YFP 143: How Using Your Creativity Can Spark a Six-Figure Business


How Using Your Creativity Can Spark a Six-Figure Business: Art by Stephanie Roberts

Stephanie Roberts, PharmD joins Tim Church to share how she went from full-time pharmacist to full-time mixed media artist after an Instagram influencer shared her pill petri art and made it go viral.

About Today’s Guest

Stephanie grew up in the hills of Eastern Kentucky, a small rural town named Prestonsburg with less than 5,000 people. From as early as she can remember, her go-to response to “What do you want to be when you grow up?” was to be an artist. Growing up as a straight A, high achieving student, there wasn’t a terrible amount of encouragement to follow your dreams if our dreams were outside the tidy box of medical field/law/etc. Stephanie learned to think like most adults surrounding her that being an artist wasn’t a “real job” or career and never thought much of it past elementary school. Art has never left her though and even as she studied and made her way through undergrad (Georgetown College) and then into pharmacy school (University of Appalachia), she was always making and painting as a creative outlet.

After graduation, Stephanie managed a couple different retail chains for a few years (PIC at CVS and Meijer), and finally landed an amazing opportunity as staff pharmacist at the University of Kentucky, opening a new retail location for them in their newest pavilion on the medical campus. At this point she had been out of school for 4 years, married with a one-year old and art was mostly a distant memory. A few years into her new position, she leaped at the opportunity when a 30 hour / 3 days a week (still considered “full-time” for benefits purposes) was offered to her, within the same pharmacy. The extra days off gave her more time with my children (up to 2 boys at this point!) and time to take up a small amount of creativity again.

The work was enough to take up every minute of her spare time but still, she was only dreaming of making art her full-time job. Until July 2019 when her resin coasters with medications suspended inside — what she has named “pill petri” — went viral. This whacky combo she created on a whim combining her love of epoxy resin and her career in medicine, became the tipping point that truly began a whole new life for her. The business was more than she could handle and she worked literally all day and night. Stephanie hired help, all either technicians or interns from her pharmacy, and together they fulfilled orders. She started an online shop that she would stock with hundreds of coasters just for it to sell out within 2 minutes with each release. After the most exhausting 2 months of her life working 2 full-time jobs, she finally took the leap and became a full-time artist still working 1 day each week in the same pharmacy. While the income from art has far surpassed her pharmacy salary, she continues to work to retain her pharmacy knowledge and stay fresh in the profession.

Summary

Stephanie Roberts joins Tim Church on this week’s podcast episode to talk about her amazing transition from full-time pharmacist to full-time artist. Stephanie always loved art growing up and kept creating during college as a hobby. After graduation Stephanie started working with CVS, became manager and then got her own store. After that, she worked at a Meijer in her town and then decided to work at a new pharmacy at University of Kentucky hospital which she absolutely loves.

Three years ago, Stephanie started taking interest in different artists she likes and felt inspired to create more, so she did. Working with epoxy resin was really popular and she was interested in it, so she dove in, researched different techniques and started to create art pieces. She posted pictures of the pieces she made on Instagram but never put a price on them and finally decided to one day. When she did, it sold within 10 minutes. At the end of 2018, she started to make pill petri dish coasters and sell them on Instagram. In July 2019, a very popular Instagram account (@things.i.bought.and.liked) shared the pill petri coasters Stephanie makes and it made her go viral and ultimately changed her life. She had hundreds of orders come in and she couldn’t take all of them. A month after, she spoke with her pharmacy manager about going down to one day a week so she could focus on her art business.

Now, Stepanie earns more money with her art business than she would with a full-time pharmacist salary. She makes different art pieces like wall panel geodes, ocean pieces, pill petri coasters and has a commission list several months out. Every Sunday at 9 pm she opens her shop. No matter how much she lists, Stephanie sells out in two minutes.

Stephanie has brought in help from people in her pharmacy circle to aid her in making the pill petri coasters, her most popular piece. She hopes to hire a full-time employee in the future and loves that she’s able to spend more time with her three children, have a flexible schedule and do something she truly loves.

Mentioned on the Show

Episode Transcript

Tim Church: Stephanie, thanks so much for stopping by and being part of this side hustle edition.

Stephanie Roberts: I am super excited to be here. Thanks so much for having me.

Tim Church: Well, shoutout to my wife for kind of getting this episode started because she reached out to me probably about a month or so ago from the time of recording this and said, “Hey, do you know who this Stephanie person is? She’s got some really cool art, and she’s a pharmacist. And I actually have one of her pieces of artwork as my cell phone background. And I think you should reach out.”

Stephanie Roberts: That is crazy. It doesn’t surprise me, but you didn’t tell me that ahead of time because, I mean, I think most of my audience is women. And I have men messaging me saying, “My wife really wants your art. Can I get it for a surprise for her?” So I feel like it comes from the females. So that’s really funny you said that.

Tim Church: That’s so cool. Well, I can’t wait to dig into the art and all the things that you’re doing in addition to pharmacy. But I want to start out with a couple icebreakers because I think it would be fun. So Stephanie, you have to sing karaoke. What song are you picking?

Stephanie Roberts: Probably anything Reba McIntyre. I think you can hear the southern accent in there, but I love me some Reba.

Tim Church: OK. And what’s — any specific one?

Stephanie Roberts: Probably “Fancy.”

Tim Church: OK.

Stephanie Roberts: I don’t know if you even know Reba, but —

Tim Church: Oh, I know Reba.

Stephanie Roberts: Right. I mean, and I’m not a big country listener. But I mean, I’ve loved Reba from the time I was little. And I have the red hair and everything, so it works.

Tim Church: Now, I did pick up the southern accent a little bit. Where are you from?

Stephanie Roberts: Kentucky. From eastern Kentucky, from the mountains. And I’m central Kentucky now. But the accent is still with me.

Tim Church: Oh, cool. Alright, I’ve got one more for you. You have to delete all but three apps from your phone. Which ones are you keeping?

Stephanie Roberts: Well, I have to keep Instagram because that’s my bread and butter. Let’s see, what else do I really use? Don’t care much for Facebook, but I guess I do still use it. And then a photo editing, again, that’s a big — I have so many photo apps, I don’t know if I could choose one. But that’s big for me and the business.

Tim Church: Cool. Well I like that. And I knew Instagram was going to be one of them, but I was curious what the others are going to be. Maybe your email, right, so you can still communicate with people that want to order?

Stephanie Roberts: Oh, I don’t know. It’s good and bad. The email folders are full, the DMs are full on Instagram. I can’t say I’m doing great at the communication. But I’m grateful for it. But yeah, I’m not too great at it.

Tim Church: Well, I want to start out with you talking about your career path as a pharmacist because obviously this show is about side hustles and how you’ve been able to grow a business. But obviously, that was not where you started. You started out as a pharmacist. So I want to hear about that.

Stephanie Roberts: Oh, OK. Well, so not the most interesting career path, but I always knew I would be in retail pharmacy. So before I had even graduated pharmacy school, I had done an interview with CVS. And they hired me on the spot. And that just seemed like a great, you know, right-out-of-school job for me. I don’t think I had planned too much into where I wanted to be, which is great if you don’t have big expectations, then you won’t get let down. So I started with CVS and quickly became manager with CVS. I floated around and then I got my own store. And from there, that was still — it was a big commute for me. I was commuting about one and a half hours, so that was pretty exhausting when you drive an hour and a half and you have a 14-hour day and you drive an hour and a half back and then you do it again the next day. So another grocery store pharmacy that was in my actual town in Lexington, Kentucky, called me because they were looking for a manager that already had experience. And so I snapped up working at Myer because that was in town where I actually lived. And so I was with Myer for a period of time and then I had a customer that would come in all the time, and he was kind of a retired pharmacist. He had worked with Eli Lilly in Indianapolis, and he was getting his license in Kentucky. He didn’t really love it; he didn’t want to, but his wife was urging him to just so he could work part-time with the University of Kentucky. And that’s where his wife was a pharmacist too. Hey Jeff, if you’re listening. And he told me they were opening a new pharmacy. And I mean, he was just — he was so nice. I wasn’t even looking for another job, but he was like, “You really, really should look into it.” So I did, and I’ve been at UK ever since. It’s retail pharmacy, but it is completely different than what most people think of retail pharmacy. And it’s been awesome. I mean, I’ve said many times, if we ever moved out, I could never do old-school retail pharmacy ever again. It’s, you know, it sometimes can be the worst of the worst. But at UK, we do a lot for the employees and stuff but mostly with the inpatient, we have a program called Meds to Beds that delivers all the medications to the patients before they’re leaving, we service a lot of our transplant patients, we continue to do their medications through mail order, we have a specialty pharmacy. It’s just — and importantly, no drive through, which is a big win for retail pharmacy. But it’s so interesting. No day is ever the same as the last. It’s just — it’s really cool. It’s been eye-opening. I’ve learned a lot. I mean, I’ve learned about medications that are probably learned about in pharmacy school, I don’t even remember, but I’ve had to relearn them because they are fast movers whereas you wouldn’t have even seen them in your normal or average retail pharmacy. So that’s where I still am today one day a week. And I really love it there. I love the people and I love the way they run their pharmacy. And they give you plenty of help. We have so many pharmacists and so many technicians working together. And it’s so great to be able to bounce off any questions, bounce them off another pharmacist or anything when you’re just unsure of something where I wasn’t used to having that before. So yeah, that’s where I am today.

Tim Church: Wow. It sounds like you’re in a much better environment and that you really have a positive working atmosphere with your colleagues and just the things that you’re able to do. What are some of the other things that you like about it compared to other traditional pharmacy models?

Stephanie Roberts: Kind of like what I said about we’re not traditional in the way that we don’t have the drive-through. We don’t have a lot of people coming — not a lot coming outside into our pharmacy as in like outside of the hospital because we’re doing a lot of discharges, a lot of the prescriptions for the patients inside plus the employees and their families. So we really get to know our patients. We don’t see a lot of drug-seeking behavior, which I saw a lot in retail pharmacy. You know, that was kind of a fear, sometimes a safety concern when you’re working until 10 at night and, you know, other pharmacies have been robbed or things just look suspicious in the store. And I don’t really have that fear at UK, kind of in the heart of the hospital and if you wanted to take something from the pharmacy, you’re going to kind of have a long run to get out and pass security into a waiting car. You know what I mean? So it’s — I love that for even safety concerns. We’ve become a 24/7 pharmacy now. That just started about a year ago. So if you even have to work overnight, it’s a great place to be. So in those terms, everything’s interesting, everything’s different. Interesting also means you have new sets of problems and things when it comes to mail order and maybe people didn’t ask for their medications in time, so you’re calling a courier to drive it to them across the state because you don’t want any of your organ transplants to lose their well-earned organ. But it’s always interesting. I just can’t even compare it to any retail pharmacy I had experience with before. It’s pretty cool.

Tim Church: Yeah, I mean, it sounds like a great place to be if you’re a pharmacist. And like you said, it’s not only — it’s challenging, but it’s interesting. And you’ve got a great support team to help you along the way. So I think that’s really cool. Now, people listening may have just picked that up and said, “Stephanie, how are you only working one day a week?” And obviously some people choose to work part-time and they choose to work as-needed, but you know, you’re working one a day a week. And obviously as we were talking about before the podcast started that that’s not how it always was. So let’s jump into how Art by Stephanie got started because obviously that’s part of the story and how you’re working one day a week.

Stephanie Roberts: Right. And it seems kind of counterintuitive when I say I’ve got this wonderful job and now it’s, you know, down to one day a week by choice because I’ve decided to do something else. But I really loved it if I was going to do pharmacy full-time forever. And who knows? One day I might go back to full-time. But that’s where I would want to be. But the art kind of fell into my lap. So I’ve always loved art since I was a little girl, that was always my go-to when somebody asked me what I wanted to be, it was going to be an artist. But you know, as you grow up, not usually — people don’t usually encourage that as a career because let’s get real, there’s not a lot of artists we know that are doing it as a full-time career and paying all the bills. I’m not trying to say I’m special in any way, but you know, it’s not something parents usually encourage their kids to do. I have awesome parents, wonderful parents. So I’ve always done it as a hobby on the side, kind of always did it through undergraduate. As I became a pharmacist, it was something that was probably let go of for a few years. I got married, graduated from pharmacy school the next year, a few years later we had our first of three kids, and so you know, life was pretty busy. And probably about three years ago, I think through Instagram and YouTube and things like that, I started really taking interest in some artists that I love. I think Justin Gaffrey is one of my first artists I ever just like fell in love with his paintings. They’re really textured, and I’m just a texture lover. I love when paintings or art just like jump off the canvas. So I really loved Justin Gaffrey. A few others that I just watched and realized they were — they had a career. I mean, they were doing great. And a lot of their interest was through Instagram. And not that even in my head at that point was I saying, oh, I could become an artist one day. It’s just like I felt inspired to create. So I did. And I would share pictures. And still, I wasn’t trying to go after anything. I was just enjoying it and it was a great creative outlet. So I did that for a few years. It really started with paintings at first. And then I think epoxy resin kind of just like hit the art scene and everybody just started getting resin and I was really interested in that. So I started resin work and kind of 50-50 between painting and resin work. And one day, I just decided after a few years of this and just posting pictures, never trying to get sales, not pushing anything, I just wanted to create and share what I was doing, I decided to put a price in the text of the picture on Instagram, just wondering, you know, I feel awkward asking somebody how much something is. So maybe other people feel awkward too. You know? You’re afraid to get that answer, “Oh, it’s $10,000,” and you’re like, oh, that’s not in my price range. I mean, I just don’t even think I could ask another artist. It’s crazy sometimes. So that’s why I thought I’ll put a price on this and see if anybody’s interested. And it sold within five or 10 minutes. And I was like, well, that was really cool. So I just continued to do that. And I think that was one of my — it was a resin piece and I called it geode, and it’s like an art panel, and it’s stained glass and it’s resin and it’s different pigments and metallics and things like that. And so it was a geode.

Tim Church: And how much was your first piece that you sold on Instagram? How much did you sell it for?

Stephanie Roberts: It was $150.

Tim Church: $150. And how much did that first piece, like in terms of the materials, how much did it cost you to build that particular piece? And then how long did it take you to make it?

Stephanie Roberts: I would say in material cost, probably under $40. I’m thinking as for time, it probably took me five or six hours because it was one of my first ones I had ever made, so everything was troubleshooting and figuring out how to do this and that, which is something I can do a lot quicker after, you know, 100 of those at this point. But yeah. So I really wasn’t doing a cost analysis on my hourly wage or anything like that. I just thought there’s nobody that’s going to want to spend more than $150 probably. Nobody is even going to want to spend $150. That’s what I’m going to price it at because I was happy to keep it. And if nobody wanted it, I was happy to keep it. So yeah, that probably wasn’t my best cost analysis. But it was still great. It was still a profit, and it kind of went on from there.

Tim Church: I mean, that’s really exciting. So what’s going through your head, though, either in the moments before you put it up to say you’re putting it up for sale or even the week or the month before you decided to do that. What’s going through your mind?

Stephanie Roberts: You could probably ask my husband because I talk a lot, but he’s probably not listening. But I mean, at that point, I was like this is really cool. I could make more of these and I could do this and if I had so many a week, it would equal this. You know, it’s probably like, OK sure, but how many people are going to buy these? But you know, in my head I was just like, I’m going to make more and I’m going to put more price on them. I’m going to see if people want to commission these. Still not in the frame of mind like oh, this is going to be a full-time career. But a side hustle, yes. Did I need a side hustle? No. But I was, you know, I loved what I was doing. And if people were going to pay me to do it, that’s all the better reason why I would do it and, you know, not be helping with cooking or cleaning in the house or something. You know, it gives you more reason to do this hobby when you’re getting paid for it. You feel a little bit better about spending your time on it. So yeah, it wasn’t much later — I think that was about like October of that year. And this was 2018. And by November or December, I had made what I went viral for is the pill petri, which is on coasters, resin coasters, with over-the-counter medications in them. And I had put those — I just shared a picture of them on a pharmacy moms group, and I got more orders than I could handle. You know?

Tim Church: Wow.

Stephanie Roberts: It was kind of near Christmastime and everybody wanted them either for themselves or for a friend. And I mean, I’m not saying it was a million orders by any means, but I wasn’t prepared to even make 50 at a time at that point. And you know, maybe I had an order for 100. So that was pretty cool.

Tim Church: That had to been awesome to really validate that what you were doing was something that was very desirable that people wanted.

Stephanie Roberts: Yeah. It was really exciting. I mean, I still, still didn’t — I was not in the frame of mind that this was going to go anywhere, that I would keep creating and I would probably still sell on the side always, maybe people would ask me to do commissions and different work, and I was happy to do it. But it was a dream. Sure, you could ask me, “Would you want to do this full-time?” Yes. But I mean, that was a big dream. It didn’t feel like reality that that could happen.

Tim Church: Do you think that because you just focused on the art and using it as a creative outlet, something that you enjoy doing without the initial intention of monetizing, do you think that that mindset has eventually helped you along the way as to where you are now in terms of making, actually earning income from it?

Stephanie Roberts: Oh yeah. 100%. I don’t think I could have started out saying, “I want to do this for money,” and went anywhere with it. It was because I loved it, it was a passion, I was learning from other artists on the Internet and wanting to do what they did. You know, different techniques and stuff. And I mean, I worked on a lot of things that just went straight into the garbage. You know? It was just for fun. Yeah, I don’t — if I had started out this was all about money and this was all, you know, I don’t think I would have went anywhere with it.

Tim Church: So talk a little bit about what the actual products that you’re selling, you went into it a little bit with the petri dishes, but obviously we’re on a podcast so need to be as descriptive as possible. We’ll definitely share some pictures once this gets posted. But can you talk a little bit about what you’re actually creating? What’s selling the most? What’s the most popular?

Stephanie Roberts: Yeah, sure. So probably earlier — this timeframe that we’re talking about, it was earlier that summer I was working with the epoxy resin, which is a liquid that you mix and then you pour and then it cures to a hard clear kind of glass-like or acrylic end result. And being the dork that I am, I had some pills around, over-the-counter medicines, and I was like, wouldn’t this be so funny? So I put the medications into — it’s a silicone mold that you put your resin into if you’re using a mold. And I made a coaster out of them. It’s like a 4-inch diameter coaster, and it just looks like the pills are suspended in the resin. It takes a few layers to do this. So I had made that that summer, I posted pictures of it. Again, I wasn’t doing any prices back then, so it’s not like anybody even asked about, “Hey, can I buy this?” And it was later that year that — I don’t even remember, I don’t know what the genesis of it was, why I decided hey, I should make a bunch of these. But for some reason, maybe it was just being in that pharmacist moms group, I thought, this could be something that other dorks like me — and I’m just kidding — but you know, other pharmacy nerds might like too. So you know, I put it out there, this is what I’m doing if anybody would like it. And it was very well received. So those are kind of like coasters, like I said, and then I make a little bigger 6-inch diameter. It came about several months later, and I put letters and words and funny quotes in those. And I put funny quotes in the coasters now too. So a lot of customers will — especially in the beginning when I had more time to take requests, they would request, “Hey, could you do this with pink? Can you do this with black? Can you do it with glitter?” And I was happy to do anything anybody asked for. And then every time I would post a picture, there would be 300 other people that agreed with that person, man, we really want them in that color too. And it always led to a new variation of what we call the pill petri. And so now there’s maybe four or five different colors or glitters or clear, whatever, pill petris that I do. And somebody’s always asking for something different. But besides just the pill petri, I still do what I call the geodes, which are wall panels that you put on the wall and those are the resin and the stained glass and the crystals. I do these ocean pieces. Some people send me shells that they’ve collected on family vacations, things like that, and I’ve included the shells in their ocean art. And again, that’s with resin. And then it looks really realistic and pretty cool, I think. But I’ve also done pill art that hangs on the wall as well. So I kind of jump all around, which is exactly what my ADD loves is doing a little bit of everything. And honestly, what I went viral for, the pill petri, can start to feel like a manufacturing process after a while. It doesn’t really get my creative juices flowing all the time, and while it’s my bread and butter, I really try to do some other things in between to really feel like I’m using my full potential, whatever that is. But yeah. A little bit of everything. I still paint, I still have requests for paintings. I have a commission list that’s into March at the moment for a wall art that’s not just the pill coasters that I get recognized the most for. But there’s still a lot of people requesting wall art of different kinds, whatever that may be, the geodes, the oceans, paintings, pill art. Yeah. It’s kind of wild.

Tim Church: Yeah. I was going to ask you, because I feel like every time I check out your Instagram profile — which is awesome, by the way — I mean, even if you’re not going to purchase anything, I think you need to just go and visit it because you’re going to have a lot of fun. And there’s so many cool designs that are on there, some of which appear to be edible. But they are not, correct?

Stephanie Roberts: Thank you, yes. Yeah, those would be the textured paintings that I love to do. And I use piping bags like you would if you were decorating a cake to make a lot of the ones that you’re talking about that edible with the flowers and things like that and pellet knives and things. But yeah, I just, I love art that looks like it’s just jumping off the wall.

Tim Church: But some of the petri dishes, they actually have real candy in there as part of the design, right?

Stephanie Roberts: Oh, yeah. Right. Yeah, no, I have the candy coasters and things too. And I’m even collaborating soon with a big sprinkle company because the sprinkles I think have been my favorite, which is kind of full circle in my life just because I’m addicted to sweets and sugar. I wish I wasn’t, but I am. And I grew up loving ice cream just covered with sprinkles, almost as many sprinkles as you had ice cream. And I would get gallons — I mean, just huge containers of it in my stocking for Christmas. That was like a gift my parents — I remember my grandmother giving me sprinkles as a gift. I mean, that was a gift that people would give me. I mean, that says you have an addiction, right there. But so it’s kind of cool that’s full circle that I’m doing the coasters with the sprinkles and other candy in them and things like that because truly, that’s just who I am, addicted to sugar. So that’s kind of fun for me too, just another side of my personality to be using in art as well.

Tim Church: So one of the things I noticed, I feel like every time I go to your profile and I go on your shopify, everything is sold out. So I was going to ask you, what’s going on with that?

Stephanie Roberts: Well, it’s really funny you say that. But I usually have a shop opening and I’ve kind of — it’s kind of become a Sunday tradition and I’ve kind of stuck with that Sunday, it kind of worked for me, at 9 p.m., I don’t know, it just worked out to be a good time. And no matter how much I put in the shop, it sells out in two minutes or less. And it’s crazy. But people still ask me like, can’t you just have your shop open all the time and just take orders all the time? Or somebody will say, “Can’t you get a real website?” And I’m just like, I don’t know what a real website is versus my shopify account, but it’s not going to increase how much product I have to sell, which I don’t think always registers with people. But if I just had it open to take, you know, requests too, I don’t know how to humbly say this, but I mean, it would be a year’s worth of orders because I can see how many people are on there at shop time when it opens versus how many people get an order through. And you know, they want to take preorders and things like that, and I don’t want for their safety and for mine, I don’t want to take preorders that are six months in advance, which some people say they’re willing to wait when you don’t know what could happen in life, happen to me, happen to my family, my house. I don’t want to hold your money in preorder status. So I like to just sell either what I have or what I can make within the week. And it seems to be working out really, really well. Right before Christmastime, about a month before Christmas, was my biggest preorder I ever did just so people would know whether they got an order in or if they should be shopping for something else if it was a gift for somebody. And that’s why I did it at that time. So it was in November, and I took how many orders I guesstimated I could do in the month before Christmas, and I was exhausted. And even then with to me, the huge amount that I put in the shop, it was still sold out in two minutes.

Tim Church: Wow.

Stephanie Roberts: So that’s just — it’s just — I mean, it’s crazy.

Tim Church: I mean, that’s incredible. That’s incredible. I was wondering if this was like a marketing tactic you were using. But it actually is the fact that you would be too overwhelmed with the amount of orders that’s coming through, which is — I think it’s a good problem to have, right?

Stephanie Roberts: Yeah. I never in 1 million years would I ever dream I had this problem. I mean, in my most earnest hopes and desires, I was like, oh, I think I could push out this many a week and that equates to this much money and that’s almost equal to pharmacy. And oh, we could cut back on things and I could become a full-time artist. I mean, never, ever, ever, ever, did I think this would be “a problem” that I would have that things would sell out. So and that — just to back up, I know I’m jumping everywhere. But last July, things changed when somebody on Instagram shared the art she had purchased. And her Instagram name is @thingsIboughtandliked. And when she bought it from me, I didn’t know who she was. But apparently she was the Oprah of Instagram. And when she shared — I mean, she only shares things that she purchased with her own money and she likes it. That’s the title of her Instagram, that’s exactly what she does. When she shared it, my life completely changed. That night, I had probably — oh gosh, I don’t know because I never did get through all the messages — like 400 or 500 messages. She shared about 9 p.m. my time. She’s in Texas. At 4 a.m., I decided to go to bed after answering as many messages as I could because I thought, well, this is the only rush I’ll ever get in my life. Like I better take every message and every order I could. But even by 4 a.m., I hadn’t got through even half of the orders. And so from her sharing that, I mean, thank God for her. That’s when life changed. So that was in July, and by maybe a month — not even a month later — I had talked to my manager about going down to one day a week and becoming a full-time artist. It was that life-changing. It was crazy.

Tim Church: Wow. So at that point when she shared that, how many hours were you working?

Stephanie Roberts: I was a 30-hour pharmacist at that point. So I was working three 10-hour days a week, which is amazing. And back when I took that — so when I started at UK, I was your regular 5 day a week, 40-hour person, kind of banker’s hours. And then a few years into it, they knew I was interested in going to 30 hours, which is still full-time benefits, and that’s what I took on. And at that point, I was doing some more art on the side, and it was like oh, this is great. I’ll have more time for art and just feeling like the human that I want to be, a little bit of everything. And if I’m going to be a good mom, obviously that was more time for kids too. So you know, it was — everything was great. But so I was 30 hours when she changed my life. And yeah. I realized burning the candle at both ends, I wasn’t sleeping, I was working around the clock to fulfill these orders, you know, it was — self-care didn’t happen for like four months. It was crazy. So I knew something had to end. Either I had to just give it up and I can’t be the person that can fulfill all these orders or I can, and I’ve got to let go of pharmacy, which was very scary when the whole family is on my insurance because the hospital has amazing insurance and benefits and things like that. And my husband has benefits, but you just can’t compare to how awesome the hospital benefits are. So it was scary, and it was something we had to weigh as a family and what we’re losing, what we’re gaining, pretty cool to be at home whenever the kids do need me because definitely the mom guilt has added up over the years. Every time they’re sick, my husband’s job is he has the best job ever and he’s flexible and he can be there for them. But man, it really hurts when you can’t be there when they’re sick. So now I can. I can be there for the kids and just so many other benefits. So that’s where we are. And I have the most supportive husband — this would never happen without the husband I have. Like I can imagine there’s a good percentage out there that would kind of be like, let it go, Stephanie. You know, you’ve got a great job — which I did. Pharmacy was great. Let’s count our blessings, let’s move on with what we have. But he’s been really supportive, and I’ve had some really pie in the sky dreams, and he’s just kind of like, go for it. I think you can do it. And without him, again, I just — without support, I don’t know how you could do it. So I’m thankful for that too. And he’s had to — when I was saying that I was burning the candle on both ends, I mean, he’s a wonderful father. But he really had to step up his game even more and really do a lot of the home things with the kids and everything it takes to run a family and a home. And he enabled me to be able to just devote everything I could to both jobs and stuff. So pretty awesome.

Tim Church: Yeah, I mean, that’s just wild how one post, and a bazillion orders come through and everything changes and no longer is pharmacy your full-time gig but now it becomes the other way around. And I think for a lot of people, that maybe they want to make that transition or do that change, but there’s obviously a lot of fear that goes behind that. Like you mentioned, obviously the healthcare benefits, that’s one, and being able to afford healthcare when that’s something that’s part of your employer benefit package. But then also, are you going to continue to get orders like that? Is it going to continue to have a demand? Or is it a one-time spurt like that? I think that probably had to be going through your mind at that time as you’re making that decision with your husband with how you’re going to proceed.

Stephanie Roberts: Oh yeah. I mean, looking back at it, I don’t really know how we made that decision. Why did we really think it would continue? I don’t know. I mean, there was kind of markers where you’d say, yeah, it looks like people will continue. But we didn’t know. This was only a few months later, but I still look back and think, why did we really think it was safe to make that jump? I don’t know, but thank God it was. And it’s continued to be — it probably took me 10 shop openings to be like, you know, every time before it opens, are people still going to be there? Are they still going to shop? Are they still going to buy things? And now I feel confident they’re going to be there because they’re in my DMs, they’re in my messages, they’re saying, “When is the next shop opening?” And I feel confident. And I might even feel confident like that it will continue for a year, but I don’t know what the future holds. I’m hopeful. But like I said before, and maybe this was while we weren’t recording, but you know, I hate to let go of pharmacy in case I need to get back into it. It’s an amazing safety net. I can’t think of a lot of people, you know, that I’ve learned about over the years, amazing authors and artists of every variation that have held onto their side job for as long as they could while they were still trying to make it. I don’t know of any side job that was as great as pharmacy is, so it was — I mean, I’m so happy that’s my safety net, even if I had to go back to the trenches of some retail pharmacy that I would prefer not to work in. It’s still a blessing, it’s still there, it’s still wonderful. So yeah. I just kind of pinch myself every day that this is happening.

Tim Church: I mean, it’s incredible. I mean, I just, I’m sitting here behind the mic like, I’m just so fascinated and intrigued with your story and how you made that jump but also how you continue to make it happen and just the demand being there. I mean, it’s just wild. So I think a lot of people are probably thinking, alright, Stephanie, you basically said you’re crushing it right now. You can’t even hold your shop open for more than a couple minutes before you sell out of your business. Can you give us just an estimate — I mean, how much are you actually earning in the business? And is it comparable to what you were making full-time as a pharmacist?

Stephanie Roberts: I think my husband wishes I was a little bit better with numbers and keeping up with things like that, but Shopify and having that online presence has really helped me to see that and see my profits and, you know, tax season is going to be really interesting this year as we figure out what we’re doing with a new business. But after this year, hopefully we are more informed about everything we need to do better next year. But yeah, it’s doing better than pharmacy. I think I would have made that jump even if it was maybe doing a little bit less than pharmacy. I think we could have handled that in our finances. I have, again, my husband has a Master’s in business and education that I don’t even understand. But you know, so he’s wonderful to have around. I call him the CFO. But yeah, it’s doing better than pharmacy, which is a huge surprise. I would go ahead and estimate that it’s going to be over six figures this year. And I mean, that’s pretty cool. I don’t know that I could ask for more. So —

Tim Church: I mean, that’s incredible right there because I mean, I know there’s a lot of people that obviously are doing — designing art and doing creative works. And I think they dream of even getting remotely close to what you’re making. And so the fact that you’ve been able to do it and replicate the process and continue to have — there’s a need out there, obviously, for people that want your designs. I mean, that’s just incredible.

Stephanie Roberts: It is incredible because who would have even thought outside of the pharmacy network I was going to find an audience for pill petri? But I mean, it far surpasses just people in the medical field anymore. I mean, there’s all the nice, fancy blog influencers, I mean, Instagram influencers and things like that. Again, other people buy it and then share it. And it’s — I would have never imagined that somebody that wasn’t in pharmacy or medicine period would want these. So I mean, yeah, just crazy. And I feel humbled by it but also feel like gosh, I look at some people that are just so talented and I wonder if their sales are like this or they’re close to this and things like that. I don’t feel worthy of it. But it’s — I’m grateful. And it’s been a really fun ride. So yeah. I put my time in at least. I may not be as wonderfully talented as they are, but I have definitely worked my butt off. I can say that. I have put the time in for sure.

Tim Church: It’s easy to tell that. And like you said, coming from your initial motivations for even pursuing art were way beyond the ability to monetize it. So I mean, I think that’s really cool. Now obviously, you’re the secret sauce of the business and creating these awesome designs. But does anybody help you with different aspects of it?

Stephanie Roberts: I have been bringing in more people, and they are to help with it. Like I said, the coasters at this point are — it’s almost like manufacturing. We make hundreds a week, and it is probably more time-intensive than anybody ever assumes when it comes to how many layers of resin you pour and putting the pills in, creating the capsules we make with the glitter and the sprinkles inside, I mean, I have thousands of those we make. So it’s not just buying over-the-counter drugs, but it’s making the glitter capsules that are kind of, again, the secret sauce that people are just like, where do you buy those? We don’t buy them. We make them. So the people I have helping me, funny enough, are technicians I’ve recruited, interns I’ve recruited, and somebody just started for me recently as one of my fellow pharmacist’s daughters. So it’s been kept close to home. I hope to hire somebody really full-time and, you know, become more of an assistant. I always tell people when I say, “Do you want to come over and help?” I mean, obviously, they get reimbursed. But you know, it’s not the most fun. But you know, we try to make it fun. It’s just time-consuming and we listen to our podcasts and we watch TV on the iPad or do whatever. So we keep it as lively as we can. And it’s not boring. It’s not the most fun. But it’s, you know, it’s better than on your worst day in pharmacy for sure. You know, the days when insurance is down and you know the customers don’t understand that and somebody’s sick and the very worst days, you’re like, yeah, you know, at my worst I may be a little bit bored on some occasions. But yeah, it’s still pretty great. I like the day-to-day

Tim Church: What about an accountant or a lawyer to help with some of the legal issues with the business? Anything — any of those people supporting you?

Stephanie Roberts: Well, I don’t have a lawyer that I have kept on staff or anything like that. But in the beginning, before we jumped this as a full-time career, my husband said, “You really need to figure out if this is legal. Legal, legal, legal.” I had kind of already been doing it, but he’s just like, you can’t jump to this full-time — and I had researched it on my own as much as I could to make sure everything was OK. So I think I contacted three different pharmacy lawyers that I knew of. So they were pharmacists plus attorneys. And they were all gracious enough — I mean, just on a friend basis looking into it for me. And nobody could find any reason why this would be, you know, illegal. Again, they’re over-the-counter medications, there’s no prescription medications in there. People shouldn’t be able to get — I mean, to get into the resin to get into a medication, you would have to use a drill. And by the time you got down to the pill, it’s going to be obliterated. So you know, good luck trying to get that Tylenol out of there to take it, but I don’t think it’s going to hurt anybody.

Tim Church: I was going to go for the Sour Patch Kid or the Swedish fish.

Stephanie Roberts: Oh, OK. Yeah, I mean, just swallow the coaster whole. That would probably easier to do than to get down to those. And on the gummies too, I mean, I’ve covered those with like shellac-type substances. So yeah. You’re not going to want them. So definitely have an accountant that will be helping us with our first tax season as a sole proprietorship this year. Plan on becoming an LLC. Should have done that last year, but time definitely got away from me. LLC I think would be much more beneficial. But yes, an accountant is a must. I don’t think we would do this on our own. Not yet. Maybe in the future. Probably not. But — and I hope I never need a lawyer, other than the initial, “Hey, is this legal?” I hope I don’t need another one for any reason.

Tim Church: But one of the things along the lines I was going to ask was, do you have any patents or other protections on your designs?

Stephanie Roberts: I have looked into patents, and patents on art are pretty difficult. You can get them, but then you have to enforce them. And when I get into something, I really — I get into 175%. So I have done every online course and researched other entrepreneurs in every field and even people like — I think it’s Sarah Blakely that does the Spanx brand. As a male, I don’t know if you’re aware, but I mean, Spanx is a huge brand. So maybe at this point you know what that is. But I mean, even on her designs, she said she had patents and people were ripping it off here and there. And she’s like, you know, I didn’t have enough time, I didn’t care enough, really, to go after every one of them. I just was focused on what I was doing. And that girl is into making billions these days. So there’s a lot of stories kind of like hers that make me believe there’s copycats. I already have copycats. And I try to just see it as flattery. They’re not doing as much. But —

Tim Church: Their shops are open, right?

Stephanie Roberts: Yeah, yeah, their shops are open all the time, just like — yeah, exactly. But yeah, I think I’m just going to keep my blinders on and keep trying to do what I’m doing and always stay ahead of them. That’s kind of one thing, it’s kind of motivated me to always stay ahead and be thinking of more, not to get comfortable or same like, you know, looking ahead, maybe we could assume I have some business in the future. But let’s not always assume. Let’s just work and earn that business and keep your clientele and keep the customers coming back for more. So it has motivated me in that way to not get comfortable and say, this is easy-peasy from here on out. No. I need to always be doing more. So that’s pretty cool.

Tim Church: So Stephanie, what advice would you give other pharmacists out there who have other interests and passions beyond pharmacy that maybe have the potential to be monetized?

Stephanie Roberts: I don’t know if I would say, jump into it. But you can do it. I mean, I just, I really think if you have a passion and a will — I saw this quote I think just two days ago, and it’s so simple. But it just really hit home for me, and it was just like, “I don’t know how, but I’m going to do it.” I mean, it was something like that. But I don’t know how, but I’ll make it happen. And it’s just like yeah, that’s exactly what it is. I don’t always know the how, but I’m going to figure it out and I’m going to do it. And I think anybody can. I think as I’ve entered my 30s and the more I’ve listened to and digested all these wonderful podcasts that exist that interview all these amazing entrepreneurs and people doing — it’s just like, you can do it. I mean, it’s amazing you can do it, how you can think outside the box and really make it happen. Growing up, I just really didn’t do that. It just seemed like degree all the way and that’s all you can do. And now I really want to educate my kids on — I mean, college is wonderful and I hope they go to college, but there’s so much more outside of that with being creative thinkers and finding a solution to a problem and that’s how some of the best inventions are made. I would just say if you’re really into it and you have a passion for it, do it. I don’t think money is always the best motivator. I think after awhile, you would get — you’re going to be exhausted and give up if it’s only about the money because I know from experience if this had only been about the money, oh, I would have given up a long time ago. It’s been exhausting. It’s been hard. But like I said, with three little kids at home, it’s not been easy. But I wanted it. So I kept on going. And I went days with only three hours of sleep every night. And that really takes a toll on you. But I wanted it. So I was going to keep on going. And I don’t think if you’re doing it only for the money that you would push through all the time. So you know, if you find something you’re passionate about, go for it.

Tim Church: I love that. Well said, Stephanie. Well thank you so much for coming on the show, sharing your story, really looking forward to hear how you continue to just explode this business. And I look forward to the day when you’re shop’s open and possibly I can order something for my wife. But also I like the coasters too, so even though you said you’re catering to a lot of women out there, I definitely think that there’s some really cool designs that you’ve done, especially if you’re a pharmacist or have that background that are really cool to have in your house. So I would encourage you to check out some of the designs. So if someone wants to reach out to you or learn more about what you’re doing and Art by Stephanie, what’s the best place to go?

Stephanie Roberts: Well thank you so much. And I have made some male designs for some male pharmacists and some doctors that did not have glitter pills in them. That’s all it takes. You just subtract those out, and it’s a male coaster. But Instagram is the best place to find me, and it’s pretty simple, but it’s @artbystephanieroberts. And you can get everything you need from there. The link is in the profile for my shop. Again, that’s most Sundays. But you know, @artbystephanieroberts on Instagram, you can find my email from there. And that’s really the place to go.

Tim Church: Thank you for listening to this episode. And as always, if you liked the content and want to hear more side hustle and pharmacist entrepreneur stories, please leave us a review on the Apple podcasts app or whatever player you use so we can get the message out and help other pharmacists on their financial journey. Just a reminder, if you want to win some of Stephanie’s art, follow @YourFinancialPharmacist and @artbystephanieroberts on Instagram and then comment on our audiogram post that’s going to be posted on Instagram Friday, March 13. And you’ve got one week to do this, and we will announce the winner the following week on Friday, March 20.

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YFP 142: Scripting Your Dream Career with Dr. Adam Martin


Scripting Your Dream Career with Dr. Adam Martin

Dr. Adam Martin joins Tim Ulbrich on the show to discuss his most recent book Gen-Z Pharmacist: Dominate Pharmacy School & Script Your Dream Career.

Dr. Martin is the founder of The Fit Pharmacist, host of The Fit Pharmacist Healthcare Podcast and a two-time author.

About Today’s Guest

Dr. Adam Martin works with people to write their script for success using proper nutrition, stress management, and the power of a positive attitude. He earned his doctorate of pharmacy degree from the University of Pittsburgh School of Pharmacy, and with over 7 years of experience working full-time in the community pharmacy setting, he’s passionate about empowering other pharmacists and pharmacy students to put the health back into healthcare through leading by example in their professional practice to not only live their best lives, but to inspire others along the way to do the same. He pairs his PharmD with his expertise as a certified personal trainer and nutrition consultant to guide self-care back into healthcare.

Dr. Martin is the founder of The Fit Pharmacist, LLC. As a National Speakers Association (NSA) Professional Speaker, Adam’s core passion is traveling to pharmacy schools across the world to speak to pharmacy students, sharing practical plans of action that will empower them to maximize their careers and create a competitive edge in the profession to maximize their success and degree of impact.

He has made his life’s work showing people how to take control of their overall wellness, sharing SimpleSolutions through his writing for numerous pharmacy publications including PharmacyTimes magazine, and is the author of the best-selling book Rx: You: The Pharmacist’s Survival Guide for Managing Stress & Fitting in Fitness as well as the forthcoming book Gen-Z Pharmacist: Dominate Pharmacy School & Script Your Dream Career.

He is the host of The Fit Pharmacist Healthcare Podcast, sharing successes and practical strategies from the most successful minds in the profession of pharmacy with a new episode released every week. You can subscribe and learn more here: https://thefitpharmacist.com/podcast

With a passion for learning and serving his patients, he’s an inaugural member of the Pennsylvania Pharmacists Association’s Leadership Excellence and Advocacy Development (LEAD) program, and strives to serval the global community of pharmacy as a medical missionary, having served in Honduras and Panama as a pharmacist in the field. In 2019, he was named the “Most Influential Pharmacist” by SingleCare’s Best of the Best Pharmacy Awards.

You can connect with him on Instagram

Twitter / Facebook / LinkedIn: @FitPharmFam

YouTube: https://www.youtube.com/thefitpharmacist

Summary

In this episode, Dr. Adam Martin digs into his reason for writing his most recent book the Gen-Z Pharmacist: Dominate Pharmacy School & Script Your Dream Career and key points in it.

Adam explains that the number one problem he heard other pharmacists say was that they were never taught how to be a pharmacist. Although they were extensively trained in medicine and other essential knowledge that lays the PharmD groundwork, they didn’t know how to enter the workforce, interact with their colleagues, develop their career, or attend conferences. Essentially, pharmacists entering the workforce already felt behind.

Adam identified this problem and knew that something needed to be done. He’s very passionate about giving back to pharmacy programs and wanted to make a lasting impact on students. He decided to focus on what isn’t taught in a PharmD program but needs to be known. Over a four year period, Adam wrote his second book, Gen-Z Pharmacist: Dominate Pharmacy School & Script Your Dream Career.

The book is divided into two parts. The first part is about your prescription to dominate pharmacy school. Topics like clarifying your why, molding your mindset and networking are discussed. Part two delves into how to script your career. This section consists of 22 expert interviews with some of the best pharmacists in their niche. In this section, pharmacy students ask seasoned pharmacists what they would have done differently in the pharmacy school and their career to get to where they are today but faster.

Mentioned on the Show

Episode Transcript

Tim Ulbrich: Hey, what’s up, everybody? Welcome to this week’s episode of the Your Financial Pharmacist podcast. I’m excited to welcome Dr. Adam Martin back on the show to talk about his most recent book, “Gen Z Pharmacist: Dominate pharmacy school and script your dream career.” Dr. Martin was previously on the show back on Episode 091 with Tim Church as a part of our side hustle series where he talked about how to become a fit pharmacist. Now, for those who don’t already know Adam, honestly, I’m not really sure how that’s the case as he’s everywhere having a positive impact, now internationally as well on so many so early in his career. His mindset, positivity and energy for helping inspire others to be the best version of themselves is second to none. I’ve been blessed to get to know Adam over the past couple years, and he’s inspired me and I’m confident will do the same for those listening today. Adam, welcome back to the show.

Adam Martin: Dr. Tim, it is a pleasure to be back, my man.

Tim Ulbrich: So glad to have you. It’s great to have you back in front of the YFP community, and it’s an exciting time for you with the recent book launch we’ll talk more about on the show as well as getting back from an international speaking gig. Tell us more.

Adam Martin: Yeah, man, so that was a blast. I actually just got back from speaking in Ireland at two pharmacy schools. So I was invited to speak on a mental health symposium in the city of Cork, Ireland. So flew into Dublin and then drove to Cork. And in Ireland, there’s three schools of pharmacy. So a little background: The healthcare system in Ireland is roughly three years behind that of the rest of the world. So just to paint a scenario for you, if someone has a mental health crisis, let’s say they have suicidal thoughts and they go to their provider, at that point, there is a 6-8 week waiting period for them to get any kind of treatment.

Tim Ulbrich: Gees.

Adam Martin: That paired with the fact that there’s a lot of stigma and no one’s talking about mental health is what’s prompted the creation of this symposium. So I was invited to speak. It was the first time ever in the country. All three schools of pharmacy were there. There were about 250 pharmacy students from the country. I spoke along with psychiatrists and pharmacists doing groundbreaking research to advance mental health. And it was the first time that there was a gathering to talk about mental health resources available and how to break down that stigma and lead to a positive impact. And the other thing that was fun — and I didn’t know this until shortly before the talk — is Irish people tend to be somewhat reserved. So they’re not used to my speaking style, and if you ever heard me speak, it is not a talk. It is an experience.

Tim Ulbrich: You bring it. You bring it.

Adam Martin: Yes. So I get everyone engaged, I get literally people up dancing in the talk. So they — the words that they used was “bloody brilliant.”

Tim Ulbrich: Bloody brilliant.

Adam Martin: It was a blast, man. And then I went the next day to speak at Trinity College at Dublin all about self-care, specifically for combating burnout that we’re facing in our profession because we hear about that all the time here in the States, but this is something that’s global. So it was an honor to be a voice representing pharmacy from the United States to talk about that in Ireland and bring what I’ve been working on here over there.

Tim Ulbrich: What an awesome experience. I mean, we talk about opportunity meeting the interest, the passion you have, the impact that you want to have. But just to be able to have that experience in Ireland, I followed you on Instagram throughout that journey. It looked like you were having a blast while you were there. So not only that, but you’ve got a second book out as well. I mean, how does that feel? We’ll reflect more on the details of the book and some of the concepts in there, but man, as you’re on the back end, the journey of writing a book is intense. I’ve joked with many, I’ve done it one, I’m not sure I’m going to do it again.

Adam Martin: Yeah.

Tim Ulbrich: But you’ve done it twice now. I mean, how does it feel to be on the back end of it?

Adam Martin: Oh man, so this actually is a funny — it leads me to a podcast that I did with a really world-renowned author. His name is Michael Lozier. And if you ever heard of the law of attraction, there’s a book called “Law of Attraction.” And it is a phenomenal read about mindset. But when I was interviewing him, I said, “Oh, I love your book. I’ve read it like five times, listened to it.” And he’s like, “Oh, that’s funny. I wrote it 100 times.” And at the time, I laughed. But after writing my second book, I was like, that is so true. So yeah, man, it’s a lot of revision and that’s really what people need to know is if you’re thinking about writing a book, really doing anything, the first draft is going to be trash. So you have to get started and dive into that process. And it’s fun. You learn, you get insight as you go. But that won’t happen until you get started. So that’s my learning experience and turned into piece of advice for anyone considering going down that path.

Tim Ulbrich: I think that’s great advice, and I think for many that have the aspirations of writing a book, they see a finished product and they think, oh my gosh, it’s so overwhelming, I’m never going to get there. But as you and I both know, to your point, the first draft often you look back at and you’re like, what was I thinking? You know, in terms of what I had here. But just the small compound effect, you write a few hundred words a day, you keep at it, and you get a draft on paper, you make revisions, you get feedback from others, and you start to refine your message and see what’s resonating.

Adam Martin: Absolutely.

Tim Ulbrich: So let’s talk about the book in detail. Again, the title is “Gen Z Pharmacist: Dominate pharmacy school and script your career.” Our listeners can learn more and get a copy at FitPharmacist.com/book. Now, three things that I love about this book as I had a chance to get a sneak preview from Adam: No. 1 — and I’ve shared this with you already — I think it’s really written in a way that is easy to understand, it’s digestable, and it’s written by someone who really has been through this journey. You know, you’ve walked the walk. And I think you’re doing a great job of teaching it. And I think it’s written in a way that it’s action-oriented is really the second piece that I love is that you can’t blow through this book. I think you’ve done a really nice job of you’re talking about some big things in the text in terms of mindset, you talk about leadership and time management, all these different concepts, and you really do a great job of forcing the reader to stop, reflect, and actually have space in the book where they can do some activities to think about that. I thought that was awesome. And then the second part of the book, which you called “Script Your Career: Experts speak,” you’ve got I think 20-something I think different experts that you have examples and stories from that I think really just showcases not only the journey you’ve had but also others. And so the thought that went behind this, you know, I think often when I see people that publish multiple books, you think, man, what are they pumping out? How quick are they doing it? What’s the quality? The intentionality here was awesome, and I think you did a really wonderful job. And I’m excited to talk more about this. So let’s start with why. What was the need? I mean, you’ve got your first book that was out, I see a copy in the book here as we’re recording.

Adam Martin: Yeah, there it is.

Tim Ulbrich: What’s the need for a second book? What was the mission and the vision?

Adam Martin: Absolutely. So first off, thank you for the kind words, Tim. I really appreciate that. It means a lot coming from you. I have tremendous respect for you and all the work that you’ve done and the impact you’re making for pharmacy. And I think that’s why you and I resonate so well and why we’re joining forces, sneak preview, for something coming up later in the spring. But to answer your question, so I’ve worked first as a nutrition consultant, and I’ve been doing that since 2013. And my niche is pharmacy students and pharmacists. And you know, we talk about problems, struggles, things like that. And the No. 1 problem that I kept hearing was very similar to what we all faced when we graduated. And that is I was never taught how to be a pharmacist. Yes, I was taught all the knowledge and all of the medication information and all those essentials that laid the groundwork for what our PharmD is for. But when it comes time to actually entering the workforce, interacting with your colleagues and then also developing your career in an increasingly competitive industry, how do you leverage social media? And then there’s all this talk about personal branding. Oh yeah, and then there’s conferences. And then there’s all that stuff that you’re not taught about in a structured way. And you get out in the workforce and then you feel behind. And something that’s something that people were struggling with a lot. So I thought, man, something needs to be done about this. So you asked why a second book, but the fun fact is I actually started working on this book before my first book came out. So this book was a four-year process because I do work full-time in the community and run a business. So time was interesting. But as far as the reason why, that comes to innovation. And that’s a core belief and a core concept at University of Pittsburgh School of Pharmacy, where I graduated, that being innovation, leadership, and excellence. So whenever I graduated, if you guys know my story, I was quite on the struggle bus to even get into pharmacy school.

Tim Ulbrich: Last seat, right? Last seat.

Adam Martin: Yeah. Last seat. Last one to get in, and no one in my class knew it. But I ended up being president of my class and all that other stuff. But because of that, and I worked so hard to get in, I was tremendously grateful for the opportunity and I had just such an amazing learning experience with phenomenal faculty and just great networking. So when I graduated, I started to think, man, I really need to give back. Like I need to get involved. So I started guest lecturing and helping some of my professors here and there. But working full-time, I would only be able to get in like when my schedules aligned, like once a semester. So that wasn’t really making a huge impact. Then I thought well, they asked for contributions financially, which is great, but I’m not a gazillionaire yet. But you know, after reading “Seven Figure Pharmacist,” it’s going to happen. Shameless plug. But you know, I don’t have enough money to make a huge impact with like a building or whatnot. So I thought, you know, how can I put this concept of innovation into practice? So I thought, what am I good at? What do I enjoy? What do people resonate with? And it’s writing and speaking. So I thought about what they don’t teach you in pharmacy school but what everyone needs in order to be a successful pharmacist. So I reached out to the dean and I said, “Hey, I thought about this idea of writing a book to complement pharmacy school. But before I do it, I just want to make sure that this doesn’t exist so I’m not spinning my wheels.” And she said, “No, it doesn’t exist.” So I was like, awesome. Well, what I want to do is I want to write a book helping students on this process so that when they graduate, they have the groundwork to hit the ground running. And what I want to do is reach out to 22 of the best pharmacists in their niche that are really crushing it. So like nuclear pharmacy, administration, dean of pharmacy school, how to get a residency if you want to get a PhD after pharmacy, all of those types of things. And what I want to do is I want to interview them and say right now, you are the best at what you do. And you’ve been doing this for years. If you knew you were going to end where you are now on your first day of pharmacy school, what would you do differently to get there faster? What organizations would you have joined? What publications, what meetings, all of those types of things. And that was my original idea. And she said, “That’s a great idea, but what if instead of you doing the interviews, you have pharmacy students do them so it’s not only a book for pharmacy students but written by pharmacy students.”

Tim Ulbrich: Love it.

Adam Martin: And it sounded great until I realized how to implement that. So you’ve got a dude that’s full-time community — and if you guys work in community, you know how rigid that structure is. I mean, we’ve got to submit our vacation requests like a year and a half advance. So you’ve got that. I’m running a business, diving into my speaking career, OK, and then you’ve got 22 super busy people that are crushing it and then you try to get pharmacy students who are in pharmacy school in leadership positions. So try to align those schedules 22 different times.

Tim Ulbrich: Sure.

Adam Martin: And that turned into four years.

Tim Ulbrich: So Adam, what I hear there is a lot of persistence as well as certainly some good mentorship and folks that gave you insight into the book. But I think that last part, you know, interviewing 20-something folks that are crushing it in their respective careers, honestly, that alone could probably be a separate book, could be a separate resource, could be a separate podcast — not that you have free time. But really getting insights into folks, you know, that’s something that I often wonder is I love the concept of sitting down with somebody and just asking them about you know, what’s made you successful? What’s your routines, your habits? And there’s obviously a lot of networking to be had there but also to learn. And that was really a big takeaway for me as I read this book was man, I wish I would have had this in pharmacy school. I wish I would have had this available to me. I just think it’s an incredible, incredible resource. And I see so many connections between this and the financial piece.

Adam Martin: Oh yeah.

Tim Ulbrich: And again, sneak preview, excited we’re going to be collaborating on some things, more things going forward. But in the book — and we’ll talk here in a minute — you talk about clarifying your why and mindset and time management and developing an outside passion and leadership and mentorship and thinking about the long game. And the thread, so much of that for me depends on is your financial situation in a position that you can clearly focus on all of those things? Because what I hear from so many people is, yes, yes, yes, but hey, I’m in $200,000 of debt and I can’t see what’s beyond this $200,000 of debt. And so I think there’s so many connections here to having a sound financial base and having a good financial plan so that you can be able to focus on these things. And so to that point, Chapter 1, which I loved, you started with this concept of clarify your why, which is something we talk about on this show as it relates to one’s financial situation. But tell me more about what you mean in terms of this concept of clarifying your why.

Adam Martin: Absolutely. So with the book, there’s two parts. The second part we talked about are the interviews that we did. So what that is it’s looking Part 1, the concepts we explore and how people in the industry have put those into practice and are thriving because of it. So it’s kind of like, here’s the script and literally Part 1 is “Your Rx to Dominate Pharmacy School.” But then Part 2 is here’s people that did this, and here’s the result. So absolutely. And that comes down to two parts. So we want to impact patients. We want to have a way to help people enrich their lives. We can’t do that until we can do that for ourselves. So that’s why in the first part, there is self-mastery and then relationship building. So the reason that the first chapter is clarify your why is because in order to thrive in your business, in your personal endeavors, whatever that looks like for you, you will face adversity, you will face setbacks.

Tim Ulbrich: Yes.

Adam Martin: Guaranteed.

Tim Ulbrich: Yep.

Adam Martin: And if you only have a short-term goal like “I want to make a ton of money,” or “I want a name for myself” or whatever that is, you will fail every time. But if you have a why that is bigger than yourself, if you have a purpose that extends farther beyond you, you will be able to realign with that and stick through that and do what it takes to overcome those hurdles.

Tim Ulbrich: Yes.
Adam Martin: For example, if you’re listening to this and you have kids, alright? When you’re sick, when you are exhausted, when you’ve got projects on the line, but your kid needs help, you do it anyway because it’s something bigger than yourself.

Tim Ulbrich: Yep, absolutely.

Adam Martin: It’s the same concept. So that’s why having a why that is clear, aligned with your goals and is bigger than you, making it about other people instead of just yourself, that’s the secret to staying at the long game because it is a process. And the thing you people have to realize is it’s not — and this is something that’s rampant in our profession being everyone Type A. I mean, I’m so Type A, my name starts with A. So I get it, y’all. Real talk. But you have to realize that it’s not going to be getting it right the first time. You can’t focus on being perfect. And we’re wired to think that way because literally as pharmacists, depending on your role, if you’re dispensing, one mistake could kill someone. That’s reality. So we take that thought process, and it translates into other areas of our life. So you have to shift your focus away from perfection and on progress because it’s a process not a one-and-done, and you have to realize that the value is on progress not perfection.

Tim Ulbrich: Absolutely. And if I could even add onto that, you know, Seth Godin, one of my favorite authors, would argue that you want to run from perfection. You want to fail often but quickly. And obviously, there’s places where you don’t want to fail and when you think about medication safety and other things. But you know, in terms of developing yourself as an individual, a road of perfection and a road of no challenges is one of the greatest fears I have for my children.

Adam Martin: Yep.

Tim Ulbrich: I don’t want them to have that, you know. They need to have adversity. They need to learn through that because as I reflect back even on a young career, like those moments, being in those, however painful they can be and however significant they seem in the moment, that’s really where the sweetness is happening. And to this concept of why, you know, again, to the listeners, the action-oriented nature of this book, I’m on page 6 here. Here I am, maybe I pick up your book and I feel like I’m just going to fly through this thing. And I’ve got to sit down and reflect on my why. And I can tell you that I recently did this activity to over 100 students in a personal finance course here at Ohio State, and I had them reflect on their why using some of the life planning questions we’ve talked about before on the podcast. And I will tell you through those responses, rarely have people thought about this question. And this is somewhat uncomfortable to think about. I think that’s good, that’s the purpose of the activity, you stop, you reflect. But again, I think it speaks to the nature of this book, you’re not just talking about this concept, you know, here I am on page 6 and I’ve already got to dig in and do some work, which is awesome.

Adam Martin: I love it, man. But yeah, to your point about the action-oriented nature of the book. And I’m an NSA professional speaker. And I tell people this at almost all my talks. I’m not a motivational speaker. I’m not here to pump you up. If you want to get pumped up, go to the gym. I’m here to literally make an impact and get you thinking to change your life and move the needle in the direction so that we can create momentum right now because when I leave, there’s two choices. I leave and a couple days later, you’re right back in your old habits.

Tim Ulbrich: Yeah. Right.

Adam Martin: Or in the moment while I’m with you, we create an action plan so that you can just do simple steps to get the momentum moving. And that’s the key because I’m really good at bringing the energy and getting people in peak states of motivation. But unless you do something with that, nothing’s going to happen. So I took that same concept with the book. I talk about the concepts in simple terms to lay it down. But at the end of every chapter, there is a place to put that into practice specific to you, the reader, because all of us are different. We’re all at different places in our life. I’ve had pharmacists that have been graduated over 15 years saying, this book is starting to change my career. So while it’s catered to pharmacy students, it depends where you are in your career. And this really can impact anyone in the profession.

Tim Ulbrich: Well, and to that point, Adam, I mean, I’ve been out of school for 12 years. And I tried to hang onto my title of “new practitioner” as long as I could, but I don’t think I can use it anymore. But I think there’s something to learn here for everyone. I mean, to me, the mindset is you are always learning. So while I talk about your why all the time or I talk about mindset or time management, like, I don’t have all the answers. I mean, I always have something to learn in these areas. And I think this is another great resource that yes, it’s really geared toward pharmacy students, but I think many can learn beyond that. Now, Chapter 2, Mold Your Mindset. And I want to spend a few minutes talking about this because one of the things I love about you, Adam, is I feel like mindset, mindset, mindset. You know, I had a chance to meet with you in person on a couple occasions, and I strategically brought my son with me one time because I wanted him to see firsthand, you know, he might not be able to articulate it as 7 or 8 years, but being around people like you that have positivity, have mindset, you know, it’s a choice that you make despite circumstances that are around you, you know? It reminds me, I’m coaching first and second graders in basketball right now. And we’re learning a lesson on joy v. happiness.

Adam Martin: Ah.

Tim Ulbrich: And so this mindset thing, I want for a moment, give us some practical tips or strategies because I think you do this so well. And you talk about in the book as well that you’ve used or you’ve seen others successfully implement that helps to mold the mindset. You know, I think we all agree that having this mindset is incredibly important, but what are some things that folks can think about that either worked for you or that have worked for others?

Adam Martin: Absolutely. So it really comes down to what your focus is. So Bruce Lee once said, “As you think, so shall you become.” And it’s really a simple concept, but when you try to apply that to the organized chaos of pharmacy, it doesn’t seem so simple because you’ve got a lot of things. You’ve got doctor calls, you’ve got texts, you’ve got patient questions, you’ve got errors, you’ve got issues, all of that stuff. But you’ve got to put a smile on that face. How are you going to do that when you feel stressed and stretched too thin to even like have time to drink water or eat lunch during a break you don’t get or stand on your feet for 13 hours? How are you going to do that? How are you going to smile? How are you going to make it real? So it really comes down to the focus of how you’re going to conduct yourself at work or in your job and then also outside of work because if you’re having a stressful moment and you need to deal with that, that’s not really practical in the moment at a pharmacy because your patients are your priority.

Tim Ulbrich: Yep.

Adam Martin: But if you don’t put in that work of self-growth and development outside, that’s really where it comes from. So to answer your question, what’s a simple tip? It’s really what you focus on. So in pharmacy, in life, there are two realities. There are things that you can control and there are things that you cannot control. And what we tend to do as Type A pharmacists is we like to just blur that line, like, oh, we’ll figure it out. We’ll make this work. So we’re wired as humans to focus on the negative, that’s what we’re wired to because that’s what kept us alive back in the primal age. And you guys probably listening to this, you probably see this happen. You have a win, something’s checked off the list, and it’s just gone. And now you’re focused on what’s the next problem I need to fix.

Tim Ulbrich: Yep.

Adam Martin: And we get our focus set on problems we can’t fix. And if you just look on Facebook at a lot of the large pharmacy pages, that’s all you see is bickering and complaining about things you can’t necessarily control. And while they’re true and I’m not saying there’s no problems, there’s always room for improvement. And yes, there are some issues that we’re facing in our profession. If you focus on that long enough, that’s exactly what you’re going to get. That’s the mindset you’re going to have. That’s the emotion you’re going to create. And that is the action you’re going to interact with others as. So I’m not saying ignore problems, I’m not saying that if you go out in your garden and you see weeds, you close your eyes and say, “No weeds, no weeds, no weeds!” If you open your eyes, the weeds are still there. You’ve got to get down on your knees and yank those suckers out. But what I am saying is focus on the fact that you have the power to pull those weeds out.

Tim Ulbrich: Yeah.

Adam Martin: Focus on what you can control and focus on those wins. Look at where you can make an impact, both in your own life and in the life of your colleagues, partner and your patients.

Tim Ulbrich: And I think this is another great example, Adam, and you go on I think in Chapter 3 or 4 talking about self-care and again, bringing back the financial piece, being in a position of having a good mindset, being able to mold your mindset, you have to have other behaviors, other strategies in place to give yourself the opportunity to be there. You know, I think about the value of something like a morning routine for a community pharmacist who gets up, alarm clock goes off, you start checking your email, the day is crazy, you run into a 12-hour shift, and you walk into chaos and in the moment, maybe a floater left you a bunch of baggage from the night before, the phone starts ringing.

Adam Martin: No.

Tim Ulbrich: That day from the very beginning was set up to not necessarily be successful in terms of mindset. So what I like about — and for me, it’s been things like morning routines that include journaling and meditation and prayer and gratitude reflections. And you give some great examples here in the book as well. But I think this is a great area for folks to think about what works for them but starting your day with intentionality, No. 1, and really leaning on others and seeing what others are doing and seeing what ultimately will work for your plan as well. And you know, many have heard this said over and over again, find those that are doing things successful that you want to role model your behaviors after. Find out what they’re doing. And hint, many of those people are very willing to share what their successes are and to talk about it. And so I think really finding people that you look at and say, wow, they’ve really got a different attitude about the day, they’ve got a different mindset. Well, why is that? You know? Ask them some questions, learn about their behaviors and habits. And I think you do a really nice job in Chapter 2 talking about some ways that folks can do that.

Adam Martin: Thank you. But yeah, to your point, that’s absolutely spot-on. You’ve got to have those morning rituals. And it’s super important. But looking at — because what you said happens at the time of getting into work and there’s all these problems. And that’s a slippery slope with the mindset of looking at problems saying, oh, it’s going to be one of those days or, oh, this always happens to me. If you say things like that and believe things like that and say like, oh, I don’t have hours, I don’t have the time, blah, blah, blah, that’s what you’re going to look for. That’s what this concept plays out to be. But instead, if you ask the question of how is this happening for me and if you just change that just a little change in your mindset but specifically the questions you ask will determine the quality of your life. So I just want to harp that point because it’s huge at breaking that slippery slope of negativity.

Tim Ulbrich: Yeah, absolutely. I love that. And I’m going to jump ahead here a little bit in the book. My goal here is not that we would cover the book in its entirety.

Adam Martin: Oh yeah.

Tim Ulbrich: I want folks to pick it up and read it and take action themselves. But in Chapter 9, you talk about Nurture Your Networking. And as soon as I saw you make a connection between network and net worth, I said, “I’ve got to” — I mean, it’s a financial show. Got to ask him about them. It’s something we’ve talked about before, the power of networking. We had David Burkus on the show to talk about his book, “Friend of a Friend.” So talk to me about networking, the importance, the value and ultimately, you know, why a pharmacy student should be really strategically thinking about this and how they may feel like hey, I’m in a vulnerable position, I don’t really have much to contribute or share, you know, some practical strategies for how they can implement this.

Adam Martin: Excellent question. So the profession of pharmacy hinges on one concept: It’s all about relationships. And that is so true. And that applies to all areas of life, whatever profession, whatever niche you’re in. It’s all about relationships. And how many of you have heard pharmacy’s a small world? So that’s the truth. And you can either ignore it or ask how can I be resourceful with this fact, coming back to that question that you ask yourself. So a lot of times, to your question of how can people get started if they’re a pharmacy student or if they have this thinking of, oh, I haven’t started yet. And they get in that trap of comparison like, oh, well I don’t have a podcast or I don’t have a book or I don’t have Your Financial Pharmacist success, like who am I to say this and that? Don’t fall into that imposter syndrome.

Tim Ulbrich: Absolutely.

Adam Martin: Every single person would be so grateful to learn from your experience. And in another chapter, I talk about the three levels of mentorship. And that is the concept that a lot of us think of as, oh, just get someone that has more degrees than the thermometer and learn everything that they know. And that’s mentorship. That’s one of three parts. The other part is having someone on your level that is looking to make progress. But the other part that so many people miss is the best way to learn is to teach. And while you might think that you’re not “there yet,” or you haven’t “made it,” whatever that means, you have people in your influence, in your school, in your company, that would love to learn your points that you’ve gone through, that are starting where you started a year or two ago. So the third part of mentorship is teaching someone who is starting where you started. While you might not think you have value, everyone has a story, everyone has experiences, and everybody wants a mentor. So by teaching that, it creates what I call the win-win-win framework. You can stock that so that you win, they win, and the people you serve win because both of you are rising together.

Tim Ulbrich: Love that. Great advice. So again, we’ve just hit on a couple high points here. I would encourage our listeners, check out a copy of the book, FitPharmacist.com/book. And as Adam mentioned, Part 1 is Your Prescription to Dominate Pharmacy School, ranging topics from why to mindset, self-care, time management, networking, mentorship, just so much wisdom here. And again, a resource I certainly wish I would have had in pharmacy school. And then Part 2, Script Your Career, experts speak, over 20 different experts sharing their career journey, stories and what’s allowed them to be successful in their own regards. And I think, Adam, before I wrap up with a couple questions here, I want to come full circle. You know, you alluded to this concept of making it, whatever that means. And I think bringing this all the way back to the beginning, this is why I loved that you started Chapter 1 with the why because all of this really goes back to this concept of what is the goal? You know, I think so many pharmacy students have this image of success in their mind or residents, they’re chasing something. But they haven’t stopped to think about what are they chasing? Why are they chasing? And do they really want to be chasing that?

Adam Martin: Absolutely.

Tim Ulbrich: And you know, this is where you see people I think often that may be 5, 7, 10 years out and maybe they finally got to whatever they had aspired to be, but they look up and say, “I’m burned out, I’m miserable. This isn’t what I thought I would be.” And I think it goes back to all the way to the beginning, taking time to stop and reflect and say, “Why? Why? What was the purpose to begin with?” And then you start to mold the plan around the why. So we often have people that approach us and say, “You know, I’ve got a really cool idea. I’d like to write a book. But my gosh, I have no idea where to start.” You mentioned four years. We might have scared them based on that statement. But talk to us about process. Like what was this like for you in terms of the daily, the weekly, the monthly rhythms to ultimately have something that you’re holding in hand and you’re distributing it? What was the process that you were able to implement to write the book?

Adam Martin: Yeah, so that comes to what we started this podcast talking about is you don’t want to be perfect the first time. You want to leverage your struggle to create your strength. And that’s really how my whole personal brand began, and that’s a whole other podcast that I think we did, actually. But the thing is is for me, one of my weaknesses is I get great ideas. And if I don’t write them down right away, they’re gone. And I don’t know if you ever resonate with this, but you’ll have a great idea and then like you get distracted and then you think, oh, what was that awesome idea? And you like think and think and think and it never comes back. So I learned quickly to avoid that pain of what was that golden nugget to writing things down. So I would just get ideas, whether it was driving to work or at home or whatever. Most of my ideas come from walking or in the shower. Real talk.

Tim Ulbrich: Yep. I’m with you there.

Adam Martin: So I would just write those down. And that’s literally how I started. I got these ideas and as I kept writing them down, I started to see the structure. I started to see how those aligned in a bigger picture. I would have — so I’m very active on Instagram @thefitpharmacist is the best place to reach me — but I would have people ask me questions through DM or commenting on my posts about struggles, about things they’ve been dealing with. And I kept seeing repeat questions. I was like, wow, there’s a need here. This needs to be addressed. So collectively, just taking notes and engaging with people and just being of service to others, that’s where this content, that’s where this concept came from. So a lot of people think, oh, you’ve got to sit down and crank it out and write 12 hours a day. No, guys. Like this book started from getting an idea and writing it down.

Tim Ulbrich: Yep.

Adam Martin: Getting an idea and writing it down. Doing it over and over again and just looking at how can this be of value? And that’s how you start. It’s always a draft when you start. So why not start with one word?

Tim Ulbrich: Yeah, and this reminds me of one of my favorite books, “The Compound Effect” by Darren Hardy, you know, which relates to finances but any goal, any project you’re working on, is small steps eventually over time result in big things. And I think that’s so true with writing, you know, you’ll see often people will do writing challenges, a few hundred words here or there. But it’s really true. It’s the habit, it’s the practice, and you surprise yourself. You look back and say, “Wow. I didn’t realize I could do this.” Then you start to shape it, you form it, it becomes a chapter. You beat it up, you get to Version 2, Version 3, and so on. But so much less intimidating than starting out and saying OK, I’m going to write a book from scratch. And I always encourage people, if there’s a topic you’re really passionate about, you know, start writing it down and posting things on LinkedIn and doing some other things. Then after 10 or 15 or 20 of those, you’ve got the beginnings of what could be a chapter or a section of a book or certainly could be a podcast or some other medium. Something I also want to point out to our listeners that are thinking about OK, so yes, Adam, you’ve written a book, but you’ve also built a brand. And sometimes I hate that word because I think it’s like we envision Adam as just like scheming in his house how to brand and market things. But the point I want to make here is that as I followed your journey for several years, you started in one place, which is a place I’m passionate about. You provided a value and service to others based on a pain point and a problem that needed to be solved and was one that you were passionate about. You didn’t start by thinking about how you were going to scheme a brand. You started by providing value, providing value, providing value, consistently, regularly, and from that, you’ve learned from the community what they’ve like, what they’ve resonated, what they’re passionate about, where you can provide a service. And so as you’re working then on a book, something like that, you’ve got a group that’s been following you and following your work because you have served them. And I think in my opinion, great businesses are formed off of serving individuals. And I’ve truly believed when you do that well, often the business will follow closely behind.

Adam Martin: 100%. And that comes back to your question about what’s the value of networking, and it’s what you just said. It’s all about relationships. So again, I like providing value in everything I say whether it’s a podcast or talking, so challenge to you, the listener. If you’re thinking about writing a book, if you’re thinking about doing any sort of endeavor whether starting or diving deeper, ask yourself two questions: What are you passionate about? And how can this help other people? Just like someone who thought, I’m passionate about investing and creating financial freedom, I see that there’s a problem with students coming out of pharmacy school at an average of $120,000 in debt, there is a need. I can help them based on my passion. Who am I describing, Tim?

Tim Ulbrich: Sounds familiar. Vaguely.

Adam Martin: Yeah, you. Exactly. And because of that, because you focused on that, you have built a brand that is so strong because it’s not based on scheming or how can I get a quick buck? It’s on how can I create relationships with people that have a need that I can solve based on my passion. And that concept, that’s your avenue. Mine’s the same with mindset and health. And I realize that our niches, you know, cross ways in a lot of different paths. And in speaking with you through the years, that’s what’s been so exciting with what’s coming up in the future because yes, self-care, self-development is great health and fitness-wise and creating that freedom, but then there’s also the financial piece. That’s the piece that together, creates the whole picture of the pharmacy student, of the pharmacist, to really be the best version of themselves so that they can dispense their full potential to those that they work with and serve.

Tim Ulbrich: And speaking of those paths crossing over, you and I have been scheming for a long time to figure out, man, how can we work together on a speaking engagement, something we both love doing, we’re passionate about inspiring others. And we’re excited to announce it’s finally going to happen this spring. Saturday, April 30, the Ohio Pharmacists Association annual meeting in Columbus, Ohio, really excited. Great meeting that OPA puts on each and every year. They get a great draw of students and new practitioners and pharmacists and we’re excited to bring this topic. So for those that are attending the Ohio Pharmacists Association meeting or maybe perhaps we can inspire them to do that after hearing this, what can those attending expect to hear from our session? What can they take away?

Adam Martin: Absolutely. So real, practical tips on how to manage stress, fit in fitness and create financial freedom for your life. Those things are crushing our profession. They are stopping people from living their dream and leading to burnout, which is a huge epidemic. And by the way, not just here in the States, but I saw it in Ireland too. And that’s why there was a whole conference on self-care because there’s a need, because there’s advice out there. And I’m sure a lot of you resonate with this. It doesn’t seem practical, it’s not specific to our profession and/or taught by people that are actually in the trenches, facing these problems themselves. That’s why I’m really excited for this because I speak the truth, like I’ll talk and I’ll be like, “Hey, I just dealt with this issue yesterday working my 13-hour shift.” Tim, you got out of school with — like your transformation financially is tremendous and you write about that in “Seven Figure Pharmacist.” And that’s the real talk is we face these things ourselves. And we’re able to speak about them with such conviction and passion because we’ve overcome them and we want to help you do it too.

Tim Ulbrich: It’s going to be a lot of fun. Saturday, April 4. I said the 3rd. It’s actually Saturday, April 4. We’re on for 8:15 a.m. And I can tell you, I don’t think the coffee’s going to be needed when Dr. Adam Martin is in the room. So we’re going to bring a lot of energy. We’d love to see you there. You can register for the OPA annual meeting, learn more about the scheduled events, including this session, by visiting OhioPharmacists.org. So Adam, in addition to picking up a copy of the book, FitPharmacist.com/book, best way for our listeners to reach out to you and learn more about the work that you’re doing over the Fit Pharmacist?

Adam Martin: So the ‘gram is jam. So hit up Instagram, @thefitpharmacist, also on the Facebook page where I create many memes because laughter is the best medicine. So you can get all of your funny memes and gifs and everything else in between on The Fit Pharmacist. That’s Facebook, @FitPharmFam.

Tim Ulbrich: Awesome. Always a pleasure, always inspired by the work that you’re doing. Excited for more collaborations in the future and to see what lies ahead and certainly greatly appreciate you taking the time to do this interview and to share your work with the YFP community.

Adam Martin: Hey, Tim, it’s an honor to be on here. Thank you so much for having me. I believe 100% in what you’re doing. And that’s why I’m super excited for this collab.

Tim Ulbrich: Absolutely. And to the YFP community, as always, we appreciate you joining us. And if you like what you heard on this week’s episode of the Your Financial Pharmacist podcast, please leave us a rating and review on Apple podcasts or wherever you listen to your shows each and every week. Again, thank you for joining us, and have a great rest of your week.

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YFP 141: How to not wreck your marriage because of student loans


How to not wreck your marriage because of student loans

Steven Chung, tax attorney, joins Tim Ulbrich to discuss about a recent article he published titled ‘Student Loans Can Be the Homewrecker in A Marriage.’ Steven also talks about tax considerations as it relates to couples and why it’s so important to communicate this information.

About Today’s Guest

Steven Chung is a tax attorney in Los Angeles, California where he helps people with basic tax planning and the resolution of tax disputes. He also assists people manage their student loans. He also writes a weekly column on the influential legal news site Above The Law. Steven received his law degree from Whittier Law School and and LLM in Taxation with honors and high distinction from Loyola Law School in Los Angeles. He can be reached via email at [email protected]. Or you can connect with him on Twitter (@stevenchung) and connect with him on LinkedIn.

Summary

Tax attorney Steven Chung discusses how to not wreck your marriage because of student loans with Tim Ulbrich.

He says that the relationships that often work out are the ones in which people fully disclose how much they owe and have a financial plan to pay it off or to pursue forgiveness. If the understanding or shared goals are there, carrying student loan debt shouldn’t affect whether a marriage stays together. On the other hand, Steven says that problems in marriages and relationships happen when the amount of student loan debt a person is carrying isn’t disclosed early enough in a relationship or if a couple has differences in how they want to pay off the debt, their spending habits or financial goals.

If a divorce does happen, there are some variables on what could happen to the loans. If a couple gets married and one person has a lot of loans and the other doesn’t but says that they will pay off the loans, it has to be determined if that was a gift or if the amount that person paid on the loans has to be paid back to them. If that isn’t the case, it’s possible that the loans could be split between both parties. Steven also mentions that if one person is getting a graduate degree during the marriage, the divorce court may say that those loans or tuition has to work collectively to pay it.

Steven also discusses community property states, tax planning with student loans, and what his outlook is on student loan forgiveness.

Mentioned on the Show

Episode Transcript

Tim Ulbrich: Hey, what’s up, everybody? Welcome to this week’s episode of the Your Financial Pharmacist. And I’m excited to have joining me tax attorney Steven Chung to talk about how student loans can impact a marriage and strategies that can be taken before and during marriage to mitigate the risks. Now, we’ve talked at length on this show about the student indebtedness pharmacy graduates are facing. And today we shift our focus to talking not about the amount or how to choose the best repayment option for your personal situation but rather, if you have a significant other, best practices for ensuring that you both are on the same page. Steven, welcome and thank you for taking time to come on to the Your Financial Pharmacist podcast.

Steven Chung: Oh, thanks for having me.

Tim Ulbrich: So you recently wrote an article, which we’ll link to in the show notes, and that article is titled “Student Loans Can Be the Home Wrecker in a Marriage.” And as I mentioned, we’ll link to that so our readers can learn more. And I’m going to use that article as the basis for our time together as I think it connects well with what many of our listeners may be facing, and that’s having lots of student loan debt and trying to figure out how to best navigate that if their significant other is in the picture. So for those listening that are not yet married that find themselves carrying student loan debt, what advice would you have for them in terms of how to best disclose or share this information with a future spouse? And why is this so important?

Steven Chung: Well, the thing is, I mean, student loans shouldn’t alone be a — shouldn’t prevent you from getting married. I mean, people come in — I mean, nowadays, a lot of people are coming in with student loan debts and unfortunately, some of them are quite large. But finances are an issue. But as long as both of you have the same financial goals and are willing — have a plan to pay it off one way or another, I mean, it should be doable. I think the problem becomes when No. 1, it’s not just — when the amount of loans is not disclosed early enough or if people just have — the potential spouses have basically incompatible financial habits, I mean, habits and goals. And that can be a problem.

Tim Ulbrich: Absolutely. And one way to wreck a honeymoon, right, is to disclose your student loan debt on a honeymoon. So we should be talking about this in advance, of course. And I think not only the amounts or do you have it but also philosophies around debt. We often talk about on this show that people view debt in different ways. And obviously, everyone has different competing priorities. And so how we’ve been raised and other variable can influence that, and I think so many conversations to be had among couples leading up to that point of becoming married. Now, I’ve seen a lot of data recently about student loans being a reason to delay starting a family. From your experience, do you think the same effect is being had regarding student loan debt impacting one’s decision to get married? Do you sense that for those that are coming out of school today and the debt load that they’re facing, that this is actually having an impact on their decision to get married?

Steven Chung: Oh, absolutely. A lot of people — they usually have two philosophies. One is that they feel guilty about having a large student loan, and they don’t want to burden their potential spouse and their kids. And they think they won’t be able to afford a nice house in a nice neighborhood to raise their kids properly. And the second group of people, they don’t want to get married — they want to marry someone who can either pay off the student loans for them or at least have the same philosophy on paying it off. And it seems like it’s become a problem, especially — it was more problematic during the Great Recession a couple years ago. But even now, the economy’s recovering, people are still kind of wondering about the potential recession and things like that. So it’s kind of making people feel a little — think deeper on financial analysis or some sort of background check, so to speak, on their potential spouse before tying the knot.

Tim Ulbrich: Steven, I was thinking before we recorded as I was preparing for this show, I could see specific situations that could cause difficulty between two individuals if there is not open communication. And three that come to mind — I’m sure there’s many others than three — but I could see a situation where one individual has a lot more debt than the other and a potential for resentment. So somebody that for whatever reason, maybe they don’t have debt through scholarships, parents helped pay for it, they worked, whatever, and somebody else has a lot of debt and potentially some resentment for that situation. Another situation I could see is just different feelings about the debt as I alluded to already and how to repay. You know, some, as we’ve talked about on the show, want to kind of go all in on debt repayment. Others want to take a slower approach with other priorities financially. And the third one I could see is whether or not parents are involved, you know, potentially cosigners or those that had family members directly loan them money. Do any one of these resonate with you more than the others in terms of experiences you’ve seen where this can cause some difficulties and resentment between two individuals?

Steven Chung: OK, definitely by far it is the philosophy on how people want to pay the student loans. There’s some people who want to pay off the debt as quickly as possible. And on the other end, someone just wants to be able to pay the bare minimum and pretty much have the YOLO attitude, You Only Live Once. Those two people, their relationship is probably not going to go anywhere. But usually, the ones that work it out are, like I said, the ones that have — I mean, they fully disclose how much they owe and knowing that, they have a financial plan to try to pay it off or a plan for loan forgiveness if that’s what they want to do and of course at the same time have a financial plan for retirement, buying a house, having children, that kind of thing. So as long as they have that kind of understanding and they’re OK with the spouse’s financial habits and have the same financial goals, whether or not one spouse has a lot more student debt than the other, it shouldn’t matter that much as long as they have some sort of plan to pay it off or to manage it. As for parents being involved or if they’re cosigners, I mean, it’s ultimately up to them. Some people have their parents cosign because they’d rather pay their parents back with interest rather than a bank. Also parents who are a third party might be more forgiving as opposed to a bank who will send collection agencies after them and impose collection fees and possibly sue them, ruin their credit. So there’s a variety of factors that determine whether parents should get involved. So I mean, there’s pros and cons either way, so to speak.

Tim Ulbrich: Yeah, and I think what you had said about, you know, couples working together with their goals is so important. And I think I don’t want that to get overlooked, something we talk often about on this show of why we think it’s so important that couples start with the goals and then of course they get into the budget and make sure they’re not looking at any one specific part of the financial plan in a silo. So you know, I’ll see this often where we may give a talk to a group of pharmacists or maybe a couple in the audience, they come up, and I can tell within 20 seconds if they have different philosophies on how to spend their money, you know, in terms of whether it be debt repayment or other parts of the plan. And I think if two people can agree on the goals and the shared vision, you know, debt repayment becomes a part of that and hopefully that mitigates any concerns or resentment might be there if there are different amounts of debt that people are carrying. Now, you mentioned in your article that for some married couples, as their joint income goes up, it might make sense for them to refinance their loans. Why is that the case?

Steven Chung: OK. Well, generally, what tends to happen is let’s just say a couple makes a lot more money, they were initially on an income-based repayment plan, paying the bare minimum, but it looks like based on their finances, assuming nothing goes wrong, they’ll probably pay it off within like six or seven years. It’s not going to make sense for them to continue paying on a income-based repayment plan for one reason or another, maybe the interest, maybe interest will increase too much and they probably won’t qualify for loan forgiveness. So basically, if they have a plan to pay it off within let’s say 5-10 years, I mean, they probably just want to refinance because of lower interest rates. So they’re basically saving money that way. So I mean, the only drawback is that if they go to a private bank, they don’t have a similar — they don’t have an income-based repayment program like the government does. And they certainly don’t have loan forgiveness programs. So that’s something to keep in mind. But yeah, it’s just really about paying less interest to the banks or to the lenders and their decision to refinance.

Tim Ulbrich: Yeah, and I’m glad you said some of those nuances that you may not get with a private company, obviously loan forgiveness, the potential for income-based repayment plan. And I know we’ve talked about before on the show, but I’ll reference our listeners to our refinance page information where they can learn more, YourFinancialPharmacist.com/refinance. What is it? Who’s it for? You know, what could be the potential savings? Pros and cons? And then we also have refinance offers there as well. Now, what’s your advice to those that are refinancing their loans where there may be a situation, whether that be the bank requests or better off, with both incomes included, where you have both spouses names that are on the loan or if one cosigns the other. What are some of the concerns that you have in that type of situation?

Steven Chung: OK, here’s the thing. If a bank does that, I would run. I mean, it’s just — I think the main drawback is you don’t want to burn your spouse with a loan. I mean, unless you’re absolutely sure that the loans can be paid off and the bank is offering a much lower interest rate, if there’s a cosigner, I mean, I would just run. I mean, there’s so many banks out there, there’s so many lenders out there. I mean, not a lot specialize in student loans, but there’s enough to make it competitive. But if a bank just says, ‘OK, well, we want your spouse to cosign or someone else to cosign,’ then run. I mean, I’d only do it if there’s like absolutely no other choice. It just doesn’t make sense. I mean, there’s so many red flags there.

Tim Ulbrich: And I think that’s a good reminder, Steven. What we have seen, as we’ve said before on this show, this is a $1.5 trillion market, student loans. So there is lots of competition out there in the market, and we often encourage our listeners go out there, shop around, do your homework. These companies I will say seem to becoming more and more aligned with how competitive their offers are, but I don’t think don’t fall into the trap of just one offer, one option. Now, your article brought up an issue that I honestly had not previously considered, which is for those that live in community property states, refinancing pre-marriage student loans during marriage could convert it into a community debt where each spouse will be liable for half of the debt. Can you first explain what it means to be a community property state? And then talk about the impact that this situation could have.

Steven Chung: OK, a community property state, which includes California and a few other states, it just means that anything acquired during a marriage is split 50-50 between each spouses, each spouse. So in the sense of refinancing, there is the potential that refinancing a loan could mean that a loan acquired before marriage turns into a community debt. For practical concerns, it doesn’t have that much of an impact if they stay married. I mean, they’re still going to pay their loans. It’s not going to — I mean, the banks will still go after a person on title, but ultimately, I think where it becomes an issue is when there is a divorce and when if the court will deem the loan a community loan and it might impact how the ex-spouses have to pay the community — the refinanced loan, whether the original spouse is liable in full or do both spouses have to pay 50%. So that’s probably going to be the issue in these type of things.

Tim Ulbrich: So let’s talk about that situation a little bit further with the very important disclaimer that we’re not here to provide legal advice and tax advice and every situation obviously can be different. We know we have people listening all over the country considering different state rules and nuances to each situation. But generally speaking, how does student debt get handled in a divorce situation in terms of shared liabilities? And what factors go into determining that?
Steven Chung: OK. Yeah, the thing is I’m not a family law attorney, so I’m not sure exactly how it works out in a divorce situation. And of course, 50 states have potentially 50 different rules, but the two nuances that kind of come up or at least — well, the big nuance where this might be an issue in a divorce is when, well, a couple gets married. One has no student loans and the other has a large amount of student loans. And then the first spouse offers to pay off the other spouse’s student loans. So in a divorce, what does that mean? Is that a gift to the other spouse? Or is it a loan that has to be paid back? So that’s kind of an issue that tends to come up in divorces. And then of course, even if there isn’t such a case, how would the loans be split? And would the couple have to pay their own loans? Or do they have to somehow pay the loans together? And usually, this situation comes up where a couple gets married and then one spouse during the marriage decides to get like a graduate degree or continues their education. But he needs student loan money to pay for basic living expenses like rent or things like that. So if that is the case, then chances are a divorce court judge will say that the couple collectively should pay a portion of the loans back and shouldn’t be responsible for — and shouldn’t just be responsible to whoever’s on the loan. So that’s kind of the issues that come up during divorce most frequently.

Tim Ulbrich: So my takeaways there are choose your spouse wisely and make sure you have open communication and conversations as far in advance as you possibly can. So let’s shift gears a little bit and talk about tax planning as it relates to student loans when we have two individuals that are involved. And again, important disclaimer, we’re not here to provide tax advice. And we certainly recommend they consult with a tax professional that can look at their personal situation in more detail. But it appears that the biggest consideration when it comes to student loans would be for those that are on an income-based repayment plan and determining whether it would be advantageous to file jointly or separately. What are some considerations here for our audience?

Steven Chung: OK. Let me add a third option and that’s just not getting married and living together. So they’ll just be filing single. But anyway, yeah, one of the things people have to look at when they’re on an income-based repayment plan is whether filing jointly will significantly increase their student loan payments. And of course, usually filing jointly, there is a small tax benefit. You’re usually in a smaller tax bracket. But let’s just say to make it simple you’re paying $10 more in student loans, but you’re saving $5 in taxes by filing jointly. Then you’re better off filing separately because even though you’re paying more in taxes, they’ll be paying even less in student loans, so that’s kind of. But usually for married couples who are both on income-based repayment plans or maybe one of them are, they should contact a tax preparer and have them do an analysis on what their tax situation will be if they file separately and then also look at what their student loan payments will be filing separately versus filing jointly. So and then make the comparison and then file the tax return on I guess whichever will save you the most money. And some people, like I said, there’s a third option. You could stay single. And interestingly, in California, you don’t even have to get married. You can actually choose to be a domestic partnership. I mean, that was an option given to homosexual couples before it became marriage was legalized. But now it seems to be making a comeback in people with large student loans. And this might be a viable option for them or just stay single altogether and just maybe live together, that kind of thing. The second biggest thing is — and this kind of could be down the road is when the income, when the loans are forgiven, that forgiven amount will be called cancellation of debt income. So it’s basically like the government kind of giving you — or somebody giving you money to pay off the loan, although you don’t actually get the money. Generally, there’s two things to consider. No. 1 is they tack the cancellation of debt income is based on your assets versus your liabilities. If your liabilities exceed your assets, then you’re considered insolvent and you will not be taxed on the forgiven debt. But if your assets exceed your liabilities, then a portion or maybe all of the forgiven debt could be taxable. Generally what I tend to tell people is don’t worry about it right now, especially if you’re just starting your careers. You know, maybe like the first 5-10 years, just focus on your career because you don’t want to live your life trying to plan for loan forgiveness. I mean, you’re pretty much throwing money away. And that’s kind of like putting the baby out with the bathwater, so to speak. So after the 5- or 10-year mark, once you kind of know what your salary will be, then you can possibly plan your finances to maximize insolvency or minimize your assets so you can minimize your taxes when loan forgiveness comes. The second thing to consider — and I think this is a very likely scenario — is that I think in about 10 years, that’s when I think the first income-based repayment forgiveness programs will begin. I think by the time, it’s probably not going to be taxed. The forgiveness is not going to be taxed. I think it’s just because a lot of potential candidates, especially Democrats, they are considering passing a law making forgiveness of debt income non-taxable. And as a precedent for that, back during the housing crisis when people were short selling their houses, the banks issued a cancellation of debt income on the amount that the banks lost or the amount of the mortgage that was forgiven, and then Congress immediately passed a law to make sure that the forgiven mortgage debt is non-taxable. So I think we’ll — I feel pretty good that there’s going to be something similar for student loan debtors when loan forgiveness comes. But just in case, I mean, you should probably make plans to maybe rearrange your assets, maybe lease or rent instead of buying, that kind of thing, at least around the time loan forgiveness happens. So yeah, so I think those kind of things you should consider.

Tim Ulbrich: Steven, let me ask you, you know, just this week I’m thinking about trying to reconcile this issue of where we may end up in five or 10 years when it comes to debt cancellation. You know, just this week, there’s news on both sides of it in terms of the Trump administration continuing to want to press forward with ending loan forgiveness and then obviously we have the campaign from the presidential Democratic candidates around debt cancellation, debt forgiveness and free college. And I think that often leaves people like in our community wondering, my gosh, what is the future of this going to be? What do I make of this? And how do I even begin to think and plan around it. And what I heard you say is you really feel like you think — obviously none of us have a crystal ball — but you think we’re going to move in that direction of not having that tax obligation based on some historical precedent. So tell me more about, you know, based on all that you have heard and based on your expertise in this area, tell me more about why you feel like that that’s the path that will go forward.

Steven Chung: OK. Well, the thing with Trump’s plan, he only calls for the removal of what they call the Public Service Loan Forgiveness. And that’s these student loan program where you work for the government or a nonprofit for 10 years and your loans are forgiven and without the cancellation of debt income.

Tim Ulbrich: Right.

Steven Chung: What he actually wanted to do was he wanted to simplify — there’s like several different IBR plans, and he wanted to simplify it into one 15-year plan. The thing is one 15-year plan for undergrads and then 30-year plan for graduate students. So he did not mention whether the loan cancellation will be forgiven. But let’s just say Trump’s proposal passes and loan forgiveness is not for another 30 years for people’s start. I mean, the way things are going now, the student loan numbers are just increasing. There’s no — I see no activity among students and schools to reduce it, to reduce tuition. I mean, just the cost of education is going up, and at some point, it’s just going to get to a point where people are going to be graduating with $300,000, $400,000, or even $500,000 debts. And I’m even starting to see that.

Tim Ulbrich: Yep.

Steven Chung: A few dentists, they’re even graduating like $700,000, $800,000 and even $1 million. There was one story in the Wall Street Journal, an orthodontist in Utah graduated with $1 million in debt. So I think with these numbers, I feel very good that this kind of relief is on the horizon. Of course, I’m not 100% sure, but I just feel good about it.

Tim Ulbrich: Sure.

Steven Chung: And it’s just going to affect so many people that there’s going to be a major outcry. And I think at that point, it’s just going to be a big — I mean, students and also their parents who also cosigned these loans will probably want them too. So there’s going to be an expanded voter base.

Tim Ulbrich: Yeah, I’ve thought a lot about that too. You know, and again, we don’t know what the future will hold. But I think when you think about the vulnerability of the borrower, the focus on costs in higher education and the political outcry that would come from something like that, I think that all of those are important considerations. One of the takeaways I’ve had, Steven, from our time together, which I really appreciate you sharing your expertise, is we often talk on this show — and I know this is second nature for you, but I think here we are in tax season, so it’s a good reminder that we often think about filing our taxes, which it really is just a mechanical retrospective look at what happened. And I think this has been a great reminder on the need to be more strategic, more prospective and to be working with experts, you know, especially as we’re thinking about things like single filed married, and some of those situations when it comes to income-based repayment and thinking on more of a strategic standpoint based on your personal situation. So again, I appreciate your time and appreciate your sharing your expertise. We’re going to link to your article in the show notes as well as your bio. But just here as we wrap, where can our listeners go to connect with you and to learn more about the work that you’re doing?

Steven Chung: Well, I write for a legal website called Above the Law, and my columns appear on every Wednesday. In fact, I just released a column today, although it’s more about tax law and video games, so totally off-topic. I’m also on Twitter. My Twitter is @stevenchung. I just post occasional tax stuff, usually nonsense, but that’s a good way to contact me. Or you can connect with me on LinkedIn or if you’re in the southern California area, you can contact me. My phone number is (818) 925-4699. I’ll be happy to answer any questions about tax planning or filing tax returns, especially this time of year.

Tim Ulbrich: Awesome, thank you. And again, to our listeners, Steven’s a tax attorney in Los Angeles, California. He helps people with basic tax planning and resolves tax disputes. He’s sympathetic to people with large student loans. Many of us can certainly sympathize with that as well. He can be reached via email. We’ll link to that in our show notes or as he mentioned, you can connect to him on Twitter. You’ll also find him writing for Above the Law and also on LinkedIn. Steven, thank you again for taking time to come on the show.

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YFP 140: How Ryan Is Bringing in $11,000 a Month Through College Town Real Estate Investing


How Ryan Is Bringing in $11,000 a Month Through College Town Real Estate Investing

Ryan Chaw, clinical pharmacist and real estate investor, joins Tim Ulbrich on the show. They talk about how Ryan was able to accelerate his financial goals through real estate investing and how he went from zero rentals and zero rental income to $10,755 per month from 18 tenants in four years.

About Today’s Guest

Ryan graduated with his Doctor of Pharmacy in 2015 at age 23.

He was inspired by his grandpa who bought 3 properties in the Bay and achieved financial independence for himself and was able to help cover college tuition for his grandchildren.

Ryan bought his first property in 2016. It was a single family home at his local college. He rented out the house per bedroom and renovated to add extra bedrooms to increase rental profit.

He repeated the same process for each property, buying 1 property each year. He then created a system for getting consistent high quality tenants, managing the tenants, and decreasing expenses through preventative maintenance. He now makes $10,755 per month in rental income.

Three of the properties are on 15 year mortgages and one is on a 10 year mortgage. Ryan took a HELOC out on the first house to help buy the 4th house.

Ryan is now teaching others his system: how to find a college town to invest near, analyzing a deal, generating tenant leads through strong marketing, and how to self-manage college tenants so everything is hands off and automated.

In his free time Ryan travels to many foreign countries to just absorb the culture and life outside of California. So far he has been to China, Japan, Taiwan, the Bahamas, Canada, Paris, London, Germany, and Mexico.

Summary

Ryan, a clinical pharmacist and real estate investor, quickly found his investing niche: college town real estate investing. Ryan started investing in real estate right after he graduated from the University of the Pacific. He now owns four single family homes in Stocktown, California, a college town, and has 18 tenants. By renting out each room individually, Ryan has maximized his income and brings in $10,755 per month.

Ryan’s grandfather owned a couple of rental properties in the Bay Area which not only funded his early retirement but also paid for Ryan and his brother’s college tuition. Ryan saw how impactful real estate investing could be and has the goal of reaching financial freedom so he’s able to do what he wants to do and provide for his family without money restricting his freedom.

Ryan purchased his first rental property in 2016 and has bought another single family home each year after. In high school, he worked a couple of jobs and saved all of that money in mutual funds. After 5 to 8 years, that money turned into $30,000. For his first rental property, he put around 25% down and took out a 10 year mortgage. He also worked overtime at his pharmacy job to help fund it. He purchased his first rental property for $262,000. Ryan receives $2,600 a month in rental income and has a $1,900 mortgage payment.

With the cash flow he brings in from his rental units, he makes sure his emergency fund is funded and averages that he’ll need about $100-200 in expenses monthly for each house. Ryan uses the leftover cash flow to fund his next property.

Ryan said that he thinks investing in student rentals in college towns can maximize your income the most in a single family home. Even though homes are expensive in California, he’s still able to have a cash flow from his properties. In this episode Ryan also discusses how he looks for tenants, handles complaints from tenants about other tenants, and how he built systems and processes.

Mentioned on the Show

Episode Transcript

Tim Ulbrich: Hey, what’s up, everybody? Welcome to this week’s episode of the Your Financial Pharmacist podcast. It is my pleasure to welcome Ryan Chaw onto the show to share his experiences with real estate investing. Now, as you know, we’ve mentioned real estate investing as a goal we have for 2020 in terms of bringing more information, more examples, more stories, to the YFP community. And today is another great one for you in this area. Ryan has a unique niche of real estate investing in California in college town real estate investing. He’s doing it well in a high cost of living area, and I think his work could translate well to other parts of the country. Furthermore, he is setting out to teach others his game plan and how real estate investing can help accelerate one’s path towards financial freedom. Ryan, welcome to the Your Financial Pharmacist podcast.

Ryan Chaw: How’s it going, Tim? I’m honored to be on the podcast.

Tim Ulbrich: Thank you so much. So glad that you reached out to me, really, really inspirational hearing the work that you’re doing. I’m excited to share that with our community as well. Let’s start with your career in pharmacy, and then we’ll dig into the real estate investing. Tell us a little bit more about your pathway into pharmacy, where you went to school and the work that you’re doing now.

Ryan Chaw: Yeah, so I graduated from the University of the Pacific in Stockton, California in 2015. Soon after that, I started working for RiteAid, and I did a part-time job at Kaiser and eventually ended up doing full-time at Kaiser. And now, I am an infectious disease pharmacist full-time at Kaiser. And from there, I just started investing in real estate. I saved up a lot for a down payment, I worked a lot of overtime, and I also had some money in mutual funds as well, so I just put 20% down on that first property in 2016 and then I rented out per room to college students to maximize my profits. Then I just bought one — I repeated the model. I just bought one each year, and now I’m at four single-family homes with 18 tenants and $10,755 in rental income.

Tim Ulbrich: That’s awesome. And we’re going to dig in to dissect that much further. You know, I think for people that are hearing that that are thinking about real estate investing, it can seem somewhat overwhelming why you went from just starting to, as I mentioned in the introduction, you just mentioned, four units, 18 tenants, roughly $11,000 of real estate income. And we’re going to talk about how you got from where you started to where you are today, really try to break down that plan. But tell us about the why, the inspiration. You know, where did your motivation come from to say, ‘I want to do real estate investing.’ And not even necessarily where you see the long-term, talk about that, but even to take that first ‘risk,’ that first step, that first property, what was the motivation and reason of doing that?

Ryan Chaw: I would say financial freedom, honestly. I just wanted freedom to kind of do what I would like with my life, have more flexibility in my life, be able to provide for my family down the line without having to worry about financials and have money restrict my freedom. So that was the goal for getting into this because eventually, this rental property portfolio will provide me passive income that will pay for all the bills and also allow me to, you know, take vacations, travel, and all of that.

Tim Ulbrich: And so, you know, as I think about your journey, your story, obviously you’re in a higher cost of living area, so you know, I don’t — as someone who is in Ohio, I think wow, real estate, California, crazy expensive, do the numbers even work? But tell me more. So I love the connection of financial freedom. But why real estate investing? I mean, other ways you could have just squirreled money and saved, you could have done other types of investing, you could have started a business. What was it specifically about real estate investing that really peaked your interest to use this as the vehicle to achieve that goal of financial freedom?

Ryan Chaw: I would say part of it actually is — because when I got to pharmacy, I wanted to provide a service for people. It’s the same idea for real estate investing. You’re providing a service for people. And I do interact with my tenants, and some of them I actually help out through the college because I actually went to UOPA as well. So just kind of giving back to that community is one reason why I did this. Another reason why is real estate investing is one of really the best ways to have true passive income and a good amount of it. If you were to invest in stocks, you would need to make — you would have to have like a several million dollar portfolio to get $10,000 a month in passive income in dividends. Right? But real estate, you can achieve it a lot faster, it’s truly a way to create generational wealth. I was actually inspired by my grandpa to get into it originally because he invested in a couple properties in the Bay area when they were cheap, right? And now they just went skyrocketed, right? So the rental income from that paid for not only his life in order for him to retire early but also paid for my college and that of my brother’s as well, so I really realized, this is a great way to create generational wealth.

Tim Ulbrich: I love that. So his experiences in doing real estate investing allowed you to get a jump start in terms of your financial plan by not having the massive debt load we see with lots of pharmacists, which allowed you to accelerate your savings. But even without the $170,000-200,000 of debt that we see with today’s graduate on average in the pharmacy world, I still don’t want to mitigate that it doesn’t mean there wasn’t hard work that was done to get to that first property. You know, often the objection I hear — and I know my wife Jess and I, we really felt like the hump of the first one is so difficult to get over, but for those that are listening or have listened to the Bigger Pockets podcast, they talk about this all the time of that first property, first property, you just got to do it. But I often hear as an objection — and there’s this disconnect between OK, I like the idea of real estate investing, I want to jump in, but my gosh, like where do I get the cash to even get started? So you talked a little bit about 2016, first property, 20% down, but talk to us, even before we analyze that property and that deal, talk to us about how you were able to save up money. What was the strategy that allowed you to have the cash flow to create the savings to get that 20% down?

Ryan Chaw: Yeah, so I actually worked a couple of jobs in high school during the summer. And I would put all my money, save it away rather than spend it into mutual funds at Edward Jones. And so that grew, that portfolio grew over the course of 5-8 years or so. And eventually when I took it out, it was around $30,000. So that was half of my down payment right there, plus I’m investing not in my directly local market, I’m investing in a city called Stockton, which is about an hour away from me in Sacramento. And the prices there for homes were around the $200,000s when I first started. Now, they’re around $300,000s. But compared to the price in Sacramento, you know, Sacramento costs $500,000 to buy a house. So for me, it made perfect sense, you know, I should just drive one hour away and create this system over in Stockton and then the cash flow would make a lot more sense. And yeah, that’s how I got started.

Tim Ulbrich: Yeah, and what I heard there is hustle and sacrifice, you know. And that was really my next question for you. I think many people, especially our California community members, might be thinking, my gosh, it’s an uphill climb to even be able to afford your own personal property, let alone being able to put 20% down on a second one. So how have you reconciled that to be able to cover your own expenses as well as then obviously be in a position to invest?

Ryan Chaw: Yeah, so part of it was a little bit of luck. First property depreciated like crazy. I bought it for $262,000. And you know California, it depreciates like crazy. So it went up to $315,000.

Tim Ulbrich: Wow.

Ryan Chaw: I was able to take out a HELOC from that to basically help pay for each house down the line.

Tim Ulbrich: OK.

Ryan Chaw: So yeah, that was one strategy I used.

Tim Ulbrich: And before we jump into more of that first property, are you living in one of the properties? Or what’s your situation to be able to cover your own personal living expenses?

Ryan Chaw: Oh yeah, great question. I actually do still — I have a great relationship with my family, so I do live with my parents. But you know, if I were to live outside, I would probably find a cheap, a very cheap place to rent, you know, nothing more than like $800 a month.

Tim Ulbrich: Yeah.

Ryan Chaw: But really, my real estate rents would cover that.

Tim Ulbrich: Yep. I love that, though. I mean, you think about the biggest barriers often and people getting started and this would obviously be their own housing expenses and student loans. And you’ve been able to overcome those barriers plus saving at a very early age, took advantage of compound growth, which allowed you to come up with a down payment, you got that first property, and then as you mentioned, you’ve got appreciation, you’re able to draw on the equity of that to be able to get into future properties. So first property, 2016, I think I heard you say $262,000? Is that correct?

Ryan Chaw: Yeah, $262,000.

Tim Ulbrich: OK. And it appreciated up to $315,000. So talk to us about just the numbers on that, roughly. You put 20% down. Talk to us about the rental situation and just so our listeners can get an idea of, you know, rental income coming in, your expenses and what those numbers look like.

Ryan Chaw: So the first house was basically a cookie-cutter property. It was a three-bed, two-bath, and what I do is I add extra bedrooms where I can. So I’ll either put up a wall or I’ll change an extra living room or family room into a bedroom where I can to maximize the profit because each room can rent out for like $600 a month. So for that house, I’m getting around $2,600 a month. And then for my mortgage payment, it’s $1,900 a month.

Tim Ulbrich: OK.

Ryan Chaw: So that’s $700 in cash flow. And this is on a 15-year mortgage, actually a 10-year mortgage.

Tim Ulbrich: Wow, OK.

Ryan Chaw: Yeah, I actually — I think I put a little bit more, like 25% down, but I did, yeah, a 10-year mortgage and you know, by renting it out per room, it really maximizes that cash flow you can get from the house. And then basically from there, we just reinvest the cash flow into the next down payment, into the next one, into the next one, right?

Tim Ulbrich: Absolutely. Tell our listeners about — a little bit more about why you decided a 10-year aggressive repayment versus a 15-, 20- or 30-year.

Ryan Chaw: I would say, you know, I did hear stories about overleveraging. So I wanted to start off a little bit safe, but then I realized it doesn’t really have to be that aggressive. I think another reason why is my end goal is financial freedom, so I want to pay them off as soon as I can because I want that passive, like complete passive income, you know, $10,755 per month coming in like period for the rest of your life.

Tim Ulbrich: Yeah, and I look at that example — this is a really good one. You know, you mentioned the rent at $2,600 a month across the tenants in that unit. And we’ll talk about the strategy and kind of the college town approach that gives you multiple renters. So $2,600 of rental income, $1,900 a month of a mortgage payment but that’s on a 10-year mortgage. So we fast forward 10 years, property is going to appreciate more, so the actual property will be worth a significant amount, which is a big impact on net worth. And then you get rid of a big part of that $1,900. Obviously, you’ll still have property tax, but you won’t have a mortgage payment. And in theory, rents will go up because of the market that you’re in and appreciation, all of these things. So I think hopefully our listeners start to put together the concept of the financial freedom. Break down a little bit further for me — I see in there $2,600 of rent, $1,900 of mortgage payment. I’m assuming that’s mortgage and taxes and insurance that’s in there as well. What would the rest of that $700, how do you reconcile that, you know — obviously you wouldn’t look at that as just being true profit because you’ve got other upkeep, vacancies, other expenses that you’re accounting for. So how do you determine, you know, what of that money, that $700 difference between $2,600 and $1,900, that you hold for those types of expenses? You know, versus that you account as more true profit?

Ryan Chaw: Yeah, so I always recommend having an emergency fund in case something breaks down, maybe $10,000-15,000 would be a good, reasonable emergency fund. I know some people say like six months emergency fund and all of that, but for me, you know, I do have my HELOC, so if I do have to use that, I can always take it out, which is — it’s basically like a credit card with a very low interest rate. So if I want to do that in an emergency, I could do that. But I would say my expenses are around maybe $200 or $100-200 a month or so average. But it really depends, a lot of times, things — because of the way I set up the house, things don’t break down too often. But when they break down, of course it’s a huge expenditure. And that’s what happened on my first house. I didn’t do my due diligence to make sure that everything was in working order before I bought it. And I made some mistakes, huge mistakes, actually. So one Monday, I got a call from a tenant who was saying, ‘Oh shoot, there’s sewage coming out the kitchen sink onto the kitchen floor.’ And this was like at 11 p.m. at night, right? I was like scrambling to call so many different plumbing companies, and it was hard to get ahold of someone because it was 11 p.m. at night to clean up the mess. So they had to put in a sump pump, they had to sanitize everything. That cost a couple thousand. And then we put a camera down the pipe, the sewage line, and then it was, you know, showed a lot of breaks in the pipes and routes in the pipes, so it cost me $6,000 to replace the whole sewage line.

Tim Ulbrich: Oh, gees.

Ryan Chaw: Yeah, it was crazy. So these things do come up, and they happen if you don’t do your due diligence. And so what I learned from that is during the escrow phase of the house, it’s very important to do a sewage line inspection. So that’s just sticking a camera down the sewage line, costs $200-300, but you know, they’ll find all the breaks, all the cracks and grooves in your pipes if there are any, and then you can use that as a negotiating point during the sale. Either have the seller repair it or have the seller cut a check for you to hire someone to repair it.

Tim Ulbrich: I love that, especially when you consider the cost of something like that, of the repair relative to the cost of the preventative, more diagnostic approach. So that’s great, great, great advice.

Ryan Chaw: Exactly. And I also learned not to buy houses that are over 100 years old when I can because that first house was like 100 years old. Crazy.

Tim Ulbrich: So you know, in California, knowing that you have multiple tenants, you’re in a college town — and again, we’ll talk about that more here in a little bit — do you not have to be as concerned about vacancy rates, you know, that you might see in other parts of the country? Or how do you think through vacancy?

Ryan Chaw: Correct. So I do one-year leases for all of my rooms, all of my 18 tenants. And it’s because the demand is so high for off-campus housing, I only charge $600 a month, right? And on-campus dormitories, they charge $1,000-1,200. So that makes sense for a lot of people. You’re getting more privacy, you’re getting a lot more space, right? And just more freedom in general, right? So a lot of people like that and they see that as a good — for them, a good place to stay. And I usually target third- or fourth-year students when I can. Sometimes I have second-year students stay. I rarely have first-year students stay because of the maturity level. Most of them, they’re already in professional school, pharmacy school, right, so they take — I mean, they mainly use the house to study and sleep.

Tim Ulbrich: Yep.

Ryan Chaw: To be honest, yeah. And not only that, the parents kind of visit them and they help clean up the house, so I cut down on the cleaning costs and all of that too. And so yeah, I do one-year lease. They can always sublease during the summer. Some schools like pharmacy school and dental school, they go year-round, so they actually go through summer. So it makes sense for them to do a one.

Tim Ulbrich: I love that. You know, the two objections I’ve commonly heard for college town real estate investing would be the summer period, but obviously you mentioned the one-year lease and the allowance of subleases or programs that have year-round type of offerings, as well as the potential damage and upkeep for a variety of reasons, you know, maturity and so forth and working with professional students — not that it’s immune to that, but obviously you have a lot better chance I think that they’re going to take care of the property and as many pharmacy students know, pharmacy is a small world, and you should be respectful, right, of somebody else’s property. So talk to us about the strategy of college town investing. I think that’s really the niche you’ve built here. And I think it’s really cool. You know, why? How? And what’s been the strategy that this is an area that you want to continue to go into further?

Ryan Chaw: Yeah, so I was first inspired by actually my friend who did this, his aunt basically bought a property right across the street from campus and rented it out to my friend’s friends. And so my friend basically lived there for free. In fact, if I were to go back, I would do the same strategy because for house hacking where you stay in the house, you can actually put down as low as 3.5% down, so I would have even started with that. But I guess I went into student rentals mainly — like I did examine the different tenant pools out there, but really, student rentals is the best way to maximize your profit on the single-family home because of that you’re renting out per room idea. So one of my houses, for example, appraised to rent out for $2,000. They estimated $2,000 in market rent, right? But I was actually — after I added the bedrooms, I was able to get $3,100 a month. So that house, you know, an extra $1,100 every month made a huge difference in my bottom line. And that’s how I’m able to invest in California where the rental rates — I mean, sorry, the housing prices are so high. If you were to do this in other states, you could get the same rent by $500-700 and the price of the properties are only hundreds of thousand — like $100,000 or $200,000. So the cash flow is tremendous. And that’s why I’m helping others and teaching others how to do this strategy because it’s really a great opportunity, especially in other states.

Tim Ulbrich: And it sounds like, you know, I’m guessing some of our listeners may be thinking about, hey, here we are in a really great, you know, 10-11 year run in the market.

Ryan Chaw: Oh yeah. They get the history, right?

Tim Ulbrich: Yeah, what happens to Ryan if this thing flips on its head? But a few things that I think you’ve done really well to protect yourself against that, obviously, it sounds like you’ve purchased properties at a good price point. You’re in a market that’s going to continue to have demand, regardless of what happens. Obviously being in a college town, you’ve got multiple tenants. You’ve built these year-long leases. But also, you’ve got some of your properties — I don’t know if you have all of them on a 10-year, but because you’ve done that and they’ve appraised and you’ve paid off a significant amount I’m guessing of some of those mortgages on a shorter time period, even that one you purchased in 2016, you’re essentially 3+ years in, so you’ve got this cushion with 20% down and this equity built in that even if housing prices go down, let’s say 10-20% overnight, you’ve really got some protection built in there, right?

Ryan Chaw: Oh yeah. For sure. They say you make your money when you buy, right? So I’ve got to make sure I look at several — oh, let’s say maybe 50 deals or so — just throughout the year. And I buy the best one, right? I constantly look at deals so I know what a good deal looks like. So that’s pretty key.

Tim Ulbrich: And what about getting tenants? What’s been your strategy of having a funnel of people that come to you? And I’m guessing this in part has to do with the relationships that you have. But how have you done that I guess initially? And then is there a point where, you know, after you have a good reputation with these students that I think it would be somewhat of a word-of-mouth of kind of passing it, you know, off to the next group that’s coming after they graduate?

Ryan Chaw: Yeah. Exactly. Nowadays, it’s word of mouth. But when I first started out, I did three things: I put signs or fliers up on the campus bulletin boards. That actually worked pretty well. I put a “For Rent” sign on my lawn. I mean, that’s usually how everyone starts out. That actually got me a lot of calls, but they weren’t from students. They were usually from people around the area. And then when I said, “Well, if you were to rent out the whole house, it would be $3,100 a month,” they’re like, “That’s crazy.” So usually, I would get some not very well qualified tenants to that. But then what really helped was the Facebook groups. All campuses have these Facebook groups for off-campus, there’s usually a textbook exchange group, there’s Class of 2020, you know, all these groups. I go onto them, and I write my targeted ads, right? I say, “Hey, we have this place that’s three minutes from campus.” I literally put up the map on there and show them where it’s at relative to their classes. And I get — I would say every time I post an ad, within the first three days, I would get like 10-12 people contacting me. No kidding, this is pretty average.

Tim Ulbrich: Wow.

Ryan Chaw: Yeah. So there’s a lot of people interested. It’s a huge market. You think about it, UOP I think has 7,000 students or so. I only need 18 of those. That’s like .1% of them, right? So yeah. It’s a great market.

Tim Ulbrich: Let me pick your brain on process. You know, as I’m hearing this — and I’m guessing our listeners as well — I hear you talk about things like advertising your properties and responding to interest and dealing with the sewage pipe issues at 11 o’clock at night and having to think about the strategy of finding these deals and you casually talk about adding rooms and putting up walls. And I’m guessing many people are like, oh my gosh, I just can’t even wrap my mind around —

Ryan Chaw: Right.

Tim Ulbrich: — how to process this. Tell me a little bit about your process, your team, what you’re doing versus maybe other things that you’ve really leaned on others to do.

Ryan Chaw: Yeah. So yeah, putting the systems and processes in place is key, so I’m glad you mentioned that. So I have a process for everything. Rental payment, I do through Zell. I require them to use an app called Zell. It’s a direct deposit app, so I don’t have to deal with a check being lost in the mail, right? And it tells you exactly when they pay their rent so I know when they’re late or not so I can charge the late fee if they’re late. Just putting everything in the lease, being very clear, having all clear, set terms and the wordings clear for any potential issues that could arise. Then you just refer back to the lease when the issue happens. I also have a system in place for like managing the properties if something breaks down. So if something breaks down, the tenant will typically send me a text. They’ll say the toilets not working. And so what I do is I just forward the text to my contractors. And I have a team of three contractors. One of them is more creative, he’s the one I use to help build walls and maybe create a hallway if I have to. He’s the creative guy. The other two, they’re more for like run-of-the-mill things like replacing a toilet, putting in a sump pump, things like that. But basically, I just forward a text to them. And then they let themselves in with the electronic lock on the door. So they just put in that code, right, let themselves in, do their job, they go home, and then I have someone else take a look at the work. And they just tell me, yeah, he fixed the toilet or whatever. And then he sends me the bill, and I send him the check. That’s it.

Tim Ulbrich: Awesome. Awesome.

Ryan Chaw: You know, I haven’t been down to Stockton in over seven months now. Right? So it’s great. Everything’s pretty automated.

Tim Ulbrich: And I think it’s hopefully an encouragement, you know, to me, to our audience, that the systems, the processes, you’ve built a lot of this, I can tell, over time. And as I talk about, again, they mention all the time on Bigger Pockets, really not hearing stories like this and feeling overwhelmed but just thinking about that first process. And there will be mistakes, you know, that’s part of the learning.

Ryan Chaw: Yes.

Tim Ulbrich: And really figuring out what the system and process, figuring out what you want to do yourself, what you want to hire out, what capacity you have time-wise, what’s the margins on the properties, you know, all of those things are really important. Now, considering your model where you have several tenants in a property, several students, I have to imagine you run into tenant issues, you know, just by nature of having people involved, probably often even between one another. Tell me about the issues that come up and how you handle those and deal with those.

Ryan Chaw: Great question, Tim. Yeah, so sometimes, you’ll get tenants complaining about other tenants about noise, maybe the other tenants smoking pot or something like that. And what you do, what I learned, actually — and I learned this the hard way — is you want to have the tenant talk to the other tenant face-to-face. Because if I go and call that other tenant, say, ‘Hey, this other guy complained about you,’ then the situation gets worse because the guy is saying, ‘Hey, you talked behind my back. I can’t trust this guy.’ So the situation actually escalates if you do that. So first, have them have a face-to-face discussion. And then if there’s still issues, then you can call up the tenant personally. And then if that still doesn’t work, you can call the parent because all these college students, they have parents, right? And usually after you call the parent, it gets straightened out pretty quickly. But I’ve only had to resort to calling the parent one time throughout my four years of investing. And most of the times, as long as you empower — and that’s the key. You have to empower the tenants that they’re adults now, they need to resolve these issues face-to-face with the other tenants. And once they kind of have that — once you empower them, then the issues get resolved very quickly. In fact, that’s all I have to do nowadays is just I’ll ask them to talk face-to-face. And after that, I don’t get any texts or phone calls or messages or anything like that.

Tim Ulbrich: I think that’s great advice. I didn’t learn that lesson in the real estate world. I learned that lesson in the academic pharmacy in terms of managing other individuals. But I think you’re spot-on. I mean, the second two individuals have an issue with one another and you jump in with one of them but they don’t talk face-to-face, things often get worse in the short term.

Ryan Chaw: Yes.

Tim Ulbrich: And even though the difficult conversation is difficult, it’s important to be had. What resources would you recommend to our listeners that are hearing this and saying, ‘Wow, I’m really inspired by Ryan’s story. I’m interested, I want to learn more.’ Podcasts, books, blogs, what is out there that you draw information from?

Ryan Chaw: Yeah, so Bigger Pockets actually has some great books on rental property investing to get you started. There’s one by Brandon Turner I think on rental property investing. But there’s also some great books for like mindset and kind of theory as well. I would say “The Millionaire Real Estate Investor” by Gary Keller is really good. That one teaches you how to build your teams and forms of that, of creating systems in place. There’s also “Rich Dad, Poor Dad,” of course. That’s a very inspirational book if you guys haven’t read that one. “Think and Grow Rich,” there’s “The Miracle Morning.”

Tim Ulbrich: Great book.

Ryan Chaw: I like that one. That was a great book, yeah, exactly. It teaches you how to take charge of your day. You know, journaling, meditation, those types of things to get your mind in the right place to really handle stressful situations if something comes up.

Tim Ulbrich: I’m really glad you gave some books that were around kind of more of the mindset, you know, morning routine types of things because I think while the x’s and o’s are important, the theme that I’ve now heard as we’re now 140-something episodes into the Your Financial Pharmacist podcast is, you know, those interviews that I reflect on afterwards and say, “Wow, there’s just something really special, something different, something unique in terms of how somebody’s operating, how they’re growing what they’re doing,” the consistent theme I see with you and others that I would say are really, really successful is this concept of mindset. And it’s just different. And I think it’s often this constant quench and desire to learn and to grow and naturally from that, you will see growth that will happen in a variety of areas. It could be business, it could be family, it could be many different things. So I know that you are kind of in this phase where you’re beginning to teach others how to do this, which I think is really cool. So tell us a little bit about that, you know, kind of what your vision is for that, and where our listeners can go to connect with you and learn more.

Ryan Chaw: Oh yeah, for sure. So I believe student housing — the student rental market is the best way to invest in single-family homes, hands down, because you can make the most profit. So I’m teaching others how to do this. I walk them through the whole deal analysis process to make sure everyone gets a good deal. I walk them through the renovations we make. We try to of course eliminate, do preventative maintenance for possible — like eliminating grass and replacing old mulch and cutting out trees and trimming branches and all of that. And then I walk them through the whole marketing process to get tenants in consistently and to screen them and how to manage issues down the line. And they can reach me at — or you guys can reach me at www.newbierealestateinvesting.com. That’s www.newbierealestateinvesting.com. And newbie is spelled newbie. And I have some great resources, you guys can put in, sign up for the newsletter, and I’ll send you some great information. I even have like a deal analysis calculator you guys can take a look at. It’s kind of like the Bigger Pockets one, but it’s more simplified and it has an amortization schedule and everything. And then I also have a great resource you can read through on the different areas of real estate investing because it’s not just student rental housing. Of course, I love that area. But there’s also fixing, flipping, there’s Airbnb, which is also known as short-term rentals. There’s apartments. But really, I think most people, the ones who aren’t millionaires or billionaires or whatever, the best place to start really is single-family housing and just doing the renting out per bedroom house hacking strategy.

Tim Ulbrich: Great stuff, Ryan. I really appreciate you taking the time, and I have a feeling this won’t be the first time that our audience will hear from you. So excited to see what comes for you in the future and as I mentioned to the community, we’re going to keep bringing more examples, stories, hopeful that will give our community some ideas of things to think about. I think this is another great example of a pharmacist who’s doing some really incredible things and is successful. So congratulations on the success that you’ve had. And thank you again for taking time to come on the show.

Ryan Chaw: Hey, thank you, Tim. I’m excited to be able to get on your podcast. Thank you.

Tim Ulbrich: Awesome. And as always, if you like what you heard on this week’s episode of the Your Financial Pharmacist podcast, please leave us a rating and review on Apple podcasts or wherever you listen to your podcasts each and every week. We appreciate you joining us. Have a great rest of your week.

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Life Insurance for Pharmacists: The Ultimate Guide

Life Insurance for Pharmacists: The Ultimate Guide

The following is a guest post from Dr. Jeffrey Keimer. Dr. Keimer is a 2011 graduate of Albany College of Pharmacy and Health Sciences and pharmacy manager for a regional drugstore chain in Vermont. He and his wife Alex have been pursuing financial independence since 2016.

For the first 24 years of my life, the only people who really cared about my financial well-being were my parents. Sure, I had a business relationship with my bank; but outside of getting the account set up and telling me to use a bankbook to keep track of it, they (or anyone else in the financial services industry) didn’t really seem interested in me or my money. As I neared graduation though, something curious happened. Seemingly out of nowhere, my email inbox was chock full of requests to meet with people wanting to be my financial advisor.

“Well, well, well,” I thought. Now that I’m about to be a pharmacist and make some real money, I must be important! Right? So I met with a few of these people, and in retrospect, I said a lot of dumb things that didn’t do me any favors. I remember when one guy asked me what one of my major financial goals was, I told him I wanted to buy an Ariel Atom. Now if you don’t know what that is, that’s fine. It’s basically a street-legal go-kart that can go 0-60 faster than a Ferrari and can peel your face back like this:

#LifeGoals

Source: Top Gear (UK), BBC

 

Yeah, looking back on it, I deserved what I got in the end.

After deciding to take one of these people on as my “financial advisor” we had a couple of lunch meetings to discuss my financial situation. I laid my cards out on the table including all of my account balances and all my debts. You’d think we would’ve come up with a strategy for me to build some cash savings and address my student loans, but did we? Not really.

However, there was one aspect of my student loans that seemed to pique this person’s interest.

Was it the balance? No.

How about the monthly payments? Getting warmer…but no.

It was the fact that my parents co-signed them for me.

If for whatever reason I stopped making the minimum monthly payment on my loans, my parents were at risk of assuming that responsibility. A truly unacceptable situation. This, of course, prompted my advisor to ask the question:

“Do you have life insurance?”

“Well…no, I don’t.”

A Basic Overview of Life Insurance

Life insurance is one of those things that no one really wants but many people need. Like any type of insurance, you hate paying for it when you’re not using it, but it can keep the world from falling apart in those rare situations when you need it.

If you have to send in a claim for insurance on your car or your home, you’ll reap the benefits of that claim. However, you’ll never personally reap the benefits of a claim with life insurance because, well, you’ll be dead.

So why get one?

Two words: income protection.

Rarely do people shuffle off this mortal coil without leaving behind some baggage for others to sort out. At the very least, it costs money to put you in the ground; and unless you know a way to work your day job from beyond the grave or set aside a burial fund, someone else will need to foot that bill for you.

But what about the regular bills your income used to pay for? While you won’t be living in your house anymore, I’m sure your spouse and/or kids still want to. How’s the mortgage going to get paid when you’re not around?

As a pharmacist, there’s a very good chance you’re the breadwinner of the house and your income is essential for making household ends meet. But here’s the rub: if something were to happen to you, the financial hit to your household could be catastrophic. And we’re not talking about “no more trips to Disney this year” catastrophic, we’re talking about fast-track to living under a bridge in bankruptcy catastrophic.

But it doesn’t have to be that way and that’s where life insurance comes in.

With life insurance, the people you leave behind can get a cash payout in the event of your death that can act as a replacement for your income. And, if set up properly, a life insurance policy (or policies) can bulletproof your financial plan in the case of your untimely demise.

So how should a pharmacist go about getting a life insurance policy and how do you know which one to get?

At first glance, it seems like a daunting task. But thankfully, getting yourself insured doesn’t have to be complicated. The team at YFP is here to provide tools that can make the process simple and straightforward.

Before we get into that though, we need to talk some more about the types of policies that exist.

Huh?

Isn’t life insurance just…life insurance?

Yes, and no.

A life insurance policy can be incredibly simple or one of the most convoluted financial products in existence. What’s more, individual policy options can complicate things to the point where it’s questionable if the person selling you the policy even understands it. Yikes!

Fortunately for us, there are really only two types of policies: permanent and term. One is good for pharmacists, and one…not so much. First, let’s talk about permanent life insurance, because I’m not done with my story.

Permanent Life Insurance

At this point, the topic of life insurance came to dominate my meetings with my financial advisor and honestly, I found it kind of boring. While I knew I had a duty to protect my parents from my loans if anything happened to me, I was much more interested in what I could do to make money in the markets. After all, isn’t the point of working with a financial advisor is to get rich? Yeah, I was an easy mark.

Picking up on this, my advisor pitched me a solution.

“What if you could take the death benefits of a life insurance policy and combine them with an investment component? Not only could you protect the ones you love, you could also set yourself up for life in the process!”

That’s a win-win if I’ve ever heard one. Sign me up!

And thus, I was sold quite the bill of goods.

The type of policy my advisor sold me on belongs to a family of life insurance policies known as “Permanent Life Insurance.” Permanent policies are just as they say, permanent, and they go by a few different names:

  • Whole Life
  • Universal Life
  • Variable Life
  • Variable Universal Life (VUL)

When you take out the policy, the intent is that you hold it till the day you die, pay premiums on the policy till the day you die, and your heirs get the death benefit when you die. Sounds good, right? But wait, there’s more!

Remember when I said that these types of policies have benefits for you when you’re alive? This is where another part of the policy known as the “cash value” comes into play. In this part of the policy you have an account that exists outside of the death benefit. Depending on the specific policy, part of the premium gets added to this account and it will have either a set rate of return or exposure to the market. In addition, the funds inside can grow tax-free within the confines of policy and be protected from the claims of creditors depending on your state law.

What’s not to like?

A lot as it turns out.

And for most pharmacists, permanent life policies should be avoided like the plague.

But why?

Costs of Permanent Life Insurance

Above all else, these types of policies can be insanely expensive. Compared to the other type of life insurance you can get like term life insurance, you can spend on premiums in a month what you would spend in a year otherwise. How can that be? To answer that, let’s take a look at a snippet from the variable life policy sold to me when I was a new practitioner.

term life insurance

I know there’s a lot to digest there but let me distill it down to one word: fees.

While part of the premium goes into the cash value portion, a good chunk of the premium goes to paying additional fees that get layered into the policy. From sales commissions to general management fees, a lot of the money you pay into these policies doesn’t really go into the cost to insure you.

Oh, and these are just the fees that get taken out of the premiums, we haven’t even gotten to the investment side of things.

If you read my article on stocks, bonds, and funds on the YFP blog, you’ll know I’m no fan of investment fees and you shouldn’t be either. These are the fees that seem small when you first look at them, but over time can eat away a massive amount of your potential gains. The investment fees you’ll find within these policies (like the one above) are usually terrible compared to what you can invest in yourself.

Because of all these hidden costs and fees, permanent life policies are generally products designed to be sold. Sure, there are certain situations where they may offer a benefit, but those are usually limited to high net worth individuals and very well structured policies as part of estate trusts.

But for most pharmacists, especially the new practitioner who’s a HENRY (high earner, not rich yet – yes, that’s an actual industry term for you), the type of policy that gets hawked to you by the “financial advisor” down the street can be safely avoided.

You still probably need life insurance though. This brings us to the other form of life insurance; the one you should get. Term life insurance.

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Term Life Insurance

Where permanent policies tend to be fraught with all sorts of riders and additional layers of complexity, a term policy is very simple to understand. It can be boiled down to two numbers: the death benefit and the term.

  • Death Benefit: The amount of money your heirs receive upon your death.
  • Term: This is the length of time that the policy is in effect.

How a term life insurance policy works is really simple.

If you die within the term window, your heirs collect. For example, if you take out a 30-year term policy on January 1st, 2020, and die at any point before January 1st, 2050, your heirs get to collect the death benefit. If you don’t die by that time, the policy simply terminates and the insurance company keeps all your premiums. That’s really all there is to it.

In addition to simplicity, the other main draw of term over permanent life insurance is the cost. Remember how I said that what you spend on a permanent policy in a month is similar to what you’d pay in a year for term? That’s not far from the truth! And, given the costs associated with investments within a permanent policy, it’s easy to see why the mantra “buy term and invest the rest” makes sense. You simply have a much better chance at building wealth when costs are low.

Here’s an example of how affordable a term life policy is. A 30-year-old woman who’s healthy that doesn’t smoke would only pay about $35 per month for a $1,000,000 policy with a 25-year term.

Costs of Term Life Insurance for Pharmacists

With a term policy, the cost to insure you typically comes down to a few factors.

Death Benefit Amount

A greater death benefit demands a greater premium. You don’t need to be an actuary to prove that one.

Term Length

As term length increases, so do the chances you’ll die within the term window. In order to cover that risk, you’ll pay a larger premium for a policy with the same death benefit over a longer-term.

Age

The younger you are, the less chance you’ll die soon and the lower your premium will be.

Sex

Sorry guys, but women tend to live longer than men and get the advantage here. Unless your state specifically disallows it, all else being equal, women can expect to pay lower premiums than men.

Personal Health

Most policies will require some sort of medical exam and/or documentation of your medical history as part of the underwriting process. Things that come up on your medical exam (bloodwork is usually done), evidence of pre-existing conditions, and most importantly your smoking habits can make your policy more expensive. In some cases where you have a serious medical condition, you might be uninsurable. If you are overweight or obese that can also increase the cost of a policy.

Family History

Usually not a make or break for the policy, but evidence of some hereditary conditions that crop up later in life can increase the cost to insure.

Recreational Activities

Do you enjoy base jumping? How about doing wheelies on the interstate at 100MPH on your new sports bike? If so, it should come as no surprise that the cost to insure against your “unexpected” death is more expensive.

#higherinsurancepremiums

Criminal History

Yes, blemishes on your legal record (speeding tickets included!) can make insurance more expensive.

Additional Riders

If you want bells and whistles on your policy such as the ability to collect ahead of time if diagnosed with a terminal illness, the policy is going to cost more.

While I know it seems like there are a lot of things that can make a term policy unaffordable, don’t worry. These factors go into the pricing of any life insurance policy, even the super expensive permanent policies. What makes term so much of a better deal though is that the simplicity of a term policy commoditizes these policies in the marketplace.

In other words, just like generic drugs, they get super cheap because a lot of companies compete in offering the same product. Unless you’re looking for a policy with a bunch of exotic riders on it, you can shop around to get a good deal. Nice!

What About Workplace Life Insurance?

Many of us nowadays can get life insurance coverage as a benefit through work. In fact, when you first started as a full-time pharmacist, you might’ve seen one of these benefits when filling out your new hire paperwork. In most cases, all you have to do is pick a death benefit and a set amount will get taken out of your paycheck. Simple right? While it may seem like a great idea to get insured this way, there are some good reasons you shouldn’t totally rely on workplace life insurance:

It’s non-portable.

When you leave your job, do you get to take your benefits with you? Nope. While there can be a grace period after you leave, by and large, that policy will be just as terminated as your employment.

It might not be enough.

Typically, the death benefits on workplace life insurance plans are limited. You’ll likely need more coverage than what your benefits allow.

It might be more expensive.

Since there’s rarely a medical exam associated with these policies, the premiums on them tend to be more expensive. If you’re young and otherwise healthy, you could be spending more than you should.

It might not be there for you.

You know what’s sad and sometimes happens when people become seriously ill? They’re forced to leave their jobs. If a serious illness were to result in your death, that workplace plan might not be there when you needed it most.

How Much Insurance Should You Get?

Good question!

Unfortunately, there’s no straight answer to that.

Oftentimes you’ll see the recommendation of 10-12x your annual income getting thrown about, but that doesn’t really take into consideration any of your personal situations. So how can you get a better idea?

Tim Ulbrich and Tim Baker tackled this question head-on in YFP Podcast Episode 44. In a nutshell, you need to make a projection of future income needs and use those projected needs to come up with a death benefit number. Huh? Don’t worry, it’s not as hard as it sounds.

Add these liabilities:

Debts: student loans, mortgages, and other debts

Future expenses: college tuition, burial, and other foreseeable expenses

Income support: How much you feel is enough to support the lifestyle enabled by your income for your loved ones, childcare support if applicable, dependent on the length of time you want to support (ie. 10, 20, or 30 years), include considerations for future inflation (ie. 3-4%/year), investment returns, and taxes.

Then, simply subtract the savings you have from the liabilities listed above and you’ll get a good estimate of what you’ll need for a policy. Want to get more into the weeds? Check out this handy calculator for estimating your coverage needs.

Now, does the number you come up with have to be exact? No! Chances are, things are going to change as life goes on. In the worst-case scenario, you can purchase an additional policy to layer on top of the one you just bought.

Speaking of which, getting additional policies to layer on each other is a legitimate life insurance strategy called “laddering.” As time goes on, most people’s need for life insurance will fluctuate. It might start out somewhat small, increase as a spouse and kids come into life, and then taper off again once the kids have left the nest. For this reason, many people choose to “ladder” multiple policies to accommodate this change in need.

If, at the end of the day, all this still seems daunting (don’t worry, it’s OK if it does), make sure to reach out to a professional that can help you put it all together. The team at YFP Planning is uniquely suited to your situation as a pharmacist and can help you build the best plan possible.

Where Should I Get Coverage and How to Do Get a Term Life Insurance Quote?

Remember how I mentioned that you can shop around for term policies and get a great deal?

YFP has partnered with Policygenius to help you do just that!

Policygenius allows you to compare and shop all of the top, A-rated life insurance companies on one, easy to use platform. Just answer a few questions to determine your coverage needs and you’ll get presented with a bunch of accurate term life insurance quotes to choose from. Plus, unlike other platforms, the information you provide stays private while you shop! That’s right, you won’t get bombarded with phone calls and emails as soon as you hit submit.

What if I Bought a Permanent Policy By Mistake?

Just because you made this bed doesn’t mean you have to lie in it. It is possible to get out of that permanent policy that was sold to you when you were a financial noob. But, and this is a big but, there’s probably going to be some pain. In all instances, you will be cashing out the policy and this will have one or a combination of the following consequences:

Loss of money

Typically in the first few years of the policy, the majority of the premiums you pay go toward sales commissions and fees, not the cash balance. Since you can only withdraw the cash balance, you may take a net loss on the difference between the cash balance and premiums paid. This was me when I finally got rid of mine. In the end, the VUL policy I took out ended up costing me several thousands of dollars lost to premiums.

In addition, there may be surrender charges on the policy. These charges are usually higher for the first few years of the policy and can eat up the entire cash balance in some cases.

Taxes

If you’ve had the policy for a long time and the cash value exceeds the total amount you’ve paid into the cash value through premiums (your cost basis), you’ll be required to pay taxes on the gains.

If that last one applies to you, there’s another strategy to get out of the policy without incurring a taxable event known as a 1035 exchange.

In this exchange, you basically exchange your permanent life policy for another insurance product such as an annuity. While annuities also get somewhat of a bad rap, there are annuities out there, such as variable annuities, that aren’t saddled with the types of fees annuities are famous for.

Finally, before you do anything with your old policy, make sure you have other life insurance! You should only cancel your permanent life insurance policy once your new policy is effective and fully replaces your old coverage.

Conclusion

Life insurance can be an incredibly important component of your financial plan.

From protecting your income and keeping your loved ones from living on the street to even help you sleep better at night, the benefits of having a life insurance policy are immense.

That said, there is a right way and a wrong way to do it. For most pharmacists, the right way is to buy term life and get the best deal on it by shopping around using a site such as Policygenius.

And, as always, if any part of this process seems confusing or you’re just looking to get a second opinion on what to do, make sure to book a call with the team at YFP Planning. You’ll be glad you did!

term life insurance, term life insurance for pharmacists, pharmacist insurance

 

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YFP 139: Should You Refinance Your Mortgage?


Should You Refinance Your Mortgage?

Nate Hedrick, the Real Estate RPh, joins Tim Ulbrich to talk about all things mortgage refinancing. They talk about what it is, how to qualify, the costs associated with refinancing a mortgage, how to determine the break even point and how Nate recently evaluated his own mortgage refinance.

About Today’s Guest

Nate Hedrick is a 2013 graduate of Ohio Northern University. By day, he is a clinical pharmacist and program advisor for Medical Mutual. By night and weekend, he works with pharmacists to buy, sell, flip, or rent homes as a licensed real estate agent with Berkshire Hathaway in Cleveland, Ohio. He has helped dozens of pharmacists achieve their goal of owning a house and is the founder of www.RealEstateRPH.com, a real estate blog that covers everything from first-time home buying to real estate investing.

Summary

Nate Hedrick, the Real Estate RPh, is back on the podcast to discuss mortgage refinancing. Nate explains that a mortgage is a bank or lender giving you money to pay for a home and you, the borrower, have a certain amount of time (term) to pay that money back. In mortgage refinancing a lender or bank gives the leftover amount to pay the existing mortgage off and you get a brand new one which essentially resets your loan. It’s possible to refinance your mortgage with the same lender. People chose to refinance their mortgage to reduce their monthly payment, reduce overall interest, get better equity in their home if the house went up in value, eliminate PMI or to reduce the term of the loan.

You likely qualify for a mortgage refinance if you already have a mortgage. To get a good refinance offer, three categories will be looked at: the equity in your home, credit score, and other debt load.

Since this is a new mortgage, you’ll incur the same costs as you did when you purchased your home (closing costs, title fees, etc). Nate cautions that advertisements for no closing costs may not be completely truthful as those costs might be rolled into the loan which you’ll end up paying interest on.

To figure out if mortgage refinancing makes sense for your situation, you have to know your current interest rate and monthly payment, what that rate and payment will change to, what your overall payment is going to be and how long you are going to live in that house. The length you’ll be in your house is really important to consider when looking at refinancing depending on the amount of closing costs you’ll have to pay with your new mortgage.

Nate and Tim suggest exploring several lenders and banks if you’re considering refinancing your mortgage. YFP recently partnered with Credible for mortgage refinancing. You can compare up to 6 lenders at a time and receive quotes in under 5 minutes. Click here to compare multiple lenders with Credible.

Mentioned on the Show

Episode Transcript

Tim Ulbrich: Hey, what’s up, everybody? Welcome to this week’s episode of the Your Financial Pharmacist podcast. Excited to be here and to welcome back Nate Hedrick, the Real Estate RPH, as we talk about mortgage refinancing, including Nate’s own experiences, and we’ll talk about a question we’ve had from a listener, a community member, as well. So Nate, welcome back to the show.

Nate Hedrick: Thanks, Tim. Nice to be here.

Tim Ulbrich: So I was doing some accounting this morning. I think you officially now may have the record for the number of times you’ve appeared on the podcast. So we’re excited to have you back.

Nate Hedrick: Yeah, I expect my championship belt to be sent in the mail as well. I’ll give you my address after this.

Tim Ulbrich: Awesome. So we’ve talked before. We know how things can get expensive. We’ve done episodes before on home buying, we know of course there’s lots to consider. We did a previous episode on all costs involved in home buying, evaluating the rent versus the buy. It’s not just the mortgage payment, of course it’s the taxes, the insurance, the HOA fees, utilities, etc. And you know, for our listeners, when it comes to the mortgage and how much of a factor that can play in your overall financial plan, it typically is a big chunk of their monthly budget. And unless you move or downsize, many of these costs that come along with home buying are things that you can’t change. However, one thing that you might be able to change is the interest rate. And that can be accomplished through a refinance, which we’re going to talk about here today. So Nate, here we are, 2020, and I think we take for granted rates today in 2020. But rates have not always been where they are today. So just give us a quick history lesson on kind of mortgage interest rates and probably for many of us, what our parents were dealing with back in the early ‘80s.

Nate Hedrick: Yeah, it’s funny. This is something that I actually learned in real estate classes and for some reason, never knew up until that point. But for years, even if you look 30 years ago, early ‘80s, end of the ‘70s, interest rates were like credit cards for houses. I mean, you’re talking 15%, 16%, 17%, 18% for a mortgage, which just — it feels absolutely crazy in today’s world. I mean, we’re at 3.5%, roughly 4% on prime, so that is such a huge difference for us. And it’s something that I don’t think a lot of people even realize if you’re in our generation.

Tim Ulbrich: Yeah, I think so too. And so here we are, as you mentioned, rates, depending on the term, depending on a whole host of factors, which we’ll talk about here today, much, much, much lower, whether that’s 3.5%, 4%, 4.5%, it’s still notably lower than interest rates that were in the teens. And I always give my parents a hard time, ‘Yes, you dealt with that. But also, let’s look at the prices of homes back at that time period.’ So basic definition, mortgage refinancing, what is it in terms of basic things our listeners should know before we talk about the reasons and the hows and all the qualifying factors.

Nate Hedrick: Yeah, absolutely. So a mortgage in itself is just basically the bank giving you money or a lender giving you money to pay for a house. And you have some term to pay that back, whether it’s a 15-year, a 30-year or something in between, you’ve got a period of time which to pay that back. Well, the mortgage refinance is effectively a resetting of that loan. You’ve either got the same lender or a different lender who is giving you the money to cover the leftover amount you have on your current mortgage, and you get a brand new one. And that can be the exact same term, that can be an extended term, a shortened term. There’s all different ways to do it. And we can talk about those details, but effectively, it’s a reset of that loan.

Tim Ulbrich: Awesome. And I think for many folks listening, especially with the rates where they are at today, most notably, we think of a refinance to reduce your monthly payment, reduce the overall interest that you pay over the course of the loan, but what else is out there? Why might somebody refinance beyond those two factors?

Nate Hedrick: Yeah, the ones that I see a lot too are your house has gone up in value, so you actually want to get a better equity on that property so you can actually get more cash back out of your property itself. You can use it to eliminate PMI, that’s actually why my wife and I did it. And we can talk through that, but we actually wanted to get rid of PMI, and it was the easiest way for us to do that. You can actually just reduce the loan term. Maybe if you’re really driving toward that FIRE movement like we’ve been talking about and you want to get that paid down that much faster, you can reduce the actual loan term to a reduced interest rate and a number of other things to basically get that paid off that much faster.

Tim Ulbrich: So if we have somebody listening, you know, I’m going to give them my situation for Jess and I. We moved here to Columbus fall 2018. You know, interest rates really were at — I say ‘peak,’ but again, if we consider this historically, peak is a relative term. But at the time, we got a 30-year mortgage for 6.25% was our interest rate, wasn’t too long ago. And here we are again with rates lower than that. So I’m guessing many of our listeners are thinking, OK, maybe I’ve got a rate where this makes sense. And we’ll talk about how you evaluate whether or not that makes sense and where the break-even is. But how does one qualify? And what are the steps that are involved that if somebody’s thinking or finding themselves in a similar situation, to determine if this is for me, how do I begin that qualification process?

Nate Hedrick: Yeah, so if you currently have a mortgage, you pretty much automatically qualify for a refinance. The tricks to how you get a good refinance come down to a number of factors. So one is the equity in your home. That’s probably the most important factor, quite honestly. Most lenders are going to ask you that up front. So what is your current loan, basically? So if you took out a 90% loan, basically you put 10% down on your house a year ago, you probably haven’t built up a lot of equity in that home, right? You’ve been paying it off for a year, but most of those payments are going toward interest, not toward principal. And the actual equity you have, the ability to refinance probably hasn’t changed very much. There’s not been enough time for it to go up in value. And similarly, you haven’t been able to pay down the debt that you have. So that really is the key factor. How much equity do you have in the home right now? And how has that changed from your original loan? That’s kind of step one. The next thing is going to be based on like your credit score. So if you’ve got a better credit score, you’re going to qualify for better rates. So if you’ve bought the house five years ago, let’s say, and your credit score has gone up 100 points since then, you may qualify for very different rates than you did just that five years ago. So that’s a question to kind of ask yourself. And then beyond that too, it’s just what other factors are going into it? Do you have other debtload that the lender should be concerned about? It’s basically all the questions they ask you on an original mortgage and making sure that you’re a qualified candidate for that original mortgage again.

Tim Ulbrich: And I think that’s where for so many of our listeners, you know, we think of the life stage that often pharmacists, especially new practitioners, are in in terms of so many variables changing where, you know, income may have gone up, credit scores may have gone better, other debt has come down, perhaps they’ve paid down some of their mortgage. And obviously, that would make them more favorable, depending on the personal situation. The one thing, Nate, I’ve seen a little bit — and I don’t know if you’ve run into this — is especially recently as some markets have gotten really hot, if people got into bidding wars on a home where they, you know, were making just crazy offers, well above whatever was kind of market value at the time, and depending on what’s happened in those markets since then and how long it’s been, the appraisal process is going to be very important here to determine what that equity position is, correct?

Nate Hedrick: Absolutely. Yeah, the appraisal’s really what it all comes down to, and that’s effectively the bank sending someone to your home or sometimes they do a desktop appraisal where they’re researching it online only and not actually driving out. But they’re determining what is the market value of your home? There’s no one else bidding on it, right? You’re not actually up for sale. So they have to kind of use other area comps to determine what is the effective value of your home? And we’re going to base our loan on that amount.

Tim Ulbrich: My favorite appraisal story recently, I think I shared this with you, as Jess and I are looking at the refi process — we’re actually in the middle of this right now — is about six months ago, we got a HELOC on the home as we were looking at doing some real estate investing, and we haven’t done anything with it. But at that time, as a part of that, we got an appraisal done. And that came in at $10,000 less than we actually purchased the home. And now as we’re going through the mortgage refinance, you know, it was at our local credit union that I work with. And obviously as lending has become a little bit looser here again in 2020, couple quick pushes of the button on the computer and that appraisal is $40,000 different than the one on the HELOC. Same institution.

Nate Hedrick: Sounds about right.

Tim Ulbrich: And that came out $30,000 higher than we purchased the home. So I think that just speaks to some of the variability you see in the appraisal process.

Nate Hedrick: Yeah, a lot of that speaks to too basically how the banks make their money and how they want to get those loans, right? It’s better to have you in there for a long time. A HELOC is kind of boring to them, so they’re not going to appraise it very competitively.

Tim Ulbrich: But we like to think it’s objective, right? So.

Nate Hedrick: Exactly.

Tim Ulbrich: So let’s talk about costs. I think this is certainly top of mind for folks. You know, of course we can look at it and say, hopefully we get a lower monthly payment, hopefully we’ll reduce the amount we pay over the life of the loan, lots of commercials out there advertising no closing costs. And if somebody goes out and starts to shop, you see a wide range of what’s advertised as $0 closing costs to, as we’ll share an example here from a listener, question what can be fairly significant closing costs. So what are the reason for the differences? And what are some of the costs that are involved in a refinance process?

Nate Hedrick: Yeah, so like I said at the beginning, this is effectively a new mortgage. You’re resetting the button on your actual debt. So the banks and the lenders are going to treat it just the same way. So there’s the same level of closing costs, the same level of effort. They’ve got appraisals, they have to pay for title fees and all sorts of things that need to be taken care of. And while it feels like it should be less because you already live in the house and you already have the title and all that stuff, a lot of those things still persist. So just like when you get a regular mortgage, you will actually get basically a good faith estimate that will lay out all of those costs and what it’s going to be. Now, you talked about no closing costs. And there are some situations where there are truly no closing costs. But a lot of times what that means is that no direct out-of-pocket closing costs. They’re going to roll them into the loan. So if you have $5,000 in closing costs and your current mortgage is $180,000, well, your new mortgage would be at $185,000. And the idea is you just roll that into the loan, you’ll figure it out with interest later. So those closing costs advertisements can be a little bit misleading at times.

Tim Ulbrich: Yeah. And I think that’s such an important point. I’m glad you brought that up is really making sure you’re digging into that good faith estimate and doing your homework to understand what exactly are the individual line item charges, especially — as we’ll talk about in a moment — if you’re comparing multiple offers, getting as close to an apples-to-apples comparison as you can and really understanding what are you paying for now versus what’s being rolled into the mortgage, which ultimately you’re going to pay back with interest, you know, along the way, which may not be a bad thing. It’s just you have to be aware of what you’re working on and weighing how much you want to pay out of pocket versus how much you want to roll into the loan. So to your point, you’re resetting the mortgage, so think of it as somebody who’s buying a home for the first time, all those closing costs, again, you’re going to be evaluating and hopefully something you’re preparing. So I’m somebody listening, Nate, and I’m looking at a situation where OK, maybe I’ve got a 30-year mortgage at 4.5%, I’ve paid off two years, let’s say, 28 years left of a 30-year term, I hear that rates are lower, I’m listening to this podcast, how do I determine whether or not this makes sense? Talk me through how do you think through this process?

Nate Hedrick: Absolutely. So just like when we go to buy a house, right, I recommend all my clients shop around for a couple different mortgages. Right now, lenders are chomping at the bit to get you to refinance with them, even if it’s — this is ridiculous — but even if it’s the current lender you have, they can’t wait to refinance your loan, right? They just want you to secure your business as long as they can. So you give a call to a local branch or a lender that you know or a lender that your listing agent has recommended, anything like that, and they’ll immediately be like, ‘Oh yeah, refinance, let me get you to our refinance department. Here’s our refinancing guy,’ or what have you. And so they’ll be able to tell you quite quickly, you know, based on a 10-question survey that they’ll have over the phone with you, ‘Here’s what we expect your rate to be, here’s what some of the breakdown of what you’d actually pay in closing costs,’ I mean, I called up when we did our refinance, I called up three different lenders and within, I mean, within an hour, all three of those lenders had gotten me a reasonable result of what I was going to be able to refinance with.

Tim Ulbrich: Absolutely. Yeah, and I did the same thing. So you know, I actually reached out to the institution that currently holds our mortgage, and to your point, I think I get something in the mail every three days from them. I haven’t got any phone calls, but I get lots of mail from the current lender. So I reached out to them, I used the Credible tool that we have on the site, which I’ll talk about at the end, and then I went through our local credit union that I’ve done other business with. And I wanted to just see both experience-wise as well as rate-wise and again, trying to compare some of those costs what’s involved as well. And three very, very different experiences. And I think it speaks to the value of making sure you shop around, just like we talk about with many other things on this show, life insurance, disability, professional liability, etc. So breakeven, how do I figure out does the math make sense on this? So instead of just looking at here’s my current rate, here’s my new rate, here’s my current monthly payment, here’s the future monthly payment under refinance. That’s a good start but one shouldn’t stop there, right? So how do I determine whether or not this makes sense and ultimately get to a breakeven point?

Nate Hedrick: Yeah, so the trick is to know your numbers up front. You have to know what your current interest rate is and what you’re actually paying monthly. And then once you start getting these quotes and start talking to these lenders, you’ll have new data to basically plug into that chart and be able to say, OK, if we’re at 4.5% now and we’re at 3.5% later, what is our monthly payment going to go down to? Or perhaps if I am changing my loan term, what is my monthly payment going to go up to or change to or whatever the case is going to be? But what does that look like? What’s that difference? And is my overall payment going to be lower, my overall interest payment over the life of that loan going to be better? Now, most people, not everybody, but most people don’t live the entire 30 years in one house, right? Most people move on. So the other question is how long am I going to live here? Because if you’re saving $1,000 a year, but the closing costs are $8,000, you better be there at least eight more years for it to make actual sense. So that’s a really important question. I think no matter what you’re doing, the breakeven analysis is how long am I going to be here to basically make up that difference in terms of the costs up front versus the costs saved over the course of years?

Tim Ulbrich: So I think that’s a great way of thinking about how long am I going to be here? And I’m looking at the math, right? So if you’re going to save let’s say $200 a month, taking that figure and then looking at the closing costs, let’s say your closing costs are $3,000, your $200 a month, how long does that $200 a month have to be saved ‘til you get to that breakeven of $3,000? But also looking at, as you mentioned, the total amount of interest, the total payout over the life of the loan. One of the most common things, Nate, that I think I see and I’m sure you see often talking with individuals is somebody who maybe started with a 30-year, they now are let’s say 26 years left, and they go to refinance and they reup a 30-year, so they restart the clock, but they only focus on the monthly payment, right? And they don’t consider the fact that they’re then going to extend the loan another four years, which is the progress that they’ve already made. Correct?

Nate Hedrick: I see people doing this with student loans too.

Tim Ulbrich: That’s right

Nate Hedrick: And you guys have more experience than I do, right? They say, ‘Oh, look at my payment’s lower, this is fantastic. Yeah, my interest rate is lower too. I’m sure it’s great.’ They’ve gone from having three years left to now jumping back to 10 years of loan payments. The overall interest paid over that life is tens of thousands of dollars more, potentially. So you have to factor all three of those things in.

Tim Ulbrich: So I think this is where I would encourage our audience to nerd out, create a spreadsheet, right? So you know what I did, as I mentioned, three different institutions, so I worked with my current lender, worked with Credible, which is then shopping around multiple options, which I’ll reference here in more detail in a moment, and then the credit union. But within each one of those, you’re then going to get different options in terms of 30-year, 20-year, 15-year term. And then even within those, you’re going to have different options that range in terms of whether or not you purchase points. So I think I ended up with the spreadsheet of, I don’t know, 20 or 30 different fields, trying to figure out not only what would that be in terms of monthly payment but then also looking at over the totality to try to determine, OK, if I were to continue on this path as is today, how much would be out-of-pocket? And then how would that work out with each one of these? What about the other side of this, Nate? So somebody who let’s say has a 30-year term right now, maybe they’ve got 26 years left to pay and they’re thinking, maybe I’m going to go down to a 15- or a 20-year, how do you think about this from an opportunity cost standpoint? Because on one hand, somebody might say, ‘Well, this is great. I’m going to save x dollars in interest,’ which they could calculate. On the other hand, they might say, ‘You know, do I really want to be making extra payments when rates are so low? Even if I can save interest, could I be using that money elsewhere?’ Talk us through your thought process there.

Nate Hedrick: Yeah. It’s a great question. It all comes down to kind of what your financial goal is, right? Do you want to be throwing extra money at your mortgage right now? Or are you saving that for something else? Maybe it’s more investing or investing in properties or whatever the case may be. So yeah, it’s a good question. It’s going to be different for everybody, but when we looked at it, actually, we had a 30-year rate when we did our refinance. And we took it down to a 15-year because the amount we saved in interest made our payment not that much different. So for us, it was like, well, we’ll just take 10 years off this mortgage to keep paying effectively what we’re paying now. But we’ll know that we’re saving money in the long-term of the interest paid. It was a feel-good thing for us. And sometimes that’s a better driver than crunching all the numbers.

Tim Ulbrich: You know, this reminds me too, Jess and I were recently talking about this as we were looking at, hey, maybe we go down to a 20- or 15-year, and then of course you have the conversation of OK, what pressure is this higher monthly payment going to put on our financial plan? How much margin do we have? You know, do you have a good emergency fund? All the things we talk about on the show. But might there be any life variables that will change that could either increase or decrease that pressure on your margin, right? So you know, I’m thinking of things like potential job loss or could go the other way, a promotion or addition in terms of children to the family or maybe you have children that are moving out of the household and you have more margin. So it can go either way. And I think the conversation that is so common, just like it is with student loans, is it’s easy to say, ‘Well, let’s just opt for the 30-year, the longer term, and then we’ll make extra payments.’ And not suggesting that’s a bad move whatsoever, obviously it depends on your personal situation. I would just challenge, you know, what’s the reality of that happening when push comes to shove? And I think for some, there’s value in kind of forcing that hand with the more aggressive payment whereas for others, that’s not the move to make. So you’ve got to really take a step back and say, behaviorally, what do we need for our plan? How much margin do we have or not have? Would this put us in a tight position? Do we need that type of behavioral solution? Or can we really depend on ourselves to make that extra payment each and every month, perhaps automate that, but have the buffer if you need it for whatever reason?

Nate Hedrick: Yeah, I think that’s huge. And to make it even more complicated, I know when I was looking at rates, the difference in interest between the 15- and 30-year rate were significant.

Tim Ulbrich: Absolutely.

Nate Hedrick: So they’re enticing you even further to go to that 15-year, and it’s like, ah, now I have to do even more math and figure out what I want to do.

Tim Ulbrich: Absolutely. What about points? You know, this is something that caught my attention — and we’ll talk about an example here from a listener that I think can make this process a little bit more confusing. And I know from personal experience, when my wife and I, Jess, purchased our first home back in 2009, I felt like this as I looked back through paperwork, either I didn’t have the memory of the conversation or it was so subtle that all of a sudden, you know, points were applied and I didn’t really have a full understanding of the process. And I think that’s all too common. So talk to us about what are points? Why might somebody consider them? And just make sure that our listeners feel educated and ready to have that conversation with the lender.

Nate Hedrick: Yeah, it’s funny, I’m seeing this conversation come up less and less. I feel like with interest rates where they are right now, points are not as big as they were a couple of years ago. I’m sure they’re still talked about plenty, but I just don’t see it with my clients as much. But what points basically are is a way to buy down your interest rate. So you pay some amount of money, the bank sets what those point values basically are, and you buy down your interest rate. So if it was 5% and you pay a certain amount that the bank sets to basically get that down to 4.75%, you can pay an upfront cost to reduce the interest of the life of that loan. So you know, the basic principle is that you’re giving away up front cash to pay less over the life of that loan. So in the case where you’re like, this is my forever home, we plan on being here 20 years, it may be very advantageous to give up a little bit more cash up front, knowing that you’re going to have a lower interest payment down the road. Now again, with interest payments this low as they are or interest amounts as low as they are today, I don’t see points as being quite as important. But it is a way to kind of if you really want to get that interest rate down as low as you possibly can and you’ve got some extra cash to throw at the problem, that’s not a bad way to do it.

Tim Ulbrich: And does this just come down again to running your numbers and doing a breakeven analysis, again, thinking of factors like time that you’ll be in the home and how much can you let go of that cash now, what other impact does that have on other financial goals, right? I mean, all of these variables come to play?

Nate Hedrick: Yeah, and it’s funny, this one more than any of them really matters on how long you’re going to be in the home. The bank is always going to make the points advantageous at some number — like it will be like, at 12 years, it will break even. So you’ll know. That point is very obvious. So it all comes down to how long am I going to be here for whether or not the points are worth it.

Tim Ulbrich: So let me — that’s a good segway into a question we had from somebody in the YFP Facebook group. And I think this will help us summarize a lot of what we talked about and just hear and give our listeners kind of an inside Nate’s brain look of how you think about this situation.

Nate Hedrick: Dangerous.

Tim Ulbrich: So this question to the group is, “Would you refinance your mortgage” — it comes from Alena — “Would you refinance your mortgage if current mortgage is 4.6% and new one will be 3.3%?” She goes on to say, “It will lower monthly bill by approximately $200,” so lower monthly payment about $200, “and saves $86,000 for the life of the loan.” And that would be over a 30-year fixed period. “But it will cost $10,000 in closing costs. Just want to hear your thoughts.” So Nate, how would you — obviously, we don’t know every variable here. So big asterisk in how we respond and really just meant for us to kind of talk through from an education standpoint, how would you think through this specific scenario?

Nate Hedrick: Yeah, so this is kind of the classic setup, right? The hook is you’re paying 4.6% right now, wouldn’t you rather be paying 3.3%? Everyone listening to this would say, ‘Yes, that sounds fantastic. I want to take a point and some off of my current interest.’ And then again, you take that a step further and you say, ‘How much does this reduce my monthly payment? Wow, it’s $200 a month. That’s great. What could I do with that extra $200?’ And then again, we’re like, ‘Well it’s a 30-year rate, but who cares? Look, we’re saving $86,000 over the life of the loan. Everything seems to make sense.’ Then that $10,000 number kind of jumps in at the end, and that’s when you have to have that, OK, well how long are we going to be here? Right? If I’m saving $200 a month, at what point am I going to be able to say, ‘Well, that $10,000 was now worth it?’ And how confident am I in that decision to say, I’m going to be here for 15 more years or whatever the case may be.

Tim Ulbrich: Absolutely.

Nate Hedrick: That’s when that — it’s no longer a numbers game. It comes down to what is your life looking like? And how long are you committed to that particular home? So that’s, again, this is actually exactly what I ran into when I was doing my refinance, looking oh, great, these numbers looks fantastic. Everything marches out, makes sense. But wait, how much is closing costs? Oh, I don’t know if we’re going to be here nine more years. That doesn’t make a lot of sense for me.

Tim Ulbrich: Yeah. And here is a great other reminder, get out the spreadsheet, start crunching the numbers, and don’t stop at the monthly payment. You know, what we don’t know here is where they’re at in the current term. So now she’s doing a comparison over the life of the loan. So $86,000 saved over the life of the loan, $10,000 in closing costs, so we’ve got to already subtract $10,000 to say what’s the net difference? $76,000. $200 a month savings, so we know that would be $2,400 a year.

Nate Hedrick: Right.

Tim Ulbrich: So we’re looking at roughly four years to get the breakeven. But the question is how confident are you? And the second question I would add is what else is going on? So how much is that $10,000 needed or treasured? So is this somebody that doesn’t have an emergency fund, you know, is paying off lots of student loan debt, is this somebody that has other goals, wants to strategically invest, to do some other things? Maybe isn’t taking advantage of an employer match retirement account that this could help get kind of that match component if they contribute? So lots of variables here that I think would really get to, again, as we talk about over and over again on the show, not looking at one part of your financial plan in a silo but really taking a step back and saying, what else is going on? Now, if this is somebody who has no debt, every other part of their plan is humming, full emergency fund, they’ve got retirement accounts that are being maxed out, they think they’re going to be in their home forever and they’ve just got cash laying around, which sounds like a pretty sweet position to be in, right, they might look at this differently, right, than somebody else who is a little bit more pressed.

Nate Hedrick: And watch too — it’s funny. This is another great example of when the bank will come and say, ‘Well, it’s $10,000 in closing. But don’t worry, we’ll roll that into the loan.’ So now all of a sudden, your math, it doesn’t actually track as well as it did. You’re paying interest on that $10,000. So watch that. Watch where they’re going to set you upfront with here’s $10,000 in closing costs, and then they’ll roll it into the loan at the back end.

Tim Ulbrich: So one of the things I want to mention as we wrap up here is we are excited about a partnership we’ve rolled recently with Credible. And this really mirrors what we’re doing with some of the other things on life and disability of trying to bring our audience as many options as they possibly can to be able to shop around. And so Credible allows you to, on our platform, check six lenders. You can check the rate with them, and they do a soft credit pull, so it will not have a negative impact on your credit. Very quick, I went through this myself, less than five minutes, very user-friendly platform. And I will say, as somebody who did not have such a great experience with a platform like LendingTree, where I was getting harassed with phone calls for I think really, a couple months, to be honest, I thought this here, they did a nice job here of allowing you to see rates, shop things around, but I wasn’t getting hounded with phone calls. And you only have to upload documents once. So again, as we always say, just as I did, I wouldn’t stop here. I think this is a great place to start. But go to your current lender if you’re refinancing, you know, go to a different lender if there’s a unique product that’s in your area. And again, compare multiple options. And I think Credible is a great resource to get started doing that. And you can learn more and do that by going to YourFinancialPharmacist.com/reduceyourpayment. Again, YourFinancialPharmacist.com/reduceyourpayment. So Nate, talk us through, you just did this. Right?

Nate Hedrick: I closed on it less than a month ago.

Tim Ulbrich: Yeah, and yours was somewhat unique. So I think it would be interesting for our listeners to hear that experience, your thought process, and how you arrived — even if that one may not apply to many people that are listening, I think it’s just a good reminder of thinking of all options that are out there and for them to hear how you and Kristin thought through that process.

Nate Hedrick: Absolutely. So we bought our house five years ago now. It was five years ago in September. And when that five-year mark kind of hit, that’s when I said, ‘We should probably look at refinancing. Rates are really low, we’ve been here for a couple years. Hopefully there’s some good equity built.’ So we started pursuing it, and one of the main drivers was the fact that we’d been paying PMI. So again, fast forward — or rewind before. I was a listing agent before I knew what I was doing in terms of buying a house. We bought early, we put 10% down, we said, this is going to be great. And then we were paying $100 a month in PMI.

Tim Ulbrich: Been there, done that.

Nate Hedrick: Yeah, exactly. Many, many listeners I’m sure are in the same boat. And we actually went to our lender first, and we said, ‘Hey, can you get rid of our PMI? We’ve been paying this much, we think our equity is this. I did my own listing agent appraisal, which is worth nothing, but here’s what I think the house is worth.’ So we applied and they said, ‘No, absolutely not. You have to have x, y, and z loan-to-value.’ They basically said no. So I said, ‘Fine, then I’m going to refinance out of it.’ And I started getting quotes. I went to our current lender, I went to kind of a big bank. I went to one of the lenders that I use for my investing properties, which is kind of a little bit smaller and they’re a little bit more crafty with what they can do. And I just started comparing quotes and kind of getting an idea of what the landscape looked like. And my first thing that I got hit with was, ‘Here’s all your closing costs. This is how much it’s going to cost you.’ And then Kristin and I had to have that discussion, OK, well, how long do we think we’re going to be here? And we’re really kind of in a tossup right now. I think, you know, sometimes we say three more years. Sometimes we say 10 more years. And it’s really hard for us to put a number on that. And so that made the conversation that much more difficult. So anyway, I went back to that small kind of hometown lender that we use for our investment properties and started having conversations about, what other options are there? Is there anything we need to get creative? And actually, she presented me with a pretty unique option that it’s effectively a mortgage, but it’s more of a home equity loan. So you have to have you’re already in the house. It’s only for refinances, and it’s a Home Equity Line of — it’s actually a home equity loan, a home equity term loan is what the official term is. And with this particular product, they had a deal going on where it was a new branch, they wanted to drive business and create value like every other bank, and they offered it with $0 appraisal fee, $0 closing costs, not just rolled in closing costs, but $0 closing costs. And a fixed rate interest, which is huge. No prepayment penalties. I mean, all the things that I was like, ‘Well, this is going to be the catch. And this is what’s going to stop this from working.’ But all of those things I worked through, and there was really no catch. So I had a couple more conversations. I actually called up Tim Baker, our financial planner, made sure it made sense with him too because I hadn’t seen this product before. And everybody said, ‘Yeah, this looks great. I think you’re good.’ And yeah, it’s been a really great way for us to refinance. We got our interest rate cut by a full percentage point, and we didn’t pay $1 in closing costs. The appraisal was free, all that was free. And the kicker, my favorite part of the whole process, was that again, we’d been in the home for five years, so when they came out to do the appraisal, they looked at the improvements we’ve done, they looked at the market around us. We actually — I scheduled the appraisal the day after I knew a house down the street was closing.

Tim Ulbrich: Well played, well played.

Nate Hedrick: It helps to be an agent, right? And so we had this great other property supporting our value. And we gained like $30,000 in equity — actually, $35,000 in equity from when we purchased the house. So immediately after we refinanced, we went out and we got a home equity line of credit for the extra equity that we’d built in. And it was a great way for us to kind of group those together and set ourselves up for more success.

Tim Ulbrich: Such a good example of reasons to refinance. Not only the lower rate, but obviously you mentioned the PMI piece but then also with the increase equity, opening up a HELOC option if you’re trying to do other things, which I know you are, real estate investing, things like that. So I think too, this was a good reminder — and I had a chance to talk with that institution, just trying to learn more — it’s a good reminder of just to think creatively and look at all solutions. And if I understand this specific product correctly, it’s not a new product. But it makes sense in the current interest rate market that we’re in whereas historically, maybe it hasn’t made as much sense. And what I’ve found is that as I compared that option for us where we think we’re going to be in the home for a very, very long time, it wasn’t as competitive rate-wise.

Nate Hedrick: Right.

Tim Ulbrich: But I think that was what was unique about your situation is that perhaps there’s a move in the shorter term. And to find a solution that had maybe not the best rate but a close rate but didn’t have all the costs up front made sense for your situation. So I think, again, just a reminder that there’s not one solution that fits everyone out there.

Nate Hedrick: And for us too, it didn’t even reduce our monthly payment. I think I mentioned already, but we dropped from a 30-year, which we had paid five years on, down to a 15-year loan, so the idea being that if we are here for a little bit longer period of time, now we’ve got — we’re overall reducing the cost of the total cost of the loan by taking off that 10 years. So we didn’t actually reduce our payment by that much every single month, but the overall value of it was there.

Tim Ulbrich: Awesome. So Nate, this is great stuff. And as always, love having you on the show, picking your brain. Here, we’re talking about refinancing. But I know there’s some listeners that maybe aren’t in a refinance situation, might be looking to buy for the first time or they’re in a home and instead of looking at refinance, they want to actually move to another home. And then I think we’ve got that unique connection with you and the concierge service that we do with obviously you wearing the dual hat of a pharmacist as well as a real estate agent. So tell our listeners more about for those that are in that situation, either buying for the first time or looking to move, where they can go to learn more and what that service is all about.

Nate Hedrick: Yeah, absolutely. So through our partnership together, we’ve kind of launched the YFP concierge services, which is a great home buying experience you can take part in for absolutely free. The way it works is you work with me, we have a 30-minute planning call, kind of go through some of your priorities, talk about budget, talk about what you’re looking for in a home, location, all that great stuff, to figure out what’s going to be a good fit for you. And then I actually set you up with a local real estate agent. One of the things that I do is interview a bunch of local agents in the area that you’re looking, make sure I’ve got somebody that’s going to line up with your priorities and what you have in mind. And then I get you guys connected and I stay a part of that process the whole time. So we’ve had a number of clients actually go through the concierge services to find a home. We’ve had some in Baltimore, I’m working with one in Washington right now. We’re kind of all over the place, which is really fun. And it’s been a great way to if you don’t know the area very well or if you don’t know any agent in the area or you just want that peace of mind knowing that you’re going to get somebody really good that’s been vetted by another real estate agent, it’s a great opportunity to kind of work with us to make sure that you’re getting the best experience possible.

Tim Ulbrich: Awesome. So to our community members, you can go to YourFinancialPharmacist.com, and then we have a page you’ll see there, you can click on at the top. We have a header “Buy or Refi a Home.” And from there, we have an option to find an agent, and you’ll see more information about being able to connect and work with Nate. So Nate, thank you as always, and looking forward to having you on at APhA this year. So for our community members that will be at APhA, Nate will be joining us out there at the booth. So we hope you’ll stop by and say hello. And as always, appreciate your contribution to the show.

Nate Hedrick: Happy to be here, as always.

Tim Ulbrich: Awesome. And as a reminder to our listeners, if you like what you heard on this week’s episode of the Your Financial Pharmacist podcast, please leave us a rating and review in Apple podcasts or wherever you listen to your podcasts each and every week. Have a great rest of your week.

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YFP 138: What You Need to Know About Retirement Accounts in 2020


What You Need to Know About Retirement Accounts in 2020

Tim Baker, our own fee-only CERTIFIED FINANCIAL PLANNER™, joins Tim Ulbrich to talk about key retirement and tax numbers for 2020 and the SECURE Act.

Summary

There have been several changes to retirement account contribution limits for 2020. In addition to these changes, the SECURE Act was passed at the end of 2019 which also carries several changes that affect retirement savings. On this episode, Tim Ulbrich and Tim Baker dive into some of these changes.

Although the increase in contribution limits is small, this will hopefully allow pharmacists the opportunity to save a larger portion of their salary to meet their retirement savings goals quicker. To start, 401(k), 403(b), Thrift Savings Plans and most 457 plans have an increased contribution limit of $19,500 with a catch up amount of $6,500. IRA accounts are typically used to supplement 401(k) or 403(b) accounts. While the contribution limits for 2020 are the same, what’s changed is the phase out numbers. Those filing married filing jointly aren’t eligible to contribute to traditional IRAs after earning a modified AGI of $206,000 and for those that are single that eligibility ends at a modified AGI of $75,000. There have also been changes to the Roth IRA and HSA deduction limits.

Tim and Tim also discuss the SECURE Act (Setting Every Community Up for Retirement Enhancement) which is effective January 1, 2020. This act carries several changes in retirement taxes, but three main changes are the change in the required minimum distribution age (RMD) to 72 years old, the elimination of an age limit for traditional IRA contributions and access to retirement benefits for part-time workers. Tim and Tim also discuss changes in 529s and the requirement for plan administration to offer projections for lifetime income and nest egg information.

Mentioned on the Show

Episode Transcript

Tim Ulbrich: Hey, what’s up, everybody? Welcome to this week’s episode of the Your Financial Pharmacist podcast. Tim Baker is back on the mic to join me as we nerd out for a little bit about changes to retirement accounts in 2020 and the recently enacted SECURE Act, including what you should know and the implications this may have on your retirement savings strategy. Tim Baker, welcome back.

Tim Baker: Hey, Tim. What’s going on?

Tim Ulbrich: What’s new and exciting in Baltimore?

Tim Baker: Oh man, just living the dream, yeah. I feel like I’ve been awhile since I’ve been on the podcast. I feel like I keep saying that. But yeah, things are good. Family’s good, good Christmas. And what’s good on your end?

Tim Ulbrich: Going well. I can’t complain. Excited to have you back on the mic. I know we’ve been doing the Ask a YFP CFP segment. We’ve been bringing you on, and we would encourage our listeners to continue to submit questions if you have them. That’s been fun. But exciting year ahead, looking forward to the American Pharmacists Association meeting coming up. Hopefully we’ll see many of our listeners out there as well in your backyard in D.C. So it’s going to be a fun year. We’ve got a lot of exciting things planned for YFP. OK, so we’re going to tackle, as I mentioned in the introduction, these important updates as it relates to retirement contributions in 2020, the SECURE Act. So first, let’s talk about changes to retirement savings contribution limits. And we’re going to nerd out a little bit here on numbers, but we’ll link in the show notes to some articles that if our listeners want to go back and see these numbers, reference tables, they can do that easily without having to worry about jotting them down or hearing them and remembering them. So we’ll go through that, and then we’ll dig into the SECURE Act a little bit further. So here we are, a new year, 2020, which means new limits on retirement savings accounts. And while we’re not going to in this episode dig into the ins and outs of investing, including terminology, how to prioritize savings, we did already talk about that in detail in our investing month-long series in November 2018, which included episodes 072, 073, 074, 075, 076. And we’ll link to those in our show notes. So Tim Baker, let’s start with the changes to 401k, 403b, Thrift Savings Plan and most 457 plans, which for the sake of our discussion, we’re going to group those together. So refresh our memory on how these accounts work and then the changes to contribution limits on those accounts in 2020.

Tim Baker: Yeah, so most of us have the 401k, a 403b, if you’re a Tim Church of the world and work for the VA or the government, the TSP, the Thrift Savings Plan. These are retirement plans that are typically sponsored by the employer. And the 2019 limits were $19,000. Going forward in 2020, they’re actually $19,500. And the catchup limits if you’re out there and you’re age 50 and older, the catchup limit after you’ve reached that age goes from $6,000 to $6,500. So again, these are typically the contributions that are coming out of your paycheck that get automatically contributed into this account and then invested for the purposes of retirement. So a little bit — and these get adjusted pretty regularly. I feel like when I was studying for the CFP way back when, these were in the $17,000 or $18,000.

Tim Ulbrich: Yeah, I remember that.

Tim Baker: And then they creep up. And it’s just kind of to account for inflation and that type of thing.

Tim Ulbrich: Yeah, and I think this number is important. So we’re talking about $19,500, obviously we’re talking about pre-tax savings here. So these are going to be taxed later on at the point of distribution. And we’ll talk about required minimum distributions here in a little bit as we talk about the SECURE Act. But I was thinking about this this morning as I was driving in, Tim, $19,500. While that may seem like an insignificant jump from $19,000, if you look back to when they were in the $17,000s — and I also think about this in the context of pharmacists’ salaries that are remaining somewhat stagnant or even in some spaces getting adjusted down, I think that these numbers continue to go up. And we’ll talk about the same thing on the IRA side. What this means for pharmacists is likely, in many cases perhaps, a greater opportunity to save a greater percentage of their salary if that’s something that they’re able to do. And just to refresh our memory, this does not include employer matches, correct?

Tim Baker: Correct. This is just your own contribution through your paycheck. It does not include what an employer matches. So that limit is actually much, much higher.

Tim Ulbrich: OK. So $19,500, as I mentioned just a few minutes ago, we’re not going to talk in this episode about the priority of investing, whether that be 401k, a 403b, or should you be putting money in an IRA? But we did talk about that back in the fall of 2018. OK, so what about IRAs, Tim? Give us again a brief overview of IRAs, the limits that we’re seeing for 2020 and the catchup provisions as well.

Tim Baker: Yeah, so the IRAs are pretty stagnant. So just to back up, the IRA is typically what you use to supplement what you’re putting into your 401k, 403b, so it’s something that you typically open up yourself, either at a Vanguard or Fidelity, a TD Ameritrade, and basically set it up and fund it yourself. Or you can do it through a financial advisor as well. The amounts are pretty much the same from 2019 to 2020. It’s still $6,000 that you can contribute into a traditional IRA and a Roth IRA in aggregate, meaning if you put $4,000 into a traditional, you can only put $2,000 into a Roth IRA. And just to back up a little bit further, Tim, just when we think of Roth, a Roth IRA, we think of after-tax. So typically, the example is if you make — and we’ll use lower numbers because of the number phase out — but if you make $50,000 and you put $5,000 into a Roth IRA, you’re taxed on $50,000. You get no deduction. If you make $50,000 and you put money into a traditional IRA, it’s as if you’re taxed on $45,000. So your taxable income goes down. So that money inside of the IRA grows tax-free. And then when it comes out, if it’s a traditional, which it hasn’t been yet taxed, it gets taxed. If it’s a Roth, which has already been taxed going in, it doesn’t get taxed. So the thing to remember is it’s either taxed going in or taxed going out. The growth it enjoys in the middle, in the actual pot, is tax-free. So the numbers are the same between 2019 and 2020. What is a little bit different are the phase-outs. So those inch up a bit. So as an example, if you’re a single individual in 2019, if you made $64,000-74,000 in Adjusted Gross Income, the deduction that you would receive would slowly go away. And then anything over $74,000, you would get no deduction. For 2020, that goes up $1,000, so now it’s $65,000-75,000. So typically the people that I’m talking to that still get a traditional IRA deduction are you students, residents, fellows out there that are going that route. And then same thing with on the Roth side of things. So once you make a certain amount of money, you can’t even contribute to the Roth. And that’s where we can kind of talk about the back door Roth conversion. So for 2019, for a single individual, once you made $122,000-137,000, it would start to phase out the contribution that you could make in there. Once over — and now in 2020, it goes from $124,000-139,000. So it goes up a touch. So if you’re in that low $120,000s, you can still put money into a Roth. But if you start creeping up to that number, then obviously the door slams shut and then we typically do a non-deductible traditional contribution that we bought back door into a Roth. So — and we’ve done, I think we’ve done podcasts on that before, I think Christina and I.

Tim Ulbrich: Yeah, we have. Episode 096 with Christina Slavonik, How to Do a Back Door Roth IRA, so I would point you to that episode. So just to summarize, Tim, contribution limits for IRAs remain unchanged from 2019 to 2020, $6,000 in 2019, $6,000 in 2020. But what we did see is some changes to the income limits going up in terms of where those phaseouts and contributions are allowed. So we’ll link again in the show notes to some articles of tables that you can look at those in more detail. So if we put the two of these together, Tim, we know for many pharmacists, you know, they’re thinking about saving for retirement in the context of a 401k, 403b, TSP, 457, as well as an IRA. So now between the two of those, excluding the employer match portion of a 401k, 403b, we’d be looking at north of $25,000 that they’re able to contribute between those. So not too bad, right?
Tim Baker: Yeah. And the other thing that we haven’t talked about that’s worth mentioning is the HSA. So the HSA has changed a bit, you know, for — this is assuming you have a high deductible health plan, you can couple that with a Health Savings Account, which for a single individual, the contribution amount moves from $3,500 to $3,550. So a little bit. And then the minimum annual deductible moves from $1,315 to $1,400. And then for a family, it’s $7,000 to $7,100 and then the deductible moves from $2,700 to $2,800. So that is, again, we’ve talked about that I think at length before. That’s the black sheep of all the different accounts out there because it has that triple tax benefit, which is a really nerdy way to say it goes in tax-free, it grows tax-free, and then it comes out tax-free if it’s used for qualified medical expenses or once you reach a certain age, you can use it for whatever you want. And the nice thing about that, Tim, is that it doesn’t matter how much money you make. You could make $50,000 or $50 million. You still get that deduction, that $3,550/$7,100 deduction.

Tim Ulbrich: Yeah, an extra $50 or $100, you know, matters, right? So from $3,500 to $3,550 for individuals in 2020, and up from $7,000 to $7,100 for individuals that have family high deductible health plan coverage. So we talked about HSA, we’ve talked about IRAs, we’ve talked about the 401k, 403b’s, etc. And so again, I think the take-home point here is making sure people are aware of what these contribution limits are, how they’ve changed, and what opportunities they have for them because ultimately, as we think about prioritizing savings and how this fits in with the budget and where you’re going to allocate your dollars, these three buckets typically are a big part of the long-term savings strategy. And really taking the time to say OK, among all of these priorities, these options that I have available here, obviously you’ve got other options in the brokerage market as well, what am I going to be doing in terms of savings? And which of these do I have available to me? And we know that HSAs aren’t available to everyone, but it seems to be we’re seeing this certainly is a growing area. And I would reference our listeners all the way back to Episode 019, where we talked about how HSAs fit into the financial plan. Obviously, the numbers then were different than what we’re talking about here. But the concept of the HSA remains the same. OK, so that’s Part 1 where we wanted to talk about the 2020 contribution limits and the changes and make sure our listeners are ready. One thing I want to ask you, Tim, before I forget and we jump into Part 2 here and talk about the SECURE Act, remind us of the timing of when those contribution periods end. So end of calendar year, going up until the tax limit deadline of April 15, so when — what is the timeline if somebody is listening who said, “You know what? I could have contributed $6,000 in a Roth at the end of 2019, but I only did $5,000. And here I am at the end of January. What options do I have?”
Tim Baker: Yeah, so for most of these retirement plans — not necessarily the 401k, the 403b, but for the IRAs — you can contribute all the way up until April 15 of this year for 2019.

Tim Ulbrich: Yep.

Tim Baker: Now a callout here because I’ve seen this with our own custodian who we manage client accounts with, and I’ve actually seen it when I logged into a client’s Betterment account here recently because we were in the process of moving that over. It’s kind of a weird thing, so I would caution — or I’d have our listeners look at this is the — when you turn the calendar — so let’s pretend, Tim, that you have at the end of 2019, you have $4,000 into your 2019 IRA contributions. So you still have $6,000 to go, right?

Tim Ulbrich: Yep.

Tim Baker: When the calendar turned — I’m not sure because I don’t know all the custodians — that January contribution actually gets counted towards 2020, which makes no sense at all because most people, the reasonable thing is like OK, fill the 2019 bucket before you start doing 2020. So you actually have to go back to the custodian, like Betterment or in our case, TD Ameritrade, and say, “Hey, let’s backfill that bucket that we still need to kind of top off before we go into 2020.” So it’s just one of those things that we have this first quarter of sorts to finish off our contributions. But the logic in a lot of these — you know, the way we contribute to our IRAs is just flawed, in my opinion. And I’ve seen this pop up a few times. So definitely something to kind of call out if you are doing this on your own.

Tim Ulbrich: So is the suggestion there then they reach out to the custodian and make sure that gets allocated correctly?

Tim Baker: Yeah. Like to me, and to me, it’s like something that I, I’m kind of talking to TD and some other institutions like why is this a thing? You know, 99 out of 100 people I would think would say, OK, if I still have 2019 contributions to make, it should be coded — I’m not a developer — but it should be coded as such as a default. So what I do is I would log in and typically, when you log in, you can see your contributions year-to-date, and it will show you basically in this period of time, it will show you your 2020 contribution, which should read $0, and your 2019 contribution, which should be — if it’s not $6,000, you should still basically backfill that until you go to 2020. It’s just this weird quirk that — and I kind of expected more from Betterment because they’re a newer kid on the block, and it was just one of these weird things that’s off. So to me, it’s use all of that up before you go onto the kind of the current year.

Tim Ulbrich: Come on, Betterment. We expect more. No, I’m just kidding.

Tim Baker: I know, I know. I don’t know, we’ll probably get a letter from them, like an angry letter.

Tim Ulbrich: Yeah, I’m sure. Yeah. Alright, let’s jump into the SECURE Act. We’re going to continue to nerd out a little bit here as we transition from numbers to talking about some recently enacted legislation that has fairly significant implications.

Tim Baker: Yeah.

Tim Ulbrich: And really a shoutout here to Tim Church, who kind of brought this forward to say, hey, we need to be talking about this. There’s some really unique provisions in here that may apply directly to our audience or at least to be aware of as we think about retirement saving strategies for the future. And I think in the midst of end of year, as this was passed at the end of December, obviously we’ve got a lot going on at the federal level that I think is drawing attention away from things like this. I think it got lost in the mix. So let’s talk for a moment, Tim, just start with what is the SECURE Act? And then we’ll talk about specifically some of the major changes that may be of interest to our audience.

Tim Baker: Yeah, so the SECURE Act stands for Setting Every Community Up for Retirement Enhancement, SECURE Act of 2019. These acronyms kill me. And being former military, I can appreciate a good acronym, but come on. So this is really the second piece of major legislation in the last 24 months, the first being basically the Trump tax code, the Tax Cut and Jobs Act, which had pretty fairly sweeping changes. And this is really — you typically don’t see this in a 24-month period. These typically happen over decades. And when we actually dug into the Act, pretty significant. This was passed by the House I believe in May. And then language in the Senate, and we kind of thought it would be buried. But in kind of the final days of the year, I believe it was passed on the 20 of December. It became law and actually became effective on January 1 of this year. So I was caught a little bit off guard, to be honest, about the big change. And I had heard about it and was kind of following it from a distance. But when it actually came through, I was actually surprised because obviously, with everything going on Capitol Hill, it’s just a lot swirling around. And they were able to actually get something done.

Tim Ulbrich: Well, and I think to be fair, like things don’t typically move this quickly, right? So we see something that passes December 20, 2019, and then with a couple exceptions here, really the Act is effective January 1, 2020, although some of the pieces are coming further behind that. But I think there’s some major, major things in here. And we’re not going to hit everything about the SECURE Act or we would I think put our audience to sleep, perhaps induce a couple car wrecks for those that are driving. So we’re going to hit the high points. We’re going to link in the show notes to some additional information that our listeners can go learn more about this. So please don’t interpret that we’re talking about every single piece of the SECURE Act. But why don’t we start, Tim, I think what really got a lot of press, even though it may not apply directly to where our audience is today, is around the changes in the required minimum distribution age. So talk to us about what that is. It’s not a concept we’ve talked a lot about on the show. And then what were some of the changes that happened related to that distribution age from this Act?

Tim Baker: Yeah, so — and I have a pretty, I want to say a pretty great graphic that I designed way back when that I sometimes will dust that off. But to kind of talk about RMDs, so — and maybe we need to post that somewhere. But so an RMD, a Required Minimum Distribution, is basically — so let’s pretend, Tim, you have a bunch of retirement accounts. And you have $1 million in a 401k, $1 million in a traditional IRA, and $1 million in a Roth IRA. How much money do you actually have? The answer is not $3 million, unfortunately because those — the traditional IRA and the 401k are all basically pre-tax dollars. So Uncle Sam has yet to take the bite of the apple. So when that gets distributed, they basically take their taxes. So in those $1 million accounts, if you’re in a 25% tax bracket, you get to keep $750,000. And then they keep $250,000. The Roth IRA, because it’s gone in after-tax, it goes free. It comes out tax-free. So after awhile, you know, after you work and you retire and you reach 70.5 years old, the government raises their hand and says, ‘Hey, Tim Ulbrich, remember all those years when we allowed you to basically have that money grow tax-free? We want our piece. We want our piece of the apple.’ So what they do is they force a required minimum distribution, which it looks at the balance of the account and then a ratio based on your age, and it applies it to that. And let’s say the first year, when you’re 70.5 years old, you have to distribute $2,000. And then every year, it gets bigger.

Tim Ulbrich: So it’s a forced contribution — or a forced withdrawal, right?

Tim Baker: It’s a forced withdrawal, right. So then you can invest that somewhere else or spend it or whatever. But for a lot of people that are like, oh, I don’t really want to use this money. I want to keep it growing so it kind of can be a disruptor, especially if we’re moving retirement to the right, which we’re seeing. So the big change, which is — I think it’s really a minor change because I think like it’s something like only 20% of the people are actually being forced to take RMDs. Most people are spending it down before that. I believe that’s the number. It moves from 70.5 years old to 72 years old.

Tim Ulbrich: OK.

Tim Baker: So they give you a little bit more runway on the back end to not have to touch those kind of those pre-tax accounts, which is typically the IRA, the 401k, 403b, that type of thing.

Tim Ulbrich: So it gives you an additional year and a half to let that money sit and grow before you have to take those forced withdrawals. But I think this — I’m glad we’re having this discussion because, you know, we talked before in the investing series about some of the strategy around taxable — you gave a great example. You’ve got three buckets of $1 million in a 401k, traditional IRA, Roth IRA, you don’t really have $3 million for those two. Now the third one, in the Roth IRA account, you’ve got $1 million there.

Tim Baker: Yeah.

Tim Ulbrich: And I think that’s one of the other advantages of a Roth account is you don’t have a required minimum distribution age, if my memory serves me correctly.

Tim Baker: Correct. Yep.

Tim Ulbrich: So you know, again, if we think about what’s happening to lifespans and as you think about where you’re at in your retirement savings and the potential whether you will or will not need that money at that age, I think that’s a really important consideration as we think about retirement savings strategy. Even though this year and a half may not be, you know, something that is monumental, I think it’s just a good reminder of how we’re thinking about the back end of taxes when it comes to our savings.

Tim Baker: Yeah, I kind of like the — it’s like, to me, it’s like who makes these rules up? It’s like 59.5 years old, 70.5 years old. It’s like, can we just use round numbers please? It’s like what? And again, it kind of is like the theory versus the application. And it’s just — it’s crazy. Yeah, I don’t understand it.

Tim Ulbrich: So in addition to the change in required minimum distribution age, we also saw that there is no longer, with the SECURE Act, no longer an age limit for traditional IRA contributions. So you know, again, obviously it may not be as meaningful for our audience in the moment. But this is really, really significant news in that previously, you couldn’t make traditional IRA contributions if you were 70.5 or older, but that’s no longer the case, right?

Tim Baker: Yeah, and it’s kind of — to me, I’m still kind of unsure how this works because if you think about it, it’s like, so you would basically be able to — now you’re able to contribute that if you’re still working and you have compensation, you can still contribute to a traditional IRA. And before, you couldn’t once you reached age 70.5. So they take that age limit off. I guess the question I have is like, OK, let’s pretend I’m 73 and I’m still working. Do I take a RMD and then just put it right back in?

Tim Ulbrich: Oh, right.

Tim Baker: You know what I mean? I don’t know. And I actually just thought about this now. Before, once you reached 70.5 years old, you typically just put it into a Roth. But again, like the idea is that the government wants you to spend that traditional, that pre-tax bucket down because they want their tax revenue. But I guess you can, I don’t know, maybe you can contribute that? I don’t know, I don’t know.

Tim Ulbrich: Yeah, maybe if we asked the representative that posed that about the age as well as that provision, maybe we’ll get a “I don’t know,” you know?

Tim Baker: Yeah, yeah.

Tim Ulbrich: And talk about that.

Tim Baker: Yeah, so you take the money out and then you just contribute it again? I guess if you have compensation, I guess that’s OK. But yeah, so again, what they’re trying to do — and I think we’re going to see more and more of this because I think the whole of traditional retirement, it’s going to go away. And I think they’re going to — even like the 10% penalties and things like that, I would imagine in 10, 20, 30 years, it’s going to look a lot different.

Tim Ulbrich: I would agree. So third thing here I want to talk about, because I think especially as we’ver seen more pharmacists that are transitioning to part-time work for a variety of reasons, is some interesting changes to your access to retirement benefits for part-time workers. So here we’re talking about employer-sponsored retirement plans. So talk to us about where we’ve been on this — and you know, this was actually kind of new news for me as I got up to speed — where we’ve been and what’s changed here as it relates to part-time workers and access to retirement benefits that are employer-sponsored.

Tim Baker: So one of the ways that a lot of employers are kind of getting around some of the costs of manpower and FTEs is to hire mostly part-time employees. And one of the reasons they could do this is if they had a 401k, you could basically exclude that from as a benefit. So the rule before the SECURE Act was that part-time employees who have worked 1,000 hours or more during the past year must be granted access to the 401k. That rule stays the same with the SECURE Act. The difference is now that part-time employees who have worked more than 500 hours per year for three consecutive years now must be allowed to enter into the 401k. Now, the caveat here, Tim, is that this sounds great. And I think we’re in alignment, obviously we’ve set up our 401k recently at YFP and we’ve included our part-time employees as part of that because obviously this is kind of the stuff that we talk about and we believe in it. The problem with this rule, though, is that the earliest a part-time employee can participate in a retirement plan due to this kind of second three-year rule that’s now still with the 1,000-hour rule doesn’t take effect until 2024.

Tim Ulbrich: Right, because of the delay.

Tim Baker: Yeah, the plans don’t start counting until 2021.

Tim Ulbrich: Yeah.

Tim Baker: So it’s good, but not for a couple more years. So I think we’re heading in the right direction. And again, I think what we’re seeing — and sometimes we hear it on the trail with politicians — is that one of the problems is employers are just hiring temp workers and part-time workers, which — it’s really because of an economics play because the true cost of a full-time employee with health benefits and retirement benefits and all that kind of stuff can be pretty steep. So I think this is a step in the right direction to kind of open up the door for a lot of part-time employees to save for retirement.

Tim Ulbrich: I agree with you. I think it’s a step in the right direction. I think the time period, because of the three years, because this doesn’t start until 2021, I’m a little bit disappointed by that. I mean, to me, this is a sooner rather than later thing. And I think from what I was reading, it looks like there’s still final rules that are in development here. So I think this is a stay-tuned type of thing. And to be clear here, this does not mean that employers have to contribute in terms of a match but rather that they will be required to allow the employer to participate if they meet the requirements that are set forth and that we just talked about.

Tim Baker: Yep.

Tim Ulbrich: And I share — you know, I’m pumped about what we’re doing at YFP in this area and some of our other benefits that we’re offering. I think it’s — it’s fun to be probably one of the most rewarding parts of 2019 is to be thinking about it from an owner’s standpoint of saying, “How do we want to invest in our employees? Why do they matter?” And philosophically, we’ve all been in employee roles and here we now are on the other side of it and how can we enact things that will increase employee satisfaction, retention, or we just feel like is the right thing to do?

Tim Baker: Yep.

Tim Ulbrich: What about — I mean, I think those got a lot of the headlines. What were some other things that stood out to you in the SECURE Act that, you know, might have been or is of interest to our audience?

Tim Baker: It’s funny because I was actually just talking about this. We do — as part of our financial plan, we do like an education presentation. And I’m going to have to go back because I was like prophesizing about, ‘Oh, I think the 529 will look a lot different in the future and blah, blah, blah,’ and I had not dug into the specifics about it yet. But so a little bit of the backdrop is that the Tax Cuts and Jobs Act a couple years ago expanded the use of 529s for K-12 expenses.

Tim Ulbrich: K-12, yep.

Tim Baker: Which was big because basically before that, the 529 was kind of like the retirement account for education where you had this long accumulation phase before your kid was born to 18, and then you would basically decumulate when they went to school. Now, the 529 — and now I say ‘now,’ but a couple years ago when they changed it, it could actually act as a pass-through. So you could put money in to get your state tax deduction and then pay for private kindergarten, first grade, etc. So the further expansion in the SECURE Act, the SECURE Act qualified education loan repayment is that it allows the 529 to basically distribute to make loan payments, which sounds like it would be an automatic thing. You have loans, and we have a balance in the 529, like that should have happened before. But the law basically includes an aggregate lifetime limit of $10,000 in qualified student loan repayments per 529 per planned beneficiary and $10,000 per each of the beneficiaries’ siblings. So again, you know, maybe not like a — I think this is a good foothold, but to me, I don’t think there should be a limit, to be honest. If there’s a 529 balance, put it towards the loans. So now homeschooling expenses still didn’t make the bill. They didn’t make an effort —

Tim Ulbrich: Come on now!

Tim Baker: I know, it’s like, get with the program. So still, that needs to happen. And then the second thing that happened is that, with the 529, it includes expenses for apprenticeship programs now. So if you’re going for an apprenticeship or your kid’s going for an apprenticeship, fees, books, supplies, required equipment, the program does need to be registered and certified with the Department of Labor, but that’s big. And that’s one of the things with a lot of parents that are like, ‘Well, what if little Johnny doesn’t want to go to education — get college?’ And my belief is that still, I think we’re going to keep going in that direction of opening up what the 529 can actually be used for. We just need to. We need to.

Tim Ulbrich: Yeah, that one, although it seems small, got me fired up, you know, in a positive way. I just think that we’re seeing certainly a transition of more people going into trades and other things.

Tim Baker: Yeah.

Tim Ulbrich: And I think from a parent concern, it’s something I think about often that hey, I’ve got four boys and maybe two go to college, two don’t, maybe four don’t, maybe four do, whatever. But to have that flexibility, you know, and that option available I think is huge. And I agree with you, I think we’re going to see more in this area. There were certainly other changes in the SECURE Act. You know, one of the things that stood out to me was a new requirement for plan administrators to offer projections for lifetime income at least once a year, info about the nest egg size, so you know, we might see, individuals might notice some more paperwork and things that are coming as a part of their 401k. But lots of changes here, and I’m glad we were able to talk about these as well as the 2020 changes to the contribution limits in the retirement accounts and the HSA component that we talked about a little bit earlier. So Tim Baker, excited to have you back on the mic. And I think this is a good place to remind our listeners as we’re talking about saving for retirement and new contributions and how do you prioritize these and where does this fit in with the rest of your plan, we offer fee-only comprehensive financial planning at Your Financial Pharmacist. Obviously, you’ve been leading that service for us. And we’ve got some exciting developments coming in 2020 with that. And if you want to learn more about that, YFPPlanning.com, you can set up a call with Tim Baker and see if that’s a good fit for you. And then we’ve also got some great calculators that Tim Church has been working on, one of them around projecting retirement savings and nest egg, so you can find that over at YourFinancialPharmacist.com. As always, if you liked what you heard on this week’s episode of the Your Financial Pharmacist podcast, don’t forget to leave us a rating and review in Apple podcasts or wherever you listen to your podcasts each and every week. Thank you for joining us, and have a great rest of your week.

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YFP 137: How to Monetize Your Clinical Expertise


How to Monetize Your Clinical Expertise

Diana Isaacs joins Tim Church on this side hustle edition to talk about her journey in becoming an expert in diabetes and how she has been able to monetize her clinical expertise through speaking engagements, advisory boards, consulting projects and CE articles.

About Today’s Guest

Diana Isaacs, PharmD, BCPS, BC-ADM, BCACP, CDE is the Continuous Glucose Monitoring (CGM) Program Coordinator and Endocrinology Clinical Pharmacy Specialist at the Cleveland Clinic Diabetes Center. Her role includes clinical practice, teaching, and research. She provides medication management and runs a robust CGM shared medical appointment program.

Summary

Diana Isaacs shares how she monetizes her clinical expertise in diabetes on this side hustle edition.

Diana’s training after graduating college was in pharmacy practice and ambulatory care. She gained clinical expertise and took additional training to receive certifications and specializations. She fell in love with diabetes and started working more and more in the field. She now works as a Continuous Glucose Monitoring (CGM) Program Coordinator and Endocrinology Clinical Pharmacy Specialist at the Cleveland Clinic Diabetes Center. Diana was recently awarded the 2020 AADE Diabetes Educator of the Year.

Her passion for diabetes is palpable and has allowed her to become an expert in the field. When she’s working at night on her side hustle as a clinical diabetes expert, she doesn’t feel as though she’s working but more that she’s doing a hobby she loves. She’s monetized her passion and expertise in several ways, including speaking engagements and presentations, advisory boards, consulting projects and CE articles and courses. She earns the most from honorariums which varies between $500 to $3,000/event. Advisory boards come in occasionally and bring in between $1,000 to $2,5000/board. Diana receives $500 to $4,000/CE article and if she works on a consulting project she usually earns $1,000 to $2,500.

The biggest reason for her success has been her willingness to say yes to opportunities and to reach out to organizations or conferences in which she’s interested in speaking.

Diana says it’s hard to quantify how many hours she works, however she makes it happen! Her side hustle has increased over time so she didn’t feel the brunt of working several additional hours on top of her day job at once. She has a very supportive husband that works part-time and is able to take on more with the children and household tasks. She works at night after her children go to bed but takes off Saturdays and Sundays when she can to make sure she’s present for her children and husband.

Mentioned on the Show

Episode Transcript

Tim Church: Diana, thanks for stopping for and for being part of this side hustle edition.

Diana Isaacs: Oh, you’re welcome. Thanks so much for having me.

Tim Church: I first want to congratulate you on your recent award. And that is the 2020 AADE Diabetes Educator of the Year. And this is an award that honors a diabetes educator who has made a special contribution to the field through dedication, innovation, and sensitivity in patient care. Now Diana, this is a really big deal, and I wanted to ask you, what does winning this award mean to you?

Diana Isaacs: Oh, well thanks. Yeah, it’s been a really exciting year. Winning this award has been tremendous. I mean, I’m so grateful to be recognized for it. And it’s definitely opened up a lot of opportunities for me in terms of it almost seemed like overnight, people were like, oh, she’s an expert in diabetes. And it’s given me a lot of new opportunities to pursue.

Tim Church: That’s great. And when was the last time a pharmacist won this award? Because this isn’t something specific to pharmacists. This is really anybody in the diabetes space.

Diana Isaacs: Yeah, that’s one of the things I really love about the organization AADE, the American Association of Diabetes Educators, is that it is, it’s a multidisciplinary. You’ve got nurses, nurse practitioners, DAs, exercise physiologists, you’ve got dieticians, you’ve really got everybody. And so it’s just — it’s really special I think to be recognized by all the different disciplines. And in terms of the last time a pharmacist, I think when I looked it was like 12 years. So it definitely had been a long time.

Tim Church: That is so cool. And it’s really awesome to see you being recognized because as we’re going to jump into, you really have done a lot for diabetes in terms of your scholarship activities and a lot of the committees and things that you’ve been on. So I’m excited to jump into that. But obviously getting this award is not something that happened by accident. So I want you to talk a little bit about your career path.
Diana Isaacs: Yeah, sure. So let’s see. Going all the way back, I graduated from SIUE, it’s about 10 — actually exactly 10 years ago now. I did a pharmacy practice residency with an emphasis in ambulatory care at the Philadelphia VA. And then I was really fortunate to get my first position as a clinical assistant professor with a practice site at the VA, getting to manage diabetes. And I think through that, I really was able to gain clinical expertise in managing different types of patients and seeing different types of things. And I pursued my certifications, like my CDE and the BCEDMs, I’m board-certified in advanced diabetes management. And really, I think one of the things that really stands out is I say yes. I definitely say yes to different opportunities and also seeking out whenever there was an opportunity to be able to speak at a meeting, whether a local program or anything, really trying to grow myself professionally.

Tim Church: So a lot of those opportunities, did you have to be very intentional about getting? Were some of those given to you?

Diana Isaacs: So that is a great question. So yeah, the golden ticket, right, is when you get one of those emails that says, “Hey, will you do this? And we’ll pay you all this money, and we’d like you to present here and write this.” Those emails come sometimes, and they have fortunately come more often since getting this award, but no. For the most part, I sought things out. When I saw that a meeting was accepting abstracts to be able to speak, I drew up an abstract and I submitted it. I, you know, submitted lots of proposals for lots of different things. I worked really, really hard. And some of the things stuck, and many times, they didn’t get accepted. But I kind of just kept trying.

Tim Church: And did you have any failures along the way when you submitted those proposals?

Diana Isaacs: Well, I don’t like to think of it as failure, right? Because you’re trying to think of it as you’re growing. But yeah, I like to think of it as like I throw 100 darts at a board, and two of them stick. And that’s great. I’ll pursue those two things. So yeah, I feel like I apply for lots of things. I’ve tried to really do a lot of different things and yeah, sometimes I don’t make it, they choose someone else, I don’t get it this time, but I just kind of keep trying. And I really try to keep my ears open for opportunities. That’s something I’ve been pretty good about paying attention, you know, sometimes you get those emails where it’s like, you can apply for this. Like for example, with the American Diabetes Association, they have these special interest groups. And I’ve been wanting to get involved with ADA, and so I applied for that. And I ended up being appointed as communication director for the pregnancy and reproductive health group. And that was just an opportunity that hey, I paid attention to my email, I filled out the application, I submitted it. And it worked out. So I think, you know, a lot of it is reading your emails and seeing what opportunities are out there.

Tim Church: At what point in your career did you realize that you had become an expert and really had authority in this space?

Diana Isaacs: So I don’t — I guess I’m still growing, and I like to think I’m still definitely growing and evolving and there’s so much to learn with diabetes that I don’t know if anyone is a full expert. But I think, you know, definitely earning this award this year has solidified some of my confidence. And I think over — especially in my current position, so right now, I’m at the Cleveland Clinic Diabetes Center. And I think in this space, I see such complex cases. I get to do so many cool things here that I think I just realized, you know, when I interact with other people that I am seeing a lot more, a lot more diverse things that I’m becoming an expert, I guess you could say.

Tim Church: So what would be some of the examples of complex cases or things that maybe most pharmacists kind of in an amb-care setting may not see every day?

Diana Isaacs: Yeah, so I get to do a lot of work with the post-kidney transplant population. And that’s a lot of fun. So there, we do a bunch of kidney transplants there. And unfortunately, our patients were kind of falling through the cracks. That was a need when I came here, that they weren’t getting good glycemic management right after that transplant. It was hard to get into endocrinology. So that’s a service that I took on. And now I see a lot of those patients. And so it’s just, it’s very interesting because they’re on high dose steroids, they’re tapering over a month’s time, they just had a transplant so they’re acutely sick. Many of them, even if they didn’t have diabetes before, now they have steroid-induced hyperglycemia, and it’s really an art to it because there’s no specific protocols. It’s really every person’s different, and you have to very closely manage it. And then in addition to that, sometimes you see the pancreas-kidney transplant. Like I have a patient this week, she had it, and you know, you would hope, right, the dream is that if you get a pancreas transplanted, you don’t need insulin anymore. But it doesn’t always work like that. They call it like angry pancreas. Like it takes some time for that new pancreas to adjust. So then we have her on Metformin and like we’re trying to see, are we doing a DPP4 inhibitor and what else are we going to do? And so it’s just — man, it’s a lot of cool stuff, a lot of cancer patients, a lot of just everything, like post-bariatric surgery, hypoglycemia, people doing keto and de-escalating therapy, lots of CGM, diabetes technology, insulin pumps, just lots of cool stuff here.

Tim Church: So it sounds like that the providers are how they come in through the clinic, they’re like if they’re complex or it’s going to be difficult, we just send them to Diana. Is that pretty close to how it works?

Diana Isaacs: So I am so fortunate. I work with like the most amazing doctors, and I have an amazing, amazing team. So what I try to do when coming here — because I was the first full-time pharmacist put into the diabetes center — was I tried to find where would I be most useful? And some of the areas I recognized that were one, we were underutilizing diabetes technology, so like insulin pump adjustments and getting more patients on CGM. And then the kidney transplant need was really two areas where I decided that I would really be best utilized, and so those are kind of niches that I’ve I guess developed. But yeah, I try to be helpful wherever I can for the team.

Tim Church: That’s really cool, and I think those are obviously niche areas within diabetes itself, but through the organization that you work for, obviously if those are very frequent types of patients that are coming in, there’s certainly going to be a need. And I think that’s really cool how you positioned yourself to basically say, what are the needs out there and how can I best be a part of this service and impact patient care in that way? So I think that’s really cool the approach that you took.

Diana Isaacs: Thanks. Yeah, and I try — you know, a lot of times, pharmacists will come and ask me what they can do and how they can get involved, and I think it’s really every place is unique and it’s about assessing the needs and making sure you’re not stepping on other people’s toes but you’re adding value to the team.

Tim Church: So besides kind of positioning yourself as an expert by taking on very difficult cases, very unique cases that many people may not see all the time, you know, one of the things I thought about prior to our interview was the book “Outliers” by Malcolm Gladwell. And essentially, one of the conclusions of that book is that in order to become an expert, you need 10,000 hours. So a lot of people out there — obviously you don’t become an expert, you don’t become a member of the Beatles like overnight. The Beatles don’t become The Beatles overnight. It takes a lot of time and practice in order to get to that point. So what do you think about that in the context of your personal journey?

Diana Isaacs: Yeah, that’s a great point. And yeah, hard work is required. I mean, I work hard. But the thing is, it’s not boring or tedious. I just, like I really love diabetes. And I love that I can use my skills in diabetes to be able to help people. Almost 10% of people now have diabetes. So wherever I am, I’m able to make an impact and to directly help people. And so like for me, I love doing it so much that I don’t think of it as work. Like if I am working on a project or I’ll do this stuff in the evenings, and I don’t really think about it because I’m enjoying doing it. But absolutely, like the hard work is necessary. And I think on one hand, that should be inspiring because it’s not that you have to have like some special secret skill or talent. Like every person or every pharmacist should know, like if they work hard enough in a certain area, they can become a clinical expert.

Tim Church: And I think too — and I think obviously, you’ve already kind of talked about this, but just that repetition of seeing the number of patients over and over and over, and you start to develop certain patterns. You know, obviously you’re going to have some complex cases that you’ve never seen before, but it’s almost kind of like it adds to the — your own repertoire of knowing OK, I’ve seen a patient like this in the past and this is how he or she has responded. And I’ve kind of instilled that in the training programs is when we take residents — because for those that don’t know, I also do primarily diabetes management, but I’m always pushing the residents and students to really see as many different types of patients as possible because that repetition is so key, even if it seems monotonous and tedious at the time.
Diana Isaacs: Yeah, and I think the great thing about kind of the ambulatory care environment too is you’re interacting, you’re communicating with different types of people. So you can always learn from every person. And so that’s really the art of it that makes it really unique and something — I have a lot of trainees, a lot of residents and students that I work with. And that’s something, you know, you can have two exact same clinical situations but what you do may be different depending on like the patient’s attitudes and other factors. So yeah, that communication and, like you said, repetition, is very helpful for navigating different situations.

Tim Church: So who or what really inspired you to become an expert? I can tell like just from your voice, obviously this is where you’re already passionate about. But is there anyone who inspired you to basically continue to achieve, continue to get to the next level?

Diana Isaacs: Yeah. So I want to highlight, so Jess Kerr, who is faculty at SIUE where I went to pharmacy school, was very inspiring. She was faculty and had a practice site — or still has a practice site at the VA. And I wanted to do what she did. I guess that passion I saw, she had that passion for helping people and I really wanted — she seemed so happy — and I really wanted to be that. I was very fortunate to get a position like that. I think something else that actually stands out is my math teacher, actually in high school. I had a really bad attitude about math. And I was like, fine, like this is too hard. Like I’m just getting C’s, like I don’t care. This is just way too hard, I don’t feel like doing it. But she invested all this time in me. And she encouraged me to have a positive mental attitude, PMA, and she said things like, “Dream it. Believe it. Achieve it.” And that really shifted things. Like I learned that my attitude really dictates how situations will turn out. And just through changing my mindset, having a positive attitude, things can go really well. So I turned myself around, I went from C’s to A’s. And I think that that message really stuck with me in a lot of different areas, not just pharmacy and diabetes but in other areas of my life too.

Tim Church: That’s really cool. And I think that a lot of people, they would not be where they are unless they heard some message, received some encouragement from somebody. So that’s cool. And I think it’s great that you highlighted those individuals. So obviously you’ve reached this expert status in managing diabetes and along with that comes some engagements and proposals and things where you can really show off those skills but also help other clinicians help patients. So talk about some of the ways that you were able to start monetizing your clinical expertise.

Diana Isaacs: Yeah. So it’s been exciting because I’ve done a lot of things over my career for free, put a lot of sweat and tears — not usually tears. But yeah, now I’m getting paid to actually speak and things like that. And I love — it happens to be that I love giving presentations. And so that now, you know, I get paid to give presentations. And part of actually what I’m doing with this Educator of the Year is I get to give presentations and then beyond the five that I will give and that I kind of already received an award for, I can do additional ones where they pay me and I’ve been able to set my price. And so that’s been exciting. And then another side benefit has been that industry has been interested in me too. So now I’m speaking for DexCom as well as I’m on the speakers bureau for Novo and for Zerus, and so that is very exciting.

Tim Church: So take a step back for the award, the Diabetes Educator of the Year, they’re already guaranteeing you five speaking spots? And are those individual speaking gigs, those are paid for? Is it one lump sum that they’re giving you?

Diana Isaacs: Yeah, so what happened is I got $5,000 up front for that. And in that, I agreed to speak at five places, which I got to choose — or places could request me, and then I got to choose from the list of people that requested me. And then beyond that five, then additional places can request me. But they won’t get the financial assistance. So they would have to pay for my travel and then pay for my honorarium on their own.

Tim Church: So besides speaking, what are some of the other ways you’ve been able to monetize?

Diana Isaacs: Yeah, so things like CE articles, so places like Pharmacy Times, Power Pack, they will basically — they will pay you to write CE articles or like give webinars. So that’s one thing I’ve been able to do. Also, like in the webinar and course development — so I actually do a lot of stuff with AADE. There’s a whole CGM course. And it’s going to be turning into a certificate. But I was involved in that. And so that’s led to a lot of honorariums along the way. We even most recently created videos for it on how to counsel on CGM. And so there’s been a good number of honorariums for that as well.

Tim Church: That’s great. So can you break down kind of the different ways you’re earning and what they would typically provide in terms of an honorarium? And that could be like a range.

Diana Isaacs: Yeah, so it really varies a lot from place to place. Like some places, you do a local program, and you speak, and you get $1,500. And that’s to cover — it usually would be like a one-hour program. Depending on the company, sometimes they’ll give you the slides. And sometimes, they’ll have you pick from slides or they’ll let you put together slides, depending on how much freedom you have. Usually, many places will pay — if it’s not done that way, they’ll pay you an hourly rate and then they will pay for presentation development. So like usually, that honorarium ranges from I would say from $200-300 an hour. And so that would, you know, if it takes 10 hours to prepare, say that would be $2,500. And then the presentation itself usually will be like a $2,000 honorarium as well. So I would say like usually, when I speak, I’ll get anywhere form like $1,000 to $5,000. $5,000 being the best and not usually so normal. But that’s kind of a range. And then they pay for travel and hotel and all that, flight and all that good stuff. Recently, I was asked to speak as part of this diabetes program, which is training people for CDE. And that, I think we agreed on like $600 per hour of speaking. But that wouldn’t be prep time, that would probably just be like the time. So if I speak for five hours, then it’s $3,000. So that’s kind of for the speaking stuff, that’s usually how it works out.

Tim Church: And then have you been able to cross — I mean, obviously with AADE, ADA, those are multidisciplinary organizations — but have you gone and done presentations specifically for physicians, for nurse practitioners, physician assistants?

Diana Isaacs: Yes, so I was just recently asked to speak for like the dietician organization. So I think that’s beginning to happen. I was asked to speak also for ADA post-grad sessions, which is in early February. So that’s exciting because that’s an organization, there’s a lot more physicians in that organization. And of course, I do a lot of speaking AADE. So I think I’m starting to tap into these other organizations as well.

Tim Church: You mentioned to me before we jumped on the call that besides speaking, besides CE articles, some of the other ways you’ve been able to monetize have been being a part of advisory boards and then also consulting. Can you talk a little bit about that?

Diana Isaacs: Oh yeah. Advisory boards are like the greatest thing in the world. They’re usually like these — it’ll be like four hours and you’ll get paid like $250 an hour, plus if there was any travel. But the best is when they’re local, and you just like go for four hours and you get $1,000. Those are wonderful. I love when those happen. Other things, like for consulting, just different types of like writing or I get asked a lot of stuff about CGM type of stuff. Like now, I’ll be working on a supplement for the Diabetes Educator for InPen by Companion Medical, so stuff like that pays. Oh, recently I got asked to do this Medscape thing, which that sounds actually really cool. It’s like about time and range. And they’re — I guess it’s more kind of like an interview. They asked me to pick a nurse that I like working with, so I picked my favorite nurse. And we’re going to go I guess to like New York to film this brief thing. But that was like another kind of cool thing that I was like, oh, wow. That’s interesting. So all that stuff’s been cool. And I guess one of the things I’ve learned is, you know, I’ve done lots of things for free in my life. And I love doing it. So sometimes, it’s like easy to get to be like, oh yeah, I’ll just do this. But recently, I’ve tried to set my boundaries that hey, if someone’s asking for a good amount of my time, to make sure that I am getting paid fairly for my amount of time.

Tim Church: Sure, I mean, I think that’s absolutely reasonable. And you’ve done a lot of the things in the past to get to the point where you are where you weren’t necessarily compensated. But I think it’s incredible all the different ways you’ve been able to monetize. And obviously, along the way, you’re providing a lot of value, whether that be organizations or education that ultimately gets in the hands of patients itself, which is really cool. Can you break down in terms of percentages — so all of these different things that you’re doing to monetize — can you break down kind of what is the highest in terms of bringing in the revenue? Without specific amounts, just kind of what percentages does speaking bring in versus advisory boards, consulting, CE, etc.?

Diana Isaacs: So I think speaking definitely brings in — if it’s like a big program where — like I’ll give you another example. Like at AADE, I had a bunch of presentations, but then I had this one presentation, it was sponsored by Abbott. And so the honorarium was like $2,000. So that’s something that just brings in money, I feel like quickly, especially if it’s a topic that I’m pretty comfortable with. Like another example was a CE article that I did, it was also on CGM, and that paid $4,000. And so those are topics I’m very comfortable with. So those are easy and much faster, I guess, to earn the money. Other things, like writing sometimes. You know, writing can take awhile, so especially if it’s a topic you’re less familiar with. So now I try to stay in the diabetes realm. But I actually, like last year, I wrote an article about hyperhidrosis, which was not as familiar to me as other disease states. So that one took a little bit more time. So I guess what I’m saying is it’s hard to completely break it down. But I think for sure speaking, advisory boards pay a lot, but those are really unpredictable. So you know, I could have two advisory boards in one month or I can go almost a year without an advisory board. It’s just, it really depends on the needs of the company and what area they’re targeting and everything. So I think it just really varies. Another thing that brings in revenue, though, which is kind of cool, is speaker training. So whenever you speak for one of these companies, they want you to get trained. And so like that, that’s amazing because you get your hourly rate for a bunch of hours and you’re not presenting or anything, you’re just learning. And so that’s pretty cool.

Tim Church: How does that work?

Diana Isaacs: Yeah, so like with Dexcom, I was really fortunate because I missed the original training, and two people came out to me and like just trained me for four hours. And like I earned $1,000 and it was amazing. Other ones, like I’ve been invited now for this year to go to a Dexcom and to a Novo training. And so those, I’ll be flying out to like to Florida in the winter, so it’s not like it’s so bad. I think the other one’s California. But it’s just basically like a day, and they’ll be paid an hourly rate. And the good thing about those is it will be with other people on their speakers bureau. So the opportunity to interact — but those are really interesting because you learn more about their product. And so I mean, I just find it’s incredibly helpful and interesting, and I get to earn money. So it’s really awe — I mean, it’s really cool to get to do that kind of stuff.

Tim Church: Yeah, it sounds like you’re getting just a tremendous amount of opportunities, which is really cool. Would you say that now at the point of where you are that most of these opportunities are already being asked of you where you’re not having to reach out as much anymore to get them in motion?

Diana Isaacs: So yes and no. So yeah, like fortunately with the pharma stuff, that’s been really exciting. But I think it goes both ways because I was pretty interested in Zerus and definitely let them know that I was interested in being a consultant for them. I’m definitely getting asked more, but I’ll tell you, there’s still things I apply for. So I think it depends the caliber of what it is. I am, fortunately, getting asked a lot more. But there’s certain things that I — I’ll give you an example, OK? So this isn’t so like — this makes sense. So like ADA Standards of Care, I would like love more than anything to be on the committee that develops the standards of care, OK? So that’s something you have to apply for. So that is something that I hope to apply for and if I were to get selected for something like that, that would be like a career dream. So I think it goes both ways, maybe my dreams are even higher now than they were before. But yeah, I still, I’m open to new opportunities and still — will still apply for things.

Tim Church: So looking back, now that you’ve obviously been able to monetize, you’ve been able to bring in extra income, what are you doing with the additional income that you’re bringing in with your side hustle?

Diana Isaacs: That is also a great question. So honestly, I just live my — I don’t want to stress about money, and I think bringing in the extra money allows me to live a very comfortable life without stressing. I work very, very full-time between my regular job and all these extra consulting opportunities. My husband, fortunately, is able to work part-time, which is good because then someone is home more for the kids and I feel like we have more balance, and he’s able to take care of some more of the stuff at home. So I think for us, it’s just really about not having this stress, being able to buy what we want, and then whatever extra, college funds, all that good stuff.

Tim Church: Cool. So how much time do you think in most weeks you’re spending kind of on consulting and all these other activities that are outside of your scope of your full-time positon?

Diana Isaacs: Yeah, that’s hard to quantify. I will say every Saturday, I completely disconnect and I am not using the phone, I’m not working, I’m like really just with the family. So I always have that day. And even Sundays, I try to really make family day. And I’m fortunate that I have a position that’s Monday through Friday so that I have my weekends off. I try really hard to do my extra work in the evenings when my kids go to sleep and like evening-weekend — or weekend-evenings. I try not to take too much time away when my kids are awake. It’s definitely a balancing act. I feel like I make it work. I don’t know. Maybe it seems like I work a lot, but I try — somehow, it all works.

Tim Church: I was going to ask you, what other tips do you have? Because I mean, you’re doing so much, you have a family, I mean, I think a lot of people when they think about the thought of taking on something in addition to their full-time job, it almost seems like it’s impossible.

Diana Isaacs: So I guess it’s built up like over time, so it hasn’t felt like oh, it’s this massive thing all at once except when I have an article that’s due and I waited until the last second to do it, which isn’t great. But I don’t know, I just, I don’t do — like I don’t watch TV really. I don’t go to movies, I try to minimize distractions. I’d like to say I’m perfect about social media, but I definitely like to post things on Twitter and stuff. But I try to really minimize the outside distractions. And when I am home with my family to really focus on my kids and not be distracted. And that way, when they go to bed, like I can really devote my time, you know, like whatever, from 8:30-10 on whatever I want to work on. So I just — and I think I just love what I do. I just love it so much that for me, it’s like my hobby, right? Like if someone else likes to paint or likes to do whatever, they would make time for that. So for me, this is kind of like my hobby. I just really enjoy it. And so I just — like I make time for it.

Tim Church: And it sounds like too that it sounds like your husband is very supportive in you doing these extra activities and things like that. And obviously, you said it makes it a little bit easier that he’s part-time. But would you say that he’s played a big role for you to be successful with all these other ventures?

Diana Isaacs: Oh my gosh, yes. Yeah. I mean, he’s the only reason that I can do what I do. He’s like really good at managing the kids, going grocery shopping, like he’s really on top of it, but also I have cleaning help. Like that’s a must. I definitely, I have cleaning help, a lot of cleaning help. So that’s another thing I use my money for lots of cleaning help. But yeah, I mean, you have to have that support. And he knows that I love doing this stuff, so he is supportive as long as I’m not out of town too much. And that’s the part I have to balance because all these speaking gigs, trying to just make sure — I like to be home on the weekends when I can and stuff. But yeah, it’s a balancing act, but it’s fun.

Tim Church: Well, Diana, this has been a great time. And obviously, it’s just cool to hear your passion in your voice. I mean, obviously, this is an area where you’ve become an expert and be able to impact not only clinicians but patients just in your full-time job but with all the work that you do. So what tips or suggestions would you have for others who want to become an expert in a particular clinical area?

Diana Isaacs: So this is going to go against all that burnout, resiliency talk that you hear. But just say yes. Like this whole thing about saying no to avoid burnout, I just, I disagree with it. And I think in order to be an expert, to have new opportunities, you’ve got to say yes. You’ve got to open yourself up to that because you never know, like when you say no because you’re worried, oh, it might overwhelm you, what you’re going to miss out on. And the thing is when you say no a lot, that really closes doors and people don’t want to ask you again. So I just, I like really encourage people to say yes or at least really, really think about it before being so quick to say no. And then the other thing is just look for those opportunities. Don’t expect that people are going to hand you things. You do have to work hard. It doesn’t happen overnight, but that’s OK. And just look for new opportunities.

Tim Church: Diana, if somebody wants to learn more about you and what you’re doing, what’s the best way to reach out?

Diana Isaacs: Yeah, so you can email me, you can find me on Twitter, @DianaMIsaacs. Yeah, I’d be happy to chat with anyone who’s interested in talking. So yeah, feel free to shoot me an email. If we’re going to one of the same meetings, we can meet up there. So yeah, happy to connect with anyone who’s interested.

Tim Church: Diana, thank you so much for coming on the podcast, sharing your story and your tips and suggestions. It’s been a lot of fun.

Diana Isaacs: Oh, you’re very welcome. Thank you so much for having me.

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YFP 136: The Ins and Outs of a Pharmacist Home Loan


The Ins and Outs of a Pharmacist Home Loan

Tony Umholtz, a Mortgage Branch Manager for IBERIABANK/First Horizon, joins Tim Ulbrich on the show. They discuss the considerations for financing a home purchase, the biggest mistakes people make when applying for lending, and a variety of lending options available to pharmacists including the Professional Loan Program (aka Doctor’s Loan).

About Today’s Guest

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

Summary

Figuring out financing is critically important in the process of buying a home. However, the decision to buy a home and how much home has to start well before digging into financing options. If you’ve decided that purchasing a home will work for your situation after you know your budget and understand all of the costs involved, you’re ready to start looking into financing options.

On this week’s podcast episode, Tim Ulbrich interviews Tony Umholtz, a Mortgage Branch Manager for IBERIABANK/First Horizon, to learn the ins and outs of the Professional Loan Program (Pharmacist Home Loan), a doctor’s loan that pharmacists are able to qualify for.

Tony talks about where you can go to look for current rates, different types of lending options that are available and the biggest mistakes people make in purchasing a home. Tony also discusses the interest aspect of loans, including a deep dive into adjustable rates.

Tony is happy to offer a Professional Loan Program through IBERIABANK/First Horizon. Programs like the Professional Loan Program are sensitive to the high student loan burden pharmacists carry. With this pharmacist home mortgage loan program, pharmacists can buy a home with 3% down and not be charged PMI. Compared to others, this is a lower cost to enter into a home. There is the option to put more down and you don’t have to take the full approval amount. This loan program also typically offers debt to income ratio thresholds as a protection to the borrower. The majority of people in this loan program opt for a 30 year fixed mortgage. The Professional Loan Program is offered in 48 states and is unique because most of these doctor loan programs do not include pharmacists.

The downsides or considerations to the Professional Loan Program are that if there is a market correction the borrower could be in a position of negative equity. Tony mentions that borrowers also need to understand what kind of investment needs to be put into the property (new roof, water heater, etc).

To learn more about the Pharmacist Home Loan, connect with Tony here.

Mentioned on the Show

Episode Transcript

Tim Ulbrich: Hey, what’s up, everybody? Welcome to this week’s episode of the Your Financial Pharmacist podcast. I hope everyone is having a great start to the new year and to 2020 as we turn the page onto a new decade. Today’s show is all about financing a home purchase. So in previous episodes of the podcast where we’ve discussed home buying — most notably, this would be episodes 040 and 041 where Nate Hedrick and I talked about 10 things every pharmacist should know about home buying, and then again in episodes 064 and 065, where Nate and I discussed six steps to home buying. In these previous episodes, I’ve emphasized that one of the most important decisions in the home buying process is figuring out the financing piece of the puzzle. Now, going through this process twice for my primary residence and now again with the start of refinancing my current home and working through the financing details with a couple investment properties, I can honestly say that this decision, although at times complicated, although at times it gets in the weeds and it can feel overwhelming considering all the options that are available, this decision of the financing is critically important. And so before we jump into our conversation with Tony about financing a home purchase, I’d be remiss if I didn’t emphasize, perhaps re-emphasize, that the decision to buy a home and how much home should start well before digging into the financing options. And this really starts with two key things: No. 1, knowing your budget and No. 2, knowing all the costs involved with home ownership to figure out whether or not you’re ready to purchase a home. Now, when it comes to knowing your budget, the question here is what can you afford? Not necessarily what the bank says, but what can you afford based on the rest of your financial goals and competing priorities? Because we know that there’s multiple costs involved with owning a home. We’ve talked about many of these in previous episodes of the Your Financial Pharmacist podcast, things like the down payment to purchase a home — and we’re going to talk about an option today that will help you there — things like closing costs, property taxes, insurance, interest, potentially HOA fees if you’re in an association, PMI if you don’t have 20% down and you’re pursuing a financing option that doesn’t eliminate PMI, and of course monthly utilities, upkeep, maintenance, and so-on. The costs of owning a home are real, and you have to know where do these costs fit in with the rest of your financial plan? And does this purchase make sense with the rest of your financial goals? So just a couple of quick notes before we jump in about evaluating mortgage rates and offers and first and foremost, where can you go to look for current mortgage rates? So many of you are probably trying to figure out if I’m ready to buy a home, what’s this going to cost me in terms of the mortgage and the interest, and if you head on over to FreddieMac.com/PMMS, again, FreddieMac.com/PMMS, you can find the most up-to-date rates that are out there. And that will help you as you’re evaluating different options and rates that are available from your local bank or perhaps some of the options that we’ll talk about here today. And as we talk about in many other areas, multiple quotes is always preferred. We talk about this with student loan refinance, we talk about this with professional liability insurance, life insurance, disability insurance. And here when we talk about purchasing a home, not necessarily just starting and stopping with your local bank or your parents’ bank perhaps but ensuring that you’re getting multiple quotes and you can find the best option and offer for your personal situation. So we fast-forward and let’s assume that you evaluated the decision to buy a home in the context of your goals, the budget, and the costs involved, and you determined that you’re ready to buy a home. Now we are ready to evaluate all the options that are available to you from a financing perspective. And one of the options that exists is a doctor or pharmacist home loan, which has some very unique features that can be attractive. And that’s why I’m excited to bring onto today’s show Tony Umholtz and the partnership that we have with Tony and IBERIABANK/First Horizon. Now, full disclosure, IBERIABANK/First Horizon is not the only lender that offers a doctor type of loan. And when I say doctor loan, these are generally those loans that are defined for higher income professionals that are lower risk to the bank and therefore, the lender requires a lower percent down, less than 20%, competitive rates, and they eliminate the PMI concerns. And we have explored several of these other doctor type of loan options, and what we have found is that the rate-limiting step of these products is the No. 1. They typically, many of them exclude pharmacists, and No. 2 is that they may not be offered widely enough across many states that it makes sense for us to bring this forward to the YFP community. So therefore, as we do with everything else, you know, we want to make sure that we’re bringing products and services to you that are as widely applicable as possible but also that we feel confident and comfortable in the partnership and product that we’re bringing forward as a consideration among others that you’ll evaluate. Also, we do have a relationship with IBERIABANK/First Horizon. And as with our other relationships, we want to be fully transparent with you about that relationship. We remain committed to bringing you solutions that we have vetted and have the chance to bring value to your personal financial plan. And yes, while we do get paid for several of these solutions, whether that be refinancing student loans, solutions for life and disability insurance, or here with a lending solution for home buying, we are committed to maintaining this approach of vetting solutions and ensuring they are of value to you, the YFP community. Alright, without further delay, let’s bring Tony in to talk more specifically about mortgage financing with the professional loan program that’s available through IBERIABANK/First Horizon. Tony, we’re excited to have you. Welcome to the Your Financial Pharmacist podcast.

Tony Umholtz: Thank you for having me, Tim. I really appreciate this.

Tim Ulbrich: So we’re really excited for our collaboration and to have you on the show to share your expertise in this area of mortgage financing as well as the collaboration to bring our audience forward an option that we, as I mentioned, haven’t been able to find as widely applicable knowing that we serve people all across the country. So Tony, before we jump into IBERIABANK/First Horizon’s professional mortgage loan program, give us a little bit of background on you personally and what led you into the role that you’re in with IBERIABANK/First Horizon.

Tony Umholtz: Oh, it’s a good question. You know, it’s funny. The mortgage business is an interesting one to get into. And I’ve been in the industry now for over 17 years. I started in the fall of 2002, and I was a finance major in college and also a football player. And I had a little bit of chance to play, bounce around with a few NFL teams post-my college career. And then always loved people and loved working with numbers. So I started working in the mortgage business, as I mentioned, a little over 17 years ago. And here I am today. I guess I look back, and time has flown. But I think we joke and we say, I think my team and I have done $1.4 billion in production probably over that timeframe. Over the years, we’ve really tailored our focus to helping many professionals, many different types of borrowers. But we’ve had a very dedicated audience in the medical professional field, so it’s been a big niche for us over the years.

Tim Ulbrich: Well, it’s been an opportunity to meet you and to get to know you a little bit more of your background. And as I’ve joked with Tim and Tim as I got to know a little bit about your background in football and obviously the mortgage business, as a diehard Buffalo Bills fan growing up in Buffalo, New York, when I saw that you played for the New England Patriots, you know, I think that’s the only knock that I have on you up until this point in time.

Tony Umholtz: Don’t hold it against me. And the Bills actually had a great year this year. So they’re coming back, Tim. They’re coming back.

Tim Ulbrich: They are coming back, although my wife reminds me I say that each and every year. So we’ll see if that will continue. So Tony, what are some of the biggest mistakes that you see people making when it comes to applying for lending and purchasing a home?

Tony Umholtz: You know, I think you really hit on it in your introduction there, Tim. It’s the planning aspect. This is the largest investment that most people make in their life. And it’s planning ahead and thinking through their budget. And I think that looking at where they’re going to be in their careers is another one too, you know? Planning ahead — and I typically recommend that if you’re going to be somewhere five years or more, it makes sense to buy. But if it’s only maybe one or two years, it may not make sense to buy. But I think just planning ahead because everyone’s needs are different.

Tim Ulbrich: Absolutely. And we see that a lot, you know, with our audience. We know we have a lot of pharmacists that are in transition potentially with residency training as one example or there’s some instability in the job market right now and they may be wondering, is this a temporary job? Am I going to pick up and move? So I think that timeline is such a critical piece. And obviously, you know, as we all know, the market can be so specific geographically. So the market here in Columbus versus D.C. versus New York City versus rural Iowa in terms of potential timelines of being there and breakeven and different lending products that are out there of course all influence that decision. Now Tony, in terms of lending options, before we talk about the professional mortgage loan option that is here applicable for pharmacists, walk us through, you know, even just at a high level — and I know we’ve talked about some of these in previous episodes — the different types of loans that are out there: conventional loans, VA loans, FHA loans and obviously here we’re talking about the professional mortgage loan. What are some of the nuances and differences between those loans?
Tony Umholtz: Yeah. So there’s really three main core products that are out there that are traded. I don’t want to get too much into industry jargon in this, but they’re basically supported by the secondary market. And that is going to be conventional loans, which are backed by Fannie Mae and Freddie Mac, the government-sponsored entities or GSEs. And then you have what’s called FHA and VA loans, which are backed by the federal government, and those are typically the core majority of loans are either going to be conventional or a government-backed program. Then there’s also what’s called jumbo mortgages, which are above the threshold, like the local limits for Fannie Mae and Freddie Mac and vary by state. But those loans are going to be above the conventional limits and are called jumbo loans. And oftentimes, those programs are held on a financial institution’s balance sheet. So they’re basically held by the bank or that institution. So that’s another type of product in the mortgage market. And then there are unique products that fall under that umbrella like the professional product, for example, or some other programs that focus on — whether it’s doctors or attorneys — oftentimes, they’re held by an institution directly on the balance sheet.

Tim Ulbrich: So those, again, the different types of loans, you outlined conventional, VA, FHA, the jumbo loans, and then the professional loans. And we’ll talk more about that last category here in a few minutes. When it comes to interest on the lending side, you know, often you see commercials or you hear terms thrown around, fixed rates, variable rates, adjustable rate mortgages, ARMs or ARM-hybrid types of loans. Talk us through just for a moment, you know, basic terminology. Fixed versus variable, adjustable rate mortgage, types of definitions.

Tony Umholtz: Sure. So obviously the fixed rates are going to be permanently locked for the term of the loan. So for example, a 30-year fixed, which is very common, has got a fixed rate that amortizes, meaning it pays itself off, incrementally over 30 years. Then you have a 15-year fixed, which is going to pay itself off over a 15-year period, so that’s going to have a 15-year amortization. So those are the most common fixed rates. Adjustable rate loans, there’s a couple different kinds. They’re what I call hybrid adjustable. And what I mean by that is when you hear the term a 5-year ARM or a 7-year ARM or a 10-year ARM, they simply mean that the rate is fixed for a 5-, 7-, or 10-year period. So they still, in most cases, are 30-year loans that are going to amortize themselves over a 30-year period. But they’re going to have a fixed rate for only that set period of time, whether it’s 5, 7, or 10 years, that is going to be the fixed rate period. And the advantage to those programs is sometimes, they actually have better rates than maybe a fixed rate program would. But they still are a 30-year loan. And then after that fixed rate period, they adjust based upon the terms of that agreement and that loan, whether it’s annually or twice a year for the rest of the life of the loan.

Tim Ulbrich: And so in that example, Tony, one of the common concerns I would have or others would likely have is I might get better rate up front, but then obviously once that adjustable rate period kicks in, what are the variables that one should be considering? You know, things to me that would come to mind would be like, what margin would you have in your budget if your monthly payment would go up? What might interest rates be in the future? So talk to us about some of the unknowns that can happen in the adjustable rate market and that type of product and how one might plan for that if they are considering a product that would adjust because of a lower rate and potential savings there.

Tony Umholtz: Yeah, absolutely, Tim. I mean, it’s definitely a program you want to plan through and think through because if you know you’re going to have a loan for at least seven years, let’s say. So a 7-year ARM or a 10-year ARM would be applicable in that case. We wouldn’t want to do a five because that could open up a little bit more risk in most cases. But rates do move up. They move down. Right? It’s hard to forecast. And typically, most ARMs are going to tell you several months in advance of the adjustment date what you’re going to adjust to. And how ARMs is they typically have an underlying index. And that could be something backed by the treasury market, it could be LIBOR index, it could be some other index that is basically a floating index where that rate is adjustable. And then the financial institution will have some sort of margin above that index. And that’s how you calculate your rate. So ARMs can actually sometimes be good, especially in a higher interest rate environment, because if rates go down, your rate will go down. But there is an element of risk because it can adjust upward. The other thing I’d recommend is to know your caps. And what that means is the absolute highest the rate could go to. And often, most ARM products or a lot of ARM products that are out there in the marketplace have both a yearly cap that the rate can move to and a lifetime cap, meaning the highest the loan could ever go. So in your scenario with planning this and looking at an ARM, one of the best calculations would be just saying, hey, what’s the max this rate could ever go to? And run your budget and your payments off that max rate. And if it’s affordable, then the ARM may be a good fit for that person.

Tim Ulbrich: And that’s a great way of thinking about it, Tony. I know we talk about something similar on the student loan refinance side of things where, you know, again, borrowers will get presented variable rate options, fixed options, and the conversation I’m always having is recommending folks run the numbers, obviously, on the introductory variable rate. Where do those numbers lie compared to the fixed rate options they’re giving you? What are those savings? And then run the worst case scenario, obviously, on a cap type of situation, and how do you feel about that? What do the numbers look like? How does that fit or not fit your budget? What are the potential savings? Are they convincing enough? And all those variables can help you make some of those decisions. And speaking of student loans, student loans are one of the biggest barriers, we know our audience knows well. Many of them are living this pain in real time. We have the average indebtedness now of today’s graduate coming out of more than $170,000. So student loans are such typically a big barrier for pharmacists being able to purchase a home. I know that was true for my wife Jess and I. And for conventional loans, most type of conventional loans, student loan debt can obviously have a significant impact on their debt-to-income ratio and their ability to borrow. But the other big concern that we see, which takes us I think to discussing more of the professional mortgage product, is that big student loan debt balances plus lots of competing financial priorities typically may prohibit somebody from being able to save up a significant percentage down while they also have aspirations to purchase a home. Now, we always have talked about ideal situation, 20% down, you don’t have to pay Private Mortgage Insurance, you’ve got some built-in equity into a home, and I think for those that are able to go that path, that still is a great solution opportunity. But we know that reality is many people are not putting 20% down. And they may not be in a position to get there in a timeline that is reasonable for their own personal situation. So this is a nice segway into the professional mortgage option that’s available and specifically talking about the option that we have available in our partnership with you and with IBERIABANK/First Horizon. So talk us a little bit more about the product, you know, how the down payment differs from a conventional, 20% down type of model and then obviously the next evolution of questions that would happen in terms of the terms, how Private Mortgage Insurance works, maximum loan amounts, those types of things with a product like this that would be available to pharmacists.

Tony Umholtz: Sure, Tim. And you hit on it absolutely accurate. I mean, student loans are very much a challenge for pharmacists, for many professionals. We see it all the time. And we see the cost of higher education continuing to rise. So I think that that’s going to be something we’ll be dealing with for a long time. But at the same time, programs like the professional product are sensitive to that. So you can, in many cases, be a first-time home buyer especially, as little as 3% down, you can buy a home without PMI and have the ability to get into a property at a lower cost than most people can, right, because of your profession. And there’s options to put more down. That’s not mandatory to put 3%. But that would be the minimum down payment in that situation. So and typically, there is debt-to-income ratio thresholds that we go to because we want to protect everyone, right? And the other thing I want to hit on too is just because we can approve you for a certain amount doesn’t necessarily mean that’s what you should do. Everyone is unique, and everyone’s budget is different. So you can definitely buy below your means and below what you’re approved for. But at the same time, we do calculate debt-to-income ratios, we do keep some accountability there where there’s a threshold of where everyone can qualify, you know, that it’s a standard percentage that we look at.

Tim Ulbrich: And such a great reminder, Tony, as we mentioned earlier in the show, just the individual setting the budget, not the bank, and really separating those two things out, the threshold the bank is using to evaluate your risk to the bank and the institution and what you’re able to purchase should be, most likely, a very different comparison and evaluation for the individual determining what they’re able to afford and how it fits in the context of all their financial goals. One of the best examples I like to use is when Jess and I moved down here to Columbus and we kind of had set our budget and we’re looking at homes and it was really the peak of the market here in Columbus. And so that was pushing a little bit of the boundary of our budget, what we were comfortable with. And then we went to the bank, and they basically said, “Double that, and that’s what you can have.” And it just made us obviously uncomfortable to go anywhere near that amount and we were able to hold true to the budget and the original numbers that we set. But if you don’t first establish that, I think it’s easy to get into a trap where you then start looking based on the numbers the bank provided you. And all of a sudden, you may be looking at homes that are going to take you out of reach of your other goals. And the bank isn’t necessarily thinking about all the other financial goals and what disposable income do you want to have available to achieve your other goals? So I think that’s such a critical piece. So Tony, obviously we can’t and shouldn’t talk about rates on a show like this. We know they can change and this wouldn’t be timely let alone there’s individual situations, credit scores, debt-to-income ratios, other things that will determine rates. So rates aside, can you talk to us a little bit more about beyond the 3% down as a minimum, obviously people can put more down than that, no Private Mortgage Insurance, are we looking at 15-year, 20-year term, 30-year term? Are these variable? Are they term rates? What’s some more details on those types of options that are available in the professional mortgage loan?

Tony Umholtz: You know, Tim, we find the majority of our clients opt for the 30-year fixed option. And that seems to be — especially given the market that we’re in right now, we’ve seen the federal reserve really compress interest rates again. And then we saw interest rates fall last year in 2019, so it’s made fixed rates very attractive. So a majority of our clients in this space have been opting for a 30-year fixed option. So that’s the majority of what we’re seeing. There are some other options available, but to answer your question, the majority of our clients just given the safety of it and just the fact that the federal reserve is really in the mortgage bond market has compressed and elongated the curve and caused fixed rates to be very attractive. So that’s where we’ve seen most people go, but there are some other options as well, ARM, ARM options as well. But the fixed has been where most people go.

Tim Ulbrich: And Tony, looking at this program, I alluded earlier in the show about there’s several other doctor loan type of programs out there. Many of them exclude pharmacists. And I mentioned geographically as well being a limitation. So for us and why we were so interested in bringing this opportunity for our community is I understand that not only are pharmacists eligible for this, but you also have coverage to 48 states in the United States, which obviously increases the accessibility. So talk to us a little bit more about the advantages of this program versus other doctor type of loans that are out there in terms of the applicability to the pharmacy population and our community here at Your Financial Pharmacist.

Tony Umholtz: Sure. And we have several different programs here for professionals. But some will only cater to MDs and DOs and veterinarians. But this particular product encompasses pharmacists, which is very unique. I haven’t — that is something that a lot of the industry has not really targeted that profession, our profession here. And the advantages — and the geography is great. I mean, that is one thing that I’m very excited about, the ability to help a lot of different people in different areas of the country. But again, the unique nature is many of the banks in our industry have only focused on MD and DO physicians, right? And that’s been the majority of the institutions that have a doctor product. And we have one too, and it has a little bit higher thresholds on loan amounts. But I’ve been very excited about this program. It’s been very well received by our clients.

Tim Ulbrich: And obviously I would be remiss if we didn’t make our audience hopefully think about, as we’ve already done a little bit here already, what might be some of the downsides or considerations? And we’ve talked about one, but I want to even get there a little bit further in that, you know, obviously making sure that somebody is setting a budget and they’re determining what value of a home fits in with the rest of their financial goals. Other potential downside I see is if somebody perhaps is not ready to buy a home and they’re able to get into a home with only 3% down, lower equity position in terms of the market changes and home values go down depending on their individual market, they obviously could be in some difficulty there. Are there any other downsides that you see as we think about the education side of this and where this product may fit well and for individuals that it may not necessarily be a good fit?

Tony Umholtz: Well, I think that in everyone’s planning, the nice thing about these loans is they’re amortized. So they’re paying principal and interest in the payment. So over time, even if your house value did not go up at all, you’re slowly building equity just through making your payments. And there is no prepayment penalty to pay the initial principal if you’d like to. But clearly, the downside is if there is a market crash and you put very, very little down and you have to move for one reason or another or relocate to another part of the country, you could be in a position where you have negative equity, you know? And I mean, obviously case show and there’s different positive forecasts for the nation, but every market is different in this country, right? And I think that that would be – the biggest risk is just what happens to the individual? And the other side of it is what kind of investment do you have to put in the property? Does it need a new roof, right? Does the air conditioner need to be repaired. These are things that are costs that you as a homeowner have to take on that if you’re a renter, your landlord does. But in your case, you’d have to take on those costs. So that’s just part of owning a home. And so just cost of ownership, maintenance, those to me would be the things you’d have to plan for. But clearly, it’s the low down payment versus having to move quickly that can be the most impactful downside of the program.

Tim Ulbrich: So I would remind our listeners too — and credit here to Tim Church who built out some great content and information, Five Steps to Getting a Home Loan — if you go to YourFinancialPharmacist.com/home-loan, again YourFinancialPharmacist.com/home-loan, you can go there to compare multiple lenders. You’ll also see there an option that says, “Apply for Pharmacist Home Loan.” And if you click on that, it will take you to a page that has Tony’s information, including his email address and I see here some beautiful palm trees. He’s based out of Florida while we’re freezing here in the blistering cold of winter in Ohio. But one of the things that most excited me about this opportunity, in addition to finding a product that was competitive, that was available to pharmacists as well, and that also covered a wider range of states, was the idea that we have an individual in Tony to work with, to connect with, and for those that are going through the process that they can work with an individual and build that relationship. So Tony, we appreciate you taking the time to come on the show. We’re looking forward to this collaboration and this partnership. And what would be the best way for our listeners to get in contact with you if they have more questions about this interview, about the product, or they would like to learn more?

Tony Umholtz: Well, Tim, first of all, thank you for having me. I’m very excited to be a part of this with you guys. And you guys are doing some great things here for your audience. And I’ve got obviously my contact information is accessible on the website. But one of the biggest joys I have in this industry is helping others. I’ve always been kind of a pay-it-forward person. But I do have a staff, a team, and several of my team members have been with me as long as 14 years. So I have three assistants and myself, and we’re all very, very much industry veterans and can answer questions. So email, call to the office, our office line is the best way to reach us. But we’re very accessible and excited to help. And thank you again, Tim, for having me here, for having me on.

Tim Ulbrich: Absolutely. And for our listeners that want to get directly to that email, it’s [email protected]. So again, [email protected]. So as one final reminder, if you’d like to learn more about the steps, considerations to getting a home loan, make sure to check the post on the YFP website, Five Steps to Getting a Home Loan, by visiting YourFinancialPharmacist.com/home-loan. And as always, if you like what you heard on this week’s of the Your Financial Pharmacist podcast and our episode this week, please leave us a rating and review in Apple Podcasts or wherever you listen to your podcasts each and every week. We appreciate you for joining us on this week’s episode, and we hope you will join us again on next week’s show. Have a great rest of your week.

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YFP 135: How Jessica Applied KonMari Principles to Jumpstart Her Financial Plan


How Jessica Applied KonMari Principles to Jumpstart Her Financial Plan

Dr. Jessica Louie joins Tim Ulbrich on this week’s episode. Dr. Louie is a Certified KonMari Consultant and Coach, creator of Clarify Simplify Align, host of The Burnout Doctor Podcast, Board-Certified Critical Care Pharmacist and Associate Professor of Pharmacy Practice at West Coast University College of Pharmacy. She shares about her journey being trained as a critical care pharmacist, how she quickly found herself burned out, how the KonMari method helped her and how she applied the KonMari method to her financial plan. These small intentional daily steps led to big changes in her financial plan including being completely debt free and having over 6 figures in savings.

About Today’s Guest

Hello there! I’m Dr. Jessica Louie, the founder of Clarify Simplify Align & The Burnout Doctor Podcast where I help BURNED out pharmacists get out of overwhelm and live with LESS clutter and MORE energy. As a former shopaholic, workaholic and pharmacist struggling with burnout, I know how it feels to live a life in overwhelm without clear goals or a clear purpose. Fortunately, I was saved by decluttering and simplifying my life and now my simple framework – Clarify. Simplify. Align Method – helps YOU go from cluttered & stressed to leading with confidence & curating a life YOU love! Are you ready to get started?

Summary

Dr. Jessica Louie shares how she became burned out as a pharmacy resident, how the KonMari method helped her recover from that burnout and how she applied the KonMari principles to her financial plan. Jessica realized that she was burned out in 2014. She thought that she was going to enjoy life after all of her pharmacy training but ended up not being fulfilled as she got closer to the finish line. She turned to shopping as a coping mechanism and wasn’t living intentionally. Her aunt suddenly died and she had a wake up call that life is short.

Jessica discovered the KonMari method which saved her from the burn out. She started looking at her life and seeing what things in her life that she spent her time and energy on sparked joy. Jessica shares that the KonMari method can be applied to not only your home but also your life.

Jessica went to a private school that cost $500,000. After grants, work study and an internship, she had to pay $300,000 out of pocket. When she finished her PGY2, she had $35,000-$40,000 in debt. Jessica was looking for another Japanese philosophy that she could use to take control of her finances and discovered the Kakeibo method which translates to “household ledger”. With this method, you track your spending with a pen and paper and break up your expenses into four categories: survival, optional, cultural and extra. Jessica reflects on her purchases each day to see where her money is going.

With this tracking system, Jessica was able to become very intentional with her spending, delay gratification by not purchasing items on a whim, and really put quality purchases and experiences in front of the quantity of them.

Mentioned on the Show

Episode Transcript

Tim Ulbrich: Hey, what’s up, everybody? Welcome to this week’s episode of the Your Financial Pharmacist podcast. It’s a pleasure to welcome back onto the show Dr. Jessica Louie. Dr. Louie came on in Episode 086 to talk about how to spark joy as an entrepreneur. And on today’s show, we talk more about her applications of the KonMari method and principles on her financial plan and the transformation that that has had. Jessica, welcome back to the show.

Jessica Louie: Thank you, Tim, for having me on the podcast.

Tim Ulbrich: Very excited. It’s been fun to track so much of what you have been doing in your own journey since Episode 086, so I look forward to bringing our audience up to speed as well as talking about some of the wins that you’ve had and how you’ve been able to tackle your own financial plan. So while I know that some of our audience is already familiar with your background from listening to Episode 086 or potentially following your podcast and the work that you’ve been doing, I certainly don’t want to make that assumption for all, considering that your background is such an important part of this story that led to the transformation that we’ll talk about in detail today on the show. So you do hold, as I mentioned in the introduction, you hold several roles, both as an entrepreneur and as a healthcare professional in the academic setting as well. So let’s start in the pharmacy space. What’s your current position at the university? And can you share about how you got into that work?

Jessica Louie: Yes, of course. So I currently am an associate professor of pharmacy practice at West Coast University School of Pharmacy in Los Angeles. And I’m a 2013 graduate from University of Southern California. And I then went on to pursue a PGY1 in pharmacy practice and then a PGY2 in critical care at University of Utah. And after I finished my residencies, I joined as an assistant professor at West Coast in 2015.

Tim Ulbrich: Awesome. So you know, as I think about, Jessica — and I know you and I have talked about this before offline, obviously you went to pharmacy school, we all know the work that needs to be done before you even get to pharmacy school. You then go through extensive residency training. And as you’ve talked about before, it took you nine years to get through the training and become a board-certified critical care pharmacist, which our listeners know it takes a lot of time, a lot of effort. But I think many people think, wow, you’ve got everything that you needed and you’ve wanted. You’ve got obviously the PharmD, you’ve got residency training, you’ve become board-certified, you finally have made it to the finish line, it’s time to enjoy life. But that really wasn’t what happened when you got to that point. You found yourself burned out. So talk to us more about how you got to that realization of getting to that point of getting burned out.

Jessica Louie: Yes, that’s a great observation, Tim. I think that a lot of us feel that when we get to the end of our training and we get all the certifications, you know, life is going to be great. We’re going to be happy and fulfilled by it. And I definitely felt that that was the path I was on. I was going to enjoy my life. So back in 2014-2015 when I was finishing up everything, I realized that getting to the finish line was not fulfilling. I was so burned out from residency, my first year in academia, and to cope with all of that, I was turning to other things. And one of the things I was turning towards was shopping to try to fill these feelings of frustration and unfulfillment. So you know, I’ve talked a little bit about my journey before, but basically, I wasn’t living intentionally, I wasn’t bringing joy into my life. So when a life event happened, it really woke me up to show me how I was living and how life can be so short. So I invested a lot of time, a lot of money, into changing my situation. And you know, that’s how it’s led into my business. And I can go into a little bit more details if you’d like.

Tim Ulbrich: Yeah, and we will — just real quick, we will link in our show notes to The Burnout Doctor podcast. I know you’ve documented more of your journey there, and I think our listeners, many of whom may be struggling with similar challenges, would get lots of value from not only hearing more about your story but also the great content and work that you’ve done with that podcast. So you mentioned some of the behaviors, you know, you mentioned the shopping piece that was really kind of a coping mechanism and that. How did you self-realize that, you know, something’s got to change? And then ultimately, talk to us about the KonMari method, what that is for our listeners that may not know and how that played such a big role in helping you get out of that cycle.

Jessica Louie: Yes. So I think that what really woke me up was the combination of a few things: realizing that I was still keeping residency hours during my first career. And you know, 60-80 hours a week wasn’t necessarily sustainable in the long term. And you know, one of the things that played into that was my partner and boyfriend was also in residency in medicine, so he was keeping long hours. So I realized, you know, maybe this isn’t normal in a full-time job situation. And I was putting work first all the time and still was not enjoying friends and family. And then when my aunt passed away suddenly from a very aggressive cancer, that’s really what woke me up and realized that wow, I really hadn’t been traveling and spending a lot of time with family that I really wanted to. So the KonMari method is what I consider saving me from a lot of my burnout. You know, it is a decluttering and simplifying technique, popularized in Japan by Marie Kondo. So it really is about how you spark joy in life and what you focus your time and energy on so that it is about decluttering a physical space first because that’s what is closest to you, that’s what has the largest impact on most people and can create a lot of distraction and overwhelm in your life. So you apply it to your home first, and then you’re able to apply the same techniques to other areas of your life. But you know, what made it a little bit more popular I would say is the technique creates this life-changing transformation because people don’t rebound when they go through the technique from beginning to end. So you’re not consistently organizing or hiring professional organizers multiple times in your life. You’re doing it once, however long it takes, one month, six months, a year, and then it really changes your habits of how you view physical items and that leads into how you spend your money and things like that.

Tim Ulbrich: So before we get into the weeds about the application of those principles to the financial plan — because I think that’s a really neat connection that those that are even familiar with the KonMari method may not see that. I know many people are aware of this through the Netflix series and others that came out. And I think people think about it — many people I think think about it more as just an organization, simplifying of your stuff at home, which obviously has impacts on your finances. But I think we’re going to talk in more details about how that can result in tracking spending and reflecting on spending. But for those that may not be as familiar, I want them to be able to visualize this, even about the physical space, before we talk about the financial aspects of it and how you apply to that. So if you’re working with somebody, and you’re going into the home and the goal is to simplify, walk us through like what does that process look like? And what are the common things that you see that are barriers that people may not even see themselves, right?

Jessica Louie: That’s a great question, Tim. So when I’m working with clients in their homes, the first step that I think a lot of people miss in the KonMari method is we don’t just start pulling things out and decluttering right away. We really take this intentional moment and my clients usually work on this as a pre-work in our workbooks to really set up the ideal vision for your life. So that’s what I call the Clarify step in my method. And you’re clarifying your why, your purpose, your values and really visualizing how you want your space to feel when you’re standing in it. So it’s not only about what it visually looks like because, you know, honestly, I don’t live in a Pinterest-worthy home or anything. And most of us don’t. So it’s more about what it feels to you when you’re standing there. And many people want that feeling to be calm, peaceful type of sanctuary in their home settings. So we’re really diving deep into that and getting into why you really want to get this done. You know, if you get stuck during the process, what’s going to help propel you forward? So we get that very well written down and on paper so it’s a good goal and very clear. And I think that you and Tim Church have talked about this as well with how you clarify in the financial process. So it’s very similar.

Tim Ulbrich: Ah, the ever-talked about why, right? We talk about that a lot on this show, as you mentioned, and I think it’s so important to the financial plan but also important here in what you’re talking about, certainly connections. And I know for you, speaking of the why, “Start With Why,” Simon Sinek’s book, which is such a great read, we’ll link to that in the show notes, was so critical for you in your own journey. So talk to us for a moment about that concept, the concept of start with why and why that’s so important as folks are thinking about this and how they may apply it to their own personal situation.
Jessica Louie: Yes. So Simon Sinek’s books are definitely transformative for me. It was actually my brother-in-law, who is a former pharmacist, who recommended them to me. It took about nine months for me to actually read them when he saw that I really needed that process. So Simon Sinek’s “Start with Why” process, he has three or four books now. And it’s really about we live life, and a lot of times, we live it on autopilot and we don’t realize a lot of things in our lives connect to one another and really sitting down and writing out how our life experiences have shaped us and getting clear on why we get up in the morning, that’s really what it comes down to. And we don’t get up in the morning for a tangible things like money and family members, we get up for a larger purpose that we won’t necessarily achieve in life but we have in the forefront of our mind when we’re making decisions. And that kind of plays into our value system and how we do things the way we do them. So I actually went and trained with Simon Sinek’s team in New York back a few years ago. So it was really helpful to get those down on paper so that what you do is not what you’re defined by. It’s why you do things and how you make decisions then. So I definitely recommend the process. It’s a great read. Also an audiobook as well. It’s really helped me in how I view life and then how I view leadership as well.

Tim Ulbrich: Absolutely. So good. And I know he’s got some really cool resources, obviously the book but also some workbooks and things that you can do that help you to articulate and go through the activities that will help you define your why. So important to everything we talk about on this show. So before we talk about the method and the steps of how you paid off your loans and have put yourself in the financial position that you’re in that I think our listeners will be able to apply as well to their own personal situation, let’s start with the position you were in. So talk to us about the debt that you accumulated through school and what was the amount that you were working with before we actually get into the how you paid that off.

Jessica Louie: Yes, definitely. So I will say that my dad was really influential in this. My dad is Chinese, and he actually kept all these Excel spreadsheets. So I actually have pretty exact numbers. So looking at it, so I went to a nonprofit private, so USC is private. And I was there for seven years for my bachelor’s degree and pharmacy school. So the school cost about $500,000. And I received $115,000 in school grants, so that’s money you don’t need to pay back. I took out $50,000 in student loans — so that was about $14,000 for undergrad. I spent three years getting my bachelor’s degree for that; I shortened it by a year intentionally — and $36,000 for pharmacy school. And then I rounded it off with about $40,000 in work-study and my intern pharmacist position at the hospital at USC. So out-of-pocket costs were just under $300,000 for my schooling.

Tim Ulbrich: Wow. Wow. So obviously big price sticker tag for what’s known as a great school, of course. And obviously, you mentioned having some grants, which is money you don’t have to pay back. You mentioned having some work-study components but still a huge out-of-pocket component. So when you found yourself — let’s fast forward and roughly, if you don’t have the exact numbers, but it sounds like maybe you do. You know, you’re at the point of graduation, you start one year of residency, two years of residency. Obviously, we’re talking big numbers, limited income during residency. So take us to the point where you finish your PGY2. Where were you at there at that point in terms of debt that you were working through and trying to pay off? And what was the mountain that you were after at that point?

Jessica Louie: So during residency, I was paying on my student loans. I wasn’t paying a large sum, I would say, but I still was paying probably about $300-500 a month, I would say.

Tim Ulbrich: OK.

Jessica Louie: And I came out, I want to say around $35,000-40,000 left. And after my PGY2 — so I started working in July of that year at the university. And it took me seven months to pay off the rest of the loan. So I want to say it was around $35,000 when I came out of residency.

Tim Ulbrich: OK. So even though — and I think it’s important for our listeners to hear that. You know, we obviously talk a lot about the national debt loads right now, Class of 2019, the average was about $172,000. So here we’re talking about a lower payoff amount but a very aggressive window in which you were able to do that. And obviously, we’ll talk about the method that you were able to do that. Short period of time, aggressive repayment, but there was also things that I don’t want our listeners to lose that you were able to do through working, through work-study, through pursuing grants that helped to minimize that while you were in school as well. So let’s talk about the method that you were able to use to help ultimately pay this off in an aggressive period of time based on the KonMari principles, the Kakebo method. Talk to us about what exactly is that? How is it used? And then we’ll dive in further of exactly how people may apply that month in and month out to their own plan.

Jessica Louie: Yes, of course. So you know the KonMari method is a Japanese philosophy, so I actually was also looking for all their philosophies, and I came across the Kakebo method. And you know, translated, it basically stands for “household ledger.” And it is a really simple philosophy and concept, in my opinion where you’re able to track your finances on this ledger. So you basically use pen and paper, going back old school, to track everything. And each month, you come up with a plan of what are your fixed expenses and you’re going to track everything that you spend money on. So I consider this a daily practice as part of my evening routines. And then you have a savings goal as well. And then at the end of the month, you look at how you did. And I also do a weekly practice to check in and then the end of month practice. So when you’re tracking, it’s not the typical tracking, I would say. It’s broken into four different pillars. So the pillars are Survival, Optional, Cultural, and Extra.

Tim Ulbrich: So you’re categorizing as you’re — let’s say you’re making charges on a credit card, those charges are coming in, you’re manually tracking those. And then you’re assigning those to one of the four categories. Is that accurate?

Jessica Louie: Yes.

Tim Ulbrich: OK. So break those down. Let’s go through those one-by-one. Survival, Optional, Cultural, Extra. So give me some examples — probably this one more self-explanatory than the others — but Survival items would include things like that?

Jessica Louie: So those would be things that you need to survive, so a lot of your fixed expenses, so your housing cost, if you have transportation costs, general food costs like groceries, and like health insurance, things like that. So things that are more difficult to change but things that are probably a large portion of your overall expenses.

Tim Ulbrich: So we often, as we’ve talked about budgeting before on the show, we would categorize these as necessary or essential expenses. So same idea. And I like to think, you know, making the connection here to something like an Emergency Fund, this is usually the number that I’m using when I think about 3-6 months of what I’m basing that off of. So that’s the survival category. What would you then put in the Optional category that I think we often refer to as the discretionary expense?

Jessica Louie: Yes, so these would be things that aren’t necessarily survival mode. So instead of groceries, this would be eating out, fast food, and those luxury type of expenses, so clothing that’s not necessary, skincare, nail salon, things like that.

Tim Ulbrich: OK. And what intrigued me is we — I see here that again, we have four buckets: Survival, Optional, Cultural, Extra. And when we tend to think of discretionary expenses, I see some crossover between the Optional and the Cultural bucket. So break down for us what would be some examples of things that would be in the cultural bucket. But why also is that important to separate that out from those things that are considered Optional?

Jessica Louie: Yes. So I think that the Cultural really plays into the Japanese philosophy of how we invest in ourselves, personal and professional development. So this is getting back into thinking about going to the theater and things like movies, music, that we consider more cultural nowadays. So it’s really about putting those experiences and memories into play. So the KonMari method really emphasizes creating memories and experiences in your life over investing in stuff. So this method also goes into that with how you view things that give back to your community or just have great memories that you don’t necessarily need to travel to.

Tim Ulbrich: I love that. I’ve never seen that separated out before, Jessica. But I love that because I think it does exactly what you just said is it forces you to be a little bit more intentional about prioritizing those things whereas I think especially if you’re in a mode of either trying to cut, cut, cut to pay off debt or you’re just a really aggressive saver and you have a hard time spending money on experiences and things like music and theater and books, things that would fall into that category, I like that there’s a manual process to keep yourself accountable to that and calling it out as a separate category. So that’s the cultural bucket. What would fall, then, into the Extra category?

Jessica Louie: So the Extra category would be kind of a sinking emergency fund. So these would be things that like unexpected car repairs, unexpected health things that come up that, you know — it can also be holiday gifts or gifts throughout the year that are just extra that aren’t always monthly expenses.

Tim Ulbrich: So car repairs, maintenance, gifts, holiday types of things. So are you saving for these in advance like in a sinking fund mode where you say, OK, I’m going to — I don’t know — put away $200 a month and then as these expenses come I already have the money saved? Or are you simply just tracking these expenses as the Extra category when they come to be?

Jessica Louie: So in the Kakebo, it’s really just about tracking. But you definitely can create those funds for you in different buckets.

Tim Ulbrich: OK. So each day, you’re tracking your spending, which I think what I love — and I hope our listeners are catching the intentionality here. When you’re doing this daily and you’re thinking about this daily, you’re manually tracking this daily, you’re doing it old school pen and paper, you know, I think there’s power — obviously there’s effort and work — but there’s power, as you and I talked about before we hit record today, in really making that emotional connection back to your financials. I think with the advancement obviously in credit cards and great apps and tools — and I’m not suggesting people shouldn’t use those if that works as a system, I know it does for my wife and I — but sometimes that manual process is really what allows you to take a step back and reflect on and have probably some of those Aha! moments of wow, I had no idea I was spending this much here or there. And I know my wife Jess and I often have conversations where it’s like, oh my gosh, we forgot we spent this charge four days ago and how quickly that can happen, and obviously the tracking helps bring that back into play, back into perspective. So each day, you’re tracking your spending, you’re categorizing them into these four different categories, Survival, Optional, Cultural, Extra. And then at the end of the day and the week, you’re reviewing them, end of the month, you’re asking questions such as how much do I have right now? How much am I spending? How much do I want to have? How can I change my habits? So give our listeners some reflection, some example. What are some of the things that you’ve identified or you and your boyfriend have identified as you’ve gone through this that might some of those Aha! moments that you wouldn’t have otherwise identified if you aren’t using a method like this.

Jessica Louie: So I think that just seeing it on paper can be really impactful because, you know, I do use credit cards and I rarely use cash. So it is being able to see that without just scrolling through an app on your phone or your desktop. So in terms of some Ahas!, I think that really seeing how much some of those luxury type of things cost, you know, I used to have my nails done at salons, I have since don’t do that almost at all and I learned how to do that at home if I really wanted to. And just seeing restaurants — so one of the things that we’ve talked about, my boyfriend and I, is when we go to restaurants, we love to have like a main meal together because we don’t cook very complex meals at home. We’re very simple at home, so we enjoy that at a restaurant, but we don’t indulge in extra things we can have at home. So beverages besides water, we don’t usually order. And we don’t usually order dessert or appetizers. So those are all things that we can just have at home if we really want to, make our own cocktails at home, have some desserts at home and not spend that extra money when we’re going out for an optional type of item.

Tim Ulbrich: OK. And I’m guessing there’s already tracking sheets and things that exist to help people do this. Or is that something that you developed to do this categorization?

Jessica Louie: Yes, so you can pull a journal out. I do have a template that walks you through this and reminds you. You can write down what you want in each of the four categories. So that’s all on my website, free to download in a short workbook. And it has the template in there.

Tim Ulbrich: Awesome. We’ll link to that in the show notes. And I’m curious to hear more, Jessica, from you on the reflection piece. I think we talk a lot about reflection, we know it’s important, you hear people say how valuable it is, but it’s often hard to put a finger on what does that look like? So talk to us, what does that look like for you? As you’re doing this reflection piece, like what are some of the things you’re reflecting upon? And how detailed is that method? Is there any guidance there? Or are you just looking and kind of making some observations and notes along the way?

Jessica Louie: So in terms of reflection, you know, it’s obviously adding up some of the categories and then putting numbers, real numbers down of what are you able to put into savings this month? What are you able to put towards your loans or other sinking funds that you have going? I also track other benefits like retirement benefits when I’m going through my monthly check-in process. But really for the reflection journaling process, I think that it’s important to think about the method really emphasizes being able to invest in quality items instead of the quantity of items. So it really helps you with that delayed gratification step of we’re saving towards something that is going to be a quality trip and experience for us or quality item that’s going to last years in our home or some other place in our lives. So you’re able to take a step back and say, “Oh, I really want that now. But we’re waiting and we’re going to have this anticipation up to getting that trip or thing in your life.”

Tim Ulbrich: Absolutely.

Jessica Louie: So one of the things that we’ve done is that relates to our cars. We’ve been able to — even though we would like to both have new cars, we’ve still delayed that gratification step because it’s still kind of an Optional category for us. It’s not a Survival category yet.

Tim Ulbrich: Yeah, I’m glad you brought that up. It’s such a richer experience when you save up for something, you think about it, you anticipate it, and then you enjoy it, knowing that you’ve had that much effort and intentionality along the way. I think that’s a great reminder for me and hopefully for our listeners as well. So a couple fun questions I have for you before we wrap up here. This has really been excellent. I know I’ve taken a lot away myself. You know, I have to ask you, as somebody who is running and created a podcast, The Burnout Doctor podcast, obviously we know that burnout and wellness is a big issue right now in our profession. Many are struggling. I can’t help but think here you are, working a busy, full-time academic job. And I know as myself as an academic, usually that’s not just a 40-hour a week job. You also have multiple businesses that you’re working on that I’m sure are taking up lots of time. You have these experiences that are important to you, obviously relationships that are important to you. So I’m assuming time is limited for you, and often you may find yourself in a position of being stressed and potentially burned out. So how do you functionally deal with that as somebody who teaches on this topic but obviously also needs to apply it in your own life?

Jessica Louie: That’s a great question, Tim. So I think you know, when you go through burnout, I don’t think that you ever solve it, you ever cure it. You really come up with strategies that are going to work in your life to really help you reset those feelings of burnout and make sure that it’s under control and you’re still thriving in life instead of just surviving. So what I teach my students as well and other pharmacists has been to come up with strategies where you are able to focus your energy levels because, you know, energy and time are some of our limited resources. So that’s really about — I focus really on the personal, what things you can control in your life versus outside things. A lot of people in the burnout world focus on organizations and leadership, but that’s really not my focus. So for me, it’s really focusing on how do I feel throughout the day? So that means that you’re time-blocking out your day and taking these intentional breaks every hour and getting up and moving. You’re really mastering transitions throughout the day to save up your energy levels. And when you’re not at work, you’re physically and mentally not cluttering your brain with thinking about work. So that means having healthy boundaries related to email and how you work and integrate your work into your life. And I think that’s been really helpful and that’s how you really align everything together in your life so you find harmony. So those are a couple things I do. I definitely go into individualized type of plans with my clients so that we can really figure out what’s going to work for them and really tackle the biggest struggle they’re having first before we tackle other items in their life.

Tim Ulbrich: That’s great stuff. And I hope, you know, for our listeners, one word of encouragement I would send out there, which I heard from what you just had mentioned, has been so important in my life is just starting with reflection. Like being aware and building some of that self-awareness of what are the moments where I’m carrying extra stress? Or what are the moments where I find myself, work is melding with home and cluttering my mind? And being able to feel those and identify those first obviously I think is such a critical step before you even put in solutions towards those. So I know you’re a big reader, and I know you draw from lots of different resources for inspiration. Is there a book or potentially two or something that you are currently reading, have read recently, that you’ve drawn inspiration from that you would recommend to our listeners?

Jessica Louie: So many great books, I would say. But I’m going to pull from not necessarily a business book. But I really have enjoyed Tonya Dalton’s “Joy of Missing Out” book. So if you’ve heard of the acronym JOMO versus FOMO, it’s really about how do you look at life and find joy in missing out on things and experiences that maybe you compare yourself to others. So I think it’s a great read. It has some very similar philosophies to the KonMari method and Simon Sinek and everything.

Tim Ulbrich: Awesome. I’m putting it on my GoodReads wishlist right now and on my Audible list as well. Thank you for that. So where can our listeners go to learn more about your work and connect with you?

Jessica Louie: So they can go to my website — it’s my name, Dr.JessicaLouie.com — and get free resources on The Burnout Doctor podcast. And I’ll be launching a free Master Class on five ways to cultivate joy at work this month as well. So you’ll be able to listen to that for free and see if one of the programs on burnout is something that you are interested in. My next 12-week program launches in March 2. So we’re taking applications now through March.

Tim Ulbrich: Great. So we will link your website in our show notes. And really appreciate 1, you coming on the show and taking time to share your journey but also, it’s been fun to watch from afar here in Ohio the great work that you’re doing in California, helping many, many pharmacists and professionals that are struggling with many of the things we talked about here on the show. And I continue to look forward to watching your success in the future. So thank you for taking time to come on the show. We really appreciate it. And to our listeners, as a reminder as always, if you like what you heard on this week’s episode of the podcast, we would really appreciate if you would take just a couple minutes to leave us a rating and review in iTunes, Apple podcasts, wherever you listen to your podcasts each and every week. As always, thank you for taking the time to join us on this week’s episode of the Your Financial Pharmacist podcast. And we look forward to having you back again next week. Have a great rest of your week.

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