Personal Finance

We All Have Blind Spots

Over the past couple weeks I have started listening to a few financial independence podcasts.  One that I really like so far is  Jonathan Mendonsa and Brad Barrett are the hosts and they do a great job talking about FI in a very engaging and personal way.  They also have guests on the show like Brandon from the and Liz from which were really good episodes!

So that brings me to today. I am on my commute into work this morning and I started playing Episode 13: THE UNFAIR (FI) ADVANTAGE OF TEACHERS | 457B. This episode caught my eye as my wife Crystal had been a public school teacher for 17 years before staying home with the kids.  Jonathan and Brad tee up the show and introduce Ed the “Millionaire Educator” who begins talking about the  different retirement strategies he has employed as a teacher in Georgia using accounts like the 403(b) and 457(b)

I just dropped two dozen eggs

You know that sinking feeling you have when you instantly recognize a giant screw up?  Maybe something like dropping a carton of eggs all over the kitchen floor? You just stand there with your jaw open and you say to yourself WTF just happened?  You are looking for the time machine button to rapidly transport you back in time so a different decision can be made!  That is pretty much what happened on my commute in today.  I literally sat in my car in total bewilderment after listening to the first 15 minutes of this podcast.

So what happened? I simply did not know that as a public school teacher, Crystal had access to a 403(b) and a 457(b) during her entire 17 year teaching career!  I had heard of these accounts before but I never spent any time learning about how they actually worked.  I always thought of them just for federal workers so had dismissed them.  Had I known about these two programs, we would have been maxing these accounts out for at least a decade if not more.  The tax deferred benefit of these accounts would have been a minimal 6 figure benefit and more likely a 7 figure benefit over a multi decade retirement. Gulp!

Always be learning and don’t get too comfortable

I learned an important lesson today.  It does not matter how much you think you know about a particular topic there are always more things to learn.  Don’t ever get too comfortable thinking you have things completely figured out.  I never guessed I would have made a mistake like this, but it turned out I had a big blind spot related to how these these accounts function and who can take advantage of them. This mistake will sting for a while, but you can’t go back in time to fix it so you just have to move forward and learn from it.

Jonathan and Brad have a set of 5 questions they ask every guest at the end of the interview.  One of them is “What is the biggest financial mistake you have made?”  After today, I know exactly what my answer would be!

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