Step 6: Save for Other Goals & Advanced Methods
Hell, by this point, you’re probably as well-versed in this stuff as I am. For posterity’s sake, however, I’ll finish off Step 6.
Step 6 kicks off with a humdinger: “Do you have a qualified high-deductible health plan and are thus eligible for an investable HSA?”.
What in the hell is an HSA?
Basically, an HSA, or a Health Savings Account, is an account that qualified folks can contribute to pre-tax for potential health expenses down the road. They’re normally granted to people with high deductibles, so those folks can head off any large, unexpected medical bills that may come their way. Check with your employer, union, or HR department to see if your health insurance plan is eligible for an HSA.
(NOTE: a “deductible” is the amount that someone has to pay for their own medical expenses before insurance kicks in. So, if you have a low deductible, you have to pay less for medical care before insurance takes care of you. If you have a high deductible, you may have to pay thousands of dollars before insurance will cover anything. That’s why HSAs are offered to those “high deductible” folks: to give them a tax-advantaged option for their medical care.)
Next: if you have kids, you may want to help ’em pay for college (as someone who just finished paying off their student loans, know that they will thank and praise you for anything you can contribute). There are lots of different savings and investment options in this arena, but a popular one is a 529 Plan.
Every state has their own 529 Plan, and they’re all slightly different. There are limits to what you can contribute, but these plans aren’t federally taxed, and most aren’t taxed by the state, either, so it’s a good place to stash money away for the kids. (I think I can speak for your future children when I say THANK YOU.)