BiggerPockets Money Podcast

519: HSA vs. FSA and When to Drain Your Emergency Fund to Pay Off Debt

Apr 12, 2024

Financial experts Amanda and Scott cover topics such as avoiding capital gains tax, lending money to family members, renting vs buying, HSA vs FSA, and using emergency funds to pay off debt in a finance FAQ episode.

38:42

Episode guests

Scott

Amanda

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Highlights

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Episode notes

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Quick takeaways

HSAs offer triple tax advantages for medical expenses and retirement savings.

Consider refinancing options like 401k loans or 0% interest credit cards to manage credit card debt.

Deep dives

Health Savings Account vs. Flexible Spending Account

Health Savings Accounts (HSAs) offer triple tax advantages allowing tax-free contributions, investment growth, and withdrawals for medical expenses. HSAs are considered an ultimate retirement saving account. Flexible Spending Accounts (FSAs) are a useful tool for planned medical expenses but do not offer the investment potential or tax advantages of HSAs. Considerations for choosing between HSAs and FSAs depend on individual healthcare needs and financial goals.

Using a 401k Loan as an Alternative Financial Option

00:39

Avoid Loaning Money to Family or Friends

00:35

Introduction

4min

Navigating the Complexities of Helping Family Members Financially

3min

Navigating Financial Dilemmas and Setting Boundaries

12min

Navigating Mortgage Complexity in Retirement and Financial Freedom

2min

Maximizing Health and Financial Savings

12min

Conclusion, Credits, and Sponsor Ad from Navy Federal Credit Union

2min

Want to know how to avoid capital gains on your next home sale? If you tune in, you may dodge a quarter-of-a-million-dollar bullet (or more!). What about investing in one of the most tax-advantaged accounts that almost EVERYONE should have but most people don’t? What do you do when a family member asks to borrow money from you but has a bad track record with keeping their personal finances together? We’re getting into it all and more on this finance FAQ with Amanda and Scott!

We get a ton of personal finance questions through the BiggerPockets Forums and our Facebook Page, so we decided to round up some of the most common ones and answer them for you. First, we’re talking about how to dodge capital gains tax when selling your home. Then, a concerned listener asks whether they should take out a loan on a family member’s behalf. A high-income earner wants to know whether renting or buying is their best bet, and we share whether paying off your mortgage early is a mistake!

Got a medical expense coming up, or just want to boost your retirement investing? We’ll answer whether an HSA (health savings account) beats an FSA (flexible spending account)—but make sure you get this one right. If you invest in one of these accounts the wrong way, you’ll be throwing money away. Finally, a debt-free chaser asks whether they should use their emergency reserves to pay off debt or keep slowly slogging away with the snowball method.

In This Episode We Cover

How to avoid capital gains tax when selling your primary residence

HSAs (health savings accounts) vs. FSAs (flexible spending accounts)

Whether or not to use your emergency fund to pay off credit card debt

Why you may want to reconsider loaning a family member money

Whether to buy or rent in today’s housing market (EVEN with low money down)

Pay off your mortgage early or invest the rest of your money?

And So Much More!

Links from the Show

BiggerPockets Money Facebook Group

Network with Other Investors on The Path to FIRE Through the BiggerPockets Forums

Finance Review Guest Onboarding