May 2021 – Your Financial Pharmacist

YFP 205: Current State of the Pharmacy Job Market

Posted on May 27, 2021November 2, 2022 by yfpadmin

Current State of the Pharmacy Job Market

On this episode, sponsored by Insuring Income, Tim Ulbrich welcomes back to the show, Alex Barker, the founder of The Happy PharmD. They talk about the current state of the pharmacy job market, considerations for those looking for their first position or switching jobs, and the intersection between your career and your financial plan.

About Today’s Guest

Alex Barker is a pharmacist, entrepreneur, author, and creator of The Happy PharmD and the Happy PharmD Summit.

Summary

Alex Barker, pharmacist and founder of The Happy PharmD, joins Tim Ulbrich to discuss the current state of the pharmacy job market. With many new pharmacists graduating around this time, looking for new positions, and still others looking to change positions, it is a perfect time to touch on the pharmacy job market, its current state, how that differs from previous years, and what the future looks like for recent graduates.

Alex shares some interesting data on the state of the pharmacy industry that includes the number of open positions currently, the percentage of full and part-time jobs, and the percentage and number of positions available in the undefined category. Without information as to whether undefined jobs are full or part-time, applicants should consider reaching out to the hiring department for more information, creating a new connection at the same time.

Alex explains that much like tackling financial goals, career goals should be approached with the end in mind. Without much change to a pharmacist’s salary throughout their career, a side hustle can provide opportunity in the form of personal satisfaction as it relates to the pharmacy career as well as a pathway to financial goals, ultimately leading to financial freedom.

Mentioned on the Show

Episode Transcript

Tim Ulbrich: Alex, happy to have you back on the show.

Alex Barker: Thanks for having me back. I think it’s a good sign that I’m back, right?

Tim Ulbrich: It is. You are a frequent guest and certainly a friend of YFP, and appreciate the contributions that you make on the show. We had you on last on Episode 192, so this was way back when, February, where we talked about the findings from the 2021 Pharmacist Salary Guide. And today, I’m excited. We’re going to have you on to dig into the current state of the pharmacist job market, including financial considerations for those that are starting their first position and those that are looking to make a move to another position. So before we jump in, Alex, I don’t want to assume that all of our listeners know who you are. But give us a quick intro to Alex Barker and The Happy PharmD.

Alex Barker: Oh, I’m just some goofy pharmacist —

Tim Ulbrich: True, true.

Alex Barker: — that figured out entrepreneurship. I’m Alex Barker. I founded The Happy PharmD in 2017 I think. And since then, we’ve helped about 700 pharmacists transition into new and better jobs. We do career and business coaching. And we focus a lot on helping people find that spark again with their career, help them create an indispensable career rather than feeling like eh, dreading what I do or I feel like my company’s going to get rid of me. So that’s my main focus. I do a lot of other fun stuff like hanging out with Tim Ulbrich in a podcast. I love Thai food and anime. And that’s — oh, and Dungeons and Dragons. That’s me in a nutshell.

Tim Ulbrich: Of course Dungeons and Dragons. Yes. You know, Alex, I’ve never asked you this question, but I’m going to put you on the spot here for a moment. When you talk about 700+ jobs or pharmacists that you have impacted to help them find a better job, more fulfilling career, however we want to word it, have you stopped and reflected on that? Like the significance of that. I know you run at a pace that is fast — we’ll call it that. But I mean, have you paused — I’m fascinated by the topic of legacy. And I think you’re just getting warmed up. But you know, what makes people tick, why do they do what they do, and when I think about the work that you do and obviously the team at The Happy PharmD are doing and the impact that has on those individuals, the profession at large, but then I even think about pharmacists being in a more fulfilling job, you know, as I think about myself being a parent of four boys and obviously my relationship with my wife Jess, like we know that home and work are so interconnected and the joys and challenges of work, we often bring home or vice versa. And so even folks that are in a more fulfilling position, the positive impact that has on their families, their households, like have you reflected on that?

Alex Barker: No. I have to admit, I don’t know how to even think about it.

Tim Ulbrich: Yeah.

Alex Barker: It’s a lot of people. And on top of that, it’s their spouses, their partners, and then it’s their kids, their community. It’s a big ripple effect. And I don’t know how to take that in. On top of it, I think you and I share this that we’re pretty driven people, and so as soon as we accomplish something, we’ve forgotten it and then we question our value like the next day. Like oh, what am I doing? Am I really achieving everything I want in life? Because I have this new goal now, and it’s not accomplished yet. But truthfully, no. And I –admittedly, I actually have a coach now, and this is one of my areas of improvement is reflecting on the things that I have accomplished because I think it’s very easy to get addicted to success. And I am working on it. So that’s my answer is no, and I’m trying.

Tim Ulbrich: Well, and it wasn’t in my notes for the episode, but when you led with that intro — and the reason I asked you it, besides just to make you a little bit uncomfortable because that’s kind of fun every once in awhile — is the reason I asked you that is I, too, am being challenged by a coach of stop, enjoy the moment, like reflect on what’s happened before you’re off and running into the next thing. And so I think that’s a valuable thing for us to talk about. But perhaps for even folks that are listening, I think many pharmacists are achievers by nature, and I think it can be easy to get caught into the strive, strive, strive without stopping along the way to enjoy it. So onward we go. This episode, you know, as I mentioned, really talking about what I see as the intersection between one’s career plan and their financial plan. And really good timing for this episode, many pharmacists graduating right now, others I suspect that are looking to make a job change. And with that, comes navigating a lot of new things, you know, whether it’s finding that position, perhaps some that are choosing or changing their career path, how does this look for me for the next 5, 10, 15 years? What about managing your finances during this transition? What about those student loans, budgeting, other financial goals? And really figuring out how to set themselves up for long-term success both professionally and financially. And we’re going to touch on several of those things throughout the episode. So Alex, let’s talk about something that every graduate is faced with right out of the gate: finding a job, choosing a career path, as much as some may enjoy being a student, at some point, we’ve got to make that decision. So you recently held the webinar about the Q1 review of the pharmacy job market where you dug into the supply and demand of pharmacy jobs. And I’m going to go there for a few minutes. And one of the questions I have to hear to start us out with is, what did we take away from Q1 in terms of the number of jobs that are out there, what types of positions are out there, and really the current state of the pharmacy job market?

Alex Barker: Yeah. So let’s just do high overview. And I know I’m going to be saying a lot of numbers. And if you’re like me, it’s hard to comprehend numbers when you’re listening to something. So some of these numbers are on our website, you can always check them out later if you want, or we have a presentation where we go over them. And I want to just take a moment to pause and ask, Tim, I know you already know the answer, but if you had to guess how many jobs were created in Quarter 1 of 2021, pharmacist jobs, how many would you think?

My answer was I thought maybe 15,000-20,000, somewhere in that range. Did you have an idea?

Tim Ulbrich: Yeah, no, my question here was are these — are you talking about open positions or like newly created positions?

Alex Barker: Open, newly created positions.

Tim Ulbrich: OK. Yeah, I would have — I don’t even know if I would have said that high, although when I think about kind of the nationwide reach and some of the roles that are expanding, some of the states that are doing some creative things, yeah, that sounds about right.

Alex Barker: So that’s what our past kind of has indicated. There is a report out there. I believe it’s called the Pharmacy Demand Index or Pharmacy Job Index. It changes names, I feel like, every other year.

Tim Ulbrich: It used to be the PDI. I don’t know if it still is.

Alex Barker: Yes.

Tim Ulbrich: Yep.

Alex Barker: Yes, I don’t think it is that name any longer. But they predicted — or they reported I think in Quarter 4 of last year that there was like somewhere between 5,000-10,000 jobs created. Well, at The Happy PharmD, we’ve recently strategically partnered with JobRx, which is a job board. And they collected all of this data, and this is data from company websites where a company posts a job, and they take that information and document it. And in Quarter 1, they reported 50,000 jobs were created, just over 50,000 jobs.

Tim Ulbrich: Wow.

Alex Barker: When I heard that, I thought that was insane. At first, I thought, that’s COVID. But then I thought, no, most of these companies did the majority of their hiring in 2020. So that — it blew me away. I just couldn’t believe it.

Tim Ulbrich: That was my thought too, Alex. When you said that number, I started to think about, you know, I remember seeing some of those offers for part-time vaccine help that some of the chains and others were doing. So I think here, the interesting question is like, peel back the onion a little bit, right. Of those 50,000, because I think many of our listeners, we’ve kind of fallen into this script of like, the job market is what it is in pharmacy right now. But that number might be shocking, so give us the details behind that. What’s going on?

Alex Barker: I think we have to because I think this is totally different than what is suspected or talked about online. The vast majority of these jobs are community jobs, about 73%. And then another 25% were health systems, which includes long-term care and home infusion. So probably no surprise there. I know that there’s a big push in careers to do nontraditional things. But vast majority of open and available jobs are community and health system. The majority of those jobs were just straight pharmacist jobs because when an employer posts a job online, you know, a lot of people want to use the word “clinical pharmacist,” but the word “clinical pharmacist” only was about 6%, a little over 6%, of the jobs that were available.

Tim Ulbrich: That makes sense.

Alex Barker: And then another 12% were management jobs. However — and you actually kind of alluded to this earlier — the majority of these jobs were part-time, part-time jobs. So let me — I’ll break this down in a minute, but 40%, so you think, that’s not the majority, well, 40% were part-time, 28% were full-time jobs. Not even a third of the jobs. But 28% of these jobs were not defined, meaning that when a company posts a job online, they put it on their website, they don’t say whether it is full-time or part-time. And I think practically every jobseeker has seen that happen where you look at a job and you’re like, is this 20 hours a week? Is this full-time? You’re not quite sure. Well, unfortunately, it’s common practice for that to be happening. So 28%, another almost third of the jobs, didn’t say whether they were part-time or full-time.

Tim Ulbrich: One of the things, Alex, when I hear this — and just to recap those numbers for those that are listening and may not be audio learners — is, so about 28% full-time, about 40% part-time, and about 28% that were undefined. So that 40% that’s part-time, you know, when I think about the financial implications, great to hear about the number of jobs that are created. And then I dampen that question a little bit, right, when I start to see the part-time. And let’s call it out right up front is that there are many folks that may opt in and want a part-time position for very good reasons. And that’s not what I’m referring to here. I’m referring to folks that may want full-time work and aren’t able to find it, which obviously has significant financial implications. What are we defining as part-time? Can we pin that down? I know one of the trends I’ve seen is 30 or 32 has become the new 40, right? So what used to be let’s just say for example base salary of, I don’t know, $110,000 in Columbus, Ohio, for a pharmacist working on average 40 hours per week in community pharmacy, you know, now, they might be guaranteed 30-32 hours, sometimes a little bit less, sometimes a little bit more, and maybe that $110,000 now looks like $85,000 or $90,000. And certainly in some of those cases, opportunities to get additional hours but they’re “guaranteeing” some base that’s a little bit lower than 40. So are we talking 15 hours? 20-25? Like what is the threshold here? Or is it a ‘it depends’?

Alex Barker: It’s of course ‘it depends.’ It’s always up to the company what they define, right, on that limit. And I’m no law expert because every state is different in how they define a little bit on this. I think with a decent rule of thumb, you can say it is less than 32, 30 hours a week. But to your point, I think there’s even more danger here because everyone’s probably heard a horror story or two that you get hired on part-time, you were told we’ll guarantee this amount, and it turns out they only need you once every other week. There’s a huge financial consideration for anyone going for a part-time position. And career-wise, there are benefits and pros and cons for doing something like that because on the one hand, it’s nice to get a part-time job. It could give you some flexibility, and it could help pay your way while looking for your next job. But on the other hand, if you just want a job to do the job and make some extra money, pay some bills, and you’re expecting 30 hours, I would encourage you, do not think that that is a guarantee, no matter what management said because we have heard this in community, in hospital, in nontraditional jobs as well. So I think the days are leaving us behind where we trust a company in telling us how much are we working and how much are we getting in return.

Tim Ulbrich: Yeah, and I think it’s just a good reminder — and I’m not saying this to be negative to companies as a business owner myself, I’m just saying it as reality of like, nothing is guaranteed, right? I mean, outside of some folks that are listening that have contracts, that have some guarantees that are associated, those are probably few are far between. But when we’re thinking about our financial plan and depending on our income, hopefully we’re not thinking about our future income as if it’s guaranteed and going to be able to fund things that we’re spending money on now. So you know, obviously, some of that can be fluid. Hopefully it’s not, but it can be. Alex, the other thing I think about here is as our listeners know very well, for many folks, their healthcare benefits, their retirement opportunities, a lot of that is tied to their employment, right? So when I — and often tied to full-time employment. So my mind is going down the path of, 401k benefits, 403b benefits, access to HSAs, healthcare benefits, dental, vision, other benefits that come from your employer. And not any one of those may seem very significant or potentially catastrophic in the moment — maybe outside of healthcare — but you know, something like a 401k, let’s just use that as an example. If you’re making $100,000 a year, and your employer is offering you a 3% match dollar-for-dollar and now you’re working part-time where not only is the salary and the hours reduced, but you’re not getting that, in that example, $3,000 per year. In that year, that may not seem catastrophic, but $3,000 a year compounded over time, especially for pharmacists that are just getting started, is very significant. So I would encourage folks to be thinking about — as we’ve talked about the intersection between the career and the financial plan — not just the salary, the sticker price, but also what other benefits may be afforded. And even for those that are working full-time and looking at other positions, that’s where you often will start to see some of the differences and nuances between one position and another and some of the benefits that can come. Alex, competition. You know, the other thing I’m thinking about here is it’s great we see 50,000 jobs, as you mentioned, not so great that many of these may be part-time. But we also have the reality of, you know, new graduates that are coming out into the market. We obviously have many that are listening to this episode. What is that looking like in terms of expected number of new graduates that are coming out into the market? And how is that impacting the competition for these positions?

Alex Barker: It’s fierce. It’s fierce. This year, in 2021, we’re graduating just over 15,000 students. And based on last year’s NAPLEX, we should probably expect at least another 14,000 and a few hundred who pass the NAPLEX because as we all know, the NAPLEX passing rates for most colleges of pharmacy has gone down significantly. And that number, the number of grads, the number of new grads every year from what we can tell, as far as I know, AACP hasn’t published information since 2019. I could be wrong about that when this goes live, but that’s the latest data that we have. The number of grads is going down steadily. By 2023, we’re looking at just under 13,000 entering the market. So we’ve got a significant group of students, probably about a third of those are going straight into residencies. And then we’ve got another two-thirds that are going into the job market. But we also have some very interesting information from AACP, they do a workforce survey every five years. And they change a little bit of the topics, but they always do ask things about your jobs. And in this group, those that were likely or very likely to be looking for a job was — it was around 34%. So again, a third.

Tim Ulbrich: Wow.

Alex Barker: And there was over 5,000 people who did this survey. And something I’ve learned in survey design is that when you get a population that big, you can start extrapolating out quite well to a larger population of similar demographics. And in our case, if we were to extrapolate that to the 300,000+ pharmacists in the United States that have an active license, we’re talking about over 100,000 pharmacists at any given time likely or very likely to be looking for their next job. So right now, in this very moment, we’ve got 100,000 people looking and now we’re adding another potentially 10,000 — I mean, many of these students probably have jobs lined up or have interviews lined up and they’re going to be hired very soon. From what we can tell, it does seem like the vast — at least the majority of students by this time have something lined up. But they’re coming into an overcrowded market. And so it isn’t looking very positive. There are some interesting things, though, happening in pharmacy that I think could be drawing attention, but that’s not obviously what we’re focusing on for this. These are just the straight facts.

Tim Ulbrich: And Alex, did I hear you correctly — and I’m guessing you’re pulling this data from the enrollment data that’s published by AACP. And we’ll link to some of this in the show notes, including the AACP workforce survey that you mentioned every five years and also some of the enrollment data — but did I hear you correctly that the projected number of graduates is going down? And I’m assuming you’re pulling that from like the current number of P1s, 2s, and 3s and then projecting that out to see what the number of graduates would be?

Alex Barker: Yes.

Tim Ulbrich: OK.

Alex Barker: Yep. So we look at numbers from NABP, AACP, ASHP, APhA, and they help kind of provide a holistic picture of what’s happening. The most data we have on this stuff is obviously students.

Tim Ulbrich: Yeah.

Alex Barker: Once we enter the workforce, the numbers are a lot more variable. We rely on the Bureau of Labor Statistics, which is always changing. Some people may know this, that they are predicting negative job growth right now for pharmacy. And so it is a tight, very tight market and likely we’ll be seeing oversupply for quite some time. But I’m positive. I think I’m more positive about the future of pharmacy. I do think opportunities are opening up, and I think that eventually, things will correct themselves because we’re already seeing a huge disinterest in the general public in pharmacy as a career option. And that’s evident by the number of applications that colleges are getting. And so at some point in the near future, we will see an evening out. As any good capitalist would believe in, the market fixes itself at some point.

Tim Ulbrich: I think the other thing that I’m thinking about, Alex, and I don’t think we have a data point to draw any conclusions, but if you think about 15,000 new graduates coming into the market in 2021, and you mentioned over 330,000 licenses in the United States active, so that’s about 4-5% of new positions coming in relative to the whole workforce. So the question is, short of new job creation, which we just talked about a little bit — and there will be some of that — short of new job creation, like are pharmacists leaving the profession? And the other thing I’m thinking about is in the midst of coming out of the pandemic and the uncertainty, what impact did this last year and a half have on folks that were near retirement and might that be delaying, might it be expediting, you know, folks are I’m ready to be done? So that’s a big factor, right, the number of positions that come open, assuming, assuming that those positions remain and then get filled. You know, but that’s a data point that I don’t often see and probably is hard to capture. But obviously we know the front end, but it’s a little bit harder to assess what’s happening on the back end.

Alex Barker: Yeah, and I don’t know how — I was just trying to think — how would you capture that? It would probably have something to do with an active license, right? But that could mean that they’re retiring. I’d imagine state boards perhaps are capturing this. So I think you’re kind of spurring on a new research project for me to pursue.

Tim Ulbrich: Well, you can hold the license but be retired.

Alex Barker: True. Right, you can.

Tim Ulbrich: Yeah.

Alex Barker: Absolutely. And in fact, one study we looked at about retirement, it was like I think 40% of people still practiced on the side after age 65. So even if you do retire, you’re still taking up jobs, you’re still practicing and I guess potentially taking that opportunity from someone else. But it’s only part-time, typically. I don’t think there is a data point to suggest it, but I think it would be interesting to track it. We have anecdotally helped people transition into different things outside of pharmacy. But the majority of people we work with stay within pharmacy, 95-97%. And I’m not sure how to get into it, but I think you’ve found a new niche.

Tim Ulbrich: Next project. Yeah.

Alex Barker: Yeah.

Tim Ulbrich: We can talk about the data all day, and it’s important to get the context. The question is, what can I actually do about this data? So you know, you mentioned roughly a third of folks, according to that workforce survey, that might be out there in the market looking. We’ve got new grads that are coming into the market, some of them that have — many of them have already secured a position, but those that are going on to residency, they’re going to be in the job search either a year or two years from now if they’re doing a PGY1 or PGY2 or for those with fellowships, same type of thing. So the question is, you know, what do you do? The reality is you need a job. Income, as we say at YFP, is the lifeblood of a financial plan, right? You need it to pay down debt, and you need it to grow your assets and ultimately achieve your financial goals. So in the webinar, Alex, you mentioned that you have to have a good strategy when it comes to targeting your career path. What do you mean by that? And bigger question than we have time to likely go into in a whole lot of detail, but you know, some tangible, practical things that folks listening can take away when it comes to designing what you call a good career strategy.

Alex Barker: Well, it starts with kind of the same steps that you guys take with when you help someone create that financial plan. It’s knowing where you want to go. It’s having an idea of where you want to end up. Everyone probably has this understanding or belief that they want to retire someday. And they very likely want to retire from a job that treated them well, that created a great work environment, that will be maybe a bittersweet finish. We know some of the feelings and the things that we want, but how do we build that? We start by the end in mind. And so typically when we work with people, we like to think big picture, where do you want to be, even just five or three years? Because thinking about your career 30 years from now is practically impossible. I mean, think about even your career, Tim. You know, I would classify you as someone who’s indispensable. You probably wouldn’t have —

Tim Ulbrich: Appreciate that.

Alex Barker: Yeah, think about your career. You have built something that has led you to building a business now. And it’s something that you absolutely love. You probably never thought about that when you graduated pharmacy school.

Tim Ulbrich: Correct. Yep.

Alex Barker: Same here. In fact, I was turned off to business when I graduated. I thought no way. There’s no way I want to do something like that. And so we tend to think smaller picture versus something like a financial plan because what we find over and over again is that as indispensable people come into their own into their careers, they typically have opportunities being presented to them frequently, often. And it can lead them in very different trajectories. You and I talked a little bit before this, when we hit the record button, about trajectories. Pharmacy, in general, not leadership, excluding leadership positions, is a very low financial career trajectory. The difference between someone who just starts a pharmacy career and someone who has like 20+ years is about $12,000 a year. And that’s unheard of in most professions.

Tim Ulbrich: And give us the details on that. So as we talk about obviously the dollars here and you know, again, income is the lifeblood of the financial plan, right, income is a tool. We’ve got to have it to be able to move forward with the goals we want to achieve. So what did you find — and we touch on some of this when we talked previously about the 2021 Pharmacist Salary Guide, and folks can download that, again, at TheHappyPharmD.com/YFP. But tell us exactly, you mentioned trajectory, not so much generally speaking, outside of admin/management positions. Give us the numbers. What are we seeing in terms of data around salary? And then how that does or does not change significantly with experience?

Alex Barker: So there was only one resource in our salary guide that looks at years of experience. And that was payscale.com. Not a lot of data points, but what they did find is that less than a year, your annual average wage was about $113,000. And if you had over 20+ years experience, it’s $125,000. That’s where that $12,000 difference came from. And what we’ve found when working with pharmacists, when building that strategy, we typically do include money because money is a major reason why we do the work we do. But what we found is that with financial trajectory, getting into something you actually enjoy doing usually presents new and exciting opportunities where you can get paid more, where there are promotions, where there are bonuses again, where there are financial incentives for performing well because if there’s one thing that pharmacy is plagued by it’s that we’re not paid for performance. I wasn’t paid any better than the person who was the best on our team and the worst on our team. I was paid because that was my pay grade. And that creates kind of I would say stagnation in our profession. So by understanding someone’s financial future, what they want to be making, it can actually help us narrow down a few things. It also helps kind of motivate typically younger people to create a business because what I’ve found, including myself, is people want lifestyle freedom over even making more money sometimes or just the ability to travel the world and live off of — I mean, heck, some people, no one I think we’ve worked with, but I know people in this industry who live off of $40,000 a year and they are some of the happiest people I know in the world. But there’s simply too much opportunity out there to make even more money than that, but it’s all about really what you want from your work, your career, and your life.

Tim Ulbrich: And I love that while we’re talking here about salary, that connects full circle to me about what you said just a few minutes ago is starting with the vision, right? Maybe it’s not 30 years out for the reasons you mentioned. Maybe it’s 5, 6, 7, what do you want? And getting clear on that. And I would argue — you probably do this in coaching all the time and do it well, like put aside the objections for a moment, right? Put aside the fears or am I qualified or am I capable? But what am I really passionate about? Or what are the moments that are happening where I feel energized, right? I always tell folks, I can think back to moments at work where I could have spent one hour on something, but if it wasn’t something that I enjoyed nor necessarily an area of strength, like I felt emotionally exhausted. And it could have been a one-hour workday, right? And there are other days — you know this from your business — you could spend working on a project for 10 or 12 hours and you get lost in it, and you feel like you could come home and do some more work because you’re just energized by what you’re doing. So I think the vision and the plan, you know, is so important. And we see the similarities here to the financial plan as somebody is thinking about, what does that next step look like? Whether it’s a first step for a graduate — and I would encourage those new graduates listening like not to fall into the trap that your first step is the only step, right? To the comment you made, Alex, it feels like that, though. You remember that feeling. I remember looking at residencies, looking at jobs, and you think, OK, this is the path, as if there’s a singular path. Like what is that all about? I mean, there is so many different paths and on the path, there’s different stops and different routes and things to get there. So excited about what you all are doing to help pharmacists and coach them in this area. Trajectory of pay. You know, this, to me, from a financial planning perspective, this to me is a big concern. Now, I will say, a pharmacist’s income, while we’re seeing the changes we’re seeing, is still a good income. And you know, it still provides us a great tool. The risk I see, Alex — and I want to flip the script here and have you play financial coach for moment — the risk I see here is if I’m somebody who’s graduating, let’s say I’m in my late 20s, early 30s, I’ve got a doctorate degree, I’m making a great income, and that’s not going to go up significantly, just by fact of inflation, just by reality of life tends to get more expensive usually as things goes on, with exceptions, of course. But whether that be because of family or other expenses or the desires and needs that we have, wants that drive up those expenses, so if income is not going to bump up like we might see in other careers or fields, like there’s somewhat of this potential like a negative effect on the financial plan, right? And so what can a new graduate, what should a new graduate be thinking about? Or even those that are looking at a job switch or position change to put themselves in a position where the stress of the salary and the finances isn’t going to be crippling to them as they think about what this means from a career perspective?

Alex Barker: I think traditional wisdom says it’s give and take. You can either get paid really, really well and you know what jobs typically pay really well, and you can suffer for a few years and potentially not really enjoy it. We all know what those jobs are. And in exchange for that misery, you give away a few years of your life, you make a decent salary, you can pay off your debts faster if that’s one of your goals, you can save up for a down payment on a really nice house. You know, you can do what you want with that. I think of — I can’t think of his name, but the pharmacist who got very famous for retiring early, saving up his millions.

Tim Ulbrich: Jason Long?

Alex Barker: Yeah. Yeah, and he retired early. And that’s great. That’s fantastic. And I think that plan or that traditional wisdom is based on financial success, wanting to achieve your financial goals over a career goal. And there’s nothing wrong with that. Absolutely nothing wrong. I would not personally pursue that path because I would encourage people to pursue the things that expand or create abundance versus thinking that this is a scarcity thing. I just talked with a student yesterday who took a job at a major retailer because he was afraid of his loans, he wanted to pay those off, and he missed out on an opportunity because you know, it didn’t pay as well. And when I say didn’t pay as well, we’re talking not a lot of money. We’re talking like $15,000 a year, which yeah, it may sound like a lot —

Tim Ulbrich: That’s significant.

Alex Barker: Yeah, for sure. It’s definitely $1,000 a month — less than that after taxes.

Tim Ulbrich: Yep.

Alex Barker: But it isn’t a huge change. The thing that I would encourage everyone to consider is choosing abundance over scarcity because this world has so many opportunities. And you as a pharmacist have an expert knowledge that is valuable in the right marketplace. And so if you feel like your job isn’t paying you enough or that you’d want to get a job that pays more, or you want to create financial freedom for yourself, then why not do something on the side? I know that that comes with some baggage that people may not be wanting to do if you’re a parent, I don’t want to give up 10 hours a week, 15 hours a week or whatever it takes.

Tim Ulbrich: Sure.
Alex Barker: But I am someone who believed in that dream, that is my personal philosophy, paid off my house 27 years early because of hustling on the side. Like if I can do it, I know you can do it because we’re all pharmacists. I’m pretty sure you only have pharmacists listening to this podcast. So if you’re listening —

Tim Ulbrich: I think so, yeah. Maybe my mom or dad occasionally?

Alex Barker: Oh, nice. Hey, Mom or Dad. Nice to see you. If you’re a pharmacist, you’re insanely capable, insanely intelligent. And you can create something that makes $1,000 extra a month. And you can hire a team to help you to fulfill on whatever those things are. And that can create your financial freedom for the future. It’s what I’ve done, it’s what I’ve helped other people do, it’s what people are doing now. And I think personally, I have my own theories about Gen Z. I really think that this next generation doesn’t care two flips about making six figures in order to — and to give up 6+ years of my life to get this job. That’s not at all what they care about.

Tim Ulbrich: That’s right.

Alex Barker: And I think that’s what the application trend shows as well. So I think it’s all about pursuing an abundant freedom through business, personally. That’s what I would find.

Tim Ulbrich: And I want to add, Alex, one of the things I think we don’t talk enough about — you know, side hustles are widely discussed — is it’s not just about the money, right? I mean, the money is a factor, of course it is as we talk about the financial plan. But one of the greatest joys I still have to do this day and had when I was at the very beginning of the journey of YFP was the creative outlet and that feeling of you’re creating something, you’re providing value, right, you’re leaning into a strength. Like it’s energizing. And I would have and did it for nothing, right? I mean, when you’re kind of getting everything going. So what value does that provide in terms of if you’re in a position where it may not be as fulfilling as you would hope, like that may be an outlet for you to think about. And we have tried on this show — and we’re going to do more of this — of featuring pharmacists that are doing different things in this area, not so that somebody can hear any one of those and say, “Oh, I’m going to do that,” maybe that’s the case, but more so of hey, that’s a cool idea and I hadn’t thought about it and hopefully beginning to let the creative juices flow in different areas. So we’ve had several folks on talking about different areas. I can think of Brittany Hoffman-Eubanks, Episode 126, we talked about her income from medical writing, Blair Thielemeier, of course, the Pharmapreneur Academy, had her on recently, 197, Brent Rollins we had back on 112 talking about expert witness and several others. So I think this is an area for many folks to consider for a variety of reasons, and Alex, you did a good job of articulating those. As always, love having you on the show. We’re going to be doing it again as I bring you back to give us an update on what’s going on in the job market and what our community needs to be up-to-speed with. Where’s the best place for our listeners to go, Alex, to stay connected with you and to stay connected with the work that you’re doing at The Happy PharmD?

Alex Barker: Oh, we’ve got a website. It’s super slick looking. You can check it out if you want.

Tim Ulbrich: It is nice.

Alex Barker: TheHappyPharmD.com. But I am the most active on LinkedIn. You can check me out there, Alex Barker. And happy to connect with you there and have a conversation with you. I try to talk to everyone that connects with me. If I miss you, I’m sorry. But feel free to send me a message, happy to connect on there.

Tim Ulbrich: Alex, appreciate having you on the show. And to our listeners, thank you for joining us for this week’s episode. If you liked what you heard, please do us a favor, leave us a rating and review on Apple podcasts or wherever you listen to your podcasts each and every week. We appreciate your feedback, love to hear your ideas on the show. And as always, we thank you for listening to this week’s episode of the Your Financial Pharmacist podcast. Have a great rest of your week.

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YFP 204: The Current State of Buying, Selling, and Refinancing a Home

Posted on May 20, 2021November 2, 2022 by yfpadmin

The Current State of Buying, Selling, and Refinancing a Home

On this episode, sponsored by IBERIABANK/First Horizon, Tony Umholtz, a mortgage manager for IBERIABANK/First Horizon, discusses trends in the housing market coming out of the COVID-19 pandemic and the current landscape for those purchasing, refinancing, or selling a home.

About Today’s Guest

Tony graduated Cum Laude from the University of South Florida with a B.S. in Finance from the Muma College of Business. He then went on to complete his MBA. While at USF, Tony was part of the inaugural football team in 1997. He earned both Academic and AP All-American Honors during his collegiate career. After college, Tony had the opportunity to sign contracts with several NFL teams including the Tennessee Titans, New York Giants and the New England Patriots. Being active in the community is also important to Tony. He has served or serves as a board member for several charitable and non-profit organizations including board member for the Salvation Army, FCA Tampa Bay and the USF National Alumni Association. Having orchestrated over $1.1 billion in lending volume during his career, Tony has consistently been ranked as one of the top mortgage loan officers in the industry by the Scotsman’s Guide, Mortgage Executive magazine and Mortgage Originator magazine.

Summary

On this episode, Tim Ulbrich welcomes Tony Umholtz back to the show to discuss housing conditions in a post-pandemic world. While there may have been significant economic turmoil related to the COVID-19 pandemic, real estate continues to boom. Tony explains some possible motivations for such an active market include work and school being remote in many cases, those in apartments feeling cramped and seeking more space, and others still who have sought to purchase second homes in less populated areas.

Tony addresses some fears about a potential future housing bubble, explains some differences between buyers in the previous housing booms with current buyers, and differentiates the present home buying process, from the practices of the housing boom and conditions that led, in part, to the Great Recession of 2008.

With post-pandemic life offering more flexibility than ever before, Tony explains how that mobility is reflected in the housing market. He makes some predictions about the future of the real estate market and interest rates, shares insight regarding new generations aging up and into the housing market, and provides considerations for those who may be first-time homebuyers, contemplating making a home purchase in the present market.

Lastly, Tony explains the details of the Pharmacist Home Loan offered through IBERIABANK/First Horizon.

Mentioned on the Show

Episode Transcript

Tim Ulbrich: Tony, welcome back to the show.

Tony Umholtz: Tim, thanks for having me. Good to be back.

Tim Ulbrich: Excited to have you back on the show. You’re a frequent guest I think at this point, and we’re going to link in our show notes to previous episodes in which you’ve been on talking about buying homes, selling homes, what this means from a lending standpoint, options, what’s the professional home loan, and we’ll dig into some of that here today as well. But for those that maybe didn’t catch you on a previous episode, give us some quick background and your current role with IBERIABANK/First Horizon.

Tony Umholtz: Sure, sure. Well, I’ve been in the business a long time now. I hate to say this, but it’s been almost 20 years in the mortgage banking business. And I have been just focused on residential lending has been my focus and have been with IBERIABANK for about 3.5 years. We recently did a merger with First Horizon, so hence the slash. But it will be a full combination by the fall. But it’s been a great company and we’ve been very excited.

Tim Ulbrich: Yeah, and excited for the collaboration here. And we’re going to talk as we get towards the end of the episode about the pharmacist home loan product as I suspect many of our listeners if they’re not already aware, that may be something that’s a good fit for them. But we’re going to spend most of our time today talking about really an interesting topic, and that is housing considerations in a post-pandemic world. I mean, it’s really been a strange year. And although there has been some significant economic turmoil related to the COVID-19 pandemic, certainly what that has meant for jobs that have been lost, the real estate market is continuing to boom. I think we’ve all probably heard stories, maybe some are dealing with it firsthand — I’ve talked with a colleague, a friend, a family member — it’s a wild market out there, Tony. So despite the challenges we’ve had economically related to COVID-19, what’s happening as we’re seeing this, really this significant real estate boom that’s going on across the country?

Tony Umholtz: Well, it’s a very interesting dynamic. And COVID-19 changed everything. But the real estate market has been a big winner. And the interesting part of all this is it’s — there’s been some long-term changes in demographics and even just housing in general, housing construction that just came to a point last year. And one of those things that we’re seeing here, Tim, is we were behind — our decade of new constructed homes, the past decade was the lowest it’s been since the ‘60s. Right? So the inventory created was nowhere near to meet the demand. And that’s one of the reasons we are where we are right now. And of course with COVID last year and so many supply chains being affected, employment being affected, you know, the raw materials, lumber, other materials needed to build homes, there’s less supply. So that’s just caused this challenge here, but it’s a good time — not every housing market is perfect, but the majority of housing markets in our country are thriving right now.

Tim Ulbrich: So Tony, you mentioned one thing in terms of the new home construction, some of the raw materials with lumber contributing to some of the issues we see, really simple supply and demand that I think is leading to a lot of the stories I know I’ve heard of bidding wars and offers that are well above asking and appraisal waivers and other things we’ll get to here in a moment. But what else? You know, I think of — is there some pent-up demand here of we had a housing market that last year if we think about the timing of COVID, you know, March of 2020, that really typically is kind of the beginning of the boom of the home buying season, obviously the pandemic might have tampered with some of that or perhaps people not picking up and moving that might have been going to other jobs or more people working from home and they want more space and so they’re looking to maybe get out of the city or move into the suburbs. What are some of these other factors beyond the construction, beyond the raw materials, that really has got us into this supply-and-demand position that we’re in right now?

Tony Umholtz: Well Tim, you mentioned a few things. And one of those is people moving to the suburbs. We’ve seen a big exodus from some of the big cities. I think one of the housing markets I could say that’s underpriced probably right now is New York City, right? There’s been a lot of — comparatively, there’s been a lot of exodus out of New York City, San Francisco and New York City, some of the bigger cities because people can work from home. A lot of people can. Not everyone can, but a lot of people can, and I think that’s changed a lot of things for a lot of people. The other thing too that I’ve seen is just when I mentioned demographics, the shifts, just the millennials, right? And even Generation Y, they’re starting to get into the housing market more and more, and they’re looking and saying, “Hey, I’m paying $2,000 in rent. I could own a house for this.” I think it’s starting a realization that you can own a home and have your own home. I’ve just seen a huge increase in first-time home buyers as well. I think that’s another big shift with this large group of our population moving up and aging. And then just low interest rates, right? I mean, you have the Fed being very supportive — our Federal Reserve is being very supportive and accommodative to help the economy get through this very, very difficult time. And the housing market’s been a winner. And anytime you have low barring costs, usually it leads to expansion in the real estate market. So that’s the multiple reasons why. And then you put on top of that a limited supply of homes, and that’s why we are where we are in many markets.

Tim Ulbrich: Yeah, and I’d like for a moment — you mentioned one factor, Tony, obviously interest rates, I’ve seen some numbers out there before that on average, you know, if you see a certain drop in basis points or certain percentage reduction in rates, that has obviously an impact on the demand, among other factors, of course. Rates aren’t the only thing. But tell us more about what we’ve been seeing really over the past year. I remember you and I talked about this back in March of 2020, here we are in April of 2021, you know, what have we seen in terms of rates, whether it’s first-time home buyers, those that are refinancing? And then not expecting you to be able to crystal ball this, but where might we see some of the trend of this going forward as I think it might have an impact for folks that are thinking about something like a refinance, you know? Does it make sense now? Or does it make sense that I kind of sit and hold and wait for the future?

Tony Umholtz: That’s a great question, Tim. It’s hard for me to pinpoint exactly. I can tell you trends that I’m seeing right now. You know, clearly we had unprecedented stimulus last year to help rates go to those levels. The Fed is still accommodative. And rates are still very, very good. Purchase money, meaning loans for purchasing a home, are going to be lower than refinancing. There is typically an adjustment — and it’s really a trickle-down effect from Fannie Mae and Freddie Mac on refinances. So there’s a slightly higher rate for refinancing versus a purchase money loan. But it still makes sense. We’re still writing a lot of refinances. And one area that I’m seeing opportunity, even though we’re off the lows — the lows were saw last fall, but we are off them now. But there’s still a lot of people with rates that are over 100 basis points, which is 1%, are over 1% savings level. And then the other thing that I see too is debt consolidation, people that own a home already and they have a lot of equity built up, but they have other loans that they’re paying higher interest rates, we’ve been able to really help some folks get their budget in line, really get themselves on a clean slate and really get a good savings plan. So I think refinancing can make sense no matter what the rates are. Everyone’s situation is different. And the trend for rates, I think what we’re going to see — and this is just, again, a disclaimer that I’m not an economist, but I do — I’m a bit of a nerd, I will admit, and I read a lot of this stuff and I have all kinds of subscriptions that I follow. But the trend is going to be some inflation this year. But the Fed is accommodative. So I think rates will be a little higher as the year goes on, but you have a lot of things that are going to help rates stay at a certain level. But I do think rates will trend a bit higher this year. On the other hand, looking out into the future, large government deficits and debt like we’re posing, I think we’ll hear even more of that here this week coming out, I mean, that’s all deflationary typically. So what that means is it puts pressure on rates to go down, right? So it’s just an interesting time. It’s hard to really be a crystal ball seeing the future, but this year, I think the trend is going to be slightly higher rates.

Tim Ulbrich: Yeah, and as you mentioned, Tony, we saw rates really at a significant low back in the fall, but I do think — and you probably see this more than I do every day — I’ve talked with a handful of individuals in the last several weeks that still may have purchased back in, you know, I remember fall of 2018, rates on a 30-year fixed mortgage were north of 4.25-4.5% for many folks. So I think there still is opportunity out there. And for folks that maybe haven’t gone through that evaluation to see do the numbers make sense? Of course there’s other factors beyond that, not to exclude refinance as an opportunity, even as we may see rates tick up here in a little bit. Tony, one of the things I wanted to get your feel on, you’re in this every day, obviously, in your market down in Florida but also have a good pulse on what’s going on nationally. Here in Columbus, I mean, the folks that I have talked to, it seems like above asking is the norm and in some cases, significantly above asking, bidding wars that are ongoing, sometimes appraisal waivers that are happening, and I think it just raises some attention and warrants some conversation about like, what are the implications of those types of things? You know, I think for folks that are out there shopping now or soon to be out there shopping throughout the spring and the summer, before you find yourself looking and then within 24 hours, you’re in a bidding war, like what are some things, you know — No. 1, are you seeing those and are hearing about that across different markets? And then for the buyer, what are some things that they should just be thinking about of the implications of those types of scenarios?

Tony Umholtz: That’s a great question. And absolutely we’re seeing that in a lot of markets. We lend across the country, so we’re seeing it in multiple, multiple markets. It is — and some are worse than others. But they’re all pretty heated in a lot of ways. One thing I’ll mention just on the waivers of contingencies, I think you’ve got to be very careful with that. I think you need to be very aware of what you’re getting into because when you say I’m just waiving the appraisal contingency, well, if you were to pay $300,000 for a house and it comes in at $280,000, well, the bank is going to use $280,000, the lender is going to use $280,000 as the price point, right? So in that case, you’re coming to the table with $20,000 more in equity. So there is some risk here involved when you waive these contingencies. So I think, you know, I know it’s hard. And I get calls all the time from listing agents on pre-approval letters I’ve sent on behalf of our customers, and they want — they ask me all these questions, and obviously I can’t answer anything personal. But they tell me, “Your input was important because we’ve got 12 offers.” You know? “And I’m taking them all to my seller tonight, and we’re going to meet and go through each one.” Some of the things I’ve learned — one thing I’ve learned from a couple very veteran real estate agents, this might help the audience here, is a lot of my clients will say, “You know, just put the minimum amount of my offer on your pre-approval letter.” So if I’m offering $300,000, just put $300,000 on that letter. So we’ll do that a lot thinking it’s a negotiating tact. But what a lot of these agents have told me, they say, “We actually like the ones that say $500,000 on it.” And the reason why is they know the client’s very qualified.

Tim Ulbrich: They know it, yep.

Tony Umholtz: So they look at it differently than I think a lot of people do because a negotiating is a negotiating. They’re trying to find the strongest candidate that’s going to close. And it’s not just about the price, even. It’s also — price is important, but I think it’s the ease of closing and a lot of times, you’re competing against cash offers too. So you have — and they might be a little lower, so you have to overcome and say, “Hey, mine has financing, but I’ve got to put my best foot forward.” But I’d be very — again, very cautious about waiving these contingencies. I think you have to have some sort of out. If you’re working with a realtor, you have to see if you can negotiate that in. If the appraisal comes in low, it’s going to cause big problems for a lot of people.

Tim Ulbrich: Yeah, and I’m glad you said that, Tony. I think this is a good reminder, you know, something I’ve shared many times on the show before, but especially in the market that we’re in where negotiation is not in your favor as the buyer, right? It’s very much a seller’s market. You’ve got to really take a step back and hopefully objectively evaluate before you’re out there even shopping, what does this mean in the context of the rest of the financial plan, right? And so you know, having a pulse of the market of if you’re looking at homes that are $300,000-400,000, what might that actually end up being in the market? Is it more like $320,000? $330,000? $420,000? $430,000? Depending on offers and so forth. And how does that work out for the rest of your plan? Run out those numbers. Work with your planner, work with your coach to really evaluate that because I think that obviously home buying can be a very exciting, emotional thing. It’s a very important step for many people in their financial plan, but we’ve got to make sure we’re doing it in the right context of everything else that we’re trying to achieve. Tony, the other question I have for you — it made me think about this when you said cash offers, more of them being out there, and I’ve heard the same thing, is how does this then work out for folks that are trying to sell a current home to buy? So I’m thinking of a contingency upon the current sale of a home to buy. You know, is this market even less favorable to them? Or are there strategies that they can employ for those that are in that position where they aren’t able to buy until they also have the sale of their home that they can be competitive against other buyers that are in the market?

Tony Umholtz: We’ve seen a lot of these lately with the contingencies. We’ve had a couple approvals that we’ve done where we’ve had to — the client clearly had to sell their house before they could afford a new one. But once they listed the house, they sold it so quickly that it really was a fast process.

Tim Ulbrich: OK.

Tony Umholtz: So I think the challenge is you don’t want to have that — it’s going to be hard to win over 12 — or say there’s 10 other people bidding on the house at the same time, it’s going to clearly be challenging to win if you have a contingency. But there are some situations where you’ll be surprised that that house sells pretty fast. That’s the other piece is if you want to sell your home, you kind of have to be on your toes and find something pretty quickly.

Tim Ulbrich: Absolutely.

Tony Umholtz: Or negotiate some lease back with the buyer of your home.

Tim Ulbrich: Tony, one of the things I’ve been thinking about lately is considering how hot the market is, considering just the unique factors we have of kind of what’s going on with interest rates and potential inflation and supply and demand and new construction being down, all these variable, like living through 2008, I can’t help but think back to man, are there lessons that we learned there that we should also be thinking about now as we’re really continuing to see this market as hot as it is? You know, essentially is there reason for concern? And I saw a statistic leading up to this episode that says — this was reported from Google — that the search for the phrase “When is the housing market going to crash?” was up 2,450% over the last month, so obviously others are thinking about this. Some research from JP Morgan, quoting that “after robust gains over the past five years, the nationwide nominal house price index is now 40% above its 2012 low point and 4% above the peak that was reached in 2006.” And they go on to say, “If 2006 was a historic bubble, then current price levels should be looked at more closely.” You know, you think about obviously the value of homes going up much faster than we’re seeing in terms of individual’s income, we’re still coming out of some unemployment, you know, related to the pandemic, people getting positions back, so my question here is like, are homes overvalued? You know, what’s the concern of this? And like what is different here from what we experienced in part related to the Great Recession of 2008?

Tony Umholtz: Great questions. I mean, you know, lots of things that you mentioned there. And I’ll give you some feedback from my experience in the business before that time. So I started in the mortgage business almost 20 years ago now. And I lived through that. I was actually — my third year, I think I was in my fourth year in the business was 2005. And I was still pretty young at the time, but I was one of the top loan originators in my company nationally at the time. I wrote 400 loans that year. And I look back at that year, and I was always a very fairly risk-averse person. So you know, I wasn’t one of those lenders doing crazy loans. But back then, Fannie Mae even took loans with no income documentation. I remember running them through Fannie Mae’s system, and they just needed a pay stub and that’s it. So I’ll give you the differences that I’m seeing, and I’ll just equip everyone with the most knowledge they can have here. So back in that timeframe, half of the business I wrote was people who were speculators. They literally were going to buy the homes to either rent them or flip them. That’s what it was. You know, everyone was caught in this train, I’m waiting in line to buy a home to flip it, to rent it. It was that kind of thing. And the other half was owner-occupied clients. So that was the mix of my volume back then. Nowadays, I’d say 95% of the loans that we write are owner-occupied homes. And some of them are like true second homes where people are literally going to be moving to Florida or to another area as soon as they retire. It’s I want to lock in my property now because we’re retiring in a few years. It’s that kind of thing. So the amount of speculation that I’m seeing on an individual buyer basis is much different. Now there’s a lot more institutional landlords out there, hedge fund-types that own rental property, but it’s not to the degree that — I remember back in ‘05, it was just so many people, the greed level, lending standards were much different. We could — like I mentioned, we could do loans with very little documentation. Lots of lenders did — and I’ll share this with the audience if anyone’s ever seen the Big Short movie, I was on the phone, probably 28 years old at the time, with Bear Stearns. I was one of the bigger producers. I remember Bear Stearns mentioning to us that they would buy 100% no documentation loans from us.

Tim Ulbrich: Sheesh.

Tony Umholtz: And I just remember thinking to myself, that’s — and I hadn’t been in the business that long, maybe four years or so — and I remember thinking, that doesn’t seem right. And then of course, couple years later, you know, I had the foresight.

Tim Ulbrich: Come to find out…

Tony Umholtz: But come to find out everything had happened. But the amount of greed that was in the marketplace was a little bit, it was a different environment than it is today. And not to say that things — but the amount of leverage that was in the environment, like anyone could get a loan. It was — people were just buying loans in speculation. Now it seems more fundamental. But you know, the one thing I will add in is interest rates, what does that do? Because if you see interest rates double from here, that’s going to affect affordability. And then from my vantage point, I think with rates being low, prices have risen. But one thing that you should look into is the historical real estate values. And even though we had that peak in ‘06, you’ll notice that we dropped off a lot, and then it typically hovers around that 3-4% long-term appreciation. I think we might be a little over that right now, but I wouldn’t be surprised if we kind of just huddle along that line. Again, never say never, but it’s one of those things where it’s hard to — I don’t see the leverage, the difficulty in getting a mortgage today is much different than it was 14, 15, 16 years ago. It’s not — if anyone’s gone through the process, we really do due diligence, right? We see your income, your assets, we see your credit, we verify everything.

Tim Ulbrich: Yeah, and I was just going to share the same thing, Tony. If anybody has gone through this within the last couple years or even since 2008, you know the difference in terms of paperwork, I saw the difference in terms of transparency of information, easier to understand documentation from a lendee perspective if you’re willing to read through all of that paperwork. So I’m glad you shared that. I think the circumstances are different, and I think it’s important for folks to understand this is not a 2008 type of scenario or 2006 type of scenario in terms of documentation required, in terms of the types of mortgages that are out there, the lending practices, in terms of how conservative I would argue they are today compared to where they were back then. Tony, you said affordability, and that’s something that’s also top of mind for me is you know, I think of pharmacists — obviously, because that’s our community here — where incomes are relatively flat for many pharmacists right now. In some cases, we’re actually seeing incomes go down just because of hours of work that are available and for a variety of industry pressures that we have on those positions — and I’m generalizing here. Of course that’s not true for all positions. But it makes me think, then, about that case where for pharmacists, specifically we may see wages that are flat, obviously housing costs here going up significantly, we’re not even talking about perhaps general inflation in other areas that may be coming into the future. But even beyond pharmacists, like I think this question of affordability is a really interesting one. And you mentioned interest and demand among millennials. I guess the other side of that coin I would ask is like is this market making housing unaffordable for perhaps a generation in some regards? That this is going to impact many people getting into a home and the economic benefits that can come from that.

Tony Umholtz: I think it clearly can influence a lot of people. I mean, you think about in certain markets and just how much prices have gone up, I mean, again, borrowing costs have kept things pretty darn low. That’s helped. But one thing about borrowing costs versus income — and flat income is not, obviously you’re not seeing that gain every year.

Tim Ulbrich: Right.

Tony Umholtz: But normally, the income increases and the increase in prices, it’s not — the increases in prices is outstripped because of that borrowing cost. But you’re clearly right. The one thing that I will throw in, the other thing that’s to me is a little more frightening is rent prices.

Tim Ulbrich: Yeah, that’s right.

Tony Umholtz: They came down right when COVID hit because of the shock to the market, but they’re really surging in most markets. So when I have clients that we do our preapprovals, we see what they’re paying in rent, and it’s eye-opening. So I think that that’s the other side of this is if rents are where they’re at and you look at that affordability, you know, that’s going to be a challenge. And this is one thing we just have to keep an eye on. The markets are — they’ll correct themselves eventually. But the Fed may have to keep rates low longer.

Tim Ulbrich: Yeah. Is that — on the rent side, Tony, I’m sure it’s more complicated than I’m suggesting, but is that a trickle down effect of supply and demand on the buying side? That you know, if there’s not as many homes to go around for people that are interested in buying, you then increase the demand on the rent side, which further drives up rent price?

Tony Umholtz: It’s twofold. So I mean, part of it is supply and demand with rentals too. You know, if you have very little vacancy in your apartment building, you can command higher rents. The other thing you’ve got to watch is as there’s more and more multifamily, which is an apartment complexes or rentals being built, that’ll also put some pressure on rents as well and I think over time will catch up, builders will catch up. It might take a couple of years, but I think there will be an equilibrium, it always does shift. And the other thing I’ll just mention too with COVID is none of us saw COVID coming, right, until it hit. And with the Great Recession of ‘08, we saw some warning signs. You can never predict what it’s going to be. Right? We don’t know this for sure. And you know, we’ve put a lot of safeguards in to prevent some of the things that happened in ‘08. But it could be something different, right? And we don’t know what that will be to impact, but at the end of the day, you need a place to sell. And it was funny, I was on the phone call with a past client this morning. And he had bought his home in 2007, probably the absolute worst time to buy it, and he said, “You know, I just kept it rented.” I think the value got — down here in Florida, there’s parts of this area that got cut in half. I mean, we were hit probably as hard as anywhere in the country. And it came all the way back and is well above what he paid for it now. But that’s one of the things about housing is even investors, if you rent the property, you get a return not just from appreciation. That’s how — this isn’t a talk about investments, but that’s why it’s always important to have that if you own an investment property, that it cash flows, right? So that’s what you’re looking for.

Tim Ulbrich: Tony, one of the other questions that comes to mind here is if I’m someone listening who maybe I’m interested in buying a home, but it’s not a burning need in the moment. I could wait. Is there any merit into hey, let’s let things cool off a little bit, let’s let supply normalize and ride this out for a little bit? Or do you think because of how significant the supply and demand issue is now, that we might be in this type of a market for awhile?

Tony Umholtz: I think it’s going to be awhile before we see things really calm down. I mean, it’s — everyone’s market is different too. I think we have to be clear on that. Most of the country is experiencing a very robust housing market, but every place is different and every pocket of the city can be different. So I think it’s your individual area, but I think overall, in general terms, it’s just going to be up to the person. I don’t think — you know, I’ll just go back and I’ll talk about last year, and I’ll go back to 2017-18. I had conversations with clients of mine, and a lot of these were people that I had done business with for years, so as some of them took a pause, I had a couple of them sold their homes in ‘16 and ‘17 because the market had gone up nicely, said, “I’m going to rent for awhile, then I’m going to buy back in.” Well, that didn’t work so well. So even my own feelings, I remember a couple years ago thinking, things are pretty hot right now, it’s 2019. So it’s hard to predict, and I think you’ve got to look at your family situation. This is a lifestyle decision. It’s not like buying a stock in Apple or Amazon, right? It’s a — you live there. So while it’s an important, big investment, over time, it’s going to be OK. And I think the amount of money you’re going to have to pay in rent will be something you have to keep in mind when you’re paying that rent versus owning a home that you’re building equity in just by making the payments. So if you absolutely don’t have to buy, yeah, you could wait it out, see what happens. But I don’t know how much better it’s going to be. Then the other side of it what are interest rates doing?

Tim Ulbrich: That’s right.

Tony Umholtz: So if we see interest rates moves a half-point higher, then even if prices stay the same and they flatline, you’re going to be paying more per month. So there’s a lot of factors to go into it.

Tim Ulbrich: I’m glad you mentioned the rates again too, Tony, because I think that we often throw around terms like a half-point, quarter-point, that obviously if folks haven’t run numbers before, I’d encourage you to do so. I mean, a half a point, three-quarters of a point, of course as that increases on a $300,000, $400,000, $500,000 loan over 30 years, we’re talking about tens of thousands of dollars of difference, if not more than that. And so this comes back to the conversation about not only where are rates from a time perspective but things like credit and optimizing your credit and understanding your credit score and how to improve your credit, things that we’ve talked about on the show before but obviously why credit such an important part of the financial plan, as we talk here related to home buying and interest rates. Tony, the other trend I want to get your perspective on, you and I have talked about this briefly offline, you know, we’ve mentioned a little bit about the work-from-home movement and perhaps because of this, folks moving more out to the suburbs. I’m also thinking about just beyond their current area, the flexibility that they may now have, not within their area but to move to a warmer climate or to move to a beach town or something that wasn’t on the table before but now because there’s perhaps more flexibility in their work environment that they’re able to do that. So are you seeing those trends, especially knowing where you’re at down in Florida where you’re seeing more folks that are looking for a second home or picking up and moving because they have more flexibility with their work?

Tony Umholtz: The transition has been amazing. I’ve — a couple of stories this week that we have. We have a couple of closings for clients here in Tampa that are from New York City. They can live anywhere. And I’ve been getting a lot of referrals from Miami as well that a lot of folks moving down from New York. And some of them have lived in the city their whole life and just are ready for a change. And they can remotely, and it’s freed them up. I think you’ll see Miami become a major financial district in our country now. I mean, you’re seeing a big exodus of kind of the Wall Street financial firms moving down, relocating their businesses down there. And we’re seeing a lot of it here in Tampa, a lot of second home purchases too for those that can afford them because they can use them and take their kids that might be homeschooled right now or doing online learning. I’ve done a lot of lending on Amory Island, which is down here about an hour and a half south of Tampa. And it’s a really neat spot, but it’s just — the amount of demand because people can do that. They can live there, they can live there part of the time and work there and enjoy the beach. But in other places too, I’ve seen other second home markets around the country where people are taking advantage of this ability to work remotely. And I think the technology has been — this is something that’s always been there. 2020 was a catalyst, right, for all this to happen. And I think you’re just going to continue to see that trend, although there is some of that movement back for some people to get back into the office, especially as the vaccinations have really grown across the country. But I still think you’re going to see this ability to work remotely. Even with me, I’m in the office a couple days a week, and then I work from my home office as well. So we can work effectively both places.

Tim Ulbrich: Yeah, I think every time you and I have connected, Tony, over the last year we’re probably both at home. Sometimes the kids are in the background. It’s just part of the new norm, you know? I think that, to your point, like we saw this coming. I mean, the desire for a more flexible, remote work environment and then obviously the pandemic in 2020 was the catalyst. And it’s going to be interesting to see what goes back, you know, to normal and what stays. You also have the advantage down there of no state income tax in Florida, right? So that’s a bonus for people that are looking there.

Tony Umholtz: We do.

Tim Ulbrich: Let’s transition, Tony. I want to talk a little bit about the pharmacist home loan that you all offer through IBERIABANK and First Horizon. I suspect many of our listeners are already aware of this product from previous podcasts that we’ve had. We’ve got information also on the website, YourFinancialPharmacist.com/home-loan. But I think for many of our listeners, when it comes to home buying, I think of, OK, what are the most common barriers? Well, student loan debt typically rises to the top. And then the other thing I think about is usually the cash available as a new practitioner or a pharmacist who’s getting started to be able to put a down payment on a home. And I think the pharmacist home loan offered through IBERIABANK/First Horizon really allows folks an opportunity that they may have thought otherwise was impossible or weren’t aware of the option that was out there. So tell us a little bit about this mortgage loan option that you all offer. What’s the product about? Minimum down payment, maximum loan amount? And then some of the requirements for one to qualify.

Tony Umholtz: Sure. Well, the product’s been just a great help for so many people. And I think the big advantage of this program is you can do as little as 3-5% down with no PMI. So if you’re a first-time home buyer, you could do 3% down with no mortgage insurance. If you’ve owned before, it’s 5% down, again, no mortgage insurance. And the interest rates are very, very strong. In most cases, they’re better than a client putting 20% down, which is an advantage. And as far as the maximum loan amounts go, we currently are capped at $548,250 as a maximum loan amount for the product. And there’s a minimum credit score of 700. So you have to have at least a 700 credit score to qualify. But other than that, it’s really — that’s the qualifier. So there’s nothing else really you have to be concerned about. There’s not a clear reserve requirement or anything to that degree. And there’s no prepayment penalty on the mortgage either. So you can pay the loan off early if you choose to. Just is a great way to get into the housing market. And PMI is — you look at a $400,000 or $500,000 home, and you’re paying hundreds of dollars a month at that point.

Tim Ulbrich: That’s right. Yeah, great stuff. And we’ll link, again, in the show notes, YourFinancialPharmacist.com/home-loan. We’ve got lots of great information on the site about the product, about home buying considerations, some great educational content there as well. So I hope our listeners will check out that post, “Five Steps to Getting a Home Loan,” again, YourFinancialPharmacist.com/home-loan. Tony, you know, two of the collaborations that we have among others as well that really have been I think a big plus for us at YFP and our community, obviously the work that we’ve been doing with you, tapping into your expertise on the podcast here for pharmacists that are looking for financing options on a home loan purchase. So if you’re in the market for buying a home, I would encourage you to reach out to Tony at IBERIABANK/First Horizon. And for those that are buying and also looking for an agent, a shoutout here to Nate Hedrick, the Real Estate RPh, who is there to help you find an agent in your area that would be a good fit for you. And Nate’s there to walk alongside you in that journey. You can find more information about that at YourFinancialPharmacist.com, click on “Buy or Refi a Home” at the top of the page, and you’ll see more information about the professional home loan with IBERIA/First Horizon as well as an option to find an agent. So Tony, thank you so much for taking the time to join again. What’s the best way that our listeners can reach out to you if they have questions or want to get in touch to learn more about the product?

Tony Umholtz: Definitely by email. My email address: [email protected]. And also our office number, (813) 603-4255. I know it’s all listed on the website, but those are the best ways. We have a great team, and glad to help. Everyone’s situation is different, so we love to help. That’s what we do.

Tim Ulbrich: Tony, great stuff again. Thanks so much for taking time to come on the show.

Tony Umholtz: Thanks, Tim. Good to be here.

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YFP 203: New Book: FIRE Rx: The Pharmacist’s Guide to Financial Independence

Posted on May 13, 2021November 2, 2022 by yfpadmin

New Book: FIRE Rx: The Pharmacist’s Guide to Financial Independence

Dr. Jeff Keimer, author of the brand new book FIRE Rx: The Pharmacist’s Guide to Financial Independence, joins Tim Ulbrich on this week’s episode. If you’ve heard about the FIRE (Financial Independence, Retire Early) movement before, you know that this is a powerful strategy to build wealth and to put yourself in control of your financial future. Regardless of whether or not you have early retirement goals, achieving financial independence gives you options when it comes to how you spend your time and money. On this episode, Jeff talks about why he wrote FIRE Rx, his FIRE journey, how to calculate how much you need to retire, three reasons pharmacists should consider pursuing FIRE, and how FIRE can change your relationship with money.

About Today’s Guest

Jeff Keimer is a retail pharmacist practicing in Vermont. He began his career in pharmacy while still in high school back in 2005, and he graduated from Albany College of Pharmacy and Health Sciences with his PharmD in 2011. Jeff is a frequent contributor to the Your Financial Pharmacist blog.

After jumping headfirst into the FIRE movement back in 2016, he and his wife were able to conquer their student loans, paying off over $105,000 in nineteen months. Since then, they have been able to set themselves on a course to be financially independent well before most people would even consider it a possibility.

Along the way, Jeff engrossed himself in all things personal finance and found that he has not only a passion for finance, but also of writing; and through that writing, it’s his sincere hope that he can serve his profession by helping enrich the financial lives of its members.

In addition to this book, you can find more of Jeff’s content on the Your Financial Pharmacist blog. You can connect with him on Facebook via the Your Financial Pharmacist Facebook group.

Summary

This week, Tim Ulbrich welcomes Jeff Keimer, PharmD to the show to discuss his new book, FIRE Rx: The Pharmacist’s Guide to Financial Independence. Jeff shares why he wrote the book, his FIRE journey, how to calculate how much you need to retire, three reasons pharmacists should consider pursuing FIRE, and how FIRE can change your relationship with money.

FIRE Rx: The Pharmacist’s Guide to Financial Independence is broken down into three parts: the why of FI and how it applies to pharmacists, how to achieve FIRE, and uncertainties surrounding FIRE. Tim and Jeff walk through each of these areas in their discussion. Jeff shares a number of reasons why pharmacists should consider pursuing FIRE, whether or not they intend to actually retire early, and explains how your relationship with money can be positively affected when seeking FIRE.

Jeff explains a practical method to creating a goal post for retirement, elaborating on the 4% rule and how to calculate how much you need to retire. Jeff and Tim close by tackling some of the greatest concerns when retiring early including health insurance and outliving your nest egg.

Mentioned on the Show

Episode Transcript

Tim Ulbrich: Jeff, welcome to the show.

Jeff Keimer: Great to be on. Thanks for having me.

Tim Ulbrich: Hard to believe this is your first time on the podcast. You’ve written a number of great blog posts about FIRE, investing, one about your debt-free journey that we have featured on the YFP website, and we’ll certainly link to that in the show notes. But today, we’re going to be digging into your new book that is available to order called “FIRE Rx: The Pharmacist’s Guide to Financial Independence.” And I’ve been really excited about getting this book out. It’s been a process, it’s been a couple years in the making, and excited to get this into the hands of many pharmacists that I think will find great value from your writing. So before we get into the book, give us a little bit of background on your pharmacy career and what you’ve been doing as a pharmacist.

Jeff Keimer: So I started in pharmacy actually quite awhile ago. I was still in high school back in 2005 when I started working for if you remember Eckerd Drug before they got bought out by Rite Aid. I worked for Rite Aid all throughout college and then took a position with a company called Kinney Drugs up here in Vermont. It’s just a regional drug chain. And yeah, been working as a community pharmacist ever since.

Tim Ulbrich: Small world, Jeff. I interned for Eckerd Drug when I was a pharmacy studen. At the time coming back home in the summers in Buffalo, New York, we had Eckerd Drug and I worked with them before that buyout happened with Rite Aid. So good memory. I think we’re dating ourself a little bit, by the way, when we talk about Eckerd Drug and some students and others are listening like, what are you talking about? You know, for those that are listening and if you’ve been a part of the YFP Facebook group, you likely have seen Jeff’s name pop up who has been really active in that group in commenting, providing some great input and advice. And I think, Jeff, folks may be wondering, especially those that have interacted with you in that group and obviously see that you’re knowledgeable not only on this topic but other areas of personal finance, you know, how did you get interested in personal finance? Was this a topic that always was one that was of interest? Or did something happen out of necessity that brought you into this world and I guess rabbit hole when it comes to personal finance?

Jeff Keimer: So I think I’ve always had kind of an interest in finance in general, maybe not in the application of it if you run my Q&A and how I was in my early years as a pharmacist, I definitely did not act like I was really interested in personal finance or whatnot. But I’ve always taken an interest in finance in general, especially investing. Then once Alex, my wife and I, we started getting down this FIRE rabbit hole, I really got into a lot more, really got to understand a lot more of the concepts. It really played to a wealth of my interests, especially as you get later on down the ways and you’re figuring out different ways to be able to solve your financial issues or invest better, sometimes it can be kind of a game, which really appeals to me.

Tim Ulbrich: So was it you driving this forward? Was it Alex driving this forward? Was it both of you — pun intended — really that caught on fire with the FIRE concept? Tell me more about for the two of you in your personal journey how you guys really made this commitment towards financial independence and why that was a priority for you and your family.

Jeff Keimer: So I think starting off, like I mentioned before, I got out as a new practitioner, really was not good with money, kind of spent every dime in sight just on ridiculous things. I think I spent $5,000 in a year on craft beer or something. But she was really — she gave me the push because she came from a much different mindset than I did when it came to money and particularly saving and really kind of establishing that financial position of strength. You know, as time went on with our relationship, I had a really pretty bad balance sheet. And she did not. I kind of got the hint that I needed to really kind of move myself in that direction, kind of get my house in order and up to her standards first. That’s really where we started. The whole foray into FIRE came later, after we got married. That became kind of a journey I took the lead on, but she was supportive at first and then really kind of came on board and got really excited about it as time went on and we made progress towards it.

Tim Ulbrich: We’ve had a few pharmacists as guests on the podcast like Jason Long on Episode 104, Jared Wonders on Episode 111, who have shared their own FIRE journey. We also had Scott Rickens, author of “Playing with FIRE” on Episode 188. But with that being said, I don’t want to assume that all of our listeners are familiar with FIRE. I shared with you before we hit record, you know, often when I’m speaking with a group of pharmacists and I introduce the concept of FIRE, many folks I find have not necessarily heard of that term before but once I have a chance to explain a little bit more about what is financial independence all about, what is the FIRE movement or community all about, I can see there is certainly an interest that is piqued and folks that are interested in, hey, I want to learn more and see whether or not this is a path for my own personal financial journey. So before we dig more into the weeds on FIRE and the strategies you talk about in the book, give us the high-level definition or overview of what exactly is FIRE.

Jeff Keimer: Basically, FIRE is an acronym. It stands for Financial Independence Retire Early. And I think that the acronym really kind of is in some ways self-explanatory. But what it actually is in practice is that you reach a stage in your personal finance journey where you reach financial independence, meaning the money that’s — your money is basically generating for you, not the money that you’re having to work for. But the money that’s being given to you in the form of dividends, capital gains, things from investments or income from rental properties or a business that you own that you’re no longer having to really work the day-to-day, from basically that is covering all of your living expenses that you have in a year. So you basically, you don’t have to work for money anymore, which then leads people into the retire early concept, in which case they may decide to totally stop working for money. Then that can be far ahead of what people normally consider to be retirement at say 65. You have some people in the space inspires really kind of a large community now that’s really cropped up over the years. You have some of the more famous names in the space. First one I was introduced to was a guy named Pete Adeney, who goes from — he goes by the name Mr. Money Mustache on his blog. And he retired in his 30s. So you know, when most people kind of hear that for the first time — and I know when I heard that for the first time, that’s when I got hooked because I was like, who is this guy? Like how do you do this? This sounds really ridiculous.

Tim Ulbrich: Tell me more.

Jeff Keimer: Tell me more about how you get to a point where you can call it quits in 10 years. But you know, the interesting thing about FIRE is like you can do whatever you want. It’s really retire early is an option. Financial independence is really what I think most of the movement has kind of squared itself around because then you have the option to do the retire early if you want or you can do something else.

Tim Ulbrich: And I think that right there, right, the option to stop trading time for money — and I’m with you, Jeff. As I heard about the movement, learned a little bit more, certainly don’t claim to be an expert myself , and like we’ll talk about here shortly, there’s a variety of options and paths that one can take, certainly not a only-one-route to do FIRE. But FI resonates with me as a goal that all of us should be considering, you know, and what that means for us. It may be something different depending on our personal situation, our income, our expenses, where we live, all of those things. RE maybe, maybe not. You know, I think there’s a lot of things that would go in that direction that would help someone make that decision. But many pharmacists invested a lot of time and money to get their degree, many pharmacists love the work that they’re doing, and so they may not have that goal of RE. Or perhaps it might not be that they have a goal of retiring early but something life throws at them requires them to pivot away from their work income, and they’ve put themselves in a position towards FI to be able to make that adjustment. So we’re going to dig into even more of that, but I want to make sure our listeners, you know, as we have this conversation, don’t necessarily hear us talking about FIRE and are making an automatic assumption that every pharmacist needs to aspire to retire in their early or mid-30s but rather we’ll talk about some of the tenets and principles of FI and of course that RE is something that some may choose and many others perhaps not. So being passionate about FIRE and financial independence for your own personal journey is one thing. Deciding to invest the time to write a book is another thing. And you know and I know that there’s a significant amount of time and effort that can go into this. So why, Jeff, did you feel the need, besides me hounding you a little bit of hey, I think this would be a great topic for pharmacists and would love to see us have more information in this area, why did you feel like it was necessary to invest the time to write a book that would help pharmacists better understand this path towards FIRE?

Jeff Keimer: Yeah, I never thought about writing the book until you asked me. You said, “Hey, would you like to” — I think we were originally starting and thinking about maybe a short audiobook or something like that. Then it morphed into more of a full form book. And initially, I’ve got to be honest, you know, you said, “Would you like to write a book?” I thought, I think that’s kind of a cool thing to do. I’d like to — maybe that would be a fun little thing to be able to say, “Oh yeah, I wrote a book.” But you know, as time goes on, that can kind of get you in the door doing something, but you have to kind of have a reason for why you actually want to beat something, and especially with writing a book, I mean, that’s the longest thing I’ve ever written. You’ve got to have something in the background. And I was thinking to myself, really I mean, as I was writing the book and kind of thinking about in all the writings that I’d done for the site as well, why I do this. And I think that what it boils down to is different people have different ways that they want to serve their profession in general. And I looked at this as like, people try to play more to their interests in how they want to do that, if they want to do that at all. And to be honest, on the clinical side of things, wasn’t — never really been a huge interest of mine. I really enjoy the role that I play in the profession as community pharmacist, being able to talk with people, help them through their problems and get better outcomes that way. But you know, some of the more clinical-minded or even legislative-minded things that you get into, haven’t really sparked too much of an interest in mine. But finance does. And I think that finance really is a — it represents an interesting problem that needs to be solved for our profession, particularly as I see it kind of going forward because as a profession, I mean, we do need a lot. We need to do a lot, you know, for our profession moving forward to be able to direct it in the ways that I think most pharmacists would like to see it. But financial burdens placed particularly on new graduates who, in my mind, are in a really good spot to be able to try and affect change in our profession, really can be a major hindrance to things actually moving forward. What I see with — through my writing is you know what, if I can help any of these people get to a point where finance is really not such a burden on their shoulders, they might be able to actually get out from the behind the bench and do things that might be more beneficial to our profession on the legislative end, clinical ends, or even on an entrepreneurial end because we really do need — in our profession, we do need to explore different avenues for our services as pharmacists to really evolve our profession as time goes on. And unfortunately, a lot of times when — I’m sure you’re an entrepreneur yourself — the beginning stages of a lot of ventures, you don’t make a lot. It can be very difficult financially. And it’s one thing to kind of come at that sort of a thing coming out of high school or coming out of college with minimal debt, it’s a whole different thing coming out of college —

Tim Ulbrich: That’s right.

Jeff Keimer: And you have $100,000 maybe plus of student loans. And your minimum payment is similar to a mortgage without actually having a house. That, to me, like if you can really kind of help fix that part of the problem, I think that there’s a better chance — not a guarantee, but a better chance that our profession will be able to do the things that it needs to do without as much of the weight of the financial burdens that we have already.

Tim Ulbrich: Yeah, and Jeff, I shared this with you when I read the first draft. What would that have been? Back in probably late fall of 2019. I think you’ve really done an incredible job of taking a topic that can feel overwhelming, especially when you get into some of the weeds on investing options, considerations, you know, and so forth and really did a nice job of breaking that down in a way that was easy to understand, it’s very conversational — for those that like reading blog posts and other things, I think you wrote it an a way that is not intimidating. It’s easy to follow. And it gives people the space to explore this topic and apply it to their own personal situation. And that is something I love because we know that when it comes to putting a financial plan together, whether you’re working with a financial planner or you’re doing it yourself, everyone’s plan is inherently unique to your own personal situation, to your own goals, to your family situation, to where you live, to all of these other factors, whether you have debt and how much, and things you’re trying to aspire to do. And I feel like you really gave the space for folks to be able to make some decisions and really just understand the options, the pathways, spark some interest in what this is all about, and then hopefully, they can take that information and begin to apply it to their personal situation where it makes sense. So as far as I know, this is the first FIRE book specifically as it relates to pharmacy professionals — if someone else wrote one that we don’t know about, they can tell me that I’m wrong on that — and I really believe the book is full of valuable information that lays really a strong foundation for pharmacists that are interested in learning about FIRE and how they can set out on the path to achieve it. In the book, you go into detail about paths to FIRE, withdrawal rates, savings rates, budgeting, debt repayment, investing, portfolio considerations, and the list goes on and we’ll talk about some of those in more detail. And one of the highlights for me is we sent this book out to some pharmacists in the YFP community before it was available to order, and the feedback we received was really amazing. Cory Jenks, who we had on in Episode 196 said, “This book takes the hours and hours of reading and self-education and condenses it to a simple, easy-to-read book that has something for anyone along the journey to FI.” And I would certainly agree with what Cory said there. So let’s dig into the book a little bit further. You wrote the book “FIRE Rx: The Pharmacist’s Guide to Financial Independence,” and you broke it up into three parts: Part 1: The Why of FI and How it Applies to Pharmacists, Part 2: How to Achieve FIRE, and Part 3: Uncertainties Surrounding FIRE. So in Part 1, the Why of FI and How it Applies to Pharmacists, talk us through the three reasons that you think pharmacists should at least consider pursuing financial independence.

Jeff Keimer: The three reasons I really tried to lay out there is first and foremost, it’s defensive. Second, it’s doable. And then third, as I kind of got into on my little soapbox over there, it’s good for the profession I think. So going to that first point, defense, where I don’t think that there’s really a whole lot of pharmacists out there in the profession that look at the state of things right now and think, oh, the gravy train is going to keep going and whatnot. You know, you hear stories every day about — you see a lot of them on the Facebook group too, posting about how tough the job market is, people are going in and getting the offers that they’re finding are really — they’re scary. I mean, they’re like a fraction of what I started at 10 years ago. There’s a lot of pressure in the marketplace right now in terms of pharmacists’ salaries and then also again, on the student debt side, that side keeps going up. Defensively, pursuing financial independence in particular at a really just basic level, I mean, you don’t even need to achieve financial independence to be able to get benefits from the techniques and the things that you do in the pursuit of it anyway.

Tim Ulbrich: That’s right.

Jeff Keimer: Because what it basically boils down to is just — I mean, it’s just good financial hygiene. So you’re getting rid of debt, you’re de-risking your whole financial situation, and really kind of building yourself up into a position of strength where you can really kind of take whatever life throws at you. Now, that could just be what a lot of us — most people kind of experience, you could just have things come up in your personal life, say the kid needs to go into the hospital or you need to go in the hospital, some kind of financial hardship there that you could absorb. Or it could be something more in the lines of the profession. So I remember last year, remember reading one day, one of the major big box stores laid off about 1,000 pharmacists or something like that. That’s a major thing that goes on. And it’s a possibility. And I think for many, many years, our profession really didn’t — we didn’t really have to think about that. I know when I first went into pharmacy school, something like that really was not on the radar or really in anybody’s mind, especially when — we called them fifth years because I went through a six-year program, but you know, the P3 students, second semester, you saw a lot of new cars in the parking lot because people were getting five-figure sign-on bonuses.

Tim Ulbrich: Yep. I remember that.

Jeff Keimer: But I mean, yeah, it basically — it boils down to for defense, it’s a good idea to really even just kind of get into this anyway because as a profession, I think every single pharmacist really needs to be thinking or have in the back of my mind, hey, it might be a possibility that I’m not going to be making more in the future, which is kind of a weird concept if you want to stay in the profession. And I would imagine most pharmacists do want to stay in the profession because we went to school for a reason, and we wanted to be pharmacists for a reason. The second thing after going that doom-and-gloom section, that it’s doable. I think currently, a lot of pharmacists, the doom-and-gloom scenario, while it’s certainly difficult in a lot of markets, that’s not the same — or not saying that every market is this kind of situation where it’s really difficult. So for a lot of pharmacists, particularly ones that are practicing now, and especially if you’re still making that good paycheck, I think financial independence is perfectly doable. You have a strong income to be able to drive it towards financial goals. It does take a lot of discipline, takes some knowledge, but you can do it relatively easily compared to a lot of your peers that might have graduated, people like let’s say you went to high school with. They might have graduated in a different field. So I think that it’s, as a pharmacist, you know, even though we kind of get down on it, most of us still do make very good money compared to what a lot of people, especially straight out of college, would be making. And then the last bit, again, I think it’s good for the profession. You know, if you go down this path and even if you get close to financial independence, you don’t even need to get to full financial independence, but even getting there close, we can remove some of the risk to your career if you need to do something to be that, you really want to get out of a situation that you’re in, maybe you did start working retail after college but you really didn’t want to do that from the beginning, which it’s very much like a thing where if you’re in a position that you don’t necessarily — if you didn’t want to be there in the first place, it could be a bad fit and could be difficult for you for a long term. So if you wanted to contemplate a switch, sometimes having that — being in a position of financial strength can be very beneficial to you and really kind of remove a lot of the risks surrounding moves there. Also, I mean, if you wanted to pursue entrepreneurial work, let’s say start a consulting business or something like that where it’s not clear that you’re going to be making the kind of salary that you were making as a dispensing pharmacist from Day 1, and you probably won’t. But if you’re in a position of financial strength, you can tackle that challenge far easier and far more responsibly I would say than someone who doesn’t have that position of financial strength.

Tim Ulbrich: Yeah, I agree with all of those, Jeff. And the one that resonates with me — and I mentioned this to you as you were writing is that last one. I really — I’m bullish on the opportunities we have. I’m an optimist by nature, but in terms of where we can go as a profession, but I also recognize that $175,000 of debt and dependence on a six-figure income with that type of debt is really golden handcuffs to folks taking risks. And I think that is risk both internally, you know, I think folks, if you’re really saddled with debt or don’t necessarily have a good financial foundation or position, you’re probably not likely within your job to propose new ideas or strategies or take some risks or push back where needed, let alone look for other opportunities that may be out there that are a better fit for you or that also could help us advance as a profession. So I believe firmly a big part of why we do what we do at YFP is if we can help offload some of the financial burden of one’s individual situation, you know, what does that mean for their career as a pharmacist? Or what does that mean for other things that they may want to pursue and may want to do? The other thing, Jeff, I like in Part 1 that you talk about is an FI mindset. And you know, my question here is what part does mindset play in pursuing FIRE? And what are your core ideas on how one can establish an FI mindset or perhaps recalibrate the current mindset that they have if it’s not in line with that?

Jeff Keimer: The concept I like to get through on the FI mindset part is really, when you decide to go for financial independence, you really have to fundamentally change your relationship with money. And what I mean by that is that instead of viewing the money that you bring in simply as the stuff that you’d pay for goods and services with, you really need to think of money in terms of time. There’s a great book, it was written many years ago by a lady, Vicki Robin and her husband, they equated money to a concept they called life energy. And basically, it was when you’re spending money on things, let’s say you’re buying a pair of jeans or you’re buying the latte or whatever, you’re giving money for those things. But in reality, if you’re having to work for that money, what it is is that you’re exchanging the time value of your work, your life energy, for whatever that thing is. Now, most of the time, like the small purchases here and there, that’s really — they can add up, but it can be immaterial in the long run. But for some of the big things like let’s say you want to buy that brand new $50,000 car, you take out a car loan, you do that stuff, what you’re doing is you are committing a lot of your life energy to buying that car. Like it’s not a just oh, I can get this. It’s like no, no, no. You are committing your life to servicing this debt for whatever that you’re spending the money on. Now, the change that gets made is when you have a look at how money, particularly when you start investing it, can beget more money. Then it’s like, alright, so I’m going to have this money and then I can save that money and then it can then buy me time. It can buy my life energy back, which I think is — that’s really the cornerstone of the FI mindset that you need to have is that you’re essentially, instead of expending your life energy, your time, for things and stuff, you’re really just kind of buying back into yourself and making your — getting yourself time back that you wouldn’t otherwise have. Once you really kind of understand that, really kind of engrain that — I mean, I’ll tell you, it is kind of an addictive concept because you end up finding yourself saving money and looking for ways to save money and do things that you ordinarily wouldn’t do because you kind of feel like, I’m doing this, this is, you think of it as miniscule, it’s like, oh, that thing’s going to get me 15 more minutes back of my time or something like that. You know, that’s kind of silly. But it kind of explains the point a little bit.

Tim Ulbrich: I think too, Jeff, you know, sometimes when folks hear that, they may think, oh my goodness, like the frugality of that and I’m scraping for pennies, but I think what happens, at least what happens for me when you talk about that concept of the connection between time and money is that you start to change how you value certain things. So again, I’m speaking for myself, but I think this may be true with others as well. If you’re going to make an investment in an experience, you’re going to make an investment in something else versus an investment in something that maybe doesn’t mean as much to you — and Ramit Sethi talks about this idea in the book “I Will Teach You to Be Rich” of like find the things that like have meaning and value to you, and figure out how you’re going to invest and prioritize in those and find the things that you don’t care about and stop spending money on them. And you know, I think that that has been really an important thing when I think about mindset — and here, we’re talking about mindset around FI — is like it really helps begin you to shape and be more I think self-aware of when you’re spending money, you’re not just making that transaction but you’re starting to think a little bit about like what value do I get or do I not get from this transaction? And is it worth it or not based on the time? And sometimes the answer is yes, and sometimes the answer is no. And I think it just helps grow that awareness and it allows us to pause, stop, think about things and really evaluate it in a little bit more detail. Now, Part 2 of the book is really the meat and potatoes. And you did an awesome job in this section, How to Achieve FIRE, and we’re just going to scratch the surface here with a couple things. But one of the things you talk about in Part 2 is you dive into safe withdrawal and the 4% Rule, which you also talked about on the recent blog post on the YFP website titled “How Much You Need to Hang Up Your Coat,” all about the 4% Rule, and we’ll link to that in the show notes. So just give us a high-level overview of what the 4% Rule is and why that is significant as folks may be getting to think about this question of how much I need.

Jeff Keimer: So in a nutshell, the 4% Rule refers to a tool in financial planning to be able to judge when a traditional let’s say traditional portfolio of stocks and bonds can really fund your expenses in perpetuity. So where it comes from, it comes from a study done by the financial planner William Bengen back in the ‘90s. And what he found was that in looking at retirement cohorts from many, many years in the past, he found that the absolute lowest that a retiree could safely withdraw from their portfolio and not run out of money — and his study was over the course of 30-50 years, depending on which study you want to look at. But in a nutshell, basically it’s he said 4% was the lowest, the worst case scenario that if you retired and then you took out 4% of your portfolio Year 1, and then Year 2 added the inflation according to Consumer Price Index to that initial 4%, so on, so on as the years go on, you keep up with inflation, you wouldn’t run out of money. And 4% was that worst-case scenario. Now, it sounds like a little wonky, but what ends up happening is you can take that 4% figure and take the inverse of it, which is 25.

Tim Ulbrich: Right.

Jeff Keimer: And then once your investment portfolio reaches 25 times your annual expenses, you can — in theory, I would say — declare yourself to be financially independent because there’s a strong probability that in the future, you are not going to run out of money should you just decide to draw down on your portfolio like this. The really powerful thing about the 4% Rule and the whole concept of a safe withdrawal rate is not really in the technical details behind it but it’s giving you a goalpost that you can work towards.

Tim Ulbrich: That’s right.

Jeff Keimer: I remember it was kind of a seminal moment like in my FI journey that when I read Mr. Money Mustache’s post, it was like “Shockingly Simple Math to Early Retirement,” something like that. But it laid that out, and I said to myself, oh, OK, so my retirement number, how much I need is not just this totally nebulous concept where somebody’s like, ‘Well you might need like $5-10 million. We don’t really know. You just need a boatload of money.’

Tim Ulbrich: Plus or minus $3 million.

Jeff Keimer: Yeah, just keep saving and once you get to 65, we’ll figure it out from there.

Tim Ulbrich: Yep.

Jeff Keimer: But this actually gave me something more concrete to work with and say, ‘OK, alright, that’s a goal. And I can achieve that.’ But the other interesting thing too compared to a lot of the traditional financial planning advice is that you tend to see in some of the guidelines out there for how much you need to retire, as it’s a multiple of your income, which many people would argue with me about this, but your income is I think less in your control than you really think it is. There are a lot of forces way outside your control that affect this thing, be it market forces, so pharmacists are seeing that firsthand with supply and demand of licensed professionals. But it could just be some exogenous event in the market that, you know what, you lose your job. Sorry. Or you had a good idea, but now there aren’t too many customers for your idea anymore. A lot of things can happen with your income that are outside of your control. However, with the 4% Rule, it frames the question of how much you need to retire and how much you need for financial independence in terms of your expenses. Now, some of these may be a little bit outside your control, but you have way more control, at least in my view, of how much you spend versus how much you bring in. So I think it’s much more powerful — it’s extremely powerful in the regard that it really takes the whole notion of your financial destiny, your financial independence, out of the hands of whatever’s going on externally in the market and putting it much more in your hands, giving you much more influence over that equation.

Tim Ulbrich: That’s great stuff, Jeff. And I like how you described that calculation towards the FI number as a goalpost, right? It’s a starting point and I think so often, we talk about retirement as I hope I can retire. I wish I can retire. Maybe I can retire at this age. And I think really starting to dig into some of the numbers and taking more control and ownership of what that might look like of your financial plan, rather than being reactive. And as I mentioned in Part 2, this is just one of the many concepts you talk about. You also talk about in Chapter 5, your savings rate, in Chapter 6, you go into a FIRE approach to debt, in Chapter 7, you talk in much more detail about FIRE investing, in 8, investing efficiently and then and finally in 9, which is a question folks probably have often is it’s great if I save it and now I need to pull it out, so how do I, as you say in Chapter 9 titled “Jail Break Your Stash,” so what’s the strategy of actually withdrawing those funds when you need it, which I think is a question for many pharmacists if they’re familiar with more traditional tax-advantaged retirement accounts and they think of things like age 59.5 or greater, well what’s the strategy if there’s early retirement? So certainly covered in much more detail in the book. Jeff, I want to wrap up here with a question about what you address in Part 3 of the book, which is some of the uncertainties surrounding FIRE. And I think is one that folks hearing this for the first time might begin to think of all the objections to why early retirement may not be a good idea. And this might be, well what about health insurance? What about other things where I’m dependent upon my income to be able to have some of those types of things? So there are considerations, potential drawbacks. What are some of the big uncertainties that you see related to FIRE that folks should be aware of?

Jeff Keimer: So I think the big one that a lot of people think of right off the bat has to do with health insurance, which to be honest, I don’t think it’s as big of an issue or will be as big of an issue as people think because I mean, health insurance is something that you can — it’s going to cost more in most regards. Now, there are some tricks that you can get around it. You can take a look into other forms of health coverage like Health Ministries or some people decide to work part-time for a company that offers health insurance benefits in retirement. Or they just, they don’t stop working, they just kind of work for the health insurance benefit. But I think, I mean, that boils down to you’re probably going to have to pay for it. That I think is the thing that comes top-of-mind for a lot of people, especially when you say, ‘Hey, you’re going to retire at 40 years old,’ and most people, like a major consideration is like, ‘Well, I’m not retiring until I get Medicare.’ It can be less of a burden than people think, but I mean, it’s still definitely out there. The other thing too that’s kind of an uncertainty is outliving your assets too, which kind of goes back a little bit to that 4% Rule, and that’s why when we were talking earlier about it, you said it’s a goalpost. But it’s also just kind of a guideline. Like it’s also not set in stone that it’s going to happen. I mean, it’s still very much a concern that you are going to outlive your money. And there are certainly things that you could do to address that, which we talk about in the book, not the least of which, I mean, surprise, kind of along the same lines as health insurance, is just save a little bit more and give yourself a buffer. The other thing — and I think that the really, probably one of the most important in terms of uncertainties to FIRE is let’s say you do want to consider retiring early. What do you do from there? That’s the major question that, you know, if you’re going to be looking at this thing, it’s the thing that you should be thinking about throughout the whole journey.

Tim Ulbrich: Absolutely.

Jeff Keimer: And you know what? I mean, the good news is you don’t need to figure it out before you start. And honestly, I think it’s a stupid exercise to even try to do something like that because this is not going to be — pursuing financial independence or the early retirement, it’s not something that you’re going to be able to say, ‘Alright, I’m going to start doing this and then two years from now, we’re going to be there. And my life two years from now is probably going to look very similar to the way it does now.’ I would say when people go after this thing aggressively, 10-15 years might be more realistic for that. When we started ours, that’s kind of the timeframe we were looking at for it. But even at those kind of time frames, I mean, you don’t know what your life is going to look like 10-15 years from now. You really don’t. My son was born six months ago. And being a new parent, I don’t — I didn’t know ahead of time really what that’s going to look like. I had maybe some idea of what that looks like, but I didn’t understand what it was going to look like. So I think that as you’re making these plans for the future, I mean, it’s something to think about. Like what do you want your life to look like after FI? How or is pharmacy going to fit into that life after FI? For some people — you know, I know for Jason Long when you had him on, it really didn’t. But I think for a lot of other people that are in the profession, it will in some shape or fashion, whether that’s even something as simple as you know what, I want to work per diem for the pharmacy or the hospital or something like that. Or it could be you know what, I have reached financial independence and one of my goals for this was to do more outreach work for the profession, and I’m going to do that. These are the things to think about during the journey because, I mean, I definitely think it’s worth it to consider. And that I would say, most of the other problems that people kind of throw around — I like this term, it gets thrown around actually in the cryptocurrency communities a lot, it’s called FUD. It’s an acronym. It stands for Fear, Uncertainty, and Doubt. And a lot of the FUD surrounding FIRE really, I mean, it’s all math. Health insurance, saving for college in the future, even like long-term care, all of these are math problems that you can solve.

Tim Ulbrich: That’s right.

Jeff Keimer: But the big uncertainty, but it’s kind of a good uncertainty is like, well, now that you have all this time, what do you want to do with it? And how do you want to construct your life after this? That’s really the big thing I think a lot of people need to think about too as they’re going on with the journey in terms of any kind of uncertainty surrounding the FIRE movement.

Tim Ulbrich: That’s great stuff, Jeff. And I love how you wrap up the book when you say, “When I think about the whole concept of FIRE, I don’t really see it as a mad race to the end of work to live a life of leisure. I see it as being a tool that can help people live their best lives. Nothing more, nothing less. And what you’ll get out of it is up to you.” So Jeff, great work. We really have just scratched the surface on the book “FIRE Rx: The Pharmacist’s Guide to Financial Independence.” Congratulations on your efforts. I think it’s going to have a significant impact on many pharmacists out there. Appreciate you taking the time and the effort to put the book together and looking forward to getting it into others’ hands. So Jeff, again, thanks for the time coming on today and your efforts in putting together the book.

Jeff Keimer: Thanks for having me on.

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YFP 202: How to Teach Your Kids About Money and Investing

Posted on May 6, 2021November 2, 2022 by yfpadmin

How to Teach Your Kids About Money and Investing

On this episode, sponsored by Insuring Income, Tim Ulbrich welcomes Dylin Redling and Allison Tom, creators of Retireby45.com and authors of two books, Start Your F.I.R.E. (Financial Independence Retire Early): A Modern Guide to Early Retirement and Investing for Kids: How to Save, Invest and Grow Money to the show. Dylin and Allison talk about their FIRE journey and share practical advice and meaningful activities to teach kids about money and investing.

About Today’s Guests

Dylin Redling and Allison Tom are a married couple living in Oakland, California. After working for 17 years in the tech industry in San Francisco, they left the workforce in January 2015 and never went back.

They own and operate the website RetireBy45.com, which provides inspiration, tips, and resources for achieving FIRE (Financial Independence/Retiring Early) and making the most of the FIRE lifestyle. In 2020, they wrote and published two books: “Start Your FIRE: A Modern Guide to Early Retirement” and the best-selling “Investing for Kids.”

They love food, fitness, and travel. Their goal of “60 by 60” is to visit 60 countries by the age of 60. They are halfway to their goal with another 10 years to go!

Summary

Dylin Redling and Allison Tom, creators of Retireby45.com and authors of Start Your F.I.R.E. (Financial Independence Retire Early): A Modern Guide to Early Retirement and Investing for Kids: How to Save, Invest and Grow Money, join Tim Ulbrich on this week’s podcast episode. In this interview, focused on their book, Investing for Kids, Dylin and Allison share their creative process and some of the practical and meaningful activities that can be found in the book.

Allison digs into some of the motivations behind Investing for Kids and talks about why they choose to have superhero protagonists. She explains that she and Dylin not only wanted to make the book educational for kids, walking them through basic concepts of personal finance, but also wanted the activities in the book to be fun and exciting for kids to participate in rather than having those activities feel like more homework.

Dylin and Allison also share their own experiences, growing up with different financial knowledge and money lessons, and how those experiences plus a series of calculated financial decisions brought them to be able to retire in their early 40s. Dylin and Allison remark on their time as retirees and the freedom that they have been afforded because of it. Their goal of “60 by 60” is to visit 60 countries by the age of 60. They are already halfway to their goal!

Mentioned on the Show

Episode Transcript

Tim Ulbrich: Dylin and Allison, welcome to the show.

Allison Tom: Thanks for having us.

Dylin Redling: Thank you very much. Great to be here.

Tim Ulbrich: I’ve very much been looking forward to this interview to talk more about your story achieving financial independence and early retirement and more specifically, the work that the two of you did in writing “Investing for Kids: How to Save, Invest, and Grow Money.” And Dylin, let’s start with you only because we share an Ohio State connection since you’re an alum so go Bucks. Why write a book specifically designed for kids about investing? What was the motivation behind your work?

Dylin Redling: Yeah, well, first of all, go Buckeyes. Yes, a great connection there. It’s interesting because I’ll start off with the interesting fact that Allison and I actually don’t have kids. And so you would think that the impetus would have been we had our own kids and we taught them financial literacy and it inspired us to teach more kids. But in fact, we sort of stumbled into this book. This is our second book. Our first book is called, “Start Your FIRE: A Modern Guide to Early Retirement.” And it’s all about early retirement and financial independence, which that book just poured right out of us because it’s something that we live and we know very well. And what happened was the publisher who we worked with on that book came back to us a couple months after that book was published and said, “Hey, we have an idea for this other book. And it’s investing for kids ages 8-12. And what do you guys think because you know about investing and financial concepts, and we think you guys might be able to pull this off.” And we thought, wow, we don’t have kids, we’re not teachers, we don’t hang out with kids. We have a few friends with kids, but we don’t spend a lot of time with them. And so we thought, man, this sounds really challenging and daunting. But it was during the 2020 year of COVID, so we had a lot of time on our hands. So we thought, let’s just go for it. And we dove into it, and it was very challenging because we wanted it to be interesting for kids and informative and fun but somehow, we put our heads together and we had a really good editing team that helped us with some of the concepts to relate to kids. And that’s — and we just dove into it and we just made it happen.

Tim Ulbrich: And I think you guys did an awesome job. You know, one of the things that stood out to me as my wife and I were looking through this book as parents of four young kids trying to teach this topic of money is that’s it’s very hands-on, it’s relatable, it’s digestible, lots of activities, really cool ideas. You know, I often find myself, especially writing, talking about this topic regularly, presenting on this topic, you take for granted how you learned some of this information along the way. You know, I often think, OK, take a concept like compound interest or, you know, mutual funds or index funds or ultimately trying to determine what your retirement savings goals, any of those concepts, and it’s very easy to get lost in the weeds. And I think it’s often hard to figure out, how am I going to break this down and teach this with my children and really work through this? And so I found myself looking through this, not only learning myself of oh, that’s a really neat way to teach a different concept or a very visual way or a nice activity to apply that information. So I think as I looked through this, whether someone is more advanced in their own knowledge and understanding of personal finance or whether they feel like they could also learn from these concepts, either one I think this book could be a really good guide for them alongside of working with their child. So great work in the work that you put together with the book. And Allison, knowing your background is a technical project manager, I’m curious, I mean, how and why did you catch FIRE — pun intended here — with this topic, not only as an individual pursuit for financial independence but also in wanting to help guide others to the work that you’re doing with RetireBy45.com and with the book “Investing for Kids.” Where does the interest come from?

Allison Tom: Part of it is that my college degree is actually psychology and education. So I had all these grand ideas of becoming a teacher, an elementary school teacher, after I graduated from college. But you know, after a couple of years, it dawned on me that frankly, our teachers are woefully underpaid. And there was pretty much there was no clear financial path for me to continue being a teacher making the salary I was making, so I was living in Boston at the time and I moved back to New York where we eventually met waiting tables, of all things. And we came out to San Francisco on a whim, we were on vacation, we were in our mid-20s, we thought, alright, let’s check out San Francisco. And so I bounced around from career to career and ended up on a consulting company that eventually brought me into the technical world of the Bay Area. But you know, so being a project manager is basically being a glorified teacher. So it’s dropping people, wrangling people to do things that you want them to do but do it in a way that makes them want to be — work as a team and learn from each other. So in a way, it was being a project manager was — it had very similar tendencies as it was being a teacher. And so we had always thought, oh, it would be great to retire early, but we didn’t really know what retiring early meant. We thought, oh, 55, that seems like a really good age to retire. It’s earlier than 65, but it seems so far in the future. And living in the Bay Area, our expenses were so high that we were like, there’s no way, even if we’re making decent salaries between the two of us that we’re ever going to retire. But about 11 years or so ago, Dylin came down with double pneumonia and was in the ICU for about 10 days and in the hospital altogether for almost two weeks. And that for us was a light bulb moment because he was within a 50/50 chance that he would make it. And so you know, after that, we kind of thought, OK, do we really want to keep working for the next 25 years or so? And so we kind of like made it our goal to get out of the rat race as soon as we could. And so we kind of fell into by accident. We can talk about that later, but it just — it kind of was a natural progression from all of the things that we’ve been doing over time.

Tim Ulbrich: Yeah, that makes sense. And I appreciate you sharing some of the background and story. We’ll come back to how you got to that point of early retirement, obviously as I mentioned in the introduction, early 40s to be able to accomplish that goal, and we’ll talk a little bit about how you got to that path, why that was possible as well. And so let’s first dig into some of the book of “Investing for Kids.” Let’s start with the main characters of the book, the Dollar Duo: Mr. Finance and Investing Woman. Allison, tell us more about these two characters, how you came up with the idea, why it was important to the overall text, and how those characters can really help the learner, again, 8- to 12-year-old is the target group here, engage with the material throughout the book.

Allison Tom: Well, first of all, it was kind of funny, today is actually Superheroes Day, so —

Tim Ulbrich: There we go.

Allison Tom: It’s a perfect segue into the topic. We were actually taking a walk one day as we were writing the book, and we were talking about politics, of all things. And we were trying to figure out in the administration, whichever administration, whoever won the presidency, what each president could do to make their administration better. And so we kind of were talking and talking about of all things, the Justice League of America and who we would think would be a good fit for making this country a better country. And so the whole idea of the Justice League, kind of thought, we thought, oh, superheroes. Kids love superheroes. Let’s talk to our publisher about bringing in some superheroes. And we were like, well, I don’t know if they’ll go for that, there’s some extra graphics involved and it could be expensive, but we felt that it would really be a good way for kids to relate to finances. And so we kind of pushed hard for this idea of having superheroes teach kids finance.

Tim Ulbrich: Yeah, and that stood out to me in addition to how visual it is. This does not — especially for a topic like investing, right, can be weighty at times, it can be overwhelming, I often find myself when I’m giving a talk on this topic, starts with excitement often when we think about what the — and then you get into the weeds and you see the eyes gloss over, right, and other things. And this does not read like a textbook in any way, shape, or form. And I’m grateful for that. So thank you for the illustrations, the activities, the superheroes, but I think it very much reads like an interactive, applicable, nuts-and-bolts, important information, but how do I actually apply it and hopefully get excited about this information. Again, we’re thinking about an 8- to 12-year-old of wanting to really hopefully empower them to be excited with this for the rest of their own financial journey. And I very much read this book, as I mentioned, being a father of four boys who also lives and breathes personal finance, I really do often find myself in conversation with my boys about money. And honestly, I struggle at times with making the topic of money tangible and meaningful. And it can feel abstract, especially when I find myself trying to say and teach a principle that I very much understand but it feels more abstract as I talk it out loud and especially when you start to view it through the lens of a child. And so I like how you start the book with Chapter 1 on Money 101. You cover important topics like money doesn’t grow on trees, ways to earn money, a little bit of entrepreneurship in there, which is really cool, the history of money, where to keep money. And so Dylin, here’s the challenge that I’m seeing with my boys. In the age of credit cards, debit cards, direct deposit, online banking, digital currency, electronic payment methods, it can feel difficult to teach a child about money when you don’t see it. Right? There’s very little actual, physical cash and therefore, it can be hard to connect work and I think the opportunities from work with earning money and therefore, the opportunity to then save and see it grow. So what are some tips and strategies as you put this book together as well as the other teaching you’ve done on this topic about how can we teach kids about money in a way that it can be relatable, it can be tangible, and then hopefully it becomes memorable for them.

Dylin Redling: Yeah, you know, that’s a really good point about money being very digital in this day and age. I remember when I was a kid, one of the coolest things was my grandmother would give me and my cousins 50 single dollars for Christmas and for our birthdays. They would come in a little box just big enough to hold those 50 $1 bills.

Tim Ulbrich: I love that.

Dylin Redling: And — yeah, it was really cool. And you know, $50 back then for a kid was a lot of money. And those 50 $1 bills would last a really long time. I would take them into the arcade, into the pizza parlor, whatever. And so maybe one way to do it is to actually bring back physical money. And I don’t think the amount really matters that much. But like you said, I mean, being able to tangibly feel it, see it, and understand it, it helps a lot more if you’re using physical money. And I’ll actually give an example of that we used on our blog and in actually “Start Your FIRE” book. I don’t think we mentioned it in “Investing for Kids,” but it’s a little story I like to tell about a money lesson that I actually learned from Allison when we were waiting tables in New York. So we met in a big restaurant in Times Square, and Allison grew up with a little bit of a better financial education in her household than I did. My single mother was wonderful, but it was all paycheck-to-paycheck, there wasn’t a lot of saving or investing. So I came into our initial relationship not very good at dealing with money. So anyway, we were waiting tables. So all of our money pretty much was in tips. So we would have tons of cash. And I remember just putting the money — I would wad it up into balls, I would stuff it into all four of my pockets because I was busy. And then we would go out afterwards and Allison saw how I was treating my money, and she was like, “What are you doing? How do you even keep track of that? That’s awful.” And so she taught me this little lesson. And she doesn’t even remember this because this was 25 years ago, but it stuck out in my head. And basically, I call it the Wallet Lesson. When you take all of your bills and you put them nicely, neatly in order from small to big or big to small, whatever works, fold it neatly into your wallet. And it’s really simple, but the reason it was impactful for me is because it just got me to think about how to respect and treat money. You know, you work really hard for money —

Tim Ulbrich: That’s right.

Dylin Redling: And if you don’t treat it well, you don’t respect it, you know, that $50 might not seem like a big deal. But when it gets to $100,000 or $500,000 and you don’t have that same respect and feel for what that money represents and how hard it was to earn it, you’re not going to put it and treat it and save it and protect it as well as you could.

Tim Ulbrich: Such a good example of a behavioral move, right? The number of dollars didn’t change, but how you treated them, how you respected them, how you viewed them, and I think many of our listeners, we talk on this show often that I believe personal finance, it’s about the math and it’s about the behavior, and both of those are very important and some of those types of moves or here, teaching kids in that way, I think can be very powerful as well. Allison, Chapter 2, save your money, you have an activity titled “Be an Interest Rate Detective.” I love this. I thought this was a really cool interactive activity where you challenge the reader to work with an adult to research interest rates for a local bank savings account, a CD, so a Certificate of Deposit, and an online savings account. So again, this was just one of many example activities you have throughout the book, but why is an activity like this so important in terms of someone being an interest rate detective to experience and go through as they begin their journey of understanding some of the basics of investing?

Allison Tom: So part of it is we wanted all the activities to be something that kids could do with the adult in their life. And we didn’t assume that every child has a parent because we know in this modern day and age that families are different nowadays, and you might have two moms or two dads or a grandmother or grandfather or a guardian of some sort. So we wanted something that people could do together with — kids could do together with someone else. And we thought, oh, it’s going to be interesting because banks are closed during COVID. When we were writing the book, it was right in the heart of shelter in place. But we thought, well, you know, kids have access to — most kids have access to a computer, they can at least walk around to a local bank and banks always have their advertisements on their windows with their interest rates. But we thought it would be an interesting way for kids to see what is in their environment and practice some good behaviors like oh, what does interest rate mean? What is APR? Those are, they’re jumbled letters and so you actually learn what the acronym stands for. And so we want to make sure that kids could kind of connect their physical world to their these abstract ideas about money. So all these activities are kind of a way to get kids to start thinking about it, and we were like, oh, kids aren’t really going to want to do activities, it’s extra homework. So we tried to make them fun and things that they could actually do and feel like they were learning something.

Tim Ulbrich: And I think this was a good example where the activity really, to me, is a rabbit hole of other learning, right? So if you go to the bank and do this activity, just like you suggested, Allison, it leads to other conversations and questions like, what is the federal reserve? And what is an insured account? What does that mean? You talk about that in the book, you know, how do you explain the federal reserve? What is compound interest? Why is that so important? What is principle? What’s interest? What do terms mean? And I think it, again, leads to further conversations, which obviously hopefully spark some motivation and curiosity to learn more on this topic. Dylin, in Chapter 3, Introduction to Investing, you cover very important topics, you know, why to invest, risk v. reward — and I love the Risk-o-meter throughout the book, that was really neat — liquidity, the importance of conducting research, and connecting back to my previous comment about the difficulties teaching a child about money when it may not be tangible, you can’t see it, can’t feel it type of a mindset, I think this is another area where parents may feel challenged to teach a child the importance of investing when again, it might feel somewhat abstract and here, we’re talking about delayed gratification, right? So not spending money on something today that has an instant reward. I think back to my childhood, it was driving to the corner store, buying baseball cards, buying candy, you earn the money, you spent the money, you saw the reward instantly. So here, the activity on investing, which I thought helped to really drive this concept further, you talk about an activity of picking a stock and really going through that process of understanding what’s involved there. So talk us through that type of an activity, what’s involved in that, and why that’s important to help a child relate to the concepts of investing.

Dylin Redling: Yeah, sure. It’s interesting because I can also relate it to how Allison and I do our own investing. And most of what we do, to be honest, are buying mutual funds and index funds. We don’t do a lot of single stock buying. However, there are some advantages to just helping a child or anybody, really, think about, well, if you were to buy a single stock, what would the thought process be when you do that? We actually just wrote an interesting post on our blog just about a week ago where we had $10,000 that we wanted to experiment with. And what we did is we selected five different stocks to invest that $10,000. So $2,000 per stock. And I went through the process in that blog post of why we would do this. And it wasn’t to get rich quick or to see what would happen in a week or a month. This particular blog post talked about a one-year time frame. And it’s the same with the activity for the child. I think we used a shorter — a relatively short time frame so they could at least measure their success. At the end of the day, investing, as you know, as your listeners know, it’s very much a long-term process where you’re investing over years and decades. But again, to get the child to think about some of the things that you might want to think about with whether you’re investing in stocks or any sort of investment, what are the things that go into that thought process? And so getting back to that blog post I wrote, some of the stocks that I suggested that we test out, one was a blockchain ETF. So now that bitcoin and other coin-based just went public, those are things that we wouldn’t necessarily invest in directly. But a blockchain ETF is an example of a way you could dip your toe into that technology. So that was the thought process there. Another example was a cruise company, NCL, Norwegian Cruise Line. Now that COVID is starting to disappear and everyone’s getting vaccinated, people, there’s this pent-up demand to start traveling again. So we thought, hey, in the next year, NCL may actually start to do really good. And they even have a program where if you have 100 shares, you get extra bonus points. And so the idea is to think about all the different aspects to that investment, like how does it relate to what’s going on in the world right now? And what other pros and cons are there to that investment?

Tim Ulbrich: Yeah, and I think we share your philosophy. What I heard there is our planning team often says a good investing plan should probably be as about boring as watching paint dry.

Dylin Redling: Right.

Tim Ulbrich: At the end of the day, it’s about a long-term play. But I like this activity as a concept. You know, I remember I had a great Econ101 teacher that had us do a similar activity. And it’s very memorable because it also leads to many other conversations like well, what type of influence does my marketing have? Or I thought this was going to go this way, and it didn’t go this way. Maybe I had some overconfidence in my selection of things. So why is diversification important? So I think, again, reading it and doing it, two very, very different things. And I think people experiencing this firsthand, especially you think of an 8- to 12-year-old, a very kinesthetic learner, right, hands-on experience that moment, be able to learn through that experience. Allison, as I went through the book, many times I thought to myself, man, what if I would have had some of this information earlier? What if I would have had this in middle school or high school or perhaps even earlier? And shoutout to my parents, who did an awesome job of the foundations, grew up in a small business, felt like I had a little bit of a head start. But outside of some K-12 programs and in higher education, I would say it’s largely absent, maybe some elective courses or some opportunities. And so I can’t help but think like, why aren’t we doing more of this? Why aren’t we covering more of this in a K-12 education? I mean, this type of book, this type of experience, these types of activities would be a home run in teaching kids about money. Here, we’re taking 8-12 investing, but obviously we all know it’s broader than that as well. So question here, I’m not asking you to solve the personal finance educational system woes, but why do you think this is not more foundational to our educational system in terms of personal finance education?

Allison Tom: Right. So I think part of it is that our generation didn’t really learn this either. And so as the educators come up with their curriculum, I think honestly, a lot of adults are really intimidated by personal finance. And so it’s something that seems easy enough for them to cut out of the education system as an elective because well, if they don’t understand it, then kids aren’t going to understand it. And if they’re intimidated by it, then kids are definitely going to not understand it and be intimidated by it, so let’s not even talk about it, which actually is one of the reasons why we thought it was important to write the book. We didn’t get this education when we were growing up. I know my parents are second-generation immigrants. And so the money lessons that they learned were from their parents, who grew up during the Great Depression. And as immigrants coming over to this country, they just pooled their money and they saved and they saved and they worked 20 hours a day to make money and then they would maybe invest it in the bank, although plenty of my relatives didn’t even bother with that. So my lessons growing up were save and save and save and save. I had a little piggy bank, and I would put all my coins in from the piggy bank, but that was the only thing that I learned. And so it wasn’t until I got to college, and then I had my first credit card that I just — oof. It was bad. I did not understand the concept of paying credit cards and interest rates and late fees and minimum payments. And so, you know, I got in trouble with credit cards after I graduated. And it wasn’t until after that that I thought, oh, I really need to learn more about what’s going on here. And so I started watching some shows on PBS, but by then, you know, I’m in my early 20s at that point. My learning took a lot longer for the habits to become engrained in me. So you know, I really do think that if kids could see this stuff earlier, it would be so much more impactful. You know, I’ve talked to a girlfriend of mine, her daughter is 17 and she read the book and she was like, “Yeah, you know, I’m going to start doing the savings plan when I get a job.” My friend was laughing because she’s like, my daughter doesn’t have a job. But she was just like, she got inspired by it, and I thought, oh, if we could just get kids to learn this stuff sooner —

Tim Ulbrich: Yeah.

Allison Tom: All the great things we could do with them. So hopefully. Hopefully.

Tim Ulbrich: Yeah, and I love that, to that point, Allison. I think it was early in the book, you have the reader go through an activity where they identify problems, things that could be improved upon, right? And one of the things I often say is that any business is a solution to a problem, and that solution is one that people care about and are willing to pay for. And you know, I love that because I think for a child, like if they can think about, what are some things that could be done better? You know, one of them you proposed in the book, which was really cool because we recently just bought this — or actually we got it as a gift for our kids from our family — is you mention like chess. Really hard game for kids to play, kids to learn. Why isn’t there a solution out there that can make chess easier to play? Sure enough, there is. There’s a card game where you draw cards, you learn the basic moves of chess. So things like that, I think you’re inspiring some of the creative thinking, the problem solving, and laying some of the seeds of entrepreneurship or even for those that don’t own their own company, which would be the vast majority of folks, intrepreneurship, how can you be a problem solver within your organization? And how can you create solutions that make you a valuable asset within that organization? I want to shift gears a bit to connect some of the work that you have in “Investing for Kids” with what you cover in your site, Retireby45.com. You mentioned your other FIRE book as well. And I got the impression that you both, you believe that everyone could put together — especially an 8- to 12-year-old reading the “Investing for Kids” book — put together a plan for FIRE, again Financial Independence Retire Early — by the age of 45. So Dylin, our listeners know firsthand that time in the market equals success, and that compound interest, as you mentioned in the book, is the eighth wonder of the world. So we know the math is possible if someone starts at an early age. But why do you think it’s important that someone plans for FIRE by the age of 45?

Dylin Redling: Whether you’re able to retire in your 40s or your 50s or you do a traditional retirement in your 60s or even beyond, Allison’s dad, for example, is 70 now — or slightly older — and has no intentions of stopping working even though Allison suggests that he stop and enjoy life. But he’s got a job that he really loves. And so there’s a lot of people out there that are like that. So we love our FIRE lifestyle and the fact that we left our W2 jobs in our 40s, but we know it’s not for everybody. But what we do also know is that the concepts of Financial Independence are good for anybody, no matter when you might want to retire. And those concepts are really about doing the right thing with your money. So it starts with saving, it starts with being somewhat frugal — and when we say frugal, we don’t mean living a spartan lifestyle. We just mean not going crazy with money with spending on things that you don’t want or that you don’t need or you feel like you have to keep up with the Joneses and get a brand new SUV every two years. So there’s that, and of course investing wisely. And you know, we have another story that we write out on our blog, which kind of I think can be somewhat inspiring to people who are in their 20s and maybe haven’t really done anything with their finances yet. We, as Allison alluded to earlier, kind of our story is we met in New York and then we moved to San Francisco. And we were in our mid-20s at the time. And we still hadn’t invested a dollar yet. And it wasn’t until our late 20s that we got “real jobs” with a 401k plan and that sort of thing. And so it wasn’t until our late 20s that we really started investing. And our entire investment life cycle, if you will, was about 17 years from our late 20s to our early 40s. And in that time, we just were so diligent about dollar cost averaging, we did — we invested into both our 401k, our IRA, and a taxable account once we got some extra income literally on a weekly basis for years and years and years, no matter what the market was doing. Through the 2001 .com crash because we’re both working in that industry and of course through the ‘08-’09 recession. Never stopped. And so those kind of habits, again, are good for anybody no matter what your retirement goals are, just really those financial habits are going to put you in a great position.

Tim Ulbrich: Yeah, and I’m glad you shared that, Dylin. One of the questions I had for you was I read your story of not really late 20s, early 30s getting serious about investing, but retired or achieving FIRE by 43, 44, so short window of time, right? We tend to think of a very long trajectory of savings. You mentioned 17 years. So my question was what was the secret sauce? And if I heard you correctly, it was tax-advantaged accounts, 401k’s, IRAs, some taxable accounts and dollar cost averaging and being consistent. Is that fair?

Dylin Redling: Yeah. You know, a couple other things we did — we did the phrase “side hustle” is really popular now. But when we did it, we just called it a side business. This was in the mid-2000s. I came up with an affiliate marketing business that I ran on the weekends. And it ended up being a third income for us. So there’s things like maximizing your income. And then another concept — I’ll shoot it over to Allison to talk about — is geographic arbitrage. And that helped us kind of move about nine years ahead of schedule. Do you want to talk about how we did that?

Allison Tom: Sure. So geographic arbitrage has a lot of different meanings in the — for people. And the gist of it is that you leverage your current salary and move to a lower cost location. And so most people think that is oh, I’m going to make my United States salary and move to Thailand or Costa Rica, where the cost of living is exceedingly low. We did it by moving from San Francisco to Oakland, California, which geographically is a 10-mile difference but at the time, we were able to save about 50% on our housing costs.

Tim Ulbrich: Wow.

Allison Tom: So yeah, it was pretty insane. For being 10 miles away, two or three train stops away on our BART system, we were able to pay off our condo in Oakland in cash by selling our place in San Francisco, which alleviated all the mortgage payments, the increase in property payments and our insurance went down as well. So that, Dylin calculated later, saved us probably about nine years of working because our mortgage in San Francisco was so astronomical that just cutting 50% off just pushed us into the financial independence sphere that much sooner. So it’s things like that. Obviously not everybody is going to be able to save 50% of their housing by moving 10 miles away, but there are other ways to do it. You can do things like house hacking where if you have space on your property, you could build an extra unit and rent it out or if you have an extra bedroom, you could rent it out and have a roommate or Airbnb it. So there are ways tod do it without going through the extreme example that we had. So there are plenty of ways to cut costs in your life that are relatively painless, that we’ve talked about all the time, so there are just different ways to do it to achieve FIRE. And some people don’t even choose to do the early retiring like my father is the example. So retirement is really more of the optional part. We’re not saying you have to retire, you have to leave your job and just sit around drinking mojitos all day long, although it’s certainly not a bad lifestyle. But you know, the retiring part is up to the individual.

Tim Ulbrich: Yeah, I’m glad you said that, Allison, because I know many of our listeners love what they’re doing as pharmacists and they worked hard, and they got a doctorate degree and they have student loan debt and they invested in that education. And so my read is that many pharmacists are captivated by the idea and the power of financial independence. And you know, I believe that’s a goal we all should strive for for a variety of reasons with RE, Retire Early, being one of those perhaps reasons, but other things as well in terms of why that financial independence may be important. So nine years, nine years was estimated from that one decision, which I’m coming full-circle, Allison, about what you shared at the beginning of Dylin being in the hospital with double pneumonia. And when you start to think about the value of time, I mean, nine years and doing some of those calculations and what does that mean for one’s personal situation, I think that’s a really powerful example of taking something that can be mathematical or objective and looking at it in a different mindset. If we were to make this move or this move, what does that mean for us in terms of timeline to retirement, working part-time, pursuing another opportunity, what does that mean for one’s goals towards financial independence? I’m glad you discussed geographic arbitrage because one of the things we see in our profession in pharmacy is that unfortunately, a pharmacist’s income usually does not translate with cost of living. So here I am in the Midwest and that income for a pharmacist in the Bay Area might be a little bit more for a similar role but nowhere near the cost of living difference between Columbus, Ohio and San Francisco, California. So I think this is a move, especially for many of our listeners that might be saying, you know, ‘I’m making a decent income, but I’ve got a lot of work to do on student loans, I want to invest, I want to buy a home, I want to do this or that. And at the end of the day, there’s only so much income.’ So is a move, whether it’s near, within 10 miles, or something a little bit more significant, is that an option that somebody may be able to pursue? Allison, what have you guys been doing since achieving FIRE? You know, what’s been the goals, what’s been the priority, how have you been spending time? I think that’s one of the other common objections that comes up is like, if I retire at 45, like I don’t even know what I would do with my time. Tell us a little bit about that journey since you guys have achieve FIRE.

Allison Tom: So it’s funny, we — so we FIREd quite by accident. We were both working in tech startups, and Dylin got laid off and then I got laid off about five weeks afterwards. And so we kind of took the time after we were both laid off to travel a little bit. That was one of the things that two people who are working can’t always schedule, coordinate their schedules, to take some time off. And so we thought, alright, this is the perfect time. We went to Europe for two weeks and did a cruise around the Mediterranean and had a blast and then came back and thought, alright, we’ve got to get back to work. So we went about — we went on interviews and we just saw just how miserable people were at their jobs. Just so stressed out, and I interviewed with this one guy who was like, “You need to tell me who said this about us so I can go talk to them.” I’m like, I don’t want to work for you. You’re scary. And so you know, the three months turned into six months and then nine months and then Dylin figured out kind of like back of the envelope math, figured out that we could actually retire without having to go back to work anymore. He stumbled into the 4% Rule, which we still hadn’t at that point heard the term FIRE before. You know, the first few years we did a fair amount of traveling domestically. Like we would go back to visit his mother and my father, who both live on the East Coast, which is one of the things you just don’t get time to do when you’re working is spending time with family. And so you know, if we would go back East, we would maybe spend two days with each parent because they don’t live that close to each other. And now, we can actually go and spend a week with each parental unit. And that makes a big difference because, you know, they’re getting older and living across the country, it’s harder to connect with them. So we do a lot more slow travel where we don’t have to feel rushed between people. And then it’s funny because we — our retirement has changed as time goes by. So for people who are concerned that oh, what am I going to do with my time? Your time is yours. You can now make your own schedule. And that, to me, is the beauty of not just financial independence, it’s financial freedom because you can choose what you want to do. And so you know, the first two years were traveling domestically, the second two years were more about traveling internationally. And we had two cats that passed away at 19. So for us, they were like our kids. And so we did not do a lot of traveling away from them until they passed on. And so once they did, we’re like, alright, we’re going to go crazy and go travel around the globe. And so the last — and then the last two years have been focused on writing books and going to financial conferences and kind of learning from others and then applying that and communicating out to audiences like yours. That’s the beauty of the time being yours is you can make it whatever you want to do. We also do a lot more work with our community that we never had time to do when we were working. So we’re a lot more invested in our neighborhood, and we spend more time working with businesses in our neighborhood to bring in more business. So having that luxury of time means you can go explore whatever interests pop up. So you know, did we ever think that we would be working with small businesses two years ago? Probably not. But now we are, and we’re advocates for small businesses in our neighborhood, and that’s something we would never have thought we would have done when we first retired.

Tim Ulbrich: That’s very cool. And I read as well your goal of 60 by 60. Sixty countries to visit by the age of 60. If I understand it, you’re about halfway through. Looking forward to following your journey. I’m hopeful you’ll be blogging about it along the way as well. Dylin, I’m going to throw the last question I have over for you. And one of the things I think about when it comes to early retirement and achieving financial independence or the FIRE movement is that it really does require delayed gratification and at times, you mentioned the word frugality earlier. And that frugality can be at various levels. As you mentioned, we’re not necessarily talking spartan type of frugality. My question here though is how do we strike the balance? You know, whether it’s for ourselves or teaching our kids about saving and investing to take care of our future selves but also valuing and making sure we understand that it’s important that we enjoy some of the money along the way as well. I find myself often struggling with this individually of, OK, I know I need to take care of my future self and probably sometimes I do that at the expense of the experiences and the enjoyment today. And I think striking this balance is really important. What are your thoughts on that?

Dylin Redling: You know, I’ll actually plug a couple of other books besides ours that I really like. One is “A Simple Path to Wealth” by Janelle Collins, which I highly recommend. And another one is actually one of Allison’s favorites. It has a funny title, it’s “I Will Teach You to Be Rich” by —

Allison Tom: Ramit Sethi.

Dylin Redling: Ramit Sethi. And we saw him speak. He was a keynote speaker at FinCon a couple years ago. And one of the things that he said, which really resonated with me and it goes to your question, is spend liberally on things that you enjoy. But hold back aggressively on things that are not important to you. And it’s a very simple concept. But again, it goes directly to your question, and it’s really — maybe you or your kids or whoever’s thinking about this makes a list. Here are the things I’m passionate about. Here are the things that I really enjoy. I love travel, I like eating out at restaurants, I like entertainment, sports, whatever it is. And I’m going to set my budget to focus on those things. I’m going to be OK — maybe I’ll go to a World Series game because I’m a huge baseball fan. Or I’m going to set a goal to go to every baseball park in America. You know, whatever that goal might be. Conversely, think about the things that aren’t that important to you like maybe a brand new car is not important to you, so you drive your car for 10-20 years and you really just never focus on spending a lot of money on that. And so those are the concepts that I think are something to really think about. And for us, that’s what we’ve always done. When people look at our lifestyle from the outside or even some of our friends, you know, they may think, wow, we’ve always lived in pretty expensive apartments — or condos or houses, so they might think, wow, they spend a lot of money. But if you look a little deeper, like we had a car for almost 20 years. We had a Volkswagen Jetta. We just recently got a new-to-us couple years old Toyota Corolla. So there’s an example where we just — you know, having a brand new car wasn’t that important to us. But again, we have the 60 by 60 goal. So travel is really important to us. And we have no problem spending that extra money to go travel for a few months and really try to see the world because that’s something that we’re passionate about. That being said, when we do travel, we try to — we don’t stay at four-star hotels because part of our kind of nature is to also find some deals here and there and to just spend consciously, to just spend our money kind of wisely.

Allison Tom: We prefer to spend money on the experiences rather than the hotel room that we’re putting our suitcase in.

Tim Ulbrich: Yeah. And I was at that keynote that you were at, and with Ramit, and I’ll never forget it. I mean, the concept that he talks about in “I Will Teach You to Be Rich,” money dials, right, is find the things that are of value to you and dial it up. And find the things that are not and dial them down. And you know, I remember hearing that, and I was like, heck yeah. It just makes so much sense. And you know, to the comment of experiences and even the literature really showing happiness related to money, it’s experience and giving typically are the areas where we see that biggest connection. So Allison and Dylin, I really appreciate you guys taking time to come on the show. Kudos on the work here with “Investing for Kids,” I really enjoyed it, as well as the work that you’re doing at Retireby45.com and your other book, “Start Your FIRE: A Modern Guide to Early Retirement.” As it relates to the book “Investing for Kids,” I hope our audience will pick up a copy of this, available at Amazon, Barnes & Noble, many other online vendors as well. I really did find it engaging, it was rich with relevant information, practical exercises to apply the information, as I mentioned, certainly does not look, feel, or read like a textbook. And so I think many in our community are going to find it helpful. What’s the best place for our audience to go to follow the work that the two of you are doing?

Dylin Redling: Well, our — I’ll plug our website, and I’ll have Allison plug our Instagram account. Retireby45.com is our website, and we blog there on a once or twice a month with a fresh new blog post, and we have a bunch of stuff on there, courses and other things. And then Allison’s been working on really putting together a pretty cool Instagram account.

Allison Tom: So we have Instagram and Twitter both @retire_by_45. Yeah, it’s been an interesting challenge trying to get into the social media, the social media space.

Tim Ulbrich: Very good. We will link to both of those in the show notes as well as the Retireby45.com as well as the books that we’ve mentioned, not only your books but the others that you referenced as well. So the two of you, thank you again very much for your time. I really appreciate it.

Allison Tom: Thanks, Tim. It’s great.

Dylin Redling: Thanks.

Allison Tom: O-H

Dylin Redling: I-O

Tim Ulbrich: I-O!

Dylin Redling: Thanks, Tim. Great talking to you.

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