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Month: January 2017

Strategies for Earning Additional Income

Posted on by yfpadmin

 

In Part 1 of this blog series (Don’t Forget About the Income Side of the Equation), I wrote about (1) why pharmacists should look at opportunities to maximize their income and (2) the importance of knowing the WHY for wanting to do so.

There are many ways for pharmacists to make extra money. The two main categories to get you thinking about earning some additional income; active and passive income. Let’s take a further look at both and some side jobs for pharmacists.

Active Income

With active income, you are trading your time and your skill for money. For most of us, this is what we do every day. We get paid a salary or hourly rate to perform our functions as a pharmacist. Thankfully, for pharmacists, where the median salary is $58/hour, it is a GREAT profession to have the option of trading time for money. As you know, not every profession has the luxury of picking up an extra day’s work for $500 of pre-tax income.

Therefore, the most common and obvious option for pharmacists looking to earn some additional income is to pick up extra shifts with their employer. As you will see with the passive income streams I mention later in this article (which may look more attractive in the long run), this strategy of working extra hours in return for income is likely the fastest way to earn additional income without investing a bunch of time, energy and money to getting something off the ground (such as a book, blog, side business, etc.).

If there are no extra shifts available from your current employer, you could explore PRN staffing opportunities at another employer such as a hospital, community pharmacy, pharmacy benefit manager, mail order pharmacy, or long-tern care consulting company to name a few. Use your network of pharmacy friends to identify companies that have staffing needs!

Other options for earning active income could be starting a consulting business where you can provide your expertise to organizations and businesses that need assistance without hiring a full time employee. For example, maybe you are a clinical specialist that has developed a transitions of care clinic within a large academic medical center and a community hospital near by is interested in doing the same thing. You could set up a limited liability company (LLC), determine an hourly rate for your services and start leveraging your expertise.

Instead of a clinical specialist in a hospital, maybe you are a community pharmacist with 10 years of experience developing and running MTM programs. Could you consult with other pharmacies (probably best to do so outside the area you are working that would be considered competition) to help them establish their own MTM program? Similar to the example above, you could establish an LLC and market your services to pharmacies looking to implement similar services.

It is a good time to mention that with all work you are doing outside of the scope of your day job, you should be very clear on the policies and procedures your employer has on you doing such work to make sure there are no conflicts of interest. After all, if you lose your current job because you are spending time outside work building a consulting business that is in conflict with what you are allowed to be doing, you just negated the purpose of earning extra income. Depending on your employer and their view of you doing these types of activities, you may have to go outside of the area where you are working which may be viewed, in their eyes, as direct competition to what they are paying you to do for your day job.

Another option for earning additional income would be to seek teaching opportunities either at local college of pharmacy that may pay you an honorarium or another health professions program (e.g., nurse practitioner, physician assistant, pharmacy technician, or podiatry) that is in need of pharmacist expertise. If you love teaching and the idea of shaping future practitioners, this is a fantastic opportunity since you will see and feel value in that aspect of the work. However, if you are looking at this as a primary revenue stream, I would use great caution here as your preparation time for class and grading afterwards (if required) will likely be much greater than the time you are being paid to be in class.

If you enjoy writing and are considered an expert in your practice area, you could consider writing CE articles and/or speaking opportunities through various trade journals and state and national professional organizations. Similar to teaching opportunities, if you factor in your total time spent in relation to payment, this usually does not come close to an hourly rate for a pharmacist but could be an excellent way to build your brand which could lead to additional opportunities.

Last, it is important not to lose sight of the things you can do within your current job to increase your income, including, but not limited to the following: (1) asking for a raise if you feel it is warranted; (2) seeking opportunities for a promotion within the organization; (3) gaining additional credentials (such as your board certification) that may allow you to earn additional income in your current position and/or be more attractive for a different position.

Passive Income

Generating passive income (where you are not trading your time for money) seems to be all the rave these days. I think there is a grandiose and unrealistic vision in many people’s mind of a NY Times best selling author sitting on the beach sipping margaritas while the income from book sales comes rolling in. While passive income can seem attractive on the surface (and certainly can be over time), what we often don’t see and hear as much about is all the time, sweat, tears and failures that occur all the way up until the point someone is making “passive income.” Before something ever becomes available for sale, there has been countless hours put behind creating whatever product is being launched.

Caution: If your financial situation is such that you are trying to pay off debt, build an emergency fund, or get any part of your financial foundation in place, any efforts towards building a business that has passive income should not cost you a lot of money. However, if you have time and that can be your main currency of investment to get this venture off the ground, go for it!

So what are some common examples of passive income that pharmacists could explore?

Writing a book in your area of expertise. If you enjoy writing, this could be incredibly rewarding while providing some ‘passive income.’ I put passive income in parentheses because after you account for your time in writing and editing, you might be making closer to minimum wage than you would be a pharmacists salary. However, once you get the first version off the ground, if you are successful in building an audience to promote your product, the true benefits of the passive aspect start to become reality as time goes on.

Starting a blog. While you may not see a blog as having passive income on the surface, a blog can become a foundation for advertising and promoting other products that you create over time (e.g., book, online course, podcast, etc.). Most blogs are not successful in earning money because of the time it takes to keep up with writing on a regular basis and promoting that content to effectively build an audience that cares enough to keep coming back (and hence, be interested in buying something else you are selling).

Developing an online course. Pharmacists are very used to the idea of completing CE hours and attending certificate training programs, so developing an online course could be a worthwhile endeavor. For example, maybe you are an ID specialist with extensive experience in developing antimicrobial stewardship programs. Could you develop an online training program for $99 (or whatever price you decide) that teaches others how to develop, implement and evaluate an antimicrobial stewardship program? Maybe you could even partner with a state or national organization to help you promote this program and in turn share the revenue.

Building a membership site. This one may be harder to visualize than the others mentioned above but the idea here is to create exclusive content that provides tremendous value in return for regular payment (e.g., monthly fee). For example, maybe you are a pharmacy educator that has years of experience developing classroom materials, test questions and other assessment activities. Could you develop a membership site, where for $9.99/month, faculty from across the country could join to get exclusive tools/resources to help them in their own teaching experiences? Maybe you could even create a separate forum where only those that pay for the membership site could pose questions where you or others in the membership site respond to help them with their teaching needs, to give feedback on test questions, etc.

Investing in real estate. We are getting outside the pharmacy box now to look at opportunities for passive income that you could generate without having to wait until you are old enough to access your retirement funds. If you are in a financial position to do so, you could look at owning a second property in the town you currently live or a place you vacation regularly. Ideally, this property would be rented out at a rate that would cover at least your mortgage , taxes, insurance, and maintenance on the home. I have heard both the lucrative and horror stories of real estate investing so make sure to do your homework before jumping into this opportunity. One of my classmates from Ohio Northern University, Ben Holter, wrote an excellent blog post on this topic that is worth checking out if you have not already done so (Real Estate: The Investment You Should Not Overlook).

Affiliate marketing programs. In short, affiliate marketing programs allow you to promote another product in return for a percentage of that sale. For example, Amazon has an affiliate program where you can sign up to promote a book (or other content as well) and in return get a certain percentage of all sales purchased by the individual clicking to buy that product (using your unique URL). While one way to take advantage of affiliate programs is to be an affiliate for someone else’s product, another way is to leverage affiliates for the product you are trying to promote. For example, maybe you are promoting a recent book you published and you have several other pharmacy colleagues that help you promote the book and in return (through a unique URL identifying that individual), they receive a portion of the sales. While you are giving up some of the revenue, you are likely having a broader reach than you could have had on your own.

Examples of Pharmacy E-Entrepreneurs

If you are a pharmacist thinking about starting up a side business (or even side hobby that may turn into a business over time), one of the best steps you can take is to see who else is out there in the pharmacy community doing this type of work. Besides checking out the work Dr. Blair is doing with her business BT Pharmacy Consulting, here are some others for you to explore:

The Time Investment is Real…and Rewarding

From experience and talking with many pharmacists working in these areas of developing passive income streams, I can tell you that these take an incredible amount of time, energy and effort to build before you may have $1 to show for it. If the idea of spending months and hours of time with the potential of still having something fail isn’t for you, then I would suggest holding off on pursuing these options. However, if the thrill of starting something to provide a solution to a problem that you see (whatever that may be), then this may be for you!

Tax Advantages

Without getting into the weeds on taxes for the sake of my sanity and you staying awake, there are significant tax advantages of turning a side project into a business. Setting up a business structure is much easier than you think and can result in being able to deduct business expenses and employing other family members to reduce your taxable income. If you are interested in learning more about the tax advantages of owning your own business, I would recommend reading or listening to Tax Free Wealth by Tom Wheelwright.

Your Financial Homework

If you read Part 1 of this blog-series, you will remember the $1,000 challenge I put in front of you. Here it is again for those that may not have seen it or to provide some extra motivation for those that have accepted this challenge.

In the next 90 days, make a commitment to earn $1,000 beyond your current income to throw directly at your top financial goal for the coming year. Whether that goal is debt repayment, saving up for a home, saving for kids college, opening a Roth IRA or something different all together, I am confident the momentum you will get from $1,000 going directly towards you goal will catapult you into doing more. Once you do this, share your success with me at [email protected]

So what would an extra $1000 (net income after taxes) do for you in 2017?

  • If you don’t have an emergency fund in place, it would be a great way to get together a ‘starter’ emergency fund that you can build upon over time. This could help give you peace of mind knowing that in the event of an emergency, you have some buffer to take on an expense without having to take on more debt.
  • Or how about retirement savings? If you were to invest $1000 today in a Roth IRA and the money were to earn 8% growth over the next 40 years, that $1,000 would turn into almost $25,000 tax-free!
  • Or how about paying off debt? If we assumed that you had $100,000 in student loan debt remaining at 6% interest (under the 10 year repayment plan) and you were able to throw $83 extra per month ($1000 per year) above and beyond your principal starting this year and continuing here on (because we will keep the momentum going!) you will save over $3000 in paying interest and have the loan paid off almost 1 year earlier.
  • What about college savings? Maybe you are debt free with a good emergency fund in place and on your way to saving for retirement so you want to start a college fund for your newborn. If you were to start saving $83/month for your newborn from now until they go to college in a tax-free growth account (such as a 529 plan), you would have almost $40,000 saved to pay in cash for college.

Talk about BIG WINS with a small start…start the momentum TODAY!

Looking for more side jobs for pharmacists or ways to make extra income?

side jobs for pharmacists, ways for pharmacists to make extra money

 

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Don’t Forget About the Income Side of the Equation

Posted on by yfpadmin

 

We tend to make personal finance way more complicated than it needs to be. Pick up an investing book at the bookstore or attend a financial seminar and you know what I mean. All the financial lingo, tax codes, strategies….yada, yada, yada.

While understanding the lingo is important (to some degree), at the end of the day, achieving financial success depends upon setting financial goals and being able to put a plan in place to achieve those goals. A good zero-based budget (the budgeting process I like most and recommend) takes your household income and intentionally and thoughtfully assigns a dollar amount to every spending category before the pay period begins. The result should be a $0 balance because every dollar has been assigned to a spending category.

If you have done a budget before with some goal in mind that you would like to achieve (whether that be debt repayment, saving up for a vacation, etc.) you know well the frustrating feeling of wanting to make progress faster than is mathematically possible. At the end of the day, you can do one of two things to make your plan move forward faster. Increase your income or cut your expenses. It is simple as that.

In this 2-part post, I am going to address (1) why pharmacists should look at opportunities to maximize their income and (2) practical ideas for getting started with earning extra income.

Increasing income vs. cutting expenses

The financial community tends to focus almost exclusively on the option of cutting expenses since there is a lot of data to suggest that we as a country are out of control with our spending. This inherently then becomes the goal of the budget…figure out as many areas as you can cut to free up cash to put towards financial goals.

I would contend that figuring out the expenses side of the equation is the most important of the two and should be your primary focus. After all, if you can figure that out, any additional income will be maximized because it will be spent with purpose and within the boundaries that you have already set. On the other hand, you could earn $150,000 instead of $120,000 next year but because of a lack of discipline with managing that $120,000 and the bad habits that have been built (we all have them!), $150,000 may not provide much additional benefit after you consider the taxes that will be taken out. Rather, if you have been spending your $120,000 with purpose and direction and have goals and a budget in place, when you get that extra income, you know exactly where it should go. That is when you see real progress being made towards achieving a financial goal!

Why should pharmacists focus on maximizing their income?

While a pharmacist’s income is certainly nice (median of $121,500 in 2015 according to the Bureau of Labor Statistics), the purchasing power of a pharmacist’s income is declining in recent years because student debt loads and the interest rates associated with that debt is outpacing any salary increases. That is worth saying again. A pharmacist today has less ‘available income’ than a pharmacist 5 or so years ago because debt loads have gone up faster than salary increases (and continue to do so).

For example, 5 years ago, the median debt load upon graduation for a pharmacy student was $110,000 (Ref: AACP Graduating Student Survey, 2011) and the median pharmacist income was $113,390. At this point in time, the median income for a pharmacist exceeded the median debt load. Fast forward to 2015, where the median student debt load was $150,000 (Ref: AACP Graduating Student Survey, 2016) while the median salary for a pharmacist was $121,500.

Therefore, the median salary during that 5 year period (2011-2015) increased by $8,110 while the median debt load during that same period increased by $40,000. Ouch.

The other consideration, besides the apparent eroding purchasing power of the pharmacists income, is the reality that for many pharmacists, income starts out high coming out of school but maintains relatively even with inflation via cost-of-living adjustments and some minor pay raises over time. This will, of course, not be true for the minority of individuals that pursue a management position or other opportunity to grow income such as starting a new business. This flat trajectory of income for the majority is unique to our profession compared to other fields of work. This further highlights the importance of avoiding the temptation to live up to your income coming out of the gate as it can be difficult to adjust down from this over time because income may not increase significantly for a pharmacist yet his/her expectations for life and the expenses that come along with life over time will go up.

Why is that relevant? We can’t continue to lean on the pharmacist’s income as the sole factor for achieving financial success. Yes, it is important, and if managed wisely, should be more than enough. However, if this trend continues, the pharmacist (to maintain his/her purchasing power today), will need to either (1) further cut expenses, (2) hope for significant pay raises or (3) take action to generate more income.

Know the WHY

Before we talk about ideas for how you may earn extra income in part 2 of this blog series, it is important to address the WHY for earning additional income or else it will feel like spending a lot of time and spinning your wheels for not a whole lot of benefit. This takes us back to the importance of setting financial goals. If you know what you are trying to achieve (pay off debt by a certain date, build an emergency fund, put more towards retirement, pay off the house early, etc.) your extra work will have that much more motivation behind it.

Once you know the “why” for earning additional income, the next logical question would be ‘how do you practically earn additional income?’

There are two major ways to think about earning extra income. You can focus on earning “active income” where you trade your time for money or you could focus on “passive income” where there is an uneven distribution between your time and earning money (hopefully less time for more money but not always the case). We will take a closer look at both of these categories with specific examples and ideas so stay tuned…you won’t want to miss it!

Your Financial Homework

In part 2 of this post, I’m going to outline specific ideas for how you may go about earning some extra income.

Before reading part 2 of this blog-series, I want you to make a commitment to earn an extra $1000 (net income after taxes) this coming year to help jumpstart progress towards a financial goal you are working on.

You might be thinking ‘how much impact can $1,000 really have?’

  • If you were to invest $1000 today in a Roth IRA and the money were to earn 8% growth over the next 40 years, that $1,000 would turn into almost $25,000 tax-free!
  • Or how about paying off debt? If we assumed that you had $100,000 in student loan debt remaining at 6% interest (under the 10 year repayment plan) and you were able to throw $83 extra per month ($1000 per year) above and beyond your principal starting this year and continuing here on (because we will keep the momentum going!) you will save over $3000 in paying interest and have the loan paid off almost 1 year earlier.
  • What about college savings? Maybe you are debt free with a good emergency fund in place and on your way to saving for retirement so you want to start a college fund for your child. If you were to start saving $83/month for a newborn from now until they go to college in a tax-free growth account (such as a 529 plan), you would have almost $40,000 saved to pay in cash for college.

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Living Like a Resident: My Strategy for Loan Repayment

Posted on by yfpadmin

 

This debt free story was written by Brent N. Reed, PharmD, BCPS-AQ Cardiology, FAHA. Dr. Reed received his Doctor of Pharmacy from the University of Tennessee College of Pharmacy in Memphis, TN and then completed a pharmacy practice residency and cardiology specialty residency at the University of North Carolina Hospitals in Chapel Hill, NC. He currently serves as an assistant professor at the University of Maryland School of Pharmacy and a clinical pharmacy specialist at the University of Maryland Medical Center, where he practices in the areas of advanced heart failure and cardiac transplantation.

As a faculty member at the University of Maryland School of Pharmacy, I’m frequently reminded of the concern students have for their loan debt. In one exercise in particular, I ask first-year students in my professionalism course to reflect on the opportunities and challenges facing them upon graduation, and loan debt inevitably rises to the top. The shadow it casts is so dreadful that students often cite it as a reason for ruling out potential career opportunities (e.g., post-graduate fellowship or residency training) that they might have otherwise considered.

 

I faced many of these same challenges when I first walked across the stage and accepted my diploma, but I’m here to share a reason to stay optimistic – it can be done, no matter which career path you choose. This past July, after two years of postgraduate training and five years of throwing every cent at my student loans, I’m proud to finally be debt-free. Below is the story of how I did it.

 

I graduated pharmacy school with a little over $90,000 in debt. Although I was fortunate to have not had any debt from my undergraduate studies, most of my loans from pharmacy school had interest rates of at least 7% – hardly what many would call “good debt.” Despite this impending burden, I was determined to complete residency training, which provided me several repayment options since I would only be making about $35,000 per year. By the time I entered residency in 2009, few lenders offered a deferment option (i.e., where trainees are not required to pay and their loans do not accrue interest), and mine was no exception. However, forbearance was an option for me, where I could opt out of making payments (which I could not afford at the time anyway), but my loans would continue to accrue interest. Doubting that there would be any point during residency where I would be able to make the minimum payment, I selected this option. Over the course of my two years of residency training, my debt grew to about $102,000.

 

Even though this was a little overwhelming at the time, I had made two important realizations. First, my parents were still only making about $35,000 per year as teachers of over 20 years (this is in the South, after all), and they had still been able to pay off their student loans, purchase a home, and raise two children. Second, I had lived fairly comfortably off of my resident salary. Now that I would be earning over three-fold that amount as a pharmacist, I realized that I could put a significant amount of that towards my student loans each month. In that moment, my strategy for loan repayment was born – I was going to live like a resident for the next five years.

 

Admittedly, living like a resident when it was no longer necessary did require some discipline. During my training, I avoided spending a lot of money because I simply could not afford to; as a pharmacist, it took willpower to make these same decisions. For example, it meant purchasing a reliable but economical car and renting a comfortable but not luxurious apartment. I also needed to account for several new expenses, including a car payment and monthly contributions to my emergency savings account. Nonetheless, I created a monthly budget using what I required during residency as a guide. I did splurge on a couple of items – a gym membership and music lessons, namely – but I considered these long-term investments in my health and well-being and well worth the expense. Even after accounting for these and other expenses, I not only had enough money to make minimum payments on my loans – I had double the amount.

 

To put this extra money to work, I used the avalanche approach, which is similar to the snowball method popularized by Dave Ramsey, only in the opposite direction. I had eight separate loans, each with a slightly different principal and interest, and my monthly minimum payment was the combined total of the minimum payments for each individual loan. Each month, after paying the combined total, I would put any remaining money towards the individual loan with the largest principle and highest interest rate. I continued to pay down this loan each month with extra money until it was completely paid off. Whatever amount that freed up in the total minimum payment (a substantial amount since it originally had the largest principal and highest interest rate), I would then add that to the extra money I would pay towards the loan with the next largest principle and next highest interest rate. Although the total amount of money I paid each month never changed, the amount I was putting towards the minimum payment decreased over time as the amount of extra money increased. Although it took me over a year to completely pay down the first loan, I paid off my last loan in less than four months.

 

To help preserve the extra money I could put towards my loans, I set-up autopay for my monthly bills and created automatic savings accounts to transfer funds from my main account with each paycheck. I had automatic accounts set up for emergency savings, professional use (e.g., memberships, conferences), personal use (i.e., large but infrequent personal expenses such as vacations, gifts, etc.), and extra loan payments (for the strategy outlined above). Automatically transferring these funds to separate accounts minimized the amount of money left over for indiscriminate purchases. Similarly, any unexpected windfalls (e.g., tax returns) were immediately distributed among savings accounts or put towards my loans so as not to influence my long-term spending habits.

 

In conclusion, it might seem like the strategy of living like a resident meant denying myself a lot of enjoyment for the first five years after residency. Although it certainly influenced my financial decision-making (for example, taking domestic rather than overseas vacations), I saw it more as a deferral rather than a denial. Besides, five years is hardly a price to pay for the sense of relief and financial security that comes with no longer seeing a loan bill every month. Although postgraduate training prevented me from being able to tackle my loans immediately after graduation, it did allow me to pursue a personally satisfying career and it taught me the discipline necessary for an effective long-term loan repayment strategy.

 

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