Over the past few weeks I’ve replied to numerous comments and questions, loosely paraphrased as:
“I’ve read that you aren’t a big fan of Roth accounts, but in your post about not paying taxes for 5 years you show how you routinely contribute to Roths. Isn’t that a bit hypocritical?
Maybe.
It’s a totally fair question. Let’s find out.
The end of 2017 marked the completion of 5 full years of early retirement and world travel.
It’s been a fun ride so far… we’ve traveled a bit, had a few good meals, and taken many naps.
But how effective have these 5 years been in terms of implementing our tax minimization strategies? Are Roth IRA Conversions and Capital Gain Harvesting just fantasies we keep while working, or do they actually produce results in the real world?
Let’s do a financial check-up and see how we are doing.
Here it is folks, the post exactly 3 of you have been waiting for… our 2017 tax return. Just in time for the October 15th deadline.
It’s an interesting one this year; 2017 is the first time we claimed the Foreign Earned Income Exclusion (FEIE) which allowed us to once again have income in excess of $100,000 and pay $0 in income tax.
Details on the FEIE were difficult to come by, and examples either lacking or confusing, so this FEIE example is for posterity.
The Foreign Earned Income Exclusion is a great tax saving opportunity for Americans living abroad, allowing the exclusion of $104,100 in foreign earned income per person in 2018. Nice!
But… Of all the tax topics I’ve explored, the FEIE is among the most convoluted and obfuscated. For one thing, documentation uses words like convoluted and obfuscated. Worse, much of the information on the Internet is confusing or inaccurate.
It also isn’t necessarily obvious if a person should claim the FEIE, and doing so isn’t guaranteed to be advantageous.
In this post I attempt to explore the FEIE and when to use it, for ourselves and our posterity. (Well, ourselves at least… should we FEIE or nah?)
Cash has to be one of my least favorite inventions of all time. I avoid using it as much as possible.
This year we had a whole slew of currencies to deal with… UK pound sterling, Euros, Polish złoty, Swedish krona, and Norwegian krone. And maybe Icelandic króna on a layover… Plus a few US Dollars…
Every time we were about to switch currencies it became clear these pieces of colored paper were doing nothing but occupying space in my wallet. So we decided to make a real go of it – could we go completely cashless?
This budget goes to 11
You may have noticed that I no longer share detailed monthly spending reports. They were super boring and nobody read them. Instead, I’ve shared our annual spending and explored costs on some of our big trips (e.g. 4 months in Europe.)
Upon reading our annual spending reports, readers sometimes come to interesting conclusions:
“OMG you spend so much more now you are going to run out of money!”
“This isn’t sustainable. You can only spend this much because you have blog income!”
“You had a kid. Have fun back at work.”
Or my most recent favorite (paraphrasing):
“This is disheartening. Your plan isn’t working. I think I’ll work longer.”
So… here are some words about that.
