Inherited Account Deep Dive, Barista FI and Saving When Starting a Business | Rachael Camp | Ep 534

24:56You could make something up. You could make it up that first year, but I would not recommend that. The spouse can assume the inherited account as their own IRA. So that's what I see most spouses do. They also could follow the stretch provisions as well, which is they leave that account in their spouse's name and they just take out those distributions over their lifetime. Most of the time, the simplest approach is just for that spouse to take over the IRA as their own. And then they're following their own IRA rules. Okay. Gotcha. So there's obviously massive interplay here with the estate tax exemption.

25:33There's the step up in basis when somebody passes, like there's lots of things. And I I'm fascinated to learn from you today on In the broadest sense, I've always understood that the beneficiary is largely not responsible for tax, assuming that the decedent and the entire estate was under that estate tax exemption. This, of course, is a very broad understanding, Rachel. And by no means am I saying that this is definitive. But I think in a lot of cases, that's generally true, certainly with gifts as well. So it's like gift and estate tax are kind of synonymous because there's this one umbrella number that you get of this exemption.

26:18And when someone gives a gift, yeah, there's a yearly annual limit. But if the person who's giving the gift goes over that amount, it's not like there's any tax in the moment. It just actually just reduces your overall lifetime exemption. So the person getting the gift never pays tax. Even in that case, the person giving the gift is not giving tax. You might have to file a gift tax return. That's beyond the scope of what we're talking about here. But I think in very general terms, that's how I've always understood it for a state. But now we're talking about like you just spent the last five minutes telling us about RMDs and IRAs.

26:55That sounds very, very different. Yeah. So with the traditional IRAs, you're not going to receive that tax free. So if we look at the different tax buckets here that you could inherit, one of them you briefly mentioned, brokerage account. That's where you get that step up in basis. People are actually usually surprised by this, but just a regular brokerage account is a great, fantastic account to pass on because of the step up in basis. So the way that works is essentially, let's just use some simple numbers here. Let's assume there's a father who passed. He had stocks in a brokerage account. He bought those stocks for$100 per share.

27:34And those shares are now worth$200. So they've doubled. You inherit that account. as the child. What happens is you actually get the benefit of a step up in basis. So what they do is they look at the value of the accounts on the date of death and step up the cost basis. So let's say the value for each share was$200 when the father passed. The cost basis is now$200 for all of those shares. That means they've wiped out the gain, which means you've wiped out the taxes that you would pay on the gain. So hypothetically, you inherit that account, let's say the shares are still worth$200 a few days after death, you can sell out of all those shares with no tax impact because you received the step up in basis.

28:16Huge, huge benefit. You're essentially inheriting a brokerage account tax-free if you want to completely liquidate it and transfer it to cash. So when it comes to inheritance, I always encourage people, if that's something that's important to you, to look at your brokerage account to do that, if it makes sense, because that's a great account to pass on. So right, just to give some terminology, because I think it's important that we all just understand because these terms get thrown around. So there's something called it's unrealized gains in this case. So you have a brokerage account. And in Rachel's example, let's say the father in this case bought 10 ,000 shares of some stock for a hundred dollars each.

28:53So his cost basis in totality on that is$1 million. You just take 10 ,000 times a hundred, and that's$1 million. Now over whatever the intervening time period, it, as Rachel said, it doubled, exactly doubled, you know, miraculous it's$200. And now that was on the date of death. Exactly. Okay. So that step up in basis when this is now passed to the son or the child in this case. So the value of that account. So the day before the father died was this roughly$2 million. So he had an unrealized gain of$1 million. So it's the current fair market value, which is 2 million minus the basis, which is a million dollars in this case, because that's the cost basis.

29:40Now, there are some items that affect cost basis outside the scope of this. We're just assuming this simple stuff. So he would have an unrealized gain if he sold all 10 ,000 of those shares. Most people are not selling, so you can pick and choose. You have lots of options, but a million bucks that he would have to put as a gain on his tax return if he sold all 10 ,000 shares. And in that case, if it's a long-term capital gain, usually for most taxpayers, it's a 15 % long-term capital gain tax rate. Now for higher income taxpayers, it jumps up to 20. For people, and we've talked about this with Cody Garrett, I think in episode 517, there are ways to pay 0 % on long-term capital gains.

30:21And this is a major, major FI hack, but let's just assume the 15. So he would have an unrealized tax liability in essence of$150 ,000 that he would owe. But now he never sold them. He passed and his child gets this. And as Rachel said, it's stepped up in basis. So it's as if by freaking magic, all of a sudden he didn't buy it for a hundred dollars. The child bought it for each of those 10 ,000 shares for$200. dollars. So as Rachel said, if he sells it that day, 2 million bucks,$0 of gain goes on the tax return. All's well in the world. You reported on the tax return, but no big deal. But now naturally the child might not sell this and it could go up, it could go down.

31:03There might still be tax liability, but it's not from that point in time. So that's the critical explanation in terms of the actual terminology. So Rachel sidebar over you were rocking and rolling with other, other options. No, that's that. And that was the perfect example. And I want to caution that if you do inherit a brokerage account, shockingly, and you're transferring that account, say to your custodian, maybe your father passed and he had an account with Schwab, you use Fidelity and you're transferring it over. You really need to make sure that the cost basis transfers correctly. I see this a lot, shockingly, but it can get lost and that will cause you to pay unnecessary tax when you go to sell.

31:43Make sure that that cost basis does in fact step up to the correct basis. It should reflect the value on the date of death. Super important, especially when you're transferring accounts. So just double check that. If we want to round out taxable brokerage just really quickly and look at it in the example of a spouse, a joint account, and one spouse dies and the other spouse is now inheriting that account. Joint account is super simple for estate planning. So when I have a married couple, I usually recommend titling joints if it makes sense, just because for a estate planning, it's the simplest way for them to assume ownership of that account.

32:16So technically what happens there with a joint account, one spouse passes, it's actually 50 % of the account that steps up in basis. So 50 % of the account that was owned by the spouse that passed away, that receives a step up in basis. Slightly different for community property states of which there are nine community property states. In those states, what would happen if one spouse passes with a joint account, actually the entire account would step up in basis. So Slight difference. Yeah. If you're in one of those nine states, California is one of them. So a lot of people are there, but that's a slight difference there, but that's, that's taxable brokerage.

32:51So simple, great account to pass on, make sure you get that step up and basis. And then again, we have the IRAs and we've been talking primarily about traditional IRAs and those RMDs that are required with traditional IRAs. So just because you are inheriting an account, if it's a traditional IRA, you don't get it tax-free. As you take money out of that account, you will pay taxes on it. You'll pay tax at your ordinary income rate. So a lot of those rules we were talking about relate to the traditional IRA. Now what happens if we inherit a Roth IRA? Well, some of you might know we don't have required minimum distributions with the Roth IRA.

33:30So how does that work? Well, without RMDs, we still are going to follow the 10-year rule for most non-spouse beneficiaries. But now, because there were no RMDs to start with, we get to follow the rule of just depleting the account within 10 years. So if you wanted to, you could leave the account. And actually, this is what I recommend most of the time when you inherit a Roth is to leave the account until that 10th year because it's a tax-free account. And if we can leave it in there growing tax-free, we really want to do that. So for most people, as long as you don't need the money, we actually try to leave it in there for the full 10 years.

34:06I haven't gotten to that 10-year point yet. The rules are too new, but that's the idea for many of my clients. And then we're going to pull it out year 10. That's for Roth IRAs. I hate to throw a wrench in it, but Roth 401ks have separate really weird rules. Yeah. And it's negative. So if you're wanting to pass on accounts and unless there's a really good reason for you to keep that Roth in the Roth 401k, it's usually a good idea to go ahead and roll it over into the Roth IRA. because a Roth 401k, they can actually implement required minimum distributions on that account. If there was anything else within the 401k, that's non Roth dollars.

34:42So really weird Roth 401k rules. I don't know why they've issued different guidance on Roth 401ks, but if you can, and you're planning to pass on the Roth account best practice as it stands right now to get it into a Roth IRA. Interesting. Okay. If you're listening, that is great, great information. you'll get nowhere else. That's just a simple thing to do. And yeah, there might be issues, there might not be issues, but if you can very simply roll it into a Roth IRA, just do it. Yeah. I mean, that's fantastic. So, okay. Right. So from a very broad sense, Rachel, this conceptually makes sense, right?

35:17Like Roth accounts, the taxes are already been paid. So therefore the recipient in the will here is not required to pay tax when they pull this money out. But then conversely, traditional, as we well know, you get the tax deduction at the time, and then you have to pay tax at ordinary income levels on the amount you pull out. If this was just your account, right? That's just very simply how traditional versus Roth works. So naturally, the government has never received income tax on that money in the traditional IRA. And it's now passed to this child in this case. And yeah, they are still responsible for paying tax on the withdrawals.

35:54And then, like you said, there's this whole interplay with how quickly you have to do it, et cetera, et cetera. And we can never give all the details on one podcast episode, obviously. But again, if you're listening here, this is about just understanding conceptually. So I think that's really important. Thanks for listening to Chooseify and for all your support of our mission here. The absolute best way to support Chooseify is when you sign up for your next rewards credit card to use our cards page at chooseify.com slash cards. I keep this page constantly updated, so it should always be the top resource for you.

36:27Thanks for being part of our community and for your support. Rachel, I'm curious. So now we've talked about different types of accounts, but what about something like an obvious one would be like a house? So somehow a house, there's only one child, there's one parent left and they own a house. let's say they have no mortgage and they bought it for, I don't know,$200 ,000 30 years ago, and now it's worth a million. Okay. So there's, there's$800 ,000 unrealized gain. Now there would have been an exemption, partial exemption for the parent, how they sold that house. But now this gets passed at the date of death.

37:07What goes on with that? Yeah. It's similar to the brokerage account where you do receive that same step up in basis. So So that's why I like to think about this in different tax buckets where you have taxable and I kind of throw in the home with that too, with the brokerage account. And then you have Roth and then you have traditional IRAs. So everything else that would fall under that bucket, like a house, you get the step up and basis. The only time where, and I don't want to throw a wrench, but just to cover it where things might change a little bit is trust, right? And then it's the type of trust.

37:37So when assets are owned in the name of a trust, it depends on the type of trust. So I actually just had an experience with this with a client where they actually inherited a taxable brokerage account. It was in the name of the trust. We noticed it did not step up in basis. So we wanted to make sure that they didn't lose that tax benefit. Well, it turns out it was an irrevocable trust while the owner of the trust was alive. So that's important. And the trust had its own separate tax ID. That's a really quick way for you to understand the type of trust, separate tax ID. and so that actually did not step up because it was essentially owned by the trust.

38:17The trust was paying taxes on it every year so that basis doesn't change. We're seeing this now with real estate. Sometimes real estate is owned in the name of a trust and then you're gonna follow the rules with the trust. Like I said, depends on the type of the trust. If it was a revocable trust and the tax ID was the same as the owner of that trust, then you should still receive a step up in basis. So you have to check. That's the one thing where we might see a slight difference is if an asset is named in a trust name rather than an individual's name. Gotcha. OK, that makes sense. And yeah, just to round out, I mentioned in passing the exemption.

38:56Right. So the estate tax exemption, there's so many people who just get all hot and bothered about like, oh, the death tax and I'm going to have to pay this and that. And it's like, it's so preposterous. There are probably only a couple hundred people in the U S a year, maybe a thousand, something like that, that are even coming close to this. And the estate tax exemption right now for 2025 is for one person, 13 million,$990 ,000. Now it is doubled for a couple to almost$28 million. I don't know about you, but I know very few people who have net worth of$14 million, 13, nine 90. So this is wholly irrelevant to essentially everyone.

39:37We can round to everyone. So basically, as we've discussed, the beautiful part about that is we don't have to worry about an estate tax. Almost every single one of us will never have to worry about an estate tax. So the nice thing is, as we've discussed, this gets passed on after death. These assets get passed on after death. There's no tax. The estate isn't paying a tax. tax. The beneficiary slash recipient is not paying any tax. It's just all zipping over. And as Rachel discussed, almost every single one of these accounts or assets get the step up in basis. So again, you're not getting penalized here.

40:13In fact, they're showering. The US government is showering you with benefits. So there's no tax at all. You've got this step up. So it's the day of death. What it was worth that day is what your basis is. So if it goes up, yeah, of course you have to pay tax on the, on the gain in that case, but you don't know any tax other than on those traditional accounts, which makes perfect sense. They were put in under the guise of, Hey, I'm getting a tax deduction now, so this can grow. And then I'll pay the tax when it's removed. It retains the character of that. And it should retain the character of that.

40:44So like, I'm always looking for like, is the world orderly Rachel? Like, does this conceptually make sense? And that makes a heck of a lot of sense to me. And yeah, I know we've just started on the background of this, but I think we dove a little deeper than we expected before we got into some of the precise questions. Yeah. Yeah. That's a really important point because I kind of ignore estate tax quite a bit and it's worth mentioning so you understand why we're not talking about it. And if you feel like there's this missing piece going on, the reason I ignore it most of the time is because it's such a small percentage of people it actually applies to.

41:18Now, that's not to say that that won't change at some point. They're always talking about bringing that exemption down. If they do do that at some point, that's where you can get into some advanced estate planning, using more trust, things like that. But for most people, all of that advanced estate planning isn't really something you need to worry about. What you need to worry about is titling things correctly, listing beneficiaries. Let me make a point on that really quickly because with retirement accounts, it is so important for you to have a listed beneficiary. Because if you don't, and it just falls to your estate, there's actually a third beneficiary type that we haven't touched on that applies to anything that falls to your estate.

42:01And that we are following the five-year rule with. So the beneficiary has to get funds out of that account within five years, which is just the worst way to inherit a traditional IRA. So one very important thing to do is to look at all of your accounts, make sure they have beneficiary designations, one from a tax perspective, so they don't have to follow that inferior five-year rule, but two just for simplicity as well. Because when you have a listed beneficiary, it avoids probate. The beneficiary trumps everything else. So make sure your beneficiaries are updated and accurate and correct. And then it's super simple.

42:37Beneficiary presents a death certificate and they're able to inherit that account. Depends on how that account transfers, if it's an IRA or a brokerage account, but it's just one plug I have to give for why listing beneficiaries on your accounts are so important. Yeah. Yeah. That's a very important public service announcement. There's no reason not to do it. It only takes a minute per account. It's usually very, very easy to find if you're at one of the major brokerages like Fidelity or Schwab or Vanguard, and I suspect everywhere, just please do that. Just do that on every type of account you have, but there's just no reason not to.

43:12There's no reason not to. Yeah. Can I give two more points? I just want to make sure we cover this because I'm getting these questions so often now. So I know there's people out there that this applies to. And I want to make sure that anybody who is dealing with an inherited account or retirement accounts, that they're not too worried right now, because you might've heard that the point that I mentioned where you have to take distributions from the account, they're required if the decedent had already started those distributions. And if you're concerned because you inherited an account in 2021 and you haven't been doing it, you don't have to worry.

43:43There was a waiver for the years 2020, 2021, 2022, 2023, and 2024. 2025 should be, and I think it is going to be, the first year where this rule is actually enforced. But because the guidance was messy, wasn't clear, was all over the place, they did give a waiver up until now, the year 2025. So don't worry about it. Don't start panicking. If you hadn't done that yet, you do have to start in 2025. But for 2020 to 2024, they waived any penalties on distributions from the account. Okay. Great information. What other point? I mentioned earlier, there are some exceptions with non-spouse beneficiaries.

44:23This is something else I see, but you could actually still follow the stretch provisions with a few exceptions. So if you are less than 10 years younger than the decedent, you don't have to do the 10-year rule. You can actually follow the stretch provisions. This is super important because from a tax perspective, stretch is much better than the 10-year rule. And so I see this most of the time with siblings. So if you had a brother who passed away, your brother is four years older than you, you don't have to follow the 10-year rule. You're actually considered an eligible designated beneficiary and you can follow stretch provisions.

44:58There's an exception for minor children as well. They can follow stretch until they get to age 21 and then actually flips to the 10-year rule. And then chronically ill, disabled, they're also eligible designated beneficiaries. So at a very high level, we covered it. But if this is applicable to you and you actually are inheriting accounts, it's really worth double checking to see what beneficiary designation you fall under. Yep. Okay. And that's the takeaway. There's no way you could remember everything Rachel just said. It's almost beside the point. It's you need to understand there are special rules for those cases.

45:31So if that jumped out to you, you need to remember that. You need to research it. You need to contact a professional. So that's the critical piece. All right, Rachel. So we went really in-depth into that, which is awesome. I had mentioned at the outset that we had a couple of different people that you had earmarked of people who had written in about inheritance and such. And frankly, we answered just about all of it. So I'm not going to read the two emails. But Zuby had asked something about life insurance and if there's any taxability of that. And I guess she also asked about fees, some general worry about basically, as I read it, like this is overwhelming and I'm worried really that there are going to be some vultures who try to step in and help me, quote unquote, but maybe just charge me more than is necessary.

46:21So I know we can't really answer that today, but maybe just like a quick overview of like, are there things to do? Is that a valid concern or is it really, hey, I have my accounts at these major brokerage firms and it just all kind of works itself out. I know that's very nebulous, but I guess let's start with the life insurance and then we'll go into that. Yeah, we didn't actually cover life insurance, but that is another great thing to inherit. I hate to use the word great when we're talking about inheritance. But from a tax perspective, yeah, we get life insurance tax-free. And I know it can be stressful to kind of come into a large windfall all at once, especially if it was unexpected, of course, and you're just worried about managing the money.

47:06She mentions fees here, being stressed about that. Totally understand it. We didn't really hit the mental part of this, but I do find it's good practice to kind of take a breather, take a break, give yourself a little bit of time to fully digest everything. There's a lot of paperwork that you have to deal with when somebody passes away. But I don't think it's any reason for you to stick with a custodian or an advisor that you don't know, you don't feel comfortable with. I see people do that quite a bit as they just let that current advisor continue managing the account for them without ever really establishing a relationship with them.

47:43So just understand that this is at this point, you know, your money and it's worth taking a break here, figuring out what you want to do. Do you want to work with that advisor? Do you want to meet other advisors? Do you feel comfortable managing it on your own? And then just doing that, whatever is the best decision for you. You don't have to inherit an advisor when you inherit accounts as well. So I know this is kind of a topic on just feeling overwhelmed. And I completely understand. I wish that inheriting money was simpler because it's already a stressful time in and of itself. But there is a lot of paperwork.

48:18Sometimes the advisor is going to tell you that before you can transfer the account out, you have to transfer it to an inherited IRA. That's actually standard practice. I've gotten a few questions where people were worried about being scammed because they thought it didn't make sense that the advisor was telling them it has to go to an inherited IRA before it transfers out. That actually is the standard now. So go ahead and follow that. But as far as everything else for where you want the money, how you want to manage it, don't feel pressured into keeping it where it is. Yeah, I think that's good advice.

48:50And Glenn also wrote in, and that was one of the other ones that you had identified here, just about how stressful this can be. And I think, as Rachel said, this is a stressful time, and that's normal. And I think that's why it's important to just have an understanding of this, maybe again, at this high level of just listening to us talking about it and just understanding that, okay, no matter what anybody says out there, I'm not going to have to pay tax on this. There's nothing terrible. It's going to befall me in terms of inheriting this money. I just need to understand that really, as we discussed, the traditional IRAs, those types of accounts, you are going to have to pay taxes on when you pull the money out.

49:30And there are these rules that you'll figure out. You can go to Nectarine and hire a CFP for an hour for$150 or whatever they charge and just ask a couple of questions like, hey, what are the rules, right? Like, is it 10 years? How long do I have? What do I have to do with these things? Maybe somebody at the brokerage will be able to help you, but that's few and far between because usually they're not allowed to give advice. So they can inform you if you knew to ask the right questions, but they're not in very broad terms from what I've seen. They're not allowed to give advice. So that's a critical distinction.

50:03But yeah, Glenn is really just describing here that, I mean, listen, this is stressful. There were a bunch of issues for, I guess, in this case, a family member past and there are multiple steps and you have to stay on top of it. And I mean, yeah, you do. But I think the nice part is, and as you said, Rachel, it's not easy to talk about this. Like people die all the time. And when you have your money with a major brokerage, they have seen this literally millions of times. Your situation is not unique or special to them. so they have people who can help you you just need to ask you just need to make the phone call and you need to ask and you have to understand that there are just steps to this and it is all going to work out it is an extraordinarily stressful time you have to cut yourself some slack but it's going to work out because at the end of the day it's just step a b c d and e and it's done and hopefully it's fewer than steps a through e yeah it depends on the custodian where the accounts are held as well.

51:00I see some that are really antiquated and Glenn mentioned notarized documents. Unfortunately, that is still a requirement for some custodians. So if it's a multi-step process, if it's taking a while, stay on top of it. But sometimes depending on the firm, that is just how they work. When this happens, call the firm, be ready with the information you have, be ready with death certificates. That's one piece of advice I always give. Often you can request a lot of copies of the death certificate. So I always recommend having a lot of copies there because a lot of these different firms, if the money's all over the place, they're going to ask for that death certificate.

51:38So call the company, tell them who you are, tell me your beneficiary, ask them, what do I need to do to get this account transferred to me and do your best to just stay on top of it, fill out that paperwork they need, give them the death certificate and watch. Yeah. Yeah. All right, Rachel. So I think we've thoroughly covered that. That feels like a really good start on inherited accounts. That was a pretty significant deep dive for a mailbag episode. So that was fun. We have one last question. So Anne in Brooklyn wrote in and said, any tips for how to continue investing when you're at the early stages of entrepreneurship?

52:14I was great about saving and investing each month when I worked for someone else and had reliable income, but I've been working for myself full-time for about 18 months now, and I'm just clearing the feast or famine stage. The first seven months working for myself, I was busy. Then I had five months with no clients at all, but happily things have turned around. I'm still in business, but I'm having such a hard time pulling money out for the future when I don't know what lies around the next corner. And yeah, I mean, Rachel, this is, I suspect, and maybe no, personally, this is a common lament of entrepreneurs is, yeah.

52:48I mean, one of the nice parts, obviously, about W2 income is that paychecks come in every two weeks, no matter, essentially, as long as you're employed, that paychecks come in every two weeks or whatever it may be. And sure, it sounds alluring to want to have your own business and go out on your own and do all this stuff. But anybody who tells you it's not stressful is a liar or a fool or maybe both. So that's from 10 years of experience of being an entrepreneur myself is it is quite stressful. Now, that doesn't mean it it can't be wonderful. It doesn't mean it can't be rewarding. It can be all of these things, but it certainly is stressful.

53:25So let's be entirely clear. It will always be stressful. So, okay. That's my random sidebar, but what are your thoughts on Anne's question in terms of like the actual heart of what she's asking? Yeah, I was really excited to dive into this one because I really relate to it. So, you know, I'm thankfully what were five years on the entrepreneurship now for myself. But those first few years were really stressful, especially somebody who comes from the financial independence community like myself. To turn off that savings muscle is actually really difficult and stressful. I had to really give myself permission to see my business as an investment and see that the savings, okay, maybe now they're not going into the index fund, but they're going into the business.

54:08And so that's how I had to reframe it to give myself permission to stopping such an aggressive saver in index funds was to say, I'm still saving, I'm still investing. It's not like I'm spending this money. It's just now being directed to the business. Now we can't promise that that is going to be a better return than index funds. Anybody who's an entrepreneur knows there's risks involved there and that's just part of it. So thankfully, if you're young enough or if you've just thought through this, you probably have time to recover if the entrepreneurship route does not work out. But for anybody in the first one to two, three years even of entrepreneurship, it's stressful enough.

54:47I would just encourage you not to add that extra stress of having to save in the first few years of trying to start your business on top of it. So I would say give yourself permission to really go for it for a few years. That means releasing the pressure of continuing to invest. If you're an entrepreneur who that first year or first two years are great for you and you manage to invest in index funds alongside it. You're actually the exception. You're not the rule. That's great. But just know that most entrepreneurs are struggling with that as well. And that it's okay to give yourself that break for a few years.

55:21Yeah. I love that. Would echo it entirely is, yeah, you are at this point investing in building your business because you believe that it can be something significant because otherwise you wouldn't have left your nice, safe, predictable W2 job, right? This is obvious when you actually think about it, but it's not obvious, right? Like that's why we need to talk about this. That's why Anne has this question. We've all had this question, but when you really dive into it, you are investing in you. You are investing in your business because you believe there's a chance that this can be fantastic. So as Rachel said, just cut yourself some slack.

55:57Come on, right? We get so bent out of shape in the FI community about my savings rate needs to be 37 % or I'm failing. Come on. Like this is ridiculous. You're living an intentional life. That's what we're doing in the fight community. We don't have arbitrary random financial goals. Again, this is not 2015. Okay. We are trying to live the best lives we can. And in this case, you've made a very intentional decision to leave your safe job and build something for yourself. And that's wonderful. And the absolute worst thing that happens is it doesn't work out. You spent a couple of years and you go back and you get another W2 and it's no harm, no foul.

56:35you go back to saving. This will be but a blip in terms of your actual fine number. You will never remember this. Okay. But you bet on yourself and that's pretty darn cool. You should feel really good about yourself. So that's the worst case scenario. And, and using Anna as, as an example here, if she's been saving for years, we spent the first 15, 20 minutes of the episode, Rachel talking about barista fi and coast fi, it changes the calculus of this entirely, right? So it's funny how these actually tie so closely together. You don't have to save. If you have a net worth, like I illustrated, you have a$187 ,500 net worth or whatever the number was, and it's going to turn into 1.5 million in 27 years.

57:16Now, obviously, nobody's going to write up an example of, hey, I want to be stressed in my entrepreneurial endeavor for the next 27 years. Not arguing that. But it's nice to know that all you need to do is coast on in. You just need to cover what your life cost. It doesn't need to be a home run. And that could be something like working in a passion project that, hey, maybe I'm making a fraction of what I used to make, but as long as it's enough to cover my life expenses, I'm golden. So I think really ratcheting down the pressure is the key that both of us would ask. Yeah. And it is why I'm such a big fan of Coast Fi.

57:52And I'm seeing this more and more where people are, you know, working traditional W-2 jobs, they're saving aggressively, but their goal isn't to hit that full retirement or financial freedom number and then retire. Their goal is to get to coast FI or maybe a little bit beyond that as quickly as possible so that they can take this risk. And it's very interesting because it's kind of a new thing I'm seeing. We see a lot of entrepreneurs glorified as putting everything on their credit cards and going into debt and asking for money from family. But now we're seeing this emergence of people in the FI community doing it in a more calculated, educated way, taking some risk off the table.

58:30I thought through this personally, I hit Coast FI and it was such a positive impact on my life because now I knew I can afford to stop investing in index funds and I can afford to invest in my business and I'm not inflating my lifestyle then. I'm still spending the same as far as personal expenses go. So really I can afford to take this risk with the business and plow a lot of money into it and really go for it. That's why I love this combination of the Coastify and entrepreneur now, because it is that gives you that peace of mind to really go for something. And now you can just deal with the stress of the business rather than the stress of the business and finances on top of it.

59:10Totally agreed. Rachel, this was super fun. I really enjoyed this episode. As always, thank you for coming on. You said this is number seven that we've done together, which is crazy. and seven of many more to come. So where can people find you, reach out to you? What's the best way to get in touch? Yeah, so website is rachelcampwealth.com. Go to the website, that'll direct you everywhere, social media, things like that. But camp underscore wealth on Twitter, campwealth on every other social media platform. Thanks for having me. Yeah, this is fun, absolutely fun. And yeah, we will have links, as you can see.

59:44You wanna make sure you spell Rachel's first name right. So obviously we'll have a link to her website in the show notes. So definitely check that out. As you can tell from this episode in the prior mailbag, she is a wealth of resources. So Rachel, thank you so much. Thanks, Brad. Thank you for listening to today's show and for being part of the Chooseify community. If you haven't already, the best ways to get involved are first subscribe to the podcast. So you're listening to this on a podcast player and just hit subscribe and then subscribe to my weekly newsletter. I actually sit down every Monday and write this by hand and I send it out Tuesday morning.

1:00:18So just head over to choosefi.com slash subscribe. And it's really, really easy to get on the newsletter list right there. And I would greatly appreciate it. It's the best way to get in touch with me. You can actually just hit reply to any of those emails and it comes directly to my inbox. So that's the way that I keep a pulse of the community and how we keep this the ultimate crowdsource personal finance show. And finally, if you're looking to join an in real life community, we have choosefi local groups in 300 plus cities all around the world. So head to chooseify.com slash local, and you'll find a list of all of those cities in 20 plus countries all across the world.

1:00:56And if you're just getting started with FI, or you have a family member or a friend who you think would be interested, two easy ways. Chooseify episode 100 is kind of our welcome to the FI community. And even though it's a couple of years old at this point, it still stands up. And it's a really great just starting point to get an understanding of what is financial independence what are we doing here why are we looking to live a more intentional life where we save money and use it as a springboard to live a better life and then choose if i created a financial independence 101 course that's entirely free just head to choose if i.com slash fi 101 and again thanks for listening

1:01:43Thank you.