Free money that costs you a Saturday every quarter
The HSA takes one click to open.
Triple tax advantage. Deductible in, tax-free growth, tax-free out for medical. On paper, the best-treated account in the tax code.
Here's what it leaves out.
You need a high-deductible plan you may not want. You have to invest the balance instead of spending it, which most people never do. And to run the reimburse-yourself-later play, you keep every medical receipt for thirty years. And you file the form every single year, forever.
Now price it. Family limit is $8,750, so at a top bracket the deduction is worth about $3,200 a year. Against the receipts, the form, and a health plan you might not have picked, that pays a few hundred dollars an hour.
Real money. Also a tenth of last week's rate, for a hundred times the commitment.
That's not a knock on the HSA. That's the point of this whole letter.
Week one paid thousands an hour. Week two, tens of thousands. This week is the tier where the hourly rate collapses, sometimes to zero, sometimes below it.
Whether it collapses for YOU is the real question. The math is half the answer. The other half is you.
FREE MONEY ISN'T FREE
Every strategy below gets sold online as free. None of it is. It's cheap, and the price is attention, paid quarterly, forever. Recurring spending is recurring revenue in reverse, same trap in a different costume.
This is the sandwich rule, back for finals. If keeping the log is a sandwich you like, the hassle costs nothing and everything below is free money. If it's a latte you resent skipping, the price is real.
Labeled-folder people, take all five. Everyone else: half of these get abandoned in year two, and an abandoned strategy is worse than one never started.
So here are five, priced straight.
1. THE BACKDOOR ROTH
Seventy-five hundred a year into tax-free-forever territory, or eighty-six if you're 50 or older. The move takes an hour.
Contribute to a traditional IRA nondeductible. Convert it to Roth. Done.
One trap: the pro-rata rule. Other pre-tax IRA money anywhere taxes the conversion pro-rata. Fix, if your 401(k) takes incoming rollovers: move those balances there first, then run the backdoor clean.
Verdict: do it. An hour a year for decades of tax-free compounding is week-two rates in week-three clothes. This one's for everybody.
2. HIRING YOUR KIDS
The most bastardized strategy on the internet, and one of the best when it's done straight.
The math: you deduct wages at your rate, 37% and up. Your kid earns it at zero, up to the standard deduction, call it sixteen grand. Same family dollars, IRS cut goes from a third to nothing.
TikTok sells paying your toddler $12,000 to "model" for the company Instagram. That's the version that falls apart the moment someone asks a question.
The version that works: real work, market wages, real timesheets. Best case: college-age kids, earning a real salary and paying their own way through school with money never taxed. You were writing tuition checks for zero deduction. Now the flow deducts.
One wrinkle: S-corp payroll taxes apply. There's a workaround. Ask, don't improvise.
Price it: pay a college-age kid $15,000 for real work in the business at your 37% bracket, and you've moved $5,550 off the family's tax bill. Twenty hours a year of payroll and timesheets. A few hundred an hour, if the timesheets are real. Fake timesheets, the rate goes negative.
Verdict: real work and real payroll, take it. Otherwise, skip it.
3. THE AUGUSTA RULE
Rent your home to your business up to 14 days a year. Income tax-free to you, rent deducts to the business. The only tax-free income in the code. One requirement: your business has to be a separate entity from you, an S-corp or partnership. A sole proprietorship can't rent from itself.
Internet version: fourteen "board meetings" at your kitchen table, $2,000 a pop, comps pulled from thin air. Real version: defensible market rent, documented. A friend rented his house to a movie studio for $30,000 a day. THAT'S a comp.
Price it: done straight, a few thousand a year against real paper. Done the TikTok way, it's an audit with a deduction attached.
Verdict: real events, real comps, real paper, or skip it.
4. THE 529
Tax-free growth for education. Front-load five years of gifts at once if you want to move real money. The newer escape valve, rolling leftover balances into the kid's Roth up to a lifetime cap, made the old overfunding fear a lot smaller. It moves on its own clock though, not all at once.
Ten minutes of setup, then it runs itself.
Verdict: open it, automate the monthly contribution, stop overthinking it.
5. THE LOG LIFE
Mileage logs. Accountable plans. Home office documentation. Real deductions, small ones, and the IRS's favorite hunting ground, because everybody claims them and nobody keeps the log.
Run the math once: hundreds of log entries defending a deduction worth a couple thousand dollars. Divide it out and you're below the rate you pay your assistant.
Verdict: born log-keeper, take them all, they're free for you. Not a log-keeper, the dollars don't pay for the person you'd have to become.
THE THREE-QUESTION TEST
Answer straight. Nobody's watching.
- Can you find a receipt from March in under two minutes?
- Did you file your extension on time last year without a reminder?
- The last tracking system you started. Was it still running in month nine?
Three yeses: your denominator is zero. Take everything above. For you it is free money.
One yes or none: take the backdoor Roth and the 529, skip the rest without guilt. Two things done for good beats nine things until April.
KNOW THYSELF
That's the series. One curve the whole time.
Week one, thousands an hour: money you find by looking.
Week two, tens of thousands: money you get with one signature.
Week three, hundreds an hour, or zero, or less: money that depends on who you are.
Dave Ramsey and Mr. Money Mustache hand everybody the same answer, no matter who's asking. That's what made them famous. It's also what makes them wrong for you: your denominator isn't theirs, and neither is your answer.
Felt tired reading this? That's an answer too. Some people keep their own log. Other people hire the log-keeper.
That's the business we're in.