Now, there have been times that I've disabled that app. So when all of the turmoil was happening, in Nepal recently. I disabled that app because I wanted to really be watching what was going on at Nepal because that news was updating minute by minute. Then I also wanted to be interfacing

with my family and a lot of them were using Instagram as a communication platform. So you can disable it from time to time if you want to. But as a default, when your finger subconsciously goes to open Instagram or Facebook or any other social media platform, and you just see a screen that says unavailable, go live out in the real world. There is a tremendous freedom to that. What you will find, and Cal Newport, Dr. Cal Newport, who's been a guest on the show multiple times, he's a professor at Georgetown who writes about avoiding digital distraction. When he runs this experiment with students, he has said that oftentimes people will engage in the principle of substitution. So if your social media is blocked, you might start obsessively reading

news articles. And then when you remove all of the news apps from your phone, he said he had one student who just started obsessively checking the weather. And there was a period of about a week where one of his students could tell you the weather in virtually any city around the globe. They were like, well, today in Johannesburg, the weather is this. And in Cape Town, the weather is that there is this addiction to opening up an app on your phone in any moment that your mind starts to wander. But after a week of obsessively checking the weather app, you're not going to get the same dopamine hit. And that unconscious scrolling is going to start to dissipate because you're not getting that reinforcement. And that's when you'll be able to disengage from your phone

and actually experience your mini retirement in the real world. So that is my number one recommendation. Block social media from yourself. And if it's also helpful, block Netflix, HBO Max, all of the various streaming platforms as well. Oh, I have another one, Paula, that works really well for me. In Catherine Price is amazing, the power of fun, where she talks about this very topic of how much your,

phone is a thief of joy. Getting rid of notifications. Yeah. Turning off all of your notifications, permanently turn off your notifications because as humans, we don't switch effectively. And so if you're on task, notification shows up, even during those times when you think you have free time, you're still really want to be in the moment with people. And a notification steals that moment from you and the people that you're with. So I get a notification. And how many of us have had this at dinner? You're out with a friend. They get a notification on their phone. It ends up being nothing. You're in the middle of a really fun conversation. And it just wrecks. Oh, hold on. Wait. Oh, okay. Okay. Anyway, you were saying, Paula? Wow. Yeah. It just steals the moment.

We are not great at switching tasks. So I love the fact that I've turned off all notifications. I did that maybe five years ago. And from time to time, my spouse gets annoyed that I'm a little difficult to reach when she needs to reach me. But man, 99% of the time, it is incredible. Yeah, absolutely. I'm the same way. And everyone in my life has learned that I am just very slow to respond. And the people in your life will get used to that.

There are probably some new people who get filtered out who never become close to me because they expect faster or The people who have stuck around in my life are the people who have accepted that I'm a slow responder. That's normal and that's just me. We were not designed to be reachable 24-7. Notable, by the way, Danielle, that notice what Joe and I are both saying, we're not actually talking about what you should do additively during your mini-retirement. We're both recommending things that you should subtract. We're highlighting the things to not do during your mini retirement because if you can avoid scrolling and streaming. Yeah, to make it qualitatively better.

Right. Let's make this a true time that you can focus and regroup and really get the relaxation that you're looking for lead into this new existence. And the theme of what this all boils down to is screen avoidance. And the number one thing that both Joe and I are recommending is screen. avoidance during that mini retirement, which is funny because the next thought that enters my mind is, all right, if she had asked the same question in the year 2005, what would I have said? That was a time in which people still took many retirements, but screens weren't so ubiquitous.

In order to use the internet, you had to go to an internet cafe. I don't know if anybody here remembers that. But once upon a time, if you wanted to use the internet, while you were traveling. You had to go to a cyber cafe. But there was the equivalent among people in business, Paula. Remember the Blackberry? Right. What did they call it? The Crackberry. The Crackberry because you'd be out to dinner with your friends and all of a sudden somebody's on the crackberry and they can't stay off it because it was the same thing. It's these interruptors, like finding the interruptors and getting rid of those things, whatever it be. It's just the

screen was replaced the Crackberry now as the interruptor of choice. Right. But that still doesn't change the fundamental question. If this was 2005, I'd say put down the crackberry. I didn't have the money for a crackberry back in 2005. In my world, only very rich people had crackberries. Or they worked for a company where they handed them to you. Or they worked for a company that gave them one. So people with important jobs had crackberries. Well, it's Danielle. She clearly has an important job. So what would I have said back then? Predominantly what I would have said. is follow your curiosity. There are probably a whole bunch of things that have been latent curiosities.

Maybe you've always wanted to try your hand at stand-up comedy or at surfing. I would have said also to delay judgment. I feel like too often when we are searching for this thing, this nebulous, perfect life, that we're so busy judging whether this is the perfect thing. or not that we're truly not in the moment, even enjoying it. I'm thinking of some research that I saw recently that the most fun that you can have is just to be in the moment. And if you are thinking to yourself, is this it? Is this is it? Is this is it? It will never be it. It will never be because you're so busy wondering if this is the perfect moment. But that said also, I think the other piece of

vice paul that i would have is view this as a science experiment you know go and experience as many different things as you possibly can walk into different situations to see what sticks and what doesn't and it's all great data it's fantastic data that this is where i think you take that carol dweck growth mentality that you and i have talked about so often on this show that if you have a growth mentality, you're curious and you're searching. And instead of thinking, is this good, is this bad, you're thinking, let's just go mess some stuff up. Right. So try anything that has sparked your curiosity. Go follow in that curiosity. Some things will stick. Some things won't. Think back to what you enjoyed when you were a child. What were the things that you did for fun when

you were five? Do more of that. And then try a couple of things. that you never would have thought of. Portuguese cooking. And along that line, once you've exhausted following your curiosity, or if you just don't feel that particularly curious, another vein to open is follow opportunities. Follow opportunities and just see what happens. If you have the opportunity to take the,

what did you say, Portuguese cooking? Portuguese cooking, yeah. If you have the opportunity to go with friends to Portuguese cooking and you're not particularly interested in that, but you're like hanging out with these friends, It's an opportunity. Give it a shot. See what happens. You may surprise yourself. Right. Exactly. Do you ever think about how much that following opportunity has played a role in your life and in your career? Oh, I think it's been tremendous. I think the root of what I have done was I took a kernel of, I guess I'd call it a kernel of a calling. I started as a newspaper reporter and then it was a matter of following opportunity.

I began with print newspapers because that was the traditional route and then quickly discovered that there's more opportunity if you're online and if you're independent. And that took the form of blogging, which took the form of podcasting, which is where I am today. I was an English major with an emphasis in creative writing who had a friend who called and said, we're hiring financial reps for this big company at the time. here's the quote Paula. We normally don't hire people like you, but I think you'd be good at this.

That is a direct quote my friend said to me. We normally don't hire people like you. And I said, let's just go talk to these people. If my friend Marcus would have never called, I might not be here with you right now. And speaking of you being here with me right now, the other element that I'll say, Danielle,

and I think you're going to find this when you embark on the mini retirement, is that ultimately it's all about the people. Your enjoyment of something, and this traces back to what we were saying earlier about how your feelings about your manager or supervisor strongly correlate with your feelings about your job. If you like your manager, you're more likely to like your job

and vice versa. If you dislike your manager, you're more likely to dislike your job. What's behind that is that it's all about people. What I think you'll see on your mini-retirement is that you're going to be trying all of these different things And sure, kite surfing or cooking or stand-up comedy, the activity itself is cool, but the thing that's really going to make it or break it are the people around you. How well do you connect with those people? What kind of friendships do you form?

What kind of community do you grow? What sort of relationships do you end up building when you're on the road? And one of my favorite things about traveling are those on the road. the road relationships. Travelers tend to make fast friends, especially solo travelers, because you're out there by yourself. You don't have your community around you. You're either literally alone, or maybe you're with one other person, a spouse, a partner, a friend, but humans naturally just want more people in their life. And so travelers have this tendency to very, very quickly bond and make friends and then go do things together. And that, more than that more than that, more than

anything is, in my opinion, the best part, the most fulfilling part of any kind of travel experience. To an introvert like me, that always feels difficult. I'm always afraid to go out and meet new people. And yet I think about some of the relationships I've forged with people on different vacations and many retirements I've taken. And those have been some of my favorite moments meeting the people in the places that I went. some of the biggest lessons I've learned have come from the people that I've also met on the road. So that's our advice for the mini retirement. Go for it. Do it. Minimise your screen time.

And I'd like to reemphasize there's never been a time when I thought I should wait longer. I've never had one. And I think the key there, Paula, is time. I think we need to be cognizant of you don't know how much time you have. So do it. Go. Find the thing. Yeah. So thank you, Danielle, for the question. And enjoy the mini retirement. Please call us back and let us know how it goes. And if you're coming through Texarkana, let me know. And we'll take you to lunch. Because that's where everybody wants to go, Paula, for their mini retirement. It's Texarkana, Texas. Texarkana, Texas. Yes. Or Texarkana, Arkansas. That's fine, too. Yeah. You can do a backbend over the Texas Arkansas state line.

spoken like somebody who's done it. Twice. We're going to take a break to hear from the sponsors who make the show possible. When we come back, we're going to talk to a young family that wants the freedom for one parent to stay at home. That's coming up next.

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That's what being a fifth third better is all about. It's about not being just one thing, but many things for our customers. Big bank muscle, fintech hustle. That's your commercial payments of fifth third best. better. Welcome back. Our next question comes from Lee. Hi, Paul and Joe. This is Lee from Oregon. I'm hoping you can help me think through what to do with $125,000 left over in my 529. I'm 31 and my husband is 33. We have a great income. We're debt free other than our mortgage. We both do have master's degrees and neither of us have an intention of going back to school. We do have a four-month-old son. I could potentially use the

529, but my parents are setting up a 529 for him that will be fully funded. I don't know how much, but it will be enough. So I'm not anticipating that he will need it either. I have been rolling over 7K per year into my Roth IRA, but since that's capped at 35,000 for the lifetime, there's still be a substantial amount left over once I'm done rolling it into my IRA. We've already taken out 30K the last two years to put on our mortgage, but since it's taxed at ordinary income instead of capital gains plus the state income tax from the great state of Oregon and the 10% penalty for non-educational purposes, it's been giving me some heartburn to take it out. But I'm not really sure what else to do with the money since I don't see anyone in my family

needing it for education. My husband and I do have a goal of paying off our house and I'm working hard towards that. So hopefully we can be financially independent enough for one of us to stay home. with the kids. The 529 money would help toward that goal, but it would not totally pay off our mortgage. Any advice on how to think through this would be great. I love the show and appreciate you helping so many people with personal finance. Lee, thank you so much for the question. First of all, congratulations on everything. You are handling your personal finances with attention, with care, with intent. It's clear that you're making some very, very excellent

financial moves. So let's talk about what to do with this 529 money. The first thing that I was going to say, and this is something that you're already doing, is to roll 529 money into an IRA. You are already doing that. That's wonderful. You're doing that until it maxes out. I would do that up to the full 35,000, get the maximum Roth IRA contribution that you can out of that 529 money. Beyond that, for the remainder of the 529 money after the Roth IRA transition has been maxed out, what I would suggest is that you have a conversation with your parents and say, hey, thank you so much for volunteering to put money aside for our sons 529. Here's the situation.

We don't need that money placed in a 529 specifically. we're not asking for any more money, but whatever money you were planning on contributing, would you consider putting that same equivalent amount of money towards our mortgage payoff? Because that would be much more beneficial for us than putting this money into a 529. I think if your parents understood the situation and the constraints around the accounts that you're managing, they might be willing to do that. If they want the money specifically to be for the child, they can put it in what's called an Utma or UGMA account for them. That may affect your child's ability to get financial aid in the future.

But you know what, Paula? If they're going to have plenty of money between the 529 plan and a brokerage account, so it's meant to be for the child specifically, then a lot of that assistance will be off the table anyway. I would present that as a second option. if they truly want to be for their grandchild and not for you. I also, Lee, I hear two different goals in the question that you've asked because I hear the goal of allowing one parent to stay at home. And I also hear the goal of mortgage payoff. Now, it's possible that the two goals could relate to one another.

So it might be the case that, and I didn't hear you state this directly, but it might be the case that you would like to pay off the mortgage such that you free yourself of a major bill. And once you have freed yourself of that mortgage, you freed yourself of that big bill, you would feel more comfortable making an income adjustment such that one parent could stay at home. Maybe that's the transition here. And that's one way to look at it. But a different way to look at this situation is that there are two separate goals that are independent of one another.

One goal is mortgage payoff and the other goal is for one parent to stay at home. Maybe the mortgage payoff does not need to happen prior to one parent staying at home. Maybe there are ways to adjust your budget such that one parent can stay at home even while you continue to have a mortgage. Yeah, we don't know enough about the situation to answer that, but that's certainly an avenue I would explore. It's a vein I think we need to look at. I think also taking money out of the 529 plan, you already have done the $35,000 maximum into the Roth IRA. You also mentioned that you and your husband have no intention of further education, which a lot of people don't know, Paula, that you are allowed to change the beneficiary. So you can change the beneficiary back to yourself or to your husband and then use it for your education.

Clearly, you already know that. I just didn't know if our afford anything audience knew that, that that flexibility exists when it comes to the beneficiary designation. Another consideration, though, the definition of education is a lot wider than I think a lot of people think that it is. So as an example, our mutual friend OG from stacking Benjamins is a pilot. If you go to a certified flight school, that 529 money can be used for certified flight school. If you decide that you want to take cooking classes or golf instruction or some other sport or activity instruction, it can be much, much wider, I think, than a lot of people think. So if those things are on the bucket list, then I may look deeper into what certification.

are necessary and ask the institution if 529 money can be taken out to pay for that tuition for the expense of learning, whatever that thing might be. Right. Remember also that 529 money can be used for K through 12 educational expenses. And so if you have any plan of sending your son to a private high school perhaps, 529 money could also be used for that. The only other possibility that I know of, of avoiding taxes are actually, if your child has any special needs, an ABLE account, you are able to change 529 money into an Able account, achieving a better life experience account. For the best majority of people, that's not an option, but that's the only other way that I know to avoid taxes all together. I think beyond that, Paula, it's much more about minimizing the tax bills.

So let's walk through this. You're going to pay the 10% penalty on the earnings that come out of the account. The money comes out of the account pro rata, meaning every time you would draw money, it's going to be a portion of it is your contribution, and a portion is going to be the gain that it had. The 10% penalty is only going to apply to the gain, not to the money that you put in. The gain also is going to be 10%. taxed as income. So again, not the money you put in, but just the gain going to be taxed as income.

I think the only way to minimize that tax is to make sure that you're not in a higher tax bracket with that money. So if you're right on the tax bracket line and next year you think you're going to have less income, I would try to withdraw the money strategically during lower income years to at least save a couple percentage points on the tax bill. Which could dovetail nicely with one parent staying at home because their overall tax bracket would decrease at that time. Yeah. It's not going to get rid of the penalty, not going to get rid of the taxes, but it will make it a little bit less of a kick in the butt. There's also the possibility on the topic of changing the beneficiary, dedicating a portion of it to nieces, nephews, other family members along the horizontal

branches of the family tree. I don't know about that. Everybody's values are different, but if it's my nephew, my nephew's college fund versus paying off my mortgage ball. I'm sorry, nephew. Well, you have eight nieces and nephews, Joe. I do. That's a lot of college funds.

Nine. Nine. You have nine. No, wait a minute. That's only on one side of the family. have. Oh, that's right. 14. Wow. Wow. You have a big horizontal family. Why, thank you. Both of my parents were one of six children. So I have a lot of cousins. So you've got a bunch of cousins. Yeah. Well, mine too. I mean, we talk nieces and nephews, but my dad had 16 brothers and sisters. So

wow. Yeah, so there you go. I've got tons of cousins. There are sea hies all over the place. We'll take it over. In any event, that's also a possibility. The other thing to consider, and Joe, this goes back to what you were saying when you discussed pilot school or culinary school. In your retirement, would you have any interest in pursuing some qualified educational program just for fun, just as a retirement thing? Not as part of your career, but just because retirement is that part of your life where you have the time and the freedom and the flexibility to be able to study something just because.

I don't know. I don't even know about waiting for retirement for that. I like doing it now. It's always fun to learn a new skill or to have a new hobby. I love to cook and there's nothing that takes your mind off of the day than a sharp knife. I'm going to play that snippet at your trial, Joe. Well, with a vegetable. That's going to be, I believe that's admissible evidence.

Talk about with a vegetable. If I've got to cut vegetables for my salad, then I'm not thinking about what happened during my day. It's a nice way to take the focus off whatever was driving my day. But on the whole, I think the number one thing, if your parents would agree to taking the same amount of money that they were planning on putting into a 520. and if they would agree to put it in some other type of account, that would be the best approach. That would certainly be the simplest of all of the things that we've discussed. So thank you for the question, Lee. Best of luck with both of the goals that you've outlined, paying off the mortgage,

and structuring your budget such that one parent can stay at home. And remember, one doesn't have to necessarily precede the other. they can both be pursued independently of each other. Before we move to the next question, let's hear from a previous caller who took our advice on how to find remote work. And that advice paid off. Hi, Paula and Joe. This is Pedro calling again. I was featured on episode 605, and I wanted to give you guys an update.

If you remember my situation, I was called back in terms of. to the office as a Fed, and I was looking for a way out. Both of you gave me very sound advice on looking for a job that was at the intersection of tech and government. You know, instead of dropping resumes, just trying to find connections and people who could refer me to these new jobs, right? That's exactly what I did, and I'm happy to say it worked pretty well. I landed a job that does government contracts, both at the federal and state level. I am loving it so far. I'm one month in.

Their culture is 100% in line with my values. They're 100% remote, for starters. A lot of the employees, including my immediate supervisor, actually, are digital nomads. I found more than a job. I found a community, and I'm really appreciating the work that I'm. doing there. On top of that, I got a match on all the benefits I had at the government, plus a 30% pay increase. And as I said, the job is 100% remote. So it's exactly what I was looking for, and I'm already planning my next RV trip to Alaska. So I have to thank both of you

for giving me such sound advice. It's really a privilege to be part of this community. Thank you, Paul and Joe. I hope. I hope Danielle has stayed around to hear that call. Wow. Because Pedro went searching for it, Paula, and look at what happened. Right. When Pedro called episode 605, we'll link to it in the show notes,

he was really wanted to find fulfilling work that was fully remote, that paid well, but that also allowed him to take these adventures with his family. And now, here we are. So congratulations to you, Pedro. You built this. You did this. You put in the effort. You made the connections. You reached out to people. You forged those relationships. You did the hard work that got you to the position that you're in right now. So big congratulations to you. This is for me the power of going out and looking at life as a science experiment. I mean, when Pedro first took that new job, He didn't know it was going to be a perfect fit. He didn't know that the community was going to be there with a bunch of like-minded people.

He just knew it sounded good. So chasing that opportunity, that is just fantastic. How well it fit. That warms my heart. That's super cool. Yeah. Yeah. Thank you so much, Pedro, for calling back with an update.

I love it when people do that. If you're someone who's listening and you've previously called in with a question, I would love it if you could call back with an update. these are some of our favorite moments, you know, hearing how it all turned out. Just to be clear, when we give this advice,

the advice truly is to just try. I love hearing that it worked out really, really well. But Paula, I have to say, in your wildest dream and my wildest dream, we would,

Pedro, go try it, and it's going to be perfect. Like we would never, you're going to get a big raise. It's going to be a bunch of like-minded people. It's all good.

going to be perfect. No. I always think in probabilities, right? There's a distribution of possible outcomes and your outcome could fall anywhere along that probabilistic distribution. Sure. But you give yourself a better shot, you know, a better likelihood of a positive outcome if you take a couple of key steps. Yes. And for that reason, our advice focused on the input of what to do, not on the outcome. The inputs are better. The chance of the outcome being better increases substantially. And I think we're seeing that today, you know,

more of more of our audience uses AI. We're learning that using AI to do your homework for you is a waste of time. It's horrible. But if you have great inputs, which takes an education to get great inputs, and it takes direction and a sense of purpose and knowing exactly what you want, as you focus on better inputs,

guess what happens with chat GPT? It becomes better and better and better. Right. But Pedro, that's great news. We're going to take one final break to hear from the sponsors who make the show possible, and when we return, we're going to hear from someone who spent

around $45,000 in order to pick up the pieces after a FEMA designated disaster. That's coming up. up right after this. Welcome back. Our final question today comes from Melanie. Hi, Paula and Joe. This is Melanie. I've called him before and I love both your shows. This time, I have a natural disaster and tax question for you. I was looking into the one big beautiful bill act and I saw that there is tax relief for disaster victims included in the bill. I then found the Federal Disaster Tax Relief Act of 2023, which was not passed until December

of 2024, long after I submitted my 2023 tax return. However, it provided tax relief retroactive for tax year 2023. In 2023, I experienced a FEMA declared natural disaster where I spent around $22,000 on demo, a new furnace, furniture, and other repairs. I spent another $23,000 on related costs, such as a flood control system, a drain tile system, and sewer pipe repair. I was able to to get some financial relief from FEMA and $5,000 from my homeowners insurance. Is there any way for me to benefit from these tax relief bills? Can I amend my 2023 tax return? What information and documentation do I need to ensure everything is done properly?

And further, as a more global question, how was I supposed to know about the retroactive bill if I can benefit from it? Should I have received something from FEMA to notify me of the possible relief? I want to make sure that I can benefit from future legislative changes and how a regular person should be keeping up with everything. Thanks so much for your time and your expertise. Melanie, thank you so much for the call. And I am so sorry to hear about the, whenever the word FEMA is part of your call, Paula, that's not good. I want to broaden this out just for a moment for the entire audience, Melanie, just because,

whenever you either find out there was some relief available, whether in your case it wasn't available and then it was available or they restated that it's available, sometimes it's retroactive like you mentioned, or if you just made a mistake or you figure out that there's some opportunity to take advantage of, you generally, 99.9% of the cases you've three years from the date that you filed your original tax return or two years from the day you paid the tax to amend your return to include the new information. If you filed early, by the way, that three years doesn't start on the day

that you filed, let's say you filed in January or February. It actually starts on the April text deadline off in the 15th of the 17th of April. So three years from that date. So you're clearly within the timeframe to do that. And everybody listening, if you go back and you find something

like Melanie did, you can look, three years out. The rest of this question, Paula, is frustrating because when they, when the government announces stuff like that, I mean, they're not going to send Melanie a quick text saying, hey, Melanie, this applies to you. And if you do get a text like that, it's probably a scammer. Beware. Yeah, because they don't do that. Because they don't send text messages. They do not. And they don't know your personal situation. It came through on telegram. Do you think it's legit? I was part of a group chat with people from the IRS. Not at all. Yeah. So the rest of this then is frustrating. You have to, you have to stay a little bit up on what's going on in the world tax-wise. I also think that if

you have a complication that you think might, might have some relief attached to it, that's a good reason to go reach out to a tax professional, professional tax preparer who is on top of it. and ask the very specific question, here is my situation. Do you know, has there been any tax relief about that situation or related situations? Yeah, the primary way that I keep up with changes to tax policy is by asking a CPA or an EA or some other type of tax professional. Their job is to stay on top of the stuff. And unfortunately, the tax code is so-called. complicated and changes so often that you do need somebody whose job is literally to stay on top of

the stuff in order to really be on top of it. And the heart part that we can't answer is how do you find out about what you don't know? The answer is if you don't know the right question to ask, it's almost impossible. It's so frustrating. I think maybe if you think there might be. a distinct possibility that your taxes are not complete. Well, then I think it might be worth the time to even sit down with a tax professional and have them look through last year's return. I had this happen, by the way, Paula, when I switched tax people maybe four or five, five years ago, my new tax people looked through my last three years returns and said,

we found a fairly significant mistake. And I ended up with a nice additional refund with a comma in it. Ooh. With a comma in it. I know. A comma in it. Yeah. Which was very surprising.

So even just getting that second opinion can be a good idea. I also think one of the benefits, if you've been working with the same tax professional for a number of years, one of the benefits of doing that is that they know you and they know you. and they know your situation and they know the changes that happen in your life, ones that slowly tend to happen over the span of years, you know, if you take on a new rental property or if you start a new business or just all of those things that happen in the span of a person's life, by virtue of working with the same tax pro year after year after year, they get to track that. And oftentimes when something happens, you know, they're

thinking about you. If there's a particular tax pro that you've been working with for a while and you get married, you get divorced, you have a baby, you in this case experience a natural disaster, they know your life. Your tax pro really has a relatively intimate knowledge of your life, of all the details of your life. The issue is with the standard deduction a few years ago, going up by a lot, the need for a tax pro for 95% of the afford anything audience is very, very small. So I will say this. When I first hired Catherine, the woman whose team currently handles my taxes, I did tell

Catherine, she made me, though, Paula, tell her my story. And she called me the next day and said, wait a minute, I was looking through your stuff, which looked fine before I thought about your story. Didn't you tell me X, Y, Z? And I said, yeah. And she said, that's not in here. And I can see how somebody would have missed it that that wasn't in here. So even if you don't have that long-term relationship, which I did not with Catherine,

just telling the tax person who knows how to convert the story into the language of taxation can be a big win. Wow. That's a good catch. that is good stuff i will mention this also and melany did not ask but i have created a tax guide that we update every single year we update actually every single month based on what's going on with tax law you get an email from me that says hey melany here's our changes with the one big beautiful bill paula oh my goodness the updates that we made on that tax guide

were monster, monster, monster updates. You're still going to need to open the emails from me, and you're going to need to see what the changes were to the tax guide. But that is something that I'm very proud of. It's stackybedjamins.com slash guides. We'll link to that in the show notes. And that's the frustration still that I have, even with our guide, is if you don't know what question to ask.

Right. Even with a guide, how do you come across this apply? to me. And that's when the pro beats everything. And Joe, going back to what you said about how for a lot of people, because a standard deduction is so high, a lot of people don't find it financially worthwhile to work with the tax pro. One thing that I will say to that topic is that working with an EA can be less expensive than working with a CPA. So if you're in a situation where you feel like you can't justify the cost of working with a CPA, and EA is also a great option. And in EA, for a lot of people, Paul, I think maybe even closer than to what you want,

there are certainly CPAs who do tax returns all day, but there's many CPA friends that I have. They don't do many tax returns. And it's a great question to ask, but in EA is EA means enrolled agent. And that means they are pros at filling out tax returns. and they know the tax code that goes into filling out tax returns the right way. I think that for many of us in EA might be specifically who you want. And there are a lot of CPAs who will hire EAs to work at the CPA firm. I know my CPA, I work with a CPA because my situation is a little complicated.

I wanted a CPA who he also has a master's in tax planning. So I wanted to go with the best of the best. but in his firm, he has a bunch of EAs who work there. Which makes sense. If he's focused on the tax planning portion and the EA is focused on the line by line stuff, that's a marriage made heaven. Exactly. So that's an option as well.

But yes, Melanie, you hit on an important topic, which is that the tax code is tremendously complicated and it changes all of the time. And it is not reasonable to expect your act. average person who has a job in an unrelated field to be able to keep up with all of this. So thank you for the question. Best of luck with picking up the pieces after this disaster and moving ahead. Yeah. Well, Joe, we've done it again.

Wow. Some fantastic questions again. Incredible. Joe, where can people find you if they'd like to hear more of you? Oh, we had a fantastic discussion with Shemannir Mohamed. recently. She is a fantastic TED Talk. She is a woman who has worked with IBM and Pitney Bowes and senior leadership. But Paula, she spent a significant amount of her career in France. And what she noticed as a productivity expert is the huge culture clash. When we work 24-7 often to get

ahead in the United States, the French take 90-minute lunches. They have this paradigm. of I'm going to take the entire month of August off. So in the same vein we were talking about today of many retirements and the fact that we need to be rested, she has a new project out that she calls the French paradox. And it's about how embracing leisure the French way can help us transform our work, life balance. And it's a really interesting granular discussion. Whether you're somebody who has to convince your boss to give you more time off, or you need to realize that, you know what, those days that we don't take, those paid time off days that we leave every year because we think we have to stay at the desk, I think she's going to be really good at changing your mind.

Excellent. And that's on the Stacking Benjamin's podcast? wherever finer podcast are found. Amazing. Well, thank you, Joe, and thanks to all of you for being part of the Afforder community. If you enjoyed today's episode, please do three things. First, share this with the people in your life. Share it with your EA and your CPA. And your French travel agent.

Ooh. Share it with all of those people and more, because that is the single most important way that you can spread the message of F-W-I-R-E. Second, open up your favorite podcast, app, leave us up to a five-star review and hit the follow button so that you don't miss any of our amazing upcoming episodes. Third, subscribe to our newsletter, afford anything.com slash newsletter. Let me add a fourth as well.

Join our community, afford anything.com slash community so you can have discussions, lively, vibrant discussions with like-minded people about all of these topics that we discussed today and more. Thank you again for tuning in. I'm Paula Pant. I'm Joss. I'll see hi. And we'll meet you in the next episode. Thank you.