Finance Friday: Planning for a Family Costs More Than I Thought…

Mindy:
Welcome to the BiggerPockets Money Podcast Finance Friday edition where we interview John and talk about planning for surrogacy. Hello, hello, hello, my name is Mindy Jensen and with me as always is my finally back from vacation co-host Scott Trench.

Scott:
Thanks, Mindy. It’s great to be finally dune with my vacation and back to work.

Mindy:
Scott and I are here to make financial independence less scary, less just for somebody else. To introduce you to every money story because we truly believe financial freedom is attainable for everyone, no matter when or where you’re starting or what big expenses you have coming down the pipeline.

Scott:
That’s right. Whether you want to retire early and travel the world, go on to make big time investments in assets like real estate, start your own business or deal with the expensive costs of starting a family with surrogacy. We’ll help you reach your financial goals and get money out of the way so you can launch yourself towards your dreams.

Mindy:
Scott, we have a new segment of the Money Show called The Money Moment where we share a money hack tip or trick to help you on your financial journey. Today’s money moment is stick to water. If you’re trying to cut back on spending money but still want to go out to eat, don’t order that beloved cocktail or beer. Stick to water. This will significantly cut down on your expenses and eating out. And if you feel like you’re going to miss out on drinking, feel free to pregame before you go.
Do you have a money tip for us? Email [email protected]. Scott, I got to tell you, I love talking to you, but I hate talking to our attorneys so I am going to say what they make me say. The contents of this podcast are informational in nature and are not legal or tax advice, and neither Scott nor I nor BiggerPockets is engaged in the provision of legal tax or any other advice. You should seek your own advice from professional advisors, including lawyers and accountants regarding the legal, tax and financial implications of any financial decision you contemplate.
All right, now let’s talk about today’s episode. I’m actually really excited to talk to John today because he has such an interesting problem. He makes a lot of money, but he has a huge expense coming down the pipeline.

Scott:
Yeah, he certainly has some of those financial decisions to contemplate here.

Mindy:
John and his wife are looking to start a family through surrogacy. He is looking for guidance to refine his budget, especially with student loan payments kicking back in and dealing with a rental property, all while planning for this larger family expense. John, welcome to the BiggerPockets Money podcast. We are so excited to have you today.

John:
Thank you. I’m excited to be here.

Mindy:
Let’s start off with a snapshot of your money story. What is your financial situation?

John:
A financial situation is my income grew significantly about two years ago. We have been saving, investing diligently. However, about two years ago we found out that unfortunately we can’t have a family naturally. So going through the process of figuring all that out, we discovered that we have to go through surrogacy and for those of you that don’t know, surrogacy is where you get an outside party, a third person to carry your genetic child.
As you can imagine, it’s not a cheap process. A lot of it isn’t covered by insurance. A lot of it is coming out of pocket, and so with loans starting back up, surrogacy on the horizon, I was hoping to get some input and insight as to how to maneuver my money a little bit.

Mindy:
So let’s talk about your money snapshot. You have a nice income after taxes and insurance and all of that you’re making $11,640. That’s not too shabby. Your expenses are about 4,500 fixed and 2,500 in variable, on average, giving you about $7,000 against $11,000 spending doesn’t seem to be your problem. This leaves $4,600 left over. That sounds great.
And then we go and look at your investments, which also sound really awesome. You have $351,000 in investments and 83,000 in cash. Your wife has almost 300,000 in investments and 121 in cash. Hooray, another awesome scenario, but wait, there’s more. There’s always more.
We look at the debts and that’s where some fun stuff comes in. We have a car loan at $15,000, not insurmountable, a car loan again at $4,000, again, not insurmountable. Your wife’s student loans are $11,000. You have mortgage number one, $289,000, mortgage number two, $114,000. None of that I care about. It’s your student loan, John, that I want to talk about. You have $362,000 in student loans, is that correct or is that a typo?

John:
That is correct. And one other clarification I think is that the 11,000 you mentioned is every two weeks.

Mindy:
Oh, oh. Oh! So okay, wait a second. Hold the phone. So you have a salary of $22,000 monthly and you’re spending $7,000 monthly. My math is wrong. $15,000 leftover. That is going to, well, thank you for clarifying that because that changes my conversation a whole lot because 4,600 is nice leftover, but 15,000 is even better. However, you still have $362,000 in student loans. Is any of that forgivable?

John:
Yes, it is. So we specifically chose where we live now and my current job, because it is a nonprofit institution and so the loans currently are in the PSLF program, so hopefully by 2027 those loans will be forgiven.

Scott:
And how much of the balance will be forgiven? Is it all of the 370,000 odd dollars?

John:
So of the 360 odd thousand dollars, I believe 350 of that will be forgiven in 2027.

Mindy:
And then is any of your wife’s loans forgivable?

John:
They were and they still are. However, she did not enroll in PSLF from the get-go, and so she is behind in payments theoretically. So we just decided that once the loans resume, we’ll just pay those off.

Mindy:
Okay. That was before I knew that you had $15,000 extra every month. That was going to be, my suggestion was to pay hers off because the PSLF, if I recall correctly, is a 10 or 20 year program.

John:
10.

Mindy:
10. Okay. So if she’s just starting that, you’re going to be able to pay that off and get it out of the way instead of worrying about it for 10 years. Yours are a touch higher and also almost gone. We have four years left. I would continue to go on that program and that kind of changes. So my first question was going to be what is your greatest money pain point? But I was going to answer that as student loans, is that still your greatest money pain point now that we know that you have the PSLF program?

John:
I think it is, and I say that because, so I’ll be paying a certain amount theoretically in September when they restart. I’ll be at $300 per month for six months until I recertify my income. Once that happens, the payments will go from anywhere between 1,500 a month to $3,000. I can’t get a good number based on various calculators I’ve looked at online. And so I think that’s going to, in terms of our level of monthly investments, I think it’s like a pain point. I don’t know exactly how to maneuver the cash.

Scott:
So let’s go back in a second. What is your job and what is the likely progression for your income over the near future?

John:
So I work in medicine and frankly there’s not going to be a ton of increase yearly. Maybe keep up with previous theoretical inflation rates, maybe like 1, 2% a year.

Scott:
Okay. When we talk… Again, I’ll pose Mindy’s question again here. We have I think a really good financial position here. We’re able to accumulate a lot of cash on a regular basis. We know that in 2027 the bulk of the student loans will be forgiven. That will be a taxable event I believe. Is that correct?

John:
With PSLF, it is not. I think in the 20-year loan forgiveness, it’s like a big tax bomb at the end, but with this one it’s not. It’s just kind of gone.

Scott:
Okay. So the story for the next couple of years is we’re going to be accumulating a lot of cash in a general sense. We’ll have the ability to accumulate that on our current base lifestyle. There will be an increase in the amount paid towards the student loans, which will continue until 2027, but the entire balance will be forgiven tax-free, essentially. The 95% of it will be, maybe 97% of it will be forgiven in 2027 and we’re going to be able to invest a lot of money in the meantime, even on top of that, those payments there. So is the question and is the struggle, what should we do with those funds? We have some other items that are coming up here as well to think through.

John:
Yeah, so foreseeably, my wife and I want to get the family started now because the process is so long and so theoretically I’ll be paying, let’s say 2,000 a month until 2027 and we also need to save money or take out a loan to have a family. We have money saved up currently for child number one if everything goes well the first time around, but we’d like to ideally have two or three kids and then adopt as well, which is not as expensive as surrogacy, but that’s kind of our thought process as well. And so we want to save up a good amount of money to do that.

Scott:
Okay, and can you explain the process of surrogacy so we can understand what the cost entails here and what the timeline looks like for this process?

John:
Okay, so you find out that you have to go through the surrogacy process, you then match up with an agency. The agency starts looking for a surrogate for you. Sometimes that timeline can take up to a year to get matched. You then get matched, the process for them to go get medically cleared. You get medically cleared, can take several months, and then the surgery occurs and you go through the regular pregnancy process. So that’s the average rate for getting matched. Sometimes it takes longer, sometimes it’s shorter. Sometimes the medical process going through the medications takes longer and unfortunately sometimes the pregnancy doesn’t occur. So we know people in the community that have gone through three previous surrogates before being successful, and so this is a process that can take years. So my wife and I have kind of been through this since 2020 and we’re still going through it.

Scott:
Awesome. And you provided an estimate for us of a six figure sum, 110 to 160,000 it looks like, is your estimate there. Is that kind of the ballpark that we should be thinking about here for that or is there even more fluctuation possible? Is that for one cost or is that for both of the potential children you’d like to have?

John:
So that’s actually just for the one and that’s one if it’s completely successful with no issues that arise. So it varies a little bit, maybe 100 if you do it all on your own and you and your partner go through, doing all the insurance stuff and contacting the surrogate and finding one and doing all that on your own, which is essentially kind of like a part-time job in and of itself. And then there are certain agencies that will do the soup to nuts that for $150,000 flat, you don’t do anything. They match you and go through the whole process and you never essentially see an insurance bill go to you. Everything just goes through the agency and so you have that variability there.

Scott:
Okay, and in that second case, it’s paid in a lump, it sounds like 150 or maybe installments or is there a cash flow or financing component to this or is it pay as you go or how do we think about financing this from a financial perspective?

John:
I want to say it’s financing because a lot of the people that we have met haven’t been as fortunate as we have in terms of our cashflow. So they’ve had to take out mortgages on their home and things like that to finance it. I’m sure there’s loans that you can get for the surrogacy process, but from what we’ve gathered, it’s kind of like lump sums that occur at different milestones throughout the process.

Mindy:
Okay. So you’re still accumulating approximately $15,000 a month right now that you could be putting into your cash pile for the surrogacy program. What is your timeline for surrogacy? You said you’ve been going through this since 2020. Have you paid anything into it yet or is this more of just conversation and you’re about ready to get started?

John:
Thus far we’ve paid $25,000 to the agency and we have a surrogate in place, and so we’re in the process in now. Earlier when you were discussing our cash reserves, a good chunk of that is for the first surrogacy, so I would say at least 100 of that is just for the surrogacy.

Mindy:
So I show about 200 in cash. Let’s just for the sake of this conversation, earmark that for surrogacy and any issues that could arise with that. You’ve paid 25 in so far, you have matched with the surrogate and now you’re in the science-y part of it.

John:
A lot of science.

Mindy:
Yeah. Okay. How many rounds do you go with the surrogate before realizing it’s not going to work, is there a set number?

John:
I don’t know if there’s a set number. Well, sort of. So when you first go through the process and we harvested eggs, we have four viable embryos. So essentially we have four shots of attempting pregnancy before we have to go through the whole science-y stuff. Again, my wife and I haven’t talked about how many attempts we want to try with this current surrogate, but I don’t know if there’s a scientific hard line. You’ve tried this many times, you have to move on now.

Mindy:
Okay. And when is your first embryo implantation going to happen?

John:
Hopefully in a few months. We hit a couple roadblocks a few weeks ago. We had to see other specialists in medicine and get clearance and get some treatments and then hopefully we can reconvene in two weeks to then do the implantation process.

Mindy:
So this is potentially within the next year if all goes according to plan, you will have the first baby, the first implantation for sure.

John:
Yeah. Yeah, hopefully.

Mindy:
Okay. At the same time that student loans are coming back and so your 15,000 is going to be, let’s say it’s going to be 3,000 a month. Now you’re going to be accruing $12,000 a month instead of $15,000 a month. That’s still a really great savings plan. What is that, $144,000 a year. Theoretically, and life doesn’t cooperate, but theoretically you could be saving for the next surrogacy for the whole year while the surrogate is getting ready to be pregnant and then being pregnant. By the time the first baby is born, you could have enough money for the second baby, all while still living the life that you’re living and paying off your car, your wife’s student loans.
I think that that should be well, but that doesn’t account for any investments. You’re in your thirties right now?

John:
35.

Mindy:
I mean babies are… You’ve got a great start on the investments.

Scott:
Well, look, I presume you don’t want to have two children within six months of one another, right? You’re going to have the first one, then you’re going to wait a year, 2 and then have the second one, right?

John:
I don’t know honestly, because keep in mind that we have to do some science-y stuff that is time dependent and I don’t think my wife would want to wait for that science-y stuff to happen two years from now. So I very much think that we’re going to hop back on the bandwagon hopefully as soon as the first one is hatched or born.

Scott:
I’ve always thought about referring to my children as the trench, so the hatched works really well with it. Okay. So we’ve got… Presumably we’re going to wait for child one to be born before second. You might start it immediately the next day even, but you wouldn’t have a second child going before the first one is born. Is that the plan?

John:
Yeah, exactly. So we want to have one go smoothly or smoothly as it can go, and then once that’s kind of in place and we’re good, then we’ll do hopefully a next one, the next one.

Scott:
Okay, great. So we’re going to accumulate $15,000 per month after tax in cash, after your salary, investments and expenses. Is that a fair statement in terms of your go forward expectations in cash accumulation?

John:
Yeah, that’s kind of roughly what it comes out to, yes.

Scott:
Okay, perfect. That’s $180,000 per year. So you have $200,000 currently you need 150-ish, 150, 160 to earmark towards surrogacy one. By this time next year you’ll be right back at that number after cash flowing and before any investment returns or any other cash flow is considered. If you stick the $200,000 that is currently in your bank account into high yield savings accounts, that’s going to generate a 4 to 5% yield. So that’s about a thousand dollars a month give or take there. So that’s 12 grand on top of this. You’re probably going to most likely pay some of this incrementally throughout the process and not one big lump right now.
Is that’s the current plan as I understand it?

John:
To give it an installments, is that what you said?

Scott:
Yeah.

John:
Yes. Yeah, exactly.

Scott:
Okay, so we don’t have a cashflow problem here, and so I guess it’s pretty simple for me for the next two years, you have the cash for this now, you’re in a responsible financial position to do this. There’s no reason not to. You have the ability to cashflow it for the next year as long as we have a stable job situation. And so to me, the higher level plan is how do we… And we know we’re going to get a knock on cashflow when you have to start paying the higher student loan amounts, but we’re still going to have plenty of cashflow, 100 to $120,000 per year that we’re able to play with after child number two, the surrogacy has been paid for, and after we’ve started paying more for the student loan debt.
So I see a path to by 2027, having your current investment situation remain largely unchanged, maintaining a strong and stable cash position throughout the entire thing, slowly amortizing your car loans, some of your student loans that are not going to be forgiven, and then your mortgages. And on top of that, having another quarter million dollars in cash accumulated, which we can deploy towards some type of investment.
And at 2027, that’s the position you’re going to be sitting in, is today with no student loan debt, $250,000 more to invest. And so the plan is what do we want that position to look like in 2027, which is really the next… Which is the moment when your financial position will be completely overhauled, right? We’ll be looking at a completely different fresh set and the next, what’s the word, next era in John’s financial life here, right?
That’s what we’re trying to back into. How’s that sound? Am I thinking about this the right way? Is this how you think about your situation?

John:
I think so, sort of, a lot of that cash reserve that we have currently is some of that’s kind of earmarked towards certain things like emergency funds or house or travel, things like that, that my wife and I do. So that 200 or so that we have currently is not all of it. Just sitting there with no purpose that has a job of sorts.

Scott:
Yeah, I figured you have $50,000 for life and 150 for the surrogacy. That’s kind of how I bucketed it in a big block. It sounds like you’re much more prescriptive in detail, which is awesome about how you bucket the cash out.

John:
Yeah, essentially.

Mindy:
So if I was in a similar position, I would do everything that Scott said except I would prioritize anything like if you have a 401(k) or whatever the 401(k) option is at your place that has a match. If your company has any sort of match, I would do that. I would contribute enough to get that match. If you have an HSA plan, I would continue to max that out because that is triple tax advantaged. It’s not taxed going in, it grows tax deferred and spending is tax-free when it’s a qualified expense. You’re going to have a lot of qualified expenses. I looked into my crystal ball and kids do a lot of things that need medical bills covered, so it’s just even band-aids and that kind of thing. You’re going to be up to your eyeballs and band-aids, although you could probably get them at work, but anyway.
So anything like that, any, I don’t want to call it free money because it’s 401(k) matches are part of your compensation. HSA accounts aren’t free, but they are a triple tax advantage, which is my favorite. I love not paying taxes when I don’t have to. But after that then I would prioritize just putting it in cash because you’ve got such a solid foundation, because you have such a bright future financially speaking. I would then take and either like Scott said, because you’re not making lump sum payments, cashflow, the surrogacy payments and keep this existing 200 in cash in cash just in case.
And by cash I agree with Scott, a high yield savings account, not just in a bucket under your bed, but easily accessible. I would not put it in the stock market because while stock market is great for long-term growth, you need it in the short term and you want to make sure that you have it available. If the stock market has a sudden 50% drop, I have full faith that it will eventually recover past performances, not indicative of future gains, but I have every confidence that it will recover eventually.
It may not recover in time for you to actually use it. So I would keep it as liquid as possible, which is a high yield savings account. Maybe even look into certificates of deposit that have a one-year timeframe. Do they have six-month CDs? I’m not sure. But maybe if they pay more, you don’t need it for a year because you can cash flow everything, then you get a slightly higher rate. But other than that, I think you have a great financial future and taking two years off of investing isn’t awesome, but you’re doing something else with the money on purpose and growing a family is a good use of your money.

John:
I think that’s the tough part for me to swallow is putting a hold on investing just because in medicine we start a little bit later and so I don’t have the compounding effects for my twenties, and so I know I have a decent amount saved up, but still, I don’t know, it’s like a mental block to just stop completely putting money into that bucket.

Scott:
I don’t think you have to. I think the situation is right now you have a good investment portfolio, like we just said, you can cash flow the two children here in this situation and you’re going to accumulate $250,000 over the next three to four years, in the next four years, in investible liquidity. And to Mindy’s point, I agree that a logical approach where I’d start with is maxing up the HSA, taking the 401(k) match, maxing out maybe the 401(k), Roth IRA, and then after tax investments in either real estate or stocks with whatever’s left over.
But yeah, you’re going to accumulate $250,000 in investible liquidity that you could invest over this time period while cash flowing the surrogacy for both of your children. So I think that’s a pretty good overall situation. Is it the great… Like you could, yes, accumulate another $300,000, but you would prefer to have a family, and that’s super reasonable, right? That’s not something you’re going to be able to do in 3, 4, 5, 7, 10 years as easily as you can do it right now, and you have the means.
So I think if I’m in your shoes hearing what you’re saying, I’m like, okay, I’m going to accept the reality that this is cash out the door for this purpose. I can invest it because what am I going to do, put it in an investment that could possibly be at risk and then delay the birth of the next child because an investment didn’t work out. That’s a non-starter for me in this situation. It’s got to be liquid, it’s got to be safe and set aside for this purpose so it’s not investible beyond whatever you’re going to earn in a high-yield savings account in an FDIC insured bank. And so that’s it.
And then we think about, okay, what does this game look like in 2027? How do I get the best, most flexible, strongest position that gives my future family all the options in the world at ’27? And guess what? You have a great shot at becoming close to, can you get to a million? You might be able to, you probably will get close to a million dollars in net worth or three quarters of the way there by 2027 once that student loan debt is wiped and we’ve got another $250,000 that we’ve added to the pile plus any investment returns and amortization of your debt.
How am I doing here? I kind of said this earlier, but am I getting any closer with this?

John:
I think so. I think so. I think when I have you guys, like outside sources, telling me, “Hey man, it’s okay. Just put money towards the kids. This is the right thing to do.” I know it’s the right thing to do, it’s just that weird mental block.

Scott:
It’s what you want.

John:
Yeah. Yeah.

Scott:
I think that’s it. What’s the right thing to do? There’s no right thing to do. If you want the advice for how to make the biggest pile of money in 30 years at retirement age, then the answer is don’t have kids. That’s a terrible answer. I can’t imagine. I love my daughter so much, it’s so wonderful. I hope you have the same type of experience with your future children there. I know how much Mindy loves her kids. But would I be richer, like sure, but that’s just not the game you’re playing right now. I think in this situation and the reality of your situation is that this is the way to make that work, and you can do it responsibly. You don’t have to take out a second mortgage or put yourself into more debt and to do it. You have accumulated the cash because you’ve studied hard and went into the medical profession and have a great income to pay for it.

John:
Yeah, you’re right. Yeah, we’re very fortunate in terms of that regard. So I can’t complain too much.

Mindy:
Yeah, I’d be way richer if I didn’t have kids, but I can’t spend all the money I have now. So have you heard of the rule of 72? Just to drive this point home a little bit more. The rule of 72 tells us that you should be able to double your money every seven-ish years. So assuming a normal rate of what? Assuming long-term market returns stay more or less the same. So I’ve done some math for you. At age 35, you have $500,000, doubling seven years from now, you’ll be 42 a million dollars. That’s just with no additional ever actually going back in. Age 49, you have 2 million, age 56, you have 4 million age 63, you have 8 million. That’s just CoastFi. If you want to continue to put more money in, you’ll have more money sooner. How much can you spend?

John:
I guess if you ask my wife, we can spend a lot more.

Mindy:
I mean in the next couple of years you’re going to be spending a lot of money, but you’re going to be spending money on good things and you can cash flow what you’re spending on. I mean, you could cash flow the first one and then cash flow the next one. It takes a while for them to cook.

Scott:
You guys are bringing in 250 grand a year. You have to live like you’re bringing in 70 a year for the next couple of years until 2027, like I mentioned with that. When 2027 rolls around, again, the whole picture is going to be completely different because this loan’s going to be out of there. Both of their kids will be born and or hatched. Life will be good. And you’re going to probably presumably continue to increase this excellent salary over that time period, like I mentioned.
So again, I really think that’s where you got to be thinking, how do I back into the most advantageous position in 2027? Because right now, with the goal of having these two children, you’re not going to be able, in a realistic sense, to earmark way more capital than we’ve currently got to investments that are going to cashflow, unless you’re willing to risk the timeline with the births of these children as a result of that.
It’s a unique circumstance, but I don’t think you can afford any risk with the cash that you’re earmarking for this purpose, in my opinion.

Mindy:
Yeah, you’re still investing. You’re just investing in a different thing. You’re investing in your family.

Scott:
One of the kids will pay for your retirement, the retirement village that you retire to and the other will visit you. So this is going to be really, really good investment.

John:
So I’m investing in my future is what you’re saying with these kids, they’ll take care of me.

Mindy:
That’s always a guarantee. If you have kids, they’re guaranteed to take care of you in your old age.

John:
Oh, perfect.

Mindy:
Also, I just want to clarify to anybody listening, the hatched comment came from John first.

Scott:
That’s right, yes. We just continued along that one. Yeah.

John:
It’s all in good fun. It’s one of those things that it can be a really sensitive topic and there’s a lot of emotions surrounding it, but I try to make light of it because what else are you going to do?

Scott:
I think I totally respect and admire that. So this is awesome. This is a hard situation, but also one that you are prepared for financially. Your household is ready to take on this challenge, this financial decision, this investment, the start of this family.
John, we really appreciate you coming on and sharing this. This is a tough situation, a very personal situation, so thank you for sharing it. I’m sure that other folks are thinking about these things and having trouble with the trade-offs that they involve. We hope this was helpful for you today and would love to hear about how things turn out over the next couple of years.

John:
Yeah, yeah, of course. I really enjoyed this. Yeah, it’s a personal topic and it’s hard for a lot of people, and if there’s anyone going through it out there, I just know that there’s a ton of support groups out there. There’s a lot of message boards. Facebook has a ton of groups for that, and they’ve been really good in terms of just getting more information and assistance. So I’d highly recommend looking for those resources.

Mindy:
Awesome. Thank you, John. That was really helpful. I really appreciate your time today.

John:
No, thank you guys.

Mindy:
Okay, we’ll talk to you soon. All right, Scott, that was John, and that was a very interesting discussion. I think he set himself up very well financially, and I think he faces a problem that a lot of people face. I want to invest, but I can’t, but I want to and I have the means, but I also have this big expense that I am looking at, and it can be really tempting to put that money in the stock market.
I hope that he takes our advice to just leave it in liquid cash or even a certificate of deposit or something that pays a little bit more than a high yield savings account, but keeps it fairly accessible because it isn’t something to be invested right now. Well, it is invested. It’s going to be invested in his family.

Scott:
Yeah. And for me, I’m kind of this person where if I’m buying my forever home, right, well, I’m going to invest in the stock market and figure it out, and if things go well, I’ll buy it sooner, or if things go worse, I’ll buy it later. While some people would be very risk averse to that because that’s a huge decision. For me that’s the way I would view it. But with a child, I feel like you’ve really got to be able to have that cash. You can’t invest the funds that are going to be used to create a family with that. I think you have no choice but to stick it into a FDIC insured deposit account. Make sure it’s available for that purpose and nothing can interrupt it, if that’s the core plan. We got to make sure that that gets done before we invest.
I mean, you can, and I guess there’s a case for some other ways to think about it, but that’s for me how I would be approaching this particular decision in that situation.
And I also want to highlight, there’s just chapters of life sometimes where something’s got to conclude, right? Kids are in college, and your cashflow in college, if you’ve made that decision, maybe you got to wait until college is over to really begin aggressively planning out the next how you’re going to deploy hundreds of whatever, tens of thousands of dollars in cash that you’re going to be accumulating because that expense is out, right? In this case, we’ve got two children to go through the surrogacy process with. That’s several hundred thousand dollars that can’t be invested. We just got to get through that period, and we know we’re getting this huge loan forgiven. Like let’s just zoom out, accept the reality of the next situation, enjoy this chapter of life, and then get serious about the next wave of financial decisions that are going to be much more meaningful right after that.
And of course, we can put a little bit of strategy to that by determining whether we want to be a tax advantaged investor with HSAs and 401(k)s, or that we want to be building a little bit more of a flexible position and after tax liquidity, maybe with some more real estate or after tax investments or debt. That’s the decision. That’s the relatively minor or relatively lower stakes decision that John has to confront in the next couple of years, and the higher stakes investment decisions will come in the next chapter in 2027 and beyond.

Mindy:
Well, I would like to hear from our listeners. We suggested a high yield savings account or even a certificate of deposit. Are we missing anything? Do you have any tips for higher yield accounts that are still very liquid and a certificate of deposit isn’t super liquid? You have to… It’s kind of locked in for a year or maybe six months or 18 months or whatever. But do you have any suggestions for John?
Come on over to our Facebook group and share your ideas, facebook.com/groups/bpmoney. All right, Scott, should we get out of here?

Scott:
Let’s do it.

Mindy:
That wraps up this episode of the BiggerPockets Money Podcast. He is Scott Trench, finally, back from vacation. I am Mindy Jensen saying Cheerio mistletoe.

Scott:
If you enjoyed today’s episode, please give us a five star review on Spotify or Apple. And if you’re looking for even more money content, feel free to visit our YouTube channel at youtube.com/biggerpocketsmoney.

Mindy:
BiggerPockets Money was created by Mindy Jensen and Scott Trench, produced by Kaylin Bennett, editing by Exodus Media, copywriting by Nate Weintraub. Lastly, a big thank you to the BiggerPockets team for making this show possible.