Mike Zung, CFP® Java Wealth Planning

About Mike Zung, CFP®

I am a podcast geek, an introvert, a die-hard Liverpool soccer fan, and a Peacemaker on the Enneagram. I am married to my wife, Sarah, who works in special education. We have two kids, Anna and Sam.

I graduated from Truman State University in 2001 with a degree in Computer Science. I started my career as a Java developer at Boeing in St. Louis and moved to Kansas City in 2006. Since then, I have been a software developer, manager, and architect in the employee benefits industry.

After 19+ years in information technology, I decided to walk away from the corporate life to follow my passion. I established Java Wealth Planning to be THE source for helping tech professionals in Kansas City navigate their financial lives.

I have first-hand experience navigating job changes, contract positions, hiring, promotions & bonuses, stock compensation, ESPPs, benefits packages, and trying to balance your job with family and outside interests. Kansas City’s tech scene is booming, opportunities are out there, and you need more than a generalist advisor who wants to either sell you a product or roll over your old 401(k).

I was blessed with a fantastic career in tech, and see the tremendous potential that this career carries for others. I have since reached a point in my financial journey and experience where I would like to pay it forward. I am a firm believer in living a life that aligns with your core values and creating a company that is focused on financial literacy, empowerment, and service is what that looks like for me.

The question now is what does a life aligned with your values look like for you and your family, and how can we make it a reality?

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Recently Published

Master Your Cash Flow With This One Visual

January 28, 2021


We all know the saying “A picture is worth a thousand words”.

If you would create a picture of your annual cash flow, what thousand words would it illustrate? What story would it tell? And most importantly, is it the story that you want to be told?

We all have core values. Principles that we live by. I think that’s a big reason why people are hesitant to talk about money. It has a way of exposing whether you’re living out your principles on an everyday basis. It can bring out feelings of embarrassment or shame. We attach our self-worth to our net worth.

But let me be clear: This is not about money.

Do you want to support non-profit charities, but find that your purple line is only a small sliver? Do you want to be a world traveler, but your debts are dominating your outflow?

This exercise is meant to get you thinking about your full financial picture, using the fictional couple Sonya & James. As you’ll see, there is a lot more to it than just what hits your checking account.



The first step is to understand your expected annual income. For tech professionals, this is usually pretty straight-forward since most are salaried W2 employees. Start with your gross salary (not take-home). You know, the one in your offer letter or compensation statement. If you’re not sure what your annual gross salary is:

  1. Grab your paystub

  2. Find your “Gross Pay” number for that pay period

  3. Multiply that by the number of pay periods you have. Hint: if you get paid every two weeks, that’s 26 pay periods.

For contractors, it gets a little fuzzier. Employment is more fluid, contracts can be cut short. On the other hand, some jobs may require working overtime… but hey, at least you’ll get paid for that! In any case, you can still take your gross hourly rate and multiply it out by the number of hours you expect to work. 2,000 hours is the average working year, accounting for taking two weeks of vacation.

Don’t forget about any bonuses or stock compensation

I know many people who somewhat purposefully don’t plan for bonuses so that when it arrives, then it feels like extra money that has no strings or job attached to it. You know, fun money!

You know who doesn’t ignore it? The IRS.

And it can have a huge impact on your tax burden and make you afraid to file your taxes. So while it spoils the surprise, plan for that bonus income.

With stock compensation, there are different flavors of stock compensation that tech employers award their employees. The most common would be Restricted Stock Units (RSUs), and can also include Incentive Stock Options (ISOs), Non-Qualified Stock Options (NQSOs, or non-quals for the cool kids), and Stock Appreciation Rights (SARs).

Without going into the gory details of each, it suffices to say that planning for stock compensation is vitally important. The tax implications are potentially huge, as are the upside benefits.

Other Income

Do you have rental income? Side hustle? Do you have investments in a taxable brokerage account that kick out dividends? Make sure that’s added in, too.



Charitable giving represents something that runs deep in defining what you stand for.

In Christianity, tithing is the act of giving 10% of your income and is often referred to as “first fruits”. In other words, it comes out off the top.

For those reasons, Charity deserves the top spot.

Efficient charitable giving strategies can save thousands in taxes and also mean more money going to your charity. A few of my favorites are:



I’m convinced that this is one of THE MOST IMPORTANT areas to focus on for effective financial planning. Lowering taxes is a concrete, quantifiable value. Paying less money in taxes means deploying more money towards what you really care about.

How much you pay in taxes is directly driven by the rest of this visual. Income, stock compensation, charity, and tax-advantaged saving all determine your resulting taxable income.

The IRS Tax Withholding Estimator is a great starting point to get an estimate of your annual tax obligation, as well as if you are withholding enough from your paycheck.

When making decisions on where you save your money such as Roth vs. Traditional 401k contributions, the key is to try to lower your lifetime taxes. This is what separates a financial planner from an accountant when it comes to tax planning (generally speaking… don’t come at me, CPAs). In addition to living in the past and present year, we look years and decades into the future. That may mean that you purposefully realize more income, contribute or convert money to Roth accounts, and actually RAISE your current year’s taxes.



Declaring What Is Important

Travel the world or buy a vacation cabin? Save for college or increase your retirement income?

Most everyone does not have enough income to fully fund everything that you could possibly want. If you do, congratulations! Let me redirect you to the Charity section…

The Savings section is where you answer these questions of priority. These conversations between partners are so meaningful, yet rarely happen. It can bring a couple together to a shared understanding and shared direction.

System Over Discipline

When I show a client their cash flow visual, they’re often taken back by how much they actually pay in taxes.

“What’s this FICA tax?!”

The answer is that it is money withheld from your paycheck by your employer to pay for the Social Security & Medicare programs. It’s common to see clients paying in excess of $20K toward it. BUT since you never see that money, you don’t feel the pain of paying it.

Apply that same principle to paying yourself first. Set up a system that moves your money into savings goals quickly enough that you aren’t tempted to spend it. The Money Guy Show refers to this tactic as forced scarcity.

Saving into a 401(k) and HSA is already set up this way since that is also done by your employer. But it’s up to you to execute your savings plan for college, IRAs, and other goals.

Mortgage (or Rent)


This portion is generally fixed. For homeowners, it includes principal, interest, and property taxes. For renters, it’s… well… rent.

The only thing to address here is whether the ratio of this expense is in line with your income or if it’s squeezing out too many other items (and you’re “house poor”).

Or if you are in the market to buy a new home, it can help gauge how much house you can afford (again, so you don’t become “house poor”).

Living Expenses


Here is where it gets down to human behavior. Gulp!

This encompasses all of your day-to-day items: Bills, subscriptions, groceries, restaurants, kids’ activities, gifts, fun money, and more kids’ activities.

Should You Follow a Budget?

Maybe… Probably… Sometimes absolutely.

It definitely aligns with the idea of living with intention. It’s assigning purpose to your money. We’ve been doing it on a larger scale this whole time.

A common misconception is that it’s very restrictive. But it can actually be a liberating experience. You can spend on that coffee without guilt because you have already allotted money to it.

You Need A Budget, or YNAB, is a platform that does very well with all things budget-related. Rather than me trying to parrot what they teach, go check them out. WARNING: You may find yourself joining the YNAB cult. It’s very active on both Reddit and Facebook Groups.

Reverse Budgeting

On the other hand, if you’re checking all of your savings boxes, maybe you don’t need to keep track of every last transaction. This is the idea behind Reverse Budgeting.

Creating this type of visualization at the beginning of your year tees up your Reverse Budget. Here, all you need to make sure is that your overall spending is not exceeding the amount that is in this one Living Expenses section.



First, let’s define the primary role of insurance: Insurance is in place to protect you from catastrophic financial loss. Period.

Keeping that in mind, what types of insurance are truly necessary? That depends on what constitutes catastrophic loss in your world. Well, and sometimes it’s required.

Unfortunately, the insurance industry has caused insurance products to be over-sold due to the high commission reward (I’m looking at you, Variable Universal Life guy). That has left a bad taste in the mouths of many consumers. It doesn’t help that they often have “Financial Advisor” on their business card.

Nevertheless, risk management is a very important piece in the financial planning puzzle. Get properly insured.



It may show on the bottom in the visualization, but it is on the top of our minds.

Personal finance is so much more than a math problem, and that’s especially true when it comes to debt.

I won’t go into all of the nitty-gritty details around debt here. I did that in a podcast episode, hosted by fellow fee-only CERTIFIED FINANCIAL PLANNER™ Kyle Hill of Hill-Top Financial Planning.

Once you can get rid of all of your debt, you can begin to make incredible strides toward your other financial goals. With this level of intentionality and visualization, another side effect may be that you will never want to be in debt again. And that’s a good thing!

Cash Flow Planning In A Changing Environment

We now have a neat and tidy plan laid out in front of us, and all we have to do is execute… right? Right?!!

Sure, some of these numbers are more static and probably won’t move much. But it goes without saying that life is unpredictable (points to “all of 2020”).

Does that mean that you shouldn’t worry about understanding your current picture and where your dollars are going? Just go with the cash flow? See what I did there…

It’s a fine balance between rigidity & apathy. We live in the grey.

If you treat your plan and budget like an infallible document, then you are setting yourself up for failure & frustration. And possibly a fight with your partner.

If you never engage with your finances and assign jobs to your dollars, then it will slip through your fingers and you will be left wondering where all of your money (and more importantly, your time) went.

“Plans are worthless, but planning is everything” -Dwight D. Eisenhower

Are You Ready To Optimize Your Cash Flow?

Begin with your free Financial Analysis + proposal to see what it would be like to work together.

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What are Incentive Stock Options?

December 29, 2020

Incentive Stock Options, otherwise known as ISOs, are a type of stock compensation that are common in the tech world. It can get really confusing, but this video & blog post should help clarify things so that it makes a little bit more sense for you.

In order to understand ISOs, we can break them down into three main stages:

  1. They are granted to you

  2. You exercise them

  3. You sell them

Your ISO Grant

Congratulations! Your company likes you enough to give you the opportunity to participate in its growth.

When you are granted ISOs, you now know a few key pieces of information:

  • Grant Date - The date that the ISOs are… um… granted to you.

  • Number of ISOs - I think you can guess what this one means, too.

  • Exercise Price (a.k.a. Strike Price) - The cost of turning 1 ISO into 1 share of stock.

  • Vesting Period - The requirements that you have to meet in order to be able to take action on the ISOs. This is either based on time, performance, or a combination of the two.

  • Expiration Date - The last date that you have to decide to exercise the ISOs. A common expiration date is 10 years from the grant date. Once this passes, then any unexercised ISOs go “poof”!

Let’s work through an example: You are granted 1,000 ISOs at a $10 exercise price. All of the ISOs vest in 1 year.

Exercising ISOs

Once you have satisfied the vesting requirements, you now have the choice to exercise any vested ISOs. Remember, “exercising” is simply the act of turning an ISO into an actual share of stock.

Why did I underline that it’s a choice? Because sometimes it simply doesn’t make sense to exercise, depending on the exercise price compared to the current stock price.

Put another way, think of an ISO as a coupon that says “Buy One Big Mac for $7”. But if your local McDonald’s is selling Big Macs for $5.50, then your coupon is essentially worthless. It’s cheaper to just buy the thing (disregarding how gross you’re going to feel afterward).

If the current stock price is lower than the exercise price, then your ISO is “out of the money” and no better than a $6 Big Mac coupon.

But if the current stock price is higher, then your ISO is “in the money” and has inherent value.

In our example, let’s say the current price is $20 per share. That’s a good deal because we can pay $10,000 (1,000 x $10/share) to buy something that is worth $20,000 (1,000 x $20/share).

To sound cool, you’d say you’re “$10,000 in the money” ($20,000 value - $10,000 cost to exercise).

And to sound extra cool, that $10,000 spread is also called the bargain element. This is important.

When To Sell (and the related tax implications)

At this point, you’re now the proud owner of 1,000 shares of stock in your company. The final decision to make is when to sell your stock.

Disqualifying Disposition

This is just a fancy way of saying that you didn’t hold on to the shares long enough to “qualify” for special tax treatment (which I’ll explain in the Qualifying Disposition segment).

The most straightforward scenario is the “Exercise & Sell” option, meaning that you’re selling your shares immediately after exercising in one motion. This will lock in your gains and you’re now free to use that money for other items, such as a home down payment or family vacation.

But before you go spending all that money, you need to know how it’s taxed. Your employer won’t be withholding anything from this, so the responsibility falls on you to know how much to put aside to pay the taxes.

In a disqualifying disposition, the bargain element is taxed as ordinary income.

In our example, that means that you’ve just received $10,000. If you’re in the 32% tax bracket, you’ll need to put aside $3,200 for federal taxes (+ however much is needed for state taxes, too).

Qualifying Disposition

The nice thing about ISOs is that there is an opportunity to get a pretty nice tax break, given you satisfy two rules.

  1. Hold onto the shares > 2 years from the grant date

  2. Hold onto the shares > 1 year from the exercise date

Doing this means that the bargain element and any additional gains are ALL taxed at preferential long-term capital gains rates.

In our example, let’s say that we’ve waited that long and in that period the stock price is now at $25 per share.

Selling at this point would mean that you would have a $15,000 gain ($10,000 bargain element + $5,000 capital gain). Since this is a qualifying disposition, we’d be paying at a 15% tax rate instead of 32% which translates to $2,550 saved on federal taxes.

What Is This AMT Business?!

Remember how I said the bargain element is important? Here’s where it comes into play.

If you exercise ISOs and hold them through the end of the calendar year, then the associated bargain element is taken into account in the Alternative Minimum Tax calculation. In other words, you may owe additional taxes. And since you’re holding onto the shares, that money may need to come from somewhere else.

(Side note, one strategy is to exercise early in the calendar year so that you can satisfy the qualifying disposition rules and still sell your shares in time to pay the AMT tax bill)

The good news is that the extra AMT paid can usually be recouped through AMT credits when filing taxes in future years.


The example that I’ve used is admittedly an ideal scenario where the stock price has continually gone up, but we know that this is not always the case. The decisions on when to exercise & sell your ISOs require taking a lot of other factors into account as well.

  • Do you have an immediate need for the money?

  • Are you willing and able to take the risk of holding stock in the company that is also your source of income?

  • What is your expected tax bracket now and in the future?

If you have this situation, I would highly recommend reaching out to a financial professional who specializes in stock compensation to help walk with you and figure out what’s best for you.

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The Ultimate Guide to Health Savings Accounts

October 28, 2020

Health Savings Accounts (HSAs) were created in 2003 so that individuals covered by high-deductible health plans could receive tax-preferred treatment of money saved for medical expenses.

Ok, that sounds great but what does that really mean? And why are they so popular in financial planning? Here is my guide through everything you need to know, including some planning strategies and lesser-known tax rules that can allow you to optimize your savings!

Part 1: The Basics + Taxes

First, let’s cover what we’re even talking about and how you can qualify for opening a Health Savings Account (HSA).

At its highest level, the HSA is a savings account that is specifically created to pay for medical expenses.

In order to be able to open a Health Savings Account, you must be enrolled in a High Deductible Health Plan (HDHP). Most employers will offer an HSA-eligible HDHP to their employees. If you are self-employed or are not offered health insurance through your employer, they are also available in the open market (e.g. through healthcare.gov).

Let’s talk briefly about how a HDHP differs from the other main categories of health insurance.

  • Preferred Provider Organization (PPO) - PPO plans provide more flexibility when picking a doctor or hospital. They also feature a network of providers, but there are fewer restrictions on seeing non-network providers. In addition, your PPO insurance will pay if you see a non-network provider, although it may be at a lower rate.

  • Health Maintenance Organization (HMO) - An HMO gives you access to certain doctors and hospitals within its network. A network is made up of providers that have agreed to lower their rates for plan members and also meet quality standards. But unlike PPO plans, care under an HMO plan is covered only if you see a provider within that HMO’s network. There are few opportunities to see a non-network provider. There are also typically more restrictions for coverage than other plans, such as allowing only a certain number of visits, tests or treatments.

PPO plans generally come with the highest monthly premium, followed by HMO plans. When families who are covered by PPO and HMO plans seek medical attention, it will generally be paid via relatively low co-pays.

On the other hand, High Deductible Health Plans will usually have a lower premium. Some companies will actually cover 100% of the premium for single employees. Most HDHPs will also cover a level of preventative medical visits, such as an annual physical.

The trade off of the HDHP comes when it relates to other visits and procedures in that the insurance company doesn’t start picking up the bill until after the deductible is met. So instead of a nice $20 copay, you pay close to the full amount of the medical procedure / visit.

Well that sounds kinda lame, right?

Uncle Sam thought so, too. In order for the HDHP to make sense for people, the government also established the Health Savings Account.

How Does the HSA Work?

First, let’s make the distinction that an HSA is different from a Flexible Spending Arrangement (FSA). The FSA is the one where you put money into it each year but it has the “use it or lose it” rule, meaning you’re unable to carry over a balance from one year to another (it’s actually a little more nuanced b/c technically there is an option where you carry over $500, but I digress). Also, the FSA is linked to your job.

The HSA is an account that YOU own. If you leave your current job, your HSA sticks with you. It’s a good friend like that.

There is no rule saying you have to spend down your HSA, meaning you can keep accumulating savings inside of the account indefinitely.

How do you get money into the HSA?

There are two primary ways of funding your HSA:

  1. Directly deposit money into it.

  2. Tell your employer to put a set amount per paycheck. This one is preferable because when your employer does this, then you don’t have to pay Social Security or Medicare tax on the money that goes into the HSA

Additionally, some employers provide an extra benefit of funding a portion of your HSA (which is a great perk).

How Much Can I Save In An HSA?

Like all tax-advantaged accounts, there is a limit to how much you can contribute into an HSA. The recently released 2021 numbers are:

  • Single: $3,600

  • Family: $7,200

  • Additional catch-up contribution for those 55 and older: $1,000

An important note is that any employer contributions also counts towards this limit, so plan accordingly!

How Is It Taxed?

This is where the HSA really can shine.

  1. It is not taxed on the way in, meaning it is deducted from this year’s earned income

  2. It is able to grow tax-deferred while inside of the account (more on this in Part 2)

  3. If used to pay for qualified medical expenses, it can be withdrawn tax-free!

Sometimes you’ll hear people say that it has a “triple tax advantage”, and this is what they’re talking about.

If you also count being able to avoid paying SS/Medicare when your employer is the one putting aside part of your paycheck, then you could say it has a “quadruple tax advantage”. But that just doesn’t have the same ring to it, I guess.

Part 2: The Secret Retirement Account

When thinking about where to save for retirement, most people think about your 401(k) and your IRAs. But let’s talk about why the HSA might be the first place that you want to look.

One of the first things to establish is that, with an HSA, you can think of it as being two types of accounts bundled into one:

  1. Cash / checking account

  2. Investment account

When you first deposit money into your HSA, it’ll go into the cash account. This account is also what you’ll use to pay for medical expenses (you’ll have a debit card linked to this account)

But you can also elect to move some of the money from the cash side into the investment side. Once in the investment account, you will be able to choose to invest in different mutual funds, similar to what you’d find in a 401(k) plan.

Knowing that and having money in these investments, you can start to see why the HSA can be used as another retirement investment account!

We just talked about how it’s not taxed on the way in. Secondly, it’s able to grow tax-deferred (now that we know we can truly invest in here).

But what if it you decide to use HSA money for non-qualified expenses? The way its treated is that it’s going to be taxed AND you’ll also get a 20% penalty.


Now The Secret Part

There is a rule that as soon as you turn 65 years old, then the 20% penalty goes away.

What you have at this point is an account where money is: 1.) not taxed on the way in; 2.) grows tax-deferred; 3.) taxed as ordinary income at withdrawal.

That sounds an awful lot like a traditional IRA or 401(k)!

So if you’ve accumulated a lot of money into your HSA by 65 and you want to take money out to go on a trip or buy a boat, then it’ll get treated the exact same way as if you withdrew from your IRA.

Keep in mind you can still be using it for medical expenses (and I’m willing to bet you’ll have medical expenses in retirement as well) and then you’re able to get the full “triple tax advantage”!

Part 3: The Power of Delayed Reimbursement

So now you’ve decided to call your HSA another retirement account. But what is one of the cardinal rules to follow whenever you’re saving for retirement?

You don’t want to take money out before you need it in retirement!

When you “unplug” your investments, then it undermines the power of compound interest. So to take full advantage of tax-deferred growth you want your money to stay invested and in this account as long as possible and have as much money as you can left in the account.

Here is the tax rule that can allow you to keep the money in your HSA, let it grow, and still withdraw it tax-free! (Bold letters added for emphasis)

Q-39. When must a distribution from an HSA be taken to pay or reimburse, on a tax-free basis, qualified medical expenses incurred in the current year?

A-39. An account beneficiary may defer to later taxable years distributions from HSAs to pay or reimburse qualified medical expenses incurred in the current year as long as the expenses were incurred after the HSA was established. Similarly, a distribution from an HSA in the current year can be used to pay or reimburse expenses incurred in any prior year as long as the expenses were incurred after the HSA was established. Thus, there is no time limit on when the distribution must occur. However, to be excludable from the account beneficiary’s gross income, he or she must keep records sufficient to later show that the distributions were exclusively to pay or reimburse qualified medical expenses, that the qualified medical expenses have not been previously paid or reimbursed from another source and that the medical expenses have not been taken as an itemized deduction in any prior taxable year.

An Example

Let’s say that you do get a medical expense. You go to the hospital and you have a $2,000 medical bill. You now have two options:

  1. Take money out of the HSA & pay the medical bill - It’s a qualified medical expense, no taxes due on the $2,000. Done.

  2. Leave HSA alone and pay the medical bill out of pocket - If you have the means to do this, you don’t have to touch your HSA and can allow it to stay invested and keep growing.

If you choose #2, here’s the really important piece. You will need to keep detailed records & receipts that show that:

  • Your medical expenses weren't paid for or reimbursed from another source.

  • You didn't take an itemized deduction for these medical expenses in any year. (Double-dip)

In the future, whether it’s one year down the line or 30 years later, you can use these records to take $2,000 out of the HSA. Since you have proof of this qualified medical expense (from a prior year), it can be withdrawn tax-free!

That’s the strategy. I’ll leave it up to you as far as whether you think it is worth the headache of keeping these records or if you just want to pay the medical bill straight from the HSA and not have to worry about it.

Part 4: The Most Important Thing

We’ve talked about all of these great benefits of a Health Savings Account: The tax advantages; being able to invest it; a tax loophole that allows you to keep it invested for a longer period.

Let’s take a step back and talk about the most important thing, and it has nothing to do with money.

Something that I think is an unintended consequence of the High Deductible Health Plan is that, since it’s not just the $20 copay and you’re actually paying either out of pocket or out of your HSA for any sort of medical attention or going to the hospital, then there’s a tendency to second-guess whether you should actually go.

You want to stay invested, right?! You don’t want to undermine what you’ve saved, do you?! Think of the financial ramifications!

While there is a healthy level of thinking through these decisions, still the most important thing is that you and your family are staying healthy and getting the medical attention that you need.

While I know it’s difficult to sometimes let go of that, it’s really important to understand and keep in mind when deciding whether you go seek medical attention or not.

Like I always say, all of this financial planning stuff… it’s not really about money.

It’s about living a life that is healthy, keeping your family healthy, and being able to do the things that you want to and live a life truly aligns with your core values!

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