June 2022 – Your Financial Pharmacist

YFP 262: How Two Pharmacists Paid Off $250k of Student Loan Debt

Posted on June 30, 2022November 2, 2022 by yfpadmin

How Two Pharmacists Paid Off $250k of Student Loan Debt

Kristen & Nate Hedrick to discuss their journey in paying off $250k of student loan debt, their motivation and why for aggressively paying off the debt, and the role a side hustle and real estate investing played to help them achieve their goal.

About Today’s Guests

Nate and Kristen Hedrick met at Ohio Northern University and were married in 2013. Nate is a pharmacist with Medical Mutual and a real estate agent with Berkshire Hathaway. Kristen is a pharmacist with Bon Secour Mercy Health. Together, they graduated with over $300,000+ in student loan debt. They enjoy visiting National Parks as a family. Today they live in the suburbs of Cleveland, Ohio, with their two daughters, Molly and Lucy, and their rescue dog Lexi.

Episode Summary

How do you go about aggressively paying off a $250,000 student loan debt without feeling overwhelmed? To help answer that question, YFP Co-Founder & CEO, Tim Ulbrich, PharmD, is joined by fellow pharmacists Nate Hedrick, PharmD, and Kristen Hedrick, PharmD, BCACP. The Hedricks tell us how they successfully paid off over $250,000 in student loan debt, their motivation for tackling that debt, the pivotal moment that sparked making repayment a priority, and the role a side hustle and real estate investing played in their journey. After a brief history of Kristen’s background, listeners will hear what motivated the couple to take an aggressive stance on their debt repayments, how a life-changing event and one book altered their financial philosophy, and how the pandemic helped them focus on their strategy. Nate and Kristen share their reasons behind paying their debt off now instead of putting their money toward investments and how they found an additional $3,443 per month to make their goal attainable by reducing expenses and increasing their income. This earnest conversation takes us through the possibilities of working full time, raising a family, making investments, and paying off a huge debt, all at the same time. Nate and Kristen talk about their life after paying off this debt and share some advice for pharmacists who may be struggling with a similar debt situation.

Key Points From This Episode

Kristen’s background, how she ended up in pharmacy, and what she’s doing now.
What their student loan debt looked like at its peak.
How student debt can creep up and surprise you.
The initial feelings the couple had towards their debt and their plans to pay it off.
What motivated our guests to come up with an aggressive plan for paying back their debt.
How a life-changing event (and a book) in 2016 changed everything.
The global pandemic as a moment of inspiration.
What they had to change in their lives to be able to make the monthly repayments.
Paying off debt now versus investing for the future.
The way the couple used ‘double motivation’ to reconcile an age-old debate.
How our guests were able to raise a child, invest, and pay off a huge debt at the same time.
Nate’s decision to pursue real estate investing and what that meant for their debt repayments.
The approach the couple has taken to make real estate investing work for their family.
Other strategies that helped to pay off the debt aside from cutting expenses and real estate investments.
The benefits of receiving objective, third-party advice.
What life is like now after paying off their massive debt.
How paying off the debt helped Nate make an important career decision.
Kristen’s advice for the pharmacist struggling with debt.
Nate’s parting words of wisdom.

Highlights

“That was the worst that it got and, that same month, for what it’s worth, we had a negative net worth of $306,000. We had about 10k to our name and a bunch of debt to add on to that.” — Nate Hedrick, PharmD [0:03:44]

“I had no plan early on until we developed the ‘why’, which was getting our financial house in order so that we could live the way that we wanted to.” — Nate Hedrick, PharmD [0:06:23]

“The expenses were the catalyst, and then it was the extra income side of the equation that really boosted everything to actually make it possible.” — Nate Hedrick, PharmD [0:13:37]

“Spending more time with the kids without having that student loan debt, and being able to do more things and travel more, it feels like it’s definitely paying off in the end, with making some of those sacrifices.” — Kristen Hedrick, PharmD, BCACP [0:17:16]

“One great thing about real estate investing is even if something happens, you still own a building.” — Kristen Hedrick, PharmD, BCACP [0:22:00]

“Find something that is going to supplement your life that the more effort you put into it, the more reward you get out of it. That is a really great way to set yourself up for success.” — Nate Hedrick, PharmD [0:29:32]

Links Mentioned in Today’s Episode

Episode Transcript

[INTRODUCTION]

[0:00:00.4] TU: Hey everybody, Tim Ulbrich here. Thank you for listening to The YFP Podcast, where each week, we strive to inspire and encourage you on your path towards achieving financial freedom.

This week, I had the pleasure of sitting down with Kristen and Nate Hedrick to discuss their journey of paying off $250,000 of student loan debt. In this show, we discuss their motivation and why, for aggressively paying down the debt. What the pivot moment was that motivated them to make the debt repayment a priority, how they were able to come up with more than $3,000 per month extra to throw towards the loans, and the role a side hustle and real estate investing played in helping them pay down the debt.

Before we jump into the show, I recognize that many listeners may not be aware of what the team at YFP Planning does in working one-on-one with more than 240 households in 40-plus states. YFP Planning offers free only, high-touch financial planning that is customized for the pharmacy professional.

If you’re interested in learning more about working one-on-one with a certified financial planner may help you achieve your financial goals, you can book a free discovery call at yfpplanning.com. Whether or not YFP Planning’s financial planning services are a good fit for you, know that we appreciate your support of this podcast and our mission to help pharmacists achieve financial freedom.

Okay, let’s jump into my interview with Nate and Kristen Hedrick to learn how and why they aggressively paid off $250,000 in student loan debt.

[INTERVIEW]

[0:01:23.4] TU: Kristen and Nate, welcomed to the show.

[0:01:24.7] NH: Hey Tim, good to be here.

[0:01:26.1] KH: Hi.

[0:01:27.0] TU: So Nate, obviously, you’re a frequent flyer. You’re old news so I’m not even going to spend a whole lot of time focusing on you. Many folks have heard you on the podcast before, whether it’s this show, talking about home buying, whether it’s the Real Estate Investing podcast on Saturday mornings, of course, Nate being the cohost of that show.

So, we’re going to focus a little bit more on Kristen’s background as we get started, and we’re going to jump into more about your debt-free journey and how ultimately, you guys were able to knock out $250,000 of debt, and what that has meant to you guys personally, to your family, as well as also the financial goals and plan that you have going forward.

So, before we jump into that debt payoff and that journey, Kristen, let’s start with you. Tell us a little bit more about your background, what drew you into pharmacy, where you went to school and the work that you’re doing now.

[0:02:13.0] KH: Yeah, thanks. I had some extended family members in pharmacy so I just thought it would be a good career path, and looked at the different pharmacy schools and found my way to Ohio Northern in the middle of cornfields, and no cellphone reception and for some reason, that’s where I wanted to go. I think we all know it’s a great campus and community there.

So went to Ohio Northern and that’s where Nate and I met. I completed my residency here in Cleveland, Ohio. Now I work for a large health system doing population health on clinical pharmacy, and following patients with their chronic disease states and helping them with their medicines, and helping in here in Cleveland.

[0:02:50.8] TU: Kristen, it’s funny you mentioned the cellphone reception in Ada Ohio, Ohio Northern University. I remember, I maybe as a P3, P4, just a few years ahead of you guys, but it was a big deal that they added a tower on campus, and I think we got one bar, maybe two bars, but not a whole lot going on in Ada Ohio. I had the chance to go back recently and take Jess and the boys. It was so fun to see campus and really relive some of the memories in that place.

So Nate, tell us about the student loan debt at its peak? What were you guys working with and then, from there, we’ll get into more of some of the motivation and journey of paying it off.

[0:03:26.4] NH: Yeah. So, when we graduated and totaled everything up and, I think it was even a month or two after we graduated that I even wanted to look at it. Because it was the initial plan of, “I just won’t look at it and then it won’t be a problem.” And when we totaled it all up, looking back at our highest count, we were at $316,000 in student loan debt at one point.

So, that was the worst that it got and, that same month, for what it’s worth, we had a negative net worth of $306,000, so we had about 10k to our name and a bunch of debt to add on to that.

[0:03:54.8] TU: I’m curious, did that surprise you guys? One of the stories I often share is that, it’s somewhat embarrassing, but when I was in pharmacy school, it felt a little bit like monopoly money, and it was all of a sudden when I crunch the numbers and I was like, “I owe how much, and how much interest, and what’s my net worth?” It just caught me off-guard, and it shouldn’t have. Were you expecting that or was that number somewhat a surprise at that point?

[0:04:15.4] NH: I agree, it was just totally like made up funds, you know? Every quarter or every semester, I’d have to go and submit for what I needed, and it was the tuition plus a little bit of living expenses, and I would just submit for it and it would get added into this imaginary pile of money somewhere, and I don’t think I ever checked the balance while I was in school, I don’t know why, I don’t know why I would have.

[0:04:35.7] TU: You’re dating yourself Nate, when you talk about quarters by the way. So that ain’t a thing anymore.

[0:04:40.7] NH: Old school, how I work.

[0:04:42.7] TU: Kristen, tell us about the plan that you guys had for the student loans after graduation, after you got married in 2013. How did you feel about the debt overall and then, what was the thought in that moment about how are you going to pay this off?

[0:04:55.7] KH: I think our main thought was it’s overwhelming. It’s just such a large amount that it feels so ambiguous that we thought that we had this plan. We had always wanted to try to pay it off within 10 years. I think I was a little more on track of, “Oh, I want to pay this off in 10 years” and we had some advice from a previous financial advisor that had said, “Oh, it’s just student loan debt, everyone has it, it will be okay.” We changed it to 30 years so we could have minimum payments but always pay extra if we wanted to and, ultimately, we just found that that eventually did not work as well for us.

We needed a more targeted plan to get us on track with what we were doing. We had always been paying the amounts, but I think it was how we were planning to target to actually pay it off. It always felt like this end date that we were never going to get to.

[0:05:44.4] TU: One of the questions I like to ask folks, and we’ll talk more in a little bit about how aggressive you guys were to really get a chunk of this paid off, but I like to understand, what’s the why? What’s the motivation behind it? It’s one of these things, as you mentioned, you can take them out 25, 30 years if you want to. Obviously, you guys made a good decision to be much more aggressive. Tell me more about for the two of you, for your family, why was that important?

[0:06:08.2] NH: It’s funny you say that because I think until I had a why, it wasn’t important. Like I said, I didn’t look at it, I barely wanted to check it. I think at one point in residency, I put myself on the graduated repayment plan and my only motivation was because the payment today is lower and that seems like—that seems better, right?

I had no plan early on, until we developed the ‘why’, which was getting our financial house in order so that we could live the way that we wanted to. Travel, work less, work in the capacities that we wanted to, all the things that have led us to this point. Until I had that in place, there wasn’t a why and it didn’t matter.

[0:06:42.7] TU: Yeah, I think that’s such a good encouragement for folks that are in the midst of their journey, or maybe have wondered into the repayment or for that matter, the financial plan at large, and feel like, “Hey, maybe I’m progressing but not as quickly as I would like to. I’m a little bit stuck.” Really going back to what gets us excited, right?

The topic of money, money is a tool. So, what gets us excited, why do we care bout this topic of money, why do we care about debt repayment, why do we care about saving/investing for the future, why do we care about giving? And then using that as the motivation to drive some of the action and the plan going forward.

So, Nate, what happened in 2016 that was really a motivation to say, “Hey, we’ve got to do something different?”

[0:07:22.0] NH: Yeah, that really is when it changed for us and, again, we’d been paying on them and, every once in a while, we get the idea that, “Hey, we should throw in some extra money because these loans are huge.” We would do it for a couple of months and I feel like we just were inconsistent. But in 2016, we got pregnant with our first child and, again, I tell this story on the podcast several times, but I read Rich Dad Poor Dad and it completely changed my mindset about money and what I wanted to do with money and what I wanted to do with my life and work, and just how I looked at finances.

It’s crazy it took that long to figure that out but I had no formal financial education. We go through pharmacy school, not business school, and until I read that book and changed how I wanted to approach finances in general, again, I didn’t have that why behind it. I didn’t have that motivation, so that’s what really jumpstarted us. I think it was a combination of, “Oh crap, we have a kid on the way and we have to pay for a lot of stuff” and again, this mindset shift that occurred, at least for me.

[0:08:16.1] TU: Kristen, I’m curious. I can just see Nate, because I know him now, I could see him like this totally nerding out over Rich Dad Poor Dad and coming to you with all these ideas and, “What about this, what about that?” Were you equally on fire in that moment or was there different motivations that really led you to say “Hey, we’ve got to do this differently?”

[0:08:34.4] KH: Yeah, I think I had always wanted to pay off the loan. Again, it was just so—it was a large amount that I think I didn’t know how to get there. When Nate said he read Rich Dad Poor Dad, he kept talking about it and talking about it. I think finally, in 2019, I read it, I said, “Oh, this is a really good book, I should have done it sooner”

So, I think we are a really good team together, in trying to work together and get those payments down, and Nate was very much more into it. I think at the time, I was like, I’m growing a human, I’m just going to keep doing what I’m doing, and that was the time that Nate entered real estate. He’s told this story before but, I’m six months pregnant and he goes, “Oh, I think I want to get my real estate license.” This is a time most people would have been getting board certified.

He’s like, “I’m going to go get my real estate license.” He had classes multiple times a week and I’m pregnant, trying to take care of the house and do all these things, getting ready for a baby. So, it paid off in the end and I’m glad that he did it, but I think in the moment there was also that stressful situation for me, but he’s a jack of all trades. He does lots of things and keeps busy, so it’s good.

[0:09:36.0] TU: We’re going to come back to that in a little bit, of what role did that play, Nate, for you, in terms of pursuing that, as you call, a side hustle. It’s much bigger than that, the work that you’re doing now, obviously, but why was that so instrumental, and not only to the numbers but also to some of the mindset and the motivation behind the financial plan and the journey that you were on?

I want to first talk about, though, Nate, walk us through what happened in the pandemic that really allowed you guys to say, “Hey, we’re going to get specific about when we’re going to payoff a big chunk of this debt, what it’s going to take each month.” Talk to us about what happened during the pandemic that led you to the decision around how you were going to pay off a huge portion of that debt.

[0:10:15.5] NH: Yeah, so, like I said, 2016 is where we started getting pretty serious, but even then, it wasn’t truly resolute plan, right? It was just, “Okay, we really got to be focusing on throwing extra money at this” and we did a lot better. But in 2020, we had a month or two in the pandemic and realized, “Okay, we’re not traveling as much, we’re not going to be going out to eat as much, everything shut down, let’s use this time to take the extra money that we’re not spending and really attack that loan.” At one point and, again, we were talking this morning, it was right at the end of the year, we said, “Okay, this thing is not going away, let’s really use next year to just get rid of this loan.”

So, right in December of 2020 and going into the beginning of the New Year, we said, “Let’s figure out a number. What is it that’s going to take to get this loan knocked out at the end of the year? Who cares of the balances right now, we’re going to do it in a year, let’s make sure to get it done.” So, we did some crunching of some numbers and basically said, “Okay, if we can pay everything we’re paying today but also throw an extra $3,443 at the loan every single month, mine will be gone by the end of the year and it will be just knocked out.”

So, that number, I wrote it on the big note card over here and it became like—actually got it here, I’ll grab it. Here you go, so there’s the evidence, right? 3,443. So, that became—I put that everywhere and it became the mantra of like, “If we can do that every single month, this will be gone” and that was such a huge motivator for us.

[0:11:32.8] TU: I don’t want to brush over that, because we’ll talk about it, I mean, that’s a big number, so we’re going to talk about the how of that, but tell us more about how you were able to get to that conclusion and get on the same page with that conclusion? What I’m specifically getting at here is, was it a, “hey budget status quo and we’re going to find ways to grow our income”? Was it a, “we’re going to cut some expenses”? How did you guys work through the details, Kristen, to ultimately say, “Yup, it’s $3,443 and this is how we’re going to do it.”

[0:12:04.5] KH: I think it was a little bit of a combination of both. During the pandemic, we had a little bit more interest. I think also, in doing some real estate investing and had an opportunity, we said, “Okay, do we take this money and do we put it towards real estate or do we pay down the loan more?” and eventually, we decide real estate, but we said, “Hey, like, maybe we should aggressively pay off our loan a little bit more if we are traveling and doing these things.”

So, I think in December, we had a lot of discussion about it and both of us just decided yes, we both want that to be our goal, that starting January 1st, we really start cutting back on what we’re spending. I think, really, from any area that we could, we went thorough our budget, we scrubbed it. We said, “What are we spending money on, what are the subscriptions we have, what can we cut out, what can we save money on?”

“Which of those little purchases can we just stop doing? Which things do we think that we need, can we actually hold off on buying?” and then, certainly, Nate’s side hustle helped with that as well. So, I think it was both a combination of, let’s cut back to really bare minimum spending. We weren’t eating out, we weren’t getting the extra cups of coffee from Starbucks, we weren’t doing the purchases at Target that said, “This is what you need, and this is in the dollar spot.” We just stopped all of that. And Nate worked as hard as he could with his real estate; it really is a motivator to keep putting that extra money towards it as well.

[0:13:22.3] NH: Yeah, I think we quickly realized that trying to find for an extra $3,000 in the budget. We weren’t over spending by three grand every month, that was not it, so it became my challenge to say, “Okay, well, how can I work at this side hustle to really get us the rest of the way?” So, the expenses were the catalyst, and then it was the extra income side of the equation that really boosted everything to actually make it possible.

[0:13:44.7] TU: Yeah. What I love about that is, certainly, cutting expenses, especially short-term, if you’re focused on a goal, you were talking about debt repayment, can be really valuable but it also can be a grind. I mean, it can be soul sucking sometimes, you know?

I think that one of the things I love about the approach that you took is that if you’re moving both sides of the equation, there’s a different level of momentum and mindset that come from that. Maybe the numbers aren’t as big for other folks that are pursuing ideas, but if you can both focus on, “Hey, how can we draw the income and how can we keep the expenses?” you all of a sudden feel like you’re picking up momentum in a significant way, but I don’t want to brush over that number.

$3,443 per month, that’s, for many pharmacist, if we assume, hundred, $120,000 of wage, it’s like, it’s about half of take home pay. I mean, for a lot of folks, we look at that at a monthly basis so that’s certainly commendable, and that’s a big number. Nate, I want to ask the question that I know the listeners are thinking, which is Nate, Kristen, you guys are smart. $3,443, why not invest that money?

Why not put that out so we could see that grow and compound over 20, 30, 40 years? Like, how did you guys reconcile this ongoing debate, which is maybe a little bit of a moot point right now because the administrative forbearance, but this ongoing debate of, “Should I pay down the debt or should I invest for the future?”

[0:15:03.9] NH: Yeah. This is something we struggled with for years. Should we go out and buy another rental property or should we just take this money and throw it at the loan? That’s been the back and forth. Like Kristen was saying, we were evaluating whether we should be doing real estate or paying down the debt.

We challenged ourself to say like, “Can we do both?” and so, for me, again, working and trying to add extra income to the equation. It became a game of, “Okay, if I can make $3,000 a month extra, that’s going to get us there. But if I can make 4,000 or 5,000, that’s another couple of grand I can put at the real estate investing budget.”

So what we have, we had a bucket in LI, in our LI bank account, that was the real estate investing fund and we still have that, we still use it, it is a great way to separate our money. I had to pull from that in any month that I didn’t make enough income to really make the difference, I had to pull out of that. So it was like this, I was afraid to give it up. So it became a challenge to myself and to us.

We need to cut our expenses and raise our income in a way where I can keep padding that account, that bucket, while also meeting our number. It was a double motivator of let’s get rid of the debt and I don’t want to lose sight of the other thing that I’m really passionate about. So, let us find a way to do both.

[0:16:09.8] TU: Kristen, we both know that kids could be expensive. We love them, but it can be very expensive. I think one of the challenges folks have that are raising young family, whether it is debt repayment, whether it is achieving other financial goals, is it’s an expensive phase of life, right?

The data suggested it’s multiples of hundreds of thousands to be able to raise a child, and I am curious of how you guys were able to reconcile this with young ones? I know you guys are so active and intentional as a family now. When you’re looking ahead to say, “Hey, this is a sacrifice now but it is going to allow us to really push our goals forward as a family later in the future.” Tell us about your thoughts on that.

[0:16:46.9] KH: For sure. I remember being pregnant in 2016 and just thinking like, “Oh my gosh, I already feel like we’re living paycheck to paycheck, how are we possibly going to raise a child and afford daycare?” We even joke now, our big expense is mortgage. Childcare and student loan debt was there, our mortgage was the least expensive of all of those.

So yes, certainly having kids is—we always felt like we knew we wanted to have kids and it was just figuring out how do we plan for that. I think, especially now, spending more time with the kids too without having that student loan debt and being able to do more things and travel more, it feels like it’s definitely paying off in the end with making some of those sacrifices or making those adjustments.

Really, that mindset change, I was joking this morning, like you said Tim, it’s mindset changing. In 2021, we actually kept a list of things of, what are things we didn’t buy that we’re going to buy when the student loan is paid, and I was laughing because I’m like, “I still haven’t even bought these things yet.” We just found that maybe we don’t actually need them.

[0:17:44.7] TU: Yeah and some of those behaviors. That’s what I always encourage folks, whatever goal you’re working towards, some of those behaviors you implement in that season will stay with you for the long run. Certainly, there’s a time and place to loosen the reigns a little bit and make sure we’re living a rich life today as well as planning for the future, but we’ll talk about what that looks like for you guys.

But some of those behaviors can stay longer, which I think is really an incredible part of the journey. I want to touch on two things we’ve mentioned I think play a really important role to this journey, which is, number one, that you talk about the side hustle you had working full-time as a pharmacist, as a real estate agent that allowed you to accelerate some of the goals and momentum.

Then the second being the investing in real estate, which much of our community already knows the work that you there on the Real Estate Investing Podcast but talk to us first about the side hustle as a realtor. When did you become a realtor, why did you become a realtor and you know ultimately, how have you been able to balance this while you are also at the time working full-time?” You are raising a young family, tell us about the decision to pursue that work and the role that it played and the debt repayment journey.

[0:18:51.3] NH: Yes, I mentioned that mindset shift that occurred in 2016. I realized I needed something else that was going to be able to supplement my pharmacy career, something where I could put extra effort in and get extra reward from doing that, real estate became a natural fit. Again, it is mentioned a dozen times in Rich Dad Poor Dad and I started reading other things about ways to diversify income streams and, you name it, right?

Real estate was in that conversation. I talked to my father-in-law who has been in real estate for years and he’s like, “You should just get your license.” At the time that felt like, “Well, that’s a different career. I can’t do that” but as I looked into it, it was actually a really reasonable option to supplement that. So I went, like Kristen said, to classes in 2016, got licensed in early 2017 and I assumed that everyone was all of a sudden coming to me, right?

All my family and friends were going to flock to me and say, “Nate, buy and sell me a house” and it was, I think, eight months before I had a real client and actually closed the deal. I mean, it was a long time, and that’s because I wasn’t putting the right amount of effort into it and I wasn’t targeting what I needed to be doing, right? I wasn’t niching down and, again, that’s what led to the creation of real estate RPH and all the work that I do with pharmacists and the real estate community.

All those things progressed down the road to the point where I am at today where, again, now I get to work with a bunch of active clients here in Cleveland. I help people all over the country with our real estate concierge service and it is a really cool way to put my passion for real estate into the world of pharmacy that I started out in and, again, it’s also been a great way for us to supplement our income stream just because it is something where I could put more effort in and get more dollars out as a result from doing that.

[0:20:21.6] TU: Yeah. I want to put a plug in, just so you don’t have to as well, but I think that service has really been so valuable to the community. So, if folks are looking to buy a home, sell a home, looking to buy an investment property and they’re looking for an agent that would be a good fit for them. It is okay if you’re not in the Cleveland area where Nate is, he’s built a network of agents all across the country that have supported other pharmacist.

So, if you go to yourfinancialpharmacist.com, you click on home buying, you’ll see a section for find an agent and from there, you can get connected with Nate further.

Kristen, I want to ask you about the real estate investing side just because Nate talks about this on the podcast every week but I know, because I’ve seen it offline through some of the times I am talking with Nate, you guys are crunching numbers on the property and you’re on the spreadsheets punching numbers, “Is this a good deal, is this not a good deal?”

Tell us more about the vision that you guys have had for real estate investing for you as a family, why that’s been a good fit, and the approach that you’ve taken thus far in your real estate investing journey?

[0:21:17.5] KH: Yeah, I think we always had an interest in real estate investing. You know, my family has some experience with that, like Nate mentioned, my dad is a realtor, so we knew its something we eventually wanted to do. It was just figuring out ,how do we put it in as part of our plan? But when Nate said he was interested, I was all onboard, but I was also that type-A risk averse pharmacist as in, “How do we do this? I have no idea.”

I vividly remember a lot of my commutes, listening to Bigger Pockets, reading a lot of real estate books just to fill my brain with the information I felt that I needed to feel comfortable with real estate investing, and we always knew that we wanted to have those properties. I think one of the biggest things I had learned from Bigger Pockets was, one great thing about real estate investing is even if something happens, you still own a building.

You still have something physical there that you could sell and we just—we always knew we wanted it to be something to supplement with one of our investments.

[0:22:13.4] TU: Yeah, so right now you guys have property, correct me if I am wrong, you’ve got property in Northeast Ohio and then you’ve also got property outside of the area, correct?

[0:22:22.0] NH: Yes, so we’ve got properties here locally and then some up in Michigan as well.

[0:22:25.7] TU: Awesome, love that. And folks can tune in to the Real Estate Investing Podcast for more stories of other pharmacists real estate investors. So, we’ve talked about really three main buckets that were instrumental in paying off this $250,000 of debt and that was, I categorize it as hustle, cutting your expenses that more than $3,000 per month, growing the income through the side hustle, and then also looking at how you’re able to build a real estate investment portfolio. We’re there other strategies that helped you along this way of paying off this debt?

[0:22:55.8] NH: There are little things. I think one that comes to mind for me is that we refinanced that loan, I think four different times, and a lot of that was because we were getting low interest rates every single time, and the other is because we were able to get big bonus. So, if you have been on any of the YFP resources for loan pay down or for loan refinance, you get cash bonuses depending on your loan balance.

A couple of times we would go out and refinance it, wait a couple of months, refinance it again, and we’d get a check and a lower interest rate, it just made a ton of sense. So, that was a little thing that helped quite a lot along the way.

[0:23:24.2] KH: I think another thing that really helped us was working with Tim Baker and the planning team at YFP. They were very much instrumental in guiding us through and helping us make the decisions. You know, I grew up putting my money under a mattress making sure it was nice and crisp and counting it every week. When we started this journey, Nate wasn’t financially savvy until 2016, when he got more into it after reading Rich Dad Poor Dad.

So, I think working together in having a third party objectively look at everything and give us some guidance was really helpful as well.

[0:23:55.9] TU: You don’t have to make Tim’s ego any bigger. No, I’m just kidding. I can see he is listening to that. So the question that I am begging to know the answer to is, you guys were throwing a huge amount of money at this debt. Obviously, at some point, you got that debt paid off and, all of a sudden, you’re not having to make that big of a payment anymore. I often think about this in the context of my journey and I often chalk it up to where did that money go.

Well, more kids, kids got expensive, other things come along the way, but I also know you guys have been really intentional as a family about what are we trying to do in terms of experiences and how we want to be intentional with the resources and the money that you have each month. So, Kristen, talk to us about this journey after the $250,000 of debt, where no longer making this massive monthly payment. What’s happening? What are we doing?

[0:24:43.5] KH: Well, we went to Disney World. I feel like that’s the most appropriate thing, you know? Honestly, in some parts, it feels like it hasn’t changed at all. We still have a lot of that mindset with being frugal and still saving for our future, but also trying to live in the moment, and we have done a lot of life planning as well and things that we want to do. I think we’re working on travelling more.

Like I said, we went to Disney, hopefully some other trips coming up, just being able to spend more time with the kids I think. People with children understand that the first five years before they start school is just hectic and overwhelming. We were just trying to take in all these moments before they head to school officially.

[0:25:20.1] TU: I love that. Right, it goes quick and everyone says that, but it’s real, and I think the intentionality around these experiences and making sure there’s the budget there to support those experiences and to be able to enjoy those moments along the way. Nate, you recently shared publically your decision to go from full-time to part-time work in your pharmacist role. So we’re going to officially call you a pseudo pharmacist now.

[0:25:41.7] NH: That’s fair.

[0:25:42.9] TU: How much of a factor was getting to this point of having this $250,000 of debt paid off, how much of a factor was that and being able to approach that decision and ultimately, feel confident in that decision.

[0:25:55.4] NH: Yeah, it was huge. I mean, I can’t say that when we stared off that was the plan but as we get closer, we realized that it was a possibility, and I looked at the timing and I looked at where we were at and I said, “Look, this is like the last summer before our oldest goes off to kindergarten and then it is just going to get crazier and crazier as time goes on” So I took a step back and said, “Now that this debt is gone, we really can take a step back.”

Kristen has been so supportive and helpful in allowing me to do that, but it’s been really cool because now I can just focus on them for the summer and those extra 20 hours that I found every single week is just, I’m on the kid’s schedule. Like the other day, it was raining in the morning and so we went to the movies and we saw a kid’s movie and then we got out and I was like, “Hey, it’s sunny. Let’s go to the playground” and so we did that.

It was just really cool to be on their schedule rather than some work schedule or something else that I had to do or had to get done. There wasn’t a timeframe anymore and that’s been really cool and again, without that debt being gone, there is no way we could have done that.

[0:26:51.3] TU: Yeah, what I love is I think both of you are such a great example. Where yes, you’ve got a PharmD, yes, you’ve got residency training, yes, you could continue to climb certainly in various clinical roles and there’s the opportunities always there and will be there, but you also have some opportunity for flexibility in those roles and I think sometimes we don’t think creatively enough as pharmacist about how we’re going to use our time each week, and that can change season to season.

I work with other pharmacists who went through a season with young family and others where they pivoted to part-time roles or more flexible schedules and then that changed the game at a later point in time. So I think there’s opportunities to make sure that we are coordinating our work plan with our life plan and with the financial plan as well. Kristen, I’ll start with you and then Nate, if you have other thoughts as well.

I’m someone listening who, maybe I’m a student, and I am like, “Oh my gosh, thanks so much I feel depressed about the journey ahead” or maybe I am in the middle of the debt repayment journey and I just feel like, “When does this going to end?” or I feel like I am spinning my wheels. What advice would you have for pharmacists that are in that debt repayment journey as they’re trying to really navigate that path forward?

[0:27:58.8] KH: Yeah. Not to sound cheesy, but I think a really big player, at least for me, was the YFP planning team. We felt like we had a plan but we weren’t really sure if it was a good plan, and really it was after I had our second child and I was listening to a lot of podcast. I was walking everyday on maternity leave and I was listening to podcast every time I would go for a walk and I was like, “We really need to look at this.”

I feel like we need a more set plan as to what we’re doing, especially since you’re at such an integral point of your life where you want to be able to spend extra time with the kids, but you also may feel like you can’t financially do that, and so I think having that, like I said, that objective third party look at what you two are talking about as a couple can be really, really helpful, and also helped us look at a lot of our other financial plan with the investments.

Like, can we get into more real estate investing, are we contributing enough to our 401(k)? Are we doing things that seem like we should be doing? I think that is really, really been a big impact on us on being able to achieve this.

[0:28:55.0] TU: Nate, any other words of wisdom, advice you’d have to folks that are kind of in the thick of it, if you will?

[0:29:00.6] NH: Yeah, I think for me, again, just for me at least, what were just this mindset shift away from being stuck at, “Okay, I only have—this is my income” right? “If I make a $110,000 a year as a pharmacist, that’s all I’ve got and there is no other opportunities and I have to make it work with that money.” I challenge everybody out there, and there’s a thousand and one different ways to do this, but you should find something where the more effort you put in, the more you get out of it, and it doesn’t have to be money, right?

That can be just time, that can be time with your family, that can be things that you enjoy doing, whatever that is, find something that is going to supplement your life that the more effort you put into it, the more reward you get out of it ,and that is just a really great way to set yourself up for success.

[0:29:40.9] TU: I love that. To reiterate what we talked about a little bit ago, the dollars are one piece of that, but don’t underestimate the momentum that comes from that as well, and that momentum is so important as it relates to the financial plan. You’re related to the debt repayment but I always stick to the other parts of the plan as well. Again guys, congratulations on knocking out this huge chunk of debt.

Really incredible to hear the story and the why behind it and how you’re able to do it, excited for what lies ahead of you guys and thanks for taking time to come on the show.

[0:30:10.5] NH: Thanks Tim, we appreciate it.

[0:30:11.6] KH: Thank you.

[END OF INTERVIEW]

[0:30:12.3] TU: As we conclude this week’s podcast, an important reminder that the content on this show is provided to you for informational purposes only and it is not intended to provide and should not be relied on for investment or any other advice. Information of the podcast and corresponding materials should not be construed as a solicitation or offer to buy or sell any investment or related financial products. We urge listeners to consult with a financial advisor with respect to any investment.

Furthermore, the information contained in our archived newsletters, blog post and podcast is not updated and may not be accurate at the time you listen to it on the podcast. Opinions and analysis expressed herein are solely those of your financial pharmacist unless otherwise noted and constitute judgments as of the dates published. Such information may contain forward looking statements, which are not intended to be guarantees of future events. Actual results could differ materially from those anticipated in the forward looking statements. For more information, please visit yourfinancialpharmacist.com/disclaimer.

Thank you again for your support of the Your Financial Pharmacist Podcast. Have a great rest of your week.

[END]

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YFP 261: YFP Planning Case Study #2: Planning for Retirement, Saving for Kids’ College, and Paying Off Debt

Posted on June 23, 2022November 2, 2022 by yfpadmin

YFP Planning Case Study #2: Planning for Retirement, Saving for Kids’ College, and Paying Off Debt

On this episode, sponsored by Insuring Income, YFP Co-Founder & Director of Financial Planning, Tim Baker, CFP®, RLP® is joined by YFP Planning Lead Planners, Kelly Reddy-Heffner, CFP®, CSLP®, CDFA®, and Robert Lopez, CFP® to walk you through a financial planning case study on planning for retirement, saving for kids’ college, and paying off debt.

About Today’s Guests

Kelly Reddy-Heffner, CFP®, CSLP®, CDFA®

Kelly Reddy-Heffner, CFP®, CSLP®, CDFA® is a Lead Planner at YFP Planning. She enjoys time with her husband and two sons, riding her bike, running, and keeping after her pup ‘Fred Rogers.’ Kelly loves to cheer on her favorite team, plan travel, and ironically loves great food but does not enjoy cooking at all. She volunteers in her community as part of the Chambersburg Rotary. Kelly believes that there are no quick fixes to financial confidence, and no guarantees on investment returns, but there is value in seeking trusted advice to get where you want to go. Kelly’s mission is to help clients go confidently toward their happy place.

Robert Lopez, CFP®

Robert Lopez, CFP®, is a Lead Planner at YFP Planning. Along with his team members, Kimberly Bolton, CFP®, and Savannah Nichols, he helps YFP Planning clients on their financial journey to live their best lives. To go along with his CFP® designation, Robert has a B.S. in Finance and an M.S. in Family Financial Planning. Prior to his career in financial planning, Robert worked as an Explosive Ordnance Disposal Technician in the United States Air Force. Although no longer on active duty, he still participates as a member of the Air Force Reserves. When not working, Robert enjoys being outdoors, playing co-ed volleyball and kickball, catching a game of ultimate frisbee, or hiking with his wife Shirley, young son Spencer, and their dogs, Meeko and Willow.

Episode Summary

What are your retirement goals, and do your investments align with your vision of the future? Welcome to another episode of Your Financial Pharmacist Podcast. YFP Co-Founder & Director of Financial Planning, Tim Baker, CFP®, RLP® is joined by YFP Planning Lead Planners, Kelly Reddy-Heffner, CFP®, CSLP®, CDFA®, and Robert Lopez, CFP®, to walk you through a financial planning case study on planning for retirement, saving for kids’ college, and paying off debt. This is our second case study, and this time we hone in on the lives of a fictitious couple, Fiona and Rob Anderson. We examine their financial portfolios, from salaries and debt to their investment accounts and insurance policies. Listeners will learn about Rob and Fiona’s retirement goals and whether they have invested in the right ways to achieve them. The problem of conflicting goals rises to the surface, and Kelly and Robert share how you can manage to prioritize your children’s college education with your own retirement plan. Kelly and Robert touch on innovative ways to spend less on college while giving us invaluable advice on making your investments work for you. Delaying your retirement and waiting to claim your Social Security are helpful methods in ensuring cash flow during retirement. Finally, we get a glimpse at what paying a mortgage during retirement is like, and whether there is reason to panic.

Key Points From This Episode

Getting to know Fiona and Rob Anderson.
The home, work, and financial portfolios of our case study couple.
Fiona and Rob’s investment accounts and insurance policies.
Diving into tax concerns.
Your children’s education versus building your retirement fund – conflicting goals.
How to prioritize conflicting goals.
Some innovative ways to lower the costs of college/university.
How to use 401Ks, RSUs, and other investment accounts wisely, for investing in your goals.
Delaying retirement and waiting to claim Social Security.
A closer look at whether their particular investment accounts work for their specific goals.
Unpacking the target date fund and traditional IRA.
What to consider when paying a mortgage in retirement.
Your age concerning your debt, and if there is reason to panic.

Highlights

“You can take out loans for school, but you can’t take out loans for your own retirement. So make sure you take care of yourself first.” —Robert Lopez, CFP® [0:08:20]

“It’s really like golden handcuffs. It’s a way for a company to make sure that you’re not going to want to leave, ‘Hey, here’s this money, but you have to stay here to get it.’” — Robert Lopez, CFP® [0:18:25]

“Taking those dollars that you feel are being wasted and putting them towards something that you actually feel pain over, is huge.” — Robert Lopez, CFP® [0:21:00]

“Things happen unexpectedly. So, having your documents in place is important, and it makes it a lot simpler and less chaotic.” — Kelly Reddy-Heffner, CFP®, CSLP®, CDFA® [0:24:20]

“The emotional variable, I can’t calculate for.” —Robert Lopez, CFP® [0:32:12]

“‘Money is power.’ But money is not power. Options are power. Having the option to do different things, and having the ability to make different plans is powerful.” — Robert Lopez, CFP® [0:35:02]

“The best plan is one that works. As long as it works for them, then they made the right choice.” — Robert Lopez, CFP® [0:35:16]

Links Mentioned in Today’s Episode

Episode Transcript

[INTRODUCTION]

[00:00:00] TB: You’re listening to the Your Financial Pharmacist podcast, a show all about inspiring you, the pharmacy professional, on your path towards achieving financial freedom. Hi, I’m Tim Baker, and we’re back with the Case Studies, this time with the Andersons. I sit down with YFP Planning’s Lead Planners, Kelly Reddy-Heffner and Robert Lopez, to walk through this fictitious family and their financial plan.

Although the Anderson’s are not an actual couple we work with, they are really a composite of clients that we do work with in reality. The first part of the discussion, we lay the groundwork of the Anderson’s jobs and salary situations, where they live. We walk through their net worth and point out important elements of their financial situation. We also talk about their goals and what they’re trying to achieve.

We then talk back and forth about their financial situation. One of the big focuses being on education versus retirement planning and how to best use their investments going forward. This is a bit of the behind the scenes look at what goes on at YFP Planning. I hope you enjoy this episode, but first, let’s hear from our sponsor and we’ll jump into the show.

[SPONSOR MESSAGE]

[00:00:58] ANNOUNCER: This week’s podcast episode is brought to you by Insuring Income. Insuring Income is your source for all things term-life insurance and own-occupation disability Insurance. Insuring Income has a relationship with America’s top rated term Life Insurance and Disability Insurance Company. So pharmacists like you can easily find the best solutions for your personal situation. To better serve you, Insuring Income reviews all applicable carriers in the marketplace for your desired coverage, supports clients in all 50 states and makes sure all of your questions get answered.

To get quotes and apply for term life or disability insurance, see sample contracts from disability carriers or learn more about these topics. Visit insuringincome.com/yourfinancialpharmacist. Again that’s insuringincome.com/yourfinancialpharmacist.

[EPISODE]

[00:01:50] TB: What’s up, everybody? Welcome back to YFP Planning, case study number two. The last time, if we remember our first case study, which I thought was smooth, looked at the Joneses. This time, we’re looking at YFP Planning case study number two, the Anderson’s. The Anderson’s that are a little bit different stage of life, but I’m excited to jump in with my colleagues Robert Lopez and Kelly Reddy-Heffner. Guys ,what’s going on? How are things going where you’re at?

[00:02:15] KRH: Good.

[00:02:16] RL: Yeah. It’s 105 today, so—

[00:02:19] TB: 105 in Phoenix. Kelly, you are, I’m sure, all in on this case study, not imagining sitting on the beach next week.

[00:02:26] KRH: That’s right. I am totally all in. Not distracted at all, but excited to talk through people in mid-stage.

[00:02:34] TB: Awesome. All good. So, Robert, same as last time. Why don’t you set up and, for those listening on the podcast, we are releasing these on video, so you should be able to see us talk through our one page overview of the Anderson’s. Robert is going to set us up in terms of salaries and things like that. Kelly is going to get into goals and debt, and then I’ll take us home, and then we’ll open it up for discussion and go from there. So, Robert, why don’t you take us away?

[00:02:58] RL: Yeah. So, today we’re working with Fiona and Roy Anderson. Fiona is Field Medical Director. She’s 46 years old, making $155,000 a year. Roy is a Pharmacy Manager, 48 years old, making 135. They’re married, filing jointly. They have two sons, Michael and Paul, aged 16 and 14 respectively. They live in Jersey City, New Jersey. Their gross income works out to about $290,000 a year, which breaks down to around $24,000 monthly. Their net, or what they actually receive in their bank accounts, is about $12,000 a month. Their fixed expenses are $6,300, variable expenses of $2,200, and then about $3,300 of monthly savings. They live and own a three bedroom, a single family house. They purchased in 2008, which they got for $420,000 using a conventional 20 percent down at a 6 percent interest rate. Then, in 2015, they’re able to refinance to a 4 percent, 30 year fixed mortgage.

[00:03:56] KRH: Then they have a few goals that they want to accomplish while we’re working together, hypothetically. They want to pay for the four years of undergrad for Michael and Paul. They are making 529 contributions, which they recently increased. They have a pretty robust amount in the account baseline. They want to know if they’ll have enough to accomplish that. Concurrently, they want to try to retire in the next ten to 15 years. One thing to consider is, with the home that they currently own, they want to downsize and move to Florida. Then they are concerned about some of the debt that they still have, as well. So, that debt is listed out as a home equity line of credit that has a 5 percent interest rate.

They remodeled their kitchen and are paying $1,000 a month on that. They still have car loans. They pay a total of 750 interest rates between 3.5 and 4.25 when the two car notes. They still have their own student loans, which is always an interesting intersection with paying your own children’s college tuition as well. They refinance to a ten year private loan, 4.25 percent five years ago. Then, of course, they have the mortgage. So it’s a 30 year fixed 4 percent interest rate after that refi. They’re seven years in and they’re paying 2,500 a month.

[00:05:21] TB: Then, from the wealth building side, they have some cash in the bank, $20 grand in checking, $50 grand in savings, but in terms of their investments they’re looking at 401K, so they both currently have 401K that they’re contributing 4 percent each, plus a 4 percent employer match, so basically 8 percent in total. They’re both invested in the 2035 target date funds. Fiona has an old 401K, a small one at $15,000 that she hasn’t really looked at. They do have a 529 account that they’re increased their contributions lately to $1,0LL, so $500 for each son, so $12,000 a year to get to that goal. Unfortunately, they don’t get an income tax deduction, because in New Jersey if you make more than $200,000 it’s off the table.

They do have a taxable account which is basically Fiona’s RSU, so stock units as part of her compensation, which we see in a lot of Industry Pharmacists. We’ll get that as part of their comp. She has $125,000 that it’s currently sitting in there, all in the company stock, and then they have a joint savings account that they’re putting a hundred bucks a month in, to consider the rainy day.

Michael graduation trip, when you graduate high school, and then a traditional IRA that they’re funding for Fiona in a balanced fund. That is basically their investment accounts. Roy also has a Roth IRA that has about $36,000 in it that he’s not contributing to. It’s sitting there presently.

From a wealth protection, so this is typically where we talk about insurance, in a state, they each have a 20 year term, $1 million policy that they purchased five years ago, plus a little bit of group life insurance that basically matches their salaries, $150,000, $135,000 respectively. They both have short term and long term disability which has a benefit of 60 percent. That’s going occupation for two years, then any act after that. Roy carries his own professional liability policy. Then, they have a will that was done when Michael was born, so basically 15, 16 years ago. A living will or trust, power of attorney that needs to be updated.

From a tax perspective, they currently use an accountant, but they’re not sure they’re maximizing their deductions. They recognize that New Jersey state income tax and property taxes are killing them, which is why a lot of people from New Jersey moved to Florida. It’s not as bad. They typically owe taxes every year, so they’re basically reached in their pocket for that. One of the big tax concerns they have is that with Fiona’s RSUs, they’re worried about capital gains on that and not really sure what to use that for.

Some other things are conflicted about how much to put towards college versus their own retirement. Can they retire in 15 years? In retirement, they’re really looking to up their travel game a little bit more. So I guess, I’ll pose the question to the group here when you guys look at the Anderson’s, Fiona and Roy, what are some major things that stick out to you when you’re approaching them in terms of their financial plan?

[00:08:08] RL: Yeah. The first two goals that they have are conflicting here. So they want to pay for education for the boys, but they also want to make sure they’re setting themselves up for retirement. One of the phrases that you’ll hear a lot through financial conversations is, “You can take out loans for school, but you can’t take out loans for your own retirement. So make sure you take care of yourself first.” I think they’ve done a really good job with that so far. They’ve saved a lot in their 401K. They’ve set aside money for the boys at the same time, but now it’s really deciding on how to be important about that and how to be decisive.

The 4 percent that they’re doing into their retirement accounts, plus 4 percent of a match is good, but not where we’d like to be. Ideally, we want to meet at least 10 percent, and I think there are going to be some ways that we can get them to that point. I think that their savings in their 529, right now, is aggressive at $1,000 a month. That’s a pretty big chunk of their cash flow. I think that that’s actually going to be enough, depending on some scenarios we may discuss. But really deciding is the order that they gave it to us, to correct order that they have. Is the boy’s education more important than their own retirement? Are they willing to accept the opportunity cost or the change that would require? They may need to work longer to send the boys to college, and really flushing that out.

[00:09:14] TB: I think one of the things that is interesting about this case, because we hear it for a lot of new practitioners, is the age old question of, should I pay down my debt, i.e., my student loans or should I get going on my retirement, my investments? There’s that push and pull that I don’t think really ever goes away, because there’s just different things that are always competing against that berm investment game. So when you look at this, how would you walk them through or walk them down the path of getting down to the granular bits and pieces of the retirement versus the education? Is that something that you would look to model out? Is it really asking more clarifying questions with regard to their goals? Walk me through your thought process there.

[00:10:03] KRH: Sure. I agree with Robert that those are conflicting. So, talking through what’s important when individuals have their own student loan debt, they really do tend to lean towards creating scenarios where that doesn’t exist for their own children. We do a high level nest egg that popping some numbers in, based on this case study, they probably wouldn’t be able to retire in ten years, based on these numbers. So, Robert is correct about that, too. More contribution would be better. As far as the education, we can model out and take a look. Certain schools are going to be more cost effective. There are other things that students can do. Good grades. Robert gives a great talk on collect exams, which I love. My own children have listened to some of the conversation.

There are ways to make college funding more affordable and have those conversations. The kids are at an age at, especially at 16, really to start the conversation about what’s affordable, what makes the most sense, and the parents, setting some boundaries on what they’re comfortable with to not sacrifice their own retirement goals. Yeah, a combination of modeling would definitely answer some of the questions about that expected cost in the future, how much they’re going to be able to cover. What the shortfall is. Then I think Robert’s right too, about finding a better balance with the goals and how to prioritize them.

[00:11:40] TB: Robert, can you give us the cliff notes on the CLEP thing? Because I think that’s actually pretty powerful, if you’re a pharmacist that’s listening and then you have kids that are high school age looking at colleges. This is something that I think [inaudible 00:11:50].

[00:11:54] RL: Yeah, Tim. One of the big things that we like to talk about with clients is not necessarily just saving for college, but also ways to save on college and education expenses. There are a ton of ways to do that, whether it’s planning to go to a community college for the first couple of years or it’s maybe just ignoring traditional education and going to our trade schools. But one of the ways I like to do it is just getting credits out of the way, and everyone understands dual enrollment credits and everyone talks about AP courses, where they can test out of college classes, but a CLEP, a C-L-E-P is run by the College Board. It’s the same people that create the SAT.

What it is? Is it’s a test where you can sit down. Take a one-time test where it costs about 90 bucks on a bunch of general education classes. If they pass that course, then they get to skip it in college, they get automatic credits that will be accepted at the majority of universities. Now, every university in college has their own rubric that they request, and they say, “Hey, you have to get at least 65 on this class for it to count. They only accept these five classes. 65 different CLEPs, that different college will accept.

If you’re a math major and you don’t want to take English classes, take these two tests while you’re in high school, when you just learn English and never have to take it in college. Or if you’re an English major who doesn’t want to take mathematics, when you take a mathematics and high school that’s practicing for the test, you take a CLEP, you pass it, you never have to take it in college again. It’s a great way to either get a head start on college or get through the classes that are going to slow you down, and allow you due to the coursework that actually excites you and makes you want to go to college, rather than slogging through the first two years of Gen Ed before you can get to the stuff that you care about.

[00:13:20] TB: Yeah, I think it’s now really important to highlight all the tools that are available for students and parents to make a good decision. I feel like, if I get in the time machine and go back to when I was looking at schools, I didn’t have any. And I think because—I would have done very foolish things back in the day. I think that if there are things that we can do, whether scholarships or things like Test NL, going to put the price tag a little bit more affordable. I think probably one of the things that I would want to model out and what’s interesting about the Anderson’s is that they have a goal in place.

A lot of people, especially, I think if they have young kids, will ask, “What’s the goal for sending your kids to college?” It’s like, “I don’t know.” That’s what we talk about the one third rule, which we’ve talked about at length, where you can pay—basically the idea is that what you’re putting in 529 is one source of the tuition, and then another source would be when your child is 17 or 18 going into college, you’re basically paying that out of your paychecks, you’re sending a check to the college. Then the last third would be the scholarships and the student loans. Last but not least. We use that as a default, that there’s no idea what they want to do. With Fiona and Roy, the idea is put them through four years of undergrad.

Kelly, we know that not all schools are created equal, right? Whether they go to somewhere like Rutgers, which is in the state in New Jersey or somewhere like The University of Miami, which is a private school out of state in Florida, how do you advise parents to talk to their kids or just approach this with their kids, in terms of sensible decisions with regard—I know it’s hard at 17, 18 year old to go about approaching that question.

[00:15:07] KRH: Well, definitely when we started that conversation, it was talking about what our budget was, what we were going to be able to contribute. Then, looking when we would look up schools, understanding what the tuition is. There’s a number that pops up a lot on schools or websites. That’s an average cost, unfortunately, depending on your income and for many of our clients. That income is not going to reflect what that average cost is. So the average cost assumes 100 percent paid for, in some scenarios, all the way up to paying the full price tag. It’s really good to understand what your cost is likely to be, and at this income level for Fiona and Roy, it’s probably not a whole lot of financial aid.

I would assume no financial aid based on need. I do recommend having an understanding of what your cost might be. What schools are going to give those scholarships? There are certain schools that only give financial based need aid. There are schools that give grants for being a tuba player, the football player, great academics. So knowing your skills, what your talents are in a range. I would agree, we mentioned, Rutgers, a state school is going to be different than Princeton. What does that look like between the two? But I think people also discount private schools, and just seeing some of those schools have pretty nice endowment and a little better package. I would say I’d look at a nice handful.

We sometimes see kids are applying to 30 schools. You’re busting your budget, just on application fees. So, pick a few that makes sense. Have a few you can compare apples to apples, oranges to oranges and be like—you’re really looking for the best package and the best fit that’s financially viable for you and the student borrower, who’s going to take on any debt that you all can’t pay for if the savings is at capacity.

[00:17:14] TB: Yeah, I agree. I think one of the wildcards in this whole situation is we look at the taxable account. So, I don’t think I broke down what they have in their 401K. But Fiona has a 425 plus another 15 in an old 401K, Roy has 459. Then they have 365 and a Roth IRA and 195 – Ira. I think the wild card Robert, in this whole scenario in terms of the planning is what to do with the RSUs. These are a weird, because it’s compensation that comes in the form of stock that can grow over time. I’m a big proponent of like, “Okay, let’s tie this to something.” So, is this something that is for retirement? Is this something that they could apply towards the debt, towards the education? What’s your thought with regard to—how would you approach it? How to utilize that for the goals that the Andersons have?

[00:18:08] RL: Yeah. So restricted stock units, for those who aren’t aware, are a form of compensation when a company gives you stock, but you have to invest into it, right? Generally it comes in with the grant where it says, “Hey, you’re going to get this many shares.” Then, you’ll get a portion of it every year or quarter or month depending on the policy. It’s really like golden handcuffs. It’s a way for a company to make sure that you’re not going to want to leave. “Hey, here’s this money, but you have to stay here to get it.” Yeah, you may want to leave, but you have some invested RSU grants that you’re not going to be able to get if you leave right now. So you should probably just stay with us.

One of the things that I like to make sure clients understand is that these RSUs are just income, right? It’s taxed as income when you get it and you need to treat it as such. Although it looks like this big shiny object that we have to save and grow forever, it is just income and we can use it as such. So when we look at them, their big goals are, “Hey, I want to pay for college. Hey, I want to make sure we retire. Hey, I want to have less debt.” We want to help them, again, rack and stack those goals where sure, if we need that money for college, then it’s there, right? But if we can find out a plan for college, “Okay, cool. Let’s check that off, the boys understand what we have for them. The boys are going to come up with their own plan and it’s going to be financially settled.”

Okay, retirement. How can we use this money toward retirement? We could reorganize our cash flow, when we’re actually cashing out. Some of these are issues which would allow us to put more away in our retirement buckets. That’s a great way to use it. Another way is to solve that fourth goal. These are issues again. It’s just a taxable investment account. We have an unknown what the capital gains are, so we’re not sure, in this scenario, exactly how much of that is the grant itself and how much that is gained.

There will be some tax complications of this plan, but the $125,000 could, in reality, pay off all of their debt other than the mortgage. We can pay off the HELOC, which is $43,000 at 5 percent. We could pay off the cars at 3.5 and 4.5 percent. We could pay off the student loans at 4.5 percent. Then all they would have left is the mortgage that would free up $2,300 in cash flow on a monthly basis—

[00:20:04] TB: It is huge.

[00:20:05] RL: That’s huge, that’s a huge amount of money, okay. That could then turn around and immediately go towards extra savings, extra travel budget for that graduation trip they want to take in two years, extra 401K contributions. Right now, they’re doing 4 percent plus a 4 percent match. We could easily get that to ten or 12 percent without changing their life at all, only by reallocating those RSU dollars that are just sitting in a holding to this thing. We also know that she’s getting more RSUs, so this isn’t the end of her getting company stock. She’s going to get those refreshed, which is what happens when you get a new grant all the time. So as long as she’s still working, those grants are going to keep coming. We just want to make sure we’re using them appropriately.

They’re just sitting there, maybe they’re growing, they’re doing phenomenally, maybe they’re going down. We got to check the company trajectory, but using that to solve an immediate goal, like get out of debt and save for retirement would be a huge lift on somebody’s spirit. Having done that with clients in the past, taking those dollars that you feel are being wasted and putting them to something that you actually feel pain over, is huge.

[00:21:05] TB: Yeah. I think one of the things that I would want to unpack. I love all of the different avenues to go, potential pot of money, the RSUs, which is, like you said, another form of compensation. I think the other thing that I would really want to impact with the two of them is to retire in the next ten, 15 years. Is it closer to ten? Is it closer to 15? One of the things that’s going through my RICP coursework that I just thought was astounding was delaying retirement by three to six months is the equivalent of saving 1 percent more for the course of your 30 year career.

Another way to look at is delaying retirement by one month is the equivalent of saving 1 percent more for the final ten years before retirement. One of the big things that I think people get wrong in retirement is when to claim Social Security. Obviously, if you can delay that, you have an income stream for life that follows inflation that’s super valuable. So, are there ways to potentially increase that retirement paycheck? Now, they could look us and we know that this is true, guys. In pharmacies, I only got ten more years left. I’m burning out, I’m not good. Maybe there is the ability to work part time or things like that.

I think to Robert, to your point, being able to model out and move those pieces around to say, “We could use this pot of money and clear all that debt that frees up that cash” is a beautiful thing. But they could also say, “We feel bullish on the company that we want to let it ride and we won’t have the certainty there of cashing out and retiring those debts. Maybe we’ll let it ride for greater upside, but we know that there’s risk there as well.” Super fascinating. The nice thing about this is there are pieces to move here and there’s different scenarios to run. I guess, one question I would have with regard to the protection of the plan. Kelly, what are some things where their insurance related or a state plan and related that you see has some areas of exposure for them?

[00:22:59] KRH: I mean, in general, the insurance looks pretty good. The term 20 years, they just purchased it five years ago. So they’re going to get the kids through college. I know we had talked about this the last time. What amounts make sense of the disability policies? The amount looks reasonable with the 60 percent of income replaced. I would say the own-occupation for two years is a little bit of a question mark or sometimes we see the policies follow an income amount. So is it the income amount? Or is it that owning your own or any occupation? That’s probably something, I’d look at a little further, because we know just with the actuarial data that that can be a bigger problem than [inaudible 00:23:42]. But things look reasonable.

I would say, I would get the estate planning documents updated. So I would get the will double checked and updated, some other things probably have changed, as well over the last six years. I am a fan of having advanced medical directives in place, in terms of retirement. I think one of the statistics in our slide deck is that things happen sooner than we think they might happen at times. On the positive side, if you have an opportunity to retire, great. But sometimes health events, issues, things happen unexpectedly. So having your documents in place is important, and it makes it a lot simpler and less chaotic, especially at this phase. The kids aren’t really old enough to be making decisions, so you do still need to have things in place for sure.

[00:24:38] TB: Yeah. I think obviously that’s one of the often overlooked parts of the financial plan. Unless you’re military, where they force you to do wills and things like that, that’s where you typically see it more frequently. But just making sure that that’s buttoned up and there’s a plan in place for that. I think the other thing that I would probably circle back on. Robert, I would love to hear your thoughts on, is just the overall allocation. Do you think l balance funds—I see that we’re funding the traditional IRA, which see— were in 2035 target date funds, which are in that time frame. Ten to 15 years is still a pretty long time to go, so I’d want to dig deeper into that in terms of what they’re actually invested in.

We know, as we talked over at length in the past, that the allocation console of a lot of things, because if you’re looking at ten years, 20 years-time, typically the stock market, will take care of you. So, how would you look at their investments, particularly with the traditional IRA and maybe some of the allocations that you’re seeing?

[00:25:35] KRH: Yeah. One of the things on the traditional IRA that we need to double check on is, how are these dollars even going in there? Based on the fact that she has a 401K and they make so much money, shouldn’t be qualified for deductible contributions. So we want to make sure that these contributions have been going in undeductable, that they’re not trying to take a deduction on it. Beyond that, having them in a balanced fund doesn’t sound bad.

Most people in the world will believe that balanced means 50/50, but in the finance world it means 60/40, because why would we make sense? So a 60/40 fund on that account isn’t terrible for their age range, but it’s probably a little conservative. To go along with that, the target date 2035 funds, which are just mutual funds aged for a use at 2035, so they decrease in risk over time. Those are probably about the same right now, so about 60/40 at this point in time. I think that that should be probably extended. If they’re going to stay at a target date fund which is not necessarily a bad thing, I’d probably want to extend it closer to that 2045 timeframe to line up more with a normalized retirement.

You don’t actually aim for the year you’re planning to retire. It’s more so you aim for 65 and then that stretches out over your lifetime. It’ll never go to 0 percent investments. It’ll always have something in the market, because if we’re going to live to 100, we can’t just put it all into cash the day we retire. We need to have some risk in there. I think they still need to have a little bit more risk going on. So we want to look at what options they have, what the fees are, what the expenses are, how complex we can make it, but at the very minimum, I’d to maybe take that up to about 80/20 from a risk perspective. We obviously talk to them and make sure that they’re comfortable with that amount, but with their current time horizon, I think that that would still work.

[00:27:10] TB: Yeah, I think it’s asking a clarifying question and maybe digging into – because I think, even all target date funds in this, they aren’t created the same. There’s different allocations that are associated, depending on the year. I think the other thing that I would probably want to look at, just to make sure, is that you could have a balanced fund for the 529, which might be good for Michael’s accounts, but maybe not for Paul’s. Maybe it is Paul’s 14, so he has a couple more years, maybe just looking at that.

As Michael is going to college, we’re not overexposed in equities and we see a crash and then not as much dollars are there. One question, and then we wrap this up, guys. I think one question that I would ask related to the mortgage. They’re 46 and 48, respectively. Based on their refi that happened after what was that? That was in 2015, so we’ll say seven years ago, they had 23 years left on the mortgage.

Kelly, you recently relocated, so maybe get your take on this. Your thoughts on you—whenever says like, we have too much debt. I think Robert did an excellent job of outlining the path, or basically, we can redeploy some of the assets to basically wipe all the debt out, except for the mortgage. My question is this. If I’m mid to late 40s, or 50s, and I have a mortgage that’s going to take me well beyond retirement age, should I be freaking out about that, or what’s your thought? How do you talk clients off the bar to that part?

Because of debt, obviously, this is something that can be a detriment to your retirement paycheck in the future. Walk me through what you guys think in terms of that. It’s like, now I’m 46, I’m 48, we have 23 years left in the mortgage, or that [inaudible 00:28:54].

[00:28:56] KRH: Oh, my gosh. I love this question, because I think it really could be all over the place. I think, well, I feel like, there could be a point-counterpoint, point-counterpoint about this. It is interesting. Off the top of my head, when we do the nest egg, we’re like, okay, the wage replacement ratio, 70 percent of what you’re living on now, because you’re debt-free, you’re not paying into retirement. They’ve said that they want to move. It will be interesting to see if you are downsizing and you’re going to sell the house. Anyhow, that current mortgage debt is not going to be as big of an issue.

I would say, if they’re not moving, ideally, you’d probably like to see it paid off, but it really does come down to cash flow. When we run modeling and looking at retirement and potential for success to reach a very pleasant age of 95, or a 100 and still have resources, it really always comes down to cash flow and budget. What you’re living on per year has a big impact on that. Is the mortgage affordable to make the plan work? It really does depend. It would go in the modeling and scenarios and again, comfort.

I guess, I would lean towards wanting the debt paid off if I wasn’t moving before retirement. Then, we just have that conversation in my house and my spouse is like, “I could live with pain for a couple years, and then we sell it, and we become expats on a Caribbean island.”

It depends, but I do think it does a little bit. Wherever they go with it, Robert, I will love to hear what you add in, too. Before I turn it over to Robert, I would say, too, the other thing about wealth protection, at this stage, this is often when our parents are having stuff going on, too, if their parents are still alive and they have a relationship with some understanding about that. That relationship, hope and expectation is definitely a key part of protection. I’m often surprised at what an overwhelming time that can be. The kids are in college, but the parents have some type of health issue, and that can be stressful as well.

[00:31:20] TB: Which is important to bring up, because it’s not necessarily that Fiona or Roy’s parents would be our clients, but their parents situation can affect the financial plan of our clients. It’s good to get in front of that before—have those hard conversations about who is doing what or providing care, or if they have policies that not left the—cover down on that. Yeah, that’s a huge important point. How about you, Robert, in terms of the debt? 23 years left. I’m in my mid to late 40s. Should I be freaking out about that, or is it depends?

[00:31:51] RL: Specifically for the mortgage, I think, to Kelly’s point there, that two of them in our own household have different vibes on that. That’s one of the key things when we’re talking about this with clients is, mathematically, I can tell you the right answer. Mathematically, it’s interest rate arbitrage. We’re paying 4 percent of the mortgage. We can get 8.50 percent, 80-20 portfolio. We should just put it in the retirement accounts. The emotional variable, I can’t calculate for.

If someone has a money script that tells them that they have to have no mortgage when they retire, because they saw their parents or their grandparents have issues in their life because they had a mortgage tying them down, then that’s something we have to attack. If they’re going to downsize, doesn’t necessarily mean that their mortgage is going to go down. In Florida, are they going to leave a single-family home in New Jersey and move to a very swanky condo, 50s plus condo in Florida where they’re playing shuffleboard with movie stars? Maybe they’re going to be paying more even with less space. Those are some things to work out.

Having that conversation of 4 percent interest rate, although it may have sounded extremely large a year and a half ago, or even six months ago, is really a good rate historically. It’s not going to be the end of the world. It’s a securitized debt, so it’s tied to their house. I would be more worried about the other loans.

[00:33:05] TB: I was going to say the same thing. Probably, even the student loans that have probably just been kicked down the road a bit, I would almost—and this is probably an emotional thing, because I’m sure the—well, we said that the student loans are four and a quarter. Then not much more. I think, and this is more an emotional thing, this is a bias of mine, I’m like, “Let’s retire those loans before we start sending Michael to school,” would be my thought.

It’s a great point is, what is the plan in the future? It’s that arbitrage. Do we emotionally make that extra payment on a 4 percent mortgage, which historically over a 30-year mortgage reduces that by seven years, if you pay that extra payment, or do you put that extra payment more towards the retirement, get a better rate of return over the long-term and secure that?

I don’t know. That’s also another thing that, as Kelly mentioned, in her household, it’s different. It’s different in our household, too. I don’t think it really even registers with, where I’m I in my mind want to have the mortgage paid off as I retire, which in my mind is 70, but I could lose my marbles before that and have to retire sooner. That could be a thing. That’s another thing that people sometimes discount, is that you’re not always in control of when you actually retire, either because of career stuff, or health stuff.

Yeah. I think these are fascinating questions that we’re talking about this on a vacuum, but really go back and ask Fiona, ask Roy, the fake clients that we’re talking about, some clarifying questions about the debt, about the investments, the education and with the retirement picture, I think would be really important to then proceed with the plan.

Again, as we always say, it’s not about necessarily the plan. It’s about planning, because we know the next time we talk, there’s going to be a wrench in the system that’s going to potentially have a zig and zag as we get further along the plan. Guys, anything else to add?

[00:34:52] KRH: No.

[00:34:51] RL: No. I think they’re in a great spot. I think that Fiona and Roy have done a really good job of setting themselves up for success. People always like to say, and I use this phrase all the time, “Money is power.” But money is not power. Options are power. Having the option to do different things, and having the ability to make different plans is powerful. They have put themselves in a place where they have a lot of options going forward, and they can choose what they believe is the best path. The best plan is one that works. As long as it works for them, then they made the right choice.

[00:35:19] TB: Totally agree.

[00:35:20] KRH: If they use the RSUs to buy an RV, we’ll see.

[00:35:24] TB: Don’t do it. Don’t do it. I was talking to the team last night, on our happy hour, that I said $800 RV. It’s actually $1,100. Yeah, they’re a money pit All right. Robert, Kelly, thanks again for talking about the Andersons on our case study here. Looking forward to doing the next one here, in the next couple of months. Yeah, we’ll do it again soon.

[00:35:45] RL: Toodles.

[MESSAGE]

[00:35:47] ANNOUNCER: Before we wrap up today’s show, let’s hear an important message from our sponsor, Insuring Income. If you are in the market to add own-occupation disability insurance, term-life insurance or both, Insuring Income would love to be a resource. Insuring Income has relationships with all of the high-quality disability insurance and life insurance carriers you should be considering, and can help you design coverage to best protect you and your family.

Head over to insuringincome.com/yourfinancialpharmacist, or click on their link in the show notes to request quotes, ask a question, or start down your own path of learning more about this necessary protection.

[DISCLAIMER]

[00:36:23] ANNOUNCER: As we conclude this week’s podcast, an important reminder that the content on this show is provided to you for informational purposes only and is not intended to provide and should not be relied on for investment, or any other advice. Information in the podcast and corresponding materials should not be construed as a solicitation, or offer to buy or sell any investment, or related financial products. We urge listeners to consult with a financial advisor with respect to any investment.

Furthermore, the information contained in our archived newsletters, blog posts and podcasts is not updated and may not be accurate at the time you listen to it on the podcast. Opinions and analyses expressed herein are solely those of your financial pharmacists, unless otherwise noted, and constitute judgments as of the date publish. Such information may contain forward-looking statements that are not intended to be guarantees of future events. Actual results could differ materially from those anticipated in the forward-looking statements.

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YFP 260: Why It’s Critical for Women to Take Control of Their Personal Finances

Posted on June 16, 2022November 2, 2022 by yfpadmin

Why It’s Critical for Women to Take Control of Their Personal Finances

On this episode, sponsored by APhA, Robin Hauser, an award-winning director and producer, talks about her most recent documentary, $avvy, which explores why it’s critical for women to understand and take control of their personal finances.

About Today’s Guest

Robin Hauser is the award-winning director and producer of documentaries (CODE: Debugging the Gender Gap, Bias, $avvy, Running for Jim) made to illuminate causes about which she is passionate. Those include the gender gap in tech, unconscious bias, equality, and financial savviness. Robin’s work has carried her around the world, from the TED and TEDx stage to the White House, NASA’s Kennedy Space Center, and conferences worldwide, speaking about mitigating bias in artificial intelligence, the likability dilemma, diversity, inclusion, financial wellness, and gender equality. A self-described “disruptor,” Robin is committed to provoking thought to address the most important socio-economic issues we face today.

Episode Summary

There is an antiquated stereotype that women are ill-equipped to deal with the complexities of finance, but did you know that women outperform men when it comes to investing? In today’s episode of the Your Financial Pharmacist podcast, YFP Co-Founder & CEO, Tim Ulbrich, PharmD, is joined by award-winning director and producer, Robin Hauser. In connection with her most recent documentary, $avvy, Robin walks us through the gender-based stereotypes surrounding finances while giving us her lived experiences of unconscious bias. Robin shares her motivation and inspiration $avvy and why it is an important work for people to view. The $avvy documentary addresses why women often take a passive role or give up their role in managing their finances, particularly millennial women. We dive into the different responsibilities men and women have concerning the financial planning of their households. Robin then highlights some of the obstacles facing women who want to take control of their finances—surprisingly, age is a noticeable factor. The conversation takes us through the confidence gap, and Robin states the importance of financial literacy education and instruction from an early age. Listeners will learn all about the pain of paying and the reasons behind financial education being a male-dominated space.

Key Points From This Episode

Robin’s real-world example of unconscious bias.
The gender-based stereotypes surrounding finances.
How day-to-day and long-term financial planning responsibilities differ in a household.
Why a woman’s lifespan is an important consideration.
The biggest obstacles facing women who want to take control of their finances.
How women outperform men when it comes to investing.
The psychology of confidence.
Negotiation and gender perception.
When financial literacy should be taught to women, men, and teenagers.
The pain of paying.
Why it’s mostly men who are the educators of financial literacy.

Highlights

“‘You do know that women have pocketbooks too, right? Women can buy condos or can join a timeshare.’ It was as though it never occurred to him. Poor guy.” — Robin Hauser [0:04:31]

“It just really struck me that they were missing this entire demographic by not actually approaching women.” — Robin Hauser [0:05:00]

“The reality is that we all take on a lot. So we need to divide and conquer at times, to be most efficient.” — Robin Hauser [0:08:05]

“We live longer than men. Even if you live a full life, chances are that a woman’s going to live eight years at the end of her life on her own.” — Robin Hauser [0:08:33]

“90% of women who are widowed or divorced changed financial planners or advisors within the first year.” — Robin Hauser [0:11:09]

“Because of women’s patience and their sensibilities to risk, they tend to make better investment decisions.” — Robin Hauser [0:13:13]

“We violate societal norms of what it is to be a likable woman when we are negotiating hard for ourselves.” — Robin Hauser [0:16:54]

“There’s no reason that you can’t learn in high school the positive and negative impacts of compounding interest.” — Robin Hauser [0:20:00]

“When you take two things that tend to have the stereotype to be very male-centric, I think it stands to reason that there are less women there.” — Robin Hauser [0:26:40]

“I do think that it’s hard to be what you can’t see.” — Robin Hauser [0:27:18]

Links Mentioned in Today’s Episode

Episode Transcript

[INTRODUCTION]

[00:00:00] TU: Hey, everybody, Tim Ulbrich here. Thank you for listening to the YFP podcast, where each week we strive to inspire and encourage you on your path towards achieving financial freedom. This week, I had the pleasure of sitting down with award-winning director and producer, Robin Hauser, to talk about her most recent documentary, Savvy, which explores why it’s critical for women to understand and take control of their personal finances. During the show, we discuss the main obstacles for women to take control of their finances, why women typically outperform men with investing, and why negotiation skills are essential for women to embrace as it relates to the financial plan.

Before we hear from today’s sponsor and then jump into the show, I recognize that many listeners may not be aware of what the team at YFP Planning does in working one-on-one with more than 250 households in 50 plus states. YFP Planning offers fee-only, high touch financial planning that is customized for the pharmacy professional. If you’re interested in learning more about how working one-on-one with a certified financial planner may help you achieve your financial goals, you can book a free discovery call at yfpplanning.com. Whether or not YFP Planning financial planning services are a good fit for you, know that we appreciate your support of this podcast and our mission to help pharmacies achieve financial freedom. Okay, let’s jump into my interview with Robin Hauser.

[INTERVIEW]

[00:01:17] TU: Today’s episode of the Your Financial Pharmacist podcast is brought to you by the American Pharmacists Association. APHA has partnered with your financial pharmacies to deliver personalized financial education benefits for APHA members. Throughout the year, APHA will be hosting a number of exclusive webinars covering topics like student loan debt, payoff strategies, home buying, investing, insurance needs and much more. Join APHA now to gain premier access to these educational resources and to receive discounts on YFP products and services. You can join the APHA at a 25 percent discount by visiting pharmacies.com/join and using the coupon code YFP. Again that’s pharmacist.com/join and using the coupon code YFP.

Well, I’m really excited to welcome on this week’s podcast, Robin Hauser, who’s the award-winning director and producer of documentaries CODE: Debugging the Gender Gap, Bias, Savvy, Running for Jim, made to illuminate causes about which she is passionate. Those include the gender gap in tech, unconscious bias, equality and financial savviness. Robin’s work has carried her around the world, from the TED and TEDx stage to the White House, NASA’s Kennedy Space Center, and conferences worldwide, speaking about mitigating bias in artificial intelligence, The Likability Dilemma, Diversity Inclusion, Financial Wellness and Gender Equality. A self-described disruptor, Robin is committed to provoking thought to address the most important socio-economic issues that we face today. Robin, welcome to the YFP podcast.

[00:02:50] RH: Thanks, Tim. I’m happy to be here.

[00:02:52] TU: I’m really excited to have you on the show and to dig into the documentary that you helped produce, Savvy. This came from a friend of mine who let me know about the documentary. I’m so glad that she did, because I think it’s going to be an incredible resource for the YFP community and, of course, for pharmacists and others even beyond. I want to start with a story, Robin, that you shared in your 2019 TED talk (that we’ll link to in the show notes). That TED talk was called, “The Likability Dilemma for Women Leaders.”

You share a story when you’re on the ski resort and a man approached you and asked you if you’re with a husband or a fiancée. You said, “No” and started to head back toward the lift, and your curiosity got the better part of you and you decided that you were going to follow up and have a conversation. Take us there and tell us what happened at that moment.

[00:03:43] RH: Right. This is such a good example to me of unconscious bias, right? I’m walking through the ski resort. I’ve got a pair of skis on my shoulder. This man, he was young, probably late twenties/early thirties, just came up to me and said, “Hey, excuse me, are you with a fiancée or a husband?” I said, “No.” He said, “Oh, okay.” Sort of like, okay, never mind. So I kept walking and I thought, this is—wait. I’ve got to find out why he asked me that. I turned around and walked back to him and I said, “Hey, I’m just curious. Just wondering why you asked me if I was with a man?” He said, “Oh, because we’re selling timeshares.” That gave me pause. Then I looked at him and I said, “So you don’t sell to women?” He said, “Oh, yeah, oh, yeah. Well, we could. Yeah. Are you interested?” I said, “Well, no, not really.” I said, “You do know that women have pocketbooks too, right? Women can buy condos or can join a timeshare.”

It was as though it never occurred to him. Poor guy, he’s just trying to do his job. But I think that it’s the way they trained him. to go for probably the average (which is fine) couples that are together, heterosexual couples, and ask the guy, because, usually, it’s the man handling the purse strings and making long term or investment decisions. It just really struck me that they were missing this entire demographic by not actually approaching women.

[00:05:09] TU: You shared another story in that same TEDx talk where you had a cocktail party and you asked the man about his line of business, and he said he was in the fintech business. You said, “What type?” He said, “Well, it’s complicated.” I think it’s just another example of what you just mentioned there. My question for you is, why do women often carry this implicit bias that women don’t understand finance or they’re not involved in the finances? Where does that come from?

[00:05:33] RH: Well, and I just want to point out that these are, likely, very well-intended men. When this man said to me, “Oh, it’s complicated,” he did definitely say it in a dismissive way. What I was curious about is, had I been a man, how he said that to me. Would he still have said, “Oh, it’s complicated?” Or would he have said, “Well, actually, we’re a white bank and we’re raising 10 million for a first fund” or whatever, and gone into details about it. But he just assumed—and maybe it’s because I’m a woman, maybe because I’m blond. I don’t know—but he just made this assumption that it would be probably too complicated. Then, my response to him was, “Try me. You might be surprised. I actually might be able to understand you and the concept of whatever your fintech deal is.”

A lot of it is stereotypes. I mean, it’s really interesting that in our society—our society dictates that finance is male territory. If you look back over the years, that’s how it’s been. So, even if a woman handles the lunch money or the day-to-day grocery money, it doesn’t mean that she’s involved in long term financial planning. It doesn’t mean that she’s necessarily involved in, how much are you saving? Who’s your mortgage with? What debt do you even have? I mean, these are questions you might not be able to answer.

[00:06:49] TU: Yeah. Just the point of vulnerability here for a moment. My wife and I had this conversation not too long ago, where just what you said there—my wife stays home. We’ve got four boys, just phase of life we’re in. She, day-to-day, is spending money on the groceries, activities, home schooling things. She has a much closer look on the financials day-to-day than I do. But long-term planning, I was really taking a lot of that under my wing. We really identified this disconnect between the long-term planning and what was happening day-to-day. We said, “Really, if anything you should be in charge and empowered in the financial plan. Obviously, we both need to be involved.”

I think that’s a very common thing that can happen. We really felt like it was a great moment to take a step back and say, “Sure, there’s the issues where if something were to happen to one of us, do we both make sure we have a good understanding of the whole plan?” But just objectively, day-to-day, week-to-week, month-to-month, year-to-year, especially in the phase that were life that we’re in, it just makes sense that she would really be taking the lead in what we’re working on financially.

[00:07:49] RH: Well, that’s right. When you think about, look, we’re all really busy, right? Division of labor in a partnership, in a marriage, is important. You don’t both need to always take the kids to school. You don’t both need to walk the dog together. I mean, if you can, that’s wonderful, that’s fabulous. But the reality is that, we all take on a lot. So, we need to divide and conquer at times, to be most efficient.

My point is, that’s not what we need to do with money. With money—when it comes to money, and planning money and understanding personal finance, it’s something that we need to at least collaborate on once a month, so that we know. That’s exactly right, as you said. Here are the reasons that women are so vulnerable. Number one, we live longer than men. Even if you live a full life, chances are that a woman’s going to live eight years at the end of her life on her own. We earn less money because we spend more time out of the workforce; therefore, we have less Social Security. And we earn less. We earn $0.80 to the dollar that a man makes.

This is why 80 percent of women, 65 and older, live in poverty (80 percent more than men). That’s astounding. I mean, that’s a problem. Women need to get involved with personal finance, take the reins of their money, and really understand how to grow their wealth. So that if they did or when they do end up on their own, they’ll be able to handle it.

[00:09:13] TU: Which is a great call to action. Our communities, I mentioned before, we hit record, the pharmacy profession is predominantly more women than men, especially as of late with graduates over the last 20 years or so. Such a good call to action and reinforcement for our community. So, the Savvy Documentary addresses why women across the board often take a passive role or give up their role in managing their finances. You say, particularly in millennial. Obviously, there’s many factors as to why, but what do you feel like is the greatest obstacle or two for women being able to take control of their finances?

[00:09:46] RH: Probably intimidation. I think what happens is that—I mean, the financial industry was built by men for men, not on purpose to exclude women. It’s just that’s the way it was when Wall Street was being created. It was men that was handling that, that organized that, right? So, along with that comes this sense of ambient belonging. We’re using a lot of acronyms, ETFs, SEP, your IRA, what do these things mean? Even very well-educated, very intelligent women can feel marginalized and can feel intimidated if they haven’t kept up and if they don’t understand.

Especially now with technology and the way fintech is working. There’s all sorts. I mean, cryptocurrency, there’s all sorts of new terminologies. It takes you no effort to keep up with what does this all mean, right? So, I think that that’s probably the biggest hurdle is this intimidation factor, thinking, “Oh, boy, I really should have kept up with this all these years and I haven’t. So now I’m behind and I don’t even know. It’s overwhelming. I don’t know how to catch up. I don’t even know how to start.”

Often the woman who is busy with kids and probably her own job and volunteer hours and everything else, doesn’t make the time to go to the financial planner with her spouse. Therefore, she doesn’t really have a great relationship with that person. 90 percent of women who are widowed or divorced changed financial planners or advisors within the first year. What does that tell you? That tells you that women are not relating to the financial advisor or the financial advisor doesn’t really understand the plights or the issues that women face when it comes to money, and they’re not really working to maintain their female clients.

[00:11:35] TU: Yeah. Perhaps weren’t invested in that relationship together or a part of the decision making for that relationship to begin with. It’s one of the reasons, when we’re talking with individuals that are looking for planning services, if it’s a situation where it’s a spouse or a significant other, but folks are doing that together, both parties need to be present from jump street.

Now, as time goes on and maybe that schedules get busy, maybe it’s not realistic that, for every single meeting, two people are always there. Upfront decision making, understanding the goals, the priorities, the issues, it’s so important to have both individuals that are involved. One of the things that you highlight in the documentary, that I thought was fascinating, is the statistic that when women invest, whether that’s hedge fund managers, mutual fund managers, or individually, they outperform men by about 1 percent annually.

When I saw that, we preach and teach on this podcast, that 1% really matters. Our listeners know that in terms of a compound effective 1 percent over time, whether that’s in returns or perhaps fees or a combination of both, so when I see 1 percent, that matters, that’s significant. Why is this? What’s behind this? Tell us more.

[00:12:42] RH: Yeah. I think it’s one basis point a year, which corresponds to about 1 percent. I think what that is, is women are more risk aware. They’re not more risk averse. They’re more risk aware. So, women understand the risks involved in investing. They might pay a little bit more attention into being well diversified, to not jump into something that sounds like it’s a really good investment but could have a huge negative impact on a portfolio if it were to go wrong. So, because of that, because of women’s patience and their sensibilities to risk, they tend to make better investment decisions.

[00:13:22] TU: Yeah. That, of course, compounds over time. We know when you look at simulations of portfolios, if you’re able to mitigate the volatility of a portfolio, but take on appropriate risks of the long term, you’re going to see really good returns, so that makes sense. The other aspect that I’ve seen, in my own situation, and a pharmacist I talk with (all across the country, the men that are pharmacist that listen may not like me calling them out), but there tends to be a little bit more overconfidence that I see in terms of— certainly there’s varying levels of education—but is there an openness and a receptiveness to learn and to have someone come alongside of you to be able to advise, but also to keep your accountability? I know that’s a big generalization, of course, but I think there’s a different level of receptiveness that may come to that as well.

[00:14:09] RH: Well, there’s no doubt that there’s a confidence gap when it comes to women and to girls. This is just something that we tend to suffer from, right? There have been some really interesting studies, and in catalyst of the study several years ago that showed ten different qualifications that you would need, whether you’re a woman or a man, to apply for a job. Men tended to apply with confidence if they had even just 60 percent of the qualifications, right? Women even who had 100 percent of the qualifications still were not 100 percent confident that they would get the job or that they qualified for the job. So, there’s a big difference in physiologically. Is that because of testosterone? Maybe.

What it says is that we need to push ourselves as women. We need to push ourselves to become more confident, to take on investing, to decide that we’re going to take that promotion in order to stay on a good career trajectory, because otherwise, I don’t know that we’ll ever feel 100 percent confident that we’re ready for that next step. But when we do take it, we perform well, right? So, it’s just a matter of feeling confident and understanding that we can take that risk.

[00:15:24] TU: Yeah. As you challenge the women to lean into that confidence and be comfortable taking some of that risk, I would challenge the men listening to really ask themselves, “Am I perhaps overconfident in the financial plan? What are the opportunities for learning and improvement and perhaps a different perspective as well?” Robin, you also touched on in the film Negotiation Skills, a topic we’ve talked about in this podcast before, specifically around credit card negotiation, salary negotiation. Why is this so important for women to develop and refine, and why do you think it’s something that many women may shy away from?

[00:15:55] RH: Well, I think we shy away from it, because the confidence gap, what we just talked about. But negotiating is a really interesting thing, because what happens is that women and men, when we negotiate, women tend to outperform men in negotiations, but only when women are negotiating on behalf of somebody else. When we negotiate for ourselves, we are not as successful. Why is that? Well, it’s because in our society, women are supposed to be especially, a good woman, right, is supposed to be supportive, deferential. We are not necessarily rewarded when we come across as overly confident, overly assertive, decisive, right? But those are things that men actually are rewarded for, because they are seen as leadership skills in men more than they are in women.

This comes into this likability dilemma. But when it comes to negotiating, it’s fascinating, because women, we violate societal norms of what it is to be a likable woman when we are negotiating hard for ourselves. We come across as being selfish and self-centered and maybe even greedy, right? Which is ridiculous, but those qualities, we tend to tolerate more in men and expect more of in men than in women. So, what does that mean? Women have to often come to the table, negotiate and give examples of why they need money, which is interesting. Why they would need a higher salary? Those are things that men aren’t burdened with as much. I think that if you’re an employer, I think we need to pay attention to this. We need to understand.

If you want to retain women, if you want women to rise in your company, we need one: to push them to take promotions. Two, understand that it’s going to be harder for her to ask for a salary raise, even though she has earned it and deserves it. So, we need to be aware of that. We need to also be aware of the fact that women know how we’re perceived when we negotiate. So, we are careful about how we negotiate in what we do. The reason we need to continue to negotiate successfully regardless is because otherwise the pay gap widens.

[00:18:09] TU: Yep. That’s where my mind is just going around with the pay gap and I appreciate the call to action to the employers that are listening. So important to be aware of it and to be taken action appropriately, especially in a field like pharmacy where we have great flexibility, where pharmacists may through different seasons of life, cutback hours or increase and then take back hours or overtime, depending on family needs and other needs, which is a great benefit, but also can be a challenge if you’re stepping out and into the workforce to make sure that that pay differential is not widening over time.

I think the responsibility certainly lies in part on the employer, also in the individual, to be able to effectively negotiate for themselves and to be confident in doing that. It’s a great, great piece. We often, on this show, talk about the lack of financial literacy available to pharmacists while they’re in pharmacy school. I know financial literacy education is a big topic, one I’m passionate about, that really should start as early as possible and be as longitudinal as possible. This is really striking for our profession, where we have new graduates coming out on average with about $170,000 in student loan debt. Because of the lack of financial literacy of education, I think it’s easy to make missteps along the way.

My question here is, were there any key lessons that you took away from the documentary, in the preparation of the documentary, that really focuses on helping to improve financial literacy among women? Even if it’s access or interest, how do we overall raise the level of financial literacy in education and make it one that is accessible of interest and also is able to be action oriented?

[00:19:46] RH: Well, and this is for men and women, we need to have relatable financial education courses in school and in high school even. I mean, I’m even a proponent for starting them age appropriately in grade school. But there’s no reason that you can’t learn in high school the positive and negative impacts of compounding interest for example. You need to understand that you can’t just— that you need a credit card. First of all, you need a credit card in order to establish good credit.

In fact, when you get to college and you’re going to rent an apartment, they’re going to check your credit score. S,o you need to establish a credit score by having a credit card and yet paying off the minimum. Nobody teaches us how to use credit cards, right? Unless we’re having to have parents that teaches these things. Otherwise, you, probably everybody, that comes out of school comes out of the pharmacist training and school gets, what, maybe three different credit card invitations a month?

[00:20:40] TU: At least.

[00:20:41] RH: Yeah. At least, if not a week, right? I mean, it’s ridiculous. Yet in any of those, unless you’re going to— even if you read the fine print, does anybody stop and say, “ut here, let me actually teach you how to use this.” Because paying the minimum is not enough. Paying the minimum means you’re actually going to be paying interest, right?

[00:20:58] TU: Yeah. Lot of interest.

[00:20:58] RH: Interest is accruing, a lot of interest. Some of those credit cards, those initial credit cards, are over 25 percent, so that’s huge. I think that’s essential for men and for women. We need to know what our credit score is. We need to pay off the total balance on a credit card every single month. We need to use less than 10 percent usage of it in order to have the highest credit score rating. But these are things that nobody teaches us, right? I think that’s important. Then I also think that, yes, whether you’re in business school, whether you’re coming out of pharmaceutical school. There’s no reason that there can’t be an education or finance course that’s specific to your industry, right? I think that that’s something that we’re owed, especially if you’re going to end up with $170,000 in student loans debt.

[00:21:43] TU: Yeah. I think we’re starting to see momentum among this. I think there’s other health professions I would give kudos to. I think medicine has done this well, from an association colleges standpoint. Veterinary medicine has done this well, from an association colleges standpoint. I think what we need immediate past is the stigma and the idea that this is a doctorate level education and personal finance doesn’t belong. It does belong, right. Because we know the connection between financial wellness and one’s ability to be a clinician and to work effectively in their role. Those things are very well connected. So, I think we’re starting to see momentum in our profession around this topic, which is very exciting.

Of course, for folks that are listening and have kids at home, what a great opportunity to just begin conversations as early as you possibly can. These come up all the time if you watch and listen for them. I remember being with my oldest son, who’s now about to be 11, probably when he was five, maybe six, and we’re at the grocery store and he just asked me a question once at checkout. He was like, “Oh, so dad, you just swipe the card and then you get the groceries. Is that how it works? You just swipe the card and you get what you need?” I was like, oh, my gosh, what a great teaching moment, about how does money go from work into a bank account. There’s not physical cash, right?

This is such an incredible learning moment, but that is a foreign concept. If a child gets money from a gift or from work and it ends up online, but I don’t see it in front of me, but it’s in an account. What? What is that? What does that mean? So, I think just such a great opportunity to be having these conversations, if we’re in a position to do that.

[00:23:18] RH: Yeah. It’s so interesting. The psychology behind all that too, right? We are just swiping. I mean, it’d be interesting to see how your son would react if you pulled out your wallet and paid in cash, which none of us do anymore for the groceries, as opposed to swiping that card, right? There’s something that they talk about called a pain of paying. I think that’s really interesting, because it is much less painful to pay with a credit card. It’s more painful when we see our balance at the end of the month than we have to say, “Okay, pay that off.” But in terms of swiping versus taking out a few twenties or fifties from our wallet, that hits us a little bit more in terms of the pain.

Let me tell you, I mean, with Venmo. What’s Venmo? I mean, that it’s crazy, right? There’s just this fictitious balance. I mean, it is a balance, actually, but you almost forget that it’s tied to your checking account and there seems to be no pain in that at all, which is why it’s so easy to spend.

[00:24:15] TU: Yeah. One of things my boys will often ask me now, I guess I’m glad that they’re comfortable asking the question, but they often ask, “How much does that cost you, Dad? How much is that cost you?” Sometimes your reaction is like, “Oh, my gosh, I had no idea.” Or “Oh, that’s not bad.” I’m like, “Well, it’s still a lot of money and let’s have a conversation about work.” But you also want to create a scarcity mindset. So, there’s a delicate balance as you’re having these conversations with kids about money, but there’s things they can relate to, right?

If they get a dollar or $3, or whatever the tooth fairy pays now nowadays for a tooth, they understand what that is. If they can understand something cost $20 or $50 that might really resonate with them and be able to put their arms around exactly what is the amount of something. And, to your comment about the pain of paying, it becomes real when they can really see the tangible dollars that are at play. One of the other things I wanted to ask you about is it feels like, to me, there’s a significant inequality of who is leading the financial education out there. One of the reasons I was so glad to see this documentary specifically geared towards empowering women around money, and obviously the work that you’ve done here is— it feels like if you look at the traditional education around financial topics, it is largely led by men.

Now I think that’s shifting what’s happening, but let me give one example. I’m going down the rabbit hole right now. I’m learning about cryptocurrency. One, because it’s a topic I feel like I’ve got a baseline knowledge in, but as we get more questions, I want to, myself, become more knowledgeable. I’m digesting YouTube videos and blogs and books, and I’m pretty far into the journey. I can maybe think of on one hand (if even that many) women that are leading the conversation and the education around cryptocurrency. Well, that’s one example. I think it sheds light into other areas of the finances, whether we’re talking about the alphabet soup of retirement planning, or estate planning, or tax planning. It feels so heavy on the male side of the equation as it relates to financial education literacy. Am I reading that correctly?

[00:26:17] RH: Well, yeah. I think so, because I mean, there are many more male financial advisors than there are women. This is something that there’s a big effort to change in trying to get more women into financial advising, but I think especially when it comes to crypto, and why? Well, because crypto’s a merge of finance (which we know is male oriented) and computer science, which is male oriented. When you take two things that tend to have the stereotype to be very male-centric, I think it stands to reason that there are less women there. Again, back to that idea of ambient belonging. I mean, if you just don’t feel you belong there, if it doesn’t feel like home when you’re—so if a woman goes to a cryptocurrency conference and she’s one of the only or the few women there, she’s going to feel like she doesn’t belong, right?

It’s really hard to pioneer and to push through being the minority, and many women have. Same goes for people of color, right? I do think that it’s hard to be what you can’t see. So, we need to get more women into finance and into crypto, into computer science and sciences in general. I love hearing that pharmaceuticals has a stronghold of women, that is fabulous. But this is what we need to do in order to change the stereotype.

[00:27:39] TU: Well, this is great, Robin. I really appreciate the conversation. I would encourage folks to make sure that they check out the Documentary Savvy. We’ll link to it in the show notes. Where is the best place that folks can go to learn more about you and to follow the journey and the work that you’re doing?

[00:27:53] RH: Well, finishlinefeaturefilms.com is our website. We will list different screenings of Savvy, whether it’s film festivals or whether we’re doing public screenings, you’ll find them listed there. So, keep an eye on that website.

[00:28:06] TU: Awesome. We’ll link to that in the show notes. Thank you so much, Robin, for your time. I appreciate it.

[00:28:10] RH: Thank you, Tim.

[OUTRO]

[00:28:11] TU: Before we wrap up today’s episode of the Your Financial Pharmacist podcast, I want to again thank our sponsor, the American Pharmacists Association. APhA is every pharmacist’s ally, advocating on your behalf for better working conditions per PBM practices, and more opportunities for pharmacists to provide care. Make sure to join a bolder APhA to gain premier access to financial educational resources and to receive discounts on YFP products and services. You can join APhA at a 25 percent discount by visiting pharmacies.com/join and using the coupon code YFP. Again that pharmacies.com/join, using the coupon code YFP.

[DISCLAIMER]

[00:28:50] TU: As we conclude this week’s podcast, an important reminder that the content on this show is provided to you for your informational purposes only and is not intended to provide and should not be relied on for investment, or any other advice. Information in the podcast and corresponding materials should not be construed as a solicitation, or offer to buy or sell any investment, or related financial products. We urge listeners to consult with a financial advisor with respect to any investment.

Furthermore, the information contained in our archived newsletters, blog posts and podcasts is not updated and may not be accurate at the time you listen to it on this podcast. Opinions and analyses expressed herein are solely those of your financial pharmacist, unless otherwise noted and constitute judgments as of the dates published. Such information may contain forward-looking statements, which are not intended to be guarantees of future events. Actual results could differ materially from those anticipated in the forward-looking statements. For more information, please visit yourfinancialpharmacist.com/disclaimer.

Thank you for your support to the Your Financial Pharmacist Podcast. Have a great rest your week.

[END]

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YFP 259: Building a Medical Writing Business with Megan Freeland

Posted on June 9, 2022November 2, 2022 by yfpadmin

Building a Medical Writing Business with Megan Freeland

On this episode, sponsored by Insuring Income, Megan Freeland, PharmD, talks about talk about her career path in medical writing, the types of health content writing that might interest pharmacists, and how she created the Health Professionals to Health Writers program.

About Today’s Guest

For the longest, Megan’s ultimate career goal was to become a public health pharmacist working for the Centers for Disease Control and Prevention. She accomplished that goal on multiple occasions — supporting divisions related to medication safety, health communications, and emergency preparedness and response — but realized she was missing the opportunity to apply a creative flair to her writing career.

Megan set out on her own to build a health content marketing company. Through StockRose Creative, LLC, Megan supports innovative health organizations, helping them use the power of words to reach their target customers and clients and turn them into raving fans. She uses a strategic approach to develop culturally-relevant content for digital health companies and health information websites. At the same time, Megan runs the Health Professionals to Health Writers program, which helps pharmacists and other health care providers learn how to replace a portion of their income through freelance health content writing.

Earlier this year, Megan also began lending her talents to an in-house communications team for the nation’s leading provider of sexual and reproductive health care and education.

When she’s not writing, reading about writing, or teaching others how to write, she’s binging podcasts and new music, scoping out the latest Peloton apparel drops, and laughing hysterically with — or at — her two young children and husband.

Episode Summary

In this episode, YFP Co-Founder & CEO, Tim Ulbrich, PharmD, is joined by Megan Freeland, a pharmacist, entrepreneur, and health content writing expert. Megan is the creator of StockRose Creative LLC, where she supports health organizations, helping them use the power of words to reach their target customers and clients. In this discussion, Megan shares how she unexpectedly found herself with a career path in medical writing after accomplishing her ultimate career goal of becoming a public health pharmacist working for the Centers for Disease Control and Prevention. Megan explains the types of health content writing pharmacists may be interested in pursuing and why many individuals get started in health content writing. She also shares how she saw the opportunity to create the Health Professionals to Health Writers program, helping pharmacists and other health care providers learn how to replace a portion of their income through freelance health content writing. Throughout the episode, listeners will discover how Megan’s passion for public health has been pivotal in the decisions that brought her to her current position. From volunteer work in healthcare centers, fellowships at the CDC, and sitting on the SNPhA board to an unexpected pregnancy, opportunities with the FDA, and more, Megan educates the listener on the art of life management while pursuing your dreams.

Key Points From This Episode

Understanding Megan Freeland’s career by looking at her interests and background in pharmacy.
How to apply knowledge and experience in pharmacy to the public health system.
What opportunities Megan took to further explore public health training and experience.
The hard journey she took to end up at her dream job in the CDC.
Her passion and motivation for the intersection of public health and writing.
The influence Megan’s family and community had on her passion for public health care.
Understanding the types of medical writing and how to pursue one.
A guide to beginning your career as a freelance health content writer.
Megan’s ideas, goals, and motivations behind StockRose Creative.
A look into how Megan has grown her career on LinkedIn.
Advice for those starting to pursue their content writing careers.

Highlights

“All of the opportunities that I was taking part in to try to enhance my candidacy for being in a public health space, all of those roles and opportunities involved writing in some way.” — Megan Freeland, PharmD [0:04:33]

“People are thinking about their own experiences and their own limitations when they are thinking about what you are or are not capable of doing. Even though they have the best intentions, those ideas and those preconceived notions get projected onto you.” — Megan Freeland, PharmD [0:15:53]

“It wasn’t just my individual, nuclear, or immediate family’s health conditions that I was aware of, but we were all aware of everybody’s business. I saw how important it was for people to have good healthcare and good health information.” — Megan Freeland, PharmD [0:19:03]

“I think about the environment, information, and access to healthcare and good health information, how critical that is to the health of communities — as a black woman in the world, that level of awareness that comes with that lived experience as well.” — Megan Freeland, PharmD [0:19:37]

“You are not necessarily a reflection of the people who are trying to learn from you.” — Megan Freeland, PharmD [0:39:36]

“Your life is your own, no one else is responsible for what you do. No one else has to live with your decisions or your choices — know that you are deserving of having the professional trajectory, having the life, having the career, having the whatever that you decide you want.” — Megan Freeland, PharmD [0:42:37]

Links Mentioned in Today’s Episode

Episode Transcript

[INTRODUCTION]

[0:00:00.4] TU: Hey, everybody. Tim Ulbrich here and thank you for listening to The YFP Podcast, where each week, we strive to inspire and encourage you on your path towards achieving financial freedom.

This week, I had a chance to sit down with Megan Freeland, pharmacist, entrepreneur, and health content writing expert. Megan is the Founder of StockRose Creative, where she supports healthcare organizations, helping them use the power of words to reach their target customers and clients and turn them into raving fans.

A few of my highlights from the show include Megan talk about how she unexpectedly found herself in a career path in medical writing after accomplishing her ultimate career goal to become a public health pharmacist working for the CDC, the types of health content writing that pharmacist may be interested in, pursuing and the main reason that individuals get started in this field and how she saw an opportunity to create the health professionals to health writers program where she helps pharmacists and other healthcare providers learn how to replace a portion of their income through freelance health content writing.

Before we jump into the show, I recognized that many listeners may not be aware of what the team at YFP planning does in working one-on-one with more than 240 household in 40 plus states. YFP planning offers fee-only, high-touch financial planning that is customized for the pharmacy professional. If you’re interested in learning more about working one-on-one with a certified financial planner that may help you achieve your financial goals, you can book a free discovery call at yfpplanning.com.

Whether or not YFP Planning’s financial planning services are a good fit for you, know that we appreciate your support of this podcast and our mission to help pharmacists achieve financial freedom.

Okay, let’s jump into my interview with Megan Freeland, Creator of StockRose Creative.

[SPONSOR MESSAGE]

[0:01:42.8] TU: This week’s podcast episode is brought to you by Insuring Income. Insuring Income is your source for all things term life insurance and own occupation disability insurance. Insuring Income has a relationship with America’s top-rated term life insurance and disability insurance companies, so pharmacists like you can easily find the best solutions for your personal situation. To better serve you, Insuring Income reviews all applicable carriers in the marketplace for your desired coverage, supports clients in all 50 states, and makes sure all of your questions get answered.

To get quotes and apply for term life or disability insurance, see sample contract from disability carriers or learn more about these topics, visit insuringincome.com/yourfinancialpharmacist. Again, that’s insuringincome.com/yourfinancialpharmacist.

[INTERVIEW]

[0:02:34.4] TU: Megan, welcome to the podcast.

[0:02:36.0] MF: Hello, Tim. I’m so excited to be here with you, thanks for having me.

[0:02:39.8] TU: I too am excited. We had a chance to connect several months ago and I’ve been excited to do this interview to share your story, your entrepreneurial journey with the YFP community. Let’s start off by hearing about your background, where did you go to pharmacy school, and what ultimately was some of your interest in going into pharmacy in the first place.

[0:02:57.6] MF: Great question and thank you for orienting me with this question, because whenever I get that background question, I’m like, “Where do we start?” I went to undergrad at Emory University and then I stayed in Atlanta for pharmacy school to attend Mercer University. When I went into pharmacy, I did not necessarily go into the field with the intention of practicing in the traditional sense.

When I was still in undergrad, I was trying to decide whether I wanted to pursue public health or whether I wanted to pursue pharmacy and I was encouraged by family members, my mom namely, to go into pharmacy because she was frankly disappointed that I decided that I did not want to go to medical school anymore and her thought was, “Well, at least, if you go to pharmacy school, you still come out with a doctorate degree.”

So I listened to mom and I chose to go to pharmacy school but I still had that public health bug in the back of my mind and so, my goal was to figure out, “Okay, how can I apply the experience, the knowledge that I gained through the pharmacy program to a public health setting?” How can I become essentially, a public health pharmacist when I leave?

Obviously, didn’t have a whole lot of guidance or examples to look to because at that time and even still now, there weren’t a whole lot of people who were kind of going down that public health path with the pharmacy background. So what was very much four year period of trial and error and kind of figuring out where I landed and how I could make that happen and what I noticed was that all of the opportunities that I was taking part in to try to enhance my candidacy for being in a public health space, all of those roles and opportunities involved writing in some way.

So, once I noticed that pattern, I decided, “Okay, well, this is kind of naturally the course that I’m going along, so I’ll just keep doing this and see where it takes me.”

[0:04:56.8] TU: It’s really interesting, Megan. I think it’s rare that someone goes into the pharmacy degree with a thought of a non-traditional career path these days. One example that I am passionate about is that my hope is that we can begin to see the PharmD education as being more of a gateway to many different opportunities and you know, not just one or two different pathways which folks may typically associate with.

So I think that’s really neat to hear that someone entered in with that non-traditional path and let me ask you a follow-up to that then, as you went into pharmacy school with a specific interest in public health, which isn’t a surprise, right? Emory University is known for their public health training, what specific opportunities did you look for in pharmacy school to further explore and build upon that interest?

Was there an organizations, was there specific internships, or rotations you’re able to get more experience, tell us more about how you’re able to foster that interest during pharmacy school?

[0:05:51.3] MF: Yeah, I love that question. And yes, that was not coincidental at all, actually, I’m originally from Columbia, South Carolina, and in the 9th grade, my magnet program, we took a field trip to Atlanta, and during that trip, we toured Emory and we also toured the CDC, which is right next door to Emory. So in the ninth grade, I decided, when I go to college, I’m going to Emory University and I’m going to work for the CDC.

So, it kind of was like a full circle situation but when I got to pharmacy school, I noticed that a lot of the extracurricular opportunities, the clubs, the programs, they were all pharmacy-related and so for me, I felt like, “Yes, I could do these things but will they really help me in the public health setting?” I’m going to have the degree, that takes care of my pharmacy qualifications.

I felt like anything that I was doing outside of going to class and taking tests needed to be more specific to public health in some way and so because of that, I was actually looking for opportunities outside of my school’s ecosystem because those were not what I felt like I needed to increase my candidacy for public health.

I looked at community organizations, I ended up volunteering at a center called, The Feminist Woman’s Health Center in Atlanta. They do a lot of education around sexual and reproductive health and I ended up volunteering on their health and education training committee for all four years of pharmacy school.

I looked into the CDC to see what types of internships or fellowships they offer that pharmacy students were eligible for. So, the summer after my second year of pharmacy school, I completed a CDC fellowship, it was called the Emerging Infectious Diseases Fellowship and it lasted for nine weeks, you were paired with a mentor, you actually worked on CDC teams, worked on a project, presented, everything.

I traveled to Panama for an epidemiology investigation in a Panamanian hospital. Those are like two of the core examples but any other time that I was engaging in extracurriculars, I made sure that they were related to public health in some way. One more that I just thought of, I was a part of SNPhA, the Student National Pharmacist Association and I participated in some of their community service projects because again, those are more public health facing educational opportunities.

I always had that lens and that perspective whenever I was doing anything outside of going to class, taking tests, and trying to get my degree.

[0:08:34.8] TU: I love the intentional and I hope if we have any students listening, they go back and rewind and listen to that because the message I hear there is that sometimes we got to get outside of the walls of the college or pharmacy to explore other opportunities and again, the PharmD can be used in so many different ways and I think your story here is a great example of that but sometimes it takes some creative thinking and it takes some initiative to see what those opportunities may be.

Tell us more one of the things you shared to me before is that you know, working for the CDC was a dream for you and you’re ultimately able to achieve that. Tell us more about what happened right after you graduated from pharmacy school. So it was during school, you identify this growing interest in public health, you see the connection to writing and then you have an opportunity to do an industry, fellowship as well as some work with the CDC thereafter, tell us more about those experiences.

[0:09:22.0] MF: Yeah, as I was going through pharmacy school and kind of collect these experiences that I hoped would be helpful for me in the future. I was also trying to think about what the immediate step post-graduation would be. My goal was to go straight back to the CDC after graduation. Those are the opportunities that I was most excited about and most intentional about but it wasn’t working out.

I wasn’t getting any opportunities that would be timely for me to start right after graduation and so I said, “Okay, if I can’t get to the CDC right now, what are other opportunities that I could take part in that were still public health-related that would still help me get back to CDC down the line?” So I looked into industry fellowships and I was specifically attracted to one program in particular because it had an FDA rotation as a component of the fellowship.

I graduated in 2015. So, at that time, it was one of the only industry fellowships that had any type of public health rotation as a part of it. It wasn’t like I had all of these choices. I did apply to many more programs because I would have made it work but this one, in particular, was of interest to me because of the FDA component and so that’s the fellowship program that I ended up getting accepted into.

Ironically, I got pregnant unexpectedly during the first year of my fellowship and so I never actually made it to the FDA rotation of the program. I was in the middle of my second rotation when I found out I was pregnant. What happened at that point was that I was located in New Jersey, the portion of my fellowship I was in at the time was the medical information rotation for Johnson Scientific Affairs, which is the pharmaceutical arm of Johnson & Johnson.

I was in New Jersey and I’m like, “Okay, well, I need to move back home” where my now husband but boyfriend at the time was and we have to get ready for it to be parents and so, I’m like, “Well, that also means I need a job because I can’t do my rotation from Atlanta” you know, maybe if it was 2020 or 2021, things are different now, maybe that would have worked out but at that time, basically, we just brought my rotation at one year instead of two.

I went back to the CDC drawing board, I was looking for fellowships, I was also applying to a whole bunch of other jobs mind you because like, this was survival at this point in time. It wasn’t about my preferences, I just needed a job in Atlanta but I was also looking for CDC opportunities and I saw this opportunity that was in the same department that I had completed my fellowship program in during pharmacy school.

I reached out to my mentor from that fellowship to ask her if she knew anything about the position, she wasn’t the hiring manager but she knew the person who was and so she connected me with that person, I went through the application, the interview process, everything and I got that position. I ended up back at the CDC, back at home in Atlanta, preparing for, to become a parent, and a lot of this story that I tell, it’s important for me to say that like, it sounds great now but that’s because I’m reflecting on past experiences, right?

Hindsight feels a lot better but all this journey was not easy. Even during pharmacy school, when I was engaging in all of these non-pharmacy specific projects, it was uncomfortable because I didn’t know if what I was trying to do was actually going to work and I had a lot of people who meant well, advisors, faculty members, in my ear, saying that I needed to go another route.

Similarly, with the fellowship experience, I was very disappointed in myself for not being able to complete my fellowship and I had three preceptors, which meant I had to tell three different people, “Hey, sorry, I’m pregnant and I can’t finish the fellowship” but they were all super supportive and when I got that role back at the CDC, one of my, I probably shouldn’t have favorites but one of my favorite preceptors said, “You should be proud of yourself because this two-year program was supposed to prepare you for a role like the one that you just got, not even nine months into your fellowship.”

“You should feel very proud of yourself.” I burst into tears because I was emotional and it was a lot going on, that really helped me put it into perspective. So that’s how I got back to the CDC. I should also add, the fellowship that I completed was in drug information and the CDC fellowship that I started after the one year of my fellowship was in health communications.

[0:14:10.0] TU: And we’re going to come back to more of the expansion on the interest and writing and where that has led to the work that you’re doing today. I want to come back real quick, Megan. You said something really important which I want – especially if we have any students listening. I want them to hear is that, you were given advice by several folks that I think, probably had good intent that maybe you should consider a different pathway and I can tell you from being in the academic environment for several years, we like very linear pathways, right?

We like very linear pathways where we know this opportunity’s going to lead to that opportunity and your pathway wasn’t necessarily linear in that you were coming in with somewhat of a nontraditional interest. You were getting different experiences but what you were doing is you were planting a lot of seeds and building a lot of relationships that sometimes it takes time for those to grow, right?

To flourish and I just love the passion and the interest that you had and continuing to pursue that, despite perhaps some outside noise of, “Maybe you might consider this and maybe you might consider that” and I think the lesson I hear there is, pursue the interest, plant the seeds, trust he process as you’re continuing to move forward and it might not always feel like one dot is going to connect to the next but I think as you shared in hindsight, you can start to appreciate how some of those things come together.

[0:15:24.3] MF: Absolutely. Trust the process and also trust yourself. One of the people who was encouraging me to do a residency which that’s what everybody was telling me to do, even my mentor at the CDC, understanding that I wanted to follow in her footsteps like once I found her, I was like, “You’re the person who I want to be like” and even knowing what my intention was, she was like, “You know, I really think you should do a residency first” and I’m like, “I hear you,” but what happens is sometimes, people are thinking about their own experiences and their own limitations when they are thinking about what you are or are not capable of doing and even though they have the best intentions, those ideas and those preconceived notions get projected onto you.

It’s really important to trust yourself enough to be able to examine what your thoughts, your preferences, your intentions are as well as the advice from trusted people but then to make your own decision based off of all of that information, including your own desires and intentions.

[0:16:26.9] TU: That’s one of the passion that I have and I’m not going to get on the financial soapbox because I do that in every other episode but that’s one of the challenges I have in our profession is that, they’re so often is the financial pressure of the student loans, the golden handcuffs of that six-figure income that folks that might be thinking about something more nontraditional or not as structured in terms of, “I’m going into residency, I’m going to go into fellowship, I’m going to go make this income” it can just be hard to have the space to explore that when you have those other pressures that are there.

I want to come back and ask you, you’ve really done a nice job I think of outlining this interest that you have in public health and an interest in writing, we’re going to come back and talk more about that but I didn’t ask you, what is the why behind that? Where did that passion come from in this intersection of public health and writing and what really motivates you and inspire you towards the work that you’re doing?

[0:17:14.1] MF: That’s a good question and one that I don’t think about as often. I can say that my interest in writing, I wouldn’t call it a passion at this present time or at the time that it started but my interest in writing actually came from a work study job that I had when I was at Emory. I was lucky enough not to be assigned to like putting books back on the shelves at the library the way a lot of our friends were for work study but I had a job with CancerQuest, which is a patient education website that was associated with Emory’s Winship Cancer Institute, and my role for CancerQuests was basically to update and write a lot of the patient education information that was on the website.

So that was like a huge directory of all these different types of treatments, preventative measures, therapies for different types of cancer and so I had to do a lot of research and write information that could be interpreted by the general public. It was kind of my first taste of health communications but I did not have the language to be able to say, “This is what this is.” I would say, from that point that kind of planted the seed for my interest in medical writing and health communications, although I didn’t realize it until probably a decade later.

Public health, I think that’s just something that has been a part of my experience as a person in the world. Like growing up in Columbia, South Carolina, amongst my family members who dealt with their own personal health issues, we were in a very communal environment. So in my neighborhood, like, my grandmother knew all the people on her street, all the people on her block, we were all kind of family.

Because of that, it wasn’t just my individual, like my nuclear or immediate family’s health conditions that I was aware of but we were kind of all aware of everybody’s business and so I really saw how important it was for people to have good healthcare, good health information and again, I wouldn’t have been able to verbalize this as a child but looking back, all of this information was kind of more abstractly in my brain at that time.

I think that just as I progressed throughout school, like K through 12, undergrad, I started to think more concretely about how environment and information and access to healthcare and good health information how critical that is to the health of communities and I think that also, just kind of as a black woman in the world, that level of awareness that comes with that lived experience as well, public health was just something that kind of called my name.

When I went to that field trip in the 9th grade, and toured the CDC, I think that was probably the first time that I was able to connect the actual field of public health with all of that previous life experience that I just named.

[0:20:13.5] TU: Admittedly Megan, my knowledge related to medical writing, health writing, health content writing, we’ve used our term health communications is pretty elementary and I’ve seen these terms used in different ways, and for folks that are listening, thinking about, “Hey, maybe I’m interested in entering this field” and whatever way that may be, break those terms down a little bit further for us.

What are the differences between those and the types of writing opportunities that folks maybe able to pursue?

[0:20:40.5] MF: So this is a juicy question because there are so many routes that a person could take, depending on what their interest are. So if we kind of backup and go to the most high-level area of this, when we talk about medical writing, like you, many people are using that term, interchangeably. Some people might describe what I do health content writing as medical writing.

It’s not that there is anything wrong in particular with using that language, but, I think what some people don’t realize is that medical wiring is more of an umbrella term that could actually describe a lot of different types of writing. Same thing with health writing. So when I talk about broadly and holistically, this space, you will sometimes hear me say medical and health writing, that’s because those are the broadest terms that describe all of the individual types that come down from that.

When we get to talking about like specific examples, you’ve heard me reference specific examples during this conversation, right? You heard me reference a drug information fellowship, a health communications fellowship, I’m a health content writer, it really depends on who is the audience and what style of writing is being done. Those are like, the two big buckets that can kind of help differentiate the different types of medical writing.

Medical writing, I typically think of those types as writing that’s geared towards a clinical audience, an audience of health professionals, an audience of scientist, it’s typically more formal in nature and the topics are often times more specific to medicine, like actual treatment, prevention, therapies and so some specific types of medical writing would be drug information that adhere to a clinical audience.

Another type would be scientific writing, another type would be regulatory writing. So you will see a lot of regulatory positions at pharmaceutical companies because there are people there who are writing INDs, they’re writing documents that need to go to the FDA or to different regulatory associations, so that’s definitely a type of medical writing. Scientific publications is a type of medical writing.

Medical communications, so these are companies who are sometimes contracted by pharmaceutical companies to create materials, to educate other health professionals, right? So if you want to put together a slide deck or a post of presentation to present at a conference, that’s often happening at medical communications companies. So, all of those are examples of medical writing, which is often times again, a more formal and geared to a clinical or health professions audience.

Then, on the other side of that, you have the other umbrella term of health writing. Health writing, I typically think of as geared to a more lay or general public audience and the topics are not always so scientific or medical. They could be more wellness oriented or more health oriented but health oriented from the standpoint of how does an individual person apply this information to their actual life, not health oriented as in like all of the science of like how this drug works or blah-blah-blah.

Specific examples of health writing are health communications, the fellowship that I mentioned at the CDC. In that position, I was basically like a liaison between our research team and the general public. So when they would come up with their research, I would create fact sheets, blog post, maybe sometimes op-eds, talking points that could go on the website that regular folks could understand.

There is also health journalism, which is when you go to the Washington Post or you go to health magazine, those articles that you see in there, those are forms of health journalism and then my personal favorite, health content writing. We’ll probably dive more into content writing but broadly content writing is information or education that’s presented online in most cases that help someone solve a health problem or answer a health question.

One of the most common ways that content writing becomes visible is when you go to Google, right? If you’re a mom, a new mom at 4:00 in the morning and you baby is not latching and they won’t go to sleep and you go to Google and you say, “Help, my four-month-old isn’t latching” the information that comes up, some of it might be like forums, parent forums but the articles that come up often times those are examples of health content writing because they’re helping you answer a question or solve a health problem that you have.

[0:25:23.7] TU: That was great. I mean, probably the best explanations I’ve heard and I know you have my mind spinning of, “Okay, if I am thinking about this as a potential side hustle or career opportunity, okay, what are the different ways? What might be my strengths or interest?” What would yours that I’d want to pursue? So the examples there were really helpful. I have heard you talk before about three main reasons that folks may get started in medical and health writing.

Those could be number one, they want to influence the public health on a larger scale, number two is to use their degree along with a healthy dose of creativity and number three is to create an additional stream of income outside of their clinical career. My question for you knowing that you coach many other pharmacists and other healthcare professionals that are exploring this area of writing, do you see one of those resonate more than the others or are folks often entering into this space because of all three of those or some combination of them?

[0:26:18.1] MF: That’s a really good question. I think most people have – I will answer this question in two ways, there are people who are interested and then there are people who take the steps to pursue. Those are often two different types of people, so people who are interested of course can have any of those three reasons. It could be relevant but I find that often times the biggest draw is the additional stream of income.

But what happens is once they realize how much work it actually involves to get to the point where they are qualified to be a health content writing, only having the interest of an additional stream of income is not enough. It’s not enough –

[0:26:59.0] TU: It’s not a strong enough why right?

[0:27:00.0] MF: No, it’s not at all because the return on investment yes, could be there because like you can make a whole living out of health content writing and plenty of people do but to get to that point where you can even do that, the time that it takes to learn the skills, to create the portfolio, to go out and find clients, only being motivated by the money is oftentimes not good enough.

The students that I work with and even students, that pharmacists that do decide to pursue health content writing but they choose another route or aren’t necessarily in my program, I find that there is more of that interest in really influencing public health and utilizing their degree in a way that brings them fulfillment and joy and opportunity to actually educate people, which is something that we are often sold on during pharmacy school.

But in reality, in real life once you get out into the workforce, sometimes it’s not really a major piece of what you are able to do in your workspace. So a lot of the students that I work with express to me that of course, they love to have some extra money because you said it earlier, loans and debt and family but what they’re really looking for is a way to find more fulfillment and joy within their profession.

There are lots of side hustles, other opportunities that people could engage in to make money but people don’t necessarily want to let their degree and their education and their experience go. It is not that they don’t love pharmacy or love healthcare, it’s that maybe they don’t love the way that they have to execute it in their full-time roles. So if there’s a way for them to still use the background that they have in a more fulfilling and impactful way, then they’re very into that.

[0:28:50.0] TU: So well said, you know, often I say and feel myself that forward progress and growth is such an important factor for us as individuals and human being, that we have a feeling of growth that we’re developing ourselves and I think for many pharmacists that may be are feeling stuck or they aren’t feeling that growth or they aren’t feeling like they’re using their degree to their full potential, that can be a suffocating feeling.

I often say that side hustle’s income that’s a nice symptom but really what we want to be focusing on I think in part and not overlook is, what’s the motivation, what’s the purpose, what creative outlet is this providing and that’s a hard benefit to measure but don’t underestimate it because it’s so powerful especially if you feel like you’re in a situation where you’re stuck. It’s so powerful to feel like you’re growing, you’re developing and you’re moving forward.

Let me ask you a question I’m sure you get all the time, which is: can I work full-time doing this? Is that a viable pathway to grow a medical writing business?

[0:29:49.3] MF: Yeah, so I’d say that the answer is emphatically yes. When I started out as a freelance health content writer, I had a full-time job. I will do a quick aside to address something that you just brought up in terms of having that source of fulfillment is I was in a job that I did not like. It was my third time at the CDC and it was a regulatory writing job and it was not my most exciting role and so I started blogging on the side just because I needed a creative outlet.

That really helped me when I was in that full-time role that I didn’t like because I had something that was going on that was interesting to me and so that was exactly how I got started as a health content writer. I had a full-time job at the time, it was accidental because I was not yet aware that health content writing was a field and so when I started my blog, it just so happened that a health company saw it and reached out to me and asked if I was right for them.

That was how I first freelance writing opportunity but it wasn’t until a year and nine months later that I actually left my full-time job for that entire year and nine months, I was freelancing on the side. So it’s definitely possible, I would say it is definitely one of the most common approaches. If you are in a position where you are just learning the skill of freelance health content writing, I don’t know what your financials are like.

If you have a couple of tens of thousands in the bank and you can afford to just shut your full-time work down so that you can focus on freelance health content writing, that’s definitely open to you but for most people, it’s going to take time to even get the foundations that you need to be able to get started and then once you start, it’s going to take you some time to get your feet under you and get to the point where you can bring on more and more clients.

So, in most cases, it actually makes sense to start with a full-time job so that you are not reliant upon this income source that you haven’t yet created. So definitely possible, it just takes time management and availability of time as well.

[0:32:02.2] TU: Yeah and I am a firm believer as you kind of were eluding to there that building a business upon the back of a strong personal financial foundation is so important, right? Because you can approach that opportunity with less stress, you can approach that opportunity with confidence and perhaps some folks can manage to make that jump and not to have that stress still if they have additional savings.

But I think for many, having that full-time job will allow them to pursue that opportunity with confidence and to minimize that stress. Talk to us about StockRose Creative, the company that you’ve started and have been growing, talk to us about what it is, how it came to be and what are the services that you offer?

[0:32:38.4] MF: Yeah, so StockRose is the business entity that I created when I decided to go full-time in my health content writing work. Unlike the students that I work with, I did not have real guidance when I got into the health content writing space. I was just out here figuring it out on my own and so because of that, I dabbled in a lot of different types of writing through StockRose before I landed on health content writing solely and before I got even narrower in the specific types of writing services that I was offering through health content writing.

Today, what that looks like is I offer blog writing and video scripting services particularly for digital health companies and especially if those digital health companies have audiences that are primarily black or they have portions of their audiences that are primarily black and the reason for that is because content writing is a very small piece of content marketing. It’s a much broader process and so a part of what you had to do if you’re interested in being a freelance health content writer is you have to understand how that fits into the broader process.

With that, strategy is a part of the process that has to come before writing and sometimes companies, they do not have that strategic part in-house and so I consult with them to say, “Hey, if you have audiences that are black or primarily black, you’re going to have to develop a different content strategy in order to actually have content writers that are writing effectively for those audiences.”

That’s the core service that I provide but it did not start out that way, it was much more lose and difficult to define because I was figuring it out as I went along. So that’s kind of the service part of my company and then the coaching part of my company, I’ll kind of give some context to how that came about. I really sat down one day and thought, “What is the theme of my professional career?”

I’ve had a lot of different roles and they’ve all had writing in common but beyond that, what kind of links everything together? I realized that in all of my past, fighting health misinformation and putting out good health information has been the theme that connects everything together and is what I’m passionate about and what I want to continue doing into the future and so if I want to fight health misinformation, which is getting more rampant by the minute it seems, I am not the only person who can or should be doing that.

There are more people and specifically, healthcare providers who should be doing that. The problem is that most healthcare providers don’t have experience in health content writing or creating online content. It is not because they can’t do it, it’s just because they don’t have the exposure or the experience in order to be able to do it. So the question is, well, how do they get that? Technically, I could hire them.

However, I am not particularly interested in running an agency or managing other writers like that’s just when you get to the point where you’re running an agency, it often takes you out of the actual execution of whatever the service that you’re providing and you become a manager and my passion is about the creation of the health information. So my question was, “Well, how do I help other healthcare professionals become health writers so that they too can be able to counter the misinformation that’s out there?”

I decided that creating this accelerator program called Health Professionals to Health Writers, where there is didactic teaching to make sure people have the foundational knowledge of content marketing that they need, where they are able to create the portfolio of samples that they need to actually get freelance gigs and where they actually build out the business processes they need to know how to go out and secure clients.

That would be the way to help more professionals have the skills and the experience that they need to be freelance health content writers as well. So that’s what my coaching side of StockRose does under the Health Professionals to Health Writers accelerator program.

[0:36:58.0] TU: I love that and I think that aligns so well with your why, right? Of how you got into this in the first place. You talk about fighting misinformation and looking at doing that on a broader scale, the impact of that is you coach up and train up other pharmacists, other healthcare professionals, the impact of that is going to be much greater than your writing alone or even a team or writing if you did go with that approach.

We’ll link in the show notes, that’s stockrosecreative.com, folks can go there. We’re also going to link in the show notes, you have a Health Writing for Health Professionals 101 series on YouTube, and then folks can also learn more about the accelerator program that you mentioned as well, some of the work that you’re doing. I do want to ask you, this is somewhat of an aside, but I think a really cool accomplishment, I’ve been following your work on LinkedIn, and I saw you recently went through the LinkedIn Creator Accelerator Program as a part of the first class of a 100.

First of all, congratulations on that accomplishment, that was fantastic. What did you take away from that program about yourself and about leveraging LinkedIn as a platform to help grow your business?

[0:37:57.2] MF: Thank you, Tim, for the congratulations. That was probably one of my most exciting accomplishments of last year. I was literally in tears when I got the email that I got into the program and I do also have to shoutout Brian Fung, who was the one and only other pharmacist in the first 100 with me, so we had a great time. I think the most important thing that we took away from that experience was how important it is to really be intentional about the content and the information that you’re creating not just on LinkedIn but online in general.

That might sound odd because as a health content writer, that’s exactly what I do but I think the most important part here is thinking about there’s always an audience that you are sharing information to. If you are ever creating any content whether it’s health content or social content or anything, if you are creating that just for you, then you are really missing an opportunity to connect with the people who are following you and watching you and listening to you.

Because they often times have different perceptions, leads, preconceived notions than you do and so, whenever you’re creating content, this applies to health content writing as well, you really have to be less focused on what you think and what you already know and really dive into what your audience thinks, what they do and don’t know so that you can create that content in a way that helps address their questions and helps solve their problems as accurately as possible.

You are not necessarily a reflection of the people who are trying to learn from you. If I were creating content on LinkedIn just for me, I would be going over the heads of so many people because I’ve been a content writer for five years. There are people, pharmacists who are coming across my account who have literally never heard of health content writing before. Students that I’ve worked with are like, “I did not know what this was until I saw your post.”

If I am not keeping that in mind and really trying to get a sense of where people are, then I am missing the point and the same holds true for any type of content that you are creating for any reason, paying attention to what your audience thinks and what they need.

[0:40:17.9] TU: I hope, folks, if they are not already following you on LinkedIn, they’ll be able to see that in action, so I hope they will. We’ll link to that in the show notes, Megan N. Freeland on LinkedIn. All right, my last question here for you, Megan, you had a post on LinkedIn recently that caught my attention and I didn’t prep you for this question, so this is going to be a discussion but you said:

“When you’ve worked so hard to get to a certain point, people may tell you to just be grateful that you’ve made it there. The sentiment implies that asking for anything more is mere greed. To that I say, don’t you dare dim your light for anyone else’s comfort. You can be grateful for your journey without having to stay there. We are all allowed to grow, mature, and evolve. Going after the career you want and the life you desire is not selfish, it’s your right and most importantly, it is within your power to do.” Tell us more.

[0:41:10.0] MF: Okay, hearing that read back to me that kind of got me in the heart a little bit. This kind of goes back to what I alluded to before about trusting yourself and recognizing that people might have your best interest at heart, or they might think that they do but they will also set limitations on you based on what they think is possible and what they think is fair and what they think is possible for them to do.

Sometimes, when you’ve worked really hard to achieve this goal, let’s say the goal is just graduating from pharmacy school, that might have been an expectation that either people didn’t have for you or people don’t have for themselves and so when you get to that point and if you turn around and realize, “I am proud of myself and I am glad that I accomplished this goal but I don’t feel completely settled” right?

I still feel like there’s something out there more for me, I still feel like maybe I am not in the exact place that I should be, maybe I’m close but maybe I’m not quite there, if you express that feeling to people, there are people who might say, “What are you talking about? You’re a pharmacist, you graduated, you should be grateful. I am over here doing XYZ, that’s not as cool as being a pharmacist, you have nothing to complain about” and that’s not about you.

That type of response is not about you, that’s about them and so my advice to anyone in this situation is your life is not anyone else’s. Your life is your own, no one else is responsible for what you do. No one else has to live with your decisions or your choices and so, regardless of how people respond to your discomfort or your feelings of unfulfillment or whatever it is, know that you are deserving of having the professional trajectory, having the life, having the career, having the whatever that you decide you want.

That’s within your control, that’s within your power and frankly, it is not for anyone else to comment on at all but if you say it to people, they will comment but just keep in mind that you determine all of that stuff. You determine the trajectory and you don’t have to feel guilty about that because it’s your life and you’re the only person who’s responsible for it.

[0:43:27.2] TU: So powerful, Megan, great said. It reminds me of a couple books I read and reread recently that I’d highly recommend, The Four Agreements, is one and the second one is, The Big Leap by Gay Hendricks. We’ll link to those in the show notes but those, both of those books get exactly to what you just shared there and that is so important for other people to hear especially for folks that are out there creating, putting content, stepping out in non-traditional ways like if you don’t work through that individual, everything you just shared there, it can be a very painful journey.

I think for folks to really realize what is their full opportunity but are their goals not what is the outside noise but what is their full opportunity, what are their goals and can they really lean into that is such encouraging words. Well, this has been a lot of fun and I am so grateful that you have taken time to come on the show. Where is the best place that folks can go to follow your work and learn more about what you’re doing?

[0:44:17.6] MF: Thank you for having me, Tim. This was a wonderful conversation. It’s been a while since I did a podcast, so I thought I was going to be a little rusty, but you made it really smooth, so I appreciate you. The best way to reach out to me is really via LinkedIn, we’ve talked about LinkedIn a lot, I am on there every day. So if you listen to this episode and you want to learn more about health content writing or you just want to say hey or you want to ask follow-up questions about anything Tim and I talked here, just find me on LinkedIn and shoot me a message. I love having conversations with folks there, so that is how you can reach me best and I look forward to chatting with you.

[0:44:51.7] TU: Great stuff, thank you so much, Megan, for taking the time to come on the show. We really appreciate it.

[0:44:55.1] MF: Thank you, Tim.

[END OF INTERVIEW]

[0:44:56.7] TU: Before we wrap up today’s show, let’s hear an important message from our sponsor, Insuring Income. If you are in the market to add own occupation disability insurance, term life insurance or both, Insuring Income would love to be your resource. Insuring Income has relationships with all of the high quality disability insurance and life insurance carriers you should be considering and can help you design coverage to best protect you and your family.

Head over to insuringincome.com/yourfinancialpharmacist or click on their link in the show notes to request quotes, ask a question or start down your own path of learning more about this necessary protection.

[DISCLAIMER]

[0:45:32.9] TU: As we conclude this week’s podcast, an important reminder that the content on this show is provided to you for informational purposes only and it is not intended to provide and should not be relied on for investment or any other advice. Information of the podcast and corresponding materials should not be construed as a solicitation or offer to buy or sell any investment or related financial products. We urge listeners to consult with a financial advisor with respect to any investment.

Furthermore, the information contained in our archived newsletters, blog post, and podcast is not updated and may not be accurate at the time you listen to it on the podcast. Opinions and analysis expressed herein are solely those of your financial pharmacist unless otherwise noted and constitute judgments as of the dates published. Such information may contain forward-looking statements, which are not intended to be guarantees of future events. Actual results could differ materially from those anticipated in the forward-looking statements. For more information, please visit yourfinancialpharmacist.com/disclaimer.

Thank you again for your support of the Your Financial Pharmacist Podcast. Have a great rest of your week.

[END]

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YFP 258: How Much Home Can You Afford?

Posted on June 2, 2022November 2, 2022 by yfpadmin

How Much Home Can You Afford?

On this episode, sponsored by First Horizon, Tony Umholtz talks through how to determine how much home you can afford.

About Today’s Guest

Tony Umholtz 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.

Episode Summary

In this episode of the Your Financial Pharmacist podcast, YFP Co-Founder & CEO, Tim Ulbrich, PharmD, is joined by Tony Umholtz, a mortgage manager at First Horizon. Tony has years of experience working with pharmacists all over the country in securing home loans. In this episode, Tim and Tony kick off the discussion by looking at how the real estate market has changed recently and why we are currently in a seller’s market. Tim and Tony discuss rate hikes and inflation, the 28-36 rule, and what that means for a pharmacist as a potential home buyer. Next, they dive into the many factors banks consider when someone applies for a home loan and which are the most important. Tony shares how each home loan situation is different and dependent on individual circumstances. He also discusses insurance and how you can make better choices to save in that area. Then, Tim and Tony dig into the area of tax and how it differs from state to state. Tony shares a brief overview of the First Horizon pharmacist home loan product, the challenges pharmacists may face with this product, and the benefits it can provide for a pharmacist, whether fully qualified and earning a full income or not.

Key Points From This Episode

An overview of today’s guest, Tony Umholtz.
How the real estate purchase market has not slowed down but refinancing has.
Why we are in a seller’s market.
What rate hikes mean and the impact they have on mortgage rates.
The impact inflation will have on rates.
Why locking as soon as possible is preferable when purchasing a home.
What the 28-36 rule is.
What banks consider when you apply for a home loan and what factors are more important.
How the appraisal gap affects the market.
The importance of considering expenses, fixed and variable, other than the loan.
How insurance changes depending on what part of the USA you are in.
The danger of over-committing to personal property insurance.
The effect of property value on tax and how that changes from state to state.
An overview of the pharmacist home loan product Tony offers through First Horizon.

Highlights

“The most important [factor] is the ability to repay [your loans.]” — Tony Umholtz [0:10:57]

“Just because the bank says you can afford this, doesn’t mean it’s right for you.” — Tony Umholtz [0:11:24]

Links Mentioned in Today’s Episode

Episode Transcript

[INTRODUCTION]

[0:00:00.4] TU: Hey everybody, Tim Ulbrich here and thank you for listening to The YFP Podcast, where each week, we strive to inspire and encourage you on your path towards achieving financial freedom.

This week, I had a chance to welcome back on to the show, Tony Umholtz, a mortgage manager for First Horizon, formerly IBERIABANK. During the interview, Tony and I talk through how to determine how much home you can afford, a timely topic, considering the seller’s market we’re in and the rising interest rates that are driving up the cost of owning a home.

During the show, we talk about the current state of the market, interest rates, and trends Tony has seen through his experiences working with pharmacists across the country. We discuss what formulas lenders use to determine the amount of home they will allow one to purchase, why you and not the bank should establish the budget for buying a home, and we also discuss the total cost of owning a home and things to consider beyond the purchase price.

Before we hear from today’s sponsor and then jump into the show, I recognize that many listeners may not be aware of what the team at YFP planning does in working one-on-one with more than 240 households in 40 plus states. YFP planning offers free only, high-touch financial planning that is customized for the pharmacy professional.

Okay, let’s hear from today’s sponsor and then we’ll jump into my interview with Tony.

[SPONSOR MESSAGE]

[0:01:36.2] TU: Does saving 20 percent for a down payment on a home feel like an uphill battle? It’s no secret that pharmacists have a lot of competing financial priorities, including high student loan debt, meaning that saving 20 percent for a down payment on a home may take years.

We’ve been on the hunt for a solution for pharmacists that are ready to purchase a home with a lower down payment and are happy to have found that option with First Horizon, previously IBERIABANK/First Horizon.

First Horizon offers a professional home loan option, AKA, a doctor or pharmacist home loan that requires a 3 percent down payment for a single-family home or townhome. Has no PMI and offers a 30-year fixed-rate mortgage on home loans up to $647,200.

The pharmacist home loan is available on all states except Alaska and Hawaii and can be used to purchase condos as well. However, rates may be higher and a condo review has to be completed.

To check out the requirements for First Horizon’s pharmacist home loan and to start the preapproval process, visit yourfinancialpharmacist.com/home-loan. Again, that is yourfinancialpharmacist.com/home-loan.

[INTERVIEW]

[0:02:41.9] TU1: Tony, welcome back to the show.

[0:02:45.3] TU2: Tim, good to be here with you.

[0:02:47.3] TU1: So, we had you last on this show on episode 245 when we talked about getting under contract in a competitive home market. Interest rates at that time were starting to creep a little bit back in March but they have certainly jumped significantly since then. So with interest rates on the rise, Tony, are things slowing down at all in this market?

[0:03:08.6] TU2: You know, it’s interesting Tim, the purchase market has not slowed down, it’s still very healthy. Refinances have, we’ve definitely seen a pullback in refinances are some cash-out refinances where people are taking advantage of their equity position and then something called a delayed cash out because there seems like there’s a lot of people that have money to pay cash for houses so they’re actually coming back to do what’s called delayed cash out. So we’ve been seeing some of those but on average, the refinance are way down as you can imagine with rates coming up.

[0:03:39.5] TU1: Yeah, it wasn’t too long ago you and I were talking about refinancing back at the beginning of the pandemic when rates were in the high twos and low three. Obviously, we’re at a very different point in place but at the end of the day, we still have a supply issue so you know, we see rent prices that are skyrocketing, which I suspect is further in individuals to want to get a new home, supply and demand.

So it feels like, despite the rate hikes that are happening, you know, recently it feels like for the home buyer, unfortunately, they’re still going to be in a very competitive market that is the seller’s market. Is that what you’re saying as well?

[0:04:11.8] TU2: Yeah, absolutely, Tim. I mean, every market’s different as we’ve discussed but on average, most markets are just not – they don’t have enough inventory and I think clearly, that’s going to push prices higher and if you’re renting and you could go pay equivalent of your rent or even less buying a home and you get appreciation. I think that’s why we have such demands. So yeah, there’s no season and demand out there that I’ve seen so far.

[0:04:36.8] TU1: Tony, I want to pick your brain for a minute, you know, the day we’re recording this, we’re expecting news today of the Fed to hike interest rates, I think we’re expecting 50 basis points, a half a percent but you know, awaiting that news and so is the stock market to see what happens.

But I always appreciate your perspective economically on what these types of Fed rate hikes mean and the impact that he may have on mortgage rates. So as you’re expecting this news to come up today, whether it’s 50 basis points or it ends up being something a little bit different than that, what are the potential implications that we should be looking for?

[0:05:09.9] TU2: Great question. I mean, the timing is a couple of hours here we’re going to get the announcement but the biggest thing is that the rates have run up so much this year since January, without the fed doing much of anything yet, right? It’s just been talk, it’s been kind of projections and they did raise a quarter already on the Fed funds rate and right now, the outlook is 50 basis points today.

It could be 76, it might shock the market but let’s say, it’s 50. Really, that’s not what I’m pinpointing as the issue for mortgage rates. It’s not going to be the front end of the curve so that front end of the curve, what we call the fed funds rate is going to affect your credit card rates, your home equity line rates, maybe some auto loans, floating rates, rates that are floating rates on the market. But long-term mortgage rates are more going to be influenced by what the fed says about balance sheet reduction.

Basically during the last couple of years, during the pandemic, they were helping stimulate the economy by basically buying bonds, being the biggest buyer of bonds, mortgage bonds, the treasury bonds and that helped push rates lower. So essentially, that runoff of their balance sheet adds supply to the bond market so that affects rates and it’s going to affect the stock market too I would think but that’s going to be what I’m watching the most for rates, you know, long-term rates and how to advice my clients.

I mean, I’ve been in a complete locking bias since the beginning of the year. I’ve had very few clients that wanted to float but my opinion’s always been lock as soon as you can and I think, today’s going to be, you know, we’ll learn more about the outlook here and what the fed’s going to do. You never want to fight the fed in what you do and the one thing I would say too is, inflation is the thing we have to watch for rates as well.

If we get any sort of ease and inflation, that can spark a new trend of rates, maybe easing a little bit, maybe capping. So those are the things I’m going to be looking for today, Tim.

[0:07:07.1] TU1: Yeah, and as you and I talk before the – we hit record, if we do find ourselves in a mild type of recession or recessionary period, we would expect the rates to come back down which could have implications as well so certainly, we’re in a volatile time period and to your comment, in case folks aren’t familiar with that terminology in terms of rate locking versus floating.

You know, in time periods where we may be expecting a reduction in rates, perhaps something like a float matters but you know, to your point, this year, as we’ve been expecting rates to go up, locking as soon as possible typically seems to be in someone’s advantage as a look they are looking to purchasing a home.

So today, what we’re talking about is how to determine how much one can afford when it comes to home buying and I think this is a really timely topic ass we’ve painted a picture so far. We’re in a seller’s market, we got rising interests rates which of course means more to the home buyer.

We also see that there’s more and more that’s out there in terms of the average loan size. So perhaps someone depending on the part of the country they were living in, you know, maybe a couple of years ago they were looking at a home that was selling at 400,000 and easily that may be north of 500,000, obviously, very different depending on the market.

So escalating home prices, rising interest rates means affordability of home, it’s certainly a timely topic and as we’re often talking about, we need to be considering how this home purchase and how the cost of the home fits in with the rest of the financial plan and the goals that someone is trying to achieve.

So Tony, let’s start with how the bank determines how much they’re willing to lend to an individual? So does the 28-36 rule stilly apply and first, if you could define what that is and talk to us about how that is determined in terms of what one is willing to lend from the institutions?

[0:08:51.1] TU2: Sure, yeah, sure. So the 28-36 rule has been around a long time. It’s a little different nowadays, we look at the multitude of factors which is to kind of go back to define what that is. Basically, the 28 percent is the amount of your monthly income that can be for a housing payment, okay? So basically, we’ll try to make it as simple as we can so let’s say you had a $10,000 a month gross income, the definition would be okay, so $2,800 can be allocated to a housing expense, okay?

Now, that is not how it’s underwritten today but historically, that was something that we looked at. It’s still looked at to some degree but we look at it a little bit differently now. It’s more your total debt, right? Your total debt ratio and that’s with a 36 percent looked at so they’d say, “Well, if you make 10,000 a month gross income, we could allocate $3,600 a month to debt” so that might be your housing expense, your car loan, credit cards.

One thing that banks do not look at is like, your auto insurance, cellphone bills, we typically don’t look at any of that in your expenses, it’s just creditor debt. So credit cards, student loans, things like that. So historically, that was a metric, especially when we did FHA loans years ago but nowadays, it’s more viewed on the total debt ratio. So we typically like to stay at 43 percent of your total debt or better.

That could be like, if you have no debt and you have a $10,000 a month gross income, household income and you are buying a home that requires a $4,300 a month payment. So that’s your total payment, it’s your principal interest, taxes, and assurance, you could still qualify because you have no other debts, right? So that’s going to be a fairly large house but you could still qualify given that there’s metrics. So that’s kind of the significance of it.

So these are called debt to income ratios is what the terminology is and that’s a very important metric for lenders. In fact, it’s one of the most important metrics. Like credit score obviously is important, reserves can be in certain products but the most important is the ability to repay. Banks are required by law to prove that.

That’s why income, if anyone’s gotten a loan anytime in the recent future, at least in the last 10 years in the recent past is you had to give a lot of documentation to the lender because we have to document the income because we have to prove you have the ability to repay. It’s called the ATR rule, so that’s the reason for these ratios.

Just because the bank says you can afford this, doesn’t mean it’s right for you, you know? So, everybody’s different, everyone’s situation is different, so it doesn’t mean it’s right for you. Now, the other side of it too and I’ll mention this is depending on the product, depending on the individual, we can go up to higher debt to income ratios, above 43 and that’s generally when you’re putting 20 percent down and you have a compensating factor.

So we do see that as well, that does occur as well. I know it’s kind of a broad scope but I wanted to kind of include because everyone’s situation is different. It’s not like a one size fits all.

[0:12:03.2] TU1: Yeah and that’s great, Tony, because I think for many pharmacists, even the numbers you use, so $10,000 a month of gross income, you know, pharmacists, you divide that by 1,200, $120,000 a year, pretty close to what we thread that comes to a national average and obviously people can do the math if there’s more than one income but I think that’s a good point of reference.

Just to reiterate what you said, you’re talking there about when we were refer to percentage that can be allocated in the housing expenses, we’re referring to the principle interest taxes and insurance, which is important. So folks are looking on Zillow or Red Fin or Realtor, we’re looking at homes that they’re looking at all those expenses that would be combined.

I want to come back Tony, and just dig a little bit deeper, you know, you mentioned a few things, if I heard you correctly that that will factor into this decision whether it’s a number lower than 43 percent or perhaps higher than 43 percent You mentioned down payment and the amount that’s down, you mention reserves. I heard you mention credit score as well.

So talk to us more about, in addition to just the income that one is making or obviously you have to produce W2s or income source as a part of the lending application, how do those other things factor in? So if I’m someone that’s got substantial reserves and I can bring more down but perhaps I don’t have as high of a credit score like how will that impact or do some of these weigh more heavily than others?

[0:13:20.5] TU2: It does. I mean, there’s different types of products out there so everything, there is different programs we have, different loan sizes, all sorts of things, so everyone’s different. So for example, we have loans for lower credit score, people with lower credit scores. I mean, FHA loans for example, which is a government backed loan, we can get pretty low credit scores approved for that with just three and a half percent down.

Now, there is high PMI with those loans, right? There’s very high PMI and then rates can be affected by your credit scores as well and then, we have loans for people that have lots of money and don’t show income, which is fairly common with business owners, right? They have sold the business or I had a couple of pro-athletes that I’ve worked with over the years that in between contracts and they’ve made a lot of money but they don’t have an employer right now.

So and there’s programs available for them. So not to get into too much of the granular but there is different options out there for different people. I would say the key though is the ability to repay. So it’s hard to say now, for example, the product we offer to pharmacist, we have minimum credit score of 700. I really can’t deviate from that because that’s a program guideline for that particular product but a conventional loan through Fannie Mae and Freddie Mac has, I mean, I can go down and do a 620-credit score with that which is pretty low.

But if your rates are going to be affected by that, you’re going to – may have to put more down than you would like to and there is going to be a give and take. So it’s viewed a little differently, depending on situations.

[0:14:50.4] TU1: Yeah and I think you just highlighted there why this is not a cookie-cutter approach, right? I mean, everyone’s credit situation’s going to be different or income’s going to be different, obviously, the area in which they’re buying a home is going to be different, what to bring down, the reserves, the type of loan product name to pursue could be different so I think really have any good understanding of those and working with a wonder that can walk you through those really important, because it needs to be a custom decision to your personal situation.

Tony, I want to talk for a moment, you mentioned obviously the idea that yes, you know, what the bank approves is one variable but also, you know, that may or may not mean that it fits in with the other financial goals and I think that’s really important but you and I have talked about this before in the show but the bank isn’t’ considering one’s list of financial goals in the home buying decision, right? They may not be thinking about, “Well, are you on track for retirement or are you not? You know, how are we addressing the student loan repayment plan?”

So obviously is a part of the broader financial plan, we need to be thinking about that overall monthly budget, that overall housing expense and how that fits in and allows us or does not allow us to be able to progress and achieve with other financial goals. So again, we’re going to have to play by the rules of the bank of course but ultimately, we need to be setting our own budget. So with that in mind, I want to talk through other costs that folks need to consider.

So we mentioned already principle, interests, taxes and insurance. So those are four things that we need to be thinking about but in this market that we’re in right now, one of the things that I’m going to talk about is just the amount that someone might have to be bringing to the table and yes, down payment is going to be one part of that but I know in our area, we’re seeing a lot of waving of appraisal gaps which could mean that more cash needs to be brought to the table by the buyer.

So can you talk to us about what is that in terms of the appraisal gap waver and why we’re seeing that play out in the market that it is and how that can obviously impact how much money somebody has to bring to the table.

[0:16:46.6] TU2: Yeah, absolutely. So, let’s address that and we could talk a little bit more about how things may evolve here but I think the appraisal gap, you know, we’re still seeing that in many markets around the country. I mean, there’s a lot of high demand markets and we haven’t built enough homes the last 10 to 15 years, so that’s why we’re in this position that we’re in and builders can’t keep up with because of obviously the tight supply chain, it’s taking longer to build and it’s harder to build.

So the appraisal gap is tricky because, if you agree to this, right? I’m going to bring this, you basically, have to have the catch, right? To fill the gap, so if the price of the home is $400,000 and you have this waver and it appraises for 350, well, the bank’s going to use a 350, right? 350 value. The lender has to uses the appraised value and you know, let’s say we’re going to lend you 5 percent down. It was a 400, now it’s 5 percent down and 350, so you’re putting 5 percent down off 350, plus, the 50,000 gap that you agreed to with the seller.

So you really have to plan ahead and look at how much cash you have if you agree to that situation. Now sometimes, it will appraise in that you don’t know, it may come in okay but I would definitely heed your realtor’s advice if they think they may not, right? Because there could be a change. You know, one of the things that we’re looking and at every market’s different so you can’t speak to every single city in the country but on average, there’s a lot of this happening around the country but a little bit of a pause with help, right?

I think if we could get, you know, instead of seeing double-digit price increases for homes, if we got mid-single digits would be healthy right? You know, if you got a 5 percent, 6 percent appreciation on your home and you are putting 5 percent down, you’re getting an unbelievable return on your money and you are getting – you are not in such a bidding war crisis that we’re in now but I am hoping that will kind of happen and will normalize a little bit.

But I would just be really careful about what you agreed to when you are buying now. I am very cautious about waving inspections and things like that. I just think if you can get anything in, plugged in, it just protects you and you have your eyes open and if there is, if you have to agree to something like a waiver, just make sure you have enough time to get your inspections done so you know every – at least you know the house is in good shape.

There is nothing to worry about there and if there is a little bit of a value change then I hate to say it, but the reason you are agreeing to that is there’s other buyers out there waiting to buy it too. So there is going to be a lot of demand for real estate for quite some time until you see inventory levels rise.

[0:19:23.6] TU1: Yeah and I think that’s the concern, right? You’re set and done, I am not in the market you know, for a home in the moment but especially for first time home buyers it’s an exciting, it’s an emotional process and in a seller’s market where we are seeing a lot of bidding wars, I think there is just caution that we need to use when you look at waiving appraisal gaps, waiving of inspections and some of that as well because ultimately again, you know as we talk about often on the show, you know home buying is a really important part of the financial plan but it is one piece of the puzzle, right?

So we got to make sure that we can enter that home, we can enter that situation with confidence that we’re able to move our other financial goals forward. We were just talking before the show, I mentioned that Tim Baker and I were looking at property here in the area that it was listed around 530 and it ended up selling for an all cash offer at 650 and that was an example where appraisal is going to come in around that 530 points.

So that means in that case, that’s someone is going to be bringing in over a $100,000 of cash to the table. So that is another thing is we talk about affordability of home, if you find yourself in that position even if it’s a smaller amount, right? Five or $10,000, we got to factor that in on top of the down payment and on top of the other expenses that relate to purchasing that home.

[0:20:39.8] TU2: Absolutely. You have to run your numbers on your reserves and how much cash you have if you agree to something to that effect.

[0:20:46.8] TU1: Tony, I think it’s interesting the trickledown effect of this economically, right? We’re seeing rent prices here in Columbus, which I think is happening nationwide are going through the roof and obviously that presents a challenge for many folks. The other thing I am seeing recently, actually I heard an ad this morning, it was a window company here in Columbus that was running an ad basically playing on this saying, “Hey, instead of moving because of the market that we’re in, now is a great time to upgrade your home” right?

So you know, I think that we’re seeing this rising level of cost, some people are thinking about making an upgrade or finishes to their home, windows, remodel their kitchens, basements, whatever and again with the supply chain issues, I mean it is really hitting people I think in all different areas. So certainly a challenging time and yes, there’s appreciation there but having to see that offset by some cash flow pinches that can happen in the moment.

[0:21:34.9] TU2: Right, yeah absolutely.

[0:21:37.1] TU1: Tony, I want to go a little bit deeper into, you know, we talked about principle interest taxes and insurance. So again, as we think about affordability of the home, we talked about the percent down and that may need to be more because of the market that we’re in especially, we find ourselves in a waving of an appraisal gap situation and so the other thing I want to hit on here is that assuming somebody chooses a fixed loan and we’ll talk about the pharmacist home loan product here in a moment.

You know, that principle and interest is going to be fixed over the life of the loan but one of the things that they need to consider and I’ve lived this firsthand is that taxes and insurance are not fixed, right? So we need to be thinking also about what is variable going into the future and I don’t know markets where taxes are going down. So our taxes are going up, my home owner’s insurance has gone up overtime.

So you know, hopefully, we have income increases that will go up overtime but we’re not always seeing that for pharmacists. So we need to be thinking about other expenses that could rise overtime and it’s not just in this moment, what’s the percentage of my take home pay that I am going to allocate to my home but how might that go up overtime as taxes increases, an insurance increases and then obviously, there’s other things to consider like HOA fees or upkeep or maintenance of the property.

All types of things that again, home investment is a great thing but we want to make sure that we are entering into that with financial confidence.

[0:22:59.3] TU2: Absolutely and that is a really good point. I mean so let’s say, we obviously fixed the rating, we fixed the payments in for principle and interest on the note but there is that variable nature of taxes and insurance and depending on what part of the country you live in, insurance can move quite a bit. If you are in Southern Texas or Florida, taxes or insurance can be a wild card sometimes.

But I would say this, I mean, I think it’s important that you check on insurance maybe every year, right? Whether it is your auto insurance and the home owners, just see what’s out there because there is new carriers coming to market and sometimes they will give you discounts for your policies and one other thing too that I see banks and mortgage companies require a certain amount of coverage.

That way your house is covered if it were to burn down or tornado damage or whatever it might be but one thing I do see, sometimes people overcommit on personal property. So make sure your insuring what you need. If you have a lot of personal property, clearly you can make sure you have the coverage but lenders don’t care about that. You could put it to zero and that wouldn’t be an issue for a lender.

So if you are really trying to reduce your cost, that’s one way to do it too is look at like the personal property terms in your insurance policy and your house insurance policy.

[0:24:15.0] TU1: That is a great call Tony. I would encourage folks if they haven’t done this in a while, you mentioned kind of looking at this regularly and even just pulling out the policy and looking at the line items, making sure you understand what those things are and I went through this recently. One of the challenges out there if you are trying to shop around policies is getting the apples-to-apples comparison.

So what I found to be helpful was as I was getting policy quotes, I basically provided the coverage amounts based on my current policy and what the categories were to try to get as close of a comparison as I possibly could and then that’s also true on auto insurance as you are looking at different carriers and options but great suggestion, a reminder to make sure that we’re taking a fresh look at that over time.

[0:24:54.9] TU2: Yeah and I think that could help maybe to some degree alleviate some of that movement but clearly over time insurance costs are going to go up, especially with inflation. You know that’s affecting insurance premiums because it costs more to replace property, right? So that’s going to affect the cost of insurance. Property taxes, you know with property values going up overtime, in some states they’re capped, in some states they’re not, right?

So you have – we got to be careful about this too Tim because every place is different but like for example in Florida, you have the homestead exemption and the save our homes cap, which essentially caps how much your tax basis value can go up every year and that really helps preserve the tax that you are paying every year. It can only go up a little bit so it is not a big deal in owner-occupied homes.

Now, if it is not owner-occupied, second home investment property, it’s free lunch basically. You know the county could do whatever it needs to do but every place is a little bit different. Some other states have similar measures and that can help kind of keep in check how much your taxes go up every year and generally taxes are going to rise with the property values increasing.

Now, the flipside is, I remember in ’08 and ’09 when my property values went down, my taxes went down, which is – you know, that was one benefit I guess of that side although I don’t want to relive it but you know that was a – you know, taxes generally go down if the county assesses your property at a lower amount and the other thing that I find too is that many of the municipalities are very, very generous in how they value your property.

Because I will see some of the tax bills and they are coming in well under the market value and their tax estimate is well under. So it may not be the same everywhere in the country and every state has different varying degrees of taxes. So I’ll just say one thing like our audience in New York, taxes are really high there, right? Even in Florida, they’re pretty high but you know I have seen some other states where they’re not bad at all. So just different states can vary on how much those taxes are.

[0:26:50.9] TU1: Good call out Tony that it is different everywhere as well as obviously there is a situation where it may go down and I am coming from the bias of only living in a period I’ve bought my first home in 2009 and you know, didn’t have a home when that happened and events were all fine.

[0:27:06.5] TU2: You bought at a good time.

[0:27:08.0] TU1: Yeah, that’s right. I’ve been spoiled by only living in a state of appreciation on the home side. So I want to shift gears and talk about the pharmacist home loan product that you offer through First Horizon. You know, anytime we do a webinar presentation that includes home buying Tony, this continues to be the most common question, the number of questions I get in terms of volume around the pharmacist home loan product.

I think it is becoming even more timely, it’s always been timely but more timely because as we see a rise in the purchase price, if folks are thinking, “Do I need 20 percent down?” or something traditional like that obviously, that becomes more of a barrier as the market does what it’s doing. So talk to us about the pharmacist home loan product offered by First Horizon. You already mentioned the minimum credit score of 700, who is this for? Who is not for? What does it mean in terms of down payment, purchase price of a home? Give us the overview.

[0:28:02.2] TU2: So as we discussed, 700 is that minimum credit score. You know clearly, you have to be a licensed pharmacist. We couldn’t give it to just anybody. You know, some of the attributes of the product is you just don’t have to put much down and if you are a first-time home buyer, you are looking at putting 3 percent down. You’re eligible to put 3 percent down. If you have owned before, you only have to put 5 percent down.

There is no mortgage insurance, so that is a really big driver to benefit as you have no MI and I find that with 5 percent down, the rates are every bit as good as someone came to me that was not a pharmacist for 20 percent down and sometimes better actually, an eighth better. So you get it sometimes a little bit better rate as well and the waiver of the PMI is a big thing. There is a loan cap, those ties-wise.

We won’t go above 647, 200 as far as loan size. I have had a lot of pharmacists come to me with purchase prices of like 680 and they put 5 percent down and they’re fine. You know, they are within that guidelines there. So it still gives you a good bandwidth of price but sometimes in more expensive markets like California, it can be tougher sometimes to meet that guideline. We only offer a 30-year fixed on the product.

So it is a 30-year fixed only, which I find is popular and then the other thing that’s a nice feature is there is no reserve requirement. You know, a lot of programs like this require that you have six months reserves for loans for specialist and this one does not have that and that’s a nice thing, no prepayment penalties. So it is a very clean loan. It doesn’t have a lot of concerns about it.

The other thing too is generally with student loans, it will use a lower factor than a normal conventional loan will if you don’t have an income base repayment plan in place already.

[0:29:46.3] TU1: Okay.

[0:29:46.9] TU2: So if we don’t know what your payments are, it will actually use a lower factor than like if we were to get it through Fannie Mae or something to that effect or FHA. That’s another attribute. I’ve noticed though Tim, most of the pharmacists that are applying, we’ve had a lot this year, a lot in the last few years seemed to have a payment in place. There is only a few here and there that don’t.

Yeah, so I find that kind of income base repayment is usually the driver or we just get a letter of what the payments are going to be and that tends to be the best way to handle things because those payments are generally a fraction of the balance now.

[0:30:20.9] TU1: That was my question Tony, you beat me to it especially because we’re still in this Federal administrative forbearance where there’s been a price on Federal loan payments now for over two years that’s going to continue through the end of August, if not extended further. So for folks that are listening that I would suspect many are not making payments, is that the case then you kind of projected out what the payment would be?

[0:30:39.9] TU2: Normally that’s the best way if they have an expense, a challenge, you know, if it’s close qualifying otherwise we use a factor of the balances that can sometimes cause the debt ratios to get out of line but sometimes it’s fine. So we use that factor too sometimes if there is not a payment being made but normally we just get that letter projecting what the payments will be and I found that that’s normally what we see.

But most people that come to us are already in that position but not everyone. We do have some that we use the factor onto.

[0:31:08.9] TU1: The most common question I get is, “Hey, tell me more what is the pharmacy home loan product? Why is it different, why might it be an advantage?” you obviously highlighted the points there. The second most common question I get, which you already addressed is, “Hey, that all sounds great but am I going to pay a higher rate?” and you kind of alluded to of course, for everyone’s situation it’s different.

But given the minimum credit threshold of 700 here and depending on the percent down, you know certainly it sounds like it can be competitive, in some cases it could be better. The third question I often get is, “Hey Tim, I am a resident. I am a fellow, I am a pharmacist but I am not yet earning that full income and so is this product eligible for me?” and I think, correct me if I am wrong, I think the answer is yes, you’re a pharmacist but you’re obviously going to run into some potential issues with that percentages because of that lower-income, is that correct?

[0:31:56.7] TU2: Yeah, that is going to be a real challenge to buy that level. You know, we typically because the income level is not where it needs to be unless you’re married and your spouse is earning a good living already and whatever field they might be in and that can change things, you know? I’ve had where the spouses of PA, a physician assistant or an attorney and they’re having a good income stream while the pharmacist is in training that can be.

So everyone is different through our point Tim but yeah, that would be a case where that probably qualifying for a loan, they’d have the ability to do it in that case but normally I find it is better to kind of wait fpr your training and you have that state license where you are going to be practicing in place.

[0:32:37.4] TU1: Tony, knowing that we’re at the time of year, so those that are doing residency fellowship that are wrapping up, you know typically they’re ending end of June, so they’re in this transitionary phase and I suspect many might be listening. So for those that are making the transition out where they’re going to be going from a resident or fellow income to that full pharmacist income where obviously things will improve financially, general rules of thumb in terms of like how many months do we like to see from a lending perspective where they are in that higher income state, so they evaluate potential timing of a home purchase.

[0:33:08.6] TU2: Tim, really month one we could help them. If they have an agreement and they are getting a W2 income, month one, we can help them. So they could close in month one, so right out the gate, you know, in July 1st if that is their first day, they could close. So they’d have the ability to close right away. So this product is not quite as flexible as our doctor products, which we’ll create.

Sometimes they’ll go out like over five months if you have a contract and stuff like that from your start date but –

[0:33:38.1] TU1: Oh really? Before.

[0:33:39.5] TU2: Yeah but it’s a little different program. This one, it will still allow you to close on day one. So they really could get under contract knowing where they’re going to start and be able to close right when they transition in.

[0:33:52.9] TU1: Okay, let me point our listeners too, we’ve got a page. If you go to yourfinancialpharmacist.com/home-loan, we’ll link to that in the show notes. Again, yourfinancialpharmacist.com/home-loan. We have a lot of information, five steps to getting a home loan. We go into a lot more detail about what we talked about here today and then from there, you can get more information in terms of applying for the pharmacist home loan product and getting in touch with Tony as well.

So Tony, thank you so much. As always, always appreciate the conversation and the expertise that you bring to the YFP community. So thank you so much for joining.

[0:34:28.5] TU2: Thanks for having me Tim. It’s always good hanging out with you here so I enjoyed it. Thank you.

[0:34:32.5] TU1: Thanks Tony.

[END OF INTERVIEW]

[0:34:33.9] TU1: Before we wrap up today’s show, I want to again thank this week’s sponsor of Your Financial Pharmacist Podcast, First Horizon, previously IBERIABANK/ First Horizon. We’re glad to have found a solution for pharmacists that are unable to save 20 percent for a down payment on a home. A lot of pharmacists in the community have taken advantage of First Horizon’s pharmacist home loan; which requires a 3 percent down payment for a single-family home or a townhome and has no PMI on a 30-year fixed-rate mortgage.

To learn more about the requirements for First Horizon’s pharmacist home loan and to get started with the preapproval process, you can visit yourfinancialpharmacist.com/home-loan. Again, that’s yourfinancialpharmacist.com/home-loan.

[DISCLAIMER]

[0:35:14.3] TU1: As we conclude this week’s podcast, an important reminder that the content on this show is provided to you for informational purposes only and it is not intended to provide and should not be relied on for investment or any other advice. Information of the podcast and corresponding materials should not be construed as a solicitation or offer to buy or sell any investment or related financial products. We urge listeners to consult with a financial advisor with respect to any investment.

Furthermore, the information contained in our archived newsletters, blog posts, and podcasts is not updated and may not be accurate at the time you listen to it on the podcast. Opinions and analysis expressed herein are solely those of your financial pharmacist unless otherwise noted and constitute judgments as of the dates published. Such information may contain forward-looking statements, which are not intended to be guarantees of future events. Actual results could differ materially from those anticipated in the forward-looking statements. For more information, please visit yourfinancialpharmacist.com/disclaimer.

Thank you again for your support of the Your Financial Pharmacist Podcast. Have a great rest of your week.

[END]

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