Disability Insurance for Pharmacists – The Ultimate Guide

Disability Insurance for Pharmacists – The Ultimate Guide

The following post contains affiliate links through which YFP or its team members may receive compensation.

I had received another email at work one morning indicating that “Julie” was not going to be in and that coverage would be needed. I knew this wasn’t planned otherwise her clinic would have been closed in advance. I didn’t know her that well so I had no idea the reason she was out but wondered what was going on and if something bad had happened.

A few weeks later it was revealed at a meeting that Julie would not be coming back to work and the reason why. You see, Julie had been struggling with rheumatoid arthritis for a long time and for many years was able to manage her disease and work full-time without any issues. Unfortunately, and unbeknownst to most of her co-workers, her disease had been progressing over the past couple of years causing tremendous pain and stiffness that became so bad that she had to drop to part-time and eventually stop working altogether.

Since she was relatively young and likely expected to work several more years, I had often wondered if she was going to be ok financially. How was she going to be able to support herself and her family without an income?

What is Disability Insurance?

One of the greatest financial assets you have as a pharmacist is your ability to generate an income. Think about how long it took you to get to that point of becoming licensed. Six years? Eight years? Maybe more with residency or fellowship? Think about the energy, the focus, the sacrifices you made. What if that income was suddenly taken away?

Remember, you are going to have projected lifetime earnings in the millions.

Disability insurance is really income insurance. It provides you with money in the event that you are unable to work because of an accident or illness.

In the example below, let’s say a 25-year-old pharmacist wants a policy for approximately 60% of his or her income (~126,000) . A monthly (or annual) premium is paid and if a disability occurs at age 35, that pharmacist would receive $6,250 per month until age 65 when the coverage ends. We will discuss some of these specifics a little later on.

long term disability insurance for pharmacists, pharmacist disability insurance

Do Pharmacists Really Need Disability Insurance?

I know what you may be thinking, “As a pharmacist, something pretty bad would have to happen to me to not be able to work.” That may be true. After all, most pharmacists just require their cognitive faculties to be intact, and therefore accommodations could be made in the event of broken bones or limited mobility secondary to an accident. Right? Remember, you are not invincible!

The Social Security Administration predicts that more than 25% of today’s 20-year-old Americans will become disabled before the age of 67. However, almost 70% of those working in the private sector do not have disability insurance. Beyond car accidents, think about potential insidious diseases like Parkinson’s disease, dementia, cancer, or MS. There a lot of health-related scenarios that could occur at a young age and either force you out of the workplace or reduce the time you are able to work.

Besides being able to afford typical bills such as food, mortgage, utilities, etc, think about your student loans. If you still have federal loans then you don’t have to worry because these are discharged in the event that you become permanently disabled. However, what about private loans? Or ones that you refinanced?

Depending on the company, you may still be on the hook for making payments. We have partnered with a number of refinance companies and some such as Commonbond, Earnest, and Sofi will discharge the loan balance similar to the Department of Education.

Therefore, unless you already have substantial wealth or have additional income streams and don’t require an income as a pharmacist to live, you need disability insurance.

Types of Disability Insurance for Pharmacists

Disability insurance is typically classified as short-term or long-term based on the length of the policy. Although not always the case, short-term disability policies are typically up to 5 years and tend to provide you with a monthly benefit very quickly from the time a claim is made. Many times these are offered by your employer or through a pharmacy association.

If you have many working years ahead, then you really should consider a long-term disability insurance policy. Most of these policies can be in force up until age 65-70, which can ensure you will have income until you are eligible to claim social security or other retirement benefits. The time to which benefits are paid once a claim is made is known as the elimination period which will typically be longer (30-180 days) for a long-term disability policy.

This often brings up the question of whether one needs both a short-term and long-term policy. If you have a good emergency fund and sick leave that can cover the elimination period for a long-term disability policy, then this may negate the need for any short-term policy. Now if your employer offers you short-term at no or very low cost then definitely don’t pass on the benefit.

For the rest of the post, we are going to focus on breaking down the components of long-term disability insurance for pharmacists.

disability insurance for pharmacists

How Premiums Are Determined

I will be honest with you. Disability insurance is not cheap, especially when compared to term life insurance. Before we get into some typical premiums you can expect to pay, let’s break down all of the things that can impact what you will actually pay. And just brace yourself, because there are a lot! The first time I received some quotes, my head was spinning because of all the features and factors they display.

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Coverage Amount

This is one of the biggest determinants of how much you will pay for your long-term policy. How much you need depends on your current income, your savings, and how much you need to maintain a desired lifestyle in the event you can no longer work. A general rule is to consider 60% of your gross income as this should be pretty close to your take-home pay after taxes. If you pay your premiums out of pocket, and not through your employer, your benefits will be tax-free. Typically most companies will have a max of somewhere of 60-70% of gross income.

If you are a government employee, you probably won’t be able to get a policy for 60% of your gross income. The reason is that there are benefits available to you in the event you are disabled. You will have to check your agency and see what you are entitled to. If you are a FERS (Federal Employee Retirement System) employee, which includes all VA pharmacists, check www.opm.com for more information. This is the reason you are asked on your initial application or quote whether you are a government employee.

Benefit Period

How long do you want to receive benefits in the event you become disabled? This will be a key question to answer and what you choose will have a large impact on what you pay. Assuming you have many working years left and have no substantial savings and will depend on earning an income, then you should probably consider choosing a benefit period up until around age 65. But depending on your situation, you may not need something in place until then and could consider a shorter period.

The way most quotes with long-term policies is that they will show you the cost of 5 years, 10 years, and then age 65, 67, or 70 or something similar to that as you can see in the example below.

long term disability insurance for pharmacists

Elimination Period

As mentioned above, the elimination period or waiting period is the time between when a claim is filed and when you actually start receiving benefits. This is typically 30-365 days. As you can see in the example above, the longer the elimination period, the cheaper your premiums will be. If you have an adequate emergency fund and have built up some paid time off, you may be able to opt for a longer period.

Payment Frequency

Like car and life insurance, you can often shave some money off your premium if you pay annually or biannually. It may not be significant savings, but every little bit helps. You can see the example below of how payment frequency can make an impact.

long term disability quote

Age / Health History

Similar to life insurance, your premium will be determined in part by your age and how healthy you are. Your weight, smoking status, past medical history, history of DUI, and any past suspensions of your professional license will also be considered.

Occupation

Most insurance companies have 5-6 occupation classes that are stratified based on the risk of injury with day-to-day activities. Pharmacists and other white-collar professionals are generally in the highest class which has a lower cost of coverage compared to other classes.

Riders

Have you ever tried to purchase a car and notice they always try to upsell you with all the bells and whistles? Long-term disability insurance policies are filled with them! That’s what makes them so complicated. It’s not like term life insurance where you just put in your info and then choose an amount and time frame for the policy to be active. Instead, these policies are jam-packed with extra benefits and features. Some, depending on the policy, are baked in and include all of these benefits while others don’t have them included. This is something to pay close attention to when you are evaluating policies and getting quotes. In addition, because the definitions are not universal, some companies may define riders slightly differently than others.

Let’s break down some of the common ones you will probably see:

Own Occupation

What if you suffered from a disability that affected your critical thinking skills and prevented you from working as a pharmacist, but you could still work in another profession likely at a lower pay? Unless you have a true own occupation rider, you may not get the full benefit or possibly no benefit at all.

This is one of the major distinctions between many workplace offerings and what you can get on your own. Some policies offer own occupation coverage but only for a couple of years. After that point, if you can perform other work, your benefits may cease. This is probably the most important feature you want in a policy and want it to be in force for the whole term of the policy.

Non-cancelable

This rider prevents your insurance company from canceling the policy (unless you aren’t paying your premiums). With a non-cancelable plan, you have the right to renew the policy every year without any increases in the premium or reduction in benefits.

Guaranteed Renewable

Having this in place means that the insurer is obligated to continue providing coverage unchanged as long as the premiums are paid. However, unlike the non-cancelable rider, premiums could go up over time.

Future Purchase Option

You can buy more coverage in the future if your income goes up with this rider. Remember, disability insurance is paid out as a percentage of your income, so you would want this to be increased as your income goes up, unless your expenses stay the same and inflation is non-existent. This rider is also known as benefit increase and may be particularly important when your income is lower initially such as during residency.

Cost of Living

Often referred to as COLA (cost of living adjustment), this rider helps protect your benefits to be protected against inflation over time. The key thing to remember here is that the adjustment for any cost of living does not begin until the disability occurs.

Partial Disability or Residual Benefit

If you become disabled, you may not be able to work full-time or your usual hours, but maybe you can still work part-time. Many policies have this rider in place so that if you experience any reduction in pay because of a disability, you can get a percentage of your benefits.

Waiver of Premium

In the event you become disabled and you start to receive benefits, who would want to continue paying for the policy during that time? That is exactly what this rider does. It eliminates the need to continue paying premiums during the period you are receiving benefits.

Student Loan Rider

This allows you to purchase additional coverage to pay student loan balances while on the claim. Remember, this won’t be necessary if you have federal loans as they will be discharged in the event of permanent disability. Where this could be a consideration is if you are with a student loan lender that does not offer this protection.

Is your head spinning yet after all this jargon? Believe it or not, there are even more options and features that exist that I didn’t even get into! Again, because some companies bake some of these riders into policies and others require you to pay an additional amount in premiums, you have to look at everything when trying to compare multiple quotes.

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How Much Will it Cost?

Remember how I said disability insurance wasn’t cheap? As you can tell by the estimated monthly premiums in the chart below, I wasn’t lying. If you are a female who graduates as a pharmacist at a traditional age of 25 and is relatively healthy, you can expect to pay about $2,112 per year assuming you want a benefit of 60% of your gross income with the additional features mentioned.

You can see that premiums for women are much higher than they are for men. Sorry ladies! This is because companies set their rates based on their claims experience and they have found that they are more likely to pay for claims for their women policyholders.

disability insurance for pharmacists, long term disability insurance quote

So what can you do to cut down these costs? As mentioned there are a lot of features you can add or leave off and obviously, the fewer add ons the less you will potentially have to pay. Another thing to consider is maybe you don’t need a benefit of 60% of your income. Your lifestyle may not require that much and perhaps you could live just fine off 40%.

Remember, you can also extend the elimination period and make annual payments to also help cope with the costs. Also, if your employer offers some benefits, you might consider this as well when determining your needs.

The other thing to consider is that if you are not in the best shape and are overweight or have uncontrolled hypertension, becoming healthier prior to submitting your application could also be to your benefit.

I know this can seem like very expensive insurance to have in place and you may not feel like you can afford it. But can you really afford to not have it? Are you willing to take the gamble? Remember, if anything happens to you, how are you going to pay your bills and potentially support those who depend on your income?

What if My Employer Offers Long-Term Disability Insurance?

As I mentioned a few times, it is possible you have some form of this benefit through your job. Besides the coverage amount, benefit duration, and whether they offer true own occupation coverage, one of the biggest things to consider is the portability of the policy. If you were to leave to take another job, would the policy go with you? Remember, if you are in excellent health and leave your job after 5 years, your new employer may not offer it and you could be paying a lot more in premiums simply because of your age.

That’s the major advantage of an individual long-term disability insurance policy. It doesn’t matter where you work or if you change jobs because it follows you and you don’t have to get another evaluation of your health status.

disability insurance for pharmacists

How Do You Purchase?

There are many reputable companies out there that offer quality coverage with the features I talked about. However, it can take a lot of time and energy to get multiple quotes and your phone could be ringing off the hook with offers and reps trying to get your info. That’s why Your Financial Pharmacist has partnered with Policygenius, an online independent broker that helps you get a long-term disability insurance quote from multiple companies for the coverage that’s right for you.

They have a very user-friendly interface and their team helps you through the entire process. You can even get an estimate without entering any of your personal information.

Check out the video below where I walk you through their interface and how quickly you can get an estimate.

 

Conclusion

Unless you already have substantial wealth or are very close to retirement, long-term disability insurance should be an important part of your financial plan. Although it can be pretty expensive, remember all of the time and effort it took to get to where you are today. In addition, if you are married, have a significant other, or have children, you have to consider how they are affected by your ability to earn an income. No one is invincible and there are so many things that can happen that you can’t predict. Using an online broker such as Policygenius allows you to get multiple quotes from reputable companies and can save you time through the entire process.

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YFP 114: Presidential Candidates’ Plans for Student Loan Forgiveness


Presidential Candidates’ Plans for Student Loan Forgiveness

On this episode, Tim Ulbrich and Richard Waithe, the creator of RxRadio, talk through the student loan forgiveness plans proposed by Senators Bernie Sanders and Elizabeth Warren, two of the 2020 presidential candidates. Tim and Richard discuss the details of who would and would not receive forgiveness under these plans and how they would be funded if enacted. They also discuss current loan forgiveness plans that are already in place and options that are available for those that need to delay loan payments due to a financial hardship such as a job loss or reduction in hours.

This episode originally aired in July 2019 on the RxRadio Podcast. You can learn more about RxRadio by visiting rxradio.fm.

About Today’s Guest

Richard Waithe, PharmD, is passionate about patient engagement and advancements in technology that improve adherence and health literacy to ultimately improve outcomes. With years of experience on the front lines in community Pharmacy, Richard is committed to helping individuals better manage their health and medications.

He is currently the President of VUCA Health, a company that has the largest library of medication education videos that serves to enhance patient engagement and provide an on-demand extension of pharmacists and other healthcare providers. He is also the host of the Rx Radio podcast where he interviews Pharmacists practicing in a vast variety of fields and discusses the future of our profession. Richard is the author of the book First Time Pharmacist: Everything you didn’t learn in school or on-the-job training.

Summary

This week’s episode is a simulcast release of a RxRadio episode. Tim Ulbrich joined Richard Waithe on the RxRadio Podcast to discuss Bernie Sanders and Elizabeth Warren’s proposals to cancel student loan debt.

Tim first dives into Bernie Sanders’ proposal, which is part of a more comprehensive college for all program and includes free tuition for public and private schools, the most ambitious plan yet. Bernie’s proposal is available to 45 million student loan borrowers, can be used for both federal and private loans, and has no eligibility differentiation as Warren’s does. Bernie is also proposing that interest rates should be capped at 2%. This debt cancellation will be funded by a Financial Transaction Tax which adds a .5% tax on stock trades.

Elizabeth Warren also has proposed a plan to cancel student loan debt, however, hers carries a few restrictions. This plan would cancel debt for about 95% of student loan borrowers. It would cancel $50,000 of student loan debt for households making $100,000 or less. The proposal offers phase out provisions: for households making $100,000-$200,000, borrowers can receive $1 forgiveness for every $3 of income. For example, if the household income is $130,000, $40,000 would be cancelled; if the household income is $160,000, $30,000 would be cancelled; and if the household income is $250,000, you would be excluded from receiving any student loan debt cancellation.

If these candidates aren’t elected or these proposals or similar ones don’t go through, there are forgiveness options that are available now. The first option is to pursue PSLF (Public Service Loan Forgiveness) which 25% of pharmacy graduates qualify for. To obtain PSLF forgiveness, you must work for a qualifying employer, have a qualifying plan, work full-time, and make 120 payments over 10 years. If you fulfill all of the requirements, your remaining loan amount will be forgiven tax free.

Non-PSLF is also an option for forgiveness. With this program, the borrower can work anywhere and makes payments over 20-25 years. However, the forgiven amount will be taxable and can be a hefty bill that you have to plan for. This program is best suited for those with a high debt to income ratio. Lastly, there are several state and federal forgiveness plans that you could qualify for.

So, if these proposals go through, what do you do with the extra money? Tim suggests that you first need to articulate your financial goals and prioritize them. First, you should focus on building up your emergency fund and paying off credit card debt. Then, you can focus on putting money toward retirement savings, home savings, college, vacations, etc.

Mentioned on the Show

Episode Transcript

Richard Waithe: Tim, how’s it going?

Tim Ulbrich: Good, doing well. Thanks, Richard, for having me on the show. I love what you’re doing over at RxRadio.

Richard Waithe: I appreciate the kind words. I am excited to have you on because one, I’ve heard obviously great things about you from Your Financial Pharmacist that we had on here. So we heard a little bit about your background, but we’ll hear a little bit again that part from you as to like how things got started, but just to give a little preface to what the episode today is going to be like, the news with the presidential candidates and their debt cancellations, I immediately thought about what your organization, Your Financial Pharmacist, and how things like this could potentially impact people’s financial plans. So you guys immediately came to mind, so I want to chop it up with you to dive into it, get some ideas, get some exact facts as to what it is that’s going on. But before we do that, if you could just start off by telling the listeners a little bit about yourself.

Tim Ulbrich: Absolutely, Richard. Yeah, great topic, excited to jump in the conversation. So I graduated with my PharmD from Ohio Northern University in 2008, did my community residency also alongside academia at The Ohio State University in 2009, and then for about 10 years, I was up in Northeast Ohio Medical University in the Akron-Cleveland area in various roles, patient care, service development, ambulatory care, community care, did some administrative work in admissions and student affairs and really developed a passion for professional development and helping students identify their career path and to really help empower them along that path. And that really intersected nicely for me with the financial piece, which really came to be in 2015 with the beginnings of Your Financial Pharmacist. But I started, and of course I know you had an opportunity to interview Tim, and we also have another Tim, hopefully no more Tims in the mix after three.

Richard Waithe: That should be in the rules.

Tim Ulbrich: Yeah, right? But I went through a journey of paying off a couple hundred thousand dollars of debt. Obviously, I’m being casual about that just for the sake of brevity so we can get into the discussion, and really felt like I lived a little bit on an island while going through that journey and didn’t really hear many pharmacists talking about this topic, talking about issues like we’re going to talk about right here tonight. And so I reached out to 100 of my closest colleagues and friends, said, “Hey, I’m thinking about starting a blog around personal finance and pharmacy. What do you think?” And the responses I got to that were really overwhelming and I think incredible for me to hear, OK, others are interested in this. It’s not just for financial nerds, and many people in pharmacy are feeling some of the pressures and pains around personal finance, especially those making the transition from student to new practitioner. So that began Your Financial Pharmacist, which started as a blog. We then launched the podcast the summer of 2017, we just crossed our 100th episode. And we’ve got comprehensive financial planning, lots of resources and tools, all designed to help the pharmacy professional on their path towards achieving financial freedom, which obviously student loans is a big, big part of that. So I think this conversation is timely. And now currently, just this past fall, I transitioned back to Ohio State University, and I direct the Masters and Health Systems Pharmacy Administration. So again, a lot of intersection between professional development. I really see personal finance being a big piece of professional development, and I’m excited that we as a profession are starting to embrace that personal finance is a topic that I think many, most, agree that we need to be addressing as a part of one’s professional development.

Richard Waithe: Yeah. So I think this is a prime example of, you know, find a passion, start creating content around it, and then all of a sudden it could potentially become either a business or a side hustle. So you’re a great example of that. Also before we jump into everything, you mentioned that you’re part of the Masters program at Ohio State now. Can you maybe shed some light on the topic of maybe what a pharmacist can benefit from going through a program like that? Because I get that question a lot, I see it a lot, like should I do this Masters? Should I do x, y, z that’s extra? An extra degree? Which a lot of times, I think it’s not an easy answer. Sometimes, I’ll discourage it depending on what their motives are. Sometimes, I’ll say it’s a great idea. Can you shed some light as to why that might be a good or bad idea for that particular program?

Tim Ulbrich: Yeah, absolutely. And I think you nailed one of the key questions that your listeners need to ask themselves or if they’re advising others is what’s the motive? What’s the reason? Because with any Masters program, whether it be a program like I direct at Ohio State, which is simply a Masters around Health Systems Pharmacy Administration, so really gearing people to be in an administrative roles in health system pharmacy. So this could be Director of Pharmacy, Chief Pharmacy Officer, Operations Manager, all types of roles that one could be depending on the type of program that they’re going to engage in. But whether it’s a health systems pharmacy administration Masters, whether it’s a PhD, an MBA, an MHA, an MPh, so many students I would advise, I often felt like they were enamored with the degree but really couldn’t connect it to why they wanted the degree and how that helped them along their career path. So I always encourage people, take a step back regardless of the program and really have some good, deep conversations and self-reflection about what’s the path — and it may not be crystal clear, but what are the things that I really identify with? What are the things that energize me, that I want to do more of regardless of how much time I spend? And what are the things that exhaust me, and how can I better align my career and my job towards those things that really give you energy? And if a Masters degree or if a residency or if a PhD, whatever be the case, helps you get there and you can specifically put an ROI on that path, then I think that that is worthwhile to consider. But I think for many people, that may not necessarily be the case. And so for specifically our program — and your question’s actually a timely one because right now and historically, our program at Ohio State has been around since 1959 and almost entirely for that time has been paired with a two years of residency and a Masters degree that are happening simultaneously. And we just now are getting ready to convert that program to an online offering, which is going to open that up for working professionals, and so the way I always describe is if somebody’s out there in the workforce, typically is working full-time, maybe they didn’t complete residency training, maybe they only did a PGY1, have interest in administrative roles, or maybe their leadership has identified them as an emerging leader, often they may want them to enroll in a program like this to help fast-track their skill set around things like operations and inventory management and supply chain and patient safety, leadership, entrepreneurship, all these types of skills that certainly with enough years of experience, you can get. But typically, in the inpatient health system setting, the leaderhsip will often identify people and say, OK, we really want them to go into this program so they can evolve to the next role that will be along their career path.

Richard Waithe: Got you. Great, great. Well that’s a lot of insight for the listeners. I really appreciate that.

Tim Ulbrich: Yeah.

Richard Waithe: OK, let’s jump into it here. So I’m also going to start off by saying that we’re going to discuss some ideas that are presented by political candidates, either maybe if you’re listening to this, maybe affiliated with your particular views or not, but we are talking about this solely to present the facts and present what the ideas are that are being presented around cancelling student debt. Neither one of us, both individually or our organizations, are taking a side with what we think is a good idea or not with some of the policies that are presented by these candidates. So I want to give that disclaimer here that no matter how you hear us describing a potential idea, it’s solely to give information about it and/or play devil’s advocate to get both sides or to get a better understanding as to how this could work. So now that we’ve gotten that disclaimer out of the way, let’s jump in by talking about Bernie Sanders’ plan that was recently announced. If you can just give us some background on that.

Tim Ulbrich: Yeah, absolutely. And before we jump into Bernie’s plan, Richard, if I could even build on what you said there because I think you articulated it really well, I also just encourage your listeners that these proposals, you know, we’re really far away from these potentially being implemented, and so I think it’s good to think and reflect on them for your own personal financial situation. But we still have current status, and we’ll talk about some current forgiveness plans and other things that are actually in place right now. So I think as you hear these, I don’t want to encourage our listeners to run and begin to make decisions on their own personal financial situation until some of these either go into place as they’re currently proposed, maybe they don’t happen at all, or they get modified to some degree. So Bernie’s plan — and I think that’s a good one to start because it’s probably the easiest to understand. So here we’re referring to Bernie Sanders’ plan, just announced last week, and it’s really a part of a more comprehensive, college-for-all program. So a common theme you’ve been hearing amongst some of the candidates is free tuition for public universities and community college, and so this plan around loan forgiveness for Bernie Sanders is a part of that more comprehensive, college-for-all program. And this is really the most ambitious plan yet that we’ve seen that’s trying to address what many of your listeners I’m sure have heard of is the $1.4 trillion student loan debt probelm in our nation. And we could debate all night long about how we’ve gotten there, but I think the better part is what does this plan address? And really, what it says it’s available to all of the nation’s almost 45 million student loan borrowers for both federal student loans and private student loans, and there’s no eligibility criteria included to be forgiven. And that’s going to be an important distinction when we talk in a little bit about Elizabeth Warren’s plan. So here, it doesn’t matter if you make $250,000 or you make $45,000, it doesn’t matter if you have $200,000 in debt or you have $20,000 debt, everyone is included. There are no specific eligibility criteria when it comes to Bernie Sanders’ plan.

Richard Waithe: Now, did they — I’m not sure if you might have seen this, but the way that you described it was as this is one plan, we’re in this one plan, we’re going to get free college, whatever, and we’re also going to get this great student loan forgiveness plan, whatever. Is there a chance that that’s potential exclusive, or was it clear in kind of what you see in that this is going to be one package and like one bill, let’s say?

Tim Ulbrich: Yeah, that’s a great question. And I think your question really gets to the point that when we’re seeing plans like this, and think about any previous presidential election, really reflect back on some major policy issues that came forward and how many of them got implemented as they were presented as a policy issue during a primary. How did that change when you actually got into the general election and you narrowed down the pool? And then once somebody is in office, what did that actually look like when it got implemented? So I don’t know, I think that will ultimately go forward in terms of how does this conversation shape? And I think that will be in part based on the reaction of the votership here in the country. As they get some receptiveness on this issue, will it be packaged as it’s currently presented in terms of a broader bill or however it gets included in terms of free tuition? And another part of this too, Richard, which I think is worth noting, is that often, people will say, well, this is great, but it doesn’t really address, what about in the future when somebody goes for a private school and they wrack up debt? We still have very interest rates, well above what you can buy a home for. So if you look at what our current pharmacy students are borrowing for their federal loans, you know, many students now are looking at interest rates at 6-8%. And what you can buy a home for on a 30-year mortgage is now down I think in the high 3’s. It’s a very stark difference, and a lot of people ask, why is it so expensive in terms of interest rates on loans? And so what Bernie is also proposing is that the student loan interest rates would be capped at just under 2%. So again, will this happen? How is it going to get funded? How will it be proposed? I think it’s all something to watch, but certainly this plan is the most ambitious, it’s the most comprehensive, there’s no exclusion criteria.

Richard Waithe: Yeah, I just hate when politics or politicians are presenting a bill or they’re voting on a bill, but that one bill has like 10 different things in it. And some of them don’t even relate to each other. And then it’s like, it didn’t go through because line item 7 was not great, you know? So I don’t know, hopefully it can be something that the American people can look at individually and make a decision on instead of forcing it to be one whole package. But alright, let’s just say things are going well, he decides he wants to implement this. Bernie Sanders decides to implement this for him, things are going well, and it seems like his plan is about to come to fruition. How would he actually pay for it?

Tim Ulbrich: Yeah, this is the million-dollar question, right? Whether it’s Bernie Sanders’ plan, Elizabeth Warren’s plan, or even a modified version of either one of these is that you can’t just erase debt. Obviously when you look at student loans and interest, ultimately, that’s a revenue stream for the federal government, so what Bernie Sanders is essentially proposing here is what’s referred to as a Financial Transaction Tax, or an FTT. And it’s really just a fancy way to say that there would be a small tax — I guess small depending on how you define it and how you view taxes — that would be about a .5% tax on stock trades. So if you were to buy $100 worth of stock, essentially you would get a $.50 charge. Now, it’s interesting because as I read that, you know, Richard, I started to think about well, why go after investments? Why go after stock? And what will be included, what will not be included in terms of this tax? And I also started to think that if you think about the individuals that are often buying high amounts of stock, especially outside of retirement accounts, I have to believe they’re going to find other ways to divert having to pay taxes such as this, such as oh, maybe I’ll put more of my money into real estate or I’ll do other types of investments. So again, it’s good to think about this question. How will it be paid for? And looking at the status quo of how people purchase stocks, guesstimation through this plan is that the Financial Transaction Tax, which would be a .5% tax on stock trades, would essentially cover the cost for the loan forgiveness provisions.

Richard Waithe: That’s interesting. I haven’t really heard of a lot of plans that targeted that specifically. I know they’ve talked about increasing corporate taxes and taxes on when you actually make a profit off of the stock trade, but this is really a little different. But any other additional information around Bernie’s plan before we move onto Warren’s plan?

Tim Ulbrich: Yeah, I think a comment I would just make here I think is a good one. And we can come back to this after we talk about Elizabeth Warren’s plan, but I think there’s some just really interesting issues that when we talk about loan forgiveness, it really presents a much broader conversation around why is college the cost that it is? Why are the interest rates the way that it is? How much of the borrowing is related to tuition, and why is tuition creeping up at a rate that is outpacing inflation by a significant amount? And how much of the borrowing is due to cost of living? And how do we teach more about personal finance? So this very much feels — when you and I talked about this leading up to — and you emailed me about the opportunity to do this, it almost feels like you’re peeling back the layers of an onion. And so what I hope we can do here is just start to begin a conversation among your listeners, among our community, that this — when you talk about student loans and you talk about loan forgiveness, you talk about student loan debt and broader just debt in general, it’s never one issue, in my opinion, that’s really just going to solve the problem, right? You have to holistically look at many of these variable, which starts to then get into some very interesting discussions around socioeconomic status and how do we teach things and all types of variables that I’m hopeful your listeners while they here these plans start to think of some of those broaders aspects as well.

Richard Waithe: Yeah, that makes a lot of sense. Alright, so let’s move onto Warren’s plan. What is her plan? Give us some details, some basics around that. And then we can see how it compares to what Bernie’s plan was.

Tim Ulbrich: Yeah, think about Elizabeth Warren’s plan potentially as a scaled-back version of Elizabeth Warren’s (sic) plan. So instead of saying that there’s no eligibility criteria, it’s open to everyone regardless of income limits, regardless of debt loads, essentially, Elizabeth Warren’s plan puts some more restrictions around forgiveness provisions so that it would cancel student loan debt for approximately 95% of borrowers, so not 100% of borrowers. And it’s estimated — from their estimations — that it would cancel student loan debt in its entirety for a large portion of those because of how they have the caps on both the indebtedness as well as the income. So let me explain the restrictions here for a minute. Again, Bernie’s plan says no eligibility criteria. Elizabeth Warren’s plan says that we will cancel $50,000 in student loan debt for every person with a household income of under $100,000. So let me say that again. It would cancel $50,000 in student loan debt for every person that has a household income under $100,000. So hopefully, your listeners are thinking, OK, well, $50,000 in debt, we know the average indebtedness of a pharmacy graduate today is about $160,000. And when you say household income under $100,000, we know the average income of a pharmacist, while it’s changing, is above or close to that threshold of $100,000. So would this even be applicable for pharmacists? And the answer is yes, maybe. So the question then is what about this group that makes more than $100,000? And essentially what they have is some phase-out provisions. So it would provide for those making between $100,000-250,000 of household income — so that’s an important variable to keep in mind — that you would have some forgiveness, but it wouldn’t be to the full amount of the $50,000. So the $50,000 in cancellation, which is the maximum amount under Warrens’ plan, phases out by $1 for every $3 in income above $100,000. So for example, Richard, if you made $130,000, instead of getting $50,000 of forgiveness, because of that phase-out, you would get $40,000 in cancellation. And if somebody had a household income of $160,000, instead of $50,000 of maximum forgiveness, they would only get $30,000. So if you make under $100,000, you get the full $50,000 maximum amount forgiven. But if you make between $100,000-250,000, you get a lesser amount of that depending on how much you make. And then if you have a household income above $250,000, which could be the case if you have let’s say two pharmacists, a pharmacist-physician, a pharmacist-another high income in the household, you would be excluded altogether with no debt cancellation. So again, while we think in pharmacy, high debt loads, high income, if you really look at the general population of those that have student loan debt, I think the last average I saw was somewhere around the mid-$30,000s, and obviously we know the median household income in the country is about $55,000-57,000, so the vast majority — while it may not be the case for pharmacists — the vast majority would have $50,000 or close to that that would be forgiven as the maximum in this situation.

Richard Waithe: And you know, it’s important to note that while a pharmacist might not see 100% cancellation as another individual, it’s still helpful. I mean, even $30,000 off of my loan would be helpful, especially if it gets accompanied by some cut of an interest rate. I think that’s a huge deal, which I’m not sure if she proposed that in the plan or not, but —

Tim Ulbrich: I didn’t see that with hers. She may have as well. But I think it’s also important to note that both of these also mention private student loans being eligible for cancellation. And I think that’s something really interesting to watch because you think of all the pharmacists who, rightfully so, for better interest rates, they weren’t pursuing loan forgiveness, they refinanced, they had significant savings, how might this impact them if these plans go into place? So while that sounds really good, I just think that tracking that and trying to identify that, and now you’re getting into the private sector when you’re dealing with those companies, will something like that really become a reality? Or will it stay in the federal system? But right now, both of these plans as is do mention private student loan debt cancellation as well.

Richard Waithe: And along some of these lines, what about bankruptcy? Has any of them talked about — because I think a student loan is one of the only type of debt in the nation that you cannot declare bankruptcy on. Have you seen anything around that? Or potential ways that that come to fruition as this problem just starts to grow?

Tim Ulbrich: Yeah, I haven’t yet. I think that’s a really good point. I mean, there’s stories now that are floating around of paychecks that are being garnished wages and other things in terms of how they’re going after these student loan types of debts that are outstanding, and I think when you look at this number — and I think in pharmacy, to your point, Richard, especially as we see there are people that maybe can’t find employment or do so at a much lesser value, if they have $300,000-400,000 of debt, which certainly are stories that we have heard, those types of situations I think certainly could come to be. One of the things we can come back to, though, is there’s strategies that those individuals should be thinking about, such as income-driven repayment plans that would allow you to eventually pursue, even over a long period of time, forgiveness, and it would adjust up as your income would go up. So I think it’s a good question. I have seen a couple crazy stories of people fleeing the country, which is really sad.

Richard Waithe: Oh, wow. That’s crazy.

Tim Ulbrich: But I want people to hear there’s options. And we can come back and talk more about this, whether it’s deferment, forbearance, seeking out an income-driven repayment plan, working with your lender to really — just like you would on an outstanding credit card payment — trying to do whatever you can to establish a payment plan. Really, you want to do anything that you can do to make sure that you don’t go into default or any situation that would have a negative impact on your credit.

Richard Waithe: Makes a lot of sense. Alright, so let’s just say none of these go through, and we’re stuck with kind of what we have now. And what is it now that’s available for programs for pharmacists or, I would say any student, I guess, that is part of a loan forgiveness program.

Tim Ulbrich: Yeah, the most common current situation we’re in — which obviously there’s lots of debate about this and whether it would stay, and I think that will be a big part of the conversation when Bernie’s and Elizabeth’s and other plans come forward — we talk a lot about on our podcast and our website, we’ve got lots of resources around Public Service Loan Forgiveness, also known as PSLF. So in my estimation, about 20-25% of all pharmacy graduates qualify for Public Service Loan Forgiveness. Now, that doesn’t mean that it’s the right decision for them. There’s lot of options that are out there, it’s very much an individual situation, but it does impact a big percentage of pharmacy graduates. And essentially what Public Service Loan Forgiveness says is that if you work for a qualifying employer, which is most commonly going to be a not-for-profit employer, so for those that are in hospital, inpatient, health system, underserved types of settings, government work, if you’re working for a government entity or a not-for-profit institution, if you make payments under a qualifying repayment plan, which is typically an income-driven repayment plan that people are going to be looking at, if you’re working full-time, and if you make 120 payments — they don’t have to be consecutive, but 10 years worth of payments — when it’s all said and done, you essentially would have any remaining balance that’s forgiven, it would be forgiven tax-free. So for pharmacists that are especially facing a high debt-to-income ratio, so let’s say somebody listening has $200,000 in debt and they’re making $100,000 a year, if they’re working for a nonprofit, depending on their personal situation, it’s usually at least worth evaluating among other options. And of course, you have to consider the variable of how do I feel about the debt? And am I OK with some of the unknowns around Public Service Loan Forgiveness? And we talk a lot about this issue exactly on Episode 078 of the Your Financial Pharmacist podcast if any of your listeners want to hear some more discussion we have on that. So Public Service Loan Forgiveness is a great option that you should at least be evaluating if you work in the public, not-for-profit, government sector. And then, Richard, a lot of people don’t actually know that there’s also a non-Public Service Loan Forgiveness option that’s out there through the federal government as well. So whereas with Public Service Loan Forgiveness, or PSLF, you have to work for a qualifying employer, with non-PSLF, it doesn’t matter who you work for. So it doesn’t have to be a not-for-profit; you can work for Walgreens, CVS, Rite-Aid, whomever, a for-profit hospital, but the kicker is instead of 10 years, you’re looking at 20-25 years. And instead of tax-free forgiveness, you’re ultimately going to have an income tax bill on the amount that’s forgiven. So some more planning and logistics you have to think about, but there’s a very small percentage of people in our estimation and research, those that are in the for-profit sector of work that have a very high debt-to-income ratio, they may consider non-PSLF, especially if they can’t afford their monthly payments for whatever reason. And so those are the current options. The other one, there are some state forgiveness plans. I just read an article recently in the Wall Street Journal about more state forgiveness plans that are popping up, so I would encourage your listeners to check out state information. And then obviously, there’s some of the military plans. And I’ve seen some unique programs around, for example, those that work in underserved settings that address some of the opioid issues, there’s some forgiveness plan types of things out there. And I want to reference your listeners to — credit here to Tim Church, who wrote a very comprehensive, great blog post that helps people evaluate all the different repayment options that are out there. Not to say this is the right one or this is the right one but to look at all the options, look at your personal situation, and then try to navigate it and work through which of those may be best. And that’s over at YourFinancialPharmacist.com/ultimate.

Richard Waithe: And I’ll definitely link that up in the show notes as well to make it easier if anyone wants to just look in the show notes to get links to everything that Tim has just mentioned. Quick question about the non- or the for-profit forgiveness plan. What qualifications are in play there, if any?

Tim Ulbrich: Yeah, not really. I mean, you have to still use one of the income-based repayment plans, which is what you’d want to do anyways because the goal would be to minimize payments, maximize forgiveness. The biggest things, as I mentioned, is that when it’s all said and done, you’re going to have an income tax bill that you’re going to have to plan for. So it requires some work, in my opinion, working with an accountant to do some projections, running some numbers, but the way that would work is let’s say you’re federal income tax is right at 20% 20 years from now. If you’ve got $100,000 left over, essentially that year when you go to file your taxes, it’s going to treat that amount that’s forgiven, in that case $100,000, as taxable income. So you’d have — depending on the rest of your financial situation — an additional tax bill to pay because if you make $100,000 that year, and you have $100,000 that’s forgiven, the IRS that year is going to look at it as if you made $200,000. But all along, you probably were only paying that year and having withholdings based on your $100,000 income. So there’s some more planning. And it really takes, in my opinion, somebody to have a very high debt-to-income ratio that’s really in a hardship. Maybe they have a lower income situation that they’re struggling to make payments. And I think you also have to especially here look at the math side-by-side with can you really kind of ride this out for 20-25 years? I mean, I know I felt after two, three, four years like I’ve got to get these things off my back. But certainly there are some people I think that very much can have the mindset of, hey, I’m going to let this ride, I’m going to treat it like a mortgage, and it’s part of the plan. And they’re methodical in how they approach that.

Richard Waithe: So like a lifestyle tax almost.

Tim Ulbrich: Yeah, that’s right.

Richard Waithe: That’s what I like to call it, make it justify that a little bit.

Tim Ulbrich: Yeah.

Richard Waithe: So let’s get into a little bit of hypotheticals here. I mean, and this is actually real for some people that actually pay off their loans eventually. But let’s just say that some of these plans were to come into place, and some pharmacists were in a position where maybe from one day to the next, obviously this could take years to come into play, but let’s just say from one day to the next, they all of a sudden don’t have that extra $500-1,500 loan payment per month. What would you advise that they do instead of just living off a fancier lifestyle? Or maybe they should live a fancier lifestyle. But what would you advise that they would do with that extra specific amount of money?

Tim Ulbrich: Yeah, now this is a fun question, right? You know, what to do with extra cash each and every month. And this was real for my wife Jess and I. When we went through our journey, we were paying off aggressively as we were getting toward the end, about $2,500 a month toward our student loan on top of the payment. So all of a sudden, you get to $0 payment, and then it’s a conversation of hey, what are we going to now do with this money we’ve been allocating toward our student loans each and every month? That is a fun, motivating conversation to have. So we talk all the time on the podcast and on our blog and when we’re speaking about this is a great example of why it is so important to articulate and write down your financial goals and prioritize those goals because whether it’s at some point, you have your loans forgiven, whether you get a raise, whether you’re able to cut your expenses, whether you get an unexpected inheritance, who knows whatever be the case, when you run into a situation like this where you’ve got extra cash, you know exactly where you’re going to put that money. So you’re essentially putting around some guardrails that yes, we should always enjoy the achievement and balance the achievement of financial goals with enjoying life along the way, right? If we’re always squirreling money away for 30 or 40 years, it’s kind of like, what’s the point? But by having that prioritized list of goals, you’re essentially putting some guardrails around avoiding lifestyle creep and letting that happen. So if somebody were to find themselves in this situation, and they didn’t yet have an emergency fund, or if they had credit card debt, those are the two things that I always focus on first. And here, I’m of course making generalizations without knowing each and every person’s individual financial plan. So Tim Baker, our certified financial planner, refers those two steps as “baby-stepping” into your financial plan: having a fully funded emergency fund and having high interest rate credit card debt paid off. So those would be the two places. And then from there, you would begin to think about what other goals are going on and what’s the personal situation, what does that all involve? So where are you at with retirement savings and investing based on the goals that you have set and how much you’ll need at retirement? When do you want to retire? How much do you need? All those types of variables. Is a home in the mix? Do you already have one? If not, how much do you want to buy? How much do you want to put down? Kids’ college, vacations, enjoyment, all these things get put into a list, and you begin to prioritize them so when you run into this situation, you can work down the list and you know exactly where you’re going to fund them along the way.

Richard Waithe: Yeah, that makes a lot of sense. We talk about fairytales, but who knows? This could happen, one, if you have a great plan financially with where your loans are going to be paid off soon, or we get lucky and one of these people or even just whoever decides to say, oh, we’re going to cancel all student debt and all of a sudden, you don’t have any more debt. One thing that does come to mind, though — and so we’re going to start getting into a little of talks that aren’t as positive as I like to keep things on the podcast, but one also downside about some of the plans that are being announced is people are upset because one, if this sort of plan does go through, we’re essentially making someone else pay for our decisions in life. And then two, what about the people that’s kind of busted their butts to try to pay off those loans and pay down all that debt that they were responsible for? And then all of a sudden, these people coming along after them don’t have to put in all that work that they did. So there’s definitely a lot of different perspectives and a lot of different things that people can either like or dislike about these particular plans. I don’t know if you have any thoughts you want to throw in there at all.

Tim Ulbrich: Yeah, I do. And actually, we had some discussion on the YFP Facebook page — it might have been in the group or the page, I’m not sure which off the top of my head — about this exactly. So I think we posted Bernie Sanders’ plan, it just got some discussion started, and there was really a range of comments to your point. I mean, there were some sentiments of, this is not fair to those that have worked so hard to pay off their loans or those that maybe their family saved for years to help them or they didn’t have to take on that debt or pursued scholarships. So I think there’s some of that or that aspect of personal responsibility or you know, all the lessons that you learn while you’re going through paying off student debt and does this really address kind of the core issues and problems around cost of higher education and personal finance literacy and education? And then I think there’s some of the opposite standpoint, probably more so from those that are currently struggling with debt repayment that would say to the previous question, this would really help me out in terms of I’m really struggling month-to-month or I’d love to be able to do A, B or C, and this would really help me be able to do that by taking some of the burden off my back. So I think this is a good discussion to just continue. And again, to my comment earlier, is that these discussions around loan forgiveness, in my opinion, need to happen at a much, much broader, more comprehensive discussion around all of the issues that we’ve been talking about because just looking at one of them, you know, one of our members in the page had mentioned that any student loan forgiveness program or free college plan really needs to be paired and coupled with a plan to decrease the cost of college because if those two things aren’t happening in tandem in terms of forgiveness as well as addressing the cost, we may not be getting to the true issue. I would even add on to that in terms of some of the other things, I think about my four young kids at home. At a very young age, they’re learning hopefully good but some bad habits from me as well around personal finance. So a lot of this starts in the home, it starts in the education system, and again, to my comments earlier, when you start talking about those types of issues, you know, when you deal with education and you deal with other variables, it can become very complex in terms of how we address them.

Richard Waithe: Yeah. So with the crazy news that happened recently — and while this is probably one of the larger pieces of these types of news we’ve heard in awhile, I mean this has been a trend that’s been going on for at least the last five or 10 years, with pharmacies closing, jobs, the market saturation is increasing, people being laid off, this was a little bit unique. WalMart allegedly — I don’t think this has been officially confirmed by WalMart, this is all I think where the Bloomberg reported that a person familiar with the editor said that it was 40% of senior pharmacists, which so let’s assume that’s true. That means that they’re trying to streamline wages, things like that, but let’s just say that there’s an individual that’s in a terrible situation like this where they get to a point where because they just potentially lost their job and their main stream of income, they can’t pay for a loan. What are their options there if they’re in that extreme position and they can’t for a loan? What happens? What are consequences? Give us some details on that.

Tim Ulbrich: Yeah, and I think this is a really, really important conversation because the news I had read related to WalMart is that it impacted senior pharmacists and I think there were some projections as well around new hires and part-time workers. And I think those may have very different implications around where somebody’s at in their debt repayment, other goals they’re achieving or not achieving, do they have credit card debt, do they not? So obviously, we know it can impact those people in a very different way. But the other reason I think it’s a really important conversation is we’ve had news here in central Ohio of pharmacists that has been, of course, known nationally around going from 40 hours to 32 hours, 32 becoming the new norm. So whether it’s WalMart or another company, whether somebody’s working full-time or gets cut to part-time or gets hours cut, whatever be the situation, I think we’re going to see more and more pharmacists that are in this question and situation of, hey, what can I do if I can’t make my student loan payment? And this really gets to the option around deferment or forbearance. And I think when we hear those words, we think, oh my gosh, stay away as far as you can, but the important point I want to make here with deferment or forbearance — and I’ll differentiate those here in a moment — is that both of those, while they may sound terrible in terms of an option to pursue, if you pursue them and you pursue them wisely with a plan in place, they will not have a negative impact on your credit. And so what we’re trying to avoid is default. Default is really worst-case scenario when it comes to student loans. So the options I’m thinking about is if I’m somebody who’s making aggressive student loan payments, and I find out that I’m getting cut part-time or maybe temporarily I’m in search for another job, I’m going to first see if I can switch to an income-driven repayment plan where I don’t have to go into deferment or forbearance, but I can adjust my payments because of course, that adjusts with income. So if I go from 40 to 32 or if I go from 40 to 20 or whatever be the case, hopefully that won’t be permanent, you can make a transition and get back on pace with the rest of your financial goals, including your student loans, but the whole point of income-driven repayment plans — and here we’re talking about things like PAYE, RePAYE, IBR, ICR — is that they adjust up and down as your income adjusts up and down. Now, that may sound really good, and obviously, as your payment goes down, as your income goes down, it most likely will mean that your interest is probably accruing faster than your monthly payment, so that has its own challenges. But you’re not altogether stopping payments, and I think that’s important not only actually making the financial momentum but also behaviorally, you still feel like you’re making momentum. Whereas with deferment or forbearance, you’re actually going to stop making payments. And these are options that are available to you specifically in the federal system. Now, when it comes to the private lenders, it depends on the lender, so you have to work with them individually. Many of them do not, but some of them will offer forbearance or deferment provisions. But essentially when it comes to your federal loans, whether it’s deferment or forbearance, the idea is that you are stopping making payments for a period of time. Now, the one advantage — if I had to say one of these is better than the other, the one advantage of deferment over forbearance is that if any of the listeners have certain types of loans, most notably these would be subsidized loans or Perkins loans, they would actually not have to pay the interest, or the interest would not accrue while you’re in the deferment period. So if somebody’s listening and they have subsidized loans, they have Perkins loans and they’re thinking about deferment or forbearance, for that reason, there probably would be an advantage around deferment. However, most pharmacy student loans, which is most of a graduate’s indebtedness today, they’re not going to have subsidized loans. Most of them are going to be unsubsidized. So in that stance, it’s really not going to matter in terms of the interest that’s saved. So if you can, Option 1 for me, Richard, would be pursue or try to pursue an income-driven repayment plan so you can continue to make payments for the reasons that I mentioned. If not, then I think it’s pursuing deferment or forbearance with the goal of trying to avoid defaulting on those loans.

Richard Waithe: So it sounds like the deferment in that one case is kind of like literally just hitting a pause button.

Tim Ulbrich: Yeah, if somebody only has subsidized loans or Perkins loans, they could essentially hit pause if they get approved. And there’s obviously some application and there’s time periods around these. But they would hit pause and for those subsidized or Perkins loans, they would essentially — that interest wouldn’t keep ticking. Whereas if you go into forbearance, and when it comes to your unsubsidized loans and your other loans, interest continues to accrue on all of those loans. So let’s say you go into a 10-month forbearance period, if you’ve $150,000 in debt and you’re at an average interest rate of 6%, you know, yes, you’re going to get through that hardship period by not having to make payments, but your student loan balance at the end of that 10-month period is going to be greater than what you started with because that interest is going to continue to accrue and continue to compound. So you want to use it wisely. I really look at it as an emergency situation to do anything you can to avoid defaulting. But better yet would be can you get in an income-driven repayment plan so you don’t have to utilize deferment or forbearance. But know that they’re there, and that’s really the intent, one of the intents is financial hardship if you need them for situations such as this.

Richard Waithe: So what are the differences between the forbearance and deferment?

Tim Ulbrich: Yeah, so besides the which loans may have the interest not accruing — so that’s really the biggest thing. So subsidized federal student loans and Perkins loans, the interest would not accrue during deferment. Whereas in forbearance, it doesn’t matter. Interest is accruing on all loans. So that’s really one of the biggest differences. The other difference is the length. So with deferment, the length, while it varies by deferment type, some last as long as three years while others will be available as long as you qualify. Whereas forbearance, it lasts for no more than 12 months at a time. You essentially would have to reapply through that process. So there’s some interest advantages to deferment if you have those certain types of loans. And then there’s the difference around the time period, but in both situations, it would have no negative impact on credit. So again, remember, these provisions are there for a reason. Income-driven repayment option I’d pursue first. Then, I’d pursue one of these second. And you can work with your loan servicer to evaluate these options further.

Richard Waithe: Now, does any one of these loan forgiveness programs affect — sorry. In terms of a hardship, where you need to postpone payments, does it potentially affect your ability to be a part of a program that’s involved in loan forgiveness?

Tim Ulbrich: It does now. So with Bernie and Elizabeth Warren’s plans, obviously the way they have those structured, it would take a lot of this out of play. But right now, with Public Service Loan Forgiveness, and even with non-Public Service Loan Forgiveness, there’s a — with PSLF, there’s one example. You have to make 120 qualifying payments. So if you’re in a forbearance or deferment period, those obviously don’t count as qualifying payments during that time because you’re not making a payment, right? However, keep in mind that with PSLF, those don’t have to be consecutive payments. So while it may extend your time, so if you’re off for a year of making payments, now maybe the 10 years becomes 11 years. It doesn’t disqualify you altogether from PSLF, but that one year or whatever the time period would be where you’re not making payments, those don’t count towards your 120 qualifying payments. So yes, it would have an impact.

Richard Waithe: Wow. So that’s really interesting.

Tim Ulbrich: Yeah.

Richard Waithe: That’s a lot of information.

Tim Ulbrich: It is. And these are great discussions. And you know, I’m happy, if your listeners have further questions, they can shoot us an email over at [email protected], and we’ve got lots of resources, I mentioned one, Episode 078 of the podcast. We’ve got, I think it’s Episode 018, we also talk about PSLF. We’ve got some other podcast resources. And then we’ve got the Facebook group and community really out there with the hope and goal that people are asking these types of questions and getting encouragement and getting those questions answered from others in the community.

Richard Waithe: Yeah, and I would highly encourage people to go in there, and whether you’re involved in some of these Facebook groups, whether you’re going to be actively talking about your stories, or whether you’re just seeing what other people are doing, and definitely checking out all the information on their website. It’s super helpful, and I think that we are undereducated on all of this stuff because I learned a bunch today even, and I’ve been out paying loans for five years now. So there’s always new stuff to learn, new things to learn around how we can better manage our finances and our student loans, so really appreciate all that. But before I kind of close out here, I do want to ask a completely random question.

Tim Ulbrich: Yeah.

Richard Waithe: If you had to take anyone out to dinner, and the person had to be famous, and they had to still be alive, who would that be and why?

Tim Ulbrich: Ooo. If I had to take anybody out to dinner, and they had to be famous, and they had to be alive. Wow. That’s a great question.

Richard Waithe: They should have a Wikipedia page. If I can’t find them on Wikipedia, I’m coming back at you. And you cannot use Donald Trump or Obama or any of the Obamas because they have been taken — or Jeff Bezos because that’s becoming a popular option. You can’t use any of those four.

Tim Ulbrich: Yeah, you know, first thing that came to mind was some dead people, but your question, before I answer it, is really timely because one of the things I think often about is the concept of legacy and really whether it’s somebody that’s served in a high leadership role, started their own company, served as a president, I’m really trying to figure out why people do what they do and what drives them in terms of leaving a legacy in what they do. So the first person that came to mind comes from one of the books that’s had probably the greatest influence on me in terms of my own personal financial journey and how I think about personal finance would be Robert Kiyosaki, who wrote “Rich Dad, Poor Dad.” You know, if you ask people about what’s the No. 1 and No. 2 financial book that’s impacted your life, you often hear that book. And I think it’s such a different way of thinking about money that once you read it, I think it really transforms the way you think about it. I know it has for me in terms of business, real estate, just how my wife and I manage our finances, and I’d love to be able to sit down and kind of pick his brain about some of the concepts around that book. So that was the first person that came to mind.

Richard Waithe: And that book — I’ve read that book as well, and it’s an easy read too.

Tim Ulbrich: Yeah.

Richard Waithe: Like it’s not as intimidating as some other books out there that are really famous and end up being like 1,000 pages long with real hard vocabulary. That was actually an easy read.

Tim Ulbrich: That’s great. It is. It is an easy read, and it’s one that I think you read more than once, you go back to, and you take something different from it when you read it a second or third time.

Richard Waithe: Yeah, great. Well Tim, thank you so much for all your insights. I really appreciate you being on the show.

Tim Ulbrich: Thanks, Richard, appreciate it.

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6 Situations When You Shouldn’t Pay Extra on Student Loans

The following post contains affiliate links through which Your Financial Pharmacist may receive compensation.

I love hearing stories about people crushing their student loan debt in record times and all of the crazy and incredible things they do to speed up the process.

For many pharmacists, it can make sense to get rid of student loans as fast as possible. This lowers the total amount of interest you pay and also frees up your budget to focus on your other goals. Beyond that, there can be an overwhelming sense of peace and freedom.

However, there are some situations where it doesn’t make sense to make extra payments or accelerate the process.

1. You don’t have an emergency fund

If you have typical pharmacist debt load, it will likely take you a number of years to pay them off even if you are being aggressive. During this time, life can happen.

Medical issues, car repairs, kids, and other life events can occur forcing you to come up with a lot of cash pretty quickly. Make sure you have a solid emergency fund in place before you get ultra-aggressive with your student loans.

2. You’re facing a crisis or major life event

Whether it’s a job loss, new baby on the way, or major illness, a number of things can occur with the potential to derail your financial game plan. If you’re faced with or expect something to happen that will require a lot of cash (exceeding your emergency fund), or anticipate a reduction in your income, temporarily putting extra student loan payments on hold and just saving it can be a good idea.

3. You’re seeking loan forgiveness

If you’re committed to the Public Service Loan Forgiveness (PSLF) program, making extra payments won’t make sense. The program requires you to make 120 qualified payments over 10 years and you can’t make the process go any faster. Therefore your ultimate goal is to pay the least amount as possible.

I know this can cause a little anxiety as your balance will actually grow over time due to interest as you make minimum payments. Plus, the news seems to be highlighting the thousands of people who are NOT receiving forgiveness for one reason or another. However, as long as you are following every step in the process, any balance will be forgiven tax free!

To do this you should choose an income-based repayment plan that results in the lowest payment (usually PAYE or REPAYE) and reduce your adjusted gross income.

The best way to minimize your total amount paid is to max out your traditional 401(k), 403(b), TSP contributions and HSA contributions if you have access to a high deductible health plan. You can read more about optimizing PSLF by checking out the ultimate guide to pay back your pharmacy school loans.

Remember, you can also receive loan forgiveness through the federal loan program after 20-25 years of income-driven repayments. This can be a good option for pharmacists who don’t qualify for PSLF and have a very high debt-to-income ratio.

The major difference is that you will have to be saving for the “tax bomb”as the amount forgiven will be considered taxable income. Even in the situation, it will not make sense to make extra payments on the loans.

4. You’re receiving tuition reimbursement/repayment

While not abundantly available, tuition repayment programs essentially provide “free” money typically from your employer or institution in exchange for working a certain period of time. Pretty awesome right?

Others will require you to pay an amount toward your loans and they will match or reimburse you up to a certain amount. The ones that tend to provide the most generous reimbursement are those offered by the federal government through the military, Veteran Health Administration, and the Department of Health.

These programs dictate the terms of the reimbursement and to get the maximum benefit, you will likely either need to make a set amount of payments in exchange for reimbursement such as the Veteran’s Health Affairs Education Debt Reduction Program (EDRP) or be employed for a specific term. Depending on the program, if you make extra payments you may not receive the full benefit of the program and could pay out more than you have to.

5. You have credit cards or other debt with high interest

From a purely mathematical standpoint, getting rid of debts with higher interest rates first makes sense. If you have credit card debt with 12% interest and student loans at 6%, you are going save money by paying off the credit card first. This is known as the debt avalanche method when you pay minimum payments on everything except the one with the highest interest rate.

6. You feel you can get a better return on your money somewhere else

Instead of paying extra on student loans, many people put that money toward retirement, small businesses, real estate or other investment with the rationale of making a better return. This is certainly a valid argument especially if you have a very low-interest rate on your loans like 2-3%. For example, if you have refinanced your loans with First Republic Bank, you can get a fixed interest as low as 1.95%.

With investments such as the stock or real estate market, there’s no guaranteed rate of return. You could actually lose money in that period. But you could also be incredibly successful like Dr. Carrie Calton who now has several income-producing rental properties which she started purchasing while she still had student loan debt.

Whether you choose to do this really comes down to how much risk you are willing to take on and your feelings about prolonging the time you are in debt.

Conclusion

Although paying extra on student loans and accelerating the time to being debt-free can seem like a great idea, there are some instances when that may not make the most sense. If you’re on track for loan forgiveness or receiving tuition reimbursement, make sure you are maximizing these programs to so you are paying the least amount possible.

If you’re not in any of these situations, then, by all means, knock out your loans ASAP. Besides cutting expenses and maximizing your income to throw more money each month at your loans, refinancing can also be a great option.

YFP has partnered with multiple student loan refinance companies in order to get you a nice cash bonus of up to $850 and sometimes more if there is a special promotion running. Yes, we get a referral fee when you refinance through our link, but we have shifted the majority of the payout to you.

Current Student Loan Refinance Offers

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YFP 113: Is Your Home an Asset or Liability?


Is Your Home an Asset or Liability?

On this week’s episode, Tim Ulbrich welcomes Nate Hedrick, The Real Estate RPh back to the show to talk about the value of homeownership. Tim and Nate discuss whether or not the American dream of owning a house is for everyone, the true costs of home ownership, when to consider renting vs. buying and tips for knowing when might be the right time to purchase a house.

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

Is your home an asset or liability? Nate and Tim dive into this question on this week’s episode.

Nate explains that there is a lot of emotion in home ownership and that pharmacists often feel pressured to buy a home even if we’re not financially ready to do, especially after residency or school. He recalls comparing the cost of a mortgage and interest vs the amount of money he was paying in rent when he decided to purchase his first home. Unfortunately, there are many costs and factors that are associated with home ownership. Like anything in the personal finance world, you have to make a decision that’s best for you while weighing both the math and your feelings toward the decision.

So what is the true cost of home ownership? Nate explains that the biggest cost you’ll have is your mortgage, which includes the principle and interest payment. In addition to the mortgage, you’ll incur other monthly costs like property tax, HOA fees, and maintenance which can produce some large capital expenditures (think roof, boiler, etc).

Of course, there are also upfront costs when buying or selling a home, like agent fees which the seller usually pays and mortgage fees such as inspections, the cost of reviewing the title, closing costs. Perhaps you’ll also spend money on adding on a deck, putting up a fence or lawn maintenance.

Robert Kiyosaki, author of Rich Dad, Poor Dad, explains that an asset is anything that puts money into your pocket while a liability is anything that takes money out of it. Nate says that a home very rarely puts money into your pocket. While homes could appreciate over time, that doesn’t necessarily mean that you’ll make money on the house. With Kiyosaki’s definition in mind, Nate says that a home is generally not an asset.

Tim and Nate also discuss how to decide if renting or buying a home is better. Nate shares that you have to look at your personal finances to see if you’re able to take on a financial hit (like a large maintenance cost). If not, you should wait to purchase a home. If so, you then have to determine how long you might be at that property to see when you’ll break even. There are factors in determining when you’ll break even, like looking at the rental price and home values in the area and how they’ve changed over a few years.

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 have a familiar voice back on the show this week, Nate Hedrick, also known as the Real Estate RPh. And here, we’re talking about this question of is your primary residence an asset? And we’re going to talk about buying a home, owning your own home versus renting, pros and cons, considerations, running the numbers. You’ve heard from Nate before on this show. We’ve had him on in Episode 040, where we talked about 10 Things Every Pharmacist Should Know About Home Buying, as well as Episode 064 and 065, Six Steps to Home Buying, Parts 1 and 2. So Nate, welcome back to the Your Financial Pharmacist podcast.

Nate Hedrick: Thanks, Tim, always nice to be here.

Tim Ulbrich: So two things I want to talk about first, before we jump into the recording. First is before we hit record today, you shared the good news that you and your wife Kristen are getting ready to close on your first rental investment property. So congratulations. Tell us a little bit more about what you’re working on there.

Nate Hedrick: Thanks, yeah, we’re really excited. I’ve helped a number of pharmacists get their own rental and investment properties, and it was time for me to pull the trigger. So I’d been looking for awhile, we finally found a house that the numbers worked on, and we got under contract just a couple of days ago now. And now we’re going through the process of inspections and all that good stuff. So hopefully that all goes well, and we’ll have that secured here by the end of the month.

Tim Ulbrich: That’s exciting. And Jess and I are going through a similar process, and you and I were talking before we hit record, we’re going to come back on in the future and kind of break down those experiences, we’ll talk about the numbers, we’ll talk about the good decisions we made, probably the stupid decisions we made that we don’t even know about yet, right?

Nate Hedrick: Exactly.

Tim Ulbrich: All with the goal of really hopefully encouraging and teaching, as we’ve done with other topics on the show before. The other thing I want to mention here is that we’ve been talking about this on social media, we’ve been talking about it on other platforms as well, but we’re excited to continue the collaboration with you to roll out the concierge service that you offer for pharmacists as a part of the YFP community, for those that are both buying or selling a home. Tell us a little bit more about what is that concierge service? What’s involved? And where people can go to learn more about that?

Nate Hedrick: Yeah, absolutely. So the concierge service is this thing that I’ve been doing for a little while from my own website, Real Estate RPh. And now we’re rolling it out to the entire YFP community. And the basic idea is that we’re looking out for pharmacists in terms of finding a local agent that knows what they’re doing. We want to be kind of on your team because if you really get into the process of buying or selling a home, as, again, I’m going through it right now myself, there’s a lot of steps, a lot of processes, and a lot of things to know. And having more people on your team can only be helpful. So what we really do is we get together with you and whoever’s going to be buying that home or selling that home, go through your budget, go through some background about why you’re making the move or whatnot. And we come up with a plan, and then we find you a local agent. And all of these agents have been personally vetted by myself, they’re a part of a growing network I’m creating, and we find that local agent or connect with that local agent that we know really well and get you to basically purchase that home using that agent. So the service is completely free, but the agent that we are working with basically pays us a referral fee. So there’s no cost to you, but we’re able to connect with more agents and bring them clients and make everybody happy in the process.

Tim Ulbrich: Yeah, one of the things I’m really excited about, Nate, with this is that obviously besides your peer-to-peer connection, pharmacist-to-pharmacist, which I think just puts you in the position to be able to understand some of the issues and the challenges but also really being able to — you know, you’ve lived this life of you’ve had student loans, you and your wife have worked through budgeting and all these other financial goals and where does home buying fit into this? So I think there’s some of that peer mentoring and advising that can happen as well that, you know, clients may be thinking about things like, hey, what would be good in terms of percentage down and how might this fit in? And you can point them to various resources and content and obviously your own personal experience as well. So we’re really excited. This is live. If you go to YourFinancialPharmacist.com, you’ll notice at the top of the home page, there’s a button that says, Buy or Sell a Home. And from there, you’ll be able to learn more about the concierge services and get access to schedule an appointment with Nate and to move that forward and hopefully coming in the future — in the not-too-distant future — we’ll also have an option here for those that are looking to jump into real estate investing. So again, that’s YourFinancialPharmacist.com, top right of the page, Buy or Sell a Home button, and that will take you to the page to learn a little bit more. So Nate, setting the stage for this conversation today, so again, we’re talking about is your primary residence an asset? How might somebody decide this decision of what’s the ROI on a home buy? Or should I continue to rent or should I purchase a home? And really the backdrop here is that I feel like there’s a lot of emotion that comes with home ownership. And I think especially here in the great U.S. of A that there’s a common belief that owning a home, I know I had it, should be a top priority and is beneficial to everyone to build equity and that often, it should supercede anything else in your financial plan. And you know, I think what we really want to talk about is some questions like, do we take this common belief too much at face value? What does the math really say? What are the pros and cons of home ownership? And how does home buying fit in with student loans and other financial priorities? Because at the end of the day, home buying is really just one — albeit a significant one — one part of a financial plan. So am I alone, Nate, in kind of hearing that common belief? Or is that something that you hear as well?

Nate Hedrick: No, I think that’s absolutely. I mean, it’s even true in my own life. I mean, as soon as we became full-time pharmacists and got out of residency, it was like, OK, how do we get a house? Because that’s the next thing, right?

Tim Ulbrich: Yeah.

Nate Hedrick: It didn’t matter if it financially was the next thing, that was just, that’s what you did next because that’s what you do, you own a house. So I’m totally with you.

Tim Ulbrich: Yeah, and I know Jess and I really felt the itch as well post-residency and I think when you feel that itch and then somebody says, “Hey, why are you dumping money down the drain renting?” and then you start looking at homes, it’s all over from there, right? I mean, you just kind of go down.

Nate Hedrick: And even worse was that I, again, at the time, totally naive to this, but I just compared mortgage and interest payments versus my rent payment, and I was like, oh, it’s cheaper to buy a house. Like it’s actually less expensive. And didn’t factor in any other things than that mortgage and interest payment.

Tim Ulbrich: So I did the same thing, so let’s start with that component, what you just mentioned, the true cost of home ownership. And I think often, as you alluded to, people are thinking about, OK, I’ve got a mortgage, I’ve got interest, and often that’s what will come up on a calculator. Or if you’re looking at a home on Zillow or Redfin or whatever, you’ll see those fees. But of course, there’s many other fees that need to be considered when somebody’s really evaluating what is the true cost of home ownership. So what is involved? What’s everything that’s involved when we look at the true cost of home ownership?

Nate Hedrick: Yeah, absolutely. So obviously the biggest things are that principal and interest payment, right? You are paying the mortgage. Unless you’re paying cash for a house, you need to be paying for that mortgage every single month in terms of the principal balance, then interest. The way most loans are structured, you’re going to pay a lot more in interest than you are on the principal. So just looking at a loan and saying, “Oh, it’s a $200,000 loan,” just that principal amount is not going to give you an idea of what your actual payment’s going to look like. So factoring in both of those and looking at your interest rate and how that’s going to affect your interest payment is certainly important. The next thing and the thing that I think is funny because I totally ignored when I bought my first house is taxes, property taxes. It can be a huge component. I mean, we pay thousands of dollars a year in taxes, and that’s money that doesn’t just come out of nowhere. You have to plan for it. And again, I don’t know why I didn’t look at that. Like everyone knows there are property taxes. But I didn’t think of that as a big important number. But it really is.

Tim Ulbrich: And how different that can be, right? From one area to another within a city even.

Nate Hedrick: Oh, absolutely. I mean, where we’re investing, the property we’ve got, the taxes are several percentage points higher, in fact, than where we live right now. And that was a major factor to say, is this really a good area to invest in? Because of that property rate. And so the number’s still work, but you have to have all that in mind. So then the other things to keep in mind, if you live in a community, there might be homeowner’s association fees. Those are often kind of hidden. But they can be quite high. I actually helped a client quite recently buy a condo here in Cleveland, and the homeowner’s association fees were probably, I don’t know, $200 more a month than her mortgage and interest payment were.

Tim Ulbrich: Oh, for the love…

Nate Hedrick: I mean, it was huge. It was crazy. And if you ignored that, it doubled her payment every single month. It doubled it. And without taking that into account, you would assume that this was a great deal. But you had to look at those numbers before you could do the final math.

Tim Ulbrich: So when you mention principal, interest, taxes, insurance, so that term is referred often to as PITI. And I think for the most part, when people are looking at a home, they’re thinking of those things. You mentioned obviously we talked about the variance that can happen on property taxes, I think for the most part, people are thinking of that, although I didn’t necessarily think as much about it. Even here in Columbus, for example, 10 minutes away, one part of the city to another part, you can easily have an increase of property taxes of 60-80% based on school districts and other factors. You mentioned homeowner’s association or some type of an association fee. And I think our goal here is not to suggest that you should find a location in the middle of nowhere that has terrible schools with low property taxes and no HOA fees, I think what we’re getting to is just understanding what’s involved in the total cost so you can really evaluate it with the rest of your financial plan. So besides those things, besides PITI, besides HOA, besides property taxes, what else could be involved when somebody’s really looking at this aspect of true cost of home ownership.

Nate Hedrick: Yeah, the last thing really that in terms of every single month kind of a thing that you need to keep in mind are the maintenance fees. So when you live in a rental place, often you’ve got a landlord or some sort of maintenance division that’s taking care of the property. Maybe they’re cutting the grass, maybe they’re fixing things when they break. But the maintenance of a home, it vastly, vastly outweighs the maintenance of a rental property. And so you all of a sudden have big capital expenditures that might come up. You might need to replace a roof or a boiler or whatever. And all of a sudden, that’s on you. So you have to kind of plan for those things. It’s much harder to predict, but I’ll tell you one of the things that we do whenever I’m walking around a home with a potential client or with a client, I say, “Look, if these things are all about to break, that means your capital expenditures in the next couple of years are going to be much, much higher. You need to factor that into the payment.” If everything’s brand spanking new, then you can look at it a little bit differently. But keeping that kind of thing in mind. And even though you may not be paying for it every single month, you’re going to be paying for it eventually. And so factoring that into your monthly payment can be really important.

Tim Ulbrich: Do you suggest, Nate, on that point — you know, I’m thinking about like on a rental property, it’s often recommended that you set aside x percent each and every month to be able to fund those big capital expenditures, roof, eventually you’re going to need a new hot water tank, things like that. Do you typically recommend clients think of that as well to say, hey, obviously the numbers may be different, but it may not be a bad idea to every single month, you put aside some dollars, essentially a sinking fund, to be able to cover those things?

Nate Hedrick: Yeah, I usually recommend it. And that probably comes from looking at investment properties so often. I’m always calculating a cap x rate and what that’s going to look like, but I definitely recommend that, especially first-time home buyers, somebody that may not have had those kind of experiences before. If all of a sudden you need a $4,000 boiler, you don’t want to just have that surprise pop up.

Tim Ulbrich: Absolutely. And I think your point on upkeep and maintenance is a good one. I was just reflecting as you were saying that — and anybody who owns a home could appreciate this — is just go into your garage and look at all of the things you didn’t have before you moved into your house, right? So it’s not even just the week-to-week type of things and OK, you’re going to plant flowers, you’re going to do these things, but even all the different tools and devices and lawn mowers and all the things that you need that you probably necessarily didn’t need in a rental situation and factoring those in over time as well. So you alluded to, Nate, that there’s these monthly types of things that you have to consider beyond just the principal, interest, taxes, insurance, which then lends me to believe there’s some other expenses that may not be monthly but that are significant that we have to consider. Tell us about those.

Nate Hedrick: Yeah, you’ve got a number of up-front fees and costs whenever you’re buying or selling a house. You know, everything from simple agent fees, so if you are a seller, for example, often the seller is the one that’s paying the real estate agent fees. So the buyer doesn’t often see that, but sometimes maybe the seller can’t afford to pay all of it and want to split that with the buyer, that’s something they negotiated. So there’s even just the fees of doing the actual deal itself can pop in, and then again, if you’re getting a mortgage, not paying cash for a house, you’re going to have a number of fees associated with that, so everything from the inspections that you do after you get under contract — and believe me, you should be doing inspections, please — to title, the cost of actually reviewing the title on that property, making sure that it’s valid and re-writing that title in your name. You’ve got things like closing costs, which can be anywhere from 2-4% of the overall loan cost. And again, I’ve been in a mire this past week of loan documents and negotiations with closing costs and such. But all those things can really start to add up. So ignoring all those one-time fees can be really scary too because if you need $30,000 and you’ve calculated that as your down payment and all the stuff that you need for a house, all of a sudden you’ve got an extra $6,000-7,000 potentially in one-time, upfront fees that might be coming out. So you really need to keep that in mind.

Tim Ulbrich: I’m glad you said that because I think it’s easy to look at let’s say a $200,000 home and say, OK, we’re going to put 10% down, so we need $20,000 but not think of the additional cash. And that’s really important for those that have a goal that are listening of they need so much down to get into a home, putting those assumptions into that calculation so they can plan accordingly. The other one I would add here, Nate, just from personal experience, and I think this is certainly very variable from one person to another and isn’t as easy to measure as some of these other things, would just be the reality of depending on where you’re at in the neighborhood is that I think it’s natural that your expenses and costs may go up accordingly to those that are around you. So we’re getting into the concept here of potentially keeping up with the Joneses and you know, as people incur law maintenance costs, they install fences, or they put nice decks or patios on their property, like do those same pressures have an influence on how you’re spending money in your own home? And again, there may be costs there that are incurred over time. So if we think about, Nate, you know, I’m thinking back here to “Rich Dad, Poor Dad,” Robert Kiyosaki’s book, that an asset is anything that puts money in your pocket. And a liability is anything that takes money out of your pocket. As we just talked about all of these costs, even after a mortgage is paid off, how do you look at this? Is a home really an asset?

Nate Hedrick: Yeah, I think it’s so funny because I think growing up, we had this societal norm that a house, you did it because it’s cheaper and it’s better for you than renting, and it makes you money somehow. And like we never really think about how that works. Well, the house appreciates and then you sell it, and you make out. Everybody wins. But in reality, if you look at all those fees we just talked about, even though historically, houses have gone up in value considerably over the years, you don’t always make money on a house. In fact, very rarely do you put any money into your pocket. And so by that definition and by what Robert Kiyosaki often says, your house is not an asset in that regard.

Tim Ulbrich: Yeah, and I think of course, we have to mention here the market specifics, right? So I’m thinking about previously to coming down to Columbus, I was living in the booming metropolis of Rootstown, Ohio. And so just seeing the appreciation in that market, while there was some post-2008, certainly it’s nowhere compared to what happened here in Columbus or other markets. So even just thinking about appreciation, taxes, expenses, of course this is going to be varied from one market to the next. So Nate, one of the most common questions if not the most common question I get besides ‘Should I pay off my student loans or how should I pay off my student loans?’ is ‘Should I rent or should I buy? And how might I consider that and weight that decision in the context of all these other competing priorities?’ So when somebody comes to you and they’re looking at a home or maybe even how you thought about it for your own personal situation, just talk us through how you think through that scenario for the right time to buy.

Nate Hedrick: Yeah, yeah, absolutely. I think the first thing you need to look at is your own kind of personal finances and where you stand. Again, the biggest thing — if we haven’t said it enough already — is that there are a lot of extra costs that come with owning a home. It’s not simply just a rent payment every single month anymore. You’ve got things that are going to show up from taxes to maintenance to stuff that breaks, and you need to be able to weather that. So if your finances are to the point where you are spending so much on student loans or so much on other debt that a big financial hit would really ruin you, it may not be the right time to buy. That’s kind of the first thing is making sure that you’re stable enough and comfortable enough that if something does crop up, you’re able to handle that. Once you’ve kind of made that decision and made that move and said, OK, I’m comfortable here, the next question I think is how often or how long do I plan to stay in this particular area. And this is where it really varies by location. Different locations benefit from longer stays or shorter stays. I was recently reading about the advantages of buying a home in like New York City, and it’s so expensive there compared to renting — I mean, renting is expensive — but it’s so expensive to buy a home in New York City, you’d have to live there something like 20 years to make it worthwhile compared to renting.

Tim Ulbrich: Wow, wow.

Nate Hedrick: It’s absolutely insane. But in other areas, it can be a year and a half and the values are increasing so quickly and the purchase prices are so low that it doesn’t matter, you can turn that around in a year and a half and be fine. So if you’re financially sound, you then need to ask yourself, how long am I going to stay here? And then what does that mean for this market? Does it make sense based on that information to buy or sell?

Tim Ulbrich: Yeah, and I think you highlighted well that it certainly can be region-specific with your example from New York and market-specific, but I think it’s also economy-specific and what’s going on. I mean, if somebody bought a home today versus they bought it right after things crashed in 2008, very different outcome in terms of how long you need to be in a home before you may be able to break even on those costs. I would reference here too, one of the tools I love and I often give out to others is New York Times — and we’ll link to it in the show notes — New York Times has a really good buy v. rent calculator because I think to our conversation earlier, it typically is not an apples-to-apples conversation because just like you did, just like I did, just like many others do, you’re typically looking at, OK, here’s what I’m paying for rent, here’s what I’m going to pay for my monthly mortgage payment, which would include the principal and the interest. And obviously, it’s much more than that as we highlighted just a few minutes ago on this episode. And what I like about that calculator is that it helps you consider all those other variables and bring it to as close to an apples-to-apples comparison as possible. So we’ll link to it in the show notes. For those that are listening that can’t get to the show notes, if you just Google “New York Times buy v. rent calculator,” you’ll see that come up. So Nate, I want to continue that conversation for a moment on how long you might need to be in a home before you really start to really that value because I think we often see this with new graduates that are doing residency or maybe they’re in a transition period with the first job, and they’re really not sure, maybe three years, maybe five years, maybe 15 years, who knows? But while we have established it can vary, what are the factors that one is really trying to consider here in terms of will this be break-even or not? What’s going to help determine that?

Nate Hedrick: Yeah, so I think what you need to look at is if you’re looking at a particular area — and most people, honestly, start with that, right? You’re not just saying, “I want to live somewhere.” You have a plan, you’re going somewhere for a job or what have you. So once you know where you’re looking, you can look at the rent prices there. And then look at the home values and look how they’ve changed over the last couple of years. You know, nobody can predict the future in terms of what home values are going to do, but it should give you some insight as to wow, this — maybe it’s like a Columbus market where you live, Tim, and it’s just been going gangbusters for the last couple of years, or maybe it’s been on a decline. And so you can get an idea of well, where do I expect this home to go? If I only live there two years, where is it going to be when I end up selling? The other thing is if you are — even as a resident, I advocate for this quite a bit — even if you’re thinking you’re only going to be there for a short amount of time, what if when you leave, you end up renting that property out as a rental property? So maybe if you really have that itch to buy a home, maybe the trick is to go buy something that you know once you’re done, you could leave it, and it could still become a cash-flowing rental property. I’ve actually advocated, again, a lot for residents to look at doing this. You’re living most of the time in a big city, a lot of people want to rent there, you’re near to a hospital, which means near to a lot of jobs, you’re kind of setting yourself up for a perfect rental property location. And so if you want to go there with the idea that hey, I might be here one year or I might be here for 10, buying a home’s not a bad idea if you set yourself up for success to begin with and get a place that kind of meets whatever need you’re going to have down the road and has that flexibility built in.

Tim Ulbrich: And are you suggesting a potential single-family home? Or like a duplex, triplex, something you could house hack? What are you thinking there?

Nate Hedrick: Yeah, yeah, so I actually had an article about house hacking as a resident and how you can do that. But I think either would be fine. I think if it were me and I could do it all again, I wish I would have gotten a duplex when I was a resident.

Tim Ulbrich: Yes. Yes.

Nate Hedrick: So if I could change one thing about residency, that would be it. I would have bought a multi-family home, I would have had people paying my rent while I went off and did my residency. But again, I think you can still go right with a single-family home as long as you build it with the idea that, OK, when I leave this, it needs to be rent-happy, it needs to be capable of producing cash flow and worth its while.

Tim Ulbrich: Yeah, and while I would say if we’re honest with ourselves, there’s many things we probably would have changed about residency, but on the personal side, I agree with you. This is one that I would have done is I think a duplex, a triplex. For those that haven’t heard that term before, can you just define that quickly?

Nate Hedrick: Yeah, so multi-family homes, the short version is — so you get single-family homes, right? Which is a one-family dwelling, most people are aware of them. There’s one door and one unit. Multi-family homes are anywhere from two to four units within the same structure. So it’s kind of like a tiny apartment building. And the advantage of these multi-family homes over an apartment over a single-family home is that the bank when you’re getting a loan on a multi-family property, they don’t look at it as a commercial loan. It’s still considered a residential loan, so there’s a number of advantages in terms of lending and in terms of tax implications and so on to having a multi-family property, that two to four units.

Tim Ulbrich: I love it. And we’ll link to your article in the show notes as well if listeners want to learn more about that concept. There’s also lots of resources out there that talk about house hacking. The other variable I would add here, Nate, when you think about kind of this question of what’s a break-even in terms of how much time I have to be here, obviously would have to include how much equity you have in the home and how much down payment you had or didn’t put down in the home, right?

Nate Hedrick: Yeah, exactly.

Tim Ulbrich: So this could either be equity you build into your down payment, it could be equity that happens because of appreciation, but you know, if you put 20% down, and you move in three years and the market has only appreciated a little bit, you’re probably not going to have forced much equity through payments just because of how those payments are structured, as you mentioned earlier on the show. However, if you have to pick up and move, even unexpected, and you’re then going to incur realtor fees with selling, closing costs, all those things, you at least have some equity that can help cover the expenses of that. And while it may not necessarily be break-even at that point, you’re at least able to weather that storm and kind of work through that. So I think how much down payment you have, how much it has appreciated, what actually are the closing costs that are involved, all those types of things will determine this number of how long you have to be in a home before you get to a break-even place. And of course, with a greater down payment, you’re kind of working yourself down that amortization table where you’re making payments that more is going toward principal and less is going toward interest, which is always a good thing. So Nate, let’s just shift gears real quick to wrap up and talk about we’ve kind of established that is a primary residence an asset? It depends when you consider the costs, probably maybe not so much for many people. But I don’t think we’re saying there’s no value in home ownership, right? I mean, from your perspective, just thinking about for you and Kristen, like beyond the number, what is the value for you guys in terms of owning your own home and having your own place?

Nate Hedrick: Yeah, I think it’s easy to get into the financial weeds and just say, yeah, well, home’s not an asset, so maybe it’s not worth it anymore. But no, the reality is that there are so many emotional aspects to owning a home that are very difficult to replace and are hard to put a value on. Just having a safe, secure place that I can go back to with my family and I can put time and money into this place, I get the benefits out of that. There’s a lot to be said for that. And again, it’s something that I don’t think you can put a true value on. So it’s not something you can calculate, not something that you can Google and pull up in a table or an Excel spreadsheet, which all my data nerds are cursing, but it is an important factor to keep in mind.

Tim Ulbrich: Yeah, I think you have to weave into this the value of your own place and making it your own and being part of a community and all that comes with those aspects and factor that in. You know, we talk about with student loans that you’ve got to run the numbers, and you have to add the emotions on top of it, right? How do you feel about the debt? And this is the same thing. I think when we’re talking about home buying, you’ve got to run the numbers, but you have to also consider some of these other variables as well. So as we wrap up here — and again, you’re going to be hearing from Nate a lot more in the future — we already talked about the concierge service. If you’re looking to buy or sell a home, make sure you check that out, YourFinancialPharmacist.com, top of the page, ‘Buy or Sell a Home’ will get you more information on that. Also would recommend you check out — if you haven’t already — we have a first-time home buying Quick Start Guide, which Nate helped develop that for somebody’s who’s looking at home buying for the first time is really a great place to get started, to get more information as you’re continuing to evaluate what the next step will be for you in that process. You can download that guide for free at YourFinancialPharmacist.com/homeguide. That’s all one word. Again, YourFinancialPharmacist.com/homeguide. So Nate, as always, thank you for taking time to come on this week’s episode of the Your Financial Pharmacist podcast.

Nate Hedrick: Yeah, thanks for having me.

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YFP 112: Why One PhD Pharmacist is Taking on Two Side Hustles


Why One PhD Pharmacist is Taking on Two Side Hustles

Dr. Brent Rollins, a pharmacy graduate of Ohio Northern who obtained his PhD in Pharmacy Administration at the University of Georgia and currently serves as a faculty member at Philadelphia College of Osteopathic Medicine, joins Tim Ulbrich on the show. They discuss Brent’s personal finance journey, why he cares so much about the importance of educating students on this topic, his unique side hustle in serving as both an expert witness and covering professional football, and how he is teaching his 3 kids about personal finance.

About Today’s Guest

Dr. Brent Rollins is an Associate Professor of Pharmacy Practice at the PCOM Georgia School of Pharmacy. He received his BS in Pharmacy from Ohio Northern University and then a PhD in Pharmacy Care Administration with an emphasis in Pharmaceutical Marketing from the University of Georgia. He has published numerous peer-reviewed articles and given presentations on health care consumer behavior, particularly focusing on direct-to-consumer prescription advertising, and the scholarship of teaching. He is the primary co-author of the textbook titled Pharmaceutical Marketing and co-author of another textbook, Financial Analysis in Pharmacy Practice. He is a member of Georgia Medicaid’s Drug Utilization Review Board. In addition to his day job, Brent also serves as a consulting pharmaceutical marketing and pharmacy practice expert witness for various law firms and works as an Analyst and College Football Writer for Pro Football Focus (www.pff.com) and now UGASports.com. In his spare time, Brent enjoys spending time with his wife, Deanna, and three children – Carson (12), Camron (11), and Breleigh (8) – and coaching youth football, basketball, and baseball.

Summary

Dr. Brent Rollins joins Tim Ulbrich on this week’s podcast for a discussion covering personal finance education in pharmacy school, side hustles, and his personal story.

Brent shares that personal finance education in the pharmacy curriculum is so important because there’s a large debt load that many pharmacists carry and more students don’t know how to manage their money. He explains that the pharmacy profession is evolving. When he moved to Atlanta and was going to attend graduate school, he was able to call to obtain a job. Now, it’s more difficult to do that and pharmacists need to focus on the business side of their degree. Brent’s ideal personal finance curriculum in pharmacy administration entails a consistent approach that starts as soon as the student steps on campus. He envisions hiring directors of careers to help show students different job paths and also offer seminars and educational sessions for students to learn more about personal finance.

Brent obtained his BS in Pharmacy in 2004 from Ohio Northern University and continued his education at the University of Georgia where he received his PhD in Pharmacy Administration. He decided to take this route because of advice from a local pharmacist he knew from his hometown, Dr. Sullivan. Dr. Sullivan said that you have to look at pharmacy like a game of chess; if you’re just a pharmacist, you are only a single piece on the board. You have to find what your king piece is that allows you to move anywhere on the board. From this, Brent knew he wanted to diversify his education while also fulfilling different passions, like business and money.

Brent and his wife aren’t shy about communicating with their three children about money. He talks to them about only making purchases if you have the money to pay for it and avoid credit card debt. They speak about how to save for large purchases, but also focus on how experiencing and living life is more important than material items.

Brent has two unique side hustles and shares that side hustles are invaluable as your day job can sometimes become monotonous. He says that side hustles allow you to do something you’re passionate about while being able to step away from his daily grind. Brent works for Pro Football Focus where he collects data on football players, plays and games and will also be content writing for them this season. He is also an expert witness and primarily has two types of cases: marketing (big pharma, patents) and standard of care.

Mentioned on the Show

Episode Transcript

Tim Ulbrich: Hey, what’s up, everybody? It’s my pleasure to have on today’s show Dr. Brent Rollins, an associate professor in the Department of Pharmacy Practice at Philadelphia College of Osteopathic Medicine in Georgia. Dr. Rollins completed his BS in Pharmacy at Ohio Northern University — Go Polar Bears — and his PhD in Pharmacy Administration at the University of Georgia. Brent, welcome to the Your Financial Pharmacist podcast.

Brent Rollins: Thanks so much for having me, Tim. Pleasure to be on. Love what you guys are doing with this.

Tim Ulbrich: Thank you, I appreciate that. And in addition to sharing our alma mater, Ohio Northern, we share a passion for personal finance education and the importance of side hustles and teaching kids about money, all of which we’re going to talk about on today’s show. So before we jump into your career and your financial story, I want to start by talking about the importance of personal finance education and the PharmD curriculum. And I think we would both share the importance of starting way before pharmacy school, but we’re going to focus on the area that we have the most opportunity to impact. And as I was reflecting on our conversation several weeks back, getting prepared for today’s interview, I was struck by your passion for needing to do more when it comes to teaching personal finance to our students. So tell me a little about where does this desire come from for you in terms of why we need to be doing more for our students on personal finance education?

Brent Rollins: I think in general, it’s mainly just my own — I like looking at money. I’m a numbers guy. And as we’ll maybe find out later when we talk about the football stuff that I do, numbers are somewhat of a passion for me, and money is the primo number we all care about, in a way. And the biggest thing that I saw was just within pharmacy school myself, watching UGA as a graduate student is when you get students talking about personal finance, money, business in general, you see eyes come open a little moreso. You see a renewed interest, you see something like, oo, this is 100% relevant to me and everything that I’m going to do moving forward. Thus, I care greatly about this.

Tim Ulbrich: And why is that, do you think? I experience the same thing, and that’s what gets me so excited is the feedback from students like, wow, we need more of this. I wish I would have had that earlier. What are the gaps that you think are there right now with students. Why are they feeling this pressure and concern around this topic? I mean, obviously, the debt load, but what else?

Brent Rollins: I would say debt load is very much there. And then also I think you’re seeing more and more students who one, they haven’t really had to manage money in their life. Thus, now it’s becoming a thing, specifically for maybe a younger student who’s two years and then straight to pharmacy school and things of that nature. But also, a lot of the students who’ve been out in the workforce for two, three, four years, especially where we are at PCOM, is you have those that are maybe in their mid- to later 20s in pharmacy school, sometimes even in their 30s and this is maybe even a second career for them. And really getting that knowledge and getting a handle of it as they move forward is I think of big importance for their own personal well being.

Tim Ulbrich: So with your Pharm Ad background, we’ll talk about that here in a little bit, I’m assuming you’ll fold some of this into your existing coursework. I know some colleges embed personal finance education in Pharm Ad courses; others do nothing at all; others have standalone courses, so tell us about what you’re doing at PCOM and maybe the desires you have even going forward because I’m assuming we have students listening, we have faculty listening, they may be able to go back to their colleges and say, oh, I really liked this idea or here’s some opportunities that Brent’s thinking about that we could utilize in our college as well.

Brent Rollins: The first thing I do is in terms of actually structuring the curriculum, it’s a piece of the Pharm Ad course, much like you see in a lot of other places. But one, we don’t ignore it. And the second part of that is there’s other pieces within the course, such as the topic of entrepreneurship in general, that personal finance continually comes up and a lot of the examples that I use, even when you teach basics of accounting and financial statements, profit-loss, those examples then become a personal finance type example. So as much as I possibly can, we try to interject — because I think it’s relevant. And it helps students truly just grasp it because whether or not maybe they understand certain concepts of pharmacology and all the things that we teach from a therapeutic standpoint, every single one of them grasps personal finance in that hey, I don’t have enough money to pay x or go on x trip.

Tim Ulbrich: So Brent, one of the things I hear — and I would say that this is changing rapidly, of which I’m grateful for — is that I think there’s still somewhat of an old-school thought of there of in some places, hey, personal finance education is really not pharmacy education, it’s not the sciences, it’s not what they need to be knowing and doing to be ready as a clinician. I obviously disagree with that wholeheartedly. I mean, to me, it’s a part of professional development, and I think we have an obligation to our students. I mean, what would your response be to sentiments like that?

Brent Rollins: I’m 100% on your side. And the biggest reason I would say that is just the evolution of the profession in general to where it’s not necessarily — I mean like, for example, when I graduated, I moved to Georgia to go to graduate school, I made a few phone calls, and shortly thereafter found a place to work part-time and then eventually full-time during graduate school. It wasn’t that difficult. And now that world doesn’t exist. It’s, to me, the business of pharmacy and the world of pharmacy is much like getting a business degree where things like right time, right place, right internship, knowing the right person.

Tim Ulbrich: That network, yep.

Brent Rollins: Or hey, I’ve got to go somewhere else to work my way up to where I want to be. All these ancillary things that matter for basically the rest of professional life outside of pharmacy and some other healthcare professions, those things now matter. And that, to me, is why educating students on one, personal finance, but two, just the realm of business and how the business world works becomes much, much more important.

Tim Ulbrich: We have over the past couple years been going to a lot of colleges, and we’ll come on campus for an hour or two. And one of the follow-up questions I often get because of the energy we see among the students is the faculty will say, “Hey, Tim, what do you think this looks like ideally? This is great to have a one-hour session, maybe a two-hour session, but obviously it’s not necessarily impacting all students, and it’s not necessarily longitudinal and intentional in its design,” so if you were to think about sort of the ideal personal finance curriculum in a pharmacy education, putting time aside and resources and other things, what would that look like to you in terms of how it’s delivered, when, and at what level along the way?

Brent Rollins: To me, it would look like a consistent approach from Day 1 that students step foot on campus. And I don’t know that I see it — it might exist. This might exist, and I haven’t looked specifically. But I see colleges of pharmacy and schools of pharmacy hiring directors of career or careers. And their job is specifically to help students, show students the different career paths, provide students internship help, I mean, a lot of that stuff is a lot under Student Services at some point now, currently. But I think it becomes more of an individual focus that we are directing your career, not just educating you on how a drug works and the side effects that it causes. And thus, over the period of the consistent three years that most students are on campus, there’s seminars from different people, there’s educational sessions from financial planning, how to buy a house, all that. We actually, at PCOM, we actually do a pretty good job of that. But it’s a campus-wide Student Services type function. But it’s not a mandatory, everybody comes, it’s a part of what you do. It’s more of a hey, here’s this evening seminar from this financial planning guy. Or here’s this evening seminar from a mortgage rep. That sort of thing. I think it becomes more and more a consistent approach, and it becomes — from an ACPE standpoint — co-curricular type thing that really helps from accreditation as well.

Tim Ulbrich: Yeah, and I share that with you. I think in my experience teaching this in an elective environment and working with other colleges, I think it tends to be a hey, we have a resource here for you if you want to engage, great. But what I typically see in those environments, especially when we talk about finance and money and a topic that for many is taboo, typically those attending it are already at a higher level or have a higher interest or have a higher concern. And to your point about kind of the requirement, most of the dreams that we have at YFP is to really move the needle and trying to move this as a requirement. And co-curriculars are nice, but co-curricular often still involves a menu and a selection, and it may not be for every student. And I think there’s some level of personal finance education that should be foundational for every student. Again, I truly believe we have an obligation, and I’m hoping we can help facilitate, just like you and I are talking here, that a lot of colleges are trying to do their own thing in this, and how can we share resources and syllabi and other things? And I hope if there’s faculty listening, we could begin to make those connections to try to leverage the expertise we have of various individuals across the country — and knowing faculty are busy and not having to reinvent the wheel at each of these institutions.

Brent Rollins: 100% spot on. And I know for darn sure, I send them to your website and tell them, hey, prerequisite for coming to class today, listening to this podcast.

Tim Ulbrich: I appreciate that. Well, we always say it’s everything that we wish we would have known while we were in school, so I’m grateful for that. So before move on to sum up your personal story, both career and financial, I have to just ask you, in your role as a faculty member, but we’re in a time period right now obviously leading up to a political election coming up in the future. We’re not going to talk politics, but we have to talk forgiveness a little bit because there’s some pretty bold plans coming out. You know, Bernie Sanders has a plan that was released recently, Elizabeth Warren, and I don’t even think we have to get in on the specifics of these plans because they’re going to change over time but rather I just want to get your feedback on the concept of forgiveness. You know, is it a good thing for pharmacy graduates? Is it a bad thing? You know, who should qualify, who shouldn’t? And does it really solve the problems? I mean, what are some things that we should be thinking about when it comes to forgiveness and pharmacy graduates?

Brent Rollins: That’s an absolutely outstanding question and one that for me, personally, I don’t know the right answer. I don’t know that there is a right answer because much like — I’m just a massive proponent of two things: One, competition, and two, sort of earning and everything that you get out of this time that you have on Earth and the work ethic that you put into these things. Now, from a resource standpoint, would it be better off and students, hey, I can go do what I want and not have to worry about these things? Of course. Me personally, I didn’t have the $150,000 student loan burden that other students and a lot of the students, the majority, have, and I realize what that means. But it’s also about sort of learning and learning how to evolve and being challenged. And financial challenges are just as much a challenge as a physical challenge or as a hey, I’m 5’9” in a 6’5” world, you know, in terms of basketball or something like that. Those challenges are things that people have to learn to overcome because every day, whether we like it or not, you have to go compete. And I guess my sentiment is hey, let’s learn, let’s evolve, as opposed to just making it something that totally, in essence, you don’t have to think about. Who knows? It’s a fantastic question. There’s so many economic ramifications of it that we could go into forever and people way smarter than I that have opinions on, but it is an interesting topic, for sure.

Tim Ulbrich: Yeah, I think your point’s a good one. I mean, it’s obviously very complicated, and actually, Richard Waithe and I, Richard being the host of the RxRadio podcast, we just recently had a great conversation on this topic specifically in more detail. So I would reference our listeners to check out the work that he’s doing over there, which is fantastic. So a shoutout to him. What I struggle with — because even these two plans aside, we talk a lot on the podcast about Public Service Loan Forgiveness, and I always am encouraging people, it always has to be a conversation of the math plus. And the plus is all the other variables that often get overlooked, so when we talk about paying off debt, you have to account things like the rest of your financial plan and your spouse and how it impacts your family and how you feel about the debt. And when I think about my journey going through paying off a couple hundred thousand dollars of debt, I’m not suggesting this is for everyone, but I don’t think my financial plan on the back end would be where it is today if it weren’t for all the lessons I learned throughout that. Now, does it mean it has to be like that for everybody? I don’t think so necessarily. But I think that has to be a part of the conversation when you have a discussion like this in terms of some of the forgiveness options.

Brent Rollins: Yes, that’s 100% on point.

Tim Ulbrich: So jumping to your personal career story, you graduated in 2004 from Ohio Northern, BS in Pharm, went on to pursue a PhD in Pharmacy Admin. So why did you go that route? Share with us, our listeners, about the route in Pharm Ad?

Brent Rollins: Well, first off, we’ve shared a great professor who very much made an impact on me at Ohio Northern and who’s currently at Ohio State, and that’s Donny Sullivan.

Tim Ulbrich: Amen to that. Yeah.

Brent Rollins: And Dr. Sullivan sort of took me under his wing in a way and just showed me a different world. And for me, I was always looking for something else when I went to school. And luckily enough, I was the last class that had the choice of the BS versus the PharmD. And I knew I was going to graduate school, so that’s one year of tuition I didn’t have to pay. But a pharmacist in my hometown who owned a pharmacy, went to my church, just a great human, told me that — before I went to school, he said, “Look, Brent, you have to look at pharmacy like a game of checkers.” OK, that was a little interesting.

Tim Ulbrich: Yeah.

Brent Rollins: And I was like, “OK, so what do you mean?” And he said, “If you’re just a pharmacist, and that’s all you do, you are a single piece on that checkerboard. You can only go certain places. You have to find whatever it is for you that becomes your kingpiece —

Tim Ulbrich: Great wisdom.

Brent Rollins: — that allows you to move anywhere on the board.” And I took that with me. And I tell students all the time that same exact sort of philosophy, and that’s what led me to hey, and business and money was always something — and numbers — was always something interesting in the first place, so doing research under Dr. Sullivan, presenting at some meetings, those sort of things, it just led to that and led to exploring a graduate option.

Tim Ulbrich: I’m going to steal that, by the way.

Brent Rollins: Steal it all day, every day. It’s a great one. I like it.

Tim Ulbrich: Yeah, and it’s so timely in kind of the state we’re in as a profession now. I think it’s great wisdom and something I want to share with my kids but also students. But I think more timely than ever with some of the things that we’re facing now. So you get your PhD in Pharm Ad from the University of Georgia, so tell me about how that connects with your current role and what you’re doing at PCOM.

Brent Rollins: So one of the things — when we moved to Georgia, and it was basically — I’m originally from West Virginia, went to Ohio Northern, and then so I looked at West Virginia University and then everywhere south because I had had enough of the frozen tundra, unfortunately, at Ohio Northern. But we just, in terms of fit and faculty fit as well as just the life fit part of it, that’s why we came to Athens. And I just, I love it here. I love living here as much as anything else. And thus, so once I graduated from graduate school, looked at various academic jobs, interviewed, and then PCOM was opening just at that exact same time. And it just worked out to where I was able to come here and was offered a job here and have been here since the school was opened. So for us, it’s just — it would take someone like adding a 0 to my salary or something like that for us to move just because we love where we live so much.

Tim Ulbrich: And I think that’s a good connection and obviously, you and your wife have three children, you shared with me 12, 11, and 8 years old. And I think the academic life fits well with activities with kids, and I know your kids are active as well. And so I want to transition and use that as an opportunity to talk a little bit about how you and your wife have effectively worked together and maybe some of the things that you guys have implemented to do that well and where there’s been challenges and then also talk briefly about what you’re doing in terms of teaching your kids about money. So when it comes to this topic, we all know the data and the literature, it’s difficult for spouses to work together, to be on the same page. My wife and I have shared some of this on the podcast. So have you and your wife always been on the same page? And I’m guessing the answer may be no, but talk us through about how you practically work together when it comes to your financial plan and more specifically, how you resolve differences.

Brent Rollins: I think for the most part, we have. I mean, there’s always certain little things here and there like we’ve built two houses and we just finished building a house recently, and there’s always like, “Hey, I would like this,” kind of argument. And I’m like, “Well, hon, that’s great. But that also costs this.”

Tim Ulbrich: Right.

Brent Rollins: So you know, those sorts of things. But in general, we have always stayed on that same page, and we have a lot of the same interests in that we, for example, we have — I wouldn’t say extended ourselves, but we’ve spent just a little bit more on homes than we maybe would if we enjoyed traveling around the world or something like that because we enjoy our time at home, we enjoy spending time with our kids at home. So that was definitely something that’s helped over time. And my wife is very much, she’s not someone who’s just going to go and spend crazy amounts of money on anything. For me personally, the only thing I care about in terms of spending money is I want to be able to go out to eat when I want to go out to eat. And if I want to go to a ball game, I can go to a ball game. Outside of that, I have no sort of massive wants and desires in that standpoint. So for the most part, we have very much been on the same page. And even like for example, when I was in graduate school, I worked full-time as a pharmacist and then also was a full-time graduate student. And her ability to stay home, take care of the kids, that allowed me to do what I needed to do. And it relieved a massive burden of, hey, who’s going to pick up the kids now? All those sort of things. So given that she’s been able to do that, it’s made everything sort of fit. And now, it’s just about growing and getting better and making sure that we don’t — I think I remember the podcast you guys had a while back on lifestyle creep, making sure that that does not happen to us and that we have those same focuses and then also, now it just becomes those things as well as teaching kids.

Tim Ulbrich: So on the topic of teaching kids, you know, while teaching in pharmacy school is nice, I firmly believe — and I think you share this with me — that I think about my kids who are now 7, 6, 4 and newborn, like outside of my newborn, like they’re already starting to establish those behaviors and being aware of conversations, so I think it starts very, very early, and it starts in the home. So what does this look like for your family? And how have you and your wife approached this topic of teaching kids about money?

Brent Rollins: The biggest thing that we’ve focused on telling them and showing them is outside of, say, purchasing a car or a home that are the large, large purchases, if you can’t pay for it, don’t buy it. Like if you can’t stroke a check for it or take some cash out and pay for it, don’t buy it. Stay away from it. And that goes with credit cards and sort of teaching them what credit cards are about that hey, we — and for us, I hate credit card debt in any way, shape or form, so it’s something if it’s on there, I’m mainly using it for the points. I know I’m just going to write a check for it. And we did a lot of that when we built the house. We got a lot of points, that was nice. But you know, it’s one of those things, that’s really the primary thing. And I’ve seen that in my oldest son, who hoards money, any money that he gets, whether that be for birthday, Christmas, whatever, grandparents taking care of him, I think the only thing that they will legitimately want to spend money is if they haven’t got a pack of baseball cards or football cards in awhile, they’ll go, hey, can we go to Target? I’ve got an extra $10. I want two packs, that sort of thing. That’s about it. So we’ve shown me that look, experiencing life and living life is maybe more so way important on the scale than buying things.

Tim Ulbrich: Absolutely. Yeah, and it’s all about a balance, right? I mean, I think that’s one of the things I often think about my own kids. I tend to be on the aggressive saving, squirrel it away type of side of things, and I want my children to understand the importance and value of that, but I also want them to understand that it’s OK to spend money but to plan and for it to be intentional and balanced with other things. But to your final point there, which I think is the most important thing, is that typically, the things that have the most joy and are most rewarding don’t have a dollar sign attached to them. And they are that time that you have with family and friends and creating a lot of those memories. One of the things I wanted to ask you here on this kids topic is I just had on the podcast, it’ll be published soon, the author of a book that just got released, “Mom and Dad, We Need to Talk: How to have essential conversations with your parents about their finances.” Cameron Huddleston wrote that book. And one of the takeaways I had there was often, this issue of being able to talk to your parents about money stems from this being a taboo topic in the home with growing up. So how do you and your wife handle that? Is this something that is just an open topic? Or how do you engage with conversation in terms of money and their spending patterns and other things?

Brent Rollins: It’s very much been an open topic in our house. And we’ve not shied away — now, do we tell them, hey, this is what we have and this is what we’re going — we don’t get into maybe specifics, but certain things we very much, hey, this is what this costs. This is what you would have to do in order to get this level of money to pay for that thing. Is it really worth it? What’s the value? Does it provide such a great benefit that it’s worth that cost? So it’s more of an open conversation than anything else.

Tim Ulbrich: Yeah, and I like that. And I think that’s the point she was trying to make in the book is that yes, there’s times where you can be really intentional and have a specific conversation, but more than anything, it’s just not making it a taboo topic. So if you and your wife are talking about a home purchase or something you’re working on, like letting them hear and be a part of that conversation. The last part I wanted to transition here to is let’s talk about your side hustles because we have done a lot on the show — and credit here to Tim Church who’s done an awesome job of starting this side hustle series and featuring pharmacists’ side hustles — but you really have two unique side hustles, which we’ll talk about here in a minute. But even before we talk about what those are, I want to ask you the question of why do you think a side hustle is valuable? And why do you think that’s something pharmacists should consider?

Brent Rollins: It’s invaluable to me because so often — and we hear this from students who are applying, I see this on the message boards about admissions with pharmacy and where we as pharmacists — a wise man once told me what you have is what you spend, so you might want to do something that you enjoy. And you get into that sort of — not necessarily the melees (?), but a this is what I make, this is is what I do. It becomes monotonous in a way. It becomes, you know, just I have to do this as opposed to I want to do this. And the side hustle allows you to sort of have that passion for something, whatever that something may be. For example, a friend of mine that works — it was a full-time pharmacist across the street from me when I was in graduate school. His side hustle was as a DJ. And he would go DJ like across the country and do that. That was his thing. So he enjoyed pharmacy, but he enjoyed that and had a passion for that as much as anything. And it allows you the balance to step away from, in essence, the grind or that day-to-day so it doesn’t become as monotonous as possible. But we talk to students about that often. I know I do individually. And I’ve had a lot of students who, especially given the fact that our program is — we have sometimes an older student population, we’ve had some who already have side hustles when they come in. I remember interviewing a student who is still successful with it, had an ebay business and was buying and selling things through ebay and doing that. I’ve had other students who do homemade soaps and natural soaps and things like that. So it’s — because it’s fun. It’s a passion, it’s something that you love. And as we’ll talk about mine, I’m a sports superfreak, so that’s why I do what I do.

Tim Ulbrich: Yeah, and I think to the point that you just made there, I think what I’ve seen is in balance, in the right balance, a side hustle often makes you better at your day job because it’s giving you that little bit of a mental break, it’s allowing you to pursue some of the passions or hobbies or other things that you had. And of course, the extra income is nice to be able to put that towards other goals, but I think it’s also the value of being able to pursue something you really are passionate about. So let’s talk about your two side hustles. They’re really unique. One is you serve as an expert witness, and the other is you cover pro sports. You mentioned you’re a sports fanatic, so let’s start there since you just mentioned it. Tell us about what that is and the work that you do related to Pro Football Focus.

Brent Rollins: OK, so the first one there, Pro Football Focus, that is a company, like if anybody who watches professional football and watches Sunday Night Football on NBC, you’ll hear Chris Collinsworth talk about the PSF ranks of players or it will show it on the screen when they introduce the players. So that is a company that I work for, Pro Football Focus. It’s a company that was started initially by a man named Neil Hornsby, who was actually from England, and basically, it looks at every player of every play of every game. And we collect absolute mountains of data and now have — when I first started, so this will be my fifth season working with them — but when I first started, I think we had like 13 or 14 NFL teams as clients and a few college teams. Now we have all 32 NFL teams as clients, and we have over 60 college programs that basically, in essence, use our data and use — it helps coaches, it helps anything and everything you can think of in the realm of preparing for and playing a football game from a data and analytics side. So for me, I get, in essence, paid to watch football and write about it.

Tim Ulbrich: Something you love, I mean, that’s awesome. Hey, without sharing specifics, obviously, is it a contract where you’re utilized hourly or for a season or for content you produce? How do those relationships typically work?

Brent Rollins: The contract part of it I think will actually start this year in terms of the writing part and getting reimbursed or paid for providing content. But the rest of the data collection-wise, it really depends on what you’re doing. Certain things, it’s you just do it, and thus, you get paid for it say on a per-play basis because obviously, some games have more plays than others. But the other part of it, some of it’s accuracy-based. Some it’s hey, how accurate are you? Because if you’re not doing a very good job and not accurate enough, it’s kind of worthless to pay you for it, in a way. So there’s some baseline level, and then you get paid more for being insanely accurate with what you do.

Tim Ulbrich: And what I love about that example, before we talk about the expert witness, is it’s completely unrelated to pharmacy. It’s something you’re passionate about. But you can translate, obviously, into some side income and the rest of your goals. So let’s talk about the expert witness. That’s something we haven’t talked about on the show, and I know we’ve wanted to before, as I think this could be an opportunity for other pharmacists to pursue. Tell us about what that looks like and how you got involved in that.

Brent Rollins: So initially, so my PhD’s in Pharmacy Administration, but my focus is marketing. And it was the area of passion that I wanted — you know, you can do economics, you can do health outcomes, things like that. Marketing was the one that was I loved the most and pursued that passion. And when I was in graduate school, my major professor was involved with a very, very large case that involved the Department of Justice, various state attorney general’s offices, all sorts of other things, and I was asked to help in certain aspects of that work. And through that, it’s just, it grows. And you have that working relationship with that person, you do more and more and more. It gets to the point where hey, my major professor, he’s swamped, and then hey, just talk to Brent initially. And then finally, once you do one, and you have a series of attorneys that say, ‘Hey, we need your opinions on this matter,’ once you do one, once you’re deposed, once you go through that process, now you get more phone calls here and there. So it just has evolved over time, and I’ve done more and more of it. I do primarily two areas of casework: One is in marketing, so those are big pharma cases. I’ve even done like a class action suit that was a marketing thing and some other variety of things that are marketing-based, patent litigation, things like that. And then also standard of care cases, which I don’t like doing as much as the other because I was trained in marketing and I get to use that. But the standard of care cases are interesting because it’s one of those things where we as a profession almost in a way have to police ourselves and just say, ‘Hey, look, there’s a certain standard that we need to have.’ Now, it doesn’t necessarily mean that I am in any way, shape, or form attacking pharmacists. I don’t. I don’t want to. I want everybody — I don’t want to have any of those cases. I don’t want people to mess up. But sometimes, they do. And someone needs to take a look at that and see if there are processes involved. And if any chance I get, it’s like, hey, let me defend the pharmacist here. They did their job, and this is not on them. So it just depends on the case. But I do get calls for those various cases as well.

Tim Ulbrich: That’s great. And I appreciate you sharing those two examples. And as I mentioned, I know the side hustle is something that we’re continuing to just try to feature different options. I mean, there’s unlimited options out there, so obviously the goal is to get people thinking. And I appreciate you taking time to come on the show to talk about personal finance education for students and for sharing a little bit about your career journey as well as the side hustle. So before we jump off, one of the questions I like to ask our guests on the show is, is there a book or a podcast or a resource that either has inspired you or that is currently inspiring you that you would recommend and share with our audience?

Brent Rollins: Well for me, obviously, like I said, sports superfreak, so most of the things that I do listen to or read are sports-related.

Tim Ulbrich: Yeah.

Brent Rollins: But from a personal finance standpoint, I think you’ve touched on it and talked about it before, but the book that really changed how I do what I do and what we do as a family for personal finance was David Bach’s, “The Automatic Millionaire.” And that was the first one that really — because I even started as soon as I graduated from school setting up those things where it came out instantaneously on certain days of the month, money comes out.

Tim Ulbrich: Automation.

Brent Rollins: And everything gets automated, it’s still to that way to this day. And you just don’t worry about it. It’s not something — well me, sadly, I check most all of these accounts daily, unfortunately. It’s an OCD-ness. But it was one that, you know — and I do that with students. We go through the latte factor, I’m going to pick on you that has the Starbucks cup in class today. We do various things in class that show like for example, just messing around with students, hey, this guy, you’re the bachelor guy, right? You’re the one that has the bachelor pad, you’re in Barkhead (?), sort of the ritzier area of Atlanta, and you’re hanging out and this is all — versus this person over here who’s in the ‘burbs, maybe with kids, and let’s look at your financial portfolio. So that was really the book that changed a lot of things for me.

Tim Ulbrich: That’s a great recommendation, “The Automatic Millionaire” by David Bach for those of you that haven’t read it. We also have talked a lot on the podcast about automation. Episode 057, we talk about it in great detail about the power of automating your financial plan, so I’d recommend that to the listeners as well. So Brent, thank you so much for taking time to come on the show. I appreciate your passion for this topic, I appreciate you sharing your journey. And as always, to the YFP community if you liked what you heard on this week’s episode of the Your Financial Pharmacist podcast, please leave us a review and rating in Apple podcasts, iTunes, or wherever you get your podcasts each and every week. Have a great rest of your week.

Brent Rollins: Thanks, appreciate it.

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YFP 111: How One New Practitioner is on FIRE


One New Practitioner and His FIRE Journey

Jared Wonders joins Tim Ulbrich on this week’s episode. Jared is a 2012 graduate of the University of Findlay and currently works for the VA remotely doing home health care. Jared and Tim talk about how he and his wife, Jess, aggressively paid off their debt within a few years, how they got started in real estate investing, and how and why they are on a FIRE journey (financial independence, retire early).

About Today’s Guest

Jared Wonders graduated from the University of Findlay school of pharmacy in 2012 and completed a PGY-1 general residency at the Dayton VA Medical Center in 2013. Jess, his wife of two years, and Jared currently reside in Charlotte, North Carolina to pursue job opportunities and get away from the long Ohio winters. Jared has had the amazing opportunity to serve our nation’s veterans for the past 5 years as a Home-Based Primary Care Pharmacist at the Dorn VA Medical Center. Jess, who is also a pharmacist, and Jared are currently pursuing FI through a high savings rate mixed with real estate investing.

Summary

On this podcast episode, Jared Wonders joins Tim Ulbrich to give an insight of his financial journey since graduating in 2012 from the University of Findlay, how he paid off their debt within a few years, how they got started in real estate investing and how and why he and his wife Jess are on the path toward FIRE (financial independence, retire early).

Although Jared and Jess didn’t carry the debt load most pharmacists accumulate, $75,000 is still a large amount of money and requires a lot of intentionality to pay off. Jared and Jess were motivated to tackle their debt to have more opportunities in their life, have the ability to explore investments and not have to be tied to a job.

They caught the FIRE (financial independence, retire early) bug when they realized that they didn’t want to be stuck without options. Jared explains that they are trying to diversify their investments as much as possible by taking advantage of different retirement funds like the TSP offered through the VA, his wife’s 401(k) as well as looking into an HSA account.They also have two real estate investment properties and are pursuing brokerage funds like Vanguard. The real estate income is supplemental and allows them to have more control in regard to expenses with the properties. Traditional retirement vehicles are unable to be accessed until age 65 1/2 , so real estate investments provide cash flow sooner and also have tax strategies and savings. Additionally, Jared and Jess currently save 50% of their income or more. Jared says that it helps that they have two good incomes, but they also try to live frugally.

Jared discusses the purchases of their real estate properties next. He shares that the first purchase was full of pure excitement. He had done research for 8 to 10 months prior and was excited to finally take the next step in purchasing a property. The biggest issue he’s faced so far is having a good property manager, so he and his wife manage their properties. They put 20% down on a $170,000 home that’s now worth $190,000 to $200,000. They purchased the second property for $140,000 and it’s now worth $190,000 to $200,000 (paid $10,000 for renovation). Jared says that they are getting close to the 1% rule, meaning that rent should be 1% of the purchase price.

Although Jared enjoys his job, he shares that they are pursuing FIRE aggressively to create opportunities in the future. In the next 5-10 years, Jared envisions that they will focus on building more equity in their properties but will keep an eye out for good deals.

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. Joining me is Jared Wonders, a 2012 graduate of the University of Findlay, who completed his residency training at the VA in Dayton and currently works for the VA in South Carolina remotely doing home healthcare. Jared and his wife Jess have a fascinating journey as two new practitioners that are on the path toward financial independence. Jared, thank you so much for joining me on this week’s episode of the Your Financial Pharmacist podcast.

Jared Wonders: Hey, Tim, I want to thank you so much for giving me this opportunity. Always good to meet a fellow Buckeye.

Tim Ulbrich: Absolutely. Go Buckeyes. So before we talk about what you’re doing with real estate investing, we’ve got some exciting late-breaking news on that related to your own journey. And before we talk about Financial Independent Retire Early, I really want to give our listeners some insight into your financial journey since graduating in 2012 from the University of Findlay, because I think all of what you did and laid the foundation has set you up on the path to be that you’re on right now, which is certainly one that I think is bright. So give us an overview of the student loan and the debt position that you and your wife Jess were facing at the point of graduation.

Jared Wonders: Yeah, absolutely. So when I graduated pharmacy school, I went and decided to go through the route of residency, so I did a residency in Dayton, Ohio, which is fortunately where my wife was actually living at the time, current wife. So we ended up moving down to North Carolina kind of just on a whim, and I was able to find a job in South Carolina working as a pharmacist. When I graduated pharmacy school, I had about $75,000 in debt, so definitely not the typical debt load that you might see with some pharmacists graduating.

Tim Ulbrich: So this is all your debt, then, not Jess’ debt.

Jared Wonders: This is all my debt. She came to the table with no debt at all. So I definitely married up in that situation for sure.

Tim Ulbrich: Well done, yes.

Jared Wonders: Yeah, so she actually was very fortunate. She went to the University of Toledo, a public school, and actually worked as a TA. So she did not come in with any debt whatsoever, which was great.

Tim Ulbrich: That’s awesome. And I think that speaks to, you know, I always talk with the students when I talk about student loans, say, “Hey, anything you can do to minimize the amount of debt at graduation makes all the difference in the world.” And here I think that’s certainly a case where being aggressive and whether it’s support from parents, scholarships, TA, anything students can do to minimize that debt load will pay off in the long term. So even though you didn’t have $160,000 like is the national average right now, $75,000 is no small chunk of change. And it still requires being intentional to get it paid off in such a short period of time. So tell me about the motivation. Why were you and Jess so adamant about aggressively paying off this debt?

Jared Wonders: Yeah, absolutely. My motivation was definitely just to have more opportunities and to kind of just give my life some sort of purpose. And I think that the one thing that really kind of catapulted me into really being aggressive with paying off my loans was actually, honestly, getting married to Jess because that just kind of gave the motivation I really needed and really thought that — you know, because I needed to provide for not only myself, but I needed to provide it for my wife. And I knew by being able to do that, paying off these loans would not be necessarily hog-tied to a job if I didn’t want to do it and would maybe be able to pursue more opportunities as far as like investments or real estate, whatnot. Yeah. So that’s pretty much where the motivation came from, honestly.

Tim Ulbrich: Yeah, options, options, options, right? Once you have that off your back, I mean, the rest of the story, you’ve got a lot of opportunities ahead. And we’ll talk about some of those here in a minute with real estate investing and other things. So one of the questions I want to ask you — because I think often, I’ve seen where whether it’s two pharmacists or not, couples may or may not be on the same page in terms of how aggressive they want to pay off the debt. Sometimes, there may be competing priorities like home or investing or cars or other things. Was this something that you and Jess had to work through to get on the same page? Or were you both of this mindset of hey, we need to aggressively get this off our plate?

Jared Wonders: Yeah, I think that for the most part, we are on equal pages I think for the most part of kind of going forward in that process. It did take us — of course there were some definite times where we were kind of like, well, maybe we don’t need to be necessarily as aggressive as we need to. But for me, I guess it was — actually before our marriage, I really wanted to try to get all my loans paid off before we got married. So it was one of those things where I wanted to make sure that happened, and I actually worked an extra pharmacy job in retail as well just to make sure, ensure that happens.

Tim Ulbrich: So did you guys go all in to get the $75,000 paid off? Meaning that you delayed other goals such as savings and other things? What was your approach to pay off the debt in the context of balancing other goals?

Jared Wonders: Yeah, no, that’s a great question. So we actually went the unconventional route, possibly from the Dave Ramsey crowd, and we actually did buy a house before we had all my debt paid off. We bought a house together before we got married, but it ended up working out. Obviously it worked out very well.

Tim Ulbrich: And we actually did an episode — I can’t remember it off the top of my head, we’ll reference it in the show notes — we did an episode on what we think are some of the pros and cons and some of the considerations around the Ramsey plan that people should think about. It’s certainly not a one-size-fit-all. I think for certain people, the steps are spot-on, exactly what they need. For others, depending on personal situation, how much debt you have, what else is going on, so I think certainly for the two of you, that made sense in the route that you went.

Jared Wonders: Right, and honestly, the interest rates were only going up at that point, so we kind of just wanted to lock in what we got.

Tim Ulbrich: Yeah. Now they’re finally coming back down, right?

Jared Wonders: Exactly.

Tim Ulbrich: It’s crazy, my wife Jess and I bought a home in October 2018 here in Columbus.

Jared Wonders: Oh yeah, congratulations.

Tim Ulbrich: I think it was a 4.62% interest rate, and now we’re back down to the 3.7-3.8%, something like that.

Jared Wonders: It’s crazy.

Tim Ulbrich: Yeah. So let’s talk about FIRE, Financial Independence Retire Early. And in Episode 104, we covered the basic tenets of FIRE. Again, Financial Independence Retire Early. So I don’t want to spend too much time rehashing exactly what is FIRE but rather talking more about specific plan that you and Jess are taking around FIRE and why you’re taking that route. So talk to me about why you caught the FIRE bug. What was in terms of why this concept of Financial Independence Retire Early really stood out to you as an option that you want to pursue? And really, what is the goal? What are you trying to achieve when it comes to FIRE for your personal situation?
Jared Wonders: Yeah, that’s a great question. Honestly, I think the most important thing is when pursuing FIRE, having a why. So you really need to have that why in order to really, I guess just really make it happen and really kind of just studying those goals and attaining those goals. So mine, honestly the thing that kind of pursued me and kind of got me into it was honestly like just really trying to not be stuck at a job or position I didn’t necessarily want and having those options to pursue if I really wanted to and you know, not having those golden handcuffs, if you will, and just being able to really not necessarily be hog-tied to a job for 30 or 40 years.

Tim Ulbrich: Sure. Yeah. I mean, again, options, like we talked about. And in Episode 104 when we interviewed Jason Long, he had retired at the age of 38, self-made millionaire, and he gave a lot of really good specifics about the amount and the calculations and how he determined that and how he was saving and a distribution plan. So what is the goal? Have you guys defined a number? And how aggressive are you saving to try to do that and the investment strategy in getting to that point?

Jared Wonders: Yeah, I mean, Jason has an absolutely terrific story. I would definitely reference that or definitely check out that podcast episode as well. But honestly, what we’re doing right now is we’re really trying to diversify as much as we can. So we’re taking advantage of the retirement accounts, we’re taking advantage of the TSP through the VA, which is an absolutely terrific retirement program. My wife is taking advantage of her 401k. We actually just recently looked into doing an HSA as well, so you know, the high deductible plan. The HSA we found out just is an absolutely terrific vehicle for those who haven’t looked at it. I know that you guys have done some research on that as well in previous podcasts. One of the things we stumbled upon is real estate, of course. And I mean, honestly, what we’re doing right now is we’re saving probably around 50%, maybe a little bit higher, of our income, and we’re trying to pursue those active investments like some of the brokerage funds, like doing some Vanguard, but also trying to attain our goals in real estate as well.

Tim Ulbrich: So let me talk about that for a minute because I think some pharmacists hear that and say, “Jared, 50% of your income? Like how is that even possible when you just think of life’s expenses and housing?” So what are you guys sacrificing? What are you giving up? What have you minimized costs in other areas so that you’re able to both save in traditional tax-advantaged retirement vehicles, you mentioned those: TSP, 401k, HSAs, but also be able to then build up cash reserves to get involved in some real estate investing? How are you doing that? And what are you giving up to be able to do that?

Jared Wonders: That’s a great question. We obviously have the advantage of having two great incomes right now. But I mean, for how we’re doing that is I would say we don’t do fancy stuff, honestly. We’re trying to live frugally. I mean, we’re still going out and enjoying ourselves from time-to-time, of course, but we have a goal and we have a mindset of when we want to retire, when we want these future assets to be utilized for our kids. So we just have that goal and are really focused in on that goal, on what we want to do. So honestly, that’s just kind of what’s kind of pushed us forward and getting us to that point. So it’s really just a lot of mindset. Honestly, you know, there is a little bit of luck that’s involved, but I believe that I’ve heard this reference on I think Scott Trench referenced it, but luck is the intersection of preparation and opportunity.

Tim Ulbrich: Amen.

Jared Wonders: So just being able to find that aspect and being able to prepared and kind of make yourself prepared for what’s coming I think is incredibly important.

Tim Ulbrich: So you mentioned an interested in diversifying in real estate, so let’s talk about that for a few minutes. Why real estate investing? And what do you see as the advantages of doing that and why you want that to be such a big part of your financial plan going forward?

Jared Wonders: Yeah, I think the biggest thing for us is that supplemental income that you can get through real estate. If you are a little bit more aggressive and have a paid-down real estate portfolio, then you have an income coming in, and it’s not through dividends, it’s not through other things. And I think that one of the greatest things that I love about real estate is the control that you have. So we currently have two properties that — and it’s obviously not like a huge portfolio — but we are able to control basically every single aspect when it comes to expenses, when it comes to income. I mean, there’s obviously things you can’t control like some capital expenditures and things, but you know, I can see a property and I can be like, “Oh wow, there’s carpet there. There’s a value-add. We can put in vinyl plank and the property look more appealing to renters,” those types of things. So it’s just a lot of different opportunities and things that you can do with a particular property that really just make it look better and make it more appealing for someone to actually live in.

Tim Ulbrich: Yeah, one of the things I enjoy — just building off of what you said there — that gets me excited about real estate investing, we’ve talked about it before on the show why I think it’s a good fit for our community to consider, and obviously, I don’t want to minimize, there is risk involved, of course, with anything. But when you think about traditional retirement vehicles, you think about accessing those at the age of 59.5, and this obviously is an opportunity to generate some cash flow sooner. It’s an opportunity to be able to have some different tax strategies and savings. But also, one of the things that I really enjoy in thinking about this — you and I talked about it before the show — is if you have that tolerance of risk, it’s I think a really fun challenge to think through. It’s a very different mindset in how we typically think as pharmacists. And there’s no ceiling on the opportunity in terms of what you’re able to do. Obviously, there’s limitations in terms of how much cash you have to invest and other types of things. But talk our audience through the IDEAL principle because I think that really helps frame the relevance and importance of why pharmacists out there may want to consider real estate investing.

Jared Wonders: Yeah, absolutely. And as pharmacists, we have the opportunity I think to actually invest in real estate and use our capital because of our good salaries as well, so because of our good income. And yeah, we had mentioned the IDEAL principle, the acronym IDEAL, which I like to use in real estate because it’s kind of a good way to kind of understand the different ways you can actually make income or offset some of your expenses that you have in real estate. And I, of course, can’t take credit for this. I’m going to give a shoutout to Bigger Pockets and Andrew Syrios, and I can’t remember the other brother, but the Syrios brothers in one of the earlier episodes, they mentioned this principle. The I stands for Income, so income being cash flow that actually comes from the property after all your expenses are paid off and everything is kind of paid off with the property. D stands for Depreciation. So the government sees the house or a home as a depreciating asset, kind of like a car or like a vehicle. So they mark it off on 27.5 years, so you basically buy a property for $100,000. They use that asset, and they divide it by 27.5 years, and you can use that depreciation to offset some of your income that you make going forward. There are some caps like as far as like income and stuff goes, so you definitely don’t want to buy a property just for tax purposes. But definitely something to look into and check out. The E stands for Equity, so as a tenant is paying off or giving you rent money, they’re actually already paying down the mortgage. Your mortgage principle is being taken down. The A stands for Appreciation. So properties typically appreciate in value, but you mentioned risk, like you said before. So 2008-2009 can happen, of course. But properties typically over a long period of time do appreciate. And then the L standing for Leverage. Now, my wife and I take a little bit less of a stance on leverage. We have leveraged two of the rental properties that we’ve bought, but we’ve bought them in a position of financial strength, which I think is incredibly important when you’re delving into real estate because we put 20% down and we have stable jobs and incomes and we’re able to kind of offset — and when we went into this going forward, we wanted to make sure that we had the reserves in place to be able to cope for anything that comes up because problems will come up. I will give you an example of one that just came up. So we had a storm come through in North Carolina, and a couple branches fall down, and you know, that’s just something that we have to deal with. I mean, stuff comes up.

Tim Ulbrich: Got to have cash reserves. Yeah, and I’m glad you mentioned that because I think, Jared, I think it’s easy to listen to something like “Bigger Pockets,” and you get all fired up and it’s like, man, I want to go buy a property tomorrow. And I think building a strong foundation — so obviously, you guys were in a position, no debt, you have reserves, I’m guessing you’re in a good equity position in your home, you’re putting 20% down, so obviously if things happen, which they will, you’re in a position to be able to handle them, market dips 5%, 10%, 15% next year, who knows what will happen, you’re able to weather some of those things and continue to move on with that plan without it being derailed. So I did just find the “Bigger Pockets” episode you were mentioning. It’s Episode 121. We’ll link to it in the show notes. “Creating the IDEAL Real Estate Investing Business with Andrew and Phillip Syrios,” and we’ll link it to our show notes for those that want to learn more about the things that you mentioned with IDEAL. So talk us through that first purchase because, you know, when I’m listening to the “Bigger Pockets” podcast, I often hear them say, “It’s about doing the first deal and getting it done.” Obviously, you don’t want to lose your money, but it’s about learning, it’s about actually doing the deal because I think so many people learn, learn, learn, read, read, read, but don’t actually do the deal. And obviously, the second one becomes a little bit easier, the third, the fourth, and so on.

Jared Wonders: Yep.

Tim Ulbrich: So when you were getting ready to do that first deal, what did that look like? And how fearful were you in that process? And what made you decide to actually finally pull the trigger?

Jared Wonders: So like I would say that the first deal was pure excitement. Like I was so pumped about this first deal because I had probably done research for 8-10 months, I did a lot of research on “Bigger Pockets,” I listened to Paula Pant. It was one of those things where I think another important thing is having an accountability partner to kind of pull you back a little bit. So my wife is my accountability partner and kind of pulling me back a little bit. The first property, I mean, it was definitely one of those things where we thought it was a good buy. And it was a good buy, and we bought it in a great area. However, we did make a lot of mistakes. That is something that I think that when you make a mistake, you can’t let it define you. You kind of have to work through it. And I think it makes you stronger on the other end of it. But you know, like you said, you have some issues that come up, of course. I don’t know if you want me to — I can give some examples because it definitely happened quite a bit. But the first one that we bought was not like a value-add, so it was one that was probably — it was pretty much rent-ready when we bought it.

Tim Ulbrich: OK.
Jared Wonders: So we were pretty much ready to have a tenant and basically move into the property. The biggest issue that came up with us was we vetted property managers, however, we probably didn’t vet them as well as we should have. So we had not a great experience with property managers, which is actually —

Tim Ulbrich: It’s funny how often you hear that.

Jared Wonders: What’s that?

Tim Ulbrich: It’s funny how often you hear that. I mean, they talk about that on the show all the time.

Jared Wonders: Oh, yeah. You really need to manage your manager. Like I can’t emphasize that enough. And honestly, for me, it’s definitely busy managing it — like we self-manage right now. It is busy, but it’s more rewarding, I think. And you get more of that control aspect back because you lose that control aspect of real estate when you do have a property manager do it. But like I said, if you have a really good property manager that you trust and is really good, then definitely — well, either send them my way —

Tim Ulbrich: Yeah, right?

Jared Wonders: But no, it’s definitely very important to have great processes around you.

Tim Ulbrich: Getting a little bit more detail if you’re willing to share, how did you guys finance that first property? What was your strategy for finding the deal? How much was the property that you’re purchasing? Because I think our listeners may be thinking, hey, I’m really interested in this, but what are we talking about here? Like what would I maybe need in terms of cash and things to get started with that first deal?

Jared Wonders: Yeah, absolutely. So we put 20% down. And Charlotte is a crazy market right now, so we purchased outside of Charlotte a little bit in an area called Lake Wiley, which is a little bit south of Charlotte. It’s in South Carolina. And that was one of those things where we purchased, like I said, 20% down, so we put in about $40,000 into the deal. The property itself was about $170,000. It’s probably worth about $190,000-200,000 now, so definitely not like a property like with a big value-add, like I said.

Tim Ulbrich: Is it a single family?

Jared Wonders: It is a single family rental, yes.

Tim Ulbrich: OK. And conventional loan, 20% down?

Jared Wonders: Conventional loan. And I should probably talk about how we found the deal too. So we honestly just had a realtor that we liked, we trusted, and he would just give us leads automatically through email. And this popped up on a Saturday. I was like, oh, this is kind a cool-looking property, nice area. I checked out the area, and he responded right back. So I think having a really good realtor on your side, especially for that first deal, is really important because having a very responsive realtor is great because you can go in and see the property that same day and really check into it before it’s popped up, especially if you’re in a hot market like Charlotte is.

Tim Ulbrich: So your goal with this first property is buy-and-hold, is that correct?

Jared Wonders: Yeah, correct. That’s honestly our focus for most — actually all — the two properties that we have right now is buy-and-hold, yeah.

Tim Ulbrich: And the second one, you mentioned before we jumped on, had a little more rehab and other things involved?

Jared Wonders: Yeah. The second rehab that we had, we might have it — we talk about the acronym BRRRR, which is Buy, Rehab, Refinance, Rinse and Repeat, which we could possibly do for this property but definitely more of a value-add. We purchased this one at $140,000, and it’s probably worth about $190,0000-200,0000 now with about — I think we spent $10,000 to renovations.

Tim Ulbrich: OK.

Jared Wonders: So there is a pretty good amount of equity buildup in there. And we kind of are trying to get close to the 1% rule, which where you buy a property for — so I’ll use my example, the $140,000. So you buy a property for $140,000, and we’re actually going to be renting it out for $1,400, which is right at that 1% rule purchase price. And that kind of usually takes care of most of your expenses, your property management if you do want to pay for property management, repairs and maintenance that come up, and vacancy, of course.

Tim Ulbrich: So to our listeners that are hearing some of this for the first time and thinking, this is awesome and I’m cracking along but I’ve got these questions, stay tuned. We’re going to be bringing a lot more content on the podcast, on the blog, around real estate investing and trying to do some more education. Obviously, Bigger Pockets is a great resource, fantastic resource as well, and we’ll continue to bring more into the future going forward. Going back to the FIRE — and obviously, real estate investing is playing a big part in that, I want to talk about the concept of Financial Independence Retire Early. And the reason why I’m thinking about this is I’m going through re-reading — actually that audio book, so I guess re-listening — “Four-Hour Workweek” by Tim Ferriss, which is a fantastic read. And it really has me thinking more and more that the concept of early retirement is somewhat overhyped and somewhat overrated, although I think the Financial Independence piece is incredibly important. And obviously, I’m making broad generalizations. This is a unique situation for everyone. But when I hear you talk and we had our previous conversation that you really enjoy your job, you’ve got great benefits, you’re working with the VA, pharmacists have great scope of practice. I think you’re probably practicing at the top of your license, you’re teaching students and residents, so really doing a lot of neat things. And so some people may be thinking, why in the world are you so aggressively chasing Financial Independence Retire Early. So talk to us about that. Is it more about the FI, Financial Independence for you? Is it about the options? You never know what may change in the future. Give us some more input on that.

Jared Wonders: It’s more about opportunities. I think having the — I believe that Jim Collins referred to it as F-You money, so have the financial resources and those funds to I guess make it happen and just kind of pursue opportunities that you wanted to pursue that may not have been possible if you didn’t have that income at your disposal I guess. So I think that’s kind of the biggest thing why we’re pursuing this. And I’m the kind of guy that I want to be there for my kid when he has a game. I want to be there for my kid. I don’t want to be stuck at work all the time and like have to have that be something that I’m tied down to. So it’s just all about opportunities and all about something that I can pursue in the future. If something comes up, and I like it, then I’m probably going to try to do it.

Tim Ulbrich: I love that. And I even love how you shared practically what you guys are doing. It sounds like you’re kind of carving out 50% of your income, some of that going to maxing out 401k’s and TSPs, some of it you’re saving up cash for real estate so you’re ready to put money down, you’re ready to do a rehab. And then obviously, you’re going to build equity in those homes and they’re further going to generate cash flow and other types of things. So a mixture of tax-advantaged retirement savings and real estate. But I think that gives our listeners one example of a road map of something you may follow if this is an area of interest. So I’m hopeful you and Jess have had some of these conversations, you know, I’m guessing you have because your story’s awesome and what you guys are doing is pretty aggressive. But what does success look like for you guys in 5-10 years in terms of where you’re at with savings, where you’re at with real estate, maybe you have other goals and things that you’re thinking about? Where are you hoping to head in the next 5 or 10 years?

Jared Wonders: Yeah, honestly, that’s awesome. I really appreciate you asking that. So I think that the biggest thing for us is we’re probably slowing down after the second one because it’s a little more rehab, a little bit more work. It was great because I tell you, I know a lot of stuff about homes that I definitely did not know before going into the second one. So that has been really interesting. So I think we’re probably going to slow down the real estate just a little bit, maybe build a little bit more equity in these homes because I think that for us, having that income at our disposal with a fully paid-off rental property is really important to us. So that’s something that we’re going to be pursuing. But we’re definitely going to keep our eyes open for deals if they come up. And if we spot a real estate deal that we like or even could partner on or something like that, that’s something that we’re definitely going to consider taking on for sure because we really like it, we like the process, and it’s something that we both really like, really enjoy.

Tim Ulbrich: That’s good. And I think that makes all the difference when the two of you are on the same page and getting excited. And you mentioned accountability partner, which is awesome because I think that getting on the same page is so critical to be able to achieve the dreams and the visions and the why that you guys have identified for your family. Do you have — outside of Bigger Pockets and the things that you’ve mentioned, do you have a book, a podcast, a resource, something you’d recommend to our community that either has inspired you in your journey in the past or is currently inspiring you in your journey towards this quest of Financial Independence?
Jared Wonders: Oh my gosh, there’s so many. But I’ll list my top three that I really enjoy. My first one is the guys at ChooseFI are absolutely incredible. Jonathan and Brad Barrett are just outstanding to listen to.

Tim Ulbrich: One of which is a pharmacist. That’s cool.

Jared Wonders: And Jonathan was a former pharmacist. Like that was one of the things that really got me hooked on the FI, honestly. The second one is Paula Pant. Paula Pant’s interviewing skills are just terrific. I would encourage anyone that is pursuing FI to listen to the Suze Orman episode because that is just an absolute hoot to listen to.

Tim Ulbrich: That’s a good one.

Jared Wonders: It will get you fired up if you’re wanting to pursue FI. But she is a great interviewer, and she’s outstanding on her FI journey and does a lot of real estate and everything. My third one is Chad Carson. He just recently had a book come out, and I think it was called “How to Retire Early on Real Estate.” That kind of was a little bit more in tune of me and Jess’ goals as far as like not — we don’t want to be real estate moguls and have thousands of properties. We want to just have a couple properties, kind of give us that cash flow, and kind of be able to just kind of live on that in the future and have those options. So that was an incredible read.

Tim Ulbrich: Awesome. And that book, “Retire Early with Real Estate: How smart investing can help you.” So we’ll link to that in the — or “How smart investing can help you escape the 9-5 grind and do more of what matters.” So we’ll link to that in the show notes. So for our listeners that have heard your story, are fired up and say, hey, I’d really like to get in contact with Jared, how can our listeners reach out to you if this is something they’re interested in learning more about?

Jared Wonders: Yeah, reaching out to me on Bigger Pockets is great. And I’m actually not really on social media too much, so Bigger Pockets is probably the biggest social media advocate or arena that I’m in. You can honestly just shoot me an email too. [email protected].

Tim Ulbrich: Awesome. Yeah, and for those not familiar with the Bigger Pockets community, easy to sign up. And from there, you can connect with others. I would highly recommend that as well. And to our listeners that are interested in learning more about FIRE, again, make sure to check out Episode 104 of the podcast where I interviewed Jason Long about his journey, including how he retired from community pharmacy at the age of 38 as a self-made millionaire. And I’d also recommend the blog post written by Jeff Kymer on our site, “The FIRE Prescription: How to retire early as a pharmacist,” which is available along with all of our blog posts at YourFinancialPharmacist.com/blog. So Jared, thank you so much for reaching out, No. 1, No. 2, coming on the show. You have got me fired up, and I enjoyed both of our conversations. And I have a feeling this is just the beginning to hopefully some exciting collaborations and future with the community as well. So thanks for coming on the show.
Jared Wonders: Absolutely. And I want to say congratulations again for getting to 100 podcast episodes, that’s incredible.

Tim Ulbrich: Thank you, appreciate that. And as always, to the YFP community, if you like what you heard on this week’s episode of the Your Financial Pharmacist podcast, make sure to leave us a review and rating on iTunes, Apple podcasts, Stitcher, Spotify, or wherever you get your podcasts each and every week. As always, we appreciate you joining us for the Your Financial Pharmacist podcast. Have a great rest of your week.

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YFP 110: How One Couple Overcame Hardship to Pay Off $150,000


Debt Free: How One Couple Overcame Hardship to Pay Off $150,000

Betsy and Casey Hoida join Tim Ulbrich to talk about their debt free journey paying off $150,000 of student loan debt, why and how Betsy left her secure pharmacy job after completing residency and getting board certification and how they managed to work together to get on the same page financially despite some highs and lows along the way.

About Today’s Guests

Betsy and Casey Hoida reside in Green Bay, WI with their two daughters, Mollie and Claire. The couple both obtained their PharmD from Ferris State University in 2006.

Casey is a home infusion and hospice/palliative care pharmacist. He has been working in the field of home infusion for 10 years. Casey specializes in infusions involving antibiotics, anti-fungals, TPN, chemotherapy, PCA, inotropic, immunoglobulin and other biologic drugs. His future plans involve continuing to expand biological services with in the pharmacy as well as introducing MTM services to his patients. Outside of work Casey’s interest in personal finance continues to grow and he plans on pursuing opportunities in fee for service based financial planning.

Betsy has a diverse clinical pharmacy background with experience in a multitude of practice settings. In December of 2017, she left her traditional hospital clinical pharmacist role to take on the position of CEO of the Hoida Household. Currently, she staffs part time in a compounding pharmacy and is obtaining a certification as a Hormone Replacement Therapy (HRT) Specialist with the hopes of using her entrepreneurial spirit to start a consulting business this fall.

Together they paid off $150,000 of debt in 6 years.

Summary

Betsy and Casey Hoida share their journey of paying off $150,000 of student loan debt. They both received their PharmD from Ferris State University in 2006 and have since had diverse careers. After graduating, Betsy worked for a year and then completed residency. In 2017, Betsy realized she was burned out and needed to step away from a traditional pharmacy career. Currently, she staffs part time in a compounding pharmacy and is obtaining a certification as a Hormone Replacement Therapy (HRT) Specialist with the hopes of using her entrepreneurial spirit to start a consulting business this fall. Casey had a retail pharmacist internship and worked for a retail company for a year after graduating. He took Betsy’s long-term care position and fell in love with the infusion portion of pharmacy. He currently works as a home infusion and hospice/palliative care pharmacist and has been working in the field of home infusion for 10 years.

Casey explains that when they graduated, the market for pharmacists was hot. He knew that they carried student loan debt, the majority being his, but he wasn’t worried about finding a job and having a good salary to begin paying it off. Casey took the lead on managing their finances and the couple began moving on paying off their debt. They did two things from the beginning to help them learn how to live off of less; automatically maxing out their 401(k) so they didn’t see the amount on their check and making the shift to living off of one salary.

Betsy explains that the driving force on their mission of becoming debt free stems from not wanting to feel trapped. Casey shares that he was raised to avoid debt, to pay it back quickly if you’re in it and to save. While in the process of paying debt off, he got to the point where he didn’t want to be owned by someone else for the debts he had.

Casey explains that in order to pay off the $150,000 of debt in 6 years, they had to become really intentional with their money and, most importantly, get on the same page. The first year that they were paying it off, they didn’t have a mortgage and used the extra money to chip away at it faster. They continued to remain mindful of their budget and made short term goals (six months or a year). They used overtime earnings and any extra income to go to paying off their student loans. Now that their student loans are paid off, they are so much more relaxed.

Betsy and Casey also discuss why and how Betsy left her secure pharmacy job after completing residency and getting board certification and how they managed to work together to get on the same page financially despite some highs and lows along the way.

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 know I say this often, but I mean it sincerely each and every time, and this week is no exception. We have a great episode for you where I’m going to talk with Betsy and Casey Hoida. We’re going to talk about their financial journey. Yes, we’re going to talk about the student loan debt that they paid off. But more than that, we’re going to talk about life, how did they manage this topic together, what does this mean for their future, and we’re going to talk about the impact and how they translate their finances and connecting that with their career. So Betsy and Casey, thank you for your time and welcome to the Your Financial Pharmacist podcast.

Casey Hoida: Thank you. Thank you for having us.

Betsy Hoida: Yeah, we’re super excited. Big fan.

Tim Ulbrich: I am excited. Thank you. We’ve been meaning to record this for some time, and here we are. And before we jump into the interview, I want to read briefly, Betsy, you had sent me an email about a month or so ago, and I think it’s going to help frame our conversation as it gives a little bit of background in your story and then certainly I’m going to ask you to build off of that. So you said, “Hi there. My husband and I love the show. I actually became addicted, and he listens from time to time as well. We’re both pharmacists, but I recently left the profession in search of something else. Not sure what. We’ve had a long but inspirational journey, currently debt-free, minus our mortgage.” So I want to talk about that journey, and before doing so, congratulations on being debt-free except your mortgage. That certainly is no small feat, and I want to talk a little bit about how you did that. So Betsy, let’s start with you. Take us back to your story, your financial journey. You graduate from pharmacy school at Ferris State, and tell us a little bit about your career path, what you did after graduation, and tell us a little bit about your student debt situation and how you viewed this topic of money.

Betsy Hoida: Sure. So I graduated in 2006, and I decided to work initially community pharmacy and then changed my mind last-minute because I had heard about a job in long-term care. So I took that position. I worked for a year, and then I decided to go back and do a residency. At that point, Casey had kind of taken over our debt together. So I really, I didn’t even know what my student loans were, to be honest with you. So I did a residency in our first year of marriage, which was interesting.

Tim Ulbrich: I did that as well. It’s challenging, right?

Betsy Hoida: Yes, it was very challenging. But we weren’t even to the real challenges in life yet like kids and so on. But anyways, to get back to my background, then I decided that we were ready to have kids. I guess we decided, not I decided.

Casey Hoida: It takes two people.

Betsy Hoida: Right. To move back home, which was the UP, but we didn’t want to move back home, so we chose Green Bay, Wisconsin. And I got us both jobs up here. I’m a networker, so at a residency conference, I kind of found about Aurora and got us both jobs up here. And my journey since then has kind of been finding out really what I wanted in the profession and also balancing being a mom, which was really hard for me married to a pharmacist as well.

Tim Ulbrich: And we’re going to come back to that because what really stood out to me when you and I had talked prior to the interview, Betsy, is that as I look at your career path, you know, PGY1 residency, board certification, you were involved in lots of different clinical services, you served as the residency program director, I mean that often for many is really viewed as kind of the premier career path into clinical pharmacy residency training, board certified and so forth. But you ultimately made a decision to pick up and walk away from that, and it’s a little bit of a teaser for our listeners, but we’re going to come back and talk about why. And we’ll talk about the impact of that obviously financially as well. So Casey, before we go into more of that, tell us a little bit about your background after graduating from Ferris State and some of the work that you’re doing now and how you got into that career path.

Casey Hoida: Sure, yeah. I graduated in 2006 also and at that time, we were one of the — not newest classes of PharmDs, but it was fairly new. So we had all this clinical knowledge and were ready to use it. And in pharmacy school, in doing my internship, I was in retail. And so I guess it just kind of made sense that I continued on there once I graduated. So I worked for a company for about a year, and then our career paths, Betsy and I, kind of intertwined here. When she left the long-term care facility to pursue a residency, I actually took her position, and that’s how I got into long-term care. To tell you how I got to where I am now, in long-term care, there was a small IV pharmacy department, and the pharmacist, who was a little bit older than me who was kind of running it didn’t really enjoy, didn’t care much for it. I said, “Oh, wow, this looks interesting.” Potential for me to use more of my clinical knowledge, and so I jumped in and just really kind of fell in love with the infusion portion of pharmacy. And so when we decided to make the move to Wisconsin, as Betsy stated, she was kind enough to find me a position. I didn’t even have to look. And it was for a home infusion position. And I had very limited experience, I interviewed for it, was asked a lot of clinical questions by my director, and he knew that I didn’t have a lot of experience but liked me and thought that I was going to be a good fit and gave me that opportunity to get into a portion of pharmacy that not a lot of people know about, a practice setting that’s not very familiar to many people. And I’ve been there for 10 years now, and I really, really enjoy it.

Tim Ulbrich: So to our listeners, if anybody needs a job or is currently looking for a job, we’ve learned that Betsy is the networker.

Betsy Hoida: You got it!

Tim Ulbrich: So she can help open up those doors. And I love that career path story, though. You know, in terms of the two of you working together. But Casey also kind of finding yourself in somewhat of a “nontraditional” career path, despite not doing residency and other things. But I think that speaks to the value and the power of networking and connections and certainly leaning on your wife where appropriate. So that’s exciting. So I want to hear about the two of you, you graduated from pharmacy school, you’ve got student loan debt, we still are in the time period where the job market’s pretty good, 2006-2007. Obviously, you’re facing somewhat of a significant indebtedness load. And one of the common things that I see among pharmacists, myself included, is there’s this tendency of, hey, I’m going to make great money or I do make great money, I’m not really worried about it. So let’s focus on buying a home and doing these other things. And then all of a sudden, you end up in a position where you feel like, wow, this is a little bit more stressful and we feel more pinched than we thought we would. So did you both have the stress as it related to student loans? Were you worried about it? Were you not worried about it? What was your perspective coming out financially. And let’s start, Betsy, if you want to talk about that.

Betsy Hoida: No. I did not. Because like I said, Casey naturally is great at finances. And I just let him have control over it. I didn’t even pay attention. That sounds horrible. It really does. But you know, that was his gift. And we bought our first house, we didn’t know what we were doing, and yeah. Do you have anything to add to that?

Casey Hoida: Yeah, you know, the first thing that I want to point out just kind of for the listeners is we were really in a different position back then when we graduated in 2006, like you said. It was — the pharmacy market was hot, there was money flowing everywhere, sign-on bonuses and stuff. And so yes, we had this student loan debt, but I wasn’t worried about finding a job and getting a top-end salary. So today, from what I know, that’s a lot different. Kids that are coming out —

Betsy Hoida: Kids.

Casey Hoida: Yeah, I say kids.

Tim Ulbrich: Those kids.

Casey Hoida: Yeah, professionals are coming out from pharmacy school, and the job market is a lot different. And salaries potentially are a lot different than what they used to be. So with that being said, yeah, I was concerned about our debt. I knew that a majority of it was mine, so there was a personal aspect of it that I brought a majority of the debt to our marriage. And I felt more responsible for it, and so it was a worry and it was something that I wanted to address right away. I didn’t want to, you know, utilize it for tax purposes for 20 or 30 years like some people think. So I was definitely on it from the beginning.

Betsy Hoida: We talked about that for awhile. But I wanted to go back, Casey, you talked about us always living on one income.

Tim Ulbrich: Yeah, go ahead. I’d love to hear about that because I think that’s something we’re seeing with graduates today where, you know, expenses go up to the income right away. Or you have two pharmacists or not even two pharmacists, but people that are able to live off of less than they make, whether that’s one income or just a lesser percentage, obviously put themselves in a position to be able to achieve all their goals that they want to achieve but also that you never know what life’s going to throw at you for a variety of reasons. So it gives you margin and flexibility. So I’d love to hear how you made that decision and why you made that decision because that’s a very intentional choice.

Casey Hoida: Yeah. I think there were two things that we did, and I had thought about this in the past and I couldn’t come up with anyone who might have mentioned this to us, so I’m going to take credit for it or Betsy and I can both take credit for it.

Betsy Hoida: No, totally you.

Casey Hoida: The first thing that we decided to do when we graduated and took our first job is we were going to — and we did — automatically max out of 401k’s. And the reason behind that is we wanted to start saving for retirement right away. And we didn’t want to know what our paycheck looked like when we weren’t contributing to retirement. And so you know, there’s pros and cons to that, but that was one thing that we did. And then the other thing that we did and being mindful about it is we knew that at some point in time, we were going to have kids and who knows what the future holds besides kids? And we wanted to be able to live off of just one salary. So when we were looking at purchasing vehicles and buying a home and a majority of our financial decisions were based on can we do this on one salary? And that’s something we’ve lived by since the beginning.

Tim Ulbrich: Such wisdom there. I hope our listeners caught on and especially the students and those transitioning post-graduation, I mean, the two themes that I really heard there were obviously living off of less than you make, which just has so many benefits in so many different areas — and we’re going to come back and talk to those, about those, here in a little bit as we talk about Betsy’s career transition — but also automation. Automation, automation, automation. And you talked about it in the context of retirement. We’ve talked about it before, Episode 057, we talked about automating your financial plan. But if you can put those automation principles in place as early as possible, you’re less likely to feel like you’re missing it. And obviously, that has a significant compound effect over time in whatever goal that you’re trying to achieve. So what I want to talk about here for a minute, before we talk about the specifics of how you paid off the debt — because I think that’s important. We often focus stories on this podcast where we talk about big numbers and short periods of time. But often, we may not necessarily talk about how you exactly did it, and that’s certainly the piece that listeners want to know. But first, I want to talk about this topic even matters to the two of you. So here, we’re getting into the concept of identifying and finding your financial why. What’s the purpose? What’s the vision? What’s the direction when it comes to the finances? Why do you want to become debt-free? Why do you want to save for the future? Why do you want to do all of the things that we talk about on this show? And that could be different for every person. But having that financial why is incredibly important to being able to have that motivation to achieve your financial goals. So I know this is a big, loaded question, but Betsy, when I say that concept of kind of finding your financial why and why does this topic of money even matter, what comes to mind for you first?

Betsy Hoida: Freedom. Just finding out I was not happy where I was. And you know, that could be a number of things. We have children. I was trying to do everything, but I think the biggest thing is I was not using my gifts to — I’m going to give a shoutout to Alex Barker with his book “Indispensable.” I’ve been following him, and my career path or personality is very similar to him, and I think I felt trapped. I know that there’s something for me, and I really want that freedom to be able to explore that. So that’s my why.

Tim Ulbrich: Love that. Freedom and trapped are two words that really start out to me there. Casey, how about you?

Casey Hoida: Well, for me, it goes back to kind of how I was raised. I was raised that you try to avoid or you don’t owe people money. And if you do, you pay them back. And you save. And that was initially my motivation is that’s how I was raised, and that’s how I viewed money. But as I got older and as I gained more experience, I’d have to kind of reiterate what Betsy has already said is that you get to a point in your life where you just don’t want to be owned by anyone. And carrying debt and having all of these payments to make keeps one working and indebted to the system. And we just got tired of doing that. And so we want to have a future that allows us to follow our passions and to just kind of go where we feel like we’re being led.

Tim Ulbrich: That’s awesome, and that obviously directly plays into why you decided to get the student loan debt off your back. So Casey, talk to me for a little bit about, you know, $150,000 roughly of student loan debt, we’re talking about approximately six years, give or take a little bit of time, that certainly is not a plan where you’re just wandering in 10, 15, 20 years. There’s some intentionality in getting those paid off in a relatively short period of time. So how did you guys practically do it? Month-to-month, year-to-year, how were you able to pay off that amount of debt in a relatively short period of time?

Casey Hoida: Well, we first of all just sat down at one point in time — although we weren’t as serious as we are now — but we sat down, we got the number, we looked at it, we were both on the same page that we didn’t like it and we didn’t want it. And so obviously then the next step is how to go about it. And you know, the first couple years in our marriage, we didn’t have kids. So, and I think —

Betsy Hoida: Yeah, we did.

Casey Hoida: I think the first year — well, not right away, did we? Anyways, the first year, we didn’t have a home and so we had some extra income because we were living off of one to really start pounding away at that debt. And so initially, it kind of went fast. Like we were seeing gains month-to-month, year-to-year. And we’re like, oh wow, this is great. And then you add on a true mortgage, not a rental, and you add on some kids and expenses, vehicles and different things, and it starts to slow down. And so I guess what we really did is we just, we remained mindful that it was there, and we made short-term goals, whether that was six months or a year. And we said, OK, well, here’s the number where it’s at right now, and here’s where we want to be in six months or in a year. And so any overtime that was worked or any extra money that we would get from tax returns or anything like that, it all went to the mortgage — or excuse me, to the student loans — which isn’t fun, but it does decrease that number a lot quicker than just making the minimal payment.

Betsy Hoida: I’d like to jump in here, Tim, and say those were Casey’s thoughts. Honestly, honestly, I mean, I think I talked to you about where we hit a fall.

Tim Ulbrich: Yeah.

Betsy Hoida: I was — again, I told you, I wasn’t happy. I couldn’t pinpoint why. So I thought you know what, let’s move into a much bigger house. And let’s just live the ways of the world, this is going to make me happy. Which I was wrong. Spoiler alert. And what had ended up happening was I had after surgery, lost my job. And that was my wakeup call. And at this point — I’m just going to be open and honest here —

Tim Ulbrich: Appreciate it.

Betsy Hoida: That our marriage had hit a low point. And we’d signed up at church for this thing called Marriage Bootcamp. Little did we know that it was actually Financial Peace University. So I put it aside, we’re not doing this, until that low point. And I pulled it out, and I was like, wow, we need to start paying attention to this. Duh. I mean, Casey already was. But I really like how as a team, he is definitely the nerd, and I’m the free spirit. And I’m the one who was finally like, you know what? We have x amount of dollars to pay on this student loan. I know you love the security, but let’s just write the check. Let’s do it. And because I think we had identified that security is so important for both of us, so we did. And on top of that, we really hit the budget in that I wanted to see the numbers. That’s where I started listening to you, I started listening to Dave Ramsey, I just — I didn’t become obsessed, but kind of. I had to because I didn’t know anything about it. And our spending was very intentional.

Tim Ulbrich: So you were a free spirit with a little bit of a conversion to a nerd, you know, right? Along the way. So yeah, and I want to talk about that because I appreciate you sharing honestly some of the back story. And for those listeners that haven’t heard of the nerd-free spirit, that comes from Dave Ramsey’s Financial Peace University. It talks about money personalities, and we tend to fall at different degrees in one of those two buckets, so a nerd or a free spirit. The terms are pretty self-explanatory when it comes to how we manage our finances. But to me, what I love about in hearing your journey is that neither one of those for anybody is right or wrong. It’s a matter of identifying which of those do you tend more towards and how can you effectively work together, especially if you tend not to approach it in the same way. I would even argue for Jess and I, it’s a blessing that we don’t approach this topic in the same way.

Betsy Hoida: Amen.

Tim Ulbrich: Because I think if we were both nerds or we were both free spirits, we may be down a very different path. And I am very appreciative of what she brings to the financial table for us and really helps me look at it in a much different and healthier way, then collectively, we’re able to help each other. So to that point, though, I think often with the nerd-free spirit mindset, there can be tension in that. And so talk to me a little bit more, Casey, about how you were able to navigate that. You know, it sounds like certainly there was some pain there, which necessitated the two of you getting on the same page. But often, I hear from people that say, ‘Hey, I’d really love to dig into this topic, but I feel like I may not be able to get my spouse or my significant other on board. So what worked and didn’t work for you in terms of the two of you getting on the same page financially? Casey, let’s start.

Casey Hoida: Well, I can tell you what didn’t work. And it was trying to impose my financial will on my wife, to simply say, “This is what we’re doing. And this is how we’re going to do it.”

Betsy Hoida: That’s never worked.

Casey Hoida: No.

Betsy Hoida: On anything.

Casey Hoida: And it hasn’t really worked for much of anything, correct.

Tim Ulbrich: She’s a true free spirit, yes.

Casey Hoida: Yes, yes. I mean, you know, I won’t speak for Betsy on this, but one, for her, it helped when she truly became interested in our finances and took ownership on her end. And that’s what I’ll say about that, but then that allowed us to really sit down and one, just have a conversation, what is important to us financially? And what I mean by that is savings, retirement, college funds.

Betsy Hoida: Giving.
Casey Hoida: Giving, yeah, yes, definitely. Giving and mortgage and everything else. And so first, we had to identify what was important to each of us because that, I feel, is important knowledge to have before you can actually put together a —

Betsy Hoida: Cohesive plan.

Casey Hoida: Cohesive plan. And see how wonderful she is at finishing my sentences? Awesome. And so that’s basically it. First, it’s just communication with each other. And then it honestly just started to fall into place. I mean, we would have monthly financial meetings, budget meetings.

Betsy Hoida: They could be heated.
Casey Hoida: They were heated at first, and then they — as we continued on in them because you need to gain experience, they were less heated and they were more productive, and we really started to gain traction at that point in time.

Tim Ulbrich: So Betsy, let me ask — to follow-up on that — ask it this way. I often will talk with people and they may say, ‘Hey, I’m really having a hard time getting my spouse or significant other on board,’ as I mentioned. So from your perspective where maybe Casey was all ready to go and obviously, again, there was pain there that helped to necessitate this, but what advice would you give to those nerds out there of how to effectively engage a significant other that may be more of the free spirit mindset? What works? And what doesn’t work?

Betsy Hoida: So I would approach it as just as, you know, marriage. You keep your side of the street clean, and you know, money is attached to emotion. So really hearing what the other person has to say. And that means sitting down, not duking it out, but you know what I mean. Like we’re going to sit here, and we’re going to get this figured out. And a lot of times, it’s shutting my mouth and listening.

Tim Ulbrich: And building off of that too, going back to what I heard you guys saying your why is that I often will encourage couples — and I’m speaking here out of things I wish I would have done differently and what it took for Jess and I to get on the same page, but if you can start with the why and start with the dream and start with the goals, these month-by-month conversations — I’ll never say easy — but become a little bit easier because you agree on the vision and where you’re going. But if it’s not a shared vision, then I think that month-to-month can be somewhat combative, people shut down, and then you’re certainly resetting the clock. So again, keeping that why and keeping that vision in mind. So the reason I wanted to talk first about the paying off of the student loans and how you guys worked together is because I think that directly relates to, Betsy, to the decision you made that you were kind of unhappy with work, family priorities, prioritizing your marriage, and making the decision to walk away from that and being in the position to do so is really what I want to talk about here. So talk us through for a minute, you know, where were you in terms of just work, you know, externally, people may look at that and say, ‘Hey, you’ve got residency training. You’re board certified. You’ve got a ‘good job.’’ So what was not going well? What wasn’t working? And what was going on that led to you to the decision to say, ‘You know what, I need to walk away and take a break from this.’

Betsy Hoida: First, people thought I was crazy, like you said. But it turned into my health was not — it was slowly going down the drain, I was not taking care of myself, we have a child with special needs, I couldn’t sleep at night, my hair was falling out, I had lost a significant amount of weight. It got to the point of I can’t do this anymore. I can’t do this anymore. I need a break. And that was really hard. And it’s still really hard, I’m not going to lie, being at home and finding out my why. But you know, I’m still working on the board certification stuff. But it’s slowly coming together, and I have a belief that if I keep this path, it’s going to lead me to something. I know it is. I listen to your show, and I’m so inspired. Listening to other pharmapreneurs talking about their journeys is so powerful. And that just kind of keeps me motivated.

Tim Ulbrich: When we had talked a couple weeks ago, Betsy, I took some notes. And you had mentioned that you felt like you were in a crazy cycle. You felt like you had “lost me.” And you felt like you were burned out. And you know, there certainly were physical things that you mentioned there, but I think that many people listening may feel some of that, and they start to see the impact of relationship with family or kids, and what I want to highlight here is the importance of the financial piece to allow yourself to make an alternative decision if you find yourself in that place. And that’s why I love the work that Alex Barker’s doing, his book “Indispensable,” and to me, there’s so much synergy here between finding a fulfilling career and making sure you have yourself in a financial position that allows you to make some of those bold decisions. And sometimes, that is a different full-time job, sometimes that’s working part-time to be with family, sometimes that’s pursuing an entrepreneurial dream. Sometimes, that’s traveling the world for a year and taking the year off like Nick Ornella did that we featured on the podcast.

Betsy Hoida: Yeah.

Tim Ulbrich: I mean, it can look many different ways depending on your why, but the point is you put yourself in a position to do that. And so talk me through, I would assume there was a significant amount of fear there when you made that decision. I’d love to hear from both of you here. But did you put some markers in place to say, hey, before we do this, we want to be out of debt, we want to have a fully funded emergency fund, we want to be here, here, and here? Or were things just at such a point that you said, you know, overall, we’re OK and we’re just going to move on and we’re going to figure it out. So talk me through how you figured out where that place was financially where you could make that jump.

Casey Hoida: Sure. The funny thing is that we were at a financial point where we could do it immediately. We had our emergency fund, the student loans were paid off at that time, we had moved on to paying off our mortgage and were making good strides there. We had no other debt, and yet it terrified — I’ll speak for me, I won’t say us. Betsy will probably agree, but it terrified me for her to stop working.

Betsy Hoida: Oh my gosh, yes.

Casey Hoida: Because we — it was multiple things. One, it was oh, we’re going to lose all of this income and we’re making such great strides on the mortgage and we’re putting additional away in savings, and I don’t want to lose that. But after stepping back and looking back at what our life had become, just a rat race of who’s going to pick up the kids this time, who’s going to — I have to be here to exchange them or I’m going to go to this meeting or whatever the case is. It’s just we were trading off our kids and our lives so each of us could work full-time. And it just got to the point, like Betsy said, where her health was being affected. Mentally, I was exhausted. And I guess —

Betsy Hoida: Or our children. What are we showing our children? You know?

Casey Hoida: Yeah. It just got to the point that we couldn’t take it anymore. And I wish there was something more magical than that. It just got to the point where it had to break. And so we had to say, OK, Betsy — it was best for Betsy to stop working as I carried the insurance and some other things. And so it was best for Betsy to say, I need to step away and take care of myself and take care of my family. And so that’s what we decided to do.

Betsy Hoida: Yeah, best decision. It was terrifying. We had summer coming up. And it’s quality of life as well, you know? Life is short.

Tim Ulbrich: So Betsy, how would you describe, you know, if we used words before like “crazy,” “psycho,” “lost yourself,” and you were burned out, physically, emotionally, etc., like how would you describe it now? I mean, give me some of the words that you would use after you made that decision, what that’s meant for you as a parent, you as a wife, and your family and what would you use to describe that?

Betsy Hoida: I would say I am so much more relaxed. I really, I am. And realize you just day-by-day, day-by-day. I don’t know the future. And we recently had a flood. That would have sent us both into a tailspin, and I’m not going to lie, it was not the greatest waking up in the morning and being ankle deep in water. But we’re able to handle that. And I think, you know, just being I’m at home during the day, so I can handle that kind of stuff and just the nitty gritty details of recovering from the flood.

Tim Ulbrich: And let’s not forget to add that Casey had flood insurance policies in place lined up.

Betsy Hoida: Oh, yeah. So smart. People in this area were shocked because we got hit really hard.

Tim Ulbrich: That’s awesome, and I asked you too because I think I said, “Hey, are you guys in a flood zone?” And you had said no but had that policy in place. So great work, Casey. We talk about building a financial foundation and having a plan to protect your income in emergencies and all those things, and certainly just as important as debt repayment and investing and some of the other things that we talk about on the show. So Betsy, the last question I want to ask you about in terms of this transition away from work is talk to me about the fear of missing out, the FOMO, because I feel like that’s real in pharmacy. It’s real in any profession, but I think for whatever reason, moreso in pharmacy. So again, here you are, board-certified, you’re still working on those very tedious, long board certification exams, right? Residency trained, you’ve had a great career as running out since 2006, but you know, I’m sure you’re having these questions of what does this mean long-term? Am I going to re-enter? Am I going to forget things? Am I going to stay relevant? Am I going to be employable if I want to go back? So is that something you’re still struggling with, the fear of missing out? Or is that something that you’re able to get over quickly as you realize the benefits of the decision that you made?

Betsy Hoida: Honestly, it terrified me until recently where I realized that I’m not going to go back. I really, really believe that there’s something else — I am currently working three hours at a compounding pharmacy, and I’m really interested in bioidentical hormone replacement therapy and care of women around mid-life in that area and also just integrative health, that there’s other areas than just the current board-certification, the stuff I’m learning there, that there’s just more out there. There’s way more out there, that’s what I’m so excited about. And I don’t have to. And I don’t have to know today.

Tim Ulbrich: Yeah, and again, just a shoutout to Alex Barker, the Happy PharmD. For those of you that are looking for something else, he’s doing great work over there, and I think he’s really helping people that are working through situations like what you have talked about. So I want to talk about kids for a minute because, you know, as I hear your story and obviously as a father of three young kids, soon to be four, one of the things that gets me so fired up about this topic is that you guys have put yourself in an awesome position in terms of what you’re teaching your kids, what you’re role modeling, but also what the legacy will be of your family going forward. You’ve become debt-free, you’re working hard to teach them financial principles, you’ve prioritized the time with the family. So the question I have here, which is sort of a loaded question, is you know, knowing you have 6 and 9, is that correct, how old your children are?

Betsy Hoida: Yep.

Tim Ulbrich: OK. Knowing you have kids that are 6 and 9, you know, when they’re grown adults, you know, how do you want them to talk about you guys? What is the legacy that you want to leave in terms of financially and how you’re raising your family and how you’re maybe changing that generation for them going forward?

Casey Hoida: I always thought initially what I wanted for my kids from a financial standpoint is just to have a big pile of money for them when they get older so life won’t be so hard for them. And that was years ago, even semi-recently, that was my thought. And then I started just doing some more searching and thinking. And you know, that’s not the answer. That is not the answer at all is just having money sitting somewhere. That doesn’t teach anyone anything. And so I guess what I’m looking at now is to teach my kids the danger of money and what the love of it can do to you, to your life, to your relationships, and how to hopefully avoid that in their lifetime. That’s the biggest thing, really, is I want them to not be ruled by money because it can put you into a life that is not at all what is going to make you happy.

Tim Ulbrich: Absolutely. And Betsy, talk me through a little bit about what you guys are doing to role model this. I know you’re beginning to do some more of this, but in terms of teaching your kids about money. I know that’s something that my wife and I talk a lot about, we struggle with at times, you know, how can we teach them about this topic that is so big and so important but also make it relevant at where, the ages of where our kids are? So how are you guys approaching the concept of money and teaching that to your children?

Betsy Hoida: Absolutely. I just was emotional for a second about that when he was talking about for me, when you’re giving up — you know, there’s quality time. The time that I’ve been able to spend with them is irreplaceable. And being around for them, they love it. I mean, you know, I’m able to pick them up from school and just invest more in them. But to get back to your question, we are just at that point where we’re starting to teach them. And our oldest is really grasping the fact that — well, she wants all the things. But no, Molly, we’re going to teach you about having a savings account, a spending account, and a giving account. And same with Claire. And I think Dave Ramsey has a program that we can look at, but I kind of, I stole my neighbor’s plan. She does a great job. She is an accountant.

Casey Hoida: I just want to add, I mean, some of the practical things that we’re doing is the girls see us having our financial meeting each month. And they know that it’s occurring, so they’re seeing that. Betsy and I are very mindful when we’re at the store with them that we don’t make just knee-jerk purchases or anything like that. If it’s something that is above a certain dollar amount, I don’t know, I’ll just say $100 — not that that’s our number — but that we have a discussion about it and we’re like, no, we need to save for this and put money away until we have it. We don’t just grab a credit card and buy it that day. Instant gratification, we talk a lot about that in regards to finances. And so along with —

Betsy Hoida: The cars we drive.

Casey Hoida: Yeah, just showing them. We don’t go out to eat all the time, and when we do, we build it up as something special and a treat and not just something you do all the time. Our vehicles are quite old and, you know, just things like that. We’re just very, very mindful about how we talk about money in front of the girls and then what we do with our money in front of them.

Tim Ulbrich: And every single one of those things matters and it has cumulative, compound effects over time. And you know, I can’t remember if I’ve shared this story on the podcast or not, but I can vividly remember — and a shoutout to my parents for this — vividly remember sitting at my kitchen table, probably as early as 7 or 8 years old and getting a weekly allowance and having some of it allocated to savings, some of it allocated to spending, some of that allocated to giving. It might have been dividing up $2 or $3, but it doesn’t matter. You know, eventually that’s going to be $5,000 or $10,000. And those principles get ingrained over time. So whatever you define as those priorities for those of you that currently have kids or will have kids, in addition to not only teaching them those concepts of saving, spending, giving, but also just talking about this. So them seeing that you’re having these meetings, them seeing that you’re working through these issues month-by-month, hearing the discussion, and figuring out that, OK, there’s a process of saving up for something before you spend it and talk it through and not necessarily swipe it on the card, and you know, not have a discussion. So kudos to you guys, I think that’s awesome. And they are, I’m sure, absorbing way more than maybe even you necessarily intend to teach them in the moment. The last piece I want to end up on here is giving. And I know when you and I had talked prior to this recording, you know, as we were talking about kind of a financial why and why does this matter, I had sensed some more philanthropic giving aspirations. And I think you all are in a great position to make this a priority of your financial plan going forward, and it is a hope I have for the YFP community that once you have your own financial foundation and personal finances in place, you’re in a great position to help in many capacities, whether that be with church, local communities, family, anybody that may be in need. And so talk to me about giving for you guys, philosophically how you feel about it and where it fits into your financial plan. So Casey, you want to start?

Casey Hoida: Yeah. Yeah. So just a quick little backstory, so about two years ago as Betsy had indicated, when we were really struggling, we kind of renewed our faith life and became true followers of Christ. And that was a stepping stone for us in regards to giving that — how important I guess it is in one’s life to give back. We’ve received so much and have so many blessings that it’s only right, then obviously, to give a portion of that back. At first, I’ll be honest, when we would go to church, we would give a certain amount because that’s what you’re supposed to do. You’re supposed to just give some money to the church. And when I thought about it more and I thought about where that money was going and who it was helping, it changed for me. And I became more of a cheerful giver, if you will, than just checking a box like, yep, I gave some money to the church. And so I just, I don’t know, I feel that as we continue to grow in our faith life, we realized how important giving is. And I know when you and I talked a few weeks ago, something that you had mentioned and I’ve heard before about having your monthly amount that you give but then having kind of a discretionary amount set to the side for anything that is just put on your heart and you’re like, wow, now I have this money to help this individual or to help this cause or whatever. And that’s something that I had heard before. But when you had mentioned it, it kind of brought it back to the forefront for me. And I think that’s something that Betsy and I want to be more intentional about is having that discretionary money set aside for just anything that would come up. And then we’re really able to give and to help, and I think that’s important.
Betsy Hoida: Show the girls, show the girls. We had a Christmas party this year. You know, Christmas was a big point where it was a really good teaching opportunity in that they got to see we picked some families to sponsor, and they got to see the families themselves receive the presents. And we got to put together boxes to send overseas, and we got to pick out toys for children. And it was awesome. It was really great. I thought it was going to be a difficult time in Target, but they had so much fun. They really did. And —

Casey Hoida: I think they really understood what we were doing and why they were doing it, especially at what Betsy was saying, the Christmas party, where the children receiving the gifts didn’t know they were from us. It was set up a little bit differently. But the girls, our girls, were able to see those kids receive those gifts and the looks on their faces and just experience the joy of sharing, of giving, I think was prominent and right out in the forefront. And that’s what we were so happy that they were able to experience and see.

Tim Ulbrich: Yeah, and there is — as you both know, I’m sure many of our community feel the same way — I mean, there is true power in giving, obviously not only for those that are receiving but also for the giver. I think it really just shifts your mindset and how you look at the rest of the financial plan, how you spend your money, prioritization of things. And so we actually talked about that in Episode 022 of the podcast, the Power of Giving, for those that want to talk a little bit more about that and again, hopefully that’s a vision that we can continue to inspire among this community. So Betsy and Casey, you have truly inspired me. I’ve enjoyed our time together here, also in our pre-recording. When we had talked prior to the recording, I ran home and shared some of your story with my wife. I was fired up about doing this. And I am 100% confident you’re going to inspire our listeners as well. So thank you so much for coming on the show, thank you for taking the time, and thank you for your willingness to share your story. I really appreciate it.

Betsy Hoida: It was wonderful. It’s our pleasure. It was great.

Casey Hoida: Yeah, we really enjoy just sharing our story. And thank you so much for having us on. I really appreciate it.

Tim Ulbrich: Thank you both. And to the YFP community, again, we appreciate you joining us for this week’s episode of the Your Financial Pharmacist podcast. If you have not done so and you’ve liked what you heard on this show or on any other show that we record each and every week, please head on over to iTunes or whatever podcast player you get your information from each and every week. We’d love to hear your feedback. And if you could leave a review in that podcast player, that would help others recognize the show as well. Until next week, thank you again for joining. And have a great rest of your day.

 

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Career Break for Pharmacists: A Practical Guide on Taking a Mini Retirement

Career Break for Pharmacists: A Practical Guide on How to Take a Mini Retirement

The following is a guest post from Nick Ornella, a full-time pharmacy manager at a large retail pharmacy chain. Nick graduated from Ohio Northern University in 2009 and took a career break in 2016 to travel the world for a year. He currently lives in Cincinnati, Ohio with his wife, Alanna. In 2019, Nick created The Young Professionals Guide to A Year Off, a blog to help others plan a year of traveling. You can contact Nick anytime at [email protected].

Have you ever considered taking a year off from your job? Radical I know. But imagine you could spend the next 365 days however you wanted.

I know what you’re probably thinking. “How could I possibly make that happen with six figures of student loan debt, other bills, and financial priorities?”

Despite how unlikely this may sound, I want you to know it’s possible.

I know it’s possible because I’ve done it.

I took a career break from my job as a retail pharmacist at the age of 31 to travel the world for a year, and it was one of the best decisions of my life. I was satisfied with my pharmacy career at the time, but I wanted more out of life. I wanted my own unique story to tell, and I simply wanted the free time while still young and healthy to do more of what I absolutely love doing, traveling and exploring.

After paying off all my debts, saving a big chunk of money, and getting a leave of absence approved, I traveled through 15 states in America, 15 countries in Europe, and 3 countries in Africa. It was an unforgettable year. I returned to my pharmacist job immediately after, completely refreshed and eager for new challenges.

Taking a career break is a decision that I believe many pharmacists can make and would benefit greatly from.

In this post, I discuss why I think pharmacists should take career breaks and provide a step-by-step practical guide for making it a reality. I also talk about some of the things I have learned from my own journey.

Why take a career break as a pharmacist?

To pursue happiness, the ultimate currency

In his book Happier: Learn the Secrets to Daily Joy and Lasting Fulfillment, Harvard psychology professor Tal Ben-Shahar describes happiness as the “ultimate currency” and states that “Happiness is the highest on the hierarchy of goals, the end towards which all other ends lead.” I believe that the best way to increase happiness is by increasing the proportion of time that you spend doing the activities that mean the most to you, not by pursuing more material wealth and possessions. A career break is how you achieve that time.

To pursue passions outside of a pharmacy career

Unfortunately, many of our own personal goals that would bring us the most happiness are non-money making pursuits and are outside of our pharmacy careers. We cannot earn a living doing them, so we need to create the time for these activities and greater life goals. This is accomplished through a career break. Spending more time with family, doing volunteer work, and traveling are just a few examples of what those greater passions might be.

A career break is also a perfect opportunity to invest a substantial amount of time in a side hustle or other business idea. These pursuits are often very difficult to get off the ground while working full-time, so a career break creates that required time. Who knows? These side hustles could end up being your path to a more fulfilling full-time career.

Studies show that the presence of meaningful relationships is a great indicator of overall happiness. As a pharmacist, it’s sometimes difficult to develop and maintain those meaningful relationships because of unusual pharmacy hours and because pharmacists are often too tired after work to engage with friends and family. A career break creates all that extra time and energy to improve relationships and build new ones.

To help prevent job burnout

With high daily demands and increasing competition among big pharmacies, burnout as a pharmacist is a very real possibility. In a 2014 National Pharmacist Workforce Study, 45% of pharmacists interviewed reported that their job had negatively impacted their mental and emotional health. That’s a lot of unhappy pharmacists.

A 2010 study published in The Journal of Applied Psychology found that overall well-being of college professors rose during and after a sabbatical. I believe that pharmacists would experience similar benefits, live happier lives, and avoid job burnout with a career break.

To help with the saturated pharmacist job market

According to Alex Barker of The Happy PharmD, the supply of pharmacists in the job market is outpacing the demand. And if you’re a retail pharmacist, it’s likely you or a colleague has been affected by recent cuts in hours. This means there are many pharmacists out there looking for jobs and more hours. Pharmacists taking career breaks will help alleviate this over-supply and create job opportunities for other pharmacists.

To infuse the profession with more creativity

The pharmacy world needs more creative thinkers. Many problems within the healthcare industry, like compliance, health literacy, and high costs of medications, require creative solutions. Career breaks will help give pharmacists the free time away from the stresses of work to think deeply about the problems affecting the healthcare industry and come up with those creative solutions.

From an employer’s perspective, to improve company loyalty

Want to improve company loyalty and retain the best pharmacist talent? Offer your pharmacists the opportunity to take a year-long career break. Guarantee them a job with the same number of hours worked per week upon their return. Make them sign a contract saying they will work for you for a certain number of years before or after the break. Maybe even partially subsidize their health insurance for the year. This will help keep your best pharmacists from leaving the company due to burnout and help avoid the high costs of finding a permanent replacement for them.

How to take a career break as a pharmacist

Now that I’ve hopefully convinced you that a career break for a pharmacist is a really good thing, let’s look at the step-by-step process for making it a reality.

Step #1: Get out of debt and stay out of debt

The most important step towards a pharmacist career break is getting out of debt. That means you should pay off all student loan debt, car loans, and credit card debt before leaving your job. That way you’re more financially secure.

Step #2: Save money

There are several big chunks of money you need to save before a career break. Let’s take a close look at each.

Emergency Fund – $15,000

The rules that apply to emergency funds while you are working can be carried over to building an emergency fund for a career break. You need approximately 6 months worth of living expenses set aside to cover any emergencies while gone and for when you return to work. This money will cover any unexpected costs like sickness or car trouble.

Retirement Savings – A Good Start

I think it’s important to get a good start on your retirement savings before taking a career break to help ensure you reach all your future financial goals. But what’s the definition of a “good start”? Some experts suggest having a percentage of your annual salary saved by each age milestone. For example, by the age of 30, you should have 50% of your annual salary saved in retirement funds. But I don’t think that’s realistic for someone wanting to take a career break.

Here’s how I would suggest getting a good start on retirement savings:

1. Figure out how much you’ll want to have saved when you retire.

2. Use YFP’s savings calculator to figure out how much you need to save per month to reach this goal.

3. Set this money aside in your retirement accounts each month while paying off debt and saving for your career break. Make sure to at least get your company’s 401(k) match.

4. By the time you have enough money saved for your career break, you will have a good start on your retirement savings.

5. Plan on working an extra year or two at the back end of your career to make up for the money you don’t save for retirement during your career break.

Career Break Fund – $40,000 for a year long career break

The amount of money you can spend on a career break can vary wildly as it It depends on where you want to live and what you want to do. I think $40,000 is an excellent amount of money to save. This will give you enough money to cover your living expenses with plenty left over for the pursuit of your dreams.

Keep in mind, it’s possible to cut your living expenses way down and make only $20,000 last a whole year. Or you can plan a 6 month career break and spend $20,000. The longer the break, the better, so shoot for one year. And the more money you have saved, the less you have to worry about.

Here’s a quick breakdown of a $40,000 career break budget:

1. $12,000 for housing

2. $5,000 for food

3. $6,000 for health insurance (or only $1,200 for travel insurance)

4. $1,000 for cell phone service

5. $1,500 for car insurance

That makes a grand total of $25,500 for all of these essentials and leaves $14,500 to spend as you please and to pursue your greater life goals.

If you are concerned about missing out on investing for a whole year you could also budget in an additional amount to take advantage of dollar cost averaging but you would have to contribute toward non-retirement accounts.

Step #3: Create the time away from work

There are two ways to create the time away from work: quit your job or get a leave of absence approved. I believe it’s far better to get a leave of absence approved over quitting. That way you have some sort of a guarantee of work to return to at the end of your break.

To get a leave of absence approved, you need to do some research. Check your company’s HR website for the appropriate forms and policies regarding leaves, then get the required signatures. I was a staff pharmacist when I took my leave, and I needed approval from my pharmacy manager, my district supervisor, and someone in the leaves department. Start this process at least 3 months in advance to give your employer plenty of time to find your replacement.

Some quick tips for getting your leave of absence approved:

1. Be the best employee your company has: become a pharmacy manager, work at the store no one else wants to work at, reach all your metric goals. The more valuable you are to them, the more likely they are to approve your leave.

2. Work for a large retail pharmacy chain. They are more likely to have the pharmacists available to cover you while gone and a formal leave of absence policy.

3. Make your leave a win-win situation for both you and your employer: get licensed in a nearby state, get MTM certified, volunteer at a health clinic in Africa, do anything that will make you more valuable to your company.

4. Read this article for a more in-depth look at a leave of absence.

Step #4: Eliminate monthly expenses

Once you are debt free and have all the money saved, it’s time to start eliminating any monthly expenses, like Netflix and gym memberships. By the first day of your career break, the only bills you should have are a cell phone bill, car insurance bill, health insurance or travel insurance bill, and your pharmacist license dues.

If you own a home and plan on traveling, you should strongly consider selling it before your leave. It’s possible to rent it out while you are gone, but I believe there are too many headaches that could arise. If you want to keep your home, you’ll need to factor in the additional costs of your mortgage and all bills related to your home and save that amount of money beforehand.

Step #5: Final preparations

If you plan on traveling for your career break, you need to do the following:

1. Move out of your apartment and store your belongings at a friend or family member’s house.

2. Get required travel vaccines.

3. Purchase travel insurance.

4. Plan out your general travel itinerary and book flights.

If you plan on staying home during your career break, you need to do the following:

1. Make sure you have the money saved to cover your mortgage or rent and utility bills.

2. Purchase health insurance.

3. Plan out how you want to spend your time.

What to do during your career break

Having personal dreams and goals is extremely important for a successful career break. Here are a few tips for figuring out what to do and how to make it successful:

1. Think back to when you were a kid or still in high school or college. What interests did you have then that you would like to pick up again?

2. What areas of your life do you want to improve?

3. Spending more time with friends and family will greatly improve your relationships with them, so how can you spend more time with them?

4. What are your favorite activities outside your pharmacy career? How can you become better at them?

5. Come up with specific goals related to each activity.

Re-entering the pharmacy workforce after a career break

When I got my leave approved, my superiors said they could not guarantee a certain number of hours upon my return and it would all depend on the company needs at the time. If you are one of your company’s best employees, I think it’s possible for you to come right back to full-time work. But be prepared to only work part-time. You will likely have to work your way back up to a staff pharmacist or pharmacy manager position. The most important thing is creating the opportunity to get back to full-time work, and that’s best accomplished through a leave of absence.

I think it’s important to make yourself more valuable and improve your resume while taking a career break. This will increase your job prospects upon your return to work. Improve your pharmacy skills in some way, get additional certifications, and get licensed in another state. If worse comes to worse, you can get a new job or you can move to a different market with better job prospects.

Don’t worry about forgetting how to do your job after a year of being away. It’s like riding a bike and will come back to you naturally after only a day or two. I do suggest doing a couple CE’s on recent drug updates before returning so you’re not behind on clinical information.

Conclusion

I think a career break is quite possible for pharmacists and would greatly improve the happiness levels within the profession.

It’s not an easy thing to pull off, and it’s quite scary at first, but once you jump into it, you’ll realize how amazing it is to have the free time out of the rat race to pursue your greater life goals. The feelings of complete freedom are amazing. I will leave you with a quote that really inspired me to take a career break and make that leap of faith to a happier, more fulfilled life as a pharmacist.

“Twenty years from now you will be more disappointed by the things you didn’t do than by the ones you did do. So throw off the bowlines. Sail away from the safe harbor. Catch the trade winds in your sails. Explore. Dream. Discover.”

– Mark Twain

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YFP 109: An Interview with Suze Orman


An Interview with Suze Orman

Suze Orman, a #1 New York Times bestselling author on personal finance with over 25 million books in circulation, joins Tim Ulbrich on today’s episode. They talk about her most recent book Women & Money: Be Strong, Be Smart, Be Secure and the advice Suze has for pharmacy professionals feeling overwhelmed with their student loan debt and managing their financial plan.

About Today’s Guest

Suze has been called “a force in the world of personal finance” and a “one-woman financial advice power house” by USA today. A #1 New York Times bestselling author, magazine and online columnist, writer/producer, and one of the top motivational speakers in the world today, Orman is undeniably America’s most recognized expert on personal finance.

Orman was the contributing editor to “O” The Oprah Magazine for 16 years, the Costco Connection Magazine for over 18 years, and hosted the award winning Suze Orman Show, which aired every Saturday night on CNBC for 13 years. Over her television career Suze has accomplished that which no other television personality ever has before. Not only is she the single most successful fundraiser in the history of Public Television, but she has also garnered an unprecedented eight Gracie awards, more than anyone in the entire history of this prestigious award. The Gracies recognize the nation’s best radio, television, and cable programming for, by, and about women.

In March 2013, Forbes magazine awarded Suze a spot in the top 10 on a list of the most influential celebrities of 2013. In January 2013, The Television Academy Foundation’s Archive of American Television has honored Suze’s broadcast career accomplishments with her recent inclusion in its historic Emmy TV Legends interview collection.

In 2010, Orman was also honored with the Touchstone Award from Women in Cable Telecommunications, was named one of “The World’s 100 Most Powerful Women” by Forbes and was presented with an Honorary Doctor of Commercial Science degree from Bentley University. In that same month, Orman received the Gracie Allen Tribute Award from the American Women in Radio and Television (AWRT); the Gracie Allen Tribute Award is bestowed upon an individual who truly plays a key role in laying the foundation for future generations of women in the media.

In October 2009, Orman was the recipient of a Visionary Award from the Council for Economic Education for being a champion on economic empowerment. In July 2009, Forbes named Orman 18th on their list of The Most Influential Women In Media. In May 2009, Orman was presented with an honorary degree Doctor of Humane Letters from the University of Illinois. In May 2009 and May 2008, Time Magazine named Orman as one of the TIME 100, The World’s Most Influential People. In October 2008, Orman was the recipient of the National Equality Award from the Human Rights Campaign.

In April 2008, Orman was presented with the Amelia Earhart Award for her message of financial empowerment for women. Saturday Night Live has spoofed Suze six times during 2008-2011. In 2007, Business Week named Orman one of the top ten motivational speakers in the world-she was the ONLY woman on that list, thereby making her 2007’s top female motivational speaker in the world.

Orman who grew up on the South Side of Chicago earned a bachelor’s degree in social work at the University of Illinois and at the age of 30 was still a waitress making $400 a month.

Summary

The one and only Suze Orman joins Tim Ulbrich on this week’s podcast episode. Suze, #1 New York Times bestselling author on personal finance with over 25 million books in circulation, talks about her most recent book Women & Money: Be Strong, Be Smart, Be Secure and the advice Suze has for pharmacy professionals feeling overwhelmed with their student loan debt and managing their financial plan.

Suze shares her journey of being a waitress until she was 30 years old and going through a giant loss of $50,000 from an investment through Merryl Lynch in a 3 month time period. This is where her passion for personal finance began. Suze landed a job at Merryl Lynch, quickly began rising in rankings and eventually started her own firm. Suze became an advocate to make sure other people’s investments make more money than she’s earning.

Suze says that it’s important to have a healthy relationship with money and that there is no shame big enough to keep you from who you are meant to be. She shares that fear, shame and anger are the three internal obstacles to wealth.

In regards to student loans, particularly for those with the biggest debt loads, Suze says that first and foremost you have to understand the ramifications that unpaid student loan debt will have on your life. She suggests following the standard repayment plan to minimize the additional interest and amount added on the end of loan (if following an income driven plan), as well as the taxes that will have to be paid if the loan is forgiven. After paying off your student loan debt, Suze says that you can start dreaming. If an employer offers a 401(k) or 403(b) with an employer match, Suze suggests to contribute to the retirement account only up until the amount of the match.

Suze has created a protection portfolio with the four must have estate planning documents: will, living revocable trust, advanced directive and durable power of attorney. Setting these forms up with a lawyer can cost upwards of $2,500 with additional fees each time they need to be amended. With Suze’s must have documents, you can update as often as you’d like with no additional charge. At the release of this podcast, the offer for these must have documents is available 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. And joining me this week is a special guest, Suze Orman, who is an extraordinary individual, has transformed the financial lives of millions of people across the world through her passion for teaching personal finance and empowering others. While many of you I’m sure are very familiar with Suze’s work and have been impacted positively by her teachings, let me provide a brief background on Suze. She has been called “a force in the world of personal finance” and “a one-woman financial advice powerhouse” by USA Today. She is a No. 1 New York Times bestselling author, magazine and online columnist, writer, producer, and one of the top motivational speakers in the world today. Orman was the contributing editor to “O,” the Oprah magazine for 16 years, the “Costco Connection” magazine for over 18 years, and hosted the award-winning “Suze Orman Show,” which aired every Saturday night on CNBC for 13 years. To mention a few of her many accolades, she is the single most successful fundraiser in the history of public television. In 2007, “Business Week” named Orman one of the top 10 motivational speakers in the world. In 2008, Orman was presented with the Amelia Earheart Award for her message of financial empowerment for women. In 2009, “Forbes” named Orman 18th on their list of most influential women in media. And in May 2009 and May 2008, “Time” magazine named Orman as one of the Time 100: The World’s Most Influential People. It is without question an honor to welcome Suze Orman to the Your Financial Pharmacist podcast. Suze, before we jump in to discuss how pharmacists can be more intentional with their financial plan, I want to give a shoutout to one of our avid listeners, Amanda Copolinski (?), who is a superfan of yours that said, “Tim, you need to interview Suze on the podcast. Her message will resonate so well with your listeners in the financial issues that pharmacists are facing.” So while you have impacted millions of people, Amanda is one of those. And because of your work, your message will now impact thousands more in our community. So thank you so much for coming on the show.

Suze Orman: You’re welcome. But Tim, I just have to say one thing about Amanda. Seriously. Amanda asked, and because she had a voice — because it is so important particularly that women have a voice and they ask for what they want — and because she asked for what she wanted, even though it was for the good of all, it obviously was also good for Amanda, she got what she wanted. So if we can just learn to ask for what we want, I mean, what’s the worst thing that could happen? I say no. So then it wouldn’t have mattered — you see what I mean? So Amanda, you go girl, you go girl, you go girl. Alright, we can go now.

Tim Ulbrich: So before we jump in and talk more about your book, “Women and Money: Be Strong, Be Smart, Be Secure,” I’m curious and want our listeners to know as well a little bit more about your background into this world of personal finance that has led you to transform millions of people on their own financial journey. Were there a series of events or an Aha! moment for you that set you on this path, on this journey to teach and empower others about personal finance?

Suze Orman: Yeah, it was a very simple story, actually, where I was a waitress until I was 30 years of age in Berkeley, California. Having been a waitress for seven years making $400 a month, to make a very long story short, I had this idea that I could open up my own restaurant because I made these people a fortune with all my ideas. My parents had absolutely no money. My mother was a secretary, my father was sick most of his life, blah, blah, blah, blah. And the customers I had been waiting on lent me $50,000 to open up my own restaurant. So I’m again making a long story short. They had me put that money in Merrill Lynch, which was a brokerage firm. I had a crooked broker, and within three months, all $50,000 was lost. And now, I didn’t know what to do. And I thought, I know I can be a broker. They just make you broker. Because during those three months, I really loved starting to learn about a world that was so foreign to me. I didn’t even know what a money market was or Merrill Lynch was. Anyway, I went and applied for a job at Merrill Lynch because I knew I wanted to pay these people back that lent me $50,000, and I wasn’t going to do that at $400 a month, which was my salary as a waitress. They hired me to fill their women’s quota. And while I was working for them, I realized what my broker did was illegal. And I also had been told that women belonged barefoot and pregnant. They had to hire me, but they would fire me in six months. And so while I was working for them, I sued them with the help of somebody who worked for Merrill Lynch who told me what had happened to me was illegal. And because I sued them, they couldn’t fire me. And during the two years until it came to court — and they then settled outside of court because I was their No. 6 producing broker at the time — but what happened was during that time, those two years, I realized, oh my God, how many people out there don’t have the money to lose?

Tim Ulbrich: Right.

Suze Orman: Like alright, I was young, I could have somehow come back. But what if it were my parents? What if it were your parents? What if it was somebody who that was every penny they had to their name? And so that’s when I became — even though I was a financial advisor in terms of serving people at that time, I became an advocate to make sure that every single person that invested money, that their money meant more than the money I was going to earn off of them. I put them before me. People first, then money, then things. It was those people that mattered because I was one of those people. And before you knew it, I just rose and rose in the ranks, started my own firm, and here we are today.

Tim Ulbrich: Indeed. And I think that’s a good segway into talking about your 1 million-copy, No. 1 New York Times bestselling book, “Women and Money: Be Strong, Be Smart, Be Secure.” And as you may or may not already know, the profession of pharmacy is made up of a majority of women, approximately 60-40 split, two-thirds one-third of graduates today, roughly speaking, and so I think this message and your book is certainly going to resonate with our audience. And you start the book with a chapter titled, “Imagine What’s Possible,” and there’s a passage in there that I want to briefly read that really stood out to me. You said, “Women can invest, save and handle debt just as well and skillfully as any man. I still believe that. Why would anyone think differently? So imagine my surprise when I learned that some of the people closest to me in my life were in the dark about their own finances. Clueless, or in some cases, willfully resisting doing what they knew needed to be done. I’m talking about smart, competent, accomplished women who present a face to the world that is pure confidence and capability.” So why, Suze, is this topic of personal finance, even for well, smart, accomplished women, such as the pharmacists listening, and heck, regardless of gender, I would say this is true. Really smart people that often can’t effectively manage their money. What are the root causes for them?

Suze Orman: Yeah. You just used the word can’t. Oh, they can. Women have more talent in their little fingers — I’m so sorry to say — more capability than most men have in both hands, really. And I don’t say that as a put-down to men. It’s just that women, women hold up the entire sky here in the United States. They take care of their parents, their children, their spouse, their brothers, their sisters, their employees, their clients, their patients — everybody — their pets, their plants. And when it’s all said and done, when they’re 50 or 60 years of age, that’s when for the very first time, they start to think about themselves. You have got to remember that women have the ability to give birth, in most cases. They have the ability to feed that which they have given birth to, in most cases. So a woman’s nature is to nurture, is to take care of everybody else before she takes care of herself. So it’s not that she can’t. It’s she doesn’t want to. She doesn’t want to. She wants to make sure that her kids, in particular — a woman will do anything to make sure that her children are fine. That is not true with men. That is not true with men. I would think, I used to think that it was until 2008 came along. And when people were laid off of their jobs, they lost their home, they lost their retirement, they lost everything, women would go back to work, working three or four jobs, a waitress, a cocktail waitress, anything, just to put food on the table. A man, if they had a $200,000 job would not go back to work if all they were offered was $60,000. They weren’t going to do it. Again, it’s not putting men down. Please, men, don’t think that because I don’t put you down. It’s the socialization effect of the difference between a man and a woman. So a woman just will do it all, but she won’t take care of herself. She chooses not to. In any aspect, she’ll only take care of her household expenses. You know why? Because her house holds everybody that she loves. That’s the only difference. That’s the only difference, boyfriend. That’s the only difference.

Tim Ulbrich: Which is a good segway to talk about healthy relationships with money because in the book, you mention that in order to build a healthy relationship with money, there are attitudes that women need to get rid of, with the first of these being these weights or burdens that you referenced that are commonly carried around, one being the burden of shame and the second being the tendency of blame. Can you tell us more about this concept of blame?

Suze Orman: Yep. You know, in the book, I talk about truthfully that there is no blame big enough or shame big enough you who you are meant from being. There just isn’t. And it’s sometimes, we’re ashamed that we don’t know about money. Sometimes, we’re ashamed that we don’t have the money that we need to be able to give our children what they want. Now, what I just said was very heavy, believe it or not, because it’s really difficult — I mean, I just experienced it. I had my niece here. In fact, I had all my nieces here, but one in particular that has a 5-year-old child who loves Pluto more than life itself. He literally thinks Pluto is alive. He said to me, “Aunt Suze, how do I get a real Pluto?” And I mean, “You mean a dog?” And he said, “No, really. I want this Pluto to be alive.” And you could just see, you want to give this kid anything this kid wants because he’s so fabulous. Not that — all your kids are fabulous, to you, anyway. And so a mother feels — especially if she’s a single mother — that she has to make up for the loss of a father figure or another mother figure or parent figure. And she does it usually by purchasing things for her kids because when they go to school, oh, but this kid has this cute backpack and this kid has this, and look at these watches, and look at this iPhone. And so it becomes very interesting that a lot of times, you’re ashamed of what you yourself don’t have. You’re not proud that you have anything. You’re ashamed of what you don’t have. And you blame it usually on somebody else. Or you blame it on yourself. You know, it’s — and fear, shame and anger are the three internal obstacles to wealth. They just are. You know, I have people — I know you’re talking about the book right now, but my true love at this moment in time is the Women and Money podcast because it’s on the Women and Money podcast that you can hear, you can hear via the emails that are sent in, the shame and the blame that women feel, the anger that they have at themselves for staying in a relationship that they don’t want to be in but they don’t have the money to leave, the confusion that’s out there. And a lot of these women are so powerless because they’re not powerful over their own money.

Tim Ulbrich: In the book, you go through a detailed financial empowerment plan, which I think is incredibly helpful for our listeners to hear more about since we know many pharmacists are struggling with spinning their wheels financially, graduating now with more than six figures of student loan debt — the average about $166,000 — having many competing financial priorities with home buying, starting up a family, building up reserves, saving up for retirement, the list goes on and on. So the question is, where does one start when they are looking at so many competing financial priorities, and it can feel so overwhelming?

refinance student loans

Suze Orman: You start by No. 1, really understanding the ramifications that student loan debt that goes unpaid will have on your life forever. So you’re No. 1 priority, bar none, is your student loan debt. And you have got to understand the difference between paying back student loan debt on the standard repayment method and the income-based repayment methods. And you have to understand that in your head, if you think, oh, I have all this debt. I’m just going to pay back a little bit because I don’t have that much of an income, and they’re going to forgive it in 20 or 25 years, I’ll be OK. No, you won’t. You won’t because if under the standard repayment method, your monthly payment should be $1,500 a month and under income-based repayment, you’re only $750 a month, that $750 difference gets added onto the back end of your loan plus interest. And when they forgive it, when a debt is forgiven, you need to pay taxes on that as if it were ordinary income. And it is possible that if you do that over 20 years, you’re going to end up owing more than you even started with that they’re going to forgive.

Tim Ulbrich: Right.

Suze Orman: So you have to be realistic here. If you’re going to go in this industry, you’re going to become a vet, if you’re going to become anything with massive student loan debt, then you have to put your priorities in place. And your first priority is your student loan. After your student loan, hopefully on the standard repayment method, is paid off, then start dreaming. Ten years isn’t that big of a deal. It will come and it will go. But don’t try to do it all at once.

Tim Ulbrich: Yeah, and that’s really timely for many pharmacists that are listening to this, they’re looking at, as I mentioned, six figures of student loan debt, $160,000, $170,000, $200,000 of loan, unsubsidized many of those, interest rates that are 6-8%. And so obviously those interest rates and the growing interest and the baby interest can have an incredible negative impact on their financial plan. So that being a good segway I think into the conversation about loan forgiveness, which has gotten a lot of attention with the upcoming presidential elections, and we’ve had some discussion with Bernie Sanders, Elizabeth Warren, have forgiveness plans that are out there. And not even getting into specific candidates or politics or the individual policies, I think it brings up an interesting discussion around loan forgiveness and the positives and benefits of that relative to what people learn through the process of paying off student loans. And I know for me, individually, going through the process of paying off more than $200,000 of student loan debt, there was a lot I learned and that my wife and I learned through that lesson in terms of budgeting, working together, setting goals. But I also understand that for many — and certainly would have been the case for us as well — not having that debt would have been fantastic. So how do we reconcile forgiveness relative to being able to learn through that process?

Suze Orman: First of all, let’s talk about student loan debt to begin with and the viability of it. Is everybody crazy that we should have to pay, our children should have to pay $200,000 for a college education?

Tim Ulbrich: Amen.

Suze Orman: Like is that just to begin with the sickest thing you have ever heard in your life? So while everybody’s dealing with the debt that we have, what we also should be dealing with is why are we paying that kind of money? Listen, if that’s what these financial institutions need to keep the buildings and the teachers and everything going, maybe we need to go to online universities that are fully credited that everything is done online because the burden that these kids are leaving school with is so heavy. It is the No. 1 question that I am asked. And it is so sad it is the No. 1 question that I do not really have an answer for because they will not let you discharge it in bankruptcy. I mean, it is crazy that you pay the same amount of money to get a Master’s in social work as you do an MBA. Really? So tuitions, No. 1, should be based on the area that you are specializing in. Hey, if you’re going to graduate and you’re going to make $200,000, $400,000, $500,000 a year, fine. Then you start spending money that then subsidizes those that are going to make $30,000 a year because they want to be a teacher. Or whatever it may be. But I do think what’s going to start to happen is that people are going to have to start going to community colleges for the first two years or so.

Tim Ulbrich: Right.

Suze Orman: And then probably switch over. But then you have to be crazy if you go to a school that’s $50,000 a year. Now, with that said, I get when you want to be a vet, when you want to be a pharmacist, when you want to be a doctor, that’s what they charge. So if you know, if you know beforehand that that’s what it’s going to cost you and you have an unsubsidized loan, which means that it is growing while you are in school, can you at least pay the interest on that loan while you’re in school? And I know everybody’s going to say, ‘But Suze, I’m working full-time at school, I can’t,’ oh yes, you can. I had to put myself through school, I worked until 2 a.m. every morning. I started at 7, I worked seven days a week for four years straight. Don’t you dare tell Suze Orman you can’t do it. You most certainly can. You just don’t want to. And when you have debt that you can’t pay back, this is not a choice if you can or you can’t, if you want to or you don’t want to. You have to, and it’s — I don’t mean to sound harsh to you. But you’ll thank me years from now that at least you haven’t accumulated an interest rate on top of everything else.

Tim Ulbrich: Suze, one of the most common questions that I get — and I’m sure you get all the time as well — is how do I balance paying off my student loan debt relative to investing and saving for the future? And as we think about pharmacy professionals specifically, many of them have gone through lots of education to get where they are, they may have four years of undergrad, they have four years likely, some people more in terms of getting their doctorate degree, they may go on and do residency training, and so here they are and they look at the clock and say, ‘Yes, I’m young, but I also know I need to aggressively save, and I keep hearing the message of I need to be putting away money for the future. But I’ve got $160,000, $180,000, $200,000 of student loan debt, unsubsidized loans, 6-8%. So how do I balance the two of these?’ What advice do you give people to help think through that?

Suze Orman: I would not not pay a student loan under the standard repayment method in order to then save in a retirement account. Obviously, if you work for a corporation that gives you a 401k or a 403b or whatever it may be and it matches your contribution, then you have absolutely no choice whatsoever but to absolutely at least invest up to the point of the match. After that, your very first bill that has to be paid before you can decide anything is your student loan repayment. After you know what it’s going to cost you to pay on your student loan, then you have to make a decision. ‘Oh, do I have to move in with six or seven kids and all live together in order just to do whatever? What do I have to do after that payment? Is there any money left over? And if there is, what will it allow me to do?’ It may only allow you — I know you’re going to really think I’ve lost it — to move back in with your parents for a number of years.

Tim Ulbrich: You’ve got to do what you’ve got to do.

Suze Orman: You’ve got to do what you’ve got to do. And for all of us to make it in today’s society, we have to either really enhance the nuclear unit and nuclear family and really help each other, or if we can’t do what we’re born into, then create our own nuclear family where it is five or six of you get together and you go, OK, we have this problem. And it’s not like communal living, but it’s how do we solve this problem? So rather than you each have your own individual apartment, you each have your own car, you each have all of this stuff, what can you do as a group of people? You know, Uber and Lyft and Zipcars, all of that came about — you know, especially Zipcars — about people who couldn’t afford to have their own car. So again, I don’t mean to be Suze Smackdown here. But I do want you just to be realistic about your life and the independence dream: living on your own, having all of these things. Nothing will give you more pleasure than having money versus things.

Tim Ulbrich: Yeah, and my wife and I talk often, as we think about our own financial situation, that we felt some of that pressure in our mid-20s of wanting to live up to the lifestyle that our parents have gotten to after 30 or 40 years. So I think really reshifting expectations and thinking about specifically today’s pharmacy graduates, it really has to be intentional with their financial plan and change some of those expectations to set them up to be successful in the long run. Shifting gears a little bit, I want to talk about planning for the future. And we recently had on the show Cameron Huddleston, author of the book, “Mom and Dad: How to have essential conversations with your parents about their finances,” an excellent book that has me thinking more and more about the significance and importance of healthy and open financial conversations with family about money and ensuring that the estate planning process is well thought out and is in place. And I noticed that you offer a protection portfolio that is meant to help people take the worry out of protecting themselves, their assets, and their family. So tell us a little bit more about why this process of having a protection portfolio in place is so important and what information is compiled in a portfolio like this.

Suze Orman: What’s really important is for everybody to understand that we have no control over the things that happen to us. Are we going to be in an accident? I mean, really, just the other day, Tim, you know I live on a private island. And I’m driving down this road, there are no cars on this private island. There are only golf carts. There were only like — there’s 80 homes. There’s nobody here most of the time. And I’m driving, you know, back to my house. And I come up on a golf cart that overturned on these four 20-year-olds. And they were seriously hurt. Alright? And I mean, five minutes before then, they were on this private island having a fabulous time, and now I’m like, oh my God. So anything can happen at any time. And every one of you needs to be protected against the what ifs of life. May you always hope for the best, but may you plan for the worst, whether it’s an accident, an illness, an early death, whatever it may be. The number of emails I get from 40-year-old women, 50-year-old women, 30-year-old women, saying, “Suze, my spouse died. I have three kids. I never expected to be in this situation.” And they go on and on and on about it. And this is also — what I’m about to tell you — very important if you have parents. Because if you have parents, the question becomes like, my mom lived ‘til she was 97. If something happens to your parents, they lose their mind, so to speak, they have dementia, they have Alzheimer’s, and they can’t write their checks anymore or pay their bills, who’s going to take care of them? You can’t do anything for them unless you have what I call the must-have documents. Not only a will, a living revocable trust, an advanced directive, and a durable power of attorney for healthcare. You must have those. But most of the time, lawyers tell you, “All you need is a will.” Oh, give me a break. The less money you have, the more you need a living revocable trust because wills make it so that in most cases, if you own a piece of real estate or whatever it may be, your estate has to go through probate. And guess who gets the probate fees? The lawyer that told you all you need is a will. So a living revocable trust not only passes your assets from one person to another within a two-week period of time, no fees, nothing. But in case of an incapacity, it will say, you can sign for so-and-so, so-and-so can sign for you. It sets up your estate every way you want it. And it also helps you because minors cannot inherit money. So if you have young children, and both you and your spouse are killed in a car crash, something happens, the money can’t go to your minors. If you left your money to them via your will, good luck. It’s going to end up in a blocked account until they’re 18. So with that said, most trusts, if you go to see a trust lawyer — first of all, you have to know there are good trust lawyers, most of them are not — are at least $2,500. And every time you make a change, $500, $1,000. You’re just sitting here talking to me about you don’t have even have enough money to pay your student loan debt. Where are you going to get $2,500 to do a will, a trust, an advanced directive, and durable power of attorney for healthcare? And every time you need to make a change, where are you going to get the money to do that? And so years ago, with my own trust lawyer, I created what’s called the must-have documents. These documents are my documents. If you were to look at my trust, my will, everything, you would see these. But I wanted to do it at a price that every single person could afford. So we created over $2,500 worth of state-of-the-art documents for approximately $69.

Tim Ulbrich: Wow.

Suze Orman: And what’s great about these documents, not only are they fabulous, every time the law changes, they automatically get updated, but you can change it as many times as you want. So if you go from one kid to two kids, you go back to your computer, you change them. So you never have to pay for it again. And if you’re interested, really, in that offer, you can just go to SuzeOrman.com/offer, and through there, it’s $69. Otherwise, you’ll see it sold for $100, $90. They’re sold for all over the place. But these documents have changed the lives of millions and millions and millions of people over the years.

Tim Ulbrich: Yeah, and I think it’s also important for our listeners just to consider the peace of mind of having all this together. When you think about all of the things that are found in estate planning documents and my wife and I went through this process, we’ve talked about on the podcast before, where you put together insurance policy information and where your accounts are at and birth certificates and all of the papers that would need to be readily accessible in addition to all of your estate planning documents. To get there and the conversations you have and the peace of mind it provides is incredible. So again, SuzeOrman.com/offer will get you there. Suze, I want to wrap up our time together by talking about legacy. And I’m fascinated with learning more about what drives very successful, highly influential individuals such as yourself to take on the life’s mission and work that they do. And so for you, as you look back on a career that is undeniably wildly successful and that has positively transformed the lives of millions of people, what is the legacy that you’re leaving?

Suze Orman: You know, I hope the legacy that I leave is that women in particular — but men as well — but women in particular really know that they are more capable than they have any idea; that they will never be powerful in life until they’re powerful over their own money, how they think about it, how they feel about it, and how they invest it; and that every one of them, one of them, has what it takes to be more and to have more. We just have to want to. So I don’t really know, I don’t know how to answer that because I never think about what I’m going to leave. I only really think about what I’m doing. And I can tell you right now, like one of my friends said to me, “You just can’t help yourself, can you, Suze Orman?” So you know, with the Women and Money podcast, people write in their emails. And I keep saying, “I’m not going to answer them. I can’t answer all these emails.” And now, I’ve answered almost every one except four. You know, I’ve got four left. And then they’ll mount up again and blah, blah, blah, blah. But I have such a desire for every single woman — and the men smart enough to listen — but really, for every single woman to get the right advice, the best advice, to start to educate them so that they become smart enough, strong enough, secure enough, so they can start educating their daughters and their sisters and their aunts and their moms and their grandmas and everybody so that we start really teaching one another because I’m just so afraid of where this world — truthfully, the hatred in this world that we are experiencing right now — I am very afraid of where it’s going to take us next year. And so, you know, I just, I hope I leave a legacy of love and power. That’s what I really hope I leave.

Tim Ulbrich: Yeah, and what really stands out to me, Suze, is the work that you’re doing — and you alluded to this — is the generational impact that it’s having. And that will forever go on. I mean, that’s an amazing thing when you think about transforming somebody’s personal financial life. And let’s say they’re a mother, and they pass that on to their kids and their friends and their cousins and their network, and that’s passed on to another generation. That is incredible, transformational work that will forever have impact. And so I thank you for that work, and I know it’s had an impact here on me in even having the opportunity to talk with you today. So to our listeners, as Suze mentioned, she responds to her requests as it relates to the podcast she has each and every week, the Suze Orman’s Women and Money podcast. So if you have a question for Suze that we did not touch on during today’s show, make sure to reach out at [email protected]. And again, as a reminder, make sure to head on over to SuzeOrman.com, where you can learn more about Suze, including her blog, the podcast, comprehensive resources, live events that she hosts, and books and products that are designed to help empower you in your own financial plan. So Suze, again, thank you so much for coming on the show. And I’m grateful for what you were able to share and the impact that it will have on our community. Thank you very much.

Suze Orman: Anytime, boyfriend. Anytime.

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YFP 108: How to Effectively Talk with Mom & Dad About Their Finances


How to Talk to Your Aging Parent About Finances

Cameron Huddleston, an award winning journalist with more than 15 years experience writing about personal finance, joins Tim Ulbrich on this week’s show. Cameron and Tim talk about her recently released book Mom and Dad, We Need to Talk: How to Have Essential Conversations with Your Parents About Their Finances. Cameron discusses why it is important to have these conversations with your parents, how to start the conversation and what to do if your parents are reluctant to talk.

About Today’s Guest

Cameron Huddleston is the author of Mom and Dad, We Need to Talk: How to Have Essential Conversations With Your Parents About Their Finances. She also is an award-winning journalist who has written about personal finance for more than 17 years. Her work has appeared in Kiplinger’s Personal Finance magazine, MSN, Yahoo, USA Today, Chicago Tribune and many more print and online publications.

Summary

Cameron Huddleston joins Tim Ulbrich to talk about her newly released book Mom and Dad, We Need to Talk: How to Have Essential Conversations with Your Parents About Their Finances. Her inspiration for the book came from the stories of her parents. Her father died at the age of 61. He was in his second marriage and didn’t have a will. At 65, Cameron’s mother was diagnosed with Alzheimers and her biggest regret is not talking to her about her finances, the type of care she wanted and how to pay for it before her memory started to get bad. Cameron didn’t want others to go through the same mistakes and suffer their consequences as she did.

Cameron shares why these conversations regarding finances and end of life care aren’t talked about, the biggest being that for older generations it’s taboo to speak about money and that it can make people uncomfortable as some people haven’t managed their money well and don’t want to divulge that information with their family. Unfortunately, consequences like lengthy and expensive court battles to prove that parents are no longer competent to handle their money or make decisions can come out of not speaking about these sometimes difficult topics.

Cameron shares that one of the biggest mistakes you can make is assuming that the conversation can wait. If your parents are healthy it’s the perfect time to have the conversation. She suggests focusing on speaking about the basics first, such as a will or living trust, power of attorney and advanced healthcare directive. From there, you can get deeper into how to pay bills and manage bank accounts. Cameron also talks about where to begin in having this conversation, what to do if your siblings aren’t on the same page as you, and when and how to have this conversation with your parents.

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 have a special guest on the show this week, Cameron Huddleston, author of “Mom and Dad, We Need to Talk: How to have essential conversations with your parents about finances.” Some brief background on Cameron, she’s a contributing editor for Kiplinger.com and wrote the popular “Kip Tips” columns, which was syndicated in the Tribune newspapers nationwide. Her work has appeared in Business Insider, Chicago Tribune, Fortune, Huffington Post, Money, MSN, and USA Today. She has appeared on Fox & Friends, MSNBC and CNN and has been a guest on ABC News Radio, Wall Street Journal Radio, NPR, WTOP in Washington, D.C., and KGO in San Francisco. She currently is the Life and Money columnist for GoBankingRates.com. Cameron, welcome to the show.

Cameron Huddleston: Hi, thank you so much for having me.

Tim Ulbrich: So first of all, congratulations on the recent release of your book. What an amazing accomplishment in putting together a book that is going to have I believe such a positive impact on so many families, and obviously, more specifically, we’re going to talk about here in the pharmacy community. But writing a book is no small feat, so congratulations on getting this book out there.

Cameron Huddleston: Thank you. You’re right, it is not an easy task. It’s probably one of the hardest things I’ve ever done, I feel like.

Tim Ulbrich: So rewarding and difficult. I really, truly believe, as I just finished up the book here in the past week, I know it’s going to have an impact on me personally. I’m excited to share with our community some of the tips and strategies and wisdom that you share for how to have what I think is such a difficult conversation with family and especially parents around finances. So as I had a chance to read through your book prior to the interview, I was really, really impressed — and I shared with you before we recorded here today — about how comprehensive it is, how many stories you use, and I think how those stories reinforce the concepts throughout the book, how you’re able to break down what can be a very overwhelming and scary topic to one that I believe you present in a way that is easy to understand and that results in action. And I found myself taking notes, saying, “Hey, my brother and I really need to get together and make sure we have some of these conversations with our parents, even though we have had many of them already.” So let’s start with why write this book. So talk us through some of your personal story and the inspiration behind getting this book out there into the hands of others.

Cameron Huddleston: So I feel like I’m the poster child for why these conversations need to happen, sooner rather than later, because both of my parents, their stories caused me to write this book. My father died when he was 61. He was in his second marriage, and he died without a will. And he should have known better because he was an attorney. And of course, when you die without a will, the state decides who gets what. So your wishes are not expressed. And you don’t even have to be a wealthy person to need a will. And I make this point very clear in the book. At least, I try to. You know, wills aren’t just for the rich and famous. They are for anyone who has anything that they are going to be leaving behind, and they want to have a say in who gets what. So my dad did not leave a will telling us who gets what. And like I said, he was in a second marriage, and it just, it didn’t turn out as bad as it could have turned out, but it was certainly awkward. And then a few years later, when my mother was 65, she was diagnosed with Alzheimer’s. I was 35 at the time, I still had young children. And suddenly, I was thrust into the role of caregiver for my mother. And my biggest regret is not talking to her about her finances before she started having memory issues. I had had a conversation with her when I had moved from Washington, D.C., where I was working for Kiplingers, back to my home state of Kentucky. And I told her when I moved back home, I said, “Mom, you need to look into getting long-term care insurance,” because knowing that she was alone and that if she ever needed care, a long-term care insurance policy would help pay for that care. And by care, I mean care in an assisted living facility or nursing home. It even pays for care in your own home. She took my advice, looked into it, but could not get coverage because of another pre-existing condition she had. Then after that conversation I had had with my mother — and that was when she was in her early 60s — she ended up developing dementia. And I look back at it now, and I realize that after she discovered that she couldn’t get coverage, I should have said to her, “OK, Mom, you cannot get long-term care coverage. Let’s figure out how you would pay for it if you ever need this sort of care. And let’s talk about what sort of care you would want.” But I didn’t do it. And I was a financial journalist. I still am. But I didn’t realize that I needed to have this conversation. And so I wrote this book because I don’t want people to make the same mistake I made. And I don’t want people to have to figure out things on their own like I did because it’s not easy. It really is not easy. So I’m sharing my experiences in this book. I’m sharing the experiences of other people who’ve had these conversations. I’m sharing the advice of experts, financial planners, financial psychologists, elder care experts, estate planning attorneys, trying to cover as many bases as I possibly can in this book.

Tim Ulbrich: Yeah, and I think your story with your mom and with your dad really, to me, laid the foundation of the importance of this topic. And you have many more stories that you use throughout the book that I think do that as well. But you know, when you talk about the situation with your mom and dementia and you as a financial expert and writer not having or pressing on some of those conversations, you know, I often feel that way often with my family as well. Or you mentioned your dad being an attorney who had experience writing wills but didn’t necessarily have a will himself. I think that speaks to how difficult these conversations can be and how necessary they are and often how emotional things can get. They can prevent some of these from happening. So one of the things you start with in the very beginning of the book, you outline — to the point we were just talking about — so well the fears that can present themselves when we consider talking about money with our parents. So much so that you reference a — I think it was a 2016 Care.com survey that found more than half of parents would rather have the sex talk with their kids than talk to their parents about money and aging issues. And the result being, as you also mentioned in the book, about three-quarters, 73% of adults, not having detailed conversations with their parents about their finances. So what are some of these fears that are holding people back from having these critical conversations? Because after all, we know that they are essential ones to have.

Cameron Huddleston: You know, I want to touch on this first because you said we know that these are essential conversations. A lot of people actually don’t even realize that they need to be having these conversations. That same survey that you mentioned, that I mentioned in my book, about 73% of adults not having had this conversation with their parents, a very significant percentage of the people who were surveyed said they haven’t had the conversation because they didn’t realize that it was important. They didn’t realize it was an important topic to discuss. And we can talk a little bit later about why it is so important, but the fears, that’s a big one. So that same survey found that people have a variety of fears about having this conversation. A big one is that people are afraid their parents will think they’re being nosy. And I’ve heard this from people, I’ve talked to, I’ve interviewed for this story, for my book and just in general, friends I’ve talked to, and people say, “Oh yeah, my parents tell me that their money is none of my business.” And the point I make in the book is you might be afraid that your parents are going to think you’re being nosy, but the reality is that if you let them know that you want to have this conversation because you’re looking out for their best interests because you might have to care for them someday, you might have to help them out, that you’re not being nosy. You’re just simply trying to gather information that will make it possible for you to help them if they ever do need that help. You know, and so the thing is you don’t want to come at them and say, “Mom and Dad, let’s talk about the details of your finances.”

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Tim Ulbrich: Right. Right.

Cameron Huddleston: Because it is — because money is a taboo topic. If you approach it by saying, “Mom and Dad, you took great care of me. I want to return that favor as you get older if you ever need help from me. And we need to discuss some things.”

Tim Ulbrich: And I think that’s what I love in this chapter but also throughout the book. In this chapter, specifically, you present some of those fears and then the realities. And you have some ideas throughout the book about specific language, conversation starters, things people can do to initiate these conversations. And in situations where they find themselves up against a reluctant parent, what are some strategies of how they do that. So I hope our listeners will take the time to get the book and read the book and really hopefully apply it with their own money — or their family situations as well. I want to ask you, since you mentioned this concept of money being a taboo topic. You know, when we’re out talking with other pharmacists and I mention this concept of money being a taboo topic, I see everybody’s heads nod in the audience. And I’m just curious, from your experience, from your expertise, for somebody who’s written on this for so long, is that just overall? Is that a generational thing? And then we know, as I think about myself with four young children, how can we reverse that trend? And what are some of the things that we can be doing to not make it a taboo topic so we’re not in the same cycle again with our children, you know, as they go through their life?

Cameron Huddleston: It certainly is generational. I think that younger generations are a little more open to talking about money, still not as open as we should be, but I’m a Gen X’er. My parents’ generation, they were actually, they fell into the silent generation. Money is certainly a taboo topic for them. And their parents told them — I remember growing up, my father would say, “You don’t talk about money. It’s impolite.” And he was always very reluctant to talk about money. And I feel like if I had tried to have a conversation with him when he was still living, he would have balked. My mother did not treat money as a taboo topic. We didn’t talk about it a lot, but I did not feel uncomfortable discussing it with her. I do feel like, though, the millennials are more open to discussing money freely. It’s not such a taboo topic among them. I think too that my generation, Gen X, is starting to open up a little bit more because we are already running into those struggles of talking with our parents and realizing that we need to be having these conversations with our kids. I have been having these conversations with my kids since they were young enough to talk. You know, of course when your mom is a financial journalist, and your dad is an economist — my husband teaches economics — you get it thrown at you all the time. And I remember my middle daughter coming up to me a couple years ago one day, just out of the blue, saying, “Mom, why are people so afraid to talk about money?” And I thought it was so interesting that she asked me that, and I tried to explain to her in the best way that I could — I think she was about 10 at the time — that people are uncomfortable talking about money because you either are afraid that you have less money than the person you’re discussing it with, or you have more. And in either situation, it can be uncomfortable. I think parents are particularly uncomfortable talking to their kids about money for a variety of reasons. Either they were taught you don’t talk about money, maybe they haven’t managed their finances well and they’re embarrassed, which anyone’s going to be embarrassed if you made mistakes, and you don’t want to admit to your kids. Or sometimes, it’s not so much the money issue that they’re afraid to address, but if you’re talking about things like wills and estate planning or long-term care, you’re talking about aging and death. And when you realize that you’re already in the midst of getting older and death is no longer such a in-the-future thing, but it could happen at any time, when you are older, it’s a scary thing to discuss for a lot of people. And when you talk about planning for long-term care, planning for end-of-life, a lot of parents don’t want to have those conversations. Because it’s scary for them.

Tim Ulbrich: Yeah, and I like how you highlighted in the book that even though both parties may come at it where it’s a difficult conversation, it’s uncomfortable, it’s that unknown territory, often, you may leave it with this feeling of, I’m really glad we had this conversation. And so I think that’s the outcome we’re hoping for is obviously some clarity around the plan. And I think the strategies you present in a great way in the book about how to do it effectively so it’s not necessarily focused on you as the individual and what you’re getting but really trying to look after your family and their wishes and all the complexities and things that are involved. One of the things that I really enjoyed in the book — I think it was Chapter 2, it was titled “Don’t Wait,” you mentioned that one of the biggest mistakes you can make when it comes to talking to your parents about finances is assuming that the conversation can wait. So what are some of the potential consequences of waiting to have these conversations until a point when maybe it’s too late? What are some of the things that could go wrong?

Cameron Huddleston: I hear from people all the time in just day-to-day conversations with friends when this topic comes up — because my friends know that I have been dealing with my mother and her Alzheimer’s for a decade now. And what I often hear from them is, ‘Well, we’re not at that point yet. I don’t need to be talking to my parents about this because they’re still healthy.’ But that is the perfect time to have the conversation. If you wait until there is a health crisis or when your parents are having memory issues, at that point, it can be too late. For starters, if there is a crisis, emotions are running high, you don’t think rationally when you are in the middle of a crisis. And the last thing your parents are going to want to do is discuss their finances with you. You know, you might need to be stepping in and helping them make sure the bills get paid, but they don’t want to talk about that because they’re in the hospital recovering from a stroke, a heart attack, something horrible that has happened to them. So waiting until that emergency happens is a terrible time to have the conversation because of the emotional issues that are going on. But the even bigger issue is that things may not be in place to actually allow you to step in and start helping them. The biggest of these is power of attorney and healthcare power of attorney. Both of these are legal documents, and you have to be mentally competent to sign them. So if you wait until you are in the later stages of dementia, it is too late. No attorney is going to let you sign a power of attorney or an advanced healthcare directive naming a healthcare power of attorney because they’re going to assume that maybe you had been pressured into signing these documents. You are no longer mentally capable to make sound decisions, and so I don’t think a lot of people realize this. They think, well, you know, if Mom and Dad need help, I can just step in and start helping them. I can write checks for them and make sure the bills get paid. I can talk to their doctor for them. I can talk to their financial institutions for them. No, you cannot. Not unless they have named you power of attorney, healthcare power of attorney. No financial institution is going to talk to. Most doctors will not talk to you. You know, pharmacists should know this. Some, you can’t hand out a prescription just because they say, ‘Hey, I need to get this prescription for my mom because she’s in pain.’ I mean, there’s no way that’s going to happen. And so if you have not sat down with your parents to find out whether they have a power of attorney, an advanced healthcare directive that names someone to make healthcare decisions for them, and that spells out what their end-of-life care that they want is, if you wait until something has happened, it can be too late. And the consequences of that are a very lengthy and expensive court battle, basically. You’re going to go to court to try to prove that your parents are no longer competent so you can become their conservator. You’re putting your parents on trial, which is a horrible thing.

Tim Ulbrich: And you did a really excellent job in the book of outlining exactly what that could look like, the cost of it, the time of it. Because I think you’re right, I think there’s the assumption that, hey, you know, maybe I’m an only child or my sibling and I get along, and yes, we don’t have power of attorney or we don’t have healthcare directives, but we’re all kind of on the same page. But if those documents aren’t signed, and you don’t have the copy of them that can be ultimately put in place, like it doesn’t mean you might not eventually get to where you had hoped to get, but it’s going to cost a whole lot of money, a whole lot of time, and a whole lot of heartache to get there that is really unnecessary, right? And I think you outlined that well in the book that my wife and I just updated this for our own family and our process, especially now that we just added a fourth child to our family. And for how easy it is — even though it seems overwhelming — for how easy it is to ultimately execute these papers when you consider that against what it would take if those were not executed, it’s really a no-brainer. I mean, you have to take action on these things. And we’ll come back here in a little bit and talk more about those documents specifically. So what I want to transition to here are some of the common reasons that you outlined in the book that parents may be reluctant to have these conversations. Because I think that if our listeners know what these are, then it can really help them frame what might ultimately be the right strategy. So what are some of the common reasons that parents may be reluctant to have these conversations with their children?

Cameron Huddleston: We hit on a big one already. The biggest is that they think money is a taboo topic. And they don’t want to discuss it, with you, with anyone, so you realize that. And you’re going to know this. I mean, you are going to know if money is a taboo topic with your parents because any money issue that might have come up in your family, if they dodged that topic, you know that they’re going to be reluctant to discuss their finances with you. And if that is the case, if you realize that is the case, then you don’t want to make the conversation about money, which sounds kind of silly being I’ve written a book about how to talk to your parents about their finances. But you don’t want to make the conversation about money. You want to talk about bigger picture issues. You know? Like, “Mom and Dad, what do you see retirement looking like for you?” And their answers might give you clues. They might be like — or, “How is retirement going for you?” “Oh, well, you know, it’s kind of boring, actually. We’re just kind of sitting around home.” “Oh really, I thought you wanted to travel.” And they might say, “Well, turns out traveling is expensive.” And that’s going to give you a clue that maybe they don’t have enough in savings for their retirement that they wanted, which can also give you a clue that if they don’t have enough in savings for the retirement they wanted, they probably don’t have enough in savings to cover any long-term care they might need. So find another way, find kind of a big-picture issue that you can discuss that they might be more comfortable talking about than actually details about their finances. But like I said, the answers that they give you, the responses, are going to start cluing you in. And then when you hear that response, don’t just let it go. Ask more questions.

Tim Ulbrich: And I think one of them that stood out to me was, you know, you had mentioned that they may be embarrassed about their finances. And if you look at the data that’s out there, in terms of the number of people who have the right documents in place and how much money people have saved for retirement and who actually has long-term care insurance relative to those who need it, more likely than not, for many of our listeners, that may actually be the case that maybe they’re embarrassed about their finances. And so you as the child and your point of reference of why you think this is important for them to have in place, well, for them, the struggle is that they’re really embarrassed about uncovering about what maybe they’re not comfortable you seeing. Obviously, there’s two different angles and viewpoints there. So I think really trying to understand why the reluctancy may be there would really help frame the strategy in which you approach it. And I think you did a really nice job of outlining those. So as I was reading the first few chapters, it was almost as if you were predicting my thoughts as I was going through the book because I read through the first few chapters, and I’m like, gosh, where do you start? You know, where do you start with this process? I understand the problem, I understand the need, I understand there may be reluctancy, but where do you start when it comes to having these difficult conversations, especially considering how complex of a topic that this can be. And your suggestion is to start by talking to a sibling. So tell us more about why you think this is a good place to start and some of the strategies to do that.

Cameron Huddleston: If you have siblings, you need to be sitting down with them before you even go to mom and dad. And there are several reasons why you should do this. For starters, you want to get on the same page with your siblings. You don’t want to go to mom and dad and have this conversation, and then your brother and sister find out, and then they’re angry. Wait, why did you do this without me? What, are you trying to get in good with mom and dad so that you get everything when they die? You don’t want to create any resentment. And you don’t want them to try to second-guess what you’re doing. So you want to let them know, ‘Hey, I think we need to talk to Mom and Dad about their finances.’

Tim Ulbrich: I really like that.

Cameron Huddleston: And so they might say, ‘Well, why? They seem to be doing fine. They’re not having health issues.’ ‘I know. And that’s why we need to do it now, before any issues arrive, so that we can make a plan together.’ And when you talk to your siblings, you want to agree on the roles you’re willing to play. You want to decide, who’s going to initiate the conversation? Maybe it’s one of you, maybe it’s all of you. Then you have to decide, OK, when are we going to do this? How are we going to approach this conversation? You also want to decide what roles you’re willing to play going forward. Maybe you live closest to mom and dad, so you’re willing to be the one who’s going to step in and provide any care that they need, take them to doctor’s appointments, you know, if you have to, let them move in with you or you would move in with them depending on your situation. Maybe your younger sister is better at money, and so she might be willing to step up and say, ‘Hey, Mom and Dad, I’m willing to be your power of attorney. I’m willing to help you out with any financial issues that you face going forward. I can be the one who will make those decisions for you if you no longer can.’ Hear out what roles you’re going to play so that when you go to your parents and have these conversations, when they see that you’ve talked and you are on the same page, that is going to lift a little bit of the burden off them. Because parents oftentimes are afraid to have these conversations because they’re afraid that perhaps it will create fighting among their children, especially when it comes to issues of wills and who’s going to get what. Because parents don’t always divide things up equally. And they don’t even want to discuss their will because they don’t want their kids to know who’s getting what because they don’t want their kids to fight. And so when you go to them and say, ‘You know, Mom and Dad, sister Susan and I have been talking, and we want to talk to you because we want to make sure that as you get older, we can help you out if you ever need it. And Susan’s willing to do this, and I’m willing to do that. But to do this, we need to get some information from you. We need to find out what sort of legal planning you’ve done. We need to know — you know, we don’t need to know details, we don’t need to know how much is in your bank account, but we do need to know where you bank.’ Coming to them as this united force is going to help, as long as it doesn’t look like you’re ganging up on them.

Tim Ulbrich: Sure.

Cameron Huddleston: The last thing you want to do is be like, ‘OK, Mom and Dad, my brothers and sisters and I, we need to sit down and talk with you right now, and you’re going to tell us everything we want to know.’ That’s the last thing you want to do. You don’t want to issue any sort of ultimatum, but if you can show them that you are on the same page, it can make it easier to have these conversations because they know that all of you are involved, that you’re looking out for their best interests and no, we don’t care what we’re getting. We just want to know whether you’ve put your wishes in writing.

Tim Ulbrich: And I love, I love that angle of laying that out there, of not only having a unified voice among your siblings but also coming at it from a, hey, this is not about what we’re getting us. This is about making sure that we have an understanding of exactly what you want and that we’re able to execute and minimize a lot of the difficulties and things that we already talked about. So what if we have somebody listening that says, ‘Hey, you know what? Me and my sibling aren’t on the same page. We disagree,’ or I could see a situation where maybe there’s multiple children, four or five, six kids, and just naturally, there’s going to be difference of opinion, even if they largely get along otherwise. What strategies or what advice would you have in those situations where there’s disagreement among siblings?

Cameron Huddleston: Actually, that can be very common. And what you want to do when you ask your siblings to have this conversation, beforehand, what would probably be a good idea is to actually make your own list of things you want to discuss so that you can kind of sort it out in your head. You know, you’re not flying by the seat of your pants when you have this conversation. And by putting it in writing beforehand, it’s going to help at least you stay calm when you have the conversation because you know the issues you want to address and you can anticipate, if you write this down beforehand, some of the responses you might get from your siblings. But when you sit down and have this conversation or if you’re going to do it on the phone or do it by Skype, you want to make it clear, we are having this conversation because our primary interest here is Mom and Dad. We want to look out for their best interests. And I think we can all agree on that. We want to do what’s best for Mom and Dad. Now, we might not agree on how to go about that, and that’s OK. And so basically, you want to do — I kind of walk you through this process that you can use that was suggested by a financial psychologist. You let everyone say, get a turn in saying what they want to discuss, how they want to go about talking to your parents, what they think is important. And you, as the person who calls the meeting, you go last.

Tim Ulbrich: Oh, I love that.

Cameron Huddleston: Everyone gets to say something. No one can interrupt. You go last. And then, this is what’s important to me, this is what I think we should discuss, and I hear what you’re saying. Let’s figure out a way that we can all come to an agreement. You want this, I want that, and you want this. Let’s find some common ground here. And always bring it back to Mom and Dad because in all honesty, they are your common ground. And so you’re looking out for them. And hey, maybe you want to do this, but maybe our brother perhaps has a good idea about how to approach it from this other way. Give everyone a chance to speak. You go last, and then find your common ground.

Tim Ulbrich: So once the siblings hopefully are on the same page, there then comes this conversation, the conversation with the parents. So what is the best time, what recommendations do you have in terms of when to have or not have this conversation? So for those listeners that are out there saying, ‘Alright, I’m ready. Me and my siblings are on the same page. We haven’t had it, but we know we need to do it.’ What advice would you have on when to have it? Or maybe when not to have this conversation?

Cameron Huddleston: Don’t do it in the middle of a family holiday gathering. All of you — a lot of people think that’s a great time to have the conversation because everyone is there together.

Tim Ulbrich: Everyone’s together, right.

Cameron Huddleston: Everyone is there together. But you don’t want to ruin a good family meal by bringing up the topic of your parents’ finances or end-of-life planning or long-term care. Don’t ruin a good family gathering by bringing this up. And there might be people there who don’t need to be part of the conversation: cousins, aunts, uncles, your children. They don’t need to be part of the conversation, and sometimes, family gatherings aren’t happy events. There are tensions there already, and so you don’t want to add to that tension by bringing up a difficult topic. If you and your parents and your siblings are only together, though, during these holiday times, at least wait until the next day. And you don’t necessarily have to have the full conversation then. You just simply let your parents know, ‘You know, Mom and Dad, my sisters and brothers and I have been wanting to talk to you about something. We don’t have to talk about it now, it’s the holidays, this is a happy time. We should be celebrating. But we want you to know that we want to have this conversation. So let’s figure out a good time when we can have the conversation.’ Let your parents have a say in this so that they feel like they have some control over the situation. If they’re having to give up some information that they might be uncomfortable sharing, let them have some control by setting up a time when they can talk, when it’s best for them.

Tim Ulbrich: And I think this is an example in the book where you get very practical — and I hope our listeners will pick up a copy and read this — Chapter 7, you have 10 tried and tested conversation starters. And I know, again, to my comment earlier, I felt like you were unfolding the text as I was wondering what could come next. And here, as I began to think about, OK, I’m ready, I’m comfortable, my sibling and I are on the same page, how do I actually execute the conversation? And I think your 10 strategies is really helpful in doing that. One of the things I want to talk through briefly — I know we could have a whole separate episode, and we probably will at a different point — talk about in more details the estate planning process and documents. But I think you do a nice job in explaining these concepts in a very easy-to-understand way. And you mentioned in the book that when talking with reluctant parents, one should start with the basics, essentially, the must-haves, and then work from there. And so I want to talk about these basics for a moment. Here, you have four things that you mentioned: will or living trust, power of attorney, advanced healthcare directive, and then the fourth being how do you pay for your bills. So let’s just walk through those briefly. Will or living trust, tell us exactly what is that document and why is it important?

Cameron Huddleston: A will spells out who gets what when you die. It’s a legal document, and if you don’t have one, your state has laws that determine who gets what. And so when you discuss this with your parents, your parents might say, ‘Well, I don’t need a will. You guys get along. Or your mother’s going to get everything.’ That’s not always the case. It’s not guaranteed that your spouse is going to get everything because in some states, the laws will divide everything up evenly among the closest family members who are still alive. So it might your spouse and your kids. And maybe you don’t want your kids to get that, you want everything to go to your spouse. But I don’t think people realize this because we’re not all attorneys. And unless you point these things out to your parents, they might have no idea why a will is important. A living trust is similar to a will, but what it does — again, it lets you say who gets what. But having a living trust helps you avoid what is called probate process.

Tim Ulbrich: Right.

Cameron Huddleston: Even if you have a will, you still have to go through court proceedings where everything is kind of sorted out. And if your parents have any debts, you know, they’re going to look at the assets that are left in the estate and with certain, they will use those assets to help pay off the debts. You will not have to pay them off as long as your name isn’t on those debts. And I know people worry about that, oh my gosh, I’m not going to inherit anything from my parents except their debt. No. You will probably not inherit their debt. Anything that they have left will help pay off those debts and so you go through this probate process. With a trust, it avoids the probate process. But a trust can be more expensive to set up, and you have to name a trustee. And if you, for example, have a home, and you don’t want to have to go through the probate process, you have to basically deed, put the title, in the name of the trust. It can be a little more complicated. It’s more expensive. And so a trust is not the right thing for everyone, but it is certainly an option that your parents might be interested in, that you might be interested in. But in general, the will and the living trust, they let you spell out who gets what when you die. And you don’t have to be someone rich and famous to have a will and trust. Everyone needs to have one.

Tim Ulbrich: Amen. And a special urgent call to action for those that have children and have wishes for where their dependents would go and what would happen with that situation, I mean, this is a must-have for everyone, but the sooner the better. And I can assure you as going through this process recently with an estate planning attorney, it is not as complicated as it may seem from the outside looking in. And I think, again, to our listeners, you did a really nice job succinctly in this chapter outlining these different areas, these documents, what they are, that I think would be a great read before working with an estate planning attorney to understand exactly what would be out there.

Cameron Huddleston: Right. And people should also know because your parents might push back and say, ‘Well, I’m going to have to pay money for this, right? I’m going to have to pay an attorney to get a will or a living trust or to get a power of attorney,’ which is a legal document that lets you name someone to make financial decisions for you if you no longer can, an advanced healthcare directive lets — it spells out the end-of-life care you want, whether you want to be on life support, it lets you name someone to make healthcare decisions for you. Without this, your family has to make that decision. Do we keep mom and dad on life support? Do we continue spending thousands of dollars? And that’s a terrible decision for you as a child to have to make. And so you want to let your parents know, I want you to make this decision. I want you to decide. I don’t want to have to make this decision for you. And your parents might say, ‘Well, this is going to cost me money. What’s it going to cost me to meet with an attorney?’ It will cost you money. It can cost several hundred dollars, more than a thousand, depending on how complex your situation is, to have all three of these documents drawn up. But that upfront cost is so much less than what your loved ones are going to have to pay if they end up in court, fighting over who gets what because you didn’t have a will, going to court to get conservatorship because you never named a power of attorney, going to court because one child thinks mom needs to stay on life support and the other one does not. Those can cost tens of thousands of dollars, those court proceedings. And so it does save your loved ones money down the road, but you don’t necessarily have to go to an attorney. There are fill-in-the-blank type documents that you can find online. I’ll list some resources. Sometimes, your state bar association will have free wills available. Now, these do-it-yourself options are certainly better than nothing. But they are not ideal because they’re not tailored to your own situation. So if you can afford to meet with an attorney, if your parents can afford to meet with one, I would encourage them to do that. And you might even offer it as a gift to your parents.

Tim Ulbrich: Yes.

Cameron Huddleston: ‘Mom and Dad, I recently met with an estate planning attorney. I didn’t even realize how important these documents were. I think that if you haven’t done it already that you should. And I’d be more than willing to pay for them for you. Think of it as a gift from me. Happy Father’s Day. Happy Mother’s Day. Merry Christmas. Happy Hanukkah. This is my gift to you.’

Tim Ulbrich: I agree in your assessment of if I had to rank order, then, because I’ve been in all three situations. I’ve been with I have nothing, I have a DIY, and I have documents drafted by an estate planning attorney. I put those in that order from worst to best. And even if I could speak to for a moment, the DIY versus the estate planning attorney, not just the peace of mind of having the documents in place for your family but also what you learn through the conversations and the back-and-forth to the attorney. So we did — my wife and I did an hour video call with the estate planning attorney, then they drafted up the documents, and then we had a follow-up call as well. And there was just a lot that you can talk through, you can process, they’re asking good questions, they’re beginning to understand your personal situation, what’s unique and what you need to consider in helping you make those decisions but also then being there to answer questions. You know, I’ve learned a lot of things about making sure obviously life insurance policies and other types of things and what would fall in the trust, what would not. So there’s a lot of things I think you learn through that process of working with an attorney that I didn’t necessarily learn when I went through the DIY approach. And so for our listeners, if you want, just a point of reference — knowing this is different, obviously, by state, by attorney — it cost my wife and I about $1,000 to have a will, a living trust, a power of attorney, and an advanced healthcare directive drafted for both of us. So you know, certainly it was a cost. But I think you also have to factor in peace of mind into the process as well. One of the things, Cameron, I think you — at least for me — was a “holy cow, Aha!” moment was that I often think, as I think many others may think, is that once you have the will or living trust, the power of attorney and the advanced healthcare directive, it’s sort of a moment of like, look at me, I’m doing a good job, all is settled. And then I saw your list of, you know, how do you pay for your bills? And what are the sources of income, bank account access, household debt, monthly bills, insurance policies, investment accounts, real estate, final wishes, social security, Medicare account logins, like oh my goodness. Like if something were to happen to my parents tomorrow, my brother and I are in a very good position with the estate planning documents, but I don’t think we are with the others. And so I really liked that section on, hey, start with these as the basics, but the more advanced, when they’re ready to share, don’t forget about these aspects as well.

Cameron Huddleston: Yes, so if you — this is so important, especially if you are your parents’ power of attorney or you are the executor of their will, you need some details about their finances so that if something does happen to them, and especially if you’re executor, I mean, everyone dies. And so when they do die, you need to know what they have. You need to have their financial inventory because if you don’t, things get lost. Like I’ve heard people say, estate planning attorneys saying that there were people who found boxes under their parents’ bed with old stock certificates. I mean, they could have tossed that stuff out. That’s just throwing away money. And this happened with me and my mother. And I would just go back —

Tim Ulbrich: Oh, the $50,000, right?

Cameron Huddleston: Yes.

Tim Ulbrich: I remember, yes.

Cameron Huddleston: Yes. And so I did get my mother in to meet with an attorney before her memory issues got to be too bad. She was still competent enough to sign the documents, and that meeting with the attorney, like you said, was so good because we learned about other things we needed to be doing, like how I should go to the bank with her and get on her account as a representative payee, how we discussed Medicaid planning, which I kind of touch in the book, which is something you do need the help with an attorney. Medicaid is the only federal government program that will pay for long-term care. Medicare does not. But I think as most of your listeners probably know, you have to be very low-income to qualify for Medicaid. You have to have very few assets, typically $2,000 or less. And you can basically go through the process of transferring your assets so that you can qualify for Medicaid, but this is something you need the help of an attorney with. This is something that my mother and I discussed with an attorney when we there. So meeting with the attorney opened our eyes to a lot of options that were available to us. But even though we got those documents in place, I had not gotten details about my mother’s finances. And because she was starting to have memory issues, and as her memory got worse, and I was trying to figure out what accounts she had, there was one that slipped under my radar. And I didn’t discover it until we had moved, and the people who bought our house, they were getting mail from some investment company saying that there was an account my mother had they were about to turn over as an unclaimed asset to the state. I had no idea it even existed. It was $50,000 worth of investments.

Tim Ulbrich: Wow. Makes you wonder how often that happens. Yeah. Wow.

Cameron Huddleston: And so because I was her power of attorney, I was able to get access to it. I just went ahead and cashed it out and used it to pay for about a year’s worth of care. But I almost lost that money because I didn’t even know it existed. And so start by finding out whether they have the legal documents, find out whether they pay their bills automatically or by check. Because if they’re paying them by check, then that power of attorney is especially important because you cannot write checks from their account unless you’ve been named their power of attorney. And then once they give you that sort of information, press a little bit more. Like you had mentioned, I tell people to find out what their sources of income are, what sort of investments they have, what sort of retirement accounts they have, do they have real estate property, what sort of insurance policies do they have, and you don’t have to get them to tell you this face-to-face. You could say, ‘Mom and Dad, there’s some information I would like to know. You can write it down for me.’

Tim Ulbrich: Absolutely.

Cameron Huddleston: Which makes it so much easier. Write it down, put it someplace safe, and tell me how to access it.

Tim Ulbrich: Yeah, and I like that. Ryan Inman, another financial planner with Physician Wealth Services, mentioned in the book with his family setting up a DropBox account and sharing files that way. I thought those strategies of some of the electronic communication and sharing might even be easier if there’s not as much comfort with some of the face-to-face conversations. So before we wrap up — because we really are just scratching the surface of I think the value and how rich this book and resource is. I hope our listeners will pick up a copy of the book, again, “Mom and Dad, We Need to Talk: How to have essential conversations with your parents about their finances.” You can get it on Amazon, on Barnes & Noble, and also make sure to check out Cameron’s easy-to-understand financial advice on CameronHuddleston.com or by following her on Facebook @CameronHuddlestonMoneyExpert. But I want to close by acknowledging something that you wrote in your final note at the very end of the book that has nothing to do with personal finance but really stood out to me, and I think it will with our listeners as well. And that’s this concept of listening and writing down stories from your parents. Tell us more about that.

Cameron Huddleston: You know, as I was finishing up the book, I thought, one of my biggest regrets, as I mentioned already, is not talking to my mom about her finances. But an even bigger regret that I have is not ever sitting down my parents and recording the stories that they would share with me when I was younger. My dad would tell me these wonderful stories when I was little at night, when I was going to bed, about his childhood. And my mother had some great stories too. But I didn’t even think to do this until it was too late. You know, my father had passed away when I was 28 and he was 61. My mother, you know, she was 65 and having memory issues, and my kids were little. I was too busy thinking about raising my kids and trying to take care of her to ask her to share her stories with me. And I regret that so much. And you can even use that as an opportunity to have these conversations with your parents about their finances. You know, ‘Mom and Dad, you always tell me these great stories when I was a kid about your childhood. Would you mind if sometime, we sit down together and you let me record you?’ And then from those stories, you can take that experience and say, ‘Thank you so much for sharing this with me. This is going to help me pass along your legacy to my children. But I also want to make sure that I really, that I can really make sure that we uphold your legacy. And to do that, I need to know what your wishes are. Do you have a will? Can we talk about what sort of care you want? Because this is important to me.’ And so that can be a very easy way to actually get them to start talking about their finances by getting them to share their stories first, letting them know your stories, your history, these are important to pass along. But there are other things I’m sure you want to pass along too. Let’s make sure we have things in place so that can happen.

Tim Ulbrich: That is great. I really like that. I’m so glad you shared that at the end. I know it was something that will stick with me for a long time. One of the things I talk about on the show a lot, and I interview other entrepreneurs about is the concept of legacy and what they’re leaving behind in the work that they’re doing. And as I read through your book — and I’m not yet as familiar with the other work that you are doing, although I’ll be following that from here on out — I really am confident, and I genuinely mean this, that I think this book in terms of legacy of the work that you’re doing is going to be transformational, not only for our audience but obviously for many others that read it and are listening, that these are such important conversations that I think are going to provide peace to families, provide clarity, and really help people with practical strategies to have some of these difficult conversations. So Cameron, thank you for putting together this excellent resource. Again, the title of the book, “Mom and Dad, We Need to Talk: How to have essential conversations with your parents about their finances.” You can get it on Amazon, Barnes & Noble. And again, thank you for taking time to come on today’s show. I appreciate it.

Cameron Huddleston: Thank you.

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