Dear Financial Samurais,
The One Big Beautiful Bill Act (OBBBA) reminded me of a key financial principle: it’s better to have a high net worth and low income than a high income and modest net worth.
While researching how OBBBA affects FIRE seekers, I realized something encouraging: there is no longer a hard subsidy cliff. Under the enhanced premium tax credits, households earning more than 400% of the Federal Poverty Level (FPL) may still qualify for Affordable Care Act subsidies. This is a big deal—though some are understandably upset that these enhanced credits are being phased out, potentially leaving millions without affordable health insurance.
But here’s the interesting part: 400% of FPL for a family of four equals $128,600. Now, let’s say you’re retired and aiming to qualify for ACA subsidies while living off your investments:
- At a 4% yield, you’d need $3,215,000 in investable assets to generate $128,600 in annual income.
- But if you’re 100% invested in the S&P 500, currently yielding only 1.25%, you’d need a whopping $10,288,000 portfolio to generate that same $128,600.
In other words, you can be a multi-millionaire and still qualify for healthcare subsidies, so long as your reported income is below the threshold. This underscores why net worth matters more than income when you’re FIRE’d.
So don’t fear early retirement because of healthcare. And if you do earn too much to qualify for subsidies—congratulations! You’re in excellent shape financially.
Check out: The One Big Beautiful Bill Act's Impact On FIRE Seekers. This post took a ton of time to research, write, and edit, but I believe it’s the most comprehensive analysis out there. Please share it with anyone who could benefit.
The Confidence To Continue Buying The Dip
The next stock market correction will likely lead to another V-shaped recovery rather than a prolonged U-shaped one. Why? Because U.S. household leverage—liabilities divided by net worth—is near an 80-year low, according to the latest Federal Reserve data.
If Trump’s proposed 30% tariffs on Mexico and the EU starting August 1 trigger another 10%–20% market decline, I and many others, will be ready to buy the dip again.
Just take a look at the chart below. We're half as leveraged today as we were leading up to the 2008–2009 financial crisis. Are you really going to sell your assets at fire sale prices during the next recession? I doubt it.
On top of that, higher interest rates are keeping excess borrowing in check, naturally pushing people to save more and reduce debt. This dynamic helps lower systemic risk and sets the stage for quicker recoveries.
See: Low U.S. Household Leverage Bodes Well for the Economy
Suffer to Know You’re Alive
I wonder—do some of you occasionally choose to suffer, just to feel more alive and grateful for what you have? I’m not talking about Silas whipping his back in The Da Vinci Code kind of suffering. I mean first-world suffering—like choosing to fly Economy when you can easily afford First Class.
Sometimes it feels surreal to live in America and invest through what’s been nearly a relentless bull market since 2012, when I left my finance job. How can we be so lucky to have this tailwind for so long?
So when the idea came up to stay at my aunt’s place and commute 1 hour and 15 minutes each way to summer school, I pitched it to my dad. He looked at me incredulously, grimaced, and basically said, “Are you crazy? Don’t do it. Just stay with us.”
Despite summer school being just an 8–10 minute drive from my parents’ house, I decided to go for it—all in the name of freedom. I didn’t want to keep hearing from my mom about where to cut my Pirie mangoes or why I shouldn’t fill my bottle with tap water. My wife wanted her freedom back as well.
After 13 nights at my parents’ house, we picked up our kids from school and drove to Laie, where we stayed for 9 nights. For five of those days, I supercommuted an extra 2 hours and 30 minutes a day.
The experience was unpleasant—but, like many things in life, it got easier with repetition. I understand the appeal of living farther away to save on housing costs or gain more space. But personally, I don’t think supercommuting is worth it. Time is far too precious to spend so much of it on the road.
That said, I appreciate the perspectives from readers who’ve been supercommuting for years. Your resilience is impressive and the experience gave me a deeper appreciation for what many of you go through.
See: The Cost Of Supercommuting: Way More Than Just Gas
Take a Sabbatical If You’re Eligible
I’m now in the final week of a 5-week stay here in Oahu, and I must say—it’s flown by. I’ll write a recap post eventually, but one key takeaway is this: if you’re burned out, take a sabbatical. Whether it’s 1, 2, or 3 months, the time will go by quickly, you’ll feel rejuvenated, and you likely won’t miss a beat at work.
Almost everyone I speak with about taking a sabbatical as part of their severance negotiation strategy expresses fear—fear of missing opportunities, losing momentum, or falling behind. But honestly, stepping away for a few months likely won’t hurt your client relationships or your promotion track. If you’re eligible to take a sabbatical, it’s because you’ve already paid your dues.
One of the biggest goals of building wealth is longevity. If you have a well-paying job that you enjoy most of the time, your goal should be to keep it for as long as possible. Taking a sabbatical can help you do just that. I didn’t take one, and I regret it. But I don’t regret taking action to improve a suboptimal situation by walking away.
To Your Financial Freedom,
Sam
Pick up a copy of my USA TODAY national bestseller, Millionaire Milestones: Simple Steps To Seven Figures. The government taxes income far more aggressively than wealth, so you might as well build the largest net worth you can—and live a better life because of it.
If you want to get my posts e-mailed to you as soon as they are published, sign up here. If you were forwarded this newsletter, you can sign up here. My goal is to help you achieve financial freedom sooner, rather than later.